After more than 12 years of litigation, Washington-based BuckleySandler partner Sam Buffone earlier this month successfully negotiated a multi-million-dollar settlement between the Navajo Nation and Peabody Energy, Salt River Project and Southern California Edison.
The settlement resulted in the dismissal of a pending lawsuit against the utilities.
In 1999, the Navajo Nation filed a lawsuit over the royalty rates of coal leases granted to Peabody by the U.S. Department of Interior more than 40 years ago.
As part of the settlement, the Navajo will receive an immediate payment of $50 million and Peabody has committed to provide $15 million toward infrastructure over the next 10 years. The Navajo will also receive $3.5 million annual bonus payments in addition to the existing 12.5 percent royalty rate. Retroactive increases to scholarships for Navajo students will be paid along with a one-time bonus of $1.55 million.
Buffone said he was pleased that both parties could resolve their differences.
“It brings an end to what was a complex piece of litigation that required a lot of resources and attention,” Buffone said.
“At the time, the Navajo had no authority to lease their mineral resources,” Buffone said. “Overall royalties increased dramatically over the last 20 years while the Navajo were getting paid next to nothing.”
The royalty rates were re-evaluated at the request of the Navajo by former Secretary of the Interior William Clark, who tentatively approved a 20 percent rate. Buffone said that Peabody sent a crony of the newly-elected Secretary of the Interior, Donald Hodel, to renegotiate the royalty rate in a “private, backroom deal.”
“This entire lawsuit has been about those actions,” Buffone said. “This settlement is a culmination in what has been a lot of activity in a number of courts.”