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Thursday, July 31, 2003

A federal judge on Monday cleared the way for the Osage Nation of Oklahoma to pursue its $2.5 billion royalty mismanagement claim against the United States.

In a ruling with implications for other tribes, Judge Emily C. Hewitt of the U.S. Court of Claims said "all funds" belonging to the Osage tribe are held in trust. Government attorneys raised statute of limitation defenses and argued that the tribe couldn't represent the interests of tribal members who ultimately received the oil royalties.

"The responsibility of the government is to the tribal trust fund account," Hewitt wrote in the 10-page decision.

The Osage trust is unique in Indian Country because Congress passed a specific law creating the trust. Under the 1906 act, royalties from the tribe's mineral reservation are passed onto "headright" owners.

But the department's administration of the trust is common to other tribes. The funds are held in an account that the government is charged with managing.

And like other tribes, the Osage Nation received a reconciliation from Arthur Andersen, whose accounting business was disbanded after the firm was convicted of one count of obstruction of justice. Although the General Accounting Office (GAO) has cited numerous problems with the effort -- noting that a complete historical accounting is "impossible" -- the Bush administration takes the position that the reports constitute a type of accounting.

Hewitt did not rule that the Osage report is or isn't an accounting. But she rejected the government's argument that the tribe filed its case too late to seek an historical accounting back to 1906. Congress, she noted, has passed laws that give tribes more time to pursue breach of trust claims.

The Osage case was filed in March 2000, well within the 1999 date that has been imposed by legislation introduced by Sen. Ben Nighthorse Campbell (R-Colo.) and signed into law by President Bush. The bill was written in response to concerns by tribes that their Arthur Andersen reports would be used against them in court.

The Department of Justice has lived up to those fears, arguing that the standard six-year statute of limitations starts ticking when a tribe received its report. For example, since the Osage Nation received its report in 1996, the government first subtracts six years to hit 1990 then another six because the 1990 Department of Interior appropriations act includes language that helps tribes.

The government then asserts that all historical accounting claims prior to October 1, 1984, are time-barred. This is the same date that was cited in the the Cobell case, which concerns individual trust funds.

But so far, judges in the federal district court and the claims court have not been receptive to this line of thought, establishing precedents that are already being applied in trust cases. Hewitt, for example, referred to a decision in the Eastern Shoshone Tribe's case that rejected the government's statute of limitations defenses.

Campbell's legislation, enacted into law in March 2002, gives tribes until 2005 to file mismanagement suits. It encourages settlement of tribal claims.

For individual Indians, the government has never provided any type of reconciliation or accounting. In the Cobell case, U.S. District Judge Royce Lamberth has ruled that the statute of limitations doesn't start ticking until an accounting is provided, or until the government repudiates the trust.

Arthur Andersen was paid $12 million for its reconciliation project, which only looked at transactions from 1972 to 1992. The firm found that $2.4 billion was unsupported by any type of documentation whatsoever. This represented 14 percent of the total value of the transactions examined. An undisclosed dollar amount of transactions were never looked at.

Arthur Andersen's report to the Osage Nation stated that the tribe was not paid at least $791,046.37. The tribe alleges the actual figure owed is at least $2.5 billion.

Get the Decision:
Osage Nation v. U.S. (July 28, 2003)

Related Documents:
S.1857 | Senate Report 107-138 | Senate Testimony | House Debate

Relevant Links:
Osage Nation - http://www.osagetribe.com

Related Stories:
Judge upholds ongoing trust relationship (04/29)
Bush strategy assumes no trust mismanagement (11/05)
Andersen reports cited in tribal trust cases (08/12)
Norton handed worst nightmare (7/25)
Trust accounting looms for tribes (3/20)
Bush administration bets on accounting (3/18)
GAO: Full reconciliation impossible (2/8)

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