FROM THE ARCHIVE

Navajo $600 million ruling at risk

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TUESDAY, JUNE 4, 2002

The Supreme Court took its second Indian law dispute of the term on Monday, agreeing to consider whether the Navajo Nation is owed as much as $600 million for a federally-approved coal mining lease whose provisions were unfavorable to the tribe.

The tribe won its landmark breach of trust case last fall when a federal appeals court said damages were owed for a deal containing a royalty rate below standard market value. In a split decision, a three-judge panel of the Federal Circuit Court of Appeals said Navajo officials -- "facing severe economic pressures" -- were forced to accept the contract even though better conditions, kept hidden, had been approved.

The ruling was a significant victory for the nation's largest tribe which has seen mining on its lands since the 1960s. Peabody Coal, the world's biggest coal conglomerate, operates in the Black Mesa region in northeastern Arizona.

The win now faces a reversal by a Supreme Court most tribal leaders and their advocates characterize as unfriendly to Indian Country. "There's always the chance we may lose," said Ray Baldwin Louis, the press officer for Navajo Nation President Kelsey Begaye.

"Hopefully," he added, "[a decision] will be in favor of the nation."

The dispute reaches to the Reagan administration, when the tribe's contracts with Peabody were up for renegotiation. Based on a federal law establishing a minimum 12.5 percent royalty rate, the Bureau of Indian Affairs approved a higher term of 20 percent.

The provision was improved on what the tribe had been receiving -- 37.5 cents per ton, or just 2 percent of total proceeds.

But Peabody disputed the new agreement and enlisted the services of lobbyist Stanley Hulett to appeal the contract. Hulett happened to be a personal friend of then-Secretary of Interior Donald P. Hodel and the two met secretly, without the tribe's knowledge, in 1985 to discuss the deal.

Subsequently, the tribe was told no decision was reached on the favorable provision when in fact it was upheld by an internal Department of Interior review. Negotiations between the parties resulted in an agreement with the 12.5 percent rate, which has been intact ever since.

"It can not be reasonably disputed that the Secretary's actions were in Peabody's interest and contrary to the Navajo's interest," Circuit Judge Pauline Newman wrote in August 2001.

Circuit Judge Alvin A. Schall filed a dissenting opinion in the case and said the tribe failed to prove the government violated a specific trust obligation. "That has not been done," he wrote.

Solicitor General Ted Olson, a Bush appointee, seized on the disagreement in briefs filed this year. Not only did he dispute the existence of a trust relationship, he said the lower court's decision could lead to other tribal victories.

"The decision below will encourage the filing of damages claims against the United States for breach of trust," he wrote on March 15. "At a minimum, such a development will subject the United States to costly litigation."

Attorneys for the Navajo Nation urged the Court to reject an appeal in a May 3 opposition brief. "Honest consultation with, not deception of, Indian tribes is the cornerstone of the modern federal-tribal relationship," they wrote.

Oral arguments in the case are expected this November. In a new development, the Court agreed to consider the Navajo dispute and one affecting the White Mountain Apache Tribe of Arizona at the same time.

Both cases deal with the limitations of the trust relationship, although the Apache Tribe seeks considerably less, $14 million, in order to repair crumbling buildings at an old Army fort the government promised to hold in trust under a 1960 federal law. The same appeals court last May ruled the tribe was owed money.

Related Documents:
Supreme Court Docket Sheet No. 01-1375 | DOJ Petition Brief | DOJ Reply Brief

Related Decisions:
NAVAJO NATION v. US, No 00-5086 (Fed Cir. August 10, 2001)

Relevant Links:
The Navajo Nation - http://www.navajo.org
Peabody Energy - http://www.peabodyenergy.com

Related Stories:
Supreme Court accepts Navajo trust case (6/3)
Navajo royalty case up for review (5/30)
Supreme Court considers 'deception' of trust (5/22)
Action due on Navajo trust case (5/20)
Court to decide limits of trust duty (4/23)
Bush wants Navajo ruling reversed (3/27)
Court rules Navajo Nation owed money (8/14)
Apache Tribe wins trust case appeal (5/17)
Tribe wins trust case appeal (5/14)
Peabody mining protested (4/3)
Peabody defends water usage (3/26)