The 10th Circuit Court of Appeals recently breathed new life into the decade old Fletcher v. United States case. The court recently ruled that Osage Nation members William Fletcher and Charles Pratt are entitled to accounting information from the United States’ management of Osage oil and gas royalties.
The turn of the 20th century brought newfound wealth to many Osage Nation members through the discovery of significant oil and gas reserves on Osage lands. In 1906 the United States enacted a statutory scheme to manage these resources. The government scheme provided that the mineral rights underlying Osage lands would be transferred to the federal government and held in trust by the Secretary of the Interior for the benefit of the Osage Nation and its members.
The Osage mineral estate trust, administered by the Secretary of the Interior, is responsible for collecting and distributing royalties created by oil and gas exploration on Osage lands. The right to receive such royalties has become known as a “headright.”
The creation of headrights under the 1906 Act led to over a hundred years of uncertainty in the payment of royalties to rightful Osage headright owners. Over the years, numerous headrights were sold and willed to non-Osage persons, sometimes through fraud and murder. This resulted in a questionable and spotty record as to the validity of payments made from the federal government Trust Fund.
In 2002, William Fletcher and Charles Pratt filed suit against the United States claiming that the United States had breached its trust responsibly to the Osage people by failing to account for its management of the Osage mineral estate, allowing headrights to be unlawfully transferred to non-Osages and by restricting participation in Osage elections to headright holders. In 2004, the United States resolved the election claims through Congressional action. However, the United States attempted to have the remaining claims dismissed several times over the last decade on different grounds, the most recent of which was the United States’ claim that only the Osage Nation was entitled to an accounting of royalty payments. The 10th Circuit disagreed.
On September 13, 2013 the 10th Circuit Court of Appeals ruled that Mr. Fletcher and Mr. Pratt are in fact entitled to an accounting from the government’s management of the Osage mineral estate trust. The court rejected the government’s argument that it’s duty to provide an accounting extended only to the Osage Nation. Instead the court reasoned that the trust relationship exists for the benefit of individual Osage headright holders and they are entitled to an accounting of these funds.
This ruling represents a crucial step in Mr. Fletcher and Mr. Pratt’s goal of determining whether headright payments have been incorrectly paid out of the trust accounts originally established for the benefit of the Osage people.