Amoco Loses Round to Indians

The Shoshone and Arapahoe Indian tribes recently won their first legal scuffle with Amoco and Sohio, two companies holding joint oil leases on the tribes' Wind River Reservation in Wyoming.

The tribes filed a petition on November 16, 1981 with the U.S. Department of the interior, asking the agency to cancel the Amoco-Sohio leases, which Amoco operates.

"For more than 15 years, Amoco repeatedly has violated provisions of the leases and the regulations of the Interior Department designed to ensure that the Tribes receive the correct royalties on the oil produced on their leases," the petition claimed. "Amoco failed to pay the Tribes royalties on almost one-half million barrels of oil" from 1969-1981, the tribes alleged (see MM December 1981).

On May 12, Ken Smith, Assistant Secretary for Indian Affairs at the U.S. Department of the Interior, notified the two companies that he was siding with the tribes. "I have concluded that the allegations presented by the Tribes are true and that such allegations warrant cancellation of the leases," Smith wrote.

The oil companies intend to request an administrative hearing to appeal the preliminary ruling. "We will avail ourselves of the opportunity to lay out the situation as we see it," says Ralph Stowe, public relations officer for Amoco.

If the Indian tribes prevail and the Interior Department cancels the leases, the decision will be a landmark: the first time the Department has cancelled a lease due to a company's breach of contract.