UNITED STATES v. NAVAJO NATION

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Case Basics
Docket No. 
01-1375
Petitioner 
United States
Respondent 
Navajo Nation
Advocates
(on behalf of the Petitioner)
(on behalf of the Respondent)
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Facts of the Case 

The Indian Mineral Leasing Act of 1938 (IMLA) allows Indian tribes, with the approval of the Secretary of the Interior, to lease the mining rights on their tribal lands to private companies. In 1964, Navajo Nation (tribe) entered into a lease with the predecessor of Peabody Coal Company, allowing Peabody to mine on the tribe's land in return for a royalty of 37.5 cents for every ton of coal mined. The agreement was subject to renegotiation after 20 years. By 1984, the tribe's royalty was only worth 2% of Peabody's gross proceeds. In 1977 Congress had required a minimum of 12.5%. The tribe requested that the Secretary set a new rate, and the Director of Bureau of Indian Affairs for the Navajo Area, as the Secretary's representative, made a preliminary decision to set the rate at 20%. Peabody's representatives urged the Secretary to reverse or delay the decision. The Secretary agreed, and urged the parties to resume negotiations. The tribe and Peabody agreed on a rate of 12.5%. In 1993, however, the tribe sued the government in the Court of Federal Claims, alleging a breach of trust and claiming $600 million in damages. The court ruled for the government, explaining that though the government may have betrayed the tribe's trust by acting in Peabody’s interest rather than the tribe’s, it had not violated any specific statutory or regulatory obligation. The tribe was therefore not entitled to monetary relief. On appeal, the tribe argued that the entirety of the IMLA imposes on the government a broad obligation to look after the wellbeing of the tribe. The Court of Appeals for the Federal Circuit agreed and reversed the lower court, finding that "the Secretary must act in the best interests of the Indian tribes."

Question 

Can the U.S. be held liable for a breach of trust with an Indian Tribe in connection with the negotiation of a mining lease, even when the U.S. has violated no specific statutory or regulatory duty established in the Indian Mineral Leasing Act of 1938?

Conclusion 
Decision: 6 votes for United States, 3 vote(s) against
Legal provision: 25 U.S.C. 396

No. In a 6-3 decision, the Court ruled that an Indian Tribe must "identify a substantive source of law that establishes specific fiduciary or other duties." The opinion by Justice Ruth Bader Ginsburg held that the IMLA could not be interpreted to require the Secretary to exercise broad authority to manage the tribe's resources for the tribe's benefit. Instead, the tribe itself controls negotiations and the Secretary has a more limited role in approving the agreements. The Court concluded that no provision of the IMLA entitled the tribe to monetary damages as a result of the government's role in the negotiations. Justice Souter, joined by justices Stevens and O’Connor, wrote a dissent arguing that the Secretary's approval power must be exercised for the tribe's benefit, and monetary damages may be awarded if the power is misused.

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UNITED STATES v. NAVAJO NATION. The Oyez Project at IIT Chicago-Kent College of Law. 18 December 2014. <http://www.oyez.org/cases/2000-2009/2002/2002_01_1375>.
UNITED STATES v. NAVAJO NATION, The Oyez Project at IIT Chicago-Kent College of Law, http://www.oyez.org/cases/2000-2009/2002/2002_01_1375 (last visited December 18, 2014).
"UNITED STATES v. NAVAJO NATION," The Oyez Project at IIT Chicago-Kent College of Law, accessed December 18, 2014, http://www.oyez.org/cases/2000-2009/2002/2002_01_1375.