Lawsuit against Peabody to resume
By Marley Shebala
Navajo Times,. OCTOBER 25, 2007
TUBA CITY — Negotiations to settle the
Navajo Nation's 1999 lawsuit against Peabody Energy
Company, which involves $600 million in damages, are
On Oct. 11, Navajo Nation Attorney General
Louis Denetsosie said negotiations with Peabody are
over and the nation is moving forward with its lawsuit
Denetsosie, who gave the keynote address
at a Navajo Nation Water Rights Commission workshop
at Greyhills High on Oct. 11, said in a separate interview
with the Navajo Times that the nation would be filing
a written request to the federal district court in Washington,
D.C., this month to end discussions between the nation
He had asked the federal court to call
for negotiations in an attempt to save about 300 jobs
at Peabody's Black Mesa Mine.
Peabody's lease for the Black Mesa mine
was drawing to a close in December 2005, which was also
the deadline the Navajo Nation Council gave to Peabody
to stop using the Navajo Aquifer to slurry over 200
miles to Southern California Edison's Mohave Generating
Station in Nevada.
December 2005 was also a federal court's
deadline for SCE to install pollution controls on MGS
at a cost of millions of dollars. the court's order
was issued in 1999 after several environmental groups
successfully sued Southern Cal over pollution.
Denetsosie noted that the decision to
resume the legal battle against Peabody was based on
several events, including a favorable U.S. Court of
Appeals' ruling on Sept. 13.
The federal appeals court decided that
the federal government owes the tribe damages for violating
its trust responsibility.
Violation of trust duty
That the Interior Department violated
its trust responsibility was not in dispute.
In 2003, the U.S. Supreme Court upheld
a 2001 appeals court decision that the federal government
had violated its trust obligation when then Interior
Secretary Donald Hodel met privately with Stanley Hulett,
a Peabody Energy Co. lobbyist and close friend, to discuss
Peabody's coal royalty payments to the Navajo Nation.
But at the same time, the high court
struck down the lower court's finding that the federal
government owed damages to the Navajo Nation.
The Sept. 13 decision addressed a new
set of arguments brought by the tribe to revive the
quest for damages.
The landmark case began in 1984, when
the Navajos sought to raise the royalty rate from 2
percent, set in the original 1964 lease, to 20 percent
for coal mined by Peabody.
Federal reports supported the increase
but Hodel derailed their release after meeting with
Peabody. Tribal leaders, who did not see the research,
finally were persuaded to settle for a 12.5 percent
When the tribe discovered the subterfuge
in 1993, attorneys for the tribe sued to recover lost
royalties. The Navajo Nation filed separate lawsuits
against the federal government, Peabody, and two utilities
that purchased coal from Black Mesa.
In its lawsuit against Peabody, the
Navajo Nation asked for $600 million and up to treble
that amount in punitive damages.
Federal courts have rejected repeated
requests by the defendants to dismiss the tribe's claim,
but directed the parties to settle the case.
After the U.S. Supreme Court threw out
the tribe's request for damages from the Interior Department,
the Navajo Nation managed to bring the question of monetary
compensation back to the appeals court by citing other
laws governing trust responsibilities.
In the Sept. 13 decision, the court
of appeals agreed with the new arguments and referred
the case back to the federal claims court to determine
the exact amount of damages.
Denetsosie explained that the new arguments were based
on the Navajo Nation's 1868 and 1849 treaties with the
U.S., the 1950 Navajo-Hopi Rehabilitation Act and the
1982 U.S. Office of Surface Mining Oil and Gas Royalty
He noted that the appeals court has
ruled twice in the tribe's favor, which leads him to
believe that the Navajo Nation has a strong case against
He also believes that the federal government
would first ask for a rehearing before the appeals court
that would involve all the judges.
Three judges made the Sept. 13 decision.
There are a total of 11 judges on the appeals court
On Sept. 19, the Navajo Times contacted
the federal government's attorney in the case, Todd
F. Aagaard, who declined to comment.
Also on Sept. 19, federal spokesperson
Andrew Ames said the federal government has 45 days
to appeal the decision, and can ask for an extension
beyond that as well.
Denetsosie also recalled the Bush administration's
2002 backing of Peabody in its appeal to the U.S. Supreme
Court to throw out the Navajo Nation's claim for damages.
Then-solicitor general Ted Olson asked
the high court to rule against the Navajo Nation because
"significant" federal dollars were in danger.
But Denetsosie said Olson's claim couldn't
hold water because the Navajo claim for damages is based
on the Navajo-Hopi Rehabilitation Act, which involves
only two tribes and so would not subject the U.S. to
costly damages claims.
He said his decision to also go back
into court against Peabody is based on SCE's latest
announcement that it's given up on returning MGS to
service, which also means the Black Mesa Mine and its
jobs are gone.
On Wednesday, Gil Alexander, SCE
spokesman, responded to Denetsosie by point to an Oct.
4 monthly report to the California Public Utilities
Commission, which stated that on Oct. 1, SCE began "decommissioning"
the plant, by reducing the workforce from about 65 employees
to about 38.
According to the report, the plant is
scheduled to be fully decommissioned in 2008.
On Wednesday, in the response to Denetsosie,
Beth Sutton, Peabody spokesperson, stated in an e-mail,
"The royalty litigation between the Navajo and
Peabody is stayed as the parties continue Mohave mediation
“Peabody actions have always been proper,
and we are working with both the Navajo and Hopi to
pursue coal-related development opportunities that would
create jobs, tribal revenue and economic benefits,"
On the matter of Black Mesa Mine,
Sutton stated, "Black Mesa mining activities remain
idled following the suspension of Mohave generating
activities. We continue discussions with the tribes
on projects that would allow the mine to resume operations.
The Kayenta Mine is unaffected and continues operating."
She declined to comment on the
Sept. 13 appeals court decision because "Peabody
is not a party to the Federal Civil court matter, and
we would not comment on the case."