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The Indian Mineral Leasing Act of 1938, 52 Stat. 347, 25 U.S.C.S. § 396a et seq., and its regulations do not give the federal government full responsibility to manage Indian resources for the benefit of the Indians with regard to coal leases. The Secretary of the Department of the Interior is neither assigned a comprehensive managerial role nor expressly invested with responsibility to secure the needs and best interests of the Indian owner and his heirs.
Provisions of the Indian Mineral Leasing Act of 1938 (IMLA) required the Secretary of the Interior's approval before coal mining leases negotiated between tribes and third parties became effective and authorized the Secretary generally to promulgate regulations governing mining operations. In 1964, the Indian tribe known as the Navajo nation permitted a mining company to mine coal on the tribe’s lands. In 1984, after a request by the chairman of the Navajo tribal council for a rate adjustment, the mining company received from the Interior Department's Bureau of Indian Affairs an opinion letter raising the rate to 20 percent of gross proceeds. The company filed an administrative appeal. While the appeal was pending, the company requested the Secretary to postpone decision on the appeal or to rule in the company's favor. In 1985, the Secretary sent a memorandum to the Interior Department official who was the decisionmaker on the appeal, which memorandum suggested that the official urge the parties to continue their efforts to resolve the matter. Ultimately, the parties agreed to amend the lease to provide for a royalty rate of 12 1/2 percent of monthly gross proceeds, which was the then-customary rate for coal leases on federal and Indian lands. Pursuant to 396a, the Secretary approved the amended lease in 1987. In 1993, the tribe, alleging, among other matters, that the Secretary’s approval of the lease amendments constituted a breach of trust – filed an action for damages against the United States pursuant to the Indian Tucker Act (28 USCS 1505). The United States Court of Federal Claims granted summary judgment for the United States, on the ground that the tribe had failed to link the asserted breach of duty to any statutory or regulatory obligation. The United States Court of Appeals for the Federal Circuit, in reversing and in ordering a remand, agreed that the Secretary's actions had violated the government's fiduciary obligations to the tribe, and concluded that the measure of control that the Secretary exercised over the leasing of Indian lands for mineral development sufficed to warrant a money judgment against the United States.
Could the tribe recover money damages from the United States for an alleged breach of trust in connection with the Secretary's approval of the coal lease amendments in question?
On certiorari, the United States Supreme Court reversed and remanded. The Court held that the IMLA and its implementing regulations could not fairly be interpreted as mandating compensation for the Secretary's alleged breach of trust, for the IMLA did not give the Federal Government full responsibility to manage Indian resources for the benefit of the Indians. 25 U.S.C.S. § 396a simply required approval before coal mining leases become effective. 25 U.S.C.S. § 399 was not part of the IMLA and did not bear on the Secretary's limited IMLA approval role. The lease fell outside of the Indian Mineral Development Act of 1982, 25 U.S.C.S. § 2101 et seq. Under 25 U.S.C.S. § 396a, there was no basis for finding that an alleged "breach" of any standards was cognizable in an action for damages under the Indian Tucker Act, 28 U.S.C.S. § 1505. The lease's royalty well exceeded the minimum royalty of 10 cents per ton established under 25 C.F.R. § 211.15(c) (1985). Neither the IMLA nor its regulations established more than a minimum royalty. There was no statutory or regulatory provision requiring an independent "economic analysis" of the reasonableness of the agreed royalty. Nothing in 25 U.S.C.S. § 396a or in the regulations proscribed ex parte communications by the Commissioner of Indian Affairs which occurred during an administrative appeal process unconstrained by formal requirements.