77 F.3d 1128 (9th Cir. 1995), 93-17075, Arizona Public Service Co. v. Aspaas

Docket Nº:93-17075, 93-17079.
Citation:77 F.3d 1128
Party Name:ARIZONA PUBLIC SERVICE COMPANY, an Arizona Corporation, Plaintiff-Appellee, v. Jayne ASPAAS, Virgil Kirk, Sr., Wallace Charley, Helen Bonnaha, Roger Pablo, Roy Begay, Honorable Tom Tso, Honorable Homer Bluehouse, and Honorable Raymond D. Austin, Defendants-Appellants. ARIZONA PUBLIC SERVICE COMPANY, an Arizona Corporation, Plaintiff-Appellant, v. J
Case Date:November 07, 1995
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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Page 1128

77 F.3d 1128 (9th Cir. 1995)

ARIZONA PUBLIC SERVICE COMPANY, an Arizona Corporation,

Plaintiff-Appellee,

v.

Jayne ASPAAS, Virgil Kirk, Sr., Wallace Charley, Helen

Bonnaha, Roger Pablo, Roy Begay, Honorable Tom

Tso, Honorable Homer Bluehouse, and

Honorable Raymond D. Austin,

Defendants-Appellants.

ARIZONA PUBLIC SERVICE COMPANY, an Arizona Corporation,

Plaintiff-Appellant,

v.

Jayne ASPAAS, Virgil Kirk, Sr., Wallace Charley, Helen

Bonnaha, Roger Pablo, Roy Begay, Honorable Tom

Tso, Honorable Homer Bluehouse, and

Honorable Raymond D. Austin,

Defendants-Appellees.

Nos. 93-17075, 93-17079.

United States Court of Appeals, Ninth Circuit

November 7, 1995

Argued and Submitted April 11, 1995.

As Amended on Denial of Rehearing and Suggestion for

Rehearing En Banc March 11, 1996.

Page 1129

Neil Vincent Wake, Bryan Cave LLP, Phoenix, Arizona, for plaintiff-appellee-cross-appellant.

Eric N. Dahlstrom and Michael C. Shiel, Rothstein, Bennett, Donatelli, Hughes & Dahlstrom, Phoenix, Arizona; Richard Davies, Davies & Jones, Port Townsend, Washington; and Herb Yazzie and Joe Lennihan, Window Rock, Arizona, for defendants-appellants-cross-appellees.

Appeals from the United States District Court for the District of Arizona.

Before: WALLACE, [*] Chief Judge, SCHROEDER and TROTT, Circuit Judges.

SCHROEDER, Circuit Judge:

This case involves a protracted dispute between Arizona Public Service Company ("APS") and the Navajo Nation over whether the Navajo Nation can regulate certain APS employment policies affecting the hiring of Navajos who wish to work in APS's Four Corners Power Plant. The plant is operated on tribal trust land in northwestern New Mexico that APS leased from the Navajo Nation in agreements that required the Department of Interior's approval. See 25 U.S.C. § 415 (providing for the Secretary of Interior's approval of Indian leases). The

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plant is owned by a consortium of utility companies and is run by APS.

After the Navajo Nation Supreme Court ruled that APS's anti-nepotism policy violated the Navajo employment discrimination laws, APS filed this suit in district court against Navajo officials challenging the Navajo Nation's authority to regulate APS's employment policies at the plant. APS chiefly contended that the Navajo Nation had waived its right to regulate employment practices at the plant pursuant to the express terms of leases executed prior to the enactment of the Navajo law at issue, the Navajo Preference in Employment Act (NPEA), 15 Navajo Trib.Code (NTC) §§ 601 et seq. (1985). The district court agreed and entered judgment for APS.

The Navajo officials appeal, challenging federal court jurisdiction as well as the validity of any waiver of Navajo authority to regulate APS. APS cross-appeals, seeking the same result on other legal theories. Because we affirm on the grounds relied upon by the district court, we need not decide all the issues raised in the cross-appeal. We have jurisdiction pursuant to 28 U.S.C. § 1291.

BACKGROUND

The rights and duties of APS and the Navajo Nation are set forth in the original lease agreement, executed in 1960, and two subsequent amendments executed in 1966 and 1985 (collectively, "Lease Documents"). 1 All of the Lease Documents were signed by the parties and approved by the Secretary of the Interior (the "Secretary").

The principal relevant clause of the 1960 Lease is the Operations Clause, § 17, which contains the following non-regulation covenant ("Non-Regulation Covenant"):

The Tribe covenants that, other than as expressly set out in this agreement, it will not directly or indirectly regulate or attempt to regulate the Company or the construction, maintenance or operation of the power plant and transmission system by the Company, or its rates, charges, operating practices, procedures, safety rules or other policies or practices.

The Non-Regulation Covenant was not materially changed by way of the 1966 or 1985 amendments. The 1960 Lease also provided in Section 19 that "[APS] agrees that in selecting applicants for employment on the Reservation, it will employ Navajo Indians when available in all positions for which they are qualified in the judgment of the Company, and will pay prevailing wages to such Navajo employees." Additionally, the 1960 Lease established a general dispute resolution process providing that the Secretary would resolve disputes arising out of the Lease. The 1966 amendment reiterated the Navajo preference and non-regulation provisions, and again provided for the Secretary's involvement in the resolution of disputes.

The 1985 amendment once again provided for the preferential employment of Indians. 2 The amendment incorporated a letter agreement ("Letter Agreement") that explained

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the preferences in more detail. 3 The Letter Agreement also provided for the establishment of a compulsory minitrial mechanism in the event of a dispute arising out of the Letter Agreement. 4

Shortly after approval of the 1985 amendment and the Letter Agreement, the Navajo Nation enacted the NPEA. The NPEA, passed "[t]o protect the health, safety, and welfare of Navajo workers," NTC § 602(a)(6), vests Navajos and their spouses with broad substantive rights against employees and non-Navajo workers. It expressly requires employers to exercise preferential hiring practices in favor of Navajos.

On October 24, 1986, the Office of Navajo Labor Relations ("ONLR") initiated proceedings before the Navajo Labor Relations Board ("NLRB"), contending that the NPEA prohibited APS from applying its anti-nepotism policy to Navajo employees and applicants at the plant. APS invoked the dispute resolution provisions of the Lease Documents, requiring arbitration before the Secretary, but the Navajo Nation refused to participate. On February 9, 1987, the NLRB awarded relief to the individuals allegedly harmed, held that APS's anti-nepotism policy was null and void because it violated the NPEA, and permanently enjoined APS from enforcing its policy at the plant.

APS appealed the NLRB's decision to the Navajo Nation Supreme Court on Feb. 19, 1987. The parties settled the individual claims, and on May 26, 1988, the Navajo Nation Supreme Court affirmed the NLRB's decision. See Arizona Public Service Co. v. Office of Navajo Labor Relations, 17 ILR 6105, 6105 (Navajo S.Ct. 1990). The court held that the Navajo Nation has power to regulate the labor relations of non-Indian businesses within the reservation; that neither federal law nor prior contracts or agreements preempt Navajo law, because the Navajo Nation, as a sovereign power, retains its police power to protect the health, welfare and safety of its...

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