United States v. Navajo Nation – Oral Argument – December 02, 2002

Media for United States v. Navajo Nation

Audio Transcription for Opinion Announcement – March 04, 2003 in United States v. Navajo Nation

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John Paul Stevens:

The Court will hear argument in the case of the United States against the Navajo Nation now.

Mr. Kneedler.

Edwin S. Kneedler:

Justice Stevens, and may it please the Court:

In 1987, the Secretary of the Interior, at the request of the Navajo Nation and Peabody Coal Company, approved a package of lease amendments to two outstanding leases between the parties.

With respect to the lease principally at issue here, Lease number 8580, the amendments increased the royalty to be paid by Peabody from 37-and-a-half cents per ton to 12-and-a-half percent of the value of the coal, a more than six-fold increase in the amount of the royalty.

That new royalty level was the same as the standard royalty on Federal coal leases, and it was well in excess of the then regulatory minimum that the Secretary had prescribed for what a tribe and a coal company could agree to, which was then only 10 cents per ton.

The package of lease amendments also contained numerous other provisions that were of benefit to the tribe, including amendments to the other lease, that more… that approximately doubled the amount of the royalty and a substantial increase in payments for water use at the mines.

The Secretary’s approval of the lease package in 1987 fully complied with the Mineral Leasing Act and the regulations that the Secretary has prescribed to govern her approval of lease agreements under that act.

Because there was no violation of any act of Congress or regulation of an executive department, much less one that could fairly be interpreted as mandating the payment of damages by the Government, there is no cause of action in this case under the Tucker Act.

The Court–

Ruth Bader Ginsburg:

Is there some other possible cause of action?

Certainly it was unfortunate, to say the least, that the Secretary of the Interior at the time apparently had private conversations that… with representatives of Peabody Coal to try to discourage the approval of the 20-dollar rate.

Edwin S. Kneedler:

–It was unfortunate, Justice O’Connor.

Ruth Bader Ginsburg:

And is there any other remedy for the tribe potentially for this action?

Edwin S. Kneedler:

I think there… it… first of all, I–

Ruth Bader Ginsburg:

Is there a lawsuit now pending–

Edwin S. Kneedler:

–Not… not on that basis.

–to cover something else?

Edwin S. Kneedler:

There’s a… there’s a suit by the tribe against Peabody, but… but the… as a remedy against the United States, the only suit would be conceivably an APA action.

I… I should point out that there was no regulation or statute that barred that communication at the time.

Stephen G. Breyer:

It’s the APA action.

I mean, is this… is this a proceeding… was the proceeding supposed to be a proceeding required by statute to be decided on a record?

Edwin S. Kneedler:

No.

No, it was not.

Stephen G. Breyer:

Well, then that’s an informal adjudication.

Edwin S. Kneedler:

Right.

I’m… I’m not–

Stephen G. Breyer:

Ex parte communications take place all the time in those situations.

So what’s unfortunate about it?

Maybe it was unfortunate politically, but I mean, legally–

Edwin S. Kneedler:

–Right.

Stephen G. Breyer:

–is there any… is there any rule, regulation, or anything in the APA that forbids an ex parte communication–

Edwin S. Kneedler:

There was not and there was–

Stephen G. Breyer:

–in this circumstance?

Edwin S. Kneedler:

–There was not and there was not in the Secretary’s regulations at the time.

I did not mean to imply–

Stephen G. Breyer:

Would there be now?

Edwin S. Kneedler:

–No.

Stephen G. Breyer:

I mean, I don’t know any agency–

Edwin S. Kneedler:

No.

There’s–

Stephen G. Breyer:

–that ever forbids of something like that, but I might be wrong.

I want to find out about it.

Edwin S. Kneedler:

–No.

No, there’s… there’s not.

And… and I didn’t mean to imply that an APA suit would be successful.

All I meant to say is that that would be the avenue in which to test that because an argument that that was a… that that was a violation would be essentially–

Stephen G. Breyer:

Violation of what?

Edwin S. Kneedler:

–Of… of some… some standard of procedure of fairness… procedural fairness I suppose that a court would impose.

Again, we don’t think that a court could do that.

I… I simply wanted to say that if–

Stephen G. Breyer:

There are some D.C. Circuit cases that suggest when there’s a contest between a valuable privilege, that ex parte communications are not… not to be permitted.

Edwin S. Kneedler:

–But that is… that is not something, first of all, that… that appears in a statute or regulation, and under Vermont Yankee, which I think came after those D.C. Circuit decisions, it wouldn’t be proper for a court to impose that on a… onto an agency.

In any event, there was no restriction here.

Antonin Scalia:

The D.C. Circuit used to create its own APA before… before–

[Laughter]

Antonin Scalia:

–before Vermont Yankee.

Edwin S. Kneedler:

That’s… that’s correct.

And we–

[Laughter]

Edwin S. Kneedler:

We don’t think there’s any legal standard, but even if there were, that sort of thing is not something that would mandate the payment of… of damages for a violation.

Ruth Bader Ginsburg:

The APA suit that you’re… you’re envisioning as a potential… that doesn’t have any dollars attached to it.

That would be for declaratory injunction?

Edwin S. Kneedler:

To… or to set aside the… the Secretary’s subsequent approval of the lease or… or something of that nature.

Sandra Day O’Connor:

Well, the lease is now expired, I take it.

Edwin S. Kneedler:

The lease–

Sandra Day O’Connor:

We’re not still operating under that same lease, or are we?

Edwin S. Kneedler:

–We… we are.

The… the tribe and the… and the Peabody are still operating under that same lease.

It was amended in 1987.

This was 3 years after the… the communication that… that you’re referring to.

Sandra Day O’Connor:

And there’s been no application to set aside the lease.

Edwin S. Kneedler:

There has not.

And… and as I… as I pointed out, there are numerous aspects of the lease package that was approved in… in 1987 that are advantageous to the… to the tribe.

Sandra Day O’Connor:

And since the events, has the tribe obtained the authority to impose taxes that was not previously–

Edwin S. Kneedler:

It… well, the… this Court in 1985 in the Kerr-McGee case upheld the right of the Navajo tribe to impose taxes, but that’s without the Secretary’s approval.

And these lease agreement… the lease amendments in 1987 were negotiated and arrived at in… in the context of that decision.

Now, the… the tribe has waived its right to collect taxes with respect to coal that goes to the… a generating station in… in Arizona.

The rest of the coal, though, is subject to the… to the tax.

There’s an overall cap on that.

John Paul Stevens:

–Mr. Kneedler, just… could I just go back for a second to the Secretary’s private communications with the… the coal company?

Is it your position that did not breach any fiduciary obligation whatsoever?

Edwin S. Kneedler:

No–

John Paul Stevens:

They did not have a fiduciary obligation to the tribes?

Edwin S. Kneedler:

–It did not… it did not breach a legal fiduciary obligation.

There is a… there is a sense in which everything that the Secretary of the Interior does or, for that matter, everything the United States Government does with respect to Indians is… is of a fiduciary nature in a moral sense.

In a political sense–

John Paul Stevens:

So at least in that respect, it’s different from the Vermont Yankee situation.

Edwin S. Kneedler:

–Well, but… but it’s important to look at the context in which this communication occurred.

The… what… what the… what the Secretary was being asked to do or… or what… what the Interior Department was being asked to do was to make an adjustment under an existing… a term of the existing lease that said that the royalty amount that was then prescribed, which was 37-and-a-half percent, was subject to a reasonable adjustment by the Secretary after the 20-year anniversary of the lease.

John Paul Stevens:

Well, isn’t it… isn’t it… maybe I misunderstand the facts.

But wasn’t it fairly clear that had this conversation not taken place, that the adjustment would have been put into effect that the tribe wanted?

Edwin S. Kneedler:

I don’t think that’s clear at all because the… Peabody Coal Company… aside from this communication, Peabody Coal Company sent the letter to the Secretary of the Interior in early July of 1985 in… in which the representative of Peabody said, it appears that the tribe believes that there’s an imminent decision in its favor on appeal from the local BIA area directors setting the 20 percent rate.

John Paul Stevens:

Which was true, wasn’t it?

Edwin S. Kneedler:

Well, yes.

That was… that was true.

But that’s a subordinate official in the Interior Department.

The Secretary of the Interior… as a matter of constitutional law, and as a matter of the regulations in effect at the time, the Secretary of the Interior had the authority to take control of any matter that was then pending in the Department.

But my important… the important point is that in that letter, Peabody Coal Company requested the Secretary to assume jurisdiction over the matter, and to either rule in its favor or, failing that, to… to send the parties… request the parties to negotiate further, which is exactly what happened.

John Paul Stevens:

And that letter–

Edwin S. Kneedler:

That letter… that letter was… a copy of that letter was sent to the Navajo Nation.

And it… it subsequently is clear that… deposition testimony of Mr. Nelson, which is in the joint appendix in this case, makes it clear that he understood.

He was… he was a special assistant to the chairman of the Navajo Nation at the time.

It makes it clear that… that the Navajo Nation had understood that the Secretary preferred for them to go back to negotiate, which was a… a perfectly reasonable response by the Secretary of the Interior in that situation.

The… the increase of the royalty rate from… from approximately 1 percent or a little over 1 percent to 20 percent was unilateral by the area director.

It… there was not a… input by… by Peabody at that time, even though the area director communicated with–

John Paul Stevens:

–Did both the tribe and Peabody understand what was being considered, the increase that had been recommended by the junior people in the Department?

Edwin S. Kneedler:

–Yes.

That… that… the… the area director’s increase of… to 20 percent, an adjustment of 20 percent, was appealed by… was appealed by Peabody and the utilities that… that are served by Peabody.

And that appeal was briefed to the Assistant Secretary, and it was pending.

And then in… in July that was… that area director’s decision was in 1984.

The briefing was, I think, about 6 months later, and then in July of 1985, the… is… is when the Secretary requested the Assistant Secretary to put off deciding this and have the parties negotiate.

And they reached a tentative agreement within… within a month.

It was–

Ruth Bader Ginsburg:

If… if Fritz, the Assistant Secretary, had signed off on the 20 percent, would there have been a further… further recourse by–

Edwin S. Kneedler:

–The… the Secretary could have overruled that.

The… the Secretary under the… under the governing regulations that we quote in our brief the Secretary retained the authority to overrule any decision by… by the Assistant Secretary.

David H. Souter:

–Mr…. I’m sorry.

Ruth Bader Ginsburg:

There was… you mentioned in your brief another route, appellate route, that could have been taken in this case which would have rendered a final decision, one not subject to the Secretary’s–

Edwin S. Kneedler:

No.

Edwin S. Kneedler:

I believe that could have still been subject to the Secretary’s determination.

What… what the Navajo Nation could have done, if it did not want to continue with negotiations, was to request that the matter be transferred from this informal appeals process to the Assistant Secretary to a formal appeals process which goes to the Interior Board of Indian Appeals.

Stephen G. Breyer:

–Well, I think–

Edwin S. Kneedler:

At that point the Secretary could have assumed jurisdiction of the matter from the IBIA under the same regulation I referred to.

The Secretary always had it within his power to… to take… take cognizance of a case and not leave it with the… with the board.

Ruth Bader Ginsburg:

–Even if the court–

Edwin S. Kneedler:

There was a prohibition against ex parte contacts in that formal adjudication, but otherwise the Secretary retained the authority to… to take the case.

David H. Souter:

–Mr…. Mr. Kneedler, did the… was the Secretary’s approval required on the contract that included, or the… the revision that included the 12-and-a-half percent royalty rate?

Edwin S. Kneedler:

Well, there were two leases, and the Secretary’s approval was required.

But the reason was different for the two.

In the… under the lease principally at issue here, 8580–

Let’s just take that one.

Edwin S. Kneedler:

–the… the lease itself had a clause that said that the royalty was subject to a reasonable adjustment–

David H. Souter:

Right.

Edwin S. Kneedler:

–by the Secretary.

David H. Souter:

Right.

Edwin S. Kneedler:

As to that, we believe that there could be no claim under the Tucker Act for the… for the fundamental reason that that is not a… a duty that is prescribed by an act of Congress, or a regulation under the Tucker Act.

David H. Souter:

No, no.

I… I understand.

Wasn’t that also subject to the general statutory requirement that these leases be approved by the Secretary?

They… you know, it would be negotiated by the tribes, but ultimately didn’t it require the Secretary’s approval?

Edwin S. Kneedler:

It… it may well have and that was not… that was not addressed.

The basis of the claim here was–

David H. Souter:

Well–

Edwin S. Kneedler:

–that the Secretary had… had a duty under the lease.

David H. Souter:

–let… let me just assume and… and maybe I shouldn’t do this, but you just briefly at least assume that the Secretary’s approval was required as a… a matter of statute.

Would that approval responsibility… in your judgment… carry any duty toward the tribe, anything comparable to a fiduciary duty toward the tribe not to approve an amendment if that amendment was not as good as the… in the Secretary’s judgment, the tribe could have gotten?

Edwin S. Kneedler:

No.

There’s… in… in our view there is no duty under this statute to maximize returns to the tribe.

David H. Souter:

What… Tell… let me ask you… maybe it would be easier if I asked you kind of the converse question.

David H. Souter:

What responsibility does the approval responsibility include?

In other words, is it merely ministerial, or does it imply any duty at all toward the tribe?

Edwin S. Kneedler:

I don’t know that I would call it ministerial, but… but the statute is… is rather bare in its terms.

It just says that the… that the tribe, through its council… and this is… this is a statute of general application… may… with the approval of the Secretary… lease its land for coal purposes.

What the… what the preconditions for the Secretary to give his approval are then and now is a matter for the Secretary to flesh out by regulations.

So–

Sandra Day O’Connor:

–Well, is… does the United States, though, have some general duty of trust to the tribe?

Edwin S. Kneedler:

I think it would be fair to say that… that there is… that there is a… as I said, a general moral and political duty.

Sandra Day O’Connor:

Sure.

And so when the Secretary has to approve a lease, should that general duty be kept in mind as part of that process?

Edwin S. Kneedler:

Surely.

Surely, and again we’re not… we’re… we quite agree that as… that as a matter of what… what judgment should… should inform the Secretary in her approval of the lease.

Antonin Scalia:

No.

But suppose the Government has a general moral and political duty to the entire citizenry not to lease Government land at… at bandit rates I assume.

Edwin S. Kneedler:

Well–

Antonin Scalia:

But that… but that doesn’t–

Edwin S. Kneedler:

–Yes, but I meant–

Antonin Scalia:

–That doesn’t give rise to a cause of action.

Edwin S. Kneedler:

–That… that’s true.

Here there is–

David H. Souter:

Nor… nor is there any specific statute, is there?

I mean, I… I think the… the point that Justice O’Connor is… is raising is… is my point.

Once you get a specific statutory obligation, assuming that approval carries some obligation of care, inquiry, whatever, doesn’t that carry with it some of the duty that we normally have in mind when we talk about the trust duty, and doesn’t that take it out of the sphere of the merely moral and the merely political into the legal?

Edwin S. Kneedler:

–Well, that… let me answer it this way.

The Secretary… as I said, I believe it’s up to the Secretary to decide how to flesh out the regime for her approval of leases and she has done this in the regulations including, importantly, now and at the time this lease was… lease amendments were approved, a minimum royalty amount.

At the time, it was just 10 cents per ton.

Now, it’s 12-and-a-half percent, which is the standard rate of–

David H. Souter:

But a minimum… a minimum is a minimum.

Edwin S. Kneedler:

–No.

David H. Souter:

So there’s still something to argue about there, I would–

Edwin S. Kneedler:

Well, no.

And it’s important to understand why… why I… I think that’s not correct the way the Secretary’s regulations are written.

This act has a number of goals, one of which is revenue for the tribe, but another is tribal self-determination, and this is clear from the legislative history of the Indian Mineral Leasing Act as described in 1938 and described by this Court in its Cotton Petroleum decision.

So the… the point is that it is up to the tribe to enter into agreements subject to approval by the Secretary.

David H. Souter:

–Well, then I… I think the implication of your argument is that the approval is purely ministerial.

In other words, if the tribe is the responsible party, then the Government is not.

Edwin S. Kneedler:

Well, the… the… it’s actually something of a hybrid I… I believe.

And what the Secretary has chosen to impose on herself, which is not the same thing as to whether it’s… it’s legally enforceable, is a set of regulations that would govern the way in which she approves a lease.

And with respect to… again, with respect to royalty, there is a specific regulation that says 12-and-a-half percent.

What… the way the Secretary has… has accommodated these competing goals is that there is a… a minimum set of standards to which any agreement between a tribe and a lessee enter into, any… a set of standards that must be satisfied.

Beyond that… beyond those… satisfaction of those standards, it is up to the tribe and the… and the lessee–

Stephen G. Breyer:

Well, all right.

That’s, I take it, their argument… as I understand their argument, or part of it anyway, is that if you put… we hold property in trust for the tribe.

That by itself doesn’t do much for them.

That’s Mitchell I.

Edwin S. Kneedler:

–Right.

Stephen G. Breyer:

But when you get a whole lot of very detailed rules and regulations about how the Government needs to behave, well, then, you find that there is a specific duty for the Government even if it isn’t quite in those rules and regulations to behave like a trustee of a trust, i.e., use prudent care, reasonable care, whatever the standards are.

So they’re saying whatever the details of the regs are here, there certainly was a highly detailed set of something that governed how the Government would behave in this particular lease complexity, a very complicated situation.

And therefore, regardless of what they said, there was also, because of that complexity, an obligation for the Government to use reasonable, prudent care no matter what the regs said.

Edwin S. Kneedler:

Well–

Stephen G. Breyer:

And that’s what they didn’t do here.

You see, it’s just like Mitchell II.

Edwin S. Kneedler:

–But it’s… it’s not just like Mitchell II.

Stephen G. Breyer:

All right.

Now, what’s your response to that?

Edwin S. Kneedler:

And I… and I think the important difference is in Mitchell II the Court recited a number of specific statutory duties… statutory and regulatory duties that were directed at assuring a particular amount of income for the tribe under the circumstances.

Fair market value for a right-of-way.

Sustained yield management of… of timber harvest.

Specific statutory directives to take into account the financial needs of the beneficiaries whose allotments were going to be logged off.

Stephen G. Breyer:

I see where you’re going.

Stephen G. Breyer:

I see where you’re going with that.

But that reads Mitchell II very narrowly.

And it is as if in that forest filled with Government foresters that the tribe members had to stay out of, one day a forester working for the Government introduces some termites into the trees, and lo and behold, there doesn’t happen to be a particular anti-termite regulation.

I think you’d read Mitchell II as even though there’s no anti-termite regulation, still there was a duty of care there for the Government not to behave that way.

Edwin S. Kneedler:

I… I… I don’t think so.

I mean, again, there may be… there may be a tort action.

The… the Tucker Act does not cover the entire universe–

Stephen G. Breyer:

So if I think–

Antonin Scalia:

–Termites are good for trees.

[Laughter]

Antonin Scalia:

You know, they’re… they’re not good for houses, but they’re good for trees.

[Laughter]

Stephen G. Breyer:

No.

These are bad anti-tree termites.

[Laughter]

Edwin S. Kneedler:

–But the–

Stephen G. Breyer:

If… if I read Mitchell II somewhat more broadly and thought that there was an obligation there to behave like a trustee even if I couldn’t pin it to a particular reg, this particular action, would I then have to decide against you here?

Edwin S. Kneedler:

–Well, no, because we… we think that there was… that the Secretary’s approval of the… of the lease amendments in 1987 satisfied a duty of reasonable prudence.

The standard that was articulated in the documents presented to the Secretary for approval was… was whether the lease package could be regarded as a reasonable exercise of… of business judgment.

This was set forward–

David H. Souter:

Well, but that… that argument sort of takes the lease terms simply in the context of the… the 12-and-a-half percent minimum that the Secretary had taken.

But it seems to me that they have a stronger argument and it is closer to the termite argument.

And the stronger argument is whatever your obligations as a trustee may be under the approval responsibility, you at least have an obligation not to skew the bargaining process in a way that hurts us when you know that is what it will do.

And as I understand the argument about the ex parte communication, it’s not that the ex parte communication was per se unlawful.

It… it clearly wasn’t.

The argument is that the ex parte communication resulted in action by the Secretary that, in effect, induced the tribe to take a different negotiating posture from the one it would have taken.

And therefore, their argument is like the termite argument: You’re not supposed to introduce bad termites into the forest, and you’re not supposed to take action as a minimum that hurts us as negotiators.

What is your response to that?

Edwin S. Kneedler:

–Well, several things.

The… the termite example is different, first of all, in that it has an immediate physical impact on the… on the trees… the substance of the trust.

Edwin S. Kneedler:

What you’re describing is a procedural… is… is at bottom a procedural–

David H. Souter:

It makes trees less valuable.

This makes coal less valuable under the contract.

They get hurt.

Edwin S. Kneedler:

–Well, the… the… secondly, the… there is no indication that the substance of the communications was any different from the… from what the tribe knew anyway, which was that Peabody had requested the Secretary not to act and to allow the parties to return to negotiations.

But beyond that, when they… then the… this… this… these are all things that happened in 1984 and 1985.

That was superseded by the parties’ lease agreement in 1987.

In 1987, as part of the lease agreement that was submitted to the Secretary and that the Navajo Nation requested that the Secretary approve, the area director’s decision that initially established a 20 percent rate unilaterally was vacated and Peabody’s appeal was dismissed.

That wiped the slate clean for everything that happened up until then.

The question then is what is… was the 1987 lease amendment package proper?

And under Mitchell, as we see it, unless there is a violation of a specific statutory or regulatory provision in the approval of the lease, there cannot be a claim for money damages under the Tucker Act.

And–

Ruth Bader Ginsburg:

Mr. Kneedler, you had started to explain that the… the responsibility, or the authority came out of the lease itself with respect to… to the main lease–

Edwin S. Kneedler:

–Right.

Ruth Bader Ginsburg:

–that we’re talking about.

But then you said that there was also Secretary approval involved in the one where it wasn’t a term of the lease.

I think you started to say that.

Edwin S. Kneedler:

Yes.

In… in 1987, what the parties presented to the Secretary was not a proposal to adjust the royalty under the… Article VI of the existing lease.

It was a set of new amendments that, among other things, superseded that clause of the lease and put in place another dispute resolution mechanism for adjusting the royalties in the future.

As part of that, the… the controversy with respect to the 1985… 1984 to 1985 adjustment was… was eliminated.

But that 1987 package provided well in excess of the minimum royalty rate both for the 8580 lease and also the other lease with… for the Navajo with respect to coal it owned jointly with the Hopi Tribe.

And that satisfied the specific regulatory standard that the Secretary had prescribed for deciding when she would approve lease agreements.

Anthony M. Kennedy:

What I can’t quite understand with reference to your position as to the correct reading of Mitchell II is this: It seems to me you say that even if there’s a breach of a fiduciary duty, there still has to be some specific statute or regulation which we violate, and that specific statute or regulation must imply that there is a cause of action for damages.

That makes the fiduciary component quite irrelevant.

Either there’s a specific statute, or there isn’t.

Edwin S. Kneedler:

No, I don’t think it does because it… the fiduciary… the important discussion in Mitchell II of the fiduciary responsibility had to do with whether the specific statutory or regulatory duty… which is prong one… could in turn be fairly interpreted to requirement… require the payment of compensation.

That’s where the fiduciary obligation comes in.

But this case fails at the first step because there is no specific statutory or regulatory provision that was violated.

There’s no need to get to the second step in the analysis on that theory.

Edwin S. Kneedler:

And this specificity requirement was reflected in Testan and Sheehan, both of which were decided prior to… to Mitchell.

Both say that there has to be a right granted with specificity.

It’s also confirmed by things that have happened since then.

That’s the way the Federal Circuit in the Brown and Pawnee decisions that we… that were cited in the decision below looked at Mitchell… Mitchell II.

There had to be a specific provision that was violated.

And that’s also entirely consistent with last year’s decision in the Gonzaga case under… under the very parallel situation of 1983 where the Court said there has to be a… a right granted with specificity… an entitlement granted with specificity… where the question is whether a… a… another Federal statute gives rise to a cause of action under a general cause of action creating a statute, in that case 1983.

But we think the analysis is directly parallel.

If I may, I’d like to reserve the balance of my time for rebuttal.

John Paul Stevens:

Mr. Frye.

Paul E. Frye:

In listening… Mr…. Justice Stevens, and may it please the Court:

In listening to the Government, it’s clear that the Government has not come to terms yet with the basic principle established in Mitchell II, that where Congress gives the Federal Government control of Indian property, that control necessarily implicates trust duties.

And violations of trust duties, when the Government is exercising responsibilities, within the contours of those statutes and regulations, gives rise to a claim for money damages in the Court of Federal Claims.

That’s what’s missing.

Ruth Bader Ginsburg:

Mr. Frye, the Government has stressed that this is not a control situation like Mitchell II.

Rather, like Mitchell I, one of the objectives of this legislation of IMLA was to give the tribe the management and control authority, and the Government had just a secondary role of approving at the end of the road.

But unlike the… the United States was running the timber operation.

Here, it’s the tribe that’s negotiating the lease.

It seems to me that’s quite different.

Paul E. Frye:

That’s a two-part question.

One, after the Navajo tribe signed the coal lease in 1964, it had absolutely no control over anything.

I’d like to read you one… just one regulation, one operating regulation, that the Secretary has.

It empowers… and this is at page 44 of our lodging.

This is BLM’s responsibility, not even BIA who has the principal responsibility.

BLM has the responsibility to, quote, oversee exploration, development, production, resource recovery and protection, diligent development, continued operation, preparation, handling, product verification, and abandonment operations.

Antonin Scalia:

Oversee.

What does oversee mean?

Did it do that or oversee it?

I mean–

Paul E. Frye:

Oh, the Secretary doesn’t mine coal anymore than the BIA cuts timber, but BIA sells timber to private timber companies to do the timber-cutting.

The BIA oversees that timber production in the same way it oversees the coal operation.

Antonin Scalia:

–I’m not sure that that’s anything more specific than the general trust responsibility that the United States has.

It has to oversee the disposition of all the lands that it holds in trust, but I’m not sure that that’s the kind of control that… that we were talking about in Mitchell II.

Paul E. Frye:

Well, Mitchell II control is absolutely parallel.

The same–

Ruth Bader Ginsburg:

What… what about–

Paul E. Frye:

–Yes, the second part of your question.

Ruth Bader Ginsburg:

–The purpose of IMLA was to help the Indians exercise their own sovereignty.

Paul E. Frye:

IMLA has come before this Court several times.

In the first case, in the Poafpybitty case in 1968, the Government looked at IMLA and said this statute imposes trust responsibilities and trust duties on the Government.

It said that three times in that decision.

Sandra Day O’Connor:

Does it waive sovereign immunity in the statute for purposes of monetary damages against the Government?

It doesn’t do so expressly.

Paul E. Frye:

It doesn’t do so expressly just as the… the timber statutes didn’t do so expressly in Mitchell II.

But it has that same overlay of comprehensive Federal control and regulation.

Stephen G. Breyer:

That’s true, but… but the Government had a good response to my question, which was that if, in fact, I was agreeing with you for the purposes of interpreting Mitchell II hypothetically, they said, you know, this is a procedure, and it’s a procedure that you’re complaining was violated.

And that’s significant for two reasons.

First, it would read this trust responsibility as creating procedures in identical circumstances where a party is an Indian tribe that do not exist in respect to anyone else, and secondly, it would be finding a… money damages, $600 million in fact, for a violation of this… one of these procedural regulations.

And I cannot even think… though there may be some, I cannot think of an instance where a private person who really has been badly hurt can recover money damages from the Government where what the Government did was not follow the right procedure.

So it’s new procedures, plus the money damages, and you’d have to overcome all those hurdles.

Paul E. Frye:

Okay.

We are not complaining, Justice Breyer, about any procedural problem.

What we are complaining is… is about the Secretary colluding with Peabody Coal Company to swindle the Navajo Nation.

That’s what this case is all about.

Stephen G. Breyer:

That’s… that’s… tell me a little bit less pejoratively and–

Paul E. Frye:

I will tell you.

Stephen G. Breyer:

–more specifically.

Yes.

Paul E. Frye:

Yes.

The… the memorandum that Secretary Hodel hand-delivered to Fritz, every word of that was penned by Peabody’s lawyers in… in the administrative appeal, and that’s shown in the joint appendix–

Stephen G. Breyer:

Again, that’s… you know, in a particular context, that might be terrible, but when you’re talking about administration, it’s a very common thing for parties to submit proposed findings, et cetera.

Stephen G. Breyer:

So I don’t know about this circumstance, but that… that in and of itself is… is not obviously it.

Paul E. Frye:

–That wasn’t my entire answer.

Following that, the Secretary of the Interior basically instructed his subordinate to lie to the Navajo Nation so it would not know what went on.

The… and that subordinate was the last person that the Navajo Nation would have expected to deceive it.

That person had worked with Navajo Chairman Peterson Zah on the reservation and had named his son Peterson Zah Vollmann.

After that, the negotiations were skewed, as Justice Souter mentioned.

The Navajo Nation thought, because of these odd communications coming from Washington, that its trustee thought that the 20 percent figure was vulnerable on the merits.

We’re talking about a breach of trust.

And the… the question is whether the–

Antonin Scalia:

Maybe he did think it was vulnerable on the merits.

I mean, couldn’t the Secretary think that?

Paul E. Frye:

–The record… the record shows absolutely no consideration by the Secretary.

The standard that was at play here–

Antonin Scalia:

Well, isn’t… isn’t that… isn’t that was… isn’t that the representation that Peabody made to the Secretary, that that was just an enormous increase in the… in the fee?

Paul E. Frye:

–Peabody actually… the letter that Peabody wrote to Secretary Hodel that was mentioned by my brother Kneedler actually didn’t get to Hodel’s office.

The record shows that that… that that letter was routed directly to Fritz, code 200 on the document, and that Fritz gave it to his solicitors who were working on his opinion, and those–

Antonin Scalia:

No. I understand that.

But… but don’t you think in the ex parte… the… the oral ex parte contact, the same point was made?

What–

Paul E. Frye:

–We have no idea what was made.

Antonin Scalia:

–Well, what do you guess they made?

I mean, why wouldn’t they have made the same point that was in their letter?

My goodness, all of a sudden, you’re… you’re upping our… our cost 20 times?

I mean, you know, that’s incredible.

Paul E. Frye:

That’s… that’s not the context of this discussion.

The… the royalty rate was upped to 20 percent a year before.

We had had extensive briefing, studies done by the Department of the Interior, all of which said that 20 percent was the right number.

The Secretary of the Interior had no basis for saying it was the wrong number.

Sandra Day O’Connor:

What is the number today?

Paul E. Frye:

The number today–

Sandra Day O’Connor:

Today.

Paul E. Frye:

–is less than the Federal minimum of 12-and-a-half percent.

And we proved that, and that’s in our proposed finding of fact number 315 that it was–

Sandra Day O’Connor:

What… has the tribe asked to set aside this lease?

Paul E. Frye:

–We have not.

We didn’t learn about this until discovery in this case.

Sandra Day O’Connor:

Well, you know about it now.

I mean, does the tribe want out from under this lease?

Paul E. Frye:

We have sued Peabody, and there are aspects of that that deal with reformation of the lease.

But we don’t have any ability to get past damages from the Government for breach of trust for the time period for which this activity was concealed.

Antonin Scalia:

I don’t… I don’t understand what the breach of trust consists of.

Number one, it… you… you acknowledge it doesn’t consist in the… in the ex parte contract.

I… contact.

I assume that any trustee does… does not have an obligation to call in the… the cestui que trust whenever… whenever a lessee wants to talk about something.

I’m sure many trustees deal ex parte.

Paul E. Frye:

No… no trustee has the ability to be disloyal, actively disloyal to the… to the beneficiary.

Antonin Scalia:

I’m not… I’m not talking about actively… I’m just talking about the ex parte… receiving ex parte presentations–

Paul E. Frye:

The Secretary–

Antonin Scalia:

–from somebody who wants… who wants a lease altered.

Can… can an ordinary trustee do that?

Paul E. Frye:

–The… the Secretary and any ordinary trustee can receive all the communications he wants.

Antonin Scalia:

Absolutely.

Paul E. Frye:

If the question is what the Secretary did in response to that–

Antonin Scalia:

All right, and so… so then you… you’re down to what the Secretary did in response.

That depends on what the Secretary’s obligation is, I… I presume.

Paul E. Frye:

–Yes.

Antonin Scalia:

And as I read the statute and regulations, the Secretary’s only obligation was to assure that a very low minimum was… was complied with.

And after that, the negotiation was up to the tribe.

Is that a fair representation of… of what the statute and regs require?

Paul E. Frye:

The statutes and regulations did require minimum royalty rates, and as this Court held–

Antonin Scalia:

Which are very low.

Paul E. Frye:

–Very low.

Absurdly low.

I mean, the… the Government would say to this Court if we had approved… if we had misled the Navajo Nation so badly that it would have taken 11 cents a ton, we could approve the 11 cents a ton because the minimum royalty rate was 10 cents a ton even though we knew it was worth $4 a ton in royalty.

Stephen G. Breyer:

Yes, but… I’m actually having exactly the same problem.

Paul E. Frye:

Okay.

Stephen G. Breyer:

What precisely is it that breached the trust, without any characterization?

Paul E. Frye:

Yes.

Stephen G. Breyer:

Who said… what is the act that’s supposed to be the breach of the fiduciary duty?

It’s not, you’re saying now, the procedure of ex parte communication.

It is… and then you said there was a misrepresentation.

What was that?

I mean, are there other things too?

Paul E. Frye:

Yes.

There are a variety of things that led the tribe to accept Peabody’s proposed package of… of lease concessions from our standpoint, and the… the breach–

David H. Souter:

Well, would you–

Paul E. Frye:

–the culminating events of the breach–

David H. Souter:

–Can I interrupt you, sir?

Could… could you specify what the variety is because I want to know the same thing Justice Breyer wants to know.

Paul E. Frye:

–Yes.

The culminating event was the approval of a lease for a less than 12-and-a-half percent royalty rate where the tribe gives up… has a negative bonus of $89 million in back–

David H. Souter:

All right.

But that’s… that’s a lease that the… that the tribe at that point had agreed to.

Would you specify what the Government did or said, number one, that led the tribe to act differently from the way it would have acted otherwise?

Paul E. Frye:

–But for the Secretary’s intervention, 20 percent would have been slipped in as the new royalty rate.

David H. Souter:

What intervention?

Precisely what?

Paul E. Frye:

The… the memo that Peabody’s lawyers wrote that Secretary Hodel signed telling the deciding official to stop action.

Antonin Scalia:

Well, now wait a minute.

When… when the Secretary exercises his authority to approve leases, is it your… is it your contention that the only obligation… not to approve leases, but to… but to… to give effect to that provision of the lease which allows him to increase the lease rates… that’s what we’re talking about here.

Antonin Scalia:

When he… when he approaches that obligation, is it your contention that his only duty is to the tribe?

Paul E. Frye:

Yes.

That… that is the–

Antonin Scalia:

He should raise it… he should raise it 5,000 percent if he can get away with it?

Paul E. Frye:

–The–

Antonin Scalia:

Surely–

Paul E. Frye:

–The key modifier is if he can get away with it.

Antonin Scalia:

–I just don’t read it that way.

It seems to me that no… anybody would be crazy to enter into a lease like that.

One would expect that the… that the Secretary would act fairly.

Sure, take into account what’s fair for the tribe, but also what’s fair for the coal company that entered into a lease at a much lower rate earlier at arm’s length.

You think he… you think the Secretary couldn’t take into account what’s fair for the coal company at all.

Paul E. Frye:

What the Secretary had to take into account is provided by the language of Article VI of the lease.

The adjustment had to be reasonable.

And to–

Antonin Scalia:

Okay.

Paul E. Frye:

–And to find that out, the Secretary’s–

Antonin Scalia:

And reasonable doesn’t mean whatever will give the tribe the most money.

It also certainly includes what… what’s fair for the… for the person who… on the other side of the lease who… who is suddenly getting socked with a 20-fold increase.

I don’t think that’s unreasonable at all for the Secretary to take that into account.

Paul E. Frye:

–The Secretary can’t doff his trust responsibilities by donning the mantel of an administrator.

If it’s reasonable, that means I think necessarily that the Secretary can’t set it so high as to bankrupt the operation and stop the coal mining.

Stephen G. Breyer:

But that may be, but there must be a statute… there must be a statute that turned over to the Secretary or his office the job of interpreting that word reasonable in the lease.

What… what’s that statute?

Paul E. Frye:

That would be the Indian Mineral Leasing Act.

Stephen G. Breyer:

And it gives the Secretary… and you’re saying that that statute, when it gives the Secretary the power to decide what is or is not reasonable under the lease, means that the Secretary must really just take the Indians’ point of view into account?

Paul E. Frye:

Absolutely not.

He needs to exercise independent judgment to make sure that whatever the royalty rate that he is going to substitute for the original one is reasonable.

Stephen G. Breyer:

Is fair, in other words, to everybody.

Paul E. Frye:

I think fair is not a bad characterization.

Paul E. Frye:

Fair and reasonable.

Stephen G. Breyer:

Okay.

Then… well, but then what’s the… the breach here?

He was doing apparently what he thought was fair, I guess.

I mean, maybe it was… maybe he was wrong, but–

Paul E. Frye:

The Secretary was not doing what he thought was fair.

The… Peabody sent his best friend in there with his pocket full of Peabody’s money and… and it was… and that’s in the records.

It’s $13,000 for a couple of hours of work.

And he says, my clients have learned that there is a decision coming down that’s going to hurt them.

Put a stop to it.

And the Secretary did.

There was no independent judgment.

Antonin Scalia:

–That $13,000 didn’t go to the Secretary, did it?

Paul E. Frye:

Oh, there’s no… absolutely–

Antonin Scalia:

That was… that was for the lobbyist.

Paul E. Frye:

–It was for the lobbyist.

And frankly, he was underpaid for this… this bit of skullduggery.

[Laughter]

Antonin Scalia:

I agree with you.

[Laughter]

Paul E. Frye:

I’d like to get back to Justice Ginsburg’s question about the second purpose of the statute.

Here, the Department of the Interior thwarted both purposes of the statute.

It thwarted our independent ability to have a… to exercise our self-determination in an informed way.

It disinformed us so that we couldn’t exercise informed self-determination.

And… and that’s what the judge in the Court of Federal Claims said.

He said, a negotiator’s weapon is knowledge.

And unaware of these things, the Navajo Nation was without critical knowledge, and in fact, the record shows that the Secretary was giving this knowledge and more to the people who were negotiating against us.

So we didn’t have that ability–

John Paul Stevens:

May I just interrupt?

Mr. Kneedler said that this really was all contained in the letter that was sent to the Secretary with copies to the tribe earlier.

Paul E. Frye:

–The… the request was… was included in that letter, and… and the tribe did get a copy of that letter.

But we didn’t know that the Secretary had acted on Peabody’s request.

In fact, the Secretary told us the opposite.

John Paul Stevens:

But didn’t you know that at least… didn’t you know at least it was a possibility as long as the letter was on the table?

Paul E. Frye:

I guess that… it certainly would be a possibility.

But there… there was sort of a law of the case that developed in this administrative procedure.

Peabody made the same request of Secretary Clark, and Secretary Clark said to his Assistant Secretary Fritz, what should I do with this?

So Fritz asked everybody, do you want me to stay this so you can negotiate?

The Navajo Nation said no.

Fritz then wrote everybody saying, we’ve gotten your letter.

You wanted us to set aside this procedure so you can negotiate.

Not everyone wants to negotiate.

So we’re going to continue.

That was kind of the law of the case here.

Getting back to Justice Breyer’s question, the culminating event was the approval of a lease at sub-12-and-a-half percent rates when every Federal study said the royalty rate ought to be 20 percent.

There was no other Federal study.

And that was a breach of the duty of care.

This Court has said in the Kerr-McGee case that the basic purpose of the Indian Mineral Leasing Act–

Antonin Scalia:

Excuse me.

Paul E. Frye:

–was to maximize revenues.

Antonin Scalia:

It wasn’t… it… more precisely it wasn’t the approval of a lease.

It was the approval of… of the… the raise of the figure that was contained in a lease that had already been concluded.

Paul E. Frye:

That is incorrect, sir.

Antonin Scalia:

That is incorrect?

Paul E. Frye:

Yes.

Antonin Scalia:

Why?

Paul E. Frye:

Volume II of the joint appendix in this Court includes both the original lease and these coal lease amendments, and they’re virtually totally different documents.

There’s new tax waivers.

There’s a new dedication of 90 million tons of coal.

There’s a… for the north lease and for the other lease another 180 million tons of coal, all without a competitive bid.

Paul E. Frye:

So we not only didn’t get the Federal minimum, we certainly didn’t get 20 percent.

We didn’t get the Federal minimum of 12-and-a-half percent, and we had to pay a bonus to the companies of $89 million to get what we got.

Ruth Bader Ginsburg:

But you got a severance tax as part of the package, and one of the things that the Government suggested is if… if you take the 12 percent and you add the 8 percent, then you get up to the 20 percent, which was your figure.

Paul E. Frye:

Justice Ginsburg, we had the tax before all of this happened.

And as… as my brother Kneedler mentioned to the Court, we can’t tax 60 percent of the coal because it goes to the Navajo generating station which has a tax waiver in the plant site lease.

So we’re capped at the 12-and-a-half percent royalty level for 60 percent of the coal.

And before we entered into these lease amendments, we were not restricted in the amount of taxes that the Navajo Nation could impose.

Stephen G. Breyer:

And as I understand it now, it’s… what you’re saying, it’s just as if the trees in Mitchell where the money from the tree was supposed to go to the Indians, if the Government had cut it down and sold it for a half a cent a tree.

Paul E. Frye:

That’s correct.

Stephen G. Breyer:

All right.

And all this other stuff with the procedures is just evidentiary of what was going wrong.

But what was going wrong is it’s like selling the trees at too low a price, if they were supposed to go to the… the tribe, if the proceeds had been.

That’s… that’s the… basically the argument.

Paul E. Frye:

I think that’s right.

The damage-causing activity finally was the approval of these damaging lease amendments.

Antonin Scalia:

Was the price above the minimum that the Secretary’s regulations provided for?

Paul E. Frye:

Yes.

Antonin Scalia:

Well, it seems to me the problem then was with the Secretary’s regulation, not with what went on here.

That regulation was invalid as arbitrary, capricious–

Paul E. Frye:

No.

The regulation only set a minimum royalty, and as this Court–

Antonin Scalia:

–But that’s… but that’s the point, I mean, in order to leave full negotiating authority to the tribe.

And what you’re saying is that minimum is so low that it… it produces, you know, highway robbery.

It seems to me that the problem is… is with the regulation and maybe you can get at it when the regulation is applied this way.

I don’t know.

Paul E. Frye:

–The… in Mitchell II, for example, there was a claim… the Mitchell II claims did not track, by the way, specific statutory and regulatory provisions.

There was a claim, for example, that was upheld for the failure of the Department of the Interior to… to develop a system of roads and easements conducive to timber harvesting.

There was no statute that required that.

There was no regulation that required that.

That was part of the trust duty.

Paul E. Frye:

And there was one other claim that was upheld in Mitchell II, and a statute said, you… if you’re going to deposit these monies into the Federal Treasury, the Federal Government has to get at least 4 percent.

It was a minimum 4 percent rate.

And the allottees and tribe in the Mitchell case said, just by turning around you could have gotten 8 percent, and the court below said, yes, you can’t be satisfied as trustee with the minimum rate.

You have to at least strive for the ceiling.

And that was upheld.

That claim was upheld here.

So there were several claims in Mitchell II that were not tracking any specific–

Antonin Scalia:

There was not in Mitchell II a statute that… that sought to place the negotiating power in the hands of the Indians rather than in the hands of the Government.

I mean, that’s what distinguishes this case.

You have here a scheme that is meant to… meant to place the tribe in… in charge of its own fate, and… and it effectively tells the Secretary, we don’t want you to negotiate these leases.

That’s quite a bit different.

Paul E. Frye:

–Actually that’s incorrect.

The statutory scheme in Mitchell II, section 406(a), said that the… the Indians could… or could sell their timber with the consent of the Secretary.

It’s the exact same structure as we have here.

What we have here is the Indians can lease their coal with the approval of the Secretary of the Interior.

The approval has a real history.

Ruth Bader Ginsburg:

It’s certainly not how… how the Court described it in Mitchell II because the Court spoke about exclusive control, that the United States did all the negotiating, that… and it made all the arrangements.

Now, whatever you… you say, you have to deal with what is in that opinion, and it does stress the exclusive control of the United States and distinguishes the prior case on the ground that the other case was designed to give the Indians autonomy to deal for themselves.

Paul E. Frye:

The… the Secretary certainly had exclusive control over whether to approve this transaction, whether to allow the trust asset to be sold or not.

He had exclusive control over that, and that is within the contours of the statutes and regulations.

And I–

Ruth Bader Ginsburg:

I thought that the… the authority came from the lease from the term that the… that the tribe agreed to, that the… the authority to adjust the royalty in this case comes from the lease, not from any statute or regulation.

Isn’t that true?

Paul E. Frye:

–That’s correct.

Of course, that lease itself was approved by the Secretary of the Interior as trustee of these–

Antonin Scalia:

Wait.

I thought you said some of these were new leases.

I mean, that’s what confuses me.

When I was making that point earlier, you said no, some of them were new leases.

Now, the authority to adjust the rate for the new leases certainly didn’t exist in the old lease, did it?

Paul E. Frye:

–That’s not even at issue.

There is… there is no secretarial authority to adjust the rate in the new lease.

Antonin Scalia:

Well, that… that’s right.

So some of your complaint does not rest upon the provision in the original lease that gives the Secretary the power to adjust the rate.

Paul E. Frye:

Yes.

I… I think in response to Justice Breyer, the… the event that caused the damages here was the improvident approval, without observation of–

Antonin Scalia:

Of the new leases.

Paul E. Frye:

–Of the new leases.

That is correct.

Stephen G. Breyer:

So that… and that… that’s… there isn’t a… sort of like a statute that says, Secretary, give an approval or not.

What there is is the tribe negotiates something.

Then they have the director… the area director, say, okay, that’s all right because the tribe asked him to say.

And then somebody approve… appeals to the Department of the Interior under a regulation of the Interior Department allowing any aggrieved party to go appeal.

And then the Secretary intervenes in that, and then they don’t tell the tribe.

And because they don’t tell the tribe, the tribe enters into a different lease.

That’s really what happened.

Paul E. Frye:

Yes.

Stephen G. Breyer:

And it’s hard to fit that into the model of the Secretary charging a penny for a tree.

The Secretary, in a sense, didn’t charge anything for anything.

The Secretary allowed this trust asset to be conveyed for what he knew to be about half of its value.

Paul E. Frye:

Now, the approval requirement has a history, going back to the first administration of George Washington.

In the Trade and Intercourse Acts, Congress first erected what this Court has called the strong shield of Federal law, to prevent Indians from being despoiled in their property.

And Congress, when it legislates, legislates against this rich history, this background in the context of the approval requirement.

In the Anicker case in 1987, in a leasing context, the… the Court said that the… this strong shield of Federal… of Federal law was designed to protect the Indians from the designs of those who would take their property for less than fair compensation.

That’s the… that’s the meat of the approval–

David H. Souter:

Okay.

So you’re saying the approval was wrong for two reasons, I guess.

Number one, the rate approved was less than half fair value.

Paul E. Frye:

–Correct.

So that, in effect, every… every lease that was approved at the 12-and-a-half percent was wrongly approved.

Paul E. Frye:

No.

This is extraordinarily valuable coal.

This is unusual coal.

David H. Souter:

I see.

Okay.

I–

Paul E. Frye:

This is 12,500 btu coal.

David H. Souter:

–I stand corrected.

So it was the… the approval was wrong simply because the… the particular value of this coal meant that it was being conveyed away for… for half what it was worth.

Paul E. Frye:

Yes.

David H. Souter:

That’s the substance.

And then you’re also making the argument that it was wrong… and I think I used the word, the… the bargaining process was skewed, but you’re… you’re making that argument too?

Paul E. Frye:

Yes.

The Secretary should have known that the end result was going to be unfair because he had skewed the bargaining.

David H. Souter:

Okay.

May… may I ask you this question as to whether he really did skew it?

As I understand what the skewing might be, it would be simply the refusal of the Secretary to allow the administrative process to go forward, as a result of which the tribe ended up negotiating when it might not otherwise have negotiated.

It might have held out.

My question is this.

Didn’t someone… and I forget who it was now… on behalf of the Secretary come right out and say to the tribe, the Secretary or the Department or the Bureau thinks it would be better if you resolved this by negotiating?

And isn’t it fair to say that that is practically saying, look, we’re not going to decide this thing?

You go out and decide it by negotiating.

And if that is true, didn’t they, in effect, tell them in substance what they were doing?

Paul E. Frye:

Well, the beneficiary of a trust shouldn’t have to guess what his trustee is really telling him.

If that’s what the trustee wanted to say, the trustee should have said, I’ve met with Peabody.

I like their lobbyist.

I’m not going to do something that Peabody doesn’t like, and… and we’re going to sit on this thing, as his subordinate said, until hell freezes over until you agree that… with something that Peabody likes and you can live with.

If we had been given that information, we would have taken a much different approach.

I guarantee you.

Now, I think Justice O’Connor made the point that if all we have… if… if the trust duty only applies to specific statutory and regulatory violations, then it’s meaningless.

Paul E. Frye:

The trust duty has to be something greater than that.

And this Court in the Varity Corporation case about 6 years ago said precisely that.

The trust duty has to be something greater than the sum of these distinct parts.

Anthony M. Kennedy:

So… so the mere designation of a trustee in these cases is a waiver of sovereign immunity?

Paul E. Frye:

I would say not, Your Honor.

There has to be this overlay of comprehensive Federal control and supervision.

And I would note too in the Indian Tucker Act, it doesn’t restrict Indian plaintiffs to the same rights and remedies.

It gives people… Indian tribes and Indian people the same access to the court, and it uses a different word.

It uses the word laws in the… in the jurisdictional statute in the Indian Tucker Act.

And we know from Illinois versus City of Milwaukee and other cases that laws means Federal common law and the… and if there’s anything that’s grounded in the Federal common law tradition, it’s the trust duty owed to Indian tribes.

And that’s what we sue under, the Indian Tucker Act.

One month ago yesterday, President George Bush once again issued a presidential proclamation, following those of President Reagan and President Clinton, honoring the Navajos and recognizing their special service to the United States in times of war.

And as this Court indicated in the Shoshone case, the Navajo tribe was entitled to a fidelity at least as constant.

We respectfully urge affirmance.

John Paul Stevens:

Thank you, Mr. Frye.

Mr. Kneedler, you have 4 minutes left.

Edwin S. Kneedler:

Thank you, Justice Stevens.

First, with several factual points.

The tribe did know the substance of… of what had happened with respect to Secretary Hodel.

As I pointed out earlier, Mr. Nelson’s deposition, which is excerpted in the joint appendix, makes clear that the tribe had learned, he said, from Washington that… that it was requested there that they go back to negotiations.

And also I would call the Court’s attention to page 2370 of the appendix, which are notes of the negotiating session… first negotiating session that occurred after that on August 30th, 1985.

It’s a note in which Chairman Zah of the Nation acknowledges that Secretary Hodel apparently wanted them to go back and try to reach an agreement.

So it’s clear that the parties entered into these negotiations with a full understanding of… of what the Secretary’s preferred course was.

Secondly, I think it’s… it’s completely not true that Secretary Hodel directed a subordinate to lie to the Navajo Nation.

The… on page 117 of the joint appendix, there’s a copy of the directive that… or the… the memorandum that Secretary Hodel sent to the Assistant Secretary about this.

And he makes four very significant points entirely reasonable under the circumstances.

He… he referred to the fact that affirming the decision outright unilaterally might lead to prolonged litigation, during which the… Peabody might well put the… the royalties into escrow and the tribe wouldn’t get them.

It would impair the future ongoing contractual relationship between the parties.

Peabody has a huge presence on the reservation, and it was obviously beneficial for the parties to resolve this peaceably and not just this isolated royalty increase under this one lease, but a whole host of issues that were… that were facing the two parties: taxation, payment for water, other… other leases in which there was a significant increase.

And those other leases, by the way, did not have an adjustment clause.

Edwin S. Kneedler:

So the tribe here got the benefit not only of an increase on this lease, but an increase on a lease that did not have an adjustment clause.

And Secretary Hodel then said it would be preferable to allow the parties to negotiate, and then importantly at the end, he said, I haven’t reached a final decision on the merits of the appeal.

I just think it would be better if the parties went back and negotiated.

And since, as Justice Scalia pointed out, this was a lease provision that was… protected both parties, what is reasonable for both parties, it was certainly an appropriate resolution of that for the Secretary to say… in the normal situation where you have a… a disagreement, or differing views under a lease, to send the parties back and seek to have them negotiate.

Also, I would point out on page 125 of the joint appendix, there’s a letter from Mr. Vollmann in which he points out that the Secretary is aware of each party’s concerns about the settlement, again making it clear that… that the Department in Washington was aware of the state of affairs out there.

So the only… the only… aside from all of that, the claims about the negotiations that preceded the 1987 lease amendments are essentially procedural or tort claims, or claims about improper regulation of… of a negotiating process.

They aren’t the sort of money-mandating statutory or… first of all, there’s no claim… no… no identification of a statutory or regulatory provision that… that specifically regulates this and was violated.

But in any event, just like the Due Process Clause that this Court held in Testan is not money-mandating, the same is true here as well.

John Paul Stevens:

Thank you, Mr. Kneedler.

The case is submitted.