updated 5/5/2004 4:45:14 PM ET 2004-05-05T20:45:14

The Navajo Nation won another round in its comeback effort to outflank Peabody Coal in a high-stakes lawsuit against the energy giant.

The Navajo lost a $600 million claim against the United States and its delegate, the Interior Department, in January 2003. The groundbreaking Supreme Court decision established that the tribe could not collect damages because the Indian Mineral Leasing Act offered no provision for monetary penalty if the Secretary of Interior failed to obtain prices higher than the legal minimum on Navajo coal leases.

Last fall, a federal appeals court ruled the Navajo could revisit their lawsuit against the government based on a thicket of other provisions in law and policy that give rise to a federal fiduciary trust obligation for Indian resource leasing, or so the Navajo contend.

Breach of fiduciary trust obligations could conceivably activate specific laws mandating monetary compensation for material damages the tribe suffered pursuant to the breach.

And on April 13, Emmet G. Sullivan, federal District Court Judge for the District of Columbia, ruled that a Navajo lawsuit against Peabody Coal can proceed under RICO, the Racketeer-Influenced and Corrupt Organizations law. (Peabody now generally goes by the name Peabody Energy, and by Peabody Holding Company as the named plaintiff in the Navajo RICO lawsuit.)

The energy company had moved for dismissal of the case, arguing that the Supreme Court settled it in March 2003. But Sullivan found that the Supreme Court settled only the tribe’s lawsuit against the United States, and that only as pertains to the Indian Mineral Leasing Act. Underlying elements in the lawsuits may be the same, he concluded, but the defendant is different and so is the tribe’s argument.

The underlying elements are these: the Navajo Nation sought to adjust its coal leases in 1984, as provided for under the lease terms on the 20th anniversary of the lease.

The nation had ascertained that its royalties from Peabody proceeds fell well below the 12.5 percent of gross proceeds established by Congress, under 1977 amendments to the 1938 Indian Mineral Leasing Act, as a minimum for coal mined on federal lands.

Don Hodel, then Secretary of Interior, delegated the area office of the BIA (a branch of Interior) to contact Peabody with an opinion letter boosting the tribe’s percentage to 20. Peabody, apprised of the rate hike, filed an administrative appeal against it and hired a friend of Hodel’s from the energy industry as a lobbyist.

Peabody representatives met with Hodel in 1985, without the tribe’s knowledge or presence at the meeting. The rate hike to 20 percent, anticipated earlier in the year by both the tribe and Peabody, got shelved in favor of a return to the negotiating table, all this in a memo unknown to the tribe. Eventually the tribe agreed to the minimum percentage of gross proceeds, 12.5 percent. The lower percentage cost the Navajo Nation $600 million over time, the tribe contends.

The private meeting between Peabody representatives and Hodel, as well as the memo shelving a 20 percent royalty to the tribe and urging negotiations, remained unknown to the Navajo until the discovery period of the court case they filed against Interior in 1993, for breach of trust.

In relying on RICO, the Navajo are insisting that Peabody’s activities leading up to the coal lease agreement fall within the law’s definitions of racketeering and organizational corruption. RICO convictions can trigger up to three times the requested damages, depending on multiple factors.

© 2013 Indian Country Today. All rights reserved.


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