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Peabody continues top-level access at Interior
Wednesday, March 17, 2004

An internal investigation released on Tuesday shows that Deputy Interior Secretary J. Steven Griles met at least a dozen times with representatives of Peabody Coal, the company at the center of the Navajo Nation's billion-dollar breach of trust and racketeering lawsuits.

The high-profile cases accuse the world's largest coal company of conspiring with top Interior officials to deny the tribe a high royalty rate on its coal assets. The lawsuits are pending in the federal courts and carry a price tag of at least $1.2 billion.

Federal approval of Peabody's mining agreement came during the Reagan administration, when Griles oversaw the office that recommended the tribe receive a 20 percent royalty rate for what has been called one of the most valuable coal deposits in the world. But after a Peabody lobbyist met with then-Interior secretary Don Hodel to protest, a decision in favor of the high rate was suppressed. The tribe, under intense economic pressure, ended up settling for 12 percent.

Nearly two decades after the debacle, Peabody continued to enjoy top-level access to department officials, the report shows. On at least 11 occasions, Griles met with Peabody to discuss the company's coal mines on the Navajo and Hopi reservations, and on at least two occasions, he discussed the company's proposal to build a power plant near a national park.

Griles was never a lobbyist for Peabody, the world's largest coal company. But he did represent the National Mining Association, an industry organization that paid Griles and business partner more than $140,000 in lobbying fees from 1997 to 2000. Peabody belongs to the organization.

The close ties and the media attention they received were enough for Inspector General Earl E. Devaney to review Griles' dealings with Peabody. But since the company was not a client, the report did not draw a conclusion on whether the contacts were appropriate.

For some Navajo leaders, however, Griles' return to the halls he once occupied in the 1980s has been enough to warrant alarm. Tribal leaders were incensed when Griles and Ross Swimmer, who approved the lower-paying Peabody lease as head of the BIA, were appointed by the Bush administration to top positions.

According to the report, Griles defended his meetings with Peabody as a necessary part of the job. The Navajo Nation, the Hopi Tribe, the company and other parties have been meeting to determine the future of the Black Mesa mines. Griles has been "coordinating efforts" between the Office of Surface Mining and the BIA, the report stated.

At one point, Griles was deposed by the Navajo Nation as part of its legal actions. Swimmer also testified under oath but failed to recall doing so when asked on a number of occasions.

In a highly-anticipated March 2003 decision, the U.S. Supreme Court rejected the tribe's breach of trust claim against the federal government. In a 5-4 decision, the justices said the law the tribe cited did not give rise to money damages. The majority found no problem with Peabody's close contacts with top Interior officials.

But last October, the Federal Circuit Court of Appeals left an opening for the tribe to pursue the $600 million claim based on other laws. The decision was unanimous.

Separately, the D.C. Circuit Court of Appeals has kept the tribe's lawsuit against Peabody alive despite the company's heated efforts to have it dismissed, or alternatively, delayed. Under federal racketeering laws, the tribe could collect up to three times the damage allegedly suffered.

Peabody denies any wrongdoing in the matter. Company representatives point out that the mines have created hundreds of jobs for Navajo and Hopi tribal members and contribute a significant amount of revenue to each tribal government.

Read the Report:
J. Steven Griles Investigation (March 2004)

Relevant Links:
Navajo Nation - http://www.navajo.org
Peabody Energy - http://www.peabodyenergy.com