Washington (Platts)--7Apr2009

The US Supreme Court in a unanimous opinion Monday ruled that the US
government was not obligated to increase royalty payments for coal mined on
Navajo Nation land.

In doing so, the Supreme Court reversed a lower court ruling that would
have enabled the Navajos to seek higher royalty payments, thereby ending a
long-running breach-of-trust argument with the US Department of the Interior.

The Navajos argued it could sue the government for violations of its
fiduciary duties under the Indian Tucker Act. They also contended the
government violated provisions of the Indian Mineral Leasing Act of 1938, but
the Supreme Court disagreed on both counts.

The Supreme Court said the ITA does not apply because the tribe must
first identify a substantive source of law that establishes specific fiduciary
or other duties and prove that the government failed to perform them.

It also said the tribe must find principles of trust law that might be
relevant "in drawing the inference that Congress intended damages to remedy a
breach." In the case of the IMLA, the court said law contains "no enforceable
fiduciary obligations that the tribe could sue the government for having
neglected."

Justice Antonin Scalia, writing for the court, said "the tribe cannot
identify a specific, applicable, trust-creating statute or regulation that the
government violated, so trust principles do not come into play here. This case
is at an end," he said, adding that the appeals court judgment is reversed,
and the case remanded with instructions to affirm the US Court of Federal
Claims' dismissal of the tribe's complaint.

Monday's ruling is the second time the high court has ruled against the
Navajos' breach-of-trust claims involving a coal-lease agreement with Peabody
Energy from the late 1980s.

In 1993, the tribe filed a $600 million suit against the government in
Federal Claims Court, alleging the government violated its statutory and
fiduciary duties by approving amendments to a lease agreement with Peabody
that the tribe claimed caused it "economic loss, a diminution of the value of
the trust and harm to the sovereignty of the Navajo Nation."

The Federal Claims Court dismissed the case and ruled in favor of the US
government in 2001. The Navajos then filed with the US Court of Appeals
for the Federal Circuit, which ruled the tribe could pursue its claim on the
basis that the government violated its fiduciary duties under the Navajo-Hopi
Rehabilitation Act of 1950 and the Surface Mining Control and Reclamation Act
of 1977.

The Supreme Court in 2003 overturned the Federal Circuit's decision
citing the tribe's failure to find an appropriate law to support their claims.
--Regina Johnson, regina_johnson@platts.com