GM 12-126

Tribe-Specific Preference Upheld in EEOC Case

A federal district court dismissed the claims brought by the Peabody Western Coal Company (Peabody) against the Equal Employment Opportunity Commission (EEOC) and the Department of the Interior (DOI) in a long-running case over the validity of tribe-specific preference agreements. The court upheld the validity of Peabody’s tribe-specific preference agreement with the Navajo Nation.

As we reported in General Memorandum 10-097 of July 29, 2010 (“Ninth Circuit Refuses to Block EEOC Suit against Tribal Preference”), the Navajo Nation leases land to Peabody for coal mining, and the leases require Peabody to give hiring preference specifically to Navajo tribal members, as opposed to members of any tribe. These provisions were drafted and approved by the Department of the Interior in the 1960s. In 2001, the EEOC sued Peabody on the grounds that the leases violated Title VII of the Civil Rights Act. The EEOC argued that while Title VII allows employers to exercise Indian preference in hiring, it does not allow them to use preference for a specific tribe.

At the time, the U.S. Court of Appeals for the Ninth Circuit decided that the lawsuit against Peabody could continue forward in a limited manner to determine whether the EEOC could seek injunctive relief requiring Peabody to adopt general Indian preference and cease its preference for Navajo Indians.

The district court first stated that any further review related to the determination of the correct parties to be included in the case, and how they are to be included, “would needlessly prolong a decision on the primary issue – whether the tribe-specific preference in Peabody’s mining leases falls within the scope of Title VII. … It is time to resolve it.”

The district court then stated that it should give DOI deference in construing the relationship between the United States and the Navajo Nation and construing the terms of the leases the DOI drafted that were based on the Indian Mineral Leasing Act of 1938 (IMLA), which predates Title VII of the Civil Rights Act.

The district court agreed with DOI that the leases were permissible as political classifications rather than racial classifications under Morton v. Mancari and thus not discriminatory. The district court observed that the federal government “has a distinct relationship with each tribe and distinct trust obligations owed to each tribe.” The district court held that the Navajo preference provision in the Peabody leases is a political classification and that, “Tribe-specific employment preferences in DOI-approved leases help discharge those trust obligations.” The district court also found that the Navajo preference provision is rationally related to legitimate goals of Navajo tribal self-sufficiency, tribal economic development, and tribal self-governance.

Finally, the district court narrowly rejected the EEOC’s argument that Congress did not intend to exempt tribe-specific preference hiring practices against discrimination complaints when it created the Indian-preference exemption in section 703(i) of Title VII of the Civil Rights Act. The Court said that while Congress may have intended such a result in cases where there is no federal oversight or approval, in this case the federal government had drafted and approved the leases which were authorized by the IMLA. Finally, the district court observed that the DOI practice of including Navajo tribal preference in leases under the IMLA predates Title VII, and held that Congress did not implicitly repeal tribal preference when it enacted Title VII.

The court’s finding that tribe-specific preference practices are consistent with the policies of tribal economic development and self-governance is encouraging.

We will continue to update you on this case.