[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]




 
                        H.R. 885 AND H.R. 1753

=======================================================================

                          LEGISLATIVE HEARING

                               before the

                    SUBCOMMITTEE ON WATER AND POWER

                                 of the

                         COMMITTEE ON RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

                       Thursday, October 2, 2003

                               __________

                           Serial No. 108-65

                               __________

           Printed for the use of the Committee on Resources



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                         COMMITTEE ON RESOURCES

                 RICHARD W. POMBO, California, Chairman
       NICK J. RAHALL II, West Virginia, Ranking Democrat Member

Don Young, Alaska                    Dale E. Kildee, Michigan
W.J. ``Billy'' Tauzin, Louisiana     Eni F.H. Faleomavaega, American 
Jim Saxton, New Jersey                   Samoa
Elton Gallegly, California           Neil Abercrombie, Hawaii
John J. Duncan, Jr., Tennessee       Solomon P. Ortiz, Texas
Wayne T. Gilchrest, Maryland         Frank Pallone, Jr., New Jersey
Ken Calvert, California              Calvin M. Dooley, California
Scott McInnis, Colorado              Donna M. Christensen, Virgin 
Barbara Cubin, Wyoming                   Islands
George Radanovich, California        Ron Kind, Wisconsin
Walter B. Jones, Jr., North          Jay Inslee, Washington
    Carolina                         Grace F. Napolitano, California
Chris Cannon, Utah                   Tom Udall, New Mexico
John E. Peterson, Pennsylvania       Mark Udall, Colorado
Jim Gibbons, Nevada,                 Anibal Acevedo-Vila, Puerto Rico
  Vice Chairman                      Brad Carson, Oklahoma
Mark E. Souder, Indiana              Raul M. Grijalva, Arizona
Greg Walden, Oregon                  Dennis A. Cardoza, California
Thomas G. Tancredo, Colorado         Madeleine Z. Bordallo, Guam
J.D. Hayworth, Arizona               George Miller, California
Tom Osborne, Nebraska                Edward J. Markey, Massachusetts
Jeff Flake, Arizona                  Ruben Hinojosa, Texas
Dennis R. Rehberg, Montana           Ciro D. Rodriguez, Texas
Rick Renzi, Arizona                  Joe Baca, California
Tom Cole, Oklahoma                   Betty McCollum, Minnesota
Stevan Pearce, New Mexico
Rob Bishop, Utah
Devin Nunes, California
Randy Neugebauer, Texas

                     Steven J. Ding, Chief of Staff
                      Lisa Pittman, Chief Counsel
                 James H. Zoia, Democrat Staff Director
               Jeffrey P. Petrich, Democrat Chief Counsel
                                 ------                                

                    SUBCOMMITTEE ON WATER AND POWER

                   KEN CALVERT, California, Chairman
        GRACE F. NAPOLITANO, California, Ranking Democrat Member

George Radanovich, California        Calvin M. Dooley, California
Greg Walden, Oregon                  Jay Inslee, Washington
Thomas G. Tancredo, Colorado         Raul M. Grijalva, Arizona
J.D. Hayworth, Arizona               Dennis A. Cardoza, California
Tom Osborne, Nebraska                George Miller, California
Rick Renzi, Arizona                  Ciro D. Rodriguez, Texas
Stevan Pearce, New Mexico            Joe Baca, California
Devin Nunes, California              Nick J. Rahall II, West Virginia, 
Richard W. Pombo, California, ex         ex officio
    officio


                                 ------                                
                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on Thursday, October 2, 2003........................     1

Statement of Members:
    Calvert, Hon. Ken, a Representative in Congress from the 
      State of California........................................     1
        Prepared statement of....................................     2
    Grijalva, Hon. Raul M., a Representative in Congress from the 
      State of Arizona...........................................    14
    Hayworth, Hon. J.D., a Representative in Congress from the 
      State of Arizona...........................................     4
        Prepared statement of....................................     5
    Kyl, Hon. Jon, a U.S. Senator in Congress from the State of 
      Arizona....................................................     6
        Prepared statement on H.R. 885...........................     8
    Napolitano, Hon. Grace F., a Representative in Congress from 
      the State of California....................................     3
        Prepared statement of....................................     3
    Nethercutt, Hon. George, Jr., a Representative in Congress 
      from the State of Washington...............................     9
        Prepared statement on H.R. 1753..........................    11
    Pearce, Hon. Stevan, a Representative in Congress from the 
      State of New Mexico........................................    13
        Prepared statement of....................................    13
    Renzi, Hon. Rick, a Representative in Congress from the State 
      of Arizona.................................................    12
        Prepared statement of....................................    12

Statement of Witnesses:
    Guenther, Herbert R., Director, Arizona Department of Water 
      Resources, Oral statement on H.R. 885......................    68
        Response to questions submitted for the record...........    76
        Supplemental statement submitted for the record..........   124
    Hickok, Steven, Deputy Administrator, Bonneville Power 
      Administration.............................................    21
        Prepared statement on H.R. 1753..........................    23
        Response to questions submitted for the record...........    26
    Juan-Saunders, Vivian, Chairwoman, Tohono O'odham Nation.....    58
        Prepared statement on H.R. 885...........................    60
    Kitcheyan, Kathleen W., Tribal Chairwoman, San Carlos Apache 
      Tribe, Oral statement on H.R. 885..........................    66
    Lopez, Estevan R., Director, New Mexico Interstate Stream 
      Commission.................................................    78
        Prepared statement on H.R. 885...........................    79
    Martin, Aurene, Acting Assistant Secretary for Indian 
      Affairs, U.S. Department of the Interior, Oral statement on 
      H.R. 885...................................................    21
    Napolitano, Hon. Janet, Governor, State of Arizona, Prepared 
      statement of...............................................    69
    Narcia, Hon. Richard, Governor, Gila River Indian Reservation    51
        Prepared statement on H.R. 885...........................    53
        Response to questions submitted for the record...........    57
    Pollak, Stanley, Water Rights Counsel, Navajo Nation, Oral 
      statement on H.R. 885......................................    82
    Raley, Bennett W., Assistant Secretary for Water and Science, 
      U.S. Department of the Interior............................    14
        Prepared statement on H.R. 885...........................    15
        Response to questions submitted for the record...........    20
    Shirley, Joe, Jr., President, Navajo Nation, Prepared 
      statement on H.R. 885......................................    84
    Seyler, Warren, Chairman, Spokane Tribe of Indians...........    33
        Prepared statement on H.R. 1753..........................    35
        Response to questions submitted for the record...........    38

Additional materials supplied:
    Arizona Cities of Chandler, Glendale, Goodyear, Mesa, Peoria, 
      and Scottsdale, Statement submitted for the record in 
      support of H.R. 885........................................    99
    Burdette, Vivian, Chairwoman, Tonto Apache Tribe, Statement 
      submitted for the record in support of H.R. 885............   123
    Fines, L. Anthony, Attorney for Gila Valley Irrigation 
      District and David A. Brown, Attorney for Franklin 
      Irrigation District, Statement submitted for the record....   101
    Fullmer, Jamie, Chairman, Yavapai-Apache Nation, Statement 
      submitted for the record in support of H.R. 885............   123
    Gila River Indian Community, Supplemental testimony submitted 
      for the record.............................................   101
    Hawker, Hon. Keno, Mayor, City of Mesa, Arizona, Statement 
      submitted for the record...................................   107
    Mason, Douglas, General Manager, San Carlos Irrigation and 
      Drainage District, Coolidge, Arizona, Statement submitted 
      for the record in support of H.R. 885......................   108
    Payson, Town of, Arizona, Statement submitted for the record 
      by the Mayor and Common Council in support of H.R. 885.....   109
    Renner, George, President, Board of Directors, Central 
      Arizona Water Conservation District, Statement submitted 
      for the record.............................................   109
    Rimsza, Hon. Skip, Mayor, City of Phoenix, Arizona, Statement 
      submitted for the record in support of H.R. 885............   112
    Spokane Tribe of Indians: A Showing of the United States' 
      Need to Fairly and Honorably Settle the Tribes Claims for 
      Grand Coulee--A Narrative with Attachments, submitted for 
      the record on H.R. 1753....................................   123
    Sullivan, John F., Associate General Manager, Water Group, 
      Salt River Valley Water Users Association and Salt River 
      Project Agricultural Improvement and Power District, 
      Statement submitted for the record in support of H.R. 885..   114
    Talley, Hon. Van, Mayor, City of Safford, Arizona, Statement 
      submitted for the record in support of H.R. 885............   122


  LEGISLATIVE HEARING ON H.R. 885, TO PROVIDE FOR ADJUSTMENTS TO THE 
CENTRAL ARIZONA PROJECT IN ARIZONA, TO AUTHORIZE THE GILA RIVER INDIAN 
    COMMUNITY WATER RIGHTS SETTLEMENT, TO REAUTHORIZE AND AMEND THE 
  SOUTHERN ARIZONA WATER RIGHTS SETTLEMENT ACT OF 1982, AND FOR OTHER 
 PURPOSES; AND H.R. 1753, TO PROVIDE FOR EQUITABLE COMPENSATION OF THE 
 SPOKANE TRIBE OF INDIANS OF THE SPOKANE RESERVATION IN SETTLEMENT OF 
  CLAIMS OF THE TRIBE CONCERNING THE CONTRIBUTION OF THE TRIBE TO THE 
    PRODUCTION OF HYDROPOWER BY THE GRAND COULEE DAM, AND FOR OTHER 
                               PURPOSES.

                              ----------                              


                       Thursday, October 2, 2003

                     U.S. House of Representatives

                    Subcommittee on Water and Power

                         Committee on Resources

                             Washington, DC

                              ----------                              

    The Subcommittee met, pursuant to notice, at 10:02 a.m., in 
Room 1324, Longworth House Office Building, Hon. Ken Calvert 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Calvert, Hayworth, Renzi, Pearce, 
Napolitano and Grijalva.

  STATEMENT OF HON. KEN CALVERT, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF CALIFORNIA

    Mr. Calvert. The legislative hearing by the Subcommittee on 
Water and Power will come to order.
    The Subcommittee today is meeting to hear testimony on H.R. 
885, to provide for adjustments to the Central Arizona Project 
in Arizona to authorize the Gila River Indian Community water 
rights settlement, to reauthorize and amend the Southern 
Arizona Water Rights Settlement Act of 1982, and for other 
purposes; and H.R. 1753, to provide for an equitable 
compensation of the Spokane Tribe of Indians of the Spokane 
Reservation in the settlement of claims of the tribe concerning 
the contribution of the tribe to the production of hydropower 
by the Grand Coulee Dam, and for other purposes.
    Mr. Calvert. Today's hearing is another step in our efforts 
to examine the potential value of other water and power 
resources throughout the West. Both bills before the 
Subcommittee today have direct impacts on Native American 
communities and their communities, and their neighbors.
    The Arizona delegation, particularly Senator Kyl, who will 
be here shortly, and my distinguished colleague, J.D. Hayworth, 
have worked hard to find consensus-based water solutions in 
their State. H.R. 885 and its Senate companion bill reflect 
those efforts to date. The bills rightly attempt to resolve 
costly litigation and give the people of Arizona a road map of 
water certainty through a whole host of water supply and uses. 
As one who has worked to bring parties together to resolve a 
similar situation involving the quantification settlement 
agreement in Southern California with our friends in the Upper 
and Lower Basin, I strongly support the concepts of long-term 
water certainty and reducing litigation.
    Although I realize that some issues remain on H.R. 885, I 
want to commend the Arizona delegation and the administration 
for their leadership in attempting to resolve this very complex 
situation.
    I would also like to commend my Washington State colleague, 
George Nethercutt, for rising in strong defense of his 
constituents and trying to bring more accountability to how our 
government operates. I know that he has worked hard for many 
years on trying to right the wrongs of the past as it relates 
to the Spokane Tribe. Everyone agrees that the tribe has been 
seriously impacted by the construction of the Grand Coulee Dam. 
However, disagreement exists over the bets method to compensate 
the tribe. I realize the tribe has run into a substantial 
statute of limitation problem with their claim, but that 
shouldn't stop the tribe and the Bonneville Power 
Administration from working constructively on a final solution.
    [The prepared statement of Mr. Calvert follows:]

           Statement of The Honorable Ken Calvert, Chairman, 
       Subcommittee on Water and Power, on H.R. 885 and H.R. 1753

    Today's hearing is another step in our effort to examine the 
potential value of our water and power resources throughout the west. 
Both bills before the Subcommittee today have direct impacts on their 
respective native American communities and on their neighbors.
    The Arizona delegation, particularly Sen. Kyl and my distinguished 
colleague, J.D. Hayworth, have worked hard to bring about consensus-
based water solutions for their state. H.R. 885 and its Senate 
companion bill reflect that progress to date. The bills rightly attempt 
to resolve costly litigation and give the people of Arizona a roadmap 
of water certainty through a whole host of water supplies and uses.
    As one who has worked to bring parties together to resolve a 
similar situation involving the March 11, 2004, Quantification 
Settlement Agreement in southern California, I strongly support these 
concepts.
    Although I realize that some issues remain on H.R. 885, I want to 
commend the Arizona delegation and the Administration for their 
leadership in attempting to resolve this very complex situation.
    I would also like to commend my Washington State colleague, George 
Nethercutt, for rising in strong defense of his constituents and trying 
to bring more accountability to how our government operates. I know 
that he has worked hard for many years on trying to right the wrongs of 
the past as it relates to the Spokane Tribe.
    Everyone agrees that the Tribe has been seriously impacted by the 
construction of the Grand Coulee Dam, however disagreement exists over 
the best method to compensate the Tribe. I realize that the Tribe has 
run into a substantial statute of limitations problem with their claim, 
but that shouldn't stop the Tribe and the Bonneville Power 
Administration from working constructively on a final solution.
    Since I have to leave mid-way through the hearing, I am going to 
hand the gavel to my able friend and colleague, J.D. Hayworth at the 
appropriate time. In the meantime, I welcome the witnesses and look 
forward to resolution on these bills. I also ask that members limit 
their questions to the Administration to the issues before us today. 
Thank you
                                 ______
                                 
    Mr. Calvert. Since I must leave midway through the hearing, 
I am going to hand the gavel over to my able friend and 
colleague, J.D. Hayworth, at the appropriate time. In the 
meantime, I will welcome the witnesses and ask all parties to 
find resolutions on these bills.
    I also ask that members limit their questions to the issues 
today before us, and I would thank you.
    I now recognize my friend and recognize Ms. Napolitano and 
the Ranking Democrat member for any statements she may have.

    STATEMENT OF HON. GRACE NAPOLITANO, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mrs. Napolitano. Thank you, Mr. Chairman. That really was a 
low blow.
    [Laughter.]
    Mrs. Napolitano. I am teasing. Thank you for the 
opportunity to be here today, Mr. Chair. The two water bills 
before us today affecting Native Americans have had a long and 
complex history, as we have heard, and upon reading it, I am 
aghast. I am amazed at how long it has been to have this before 
us, and I am sure my colleagues are as distressed as I am and 
hope that this neglect, this shunning of our obligation to our 
Native Americans will be righted, or at the least the beginning 
of finding the solutions to helping those people that have 
suffered for so long without some equality in these areas.
    I congratulate my colleagues for their efforts and trust 
that we will be having some solutions as we move forward. Thank 
you so very much, Mr. Chair. I look forward to the hearing.
    [The prepared statement of Mrs. Napolitano follows:]

   Statement of The Honorable Grace Napolitano, a Representative in 
                 Congress from the State of California

    Thank you, Chairman Calvert, for holding this important hearing 
today.
    H.R. 885 would provide adjustments to the Central Arizona Project, 
authorize a water rights settlement for the Gila River tribe and amend 
the Southern Arizona Water Rights Settlement Act.
    H.R. 1753 would provide equitable compensation of the Spokane Tribe 
of Indians of the Spokane Reservation.
    Both bills have a long and complex history that dates back prior to 
my time in Congress. I look forward to hearing from our witnesses, and 
especially thank those that traveled to Washington to be here today.
                                 ______
                                 
    Mr. Calvert. I thank the gentlelady.
    Mr. Hayworth?

 STATEMENT OF HON. J.D. HAYWORTH, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF ARIZONA

    Mr. Hayworth. Mr. Chairman, thank you very much, and I 
would like to begin by thanking Chairman Pombo and Chairman 
Calvert for scheduling this, also my good friend and colleague 
from the First District, Rick Renzi, who is the Vice Chairman 
and will have a hand in the hearing today, and I see my friend, 
Mr. Grijalva, so we have good bipartisan representation from 
the State of Arizona; and we will no doubt be joined by our 
friend from the new Sixth District, Congressman Flake, who also 
serves on this Subcommittee.
    Let me pause at this juncture, Mr. Chairman, to personally 
thank the witnesses for traveling so far to be here today to 
testify. In particular, I know that in addition to the tribal 
chairpeople who are here to testify, a number of my friends who 
serve on the tribal councils as well as tribal administrators 
and many other Arizonans join us today in the audience.
    Because of time constraints, we will have only one witness 
representing the State of Arizona, but I am informed that you 
have secured formal approval of the settlement agreement from 
most of the cities, towns, irrigation districts, and water 
purveyors in Arizona that are incorporated in the current 
settlement framework.
    We are also joined today by our friends from New Mexico. It 
is my understanding that Arizona and New Mexico interests have 
been able to reach an agreement that will resolve some of the 
claims that are currently in dispute between water users in our 
two States. I am hopeful this successful effort will soon 
translate into a successful resolution on another Arizona-New 
Mexico issue that has apparently been lingering since 1968.
    And finally, I am pleased to acknowledge the hard work and 
leadership of my colleague from the U.S. Senate, Senator Jon 
Kyl. Senator Kyl, I believe you to be the right man at the 
right time to move this along and get this done.
    At the center of the legislation we are here today to 
consider is an effort to do justice to all Indian tribes in 
Arizona. By any measure, Indian tribes, especially those in 
Arizona, have given much more to the United States than they 
have received in return. Although Arizona includes more 
reservations and reservation land than any other State, we 
should not lose sight of the fact that all of the remaining 
land was in some way ceded by an Arizona Indian tribe. Of 
course, the contributions made by Native Americans and 
throughout Indian country continue on today, including 
involvement in our State's economy, and as the State of Arizona 
makes clear in its testimony, through dedication and service in 
our nation's armed forces.
    In my estimation, this legislation represents a new era in 
Arizona and Federal relations with Indian tribes. First, this 
is an agreement that originated in Indian country. Second, it 
is not a handout. It includes bargained-for exchanges between 
all of the parties to the settlement. No one got everything 
they wanted, and in some cases, some parties had to settle for 
less than they believe they deserved. But the town of Autumn 
Nation and the Gila River Indian Community have taken the stand 
that, on balance, this represents a significant step forward 
for their government and their people.
    Every Indian tribe that receives Central Arizona Project 
water will immediately receive a benefit from this legislation 
because it provides decades of relief from certain charges that 
apply to their CAP water. In addition, those Indian tribes with 
existing settlements will have access to a new funding source 
to pay for the components of their settlement agreements. This 
same funding source will be available to settle any remaining 
tribal water rights claims in Arizona.
    While this legislation aids Arizona Indian tribes, it also 
provides benefits to the overwhelming majority of Arizona's 
citizens. First, by resolving Arizona's dispute over CAP 
repayment and over the division of CAP water, Arizona can 
effectively manage its scarce water resources. For decades, 
Arizona has made groundwater management one of its highest 
priorities, and this legislation builds upon this effort. Water 
management is nearly impossible without certainty of supply and 
priority. Through the negotiations affirmed by this 
legislation, we can have that certainty without waiting years 
or even decades for court rulings.
    Mr. Chairman, colleagues, ladies and gentlemen, I am 
hopeful that today's testimony will focus on how we can resolve 
any remaining issues and get this important legislation done as 
quickly as possible.
    Again, thank you, Mr. Chairman. I yield back.
    [The prepared statement of Mr. Hayworth follows:]

Statement of The Honorable J.D. Hayworth, a Representative in Congress 
                       from the State of Arizona

    I would like to begin by thanking Chairman Pombo and the Chairman 
of this Subcommittee, Mr. Calvert and the Vice Chairman, my friend from 
Arizona, Rick Renzi, for scheduling this hearing today. I would also 
like to personally thank the witnesses for traveling so far to be here 
today to testify. In particular, I know that in addition to the tribal 
chairpeople who are here to testify, a number of my friends who serve 
on the tribal councils and as tribal administrators, as well as many 
other Arizonans also join us today in the audience.
    Because of time-constraints we will only have one witness 
representing the State of Arizona, but I am informed that you have 
secured formal approval of the settlement agreement from most of the 
cities, towns, irrigation districts, and water purveyors in Arizona 
that are incorporated in the settlement framework.
    We are also joined today by our friends from New Mexico. It is my 
understanding that Arizona and New Mexico interests have been able to 
reach an agreement that will resolve some of the claims that are 
currently in dispute between water users in our two states. I am 
hopeful that this successful effort will soon translate into a 
successful resolution on another Arizona-New Mexico issue that has 
apparently been lingering since 1968.
    Finally, I would like to acknowledge the hard work and leadership 
of my colleague from the United States Senate, Senator Jon Kyl. Senator 
Kyl is the right man at the right time to get this done.
    At the center of the legislation that we are here today to consider 
is an effort to do justice to all Indian tribes in Arizona. By any 
measure, Indian tribes, especially in Arizona, have given much more to 
the United States than they have received in return. Although Arizona 
includes more reservations and reservation land than any other State, 
we should not lose sight of the fact that all of the remaining land was 
in some way ceded by an Arizona Indian tribe. Of course, the 
contributions made by Indians and Indian country continue on through 
today including involvement in the State's economy and, as the State of 
Arizona makes clear in its testimony, through dedication and service in 
our Nation's armed forces.
    In my estimation, this legislation represents a new era in Arizona 
and federal relations with Indian tribes. First, this is an agreement 
that originated in Indian country. Second, it is not a hand-out. It 
includes bargained-for exchanges between all of the parties to the 
settlement. No one got everything they wanted, and, in some cases, they 
had to settle for less than they believe they deserve. But the Tohono 
O'odham Nation and the Gila River Indian Community have taken the stand 
that, on balance, this represents a significant step forward for their 
government and their people.
    Every Indian tribe that receives Central Arizona Project water will 
immediately receive a benefit from this legislation because it provides 
decades of relief from certain charges that apply to their CAP water. 
In addition, those Indian tribes with existing settlements will have 
access to a new funding source to pay for the components of their 
settlement agreements. This same funding source will be available to 
settle any remaining tribal water rights claims in Arizona.
    While this legislation aids Arizona Indian tribes, it also provides 
benefits to the overwhelming majority of Arizona citizens. First, by 
resolving Arizona's dispute over CAP repayment and over the division of 
CAP water, Arizona can manage its scarce water resources. For decades, 
Arizona has made groundwater management one of its highest priorities. 
This legislation builds upon that effort.
    Water management is nearly impossible without certainty of supply 
and priority. Through the negotiations affirmed by this legislation, we 
can have that certainty without waiting years or even decades for court 
rulings.
    I am hopeful that today's testimony will focus on how we can 
resolve any remaining issues and get this important legislation done as 
quickly as possible.
                                 ______
                                 
    Mr. Calvert. I thank the gentleman.
    If there are any other additional opening statements, I 
would ask that we would put them off until after our first 
panel gives their testimony to allow them to return to their 
duties.
    With that, I would like to recognize the first panel, our 
friend and former colleague here in the House, Senator Jon Kyl, 
United States Senator, State of Arizona, who will testify on 
H.R. 885. Senator?

  STATEMENT OF HON. JON KYL, A UNITED STATES SENATOR FROM THE 
                        STATE OF ARIZONA

    Senator Kyl. Thank you very much, Mr. Chairman. I thank 
Representative Nethercutt for allowing me to go first here. 
Thank you, Mr. Chairman. I thank Representative Hayworth for a 
fine statement, for his cosponsorship of the bill, and both 
Representatives Grijalva and Renzi for their assistance in 
getting this hearing scheduled. We appreciate it very much.
    The water users of Arizona have waited a long time for this 
day, and I just hope you can appreciate the significance that 
all of the people behind you feel, the fact that you are 
holding this hearing. That is very much why I appreciate it. It 
is really the product, this legislation, of about 14 years of 
negotiation and litigation and then negotiation again.
    Virtually every major water user and provider in Central 
Arizona has devoted itself to the passage of this bill. In 
fact, H.R. 885 would codify the largest water claims settlement 
in the history of Arizona. The three titles in the bill 
represent the tremendous efforts of literally hundreds of 
people in Arizona, as well as Washington, D.C., over this 
period of 14 years. Looking ahead, this bill could ultimately 
be nearly as important to Arizona's future as was the 
authorization of the Central Arizona Project.
    Since Arizona began receiving CAP water from the Colorado 
River, litigation has divided water users over how the CAP 
water should be allocated and exactly how much Arizona was 
required to repay the Federal Government. Recall that, I think 
wisely, other States required of Arizona a payback of a portion 
of the CAP if the Federal Government was going to up-front the 
costs. There has now been a settlement between the U.S. 
Government and the State of Arizona as to how much that 
repayment should be. So the bill, among other things, codifies 
that settlement and it also resolves once and for all the 
allocation of all of the remaining CAP water, as I said.
    The final allocation provides necessary stability for State 
water authorities to plan for Arizona's future water needs, and 
in addition, approximately 200,000 acre feet of CAP water will 
be made available under this settlement to settle various 
Indian water claims in the State.
    The bill would also authorize the use of the Lower Colorado 
River Basin Development Fund, which is funded solely from 
revenues paid by Arizona entities, to construct irrigation 
works necessary for the tribes with Congressionally approved 
water settlements to use their CAP water.
    Mr. Chairman, Title II of the bill settles the water rights 
claims of the Gila River Indian Community, allocating nearly 
100,000 acre feet of CAP water to the community and providing 
funds to stabilize the costs of delivering CAP water and to 
construct the facilities necessary to allow the community to 
fully utilize the water that it has been allocated.
    Title III provides for long-needed amendments to the 1982 
Southern Arizona Water Settlement Act for the Tohono O'odham 
Nation, and that has never been fully implemented.
    The bill will allow Arizona cities to plan for the future, 
as I said, knowing how much water they can count on. The Indian 
tribes will finally get wet water, not just the paper water 
rights that they have had in the past, and projects to use that 
water. In addition, mining companies, farmers, irrigation 
delivery districts, and others can continue to receive water 
without the fear that they will be stopped by litigation.
    There are some minor issues that remain, as Representative 
Hayworth said, but we have every confidence that those issues 
can be resolved before we mark up the legislation, and I made 
that commitment in the hearing that we had in the Senate just a 
couple of days ago.
    In particular, the States of Arizona and New Mexico have 
been negotiating the best way to address New Mexico's rights 
under the 1986 Boulder Canyon Act to exchange 18,000 acre feet 
of CAP water on the Gila River. They are meeting regularly and 
report that they are making progress in those negotiations.
    In addition, I hope that negotiations with the San Carlos 
Apache Tribe will move forward so that their claims can be 
resolved by the legislation. We have made it clear by leaving a 
title open in the legislation that if they would like to 
negotiate their claims, there is a place in the bill for those 
claims to be resolved and, if not, that is a decision that they 
have to make. But in any event, that opportunity is available.
    In summary, the bill is vital to the citizens of Arizona. 
It will provide certainty needed to move forward with water use 
decisions. Furthermore, the United States can avoid litigating 
water rights and damage claims and satisfy its trust 
responsibilities to the tribes. The parties have worked many 
years to reach consensus rather than litigate, and I believe 
the bill represents the best opportunity to achieve a fair 
result for everyone.
    Mr. Chairman, might I make just one final comment. I 
thought the hearing that was held in the Senate did something 
very good. The record is full of all of the good things that 
this legislation will do. Representative Hayworth and I just 
barely touched on what this means to the people in Arizona. But 
we went right back to business, rolled up our sleeves in the 
previous hearing, by focusing really on the remaining concerns, 
the things that have to be done. That is what we want the 
people of this Committee to know, not just all of the good 
things, but the few things that we remain working on, and 
especially Bennett Raley from the Department of Interior will 
identify things the Department is working on so you will know 
exactly what is left to do before we can conclude this 
settlement. So I count that as good news, not something that we 
should be concerned about.
    I am very appreciative of all of the people behind me who 
have worked so hard to make this settlement a reality and I 
thank you again for giving them the opportunity to be here and 
to see that we can move this legislation forward.
    [The prepared statement of Mr. Kyl follows:]

          Statement of The Honorable Jon Kyl, a U.S. Senator 
                       from the State of Arizona

    Chairman Calvert, and members of the Subcommittee, I would first 
like to thank you for holding this hearing and allowing me to testify. 
My special thanks also go to my colleague, Rep. Hayworth, for 
sponsoring this important legislation and shepherding it through the 
Congressional process. The water users and providers of Arizona have 
waited a long time for this day. The bill before your committee, the 
Arizona Water Settlements Act (H.R. 885), is the product of fourteen 
years of negotiation, litigation, and more negotiation. Virtually every 
major water user and provider in central Arizona has devoted itself to 
the passage of this bill. In fact, H.R. 885 would codify the largest 
water claims settlement in the history of Arizona. The three titles in 
this bill represent the tremendous efforts of literally hundreds of 
people in Arizona and here in Washington over a period of fourteen 
years. Looking ahead, this bill could ultimately be nearly as important 
to Arizona's future as was the authorization of the Central Arizona 
Project (CAP) itself.
    Since Arizona began receiving CAP water from the Colorado River, 
litigation has divided water users over how the CAP water should be 
allocated and exactly how much Arizona was required to repay the 
federal government. This bill will, among other things, codify the 
settlement reached between the United States and the Central Arizona 
Water Conservation District over the state's repayment obligation for 
costs incurred by the United States in constructing the Central Arizona 
Project. It will also resolve, once and for all, the allocation of all 
remaining CAP water. This final allocation will provide the stability 
necessary for state water authorities to plan for Arizona's future 
water needs. In addition, approximately 200,000 acre-feet of CAP water 
will be made available to settle various Indian water claims in the 
state. The bill would also authorize the use of the Lower Colorado 
River Basin Development Fund, which is funded solely from revenues paid 
by Arizona entities, to construct irrigation works necessary for tribes 
with congressionally approved water settlements to use CAP water.
    Mr. Chairman, Title II of this bill settles the water rights claims 
of the Gila River Indian Community. It allocates nearly 100,000 acre-
feet of CAP water to the Community, and provides funds to subsidize the 
costs of delivering CAP water and to construct the facilities necessary 
to allow the Community to fully utilize the water allocated to it in 
this settlement. Title III provides for long-needed amendments to the 
1982 Southern Arizona Water Settlement Act for the Tohono O'odham 
Nation, which has never been fully implemented.
    This bill will allow Arizona cities to plan for the future, knowing 
how much water they can count on. The Indian tribes will finally get 
``wet'' water (as opposed to the paper claims to water they have now) 
and projects to use the water. In addition, mining companies, farmers, 
and irrigation delivery districts can continue to receive water without 
the fear that they will be stopped by Indian litigation.
    While some minor issues remain, we have every confidence that these 
issues will be resolved before we mark-up the bill. In particular, the 
states of Arizona and New Mexico have been negotiating the best way to 
address New Mexico's right under the 1968 Boulder Canyon Project Act 
(authorizing the CAP) to exchange 18,000 acre-feet of CAP water on the 
Gila River. The states are meeting regularly and report that they are 
making progress. In addition, we hope that negotiations with the San 
Carlos Apache Tribe will move forward so that all claims can be 
resolved by this bill.
    In summary, this bill is vital to the citizens of Arizona and will 
provide the certainty needed to move forward with water use decisions. 
Furthermore, the United States can avoid litigating water rights and 
damage claims and satisfy its trust responsibilities to the Tribes. The 
parties have worked many years to reach consensus rather than litigate, 
and I believe this bill represents the best opportunity to achieve a 
fair result for all the people of Arizona.
                                 ______
                                 
    Mr. Calvert. Thank you, Senator, for your testimony. I know 
you have to get back a couple hundred yards away here, and so 
we appreciate your coming today and look forward to working 
with you on this legislation.
    Next, The Honorable George Nethercutt, U.S. House of 
Representatives. The gentleman is recognized.

 STATEMENT OF HON. GEORGE R. NETHERCUTT, JR., A REPRESENTATIVE 
            IN CONGRESS FROM THE STATE OF WASHINGTON

    Mr. Nethercutt. Thank you, Mr. Chairman, and thanks to the 
Ranking Member and members of the Subcommittee for holding this 
hearing and giving me the opportunity to provide testimony in 
support of H.R. 1753. It was introduced jointly with me and 
Congressman Norm Dicks of my State of Washington, and we urge 
that the Subcommittee take action with respect to this 
legislation.
    It would provide a settlement to the Spokane Tribe of 
Indians for losses suffered as a result of the construction of 
the Grand Coulee Dam in my State. I don't know if any members 
of the Subcommittee have had a chance to see this dam. It is 
the largest concrete dam in the world. It is the largest 
producer of hydroelectricity in the United States. It is the 
third largest producer of electricity in the world. So it is a 
huge structure. It is a mile across and it is a site to behold.
    The importance of mentioning that project is that it had a 
serious and detrimental impact on tribes that surround the 
Grand Coulee Dam area. The Spokane Tribe, the Colville 
Confederated Tribes were deeply impacted by this construction 
that provides cost-based hydroelectric power to the citizens of 
the Pacific Northwest and it had an impact on the fisheries, 
resources, and the traditional heritage of these tribes.
    It is a complicated issue that surrounds the history of the 
Grand Coulee Dam and its impact on the tribes, the Colville 
Tribe and the Spokane Tribe. This legislation would provide a 
settlement to the Spokane Tribe, which has been lacking in a 
settlement with the U.S. Government for the taking of the lands 
and the fishing rights and the other consequences of the dam 
over a period of years since 1941.
    Similar legislation was created and enacted in 1994 to 
compensate the Colville Tribe, with the difference being that 
the Colville Tribes maintained the legal claim against the USA 
dating back to 1951. The claim held by the Colville Tribes was 
a land claim that the tribe was able to amend in 1976 to cover 
damages arising from the construction and operation of the 
Grand Coulee. While the Spokane Tribe had filed similar land 
claims, the tribe had entered into settlement negotiations in 
1967, approximately 9 years prior to any indication that the 
United States might attempt to limit or eliminate its 
obligations to the tribes regarding the Grand Coulee Dam. So as 
a consequence, the Spokane Tribe did not have a pending Indian 
Claims Commission claim to amend in 1976 as did the Colville 
Confederated Tribes.
    So this legislation, the legislation which enacted the 
settlement for the Colville Tribes provided for a cash lump-sum 
payment and annual payments in the tens of millions to the 
tribe, representing the ongoing proceeds from the sale of 
hydropower, monitored, administered by the Bonneville Power 
Administration, which is the power marketing agency in our 
region.
    At that time, the House Resources Committee noted that the 
Spokane Tribe has a moral claim and requests that the 
Department of Interior and the Department of Justice work with 
the Spokane Tribe to develop a means to address the Spokane's 
claim. In 1997, the BPA, Bonneville Power Administration, 
entered into negotiations with the tribe. There were some 
meetings. No settlement was reached.
    The tribe wants 39.4 percent, the same percentage as the 
Colville Tribe, the Spokane Tribe that is the subject of this 
legislation. We had negotiations a year ago. I moderated those. 
We thought we were pretty close to a settlement, about 29.3 
percent as a compromise. That broke down, didn't occur. The 
latest offer we see from the Bonneville Power Administration 
through the Department of Energy is 19.2 percent one-time 
annual payment and then 19.2 percent structured catch-up 
payments thereafter.
    We think that is inadequate. I believe it is inadequate. 
The tribe believes it is inadequate. It is not fair.
    This is a matter of equity and fairness, Mr. Chairman, 
members of the Subcommittee. We are expecting that this 
legislation will spur negotiations, we will have a chance to 
sit down further with Bonneville Power Administration and the 
tribe. I am fearful that there won't be any further 
negotiations unless this legislation is enacted. This is a 
matter of fairness and equity to the Spokane Tribe. They have 
proceeded in good faith from day one, back 30 and 40 years ago, 
50 years ago, and now they are on the short end of this 
negotiation stick. We believe it is fair that they receive this 
fair consideration by enactment of this legislation so that 
they can be equitably treated as the Department of Justice and 
the government and this Committee and others have said they are 
entitled to.
    So I am happy to be here to testify in support of this bill 
and urge your favorable consideration.
    Mr. Calvert. I thank the gentleman. So you believe as this 
process moves forward that you potentially could find some 
middle ground on this issue if the folks from Bonneville 
negotiate in good faith?
    Mr. Nethercutt. Yes, sir, I do. I think we are between $20 
and $90 million apart. We can reach a settlement if we have a 
chance to get some pressure added to both sides to sit down, 
negotiate in good faith, and get this resolved. But the offer 
on the one end is way too low and the Spokane Tribe is willing 
to come off its higher offer, the same fair offer that the 
Colville Tribes got, the 39.4 percent.
    So there is some middle ground here that can be reached, in 
my judgment. We thought we had it reached. It broke down. It is 
time to get back to the table and really seriously, in good 
faith, negotiate and get this off everybody's table.
    Mr. Calvert. I thank the gentleman.
    Any additional questions for Mr. Nethercutt?
    [No response.]
    Mr. Calvert. Seeing none, we thank our colleague for coming 
today and we appreciate your testimony.
    Mr. Nethercutt. Thanks for having me.
    [The prepared statement of Mr. Nethercutt follows:]

Statement of The Honorable George R. Nethercutt, Jr., a Representative 
                in Congress from the State of Washington

    Mr. Chairman and Members of the Committee, thank you for holding 
this hearing today and for the opportunity to present testimony today 
in support of H.R. 1753. This legislation would provide a settlement to 
the Spokane Tribe of Indians for losses suffered as a result of 
construction of the Grand Coulee Dam.
    Similar settlement legislation was enacted in 1994 to compensate 
the neighboring Confederated Colville Tribes with the difference being 
that the Colville Tribes maintained a legal claim against the United 
States dating back to 1951. The claim held by the Colville Tribes was a 
land claim that the Colville Tribes were able to amend in 1976 to cover 
damages arising from the construction and operation of Grand Coulee 
Dam. While the Spokane Tribe had filed similar land claims, the Tribe 
had entered into settlement on those claims in 1967, approximately nine 
years prior to any indication that the U.S. might attempt to limit or 
eliminate its obligations to the Tribes regarding Grand Coulee Dam. As 
a consequence, the Spokane Tribe did not have a pending Indian Claims 
Commission claim to amend in 1976 as did the Colville Tribes.
    The legislation which enacted a settlement to the Colville Tribes 
provided for a $53 million lump sum payment for past damages payable by 
the U.S. Treasury's Judgment Fund and roughly $15 million annually from 
the ongoing proceeds from the sale of hydropower by the Bonneville 
Power Administration. At that time, the House Resources Committee noted 
``that the Spokane Tribe has a moral claim and requests that the 
Department of the Interior and the Department of Justice work with the 
Spokane Tribe to develop a means to address the Spokane's claim.''
    In 1997, BPA entered into negotiations with the Spokane Tribe and 
several meetings occurred without fruitful progress. I then introduced 
legislation in 1999 to provide a settlement to the Spokane Tribe 
directly proportional to the settlement afforded the Colville Tribes 
based upon the percentage of lands appropriated from the tribe for the 
Grand Coulee Project, or approximately 39.4 percent of the past and 
future compensation awarded the Colville Tribes.
    Negotiations resumed and at the last meeting held in Spokane, on 
January 14, 2002, which I moderated, the Tribe presented what it 
believed to be a ``middle ground'' settlement offer equaling 29.3 
percent of the Colville settlement and a one time ``catch up'' payment 
of $29,234,000 that would cover back payments from Fiscal Year 1995 
(the time when the Colville settlement was enacted) through 2002. The 
Tribe agreed to defer the receipt of the ``catch up'' payments in the 
first years following the settlement to ease passage of the legislation 
through Congress. In addition, the Tribe remained open to discussing 
alternative payment structure arrangements that would ease the impact 
on BPA ratepayers. The Administrator of BPA stated at this meeting that 
he felt a middle ground had been reached and he would ``run the 
numbers'' and respond to the Tribe within two weeks. We all left that 
meeting, Mr. Chairman, thinking that a settlement had been reached.
    Four months later, on May 15, 2002, the Administrator of BPA 
finally responded to the Tribe's last offer, with a one-time promise of 
annual payments of 19.2 percent of the Colville settlement and a 19.2 
percent structured ``catch up'' payment covering FY 1995 through FY 
2002. The difference between the two proposals was estimated at the 
time to be between $20 million and $90 million.
    Unfortunately, I believe we have now reached a point where 
negotiations between BPA and the Tribe will proceed no further without 
additional direction from Congress. Therefore, I request that you 
approve this legislation so that the Federal Government may keep the 
word of our Nation to the Spokane Tribe.
                                 ______
                                 
    Mr. Calvert. I would now like to--excuse me. Are there any 
additional opening statements? Mr. Renzi?

STATEMENT OF HON. RICK RENZI, A REPRESENTATIVE IN CONGRESS FROM 
                      THE STATE OF ARIZONA

    Mr. Renzi. Thank you, Chairman Calvert and members of the 
Committee. I want to take this opportunity to provide brief 
remarks on H.R. 885, the Arizona Water Settlement Act.
    I would like to begin by welcoming all of our speakers 
today, specifically those speakers from the First District of 
Arizona, especially San Carlos Apache Chairwoman Kathy 
Kitcheyan and members of the Tribal Council, as well as Navajo 
Nation President Joe Shirley. I want to thank you all for 
traveling to Washington, D.C., for being here, my friends from 
the Apache Nation. Both the White Mountain Apache Nation and 
the Avapaya Apache and the Tonto Apache have provided written 
testimony, and I appreciate your participation in this process.
    I know this legislation has taken years to draft and 
negotiate, has resulted in parts of it that remain complex. I 
recognize that a hearing on this Arizona Water Settlements Act 
is an important first step in the legislative process. And 
while all parties are aware that we still may address some 
issues, as Senator Kyl has discussed, I am hopeful that these 
final issues can be worked out and that the settlement can 
occur specifically to benefit all parties involved.
    I want to thank you for the opportunity to open with these 
remarks. I look forward to hearing the testimony.
    [The prepared statement of Mr. Renzi follows:]

  Statement of The Honorable Rick Renzi, a Representative in Congress 
                       from the State of Arizona

    Chairman Calvert and members of the committee, thank you for the 
opportunity to provide brief remarks on H.R. 885, the Arizona Water 
Settlements Act.
    I would like to welcome all of our speakers today, specifically 
those speakers from the First District of Arizona, San Carlos Apache 
Chairwoman Kathy Kitcheyan and Navajo Nation President Joe Shirley. 
Thank you for traveling to Washington, D.C., to discuss your interest 
in this legislation. In addition, written testimony has been submitted 
by several other tribes in my district, the White Mountain Apache, 
Yavapai Apache and Tonto Apache. I appreciate the participation by all 
of these tribes.
    This legislation has taken years to draft and negotiate and, as a 
result, is extremely complex. I recognize that a hearing on the Arizona 
Water Settlements Act is an important first step in the legislative 
process. While all parties are aware that issues need to be addressed 
in the Arizona Water Settlements Act, I am hopeful that these final 
issues can be worked out.
    Thank you for the opportunity to provide opening remarks and I look 
forward to listening to the testimony today.
                                 ______
                                 
    Mr. Calvert. I thank the gentleman.
    Any additional opening statements? Mr. Pearce?

 STATEMENT OF HON. STEVAN PEARCE, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF NEW MEXICO

    Mr. Pearce. Thank you, Mr. Chairman. Again, I appreciate 
the opportunity to speak on this bill and I appreciate you 
holding the hearings on H.R. 885. I welcome those who have 
worked hard to reach a tentative agreement to bring this bill 
before you.
    I especially want to welcome Estevan Lopez, the Chairman of 
the New Mexico Interstate Stream Commission, who is going to 
testify today.
    This is a very important bill that settles some difficult 
issues in Arizona and New Mexico that have divided friends and 
neighbors for quite some time. It seems that in the West, as 
you know, Mr. Chairman, water may be the most contentious issue 
facing us all. Reaching agreement seems to be taking decades, 
as evidenced by the authorizing legislation originally passed 
in 1968, and we are now ready to move forward with settlement 
soon. I understand the issue of diversions in the Riordan 
Valley in New Mexico are settled. The issue of further 
development of the Gila River Basin water in New Mexico remains 
unsettled.
    Thirty-five years ago, as part of the 1968 Colorado River 
Basin Project Act, the New Mexico Unit of the Central Arizona 
Project was authorized, conceived to provide the future water 
supply in Southwestern New Mexico. Before this legislation is 
enacted, we must ensure the promises made to New Mexico in 1968 
is fulfilled. Negotiations are still ongoing to settle 
outstanding issues and are progressing. We are committed to 
working with Senator Kyl and Representative Hayworth to bring 
this settlement to conclusion and to support the settlement 
once New Mexico's concerns are resolved.
    Thank you, Mr. Chairman, for the opportunity to speak to 
this issue.
    [The prepared statement of Mr. Pearce follows:]

Statement of The Honorable Stevan Pearce, a Representative in Congress 
                      from the State of New Mexico

    Thank you Mr. Chairman for holding this hearing on H.R. 885, and I 
welcome those who have worked hard to reach a tentative agreement in 
order to bring this bill before you.
    This is a very important bill that settles some very difficult 
water issues in Arizona and New Mexico that have divided friends and 
neighbors for quite some time. It seems that in the West, as you know 
Mr. Chairman, water may be the most contentious issue. Reaching 
agreements seem to take decades, as evidenced of the authorizing 
legislation originally passing in 1968, and we are now ready to move 
forward with the settlements soon.
    I understand the issue of diversions in the Virden Valley in New 
Mexico is settled. The issue of further development of Gila River Basin 
water in New Mexico remains. Thirty-five years ago, as part of the 1968 
Colorado River Basin Project Act, the New Mexico Unit of the Central 
Arizona Project was authorized--conceived to provide the future water 
supply in Southwestern New Mexico. Before this legislation is enacted, 
we MUST assure the promise made to New Mexico in 1968 is fulfilled.
    Negotiations are still ongoing to settle outstanding issues, and 
are progressing. I am committed to working with Senator Kyl and 
Representative Hayworth to bring this settlement to conclusion, and to 
support this settlement once New Mexico's concerns are resolved.
    Thank you Mr. Chairman. I yield back the balance of my time.
                                 ______
                                 
    Mr. Calvert. I thank the gentleman from New Mexico.
    The gentleman from Arizona, Mr. Grijalva.

 STATEMENT OF HON. RAUL GRIJALVA, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF ARIZONA

    Mr. Grijalva. Thank you, Mr. Chairman. I, too, want to 
acknowledge the fine work that Senator Kyl and my colleague, 
Representative Hayworth, have done on this H.R. 885. It is very 
important to the State of Arizona, very important to the 
nations that are represented here, Tohono O'odham Nation, the 
Gila River Indian Nation and Community, and both of their--
Chairwoman Vivian Saunders is here and I want to welcome and 
thank her for coming and giving testimony to this Committee. 
Governor Narcia is also here and I want to thank him for his 
effort on this legislation.
    There are unresolved issues, but the momentum and the work 
that both the community and all the interests in the State of 
Arizona have done to this point have brought us to this 
hearing, and I want to acknowledge the hard work and the 
efforts that they put forth. I look forward to a resolution and 
I look forward to this hearing continuing the momentum to reach 
a final settlement, to reach a markup, and to give some 
stability and security both to the Nation and to the State of 
Arizona in terms of water use.
    Thank you, Mr. Chairman.
    Mr. Calvert. I thank the gentleman.
    I would now like to recognize the administration, our next 
panel of witnesses. Testifying on H.R. 885 is Mr. Bennett 
Raley, Assistant Secretary of Water and Science, Department of 
Interior, and Assistant Secretary Raley is accompanied by Ms. 
Aurene Martin, Acting Assistant Secretary for Indian Affairs.
    Testifying on H.R. 1753 is Mr. Steven Hickok, Deputy 
Administrator of the Bonneville Power Administration.
    I would now like to recognize Mr. Bennett Raley to testify 
for 5 minutes on H.R. 885. The gentleman is recognized.

 STATEMENT OF BENNETT W. RALEY, ASSISTANT SECRETARY FOR WATER 
AND SCIENCE, DEPARTMENT OF THE INTERIOR, ACCOMPANIED BY AURENE 
     MARTIN, ACTING ASSISTANT SECRETARY FOR INDIAN AFFAIRS

    Mr. Raley. Thank you, Mr. Chairman, Congresswoman 
Napolitano, Mr. Hayworth, and other members of the Committee. 
We are pleased today to testify on H.R. 885 for the simple 
reason that the issues addressed in this legislation and the 
parallel legislation on the Senate side are among the highest 
priorities for the Department of the Interior. This suite of 
issues spans the entire scope of the State of Arizona. It 
addresses, or will address, we hope, issues important to the 
State of New Mexico, and it is time to bring to closure the 
untold years of effort that have gone into this work and 
brought everyone this far.
    We have submitted written testimony, Mr. Chairman, which 
contains detailed comments on the legislation, but what I would 
like to do at this time is to observe that from the 
Department's standpoint, we are within striking distance of 
success, and one never knows when a window of opportunity is 
presented like it is here. If the parties don't take that 
opportunity to close the final gap, the window may never open 
again, or it may be decades down the road.
    The window is open. We are within striking distance, and we 
pledge on behalf of the Department our utmost efforts to work 
with this Committee and Mr. Kyl in the Senate to bring this to 
closure, because it is good for the State of Arizona. We trust 
it will be good for the State of New Mexico. And it will be a 
key part of providing certainty for resource users in those 
States.
    We would observe that there are three areas that need 
particular attention. First of all, the funding mechanism that 
is in H.R. 885 is innovative but does not follow the normal 
appropriations process. The administration is currently 
studying that funding mechanism to determine if it is an 
appropriate way to provide the certainty for funding that is 
required under the settlement stipulation and other aspects of 
this compromise.
    Second, as this Committee well knows, the Department, the 
Secretary of Interior, has trust responsibility to Native 
American tribes which extend to all tribes, and in particular 
we would encourage the parties to redouble their efforts to 
address issues relating to the San Carlos Apache Tribe so that 
all of the in-basin issues in Central Arizona can be resolved 
and we don't end up leaving an important part unresolved and 
potentially a source of concern in the near future.
    Third, the Department deeply desires that the States of 
Arizona and New Mexico find common ground so that both may move 
forward and attain the goals of the 1968 Act. We are 
comfortable that the delegations of these two States that we 
treasure will be able to do that and we will lend our efforts 
if that is helpful, or if it is helpful for us to stay back and 
stay out of the way, we will do that, as well.
    With that, Mr. Chairman, I would direct any other questions 
to the written testimony and would like to allow Assistant 
Secretary Martin to make any comments that she has. Thank you.
    [The prepared statement of Mr. Raley follows:]

   Statement of Bennett W. Raley, Assistant Secretary for Water and 
                Science, U.S. Department of the Interior

    Good morning Mr. Chairman and members of the Committee. I am 
Bennett W. Raley, Assistant Secretary for Water and Science at the 
Department of the Interior. I am accompanied by Aurene Martin, Acting 
Assistant Secretary for Indian Affairs. I appreciate the opportunity to 
appear before this Committee to discuss H.R. 885, a bill to authorize 
the Arizona Water Rights Settlement Act of 2003.
    H.R. 885 is the single most far-reaching piece of federal 
legislation regarding water use within Arizona since Congress 
authorized the Central Arizona Project thirty-five years ago. H.R. 885 
is an impressive and complex bill, designed to provide a comprehensive 
resolution of critical water use issues facing the State of Arizona, 
and Arizona Indian tribes today. This legislation provides certainty 
regarding the use of water in Arizona in a number of ways: It provides 
water to settle outstanding water rights claims of certain Arizona 
tribes; provides financing of infrastructure so that all tribes can put 
CAP water to use; and it provides water for future water rights 
settlements. It also provides water necessary to accommodate the 
explosive population growth in the cities of central Arizona; it 
provides certainty for farmers who currently utilize imported water 
supplies from the Colorado River; and it also provides a mechanism to 
secure water to protect against future droughts. These arrangements, 
necessary to all users of Colorado River water in Arizona are 
accomplished utilizing local tax revenues to accomplish the financing 
of all undertakings under the global settlement embodied in the 
legislation.
    The Administration supports the core concepts of the settlements 
that are achieved through H.R. 885 and the overarching goal of 
resolving many important water challenges facing the State of Arizona, 
with the caveats discussed below. We believe that the comprehensive 
approach that is embodied in H.R. 885 is the right way to resolve these 
longstanding disputes regarding the use of the CAP and this portion of 
Arizona's allocation to the Colorado River.
    Before providing detailed comments on particular provisions of the 
bill, some of which will require addressing outstanding concerns, it is 
necessary to review the overall structure and goals of H.R. 885. As we 
move forward, this Administration remains committed to working with the 
Committee, Congressman Hayworth, Senator Kyl, and the settlement 
parties to reach mutually agreeable solutions to all remaining issues. 
The resolution of these outstanding issues is an extremely high 
priority for the Department of the Interior.
Background
    Even in the days before statehood, Arizona's leaders saw the need 
to bring Colorado River water to the interior portions of the State. 
During the 1940's and ``50's California developed facilities allowing 
the utilization of more than its apportionment from the Colorado River 
and quickly began full use of its share of the river, and more. During 
that same time, Arizona began developing its own plans for utilization 
of its 2.8 maf apportionment. However, California effectively prevented 
Arizona from implementing its plans, arguing that development and use 
of water from Colorado River tributaries within Arizona counted against 
its apportionment and limited significant additional development and 
diversion from the mainstream by Arizona.
    Unable to reach resolution on this issue, in 1952 Arizona brought 
an original action in the U.S. Supreme Court, asking the Court to 
clarify and support Arizona's apportionment from the Colorado. After 12 
years of fact finding by a Special Master and arguments by the two 
states, the Supreme Court issued a decision in 1963 affirming Arizona's 
2.8 maf apportionment.
    Despite Arizona's victory in the Supreme Court, California was 
still able to extract a final concession from Arizona. In exchange for 
California's support of Congressional authorization in 1968 for the 
Central Arizona Project (CAP), Arizona was forced to allow its CAP 
water to have a subservient priority to California water use during 
times of shortage on the Colorado River system. This was a significant 
concession since CAP water use represents more than half of Arizona's 
Lower Basin apportionment--approximately 1.5 maf of its 2.8 maf. The 
CAP brings this critical supply from the Colorado River through Phoenix 
to Tucson, Arizona, via a primary canal of more than 330 miles.
    After decades of fighting to get the CAP authorized and 
constructed, in the early 1990's Arizona faced financial and water 
supply disputes over how the Project--and the State's allocation from 
the Colorado River--would be utilized.
    For most of the 1990's uncertainty existed for Arizona: uncertainty 
over who would receive water from the CAP, and uncertainty over the 
costs of the project and who would repay those costs. Perhaps most 
importantly to the State, uncertainty existed over the ability of the 
State to store water and protect against the eventual shortages on the 
Colorado--which have a unique impact on Arizona water users due to the 
junior status imposed by Congress in 1968.
    The uncertainty also involved complex and contentious litigation 
filed in 1995 between the federal government and the Central Arizona 
Water Conservation District, the political entity which operates the 
CAP and repays the local costs of the project. After years of 
litigation over the CAP, extensive negotiations were conducted to 
resolve the complicated CAP issues so that the needs of all project 
beneficiaries would be adequately addressed.
    During these discussions it became clear that financial repayment 
and other operational issues could not be resolved until there was a 
firm agreement on the amount of CAP water that would be allocated to 
federal uses, i.e., allocations to Indian tribes in Arizona. When these 
discussions were initiated, 32% of the CAP water was allocated for 
Federal uses, 56% for Non-Federal uses and 12% was un-contracted.
    Both the United States and the State of Arizona were interested in 
dedicating un-contracted water to allow settlement of outstanding 
Indian water rights claims and to meet emerging needs for municipal 
purposes. The amount of water needed for future Indian water rights 
settlements within Arizona turned in large part on consideration of the 
large pending claim of the Gila River Indian Community (Community) in 
the on-going general stream adjudication of the Gila River system. The 
Gila River Indian Reservation encompasses approximately 372,000 acres 
south of, and adjacent to, Phoenix, Arizona.
    The claim filed by the United States on behalf of the Community in 
the Gila River adjudication was for 1.5 million AFA. This represents 
the largest single Indian claim in Arizona--and one of the largest 
Indian claims in the West. If this claim were successful, the amount of 
water available to central Arizona cities, towns, utilities, industrial 
and commercial users, and major agricultural interests would be greatly 
reduced.
    Consequently, ongoing negotiations of that claim were put on a 
parallel track with the CAP litigation negotiations, with the 
understanding that tandem resolution of the issues would be necessary. 
The underlying premise of the settlement that emerged--including the 
framework of this legislation--is to achieve a comprehensive resolution 
of all outstanding CAP issues. This, in turn, will allow sustainable 
operation of the CAP in a manner that provides benefits and equitable 
treatment to all intended project beneficiaries. The alternative, 
piecemeal and sequential resolution of all of the outstanding disputes 
on the CAP, would be doomed to fail.
    The linkage embodied in this legislation integrates U.S. 
obligations under Federal statutes and the trust relationship with 
Indian tribes. As with the initial authorization of the CAP in 1968, we 
are presented with a unique opportunity to provide a final settlement 
of many of the complex Federal, State, Local, Tribal and private water 
issues in the State.
    In May of 2000, the Department and CAWCD reached agreement on a 
stipulated settlement of the CAP litigation. This stipulation serves as 
a blueprint for a comprehensive resolution of the suite of CAP issues I 
have identified above. The stipulation requires that a number of 
conditions must occur before it is effective or final. Under the 
stipulation, these conditions must occur before December 2012 or the 
stipulation will terminate.
    The CAWCD v. U.S. settlement stipulation is contingent on 
Congressional enactment of a Gila River Indian Community Settlement; 
Amendment of the Southern Arizona Indian Water Rights Settlement 
(SAWRSA); and the identification of a firm funding mechanism for the 
CAP, GRIC and SAWRSA settlements.
Settlement Stipulation & H.R. 885: The Arizona Water Rights Settlement 
        Act of 2003
    H.R. 885 approves three separate and significant settlements: the 
settlement stipulation reached in the CAWCD v. U.S. litigation 
(addressing CAP operational and repayment issues), the Gila River 
settlement (addressing water rights claims of the Gila River Indian 
Community), and the SAWRSA settlement (addressing water rights claims 
of the Tohono O'odham Nation).
    The basic structure of the stipulation developed in 2000 is 
preserved in H.R. 885, subject to certain conditions. The main 
components of the settlement contained in H.R. 885 are to provide: (1) 
additional water to resolve tribal claims; (2) certainty regarding 
allocation of available water supply; (3) additional water supplies for 
Arizona's growing cities; (4) financial and operational certainty for 
CAWCD (operator and repayment entity of CAP); (5) affordable water for 
non-Indian agriculture; (6) appropriate repayment of CAP costs; (7) 
structures and programs to bank water for Arizona's future; and (8) a 
firm funding mechanism to provide affordable water to tribes, while 
developing the infrastructure necessary to allow all of Arizona's 
tribes to fully utilize their CAP supplies.
    The structure of H.R. 885 represents Arizona's extensive efforts to 
resolve these contentious issues. The bill is strongly supported by the 
relevant Arizona State Agencies, Members of Congress with Arizona 
constituencies, the Gila River Community, the Tohono O'odham tribe, and 
a wide array of Arizona interests. In light of the diverse parties, 
competing interests and longstanding controversies involved, H.R. 885, 
if amended to address certain issues, represents the best prospect to 
restructure the CAP in a context that reconciles the Public, Tribal and 
Private interests--including statutory obligations of the United 
States.
    I will summarize each of the three titles contained in H.R. 885 and 
comment on some of the provisions of each that are of concern to the 
Administration.
Title I--Central Arizona Project Settlement
    The critical components of the CAP stipulated settlement are set 
forth in Title I of H.R. 885. They include: (1) a final allocation of 
CAP water supplies so that 47% of Project water is dedicated to Arizona 
Indian tribes and 53% is dedicated to Arizona cities, industrial users 
and agriculture; (2) setting aside a final additional allocation pool 
of 197,500 acre-feet for use in facilitating the GRIC settlement and 
future Arizona Indian water rights settlements; (3) a final allocation 
of 65,647 AFA of remaining high priority (M&I) water to Arizona cities 
and towns; (4) relief from debt incurred under section 9(d) of the 1939 
Reclamation Projects Act by agricultural water uses, which allows these 
users to relinquish their long-term CAP water contracts so that the 
water can be used for the Indian water rights settlements and future 
municipal use; and (5) allowing the Colorado River Lower Basin 
Development Fund (LBDF), the Treasury fund where CAP repayment funds 
are deposited, to be used for the costs of Indian water rights 
settlements, completing tribal water delivery systems and reducing the 
cost of CAP water for tribes to affordable levels.
    H.R. 885's utilization of the Colorado River Lower Development Fund 
is intended to meet the terms of the stipulation by providing for, 
among other things, subsidizing fixed OM&R costs for Indian tribes, 
including OM&R costs for the Gila River Indian Community, 
rehabilitation of the San Carlos Irrigation Project (SCIP), 
construction of Indian Distribution Systems, and funds for future 
Indian water settlements.
    The financing mechanism assumed in H.R. 885 is complex, and 
operates outside of the normal annual appropriations process. Given 
this, the Administration is currently reviewing the funding provision 
to determine whether it is an appropriate way to satisfy the 
contingencies of the settlement. There may be other funding mechanisms 
that meet the firm funding requirement of the settlement. We look 
forward to working with the Committee on this issue.
Title II--Gila River Indian Community Water Rights Settlement
    Title II of H.R. 885 is the Gila River Indian Community Settlement. 
This settlement would resolve all of the Community's water rights 
claims in the general stream adjudication of the Gila River system, 
litigation that covers much of the water supply of central Arizona. 
This litigation has been the subject of negotiation and settlement 
talks for more than 13 years.
    The major components of the settlement are: (1) confirmation of 
existing, and dedication of additional, water supplies for the 
Community in satisfaction of its water rights claims; (2) use of 
existing facilities to deliver the additional water supplies; (3) 
funding for on-Reservation agricultural development; and (4) protection 
of the Reservation groundwater supplies.
    While the United States supports a settlement of the Gila River 
Community's water claims, and believes the majority of the provisions 
of the Settlement Act in this title are consistent with that objective, 
we do have concerns, detailed below, that we want to work on with the 
Committee, Congressman Hayworth, Senator Kyl and the various parties to 
promptly resolve.

A. Inclusion of a Settlement with the San Carlos Apache Tribe
    In resolving the water rights claims of the Gila River Indian 
Community, we must remain mindful not to place the United States in a 
position of having conflicting obligations to two Indian tribes. The 
Gila River Indian Community and the San Carlos Apache Tribe have 
reservations and existing decreed water rights in the same watershed. 
In litigation underlying the settlement, the United States has argued 
in favor of both the Gila River Indian Community's and the San Carlos 
Apache's water rights under the 1935 Globe Equity Decree. That Federal 
Consent Decree addresses the water rights of those tribes, as well as 
the rights of most non-Indian water users, in the mainstem of the Gila 
River above the confluence of the Gila and Salt rivers. The GRIC 
settlement will alter operations under the Gila Decree. These changes 
have the potential to impact the rights of the San Carlos Apache Tribe.
    We believe that additional efforts to resolve the concerns of the 
San Carlos Apache Tribe should be taken, and Interior has engaged in a 
serious effort to do that. The Department has taken a number of steps 
in this regard and is prepared to do more. Interior officials have met 
with the San Carlos Tribal leaders on numerous occasions, and our 
sincere hope is that we can reach resolution on a wide array of issues 
so that agreement on the San Carlos Apache Tribe's water rights can be 
added to this legislation as it proceeds. We look forward to working 
with the Committee and the Tribes on this matter.

B. Waivers of the United States Enforcement Authorities
    H.R. 885, as introduced, also includes significant waivers of the 
United States' ability to enforce environmental statutes relating to 
water quality in the Gila River basin The settling parties seek to 
limit their exposure to environmental liability. However, the 
Administration believes the waivers, as currently drafted, may provide 
undue immunity from environmental liability and shift costs for cleanup 
to the Federal government. This could restrict the ability for the 
federal government to clean up the most contaminated waste sites in the 
Gila River Basin. For example, the legislation waives claims by the 
United States against both parties to the settlement as well as non-
parties. As drafted, this legislation can also be interpreted to 
provide a waiver for future claims under certain environmental 
statutes, including those under the Superfund authority. This could 
restrict the ability for the federal government to cleanup the most 
serious hazardous waste sites in the Gila River Basin. These water 
quality waivers were not included in prior water rights settlements 
affecting Indian Tribes and are not necessary in this legislation.
    Following the introduction of H.R. 885, the Department of Justice 
entered into discussions with the settlement parties regarding the 
waivers. These discussions continue to progress. The Administration is 
committed to continuing these discussions to find a solution to these 
significant issues, as this legislation must maintain the Federal 
government's ability to protect human health and environment.

C. Overly Broad Waiver of the United States Sovereign Immunity
    The Administration also is concerned, as we believe that H.R. 885 
contains an overly-broad waiver of United States sovereign immunity. We 
believe that this provision is unnecessary, as sovereign immunity 
waivers in the McCarran Amendment allow a suit against the United 
States to administer its adjudicated water rights. Further, if such a 
waiver is retained, it should be narrowly drafted. The Administration 
also has some concern about the scope of certain waivers under Section 
312 of the bill.

D. Impacts of the Intended Water Exchanges
    H.R. 885 authorizes several water exchanges between the Community 
and various parties in the State, including the Phelps Dodge 
Corporation, ASARCO and several municipalities in the Upper Gila River 
watershed. While we support the mechanism of water exchanges, we want 
to work with the committee to ensure that the current language 
adequately takes into account the water rights of the San Carlos Apache 
Tribe, parties affected in the State of New Mexico (under the Colorado 
River Basin Project Act), listed species and critical habitat under the 
Endangered Species Act (ESA), and rights to divert water in relation to 
the Globe Equity Decree. Previous analyses indicate that appurtenant 
structures and dams involved in this agreement could lead to more 
extensive and frequent Gila River drying, which, in turn, could lead to 
potential ESA conflicts.

E. Fifth Amendment Takings Concern
    Title II places the ownership of all settlement water in the hands 
of Gila River Indian Community, notwithstanding the fact that the Gila 
Decree (the 1935 Globe Equity Decree) framed its award under that 
Decree ``for the reclamation and irrigation of the irrigable Indian 
allotments on said reservation.'' We would like to refine the language 
of the bill to reduce the likelihood that an individual allottee may 
assert a ``takings'' claim based on the settlement. Both Interior and 
Justice are committed to working with the settlement parties and the 
proponents of H.R. 885 to reduce any risk of a Fifth Amendment taking 
and to assure that the rights of individual Indian allottees are 
protected.

F. Costs Associated
    Federal contributions to the proposed settlement within this Title 
include the fulfillment of existing statutory and programmatic 
responsibilities and the assumption of new obligations designed to put 
GRIC in a position to utilize the water resources confirmed or granted 
in the settlement. There are also numerous costs contained within this 
title, which the United States does not believe are reasonably related 
to the costs avoided and benefits received, and we look forward to 
working with the Committee, Congressman Hayworth and Senator Kyl prior 
to further consideration of this legislation to ensure the costs 
contained in the legislation are appropriate.
    For example, given the correlative benefits, we support the 
rehabilitation and completion of the Indian portion of the San Carlos 
Irrigation Project (SCIP)--an irrigation project that was initiated in 
the 1930's but never completed and which has fallen into significant 
disrepair. However, we believe that the language of H.R. 885, requiring 
the Secretary to provide for the ``rehabilitation, operation, 
maintenance and replacement'' of the San Carlos Irrigation Project, 
needs to be refined. Our view is that both the cost control and 
indexing mechanisms for these expenditures need to be revisited.
    Similarly, when looking at the government's cost of addressing 
subsidence damages on the reservation, we recognize the settlement 
requires the United States to repair past and future subsidence damage. 
We believe that federal liability for such damages should be limited.
    Additionally, in some instances we believe that existing costs have 
been shifted from State parties to the United States, and those costs 
may be more appropriately addressed by other existing Federal programs. 
We believe disbursements from the Lower Basin Fund should be limited to 
those costs which have a direct relationship to the core concepts of 
the settlements addressed in H.R. 885.
    We also believe that a closer look should be given to some of the 
costs included in the provisions of Title II, dealing with the Upper 
Gila River. One example is the costs identified to line San Carlos 
Irrigation and Drainage District (the non-Indian component of SCIP) 
canals so that water can be conserved. The Administration supports this 
concept but believes a greater share of the conserved water should be 
provided to the United States for possible use in settling the San 
Carlos Apache Tribe's water rights claims in the Gila River.

Title III--Amendments to the Southern Arizona Water Rights Settlement 
        Act (SAWRSA)
    The Southern Arizona Water Rights Settlement Act, known as 
``SAWRSA,'' Pub. L. 97-293, was enacted in 1982 to resolve Indian water 
rights claims arising within the San Xavier and Shuk Toak Districts of 
the Tohono O'odham Nation. SAWRSA did not settle all outstanding Tohono 
O'odham water rights claims. Claims for the Sif Oidak District and 
other Reservation lands remain to be settled.
    As originally enacted, SAWRSA allocated 37,000 AFA of CAP water to 
the San Xavier and Shuk Toak Districts of the Nation, together with 
another 28,200 AFA of water to be delivered from any source by the 
United States to the Districts. All of the water is to be delivered 
without cost to the Nation. The original settlement also requires the 
United States to rehabilitate and extend an historic allottee farming 
operation and design and construct irrigation facilities sufficient to 
put remaining settlement water to use.
    Construction of all irrigation facilities and the full 
implementation of SAWRSA has not occurred, principally because of a 
disagreement over proper allocation of settlement benefits between the 
Nation and allottees within the San Xavier District. Because of this 
disagreement, the allottees have refused to join in the dismissal of 
United States v. City of Tucson, CIV. 75-39 TUC-WDB (D. Ariz.), the 
litigation which lead to the enactment of the settlement. SAWRSA 
requires the United States, the Nation and the allottees to dismiss the 
litigation as a condition of full effectiveness of the settlement.
    For over ten years, the Department of the Interior, the City of 
Tucson and other state parties have been engaged in discussions with 
the Nation and the allottees in an attempt to agree on amendments that 
would resolve disputed issues. The Nation and the allottees have now 
agreed on how settlement water resources and funds should be 
distributed. The agreements between the Nation and the allottees are 
contained in Title III of H.R. 885. Essentially, the Nation and the 
allottees have agreed upon allocation of water resources, construction 
of new irrigation facilities and sharing of settlement funds.
    In general, the Administration supports these agreements and we 
look forward to working with the Committee to clarify or refine a few 
items we remain concerned about. Chief among these is the so-called 
``net proceeds'' issue that revolves around the United States' ability 
to make the Cooperative Fund a self-sustaining fund and potential 
federal liability if it is not self-sustaining or is underfunded.

Conclusion
    It is important to emphasize that the Administration fundamentally 
supports this important settlement effort if it is amended to address 
concerns discussed above, and we look forward to working with the 
Committee to revise specific provisions of the legislation so that we 
can support the bill without reservation.
    The Administration lauds the tremendous efforts dedicated by all 
parties to find a workable solution to this complex set of issues and 
supports the core settlement concepts and framework as set forth in 
H.R. 885. We recognize that this legislation will resolve long-standing 
and critical water challenges facing the State of Arizona. We look 
forward to working with the Committee, Congressman Hayworth, Senator 
Kyl, and the settlement parties to craft legislation that accomplishes 
these goals in a manner that comports with Federal financial policy and 
legal considerations.
    This concludes my testimony. I would be pleased to answer any 
questions that the members of the Committee may have.
                                 ______
                                 
    [Mr. Raley's response to questions submitted for the record 
follows:]

  Response to questions submitted for the record by Bennett W. Raley, 
   Assistant Secretary for Water and Science, U.S. Department of the 
                                Interior

Question:
    It is my understanding that numerous Indian water rights 
settlements (including the following Fort McDowell, P.L. 101-628 (1990) 
Sec. 410(a) and San Carlos Apache, P.L. i02-575 (1992) Sec. 3709(a)) 
include a provision that ensures that environmental impact of the 
components of the settlement agreement and legislation are subject to 
environmental review subsequent to execution by the Secretary. Can you 
assure the Committee that this provision is now routinely included in 
Indian Water rights settlements, including the Arizona Water 
Settlements Act?

Answer:
    As noted by the Committee, it is common for Indian water rights 
settlement legislation to include provisions that address environmental 
compliance regarding actions during the implementation phase of 
settlements. The Department has consistently carried out all necessary 
environmental compliance documentation for such implementation actions 
and will continue to do so. The specific provisions of individual 
Indian Water rights settlements in this regard are the result of 
negotiations among the Tribe, the Department, and other relevant 
stakeholders. In addition, these negotiations often include the 
participation of potential Congressional sponsors and Congressional 
staff. While common, it is difficult for the Department to assure the 
Committee that similar language will be included in all proposed Indian 
Water rights settlements. As an example, it is appropriate to note that 
the two cited settlements include distinct provisions regarding 
environmental compliance. Compare Ft. McDowell Indian Community Water 
Rights Settlement Act of 1990, Pub. L. 101-628, Sec. Sec. 410(a)-(d) 
(1990) with San Carlos Apache Tribe Water Rights Settlement Act of 
1992, Pub. L. 102-575, Sec. Sec. 3709(a)-(d) (1992).
    With respect to efforts pursuant to the proposed Arizona Water 
Settlements Act, the Department began work in 1999 on an Environmental 
Impact Statement on the allocation of CAP water supply and long-term 
CAP contract execution. In June of 2000, the Department published a 
Draft EIS on this effort. Appropriations restrictions prevented further 
work on this EIS subsequent to the publication of the Draft EIS. At 
this time, however, such restrictions have lapsed and the Department is 
now preparing to reinitiate the EIS process to allow the contracting 
actions identified as part of the settlement alternative to move 
forward in advance of the finalized legislation.
                                 ______
                                 
    Mr. Calvert. Assistant Secretary, you are recognized.

  STATEMENT OF AURENE MARTIN, ACTING ASSISTANT SECRETARY FOR 
                         INDIAN AFFAIRS

    Ms. Martin. Good morning, sir. I would only echo what Mr. 
Raley has already stated. We are supportive of the core 
concepts contained in H.R. 885 because they resolve 
longstanding significant issues for both the Tohono O'odham and 
the Gila River Indian Community and we believe that they 
provide sufficient flexibility for resolving other disputes in 
the State of Arizona.
    We do have some outstanding issues which we do need to 
resolve, including the concerns of the San Carlos Apache, 
resolution of some individual issues, and immunity and 
environmental liability issues. But we are very optimistic 
about our ability to resolve those issues and look forward to 
working with the different parties. Thank you.
    Mr. Calvert. Thank you.
    I would now like to recognize Mr. Steven Hickok to testify 
on H.R. 1753.

STATEMENT OF STEVEN G. HICKOK, DEPUTY ADMINISTRATOR, BONNEVILLE 
                      POWER ADMINISTRATION

    Mr. Hickok. Thank you, Mr. Chairman and members of the 
Subcommittee. With your permission, I will submit my written 
testimony for the record.
    Mr. Calvert. Without objection, so ordered.
    Mr. Hickok. I am Steve Hickok, Deputy Administrator of 
Bonneville. The administration, while it is unable to support 
H.R. 1753 as it is currently drafted, we are definitely in 
interest of reaching a fair and final settlement of these 
issues with the Spokanes. I think in my 5 minutes, I would best 
serve the Subcommittee by focusing on the two issues that have 
stood in the way of our reaching a settlement with the Spokanes 
over the past half-dozen years or so and highlight an issue 
that may be in front of us if and when we go forward.
    First, the method we used in arriving at compensation for 
the Colville Tribes, if applied to the Spokane Tribe situation, 
would result in payments to the Spokanes that would be about 19 
percent of the amounts that are currently being provided to the 
Colvilles, not the 39 percent that is currently in the 
legislation, and the reason is that the method that we used, 
one of three that we evaluated when we were negotiating with 
the Colvilles and that had been proposed for use in other 
situations like this or actually used in the past, the method 
we used divided the value of the land differently between what 
is under the reservoir and what is under the dam, and it 
literally provides half the value of the project to the 
relatively few acres under the dam and the other half to the 
relatively large number of acres under the reservoir.
    The Colvilles had acreage under the dam and the Spokanes do 
not, and that is very simply the reason why, if you just do a 
fraction of the acreage involved under the reservoirs, which is 
the proposal of the bill, you get 39, whereas the method we 
used in the Colville settlement produces about half that 
amount.
    The second big issue is that while the Colvilles had made a 
claim and brought suit against the government for past damages 
in the window provided under the Indian Claims Act, and the 
Spokanes had not, we have been willing to establish a sharing 
of Grand Coulee power revenues on a going-forward basis, but we 
haven't been willing to resurrect the past damages issue, 
leaving that closed, basically, after 1951.
    Now, having summarized those positions on the two big 
issues, I should hasten to say that both parties have explored 
departures from their positions on these issues. Congressman 
Nethercutt mentioned, for example, that the Spokanes, while 
holding to their past damages position, had at one point 
proposed splitting the difference with us between 1939 at 29 
percent on the value question. And Bonneville, while holding to 
the 19 percent position, had at one point in these discussions 
proposed back-casting 10 years back and structuring a 
settlement that would provide payments to the Spokanes 
beginning as if they had begun exactly at the moment that we 
had settled with the Colvilles. It would pick up the years 
roughly since 1994 to the present date.
    Neither of those concessions by the two parties, though, 
resulted in a package that either one could support, and in the 
end, we are back where we started from.
    The third issue, look forward, and one that is probably 
more significant now than pre-2001, is the rates issue on 
Bonneville's ratepayers. Back in 2001, Bonneville instituted a 
45 percent rate increase and that increased the power component 
of people's bills by 50 percent, from 22 mils a kilowatt hour 
to 32. And just to put that in perspective, while 1,000 
kilowatt hour residents would see the wholesale power component 
of their bill go up $10 a month, from $20 to $30, the 100,000 
megawatt hour a month aluminum smelter would see their monthly 
power bill go up from $2 million to $3 million a year, and that 
happened in 2001.
    We proposed another rate increase to go into effect in 
October of this year of another 15 percent, and as your 
colleagues from the Northwest can attest, there has been a 
firestorm about whether or not the Northwest economy can stand 
that, and we took $381 million out of Bonneville's cost 
structure for the next 3 years in order to bring that increase 
down from 15 percent to 2 percent, and that is what we put into 
place yesterday.
    So what would a settlement mean in terms of the cost to the 
ratepayers of a Colville-type settlement? Well, if you used the 
H.R. 1753 and it would result in about a $5 million a year 
additional cost to Bonneville, that is a sixth of a mil per 
kilowatt hour, so that 1,000 kilowatt hour house would pay an 
extra 17 cents a month. It sounds pretty reasonable. And the 
100,000 megawatt hour a month smelter would pay another $17,000 
a month in their power bill, and I think that pretty well 
frames the issue.
    Thank you, Mr. Chairman.
    Mr. Calvert. I thank the gentleman.
    [The prepared statement of Mr. Hickok follows:]

         Statement of Steven G. Hickok, Deputy Administrator, 
                    Bonneville Power Administration

    Mr. Chairman, my name is Steven G. Hickok. I am the Deputy 
Administrator of the Bonneville Power Administration (Bonneville). It 
is my pleasure to appear before the House Resources Committee, 
Subcommittee on Water and Power. Bonneville appreciates the opportunity 
to comment on H.R. 1753, the Spokane Tribe of Indians of the Spokane 
Reservation Grand Coulee Dam Equitable Compensation Settlement Act.
    My testimony today will focus on the discussions Bonneville has had 
with the Spokane Tribe and the proposal the prior Administration made 
to the Spokane Tribe in response to its request for compensation 
related to the construction of Grand Coulee Dam. I will also compare 
that proposal to what would result for the Spokane Tribe if H.R. 1753 
were enacted. Finally, I will address the present Administration's 
concerns with the proposed legislation. Although the Administration is 
committed to appropriate compensation for the Spokane Tribe, it is 
unable to support the legislation.
    First, let me set out the factual background that gave rise to the 
Spokane Tribe's request for compensation, which affects our view of the 
current situation.

Factual Background
    This matter arose out of representations made by Federal officials 
to the Spokane Tribe and the Confederated Tribes of the Colville 
Reservation when Grand Coulee Dam was under construction in the 1930s. 
Approximately 2,500 acres of land within the Spokane Reservation and 
6,900 acres of land within the Colville Reservation were taken for use 
in the Grand Coulee Project. Originally, the State of Washington 
planned to develop a hydroelectric project at Grand Coulee. An agency 
of the state obtained a preliminary permit under the Federal Power Act 
to develop the site. Had the state built the project, a license issued 
under the Federal Power Act would have provided the Spokane Tribe and 
the Colville Tribes compensation for use of their lands in the Grand 
Coulee Project. In 1933, however, Congress authorized Federal 
construction of Grand Coulee Dam as part of the Columbia Basin Project, 
to be developed and administered by the U.S. Bureau of Reclamation. 
Federal projects are not subject to licensing under the Federal Power 
Act.
    That same year, Secretary of the Interior Harold Ickes approved two 
letters from the Department of the Interior--one to the Supervising 
Engineer of the Grand Coulee Project and one to the Commissioner of 
Reclamation--indicating that, because Spokane and Colville Tribal land 
would be taken for the project, each of the Tribes should receive a 
share of the revenue from the sale of power produced by the dam. The 
following year, the Assistant Director of Irrigation wrote the 
Commissioner of Indian Affairs, proposing that the Tribes be paid an 
appropriate percentage of the ``profits'' of the project based on the 
amount of Reservation land beneath the dam and the reservoir. He 
proposed that half of the value of the project be ascribed to the dam 
and half to the reservoir, and that the Spokane Tribe participate in 
proportion to the Reservation's contact with the reservoir only, as the 
Spokane Tribe had no land under the dam.
    The Government did not act on this proposal, nor did it determine 
what might be an appropriate share of revenues for either Tribe. In 
1946 Congress passed the Indian Claims Commission Act (ICC), creating a 
five-year window in which Indian tribes could sue the United States for 
past harms. The Colville Tribes brought suit under the Act for a share 
of the power revenues of Grand Coulee Dam. Although the Spokane Tribe 
brought suit against the Government under the Act for other claims, it 
did not bring a suit for a share of Grand Coulee's revenues prior to 
settling its ICC claim.

Settlement With the Colville Tribes
    Bonneville has marketed the power from Grand Coulee Dam since the 
dam began operations in 1942. Therefore, although Bonneville was not a 
named party to the Colville Tribes litigation, Bonneville understood 
that the power function--among the other, multiple functions of Grand 
Coulee--and its users (the Bonneville ratepayers) would likely be 
expected to bear a share of any judgment in the case. Together with the 
Department of Justice, Bonneville entered into discussions with the 
Colville Tribes to settle the Colville's lawsuit. The parties reached 
agreement in 1993, and legislation was passed in 1994 approving the 
settlement and directing payment of the settlement amounts to the 
Colville Tribes.
    The settlement value was based largely on a formula that had been 
used to compensate the Flathead Indian Tribe when the Tribe's land was 
taken by a private entity for the development of Kerr Dam. It also 
included a litigation risk premium in recognition of the financial risk 
to the Government in proceeding to trial if the case did not settle. 
The settlement payments included two elements. First, the Colville 
Tribes in total were paid a lump sum of $53 million from the Judgment 
Fund (a fund available to pay certain court judgments against the 
United States, and any Justice Department settlements of litigation) to 
compensate them for use of their land from 1942, when Grand Coulee 
began operations, to the time of settlement. Bonneville was not 
obligated to reimburse the Judgment Fund for any of this amount.
    Second, Bonneville agreed to make annual payments to the Colville 
Tribes going forward. These payments represent a share of the revenue 
from the sale of the power from the dam. The first payment was for 
$15.25 million for Fiscal Year 1995. Subsequent payments have been 
governed by a formula based on the annual value of power produced by 
Grand Coulee. Under the 1994 legislation enacting the settlement and a 
subsequent 1996 amendment, Bonneville receives an annual credit for its 
repayment to the Treasury that covers a portion of Bonneville's payment 
to the Colville Tribes. The credit was $15.86 million in Fiscal Year 
1997, and increased annually until Fiscal Year 2001, when it was $18.55 
million. Since Fiscal Year 2001 the credit has been fixed at $4.6 
million, and Bonneville will receive an annual credit of $4.6 million 
as long as it continues making payments to the Colville Tribes. 
Therefore, the percentage of the Bonneville payment that the credit 
covers is changing through time. These credits, together with the 
amount paid by the Judgment Fund, achieve the contribution of the U.S. 
taxpayers to the settlement--30 percent of the settlement's value. 
Bonneville's ratepayers are contributing 70 percent of the value of 
approximately $570 million.

Discussions With The Spokane Tribe
    On August 4, 1994, the Senate Indian Affairs Committee and the 
Senate Energy and Natural Resources Committee held a joint hearing on 
S. 2259, a bill that endorsed the settlement agreement with the 
Colville Tribes. A representative of the Spokane Tribe testified at the 
hearing, seeking an amendment to the bill to address the Spokane 
Tribe's claims of damage from the project.
    During full Senate consideration of the bill, which took place 
during the prior Administration, Senators Daniel Inouye, Bill Bradley, 
John McCain and Patty Murray engaged in a colloquy urging the 
Department of the Interior and other relevant Federal agencies to enter 
into negotiations with the Spokane Tribe to conclude a fair and 
equitable settlement of the Tribe's claims. On August 5, 1994, Interior 
Solicitor John Leshy wrote Senator Bill Bradley, indicating that the 
Department of the Interior was reviewing information submitted by the 
Spokane Tribe and would continue its examination. Subsequently, 
representatives of the Department of the Interior and the Spokane Tribe 
met on a number of occasions to discuss the Spokane Tribe's claims.
    Bonneville then entered into discussions with the Spokane Tribe. In 
1998 Bonneville representatives traveled to the Spokane Reservation to 
explain the formula used in the Colville Tribal settlement and how it 
might be applied to the Spokane Tribe's compensation request. In doing 
this, Bonneville recognized the Spokane Tribe's current and future 
contributions to the value of the project (from the continuing use of 
former Reservation lands), but, because of the absence of a claim and 
the lack of access to the Judgment Fund, indicated that it would not 
address any past contributions.
    Since 1998 Bonneville and the Spokane Tribe have met a number of 
times to discuss appropriate compensation. Unfortunately, the two have 
been unable to reach agreement. In the end the Spokane Tribe was not 
satisfied with the going-forward payments that resulted when the 
formula used to compensate the Colville Tribes was applied, and was 
unhappy with the Administration's resistance to paying past damages.
    On May 2, 2000, Bonneville Administrator Judi Johansen reiterated 
the prior Administration's position on compensation in a letter to 
Senator Murray. In the letter, Ms. Johansen underscored that the then 
Administration did not support payments for any past periods, but was 
prepared to discuss again the possibility of prospective annual 
payments of a share of Grand Coulee power revenues, based on the 
methodology employed in the Colville Tribes' settlement. She added that 
it would also be reasonable to discount these payments because, unlike 
the Colville Tribes, the Spokane Tribe had no legal claim. Finally, she 
stated that it was the Administration's position that, consistent with 
the cost-sharing arrangement between ratepayers and taxpayers adopted 
in the Colville Tribes legislation, 70 percent of the value of any 
compensation to the Tribe should come from Bonneville ratepayers and 30 
percent from U.S. taxpayers.
    If enacted, H.R. 1753 would compensate the Spokane Tribe at a level 
that appears to be substantially in excess of the amount that the prior 
Administration considered in previous negotiations. The bill would 
establish in the Treasury an interest-bearing account called the 
Spokane Tribe of Indians Settlement Fund Account. Section 5(b)(1) of 
the bill would require the Secretary of the Treasury to deposit into 
this account an amount equal to 39.4 percent of the lump sum paid to 
the Colville Tribes, adjusted for inflation, to compensate the Spokane 
Tribe for use of its land from June 29, 1940, to November 2, 1994.
    The bill also would require the Administrator of the Bonneville 
Power Administration to make two series of payments. First, Section 
5(b)(2) would require the Bonneville Administrator to deposit into the 
account each year for six years an amount equal to 7.88 percent of the 
total annual payments made to the Colville Tribes from 1996 (when the 
first annual payment was made to the Colville Tribes) through the end 
of the fiscal year during which H.R. 1753 is enacted, adjusted for 
inflation. Second, Section 5(c) of the bill would require the 
Bonneville Administrator to pay the Spokane Tribe on an annual basis, 
an amount equal to 39.4 percent of each annual payment that Bonneville 
is making to the Colville Tribes in fiscal years after the date of 
enactment of the Act.
    Section 7 of the bill would require the Bonneville Administrator to 
deduct from interest payable each fiscal year to the Secretary of the 
Treasury, a percentage of each annual payment made to the Spokane Tribe 
for the preceding fiscal year. The percentage deducted would be 
calculated and adjusted to ensure that the Bonneville Power 
Administration receives a deduction comparable to the deduction it 
receives for payments made to the Colville Tribes under the 
Confederated Tribes of the Colville Reservation Grand Coulee Dam 
Settlement Act.
    Finally, Section 9 of the bill would authorize an appropriation of 
such sums as are necessary to carry out the Act.
    In contrast to the payments that would be provided the Spokane 
Tribe under H.R. 1753's provisions, Bonneville's estimate of going-
forward payments to the Spokane Tribe--based on the methodology 
employed in the Colville Tribes settlement and taking into account the 
difference between the amount of acreage taken from the Colville 
Reservation and the amount taken from the Spokane Reservation--is about 
19 percent of those provided to the Colville Tribes. During most of our 
discussions with the Spokane Tribe we have also assumed that this 
number should be discounted to reflect the lack of any claim filed 
under the ICC.

More Discussions With the Spokane Tribe
    During the Bush Administration and Administrator Steve Wright's 
tenure, Bonneville continued discussions with the Spokane Tribe. 
Bonneville advanced a number of it own proposals to the Spokane Tribe 
that were outside the framework approved by the prior Administration in 
the hope that these proposals could bring prompt resolution of this 
issue. None of these proposals were embraced by the Spokane Tribe as 
acceptable for settlement, and so Bonneville has not pursued approval 
of them in the present Administration. None of these proposals remain 
on the table. We advanced them in a spirit of reaching closure 
promptly. Bonneville did not advance them as proposals the Spokane 
Tribe could accept as a starting point and then build on to pursue 
additional compensation. Without agreement by all the Federal and non-
Federal parties, the Administration is without a proposal for an 
appropriate settlement. The Administration is willing to resume working 
with the tribe to reach a fair settlement. At the appropriate time, the 
Administration would want to discuss the potential funding mechanisms.

Conclusion
    Mr. Chairman, in closing I want to reiterate that the Bush 
Administration is supportive of reaching a fair and final settlement 
with the Spokane Tribe. I stand ready to answer any questions you may 
have.
                                 ______
                                 
    [Mr. Hickok's response to questions submitted for the 
record follows:]

Response to questions submitted for the record by Steven Hickok, Deputy 
 Administrator, Bonneville Power Administration, from Congressman Ken 
                          Calvert on H.R. 1753

Failed Negotiations
    Q1. Why have negotiations between Bonneville and the Tribe failed?
    A1. I believe there are three reasons that negotiations have not 
resulted in an agreement. First, Bonneville believes that any agreement 
with the Spokane Tribe should be based on the methodology employed in 
the Colville Tribes settlement. This methodology provides a principled 
basis for compensating the Spokane Tribe. The Tribe has not accepted 
the applicability of the Colville methodology.
    Second, the lump sum that the Government paid to the Colville 
Tribes for past use of their lands was paid out of the Judgment Fund, 
in settlement of the Colvilles' lawsuit. Because the Spokane Tribe does 
not have a legal claim, the Judgment Fund is unavailable to pay the 
Spokane Tribe for past use of its land, and Bonneville has not been 
willing to make up any such amounts. Bonneville was not responsible for 
any part of the lump sum that was paid to the Colville Tribes, and it 
has been adamant in its refusal to assume this obligation with regard 
to the Spokane Tribe.
    Third, the Spokane Tribe may view Bonneville's proposals as 
starting points from which the Tribe can build its pursuit of a larger 
compensation through legislation. H.R. 1753 appears to reflect this 
kind of strategy, as it adopts the Tribe's original position in 
negotiations from more than five years ago.

Middle Ground
    Q2. Do you believe there is middle ground on this issue?
    A2. H.R. 1753 represents the Spokane Tribe's original position in 
this negotiation, which is poles apart from BPA's. We will not find 
middle ground between these two positions if the Spokane Tribe believes 
it can expect to get H.R. 1753 passed in its current form.
    Through the history of these negotiations, both parties have 
amended their positions at different points in the negotiations in 
search of ``middle ground'' that might support a fair solution. We will 
continue to try to find a compromise. BPA is committed to appropriate 
sharing of Grand Coulee revenues with the Spokane Tribe. We also will 
likely need the implementation assistance of Congress if and when we 
reach an agreement.

No Back Payments without Pending Claim
    Q3. How has the Spokane Tribe's statute of limitations problems 
impacted the financial aspect of negotiations? Would this legislation 
set a precedent by which a back payment is given to a tribe that did 
not have a pending claim?
    A3. As I testified, Bonneville has assumed that, because the 
Spokane Tribe has no legal claim, payments to the Tribe should be 
discounted. At one point Bonneville did advance an offer of annual 
payments with no discount. This offer was outside of the framework 
approved by the prior Administration, and was advanced in hope of 
bringing prompt resolution to this matter. It failed to do so.
    In addition, because the Spokane Tribe does not have a legal claim, 
the Judgment Fund is unavailable to pay on any settlement. Therefore, 
the taxpayers' portion of any settlement payments to the Spokane Tribe 
would have to be provided through other means. As I stated above, 
Bonneville has not been willing to assume any financial obligation for 
its ratepayers that it did not assume in the Colville Tribes 
settlement.
    The question of possible precedent-setting potential of this 
legislation is best directed to the Justice Department. It is 
Bonneville's view that the Government compensated the Colville Tribes 
because a specific promise was made to the Tribes to pay them a share 
of the revenues of Grand Coulee Dam. The same promise was made to the 
Spokane Tribe.

Rate Impacts of the Legislation
    Q4. How would you build this bill's costs into the BPA's rates? Has 
BPA heard from the customers on what this rate impact would have on 
them?
    A4. Under the bill as presently drafted, Bonneville would make an 
initial payment of approximately $20 million and annual payments of 
about $20 million per year for the following 4 or 5 years. At that time 
the annual payment would decrease to approximately $6-8 million (in 
today's dollars), and would be adjusted each year to reflect actual 
power sales from Grand Coulee Dam. Bonneville would build these 
payments into its rates as a power cost. The Fiscal Year 2004 payment 
would increase our wholesale priority firm rate by about one-half of 
one mill per kilowatt-hour (kwh). This would increase electricity bills 
by about 50 cents per month for an average-sized home (1,000 kwh per 
month) and about $50,000 per month for an aluminum smelter (100,000 
megawatt hours per month). While we have not discussed a potential 
Spokane settlement with our customers, customers have been quite clear 
that we need to take all actions possible to reduce the upward 
pressures on our rates.

Appropriate Time for Negotiations
    Q5. Mr. Hickok, you mention that BPA would enter into new 
negotiations at an ``appropriate time.'' When is an appropriate time?
    A5. We are prepared to meet with the Spokane Tribe to renew these 
negotiations at any convenient time.
                                 ______
                                 
    Mr. Calvert. Mr. Raley, as you know, Secretary Norton has 
made wise water management a focus of her tenure. Do you 
believe that this settlement regarding H.R. 885 is consistent 
with the Secretary's 2025 water initiative?
    Mr. Raley. Yes, sir, in all respects. From the cooperative 
approach to its identification of canal lining and efficiency 
gains, this is one of the models that 2025 is based on.
    Mr. Calvert. The Arizona bill also has a unique and complex 
funding mechanism, as you mentioned in your testimony. Can you 
explain how that funding works now and how it would be changed 
under the bill?
    Mr. Raley. Mr. Chairman, at the present time, revenues from 
Arizona sources go into the Lower Basin Fund, which is not used 
or identified for anything in particular. This mechanism would 
create, in essence, a revolving fund where those revenues would 
be pledged as a permanent source of funding for the 
expenditures necessary to implement this legislation. That 
funding mechanism is what is being reviewed at the present time 
by the administration. A decision has not been made as to 
whether it is appropriate. I can say, though, that from the 
Department of Interior's standpoint, we are not aware of an 
alternative mechanism that provides the certainty that is 
required by the stipulation. We are open to finding whatever 
works.
    Mr. Calvert. How long do you think that will take?
    Mr. Raley. Mr. Chairman, I believe that the administration 
will need to be responsive to this Committee and this body's 
needs as you move this legislation forward, and that will help 
us reach closure on that issue.
    Mr. Calvert. I thank the gentleman.
    Mrs. Napolitano?
    Mrs. Napolitano. There are many questions that I would like 
to have. I still would love to hear more of the testimony from 
the witnesses before I ask the questions. Will you be around, 
Mr. Raley?
    Mr. Raley. Unfortunately, I have to leave, but we will 
certainly respond to written questions, or, Congresswoman, if 
you would like, I can try to schedule a time to come back up 
and meet with you and your staff this week or next week. I do 
want to talk about a certain study that you and I discussed on 
numerous occasions and would be happy to come up----
    Mrs. Napolitano. I was going to ask about that, but I was 
precluded.
    Mr. Raley. Well, I appreciate the Chairman keeping us 
focused, but we need to talk about that, as well, so I am sorry 
I can't stay.
    Mrs. Napolitano. Would you like a copy of it?
    Mr. Raley. Pardon?
    Mrs. Napolitano. Would you like a copy of it?
    Mr. Raley. Well, actually, I directed that it be sent out 
to the people that paid for it so they could review the draft, 
so I hope we have the same copy.
    Mrs. Napolitano. I trust. There is one question before you 
leave, then, and I will be in trust with you later, Mr. Chair, 
and I will share information with you for the record. How would 
the bill affect the repayment of the Central Arizona Project 
costs and the money that has been spent on non-Indian 
irrigation water distribution systems?
    Mr. Raley. As the Congresswoman is aware, there are aspects 
of the legislation that address 90 repayment. We believe that 
those aspects of the legislation are entirely appropriate, 
given that the allocation of water for the Central Arizona 
Project under this legislation is far different from what was 
originally intended under the Central Arizona Project. Simply 
put, it makes no sense to us, nor do we consider it to be fair, 
to have the prior 90 repayment structure continue even though 
the water is being allocated and used for other purposes.
    Mrs. Napolitano. That is very, very interesting to not have 
an idea of how that is going to happen.
    The question then for Mr. Hickok would be, how soon can we 
expect BPA to get together with the tribe to resolve these 
outstanding issues and attempt to come to a settlement?
    Mr. Hickok. We would be prepared to start it at any time. 
There aren't any preconditions. And I think----
    Mrs. Napolitano. Are you scheduled now to continue meeting 
with them, I guess is my question.
    Mr. Hickok. We are not at the present time.
    Mrs. Napolitano. How soon would you be willing to meet with 
them?
    Mr. Hickok. We are ready at any time.
    Mrs. Napolitano. Thank you. Mr. Chair, I don't have 
questions right now.
    Mr. Calvert. I thank the gentlelady.
    Mr. Hayworth?
    Mr. Hayworth. Thank you, Mr. Chairman.
    Assistant Secretary Raley, I touched on it in my opening 
statement, as did Vice Chairman Renzi and Senator Kyl, about 
the whole notion of inclusion of the San Carlos Tribe. If the 
bill is moved in its current form, in your opinion, is there 
sufficient flexibility to accommodate a settlement of the San 
Carlos Tribe?
    Mr. Raley. Yes, sir.
    Mr. Hayworth. The absence in this bill of a settlement with 
the San Carlos Apache Tribe is a concern for us as well because 
of the many reasons you have articulated in the written 
testimony and as we have touched on earlier today. As Senator 
Kyl mentioned, and I think it bears repeating, we have a 
placeholder for water rights settlement for the San Carlos 
Apache Tribe. It is our understanding the negotiation toward a 
settlement are underway and the political and geographic 
position of the tribe is important toward final solutions 
toward water rights settlements on the Gila River.
    From your perspective, can you delineate the efforts that 
are underway to move this toward resolution?
    Mr. Raley. Well, the Secretary's team has had numerous 
meetings with the interested parties and will continue to meet 
with them. It will be at increasing frequency and intensity 
because of the need to resolve these issues as this legislation 
proceeds. There were meetings in March and there is fairly 
constant communication. We are ready, willing, and able to 
engage at any time and commit to do so.
    Mr. Hayworth. My friend, the Ranking Member, touched on the 
notion of funding as we look at H.R. 885, and on the record, 
Assistant Secretary Raley, do you agree with us that this bill 
needs a firm funding source to work?
    Mr. Raley. The stipulation entered for settlement of the 
litigation requires that there be a firm funding source, first. 
Second, from an equitable standpoint, the point that has been 
made in the past by the Gila River Indian Community is that 
paper water, or water that they can't use, is of ultimately no 
value to them. A foundational aspect to this settlement has 
been that it would provide the Gila River Community with actual 
ability to use the water they are accepting under this 
settlement. So from both a technical as well as an equitable 
standpoint, we recognize that if this concept is moved forward, 
there has to be a stable funding source.
    Mr. Hayworth. As we look toward that stable funding source, 
in your opinion, will the fund be exhausted by the requirements 
of H.R. 885 prior to other tribes reaching water rights 
settlements, and if not, what part of the Lower Basin 
Development Fund would or could be available for use by other 
tribes, such as the White Mountain Apache, for future water 
development?
    Mr. Raley. As the Committee knows, the revenues into the 
fund are roughly $40 to $50 million a year. The actual outflow 
from the fund would be dependent upon the implementation of the 
construction schedule, so we cannot predict with precision 
exactly what the cash-flow would look like. We are comfortable 
that this bill could be implemented under that sort of a cash-
flow arrangement.
    We can't tell at this point what the total cost would be 
because of some of the open-ended aspects of the legislation, 
such funds as required, et cetera, et cetera. But we are 
comfortable that this approach, whether it is focused on this 
funding mechanism, if that were to be the will of Congress, or 
from a water standpoint, is fully consistent with the 
Secretary's trust responsibility to all of the tribes that are 
affected by this legislation.
    Mr. Hayworth. I see my time is almost up. Just one question 
I think can be answered fairly quickly. If the administration 
did not settle these cases, what would the potential damages be 
to the Federal Government?
    Mr. Raley. The risk of litigation is very, very significant 
and it is very clear to the administration that settlement is 
in the best interests of the United States taxpayers, the 
United States citizens, and that litigation should be the last 
resort.
    Mr. Hayworth. I thank you, Mr. Secretary, and thank you, 
Mr. Chairman.
    Mr. Calvert. I thank the gentleman.
    Mr. Pearce?
    Mr. Pearce. Mr. Chairman, Assistant Secretary Raley, the 
18,000 square feet that were made available to New Mexico by 
the 1968 bill. I am a little unfamiliar with it. Was that in 
the form of water moving down the stream or in the form of 
water that would potentially be stored? What form was that in?
    Mr. Raley. Well, there is a need for an exchange agreement 
to be worked out between the States and with Interior and we 
are committed to moving forward and working out that sort of 
exchange agreement. I believe originally that the contemplation 
was that there would be a dam constructed in New Mexico that 
would be used. That dam may not be the best--that particular 
site may not be the most feasible or most appropriate way, and 
the Department will be working with New Mexico to identify any 
structures that would be necessary as well as institutional 
arrangements for New Mexico to gain the benefits that were 
intended under the 1968 Act.
    Mr. Pearce. Mr. Raley, if the dam would not be the best 
possible solution, what potential solutions would you see and 
what recognition is there that every year that we don't have 
the 18,000 acre feet available is a loss of income, a loss of 
jobs, a loss of earning potential to people in that region?
    Mr. Raley. I think it would be premature for us to identify 
what would be the preferred course, which is why I can only 
commit to New Mexico that the Bureau of Reclamation and the 
other agencies within the Department of the Interior will work 
with New Mexico and, of necessity, with the other Colorado 
River Basin States to effectuate New Mexico's ability to gain 
the benefits of the 1968 Act. We are not prepared today to 
identify exactly how that should be implemented on the ground.
    Mr. Pearce. And, Mr. Raley, I don't think that there are 
provisions in this bill describing how that longstanding 
obligation since 1968 even will be resolved at this point. Do 
you foresee that that would be an addition to this bill? Would 
it be a supplemental bill? Would it--how do we move that 
forward? It has been one of the ongoing concerns of the Western 
side of our State.
    Mr. Raley. And legitimately so. We would leave to this body 
and the Senate exactly the form, whether it is an addition to 
this bill or a separate bill. We are, as I indicated, very 
hopeful and desirous of the Arizona and New Mexico delegations 
reaching an accommodation on this issue so that the needs of 
both States can be met.
    Mr. Pearce. Thank you, Mr. Chairman. My last question would 
be that there is an outstanding need to settle an agreement 
between the Navajo Nation and New Mexico to provide water for 
Window Rock, and again, I wonder if there is any provision that 
you know of that is moving forward to create a conclusion to 
those needs?
    Mr. Raley. I am aware that within the Department, we have 
had a number of discussions on how to provide--to make that 
happen from an institutional or legal framework arrangement, 
and I know that is considerable interest and a focus within the 
New Mexico delegation, yourself and Senator Domenici and others 
to provide legislation that will give us direction on how to 
meet those needs.
    Mr. Calvert. I thank the gentleman.
    Mr. Hickok, in your opinion, why have the negotiations 
between the Bonneville Power Administration and the tribe 
failed?
    Mr. Hickok. Mr. Chairman, it is probably because the 
Spokanes are encouraged to believe that whatever we might 
arrive at out there might simply be the starting point to do 
better back here. For example, H.R. 1753 adopts their 
negotiating position, the position they took at the beginning, 
which is poles apart from ours. So if they are encouraged to 
believe that they can actually obtain that, it probably 
wouldn't be worth anybody's time to continue negotiations.
    But if, on the other hand, they were encouraged and we were 
encouraged to go out and find a fair and equitable settlement, 
recognizing that we should bring it back to you for its 
approval and to effect it, put it into effect, that would be a 
different dynamic.
    Mr. Calvert. Well, in your opinion, do you believe that you 
can find that middle ground? I asked that same question to Mr. 
Nethercutt. Do you have any encouragement at all for that?
    Mr. Hickok. I think we can. Yes, we can.
    Mr. Calvert. Mrs. Napolitano asked a question about when 
will these new negotiations begin, and you said any time, or 
whenever that is appropriate. Does everybody agree to that, 
both sides? I mean, are you willing to sit down immediately 
rather than we have to go through this legislative process?
    Mr. Hickok. We haven't discussed recently sitting down once 
again and moving--trying to move forward from positions we have 
taken in the past. I think the focus, frankly, has been to see 
whether this could be legislated to a resolution that they 
haven't been able to accomplish in negotiations.
    Mr. Calvert. Well, I would certainly encourage you to find 
that appropriate time and try to work this out. Obviously, we 
are very interested in possibly moving some legislation if, in 
fact, you are not able to negotiate this, and I think that is 
possibly consistent with this Committee. So I am hopeful that 
that can occur. We would much rather see negotiated settlements 
rather than legislated settlements. It is a much better 
solution to the problem.
    With that, I am going to ask Mr. Hayworth to take over. I 
apologize to the Committee and I will recognize Mrs. Napolitano 
for additional questions.
    Mrs. Napolitano. Just one last question that I had and it 
had to do with the treaty with Mexico that you were referring 
to, Mr. Raley.
    Mr. Raley. I am sorry, could you repeat that? I didn't 
hear.
    Mrs. Napolitano. The treaty, the treaty with Mexico over 
water release. Are we in compliance in releasing that water?
    Mr. Raley. Yes, we are.
    Mrs. Napolitano. You are? Is this the same treaty that 
covers all the rivers that go into Mexico, or is it a separate 
treaty from the Colorado and the Rio Grande?
    Mr. Raley. No. Both the Rio Grande and the Colorado are 
covered by, or addressed in, the 1944 treaty.
    Mrs. Napolitano. Forty-four, so it is prior to 1968.
    Mr. Raley. Well, the treaty addresses both Rio Grande and 
the Colorado. The 1968, to my recollection, does not address 
issues in the Rio Grande.
    Mrs. Napolitano. OK.
    Mr. Raley. I hope--did I misunderstand your question?
    Mrs. Napolitano. No, no, you are right. I just wanted to 
clarify that. There is an issue of water shortages along the 
Rio Grande and I was wondering whether this is part of the same 
treaty.
    Mr. Hickok, I wanted to continue just a little bit further 
on the sitting at the table with Bonneville and whether or not 
you see that as being a peaceable solution at this point. Can 
you sit down with the group, with the tribe, and look at it 
from the perspective of moving forward and finding a solution, 
as the Chairman had indicated, without the benefit of 
legislative process?
    Mr. Hickok. I think that is the preferable way to go. I 
think that is what we would like to do. The negotiations we 
concluded with the Colvilles were not a piece of cake, but we 
were both smiling when we shook hands at the end of that. We 
reached a settlement that we believe was good for the 
government and good for the tribe, and we are prepared to do 
that with the Spokanes.
    Mrs. Napolitano. When was the last time you met with 
Bonneville, the tribes on this issue?
    Mr. Hickok. It was probably under the auspices of 
Congressman Nethercutt, who convened a meeting in January--
January of last year.
    Mrs. Napolitano. So about a year and a half ago?
    Mr. Hickok. Yes.
    Mrs. Napolitano. And any attempts been made to renegotiate 
or sit down at the table since?
    Mr. Hickok. Not since.
    Mrs. Napolitano. Not since. Well, I look forward to talking 
to the tribes and finding out if they have the same willingness 
to sit at the table.
    Mr. Hickok. Thank you.
    Mrs. Napolitano. Thank you. Thank you, Mr. Chair.
    Mr. Hayworth. [Presiding.] And we thank the Ranking Member 
as well as this panel of witnesses. Thank you very much for 
your time and your testimony.
    Mr. Hayworth. And with that, I would like to recognize and 
call forward the third and final panel of witnesses who join us 
today in this hearing on these two bills.
    The Subcommittee will welcome first Mr. Warren Seyler, 
Chairman of the Spokane Tribe of Indians; Governor Richard 
Narcia, who is Governor of the Gila River Indian Community; Ms. 
Vivian Juan-Saunders, who is the Chairwoman of the Tohono 
O'odham Nation; Mr. Joe Shirley is President of the Navajo 
Nation, and we understand that President Shirley, who was with 
us here yesterday, was unable to attend. Using the Chairman's 
prerogative, I understand that Legal Counsel for the Nation is 
here and the Subcommittee will make an exception to the rule 
and allow Legal Counsel for the Navajo Nation to offer 
testimony in the place of President Shirley Stanley Pollack, we 
understand will provide that testimony.
    Also here joining us today to testify on H.R. 885 is Ms. 
Kathy Kitcheyan, who is the Tribal Chairwoman of the San Carlos 
Apache Tribe. We also welcome Mr. Herb Guenther, the Director 
of the Arizona Department of Water Resources, and Mr. Estevan 
R. Lopez, Director of the New Mexico Interstate Stream 
Commission.
    We appreciate all the witnesses coming for this third panel 
this morning, and as we take care of all the logistics and make 
sure that literally all our witnesses have a place at the table 
and access to the microphones, again, we welcome you. Many of 
you have traveled great distances to be here today to discuss 
these two pieces of legislation.
    And so now, as I believe name plates and microphones are in 
place, let us first recognize Chairman Seyler of the Spokane 
Tribe of Indians. Welcome, Mr. Chairman, and we would 
appreciate your testimony.

             STATEMENT OF WARREN SEYLER, CHAIRMAN, 
                    SPOKANE TRIBE OF INDIANS

    Mr. Seyler. Thank you, Mr. Chairman and members of the 
Subcommittee on Water and Power, for the opportunity to testify 
on H.R. 1753. Accompanying me today is Howard Funke, our 
attorney, and Dr. Charles Pace, our economist. Also joining us 
is my Vice Chairman, Greg Abrahamson, and Tribal Council member 
Dave Wynecoop.
    I am here today on behalf of the Spokane Tribe to ask for 
your help as representatives of the United States of America. I 
ask that you act on behalf of the United States to finally 
treat the Spokane Tribe fairly and honorably for the injury to 
our tribe and reservation caused by the Grand Coulee Project. 
My testimony today summarizes the critical need for this 
important legislation. We are also providing briefing books for 
the record and a video, if you allow them on the record, 
please.
    Mr. Hayworth. Without objection, those will be submitted 
for the record.
    Mr. Seyler. The Spokane Tribe is an honorable tribe, a 
strong tribe, the tribe historically that has been a trusting 
tribe. We are good to our word and strong for this nation. 
Grand Coulee's waters flooded the lands of two sister Indian 
reservations that held great economic, cultural, and spiritual 
significance. Ours is one of those reservations.
    Let me briefly say why I say sister reservations. The two 
reservations lie directly across from each other on the 
Columbia and Spokane Rivers. We have brothers and sisters that 
live on both reservations. We have brothers and sisters that 
are enrolled in both reservations. One sister may be Spokane, 
the other brother may be Colville. We have families that are 
joined. But yet this issue divides us. It is unfair.
    Our life, culture, economy, and religion centered around 
the rivers. We were a river people. We were a fishing people. 
We depended heavily on the rivers and historic salmon runs that 
were brought to us. We are known by neighboring tribes as 
salmon eaters. The Spokane River, which was named after our 
people, was and is the center of our universe. We call it the 
``Path of Life.'' President Rutherford B. Hayes in 1881 
recognized this importance and significance of the rivers to 
the Spokane Tribe and expressly included the entire adjacent 
river beds of the Spokane and Columbia Rivers within our 
reservation. But the Spokane and Columbia Rivers now are 
beneath the backwaters of the Grand Coulee Dam.
    If I move forward, if I may, address the three issues that 
BPA listed were troublesome for them. First, they indicated 
that the method used in reaching settlement with the Colville 
Tribe. I don't think this was completely accurate. In speaking 
with the Colville Tribe and economists, and speaking with my 
good friend, Eddie Palmenteer, who was the Chairman of the 
Colville Tribe at that time, and I verified this just 2 or 3 
days ago at a funeral of our former Chairman, he had said there 
were formulas, but that is not what the agreement was reached 
on.
    He said they cut a money deal and cut it down the middle. 
Later, we feel that Bonneville went out, went back after this 
deal was cut, and then created a formula and made it work, so 
much so, that there was a litigation premium of 13 percent that 
was added. Why not 10 percent? Why not 15 percent? There was 13 
so their formula could then work.
    He also mentioned the ICCA Act of 1951. Understand that in 
the 1950s, our tribe was very remote. We were 100 miles away 
from the BIA office. All the communication was done in the form 
of letters. Yes, we didn't have a claim, but until 5 months 
before the 1951 deadline, we did not even have a formal 
government. Our constitution was still being worked on. We 
didn't have any method, really, to put our claims forward.
    Our attorneys were not even hired until a few months before 
the end of the 1951 deadline. It was held up back here in D.C. 
in the Department of Interior in the Solicitor's Office. Back 
then, they had to approve who could be our attorneys. They held 
on to that approval until it was almost too late. We did get a 
land claim, but back then, we did not know we could file a 
claim on Coulee Dam. The Colvilles did not know they could file 
on Coulee Dam. Their claim did not come until, I believe it was 
in the 1970s, and they amended their claim.
    And there were other issues that happened in 1967 when we 
did finally file our claim, issues that were held and were not 
given to the tribe. This, you can see in the report.
    Also, they spoke about the rate issues, the 45 percent rate 
increase. The Spokane Tribe did not cause this rate increase. 
We still receive nothing. All we do is give and give and give 
to this great nation. This is a great nation. We give our land. 
The government uses our land every year to create such a vast 
opportunity for this country to survive and to thrive. That dam 
in the 1940s helped win World War II. All we ask is to be paid 
to offer something for our contribution to helping do that.
    Mr. Hayworth. Mr. Seyler, I wanted to intervene right now 
because, first of all, I just want to thank you for your 
testimony. We need to--and if I failed to mentioned this at the 
outset, forgive me--we are trying to get the brief comments in 
within a 5-minute parameter. If there is one final point you 
would like to make here, that would be great. And again, I will 
remind all assembled that your entire written testimony has 
been submitted for the record and we will take that into 
account. So let me respectfully ask you if you have one 
statement in summary.
    Mr. Seyler. Ninety seconds?
    Mr. Hayworth. That would be fine, sir.
    Mr. Seyler. Back home, in my travels over these last 13 
years, many times they ask what the people back home really 
feel. They feel we want to resolve this issue. They look back 
at the words that were spoken, and Acting Solicitor Ashton 
Brenner stated, ``The government overlooked the prohibition 
against the guardian seizing the property of its own ward''--
the tribe is that ward--``and then profiting from that 
seizure.''
    One other statement from Chief Justice Blackman. ``Great 
nations, like great men, should honor their word.'' This is 
what we are asking today, is that for the 70 years of promises 
and honor that this country, that we live up to that today. 
Thank you.
    Mr. Hayworth. And we thank you, Mr. Seyler, for your 
statements.
    [The prepared statement of Mr. Seyler follows:]

     Statement of Warren Seyler, Chairman, Spokane Tribe of Indians

    Thank you Mr. Chairman and members of the Subcommittee on Water and 
Power for the opportunity to testify on H.R. 1753. Accompanying me are 
Howard Funke, our attorney, and Dr. Charles Pace, our economist, who 
are available for questions and may have a few comments.
    I am here today on behalf of the Spokane Tribe to ask for your help 
as representatives of the United States of America. I ask that you act 
on behalf of the United States to finally treat the Spokane Tribe 
fairly and honorably for the injury to our Tribe and Reservation caused 
by the Grand Coulee Project. My testimony today summarizes the critical 
need for this important legislation. We are also providing briefing 
books for the record which give greater detail on our issues.
    Grand Coulee's waters flooded the lands of two sister Indian 
reservations that held great economic, cultural and spiritual 
significance. Ours is one of those reservations.
    Our life, culture, economy and religion centered around the rivers. 
We were river people. We were fishing people. We depended heavily on 
the rivers and the historic salmon runs they brought to us. We were 
known by our neighboring tribes as the Salmon Eaters. The Spokane 
River--which was named after our people--was and is the center of our 
world. We called it the ``Path of Life.'' President Rutherford B. Hayes 
in 1881 recognized the importance and significance of the rivers by 
expressly including the entire adjacent riverbeds of the Spokane and 
Columbia Rivers within our Reservation. But the Spokane and Columbia 
Rivers are now beneath Grand Coulee's waters. Today our best lands and 
fishing sites lie at the bottom of Lake Roosevelt.
    The other Reservation flooded by Grand Coulee's waters is that of 
the Colville Confederated Tribes. The waters that rose behind Grand 
Coulee Dam brought similar fates to both our Reservations. Our burial 
sites--the places our ancestors were laid to rest--were lost to the 
rising waters. The river banks, which provided us plants for foods and 
medicines were forever flooded. The homes, gardens, farms and ranches 
our people had worked hard to build on our Reservation are now under 
water. The free-flowing Columbia River and our ``Path of Life'' are now 
slack water behind Grand Coulee. The Dam also destroyed our salmon 
runs, which from time immemorial had given us life and identity. While 
the Colville lost most of their runs, salmon still were able to reach 
the Colville Reservation up to the Grand Coulee Dam. But upstream, at 
our Reservation, the salmon were entirely lost.
    For decades, the Colville and Spokane Tribes shared similar 
histories and dialogue in connection with the Grand Coulee issue, and 
were subjected to the identical misconduct by the United States 
Government. When the project first began, it was to be a state project, 
governed by the Federal Power Act which required annual compensation to 
impacted Indian tribes. Later, after the Project was federalized and no 
longer fell under the Federal Power Act, Government officials continued 
to recognize that the Tribes should be compensated. When construction 
on Grand Coulee began, the Commissioner of Indian Affairs recommended, 
in writing, that both Tribes receive annual payments for the dam's 
operations. The Secretary of the Interior and other high-level federal 
officials knew the Tribes should receive compensation. But it never 
happened. Both Tribes were equally deceived.
    In 1941, our Tribes renewed their efforts, taking the extraordinary 
step of sending a joint delegation cross-country to meet in Washington, 
D.C., with the Commissioner of Indian Affairs on Grand Coulee. The 
meeting was held on December 10--three days after Pearl Harbor was 
bombed. The Commissioner and his staff explained that the war had 
become the nation's priority, and that Congress could not be expected 
during such times to address the Tribe's needs. But they committed to 
do what they could to help, and our leaders returned home trusting that 
things would be made right once the war was over--the same war we sent 
our young to fight.
    These were times when our people were almost completely dependent 
on the Bureau of Indian Affairs for protecting our Reservation and 
resources. Our great white father was BIA. We were allowed to do 
nothing without the BIA. We were not experienced in the ways of 
American law, politics and business. At that time, we were among the 
most isolated of tribes in the nation. We were beginning to farm and 
ranch, but our subsistence ways--depending on the Rivers' salmon--was 
most prominent. At that time, we also had no constitutionally formed 
government. And even though the Bureau of Indian Affairs' nearest 
agency was 100 miles away on the Colville Reservation, we relied on BIA 
officials for managing details like recording the minutes of Tribal 
meetings. So when the Commissioner of Indian Affairs told our people he 
would do all he could to help, it carried great weight. Being a 
trusting people, we took the government representatives' word.
    Soon after the War's end, in 1946, Congress enacted the Indian 
Claims Commission Act. The ICCA allowed Indian tribes to bring historic 
legal claims against the United States government. Several obstacles 
unique to our Tribe made the task of filing our ICCA claims unusually 
difficult. First, although the Act required the Commission and BIA to 
notify all tribes of claims that should be filed, we received no such 
notice. We learned of the ICCA from neighboring tribes only months 
before the 1951 filing deadline. Second, our leadership acted to retain 
a lawyer once they learned of the ICCA. But the Commissioner of Indian 
Affairs withheld his approval for several months, costing our Tribe 
much critical time. Also, our Constitutional government was first 
formed only 60 days before the 1951 deadline for filing. Eventually, 
the Spokanes filed a standard ICCA claim much like the claim filed by 
the Colville Tribes. No mention of Grand Coulee was made in either 
since the ICCA was understood to apply to historic claims rather than 
claims where wrongful conduct was ongoing.
    In 1972, the Secretary of the Interior established a Task Force to 
address the Spokane and Colville Tribes' Grand Coulee issues, and 
later, in 1976, the Senate Appropriations Committee renewed the hope of 
both Tribes by directing the Secretaries of the Interior and the Army 
to ``open discussions with the Tribes to determine what, if any, 
interest the Tribes have in such production of power and to explore 
ways in which the Tribes might benefit from any interest so 
determined.'' During the next several years, numerous meetings were 
held. Both the Colvilles and the Spokanes participated in earnest, 
fully believing that the Government would satisfy Congress' directive. 
When the Task Force's report came out, however, it was nothing more 
than a legal position: the United States has legal defenses and, 
therefore, there is no requirement to compensate the Tribes. After 
several years of work, the Report, which is included in our briefing 
materials, failed to consider the Tribal interests involved in the 
process. And it completely ignored Congress' mandate that benefits 
associated with those interests be explored. We had trusted that 
Congress would help by addressing our claim side by side with the 
Colvilles.
    As I said earlier, Grand Coulee's impacts on the Spokane and 
Colville Tribes was virtually identical, as were the Tribes' histories 
of dealing with the United States. While the Colvilles may have lost 
more land, the Spokane lost our salmon fisheries entirely. And both 
Tribes have survived decades of lost hope and broken promises.
    There is a simple historical fact that separates the Colville and 
Spokane Tribes. It is that fact that led ultimately to the Colville 
Tribe's settlement of its claims--a settlement under which the 
Colvilles received $53 million in back damages, and annual payments in 
perpetuity that since 1994 have been $15-20 million each year.
    We believe it is unprecedented for one tribe to receive 
compensation from the United States while a similar tribe receives 
nothing.
    In the mid-1960s, the Spokane Tribe--a trusting tribe that has 
always come to the aid of the U.S.--entered a cooperative relationship 
with the United States government, and in 1967 the Tribe settled its 
Indian Claims Commission case. The Colvilles did not. Instead, the 
Colvilles persisted with their legal battles through the 1960s, and 
beyond the days of the Task Force. The Colvilles hadn't raised Grand 
Coulee claims in their original ICCA case any better than had the 
Spokanes. But their decades-long resistance to settlement enabled them 
to benefit from a mid-1970s Indian Claims Commission case. In 1975, the 
Commission ruled for the first time ever that it had jurisdiction over 
cases where the wrongful conduct continued beyond the ICCA's 1951 
statutory deadline.
    Armed with that new decision, the Colvilles by 1976 had sought and 
obtained permission to amend their ICCA claim to include for the first 
time their Grand Coulee case. Our Tribe, having come to terms with the 
United States in the 1960s, had no case left to amend. In spite of 
that, both tribes continued to negotiate and meet with the United 
States.
    In 1978, the Indian Claims Commission ruled that the United States' 
conduct in building Grand Coulee Dam was unfair and dishonorable and, 
therefore, awarded the Colville Tribes over $3 million for fisheries 
losses. In 1992, the Federal Circuit Court of Appeals ruled that the 
Colvilles' claim for power values, based on the same standard, was not 
barred. With that leverage, the Colvilles secured a settlement which, 
in 1994 the Congress approved in Public Law Number 103-436.
    Nine years ago, in the context of the Colvilles' settlement, I came 
here and testified to Congress on my Tribe's behalf. I asked Congress 
to include our settlement with the Colvilles, or to waive the ICCA 
statute of limitations so we might be able to present our case. But 
rather than providing our requested relief, Congress again directed the 
United States to negotiate with us a fair settlement.
    Since then, I have participated in virtually all discussions held 
between our Tribe and three BPA administrators representing the United 
States. During the past nine years, we have been forced to confront 
countless tactics that ran directly counter to the Congress' direction 
and intent that our Grand Coulee claims be negotiated in good faith and 
on the merits. As Senator Patty Murray stated:
        ``The fair and honorable dealings standard established in the 
        Indian Claims Commission Act should clearly apply to the United 
        States' conduct and relationship with both the Colville and 
        Spokane Tribes.''
    For the first several years we met nothing but delay and the 
assertion of technical legal defenses. Members of Congress who had been 
made aware of these failings, admonished the United States, stating in 
clear terms that the negotiations must be on the merits of our claim 
without consideration of legal defenses, and that by definition, 
negotiations must involve flexibility. We were advised that an offer 
was being developed, but that it had to go through several levels of 
federal approval. We were concerned that there would be little room for 
negotiation. As we awaited the offer, we continuously sought and 
obtained assurances from BPA and others that once presented, there 
would be sufficient flexibility for negotiations. But when the offer 
finally came five years later, it was presented as an ultimatum--``Take 
it or leave it.''
    The offer fell far short of what we felt represented a fair 
settlement. Since 1992, we had sought a settlement that was 
proportionate to the Colvilles' based on lands used by the Project. So 
again we regrouped, and enlisted the assistance of Congressman 
Nethercutt to moderate a negotiation session with BPA. At the end of 
that session, both sides had made concessions, as occur during good 
faith negotiations. BPA committed to examining ways to make the 
agreement in principle work, and promised to get back to us in a couple 
of weeks. Then came more delay. After more than a year of waiting for 
BPA to follow through, we were stunned when BPA backed altogether away 
from the agreement in principle. Since then, we have tried numerous 
approaches on numerous occasions to make the agreement work--and each 
time BPA has rejected our efforts.
    After nine years of fruitless negotiations, nine years of broken 
promises and delays, I am back here today requesting that this 
injustice not go unanswered. That the United States Government 
recognize our contributions and sacrifices. To compensate one of the 
two Tribes devastated by Grand Coulee, and not the other has only 
compounded the injustice to our people and prolonged this conflict. We 
believe it would be unprecedented for Congress to only provide relief 
to one tribe--and not the other--when both are so similarly impacted.
    In closing, Mr. Chairman, and honorable members of the Committee, I 
ask you to listen with your hearts. We have no place to turn. We have 
no place to go. We ask for our day of justice. We have waited for this 
day for over sixty years.
                                 ______
                                 

                            October 20, 2003

Honorable Ken Calvert, Chairman
Subcommittee on Water and Power
U.S. House of Representatives
Committee on Resources
Washington, D.C., 20515

Dear Chairman Calvert:

    Thank you for the opportunity to appear before the House 
Subcommittee on Water and Power's October 2, 2003 legislative hearings 
on H.R. 1753. The hearing was very important to the Spokane Tribe of 
Indians in our longstanding and continuing efforts to secure a fair and 
honorable settlement for tribal lands which were confiscated by the 
United States for purposes of the Grand Coulee Project.
    In your letter of October 6, 2003, you indicated that the Majority 
Members of the Committee had five additional questions as follows:
    1.  Why have negotiations between Bonneville and the Tribe failed?
    2.  Do you believe there is middle ground on this issue?
    3.  Since Indian settlements are a national interest, are you 
opposed to having the U.S. Treasury fund all of the Spokane settlement?
    4.  The primary difference over the Colville and Spokane situation 
is the statute of limitations issue. Grand Coulee construction impacted 
your reservation before 1967, the year the Tribe settled on its 
original land claim. Why didn't the Tribe amend its original land claim 
to account for the Grand Coulee impacts?
    5.  Would this legislation set a precedent by which a back payment 
is given to a tribe that did not have a pending claim?
    Please find attached my response to the above questions. Once 
again, thank you for holding hearings on H.R. 1753.

                               Sincerely,

                        Warren Seyler, Chairman

                        Spokane Tribe of Indians

                              P.O. Box 100

                          Wellpinit, WA 99040

Attachment
                                 ______
                                 

  Responses of Warren Seyler, Chairman, Spokane Tribe of Indians, to 
 questions submitted for the record from Ken Calvert, Chairman, House 
Resources Subcommittee on Water and Power, regarding Spokane Settlement 
              Bill, H.R. 1753--Submitted October 21, 2003

Question No. 1: Why have negotiations between Bonneville and the Tribe 
        failed?
    Response: There are three main reasons why negotiations between 
Bonneville and the Tribe have failed to produce a fair and honorable 
settlement. First, the Administration and BPA, despite repeated 
congressional directives, have consistently delayed and stalled 
progress. By doing so, BPA has deferred across two successive rate 
cases, without interest, on paying any compensation to the Tribe.
    Second, during negotiations, BPA also insisted that any 
compensation package for the Spokane Tribe be based on a nonsensical 
formula that was never used as a basis for the Colville settlement and 
greatly disadvantages the Spokane Tribe.
    Third, while delaying negotiations and devaluing the losses 
suffered by the Spokane Tribe, BPA was simultaneously distributing 
enormous additional benefits to aluminum companies and the other 
entities in the Pacific Northwest, far in excess of the historic 
benefits which it has provided. This extreme increase in benefits was 
deliberately pursued in spite of the western energy crises and has led 
to unprecedented impacts on BPA's rates.
    In 1994, while considering the Colville settlement, Congress 
directed the Administration to reach a fair and honorable settlement 
with Spokane. However, despite repeated letters from Congressman George 
Nethercutt, Senator John McCain and others urging the Departments of 
Justice and Interior to enter into negotiations with the Spokane Tribe 
and reach a fair and honorable settlement, the Administration stalled 
on its obligation and no negotiations occurred for four years, from 
1994 through 1998.
    Finally, in August of 1998, BPA began ``discussions'' with the 
Spokane Tribe but, even then, indicated that it had no authority to 
negotiate. In those discussions, BPA presented to the Spokane Tribe a 
formula which it proposed be used to value the lands which the United 
Stated seized from the Spokane Tribe for the Grand Coulee Project, 
claiming that this formula was the basis for the Colville settlement.
    This formula was an improper and arbitrary application of an 
unrelated single FERC case, completely unlike Grand Coulee, and was 
totally unsuitable for valuing Spokane (or Colville) lands taken for 
the project and, more importantly, did not serve as a basis for the 
Colville Settlement. BPA, even though it lacked authority to negotiate, 
also demanded substantial additional concessions from the Spokane 
Tribe. For example, BPA insisted that any compensation paid the Spokane 
Tribe must not include payments for the fact that Grand Coulee 
exterminated the fish runs in the upper Columbia River and Spokane 
River which the Spokane people had depended upon since time immemorial.
    As late as 1999, BPA still lacked authority to negotiate with the 
Spokane Tribe. As a result, Congressman George Nethercutt and Senator 
Patty Murray introduced Spokane settlement legislation. Those proposed 
settlement bills were based on straight-forward ``proportional'' 
settlement whereby the Spokane would receive 39.4% of the payments 
which the United States made to Colville. This proportion was based on 
the ratio of lands taken from the Spokane to lands taken from the 
Colville Tribe.
    By March of 2000, BPA still had no authority to negotiate with the 
Spokane Tribe but made an ``unofficial'' proposal, again based on the 
``formula'' BPA claimed it used in the Colville settlement. This 
proposal, which provided annual payments of just 19.2% of annual 
payments to Colville, contained numerous, significant mathematical 
errors and faulty analysis. It applied a ``profitability method'' to a 
non-profit organization. It viewed the Grand Coulee Project as a sort 
of ``joint venture'' between the United States and project developer 
and the Spokane Tribe as landowner. And, most importantly, it weighted 
a handful of acres in the project which the Spokane Tribe did not own 
at 2200 times the value of lands which the Spokane Tribe did own.
    By May 2000, near the end of the 106th Congress, BPA had received 
authority to negotiate. The late release of authority to negotiate, the 
insistence on use of an unjust formula, the erroneous math and analysis 
provided by BPA to the Tribe delayed not only a fair negotiated 
settlement as directed by Congress but foreclosed meaningful 
consideration of the Spokane settlement bills by Congress.
    In June 2001, the Spokane Tribe sought to revive negotiations with 
BPA by offering, at BPA's request, a range of creative approaches to 
settlement. These included a mix of less revenue in exchange for a 
block of power, upgrading of distribution/transmission facilities, 
assigning the Bureau of Reclamation (which operates the Grand Coulee 
Project) partial payment responsibility. The Spokane Tribe also 
indicated its willingness to structure payments for back damages over 
time to minimize any impacts on BPA's ratepayers.
    In July of 2001, BPA flatly rejected the Spokane Tribe's proposal 
and, in response, withdrew its previous offer of a one-time back 
payment. In doing so, BPA cut the value of its prior best offer by 
approximately $17 million. Thus, by August 2001, negotiations were at 
an impasse.
    In September of 2001, the Spokane Tribe returned to Congress and 
requested settlement legislation be introduced. In response, 
Congressman George Nethercutt suggested that the Spokane Tribe make a 
final effort to negotiate and agreed to conduct and facilitate a 
negotiation session between the Tribe and BPA. Due to events which 
occurred in mid September, that session did not occur until January of 
2002.
    In January of 2002, Congressman Nethercutt facilitated a 
negotiations which arrived at a ``middle ground'' settlement scenario 
which provided compensation for back payments and annual payments of 
29.4%, i.e., halfway between BPA's 19.2% and the Spokane Tribe's 39.4%. 
In those sessions, Steve Wright, BPA administrator, stated the middle 
ground settlement scenario should work for BPA but that he needed 10 
days to 2 weeks to ``run the numbers'' and determine how best to 
structure the back payment over time.
    By the first week in April of 2002, nearly three months after the 
session facilitated by Congressman Nethercutt, the Spokane Tribe had 
still heard no response form BPA. Out of total frustration, the Spokane 
returned to Washington, D.C., to request settlement legislation from 
Congress.
    In May of 2002, four months after the January 2002 negotiating 
session and while in Washington, D.C., meeting with members of 
Congress, the Spokane Tribe finally received a reply from BPA regarding 
the ``middle ground'' settlement scenario. BPA's delayed response 
merely put the back pay back on the table. BPA did not budge from its 
long-standing insistence that annual payments to the Spokane Tribe not 
exceed 19.2% of payments to Colville. BPA's letter also warned the 
Tribe to promptly accept this offer or back pay would again be taken 
off the table.
    As a result, the leadership of the Spokane Tribe concluded that 
further negotiations with BPA were unlikely to yield any kind of fair 
or honorable settlement. Rather, BPA merely used the January 14, 2002 
facilitated negotiations to successfully stall reintroduction of 
settlement legislation and prevent timely congressional hearings.
    In May, 2002, Congressman Nethercutt and Senator Patty Murray, for 
the second time, reintroduced Spokane settlement bill based on a 39.4% 
proportional settlement with the Colville. In July of 2002, staff for 
the Senate Committee staff of the Indian Affairs, Energy and staff 
acting on behalf of members of the Washington delegation suggested the 
Spokane Tribe attempt further negotiations with BPA, this time 
facilitated by and through the staff of the committees and requested 
the Tribe resubmit an expanded version of the creative areas/options 
for settlement to the Committee to serve as a basis for further 
settlement discussions.
    At the time, BPA expressed renewed optimism and clarity stating 
that BPA staff would take a ``first cut'' at costing out the Tribe's 
proposal and indicating that they would respond to Committee staff by 
August 1, 2002. August came and went with no reply by BPA. In fact, BPA 
did not respond until six weeks later and even then, in an email, 
merely stated that the Spokane Tribe's proposal ``simply increases 
costs to BPA'' and ``we have many obligations and requests for spending 
on worthy efforts.''
    Thus, the Spokane Tribe renewed its request for congressional 
hearings in October 2002. However, congressional elections were hotly 
contested and no hearings were scheduled. Finally, in 2003, Congressman 
Nethercutt introduced a settlement bill in the House of Representatives 
and Senator Maria Cantwell introduced a settlement bill in the Senate. 
Hearings were held on October 2, 2003. At those hearings, BPA testified 
before the House Water and Power Subcommittee taking the position that 
the Tribe would be forced to accept its 19.2% offer if only Congress 
would stop encouraging the Tribe to expect more.
Question No. 2: Do you believe there is a middle ground on this issue?
    Response: In a meeting hosted by Congressman Nethercutt in January 
2002, the Spokane Tribe offered a ``middle ground'' proposal to BPA of 
29.3% of the Colville Settlement. The 29.3% is the midpoint between 
BPA's position of 19.2% and the Spokane Tribe's position of 39.4%. BPA 
ultimately ignored the Tribe's proposal.
    Essentially, the Spokane Tribe had always bargained for 39.4% of 
the compensation package received by Colville. This proportion was 
based upon the ratio of the respective lands taken from the two tribes. 
However, BPA, applying its profitability-Kerr Dam methodology, was 
unwilling to offer more than 19.2% of annual payments made to Colville. 
And BPA's last offer contained no ``back pay'' comparable to the $53 
million one-time payment to Colville.
    With Representative Nethercutt's assistance and guidance, the 
parties arrived on January 14, 2002 at a ``middle ground'' settlement 
scenario which (it was thought) could work for all parties. Following 
the January 14, 2002 meeting, the Tribe prepared a preliminary analysis 
of impacts of an annual payment--based on 29.3% of Colville--on BPA's 
Power Business Line's expenses and found they would be negligible. The 
increase in the average monthly electric bill of a typical household in 
the Pacific Northwest would be less that 12 cents, i.e., less than one-
half of one percent of the rate increases BPA put in effect as of 
October, 2001 for the FY 2002-2006 rate case.
    Near the end of the January 14, 2002 negotiations, Steve Wright, 
BPA Administrator and CEO, stated that the middle ground compromise, as 
outlined, should work for BPA but that he would need ``ten days to two 
weeks'' for BPA staff to ``run the numbers'' and determine how best to 
structure the back payment over time. The Tribe reiterated its 
willingness to partition the back payment into several separate 
payments in order to distribute the impact of the settlement over time, 
and its willingness to join with BPA in analyzing the impact on BPA 
ratepayers of various approaches for making the one-time payment. The 
BPA, however, virtually ignored the Tribe following the meeting.
    Seventy-six (76) days later the Spokane Tribe had still not heard 
back from the Administrator. Two weeks had drawn out to nearly three 
months with no response on BPA's part. During that time, 
representatives of BPA had repeatedly indicated that their response was 
imminent. On April 3, 2002, the Chairman of the Spokane Tribe, Alfred 
Peone, contacted Representative Nethercutt, thanking him for his 
efforts and respectfully requesting that the settlement legislation be 
reintroduced and hearings scheduled regarding the Spokane Tribe's 
claims against the United States for damages associated with the Grand 
Coulee Project.
    The Spokane Tribe's assessment was that further negotiations with 
BPA were unlikely to bear fruit and that reintroduction of settlement 
legislation and scheduling of congressional hearings was the best 
approach to resolving the Spokane Tribe's claims for damages and 
providing a fair settlement with the Spokane Tribe.
          ``At this point, we have lost faith in the value of further 
        negotiations with Bonneville.... BPA throughout its dealings 
        with the Spokane Tribe on this matter has...grossly 
        undervalue[d] the contribution of Spokane lands seized by the 
        United States for project purposes.... [T]his devaluation has 
        taken many forms.... BPA has insisted on applying a profit-
        based methodology to a federal power marketing administration 
        that earns no profits. BPA has insisted on using the lowest 
        possible estimate of actual Spokane lands taken. It has 
        insisted on imposing an arbitrary, capricious and wholly 
        unwarranted litigation penalty in perpetuity on the Tribe to 
        further reduce payments. Representatives of BPA have 
        steadfastly refused to consider making a one-time back payment 
        to Spokane comparable to the $53 million which the Colville 
        received in 1995, thereby undermining any semblance of a 
        ``proportional'' settlement.

                                 * * *

          They requested that we develop but then refused to even 
        discuss a creative approach to settlement, offered and then 
        rescinded a proposal to provide the Tribe with a few years 
        `catch up' payment, and since January 14th failed to keep their 
        promise as to when we could expect a response on strategies to 
        structure a scenario for making payments over time.''
Letter from Chairman Peone to Rep. Nethercutt, dated April 3, 2002.
    In response to being totally ignored the Tribe again returned to 
Congress to request a legislated settlement. While meeting with members 
of Congress the Tribe received a belated written response from BPA in a 
letter from Steve Wright to Chairman Peone, dated May 15 2002--some 
seventeen weeks following the negotiation session. The Tribe left the 
January 14, 2002 session with the feeling an agreement had been reached 
subject to BPA ``running the numbers.'' BPA had a different 
perspective. While apologizing for his ``lengthy delay'' in responding 
to the Tribe, Wright stated:
        ``I want to reiterate that while I expressed appreciation for 
        your willingness to move from your earlier position, I did not 
        in any way signify an agreement with your position. Our 
        conversation was wide ranging and left many issues to be 
        considered. Given that the current Administration has not been 
        briefed on the issues we discussed, let alone any proposed 
        settlement, I could in no way commit to any specific outcome.''
Letter from Steve Wright to Alfred Peone, May 15, 2002.
    Stating his continued support ``for an agreement based on the 
Colville Settlement'' the Administrator renewed the offer to the Tribe 
``of 19.2% of the total compensation paid the Colvilles.'' In effect 
this offer merely placed back into consideration the back pay of 
roughly $17 million that was taken out of the offer on July 31, 2001 by 
BPA. The letter warned the Tribe that ``Lacking prompt resolution, I 
will again withdraw the provision for payment for Fiscal Years 1995 
through 2002.'' The only conclusion the Tribe could reach was that BPA 
used the January 14 negotiations to stall reintroduction of settlement 
legislation and hearings in Congress. BPA was ultimately successful.
Question No. 3: Since Indian settlements are a national interest, are 
        you opposed to having the U.S. Treasury fund all of the Spokane 
        settlement?
    Response: No, so long as the payments are forthcoming, mandatory 
and certain. Indeed, the nation has realized enormous benefit from the 
use of Spokane lands to generate hydropower at Grand Coulee and so has 
the Pacific Northwest Region. While the Tribe does not care where the 
revenues come from to fund a fair and honorable settlement, the Tribe 
believes it would be simple to follow the Colville payment structure 
which in effect splits the costs of settlement between Bonneville and 
the U.S. Treasury.
    The United States General Accounting Office (GAO) suggests 
splitting the costs between Treasury and Bonneville may be the 
preferred approach. The GAO provided testimony on October 2, 2003, to 
the Committee on Indian Affairs, U.S. Senate on the Spokane Settlement 
Bill, S. 1438, for the express purpose of addressing:
    1.  impact of a settlement on Bonneville if the costs were split 
between Bonneville and the Treasury; and
    2.  possible allocation of these costs between Bonneville and the 
Treasury.
GAO, Testimony Before the Committee on Indian Affairs, U.S. Senate 
        (October 2, 2003). (Attachment 1). Speaking to the issue of the 
        allocation of payment responsibility among both the Treasury 
        and Bonneville, GAO states:
          A reasonable case can be made for having Bonneville and the 
        U.S. Treasury allocate any costs for the Spokane tribe's claims 
        along the lines agreed to for the Colville tribes. Any 
        settlement would attempt to re-institute a commitment the 
        federal government made to the tribes in the 1930s. Under the 
        Federal Water Power Act of 1920, licenses for the development 
        of privately owned hydropower projects should include a 
        ``reasonable annual charge'' for the use of Indian lands. 
        Originally, the Grand Coulee site was licensed, and the Spokane 
        tribe expected to receive annual payments for its lands used 
        for the project. However, the license was cancelled when the 
        federal government took over the project (federalized the 
        project). Since the federal government is not subject to the 
        Federal Water Power Act, it was not required to make annual 
        payments to the tribes. Nevertheless, the federal government 
        made a commitment in the 1930s to make annual payments to the 
        Colville and Spokane tribes as if the project had remained a 
        nonfederal project. However, the federal government did not 
        follow through on this commitment after the project was 
        completed and started generating revenues from electricity 
        sales in the 1940s. In pursuing this matter, the tribes 
        weathered various administrations and changes in the federal 
        government's Indian policy. In the 1950s and 1960s, the federal 
        government actively sought to terminate its relationship with a 
        number of tribes, including the Spokane tribe.
          In the early 1970s, when it became clear that the federal 
        government was not going to make these payments, the Colville 
        tribes were able to amend their claim with the Indian Claims 
        Commission to pursue this matter. After agreeing to the overall 
        legitimacy of the Colville tribes' claims, the Congress 
        ultimately approved a settlement that primarily required 
        Bonneville to provide annual payments for water power values. 
        This settlement was a compromise to split the costs between 
        Bonneville and the U.S. Treasury. Bonneville is primarily 
        paying the recurring annual payments, and the U.S. Treasury's 
        Judgment Fund provided the one-time lump sum payment in 
        settlement of the past annual payments--$53 million. The 
        Spokane tribe, however, had already settled its claim years 
        earlier and therefore could not file an amended claim with the 
        commission. Nevertheless, since Bonneville collects the annual 
        revenues for the electricity generated by the dam, it could be 
        argued that Bonneville should make annual payments to the 
        Spokane tribe out of those revenues, as it does for the 
        Colville tribes; the U.S. Treasury would then pay a lump sum to 
        settle any claims for past years. The current House settlement 
        proposal, H.R. 1753, and previous House and Senate settlement 
        proposals introduced in the 106th and 107th Congresses directed 
        the settlement costs to be split between Bonneville and the 
        U.S. Treasury.
          It could also be argued that the U.S. Treasury should pay the 
        Spokane tribe's claim, as it does for most claim settlements 
        against the federal government. S. 1438 provides for the 
        settlement of the tribe's claim from the U.S. Treasury. 
        However, we do not believe a compelling case can be made to 
        have the nation's taxpayers fully absorb an additional cost of 
        doing business associated with Bonneville's production of power 
        in one region of the country.
In summary, the Tribe is not opposed to the U.S. Treasury funding all 
        of the Spokane payments. However, the Tribe believes it would 
        be simple and equitable to split the costs between the Treasury 
        and BPA along the lines of the Colville settlement.
    [NOTE: Attachment 1--``Spokane Tribe's Additional Compensation 
Claim for the Grand Coulee Dam''--a statement submitted for the record 
by Robert A. Robinson, Managing Director, Natural Resources and 
Environment, U.S. General Accounting Office, can be found at the end of 
this response to questions.]
Question No. 4: The primary difference over the Colville and the 
        Spokane situations is the statute of limitations issue. Grand 
        Coulee construction impacted your reservation before 1967, the 
        year the Tribe settled on its original land claim. Why didn't 
        the Tribe amend its original land claim to account for the 
        Grand Coulee impacts?
    Response: The Spokane Tribe of Indians did not amend its original 
petition to include Grand Coulee claims before the 1967 settlement for 
several reasons, including the failure of its trustee--the BIA--to 
advise the Tribe of its claims as required by statute, the continuous 
representation by its trustee that the Tribe's claims would be fairly 
and honorably addressed, and a 1975 development in ICCA case law that 
for the first time recognized the legal viability of ongoing claims 
that had not fully accrued before the ICCA statutory deadline.
    In 1946, Congress enacted the Indian Claims Commission Act. Act of 
August 13, 1946 (60 Stat. 1049). Pursuant to that Act, there was a five 
year statute of limitations to file claims before the Commission which 
expired August 13, 1951. The ICC Act imposed a duty on the Bureau of 
Indian Affairs to apprize the various tribes of the provisions of the 
Act and the need to file claims before the Commission. 25 U.S.C. 
Sec. 70l (repealed). Unfortunately, the BIA agency responsible for the 
Spokane Tribe was located 100 miles away on the Colville Indian 
Reservation. According to a 1981 memorandum to the Chairman of the 
Senate Appropriations Committee:
          ``There is no record of the Claims Commission or the Indian 
        Bureau notifying or dealing with the Spokane Tribe in any way 
        regarding its right to file claims before the Indian Claims 
        Commission. During the Calvin Coolidge administration a bill 
        had passed through Congress permitting it and the neighboring 
        Kalispel Tribe to file claims for their ceded aboriginal lands, 
        but that bill was vetoed by the president. That potential claim 
        for the cession of its land was the only Claim that the Tribe 
        had knowledge that it had.
          At about the time of the approval of its tribal government in 
        June 1951 the tribal leaders heard from their neighboring 
        Kalispels and Coeur d'Alenes of their having filed claims for 
        the cession of their aboriginal lands. They hastened back to 
        Washington, D.C., and belatedly employed the same claims 
        attorneys these tribes had. These just-hired attorneys had no 
        time to investigate other claims and filed only one claim, that 
        for the cession of their approximately 3.5 million acres of 
        aboriginal land.''
    See Memorandum of January 12, 1981 with Final Report, Colville/
Spokane Task Force (September 1980). (Attachment 5 to Spokane Tribe of 
Indians' Written Materials submitted October 2, 2003). While the BIA 
was well aware of the potential claims of the Spokane Tribe to a 
portion of the hydropower revenues generated by Grand Coulee, there is 
no evidence that the BIA ever advised the Tribe of such claims. Thus, 
the Tribe had no way of knowing that its Grand Coulee claims should, or 
could, have been brought under the ICCA.
    Although the Indian Claims Commission statute of limitations 
expired in August 1951, neither the Colville Confederated Tribes nor 
the Spokane Tribe knew then or for many years thereafter were aware 
that there would be a need to even file claims related to the use of 
their tribal land and water resources for the construction and 
operation of the Grand Coulee Dam for power production and reclamation. 
Instead, they were led by their federal trustee to believe that the 
United States would address their claims. Beginning in the 1930s and 
through the 1970s, the historical and legal record is replete with high 
level agency correspondence, Solicitor's Opinions, inter-agency 
proposals/memoranda, Congressional findings and directives and on-going 
negotiations with the affected Tribes to come to agreements upon the 
share of revenue generated by Grand Coulee which should go to the 
Tribes for the use of their respective resources.
    The Tribes had every reason to believe that its trustee, the United 
States, was, although belatedly, going to act in good faith to provide 
fair and honorable compensation to the Tribes for the United States' 
proportionate use of their Tribal resources for revenue generated by 
the Grand Coulee Dam. Thus, while the Spokane Tribe in 1967 settled the 
ICCA claims, the expectation of fair treatment for Grand Coulee's 
impacts continued. Ironically, the Spokane Tribe's willingness to 
resolve its differences with the United States would later be used as 
justification for the United States' refusal to deal fairly and 
honorably with the Tribe.
    In addition to these points, no case law under the ICCA supported 
claims that had not fully accrued before 1951. Claims for wrongful 
conduct that began before 1951 and continued beyond that date were not 
recognized as legally viable until nearly a decade after the Spokane 
Tribe's settlement. The Colvilles, who had not settled their ICCA 
claim, continued their litigation against the United States. In 1975, 
the Indian Claims Commission ruled for the first time ever on a 
jurisdictional question, left open since 1956, that controlled the 
Colvilles' Grand Coulee claim. The Commission held that it had 
jurisdiction over ongoing claims as long as they were part of a 
continuing wrong which began before the ICCA's enactment and continued 
thereafter. Navajo Tribe v. United States, 36 Ind. Cl. Comm. 433, 434-
35 (1975). With this major legal question answered, the Colvilles 
sought, and in 1976 obtained, permission from the Commission to amend 
their complaint to include for the first time their Grand Coulee 
claims. With new life breathed into their claims, the Colvilles pursued 
litigation to the Federal Circuit Court of Appeals, which held that the 
ICCA's ``fair and honorable dealings'' standard may serve to defeat the 
United States' ``navigational servitude'' defense. Colville 
Confederated Tribes v. United States, 964 F.2d 1102 (Fed. Cir. 1992). 
In light of this ruling, the United States in earnest renewed 
negotiations with the Colvilles to resolve that Tribe's Grand Coulee-
related claims. Unfortunately because the Spokane Tribe in 1967 had 
acted in cooperation with the United States to settle its ICCA case, it 
lacked the legal leverage to force meaningful negotiations.
    Numerous historical occurrences factored into the different legal 
postures held under the ICCA by the Colville and Spokane Tribes. Key 
among them was the Spokane Tribe's inability to amend its original 
petition to include Grand Coulee-related claims. The Spokane Tribe was 
not advised by its federal trustee, as required by statute, of its 
potential ICCA claims related to Grand Coulee. The Tribe was misled by 
continuing representations by its federal trustee that the United 
States would fairly and honorably address its Grand Coulee claims. And, 
finally, no ICCA case recognized the Commission's jurisdiction over 
such ongoing claims until 1975, eight years after the Spokane Tribe's 
claims were settled.
Question No. 5: Would this legislation set a precedent by which a back 
        payment is given to a tribe that did not have a pending claim?
    Response: A complete answer to this question requires a four-part 
response.
    First: The Spokane Indian Tribe's claim is so factually and legally 
unique that any precedential value of the legislation would be 
extremely limited.
    Based on the Tribe's survey, there were only two other tribal 
governments who may have moral claims against the United States for 
lands inundated by federal dams in the Columbia Basin, but for the 
ICCA's statute of limitations. The Dworshak Dam on the North Fork of 
the Clearwater River barely touches upon the northern boundary of the 
Nez Perce Reservation, inundating a tiny portion of reservation lands. 
The American Falls Dam on the Snake River is located below the Fort 
Hall Indian Reservation. The reservoir behind the dam inundates a small 
portion of the Fort Hall Reservation, where the Snake River forms the 
northwestern boundary of the Fort Hall Reservation.
    A third--the only other Indian Reservation in the United States 
that may have suffered similar devastation--is the Fort Berthold 
Reservation, which was flooded by a federal dam on the Missouri River. 
Unlike the Spokane, the Fort Berthold Tribes' culture was not centered 
around fishing. Moreover, Congress has already provided additional 
compensation to the Fort Berthold Tribes, over and above the 
substantial compensation these Tribes received when their lands were 
inundated, because of the especially egregious impacts. See Public Law 
102-575.
    None of these Reservations are impacted to the degree the Grand 
Coulee devastated the Spokane Reservation. The western (Columbia River) 
and southern (Spokane River) borders of the Spokane Reservation are 
flooded by the Grand Coulee Project. The Grand Coulee Project 
devastated the Spokane Reservation, and the Tribe's culture, far worse 
than any other Indian Reservation was impacted by federal hydro-
electric development in the United States, except perhaps the Colville 
Reservation.
    These comparisons go to the heart of the uniqueness of the Spokane 
claims. No other Northwest Indian reservations were devastated by a 
federal hydro-electric project as severely as the Colville and the 
Spokane. It is unique in that one inundated Tribe was compensated and 
the other is not, yet the impacts are identical. It is unique in that 
express, written commitments were made by the Secretary of the Interior 
to compensate the Tribes for Grand Coulee impacts, but these promises 
were not kept. The sheer size of the Grand Coulee Project (the largest 
electricity producer in the United States and the largest concrete dam 
in the world), combined with the absolute economic, social, cultural, 
and religious reliance of the Spokane Tribe on fishing and the Spokane 
and Columbia Rivers, makes its claims unique. The precedential value 
is, therefore, virtually non-existent.
    Second: The Spokane Tribe's claim for the loss of its salmon runs 
may have created a precedent, and for that reason the Tribe agreed not 
to include it in this legislation.
    Early in the negotiations that followed enactment of the Colville 
Tribe's settlement bill, the Spokane Tribe explained to the various 
involved federal agencies that it intended to pursue damages for the 
loss of its historic salmon runs. The Spokane Tribe, once totally 
dependent on the salmon, had lost these runs entirely to Grand Coulee. 
The Colville Tribes, which did not entirely lose access to the runs, 
were compensated for their losses through the ICCA.
    When the first drafts of the Spokane Tribe's settlement bill were 
being discussed with potential Congressional sponsors, the Tribe was 
asked to remove provisions for compensation related to fish losses 
because they might establish a precedent. The remainder would be left 
in place because it was not viewed as precedent-setting. The Tribe 
agreed to the request.
    Third: The legislation will not create a new precedent for similar 
claims, since there already exists ample legislative precedent for 
Congressional resolution of tribal claims against the United States 
notwithstanding technical defenses the United States could raise.
    P.L. 103-436. The 1994 Colville Tribes Settlement Act is the most 
important precedent. The Colville and the Spokane are neighboring 
tribes situated across the Columbia River from one another. In 1994, 
Congress provided the Colville Tribes $53 million back damages and an 
initial annual payment of $15,250,000. Subsequent annual payments will 
be made to Colville as long as the Grand Coulee Dam generates 
hydroelectric power. The Spokane Tribe, suffering virtually identical 
in nature impacts, have received no such compensation from Congress.
    P.L. 107-331. In 2002, the 107th Congress enacted the Yankton Sioux 
Tribe and Santee Sioux Tribe Equitable Compensation Act which provided 
a $28 million trust fund as compensation to both Tribes for the taking 
of Reservation lands for the construction of the Fort Randall and 
Gavins Point Dams on the Missouri River system under the Pick-Sloan 
Project.
    P.L. 106-511. In 2000, Congress enacted the Cheyenne River Sioux 
Equitable Compensation Act which provided a $290 million trust fund as 
additional compensation to the Tribe for the taking of tribal lands for 
the Oahe Dam as part of the Pick-Sloan Project on the Missouri River.
    P.L. 105-132. In 1997, in the first session of the 105th Congress, 
legislation was enacted to provide $35 million of additional 
compensation to the Lower Brule Sioux Tribe of South Dakota for the 
takings of its lands for the Pick-Sloan Project.
    P.L. 104-223. In 1996, the 104th Congress enacted legislation to 
provide compensation of $27.5 million to the Crow Creek Sioux Tribe in 
South Dakota for infrastructure that was inundated by flood waters from 
two dams on the Missouri River. The ``taking'' legislation for the 
Pick-Sloan Project authorized under a 1944 Act of Congress provided for 
construction of alternative structures which were either not 
constructed or were constructed in a shoddy way. The method of 
compensation was premised on computation of revenues from the Western 
Area Power Administration (WAPA)--the same process used to fund the 
Three Affiliated Tribes and Standing Rock Sioux compensation bill 
(below).
    P.L. 102-575. In 1992, Congress enacted the ``Three Affiliated 
Tribes and Standing Rock Sioux Tribe Equitable Compensation Program 
Act,'' which provided compensation to both tribes for the taking of 
reservation lands for the construction of Garrison Dam and Reservoir 
and the Oahe Dam and Reservoir. Like Grand Coulee Project, these 
Missouri River dams were built without consultation and equitable 
compensation to the two impacted tribes, yet enormous benefits accrued 
to the United States and its designated beneficiaries.
    The $12 million in compensation each tribe had received for the 
taking of its lands at the time was found to be totally inadequate in 
light of the devastating and inordinate share of the impact borne by 
these two tribes. Congress appropriated an additional $149.2 million 
for the Three Affiliated Tribes and $90.6 million to the Standing Rock 
Sioux Tribe, which provides an annual revenue stream for both tribes 
based on the interest earned. (See Title 35 of Public Law 102-575 and 
Senate Report No. 102-267.)
    P.L. 96-338. Restored lands to the Tule River Indian Tribe despite 
fact Tribe did not bring a claim for these lands under the ICCA.
    P.L. 96-401. Authorizing the Secretary of the Interior to cancel 
and renegotiate coal leases involving Northern Cheyenne lands in light 
of an apparent violation of the Federal Government's fiduciary duty to 
the tribe and because the present ``impasse can only lead to expensive 
and lengthy litigation.'' House Report No. 96-1370, at 3.
    P.L. 95-280. The Zuni Act directed the Secretary of the Interior to 
purchase and hold certain lands in trust for the Zuni Indian Tribe of 
New Mexico. Not withstanding statutes of limitations, the Act also 
conferred jurisdiction upon the Court of Claims to hear and determine 
the Zuni's aboriginal lands claim. Congress recognized that 
``[u]nfortunately, the Zuni Indian tribal leadership failed to 
comprehend the absolute necessity of filing a claim during the 
statutory five-year period ending in 1951.'' Congress took note of the 
fact that the Zuni lacked sufficient legal representation and that the 
federal government had failed to meet its obligation to provide notice 
and explanation to the Zuni of their right to file a claim against the 
United States.
    Each of these enactments represent occasions when Congress provided 
compensatory or other direct relief to Indian tribes for past wrongs 
despite the absence of pending claims. As a consequence, the 
legislation will not stand as significant additional precedent.
    Fourth: Pre-existing precedent also can be found, to a degree, in 
the various Congressional Bills of Reference or jurisdictional 
statutes, which allow Indian tribes to proceed with legal claims 
despite the running of statutes of limitations.
    P.L. 104-198. Conferred jurisdiction on the United Court of Federal 
Claims with respect to land claims of the Pueblo of Isleta.
    P.L. 95-280. The Zuni Act directed the Secretary of the Interior to 
purchase and hold certain lands in trust for the Zuni Indian Tribe of 
New Mexico. Notwithstanding statutes of limitations, the Act also 
conferred jurisdiction upon the Court of Claims to hear and determine 
the Zuni's aboriginal lands claim. Congress recognized that 
``[u]nfortunately, the Zuni Indian tribal leadership failed to 
comprehend the absolute necessity of filing a claim during the 
statutory five-year period ending in 1951.'' Congress took note of the 
fact that the Zuni lacked sufficient legal representation and that the 
federal government had failed to meet its obligation to provide notice 
and explanation to the Zuni of their right to file a claim against the 
United States.
    P.L. 95-247. Notwithstanding certain statutes of limitations, 
Congress conferred jurisdiction on the Indian Claims Commission to 
consider the merits of the Wichita Indian Tribe's claim against the 
United States for the taking of lands.
    P.L. 95-243. This Act authorized the U.S. Court of Claims to 
review, without regard to the technical defenses of res judicata or 
collateral estoppel, the Sioux Tribe's claims for compensation for the 
taking of the Black Hills. Thus Congress overrode the Court of Claims 
dismissal of the Sioux's claim, which had been dismissed on the grounds 
of res judicata.
    P.L. 96-251. Waived the statute of limitations of the ICCA to 
permit the Cow Creek Band of Umpqua Indians to file a claim against the 
United States for treaty violations. Congress stated that its enactment 
of this legislation ``will assure the Cow Creek Ban their right to due 
process and a fair day in court.'' Senate Report No. 96-397 at 2.
    P.L. 96-404. Allowed a land claim suit by the Three Affiliated 
Tribes to proceed in the U.S. Court of Claims notwithstanding statutes 
of limitations, lapse in time, res judicata, collateral estoppel, or 
any other provisions of law.
    P.L. 96-405. Authorized the U.S. Court of Claims to hear claims by 
the Blackfeet and Gros Ventre Tribes for land takings notwithstanding 
Court of Claims earlier dismissal of these tribes' suit on the grounds 
of res judicata.
    P.L. 96-434. Same relief as in P.L. 96-405 afforded to the 
Assiniboine Tribe.
    Thus, this legislation is not precedentially unique since Congress 
often has provided mechanisms that enable Indian tribes to seek 
compensation for past wrongs. 1
---------------------------------------------------------------------------
    \1\ See also, footnote 12, GAO, Testimony Before the Committee on 
Indian Affairs, U.S. Senate (October 2, 2003) (listing various 
additional public laws similar to those above).
---------------------------------------------------------------------------
    The enactment of legislation to allow the Spokane Tribe to litigate 
its claims, like those listed above, is a potentially available 
alternative that was considered and rejected by the Tribe and by one of 
the bill's primary sponsors. Such actions almost unanimously result in 
the expenditure by both sides of vast sums on lawyers and expert 
witnesses, take years to resolve, are exceedingly contentious, and 
rarely are resolved in a manner satisfactory to all parties. As 
experienced lawyers often say, a bad settlement is always better than a 
good judgment.
                                 *_____
                                 
                              Attachment 1

    Testimony before the Committee on Indian Affairs, U.S. Senate, 
  Statement submitted for the record by Robert A. Robinson, Managing 
 Director, Natural Resources and Environment, U.S. General Accounting 
                                 Office

    Mr. Chairman and Members of the Committee:
    We are pleased to have the opportunity to comment on the Spokane 
tribe's additional compensation claim for the Grand Coulee Dam and the 
proposed legislative settlement, S. 1438. As you know, the Grand Coulee 
Dam was constructed on the Columbia River in northeastern Washington 
State from 1933 to 1942. When finished, the 550-foot high dam was the 
largest concrete dam in the world. It is still the largest 
hydroelectric facility in the United States. The Franklin D. Roosevelt 
Reservoir, which was created behind the dam, extends over 130 miles up 
the Columbia River and about 30 miles east along the Spokane River. The 
reservoir covers land on the Colville Reservation along the Columbia 
River and land on the adjacent Spokane Reservation along both the 
Columbia and Spokane rivers. Under a 1940 act, the federal government 
paid $63,000 and $4,700 to the Colville and Spokane tribes, 
respectively, for the land used for the dam and reservoir. 1
---------------------------------------------------------------------------
    \1\ Pub. L. No. 76-690, 54 Stat. 703 (1940), an act for the 
acquisition of Indian lands for the Grand Coulee Dam and Reservoir, and 
for other purposes, granted the United States title to Indian lands the 
Secretary of the Interior designated as necessary for the Grand Coulee 
Dam project and authorized the Secretary to determine the appropriate 
amount to be paid to the tribes for lands so designated.
---------------------------------------------------------------------------
    Subsequently, the Colville tribes pursued additional claims for 
their lost fisheries and for ``water power values'' (i.e., a share of 
the hydropower revenues generated by the dam from the use of their 
lands) before the Indian Claims Commission. The Colville tribes' 
fisheries claim was settled in 1978 for about $3.3 million. Under a 
1994 Act--the Confederated tribes of the Colville Reservation Grand 
Coulee Dam Settlement Act (P.L. 103-436, Nov. 2, 1994)--the Colville 
tribes were awarded a lump sum payment of $53 million for lost 
hydropower revenues and, beginning in 1996, annual payments that have 
ranged between $14 million and $21 million for their water power values 
claim. 2 The lump sum payment was made from the U.S. 
Treasury, and the cost of the annual payments is shared between the 
Bonneville Power Administration (Bonneville), which markets the power 
generated at the dam, and Treasury.
---------------------------------------------------------------------------
    \2\ Pub. L. No. 103-436, 108 Stat. 4577 (1994).
---------------------------------------------------------------------------
    The Spokane tribe is currently pursuing similar claims. S. 1438, 
introduced in July 2003, is a proposed legislative settlement for the 
Spokane tribe's claims. While settlement proposals introduced in the 
106th and 107th Congresses directed the settlement costs to be split 
between Bonneville and the U.S. Treasury, S. 1438 provides that the 
settlement be paid entirely out of the U.S. Treasury. 3 In 
this context, you asked us to address the (1) impact of a settlement on 
Bonneville if the costs were split between Bonneville and the U.S. 
Treasury; and (2) possible allocation of settlement costs between 
Bonneville and the U.S. Treasury. To meet these objectives, we relied 
on information developed for a preliminary GAO report to the 
Subcommittee on Energy and Water Development, House Committee on 
Appropriations; 4 interviewed officials at Bonneville and 
representatives of the Spokane tribe; and reviewed numerous documents 
on the Colville and Spokane tribes' claims for additional compensation. 
Our work for the Appropriations Subcommittee on Bonneville's financial 
condition is continuing. We plan to issue our final report in June 
2004. Also, as you know, we are continuing our review of Bonneville's 
obligations for tribal fish and wildlife programs for this Committee. 
See appendix I for a more detailed description of how we estimated the 
impact of a settlement on Bonneville. We performed our work in 
September 2003, according to generally accepted government auditing 
standards. We provided a draft of this statement to Bonneville for 
comment but did not receive a response in time to include in this 
statement.
---------------------------------------------------------------------------
    \3\ The legislative settlement proposals introduced in the 106th 
Congress were S. 1525 and H.R. 2664. In the 107th Congress, the 
proposals were S. 2567 and H.R. 4859. The proposals pending in the 
108th Congress are S. 1438 and H.R. 1753. Under S. 1438 the settlement 
costs would all be paid out of the U.S. Treasury, while under H.R. 
1753, the settlement costs would be split between Bonneville and the 
Treasury.
    \4\ U.S. General Accounting Office, Bonneville Power 
Administration: Long-Term Fiscal Challenges, GAO-03-918R (Washington, 
D.C.: July 1, 2003).
---------------------------------------------------------------------------
    In summary, we found the following:
      A settlement with the Spokane tribe along the lines 
provided to the Colville tribes would likely necessitate a small 
increase in Bonneville's rates for power. While the rate increase would 
amount to less than 20 cents per month per household, it comes at a 
time when Bonneville's customers have already absorbed rate increases, 
including those announced on October 1, 2003, of over 40 percent and 
when the region's economy is experiencing difficulties. However, the 
bulk of Bonneville's obligations in any settlement similar to the 
Colville settlement will occur in the future, when the conditions 
causing Bonneville's current financial difficulties will probably have 
abated. Therefore, Bonneville's current financial difficulties should 
not unduly influence current discussions about how to compensate the 
Spokane tribe.
      A reasonable case can be made to settle the Spokane 
tribe's case along the lines of the Colville settlement--a one-time 
payment from the U.S. Treasury for past lost payments for water power 
values and annual payments primarily from Bonneville. Bonneville 
continues to earn revenues from the Spokane Reservation lands used to 
generate hydropower. However, unlike the Colville tribes, the Spokane 
tribe does not benefit from these revenues. The Spokane tribe does not 
benefit because it missed its filing opportunity before the Indian 
Claims Commission. At that time it was pursuing other avenues to win 
payments for the value of its land for hydropower. These efforts would 
ultimately fail. Without congressional action, it seems unlikely that a 
settlement for the Spokane tribe will occur.

Background
    The Colville and Spokane Indian reservations were established in 
1872 and 1877, respectively, on land that was later included in the 
State of Washington. The Colville Reservation, of approximately 1.4 
million acres, was created on July 2, 1872, through an executive order 
issued by President Grant. The Spokane Reservation, of approximately 
155,000 acres, was created by an agreement between agents of the 
federal government and certain Spokane chiefs on August 18, 1877. 
President Hayes' executive order of January 18, 1881, confirmed the 
1877 agreement. In 2001, the Colville and Spokane tribes had enrolled 
populations of 8,842 and 2,305, respectively.
    The Indian Claim Commission was created on August 13, 1946, to 
adjudicate Indian claims, including ``claims based upon fair and 
honorable dealings that are not recognized by any existing rule of law 
or equity.'' 5 Under section 12 of the Act that created the 
Commission, all claims had to be filed within 5 years. Ultimately 370 
petitions, which were eventually separated into 617 dockets, were filed 
with the Commission. The great majority of the claims were land claims. 
Settlements awards were paid out of the U.S. Treasury.
---------------------------------------------------------------------------
    \5\ Pub. L. No. 79-726, Sec. 2, 60 Stat. 1049, 1050 (1946).
---------------------------------------------------------------------------
    The Colville tribes filed a number of claims with the Indian Claims 
Commission within the 5-year window--on July 31, August 1, and August 
8, 1951. Their fisheries claim and water power values claim became part 
of Indian Claims Commission Docket No. 181, which was originally filed 
on July 31, 1951. The original petition for Docket No. 181 included 
broad language seeking damages for unlawful trespass on reservation 
lands and for compensation or other benefits from the use of the 
tribes' land and other property. The tribes' original petition did not 
specifically mention the Grand Coulee Dam. In 1956, Docket No. 181 was 
divided into four separate claims. The tribes' fisheries claim became 
part of Docket No. 181-C. In November 1976, over 25 years after the 
original filing of Docket No. 181, the Indian Claims Commission allowed 
the Colville tribes to file an amended petition seeking just and 
equitable compensation for the water power values of certain riverbed 
and upstream lands that had been taken by the United States as part of 
the Grand Coulee Dam development. This amended water power value claim 
was designated as Docket No. 181-D, and it was settled in 1994 by 
Public Law 103-436.
    The Spokane tribe filed one claim with the Indian Claims 
Commission, Docket No. 331, on August 10, 1951, just days before the 
August 13, 1951, deadline. The claim sought additional compensation for 
land ceded to the United States by an agreement of March 18, 1887. 
Furthermore, the Spokane tribe asserted a general accounting claim. 
These two claims were separated into Docket No. 331 for the land claim 
and Docket No. 331-A for the accounting claim. Both claims were jointly 
settled in 1967 for $6.7 million. That is, the Spokane tribe settled 
all of its claims before the Indian Claims Commission almost 10 years 
before the Colville tribes were allowed to amend their claim to include 
a water power values claim. In doing so, the Spokane tribe missed its 
opportunity to make a legal claim with the Indian Claims Commission for 
its water power values as well as its fisheries. At that time, the 
Spokane tribe, as well as the Colville tribes, were pursuing other 
avenues for compensation of water power values.
    The Bonneville Power Administration was formed in 1937 to market 
electric power produced by the Bonneville Dam. 6 
Bonneville's marketing responsibilities have expanded since then to 
include power from 31 federally owned hydroelectric projects, including 
the Grand Coulee Dam. Under the Pacific Northwest Electric Power 
Planning and Conservation Act of 1980 (Northwest Power Act), Bonneville 
is responsible for providing the Pacific Northwest with an adequate, 
efficient, economical, and reliable power supply. 7 
Bonneville currently provides about 45 percent of all electric power 
consumed in Idaho, Montana, Oregon, and Washington and owns about 75 
percent of the region's transmission lines.
---------------------------------------------------------------------------
    \6\ Pub. L. No. 75-329, Sec. 2, 50 Stat. 731, 732 (1937).
    \7\ Pub. L. No. 96-501, Sec. 2, 94 Stat. 2697 (1980).
---------------------------------------------------------------------------
Bonneville Would Have to Recover Settlement Costs from Ratepayers, but 
        Magnitude of Rate Increase Would Be Small
    A settlement requiring Bonneville to pay the Spokane tribe would 
add to its costs of operation, and it therefore would probably pass 
these costs to Bonneville's customers in the form of higher rates for 
power. Bonneville is a self-financing agency, which means that it must 
cover its costs through the revenue generated by selling power and 
transmission services. Bonneville typically sets its rates for 5-year 
periods in order to generate enough revenue to cover the costs of 
operating the federal power system and to make its debt payments.
    Assuming that the settlement with the Spokane tribe is similar in 
nature to the settlement with the Colville tribe in 1994, the impact on 
Bonneville's rates would be small. Under the settlement with the 
Colville tribe, Bonneville has made annual payments since 1996 that 
have ranged from about $14 million to $21 million. Currently, 
Bonneville estimates that it will pay about $17 million per year over 
the next 5 years. 8 In its negotiations with Bonneville, the 
Spokane tribe has asked for about 40 percent of the Colville tribe's 
settlement, which would amount to about $7 million annually from 
Bonneville. Bonneville uses a rule of thumb to determine rate 
increases: between $40 million and $50 million in additional annual 
costs will lead to a rate increase of 1/10th of a cent per kilowatt 
hour (kWh). Using this rule, we estimate that a settlement with Spokane 
that is equivalent to 40 percent of the Colville settlement would lead 
to an increase in rates of less than 20 cents per month per household 
for a typical household relying solely on power from Bonneville, or a 
0.5 percent increase in rates over current levels. 9
---------------------------------------------------------------------------
    \8\ The payments are to be made in perpetuity, but Bonneville gave 
us an annual estimate for the next five years that conforms to its 5-
year rate case planning horizon. While Bonneville will make these 
payments to the Colville tribes, it will receive interest credits in 
the amount of $4.6 million per year from the U.S. Treasury--also in 
perpetuity--effectively reducing its payments by about 27 percent.
    \9\ This estimate also assumes that Bonneville pays the entire $7 
million per year. If Bonneville receives interest credits from Treasury 
for part of the amount, the impact would be proportionally smaller.
---------------------------------------------------------------------------
    Although the magnitude of the rate increase necessary to fund a 
settlement with the Spokane tribe would be small, it comes at a time 
when Bonneville's customers have recently faced large rate increases. 
From 2000 through early 2003, Bonneville experienced a substantial 
deterioration in its financial condition because of rising costs and 
lower-than-projected revenues. As a result, Bonneville's cash reserves 
of $811 million at the end of Fiscal Year 2000 had fallen to $188 
million by the end of Fiscal Year 2002. To cope with its financial 
difficulties, Bonneville raised its power rates for 2002 by more than 
40 percent over 2001 levels. On October 1, 2003, Bonneville raised its 
rates a further 2.2 percent. Despite Bonneville's current financial 
difficulties, Bonneville predicts the conditions that led to the 
financial problems--namely, consecutive years of low water conditions, 
extreme market price volatility, and long-term contracts Bonneville 
signed to buy power from other suppliers at a high cost, which are due 
to expire in 2006--will abate. Therefore, because the bulk of 
Bonneville's obligations in any settlement similar to the Colville 
settlement will occur in the future, Bonneville's current financial 
difficulties should not unduly influence current discussions about how 
to compensate the Spokane tribe.

A Reasonable Case Can Be Made for Adopting the Colville Model in 
        Allocating Any Costs Associated with a Settlement for the 
        Spokane Tribe
    A reasonable case can be made for having Bonneville and the U.S. 
Treasury allocate any costs for the Spokane tribe's claims along the 
lines agreed to for the Colville tribes. Any settlement would attempt 
to re-institute a commitment the federal government made to the tribes 
in the 1930s. Under the Federal Water Power Act of 1920, licenses for 
the development of privately owned hydropower projects should include a 
``reasonable annual charge'' for the use of Indian lands. 10 
Originally, the Grand Coulee site was licensed, and the Spokane tribe 
expected to receive annual payments for its lands used for the project. 
However, the license was cancelled when the federal government took 
over the project (federalized the project). Since the federal 
government is not subject to the Federal Water Power Act, it was not 
required to make annual payments to the tribes. Nevertheless, the 
federal government made a commitment in the 1930s to make annual 
payments to the Colville and Spokane tribes as if the project had 
remained a nonfederal project. However, the federal government did not 
follow through on this commitment after the project was completed and 
started generating revenues from electricity sales in the 1940s. In 
pursuing this matter, the tribes weathered various administrations and 
changes in the federal government's Indian policy. In the 1950s and 
1960s, the federal government actively sought to terminate its 
relationship with a number of tribes, including the Spokane tribe.
---------------------------------------------------------------------------
    \10\ Pub. L. No. 66-280, Sec. 10(e), 41 Stat. 1063, 1069 (1920).
---------------------------------------------------------------------------
    In the early 1970s, when it became clear that the federal 
government was not going to make these payments, the Colville tribes 
were able to amend their claim with the Indian Claims Commission to 
pursue this matter. After agreeing to the overall legitimacy of the 
Colville tribes' claims, the Congress ultimately approved a settlement 
that primarily required Bonneville to provide annual payments for water 
power values. This settlement was a compromise to split the costs 
between Bonneville and the U.S. Treasury. Bonneville is primarily 
paying the recurring annual payments, and the U.S. Treasury's Judgment 
Fund provided the one-time lump sum payment in settlement of the past 
annual payments--$53 million. 11 The Spokane tribe, however, 
had already settled its claim years earlier and therefore could not 
file an amended claim with the commission. Nevertheless, since 
Bonneville collects the annual revenues for the electricity generated 
by the dam, it could be argued that Bonneville should make annual 
payments to the Spokane tribe out of those revenues, as it does for the 
Colville tribes; the U.S. Treasury would then pay a lump sum to settle 
any claims for past years. The current House settlement proposal, H.R. 
1753, and previous House and Senate settlement proposals introduced in 
the 106th and 107th Congresses directed the settlement costs to be 
split between Bonneville and the U.S. Treasury.
---------------------------------------------------------------------------
    \11\ The Judgment Fund is a permanent indefinite appropriation 
available to pay certain settlements and judgments against the federal 
government.
---------------------------------------------------------------------------
    It could also be argued that the U.S. Treasury should pay the 
Spokane tribe's claim, as it does for most claim settlements against 
the federal government. S. 1438 provides for the settlement of the 
tribe's claim from the U.S. Treasury. However, we do not believe a 
compelling case can be made to have the nation's taxpayers fully absorb 
an additional cost of doing business associated with Bonneville's 
production of power in one region of the country.

Conclusion
    In conclusion, since the Spokane tribe missed its opportunity to 
file claims with the Indian Claims Commission for its fisheries and 
water power values, it is unlikely that the tribe's claims and any 
associated settlement or final resolution will move forward in any 
meaningful way without some form of congressional intervention. If the 
Congress is satisfied with the merits of the tribe's claims, settlement 
legislation, such as the current House and Senate bills, could be used 
as a method to resolve the tribe's claims. A reasonable case can be 
made for adopting the model established in the Colville settlement to 
allocate the settlement costs between Bonneville and the U.S. Treasury. 
Another option would be to enact legislation providing for some form of 
dispute resolution, such as mediation or binding arbitration. If the 
Congress has any doubts about the merits of the claim, it could enact 
legislation to allow the tribe to file its claim in the U.S. Federal 
Court of Claims. 12 The merits of the claims could then be 
decided in court. Such an action was discussed in 1994 when the 
Colville settlement was reached.
---------------------------------------------------------------------------
    \12\ See, e.g., Pub. L. No. 95-280, Sec. 2, 92 Stat. 244 (1978), 
Pub. L. No. 96-251, 94 Stat. 372 (1980), Pub. L. No. 96-404, 94 Stat. 
1711 (1980), or Pub. L. No. 104-198, 110 Stat. 2418 (1996).
---------------------------------------------------------------------------
Contacts and Acknowledgments
    For further information, please contact Robert A. Robinson on (202) 
512-3841. Individuals making key contributions to this testimony 
included Jill Berman, Brad Dobbins, Samantha Gross, Jason Holliday, 
Jeffery Malcolm, Frank Rusco, Rebecca Sandulli, and Carol Herrnstadt 
Shulman.Appendix I

Methodology for Estimating the Impact of a Settlement on the Bonneville 
        Power Administration
    Because a settlement has not yet been negotiated, we used the terms 
of the Colville settlement to estimate the potential effect of the 
Spokane settlement on electricity rates in the Pacific Northwest. 
Assumptions used in this calculation are designed to provide a 
conservative (high-end) estimate of the impact of the settlement on 
Bonneville's ratepayers. For planning purposes, Bonneville estimates 
that payments to the Colville tribes total $17 million annually. 
13 The Spokane tribe is requesting as much as 40 percent of 
the Colville settlement, or approximately $7 million annually. To 
estimate the impact of increasing costs on power rates, Bonneville uses 
a rule of thumb that $40 million to $50 million in increased costs over 
a year necessitate a rate increase of approximately $0.001 per 
kilowatt-hour (kWh). Using this rule of thumb, a $7 million per year 
cost increase would raise Bonneville's wholesale power rates by 
approximately $0.00016 per kWh.
---------------------------------------------------------------------------
    \13\ From Fiscal Year 2000 onward, Bonneville receives a $4.6 
million interest credit on its Treasury debt payment to offset some of 
the cost of the Colville settlement. Therefore, Bonneville's share of 
the Colville payments total $12.4 million net of the credit. This 
calculation conservatively assumes that Bonneville will be responsible 
for the entire Spokane payment.
---------------------------------------------------------------------------
    According to the Oregon Department of Energy, the average household 
in Oregon uses approximately 1,000 kWh of electricity per month. An 
average household in Washington uses 1,170 kWh of electricity per 
month, according to the Washington Utilities and Transportation 
Commission. Using the approximate rate increase calculated above, the 
electricity bills for average households in Oregon and Washington would 
increase approximately 16 cents and 19 cents, respectively. These 
calculations assume that the household receives all its electricity 
from Bonneville and that its retail utility passes through the 
wholesale rate increase. The impact on the region as a whole would be 
smaller because Bonneville provides only about 45 percent of the 
region's power. Our calculations also assume that Bonneville would not 
be permitted to deduct any portion of its payment to the Spokane tribe 
from its debt payment to the U.S. Treasury. Public Law 103-436 enables 
Bonneville to deduct a portion of its annual payment to the Colville 
tribes as an interest credit on its Treasury debt payments. If a 
similar provision were included for any payments for the Spokane tribe, 
the impact on ratepayers would be reduced.
                                 ______
                                 
    Mr. Hayworth. Now, as we consider H.R. 885, it is my 
privilege again to recognize Governor Narcia for his testimony 
on H.R. 885. Governor Narcia?

   STATEMENT OF RICHARD NARCIA, GOVERNOR, GILA RIVER INDIAN 
 RESERVATION, ACCOMPANIED BY RODNEY B. LEWIS, GENERAL COUNSEL, 
                  GILA RIVER INDIAN COMMUNITY

    Mr. Narcia. Thank you, Mr. Chair. Chairman Calvert, Vice 
Chairman Renzi, and members of the Subcommittee on Water and 
Power, I am Richard Narcia, Governor of the Gila River Indian 
Community, and I appreciate this opportunity to share with you 
the Community's strong support for the Arizona Water Settlement 
Act. I also take this opportunity to thank you, Representative 
Hayworth, for your hard work and leadership in sponsoring this 
important legislation. I also thank you, Senator Kyl, for his 
steadfast support of the Community and for his commitment, 
support, and dedication to our settlement.
    This settlement is a monumental achievement for our 
Community and enjoys the unanimous support of our council, nine 
of whom are here with me today and are listed in my written 
testimony.
    The Gila River Indian Community was formerly established by 
executive order in 1859. The community is comprised of the 
Akimel O'odham, or the Pima, and the Pee Posh, or the Maricopa, 
people. We are the largest Indian community in the metropolitan 
Phoenix area. Our reservation encompasses nearly 600 square 
miles with an enrolled membership of over 19,000.
    Our history in the Phoenix Valley dates back thousands of 
years. Some of the most ancient agricultural irrigation systems 
in the world were built by our ancestors and can be found 
throughout the metropolitan Phoenix area. Agriculture was a 
mainstay of our community until very recent times. We are the 
Akimel O'odham, the river people, and as I have stated, we have 
resided in the Gila River Valley of Central Arizona for 
centuries. We are the direct ancestors of the Hohokum, who 
farmed the Gila River Valley since 300 A.D., developing 
hundreds of miles of irrigation canals for crops such as corn, 
squash, lima beans, tobacco, and cotton.
    Together, the Akimel O'odham and the Pee Posh thrived on 
what the Gila River provided--food, water for irrigation, a way 
of life for our people. The river was our source of life and 
the center of our economic and social environment. It provided 
for all the community's needs, and as a result, the river 
people were among the most prosperous and self-sufficient 
communities, Indian and non-Indian, in the entire Phoenix 
Valley. As settlers moved to the Phoenix Valley, the Community 
adapted to and assisted the new settlers by providing food and 
protection. Members of our Community formed components of the 
first Arizona Territorial Guard.
    This changed in the late 19th century. The settlements were 
established upstream from our tribal lands, including farmers, 
industry, and other landowners who began to divert water from 
the Gila River. As the turn of the century approached, the 
steady flow of the Gila River across our tribal lands 
diminished.
    Today, the Gila River does not flow. It is now a dry river 
bed winding through our lands. The loss of the Gila River has 
resulted in great poverty for many members of our Community and 
has led to changes in our diet that has resulted in the highest 
per capita incidence of diabetes of any community in the world.
    In 1989, our Community and the U.S. Government initiated 
water settlement negotiations to address the great uncertainty 
and about the allocation and dependability of water supplies to 
our reservation and to more than three million residents and 
businesses of Maricopa, Pinal, Pima, Yavapai, Graham, and Gila 
Counties in Central Arizona. Nearly 14 years later, we have 
reached a comprehensive settlement of our Community's water 
rights claims and the allocation and priority of water supplies 
among the major water users in Central Arizona.
    The benefits of this settlement for our Community are many. 
Most importantly, it will guarantee a dependable water supply 
to our lands. In total, we will receive an annual entitlement 
of 653,500 acre feet of water, most of which will come from the 
Central Arizona Project, which delivers approximately 1.5 
million acre feet of Colorado River water annually to Central 
Arizona. While this is only a fraction of the amount that we 
are legally entitled to, it does provide our Community with a 
new source of water to replace some of the Gila River water 
that we have lost.
    The settlement agreement will also ensure construction and 
maintenance of the distribution system that would be needed to 
allow delivery of the water to the reservation. Together, the 
settlement water and the distribution system will enable our 
Community members to farm tribal and allotted lands as well as 
provide them an opportunity to escape poverty and participate 
more meaningfully in the economy of the region. While there is 
little chance that we can recapture the prosperity of our 
ancestors, a settlement agreement will enable more tribal 
members to participate in our ancestors' way of life.
    As a result of this settlement, the Community will also 
achieve a separate piece with non-Indian parties throughout 
Arizona. We are convinced that this is the right path for the 
Community at this time. There is no question that our presence 
may be missed by other tribes who are involved in ongoing 
litigation. However, the Community has deliberated on this at 
length and has made its choice. This is not to say that this 
was an easy choice. To achieve agreement, we, like all the 
other parties, have had to make compromises. Some were harder 
than others, but each was carefully considered and approved by 
our council.
    The settlement agreement encompassed in the Arizona Water 
Settlement Act is the top priority of the Gila River Indian 
Community. We have expended enormous amounts of time and 
resources to reach this agreement with nearly every major water 
user in Central Arizona. While our Community and each party to 
this agreement will make sacrifices to fulfill this settlement, 
we will do so in exchange for dependable supplies of renewable 
water and a more certain economic future.
    I again want to express my appreciation for the opportunity 
to come before you this morning. In conclusion and for the 
record, our settlement negotiations have been extremely 
transparent. Anyone or any entity who had an issue or concern 
with the settlement had a place at the negotiating table if, 
and if they wanted to participate. We are very hopeful that the 
Subcommittee will favorably consider this legislation and that 
it will be enacted in this Congress. Thank you.
    Mr. Hayworth. Thank you, Governor Narcia.
    [The prepared statement of Mr. Narcia follows:]

        Statement of The Honorable Richard P. Narcia, Governor, 
                      Gila River Indian Community

    Thank you Chairman Calvert and Vice Chairman Renzi, and members of 
the Subcommittee on Water and Power. I am Richard Narcia, Governor of 
the Gila River Indian Community. I appreciate this opportunity to share 
with you the Community's strong support for the Arizona Water 
Settlements Act (H.R. 885). I would also like to take this opportunity 
to particularly thank you, Representative Hayworth, for your hard work 
and leadership in sponsoring this important legislation. I would also 
like to thank Senator Kyl for his steadfast support of the Community 
and for his commitment and dedication to our settlement.
    This settlement is a monumental achievement for our Community and 
enjoys the unanimous support of our Council, ten of whom are here with 
me today. For the record, I would like to acknowledge each of them: 
Wally Jones, Eugene Blackwater, Jennifer Allison-Ray, Bernell Allison, 
Sr., Cecil Lewis, Gordon Santos, Gerald Sunna, Christopher Soke, Sr., 
Jonathan Thomas and Harry Cruye. Finally, I would also like to 
recognize and thank the members of the Community Water Negotiation Team 
for their hard work in making this a reality, including Council members 
who are also members of the Team--Harry Cruye, Jonathan Thomas, Chris 
Soke, Dana Norris, the former Director of the Office of Water Rights, 
Cecil Antone, the current Director of the Office of Water Rights, Rod 
Lewis, the General Counsel for the Community, Ardell Ruiz, Harlan 
Bohnee and Lee Thompson.

Introduction
    By way of introduction, the Gila River Indian Community was 
formally established by Executive Order in 1859. The Community is 
comprised of the Akimel O'odham (Pima) and the Pee Posh (Maricopa) 
people. We are the largest Indian Community in the Phoenix metropolitan 
area, with a Reservation encompassing nearly 600 square miles and with 
an enrolled population of over 19,000. We have a long history in the 
Phoenix Valley, dating back thousands of years. Some of the most 
ancient agricultural irrigation systems in the world were built by our 
ancestors and can be found throughout the Phoenix metropolitan area. 
Agriculture was the mainstay of our Community until very recent times.
    The Arizona Water Settlements Act will help reestablish our 
Community's access to renewable sources of water as compensation for 
the Gila River water taken from the Tribe beginning over a century ago. 
The return of dependable sources of water will enable more members of 
our Community to participate in our agricultural heritage and enjoy a 
better way of life.
    The Arizona Water Settlements Act encompasses the largest Indian 
water claims settlement in U.S. history. This agreement has been 
negotiated over the last fourteen years by nearly all major water users 
in central Arizona, including representatives of our Community, state, 
local and other tribal governments, farming and industry. The agreement 
establishes and prioritizes the allocation of water among these 
parties. It concludes longstanding litigation that has been expensive 
and disruptive to our Community and to others in central Arizona, 
preventing us from planning future growth and impeding steps to achieve 
economic stability and political harmony in the region.
    The Arizona Water Settlements Act also provides a mechanism for 
funding future Indian water rights settlements in Arizona and the 
construction of new water distributions systems for Indian tribes in 
the Phoenix Valley, as required under existing water settlement 
agreements. Thus, it provides major benefits for other Arizona tribes, 
both those that have already settled their water claims and are 
awaiting the construction of their water systems, as well as those that 
are seeking to settle their claims at some point in the future.

Our History
    To fully appreciate the importance of the Arizona Water Settlements 
Act to our Community and its future, I would like to briefly review our 
history and the central role of water to our culture and economic 
prosperity.
    We are the Akimel O'odham, the People of the River. We have resided 
in the Gila River Valley of central Arizona for centuries. The direct 
ancestors of the Akimel O'odham, the Ancient Hohokum, farmed in the 
Gila River Valley since at least 300 A.D., developing hundreds of miles 
of irrigation canals to supply water for crops such as maize, squash, 
lima beans, tobacco and cotton.
    Together, the Akimel O'odham and Pee Posh thrived on what the Gila 
River provided--a plentiful source of food for tribal members, water 
for irrigation and a way of life for all the Tribes' people. The River 
was our breadbasket and the center of our economic and social life. It 
provided for all the Community's needs, and, as a result, the People of 
the River were among the most prosperous, self-sufficient communities, 
Indian and non-Indian, in the entire Phoenix Valley.
    As settlers moved to the Phoenix Valley, our Community adapted to 
and assisted the new settlers by providing food and protection. Members 
of the Community formed a component of the first Arizona Territorial 
Guard.
    This all changed in late 19th century. New settlements were 
established upstream from our Tribal lands, including farmers, industry 
and other landowners, who began to divert water from the Gila River. As 
the turn-of-the-century approached, the steady flow of the Gila River 
across our tribal lands diminished, and with this dependable water 
source went our vast farmlands and our ability to sustain all Members 
of our Community.
    Today, the Gila River does not flow through our Tribal lands. It is 
now a dry river bed winding through the desert. The loss of the Gila 
River has resulted in great poverty to many Members of our Community, 
and has led to changes in our diet that have resulted in the highest 
per capita incidence of diabetes of any community in the world. 

Background to Arizona Water Settlements Act
    Our struggle to regain the Gila River began in the early part of 
the last century. In 1924, Congress authorized construction of the 
Coolidge Dam as the primary feature of a new irrigation project--called 
the San Carlos Irrigation Project--that would provide irrigation for 
our Reservation. The 1924 Act was intended to address our loss of Gila 
River water and, in so doing, fulfill the trust obligation of the 
United States to our Community.
    The 1924 Act was also to create a non-Indian component to this 
irrigation project. Unfortunately, although the 1924 Act provided that 
our component of this project was to be built before the non-Indian 
portion, our portion was never completed, and what was built was never 
adequately engineered or maintained. Thus, although the San Carlos 
Irrigation Project was intended to create an irrigation project for 
50,000 of the irrigable acres on our Reservation, it never served more 
than 30,000 acres and today serves just over 15,000 acres.
    In 1925, citing the 1924 Act, the United States sued water users 
upstream of our Community in order to reestablish existing rights of 
the Community in the Gila River. Unfortunately, the U.S. government, in 
all candor, did not do a very good job in making its case on our 
behalf, which resulted in greater frustration and increased federal 
liability to our Community. Our frustration was fed by the fact that 
when the Community sought to intervene itself in this litigation, the 
United States actually opposed our intervention. As a result, we were 
prevented then from actually participating in litigation that would set 
the framework for our struggle to protect our water rights up to the 
present day.
    Ten years later, in 1935, this litigation ended in a settlement and 
consent decree--called the 1935 Globe Equity Decree--which recognized 
the Community's rights to 300,000 acre-feet of Gila River water each 
year. This was far less water than our people had access to for 
centuries prior to the settlement. Moreover, to this day, we have yet 
to receive much more than 100,000 acre-feet annually of the amount 
decreed in 1935. Thus, not only did the Community not receive 
recognition of all its water rights in 1935, it has not even received 
from the Gila River that to which the Globe Equity Court decreed it was 
entitled.
    As a result, our Community has been forced to continue its struggle 
to vindicate its claims to water through litigation. First, in 1982, we 
began an effort in federal district court to enforce the 1935 Decree 
against upstream Gila River diverters. Second, we filed the single 
largest claim for water rights in the Gila River Adjudication, a 
separate State court proceeding begun in the mid-1970s to determine and 
establish the priority of water rights in the Gila River system and its 
tributaries. In this State court adjudication, we are claiming 
approximately 1.2 million acre-feet of water annually from these water 
systems and seeking judicial recognition that our water rights 
supercede those of all other non-Indian users.
    Absent the comprehensive water settlement contained in the Arizona 
Water Settlements Act, we will have no choice but to continue to pursue 
our water rights through this litigation. We will also have to explore 
more actively any action we might have against the federal government 
for its failure to adequately protect and develop our water resources 
as required by its trust responsibility to the Community and its 
statutory obligations under the 1924 Act.

The Settlement Agreement and Arizona Water Settlements Act
    In 1989, our Community and the United States Government initiated 
water settlement negotiations to address the great uncertainty about 
the allocation and dependability of water supplies to our Reservation 
and to the more than three million residents and businesses of 
Maricopa, Pinal, Pima, Graham and Gila Counties in central Arizona. 
Nearly 14 years later, we have reached a comprehensive settlement of 
our Community's water rights claims and the allocation and priority of 
water supplies among the major water users in central Arizona.
    Our settlement is in many ways unique:
      One, it is the largest settlement of Indian water rights 
in U.S. history, at least to this date;
      Two, it involves thirty-five separate parties, both 
Indian and non-Indian, most of which have required separate 
negotiations and agreements to resolve the specific issues raised 
between them and the Community. It is a very large bundle of 
compromises, each of which was thrashed out with the full consideration 
of its implications and importance in the overall deal. Its very size 
precludes the possibility of it being perfect, but the Community 
recognizes that it would be unrealistic to expect perfection in a 
settlement of this size and scope. I can assure the Subcommittee that 
in each instance in which the Community has compromised, it has done so 
with due deliberation by both the Water Negotiation Team and, when 
necessary, the prior approval of the Council;
      Three, our settlement is part of a more comprehensive 
settlement of repayment issues between the United States and the 
Central Arizona Water Conservation District. This settlement 
establishes a unique framework for resolving funding and water supply 
issues not just for our settlement and that of the Tohono O'odham 
Nation, but also Indian water rights settlements already negotiated and 
approved in the past, and those to come in the future. This settlement 
component is critical to our settlement and without it, the settlement 
will not work;
      Four, although most Indian water settlements affect only 
a single State, ours includes water users in New Mexico as well. A 
number of the parties with whom we are settling are located in the 
State of New Mexico in the Virden Valley. Moreover, we have worked 
closely with the State of New Mexico to ensure our settlement does not 
adversely affect the exchange rights that the State of New Mexico 
obtained in the 1968 Colorado River Basin Project Act. We are now 
actively exploring with the State of New Mexico, along with all the 
other affected parties in the State of Arizona, means of potentially 
implementing these exchange rights. If other New Mexico concerns or 
interests are raised, we will, of course, do what we can to help to 
address them;
      Fifth, given the complexity of interests addressed in our 
settlement, and the very large number of parties involved, as well as 
our geographic location in close proximity to major metropolitan areas 
in the Phoenix area, the Community has been obliged to serve as the 
primary coordinator of all such negotiations and to work out issues 
between parties as well as our own. This has been a major undertaking 
on the part of the Community, but one that we believe is well worth the 
effort. As we approach Congress for consideration of this major piece 
of legislation, we can safely say that every essential issue that can 
be resolved in the context of one individual Tribe's settlement has 
been resolved; and
      Sixth, the Community has actively sought out the views of 
other parties potentially affected by this settlement, particularly 
other tribes, in an effort to explain our settlement and alleviate any 
concerns that we can. I have personally reached out to all other tribal 
leaders in the State in this regard. I cannot guarantee that we 
completely agreed with their concerns, but I know that we have made a 
fair and reasonable effort to do so. My own experience with other 
Indian water settlements in Arizona that were considered without any 
consultation or consideration of other tribes' concerns is a major 
motivation for me in this regard.
    The benefits of this settlement for our Community are many. Most 
importantly, it will guarantee a dependable supply of water to our 
lands. In total, we will have an annual entitlement of 653,500 acre-
feet of water under the agreement. Most of this will come from the 
Central Arizona Project, which delivers approximately 1.5 million acre-
feet of Colorado River water each year to central Arizona. While this 
amount is only a fraction of the water to which we are legally 
entitled, it does provide our Community with new water sources to 
replace some of the Gila River water we have lost--our Community has a 
strong desire for actually deliverable water rather than rights to 
water that is not enforced.
    The settlement agreement also will ensure construction and 
maintenance of the distribution systems that will be needed to allow 
delivery of water to the Reservation. Together, the settlement water 
and distribution infrastructure will enable more of our Community 
Members to farm Tribal lands and Allotted lands, as well as provide 
them an opportunity to escape poverty and to participate more 
meaningfully in the economy of the region. While there is little chance 
that we can recapture the past prosperity of our ancestors, the 
settlement agreement will enable more Tribal members to participate in 
our ancestors' way of life.
    I would note that all funds that the Community is to receive as 
part of this settlement are being used solely for the development of a 
viable water delivery system for our farmers. One portion of the funds 
that the Community will receive from this settlement is to be used to 
rehabilitate and finally build out the long-awaited San Carlos 
Irrigation Project on our Reservation. Although authorized in 1924 and 
intended by Congress to be built prior to any non-Indian portions of 
that project, it never was completed and what was built has fallen into 
substantial disrepair.
    The Community has agreed to use most of the funds it receives for 
that worthwhile end. The remaining balance is intended to assist the 
Community in making the CAP water it receives in lieu of its rights to 
the natural waters of the Gila River affordable for its Members and 
Allottees. The Community has committed to supplement the funds it 
receives from the settlement for this purpose.
    As a result of this settlement, the Community will also achieve a 
separate peace with non-Indian parties throughout Arizona. The 
Community has struggled for this peace for many years, many times 
working hand in hand with other Arizona Indian Tribes, such as the San 
Carlos Apache Tribe. We are convinced that this is the right path for 
the Community at this time. There is no question that our presence may 
be missed by other tribes who are still involved in ongoing litigation. 
However, the Community has deliberated on this at length and made its 
choice.
    This is not to say that our choice was easy. To achieve agreement, 
we, like all other parties to this settlement, have had to make many 
compromises along the way. Some were harder than others, but each was 
carefully considered and approved by our Council. We view the package 
as developed as one that is worthy of all our support.
    The Arizona Water Settlements Act contains numerous benefits for 
Arizona. It will eliminate uncertainty among Indian communities, state 
and local government leaders, industry, farmers and other citizens, 
concerning future water use in central Arizona. This will enable long-
term water planning to proceed for all concerned. The Act will help 
settle drawn-out and costly litigation of water rights and damage 
claims, enabling all parties to the settlement to refocus on future 
economic planning and growth.
    The Act also will help ensure that existing water use in central 
Arizona and upstream of our Reservation on the Gila River will not be 
disrupted or displaced by our claims. Through lease and exchange 
agreements with the surrounding cities, the settlement provides for 
unique new opportunities for the Community and the surrounding 
municipalities to cooperate in their water use and planning. Finally, 
the Arizona Water Settlements Act, more than any federal government 
action since this water dispute began over a hundred years ago, will 
help satisfy the United States' trust responsibility to our Community 
and other Indian tribes. It will ensure dependable renewable water 
supplies and delivery to Tribal lands, as partial compensation for 
water taken from the Community, its Members and Allottees for over a 
century.

Conclusion
    The settlement agreement encompassed in the Arizona Water 
Settlements Act is the top priority of the Gila River Indian Community. 
We have expended enormous amounts of time and resources to reach this 
agreement with nearly every major water user in central Arizona. While 
our Community, and each party to this agreement, will make sacrifices 
to consecrate this settlement, we will do so in exchange for dependable 
supplies of renewable water and a more certain economic future. For our 
Community, this settlement offers an opportunity for more of our Tribal 
members to partake in the rich agricultural heritage of our ancestors, 
the Akimel O'odham and Pee Posh.
    I again want to express my appreciation for the opportunity to 
appear before the Subcommittee today to share our views on this 
historic legislation. We are very hopeful that the Subcommittee will 
favorably consider this legislation and that it will be enacted during 
this Congress so that our people--and so many other stakeholders in 
Central Arizona--may finally begin to realize the benefits that will 
flow from this long overdue water settlement.
    Thank you.
                                 ______
                                 
    [Response to questions submitted for the record by Governor 
Narcia follows:]

             Gila River Indian Community, Executive
              Office of the Governor & Lieutenant Governor,
                                                  October 31, 2003.
Hon. Ken Calvert,
Chairperson, Water and Power Subcommittee of the House Committee on 
        Resources, Longworth House Office Building, Washington, DC.
    Dear Chairman Calvert: Thank you for the opportunity to answer the 
follow-up question you submitted after the Water and Power 
Subcommittee's October 2, 2003, hearing on H.R. 885, Arizona Water 
Settlements Act. The answer to the question you submitted is attached.
    Your interest and participating in the consideration of this 
important legislation is greatly appreciated by the members of the Gila 
River Indian Community (Community).
    Please contact me if the Community can be of any assistance in the 
Committee's deliberations on H.R. 885.
            Best Regards,
                                         Richard P. Narcia,
                                                           Governor
    Enclosure.

                                 * * *

    Question. Unlike other Indian Water rights settlements, which 
frequently require the federal government to fund an open-ended 
development trust fund, all of the funds made available to the 
Community under H.R. 885 go exclusively to fund water development and 
use on the Gila River Indian Reservation. Does this demonstrate the 
Community's commitment to fully utilizing its water supply?
    Answer. All of the federal money that goes to the Community under 
H.R. 885 will go only to provide water for the Community's lands, the 
means to use this water, or help with paying the cost of CAP water. 
While we would certainly not be opposed to federal resources for other 
tribal projects, we realize that the size of our water rights claims 
and the resources needed to fulfill the promises made to the Community 
in the 19th and 20th centuries already requires a substantial 
commitment of federal resources. For that reason, we recognize that 
certain components, like a development fund, would not be included in 
our settlement.
    The members of the Community are the descendants of the people who 
farmed in the valley for thousands of years. We view our Settlement as 
a way of preserving this fundamental part of our heritage.
                                                  Richard P. Narcia
                                 ______
                                 
    Mr. Hayworth. Now, it is my honor to recognize Chairwoman 
Joan-Saunders to testify on H.R. 885. Welcome.

        STATEMENT OF VIVIAN JUAN-SAUNDERS, CHAIRWOMAN, 
                     TOHONO O'ODHAM NATION

    Ms. Juan-Saunders. Thank you. Good morning. I would like to 
thank Chairman Calvert and members of the Committee for 
scheduling this very historic day.
    My name is Vivian Juan-Saunders. I am the Chairwoman of the 
Tohono O'odham Nation. The Tohono O'odham Nation is located in 
Southern Arizona. We have a land base of 2.8 million acres and 
an enrolled membership of 28,000. I would like to thank you for 
the opportunity to speak on the Arizona Water Settlement Act of 
2003, which is a very critical issue for our people.
    I would like to first express my appreciation to you, 
Representative Hayworth, for cosponsoring the introduction of 
the Settlement Act with Senator Kyl and recognize the other 
members of the Arizona Congressional delegation for your 
support, Mr. Renzi, Mr. Grijalva.
    I would like to first of all recognize the extraordinary 
efforts of the negotiating team in reaching a consensus on the 
issues which enable the introduction of the amendments to the 
Nation's 1982 water settlement. The negotiating team included 
representatives of the Tohono O'odham Nation, our legislative 
counsel, the San Xavier District, the Schuk Toak District, the 
San Xavier allottees, the San Xavier Cooperative Farm, the 
State of Arizona, the city of Tucson, Asarco Incorporated, 
which is a copper mine, and Farmers Investment Company.
    I would like to focus on the benefits which would be 
realized by water users in the Tucson Management Area as a 
result of the enactment and implementation of this Settlement 
Act, with particular emphasis on the amendments.
    One, what has historically been widespread uncertainty 
regarding the rights of water users in the Tucson Management 
Area will be transformed into certainty regarding these rights.
    Two, receipt of several significant benefits under the 
Southern Arizona Water Settlement Act was conditioned on final 
dismissal of the underlying water litigation, United States v. 
Tucson, including the annual delivery of 28,200 acre feet of 
water within the San Xavier and Eastern Schuk Toak Districts of 
the Nation, and collection of damages by the Tohono O'odham 
Nation for failure of the United States to deliver water to the 
districts.
    In addition, the agreement by the Tohono O'odham Nation to 
waive and release past and future water claims and past 
injuries to water rights only takes effect on final dismissal 
of the United States v. Tucson. By agreement among the parties 
to the amendments, this lawsuit will be dismissed with 
prejudice. Under the amendments, the waiver and release of 
claims also extends to future injuries to water rights.
    The parties' commitment to dismiss the lawsuit was 
predicated on resolving longstanding differences of opinion 
between the Tohono O'odham Nation, the San Xavier District, and 
the San Xavier allottees regarding the division of water and 
financial benefits under the Southern Arizona Water Rights 
Settlement Act, and in our testimony, we have outlined how 
these disputes have been resolved.
    Four, a reliable source of funding is critical to the 
timely implementation of the amendments. The interest on the 
cooperative fund established under the Southern Arizona Water 
Rights Settlement Act is inadequate to fund the cost required 
to fulfill the obligations of the United States imposed by the 
Southern Arizona Water Rights Settlement Act and the 
amendments.
    I would like to focus on the amendments and related 
settlement agreement. First of all, the city of Tucson has 
agreed to pay for the repair of sinkhole damage in the San 
Xavier District on allotted lands and lands held in trust for 
our Tohono O'odham Nation. Tucson has further agreed that the 
Tohono O'odham Nation's claims for subsidence damages in the 
San Xavier and Eastern Schuk Toak Districts are preserved and 
will be processed pursuant to the procedures outlined in the 
agreement.
    Asarco, the copper mine, has agreed to accept Central 
Arizona Project water for processing ore at the Mission Mine 
and reduce groundwater withdrawals by an acre foot for each 
foot of CAP water delivered. The intended effect of this 
exchange is to stabilize or elevate the groundwater table in 
the San Xavier District. Subject to receiving adequate security 
to assure repayment, the Tohono O'odham Nation has agreed to 
provide a loan to Asarco Mine to construct the CAP delivery 
system to the mine.
    Farmers Investment Company has agreed to various 
limitations on its groundwater withdrawals affecting the San 
Xavier District. The agreement will be recorded in the official 
records of Pima County to assure the limitations bind 
successors in interest.
    And finally, certain provisions of Title I of the 
Settlement Act are essential to implementation of the 
amendments.
    I would like to conclude by highlighting the new Federal 
obligations under the amendments. First of all, Sections 
311(c)(1) and (2) authorizes the Secretary to expend sums not 
to exceed $215,000 for the San Xavier District and $175,000 for 
the Eastern Schuk Toak District for groundwater monitoring 
programs.
    Second, Section 311(f) authorizes the Secretary to conduct 
a feasibility study of the land exchange between the allottees 
and Asarco Mine at a cost not to exceed $250,000.
    I would like to conclude by sharing that it has been 28 
years since the first lawsuit was filed to clarify water 
claims. That was in 1975. It has been 21 years, 1982, since the 
Southern Arizona Water Rights Settlement Act was passed here in 
Congress. We believe that the passage of these amendments will 
not only benefit the Tohono O'odham Nation, but benefit all 
water users in Southern Arizona. We strongly urge you to 
support the passage of these amendments and we, as a nation, 
will continue to support any efforts in compromise on issues 
that are still outstanding regarding water rights settlements 
for other tribes.
    We thank you for the opportunity to testify.
    Mr. Hayworth. And Chairwoman Juan-Saunders, we thank you 
for your testimony.
    [The prepared statement of Ms. Juan-Saunders follows:]

            Statement of Vivian Juan-Saunders, Chairwoman, 
                         Tohono O'odham Nation

I. INTRODUCTION
    Chairman Calvert and members of the Committee. I am Vivian Juan-
Saunders, Chairwoman of the Tohono O'odham Nation. The Nation's 
Reservation is located in southern Arizona, has a land base of 2.8 
million acres, and is the second largest Indian reservation in the 
United States.
    On behalf of the 28,000 members of the Nation, I thank you for the 
opportunity to speak on the Arizona Water Settlements Act of 2003 which 
is an issue of critical importance to our people. I would like to first 
express my appreciation to Representative Hayworth who co-sponsored 
introduction of the Settlements Act with Senator Kyl, as well as other 
members of the Arizona delegation who have expressed their support.
    I would also like to recognize the extraordinary efforts of the 
negotiating team in reaching a consensus on the issues which enabled 
the introduction of Amendments to the Nation's 1982 water settlement. 
The negotiating team included representatives of the Nation, the 
Nation's Legislative Council, the San Xavier District, the Schuk Toak 
District, the San Xavier allottees, the San Xavier Cooperative Farm, 
the State of Arizona, the City of Tucson, Asarco Incorporated and 
Farmers Investment Company. Officials in the Interior Department also 
actively participated in the negotiations.
    The written testimony filed with this Subcommittee includes a 
detailed summary of the Southern Arizona Water Rights Settlement Act of 
1982 (``SAWRSA''); the Southern Arizona Water Rights Settlement 
Amendments Act of 2003 (the ``Amendments''); and cost and appropriation 
items related to the Amendments.
    I would like to focus on the benefits which would be realized by 
water users in the Tucson Management Area (``TMA'') as a result of the 
enactment and implementation of the Settlements Act, with particular 
emphasis on the Amendments.
    1. What has historically been wide-spread uncertainty regarding the 
rights of water users in the TMA would be transformed into certainty 
regarding these rights.
    2. Receipt of several significant benefits under SAWRSA was 
conditioned on final dismissal of the underlying water litigation 
(United States v. Tucson), including the annual delivery of 28,200 
acre-feet of water within the San Xavier and eastern Schuk Toak 
Districts of the Nation; and collection of damages by the Nation for 
failure of the United States to deliver water to the Districts. (Under 
the Amendments, the damage remedy would also apply to a failure of the 
United States to complete the rehabilitation and extension of the 
Cooperative Farm within stated deadlines.) In addition, the agreement 
by the Nation to waive and release past and future water claims, and 
past injuries to water rights, only takes effect on final dismissal of 
United States v. Tucson. By agreement among the parties to the 
Amendments this lawsuit will be dismissed with prejudice. Under the 
Amendments, the waiver and release of claims also extends to future 
injuries to water rights.
    3. The parties' commitment to dismiss the lawsuit was predicated on 
resolving long-standing differences of opinion between the Nation, the 
San Xavier District and the San Xavier allottees regarding the division 
of water and financial benefits under SAWRSA. These disputes have been 
settled as follows:
           (a) The Amendments provide an apportionment of water between 
        the Nation, and the San Xavier District and San Xavier 
        allottees.
           (b) The Amendments provide the San Xavier District with the 
        option to cash out the construction costs of a new farm 
        authorized for construction under SAWRSA. If that option is 
        exercised, the District and the allottees will be entitled to 
        use the funds for a variety of purposes.
           (c) The Nation has agreed to make a substantial financial 
        contribution to subjugate lands within the proposed extension 
        of the allottees' Cooperative Farm, provide working capital for 
        the Cooperative Farm and to remediate contaminated groundwater 
        within the San Xavier District. The amount of this contribution 
        significantly exceeds the appropriations required by the 
        Amendments.
    4. A reliable source of funding is critical to the timely 
implementation of the Amendments. The interest on the Cooperative Fund 
established under SAWRSA is inadequate to fund the costs required to 
fulfill the obligations of the United States imposed by SAWRSA and the 
Amendments. This shortfall is addressed in the Amendments.
           (a) The Amendments provide for a significant adjustment in 
        the principal amount of the Fund.
           (b) The Amendments also provide for the deposit in the Fund 
        of all proceeds of sale of recharge credits received by the 
        United States in a managed recharge project in the Santa Cruz 
        River, using a portion of the 28,200 acre feet of effluent 
        water deliverable by Tucson under SAWRSA.
           (c) The Amendments authorize the use of the Lower Colorado 
        River Basin Development Fund to pay identified costs of 
        implementing the settlement.
    5. Under the Amendments and related Settlement Agreement:
           (a) Tucson has agreed to provide $300,000 to repair sinkhole 
        damage in the San Xavier District on allotted lands and lands 
        held in trust for the Nation. Tucson has further agreed that 
        the Nation's claims for subsidence damages in the San Xavier 
        and eastern Schuk Toak Districts are preserved, and will be 
        processed pursuant to the procedures outlined in the agreement;
           (b) Asarco has agreed to accept Central Arizona Project 
        (CAP) water for processing ore at the Mission Mine and reduce 
        groundwater withdrawals by an acre foot for each acre foot of 
        CAP water delivered. The intended effect of this exchange is to 
        stabilize or elevate the groundwater table in the San Xavier 
        District. Subject to receiving adequate security to assure 
        repayment, the Nation has agreed to provide a loan to Asarco of 
        up to $800,000 to construct the CAP delivery system to the 
        Mine; and
           (c) Farmers Investment Company has agreed to various 
        limitations on its groundwater withdrawals affecting the San 
        Xavier District. The agreement will be recorded in the official 
        records of Pima County to assure the limitations bind 
        successors in interest.
    6. Finally, certain provisions of Title I of the Settlements Act 
are essential to implementation of the Amendments:
           (a) SAWRSA did not identify the source for the 28,200 acre 
        feet of water. Title I identifies CAP agricultural priority 
        water as the source of water to satisfy the annual delivery of 
        the 28,200 acre feet identified in SAWRSA;
           (b) Title I obligates the United States to firm the 28,200 
        acre-feet of CAP agricultural priority water to a municipal and 
        industrial delivery priority, with financial or in-kind 
        assistance provided by the State of Arizona; and
           (c) Title I provides that unallocated CAP water and 
        dedicated funding will be available for future Indian water 
        settlements. These features of the Settlements Act are of 
        particular importance to the Nation in order to facilitate the 
        settlement of the Nation's remaining water claims in the Sif 
        Oidak District and portions of adjoining Districts which are 
        within the boundaries of the Pinal Active Management Area.

II. SOUTHERN ARIZONA WATER RIGHTS SETTLEMENT ACT OF 1982

A. Overview of Settlement
    In 1975 the Papago Tribe (now the Tohono O'odham Nation), the 
United States and two individual Indian allottees, as representatives 
of a class of Indian trust allotment landowners in the San Xavier 
District, sued the City of Tucson and other water users in the Upper 
Santa Cruz Basin, claiming damages and seeking to enjoin pumping of 
groundwater (United States v. Tucson). There was concern that the 
litigation would cast a cloud over the future of the Tucson area. Local 
entities engaged in extensive negotiations with the United States and 
the lawyers for the Indian parties and finally reached a settlement in 
1982. In October 1982, Congress passed the Southern Arizona Water 
Rights Settlement Act of 1982, 96 Stat. 1274 (``SAWRSA''), which 
embodied the settlement.
    The terms of the settlement called for the Nation to receive, 
without charge, farm improvements, 66,000 acre feet of water annually, 
the right to pump 10,000 acre feet of groundwater annually within the 
San Xavier District and a $15 million trust fund. (Of the 66,000 acre 
feet, 37,800 acre feet is the Nation's contracted Central Arizona 
Project (CAP) water for the San Xavier District and the eastern Schuk 
Toak District. 1 An additional 28,200 acre feet of the water 
was to be acquired by the Secretary and delivered after United States 
v. Tucson was dismissed.) The City was required to transfer 28,200 acre 
feet of effluent water to the United States and, with the State and 
other local entities, to contribute a total of $5.25 million to a 
Cooperative Fund. Interest on the Cooperative Fund was available to the 
United States for payment of the ongoing costs of implementing the 
settlement. The San Xavier allottees' water rights were to be satisfied 
out of water provided to the Nation in the settlement.
---------------------------------------------------------------------------
    \1\ The Tohono O'odham Nation is the national government and 
consists of Districts organized as political subdivisions of the 
Nation. The San Xavier and Schuk Toak Districts are two of the 11 
Districts of the Nation. The San Xavier District and the eastern 
portion of the Schuk Toak District are within the Upper Santa Cruz 
Basin and are part of the SAWRSA settlement.
---------------------------------------------------------------------------
    The City, State and local interests timely performed all of their 
obligations under the settlement and the Nation agreed to dismiss the 
case. The San Xavier allottee landowners objected to certain aspects of 
SAWRSA and opposed dismissal of the litigation.
    In 1993, allottees filed a class action lawsuit (Alvarez v. Tucson) 
in which they sought to enjoin groundwater pumping by the City and 
others, and asserted more than $200 million damages. Individual San 
Xavier allottees also filed a lawsuit in 1993 against the United States 
(Adams v. United States) which asserted breaches of trust related to 
the allottees' land and water resources, and sought declaratory and 
injunctive relief. Dispositive motions in these lawsuits are pending 
before the Court. Rulings on the motions have been suspended to allow 
the SAWRSA parties to negotiate amendments which would resolve the 
outstanding issues among the parties.
    For many years, the Nation, the San Xavier District, the Schuk Toak 
District, the allottees, the City of Tucson, the State of Arizona, 
Asarco Incorporated and Farmers Investment Co. negotiated amendments to 
SAWRSA that would allow full implementation of the settlement, provide 
important clarification in the allocation of existing benefits, and 
provide more flexible water use by the parties.

B. Specific Benefits and Obligations of Parties
    The following is a summary of the substantive provisions of SAWRSA, 
as amended by the Southern Arizona Water Rights Technical Amendments 
Act of 1992 (106 Stat. 3256).
Nation's Benefits:
    1. The United States is required to annually deliver 37,800 acre 
feet of CAP water without the Nation having to pay any OM&R or capital 
charges.
         a. 27,000 acre feet for San Xavier District
         b. 10,800 acre feet for eastern Schuk Toak District
    2. The United States is required to improve and extend the 
allottees' Cooperative Farm in San Xavier and to construct irrigation 
works for a new farm in San Xavier to take the CAP water.
    3. The United States is required to annually deliver an additional 
28,200 acre feet of water suitable for agriculture, after the pending 
water claims litigation is finally dismissed:
         a. 23,000 acre feet to San Xavier District; and
         b. 5,200 acre feet to eastern Schuk Toak District.
    4. If the United States fails to deliver any of the 66,000 acre 
feet in any year after October 1992, it must pay the Nation damages 
equal to the value of the undelivered quantity of water (the deadline 
was extended to June 30, 1993 by the Technical Amendments enacted in 
1992).
    5. The United States established a $15,000,000 Trust Fund which is 
managed by the Nation, the interest from which can be used to develop 
land and water resources within the Nation.
Nation's Obligations:
    1. The Nation agreed to file a stipulation for dismissal of United 
States v. Tucson, and to file in court the allottee class 
representatives' petition to dismiss.
    2. The Nation agreed to waive and release all past claims of water 
rights or injuries to water rights, and to waive and release all future 
claims of water rights. This waiver and release encompasses past and 
future claims of federal reserved water rights in the San Xavier 
District and the eastern Schuk Toak District. The waiver and release 
does not take effect until United States v. Tucson is finally 
dismissed.
    3. The Nation agreed to limit pumping of groundwater:
         a. To 10,000 acre feet per year in the San Xavier District; 
        and
         b. To the 1981 pumping amount in the eastern Schuk Toak 
        District.
    4. The Nation agreed to comply with the water management plan 
established by the Secretary of the Interior.
City's Obligations:
    1. The City agreed to make 28,200 acre feet of effluent available 
to the Secretary.
    2. The City contributed $1,500,000 to a Cooperative Fund, the 
interest from which is for ``carrying out the obligations of the 
Secretary'' under provisions of the settlement.
Other Obligations:
    1. Other contributors to the Cooperative Fund were:
            State of Arizona--$2,750,000
            An amax, Cyprus-Pima, AS&R (``Asarco''), Duval & Farmers 
            Investment Co. (``FICO'')--$1,000,000
            United States--$5,250,000
    2. If United States v. Tucson was not dismissed by October 1985, 
the Cooperative Fund was to be terminated and the contributed funds 
returned to the contributors (this provision was deleted by the 
Technical Amendments in 1992).
    3. The United States is not obligated to annually deliver the 
28,200 acre feet of water to the Nation until United States v. Tucson 
is finally dismissed.
    4. The United States is not obligated to pay the Nation damages for 
failure to annually deliver any of the 66,000 acre feet of water until 
United States v Tucson is finally dismissed.
    5. The Nation can only use its settlement water within the Tucson 
Management Area (TMA).
    6. The Nation can sell or lease settlement water, but only within 
the TMA.
III. SOUTHERN ARIZONA WATER RIGHTS SETTLEMENT AMENDMENTS ACT OF 2003
    The Southern Arizona Water Rights Settlement Amendments Act of 2003 
(the ``Amendments'') appears as Title III in the Arizona Water 
Settlements Act of 2003 (the ``Settlements Act''). Subject to the 
satisfaction of all conditions to the effective date of the Amendments 
(Section 302), the Amendments will clarify, restate, supplement and 
modify the provisions of SAWRSA in the following respects:
     1. The Secretary would be obligated to annually deliver 28,000 
acre feet of water from the federal share of CAP water. The Secretary 
and the State are required to cooperate in a program to firm this CAP 
water to municipal and industrial delivery priority pursuant to the 
obligations in Section 105 of Title I to the Settlements Act;
     2. The Secretary would be required to rehabilitate and extend the 
allottees' existing Cooperative Farm by a date certain, or pay 
specified penalties. The Farm would be extended to 2,300 acres. 
Rehabilitation of the Cooperative Farm would include bank stabilization 
on the Santa Cruz River and repair of sinkholes;
     3. Pursuant to an agreement between the Nation, the San Xavier 
District and the allottees, the Nation would make a substantial 
financial contribution for subjugation of lands within the proposed 
extension to the Cooperative Farm, working capital for the Cooperative 
Farm and a fund to remediate contaminated groundwater within the 
District;
     4. The San Xavier District would receive the option of taking cash 
instead of construction of a new farm;
     5. Penalties payable by the United States for failure to timely 
perform its obligations with regard to the Cooperative Farm and its 
extension would be payable to the Cooperative Farm Association;
     6. The San Xavier District and the allottees would be entitled to 
annually receive up to 35,000 acre feet of the settlement water for 
beneficial use, subject to compliance with the Nation's water code;
     7. SAWRSA does not provide for specific releases of claims for 
future injuries to water rights. The release of claims for future 
injuries to water rights would be required by the Amendments so long as 
groundwater withdrawals outside the San Xavier District are in 
compliance with State law and with the related Settlement Agreement;
     8. The waiver and release of water rights by the Nation and the 
allottees, other than the rights established in SAWRSA, would be 
confirmed, clarified and made more explicit. One of the conditions to 
the effective date of the Amendments would be final dismissal of the 
litigation. As to any allottees who opt out of a class, their water 
rights, if any, would be barred;
     9. Lands acquired by the Nation outside the boundaries of the 
Nation's Reservation which the Nation seeks to have taken into trust by 
the United States will not include federal reserved rights to surface 
water or groundwater;
    10. SAWRSA now limits the Nation to pumping no more than 10,000 
acre feet of groundwater per year within the San Xavier District, with 
no provisions for underground storage and recovery. The Amendments 
would create a deferred pumping storage account, with an initial credit 
to recognize a portion of the groundwater allowance that has not been 
pumped since 1983. Withdrawals from the deferred pumping storage 
account could not exceed 10,000 acre feet in any year or 50,000 acre-
feet over any ten-year period. The Amendments would also allow direct 
underground storage and recovery of surface water, in a manner similar 
to that provided for under current State law. Comparable provisions are 
made for pumping groundwater within the eastern Schuk Toak District. 
The Nation could also pump additional groundwater during CAP shortage 
periods and interruption in CAP deliveries;
    11. SAWRSA now requires that all of the Nation's water be used 
within the boundaries of the Tucson Management Area (TMA). The 
Amendments would allow the Nation to lease its water outside the TMA, 
after giving a right of first refusal to users within the TMA. It would 
also allow the Nation to use a portion of its settlement water within 
the Nation's Reservation outside of the TMA;
    12. A new comprehensive Settlement Agreement among the Nation, the 
allottee classes, the United States, the State of Arizona, the City of 
Tucson, Asarco and FICO would be approved by the Amendments; and
    13. Separate agreements would be entered into among the Nation, 
United States, allottees and Tucson; the Nation, San Xavier District, 
allottees, the United States and Asarco; and the Nation, San Xavier 
District, allottees, United States and FICO. These agreements would be 
confirmed and approved by the Amendments.
         a. The Tucson Agreement provides:
             (i) For the payment by the City of Tucson of $300,000 to 
            the San Xavier District to establish a sinkhole remediation 
            fund to be used to maintain and repair any future sinkholes 
            after the United States has completed its sinkhole repair 
            project; and
            (ii) For the release by the United States and the allottees 
            of past, present and future claims for damages from 
            sinkholes or subsidence; release by the United States and 
            the Nation of past, present and future claims for damages 
            from sinkholes; and an administrative process for review by 
            the City of any claim of the Nation for damages from 
            subsidence before any court action is filed on such claim.
        b. The Asarco Agreement provides:
              (i) Up to 10,000 acre feet of the 35,000 acre foot 
            allocation of CAP water for use in San Xavier will be 
            delivered annually to Asarco for mining purposes in 
            exchange for an equivalent reduction in groundwater pumping 
            pursuant to a water agreement with the Nation;
              (ii) Asarco will have an option to renew the existing on-
            Reservation well site lease with the Nation for an 
            additional 25 year term;
             (iii) Subject to adequate security to assure repayment, 
            the Nation agrees to loan Asarco up to $800,000 for 
            construction of a CAP delivery system repayable over a 
            period not to exceed 14 years;
             (iv) Pursuant to A.R.S. Sec. 45-841.01, the Nation is 
            qualified to earn marketable storage credits which have an 
            assigned value under the Asarco Agreement and are used to 
            repay the Asarco loan and thereafter apportioned between 
            the Nation and the San Xavier District;
             (v) With the exception of discharges of toxic or hazardous 
            substances to groundwater, certain claims for groundwater 
            contamination by Asarco are settled by Asarco payments of 
            water lease delivery charges into a settlement fund, with 
            Asarco making additional direct payment from its funds to 
            the extent of any shortfall in the scheduled payment 
            amount; and
             (vi) Waivers and releases of all past and future claims by 
            the Nation, San Xavier District, allottees, United States 
            and Asarco related to withdrawal of groundwater by the 
            parties within the TMA.
         c. The FICO Agreement provides:
             (i) Limitation of 850 acre feet annual withdrawal of 
            groundwater by FICO within two miles of the exterior 
            boundaries of the San Xavier District;
             (ii) Limitation of 36,000 acre feet annual withdrawal of 
            groundwater by FICO from all FICO lands;
             (iii) Prohibition on FICO from selling groundwater credits 
            to third parties for withdrawal within three miles of the 
            exterior boundaries of the Tohono O'odham Nation;
             (iv) Except as otherwise provided in (i), (ii) and (iii) 
            above, waivers and releases of all past and future claims 
            by the Nation, allottees, United States and FICO related to 
            withdrawal of groundwater by the parties within the TMA;
             (v) FICO shall record the Agreement in the official 
            records of Pima County upon the effective date of the 
            Amendments; and
             (vi) Terms of the Agreement are binding on heirs, 
            devisees, executors, assigns and successors of the parties.

IV. FUNDING COSTS UNDER AMENDMENTS
    The following is a summary of the various provisions in the 
Amendments that authorize use of the Lower Colorado River Basin 
Development Fund. The summary first discusses federal obligations in 
the Amendments that arise from obligations in SAWRSA and second new 
federal financial obligations under Amendments.

A. FEDERAL OBLIGATIONS ARISING FROM SAWRSA
    Section 304(c)(3)(B): Authorizes the Secretary of the Interior to 
pay to the San Xavier District the sum of $18,300,000 in lieu of, and 
in full satisfaction of, the obligation of the Secretary to construct a 
``new farm'' in the San Xavier District including design and 
construction activities relating to additional canals, laterals, farm 
ditches, and irrigation works for the efficient distribution of water 
described in section 303(a)(1)(A) of SAWRSA. Use of the funds is 
regulated pursuant to section 304(f).
    History of the Expenditure. Section 303(a)(1)(B) of SAWRSA directs 
the Secretary, acting through the Bureau of Reclamation, to improve and 
extend the irrigation system, including the design and construction of 
additional canals, laterals, farm ditches and irrigation works, 
necessary for the efficient annual distribution for agricultural 
purposes of 27,000 acre feet of water referred to in 303(a)(1)(A) of 
SAWRSA. Section 304(c)(3)(B) of the Amendments gives the San Xavier 
District the option to cash out the construction benefit of a new farm 
and thereby use the portion of the 27,000 acre feet annual distribution 
not required for the existing or extended Cooperative Farm for other 
purposes. Identification and retention of this amount in the Lower 
Colorado River Basin Development Fund is a condition to the Amendments 
becoming effective pursuant to Section 302.
    Sections 308(d)(2)(A)(i) and (ii): Authorizes the Secretary to 
enter into a contract with the San Xavier District and to pay a sum not 
to exceed $891,200 for the development of a water management plan for 
the San Xavier District and authorizes the Secretary to enter into a 
contract with the Nation and to pay a sum not to exceed $237,200 for 
the development of a water management plan for the eastern Schuk Toak 
District.
    History of the Expenditure. Section 303(a)(3) of SAWRSA directs the 
Secretary, acting through the Bureau of Reclamation, to establish water 
management plans for the San Xavier District and the eastern Schuk Toak 
District, that have the same effect as those plans developed under 
State law. Identification and retention of this amount in the Lower 
Colorado River Basin Development Fund is a condition to the Amendments 
becoming effective pursuant to section 302.
    Section 310(a)(2)(A)(ii): Establishes that the Cooperative Fund may 
be increased in principal by an amount not to exceed $32,000,000 based 
on a determination by the Secretary that the additional funds are 
necessary to carry out the Amendments and after providing notice to 
Congress.
    History of the Expenditure. Section 313(b)(3)(B) of SAWRSA provided 
for an additional sum up to $16,000,000 which the Secretary determined 
to be necessary to meet the Secretary's obligations, after providing 
notice to Congress. SAWRSA provides that the $16,000,000 shall be 
adjusted pursuant to Section 312(b)(2). Section 313(b)(2) states that 
the adjustment represents the additional interest that would have been 
earned by the Cooperative Fund had the monies been contributed 
initially. The Technical Amendments to SAWRSA enacted in 1992 
inadvertently dropped the reference to the means for calculating the 
adjustment. Thus, the requirement to adjust the $16,000,00 existed 
between 1982 and 1992.
    Section 317(a)(1): Authorizes an expenditure of $3,500,000 
(adjusted for fluctuations in construction costs) to construct features 
of the irrigation systems described in Sections 304(c)(1) through (4) 
that are not authorized to be constructed under any other provision of 
law.
    History of the Expenditure. Section 303(a)(4) of SAWRSA authorizes 
the appropriation of up to $3,500,000, adjusted for fluctuations in 
construction costs.
    Section 317(a)(5): Authorizes an expenditure of $4,000,000 to carry 
out Section 311(d).
    History of Expenditure. Section 303(b)(1) of SAWRSA authorized the 
Secretary to carry out a study to determine the available and 
suitability of water resources within the Sells Reservation. 
Identification and retention of this amount in the Lower Colorado River 
Basin Development Fund is a condition to the Amendments becoming 
effective pursuant to Section 302.

B. NEW FEDERAL OBLIGATIONS OF AMENDMENTS
    Sections 311(c)(1) and (2): Authorizes the Secretary to expend sums 
not to exceed $215,000 for the San Xavier District and $175,000 for the 
eastern Schuk Toak District for groundwater monitoring programs.
    History of the Expenditure. The tribal parties and the federal team 
reached agreement on this new obligation prior to the introduction of 
S. 3231, the Arizona Water Settlements Act of 2000. Identification and 
retention of this amount in the Lower Colorado River Basin Development 
Fund is a condition to the Amendments becoming effective pursuant to 
Section 302.
    Section 311(f): Authorizes the Secretary to conduct a feasibility 
study of a land exchange between the allottees and Asarco at a cost not 
to exceed $250,000.
    History of the Expenditures. This is a new obligation. The 
introduction of S. 2992, the Arizona Water Settlements Act of 2002, 
included a land exchange study with Asarco but did not provide a 
specific dollar amount for the study. The Amendments have included a 
sum not to exceed $250,000. Identification and retention of this amount 
in the Lower Colorado River Basin Development Fund is a condition to 
the Amendments becoming effective pursuant to Section 302.
                                 ______
                                 
    Mr. Hayworth. Let me yield at this juncture to my colleague 
from Arizona because he, in exercising his Congressional 
prerogative, would like to introduce the next witness.
    Mr. Renzi. Thank you, Chairman. I want to take a minute to 
share with my friends here today a little history and welcome 
Chairwoman Kathy Kitcheyan from the San Carlos Apache Tribe. I 
apologize for not having a better seat at the table for you. 
You certainly deserve better.
    Chairwoman Kathy Kitcheyan is a former teacher and educator 
and longtime advocate on health and children's issues both 
nationally as well as in Arizona. Chairwoman Kitcheyan was the 
first woman elected to the Chair position of her tribe in a 
long history of great leaders of the Apache Nation.
    I want to thank you for coming here today. I know that you 
have had some concerns and we all listen with interest. 
Welcome.
    Mr. Calvert. Thank you, Mr. Chairman.
    Ms. Kitcheyan. I guess that means it is my turn.
    Mr. Hayworth. Yes, ma'am, Madam Chairwoman. It is your turn 
to testify. Welcome.

STATEMENT OF KATHY W. KITCHEYAN, TRIBAL CHAIRWOMAN, SAN CARLOS 
 APACHE TRIBE, ACCOMPANIED BY JOE SPARKS, SPECIAL COUNSEL, SAN 
                      CARLOS APACHE TRIBE

    Ms. Kitcheyan. Thank you very much. I feel like I need to 
say this because the day before and today, I feel like I am a 
woman with very few friends in Washington, D.C., so I want to 
point out something in this room. That man over there, Morris 
Udall, was a true friend of Apache people, him and his brother 
Stewart. I interned for him in the 1970s under the National 
Indian Youth Council, and I hope I have a friend here today.
    Having said that, I would like to say good morning. J.D. 
Hayworth, from the Great State of Arizona and Congresswoman 
Napolitano, and sir, I don't know your name, I am sorry--Steve 
Lanich, OK. Good morning, sir. Kyle Weaver. And, of course, our 
Congressman, Rick Renzi. Thank you for that introduction.
    You have my written testimony, so I am not going to read it 
verbatim. You guys all have a master's or doctor's degree and I 
am sure you can read that on your own.
    Anyway, today, I am here alone with two of my council 
members, Mary Moses and Karen Kee, and also our attorney, Joe 
Sparks. Our reservation was first established with a treaty in 
1852, and in the beginning, our reservation was over two 
million acres. But due to the greed of ranchers and farmers and 
unscrupulous politicians, it was reduced five times. Why? 
Because they discovered copper, silver, gold, and water. Had 
that not been done, our unemployment rate today would not be 76 
percent. It was about money then, and today, I personally feel 
that it is about money, too.
    I, along with many other friends and relatives, were raised 
on the banks of the Gila River. It flowed well in those days. 
It was our playground and also sustained our crops. Many of our 
people had their own gardens. With the eventual growth of the 
mining industry, expansion of the ranching and farming 
community upstream, the flow of the Gila River slowed down 
tremendously. According to the Globe Equity Decree of 1935, the 
San Carlos Apaches are supposed to get 6,000 acre foot of water 
to irrigate 1,000 acres. But today, we barely get enough water 
to irrigate 400 acres. Imagine that. There have been occasions 
when the water commissioner calls to tell us to turn off our 
river pumps while Upper Valley users have their pumps running 
24 hours a day.
    Under this proposed legislation for CAP water, we will most 
likely pay $74 per acre foot, while non-Indians pay anywhere 
from $26 to $28 per acre foot. This is such a disparity. I say 
it is a severe injustice and discriminating.
    The other issue, Coolidge Dam, named after one of our 
Presidents, Calvin Coolidge, synonymous with San Carlos Lake. 
This Act will certainly result in its destruction. Imagine 
that. It would be a national disgrace because it is named after 
one of our Presidents.
    It will also choke off a large majority of the natural 
surface flow from the Gila River and encourage the discharge of 
sewer water into the river by upstream communities.
    If Coolidge Dam dies also, millions of birds and fish will, 
too, including species listed under the Endangered Species Act, 
the Southwestern willow, the flycatcher, the razor back sucker, 
and the bald eagle. This is why our tribe has tried for decades 
to get a minimum pool established in the lake of at least 
75,000 acre foot, and I believe J.D. Hayworth was instrumental 
a few years back in helping us with that. We can store our CAP 
water here, but only if we can pay that $74 per acre foot for 
the CAP water.
    In our treaty with the U.S. Government, they have agreed to 
uphold its trust responsibility in the protection of land, 
natural resources, and water. We, as Apaches, have also pledged 
to be loyal and law abiding in all areas. We have lived up to 
our end of the bargain, even though we were not made citizens 
until 1924, even though we did not have the voting franchise 
until 1948. We have been loyal to the government. All we are 
asking for in this settlement is equity and fairness. It is not 
a window of opportunity for us. There is no benefits for us as 
the bill is written and we would like equal funding for the San 
Carlos Apaches.
    In our culture, water is very sacred, and this may be 
difficult for some of you to understand, but it is the lifeline 
of our existence, along with our language, our culture, and our 
spirituality. Therefore, it is not about fame. It is not about 
money. And it is not about power.
    Thus, we should not be taken lightly. Just because we are a 
small tribe with no political clout and just because we are a 
tribe with limited financial resources and can't contribute for 
someone's reelection, that does not mean we should get the 
scraps. We are a proud and honorable people and will continue 
to talk in good faith to anyone that will listen to us. And we 
certainly appreciate the efforts of Mr. Renzi and anyone that 
will help us.
    Thank you very much, Mr. Hayworth.
    Mr. Hayworth. And Chairwoman Kitcheyan, we thank you very 
much for your testimony.
    Representing the State of Arizona, Mr. Herb Guenther is 
here, and we would appreciate your testimony, sir.

          STATEMENT OF HERBERT R. GUENTHER, DIRECTOR, 
             ARIZONA DEPARTMENT OF WATER RESOURCES

    Mr. Guenther. Thank you, Mr. Chairman, members. I am here 
on behalf of Governor Janet Napolitano, who sends her regards 
and her testimony will be introduced into the record.
    I am not going to speak to the comments, as you can all 
read the comments as far as our participation within the bill. 
The State of Arizona strongly supports the bill as it stands 
today and will continue to work on those aspects of the bill 
that need some finishing touches, as well as those which are 
currently in negotiation, such as Title IV.
    This effort has taken, at least a couple of the titles, 
over 30 years to bring to closure. There are a lot of people 
who have a good portion of their lifetime invested in this 
settlement. It is an extremely complex settlement, as you can 
imagine, involving well over two-thirds of the water users in 
the State of Arizona. So just by its nature, it is extremely 
delicate. It is a house of cards with each card maintaining a 
certain--sharing the burden of the rest.
    The main issues here that give us comfort is primarily the 
stipulated settlement of longstanding litigation. All three 
titles that are active have brought to closure extended 
litigation, and hopefully, those will go a long way to giving 
people a longer predictability, more predictability about their 
water supply, and therefore, more reliability and the realism 
that, in fact, they can plan for their future accordingly.
    Again, Mr. Chairman, members, we support the legislation in 
its entirety and we pledge our continuing participation in 
trying to resolve those outstanding issues and bringing those 
to successful closure, as well. I stand ready to answer any 
questions.
    Mr. Hayworth. Mr. Guenther, thank you very much.
    [The prepared statement of Governor Napolitano follows:]

        Statement of The Honorable Janet Napolitano, Governor, 
                            State of Arizona

    Chairman Calvert, and Members of the Subcommittee:
    Good morning, and thank you for the opportunity to present the 
views of the State of Arizona on H.R. 885, the Arizona Water 
Settlements Act of 2003.
    It is now time for Congress to confirm the agreements reached after 
many years of intense negotiations and compromise. With passage of H.R. 
885, and implementation of the settlements, Arizona will embark on a 
new age of water resource planning, usage and cooperation.
    The legislation encompasses multiple Titles to resolve many 
longstanding water disputes in Arizona. Additionally, it provides 
benefits to New Mexico. Each Title addresses a particular settlement 
agreement, and provides the congressional authorization and funding 
needed to implement the settlement. Many times in the past, Congress 
has been faced with enacting legislation to authorize settlements that 
have not been finalized. I am pleased to inform the Committee members 
that the three settlement agreements to be ``authorized, ratified, and 
confirmed'' by Act of Congress have been executed by the State of 
Arizona, the tribes, and nearly all of the non-Indian parties, except 
the Secretary of the Interior. The Secretary requires congressional 
authorization prior to signing the settlements. There is no question 
that the parties intend to settle the issues, and, in fact, many of the 
parties are carrying out their government functions as if the 
settlements were already final.
    This legislation is vitally important to the future of Arizona, in 
economic terms, in meeting water management goals, and in furthering 
our relations with our tribal citizens. H.R. 885 will provide the 
mechanisms to resolve two major tribal water settlements immediately, 
and will provide the United States and non-Indian parties additional 
tools to resolve water rights claims of other Arizona tribes. It 
establishes a means for acquiring water and funding for future tribal 
water rights settlements.
    Let me provide some highlights of each Title and why each is so 
important to all the people of Arizona.

Title I: Central Arizona Project Settlement
    Since statehood in 1912, Arizonans have dreamed of bringing 
Colorado River water to the cities and farms of central Arizona. It was 
the great Senator Carl Hayden's dream. The recently deceased John 
Rhodes, former House minority leader, claimed passage of legislation to 
authorize the Central Arizona Project (CAP) as his greatest achievement 
in his 30 years in Congress. The CAP authorization became a reality in 
1968 and by 1985 the CAP was delivering Colorado River water to farms 
and communities, as a replacement for groundwater. It continues to be 
our lifeblood, allowing many Arizonans to weather the drought 
conditions of eight of the last nine years. We continue to enhance the 
use of CAP, and this legislation furthers the State's water management 
goals utilizing the CAP.
    Title I is consistent with, and in furtherance of, the intent of 
the stipulated settlement approved by the U.S. District Court of the 
litigation between the United States and the Central Arizona Water 
Conservation District (CAWCD) over the amount of repayment for the CAP. 
This Title also resolves other non-contract issues between the United 
States and the non-Indian CAP water users. Further, Title I provides 
the means to acquire the water supplies and funding necessary for the 
settlements in the other Titles of H.R. 885, and for future tribal 
water settlements.
    Final division of the Colorado River water for the CAP between the 
state users and the federal users is important to the State. With this 
legislation, approximately 47% of the CAP will be dedicated for use by 
Arizona Indian tribes. The rest has been, or will be, allocated among 
the many Arizona non-Indian municipal, industrial and agricultural 
users. As part of Title I, 65,647 acre-feet of CAP high priority rights 
will be reallocated to Arizona cities, towns and water companies for 
municipal and industrial use. This reallocation has been pending for 
years after an extensive public process by the Arizona Department of 
Water Resources.
    To acquire water for tribal water settlements, Title I provides a 
mechanism for agricultural interests to relinquish their CAP 
subcontracts in return for debt relief from Section 9(d) of the 
Reclamation Project Act of 1939 totaling $158 million (shared by the 
federal government and state interests). Additionally, Title I provides 
for waivers of water rights claims by certain Indian tribes, and 
regulatory relief from the Reclamation Reform Act (RRA). It is 
important to the State that the water for tribal settlements, over and 
above that contributed by the parties, be acquired water from willing 
rightholders and not water taken by the federal government. Early 
tribal settlements were based on this concept, but in the 1990s the 
Secretary and Congress allocated water for settlements despite concerns 
raised by the State. We hope that the provisions of Title I can be a 
precedent for settlements throughout the country.
    The 1982 Reclamation Reform Act (RRA) has prevented the State from 
making full use of the CAP, which was designed to replace existing 
groundwater use for agriculture. Some lands are not eligible to receive 
CAP water due to RRA and are instead still irrigated with groundwater. 
Additionally, the administrative costs of implementing RRA in Arizona 
outweigh any perceived benefits to the government. The relinquishing 
districts would then be able to purchase CAP water over the next 30 
years from year-to-year agriculture pools at an affordable price. RRA 
relief for the agricultural districts within the CAP service area, as 
provided in Title I, furthers implementation of the Arizona Groundwater 
Code, and our effort to preserve our depleted groundwater supply for 
future generations.
    The water acquired pursuant to the CAP agricultural subcontract 
relinquishments will be used in the water budgets for the Gila River 
Indian Community settlement in Title II, for the Tohono O'odham Nation 
settlement amendments in Title III, and provide the Secretary of the 
Interior with additional water for future Arizona tribal water 
settlements, for a total of 197,500 acre-feet of water. Up to an 
additional 96,295 acre-feet will be provided for the State to hold in 
trust for a period of time and then reallocate to municipal and 
industrial water users in Arizona.
    Title I also authorizes an agreement between Arizona and the 
Secretary to share in the ``firming'' of 60,648 acre-feet of the tribal 
CAP water to make it a more reliable water source for tribes to use for 
municipal and industrial purposes. Firming is the process of storing 
water underground today to be used when the dedicated surface water 
supply is lacking due to shortages. The State is obligated to firm 
15,000 acre-feet for the Gila River Indian Community Water Rights 
Settlement, and another 8,724 acre-feet for future Arizona Indian 
tribal settlements. Through the Arizona Water Banking Authority we have 
begun a process to identify the best ways to meet this obligation, and 
to examine whether additional state law authorizations are needed, as 
well as funding options.
    Arizona has been concerned in the past about proposals to market 
water out-of-state, in derogation of the Law of the River, the Indian 
non-intercourse acts, and other applicable laws. The Law of the River 
includes several U.S. Supreme Court decisions, two multi-state 
compacts, and numerous acts of Congress concerning the use of the 
Colorado River. We believe that uses of the Colorado River must be 
consistent with this body of law.
    Title I clearly prohibits the direct or indirect marketing of CAP 
outside the boundaries of the State of Arizona. However, it would not 
impact the existing interstate banking agreements with California and 
Nevada through the Arizona Water Banking Authority. Nor would it affect 
any exchange necessary for the New Mexico Unit of the CAP as authorized 
in 1968. The State has been negotiating with the State of New Mexico 
over proposed changes to confirm that New Mexico can develop the CAP 
New Mexico Unit as envisioned in the 1968 Act.
    Funding of tribal water settlements has been a problem in the past. 
Tribes are asked to give up potential large paper water rights in 
return for a reasonable water budget and the ability to make use of the 
water. Use of water involves development funds for on-reservation 
projects. As you know, the appropriations process is difficult and may 
continue to be so in the future.
    Title I outlines the intended uses for the Lower Colorado River 
Basin Fund (Fund) over the next 40 years. The Fund consists of payments 
by the non-Indian CAP water users and power revenues of the CAP. These 
sources will continue to flow into the Fund until the CAP is fully 
repaid. Under Title I, the revenues in the Fund are redirected to be 
used to reduce the cost of delivery of water to tribal water users, to 
finance current and future tribal water settlements and to finance CAP 
distribution systems on tribal lands. It is important to note that this 
funding is for the long-range water and economic development needs of 
Indian tribes.
    Other issues resolved in Title I include clarifying that CAP 
contracts, whether tribal or non-Indian, are for permanent service 
within the meaning of the Boulder Canyon Project Act and for a term of 
service of 100 years. It also resolves the long-standing dispute 
between the Secretary and CAWCD about how shortages will be shared by 
users of the CAP.
    The provisions of Title I have been memorialized in the Arizona 
Water Settlement Agreement (Agreement), among the CAWCD, the Director 
of the Arizona Department of Water Resources, and the Secretary of the 
Interior. CAWCD and the Director signed the Agreement last year, but 
the Secretary will need to complete the National Environmental Policy 
Act process before signing. Finishing the Agreement will further the 
stipulated settlement of the repayment litigation in U.S. District 
Court, which could not be completed without passage of H.R.885.
Title II: Gila River Indian Community Water Rights Settlement
    Coronado visited the Pima Indians of what is now central Arizona in 
1540. There the conquistador bought grains from lush tribal fields 
along the Gila River. The current Gila River Indian Community 
(Community), made up of two tribes, the Pima and the Maricopa, are the 
descendents of those Indians visited so long ago by Spanish explorers 
and missionaries. These tribes assisted the U.S. Cavalry in the Indian 
wars, sold grain to American settlers, and its members have volunteered 
to serve in many overseas conflicts. One such member was Ira Hayes who 
helped raise the United States Flag over Iwo Jima.
    With a history of farming they have fought in the courts for 
decades for their water rights. Over the last two decades negotiations 
have been held. In the last year we finally succeeded in reaching a 
settlement. Title II would authorize the Secretary to sign the Gila 
River Indian Community Water Rights Settlement and provide the ways and 
means needed to make it a reality.
    The State participated in this settlement in many roles, that of 
facilitator, water rights holder, and protector of state policies and 
interests. Additionally, the State attempted to make the settlement 
acceptable for small water users unable to represent themselves in the 
negotiations. After enactment of the congressional settlement 
legislation, Arizona must address and enact changes to Arizona law 
consistent with the settlement to bind all citizens to the settlement, 
now and in the future. A State does not commit lightly to changing its 
laws, but in this case it will not only address issues presented by the 
settlement, but also serve the water management goals of the State. To 
this end the Arizona Department of Water Resources, the Arizona Game 
and Fish Commission and the Arizona State Land Department represented 
the State in negotiations. I will outline the State's policy 
considerations.
    A major goal of any Indian water rights settlement is finality. 
Title II confirms an overall final water budget for the Gila River 
Indian Community and provides strict accounting of that budget, funding 
to allow utilization of the water, and broad waivers of claims by the 
Community and the United States as trustee to pending and future court 
claims to water rights.
    In the General Stream Adjudication of the Gila River and its 
sources, the Community and the United States claim between 1.5 million 
and 2 million acre-feet of water from all sources. The Gila River 
bisects the Community, which has proven uses of Gila River and 
groundwater since before recorded history. It is not a matter of 
whether the Community is entitled to water; it is a question of how 
much.
    In the settlement, the Community has agreed to an overall water 
budget of 653,500 acre-feet annually, calculated on a rolling average 
over 10 years. The sources of the water are Gila River water, Salt/
Verde River water, groundwater, exchanged reclaimed water, and Central 
Arizona Project (CAP) water. Well over one-half of the proposed water 
budget is currently under the legal control of the Community. It has a 
CAP contract for 173,100 acre-feet, a time-immemorial right to over 
200,000 acre-feet Gila River water under the Globe Equity decree 
(125,000 acre-feet of reliable water in the tribal water budget), 5,900 
acre-feet of Salt/Verde River water under the Haggard Decree, and the 
sovereign right to pump their own groundwater outside of State 
regulation. Part of this settlement is recognition of rights already 
held and used by the Community, with methods to improve those existing 
uses. Attached to my statement is an outline of the Community 
settlement water budget.
    The primary source of additional water for the Community's water 
budget is CAP, with some contributed Salt/Verde River water and 
exchanged reclaimed water. Some parties contribute CAP water, but the 
largest block is from the CAP subcontract relinquishment pool 
established under Title I, approximately 102,000 acre-feet of lower 
priority water used for agriculture. The final piece to the water 
budget came from creative thinking by the Phoenix area cities. The 
cities of Mesa and Chandler will exchange highly treated reclaimed 
water with the Community for Community CAP water on a 5 to 4 ratio. 
This creative thinking solves several water management issues and 
benefits Indians and non-Indians. In fact, the two cities have already 
entered into the agreements necessary to make the exchange, beginning 
the construction process prior to enactment of this legislation. The 
Community and the United States are prohibited from seeking water above 
the proposed water budget.
    In exchange for this water budget and funding to make use of the 
budget, the Community and the United States are granting broad waivers 
to all the citizens of Arizona of past, present, and future court 
actions on water rights, subject to some retention of rights to enforce 
the benefits of the settlement. Arizona insisted that this be a final 
settlement of the Community's claims to water.
    A benefit to settlements is to make partners out of combatants. An 
example of this, to be confirmed in the settlement, is the relationship 
between the Gila River Indian Community and the San Carlos Irrigation 
and Drainage District (SCIDD). SCIDD and the Community share in the San 
Carlos Indian Irrigation Project run by the Bureau of Indian Affairs. 
Sharing water of a project operated by an under-funded federal agency 
has strained the relationship. Through the settlement, SCIDD and the 
Community will enter into a new relationship, dividing the project 
features and taking over responsibility for operating their own 
systems. The settlement also provides funding to rehabilitate the 
existing unlined system to make better use of limited water supplies. 
SCIDD and the Community now share common goals and work together as a 
team. This is but one example of how this settlement is making 
neighbors out of antagonists.
    I will, at this point, list the parties to separate agreements 
(settlement, exchange, lease, or otherwise) that are part of the 
overall Community settlement confirmed by H.R. 885. The parties are:
      The Salt River Project;
      Phelps Dodge Corporation;
      The irrigation districts and many towns and cities in the 
Upper Gila River Valley and the San Pedro River, including New Mexico 
rightholders;
      Arlington Canal Company and the Buckeye Irrigation 
Company;
      Maricopa-Stanfield Irrigation and Drainage District;
      Central Arizona Irrigation and Drainage District;
      San Carlos Irrigation and Drainage District;
      The Cities of Mesa and Chandler;
      Arizona Game and Fish Commission; and
      Phoenix area cities with leasing arrangements.
    Some of these separate agreements further the water management 
goals of the State. For example, the ability of various cities to lease 
high-priority CAP water from the Community for 100 years is important 
in meeting Assured Water Supply requirements under state law for new 
subdivisions. The reclaimed water exchange agreements between the 
cities and the Community provide the Community with a reliable source 
of water for agriculture, and assist the cities in making full reuse of 
treated effluent.
    The Upper Gila Valley settlements provide many benefits. Not only 
do the settlements end long-standing contentious litigation before the 
Globe Equity Court, between the large irrigation districts and the 
Community, but also provide a basis for future settlements. The 
irrigation districts have agreed to permanently reduce irrigation 
acreage for the benefit of the Community, and if there were a future 
settlement with the San Carlos Apaches, the districts would permanently 
reduce additional irrigation acreage. The irrigation districts have 
also agreed to a cap on combined diversions and groundwater pumping; 
real reductions in water use, to the benefit of the river's health, the 
Community, and the San Carlos Apache Tribe.
    In past Indian settlements, States have been asked to make 
financial contributions to settlements. In previous Arizona Indian 
tribal water settlements, the State has provided an appropriation to 
the tribal development fund. The State's contribution to the Community 
settlement is structured differently. First, the State believes that 
the CAP water that is being relinquished is a state contribution. It 
was originally part of the non-Indian allocations of the CAP. We have 
agreed to this division of water in Title I and urge its use for the 
Community's settlement. The financial aspect for the State in this 
settlement may be large as time goes by, but it does not include any 
contribution to the Community development. Instead the State has agreed 
to firm up to 15,000 acre-feet of low-priority CAP water. Title I 
outlines this commitment but leaves the details to a future agreement 
with the Secretary about firming of tribal supplies Through the Arizona 
Water Banking Authority we are in the process of analyzing how this 
will be accomplished. It may involve millions of dollars to bank an 
amount necessary to firm the water to municipal and industrial delivery 
priority.
    One of the separate agreements involves protection of groundwater 
in the areas south of the Gila River Indian Reservation. By changes to 
state law, the State will limit the use of groundwater in specific 
areas adjacent to the reservation to help protect tribal groundwater. 
To further ensure that the restrictions benefit the aquifer for the 
Community, the State will authorize and supply a water replenishment 
bank. The settlement outlines the goals of the replenishment bank but 
leaves implementation up to the Arizona Legislature. By enacting state 
legislation we will bind all future water users in that protected area 
to the settlement. This replenishment bank may involve millions of 
dollars.
    Water uses in other areas within the Gila watershed are also of 
concern to the Community, including groundwater users along the San 
Pedro River and the Upper Gila River. The water budget makes 
assumptions about the present flow of the Gila and San Pedro rivers. 
The State has proposed that present uses on those streams should be 
allowed to continue and the Community has agreed. The settlement 
proposes a ``safe harbor'' provision for these current uses that the 
Community, SCIDD and the United States would not challenge. To limit 
future uses, the State has agreed to propose changes in state law that 
prohibit the construction of new dams and the development of new 
irrigation uses within the San Pedro River and the Upper Gila River 
basins. When enacted the State assumes an ongoing enforcement 
responsibility. At this time we do not have an estimate of this future 
financial commitment.
    To summarize: The State contributions involve several changes in 
state law to accomplish the goals of the settlement; obligate the State 
to ongoing enforcement provisions, and necessitate large underground 
water storage expenditures for firming of tribal water and for the 
replenishment bank.
    This settlement encompasses many good things for many entities 
within Arizona. I have touched only on those of particular importance 
as State policy considerations. However, I must comment on one more 
provision. In Title II, and in Title III, the legislation outlines 
procedures for the Gila River Indian Community and the Tohono O'odham 
Nation to have lands placed into trust.
    It is important to remember that 28 percent of Arizona's total land 
base consists of various Indian Reservations, with much more land held 
in trust for benefit of tribes or individual Indians, or in fee by 
tribes. We are proud of our tribal governments and have improved our 
ability to work with them on a government-to-government basis, 
especially on health, education and gaming issues. However, there are 
many consequences to state and local non-Indian authorities when lands 
are added to reservations, or taken into trust. For many years the 
State has taken the position that only Congress has the authority to 
make new reservations or additions to existing reservations, pursuant 
to congressional directives found in 25 U.S.C. 211. Some tribes and the 
Secretary of the Interior disagree with our legal analysis. To 
circumvent future litigation on this issue we, along with other Arizona 
interests including the congressional delegation, have urged that the 
settling tribes agree to a clarification of this issue concerning their 
reservations.
    Title II confirms that new additions to the reservation, or the 
placing of lands into trust status for the benefit of the Community, 
will only be accomplished by specific acts of Congress. Congress 
enacted the Zuni Indian Tribe Water Settlement Act earlier this year 
with similar provisions. We strongly support retention of this 
provision in Title II, as well as in Title III.
    In summary, the Gila River Indian Community Tribal Water Settlement 
provides many benefits to all Arizonans, and the State has committed 
itself to changes in state law and future use of resources to effect 
the benefit of the settlement for the Community.

Title III: Amendments to the Southern Arizona Water Rights Settlement 
        Act of 1982
    In 1982, Congress enacted the Southern Arizona Water Rights 
Settlement Act (SAWRSA) to resolve the tribal claims against non-Indian 
water users in the Upper Santa Cruz Basin by the Tohono O'odham Nation 
(Nation), then known as the Papago Tribe, pending in the case U.S. v. 
Tucson. The 1982 SAWRSA called for a water budget of 66,000 acre-feet 
of delivered water, a 10,000 acre-feet limit on groundwater pumping by 
the Nation, a $15 million development trust fund, and a cooperative 
fund to pay for the delivery of surface water.
    Portions of the settlement have been completed, including the 
construction of a major portion of the distribution system to use the 
Nation's original CAP allocation. The Nation, the State, and the local 
entities have performed their required tasks under the 1982 Act. This 
included state entities' financial contributions of $5.25 million, 
Tucson's contribution of 28,200 acre-feet of effluent and tribal 
waivers of claims to water rights.
    However, issues about the distribution of the tribal benefits arose 
before final dismissal of U.S. v. Tucson. At the same time, questions 
were raised about the source of a portion of the tribal water budget, 
and opposition formed to the building of a new farm on unbroken desert 
lands. Title III of H.R. 885 would amend the 1982 Act to address these 
issues, provide a better method for dismissal of the pending lawsuits, 
and modernize the authorized uses of water by the Nation to be more 
consistent with those allowed under state law. It also confirms the 
settlement agreement among the Nation, the State of Arizona, Asarco, an 
international mining company, and Farmers Investments Companies (FICO). 
I recently signed the settlement agreement, as have all parties except 
the Secretary of the Interior, who is awaiting congressional 
authorization.
    To begin the more recent negotiations with all parties to the 
settlement, an agreement was reached between the Nation and the Indian 
allottees, whose allotment lands are within the basin, about the use of 
the settlement benefits. It is a tribute to the tribal parties that 
they have worked out internal differences, and now are ready to finish 
the settlement. The State acted as a party to the final settlement and 
facilitated the negotiations.
    Title III clarifies all the issues that delayed implementation. 
First, it identifies the source of the additional settlement water. The 
Nation has an original CAP allocation of 37,800 acre-feet, but SAWRSA 
provided for an additional 28,200 acre-feet of unidentified settlement 
water. Under Title I of H.R. 885, CAP agricultural water is made 
available to the Secretary for Indian water settlements, and it is from 
this pool of relinquished contracts that the Nation will receive its 
full settlement budget. Title I directs that the Secretary will have 
the responsibility to firm the 28,200 acre-feet of settlement water. 
The State offered up to $3 million in appropriations or services to 
assist the Secretary in that obligation. It should be noted that the 
State had already appropriated a contribution to the Cooperative Fund, 
as required under the 1982 Act, and this $3 million is an additional 
contribution.
    The settlement better defines the nature of the 10,000 acre-foot 
limit on pumping rights. The 1982 congressional directive on the 
limitation of pumping did not address whether this is a ``reserved'' 
pumping right or the equivalency of a state-based grandfathered pumping 
right in an active management area. In return for clarifying that this 
is not a reserved right the State has agreed to seek state law changes 
to allow additional protection to the Nation's groundwater resource 
from the effects of new wells around the reservation. Under this 
legislative change, the State adds to its water management 
responsibilities in the Tucson Active Management Area.
    Each of the major parties, the City of Tucson, Asarco, and FICO, 
have entered separate agreements with the Nation and the allottees to 
further protect the groundwater resource of the reservation. This 
includes a creative solution by Asarco to substitute tribal CAP water 
for Asarco's industrial groundwater use through a storage arrangement.
    Waivers and releases under the 1982 Act only provided for past and 
present claims to water rights and injuries to water rights, while the 
Title III amendments include future claims to water rights and injuries 
to water rights with some defined exceptions to enable the parties to 
enforce the settlement provisions.
    In 1982, it was envisioned that the Bureau of Reclamation would 
construct or rehabilitate three different farm units for the Nation. 
Under Title III, a procedure is outlined to substitute a $18.3 million 
development fund for one farm that would have been built on unspoiled 
desert lands. The $18.3 million is a present value substitute for a 
project already authorized as part of a settlement and committed to 
construction. Of the remaining commitment, one farm is already 
completed, and the last farm rehabilitation and expansion project has 
begun, both using CAP funding.
    A procedure for dismissing the pending lawsuits is agreed upon in 
the settlement agreement, and confirmed by Title III. It provides for 
class action consolidation and dismissal of Indian allottee claims 
based on the receipt of settlement benefits. There are over 3,000 
individual Indian allottees with land interests in the basin. The State 
finds that this procedure gives greater certainty, binding not just the 
present litigants but also their successors.
    In summary, Title III provides better tools for dismissal of 
pending lawsuits, a confirmed supply of settlement water for the 
Nation, protection of tribal groundwater, creative uses of CAP water, 
and legal certainty over issues not addressed in 1982, such as the 
nature of the groundwater pumping right.

Title IV: San Carlos Apache Tribal Water Settlement
    Unfortunately, at this time we do not have a San Carlos Apache 
tribal water settlement. Congress approved a San Carlos Apache Tribe 
water settlement of their claims to the Salt River watershed portion of 
the reservation in 1992. Since that time, several discussions have been 
about resolving the tribe's claims to the Gila River watershed portion 
of the reservation. These issues are also being addressed in the 
General Stream Adjudication of the Gila River and its source.
    The State stands ready to assist in the negotiation of the San 
Carlos Apache tribal claims to the Gila River when the Tribe and the 
United States reach an understanding of the parameters of such a 
settlement. It is possible that a settlement will be reached before 
passage of H.R. 885. However, the State does not believe that the rest 
of legislation should be delayed if Title IV cannot be completed.
    Provisions have been made in Title II to maintain the rights of the 
San Carlos Apache Tribe against the settling parties. The San Carlos 
Apache Tribe expressed concerns to the State that the legislation and 
the settlement agreement for the Gila River Indian Community hinder use 
of their current water rights. They cite primarily the exchange 
provisions in the Community's settlement, and the legislative changes 
proposed by the State of New Mexico, both in Title II. Under the Globe 
Equity decree of 1935 the Apaches were awarded a water right with an 
1846 priority date to irrigate 1,000 acres along the Gila River. The 
State fully supports maintaining the ability to use this right, and, in 
fact, would support proposals to enhance the ability of the Apaches to 
make use of the 1846 right.
    The State is optimistic that the Apache claims to the Gila will be 
resolved in the not too distant future, either by settlement or in 
Adjudication Court, but urges the Committee to move forward on H.R. 
885, with or without a new Apache settlement.
Summary and Conclusion
    Before closing I would note that there are concerns that have been 
raised by non-parties to the settlements. Most notably the Navajo 
Nation, in its endeavor to quantify its water rights, has offered 
comments. Their primary concern is that the Navajo Nation claims have 
not been considered in this legislation. The State of Arizona is 
currently negotiating with the Navajo Nation about its claims to the 
mainstream Colorado River. It is our hope that a portion of the water 
acquired pursuant to the relinquishments authorized in Title I will be 
available for settling their claims.
    Title I provides the final division of the Colorado River waters to 
be delivered through the CAP, clarifies contractual relationships with 
the United States, authorizes a shortage-sharing approach, and furthers 
the intent of the stipulated settlement between Central Arizona Water 
Conservation District and the United States on repayment of 
construction costs of the CAP. Presently unallocated CAP water is 
finally allocated or reallocated pursuant to public processes completed 
many years ago. Finally, Title I provides a mechanism for 
relinquishment of agricultural priority water to be used for Indian 
water settlements, both present and future, along with a funding 
mechanism for those settlements and for the delivery of CAP water to 
Indian customers. The funding mechanisms proposed through the Lower 
Colorado River Basin Fund may be unique, but they are worthy of 
congressional approval. These benefits accrue primarily to Arizona 
Indian tribes and their future economic development.
    Title II confirms the water rights settlement of the Gila River 
Indian Community, ending long-standing judicial and cultural conflicts 
concerning millions of acre-feet of water. It provides the Community 
with a clear final water budget and the resources to utilize that water 
in return for complete waivers and releases of water rights claims and 
injuries to water rights. Many of the settlement's features enhance the 
ability to conserve groundwater in central Arizona, including the 
leasing of tribal CAP supplies to non-Indian users in Arizona. Title II 
resolves potential legal disputes over how non-tribal lands gain trust 
or reservation status by confirming that it is properly Congress' role 
to determine if and how reservations are changed. The State has 
committed to pursue changes in state law and to expend millions of 
dollars to assure the Community more reliable water supplies and to 
preserve groundwater on and around the reservation.
    Title III provides means to finalize a settlement long overdue for 
the Tohono O'odham Nation and the people of southern Arizona. It 
modernizes the 1982 settlement, providing water use flexibility, 
especially of CAP water. In seeking additional protections of tribal 
groundwater, the settlement complements existing state water management 
goals. The effort in amending the settlement gave tribal, local, state, 
and federal government representatives an opportunity to better 
understand each other and to become partners instead of combatants.
    We have worked long and hard to negotiate the three settlements 
represented by the respective Titles, and the State of Arizona strongly 
recommends that the Committee support H.R. 885, the Arizona Water 
Settlements Act of 2003.
                                 ______
                                 
                                 [GRAPHIC] [TIFF OMITTED] T9653.002
                                 
    [Mr. Guenther's response to questions submitted for the 
record follows:]

Response to questions submitted for the record by Herbert R. Guenther, 
            Director, Arizona Department of Water Resources

Congressman Hayworth's Question to the State of Arizona
    It is my understanding that any party that holds a water right 
under the Globe Equity 59 Decree (G.E. 59 Decree) may engage in a 
transfer of that right which involves a change in the point of 
diversion or manner or purpose of the use of such water. It is also my 
understanding that the authorization for such transfers is contained in 
Article XI of the Decree, which also requires that such transfers occur 
``without injury'' to the rights of other parties that hold water 
rights recognized by the Decree.
    Can you confirm that all water exchanges and transfers that involve 
G.E. 59 Decree water rights contemplated or authorized by the Arizona 
Water Rights Settlements Act will be subject to approval by the Globe 
Equity Court applying the standard contained in Article XI of the G.E. 
59 Decree?
Answers
    Concerning Congressman Hayworth's understanding of Article XI of 
the Globe Equity 59 Decree and its application to transfers and 
exchanges we offer the following comments:
    In an order dated September 23, 1993, rules were adopted by the 
Decree Court on sever and transfers or change of use of decreed rights, 
but did not address short-term or long-term exchanges. However, the 
Court has reviewed exchange proposals in the past couple of years due 
to the on-going drought.
    In April of 2003 the Court approved an exchange of Central Arizona 
Project water for water retained in San Carlos reservoir. Here the San 
Carlos Apache Tribe had CAP water delivered to the San Carlos Indian 
Irrigation Project (SCIP) entities (San Carlos Irrigation and Drainage 
District and Gila River Indian Community) in exchange for retention of 
SCIP rights in the reservoir. The parties presented the Court with a 
stipulation.
    To meet emergency water needs the Town of Kearny executed an 
exchange agreement with the Gila River Indian Community (GRIC) and the 
San Carlos Irrigation and Drainage District (SCIDD) for 2001-2002. 
Decree parties protested the exchange because it did not go through the 
1993 rules. The Gi1a River Water Commissioner did not think the rule 
applied to a short-term exchange. After a briefing and a hearing the 
Judge decided on June 6, 2003, to allow the 2001-2002 exchange because 
there was no harm to other users, but did not grant it as a long-term 
exchange. After noting that the Kearny exchange was not a precedent, 
the Judge urged all parties to come to the Court with stipulated 
agreements for proposed exchanges. The Judge did not decide whether 
exchanges were authorized or consistent with Article XI of the Decree 
because that issue had not been briefed. However, in our opinion the 
Judge has clearly indicated that exchanges involving parties to the 
Decree such as GRIC and SCIDD should come before the Decree Court for 
approval under a no harm to other rightholders standard.
    Concerning the specific question about the Arizona Water 
Settlements Act and its requirement of Globe Equity 59 Decree Court 
approval of transfers and exchanges we offer the following comments:
    We believe the legislation does (pursuant to agreement of the 
parties) require the approval of the Globe Equity 59 Decree Court for 
many provisions. Exchanges and transfers are specifically part of the 
Arizona Water Settlements Act. Provisions of the Upper Valley 
Defendants (UVD) Settlement Agreement, Exhibit 26.2 relates to 
transfers; and the Phelps Dodge Agreement, Exhibit 10.1, relates to 
exchanges. Both of those agreements contain specific provisions for 
Globe Equity 59 Decree Court jurisdiction and approvals. See paragraphs 
5.2, 11, 12.1, and 13.3 of the UVD Settlement Agreement, and paragraph 
6.1 of the Phelps Dodge Agreement. Should an Asarco Agreement be 
reached, it is anticipated that it would also contain provisions about 
the Globe Equity 59 Decree Court, including any exchanges pursuant to 
CAP leases.
    Related but not currently contained in the legislation are the 
amendments to be offered by the New Mexico congressional delegation. 
Under the 1968 Central Arizona Project Act (43 U.S.C. 1521 et seq) a 
New Mexico Unit of the CAP was authorized (Sec. 1524(f)). Gila River 
exchanges were specifically authorized and subject to a standard of 
``without injury or cost to the holders'' of Globe Equity Decree rights 
to the Gila River. While approval of the exchange is not required under 
the 1968 Act, the Decree Court would probably be the forum for 
determination of any injury claims by rightholders. We believe the New 
Mexico amendments may be drafted to require Globe Equity 59 Decree 
Court approval of the proposed exchange agreement.
                                 ______
                                 
    Mr. Calvert. At this point, the Chair would recognize our 
friend from New Mexico, Mr. Lopez, to offer his testimony on 
H.R. 885.

           STATEMENT OF ESTEVAN R. LOPEZ, DIRECTOR, 
            NEW MEXICO INTERSTATE STREAM COMMISSION

    Mr. Lopez. Good morning, Mr. Chairman and Subcommittee 
members. My name is Estevan Lopez. I am the Director of the New 
Mexico Interstate Stream Commission. I appreciate very much the 
opportunity to appear before you today and provide comments on 
behalf of the State of New Mexico regarding the Arizona Water 
Settlement Act, H.R. 885. With your permission, I will submit 
my written testimony for the record.
    This legislation will resolve longstanding water issues 
among Indian tribes and water users in New Mexico and Arizona. 
It is of great importance to the State of Arizona and will 
bring numerous benefits to water users in communities in the 
Gila River Basin. I want to commend you, Representative 
Hayworth, and Senator Kyl and other members of the Arizona 
delegation for such comprehensive and important legislation.
    In addition to the benefits to Indian tribes and water 
users in Arizona, this bill could benefit Western New Mexico, 
which shares the Gila River with Arizona. Both Title I of the 
bill, the Central Arizona Project Settlement Act, and Title II, 
the Gila River Indian Community Water Rights Settlement Act, 
bear directly on use of water within the Gila River Basin in 
New Mexico.
    During the last year, we have worked with representatives 
of the State of Arizona, Indian tribes, and water users to 
craft language that will address New Mexico's needs. We have 
made substantial progress, and if New Mexico's interests can be 
protected, we will be able to stand fully behind the bill.
    New Mexico has two discrete areas of interest. First, in 
the Upper Valley Defendant, or UVD, agreement, approved in 
Title II of the bill, we want to ensure that New Mexico farmers 
in the Virden Valley are fairly treated. Second, the 
authorization for the New Mexico unit under Section 304 of the 
1968 Act authorizing the Central Arizona Project must be fully 
protected in advance. I will discuss these two matters in turn.
    Last year, my office and the New Mexico Office of the State 
Engineer participated in negotiating provisions of the UVD 
Agreement. The core agreement calls for the UVDs to reduce 
current irrigation by 3,000 acres in exchange for the ability 
to pump groundwater up to six acre feet per acre, regardless of 
priority. The result in New Mexico is that water rights 
associated with up to 240 acres, or approximately 8 percent of 
the current irrigated acres in the Virden Valley, would be 
extinguished. The State of New Mexico believes the UVD 
settlement in H.R. 885 is a fair and reasonable compromise that 
will protect all parties and provide a more secure and 
dependable water supply. We support implementing the UVD 
settlement.
    Our second concern is to carry out the authorization for 
the New Mexico unit of the Central Arizona Project, or CAP, as 
provided in the 1968 Act. The 1964 U.S. Supreme Court decree in 
Arizona v. California limited the State of New Mexico to 
present and past uses of water with no water for future uses. 
The 1968 Act authorized an apportionment to New Mexico as part 
of the cap. The intent of the 1968 Act is to provide for future 
uses of water in New Mexico from the Gila River Basin above 
those specified in Arizona v. California. The 1968 Act directs 
the Secretary of Interior to provide New Mexico with additional 
water through an exchange by which the Secretary would contract 
with water users in New Mexico for water from the Gila River 
Basin in amounts that will permit consumptive use of water not 
to exceed an annual average of 18,000 acre feet, including 
reservoir evaporation, over and above the consumptive uses 
provided in Article IV of the decree of Arizona v. California. 
To complete the exchange, the 1968 Act also directs the 
Secretary to deliver CAP water to users in Arizona in 
sufficient quantities to replace in full any diminution of 
their Gila River water supplies that results from the 
additional consumptive use of Gila River water in New Mexico. 
Amendments to H.R. 885 are required to ensure New Mexico's 
ability to construct the New Mexico unit and develop the 18,000 
acre feet. Over the last 9 months, we have been working with 
the State of Arizona, the Bureau of Reclamation, the Bureau of 
Indian Affairs, the Gila River Indian Community, the San Carlos 
Irrigation and Drainage District, and the Central Arizona Water 
Conservation District to develop necessary amendments and 
related settlement documents to facilitate construction and 
operation of the New Mexico unit of the CAP. Attached to my 
written testimony is a summary of progress and remaining issues 
relating to the Arizona Water Settlement Act and the New Mexico 
unit of the Central Arizona Project, as jointly prepared by New 
Mexico and Arizona on September 23 of 2003. That summary 
outlines the issues and tasks that have been or remain to be 
resolved, in part or whole, between Arizona and New Mexico in 
relation to the 18,000 acre foot exchange.
    Mr. Chairman, we are working tirelessly to finish our 
negotiations with the State of Arizona, Indian tribes, and 
other water users. Once those discussions are complete and 
resolutions of these issues can be incorporated into the 
legislation, we look forward to providing New Mexico's strong 
support for enactment of this bill by Congress.
    Thank you again for the opportunity to present our views on 
this matter.
    Mr. Hayworth. And, Mr. Lopez, we thank you.
    [The prepared statement of Mr. Lopez follows:]

               Statement of Estevan R. Lopez, Director, 
                New Mexico Interstate Stream Commission

    Mr. Chairman and Subcommittee members, I am Estevan Lopez, Director 
of the New Mexico Interstate Stream Commission. I appreciate very much 
the opportunity to appear before you today and provide comments on 
behalf of the State of New Mexico regarding the Arizona Water 
Settlements Act, H.R. 885. This legislation will resolve long-standing 
water issues among Indian Tribes and water users in New Mexico and 
Arizona. It is of great importance to the State of Arizona and will 
bring numerous benefits to water users and communities in the Gila 
River Basin.
    In addition to the benefits to Indian Tribes and water users in 
Arizona, this bill could benefit western New Mexico, which shares the 
Gila River with Arizona. Both Title I of the bill, the Central Arizona 
Project Settlement Act, and Title II, the Gila River Indian Community 
Water Rights Settlement Act, bear directly on use of water within the 
Gila River Basin in New Mexico.
    During the last year, we have worked with representatives of the 
State of Arizona, Indian Tribes, and water users to craft language that 
will address New Mexico's needs. We have made substantial progress, and 
if New Mexico's interests can be protected we will be able to stand 
fully behind the bill.
    At this time, I would like to give you a brief summary of New 
Mexico's interests in the legislation and the progress the two states 
and other parties have made in addressing our concerns in the 
settlement documents and legislation. New Mexico has two discrete areas 
of interest. First, in the Upper Valley Defendant (``UVD'') Agreement 
approved in Title II of the bill, we want to ensure that New Mexico 
farmers in the Virden Valley are treated fairly. Second, the 
authorization for a New Mexico unit under Section 304 of the 1968 Act 
authorizing the Central Arizona Project (43 U.S.C. 1543, Public Law 90-
537) (the ``1968 Act'') must be fully protected and advanced. I will 
discuss these two matters in turn.
    Last year, my office and the New Mexico Office of the State 
Engineer participated in negotiating provisions of the UVD Agreement. 
The core agreement calls upon the UVDs to reduce current irrigation by 
3,000 acres in exchange for the ability to pump groundwater up to 6 
acre-feet per acre regardless of priority. The result in New Mexico is 
that water rights associated with up to 240 acres, or approximately 8 
percent of the currently irrigated acres in the Virden Valley, would be 
extinguished.
    The State of New Mexico believes the UVD settlement in H.R. 885 is 
a fair and reasonable compromise that will protect all parties and 
provide a more secure and dependable water supply. We support 
implementing the UVD settlement.
    Our second concern is to carry out the authorization for the New 
Mexico unit of the Central Arizona Project (``CAP'') as provided in the 
1968 Act.
    In the U.S. Supreme Court litigation Arizona v California, 376 U.S. 
340 (1964), the State of New Mexico presented evidence of present and 
past uses of water from its tributaries in the Lower Colorado River 
Basin including the Gila River and its tributaries. In addition, New 
Mexico presented a water supply study showing how the state could apply 
and use the water it claimed as its equitable share of the Gila River.
    The report of the Special Master found that New Mexico should be 
allowed present uses as an equitable apportionment of the waters of the 
Gila River Basin, but did not make an apportionment of water to New 
Mexico for future uses from the Gila. The 1968 Act authorized an 
apportionment to New Mexico as part of the CAP. The intent of the 1968 
Act is to provide for future uses of water in New Mexico from the Gila 
River Basin above those specified in Arizona v California.
    The 1968 Act directs the Secretary of the Interior to provide New 
Mexico its additional water through an exchange by which the Secretary 
would contract with water users in New Mexico for water from the Gila 
River Basin in amounts that will permit consumptive use of water not to 
exceed an annual average of 18,000 acre-feet, including reservoir 
evaporation, over and above the consumptive uses provided for by 
Article IV of the decree in Arizona v California.
    To complete the exchange, the 1968 Act also directs the Secretary 
to deliver CAP water to users in Arizona in sufficient quantities to 
replace in full any diminution of their Gila River water supply that 
results from the additional consumptive use of Gila River water in New 
Mexico.
    Amendments to H.R. 885 are required to ensure New Mexico's ability 
to construct the New Mexico unit and develop the 18,000 acre-feet. Over 
the last nine months, we have been working with the State of Arizona, 
the Bureau of Reclamation, the Bureau of Indian Affairs, the Gila River 
Indian Community, the San Carlos Irrigation and Drainage District, and 
the Central Arizona Water Conservation District to develop necessary 
amendments and related settlement documents to facilitate construction 
and operation of the New Mexico unit of the CAP.
    I will briefly note the issues under discussion and the progress 
being made. The issues are more fully described in the attached 
``Summary of Progress and Remaining Issues Relating to the Arizona 
Water Settlements Act and the New Mexico Unit of the Central Arizona 
Project,'' as jointly prepared by New Mexico and Arizona on September 
23, 2003. The following issues and tasks have been or remain to be 
resolved, in part or whole, between Arizona and New Mexico in relation 
to the 18,000 acre-feet exchange:
    1.  New Mexico's initial concern was that the Arizona Water 
Settlements Act would prohibit the exchange of CAP water for New 
Mexico's additional diversion of Gila River water. This issue is 
resolved;
    2.  Progress is being made towards agreement on terms and 
conditions that will be incorporated into the exchange agreement 
between New Mexico, the Gila River Indian Community, and the Secretary 
of the Interior to effect the exchange provided in the 1968 Act;
    3.  All parties are working to develop acceptable operational 
parameters that will allow New Mexico to divert water without causing 
economic injury or harm to holders of senior downstream water rights. 
General concepts have been proposed and technical review is scheduled. 
We are working hard to resolve this difficult and complex issue;
    4.  Globe Equity constraints may serve to contravene the intent of 
the 1968 Act to provide additional consumptive uses in New Mexico. Work 
is ongoing related to the following Globe Equity issues:
         a.  To keep UVD users whole, accounting of storage in San 
        Carlos Reservoir must include any water diverted by the New 
        Mexico unit; and.
         b.  The ability of New Mexico to exchange without regard to 
        the 1924 federal storage priority in San Carlos Reservoir, as 
        was assumed in Reclamation's 1982 and 1987 studies, must be 
        confirmed;
    5.  As originally contemplated in the 1968 Act, funding for the New 
Mexico unit is authorized as part of the CAP. While the original New 
Mexico project cost estimate was approximately seventy million dollars, 
that estimate inflated according to the Consumer Price Index results in 
a cost total of over three hundred million in today's dollars. However, 
we believe we can build a suitable project for approximately two 
hundred twenty million dollars, including increased costs to 
accommodate federal environmental mandates.

       In the settlement, New Mexico has proposed and Arizona is 
considering one hundred fifty million dollars in funding for the New 
Mexico unit that would be integrated with the funding provided for 
other projects under the Arizona Water Settlements Act. Discussions are 
ongoing regarding what costs would be supported. Under this proposal, 
New Mexico would have to make provision for at least seventy million 
dollars in construction costs plus substantial annual costs; and
    6.  Several entities are seeking to exchange Gila River water for 
CAP water, a situation that could result in shortages of available Gila 
River water in some years. New Mexico has the senior exchange priority 
emanating from the 1968 Act. However, in the spirit of compromise, New 
Mexico has offered to share priorities up to a set amount of aggregate 
exchanges. Discussions and studies are under way to determine the 
amount of exchanges with which New Mexico would share priority.
    Mr. Chairman, we are working tirelessly to finish our negotiations 
with the State of Arizona, Indian Tribes and other water users. Once 
those discussions are complete and resolution of these issues can be 
incorporated into this legislation, we look forward to providing New 
Mexico's strong support for enactment of this bill by Congress. Thank 
you again for the opportunity to present our views on this matter.
                                 ______
                                 
              Attachment to Statement of Estevan R. Lopez
    new mexico and arizona department of water resources summary of 
  progress and remaining issues relating to the arizona water rights 
settlement act and the new mexico unit of the central arizona project, 
                           september 23, 2003
    The following issues and tasks have or remain to be resolved, in 
part or whole, between Arizona and New Mexico in relation to the Gila 
18,000 acre-feet exchange:
    1. Effect of the Arizona Water Rights Settlement Act on the 
provision in the 1968 Colorado River Basin Project Act that provides 
for exchange of 18,000 acre-feet of Central Arizona Project water for a 
like amount of Gila River water consumptively used in NM. The concern 
was that the Arizona Water Rights Settlement Act could directly or 
indirectly impair New Mexico's ability to realize the benefits of the 
1968 Act. Resolved in current proposed amendments.
    2. Exchange agreements between New Mexico, Gila River Indian 
Community, and Secretary of the Interior to effect the 1968 exchange. 
Progress is being made to agree on terms and conditions to be 
incorporated in the exchange agreement.
    3. Operational parameters for the New Mexico Unit. All parties, New 
Mexico, Arizona, Gila River Indian Community, and Reclamation, are 
working to develop operational parameters that will define how and when 
the New Mexico project diversion may occur without creating economic 
injury and harm to downstream senior Gila water users, including 
effects on groundwater users. General concepts have been proposed and 
technical review is scheduled. Resolution is hoped.
    4. Globe Equity issues. Work is ongoing related to these issues:
         a.  Under the Globe Equity, water users above San Carlos 
        Reservoir are permitted to divert Gila River water out of 
        priority in an amount equal to water stored in San Carlos 
        Reservoir. A New Mexico project would reduce the amount of out 
        of priority diversion permitted. To keep Arizona water users 
        whole, an adjustment is required to Globe equity accounting of 
        San Carlos storage to include any water diverted by the New 
        Mexico feature; and
         b.  In the Globe Equity, San Carlos has a 1924 storage 
        priority. This was assumed not to pose an obstacle in 
        Reclamation's 1982 or 1987 studies of potential New Mexico 
        projects. Changes are needed to clarify the ability of New 
        Mexico to exchange as intended in the 1968 Act.
    5. Funding. New Mexico has estimated current project costs could 
exceed $220M. New Mexico has proposed and Arizona is considering that 
funding for the New Mexico unit be integrated with the funding provided 
for other projects under the Arizona Water Rights Settlement Act. 
Discussions are ongoing regarding what costs would be supported under 
this provision.
    6. Exchange priority. The desires of various Arizona entities to 
enter into exchange agreements of Gila River water for Central Arizona 
Project water presents problems when water supplies are low. In one out 
of two years, there will not be enough Gila River water to supply all 
contemplated exchanges. New Mexico has the senior 1968 exchange 
priority in the 1968 Colorado River Basin Project Act but has offered 
to share priorities up to a set amount of exchanges. Discussions and 
studies are under way to determine the amount of exchanges with which 
New Mexico would share priority.
                                 ______
                                 
    Mr. Hayworth. Of course, transcending the border of the 
States of Arizona and New Mexico, the presence of the Sovereign 
Navajo Nation. Before I recognize the witness here to testify 
on behalf of President Joe Shirley, let me apologize to those 
assembled. A scheduling dilemma has me having to leave the 
dais, but the very capable Vice Chairman of the Committee, my 
colleague from Arizona, will be taking the chair. But it is my 
privilege to recognize Stanley Pollack, Legal Counsel who is 
here representing Navajo Nation President Joe Shirley, with his 
testimony. Mr. Pollack, your testimony, please, sir.

          STATEMENT OF STANLEY POLLACK, NAVAJO NATION

    Mr. Pollack. Thank you very much, Congressman Hayworth, and 
thank you very much for affording the opportunity to the Navajo 
Nation to testify on this important piece of legislation and 
affording me the opportunity to sit in for President Shirley, 
who sends his regrets. My name is Stanley Pollack. I am the 
water rights counsel for the Navajo Nation from the Navajo 
Nation's Department of Justice.
    Again, we want to thank the Committee for addressing this 
important issue for the State of Arizona and Indian tribes in 
the State of Arizona. The Navajo Nation certainly appreciates 
the importance of water. We understand this importance, 
particularly since almost half of the homes on the Navajo 
reservation lack a reliable supply of domestic water. Almost 
half the homes on the Navajo reservation have to haul water 
from distant sources in order to have a basic supply of potable 
water. Thus, the Navajo people do not take water for granted 
and we support the efforts of the Gila River Indian Community 
to settle their water rights claims.
    Despite this support, however, there are various aspects of 
H.R. 885 that are troubling to the Navajo Nation and our 
concerns are summarized and set forth in our written testimony. 
Very briefly, we discuss in the written testimony about how a 
huge amount of Central Arizona Project water will go toward the 
settlement for the Gila River Indian Community. The Navajo 
Nation does not begrudge the fact that the Gila River Indian 
Community is entitled to a very large quantity of water and we 
do not hold that against the Community.
    Our concern, however, is that the Secretary of Interior, by 
utilizing the vast resources of Colorado River water to settle 
Central Arizona water rights matters for tribes in Central 
Arizona may be without the resources necessary to settle the 
Navajo claims on the Colorado River directly. So we want the 
Department to be mindful of the potential conflict that may 
arise when it is time to settle the Navajo claim.
    Second of all, there is a piece of water in the settlement 
with the Gila River Indian Community that relies on water from 
Blue Ridge Reservoir, and again in our testimony we outline now 
the Navajo Nation considers water from Blue Ridge Reservoir, 
which is in the Little Colorado Basin where the Navajo Nation 
is located, to be claimed by the Navajo Nation. Again, this is 
an issue--we don't begrudge the Gila River Indian Community for 
seeking in their water budget and we are confident that we will 
be able to sit down with the Community and work out our 
concern.
    But the most critical issue that we have with the 
particular legislation is Section 104(b). In that particular 
provision, the Secretary's hands are tied by requiring that 
water rights settlements--I am sorry, that the reallocation of 
CAP water to an Indian tribe in Arizona can only occur through 
a Congressionally approved water rights settlement. This is a 
problem for the Navajo Nation, because we need Central Arizona 
Project water today.
    The community of Window Rock, Arizona, where I live, where 
I work, needs a supplemental water supply of drinking water. 
Although the community is located in Arizona, the best source 
of providing potable water to Window Rock comes from the San 
Juan River in New Mexico.
    The Navajo Nation is actually very close to a settlement 
with the State of New Mexico concerning its water rights claims 
to the San Juan River. The centerpiece of that particular 
settlement would be the construction of the Navajo-Gallup 
Project, which would bring water to Gallup, New Mexico, and to 
Navajo communities in Western New Mexico. But Window Rock is on 
the border of New Mexico and Arizona and the best way to get 
Window Rock water is through the Navajo-Gallup Project.
    The Navajo Nation needs approximately 6,400 acre feet of 
water for that Arizona piece of the project. We need an Arizona 
allocation. We have sought a Central Arizona Project allocation 
of 6,400 acre feet. We hope to introduce settlement legislation 
as early as January of next year that would authorize this 
particular settlement and this particular project, the Navajo-
Gallup Project.
    We can't afford to wait to settle all of the claims we have 
with the State of Arizona, which includes the claims in the 
Little Colorado River and the Colorado River mainstem, in order 
to have a final settlement that could get us CAP reallocation 
under Section 104(b). Thus, Section 104(b) of H.R. 885 makes it 
impossible for the Secretary to allocate much-needed drinking 
water for the community of Window Rock.
    We can't afford the wait, again, for the settlement of our 
Arizona claims, so we need that water now. We are presently 
engaged in discussions with the State of Arizona, with the 
Department of Interior, and with the Gila River Indian 
Community to try to resolve these claims. We are confident that 
at the end of the day, we will all be there and we will be in 
support of this particular piece of legislation.
    Thank you for the opportunity to testify.
    Mr. Renzi. [Presiding.] I thank the gentleman.
    [The prepared statement of Mr. Shirley follows:]

  Statement of Joe Shirley, Jr., President, Navajo Nation, on H.R. 885

    Chairman Calvert and Members of the Subcommittee:
    I am President Joe Shirley of the Navajo Nation. Thank you for the 
opportunity to provide testimony before the Committee regarding the 
Navajo Nation's views on the proposed settlement for the Gila River 
Indian Community to be implemented by H.R. 885 entitled the ``Arizona 
Water Settlements Act.'' The proposed settlement will have a tremendous 
impact on the ability of the United States to supply the Navajo Nation 
with the water supplies needed to transform the Navajo Reservation into 
the permanent homeland envisioned when the Reservation was established. 
I ask the Committee to consider those impacts before recommending the 
approval of the proposed settlement. Working together, we are confident 
that the Gila River settlement can be crafted in a way that will not 
adversely affect the ability of the Navajo Nation to obtain the water 
supplies so desperately needed on the Navajo Reservation.
    Let me begin by saying that the Navajo Nation greatly appreciates 
the tremendous effort that the Arizona Congressional Delegation has 
devoted to addressing the difficult water issues that confront the 
State of Arizona. Nothing is more important to the long-term welfare of 
the State than developing a reliable supply of water to meet the needs 
of all of the State's citizens, Indian and non-Indian alike. That 
cannot be done while the water rights of the Indian tribes in the State 
remain uncertain and cloud the rights of other water users without 
providing the tribes with the water that they so desperately need. We 
know that Congress is working hard to find fair and equitable solutions 
to these difficult problems, and the Navajo Nation wishes to work with 
you to find a way to address these issues in a way that also meets the 
long-term needs of the Navajo Nation.
    The Navajo Nation is not a party to the proposed Gila River 
agreement nor were we invited to participate in the settlement 
discussions. Having reviewed H.R. 885 and the settlement that it would 
implement, however, it is apparent that there are at least two aspects 
of the proposed settlement for the Gila River Indian Community that 
involve water resources that are critical to the Navajo Nation. Both of 
these issues are matters of utmost importance to the Navajo Nation. In 
addition, the legislation represents an enormous federal investment in 
providing water supplies to the State of Arizona. We want to be certain 
that the present legislation does not preclude devoting further 
resources towards solving the difficult water supply issues facing the 
Navajo Nation and its neighbors in rural Arizona and New Mexico.
    First, Section 104 of H.R. 885 reallocates 197,500 acre-feet per 
year of agricultural water priority water from the Central Arizona 
Project (``CAP'') for use by Arizona Indian tribes. The bill proposes 
to transfer to the Gila River Indian Community 102,000 acre-feet of 
that supply. In addition, Section 104 prohibits the reallocation of any 
of the supply to an Indian tribe in absence of an Indian water rights 
settlement that calls for such a reallocation. Moreover, the water in 
question is ``agricultural priority'' water which has an extremely 
limited reliability. Under the provisions Section 105 of the bill, only 
17,448 acre-feet of that supply is firmed up so that it can be used for 
municipal and industrial purposes by the other tribes in Arizona for 
municipal and industrial purposes. In contrast, Section 104 (b) 
reallocates 65,647 acre-feet of the far more valuable municipal and 
industrial priority water to non-Indian towns and cities in Arizona.
    The Navajo Nation is deeply concerned about these provisions. While 
we have worked hard over the last two decades to resolve the Nation's 
claims to water throughout Arizona and New Mexico, we have outstanding 
needs for water that cannot be put aside during the years that will be 
required to achieve an overall settlement of the Nation's claims in 
those states. We do not believe that water required to meet the 
everyday needs of tribal members should be held hostage until those 
settlements are completed. Nor do we believe that the water provided 
under the provisions of Sections 104 and 105 is adequate to meet the 
needs--or the outstanding claims--of the Navajo Nation.
    For example, it is clear that water from the mainstream of the 
Colorado River in the Lower Basin is essential to meeting the long-term 
needs of the Navajo Nation on its Reservation, yet the extent of the 
Nation's mainstream rights has never been seriously addressed, let 
alone determined. The residents of western portion of the Navajo 
Reservation lack reliable water supplies and commonly are forced to 
haul water to meet their everyday needs. As a result of these critical 
and immediate needs, the Navajo Nation recently brought suit against 
the Secretary of the Interior to redress the United States' failure to 
obtain and protect a water supply for the benefit of the Nation from 
the Lower Basin of the Colorado River. While we recognize that this 
litigation poses a threat to various Colorado River programs that are 
critical to all of the basin states, the continued neglect of Navajo 
interests left us no choice but to proceed with our claims in court.
    The Arizona portion of the Navajo-Gallup Project is another example 
of the efforts underway to address the immediate drinking water needs 
of the Navajo Nation's members. That project would be the centerpiece 
of a settlement of the Navajo Nation's water rights claims to the San 
Juan River rights in New Mexico. The Navajo Nation and the State of New 
Mexico are close to a final settlement agreement and hope to introduce 
settlement legislation as early as next year. However, the most 
troublesome issue is identifying a supply of water for the Navajo-
Gallup Project to serve the water-short community of Window Rock in 
Arizona. A CAP allocation may be necessary for use in Arizona through 
the Navajo-Gallup Project, but H.R. 885 would prohibit the Secretary 
from allocating that water supply in the absence of a water rights 
settlement in Arizona. The Navajo communities to be served by the 
project have an immediate need for additional drinking water and cannot 
wait for the resolution of the Navajo claims in Arizona.
    Ultimately, the nature and extent of the Nation's water rights in 
Arizona must be resolved if there is to be any certainty with regard to 
the CAP water supply and for the Indian communities that rely on this 
supply. If, in fact, the Gila River settlement eliminates or 
substantially reduces the availability of CAP water for other tribal 
water rights settlements in Arizona, the United States and the State, 
in all likelihood, will not have sufficient Colorado River resources to 
facilitate a Navajo mainstream settlement without taking water away 
from existing users. In short, we ask that you do not fully obligate 
CAP allocations in accordance with the terms of this bill, given the 
Navajo Nation's outstanding needs. The failure to recognize those needs 
and to obtain and protect a water supply sufficient to meet those needs 
will only lead to further controversy and disruption in the future.
    Second, Section 12.14 of the proposed settlement describes a water 
budget for the Gila River Indian Community that includes a supply of 
water from Blue Ridge Reservoir, which is located on Clear Creek, a 
tributary of the Little Colorado River. The need for water from Blue 
Ridge to provide drinking water for water-short communities in the 
southern portion of the Navajo Reservation through the Three Canyon 
Project is now being studied by the Bureau of Reclamation in an ongoing 
study which Senator Kyl has sponsored. The Navajo Nation has always 
viewed Blue Ridge Reservoir as the cornerstone of any settlement of the 
Navajo rights in the Little Colorado River Basin because it is the only 
practical way to provide renewable surface water supplies to meet the 
domestic water needs of reservation communities in the vicinity of 
Leupp. As a result, the suggestion that Blue Ridge Reservoir provide a 
water supply for the Gila River settlement jeopardizes the contemplated 
Little Colorado River settlement to the detriment of everyone in the 
Basin. It is also important to point out that the water supply for Blue 
Ridge Reservoir is subject to the claims of the Navajo Nation in the 
Little Colorado River Adjudication, even if a portion of that water 
were to be provided to the Gila River Indian Community. In the absence 
of a settlement of the Navajo claims on the Little Colorado River, the 
Navajo Nation will have no alternative other than to pursue its claims 
to such water in the ongoing adjudication.
    Third, this is a very substantial settlement. It provides the Gila 
River Indian Community with a water budget of 653,500 acre-feet of 
water and a hefty amount federal funds. Moreover, it permits the 
leasing of subsidized settlement water supplies from the community to 
non-Indian water users in central Arizona with no reimbursement to the 
United States for the capital costs of CAP. Far more troubling, 
however, are the benefits extended to non-Indian water users by the 
settlement. For example, Section 106(b) in conjunction with Section 107 
appears to render non-reimbursable $73,561,337 of debt incurred by CAP 
agricultural water users in Arizona under Section 9(d) of the Act of 
August 4, 1939. We fail to see the justification for such waivers. 
Moreover, we understand that other non-Indian water users are waiting 
in the wings to take advantage of the unique and expensive funding 
mechanisms provided by the legislation. Whatever the merits of the 
funding mechanisms in the bill, the benefits of those procedures should 
be reserved for Indian water right settlements or the provision of 
much-needed water supplies to tribal communities.
    In closing, the Navajo Nation understands the significance of 
proposed Gila River settlement for the Gila River Indian Community and 
the State of Arizona. Unfortunately, the settlement as currently 
proposed jeopardizes the ability to resolve the critical issues facing 
Arizona, the United States and the Navajo Nation. The Navajo Nation 
wants to work with Congress, the Arizona Delegation, the State of 
Arizona and the other parties to the proposed Gila River settlement to 
address these concerns so that the proposed settlement may move forward 
promptly. Thank you for the opportunity to testify on this matter of 
great importance to the Navajo Nation.
                                 ______
                                 
    Mr. Renzi. Before we move to members' 5-minute questions, I 
want to recognize a gentleman here today, a great young leader 
of the Yavapai Apache, Mr. Jamie Fullmer. If you could stand, 
please, and be recognized, I appreciate you being here and 
coming today. I am grateful. Your written testimony and 
concerns have been written for the record.
    Mr. Renzi. We are going to move now to the gentlelady from 
California.
    Mrs. Napolitano. I wish I had all day. I have got a ton of 
questions for a lot of people.
    Essentially, Governor Narcia, one of the things that I have 
noticed in your report, that you say--on page 11, actually, of 
the bill--your testimony, rather--that this bill is partial 
compensation, on page 11, for water taken from the Community. 
Do you anticipate a need for future compensation legislation?
    Mr. Narcia. Mr. Chair, Congresswoman Napolitano, I will 
defer to our chief negotiator, Mr. Rod Lewis, to answer that 
question.
    Mrs. Napolitano. Thank you.
    Mr. Lewis. Mr. Chair and Congressman Napolitano, the Gila 
River Indian Community is located in Central Arizona just 
immediately south of Phoenix. The Gila River flows directly 
through the reservation and the Salt River is immediately 
adjacent to the reservation.
    We have great claims to waters of both the Gila River and 
the Salt River. Unfortunately for the Gila River Indian 
Community, both those rivers have been diverted above us. We 
are downstream from most people here at the table and people 
upstream divert our water, we think illegally and in violation 
not only of the Gila Decree, but of our winter's rights claims 
that we have to both the Salt River and the Gila River.
    So that is the basis for the statement that we have been 
deprived and have lost water, because throughout the years, 
since settlers came West and settled upstream from us. However, 
this legislation will correct that situation by providing us 
wet water and in return providing certainty and stability for 
the entire State of Arizona with respect to a water supply.
    Mrs. Napolitano. So the answer is yes?
    Mr. Lewis. Yes.
    Mrs. Napolitano. Thank you. Governor Narcia, then under 
this bill, H.R. 885, how much water will be used on your 
reservation and how much do you anticipate might be sold to 
non-Indian customers?
    Mr. Narcia. The Community has federally approved plans to 
use all the water provided there by the Settlement Act. Certain 
water leases are included in the settlement framework. Other 
than the settlement leases, the Community plans on putting all 
of our water to use. We are farmers. We have always been 
farmers. We will continue to be farmers. We don't plan to sell 
any of our water. We want to use it all.
    Mrs. Napolitano. Or lease it out. OK. Thank you.
    To Chairman Seyler, Mr. Hickok of BPA expressed a 
willingness to reconvene discussions with the Spokane Tribe. Do 
you think the discussions would be fruitful, and do you share 
his interest in meeting with intent to reach agreement between 
both?
    Mr. Seyler. We have been trying to reach an agreement for 
60 years. We are still willing to negotiate.
    Mrs. Napolitano. OK.
    Mr. Seyler. We would hope that BPA understands the term of 
negotiation and that it moves away from a ``take it or leave 
it'' offer.
    Mrs. Napolitano. Thank you. Mr. Lopez, if New Mexico 
develops more water as you describe in your testimony, how will 
that affect the San Carlos Apache Tribe downstream?
    Mr. Lopez. Representative, it is our intent, as part of the 
continuing negotiation on amendments that we feel are still 
needed, to make sure that we can reach agreement on describing 
under what parameters New Mexico would be authorized to divert 
water from the river in such a way that would assure that 
downstream users would not be harmed or economically injured.
    Mrs. Napolitano. Mr. Chair, I will forego right now, but I 
want to make just one statement, that I think that all of the 
tribes that have been at the table may not have been getting a 
fair shake. If I have listened to the testimony from Kathy 
Kitcheyan in regard to the smallness of their ability to have 
friends in Congress--you have friends in Congress, ma'am. I 
would like to pass on, and my next round of questions is going 
to deal with many of the other issues I have in mind. Thank 
you.
    Mr. Renzi. I thank the gentlelady.
    I am going to move to the gentleman from Southern Arizona.
    Mr. Grijalva. Thank you, Mr. Chairman. I have just some 
comments and questions, and one question in particular that 
comes to mind, and maybe that is a question for the Governor or 
Chairwoman Saunders, either/or, or both. Can you explain to me 
how the communities will be protected from environmental risk 
if Congress enacts the waiver that is included in this piece of 
legislation?
    Mr. Narcia. Congressman Grijalva, like other Indian water 
settlements, H.R. 885 specifies that the United States will 
bring certain types of claims either to acquire additional 
water rights or to constrain the activities of those parties 
that are incorporated in the settlement framework.
    With respect to this particular agreement, the Community 
has agreed that the United States should be bound to the 
settlement framework in this manner. However, we also believe 
that the United States is only binding itself in its capacity 
as trustees for the Community and its members. In other words, 
in a situation where a claim could be made based on 
environmental or other laws for a non-Indian citizen or entity, 
the United States is still free to assert that claim on behalf 
of a member of the Community. The United States is only being 
asked to waive its ability to bring those unique claims that 
could be brought on behalf of an Indian tribe, an Indian 
citizen, an allottee, or any other Indian tribal member, but 
not on behalf of a similarly situated non-Indian.
    Mr. Grijalva. Thank you.
    Ms. Juan-Saunders. Congressman Grijalva, the Tohono O'odham 
Nation didn't waive water quality claims and we feel that that 
is a critical issue for our nation, and it is important not 
just for us but the other water users in Southern Arizona. I 
just want to conclude by saying that this was a very important 
piece of negotiations for all parties. Coming to the table 
wasn't easy for all parties, but we reached compromise and we 
are here today and this is a very significant event for the 
Nation and we ask for support. Thank you.
    Mr. Grijalva. Thank you. Mr. Chairman, just an observation 
and a comment in following up on the Chairwoman's last 
statement. The process of good faith compromising and good 
faith negotiations is a difficult process for anyone involved 
in it, but I really feel that there are unresolved issues, 
issues that seem to be moving forward with regard to New Mexico 
and Arizona. I look forward to that. Issues that need to be 
dealt with with that Navajo Nation, and my fond hope that 
issues relative to San Carlos and the Apache Nation are also 
dealt with in that process of good faith negotiating.
    As the Chairwoman said, it is difficult, and I know it was 
difficult for all parties and particularly for the nations to 
come to the table on this discussion, but I want to extend my 
appreciation and admiration, because the process is a difficult 
one, to bring it to this point. If the history of this process, 
being that it is done in good faith and among equals, 
continues, I will certainly continue to support the 
legislation. Thank you.
    Mr. Renzi. I thank the gentleman.
    I take my privilege and ask a few questions and then we 
will go for a second round if that is OK. Well, let us go to 
Mrs. Napolitano, with a great Italian name.
    Mrs. Napolitano. Thank you. I just wanted to say to Mr. 
Guenther to give my regards to the Governor, whom I have never 
had the pleasure of meeting.
    [Laughter.]
    Mrs. Napolitano. There was an article on myself when I 
first got elected to Congress with her picture and we have 
laughed about that, which I found rather interesting.
    I hear a lot of--thank you, sir. I hear a lot of concern 
about how this government has not really come to the table with 
all the parties equitably or in an expedient manner or in a 
fair manner, and that bothers me, because for many years--since 
I have been in government, since I have been in public office, 
I have found that sometimes only the squeaky wheel gets the 
oil--that is to say, those that can afford to be represented or 
have information about how to come to the table and what to say 
and what to do sometimes get supported and get the ability to 
get some of their legislation through or assistance in matters 
that are important to the people we represent.
    I am very concerned about what I hear with Ms. Kitcheyan 
with the issues involved with the San Carlos Apaches and also 
with the Navajos. To say that you do not--that you have to cart 
in water to half your people is unconscionable for us in this 
day and age.
    I would like to ask Ms. Kitcheyan, there is apparently 
pooled water behind the dam. Will this be destroyed by the 
agreement, and are there sacred cemeteries that will be 
destroyed?
    Ms. Kitcheyan. Madam, I will answer your second question 
and I will defer to an attorney on the first question. There 
are graves underneath Coolidge Dam of our ancestors, and if it 
dries up, I fear that those spirits will come out.
    And on your first question, I am going to defer to our 
attorney.
    Mrs. Napolitano. Would you identify your name for the 
record, please, sir?
    Mr. Sparks. Mr. Chairman, Congressman Napolitano, my name 
is Joe Sparks. I am Special Counsel to the San Carlos Apache 
Tribe.
    As to the pool behind the San Carlos Dam, that pool of 
water was purchased as a CAP water exchange by San Carlos, for 
which it paid $66 an acre foot. The diversions of water 
upstream, both in violation of the decree and new diversions 
that would be authorized by this Act, will diminish the flow of 
the Gila River to the lake and make it less likely that the 
natural flow will go through the lake, less likely that it will 
be replenished, and less likely that San Carlos Apache will be 
able to implement its existing 1992 settlement by exchange of 
water in San Carlos Lake. So all of those things are 
exacerbated by the anticipation of this legislation.
    Mrs. Napolitano. What would be a better compromise? What 
would help not dry up that pool?
    Mr. Sparks. We have been fighting for decades to get a 
natural flow of decent quality water from the headwaters of the 
Gila Mountains to and through Coolidge Dam so that the entire 
stretch or reach of the river can be fresh enough for San 
Carlos to use. But at the moment, the water is of such a poor 
quality that it kills the crops, it ruins the land, and there 
is an injunction by the Federal court ordering that the water 
quality be improved to San Carlos Apache to a point where they 
can grow moderately salt-sensitive crops. But that has not 
occurred. The river dries up because it is pumped upstream and 
does not come to San Carlos.
    Mrs. Napolitano. Do the requirements of the river for 
pumping include sufficient water for that pond?
    Mr. Sparks. No, it doesn't.
    Mrs. Napolitano. Has the Department of Interior or any 
agency looked at ameliorating the issue of water quality, in 
other words, setting up a plant to be able to treat the water 
so that it can be utilized?
    Mr. Sparks. If they have, it is a well-guarded secret. The 
answer, to our knowledge, is no.
    Mrs. Napolitano. Thank you. You have answered the 
questions. I will go for another round after you are done.
    Mr. Renzi. OK. Thank you.
    Ms. Kitcheyan. Congressman Renzi, may I add something to 
that----
    Mr. Renzi. Yes, ma'am, please.
    Ms. Kitcheyan [continuing]. For the Congresswoman? Please?
    Mr. Renzi. Please.
    Ms. Kitcheyan. Because of the quality of the Gila River 
that runs through our reservation, we have experienced a lot of 
birth defects, cleft palates, also a lot of cancer, breast 
cancer, and I can attest to that because my son was born with a 
cleft palate. My daughter was born deaf in one ear, what you 
call a cauliflower ear. And I just wanted you to know that. 
Thank you.
    Mrs. Napolitano. Have there been any studies by any of the 
universities to affirm that the issue may be the water?
    Ms. Kitcheyan. In the past, Indian Health Service has 
started, but have left the research of it.
    Mrs. Napolitano. Is there a possibility, then, that part of 
the amendments to this water bill maybe will address the issue 
of water quality?
    Ms. Kitcheyan. I would like to see that, ma'am.
    Mrs. Napolitano. Thank you.
    Ms. Kitcheyan. Thank you.
    Mr. Renzi. I thank the gentlelady.
    I just have a few questions I want to help flesh out here 
before we go back to a third round, if the gentlelady would 
like to.
    Mrs. Napolitano. I would.
    Mr. Renzi. OK. I want to stay on the idea of talking about 
the pool of water behind the dam. I personally have fished the 
lake and know firsthand the reliance the San Carlos Tribe has 
on the tourism, the fees, and the prosperity of that pool of 
water that we made.
    When we talk about getting wet water to that lake and the 
idea that the Upper Valley users are using at a level that 
causes the water not to flow all the way down to the lake, part 
of the problem also is, knowing the area and being from my 
district, that we have got salt cedars that just clog the river 
bed to the point where it contributes to the high sodium levels 
and possibly to some of the impacts that we have been hearing 
today.
    Have we had an opportunity at all to look at the 
alternative of how we would actually physically get wet water 
there--I mean, realistically get water to the pool and the idea 
that the offer from Governor Narcia of the pipeline? Are there 
any thoughts, Joe or Kathy, on that?
    Ms. Kitcheyan. Congressman, I would like to have Joe answer 
that, please.
    Mr. Sparks. Congressman Renzi, Mr. Chairman, thank you for 
providing that to us and we have evaluated it. Let me explain 
that it proposes to deliver the Globe Equity water that the San 
Carlos Apache is entitled to by developing a well field next to 
the reservation at Goodwin Wash, which would then provide 
underground water to the pipeline and deliver it to the 
reservation boundary.
    That has two problems. One is that it certainly is a good 
faith suggestion by Governor Narcia. That is not a problem. The 
problem is that it further diminishes the water flow of the 
Gila River and further degrades the quality of the natural 
flow. It also does not comply with the Creed, because the court 
has ruled specifically, and it has been appealed to the Ninth 
Circuit and confirmed, that San Carlos Apache is entitled to 
the natural flow of the Gila River and, therefore, that isn't a 
practical way to comply with the decree.
    Mr. Renzi. Joe, are we going to be able to get the river, 
honestly, and I am grateful for the articulation you are 
teaching me--are we ever going to really be able to get the 
river to the point where we could run it all the way from New 
Mexico through the Franklin Water District, the Safford cotton 
growers, all the way to the pool? Is that a reality, or are we 
really probably looking at some point at a pipeline?
    Mr. Sparks. That is a reasonable question, and it would be 
reasonable for you to ask it even if it was unreasonable.
    [Laughter.]
    Mr. Sparks. But the answer is, under the proposed 
settlement, it is not realistic to expect that the river will 
flow except at flood flows. And the proposal has been made in 
the past that a canal be developed, or pipeline, all the way 
from the head of Safford Valley at San Jose Diversion all the 
way to the San Carlos Apache points of use. That certainly 
would supply high-quality water at that location. It does 
nothing to address the inadequacy of San Carlos Apaches' water.
    The one thing that has never been given serious thought, 
which in my mind is the only safety valve that may be possible 
to relieve some of this problem, is actually a pipeline from 
the CAP canal to San Carlos Lake, which would allow CAP water 
to be parked in San Carlos Lake, much like it is in Lake 
Pleasant as increased. It is very expensive, but it is the one 
place where water can be parked at a time when demands on the 
CAP canal is lower and the water could then be used not only to 
buffer and mitigate upstream diversions at various times, but 
it also could be used to move water downstream to Ashurst, 
Hayden, and on down to Tucson when the CAP canal is at 
capacity.
    Mr. Renzi. Thank you, Joe.
    Governor Narcia, there has been some discussion, 
particularly in Chairwoman Kitcheyan's comments, about the 
Globe Equity Decree and their rights. Could you discuss or have 
counsel discuss briefly how the settlement or how the opinion 
of the tribe is that it may override the settlement, override 
their rights?
    Mr. Narcia. If I understand your question regarding 
overriding their claims----
    Mr. Renzi. I am just looking for--yes, the claim of the San 
Carlos Apache is that this settlement is going to override 
their Globe Equity Decree rights and I am just looking for your 
response.
    Mr. Narcia. Congressman Renzi, no, it does not. We have 
simply agreed not to enforce our rights upstream for the 
upstream diverters. The San Carlos Apache Tribe and the United 
States on their behalf remain completely free to pursue 
enforcement of their rights. We have in the past been in court 
with the San Carlos Apache Tribe doing just that. Our 
settlement means that only we will no longer pursue the 
enforcement together. The San Carlos Apache Tribe can certainly 
continue on their own.
    Also, the 1992 San Carlos Apache Tribe settlement did not 
interfere with our ability to assert our rights under the 1935 
Globe Equity Decree. In the same fashion, our settlement does 
not interfere with the San Carlos Apaches' ability to assert 
their rights.
    Mr. Renzi. I thank the gentleman.
    I am going to move now to the Congressman from Arizona, Mr. 
Hayworth.
    Mr. Hayworth. Mr. Chairman, I thank you very much, and 
again, thanks to all the witnesses for coming and taking part 
in this worthwhile hearing. I think we still hear, as has been 
chronicled this morning, that a great deal of work is done and 
there is some work that remains.
    Governor Narcia, could you describe some of the steps you 
have taken to work with the other tribes in your settlement 
negotiations with the United States and the other settlement 
parties?
    Mr. Narcia. Early in our negotiations, we met and discussed 
with other Arizona Indian tribes our water settlement for the 
Gila River. We desire to approach the settlement with non-
Indian parties with a common effort with other tribes.
    During the negotiation process, we met with representatives 
of the San Carlos Apache Tribe, the Tohono O'odham Nation. I 
personally participated in numerous meetings with the San 
Carlos Apache Tribe. In addition, our negotiation team 
participated in dozens of meetings with them, also.
    During the negotiations, we also met with representatives 
of the Tohono O'odham Nation. The community shared with the 
representatives of the Nation our settlement agreement and 
proposed legislation. In turn, the Tohono O'odham Nation shared 
with us drafts of their proposed legislation and settlement 
agreement.
    In addition, we met several times to discuss common 
concerns. Recently, we have met with the majority of the tribal 
leaders, including Walapi Nation, the Camp Verde Yavapai Tribe, 
Hopi Tribe, San Carlos Tribe, and Cuchan to discuss issues 
surrounding water settlement. We will continue to meet and I 
remain personally available for any future meetings as 
appropriate.
    Mr. Hayworth. Thank you very much, Governor.
    Let me turn to Director Guenther of the Arizona Department 
of Water Resources. Mr. Guenther, do you believe this bill will 
allow for adequate water and financial resources to help 
resolve other water rights settlements?
    Mr. Guenther. Mr. Hayworth, no. I mean, I can elaborate on 
that, if you would like.
    Mr. Hayworth. Please.
    Mr. Guenther. Obviously, the difference between the claims 
and what is available is significant. There are more claims to 
water in Arizona than there is water on any river system that 
we have, and the Gila is no different. The Gila is different 
inasmuch as it is a much, what do I say, it is either feast or 
famine on the Gila, and so you don't have significant 
dependable base flows that are available for the settlement of 
perfected long-term or Federal reserve rights.
    Now, a lot of that water has already been divided up by 
decree and so we are left with waters that are imported from 
the Colorado River, which then through exchange can be made 
available for rights that would have been on the Gila River. 
That water is limited, too. The Central Arizona Project really 
is only entitled to about 1.4 million acre feet off the 
Colorado River. All the other rights are higher priority and 
perfected by users along the Colorado River.
    So if you take that 1.4 million and then you assess the 
claims that are against it, you tend to run out of water very 
quickly. And so in this--I think the settlement is fair in the 
division of the waters between the non-Indian and Indian 
communities, but is there enough water to settle all the 
claims? No. Is there water there to settle a lot of the 
realistic uses, the beneficial uses that this water could be 
put to on Indian lands as well as non-Indian? I believe it 
would go a long way toward that end.
    Mr. Hayworth. Director Guenther, I thank you for that 
candid answer and I think it reaffirms the importance of this 
hearing and what transpires with this vital resource that is so 
important to us all, water, within the State of Arizona. And 
again, I want to thank everyone for coming today.
    You mentioned some of the previous decrees, some of the 
challenges that brought us here. But for the record, obviously, 
there are other Indian tribes with claims on other river 
systems in the State of Arizona, for example, the Salt River. 
With your knowledge of the Salt River system, granted that we 
have typified here, specified that there is never enough to 
anyone's liking in an ideal situation, because, after all, so 
much of our State is desert, with reference to the Salt River 
system, how much water is there that could be used to satisfy 
claims?
    Mr. Guenther. Well, really, there is no water available. I 
mean, the Salt River is overallocated, as well. So if you want 
to say, is there any water available to settle outstanding 
claims of a higher priority right, the answer would be no. But 
that is--the way the system works, as far as appropriated water 
is concerned and doctrine of appropriation, right in time, 
first in right. So if you are going to negotiate a settlement 
of claims that have a more senior right, then you take water 
from a current user and make that water available to satisfy 
that senior right, which has been done on all of the river 
systems and is involved--that is basically what we are doing 
here with this bill.
    Mr. Hayworth. Director Guenther, thank you.
    Just in closing, and I thank you all for the time, and I 
thank you, Mr. Chairman, for being very respectful of the time, 
for those who have come here to testify on H.R. 885, just a 
quick answer. Obviously, there are some outstanding issues that 
need to be resolved. I would like to ask all parties who are 
here in testimony, will you commit to sit down and resolve 
these issues promptly?
    [Nodding from witnesses.]
    Mr. Hayworth. We are seeing nods of ascent.
    Ms. Kitcheyan. San Carlos Apache agrees to compromise, to 
negotiate in good faith. We also expect the same from everyone.
    Mr. Hayworth. Thank you, Madam Chair.
    Governor Narcia?
    Mr. Narcia. We have always been open to negotiating with 
anyone to resolve any issues that we may have. As I said 
earlier, this is our highest priority and whatever we need to 
do to reach settlement and resolve issues, we are certainly 
open to meet with anyone.
    Mr. Hayworth. Thank you very much.
    Chairman?
    Ms. Juan-Saunders. It has taken us 28 years to reach this 
level and it is important to bring parties to the table and to 
discuss issues and to be respectful of one another. Water is a 
precious commodity for everyone and we certainly have done that 
in good faith with all parties in Southern Arizona.
    Mr. Hayworth. Thank you very much.
    Mr. Guenther?
    Mr. Guenther. Mr. Hayworth, the Governor's top priority--
Governor Napolitano's top priority--is settling outstanding 
claims to water rights, especially with the American Indian 
communities. I stand ready to commit to that, as well, and have 
already begun negotiations with several tribes who have not 
been to the table in quite some time. To the degree that we can 
start with realistic water budgets and numbers, it certainly 
would enhance the chances of bringing those negotiations to 
some beneficial closure.
    Mr. Hayworth. Thank you.
    Mr. Lopez?
    Mr. Lopez. Representative, New Mexico has been working on 
identifying the issues that are important to us to assure that 
New Mexico's interests are protected and we stand ready to 
continue those negotiations in good faith.
    Mr. Hayworth. Thank you very much. Ladies and gentlemen, 
again, thank you for the testimony. Mr. Chairman, I guess it 
just shows again that whiskey is for drinking, water is for 
fighting, or perhaps for meaningful mediation, and we are 
grateful for the negotiations and thank you all.
    Mr. Renzi. Thank you, Mr. Hayworth.
    We are going to go one more round here. The gentlelady from 
California.
    Mrs. Napolitano. I can go another five rounds, really. I 
have so many questions that I am sure time will not permit, but 
one of the things that really bothers me from what I have heard 
is, whether it was Kathy Kitcheyan or Mr. Sparks stating they 
would have to pay $74 an acre foot where upstream is about a 
third of the cost. Could somebody answer the reason why?
    Ms. Kitcheyan. Madam, I will defer that question to our 
Legal Counsel.
    Mrs. Napolitano. If you will make it short, because I have 
several other questions, please.
    Mr. Sparks. Mr. Chairman, Congresswoman, the $26 to $28 
price is the non-Indian CAP price in the valley, not upstream, 
at San Carlos.
    Mrs. Napolitano. Upstream, OK.
    Mr. Sparks. The decreed water costs about $3.41 an acre 
foot, and that is what the local price would be and that is--it 
is even a greater disparity. The CAP water costs $74 and $28 is 
the spread between what it costs the Indian tribe to use 
agricultural water of its own and what it costs the non-Indian 
farmer to use the same Indian agricultural water that is unable 
to be paid for and delivered to the Indian tribes.
    Mrs. Napolitano. And why is that?
    Mr. Sparks. Because they can't afford it or they don't have 
a delivery system for the exchange systems.
    Mrs. Napolitano. And those delivery systems have been 
requested be put in place? Have they been negotiated? Have they 
been somewhere on somebody's table to be able to address----
    Mr. Sparks. Pardon me. They were authorized by the 1968 CAP 
Act. They were authorized by the 1980 CAP contracts for each of 
the tribes and they really never--the non-Indian systems were 
built. The Gila River Indian Community system is being built. 
The Achan system was built, but the tribes which require 
delivery by exchange have not been built and they will be last 
to be built if there is money left over under the Basin Project 
Act fund.
    Mrs. Napolitano. Mr. Chairman, it looks like the priorities 
have to be reorganized.
    One of the other questions I would have for Mr. Guenther 
from Arizona, under the current law, what happens to CAP Indian 
water if it is not used by the tribe and how would that change 
under this bill, and if there is excess water, which many times 
there won't be, I am sure, any excess water, are the tribes 
compensated for that water that is not used by them and used by 
other entities?
    Mr. Guenther. Congressman----
    Mrs. Napolitano. Woman.
    Mr. Guenther [continuing]. Napolitano, my sense is right 
now, as I recall, that water is excess water----
    Mrs. Napolitano. Right.
    Mr. Guenther [continuing]. And is available for 
distribution under excess water rules by the CAWCD. As far as 
what is paid for, usually it is you pay for the water whether 
you use it or don't use it. It depends if you have an 
allocation for CAP water. It is the same for Indian and non-
Indian.
    Mrs. Napolitano. Thank you. I hear a lot of discussion 
about the water, the differences, the allocations, but I hear 
no one talking about establishing either recycled water 
projects or finding out if you have underground water aquifers 
where you can store water or being able to do what we are doing 
in California, and that is recycling brine water, in other 
words, cleaning it for use, another use, and I would like to 
have somebody tell me if there is anything in anybody's mind 
toward this area, toward this end.
    Mr. Narcia. Congressman Napolitano, our bill does, or our 
settlement does include reclaimed water was part of our water 
budget and the reuse of reclaimed water.
    Mr. Renzi. Sir, go ahead. Did you finish?
    Mrs. Napolitano. Well, that doesn't totally answer my 
question. I think what I am searching for is that American 
Indian tribes have forever and ever said that water is sacred. 
We are learning that in the inner cities and beginning to take 
care of it, or beginning to look at ways of being able to reuse 
it. There is no more water. We have water. We just in some 
areas do not use it wisely. We contaminate it, and that is 
borne out in the defense installations where we now have 
volatile organic compounds and perchlorates and all those great 
things brought about by industry.
    I guess my concern is whether or not your being helped to 
be able to harness rainwater, to be able to store it, to be 
able to understand how other options are available, if they are 
available, and how you can go about instituting those, coming 
through for appropriations through this body to assist----
    Mr. Hayworth. Would my friend yield for just a second to--
--
    Mrs. Napolitano. I certainly do.
    Mr. Hayworth. I think it is important just to reaffirm 
something that we have had to live under in Arizona for now 
over 20 years, the Groundwater Management Act, which I think 
for all water users, both Native American and non-Native 
American, that has been something that we have done and we are 
pleased to see others are doing it and I am pleased that you 
raised that, but I believe that is something under which we all 
live within the State of Arizona and have done so for the 
better part of two decades.
    Mrs. Napolitano. Thank you. Well, I am talking about 
utilization of rainwater, capturing, storing, et cetera, and 
that is where I am coming to, is those other issues that--I 
know underground water management has been totally all over in 
Arizona and New Mexico.
    Ms. Juan-Saunders. Mr. Chairman, Congressman Napolitano, 
the Tohono O'odham Nation is located in Southern Arizona. We 
live in the desert. We survive temperatures of 110 degrees 
every summer, and over the last eight to 10 years, we have 
experienced severe drought and just 2 years ago requested a 
state of emergency for the whole State of Arizona in Southern 
Arizona. So rainwater is precious to us, but we are not 
getting--we can't control Mother Nature.
    Mrs. Napolitano. Correct.
    Ms. Juan-Saunders. So any alternative sources of water is 
so important to the Nation.
    Mrs. Napolitano. Have you been able to identify any 
underground storage capability or capacity?
    Ms. Juan-Saunders. Not at this point.
    Mrs. Napolitano. Thank you very much.
    Mr. Renzi. I thank the gentlelady. I want to----
    Mr. Narcia. Mr. Chairman?
    Mr. Renzi. Please, go ahead, sir.
    Mr. Narcia. You know, water conservation has been uppermost 
in the minds of Gila River. You know, your suggestion with the 
rainwater, the annual rainfall in Arizona, or Southern Arizona, 
is about seven or 8 percent a year, or annually, so there isn't 
much rainwater to come. But living on, as Chairman Saunders 
stated, we are in a desert and water conservation is the 
highest priority for us and the use of that water.
    Mr. Guenther. Mr. Chairman, if I could just add a little 
bit to that, to answer----
    Mrs. Napolitano. I just want to say, I don't diminish what 
is being done. I am just wondering if all other options, all 
other assistance from the government, from the Department of 
Interior, from Bureau of Reclamation, from the Army Corps of 
Engineers have been utilized for the tribes. I am not talking 
about the major communities, which I am sure can take care of 
themselves. I am talking about assisting tribes.
    Mr. Guenther. Yes, and we do that. Most of our major 
projects, the San Carlos Project, which Coolidge Dam, that is 
an Indian project. We have the Salt River system, which 
captures just about every drop of rain or snow that comes off 
the watersheds. And then, of course, we have the Verde River 
systems, which is on the other side of the State, which 
captures all the water that comes off those watersheds. And 
then at the bottom of it, we have one dam that never has water 
in it which is used to take the crest off floods.
    But we also have water banking programs, which we bank 
water. In fact, we bank water for California and Nevada in 
underground banks that by exchange is made available at times 
of increased need, and we also have replenishment districts, 
which take all the excess water and put that in the ground so 
it will evaporate for future use.
    Mr. Renzi. I thank the gentlelady.
    I have just got a couple of questions. Mr. Pollack, when we 
talk about the Navajo Nation and we talk about the settlement 
and the ability that it might interfere with water flowing in 
from New Mexico into Arizona, could you expand on that and 
could you provide me, particularly with Congressman Hayworth 
here today, what you see as the simple fix?
    Mr. Pollack. Thank you, Congressman Renzi. The solution for 
Window Rock's water shortage is to get water from New Mexico, 
and we believe that the project that we have negotiated with 
the State of New Mexico is the project to do that. That is the 
Navajo-Gallup Project. Because the water is used in the State 
of Arizona, the Colorado River Basin States abide by the terms 
of the Colorado River Compacts, which require that uses 
charge--I am sorry, uses that are made within any given State 
be charged against that State. So even though we would be 
taking water from the San Juan River in New Mexico, in order to 
charge it to the place of use, we would need to get an Arizona 
water right to do that. So what we are seeking is an Arizona 
water right.
    We think that the easiest solution is simply for the 
Secretary of the Interior to allocate 6,400 acre feet of water 
under her control. We can't get that allocation under the 
provisions of 104(b) without an Arizona settlement. Ironically, 
we would have a settlement with New Mexico, but not one with 
Arizona and, as I said before, there are a myriad of issues 
that we have with the State of Arizona. We are ready to move on 
a New Mexico settlement and the Window Rock water supply simply 
can't wait to resolve all the issues we have with Arizona.
    We believe that an appropriate fix would be for this 
legislation to carve out 6,400 acre feet of water, not for the 
Navajo Nation but 6,400 acre feet of water that could be held 
by the Secretary of the Interior in the event that there is a 
Congressionally approved water rights settlement with the State 
of New Mexico to provide that 6,400 acre feet. So we would have 
parallel provisions.
    Mr. Renzi. Thank you. Is there anyone who would like to 
comment on that?
    Mr. Guenther. Mr. Chairman, I can comment on it. We--
obviously, we are talking about two different basins here, but 
I do see the Navajo's concern with regard to the limitations 
that 104(b) may or may not legally impose. But regardless of 
which way we do go, I would ask that we participate very 
closely in any words that are chosen with regard to this type 
activity because it involves 1922 Compact issues, which are 
extremely sensitive in the Basin States. It is a matter of 
Upper Basin right versus Lower Basin right, Upper Basin 
diversion use and Lower Basin. I mean, they are artificial 
boundaries, but----
    Mr. Renzi. You don't necessarily agree that the settlement 
would impede the ability? You are not sure about that? You need 
to research that more?
    Mr. Guenther. Yes, and it would not impede the ability of 
using a leased right or a purchased right, of a retired 
agricultural right of some other type on the river. But I think 
Mr. Pollack is probably correct that it could be interpreted to 
include an allocation.
    Mr. Renzi. OK. We can work on that, too, then.
    Let me finish up by asking Chairwoman Kitcheyan, we spoke a 
little bit about the Globe Equity Decree and the fact that you 
feel that the settlement would impinge on those rights. 
Governor Narcia addressed it by saying that he is willing to 
give up his upstream rights. Chairwoman Kathy, do you want to 
comment on that?
    Ms. Kitcheyan. You know, I was listening to Governor Narcia 
talked about the upstream rights. Though we have not met to 
discuss this, I have been in office 9 months now and we did 
have one meeting scheduled, and unfortunately, I was ill, so we 
didn't meet to discuss it.
    However, on the Globe Equity, you know, that has been since 
1935 and we have never received our full allocation of it. I 
would certainly like to see Governor Narcia give up his right 
plus more. Thank you.
    [Laughter.]
    Mr. Renzi. I think--yes, go ahead, Joe.
    Mr. Sparks. Mr. Chairman, in further response and 
supplement to the Chairwoman's response, the Gila River Indian 
Community is not giving up their Globe Equity rights. They 
still will have the right to take, when the river is running on 
priority, the first 437.5 cubic feet per second of the natural 
flow of the river. What they have potentially agreed to is that 
the Upper Valley pumpers can take that water in disregard of 
Gila River's priority to have the first 437.5 cubic feet per 
second. But Gila River has not given up its right to call on 
that water and the result of that is that the pumpers will 
continue pumping in violation of the decree at least as to the 
way San Carlos is treated----
    Mr. Renzi. And the threat that you----
    Mr. Sparks [continuing]. And the flow of the water will be 
reduced by that pumping.
    Mr. Renzi. OK. Let us wrap up. Is there anything 
substantive that remains in any of your hearts that hasn't been 
drawn out? Real quick. We are going to go to votes here in 
about 5 minutes. Speak now, please. Is there anyone else who 
would like to address any issue of a substantive nature?
    [No response.]
    Mr. Renzi. OK. With that, I want to thank the witnesses for 
their valuable testimony. I want to thank the members here for 
their questions. Members of the Subcommittee may have 
additional questions for the witnesses and we will ask that you 
respond to these in writing. The hearing record will be open 
for 10 days for these responses.
    If there is no further business before the Subcommittee, I 
thank the members of the Subcommittee and our witnesses. The 
Subcommittee stands adjourned.
    [Whereupon, at 12:33 p.m., the Subcommittee was adjourned.]

    The following information was submitted for the record:
      Arizona Cities of Chandler, Glendale, Goodyear, 
Mesa, Peoria, and Scottsdale, Statement submitted for the 
record in support of H.R. 885
      Fines, L. Anthony, Attorney for Gila Valley 
Irrigation District and David A. Brown, Attorney for Franklin 
Irrigation District, Statement submitted for the record
      Gila River Indian Community, Supplemental 
testimony submitted for the record
      Hawker, Hon. Keno, Mayor, City of Mesa, Arizona, 
Statement submitted for the record
      Mason, Douglas, General Manager, San Carlos 
Irrigation and Drainage District, Coolidge, Arizona, Statement 
submitted for the record in support of H.R. 885
      Payson, Town of, Arizona, Statement submitted for 
the record by the Mayor and Common Council in support of H.R. 
885
      Renner, George, President, Board of Directors, 
Central Arizona Water Conservation District, Statement 
submitted for the record
      Rimsza, Hon. Skip, Mayor, City of Phoenix, 
Arizona, Statement submitted for the record in support of H.R. 
885
      Sullivan, John F., Associate General Manager, 
Water Group, Salt River Valley Water Users Association and Salt 
River Project Agricultural Improvement and Power District, 
Statement submitted for the record in support of H.R. 885
      Talley, Hon. Van, Mayor, City of Safford, 
Arizona, Statement submitted for the record in support of H.R. 
885

 Statement submitted for the record by the Arizona Cities of Chandler, 
            Glendale, Goodyear, Mesa, Peoria, and Scottsdale

    Chairman Calvert and Members of the Subcommittee:
    The Arizona Cities of Chandler, Glendale, Goodyear, Mesa, Peoria 
and Scottsdale (``Cities'') appreciate the opportunity to submit this 
testimony in support of H.R. 885. The Cities collectively represent 
more than 1.6 million people within the Phoenix metropolitan area of 
Maricopa County, Arizona. H.R. 885 is very important to the Cities and 
other water users throughout Arizona.
    H.R. 885 approves the settlement of ongoing disputes over the past 
decade between the United States and Arizona interests concerning 
Central Arizona Project (``CAP'') repayment and water allocation 
issues. H.R. 885 also approves the settlement of long-standing disputes 
relating to the Gila River Indian Community water right claims. The 
Gila River Indian reservation includes a large land area of 
approximately 372,000 acres immediately south of the Phoenix 
metropolitan area where the Cities are located.
    H.R. 885 resolves these contested CAP repayment, CAP water 
allocation and Gila River Indian Community water rights claims in a 
manner that is fair and equitable to all parties. H.R. 885 is important 
to the Cities and their future water management. It provides more 
certainty regarding the Cities' future water supplies while settling 
complex and contentious CAP and Indian water rights claims.
    The Cities are contributing substantial financial and water 
resources to the Gila River Indian Community as part of the Gila River 
Indian Community Settlement. The City of Chandler is directly 
contributing 4,500 acre feet of reclaimed water annually to the Gila 
River Indian Community as part of the Settlement. In addition, both 
Chandler and Mesa are annually contributing up to 8,100 acre-feet of 
additional high quality reclaimed water to the Gila River Indian 
Community as part of the Settlement. The Cities have contributed 
millions of dollars in treatment and delivery infrastructure to provide 
this water to the Gila River Indian Community at no cost to the 
Community or the United States. The other Cities are contributing tens 
of millions of dollars to the Settlement by leasing CAP water from the 
Community.
    The Cities' consideration for the above contributions also includes 
the benefits the Cities are receiving under Title 1 of H.R. 885. The 
settlement of the CAP issues reflected in Title 1 of H.R. 885 is 
directly connected to the settlement of the Gila River Indian Community 
water rights claims.
    Title 1 approves the reallocation of CAP water previously 
designated for allocation to Arizona municipal and industrial 
interests. Since the mid-1980's, 65,647 acre-feet of CAP water that was 
designated by the Secretary of Interior for allocation to Arizona's 
municipal and industrial sector has remained uncontracted. This 
represents enough water to serve a population of nearly 300,000 people. 
Despite the undeniable need for the water by Arizona's Cities and 
Towns, this water has remained unallocated because of various disputes 
between the United States and the Central Arizona Water Conservation 
District over the CAP repayment obligation and allocation of CAP water 
between Federal and non-Federal interests. H.R. 885 resolves those 
disputes and provides a final allocation of CAP water between federal 
and state interests in Arizona. Under Title 1 of H.R. 885, the Cities 
each receive a specific allocation of the uncontracted municipal and 
industrial CAP water, which is needed to serve their growing 
populations.
    In addition, the Cities' municipal and industrial CAP subcontracts, 
like the Gila River Indian Community's CAP contract, will be expressly 
recognized as permanent service contracts with the existing delivery 
terms extended for 100 years. Title 1 of H.R. 885 also provides for the 
future allocation of 96,295 acre-feet of agricultural priority water to 
Arizona's municipal and industrial interests.
    The settlement of the Gila River Indian water rights claims as 
approved by H.R. 885 accomplishes many objectives. First, the 
Settlement Agreement permanently settles all water rights claims of the 
Gila River Indian Community to both surface water and groundwater, 
including all appropriative rights, federal reserved rights and 
aboriginal rights. Second, it resolves disputes as to groundwater 
pumping, land subsidence and water quality. Third, it will provide the 
Gila River Indian Community with a significant water right to develop 
the Community's lands. Fourth, it will furnish the Gila River Indian 
Community with adequate financial resources to allow for the beneficial 
and productive use of the water resources provided by the Settlement. 
This Settlement also will allow the parties, Native American and non-
Native American, to plan for the future use and development of their 
water resources in cooperation rather than in conflict, and with 
certainty rather than uncertainty.
    H.R. 885 also provides an additional 214,500 acre-feet of CAP water 
to be allocated to Federal interests in the State. This represents a 
significant transfer of water from non-Federal to Federal interests 
within Arizona. However, the Cities recognize that the transfer of this 
water will help resolve Indian water rights claims, including the 
claims of the Gila River Indian Community and other Native American 
interests whose water rights claims have not yet been settled.
    H.R. 885 also resolves significant claims against the federal 
government, some of which involve only the federal government and the 
Gila River Indian Community. H.R. 885 provides an important opportunity 
for the federal government to meet its trust obligations to the Native 
American communities involved while at the same time providing long-
term certainty regarding available Central Arizona Project Water 
(``CAP'') supplies to both Native American and non-Native American 
interests in Arizona.
    All parties to the CAP and Gila River Indian Community settlements 
benefit by settling their claims rather than continuing with protracted 
litigation. This settlement, as approved by H.R. 885, provides 
extensive and creative mechanisms to accomplish all the parties' 
objectives. These mechanisms are unavailable through a court process. 
These creative mechanisms include exchanging reclaimed water for some 
of the Gila River Indian Community's Central Arizona Project Water and 
the Cities leasing CAP water from the Community. The settlement also 
includes the use of some state parties' water facilities to deliver 
water designated for the Community under the Settlement. This 
settlement provides for the parties to work together to accomplish 
their respective water use objectives and needs rather than continuing 
to devote substantial sums litigating over the nature and extent of CAP 
water allocation rights and the Gila River Indian Community's water 
rights.
    The settlement of the CAP repayment and water allocation issues 
allows the parties to plan adequately for the future by eliminating 
uncertainty regarding available CAP water supplies and the Gila River 
Indian Community's water rights claims. The problems that H.R. 885 
resolves are serious problems, both for Arizona and the federal 
government. H.R. 885 represents a fair settlement of the disputes over 
the CAP repayment and water allocation issues, and the Gila River 
Indian Community's water rights claims. We therefore urge your support 
of H.R. 885 and appreciate the opportunity to provide our written 
testimony to you.
    NOTE: This statement was signed by the following individuals:
        Boyd Dunn, Mayor, Chandler, Arizona
        Elaine M. Scruggs, Mayor, Glendale, Arizona
        Jim Cavanaugh, Mayor, Goodyear, Arizona
        Keno Hawker, Mayor, Mesa, Arizona
        John Keegan, Mayor, Peoria, Arizona
        Mary Manross, Mayor, Scottsdale, Arizona
                                 ______
                                 

 Statement submitted for the record by L. Anthony Fines, Attorney for 
   Gila Valley Irrigation District, and David A. Brown, Attorney for 
                      Franklin Irrigation District

    Chairman Calvert and Members of the Subcommittee, we have read 
some, but not all, of the testimony presented on behalf of the San 
Carlos Apache Tribe with respect to H.R. 885, the Arizona Water 
Settlements Act. In our opinion, much of the testimony presented on 
behalf of the San Carlos Apache Tribe is incorrect or not true. We do 
not have the time to address all the errors, but one error is 
especially significant. In the settlement that we are negotiating on 
behalf of the Gila Valley Irrigation District and the Franklin 
Irrigation District with the Gila River Indian Community, all parties 
have been careful to draft the language so that the rights of the San 
Carlos Apache Tribe will be unaffected by the settlement. In fact, the 
San Carlos Apache Tribe will have the same opportunities and ability to 
assert its rights after the settlement that it now has. We are hopeful 
that we will also be able to negotiate a settlement on behalf of our 
clients with the San Carlos Apache Tribe. If we are unable to reach a 
settlement with the San Carlos Apache Tribe, we will agree to any 
appropriate amendments to make clear that the rights of the San Carlos 
Apache Tribe are unaffected by our clients' settlement with the Gila 
River Indian Community.
    Thank you for the opportunity to present this rebuttal statement.

                                   L. Anthony Fines
                                   David A. Brown
                                 ______
                                 

 Statement submitted for the record by the Gila River Indian Community

    This supplemental testimony is being submitted to correct certain 
errors, omissions, and misstatements contained in the testimony of the 
San Carlos Apache Tribe (SCAT). Because of the large number of such 
errors, omissions and misstatements the Gila River Indian Community 
(Community) has limited its supplemental testimony to those that were 
most egregious or potentially misleading. The italicized text below 
indicates the error, omission or misstatement being addressed and the 
Fact section presents the Community's correction for the record.

                    I. San Carlos Apache Reservation

A. Water sources
    During the hearing before the House Water and Power Subcommittee of 
the House Resources Committee, the Chairperson of the San Carlos Apache 
Tribe asserted that the flow of the Gila River was contaminated by 
pollution that causes birth defects on the SCAT Reservation.
    Fact: First, as discussed in greater detail below, the only known 
water quality issue present in the upper Gila River concerns salinity 
from within the Gila River basin. It is generally accepted that 
elevated salinity levels in water, particularly of the levels found in 
the upper Gila River basin, do not, by themselves, cause birth defects. 
The Community recently contacted local and state health officials to 
confirm that there is no known connection between salinity in water and 
birth defects.
    Second, even if there were a connection between increased salinity 
and birth defects, which there is not, SCAT's written testimony to the 
Committee confirms that SCAT does not use Gila River water for any 
domestic or municipal use but rather relies exclusively on groundwater 
for domestic and municipal uses.
    Third, although the rate for all Arizona Indians is high by 
comparison to non-Indians, the rate of birth defects at SCAT (2.4%) is 
not elevated at all by comparison to the average rate of all other 
tribes in Arizona (2.5%).
    During the hearing, an attorney for SCAT indicated that federal 
court rulings explicitly require the delivery of SCATS 6,000 acre-feet 
of water per year (af/y) by direct diversion from the Gila River, 
rather than by means of an upstream diversion into a pipeline that 
avoids high salinity springs that flow into the Gila River.
    Fact: SCAT's written testimony includes the Water Quality 
Injunction issued by the Globe Equity Court on May 28, 1996, which 
states:
    ``Nothing in this injunction shall prohibit the parties, upon 
agreement or by order of this Court, from connecting the Apache Tribe's 
irrigation system directly to the canals of the Gila Valley Irrigation 
District for Delivery of water directly to Apache farm lands. The 
connections may be made by canal or a pipe.'' (SCAT Exhibit K, p. 14 
(emphasis supplied).)

 II. Overview of Title I and Title II of the Arizona Water Settlement 
                    (sic.) Act (S. 437 and H.R. 885)

    The settlement agreements and the exhibits to the settlement 
agreement ``attempt to `legislate' the water rights of [certain] 
parties in lieu of their adjudication in the Gila River Adjudication.'' 
(p. 3)
    Fact: First, a condition of the enforceability of the Arizona Water 
Settlements Act is the approval by the Gila River Adjudication Court of 
the Gila River Indian Community Water Rights Settlement Agreement 
(Settlement Agreement). Thus, any water rights confirmed to the 
Community as a result of this settlement will be reviewed, and 
hopefully approved, by the Gila River Adjudication Court. During this 
court approval process any affected party, including SCAT or the United 
States on its behalf, may object to the settlement stating the grounds 
for their objection. The Gila River Adjudication Court will then render 
a judicial determination itself approving the Settlement Agreement or 
not.
    Second, all of the Indian tribes with claims to the waters of the 
Gila River and its tributaries are participating in the Gila River 
Adjudication. Several of these Indian tribes, including SCAT, have 
reached agreements with other parties asserting adverse or competing 
claims. These agreements provide that in exchange for an agreement on 
the amount of reserved right to be asserted by or on behalf of the 
Indian tribe, the tribe and the United States in its trust capacity for 
that tribe, agree not to challenge the claims of the parties to the 
agreement. In addition to entering such an agreement, SCAT sought and 
obtained a Special Proceeding before the Gila River Adjudication Court 
to obtain expeditious consideration of its agreement. The Court's order 
was issued December 12, 1999. There is absolutely no basis for SCAT to 
challenge the Community's effort to utilize the same process to reach 
settlements in the Adjudication. The Community's settlement no more 
``legislates'' water rights in the Adjudication than the SCAT 
Settlement, the Fort McDowell Settlement, the Salt River Pima-Maricopa 
Settlement, or the Yavapia-Prescott Settlement.
    ``The proposed legislation also attempts to settle all pending 
disputes between certain decreed parties in the Globe Equity No. 59 
proceeding. (p. 3)''
    Fact: First, the legislation and the Settlement Agreement only 
address the Community's pending disputes with certain parties in the 
Globe Equity 59 enforcement proceeding. All other parties, including 
SCAT, retain all their legal rights in connection with any pending or 
future proceedings to protect their rights or claims to water in 
Arizona.
    Second, an additional condition to the enforceability of the 
Arizona Water Settlements Act is the approval of the Community's 
Settlement Agreement by the Globe Equity Court. Thus, any water claims 
settled by the Community as a result of this settlement will be 
reviewed, and hopefully approved, by the Globe Equity Court. During 
this court approval process any affected party, including SCAT or the 
United States on its behalf, may object to the settlement stating the 
grounds for their objection. The Globe Equity Court will then render a 
judicial determination itself approving the agreement or not.
    ``The settlement agreements would allow Gila Valley and Franklin 
Irrigation Districts to continue to pump up to six acre-feet per year 
of water from the `subflow' of the Gila River in violation of the 
Tribe's senior 1846 water rights under the Globe Equity Decree and 
continue to divert water for `hot lands' which do not have any decreed 
water rights.'' (p. 3)
    Fact: The Community has agreed not to challenge uses of up to 6 af/
y of water (by pumping and direct river diversions) on a number of 
acres that is reduced from current levels by 3,000 acres. The 
Community's agreement not to challenge such uses is contingent on the 
Upper Valley Diverters' (``UVDs'') compliance with very specific 
conditions set forth in the UVD Agreement, including monitoring 
requirements and control of phreatophytes, among many others. The 
existing ``hot lands'' are part of the acreage limit to the extent they 
become Decreed lands pursuant to application to Globe Equity court for 
such status. SCAT may object to such application, as may the United 
States on SCAT's behalf, or any other party except the Community.
    Overall, the UVD agreement will unquestionably reduce UVD water use 
and consumption. Diversion and pumping records for the period 1936-1997 
clearly show that pumping and surface diversions as well as total 
consumptive use of water by crops will be reduced when the Settlement 
Agreement is fully implemented. The Settlement Agreement holds the UVDs 
to total pumping and diversions of approximately 181,860 af/y. In every 
year since 1956, the UVD's combined pumping and diversions have 
substantially exceeded this amount. The average of the UVDs' combined 
pumping and direct diversions for the period 1937 to 1997 was almost 
230,000 af/y.
    Most significantly, all uses of water, even uses that conform to 
the UVD agreement, will still remain subject to challenges by SCAT if 
they believe such uses affect their 1846 water right. There is nothing 
in the legislation, the Settlement Agreement or its exhibits which 
prevents SCAT or the United States, in any capacity other than as 
trustee for the Community, from proceeding with any new or existing 
claims against the UVDs.

                      III. Central Arizona Project

B. Repayment of CAP debt to United States
    ``If CAWCD's debt was $1.65 billion, that would leave approximately 
$2.35 billion in project costs unresolved and possibly charged to 
Indian lands.'' (p. 6-7)
    Fact: There is simply no basis in federal law or policy for even 
speculating about whether CAP costs will be disproportionately charged 
to Indian tribes because the Colorado River Basin Project Development 
Act of 1968 (CRBPA) imposes the following limitation:
    ``The Secretary shall determine the repayment capability of Indian 
lands within, under, or served by any unit of the Central Arizona 
Project. Construction costs allocated to irrigation of Indian lands and 
within the repayment capability of such lands [shall be indefinitely 
deferred as provided in 25 U.S.C. Sec. 386a], and such costs that are 
beyond repayment capability of such lands shall be nonreimbursable.'' 
(43 U.SC. Sec. 1542, emphasis supplied)
    Other parties address the SCAT's other misstatements about CAP 
repayment.
C. CAWCD sells Indian water to non-Indians and keeps the income
D. CAWCD discriminates against Indians in its pricing structure for CAP 
        water which makes tribal use of CAP water under Indian 
        contracts cost prohibitive
E. Disincentive to construct tribal CAP projects due to CAWCDs ability 
        to market Indian water for non-Indians and keep the income
    Fact: The Community agrees that CAWCD has very recently proposed a 
problematic ``excess water'' pricing scheme, which, if implemented, 
would allow non-Indians to purchase CAP water at a lower rate than 
Indian tribes. Such policy would affect the Community more than SCAT 
because the Community has an existing CAP allocation of water that is 
larger than that of SCAT. The enactment of Title I of S. 437 and H.R. 
885 will provide immediate relief from the disparity caused by this 
proposed CAWCD pricing scheme. In addition, because CAWCD will be 
reimbursed by the federal government for fixed Operation, Maintenance, 
and Replacement (OM&R) charges for CAP water held under long-term 
tribal contracts, and not reimbursed for such charges for ``excess 
water'', the CAWCD's incentive will be to encourage the use of CAP 
water by Indians.
H. CRBP development fund will be used for non-project purposes and will 
        continue to be used to the disadvantage of Indians
    Fact: Each of the points raised in this section are effectively 
refuted by the proposed amendment to Sec. 403 (43 U.S.C. Sec. 1543) of 
the Colorado River Basin Project Act (CRBPA).
    Three sources of revenue established by the CRBPA and the ``annual 
payment by the CAWCD to effect repayment of reimbursable CAWCD 
construction costs [$1.65 billion], shall be credited against the 
annual payment owed by the CAWCD,'' and then all of these funds:
    ``shall be available annually, without further appropriation, in 
order of priority: (A) to pay fixed operation, maintenance, and 
replacement charges associated with the delivery of Central Arizona 
Project water under long-term contracts for use by Arizona Indian 
tribes.'' (Sec. 107(a))
    ``GRIC is first in line to take the credits from the annual 
payments made by CAWCD each year. GRIC proposes to not only use the 
Fund for CAP purposes * * * it will use $147 million to rehabilitate 
its BIA San Carlos Irrigation Project system which delivers water to 
GRIC from the Gila River.'' (p. 12)
    Fact: The Settlement Agreement ratified by S. 437 and H.R. 885 
impose an annual cap of $25 million on the amount of money available 
from the Lower Colorado River Basin Development Fund (Development Fund) 
for San Carlos Irrigation Project (SCIP) rehabilitation. This ensures 
that every year there will be millions of dollars in excess of this 
particular cap that can and will be applied to other Indian projects. 
At the request of other parties, the Community agreed to this annual 
limit to ensure that other Indian water projects are also paid for on 
an ongoing basis. The Bureau of Reclamation has developed a projection 
of funding inflows and outflows for the Development Fund that 
demonstrates that all Indian projects currently contemplated, including 
SCAT, will be funded in a timely and certain manner.
    SCAT appears to argue that none of the Development Fund should be 
available for tribal irrigation systems unless those systems are used 
exclusively for CAP water. Yet the SCAT project authorized by its 1992 
settlement, and funded by the Development Fund, will deliver both CAP 
water and non-CAP water. ``The draft EIS will evaluate reasonable 
alternative methods of delivering the CAP water and other waters'' 
including 6,000 af/y of G.E. 59 decreed water, 7,300 af/y from the 
Black and/or Salt Rivers, and water from local Tribal water sources. 
(Notice of Intent to Prepare EIS, 67 Federal Register 8316 (February, 
2002)
    In addition, SCAT's argument would deny access to the Development 
Fund to the Navajo Nation, Hopi and possibly other Indian tribes in the 
Gila River watershed and other Arizona watersheds if they obtain 
settlements that include non-CAP water supplies.
I. The proposed legislation will require that tribes have a water 
        rights settlement in place before a tribe can use CAP water 
        whereas non-Indians have been able to use CAP water for years 
        without a settlement of water rights
    ``Tribes without water settlements will not have their CAP delivery 
systems built until a settlement is in place. That violates the Tribe's 
CAP contracts.'' (p. 13)
    Fact: This statement simply ignores the provisions of S. 437 and 
H.R. 885, which provide that both CAP repayment funds and appropriated 
funds are available ``to pay the costs associated with the construction 
of distribution systems required to implement the provisions of * * * 
(II) section 3707(a)(1) of the San Carlos Apache Tribe Water Settlement 
Act of 1992 (106 Stat. Sec. 747)'' (emphasis added), which includes CAP 
delivery components. See Section 107(a) (amending section 
403(f)(2)(D)(i)(II) of the CRBPA). Both bills also explicitly make 
funds available for the construction of on-reservation distribution 
systems for the Yavapai Apache (Camp Verde), Pascua Yaqui, and Tonto 
Apache Indian tribes along with the Sif Oidak District of the Tohono 
O'odham Nation.'' (See Section 107(a)(amending section 403(f)(2)(E) of 
the CRBPA.)
    In addition, SCAT's testimony acknowledges that money from annual 
appropriations, as well as funds from the Development Fund, will be 
available to underwrite the cost of these and other Indian distribution 
systems in Arizona. (p. 14).
    ``For over 10 years, the San Carlos Apache Tribe has had a 
settlement in place.'' (p. 14)
    Fact: Unlike other statements in SCAT's testimony, this statement 
is correct. As discussed above, SCAT's settlement was only made 
enforceable in December 1999. Nevertheless, for more than 10 years, 
SCAT has enjoyed the certainty and other benefits it has acquired from 
its 1992 water settlement, a certainty that it seeks to deny to the 
Community. At that time, SCAT ensured that it acquired a water supply 
that is more reliable than other Indian tribes in Arizona can even hope 
for. SCAT was able to accomplish this by keeping other interested 
parties in the dark about its intentions and its negotiations until its 
settlement was included as one of the last titles in largest 
reclamation project legislation approved by Congress in decades. While 
SCAT is now championing the virtues of inclusiveness in water 
settlement negotiation, it did not even attempt to consult with the 
Community in 1992 or consider the impact of its settlement on the 
Community's efforts to assert claims to the Salt and Verde Rivers.
J. Gila River Indian Community's settlement CAP water will be 
        substantially used by non-Indians
    Fact: SCAT fails to acknowledge that water leases are often an 
integral component of Indian water rights settlements, including SCAT's 
1992 settlement, where they serve a variety of purposes. For example, 
in the Community's case, it is able to leverage CAP leases in exchange 
for a greater supply of treated effluent from neighboring cities. Upon 
close examination the leases and exchanges contemplated by the 
Settlement Agreement all serve such dual purposes by increasing water 
use efficiency and/or the reliability of the water provided to the 
Community. SCAT itself has leased much of the CAP water it obtained 
from its 1992 settlement to non-Indian parties.
L. When the CAP canal capacity is not enough to deliver all CAP water 
        orders, GRIC will be the last to be required to take a 
        reduction
    Fact: This is simply incorrect. Paragraph 8.14 of the Settlement 
Agreement, to which the statement by SCAT is directed, simply ensures 
that GRIC's CAP water deliveries are not reduced based on delivery 
capacity unless those of ``similarly located,'' CAP water users are 
also reduced.
N. San Carlos Apache Tribe's Water Rights Settlement Act will likely be 
        impaired
    Fact: At the September 30, 2003 joint hearing before the Senate 
Energy and Natural Resources and Senate Indian Affairs Committees and 
then before the Water and Power Subcommittee of the House Committee on 
Resources the Acting Assistant Secretary for Indian Affairs, Aurene 
Martin, was asked several times whether the Arizona Water Settlements 
Act violated the federal government's trust responsibility to any 
Indian tribe. She answered that it did not. The Acting Assistant 
Secretary provided similar assurances to the House Water and Power 
Subcommittee of the House Resources Committee.
O. San Carlos Apache Tribe's water supply from Gila River will be 
        further diminished by exchanges of CAP water for Gila River 
        water upstream of tribe's reservation
    Fact: The Community has already shown that the UVD agreement will 
decrease the amount of water used for irrigation in the upper Gila 
valley. The Community also notes that all exchanges contemplated by the 
Settlement agreement are subject to full federal environmental review 
before they are approved by the Secretary. They must also be approved 
by the Globe Equity Court. The Phelps Dodge agreement explicitly 
prevents the Secretary from approving the lease/exchange until: ``All 
Environmental Compliance has been completed relating to the United 
States' execution of the Lease and Exchange Agreement and any 
litigation relating to such Environmental Compliance is final and 
subject to no further appeal.'' In addition, the entire Settlement must 
be approved in a Special Proceeding before the Gila River Adjudication 
Court. SCAT will have at least three opportunities to present evidence 
about any impact associated with these exchanges. Finally, in an effort 
to ensure that the SCAT current water supply is not simply preserved, 
but improved both as to quality and quantity, the Community is working 
actively with other parties to develop a mechanism to provide SCAT with 
a direct delivery of Gila River water through a pipeline that avoids 
the salinity of which SCAT complains.
P. San Carlos Apache Tribe's right to power generation benefits of its 
        power site at Coolidge Dam will be diminished
    Fact: Any discussion about SCAT's claim of injury based on a loss 
of electrical power is, of course, academic and speculative at this 
juncture because no electricity is being produced.
    With respect to SCAT's claim that it was inadequately compensated 
for the construction of Coolidge Dam, this has no relevance to the 
settlement of water rights disputes concerning the Gila River Indian 
Community and Tohono O'odham Indian tribes. Whatever the merits of SCAT 
claims, they only serve to create confusion about unrelated issues. 
SCAT chose not to press for resolution of this issue when its 1992 
settlement was before Congress, perhaps because it did not wish for 
these issues to interfere with its efforts to enact a water settlement 
It should not be entitled to interject these issues at this juncture, 
at the expense of other Arizona Indian tribes.

     IV. The GRIC Settlement (S. 437 and H.R. 885) Will Result in 
 Unprecedented Environmental Degradation to the Gila River System and 
                     Source and to San Carlos Lake

A. The Gila River system and source as well as San Carlos Lake provide 
        some of the last remaining riparian habitat in Arizona, which 
        must be preserved to ensure the continued existence of many 
        sacred, rare, and federally listed animals and plants
    1. The habitat of the Gila River and its tributaries.
    Fact: Nothing in the Gila River Indian Water Rights Settlement Act 
or Settlement Agreement contradicts the provisions of P.L. 101-628 
establishing the Gila Box Riparian National Conservation Area.
    2. The habitat of San Carlos Lake.
    Fact: SCAT's assertions about San Carlos Lake mirror a series of 
claims that were rejected by the U.S. District Court for Arizona in 
July 2003. The court found that SCAT had not presented enough evidence 
of any threats to threatened, endangered, or other species in San 
Carlos Lake to merit any further consideration of its claims. The court 
explicitly rejected SCAT's efforts to tie low lake levels to avian 
botulism. ``[T]wo experts with 30 years experience treating injured and 
diseased raptors, one expert working in Arizona since 1973, have never 
encountered botulism in Bald Eagles and both stated that Bald Eagles 
would not likely be impacted by this disease.'' SCAT v. United States, 
2003 WL 21697724 (2003 D.Ariz.)
B. The act and agreement will destroy the flows in the Gila River 
        watershed and contaminate its flows through the discharge of 
        treated effluent
    Fact: Re-use of highly treated effluent by putting it back into 
river systems is a recognized mechanism for efficient water use, 
particularly in water-short areas such as Arizona. Any discharges of 
such effluent will be governed by both federal and state law, and 
cannot therefore be characterized as a contaminating pollutant.
    Exchanges with Phelps Dodge, ASARCO and New Mexico can only occur 
after environmental compliance and then only in accordance with Article 
XI of the Globe Equity Decree.
    ``The Apache Tribe objects to the SCIDD proposal which cannot 
fulfill the United States' trust responsibility to the Apache Tribe to 
preserve and protect San Carlos Lake.'' (p. 31)
    Fact: In July 2003, the U.S. District Court for Arizona addressed 
each of SCAT's claims that the operation of San Carlos Reservoir and 
the failure to provide a minimum storage pool breached the federal 
government's trust obligation to SCAT. The court rejected each of 
SCAT's allegations, including the allegation that the operation of the 
dam violates federal laws for the protection of archeological and 
cultural resources. The court found that SCAT had simply not presented 
evidence that there was any factual or legal basis to require the 
government to maintain the minimum project pool. In clear terms, there 
is no trust responsibility to maintain a minimum lake level.

 V. The GRIC Settlement Expressly Exempts Itself From Compliance With 
 the National Environmental Policy Act and Contains Broad and Sweeping 
                         Environmental Waivers

A. Exemption from NEPA compliance
    Fact: SCAT is well-aware that this provision is included in all 
Indian water rights settlements. For example, it was included in the 
San Carlos Apache Water Rights Settlement Act of 1992 (3709(a), P.L. 
102-575).
B. The GRIC settlement requires the United States to execute broad 
        waivers and releases for past, present, and future 
        environmental harms
    Fact: SCAT's comments purposefully ignore the limitations on the 
scope of the claims the United States will not assert pursuant to 
207(c). The only claims the government agrees that it will not pursue 
are those claims enumerated in 207(a). These are claims that only 
involve the interests of the Community, its members, and its members as 
allottees.

  VII. The GRIC Settlement Act Creates a ``Template'' for the Loss of 
 Tribes' Federal Reserve Water Rights for Lands Transferred Into Trust

    Fact: Indian land and water settlements frequently contain 
provisions that address or place constraints on future tribal 
acquisitions of land or water. SCAT has no objection to similar 
provisions in the Zuni Water Settlement (P.L. 108-34) or in Title III 
of the Arizona Water Settlements Act.

     IX. Globe Equity Decree-Rights of the San Carlos Apache Tribe

A. Federal Globe Equity No. 59 Consent Decree
    1. The San Carlos Apache Tribe has federal reserved and aboriginal 
water right claims pending in the Gila River general stream 
adjudication for additional water rights to the mainstem of the Gila 
River which could affect the Globe Equity No. 59 Decree.
    Fact: As the testimony before the Committee explained, nothing in 
the Arizona Water Settlements Act impedes SCAT's effort to assert its 
reserved water rights claims, just as the Community accepts that SCAT 
could and did reach settlements with parties asserting claims adverse 
to the Community's reserved rights claims through the 1992 SCAT 
settlement legislation. The Community's settlement also preserves 
SCAT's ability to object to any provision in its settlement in federal 
and state court before the Community's settlement would become 
effective. It also preserves SCAT's ability to object in court as to 
any of the possible exchanges contemplated by the Community's 
settlement.
    2. The Globe Equity No. 59 Court has entered a water quality 
injunction against the Gila Valley and Franklin Irrigation District to 
ensure that the San Carlos Apache Tribe receives that quality of water 
necessary to cultivate moderately salt-sensitive crops.
    Fact: Nothing in the Community's settlement framework interferes 
with the water quality injunction, which, as discussed above, concerns 
only salinity from within the Gila River Valley.
    3. Standard for construing the Globe Equity Decree.
    4. Previous rulings by the Globe Equity Court and the Ninth Circuit 
confirm that UVD pumping is ``covered'' by the decree.
    The Community has no specific comments on these sections of SCAT's 
testimony, which recite SCAT's interpretation of certain laws and court 
rulings. SCAT's generalized views on these topics are simply not 
relevant to the Committee's consideration of the Arizona Water Rights 
Settlements Act. As noted above, because SCAT retains all its existing 
rights and claims, it can vigorously pursue the enforcement of such 
rights and claims using such interpretations as a basis for its 
actions.
B. The Arizona Gila River General Stream Adjudication
    1. The San Carlos Apache Tribe has unadjudicated federal reserved 
and aboriginal water right claims to waters of the mainstem and 
tributaries of the Gila River in the Arizona Gila River General Stream 
Adjudication.
    Fact: Under the Arizona Water Settlements Act, the Community will 
not seek to increase the reserved rights available to it in the Gila 
River. Nothing in the proposed legislation interferes with SCAT's right 
or ability to attempt to increase its reserved rights through 
litigation or separate settlement.

                                 ______
                                 

       Statement submitted for the record by Keno Hawker, Mayor, 
                         City of Mesa, Arizona

    Chairman Calvert and members of the Subcommittee; as the Mayor of 
the City of Mesa, Arizona, I appreciate the opportunity to submit this 
testimony in support of H.R. 885. The City of Mesa provides water 
service to approximately 435,000 people in four cities and across two 
counties. The importance of H.R. 885 to Mesa, its customers, and other 
water users throughout Arizona cannot be underestimated.
    You will hear a great deal of testimony about the benefits of the 
Arizona Water Settlements Act. You will hear talk of the stability, 
certainty in water resources planning, cessation of costly litigation, 
and reduced CAP repayment obligation that the settlement brings to the 
State of Arizona. You will hear of the benefits the settlement brings 
to the federal government, including an increased share of CAP water 
that can be used by the federal government to meet its trust 
responsibilities towards the many Native American communities within 
Arizona. The City of Mesa shares in these important benefits and values 
them greatly, but I want to emphasize the value of some of the unique 
benefits that the City of Mesa in particular realizes from this Act.
    Through this settlement and its enabling legislation, Mesa will 
receive an additional allocation of 7,115 acre-feet per year of CAP M&I 
priority water that is vital to ensuring Mesa's sustainable growth and 
development. Mesa also will gain the option to lease Gila River Indian 
Community CAP water in the future, again adding to the pool of water 
Mesa can use for its future.
    Most importantly, however, the City of Mesa is undertaking a water 
exchange with the Gila River Indian Community. Mesa will deliver 29,400 
acre-feet per year of high quality reclaimed water to the reservation 
boundary and in exchange will receive 23,530 acre-feet of CAP water 
that Mesa can use in its potable system. This exchange is essential to 
the City of Mesa. The exchange affords Mesa the opportunity to 
efficiently convert what is a non-drinking water source into a drinking 
water resource that can be used to meet growing municipal and 
industrial demands. The exchange allows the Gila River Indian Community 
to increase the size of its water budget and use this high quality 
water for agricultural purposes at a very low price. Mesa has a history 
of partnership with its neighbor the Gila River Indian Community in the 
redevelopment of what was Williams Air Force Base, and strongly values 
the opportunity to partner again with the Community in a project that 
can bring so many benefits to both communities. The proposed reclaimed 
water exchange allows both entities to manage water in a regional, 
conjunctive, and efficient manner that brings great benefits to the 
residents of both communities.
    For these reasons and others, the City of Mesa strongly endorses 
the Arizona Water Rights Settlements Act and urges your support of H.R. 
885.
    Thank you for the opportunity to provide written testimony.

                                 ______
                                 

 Statement submitted for the record by Douglas Mason, General Manager, 
     San Carlos Irrigation and Drainage District, Coolidge, Arizona

    Chairmen Calvert and Members of the Subcommittee, the San Carlos 
Irrigation and Drainage District (District) is pleased to submit this 
testimony supporting the enactment of H.R. 885, the Arizona Water 
Settlements Act. Our support for enactment reflects the efforts of many 
parties that have collaborated to bring this settlement to the point 
where the Congress can consider enactment of the authorizing 
legislation. Of particular note are the efforts of the Arizona 
Congressional delegation, who have been instrumental in bringing the 
parties together to structure innovative solutions to what had been 
considered to be intractable disputes.
    Although the broad fabric of the Settlement is complete, two areas 
continue to be completed through ongoing negotiations. These include: 
(1) finalization of arrangements for water users in New Mexico to use 
the 18,000 acre-feet per year of Central Arizona Project water that was 
promised in the 1968 Colorado River Basin Project Act; and (2) 
completion of agreement language defining the rights of water users in 
the Upper Gila River valleys near the communities of Duncan and Safford 
in western New Mexico and eastern Arizona. This District is 
participating in those discussions. With conclusion of those two items 
and any necessary conforming changes to the Settlement Agreement and 
the legislation, the Bill will be ready for enactment.
    From the perspective of this District, the Settlement accomplishes 
important objectives. They include:
    1.  Resolves decades of difficulties between District farmers and 
members of the Gila River Indian Community (Community) over how the 
Gila River water rights shared by the District and the Community are 
managed; this is accomplished by restructuring and simplifying how San 
Carlos Irrigation Project (Project) water is divided;
    2.  Vests in the District and the Community, through a Joint 
Control Board, operation and maintenance responsibility for the Project 
irrigation water delivery facilities;
    3.  Provides for the rehabilitation of Project irrigation water 
delivery facilities using moneys available in the Lower Colorado River 
Basin Development Fund that is to be made available through contracts 
between (1) the United States and the Community and (2) the United 
States and the District;
    4.  Provides that the District will use its available contracting 
authorities and workforce to cost-effectively complete the 
rehabilitation of all District and most Project Joint Works facilities;
    5.  Provides that 8,000 acre-feet per year of water conserved 
through rehabilitating District facilities will be made available to 
maintain a sustainable water supply for a minimum Project fish and 
wildlife pool in the San Carlos Reservoir;
    6.  Provides an option for the United States to use, for a future 
water rights settlement with the San Carlos Apache Tribe, an average of 
10,000 acre-feet per year of water conserved through rehabilitating 
District facilities; and.
    7.  Provides that the District will assume the obligation to repay 
that portion of District facility rehabilitation costs that are 
associated with the net new conserved water supplies received by the 
District and, further, provides that remaining costs will be non-
reimbursable because the beneficiaries of those investments are tribal 
entities and fish and wildlife resources.
    In conclusion, the San Carlos Irrigation and Drainage District 
supports enactment of H.R. 885 because it resolves historical disputes 
and establishes mechanisms where future disagreements can be resolved 
among the local interested parties without needing to involve the 
United States in such management decisions.
    Along with myself, our General Counsel, Riney B. Salmon II, and our 
Engineering Consultant, Michael J. Clinton, will attend the Committee 
Hearing. We would be pleased to address any questions that arise about 
District participation in the Arizona Water Settlements Act and the 
associated Settlement Agreement.
    Thank you for considering this testimony.
                                 ______
                                 
    [A letter submitted for the record by the City of Payson, 
Arizona, follows:]

[GRAPHIC] [TIFF OMITTED] T9653.001


 Statement submitted for the record by George Renner, President, Board 
       of Directors, Central Arizona Water Conservation District

    Chairman Calvert and Members of the Subcommittee, the Central 
Arizona Water Conservation District is pleased to offer the following 
testimony regarding H.R. 885, the Arizona Water Settlements Act.
    The Central Arizona Project or ``CAP'' was authorized by the 90th 
Congress of the United States under the Colorado River Basin Project 
Act of 1968 (Basin Project Act). The CAP is a multi-purpose water 
resource development project consisting of a series of canals, tunnels, 
dams, and pumping plants that lift water nearly 3,000 feet over a 
distance of 336 miles from Lake Havasu on the Colorado River to the 
Tucson area. The project was designed to deliver the remainder of 
Arizona's entitlement to Colorado River water into the central and 
southern portions of the state for municipal and industrial, 
agricultural, and Indian uses. The Bureau of Reclamation (Reclamation) 
initiated project construction in 1973, and the first water was 
delivered to central Arizona in 1985. In 2000, CAP delivered its full 
normal year entitlement of 1.5 million acre-feet for the first time, 
allowing Arizona to utilize its full Colorado River apportionment of 
2.8 million acre-feet.
    CAWCD was created in 1971 for the specific purpose of contracting 
with the United States to repay the reimbursable construction costs of 
the CAP that are properly allocable to CAWCD, primarily non-Indian 
water supply and commercial power costs. In 1983, CAWCD was also given 
authority to operate and maintain completed project features. CAWCD's 
service area is comprised of Maricopa, Pima, and Pinal counties, and 
includes the state's major metropolitan areas of Phoenix and Tucson. 
CAWCD is a tax-levying public improvement district, a political 
subdivision and a municipal corporation, and represents roughly 80% of 
the water users and taxpayers of the State of Arizona. CAWCD is 
governed by a 15-member Board of Directors elected from the three 
counties it serves. CAWCD's Board members are public officers who serve 
without pay.
    Project repayment is provided for through a 1988 Master Repayment 
Contract between CAWCD and the United States. Reclamation declared the 
CAP water supply system (Stage 1) substantially complete in 1993, and 
declared the regulatory storage stage (Stage 2) complete in 1996. No 
other stages are currently under construction. Project repayment began 
in 1994 for Stage 1 and in 1997 for Stage 2. To date, CAWCD has repaid 
$685 million of CAP construction costs to the United States.
    In 2000, CAWCD and Reclamation successfully negotiated a settlement 
of their $500 million dispute regarding the amount of CAWCD's repayment 
obligation for CAP construction costs. That dispute had been the 
subject of ongoing litigation in United States District Court in 
Arizona since 1995. The settlement includes a number of conditions that 
must be satisfied before it will become final, including completion of 
Indian water rights settlements for the Gila River Indian Community and 
Tohono O'odham Nation. Several of those conditions are addressed in 
H.R. 885.
Title 1--Central Arizona Project Settlement Act
    Title 1 of H.R. 885 resolves a long-standing dispute between the 
United States and the State of Arizona regarding the allocation of CAP 
water. Title 1 also provides the water supplies and funding source that 
are necessary to complete Indian water rights settlements for the Gila 
River Indian Community (Title 2), the Tohono O'odham Nation (Title 3), 
and other Arizona tribes.

                    CAP WATER FOR INDIAN SETTLEMENTS

    Congress authorized the Central Arizona Project for the stated 
purposes of reducing groundwater overdraft, maintaining as much of 
central Arizona's irrigated agriculture as possible, and providing 
additional water for future municipal and industrial use. H.R. Rep. No. 
1312, 90th Cong., 2d Sess. 55 (1968). There is scant mention of any 
intended CAP benefits for Indian tribes in the legislative history of 
the Basin Project Act.
    Nevertheless, by 1983 the Secretary of the Interior (Secretary) had 
allocated 309,828 acre-feet of CAP water to Indian tribes and entered 
into long-term contracts with tribes for much of that supply. That 
represented about 22 percent of the anticipated annual CAP supply. 
Arizona Indian water rights settlements completed since 1983 have 
increased the amount of CAP water allocated to Indian tribes and 
decreased the amount available for non-Indian use. Presently, 453,224 
acre-feet of CAP water--32 percent of the CAP supply--is under contract 
to Indian tribes or dedicated for use in Indian settlements.
    The Arizona Water Settlement Agreement (Agreement) among the United 
States, CAWCD and the Arizona Department of Water Resources, which 
would be ratified by H.R. 885, would make an additional 214,500 acre-
feet of CAP water available for use by Indian tribes. Most of this 
additional water would come from non-Indian agricultural water users. A 
total of 293,795 acre-feet of non-Indian agricultural CAP water is 
being sought under the Agreement. Two-thirds of this water would be 
used to facilitate pending and future Indian water rights settlements; 
one-third would go to the State of Arizona for future municipal and 
industrial use.
    With the additional water provided under the Agreement, a total of 
667,724 acre-feet of CAP water--47 percent of the total CAP supply--
would be available for Indian use. H.R. 885 provides that this division 
of the CAP supply is final. This is a key element of the settlement 
legislation for non-Indian CAP water users. Some have suggested that 
even more CAP water should be allocated for Indian use, but any change 
in the division of CAP water from that reflected in H.R. 885 would 
require amendment of both the Agreement and the CAP repayment 
settlement. CAWCD is a party to both of those agreements, and CAWCD 
will not accede to any further reduction in the non-Indian CAP supply.
    No central Arizona Indian tribe has a Winters right claim to CAP 
water, and the rights of mainstream tribes to Colorado River water were 
adjudicated in Arizona v. California. Nevertheless, under H.R. 885 the 
Secretary would have a pool of 67,300 acre-feet of CAP water to use in 
future Arizona Indian water rights settlements. That is the only CAP 
water that will be available for future Indian settlements. 
Accordingly, it is imperative that the Secretary only be permitted to 
reallocate this water as part of a final Indian water rights 
settlement, as provided in section 104(b) of H.R. 885.
    As noted, the CAP water to be reallocated under H.R. 885 would come 
from non-Indian agriculture. Non-Indian agricultural water users with 
long-term contract entitlements to CAP water will be encouraged to 
permanently relinquish their long-term rights to CAP water. As partial 
compensation, the Agreement provides that the non-Indian agricultural 
contractors would be relieved from the federal debt they incurred under 
section 9(d) of the Reclamation Project Act of 1939. (Those contractors 
would remain responsible for repaying any private bond debt.) 
Collectively, their 9(d) debt totals more than $158 million. Under the 
Agreement, CAWCD will pay about $85 million of that debt and the United 
States will forgive $73.5 million. Section 106 of H.R. 885 makes the 
9(d) debt that the United States has agreed to forgive non-reimbursable 
and non-returnable.
    Section 106 also exempts land within the CAP service area from the 
Reclamation Reform Act and any other acreage limitation or full cost 
pricing provision of federal law. The Central Arizona Project was 
constructed to provide a renewable water supply to agriculture to 
alleviate the significant groundwater overdraft in central Arizona. By 
limiting the agricultural lands that may receive CAP water, the 
Reclamation Reform Act operates to increase groundwater pumping in 
central Arizona. Thus, the exemption in section 106 is appropriate to 
help the CAP achieve its mission. This exemption also satisfies a 
condition to the relinquishment of the CAP non-Indian agricultural 
entitlements.
    Title 1 also prohibits the transfer or use of any CAP water outside 
the State of Arizona, except in the context of the interstate water 
banking program already established under regulations adopted by the 
Secretary. Title 1 also directs the Secretary to reallocate 65,647 
acre-feet of currently uncontracted CAP M&I water to M&I water 
providers in Arizona. Both of these provisions are essential to CAWCD 
and its water users.

              FUNDING--FOR INDIAN WATER RIGHTS SETTLEMENTS

    To provide a funding source for Indian water rights settlements, 
Title 1 amends section 403(f) of the Basin Project Act to allow 
additional uses of certain funds deposited into the Lower Colorado 
River Basin Development Fund (Fund). The Fund is a separate fund within 
the U.S. Treasury established by Congress under the Basin Project Act, 
which authorized construction of the CAP. Revenues deposited into the 
Fund come from a number of sources, including: the sale of power from 
the Navajo Generating Station that is surplus to CAP pumping needs; a 
surcharge on power sold in Arizona from Hoover Dam and (beginning in 
2005) Parker and Davis Dams; and other miscellaneous revenues from 
operation of the CAP. Under existing law and contract, these revenues 
are paid each year to the general fund of the Treasury to return the 
CAP construction costs that are reimbursable by CAWCD. To the extent 
that Fund revenues are insufficient to meet CAWCD's annual repayment 
obligation, CAWCD makes up the difference with a cash payment to the 
United States, which is also deposited into the Fund.
    Title 1 does not affect the collection and deposit of revenues to 
the Fund. Nor does it affect CAP repayment or alter CAWCD's obligation 
to make cash payments sufficient to meet its annual repayment 
obligation for the CAP. Under Title 1, monies in the Fund will still be 
credited first against CAWCD's annual repayment obligation. But instead 
of being returned to the general fund, those funds may also be used 
each year, without further appropriation, to pay certain costs of 
delivering CAP water to Indian tribes, constructing distribution 
systems to deliver CAP water to Indian tribes, and other costs 
authorized under Titles 2 and 3 of H.R. 885.
Title 2--Gila River Indian Community Water Rights Settlement Act
    Title 2 authorizes, ratifies and confirms a settlement of the water 
rights claims of the Gila River Indian Community (Community) that has 
been more than a decade in the making. This agreement is a significant 
step forward for Arizona that will settle longstanding litigation over 
the Community's water rights and provide much-needed certainty for 
state water management.
    Of particular importance to CAWCD, Title 2 prohibits the lease, 
exchange, forbearance or transfer of CAP water in any way by the 
Community for use outside the State of Arizona.
Title 3--Southern Arizona Water Rights Settlement Amendments Act
    Title 3 resolves remaining disputes related to the Southern Arizona 
Water Rights Settlement Act, which was enacted by Congress in 1982 to 
settle the water rights claims of the Tohono O'odham Nation (Nation). 
Like the Community in Title 2, the Nation is expressly prohibited from 
leasing, exchanging, forbearing or transferring any of its CAP water 
for use outside the State of Arizona.

Conclusion
    CAWCD strongly supports H.R. 885 as introduced. This legislation 
represents the culmination of years of effort by central Arizona water 
users in an open and inclusive process to resolve Indian water rights 
claims by negotiation rather than litigation. Passage of H.R. 885 will 
help bring closure to many longstanding disputes involving Arizona's 
water supplies.
                                 ______
                                 

   Statement submitted for the record by The Honorable Skip Rimsza, 
                    Mayor, City of Phoenix, Arizona

    Chairman Calvert and Members of the Subcommittee:
    The City of Phoenix, an incorporated municipality within Maricopa 
County, Arizona, greatly appreciates the opportunity to offer testimony 
in support of the Arizona Water Settlements Act, H.R. 885, which 
settles the long-standing water rights claims of the Gila River Indian 
Community and disputes over water allocations and costs of the Central 
Arizona Project. The Settlement Act provides many benefits to Arizona 
Indian tribes, the federal government, the State of Arizona and the 
City of Phoenix, both directly and indirectly.
    The linchpin of the Act is Title I, the Central Arizona Project 
Settlement. Title I settles disputes between the federal government and 
the State of Arizona over repayment obligations for the Central Arizona 
Project (CAP). It also divides CAP water between state and federal 
purposes. Most importantly, it provides a framework for the Gila River 
Indian Community Water Rights Settlement and future Indian water rights 
settlements in Arizona by providing funding sources and identifying 
water supplies that can be used to fill water budgets for those 
settlements. It also insures that precious Colorado River water will 
remain within the State and be used for the benefit of its citizens. 
The State, Indian tribes and federal government all reap rewards from 
settlements.
    Title I provides for long-term contractual commitments of CAP water 
to be capped at 1,415,000 acre-feet with 667,724 acre-feet going to 
Arizona Indian Tribes and the federal government. The remainder of the 
entitlement, 747,246 acre-feet goes to the State and non-Indian water 
users. The split of this entitlement is used as the basis of the 
State's repayment obligation for the Central Arizona Project. Agreement 
between the State of Arizona, the federal government and Arizona Indian 
tribes on this point is a major accomplishment that only could have 
come to closure in the context of the overall settlement package 
authorized in this bill.
    The reallocation to Arizona's Municipal and Industrial CAP water 
users in the amount of 65,500 acre-feet has been a hotly debated issue 
between water users in the State of Arizona, the federal government and 
Arizona Indian Tribes. Title I provides that the City of Phoenix shall 
receive 8,206 acre-feet of CAP water from this pool. The City will pay 
over $500,000 in back capital charges to the Central Arizona Water 
Conservation District (CAWCD) when that reallocation is finalized. This 
is a critical component of the Arizona Water Settlements Act for the 
City of Phoenix. Other important provisions include the extension of 
the City's CAP subcontract for an additional 100 years, recognition 
that the contract is for permanent service and the creation of a 
formula for sharing CAP water between federal and non-federal water 
users in the event a shortage of Colorado River water for the Lower 
Basin States is declared. The City is not alone in the receipt of these 
benefits; they are available to all CAP subcontractors within Arizona.
    The identification of water supplies for Arizona Indian tribes now, 
in the case of the Gila River Indian Community (Community) and in the 
future for Indian Tribes with unfulfilled water rights claims, will 
benefit tribes, the federal government and the State of Arizona. The 
ability to facilitate settlement of these claims is critical to the 
continued vitality of the State. Settlement of these claims will 
provide certainty and will avoid costly and protracted legal battles 
over water resources. Perhaps the most important provision of the 
entire bill is Section 107 of the Act which: (1) amends the Colorado 
River Basin Project Act to allow for revenues deposited into the Lower 
Colorado River Basin Fund to be credited against the repayment 
obligation for the Central Arizona Project; (2) provides funding for 
the Gila River Indian Community and the Tohono O'Odham Nation 
settlements; (3) allows the federal government to meet its obligations 
to fund Indian tribes' operation and maintenance costs for CAP water 
deliveries to tribes; (4) provides funds for construction of critical 
water delivery infrastructure for Indian tribes; and (5) creates a 
mechanism to fund future Indian water settlements. This part of the Act 
provides an enormous collective benefit to the tribes, the federal 
government and for the State of Arizona and is an example of the 
forward thinking that went into the settlement package.
    Title II, the Gila River Indian Community Water Rights Settlement, 
is the culmination of many years of intensive negotiations. The 
settlement is fair and equitable for the GRIC, the State of Arizona, 
the federal government and local municipal, corporate, agricultural, 
and private parties and was achieved only with tremendous amounts of 
give-and-take on all sides. The Indian Community is a reservation of 
over 350,000 acres located within Maricopa and Pinal Counties. The 
reservation is located immediately south of the City of Phoenix and 
shares a common border with the City of Phoenix of approximately 
twenty-two miles in length. It is the city's largest neighbor in terms 
of land area. The City of Phoenix has a population of over 1.4 million 
people. This settlement agreement has many benefits for both the Gila 
River Indian Community and the City of Phoenix. The success of the 
settlement negotiations has also opened up many doors between the two 
communities on other important issues as well, and successful passage 
of the Water Settlement Agreement and implementation of the settlement 
agreement will further enhance future cooperative efforts between the 
Gila River Indian Community and the City of Phoenix.
    To provide some background to the settlement, the City and the Gila 
River Indian Community have been engaged in longstanding disputes over 
the rights to Arizona's most scarce and precious natural resource, 
water. The City and the Community are not alone in this regard. These 
disputes involve significant claims to water by surrounding cities and 
towns, the State of Arizona and the federal government. The settlement, 
which the City helped craft provides resolution for all these claims in 
a fair and equitable manner to all parties, including the federal 
government.
    The nature and extent of the disputes deserves some explanation. 
The Indian Community primarily sits astride the Gila River. A portion 
of the Community also sits along the Salt River, a primary tributary to 
the Gila River. The Community contends that it has been denied by its 
neighbors, as well as by the actions and inactions of the federal 
government, to its fair share of the surface waters of the Gila River. 
More importantly to Phoenix, the Community claims that its fair share 
of the Salt River has been negatively impacted as well. For many years, 
the City of Phoenix has relied upon its water rights to the Salt River 
and its tributaries, through deliveries by the Salt River Project, for 
over 60% of its total water supplies.
    The Community also claims that its groundwater resources have also 
been unduly impacted by pumping that occurs off the reservation. 
Numerous lawsuits against parties in the State, including Phoenix, have 
been filed by the Community and by the federal government on behalf of 
the Community.
    Without this legislation the settlement will not become effective, 
and the parties including the federal government, will be forced to 
continue to litigate their disputes in court. A general stream 
adjudication to the rights of the Gila River and all its tributaries, 
the Gila River Adjudication, has been underway in Arizona since the 
1970's. Without this bill the Community, the federal government and 
thousands of state parties will continue to have to assert and defend 
their claims in an expensive and lengthy process. This settlement 
solves that problem as well.
    There is a clear need for settlement of all these disputes. This 
settlement is appropriate and it is fair to all parties including the 
federal government and the Indian Community. All parties have been well 
represented in negotiating it. The City of Phoenix, for its part, has 
given up some of its Salt River water supplies, for the benefit of the 
GRIC. The City will also lease 15,000 acre-feet per year of the 
Community's CAP water supply at an up-front cost of over $20,000,000. 
Congressional authority for the Community to lease its water is 
necessary and that authority is contained in this bill. Phoenix's 
contributions to the settlement package are significant as are the 
contributions of the other parties in Arizona. Reciprocal waivers of 
claims between the Community, the federal government and the City of 
Phoenix and other state parties are also a key part of this legislation 
and are a vital component of the settlement.
    In summary, the City of Phoenix believes the Arizona Water 
Settlement Act is a fair, equitable and cost-effective solution for the 
settlement of financial and water claims for the benefit of the State 
of Arizona and its citizens, Arizona Indian tribes and the federal 
government and urges its enactment.
                                 ______
                                 

   Statement submitted for the record by John F. Sullivan, Associate 
General Manager, Water Group, Salt River Valley Water Users Association 
and Salt River Project Agricultural Improvement and Power District, on 
                                H.R. 885

    Chairman Calvert, and members of the Subcommittee:
    Thank you for the opportunity to submit testimony in support of 
H.R. 885, the Arizona Water Settlements Act. My name is John F. 
Sullivan. I am the Associate General Manager, Water Group, of the Salt 
River Project (``SRP''), a large multi-purpose federal reclamation 
project embracing the Phoenix, Arizona metropolitan area. SRP is 
composed of the Salt River Valley Water Users' Association 
(``Association'') and the Salt River Project Agricultural Improvement 
and Power District (``District''). Under contract with the federal 
government, the Association, a private corporation authorized under the 
laws of the Territory of Arizona, and the District, a political 
subdivision of the State of Arizona, provide water from the Salt and 
Verde Rivers to approximately 250,000 acres of land in the greater 
Phoenix area. Over the past century, most of these lands have been 
converted from agricultural to urban uses and now comprise the core of 
metropolitan Phoenix.
    The Association was organized in 1903 by landowners in the Salt 
River Valley to contract with the federal government for the building 
of Theodore Roosevelt Dam, located some 80 miles northeast of Phoenix, 
and other components of the Salt River Federal Reclamation Project. SRP 
was the first multipurpose project approved under the Reclamation Act 
of 1902. In exchange for pledging their land as collateral for the 
federal loans to construct Roosevelt Dam, which loans have long since 
been fully repaid, landowners in the Salt River Valley received the 
right to water stored behind the dam.
    In 1905, in connection with the formation of the Association, a 
lawsuit entitled Hurley v. Abbott, et al., was filed in the District 
Court of the Territory of Arizona. The purpose of this lawsuit was to 
determine the priority and ownership of water rights in the Salt River 
Valley and to provide for their orderly administration. The decree 
entered by Judge Edward Kent in 1910 adjudicated those water rights 
and, in addition, paved the way for the construction of additional 
water storage reservoirs by SRP on the Salt and Verde Rivers in Central 
Arizona.
    Today, SRP operates six dams and reservoirs on the Salt and Verde 
Rivers in central Arizona, as well as 1,300 miles of canals, laterals, 
ditches and pipelines, groundwater wells, and numerous electrical 
generating, transmission and distribution facilities. The six SRP 
reservoirs impound runoff from a 13,000-square mile watershed. The 
water stored in these reservoirs is delivered via SRP canals, laterals 
and pipelines to municipal, industrial and agricultural water users in 
the Phoenix metropolitan area. SRP also operates approximately 250 deep 
well pumps to supplement surface water supplies available to the 
Phoenix area during times of drought. In addition, SRP provides power 
to nearly 800,000 consumers in the Phoenix area, as well as other rural 
areas of the State.
    SRP holds the rights to water stored in its reservoirs, and for the 
downstream uses they supply, pursuant to the state law doctrine of 
prior appropriation, as well as federal law. Much of the water used in 
the Phoenix metropolitan area is supplied by these reservoirs.
    SRP fully supports the enactment of H.R. 885 in its entirety. 
However, my testimony, offered today on SRP's behalf, is specifically 
directed to Title II of the bill, authorizing the Gila River Indian 
Community Water Rights Settlement.
    The Gila River Indian Reservation was created by an Act of Congress 
in 1859 and was enlarged by seven separate Executive Orders in 1876, 
1879, 1882, 1883, 1911, 1913 and 1915. Currently, the Reservation 
encompasses approximately 377,000 acres of land in central Arizona. 
Most of the lands within the Reservation are located within the Gila 
River watershed. The water rights appurtenant to these lands are 
subject to a consent decree entered by the United States District Court 
in 1935. The 1935 ``Globe Equity Decree'' adjudicated the rights to 
water from the main stem of the Upper Gila River above its confluence 
with the Salt River. The Decree entitles the United States, on behalf 
of the Indians of the Gila River Reservation, to divert 300,000 acre-
feet of water annually from the Gila River. Historically, however, the 
Indian Community has received, on average, only about 100,000 acre-feet 
annually of its decreed entitlement, due to insufficient flows in the 
Gila River at the Reservation's diversion point.
    A small portion of the Gila River Indian Reservation lies within 
the Salt River watershed, west of Phoenix and several miles downstream 
from SRP's reservoirs. Many of these lands were added to the 
Reservation in 1879. At that time, a group of Indians, commonly 
referred to as the Maricopa Colony, was living there. Since some time 
prior to 1900, these Indians diverted water from the Salt River for the 
irrigation of approximately 1,000 acres.
    In 1901, the federal government, acting on behalf of the Maricopa 
Indians, brought suit in Arizona territorial court to stop nearby non-
Indian irrigators from interfering with the waters used by the Indians. 
Some of the defendants named in the suit later became shareholders of 
the Association, after its incorporation in 1903. On June 11, 1903, 
Judge Kent issued the decree in United States v. Haggard, which 
adjudicated the Maricopa Indians' right to irrigate approximately 1,080 
acres of land with water from the Salt River. In 1917, the Haggard 
decree was incorporated into the Benson-Allison decree, which also 
adjudicated water rights for lands not included in the original decree, 
located near the confluence of the Salt and Gila Rivers.
    Other than the approximately 1,080 acres irrigated by the Maricopa 
Colony, and included in the Haggard and Benson-Allison decrees, no 
lands on the Gila River Indian Reservation have ever been directly 
irrigated using Salt River water. Despite this fact, in the mid-1980s, 
the Gila River Indian Community asserted claims for the Reservation in 
the pending Gila River Adjudication to approximately 1.8 million acre-
feet of water annually from the Salt, Verde and Gila Rivers. More 
recently, the Indian Community amended its claims and now asserts the 
right to more than 2.7 million acre-feet of water annually from the 
Gila River, its tributaries and groundwater. These claims, which far 
exceed the combined annual flow of all of these rivers, are based on 
the federal reservation of rights doctrine and largely encompass 
potential future uses of water by the Indian Community on its 
Reservation.
    Thus far in the Adjudication, the Community's attempts to prosecute 
its extremely large claims to the Salt and Gila Rivers have not met 
with success. The Superior Court in the adjudication recently concluded 
that the Community and the United States are estopped by a decision of 
the United States Court of Claims, entered decades ago, from asserting 
any claim to the Salt River other than for the 1,490 acres within the 
Maricopa Colony. An earlier decision of the Superior Court would limit 
Reservation lands within the Gila River watershed to their decreed 
entitlement under the Globe Equity Decree. The Indian Community and the 
United States have appealed both of these decisions of the trial court, 
and the Arizona Supreme Court is presently considering whether to 
accept review of these decisions. In the absence of the Settlement 
before this Subcommittee today, the matter is likely to continue in 
litigation for some time. In the meantime, the uncertainty associated 
with the potential magnitude of the Community's rights to water from 
the Salt and Verde Rivers poses a threat to the rights of existing 
appropriators, including SRP.
    In order to alleviate this uncertainty and assure the dependability 
of water supplies to the more than 3 million residents of Maricopa 
County in central Arizona, SRP initiated water settlement negotiations 
with the Indian Community and the United States in 1989. Over time, 
neighboring water users joined the negotiations, which were often 
complex and difficult. Fourteen years later, the Indian Community, the 
United States and local interests including SRP, spurred on by the 
leadership of Senator Kyl and former Secretary Babbitt, have reached a 
comprehensive settlement of the Community's water rights claims, 
benefiting water users throughout the Gila River Basin, in Maricopa, 
Pinal and Yavapai Counties. The settlement is embodied in the 
Settlement Agreement and legislation before this Subcommittee today.
    The Settlement resolves all outstanding water-related litigation 
between the Gila River Indian Community and the other settling parties 
and settles, once and for all, the water rights of the Indian Community 
to surface water and ground water in the Gila River Basin. I have 
attached a summary of the components of the Settlement to my written 
testimony. However, a few important points, pertaining to the 
Community's use of Salt and Verde River water, will be discussed here.
    First. The Settlement recognizes the right of the United States, 
the Community, its members and allottees under the Haggard Decree, as 
modified by the Benson-Allison Decree, to 540 miners inches of water 
from the Salt River. The Settlement also confirms that such rights 
shall be deemed fully satisfied by SRP's performance of its water 
delivery obligations under the Contract between the United States and 
the Salt River Valley Water Users' Association dated May 5, 1936, as 
amended. This Contract, commonly referred to as the Maricopa Contract, 
provides that SRP shall make available 5,900 acre-feet of water per 
year for diversion and use on Reservation lands with rights under the 
Haggard Decree, as modified by the Benson-Allison Decree.
    Second. Under the Settlement, the Community also shall have an 
annual entitlement to SRP stored water in an amount varying from zero 
to 35,000 acre-feet, depending on SRP reservoir storage levels on May 1 
of each year. The water will be transported to the Reservation via 
SRP's water delivery system, subject to certain delivery system 
capacity limitations specified in the Agreement. Water that is credited 
to the Community on May 1 of each year, but is not used by April 30 of 
the following year, may be carried over in storage for the Community's 
subsequent use, up to a maximum amount, specified in the Agreement, 
which may not be exceeded at any time. Moreover, in any single year, 
the Community will not be entitled to order more than 45,000 acre-feet 
total from the current year's entitlement and the Community's 
entitlement to ``carry over'' water from prior years. The Community 
will pay for the delivery of SRP stored water at 100 percent of the 
cost per acre-foot of stored water for SRP shareholders. The 
Community's entitlement to SRP stored water will be phased in over a 
period of five-years, commencing in the year that the Settlement 
becomes enforceable.
    Third. Subject to certain monthly and annual volume limitations, 
SRP has agreed to take delivery of CAP water to which the Community is 
entitled for use by SRP shareholders, in exchange for the storage of 
the same amount of Salt and Verde River water in SRP reservoirs for 
eventual use by the Community. This exchange is subject to the ability 
of SRP to divert and beneficially use the CAP water to which the 
Community is entitled. SRP will deliver exchange water ordered by the 
Community via the SRP water delivery system only after determining that 
the system capacity is not needed to fulfill water delivery obligations 
of SRP that predate the Settlement.
    Fourth. SRP has agreed to accept delivery of CAP water to which the 
Community is entitled for direct delivery to the Reservation, via SRP's 
water delivery system. The direct delivery of this water to the 
Community also will be subject to the limits of SRP's water delivery 
system capacity, as discussed in the previous paragraph.
    Fifth. Phelps Dodge Corporation has offered to transfer to SRP its 
right, title and interest in Blue Ridge Reservoir, including all rights 
to water developed by operation of the reservoir. If SRP accepts Phelps 
Dodge's offer, and the transfer of water rights to SRP is accomplished 
under Arizona law, then SRP will provide to the Community a portion of 
the water stored behind Blue Ridge Reservoir, ranging from zero to 836 
acre-feet annually, depending on reservoir storage levels in Blue Ridge 
on May 1 of each year. Water that is credited to the Community on May 1 
of each year, but is not used by April 30 of the next year will not be 
available for the Community's use in subsequent years. If SRP accepts 
Phelps Dodge's offer and obtains the right to water stored in Blue 
Ridge, there also may be an opportunity for municipalities in water 
scarce areas of Gila County, Arizona, to enter into agreements with SRP 
for the use of some of this water.
    Sixth. The Settlement permits the continued use by the Community of 
water discharged into certain drain ditches by SRP, and provides for 
the contribution by SRP of $500,000 toward the cost of easements, 
construction, rehabilitation, operation and maintenance of these drain 
ditches on the Reservation.
    Seventh. In exchange for these and other benefits to the Community, 
its members and allottees, the Settlement provides for the execution of 
a permanent, comprehensive waiver of the claims of these parties, and 
the United States on their behalf, for water rights, injuries to water 
rights and injuries to water quality, among others, as provided in 
exhibits to the Settlement Agreement. Of greatest significance, the 
waiver of all water rights claims by the Community, its members and 
allottees, and the United States on their behalf, extends to all water 
users in the Gila River Basin, including users who are not parties to 
the Settlement Agreement. Other parties to the Settlement Agreement 
will also execute waivers and releases of claims that these parties may 
have against the Community, its members and allottees, or the United 
States on their behalf, as specified in the Settlement Agreement.
    In conclusion, we support the passage of H.R. 885, which is the 
culmination of the efforts of many people, over almost 15 years, to 
resolve these difficult issues regarding the allocation of an extremely 
scarce resource. Enactment of H.R. 885 is crucial to achieving 
certainty among users in central Arizona regarding water rights, and 
the dependable allocation of water supplies for the foreseeable future. 
We therefore strongly urge this Subcommittee to recommend passage of 
the bill to the full House.

                     Arizona Water Settlements Act

     TITLE II--GILA RIVER INDIAN COMMUNITY WATER RIGHTS SETTLEMENT

Briefing Paper/Attachment to Testimony of John F. Sullivan, Salt River 
 Project Prepared by Salmon, Lewis & Weldon, P.L.C., on Behalf of Salt 
                             River Project

  HISTORY OF WATER RIGHTS ISSUES PERTAINING TO THE GILA RIVER INDIAN 
                              RESERVATION.

    The Gila River Indian Reservation was created by an Act of Congress 
in 1859 and was enlarged by seven separate Executive Orders in 1876, 
1879, 1882, 1883, 1911, 1913 and 1915. Currently, the Reservation 
encompasses approximately 377,000 acres of land in central Arizona. 
Most of these lands are located in the Gila River watershed. A small 
portion of the 1879 enlargement, however, borders the Salt River near 
its confluence with the Gila River.
    In approximately 1872, upstream settlers in the Safford Valley 
(presently the Gila Valley Irrigation District), Duncan-Virden Valley 
(presently the Franklin Irrigation District) and in the Florence-Casa 
Grande area (presently the San Carlos Irrigation and Drainage District) 
(``SCIDD'') began settling upstream of the Reservation and diverting 
water from the Gila River for irrigation. These diversions had the 
effect of reducing the quantities of Gila River water available to the 
Indian Community for downstream diversion. In 1924, in an attempt to 
obtain a more dependable source of water for the Indian Community, the 
United States Congress authorized the construction of Coolidge Dam as 
the principle feature of the San Carlos Irrigation Project (``SCIP''). 
Pursuant to the 1924 Act, and a separate agreement between the 
government and private landowners within the present boundaries of 
SCIDD, water stored behind Coolidge Dam, when constructed, would be 
used for the irrigation of 50,000 acres within the Gila River Indian 
Reservation and 50,000 acres within SCIDD.
    In 1925, the United States, on behalf of the Indian Community, 
SCIDD landowners and others, sued upstream water users in the Safford 
and Duncan-Virden Valleys, along with all other users of water from the 
Gila River from its confluence with the Salt River up to the Duncan-
Virden Valley, ending in New Mexico. The suit, which came to be known 
as the Globe Equity litigation, sought among other things to establish 
the prior rights of the Indians of the Gila River Indian Reservation 
and the newly created SCIP to the use of Gila River water.
    The United States District Court for the District of Arizona 
appointed a Special Master who heard arguments, listened to testimony, 
and admitted exhibits. After ten years of negotiations, the parties 
agreed to settle the suit and a consent decree embodying the settlement 
was drafted. The court entered the stipulation and consent for entry of 
the Final Decree on June 29, 1935. Under the Decree, the United States, 
on behalf of the Indians of the Gila River Indian Reservation, is 
entitled to divert 300,000 acre-feet of water annually from the Gila 
River. Historically, however, the Indian Community has received, on 
average, only about 100,000 acre-feet annually of its decreed 
entitlement, due to insufficient flows in the Gila River at the 
Reservation's diversion point.
    Despite the entry of the Globe Equity Decree, disputes persisted 
over the interpretation of certain of its provisions, particularly 
those concerning the calculation of the upper valley diverters' annual 
entitlements under the Decree. Additionally, as technology for pumping 
from wells became more readily available, withdrawals of groundwater in 
the upper valleys increased. The legality of these uses were not 
expressly addressed in the Decree; nevertheless, the effect of 
increased groundwater pumping in the upper valleys was to lessen the 
flow of the Gila River, thereby decreasing the amounts of water 
available for use by the Community and SCIDD landowners downstream.
    At the time of the entry of the Decree in 1935, the Indian 
Community's interests were represented in the Globe Equity proceeding 
by the United States. A motion to intervene submitted by the Indian 
Community just prior to the entry of the Decree was denied by the 
district court, and this denial was never appealed. In 1982, the United 
States District Court entered an Order permitting the Indian Community 
to intervene as party to the Globe Equity Decree for the purpose of 
enforcing the Decree against the upper valley users. The court declined 
to permit the Community to reopen the issues resolved by the Decree. 
This decision was recently echoed by the Maricopa County Superior Court 
in the Gila River Adjudication. The adjudication court held that the 
Globe Equity Decree was res judicata as to the Indian Community's 
claims to additional Gila River water which might have been asserted 
and decided by the court in 1935; the Community accordingly was 
precluded from asserting these claims to additional Gila River water in 
the adjudication. This decision, along with the earlier decision of the 
Globe Equity Decree court, enhanced the importance of the Community's 
enforcement suit as a vehicle for addressing its longstanding 
grievances with water users in the upper Gila valley.
    The Globe Equity enforcement litigation, commenced by the Indian 
Community in 1982, remains ongoing. The court has issued numerous 
decisions interpreting provisions of the Decree; however, the 
Community's challenge to the legality of groundwater pumping by the 
upper Gila valley users has not yet been decided.
    While most of the lands within the Gila River Indian Reservation 
are within the Gila River watershed, a small portion of the Reservation 
lies within the Salt River watershed, west of the Phoenix metropolitan 
area. Many of these lands were added to the Reservation in 1879. At 
that time, a group of Indians, commonly referred to as the Maricopa 
Colony, was living there. Since some time prior to 1900, these Indians 
diverted water from the Salt River for the irrigation of approximately 
1,000 acres.
    In 1901, the federal government, acting on behalf of the Maricopa 
Indians, brought suit in Arizona territorial court to stop nearby non-
Indian irrigators from interfering with the waters of the Salt River 
used by the Indians. Some of the defendants named in the suit later 
became shareholders of the Association, after its incorporation in 
1903. On June 11, 1903, Judge Kent issued the decree in United States 
v. Haggard, which adjudicated the Maricopa Indians' right to irrigate 
approximately 1,080 acres of land with water from the Salt River. In 
1917, the Haggard Decree was incorporated into the Benson-Allison 
Decree, which also adjudicated water rights for lands not included in 
the original Haggard Decree, located near the confluence of the Salt 
and Gila Rivers.
    Other than the approximately 1,080 acres irrigated by the Maricopa 
Colony, and included in the Haggard and Benson-Allison Decrees, no 
lands on the Gila River Indian Reservation have ever been directly 
irrigated using Salt River water. Despite this fact, in the mid-1980s, 
the Indian Community asserted a claim in the pending Gila River 
Adjudication to approximately 1.8 million acre-feet of water annually 
from the Salt and Verde Rivers, as well as the Gila River. More 
recently, the Indian Community amended its claims and now asserts the 
right to more than 2.7 million acre-feet of water annually from the 
Gila River, its tributaries and groundwater. These claims, which far 
exceed the combined annual flow of all of these rivers, are based on 
the federal reservation of rights doctrine and largely encompass 
potential future uses of water by the Indian Community on its 
Reservation.
    Thus far in the Adjudication, the Indian Community's attempts to 
prosecute its enlarged claims to the Salt River have not met with 
success. The Superior Court in the adjudication recently concluded that 
the Indian Community and the United States are estopped by a decision 
of the United States Court of Claims, entered decades ago, from 
asserting any claim to the Salt River other than for the 1,490 acres 
within the Maricopa Colony. The Community has appealed this decision of 
the Superior Court, as well as its earlier decision precluding the 
Community's assertion of additional claims to the Gila River. At this 
time, the Arizona Supreme Court has not decided whether to hear the 
Community's appeal. In the absence of the Settlement that is presently 
before the Congress, the continued prosecution of these appeals by the 
Community could delay the ultimate determination of its water right 
claims by a court for some time. In the interim, the uncertainty 
associated with the potential magnitude of the Community's rights to 
water from the Salt and Verde Rivers continues to threaten existing 
water uses.
    In order to alleviate this uncertainty and assure the dependability 
of water supplies to the more than 3 million residents of Maricopa, 
Yavapai and Pinal Counties in central Arizona, local parties initiated 
water settlement negotiations with the Indian Community and the United 
States in 1989. Fourteen years later, the Indian Community, the United 
States and local interests have reached a comprehensive settlement of 
the Community's water rights claims, which is embodied in the 
Settlement Agreement and legislation presently before the Congress.

 COMPONENTS OF THE GILA RIVER INDIAN COMMUNITY WATER RIGHTS SETTLEMENT 
                               AGREEMENT

I. Parties.
    The Settlement Agreement is entered into among: the United States 
of America; the Gila River Indian Community; the State of Arizona; the 
Salt River Project Agricultural Improvement and Power District; the 
Salt River Valley Water Users' Association; the Roosevelt Irrigation 
District; the Arizona Water Company; the Arizona cities of Casa Grande, 
Chandler, Coolidge, Glendale, Goodyear, Mesa, Peoria, Phoenix, Safford, 
Scottsdale and Tempe; the Arizona towns of Duncan, Florence, Gilbert, 
Kearny and Mammoth; the Franklin Irrigation District; the Gila Valley 
Irrigation District; the Maricopa-Stanfield Irrigation & Drainage 
District; the Central Arizona Irrigation and Drainage District; the San 
Carlos Irrigation and Drainage District; the Hohokam Irrigation and 
Drainage District; the Arlington Canal Company; the Buckeye Irrigation 
Company; the Buckeye Water Conservation and Drainage District; Central 
Arizona Water Conservation District; Phelps Dodge Corporation; and the 
Arizona Game and Fish Commission.

II. Annual Water Entitlement and Components.
    A. Average Annual Entitlement. Under the Settlement Agreement, the 
Indian Community shall be entitled to an average of 653,500 acre-feet 
of water annually. This includes, among other things, the Community's 
existing decreed rights under the Globe Equity, Benson-Allison and 
Haggard Decrees, plus substantial amounts of groundwater pumped from 
beneath the Reservation. The average shall be calculated over a 
consecutive ten-year period, reckoned in continuing progressive series, 
beginning on January 1 of the year after the date that the Settlement 
Agreement becomes enforceable.
    B. Components of Entitlement. The Indian Community's average annual 
entitlement shall be satisfied from the following sources, subject to 
their availability in any given year, as specified in the pertinent 
provisions of the Settlement Agreement.
          1.  Globe Equity Decree Water. As part of the Settlement, the 
        United States and the Indian Community have agreed not to claim 
        any rights to the waters of the Gila River except those decreed 
        to them as specified in Articles 5 and 6 of the Globe Equity 
        Decree. The United States and the Indian Community shall have 
        the right to enforce the provisions of the Decree against other 
        water users, including water users that are not parties to the 
        original Decree. However, the Indian Community has agreed to 
        limit its enforcement rights under the Decree, by refraining 
        from bringing enforcement proceedings against existing users in 
        the Upper Gila and San Pedro River watersheds. See Section 
        II.B.10 below.
          2.  Haggard Decree Water. The Settlement recognizes the right 
        of the United States, the Community, its members and allottees 
        under the Haggard Decree, as modified by the Benson-Allison 
        Decree, to 540 miners inches of water from the Salt River. The 
        Settlement also confirms that such rights shall be deemed fully 
        satisfied by SRP's performance of its water delivery 
        obligations under the Contract between the United States and 
        the Salt River Valley Water Users' Association dated May 5, 
        1936, as amended. This Contract, commonly referred to as the 
        Maricopa Contract, provides that SRP shall make available 5,900 
        acre-feet of water per year for diversion and use on 
        Reservation lands with rights under the Haggard Decree, as 
        modified by the Benson-Allison Decree.
          3.  SRP Stored Water. Resolving the additional claims of the 
        Indian Community to water from the Salt River, the Settlement 
        entitles the Indian Community to an annual amount of water from 
        the Salt River Project (``SRP''), ranging from 0 to 35,000 
        acre-feet, depending upon storage levels in SRP reservoirs on 
        May 1 of each year. The annual variation in the amount of the 
        Community's water entitlement is based on a program of shared 
        surpluses and shortages, agreed to as a guiding principle by 
        the parties during their negotiations. The Community's stored 
        water entitlement will be transported to the Reservation via 
        SRP's water delivery system, subject to certain delivery system 
        capacity limitations specified in the Agreement. Water that is 
        credited to the Community on May 1 of each year, but is not 
        used by April 30 of the following year, may be carried over in 
        storage for the Community's subsequent use, up to a maximum 
        amount, specified in the Agreement, which may not be exceeded 
        at any time. Moreover, in any single year, the Community will 
        not be entitled to order more than 45,000 acre-feet total from 
        the current year's entitlement and the Community's entitlement 
        to ``carry over'' water from prior years. The Community shall 
        pay for the delivery of SRP stored water at 100 percent of the 
        cost per acre-foot of stored water for SRP shareholders. The 
        Community's entitlement to SRP stored water will be phased in 
        over a period of five-years, commencing in the year that the 
        Settlement becomes enforceable.
          4.  Roosevelt Water Conservation District Surface Water. The 
        Indian Community has reached a separate settlement of its water 
        disputes with the Roosevelt Water Conservation District 
        (``RWCD''), under which the Community is entitled to 4,500 
        acre-feet of water annually from RWCD. The agreement also 
        provides for the relinquishment of RWCD's allocation of Central 
        Arizona Project water to the United States for the benefit of 
        the Community, also referred to in Section II.B.5 below. The 
        Gila River adjudication court's approval of the Indian 
        Community's settlement agreement with RWCD is proceeding 
        independent of this Settlement.
          5.  CAP Water. The Settlement entitles the Indian Community 
        to a total of 328,500 acre-feet annually of water, from the 
        Central Arizona Project (``CAP''), subject to the availability 
        of the water and the priorities of the respective allocations 
        comprising the Community's entitlement. In addition to the 
        Community's original CAP entitlement, multiple entities with 
        contractual rights to water from the Central Arizona Project 
        (``CAP'') have agreed to assign their CAP allocations to the 
        Indian Community, as a vehicle for settling the Community's 
        objections to appropriative rights also held by these entities. 
        The individual components of the Community's entitlement to CAP 
        water are: (a) the Community's original CAP Indian Priority 
        Water allocation (173,100 acre-feet); (b) Roosevelt Water 
        Conservation District CAP Water (18,600 acre-feet); (c) 
        Harquahala Valley Irrigation District CAP Water (17,800 acre-
        feet); (d) Asarco CAP Water (17,000 acre-feet) if an agreement 
        is reached between Asarco and the Community; and (e) new CAP 
        non-Indian Agricultural Priority Water (102,000 acre-feet). The 
        Indian Community may lease or exchange all or a portion of its 
        CAP entitlement, but none of its entitlement may be permanently 
        transferred, nor may the Community lease, exchange, forbear or 
        otherwise transfer its CAP entitlement for use outside the 
        State of Arizona.

             Subject to certain monthly and annual volume limitations, 
        SRP has agreed to take delivery of CAP water to which the 
        Community is entitled for use by SRP shareholders, in exchange 
        for the storage of the same amount of Salt and Verde River 
        water in SRP reservoirs for eventual use by the Community. This 
        exchange is subject to the ability of SRP to divert and 
        beneficially use the CAP water to which the Community is 
        entitled. SRP will deliver exchange water ordered by the 
        Community via the SRP water delivery system only after 
        determining that the system capacity is not needed to fulfill 
        water delivery obligations of SRP that predate the Settlement.

             SRP also has agreed to accept delivery of CAP water to 
        which the Community is entitled for direct delivery to the 
        Reservation, via SRP's water delivery system. The direct 
        delivery of this water to the Community also will be subject to 
        the limits of SRP's water delivery system capacity, as 
        discussed in the previous paragraph.
          6.  Reclaimed Water from the Cities of Chandler and Mesa. The 
        Indian Community shall be entitled to receive 40,600 acre-feet 
        annually of reclaimed water, made available to it by the cities 
        of Chandler and Mesa. In exchange, the Indian Community shall 
        cause the delivery to these cities of 32,500 acre-feet of the 
        Community's CAP Indian Priority water. In addition to the 
        exchange of reclaimed water for CAP water, the City of Chandler 
        shall deliver reclaimed water to the Community in the amount of 
        4,500 acre-feet annually.
          7.  Underground Water. The Indian Community also shall be 
        permitted to pump underground water from wells on the 
        Reservation to the extent needed to satisfy its annual water 
        entitlement to 653,500 acre-feet. The Settlement Agreement 
        additionally calls for the state legislature's creation of 
        underground water ``protection zones'' on the south side of the 
        Reservation, in Pinal County. Underground water pumping by non-
        Indians from these zones will be limited to specific per-acre 
        amounts set forth in the Settlement Agreement. Pumping by non-
        Indian water users that exceeds these amounts must be 
        replenished by the State or other persons as specified in the 
        Agreement.
          8.  Blue Ridge Water. Phelps Dodge Corporation has offered to 
        transfer to SRP its right, title and interest in Blue Ridge 
        Reservoir, including all rights to water developed by operation 
        of the reservoir. If SRP accepts Phelps Dodge's offer, and the 
        transfer of water rights to SRP is accomplished under Arizona 
        law, then SRP will provide to the Community a portion of the 
        water stored behind Blue Ridge Reservoir, ranging from zero to 
        836 acre-feet annually, depending on reservoir storage levels 
        in Blue Ridge on May 1 of each year. Water that is credited to 
        the Community on May 1 of each year, but is not used by the end 
        of April 30 of the next year, will not be available for the 
        Community's use in subsequent years. If SRP accepts Phelps 
        Dodge's offer and obtains the right to water stored in Blue 
        Ridge, there also may be an opportunity for municipalities in 
        water scarce areas of Gila County, Arizona, to enter into 
        agreements with SRP for the use of some of this water.
          9.  SRP Drain Water. The Settlement permits the continued use 
        by the Community of water discharged into certain drain ditches 
        by SRP, and provides for the contribution by SRP of $500,000 
        toward the cost of easements, construction, rehabilitation, 
        operation and maintenance of these drain ditches on the 
        Reservation.
         10.  Diversions by Upper Gila Valley and San Pedro River Water 
        Users. As part of the Settlement, the Indian Community will 
        enter into agreements with municipalities in the upper Gila 
        valley and San Pedro River watershed, resolving objections by 
        the Community to these municipalities' water uses. Agreements 
        with Safford, Duncan, Kearny and Mammoth are attached as 
        exhibits to the Settlement Agreement. Additionally, the 
        Community will enter into a comprehensive agreement with 
        multiple irrigation districts and other water users in the 
        upper Gila valley, which resolves long-held grievances by the 
        Community's with respect to the effects of diversions by these 
        users, who are parties to the Globe Equity Decree, on the 
        Community's downstream water rights.

             In addition to the resolution of disputes between the 
        Indian Community and upper valley users with water rights under 
        the Globe Equity Decree, the Settlement also creates a legal 
        framework for resolution of present and future disputes between 
        the Community and upstream water users who do not hold decreed 
        rights. The Settling Parties have agreed to the establishment, 
        by state legislation, of the Upper Gila Watershed Maintenance 
        Program, whose purpose is to limit groundwater pumping in the 
        Upper Gila River watershed and San Pedro River watershed. After 
        the program is established, as long as its provisions are 
        enforced, the Settlement's ``Safe Harbor'' provisions, 
        described in detail in the Agreement and exhibits, will shield 
        existing water diversions from the upper Gila valley and San 
        Pedro River watersheds from legal challenge by the Community. 
        In general, the Safe Harbor provisions allow the continuation 
        of existing diversions of water for irrigation, municipal and 
        industrial, and domestic purposes within the upper Gila River 
        watershed and the San Pedro River watershed. These Safe Harbor 
        provisions also permit the initiation of new domestic and large 
        industrial uses in these areas, under terms and conditions 
        specified in the Settlement.

III. Waiver and Release of Claims.
    In exchange for the benefits provided under the Settlement 
Agreement, the Indian Community, its members and allottees, and the 
United States on their behalf, shall execute a comprehensive waiver and 
release of claims for water rights, injuries to water rights and 
injuries to water quality, among others, as provided in the exhibits to 
the Settlement Agreement. The other settling parties also shall execute 
waivers and releases of claims that such parties may have against the 
Community, its members or allottees, and the United States on their 
behalf, as specified in the Agreement.

IV. Community Fund.
    A.  Federal Funds. The Settlement, when confirmed and implemented 
by an enactment of the United States Congress, will provide the 
Community with funding for the following purposes:
         1.  Rehabilitation of existing facilities and construction of 
        extensions to those facilities--$147 million.
         2.  Defrayal of operation, maintenance and replacement costs 
        associated with the delivery of the Community's CAP water--$53 
        million.
         3.  Rehabilitation of subsidence damages to lands within the 
        Gila River Indian Reservation occurring before the date the 
        Settlement Agreement becomes enforceable--$4 million.
         4.  Implementation of a water quality monitoring program--$3.4 
        million.
    B.  State Contribution. The Settlement also calls for the State of 
Arizona to ``firm'' the delivery of 15,000 acre-feet of the Community's 
new entitlement to CAP non-Indian agricultural priority water to the 
equivalent of municipal and industrial CAP water delivery priority for 
100 years.

V. Congressional and Court Approval.
    Before it can be enforceable, the Agreement must, among other 
things, be confirmed by the United States Congress and approved by the 
courts in the Gila River Adjudication and Globe Equity proceedings.

VI. Benefits to the State of Arizona Resulting From the Settlement.
    A. Greatly increased certainty of the priority and quantity of 
relative rights to the Salt, Verde, Gila and San Pedro Rivers, and of 
CAP allocations will benefit all of Arizona in future planning.
    B. The waiver of claims to be executed by the Indian Community and 
the United States under the Settlement Agreement is comprehensive. 
Specifically, the Community will agree not to assert claims to water in 
excess of the quantities provided in the Agreement as to all water 
users in Central Arizona, including individuals and small entities 
without the resources to defend themselves in litigation. The Community 
will also agree not to object to the water right claims of all other 
users in Central Arizona, with the exception of a small number of users 
whose asserted water rights, if upheld, would impair the exercise of 
the Community's water rights under the Settlement Agreement. The 
Community is continuing its efforts to reach a settlement of its 
disputes with these users.
    C. The resolution of disputed issues related to the allocation of 
CAP water as part of the Congressional legislation approving the 
Settlement frees up that water for future Indian settlements.
    D. Additional water is made available to the valley cities and 
towns under the Settlement, through leases or exchanges of water with 
the Indian Community.
    E. State agencies, including the Arizona Department of Water 
Resources and the Arizona Game and Fish Commission would save money 
that would otherwise be spent in litigation of the Indian Community's 
claims, as well as the Community's objections to the claims of these 
state agencies.
    F. This settlement will permit the Community, the United States on 
its behalf and the Community's neighboring non-Indian water users to 
put behind them contentious and divisive litigation concerning the 
Community's water rights and to move forward together in planning for 
the continued prosperous development of Arizona.
                                 ______
                                 

Statement submitted for the record by The Honorable Van Talley, Mayor, 
                        City of Safford, Arizona

    Chairman Calvert and Members of the Subcommittee:
    Thank you for the opportunity to submit testimony on H.R. 885--
Arizona Water Settlements Act. The City of Safford respectfully submits 
written testimony supporting the Gila River Indian Community Water 
Rights Settlement authorized in H.R. 885. On behalf of the residents of 
Safford, Arizona, and customers of the City water system I express 
gratitude for your interest in our water problems.
    Located along the bank of the Gila River upstream from the Gila 
River Indian Reservation, Safford is a growing city serving water to 
more than 20,000 people, including the Town of Thatcher and other 
neighboring communities in Graham County. As Southeast Arizona's 
commercial center, Safford, like other municipal, industrial and 
agricultural sectors, requires reasonable and reliable water supplies. 
The Gila River Indian Community Water Rights Settlement offers this 
security among the parties.
    For decades, Safford has continued to work with water users in the 
Upper Gila River Valley, the United States, and Native American tribes 
and communities to resolve water quantity and water quality issues. For 
the past five years, the City, along with other parties, diligently 
worked to settle the Gila River Indian Community's water rights claims. 
The bill before you is the culmination of efforts resolving the 
Community's claims, which in turn saves the parties from uncertain, 
complex, and expensive litigation concerning water rights.
    Like many other parties, one of the benefits Safford receives is 
certainty of water supplies and the ability to plan for the future 
accordingly. The Community and certain other parties confirm Safford's 
water rights that would otherwise be contested and litigated. The 
Settlement recognizes Safford's right to use 9,740 acre-feet of water 
per year and provides mechanisms to enable the City to meet higher 
demands. While Safford's water allocation is relatively small when 
compared to the Community's 653,500 acre-feet, it nonetheless assures 
Safford of water for present and reasonably foreseeable needs.
    The Settlement also helps to enhance Gila River water quality while 
simultaneously providing Safford with a water source to meet additional 
demands. The Settlement authorizes the appropriation of funds to repay 
indebtedness on the City's recently constructed state-of-the-art water 
treatment facility. Treated water may be returned to the stream to 
enhance stream flows and stream quality, or recharged to meet Safford's 
future water demands. The use of treated water is just one of the 
methods that Safford may implement to meet future needs without 
diminishing available water for other users and parties to the 
Settlement. To obtain these benefits, Safford agreed to a water budget 
of about one half of its claimed water rights.
    The treatment plant and a dependable water supply for the benefit 
of Safford are just a few of the positive results that are being 
proposed in the Settlement. Dozens of cities and towns receive similar 
benefits. Agricultural and industrial interests may continue to operate 
with less litigation risk towards their water supplies. The Settlement 
also enhances and preserves land, wildlife, and the environment.
    The Settlement with the Gila River Indian Community and H.R. 885 is 
a giant step in resolving the pending issues and confirming water 
rights among the parties to a limited supply of water. I urge the House 
to pass this bill that will settle significant water rights in the 
State of Arizona and allow the Gila River Indian Community and many 
cities, towns, irrigation districts and others to plan for future 
growth with confidence and reliable water supplies.
                                 ______
                                 
    The following information submitted for the record was too 
lengthy to print and has been retained in the Committee's 
official files:
      Burdette, Vivian, Chairwoman, Tonto Apache Tribe, 
Statement submitted for the record in support of H.R. 885
      Fullmer, Jamie, Chairman, Yavapai-Apache Nation, 
Statement submitted for the record in support of H.R. 885
      Spokane Tribe of Indians: A Showing of the United 
States' Need to Fairly and Honorably Settle the Tribes Claims 
for Grand Coulee--A Narrative with Attachments, submitted for 
the record on H.R. 1753

    [A supplemental statement on H.R. 885 submitted for the 
record by Herbert R. Guenther, Director, Arizona Department of 
Water Resources, follows:] 
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