# Reply Brief — United States v. Navajo Nation

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Reply Brief
- **Published:** January 1, 2003
- **Citation:** 537 U.S. 488

## Text

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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385014_0552%3A09. Public record. Not legal advice.