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Navajo Nation Gets $554M Settlement Over Trust Mismanagement

By Mark Wilson, Esq. on September 29, 2014 | Last updated on March 21, 2019

The Court of Federal Claims normally only gets mentioned when its cases are appealed to the Federal Circuit Court. But last week, the Court of Federal Claims was in the news thanks to the largest settlement ever obtained by a single Indian tribe against the U.S. government -- $554 million, according to the Los Angeles Times.

Mineral Mismanagement

The case began in 2006 when the Navajo Nation, the country's largest Indian tribe, sued the United States for $900 million over mismanagement of royalties from oil, coal, and gas mining on Navajo land. A complex regulatory scheme controls natural resource extraction on Indian land. Treaties with various tribes control how much the federal government pays the tribes for mining rights and how much the tribes get in royalties.

The Navajo Nation claimed that the administrators of a trust account, into which the royalties were placed, mismanaged the trust, breaching their fiduciary duties. The case has been up and down between the Supreme Court, the Federal Circuit, and the Court of Federal Claims, usually arguing not facts but whether a treaty established a fiduciary duty or even there were a theory under which the Navajo could recover.

Rather than go to trial, the government settled for $554 million. The settlement was accompanied by a ceremony, apparently intended to broker a truce in the acrimonious suit claiming the mismanagement went all the way back to 1946.

Nothing New

This isn't remotely the first time that the Navajo have alleged breach of fiduciary duty claims. For example, in a case dating back to 1993, the Navajo Nation alleged mismanagement in a coal extraction contract with Peabody Energy -- a contract in which the Secretary of the Interior was caught in ex parte conversations with Peabody Energy over renegotiated royalty rates for coal extraction.

The $554 million settlement still allows the Navajo to proceed with lawsuits against the federal government for things like water rights and uranium mining. This particular settlement follows on the heels of a $1 billion settlement two years ago paid to 41 different tribes -- again, over breach of fiduciary duty.

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