Friday, July 10, 2020


Article Index


      Contrary to the plights of indigenous ethnic populations of the Niger Delta, Native American tribes have played an important role in the exploitation, control, and management of natural resources found on tribal lands, including exercising the power to issue leases or permits and to set rates for rent and royalties, and sharing other benefits accruing from the exploitation of their natural resources. Furthermore, the tribes have legal standing to maintain an action against the United States government for any breach of trust with respect to tribal lands and resources whenever the tribes perceive that they have been denied a fair and equitable benefit or that the federal government supported unfavorable benefits or royalty rates on their behalf. In the United States v. Navajo Nationcases, the Secretary of the Interior approved a mining lease (Lease #8580) executed in 1964 between the Navajo tribe and the private company Peabody Coal; the lease allowed the company to engage in coal mining on the Navajo reservation in exchange for royalty payments to the tribe. The maximum royalty rates were initially set at 37.5 cents per ton of coal, and a lease provision provided that the rates were “subject to reasonable adjustment by the Secretary of the Interior” after twenty years, and then at the end of each successive ten-year period thereafter. In 1984, when the initial twenty-year period had elapsed, the tribe requested that the Secretary exercise his power to increase the royalty rate, because the 37.5 cents per ton rate had become lower than the minimum royalty rate of 12.5% of gross proceeds set by the U.S. Congress. The Bureau of Indian Affairs (BIA) recommended adjusting the lease royalty rate to 20% of gross proceeds; however, the Secretary of Interior, after meeting privately with the representative of Peabody, eventually approved a royalty rate set at 12.5% of monthly gross proceeds. The approved rates, which seemed to be an increase from the original 37.5 cents per ton lease rate, were much lower than the 20% of gross proceeds rate initially recommended by the BIA with the support of the Secretary.

      The Navajo Nation brought an action against the United States seeking approximately $600 million in damages on the grounds that the Secretary's approval of a less favorable lease royalty amendment constituted a breach of trust by the U.S. government. The Navajo were unsuccessful before the Supreme Court on technical grounds: the relevant implementing regulations did not provide for money damages, and the tribe did not identify a substantive, applicable trust-creating statute or regulation violated by the government. Nevertheless, the fact that a tribe may legally hold the U.S. government accountable for mismanagement of natural resources found on tribal lands was not lost at all. This conclusion is reinforced by the fact that the U.S. Supreme Court has on other occasions found the federal government liable for breach of its trust responsibility to Native American tribes. Also, the Court of Federal Claims and the United States Court of Appeals have equally, on various occasions, held that the federal government breached its common-law fiduciary duties to the Navajo Nation.

      The idea of holding the federal government responsible for a breach in the rights of Native American tribes to use, manage, and conserve their natural resources, as well as to partake in its benefits, has not been an isolated occurrence. It has received appreciable judicial protection in a number of cases, such as Jicarilla Apache Tribe v. Supron Energy Corp., where a federal court of appeals concluded that the U.S government owed a fiduciary duty to tribes in administering tribal oil and gas reserves and in determining royalties to which the tribe is entitled.

      The indigenous ethnic populations of the Niger Delta, just like many other ethnic groups in Africa, do not enjoy this kind of protection. In fact, they generally do not own or control natural resources, especially with respect to minerals, precious stones, forestry, oil, and gas. They are often not empowered by the national legal regimes to play a major role in the determination of the royalty or revenue allocation rates with regard to the proceeds derived from the commerce of resources found on their lands. Revenue sharing and royalty rates are often determined by federal legislation or prescribed by national constitutions.

      Moreover, attempts to challenge the perceived inequity regarding the structure of natural resource ownership and revenue allocation have largely been unsuccessful. One profound example is the landmark decision of the Nigerian Supreme Court in the case Attorney General of the Federation v. Attorney General of Abia State and 35 Others, otherwise referred to as the Resource Control case. A prominent part of the issues here arose from the contention of the federal government that all natural resources exploited along the territorial waters of the Niger delta region cannot be regarded as property of the host states and communities, but were deemed vested in the national government. All the revenues derived from the exploitation of natural resources in these areas belonged to the federation, contrary to the states' assertion that they were entitled to such revenues. The apex court, in upholding the argument of the federal government, established a judicial precedent that has remained difficult for indigenous peoples to surmount.

      It is, however, acknowledged that the current situation has not always been the case. Shortly after Nigeria's independence from Britain in 1960, a sizeable portion of the mineral revenues (up to 50%) were apportioned to the regions where the minerals were extracted, a position that was emphasized by section 134 of the then Independence Constitution. It stated:

       (1) There shall be paid by the Federation to each Region a sum equal to fifty per cent of--

       (a) The proceeds of any royalty received by the Federation in respect of any minerals extracted in that Region; and (b) Any mining rents derived by the Federation during that year from within that Region.

       (2) The Federation shall credit to the Distributable Pool Account a sum equal to thirty per cent.

       (a) The proceeds of any royalty received by the Federation in respect of minerals extracted in any Region; and (b) Any mining rents derived by the Federation from within any Region.

      Since 1966, however, the issues of royalty rates and revenue-sharing formulas have been subject to arbitrary federal discretion. By the early 1980s, the rates adopted under the Allocation of Revenue Act were:

       i. Federal Government - 55%.

       ii. State Governments (jointly) - 32%.

       iii. Local Governments (jointly) - 10%.

       iv. Fund for amelioration of ecological problem - 1%.

       v. Funds for development of mineral producing areas - 15%.

      Additionally, the current Constitution explicitly requires:

       The President, upon the receipt of advice from the Revenue Mobilization Allocation and Fiscal Commission, shall table before the National Assembly proposals for revenue allocation from the Federation Account, and in determining the formula, the National Assembly shall take into account, the allocation principles especially those of population, equality of States, internal revenue generation, land mass, terrain as well as population density; Provided that the principle of derivation shall be constantly reflected in any approved formula as being not less than thirteen per cent of the revenue accruing to the Federation Account directly from any natural resources.

      By virtue of this arrangement, all revenues, including royalties, that accrue from the commerce of natural resources in any area within the jurisdiction of the Federal Republic of Nigeria, are collected in a central pool designated as ““the Federation Account” and are subsequently allocated to the constituent states of the federation by the national government on the basis of certain considerations decided by the federal government. Such considerations may include factors such as land mass, population, and equality of states. In practical terms, non-mineral producing states or regions may derive a greater revenue share than the mineral-producing territories themselves. In effect, the indigenous communities in resource-rich territories are left holding the short end of the national stick.