WASHINGTON – Chalk up another reason for tribes to assume all possible control over their own resources.
In its first major ruling in almost a generation on federal trust responsibilities toward tribes, the U.S. Supreme Court on March 4 dismissed a $600-million claim of the Navajo Nation against Peabody Coal Company. A majority of the court reasoned thus: although the tribe may or may not have legitimate complaints about its treatment by a federal trustee, no law says it can recover its lost resources if in fact it was treated that way. Case dismissed – and go figure.
The closely watched decision drew a swift reaction of disappointment from Navajo leaders, and from Peabody Coal an equally swift insistence that the decision holds precedent for other legal proceedings with the tribe, presumably meaning a case based on similar facts involving coal royalties and a water rights issue. Tribal spokespersons have indicated that the Nation will press ahead with these cases. Beyond the parties to the case itself, implications have already appeared in print as to the impact of the court’s findings on the Native class-action lawsuit against the government for its mismanagement of Indian trust funds.
As with any case that has been in the courts for 10 years, the subject all that time of decisions made “in no uncertain terms” at one level of the legal system and reversed at the next, this was dauntingly complex case in many ways. But in other ways, it may boil down to the simple question of whether a violation of moral law that materially damages others should yield a monetary payment to the victims.
At every important turn in the proceedings, it has been clear that a potential weakness in the Navajo case has been the nation’s inability to link the disputed conduct of former Interior Secretary Donald Hodell to specific laws obligating any Interior Secretary to seek standard market value for tribal resources under the Indian Mineral Leasing Act. Such specific laws would mandate monetary compensation for material damages the tribe suffered due to a breach of trust responsibility by the government.
It was this potential weakness the Supreme Court seized upon in its six to three decision. After rehearsing the various claims and counterclaims in the case, Justice Ruth Bader-Ginsburg concludes the opinion of the court as follows: “However one might appraise the Secretary’s intervention in this case, we have no warrant from any relevant statute or regulation to conclude that his conduct implicated a duty enforceable in an action for damages ?”
This thinking is much in line with the Bush administrations’ in asking the high court to reverse a lower court ruling in favor of the Navajo claim. Otherwise, the administration stated in a brief filed March 15, 2002, the government would face “adverse consequences” from “the filing of damages claims against the United States for breach of trust.”
Dissenting justices Souter, Stevens and O’Connor, argue that even the most modest standard of fiduciary duty would be enough to keep the Navajo case alive on remand to the lower courts. Noting that if every disputed fact in the case were tried, the tribe might recover nothing as the negotiation of other lease provisions in 1987 may have netted “an overall bargain in the tribe’s interest.”
To leave the legal opinions behind, what all this relates in ordinary language is that 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 1/2 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.
Hodell, then Secretary of Interior, delegated the area office of the BIA 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 good friend of Hodell’s from the energy industry as a lobbyist. Peabody representatives met with Hodell 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, was 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 1/2 percent.
The private meeting between Peabody representatives and Hodell, as well as the memo shelving a 20 percent royalty to the tribe and urging negotiations would remain unknown to the Navajo until the discovery period of the court case they filed suit against Interior in 1993, for breach of trust. Not that it mattered by that time: the Supreme Court in its final opinion stated that ex parte communications, such as meetings where not all of the stakeholders are present, are not explicitly prohibited under the Indian Mineral Leasing Act.