United States v. Navajo Nation

PETITIONER: United States
RESPONDENT: Navajo Nation
LOCATION: Peabody Coal Operation

DOCKET NO.: 07-1410
DECIDED BY: Roberts Court (2006-2009)
LOWER COURT: United States Court of Appeals for the Federal Circuit

CITATION: 556 US (2009)
GRANTED: Oct 01, 2008
ARGUED: Feb 23, 2009
DECIDED: Apr 06, 2009

ADVOCATES:
Carter G. Phillips - argued the cause for the respondent
Edwin S. Kneedler - Acting Solicitor General, Department of Justice, argued the cause for the petitioner

Facts of the case

In 1964 the Navajo Nation entered into a contract with Sentry Royalty Company for the mining of coal on its land. The contract called for royalty payments to the Navajo Nation not to exceed 37.5 cents per ton of coal mined. However, the contract allowed for the Secretary of the Interior to adjust the royalty rate to a "reasonable" level after twenty years. At the end of twenty years, the Navajo Nation was being paid the equivalent of 2 percent of the proceeds from the mining operation. As stipulated by the contract, the Navajo Nation entered into discussions with Peabody Coal Company (formerly Sentry Royalty Company) to adjust the royalty rate. After discussions failed, the Navajo Nation asked the Secretary of the Interior to resolve the dispute. The Department of the Interior's Bureau of Indian Affairs reached an initial decision to set the royalty rate at 20 percent. This decision was delayed on the recommendation of the Secretary of the Interior. Unbeknownst to the Navajo Nation, the Secretary had been meeting with executives of the Peabody Coal Company who requested the delay. Facing dire economic circumstances, the Navajo Nation agreed to a royalty rate of 12.5 percent which was approved by the Secretary of the Interior.

In 1993, the Navajo Nation brought suit against the United States for violations of its statutory and fiduciary duties to the Nation. It sought damages of $600 million. This latest decision by the U.S. Court of Appeals for the Federal Circuit represents the fifth chapter in the long running saga over the original dispute. Its decision comes in the wake of the U.S. Court of Federal Claims holding, on instructions from the Supreme Court, that the Navajo Nation did not provide sufficient evidence to seek damages from the United States.

The Court of Appeals disagreed. It held that the Navajo Nation marshaled sufficient evidence to show that the United States "controls the leasing of the [Navajo's] coal resources and that the government is responsible for the liabilities arising thereunder." It reasoned that the body of regulations and statutes that governed the Nation's resources were "reasonably amenable" to an interpretation that imposed liability on the part of the government for breach of its duties.

Question

  1. Does the decision by the Supreme Court in Navajo Nation I, foreclose this most recent decision by the U.S. Court of Appeals for the Federal Circuit?

  2. If the decision was not foreclosed, did the U.S. Court of Appeals for the Federal Circuit properly hold that the United States was liable based on its interpretation of statutes that do not address royalty rates in tribal leases?

Media for United States v. Navajo Nation

Audio Transcription for Oral Argument - February 23, 2009 in United States v. Navajo Nation

Audio Transcription for Opinion Announcement - April 06, 2009 in United States v. Navajo Nation

John G. Roberts, Jr.:

Justice Scalia has our opinion this morning in Case 07-1410, United State versus Navajo Nation, which I will announce.

For over 15 years, the Navajo Nation Indian Tribe has been pursuing litigation against the Federal Government seeking $600 million in compensation for what it says was a breach of trust by the Secretary of the Interior.

The Secretary allegedly violated duties to the Tribe by failing promptly to approve an increased royalty rate for a coal lease that had been executed in 1964 by the Tribe and a mining company.

Under the terms of that lease, the royalty rate was subject to reasonable adjustment by the Secretary of Interior after 20 years.

The Tribe accordingly sought to secure an increase in the royalty rate but the mining company objected.

According to the Tribe, the Secretary delayed acting on the matter until economic pressures forced the Tribe to reach a far less favorable negotiated settlement.

The United States Court of Appeals for the Federal Circuit initially held in favor of the Tribe but six years ago, we reversed that decision.

To recover damages from the Federal Government under the relevant statute, a Tribe must “identify” a substantive source of law that establishes specific fiduciary or other duties and allege that the Government has failed faithfully to perform those duties.

We held that the statutes and regulations cited by the Tribe did not establish any enforceable fiduciary duties with respect to coal leases negotiated by Tribes with third parties.

We remanded the case for further proceedings consistent with our opinion.

The Federal Circuit again held that the Tribe had a viable claim, this time based on a series of other statutes and on common law trust duties arising from the Government's comprehensive control over Indian coal.

Once again, we reversed.

The three statutes that the Federal Circuit relied upon do not provide any more sound of a basis for the Tribe's breach of trust lawsuit than those we considered and rejected the first time we considered this case, nor can the Government's control over Indian coal standing alone create fiduciary duties enforceable in suits for money damages.

The Federal Government has only waived sovereign immunity with respect to certain categories of claims and the Tribe cannot succeed in this lawsuit unless it identifies a “specific rights-creating or duty-imposing statutory or regulatory prescription.”

The Tribe has failed to make the showing.

The Court of Appeals' decision is reversed and this case should now be regarded as closed.

The opinion of the Court is unanimous.

Justice Souter has filed a concurring opinion in which Justice Stevens has joined.