American Oil and Gas Reporter - August 2016 - 29

WASHINGTONWATCH
Infrastructure Woes
Extend To Rights Of Way
On Indian Lands
Our industry is hearing quite a bit about efforts-some
successful-to prevent construction of pipeline infrastructure. But
there is a slight twist on this: renewal of pipeline rights of way
over Indian lands.
Negotiating such ROWs has never been easy. Pipeline and
electric transmission companies must negotiate with the tribe, and
final terms must be approved by the secretary of the interior. Often,
such approval is delegated to one of 12 regional directors for the
Bureau of Indian Affairs. BIA has finalized a new rule for ROW
regulations on Indian lands. While it is intended to update stale
regulations, some changes create an untenable position for
infrastructure owners.
According to BIA, the April 2016 final rule updates 45-yearold ROW regulations to "streamline the process for obtaining BIA
approval, ensure consistency with leasing regulations, increase
flexibility in compensation and valuations, and support landowner
decisions regarding use of their land." In practice, the new rule
prevents pipeline owners from negotiating extensions of ROWs,
resulting in the companies facing trespass claims.
Tribal lands are not subject to eminent domain. Therefore,
companies cannot use condemnation procedures. However,
portions of tribal lands have been deeded in fee over the years to
individual tribal members, who are termed "allottees." Allottees'
lands are no longer tribal, are subject to state property taxes, and
can be managed like any other private property, including being
subject to eminent domain and, potentially, condemnation if the
allottee and pipeline company cannot agree on a fair market value.
Terms for ROWs can be up to 20 years.
The number of allottees has multiplied through division among
heirs and their families. Under the old rules, pipeline owners could
obtain ROWs with agreements from a majority of allottees. Under
the new rules, the ROW is contingent on agreement from the
majority of the current life estate owners, but also a majority of
the heirs of the life estate owners. The heirs do not receive any
lease rental money, yet they are in a position to exert power when
a company is negotiating a new ROW or extension. For example,
some of the heirs can seek side payments in exchange for their
consent.
The new rule is particularly problematic if a company
reached an agreement with a slim majority of the allottees, but
one of the consenting allottees dies before the end of the ROW's
term. The Interior Board of Indian Appeals held in May that if a
life estate allottee, whose consent contributed to the majority
approval, passes away prior to the end of the 20-year ROW term,
the company must obtain the consent of the life estate allottee's
heirs to maintain a valid ROW.
Two lawsuits pending before different judges in Albuquerque,
N.M., federal district court demonstrate the intricacies of the new
rule, as well as the difficulties faced by pipeline owners. Western
Refining Pipeline Company was attempting to renew ROWs that
are part of the 280-mile pipeline that provides 60 percent of the
petroleum for its refinery in Gallup, N.M. In the ROW negotiations,
Western succeeded in obtaining consent from 56 percent of the

"A new rule for ROW regulations
creates an untenable position for

infrastructure owners.

allottee owners on a parcel of land containing a half-mile
segment of pipeline. However, Western could get only 24 of the
48 heirs to consent.
The BIA regional director denied the renewal application
because Western had failed to obtain consent from a majority of
the heirs. The 24 nonconsenting allottees sued, claiming Western
was in trespass, and sought to have Western remove its pipeline
from the allotment and pay damages for trespass. To settle the case,
the allottees are willing to accept $8 million.
Western, in turn, filed two complaints: 1) challenging the BIA's
authority, based on its rule change giving more power to
allottee's heirs; and 2) seeking condemnation authority under a
rarely used 1907 federal statute.
The second lawsuit entails an unsuccessful effort by Public
Service of New Mexico (PNM) to obtain consent from a
majority of life estate heirs to renew pipeline ROWs. Like Western,
PNM sued under the 1907 statute for condemnation authority.
However, PNM's private-property avenues evaporated when a
deceased allottee left her 1 percent ownership to the Navajo Nation,
making the property tribal land and immune to condemnation.
Like the allottees in the Western case, the PNM allottees have filed
a trespass claim against PNM.
Taking a cue from the PNM case, 1 percent of the allotment
in the Western case is now owned by the Navajo Nation. Using
the PNM precedent, the Western allottees have filed to dismiss
Western's condemnation case. Further litigation is likely this fall.
The legal outcomes of these cases will have profound
ramifications for the 40 petroleum pipeline ROWs involving tribes
and allottees expiring before 2020.
❒

SUSAN GINSBERG is vice
president of crude oil and natural gas regulatory affairs for
the Independent Petroleum
Association of America. She
covers legislation and regulation, focusing on the CFTC
and FERC. Her experience in
natural gas regulatory affairs
spans 25 years.
AUGUST 2016 29

American Oil and Gas Reporter - August 2016

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