Judge rejects Osage Nation brief in Cobell case

Cobell

Friday, June 13, 2008

A federal judge on Thursday denied an attempt by the Osage Nation to enter the Indian trust fund lawsuit but the status of the tribe's hefty royalties remains at issue as the case heads towards final resolution.

The tribe filed a last-minute brief that claimed ownership of a valuable mineral estate in northeastern Oklahoma. According to data from the federal government, oil and gas royalties from the Osage Reservation could account for as much as 20 percent of the Indian trust.

The tribe supported the right of the Cobell plaintiffs to receive a judgment for the government's failure to account for the Individual Indian Money (IIM) trust. But the brief also accused the plaintiffs of trying to include tribal assets in their claim for $58 billion in restitution.

"Although the plaintiffs admit in their reply brief that the Osage Nation owns the mineral estate, they go on to argue that the income from the estate does not belong to the Osage Nation. They seek to turn the Osage Nation's ownership of the minerals into a meaningless fiction," attorneys for the tribe wrote in their May 29 motion.

Coming shortly before the trial that started on June 9, the brief raised a significant issue for Judge James Robertson. He is trying to decide how much money is owed to Indian beneficiaries for the government's failure to account and he has asked both sides in the case for their views on the Osage trust.

The Osage trust is unique because it was created by a separate act of Congress. Royalties from the reservation are distributed to individual tribal members based on a system of "headright" ownership.

The plaintiffs included the Osage headrights in their model for restitution due to their character as individual trust funds. But the Department of Justice, in questioning one witness, suggested it was wrong to do so.

Excluding the Osage revenues would in fact cut down the plaintiffs' claim for $58 billion significantly, economic expert Bradford Cornell acknowledged under cross-examination. "That's like about eleven-plus billion dollars?" asked John Warshawsky, an attorney for the government. "Yes," Cornell responded on Monday.

Cornell didn't testify whether or not he knows the Osage revenues are individual trust funds. But another plaintiffs' witness brought her experience to the table.

Mona Infield, a Bureau of Indian Affairs employee, spent more than a decade working on the Osage trust in Oklahoma. At one point, the tribe employed her directly to handle the royalties.

Infield, who now works in New Mexico, said it was clear to her that the Osage royalties are individual Indian trust funds. "It would be very surprising to me to hear that those were actually tribal trust funds," she testified on Monday in response to the tribe's assertions.

A witness for the government, on the other hand, testified that she excluded Osage royalties from IIM disbursement figures. Michelle Herman, of FTI Consulting, supported the view that headright payments aren't part of the system.

"There are some payments that are made directly from the tribal trust to owners of headrights, and that money would not be included," Herman said on Wednesday.

Robertson hasn't expressed views one way or another on the issue though his pre-trial order sought evidence on the inclusion of the Osage headrights in the plaintiffs' claim for restitution. He didn't explain why he rejected the Osage brief yesterday.

So far, Robertson has heard four days of testimony in what is turning out to be a quick-moving trial. The plaintiffs rested their main case on Wednesday and the government began calling its witnesses.

Testimony resumes Monday with more government witnesses and plaintiffs plan to call some rebuttal witnesses. The trial is expected to wrap up next week and Robertson has said he intends to issue a ruling later this summer.

Separately, the Osage Nation is suing the government in the U.S. Court of Claims for failing to account for an estimated $2.5 billion in headright royalties.

Relevant Documents:
Osage Nation Brief | Denial of Osage Brief