The policy of the administration is to increase domestic oil production, but here in Osage County, the Corps of Engineers is trying to swamp 83,000 acres of oil-rich country with dams and reservoirs. The National Park Service wants to expropriate another 97,000 acres for a park.

That these two bureaucratic giants have so far been slowed or stopped short of their goals is due to the spunk of the Osage Indians, who own the mineral rights in Osage County. After years of being exploited by white men seeking to do them good or otherwise, the Osage Indians have learned a basic rule of survival in white man's country: Sue on sight.

The result is that the bureaucratic armies of the Great White Father have not been very successful in their attempts to cover the oil. In fact, the Osage are running circles around them.

"We've got 9,970 pumping oil wells in the country right now," says Sylvester J. Tinker, 78, chief of the Osage. "Hell, we can't get enough rigs in here to drill the new ones. And still those sorry sons of bitches in Washington are telling us to cover it up."

The chief regularly flies to Washington to lobby on behalf of the tribe, and he gets results. A bill before Congress to create a Tallgrass Prairie National Park has been revised so that the Osage will be able to continue producing oil and gas. Still not satisfied, the chief is out to kill the legislation. The chief and tribal council also played a role in winning complete exemption for all Indian oil from the windfall profits tax -- a feat the oil companies have failed to pull off. And, with the help of the courts, the Osage have stopped or slowed work on two dams that have already run up construction bills of $49 million.

Just who the bad guys are in this tale out of the Wild West is not always clear. The Corps, for instance, claims the dams are needed not only for recreation but for controlling floods in nearby Tulsa, and that little Osage oil would be covered up. The Osage, of course, disagree.

What is clear in all this is that the Osage have proved to be adept politicians, defending themselves in the face of a sprawling bureaucracy. a

The dams in question were authorized by Congress in 1962, when filling stations were pumping gas for 30 cents a gallon. And the Prairie Park is a classic case of ongoing bureaucratic schizophrenia.

Two agencies within the Interior Department are fighting each other, the Bureau of Indian Affairs (BIA) to save the Osage lands and the National Park Service to take them away.

Unlike their brethren of the TV stereotype who battle only poverty and squalor, the Osage are the richest Indians in the world. In 1970, the income from leases to the mineral rights in Osage County amounted to $6.5 million. Today the high price of oil is turning once-marginal fields into money-makers. In 1979, the Osage took in $31 million.

One reason the Osage refuse to let their oil wealth be covered up or compromised is their strong memories of past exploitation. The Osage suffered a long history of abuse at the hands of those out to get the Osage oil money by any means available, even murder. Their past treatment offers an important clue to their present attitudes.

Back in the booming oil days of the 1920s, the Osage spent lavishly, foolishly, becoming the envy of every other Indian tribe and the target of every hustling white. An average Osage family of five had an income of $65,000 a year.

An army of salesmen soon took up residence in the towns of Osage County. Much of what they sold was alien to Osage culture. Priceless china and silverware sat on shelves while the Indians ate with their fingers. Expensive vases were used to keep vegetables. Grand pianos often stood out on lawns, rain or shine.

Marriage was another way to part the Indian from his money. Don Dickenson was a full-blood who lived in the town of Fairfax. He met a white woman, went with her for about a week and then married her. Three days later she left him with $100,000 in alimony in her purse.

Soon the feds stepped in. They decided that since so many Indians were indifferent to money, the Osage required guardians, persons who would wisely manage their affairs. A good plan on paper, it seldom worked in the real world.

Typical was the attitude of one guardian who bought a car for $200, and then sold it to his ward for $1,250. Even as the feds were looking to the guardians as a way to control the fleecing, con artists were hatching a new plot that called for the murder of whole Indian families. This period of Osage history is commonly refeered to as the reign of terror.

The idea was to snatch an Indian's "headright" -- the unit by which oil revenues were divided among the tribe. In 1906, as Oklahoma was preparing for statehood, the reservation was broken up into individual allotments. At the time there were 2,229 Osage Indians. Each Indian got 658 acres and could do with it as he pleased, even sell it. But what lay beneath the ground, the mineral rights, could not be touched. They belonged to the tribe as a whole and any income derived from those mineral rights would be spread equally among all 2,229 Indians. The equal share was a headright.

From that day in 1906, the number of headrights never changed. The only way to lose one was to die, at which time the headright, or part of it, was passed on to the immediate heirs.

This fact led to the slaughter of dozens of Indians during the reign of terror. The brains behind one of the worst schemes was William K. Hale, a wealthy white man who was related to an Osage family by marriage. Hale figured he would inherit an estate valued at $2.5 million and an annual headright income of $250,000. All that was required was the deaths of 10 people. For the deaths of one household, he simply arranged to have the whole house blown up.

For a time, there were more federal agents in Osage County than were stationed in New York. They worked for three years before cracking the case. By then, Hale had killed all but two of his victims.

With the solving of the Hale case, the reign of terror had come to an end. It is the memory of the Hale case, and the many incidents like it, that still haunt the Osage. This fear of being exploited, even murdered, for their oil money helps explain their violent opposition to recent "threats" such as a flood control dam or a Tallgrass Prairie Park.

Another reason for Osage obstinance is that they have twice seen oil revenues shrink, and they see the current booming situation as a new lease on a life of affluence. By the late 1930s, the oil fields that could easily be tapped for primary production had been played out, and the oil income dropped.

Boom and bust occurred again in the 1960s, when secondary production methods -- those where water or other solvents are first pumped into an oil field -- for a while increased oil income.

Things went slowly downhill until the Arab oil embargo started the current oil price spiral, making even hard-to-get oil profitable to pump. The upshot is clear. The income from a single headright currently amounts to $26,680 a year, the largest payments to the Osage in the history of the tribe. "We've been doing pretty good since them Arabs started causing problems," says chief Tinker. "I bless 'em every morning."

To keep their oil profits flowing, the Osage are now engaged in a legal and legislative battle with the Corps of Engineers. During the past 30 years, four Corps dams and their reservoirs have covered 45,000 acres in Osage County with water, and now the tribe is out to stop the covering of an additional 38,000 acres.

In the past this was no easy matter. Through rights of eminent domain, the Corps would come in, buy surface rights and have the Osage mineral rights subordinated to the surface rights by court order. The tribe still owned the oil under the reservoirs, but they had no control over access to it.

That changed after a 1976 ruling by a federal court of appeals. The Court ruled that the United States was without authority to condemn, without a clear expression of congressional intent, Indian lands acquired by treaty and held in trust by the United States.

This ruling brought to a halt the Corps' Candy Lake project last August and threatens the future of the Skiatook Lake project, in which the dam is already completed but the lake cannot be impounded until the mineral rights are subordinated to the surface rights. Two other proposed dams are also in jeopardy. The Corps is now awaiting passage of special legislation in Congress that would allow them to continue work.

The Corps contends that the loss of oil revenues would be minimal, and that the federal investment in the dams under construction is already so large that to stop now would be foolish. The Corps estimates, for instance, that the oil production in the Skiatook Lake area amounts to only 1 percent of the total Osage daily production. This, they say, pales in comparison to the $6.9 million in annual benefits expected from flood control, water supply and recreation. Moreover, $44 million has been spent on the Skiatook project.

The Osage are not impressed. They note that eastern Oklahoma already has the world's greatest concentration of man-made reservoirs. They claim the so-called benefits of the proposed dams are the daydreams of idle bureaucrats. In the past, moreover, the payments for lost oil and gas revenue have not nearly matched the projected losses.

And it is happening again, they insist. With Skiatook, 436 oil and gas wells would be affected, and the tribe would lose more than $1 million a year in royalty payments. These payments would now be even greater, they say, but companies hoping to lease mineral rights have been scared off by the prospect of the dam and its reservoir. Their reluctance to explore the field will result in an underestimation of the field's capacity.

Shrewd politicians that they are, the Osage are not particularly worried by all this. When pressed, they even admit that the two dams already under construction will probably be finished, given the hefty federal investment.

Their legislative and legal maneuvering is basically a stalling tactic so that they can pump as much oil as possible before flooding of the area and so they can up the ante on the proven reserves of the covered oil fields.

One way to do this is to let out oil leases near the dam sites to producers for free. The tribe still takes about one-sixth of the money made off any oil discovered by a driller as a royalty payment, and will eventually get a better idea of the proven reserves under the flooded area. This information is then used in court during settlement for mineral rights.

One Osage official, who asked not to be named, took this logic a step further. "We'll actually get paid for the oil twice," he said. "Once in court and once when the technology of oil extraction has evolved to the point where drillers will be able to suck oil from under the reservoirs." This type of extraction is normally done by slant drilling, but since the oil fields of Osage County are close to the surface, this method is not practical. For the moment at least.

And so it goes. The chief flies out to Washington to battle the Prairie Park, the dams, the bureaucrats. The litigation continues even at home in Oklahoma. On the basis of the appellate court decision, the tribe last year sued six cities in Osage County because their municipal lakes are said to impinge upon the Osage mineral rights.

Such local activity is nothing new. Back in the 1960s, when the Osage were not quite so flush, a white resident of Osage County gave some 1,500 tons of boulders to the city of Tulsa for use in a park. The Osage, however, claimed they owned the mineral rights to the stone. After some haggling, the donor ended up paying the Osage 10 cents per cubic yard for the boulders.

Is it worth the effort? To most Osage, the answer is a clear yes, a yes on basic economical grounds. For some, the exploitation of the past makes enlightened self-interest even more to the point.

It was because of increasing white settlement that the Osage in 1872 were compelled to leave their lands in southeastern Kansas, going south to settle in what some whites laughingly called those barren hills, not fit for man or plow.

And though the arrival of unexpected wealth brought its compensations, it also brought con artists and mass murderers. The Osage do not forget. Chief Tinker, for instance, takes along a small-caliber gun when he travels the back roads of Osage County.

"The Osage got money," he says with a grin. "All them other Indians got is their ass and a hat."