Court Holds United States Breached Its Fiduciary Duty to Indian Tribe

Osage Tribe of Indians of Okla. V. United States
2006 WL 2708045

The Osage Tribe of Indians of Oklahoma brought suit against the United States, alleging that the government violated its duty as trustee of the tribe’s mineral estate by failing to collect all moneys due from tribal oil leases and to deposit and invest those moneys as required by statute and according to the fiduciary duty owed to the tribe. The tribe’s action was founded on the government’s alleged breach of duties it assumed under the terms of an agreement between the tribe and the government that was entered into law in 1906. The U.S. Court of Federal Claims held that the government breached its fiduciary duty to the tribe in five ways: (1) by not collecting oil royalties based on the highest “offered prices;” (2) by failing to apply the highest posted price or offered price paid to producers of unregulated stripper oil to the calculation of royalty payments during months when federal price controls on the sale of crude oil were in effect; (3) by its failure to promptly deposit royalty funds during the period before it designated a local federal depository, thus becoming liable for investment income lost due to the delay; (4) by failing to prudently invest cash balances of oil and gas royalty income in excess of $25,000; and (5) by failing to obtain the highest available investment yields on funds derived from royalties during five separate months.

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