INTERIOR BOARD OF INDIAN APPEALS ) ) ) ) ) ) ) ) ) ) ) ) NOTICE OF APPEAL & STATEMENT OF REASONS

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1 INTERIOR BOARD OF INDIAN APPEALS Charles O. Tillman, Cora Jean Jech, Dudley Whitehorn, Joanna Barbara, R.E. Yarbrough, John Johnson, Joe Hall and Cody Tucker, vs. Appellants, Michael S. Black, Director, Bureau of Indian Affairs, Appellee. IBIA No. NOTICE OF APPEAL & STATEMENT OF REASONS COME NOW, Charles O. Tillman, 2804 Wulf Rd, ; Cora Jean Jech, 1414 Grandview Ave, Pawhuska, OK 74056, ; Dudley Whitehorn, P.O. Box 192, Hominy, OK 74035, ; Joanna Barbara, 18 Tanager Lane, Sedona, AZ, ; R.E. Yarbrough, 205 E. 13th St., Pawhuska, OK 74056, ; John Johnson, 8778 N. Fuller, Fresno, CA 93720, ; Joe Hall P.O. Box 121, Burbank, OK [phone number], and Cody Tucker, 315 South 5th, Fairfax, OK [phone number], (collectively referred to hereafter as Shareholders, and respectfully file this Notice of Appeal and Statement of Reasons in accordance with 25 C.F.R. 2.4 and 2.8, and 43 C.F.R and Specifically, the Shareholders appeal the failure of Michael S. Black, Director, Bureau of Indian Affairs ( Director to take the action requested in the Shareholders letter to the Director, dated April 28, 2011, attached hereto as Exhibit 1. In support of their appeal, the Shareholders state as follows:

2 I. NOTICE OF APPEAL 1. The Shareholders are represented by counsel, Cori D. Powell, Oklahoma Bar Association No and William R. Grimm, Oklahoma Bar Association No. 3628, of Barrow & Grimm, P.C. 110 West 7th Street, Suite 900, Tulsa, OK On April 28, 2011, in accordance with 25 C.F.R. 2.8, the Shareholders requested in writing that the Bureau of Indian Affairs ( BIA conduct an election for the governing body of the Osage Mineral Estate, which includes a trust fund for the sale of the lands and income derived from the Osage Mineral Estate, created by the Osage Allotment Act of June 28, 1906, 34 Stat. 539, as amended (the 1906 Act ( Mineral Estate. The Shareholders requested an election of a Principal Chief, Assistant Principal Chief and eight (8 member Tribal Council (Principal Chief, Assistant Principal Chief and Tribal Council collectively referred to as the Tribal Council, as prescribed by the 1906 Act and 25 C.F.R. Part 90 ( CFRs and recognize the Tribal Council as the independent governing body of the Osage Mineral Estate ( Shareholders Request for Action. Exhibit 1 Letter from the Shareholders to the Director, April 28, The Shareholders Request for Action specifically stated that in the event the BIA failed to take the requested action within ten (10 days or establish a date upon which the action will be taken, an appeal would be filed in accordance with 25 C.F.R The Director has failed to respond to the Shareholders Request for Action in any manner, thus, the Shareholders are entitled to appeal the Directors decision and inaction pursuant to 25 C.F.R. 2.4 and 25 C.F.R

3 5. Counsel certifies that the following may be interested parties: the BIA and the Director of the BIA. Counsel knows of no other interested parties but notes that the relief requested may impact other shareholders similarly situated as the appellant Shareholders, whose names and contact information are not available to Shareholders. II. STATEMENT OF REASONS The Director and the BIA violate federal law by their failure to conduct an election for the Tribal Council, described herein, in accordance with the 1906 Act and CFRs. The Shareholders are entitled to elect an independent Tribal Council in accordance with the 1906 Act and CFRs as part of their vested property rights granted by the United States of America. A. History Shareholders are legal members of the Osage Tribe because they own headrights, which are vested private property interests that entitle the owner to a pro rata share in the revenues from the Mineral Estate. Additionally, the headright entitles the Shareholders to vote for a Principal Chief, Assistant Principal Chief and eight member Tribal council in proportion to their headright share to govern the Mineral Estate, which right is at issue in this appeal. 1. History of the Osage Tribe By way of brief history, the Osage Tribe was created by the 1906 Act. The 1906 Act, among other things, required the creation of a final tribal roll of the members entitled to receive distributions ( 1; reserved mineral rights to the Osage Tribe in the allotted lands ( 3; set aside a trust fund for the sale of lands and income from the Osage Mineral Estate ( 3; and prescribed a form of tribal government ( 9. Section 1 of the 3

4 1906 Act limited the enrollment of members in the Osage Tribe to persons on the roll at the time of the 1906 Act and their children born before July 1, 1907 ( Alotted Members. The reservation of the mineral rights to the Osage Tribe for the allotted lands under the 1906 Act 3 is commonly referred to as the Mineral Estate. The roll created by the 1906 Act is the permanent basis for per capita distributions of tribal income and property and it converted the right to receive tribal property distributions into a restricted tenancy in common in the persons on the 1906 roll. Cohen s Handbook of Federal Indian Law, (Nell Jessup Newton, ed., LexisNexis Mathew Bender 2005 ed. (hereinafter Cohen, 4.07(1(d. 1 The right to receive mineral revenue distributions from production of the Osage Mineral Estate is a headright. Taylor v. Tayrien, 51 F.2d 884, (10 th Cir. 1931; (Aplt. App. at 114. The 1906 Act, as subsequently amended, provided the headrights would pass to the heirs, devisees and assigns of the Allotted Members. See Cohen, 407(1(d. Consequently, some Osage do not own headrights ( Non-Headright Osage, others may own a fractionalized interest in a headright, while others may own multiple headrights. Id. In fact, some headrights are owned by non-osage. Id. A headright is a substantial private property right because it provides Mineral Estate production revenues for quarterly distribution to the individual members of the Osage Tribe. Id. Persons who own headrights are commonly referred to as Shareholders. 1 The legal authority cited herein may be found in the Shareholders Appendix, submitted contemporaneously herewith. 4

5 2. Osage Tribal Government The 1906 Act prescribed a form of tribal government for the Mineral Estate, which included a Principal Chief, Assistant Principal Chief and eight (8 member Osage Tribal Council and that such government would be selected by an election of the Osage Tribe (i.e. Shareholders Act, 9. Congress imposed upon the Secretary of Interior the duty of general supervision over the affairs of the Osage Tribe Act, generally. The Tribal Council was vested with the power to administer the Mineral Estate under the 1906 Act. Logan v. Andrus, 640 F.2d 269, 271 (10 th Cir The 1906 Act s provisions for elections of tribal officials and the Tribal Council were amended in 1978 to require elections every four years in a manner prescribed by the Secretary of the Interior Act, as amended by Pub. L (1978. Elections for the Osage Tribe are governed by Title 25 C.F.R. Part 90 Election of Officers of the Osage Tribe ( the CFRs. Only Shareholders are permitted to vote in elections for the government of the Osage Tribe under the 1906 Act. See Logan, 640 F.2d at 271. The BIA is charged with the responsibility of administering and supervising the elections of the Osage Tribe. See 25 CFR Part 90, generally. The CFRs provide voting eligibility requirements for members of the Osage Tribe which, among other things, provide that only headright owners over the age of 18 and whose names appear on quarterly annuity roll at the Osage Agency were permitted to vote in elections or qualified to hold any tribal office (CFR 90.21; and each ballot cast had exactly the same value as the voter s headright interest shown on the last quarterly annuity roll (CFR Thus, each headright owner was entitled to a vote that was directly 5

6 proportional to his headright interest, much like shareholders in a corporation. CFR B. Reaffirmation Act Historically, in addition to governing the Minerals Estate, the Tribal Council handled all tribal matters, including minerals, federal benefits, gaming, etc. However, despite the fact that various persons were considered Osage and entitled to federal benefits, etc., only those with headrights could vote for the governing body of the Osage Tribe. To rectify this apparent dichotomy, Congress passed the Reaffirmation of Certain Rights of the Osage Tribe, Pub. L. No ( Reaffirmation Act. The Reaffirmation Act clarified that legal membership in the Osage Tribe under the 1906 Act meant those eligible as headright owners; however not membership in the tribe for all purposes. The Reaffirmation Act reaffirmed the right of the Osage to self-govern provided that the rights of any person to the Osage mineral estate shares are not diminished thereby. The Reaffirmation Act did not repeal, modify or supersede the CFRs. Its intent was to clarify the right of all Osage to self-govern its tribal affairs outside of the Minerals Estate. Notably, nowhere in the Reaffirmation Act is there any mention of the Osage Nation. Congress's intent in enacting the Reaffirmation Act is clear from the House of Representatives Report from the 108th Congress, dates May 19, 2004, which states [i]f enacted, this bill would make no changes in existing law and the Senate Report from the 108th Congress, dated September 15, 2004, which states the Committee finds that the enactment of H.R [Reaffirmation Act] will not affect any change in existing law. Exhibit 2 House of Representatives Report, May 19, 2004 (emphasis added; Exhibit 3 - Senate Report, September 15, 2004 (emphasis added. Congress s intent is even more evident from the congressional 6

7 hearing record, that is, Congress intended to give the Non-Headright Osage a voice in tribal government matters that did not involve the Minerals Estate. In support thereof, Shareholders ask you to consider the following exchange between Representative Brad Carson (Oklahoma-D and one of the Shareholders, R.E. Yarbrough, President of the Osage Shareholders Association at that time, at the Legislative Field Hearing before the Committee on Resources, U.S. House of Representatives, March 15, 2004 ( Field Hearing, attached as Exhibit 4: The Chairman.... Mr. Yarbrough, it s my understanding that, as this bill would be enacted, it doesn t impact the property rights, headrights that individual Osage own. It only impacts the ability of the Tribe to organize and determine its membership. Mr. Yarbrough. Yes, sir. That s our understanding also. Id. at 37. Mr. Carson. Just a quick question for Mr. Yarbrough. And I may have let me know if I misstated the legal issues involved here. The mineral estate is held essentially as tenants in common to people with Headrights. Is that correct? Mr. Yarbrough: Yes. That's correct. Mr. Carson. And I know we've talked a lot in here about protections that the Headright owners have. This legislation wouldn't affect them. Does the Tribal Council have the right to alter the disposition of the minerals estate among Tribal members? If not, what prevents them from doing that. For example, could Tribal Council vote to say, Well we recognize that these people all, you know, have Headrights handed down from the 1906 Act. But we've suddenly decided as a matter of policy that the Osage Nation owns the mineral estate that we want to allocate it in some different fashion? Mr. Yarbrough: My interpretation of what is about to happen is that we as shareholders will maintain our identity and we'll go on separately, but we'll also be inclusive of the tribe at the same time. So we'll actually go ahead and conduct ourselves as we always have. Mr. Carson: Maybe I should Maybe Congressman Lucas can answer it or someone. I guess the question is are there institutional protectors from the 1906 Act that says you, for any reason you couldn't you couldn't feel free to --- what 7

8 institutional protections are there to keep Headright ownership basically as it has been for the last near century or altering any kind of the voting membership with this? Chief Jim Gray: Well Congressman, there are clearly protected property rights that no activist council would have any control over, you know, that particular process. What has been statutorily set up is what's policy now. And there's nothing that this Council can do, even with the passage of this bill to change that. Mr. Carson: Thank you on all of that. Id. at 41 (emphasis added. Similarly, in a subsequent June 1, 2004 hearing on the matter in the United States House of Representatives, Representative James Gibbons (R-Nevada noted: It is past time to consider letting the Osage Tribe decide how to govern itself as it sees fit, providing that no one loses any property or other vested legal rights in the process. H.R includes language to ensure that no one's interest in Headright shares is touched. Headrights are private property, and there is no intent to affect them under this bill. See Exhibit 5 - U.S. House of Representatives Hearing on the Reaffirmation of Certain Rights of the Osage Tribe, June 1, 2004 ( Congressional Record. Likewise, during the same Congressional Hearing the author of H.R. 2912, Representative Frank Lucas (R-Oklahoma stated: It [HR 2912] is intended to put the Osage Tribe on equal footing with all other federally recognized tribes by allowing them to determine their own membership criteria and system of government, while protecting the Headrights of the shareholders. Id. The foregoing makes patently clear, neither the Osage advocating the Reaffirmation Act nor the congressmen considering the Reaffirmation Act contemplated that Headrights or Shareholders other interest in the Mineral Estate would be touched contrary to the protections granted to the Shareholders in the 1906 Act. Even the presiding Principal Chief of the Osage Tribe at the time acknowledged that there's nothing that this Council can do, even with the passage of the [Reaffirmation Act] that can alter the statutory scheme in place for governing the 8

9 Mineral Estate. Exhibit 4 Field Hearing at 41. Indeed at least one federal court that has considered the Reaffirmation Act has noted that the Reaffirmation Act maintains the system for assigning mineral interests, but grants the Osage Tribe the right to determine membership for other purposes. Fletcher v. U.S., 2005 WL , *2 (10th Cir (emphasis added. C. BIA s Refusal to Conduct an Election for the Tribal Council Notwithstanding Congress s clear expression of its intent that the Shareholders interests would not be touched, a new form of tribal government was proposed which purports to govern and control the Mineral Estate. The BIA maintains that the new government, known as the Osage Nation, upholds the intent and direction of Congress with respect to its admonishment that the rights of any person to Osage Mineral estate shares are not diminished by the Osage s exercise of self-governance. See Exhibit 6 - Letter from Director, Bureau of Indian Affairs, May 19, The BIA s policy in this regard is clearly contrary to Congress s express intent in the Reaffirmation Act. The new form of tribal government was proposed by the Osage Reform Commission to the 31 st Council of the Osage Tribe. The new government was ratified by a majority vote of a minority number of the total Osage people, both Shareholders and Non-Headright Osage who were not legal members of the Osage Tribe, and subsequently formed the Osage Nation which is governed by the Constitution of the Osage Nation ( Nation Constitution. 2 See Exhibit 7 - Nation Constitution, Articles XXIII & III. 3 2 The issue of those entitled to vote on the Nation Constitution other than Shareholders, in and of itself, has substantial constitutional taking issues regarding voting eligibility which the Shareholders note, but do not challenge at this time in any respect other than the purported transfer of control of the Tribal Council and governing body of the Mineral Estate to the Osage Nation. 3 The Osage Nation is not an interested party in this dispute. The Shareholders are concerned only with the BIA s responsibility to the Shareholders and do not seek to effect any change to the Osage Nation or its Constitution. The Shareholders recognize that the Osage Nation is the appropriate governing body of the Osage for all matters except the Mineral Estate. The Shareholders merely challenge the BIA s actions in abandoning the Shareholders and the form of governance of the Mineral Estate prescribed by the 1906 Act. 9

10 The new Nation Constitution provides that all oil, gas, coal and/or other minerals are reserved to the Osage Nation, not the Osage Tribe [Shareholders] as required by the 1906 Act. See Id. at Article XV 1-2, & 4. Additionally, it established a minerals council, as an independent agency within the Osage Nation ( the Agency, whose authority is subject to the laws and decisions of the Chief of the Osage Nation and the Osage Nation s Congress, rather than the Secretary of the Interior as provided for in the 1906 Act. Id. at Article XV 4. The Chief, Assistant Chief and Congress of the Osage Nation are elected by Osage that are Shareholders and Non-Headright Osage, not the Shareholders entitled to vote under the 1906 Act. Id. Article III. There is no Principal Chief or Assistant Principal Chief elected by the Shareholders to govern the Mineral Estate, as prescribed by the 1906 Act. Specifically, the Chief of the Osage Nation has the power to veto oil and gas leases and other decisions of the newly created Agency; approve or deny funding for the Agency and otherwise subject the Minerals Estate to the laws of the Osage Nation (which, for example, could include taxation issues, removing funds from the Minerals Estate, etc.. Thus, while the Osage Constitution created the Agency as a minerals council, it is nothing more than an executive agency within the Osage Nation that is subject to the control of the entire Osage Nation, not the Shareholders. It goes without saying that Non-Headright Osage have irreparable conflicts of interest with the Shareholders when it comes to the administration of the Minerals Estate both groups stand to gain more from keeping control of the Minerals Estate away from the other. Clearly, this was not the Congressional intent of the Reaffirmation Act. Upon the ratification of the Nation Constitution, the BIA absolved itself of any responsibility for the election process for the Tribal Council and the oversight of the Minerals Estate, citing non-involvement with internal tribal issues. Several concerned Shareholders called 10

11 upon the BIA to conduct an election in accordance with the CFRs and further requested the reinstatement of a Principal Chief, Assistant Principal Chief and independent Tribal Council to govern the Minerals Estate. See Exhibit 8 Letters from Concerned Shareholders. In response, the BIA cited the Reaffirmation Act and stated that (1 the Reaffirmation Act superseded prior regulations; (2 the Nation Constitution did not diminish the headright owner s interest; and (3 the passage of the Reaffirmation Act rendered the CFRs moot. See Exhibit 9 Letter from Patrick Ragsdale to Charles Tillman, March 19, 2007; Exhibit 10 Letters from the BIA and Exhibit 11 - Letter from Acting Director of the Bureau of Indian Affairs to John H. Mashunkashey, Chairman of the Osage Minerals Council ( Chairman Mashunkashey, February 12, The BIA has remained steadfast in its position, which was stated in a January 28, 2008, letter from Carl J. Artman, the Assistant Secretary Indian Affairs at the time, in response to a concerned shareholder s request for an election. The Assistant Secretary stated that it was his opinion that the BIA had fulfilled its obligations under the 1906 Act and will take no further actions in this issue since it is an internal tribal matter. Exhibit 12 - Letter from Assistant Secretary Indian Affairs, January 28, The BIA affirmed its position in a letter dated February 12, 2010, where the Agency established by the Osage Nation requested that the BIA administer the Agency elections in accordance with the CFRs and the BIA refused; instead directing the Agency back to the Chief of the Osage Nation. See Exhibit 11 - Letter from Acting Director of the Bureau of Indian Affairs to Chairman Mashunkashey, February 12, D. BIA s Inaction Diminishes the Shareholders Interest in their Headrights 11

12 The unintended result of the Reaffirmation Act has thus been an overt confiscation of the Minerals Estate from the Shareholder s duly elected Tribal Council by the Osage Nation, which is undeniably comprised of and controlled by Non-Headright Osage, not Shareholders; and a complete abolishment of the Tribal Council as the previous form of governance over the Minerals Estate. This occurred under the blindfolded oversight of the BIA contrary to the Congressional intent of the Reaffirmation Act and the CFRs. It is against this backdrop of the BIA s complete abandonment of its trust responsibility and prior form of government of the Minerals Estate that the Shareholders Request for Action emerge. It has long been held that property interests granted by the United States to individual Indians, once vested, may not be abrogated by statute. See Choate v. Trap, 224 U.S. 665 (1912; see also Morrow v. U.S., 243 F. 854 (8 th Cir ( There is no question that the government may, in its dealings with the Indians, create property rights which, once vested, even it cannot alter. As previously noted, courts have consistently recognized a Headright as a vested interest in real property and the Minerals Estate is held by the Shareholders as a tenancy in common. It is axiomatic that the loss of the right to vote for the governing body of the Mineral Estate is the loss of the right to control the administration of the Minerals Estate, which is a valuable property interest granted by the United States in the 1906 Act. Indeed, the Tenth Circuit has noted that the 1906 Act set up the machinery for the administration of the Osage Mineral estate and described and declared the rights vested in the individuals. Logan, 640 F.2d at 270 (emphasis added. The Logan Court further noted that such machinery included the election of a Principal Chief, Assistant Principal Chief and eight-member Tribal Council elected solely by headright owners to govern the Mineral Estate. Id. (emphasis added Yet, inexplicably, the BIA refuses to supervise or administer this longstanding tribal governance, 12

13 because the intent of the 2004 Act eliminates the BIA s authority under the Part 90 regulations. See Exhibit 8, Letters from BIA to Shareholders; and Exhibit 12 Letter from Assistant Secretary Indian Affairs, January 28, Notably, despite this complete abandonment of prior legislation in the face of a clear congressional statement that there have been no changes to existing law, the BIA declares the CFRs moot without following the rulemaking required by 5 U.S.C It is well settled that where an agency changes a published rule in the Code of Federal Regulations or effectively amends a rule in the Code of Federal Regulations, the Administrative Procedure Act s rulemaking procedures must be followed. See Steinhorst Associates v. Preston, 572 F.Supp.2d 112, 120 (D.D.C Nowhere within the four corners of the statutory language, transcripts of congressional hearings on the Reaffirmation Act or Congressional Record can the BIA s strained interpretation of the Reaffirmation Act be found. The Draconian result of the BIA s interpretation of the Reaffirmation Act has allowed the Osage Nation to simply claim ownership and control of the Minerals Estate from the statutorily-created Tribal Council, contrary to the precise statutory language of 1906 Act and the express congressional admonishments under the Reaffirmation Act. This seizure by the Osage Nation results in the loss of two specific property rights of the Shareholders; i.e. respective voting rights to select their representatives to the Tribal Council, including Principal Chief and Assistant Principal Chief, and the control of the Minerals Estate itself. As a result of its continuing inaction, the BIA is failing to protect the integrity of the Mineral Estate mandated by Congress and the Shareholders voting rights to select the leadership to a Tribal Council. Instead, the BIA continues to maintain a blind eye to this colossal seizure of 13

14 Shareholders property interests and congressionally-vested rights without due process under the auspices of internal governmental affairs of the Osage Nation. The Shareholders do not challenge the actions of the Osage Nation or the Nation Constitution and, in fact, agree that the Osage Nation is the governing body of Osage on all matters except the Mineral Estate. Rather, the Shareholders only challenge the actions of the BIA in its stated position that the Reaffirmation Act eliminates its delegated responsibility under the 1906 Act to administer and supervise the elections for the governing body of the Mineral Estate prescribed by the 1906 Act (eight (8 member Tribal Council, Principal Chief and Assistant Principal Chief and recognize such Tribal Council as the independent governing body of the Mineral Estate. It is under this authority that the Shareholders allege the BIA acts in violation of the 1906 Act when it refuses to conduct an election in accordance with the CFRs and recognizes the Agency under the Osage Nation as the governing body of the Minerals Estate. The Shareholders have no care or concern for the language written in the Nation Constitution which may violate federal law or the actions taken by the Osage Nation which do not involve the Minerals Estate. The Shareholders simply ask the BIA to continue to recognize the independence of the Minerals Estate and supervise its governance as the BIA has for the past 100+ years since 1906 by conducting elections to the Tribal Council in accordance with the 1906 Act and the CFRs. III. CONCLUSION The Shareholders respectfully appeal the Director s inaction in response to their request by letter dated April 28, 2011, that the BIA conduct an election for the governing body of the Osage Mineral Estate, including a Principal Chief, Assistant Principal Chief and eight (8 member Tribal Council as prescribed by the 1906 Act and CFRs and recognize the Principal 14

15 Chief, Assistant Principal Chief and Tribal Council as the independent governing body of the Osage Mineral Estate. The BIA s continued failure to take the requested action results in an overt diminishment of the Shareholders interests in the Mineral Estate and is contrary to the express admonishment of Congress in the Reaffirmation Act and legislative history of the Reaffirmation Act. Respectfully submitted, BARROW & GRIMM, P.C. By: William R. Grimm OBA# 3628 Cori D. Powell OBA# W. Seventh Street, Suite 900 Tulsa, OK ( ( (Fax ATTORNEYS FOR APPELLANTS 15

16 CERTIFICATE OF SERVICE I hereby certify that on this day of November, 2011, I mailed a true and correct copy of the above and foregoing instrument by U.S. mail, with proper postage fully prepaid thereon, to: Mr. Michael S. Black Director, Bureau of Indian Affairs MS-4606-MIB 1849 C Street NW Washington, D.C Mr. Larry Echo Hawk Assistant Secretary Indian Affairs MS-4141-MIB 1849 C. Street NW Washington, D.C Osage Agency Bureau of Indian Affairs P.O. Box 1539 Pawhuska, OK William R. Grimm S:\WPDOC\8261\000\Plead_Notice of Appeal_cdp.doc 11/7/2015 cdp 16