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El Paso Calls Native American ROW Contract Demands 'Hugely Inflated;' Seeks FERC Help

A "significant threat" facing natural gas pipelines in the Southwest, Rockies and Midwest Plains is the "hugely inflated cash demands" of Native Americans for renewal of rights-of-way (ROW) contracts for the use of their tribal lands, a top El Paso Corp. official told FERC last Wednesday.

"Recently we're seeing tribal demands grow exponentially...We think this problem is going to get much, much worse," said James Cleary, president of western pipelines for El Paso, during the Federal Energy Regulatory Commission's fourth annual "State of the Natural Gas Infrastructure Conference" in Washington, DC. He called it a "national problem."

The demand by tribes for larger sums to renew ROW contracts "presents [an] untenable choice for pipelines," either pipes can accede to the tribal wishes of more money or they can refuse and face trespassing charges, he said. He estimated that demands for ROW on tribal lands are increasing by 50-to-100 times the fair market value of non-tribal lands.

This action by Native American tribes "frustrates the Commission's goal" of enhancing the nation's gas pipeline infrastructure, and it would in effect be a tax on energy infrastructure, Cleary charged.

He said FERC should be "fully prepared" to take the position that any action by a tribal government that would effectively force abandonment of a pipeline would "impermissibly encroach" upon the Commission's exclusive jurisdiction under the Natural Gas Act (NGA).

The omnibus energy bill, which was enacted into law in early August, requires the federal government to conduct a study of the ROW situation on tribal lands nationwide, and to submit the findings to Congress next year. Cleary called on FERC to take an "active role" in the study and in developing standards for "fair and appropriate compensation" by pipelines for the use of Native American lands.

FERC also could recommend that Congress clarify that pipelines' eminent domain authority under the NGA extends to tribal lands upon payment of just compensation to Native Americans, he said. This issue has yet to be addressed by the courts.

"I think FERC must leave to Congress any decision to change that right" by Native Americans to seek higher priced ROW contracts, said FERC Commissioner Suedeen Kelly. Chairman Joseph Kelliher and Commissioner Nora Brownell were silent on the issue.

Cleary's request for help from FERC comes amid contentious negotiations between El Paso and the Navajo Nation over the renewal of a 20-year ROW contract, which expires on Oct. 17 (see Daily GPI, Oct. 6). The Navajo Nation has rejected El Paso's offer of nearly $200 million to renew the contract for the ROW to transport gas over 900 miles of land in Navajo territory in Northeast Arizona and Northwest New Mexico. The Navajo Nation has requested $440 million., or twice El Paso's offer, according to the pipeline.

Navajo Nation Attorney General Louis Denetsosie has vowed there would be no disruption to gas flowing over tribal lands in the event the two sides fail to reach an agreement by Oct. 17.

With negotiations at a standstill, El Paso earlier this month filed an application asking the Interior Department to extend the ROW contract without the consent of the tribe so that it can continue transporting gas over tribal lands from the San Juan Basin to customers in the Southwest. The Navajo Nation said it plans to file a response before the deadline.

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