Contracting for Original and Renewal of Pipeline Right-of-Ways on Tribal and Allottee Lands

Posted on February 24, 2016 by Tom Sansonetti

The Department of the Interior’s Bureau of Indian Affairs (BIA) has promulgated new regulations involving the original procurement and renewal of Right-of-Ways (ROW) on tribal and allottee lands which take effect on March 22, 2016. These new rules will replace those in place since 1947, creating a series of significant problems. This post lists the problems and suggests a legislative solution.

1) Majority Consent of Life Estate Heirs is Needed for ROW to be Granted or Renewed

The new rules limit the length of a ROW to 20 years. The ROWs are not subject to state or local laws, and the new rules impose consent and approval requirements that do not appear in the current regulations. Under the current law, voluntary agreements could be struck between tribes, allottees, and a company, so long as the BIA Regional Director approved the deal. The BIA would approve if a majority of the allottee landowners consented and the amounts of money paid for the ROW were not less than the fair market value (FMV) of the allotment parcel. Under the new rules, however, the company must obtain a majority consent for the original ROW or renewal thereof, not only from the living life estate allottees, but from their heirs as well. This presents a huge obstacle, as companies will now have to find each of the heirs and then attempt to bargain with them individually. Under the current rules, if agreement could not be reached, then the company was free to use a 1907 statute to condemn the allottee land but never the tribal land.

2) Life Estate Holders Can Withdraw Previously Granted Consents

In two separate New Mexico ROW cases involving Western Refining’s pipeline and Public Service of New Mexico’s (PNM) overhead wires, the companies both originally obtained the written consent of a majority of the life estate holders who were paid fair market value for their consent. However, upon the BIA Regional Director finding a lack of a majority of heirs consenting, certain life estate holders informed the BIA that they were “unconsenting” in order to hold out for better compensation, even though they had cashed the original checks. Because the BIA allowed the holdouts’ action of “unconsenting” to stand, the companies lost their majority consent of life estate holders. Attorneys for the life estate holders are now suing PNM for trespass in federal court in Albuquerque.

3) Fair Market Value Has Become a Floor in Negotiations Rather Than an Appraisal Standard

Since the 1947 statute came into existence, the fair market value (FMV), as determined by BIA-qualified appraisers, of the allotment acreage to be crossed by the pipeline served as the negotiation basis between the company and individual allottees. The allottees, knowing that their land could be condemned under the 1907 statute dealing with ROWs, often bargained for a payment that was two or three times FMV. However, under the new regulations, FMV is a starting point, non-binding and irrelevant to an allottee who believes that the sky is the limit when dealing with large corporations.

4) The Condemnation Alternative is Under Attack Due to Tribal Ownership of Undivided Interests in Allotments

In the Public Service of New Mexico federal district court litigation, PNM sued the allottees of several allotments under the New Mexico condemnation statutes after failing to obtain the consent of a majority of life estate heirs for a 20-year renewal. The federal judge dismissed the condemnation lawsuit, because recently deceased allottees left their interests to the Navajo Nation. Even though those interests amounted to less than 1% of the entire allotment, the court labeled that interest tribal land, recognized the Navajo Nation’s sovereign immunity from suit, declared the Navajo Nation an indispensable party, and dismissed the lawsuit. PNM is appealing the dismissal to the Tenth Circuit. Without the ability to condemn, pipelines will be left only with choice of either paying ransom under the 1947 statute or facing allottee trespass actions.

Western Refining has also filed a condemnation suit against the unconsenting allottees under the New Mexico condemnation statutes. The case is before a different judge than the PNM case and is currently stayed pending a decision from the Interior Board of Indian Appeals on the majority consent of heirs issue.

The best solution to the four problems above requires the active involvement of the Legislative Branch.

Utilizing its plenary authority concerning tribal issues, Congress should pass amendments to the 1907 and 1947 statutes or create new legislation supplanting the current law that:

  1. Eliminates the need for heirs to consent
  2. Eliminates the ability of consenters to unconsent once consideration is paid
  3. Re-establishes the sufficiency of fair market value as the basis for the compensation to be paid
  4. Guarantees the right of pipeline owners to condemn allottee land regardless of partial tribal ownership

Nothing less than the free flow of energy-oriented interstate commerce is at stake. 



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