FROM THE ARCHIVE
Navajo 'deception' gets Supreme Court hearing
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TUESDAY, DECEMBER 3, 2002

The Supreme Court on Monday confronted one of the largest tribal trust mismanagement cases in history but seemed hard pressed to find any wrongdoing on behalf of government officials who suppressed and concealed vital information from the Navajo Nation.

No one disputes that former Secretary of Interior Donald P. Hodel in July 1985 met secretly with an industry lobbyist whose client, Peabody Coal, opposed paying a 20 percent royalty rate to mine what government experts considered a high-quality coal deposit. What happened as a result -- the tribe, at the urging of the Bureau of Indian Affairs, ended up settling for a much lower rate -- gave rise to debate among the justices.

"It was unfortunate, to say the least," Justice Sandra Day O'Connor said of the situation.

Deputy Solicitor General Edwin S. Kneedler agreed with the assessment. But he said the Department of Interior was under no obligation to limit its communication with the lobbyist, who was a personal friend of Hodel, or even inform the tribe of what transpired.

"There was no regulation or statute that barred that action," he told the Court.

Paul Frye, an attorney for the Navajo Nation, said the incident put the tribe, which was undergoing a financial crisis and political change at the time, at a disadvantage. He urged the justices to find that the United States, as a trustee, disregarded its duties of loyalty, candor and care.

"No trustee has the ability to be actively disloyal," he said.

At issue is whether the government owes an estimated $600 million for the alleged breach of trust. The Bush administration argues that the case fails to meet Supreme Court precedents for money damage claims.

Members of the Court seized on that aspect and questioned whether the Indian Minerals Leasing Act (IMLA) created a fiduciary relationship. The law authorizes the Interior to approve leases to exploit tribal resources but some justices suggested the ball is really in the tribe's court.

"That's what distinguishes this case," offered Justice Antonin Scalia. "You have a scheme that puts the tribe in control of its own affairs."

Justice Ruth Bader Ginsburg said the law recognizes tribal sovereignty by giving tribes greater "management and control authority" over their assets. The Interior, she reasoned, only has control "at the end of the road."

Justice David Souter suggested the government's involvement definitely played a role even though the tribe made its own decision to accept the lower rate. "What the government did or said led the tribe to act differently," he offered.

"But what's the breach here?" questioned Justice Stephen G. Breyer. He and other members referred back to the law to determine whether a violation of a specific trust duty occurred.

Frye proposed that the government did in fact disobey its responsibilities. "The Department of the Interior thwarted both purposes of the statute," he said, referring to the law's goals of providing a minimum lease rate and encouraging self-determination. "It disinformed us."

But Kneedler, in a short rebuttal at the end of the one-hour oral argument session, disputed Frye's version of the events. "It's completely not true that Secretary Hodel directed a subordinate to lie to the Navajo Nation," he told the Court.

The case was filed in the Federal Court of Claims following the approval of the lease. Only through legal discovery did Hodel's secret meeting, and numerous documents detailing an internal decision to affirm the 20 percent rate, come to light.

A federal judge in February 2000 chastised Hodel for claiming not to remember the conversation. But the court found no basis to award the tribe damages.

The Federal Circuit Court of Appeals in August 2001 reversed. In a 2-1 decision, the court sided with the Navajo Nation. The Bush administration then sought Supreme Court review.

A ruling on the case, which was heard in tandem with a related one affecting the White Mountain Apache Tribe of Arizona, is expected by summer 2003. Chief Justice William H. Rehnquist did not take part in the oral arguments due to recent surgery but the Court said he will participate in the final decision.

Relevant Documents:
Supreme Court Docket Sheet No. 01-1375 | Petition: United States | Reply: United States | Merits: United States | Merits: Navajo Nation | Reply Brief: United States | Joint Appendix Vol. I | Joint Appendix Vol. II

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

Related Decisions:
Mitchell I: UNITED STATES v. MITCHELL, 445 U.S. 535 (1980)
Mitchell II: UNITED STATES v. MITCHELL, 463 U.S. 206 (1983)

Relevant Links:
Navajo Nation - http://www.navajo.org

Related Stories:
Supreme Court takes on trust (12/2)
Review disputes 'costly' Indian trust litigation (10/21)
Tribes await Supreme showdown (10/17)
Peabody sides with Bush administration on trust (09/04)
Legal tactics land Peabody in hot seat (7/22)
Griles slammed for ignorance (7/12)
Griles can't explain trust standards (6/27)
Navajo royalty case accepted (6/4)
Don Hodel's Navajo Folly (6/4)
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)
Bush wants Navajo ruling reversed (3/27)
Court rules Navajo Nation owed money (8/14)

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