Navajo coal royalty case heads to Supreme Court
By Felicia Fonseca
Associated Press Writer
FLAGSTAFF, Ariz. (AP) — Coal has proved to be a valuable resource for the Navajo Nation, providing tens of millions of dollars in revenue each year to the tribe and jobs to its people on a reservation where half of the work force is unemployed.
But the Navajo Nation contends it could have received up to $600 million more in royalties over the years had the U.S. government not conspired with a coal company to cheat the tribe. The federal government says the tribe's contentions are unsupported.
The tribe's lawsuit claiming that the United States breached its trust duties is headed to the U.S. Supreme Court Monday for the second time since it was filed more than 15 years ago. The U.S. government is looking for a second favorable ruling from the high court, while the Navajo Nation wants a lower court's ruling that found the tribe is entitled to damages upheld.
"It's a very big case about the federal trust responsibility, and that's why I think people are keeping a close eye on this," said John Dossett, general counsel for the National Congress of American Indians.
The Supreme Court handed the federal government a victory in 2003 when it ruled the Department of Interior had protected the tribe's interests under the Indian Mineral Leasing Act.
A ruling later by the U.S. Court of Appeals for the Federal Circuit kept the lawsuit alive. The court said the Navajos had the right to present their argument that a "network" of laws not considered by the Supreme Court were broken by the government and the tribe is deserving of damages from the United States. Those laws include the Navajo-Hopi Rehabilitation Act and the Surface Mining Control and Reclamation Act.
The appeals court sided with the Navajo Nation in the most recent decision in the case, and the U.S. government appealed to the Supreme Court. The government said the appeals court decision is at odds with the high court decision, and it should be reversed.
The Navajo Nation, which extends into Arizona, New Mexico and Utah, is one of just a handful of coal-producing tribes. In 1964, the tribe approved a lease for Peabody Energy under which the company paid a royalty rate of 37.5 cents per ton, about 2 percent of gross proceeds.
When the lease came up for renewal 20 years later, the Navajo Nation sought a higher royalty rate of 20 percent. That effort was backed by the Navajo-area U.S. Bureau of Indian Affairs director.
But before the rate was set, then-Interior Secretary Donald Hodel met with a Peabody lobbyist and blocked the rate, forcing the tribe back into negotiations. The tribe, not knowing what became of its proposal, later agreed to a 12.5 percent royalty, the then-standard rate for federal coal leases.
"We used the best information we had at the time, and it just turned out to be not all of the information that was available," said tribal spokesman George Hardeen. "We took a loss and we didn't now it at the time. Somebody was popping the champagne corks, and it wasn't the Navajo Nation."
The tribe sued in 1993, claiming Hodel's secret meetings were counter to the interests of the tribe, which as a trustee he was obligated to protect.
The federal government says there was nothing illegal about the meetings and that a Navajo official also had communicated with Interior officials about the lease. The network of laws the tribe claims Hodel violated do not apply to lease approvals or royalty rates and cannot serve as the basis of claim for damages, the United States said.
A spokeswoman for Peabody, which is not a party in the case, said the company's actions have always been proper and it believes the royalty rate is fair.
Four former Interior secretaries, the National Congress of American Indians, a group of tribes, eight professors of American Indian law, and the attorneys general of New Mexico, Utah and Arizona have filed briefs in support of the Navajo Nation.
For the Navajo Nation, where many people live without running water or electricity, $600 million is more than three times the total annual tribal budget.
"Virtually every stage of the coal leasing process on the Navajo reservation is under federal control or supervision, and the government should be held to account for its violations of its basic management duties," the tribe said.