by HOWARD FISCHER
Arizona
Daily Sun
01 May 2004
A federal
judge has handed a key victory to the Navajo Nation in its fight
over lost coal royalties.
Judge
Emmet G. Sullivan rejected efforts by Peabody Energy to throw out
legal claims by the tribe over the question of whether the company
engaged in illegal acts in its apparently successful efforts to
get a top federal official to approve a favorable royalty deal.
Sullivan
acknowledged that the underlying incidents in this case are the
same as ones brought by the tribe in its $600 million lawsuit
against the federal government.
The U.S.
Supreme Court last year threw out a suit by the tribe against the
U.S. Department of Interior seeking damages. The high court said
former Interior Secretary Donald Hodel had no duty to act in the
tribe's best interests.
But
Sullivan said that did not make this case illegally duplicative of
that failed effort.
"The
issue before this court is whether a private company–not the U.S.
government–violated RICO (racketeering laws) and committed
various common law torts when it hired a lobbyist to procure
favorable government action at the expense of the tribe,"
Sullivan wrote. "In other words, although the underlying
facts are the same as those presented before the Supreme Court,
the legal issue and concomitant question of liability are
different.''
Beyond
that, he noted that the original Navajo case against the federal
government still survives based on theories other than Hodel's
duty.
The
Navajo's original 1964 lease with Peabody's predecessor provided
for a royalty of not more than 37.5 cents per ton. It also
authorized the Interior Secretary to adjust that to a
"reasonable'' rate on the 20th anniversary of the lease.
As that
approached, that 37.5 cent figure was equivalent to about 2
percent of gross proceeds.
When the
tribe and Peabody could not resolve the matter the case went to
the Bureau of Indian Affairs which set the royalty rate to 20
percent, a figure affirmed on appeal. But in 1985 Hodel sent a
memo to John Fritz, his deputy assistant secretary for Indian
Affairs, directing him not to divulge that ruling.
Court
records also show that memo had been drafted by Peabody lawyers.
And the Supreme Court, in its ruling last year, acknowledged Hodel
met privately with Peabody officials.
The
Navajos, however, not told that the 20 percent figure was upheld,
eventually agreed to a 12.5 percent royalty rate. That decision,
according to the tribe, cost it $600 million.
Attorneys
for Peabody argued to Sullivan that they are entitled to
protection now under the concept of "collateral estoppel.''
That generally precludes litigants from bringing suit on matters
that they have had a full and fair opportunity to litigate.
But
Sullivan said the basis of the Supreme Court ruling was the
absence of any duty imposed by law on the Secretary of Interior.
In fact,
Sullivan noted, a federal appellate court, ruling on issues after
the Supreme Court decision, concluded that the high court decision
was based solely on the Indian Mineral Leasing Act. He said that
decision did not conclusively uphold the validity of Hodel's
actions -- and, by implication, those of Peabody.
Copyright © 2004 Arizona
Daily Sun
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