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Monday, June 24, 2024 | Back issues
Courthouse News Service Courthouse News Service

Oil Company Owes Crow Tribe $869,000

BILLINGS, Mont. (CN) - Elk Petroleum owes the Crow Tribe $859,000 for leases and royalties even though it never pulled oil or gas from the ground, a federal judge ruled.

The Crow, or Apsáalooke in their Siouxan language, historically lived in the Yellowstone River Valley, which extends from present-day Wyoming to Montana and into North Dakota.

In 2008, the federally recognized Crow Tribe of Montana signed a lease with Elk Petroleum, giving it the right to explore, develop and produce oil and gas on about 88,000 acres on the Crow Reservation.

In exchange, the Crow were to receive a bonus of $5 per acre and $2 per acre for annual rent, plus an undisclosed amount of royalties on any oil or gas produced there.

The tribe submitted the lease to the Bureau of Indian Affairs, as required under the Indian Mineral Development Act, and Indian Affairs Superintendent George Gover recommended the regional director approve the lease.

The regional director approved it but recommended that production and sales and reporting methods be clarified.

One year later, Elk Petroleum received invoices from the Crow for $179,123.10 for rent and $447,807.75 for the bonuses.

But Elk Petroleum claimed it never signed a binding lease and that it has no obligation to pay the money because the regional director's approval was conditioned on "further clarifications."

The Crow reject that. They say the regional director stated that "approval was not conditional and is considered final for the department."

Elk Petroleum appealed to the Interior Board of Indian Appeals, which ruled for the Crow on Feb. 18.

The lawsuit dates back to August 2014, when Elk Petroleum sued the BIA in Federal Court.

Both sides sought summary judgment in September 2015.

U.S. District Judge Susan Watters ruled on Feb. 18 that the board properly found in favor of the Crow because it relied, in part, on the regional director's letter that plainly states: "This is our approval of the Indian Mineral Development Act agreement between the Crow Tribe of Indians and Elk Petroleum, Inc."

"The court finds that the board's decision to affirm the regional director's decision was not arbitrary and capricious, nor was it an abuse of discretion," Watters wrote in her opinion and order.

"The board carefully reviewed the administrative record before it and made a reasoned decision that the regional director unconditionally approved the lease."

She added: "The board also did not abuse its discretion when it found that the regional director did not amend or conditionally approve the lease, but rather made suggestions of how Elk Petroleum and the Crow Tribe could clarify certain terms."

Elk Petroleum claimed it had been denied due process, but Watters said it failed to properly state the claim: citing Navajo Nation v. U.S. Forest Service, which states that "a party may not effectively amend a complaint by raising a new theory in a summary judgment motion; and La Asociacion de Trabajadores de Lake Forest v. City of Lake Forest, which states that, 'Simply put, summary judgment is not a procedural second chance to flesh out inadequate pleadings.'"

She concluded that "Elk Petroleum owes the amount of $869,176.89 to the Bureau of Indian Affairs."

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