WASHINGTON, DC, June 22, 1999 (ENS) - The Navajo Nation has filed suit in
U.S. District Court in Washington, DC seeking recovery of $600 million in
damages from Peabody Western Coal Company for "unlawful acts defrauding the
Navajo Nation." The lawsuit alleges that Peabody has virtually stolen the
Navajo Nation's "strategically located, uniquely valuable, high-BTU and
low-sulfur coal at far below fair value."

Peabody operates the Black Mesa and Kayenta mines on the Navajo reservation
in northeast Arizona.

Peabody Coal Company's Kayenta mine covers over 10 miles in Arizona
(Photo courtesy Sol Communications/)

The Los Angeles based Southern California Edison Company, the Arizona
based Salt River Project, other Peabody holdings and three current and former
Peabody employees also named as defendants in the lawsuit filed Monday.

Coal from the mines powers electricity generation across Arizona, Nevada and
Southern California. The coal is transported to the Navajo Generating Station
of
the Salt River Project near Page, Arizona and the Mohave Generating Station
of Southern California Edison on the Colorado River near Laughlin, Nevada.

The lawsuit alleges the defendants engaged in misconduct that included
"corruption of a federal administrative appeal, fraudulent misrepresentation,
obstruction of justice, conspiracy, breach of contract and interference with
the fiduciary relationship between the United States government and the
Navajo Nation."

From its headquarters in St. Louis, Missouri, the Peabody Group said it would
"vigorously defend" the lawsuit served today by the Navajo Nation related to
the 1987 renegotiation of their coal lease agreements for the Black Mesa and
Kayenta mines."

The mines are operated by Peabody Western through lease agreements originally
signed with the Navajo Nation and the Hopi Tribe in the mid-1960s. The leases
now have provisions that allow renegotiation of royalty rates every 10 years
if any party requests a review. Two revisions have been completed since the
mines opened.

Edward Begay is Speaker of the Navajo Nation Council.
(Photo courtesy office of the Speaker)

"We will not be cheated any longer," said Edward Begay, speaker of the Navajo
Nation Council. "Coal represents the Navajo Nation's most valuable natural
resource. This lawsuit will restore lost revenues to the Navajo Nation and
place us on the road to achieve economic self-sufficiency for our people. We
are not asking for a handout. We are demanding to be compensated equitably by
American corporations and treated fairly by the United States Government."

The Navajo leases were renewed and expanded in 1987 after both the Navajo
Nation Tribal Council and the U.S. Secretary of the Interior approved the new
agreement. At that time, the renewal included a 12.5 percent coal royalty
rate - equivalent to the federal coal royalty rate - applied to the sales
price of each ton sold to the power plant customers, the Navajo and Mohave
Generating Stations.

That is precisely the problem, the Navajos claim. In a statement Monday, the
tribe said, "Under the terms of the 1964 lease, the Navajo Nation received
less than two percent for its coal, a tiny fraction of its real value."

In the 1984 the tribe sought to renegotiate the royalty rate. "The Interior
Department, after a series of U.S. Government studies, decided in favor of a
royalty rate of 20 percent. The defendants appealed Interior's decision and,
when they learned that the 20 percent royalty rate was about to be upheld,
schemed to influence Interior Secretary [Donald] Hodel to derail his
Department's decision. Peabody's interference caused Hodel to suppress the
decision to grant fair value for the Navajo Nation's coal."

The Navajo Nation agreed to the federal minimum 12.5 percent royalty rate in
1987. They claim the 1987 agreement also forced the tribe to forfeit back
taxes, back royalties and future taxes, and to concede more coal, more land
and more rights-of-way to Peabody.

But Peabody said in its statement, "Last year, the Navajo Nation and Peabody
Western reached their second renegotiated coal royalty agreement for the
leases that continues to include a 12.5 percent royalty rate on each ton of
coal in addition to a $3.5 million annual payment. That agreement was
subsequently approved by the Navajo Nation Tribal Council as well as the U.S.
Secretary of the Interior."

Peabody Group Vice President Roger B. Walcott Jr. said, "We are confident
that the lawsuit is without merit and our intent is to aggressively defend
our actions."

Since mining operations began, the Black Mesa and Kayenta mines have injected
more than $1.2 billion into Navajo and Hopi tribal economies in royalties,
taxes, wages and charitable contributions. Each year, Peabody Western
provides the Navajo Nation and the Hopi Tribe with more than $40 million in
royalties and taxes generated from the mining operations, Walcott said.

© Environment News Service (ENS) 1999. All Rights Reserved.

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