Procedure Update: North Dakota Contracts Involving Tribal Member Land

Throughout the country, many oil and gas companies conduct commercial activities on tribal territory. In the case of a contract dispute in North Dakota, what is the proper procedure for companies to resolve the issue? Generally, when there is a dispute between a nontribal company and a tribal member involving activity within tribal territory, tribal courts have jurisdiction over the matter. Nonetheless, companies may continue litigation involving the matter in federal district court if (1) the tribal court waives their jurisdiction or (2) the company has exhausted all their tribal court remedies (a final judgement on appeal).

In WPX Energy Williston, LLC v. Honorable B.J. Jones, the United States Court of Appeals for the Eighth Circuit (“the Eighth Court”) addressed the question of whether a tribal court had jurisdiction to hear a dispute involving a breach of right-of-way grants from the Bureau of Indian Affairs to WPX Energy Williston, LLC (“WPX”).  While such grants are issued by the Bureau, companies seeking rights-of-way must obtain consent from the tribe or individual landowners, and in doing so, the parties may contract for additional restrictions or conditions (see 25 U.S.C. § 324 and C.F.R. § 169.107). The right-of-way sought by WPX crossed over land owned by the Fettig family (“Fettigs”), members of the Mandam, Hidatsa, and Arikara Nation, located within the Fort Berthold Indian Reservation. The grants incorporated a condition, agreed to by the Fettigs and WPX, that banned smoking on the right-of-way land and imposed a $5,000 fine per violation. In 2020 the Fettigs sued WPX in the Three Affiliated Tribes District Court for breaching that condition. The tribal court ruled in favor of the Fettigs, and WPX subsequently appealed to the tribal appellate court.

Before a final judgement was made on the appeal, WPX filed a suit in federal district court arguing that the tribal courts lacked jurisdiction because the right-of-way grants were formed under federal law and the company was a non-Indian entity. The lower federal district court agreed with WPX and issued a preliminary injunction by concluding that WPX had exhausted its tribal court remedies and that the tribal court lacked jurisdiction. Upon appeal brought by Judge Jones and the tribal court, the Eighth Court concluded that WPX had not exhausted its tribal court remedies and any federal court ruling would be premature.

The Eight Circuit held that the tribal courts had jurisdiction because (1) although the right-of-way grants were formed under federal statute, the conditions at issue were privately negotiated, (2) the parties in the matter here between a company and tribal members, and (3) the tribal courts did not waive their jurisdiction over the matter. The Eighth Court cited Montana v. United States, which stated tribal courts may exercise jurisdiction where nonmembers “enter consensual relationships with the tribe or its members, through commercial dealing, contracts, leases, or other arrangements.” While the grants are governed by federal law, the Eight Court stressed that the incorporated conditions were “independently negotiated” by the parties and are not the same as oil leases between companies and tribal members.  As stated in Kodiak Oil & Gas (USA) Inc. v. Burr, federal law controls “nearly every aspect” of oil and gas leasing, and any dispute is between a “non-Indian company and the federal government.” Furthermore, the Court concurred with the U.S. Supreme Court’s ruling in Iowa Mut. Ins. Co. v. LaPlante, which held that exhaustion of tribal court remedies means “that the tribal appellate courts must have the opportunity to review the determinations of the lower tribal courts.” Therefore, WPX did not exhaust all tribal court remedies before moving the matter to federal court.  The Eighth Court vacated the district court’s preliminary injunction and the case was remanded with direction to dismiss WPX’s complaint for failure to exhaust these remedies.

Oil and gas companies operating on tribal territory in North Dakota should be aware of the proper legal procedure when determining where to litigate claims originating on tribal land. As noted above, tribal courts have jurisdiction if the dispute is between a nontribal company and a tribal member when the issue is not predominantly controlled by federal law. In order for a party to successfully bring a case in a North Dakota federal district court, they must prove that (1) the tribal court has waived their jurisdiction or that (2) the party has exhausted all their tribal court remedies (a final judgement on appeal).

Kuiper Law Firm, PLLC specializes in oil and gas issues; if you have any questions about how the information in this article may apply to you or your operations, do not hesitate to contact us.