Cayugas disconnect Union Springs district from gas well

The action has increased the district’s energy bills by thousands of dollars, Superintendent Dr. Jarett Powers told The Citizen, leading it to ask the Department of the Interior to address the issue. 

The nation disconnected the district from the well, which is located on land the nation owns behind its Lakeside Entertainment gaming facility at 271 Cayuga St. in the village, in early February.

The action followed months of failed negotiations between the nation and the district over payments for its continued use of the well. According to a Feb. 7 letter the district’s counsel sent to the Department of the Interior, the district began using the well in 1981 through a farmout agreement with an energy corporation that had an oil and gas lease with the property owner at the time.

The nation acquired the property in 2004. The lease was excepted from the deed, the letter said, and a year later the nation told the district it did not wish to receive royalty payments for the well’s use.

In April 2023, however, the nation contacted the district about its use of the well and “payments allegedly due the nation since 2005,” the district’s counsel wrote. The nation offered to release the district from its responsibility for those payments by terminating the lease, and blocked the well’s access road. The offer, Powers noted, came shortly after the land was placed into federal trust. 

In a Feb. 6 letter to the district, the nation’s counsel argued that the farmout agreement is not binding on the nation. For that reason, the letter continued, the district has owed the nation an annual lease payment of $148.80 and monthly royalty payments of 1/8 of the wholesale price paid for any gas from the well. The lease also gives the nation rights to 300,000 cubic feet of gas from the well a year.

In response, the Feb. 6 letter said, the district indicated to the nation “a willingness to resolve the discussion with a path to disconnect.”

The nation then offered to let the district continue using the well through April 30 for $1,000 a month, which the letter said is “well below the market value of the gas the school district is withdrawing.” The district counteroffered, the letter continued, by asking for $250,000 from the nation to disconnect. Calling the offer “outlandish,” “unlawful” and “wrong,” the nation cut the district off from the well.

“The Nation has tried to resolve this matter amicably,” the Feb. 6 letter said. “But it appears the School District is simply unwilling to do so.”

The Cayuga Nation and the Department of the Interior did not respond to requests for comment by The Citizen. 

Powers said the well was a major source of energy for heating Union Springs school buildings over the past four decades. When the district was disconnected, it switched to NYSEG. The increased heating expenses for February, March and April required the district to adjust its budget in the middle of the year, he continued, which is why he called the well “a significant benefit to taxpayers.”

Now, Powers hopes the federal government can find a solution.

“We’re trying to figure out a path forward that’s respectful to both sides,” he said. “We want good relationships with our neighbors and to respect people’s rights.”