Wyoming Tribes Say Federal Court Can't Make Them Pay $13.1 Million To Oil Company

The Northern Arapaho and Eastern Shoshone Tribes say a federal court lacks jurisdiction to make them pay the $13 million they owe an oil company for field equipment. 

Clair McFarland

June 23, 20233 min read

Steamboat butte equipment shoshoni tribe 6 23 23
(Cowboy State Daily Staff)

The two American Indian tribes of Wyoming told a federal court this week that it does not jurisdiction to make them pay the $13 million they owe an oil company for extraction equipment.  

Merit Energy Operations in April asked the U.S. District Court for Wyoming to require the Eastern Shoshone and Northern Arapaho Tribes to pay the company $13 million for equipment and infrastructure Merit transferred when the tribes took over the company’s operations on their land.  

An arbitration panel first ordered the tribes to pay the sum April 7. Four days later Merit asked the court to enforce that order.  

The tribes jointly filed a motion for the federal court to drop the case this week, saying it doesn’t have jurisdiction over the arbitration panel’s demand.  

Federal courts can oversee disputes between parties from different states if the dispute exceeds $75,000. They also can oversee disputes involving federal questions.

‘Irrelevant’ Argument

Merit’s request satisfies neither requirement, the tribes allege, because Indian tribes are stateless and because arbitration demands aren’t necessarily federal in nature.  

“Merit’s hodgepodge of potential federal connections cannot save it, as those are all clearly irrelevant to the actual jurisdictional question before this federal court,” says the tribes’ filing.  

Merit’s petition notes that the underlying lease between itself and the tribes draws from the federal Indian Minerals Development Act, which is subject to various federal laws and was approved by the U.S. Secretary of the Interior.  

The tribes say this doesn’t matter. The question before the court is whether the court can and should require the tribes to give Merit the $13 million the arbitration panel ordered them to pay.

This isn’t a question of federal law, the tribes assert, referencing 2022 U.S. Supreme Court Badgerow vs. Walters. The high court ruled that federal courts can’t look at underlying federal law factors when deciding how to adjudicate an arbitration demand.  

Merit should pay the tribes’ attorney fees and costs for the federal court action, say the tribes, alleging that Merit will likely be the losing party in its own petition for court enforcement.  

All These Millions Left Behind 

Merit left behind valuable machinery, buildings, tools, well casings and other infrastructure when its oil and gas lease for Circle Ridge Field on the Wind River Indian Reservation expired in 2021.

The tribes took over the field’s operations officially in 2021 after leasing the field for decades, first to Marathon Oil Co. and then to Merit.  

But when their lease agreement ended, the tribes and Merit Energy quarreled over how much money the tribes should pay the oil company for the equipment on the site.   

They selected an arbitration panel, with the tribes choosing one panel member, Merit choosing another, and the two panelists together selecting a third, independent panelist to join them, according to court documents.   

The panel considered assessing the equipment as high as $23.1 million and as low as $3.6 million, eventually settling on a little more than $13 million.

Clair McFarland can be reached at clair@cowboystatedaily.com.

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Clair McFarland

Crime and Courts Reporter