On April 6, the U.S. Supreme Court denied the Navajo Nation any compensation for government actions that allowed Peabody Coal to extract millions of tons of Navajo coal at low rates for 45 years. The decision raises deep issues about the meaning and continuing viability of what is known as the “trust doctrine” in federal Indian law.
The original 1964 lease established a maximum royalty rate of 37.5 cents per ton of coal. U.S. Department of Energy historical data show the average market price of coal of all kinds in 1963 was $4.55. Thus, the original royalty rate was 8.24 percent. The rate was “subject to reasonable adjustment” by the secretary of the interior on the 20th anniversary of the lease and every 10 years thereafter. DOE data show that by 1984 the 37.5 cents per ton rate yielded one to two percent of gross proceeds, far less than the original 8.24 percent.
In 1984, the area director of the BIA, pursuant to the presumed federal “trust” authority, raised the lease rate to 20 percent of gross proceeds, as requested by the Navajo Nation. Peabody filed an administrative appeal and requested the secretary of the interior to postpone decision or to rule in Peabody’s favor. Thereafter, the secretary and Peabody representatives met privately and the secretary postponed his decision. The Navajo resumed negotiations with Peabody and a rate of 12.5 percent was agreed to. The secretary approved the amended rate.
The bottom line is that the United States uses 'trust doctrine' to control coal leasing on Navajo lands, while refusing any fiduciary responsibility that is not specifically designated in some other law or statute. This is not a 'trust.'
In 1993, the Navajo filed suit against the United States, alleging the secretary’s actions constituted a breach of trust. The Court of Federal Claims found the secretary had “violated the most basic common law fiduciary duties owed the Navajo Nation” by acting in Peabody’s best interests rather than those of the Navajo. That court nevertheless concluded the breach of trust did not require any compensation, because “the trust relationship necessary for our jurisdiction does not exist.”
The record of the case shows the entire leasing arrangement was premised on federal supervisory authority, the core of the so-called “trust doctrine.” Under this doctrine, the federal government asserts paramount ownership of and power over Indian lands. The Peabody lease and rates were negotiated in this framework and only became valid after the secretary’s approval.
Leaving aside, for the moment, the corruption of administrative process by the secretary’s private meeting with Peabody, the question that arises from this case is, “What does the federal trust relationship mean if it provides a presumption of authority over Indian nations but carries no responsibility to them?”
A trustee is someone who holds property for the benefit of another. If the federal government pretends to control Indian lands as a “trustee,” how can it walk away from fiduciary responsibility when Indian lands are exploited for corporate profit? The Peabody lease is not the first or only example of this problem, but the Navajo case brings to our minds a new realization that the “trust doctrine” is not a viable basis for preserving Indian nations.
“Trusteeship responsibility” in federal Indian law is often said to have begun with John Marshall’s suggestion in Cherokee Nation v. Georgia (1831) that the relation of the “Indian tribes” to the United States “resembles that of a ward to his guardian.”
Courts have given the government wide discretion as “trustee.” The Supreme Court said in Lone Wolf v. Hitchcock (1903), “We must presume that Congress acted in perfect good faith in the dealings with the Indians. …” In United States v. Mitchell (1980), the court came up with the notion that the “trust” relationship might be “bare:” In other words, all power and no responsibility. This is what happened in the Navajo case.
Many people, Indian and non-Indian, have failed to understand the evolution of the “trust doctrine;” they see it historically as federal protection against state governments. This view produces considerable tension when federal actions undercut the survival of Indian nations, as in the Navajo case. It is time to see the “trust doctrine” for what it is; a relic of colonial thinking that allowed the federal government to push aside states in the rush to control Indian lands. The doctrine does not protect Indian nations from the federal government itself.
In the opening sentence of the court’s opinion denying relief to the Navajo, Justice Antonin Scalia refers to “the Indian tribe known as the Navajo Nation.” This is a linguistic move that displaces the external reality – the Navajo Nation, an indigenous people, originally free and independent of the United States – into a legal category – the category of “Indian tribe,” presumably subject to the power of the United States. This linguistic move sets up the cognitive framework that makes the court’s ultimate decision inevitable.
The bottom line is that the United States uses “trust doctrine” to control coal leasing on Navajo lands, while refusing any fiduciary responsibility that is not specifically designated in some other law or statute. This is not a “trust.” It is analogous to the old royal prerogative.
The underlying historical and legal relationship between the Navajo Nation and the U.S. involves two distinct parties dealing with each other as separate nations. It is an international relationship, negotiated and set forth in a treaty. The Navajo have now demonstrated the U.S. federal Indian law “trustee” system cannot protect the basic treaty relationship.
The U.S. assertion of power without responsibility violates not only the treaty, but also a variety of international rights and norms. Scalia’s statement, “This case is at an end,” applies only to the system of federal Indian law. It does not bind the Navajo Nation from taking this case to international tribunals. Indeed, the decision sets the stage for the Navajo to do this. That would be a good move.
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Peter d’Errico graduated from Yale Law School in 1968. Staff attorney in Dinebeiina Nahiilna Be Agaditahe Navajo Legal Services, 1968-1970. Taught Legal Studies at University of Massachusetts, Amherst, 1970-2002. Consulting attorney on indigenous issues.