Electric substation improvements in Star Lake area were part of terminated casino project

Lake Region Electric Cooperative and its members received about $1.6 million in transmission improvements at no charge–courtesy the White Earth Nation. 

An arbitration panel ruled unanimously that the White Earth Nation was not entitled to any reimbursement for the upgrades. 

Nearly $6 million was invested in the Star Lake Casino project, which was cancelled by the tribal board in 2018. 

Among the expenses, a $1.6 million upgrade of a Star Lake area electrical substation and related transmission lines—which were necessary to meet the load demands of a high volume resort and casino operation. 

In 2019, the White Earth Nation brought a claim against Great River Energy (GRE) and Pelican Rapids-headquartered Lake Region Electric Cooperative (LREC) to try and recover money paid to GRE and LREC as a result of the failed Star Lake Casino.

The three-person arbitration panel actually ruled twice to dismiss the White Earth claims, first in July of 2020. White Earth, in effect, appealed the decision, but the panel again unanimously dismissed the claim in August 2020. 

As part of the original 2016 contract, LREC requested payment up front from 

White Earth Nation. GRE requested an irrevocable letter of credit that GRE could draw on for payment for work performed by GRE. After the contract was signed, both LREC and GRE started working to provide electric service for the Star Lake Casino Project. 

In 2018, White Earth unilaterally terminated the casino project. 

In 2019, White Earth sought to recover payments made to LREC and GRE as a result of the failed project. 

The three arbitrators unanimously ruled in LREC’s and GRE’s favor and dismissed White Earth’s claims.

  As it stands, White Earth will receive no recovery for the money spent on the Start Lake area electrical upgrades. 

“Lake Region is committed to making prudent and sound financial decisions on behalf of its members. LREC was very careful from the beginning of the Star Lake Casino project and requested a payment up front from WEN before LREC started work on the project,” said Lake Region CEO Tim Thompson, adding that the cooperative “is very pleased with the decision of the arbitrators to dismiss WEN’s claims.”

This matter was not in any type of court.

In the contract between White Earth Nation and LREC/GRE, the parties had agreed that any dispute would be resolved by arbitration rather than in court. Under terms of the arbitration, White Earth Nation selected one arbitrator and LREC/GRE selected one arbitrator. Those two arbitrators then selected a third arbitrator, who acted as the umpire for the arbitration panel.

“We believe that this matter is closed, said Chad R. Felstul, attorney, Pemberton Law, Fergus Falls. However, there is a very limited opportunity under Minnesota law to challenge in court an arbitration panel’s decision, added Felstul. 

“(We) feel strongly that if White Earth Nation attempts to challenge (further)… the arbitration panel’s decision … will be upheld,” said Festul.