Respondents Brief — United States v. Navajo Nation

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No. 01-1375

In The

Supreme Court of the Gnit

UNITED STATES OF AMERICA,

Petitioner,

NAVAJO NATION,

Respondent.

On Writ Of Certiorari To The

United States Court Of Appeals

For The Federal Circuit

BRIEF ON THE MERITS FOR RESPONDENT,

THE NAVAJO NATION

LEVON B. HENRY PAUL E. FRYE

Attorney General Counsel of Record

BRITT E. CLAPHAM, II RICHARD W. HUGHES

Deputy Attorney General ROTHSTEIN, DONATELLI,

THE NAVAJO NATION HUGHES, DAHLSTROM,

P.O. Drawer 2010 SCHOENBURG & FRYE, LLP

Window Rock, AZ 86515 500 4th Street NW,

(928) 871-6343 Suite 400

Albuquerque, NM 87102

RICHARD B. COLLINS

401 UCB (505) 243-1443

Boulder, CO 80309 DaviID O. STEWART

(303) 492-5493 SAMUEL J. BUFFONE

Ropes & GRAY

1301 K Street NW,

Suite 800 East

Washington, D.C. 20005-7008

(202) 626-3900

COCKLE LAW BRIEF PRINTING CO. (800) 225-6964

OR CALL COLLECT (402) 342-2831

BEST AVAILABLE COPY |immaaaa

ee A ee

QUESTION PRESENTED

Federal statutes and regulations govern virtually

every aspect of surface coal mining on Indian lands, under

a statutory scheme designed to maximize tribal revenues

from reservation lands. The question presented is:

Whether, under United States v. Mitchell, 463 U.S.

206 (1983), the Navajo Nation stated a claim for breach of

trust cognizable under the Tucker Act and the Indian

Tucker Act where the Department of the Interior sup-

pressed a well-supported decision raising Navajo coal

royalties from extremely low rates, deceived the Navajo

Nation and withheld from it key information, forced it to

negotiate at a decided disadvantage, and ultimately

approved a lease of Navajo coal for far less than every

federal study had found reasonable, all in violation of

applicable statutes, departmental ~egulations, and the

‘core trust duties of loyalty, candor, and care.

TABLE OF CONTENTS

Page

STATUTES AND REGULATIONS INVOLVED ........ 1

STATEMENT OF THE CASE ................cccceseeeeeseeeeees 2

BD. TABOR IREIR cececcescsesoscesscessisuesunaneeeneee 2

B. Factual Background.....................ccseeeeeeees 3

C. Course of Proceedings ..................csecseeseee: 13

SUMMARY OF ARGUMENT.....................ccccceeeeeeeeees 14

P| 5 a 16

I. THE GOVERNING STATUTES, REGULA-

TIONS, AND LEASE ESTABLISH TRUST

DUTIES FOR FEDERAL MANAGEMENT

OF NAVAJO COAL AND MANDATE COM-

PENSATION FOR BREACH OF THOSE

IU TERED BERBER «ccccecccnsevecccnsseseesnninbainaaannaaann

A. The Tucker Act Waives Sovereign Immu-

nity for Claims Founded on Statutes,

Treaties, and Regulations Under Which

the Government Exercises Trusteeship

Over Indian Resources ...................s0ese00s:

B. The Statutes and Regulations That Gov-

ern Every Aspect of Indian Coal Leasing

Parallel Those in Mitchell I1....................

C. The Applicable Statutes, Regulations,

and Lease Establish Fiduciary Duties to

Manage Navajo Coal in Accordance with

Indians’ Best Interests and Basic Trust

La BRRRERIED .ccccccsecenssesetseeneennnnae

— —

iii

TABLE OF CONTENTS - Continued

Page

D. The Department Violated Compensable

Trust Duties by Shelving a Well-

Supported Lease Adjustment for Pea-

body’s Benefit, Misleading the Navajo

Nation and Forcing It to Negotiate, and

Rubber-Stamping Lease Amendments at

Sub-Minimum Royalty Rates .................. 39

Il. OTHER VARIANTS OF THE GOVERN-

MENT’S UNSUCCESSFUL ARGUMENTS IN

MITCHELL II SHOULD BE REJECTED......... 44

A. The Ideal of Tribal Self-Determination

Does Not Dilute Trust Duties.................. 44

B. The Navajo Nation Had No Effective APA

Remedy Here, and Mitchell II Rejected

the Government’s Argument That Such

Remedies Preclude Monetary Relief........ 47

C. The Implied Right of Action Doctrine

Does Not Apply Here.....................c.c0ce00 49

EES LTTE 50

TABLE OF AUTHORITIES

Page

I. CASES

Alexander v. Sandoval, 532 U.S. 275 (2001)...................... 18

Anicker v. Gunsburg, 246 U.S. 110 (1918)................... 21, 30

Arizona v. California, 460 U.S. 605 (1983)........................ 35

Assiniboine & Sioux Tribes v. Board of Oil & Gas

Conserv., 792 F.2d 782 (9th Cir. 1986).......................... 29

Astoria Fed. Sav. & Loan Ass’n v. Solimino, 501

8 RE eae TF 37

Babbitt v. Youpee, 519 U.S. 234 (1997)...................0.......... 44

Bell v. Hood, 327 U.S. 678 (1946) o........ccccccccoceccceceoceeeceeeee. 18

Board of County Comm’rs v. Seber, 318 U.S. 705

Saree cetera iat 21, 31

Bunch v. Cole, 263 U.S. 250 (1923) .........ccccccccccecessesceceseees 25

Burlington Resources Oil & Gas Co. v. Dep’t of the

Interior, 21 F. Supp. 2d 1 (D.D.C. 1998) .........cccccccccecse. 31

Burns v. Reed, 500 U.S. 478 (1991) .o......ccccccccccccececscececeeees 38

California v. F.E.R.C., 495 U.S. 490 (1990)....................... 29

Camero v. United States, 375 F.2d 777 (Ct. Cl.

iii iecdevenecentnnscasdiinanaitididiesinniaincadinasstadiiiihitati at 48

Cannon v. Univ. of Chicago, 441 U.S. 677 (1979)........ 17, 41

Cherokee Nation v. Georgia, 30 U.S. (5 Pet.) 1

Sane ech naevenniscinsianeiainitnniiiiiatintecitinisiesidt ete be et 18

Cheyenne-Arapaho Tribes v. United States, 966

F.2d 583 (10th Cir. 1992), cert. denied, 507 U.S.

EUs a ED SD a 29, 32, 43

Clearfield Trust Co. v. United States, 318 U.S. 363

Se ceenscccnecnsivasitliaitiiatinieaminteattsite taint ae 37

TABLE OF AUTHORITIES -— Continued

Page

Coast Indian Cmty. v. United States, 550 F.2d 639

IDB. CA. DTA) ocecccccccccsccecseccsccsccccsccccssscsssesccsssssssossssosooooes 42

Consolidated Rail Corp. v. Gottshall, 512 U.S. 532 -

CRIA. ........ccciccosssessennnnnesnesnssnessnnnnstensennsnesesensssenasasenessasenans

Cotton Petroleum Corp. v. New Mexico, 490 U.S. -

| |

County of Oneida v. Oneida Indian Nation, 470 -

UI.G, BBB (1DBB) ...2ccccccccccccccccccccccccccccesssscssccccsssososocosooosooes

Dawn Mining Co. v. Watt, 543 F. Supp. 841 (D.D.C. ne

Dep't of the Interior v. Klamath Water Users

Protective Ass’n, 532 U.S. 1 (2001)............::ceceeneenreeeeeees 35

Earll v. Picken, 113 F.2d 150 (D.C. Cir. 1940) ...........0000++: 40

Faragher v. City of Boca Raton, 524 U.S. 775 (1998)..29, 33

FDA v. Brown & Williamson Tobacco Corp., 529

TUG, 2BD (IBID. .ccccccccccccccccnsccccccesssscsnssssccssssssscsscosossooseees 21

Federal Power Comm’n v. Tuscarora Indian Nation,

BOD U).B. BO (19GD)....ccccccccscccesecsescosecoscccccserseesesesesees 30, 45

Franconia Assoc. v. United States, 122 S. Ct. 1993

CRIED... ..ccccceccsecseeesesccnscsesecssnsssosssssssossssssssosssnesessssoseesenes 37

General Crude Oil, 18 IBLA-326 (1975) ..............cccsseeeeeees 32

Great-West Life & Annuity Ins. Co. v. Knudson, 122 i

&, Ct. 70 (BOOB)....0..cccccccscccccceessecssccscsseccscrssssenssossssocooss

Harris Trust & Sav. Bank v. Salomon Smith Barney

Inc., 530 U.S. 238 (2000)...........:cecceeeeesseesenserseeseneennsenes 36

Indian Towing Co. v. United States, 350 US. 61 =

CRI oececcoccencecsecescsscsesseocsssensnscnssnsssnssscssscossnasqneessnsssesene

TABLE OF AUTHORITIES -— Continued

Page

Jicarilla Apache Tribe v. Supron Energy Corp., 728

F.2d 1555 (10th Cir. 1984), on reh’g, 782 F.2d 855

(en banc), supplemented, 793 F.2d 1171, cert.

denied, 479 U.S. 970 (1986) .............ccccccccccseeeeeeeeees passim

Joint Bd. of Control v. Acting Portland Area Direc-

emmy, Ba, SE Bae Se CIID cccccccccccncccsccssscssenssccessnsesscense 5

Kenai Oil & Gas, Inc. v. Dep’t of the Interior, 671

SRT na 28, 31

Kerr-McGee Corp. v. Navajo Tribe of Indians, 471

ART eee 23, 25, 28, 39, 44

Klamath & Moadoc Tribes v. United States, 296

TT iiicicereintlidinainsscitieiicdidlaihitiialbaneaittaiaiitatniat 18, 41

Meinhard v. Salmon, 249 N.Y. 458 (1928) ..............ccccccc0e. 34

Menominee Tribe v. United States, 101 Ct. Cl. 10

A Ane NON eae NS a 18

Mertens v. Hewitt Assocs., 508 U.S. 248 (1993)................ 35

Minnesota v. Mille Lacs Band of Chippewa Indians,

I iia al 21, 49

Mitchell v. United States, 664 F.2d 265 (Ct. Cl.

1981), aff’d, 463 U.S. 206 (1983)... ceccceceeeseeeeeeees 32

Mobil Oil Expl. & Producing Southeast, Inc. v.

United States, 530 U.S. 604 (2000) .0...........ccccccceeeeeeeee 37

Montana v. Blackfeet Tribe, 471 U.S. 759 (1985)...... passim

Morton v. Mancari, 417 U.S. 535 (1974) ..........cccccccceeeeeeeeee 19

Musick, Peeler & Garrett v. Employers Ins., 508

EE ee 50

Vii

TABLE OF AUTHORITIES -— Continued

Page

Navajo Nation v. United States, 46 Fed. Cl. 217

(2000), rev'd 263 F.3d 1325 (2001), cert. granted, .

BEG. Go, SD Ce ecccccvsccvcsscccscecsscssscsessscnscesesese passim

Navajo Nation v. United States, 263 F.3d 1325 .

(2001), cert. granted, 122 S. Ct. 2326 (2002)......... passim

Navajo Nation v. United States, 46 Fed. Cl. 353

(2000), aff’d No. 00-5072, 2002 WL 312117 (Fed.

CCB 8

Navajo Tribe v. United States, 9 Cl. Ct. 227 (1985).......... 29

NLRB v. Amax Coal Co., 453 U.S. 322 (1981) ...34, 36, 38, 40

Oneida Indian Nation v. Oneida County, 414 US.

Cl w$ 21

Palmer v. United States, 168 F.3d 1310 (Fed. Cir.

EE 20

Patterson v. McLean Credit Union, 491 U.S. 164

— 29

Pawnee v. United States, 830 F.2d 187 (Fed. Cir.

1987), cert. denied, 486 U.S. 1032 (1988).......... 29, 38, 39

Peabody Coal Co., 93 IBLA 317 (1986).................. 11, 32, 42

Peabody Coal Co. v. State, 761 P.2d 1094 (Ariz. Ct.

App. 1988), cert. denied, 490 U.S. 1051 (1989) ....... 25, 28

Pegram v. Herdrich, 530 U.S. 211 (2000) .............e:cseeeseee 34

Pennsylvania v. Muniz, 496 U.S. 582 (1990)................0++ 33

Poafpybitty v. Skelly Oil Co., 390 U.S. 365

‘aie ileal iatelialeteaaahianintanin 25, 29, 30, 33

Pueblo of Laguna v. Assistant Secretary for Indian

Affairs, BIA, 12 IBIA 80, 90 Interior Dec. 521

Viii

TABLE OF AUTHORITIES -— Continued

Page

Richards v. United States, 369 U.S. 1 (1962)...............00... 37

Robert L. Bayless, 149 IBLA 140 (1999) ...........cccccccceeeee 32

Seminole Nation v. United States, 316 U.S. 286

ae iredeiibetadaradibteic titanate aaiieanitatitaatiatateitticieaeetiiees 18, 34, 35

Shoshone Tribe v. United States, 299 U.S. 476

eee beieciaihenatiieriirinenb iether cerainntatitiieteatnaieatatneeaaiaes 15, 40

Smith v. McCullough, 270 U.S. 456 (1926)........0....0cccce 30

Sunderland v. United States, 266 U.S. 226 (1924)......21, 45

Thompson v. Western States Med. Ctr., 122 S. Ct.

ee icecheheceitthinneasitaaateniatiithiatiateaiicesiainiiaiinaattianest) 50

Timpanogos Tribe v. Conway, 286 F.3d 1195 (10th

ERNE ne me one RON 49

United States v. Cherokee Nation of Okla., 480 U.S.

ee ee REET 31, 32, 35

United States v. Creek Nation, 295 U.S. 103 (1935)......... 18

United States v. Dann, 470 U.S. 39 (1985)............ 17, 35, 38

United States v. Mason, 412 U.S. 391

Ee eee Ne E 34, 37, 38, 42, 43

United States v. Mitchell, 463 U.S. 206 (1983)......... passim

United States v. Shoshone Tribe, 304 U.S. 111

EE ee ee a ee 18

United States v. Wheeler, 435 U.S. 313 (1978) .................. 3

United States v. Winstar Corp., 518 U.S. 839 (1996)........ 19

Varity Corp. v. Howe, 516 U.S. 489 (1996) .................. 36, 40

Vermont Yankee Nuclear Power Corp. v. N.R.D.C.,

ey re Se incstncerinrseiliinialiecianatciatihiadiattaeteea dst 48

TABLE OF AUTHORITIES -— Continued

Page

Virginia Bankshares, Inc. v. Sandberg, 501 US.

Lg | eee 50

Welch v. Texas Dep’t of Highways & Public Transp.,

4BS U.S. 468 (1987)......ccccccccccssssssrecccccsccsssvereeeeeesscsseensees 29

Il. TREATIES, STATUTES AND REGULATIONS

Treaty between the United States of America and

the Navajo Tribe of Indians, 9 Stat. 574 (1849) ........ 1, 32

Treaty between the United States of America and

the Navajo Tribe of Indians, 15 Stat. 557 (1868) ......... 21

Act of Dec. 16, 1926, ch. 12, 44 Stat. 922 ..........ccccceeeeeeees 22

Act of June 14, 1934, ch. 521, 48 Stat. 960 ..............ccceeeees 3

BE UBC. BB BED-BID ..eccecsccecsecscessscsecsccscsensccscsssscsscsscsstoollg SO

25 U.S.C. $§ 396 a-396g ..........ccccccceeeseeeeeeeereeeeeennneeenenees 1, 23

BE U.B.C. 8 SOGCR......cccccccecveseececcccccscccososeees 14, 15, 20, 28, 39

25 U.S.C. §§ S9GD.........ssessessessseeneesernenneensnnennnsnnsnnennnssnseens 30

2B U.S.C. § SOGG..........cccccsssscccsssscsssesenrseeesreseesessssenssseneees 25

2B U.S.C. $ 8O7........ccccccccssrssecsessccessssessesevessrssesesessesssssssssens 22

2B U.S.C. § SOB...........ccccccsessssssecesssssvccsseeersssensessssesossesoesees 22

2B U.S.C. § SOBA.........ccccesssscesssccsssresssessersersseeresssssesessnsenens 22

BE U.G.C. © BOD.........cccccscssssescesesecevovssesecsovsvsesvsesesesseese passim

2B U.S.C. § 406(a) .......cccccececssssssssrrreeeeseseesesenees 20, 28, 35, 37

25 U.S.C. § 415(@)1) ......cccccceeeeeeeereeeeeeeeeenes sesesnnecnnnecgnneennnes 25

QB U.S.C. § 450m(2) ...........cscsscesessrseeseeereeeeereesseeenessssnneeseees 46

25 U.S.C. § 458fR Db) ..........ccsssscccesssesessseereseeeteessnernesssennessnees 46

BE U.B.C. 8 GBL......cccccccccccesccceccscesssscccvcsccevseseveees 1, 23, 30, 43

TABLE OF AUTHORITIES - Continued

Page

Ae 23

Ee Ce Bene va 23

25 U.S.C. $§ 2101-08 .0......cccccecssscsssecssecssessssesssssssesssesseseesees 23

a ha 1

28 U.S.C. § 1491(a)N(1) ..eecceccseccseccsecssecessesesseessee 1, 14, 16, 19

ON Ce 1, 14, 16, 18, 36

| FS Eee eRe OMEN 1, 27

SO WBL. OB NORE TUE oaccececsicccncecccevocesecscsecesscesesessesecesss 1, 26

Pe ieee 27

tn 0 8 es 1, 26

in a Td 26

RE TIE: 26, 3i

25 C.F.R. § 211.2 (1985) ....c.cccsscccsseesssecsseessseeee 11, 14, 39, 41

Sere Le een. ree 31

EES SO TN TENT ET 26

Pree a Le aT TET) 1, 26

| 28

SERS eee 1, 26, 27

| an ee eT 1

BO C.F. § 206.450(b) ........2.cccscccescceccccescecscscescssssssscosscosece 39

30 C.F. § 206.450(d)......ccccccccssccsseccssecssesssssssssessecesuecoseece 27

| Le eae 27, 28

ia cisiiiciinasictiniinteniasniiitenicntetiedi ics 27, 28

EN ae iiilieesiniiierindeaiiitisniatiltdiitiiaainiataaieatial 27, 28

TABLE OF AUTHORITIES — Continued

Page

SO GRRE. 1, TB aececccnccscccccvsscecccesnssccrssssscscessanesessnsncssnssasoues 1

GE CBRE BR, Ba Bancccccscscccecsscccccesceccsccseccvesnecsnssesesssessoones 1, 26

33 Fed. Reg. 19,803 (Dec. 27, 1968)............cccccesesseeeeeereeees 26 ~

34 Fed. Reg. 813 (Jam. 18, 1969).............ccccccesesessereeeeeeeeeees 27

42 Fed. Reg. 18,083 (Apr. 5, 1977)........:cccccccceeeseseeeeeees 27, 47

51 Fed. Reg. 8,168 (Apr. 8, 1986)............:cccccsseserereeeeeeenenes 27

51 Fed. Reg. 15,763 (Apr. 28, 1986)...........:::cccceseereeeeeeeeeees 27

61 Fed. Reg. 35,634 (July 8, 1996).............ccccseeseeeeeeeees 26, 31

66 Fed. Reg. 7,068 (Jam. 22, 2001)...........:cccceeseeeeesreeeeeeneees 25

III. OTHER AUTHORITIES

Legislative Materials

H.R. Rep. No. 75-1872 (1938) ..........::cccceeesesseneeeeeeeeeeeeenenes 23

H.R. Rep. No. 79-1466 (1945) .........:ccccccesseeeeeereeeeeneeees 17, 18

H.R. Rep. No. 81-352 (1949) .........:cccccccesseeeeeeeeseeeeeeeeeneneees 36

H.R. Rep. No. 81-963 (1949) ..........::cccccceeeeseeeeeseeereeeeeeeeneees 23

H.R. Rep. No. 97-746 (1982) .........:ccccceceeseeeeeeeeeneeeeeenes 24, 46

S. Rep. No. 81-550 (1949)..............ssccscrsesrreessrsesesesesseesssnes 23

S. Rep. No. 97-472 (1982)........cccccsesceessreeeeeeeeereeeeeeseeeenereees 46

Hearings on H.R. 1198 and H.R. 1341 Before the

House Committee on Indian Affairs, 79th Cong.,

Bah Bint, CIID. cecececcceccccccccccccsccsssesecsscsvescccsscesese 17, 18, 36

xii

TABLE OF AUTHORITIES - Continued

Page

Hearings Before the Senate Select Committee on

Indian Affairs on. S. 1894, 97th Cong., 2d Sess.

| TEER schhaebdeispicniaidehiatiiahpiaaiaatinitiaminandiiaiiandtmenntadiaaaed 42

Se I, TE, Bh, Ge i cecccttcciccconessintcncctnecensstnanencisenens 36

Executive Materials

Executive Order of May 17, 1884, I Charles J.

Kappler, Indian Affairs, Laws and Treaties 876

EERE ee ee a eT Te ae ee 3

Special Message to the Congress on Indian Affairs,

TITIES sencustitbacinieatncnscetistdiinistsintiteniendaitammsasiand | 45

President’s Statement on Indian Policy, 1983 Pub.

EE en ere ee Ne eo ae eT OT 46

Statement on Signing the Department of the

Interior and Related Appropriations Act, 1991, 26

Weekly Comp. Pres. Doc. 1768 (1990) .............cccccceeeeee 46

Executive Order No. 13,175, Consultation and

Coordination with Indian Tribal Governments,

65 Fed. Reg. 67,249 (Nov. 6, 2000)............cccccccccesceeeeeeees 47

Executive Order Indian Reservations-Leasing Act,

St Re. Cee 22

Indian Leases, 18 Op. Att’y Gen. 486 (1886)..................... 21

U.S. Dep’t of the Interior, Annual Report of the

Secretary of the Interior for 1921 (1921)................cccc.0. 4

Young, Robert W., Navajo Yearbook (1957) .............ccccce00e- 21

a ia Te rng pom.

eee

TABLE OF AUTHORITIES - Continued

Page

_ Treatises And Articles

3 Am. L. c* Mining § 67.04[4][d] (1999)............:ccccseeeeeeeeees 32

Cardozo, Benjamin, The Nature of the Judicial

ETD «.cccsoncccnneneisattinianianiensiianenaeeaninnnenmnanenntes 29

Chamberlain, Kathleen P., Under Sacred Ground: A |

History of Navajo Oil, 1922-1982 (2000) ................e+ 4

Cohen, F. Handbook of Federal Indian Law (1982) ....17, 34

Developments in the Law, Remedies Against the

United States and its Officials, 70 Harv. L. Rev.

ee eer 37

Kelly, Lawrence C. The Navajo Indians and Federal

Indian Policy: 1900-1935 (1986) .........s0csccseseeeeseseeeeeeenees 4

Restatement (Second) of Contracts § 346...............:cc::e000++ 19

Royster, Judith V., Mineral Development in Indian

Country: The Evolution of Tribal Control Over

Mineral Resources, 29 Tulsa L. J. 541 (1994) ............... 45

Scott, Austin W., et al., The Law of Trusts § 171

eee 40

Williams, Aubrey W., Navajo Political Process

| eee 4

Wood, Mary C., Indian Land and the Promise of

Native Sovereignty: The Trust Doctrine Revis-

ited, 1994 Utah L. Rev. 1471...........:cccccssscesereeeseeeeeeeenees 47

Young, Robert W., A Political History of the Navajo

TINIE... sucisiaesenasaganianenneintinesmonniimmnnenennsseninmentetn 4

BRIEF ON THE MERITS FOR RESPONDENT,

THE NAVAJO NATION

STATUTES AND REGULATIONS INVOLVED

The following authorities establish comprehensive

federal control and supervision over Navajo coal leasing

and impose trust duties on the Government: two treaties

between the United States of America and the Navajo

Tribe of Indians, 9 Stat. 574 (1849) and 15 Stat. 667

(1868); the Indian mineral leasing statutes, 25 U.S.C.

§§ 396a-396g, 399, and implementing regulations, 25

C.F.R. pts. 211' and 216 subpart A and 43 C.FR. pt. 3480;

the 1948 Indian right-of-way statute, 25 U.S.C. §§ 323-

328, and implementing regulations, 25 C.F.R. pt. 169; the

Navajo and Hopi Rehabilitation Act of 1950, 25 U.S.C.

§§ 631-640; the Federal Oil and Gas Royalty Management

Act (FOGRMA), 30 U.S.C. §§ 1701-1757, and regulations

applying FOGRMA to Indian coal, 30 C.F.R. § 206.450 et

seq. and 25 C.F.R. § 211.40 (applying 30 C.F.R. Chapter II,

Subchapters A and C); and the Indian lands section of the

Surface Mining Control and Reclamation Act of 1977

(SMCRA), 30 U.S.C. § 1300, and implementing regula-

tions, 25 C.F.R. pt. 216, subpart B, and 30 C.F\R. pts. 750

and 955. These provisions are set forth in the Navajo

Lodging, except for relevant provisions of the 1868 Treaty,

the Navajo-Hopi Rehabilitation Act, and 25 U.S.C. § 399,

set forth in che appendix to this brief. The Tucker Act, 28

U.S.C. § 1491, and the Indian Tucker Act, 28 U.S.C.

§ 1505, are set forth in the petition appendix at 86a.

' Unless otherwise noted, references to the Code of Federal

Regulations are to the 2001 edition. The Navajo Lodging includes

regulations from both the 1985 and 2001 editions.

STATEMENT OF THE CASE

A. Introduction

The Navajo people occupy the largest Indian reserva-

tion in the country. Despite significant mineral wealth, the

reservation lacks basic infrastructure needed to support a

self-sustaining economy. The Navajo Nation government

relies significantly on revenues from coal leasing to pro-

vide basic services.

Due to its high BTU content, low sulfur content, and

favorable stripping ratio, the coal at issue here is “excep-

tionally valuable.” J.A. 81, 86. The United States controls

and supervises all aspects of its leasing. The United States

arranged and approved a lease for this coal for a pittance

(between 20¢ and 37%¢ per ton) in 1964, but reserved

Interior Department authority in that lease to adjust the

royalty rate after twenty years. J.A. 191, 194.

In 1984, the Bureau of Indian Affairs (BIA) exercised

that authority and raised the royalty rate to 20%, based on

two federal studies. J.A. 6-9. The lessee, Peabody Coal

Company, appealed. After briefing and additional federal

studies, the appellate decision maker prepared a final

decision affirming the adjustment. J.A. 14-97. However,

the Interior Department leaked the pending decision to

Peabody before the decision maker could sign it. J.A. 155.

Peabody sprang into action, retaining a close friend of the

Secretary of the Interior to influence him ex parte. J.A.

101-03.

As a result of clandestine meetings with Peabody’s

agent in July 1985, the Secretary suppressed a well-

supported decision to raise royalties from unconscionably

low levels. The Department then concealed its actions

from the Navajo Nation, misled it about the value of its

coal, and forced it to negotiate with Peabody at a decided

bargaining disadvantage. For the next two years, the

Navajo Nation continued to receive virtually nothing for

its coal. Ultimately, in December 1987, after performing no

further economic analysis, the Department approved lease

amendments setting royalties at little over one-half the

royalty rate that every federal study had found fair. These

actions, taken out of “sympath[y]” for Peabody, J A. 102,

sacrificed the Navajo Nation’s best single opportunity to

move from a welfare economy toward self-sufficiency.

rnment does not contest these facts. J.A.

nant a court below held that the Tucker Act and

governing statutes afford a remedy for the Department's

breaches of trust. The Navajo Nation respectfully urges

this Court to affirm.

B. Factual Background

1. The relationship between the United States and

the Navajo Nation is founded on two treaties. See United

States v. Wheeler, 435 U.S. 313, 324 n.20 (1978). In the

first, ratified in 1850, the Navajo Tribe submitted to the

Government’s “sole and exclusive right of regulating the

trade and intercourse” with the Navajo. 9 Stat. 974. In

exchange, the United States promised to give the treaty a

“liberal construction” and to “legislate and act as to secure

the permanent prosperity and happiness” of the Navajo

people. Id. at 975. The second, ratified in 1868, defined a

reservation within the Navajo homeland. 15 Stat. 667. The

part of the reservation at issue here was added by Execu-

tive Order of May 17, 1884, I Charles J. Kappler, Jndian

Affairs, Laws and Treaties 876 (1904), and confirmed by

Congress in the Act of June 14, 1934, ch. 521, 48 Stat. 960.

* Pages 37 to 187 of the Joint Appendix reproduces only

ea te, die the appendix filed in the Court of Federal

Claims. See C.A. App. A1982-A2065, A2703-A2727.

The coal at issue here is held in trust by the United States

for the Navajo Nation. Pet. Br. 4.

The United States has exercised control over Navajo

mineral leasing from the beginning. Secretary of the

Interior Albert Fall stated that Indians as a rule were “not

qualified to make the most of their natural resources,” and

that the federal government should therefore control

them. U.S. Dep’t of the Interior, Annual Report of the

Secretary of the Interior for 1921 8 (1921). Under such

control, some Fall-era oil leases generated bonuses for the

Navajo of only $1,000—but netted $300,000 in spoils for

those submitting “dummy” bids. Kathleen P. Chamberlain,

Under Sacred Ground: A History of Navajo Oil, 1922-1982,

46, 60 (2000). Secretary Fall created the Navajo Tribal

Council in 1923 for the “sole purpose” of making oil and

gas leases in favor of his associates.’ Faced with unrelent-

ing pressure from Fall and the Standard Oil cartel, this

first Council, whose delegates “were generally chosen by

the [BIA] Superintendents,” capitulated. See Chamber-

lain, supra, at 33-35; Kelly, supra note 3, at 69.

Congress’ call for greater tribal self-determination in

the 1930s fell on the deaf ears of federal agents in charge

of the Navajo. See Young, supra note 3, at 93-94, 99-100.

Federal regulations approved in 1938 retained provisions

allowing only the BIA to call the Navajo Tribal Council

into session. Jd. at 113. As late as 1970, the Council “re-

main(ed] structurally and functionally dependent upon

and responsive to ... the Department of Interior.” Aubrey

W. Williams, Navajo Political Process 26 (1970).

* Robert W. Young, A Political History of the Navajo Tribe 55-58,

89-90 (1978); Chamberlain, supra, at 18-28, 50; see generally Lawrence

C. Kelly, The Navajo Indians and Federal Indian Policy: 1900-1935 55-

63 (1968).

PPG re

2. In August 1964, the Department arranged and

approved a lease of Navajo coal with a Peabody affiliate.

See J.A. 210; Navajo Nation’s Mot. for Summ. J., Court of

Federal Claims docket no. 168, Vol. III at 1790. The lease

set an “extremely low royalty rate,” Pet. App. 36a,‘ but

reserved for the Secretary unilateral authority to adjust

that rate after 20 years. J.A. 194. In 1978, the Depart-

ment’s Office of Audit and Investigation pointed out the

unfairness of the lease, under which the Navajo had

received less than $2.7 million in royalties for coal resold

by Peabody for over $141 million. J.A. 138. It urged the

BIA “to exercise its trust responsibility and attempt to

have these leases amended.” Jd. In March 1984, after

several years of fruitless negotiations with Peabody, see

J.A. 138-39, 143, and five months before the 20-year

anniversary of federal approval of the lease, the Navajo

Nation requested Interior Secretary William Clark to

adjust the royalty rate. J.A. 139-40." The BIA’s Navajo

Area Office responded, assuring the Navajo that the BIA

was “pursuing our responsibility ... by implementing an

adjusted royalty rate as called for by the said lease.” J.A.

140.

The Area Office sought technical advice from the

Bureau of Mines and the BIA’s Division of Energy and

Mineral Resources (BIA’s Minerals Division). J.A. 140-41.

The Bureau of Mines recommended adjusting the royalty

rate to 20%; BIA’s Minerals Division to 24.4%. J.A. 6-7. On

June 18, 1984, relying on the Bureau of Mines, the Area

* The royalty rate in the lease was capped at 37% cents per ton.

J.A. 191. In 1984, the coal commanded a market price of around $18 per

ton, equating to a royalty rate of about 2%. See Pet. App. 2a.

* Contrary to Peabody's suggestions, there was nothing wrong with

the Navajo Nation communicating with its trustee before commence-

ment of adversarial proceedings. See Joint Bd. of Control v. Acting

Portland Area Director, BIA, 22 IBIA 22, 25 & n.4 (1992).

Director notified Peabody that the royalty rate was ad-

justed to 20%, effective August 1984, twenty years after

the Departmental lease approval. J.A. 8-9, C.A. App. A453.

Peabody and its two utility customers (the Southern

California Edison Company (Edison) and the Salt River

Project (SRP)*) appealed, invoking the formal appeal

procedures of 25 C.F.R. pt. 2. J.A. 142. The appeal went to

Deputy Assistant Secretary (and Acting Commissioner) for

Indian Affairs, John Fritz. J.A. 143. Fritz stayed the effect

of the adjustment decision during the appeal, causing the

Navajo to lose about $50,000 each day the appeal lan-

guished. C.A. App. A453; J.A. 141. Edison instructed its

counsel to “proceed[] on maximum delay mode in the

appeal.” J.A. 143.

Eventually, Peabody filed a study concluding that a

fair royalty rate would be between 5.57% and 7.15%. J.A.

144. This is about one-half the “absolute minimum” for

Indian coal established as binding Departmental policy

shortly after Congress set the minimum royalty for federal

coal at 12%% in 1976. J.A. 135; see 30 U.S.C. § 207(a). The

Navajo Nation urged affirmance or lease cancellation

based on Peabody's ongoing lease violations. J.A. 144-45;

see J.A. 138. The Navajo expert report showed that, with

the 20% royalty, fuel costs for the two power plants using

Peabody coal would remain “among the cheapest in the

Southwest.” J.A. 10-11.

The BIA’s expert, Vijai Rai, Ph.D., examined the

technical reports for Fritz and reported that “based on

* Edison operates the Mohave Power Plant near Laughlin, Nevada,

which is fueled entirely by coal transported from the Peabody mine via

a dedicated slurry pipeline. CA. App. 1537. SRP operates the Navajo

Generating Station near Page, Arizona, which is fueled entirely by coal

transported from the Peabody mine via a dedicated rail line. Jd.

OPE mm

ee ee

data currently available, a 20% royalty rate determination

appears reasonable and defensible.” J.A. 145-46. However,

Dr. Rai recommended that Peabody be given one more

opportunity to show that the 20% rate was unreasonable.

Id. Fritz agreed and in March 1985 requested Peabody to

supply additional cost and revenue data. J.A. 146-50.

Peabody refused to supply the data, so Fritz sought

further technical input from the Bureau of Mines. J.A.

151. Its mineral economist and its mining engineer pro-

duced another report and an addendum, J.A. 24-72,

concluding that Peabody would achieve a rate of return

from 20.1% to 32.4% if the 20% royalty rate were upheld.

J.A. 151. Dr. Rai then examined the Bureau of Mines’ work

and produced his final report. J.A. 73-88, 152. Dr. Rai

found that the “coal deposits under lease to Peabody are

exceptionally valuable” and recommended affirmance of

the 20% rate. J.A. 86-88. No federal study ever concluded

otherwise. J.A. 134, 153.

In June 1985, the Solicitor’s Office drafted the deci-

sion for Fritz affirming the 20% royalty rate. J.A. 153. In

late June or early July, the decision was finalized, copied,

and check-marked for mailing to counsel of record, and

awaited Fritz’ signature upon his return from military

reserve duty. J.A. 89-97, 153. As Fritz testified, it was

“teed up” for his signature. C.A. App. Al245. ;

3. However, someone in the Department leaked the

pending decision to Peabody. C.A. App. A1089-A1090; J.A.

155. The Navajo were never told of it. J.A.344-45 (testi-

mony of former Navajo attorney and now Arizona Superior

Court Judge Michael Nelson); J.A. 154-55. Peabody

immediately wrote to Secretary Hodel and asked him to

take personal jurisdiction over the appeal, but its July 5,

1985 letter was routed directly to Fritz. J.A. 155. Edison

directed Peabody to retain Stanley Hulett, a close friend of

Hodel, to influence Hodel to jettison the royalty adjust-

ment. J.A. 157-58. Peabody’s counsel in the appeal, Greg

Leisse, prepared Hulett to discuss the merits of the appeal

in ex parte meetings with Hodel; the merits of the appeal

were to be a central issue in those discussions. J.A. 158.

A July 22, 1985 Peabody memorandum sets forth in

detail what happened then. J.A. 101-05.’ Peabody’s Presi-

dent Ken Moore told his lawyers to meet with Hulett and

to determine if he “possessed the type of influence which

would be required.” J.A. 101. After meeting with Hulett,

Peabody's lawyers agreed to

allow Mr. Hulett to proceed on Peabody's behalf.

He subsequently met with both Mr. Fritz... and

Secretary Hodel on at least two (2) occasions.

Secretary Hodel was sympathetic to Peabody's

concerns and agreed that the parties to the lease

should be encouraged to work out an agreeable

resolution of the lease without interference from

the Bureau of Indian Affairs. He agreed to, and

subsequently did, sign a memo—drafted in part

by Greg [Leisse] and myself—addressed to Mr.

Fritz instructing him to (1) not make an un-

timely [sic] decision on the appealed case itself,

and (2) encourage the parties to negotiate their

differences.

J.A. 102.

Though unaware of these improper meetings,’ the

Navajo Nation’s counsel did receive a copy of Peabody's

July 5, 1985 letter to Hodel. J.A. 161. Navajo legal counsel

” Peabody immediately identified this memorandum internally as

responsive to discovery subpoenae in this case, but concealed it for the

next 2% years, “agreements of counsel and court orders notwithstand-

ing.” Navajo Nation v. United States, 46 Fed. Cl. 353, 354 (2000), aff’d,

No. 00-5072, 2002 WL 312117 (Fed. Cir. Mar. 29, 2001).

* As Hulett testified, “I had no contacts with the Tribe at that point

that it would have made any sense for me to pick up the phone and say

hey, oh, by the way, I’m going to do this to you.” J.A. 160-61.

objected and repeated the Navajo’s request that the

Department decide the appeal. Jd. The Solicitor’s Office

was then also unaware of the Secretary's deal with Pea-

body and, in response to Peabody’s July 5 letter, simply

added a paragraph to the decision rejecting Peabody's

request. Jd.; J.A. 113-14. On July 15, 1985—the same day

that Peabody drafted Hodel’s instructions—Assistant

Solicitor Field “sent forward for signature” the revised

decision affirming the royalty adjustment. J.A. 104-05,

106-16, 161-62.

Before Fritz could sign the decision, he received

instructions from Hodel not to do so. J.A. 162-63. With the

exception of one word, the body of Peabody's draft instruc-

tions had simply been retyped on Secretarial letterhead.

Compare J.A. 104-05 with J.A. 117-18. Peabody was

informed immediately of Hodel’s instructions. See J.A.

101-02. The Department concealed these events from the

Navajo. See Pet. App. 1la-12a, 32a, 40a-41a, 46a-47a.

Navajo Chairman Peterson Zah had also responded to

Peabody's July 5 letter, again urging that the appeal be

decided. J.A. 119-21. Associate Solicitor for Indian Affairs

Tim Vollmann, ordered to respond to Zah, learned of

Hodel’s instructions and became “uncomfortable.” J.A. 165.

Vollmann sought an opportunity to brief the Secretary.

J.A. 122. He warned that if the Navajo Nation learned of

the instructions, it would likely sue. Jd.

But Hodel’s instructions were clear. J.A. 164. “[YJou

would have to be Lrain dead not to understand what this

is telling you. You’re going to go back and consider this

until hell freezes over is what you're going to do.” C.A.

App. A1648 (testimony of Deputy Assistant Secretary and

Director of the Office of Trust Responsibilities Frank

Ryan). Accordingly, Vollmann, a month after expressing

his serious concerns about Hodel’s actions, responded to

Zah, stating that “a decision on the appeal is currently

being considered by the Deputy Assistant Secretary—

Indian Affairs and his staff.” J.A. 124-25. Both Vollmann

and the drafter of his letter knew this was false. J.A. 122-

23, 135-36, 168-69.

Vollmann’s letter misled the Navajo leadership, who

thought that it, coupled with a message that Hodel wanted

negotiations begun anew, signaled that the Department

could not support the 20% figure on the merits. J.A. 343,

358-59 (testimony of Judge Nelson); C.A. App. A3149-50.

By contrast, Edison’s 1985 negotiation notes show full

disclosure by the Department to Edison. J.A. 126. Because

of the Department's disloyalty and dishonesty, “the Navajo

Nation, arguably already at a competitive disadvantage,

could not truly be said to have negotiated from a position

of equality with Peabody.” Pet. App. 51a-52a; see J.A. 354-

61 (testimony of Judge Nelson).

Peabody then reiterated its previous offer to raise the

royalty rate to 124%. See, e.g., J.A. 17. The Navajo Nation

rejected that offer in July 1986. C.A. App. A1563. In early

1987, a new Navajo administration sought to learn the

status of the appeal through the BIA’s Navajo Area Office.

J.A. 170. The Area Director inquired, but was refused a

status report, the only time that this happened in his

career. Id.

4. During the two and one-half years of negotiations

after Hodel’s intervention, the Navajo Nation continued to

receive negligible royalties. The Department knew the

Navajo would get “beat up” in the negotiations. C.A. App.

A1279-A1280 (Fritz testimony); C.A. App. Al643-A1644

(Ryan testimony); J.A. 185. But the Department continued

to conceal from the Navajo both the ex parte deal and the

federal studies supporting the 20% rate generated by the

Bureau of Mines and Dr. Rai during the administrative

appeal. J.A. 166-69, 359; C.A. App. A1284. In forcing those

negotiations, the Department violated regulations prohib-

iting mineral lease negotiations unless desired by Indians

11 :

and generally restricting negotiations to thirty days. See

25 C.F.R. § 211.2 (1985); J.A. 174-75.

Facing “severe economic pressures,” Pet. App. 3a, the

Navajo Nation eventually caved in to Peabody's proposal

for a facial royalty rate of 12%% and, considering other

factors unique to this tran:action, an effective royalty rate

even less than that minimum rate for federal coal. See J.A.

181; C.A. App. A1973. This was considerably less than the

17.08% that the United States had set in readjusting one

of its own coal leases just a year earlier, see Peabody Coal

Co., 93 IBLA 317 (1986), and little over half the 20%

royalty rate that all federal studies had found reasonable

for the superior Navajo coal, see J.A. 14-88. Furthermore,

contrary to the Government’s assertion, Pet. Br. 9, because

of a pre-existing tax waiver on coal used at the Navajo

Generating Station, which consumes over half the Pea-

body coal, the total of Navajo taxes and royalties for that

coal cannot exceed 12%% under the lease amendments,

much less approach the 20% figure found by the Depart-

ment to be a fair royalty just for the coal. J.A. 179. SRP

estimated the Navajo Nation’s loss of royalty income just

for the coal used at the Navajo Generating Station at

$347.5 million. J.A. 156.

Numerous other provisions of the negotiated lease

amendments also substantially harmed Navajo interests,

contrary to the Government's suggestions. For example,

the amendments eliminated the “extremely valuable”

provision for future Secretarial adjustment in favor of

neutral arbitration, see J.A. 178, 186, 286-87; they re-

quired the Navajo to forfeit $56 million in back royalties,

Pet. App. 44a; and they leased an additional 90 million

tons of Navajo coal for insubstantial bonuses and at the

facial 124% royalty rate. J.A. 279-81. The Navajo Nation

also granted valuable tax concessions to get the facial

12'4% deal, relinquishing $33 million in valid back taxes,

Pet. App. 44a; and both confirming old tax waivers and

granting new ones, J.A. 293-94, 298-301. The Department

knew that the Navajo Nation “gave up something for

nothing” here, but did nothing. C.A. App. A2865 (Ryan

testimony), Al661.

5. The Navajo Nation sought BIA review of the lease

amendments. J.A. 172. The Navajo Area Office invoked

normal procedures and requested review by the BIA’s

Minerals Division to determine if the proposed amend-

ments provided proper benef*ts to the Navajo. J.A. 172-73.

It did not receive any response. J.A. 173.

This was because the merits of the transaction were

irrelevant to high-level DOI officials. J.A. 176. The ap-

proval process was described by Ryan as follows: “And my

shop, what are we doing? We can’t help, because we are

not supposed to help .... The way this happened was, we

were rubber stamping a review of a bunch of [lease]

amendments that we weren’t supposed to review... .” C.A.

App. A1659-A1661; J.A. 173.

Assistant Solicitor Field “assisted Peabody in shep-

herding the amended leases through the Department.”

J.A. 173. He assigned legal review of perhaps the largest

Indian mineral transaction in history to an inexperienced

lawyer who had just joined the Solicitor’s Office. J.A. 173.

Field did not inform that lawyer of the decision Field

himself had forwarded for Fritz’ signature, and the new

attorney “didn’t have the time” to review the reports

generated by BOM and E&M in the royalty appeal. J.A.

174. His first memorandum observed that the lease

amendments violated three regulations, including the one

that should have governed the negotiations. J.A. 174.

On November 24, 1987, the Navajo Area Office rec-

ommended approval based on the erroneous belief that

BIA’s Minerals Division had performed an “in depth

technical review” of the lease amendments. J.A. 175. A

last-minute effort to generate a “technical review” on

December 2, 1987 was simply a file-papering exercise. See

IE EON. rome

nen OPC, ORL

J.A. 176-80. Had the reviewer been informed just about

the tax waiver for the coal used at the Navajo Generating

Station, he would have recommended disapproval. J.A.

179. The irrelevance of this exercise was underscored

when he delivered his review the day after Secretary

Hodel promised Peabody’s Vice President that he would

approve the lease amendments, without any review. J.A.

132.

The lease amendment package went to Ryan, and a

memorandum recommending approval was drafted for his

signature. J.A. 182. Ryan refused to sign: “I knew—well, I

thought that I would be participating in a breach of trust.”

J.A. 183. The package went forward anyway. J.A. 184.

Assistant Secretary Ross Swimmer signed a memorandum

prepared by Peabody and Field recommending approval.

J.A. 185. After another meeting with Peabody executives,

Hodel signed the Secretarial Approval document, also

prepared in part by Peabody. J.A. 186. The Area Director’s

20% royalty adjustment decision was vacated four days

later. J.A. 186-87. Three days after that, SRP determined

that “the impact of the approval of the new lease amend-

ments should be negligible.” J.A. 187.

C. Course of Proceedings

The Navajo Nation filed this suit in 1993. The Court

of Federal Claims was outraged by the Government’s

misconduct:

The basic duties owed a beneficiary by a

trustee are clear—care, loyalty, and candor ....

Let there be no mistake. Notwithstanding the

formal outcome of this decision, we find that the

Secretary has indeed breached these basic fidu-

ciary duties. There is no plausible defense for a

fiduciary to meet secretly with parties having in-

terests 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 misicad the beneficiary concerning these

events.

Pet. App. 48a-49a. However, the court dismissed for lack of

jurisdiction.

The Court of Appeals for the Federal Circuit reversed.

It determined that federal control and supervision over all

aspects of Indian coal leasing establish a “clear and

unqualified” duty to “manage the mineral resources for the

benefit of the Indians.” Pet. App. 1la. The Federal Circuit

concluded that “[IMLA] and its regulations are similar to

those governing timber resources that were the subject of

Mitchell II [United States v. Mitchell, 463 U.S. 206

(1983)],” Pet. App. 8a, and found that all of the Depart-

ment’s revenue-minimizing activities, from its collusion

with Peabody to its rubber-stamp approval of the lease

amendments, violated compensable fiduciary duties. Pet.

App. lla-12a.

| In a separate opinion, Judge Schall concurred in the

judgment. In Judge Schall’s opinion, the Department’s

“failure to perform an economic analysis on the Agreement

between Peabody and the [Navajo] Nation that was

approved by the government under 25 U.S.C. § 396a and

25 C.F.R. § 211.2 [(1985)] ... amounted to a breach of a

fiduciary obligation owed to the Nation” mandating

compensation. Pet. App. 30a.

SUMMARY OF ARGUMENT

Congress has expressly provided a remedy in damages

for Indian claims founded on treaties, statutes, or regula-

tions. 28 U.S.C. §§ 1505, 1491(a)(1). If those treaties,

statutes or regulations give the Government control or

supervision over a tribal trust resource, they impose

fiduciary duties to manage that resource for the benefit of

the Indian beneficiaries, and form the “contours” of trust

duties enforceable in the Court of Federal Claims. Mitchell

IT, 463 U.S. at 224-26.

There is no principled distinction between the statu-

tory scheme governing Indian coal at issue here and that

governing Indian timber in Mitchell II. Both statutes allow

the Indian owners to convey the resource, but condition

that ability on the Secretary's approval. In both cases, the

Secretary exercises comprehensive control and supervision

over virtually every stage of resource development. Both

regimes are designed to assure that the Indians receive

the greatest benefits the resource can reasonably generate.

Thus, here, as in Mitchell II, the statutes and regulations

that establish the Government's fiduciary obligations over

Indian resource management should be interpreted as

mandating compensation by the Government for damages

sustained from breaches of basic trust duties.

To find liability, the Court of Appeals properly deter-

mined the contours of federal trust duties by examining

the applicable statutes and regulations. It properly consid-

ered trust law standards to measure the Government's

performance of its duties, consistent with an unbroken line

of this Court’s cases and with congressional intent, evi-

denced both in the Indian Tucker Act and in legislation

requiring federal approval of Indian mineral transactions.

Under applicable statutes, the Secretary had a duty to

control and supervise Navajo coal leasing for the Navajo

Nation’s benefit, not for the benefit of third parties. The

Secretary breached those duties by scuttling a final

decision upholding a 20% royalty rate adjustment, forcing

the Navajo Nation back into extended negotiations con-

trary to his own regulations, and abusing his approval

power under 25 U.S.C. § 396a by approving a mineral

lease without analysis for a royalty rate far below what

every federal study had concluded was reasonable. Liabil-

ity must follow. “Spoliation is not management.” Shoshone

Tribe v. United States, 299 U.S. 476, 498 (1937) (Cardozo,

J., for a unanimous Court).

ARGUMENT

I. THE GOVERNING STATUTES, REGULA-

TIONS, AND LEASE ESTABLISH TRUST DU-

TIES FOR FEDERAL MANAGEMENT OF

NAVAJO COAL AND MANDATE COMPENSA-

TION FOR BREACH OF THOSE DUTIES

HERE.

A. The Tucker Act Waives Sovereign Immu-

nity for Claims Founded on Statutes,

Treaties, and Regulations Under Which

the Government Exercises Trusteeship

Over Indian Resources.

The Indian Tucker Act confers jurisdiction in the

Court of Federal Claims over tribal claims arising under

federal laws or treaties or “which otherwise would be

cognizable in the Court of Federal Claims.” 28 U.S.C.

§ 1505. Under the Tucker Act, such claims include those

“founded either upon ... any Act of Congress or any

regulation of an executive department.” 28 U.S.C.

§ 1491(a)(1). Mitchell IT held that the Tucker Act waived

the Government’s immunity for claims of breach of trust

concerning federal management of Indian resources.

“(S]tatutes and regulations [that] ... establish fiduciary

obligations of the Government in the management and

operation of Indian lands and resources ... can fairly be

interpreted as mandating compensation by the Federal

Government for damages sustained.” 463 U.S. at 226. In

other words, such statutes and regulations provide proper

predicates for jurisdiction in the Court of Federal Claims

under the Tucker Act.

Mitchell IIT honored congressional intent. See id. at

214-15 & n.13. Congress enacted the Indian Tucker Act in

1946 as section 24 of the Indian Claims Commission Act.

The House Report on that legislation is clear. “If we fail

to meet these obligations by denying access to the

courts when ... fiduciary duties have been violated, we

compromise the national hon. r of the United States.” H.R.

Rep. No. 1466, at 4 (1945), quoted in Mitchell II, 463 U.S.

at 215. In urging passage, sponsor Henry M. Jackson

likewise stressed that “(t]he Interior Department itself

suggested that it ought not be in a position where its

employees can mishandle ... lands of a national trustee-

ship without complete accountability.” 92 Cong. Rec. at

5312 (1946), quoted in Mitchell II, 463 U.S. at 214 n.13.

The Government’s position here contravenes this clear

congressional intent as well as its own position at the time

of enactment, and would “import immunity back into a

statute designed to limit it.” See Indian Towing Co. v.

United States, 350 U.S. 61, 69 (1955); Hearings on H.R.

1198 and H.R. 1341 Before the House Committee on Indian

Affairs (Hearings), 79th Cong., 1st Sess. 130 (1945)

(statement of Assistant Solicitor Felix Cohen).

The legal context in 1946 provides further support for

Mitchell IT's conclusion that Congress intended a damage

remedy for breaches of trust regarding Indian resource

management. In 1946, an 1863 statute was understood to

bar Indian tribes from suing in the Court of Claims to

vindicate rights under federal law. Mitchell II, 463 U.S. at

214; H.R. Rep. No. 1466, supra, at 5. Tribes obtained such

redress by securing special jurisdictional acts from Con-

gress; between 1836 and 1946 Congress passed 142 suc.

acts. F. Cohen, Handbook of Federal Indian Law (Hand-

book) 563 (1982). Before 1946 Congress also had to review

the recommendations of the Court of Claims and appro-

priate the necessary funds. See United States v. Dann, 470

U.S. 39, 47 (1985). This pervasive congressional involve-

ment with Indian claims bolsters the presumption that

Congress knew the preexisting law when it enacted the

Indian Tucker Act in 1946. See Cannon v. Univ. of Chicago,

441 U.S. 677, 696-99 (1979).

The law in 1946 included (1) this Cour decisions in

special jurisdictional act cases that held th wovernment

liable for breach of fiduciary duties, established standards

of conduct, and emphasized trust duties of loyalty and

care;’ (2) Court of Claims decisions awarding damages for

breach of trust in such cases; and (3) the overlay of the

Court’s general philosophy of ubi jus ibi remedium, see

Bell v. Hood, 327 U.S. 678, 684 & n.6 (1946). Here, context

“clarifies text,” see Alexander v. Sandoval, 532 U.S. 275,

288 (2001): Congress intended and expected that claims

brought under the Indian Tucker Act would be decided

under the rules established by this Court’s decisions in

special jurisdictional act cases which awarded damages for

violations of federal trust duties and held Government

officials to basic trust law standards.

The Government argues that Indians should be

treated no differently than other claimants under the

Tucker Act. E.g., Pet. Br. at 22. Certainly, Congress sought

to allow Indians equal access to the courts, but that does

not mean that the substantive law on which tribal claims

are predicated must be identical to that which would apply

if there were no trust relationship. The relationship

between the United States and Indian tribes is unique,

“perhaps unlike that of any other two people in existence.”

Cherokee Nation v. Georgia, 30 U.S. (5 Pet.) 1, 16 (1831). It

is “dominated” by a “ ‘distinctive obligation of trust incum-

bent upon the Government.’” Mitchell II, 463 U.S. at 225

(citation omitted). Thus, the lives and properties of Indi-

ans are subject to an entire title of the United States Code

* E.g., Seminole Nation v. United States, 316 U.S. 286, 296-97 &

n.12 (1942); United States v. Shoshone Tribe, 304 U.S. 111, 115-17

(1938); Klamath & Moadoc Tribes v. United States, 296 U.S. 244, 255

(1935); United States v. Creek Nation, 295 U.S. 103, 109-10 (1935).

° See, e.g., Menominee Tribe v. United States, 101 Ct. Cl. 10, 18-19,

40 (1944) (tribal negotiation of contracts “does not exonerate the

Government from its responsibility” concerning their approval),

discussed in H.R. Rep. No. 1466, supra, at 4. See generally Hearings,

supra, at 73 (“A good many cases have come about where the Govern-

ment has failed to discharge its duties as trustee properly.”) (statement

of Assistant Secretary McCaskill).

—— —- eo

and to implementing regulations “derived from historical

relationships and explicitly designed to help only Indians.”

Morton v. Mancari, 417 U.S. 535, 552 (1974). The Court of

Federal Claims has jurisdiction over Indian claims of

breach of trust founded on federal statutes that impose

federal control over Indian trust resources, even though

such statutes apply only to Indians.

The Government contends that to satisfy 28 U.S.C.

§ 1491(aX(1) an Indian claiming a breach of trust must

show both federal control or supervision over the Indian

property, giving rise to an active trust relationship with

respect to that property, and “that the government vio-

lated a statute or regulation that would clearly mandate

the payment of damages.” Pet. Br. 16." But as this Court

explained in Mitchell II, if a statute or regulation is found

to establish such a trust relationship with respect to

Indian property—by giving the Government control or

supervision over that property—that statute or regulation

itself “can fairly be interpreted as mandating compensa-

tion for damages sustained,” Mitchell II, 463 U.S. at 226,

thus giving rise to trust duties enforceable under the

Tucker Act. This is so, the Court went on, because “[gliven

the existence of a trust relationship, it naturally follows

that the Government should be liable in damages for the

breach of its fiduciary duties.” Id.; cf. United States v.

Winstar Corp., 518 U.S. 839, 887 n.30 (1996) (“‘Every

breach of contract gives the injured party a right to dam-

ages against the party in breach .. . .’”) citing Restatement

(Second) of Contracts, § 346 Comment a (1981). In short,

once an active trust relationship is found to arise from the

statutory scheme, there is no need to go back and look for

a separate “money mandating” statute or regulation to

state a claim cognizable under the Tucker Act.

" The Government made essentially this argument, unsuccess-

fully, in Mitchell II. See Brief for the United States, No. 81-1748, at 19,

46-48; Reply Brief for the United States, No. 81-1748, at 2, 4, 8.

The Government’s argument that the Tucker Act

requires IMLA and other governing statutes and regula-

tions to waive the Government's sovereign immunity, e.g.,

Pet. Br. at 24, is unfounded. As the Court stated in

Mitchell II, “[bjecause the Tucker Act supplies a waiver of

immunity for claims of this nature, the separate statutes

and regulations need not provide a second waiver of

sovereign immunity, nor need they be construed in the

manner appropriate to waivers of sovereign immunity.”

463 U.S. at 218-19. The Government's conflation of juris-

diction and the existence of a cause of action here reflects

its “persistent confusion over the meaning of ‘jurisdiction’

as that term applies to claims against the United States

under the Tucker Act.” Palmer v. United States, 168 F.3d

1310, 1312-13 (Fed. Cir. 1999). Rather, as the Government

conceded below, “[tJhere is thus no question that the Court

of Federal Claims had subject-matter jurisdiction over the

Navajo’s complaint ....” Brief of the United States, No.

00-5086, at 2.

B. The Statutes and Regulations That Gov-

ern Every Aspect of Indian Coal Leasing

Parallel Those in Mitchell II.

Mitchell II recognized that “[wJhere the Federal

Government takes on or has control or supervision over

tribal monies or properties, the fiduciary relationship

normally exists ... even though nothing is said expressly

in the authorizing or underlying statute .. .. ” 463 U.S. at

225 (citation omitted). Federal statutes and regulations

govern virtually every aspect of coal mining activities on

Navajo land, from the creation of leases to the reclamation

of land. As the Court of Appeals determined, Pet. App. 8a-

lla, this statutory scheme parallels that involved in

Mitchell II.

1. Like the Indian timber at issue in Mitchell II,

Indian minerals may not be conveyed without prior

Secretarial approval. See 25 U.S.C. §§ 396a, 406(a). This

requirement is rooted in federal statutes and policies going

o——

back to the beginning of the Republic. Oneida Indian

Nation v. Oneida County, 414 U.S. 661, 668 (1974). Con-

gress has retained this “strong shield of federal law to the

end that [Indians] be not overreached or despoiled in

respect of their property of whatsoever kind or nature.”

Sunderland v. United States, 266 U.S. 226, 234 (1924).

Exercising its war and treaty powers, “the United States

overcame the Indians and took possession of their lands,

sometimes by force, leaving them an uneducated, helpless

and dependent people needing protection against the

selfishness of others and their own improvidence.” Board

of County Comm’rs v. Seber, 318 U.S. 705, 715 (1943).

The Secretary's power to approve leases was therefore “

unquestionably ... given to him for the protection of

Indians against their own improvidence and the designs of

those who would obtain their property for inadequate

compensation.” Anicker v. Gunsburg, 246 U.S. 110, 119

(1918). The approval authority in IMLA must be construed

in light of this clearly established law and tradition. See

FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120,

132-33 (2000); see also Minnesota v. Mille Lacs Band of

Chippewa Indians, 526 U.S. 172, 196 (1999) (examining

context to construe Indian treaty).

Until 1891, there was no general law authorizing

mineral leasing of Indian lands. See Indian Leases, 18 Op.

“" That was especially true of the Navajo. The United States

promised in the 1868 Treaty to provide schools and teachers, 15 Stat. at

669, but the Government defaulted on that obligation, 26 Cong. Rec.

7703 (1894). In 1947 “over 66% of the Navajo people had no schooling

whatsoever and the median number of school years for the Navajo

ion was less than one.” Robert W. Young, Navajo Yearbook 1

(1957). Thus, in 1964 when the Navajo Tribal Council considered a

possible percentage-based royalty for the Peabody lease, at least one

key Committee member did not understand the concept of a “percent-

age,” and the Council accepted the cents-per-ton royalty that Peabody

had proposed. See Navajo Nation’s Mot. for Summ. J., Court of Federal

Claims docket no. 168, Vol. I at 163; J.A. 191.

Att’y Gen. 486 (1886). Since then, Congress has enacted

several laws doing so. Each requires affirmative Secretar-

ial action for any lease to be effective.

An 1891 statute authorizes mineral leases of lands

that Indians “bought and paid for ... subject to the ap-

proval of the Secretary.” 25 U.S.C. § 397. A 1924 statute

amended the 1891 Act, authorizing leases of Indian lands

for oil and gas to be offered “at public auction by the

Secretary of the Interior.” 25 U.S.C. § 398; see Montana v.

Blackfeet Tribe, 471 U.S. 759, 763 (1985). Nonetheless,

Secretary Fall attempted to lease lands withdrawn for

exclusive Navajo use by executive order as if they were

public domain lands. See Kelly, supra note 3, at 57. Then-

Attorney General Harlan Fiske Stone disagreed with Fall.

See Executive Order Indian Reservations-Leasing Act, 34

Op. Att’y Gen. 171 (1924). In 1927, Congress adopted

Stone’s position, providing that such minerals could be

—leased only “in accordance with the provisions” of § 398,

i.e., at an auction held by the Secretary for the Indians’

benefit. See 25 U.S.C. § 398a.

Under a 1919 Act, the “Secretary of the Interior . . . is

authorized and empowered ... to lease” reservation land

in Arizona and eight other states for metalliferous miner-

als. See 25 U.S.C. § 399, para. 1. That Act provides that

leases “shall be for a period of twenty years, with the

preferential right in the lessee to renew the same for

successive periods of ten years, upon such reasonable

terms and conditions as may be prescribed by the Secre-

tary of the Interior.” Jd. at para. 6. The Act also authorizes

the Secretary “to make such rules and regulations ... as

may be necessary and proper for the protection of

the interests of the Indians.” Jd. at para. 17. Congress

amended this Act in 1926 to allow leasing of coal and other

“nonmetalliferous minerals, not including oil and gas” in

Arizona and the other states, leaving intact the provisions

protecting Indians’ interests and providing for Secretarial

lease adjustments after twenty years. Act of Dec. 16,

1926, ch. 12, 44 Stat. 922; see 25 U.S.C. § 399, para. 1.

Congress sought to consolidate and simplify mineral

leasing procedures in the Indian Mineral Leasing Act of

1938 (IMLA), 25 U.S.C. §§ 396a-396g. IMLA’s “basic

purpose” is “to maximize tribal revenues from reservation

lands,” Kerr-McGee Corp. v. Navajo Tribe of Indians, 471

U.S. 195, 200 (1985). Congress enacted IMLA in large part

because the earlier statutes were not “adequate to give the

Indians the greatest return from their property.” H.R. Rep.

No. 75-1872, at 2 (1938). Contrary to the Government's

bald assertion, Pet. Br. 44 n.16, IMLA did not repeal

earlier leasing statutes such as those codified at 25 U.S.C.

- § 399. IMLA contains only a general repealer clause for

inconsistent provisions. Blackfeet, 471 U.S. at 764.

Since enacting IMLA, Congress has enacted three

statutes that reconfirm the Secretarial power to control

Navajo mineral leasing. After World War II, Congress

learned that 80% of Navajos were illiterate and 65% could

not speak English, that all-weather roads were “practically

nonexistent” on the reservation, that public health and

other services were “completely inadequate,” see H.R. Rep.

No. 81-963, at 3-4 (1949), and that the Navajo were living

in “abject poverty,” S. Rep. No. 81-550, at 4-5 (1949). In

response to these extremely bleak conditions, Congress

enacted the Navajo and Hopi Rehabilitation Act of 1950,

25 U.S.C. §§ 631-640. That Act authorized the Navajo

Tribe to lease its trust lands for “development or utiliza-

tion of natural resources,” 25 U.S.C. § 635, but conditioned

that authority on the “approval of the Secretary of the

Interior.” Id. Congress enacted that law “to further the

purposes of existing treaties with the Navajo Indians” and

“to make available the resources . . . for use in promoting a

self-supporting economy and self-reliant communities.” 25

U.S.C. § 631.

In 1982, in the Indian Mineral Development Act

(IMDA), 25 U.S.C. §§ 2101-08, Congress both sought to

extend a true measure of self-determination over the

disposition of tribal minerals and confirmed its view that a

careless or disloyal exercise of the Secretarial approval

duty under JMLA would subject the Government to liabil-

ity. IMDA allowed tribes to negotiate minerals agree-

ments, yet it, too, conditioned the validity of those

agreements on Secretarial approval. 25 U.S.C. § 2102(a).

The Department “strenuously oppose[d]” the bill unless a

section were added “to hold the Secretary harmless from

any damages based upon approval of any agreement.” H.R.

Rep. No. 97-746, at 13 (1982). Congress responded by

confirming that Secretarial approval must promote “the

best interest of the Indian tribe,” 25 U.S.C. § 2103(b), by

providing that nothing in the statute would “absolve” the

United States from any trust duties, id. § 2103(e), and by

exempting the- Secretary from liability “for losses sus-

tained ... under [an] agreement” only “[wJhere the Secre-

tary has approved [the] Minerals Agreement in compliance

with [IMDA] and any other applicable provision of law,” id.

IMDA thus “simply restates the law” as it was under

IMLA: “If the Secretary, acting as trustee, approves a lease

... and acts responsibly and within his discretion in doing

so, the United States would not be liable for any loss or

impairment of the trust resources. On the other hand, if

the Secretary acts recklessly and in abuse of his discretion

as trustee, the United States cannot avoid liability.” H.R.

Rep. No. 97-746, at 7-8. The Government characterizes

such exercises of trusteeship as “second-guessing.” Pet. Br.

39, 43, 48, but Congress has consistently required sub-

stantive federal review of conveyances of Indian minerals.

Most recently, in 2000 Congress reaffirmed federal

control over—and impliedly recognized federal liability

for—the disposition of Navajo minerals. In the Navajo

Nation Leasing Act, Congress granted the Navajo Nation

final authority to lease its trust lands, “except a lease for

exploration, development, or extraction of any mineral

nee IT

resources” which remain subject to Secretarial approval.

25 U.S.C. § 415(e)(1). The Act also provides that “(t]he

United States shall not be liable for losses sustained” by

the Navajo Nation only regarding leases consummated

under that Act. Id. § 415(e)(5). Congress has the sole pre-

rogative of determining when federal trusteeship over

Navajo minerals is no longer needed. Bunch v. Cole, 263

U.S. 250 (1923). It obviously believes that this federal

protection is still warranted.”

2. In addition to its control over disposition of Indian

minerals, the Government exercises comprehensive

supervision over those resources. IMLA is “comprehensive

legislation” that “detail[s] uniform leasing procedures

designed to protect the Indians.” Blackfeet, 471 U.S. at

763-64. Under that Act, the Secretary has issued “compre-

hensive regulations,” Kerr-McGee, 471 U.S. at 199, and

exercises supervisory authority over Indian mineral

leasing “in considerable detail,” Poafpybitty v. Skelly Oil

Co., 390 U.S. 365, 373 (1968). Federal “statutes and

regulations govern[] virtually every aspect of [Peabody’s]

coal mining activities, from the creation of its leases to the

reclamation of land.” Peabody Coal Co. v. State, 761 P.2d

1094, 1099 (Ariz. Ct. App. 1988), cert. denied, 490 U.S.

1051 (1989); C.A. App. A3392-A3435.

¢ Leasing and Operating Regulations. Congress

delegated rulemaking authority to the Secretary in IMLA.

25 U.S.C. § 396d. Under the Secretary's IMLA regulations,

the BIA comprehensively supervises coal exploration

permits, lease negotiations, bonding, the size and shape of

leases, specific lease terms, approval or disapproval of

* So does the Department, which rejected proposals for greater

deference to tribal leasing decisions under § 415, explaining “existing

statutory authorities require meaningful review by the Secretary in

carrying out the trust responsibility.” 66 Fed. Reg. 7068, 7080 (Jan. 22,

2001).

leases and mining plans, rental and royalty payments,

permission to commence mining, promulgation and en-

forcement of “operating regulations,” penalties for non-

compliance with leases and regulations, and lease

cancellation. 25 C.F.R. pts. 211 and 216, subpart A; Pet.

App. 9a-10a; C.A. App. A3393. The Department promul-

gated IMLA regulations to ensure that Indian mineral

resources “will be developed in a manner that maximizes

their best economic interests,” 25 C.F.R. § 211.1(a), and to

be “consistent with the Federal government’s role as

trustee for these mineral resources,” 61 Fed. Reg. 35,634

(July 8, 1996).

¢ Rights of Way. The Government’s supervision of

Navajo land and minerals is also exercised through its

control of rights-of-way, which the Secretary can grant

with tribal consent, 25 U.S.C. §§ 323-328; 25 C.F.R. pt.

169; J.A. 139. The statutes and regulations governing

rights-of-way across Indian lands also serve to protect the

Indians’ “best interests,” 33 Fed. Reg. 19,803, 19,804 (Dec.

27, 1968), and give rise to enforceable trust duties,

Mitchell II, 463 U.S. at 223.

¢ Resource Evaluation and Recovery; Prevention of

Waste. BIA regulations delegate some IMLA responsibili-

ties to the Bureau of Land Management (BLM). BLM

supervises exploration, resource evaluation, approval of

drilling permits and mining plans, mineral appraisals,

mining operations, inspection and enforcement, and

production verification for Indian coal. 25 C.F.R. § 211.4

(incorporating 43 C.F.R. pt. 3480). In performing these

functions, BLM exercises “the trust responsibility of the

United States.” 61 Fed. Reg. at 35,641. _

¢ Royalty Management. BIA regulations incorporate

by reference requirements of the Minerals Management

Service (MMS) that cover royalty collection, accounting,

and audit. 25 C.F.R. § 211.40. In the Federal Oil and Gas

Royalty Management Act (FOGRMA), 30 U.S.C. §§ 1701-

1757, Congress specifically required the Secretary to

address “the adequacy of royalty management for coal . . .

on ... Indian lands.” FOGRMA § 303, codified at 30

U.S.C.A. § 1752, Hist. Notes. The Secretary satisfied this

congressional mandate by establishing the Auditing and

Financial System in 30 C.F.R. pts. 212 and 218, and

applying it to solid minerals retroactive to June 1985, see

51 Fed. Reg. 15,763, 15,765 (Apr. 28, 1986); and by adopt-

ing the Production Auditing and Accounting System in 30

C.F.R. pt. 216, see 51 Fed. Reg. 8,168 (Apr. 8, 1986). MMS

promulgated these regulations “to ensure that the trust

responsibilities of the United States are discharged.” 30

C.F.R. § 206.450(d).

¢ Surface Mining, Reclamation, and Lnforcement.

BIA first established special rules governing surface

mining on Indian lands under IMLA in 1969. See 34 Fed.

Reg. 813 (Jan. 18, 1969). These rules govern all stages of

Indian coal surface mining, including exploration, devel-

opment, operations and reclamation. 25 C.F.R. pt. 216,

subpart A. Under the Indian lands section of the 1977

Surface Mining Control and Reclamation Act, 30 U.S.C.

§ 1300, Congress augmented federal control over Indian

coal mining and lease amendments. See 25 C.F.R. pt. 216,

subpart B (1985); 30 C.F.R. pt. 750. These regulations

were also promulgated to satisfy “the Department’s legal

role as trustee of the natural resources of the Indian

tribes.” 42 Fed. Reg. 18,083 (Apr. 5, 1977).

It is hence “quite clear that the statute and regula-

tions assign to the Secretary of the Interior and other

government officials the authorization, supervision, and

control of Indian mineral leasing activities,” as the Court

of Appeals found. Pet. App. 10a.

3. Mitchell II held that a comprehensive statutory

scheme governing disposition of Indian trust resources

imposed fiduciary resource management obligations on the

Government and could fairly be interpreted as mandating

compensation for damages caused by Government

mismanagement. See 463 U.S. at 226. While the

Government repeatedly—but without support—proclaims

otherwise, the statutory and regulatory scheme governing

Indian mineral leasing and development is no less

comprehensive than the scheme governing Indian timber

in Mitchell II. Both allow conveyances by Indian owners

subject to Secretarial approval. 25 U.S.C. §§ 396a, 406(a).

In both, virtually every stage of conveyance and

development is under federal supervision. Peabody Coal

Co., 761 P.2d at 1099; Mitchell II, 463 U.S. at 222. In both,

the Secretary, through his approval power and through

regulations, controls the amount and collection of

compensation due the Indians. See 25 C.F.R. § 211.43(a);

30 C.F.R. pts. 212, 216, 218; Mitchell II, 463 U.S. at 220-

23. Both are intended to protect against improvident sales

and waste of the resource. Pet. App. 9a-10a; C.A. App.

A3392-A3428; Mitchell II, 463 U.S. at 221. The principal

goal of both statutory schemes is to ensure that the

Indians receive the maximum benefit from their trust

resources. Kerr-McGee, 471 U.S. at 200; Mitchell II, 463

U.S. at 221-22.“ The Court of Appeals’ determination that

the IMLA scheme is analogous to the Mitchell II statutory

scheme, see Pet. App. 8a-10a, 12a-13a, conforms with this

“ Accord See Jicarilla Apache Tribe v. S

F.2d 1555, 1570 (10th Cir. 1984) (Seymour, Psi ne the ong

ing) (Supron), concurring and dissenting opinion adopted as majority

opinion as modified, 782 F.2d 855 (en banc), supplemented, 793 F.2d

1171, cert. denied, 479 U.S. 970 (1986); Kenai Oil & Gas, Inc. v. Dep't of

the Interior, 671 F.2d 383, 386 (10th Cir. 1982); Dawn Mining Co. v

Watt, 543 F. Supp. 841, 843 n.8 (D.D.C. 1982). The monetary character

ee Ceenns Ctututo “is 2 strung indication thet o statute in ttealf

... can y be interpreted as mandating compensation.” Mitchell

pn tae at 232 n.6 (Powell, J., yom (internal aie mots

omi '

Pian td

Court’s observations in Blackfeet and Poafpybitty and with

decisions of all the other lower courts that have addressed

the issue.”

Stare decisis mandates adherence to Mitchell II here

and compels affirmance of the Court of Appeals’ determi-

nation that the Navajo Nation’s claim is cognizable under

the Tucker Act. The doctrine of stare decisis, one “of

fundamental importance to the rule of law,” Welch v. Texas

Dep't of Highways & Public Transp., 483 U.S. 468, 494

(1987), has special force in cases of statutory construction.

E.g., Faragher v. City of Boca Raton, 524 US. 775, 792

(1998). There has been no intervening change in the law

nor any indication that Mitchell II has proved unworkable

or fostered inconsistency in the law. Cf. California v.

FE.R.C., 495 U.S. 490, 499 (1990); Patterson v. McLean

Credit Union, 491 U.S. 164, 173 (1989). Additionally,

Mitchell II has been cited with approval in nine decisions

of this Court and over 700 decisions of the lower courts. Cf.

California, 495 U.S. at 499. Finally, only a faithful appli-

cation of Mitchell II under stare decisis principles would be

consistent with “‘a sense of justice.’” See Patterson, 491

U.S. 174 (quoting Benjamin Cardozo, The Nature of the

Judicial Process 149 (1921)).

“ See Supron, 728 F.2d at 1564 (“the statutory and regulatory

scheme in Mitchell II parallels that involved here”) and 1565 (IMLA

“regulations detail in exhausting thoroughness the government's

management ... responsibilities”); accord Cheyenne-Arapaho Tribes v.

United States, 966 F.2d 583, 589 (10th Cir. 1992), cert. denied, 507 U.S.

1003 (1993); Pawnee v. United States, 830 F.2d 187, 190 (Fed. Cir.

1987), cert. denied, 486 U.S. 1032 (1988); Assiniboine & Sioux Tribes v.

Board of Oil & Gas Conserv., 792 F.2d 782, 794 (9th Cir. 1986); Navajo

Tribe v. United States, 9 Cl. Ct. 227, 238 (1985).

C. The Applicable Statutes, Regulations, and

Lease Establish Fiduciary Duties to Man-

age Navajo Coal in Accordance with Indi-

ans’ Best Interests and Basic Trust Law

Standards.

The mineral leasing statutes and regulations, the

lease, and the treaties form the contours of the Govern-

ment’s trust duties here. See Mitchell II, 463 U.S. at 225.

Actions taken by it within those contours are actions taken

in the Government’s capacity as trustee, and should be

judged by familiar trust law standards.

1. Both courts below determined that IMLA, its

implementing regulations, and this Court’s precedents

“place on the federal official a clear and unqualified

fiduciary responsibility to manage the mineral resources

for the benefit of the Indians.” Pet. App. 11a; Pet. App. 55a.

These determinations are consistent with all of the re-

ported decisions. See supra notes 14-15.

All relevant statutes provide that Secretarial over-

sight must be exercised in the Indians’ best interests. E.g.,

25 U.S.C. §§ 396b; 399, para. 17; 631; 2103(b). That was

the standard that the Department adopted in its Coal

Leasing Policy on Indian Lands, in effect here at all

relevant times. J.A. 2, 133-34. The “best interest” standard

is a necessary incident of the IMLA scheme and purposes.”

That standard is implicit in the restraint on alienation of

Indian trust property.” It is inherent in the unique historic

* See Blackfeet, 471 U.S. at 763 (IMLA’s provisions are “designed

to protect the Indians”); Poafpybitty, 390 U.S. at 373-74 (referring to the

Government's “trust duties” and “trust responsibility” under IMLA).

" See, e.g., Federal Power Comm'n v. Tuscarora Indian Nation, 362

U.S. 99, 118-19 (1960) (“obvious purpose” of such restraint “is to

prevent unfair, improvident or improper distribution by Indians of

lands owned or possessed by them”); Smith v. McCullough, 270 U.S.

456, 464-65 (1926); Anicker, 246 U.S. at 119.

federal/Indian relationship against which Congress legis-

lates. See, e.g., Mitchell II, 463 U.S. at 225-26; United

States v. Cherokee Nation of Okla., 480 U.S. 700, 707

(1987); Seber, 318 U.S. at 715. A “best interest” standard

is implicit in any trust relationship.

The Government here opposes reliance on the “best

interest” requirement, whether in 25 U.S.C. §399 or

otherwise. Pet. Br. at 18, 33, 37-38, 44 n.16, 45. However,

IMLA did not repeal, expressly or impliedly, that preexist-

ing statutory requirement governing leases of nonmetalli-

ferous minerals in Arizona such as Navajo coal. See

Blackfeet, 471 U.S. at 764. Moreover, the Department

- formally adopted the “best interest” standard for any “ad-

ministrative action affecting the interests of an Indian

mineral owner ... (such as approval of a lease ... ),” 25

C.F.R. § 211.3, both to conform with the Department's

longstanding policy to “maximize [Indians’] best economic

interests,” 25 C.F.R. § 211.1(a), and to codify the holding of

a 1982 case that the Department must “take the Indians’

best interest into account when making any decision

involving [mineral] leases on tribal lands,” Kenai, 671 F.2d

at 387; see 61 Fed. Reg. at 35,634, 35,640. The Govern-

ment forcefully argued for that very test below. C.A. App.

A2993-97, A3191.

The Government contends that Cotton Petroleum

Corp. v. New Mexico, 490 U.S. 163 (1989), indicates that

the Secretary can ignore IMLA’s basic purpose. See Pet.

Br. 42. But that case concerned state taxation of non-

Indian lessees, and the Interior Department has no

responsibilities over state taxation of non-Indians. More-

over, in Cotton, “{iJmportant considerations of federalism

took precedence over the Secretary’s general duty to act on

behalf of the tribe.” Burlington Resources Oil & Gas Co. v.

Dep't of the Interior, 21 F. Supp. 2d 1, 4 (D.D.C. 1998). No

such considerations exist here, and the Department itself,

both before and after Cotton, has ruled that it is duty

bound to maximize tribal revenues under IMLA. See

General Crude Oil, 18 IBLA 326, 329 (1975); Robert L.

Bayless, 149 IBLA 140, 150 (1999).

The Government's suggestion that it could have leased

Navajo coal for 10¢ per ton based on a 1957 regulation,

when the minimum royalty for federal coal was 124% and

when it knew that the proper royalty for the Navajo coal

was closer to $4.00 per ton, see Pet. Br. 34, is disturbing

and wrong. The Department's trust duty requires it “to

review all leases and amendments to leases to assure that

the rent and royalty received by the Indian tribe ...

represents the best return that the market will bear.” 3

Am. L. of Mining § 67.04[4)[d], at 67-17 (1999). Thus, “the

Secretary's discretion to approve or disapprove leases .. .

must be governed by fiduciary standards and limited by

fiduciary duties.” Cheyenne-Arapaho Tribes, 966 F.2d at

589. The United States “must as trustee exercise reason-

able management zeal to get for the Indians the best rate,”

to strive for the “ceiling” and not settle for the “floor.”

Mitchell v. United States, 664 F.2d 265, 274 (Ct. Cl. 1981),

aff’d, 463 U.S. 206 (1983).

2. “It is ... well established that the Government in

its dealings with Indian tribal property acts in a fiduciary

capacity.” Cherokee Nation, 480 U.S. at 707. The commit-

ments in the 1850 treaty indicate the Government’s “will-

ing assumption” of trust duties. See supra p. 3; Supron,

728 F.2d at 1563 n.1. The United States concedes that it

must comply with basic trust duties. See generally Pet. Br.

Peabody's amicus brief is predicated on a report that purportedly

shows that “a royalty rate of 12.5% .. . was as high as any of the more

than 471 federal, state, and Indian coal leases in the Western coal-

producing states between 1985 and 1996.” Peabody Br. at 2, 26-28. That

assertion is false and its data are irrelevant. See Peabody Coal Co., 93

IBLA 317 (1986); Navajo Nation's Reply to Opposition of Amici Peabody

Coal Co., et al., to Motion to Strike Lodged Material; J.A. 83 (regarding

inappropriateness of applying royalty rates for federal coal).

47 (“The United States fully accepts the implications of

that [trust] relationship and the undertakings that go with

it.”)..* However, it contends that the remedies available to

Indians damaged by breaches of trust are limited to

declaratory and injunctive relief, Pet. Br. 36-37, and that

common law trust standards are irrelevant, id., at 20, 49.

Mitchell II rejected the first contention, see 463 U.S. at

227-28; infra pp. 47-49, and the second conflicts with

congressional intent and an unbroken line of this Court’s

decisions, as discussed below.

The Government’s duties over Indian mineral leasing

are fiduciary in nature. See Poafpybitty, 390 U.S. at 373-

74. In Mitchell II, the Court concluded that when govern-

ing statutes and regulations, like those here, impose on

the United States “full responsibility to manage Indian

resources and land for the benefit of Indians({, tjhey

thereby establish a fiduciary relationship and define the

contours of the United States’ fiduciary responsibilities.”

463 U.S. at 224 (emphasis added). “Contours” are outlines,

providing a “framework for analysis.” Pennsylvania uv.

Muniz, 496 U.S. 582, 591 (1990); see Faragher, 524 US. at

788 (distinguishing “contours” from “definitive rules”).

To fill in the “contours” of that relationship—in

Mitchell II, to determine if a remedy in damages for

breach existed—the Court relied on the three leading

treatises regarding trust law standards. 463 U.S. at 225-

26 & n.30. The Mitchell II dissent also understood that the

“law of trusts generally will control.” Jd. at 237 n.11

(Powell, J., dissenting). The Court cited with approval

several cases that relied on trust law standards to meas-

ure the Government’s performance as trustee.

* ‘The Government made the same statement in Mitchell II. Brief

for the United States, No. 81-1748, at 44 (“We fully accept the implica-

tions of that special relationship and the obligations that go with it.”).

a eee A SS ee

First among those cited cases is Seminole

United States, 316 U.S. 286 (1942). The Seminole ioe

considered the Government’s conduct as trustee in its

disbursement of Indian monies. The Court could not have

been clearer: the Government’s conduct must “be judged

by the most exacting fiduciary standards.” Jd. at 297.

Significantly, the Court emphasized the duty of loyalty. “‘A

trustee is held to something stricter than the morals of the

market place. Not honesty alone, but the punctilio of an

honor the most sensitive, is then the standard of behavior.

As to this there has developed a tradition that is unbend-

ing and inveterate.’” Id. at 297 n.12 (quoting Meinhard v.

Salmon, 249 N.Y. 458, 464 (1928) (Cardozo, C.J.)). The

duty of loyalty is still enforced with “‘uncompromising

rigidity.’” NLRB v. Amax Coal Co., 453 U.S. 322, 329-30

(1981) (quoting same); Pegram v. Herdrich, 530 U.S. 211,

224-25 (2000) (quoting same). Adherence to that duty at

the Interior Department is of “particular importance”

because of the temptation to compromise Indian interests

in favor of other policies and programs. Handbook at 227-

28. Mitchell II cited with approval several other cases that

rely explicitly on the Seminole standard or the common

law of trusts (or both) to measure the Government’s

performance as trustee. See 463 U.S. at 226 n.31.

Similarly, in United States v. Mason, 412 U.S. 391

(1973), this Court relied on the law of trusts to measure

the performance of the Government’s conduct as trustee

Id. at 391-92. Citing Seminole, the Court first observed

that “[t}here is no doubt that the United States serves in a

fiduciary capacity with respect to these Indians and tha

as such, it is duty bound to exercise great care in adminis-

tering its trust.” Jd. at 398. The Court then measured the

Government’s performance of its duty of care with refer-

ence to trust law standards. /d. (quoting Scott treatise).

Furthermore, Nevada—decided just three da

Mitchell II—quotes Seminole in vain i thet ae

Court has long recognized ‘the distinctive obligation of

trust incumbent upon the Government in its dealings with

Indian tribes.” 463 U.S. at 127 quoting Seminole, 316 U.S.

at 296. Nevada also recognized that “[iJt may be that

where only a relationship between the Government and

the tribe is involved, the law respecting obligations be-

tween a trustee and a beneficiary in private litigation will

in many, if not all, respects, adequately describe the duty

of the United States.” Id. at 142. This case presents just

such a situation.

Contrary to Petitioner’s assertion, Pet. Br. at 46,

Nevada held that the Government’s management duties

over Indian trust resources differ from those of a private

trustee only where Congress “by statute” has imposed

conflicting duties on the Government. 463 U.S. at 128,

142; cf. Dep't of the Interior v. Klamath Water Users Protec-

tive Ass’n, 532 U.S. 1, 11 (2001). Congress has imposed no

such conflicting duties here. Furthermore, even when

Congress has imposed such conflicting duties, the Court

has recognized that Indian tribes may obtain relief in the

Court of Claims for the United States’ fiduciary failures.

See Nevada, 463 U.S. at 135 n.14, 144 n.16; Arizona v.

California, 460 U.S. 605, 627 n.20 (1983). Subsequent

decisions of this Court confirm that trust law standards

measure the Government’s performance as trustee. See

Mertens v. Hewitt Assocs., 508 U.S. 248, 256 (1993);

Cherokee Nation, 480 U.S. at 707; Dann, 470 U.S. at 50

n.13.

The Government’s argument that its fiduciary duties

are, at most, coextensive with specific statutory and

regulatory commands, is unfounded. For example, the

Government notes that the Indian timber statute requires

that “proceeds from timber sales ‘shall be paid to the

owner or owners or disposed of for their benefit.’” Pet. Br.

27 (quoting 25 U.S.C. § 406(a)). The Government thus

that the absence of such a specific command in

IMLA allows it to divert proceeds from Indian minerals to

any third party free of liability to Indian owners. That

pinched reading of the trust duty contravenes the reason-

ing and holding of Mitchell II and Congress’ intent to

provide monetary remedies for federal mismanagement of

trust resources. “If the fiduciary duty applied to nothing

more than activities already controlled by other specific

legal duties, it would serve no purpose.” Varity Corp. v.

Howe, 516 U.S. 489, 504 (1996).

By enacting the Indian Tucker Act, Congress under-

stood that the courts would use strict standards to meas-

ure the Government's performance as trustee. See supra

pp. 16-18. Indeed, in 1946 the conference committee struck

a provision in the bill that became the Indian Tucker Act

directing the courts to apply “the same principles of law as

would be applied to an ordinary fiduciary” in cases under

the Indien-Tueker Act, explaining “it is well settled that

without express language the United States owes a very

high degree of fiduciary duty to Indian Tribes, and the bill,

nb sectio ty — ‘That nothing contained in this

nD 8 construed as altering the fiduciary or

other relations between the United States and the several

Indian tribes, bands or groups.’” 92 Cong. Rec. at 10,402

(statement of House conferees on Conference Report). That

proviso was added to preclude the Government’s present

misconstruction of the Indian Tucker Act. See Hearings,

supra, at 127, 130-31 (testimony of Assistant Solicitor

Cohen).” With this background, Congress should be

understood to have imported established principles of

trust law, see Amax Coal Co., 453 U.S. at 329, at least as a

starting point, see Harris Trust & Sav. Bank v. Salomon

Smith Barney Inc., 530 U.S. 238, 250 (2000); Varity Corp.,

” That proviso was itself dropped “as surplusage” in the |

1949

codification of that section as 28 U.S.C. § 1505, “since the provision

conferring jurisdiction cannot in any way alter the relationship of the

Government with its Indians.” H.R. Rep. No. 81-352, at 15 (1949).

A ee

516 U.S. at 496-97; Astoria Fed. Sav. & Loan Ass’n v.

Solimino, 501 U.S. 104, 108 (1991).

Where, as here, the scope of duty is a question of

federal law and Congress has understandably not specified

all acts or omissions that would constitute compensable

breaches of trust, the character of the Government’s trust

duties should be explicated by accepted principles of trust

law as a “necessary expedient.” See County of Oneida

v. Oneida Indian Nation, 470 U.S. 226, 236-37 (1985).

Moreover, “the scope of the United States’ fiduciary duty in

administering the [Indians’) trust property is a question of

federal law.” Mason, 412 U.S. at 397 n.9. Such federal law

requires nationwide legal standards; thus, the interstices

of the remedial scheme will be filled with uniform federal

rules. See, e.g., Clearfield Trust Co. v. United States, 318

U.S. 363, 366-67 (1943), cited in Mason, supra.

The Government’s fear that entrusting courts to fill in

these contours will subject the United States “to liability

based on unanchored, judge-made concepts of common

law,” is as unfounded in the trust law context as it is in

the contract or tort law context.” It is precisely because

” Brief for the United States, United States v. White Mountain

Apache Tribe, No. 01-1067, at 12, 34. The Government here simply

paraphraseé without attribution the words “unanchored judge-created

principles of fiduciary law” that it borrowed from a dissenting Court of

Claims judge and quoted in its unsuccessful Mitchell II brief. Brief for

the United States, United States v. Mitchell, No. 81-1748, at 45.

® Once a contract claim passes Tucker Act muster, the dispute is

governed by “federal common law of contract,” Developments in the

Law, Remedies Against the United States and its Officials, 70 Harv. L.

Rev. 827, 884 (1957), under which breach and remedies issues are

decided mainly based on the Restatement and respected treatises. See

Mobil Oil Expl. & Producing Southeast, Inc. v. United States, 530 U.S.

604, 607-08 (2000); Franconia Assoc. v. United States, 122 S. Ct. 1993,

2002 (2002). The Court’s approach in tort claims against the United

States is similar. See Richards v. United States, 369 U.S. 1, 6 (1962).

the basic features of trust law are so well known that the

Mitchell framework, informed by trust law principles,

offers stability and predictability. See Amax, 453 U.S. at

330; Great-West Life & Annuity Ins. Co. v. Knudson, 122

S. Ct. 708, 716 (2002) (contours of the term “equitable

relief” are so well known that courts rarely need to inquire

further than the Restatement and respected treatises).

Indeed, trust law principles will often limit the Govern-

ment’s liability to Indians. See, e.g., Dann, 470 U.S. at 48;

Mitchell II, 463 U.S. at 237 n.11 (Powell, J., dissenting);

Mason, 412 U.S. at 398.

This Court and the lower courts have taken into

account the uniqueness of the federal/Indian relationship

and have placed limits on the Government's potential

liability, limits appropriate to the unique ccntext of the

federal trust. For example, Nevada recognized that the

Department of the Interior cannot be held to the “fastidi-

ous standards of a private fiduciary” when Congress has

specifically imposed conflicting duties on it. 463 U.S. at

128. Similarly, Pawnee recognized federal trusteeship over

Indian mineral leases, but rejected liability for claims that

would have required Interior officials to contravene the

regulations and lease terms that formed the “contours” of

the trust duties. 830 F.2d at 191-92.

Most importantly, in fashioning these federal rules,

the courts will “look to the common law and other history

for guidance . . . ‘not to make a freewheeling policy choice,’

but rather to discern Congress’ likely intent” in enacting

IMLA and the Indian Tucker Act. See Burns v. Reed, 500

U.S. 478, 493 (1991) (citation omitted); see also Consoli-

dated Rail Corp. v. Gottshall, 512 U.S. 532, 543-44 (1994).

Here, Congress contemplated use of basic trust law

standards when it enacted the Indian Tucker Act. Mitchell

IT honored that clear congressional intent, and the Court

of Appeals did so as well.

—

D. The Department Violated Compensable

Trust Duties by Shelving a Well-Supported

Lease Adjustment for Peabody’s Benefit,

Misleading the Navajo Nation and Forcing

It to Negotiate, and Rubber-Stamping

Lease Amendments at Sub-Minimum Roy-

alty Rates.

In this case, the Department exercised its control not

to assist the Navajo Nation to become self-sufficient, but to

benefit Peabody at the Navajos’ expense. Pet. App. 3a. The

Department violated its duty to adjust the royalty rate

under the original lease, see 25 U.S.C. § 399, para. 6;

Lease, art. VI, J.A. 194; its duty to supervise and limit

negotiations to prevent unfairness and overreaching, see

25 C.FR. § 211.2 (1985); and its duty to review and ap-

prove any proposed coal lease with care to promote IMLA’s

basic purpose and the Navajo Nation’s best interests. Sve

25 U.S.C. § 396a; Kerr-McGee, 471 U.S. at 200. These

breaches of fundamental trust duties are compensable

under Mitchell II.

1. In addition to the governing statutes and regula-

tions, Mitchell II recognized that “other fundamental

document[s]” help define the contours of the Government's

trust duties. Mitchell IJ, 463 U.S. at 225. When the Gov-

ernment approves a mineral lease pursuant to a federal

statute and exercises reserved trust authority under that

lease, the lease is a “fundamental document.” See Pawnee,

830 F.2d at 192; 30 C.F.R. § 206.450(b). A faithful exercise

of the right to adjust the royalty rate here, the most

important financial term of the lease, lay well within the

“eontours” of both IMLA and 25 U.S.C. § 399. The Gov-

ernment’s administration of that lease provision was a

trust function. See Supron, 728 F.2d at 1567.

All federal studies found that a 20% royalty rate

adjustment by the BIA Area Director in 1984 was fair

and reasonable. J.A. 134, 153. But, at Peabody’s ex parte

behest, the Secretary signed instructions to Acting Com-

missioner Fritz drafted by Peabody's lawyers that jetti-

soned a well-supported royalty adjustment and effectively

reverted the royalty rate to 37.5¢ per ton indefinitely. See

J.A. 118 (“If it becomes inevitable that such a [royalty

adjustment] determination must be made by the Depart-

ment, then we can discuss it at that time.”); C.A. App.

A1670. The Secretary did this in violation of the duty of

loyalty, “the most fundamental duty owed by the trustee to

the beneficiaries.” Austin W. Scott, et al., The Law of

Trusts § 171, at 311 (4th ed. 1987); Amax, 453 U.S. at 329-

30.

The loyalty of the Navajo Nation to the United States

“has been conspicuous and unfa'tering. A fidelity at least

as constant and inflexible was owirg in return.” See

Shoshone Tribe, 299 U.S. at 486; Pres. Proc. No. 6847

(1995). Such fidelity was conspicuously lacking at the

Interior Department, but was restored by the court below.

2. The Department chose to deceive the Navajo

Nation, Pet. App. 1la-12a; J.A. 167-69, in violation of basic

trust principles. “[Llying is inconsistent with the duty of

loyalty owed by all fiduciaries.” Varity Corp., 516 U.S. at

506. The Department’s false and cryptic communications

reasonably led the Navajo leadership to conclude that the

Department believed the 20% figure was vulnerable on the

merits. Cf. Earll v. Picken, 113 F.2d 150, 158 (D.C. Cir.

1940) (“The trustee’s duty of disclosure is not discharged

by leaving the cestui to draw doubtful inferences, conclu-

sions and suspicions .. .”).

As Judge Baskir observed below, “[a] negotiator’s

weapon is knowledge. ... Unaware that the Secretary had

already promised their opponents he would not decide

the dispute, the Navajo Nation, arguably already at a

competitive disadvantage, could not truly be said to have

negotiated from a position of equality with Peabody and

the utilities....” Pet. App. 51a-52a; see C.A. App. 1280.

Hodel’s instructions, drafted by Peabody, were a perfect

instrument for the companies’ “maximum delay” strategy.

See J.A. 143, 169; C.A. App. A1648.

By contrast, applicable regulations allowed mineral

leasing negotiations only when sought by the Indian

mineral owner, and generally limited those negotiations to

thirty days. 25 C.F.R. § 211.2 (1985). This regulation “is

designed to prevent overreaching by those negotiating

with Indians and to assure that fair market value is

obtained for tribal resources.” Pet. App. 57a. The Depart-

ment wilfully violated it. J.A. 174-75. Any doubts about its

construction should be resolved in the Indians’ favor. See

Blackfeet, 471 U.S. at 766; Supron, 728 F.2d at 1567.

The Department knew that the Navajo Nation did not

have the staying power of Peabody, the world’s largest coal

company, and Edison, one of the country’s largest investor-

owned utilities. See J.A. 137-38. These companies were

paying virtually nothing for Navajo coal while negotiations

dragged out. By contrast, the Navajo Nation was strug-

gling to provide water, electricity, and paved roads for its

citizens; “[t]he need for money was great, and it was

growing daily.” J.A. 355 (testimony of Judge Nelson). The

Department knew that the Navajo Nation would get “beat

up” in the years-long negotiations. See J.A. 185; C.A. App.

A1280, A1643-44.

Such actions breach compensable trust duties. An

Indian tribe may recover damages for breach of trust

where federal officials mislead it about the value of its

resources or w'thhold knowledge of that value to the

tribe's detriment. See Klamath, 296 U.S. at 255. The

Department’s active collusion with Peabody also consti-

tutes a compensable breach of trust. “[FJraud or gross

negligence in the actual conduct of the United States as

trustee, or in the conduct of its agents, will make the

Government liable for damages in breach of trust.” Coast

Indian Cmty. v. United States, 550 F.2d 639, 653 (Ct. Cl.

1977), cited in Mitchell IT, 463 U.S. at 226 n.31.

3. As Judge Schall’s concurrence emphasized, a

fundamental trust responsibility under IMLA, and one

rooted in statutes dating back to the beginning of the

Republic, is the duty to exercise the federal lease approval

power in the Indians’ best interest. See Pet. App. 26a-27a;

supra pp. 20-21. The Secretary must, as trustee, “exercise

such care and skill as a man of ordinary prudence would

exercise in dealing with his own property.” Mason, 412

U.S. at 398 (citation omitted).

By contrast, once Secretary Hodel was assured the

lease amendments were desired by Peabody, see J.A. 175,

the merits of the deal from the Navajo Nation’s perspective

became “irrelevant.” J.A. 176. Determining a proper

royalty rate by the United States for its own coal is not “ir-

relevant.” See Peabody Coal Co., 93 IBLA 317 (1986)

(adjusting royalty for federal coal to 17.08%). The lease

amendments Hodel approved also abrogated the Depart-

ment’s right to adjust the royalty rate forever, but the

United States has never relinquished that right for its own

coal, J.A. 186, and the lease provided for such abrogation

only “[iJn the event of termination of federal jurisdiction,”

J.A. 186, 194.” Such approval of these and many other

damaging terms, see supra p. 11,” did not comply with

fundamental requirements of a trustee’s duty of care.

* Peabody had long been trying to abrogate this trust authority,

see Hearings Before the Senate Select Committee on Indian Affairs on S.

1894, 97th Cong., 2d Sess. 108 (1982) (Peabody, through Farrand, seeks

legislation to subject IMLA disputes to arbitration).

* The Government’s suggestion that the Navajo Nation did not

seek to invalidate the lease in the Court of Federal Claims because it

liked some of the terms, Pet. Br. 32, 40, is baseless. At argument,

(Continued on following page)

gees eo. -

The Secretary's exercise of his approval power was

required to conform to the basic purpose of IMLA, to

maximize tribal revenues, and that of the Navajo and Hopi

Rehabilitation Act, to “further the purposes of existing

treaties with the Navajo Indians” by “promoting a self-

sustaining economy and self-reliant communities,” 25 U.S.C.

§ 631. The Department’s manuals “prescribe economic

appraisals of the transactions between Indians and private

companies such as Peabody.” Pet. App. 58a. Here, however,

“ijt is undisputed that ... DOI failed to perform any

economic analysis regarding the lease amendments.” Pet.

App. 27a (Schall, J.). This unconsidered approval violated

the trustee’s duty of care. See Mason, 412 U.S. at 398;

Cheyenne-Arapaho, 966 F.2d at 589.”

SRP estimated the Navajos’ loss in royalties for the

coal used at just one of the two power plants at $347

million, and Edison estimated the Navajos’ loss of back

royalties and taxes alone at $89 million. J.A. 187, Pet.

App. 44a. A few scholarships and increased water pay-

ments cannot make up for that.”

Navajo counsel simply recognized that the Court of Federal Claims had

no authority to invalidate an approved lease, and characterized the few

beneficial terms of the lease amendments as providing “chump change”

to the Navajo. C.A. App. A3088, A3123-A3127.

* The instructions to Fritz drafted by Peabody's lawyers and

signed by Hodel advert to the threat of litigation. Pet. Br. 8. Though

even a genuine “threat of litigation may be intimidating ... careful

analysis of relevant factors takes precedence over avoiding a lawsuit.”

Cheyenne-Arapaho Tribes, 966 F.2d at 590. Regardless, the Navajo

Nation was prepared to defend the royalty adjustment in litigation, as

it had informed its trustee. See C.A. App. A751.

* The Government argues that the royalty rate for coal jointly

owned by the Navajo and Hopi was also raised from 6.67% to 122%. See

Pet. Br. at 4 n.3, 9. However, that limited rate increase only damaged

the Navajo further, and damaged the Hopi as well. The Navajo had

already raised royalty rates of other inequitable coal leases to 124%

(Continued on following page)

II. OTHER VARIANTS OF THE GOVERNMENT'S

UNSUCCESSFUL ARGUMENTS IN MITCHELL

II SHOULD BE REJECTED.

The Government’s arguments here generally repack-

age its unsuccessful arguments in Mitchell II. As discussed

above, Mitchell II rejected its views that an Indian plain-

tiff may only prevail if it shows a violation of a specific

statute or regulation that in itself clearly mandates

compensation for its violation, and that trust law stan-

dards are too imprecise to apply to the Department. And,

as explained below, real or feigned respect for tribal self-

determination does not excuse violation of basic trust

duties, federal law does not limit Indians damaged by

breaches of trust to prospective relief, and the Govern-

ment’s casual invocation of private right of action cases

cannot negate jurisdiction conferred by the Tucker Act.

These arguments also failed to convince the Court in

Mitchell II and should again be rejected. See Babbitt v.

Youpee, 519 U.S. 234, 245 (1997).

A. The Ideal of Tribal Self-Determination

Does Not Dilute Trust Duties.

In the space of 20 pages, the Government’s brief

transforms the modern federal policy favoring tribal self-

determination from a supposed “focus” of IMLA to its “cen-

tral aim.” See Pet. Br. 18, 19, 20, 38. Contra Kerr-McGee,

despite the lack of adjustment provisions in those leases. J.A. 175-76.

Here, as Peabody and its customers recognized, if the royalty rate here

were adjusted to 20%, the royalty rate for the jointly owned coal would

have risen to the same figure. See J.A. 157. The Government's assertion

that the Navajo Nation “has made no ... claim” that a reasonable

trustee could not have believed the lease amendments were in the

tribe's “best interest,” Pet. Br. 33, is nonsense. That is what this case is

all about. First Am. Compl. 4 17, 21-24; C.A. App. 36, 40-41.

471 U.S. at 200. It repeatedly offers, never with any

citation to authority, that the historic requirement of

federal approval of Indian land transactions is merely to

give “backstop protection” to the tribes, whatever that

might be. E.g., Pet. Br. 18, 43, 49. Contra Tuscarora, 362

U.S. at 118-19; Sunderland, 266 U.S. at 234. The Govern-

ment unsuccessfully asserted in Mitchell II that the

federal policy favoring Indian self-determination compro-

mises trust duties. See Brief for the United States, No. 81-

1748, at 35. That argument has gained no force in the

intervening 20 years.

In fact, IMLA’s only nod to tribal self-determination

was to prevent the Secretary from leasing tribal minerals

over the Indians’ objections. See Judith V. Royster, Mineral

Development in Indian Country: The Evolution of Tribal

Control Over Mineral Resources, 29 Tulsa L. J. 541, 558-61

(1994). IMLA and its implementing regulations “leave no

significant authority in the hands of the Indian tribes.”

Pet. App. 10a; Royster, at 565. But even if IMLA allowed

tribes to exercise significant management authority, the

Government presents a false dichotomy.

President Nixon, who forged the Indian self-

determination policy, found vigorous enforcement of the

trust duty and respect for tribal self-determination to be

complementary. President Nixon sought to ensure Federal

support for tribal self-determination by emphasizing, not

limiting, the trust duty. Focusing on the Indians’ “natural

resource rights,” President Nixon emphasized that “[e]very

trustee has a legal obligation to advance the interests of

the beneficiaries of the trust without reservation and with

the highest degree of diligence and skill.” Special Message

to Congress on Indian Affairs, 1970 Pub. Papers 564, 573.

President Reagan continued that policy. “In support of

our policy, we shall continue to fulfill the federal trust

responsibility for the physical and financial resources we

hold in trust for the tribes and their members. The fulfill-

ment of this unique responsibility will be accomplished

with the highest standards.” President’s Statement on

Indian Policy, 1983 Pub. Papers 96. President George H.

W. Bush reaffirmed that the federal trust duty over natu-

ral resources was “an obligation of the highest responsibil-

ity and trust,” to be judged “by the most exacting fiduciary

standards.” Statement on Signing the Department of the

Interior and Related Appropriations Act, 1991, 26 Weekly

Comp. Pres. Doc. 1768, 1769 (1990).

In both the Indian Self Determination and Education

Assistance Act and later amendments to that Act promot-

ing tribal self-governance, Congress provided that greater

tribal authority shall not compromise Federal trusteeship.

See 25 U.S.C. §§ 450n(2), 458ff{b). Congress embraced this

principle specifically in the Indian mineral context. Con-

gress enacted IMDA in 1982 “first, to further the policy of

self-determination and second, to maximize the financial

return tribes can expect for their valuable mineral re-

sources.” S. Rep. No. 97-472, supra, at 2. But, even under

IMDA, if the Secretary exercises his approval authority

“recklessly and in abuse of his discretion as trustee, the

United States cannot avoid liability.”” H.R. Rep. No. 97-

746, supra, at 7-8; accord S. Rep. No. 97-472, supra, at 4-5.

In this case, the Navajo Nation consistently stated its

position to the Department: it requested the royalty to be

adjusted as provided by the lease and it sought a decision

on Peabody's appeal of the adjustment decision. See, e.g.,

J.A. 12, 119-21, 139-40, 161, 165; C.A. App. A468. Had the

Department truly respected Navajo decision-making, it

would have decided the appeal on the merits, not forced

the Navajo Nation to negotiate at a decided disadvantage.

The Department did not advance the policy of respect

for tribal self-government when it colluded with Peabody.

Honest consultation with, not deception of, Indian tribes is

the cornerstone of the modern federal-tribal relationship.

See, e.g., Exec. Order No. 13,175, Consultation and Coor-

dination with Indian Tribal Governments, 65 Fed. Reg.

67,249 (Nov. 6, 2000). “[WJhile the trust responsibility

should support self-determination, that goal is illusory if it

results from a compromised process or undue federal

manipulation ....” Mary C. Wood, Indian Land and the

Promise of Native Sovereignty: The Trust Doctrine Revis-

ited, 1994 Utah L. Rev. 1471, 1558. Indeed, as the De-

partment recognizes, “maximizling] the economic return

on Indian mineral development [helps] to achieve greater

Indian self-determination.” 42 Fed. Reg. 18,083 (Apr. 5,

1977). Minimizing that return, as here, surely undermines

tribal self-determination.

B. The Navajo Nation Had No Effective APA

Remedy Here, and Mitchell II Rejected

the Government’s Argument That Such

Remedies Preclude Monetary Relief.

The Government urges that the Navajo Nation’s sole

recourse is an action for equitable relief under the

Administrative Procedure Act. See Pet. Br. at 36-37.

Mitchell II rejected this argument, because “by the time

Government mismanagement becomes apparent, the

damage to Indian resources may be so severe that a

prospective remedy may be next to worthless.” 463 U.S. at

227. That is especially true here, where, unlike timber, the

coal resource is non-renewable and the Government

concealed from the Navajo Nation for years its subversion

of Navajo interests. Even Government counsel was

unaware of the depth of the Government’s misconduct

until well into discovery in this case. See C.A. App. A2093-

94 nn.5-6; A3149-50.

The Navajo Nation’s claim is not a quibble over

procedural niceties, as the Government contends. Ex parte

communications that do no harm to Indians would indeed

be a mere technical wrong. Here, however, the ex parte

communication led the Secretary to suppress a finished

decision favoring the Navajo, to hide his actions and

conceal valuable information from the Navajo, and,

ultimately, to agree to approve damaging lease

amendments with no substantive review. Even if Peabody's

advances had not been made surreptitiously, those actions

would still mandate compensation. The Secretary “cannot

escape his role as trustee by donning the mantle of

administrator.” Supron, 728 F.2d at 1567.”

Surely, claims not seeking injunctive relief rely on

allegations of past wrongdoing. But that general truism

does not mean that the Navajo Nation’s claim here is

simply second-guessing. Cf. Pet. Br. 43. Nevada is instruc-

tive on this point. Nevada rejected a tribe’s claim that did

rely in part on hindsight, but distinguished such hindsight

from the type of facts present here:

* Even where parties have purely procedural claims and the

agency has complied with its own procedural rules, agency action may

still be challenged “in order to afford the aggrieved individuals due

process” or if there is “a totally unjustified departure from well-settled

agency procedures.” Vermont Yankee Nuclear Power Corp. v. NRDC, 435

U.S. 519, 542 (1978). “It is difficult to imagine a more serious incursion

on fairness than to permit the representative of one of the parties to

privately communicate his recommendations to the decision mak-

ers. . . . [D)ue process forbids it.” Camero v. United States, 375 F.2d 777,

781 (Ct. Cl. 1967) (en banc). Moreover, Solicitor Richardson had

previously warned Secretary Hodel not to meet ex parte with Peabody,

J.A. 148-49, and after Hodel ignored that advice, the Associate Solicitor

for Indian Affairs warned that the Secretary had denied the Navajo due

process by adopting Peabody's desired course of action, J.A. 122-23. The

Department's Office of Hearings and Appeals, the Secretary's “author-

ized representative,” 43 C.F.R. § 4.1, had forbidden ex parte communica-

tions with Interior decision makers, “whether or not they are prohibited

by statute or regulation.” Pueblo of Laguna v. Assistant Secretary for

Indian Affairs, 12 IBIA 80, 97, 90 Interior Dec. 521, 531 (1983).

there is nothing in the record in this case to indi-

cate that any official outside of the BIA at-

tempted to influence the BIA’s decisions in a

manner inconsistent with these [trust] obliga-

tions. The record suggests that the BIA alone

may have made the decision ... for reasons

which hindsight may render questionable, but

which did not involve other interests represented

by the Government.

Nevada, 463 U.S. at 135 n.15. Here, in contrast, the BIA

did everything correctly before being stopped in its tracks

by the Secretary acting on behalf of Peabody.

Determining the Government’s liability in this case

requires no hindsight. The Department knew when it

jettisoned the royalty rate adjustment and forced more

negotiations that the Navajo would suffer. E.g., C.A. App.

A1641-44. The Department knew that the Navajo coal

should have commanded a 20% royalty when it approved

the sub-12%% deal. J.A. 14-88. Hodel knew that his

actions were improper. See Pet. App. 3la-32a; J.A. 148-49.

C. The Implied Right of Action Doctrine

Does Not Apply Here.

The Government drops oblique references to cases

that concern implied rights of action. Pet. Br. 24. “How-

ever, the legion of cases in which tribes have sued to

enforce Indian rights protected by treaties, statutes and

executive orders have proceeded without undertaking that

analysis.” Timpanogos Tribe v. Conway, 286 F.3d 1195,

1204 (10th Cir. 2002), citing Minnesota v. Mille Lacs Band

of Chippewa Indians, 526 U.S. 172 (1999). In the Tucker

Act, Congress expressly waived sovereign immunity

concerning actions for money damages. Mitchell II, 463

U.S. at 216, 218-19. The question of implication is there-

fore moot. See Cannon, 441 U.S. at 694.

50 =

This issue was briefed by the Government and dis-

cussed at argument in Mitchell IJ, see Brief for the United

States, No. 81-1748, at 27-28 & n.23; Tr. of Oral Arg. at 32-

40 (Mar. 1, 1983), yet it merited not a word in the majority

opinion and only a brief statement in the dissent, see 463

U.S. at 232 (Powell, J., dissenting). Mitchell IJ decided

that the Tucker Act confers jurisdiction over tribal claims

for breach of trust. If jurisdiction were denied here based

on lack of an implied right of action, Mitchell IT would be

effectively overruled. Such a result would be “demonstra-

bly inequitable” and should be avoided. See Virginia

Bankshares, Inc. v. Sandberg, 501 U.S. 1083, 1104 (1991);

see also Musick, Peeler & Garrett v. Employers Ins., 508

U.S. 286, 292 (1993). Moreover, the Government did not

seek such a drastic ruling in either its Petition or its brief,

and its brief accepts the Mitchell II] framework. Therefore,

this Court has no reason to reconsider Mitchell II, through

the guise of the implied right of action doctrine or other-

wise. See, e.g., Thompson v. Western States Med. Ctr., 122

S. Ct. 1497, 1504 (2002).

CONCLUSION

The judgment should be affirmed.

Respectfully submitted,

PAUL E. FRYE*

ROTHSTEIN, DONATELLI, HUGHES,

DAHLSTROM, SCHOENBURG &

FRYE, LLP

500 Fourth Street NW, Suite 400

Albuquerque, NM 87102

(505) 243-1443

Counsel for Respondent

Navajo Nation

*Counsel of Record

eT ETT

APPENDIX

NAVAJO AND HOPI

REHABILITATION ACT OF 1950

25 U.S.C. §§ 631-40

§ 631. Basic program for conservation and devel-

opment of resources; projects; appropria-

tions

In order to further the purposes of existing treaties

with the Navajo Indians, to provide facilities, employment,

and services essential in combating hunger, disease,

poverty, and demoralization among the members of the

Navajo and Hopi Tribes, to make available the resources of

their reservations for use in promoting a self-supporting

economy and self-reliant communities, and to lay a stable

foundation on which these Indians can engage in diversi-

fied economic activities and ultimately attain standards of

living comparable with those enjoyed by other citizens, the

Secretary of the Interior is authorized and directed to

undertake, within the limits of the funds from time to time

appropriated pursuant to this subchapter, a program of

basic improvements for the conservation and development

of the resources of the Navajo and Hopi Indians, the more

productive employment of their manpower, and the sup-

plying of means to be used in their rehabilitation, whether

on or off the Navajo and Hopi Indian Reservations. Such

program shall include the following projects for which

- capital expenditures in the amount shown after each

project listed in the following subsections and totaling

$108,570,000 are authorized to be appropriated:

(3) Surveys and studies of timber, coal, mineral, and

other physical and human resources, $500,000.

* * *

§ 632. Character and extent of administration;

time limit; reports on use of funds

The foregoing program shall be administered in

accordance with the provisions of this subchapter and

existing laws relating to Indian affairs, shall include such

facilities and services as are requisite for or incidental to

the effectuation of the projects herein enumerated, shal!

apply sustained-yield principles to the administration of

all renewable resources, and shall be prosecuted in a

manner which will provide for completion of the program,

so far as practicable, within ten years from April 19, 1950.

An account of the progress being had in the rehabilitation

of the Navajo and Hopi Indians, and of the use made of the

funds appropriated to that end under this subchapter,

shall be included in each annual report of the work of the

Department of the Interior submitted to the Congress

during the period covered by the foregoing program.

* * *

§ 635. Disposition of Lands

(a) Lease of restricted lands; renewals

Any restricted Indian lands owned by the Navajo

Tribe, members thereof, or associations of such members,

or by the Hopi Tribe, members thereof, or associations of

such members, may be leased by the Indian owners, with

the approval of the Secretary of the Interior, for public,

religious, educational, recreational, or business purposes,

including the development or utilization of natural re-

sources in connection with operations under such leases.

All leases so granted shall be for a term of not to exceed

twenty-five years, but may include provisions authorizing

their renewal for an additional term of not to exceed

twenty-five years, and shall be made under such regula-

tions as may be prescribed by the Secretary. Restricted

allotments of deceased Indians may be leased under this

section, for the benefit of their heirs or devisees, in the

circumstances and by the persons prescribed in section

380 of this title. Nothing contained in this section shall be

construed to repeal or affect any authority to lease re-

stricted Indian lands conferred by or pursuant to any

other provision of law.

§ 638. Participation by Tribal Councils; recom-

mendations

The Tribal Councils of the Navajo and Hopi Tribes and

the Indian communities affected shall be kept informed

and afforded opportunity to consider from their inception

plans pertaining to the program authorized by this sub-

chapter. In the administration of the program, the Secre-

tary of the Interior shall consider the recommendations of

the tribal councils and shall follow such recommendations

whenever he deems them feasible and consistent with the

objectives of this subchapter.

* * *

25 U.S.C. § 399

§399 Leases of unallotted mineral lands with-

drawn from entry under mining laws

(para. 1] Authority of Secretary of Interior to lease. The

Secretary of the Interior is authorized and empowered

under general regulations to be fixed by him and under

such terms and conditions as he may prescribe, not incon-

sistent with the terms of this section, to lease to citizens of

the United States, or to any association of such persons, or

to any corporation organized under the laws of the United

States or of any State or Territory thereof, any part of the

unallotted lands within any Indian reservation within the

States of Arizona, California, Idaho, Montana, Nevada,

New Mexico, Oregon, Washington, or Wyoming withdrawn

prior to June 30, 1919, from entry under the mining laws

for the purpose of mining for deposits of gold, silver,

copper, and other valuable metalliferous minerals, and

nonmetalliferous minerals, not including oil and gas

which leases shall be irrevocable, except as herein na

vided, but which may be declared null and void upon

breach of any of their terms.

a . *

(para. 6] Term of lease; renewal. Leases under this

section shall be for a period of twenty years, with the

preferential right in the lessee to renew the same for

successive periods of ten years, upon such reasonable

terms and conditions as may be prescribed by the Secre-

tary of the Interior, unless otherwise provided by law at

the time of the expiration of such periods.

* * *

[para. 15) Examination of books and account of lessees.

The Secretary of the Interior is authorized to examine the

books and accounts of lessees, and to require them to

submit statements, representations, or reports, including

information as to cost of mining, all of which statements,

representations, or reports so required shall be upon oath,

unless otherwise specified, and in such form and upon

such blanks as the Secretary of the Interior may require;

and any person making any false statement, representa-

tion, or report under oath or in any declaration, certificate,

verification, or statement under penalty of perjury as

permitted under section 1746 of Title 28 shall be subject to

punishment as for perjury.

[para. 16) Disposition of rentals and royalties. All moneys

received from royalties and rentals under the provisions of

this section shall be deposited in the Treasury of the

United States to the credit of the Indians belonging and

having tribal rights on the reservation where the leased

land is located, which moneys shall be at all times subject

to appropriation by Congress for their benefit, unless

otherwise provided by treaty or agreement ratified by

Congress: Provided, That such moneys shall be subject to

the laws authorizing the pro rata distribution of Indian

tribal funds.

{para. 17] Protection of interests of Indians. The Secre-

tary of the Interior is authorized to perform any and all

acts and to make such rules and regulations not inconsis-

tent 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: Provided, That nothing in this section

shall be construed or held to affect the right of the States

or other local authority to exercise any rights which they

may have to levy and collect taxes upon improvements,

output of mines, or other rights, property, or assets of any

lessee.

TRIBAL SELF-GOVERNANCE AMENDMENTS

25 U.S.C. § 458

§ 458ff Disclaimers

* * *

(b) Federal trust responsibilities

Nothing in this subchapter shall be construed to

diminish the Federal trust responsibility to Indian tribes,

individual Indians, or Indians with trust allotments.

* * *

TREATY WITH THE NAVAJO INDIANS.

June 1, 1868

* * *

ARTICLE VI. In order to insure the civilization of

the Indians entering into this treaty, the necessity of

education is admitted, especially of such of them as may

be settled on said agricultural parts of this reservation,

and they therefore pledge themselves to compel their

children, male and female, between the ages of six and

sixteen years, to attend school; and it is hereby made the

duty of the agent for said Indians to see that this stipula-

tion is strictly complied with; and the United States agrees

that, for every thirty children between said ages who can

be induced or compelled to attend school, a house shall be

i t to teach the elementary

provided, and a teacher competen

branches of an English education shall be furnished, who

will reside among said Indians, and faithfully discharge

his or her duties as a teacher.

The provision of this article to continue for not less

than ten years.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.