Inupiat family lawsuit still active

PRUDHOE BAY, Alaska – A letter dated Jan. 9 from the Department of the Interior’s BIA to B.P. Exploration (Alaska) Inc. directed the immediate halt to a portion of its oil production at Prudhoe Bay on Alaska’s North Slope. The letter was on behalf of an Inupiat family, descendants of Andrew Oenga. The lawsuit precipitating this letter was filed two-and-a-half years ago by Oenga’s heirs seeking federally required “present fair annual rent” for the oil company’s use of their land.

One must examine the past to understand the basis for this ruling.

Oenga was an Inupiat Native in his late 70s who neither read nor spoke English, other than a few words of greeting, when British Petroleum (BP) became interested in his land in the late 1980s. His land was a narrow spit projecting into the Arctic Ocean known as Heald Point, part of the surface estate in a Native allotment and thus subject to the trust protection of the United States.

BP approached BIA about leasing Oenga’s land and a lease was signed in 1989 by a BP subsidiary, the BIA and Oenga. It called for periodic appraisals to determine the amount of rent to be paid. The land passed to his children a year later when Oenga died.

The initial plan, an off-shore production facility, a pipeline to the Oenga property and a pipeline to connect to the Trans Alaska Pipeline, failed to be permitted. BP then built an oil production facility on the Oenga property to develop its off-shore oil lease using a technology which bends the underground drilling procedure and can reach several miles to the oil accumulation.

BP used the facility to not only produce oil from their own Niakuk Participation Area, but also sold to other companies to develop off-shore leases through the facility on the Oengas’ allotment.

The latest figures available are through 2006 and show that BP has produced an estimated $1.5 billion worth of oil through the Oengas’ allotment and another $500 million worth of oil from other companies for an estimated total of more than $2 billion. Rent collected from BP by the BIA was never adjusted to reflect the property’s unique value for this new use. The BIA has collected for the Oenga’s less than 70 cents on every $1,000 worth of oil produced. That’s less than seven-one hundredth of 1 percent.

Federal law requires the U.S. to collect “present fair annual rental” in such situations. The Oengas have had to sue the U.S. for failing to collect proper rents for the years 1993-2001 and have appealed the BIA’s appraisal/rent decisions for the rent collected from 2002-2009.

Federal Court has now ruled the lease did not authorize BP to allow oil to be produced through the Oenga allotment from neighboring oil accumulations and is in the process of determining damages due for that unauthorized use. The value of the property must be determined to set proper past and future rent, much like value is determined for ordinary property tax assessment. This could thus be used in calculating damages due for the unauthorized use of the Oengas’ allotment.

The Jan. 9 letter is directed at halting production of oil from Lisburne, one of the areas not covered by the lease. The Federal Court ruling held “the scope of the lease did not include the activities in the Lisburne PA.”

“The family is very pleased,” said Joe Delia, one of Oenga’s heirs who filed the suit. “The BIA’s action this week is a small, but important first step in recovering fair rent for BP’s use of our land. My grandfather leased his land to BP for a road and pipeline project. Instead, BP has used the land as the site of a huge oil production facility with over 20 wells to produce oil from numerous areas, some of which they kept secret from us. This is much different from what they told my grandfather. All we have ever wanted is to be paid fairly for the oil company’s use of our land.”

The letter also refers to two other areas, the West Niakuk and Raven, two areas from which oil is produced through Oenga’s property in potential violation of the lease. The judge has not yet issued rulings on whether they should be shut down or not.

At this point, no specific amount owed has been requested until guidance from the court regarding the subject of damages recoverable for violation of the lease, if any, is determined. No immediate payment is being asked, but a determination in this regard can be expected at a later date.

The lawsuit was first reported in Indian Country Today in November 2006.