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El Paso, At Impasse with Navajo Nation Over ROW, Asks Interior Department to Intervene

After reaching an impasse with the Navajo Nation over the renewal of a rights-of-way (ROW) contract, El Paso Natural Gas on Thursday filed an application asking the Interior Department to extend the contract without the consent of the tribe so that it can continue transporting natural gas over tribal lands from the San Juan Basin to customers in the Southwest.

Negotiations between the two sides broke off last week when the Navajo Nation rejected El Paso's offer of nearly $200 million to renew a 20-year contract, scheduled to expire on Oct. 17, for the ROW to transport gas over 900 miles of land in Navajo territory in Northeast Arizona and Northwest New Mexico, according to El Paso spokesman Bruce Connery.

The Navajo Nation has requested $440 million, or more than twice El Paso's offer, to extend the ROW contract for another 20 years, he said. Connery said this translates to $50,000 per acre, far more than the fair market value of $100 to $500/acre for a perpetual ROW. He noted that the existing ROW contract, which was negotiated in 1985, was for $27 million.

"There's just no justification for what they're asking for," he told NGI. "We can't justify passing these costs on to consumers" in the western United States, primarily Arizona, Nevada, New Mexico and California, whose service could be disrupted if the contract is not renewed. Connery estimated that 2.7 Bcf/d of gas supply flows over the portion of its system that crosses tribal lands.

"Interior can and should renew the rights-of-way before Oct. 17...Renewal will secure the flow of natural gas to millions of consumers [in these states] who depend on these rights-of-way for their critical energy needs," El Paso said in its application. In the meantime, "El Paso will continue to negotiate in good faith with the Nation to determine a fair value for the rights-of-way," it said.

Navajo Nation Attorney General Louis Denetsosie, in a prepared statement, said the Navajo Nation offered reasonable terms for the 20-year renewal of El Paso's ROW crossing tribal lands, and added that the effect of the terms -- if agreed to by the pipeline -- would be "utterly insignificant from the consumers' perspective."

El Paso's competitors "have accepted comparable terms" with the Navajo Nation, he noted. Denetsosie charged that El Paso "simply wants to return the Navajo Nation to the earlier times when rights-of-way over Native American lands were granted by the United States for non-consideration, thus gaining a competitive advantage over other gas pipeline companies."

He said the Navajo Nation was willing to work with El Paso, but "we will not willingly submit to the type of predatory behavior that El Paso has visited on other groups in recent years."

Denetsosie called El Paso's latest attempt to gain access to tribal lands via the Interior Department without Navajo Nation consent a "public relations strategy to scare consumers and regulators alike." NGI attempts to speak personally with officials of the Navajo Nation were unsuccessful Friday.

In seeking Interior action, El Paso argued that the Navajo Nation's "unreasonable" contract request was "tantamount to an unlawful exercise of regulatory authority over non-Indians and is well beyond the scope of its tribal jurisdiction as defined by federal law."

The pipeline further claimed that the Navajo Nation was in violation of an 1868 treaty with the United States in which it agreed to permit construction of works of utility or necessity upon Navajo lands subject to the payment of damages.

Moreover, Interior's renewal of El Paso's ROW is necessary to avoid a conflict with FERC's jurisdiction over the pipeline under the Natural Gas Act, according to El Paso. "Neither Secretary [Gale] Norton nor the Nation can effectively veto the decision of FERC to certificate El Paso's pipeline for public convenience and necessity. Indeed, the secretary has an obligation to consider El Paso's 54-year history of natural gas transportation over these rights-of-ways and to ensure that her actions do not interfere with the continuous supply of this gas at reasonable rates over rights-of-way maintained on reasonable terms."

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