Appeals court rules government breached trust duties in Navajo coal

By Susan Montoya Bryan
Albuquerque, New Mexico (AP) 9-07

A federal appeals court handed the nation’s largest Indian reservation a victory September 13 in a yearslong legal battle over claims that the government and a coal company conspired to cheat the Navajo Nation out of millions of dollars in royalties.

The U.S. Court of Appeals for the Federal Circuit ruled that the federal government failed to uphold its trust duties to the Navajos and that the tribe is entitled to damages from the government.

“After 14 years of litigation, it’s extremely gratifying that a distinguished court of appeals has embraced the position that the Navajo Nation has taken and has ensured that trust responsibility is not simply a catch phrase, but it has some real meaning,” said Paul Frye, an Albuquerque lawyer who represented the tribe in the case.

It was unclear late Thursday whether the government would appeal the ruling. A U.S. Department of Justice spokesman said he could not immediately comment.

The appeals court has remanded the case back to the Court of Federal Claims to determine how much damage the tribe suffered as a result of the government’s actions.

Navajo President Joe Shirley Jr. said he was ecstatic about the ruling.

“I feel like they’ve been doing an injustice to us all along but now we’re beginning to call their hand,” he said.

The Navajos claim the government’s breach of trust cost them as much as $600 million in lost coal royalties. For the Navajo Nation, where many people live without running water or electricity, that’s more than the total annual tribal budget.

Frye said he hopes the tribe would be able to use whatever damages the court may eventually award to “remedy some serious infrastructure deficiencies.”

The sprawling Navajo reservation covers part of New Mexico, Arizona and Utah. The Peabody Coal Co. has mined coal on tribal lands for decades, paying the tribe taxes and mineral royalties.

In 1985, the tribe alleged that Peabody conspired with then-Interior Secretary Donald Hodel to persuade the tribe to accept a lower royalty than other government officials believed the tribe should be paid.

The Navajos said the Interior Department failed in its duty under the Indian Mineral Lease Act to protect the tribe’s interest.

The tribe filed a lawsuit in 1993 and demanded payment from the government, but the Court of Federal Claims ruled that the tribe was not entitled to damages.

The appeals court reversed the decision in 2001, resulting in an appeal by the government. The Supreme Court ruled two years later that violations of the Mineral Lease Act didn’t entitle the tribe to payment from the government.

The tribe then presented arguments that a network of statutes and regulations other than the Mineral Lease Act were violated, which would entitle the tribe to damages.

The case was sent back to the claims court, which denied that argument in 2005, resulting in the tribe’s successful appeal.

The appeals court said Thursday the network of laws cited by the tribe establish “specific trust duties and can fairly be interpreted as mandating compensation for damages sustained as a result of a breach of the duties imposed by the governing law.”

The ruling also states that the tribe demonstrated that the government violated its common law trust duties of care, candor and loyalty as well as its duty to keep the tribe informed regarding the development of its coal resources.