Judge strikes down a trust claim in royalty suit

THURSDAY, JULY 3, 2003

The federal government doesn't have a trust responsibility to "maximize" oil and gas revenues for Indian beneficiaries, a federal judge ruled last month.

On June 9, Judge Emily C. Hewitt, a judge for the U.S. Court of Claims in Washington, D.C., ruled on a motion in a long-running case involving the Eastern Shoshone Tribe and the Northern Arapaho Tribe. Siding with the Bush administration, she dismissed one of the tribes' breach of trust claims.

Hewitt relied in part on the Supreme Court's ruling in U.S. v. Navajo Nation, decided this past March against the Navajo Nation. Department of Justice attorneys interpret the outcome to mean that the government has no fiduciary duty to "maximize" Indian royalties without specific statutory, regulatory, or contractual obligations.

Hewitt agreed on this point, concluding that the tribes cannot force the Department of Interior "to go contrary to and beyond" existing law to maximize their revenues.

At the same time, Hewitt said the government is not off the hook for other mismanagement claims. She cited the existence of numerous statutes and regulations governing the handling of oil and gas royalties, finding a fiduciary relationship that would give rise to money damages if breached.

"The court, however, agrees with plaintiffs that the discretion afforded the Secretary here is not so wide as to protect defendant from liability," Hewitt wrote.

The tribes, which share the Wind River Reservation in Wyoming, filed suit in 1979 to recover millions in missing oil and gas payments. They allege that the Minerals Management Service (MMS) failed to collect the proper amount for their trust assets.

MMS is responsible for monitoring the annual collection of $6 billion in royalties and fees for minerals produced from federal and Indian lands. It plays a significant role in Interior's role as trustee but its exact fiduciary obligations to tribes and individual Indians are sometimes in dispute.

In the ongoing Cobell trial, special trustee Ross Swimmer suggested that the agency has a limited fiduciary responsibility. When MMS collects payments from an oil company, he said last Thursday, it doesn't necessarily know that the money belongs to an Indian beneficiary. That determination lies with the Bureau of Indian Affairs (BIA) and the Office of Special Trustee (OST, he testified.

As head of OST, Swimmer has oversight over MMS. The agency, in late 2001, finalized a "re-engineering" project as part of the Clinton administration's trust reform blueprint. Swimmer testified that he considered the effort a success.

Get the Decision:
Shoshone v. U.S. (June 9, 2003)

Relevant Links:
Minerals Management Service - http://www.mms.gov