[Senate Hearing 108-216]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 108-216
 
                     ARIZONA WATER SETTLEMENTS ACT

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

                             JOINT HEARING

                               before the

                    SUBCOMMITTEE ON WATER AND POWER

                                 of the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES

                                AND THE

                      COMMITTEE ON INDIAN AFFAIRS

                          UNITED STATES SENATE

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                                   on

                                 S. 437

 TO PROVIDE FOR ADJUSTMENTS TO THE CENTRAL ARIZONA PROJECT IN ARIZONA, 
 TO AUTHORIZE THE GILA RIVER INDIAN COMMUNITY WATER RIGHTS SETTLEMENT, 
TO AUTHORIZE AND AMEND THE SOUTHERN ARIZONA WATER RIGHTS SETTLEMENT ACT 
                    OF 1982, AND FOR OTHER PURPOSES

                               __________

                           SEPTEMBER 30, 2003


                       Printed for the use of the
               Committee on Energy and Natural Resources
                  and the Committee on Indian Affairs








                      U.S. GOVERNMENT PRINTING OFFICE

90-840                        WASHINGTON : 2003
_______________________________________________________________________
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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                 PETE V. DOMENICI, New Mexico, Chairman
DON NICKLES, Oklahoma                JEFF BINGAMAN, New Mexico
LARRY E. CRAIG, Idaho                DANIEL K. AKAKA, Hawaii
BEN NIGHTHORSE CAMPBELL, Colorado    BYRON L. DORGAN, North Dakota
CRAIG THOMAS, Wyoming                BOB GRAHAM, Florida
LAMAR ALEXANDER, Tennessee           RON WYDEN, Oregon
LISA MURKOWSKI, Alaska               TIM JOHNSON, South Dakota
JAMES M. TALENT, Missouri            MARY L. LANDRIEU, Louisiana
CONRAD BURNS, Montana                EVAN BAYH, Indiana
GORDON SMITH, Oregon                 DIANNE FEINSTEIN, California
JIM BUNNING, Kentucky                CHARLES E. SCHUMER, New York
JON KYL, Arizona                     MARIA CANTWELL, Washington

                       Alex Flint, Staff Director
                   Judith K. Pensabene, Chief Counsel
               Robert M. Simon, Democratic Staff Director
                Sam E. Fowler, Democratic Chief Counsel
                                 ------                                

                    Subcommittee on Water and Power

                    LISA MURKOWSKI, Alaska, Chairman
            BEN NIGHTHORSE CAMPBELL, Colorado, Vice Chairman

GORDON SMITH, Oregon                 BYRON L. DORGAN, North Dakota
JON KYL, Arizona                     BOB GRAHAM, Florida
LARRY E. CRAIG, Idaho                RON WYDEN, Oregon
JAMES M. TALENT, Missouri            TIM JOHNSON, South Dakota
JIM BUNNING, Kentucky                DIANNE FEINSTEIN, California
CRAIG THOMAS, Wyoming                CHARLES E. SCHUMER, New York
                                     MARIA CANTWELL, Washington

   Pete V. Domenici and Jeff Bingaman are Ex Officio Members of the 
                              Subcommittee

                         Shelly Randel, Counsel
                    Mike Connor, Democratic Counsel
                                 ------                                

                      COMMITTEE ON INDIAN AFFAIRS

              BEN NIGHTHORSE CAMPBELL, Colorado, Chairman
                DANIEL K. INOUYE, Hawaii, Vice Chairman
JOHN McCAIN, Arizona,                KENT CONRAD, North Dakota
PETE V. DOMENICI, New Mexico         HARRY REID, Nevada
CRAIG THOMAS, Wyoming                DANIEL K. AKAKA, Hawaii
ORRIN G. HATCH, Utah                 BYRON L. DORGAN, North Dakota
JAMES M. INHOFE, Oklahoma            TIM JOHNSON, South Dakota
GORDON SMITH, Oregon                 MARIA CANTWELL, Washington
LISA MURKOWSKI, Alaska

         Paul Moorehead, Majority Staff Director/Chief Counsel
        Patricia M. Zell, Minority Staff Director/Chief Counsel




                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Akaka, Hon. Daniel K., U.S. Senator from Hawaii..................     7
Bingaman, Hon. Jeff, U.S. Senator from New Mexico................     6
Campbell, Hon. Ben Nighthorse, U.S. Senator from Colorado........     2
D'Antonio, John, New Mexico State Engineer, Santa Fe, NM.........    60
Domenici, Hon. Pete V., U.S. Senator from New Mexico.............    67
Guenther, Herbert R., Director, Arizona Department of Water 
  Resources, Phoenix, AZ.........................................    52
Inouye, Hon. Daniel K., U.S. Senator from Hawaii.................     3
Juan-Saunders, Vivian, Chairwoman, Tohono O'odham Nation, Sells, 
  AZ.............................................................    32
Kitcheyan, Kathleen W., Chairwoman, San Carlos Apache Tribe, San 
  Carlos, AZ.....................................................    41
Kyl, Hon. Jon, U.S. Senator from Arizona.........................     3
McCain, Hon. John, U.S. Senator from Arizona.....................     2
Murkowski, Hon. Lisa, U.S. Senator from Alaska...................     1
Napolitano, Hon. Janet, Governor, State of Arizona...............    53
Narcia, Richard P., Governor, Gila River Indian Community, 
  Sacaton, AZ....................................................    23
Raley, Bennett W., Assistant Secretary, Water and Science, 
  Department of the Interior, accompanied by Aurene Martin, 
  Acting Assistant Secretary for Indian Affairs..................     8
Shirley, Joe, Jr., President, Navajo Nation, Window Rock, AZ, 
  accompanied by Stanley Pollack, Attorney.......................    29

                               APPENDIXES
                               Appendix I

Responses to additional questions................................    69

                              Appendix II

Additional material submitted for the record.....................    81


                     ARIZONA WATER SETTLEMENTS ACT

                              ----------                              


                      TUESDAY, SEPTEMBER 30, 2003

                           U.S. Senate,    
     Subcommittee on Water and Power of the
         Committee on Energy and Natural Resources,
                       and the Committee on Indian Affairs,
                                                   Washington, D.C.

    The subcommittee and committee met, pursuant to notice, at 
10 a.m. in room SD-366, Dirksen Senate Office Building, Hon. 
Lisa Murkowski presiding.

           OPENING STATEMENT OF HON. LISA MURKOWSKI, 
                    U.S. SENATOR FROM ALASKA

    Senator Murkowski. Good morning. I call to order the 
Subcommittee on Water and Power. Good morning to all of you. I 
would like to take this opportunity to welcome all the parties 
to this morning's joint hearing before the Water and Power 
Subcommittee and the Indian Affairs Committee. I would like to 
express my appreciation to you, Senator Campbell, for agreeing 
to work together on this legislation and to extend a special 
welcome to Senator Inouye.
    The legislation before us today is quite monumental. What 
began roughly over a decade ago is of significant importance to 
two States, numerous tribes, several communities, and many, 
many individuals. It is my understanding that upon enactment 
and implementation, settlement of the Gila River Indian 
Community's claims would be one of the largest Indian water 
rights settlements ever undertaken. So I commend everyone for 
all of the efforts that have gone into the settlement thus far.
    Now, while this hearing represents a significant step 
forward, I also know that not all concerns have been addressed 
and some degree of compromise on a variety of issues still lies 
ahead. Therefore, I look forward to hearing from all of our 
witnesses today.
    At this time I would like to invite other Senators to make 
opening statements. I do understand that there are several of 
you that have conflicting commitments. Appropriations is 
meeting at this same time. Senator Kyl, as the sponsor of S. 
437, we would anticipate your statement, but as a courtesy to 
both Senator Campbell and Senator Inouye, who do have to go to 
another committee, I would like to invite you to make your 
statements at this time, and then we will recognize those other 
Senators as they have arrived.
    Senator Campbell.
    [The prepared statements of Senators Murkowski and McCain 
follow:]
  Prepared Statement of Hon. Lisa Murkowski, U.S. Senator From Alaska
    I would like to take this opportunity to welcome all the parties to 
this mornings joint hearing before the Water and Power Subcommittee and 
the Indian Affairs Committee. I would like to express my appreciation 
to Senator Campbell for agreeing to work together on this legislation 
and to extend a special welcome to Senator Inouye.
    The legislation before us today is quite monumental. What began 
roughly over a decade ago is of significant importance to two states, 
numerous Tribes, several communities, and many, many individuals. It is 
my understanding that upon enactment and implementation, settlement of 
the Gila River Indian Community's claims would be one of the largest 
Indian water rights settlement ever undertaken. I commend everyone for 
all of the efforts that have gone into this settlement thus far.
    While this hearing represents a significant step forward, I also 
know that not all concerns have been addressed and some degree of 
compromise on a variety of issues still lies ahead. Therefore, I look 
forward to hearing from all of our witnesses here today.
                                 ______
                                 
   Prepared Statement of Hon. John McCain, U.S. Senator From Arizona
    I want to thank the Chairmen of the Indian Affairs and Energy and 
Natural Resources Committees for holding this hearing on the Arizona 
Water Settlements Act of 2003, a bill of great significance to the 
future of Arizona and its citizens. I also want to commend my 
colleague, Senator Kyl, for all the effort that he has expended to 
bring this complex legislation to this point in the process. The 
legislation would ratify negotiated settlements for Central Arizona 
Project (CAP) water allocations to municipalities, agricultural 
districts and Indian tribes, state CAP repayment obligations, and final 
adjudication of long-standing Indian water rights claims.
    These settlements reflect more than five years of intensive 
negotiations by state, federal, tribal, municipal, and private parties. 
I want to recognize the extraordinary commitment of all the parties 
represented in this agreement. From my experience in legislating past 
agreements, I recognize the enormous challenge of these negotiations, 
and I appreciate their personal dedication to this settlement process.
    This legislation is vitally important to Arizona's future because 
these settlements will bring greater certainty and stability to 
Arizona's water supply by completing the allocation of CAP water 
supplies. Pending water rights claims by various Indian tribes and non-
Indian users will be permanently settled as well as the repayment 
obligations of the state of Arizona for construction of the CAP.
    I join Senator Kyl in expressing my support for the agreements 
embodied in this bill and encouraging thoughtful conclusion of this 
settlement process. Significant progress has been made in resolving key 
issues since we last sponsored a bill to facilitate this agreement in 
the 107th Congress. Some of these key issues pertain to the final 
apportionment of CAP water supplies, cost-sharing of CAP construction 
and water delivery systems, amendment of the 1982 settlement agreement 
with the Tohono O'odham Nation, mitigation measures necessitated by 
sustained drought conditions, and equitable apportionment of drought 
shortages.
    While this bill reflects agreements reached on a host of issues, it 
is important to emphasize that the legislation may be modified as the 
negotiations continue. There are parties that are engaged in water 
rights litigation that may find that becoming part of this legislated 
settlement will provide a more satisfactory and expeditious resolution 
of claims. I encourage all the parties involved to continue to work 
diligently toward the successful conclusion of this process. The future 
passage of the Arizona Water Settlements Act will be an historic 
accomplishment that will benefit all citizens of Arizona, the tribal 
communities, and the United States.

          STATEMENT OF HON. BEN NIGHTHORSE CAMPBELL, 
                   U.S. SENATOR FROM COLORADO

    Senator Campbell. Thank you, Madam Chairman, and thank you 
very much for doing this hearing. As you know, we are marking 
up the President's emergency supplemental for Iraq and 
Afghanistan in Appropriations today, so I will only stay for a 
few minutes because I need to be at that committee too, as 
Senator Inouye does.
    But I want to commend Senator Kyl, the Gila River Indian 
Community, and the States of Arizona and New Mexico for their 
work on this very important bill. As a sponsor of a very, very 
difficult Indian water rights settlement act in Colorado that 
took over 15 years, I know firsthand how incredibly difficult 
these issues can be. Even though Indian people certainly have a 
right, an early priority water right, to water running within 
the boundaries of the State, changes in demographics and 
populations and many other things have made it very, very 
complicated to actually give them the right that they certainly 
deserve.
    S. 437 is no exception. It represents the product of many 
years of hard work by all of the parties involved. By settling 
the Central Arizona Project issues, implementing the Gila River 
water rights settlement, and addressing Southern Arizona Water 
Rights Settlement, S. 437 is a large and very complex bill. The 
committee will hear from the witnesses today. I will read with 
great interest all the testimony that is turned in, but I am 
hopeful that there are areas we can improve and the two 
committees will be able to work together, as we always do, to 
make sure that we do our best to expedite this bill. I think it 
is extremely important.
    Thank you, Madam Chairman.
    Senator Murkowski. Thank you.
    Senator Inouye.

       STATEMENT OF HON. DANIEL K. INOUYE, U.S. SENATOR 
                          FROM HAWAII

    Senator Inouye. Thank you very much, Madam Chairman.
    In the interest of time to receive the testimony of 
witnesses this morning, I would just like to welcome Governor 
Narcia of the Gila River Indian community, Chairperson Saunders 
of the Tohono O'odham Nation, President Shirley of the Navajo 
Nation, and Chairwoman Kitcheyan of the San Carlos Apache 
Tribe, and to assure my colleague from Arizona, Senator Kyl, 
that I look forward to working with him to assure passage of 
this very important measure.
    Thank you very much, Madam Chairman.
    Senator Murkowski. Thank you.
    Senator Kyl.

      STATEMENT OF HON. JON KYL, U.S. SENATOR FROM ARIZONA

    Senator Kyl. Thank you, Madam Chairman and Chairman 
Campbell, and I know that the members of the Appropriations 
Committee will have to attend that markup, that very important 
markup, and I therefore fully appreciate why you cannot be here 
the entire time. But I can certainly assure many of my friends 
from Arizona who are here that all of you have taken this very 
seriously and have studied up on the issue and will continue to 
study more even though you are not here for much of the hearing 
today, and I appreciate that very, very much.
    I also want to thank Senator Campbell, Senator Murkowski, 
and Senator Domenici for being willing to hold this hearing at 
this time. We have waited a long time, the water users in 
Arizona, for this day, and the bill is the product of 14 years 
of negotiation and litigation and then more negotiation. 
Virtually every major water user and provider in central 
Arizona has devoted itself to the passage of this bill.
    In fact, S. 437 would codify the largest water claim 
settlement in the history of our State. The three titles in the 
bill represent the tremendous efforts of literally hundreds of 
people in Arizona and here in Washington, as I said, over this 
period of 14 years.
    Looking ahead, the bill could ultimately be nearly as 
important to Arizona's future as was the authorization of the 
Central Arizona Project 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. 
Those of you who assisted Arizona on the CAP will recall that 
Arizona under the CAP legislation always committed to repay a 
portion of the project back to the Federal Government, 
something on the order of from a third to about 40 percent, and 
litigation arose as to exactly how much that repayment was and 
how it was to be accomplished.
    Well, this bill, among other things, codifies the 
settlement reached between the U.S. Government and the Central 
Arizona Water Conservation District, the entity that runs the 
CAP, over the State's repayment obligation for costs incurred 
by the United States in constructing the Central Arizona 
Project.
    By the way, I might add for my Democratic colleagues, some 
of the genius in figuring out how to do this, supporting a lot 
of different Federal interests, came originally from Bruce 
Babbitt, who was then Secretary of the Interior, knew the 
issues very, very thoroughly as a result of his background in 
Arizona as well. So I attribute a lot of the good ideas in the 
settlement to Secretary Babbitt.
    The settlement will also resolve once and for all the 
allocation of all remaining CAP water. The 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 and people, to construct 
irrigation works necessary for the tribes with Congressionally 
approved water settlements to use their CAP water, really 
converting their paper water rights to wet water for the first 
time.
    Madam Chair, title 2 of the bill settles 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 stabilize 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 3 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, as 
I said, will finally get wet water as opposed just to the paper 
claims that they now have, and they will have projects to use 
their water. In addition, mining companies, farmers, and 
irrigation districts can continue to receive water without fear 
that they will be stopped by this litigation.
    While some minor issues remain, we still have every 
confidence that those issues will be resolved before we 
actually 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, 
which authorized 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, the only party not yet included in the 
settlement, will move forward so that all claims can be 
resolved by this bill, and there is a title specifically 
reserved for that settlement should we be able to accomplish 
that result.
    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 
responsibility 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 of the people of Arizona.
    I want to thank everyone from Arizona who has traveled here 
today to attend this hearing and again thank all of the members 
of the committee who have been here at least up to now. Thank 
you, Madam Chairman.
    [The prepared statement of Senator Kyl follows:]
     Prepared Statement of Hon. Jon Kyl, U.S. Senator From Arizona
    Madam Chairman, Chairman Campbell, I would first like to thank you 
and Chairman Domenici for holding this hearing. The water users and 
providers of Arizona have waited a long time for this day. The bill 
before our committees, the Arizona Water Settlements Act (S. 437), 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, S. 437 
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.
    Madam Chairman, 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 afy 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, the only party not yet included in the settlement, 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.

    Senator Murkowski. Thank you, Senator Kyl.
    Senator Bingaman.

         STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR 
                        FROM NEW MEXICO

    Senator Bingaman. Thank you very much for having this 
hearing. Let me welcome all the witnesses and thank Senator 
Murkowski and Senator Kyl, Senator Murkowski for having the 
hearing, Senator Kyl for all the work that has gone into this 
complex piece of legislation.
    This bill as I understand it would ratify a series of water 
settlements that are very important to the State of Arizona. It 
involves resolution of issues concerning the Central Arizona 
Project, as Senator Kyl indicated, a reclamation project that 
was authorized in 1968 to furnish water both to Arizona and to 
New Mexico.
    The Central Arizona Project settlement also attempts to 
address the U.S. trust responsibility to Arizona Indian tribes 
by facilitating several important Indian water rights 
settlements. I know this is a difficult negotiation to get to 
this point and I congratulate all the parties for the work that 
has gone into it. Nevertheless, the legislation involving the 
allocation of water from the Colorado River does affect a 
number of different interests. This bill, S. 437, addresses a 
large number of CAP issues, but there are some New Mexico-
related issues that I believe should also be addressed as part 
of a settlement.
    These issues arise as the result of the provisions in the 
1968 Colorado River Basin Project Act that were intended to 
ensure that water users in New Mexico could benefit from the 
construction of the Central Arizona Project. Given that S. 437 
provides a certain and final resolution to so many CAP issues, 
it seems to me appropriate to provide that same level of 
certainty for New Mexico's portion of the project that was 
authorized 35 years ago.
    Today, we have our State Engineer from New Mexico, John 
D'Antonio, testifying. I look forward to hearing his testimony 
on New Mexico issues related to this bill. It is my 
understanding that discussions are under way, as Senator Kyl 
indicated, between New Mexico and Arizona parties to resolve 
some of the outstanding issues, and I appreciate the 
willingness of the Arizona parties to work with New Mexico 
representatives to resolve these issues.
    Speaking as a representative from New Mexico, as a Senator 
from New Mexico, let me just say that it is not New Mexico's 
intention to delay the bill, but instead just to assure that 
all appropriate issues are being addressed. S. 437 is a very 
important piece of legislation and I look forward to working 
with you, Senator Kyl, and with Senator Murkowski and all the 
rest of my colleagues here, Senator Campbell, to make sure that 
the issues are resolved and that we can move ahead with 
legislation.
    Thank you.
    Senator Murkowski. Thank you.
    Senator Akaka.

        STATEMENT OF HON. DANIEL K. AKAKA, U.S. SENATOR 
                          FROM HAWAII

    Senator Akaka. Thank you very much, Madam Chairman and 
Chairman Campbell. Thank you for holding this hearing.
    Water is one of the most important natural resources in our 
country and especially for Indian country. I want to commend 
Senator Kyl, Senator McCain, and Senator Johnson for their 
efforts to bring forth this legislation to codify the largest 
water claims settlement in Arizona, in Arizona's history, and 
resolve some, as Senator Kyl mentioned, 14 years of 
negotiations.
    This is all about reserved water, and what has been 
happening in our country is that Indian country has lost some 
of its rights to reserved water, and this will certainly help 
the cause. We are looking forward to this being a model for 
other settlements as well. Also I am looking forward to having 
this bill to be a model not only for the Gila River Indian 
Community, but for other tribes in the country as well. And I 
look forward to working with Senator Kyl on this bill.
    Thank you.
    [The prepared statement of Senator Akaka follows:]
  Prepared Statement of Hon. Daniel K. Akaka, U.S. Senator From Hawaii
    I thank Chairman Campbell and Chairman Murkowski for holding this 
joint hearing today. Water is one of our most important natural 
resources, and for Indian Country, it is the bounty of their homelands. 
In the past, Native peoples would relocate to other parts of the land 
if their crops, fish and wildlife were no longer plentiful. Now, they 
must remain on their designated homelands. They must wisely utilize the 
resources available to them. However, increased demand over this 
limited resource by communities outside of Indian Country has 
diminished the right of tribes to ``reserved water.'' These communities 
are expanding and drawing from this valuable resource. While tribes 
have sought litigation to enforce their water rights, in many cases, 
the economic and social costs of litigation have forced them to seek 
compromises. These compromises have resulted in what is before us 
today, S. 437, the Arizona Water Settlements Act.
    I look forward to hearing the testimony from our witnesses to 
discuss the intent of this legislation and its ramifications on Indian 
Country. While I commend Senators Kyl, McCain, and Johnson for their 
efforts to bring forth this legislation to codify the largest water 
claims settlement in Arizona history and resolve some 13 years of 
negotiations, I wish to ensure that by codifying this legislation, we 
are not hurting other tribal governments that are also seeking 
settlements for their water rights. It has been said that this 
legislation may be used as a ``model'' for other settlements. 
Therefore, it is imperative that Congress ensures that this legislation 
will help not only the Gila River Indian Community, but other tribes in 
Indian Country. Again, I wish to thank the Chairmen for holding this 
important hearing.

    Senator Murkowski. Thank you.
    Senator Domenici is also participating in the 
Appropriations markup of the supplemental and it is unlikely 
that he will be able to attend this morning. He has submitted a 
statement and asked that I read it so that all of you can hear 
his comments this morning, and I also have some questions that 
I will be asking on his behalf. So again, this is a statement 
from Senator Domenici:

    The Arizona Water Settlements Act is of great importance to the 
State of Arizona. Any time parties successfully negotiate a water 
settlement, it is a substantial achievement. I commend Senator Kyl for 
his hard work, as well as each of the parties for the compromises made 
to reach this agreement.
    This bill is also extremely important to the State of New Mexico. 
One of the elements originally part of the Central Arizona Project was 
a New Mexico diversion and storage unit. This unit would have allowed 
New Mexico to contract and exchange up to 18,000 acre-feet of CAP water 
for Gila River water to be used in New Mexico. While Arizona has 
witnessed completion of its portion of the CAP, New Mexico is still 
waiting for construction to begin on its unit.
    Additionally, because the New Mexico project was authorized as a 
unit of the CAP, it should be financed in part out of CAP funds under 
this settlement. Under the 1968 act and current CAP contracts, CAP 
users would be required to proportionally fund 98.7 percent of the New 
Mexico unit. In 1987 the Bureau of Reclamation estimated the capital 
cost of the New Mexico unit at $142 million.
    In its current form, S. 437 would utilize the Lower Basin 
Development Fund to subsidize $1.6 to $2.2 billion in Arizona projects. 
Because Congress intended New Mexico to be a beneficiary of the CAP, 
sufficient funds should be dedicated from the Lower Basin Development 
Fund to partially support the New Mexico unit as well.
    I assure you, it is not my objective to prevent this settlement 
from moving forward. But it is my intent to see that the commitments 
made to New Mexico by Congress in 1968 are fairly considered. I believe 
that S. 437 is designed to be a comprehensive settlement of Central 
Arizona Project water issues, including allocations, payments, and 
funding. Therefore, I feel any comprehensive settlement should also 
include to the greatest extent practicable a resolution of outstanding 
New Mexico issues as well. I simply cannot support a settlement until 
the interests of New Mexico are protected.
    I understand that parties in both States have met numerous times 
and continue trying to reach an agreement that will accommodate both 
States. I understand that a list of issues has been identified and, 
while consensus has been reached on a couple of issues, there are still 
several outstanding items in need of resolution, including mechanisms 
for New Mexico accessing CAP water.
    I stand ready to do what I can to help facilitate a consensus with 
regard to the outstanding issues in this settlement so that New 
Mexico's interests are protected and advanced. I will gladly hold 
additional hearings, both here in Washington or out in the State, if it 
becomes necessary and will aid the parties in reaching agreement.
    Once again, I commend all the parties involved for their dedication 
and commitment to this very important legislation. I look forward to 
working with you all to address the concerns of the State of New Mexico 
and I look forward to moving this bill expeditiously once those 
concerns have been adequately addressed.

    Again, that was the statement of Senator Domenici.
    So, with that, I would like to introduce our first panel 
this morning, representing the administration. We have: Bennett 
Raley, the Assistant Secretary of Water and Science; and Aurene 
Martin, Acting Assistant Secretary of Indian Affairs. Good 
morning and welcome to the committee.
    Mr. Raley.

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

    Mr. Raley. Good morning. Madam Chair, thank you. Senators, 
thank you. It is a pleasure to be here, particularly so when we 
are addressing an issue, a suite of issues, the resolution of 
which is of vital importance to the Department of the Interior. 
The Department takes very, very seriously its trust 
responsibilities. It takes very, very seriously its 
responsibility to forward certainty for water users and the 
people of Arizona and New Mexico.
    This effort, which has been noted by Senator Kyl and others 
stretches back over 14 years, it is one of the most complex 
Indian water rights settlements that the Department has been 
engaged in in decades. The resolution of these issues is of 
critical importance. It is our judgment that all of the 
entities are within striking distance of success. As the 
members of this committee know, sometimes when parties do not 
take that extra step to get to success the window of 
opportunity does not open for a long time.
    We believe that the window of opportunity is open today, 
and I pledge to you on behalf of the Secretary and the 
Department of the Interior our utmost efforts to bring this 
effort to fruition and to provide the resolution of these 
issues.
    As the Senators have noted, S. 437 has three substantial 
components. Title 1 is the negotiated settlement in the Central 
Arizona Water Conservancy District litigation with the United 
States. Title 2 approves the Gila River Indian Community water 
rights settlement, and title 3 makes necessary amendments to 
the 1982 Southern Arizona Water Rights Settlement Act. Each one 
of those components is critical and we believe that they are 
all worthy of proceeding.
    A number of issues have been raised in the opening 
statements by Senators, some of which we have addressed in the 
written testimony that I have submitted on behalf of the 
Department. I would like to draw attention to three issues and 
then allow Assistant Secretary Martin to make any comments if 
she wishes, but to preserve as much time for the Senators to 
ask questions as possible.
    The three issues that I would point to would be: First, we 
all understand that S. 437 has a complex and innovative 
financing mechanism that operates outside of the normal 
appropriations process. The administration is currently 
reviewing the funding provision to determine whether it is the 
most appropriate way to proceed. We are not aware at the 
Department of alternative methods of proceeding, but we are 
going to work hard to achieve success, and we will be spending 
as much time with the participants in this effort as will be 
productive to find a way to get to success, because a long-term 
funding mechanism is required by the stipulation. It is 
essential for this effort to be successful.
    The second issue that I would draw attention to is that the 
Department believes that additional efforts to address issues 
associated with the San Carlos Apache Tribe will be productive 
and will allow this bill to proceed.
    Third, as has been noted, the Department is very anxious to 
have this effort supported by both Arizona and New Mexico so 
that it can be supported by the Senate and the administration. 
We again pledge to the representatives of the States and to 
each of you that we will do everything we can as an 
administration to help facilitate an agreement between two 
States that are very important to the Department.
    In closing, Madam Chair, I would like to return to my 
earlier comment. The window is open. Let us not risk, over what 
in retrospect may be minor details, the chance for success, the 
chance for bringing closure to what otherwise will be very, 
very divisive issues. It is not worth the risk.
    Thank you, Madam Chair, and I would like to allow Assistant 
Secretary Martin to make any comments if she wishes to add 
anything.
    [The prepared statement of Mr. Raley follows:]
     Prepared Statement of Bennett W. Raley, Assistant Secretary, 
             Water and Science, 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 S. 437, a bill to authorize the 
Arizona Water Rights Settlement Act of 2003.
    S. 437 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. S. 437 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 S. 437 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 S. 437 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 S. 437. As we 
move forward, this Administration remains committed to working with the 
Committee, 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, on-going 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 & s. 437: the arizona water rights 
                         settlement act of 2003
    S. 437 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 S. 437, subject to certain conditions. The main components 
of the settlement contained in S. 437 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; (8) and 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 S. 437 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, S. 437, 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 S. 437 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 S. 437. 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.
    S. 437'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 S. 437 is complex, and operates 
outside of the normal 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 S. 437 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, 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
    S. 437, 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 S. 437, 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 S. 437 
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
    S. 437 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 S. 437 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 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 S. 437, 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 S. 437.
    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 S. 437. 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 under-funded.
                               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 S. 
437. 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, 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.

    Senator Murkowski. Thank you, Mr. Raley.
    Ms. Martin.
    Ms. Martin. Good morning, members of the committee. I would 
only echo Mr. Raley's support for further efforts to undertake 
discussions with the San Carlos Apache Tribe to try to reach 
settlement. I think that we feel it is very important that 
further efforts can and should be made, and that agreement is 
within our grasp.
    Additionally, we also must ensure that individual allottee 
rights are addressed fully and completely within the 
settlement, and we look forward to further review and 
discussion on those issues as well.
    Thank you.
    Senator Murkowski. Thank you. I appreciate the testimony 
and the opportunity to ask some further questions.
    Both of you have mentioned the San Carlos Apache Tribe and 
we recognize that is the title that has been left blank here. 
Can you, either one of you, elaborate on the administration's 
view of what steps can be taken or are being taken to complete 
the negotiations in a timely manner?
    Mr. Raley. Madam Chair, we are aware that discussions are 
proceeding. We believe that the pace of those discussions needs 
to accelerate, but we as a Department are not in a position of 
feeling comfortable that it is helpful if we were to dictate or 
preordain the outcome of what ultimately need to be discussions 
that reach a common agreement between the parties. So we will 
be there in the negotiations and obviously the Department and 
the administration must be comfortable that the trust 
responsibility of the United States to all tribes is fulfilled, 
although we recognize ultimately Congress's authority to define 
what that is. I think that is all it would be appropriate for 
us to say at this point.
    Senator Murkowski. If this bill were to be moved forward in 
its current form, is there sufficient flexibility in your 
opinion to accommodate a settlement with the San Carlos Tribe?
    Mr. Raley. Although the bill in its present form has some 
open-ended or undefined funding aspects that make it impossible 
to calculate the exact expenditures, we believe that there is 
and we are comfortable that there is the opportunity for 
addressing the needs of the San Carlos Tribe as a part of this 
legislation and within the funding mechanism identified in the 
legislation, assuming that that ends up being the preferred 
mechanism for proceeding.
    Senator Murkowski. You spoke a little bit about the funding 
mechanisms and that apparently is one of the, I do not know if 
we will call it a bugaboo--we will call it a bugaboo. What are 
the annual deposits to the Lower Basin Development Fund and 
what will the annual withdrawals pursuant to the act under 
consideration today--what is going to happen in terms of our 
withdrawals?
    Mr. Raley. Madam Chair, the annual income to the fund is 
between $40 and $50 million. Expenditures under this 
legislation, it is difficult at this point to tie that to the 
annual amounts because it depends on construction schedules, 
but we believe that, should this be the preferred alternative 
for funding this settlement, that the needs of all of the 
entities for funding under this mechanism could be met within 
the revenues that are produced to the lower basin fund.
    Senator Murkowski. Is it possible that the funds could be 
exhausted by the requirements of this legislation, of S. 437, 
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 Apaches?
    Mr. Raley. Madam Chair, our assessment is that, should this 
be the preferred mechanism for funding, that there is capacity 
within that fund for addressing the reasonably anticipated 
needs of all participants in what would be a broader 
settlement. We do not believe that this legislation if it 
proceeds would result in that fund being exhausted and 
therefore not available for other settlements.
    Senator Murkowski. How many other tribes still have 
outstanding water rights claims?
    Mr. Raley. Well, as the Senator knows, there are two 
general stream adjudications and my understanding--and if you 
will allow me to refer to my notes here so I do not omit any of 
these tribes. Subject to confirmation, tribes without 
settlement would include: the Navajo Nation, Hopi, White 
Mountain Apache, Wallapi, San Juan Southern Payute, Camp Verde 
Apache, Pascoyaki, and Tohono Apache.
    Senator Murkowski. So under this settlement agreement there 
is going to be approximately 67,300 acre-feet of CAP water 
available for these future Indian water rights settlements. Is 
this going to be sufficient water to settle those claims that 
you have just identified?
    Mr. Raley. Senator, I believe that if you aggregate the 
claims in existence now, it is about 3.3 million acre-feet. If 
you subtract the claims that would be addressed within this 
legislation, it leaves the claims outstanding at something like 
1.7 million acre-feet. Suffice it the say that, just to make a 
point, even if the entire Central Arizona Project were 
dedicated to those claims, which is not being contemplated by 
anyone, that would not provide adequate water by itself.
    We believe that resolution of these future claims, first of 
all, would not be precluded by this existing legislation, this 
proposal, and that it is obvious that for settlement of those 
other claims water from other than CAP sources would have to be 
included. Otherwise it is simply impossible to even enter into 
the ball park of what those claims are. And the quantities and 
sources are something that would have to be addressed in claim-
specific negotiations.
    Senator Murkowski. I have additional questions, but we will 
move on to the other Senators.
    Senator Bingaman.
    Senator Bingaman. Thank you very much.
    Let me go back to this issue of the financing mechanism. Do 
I understand that the administration agrees to the use of the 
Lower Basin Development Fund to fund this, these settlements in 
this legislation, or objects to the use of that fund for that 
purpose?
    Mr. Raley. Senator, the administration is reviewing that 
concept and is committed to finding a concept that works. 
Whether or not this is the one that will be ultimately 
acceptable to the administration or not has not been 
determined.
    Senator Bingaman. Do you have any alternatives? I mean, 
when I look around, if you want a firm funding source moving it 
forward, is there anything else?
    Mr. Raley. The Department of the Interior is not aware of 
alternative concepts at this time.
    Senator Bingaman. So this is the only game in town, and you 
are not opposed to using this Lower Basin Development Fund as 
the funding source?
    Mr. Raley. Well, Senator, that is currently under review in 
the Department and the administration and a decision has not 
been made.
    Senator Bingaman. Okay. I gather you somewhat answered this 
in response to Senator Murkowski's question, but do you have an 
estimate, could you give us a flow line over the next several 
decades as to what would be going into this Lower Basin 
Development Fund, what would be coming out, and what would be 
left? Is that possible? Does somebody have that?
    Mr. Raley. If you will allow me a moment to ask staff. What 
I do recall is that it is $40 to $50 million annually inflow.
    Senator Bingaman. Right.
    Mr. Raley. And that the actions contemplated by this 
legislation could be funded within those amounts, generally 
speaking. That obviously would be subject to construction 
schedules.
    But let me--if you will allow me a moment, let me see if we 
have more detailed information.
    Senator Bingaman. What I would like to see if we could get 
something that would say, go for the next 40 or 50 years: Here 
is what will be going in each year during this period and here 
is what we would expect to be expended from this fund each year 
in order to implement this legislation.
    Mr. Raley. Senator, if I might offer, given the preciseness 
of your question, if you will allow us to respond to the 
committee and to you in writing, I believe that might provide 
more clarity than a broad answer at this hearing.
    Senator Bingaman. I think that would be fine. I think that 
would be useful for us to know what the dollars are as best we 
understand them. I understand these are projections, but I 
think that would be useful.
    The Navajo Nation has expressed concern that the CAP water 
provided for in this bill, S. 437, to address outstanding 
Indian water claims in Arizona is not sufficient to meet the 
needs and claims that the Navajo Nation has outside this 
legislation. I guess the question would be, in your view, is a 
sufficient amount of water reserved from the CAP to settle 
these remaining Indian water claims in Arizona, including those 
of the Navajo Nation? I guess maybe you just responded in one 
of your earlier answers that sufficient CAP water is not going 
to be available, but that you are going to look elsewhere to 
meet those claims of the Navajos and other Indian tribes. Could 
you clarify that once more for me?
    Mr. Raley. Senator, I was observing that the numbers simply 
speak for themselves, given that there are roughly. If this 
settlement were to proceed, 1.7 million acre-feet of claims, 
that dwarfs the amount of water available from the entire 
Central Arizona Project and, should the claimed amounts be the 
reference for settlement it is obvious that water from another 
source would have to be available.
    We believe that the amount set aside in this legislation is 
an appropriate and adequate amount. But beyond that I really 
cannot comment, particularly with respect to the Navajo Nation, 
because, as the Senator knows, those issues now have been 
raised in Federal court litigation with respect to the 
Department's responsibility to address those claims and I will 
have to defer to the Department of Justice with respect to any 
detailed analysis of what amounts might be implicated under the 
claims and expectations of the Navajo Nation.
    Senator Bingaman. Well, I think you can understand the 
concern I am raising, which is that we have got a lot of 
unquantified claims out there. We have got claims where we are 
not sure how much is going to be actually ultimately 
recognized. And here we are considering legislation that goes 
ahead and firmly commits a substantial amount of the CAP water 
for some of those that have been resolved.
    We want to be sure that we are not doing something here 
that precludes us from doing justice to the tribes that are 
still making claims but have not gotten to the point of 
actually having the amount specified. So you understand that--I 
mean, I know that this is sort of ready to go and everybody is 
anxious to do this piece of it. I am just afraid that by doing 
this piece of it without knowing what is left to be done, we 
may be closing off opportunities that we do not want to.
    Mr. Raley. Senator, we share your concern and that, as 
noted in my opening comments, the trust responsibility of the 
Department extends to all tribes. The Department believes that 
the settlement is consistent conceptually with the Department's 
trust responsibilities and does not preclude the fulfillment of 
the trust responsibilities of the United States to other 
tribes. As this committee wrestles with daily, we believe that 
if we were to wait for all issues to be resolved, which in a 
perfect world would be preferable, we would wait for decades 
more; and that this is a responsible and an appropriate piece 
to proceed with at this time and will provide a foundation for 
moving forward with both tribal and non-tribal issues in 
Arizona and New Mexico.
    Senator Bingaman. Let me ask about one other issue. Section 
106(b) of the bill reclassifies as non-reimbursable $73.5 
million of debt that is owed to the United States for the 
construction of irrigation delivery systems for agricultural 
water users. What value--what is the Government receiving in 
the settlement in return for waiving the repayment requirement 
for that $73.5 million and what is the present value of the 
$73.5 million repayment that it is proposed that we waive here?
    Mr. Raley. Senator, with respect to the present value, if 
you will allow we will include that amount in the written 
response that we will provide you.
    With respect to the question, which we care very much 
about, as to what is the value to the United States of this, 
the value is water, in that this settlement is predicated on a 
final allocation of CAP water that allows the needs of multiple 
entities to be met and involves in some cases entities 
receiving less water than they had originally anticipated. So 
we believe that there is----
    Senator Bingaman. So you think these agricultural water 
users had a valid claim to water that they are now giving up in 
return for the Government foregoing that repayment?
    Mr. Raley. Senator, we believe that there is value to the 
United States associated with the agreements by agricultural 
water uses to participate in this settlement.
    Senator Bingaman. And this is the price to get them to 
participate in the settlement?
    Mr. Raley. Yes, sir.
    Senator Bingaman. That is all I have right now.
    Senator Murkowski. Thank you.
    Senator Kyl.
    Senator Kyl. Thank you, Madam Chairman. I will not ask a 
question unless either Ms. Martin or Mr. Raley would like to 
comment on what I have to say.
    Let me just say first of all that I very much appreciate 
the testimony and in particular, the notion that there is an 
opportunity here and this opportunity may not present itself in 
the future; and that I would expand on that by saying that, in 
response to the very good questions that have been raised by 
both you, Madam Chairman, and you, Senator Bingaman, that there 
is a capability built into this settlement to assist all of the 
tribes that have outstanding claims, even though some of the 
tribes, like the Navajo and Hopi for example, are not in the 
Gila Basin.
    In other words, the Central Arizona Project brings CAP 
water to the central part of the State. Those are the taxpayers 
that actually pay back the cost of the CAP. But through 
exchange mechanisms we can set some additional water aside and 
by various parties doing exchanges actually use some of that 
water to satisfy obligations to the Navajo and the Hopi, and 
that is how they can be assisted by this fund.
    About 50 percent of the CAP water will go to Indians as a 
result of this settlement. Back when it was being debated--I do 
not know if Senator Akaka or Senator--I think Senator Domenici 
would probably remember and Senator Inouye for sure. But if 
anybody had said back then that even 20 percent of the water of 
the CAP was going to go to Indian use, they would have said no, 
that is not the way it is.
    Now 50 percent--it is 49 percent roughly, but almost 50 
percent--of the water is going to go to Indian tribes. 
Obviously, some people had to give up water in order to 
accomplish that, including these agricultural users. The 
Department is being careful not to characterize the validity of 
the claims because there is litigation, obviously, as to that. 
But those farmers think they have a pretty good claim, and they 
have committed a lot of money, borrowed it. That is the so-
called 9-D debt. Obviously, if they are going to give up some 
of their water and no longer use the facilities that have been 
constructed, they cannot be asked to continue to pay off those 
loans. So that is the value of the U.S. Government there.
    I would just make a final comment here. That is that I 
think it is appropriate for us to be focusing on the issues 
that remain. I wish we could spend all of our time just talking 
about all of the things the parties have gotten together on and 
all of the benefits of this. I think everybody here is 
sophisticated enough to know that we would not be here if there 
were not a lot of those benefits and that the remaining work is 
to focus on the remaining issues, and that is totally 
appropriate.
    Therefore, Senator Bingaman, your question and the comments 
that Senator Murkowski read from Senator Domenici, we are fully 
prepared to work on the issues that are of importance to New 
Mexico and understand that those issues need to be resolved.
    We have been working with the San Carlos Apache Tribe more 
recently about the possibility of an agreement with that tribe 
that would bring them into the settlement, and I am hopeful and 
I think I can say optimistic, but I better reserve that for the 
moment, but at least hopeful, that that will be done by the 
time we get ready to actually move the legislation on to the 
President.
    So the other issues that remain do need to be addressed. 
They can be addressed within the appropriate time frame. We are 
totally committed to getting them addressed. But as with all of 
these opportunities, and going back to the original comment 
about the window of opportunity, there is an importance in 
getting the process started.
    That is why I am so appreciative of Senator Domenici 
allowing this hearing to be held even though the issues 
regarding New Mexico have not yet been resolved, because it is 
another step forward in the process here. We understand that 
the journey cannot be completed without a resolution of those 
issues, but there is a timing factor here, and if we can get 
the process started now I would think we can have those issues 
resolved by the time we are done.
    Senator Bingaman, you also asked a very key question about 
the payments into the fund and out of the fund. There is a lot 
of data about that, which we will supply to you. We all need to 
know that, and we have that. It is somewhat notional because, 
as Mr. Raley said, we are not exactly sure exactly what the 
timing on these various contracts is, and that will dictate, to 
some extent, how certain monies are paid out.
    The Bureau of Reclamation has been working very closely 
with the Gila River Indian Community about those contract 
issues, but to the extent that that information can be nailed 
down, it is there, and it will be provided to the committee. 
Actually, it is very specific, and there are some really 
interesting and complex charts that try to explain it further. 
So we will, for sure, have that information as well.
    Those are comments that I wanted to make, and I appreciate 
the indulgence of my colleagues.
    Senator Murkowski. Thank you.
    Senator Akaka, questions?
    Senator Akaka. Thank you very much, Madam Chairman.
    Ms. Martin, concerns have been raised that the water 
allocations from the Central Arizona Project for Indian tribes 
are substantially lower than the water allocations for non-
Indian communities. Do you believe the allocation of 47 percent 
to tribes and 53 percent to non-Indian users fulfills the 
Federal Government's trust obligations to these tribes? And if 
not, what is your recommendation?
    Ms. Martin. Well, under I think previous agreements the 
actual allocation for tribes was lower. So I do believe that 
this increase, this 47 percent allocation, is an improvement 
and that it does meet the trust responsibility to Indian 
tribes.
    Senator Akaka. Mr. Raley, as we will hear from other 
panelists, there are concerns about the future water supply, 
both for agricultural as well as municipal use. As non-Indian 
communities continue to expand and water demands increase, do 
you believe that the water allocations in the bill will meet 
the future demands of both Indian and non-Indian countries?
    Mr. Raley. Madam Chair, Senator, the Department believes 
that the allocations are fair and appropriate. However, it is 
clear that all demands for water for all uses cannot be met 
from the Central Arizona Project, and that reality is the basis 
for the Secretary's Water 2025 initiative, which points out 
that if we are to meet the water needs of the West for all 
sectors--ag, urban, tribal, environmental, and recreation--we 
need to proceed with tools we know that can work and stretch 
the existing water supplies further, because if there is one 
thing the Department of the Interior cannot do that is make it 
rain or snow. So we are left with the task of managing as 
stewards collectively with our State and tribal partners this 
most vital resource.
    Senator Akaka. I was interested in a comment you made in 
your statement about the Navajo Nation's water claims and 
mentioned that you would want to talk with the Department of 
Justice in order to understand future demands on the CAP. Does 
S. 437 have mechanisms in place to address future demands and, 
if so, what mechanisms are there?
    Mr. Raley. Senator, as Senator Kyl has observed, this 
legislation has the capacity to be consistent with and to 
enable additional settlements. We also believe that this 
legislation does not preclude or prohibit or impair future 
settlements, which is the reason that we are able to testify 
here today that this legislation is consistent with and would 
not result in the Department being unable to fulfill its trust 
responsibilities, noting that we very much would like to see 
the interests of the San Carlos Apache Tribe dealt with as 
being an in-basin user in the Gila Basin that inevitably must 
be dealt with.
    Senator Akaka. Thank you very much.
    Madam Chairman, thank you very much, and I look forward to 
working with Senator Kyl on this bill. Thank you.
    Senator Murkowski. Thank you.
    There were a couple of other questions that I had. I know 
Senator Domenici had a question. I am going to be submitting 
mine to you for a written response as well as Senator 
Domenici's. Senator Bingaman, do you have an additional 
question?
    Senator Bingaman. I did want to. Thank you, Madam Chair. 
Let me ask one additional question.
    I notice on page 10 of your testimony you have an 
interesting paragraph there and I just wanted to ask you to 
elaborate on it. You say: ``S. 437 also includes significant 
waivers of the United States' ability to enforce environmental 
statutes related to the water quality in the Gila River Basin. 
The settling parties seek to limit their exposure to 
environmental liability.''
    Then you go on to say: ``This could restrict the ability of 
the Federal Government to clean up the most contaminated waste 
sites in the Gila River Basin. As drafted, the legislation 
could also be interpreted to provide a waiver for future claims 
under certain environmental statutes, including those under the 
Superfund authority.''
    I gather your point there is that the administration 
opposes those provisions in the proposed legislation?
    Mr. Raley. Senator, we believe that additional work is 
required to address these issues. The Department of Justice is 
in the lead on these issues and we are comfortable that they 
can be resolved so that we can fully support those aspects of 
this legislation.
    Senator Bingaman. So you think some change needs to be 
made, but you are not prepared to tell us what it is?
    Mr. Raley. The answer is yes and yes.
    Senator Bingaman. That is all I have, Madam Chair.
    Senator Murkowski. Thank you.
    Senator Kyl, anything further?
    Senator Kyl. Thank you, Madam Chairman. I would just note 
that my understanding is that some of the people who are here 
this week to testify and to be here have also been in 
consultation with the Department of Justice on precisely that 
issue and they report that they are making progress on 
resolving that issue. It is another one of the issues that has 
to be resolved, but the parties believe can be resolved.
    Senator Murkowski. With that, thank you both very much, Mr. 
Raley, Ms. Martin. We appreciate your being here this morning.
    Mr. Raley. Thank you, Madam Chair.
    Senator Murkowski. I would now like to invite up the 
members of the second panel who will be providing testimony 
here this morning: Mr. Richard Narcia, the governor of Gila 
River Indian Community; Ms. Vivian Juan-Saunders, chairwoman of 
the Tohono O'odham Nation; Mr. Joe Shirley, Jr., State of the 
Navajo Nation; and Ms. Kathy Kitcheyan, the tribal chairwoman 
for the San Carlos Apache Tribe.
    Senator Kyl. Madam Chairman, as they are being seated might 
I be permitted to just make one comment?
    Senator Murkowski. Please, go ahead, Senator Kyl.
    Senator Kyl. This is a remarkable panel that you have 
before you. They are all representatives of--we share 
representation of constituents in Arizona. I just wanted to 
express my appreciation for all of them being here. I could 
discuss in great detail the cooperation that we have had over 
the years on many matters, and it has been a real pleasure for 
me to get to work with them, and I just very much appreciate 
their participation here today.
    Senator Murkowski. Thank you.
    And a welcome to all of you this morning. I would remind 
you that, in the interest of time, if you could attempt to keep 
your testimony to the 5 minutes, we would appreciate it. We 
understand this is very complex. There is a lot of information 
to provide and a great many years have gone before us, so it is 
difficult to keep your comments limited. But we do appreciate 
that.
    Let us begin on this end, please, with Governor Narcia. 
Good morning and welcome.

           STATEMENT OF RICHARD P. NARCIA, GOVERNOR, 
            GILA RIVER INDIAN COMMUNITY, SACATON, AZ

    Mr. Narcia. Good morning. Thank you, Chairman Murkowski, 
Senator Bingaman, Chairman Campbell, and Vice Chairman Inouye, 
and members of the Energy and Natural Resources Committee and 
the Committee on Indian Affairs.
    I am Richard Narcia, governor for the Gila River Indian 
Community, and I appreciate the opportunity to share with you 
the community's strong support of the Arizona Water Settlement 
Act. I would also like to take this opportunity to thank you, 
Senator Kyl, for your hard work and leadership in sponsoring 
this important legislation; also to thank you, Senator McCain, 
for your steadfast support of our community; as well as Senator 
Johnson for his commitment and support to our settlement.
    This settlement is a monumental achievement for our 
community and enjoys the unanimous support of our council, nine 
of whom are with me today and are listed in my written 
testimony.
    The Gila River Indian Community was formally established by 
executive order in 1859. The community is comprised of the 
Pima's, or the Akimel O'odham, and the Pee Posh, or the 
Maricopa, people. We are the largest community in the 
metropolitan Phoenix area. Our reservation encompasses nearly 
600 square miles, with an enrolled population 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 metropolitan Phoenix. Agriculture was the mainstay 
of our community until recent times.
    We are the Akimel O'odham, the River People, and, as I 
stated, we have resided in the Gila River Valley of central 
Arizona for centuries. We are direct ancestors of the ancient 
Hohokum, who farmed the Gila River Valley since at least 300 
A.D., developing hundreds of miles of irrigation canals to 
supply water 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--a plentiful source of food, water 
for irrigation, and a way of life for all our people. The river 
was our source of life, 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, self-
sufficient communities, Indian and non-Indian, in the entire 
Phoenix Valley. As settlers moved to the Phoenix Valley, our 
community adapted and assisted the new settlers by providing 
food and protection. members of our community formed a 
component of the first Arizona Territorial Guard.
    This all changed in the 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. 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 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 
about the allocation and the dependability of water supplies to 
our reservation and to the more than 3 million people 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 of 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 have an annual entitlement of 
653,500 acre-feet, 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 amount is only a fraction of the water which we are 
legally entitled to, it does provide our community with a new 
source of water to replace the Gila River water that was lost.
    The settlement agreement also will ensure us construction 
and maintenance of a distribution system that will be needed to 
allow delivery of the water to the reservation. Together, the 
settlement water and distribution infrastructure will enable 
our community members to farm tribal and allotted lands as well 
as provide them an opportunity to escape poverty and to 
participate meaningfully in the economy of the region. While 
there is little chance that we can recapture the prosperity of 
our ancestors, the settlement agreement will enable more tribal 
members to participate in our ancestors' way of life.
    As a result of this settlement, the community will achieve 
a separate peace with non-Indian parties throughout Arizona. We 
are convinced that this is the right path for the community. 
There is no question that our presence may be missed by other 
tribes who will still be 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 to other parties in this settlement, 
have had to make many compromises. But we view these 
compromises each very carefully and considered and approved by 
our council.
    The settlement agreement encompassed in the Arizona water 
settlement 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 want to again express my appreciation to appear before 
this committee today and I would like to make a comment. After 
having reviewed some of the testimonials that will be heard 
today, I just want to reflect on the fact that this settlement 
has been very transparent. That was the direction that I gave 
when I became Governor to our water negotiation team and to our 
negotiators, that we need to be able to address any issue, any 
concern of anyone or any entity in our negotiations, that they 
had a seat at the table.
    Now, recognizing whether or not those entities or people 
wanted to have a part of this, that was up to them. But the 
fact remains and for the record, our settlement has been very 
open and we believe that the negotiations and agreement have 
reflected that. I am sure that we will continue to work with 
anyone who has concerns about this settlement.
    [The prepared statement of Mr. Narcia follows:]
          Prepared Statement of Richard P. Narcia, Governor, 
                Gila River Indian Community, Sacaton, AZ
    Thank you Chairman Domenici, Senator Bingaman, Chairman Campbell 
and Vice-Chairman Inouye, and members of the Energy and Natural 
Resources Committee and the Committee on Indian Affairs. 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 (S. 437). I would also like to take this 
opportunity to particularly thank you, Senator Kyl, for your hard work 
and leadership in sponsoring this important legislation. I would also 
like to thank Senator McCain for his steadfast support of the Community 
in accomplishing this settlement, as well as Senator Johnson for his 
commitment and dedication to issues affecting tribes throughout the 
country and in particular his support for 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, and 
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 up-stream 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 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 
supersede 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 Committees 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.
   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 Committees today to share our views on this historic 
legislation. We are very hopeful that the Committees 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.

    Senator Murkowski. Thank you, Mr. Narcia.
    Mr. Narcia. Thank you.
    Senator Murkowski. We appreciate it.
    Mr. Shirley.

STATEMENT OF JOE SHIRLEY, JR., PRESIDENT, NAVAJO NATION, WINDOW 
               ROCK, AZ, ACCOMPANIED BY STANLEY 
                       POLLACK, ATTORNEY

    Mr. Shirley. Thank you very much, Madam Chair Murkowski, 
Senator Kyl, Senator Bingaman. Thank you for the opportunity to 
be heard.
    We have written testimony. I just want to add a few more to 
that written testimony.
    Senator Murkowski. Mr. Shirley, can you make sure that your 
button is pressed on your microphone there, right at the base 
there.
    Mr. Shirley. Okay.
    Senator Murkowski. See how that works.
    Mr. Shirley. Okay. Can you hear me?
    Senator Murkowski. That is good, thank you.
    Mr. Shirley. Again, thank you, Madam Chair Murkowski, 
Senator Kyl, Senator Bingaman, and the rest of the committees. 
I want to express a great appreciation to the efforts put 
forward by Senator Kyl in Congress to have devoted to 
addressing, what time was devoted to addressing the water 
issues in the State of Arizona and also water issues related to 
Native Americans, including the Navajo Nation in the State of 
Arizona.
    The Navajo people understand the importance of water, 
particularly since almost half the Navajo homes lack running 
water. These Navajo families must haul water from distant water 
sources in order to have a reliable supply of domestic water. 
Thus, the Navajo people do not take water for granted and 
support the efforts of the Gila River Indian Community to 
settle their water rights claims.
    However, there are various aspects of S. 437 that are 
troubling to the Navajo Nation. Our concerns are identified in 
the written testimony submitted by the Navajo Nation. The most 
critical issue arises out of section 104 of the proposed 
legislation. That section ties the hands of the Secretary by 
requiring a water rights settlement approved by the Congress as 
a precondition to the reallocation of Central Arizona Project 
water. The Navajo Nation needs a supply of the Central Arizona 
Project water today. The community of Window Rock needs a 
supplemental supply of drinking water. Although that community 
is located in Arizona, the best source of potable water for 
Window Rock is from the San Juan River in New Mexico.
    The Navajo Nation is close to a final settlement of its 
water rights to the San Juan River in New Mexico. The 
centerpiece of that settlement is the proposed Navajo-Gallup 
Water Supply Project that would bring potable water to the city 
of Gallup, New Mexico, and to Navajo communities in western New 
Mexico and eastern Arizona. The Navajo Nation needs 6400 acre-
feet of Arizona water for that project and for the settlement 
with New Mexico. We hope to introduce settlement legislation 
early next year that would authorize this project.
    We cannot afford to wait for a settlement of our claims in 
Arizona in order for the New Mexico settlement to move forward. 
In short, section 104 of S. 437 makes it impossible for the 
Secretary to allocate much-needed water to Window Rock. The 
residents of Window Rock cannot afford to wait for a settlement 
of the Navajo Nation's water rights claims in Arizona as the 
precondition to obtaining a much-needed drinking water supply.
    We are presently engaged in discussions with the State of 
Arizona and the Gila River Indian Community concerning this 
issue and hope that we can find a win-win solution for the 
Navajo Nation and the community. I have our water rights 
attorney, Mr. Stanley Pollack, to answer any of your questions.
    Thank you.
    [The prepared statement of Mr. Shirley follows:]
   Prepared Statement of Joe Shirley, Jr., President, Navajo Nation, 
                            Window Rock, AZ
    Chairman Murkowski, Chairman Campbell, and members of the 
committee, 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 Senate Bill 437 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 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 Senator Kyl and the Congress have 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 S. 437 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 Senate Bill 437 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 S. 437 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, Senator Kyl, 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.

    Senator Murkowski. Thank you, Mr. Shirley. Thank you for 
being here this morning.
    Ms. Juan-Saunders, welcome.

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

    Ms. Juan-Saunders. Thank you. Thank you, Madam Chair, 
Senator Murkowski, Senator Kyl, and Senator Bingaman and 
members and staff members from the Senate Committee on Indian 
Affairs.
    My name is Vivian Juan-Saunders. I am the chairwoman of the 
Tohono O'odham Nation. We are located in southern Arizona, with 
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. I would first of 
all like to express our appreciation to Senator Kyl, who co-
sponsored the introduction of the Settlement Act and was 
instrumental in securing a resolution among multiple parties 
with varied interests, as well as our appreciation to other 
members of the Arizona delegation who expressed their support.
    Madam Chair, in your opening remarks you used the term 
``monumental'' and I would like to share with you the 
extraordinary efforts of the negotiating team in reaching a 
consensus on the issues which enabled the introduction of 
amendments to the Tohono O'odham Nation's 1982 water 
settlement. The negotiating team included representatives of 
the Tohono O'odham Nation, the nation's legislative council, 
the San Xavier District, the Schuk Toak District--the Tohono 
O'odham Nation is comprised of 11 political districts; San 
Xavier and Schuk Toak are 2 of the 11 districts--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. Officials from the 
Department of the Interior also actively participated in the 
negotiations.
    The written testimony that we submitted includes a detailed 
summary of the Southern Arizona Water Rights Settlement Act, as 
well as the cost and appropriation items related to the 
amendments.
    I would like to focus on the benefits which will be 
realized by water users in the Tucson Management Area. First of 
all, 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.
    Receipt of several significant benefits under the Southern 
Arizona Water Rights Settlement Act was conditioned on final 
dismissal of the underlying water litigation, 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. 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. Listed in our testimony you will find the 
disputes and how they were settled.
    Number four, 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 by the following: 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. 
The amendments authorize the use of the Lower Colorado River 
Basin Development Fund to pay identified costs of implementing 
the settlement.
    Under the amendments and related settlement agreement: 
Tucson, the city of Tucson, has agreed to provide repairs and 
funding 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.
    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 
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 payment, the nation, the Tohono O'odham Nation, has 
agreed to provide a loan to Asarco 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.
    Finally, certain provisions of title 1 of the Settlement 
Act are essential to implementation of the amendments, and we 
have listed what the implementation process will be.
    In conclusion, I would just like to highlight the Federal 
obligations under the new amendments. Section 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. Lastly, 
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.
    I would like to conclude my remarks by sharing that we are 
very proud of the process for reaching the compromises and 
agreements among all parties. This is a monumental task that we 
need to recognize and others need to use as an example of how 
parties from different backgrounds, tribal and non, can come 
together and reach a consensus on issues, especially an issue 
as critical as water.
    The Tohono O'odham live in the desert. We have survived for 
generations in 110 degree weather, and water is a very precious 
commodity, and we would support the amendments and urge your 
consideration. We also, with respect to the other tribes who 
are also in need of this precious commodity, we ask that 
consideration be given to the amendments to this act.
    Thank you.
    [The prepared statement of Ms. Juan-Saunders follows:]
        Prepared Statement of Vivian Juan-Saunders, Chairwoman, 
                    Tohono O'odham Nation, Sells, AZ
                            i. introduction
    Chairwoman Murkowski, Chairman Campbell and members of the 
Committees. 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 Senator Kyl who co-sponsored introduction of 
the Settlements Act and was instrumental in securing a resolution among 
multiple parties with varied interests affected by the Settlements Act. 
I also extend my appreciation to Representative Hayworth who co-
sponsored introduction of the Act, 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 the Committees 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.
          (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.
          (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
          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
          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 $15,000,000 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
          Anamax, 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 
or 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.
    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.
                  (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.
                  (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.
                  (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.

    Senator Murkowski. Thank you very much.
    Ms. Kitcheyan, welcome.

        STATEMENT OF KATHLEEN W. KITCHEYAN, CHAIRWOMAN, 
            SAN CARLOS APACHE TRIBE, SAN CARLOS, AZ

    Ms. Kitcheyan. Good morning, Chairwoman Murkowski, Chairman 
Ben Nighthorse Campbell, Senator Kyl from the great State of 
Arizona, and Senator Bingaman and other distinguished members.
    My name is Kathy W. Kitcheyan. I am the chairwoman of the 
San Carlos Apache Tribe. On behalf of the tribe, I would like 
to extend my appreciation to you for giving us an opportunity 
to testify today.
    Our land base is just under 2 million acres. We have a 
population of approximately 13,000 tribal members. Please 
accept my comments on behalf of the tribe. As you know by now, 
the San Carlos Apaches are opposing the GRIC settlement. GRIC 
would receive enormous quantities of water from the CAP canal 
and other sources delivered to the GRIC reservation, 60 miles 
downstream from our San Carlos Apache Reservation to mitigate 
and replace what GRIC has agreed others can use from streams on 
our land and the Gila River.
    Absolutely no one should have the right to say what can be 
used from our land. The Gila River on our reservation will most 
certainly die under the GRIC settlement. It suffers greatly 
now, as do our tribal members, from the violations to the Globe 
Equity decree and Arizona versus California by nits in the 
upper valleys of Arizona and New Mexico. The GRIC settlement 
disregards those decrees and our decreed rights. It stands 
Federal law and the law of two States, as well as two Federal 
decrees, on their heads. It does all of this in profound injury 
to our river, our land, and our people.
    In our culture water is sacred. This may be difficult for 
some of you to understand, but it is the lifeline of our 
existence, along with our language and our culture and our 
spirituality. Therefore, the health of the Gila River reflects 
the health of our land and our people. To kill the river with 
more diversions than the river can provide and still remain 
clean and healthy is a crime. Right now the river is not 
running. Yet, upstream from us the turbine pumps hum 24 hours a 
day to irrigate 40,000 acres of lush crops. In comparison, our 
tribal farm is only 400 acres, and there is not enough water 
for it as it is.
    Coolidge Dam, which was named after one of our presidents, 
President Calvin Coolidge, is synonymous with San Carlos Lake. 
It is located on our reservation and it is fed by the Gila 
River. It is going dry. When the lake is healthy, it provides 
recreation for up to 250,000 annual visitors, and it is a 
critical environmental asset for the Southwest. However, with 
the dam going dry there is a possibility of endangered species 
dying--the willow flycatcher, the bald eagle, the razorbacked 
sucker, and the peregrine falcon.
    This is the reason we have tried for decades to get a 
minimum pool established in the lake of at least 75,000 acre-
feet. We can store our CAP water from our 1992 Settlement Act 
there, but only if we pay $74 an acre-foot for the CAP water. 
The same water costs the non-Indian farmers $28. Is that fair? 
This situation will get worse under titles 1 and 2 of the act.
    Of course, before we can store CAP water in the Coolidge 
Dam the water must first run out of the mountains in New Mexico 
and escape the pumps in the upper valleys. This is a rare 
occurrence now. Today the only water in the dam, about 30,000 
acre-feet, was purchased by the tribe at a cost of $66 per 
acre-feet. But for the tribe's purchase, the lake would be dead 
right now. This problem will get worse under the GRIC 
settlement.
    As it is, we are not permitted to store our Globe Equity 
water in Coolidge Dam. We must divert it from the flowing 
river. We have the earliest priority above Coolidge Dam at 1846 
to divert the waters of the Gila River. Still, the river does 
not run to us. It is diverted by the pumps of the upper valley. 
This will get worse if the bill before you is enacted and 
survives our court challenges.
    What is very clear and transparent is that our neighbors 
upstream do not obey the law of the decree. They do not obey 
the State law of prior appropriation. We do, they do not. Yet 
this bill will somehow make it legal, retroactively legal. This 
is the second time they have tried to avoid the decree in the 
many court cases we have won over decades of litigation. They 
got the Arizona legislature to do the same scheme a few years 
ago and the Arizona Supreme Court said that was 
unconstitutional, not just a little bit.
    This bill is much worse. Congress should look long and hard 
at this bill before it sets a course which upsets the prior 
appropriation law of the West and Federal decrees such as the 
Globe Equity and Arizona versus California decrees, and the 
vested property rights of the tribe and thousands of others who 
expect to take our water only in turn when there is a shortage.
    The BIA stipulated that GRIC will get the first 210,000 
acre-feet under the Globe Equity decree to irrigate 35,000 
acres, and until they got that the Apaches could not get any of 
the 6,000 acre-feet to irrigate the 1,000 acres on our 
reservation. This agreement was punitive. To make it worse, the 
BIA built Coolidge Dam on our reservation and flooded out our 
farms, homes, mill, and the graves of our ancestors. We were 
not allowed to store our meager 6,000 acre-feet in the lake, 
and even if we could we have no way or electricity to get the 
water out of the lake in order to use it.
    The power site at Coolidge Dam belongs to the San Carlos 
Apache Tribe. Instead of paying the power proceeds to us 
required by the Federal Power Act of 1928, Congress promised 
our tribe that it would receive electricity power at 2 mills 
for irrigation, schools and agency purposes and a power line 
from Coolidge Dam to the little town of Bylas. We are still 
waiting.
    A very important use for basin project funds under the CAP 
was to pay for reduced power generation in Coolidge Dam in the 
event New Mexico received CAP water. All of the diversions 
authorized by the legislation before you reduce the value of 
the power site and the potential electricity and revenue from 
power generation at Coolidge Dam.
    Senator Murkowski. Ms. Kitcheyan, I am going to have to ask 
you to wrap it up very soon.
    Ms. Kitcheyan. I am going to wrap it up here, okay.
    We certainly do not need more paper unless that paper is 
somehow respected. We need a fair share of the water which is 
being diverted upstream. We need to receive the CAP water that 
we have been entitled to since 1980. We need to receive the 
water and CAP funding that we are entitled to in our 1992 
settlement. Our CAP water price should be reasonable. We should 
get a fair share of the basin project fund and revenues, 
including a fair share of the power revenues. Unlike GRIC and 
SCIDD, we do not have a CAP canal running through our land to 
bring Colorado River. No one can make us whole by replacing our 
water with anything downstream. If the Gila River does not 
flow, we have no way to get water for the 1,500,000 acres of 
our readiness in the Gila Valley.
    In conclusion, Madam Chair, I would like to emphasize that 
San Carlos Apaches and the U.S. Government had a treaty 
approved in 1852. As you know, my ancestors did not ask for 
this treaty. At the origin of this treaty we had over 2 million 
acres of prime real estate. Unfortunately, it was so prime that 
the U.S. Government reduced it five times: in 1873, in 1874, 
1876, and 1877, respectively. This was done to pacify the greed 
of miners and ranchers because they had discovered gold, 
silver, copper, and water.
    Yet our Apache people remained loyal and loved their 
country. They sent their men to World War I, and these soldiers 
were not even U.S. citizens at the time. This came later, in 
1924. World War II came again and many of our men served and 
died. They did not even have the basic tenets of citizenship. 
They could not vote until 1948.
    A San Carlos Apache was the first soldier to die in the 
Gulf War. I remember this day like I remember the day when John 
F. Kennedy died. Veterans Day is very important to us. We 
celebrate it. Senator Kyl was one of our grand marshals a few 
years back.
    I share all of this with you----
    Senator Murkowski. Ms. Kitcheyan, I am going to have to ask 
you to--you have gone over your time twice.
    Ms. Kitcheyan. Okay. I have 10 seconds, ma'am.
    Senator Murkowski. Okay.
    Ms. Kitcheyan. I share all of this with you to inform you 
and remind you of all the injustices and inequities suffered by 
my people, and if the GRIC settlement is approved without any 
consideration of us, the San Carlos Apaches, then once again 
the U.S. Government will have failed to uphold their own 
treaty--did we not just hear about trust responsibilities?--in 
which they promised to protect our land, natural resources, act 
in good faith, and to legislate in the best interests of the 
San Carlos Apaches.
    Thank you, Madam Chair. I am sorry I took more time than 
you thought was necessary, but I came thousands of miles to be 
heard. Thank you.
    [The prepared statement of Ms. Kitcheyan follows:]
  Prepared Statement of Kathleen W. Kitcheyan, Chairwoman, San Carlos 
                      Apache Tribe, San Carlos, AZ
    Good morning Chairwoman Murkowski, Chairman Ben Nighthorse 
Campbell, Senator Kyl and Members of the Committee. I am Kathy 
Kitcheyan, Chairwoman of the San Carlos Apache Tribe. The Tribe thanks 
the Chairwoman and the Committee for the opportunity to testify today.
    The Tribe submitted formal written testimony yesterday. I'm a 
school teacher and I am sure you are all prepared for a quiz on our 
papers.
    It troubles the Tribe to oppose Title I and II of the Act and the 
associated agreements, exhibits and attachments which total nearly 
4,000 pages. However, the physical burden of substantially all of the 
provisions of Title II, which we refer to as the GRIC Settlement, and 
which deals with the Gila River and its tributaries upstream on the 
Gila River from our Reservation, are suffered by our Tribe--the Apache 
People--not by GRIC.
    GRIC would receive enormous quantities of water from the C.A.P. 
Canal and other sources delivered to the GRIC Reservation 60 miles 
downstream from our San Carlos Apache Reservation to mitigate and 
replace what GRIC has agreed others can use from streams on our land 
and the Gila River.
    The Gila River on our Reservation will most certainly die under the 
GRIC Settlement. It suffers greatly now, as do our Tribal Members, from 
the violations to the Globe Equity Decree and Arizona v California by 
interests in the Upper Valleys of Arizona and New Mexico. The GRIC 
Settlement disregards those Decrees and our Decreed rights. It stands 
Federal law, and the law of two States, as well as two Federal Decrees 
on their heads. It does all of this in profound injury to our River, 
our Land, and our People.
    We Apaches are patriots. We have fought for America as special 
forces and Marines in disproportionate numbers compared to others. That 
is true as we speak. Our Tribal Members are among the first to go into 
battle all over the world in defense of freedom and the United States. 
A San Carlos Apache was the first soldier to die in the Gulf War. 
Veterans Day--not any other--is the most important day to our Tribe, as 
Senator Kyl knows personally. He honored the Tribe as the Grand 
Marshall of our Veterans Day Parade a few years back.
    Senator Kyl--remember that Day??? It rained and rained. I hope you 
understand that rain is a blessing from our Creator. It may have 
``rained on your parade'', but in our culture, the Creator blessed your 
presence and the Tribe that day. We need you to come back. We need some 
more rain.
    Please understand, in our culture the Gila River--all rivers and 
springs--are sacred. The health of the Gila River reflects the health 
of our land and our People. To kill the River with more diversions than 
the River can provide and still remain clean and healthy, is a crime 
against us. Right now the River is not running, yet upstream from us 
the turbine pumps hum 24 hours a day to irrigate 40,000 acres of lush 
crops. Downstream, our farm is dead.
    San Carlos Lake, which is located on our Reservation and fed by the 
Gila River, is going dry. When the Lake is healthy it provides 
recreation for up to 250,000 visitors a year, and is a critical 
environmental asset for the Southwest. It will die with millions of 
fish and birds being harmed. That is the reason we have tried for 
decades to get a Minimum Pool established in the Lake of at least 
75,000 acre-feet. We can store our C.A.P. water from our 1992 
Settlement Act there--but only if we can pay the $74 an acre-foot for 
this C.A.P. water that only costs the non-Indian farmers $28. This 
situation will get even worse under Titles I and II of the Act.
    Of course, before we can store C.A.P. water in San Carlos Lake, the 
water must first run out of the mountains in New Mexico and escape the 
pumps in the Upper Valleys. That is a rare occurrence now. Today, the 
only water in the Lake--about 30,000 acre-feet--was purchased by the 
Tribe at a cost of $66 per acre-foot. But for the Tribe's purchase, the 
Lake would be dead right now. This problem will only get profoundly 
worse under the GRIC Settlement.
    We are not allowed to store our Globe Equity water in San Carlos 
Lake. We must divert it from the flowing River. We have the earliest 
priority above Coolidge Dam at 1846 to divert the waters of the Gila 
River. Still the River does not run to us--it is diverted by the pumps 
of the Upper Valley. This will also get worse if the bill before you is 
enacted and survives our Court challenges.
    What is clear to us is this. Our neighbors upstream do not obey the 
law of the Decree. They do not obey state law of prior appropriation. 
We do--they don't. Yet, this bill will somehow make all that is 
illegal--retroactively legal. This is the second time they have tried 
to avoid the Decree and the many court cases we have won over three 
decades of litigation. They got the Arizona legislature to do this same 
scheme a few years ago and the Arizona Supreme Court said that was 
unconstitutional. Not just a little bit, but pervasively so. This bill 
is much worse. Congress should look long and hard at this bill before 
it sets a course which upsets the prior appropriation law of the west, 
and federal decrees such as the Globe Equity and Arizona v. California 
Decrees, and the vested property rights of the Tribe and thousands of 
others who expect to take our water only in turn when there is a 
shortage.
    When the waters flow in the Gila on our Reservation now, it is 
either an enormous flood--which first must fill up the Upper Gila 
Valley aquifers--before it can come through our Reservation, and then, 
only in high volume flows. Even then, when the River is running on 
priority, the first 437.5 c.f.s. must be bypassed by us for the benefit 
of SCIP, which is the BIA project which delivers water to GRIC and the 
non-Indian San Carlos Irrigation and Drainage District, which we call 
SCIDD.
    The BIA stipulated that GRIC would get the first 210,000 acre-feet 
under the Globe Equity Decree to irrigate 35,000 acres, and that until 
they got that, the Apaches could not get any of the 6,000 acre feet to 
irrigate the 1,000 acres on our Reservation. This agreement was 
punitive. To make it worse, the BIA, built San Carlos Lake on our 
Reservation and flooded out our farms, homes, grist mill and the graves 
of our relatives. We were not allowed to store our meager 6,000 acre-
feet in the Lake, and even if we could, we have no way or electricity 
to get the water out of the Lake in order to use it.
    The power site at Coolidge Dam belongs to the San Carlos Apache 
Tribe. Instead of paying the power proceeds to us required by the 
Federal Power Act in 1928, Congress promised our Tribe that it would 
receive electricity power at 2 mils for irrigation, schools and agency 
purposes, and a power line from Coolidge Dam to the town of Bylas. We 
are still waiting. A very important use for Basin Project funds under 
the C.A.P. was to pay for reduced power generation in Coolidge Dam in 
the event New Mexico received C.A.P. water. All of the diversions 
authorized by the legislation before you reduce the value of the power 
site and potential electricity and revenue from power generation at 
Coolidge Dam.
    The water quality in the Gila River makes us ill. It damages our 
teeth. Because it contains high concentrations of heavy metals, 
including eight times the safe drinking water level for copper. The 
poor water quality of the River contributes and complicates other 
health problems suffered by the Tribe, including what appears to be a 
cancer cluster at Bylas on the Reservation. The River on our 
Reservation is classified by Arizona as ``not swimmable or drinkable.'' 
We understand why this is so when it is dry. We do not understand why 
the River is not ``swimmable and drinkable'' when it runs.
    The waters of the River also kills our crops and damages our land. 
The water quality in the Gila River will only get worse as a result of 
the legislation before you. We have a water quality injunction imposed 
by the Federal Court in Globe Equity to give us water under the Decree 
to grow moderately salt sensitive crops, as we once did in the past. 
That was not in the distant past.
    My mother and father farmed on the Gila River. We grew those crops 
and our family and other Apaches ate them. That was before the massive 
pumping started in the Upper Valleys and the San Simone River Valley. 
The San Simone River doesn't even run any more. Pumping which only 
began in the 1950s dried it up. The U.S.G.S. took out the gage just a 
few years ago. All this will be made worse by the GRIC Settlement.
    In settlement discussions which have occurred periodically since 
the mid 1970s, we have been trying to get only the water which we 
historically used to farm 8,600 acres and the water for the 1,000 acres 
under the Globe Equity Decree. No matter what the number would be in a 
settlement, one or a million, we cannot receive it unless the parties 
upstream obey the law and respect our rights.
    We certainly don't need more paper unless that paper somehow is 
respected. We need a fair share of the water which is being diverted 
upstream. We need to receive the C.A.P. water that we have been 
entitled to since 1980. We need to receive the water and C.A.P. funding 
that we are entitled to under our 1992 Settlement. Our C.A.P. water 
price should be reasonable. We should get a fair share of the Basin 
Project Fund and revenues--including a fair share of the power revenues 
to pay our OM&R for C.A.P. Unlike GRIC and SCIDD, we do not have a 
C.A.P. canal running through our land to bring Colorado River water 
under the C.A.P. No one can make us whole by replacing our water with 
anything downstream. If the Gila River does not flow, we have no way to 
get water for the 1,500,000 acres of our Reservation in the Gila 
Valley.
    We Apaches have a Treaty that was approved by the President and 
this Senate in 1852. It says that the United States will protect our 
land, act in good faith, legislate for our happiness and well being. We 
know how weary you must be hearing the horrors and difficulties that 
Tribes have suffered. We are weary of suffering them.
    I see that the elected leaders of the White Mountain Apache Tribe, 
the Yavapai-Apache Nation and the Tonto Apache Tribe are here. If they 
had been allowed to testify, I am confident that each would say ``We 
have kept our word to the United States. We believe the word of a great 
nation never gets `too old to keep.' '' Still we wait and expect each 
day that the law of this Nation will be kept and honored and enforced,
    We respectfully ask your protection and assistance here. This 
legislation and the agreements it authorizes, ratifies, and confirms 
unlawful conduct and violations of the Globe Equity Decree and Arizona 
and New Mexico law. It adversely affects the Gila River and Bonita 
Creek and Eagle Creek on our Reservation, and other tributaries 
upstream from us. It adversely impacts the chance that our C.A.P. 
project and those of other C.A.P. Tribes, such as the Yavapai-Apache 
Nation and Tonto Apache Tribe will ever be built. This legislation will 
also adversely impact the cost and reliability of C.A.P. water for all 
Arizona C.A.P. Tribes, except for GRIC.
    Titles I and II should not be adopted by this Senate as introduced. 
If Congress had been asked to authorize, ratify, and confirm by means 
of legislation a settlement agreement that would result in this level 
of unprecedented damage to a people and the environment, as well as 
vested property rights for anywhere else in the country, Congress would 
not consider such legislation--even for a moment. We ask that Congress 
not enact such legislation now. We ask only for fairness and equity. 
More than that--no one is entitled to. Less than that cannot be 
tolerated by this body.
    Thank you again for hearing these words on behalf of the San Carlos 
Apache Tribe. We ask for these comments and a copy of the Summary of 
Elements Needed for the Settlement of the Resources of the San Carlos 
Apache Tribe and Its Reservation be made part of the record, and that 
we be allowed to supplement the record in response to statements by 
others which are made part of the record.
    Respectfully submitted this 30th day of September 2003.
                                 ______
                                 
  Summary of Elements Needed for the Settlement and Protection of the 
Resources of the San Carlos Apache Tribe and Its Reservation Within the 
                    Upper Gila Subwatershed--Arizona
    1. A permanent Minimum Pool of not less than 75,000 acre feet of 
water stored on the San Carlos Apache Reservation in San Carlos Lake 
behind Coolidge Dam, which does not spill, and is reliably supplemented 
to replace losses related to evaporation and seepage for the protection 
of fish, wildlife, cultural resources, public health, safety and 
recreation, and reimbursement for the water purchased by or for the 
Tribe which has previously been expanded to establish and maintain a 
Minimum Pool.
    2. 48,000 acre feet of water from the mainstem of the Gila River 
with an ``immemorial'' priority date. This represents 4.5 acre feet of 
water for 9,600 acre feet of historically irrigated lands on the 
Reservation and 1,000 acres of land under Globe Equity No. 59 and 
thirty-three percent (33%) of the storage rights for the water on San 
Carlos Lalce, after deducting the Minimum Pool.
    3. The right to divert, store and consumptively use all 
groundwater, tributary water and effluent water on the Reservation.
    4. The Central Arizona Project (``CAP'') Contract between the 
United States and the San Carlos Apache Tribe dated December 11, 1980, 
as amended, for water previously allocated to the Tribe to be made 
permanent; the priority and reliability of the water in that CAP 
Contract to be preserved and enforced; the delivery of CAP water by 
exchange under the Contract confirmed as mandatory, subject only to the 
available CAP supply and the Tribe's present CAP Contract priority; 
equitable funding for the infrastructure to exchange, deliver and 
distribute all Apache Tribal CAP water be made mandatory from the Lower 
Colorado River Basin Development Fund, and an equitable share of all 
other CAP appropriations for the Tribe's CAP project, design and 
construction; and the Tribe's CAP Water be delivered to its head gates 
at the ``postage stamp'' electrical rate under CAP; waiver of any 
remaining capital debt related to CAP or Leavitt Act of July 1, 1932, 
47 Stat. 564, 25 U.S.C. 386a.
    5. Confirmation that certain lands within the Reservation, 
including the bed of the San Carlos Lalce subject to a flowage easement 
for SCIP only, are held in trust by the United States for the benefit 
of the Tribe; together with capital funding to relocate the fences to 
show the correct legal boundary as reflected in Map 388 titled 
``Sketch, of Eastern Portion of White Mountain Indian Reservation, A.T. 
1874'', National Archives Record Group 75.7.2 dated 1874 and the 
Executive Order of President U.S. Grant dated July 21, 1874.
    6. A capital trust fund for planning, design, development, 
training, education, equipment and start up initial operation costs for 
15,600 acres of irrigated agriculture on the Reservation.
    7. A capital trust fund to construct basic transmission and 
distribution systems for water, sewage, electricity, telephone services 
on the Reservation.
    8. A full accounting and compensation for all of the electricity 
generated, and revenue and other consideration received by the United 
States related to the generators located in Coolidge Dam; fair 
compensation for the value of power production of the Coolidge Dam site 
and for failure of BIA to deliver 2 mil power to the Tribe for 
irrigation, school, and agency purposes pursuant to Seventieth 
Congress, Session I, Ch. 1371928, section 10(e) of the Federal Water 
Power Act and section 5 of Regulation 14 of the Federal Power 
Commission; and 45 Stat. 210, 211; 43 U.S.C. Sec. 1543(d)(2); and 16 
U.S.C. 791, et seq.; see also 105 Stat. 1722, 1730 (December 12, 1991).
    9. A full accounting for all revenue and all other consideration 
received by the United States pursuant to 27 Stat. 469 (February 20, 
1893) and 29 Stat. 321, 358-60 (June 10, 1896); and fair compensation 
to the Tribe.
    10. Compensation for the loss of the use of our historically 
irrigated Tribal farm, and salt damage to our farm land, along the Gila 
River.
    11. Cultural Resources and Tribal graves protection trust fund to 
recover, stabilize and protect our graves, cemeteries and cultural 
sites around San Carlos Lake exposed to erosion, desecration and 
looting us a result of BIA construction and operation of Coolidge Dam.

    Senator Murkowski. And I appreciate your testimony along 
with that of the other panel members, and we do recognize the 
contributions that all of you have made in order to get here. 
It is difficult to keep within the time parameters, but in 
fairness to the remaining panel members it is important that we 
stick with it.
    At this point in time I would like to take the opportunity 
for a few questions. Governor Narcia, the Gila River originates 
in New Mexico, obviously an important source of water for that 
State. Can you explain the steps that you have taken to 
coordinate this settlement with the rights and claims the State 
can assert under existing law?
    Mr. Narcia. Madam Chair, the answer to your question 
involves three components--is this on?
    Senator Murkowski. I think you are on, yes.
    Mr. Narcia. First, have settlements been reached between 
Arizona and New Mexico interests with respect to the interstate 
components of the settlement framework? The answer to this 
question is yes, definitely. As you are aware, New Mexico water 
users are implicated in the Globe Equity '59 enforcement 
proceedings in Federal court. The community has reached an 
agreement that incorporates Verdant Valley water users into our 
efforts to settle that litigation.
    Secondly, with respect to the exchange required by the 1968 
act, the community has engaged with appropriate Arizona and New 
Mexico parties in a diligent effort to address all the concerns 
and objectives raised by the State of New Mexico.
    Finally, let me take this opportunity to assure both 
committees that if any unanticipated interstate issues should 
arise, I have directed individuals representing the community 
to give these matters their full and immediate attention and 
resolution.
    Senator Murkowski. Thank you. I appreciate that.
    We have heard from the administration's reference to the 
Secretary of the Interior's Water 2025 initiative. Do you 
believe that this settlement is consistent with that water 
initiative?
    Mr. Narcia. Yes, yes, we do. We recognize that Arizona 
includes large areas designated by the Secretary as areas where 
water conflict is either substantially or highly likely to 
occur by 2025. We believe that the components of our settlement 
can and will be held up as an example of the framework that 
potential water conflicts, by using each of the six principles 
articulated by the Secretary. I will address one of the 
principles in my testimony and provide written testimony 
concerning the other five if that is acceptable to the 
chairperson.
    The third principle involves maximizing the water use 
efficiency. The settlement does this in two important ways. 
First, it builds upon Arizona's longstanding effort to treat 
groundwater as a finite resource and to instead emphasize the 
use of renewable surface water supplies. Under this settlement 
both communities and other parties are required to constrain 
their groundwater use.
    Second, the settlement looks at every opportunity to 
maximize the use, to help the community to achieve its water 
budget. In some instances we have reached effluent exchange 
agreements with our neighboring communities to achieve this 
objective. In my written submission I look forward to providing 
more detail on how this settlement is consistent with other--
with each of the other principles.
    Senator Murkowski. Thank you, Governor Narcia.
    Ms. Kitcheyan, your comments make it very clear that the 
San Carlos Apache Tribe is not there yet. They oppose the 
settlement. We heard from the administration before this panel 
suggesting that it is very important to the settlement that the 
San Carlos Apache Tribe settlement be included as part of this. 
Do you see any area in the middle, any way that it can be 
included as part of this settlement?
    Ms. Kitcheyan. The San Carlos Apaches have been acting and 
negotiating in good faith with the Department. We will continue 
to do so. But I will be forthright and let you know that I do 
not know if we can settle it in the near future. I hope so. But 
you know, a part of this depends on what San Carlos Apaches can 
get as well.
    Senator Murkowski. Thank you.
    Senator Bingaman.
    Senator Bingaman. Thank you very much.
    Let me ask President Shirley from the Navajo Nation a 
couple of questions here. You mentioned that the Bureau of 
Reclamation is currently studying potential water supplies for 
Navajo communities in the Little Colorado River Basin, 
including the use of water from the Blue Ridge Reservoir. Do 
you know anything about the time frame for completing that 
study, and will that provide recommendations for addressing the 
water supply needs that the Navajo Nation has in this basin?
    Mr. Shirley. Thank you, Senator Bingaman. I will go ahead 
and have our water rights attorney, Mr. Sandy Pollack, to help 
me answer that question. But the contractor's work is done, 
Senator Bingaman, but the Reclamation believes that the work 
was not adequate and has formed a technical working group to 
revise the report. The settlement negotiations are not expected 
to resume by the final report.
    Sandy.
    Mr. Pollack. Thank you, Mr. President.
    Senator Bingaman, I think that President Shirley really 
outlined it for you. That study has actually been completed. 
The Bureau of Reclamation is trying to revise the report. 
Apparently it didn't address all the concerns Senator Kyl had 
directed in authorizing that particular study to be done. The 
important point about that study is that settlement 
negotiations on the Little Colorado adjudication are really 
predicated on receiving that report, and we just simply cannot 
move forward with addressing our issues in Arizona until that 
report is done.
    Senator Bingaman. Okay. Let me also ask, President Shirley: 
I believe you stated in your testimony that it is critical from 
the Navajo perspective that Window Rock be served by the 
Navajo-Gallup Project so that that project would be part of 
what you would be asking authorization for when you present us 
with possible legislation this next year. Is that the correct 
understanding of that?
    Mr. Shirley. Yes, I believe you have the correct 
understanding, Senator Bingaman. It is very important. Some of 
these things happen only one at a time and at very strategic 
times, and this is such a case with the Navajo-Gallup water 
line project. If we cannot do it now, bringing water to Window 
Rock, I do not know if there is going to be another opportunity 
to do so. So it is very critical that Window Rock is included 
in the Gallup, the Navajo water line project at this point in 
time.
    Senator Bingaman. The other piece of this which makes you 
so concerned about this bill as it currently stands is you need 
an allocation of CAP water in order to meet this demand, meet 
these water needs there in Window Rock, as I understand it?
    Mr. Shirley. Exactly, that is very true. We need 6400 acre-
feet of water from the CAP water at the current time to make 
the Gallup water line project work. If this legislation that is 
before us is going the tie the hands of the Secretary to 
allocate additional water, we cannot get at that water, and we 
need that water.
    Senator Bingaman. That is the basis for your objection to 
this 104(b), section 104(b), where it says the reallocation of 
agricultural priority water under subparagraph (a) shall be 
subject to the condition that first, before the Secretary may 
reallocate the water to any Arizona Indian tribe--that would 
include you--Congress would have to enact a law approving an 
Indian water rights settlement for that Arizona Indian tribe 
that provides for the reallocation.
    Essentially, we would be legislating here a prohibition on 
the Secretary doing what you believe the Secretary needs to do 
in order to meet your needs?
    Mr. Shirley. Exactly.
    Senator Bingaman. Let me ask one or two other questions if 
I could here. Governor Narcia, in your view is it absolutely 
essential that Colorado River Lower Basin Development Fund be 
used as the source of funding to implement this bill?
    Mr. Narcia. Senator Bingaman, the specific process for 
funding this settlement is absolutely, absolutely fundamental 
to our settlement. Without it, our settlement simply will not 
work. First, obviously we can give up our claims in exchange 
for sufficient water and a revenue stream that vests 
immediately and that is guaranteed. Secondly, the funding 
mechanism is also an important component, ensuring that Central 
Arizona Project portions of this legislation in title 1 will 
operate as intended.
    Third and perhaps most importantly, the funding mechanism 
of this bill is the strongest possible affirmation that the 
Federal Government is serious about reaching a fair and binding 
settlement with every Arizona Indian tribe that is willing to 
negotiate in good faith. For the first time, the United States 
will be able to negotiate with Indian tribes in Arizona knowing 
that if they are able to reach a settlement they will have the 
revenue, a certain quantity of CAP water, and the resources to 
guarantee that the operations, maintenance, and the replacement 
costs associated with that water can be paid for both for this 
generation and the next generation to come.
    Senator Bingaman. Let me ask one additional question, 
Governor Narcia. The State Engineer, John D'Antonio, is going 
to testify in the next panel. He indicates in his testimony 
that New Mexico is working cooperatively with your community, 
the Gila River Indian Community, to develop an agreement where 
the community could serve as the exchange partner, so that New 
Mexico could actually go forward and begin to use that 18,000 
acre-feet that was reserved for New Mexico in the '68 
legislation. Is that an accurate representation of the 
situation as you see it?
    Mr. Narcia. I believe you are correct. We have been working 
very extensively with the State of New Mexico. Our negotiators 
have met with Governor Richardson and Mr. D'Antonio and his 
staff and we are working very hard to resolve the issues that 
we have been dealing with, and I think that would be an 
accurate statement, Senator.
    Senator Bingaman. Okay. Thank you very much, Madam Chair.
    Senator Murkowski. Senator Kyl.
    Senator Kyl. Thank you.
    If any of the panelists would like to respond to what I 
say, they are welcome to do so. I simply want to thank all of 
you for being here and for testifying. It is evident from the 
testimony of at least two of the witnesses here that this is an 
extraordinarily important settlement for their future. With 
regard to the Navajo Nation, President Shirley and I have 
talked about this and it is my very fervent hope that, using 
the funds and water available that would be created by this 
settlement, we can move forward quickly to resolve the claims 
of the Navajo Tribe and also develop the projects necessary the 
satisfy in a real way the claims that the Navajo have.
    It is complicated by the fact that we are dealing with an 
upper basin and a lower basin and a New Mexico and an Arizona 
component. But I think that President Shirley is absolutely 
right that one of the first things the Navajo need is to get a 
water supply to Window Rock. So there is no disagreement among 
us, I think, about what needs to be done. It is a matter of 
timing and calibrating all of this so that we can get it done 
in the appropriate way, and I pledge to continue to work with 
you, President Shirley, and appreciate the remarks that you 
made.
    To Chairwoman Kitcheyan, first let me say you could have 
said much more and your long statement reflects much more that 
is worth reading. The U.S. Government did not treat the San 
Carlos Apache Tribe well and there are many things that you 
could have said about that. And that is part of the backdrop of 
this hearing today. It is part of the reason why, on behalf of 
your people, I know that you have to be very careful about 
negotiations and making concessions that you think are 
inappropriate under all of these circumstances.
    I also want to say that the things you said about what is 
really important to the San Carlos Apache people I know, I have 
witnessed. There is no group in the country that has greater 
pride in the service of its young men and women in our military 
than the San Carlos Apache Tribe. I was honored to be grand 
marshal of the parade.
    By the way, it rained on the day that I was there. So maybe 
you want to think--maybe I should come back again.
    So I note the difficulty that these issues have presented. 
You have very competent legal advice from your counsel. You are 
committed to doing the right thing on behalf of the San Carlos 
Apache Tribe. You have recognized the difficulty and told us of 
that. It is just my hope that as we move forward we can 
continue to negotiate and that we will find a way to satisfy 
the requirements of the San Carlos Apache Tribe and treat the 
tribe in a way that is fair and equitable and also get an 
agreement in time actually to be included within this overall 
settlement. If we can do that, I think it will be to the 
advantage of everyone. But it cannot be done unless you are 
satisfied that it is fair and we recognize that.
    I again thank all of you for being here. Governor Narcia 
has been--I do not know how many meetings we have attended 
together, but it takes a huge amount of effort to get these 
settlements done and I just appreciate everybody that is on the 
panel, but also all of the people behind you who have spent so 
many hours working on this as well.
    Thank you, Madam Chairman.
    Ms. Kitcheyan. Madam Chair, may I please say something?
    Senator Murkowski. Yes, please.
    Ms. Kitcheyan. I want to say thank you to Senator Kyl and 
also for the comments that you made. But you know, it is 
important to everyone's future, not just to two tribes. And 
next time you meet with Governor Narcia, please take me along.
    Thank you.
    [Laughter.]
    Senator Murkowski. I thank you all. I thank you for your 
representation here today on behalf of your tribes, your 
community, your nation, and appreciate the testimony from all 
of you.
    Thank you.
    Mr. Narcia. Thank you.
    Mr. Shirley. Thank you.
    Senator Murkowski. We now move to our third and final 
panel, representing the two States who have interests in the 
legislation before us: Mr. Herb Guenther of the Arizona 
Department of Water Resources and Mr. John D'Antonio, the New 
Mexico State Engineer.
    Gentlemen, good morning. Welcome to the committee. Mr. 
Guenther, I recognize you from our previous lives, I think. I 
was looking at you trying to figure out where it was, but State 
legislatures.
    Mr. Guenther. Yes, Madam Chairman, that is correct. The 
Council of State Governments.
    Senator Murkowski. That is right, that is right. It is nice 
to see you here today. That is right. Good to see you.
    All right, if we can proceed then with you first, Mr. 
Guenther, with the Arizona Department of Water Resources.

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

    Mr. Guenther. Thank you, Madam Chairman and Senator 
Bingaman and Senator Kyl. I am here, of course, on behalf of 
Governor Janet Napolitano, who would have also liked to have 
been here, but was unable to do so today. I will ask that her 
comments be inserted into the record in full.
    Senator Murkowski. They shall.
    Mr. Guenther. This obviously is a momentous occasion. You 
have heard all of the importance that this particular agreement 
brings to the Southwest and especially to Arizona. There also 
are parts that are still growing and are developing as we 
speak. The State of Arizona is very supportive of this 
settlement in all its aspects, including those which are still 
developing.
    While some have said it is 14 years in the making, I know 
that some who have been instrumental in this settlement 
agreement have been working on it their entire lives. In excess 
of 30 years of adult life have been invested in portions of 
this settlement.
    Certainly by the sheer number of participants in this 
settlement it is a very precarious and delicate balance that we 
seek to maintain, if you will a house of cards that is in a 
very delicate position. It has so many working parts that when 
you touch one its impacts can reach many.
    One of the major benefits that we see in Arizona is the 
ability to a stipulated settlement of some very longstanding 
litigation, certainly a benefit from the timeline of our 
biological time scale that we all are faced with as humans.
    Other aspects of this settlement that make it extremely 
important to Arizona is the surety it provides, the 
predictability with regard to Gila River resources, the ability 
to bring those resources back within some modicum of reality, 
as well as the reliability that those resources will provide 
both to the tribes in the settlement and the many cities and 
water companies that also participate in the settlement.
    I think the realism of this particular settlement has yet 
to reach full understanding. While there are outstanding issues 
we will continue to work toward, there are hordes of benefits 
to entities that have chose to be combatants for years and 
years and I think now will have the opportunity the sit side by 
side and enjoy the privileges that this settlement will afford.
    With that, Madam Chair, I think I will reserve sufficient 
time for questions that might be pressing. We will continue to 
work with the Navajo Nation, we will continue to work with the 
San Carlos Apache, and we will continue to work with the State 
of New Mexico toward resolution of their issues as it relates 
to the 1968 right to the Central Arizona Project.
    I thank you.
    [The prepared statement of Governor Napolitano follows:]
Prepared Statement of Hon. Janet Napolitano, Governor, State of Arizona
    Chairman Murkowski, Chairman Campbell, and members of the 
committees, good morning, and thank you for the opportunity to present 
the views of the State of Arizona on S. 437, 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 S. 
437, 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. S. 437 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 S. 437, 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 S. 437.
     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 S. 437. 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;
   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 S. 437 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 S. 437, 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 lauds. 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 3000 
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 S. 437. 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 S. 437, 
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 
mainstem 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 S. 437, the Arizona Water 
Settlements Act of 2003.
                                 ______
                                 
                        Community's Water Rights
    The Community and the United States shall have the following rights 
to water, which shall be held in trust by the United States on behalf 
of the Community:

------------------------------------------------------------------------
                                        Amount
               Source                   (AFY)           Reference
------------------------------------------------------------------------
Underground Water...................    156,700  as set forth in
                                                  Paragraph 5.0
Globe Equity Decree Water...........    125,000  as set forth in
                                                  Paragraph 6.0
Haggard Decree Water................      5,900  as set forth in
                                                  Paragraph 7.0
Community CAP Indian Priority Water.    173,100  as set forth in
                                                  Subparagraph 8.3.1
RWCD CAP Water......................     18,600  as set forth in
                                                  Subparagraph 8.3.3
RWCD Surface Water..................      4,500  as set forth in the
                                                  RWCD Agreement
HVID CAP Water......................     18,100  as set forth in
                                                  Subparagraph 8.3.5
Asarco CAP Water \1\................     17,000  as set forth in
                                                  Subparagraph 8.3.4
SRP Stored Water \2\................     20,000  as set forth in
                                                  Paragraph 12.0
Chandler Contributed Reclaimed Water      4,500  as set forth in
                                                  Paragraph 18.0
Mesa Reclaimed Water Exchange             5,870  as set forth in
 Premium.                                         Paragraph 18.0
Chandler Reclaimed Water Exchange         2,230  as set forth in
 Premium.                                         Paragraph 18.0
New CAP NIA Priority Water..........    102,000  as set forth in
                                                  Subparagraph 8.3.2
    TOTAL...........................   653,500
------------------------------------------------------------------------
\1\ Subject to completion of ongoing negotiations between the Community
  and Asarco.
\2\ SRP has conditionally agreed to provide an average of five hundred
  (500) AFY of Blue Ridge Stored Water to the Community pursuant to
  Subparagraph 12.13. In the event the conditions in Subparagraph
  12.13.1 are satisfied, the amount of water listed in Subparagraph 4.1
  to be provided by SRP shall increase to twenty thousand five hundred
  (20,500) AFY and the amount of Underground Water listed in
  Subparagraph 4.1 shall be reduced to one hundred fifty-six thousand
  two hundred (156,200) AFY.


    Senator Kyl [presiding]. Senator Murkowski stepped out 
momentarily, so I will take the chair for a second. Senator 
Bingaman, the floor is yours.
    Senator Bingaman. Mr. Chair, did you want to go ahead and 
hear from John D'Antonio first?
    Senator Kyl. That might be better because we could join at 
least those two issues together. So, Mr. D'Antonio, if you 
would like to go ahead and make your comments now, then we will 
just combine both of you for our questions.

            STATEMENT OF JOHN D'ANTONIO, NEW MEXICO 
                  STATE ENGINEER, SANTA FE, NM

    Mr. D'Antonio. Mr. Chairman, thank you, committee members. 
My name is John D'Antonio. I am the State engineer for New 
Mexico and I very much appreciate the opportunity to appear 
before you today and provide comments on behalf of the State of 
New Mexico regarding the Arizona Water Settlements Act, S. 437.
    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 it will 
bring numerous benefits to water users and communities in the 
Gila River Basin. I commend Senator Kyl for introducing such 
comprehensive and much-needed 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 titles 1 and 2 
of the bill--both title 1 of the bill, the Central Arizona 
Project Settlement Act, and title 2, the Gila River Indian 
Community Water Settlements Act, bear directly on use of the 
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, and that is referred to as the 
UVD's, the agreement provided in title 2 of the bill, we want 
to ensure that New Mexico farmers in the Verdant Valley are 
treated fairly. Second, the authorization of a New Mexico unit 
under section 304 of the 1968 Act authorizing the Central 
Arizona Project must be fully protected and advanced. I will 
discuss these two matters in turn.
    Last year my office provided--participated in negotiating 
provisions of the UVD agreement. The core agreement calls upon 
the UVD's to reduce current irrigation by 3,000 acres in 
exchange for the ability to pump groundwater up to 6 acre-feet 
per year regardless of priority. The result in New Mexico is 
that water rights associated with up to 240 acres, which is 
about 8 percent of the currently irrigated acres in the Verdant 
Valley, would be extinguished.
    The State of New Mexico believes the UVD settlement in 
Senator Kyl's bill 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 of the 
New Mexico unit of the Central Arizona Project as provided in 
the 1968 Act. The U.S. Supreme Court decree limited the State 
of New Mexico to present and past uses of water. 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 with 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 the 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 4 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 Gila 
River water supply that results from the additional consumptive 
use of Gila River water in New Mexico. Amendments to S. 437 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, Bureau 
of Rec, Bureau of Indian Affairs, the Gila River Indian 
Community, the San Carlos Irrigation and Drainage District, and 
the Central Arizona Water Conservancy District to provide 
necessary amendments and related settlement documents to 
facilitate construction and operation of the New Mexico unit of 
the CAP.
    The following issues and tasks, have been--the following 
issues and tasks have been or remain to be resolved in whole or 
in part between Arizona and New Mexico in relation to the 
18,000 acre-foot exchange: Number one, New Mexico's initial 
concern was 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.
    Progress is being made on terms and conditions that will 
incorporate 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.
    Number three, 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.
    Number four, 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.
    Number five, 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 
severely--was approximately $70 million, the estimate inflated 
according to the consumer price index results in a cost total 
of over $300 million in today's dollars. However, we believe we 
can build a suitable project for approximately $220 million, 
including increased costs to accommodate the Federal 
environmental mandates. Discussions are ongoing regarding what 
costs would be supported under this proposal.
    Number six, 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 a senior exchange priority emanating from the 1968 
act. Discussions and studies are under way to determine the 
amount of exchanges with which New Mexico would share priority.
    Madam Chairman, we are working tirelessly to finish our 
negotiations with the State of Arizona, Indian tribes, and 
other water users. Once these discussions are complete and 
resolution 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.
    Senator Murkowski [presiding]. Thank you both. We 
appreciate your testimony here this afternoon.
    Mr. Guenther, throughout the hearings that we have had 
before this subcommittee, we certainly learned that in the 
West, groundwater pumping over many decades can deplete the 
groundwater resources which are connected to our river systems 
and the effects that this takes can sometimes be very difficult 
to realize or take decades to realize.
    How confident are you that the groundwater pumping and 
other land use practices in the Gila and the Salt River Basin 
will not materially change the hydrologic conditions upon which 
all these settlements are based? If you can just kind of give 
me the details on your answer, that would be appreciated.
    Mr. Guenther. Madam Chairman, I feel relatively certain 
that the continued use--the nice thing about groundwater in our 
Arizona in particular and certain areas of New Mexico is that 
it provides an excellent storage basin for being able to bridge 
the gaps in shortage years during our surface supplies. There 
is always a vacillation between groundwater and surface water 
use depending upon the local conditions of the watersheds and 
meteorological conditions that develop on a year to year basis. 
I would assume that that delicate balance would continue and 
that, while you would see swings in the use of surface water 
versus groundwater and vice versa, that there is no trend to 
suggest that one use would exceed the other.
    One thing I would hasten to add is that in Arizona I think 
we have come to the realization that for all practical purposes 
groundwater is a non-renewable resource due to the smaller 
amounts of rainfall that we have, and that if we are going to 
use that resource we need to do so wisely and in a safe yield 
fashion, so that we do not eventually become dependent on a 
resource that will be gone some day.
    But I am relatively confident, Madam Chairman, that the 
continued--the trend in usage will continue as it is now and 
that we will continue to try to build bridges over tribal 
litigation in the former settlements.
    Senator Murkowski. Thank you.
    Mr. D'Antonio, the Upper Valley Diverters in the Verdant 
Valley of New Mexico, are they going to support this settlement 
and if so how would the settlement affect the water uses in the 
Verdant Valley?
    Mr. D'Antonio. Madam Chairman, yes, the users in the upper 
valley, the Verdant Valley, are in support of this. The States 
worked closely with representatives of the Sunset Ditch and the 
New Model Canal regarding the UVD settlement and we have had 
several public meetings in the Verdant Valley, including 
domestic well users there, and they are in support of this 
agreement.
    Senator Murkowski. I have several other questions. I think 
what I will do, I also have some that Senator Domenici has 
submitted, and what I will do is submit these to be responded 
in writing.
    Senator Bingaman.
    Senator Bingaman. Thank you very much.
    Let me ask Mr. Guenther first. As I understand what is 
being proposed here, the settlement included in this 
legislation contains this provision authorizing groundwater 
pumping up to 6 acre-feet per acre in the upper valley. This 
would seem to allow an increase in the depletion. However, in 
your statement you say that you see this resulting in real 
reductions in water usage. Could you explain how granting 6 
acre-feet of water per acre can result in reductions in water 
use?
    Mr. Guenther. Senator Bingaman, currently the use per acre 
is an unknown because it involves both a use of surface water 
as well as a use of groundwater, both of which are measured to 
less than an accurate degree. What this does is it has assumed 
a beneficial use which is typical for agricultural production 
of 6 acre-feet per acre combined use, we believe that, 
depending upon what the source of that original use was, 
whether it be groundwater or surface water, that this will in 
turn be in most cases a reduction in applied water.
    But in addition to that, we are also retiring 3,000 acres 
of productive agricultural land at this time. So in essence you 
are retiring 18,000 acre-foot of water use there as well.
    I hope that answers your question.
    Senator Bingaman. Well, we really do not know what the 
amount of usage is at the current time, but we are assuming 
that, whatever it is, by going to 6 acre-feet per acre, we will 
still be seeing a decrease in water usage by virtue of the 
retirement of that 3,000 acres. Is that basically what you are 
saying?
    Mr. Guenther. Yes.
    Senator Bingaman. The Navajo Nation, you heard President 
Shirley describe the concern they have with section 104 that 
limits the existing authority that the Secretary of the 
Interior has to allocate CAP water to Indian tribes. Would the 
State of Arizona object to modifying this legislation in a 
manner that would preserve the Secretary's authority to 
allocate an amount that is needed to deal with the Navajo's 
concern for CAP water under this Navajo-Gallup project?
    Mr. Guenther. Senator Bingaman, we would not object to that 
consideration. We would certainly like to be a part of putting 
the language together, because this is a very fine needle that 
needs to be threaded, and whether it is lower basin water for 
use in an upper basin or an upper basin use in lower basin, we 
need to make some wording adjustment there.
    We have been working with the Navajo Nation and will 
continue to work with them in trying to identify sources of 
water for that, whether it be an allocation of the CAP, a 
purchase of a right on the main stem, or a potential CAP lease, 
are some of those areas that are currently being considered.
    Senator Bingaman. Let me ask John D'Antonio. You heard 
President Shirley's testimony also on this section 104 
limitation on authority of the Secretary of the Interior to 
allocate funds. Do you have a position or a view on that, which 
you would like to express or elaborate on here?
    Mr. D'Antonio. Madam Chairman, Senator Bingaman, my feeling 
is that we do have and we are ongoing our separate Navajo 
negotiations within the State of New Mexico. The issues are 
pretty complex in terms that there is an upper basin Colorado 
and a lower basin Colorado and some of the water in the 
settlement that we are talking about with New Mexico is within 
the upper basin States and we treat the two basins much 
differently in terms of separate allocations.
    In order for there to be any I guess dealing with the upper 
basin, you would have to deal with seven States, obviously, in 
looking at a different mechanism for water. Within our New 
Mexico section, we are taking care of the Gallup, New Mexico, 
water issues through a proposed pipeline in our negotiations.
    Senator Bingaman. Do you agree that there is a problem with 
us prohibiting the Secretary to allocate CAP funds, which is 
what one of the provisions in this proposed legislation is?
    Mr. D'Antonio. Madam Chairman, Senator Bingaman, I think 
there would be a problem in restriction, just because water all 
over the West is pretty limited and it limits the flexibility 
in terms of going after what available water there is.
    Senator Bingaman. Let me ask you about the same issue that 
I asked Mr. Guenther about. Are you satisfied that what is 
contemplated here with this 6 acre-feet per acre pumping being 
permitted, that this in fact does not impede New Mexico's 
ability to go ahead and use the Gila River water for its other 
needs, that we are not going to see an increased usage of water 
as a result of what is contemplated in the settlement here?
    Mr. D'Antonio. Madam Chairman, Senator Bingaman, in New 
Mexico there is only about 8 percent of that water usage in the 
Verdant Valley in terms of drying up the 240 acres, which 
represents 8 percent of the total 3,000 acres. That is the only 
portion that is in New Mexico. It is not necessarily are we 
concerned about impairing New Mexico's water users, but there 
is a provision that we do not create any economic injury or 
harm to any of the downstream Gila River water users that have 
seniority status. So we are working closely with the State of 
Arizona in terms of coming up with operational parameters once 
that project is implemented to assure that there is not 
additional harm or economic harm to any of the downstream 
users.
    Senator Bingaman. I will stop with that. Thank you, Madam 
Chair.
    Senator Murkowski. Thank you.
    Senator Kyl.
    Senator Kyl. Thank you, Madam Chair.
    Let me just make a couple of comments and again, if either 
one of you would like to respond--in fact, I am going to get 
into pretty deep water here if I speculate too much. So please 
correct me if I am wrong.
    With regard to the most recent point that Senator Bingaman 
made and then also going back to a question of Senator 
Murkowski regarding use of groundwater, and in particular this 
use of a combination of surface or groundwater for 6 acre-feet, 
it is my understanding that in this particular area, because 
the groundwater is pumped very near the river and because of 
the soils involved, that there is a very quick recharge of the 
aquifer and the underflow of the river, and that is an 
additional factor, I think, that is somewhat unique to this 
area that is not that unique to the area around the Gila River 
Indian Community.
    In other words, there is water taken out, applied to the 
land, and quickly finds its way back into the underflow of the 
Gila River. If I am incorrect on that, I think that are two 
water experts can tell me.
    But with respect to an area in central Arizona like the 
area which is being farmed today in Pinal County adjacent to 
the Gila River Indian Community, one of the benefits of the 
settlement is to get that pumping stopped or at least a large 
part of it stopped. That is one of the reasons why this 9-D 
debt is being forgiven, that those farmers would stop pumping 
water irrigating their lands and instead the Gila River Indian 
Community would accede to much of that water that is currently 
being used by the farmers in the area, non-Indian farmers, and 
that the damage to the aquifer of the Gila River Indian 
Community would then be ameliorated as a result of the fact 
that the farmers would no longer be pumping.
    And in that area you do not have that really quick 
recharge. In fact, as Mr. Guenther pointed out, it is a very 
long time in certain areas. So it depends on which area of the 
State we are talking about with respect to recharge.
    Then the other point I would like to make, I will go back 
and check--I do not think--I might be wrong in this, but I do 
not think the legislation limits the Secretary's authority to 
upper water--excuse me--upper basin allocations. If we are 
talking about an upper basin allocation for the Window Rock 
project, then that would be one thing.
    But with respect to the lower basin allocations, the reason 
why I think it is important to retain the connection to Indian 
water settlements is that obviously we are taking an amount of 
water and setting it aside for Indian settlements and the 
object here is to resolve all of these competing claims. That 
is why it is important for the Secretary to be able to have 
that water available to apply to Indian water settlements.
    If he were simply given or she were given the discretion to 
simply allocate water without those settlements, there could 
well not be enough water available for future Indian water 
settlements. Clearly, it was our intention that we have both a 
means of paying for and supplying water for those settlements.
    So I think there would be a very strong objection to 
disaggregating the ability of the Secretary to make water 
available for Indian water settlements in the lower basin and 
to somehow provide an authority to allocate water outside of 
those settlements. If I am incorrect in that, then please 
correct me.
    Mr. Guenther. Senator Kyl, I think you are very correct on 
those issues. But you did raise a point that I think I would 
like to help use to clarify, Madam Chairman, your question 
earlier. That is, do we see a change in type of use in these 
areas where these settlements are taking place? We are 
currently before--the Gila River is currently in an 
adjudication court. In that court, one of its highest 
priorities is going to differentiate between groundwater and 
surface water as to whether tributary sub-flows will be 
included or whether sub-flows in general would be included.
    To the degree that the court identifies sub-flows of the 
river as surface water, what is now perceived to be groundwater 
usage could be in fact surface water uses, which then would 
require a surface water right which might not exist, and 
therefore we might be weaning considerable numbers of people 
from the use of groundwater in proximity to the main stem of 
these rivers that are being adjudicated, just for a point of 
clarification.
    Senator Murkowski. Thank you.
    Senator Domenici, we have had a very good, very thorough 
hearing this morning, but do understand that you were occupied 
with other committees. But if you would like to make any 
comments--I did have an opportunity to read your opening 
statement into the record, so that is there. But we have heard 
some very good testimony regarding the settlements. If you 
would like to make a comment or questions of either Mr. 
Guenther or Mr. D'Antonio at this time, it would be most 
welcome.

       STATEMENT OF HON. PETE V. DOMENICI, U.S. SENATOR 
                        FROM NEW MEXICO

    The Chairman. Well, I thank you. Thank you very much.
    I have met with the New Mexico delegation yesterday, 
including the lawyer, who is a second generation lawyer. His 
father was a great lawyer in New Mexico. I told him his father 
was great, but I thought he was better. At least he was brief 
and articulate and very easy to understand. He said that he 
hoped his dad was that, too.
    In any event, without too much time with them, but just 
doing a little bit of the background thinking, I come up with 
the conclusion that little old New Mexico is going to get her 
share of this pot of money to make sure that we get our 18,000 
acres. And anybody that has in mind that this project is going 
through and we are not has it wrong, because we should have 
already had it paid for. It should have come out of the 
Colorado project clearly, from everything we read. As always 
seems to happen, at least two or three of the projects in New 
Mexico, they get left to the end.
    But fortunately, before things finish somehow or another 
they find their way back to having to have us involved. So my 
statement was prepared to make sure everybody understood that, 
and I came today to make sure that the Senators that were here 
understood that, in particular that you, Senator Kyl, that you 
understand. It is an expensive project, and it is expensive for 
our little piece, but our little piece is absolutely a must, 
because when you leave New Mexico out of the big project and it 
comes back later and it costs money, you cannot excuse it on 
the basis that it costs too much.
    So we will be supportive. I have been supportive of what 
you have been trying to do for 4 years and in the 
appropriations bill specifically helped. But now is the time 
when we see about others helping us.
    So thank you very much. To the New Mexicans, I am very glad 
that you came to the hearing and that you were well-prepared, 
and I thank you for the strength of your intellectual concerns 
and presentations, and it was good to b with you. Thank you.
    Senator Murkowski. Senator Kyl.
    Senator Kyl. Madam Chair, might I just make it clear, for 
those of you what might not know, that what Senator Domenici 
said is absolutely correct. He has been--he also serves as 
chairman of the Energy and Water Appropriations Subcommittee, 
and that subcommittee has had to, for the last 2 years and then 
this year as well, include a provision which protects the 
source of funding here for future use if we are able to get 
this legislation adopted.
    So he has already been helping to make this settlement work 
if we are able, ever able to get it passed. I have thanked him 
privately, but I will thank him publicly for his support again 
this year for making that possible.
    The Chairman. Madam President, Madam Chairwoman, is the 
president of the Navajo Nation here?
    Senator Murkowski. Yes, President Shirley was here earlier.
    The Chairman. Is he still here?
    Mr. Shirley. Yes.
    The Chairman. President Shirley, I just wanted to say 
hello, thank you very much for coming, and we hope we can make 
this work to all our mutual benefits.
    Mr. Shirley. Good afternoon, your honor.
    The Chairman. Thank you very much.
    Senator Murkowski. Thank you.
    Well, I appreciate the testimony of those who were able to 
participate on the panel this morning and now into the 
afternoon. And for those of you who have attended and for those 
that have come long distances, we appreciate all you have given 
us this morning.
    Because of the complexity of some of the issues and the 
delay in receiving some of the testimony that we did get today, 
the record on this legislation will remain, or for this 
subcommittee, will remain open until the close of business on 
Thursday for submission of additional questions, and then an 
additional 2 weeks for other materials that you would like to 
have submitted to the subcommittee for consideration.
    So with that, I thank the members, Senator Kyl, Senator 
Domenici, and for all those that came today. With that, we are 
adjourned.
    [Whereupon, at 12:27 p.m., the hearing was adjourned.]
                               APPENDIXES

                              ----------                              


                               Appendix I

                   Responses to Additional Questions

                              ----------                              

                     Arizona Department of Water Resources,
                                     Phoenix, AZ, October 14, 2003.
Hon. Lisa A. Murkowski,
Chairman, Subcommittee on Water and Power, Senate Committee on Energy 
        and Natural Resources, Washington, DC.
    Dear Madame Chairman Murkowski: Thank you for the opportunity to 
appear before the Subcommittee on Water and Power to present the State 
of Arizona's testimony on S. 437, the Arizona Water Settlement Act.
    I have reviewed the question submitted by Senator Bingaman and have 
enclosed my answer to his written question. Additionally, I enclosed an 
answer to the question that Senator Bingaman posed during my testimony. 
Finally, the Central Arizona Water Conservation District (who submitted 
separate testimony) and the Arizona Department Water Resources prepared 
supplemental information in response to the written and oral testimony 
of the San Carlos Apache Tribe about S. 437. The Cities of Phoenix, 
Chandler, Glendale, Goodyear, Mesa, Peoria, Tucson, and Scottsdale; the 
Maricopa Stanfield Irrigation and Drainage District, and the Central 
Arizona Irrigation and Drainage District have reviewed this 
supplemental response and those entities support the submittal of the 
supplemental response.
    I respectfully ask that my responses to questions and the 
supplemental response be made a part of the official hearing record. 
Again, I thank you for the opportunity to represent the State of 
Arizona before the Subcommittee.
            Sincerely,
                                       Herbert R. Guenther,
                                                          Director.
[Enclosures.]
                     Question From Senator Bingaman
    Question. It is my understanding that the Upper Valley settlement 
included in S. 437 includes provisions that authorize groundwater 
pumping up to an amount of 6 acre-feet acre. This would seem to allow 
for increased depletions in Upper Gila, but your statement sets out 
that the Upper Gila settlement will lead to ``real reductions in water 
use, to the benefit of the river's health.'' Can you briefly explain 
how the Upper Valley settlement is structured so that we can understand 
how it may lead to reduced depletions from the Upper Gila River?
    Answer. At dispute has been irrigated lands near decreed acreage 
that may or may not have been irrigated with Gila River water over the 
years. The settlement sets up a procedure to transfer decreed rights to 
some of the acres while retiring others. In essence this reduces the 
overall acreage being irrigated in the Upper Gila Valley. Finally, the 
settlement provides that the irrigation districts in the Upper Gila 
Valley will permanently retire 3000 acres of currently farmed decreed 
lands. This retirement will reduce diversions off the River and its 
conjunctive groundwater pumping. The settlement also provides that if 
an agreement is reached over the water rights of the San Carlos Apaches 
the irrigation districts will transfer another 2000 acres of decreed 
rights to the Apaches, and another 500 acres would be retired for the 
benefit of the Gila River Indian Community.
    Under the 1935 Globe Equity Decree the farmers in the Upper Gila 
Valley were granted a diversion right of 6 acre-feet per acre of 
decreed lands. Over the years the farmers supplemented this supply with 
groundwater. The Globe Equity Court has wrestled with the groundwater 
pumping issue for many years without clarifying the relationship 
between surface water and groundwater. Under the settlement the 6 acre-
feet per acre limit is on conjunctive use of surface and groundwater 
supplies. Therefore the farmers will be limited to a total amount of 
water regardless of source.
             Question From Senator Bingaman at the Hearing
    Question. The Navajo Nation has recommended that section 104 be 
amended to allow the Secretary to reallocate Central Arizona Project 
(CAP) water for drinking water purposes prior to congressionally 
approved water settlement with the Navajo Nation. Would you object to 
Congress making this change?
    Answer. We believe it is unnecessary to change that provision, and 
would be inconsistent with the purposes of the Title I CAP settlement. 
In the 1980s the Secretary made allocations of CAP water to Arizona 
Indian tribes without any requirement of settlement of water rights 
claims. The purpose of the restriction in section 104(a)(1)(B)(i) is to 
make the limited resource of CAP water available for future tribal 
water settlements. This provision was negotiated over several years and 
is a key to the CAP settlement. Such an amendment would require the 
agreement of the settlement parties. Various parties in Arizona have 
indicated they may no longer support S. 437 should this provision be 
deleted or amended to bypass the tribal water settlement requirement.
    We do not believe the water defined in section 104 best meets the 
needs of the Navajo Nation in terms of immediacy. Such water will not 
be available for reallocation until the final enforceability date after 
congressional passage. It is estimated that the necessary court 
approvals, state legislative actions, and funding requirements will 
place that date several years away, time enough to reach a tribal water 
settlement with the Navajo Nation.
    We are currently in negotiations with the Navajo Nation about their 
mainstem water claims. Through these negotiations and other talks we 
are exploring options with the Navajo Nation of other Arizona Lower 
Basin allocations and from Arizona's Upper Basin allocation to meet the 
Window Rock needs.
                                 ______
                                 
 Arizona Supplemental Testimony in Response to San Carlos Apache Tribe 
                           Written Testimony
    The written testimony submitted by the San Carlos Apache Tribe 
regarding S. 437 and H.R. 885 contained errors and misstatements, the 
most notable of which are set forth below (in italics) followed by a 
correct statement of the facts.
    ``The San Carlos Apache Tribe was intentionally and systematically 
excluded from the drafting of this Settlement, and from participating 
in the negotiations of the settlement agreements which have occurred 
over the last several years.'' (Statement of Kathleen W. Kitcheyan, 
page 3)
    Fact: The San Carlos Apache Tribe was not excluded from the 
negotiation or drafting of the Arizona Water Settlements Act or the 
Gila River Indian Community Water Rights Settlement Agreement. To the 
contrary, the Tribe was repeatedly invited to participate, but chose 
not to.
    ``Section 106(b) of the proposed legislation' would relieve CAWCD 
of $73,561,337 in capital debt to the United States for the CAP.'' (p. 
6)
    Fact: The legislation does not relieve CAWCD of any CAP repayment 
debt. The debt relieved in section 106(b) is debt owed by non-Indian 
irrigation districts for construction of their CAP distribution 
systems. That debt is being relieved to compensate the non-Indian 
irrigators for relinquishing their long-term CAP water rights to make 
that CAP water available to settle the water rights claims of Indian 
tribes such as the San Carlos Apache Tribe. As part of the 
relinquishment, CAWCD will pay $85 million of the irrigators' debt in 
addition to its CAP repayment debt.
    ``The proposed legislation permits CAWCD to continue discriminatory 
pricing of Indian CAP water, and to keep all of the power and other 
revenues to subsidize non-Indian use of CAP water to the lowest rates, 
thus making Indian use of CAP water virtually impossible.'' (p. 8)
    Fact: The legislation does not address the pricing of CAP water. By 
law and contract, CAWCD operates the CAP and sets rates for water 
delivery to non-Indian water users and for federal uses. The Secretary 
of the Interior (Secretary) then decides what delivery rate Indian 
tribes will pay; if the rate charged Indian tribes is less than the 
federal use rate established by CAWCD, then the Secretary is 
responsible for paying the difference. The CAP delivery rate 
established by CAWCD for federal uses is the same as that for non-
Indian CAP subcontractors and is tied to the actual cost of delivering 
water. As part of the Arizona Water Settlement Agreement, to which the 
United States is a party, CAWCD has promised to deliver to non-Indian 
farmers a limited quantity of CAP water for a limited time at less than 
the full cost of delivering that water. The non-Indian irrigators will 
receive low-cost pricing in return for permanently relinquishing their 
long-term rights to CAP water so that water can be reallocated to 
Indian tribes such as the San Carlos Apaches to facilitate Indian water 
rights settlements. The water to be delivered to those farmers is 
``excess'' CAP water--that is, water that is not ordered by those with 
long-term CAP contract entitlements. CAWCD's taxpayers will pay the 
remainder of the cost of delivering excess water to the non-Indian 
farmers. Indian tribes such as the San Carlos Apaches do not pay taxes 
to CAWCD. Power revenues are not used to subsidize CAP rates for non-
Indian water users. Far from making Indian use of CAP water 
``impossible,'' the Act will instead allow the use of Development Fund 
revenues to pay a substantial portion of the cost of delivering CAP 
water to Indian tribes, leaving the tribes to pay the same effective 
rate as non-Indian irrigators and far less than CAP municipal and 
industrial water users.
    ``The proposed allocation of CAP water in the Arizona Water 
Settlements Act increases the size of the Indian and M&I water 
categories, which in turn, increases the uncertainty of the entire pool 
of Indian and non-Indian CAP water pools.'' (p. 10)
    Fact: The Act does not increase the amount of Indian and M&I 
priority water; all CAP water reallocated under the Act will retain its 
existing priority. [See, e.g., section 104(a)(3)] The act will not 
``increase uncertainty,'' but rather will improve the reliability of 
the San Carlos Apache Tribe's CAP water in at least two respects. 
First, the Act enhances the reliability of the Tribe's M&I priority 
water by reducing the ability to convert lower priority non-Indian 
agricultural water to M&I priority, thereby diluting the M&I pool. 
Second, the new shortage sharing criteria in the Gila River Indian 
Community water rights settlement agreement will elevate the priority 
of the Tribe's ``Indian irrigation'' water to be the same as its 
``Tribal homeland'' water.
    ``The proposed legislation prescribes an entirely new system for 
use of the [Development] Fund which greatly assists CAWCD in its 
repayment obligation for the non-Indian portion of construction costs 
of the CAP (which will be reduced to $1.65 billion in the proposed 
legislation), assists in payment of OM&R expenses for non-Indians, and 
relegates, except for the benefits of GRIC, the Indian portion of 
construction costs, the funds for construction of Indian CAP projects, 
and payment of Indian OM&R to the leftover scraps, if any.'' (p. 11)
    Fact: Under existing law and contract, Development Fund revenues 
are applied each year against CAWCD's repayment obligation. The Act 
does not alter that arrangement in any respect and provides no 
additional ``assistance'' to CAWCD. Nor does the Act reduce CAWCD's 
repayment obligation for the CAP, which was established in a stipulated 
settlement of litigation in U.S. District Court between CAWCD and the 
United States. The Development Fund does not pay any OM&R expenses for 
CAP water delivered under contract with non-Indian CAP water users, 
either currently or under the Act. Indeed, the first priority use of 
Development Fund revenues under the Act is to pay the fixed OM&R costs 
of delivering CAP water to Indian tribes, such as the San Carlos Apache 
Tribe. No Indian tribe has ever been asked to repay one cent of the 
cost of constructing the CAP. By comparison, non-Indian water users, 
through CAWCD, have repaid the federal government nearly $700 million 
thus far. The Act does not alter the provisions of the Basin Project 
Act that authorize appropriations for the construction of CAP 
distribution systems for Indian tribes. The State of Arizona and CAWCD 
have supported appropriations necessary for the construction of those 
systems and will continue to do so. Far from relegating tribes to the 
``leftover scraps,'' the Act supplements traditional methods of finding 
the construction of Indian distribution systems by authorizing use of 
Development Fund revenues, in addition to appropriations, for that 
purpose.
    ``The proposed legislation would tie the development of 
infrastructure to deliver a Tribe's CAP water entitlement, obtained in 
the 1980 contract, to a final settlement of the Tribe's water rights.'' 
(p. 15)
    Fact: The Act would allow the use of Development Fund revenues to 
fund construction of CAP distribution systems for tribes that have 
Congressionally approved water rights settlements, such as the San 
Carlos Apache Tribe, as well as other specific tribes without 
settlements, such as the Yavapai-Apache. The Act does not preclude 
Congress from making appropriations to fund construction of CAP 
distribution systems for tribes that do not have final Indian water 
rights settlements.
    ``The new shortage sharing criteria creates a structure whereby 
Indians will be required to take a greater reduction in their CAP 
supplies than required by the current Indian CAP contracts and non-
Indians will bear less of the burden for the shortage than under the 
current non-Indian M&I contracts.'' (p. 16)
    Fact: The shortage sharing criteria in the Gila River Indian 
Community water rights settlement agreement reconciles incompatible 
provisions in the CAP Indian contracts, CAP non-Indian subcontracts and 
the Secretary of the Interior's 1983 Record of Decision regarding the 
allocation of CAP water. It does so in a manner that is fair and 
equitable to all CAP water users. The new shortage sharing criteria 
will not apply to any CAP Indian tribe, including the San Carlos Apache 
Tribe, unless that tribe agrees to be bound by them.
    ``Under Title II of the proposed legislation, when the CAP canal 
capacity is not enough to deliver all CAP Water Orders, GRIC will be 
the last required to take a reduction.'' (p. 17)
    Fact: There is no such provision in Title 2 (or elsewhere in the 
Act). If canal capacity is limited, the Gila River Indian Community is 
entitled to receive no greater percentage of its annual water order in 
any month than any other similarly situated CAP water user.
    ``The proposed legislation would eliminate the Secretary of 
Interior's discretion of determining when a shortage exists and the 
discretion of determining many of the terms of CAP delivery 
contracts.'' (p. 17)
    Fact: The Act will not affect the Secretary's discretion in 
determining whether a shortage exists on the Colorado River or in 
implementing CAP delivery contracts.
                                 ______
                                 
  Supplemental Testimony Submitted 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 SCAT's 6,000 acre-feet 
of water per year of water (afy) 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 
Tribes 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 afy 
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 afy. In every 
year since 1956, the UVDs 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 afy.
    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.S. 
        Sec. 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 for 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 afy of G.E. 59 decreed water, 7,300 afy 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. Gild 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 Tribes Water Supply from Gila River 
                    Will Be Further Diminished by Exchanges of CAP 
                    Water for Gila River Water Upstream of Tribes 
                    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 Tribes 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.Axiz.)
            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 be 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 allegation, 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 (Sec. 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 
Sec. 207(c). The only claims the government agrees that it will not 
pursue are those claims enumerated in Sec. 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
    2. 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 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.
    3. 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.
    4. Standard for Construing the Globe Equity Decree
    5. 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.
                                 ______
                                 
                               Gila River Indian Community,
                                     Sacaton, AZ, October 31, 2003.
Hon. Lisa A. Murkowski,
Chairperson, Water and Power Subcommittee of the Senate Committee on 
        Energy and Natural Resources, Washington, DC.
    Dear Senator Murkowski: Thank you for the opportunity to answer the 
follow-up questions you submitted after the Water and Power 
Subcommittee's September 30, 2003 hearing on S. 437, Arizona Water 
Settlements Act. The answers to the questions you submitted are 
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 S. 437.
            Best Regards,
                                            Richard Narcia,
                                                          Governor.
[Enclosure.]
 Answers to Questions Submitted to the Gila River Indian Community by 
  the Subcommittee on Water and Power, Senate Committee on Energy and 
                           Natural Resources
    Question. As you know, Secretary Norton has made wise water 
management a focus of her tenure. Do you believe this settlement is 
consistent with the Secretary's Water 2025 initiative?
    Answer. Yes. The Interior Department's 2025 program features six 
stated principles; which the Gila River Indian Community settlement 
satisfies in the following manner:
    1. Recognize and respect state, tribal, and federal water rights, 
contracts, and interstate compacts or decrees of the United States 
Supreme Court that allocate the right to use water. The Arizona Water 
Settlements Act, S. 437, builds upon existing decrees and federal laws. 
Most significantly, under S. 437 The Community and the United States as 
The Community's trustee agree that they will no longer assert a 
reserved water rights claim to the Gila River that exceeds 2 million 
acre feet of water year. In addition, Title I of the Settlements Act 
incorporates a settlement agreement approved by the United States 
District Court of Arizona. This agreement resolves significant 
conflicts over the repayment, operation, management of the Central 
Arizona Project (CAP) and, in the process; makes available water needed 
to settle long-standing Indian water rights claims. This additional 
water will be available to avoid further litigation, and guarantee that 
the United States satisfies its trust responsibility to Native American 
communities in Arizona.
    2. Maintain and modernize existing water facilities so they 
continue to provide water and power. The Settlement Act will provide a 
dependable revenue-stream to provide for the rehabilitation and 
completion of the portions of the San Carlos Irrigation Project that 
were promised to the Community over a half a century ago.
    3. Enhance water conservation, use efficiency, and resource 
monitoring to allow existing water supplies to be used more 
effectively. There are broad-ranging beneficial environmental impacts 
from The Settlement Act. First, the Settlement Act resolves the GRIC's 
ancient claims to water without having to rely on developing new 
sources of water but instead by using existing sources of water from 
Indian and non-Indian parties to the agreement, including extensive re-
use of waste water as a water management tool. Second the Settlement 
Act provides adequate supplies of water for non-Indian water users up-
stream and thereby reduces the incentive to pump groundwater and 
encourages the State to store groundwater by lowering the cost of CAP 
water, encouraging CAP water use over groundwater use. Finally, by 
providing certainty to local, state and tribal leaders, as well as 
industry and citizens, concerning future water use in Arizona, the 
Settlement Act provides the missing element of a coherent, long-term 
water framework for the State's future to enable the State to 
effectively manage on a long-term basis increasingly scarce water 
resources.
    4. Use collaborative approaches and market based transfers to 
minimize conflicts. The settlement is a comprehensive agreement 
negotiated over the last 13+ years among hundreds of individuals 
representing state, local, Native American, agriculture and industry 
stakeholders in Arizona and the United States Government. It settles 
ancient disputes over water rights, thereby allowing the United States, 
the State of Arizona, and the numerous Central Arizona Project (CAP) 
water users in Arizona including the tribes to avoid costly and 
protracted litigation of water rights and damage claims. It provides 
certainty to local, state and tribal leaders, as well as industry and 
citizens, concerning future water use in Arizona, thereby furnishing 
the missing element of a coherent, long-term water framework for the 
State's future to enable the State to effectively manage on a long-term 
basis increasingly scarce water resources.
    5. Improve water treatment technology, such as desalination, to 
help increase water supply. The settlement makes available additional 
water for valley cities and town, through leases, exchanges and 
reclamation agreements--including state-of-the-art waste water 
desalination projects--among the tribes and the numerous non-Indian 
water users in central Arizona and therefore provides increased 
certainty to existing users regarding rights to water allocated under 
the act.
    6. Existing water supply infrastructure can provide additional 
benefits for existing and emerging water needs. The water resource and 
infrastructure central to the settlement agreement is the 336-mile 
long, Central Arizona Project (CAP), a system of aqueducts, tunnels, 
pumping plants and pipelines that is the largest single source of 
renewable water supply in Arizona. Its primary purpose is to help 
Arizona conserve its scarce groundwater by importing water from the 
Colorado River, which is renewed annually by rainfall and snowmelt. The 
federal government, the State of Arizona and the Central Arizona Water 
Conservation District (CAWCD), which operates the CAP, have long 
disputed how CAP water should be allocated. The settlement among these 
parties resolves, once and for all, the allocation of CAP water, which 
will enable all CAP water users and State water authorities to plan for 
future water needs and economic development in Arizona and will provide 
a quantity of CAP water and infrastructure water delivery improvement 
that the Secretary of the Interior may use to resolve Indian water 
rights claims.
    Question. As you are aware, the Gila River originates in New Mexico 
where it is an important source of water to the State. Can you explain 
the steps you have taken to coordinate this settlement with the rights 
and claims the State can assert under existing law?
    Answer. As you are aware, New Mexico water users are implicated in 
the ongoing Globe Equity 59 enforcement proceeding in the United States 
District Court in Arizona. The Community has reached an agreement that 
incorporates Virden valley wafer users into our effort to settle the 
claims raised by the Community in that litigation. The Community was 
very pleased that the witness representing the State of New Mexico 
testified that the UVD settlement incorporated in H.R. 885 is a ``fair 
and reasonable compromise.''
    The Community also recognizes that the federal law that authorized 
the CAP also required an exchange on The Gila River to benefit New 
Mexico. The Community is engaged with appropriate Arizona and New 
Mexico parties in a diligent effort to address all of the concerns and 
objectives raised by the state of New Mexico. The Community believes 
that all of the issues raised by the State of New Mexico in these 
discussions can and will be resolved.
    The Community also testified before the Committee that it is 
willing to address any additional interstate issues that may arise in 
the congressional deliberations over this bill. Governor Richard Narcia 
has directed the individuals representing the Community to give these 
matters their full and immediate attention and resolution.
    Question. S. 437 relies on utilizing the Colorado River Lower Basin 
Development Fund as a guaranteed off-budget funding source to pay the 
costs associated with the Community's water rights settlement, other 
Indian water rights settlements, and other costs that will assist 
Indian tribes with putting their water rights to beneficial use.
    How important is this funding mechanism to implementation of the 
settlements in the bill?
    Answer. The use of the Lower Colorado River Basin Development Fund 
(LCRBDF) is absolutely fundamental to the Gila River Indian Water 
Rights Settlement Agreement (Settlement Agreement) as well as the other 
settlements and stipulations that are included in or contemplated by S. 
437.
    1. Obtaining the benefits of the Settlement Agreement immediately. 
In general, Indian water rights settlement legislation only becomes 
effective when the federal government has fully appropriated its share 
of the funds called for by the settlement. This process is both 
impractical and unworkable with respect to the Settlement Agreement 
because it is the largest Indian water rights settlement ever presented 
to Congress and because it affects millions of Arizona citizens. As a 
result, it is impractical to appropriate millions of dollars for the 
Settlement Agreement every year without obtaining the reciprocal 
benefit of the Community's waivers until the Settlement Agreement is 
fully funded. It is also unworkable to make millions of Arizona 
citizens wait for the Settlement to be fully-funded before the 
Settlement Agreement become enforceable.
    Relying on the LCRBDF avoids both of these problems because it 
provides the only practical means for the Community to give-up its 
reserved water right and other claims in exchange for a revenue stream 
that vests immediately and that is guaranteed. In other words, while 
the Community will not immediately receive all of the money provided in 
the settlement agreement, as long as the other conditions of 
enforceability are met, much of the federal revenue stream will be 
guaranteed as a matter of explicit federal law. As the Community made 
clear in its testimony to the Committee, the entire federal financial 
contribution to the Settlement Agreement will be used to provide water 
to the Community's land, the facilities to utilize that water, or to 
assist with paying the costs associated with using water on the Gila 
River Indian Reservation.
    2. Implementing and resolving the lawsuit involving the Central 
Arizona Project (CAP). The funding mechanism is also an important 
component of ensuring that the CAP portions of the legislation in Title 
I will operate as intended. Title I of S. 437 incorporates the 
framework of a stipulation approved by U.S. District Court of Arizona 
in Central Arizona Water Conservation District v. United States, (Civ. 
95-625-TUC-WDB-FH and Civ. 95-1720-PHX-FHC). This lawsuit involves a 
controversy concerning the use, allocation, and cost of water delivered 
by the CAP. Through the stipulated settlement, as incorporated in Title 
I of S. 437, The United States reserves 47% of the CAP water supply, 
federal government entered into a stipulation to resolve certain 
disputes involving the CAP, including for Indian water settlements. 
Through such settlements, Indian tribes give up free ``reserved right'' 
water supplies for an out-of-basin supply of CAP water. The stipulation 
recognizes that without a ``firm'' funding stream to address the 
Operation, Maintenance, and Replacement cost associated with CAP water 
delivered to Indian tribes, it will be difficult to obtain additional 
settlements with Indian tribes and it is unlikely that Indian tribes 
will be able to actually utilize the portion of CAP water reserved for 
their use by the stipulation.
    3. Settling other Indian water rights claims. Finally, the funding 
mechanism of this bill is the strongest possible affirmation that the 
federal government is serious about reaching a fair and binding 
settlement with every Arizona Indian tribe that is willing to negotiate 
in good faith. For the first time, the United States will be able to 
negotiate with Indian tribes in Arizona knowing that if they are able 
to reach a settlement, they will have the revenue, a certain quantity 
of CAP water, and the resources to guarantee that the operation, 
maintenance, and replacement costs associated with that water can be 
paid for both for this generation and the next generation. In other 
words, the use of the LCRBDF is necessary for both the settlements 
included in S. 437 as well as subsequent settlements that are 
contemplated by this legislation.
                              Appendix II

              Additional Material Submitted for the Record

                              ----------                              

                                   San Carlos Apache Tribe,
                                San Carlos, AZ, September 18, 2003.
Hon. Pete V. Domenici,
Chairman, Hart Senate Office Building, Washington, DC.

Re: Arizona Water Settlement Act S. 437 and H.R. 885--San Carlos Apache 
        Tribe
    Dear Senator Domenici: The San Carlos Apache Tribe respectfully 
requests an opportunity to testify and answer questions during the 
hearing currently proposed for September 30, 2003, at 10:00 a.m., and 
all related future proceedings on the above referenced matters.
    S. 437 adversely impacts the priority and reliability of our CAP 
water supply and potential funding of the Central Arizona Project 
Contract between the Tribe and the United States dated December 11, 
1980.
    It also unfairly allocates scarce federal water and financial 
resources to the proposed settlement which leaves the United States 
with inadequate ``wet'' water resources to meet the trust 
responsibility to provide an adequate water supply for the permanent 
Tribal Homeland for our Tribe and other Tribes in Arizona, and is 
contrary to the Apache Treaty of 1852, 10 Stat. 979.
    It interferes with our decreed rights under the Globe Equity No. 
59, and active litigation in Federal and State Court on the Gila River 
in Arizona and New Mexico.
    We are grateful for your courtesy and respectfully ask that you 
authorize your staff to arrange the details for our testimony with our 
attorney, Joe P. Sparks, Sparks, Tehan & Ryley, P.C., 7503 First 
Street, Scottsdale, AZ 85251, phone 480-949-1339 and fax 480-949-7587.
            Yours truly,
                                     Kathleen W. Kitcheyan,
                                                        Chairwoman.
                                 ______
                                 
                                     Latham & Watkins, LLP,
                                Washington, DC, September 26, 2003.
Hon. Pete V. Domenici,
Chairman, Energy and Natural Resource Committee, Washington, DC.
    Dear Senator Domenici:  I am writing in support of the Gila River 
Indian Water Rights Settlement which is included in Senate Bill 437 
introduced by Senators Kyl and McCain.
    The Gila River Settlement is the result of negotiations initiated 
by Senator Kyl some six years ago during my tenure as Secretary of the 
Interior. With support from the Department during both the Clinton and 
Bush administrations, Senator Kyl has managed to achieve a consensus 
supported by our Governor, the Arizona State Department of Water 
Resources, and cities, towns and irrigation districts throughout the 
State.
    As you are well aware, the equitable resolution of Indian water 
rights is always a complex, lengthy and difficult process; and that has 
been especially true in this instance, given the extensive Gila River 
claims grounded in both historical use and the reserved rights 
doctrine. This settlement has been achieved through a long process of 
give and take and it now represents a broad consensus of how our 
limited water resources can he used and developed for the benefit of 
all Arizonans.
    I urge your favorable consideration of this settlement.
            Very truly yours,
                                                     Bruce Babbitt.
                                 ______
                                 
                                Renaud, Cook & Drury, P.A.,
                                   Phoenix, AZ, September 29, 2003.
Senator Lisa Murkowski,
U.S. Senate, Water & Energy Subcommittee, Washington, DC.

Re: Smith Farms Pretzer Land and Cattle v. MSIDD & CAIDD CV 2001-00924
    Dear Senator Murkowski: I respectfully ask that this letter and its 
testimonial exhibits * be considered by the Water & Energy Subcommittee 
hearing on the Arizona Water Settlement Act bill (S. 437) scheduled to 
begin on September 30, 2003 at 10:00 a.m. I represent a number of 
plaintiffs who are involved in litigation in the Pinal County Superior 
Court who are suing to prevent the relinquishment of their allocated 
rights to Central Arizona Project water that is appurtenant to their 
lands by Section 8 of the Reclamation Act of 1902, as confirmed by 
decisions of the United States Supreme Court and by Arizona's supreme 
court.\1\ The lead plaintiffs are John Smith and Norman Pretzer, the 
president of plaintiff Pretzer Land & Cattle Company, Inc., who were 
the presidents of Maricopa-Stanfield Irrigation and Drainage District 
(MSIDD) and Central Arizona Irrigation and Drainage District (CAIDD), 
when those districts signed a subcontract with Central Arizona Water 
Conservation District (CAWCD) and the United States on November 21, 
1983. These contracts were executed for the primary and only purpose of 
delivering CAP water to these districts. MSIDD now has 87,142 irrigable 
acres that are now qualified to receive reclamation water and CAIDD has 
87,349 acres.
---------------------------------------------------------------------------
    * The exhibits have been retained in subcommittee files.
    \1\ Section 8 of the Reclamation Act of 1902 reads: ``The right to 
use of water acquired under the provisions of the Act shall be 
appurtenant to the land irrigated, and beneficial use shall be the 
basis, the measure, and the limit of the right.'' Nebraska v. Wyoming, 
325 U.S. 589, 65 S.Ct. 1332 (1945), after quoting from this section 8 
of the Reclamation Act, decided that the rights to reclamation water 
that ``were acquired by the landowners in the precise manner 
contemplated by Congress . . . are recognized . . . water rights of the 
landowners'' and ``[t]o allocate those water rights to the United 
States would be to disregard the rights of the landowners.'' 325 U.S. 
at 615, 616, 65 S.Ct. 1349, 1350. California v. United States, 438 U.S. 
645, 675, 98 S.Ct. 2935. 3001 (1978), held that not only does Sec. 8 of 
the Reclamation Act of 1902 ``provide for the protection of vested 
rights, but it also requires the Secretary [of the Interior] to comply 
with state law in the `control, appropriation, use or distribution of 
the water.' '' Arizona's supreme court in Day v. Buckeye Water Cons. 
Drainage Dist., 28 Ariz. 466, 478, 237 P. 639, 640 (1925), decided that 
the use by districts' landowners of water received from an irrigation 
district ``is appurtenant to the lands.''
---------------------------------------------------------------------------
    The Department of the Interior on March 24, 1983 (see 48 F.R. 
12446) allocated CAP water. The allocations were 309,828 acre-feet 
annually for Indian use and 640,000 acre-feet annually for municipal 
and industrial use. Deducting expected evaporation per year of 75,000 
acre-feet leaves, more or less, 475,000 acre-feet available for non-
Indian agricultural use. MSIDD was allocated 20.48 percent, which is 
approximately 97,200 acre-feet per year, and CAIDD was allocated 18.01 
percent, which is approximately 85,547 acre-feet per year. The reason 
for this letter is the legislation under consideration is an attempt to 
take away (respectfully, illegally) allocated water to MSIDD and CAIDD 
irrigators that desire to keep their allocations. A loss of allocated 
priority CAP water to lands in MSIDD and CAIDD will, in the future, 
cause them to become dust bowls. See the attached copies of affidavits 
of John Smith and Norman Pretzer, and in particular, their paragraph 6.
    Messrs. Pretzer and Smith worked hard to bring CAP water to the 
districts because they realized that without it the reduction in 
groundwater levels would eventually cause farming to be impossible. Mr. 
Smith, for MSIDD, on July 21, 1981, sent a letter to Mr. Eugene Heinz, 
regional director, Lower Colorado Regional Office, U.S. Bureau of 
Reclamation, that enclosed an application for a loan to provide part of 
the funds for a canal from the CAP Canal to land in MSIDD. This letter 
reads ``that the construction of the irrigation distribution system 
project'' would ``deliver urgently needed Colorado River water to the 
District from the facilities of the Central Arizona Project.'' This is 
consistent with the purpose of the Boulder Canyon Project Act that 
authorized construction of the Central Arizona Project that was ``[f]or 
the purpose of furnishing irrigation water and municipal water supplies 
to the water-deficient areas of Arizona. . . .'' Mr. Smith's such 
letter was followed by a report by the DOT's regional director that 
approved the application that recognized that CAP water is to serve as 
a replacement water supply, thus decreasing the rate of groundwater 
overdraft currently being experienced. CAIDD made a similar 
application.
    With the help of the United States, MSIDD in 1984 issued general 
obligation unlimited tax bonds in the sum of $26,000,000 and CAIDD 
issued general obligation unlimited tax bonds in the sum of $22,700,000 
in 1984 that paid approximately 20 percent of the cost of construction 
of their respective canals from the CAP Canal to their districts. 
Messrs. Smith and Pretzer, for their districts, executed the necessary 
bond documents and also, on November 21, 1993 (the same date they 
executed the above-referenced subcontracts) executed 9(d) contracts 
with the Department of the Interior for repayment of monies lent by the 
United States for approximately 80 percent of the construction of the 
districts' respective canals. Since completion of the CAP canal and its 
features and MSIDD's and CAIDD's canal, MSIDD and CAIDD have used all 
of the CAP water that was allocated to their Partners in 1983 by the 
Department of the Interior.
    The attached affidavits also explain the irreplaceable value of the 
right of irrigators in MSIDD and CAIDD, when they no longer desire to 
farm, to convert 1 acre-foot per municipal and industrial purposes that 
includes development for subdivisions.
    The 1983 allocations provided 173,100 acres of surface CAP water 
for irrigation to the Gila River Indian Community (GRIC) per year. GRIC 
does not use all of this water. The last version of the Arizona Water 
Settlement Act that I have seen provides GRIC with approximately 
102,000 acre-feet of priority CAP water per year and approximately 
95,500 acre-feet of priority CAP water per year to other tribes that is 
in excess of their 1983 allocations of priority CAP water. The primary 
source of this water is water allocated to MSIDD and CAIDD in the 1983 
allocations. The Arizona Water Settlement Act does not limit this 
priority CAP water taken away from MSIDD and CAIDD farmers for 
irrigation use or for municipal and industrial use by Indians on their 
reservations because it will not be used on their reservations. It will 
be used for leasing of water by the tribes, primarily for use in the 
greater Phoenix area by municipalities and water companies. 
Unfortunately, neither the Arizona Water Settlement Act nor any other 
documentation that is in existence limits the leasing price by the 
Indians. I have read articles that could be as high as $1,000 per acre-
foot per year. For all I know, the Indians will charge even more. Thus, 
the contemplated legislation could cause the Indian tribes to become 
richer than oil owner sheiks at the expense of landowners in the Pinal 
County Irrigation District served by MSIDD and CAIDD.
    It is doubtful that GRIC needs more surface water for irrigation or 
for municipal and industrial use on the reservation than it received in 
1983 allocation of 173,100 acre feet per year. However, if it does need 
more CAP water for use on its reservation, then this need should be 
fairly received from all existing users of CAP water and not primarily 
from landowners in MSIDD and CAIDD, where farming has been in existence 
for decades. There should be a reasonable and fair balance of the use 
of CAP canal water that will prevent most of Final County being no more 
than a dust bawl when all of CAP canal water is being used by others.
    I respectfully remind you that when the Secretary of the Interior, 
Gail Norton, Esq., attempted to take away CAP water from the Imperial 
Irrigation District, United States District Court Judge Thomas J. 
Whelan for the San Diego District Court on March 18, 2003 granted a 
preliminary injunction that restrained her and the United States from 
taking away CAP water that was being supplied by the Imperial 
Irrigation District for, the beneficial use of its irrigators.'
    Plaintiffs' position is if there is to be legislation that provides 
more water to Indians, that legislation should be limited to water for 
irrigation use or for municipal and industrial purposes on the 
reservation and not elsewhere, and it should protect the rights of 
those farsighted irrigators in MSIDD and CAIDD who wish to retain their 
precious ``gold,'' CAP surface water for a supplement to their farming 
and for municipal and industrial uses when they no longer desire to 
farm.
            Very truly yours,
                                                    J. Gordon Cook.
                                 ______
                                 
                                            City of Tucson,
                                    Tucson, AZ, September 30, 2003.
Senator Lisa Murkowski,
Chair, Subcommittee on Water and Power, Committee on Energy and Natural 
        Resources, U.S. Senate, Dirksen Senate Building, Washington, 
        DC.
Senator Ben Nighthorse Campbell,
Chair, Committee on Indian Affairs, U.S. Senate, Hart Senate Building, 
        Washington, DC.
    Dear Senators Murkowski and Campbell: The Mayor and Council of the 
City of Tucson strongly endorse and urge early passage of S. 437, the 
Arizona Water Settlements Act. The Act would ratify and implement the 
largest water settlements in Arizona history, resolving long standing 
disputes between the State of Arizona and the United States concerning 
the Central Arizona Project (``CAP'') and settling two significant 
Indian water claims cases. Title I of the Act is important to Tucson 
because it resolves the division of the CAP water between Indian tribes 
and non-Indian water users and confirms the amount of the State's 
repayment obligation for construction of the CAP. Tucson was not 
involved in the negotiation of Title II, the Gila River Indian 
Community Water Settlement, but the City supports this settlement as 
part of the larger water settlement package contained in the Act. Of 
particular importance to the City of Tucson is Title III of the Act, 
which would amend the Southern Arizona Water Rights Settlement Act of 
1982 so that the 1982 settlement between the Tohono O'odham Nation, the 
City of Tucson and others could, at long last, be implemented.
                                title i
    Title I of the Act deals with the repayment of the allocable costs 
of construction of the CAP by Arizona non-Indian beneficiaries and the 
division of CAP water between Arizona Indian tribes and non-Indian 
water users. Approximately 47% of the water will be allocated to Indian 
tribes and 53% will be allocated to non-Indian water users. Allocation 
of the water to Indian tribes is an important element of the settlement 
of pending Indian water rights claims. Title I contemplates that 
approximately 294,000 acre-feet of non-Indian agricultural (``NIA'') 
priority water will be relinquished by CAP NIA subcontractors and be 
available for reallocation. Of the relinquished water, 197,500 acre-
feet will be used by the U.S. for Indian water settlements, and the 
remaining 96,295 will be allocated to the Arizona Department of Water 
Resources (``ADWR'') for future allocation to non-Indian municipal and 
industrial (``M&I'') users in Arizona. Title I also assures the 
immediate allocation of currently un-contracted CAP M&I water to 
various M&I providers as recommended by the ADWR.
    In addition, Title I of the Act confirms the agreement between the 
U.S. and the Central Arizona Water Conservation District (``CAWCD'') 
that the obligation of CAWCD to repay the allocable costs of the CAP 
construction is $1.65 billion.
    Until the Central Arizona Project brought Colorado River water to 
Southern Arizona, the City of Tucson was one of the largest cities in 
the world entirely dependent on groundwater. Tucson holds the largest 
entitlement to CAP M&I water and is using that water to significantly 
reduce groundwater pumping in the Tucson basin. Over the next decades, 
the growth and economic health of Tucson will be depend to a large 
degree on the availability of CAP water to the City. Enactment of Title 
I will assure that Tucson receives an additional allocation of 8,206 
acre-feet of CAP M&I water. In addition, the City will have the 
opportunity to seek from the ADWR a reasonable share of the 96,295 
acre-feet of CAP NIA priority water that in the future will be made 
available to M&I users. As the holder of the largest allocation of CAP 
M&I water, the City of Tucson has been paying millions of dollars in 
CAP capital charges toward satisfying the CAWCD's repayment obligation 
and has a strong interest in having the amount of that obligation 
clearly established. For all of these reasons, the City strongly 
supports the enactment of Title I of the Act.
                               title iii
    In 1975, the Tohono O'odham Nation (then known as the Papago Tribe) 
and the United States filed suit against the City of Tucson and other 
water users in the Tucson basin claiming damages and seeking to enjoin 
groundwater pumping by the City and others in the basin. In 1982, 
Congress passed the Southern Arizona Water Rights Settlement Act of 
1982 (``SAWRSA'') to settle the water rights claims of the Nation in 
the Tucson basin. (The two portions of the Nation in the Tucson basin 
are the San Xavier District and the Eastern Schuk Toak District.) 
Subsequently, Indian allottees in the San Xavier district of the Nation 
objected to certain aspects of the settlement and opposed dismissal of 
the pending litigation. Consequently, implementation of SAWRSA did not 
occur.
    The San Xavier allottees objected to the 1982 settlement because 
the benefits of that settlement had not been divided between the Nation 
and the individual Indian allottees. During the past six years, the 
allottees and the Nation have negotiated an agreement for such a 
division and have worked with the City of Tucson and others to bring 
the settlement up to date.
    The basic elements of the 1982 settlement remain in place but are 
modified as follows:

   In the initial allocation of CAP water, the Nation had 
        received 37,800 acre-feet for use in the Tucson basin. The 1982 
        settlement added 28,200 acre-feet of water to be obtained by 
        the United States for use by the Nation but did not identify 
        the source of that water. Under S. 437, the United States will 
        use a portion of the relinquished NIA agricultural subcontract 
        water to supply the 28,200 acre-feet of additional water called 
        for in the 1982 settlement.
   Provisions have been added to allow the Nation to store 
        water underground consistent with the underground storage 
        provisions that were added to Arizona law after 1982.
   The 1982 Act empowered the Nation to lease water for 100 
        years for use within the Tucson Active Management Area. The 
        amendments in Title III allow the Nation to lease water for use 
        anywhere in the CAWCD service area so long as Tucson area users 
        are given a right of first refusal.
   The 1982 Act allowed the Nation to pump not more than 10,000 
        acre-feet per year of groundwater in the San Xavier District. 
        The amendment in Title III provides, as a condition of the 
        settlement, for the adoption by the Arizona Legislature of a 
        program to protect San Xavier groundwater from new groundwater 
        wells near the San Xavier borders. This program would be 
        similar to the state's current well spacing and protection 
        program for areas outside Indian reservations.

    The Nation's receipt of the additional water and many of the other 
benefits of the settlement will only occur after the dismissal with 
prejudice of pending water rights litigation.
                               conclusion
    For almost thirty years, the pendency of major Indian water claim 
litigation has been a threat to the long-term growth and stability of 
the Tucson area. Because of the importance of resolving these water 
claims, the City of Tucson and other state and local entities have made 
significant contributions to the SAWRSA settlement:

   Water--In the initial allocation of CAP water, the Nation 
        received 37,800 acre-feet for use in the Tucson basin. The 1982 
        settlement added 28,200 acre-feet of water to be obtained by 
        the United States for use by the Nation. The City of Tucson 
        contributed 28,200 acre-feet of effluent to the United States 
        to assist the U.S. in obtaining the additional water for the 
        Nation.
   Funds--The 1982 settlement requires the U.S. to pay the 
        costs of providing the 37,800 acre-feet of CAP water and the 
        28,200 acre-feet of additional water. For this purpose, a Co-
        operative Fund of $10.5 million was established, to be funded 
        50% by the U.S. and 50% by local interests. The City of Tucson 
        contributed $1.5 million to the Cooperative Fund; the State of 
        Arizona contributed $2.75 million and Tucson area mines and 
        Farmers Investment Company contributed $1 million.

    Enactment of Title III, the amended Southern Arizona Water Rights 
Settlement Act Amendments, will ensure the dismissal of the water 
claims litigation of the Nation and the San Xavier allottees. The 
entire Arizona Water Settlements Act is a matter of the highest 
importance to the City of Tucson and we urge its enactment.
            Sincerely,
                                          Robert E. Walkup,
                                                             Mayor.
                                 ______
                                 
                                                Zuni Tribe,
                                       Zuni, NM, November 12, 2003.
Senate Energy and Natural Resources Committee, Water and Power 
    Subcommittee,
Dirksen Senate Office Building, Washington, DC.
Senate Indian Affairs Committee,
Hart Senate Office Building, Washington, DC.
House Committee on Resources, Subcommittee on Water and Power,
Longworth House Office Building, Washington, DC.
    Dear Chairman Domenici, Campbell, and Calvert and Ranking Members 
Bingaman, Inouye, and Napolitano: I am writing to express support for 
the Gila River Indian Community's efforts to reach a comprehensive 
settlement of its water rights as provided in S. 437 and H.R. 885, the 
Arizona Water Settlements Act. Title II of the proposed legislation is 
the Gila River Indian Community Water Rights Settlement Act of 2003.
    As you know, the Zuni Indian Tribe Water Rights Settlement Act of 
2003, P.L. 103-34, is the most recent Indian water settlement enacted 
by Congress and, like S. 437, settles water rights claims in the State 
of Arizona. Our Zuni settlement is unique because of the limited 
function of the Arizona Reservation as the site for some of our most 
significant religious practices. However, because the Gila River 
settlement contains certain provisions that are similar to those found 
in the Zuni water settlement legislation, I wanted to offer a few 
thoughts for your consideration.
    Similar to S. 437, the Zuni water settlement legislation contains 
certain waivers of claims against the United States and other parties 
(including certain water quality claims), limitations on Arizona lands 
that can be placed into trust status absent subsequent acts of 
Congress, and limited waivers of sovereign immunity. During the course 
of the Zuni water settlement negotiations, Zuli's water rights 
negotiation team and the Tribal Council were faced with some very 
difficult, even painful choices, about how to proceed. Zuni deliberated 
long and hard about these and other provisions and concerns. 
Ultimately, however, my Tribe determined that the overall benefits of 
its settlement far outweighed the difficulties presented by these 
concessions.
    The Gila River Community's settlement contains somewhat similar 
provisions. We are aware from our own experience of the difficult 
choices the Community faced in working to reach a settlement that it 
and the other Arizona parties could support. These decisions require a 
great deal of soul-searching. Under the leadership of Governor Richard 
Narcia and others, the Gila River Indian Community has arrived at a 
settlement that it believes furthers its interests and goals. In my 
view, Congress should defer to the Community's decisions on these 
difficult matters, much as it deferred to Zuni's determination that our 
settlement, taken as a whole, was in our best interest.
    Zuni also faced concerns raised by other parties that our 
settlement might impede their own settlement efforts or set a harmful 
precedent. However, each tribal government must exercise its powers of 
self-determination to make choices based upon its own needs, and 
circumstances and decisions will differ from one tribe to another. In 
that regard, the decisions (and, perhaps, concessions) of the Zuni 
Tribe or the Gila Community should not be viewed as restricting other 
tribes or the federal government from making different choices or 
pursuing different kinds of settlements based on their own needs and 
circumstances. Each settlement is unique. Zuni strongly supports the 
efforts of its neighboring tribes in Arizona and New Mexico to settle 
their water rights claims where such a settlement is desired. We were 
also encouraged to hear that Governor Narcia has indicated he is open 
and receptive to meeting with the San Carlos Apache Tribe, and we 
support those efforts.
    The Zuni Tribe wishes specifically to express its support for the 
Navajo Nation's suggestion that means for meeting the domestic water 
supply needs of Window Rock, Arizona communities should also be 
incorporated within the framework established by the proposed 
legislation. There is no more fundamental a need for water than that 
used for drinking, hygiene, and other domestic purposes. I have 
indicated to President Shirley that we support this important 
objective, and I deeply hope that a means for accomplishing this end 
will soon be produced.
    Finally, the Zuni Tribe is also very encouraged to hear that there 
is a consensus that the consideration of the Arizona Water Settlements 
Act provides an opportunity to fulfill New Mexico's right to increase 
its use of the Gila River by 18,000 acre-feet per year, as promised by 
the 1968 Colorado River Basin Development Act. The Zuni Tribe supports 
the State of New Mexico's effort to fulfill this long-awaited promise.
    Thank you for providing me with the opportunity to express support 
for this legislation and the Gila River Indian Community's efforts to 
settle their water rights.
            Sincerely,
                                    Arlen P. Quetawki, Sr.,
                                                          Governor.
                                 ______
                                 
Joint Statement of Austin Nunez, Chairman, San Xavier District Council 
  and Julie Ramon-Pierson, President, San Xavier Allottees Association
    Chairman Murkowski, Chairman Campbell, and member of the 
committees, thank you for the opportunity to provide written testimony 
for the record on S. 437 and H.R. 885, the Arizona Water Settlement 
Act.
    Title III of the Arizona Water Settlements Act contains amendments 
to the Southern Arizona Water Rights Settlement Act of 1982, P.L. 97-
293, 96 Stat. 1261 (1982). These amendments are crucial to finalizing 
and implementing the Southern Arizona Water Rights Settlement Act 
(SAWRSA). The San Xavier District of the Tohono O'odham Nation, and the 
San Xavier Allottees Association, wholeheartedly support the enactment 
of the Arizona Water Settlements Act, including Title III, the 
amendments to SAWRSA.
         i. brief history of the san xavier water rights issue
    Our ancient Tohono O'odham village of Wa:k has been located on the 
banks of the Santa Cruz River south of Tucson since time immemorial. In 
the Tohono O'odham language, ``Wa:k'' means ``place where the water 
goes under.'' This is a reference to the fact that the reach of the 
Santa Cruz River at and above the village of Wa:k flowed perennially, 
but sank into the sand just below the village during certain parts of 
the year. The River disappeared due to certain geologic conditions at 
this point.
    The San Xavier Indian Reservation was established by Executive 
Order in 1874 specifically to protect the lands and resources of our 
Wa:k Village from white settlement and appropriation. The Main (Sells) 
Papago Reservation was not established by Executive Order until 1916. 
The two executive order reservations are not adjacent. In 1937 the 
Papago Tribe (now Tohono O'odham Nation) adopted a constitution under 
the Indian Reorganization Act of 1934, which incorporated the San 
Xavier Reservation as one of eleven districts (local units of 
government) of the Papago Tribe. At no time was title to the lands and 
resources of the San Xavier Reservation ever conveyed to the Papago 
Tribe or the Tohono O'odham Nation.
    The perennial water supply for our village was used for domestic 
water supply, livestock and approximately 2300 acres of irrigated 
agriculture. River flows began to diminish as early as the 1890s due to 
non-Indian appropriations of surface flows and groundwater pumping. The 
River finally disappeared completely in the 1960s due primarily to the 
overdrafting of groundwater by the City of Tucson. The groundwater 
level on our Reservation dropped steadily until we had to completely 
abandon irrigated farming in 1986 because our irrigation wells became 
unproductive. The actual damages to our community and our community 
members and farmers resulting from the loss of our agricultural economy 
and the destruction of approximately 3500 acres of native mesquite and 
cottonwood forest in the river floodplain have never been computed or 
compensated.
    The case of United States v. Tucson was filed in 1975 to enjoin the 
City from continuing to appropriate and deplete our groundwater supply. 
It was filed as a class action by the United States as Indian trustee 
on behalf of the Papago Tribe and all individual Indian trust allotment 
landowners on the San Xavier Reservation, and included two named class 
representative plaintiffs. 98% of the land with appurtenant water 
rights encompassed by the litigation is individually owned. The 1982 
Southern Arizona Water Rights Settlement Act was intended to resolve 
the litigation. It was unsuccessful because the individual Indian 
allotment landowners were not included in the settlement negotiations, 
and insufficient benefits were allocated to the San Xavier District and 
the landowners in the settlement. The class action representative 
plaintiffs refused to consent to the dismissal of United States v. 
Tucson, and initiated the negotiation of amendments to SAWRSA. The 
landowners also filed two additional lawsuits to protect and fully 
assert their claims-- Alvarez v. Tucson and Adams v. United States. All 
three lawsuits will be dismissed to finalize and implement SAWRSA as 
amended.
    The individual landowners, the San Xavier District and the Tohono 
O'odham Nation government (formerly the Papago Tribe) first negotiated 
a resolution of their differences, and then entered into broader 
negotiations with other affected parties for acceptable amendments to 
SAWRSA that benefit everyone. These amendments are Title III of the 
Arizona Water Settlements Act. The major provisions of both the 1982 
SAWRSA and Title III are summarized in the testimony of Vivian Juan-
Saunders, Chairperson of the Tohono O'odham Nation.
            ii. san xavier district and allottees' position
    At the outset of negotiations to amend SAWRSA, the San Xavier 
Allottees Association and the San Xavier District identified the 
following negotiation objectives:

          A. Permanently restore and stabilize the groundwater table 
        beneath the San Xavier Reservation.
          B. Restore the flow of water in the Santa Cruz River on the 
        San Xavier Reservation.
          C. Restore up to 3500 acres of the Santa Cruz River riparian 
        habitat, including the historic mesquite and cottonwood forest.
          D. Confirm a ``first right of beneficial consumptive use'' to 
        a total of 35,000 acre-feet annually of SAWRSA CAP water and 
        groundwater to the San Xavier District subject to a Water 
        Management Plan and regulation under the Tohono O'odham Nation 
        Water Code. The San Xavier District, the San Xavier Cooperative 
        Association and the allottees could pump or take direct 
        delivery of this water for beneficial consumptive uses on the 
        San Xavier Reservation only.
          E. Any part of the 35,000 acre-feet annual allocation not 
        consumptively used by the District Coop Farm allottees on the 
        San Xavier Reservation could be used for recharge to 
        Reservation aquifers.
          F. 15,000 acre-feet of SAWRSA CAP water would be subject to 
        the use and allocation of the Tohono O'odham Nation under the 
        Nation's Water Code, and could be leased off-Reservation for 
        the sole financial benefit of the Nation on a call-back basis. 
        Any part of the 35,000 acre-feet of annual allocation to the 
        District not required by the District Coop Farm allottees could 
        also be leased for the financial benefit of the Tohono O'odham 
        Nation.
          G. The Tohono O'odham Nation would receive in lieu 
        groundwater recharge credits of 10,000 acre-feet annually, plus 
        direct recharge credits for whatever amounts of District and 
        Nation SAWRSA CAP water is recharged, less the amount of 
        groundwater consumptively used within the District. Such 
        credits could be used or sold by the Nation for its sole 
        financial benefit.
          H. The Nation could use up to 16,000 acre-feet of SAWRSA CAP 
        water not required by the San Xavier or Schuk Toak Districts 
        for the San Lucy Farm.
          I. ASARCO to stop pumping San Xavier Reservation groundwater 
        pursuant to its leases and use SAWRSA CAP water provided by the 
        Nation as a substitute water supply.
          J. The 9B Farm would be cashed-out to create a fund 
        representing past damages for trespass to San Xavier water 
        rights. The fund would be held in trust by the San Xavier 
        District to be used for the benefit of its members, residents 
        and allottees. The fund would be used for agricultural and 
        water development projects, and social services for San Xavier 
        District members, residents and allottees.
          K. The United States' obligations to rehabilitate and extend 
        the San Xavier Cooperative Farm based upon an extended Farm of 
        2289 acres could be carried out by or under contract with the 
        Bureau of Reclamation, or contracted to the San Xavier 
        Cooperative Association.
          L. $5 million each for working capital for the San Xavier 
        Coop Farm and the Schuk Toak Farm would be provided from the 
        proceeds of leasing water to Tucson and the existing SAWRSA 
        Sec. 313 Cooperative Fund.
          M. The Allottees District would have access to the Nation's 
        SAWRSA CAP water in addition to the Allottees' 35,000 acre-feet 
        of SAWRSA CAP water if additional water is required by the 
        District Coop Farm allottees for beneficial, consumptive uses 
        on the Reservation.
          N. San Xavier Reservation groundwater and SAWRSA CAP water 
        recharge would be managed so as to guarantee a permanent supply 
        to the District allottees of the maximum possible quantity of 
        high quality local groundwater.
          O. Damages for non-delivery of SAWRSA CAP water would go to 
        the on Reservation users of such water.
          P. Per capita distributions of any of the funds would be 
        prohibited.
          Q. United States v. Tucson, Alvarez v. Tucson and Adams v. 
        United States would be dismissed pursuant to settlement 
        agreements and the SAWRSA amendments. The City of Tucson and 
        the other defendants would be asked to commit to a water 
        management plan for the Upper Santa Cruz River Basin that would 
        guarantee that the groundwater aquifer on and near the San 
        Xavier Reservation would not be depleted in the future.
          R. The Nation and the Schuk Toak District would have the 
        right to pump a maximum of 3200 acre-feet of groundwater per 
        year in the Eastern Schuk Toak Reservation. The Nation would 
        acquire in lieu groundwater recharge credits for any water not 
        pumped. These credits could be sold by the Nation for use off-
        Reservation.

    Most of these objectives are met by the SAWRSA Amendments. Notably, 
the objectives stated in items a, b and c will not be met. Although the 
San Xavier District has undertaken a riparian habitat restoration 
project in the Santa Cruz River, the restoration of river flows and 
large areas of the native riparian habitat appears to be impossible. 
These important resources and amenities have been permanently 
destroyed.
   iii. water rights ownership and allocations as between the tohono 
    o'odham nation and individual indian trust allotment landowners
    The individual Indian trust allotment landowners on the San Xavier 
Reservation, and the San Xavier District Council, opposed the dismissal 
of United States v. Tucson and the implementation of the 1982 SAWRSA 
primarily because the water rights ownership interests of the 
individual Indian trust allotment landowners were not recognized in 
SAWRSA and their right to use SAWRSA water supplies and groundwater on 
their allotments was not expressly protected. Additionally, there was a 
critical imbalance in the allocation of settlement benefits as between 
the Tohono O'odham Nation on the one hand, and the Indian allotment 
landowners and the San Xavier District on the other. Despite the loss 
of the traditional Wa:k Village agricultural economy, the loss of 
perennial flows in the Santa Cruz River, and the complete destruction 
of the community's large native cottonwood and mesquite bosque and 
riparian habitat, the settlement included no past damages for the 
landowners or the community. The lack of an element of past damages in 
the settlement has been remedied by giving the San Xavier District the 
option to cash-out the federal obligation under the 1982 Act to build a 
new, irrigated farm on the San Xavier Reservation to create a trust 
fund to provide governmental services and economic development.
    Sections 307(a)(1)(G) and 308(a), (b) and (c) of S. 437/H.R. 885 
are intended to quantify and statutorily guarantee a just and equitable 
distribution of water on the San Xavier Reservation and guarantee the 
availability of SAWRSA Central Arizona Project water and local 
groundwater to individual Indian trust allotment landowners for any and 
all beneficial uses, although the Tohono O'odham Nation and the San 
Xavier District will continue to exercise their respective jurisdiction 
and authority under tribal law to regulate the use and allocation of 
water on the Reservation. Although the authority of the Secretary of 
the Interior under 25 U.S.C. Sec. 381 ``to secure a just and equal 
distribution . . . [of water] among the Indians residing upon any such 
reservations: . . . .'' is limited to ensuring a just and equal 
distribution of water for irrigated agriculture, the intent of the 
drafters of Section 307(a)(1)(G) is to ensure the availability of 
SAWRSA settlement water to individual Indian trust allotment landowners 
for any and all beneficial uses.
                       iv. groundwater protection
    We are not confident that the water table will be restored and 
stabilized on the San Xavier Reservation because of continuing 
groundwater pumping by the City of Tucson in adjacent areas and because 
of continuing regional groundwater decline. The Tohono O'odham 
Settlement Agreement will implement SAWRSA as amended. Exhibit 8.8 to 
the Settlement Agreement is a proposed concept for a Groundwater 
Protection Program for the vicinity of the San Xavier Reservation to be 
implemented under state law as part of the SAWRSA settlement. The 
Tohono O'odham parties have not accepted all of the provisions of the 
concept as described in Exhibit 8.8 at the time of introduction of S. 
437/H.R. 884. We have proposed a different version of the Concepts for 
Groundwater Protection Program, but it has not yet been accepted by the 
other parties. Our position on the Groundwater Protection Plan is 
attached to this testimony.
                                 ______
                                 
      Memorandum of Luebben, Johnson & Young, LLP, Albuquerque, NM
    Prior to March, the Tohono O'odham Nation SAWRSA Task Force had 
never carefully reviewed or reacted to Exhibit 8.8 to the Tohono 
O'odham Settlement Agreement. This is still an open issue. The TON 
SAWRSA Task Force has drafted the following as an alternative concept 
proposal for the SAWRSA Groundwater Protection Program.
                              Exhibit 8.8
              concepts for groundwater protection program
    The terms used herein shall have the meanings defined in paragraph 
2 of the Tohono O'odham Settlement Agreement. In addition, the term 
``Non-exempt Well'' means a well that is not an ``Exempt Well'' and the 
term ``Replacement Well'' means a well no further than 660 feet from an 
existing well being replaced that will not annually withdraw in excess 
of the historical withdrawals from the original well or as that term is 
defined in future ADWR well-spacing regulations if the distance of the 
replacement well from the original well is less than 660 feet.
    The basic elements of the Groundwater Protection Program 
(``Program'') referenced in paragraph 8.8 of the Tohono O'odham 
Settlement Agreement are as follows:

          1. Written consent of the Nation shall be required for the 
        permitting of any new Non-exempt Well, for which the projected 
        10-feet-within-5-year drawdown contour (as determined by a 
        well-spacing analysis done under state regulations by ADWR) 
        intercepts the border of the San Xavier Reservation.
          2a. In addition to the requirements of paragraph 1, an 
        applicant for a permit to drill a proposed well of over 300 gpm 
        [note: approx. 500 afa] capacity, or for a group of wells of 
        over 300 gpm total capacity, to be located within two miles of 
        the exterior boundaries of the San Xavier Reservation shall 
        submit to ADWR both of the following; or, in the alternative, 
        the Nation's written consent:

                  i. Evidence based on annual water level data 
                collected during the five years prior to the permit 
                application date showing:
                          I. if the proposed well is within one mile of 
                        the Reservation, that the water levels at the 
                        proposed well site(s) are declining at less 
                        than an average rate of one foot per year; or
                          II. if the proposed well is within two miles 
                        of the Reservation, but is further than one 
                        mile from the Reservation, that the water 
                        levels at the proposed well site(s) are 
                        declining at less than an average rate of two 
                        feet per year;
                  ii. Evidence showing that a projected 5-feet-within-
                5-year drawdown contour does not intercept the border 
                of the San Xavier Reservation.

          2b. In determining the average annual water level change at a 
        proposed well site and the projected drawdown effect of the 
        proposed well(s) for purposes of obtaining a permit under this 
        paragraph, the water-level effects of underground storage 
        facilities within the 2 mile limit and permitted recovery wells 
        within that limit, except the water-level effects at the site 
        of the proposed well of storage at said underground storage 
        facilities by or for the direct benefit of the applicant within 
        the 2 mile limit, shall be excluded.
          2c. For purposes of this paragraph, if the same applicant 
        submits an application for a permit to drill a well within 
        eighteen months of a previous application, the applications 
        shall be aggregated in terms of capacity and considered as an 
        application for a group of wells.
          3. Upon receiving an application for a permit to drill any 
        Non-exempt Well located within two miles of the San Xavier 
        Reservation, the ADWR shall mail to the Nation written notice 
        of the application along with a copy of thereof. The Nation 
        shall have 60 days after mailing of the written notice to file 
        an objection to the application. The grounds for an objection 
        are that the application fails to meet the standards required 
        herein or that the granting of the permit will violate these 
        standards. If objection is made, a hearing shall be held on the 
        application within 60 days of receipt of the objection. The 
        Nation shall be a party in such hearing. A recommendation based 
        on the hearing shall be made by the hearing officer within 30 
        days after the close of the hearing. Within 30 days of the 
        recommendation, the Director of ADWR (``Director'') shall 
        render his decision on the application. Any decision of the 
        Director granting or denying a permit after objection by the 
        Nation shall be subject to review by the Gila River 
        Adjudication Court by an aggrieved party filing an application 
        for review with the court within 30 days of mailing of the 
        written notice of the decision of the Director on the 
        application.
          4. An applicant for a ``Replacement Well'' within two miles 
        of the San Xavier Reservation shall be exempt from the 
        requirements set forth in paragraphs 1 and 2 except that ADWR 
        shall give notice thereof and provide the opportunity to object 
        to the application and obtain review of the Director's decision 
        thereon as provided in paragraph 3.
          5. An applicant for a permit to drill an Exempt Well shall be 
        exempt from the requirements set forth in paragraphs 1 and 2.
          6. An applicant for a permit to drill a recovery well within 
        two miles of the exterior boundaries of the San Xavier 
        Reservation and within one mile of an underground storage 
        facility shall be exempt from the requirements set forth in 
        paragraphs 1 and 2 so long as the well is permitted only to 
        recover storage credits accrued for water stored at that 
        facility. The San Xavier Reservation shall have the same status 
        as a service area and the Nation shall have the same status as 
        a city, town, private water company or irrigation district 
        under A.R.S. Sec. 45-834.01.
          7. This Program need not be described in detail in the SAWRSA 
        Amendments, but the enactment of state legislation implementing 
        the Program and authorizing ADWR's role in the Program will be 
        a condition precedent to the Enforceability Date.
          8. The judgment approving the Tohono O'odham Settlement 
        Agreement should incorporate the salient provisions of this 
        Program and the settlement will be made contingent on the 
        passage of state legislation implementing the Program and 
        authorizing the Director to enforce the Program as part of an 
        approved Indian water rights settlement. Review of decisions of 
        the Director will be part of the continuing jurisdiction of the 
        Gila River Adjudication Court.
                                 ______
                                 
Statement of the Cities of Chandler, Glendale, Goodyear, Mesa, Peoria, 
                           and Scottsdale, AZ
    Chairman Murkowski, Chairman Campbell, and members of the 
subcommittees, the Arizona Cities of Chandler, Glendale, Goodyear, 
Mesa, Peoria and Scottsdale (``Cities'') appreciate the opportunity to 
submit this testimony in support of Senate Bill 437 (``S. 437''). The 
Cities collectively represent more than 1.6 million people within the 
Phoenix metropolitan area of Maricopa County, Arizona. S. 437 is very 
important to the Cities and other water users throughout Arizona.
    S. 437 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. S. 437 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.
    S. 437 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. S. 437 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 S. 437. The 
settlement of the CAP issues reflected in Title 1 of S. 437 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. S. 437 resolves those 
disputes and provides a final allocation of CAP water between federal 
and state interests in Arizona. Under Title 1 of S. 437, 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 S. 437 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 S. 437 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.
    S. 437 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.
    S. 437 also resolves significant claims against the federal 
government, some of which involve only the federal government and the 
Gila River Indian Community. S. 437 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 S. 437 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 Senate Bill 
437 resolves are serious problems, both for Arizona and the federal 
government. S. 437 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 S. 437 and appreciate the opportunity to provide our written 
testimony to you.
                                 ______
                                 
 Statement of John F. Sullivan, Associate General Manager, Water Group 
   Salt River Valley Water Users Association and Salt River Project 
              Agricultural Improvement and Power District
    Chairman Murkowski, Chairman Campbell and members of the 
committees, thank you for the opportunity to submit testimony in 
support of S. 437, 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 S. 437 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 these Committees 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 these Committees 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.*
---------------------------------------------------------------------------
    * The attachments have been retained in subcommittee files.
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    First. The Settlement recognizes the right of the United States, 
the Community, its members and allottees under the Haggaa 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 per cent 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 diet 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 S. 437, 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 S. 437 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 these Committees to recommend passage of the 
bill to the full Senate.
                                 ______
                                 
      Statement of George Renner, President, Board of Directors, 
              Central Arizona Water Conservation District
    Chairman Murkowski, Chairman Campbell, and members of the 
committees, the Central Arizona Water Conservation District is pleased 
to offer the following testimony regarding S. 437, 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 of 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 S. 
437.
            title 1--central arizona project settlement act
    Title 1 of S. 437 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
    To provide water for Indian water rights settlements, Title 1 
ratifies the Arizona Water Settlement Agreement among the United 
States, CAWCD and the Arizona Department of Water Resources. That 
agreement provides a framework under which non-Indian agricultural 
water users with long-term contract entitlements to CAP water will be 
allowed to relinquish their CAP entitlements in return for, among other 
benefits, relief from federal debt they incurred under section 9(d) of 
the Reclamation Project Act of 1939. Collectively, that 9(d) debt 
totals more than $158 million. Under the Arizona Water Settlement 
Agreement, CAWCD has agreed to pay about $85 million of that debt and 
the United States has agreed to forgive $73.5 million. Section 106 of 
S. 437 makes the 9(d) debt that the United States has agreed to forgive 
non-reimbursable and nonreturnable.
    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 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 directs the Secretary of the Interior (Secretary) to 
reallocate the CAP water relinquished by non-Indian agricultural 
contractors, with two-thirds going to facilitate pending and future 
Indian water rights settlements and one-third to the State of Arizona 
for future municipal and industrial (M&I) use. Ultimately, 47 percent 
of the CAP water supply will be designated for Indian uses, while 53 
percent will be available for non-Indian M&I or agricultural uses. This 
represents an increase of 214,500 acre-feet in the amount of CAP water 
available for use by Indian tribes. This division of the CAP supply is 
intended to be final. No CAP water will be made available for future 
Indian settlements except as provided in Title 1.
    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 of the Interior (Secretary). Title I 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 in 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 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 S. 437.
    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 S. 437. Passage of this legislation will 
help bring closure to many longstanding disputes involving Arizona's 
water supplies.
                                 ______
                                 
 Statement of Timothy R. Snider, President, Phelps Dodge Mining Company
    Chairman Murkowski, Chairman Campbell, and members of the 
committees, thank you for the opportunity to submit written testimony 
on S. 437, the Arizona Water Settlements Act (``the Act''), which 
includes in Title II an approval of the Gila River Indian Community 
Water Rights Settlement. The settlement constitutes a truly historic 
accomplishment on the part of the Gila River Indian Community (``the 
Community'') and others who helped achieve it, and reflects more than a 
decade of hard work. Once enacted and implemented, the Act and the 
settlement will yield profound and beneficial results in Arizona and 
New Mexico; the Act and the settlement are as important to the region 
as the enactment of the legislation authorizing the construction of the 
Central Arizona Project in 1968.
    Phelps Dodge Corporation (``Phelps Dodge'') is a participant in the 
settlement, which is authorized by Title II of the Act. Indeed, Phelps 
Dodge was one of the first entities in Arizona to enter into a water 
rights settlement agreement with the Community, in an agreement that 
the Community and Phelps Dodge executed on May 5, 1998. A bill to 
approve the settlement was introduced in the United States Senate (S. 
2608) in 1998. Bills to approve the settlement were introduced again in 
the Senate and the House of Representatives (S. 421 and H.R. 1944) in 
1999. The Community and Phelps Dodge did not pursue the enactment of 
the legislation in 1998 or 1999, in order to achieve and participate in 
a more comprehensive settlement of the Community's water rights claims. 
That larger settlement is embodied in the master settlement agreement 
(``the Settlement Agreement'') that will be signed by numerous Arizona 
water rights claimants, including Phelps Dodge, and approved by the 
Act. The 1998 settlement agreement between the Community and the Phelps 
Dodge has been revised and is incorporated into the Settlement 
Agreement.
    Phelps Dodge has not yet executed the Settlement Agreement, not as 
a result of any unresolved issues with the Community, but as a result 
of several outstanding matters unrelated to the Community. These 
matters are expected to be resolved prior to the markup of S. 437.
    The Act, once it becomes law, will significantly improve the 
fortunes of the Community and its members and will resolve long-
standing disputes and litigation in Arizona, as well as important water 
supply issues in Arizona and New Mexico, to the ultimate benefit of all 
of the citizens of Arizona, New Mexico and the Southwest.
    We thank you for the opportunity to submit this testimony and look 
forward to working with the parties to the Settlement Agreement to 
achieve its successful execution, approval and implementation.
                                 ______
                                 
Statement of Douglas Mason, General Manager, San Carlos Irrigation and 
                    Drainage District, Coolidge, AZ
    Chairmen Domemici and Campbell and Members of the Committees, the 
San Carlos Irrigation and Drainage District (District) is pleased to 
submit this testimony supporting the enactment of S. 437, 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 Senator Jon Kyl of 
Arizona, who has 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 S. 437 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 Agre6ment.
    Thank you for considering this testimony.
                                 ______
                                 
  Statement of L. Anthony Fines, Attorney for Gila Valley Irrigation 
 District and David A. Brown, Attorney for Franklin Irrigation District
    Chairman Murkowski, Chairman Campbell, and members of the 
committees, thank you for the opportunity to advise the committees of 
our support of S. 437, the Arizona Water Settlements Act. We represent 
the Gila Valley Irrigation District and the Franklin Irrigation 
District. Both Irrigation Districts have been litigating for over 15 
years with the Gila River Indian Community, the San Carlos Irrigation 
District and others in United States District Court regarding the Globe 
Equity No. 59 Decree. The Irrigation Districts have been litigating 
with the same parties for almost as long in Arizona State Court 
regarding the adjudication of all rights to the Gila River. After years 
of negotiations among the lawyers and technical representatives of the 
Gila River Indian Community, the San Carlos Irrigation District, and 
the lawyers and technical representatives for our clients, we have 
reached a resolution of the substantive issues between the Irrigation 
Districts and the Gila River Indian Community that will settle both 
court cases. We are confident that we will soon reach an identical 
resolution with the lawyers and technical representatives for the San 
Carlos Irrigation District.
    We strongly support the Arizona Water Settlements Act which will 
make the settlement between the Irrigation Districts we represent, the 
Gila River Indian Community and the San Carlos Irrigation District 
possible.
                                 ______
                                 
      Statement of Greg Pierce, President, Paloma Irrigation and 
                           Drainage District
    Chairman Murkowski, Chairman Campbell, and members of the 
committees, thank you for the opportunity to provide written testimony 
on Senate Bill 437--Arizona Water Rights Settlement Act. The Paloma 
Irrigation and Drainage District (``Paloma'') respectfully submits 
these comments on behalf of its landowners in general support of the 
proposed Arizona Water Rights Settlement Act, and particularly Title 
II, the Gila River Indian Community Water Rights Settlement. Paloma 
appreciates and supports all of the parties' efforts to resolve Indian 
water rights claims, including those of the Community.
    Paloma comprises approximately 65,000 irrigated acres of farmland 
in southwestern Maricopa County near Gila Bend along the Gila River 
downstream from the Gila River Indian Reservation. On behalf of its 
landowners, Paloma diverts Gila River water using the Gila Bend Canal 
and other diversion works to irrigate these farmlands. The landowners 
hold appropriative rights to water from the Gila River and its 
tributaries with priority dates as early as 1881, which are among the 
oldest water rights in Arizona.
    Paloma has always supported the concept of offering to the 
Community a reasonable amount of water, and funds to apply that water 
to Reservation lands, and to resolve its claims against other water 
rights claimants in the Gila River Adjudication. For some time, Paloma 
and the Community have worked together to ensure that the water users 
situated downstream from the Reservation receive reasonable assurances 
that the proposed settlement will put an end to litigation with the 
Community, its members and allottees, and the United States on their 
behalf.
    The provisions resolving litigation downstream from the Reservation 
are in the final stages of completion. Paloma will continue to support 
the proposed settlement provided the parties continue to work towards 
resolving these matters and the final settlement incorporates terms 
whereby the Community, its members and allottees, and the United States 
on their behalf, waive their claims against Paloma and its landowners 
in the same manner as the Community has done for other water claimants 
throughout the State.
    Paloma and its landowners appreciate the efforts of the Community 
and other parties working to resolve the water rights litigation that 
has plagued Arizona for decades. Paloma looks forward to working with 
the parties and Congress to finalize a complete settlement. Thank you 
for your attention to this matter.
                                 ______
                                 
            Statement of Skip Rimsza, Mayor, City of Phoenix
    Chairman Murkowski, Chairman Campbell, and members of the 
committees, 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, S. 437, 
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. If 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 upfront 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' 
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 of Van Talley, Mayor, City of Safford, AZ
    Chairman Murkowski, Chairman Campbell, and members of the 
committees, thank you for the opportunity to provide written testimony 
on Senate Bill 437--Arizona Water Rights Settlement Act. The City of 
Safford respectfully submits written testimony supporting the Gila 
River Indian Community Water Rights Settlement authorized in Senate 
Bill 437. 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 Senate Bill 
437 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 
Committees and the Senate 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.
                                 ______
                                 
  Statement of the Mayor and Common Council of the Town of Payson, AZ
    Chairman Murkowski and members of the subcommittee, the Town of 
Payson, Arizona, appreciates the opportunity to express its support for 
S. 437. The Town is a community of 14,500 residents, which is located 
an hour's drive northeast of the Phoenix metropolitan area in the 
scenic and cool pine county below the Mogollon Rim. Its climate and 
exquisite setting offer abundant blessings, in sharp contrast to the 
limited water supply available to the Town from the fractured granite 
aquifer underlying it. For decades the Town has strained to be a 
responsible steward of the water resources at its disposal, but the 
time is fast approaching when there simply will not be enough water to 
meet the demand.
    The Town is especially pleased that S. 437 would confirm and ratify 
a settlement agreement facilitating an eventual transfer of Blue Ridge 
Dam and related facilities and water rights to the Salt River Federal 
Reclamation Project. It realizes that this transfer is not assured even 
if the legislation passes, and that such a transfer would be only the 
first of many important steps needed to make water from Blue Ridge 
Reservoir available to meet the Town's water supply needs. The Town has 
done what it can within its own governing structure, however, and it is 
critical that progress be made toward securing a renewable water 
supply.
    We commend Senator Jon Kyl, his staff, and the parties to the 
settlement for their dedication. We urge this Subcommittee, the 
Committee on Energy and Natural Resources, the Indian Affairs 
Committee, and the full Senate to give S. 437 favorable consideration.
    Thank you for considering our views.
                                 ______
                                 
Statement of Dallas Massey, Sr., Tribal Chairman of the White Mountain 
  Apache Tribe of the Fort Apache Indian Reservation, State of Arizona
             tribe's aboriginal title from time immemorial
    The White Mountain Apache Tribe currently has beneficial title, 
equivalent to fee-simple absolute, to over 1.6 million acres of its 
once much larger aboriginal territory in the east central highlands of 
the State of Arizona.\1\ The Tribe's Fort Apache Indian Reservation was 
established by Executive Orders in 1871 and 1872. The Tribe has 
retained actual, exclusive, use and occupancy of its aboriginal lands, 
within the boundaries designated by the Executive Orders dated November 
9, 1871 and December 14, 1872, without exception, reservation, or 
limitation since time immemorial. The Tribe has an unbroken chain of 
title and has retained said title to its lands. The Tribe's vested 
property rights, including its aboriginal rights to the use of waters, 
that underlie, border and traverse its lands have never been 
extinguished by the United States and are prior and paramount to all 
rights to the use of water in the Gila River drainage, of which the 
Salt River is a major affluent.
---------------------------------------------------------------------------
    \1\ Current Tribal membership is approximately 14,000 persons. The 
Tribe's Reservation population is projected to be 38,000 to 40,000 
persons by 2050, and 102,000 by the year 2100.
---------------------------------------------------------------------------
   the tribe's reservation the source of salt river and its numerous 
                              tributaries
    Except for a small portion of the Reservation that drains to the 
Little Colorado River Basin, virtually the entire Reservation drains to 
the Salt River. The headwaters and tributaries of the Salt River arise 
on the Tribe's Reservation: the north fork of the White River joins the 
east fork of the White River at Fort Apache which then joins the Black 
River to form the Salt River, the Tribe's southern most boundary and 
the northern boundary of the San Carlos Apache Reservation.
   measure of tribe's aboriginal salt river rights adequate to meet 
                    present and future requirements
    The Tribe claims aboriginal, reserved water rights to Salt River 
water with a priority date of time immemorial in the amount of 260,000 
acre feet annually.\2\ That claim includes approximately 49,800 acres 
of practicably irrigable acreage (less than 3% of the Tribe's 
Reservation) with a water duty of 5.3 acre feet to the acre. In 
addition, the Tribe claims water to meet the projected population of 
the White Mountain Apache Tribe to the year 2100 of some 102,000 
persons with attendant municipal, industrial and commercial water use. 
Currently, the Tribe has a ski resort/park, over 25 outdoor 
recreational lakes, two United States fish hatcheries on the 
reservation, several hundred miles of cold water streams, mineral 
deposits that have yet to be developed, including gravel, gypsum and 
high grade iron ore, and hundreds of thousands of acres of commercial 
pine and spruce timber stands which supply commercial grade timber for 
the Tribe's sawmill which produces 60 million board feet annually.
---------------------------------------------------------------------------
    \2\ The Tribe's aboriginal rights to the use of water on its lands 
include all beneficial uses, whether for livestock, agriculture or for 
the ``arts of civilization''. See Winters v. United States, 143 Fed. 
740 (CA9, 1906); 143 Fed. 684 (CA9, 1906), Winters v. United States, 
207 U.S. 564, 576 (1908); Arizona v. California, 373 U.S. 546,599-601 
(1963).
---------------------------------------------------------------------------
    The Tribe's water rights remain unquantified, although the United 
States in its capacity as the Tribe's as Trustee, has filed a claim in 
the name of the United States for approximately 175,000 acre feet of 
Salt River water in the Gila River General Stream Adjudication now 
pending in the Mancopa County Superior Court, State of Arizona.\3\ The 
United States has Amended filings in the Little Colorado River and the 
Gila River General Stream Adjudications in September 2000, to assert 
the Tribe's aboriginal and priority rights to the transbasin aquifer 
sources necessary to sustain the base flow of the springs and streams 
on the Tribe's Reservation. These two claims filed by the United States 
as Trustee specifically recognize the Tribe's unbroken chain of 
aboriginal title and time immemorial priority rights to the base flow 
of the springs and streams as well as surface water contributed by 
rainfall and snowfall runoff on the Tribe's Reservation.\4\
---------------------------------------------------------------------------
    \3\ The United States has also filed a claim in the Little Colorado 
River General Stream Adjudication as the Tribe's Trustee. To date, the 
Tribe has not intervened as a party in either adjudication nor has 
settlement been sought, but the Tribe has taken steps throughout its 
history to protect and preserve its reserved and retained water rights.
    \4\ The United States officially acknowledges that Indian water 
rights are vested property rights for which the United States has a 
trust responsibility, with the United States holding legal title to 
such water in trust for the benefit of the Indian people. See for 
example, ``Preamble to Department of Interior Policy Statement, Working 
Group in Indian Water Settlements; Criteria and Procedures for the 
Participation of the Federal Government in Negotiations for the 
Settlement of Indian Water Claims'', 55 FR 9223 (March 12, 1990).
---------------------------------------------------------------------------
    The Tribe's retained rights are continuing against the United 
States and its grantees as well as against the State of Arizona and its 
grantees. See United States v. Winans, 198 U.S. 371, 382 (1905). Thus, 
the Tribe's priceless aboriginal Salt River rights to the use of water 
are an interest in real property of the highest dignity and a right 
recognized by the United States Supreme Court, and by the Arizona 
Supreme Court in the Gila River General Stream Adjudication, 171 Ariz. 
230, 830 P.2d. 442,447 (1992), in which that Court declared that water 
rights are property rights.
    The Court of Federal Claims has found as a matter of fact that 
prior to the establishment of the Tribe's Reservation in 1871-1872, the 
White Mountain Apache Tribe exercised its aboriginal rights to the use 
of water in the Salt River and the tributaries of that stream for 
purposes of agriculture, including the production of corn, wheat, 
beans, and vegetables in quantities sufficient to satisfy ``an 
estimated twenty-five percent'' of the Tribe's diet. White Mountain 
Apache Tribe v. United States, 11 CI.Ct. 614, 622, See, Plate in that 
case displaying Salt River drainage within Fort Apache Indian 
Reservation, at 623. The Court of Federal Claims also declared as a 
matter of law, that the Tribe had vested in it, title to Winters 
Doctrine rights to the use of water in die Salt River and the 
tributaries of that stream, White Mountain Apache Tribe v. United 
States, 11 CI.Ct. 614, 638 (1987), and that the Tribe's aboriginal 
rights were prior to and paramount to the claims asserted for the Salt 
River Project by the Salt River Valley Water Users Association, Ibid. 
See also, Winters v. United States, 207 U.S. 564, 576 (1908), 
``fundamentally, the United States as Trustee for the Indians, 
preserved . . . the title to the rights to the use of water which the 
Indians [as here] had `reserved' for themselves''. The White Mountain 
Apache Tribe may exercise its aboriginal, reserved, and retained Salt 
River rights for any beneficial purpose, including but not limited to, 
aboriginal rights to the use of water, all surface water, percolating 
water, groundwater, forests, range lands, fisheries, wild life, 
aesthetics, and all other constituent elements of which an estate in 
fee simple absolute title is comprised.
    The Tribe recognizes that full development of the Tribe's rich 
natural resources, referred to above, must be predicated upon the 
exercise of the Tribe's aboriginal Salt River rights to the use of 
water for a vast variety of uses, involving municipal, domestic, 
mineral, industrial, recreation, and all other related uses. All of the 
foregoing is necessary to fulfill the commitment by the Tribe's 
Trustee, the United States, that the Tribe's permanent homeland would 
be both an economic and socially acceptable area in which the Tribe may 
live and prosper for all time and for all purposes.
    The White Mountain Apache Tribe, is seeking to achieve in 
cooperation with its Trustee, the United States, without interference 
from the State of Arizona, a sound, economic, and social base, which 
can only be achieved if the Tribe is also free to exercise its Salt 
River rights to the use of water in its broad programs to revitalize 
its severely damaged range and forest lands caused by the mismanagement 
of its Trustee, and to fully develop a self-sustaining, stable economic 
and social community that will guarantee the perpetuation now and in 
the future of the Tribe's range lands, forest lands, minerals, surface 
and ground waters and all other resources for the benefit of the Tribe 
and its members now and in perpetuity.
                  arizona water settlement act s. 437
    It is within the foregoing context that the Tribe has grave 
concerns about the impact of the Arizona Water Settlement Act (as 
presently drafted) on its vested and reserved water rights. The White 
Mountain Apache ``tribe submitted comments for the Environmental Impact 
Statement on the reallocation of the CAP water supply, to the effect 
that depletion by the White Mountain Apache Tribe and other Indian 
Tribes of waters in the Salt River System should be considered in 
regards to the reallocation of CAP water.\5\ Specifically, that 
reallocating 200,000 acre feet of non-Indian agricultural CAP water in 
an already over appropriated and water bankrupt delivery system 
presupposes that there will be no depletion by the White Mountain 
Apache Tribe of any waters within the Salt River drainage. It is 
imperative, however, that there must be sufficient water remaining in 
the Salt River System pursuant to S. 437 to fulfill a decreed water 
right from the Gila River Adjudication or a future settlement of the 
Tribe's water rights.
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    \5\ See comment B, p. 2-14, Draft Environmental Impact Statement, 
June 2000, Volume 2, Technical Appendices A-H. ``Allocation of Water 
Supply and Long Term Contract Execution'', Central Arizona Project, 
U.S. Department of Interior, Bureau of Reclamation.
---------------------------------------------------------------------------
    The proposed reallocation of 200,000 acre feet of non-Indian 
agriculture rights to Central Arizona Project water to facilitate 
settlement of the Gila River Indian Community and Tohono O'odham 
Nation's water rights claims, ignores the upstream, prior and paramount 
water rights of the White Mountain Apache Tribe a portion of which has 
been filed by the Tribe's Trustee, the United States, and the depletion 
impact of the Tribe's water use on junior, downstream, non-Indian water 
users in the Phoenix Valley. The apparent reliance by the Phoenix 
Valley, primarily the Salt River Project on no depletion of the Salt 
River by the White Mountain Apache Tribe imposes exponential political 
and judicial pressure to deprive the Tribe of its vested property right 
to the use of water for a self-sustaining homeland now and into the 
future.
 future water availability and s. 437 dependence on minimal future use 
                     by white mountain apache tribe
    Table 1, page 12, infra, summarizes the water supply and projected 
water demands for the Phoenix Active Management Area (AMA) through year 
2025. The source of information for each of the entries is provided 
from state and federal agencies as identified in Table 1. The analysis 
presented below draws attention to the dependence of the future water 
supply on minimizing future water use, and consequently, growth and 
economic development on the Fort Apache Indian Reservation.
    The future sources of water supply for the Phoenix AMA are CAP 
(Central Arizona Project), Salt River, Gila River, Agua Fria River, 
wastewater effluent and groundwater. As shown in Table 1, those sources 
provide a supply of 2,618,923 acre-feet annually, including an 
overdraft from groundwater of 430,757 acre-feet annually.
    CAP water supplies are part of the amount of water allocated to 
Arizona in the Lower Colorado River Compact. The total available to 
Arizona by Compact is 2.8 million acre-feet annually, as confirmed in 
Arizona v. California, and the amount provided by CAP is 1.5 million 
acre-feet annually at the point of diversion on the Colorado River. 
Transmission losses (85,000 acre-feet annually) reduce the amount of 
water available for contract by the Secretary of Interior through CAP 
to 1,415,000 acre-feet annually:

          In passing the Boulder Canyon Project Act, Congress intended 
        to, and did, create its own comprehensive scheme for the 
        apportionment among California, Arizona, and Nevada of the 
        Lower Basin's share of the mainstream waters of the Colorado 
        River, leaving each State her own tributaries. It decided that 
        a fair division of the first 7,500,000 acre-feet of such 
        mainstream waters would give 4,400,000 acre-feet to California, 
        2,800,000 to Arizona, and 300,000 to Nevada, and that Arizona 
        and California should each get one-half of any surplus. 
        Congress gave the Secretary of the Interior adequate authority 
        to accomplish this division by giving him power to make 
        contracts for the delivery of water, and by providing that no 
        person could have water without a contract. (Arizona v. 
        California, No. 8, Original, Decided June 3, 1963, 373 U.S. 
        546, p. 546.)
          The CAP was constructed to annually deliver 1.415 . . . MAF 
        of Arizona's allocation of Colorado River water to central and 
        southern Arizona although up to 1.8 MAF can be delivered 
        through the CAP aqueduct if it is used at maximum capacity. . . 
        . This represents the volume of CAP water allocated to Arizona, 
        1.5 MAF, reduced for transmission losses. Supplies can also be 
        reduced when there is drought on the Colorado River. CAP 
        supplies have the lowest priority on the Colorado system and 
        would be the first to be reduced in drought conditions. 
        Conversely, when there is a surplus declared on the Colorado 
        River, more water could be delivered. Governor's Water 
        Management Commission, November 19, 2000, Availability, 
        Reliability and Utilization of Renewable Supplies, p. 4, and 
        footnote 2).

    The total amount of water available for CAP on a long-term average 
is estimated by others at 1,298,000 acre-feet annually:

        . . . The DWR and Bureau agreed to use Bureau hydrologic 
        Sequence number ten for analysis purposes in this EIS. This 
        sequence produces a long-term average Colorado River water 
        availability of 1,298,000 acre feet per year while the average 
        of all 15 sequences is 1,144,000 acre feet per year. Within the 
        15 Bureau sequences, average Colorado River water availability 
        varies between 742,000 acre feet per year and 1,523,000 acre-
        feet per year. . . . (Bureau of Reclamation, March 19, 1982, 
        Central Arizona Project, Water Allocation and Water Service 
        Contracting, Final EIS, p. 10).

    This is remarkably consistent with the conclusion reached by the 
White Mountain Apache Tribe that only 1,279,000 acre feet per year can 
be supplied by the Central Arizona Project at 1980 levels of 
development.
    Differences exist between the ADWR and Reclamation estimates. 
According to the Final EIS on CAP allocations, the differences resulted 
from the procedural methodologies employed by each agency and 
assumptions regarding the estimates of future water resources developed 
in the Upper Colorado River Basin states, delivery system losses, 
dependable yield from the Salt and Gila Rivers, and other hydrologic 
factors. ADWR estimates of depletions, uses, and losses were generally 
less than Reclamation estimates. ADWR estimates of dependable tributary 
yields and depleted inflows were generally greater than Reclamation 
estimates.
    Assuming an average CAP water supply of 1,289,000 acre-feet 
annually, shortages can be expected 38% of the years, and shortages 
could run continuously for up to 20 years. (CAP Final EIS, pp. 9 and 
10). The water supply allocations in the CAP Final EIS also assume 
water developed on the Salt and Verde Rivers with a functional 
equivalent of Orme Dam on the Verde River and Buttes and Hooker Dams on 
the Gila River (CAP Final EIS, p. 6). The Roosevelt enlargement was 
implemented as an alternative, and perhaps a functional equivalent, to 
Orme Dam. Buttes and Hooker Dams have not been built on the Gila River 
system. Therefore, the ability to sustain a long-term average of 
1,289,000 acre-feet annually with shortages in 38% of the years is an 
overstatement of the reliability of the current supply based on 
information collected to date.
    The Salt River Project (SRP) modeled the Salt River (Salt and Verde 
Rivers at Granite Reef Dam) (a) before (1995) and (b) after (1997) the 
enlargement of Roosevelt Dam. SRP determined an average annual Salt 
River supply before the Roosevelt Dam enlargement of 833,000 acre-feet 
annually and after the enlargement of 906,800 acre-feet annually 
(Arizona Department of Water Resources, Phoenix AMA, Section III, 
Future Conditions and Directions, Chapter 11, Water Budgets and 
Projections, p. 11-9). These estimates are assumed different than the 
estimates by ADWR when the CAP Final EIS was in preparation. The 
assumptions in either the SRP of ADWR estimates are unknown but 
allocate all of the water supply created by enlargement of Roosevelt 
Dam to the Phoenix AMA. The level of future depletions assumed by SRP 
and ADWR on the Salt and Verde Rivers are not known and are of 
considerable interest to the White Mountain Apache Tribe. Did SRP and 
ADWR assume no future level of depletion on the Fort Apache Indian 
Reservation and what level of future depletion was assumed if greater 
than the current level of depletion?
    The Gila and Agua Fria Rivers add 92,963 and 32,308 acre-feet 
annually to the water supply for the Phoenix AMA, far less than the 
906,800 acre-feet annually provided by the Salt River with Roosevelt 
enlargement. Effluent in the Phoenix AMA accounts for an additional 
159,447 acre-feet annually (Table 1). Groundwater pumping will continue 
with an estimated pumping requirement of 999,237 acre-feet annually, 
which will be offset by natural recharge, incidental recharge, 
replenishment, artificial recharge and other factors that will 
presumably reduce the total pumping to an overdraft amount of 430,757 
acre-feet annually (ADWR, Chapter 11, pp. 11-10). There is a serious 
question with respect to the level of projected overdraft and whether 
the overdraft amount is acceptable under the authorizing legislation of 
CAP. This is a question requiring further investigation.
    The total water supply to the Phoenix AMA is projected at 2,618,923 
acre-feet annually, to be fully consumed by the demand for the Phoenix 
AMA estimated to range from 2,400,000 to 2,900,000 acre-feet annually 
with a mid-range demand level of 2,624,844 acre-feet annually as given 
in Table 2, see page 13, infra.*
---------------------------------------------------------------------------
    * Tables 1 and 2 have been retained in subcommittee files.
---------------------------------------------------------------------------
    Notable in Table 1 is the presentation of population projections 
for Maricopa County (see bottom of Table 1). The 2000 projection was 
2,900,000 persons, and the 2000 census reports 3,072,000 persons. This 
draws into question the projection of 3,700,000 for year 2010, which 
may be under-estimated, as well as the potentially under-estimated 
projection of 4,483,000 persons for year 2025.
    There is a need for congressional or judicial review to determine 
(1) whether the expectations of the authorizing legislation of Central 
Arizona Project relating to groundwater pumping are being met, (2) the 
level of dependence on the Salt River water supply of 906,800 acre feet 
annually without future use by the White Mountain Apache Tribe and (3) 
whether the water supply, considering all sources, is available in 
sufficient quantities for the regulatory agencies of the State of 
Arizona to permit a continuation of unrestrained subdivision in the 
Phoenix AMA at the current levels of water conservation, or lack 
thereof.
    The pressures of water supply and future demand for the Phoenix AMA 
as outlined here are believed sufficient to prejudice any state court, 
including the Arizona Supreme Court, in the adjudication of Indian 
water rights in the W-1 proceeding, particularly as related to the 
water rights of the White Mountain Apache Tribe on the Fort Apache 
Indian Reservation. The White Mountain Apache Tribe is the only Indian 
Tribe that can significantly impact the future water supply of the Salt 
River.
    The supply of water available from the Salt River as determined by 
SRP at a level of 906,800 acre-feet annually is the largest component 
of renewable water supply available to the Phoenix AMA. The degree of 
participation in the renewable surface waters of the Salt River as 
reflected by SRP in the 906,800 acre-feet annually is unknown and must 
be determined. If information is not available from SRP, comparable 
information is needed from the Bureau of Reclamation.
              tribe's additional concerns regarding s. 437
    The Arizona Water Settlement Act allocates 653,000 acre feet to the 
Gila River Indian Community. This allocation to a single Indian Tribe 
prejudices the claims of other Indian Tribes and prevents their 
development by the allocation of all reasonably foreseeable water and 
funding to a single Arizona Tribe. This may be desirable from the 
standpoint of the State's interest to focus all remaining water supply 
and all funding sources on a single Tribe that can have the least 
impact on the Salt River Project. In the meantime, the Salt River 
Project would retain the most valuable water supply in the Phoenix 
Valley for the reason that no pumping costs are involved, the water 
quality is good and the regulated supply is firm and is not dependent 
on the Colorado River Basin Compact, which is an undependable and over 
appropriated supply of water for Arizona. The proposed settlement would 
rely on Central Arizona Project water, primarily low priority 
agricultural water, and would ``dry up'' the lower Colorado Basin 
Development Fund.
gila river indian community's and united states' reservation of rights 
          to oppose white mountain apache tribe's use of water
    The White Mountain Apache Tribe is particularly alarmed about the 
scope of paragraph 28.1.4 in the Gila River Indian Community Agreement, 
which will be confirmed and ratified by S. 437. Paragraph 28.1.4 
states:

          ``the Community and the United States reserve and retain the 
        right to challenge or object to any claim for use of water by 
        or on behalf of the following persons or entities:
          28.1.4.1 ``the White Mountain Apache Tribe of the Fort Apache 
        Reservation, Arizona;''

    In addition to listing the White Mountain Apache Tribe, the Yavapai 
Apache Nation of the Camp Verde Indian Reservation, the Tonto Apache 
Tribe of Arizona, the San Carlos Apache Tribe of the San Carlos 
Reservation, the Yavapai Prescott Tribe of the Yavapai Reservation, 
Arizona, the Salt River Pima Maricopa Indian Community of the Salt 
River Reservation, Arizona, and the Fort McDowell Mohave-Apache 
Community of the Fort McDowell Indian Reservation, Arizona are also 
listed.
    Paragraph 28.1.4.1 aligns the power of the United States against 
the White Mountain Apache Tribe and authorizes the United States to 
breach its trust obligation to protect the retained and reserved water 
rights and vested property rights of the White Mountain Apache Tribe. 
Moreover, the provision creates an intolerable and irreconcilable 
conflict of interest on the part of the Trustee United States which has 
filed substantial claims for the Tribe in both the Gila River and 
Little Colorado River General Stream Adjudications. This reservation by 
the United States to oppose the use of water by the White Mountain 
Apache Tribe is also subject to being read together with Section 207(c) 
of the Arizona Water Settlement Act which provides:

          ``The United States shall not assert any claim against the 
        State (or any agency or political subdivision \6\ of the State) 
        or any other person, entity, or municipal or other corporation 
        under Federal, State, or other law in the own right of the 
        United States or on behalf of the Community, Community members 
        and allottees, for any of the claims described in subsection 
        (a).'' (Emphasis added).
---------------------------------------------------------------------------
    \6\ The Salt River Project as defined in S. 437, means ``the Salt 
River Project Agricultural Improvement and Power District, a political 
subdivision of the State, and the Salt River Valley Water Users' 
Association, an Arizona Territorial Corporation.''

    Although, Section 207(a) only includes those claims that could be 
raised or asserted by the Gila River Indian Community, Community 
members and allottees, Section 207(c), as punctuated and written in the 
disjunctive, is subject to the interpretation that the United States 
shall not assert any claim on behalf of the White Mountain Apache Tribe 
or any other Tribe which it has asserted or could assert in the name of 
the United States in addition to whatever claims the United States 
could raise on behalf of the Community, Community members and 
allottees.
    The Tribe opposes the Act's ratification of existing and proposed 
agreements for the Salt River Project to deliver Salt River Project 
water to cities and communities outside the Project area. The Bureau of 
Reclamation Act establishing the Salt River Project provides that Salt 
River water cannot be delivered outside the Project area unless there 
is a surplus. There is no surplus. Moreover, the Salt River Project has 
no right to dispose of water from the Salt River System without 
considering the reserved water rights of the White Mountain Apache 
Tribe. An Act of Congress that confirms delivery agreements of Salt 
River water outside the Salt River Project area without setting aside 
or considering the reserved rights of the White Mountain Apache Tribe, 
may constitute a taking of the Tribe's vested property rights in 
violation of the Fifth Amendment of the United States Constitution.
    The White Mountain Apache Tribe requests express and explicit 
exclusion from paragraph 28.1.4.1 of the Gila River Indian Community 
Agreement and from section 207(c) of S. 437. The Tribe also requests an 
express and explicit exclusion of its reserved water rights from S. 437 
to make unequivocally clear that none of the agreements entered into by 
the Salt River Project with cities, towns or irrigation districts 
outside of the Salt River Project area for Salt River water, truncates, 
diminishes, or amounts to a taking of any kind of the reserved Salt 
River rights of the White Mountain Apache Tribe. If S. 437 is not 
designed to take, extinguish or otherwise denigrate the reserved water 
rights of the White Mountain Apache Tribe to the Salt River, then it 
will be of no moment to explicitly state so in S. 437.
    A McCarran Amendment--General Stream Adjudication, must be inter 
sere. The Arizona Water Settlement Act ``grandfathers'' in, confirms 
and legislatively ratifies existing uses of the Salt River and its 
tributaries without an inter sere adjudicatory determination of the 
reserved water rights of the White Mountain Apache Tribe vis-a-vis 
downstream junior water users thereby removing from the General Stream 
Adjudication a necessary requirement for McCarran Amendment 
jurisdiction in the State Court. Accordingly, the Arizona Water 
Settlement Act may violate the Separation of Powers Doctrine because 
Congress is in effect being asked in S. 437 to adjudicate by 
legislation the inter sere rights of the White Mountain Apache Tribe to 
the use of water in the Gila River System. A similar attempt was made 
by the State of Arizona in its 1995 Water Code with like impact on 
Indian reserved water rights but was successfully challenged by the San 
Carlos Apache Tribe in the Arizona Supreme Court. S. 437 seems, in 
part, to plow the same unconstitutional ground the Arizona State 
Legislature did in 1995.
                               conclusion
    The White Mountain Apache Tribe respectfully requests that S. 437 
not be approved by the Committee unless and until the reserved water 
rights of the White Mountain Apache ``Tribe are specifically named and 
protected by explicit and express exclusionary language, that 
paragraphs 28.1.4 and 28.1.4.1 of the Gila River Indian Community 
Agreement be deleted, and that the Act provide for and set aside 
sufficiently for depletion of the Salt River by the White Mountain 
Apache Tribe to the extent of its Salt River claims, i.e. 260,000 acre 
feet annual diversion with corresponding depletion.
                                 ______
                                 
           Statement of Keno Hawker, Mayor, City of Mesa, AZ
    Chairman Murkowski, Chairman Campbell, and members of the 
committees, as the Mayor of the City of Mesa, Arizona, I appreciate the 
opportunity to submit this testimony in support of Senate Bill 437 
(``S. 437''). The City of Mesa provides water service to approximately 
435,000 people in tour cities and across two counties. The importance 
of S. 437 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 S. 
437.
    Thank you for the opportunity to provide written testimony.
                                 ______
                                 
                 Statement of Earl Zarbin, Phoenix, AZ
    Dear Committee: This message is offered to let you know that there 
is in Arizona opposition to S. 437. One reason is that thirteen tribes 
with little more than one (1) percent of the state's year 2000 
population already control 44 percent of Arizona's annual Colorado 
River entitlement, and S. 437 would increase that control to slightly 
more than 51.5 percent. A second major reason to reject this 
legislation is that the tribes receiving additional water do not intend 
to use all of the water on their reservations. Tribes already are 
leasing more than 40,000 acre-feet of water to cities and a community 
developer, and one tribe, the Gila River Indian Community, immediately 
plans on leasing 40,000 acre-feet to Phoenix and other cities.
    This is unjust enrichment, because tribes have paid not a penny for 
construction of the Central Arizona Project, through which Colorado 
River water is delivered to them and other users, and because the 
tribes are receiving tens of millions of dollars in lease payments. It 
is not the price of the water that it is of concern. It is the 
principle that no user, in a water-short state like Arizona, should 
receive excess quantities of water to lease off reservation. These 
things are being done with the excuse that giving the Indians water to 
which they are not entitled historically, legally, morally or ethically 
will give cities certainity as to their water supplies. Another excuse 
is that it will end litigation, but that is not true.
    Another excuse is that the leases provide the Indian tribes with 
income. Some of these tribes already are earning multiple tens of 
millions of dollars through gambling casino profits. There is much, 
much more that can and should be said about the problems with S. 437--
just one example: the so-called Gila River Agreement with the Gila 
River Indian Community is more than 2,000 ``mind-bending'' pages, and 
this writer will be pleased to provide information.
    Please enter into the record of the forthcoming hearing that there 
is opposition to S. 437, and please schedule in Arizona hearings so 
that all Senators will have an opportunity to get more of the story 
about why there is opposition.
    Thank you.

                                    

      
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