THREE AFFILIATED TRIBES DISTRICT COURT
FT. BERTHOLD INDIAN RESERVATION NEW TOWN, ND
Save Our Aboriginal Resources (SOAR);
Jill Gillette, tribal member; Verdell Smith,
tribal member; Joletta Bird Bear, tribal
v. No. CV 2013-0083
Mervin Packineau, council member;
Judy Brugh, council member; Tex Hall,
Chairman of Three Affiliated Tribes;
old council member, Scott Eagle; old
council member, Arnie Strahs,
1. Introduction. This case is about how self-dealing by tribal council members threatens loss of millions of dollars needed for housing, road repairs, and social problems related to the oil boom.
In 2012 Spotted Hawk oil co. offered $l million ($30 per acre bonus) to renew a 2007 lease when they did not drill as required.
The going rate is $5,000 an acre, on up, in the proven Bakken area. The tribe stands to lose millions as noted below.
Plaintiffs contend that only two council members can’t approve or “renew” an oil lease in 2012, worth millions – when a council man pushing the lease has business interests in the oil patch. And a majority vote is needed.
The 2007 oil lease for 32,000 acres to Spotted Hawk oil co. was $300 an acre. In 2012, the rate is $5,000 per acre on up. If the new lease stands, the Tribe will lose over $l50 to $400 million in oil monies. RELIEF: Plaintiffs seek an order to rule that the August 9 lease approval is invalid.
2. Plaintiffs: SOAR is an informal association of tribal members from each segment of the Reservation. Jill Gillette, Verdell Smith and Joletta Bird Bear are members of the Three Affiliated Tribes.
3. Defendants. In August 2012 five council members were
present: Mervin Packineau, Arnie Strahs, Judy Brugh, Scott
Eagle and Tex Hall, Chairman. They are sued in their official and individual capacities, for acts contrary to law.
Two council members not present were Frank White Calfe and Barry Benson. After a November 2012 election, Fred Fox replaced White Calfe, L. Ken Hall replaced Eagle, and Randy Phelan replaced Straus. These persons are not named defendants.
4. Oil boom. In 2006 an oil well was hit in the Bakken field, by Parshall ND. Then Chairman Marcus Wells, Jr. issued cheap leases at $50 per acre to Dacotah 3, run by tribal member Spencer Wilkinson, Jr. He later flipped an 80,000 acre lease for $925 million to Williams oil co. around 2011.
5. Lease. In 2007, the Wells tribal council approved an IMDA (Indian Mineral Dev. Act) lease with Spotted Hawk for 32,000 acres south of Parshall, ND at $300 per acre and 22% royalty. This was lower than area leases of $l,000 per acre.
6. Drilling required. The lease required five wells within a certain time; one was drilled. Spotted Hawk, a black owned co. from Virginia, has little experience in the oil patch. They hired
local Indian Delvin Foote, and later Bernard Fox as “lobbyists” since they are related to Mervin Packineau by blood and marriage.
7. Severe impact on Reservation. While the oil monies flow in
from tribal lands, the oil boom brought in heavy traffic, drugs, destruction of roads and a housing shortage. The new Chairman Tex Hall and council struggle with how to fund programs. Tribal members live in Fema trailers and many lack housing.
8. In November 2011 Chairman Tex Hall wrote a letter to Spotted Hawk that they failed to drill as required. In 2012 the BIA was going to cancel the lease, but conflicting reports were done between Aberdeen and Denver BIA offices.
9. The Vote. On August 9, 2012 Spotted Hawk, had Delvin Foote and Bernard Fox offer the council $l million to “amend” the lease. Upon belief, Mervin Packineau and A. Straus, voted to approve the lease. 1 no, and 2 abstained.
10. Cronies. Mervin Packineau is nephew to Delvin Foote, and they are in oil related businesses together such as pipe and fracking, according to the TERO list of contractors. Bernard Fox is married to a cousin of Mervin Packineau.
11. Self-interest unchecked. The tribal ethics law set up a committee, which is not staffed, so complaints are futile. Some council members have oil contracts and hustle work for water hauling, pipe and frack jobs – when they are supposed to regulate the oil companies! This led to the Spotted Hawk affair.
12. Oil contracts. The cost to drill one well is $7 million with fracking. Spotted Hawk is borrowing $100 million – using the tribal minerals as collateral.
First Claim – to declare the August 2012 vote by defendant Packineau invalid.
13. Plaintiffs re-allege and incorporate paragraphs 1-12.
14. First ground – self dealing prohibited. Case law bars a council member from voting, when his self-interests are involved. Tex Hall v. Tribal Business Council, No. 95-0069 (Ft. Berth. D. Ct. 1996) (council member with a self-interest cannot participate in a vote to allocate grazing lease).
15. Second ground – Conflict law. Tribal law prohibits a
public official form using his position or “could reasonably be
perceived as placing their private economic gain” before those of
the general public. Ethic Ordinance, Section II, pages 4-5.
16. Council member M. Packineau misused his position by
a) voting to favor his own business interests with D. Foote,
b) to reap future contracts with Spotted Hawk, and
c) he favored his cronies allied with Spotted Hawk. He stands to benefit personally, e.g. $l00 million drilling program on tribal land, with water hauling, trucking et. al.
Relief. Packineau’s vote of August 9 is tainted and should be ruled invalid. This leaves l vote of Arnie Straus, which is not enough to approve the Spotted Hawk lease.
Second claim: lack of Majority Vote and lack of notice to full council (7), violates ICRA.
17. Plaintiffs re-allege and incorporate paragraphs 1-16.
18. Majority rule. The tribal constitution states that five members are required for a quorum. Bylaws, Article III, Section 3. Tribal practice is for a majority vote, or 3 of 5 to approve an item. Or, when a full council for 4 out of 7 votes. See Roberts Rule of Order – majority is more than half.
On August 9, 2012 the vote was:
2 Yes by council members M. Packineau and A. Straus
1 no 2 abstain. Plaintiffs exhibit 1.
19. Lack of notice. The tribal council failed to give proper notice of the August 9, 2012 meeting to all council members and the public, as required by the tribal constitution and custom. Article III, Section 2.
20. Relief. The August 9, 2012 “two vote” scheme by Packineau and Straus to approve the S. Hawk lease should be ruled invalid. The defendant’s acted contrary to the majority rule, e.g. 3 of 5 votes needed.
21. Harm to Members. Without notice to 7 council members, only five were present. This left out council reps. Barry Benson (Twin Buttes) and Frank White Calfe (White Shield). The lack of notice disenfranchises plaintiffs since their council members were left out of the August 2012 vote. 25 USC l302 (1). First Amendment, right to associate. Indian Civ. Rts. Act.
Third claim – no notice of meetings and secret votes violates plaintiffs’ right to associate. ICRA
22. Plaintiffs re-allege and incorporate paragraphs 1-21.
23. The plaintiffs have a right to associate. A tribe cannot abridge freedom of speech, or of the press, or the right to assemble and petition for redress. lst Amendment.
24. Defendants use secret votes. See Pls. exhibit 1. The defendants have a practice of:
a) no notice of meetings to tribal members,
b) secret votes or no roll call vote, and
c) no published minutes until way later. Only recently, did plaintiffs get the 2012 minutes for the Spotted Hawk lease deal.
25. Relief. To rule that the defendants practice of secret votes and failure to give out notices or information, violates plaintiffs lst Amendment right to associate. ICRA.
Fourth Claim – breach of duties as tribal trustees
of land and minerals. The council failed to seek out comparable rates of $5,000 per acre, and up.
26. Plaintiffs re-allege and incorporate paragraphs 1-25.
27. Federal law provides for initial tribal approval, then for BIA review of an IMDA lease. The factors includes:
b) best interests of the mineral owner; consider adverse cultural, social and environmental impacts. Best interests requires a
“review of comparable contemporary contractual
arrangements or offers for the development of similar
mineral resources received by Indian mineral owners, by
non-Indian mineral owners, or by the Federal
Government….” 25 CFR Part 225 (c) (d).
The Secretary of Interior is not liable for damages, but the Secretary has a “trust obligation to ensure that the rights of the tribe or individual Indian are protected.”
28. Council duties as trustee. The council has the duty to lease tribal and manage tribal lands. And to protect and preserve the property, wildlife and natural resources of the Tribes. Article VI, Powers, Constitution. Article IX, Land. The Treasurer of the Tribal Council shall “safeguard all funds” … “for which the Council is acting as trustee or custodian.” Article I, Duties of Officers, Constitution.
29. In 2007 Spotted Hawk paid $300 an acre, but they failed to drill wells as required by 2011-12. The lease should have been canceled by the tribal council. Instead, M. Packineau pushed through “approval” of the lease in August 2012. The defendants neglected their trustee duties as noted below.
30. Comparable lease rates. In Fall 2012 the going rate was from $2,000 to $5,000 per acre and up.
a) Same area. $l3,000 per acre for 240 acres, by QEP oil company. Sec. 33 Twnship l50, R 90 W. This is by Skunk Bay and a few miles west of the “Spotted Hawk” lease area of 32,000 acres. Oil Patch hotline.com, Feb. 2013. Plaintiffs Exhibit 2, map.
b) Same area. The Tribe leased land to QEP oil co., with wells coming in at over 2,000 per day. This land is south of Parshall, ND and located next to the “Spotted Hawk” tribal lease. See websites: w.dmv.nd.gov/oilgas and milliondollarway.blogspot.
c) In a proven field wells come in at over 2,000 Barrels of oil per day initially x $80 per barrel = $l60,000 one day. $4.8 million per month for one well! See websites, above.
d) Federal BLM sale. A tract in Mountrail County went for $l9,500 per acre. Feb. 2013 Dickinson ND News.
31. Loss of Income. If the Spotted Hawk lease stands,
the Tribe and plaintiffs will lose millions in revenue.
A). At $5,000 per acre x 30,000 acres (tribal minerals) equals
$l50,000,000. One hundred fifty million. Rounded off.
B). At $l0,000 per acre x 30K acres= $300,000,000 million.
Compare, the Spotted Hawk $l million “carrot” to renew the lease is only $30 acre. Not much, compared to rates above.
32. Or, a tribal company can operate the wells at 50% or more of the royalty. The income would be over $500 million ….
33. On August 9, 2012 treasurer Packineau violated his trust duties to manage Indian trust land, by promoting a lease at rates
far below market value.
34. Breach by silence. Two other council members “abstained” on August 9, and violated their duties by failing to oppose the S. Hawk lease, or get a deal that protected the interests of plaintiffs.
WHEREFORE plaintiffs request:
1. an order to declare that defendant Mervin Packineau had conflicts of interests and his vote to approve the Spotted Hawk
lease is invalid. This leaves one vote of A. Straus, which is not enough for approval.
2. To declare that majority rule requires 3 of 5 votes (when a 5 member quorum) for approval. And, that 4 out of 7 votes is required for approval when a full council is present.
3. To declare that the council’s practice of no notice of meetings,
secret votes, and no published minutes, violated plaintiffs’ right to associate. Indian Civil Rights Act.
4. To declare that the tribal council has a duty to seek out
comparable rates (market value) when leasing tribal minerals.
5. And for other relief deemed just, plus fees and costs.
Dated February 12, 2013.
__________________________ Vance Gillette
P. O. Box 1461
New Town, ND 58763
Attorney for Plaintiffs
Spotted Hawk complaint filed at TAT Feb. 12, 2012
New Town, ND 702 627 4803