Navajos troubled by award given to Peobody Energy following royalty scandal

By Brenda Norrell
Freelance Writer

The Bush administration has intervened in a Navajo Nation lawsuit that has been wending its way through the federal courts for a decade. The lawsuit is against Peabody Energy, one of the world’s largest coal mining companies. The Bush Administration has asked the Supreme Court to overturn an appeals court ruling that, if allowed to stand, could have the U.S. government paying millions of dollars in lost revenue to the tribe. The lawsuit, and the resulting ruling, are related to a secret deal struck between the Interior Department and Peabody Energy in the 1980s. The deal, quietly made while the Navajo Nation was negotiating new royalty rates with Peabody, had the effect of reducing the amount of revenue Peabody shared with the Navajo Nation for coal mined from Navajo land. Since 1964, the tribe has leased mining rights to Peabody for two strip mines. One mine is on Black Mesa, which is also home to the Hopi tribe. The other mine is outside Kayenta in northeastern Arizona.

 The Navajo-Peabody dispute is entering its final chapter just as another energy scandal is making headlines: All across the nation billions in Indian royalty funds remain unaccounted for and many tribes are accusing the Interior Department of mismanaging the funds. In April, the Interior Department, under the guidance of Gale Norton, added insult to injury by giving Peabody Energy the Mineral Revenues Stewardship Award in recognition of the company’s “timely reporting of production and royalty data.” The award recognizes the “company’s exceptional financial reporting” from its mines on Indian and federal lands in Wyoming, Montana, Arizona and Colorado. Ironically, coal royalty payments are the basis of the Navajo Nation’s lawsuit against Peabody.

A U.S. Court of Appeals ruled in August that the Interior Department violated its trust responsibility when it engaged in backdoor deals with Peabody and diminished Navajo royalties in 1985. Currently, however, the Bush administration says a ruling ordering the government to make payments to the Navajo Nation to make up for lost royalties could be too costly and lead to similarly expensive rulings favoring other tribes that share royalties with other energy companies.

The U.S. Justice Department has intervened. “The (appeals court decision) will encourage the filing of damages claims against the United States for breach of trust,” Solicitor General Ted Olson wrote in a March 15 brief. “At a minimum, such a development will subject the United States to costly litigation.”

In the federal lawsuit, the Navajo Nation produced evidence that Peabody engaged in a conspiracy with then-Secretary of Interior Donald Hodel to prevent Navajos from receiving fair payment for coal mined on Black Mesa.

It was during the discovery phase of another federal lawsuit that documents surfaced and exposed meetings between Hodel, Peabody representatives and other energy barons, without the presence of representatives of the Navajo Nation. Defendants include Southern California Edison and the Salt River Project in Arizona. The Salt River Project is accused of trying to involve the Arizona congressional delegation in preventing Navajos from gaining fair payment.

During contract negotiations between Peabody and the Navajo Nation in 1984, the Bureau of Indian Affairs recommended a 20 percent royalty on coal revenue. Later, the Navajo Nation’s evidence would show that a Peabody lobbyist, Stanley Hulett, had met with Secretary Hodel and persuaded him not to approve the royalty rate suggested by the BIA. Hulett, in addition to being a Peabody lobbyist, also happened to be a friend of Hodel’s. During the contract negotiations, the tribe settled for a 12.5 percent royalty. It was more than the 2 percent royalty they had previously received, but far less than the cash-strapped tribe had hoped for.

The Navajo Nation seeks $600 million in actual damages, $1 billion in punitive damages for malicious and reckless behavior, and legal costs from the federal government. The appeals court said it will be up to a lower court to determine the actual amount awarded to the tribe.

Navajo President Kelsey Begaye pointed out that many Navajo children still read by kerosene lanterns. Meanwhile, Navajo coal lights up the homes of the wealthy in the Southwest. “While the defendants reap huge and illicit profits using Navajo coal to generate electricity for homes and businesses in Southern California, Las Vegas and Arizona, thousands of Navajo homes are still without electricity,” said Begaye.

Alluding to the various coal mines and power plants on the Navajo reservation, the lawsuit states, “For many years, the Navajo Nation has served as an energy colony of the United States.”

Roberta Blackgoat and some other Navajo elders are opposed to continued mining. She says coal mining is gouging out the liver of Mother Earth and all humanity will suffer. (See news brief on Page 7 about Blackgoat’s recent death.)

Nonetheless, Peabody has released a 30-minute film, Miracle on Black Mesa. The promotional film claims the company is “balancing reverence for the earth with the need for economic development on tribal lands.”

Brenda Norrell has spent the past 18 years covering Indian country, serving as a staff reporter for Indian Country Today and Navajo Times and a stringer for the Associated Press and USA Today. She lived on the Navajo Nation for 18 years and now divides her time between southern Arizona and Mexico. Tea Party Editor Dan Frazier contributed to this story.