From Native Lands To Corporate Pockets -- Navajo Coal Royalty Claim Rejected

Coal Mine In Navajo Territory (Youth Climate Movement)

Stating that “This case is at an end”, Supreme Court Justice Antonin Scalia closed the books on the multi-decade effort by the Navajo Nation to obtain a greater share of mineral royalties from the coal that is mined from their lands by non-Native corporations. The Nation’s claim was for back-royalties in excess of $600 million. The result: No acknowledgement of government wrongdoing, no renegotiation of the mineral lease terms, no more money for the Nation.

The Court’s holding in United States v. Navajo Nation dismissed the Nation’s assertion of a breach of fiduciary duty by the Secretary of the Interior, arising from his failure promptly to approve a royalty rate increase under a coal lease the Tribe executed in 1964.  The lease allowed the corporation currently known as the Peabody Coal Company to engage in coal mining on a tract of the Navajo reservation in exchange for royalty payments to the Tribe. After the initial 20-year lease elapsed in 1984, the Nation requested that the Secretary exercise his power to increase the royalty rate, and the Director of the Bureau of Indian Affairs for the Navajo Area issued an opinion letter imposing a new rate of 20 percent of gross proceeds.  However, the actual new royalty rate was set significantly lower, under circumstances the Nation found highly suspicious. In particular, the Nation alleged that the Secretary, following improper ex parte contacts with Peabody, had delayed action on Peabody’s administrative appeal in order to pressure the economically desperate Nation to return to the bargaining table. This, the complaint charged, was in violation of the United States’ fiduciary duty to act in the Tribal members’ best interests.

Although it did little to dispute the facts alleged in the Complaint, the Supreme Court rejected the Nation’s argument and claim. Scalia’s opinion holds that “The Government’s “comprehensive control” over Indian coal, alone, does not create enforceable fiduciary duties. “ The Court ruled that the Nation was required to identify an explicit statutory provision that created a particular trust obligation, rather than relying on the long-standing principles on which the trust relations between the federal government and Native communities has been based.  “Because the Tribe cannot identify a specific, applicable, trust-creating statute or regulation that the Government violated, we do not reach the question whether the trust duty was money mandating. Thus, neither the Government’s “control” over coal nor common law trust principles matter.”

This case and its ultimate decision highlights the continuing tension between Tribes and the Department of Interior regarding the management – both environmental and financial – of natural resources in Native lands. Although certainly a disappointment for the Navajo Nation and other Tribes seeking to realize fair value for their mineral wealth, the Court’s opinion actually provides a roadmap for correcting the apparent inadequacy of federal fiduciary responsibilities to Tribes. Native communities and their representatives should initiate federal legislation that clarifies and explicitly enumerates the obligations of the federal government in handling Tribal resources, and provides meaningful and efficient remedies for a breach of trust that damages or materially undervalues Native resources.

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