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Court opens window for Navajo Nation trust suit
Monday, October 27, 2003

A federal appeals court on Friday gave the Navajo Nation another chance to prove its $600 million breach of trust claim against the federal government.

In a 5-4 ruling this past March, the U.S. Supreme Court rejected the tribe's case, which stems from a coal mining agreement approved during the Reagan administration. Pitting tribal self-determination against the federal trust responsibility, the majority said the laws at issue did not create a fiduciary relationship that gives rise to money damages if breached by the United States.

But the tribe argued that the decision left open the possibility that a "network" of other laws, regulations and treaties could establish that relationship. A three-judge panel of the Federal Circuit Court of Appeals agreed, rejecting the government's opposition to reopening the long-running case.

The tribe has some hurdles to overcome before proceeding, however. First, the judges said the Court of Federal Claims must determine whether the tribe waived its claim with respect to the network of other laws, as the government contends.

Second, the majority imposed a limit on the network of laws the tribe can cite in the lower court. Two judges excluded the Indian Mineral Leasing Act (IMLA) and the Indian Mineral Development Act (IMDA) because they said the Supreme Court addressed both in its March 3 decision.

But in a dissent, one judge disagreed with this line of thinking. "This restriction is neither implicit in the court's decision, nor supportable as a matter of objective analysis," wrote Judge Pauline Newman. She said the tribe should be allowed to use "all sources" on information in the case.

Finally, the tribe still has to show that its claim satisfies Supreme Court precedents in breach of trust cases. The Mitchell I and Mitchell II cases set up the framework by which laws, regulations and treaties are examined to determine whether the federal government has "full responsibility to manage Indian resources and land for the benefit of the Indians."

In ruling against the Navajo Nation in March, the Supreme Court found that the IMLA and IMDA did not impose judicially-enforceable duties upon the Department of Interior. Instead, the majority said the laws placed the tribe in control of its resources.

The decision rocked the tribe's dispute over a mineral development lease with Peabody Energy, the largest coal company in the world. Tribal leaders signed the deal in 1987 under financial pressure, and have always contended that it was not in their best interests because Reagan administration officials rejected their bid for a higher royalty rate on the coal deposit, considered one of the most valuable in the nation.

The tribe had won the backing of a Bureau of Indian Affairs subordinate for a 20 percent royalty rate. But mysteriously, then-Interior Secretary Don Hodel told the tribe to continue negotiations with Peabody.

Only through litigation did the tribe discover that Hodel's directive came days after he met secretly with a Peabody lobbyist who happened to be a close friend. The BIA had already drafted a decision affirming the 20 percent rate, but this was also kept from the tribe, whose leaders eventually settled for a 12.5 percent royalty rate.

As a result of the lower rate, the tribe claims it lost at least $600 million. The exact amount would be decided by the courts.

Separately, the tribe is pursuing a federal racketeering case against Peabody for allegedly conspiring with the Reagan administration to deny the higher royalty rate. The case is in the U.S. District Court in Washington, D.C. Peabody has tried numerous times to delay or dismiss the case but the attempts have been rejected.

Bush administration officials currently in charge of Indian trust have been involved in the case. Deputy Secretary J. Steven Griles oversaw the now-defunct mining division that supported the tribe's stance on the scientific facts before it was rejected by the political appointees. Special Trustee Ross Swimmer, as former head of the BIA, ended up approving the 1987 lease without conducting an economic analysis.

Get the Decision:
Navajo Nation v. U.S. (October 24, 2003)

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

Related Stories:
Peabody seeks to dismiss Navajo Nation claim (06/18)
Court appears ready to toss Peabody appeal (04/15)
Supreme Court's trust rulings criticized (4/14)
Navajo Nation back in court over Peabody lease (4/8)
Effects of Supreme Court decision debated (03/07)
High court ruling makes 'passive' trustee of U.S. (3/5)
A mixed bag for Indian trust (3/5)
Supreme Court issues trust decisions (3/4)
Swimmer can't recall Navajo involvement (02/13)
Panel predicts Apache victory (12/4)
Navajo 'deception' gets Supreme Court hearing (12/03)
Peabody sides with Bush administration on trust (09/04)
Legal tactics land Peabody in hot seat (7/22)
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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