AG: 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 over.

On Oct. 11, Navajo Nation Attorney General Louis Denetsosie said negotiations with Peabody are over and the nation is moving forward with its lawsuit against Peabody.

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 and Peabody.

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 royalty rate.

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.

New Arguments
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 Management Act.

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 Peabody.

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 bench.

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.

Decommissioning MGS
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 discussions.

“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," she stated.

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."




Reprinted as an historical reference document under the Fair Use doctrine of international copyright law.