Reply Brief — United States v. Navajo Nation

NOV 12 200

No. 01-1375 | Ou Tie me

In the Supreme Court of the United States

UNITED STATES OF AMERICA, PETITIONER

Vv.

NAVAJO NATION

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

REPLY BRIEF FOR THE UNITED STATES

THEODORE B. OLSON

Solicitor General

Counsel of Record

Department of Justice

Washington, D.C. 20530-0001

(202) 514-2217

TABLE OF CONTENTS

A. The existence of a general trust relationship

does not alter the scope of the Tucker Act’s

limited waiver of sovereign immunity 1

B. The Tribe has not identified the violation of any

specific statutory or regulatory duty not speci-

fied by Congress : 6

C. Principles derived from the common law cannot

supply a substantive right to damages not speci-

fied by Congress 16

D. In alleging generalized breaches of fiduciary

duty, the tribe mischaracterizes the underlying

events 17

TABLE OF AUTHORITIES

Cases:

Army & Air Force Exch. Serv. v. Sheehan, 456

U.S. 728 (1982) 5

County of Oneida v. Oneida Indian Nation, 470

U.S. 226 (1985) 16

Cotton Petroleum Corp. v. New Mexico, 490 US.

163 (1989) 11, 12

Eastport S. S. Corp. v. United States, 372 F. 2d

1002 (Ct. Cl. 1967) 9

General Crude Oil Co., 18 I. B. L.A. 326 (1975) 11

Gonzaga Univ. v. Doe, 122 S. Ct. 2268 (2002) 5, 6

Jicarilla Apache Tribe v. Supron Energy Corp., 728

F. 2d 1555 (1984), on reh’g, 782 F. 2d 855, supple-

mented, 793 F.2d 1171 (10th Cir.), cert. denied, 479

U.S. 970 (1986) 7

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

471 U.S. 195 (1985) 10, 11

Klamath & Moadoc Tribes of Indians v. United

States, 296 U.S. 244 (1935) 5

(1)

II

Cases Continued:

Morton v. Ruiz, 415 U.S. 199 (1974) 15

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

Cir. 1987), cert. denied, 486 U.S. 1032 (1988) 7

Peabody Coal Co., 98 I. B. L. A. 317 (1986) 12

Pueblo of Laguna v. Assistant Sec for Indian

Affairs, 12 1.B.1.A. 80 (1983) 8

Robert L. Bayless, 149 I. B. L.A. 140 (1999) 11

Schweiker v. Hansen, 450 U.S. 785 (1981) 15

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

(1942) 4

United States v. Creek Nation, 295 U.S. 103

(1935) 5

United States v. Mitchell:

445 U.S. 535 (1980) 4, 10, 16, 17

463 U.S. 206 (1983) 1, 2-3, 4,

6, 9, 17

United States v. Shoshone Tribe of Indians, 304

U.S. 111 (1938) 4

United States v. Testan, 424 U.S. 392 (1976) 5,6

Statutes and regulations:

Indian Mineral Development Act of 1982, 25 U.S.C.

2103(b) 12, 13

25 U.S.C. 348 10

25 U.S.C. 396a 9, 10, 11, 12

25 U.S.C. 396b 10, 11

25 U.S.C. 399 7,8

25 U.S.C. 399 para. 6 7,8

28 U.S.C. 1491(a)(1) 2

30 U.S.C. 207(a) 12

42 U.S.C. 1983 5,6

25 C.F.R.:

Section 211 (2001) 13

Section 211.2 (1985) 9

Section 211.43(a)(2) (2001) 14

Section 211.43(b) 14

III

5 Bureau of Indian Affairs, U.S. Dep’t of Interior,

Indian Affairs Manual Pt. 4 (Feb. 1984)

56 Fed. Reg. (1991):

p. 58,733

p. 58,735

p. 58,736

61 Fed. Reg. (1996):

H.R. Rep. No. 1872, 75th Cong., 3d Sess. (1988)

Restatement (Second) of Trusts (1959)

2 A. Scott, The Law of Trusts (4th ed. 1987)

S. Rep. No. 985, 75th Cong., Ist Sess. (1937) ..............

U.S. Dep't of Interior, Department Manual Ch.

6 (1992)

In the Supreme Court of the United States

No. 01-1375

UNITED STATES OF AMERICA, PETITIONER

V.

NAVAJO NATION

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

REPLY BRIEF FOR THE UNITED STATES

The Federal Circuit held that the United States may be

liable to the Navajo Nation (Tribe) for up to $600 million in

damages for breach of fiduciary duty, without finding that

the Secretary violated any specific statutory or regulatory

duty. In this Court, the Tribe likewise fails to identify the

violation of any specific statutory or regulatory duty, much

less one that can fairly be read to mandate monetary com-

pensation in the event of a violation. The Tribe suggests

that the United States may be held liable in damages based

simply on the breach of a generalized trust relationship. But

that expansive alternative theory for affirming the judgment

below is contradicted by the terms of the Tucker Act, this

Court’s precedents, and bedrock sovereign immunity

principles.

A. The Existence Of A General Trust Relationship Does

Not Alter The Scope Of The Tucker Act's Limited

Waiver Of Sovereign Immunity

1. The Tribe refuses to recognize the limits on the waiver

of sovereign immunity effected by the Tucker Act. The

Tucker Act itself does “not create any substantive right en-

forceable against the United States for money damages.”

(1)

United States v. Mitchell, 463 U.S. 206, 216 (1983) (Mitchell

IT); see U.S. Br. 21-24. Rather, in order to state a cause of

action for damages under the Tucker Act, a plaintiff suing

other than for breach of contract must point to an “Act of

Congress” or “regulation of an executive department,” 28

U.S.C. 1491(a)(1), that “can fairly be interpreted as mandat-

ing compensation by the Federal Government for the dam-

age sustained.” Mitchell II, 463 U.S. at 217. As discussed in

the government’s opening brief (Br. 26-40) and in Point B,

infra, the Tribe has not identified the violation of any such

statute or regulation.

2. Instead of attempting to ground its claims on the vio-

lation of an Act of Congress or implementing regulation, the

Tribe argues (Br. 16) that “Mitchell II held that the Tucker

Act waived the Government’s immunity for claims of breach

of trust concerning federal management of Indian re-

sources.” See Resp. Br. 16-20. Thus, according to the Tribe

(Br. 19), “once an active trust relationship is found to arise

from [a] 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.” See also

Br. for Amicus Nat’] Congress of American Indians (NCAI

Br.) 6, 12-14. But neither Mitchell II nor this Court’s other

Tucker Act decisions support such an expansive interpreta-

tion of the Tucker Act.

In Mitchell II, the Court did not simply point to “an active

trust relationship” (Resp. Br. 19) and hold that damages

were available under the Tucker Act for generalized

breaches of such a relationship as a court may conceive of it.

To the contrary, the Court examined in detail the “various

Acts of Congress and executive department regulations”

governing Indian timber sales and looked to “whether they

li e., the statutes and regulations] can fairly be interpreted

as mandating compensation for damages sustained as a

result of a breach of the duties they impose.” 463 U.S. at 219

(emphasis added); see id. at 219-223. So too, the Indian

plaintiffs in Mitchell II based their claims on alleged viola-

tions of specific statutory and regulatory provisions. See id.

at 210; U.S. Br. 27-28. In stark contrast, while “[ajlleging

breaches of general fiduciary duties, the Navajo have failed

to link any breach to a specific money-mandating statutory

or regulatory provision.” Pet. App. 66a (Court of Federal

Claims); id. at 26a (Judge Schall); U.S. Br. 29-38. Thus, to

allow a damages action in this case under the Tucker Act

would require a significant departure from Mitchell II.

The Tribe suggests (Br. 19, 20) that the existence of fed-

eral control over an Indian resource is alone sufficient to

support a damages claim against the United States for mis-

management of that resource. In Mitchell II, however, the

Court did not look to the existence of federal control in the

abstract. Instead, the Court looked to whether the particu-

lar statutes and regulations on which the Indian plaintiffs

based their claims “can fairly be interpreted as mandating

compensation for damages sustained as a result of a breach

of the duties they impose.” 463 U.S. at 219 (emphasis added).

Thus, instead of adopting the sort of generalized control test

advanced by the Tribe here, the Court required the Indians

to show the violation of a specific statutory or regulatory

duty in exercising control. U.S. Br. 40-46.

1 The Tribe argues (Br. 15) that It here is no principled distinction

between the statutory scheme Indian coal at issue here and

that governing Indian timber in Mitchell II.“ See Br. 20. But as the

Court of Federal Claims concluded, the regulatory scheme in this case

“falls far short of (creating) the detailed fiduciary responsibilities of

Mitchell II.“ Pet. App. 68a; see U.S. Br. 41-42. The Tribe asserts (Br. 25-

27) that the Department has issued “comprehensive regulations” to

implement the IMLA. But none of the regulations cited by the Tribe

imposes any specific requirements with respect to the Secretary's decision

to approve a lease or lease amendments, with the exception of ensuring

that a lease contains the minimum federal royalty rate. See U.S. Br. 3. By

contrast, the statutes and regulations governing Indian timber sales

established numerous specific duties with respect to the particular aspects

4

3. The Tribe argues (Br. 17) that the Indian Tucker Act

“provides further support for Mitchell II’s conclusion that

Congress intended a damage remedy for breaches of trust

regarding Indian resource management.” But in Mitchell I]

itself the Court reiterated that the Indian Tucker Act

entitles Indian or tribal claimants to the “same” rights and

remedies in suits against the United States that non-Indians

enjoy under the Tucker Act, and not a special right to dam-

ages against the United States based on the existence of a

generalized fiduciary relationship with Indian Tribes or re-

sources. Mitchell II, 463 U.S. at 212 n.8; see United States

v. Mitchell, 445 U.S. 585, 540 (1980) (Mitchell J). In addition,

as this Court has explained, the legislative history of the

Indian Tucker Act confirms that Congress did not intend

that Act “to be a waiver of sovereign immunity for any

alleged breach of trust accruing after August 13, 1946” that

is not based on a specific statutory or regulatory duty. Id. at

540 n.2 (emphasis added).

The Tribe claims (Br. 17) that its interpretation of the

Indian Tucker Act is consistent with “this Court’s decisions

in special jurisdictional act cases that held the Government

liable for breach of fiduciary duties.” But the decisions on

which it relies (see Br. 18 n.9) based the availability of

damages not on the breach of a generalized trust relation-

ship, but instead on the violation of specific statutory or

treaty provisions. See Seminole Nation v. United States,

316 U.S. 286, 295-297 (1942) (violation of specific treaty

obligation to disburse payments to individual tribal mem-

bers); United States v. Shoshone Tribe of Indians, 304 U.S.

111 (1938) (violation of specific treaty right to “absolute and

i and occupation” of reservation lands);

— On Nation, 295 US. 108, 109-110 (1985)

(violation of specific treaty provision conferring “fee simple

” 2

* Ay argument that the Tucker Act confers

jurisdiction over claims for breach of trust based on general-

ized conceptions of fiduciary duties is further contradicted

by this Court’s Tucker Act decisions stressing that the

“grant of a right of action [for money damages] must be

made with specificity.” United States v. Testan, 424 US.

392, 400 (1976) (emphasis added), accord Army & Air Force

Exch. Serv. v. Sheehan, 456 U.S. 728, 789-740 (1982) (Under

the Tucker Act, “jurisdiction over respondent’s complaint

cannot be premised on the asserted violation of regulations

that do not specifically authorize awards of money dam-

ages.”) (emphasis added). The Tribe's theory would vitiate

“specificity” requirement.

thie Court shows similar restraint in determining

whether an Act of Congress creates a federal right that is

enforceable under 42 U.S.C. 1983. See Gonzaga Univ. v.

Doe, 122 8. Ct. 2268, 2274-2275 (2002), U.S. Br. 24. In Gon-

zaga, this Court rejected “a relatively loose standard for

finding rights enforceable by § 1983.” 122 8. Ct. at 2274.

Here, the Court should reject the even looser standard

urged by the Tribe and its amici for determining when-a

money damages claim may be brought under the Tucker Act.

NCAI suggests (Br. 25-28) that this line of authority is

te. But here, as in the Section — —

is whether rights allegedly confe yas

— or implementing regulation are enforceable in

an action brought under the general terms of a statute that

allows for the recovery of damages for the violation of

Klamath US.

: & Moadoc Tribes of Indians v. United States, 296

044, 264-256 (1985), the damages claim at issue did not fall within the

terms of the special jurisdictional act, and therefore was dismissed.

6

federal rights. In both situations, it is not enough to point

simply to a statute or regulation that a plaintiff seeks to en-

force. Rather, the plaintiff must point to the violation of a

statute that “confer[s] entitlements sufficiently specific and

definite to qualify as enforceable rights,” 122 S. Ct. at 2273,

in the form of “specific monetary entitlements,” id. at 2274.

See Testan, 424 U.S. at 400. Indeed, in a critical respect, the

inquiry under the Tucker Act is even more stringent than

that under Section 1983: under the Tucker Act, the plaintiff

must not only point to a statute or regulation that creates

enforceable rights, but also establish that the statute or

regulation mandates the payment of compensation for a

violation. Mitchell II, 463 U.S. at 217-218.

B. The Tribe Has Not Identified The Violation Of Any

Specific Statutory Or Regulatory Duty Mandating

Compensation For A Violation

It is not until page 39 of its brief that the Tribe attempts

to link the alleged breach of trust to the violation of any

concrete duties. None of the purported duties identified by

the Tribe supports its damages claim under the Tucker Act.

1. The Tribe argues (Br. 39) that “(t]he Department

violated its duty to adjust the royalty rate under the original

lease.” Article VI of the lease made its royalty provisions

“subject to” a “reasonable adjustment” by the Secretary

upon the 20-year anniversary of the lease. Pet. App. 67a. As

the Court of Federal Claims concluded (and the Tribe does

not challenge in this Court), that provision was not con-

tractually binding on the Secretary. Id. at 70a. Because

Article VI of the lease itself merely authorized but did not

mandate any royalty adjustment and did not contractually

bind the Secretary, any claim for damages based on a failure

to adjust the royalty (or to adjust it by a certain amount)

must fail. Furthermore, a claim that the Secretary did not

act in compliance with the terms of a lease is not a claim

7

based on an Act of Congress or implementing regulation, as

required by the Tucker Act. See U.S. Br. 33.°

In addition, even if the lease had obligated the Secretary

to adjust the royalty rate and that obligation were enforce-

able in an action under the Tucker Act, the lease would not

have required the Secretary to adjust the rate in a manner

that maximized profits for the Tribe, as the Tribe appar-

ently maintains. The lease made the original royalty rate

subject to “reasonable adjustment” (Pet. App. 67a), and

determining what would be “reasonable” under a lease that

protected both parties would properly take into account the

interests of both parties, not only those of the Tribe. That

conclusion is confirmed by the fact that Article VI of the

lease provided for renegotiation and if necessary arbitra-

tion—standard contract procedures that allow for the play of

both parties’ interests—to resolve differences between the

parties concerning a possible adjustment to the royalty rate

if the land was no longer subject to fede: al jurisdiction at the

time an adjustment could be made. J.A. 194.

The Tribe also relies (Br. 39-40) on paragraph 6 of 25

U.S.C. 399 in arguing that the Secretary breached a duty in

connection with the royalty-adjustment clause of the original

lease. That reliance is misplaced. Section 399, which was

enacted in 1919, is not part of the Indian Mineral Leasing

8 The Tribe argues that the lease is “a ‘fundamental document’” that

“define[s] the contours of the Government’s trust duties.” Kesp. Br. 39

(citing Pawnee v. United States, 830 F.2d 187 (Fed. Cir. 1987), cert.

denied, 486 U.S. 1082 (1988)). In Pawnee and Jicarilla Apache Tribe v.

Supron Energy Corp., 728 F.2d 1555 (1984), on reh’g, 782 F.2d 855 (en

banc), supplemented, 793 F.2d 1171 (10th Cir.), cert. denied, 479 U.S. 970

(1986), on which the Tribe also relies (Br. 39), the relevant duties of the

Secretary (to calculate and recover royalties) were imposed by a statute

and regulations governing oil and gas leases, not the leases themselves.

Reference to the leases was required only to ascertain the measure of the

royalties to be collected for the Indians. The Tribe here, by contrast,

relies on the lease to supply the duty that, it claims, is enforceable under

the Tucker Act.

8

Act (IMLA), and thus does not govern the lease at issue in

this case. In fact, because Section 399 governed leases of

lands by the Secretary, rather than by a Tribe, it could not

apply to the Navajo lease here. See U.S. Br. 44 n. 16. Nor

does the general discussion of lease renewals in paragraph 6

of Section 399 specify any duty with respect to the adjust-

ment of royalty rates pursuant to a clause in an existing

lease or the handling of administrative appeals concerning

such an adjustment, and it in any event provides only for

“reasonable” terms upon renewal, not a maximum return to

the Tribe. 25 U.S.C. 399 para. 6.

Although the Tribe claims (Br. 39) that the Secretary

breached a duty in failing to “adjust the royalty rate under

the original lease,” the Tribe does not seriously attempt to

defend the ground on which the court of appeals relied in

finding a breach of fiduciary duty that is enforceable under

the Tucker Act, i.e, the Secretary’s actions in 1985 with

respect to the administrative appeal. See Pet. App. 1la-12a.

As explained in the government’s opening brief (Br. 30-31),

the Secretary’s responsibilities with respect to administra-

tive appeals are governed by the Department’s general pro-

cedural rules and the Administrative Procedure Act (APA).

The court of appeals did not identify a violation of any pro-

cedural rule or provision of the APA, and even if it had,

procedures governing administrative appeals are not fairly

interpreted as mandating compensation for any alleged in-

jury. See U.S. Br. 30-32.‘

In a footnote, the Tribe asserts (Br. 48 n.27) for the first time in this

case that the government violated “due process” by allegedly departing

from agency procedures. But the Secretary did not depart from any

established agency procedure. U.S. Br. 31-32. Pueblo of Laguna v.

Assistant Secretary for Indian Affairs, 12 1.B.1.A. 80 (1983), is not to the

contrary. In Pueblo of Laguna, which did not involve a claim for damages,

the D terior Board of Indian Appeals rejected a claim that an administra-

tive decision should be set aside on the ground that it was tainted by

improper ex parte communications. 12 IL. B. LA. at 97. In any event, the

/

2. The Tribe argues (Br. 39) that “[tJhe Department

violated * * * its duty to supervise and limit negotiations

to prevent unfairness and overreaching,” citing 25 C.F.R.

211.2 (1985). See Resp. Br. 40-42. But as Judge Schall and

the Court of Federal Claims recognized, the text of that

regulation lends no support to the Tribe’s position. Pet.

App. 26a-27a n.5, 57a-58a. In pertinent part, the regulation

allowed the negotiation of leases as an alternative to com-

petitive bidding, “reserve[d]” to the Secretary the right “to

direct that negotiated leases be rejected,” and provided that

negotiated leases “shall be filed” with the Indian agency

within 30 days after negotiations were authorized, unless

that time was extended. 25 C.F.R. 211.2 (1985). It said

nothing about supervising negotiations. Moreover, the reg-

ulation did not refer to royalty adjustments under (or

amendments to) existing leases. It instead was addressed to

the negotiation of new leases, as an alternative to com-

petitive bidding for such leases. But even if Section 211.2

imposed procedural parameters that were somehow violated

by the Secretary, nothing in that provision can fairly be

interpreted as mandating monetary compensation. See U.S.

Br. 38-39 n.14.°

8. The Tribe argues (Br. 39) that “[t]he Department

violated * * * its duty to review and approve any proposed

coal lease with care to promote IMLA’s basic purpose and

the Navajo Nation’s best interests,” citing 25 U.S.C. 396a

Tucker Act does not provide a damages remedy for violation of the Due

Process Clause. See U.S. Br. 32.

5 Indeed, under the Court of Claims’ seminal decision in Eastport

Steamship Corp. v. United States, 372 F.2d 1002 (1967), on which this

Court has relied in its Tucker Act cases ever since (including in Mitchell

II, see 463 U.S. at 217, 223 n.23), the Tribe’s arguments (Br. 40-42)

regarding the actions of the Interior Department that the Tribe alleges

might have affected negotiations between the Tribe and Peabody sound in

tort, and therefore are beyond the scope of the Tucker Act for that

additional reason. See 372 F.2d at 1009-1011.

10

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

195, 200 (1985). See Resp. Br. 42-43. The breach of a gener-

alized statutory directive to act in the interests of the In-

dians would not support a damages claim under the Tucker

Act. Indeed, in Mitchell I, this Court held that the Indian

plaintiffs failed to state a claim for damages that was en-

forceable under the Tucker Act even though the plaintiffs

alleged a breach of trust under a statute that explicitly obli-

gated the United States to hold allotted lands “‘in trust for

the sole use and benefit of [Indian allottees].’” 445 U.S. at

541 (quoting 25 U.S.C. 348). In any event, the IMLA does

not specify the sort of duty urged by the Tribe. See U.S. Br.

37-39.

Section 396a of the IMLA states that a Tribe “may, with

the approval of the Secretary of the Interior,” lease unallot-

ted lands for mining purposes. 25 U.S.C. 396a. Nothing in

that provision specifically obligates the Secretary to deter-

mine, prior to approving a lease, whether a lease agreed to

by a Tribe and a private party is in the Tribe’s “best

interests,” much less that it maximizes the return to the

Tribe. Furthermore, the IMLA’s objective of promoting

Indian self-determination would be directly undercut by

requiring the Secretary to look behind every mineral lease

negotiated by a Tribe and a private party and determine

whether, in the government’s view, the agreement was in

fact in the Tribe’s best interests. See U.S. Br. 41-42 & 44

n.16. The Department underscored that objective when it

revised the IMLA regulations in 1996, and explained that

“consistent with the United States’ policy on self-determina-

tion, the Department has attempted to provide the Tribes as

much freedom as possible to make their own determination

on issues affecting the development of their minerals.”

56 Fed. Reg. 58,733, 58,735 (1991).

Section 396b of the IMLA addresses the public auction of

oil and gas leases by the Department, and reserves to the

— —Uñ44 ͥ ſdũ -

11

Secretary the right to reject the highest competitive bid for

an oil and gas lease when the Secretary shall determine

that it is unwise in the interest of the Indians to accept the

highest bid.“ 25 U. S. C 396b. The juxtaposition of Section

396a and Section 396b underscores that Congress did not

specifically obligate the Secretary to conduct an “interest of

the Indians” analysis in determining whether to approve a

coal lease that was negotiated and agreed to in the first

instance by a Tribe itself. That is especially true where, as

here, the royalty rate and other provisions of the lease

satisfied all applicable regulatory requirements.

The Tribe’s reliance on Kerr-McGee is also misplaced. In

that case, the Court held that the Navajo Tribe was

authorized to impose certain business taxes without first

obtaining the approval of the Secretary. 471 U.S. at 201. In

dictum, the Court stated that a “basic purpose” of the IMLA

is “to maximize tribal revenues from reservation lands,”

referring to a statement in a committee report accompany-

ing the passage of that 1938 Act. Id. at 200 (citing S. Rep.

No. 985, 75th Cong., Ist Sess. 2-3 (1937)). But in its subse-

quent decision in Cotton Petroleum Corp. v. New Mexico,

490 U.S. 163, 179 (1989), this Court recognized that the state-

ment in the same committee report referred to in Kerr-

McGee—which “happened to include the phrase ‘the greatest

return from their property’”—cannot be given “talismanic

effect.” The Cotton Petroleum Court therefore rejected the

argument “that the 1938 Act embodies a broad congressional

policy of maximizing revenues for Indian tribes.” Jd. at 179;

see U.S. Br. 42.°

6 Citing two decisions of the Interior Board of Land Appeals, the

Tribe claims (Br. 31-32) that “the Department itself * * * has ruled that

it is duty bound to maximize tribal revenues under IMLA.” But in

General Crude Oil Co., 18 I. B. L. A. 326, 329 (1975), the Board determined

that the Secretary properly rejected an offer for an oil and gas lease on

trust lands under the Act of August 21, 1916; the IMLA was not involved

at all. And in Robert L. Bayless, 149 1.B.L.A. 140, 150 (1999), the Board

12

As this Court explained in Cotton Petroleum, Irlead in

the broadest terms possible, the relevant paragraph [in the

legislative history] suggests that Congress sought to remove

‘disadvantages in [leasing mineral rights] on Indian lands

that are not present in applying for a claim on the public

domain., 490 U.S. at 179 (citing S. Rep. No. 985, supra, at

2: H.R. Rep. No. 1872, 75th Cong., 3d Sess. 2 (1938)) (latter

brackets added by this Court). That policy objective was

met here inasmuch as the 12 1/2 percent royalty rate ap-

proved by the Secretary under the 1987 lease amendments

equals the minimum rate set by Congress for coal mined on

federal lands. See 30 U.S.C. 207(a); U.S. Br. 5 n.4, 34.”

The Tribe refers (Br. 30) to a provision of the Indian

Mineral Development Act of 1982 (IMDA), 25 U.S.C. 2103(b),

which governs the Secretary’s approval of agreements for

the development of Indian mineral resources subject to that

Act. The lease in this case is not subject to the IMDA.

Moreover, Section 2103(b) of the IMDA only underscores

that Congress knows how to direct the Secretary to consider

specific factors in reviewing an agreement, and that it did

not do so in Section 396a of the IMLA. Compare 25 U.S.C.

396a (authorizing Tribes to enter into mineral leases “with

the approval of the Secretary of the Interior”) with 25 U.S.C.

merely noted that it was following a court of appeals’ holding that where

the Department “is faced with two reasonable interpretations of a

regulation, it must choose the one that better promotes the Tribe’s

interests.”

7 In response to the statement by Amicus Peabody Coal Co. (Peabody

Br. 26) that “a royalty rate of 125% * * * 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,” the Tribe points to a single fed-

eral coal lease with a royalty rate of 17.08 percent. See Resp. Br. 32 n.18

(citing Peabody Coal Co., 98 I. B. L.A. 317 (1986)); id. at 11 (same). But the

lease in Peabody Coal was “part of an experimental leasing policy tried by

the Department for a short time [in which] bidders were permitted to bid

for a higher royalty rate instead of submitting so large a cash bonus.” 93

1.B.L.A. at 320.

13

2103(b) (“In approving or disapproving a Minerals

Agreement, the Secretary shall determine if it is in the best

interest of the Indian tribe or of any individual Indian who

may be party to such agreement and shall consider, among

other things, the potential economic return to the tribe; the

potential environmental, social, and cultural effects on the

tribe; and provisions for resolving disputes that may arise

between the parties to the agreement.”). There is good

reason for Congress and the Secretary to distinguish

between the two statutes. The IMLA governs leases, which

can be expected to have more standardized terms and can be

measured against criteria of general applicability, such as a

minimum royalty rate tied to the minimum rate for federal

leases, while the IMDA authorizes a wide variety of joint

ventures and other arrangements for which a more

particularized evaluation is appropriate.

The Tribe points (Br. 26, 31) to language in regulations

promulgated in 1996, see 25 C.F.R. 211 (2001), more than a

8 The Secretary's regulations governing the approval of mineral

agreements subject to the IMDA similarly specify detailed procedures not

set forth in the IMLA or the IMLA’s implementing regulations. See 25

C. F. R. 225.22. For example, the regulations direct the Secretary to issue

“written findings” including an “environmental study” and “economic

assessment” of a proposed minerals agreement, 25 C. F. R. 225.22(b)(1), and

state that la] minerals agreement shall be approved if, at the Secretary's

discretion, it is determined that * * [tlhe minerals agreement is in the

best interest of the Indian mineral owner,” 25 C.F.R. 225.22(c)(1); see 25

C.F.R. 225.22(d) (specifying factors to take into account on t he question

of ‘best interest’”). Notably, with respect to the “economic assessment,”

the IMDA regulations further specify that the Secretary “shall address,”

inter alia, “[wJhether the production royalties or other form of return on

mineral resources is adequate.” 25 C.F.R. 225.23(b) (emphasis added).

Thus, the regulations do not require the Secretary to ensure that the

royalty rate or other form of return maximizes profits to the Tribe. A

fortiori that claim must be rejected here, where there is no statute or

that required the Secretary to undertake any economic analysis

of an IMLA lease beyond assuring that the royalty rate satisfied the

minimum specified by the Secretary’s regulations.

14

decade aſter the events at issue here. As explained in the

government’s opening brief (Br. 37-38), even if the current

regulations were applicable here, they would not support the

Tribe’s argument that the IMLA creates a free-floating

“best interest” standard, much less a requirement, enforce-

able in a damages action under the Tucker Act, that the

Secretary disapprove a lease unless he finds it would provide

the maximum return to the Tribe. The regulations in fact

refute that notion. They require only that a royalty rate be

at least equal to 12 1/2 percent or, if less than 12 1/2 percent,

that the Secretary determine that it nonetheless is in the

best interest of the Indians, 25 C. F. R. 211.43(b) (see U.S. Br.

45-46), which the Secretary has construed to mean that it

provides “adequate” consideration for the Tribe. 61 Fed.

Reg. 35,634, 35,646 (1996).

4. The Tribe suggests (Br. 43) that the Secretary vio-

lated an asserted duty to perform an independent economic

analysis before approving the lease amendments in 1987,

referring to internal agency manuals. See Pet. App. 24a, 58a.

But the internal manual provisions relied upon by the Tribe

(see Resp. C.A. Br. 55) do not suggest any such duty. One

provision (54 BIAM 604.05) applies only to new oil and gas

9 See also 61 Fed. Reg. at 35,645 (minimum royalty rate “may be

raised upon agreement of the parties to a lease” or “may be reduced upon

agreement of the parties and the findings of the Department that a lower

rate is in the best interest of the Indian mineral owner”) (emphasis added),

id. at 35,646 (the determination whether to approve a lease with “a lower

royalty rate” than the minimum rate specified in the regulations “will

require a higher level of analysis to assure that the tribe is receiving

adequate consideration”; “Tribes and industry are required to justify

proposed lower royalty rates for leases on a case-by-case basis”) (emphasis

added). Accordingly, even if the adjusted 12 1/2 percent royalty rate

included in the lease amendments approved by the Secretary in 1987 were

subject to the 1996 regulations, that rate would not trigger any duty on

the part of the Secretary to conduct a particularized best interest

determination because, even today, the royalty rate is equal to the

minimum royalty rate specified in the IMLA regulations. See 25 C. F. R.

211.43(a)(2) (2001).

15

leases; the other (130 DM 10.5) merely describes the

functions of the Department’s former Division of Energy and

Minerals Resources and does not purport to call for an analy-

sis in any particular circumstance. Moreover, those manual

provisions are for internal agency guidance only, were not

published in the Federal Register, and do not have the force

of a regulation. Cf. Morton v. Ruiz, 415 U.S. 199, 235 (1974);

Schweiker v. Hansen, 450 U.S. 785, 789 (1981). As such, the

manuals could not provide the basis for a claim founded on an

Act of Congress or implementing regulation, as required by

the Tucker Act. As explained above, the IMLA and regula-

tions implementing that Act do not require such an inde-

pendent economic analysis, in contrast to the IMDA and

regulations implementing that Act, which do impose such a

requirement for mineral development agreements.

5. The Tribe has not alleged a violation of the Depart-

ment’s regulation specifying the minimum royalty rate for

leases subject to the IMLA. That regulation is intended to

assure that Tribes receive what the Secretary has deter-

mined to be a “reasonable” return. See 56 Fed. Reg. 58,736

(1991) (minimum royalty rates are “helpful in providing

additional guidance to potential lessees while providing

reasonable royalty rates for lessors”) (emphasis added). It is

the sort of specific regulatory requirement that might be

interpreted as mandating compensation if the Secretary

approved a lease providing for a lower royalty without de-

termining that the lower rate still afforded the Tribe an

adequate return. The Court may therefore assume for pre-

sent purposes that a failure by the Secretary to ensure, prior

to approving a proposed lease, that its terms (or amend-

ments) comply with the regulation specifying the minimum

royalty rate to which the parties may agree would support a

claim under the Tucker Act. But in 1987, when the lease

amendments at issue were approved by the Secretary, the

12 1/2 percent royalty rate agreed to by the Tribe was well

16

in excess of the applicable minimum royalty rate. See U.S.

Br. 34, 38.

C. Principles Derived From The Common Law Cannot

Supply A Substantive Right To Damages Not Specified

By Congress

The Tribe argues that when, as here, Congress has not

prescribed either a specific duty or a damages remedy for

alleged breach of trust, “the character of the Government’s

trust duties should be explicated by accepted principles of

trust law as a ‘necessary expedient.’” Resp. Br. 37 (quoting

County of Oneida v. Oneida Indian Nation, 470 U.S. 226,

237 (1985)). That is incorrect. County of Oneida did not in-

volve a damages action against the United States or the

Tucker Act. The Tucker Act requires a plaintiff not suing

for breach of contract to point to the violation of an Act of

Congress or implementing regulation, and thus does not

authorize claims against the United States based on princi-

ples drawn from the common law. See U.S. Br. 46.

According to the Tribe (Br. 36), “Congress should be

understood to have imported established principles of trust

law” under the Indian Tucker Act. But the Indian Tucker

Act entitles Indian plaintiffs to the “same” rights and reme-

dies in suits against the United States as those enjoyed by

non-Indians, not more. Mitchell I, 445 U.S. at 539; see U.S.

Br, 22. Moreover, the Indian Tucker Act could not have

“imported” any common law trust principles enforceable

against the United States in a damages action such as this

because the Indian Tucker Act is merely a jurisdictional pro-

vision that did “not create any substantive right enforceable

10 By 1987, the Department's practice was not to approve IMLA leases

with royalties less than the minimum rate for federal coal (i. e., 12 1/2

percent). C.A. App. A1872. But as the Court of Federal Claims noted,

“there is no claim by the Navajo Nation that the 1987 approval of Lease

8580, with royalties of 12.5%, ran afoul of that policy.” Pet. App. 68a.

17

against the United States for money damages.” Mitchell II,

463 U.S. at 216; see Mitchell I, 445 U.S. at 538, 540.

The Tribe suggests (Br. 38) that reliance on trust law

principles “offers stability and predictability.” But just the

opposite is true. Holding that the United States may be

liable in damages for the violation of any duty discoverable

by a court in the “interstices” (Br. in Opp. 12) of the law of

trusts would turn the Court of Federal Claims into a court of

equity and leave federal officials without any clear principles

to follow—which specific statutory and regulatory duties

supply—in seeking to avoid damages actions in undertaking

a multitude of day-to-day actions affecting Indians and In-

dian resources.

D. In Alleging Generalized Breaches Of Fiduciary Duty,

The Tribe Mischaracterizes The Underlying Events

In alleging generalized breaches of fiduciary duty, the

Tribe attempts to put the Secretary’s conduct in the worst

possible light, often making assertions and drawing conclu-

sions that are both disputed and unsupported by the record.

For example, although the Tribe suggests (Br. 7) that the

Department “leaked” a draft decision on Peabody’s adminis-

trative appeal to Peabody and withheld it from the Tribe,

the record indicates that Peabody learned of the draft

decision from the Tribe. J.A. 99. The Tribe also asserts (Br.

7, 15) that Acting Assistant Secretary Fritz’s decision was

“final” in July 1985, but that is incorrect. See U.S. Br. 8 n.6;

J.A. 125.

11 Amicus NCAI argues (Br. 21) that there is “a long-established

tradition of requiring trustees to pay money damages for fiduciary

breaches.” But if anything the tradition is not to allow damages claims

when, as here, the trustee is sovereign. See 2 A. Scott, The Law of Trusts

§ 95, at 17 (4th ed. 1987) (“At common law it was held that a use or trust

could not be enforced against the Crown.”); Restatement (Second) of

Trusts § 95 (1959) (“The United States or a State has capacity to take and

hold property in trust, but in the absence of a statute otherwise providing

the trust is unenforceable against the United States or a State.”).

18

The Tribe asserts that it lacked knowledge of the Hodel-

Hulett meeting, but concedes (Br. 8) that it “did receive a

copy of Peabody’s July 5, 1985 letter to Hodel.” That letter

(J.A. 98-100) stated, inter alia, that “the Tribe has received

word of an imminent and favorable decision on the appeal,”

and has “suspended [negotiations] until the Department

ruled on the appeal of the Area Director’s decision.” J.A. 99.

The letter further urged the Secretary “to (1) assume direct

responsibility for this unusual royalty appeal case, and (2)

either postpone a judgement to allow for a voluntary settle-

ment or grant Peabody’s appeal of the Area Director’s deci-

sion.” J.A. 100. The Tribe also concedes (Br. 10) that it

subsequently learned that the Secretary preferred that the

parties resume negotiations. See J.A. 342-343 (testimony of

Michael C. Nelson). Accordingly, although the Tribe claims

(Br. 2) that it negotiated “at a decided bargaining disadvan-

tage,” the Tribe was aware that Peabody had affirmatively

sought the Secretary’s assistance to facilitate a mutually

agreed-upon adjustment to the royalty rate; that the Secre-

tary had concluded that the parties should resume negotia-

tions; and that the Acting Assistant Secretary’s decision on

reg pending appeal hald] not yet been finalized.”

A. 125.

The Tribe accuses (Br. 10) the Secretary of “forcing” it to

negotiate with Peabody by delaying a decision on the admin-

istrative appeal, but the Tribe had the ability to terminate

negotiations unilaterally at any time and could have sought

to compel the Department to decide the appeal by request-

ing that it be transferred to the Interior Board of Indian

Appeals. See J.A. 12, 122; U.S. Br. 35. The Tribe suggests

(Br. 41) that the negotiations “dragged out” for years. But in

fact the parties “quickly reached a tentative agreement” less

than a month after resuming negotiations in August 1985.

Pet. App. 42a. Although the tentative agreement was not

formally approved by the Tribe until 1987, after a political

19

change in the Tribe’s leadership, the agreement approved in

1987 was “essentially the same agreement” reached in 1985,

and included a provision for the payment of back royalties at

the increased rate of 12 1/2 percent, retroactive to February

1984. Pet. App. 42a; U.S. Br. 9-10.

The Tribe suggests (Br. 9) that the Secretary struck a

“deal with Peabody” in July 1985, and improperly thwarted

the issuance of a draft decision by his subordinate, Acting

Assistant Secretary Fritz. But in his memorandum to Fritz

in July 1985, the Secretary said that he “d[id] not necessarily

agree” with all the points in Peabody’s July 5 letter, but that

there would appear to be “significant advantages” to a

negotiated solution rather than a royalty adjustment

imposed on the parties, which would “almost certainly” lead

to protracted and costly appeals and impair the ongoing

contractual relationship under the lease. J.A. 117. The

Secretary therefore simply “suggest{ed] that [Fritz] inform

the involved parties that a decision on this appeal is not

imminent and urge them to continue with efforts to resolve

this matter in a mutually agreeable fashion.“ Ibid. At the

same time, the Secretary “assure(d]” Fritz that he hud not

made any decision on “the merits of the arguments of the

parties with respect to the issues which are subject to the

appeal.” J.A. 118.

Finally, the Tribe complains (Br. 11-12) that elements of

the package of lease amendments that it negotiated with

Peabody were unfair, but does not mention the “many

aspects of the renegotiated lease package” that the Tribe’s

counsel “conceded [in the Court of Federal Claims} * * *

are favorable to the Navajo Nation.” Pet. App. 50a. In

addition, although the Tribe objects to the Secretary’s ap-

proval of the lease amendments that the Tribe negotiated

with Peabody, it fails to acknowledge that its own Tribal

Council approved the amendments only after finding that

20

they were in “the best interest of the [Tribe].” C. A. App.

A2432-A2433.

Nor does the Tribe seek to set aside the lease amend-

ments approved in 1987. See Pet. App. 50a (“counsel in-

formed the Court that the Navajo did not wish to invalidate

the entire agreement.”). Rather, the Tribe seeks to hold on

to the “many aspects of the renegotiated lease package that

are favorable to the Navajo Nation,” ibid., and secure

damages from the United States for the Secretary’s refusal

to insist on an increase in the royalty rate well above what

the parties agreed to (from 12 1/2 to 20 percent), and far in

excess of the applicable minimum rate for leases subject to

the IMLA. Nothing in the IMLA, the Tucker Act, or this

Court’s decisions sanctions that damages claim.

R W

For the foregoing reasons and those stated in our opening

brief, the judgment of the court of appeals should be re-

versed.

Respectfully submitted.

THEODORE B. OLSON

Solicitor General

NOVEMBER 2002