WASHINGTON, D.C. - A special report to the court in the Cobell litigation over federal mismanagement of Indian trust funds charges that Navajo land allottees are being short-changed by undervalued rights-of-way appraisals.
Alan L. Balaran, appointed by U.S. District Court Judge Royce C. Lamberth as a special master in the long-running case, did not quantify the losses he alleged. But he provided a handful of examples showing that tribes and private landowners have obtained up to $575 per rod for permitting oil and gas pipelines to traverse their land. By contrast, individual Navajo allottees may have received $25 to $40 per rod for permitting similar rights-of-way on similarly situated land. (A rod is a traditional unit of measure equaling 5.5 yards.)
"The potential range of loss to Trust beneficiaries is as much as $170-$550 per rod," Balaran writes.
Balaran made investigative site visits to Gallup, N.M., and Window Rock, Ariz., following the "whistle-blower" accusations of Kevin Gambrell, director of the federal Farmington Indian Minerals Office. Gambrell warned superiors at Interior and the BIA of longstanding discrepancies in rights-of-way appraisal valuations between individual Indian lands and similar privately owned lands.
Gambrell's remarks echoed the assertions of allottee associations, especially in the eastern Navajo reservation. These associations have claimed for some years now that Interior and the BIA customarily accept oil and gas industry valuations of rights-of-way on allottee land.
Gambrell too got no adequate response from federal agencies in his view. Eventually he got in touch with Balaran. Interior has placed him on paid leave.
Because most individual Indian land allotments are held in trust by the federal government, the Interior Department and its lead agency on Indian issues, the Bureau of Indian Affairs, are responsible for individual allottee rights-of-way appraisals and pricing negotiations based on them.
The Balaran report was immediately seized upon by interested parties. President Joe Shirley of the Navajo Nation called the rights-of-way devaluations tantamount to swindling, and part of a recurring pattern of federal control over tribal resources. Attorneys for the plaintiff class of Individual Indian Monies accountholders in the Cobell lawsuit termed it further evidence of Interior mismanagement, and repeated their charge that Interior Secretary Gale Norton is "unfit" for her position. Dan Dubray, communications director for Interior's office of the BIA, repeated the department's charges that Balaran is biased against Interior, and added that Balaran has no expertise in the complex field of appraisal.
Interior has 10 court days to file a response to the latest Balaran report. Dubray said it will do so in great detail.
Among the points that will be discussed in the Interior response, Dubray said, are cost factors. Allottee trust lands may have multiple owners due to the "fractionation" of landholdings among heirs, and this might raise the cost to a company of rights-of-way on such land (every heir must be contacted), compared with adjacent single-owner land. In addition, allottee land, usually held in trust by the federal government, might be encumbered by regulatory requirements that adjacent privately owned land is free of, further raising the cost to a company of rights-of-way on such lands.
In theory then, this higher cost to companies of doing business might be thought to justify their paying a lower fee to allottees.
Interior and BIA officials readily admitted to Balaran that allottee land rights-of-way appraisals are discounted compared with the same on private lands. Balaran acknowledges cost factors at several points in the report, mentioning Interior's claim of inadequate funding for detailed assessment of individual allottee tracts, as well as footnoting Interior's current special trustee on trust funds, Ross Swimmer, at some length.
Rights-of-way prices are always negotiated, and the private sector oil and gas companies that lay natural gas pipeline always seek a price advantage where they can find it. Pipelines run for many rods, and rights-of-way prices are a significant cost factor in their construction. The San Juan Basin, where approximately 1,000 Navajo have allotments and which Balaran depicted as a "spider web" of pipelines, provides 10 percent of the nation's natural gas.
Balaran was appointed in part to give the court some handle on document management pertaining to Interior's trust-related functions. The court has leveled withering criticism at Interior for faulty document management in the past, and Balaran finds occasion for more of the same in his Aug. 20 report.
Balaran states that Anson Baker, a former chief appraiser in the Navajo regional office of Interior's Office of Appraisal Services, erased computer files that contained information on his appraisal evaluation methods, misplaced two important memoranda that guided his appraisal methodology, did not maintain documents in support of the "market rate" he arrived at in his appraisal process, and perhaps never generated working papers that could not be located.
Balaran found "no documentary evidence in the appraisal file substantiating that ? research was actually conducted, confirming past and present market conditions."
Elsewhere he notes, "One possibility is that these documents were never generated in the first place."
The lack of such documents makes it impossible for Navajo trust beneficiaries to challenge Interior appraisals of the rights-of-way prices they assign, Balaran reports.