Gas company, Navajos reach deal on pipeline pay

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FLAGSTAFF, Ariz. – A years-long fight between the Navajo Nation and El Paso Natural Gas Company over a pipeline right of way easement has been settled with a deal that will pay the tribe about $350 million over 20 years.

That’s more than 10 times what the previous lease brought in for the tribe, which battled fiercely for higher payments when it expired in 2005.

The tribe and the Houston-based company reached an agreement on the economic terms of a lease last year, but jurisdictional issues remained a sticking point, said Arvin Trujillo, director of the tribe’s Division of Natural Resources.

The Tribal Council’s Resources Committee approved the agreement earlier this month. It still must go before the BIA, but Trujillo called that a formality.

Under the agreement, El Paso, which operates 900 miles of pipeline on the reservation, will pay the tribe $18 million a year for the lease that expires in 2025. The previous lease signed in the mid-1980s was valued at $29 million.

“We want to continue our relationship with El Paso,” Trujillo said. “We did go through some very difficult negotiations at different points and times. Positions were made, but again, it’s part of the process.”

Richard Wheatley, a spokesman for El Paso, declined to comment citing a confidentiality agreement between the company and the tribe.

The parties appear to have reached a middle ground between El Paso’s previous offer of about $200 million for the two-decade deal and the $440 million the tribe argued the lease was worth.

During the negotiations, El Paso had claimed the tribe’s demands were unreasonable and that customers would bear the cost of increased payments. Navajo officials said the company was resorting to scare tactics to sway public opinion.

The question of what constitutes fair market value remained a point of contention. While standards apply to state and federal land, that’s not always the case on American Indian reservations.

The energy industry, including El Paso, attempted to have the federal government set a standard for payment on tribal lands as part of the 2005 Energy Policy Act. A study mandated by Congress found tribes historically have been underpaid for land and encouraged negotiations between tribes and energy companies.

It did not, however, adopt a standard for rights of way payments on tribal lands.

Under the renewed lease, El Paso also agreed to contribute $50,000 a year to a scholarship fund for Navajo students.

The company won an option to operate an additional 300 miles of pipeline and acquire up to 20 acres for facilities. The current pipeline delivers gas from Texas, New Mexico and Oklahoma to western markets.

The option to operate additional miles of pipeline initially drew criticism from the tribe’s Environmental Protection Agency, which said it did not provide for environmental consultation with the agency.

Navajo EPA officials said the agency’s concerns were addressed by a memo from the director of the tribe’s Minerals Department to the Resources Committee chairman. It stated that El Paso would have to submit an application for each option made that would include maps, environmental assessments and archaeological clearances.

“That pretty much cleared it for us,” said Rita Whitehorse-Larsen, senior environmental specialist with the Navajo EPA.

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