Navajo Nation trust case on Supreme Court docket again

Law | Trust

Thursday, October 2, 2008

A long-running breach of trust case that the Bush administration claims will encourage more lawsuits was accepted by the U.S. Supreme Court on Wednesday.

The justices will determine whether the Navajo Nation can sue the federal government over a bungled coal lease. The tribe claims it lost $600 million in royalties as the result of improper lobbying during the Reagan administration over 20 years ago.

The Federal Circuit Court of Appeals, has twice sided with the tribe in holding the government liable for mismanaging the tribe's trust assets. Rulings noted that Peabody Energy, the world's largest coal company, pushed Interior Department officials to approve a lease with a less than favorable royalty rate while the tribe was under "severe economic pressure."

But after an appeal by the Bush administration, the Supreme Court reversed the first victory in the case. By a 6-3 vote in March 2003, the justices held that the tribe failed to prove that approval of the lease violated the trust relationship.

On remand, the tribe cited additional laws and regulations that once again convinced the Federal Circuit to hold the government liable. A second appeal followed earlier this year, with the Department of Justice warning about the costs of litigation involving tribes and individual Indians.

"The practical implications of the court of appeals' decision are significant," the government's petition stated. "The tribe's damages claim in this case alone totals $600 million."

"The decision below will encourage the filing of damages claims against the United States for breach of trust with respect to the Secretary's approval of Indian mineral leases," the petition continued, citing 55 pending tribal cases and lawsuits by potentially "thousands of individuals."

The Navajo Nation, the largest tribe in the U.S., filed the case in hopes of recovering the money it would have received under a more favorable lease. At the time, tribal leaders had no idea of the circumstances surrounding Interior's dealings with Peabody.

The Bureau of Indian Affairs initially backed the tribe's request for a higher royalty rate. But an appeal by Peabody drew the involvement of then-Interior secretary Don Hodel.

Without the tribe's knowledge, Hodel met privately with a Peabody lobbyist who happened to be a close friend. Shortly after the meeting, he informed the tribe that a decision on the appeal would not be coming any time soon.

The BIA, however, had written the appeal in favor of the tribe. The decision was suppressed and kept hidden from the tribe until it came to light years later as part of the litigation.

"These unrebutted facts show that the department violated the most basic trust duties of care, loyalty, and candor and that there is 'no plausible defense' for the department's actions here," the tribe's brief in opposition to the government's petition stated.

The Supreme Court, in the 2003 ruling, found no reason to hold the government liable despite the backdoor dealing. The government's briefs in the current appeal describes Hodel's actions but do not mention the lobbyist connection.

The lease with the lower royalty rate was eventually approved by Ross Swimmer, who was the assistant secretary of Indian Affairs at the time. He now serves as the Special Trustee for American Indians, a Senate-confirmed position.

Another Interior official involved in the case was J. Steven Griles, who oversaw the mining division at Interior that studied the issue and at one point supported the tribe. Griles, a former lobbyist for the coal and mining industry, recently completed a 10-month sentence in federal prison for his role in the Jack Abramoff scandal.

In addition to accepting the Navajo case, the Supreme Court yesterday agreed to hear a dispute involving Native Hawaiian lands. As of yesterday, the justices had not said whether or not they will accept two other Indian law cases -- one affecting gaming and the other involving jurisdiction and taxation.

Separate from the lawsuit against the government, the Navajo Nation is suing Peabody under federal racketeering laws. The case has proceeded despite Peabody's attempts to have it dismissed.

Supreme Court Documents:
Docket Sheet: No. 07-1410 | Petition for Certiorari | Brief in Opposition | Reply Brief

Federal Circuit Decision:
Navajo Nation v. US (September 13, 2007)

Supreme Court Decision in US v. Navajo Nation:
Syllabus | Opinion [Ginsburg] | Dissent [Souter]

Related Supreme Court Decision in US v. White Mountain Apache Tribe:
Syllabus | Opinion [Souter] | Concurrence [Ginsburg] | Dissent [Thomas]