Civil Rights Monitor
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The CIVIL RIGHTS MONITOR is a quarterly publication that reports on civil rights issues pending before the three branches of government. The Monitor also provides a historical context within which to assess current civil rights issues. Back issues of the Monitor are available through this site. Browse or search the archives Winter 2004
Supreme Court Renders Mixed Outcome Regarding Government Liability for Breach of Trust in its Management of Resources Belonging to Native Americans United States v. White Mountain Apache Tribe and United States v. Navajo Nation, No. 01-1067 and No. 01-1375
Summary
On March 4, 2003, the Supreme Court handed down two decisions addressing whether the United States government could be held liable for a breach of fiduciary obligations with respect to its management of certain tribally-owned resources. However, outcomes in the two cases were different.
Each case turned on the existence and specific nature of the fiduciary or trust relationship between the government and the Tribes. Each case raised the question of the duties the government had with respect to its management of Tribal resources, as well as the remedies available to the Tribe if the government mismanages Tribal resources.
In determining whether a trust relationship exists, and in characterizing the type and scope of the relationship, the Court relied heavily on two previous cases dealing with tribal timber resources: United States v. Mitchell (1980) (Mitchell I, in which the government was found not to have a fiduciary obligation compensable by money damages) and United States v. Mitchell, (1983) (Mitchell II, in which the government was found to have just such an obligation).
In United States v. White Mountain Apache Tribe, the Court found for the Tribe, holding 5 - 4 that the Court of Federal Claims had jurisdiction over the Tribe's suit against the Government for roughly $14 million in monetary damages. The claim was for breach of trust with respect to land and improvements that the Government occupied and allowed to deteriorate. The Court held that although the statute that provided for the tribal property to be held in trust and used by the United States did not impose a specific duty to maintain it, the federal occupation and use of the land and improvements did raise a duty to preserve the trust assets.
In contrast, in United States v. Navajo Nation, the Court found for the United States, holding 6-3 that the Indian Mineral Leasing Act and its regulations did not impose any substantive fiduciary obligation on the part of the Government with respect to the Tribal resources in question, and that as a result the Navajo Nation's suit for $600 million in monetary damages for breach of trust could not be maintained.
United States v. White Mountain Apache Tribe
Background
The former Fort Apache Military Reservation dates back to 1870. The fort was established by the United States within territory that ultimately became the reservation of the White Mountain Apache Tribe. In 1922, Congress transferred control of the fort to the Secretary of the Interior, and in 1923, it set aside several hundred acres of the fort's land for use as the Theodore Roosevelt Indian School.
In 1960, Congress provided by law (“the 1960 Act”) that the former Fort Apache Military Reservation would be "held by the United States in trust for the White Mountain Apache Tribe, subject to the right of the Secretary of the Interior to use any part of the land and improvements."
Over the years, the Government exercised this right of use with respect to about 30 of the fort's buildings and related structures and in 1976, the National Park Service listed the fort as a national historic site. However, the fort was allowed to fall into disrepair and in 1998 it was placed on the World Monuments Watch List of 100 Most Endangered Monuments. An engineering assessment commissioned by the Tribe found that as of 1998 it would cost roughly $14 million to rehabilitate the property in accordance with historic preservation standards.
In 1999, the Tribe sued the United States in the U.S. Court of Federal Claims for the $14 million necessary to rehabilitate the property. In its suit, the Tribe alleged that the United States had breached a fiduciary duty to "maintain, protect, repair, and preserve" the trust property. As authority, the Tribe cited the 1960 Act, the National Historic Preservation Act and the Snyder Act. The Court of Federal Claims, agreeing with the government's contention that no statute or regulation could fairly be read to impose a legal obligation on it to maintain or restore the trust property, or to require monetary compensation, dismissed the complaint, relying on Mitchell I and Mitchell II. On appeal, the U.S. Court of Appeals for the Federal Circuit reversed and remanded, finding that the government's occupation and use of the trust property under the 1960 Act triggered a common law trustee's duty and obligation that could be fairly interpreted as supporting a claim for monetary compensation.
The Supreme Court agreed to review the case to decide whether the 1960 Act gave rise to jurisdiction over suits for money damages against the United States.
Opinion
On March 4, 2003, Justice Souter, joined by Justices Breyer, Ginsburg, O'Connor and Stevens, delivered the 5-4 opinion in favor of the White Mountain Apache Tribe. Justice Ginsburg filed a concurring opinion in which Justice Breyer joined. Justice Thomas filed a dissenting opinion, which was joined by Chief Justice Rehnquist and Justices Scalia and Kennedy.
The Court began with a discussion of the appropriate jurisdictional standard. Because the Tucker Act did not of itself create a substantive right enforceable against the government for monetary damages, the tribe was required to first have a claim under another statute that could support monetary compensation.
A statute creates a right that can support such a claim for monetary damages under the Tucker Act only if it "can fairly be interpreted as mandating compensation by the ... Government for the damages sustained." This has been characterized as the "fair interpretation" rule and the Court noted that "this 'fair interpretation rule' demands a showing demonstrably lower than the standard for the initial waiver of sovereign immunity" that is normally needed to authorize a suit against the Government.
The Court then stated that it is enough that a statute creating an Indian Tucker Act right is "reasonably amenable" to a reading that it mandates a right of recovery in damages, and that while the premise to a Tucker Act claim will not be "lightly inferred," a fair inference will do.
In discussing the "fair inference" standard as applied in the two Mitchell cases discussed above, the Court noted that both cases give guidance as to when it is fair to infer a fiduciary duty qualifying under the Indian Tucker Act and when it is not. Among other factors, the Court distinguished the "bare trust" in Mitchell I from the more "elaborate trust" in Mitchell II by noting that in Mitchell I the Allotment Act gave the Government no functional obligations, and, to the contrary, established that the Indian allotee rather than a representative of the United States was responsible for using the land. By contrast, in Mitchell II, the United States was given full responsibility to manage Indian resources and land for the Indians' benefit. The Court noted that the scope of the United States' fiduciary responsibilities in Mitchell II was therefore beyond the "bare" or minimal level and could fairly be interpreted as mandating compensation via monetary damages if the Government breached its obligation.
In White Mountain, the Court determined that the 1960 Act goes beyond a bare trust and permits a fair inference that the Government is both subject to the duties of a trustee and potentially liable in damages for breach. In supporting this determination, the Court noted that the 1960 Act "expressly defines a fiduciary relationship" in the provision that Fort Apache be held by the Government in trust for the Tribe. The Court also noted that the statute provides the United States with authority to make direct use of trust assets and that the Government did indeed make use of them.
The Court further noted that "the fact that the property occupied by the United States is expressly subject to a trust supports a fair inference that an obligation to preserve the property and improvements was incumbent on the Government as trustee." According to the Court, quoting from Mitchell II, "it naturally follows that the Government should be liable in damages for the breach of its fiduciary duties."
In so holding, the Court rejected the government's three defenses:
Holding that the 1960 Act gives rise to Indian Tucker Act jurisdiction in the Court of Federal Claims, the Court affirmed the judgment of the Court of Appeals for the Federal Circuit and remanded the case to the Court of Federal Claims.
Justice Ginsburg in her concurrence further discussed the role of the Mitchell cases in the White Mountain Apache and Navajo Nation decisions, as well as further distinguishing the results in the two cases from one another. Justice Ginsburg also stated that the Court's opinion in White Mountain Apache was not inconsistent with the opinion she delivered on behalf of the Court in Navajo Nation (discussed below).
In dissent, Justice Thomas argued that the majority's opinion was supported neither by the text of the 1960 Act nor by the Court's case law, and that the 1960 Act creates only a "bare trust." Justice Thomas also argued that the majority misconstrued Mitchell II and that it "radically alters" the relevant inquiry from a focus on "actual" fiduciary duties imposed by statute or regulation to a focus on implying fiduciary duties from use of the word "trust" and the concept of control.
United States v. Navajo Nation
Background
The reservation of the Navajo Nation covers roughly 25,000 square miles of Arizona, New Mexico and Utah. Certain portions of the reservation have significant coal reserves.
Coal leases between a tribe and a private lessee are governed by the Indian Mineral Leasing Act of 1938 ("IMLA"), which provides the Secretary of the Interior significant authority in the review and approval of such leases. The IMLA states that "[u]nallotted lands within any Indian reservation," or otherwise under federal jurisdiction, "may, with the approval of the Secretary [of the Interior (Secretary)]... be leased for mining purposes, by authority of the tribal council or other authorized spokesmen for such Indians."
In 1964, the then-Secretary of the Interior approved a lease with a large coal company to mine high quality coal on the reservation for a royalty of 37.5 cents per ton (yielding for the Navajo about 2% of gross proceeds). The lease provided for "reasonable adjustment" of the royalty by the Secretary upon the 20-year anniversary of the lease and every 10 years thereafter. When a 1970s Interior Department study showed that the Navajo had received $2.7 million in royalties for coal resold for $141 million, the tribal leaders pushed for a renegotiation of the lease.
In 1984, an official from the Bureau of Indian Affairs sent an opinion letter to the coal company raising the lease rate to 20% of gross proceeds. The coal company appealed the increase to the Deputy Assistant Secretary for Indian Affairs. While this administrative appeal was pending, the coal company wrote to the Secretary of the Interior, asking him to postpone a decision on the appeal or to rule in the company's favor. The company's representatives also met privately with the Secretary during that period. The lease was ultimately amended to a royalty rate of 121/2 percent of gross proceeds.
The Navajo perceived the events surrounding the mid-80's royalty negotiations as demonstrating a significant breach of trust by the Government, including collusion between the Department of the Interior and the coal company to depress the royalty percentage accruing to the Tribe. They concluded that they were wrongly denied millions of dollars in royalties for allowing the company to take high quality coal from the reservation.
In 1993, the Navajo Nation filed a claim for roughly $600 million in monetary damages against the United States in the U.S. Court of Federal Claims. The Navajo alleged, among other things, that the Secretary's approval of the royalty amendments to the lease amendments constituted a breach of trust.
While finding for the government as a matter of law as to the issue at bar, the Court of Federal Claims also found that the Secretary had "flagrantly dishonored" the Government's general fiduciary duties to the Navajo by acting in the best interests of the coal company rather than those of the Navajo. Nevertheless, according to the court, the Navajo had not succeeded in linking that breach of general trust obligation to any statutory or regulatory obligation that could be fairly interpreted as requiring compensation for the Government's actions.
The U.S. Court of Appeals for the Federal Circuit reversed. While agreeing with the federal claims court that the Secretary's actions violated the Government's fiduciary obligations to the Navajo, the appellate court also found that the Secretary exercised a sufficient measure of control over the leasing process to support a monetary damages judgment against the Government. The appellate court then remanded for further proceedings, including a determination of damages.
The Court of Appeals denied rehearing and the government appealed to the Supreme Court, which granted review.
Opinion
On March 4, 2003, Justice Ginsburg delivered the 6-3 majority opinion in favor of the government. Justice Ginsburg was joined in the opinion by Chief Justice Rehnquist and Justices Breyer, Kennedy, Scalia and Thomas. Justice Souter filed a dissenting opinion, which was joined by Justices O'Connor and Stevens.
The majority held that (i) the Mitchell cases, discussed above, control the Navajo Nation case, (ii) the situation at hand falls within the scope of Mitchell I's "bare trust," which does not give rise to a compensable claim, and (iii) that the Navajo Nation's claim for compensation fails because it is not derived from any provision of IMLA or its implementing regulations that might impose liability on the Government.
As in White Mountain Apache, the Court first addressed the jurisdictional standard, noting that although the Indian Tucker Act confers jurisdiction upon the Court of Federal Claims in cases where the requirement of a viable claim is met, the Act is not itself a source of substantive rights to state such a claim. Rather, a Tribal plaintiff must invoke a source of substantive law that "can fairly be interpreted as mandating compensation by the Federal Government for the damages sustained."
The majority opinion said: "to state a claim cognizable under the Indian Tucker Act . . . a Tribe must identify a substantive source of law that establishes specific fiduciary or other duties, and allege that the Government has failed faithfully to perform those duties."
The Court also reviewed IMLA and its implementing regulations to determine whether they can fairly be interpreted as mandating compensation for the Government's alleged breach of trust. The conclusion was negative, rejecting the Mitchell II analogy. Rather, the Court found IMLA more analogous to the situation presented by Mitchell I. In addition, the Court rejected the Navajo Nation's arguments that the Government's actions violated specific statutory and regulatory provisions whose violation may be compensated by monetary damages.
In dissent, Justice Souter argued that the Secretary of the Interior's obligation to approve mineral leases under 25 U.S.C. §396a raises a "substantial" fiduciary obligation to the Navajo Nation, particularly in light of other Supreme Court cases addressing the issue of the Secretary's approval power in various contexts. He further argued that the Navajo Nation had pleaded and shown more than enough on the record to survive the Government's motion for summary judgment, with a later trial to determine whether there was be a monetary recovery.
Implications
The White Mountain Apache and Navajo Nation cases further define the contours of the trust relationship between Native Americans and the United States government when the government is either directly managing, or significantly influencing the management of, Native American-owned resources.
In particular, these cases address the duties that are owed by the government to Native Americans in resource-management situations, how specific a statute or regulation must be in order to give rise to a compensable obligation, the level of governmental use and control that is needed to reinforce or supplement the statutory and regulatory context, and what remedies, if any, are available to Native American tribes if the government breaches its obligations. The cases also provide some insight into how the Court interprets the Mitchell cases 20 years after those decisions were made.
With respect to White Mountain Apache, interested parties have noted that although it is a narrow ruling, it is an important reinforcement of the government's trust responsibility to Native American tribes. Commenters have also remarked that this is particularly noteworthy in light of the argument by the government's attorney that the government should prevail in both cases, because if the Court honored implied trust obligations to Native Americans, the government could be subject to a "mountain of lawsuits."
Commenters have observed that Navajo Nation, on the other hand, is emblematic of the Court's attention to specific statutory and regulatory detail. Although the Navajo Nation suffered a more significant breach, at least as measured by the damages claim ($600 million in Navajo Nation as opposed to $14 million in White Mountain Apache), and although reviewing courts found "flagrant dishonoring" of a general fiduciary duty, relief was barred because IMLA and its regulations did not clearly cover the Secretary's specific actions.
  
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