Osage sues government for $2.5 billion

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OKLAHOMA CITY, Okla. - The Osage Nation filed a lawsuit against the federal government to recoup royalties from oil and gas leases it says the nation has never received.

Chief Charles Tillman said the amount owed the Osage could be in excess of $2.5 billion. The nation already has a $100 million lawsuit against the government for non-payment of royalties. Bradley Brickell, attorney for the tribe, said the court will be asked to consolidate the two cases.

The most recent case evolved from an audit performed for the government that could not prove the royalty money ever reached the tribe's accounts. Brickell said the firm that did the audit reported that most of the government's books could not be audited because of missing information and poor record keeping procedures.

"Let's make it clear to the people. It's not taxpayer money. It's our money which came off the reservation; money derived from oil and gas, from our resources," Tillman said.

The BIA is entrusted with handling the royalties much the same as it is entrusted to manage the trust accounts for the tribes and individual tribal members who receive lease, royalty and other payments for land. A class-action lawsuit that involves some 300,000 Individual Indian Money account holders was filed against the federal government. That suit claims that possibly billions of dollars cannot be accounted for.

In that case the BIA admits years of improper management of the accounts, but argues the money is not missing.

The Osage claim that 2.1 billion barrels of oil have been taken from the Osage reserves, about 40 percent of the deposits.

Brickell said the BIA and the government can't reconcile the accounts that go back to the 1920s. Some of the royalties in the early days were set at 12.5 percent of the price and today the percentage could be as high as 25 percent.

The first oil drilling in Oklahoma took place in Osage County in 1906. Many tribal members who owned land could not afford to drill on their own so they issued leases to the oil companies. The tribe also owned land from which oil was extracted. The new lawsuit does not include any royalties to individuals that would be included in the IIM suit, Brickell said.

This lawsuit will not affect any other tribe. The report that uncovered the fact that accounts couldn't be reconcile, pointed specifically to the Osage. The tribe leases all of Osage County.

Royalty amounts established in the 1920s and later are not subject to change. They are set for the entire production life of the oil well.

In a related case, many tribes across the country complained about the nomination of Arizona Banker Thomas Slonaker as special trustee, a position developed in 1994 to clean up the problems in the trust accounts.

A senate panel headed by Sen. Ben Nighthorse Campbell, R-Colo. Delayed action on Slonaker's nomination hearing to allow tribes time to meet with and learn more about the nominee. He was chosen by President Bill Clinton to replace Paul Homan, who quit after he accused Secretary of Interior Bruce Babbitt of removing some of the special trustee's powers.

Sen. Campbell said he was confident Slonaker would be chosen.

"I don't think Indian country knows a thing in the world about this man," Tillman said.