[Senate Hearing 107-101]
[From the U.S. Government Publishing Office]
S. Hrg. 107-101
TRUST LANDS AND RESOURCES OF THE CONFEDERATED TRIBES OF THE WARM
SPRINGS RESERVATION OF OREGON
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON INDIAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
ON
S. 266
REGARDING THE USE OF THE TRUST LAND AND RESOURCES OF THE CONFEDERATED
TRIBES OF THE WARM SPRINGS RESERVATION OF OREGON
__________
JULY 24, 2001
WASHINGTON, DC
_______
U.S. GOVERNMENT PRINTING OFFICE
74-483 WASHINGTON : 2002
____________________________________________________________________________
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COMMITTEE ON INDIAN AFFAIRS
DANIEL K. INOUYE, Hawaii, Chairman
BEN NIGHTHORSE CAMPBELL, Colorado, Vice Chairman
FRANK MURKOWSKI, Alaska KENT CONRAD, North Dakota
JOHN McCAIN, Arizona, HARRY REID, Nevada
PETE V. DOMENICI, New Mexico DANIEL K. AKAKA, Hawaii
CRAIG THOMAS, Wyoming PAUL WELLSTONE, Minnesota
ORRIN G. HATCH, Utah BYRON L. DORGAN, North Dakota
JAMES M. INHOFE, Oklahoma TIM JOHNSON, South Dakota
MARIA CANTWELL, Washington
Patricia M. Zell, Majority Staff Director/Chief Counsel
Paul Moorehead, Minority Staff Director/Chief Counsel
(ii)
C O N T E N T S
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Page
S. 266, text of.................................................. 2
Statements:
Blackwell, Sharon, deputy commissioner, Indian Affairs,
Department of the Interior................................. 5
Goe, Douglas, Esquire, Ater Wynne, LLP....................... 12
Inouye, Hon. Daniel K., U.S. Senator from Hawaii, chairman,
Committee on Indian Affairs................................ 1
Noteboom, James D., tribal attorney, Confederated Tribes of
the Warm Springs Reservation............................... 9
Patt, Jr., Olney, chairman, Confederated Tribes of the Warm
Springs Reservation........................................ 9
Smith, Hon. Gordon, U.S. Senator from Oregon................. 7
Tompkins, Robin, assistant general counsel, Portland General
Electric Co., Portland, OR................................. 10
Wyden, Hon. Ron, U.S. Senator from Oregon.................... 15
Appendix
Prepared statements:
Blackwell, Sharon............................................ 17
Goe, Douglas................................................. 18
Patt, Jr., Olney............................................. 19
Tompkins, Robin.............................................. 22
Wyden, Hon. Ron, U.S. Senator from Oregon.................... 23
TRUST LAND AND RESOURCES OF THE CONFEDERATED TRIBES OF THE WARM SPRINGS
RESERVATION IN OREGON
----------
TUESDAY, JULY 24, 2001
U.S. Senate,
Committee on Indian Affairs,
Washington, DC.
The committee met, pursuant to notice, at 10 a.m. in room
485, Senate Russell Building, Hon. Daniel K. Inouye (chairman
of the committee) presiding.
Present: Senators Inouye, Akaka, and Campbell.
STATEMENT OF HON. DANIEL K. INOUYE, U.S. SENATOR FROM HAWAII,
CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS
The Chairman. The committee meets this morning to receive
testimony on a bill which provides for the ratification by the
Congress of an agreement between the Confederated Tribes of the
Warm Springs Reservation, the Department of the Interior, and
the Portland General Electric Co.. This agreement would provide
the Warm Springs Tribes with the means to secure an ownership
interest in the Pelton Project and become a co-applicant with
the Portland General Electric Co. in the licensing process of
the Federal Energy Regulatory Commission.
[Text of S. 266 follows:]
The Chairman. Is Senator Wyden or Senator Smith here?
[No response.]
The Chairman. If not, may I call upon the Deputy
Commissioner for Indian Affairs, Department of the Interior,
Sharon Blackwell.
STATEMENT OF SHARON BLACKWELL, DEPUTY COMMISSIONER OF INDIAN
AFFAIRS, DEPARTMENT OF THE INTERIOR
Ms. Blackwell. Good morning, Mr. Chairman, Mr. Vice
Chairman and members of the committee.
Thank you for the opportunity to present the views of the
Department of the Interior on S. 266 entitled, ``The Use of
Trust Land and Resources of the Confederated Tribes of the Warm
Springs Reservation of Oregon.'' We have no objection to the
enactment of S. 266 and include at the end of the statement
suggested language that covers the Department's concerns
regarding the authorities addressed in the legislation.
As those testifying later can speak more directly about the
project and its financing arrangements, I will briefly
summarize the agreement that is the subject of this
legislation. On April 12, 2000, the Confederated Tribes of the
Warm Springs Reservation signed an agreement that created a
process whereby the tribes would gain part ownership in the
three dam Pelton Project partially situated on reservation land
and would become a co-applicant with Portland General Electric
before the FERC licensing proceedings. The agreement was
approved by the Secretary of the Interior.
We understand that the tribes plan to finance their
participation in the project through the issuance of bonds. The
tribes bonding counsel has asked the tribes to seek legislative
approval of the agreement in order to provide an unqualified
level of assurance that the agreement is proper, binding and
will not be altered.
The Department maintains that the Secretary of the Interior
had all the necessary authority to approve the terms and the
intent of the agreement under the provisions of the Federal
Power Act. Under that act, the Secretary is given broad
authority to ensure adequate protection and utilization of
Federal reservations and FERC licenses. For example, under 16
U.S.C. section 797(e), referred to generally as section 4(e),
the Secretary provides FERC with license conditions to ensure
that hydropower projects are consistent with the purposes of
affected Indian reservations. In this regard, the Secretary of
the Interior has approved agreements of a similar nature in the
past without congressional approval and has the authority to do
so in the future.
The Department is also concerned that this legislation as
proposed may effectually require other tribes to seek similar
legislative approval of other settlement agreements needed to
realize economic development opportunity. As a consequence,
tribes with fewer political resources or less economic clout
may be unable to meet the increased standard of contractual
security sought by this legislation.
The Department is also concerned that the legislation would
amend 25 U.S.C. section 415(a) to provide the tribes with 99-
year leasing authority to account for the life of this
agreement. Similar to our position regarding the Secretary's
authority, the Department maintains that the Federal Power Act
provides all the authority necessary for FERC license projects
to occupy tribal lands for the term of the license. Thus, no
leases of any term are required and the amendment of 25 U.S.C.
section 415(a) is not necessary. Nevertheless, while the
Federal Power Act does not require it, the Department has no
objection to extending the tribes' leasing authority.
In sum, the Department does not want to stand in the way of
the tribes securing their necessary financing and potentially a
more favorable financing arrangement. As such, we have no
objection to S. 266. We do request, however, that the bill be
amended to clarify that the Secretary is deemed authorized to
take all actions necessary to approve and implement not only
this agreement but all other such agreements entered into
before this time and in the future pursuant to that authority
of the Secretary under the Federal Power Act. We believe that
this language will allow the Warm Springs Tribe the benefit of
their agreement while preserving the Department's authority
needed to ensure this opportunity for all other Indian tribes.
This concludes my prepared statement. Specific language to
address the Department's concern follows this statement and has
been provided to the committee.
I would be pleased to respond to any questions.
[Prepared statement of Ms. Blackwell appears in appendix.]
The Chairman. The Department of the Interior's position is
that although legislation may not be necessary, this bill will
not be objected to because it may cover whatever questions the
court may?
Ms. Blackwell. I believe that the intent of the legislation
is to provide the tribes bonding counsel with what, in the
opinion of the bonding counsel, will result in an unqualified
bonding opinion. The Department has no objection to seeing the
tribes achieve that. Our concern is related entirely to past
agreements of a similar nature, that have been approved
pursuant to the Federal Power Act and those that may be
approved in the future.
The Chairman. So with the suggested amendment, the
Department would have no objection whatsoever?
Ms. Blackwell. That's correct, Senator Inouye.
The Chairman. Thank you.
Mr. Vice Chairman.
Senator Campbell. Thank you, Mr. Chairman.
And the Confederated Tribes have no objection to your
suggested language?
Ms. Blackwell. I visited this morning with Chairman Patt
and it may be that he will have a statement to make with regard
to our suggestions.
Senator Campbell. Do you have any input at all from the
State?
Ms. Blackwell. No; we have not.
Senator Campbell. I'm not familiar with this project. Can
you tell me in a nutshell the scope of it? I guess like all
water projects, it provides irrigation of water and power to
someone, is that right?
Ms. Blackwell. The Portland General Electric Co. [PGE] owns
three dams at the Pelton-Round Butte Hydroelectric Project. It
is on the Deschutes River and it is approximately 100 miles
from where the river flows into the Columbia.
The Round Butte Dam is a big project, 440 feet tall. The
Pelton Dam is 204 feet tall and then the deregulating dam,
operated by the Warm Springs Tribe, is a smaller operation and
about 40 feet tall. The project has about 427 megawatt
capacity. PGE owns and operates the generators in the two
larger, upstream dams. The tribe owns, operates and sells
electricity from a 19 megawatt generator and a smaller,
deregulating dam.
Senator Campbell. I see. Thank you.
Thank you, Mr. Chairman. I have no further questions.
The Chairman. Thank you, Ms. Blackwell.
The committee is most pleased to recognize the presence of
the very distinguished Senator from Oregon, the Honorable
Gordon Smith. Senator Smith, we would be most pleased to
receive your testimony, sir.
STATEMENT OF HON. GORDON SMITH, U.S. SENATOR FROM OREGON
Senator Smith. Thank you, Mr. Chairman.
I appreciate your willingness, and Senator Campbell, to
hold this hearing to consider S. 266, a bill I introduced along
with my colleague, Senator Wyden, regarding the use of the
trust land and resources of the Confederated Tribes of the Warm
Springs Reservation in Oregon.
I would also like to extend a warm welcome to those
witnesses who have traveled here today to testify on this
bill--Olney Patt, Jr, the chairman of the Warm Springs Tribal
Council; Robin Tompkins, general counsel, Portland General
Electric; and Doug Goe, chairman of the Public Finance Group at
Ater Wynne.
This legislation is vital to ensuring that all the
provisions of the April 12, 2000 agreement between the
Confederated Tribes of the Warm Springs Reservation and PGE are
valid and have Federal approval. Under this agreement, the
tribes and PGE will seek a joint Federal Power license for the
Pelton-Round Butte Hydroelectric Project on the Deschutes River
in Oregon.
This agreement and this legislation were both negotiated
with great care. The tribes are seeking this legislation to
ensure that the agreement in its entirety is valid and can
serve as the basis for financing to purchase its interest in
the project on January 1, 2002. This historic agreement is good
for all the parties involved and will benefit the ratepayers of
Oregon in years to come. It is an innovative approach to the
often contentious issue surrounding the relicensing of
hydroelectric facilities on or adjacent to Indian lands.
I also want to congratulate the tribes for responding to
and resolving the concerns of county officials in Jefferson
County, OR who are concerned about the loss of property tax
revenue to the county under this new agreement. That issue has
been resolved. It is my understanding local officials are
strongly supportive of this agreement and this legislation.
There is, however, a need to move this legislation in an
expeditious manner. The legislation must be enacted before the
end of this session so the tribes can put together the
financing to purchase their share of the project by January 1,
2002. I realize that the legislation has been substantially
rewritten on the House side and there are a few issues still to
be resolved with that redraft. In fact, staff are meeting with
stakeholders after this hearing to try and reach a consensus on
the bill on that side of the Hill. As the principal sponsor of
the Senate bill, I am happy to have the new language, once
agreed upon by the parties, substituted for the bill that I
have introduced.
Mr. Chairman, again, I thank you for your leadership on
this issue and Senator Campbell as well. I am hopeful that this
consensus legislation can move in the near future. Thank you in
advance for your consideration of it.
I would be happy to answer any questions.
The Chairman. Thank you very much, Senator Smith.
This is a historic moment because it should serve as a
model for Indian nations and interested parties in getting
together and I congratulate you on coming forth with this bill.
I have been advised that the parties you represent will be
meeting this afternoon to work out the language and if an
agreement is reached, the vice chairman and I would be very
glad to set up a markup for this measure next Tuesday, July 31.
Senator Smith. Wonderful. I thank you for that. I would
just add parenthetically that I am very gratified by this
agreement in that it brings together the interest of the
general community and ties them to the interest of the tribal
community and gives the tribe a financial stake in these
contentious issues around hydroelectric power, around fish, and
all these competing values that are all valuable and it puts
everyone at the table with a stake in the outcome to make sure
our obligation to people to provide electric power and our
obligation to fish and wildlife will be well served by the
tribes having a place in this very important deal.
The Chairman. Senator Campbell.
Senator Campbell. I just want to commend both Senators for
this bill. In the history of the American West, the discussion
of the use of water and power has not always been a friendly
discussion between tribes and non-Indians or tribes and States.
The money, the millions if not hundreds of millions of dollars
that have gone into litigation fighting out those problems
through courts to my way of thinking is something we have to
get away from. I think this kind of legislation in which the
parties agree and in which all can share the benefits of the
project is definitely the way to go. I just wanted to tell you
that for the record.
Senator Smith. Thank you, Senator Campbell. I agree with
you. I think in our history in interior matters, we take water
and power projects at the tribes rather than with the tribes.
This is breaking new ground and it's a credit to the parties
and this committee that such legislation could come forward.
The Chairman. Thank you very much, sir.
Now may I call upon the chairman of the Confederated Tribes
of the Warm Springs Reservation, Warm Springs, OR, Olney Patt,
Jr.; the assistant general counsel, Portland General Electric
Co., Portland, OR, Robin Tompkins; and Douglas Goe, Esq.,
Portland.
Mr. Chairman, welcome, sir.
STATEMENT OF HON. OLNEY PATT, Jr., CHAIRMAN, THE CONFEDERATED
TRIBES OF THE WARM SPRINGS RESERVATION, ACCOMPANIED BY JIM
NOTEBOOM, ESQUIRE, TRIBAL ATTORNEY
Mr. Patt. I am Olney Patt, Jr., tribal council chairman of
the Confederated Tribes of the Warm Springs Reservation of
Oregon. To my left is tribal attorney, Jim Noteboom.
I am pleased to appear before the committee today to
express our strong support for S. 266, a bill essential to our
purchase of one-third or more of the Pelton Hydroelectric
Project. Section 1 of the bill provides the Secretary of the
Interior with authority to approve leases of up to 99 years for
trust land on our reservation and land held in trust for our
tribe. This authority will help give our tribe greater
flexibility in managing our land for economic and other
development. Section 2 provides the Secretary of the Interior
with clear authority to approve the use of Warm Springs Trust
Land resources and other assets in our purchase of an interest
in Pelton Project. As Mr. Goe, our bond counsel, will discuss a
little later, this express authority is necessary for the bonds
that will finance our purchase.
The 440 megawatt Pelton Hydroelectric Project is a series
of three dams across the Deschutes River that forms the eastern
boundary of the Warm Springs Reservation in central Oregon.
Portland General Electric Co. represented here today by their
general counsel, Robin Tompkins, owns the project with the
exception of a 19 megawatt generator and the reregulating dam
owned by the tribe.
About one-third of the project is on the Warm Springs Trust
land for which the tribe has been receiving about $11-million a
year in rent. Clearly the project is a key economic resource to
Warm Springs and one in which we would prefer to be owners
rather than recipients of rent.
The FERC license for the project expires this December 31
and both the tribe and PGE submitted competing applications for
the new license. Rather than compete, the parties realize it
would be far better to join forces and after lengthy
negotiations, we arrived at a global settlement agreement
whereby the tribe will purchase a one-third interest in the
project this December 31 with options through the year 2037 to
buy a majority interest.
Because this agreement involves the use of Warm Springs
Trust Land, resources and other assets for the project, the
Department of the Interior was a full party to the
negotiations. One of the issues we examined was the adequacy of
Interior's authority to approve the use of those trust assets
for the agreement. Interior believes its existing authority is
sufficient and on April 12, 2000, all three parties, Interior,
the tribes and PGE signed the agreement.
There is a high likelihood that there is legal authority
under existing Federal law for this agreement but there is not
absolute certainty and the lenders who will finance our Pelton
purchase will require legal certainty, particularly for the
revenue bonds we expect to use. So S. 266 seeks to establish
that certainty and is essential for our going to the bond
market to secure the $30 million we need by December 31 for the
project.
Accordingly, section 2 of S. 266 seeks to do four things.
First, it provides the needed clear and specific Federal
approval of the use of Warm Springs trust land, resources and
other assets in the project. Second, it limits the scope of
that authority to just that needed for the use of our land,
resources and other assets as described in the agreement.
Third, it seeks to make certain that the funds the tribes
receive from the sale of power from the project can be securely
pledged to repay the bondholders. Fourth, it seeks to assure
this particular bill is not to create inference regarding
Interior's current authorities so they remain fully in tact and
effective.
Mr. Chairman, counterpart legislation has been introduced
in the House and the Resources Committee has suggested some
refinements to further clarify the legislation. We have been
working with the House committee staff and the Oregon
delegation on those refinements and hope to reach resolution in
the next few days. We look forward to discussing those
revisions with this committee so that if they are acceptable,
S. 266 may be taken to mark up before Congress adjourns for its
August recess.
Thank you. That concludes my statement and I would be happy
to respond to any questions.
[Prepared statement of Mr. Patt appears in appendix.]
The Chairman. Thank you very much, Mr. Chairman.
May I call upon the assistant general counsel, Ms.
Tompkins.
STATEMENT OF ROBIN TOMPKINS, ASSISTANT GENERAL COUNSEL,
PORTLAND GENERAL ELECTRIC
Ms. Tompkins. Thank you, Mr. Chairman.
I am Robin Tompkins, assistant general counsel of Portland
General Electric Co. in Portland, OR.
I am genuinely pleased to have this opportunity to testify
to the U.S. Senate Committee on Indian Affairs regarding S. 266
and share with you the views of our company on this important
legislation.
This bill, and the companion legislation in the U.S. House
of Representatives, address the use of trust land on the Warm
Springs Reservation of Oregon. I want to begin by commending
Senators Ron Wyden and Gordon Smith for proposing this
legislation and for their support of this historic agreement
between the Confederated Tribes of the Warm Springs Reservation
of Oregon and Portland General Electric regarding the ownership
and operation of the Pelton-Round Butte Hydroelectric Project
in central Oregon.
The passage of this bill will help bring closure to almost
5 years of negotiations between the parties and the resulting
review by various Federal agencies which include the Department
of the Interior and the Federal Energy Regulatory Commission.
The negotiated settlement between PGE and the tribes has the
full support of the Oregon congressional delegation and the
bipartisan leadership of Senators Wyden and Smith have been
essential.
The Pelton-Round Butte Project is located on the Deschutes
River in central Oregon. It is one of the most important
sources of electricity in the State of Oregon, supplying
electric power to over 300,000 Oregon families. The project
consists of three dams--the Pelton Dam, the Round Butte Dam and
the reregulating dam. The project commenced operation in 1957
with construction of the first of the three dams and became
fully operational in 1964.
The Federal Power Commission in the State of Oregon issued
PGE a license for the construction and operation of the project
based on an agreement between PGE and the tribes which included
the ability of the tribes to install generating facilities at
the reregulating dam. The dam and the reservoirs are located
partly on tribal lands as you previously heard.
During the first term of the 50-year license, PGE was the
sole owner and operator of the project. In the mid-1980's, the
tribes became a co-licensee. Pursuant to the Federal Power Act,
PGE has made annual rent payments to the tribes for the use of
their tribal land. During the relicensing process, PGE and the
tribes both applied to compete for ownership for the project.
This arduous and competitive relationship existed until the
parties negotiated the settlement of their differences and
joined together to own and operate this valuable and important
resource. The settlement that was reached called for PGE and
the tribes to become joint licensees of the project.
As the chairman of the Confederated Tribes just reported,
for the first 20 years of the project, beginning at the end of
2001, the tribes will own a one-third share of the project and
then will have the opportunity to buy an additional share of
the project and eventually become the majority owner.
This agreement accomplishes several important goals of PGE
and the tribes. For the tribes, the settlement will grant the
tribes a strong ownership position in the project and ensure
many economic benefits far into the future. It will also enable
them to exert more influence over environmental, cultural and
recreational resources of the Deschutes River Basin. Most
importantly for PGE, the agreement will preserve the value of
the project for PGE customers.
The settlement negotiations have been lengthy and arduous
but the hard work has been productive. The results of these
consultations is a victory for PGE and the tribes but most
importantly for the people of Oregon.
This legislation is necessary to ensure beyond all
certainty that there is legal authority for the settlement
agreement. As members of the committee know, the United States
must consent to the lease, sale or other conveyance of tribal
trust lands, resources and other assets. This legislation and
the companion bill introduced in the House of Representatives
ensures legal certainty to this historic agreement.
The lender who will finance the purchase of the tribe's
interest in the project will require absolute authority in
order to carryout the terms of the settlement agreement.
S. 266 addresses these concerns. First, the legislation
confers authority on the Secretary of the Interior to approve
leases of up to 99 years for trust lands on the Warm Springs
Reservation and lands held in trust for the tribes. Second, the
bill provides for specific approval of the lands and other
resources owned by the tribes. The legislation also grants
express authority to the Secretary of the Interior to execute
and carry out these terms of the agreement. The bill further
ensures that no Federal law would render the agreement
unenforceable or impede the ability of the tribes to pledge the
revenues it receives from the sale of its power. Third, the
bill specifies that the legislation does not apply to any
provision other than those that deal with tribal lands and does
not affect any other Federal or State agency's authority to
approve this agreement. Fourth, the bill states this
legislation does not require the Department of the Interior to
seek legislative approval for similar agreements with other
tribes.
This legislation is a critical and necessary component of
this relicensing process. Its enactment will be a final step in
a historic and significant agreement between Portland General
Electric and the tribes and on behalf of PGE, I urge its speedy
passage.
Thank you.
[Prepared statement of Ms. Tompkins appears in appendix.]
The Chairman. Thank you very much, Ms. Tompkins.
Mr. Goe.
STATEMENT OF DOUGLAS GOE, ESQ., ATER WYNNE LLP
Mr. Goe. Mr. Chairman, my name is Doug Goe. I am bond
counsel and chair the Public Finance Group of Ater Wynne in
Portland, OR. We serve as bond counsel to the Warm Springs
Tribe and to the States of Oregon and Washington and local
governments throughout the western United States.
In addition to serving as bond counsel to the Warm Springs
Tribe on a national basis, we serve as bond counsel to many
other Indian nations including the Yakima Nation in Washington,
the Nez Perce Tribe in Idaho, the Seminole Tribe in Florida and
the Navajo Nation in Arizona, New Mexico, and Utah.
Nationally recognized bond counsel are lawyers who work
with State, local, and tribal governments in financing the
whole range of public projects. As a necessary component of our
role, we must analyze the Federal tax, the securities and
administrative law and the substantive underlying legal
principles governing the type of project being financed.
I appreciate this opportunity to testify today on why S.
266 is necessary for the Warm Springs Tribe to issue revenue
bonds to finance its acquisitions of its interests in the
Pelton and Round Butte Projects.
A key point in understanding why the legislation is
necessary is that the bonds being issued are revenue bonds.
That is, they will be secured solely by the revenues the tribe
derives from selling its power generated by the dams. In the
event those revenues are not available for whatever reason,
bond investors will lose their investment.
Revenue bond investors are extremely conservative. They are
conservative because bonds, as you know, are a form of debt
instrument in which the only return to investors is the
interest rate. In contrast to the NASDAQ and other stock
markets where investors can realize a huge up side return--we
hope the markets will return to those kind of days--bond
investors have no up side.
Since the 1800's, the bond market has required an
unqualified opinion of bond counsel before they will purchase
the bonds. The bond counsel opinion must say that the bonds
were legal, valid and binding obligations of the government
issuing the bonds. In the case of revenue bonds, which are not
backed by the taxing power or other resources of the government
issuing the bonds, investors require an additional opinion that
the pledge of revenues securing the revenue bonds is valid and
superior to all other liens or encumbrances.
After an extensive review of the applicable Federal
statutes and case law, we have concluded that we cannot render
an unqualified opinion without S. 266 because we do not find
any express authority in Federal law for the Secretary of the
Interior to have executed the long term global settlement and
compensation agreement.
We also think there is an issue under section 10(e) of the
Federal Power Act whether compensation for use of the tribes'
lands should be payable to the United States in trust for the
benefit of the tribes instead of being paid directly to the
tribes as provided in the global settlement agreement.
A related concern is that a Federal court would consider
the proceeds of the sale of the electricity from the Pelton
Project to be trust funds payable for the benefit of the tribes
and therefore, the revenues pledged to bondholders cannot be
used to pay principal and interest on the bonds.
While at the same time we concede there are good arguments
for why these issues raised could be resolved in favor of the
Department of the Interior, Portland General Electric Co. and
the tribes and bondholders, these issues are not free from
doubt. Therefore, the unqualified opinion standard of absolute
certainty cannot be met.
We have discussed these matters extensively with the
tribes' underwriter, the firm of Salomon Smith Barney and its
counsel, Orrick Herrington and Sutcliffe, the leading bond
counsel firm in the United States and Orrick has advised us as
well that they would not be in a position to render an
unqualified opinion given the state of the law.
They, with us, have advised the tribes that S. 266 is
absolutely necessary for the tribes to obtain bond financing
for this project. The essential elements that we think are
required in the legislation are: congressional approval to the
global settlement agreement, ensuring the Secretary has the
authority to sign and implement the agreement; and that it is a
legal, valid and binding agreement with respect to all parties.
S. 266 also must make clear the authority of the tribe to
pledge revenues from the project and that such pledge will not
violate section 10(e) of the Federal Power Act or any other
provision of Federal law.
We support S. 266 and urge its prompt consideration and
approval by the committee and its prompt passage on the Senate
floor.
I very much appreciate the committee's time and attention
and would be pleased to address any questions you might have.
[Prepared statement of Mr. Goe appears in appendix.]
The Chairman. Thank you.
Before proceeding, I would like to apologize for not
announcing that Senator Ron Wyden has been at another committee
hearing and he just walked in. I was just extending your
apologies but I am glad you are here.
First, I just announced that all the parties are having a
conference this afternoon. If the conference is successful in
coming forth with an agreement, this committee is prepared to
bring this matter up for a markup 1 week from now. If that is
the case, we may be able to consider this measure before the
recess begins.
Are there any contentious provisions in this measure that
might delay this agreement?
Mr. Goe. If I might, I don't really think so. I think we
are down to the lawyers talking about some very important words
in the legislation and there have been some issues raised on
the House side that we are working diligently with the House to
resolve. I would say the House staff came back with a few
changes in their markup of the bill. We had only very few word
changes, very important word changes in terms of restoring what
was in the Senate version but I think we are down to a very few
words.
I certainly would hope that later this morning and this
afternoon, we would be able to resolve those issues.
The Chairman. Are there any substantive or important
material differences between the Senate bill and the House
bill, Mr. Chairman?
Mr. Noteboom. I don't believe there are important
substantive differences. Each try and accomplish the same
thing, obtain Federal approval and not adversely impact any
other situation with an Indian tribe outside of this
legislation. Both accomplish the same fundamental purpose, just
in slightly different ways.
The Chairman. I gather this bill is necessary in the eyes
of the bond counsel because without this you may not be able to
go through with this agreement?
Mr. Goe. That is correct, Mr. Chairman.
The Chairman. Is that the understanding of the tribes?
Mr. Noteboom. Yes; in addition, I think it is important to
stress that this is not only important to bond counsel but to
the tribes and the PGE because the agreement is potentially 50-
plus years long and we have had a history of differences in the
past. We've worked very hard to ensure this agreement will
endure for the entire time and we will not have those
differences arise again.
The Chairman. So this bill is necessary to clarify that
term limitation issue?
Mr. Noteboom. Yes; it is.
The Chairman. Ms. Tompkins, I note in your testimony that
the tribal nation will have one-third interest for the first 20
years?
Ms. Tompkins. That is correct.
The Chairman. During that period, while PGE has the
majority interest, will you continue to confer and consult with
the tribes on matters of culture and environment?
Ms. Tompkins. Yes; not only is there an operations
agreement where both parties work through operational issues
related to the project, but the tribal representatives have a
unique standing in that they also have a big say in both
natural resources and cultural issues. As we move through the
relicensing process, the tribes wear two hats. They will not
only be project owners but they are sort of an agency that
oversees, gives recommendations and input into significant
cultural and fishery related issues.
We have worked successfully over the past few years as we
have transitioned from say a landlord/tenant relationship to
more of a partnership relationship. Now that we have this
codified in this agreement, I think all parties can represent
that we are working strong as partners and will always try to
address each others' issues in a very productive manner so that
we come out with the best solutions for the people of the State
of Oregon.
The Chairman. On behalf of the committee, may I
congratulate all of you for coming forth with this agreement.
It is a historic moment. It is a model agreement which should
give guidance to other Indian tribes and utility companies that
hope to come forth with similar agreements on tribal lands. I
think many tribes are watching this process. Congratulations
and thank you very much.
The Chairman. May I now call upon the author of the measure
that will make all this possible, the very distinguished
Senator from Oregon, Senator Wyden.
STATEMENT OF HON. RON WYDEN, U.S. SENATOR OREGON
Senator Wyden. Thank you, Mr. Chairman, and I will be very
brief.
I want to express my thanks to you for your thoughtfulness.
You have one of the busiest schedules of any member of the U.S.
Senate and yet you have continually made time for this Senator
and for important issues for our State. I just want to express
my gratitude to you for all the thoughtfulness you have shown
me.
I think you are absolutely right. This is precedent-setting
work, what the tribes have done in our home State with PGE and
with the Department of the Interior. I think they have outlined
they have a number of technical issues yet to go but it is
something that could serve as a model for this country. You
better than anyone else in the U.S. Senate knows how
contentious these issues can be in local communities. There are
few issues that seem to polarize communities more than these
sorts of questions. Yet, what we have been able to do in Oregon
is what you have done in the U.S. Senate again and again and
that's to bring folks together and say, let's get beyond this
polarizing business, beyond the bickering and find the common
ground.
I have a prepared statement and with your indulgence if
that could be a part of the record, I would appreciate it. Just
know of my profound gratitude to you for this and for all the
help you have given me as a relatively new member of the
Senate.
[Prepared statement of Senator Wyden appears in appendix.]
The Chairman. I thank you for your kind words but we are
here because of this measure which we feel will set the tone
for Indian country, especially those tribes with energy
resources on their lands. They are looking for guidance and I
think this is the type of guidance that should help everyone
concerned. So once again, congratulations, sir.
Senator Wyden. Thank you.
The Chairman. We will try our best to have this matter
marked up 1 week from today. It should be on the floor for
consideration before we begin our August recess.
Senator Wyden. That would be very welcome news to the
people of my State and we are very appreciative.
The Chairman. We do not want any brownouts there.
[Laughter.]
Thank you very much.
With that, the hearing is in recess.
[Whereupon, at 10:55 a.m., the committee was recessed, to
reconvene at the call of the Chair.]
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A P P E N D I X
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Additional Material Submitted for the Record
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Prepared Statement of M. Sharon Blackwell, Deputy Commissioner of
Indian Affairs, Department of the Interior, Washington, DC
Good morning, Mr. Chairman and Members of the Committee. Thank you
for the opportunity to present the views of the Department of the
Interior [Department] on S. 266, a bill, ``Regarding the use of the
trust land and resources of the Confederated Tribes of the Warm Springs
Reservation of Oregon.'' We have no objection to the enactment of S.
266, and include at the end of this statement suggested language that
covers the Department's concerns regarding the authorities addressed in
the legislation.
On April 12, 2000, the Confederated Tribes of the Warm Springs
Reservation [Tribes] signed an agreement that created a process whereby
the Tribes would gain part ownership in the three dam Pelton Project
partially situated on Reservation land and would become a co-applicant
with Portland General Electric in the Federal Energy Regulatory
Commission [FERC] licensing process. The Agreement was approved by the
Secretary of the Interior. We understand that the Tribes plan to
finance their participation in the Project through the issuance of
bonds. The Tribes bonding counsel has asked the Tribes to seek
legislative ``approval'' of the Agreement to provide an ``unqualified''
level of assurance that the Agreement is proper, binding, and will not
be altered.
The Department maintains that the Secretary had all the necessary
authority to approve the terms and intent of the Agreement under the
Federal Power Act [FPA]. The Secretary is given broad authority under
the FPA to ensure adequate protection and utilization of Federal
reservations in FERC licenses. For example, under 16 U.S.C. Section
797(e), also known as Section 4(e), the Secretary provides FERC with
license conditions to ensure that hydropower power projects are
consistent with the purposes of affected Indian reservations. In this
regard, the Secretary has approved agreements of a similar nature in
the past without Congressional approval, and has the authority to do so
in the future.
The Department is also concerned that this legislation, as
proposed, may effectually require other tribes to seek similar
legislative approval of other settlement agreements needed to realize
economic development opportunities. As a consequence tribes with fewer
political resources or less economic clout may be unable to meet the
increased standard of contractual security sought by this legislation.
Finally, we note that this legislation would amend 25 U.S.C.
Section 415(a) to provide the Tribes 99-year leasing authority to
account for the life of the Agreement. Similar to our position
regarding the Secretary's authority, the Department maintains that the
FPA provides all the authority necessary for FERC licensed projects to
occupy tribal lands for the term of the license. Thus, no leases of any
term are required, and amendment of 25 U.S.C. Section 415(a) is not
necessary. Nevertheless, while FPA does not require it, the Department
has no objection to extending the Tribes leasing authority.
In sum, the Department does not want to stand in the way of the
Tribes securing their necessary financing, and, potentially, a more
favorable financing arrangement. As such, we have no objection to S.
266. We do request, however, that the bill be amended to clarify that
the Secretary is deemed authorized to take all actions necessary to
approve and implement not only this Agreement, but all other such
agreements entered into previously, and in the future, pursuant to the
Secretary's authority under the FPA. We believe that this language will
allow the Warm Springs Tribes the benefit of their Agreement, while
preserving the Department's authority needed to ensure this opportunity
for all other Indian Tribes. This concludes my prepared statement.
Specific language to address the Department's concerns follows this
statement. I would be pleased to respond to any questions the Committee
may have.
Specifically, the Administration requests that section 2(a) be
amended to read as follows:
(a) APPROVAL OF AGREEMENT--The use of tribal lands, resources and
other assets described in the Long-Term Global Settlement and
Compensation Agreement [in this section referred to as the`Agreement']
dated April 12, 2000, between the Department of the Interior, the
Confederated Tribes of the Warm Springs Reservation of Oregon, and the
Portland General Electric Company, is approved, and the Secretary of
the Interior, pursuant to the authority provided to the Secretary in
the Federal Power Act, shall be deemed authorized to take all actions
necessary to approve and implement the Agreement, and any other similar
agreement involving an Indian Tribe heretofore or hereafter approved or
implemented by the Secretary pursuant to the Secretary's authority
under the Federal Power Act. No Federal law regarding tribal lands,
resources, or other assets shall be deemed----
No. 1, to render the Agreement unenforceable or void against the
parties; or
No. 2, to prevent, prohibit, supersede, impair, restrict, or
otherwise hinder any pledger encumbrance by the Tribes of the sums that
may be paid to or received by or on the account of the Tribes in
connection with the Agreement.
______
Prepared Statement of Douglas E. Goe, Chair, Public Finance Group Ater
Wynne LLP and Bond Counsel to Confederated Tribes of the Warm Springs
Reservation, Oregon
Mr. Chairman, members of the committee, my name is Doug Goe.
I am a bond counsel and the chair of the Public Finance Group of
Ater Wynne LLP. We serve as bond counsel to the Warm Springs Tribe, to
the States of Oregon and Washington and local governments throughout
the western United States. We also serve as bond counsel to tribal
governments on a national basis. For example, in addition to serving as
bond counsel to the Warm Springs Tribe, we have served as bond counsel
to the Yakima Nation in Washington, the Nez Perce Tribe in Idaho, the
Navajo Nation in Arizona, New Mexico and Utah, and the Seminole Tribe
in Florida. Nationally recognized bond counsel are lawyers who work
with state, local and tribal governments in financing all types of
public projects. As a necessary component of our role, we must analyze
the applicable provisions of Federal, State and tribal tax, securities
and administrative law and the substantive law governing the type of
project being financed.
I appreciate the opportunity to testify today on why S. 266 is
necessary for the Warm Springs Tribe to issue revenue bonds to finance
its acquisition of certain interests in the Pelton and Round Butte
hydroelectric project. A key point in understanding why the legislation
is necessary is that the bonds being issued are revenue bonds that will
be secured solely by the revenues the Tribe derives from selling its
share of power generated by the dams. In the event those revenues are
not available for whatever reason, bond investors will lose their
investment.
No. 1. Revenue Bond Investors are Very Conservative. Bond investors
are very conservative because bonds are a form of debt instrument under
which the only return to investors is an interest rate. In contrast to
the Nasdaq and other stock markets where investors can realize a huge
upsides and downside return, bond investors have no upside.
Since the 1800's, the bond market has demanded an unqualified
opinion of nationally recognized bond counsel to the effect that the
bonds they are purchasing are legal, valid and binding obligations. In
the case of revenue bonds which are not backed by the taxing power or
other resources of the entity issuing the bonds, investors require an
additional opinion that the pledge of ``revenues'' securing the revenue
bonds is valid and superior to all other liens or encumbrances.
No. 2. Unqualified Opinion Standard Cannot Be Met Without S. 266.
After extensive research of applicable Federal statutes and case law,
we have concluded that we cannot render an unqualified opinion without
S. 266 because we do not find any express authority in Federal law for
the Secretary of the Interior to have executed the Long-Term Global
Settlement and Compensation Agreement dated as of April 12, 2000 among
the Tribes, the Department of the Interior and Portland General
Electric Company [the ``Global Settlement Agreement''].
We also think that there is an issue under section 10(e) of the
Federal Power Act whether compensation for use of the Tribes' lands
should be payable to the United States in trust for the benefit of the
Tribe instead of being paid directly to the Tribe as provided in the
Global Settlement Agreement. A related concern is that a Federal court
would consider the proceeds of the sale of electricity from the Pelton
Project as trust funds payable to the United States for the benefit of
the Tribe and that, therefore, the revenues pledged to bondholders
cannot be used to pay principal and interest on the bonds.
Time does not permit me to get into detail regarding other Federal
law issues. We think that there are good arguments for why these issues
we raised could be resolved in favor of the Department of the Interior,
the Tribe, PGE and bondholders. However, the issues are not free from
doubt. Therefore, the unqualified opinion standard of absolute
certainty cannot be met.
No. 3. Bond Underwriters Refuse to Purchase Bonds Without Opinion.
We have discussed these matters extensively with the Senior Managing
Underwriter of the Tribes' bonds, Salomon Smith Barney and their
counsel, Orrick Herrington and Sutcliffe. Orrick Herrington is the
leading bond counsel firm in the United States. Orrick has told us that
they, too, would not give an unqualified opinion because of the Federal
law issues. Salomon has refused to take anything but an ``unqualified
opinion'' on these issues. They have advised the Tribe, as have we,
that S. 266 is absolutely necessary for the Tribe to obtain bond
financing for the project.
No. 4. Essential Elements of S. 266. The essential elements that we
think are required in the legislation is congressional approval of the
Global Settlement Agreement insuring that the Secretary has the
authority to sign and implement the agreement and that it is a legal,
valid and binding agreement with respect to all parties. S. 266 also
must make clear that the authority of the Tribe to legally pledge
revenues from the Project and that such pledge will not violate section
10(e) of the Federal Power Act or any other provision of Federal law.
We support S. 266, and urge it's prompt consideration and approval
by the Committee, and its prompt passage on the Senate floor.
Thank you for the committee's time and attention. I would be
pleased to answer any questions.
______
Prepared Statement of Olney Patt, Jr., Chairman, Confederated Tribes of
the Warm Springs Reservation, Oregon
Mr. Chairman, members of the committee, I am Olney Patt, Jr.,
Chairman of the Tribal Council of the Confederated Tribes of the Warm
Springs Reservation of Oregon. The Tribe appreciates your having
scheduled this hearing on S. 266, and it is my pleasure to present
today the views of the Warm Springs Tribe on this legislation regarding
the use of trust land and resources on our Reservation.
In summary, the Warm Springs Tribe strongly supports S. 266, and
urge that, with the adoption of clarifying revisions soon to be
finalized among the Oregon Delegation sponsors of the legislation, the
committee approve, and the Senate pass, this essential legislation as
soon as possible.
S. 266 provides for Federal approval of an historic Agreement
reached on April 12, 2000, between the Confederated Tribes of the Warm
Springs Reservation of Oregon, Portland General Electric Company [PGE],
and the U.S. Department of the Interior. This Agreement is important
not only to the parties, but to all the citizens of Oregon, because of
the responsible way in which it deals with the ownership of one of the
State's most important resources, the Pelton-Round Butte Hydroelectric
Project. It also provides a model for the rest of the country to
demonstrate how the United States, Indian tribes and electric utilities
can work together to solve the often contentious issues surrounding
hydroelectric projects and the use of Indian lands.
The Pelton-Round Butte Hydroelectric Project is a 440-megawatt
project consisting of three dams and generation units on the Deschutes
River in Central Oregon. About one third of the Project lands are
located on the Warm Springs Indian Reservation. Currently, PGE owns and
operates the two larger dams and their generating facilities while the
Tribe owns and operates the 19 megawatt generating facility located in
the Re-regulating Dam. Today, PGE pays approximately $11 million in
annual rental charges to the Tribe for the use of our land.
Beginning in the summer of 1998, representatives of the Tribes and
PGE commenced negotiations to attempt to reach a settlement on all
issues between us relating to ownership and operation of the Pelton
Project. Because of the trust responsibility of the Department of the
Interior to the Tribe, Department representatives participated in the
negotiations. On April 12, 2000, Interior, Tribal, and PGE
representatives signed the Long-term Global Settlement and Compensation
Agreement and its Included Agreements that is the subject of S. 266.
The key elements of the Agreement are:
No. 1. On January 1, 2002 the Tribe will purchase from PGE at its
net book value a 33.33-percent interest in the Project. The Tribe has
the option to purchase an additional 16.66 percent interest on January
1, 2022, as well as a further option to purchase a controlling .02
percent interest in the Project no later than 2037. The length of the
Agreement is approximately 50 years, with flexibility to run a little
longer or shorter depending upon when the new FERC license for the
Project is actually issued, and the length of the license itself, which
can be from 35 years to 50 years. To provide for our purchase of our
share of the Project and to cover the costs of Project modifications
anticipated under the new license, Warm Springs must secure
approximately $30 million from the bond market by January 1, 2002.
No. 2. PGE will operate the Project and be guided by an Operating
Committee composed of representatives of the Tribe and PGE as owners.
No. 3. The Tribe has the option to sell its share of the power to
PGE or on the open market.
No. 4. The Agreement settles all disputes between the parties and
establishes the compensation to be paid to the Tribe for the use of its
lands and resources throughout the period of the entire license.
One of the central issues that the parties have been concerned
about since the inception of the negotiations is the legal authority
for the Agreement. As a general principle of Federal Indian law, the
United States must consent to the lease, sale, or other conveyance of
tribal trust lands, resources, or other assets. Although there is a
high likelihood that there is legal authority under existing Federal
law for this Agreement, there is not absolute certainty. And, because
the economic consequences to the parties would be so serious if it were
ever to be held that there is no legal authority for the Agreement, and
because the lenders who will finance the Tribe's purchase of Project
interests will require legal certainty, it is essential to the Tribe
and PGE that all questions regarding authority for the Agreement be
resolved definitively.
Briefly, these are the issues that gave the Tribes and PGE pause
regarding legal authority:
No. 1. Under 25 U.S.C. Sec. 415(a), the Warm Springs Tribe only
has leasing authority for trust lands of 25 years with an option for a
25-year renewal. The Agreement at hand committing Tribal resources and
land extends beyond those periods and beyond just the lease of land.
The 99 year lease authority, as provided in section 1 of S. 266, could
provide sufficient time for a lease of land, but is not broad enough in
scope to cover the full range of Warm Springs resources and assets
involved in the Project.
No. 2. Section 17 of the Indian Reorganization Act of 1934 [25
U.S.C. Sec. 477] under which the Warm Springs Tribe is organized
limits leases of Indian lands to 25 years.
No. 3. The general right of way statute dealing with Indian lands
(25 U.S.C. Sec. 323) is made inapplicable by the provisions of 25 CFR
Sec. 169.2(c), which provides that the right of way regulations do not
apply to hydroelectric projects licensed under the Federal Power Act on
Indian reservations.
No. 4. The Indian Non-intercourse Act (25 U.S.C. 177) generally
requires that all leases and other conveyances of tribal lands have
specific Federal authority, of which the foregoing are examples.
No. 5. The revenues the Tribe will receive from the sale of power
from its portion of the Project are the proceeds of Tribal trust assets
and Federal consent may be required to make a pledge of those revenues
legally binding on the Tribe.
No. 6. Although 16 U.S.C. 803(e) provides for the payment of annual
charges for the use of Indian lands in connection with hydroelectric
projects, there is no express authority in that section for the actual
lease of those lands. Similarly, 16 U.S.C. 797(e) regarding the
Secretary's conditioning authority does not contain the express
authority required.
The parties believe that if a court were faced with the question of
whether or not there was Federal authority for this Agreement, it would
answer in the affirmative. However, because of the length, complexity
and magnitude of the Agreement, its uniqueness, and some ambiguities on
the face of existing statutes granting authority, it is important that
such doubt be removed and this can best be done by specific Federal
legislation tailored to this Agreement.
S. 266 does the following:
No. 1. Section 1(a) confers authority on the Interior Secretary to
approve leases of up to 99 years for trust land on the Warm Springs
Reservation and land held in trust for the Warm Springs Tribes, similar
to authority that has been conferred for many other tribes.
No. 2. Section 2(a) provides specific Federal approval for the use
of our Tribal lands, resources, or other Tribal assets described in the
Agreement. It ratifies and confirms the authority of the parties, which
include the Interior Secretary, to sign the Agreement, the actual
signing of the Agreement, and its distribution among the parties. It
also deems the Secretary as authorized to approve and carry out the
agreement. This particular sentence would confer upon the Secretary
sufficient authority to approve and implement the Agreement in the
event the Secretary's current authority, despite ratification and
confirmation, is determined to be lacking. Finally, Section 2(a)
provides that no Federal law, such as those discussed earlier in this
testimony, would render the Agreement unenforceable or impede the
ability of the Tribe to pledge the revenues that it receives from the
sale of power to pay bondholders.
No. 3. Section 2(b)(1) makes it clear that the legislation does not
apply to any provisions of the Agreement other than those dealing with
Tribal lands, resources, or other assets. It also makes it clear that
it does not affect the normal Federal and State regulatory approvals
that would be required for an agreement of this type.
No. 4. Section 2(b)(2) is included to address a concern of the
Department of the Interior that the legislation not, by implication,
cast any doubt on current authorities relied upon by Interior to
approve the Agreement. Interior Department personnel were regularly
consulted while S. 266 was being drafted, and this language to
safeguard Interior's authorities was included in the bill at their
direct request. By fully preserving Interior's authorities, this
provision also eliminates any concern about similar agreements needing
legislative approval.
S. 266 will not only give the parties to the Agreement the
necessary assurances that they need about the authority for this
Agreement, it will provide the lenders that finance the Tribes'
purchase of Project interests from Portland General Electric assurance
that there are no legal impediments to the pledge of revenues the Tribe
receives from the sale of power from the Project to the lenders.
S. 266 is the result of extensive discussion and collaboration
between ourselves, PGE, the Interior Department, and Congressional
personnel in the Oregon Delegation and on this Committee. At the time
S. 266 was introduced, a House companion bill, H.R. 483, was also
introduced by all five members of the Oregon House Delegation. The only
difference between S. 266 and H.R. 483 is the addition of an April 12,
2000 effective date at the end of the House bill. Otherwise in the
House, Resources Committee personnel have carefully evaluated H.R. 483,
and have suggested several revisions to clarify the legislation. These
revisions are under discussion with the Oregon Delegation, and we
expect to have them settled in the next few days. They do not change
the substance of the legislation, and basically fine tune its language.
We hope that the Senate Indian Affairs Committee will be able to adopt
these revisions, and incorporate them in approving S. 266.
We expect the revisions will make the legislation more explicit
that nothing in this legislation is to create any inference whether the
Secretary of the Interior did or did not have authority to sign and
implement the Global Settlement Agreement. The effect of this revision
is to essentially neutralize this legislation from having any effect on
the Department's authorities regarding the use of tribal resources for
hydro projects.
By very clearly safeguarding Interior's authorities, the revision
will further quell any question about whether this legislation will
prompt other legislation for similar projects involving tribal
resources. By basically removing this particular legislation from
having any impact on the Interior Department's authorities, those
authorities remain intact and unaltered for any future projects. In
addition, there are several factors that make this Agreement truly
unique and make it unlikely that a similar situation requiring Federal
legislative approval will arise in the future. They include:
No. 1. The Agreement involves a tribe's purchase of a part of a
hydroelectric project located on its reservation from an existing
licensee. The only other hydroelectric project of similar magnitude on
an Indian reservation is the Kerr Project in Montana, and in that case
the Tribe and the Montana Power Company reached a joint ownership
agreement approximately 15 years ago.
No. 2. The purchase involves bond financing by the Tribe which
requires an unqualified opinion from bond counsel regarding the
enforceability of the underlying agreement, thereby increasing the
level of certainty needed regarding enforceability.
No. 3. The agreement has some highly unique aspects that are
unlikely to be present in other agreements, such as settling license
ownership beyond the term of the next license, settling compensation to
the Tribe in the form of a share of the power output from the project
rather than a dollar amount that can be adjusted over time, and
defining PGE's liability for Treaty rights claims by the Tribe.
In summary, the uniqueness, length, breadth and complexity of the
Agreement are the reasons that legislation is required to approve it.
We are aware of no similar situations that would require legislative
approval.
We anticipate that Senators Smith and Wyden will convey the
revisions to the Committee in the next few days, and ask the Committee
to adopt them when S. 266 is marked-up.
We urge the committee's prompt consideration and approval of S.
266, and its prompt passage on the Senate floor.
Thank you for the committee's time and attention. I would be
pleased to answer any questions.
______
Prepared Statement of Robin Tompkins, Assistant General Counsel,
Portland General Electric Co., Portland, OR
Mr. Chairman, members of the Committee on Indian Affairs, I am
Robin Tompkins, Assistant General Counsel of Portland General Electric
Company of Portland, Oregon [PGE]. I am pleased to have this
opportunity to testify to the U.S. Senate Committee on Indian Affairs
regarding S. 266 and share with you the views of our company on this
important legislation. This bill and the companion legislation in the
U.S. House of Representatives address the use of trust land on the Warm
Springs Reservation of Oregon.
I want to begin my testimony by commending Senators Ron Wyden and
Gordon Smith for proposing this legislation and for their support of
this historic agreement between the Confederated Tribes of the Warm
Springs Reservation of Oregon (``Tribes'') and Portland General
Electric regarding the ownership and operation of the Pelton Round
Butte Hydroelectric Project (``Project'') in central Oregon. The
passage of this bill will help bring closure to almost 5 years of
negotiations between the parties and the resulting review by various
Federal agencies, which included the Department of the Interior and the
Federal Energy Regulatory Commission. The negotiated settlement between
PGE and the Tribes has the full support of the Oregon congressional
delegation, and the bipartisan leadership of Senators Wyden and Smith
has been essential.
The Pelton Round Butte project is located on the Deschutes River in
central Oregon. It is one of the most important sources of electricity
in the State of Oregon, supplying electric power to over 300,000 Oregon
families. The Project consists of three dams, the Pelton Dam, the Round
Butte Dam and the. Re-regulating Dam. The Project commenced operation
in 1957 with the construction of the first of the three dams and became
fully operational in 1964. The Federal Power Commission and the State
of Oregon issued PGE a license for the construction and operation of
the Project based on an agreement between PGE and the Tribes, which
included the ability of the Tribes to install generating facilities at
the Re-regulating Dam. The dams and their reservoirs are located partly
on tribal lands.
During the first term of the 50-year license, PGE was the sole
owner and operator of the Project. In the mid-1980's the Tribes became
a co-licensee. Pursuant to the Federal Power Act, PGE has made annual
payments to the Tribes for the use of their tribal lands.
During the relicensing process, PGE and the Tribes both applied for
complete ownership of the Project. This arduous and competitive
relationship existed until the parties negotiated a settlement of their
differences and joined together to own and operate this valuable and
important resource. The settlement that was reached called for PGE and
the Tribes to become joint licensees of the Project. For the first 20
years of the Project, beginning at the end of 2001, the Tribes will own
one-third of the Project. Then the Tribes will have the opportunity to
buy an additional share of the Project, eventually becoming the
majority owner.
This agreement accomplishes several important goals of PGE and the
Tribes. For the Tribes, the settlement will grant the Tribes a strong
ownership position in the Project and insure many economic benefits far
into the future. It will also enable them to exert more influence over
the environmental, cultural and recreational resources of the Deschutes
River basin. Most importantly for PGE, the agreement will preserve the
value of the Project for PGE customers. The settlement negotiations
have been lengthy and arduous, but the hard work has been productive.
The result of these consultations is a victory for PGE, for the Tribes
and most importantly for the people of Oregon.
This legislation is necessary to insure beyond all certainty that
there is legal authority for the settlement agreement. As members of
the committee know, the United States must consent to the lease, sale
or other conveyance of tribal trust lands, resources, or other assets.
This legislation and the companion bill introduced in the House of
Representatives ensures legal certainty to this historic agreement. The
lender who will finance the purchase of PGE's interests in the Project
will require absolute authority in order to carry out the terms of the
settlement agreement. Mr. Chairman, S. 266 addresses these concerns.
First, the legislation confers authority on the Secretary of the
Interior to approve leases of up to 99 years for trust lands on the
Warm Springs Reservation and land held in trust for the Tribes.
Second, the bill provides for specific approval for the use of land
and other resources owned by the Tribes. The legislation also grants
express authority to the Secretary of the Interior to execute and carry
out the terms of the agreement. The bill further ensures that no
Federal law would render the agreement unenforceable or impede the
ability of the Tribes to pledge the revenues it receives from the sale
of its power.
Third, the bill specifies that the legislation does not apply to
any provisions other than those that deal with tribal lands and does
not affect any other Federal or State agencies' authority to approve
this agreement.
Fourth, the bill states that this legislation does not require the
Department of the Interior to seek Federal legislative approval for
similar agreements with other tribes.
Mr. Chairman, this legislation is a critical and necessary
component of the relicensing process. Its enactment will be a final
step in a historic and significant agreement between PGE and the
Tribes, and on behalf of PGE, I urge its speedy passage.
Thank you.
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Prepared Statement of Hon. Ron Wyden, U.S. Senator from Oregon
Mr. Chairman, thank you for the opportunity to speak in support of
S. 266, the Pelton Dam Agreement legislation, that I have cosponsored
with my friend and colleague, Senator Smith of Oregon. I appreciate the
time that you and your staff have invested in this important bill.
This legislation sanctions an historic agreement between the
Confederated Tribes of the Warm Springs, Portland General Electric
Company and the U.S. Department of the Interior: The use of tribal
lands, resources, and other assets for economic development as
described in the Long-Term Global Settlement and Compensation Agreement
(Pelton Dam Agreement). The bill ratifies authorization, execution, and
delivery of the Agreement and authorizes the Secretary of the Interior
to take necessary actions to approve and implement it. The bill also
extends the Warm Springs Tribes a 99-year lease authority for any
restricted lands on their reservation held in trust for them by the
BIA.
S. 266 is supported by all the local parties to the Agreement, as
well as the local county commissioners. I worked with Senator Smith to
carefully craft this legislation because it is a good example of how
contentious issues can be solved when the parties are willing to work
together.
The Agreement sets the joint ownership and operation of the Pelton-
Round Butte Hydroelectric Project located in Jefferson County, Oregon,
on the Deschutes River. But, this process has also recognized, in a
side agreement, the needs of the county and other local folks for
potential lost tax revenue resulting from the Agreement joint
ownership.
I applaud the efforts, begun in 1998, of the folks here today to
testify on this legislation, and urge the committee to move this bill
as soon as possible.