Navajo Nation denied coal royalties for second time

<i>Photo courtesy of Enei Begaye/Black Mesa Water Coalition</i><br>
Roberto Nutlouis (left) and Lillian Hill stand in front of coal excavations at the Black Mesa Mine before it closed.

<i>Photo courtesy of Enei Begaye/Black Mesa Water Coalition</i><br> Roberto Nutlouis (left) and Lillian Hill stand in front of coal excavations at the Black Mesa Mine before it closed.

WINDOW ROCK, Ariz. - Navajo Nation President Joe Shirley Jr. expressed disappointment last week over an April 6 Supreme Court ruling that effectively ended the Nation's fight for approximately $600 million in lost coal royalties. This was the second time the 10-year-old case went before the Supreme Court.

"Of course I wish the decision had gone the other way," President Shirley stated. "I think there was real damage done by the U.S. government. Working with Peabody, they really did us wrong. The appellate court said there was a real wrong done."

"The reason why the U.S. Supreme Court, as I understand it, didn't go along with it was that the wrong set of laws was used to bring that lawsuit," he added.

In March 2003, the court ruled 6-3 against the Navajo Nation, saying it did not prove a breach of trust under the Indian Mineral Leasing Act (IMLA), which gives tribes control over their trust assets. After further litigation on remand, the U.S Court of Appeals for the Federal Circuit entered summary judgment in favor of the Navajo Nation, ruling that the Nation had established its case based on statutes and regulations other than the IMLA.

In a hearing in February, the Supreme Court found that a meeting between former Interior Department executive Stanley Hulett and then-Interior Secretary Donald Hodel occurred in July 1985 without the Navajo Nation being present, and that shortly afterward, Hodel signed a memorandum prepared by Peabody Coal directing the company and the Navajo Nation to return to the bargaining table although an adjustment had already been made by Navajo Area Director Donald Dodge in 1984. The adjusted rate was 20 percent, but Peabody had requested that Hodel postpone the decision on the 20 percent or rule against it.

The Navajo Nation began to lease land on Black Mesa to Peabody Coal in 1964 with approval by the Interior Department. The lease established a schedule of royalty payments not greater than 37.5 cents per ton with a provision for a "reasonable adjustment" in 20 years - 1984. The 37.5-cent rate was deemed "inequitable" and "substantially lower" than the 12.5 percent minimum royalty set by Congress in 1977 for coal mined on federal land.

However, following Hodel's issuance of the memorandum, the Navajo Nation, facing the alternative of receiving unadjusted flat royalties of $.375 per ton, was compelled to agree to the lower rate of 12.5 percent.

Eight law professors who specialize in Native American law wrote, "After the Navajos gave in to Peabody's lower rate, [Hodel] approved the deal, fully aware that he had misled the tribe in crucial ways."

Four former Interior secretaries added, "As a result of these actions, Peabody Coal was able to reduce its royalty payments ... [depriving the Navajo Nation] of hundreds of millions of dollars ... [and] undermined one of the key components of the Navajo-Hopi Rehabilitation Act."

The Navajo-Hopi Rehabilitation Act of 1950 encouraged the development of Navajo natural resources such as coal and to provide infrastructure funding to promote self-sustaining Navajo communities, fulfilling provisions of the Navajo Treaty of 1868.

"[We] need to get back together as a nation and see what we can do to right that wrong that was done to the tune of $600 million against our nation. I don't believe it's right. Just because the U.S. Supreme Court said we need to stop, I don't think so," President Shirley concluded.


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