February 28, 2013

Lawsuit challenges tribal leases

Lawsuit challenges tribal leases
By Jerry W. Kram

About two dozen members of the Three Affiliated Tribes gathered at the Scenic 23 on Feb. 21 to share their experiences with oil companies on the Fort Berthold Reservation.
The main speaker at the meeting was attorney Vance Gillette. He told the group he had drafted and filed lawsuit on behalf of an informal group called Save our Aboriginal Resources (SOAR). Jill Gillette, Verdell Smith and Joletta Bird Bear were listed as individual plaintiffs. The lawsuit contends that the vote to renew of 32,000 acres of oil leases to Spotted Hawk Oil Company was invalid because only two members of the tribal business council voted for it.
The genesis of the problem, Gillette said, when the Bureau of Indian Affairs approved tribal leases in 2006 for an 80,000 acre area called Dakota 3 for just $50 an acre. Those leases were later sold for $925 million. Gillette said there is little that could be done about that lease. The following year, a 32,000 acre south of Parshall was leased to Spotted Hawk for $300 an acre, less than the $1,000 other landowners were getting at the time.
The Spotted Hawk lease required the company to drill five wells over the next five years to hold the lease. When the lease was up in 2012, Spotted Hawk had drilled just one well, according to Gillette. The company approached the Tribal Business Council to extend the lease for two years. The company offered to pay an additional $1 million to extend the leases, which was about $30 an acre. According to the lawsuit, a majority vote of the board, or three of the five members who were present, was needed to pass a motion. The council approved the extension on a 2-1 vote with two abstentions and two members absent.
“If we win this case the lease would be canceled,” Gillette said. “The tribe could stand to lose $14 million if that happened. Spotted Hawk would also be certain to sue the tribe. But the tribe stands to gain more than $200 million from that land just in lease bonus money if the leases are broken. That money would go into the tribal general fund to help all the people.”

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