Supreme court sends helium plant dispute back to district

By Bill Donovan
Special to the Times

WINDOW ROCK, June 6, 2013

That's the basis of a Navajo Nation Supreme Court decision that was made public this week.

The case involves three non-Indian companies - Neptune Leasing, Mountain States Petroleum Corporation and Nacogdoches Oil and Gas, Inc. - which operated a helium plant at various times on the Navajo Reservation.

Neptune came in control of the plant at some time from a company not involved with the suit and then sold it to Mountain States who later sold it to Nacogdoches.

The sale to Neptune, according to the supreme court decision, was very nebulous - the company could not produce a lease or any document showing it had ownership of the improvements made on the plant.

The final owner, Nacogdoches, has similar problems but lawyers for the company said the purchase from Mountain States was done with "the knowledge and consent of the Navajo Nation."

Nacogdoches officials also stated that it operates the plant with the verbal approval of tribal officials and pays the tribe applicable royalties and rents "pursuant to certain regional oil and gas operating agreements with the Nation under which Nacogdoches has the right to generally develop and produce helium, hydrocarbon and other gas resources within specified areas of the Nation."

What has brought everyone to court is the agreement between Neptune and Mountain States, two companies that are no longer doing business on the reservation.

When Mountain States purchased the helium plant from Neptune, it entered into a multi-year installment plant and at some point was in breach of that payment plan. Under the sale agreement, this gives Neptune the right to require the "physical and intangible assets of the plant" despite the fact that it is now being operated by Nacogdoches.

To settle this matter, Neptune filed a suit against Mountain States in a Texas court since both companies have their headquarters in Texas. In November, 2008, it also filed suit in the Shiprock District Court since the helium plant was and is still located on the Navajo Reservation.

When the matter got to the Shiprock District Court, the judge, Genevieve Woody, said while she felt that the Navajo Nation has jurisdiction over the matter, she decided to let the matter go further in the Texas courts and the winner of that case could then file the Texas decision and have it recognized by the Navajo Nation.

Woody also mentioned in her dismissal that Mountain States was no longer doing business with the Navajo Nation and since no evidence was submitted that the company had any contact substantial enough to establish jurisdiction, the district court concluded that personal jurisdiction over Mountain States was lacking.

When that decision was appealed by Neptune, the Navajo Nation became involved, mainly to bring the supreme court up to date on what was happening in the Texas courts, describing the proceedings as a bankruptcy. Oral arguments on the case were held on March 21 at the University of Idaho in Moscow, Idaho.

In the end, the supreme court decided that the district court should have done more research and analysis over the jurisdiction issues.

"The district court appeared to believe that only whether Mountain States continues now to do business is relevant for jurisdictional purposes," the ruling stated.

"We find that this was clear error," the court ruling stated. The fact that it purchased and then re-sold the helium plant on trust land was enough to bring it under tribal jurisdiction.

For this and other reasons, the case was remanded back to the Shiprock District Court for further proceedings.