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O&G LEASEHOLDERS WIN APPEAL IN LEASE DISPUTE INVOLVING TRIBAL LAND

Successful bidders, including Houston-based Schlumberger, in a 2007 auction of Bakken Shale oil and gas rights conducted by the Bureau of Indian Affairs (BIA) and related to tribal land, recently won in an appeal before the U.S. Court of Appeals for the Eighth Circuit. The law firm of Baker Botts represented the leaseholders in the appeal. 

The appeal was brought by several Native American mineral owners in North Dakota who claimed that the United States had breached its fiduciary duty owed to Native Americans by approving the leases for the oil and gas development rights and that the defendant-appellee bidders aided, abetted and induced the U.S. to breach that duty.

Plaintiffs-appellants Ramona Two Shields, Mary Louise Defender Wilson, and the other plaintiffs in the class action are Native Americans with interests in land allotted to them by the U.S. under the Dawes Act of 1887, according to the Eighth Circuit's recent opinion. Such land is held in trust by the government, but may be leased by allottees. The opinion states that the defendants leased oil and gas mining rights on their allotments to defendant companies and affiliated individuals who won a sealed bid at the BIA auction in 2007

Plaintiffs later filed this class action on Nov. 26, 2012. The complaint alleged that defendants ultimately leased roughly 85,000 acres of land, bundled the leases together for sale and then sold the leases in 2010 to a third party for $925 million, according to the opinion. The complaint also claims that while defendants received over $10,000 per acre from their own sale, they paid some putative class members lease bonuses of only $200 per acre or less.

The district court concluded that the U.S. was a required party that could not be joined, but without which the action could not proceed in equity and good conscience, and dismissed the case, according to the opinion. Plaintiffs challenged that dismissal in the district court, and the Eighth Circuit affirmed the district court's ruling.

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