[Senate Hearing 115-179]
[From the U.S. Government Publishing Office]





                                                        S. Hrg. 115-179
 
                           S. 664 AND S. 1770

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

                                HEARING

                               before the

                      COMMITTEE ON INDIAN AFFAIRS
                          UNITED STATES SENATE

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                            DECEMBER 6, 2017

                               __________

         Printed for the use of the Committee on Indian Affairs
         
         
         
         
         
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                      COMMITTEE ON INDIAN AFFAIRS

                  JOHN HOEVEN, North Dakota, Chairman
                  TOM UDALL, New Mexico, Vice Chairman
JOHN BARRASSO, Wyoming               MARIA CANTWELL, Washington
JOHN McCAIN, Arizona                 JON TESTER, Montana,
LISA MURKOWSKI, Alaska               AL FRANKEN, Minnesota
JAMES LANKFORD, Oklahoma             BRIAN SCHATZ, Hawaii
STEVE DAINES, Montana                HEIDI HEITKAMP, North Dakota
MIKE CRAPO, Idaho                    CATHERINE CORTEZ MASTO, Nevada
JERRY MORAN, Kansas
     T. Michael Andrews, Majority Staff Director and Chief Counsel
       Jennifer Romero, Minority Staff Director and Chief Counsel
       
       
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on December 6, 2017.................................     1
Statement of Senator Flake.......................................     4
    Prepared statement...........................................     5
Statement of Senator Hatch.......................................     3
Statement of Senator Hoeven......................................     1
Statement of Senator Udall.......................................     2
    Prepared statement...........................................     2

                               Witnesses

Begaye, Hon. Russell, President, Navajo Nation...................     7
    Prepared statement...........................................     8
Buschatzke, Thomas, Director, Arizona Department of Water 
  Resources......................................................    25
    Prepared statement...........................................    26
Clarke, Hon. Damon, Chairman, Hualapai Nation....................    17
    Prepared statement...........................................    17
Cox, Hon. Spencer J., Lieutenant Governor, State of Utah.........    24
    Prepared statement...........................................    24
Mikkelsen, Alan, Deputy Commissioner, Bureau of Reclamation, U.S. 
  Department of the Interior.....................................    12
    Prepared statement...........................................    12

                                Appendix

Bennett III, Alfred, Shiprock/Northern Agency, Navajo Nation, 
  prepared statement.............................................    40
Kalt, Prof. Joseph P., Co-Director, The Harvard Project on 
  American Indian Economic Development, John F. Kennedy School of 
  Government, Harvard University, prepared statement.............    37
Response to written questions submitted to Alan Mikkelsen by:
    Hon. Catherine Cortez Masto..................................    43
    Hon. Tom Udall...............................................    41
Valencia, Hon. Robert, Chairman, Pascua Yaqui Tribe, letter......    40


                           S. 664 AND S. 1770

                              ----------                              


                      WEDNESDAY, DECEMBER 6, 2017


                                       U.S. Senate,
                               Committee on Indian Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 2:50 p.m. in room 
628, Dirksen Senate Office Building, Hon. John Hoeven, 
Chairman of the Committee, presiding.

            OPENING STATEMENT OF HON. JOHN HOEVEN, 
                 U.S. SENATOR FROM NORTH DAKOTA

    The Chairman. Good afternoon. I call this hearing to order.
    I want to thank our witnesses for being here today.
    Before we begin, I also want to extend my sincerest 
condolences to the Navajo Nation and to President Begaye, who 
is testifying before us today, on the recent loss of Navajo 
Nation Code Talker, George B. Willie, Sr.
    Mr. Willie served in the Marine Corps with the 2nd Marine 
Division. His bravery and sacrifices, and that of all code 
talkers, was absolutely invaluable in securing freedom and 
victory during World Wars I and II.
    On a personal note, my dad was a Marine. I can remember the 
movie on the code talkers. As a matter of fact, a friend of 
mine growing up, a fellow by the name of John Rice, I think, 
wrote the screenplay for that amazing, amazing movie about the 
code talkers of World War II.
    Certainly we remember and honor Mr. Willie's service and 
life today.
    With that, this Committee will receive testimony on two 
Indian water rights settlement bills, S. 664 and S. 1770.
    In the early 1900s, the Supreme Court paved the way for 
Indian tribes to settle their water rights in the case of 
Winters v. United States. Since then, only a handful of the 
Indian tribes have settled their claims for water rights. Many 
more claims still need to be addressed.
    S. 664, the Navajo Utah Water Rights Settlement Act of 2017 
is intended to resolve claims between the Navajo Nation and the 
State of Utah regarding water allocation in the San Juan River.
    The bill would authorize over $210 million for approved 
water development projects for the Navajo Nation and also would 
allocate 81,500 acre feet per year of water from the San Juan 
River.
    S. 1770, the Hualapai Tribe Water Rights Settlement Act of 
2017 would resolve the claims of the Hualapai Nation to water 
in the Colorado River Basin. The bill would authorize 
approximately $173.5 million for water development projects and 
reallocate 4,000 acre feet per year of water from the Central 
Arizona Project to the tribe.
    A lot of stakeholders have given their input on these bills 
and we appreciate our witnesses being here today to testify on 
them.
    Before turning to Senator Flake, I will turn to our Vice 
Chairman, Senator Udall, for his opening remarks.

                 STATEMENT OF HON. TOM UDALL, 
                  U.S. SENATOR FROM NEW MEXICO

    Senator Udall. Thank you so much, Mr. Chairman.
    First of all, let me recognize President Begaye who is here 
from the Navajo Nation. The Navajo Nation is the largest tribe 
in the Nation and overlaps into three States. He is one of the 
great leaders in Indian Country. I know the Senators who serve 
in those three States always respect having his point of view.
    It is wonderful to have you here today, President Begaye 
and all your distinguished people here with you. I know we also 
have two Navajo Council delegates here with you.
    Let me also echo what the Chairman has said regarding 
condolences for George Willie, one of the great code talkers. 
My father also served in World War II and talked a lot about 
the code talkers and the many Navajo code talkers he met during 
his life. It is a sad occasion when we have the passing of a 
code talker.
    With that, because we have votes fast approaching and we 
want to get to questions before we have to get over there and 
vote, I am going to ask the Chairman to put my opening 
statement in the record.
    The Chairman. Without objection.
    [The prepared statement of Senator Udall follows:]

   Prepared Statement of Hon. Tom Udall, U.S. Senator from New Mexico
    Thank you, Chairman Hoeven, for calling today's legislative 
hearing. I'd first like to acknowledge and welcome President Begaye of 
the Navajo Nation. President Begaye is no stranger to this Committee. 
He is a strong advocate for the Navajo people. And I welcome his 
valuable input on behalf of the Navajo Nation.
    I'm glad that we have the opportunity to discuss the specifics of 
the bills we're considering today . . . but I'd also like to underscore 
the importance of Indian water rights settlements generally.
    Indian water settlements are critically important--not only to 
fulfilling the United States' fiduciary obligations to tribes, but also 
for the long-term economic vitality of the surrounding communities. 
This is especially true for my home state of New Mexico and across the 
west where water is the lifeblood of many communities, both Indian and 
non-Indian.
    I often say that western water has a 19th century legal framework--
with 20th century infrastructure--and 21st century pressures of 
increasing demand and dwindling resources due to climate change.
    Our long-term water supply and consumption are out of balance--even 
with current conservation efforts. Every year brings a new ``warmest 
year on record'' forecast and with it increased water insecurity across 
the arid west.
    We must work together to tackle these big challenges. Collectively, 
we must step up our efforts to combat climate change as we plan for a 
changing planet and what it means for our future water supplies.
    I can go on about the threat of severe droughts, decreased 
snowpack, and increasing wildfire threats that ravage our precious 
watersheds.
    Instead, I would simply like to stress that we need more 
collaboration and less litigation when it comes managing water in the 
21st century.
    Indian water rights settlements are a perfect example of the 
benefits of collaboration over litigation. These settlements fund vital 
water infrastructure for communities that may have gone decades without 
adequate sources of water . . . while also providing certainty and 
fostering cooperation within and among communities and all water 
stakeholders.
    It is my sincere hope that the Department of the Interior 
prioritizes the management, negotiation and implementation of Indian 
Water Settlements now and into the future.
    For my part, I will work with my Senate colleagues to ensure that 
Congress fulfills its promise. And makes adequate funding available for 
these settlements. I'm particularly interested in exploring alternative 
funding mechanisms for future Indian water settlements, like extending 
the Reclamation Water Settlements Fund established in the Omnibus 
Public Lands Management Act of 2009.
    This could help provide some certainty in our commitment to work 
collaboratively on future Indian water rights settlements.
    Turning to the bills themselves, I appreciate the sponsors' efforts 
to bring these bills forward. But have some questions on the specifics. 
I look forward to our witnesses' testimonies, which will hopefully 
provide clarity on potential impacts to tribes in New Mexico and 
Arizona.
    Again, thank you, Mr. Chairman, for calling this hearing. I yield 
back.

    The Chairman. With that, I would turn to our President Pro 
Tem, Senator Hatch.

  STATEMENT OF HON. ORRIN HATCH, PRESIDENT PRO TEMPORE, U.S. 
                             SENATE

    Senator Hatch. Thank you so much, Mr. Chairman, for the 
opportunity to share my thoughts with the Committee.
    I am here today to speak in support of the Navajo Utah 
Water Rights Settlement Act of 2017. In doing so, I would like 
to introduce two men who were instrumental in making this 
agreement a reality: the Lieutenant Governor of my home State 
of Utah, Spencer Cox and the President of the Navajo Nation, 
Russell Begaye. I am proud of both of you.
    These men are good friends who have kindly made the trip to 
Washington to provide testimony and speak to the merits of the 
legislation before us. I am proud to be able to say a few words 
about both of them.
    The Committee should know that the State of Utah, 
represented by Lieutenant Governor Cox, and the Navajo Nation, 
represented by President Begaye, has spent over 13 years 
formalizing a negotiated settlement over Navajo water rights 
claims on the Colorado River.
    Both parties invested significant time and resources on 
this issue because water rights settlements are critically 
important in many western States, especially in Utah. As 
everyone here can appreciate, reaching agreement on water 
settlements is extremely difficult, so I applaud our witnesses 
today and their hard work in helping us reach the settlement 
outlined in my legislation.
    My bill would settle the water rights claims of the Navajo 
Nation and the United States within the State of Utah by 
providing a permanent source of water for the Navajo Nation in 
Utah and a water settlement fund to be used for the 
construction of drinking water infrastructure on the Navajo 
reservation.
    In consideration for this water and funding, the Navajo 
Nation will waive its water-related claims against the United 
States and Utah. Importantly, this will provide both Navajo and 
non-Native Americans citizens in the Upper Colorado River Basin 
and Utah with certainty regarding their respective water rights 
that will allow them to plan for their futures.
    It should come as no surprise that the State of Utah and 
the Navajo Nation strongly support this settlement.
    Mr. Chairman, as you know, water settlement negotiations 
are high stakes, take years to complete and often involve 
contentious issues. I am appreciative that you are willing to 
face up to these issues and handle them.
    These negotiations can only be successful when the 
participants are dedicated to the cause, act in good faith and 
show they are willing to stand up for the people they 
represent. Lieutenant Governor Cox and President Begaye have 
proven to be valuable partners in the Utah-Navajo settlement 
discussions.
    Both are committed to moving the Utah-Navajo settlement 
forward and working with the Federal Government to resolve any 
outstanding issues. They are eager to secure benefits for the 
citizens both of the Navajo Nation and the State of Utah. Their 
leadership has been invaluable in advancing the settlement 
negotiations. I personally am confident they will continue to 
push the settlement forward until the job is done.
    I am honored to introduce these two wonderful men, these 
two witnesses to the Committee, and look forward to working 
with all involved stakeholders who share a common goal of 
enacting a mutually supportive settlement.
    Thank you for allowing me this opportunity to say these few 
words. I wish you the best as the leadership of the Committee. 
I appreciate the work you are doing.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator. Thank you for being with 
us today.
    Senator Flake.

                 STATEMENT OF HON. JEFF FLAKE, 
                   U.S. SENATOR FROM ARIZONA

    Senator Flake. Thank you, Mr. Chairman.
    Thank you all for being here. I especially want to welcome 
Dr. Clarke of the Hualapai Tribe and also Tom Buschatzke, the 
director of the Arizona Department of Water Resources.
    Because we are in such a rush, I will ask unanimous consent 
to have my opening statement included as part of the record.
    I described, in a similar hearing last year, the importance 
of this settlement, both for the tribe and for those outside of 
the reservation in the region. This is critically important to 
have some surety moving ahead in terms of the disposition of 
Colorado River water and the settlement claims of the Hualapai.
    It is also great to have Russell Begaye here from the 
Navajo Nation as well.
    I welcome all of you and look forward to the questions and 
answers.
    I would also ask unanimous consent to submit as part of the 
record some statements in support from Mohave County, as well 
as some other organizations.
    The Chairman. Without objection.
    Senator Flake. Thank you.

    Prepared Statement of Hon. Jeff Flake, U.S. Senator From Arizona
    Mr. Chairman, Mr. Vice Chairman, I appreciate you holding this 
hearing on S. 1770, The Hualapai Tribe Water Rights Settlement Act.
    I would also like to welcome the Hualapai Tribe's Chairman, Dr. 
Clarke, and the Director of the Arizona Department of Water Resources, 
Tom Buschatzke and thank them for their appearances before the 
Committee today.
    This is a widely supported settlement and I am pleased to see 
representatives from other parties to this settlement, the State of 
Arizona, the Central Arizona Water Conservation District, the Salt 
River Project, and the Freeport Minerals Corporation here in support of 
this settlement.
    I also ask that the unanimous resolution of support from Mohave 
County be included in the hearing record.
    [The information referred to follows:]

                        RESOLUTION NO. 2017-063
A RESOLUTION CONVEYING THE UNANIMOUS SUPPORT OF THE MOHAVE COUNTY BOARD 
  OF SUPERVISORS FOR THE HUALAPAI WATER SETTLEMENT AND URGING SENATOR 
  FLAKE, SENATOR MCCAIN AND CONGRESSMAN GOSAR AND THE ENTIRE ARIZONA 
 CONGRESSIONAL DELEGATION TO REINTRODUCE AND PURSUE THE PASSAGE OF S. 
    3300 ORIGINALLY INTRODUCED BY SENATORS FLAKE AND MCCAIN IN 2016

    WHEREAS, the Board of Supervisors met in Regular Session this 15th 
day of May, 2017; and
    WHEREAS, the Hualapai Tribe is a key member and economic driver of 
Mohave County; and
    WHEREAS, the water settlement they have negotiated with the State 
of Arizona as well as other parties represents a responsible and 
rational allocation of water for the Hualapai Tribe; and
    WHEREAS, the water will allow the Tribe to create hundreds of jobs 
for both residents of the Hualapai Reservation and non-reservation 
residents of Mohave County.
    NOW, THEREFORE, BE IT RESOLVED that the Mohave County Board of 
Supervisors conveys its support of this water settlement and urges 
Senator Flake, Senator McCain, Congressman Gosar and the entire Arizona 
Congressional Delegation to reintroduce and pursue passage of S. 3300, 
originally introduced by Senators Flake and McCain in 2016.
    PASSED, APPROVED and ADOPTED this 15th day of May, 2017.
        MOHAVE COUNTY BOARD OF SUPERVISORS
                                      Gary Watson, Chairman
        ATTEST:
                         Ginny Anderson, Clerk of the Board

    This is an important piece of legislation for the tribe and 
for Arizona.
    The roughly one-million-acre reservation is ill-suited for 
an economy based on mining, oil and gas, timber, or agriculture 
and the Hualapai are building an economy based on one resource 
they have in abundance--people wanting to experience the Grand 
Canyon and Colorado River.
    Without access to additional reliable water supplies, they 
are unable to realize its full potential, which includes a 
residential community at Grand Canyon West for their tribal 
members who work there.
    In short, this legislation provides significant but fair 
benefits for the Hualapai.
    Mr. Chairman, as I described at a similar hearing last 
year, this settlement and legislation also have important 
benefits outside the reservation and region.
    The Hualapai Tribe makes a claim to Colorado River, a 
critically important water source for the state that provides 
roughly 40 percent of our water supplies.
    This fair settlement dedicates 4,000 acre-feet of CAP's 
Colorado River water to the tribe in a way that puts them on 
par with existing CAP water users.
    Because of the priority of the tribe's claims, there is the 
possibility that future development of their water rights would 
displace current water users in Arizona.
    I am pleased to see the Administration's support of the 
policy of settling tribal water rights claims, but am somewhat 
disappointed with their continued resistance to support this 
particular settlement.
    The administration's insistence on repeating the last 
administration's commitment to endless groundwater studies is 
frustrating.
    I ask that the 2015 memorandum from Natural Resource 
Consulting Engineers documenting the 16 studies of groundwater 
on the reservation that have been in the past 65 years be 
entered into the hearing record.
    [The information referred to follows:]

               Natural Resources Consulting Engineers, Inc.
                                      Oakland, CA, December 4, 2015
MEMORANDUM
To: Hualapai Project Files
                           RE: Previous Groundwater Studies
    This memorandum presents a list and brief description of previous 
groundwater studies on the Hualapai Reservation. The list of studies is 
separated between the deep regional aquifer and the alluvial-volcanic 
aquifers.
Deep Regional Aquifer
    Description: The deep regional aquifer on the Hualapai Reservation 
includes the Redwall-Muav Aquifer (R-Aquifer) and the Tapeats Sandstone 
lying at the bottom of the Paleozoic section in contact with 
crystalline basement rocks.

    Representative well yields from the R-Aquifer range from 5 
        to 40 gallons per minute, with 150 gallons per minute the 
        highest reported in the region (Twenter, 1962; Myers, 1987; and 
        others).

    There is some evidence indicating that faults, fractures, 
        and folds may enhance aquifer properties that can localize 
        potential for larger well yields; however targeting these 
        features using surface geophysics is speculative and drilling 
        costs are very high.

    The USGS conducted a hydrogeological study of the 
        Reservation between 1957 and 1962 (Twenter, 1962). The R-
        Aquifer was identified as the most promising aquifer, but 
        drilling depths were prohibitive.

    Several wells were drilled to various depths (mostly 
        shallow) in the late `60's and `70's by the BLM and the BIA 
        loosely based on Twenter's recommendations but most were 
        unsuccessful (Huntoon, 1977).

    Several deeper wells were completed on the Hualapai Plateau 
        in 1992 by the Bureau of Reclamation. One well drilled near the 
        GCW resort in 1992 targeted the deep regional R-Aquifer. The 
        well was deepened in 1999 (Watt, 2000). That well (GCW-1) 
        encountered groundwater only in the Tapeats Sandstone. The 
        shallower Redwall and Muav Formations were unsaturated. The 
        well is equipped with an oilfield-type pumping unit but is 
        currently unused due to low water quality and low yield (15-26 
        gpm).

    NRCE was contracted in 2005 to investigate and evaluate all 
        possible water supply options for the resort. The preferred 
        alternative recommended diversion from the Colorado River. 
        Groundwater development options were judged to be infeasible 
        for a variety of reasons, but primarily because of their 
        inability to supply the sustainable yield required by the Grand 
        Canyon West resort at a reasonable overall project cost.

    DOWL (2013) further assessed a few Colorado River 
        alternatives considered in the NRCE study. Groundwater 
        development alternatives were judged to be infeasible in this 
        study for the same reasons as the 2005 study by NRCE.

Alluvial-Volcanic Aquifers
    Description: The main alluvial-volcanic aquifers are in the 
northern Aubrey Valley around Frazier Wells (eastern part of the 
Reservation), Westwater Canyon, Peach Springs-Truxton Wash Valley, and 
elsewhere along the southwest flank of the Hualapai Plateau (e.g. Horse 
Flat area and the upper Milkweed Canyon). The alluvial-volcanic 
aquifers have areal extents that are limited by the valleys and washes 
that contain them. The volume of stored groundwater is similarly 
limited. Depth to water is generally shallow, typically less than 500 
feet below ground level, and well yields of up to 170 gallons per 
minute have been reported. Water from these aquifers is generally 
acceptable for domestic use.

    The Santa Fe Railroad drilled 6 fairly shallow wells within 
        Peach Springs between 1903 and 1922. The Hualapai Tribe 
        acquired use of water from the railroad spring-fed water system 
        between 1931 and 1954. One well near the town is currently 
        used.

    The USGS conducted a study in 1942 to assist location of 
        prospective sites for development of stock water supply on the 
        Hualapai Reservation (Peterson, 1942). In addition to a 
        hydrogeological characterization of the region, the study 
        inventoried numerous existing wells and stock ponds. Peterson 
        recommended 18 sites across the Reservation for drill-testing.

    N. J. Devlin evaluated the Peach Springs water system in 
        1973 and considered possibilities for development of additional 
        water supplies for the town. Devlin recommended further 
        development of the aquifer contained in the lake beds of 
        Truxton Valley. Development of other springs and other 
        exploration areas were judged to have low potential.

    The Indian Health Service drilled two wells in Truxton 
        Valley in 1972 to provide additional water supply for Peach 
        Springs. A third well was drilled in 1976 by the IHS in Truxton 
        Valley near the wells drilled in 1972. These wells currently 
        supply all of the water needs for the town of Peach Springs.

    The Bureau of Reclamation drilled an unsuccessful hole into 
        Cenozoic volcanics near the head of Milkweed Canyon in 1975. A 
        second successful well in Westwater Canyon alluvium and 
        volcanics was completed in 1975. This well currently provides 
        most of the water to Grand Canyon West via a 30-mile pipeline.

    A well drilled in the Frazier Wells area in the eastern 
        part of the Reservation serves a fish-rearing facility. An 
        additional two boreholes were completed in the shallow alluvial 
        aquifer in the Frazer Wells area in an effort by the Tribe to 
        develop additional groundwater supply. Both wells were dry and 
        were abandoned.

    Regional hydrogeological mapping by Richard Young (State 
        University of New York at Geneseo) focused on the Tertiary 
        volcano-sedimentary aquifer in the area of Westwater Canyon 
        near the well drilled by the Bureau of Reclamation (Young, R. 
        A., 1987, 1991, 1992, 2007). Stantec (2009) estimated the safe 
        yield of this aquifer to be approximately 600 afy. Further 
        development of this aquifer is prohibited by tribal policy as 
        it would likely reduce spring flow (considered to be a cultural 
        resource) in its discharge area.

    NRCE conducted an evaluation of the groundwater supply for 
        the town of Peach Springs in 2011. That study included an 
        inventory of wells in the sub-regional area, a comprehensive 
        review of the regional geology, an evaluation of hydrologically 
        attractive areas for development of additional groundwater 
        supplies in the southern part of the Reservation, and made some 
        specific recommendations for exploratory evaluation of both the 
        R-Aquifer and alluvialvolcanic aquifers. The adequacy of 
        natural aquifer recharge to support existing and future water 
        needs was also assessed.

    Furthermore, I am frustrated that this administration 
continues to overlook the significant contributions by the 
tribe, Freeport Minerals, and the State.
    The non-federal contributions to this settlement are at 
least as significant as recently completed and currently 
pending settlements, yet the administration's position is that 
it is still not enough.
    This legislation is an important step that the State of 
Arizona needs to take, both for the sake of the Hualapai Tribe 
and for all of us in Arizona who depend on Colorado River water
    I look forward to working with the tribe, the state 
parties, and the administration to find a way forward for this 
settlement.
    Thank you.

    The Chairman. Thank you, Senator Flake.
    With that, we will turn to the witnesses. I understand at 
this point, the witnesses have agreed to forego their opening 
statements in the interest of time because of the votes on the 
floor. However, I would ask if there is anything briefly that 
the witnesses want to put on the record in the form of an 
opening statement? I would offer this opportunity.
    Chairman Begaye.

   STATEMENT OF HON. RUSSELL BEGAYE, PRESIDENT, NAVAJO NATION

    Mr. Begaye. Thank you, Chairman Hoeven, Senator Udall, 
Senator Flake and members of the Committee.
    I want to really say thank you to the State of Utah for 
partnering and collaborating with the Navajo Nation to make 
this come about. This has been a very unusual relationship and 
partnership in making this come about.
    I want to publicly say, I appreciate the leadership from 
the Senators and members of Congress, from the Governor and 
members of the legislative body in the State of Utah for coming 
alongside Navajo and making this possible. I just want to 
express my appreciation in that regard.
    Thank you.
    [The prepared statement of Mr. Begaye follows:]

  Prepared Statement of Hon. Russell Begaye, President, Navajo Nation
    Ya'at'eeh Chairman Hoeven, Vice-Chairman Udall, and members of the 
Committee. My name is Russell Begaye. I am the elected President of the 
Navajo Nation. Thank you for this opportunity to present testimony on 
S. 664, the Navajo Utah Water Rights Settlement Act. I also wish to 
convey the gratitude of the Navajo Nation to Senator Hatch for his 
commitment to improving the lives of the Navajo People and for his 
leadership in sponsoring this important legislation.
    The Navajo Utah Water Rights Settlement Act accomplishes two 
things. First, the Act would authorize the Secretary of the Interior to 
execute, on behalf of the United States, the Navajo Utah Water Rights 
Settlement Agreement. The Settlement Agreement was approved by the 
Navajo Nation Council in January 2016. It reflects over a decade of 
negotiations involving officials from the Navajo Nation, State of Utah, 
and since 2013, the federal government. Second, the Act provides 
funding for water supply infrastructure intended to address short-term 
and long-term water development needs in the Utah portion of the Navajo 
Nation. The challenges of providing access to water on the Navajo 
Reservation in Utah are monumental and the conditions are dire--more 
than 40 percent of Navajo households lack running water or adequate 
sanitation in their homes. In some cases, such as in the community of 
Oljato on the Arizona-Utah border, a single spigot on a desolate road, 
miles from any residence, serves 900 people.
    As this Committee is well aware, in the Treaty of 1868, Navajo 
leaders pledged their honor to keep peace with the United States and, 
in return, the United States pledged to assist the Navajo People to 
create a permanent homeland on their reservation lands. The original 
Navajo Reservation on the border of present day Arizona and New Mexico 
was enlarged numerous times both by executive order and Congressional 
act to encompass lands where Navajos were already living. Land in Utah 
was added to the Reservation by executive orders in 1884 and 1905, and 
additional acreage was added by the Act of March 1, 1933, 47 Stat. 
1418. These Utah Reservation lands would be valueless without a water 
supply. In the arid West, it is clear--no lands can be a permanent 
homeland without an adequate supply of water, especially potable water. 
The Navajo Nation will secure its water rights either through 
litigation or through settlement. As this testimony seeks to make 
clear, the advantages of settlement in this case far outweigh the 
costs, risks, and policy disadvantages of divisive litigation.
I. The Settlement Agreement
    The Settlement would result in a win-win for the Navajo Nation and 
the State of Utah by quantifying the Navajo Nation's water rights in 
the Upper Basin of the Colorado River in Utah in a manner that will 
benefit not only the State of Utah and the Navajo Nation, but the 
federal government and all water users in the Colorado River basin. 
Without a negotiated settlement, conflict over these water rights could 
easily devolve into protracted, expensive, and divisive litigation. 
Choosing a more conciliatory and productive path, the State of Utah and 
the Navajo Nation devoted years to developing an agreement that would 
protect existing uses while at the same time guarantee the Navajo 
Nation the firm supply of drinking water we need for our reservation to 
function as a permanent homeland. We are grateful to Utah Governor Gary 
Herbert, Lt. Governor Spencer Cox, their staff and advisors for their 
steadfast work to make this settlement a reality.
    Of course, Indian water rights settlements require the involvement 
and approval of the federal trustee. In February of 2013, Interior 
Secretary Ken Salazar appointed a federal negotiation team to 
participate in the resolution of the Navajo Nation's claims in Utah. 
The Navajo Nation has been working with the federal team to address 
their concerns about the terms of the settlement and to develop 
information required by the Criteria and Procedures for the 
Participation of the Federal Government in Negotiations for the 
Settlement of Indian Water Rights Claims, 55 FR 9223 (Mar. 12, 1990). 
The Nation is particularly appreciative of the work that the United 
States Bureau of Reclamation (Reclamation) has undertaken at the behest 
of the federal team to evaluate the water development projects analyzed 
by the Nation in determining the dollar amount of the settlement Fund. 
For example, Reclamation's Design, Estimating and Construction Advisory 
Team Review Report: Navajo Nation/State of Utah Water Rights Settlement 
Projects, a report completed in September 2013, made findings and 
recommendations that the Navajo Nation Department of Water Resources 
(NNDWR) has used to determine the best way to bring water to Navajo 
people in Utah.
A. Quantifying the Nation's Water Rights in Utah
    Turning first to the quantification of the Navajo Nation's water 
rights in Utah, this settlement is a fair and comprehensive resolution 
to problems that affect not only the Navajo Nation, but also non-
Indians in Utah and in other parts of the Colorado River Basin as well 
as federal interests such as Reclamation projects and endangered 
species. The work that has gone into this settlement has resulted in an 
agreement that is just and equitable to all parties.
    As is typically the case in an Indian water rights settlement, the 
Navajo Nation would agree through this settlement to forbear use of 
senior water rights that the Nation would likely be able to establish 
in litigation. Less typically, the Navajo Nation has worked in 
partnership with the State of Utah to develop an agreement that will 
maintain the delicate equilibrium that is the Law of the River. The 
Navajo Nation recognizes that the San Juan River, the source of its 
Utah water rights, is part of the Colorado River system. The Colorado 
River is the subject of several interstate Compacts and has been a 
touchstone for some of the most complex water litigation of the last 
century. The settlement is constructed to avoid further divisive 
litigation, including litigation over the applicability of those 
compacts to the reserved water rights of the Navajo Nation.
    Under the Settlement Agreement, the Navajo Nation has the right to 
deplete 81,500 acre-feet per year of surface and groundwater from the 
Upper Colorado River Basin in Utah. The Nation further has the right to 
divert and store this water right at a rate of 435 cubic feet per 
second. The Nation would also secure the ability to market its water 
rights to the same extent as other Utah water rights holders. The bulk 
of the Nation's Utah water rights would have a priority date of 1884, 
when the Utah portion of the Reservation was first set aside for the 
Navajo people. Finally, the Settlement Agreement provides for a water 
development fund to be used for water infrastructure development to 
allow the Navajo Nation to put these water rights to use.
    The subordination provisions in the agreement are of substantial 
benefit to the non-Indians in Utah. Non-Indian water development in the 
San Juan River Basin has been extensive, especially in comparison to 
development on the Navajo Reservation. The records of the Utah State 
Engineer identify 1,510 state law based permits in the San Juan River 
Basin in Utah for water rights, with major surface diversions totaling 
more than 158,000 acre-feet per year. In the Navajo Utah settlement, as 
in virtually every Indian water rights settlement, the State sought to 
protect existing non-Indian uses from impairment by potentially senior 
Indian water rights. This result is possible only by the Navajo Nation 
agreeing to subordinate it water rights to existing non-Indian water 
users. As a result of this subordination, it is estimated that existing 
and proposed Navajo uses supplied by infrastructure constructed with 
the Fund will experience shortages between 1.8 percent and 11.6 percent 
of the time, depending on how Navajo Dam is operated upstream. When the 
Navajo Nation puts its entire 81,500 acre-foot per year right to use, 
the subordination of the Nation's water right to non-Indian uses could 
result in shortages for the Nation 11 percent to 46 percent of the 
time.
B. Value of the Settlement
    I understand that the Administration and this Committee have a keen 
interest in ensuring that water rights settlements, including this one, 
make sense for the United States and for the American taxpayer. I will 
address this concern briefly in this testimony, and I will be glad to 
provide additional follow up information to fully address any concerns 
expressed by members of Congress or the Administration's Office of 
Management and Budget. There are various ways of calculating the value 
of the settlement, and I will highlight two of them today.
    First, the Navajo Nation will forbear the use of water that we 
would claim in litigation and to which we claim the senior right. Using 
conservative estimates of the value of water in this water-stressed 
basin, at $3,000 to $10,000 per acre-foot for a perpetual supply of 
Colorado River water, the value of the water forborne by the Navajo 
Nation is in the range of $250 million to more than $850 million. These 
numbers provide clear evidence that the roughly $211 million 
authorization of appropriations in the bill as introduced is an 
excellent value for American taxpayers.
    A second approach to determining the value of this settlement is to 
look more closely at the potential liability of the United States, and 
the litigation and related costs that would be anticipated in the 
absence of settlement. The United States, as trustee for the Navajo 
Nation, has a responsibility to protect the Nation's trust resources. 
In quantifying the Nation's reserved water rights claims within the 
State of Utah, the settlement resolves potential claims that could be 
brought against the United States for failure to develop and protect 
Navajo water resources. These claims include the failure of the United 
States to ensure that the Upper Colorado River Basin Compact (UCRBC) 
does not limit Navajo uses of water in Utah.
    In the Settlement Agreement, the Navajo Nation made concessions to 
protect the State of Utah in two distinct ways. First, the Nation 
agreed to reduce the extent of its water right claim to enable Utah to 
stay within its Upper Colorado River Basin apportionment. Second, the 
Nation agreed not to make calls against upstream water users on the San 
Juan River in Colorado and New Mexico because the UCRBC does not 
allocate San Juan River water to Utah. By agreeing not to make calls 
against upstream water users, the Navajo Nation sidesteps the 
significant question of the effect of the interstate compacts on Indian 
tribes, and avoids the threat of litigation that could jeopardize the 
Law of the River.
    The costs of litigation of these issues would be incredibly high 
for all sides. The value of this settlement, when viewed as necessary 
to maintain existing interstate allocations of the Colorado River, is 
practically incalculable, and when this value (of keeping the 
settlement within Utah's Upper Colorado River Basin Compact 
apportionment and avoiding the displacement of existing water rights) 
is added to the value of the water rights discussed above, enactment of 
S. 664 is undoubtedly very much in the interest of all taxpayers. 
Finally, the forgoing discussion of the return on investment from this 
settlement does not take into account the programmatic and policy 
priorities that would be fulfilled with the funding that this 
settlement proposes for water infrastructure development.
II. Water Development Fund
    The settlement includes a water development fund (Fund). Funding 
for water management and delivery infrastructure included in this 
settlement would improve living conditions for the Nation's citizens. 
The economic and human costs of hauling water--which consists of 
conveying water in non-sterile containers obtained from water sources 
ranging from relatively clean watering points to livestock storage 
facilities, often over very long distances--are significant. As the 
Navajo Nation's population increases, the need for water delivery and 
treatment infrastructure intensifies. S. 664 would establish two funds, 
one for planning, design and construction and the other for operation 
and maintenance. The bill authorizes the appropriation of approximately 
$210 million dollars to these two funds. The State of Utah will 
contribute $8 million dollars to the funds for planning, design, and 
construction. The United States is also authorized to appropriate $1 
million for the hydrographic surveys that are needed to complete the 
quantification of Navajo water rights.
    Unfortunately, as a result of the hurricanes that wrought havoc in 
Houston, Florida, and Puerto Rico this fall, the terrible economic and 
social costs associated with the lack of safe water supplies were 
thrown into vivid relief for many Americans. Whereas less than 1 
percent of Americans overall live in areas without safe water supply 
and waste disposal facilities, the corresponding rate on the Navajo 
Reservation in Utah has been estimated to be at least 40 percent. 
Investment in basic water delivery infrastructure is essential for the 
Navajo people, as it is for all Americans; in the absence of the 
investment in human sustenance this settlement represents, more Navajo 
families will be consigned to living without running water. One study 
commissioned by the Nation found that while the Navajo Tribal Utility 
Authority, a Navajo government enterprise, delivers about 400 acre-feet 
of water per year for municipal and domestic use, meeting the projected 
water needs by the year 2050 would require more than a fifteen-fold 
increase, to about 6,700 acre-feet/year. Significant investments must 
be made now if the Nation has any chance of meeting these future 
demands for water.
    Safe drinking water is a basic human need, and the consequences of 
lack of access to reliable potable water supplies can be staggering. 
The Indian Health Service (IHS) reports that for every dollar the 
agency spends on home sanitation facilities, at least a twentyfold 
return in health benefits is achieved. See https://
www.ihs.govinewsroom/index.cfm/factsheets/safewater/. Accordingly, the 
water infrastructure the Nation plans to construct with funding 
provided in this settlement will yield important benefits that will 
conserve federal health care dollars while sparing people the economic 
and human costs of illness directly attributable to contaminated water 
and lack of adequate sanitation facilities.
    In 2014, NNDWR produced a ``White Paper'' proposing a series of 
water development projects to address the water needs of Navajo 
communities in Utah. The White Paper was the culmination of work 
performed by NNDWR, the engineering firm of Brown & Caldwell, and 
Reclamation assessing alternatives methods that might be employed to 
meet Navajo water needs. After consideration of all viable 
alternatives, the Nation proposed a regional water infrastructure 
supply project as the primary method to meet the minimum needs for 
drinking water on the Navajo Reservation in Utah. The project as 
proposed would rely on groundwater and San Juan River water 
conjunctively to most effectively utilize available supplies. In an 
attempt to meet water needs in Utah in a comprehensive manner, the 
White Paper also proposed a package of smaller developments that would 
address long overdue projects on the IHS Sanitation Deficiency List, 
address necessary short-term capital improvements, and implement an 
agricultural water conservation program. The estimated cost of the 
projects included in the White Paper formed the basis for the amount of 
the settlement Fund.
    The Nation, together with the United States and the State of Utah, 
has expended significant time and effort to develop proposed uses of 
this funding that will give us the greatest return from the investment. 
However, there is flexibility built into the settlement, and once funds 
are appropriated under this Act, actual project design, construction, 
and management will be the full responsibility of the Navajo Nation. 
This Fund-based approach is unique. While other settlements authorize a 
federal agency to plan, design and construct water infrastructure 
projects, there are several reasons that we think a settlement fund is 
the right approach for this settlement. First, the Navajo Nation has an 
expert Department of Water Resources with the technical capacity to 
manage these kinds of projects and to build them in the most cost-
efficient manner. Second, the water planning studies that have preceded 
this settlement make clear that future developments that cannot be 
accurately projected now--whether in population size, community 
development, water quality, or others--and the Nation needs flexibility 
to adapt its water infrastructure plans on an on-going basis. Third, 
given the fact that the Navajo Reservation extends into multiple 
states, there are potential costs savings in constructing water 
projects that may cross-state lines. Fourth, Navajo management of the 
funds is consistent with the federal goal of tribal self-determination. 
While the Nation is aware that funding associated with this settlement 
is limited to use within the boundaries of the State of Utah, the 
flexibility to adopt project designs that take advantage of economies 
of scale is particularly important for this settlement. In summary, the 
Navajo Nation has the institutional capacity to manage these funds 
effectively, to adapt to unforeseen developments, and to produce 
results demanded by the Navajo people.
    However ultimately configured, the projects that the Navajo Nation 
plans to undertake with the settlement Fund will make a lasting impact 
on the lives of the Navajo people in Utah. Together, a regional water 
supply project, coupled with short-term capital improvements and water/
sanitation facilities connecting homes to the water supply project, 
though modest in terms of overall need, represent a comprehensive 
approach to meet current and future demands. The work on agricultural 
water conservation will help Navajo farmers deal proactively with the 
risk of water shortage, and allow for the potential leveraging of funds 
available from the USDA for water management. The Fund will make 
possible projects that will lead to improved water management and water 
availability, making the Navajo Reservation in Utah a place where 
people can live and work.
Conclusion
    I cannot emphasize enough that securing the Nation's water rights, 
and building infrastructure to convert paper water rights into wet 
water, are the necessary foundation for economic growth. S. 664 is 
important legislation that would confirm the settlement of the Nation's 
water rights and help build desperately needed water infrastructure. 
When I campaigned for President, the need for infrastructure 
development was constantly brought up as a priority by my constituents, 
the Navajo people. Infrastructure development is one of the Four 
Pillars of my administration, together with job creation, and programs 
for Navajo veterans, elders and youth. Your assistance in enacting S. 
664 into law will help the Navajo people to realize our economic 
potential, creating jobs and improving living conditions in a part of 
the country that has been ignored for far too long.
    Since signing the Treaty of 1868, the Navajo people have taken 
their treaty obligations seriously. When the United States needed us, 
brave Navajo men and women heeded the call to serve in all branches of 
the armed forces. The Navajo Code Talkers used our language to devise 
an unbreakable code; there could be no better example of the way the 
partnership between the United States and Native peoples strengthens us 
all. For my people, fighting to preserve American freedom is also 
fighting to preserve the Navajo homeland. The American ideal is not 
just an abstraction; it is a place where communities like those within 
the Navajo Nation have a chance to develop into viable economies, where 
our young people can learn our values, and where our culture can 
thrive. We have a saying, to bee iina--water is life; water helps us 
live. Without water and a means to get it to our people, we cannot 
survive.
    This settlement legislation, if enacted, will help the Navajo 
Nation to build vital infrastructure and help our next generation to be 
our most successful generation yet. We are asking the United States to 
fulfill its promises under the Treaty of 1868 to work with us to a 
create a viable homeland. We stand ready to work with Congress and the 
Administration, together with the State of Utah, to push this 
settlement to this finish line and to ensure that it is implemented. 
Again, we appreciate Governor Herbert's and Senator Hatch's leadership 
and the Committee's attention to this important issue. With your help, 
we can secure a bright and prosperous future for the Navajo Nation. 
Thank you. Ahehee'.

    The Chairman. Thank you, Chairman Begaye.
    Mr. Mikkelsen.

  STATEMENT OF ALAN MIKKELSEN, DEPUTY COMMISSIONER, BUREAU OF 
          RECLAMATION, U.S. DEPARTMENT OF THE INTERIOR

    Mr. Mikkelsen. Mr. Chairman, I would ask that my opening 
statement be submitted for the record.
    I would also simply like to note that the department, for 
the record, does support Indian water rights settlements, 
particularly as an alternative to the protracted and divisive 
litigation that often results if we do not do this.
    With that, I will forego my opening statement.
    [The prepared statement of Mr. Mikkelsen follows:]

 Prepared Statement of Alan Mikkelsen, Deputy Commissioner, Bureau of 
              Reclamation, U.S. Department of the Interior
    Good afternoon Chairman Hoeven, Vice Chairman Udall, and Members of 
the Committee. My name is Alan Mikkelsen, and I am the Deputy 
Commissioner at the Bureau of Reclamation (Reclamation) and Chair of 
the Working Group on Indian Water Settlements at the Department of the 
Interior (Department). I am pleased to appear before you today to 
discuss Indian water rights settlements, a subject I have first-hand 
and extensive experience with given my years working and living 
throughout the West.
    Thank you for the opportunity to provide the Department's position 
on S. 1770, the Hualapai Tribe Water Rights Settlement Act of 2017, 
which would approve and provide authorizations to carry out the 
settlement of certain water right claims of the Hualapai Tribe in 
Arizona (Tribe). The Department has significant concerns about the 
Federal costs of the settlement, totaling approximately $173.5 million 
in 2016 dollars, which we believe may also underestimate its true cost. 
In addition, the United States has significant concerns regarding the 
overly-broad and unnecessary waiver of federal sovereign immunity in S. 
1770. For these, and other reasons, the Department cannot support S. 
1770 as introduced, but is eager to work with all of the interested 
parties to negotiate a settlement that adheres to the Criteria and 
Procedures.
I. Introduction
    Before I begin discussing the Hualapai settlement, I want to note 
that the Department supports the policy that negotiated Indian water 
rights settlements are preferable to protracted and divisive 
litigation. Indian water rights settlements have the potential to 
resolve long-standing claims to water, provide certainty to water 
users, foster cooperation among water users within a watershed, allow 
for the development of water infrastructure, promote tribal sovereignty 
and self-sufficiency, and improve environmental and health conditions 
on reservations. We understand that Congress plays an important role in 
approving Indian water rights settlements, especially when they involve 
federal spending, the alteration of the Tribe's reserved water rights, 
or the waiver of the United States' sovereign immunity, and we stand 
ready to work with this Committee and Members of Congress to advance 
Indian water rights settlements. The framework the Department follows 
to guide the negotiation of Indian water rights settlements, and the 
support for legislation to authorize these settlements, includes four 
general principles set forth in the Criteria and Procedures published 
in 1990. First, settlements must be consistent with the Nation's trust 
responsibilities. Second, Indian tribes must receive equivalent 
benefits in exchange for the rights they, and the United States as 
trustee, release as part of a settlement. Third, Indian tribes must 
obtain the ability to realize value from confirmed water rights, which 
ensures they do not receive legal rights to water supplies that never 
materialize in the delivery of water. Fourth, settlements must contain 
an appropriate cost-share by all parties benefiting from the 
settlement. In our current budget climate, concerns over federal costs 
are an area of particular interest to the Department as we evaluate 
Indian water rights settlements.
II. Historical Context
A. The Hualapai Reservation and the Hualapai Tribe
    The Hualapai Tribe's aboriginal homeland is located in the Grand 
Canyon and plateau region to the south of the Grand Canyon. The Tribe's 
main Reservation was established in January 4, 1883 by Executive Order, 
and is comprised of approximately 992,462 acres of tribal trust lands 
in northwestern Arizona. The tribal headquarters is Peach Springs, 
Arizona, near the southern boundary of the Reservation. The northern 
boundary of the main Reservation is 108 miles along the Colorado River 
in the Grand Canyon. There is also a 60-acre Executive Order 
Reservation located in the Big Sandy River Basin, approximately 40 
miles south of the main Reservation.
    The population of the Reservation is 1,621, of whom 1,353 are 
tribal members, according to the 2010 U.S. Census. The total tribal 
membership in 2010, including members living off the Reservation, was 
2,300. The majority of on-Reservation residents reside in or near Peach 
Springs.
    The primary sources of employment on the Reservation are 
recreation, tourism, and tribal and federal government services. The 
Grand Canyon is the primarily source of tourism on the Reservation, 
with considerable tourism activities located at the Tribe's tourism 
center, Grand Canyon West, and from river rafting in the Colorado 
River. The Tribe also owns and operates the Hualapai Lodge, located in 
Peach Springs.
    In 2007, the Tribe completed Grand Canyon West, which includes the 
Skywalk, a horseshoe-shaped glass-bottom walkway that extends out from 
the rim of the Grand Canyon. Annual visitation at Grand Canyon West has 
steadily increased since its opening, and exceeded one million visitors 
for the first time in 2015, making it the primary economic driver on 
the Reservation.
B. Water Resources of the Hualapai Reservation
    The main Reservation is located primarily in the Colorado River 
Basin with a small portion in the Upper Verde River Basin. The majority 
of on-Reservation streams are ephemeral. Several springs discharging 
from the regional aquifer at the bottom of canyons can provide base-low 
for short perennial reaches, which ultimately discharge to the Colorado 
River. The largest of these perennial streams are Diamond Creek and 
Spencer Creek, with mean annual flows of over 3,700 acre-feet per year 
(afy) and 4,600 afy, respectively. The springs that feed these streams 
are remotely located in deep canyons and are not practically accessible 
for use by the Tribe. Smaller springs on the plateaus provide water for 
livestock purposes.
    Groundwater resources on the Reservation occur in varying degrees 
of magnitude, depending on the type and location of water-bearing 
zones. The Department is conducting groundwater studies in an effort to 
accurately characterize the groundwater resources on and near the 
Reservation.
    The major water use on the Reservation occurs in two locations: the 
town of Peach Springs and Grand Canyon West. Three wells serve the 
Peach Springs public water supply system and are located approximately 
6.5 miles southwest of the town. The current level of water use in 
Peach Springs is approximately 250 afy. All supply wells produce water 
from the Truxton aquifer, an aquifer in the Truxton Valley that extends 
off the Reservation. Water for Grand Canyon West is supplied via a 
pipeline from a well approximately 30 miles away. Current water use at 
Grand Canyon West is 40 afy. Current cumulative water use for the 
Reservation is approximately 300 afy.
III. Proposed Hualapai Tribe Settlement Legislation
    The Tribe claims water rights in the Colorado, Verde, and Bill 
Williams River basins. Negotiations regarding potential settlement of 
the Tribe's water rights claims have been ongoing since 2011, when the 
United States established a negotiating team to negotiate .a 
comprehensive settlement of all the Tribe's water rights within 
Arizona. The settlement was divided into two phases; the first phase 
addressed reserved water rights to several off-reservation tracts in 
the Bill Williams River Basin and resulted in the Bill Williams River 
Water Rights Settlement Act of 2014, P.L. 113-223. The second phase, 
addressed in S. 1770, covers additional water rights in the Bill 
Williams River Basin, as well as the remainder of the Tribe's water 
rights in the Colorado River Basin and the Verde River Basin.
    S. 1770 would resolve the Tribe's remaining water rights claims in 
Arizona; ratify, and confirm the Hualapai Tribe water rights settlement 
agreement among the Hualapai Tribe, the United States, the State of 
Arizona, and others; and authorize funds to implement the settlement 
agreement. The bill would reallocate 4,000 acre-feet of fourth-priority 
Central Arizona Project (CAP) non-Indian agriculture priority water to 
the Tribe to be used for any purpose on or off the Reservation within 
the lower Colorado River basin in Arizona.
    S. 1770 authorizes the appropriation of a total of $173,500,000 for 
the following purposes:

    $134,500,000 to design and construct the Hualapai Water 
        Project (Project), consisting of approximately 70 miles of 
        pipeline from the Colorado River to Peach Springs and Grand 
        Canyon West, two water treatment plants, several pumping 
        plants, and other appurtenant features with an overall capacity 
        designed to deliver 3,414 afy;

    $32,000,000 for the Hualapai OM&R Trust Account, to be used 
        by the Tribe for operation, maintenance, and replacement of the 
        Project;

    $5,000,000 for the Secretary of the Interior for operation, 
        maintenance, and replacement of the Project until such time 
        that title of the Project is transferred to the Tribe by the 
        Secretary; and

    $2,000,000 for the Secretary to provide technical 
        assistance to the Tribe, including operation and management 
        training for the Project.

IV. Department of the Interior Positions on S. 1770
    While the Department continues to strongly support Indian water 
rights settlements, the Department has significant concerns about S. 
1770 and cannot support the legislation as introduced.
    The Department is concerned about the scope and size of the Project 
given current and projected water uses on the Reservation. In addition, 
we believe the cost to construct a 70-mile pipeline from the Colorado 
River lifting water over 4,000 feet in elevation will greatly exceed 
the costs currently contemplated in S. 1770 and might trigger 
significant additional litigation.
    The Department believes it should evaluate the water rights, water 
availability, and water resource needs of the tribe from a holistic 
viewpoint, including information regarding available groundwater 
resources. Completing ongoing groundwater studies will inform the 
Department's views on the proposed pipeline.
    The Criteria and Procedures require us to analyze whether the 
settlement ``include[s] nonFederal cost sharing proportionate to the 
benefits received by the non-Federal parties.'' We believe that the 
State parties can and should contribute a commensurate share of the 
cost of the settlement in return for the benefits they will receive. As 
an example, the state of Montana, with barely one million residents, 
has contributed tens of millions of dollars in appropriated settlement 
funds to Montana Indian Water Rights Settlements.
    S. 1770 includes an overly broad waiver of sovereign immunity 
provision--which allows for suits against the United States by ``[a]ny 
landowner or water user in the Verde River Watershed or the Colorado 
River basin within the State of Arizona'' and for the interpretation of 
previously enacted statutes. This waiver of sovereign immunity is 
unnecessary and overly broad and presents a significant concern for the 
United States.
    S. 1770 also includes several additional provisions that the 
Department is concerned about, including an unnecessary reference to 25 
USC Section 211, which we believe is of limited application based on 
more current statutes; ambiguous settlement fund management language; 
and unnecessary obligations placed on the Bureau of Reclamation with 
respect to the proposed Project.
    As a final matter, the Department must register serious concern 
about provisions of S. 1770 and the settlement agreement that prohibit 
the Tribe and the United States from objecting to any use of 
groundwater outside the boundaries of the Reservation, even if those 
uses interfere with acknowledged Federal reserved groundwater rights.
V. Conclusion
    The Department recognizes that the Tribe, the State of Arizona, and 
the state parties want to achieve a Hualapai water settlement and have 
devoted substantial efforts to that goal. The Department shares this 
goal and is committed to working with the Tribe and the parties to 
reach a final and fair settlement of the Tribe's water rights claims 
that adheres to the Criteria and Procedures, and that we can fully 
support.
                                 ______
                                 
    Thank you for the opportunity to provide the Department's position 
on S. 664, the Navajo Utah Water Rights Settlement Act of 2017, which 
would authorize the settlement of water right claims of the Navajo 
Nation (Nation) to the portion of its land within the State of Utah. 
The Department supports the goals of the settlement, which include 
quantifying the reserved water rights attached to the Utah portion of 
the Navajo reservation and facilitating the development of essential 
municipal water systems that will provide a reliable quantity and 
quality water supply for the communities within the Reservation, which 
currently lacks the sort of basic services that most Americans take for 
granted. The Department is working with the Nation and sponsor of S. 
664 to ensure this bill meets these goals while adhering to the 
Criteria and Procedures that guide the Department's participation in 
Indian water right settlements.
I. Introduction
    Before I begin discussing the Navajo Utah settlement, I want to 
note that the Department supports the policy that negotiated Indian 
water rights settlements are preferable to protracted and divisive 
litigation. Indian water rights settlements have the potential to 
resolve long-standing claims to water, provide certainty to water 
users, foster cooperation among water users within a watershed, allow 
for the development of water infrastructure, promote tribal sovereignty 
and self-sufficiency, and improve environmental and health conditions 
on reservations. We understand that Congress plays an important role in 
approving Indian water rights settlements, especially when they involve 
federal spending or the waiver of the United States' sovereign 
immunity, and we stand ready to work with this Committee and Members of 
Congress to advance Indian water rights settlements.
    The framework the Department follows to guide the negotiation of 
Indian water rights settlements, and the support for legislation to 
authorize these settlements, includes four general principals set forth 
in the Criteria and Procedures published in 1990. First, settlements 
must be consistent with the Nation's trust responsibilities. Second, 
Indian tribes must receive equivalent benefits in exchange for the 
rights they, and the United States as trustee, release as part of a 
settlement. Third, Indian tribes must obtain the ability to realize 
value from confirmed water rights. This ensures Tribes do not receive 
legal rights to water supplies that never materialize in the delivery 
of water. Fourth, settlements must contain an appropriate cost-share by 
all parties benefiting from the settlement. In our current budget 
climate, concerns over federal costs are an area of particular interest 
to the Department as we evaluate Indian water rights settlements.
II. Historical Context
    The Navajo Reservation is the largest Indian reservation in the 
United States with a current total membership of 300,048, of which 
217,609 live on the reservation. The Navajo Reservation has a total 
unemployment rate five times the national average, a median household 
income of $20,005, and a poverty level of approximately 42 percent. The 
Navajo Indian Reservation consists of approximately 26,600 square miles 
in Arizona, New Mexico, and Utah. Approximately 1,987 square miles lie 
in southeastern Utah and are the focus of this settlement. The current 
boundaries of the Navajo Nation Reservation in Utah were established 
over a period of time by two Executive Orders and two congressional 
Acts between the years of 1884 and 1958. Currently, there are 5,029 
Navajo tribal members residing within the Utah portion of the 
reservation.
    The portion of the Navajo Reservation in Utah is primarily a desert 
landscape with much of the area receiving about 7 inches of water per 
year. Surface water resources include the San Juan River and its 
tributaries, which flow along the much of the northern boundary of the 
Reservation in Utah. The primary potable water source is almost 
entirely from groundwater and the majority of the groundwater is of 
relatively low quality. The shallow aquifers near Monument Valley 
provide the highest quality water, but those aquifers are nearly fully 
utilized. The deeper bedrock aquifers in the eastern portions of the 
Reservation contain more water but have significant water quality 
issues, including high total dissolved solids (TDS) and arsenic. Much 
of the Reservation in Utah lacks easy access to potable water. Of the 
2,581 households, only roughly half have indoor plumbing. Approximately 
46 percent of households haul water, some as far as 50 miles round-trip 
from Halchita to Monument Valley.
III. Proposed Navajo Utah Settlement Legislation
    Since 2003, the State of Utah, the Nation, and the United States 
have worked cooperatively, without litigation, to negotiate a water 
rights settlement for the portion of the Navajo Reservation within 
Utah.
    As introduced, S. 644 contains a number of provisions that the 
Department supports. The legislation recognizes a reserved water right 
of 81,500 acre-feet per year of depletion for the Navajo Nation, which 
will be deducted from the State of Utah's allocation of water in the 
Upper Basin of the Colorado River. The Department believes that the 
amount of water negotiated is an appropriate quantification of the 
Nation's water rights and is in keeping with important statutes, 
compacts, and regulations that make up the ``Law of the Colorado 
River.'' As part of the proposed settlement, the Navajo agree to 
subordinate their reserved water right to all perfected non-tribal 
water rights as of the date the settlement is signed, which is 
relatively common in in tribal water rights settlements. Finally, S. 
664 provides for exchange and lease of Navajo's water rights within 
Utah, allowing for greater flexibility in the use of water resources 
and greater drought resiliency.
    As introduced, Section 6 of the bill would authorize $198.3 million 
in appropriations for Reclamation to plan, design, and construct 
several Navajo water development projects. S. 664 also includes $11.4 
million to establish an operation and maintenance fund to cover the 
initial operation and maintenance costs associated with projects 
constructed from the water development fund, as well as $1 million for 
a survey of all current water uses on the Utah portion of the 
Reservation, which will allow both the State and Nation to manage water 
resources. Section 6 also includes a state contribution of $8 million 
payable to the Secretary of the Interior for planning, design and 
construction of the Navajo water development projects.
    In evaluating the project plans and cost estimates, Reclamation 
identified deficiencies that would require significant time and effort 
to resolve and very likely would lead to project cost overruns in the 
future. Subsequent to the introduction of S. 664, the United States, 
the Nation, and the State discussed a simplified settlement, which 
would replace the Department's construction obligations under Section 6 
with a water development fund to be used by the Nation to build water 
projects on an as needed basis. Such a revision would afford the Navajo 
Nation the opportunity to achieve economic efficiency and flexibility 
in designing and construction water projects over time as needs arise. 
We believe that a fund-based settlement would allow for tribal self-
sufficiency in meeting future water needs while, at the same time, 
relieving the Department of the risks inherent in attempting to design 
and estimate the costs of projects that have not advanced beyond a 
conceptual level. We will continue to work with the Nation, the State, 
and the bill sponsor to craft changes to the proposed bill that would 
allow for Administration support.
    The Department also has other concerns about the bill as 
introduced. Of significant concern is how the water rights held by 
individual Indians on public domain allotments located within the 
exterior boundaries of the Reservation will be quantified and 
protected. We have made substantial progress with the Nation and the 
State in negotiating potential changes to bill language that would 
address this concern and are confident that we will be able to 
satisfactorily address this issue. The provisions on indexing the water 
development fund are also under discussion. Finally, the waiver 
language included in the bill as introduced needs to be modified to be 
consistent with current Administration policy.
IV. Conclusion
    In conclusion, the Department supports the goals of the settlement 
which include quantifying the reserved water rights attached to the 
Utah portion of the Navajo reservation and facilitating the development 
of essential municipal water systems that will provide a reliable 
quantity and quality water supply for the communities within the 
Reservation. The Department is supportive of a fund-based settlement 
for the Navajo Utah Reservation, as it would allow the Nation the 
greatest flexibility and self-determination in meeting its future water 
needs. The Department is working with the Nation and sponsor of S. 664 
to ensure this bill meets these goals while adhering to the Criteria 
and Procedures established for tribal water right settlements.

    The Chairman. Mr. Clarke.

   STATEMENT OF HON. DAMON CLARKE, CHAIRMAN, HUALAPAI NATION

    Mr. Clarke. I wanted to thank you, Senator Hoeven, Senator 
Udall and members of the Committee, especially Senator Flake, 
for bringing this forward to the Committee for their 
consideration.
    I thank everyone else who has been a part of this to give 
us the opportunity to bring water to a very, very rural area. 
Without it, we would not be making strides to give our tribe 
that economic development.
    Thank you.
    [The prepared statement of Mr. Clarke follows:]

   Prepared Statement of Hon. Damon Clarke, Chairman, Hualapai Nation
    Chairman Hoeven, Vice Chairman Udall and members of the Committee, 
my name is Dr. Damon Clarke, Chairman of the Hualapai Tribe.
    The Hualapai Tribe strongly supports S. 1770, the Hualapai Tribe 
Water Rights Settlement Act of 2017. Before I describe the major 
elements of this legislation and the critical benefits the Tribe 
receives from it, let me briefly inform the Committee of the Tribe's 
pressing water needs.
    The Hualapai Reservation encompasses approximately 1 million acres 
in northwestern Arizona. All lands on the Reservation are tribal trust 
lands; there are no allotments or fee inholdings. The Colorado River 
forms the 108-mile northern boundary of the Reservation through a 
portion of the Grand Canyon.
    Our Reservation has no significant surface streams other than the 
Colorado River, and has very limited groundwater resources. While the 
Tribe now relies on groundwater to serve Peach Springs, which is our 
principal residential community, that groundwater is a depletable 
resource and well levels on the Reservation are dropping. The Colorado 
River is the only feasible water supply for satisfying the long-term 
future needs of Peach Springs and of the rest of our Reservation. Our 
Tribe needs delivery of Colorado River water both to provide a 
permanent and secure water supply for the domestic and residential 
needs of our present and future population, and also to fully realize 
the unique opportunities for economic development that we have at Grand 
Canyon West--a world class on-Reservation tourist development that the 
Tribe operates on the western rim of the Grand Canyon.
    The Hualapai Reservation does not have the natural resources to 
permit commercial agriculture, timber or mineral development. But the 
Reservation's virtually unique location on the Grand Canyon gives the 
Tribe a strong basis to create a self-sustaining tourism-based economy. 
Grand Canyon West is the centerpiece of the Tribe's economy. The Grand 
Canyon Resort Corporation, a tribal corporation which operates Grand 
Canyon West and other tribal enterprises, along with the tribal 
government, currently employs more than 1,500 workers (more than 550 of 
which are non-Hualapai members). The Hualapai Tribe is the second 
largest employer in Mohave Country, Arizona. Grand Canyon West hosts 
over 1 million visitors a year.
    As successful as Grand Canyon West has been to date, there is an 
even greater unrealized potential to further develop Grand Canyon 
West--but we are unable to take advantage of this potential because of 
a critical lack of water. The nearest groundwater to Grand Canyon West 
is 35 miles away, and the supply from that low-production well is 
barely adequate for current operations, and completely inadequate for 
growth. With the Colorado River water that the Tribe would receive from 
this settlement, and with the infrastructure to deliver that water to 
Grand Canyon West that would be authorized by this legislation, the 
Tribe could take full advantage of the potential for further 
development of Grand Canyon West that would create additional jobs for 
both tribal members and non-Indians, as well as provide new revenues 
for our tribal government.
    But there would also be significant benefits beyond this. I am 
accompanied today by Professor Joseph P. Kalt from the Harvard Project 
on American Indian Economic Development at the John F. Kennedy School 
of Government. Professor Kalt was commissioned by the Tribe to analyze 
the economic impact that enactment of S. 1770 would have on the 
regional economy of northwestern Arizona and southern Nevada, as well 
as on the economy of the State of Arizona and the Nation as a whole. 
Professor Kalt's report, which is attached to his written testimony, 
states that the significant increase in visitors to both Grand Canyon 
West and the Grand Canyon National Park in recent years serves as 
evidence that the Grand Canyon will continue to attract a growing 
number of visitors in the coming years. His report also states that the 
economic development of Grand Canyon West that would be triggered by 
the water and infrastructure authorized by this legislation would 
support an average of more than 6,500 jobs per year in Arizona, and 
close to 1,000 jobs per year in southern Nevada. For the Nation as a 
whole, the project would support an average of more than 10,000 jobs 
per year, nearly $1.5 billion in federal tax revenues in present value, 
and a present value of more than $9.3 billion in gross domestic product 
(GDP) for the United States. I believe this settlement is unique among 
Indian water settlements in supporting this level of regional and 
national economic benefits-benefits that dwarf the level of federal 
outlays authorized by S. 1770.
    The use and delivery of water for this kind of economic development 
is well within the parameters of past Indian water rights settlements. 
Most Indian water rights settlements in this century have provided 
federal funding for infrastructure development to support commercial as 
well as residential uses of water. There is, for example, ample recent 
precedent for federally-funded irrigation projects to deliver water to 
Indian reservations for purposes of commercial agricultural, where 
agriculture is the basis of a tribe's economy. And in other recent 
settlements, federally-funded projects have delivered water to support 
other kinds of economic development--including hydropower and other 
energy development, and a retail travel center. Therefore, the 
infrastructure development for the Hualapai Tribe's tourism-based 
economy that is authorized by S. 1770 is completely consistent with 
past Indian water rights settlements approved by Congress.
    The lack of water we currently suffer at Hualapai also imposes 
another substantial burden on our members. Grand Canyon West is located 
a two-hour drive on a dirt road from Peach Springs, where virtually all 
tribal members on the Reservation live. Thus, tribal employees at Grand 
Canyon West have daily round-trip commutes of four hours a day to their 
jobs, longer in inclement weather. Currently, it is impossible to 
locate a residential community at Grand Canyon West because of the lack 
of water there. This imposes an unsustainable burden on tribal members 
who work at Grand Canyon West, and on their families. The Tribe 
urgently needs Colorado River water at Grand Canyon West in order to 
allow the Tribe to construct a residential community there so tribal 
member can reside near to their jobs on the Reservation.
    Over the past seven years, the Hualapai Tribe has, in two phases, 
negotiated a settlement of all of the Tribe's reserved water rights 
with the State of Arizona and major private entities in Arizona. The 
United States actively participated in these settlement negotiations 
through a Federal Negotiating Team consisting of representatives from 
affected Interior Department agencies and from the Department of 
Justice. In phase 1, the parties successfully resolved a portion of the 
Tribe's water rights--those in the Bill Williams River watershed, where 
the Tribe has a small parcel of Reservation land and some allotted 
trust land--in a settlement that was ratified by the Bill Williams 
River Water Rights Settlement Act of 2014, Pub. L. 113-223, 128 Stat. 
2096 (Dec. 16, 2014).
    The Tribe and the State parties have now reached agreement on phase 
2. The legislation now before the Committee, S. 1770, would resolve the 
Tribe's remaining water rights claims on a comprehensive basis. The 
legislation is strongly supported by the State of Arizona and by the 
private entities which are parties to the settlement--the Salt River 
Project, Central Arizona Water Conservation District and Freeport 
Minerals Corporation. It is also strongly supported by Mohave County, 
the local jurisdiction in which most of the Reservation is located.
    Let me now summarize the principal elements of the comprehensive 
water rights settlement ratified by S. 1770:

    The Act comprehensively settles of all of the Hualapai 
        Tribe's federally reserved water right claims for its 
        Reservation and trust lands.

    The Tribe receives exclusive rights to all groundwater and 
        surface water on the Reservation and its other trust lands, and 
        agrees not to object to any pumping of groundwater or 
        diversions of surface water outside the Reservation or its 
        trust lands.

    The Tribe receives an allocation of 4,000 acre-feet a year 
        of Central Arizona Project water from the Colorado River. Of 
        this amount, 1,115 acre-feet a year will be ``firmed'' (half by 
        the United States and half by the State) until 2108 to protect 
        against future shortages of the availability of Colorado River 
        water in Arizona. The Act also provides that the Tribe itself 
        can ``firm'' additional portions of the Central Arizona Project 
        Water allocated to the Tribe in any year the water is available 
        and is not needed for delivery to the Reservation.

    The legislation authorizes the expenditure of $134.5 
        million in federal funds (in 2016 dollars) to construct an 
        infrastructure project to deliver up to 3,414 acre-feet a year 
        from the Colorado River to the Reservation. The project would 
        divert water from the Colorado River on the Reservation at 
        Diamond Creek and then deliver it through a 70-mile pipeline to 
        both Peach Springs and Grand Canyon West. This system would 
        replace the Tribe's reliance on the existing groundwater wells 
        (except when those wells are needed as an emergency backup). 
        The legislation also authorizes an OM&R Trust Fund of $32 
        million for the Tribe partially to defray future costs of 
        operating, maintaining and replacing the project works, $5 
        million for OM&R costs prior to transfer of the project to the 
        Tribe, and $2 million for training of Tribal members in 
        operating and managing the project.

    Certain lands designated by the legislation owned by the 
        Hualapai Tribe near the Reservation will be brought into trust 
        status and certain other lands currently held in trust for the 
        Tribe will be made part of the Hualapai Reservation.

    There are substantial non-federal contributions to this settlement. 
As part of the phase 1 Bill Williams settlement, the Freeport Minerals 
Company provided a significant multi-million dollar contribution to a 
Hualapai Tribe economic development fund which the Tribe can use to 
purchase Colorado River water rights to supplement the allocation of 
CAP water provided by the settlement. The 2014 Bill Williams Settlement 
Act expressly states that this substantial funding from Freeport 
constitutes a non-federal contribution to the Tribe's comprehensive 
water rights settlement. Pub. L. 113-223 at sec. 5(d)(1)(B). Freeport 
also contributed an additional $1 million to the Tribe that enabled the 
Tribe to conduct an essential ``appraisal-plus level'' study to 
determine the feasibility and costs of alternative infrastructure 
projects to bring Colorado River water to the Hualapai Reservation. 
That study is the technical report referenced in this settlement 
legislation. The State of Arizona is also making a contribution, which 
it values at approximately $3.2 million, in the form of ``firming'' 
557.5 acre-feet-per year of the CAP water allocated to the Tribe, until 
the year 2108. Finally, the Tribe has agreed to fund the cost of 
constructing an electrical transmission line to the project, which the 
infrastructure study estimates will cost about $40 million. In 
aggregate these various non-federal contributions to the settlement 
constitute over 30 percent of the Federal costs of the comprehensive 
settlement.
    Passage of this legislation is absolutely essential if our Tribe is 
to realize the full economic potential of our Reservation. We have done 
everything possible to provide jobs and income to our people in order 
to lift them out of poverty--but the lack of a secure and replenishable 
water supply on our Reservation is our major obstacle to achieving 
economic self-sufficiency, a goal that Federal Indian policy has long 
favored. Passage of this legislation is essential to allow my Tribe to 
attain this goal.
    Thank you for the opportunity to testify before you today. I will 
be pleased to answer any questions you may have, and our Tribe will 
help in any way it can to secure enactment of this critical 
legislation.

                         supplemental testimony

    This supplemental testimony is in response to several ``concerns'' 
about the legislation set forth in the written testimony of Deputy BOR 
Commissioner Alan Mikkelsen, chair of the Department of Interior's 
Working Group on Indian Water Settlements.
    The Hualapai Tribe remains disappointed that the Department of 
Interior continues to withhold its support for a water rights 
settlement that has the strong support not just of the Tribe, but also 
of all of the major State and local stakeholders--the Governor of 
Arizona, the Arizona Department of Water Resources, the Central Arizona 
Water Conservation District, the Salt River Project and Freeport 
Minerals Corp. The settlement also has the strong support of Mohave 
County, the local jurisdiction in which most of the Reservation is 
located.
    Disputes between Indian tribes and non-Indians over rights to the 
Colorado River are particularly contentious and divisive matters in 
Arizona. When, as here, the Hualapai Tribe and the State parties have 
worked hard over a period of seven years to resolve one of these 
disputes and to craft a compromise that will strengthen both the Tribe 
and the non-Indian stakeholders, the Department should respect that 
effort by giving its support to that settlement.
    For the reasons set forth below, I believe that the criticisms of 
the settlement legislation set forth in Deputy Commissioner Mikkelsen's 
testimony are misguided.
1. The Need for Additional Groundwater Studies
    The Deputy Commissioner's testimony states that the Department must 
``complet[e] ongoing groundwater studies'' in order to ``inform the 
Department's view on the proposed pipeline.''
    This position is, for the Tribe, a particularly frustrating 
objection that is likely to lead to years of unnecessary delay in 
moving this settlement forward. I have previously pointed out to the 
Committee that the groundwater on the Hualapai Reservation has already 
been studied for decades, and none of the many prior studies has shown 
that there is a supply of groundwater sufficient to meet the long-term 
domestic and municipal needs of the Hualapai Tribe. Nor have any of the 
prior studies shown that the groundwater is sufficient to permit the 
Tribe to realize the significant opportunities for economic development 
that exist on the Reservation, but which the Tribe cannot pursue 
because of the lack of water. In my supplemental testimony to the 
Committee last year on S. 3300, I provided the Committee with a summary 
of all of the past Reservation groundwater studies that have been done. 
\1\
---------------------------------------------------------------------------
    \1\ S. 2636, S. 3216, S. 3222, and S. 3300, Hearing before the 
Committee on Indian Affairs, United States Senate, 114th Cong., 2d. 
Sess. (Sept. 14, 2016) (hereafter ``Hearing on S. 3300'') at 17-20 
(Supplemental Testimony of Dr. Damon Clarke, chairman of the Hualapai 
Tribe).
---------------------------------------------------------------------------
    This summary, which I attach again for the convenience of the 
Committee, references 16 prior studies of the groundwater on the 
Reservation, from 1942 through 2011, most of which were done by 
agencies of the Interior Department, including the U.S. Geological 
Survey (USGS), the Bureau of Reclamation (BOR), the Bureau of Land 
Management (BLM) and the Bureau of Indian Affairs (BIA). None of these 
prior studies gives any reason to believe that the groundwater on the 
Reservation can serve as a sufficient and reliable source of water even 
for the Tribe's short-term needs, much less for our long-term needs.
    In responses to written questions posed by Senator McCain after the 
Committee's hearing on S. 3300 last year, then-Assistant Secretary 
Larry Roberts said that the prior studies provide ``only general ranges 
of estimated groundwater discharges'' and do not ``give a high degree 
of certainty'' about the occurrence and movement of groundwater on the 
Reservation. Further study, the Assistant Secretary said, ``will 
provide improved understanding'' of the hydrogeology and ``may lead to 
improved characterization of groundwater resources.'' \2\
---------------------------------------------------------------------------
    \2\ Id. at 48 (emphasis added).
---------------------------------------------------------------------------
    Deputy Commissioner Mikkelsen appears to adhere to this prior 
Departmental position. Although it is hard to dispute the proposition 
that more study ``may lead'' to more information, the relevant question 
is whether the additional information is likely to provide the 
assurance the Tribe must have if we are expected to rely on 
groundwater--a depletable resource--instead of Colorado River water, as 
a long-term solution to our Tribe's critical water needs. And based on 
the many studies that already have been done--none of which shows that 
there are substantial groundwater resources on the Reservation--the 
answer to this question is certainly no.
    Further, the Department's insistence on conducting additional 
groundwater studies comes at an unacceptable cost to the Tribe in terms 
of delay, which will certainly be measured in years. The Tribe's 
experience with regard to the Department's most recent groundwater 
study is instructive.
    In February 2015, four years after the Tribe and the State parties 
began negotiating this settlement with the active participation of the 
Interior Department, the Department--for the first time--told the Tribe 
that it wanted to conduct additional groundwater studies on the 
Reservation. The Department said that it first would commission the 
USGS to study the Truxton Aquifer, which partially underlies the 
Reservation in the Peach Springs area, and that the study would be 
completed in six months.
    The Tribe received the results of that study in January 2017--
almost two years later. And the USGS report was, in the opinion of our 
hydrogeological experts, so flawed as to be neither credible nor 
useful. Our experts reviewed the study and concluded that it overstates 
the amount of groundwater in the Truxton Aquifer by a probable factor 
of 2. When we promptly provided the Department in February 2017 with 
our experts' reviews of the USGS study, we were told that USGS would 
consider those views and inform us as to whether it would revise its 
own report in light of them. Ten months later, we have heard nothing 
further. Thus, almost three years after the Department told the Tribe 
it intended to conduct additional groundwater studies, its first study 
is not yet complete. And the Department has admitted that other 
groundwater studies on the Reservation will also take years to 
complete.
    This delay is unfair, unjustified and unacceptable. It is unfair to 
the Tribe and the State parties, who have worked diligently and 
cooperatively for years to resolve the Tribe's claims to the Colorado 
River, and whose work is being undermined by the Department's call for 
years of additional studies. It is unjustified because multiple studies 
of groundwater on the Reservation have already been done, most of them 
by the Department itself, and none of the prior studies suggest that 
there is adequate groundwater to satisfy the Tribe's long-term needs. 
And it is unacceptable because, as I discuss in my initial testimony, 
the lack of water on the Reservation is causing tribal members to 
suffer ongoing hardship by having to endure daily four-hour commutes 
from their homes in Peach Springs to their jobs at Grand Canyon West, 
where the lack of water prevents any residential development. A 
solution to this problem cannot be put off for an indefinite number of 
additional years in order to allow the Department to conduct more 
groundwater studies simply because those studies ``may lead'' to more 
information.
2. The Cost Estimates for the Infrastructure Project
    Deputy Commissioner Mikkelsen repeats a criticism also made by the 
Department in its testimony before this Committee last year that the 
costs of the infrastructure project ``will greatly exceed the costs 
currently contemplated in S. 1770. . . .'' The Tribe has repeatedly 
asked the Department to substantiate this claim of cost overruns so we 
could respond to it, and the Department has failed to do so.
    The costs in the legislation are based on a thorough study 
conducted by a highly regarded engineering firm, DOWL, of Tucson, 
Arizona. The DOWL study included significant field investigations and 
was conducted at above the appraisal-level standard commonly used in 
Indian water settlements. Further, DOWL designed and completed its 
study in conjunction with staff from the Bureau of Reclamation, and 
based its study on BOR cost estimating methods. Another nationally 
recognized water resources specialty contractor, ASI Contractors, 
independently developed cost estimates for the project which were used 
by DOWL as a check on its own estimates. In short, the Tribe knows of 
no reason to expect cost overruns in this project, and nothing in 
Deputy Commissioner Mikkelsen's testimony, or in any other information 
the Department has provided to the Tribe, is a basis for concluding 
otherwise.
    In his responses to Senator McCain's written questions last year, 
then-Assistant Secretary Roberts did list certain broad cost categories 
for which he said BOR concluded that DOWL had underestimated the costs. 
\3\ But he also said that BOR has ``no finalized specific reports with 
respect to costs of the infrastructure project.'' Id. Without specific 
information about which costs the Department believes DOWL has 
underestimated, by how much, and why, it is simply impossible for the 
Tribe (or for DOWL) to evaluate the Assistant Secretary's generic 
summary of BOR's generic claim of cost overruns, or to respond to it. 
We do not think it is responsible for the Department to continue to 
criticize the DOWL cost estimates without substantiating its 
criticisms, providing specific information to the Tribe, and allowing 
us the opportunity to address the merits of the specific cost estimates 
that concern BOR.
---------------------------------------------------------------------------
    \3\ Id. at 49
---------------------------------------------------------------------------
3. The Threat of Litigation
    Another unsubstantiated Departmental criticism repeated by Deputy 
Commissioner Mikkelsen is that the Hualapai settlement ``might trigger 
significant additional litigation.'' (emphasis added). The Tribe knows 
of no litigation threat that has been made about the infrastructure 
project in the Hualapai settlement, even though information about the 
project has been in the public domain for well over a year, since the 
bill was first introduced in September 2016 in the 114th Congress.
    In his responses to Senator McCain's written questions last year, 
Assistant Secretary Roberts said it is ``likely that environmental and 
conservation organizations will oppose the project, and such opposition 
may include litigation. . . .'' \4\ This is speculation on top of 
conjecture. To the Tribe's knowledge, no environmental or conservation 
organization has publicly expressed opposition to the project, much 
less threatened litigation. If the Department has information to the 
contrary, it has a responsibility to discuss that information with the 
Tribe, which would permit the Tribe to reach out to the concerned 
organization in an effort to allay its concerns. The fact that the 
Department has never given the Tribe any specific basis for its fear of 
litigation, and instead appears to be basing its concern on no more 
than what ``may'' happen, is hardly a reasonable ground for not 
supporting the settlement.
---------------------------------------------------------------------------
    \4\ Id. at 49-50 (emphasis added).
---------------------------------------------------------------------------
4. The Non-Federal Cost Share
    Deputy Commissioner Mikkelsen criticizes S. 1770 because, he says, 
the State parties have not contributed ``a commensurate share of the 
costs of the settlement in return for the benefits they will receive.''
    As I pointed out in my principal testimony, the non-federal cost 
share in S. 1770 is over 30 percent of the amount of the federal cost, 
when all non-federal contributions are taken into account (including 
the Tribe's own very substantial contribution to the cost of 
constructing the project).
    It is, however, illuminating to see that the Department raised no 
issue with the nonfederal cost share in the Navajo Utah settlement in 
S. 664, a bill that was also examined by the Committee at the December 
6 hearing. In his testimony on that legislation, Deputy Commissioner 
Mikkelsen says that S. 664 authorizes a total of $210.7 million in 
federal appropriations for the projects contemplated in that 
settlement, and includes a State contribution of $8 million. That non-
federal cost share by Utah is less than 4 percent of the federal cost 
of that settlement, as compared to a non-federal cost-share in the 
Hualapai settlement that is a full 30 percent of the federal cost.
    Indeed, just one element of the non-federal cost share in the 
Hualapai settlement--the contribution by Freeport Minerals to the 
Tribe's economic development fund--is by itself larger than the entire 
contribution by the State of Utah in S. 664, even though the federal 
cost of the Hualapai settlement is 18 percent less than the federal 
cost of the Navajo Utah settlement. And as I previously pointed out, 
Congress specifically stated in the 2014 Bill Williams Settlement Act 
that this Freeport contribution is to be treated as a non-federal 
contribution to the comprehensive water rights settlement in S. 1770. 
Pub. L. 113-223, sec. 5(d)(1)(B).
    Thus, as compared to the Navajo Utah settlement, the non-federal 
cost share in the Hualapai settlement is more than six times greater in 
absolute terms (approximately $50 million v. $8 million), and more than 
seven times greater relative to the federal cost of each settlement 
(approximately 30 percent v. 4 percent). Yet the Department raises no 
objection to the nonfederal cost share in the Navajo Utah settlement 
while it criticizes the Hualapai settlement as having a non-federal 
cost share that is not ``commensurate.''
    The Department's differential treatment of the non-federal cost 
share in these two settlements is stark, unexplained and unfair.
5. Off-Reservation Groundwater Pumping
    The final significant concern raised in Deputy Commissioner 
Mikkelsen's testimony is that S. 1770 prohibits the Tribe from 
objecting to any use of groundwater outside the Reservation boundaries.
    This concern ignores the fact that the Tribe is given the right to 
the exclusive use of all groundwater on the Reservation, thereby 
prohibiting any non-Indian from objecting to any tribal use of 
groundwater on the Reservation. It also ignores the fact that this 
settlement is a negotiated compromise, with reciprocal concessions by 
the parties. As the Department surely knows from its participation in 
the six years of negotiations that led to this settlement, the State 
parties firmly refused to agree to any restrictions on groundwater 
pumping outside the Reservation, and advised the Tribe that such 
restrictions would require changes to State law that would, as a 
practical matter, be impossible to enact in the Arizona Legislature.
    The Tribe's agreement to forego such off-Reservation groundwater 
restrictions is reasonable because the thrust of the settlement is to 
provide the Tribe with sufficient water from the Colorado River to meet 
its domestic, commercial and municipal needs, so that the Tribe is not 
solely reliant on groundwater, as it is at present.
    In this light, the Department's concern that the Tribe has waived 
its right to object to off- Reservation groundwater pumping is neither 
wise nor practical: had the Tribe adopted the Department's policy 
position, it would only have led to an impasse among the parties and a 
failure of the settlement negotiation.
    While I am disappointed in Deputy Commissioner Mikkelsen's 
testimony, I am pleased that he said the Department is ``eager to work 
with all of the interested parties'' in the Hualapai settlement to 
reach a ``final and fair settlement of the Tribe's water rights 
claims'' that the Department can support. The Tribe intends to engage 
the Department promptly on this promise, but we nonetheless urge the 
Committee to support S. 1770 and to report the bill for action by the 
full Senate.
    I appreciate the opportunity to submit this supplemental testimony 
to the Committee. \5\
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    \5\ I would also like to take this opportunity to correct a 
misstatement made in my answer to a question at the hearing about the 
number of jobs that would be created if S. 1770 is enacted. I have 
again reviewed Professor Kalt's report which concludes, at page 51, 
that the economic development caused by the Diamond Creek pipeline 
would support an average of slightly over 10,000 jobs per year.
---------------------------------------------------------------------------
    Attachment
               Natural Resources Consulting Engineers, Inc.
                                        December 4, 2015 MEMORANDUM
To: Hualapai Project Files
From: NRCE, Inc.
                           RE: Previous Groundwater Studies

    This memorandum presents a list and brief description of previous 
groundwater studies on the Hualapai Reservation. The list of studies is 
separated between the deep regional aquifer and the alluvial-volcanic 
aquifers.
Deep Regional Aquifer
    Description: The deep regional aquifer on the Hualapai Reservation 
includes the Redwall-Muav Aquifer (R-Aquifer) and the Tapeats Sandstone 
lying at the bottom of the Paleozoic section in contact with 
crystalline basement rocks.

    Representative well yields from the R-Aquifer range from 5 
        to 40 gallons per minute, with 150 gallons per minute the 
        highest reported in the region (Twenter, 1962; Myers, 1987; and 
        others).

    There is some evidence indicating that faults, fractures, 
        and folds may enhance aquifer properties that can localize 
        potential for larger well yields; however targeting these 
        features using surface geophysics is speculative and drilling 
        costs are very high.

    The USGS conducted a hydrogeological study of the 
        Reservation between 1957 and 1962 (Twenter, 1962). The R-
        Aquifer was identified as the most promising aquifer, but 
        drilling depths were prohibitive.

    Several wells were drilled to various depths (mostly 
        shallow) in the late 1960s and 1970s by the BLM and the BIA 
        loosely based on Twenter's recommendations but most were 
        unsuccessful (Huntoon, 1977).

    Several deeper wells were completed on the Hualapai Plateau 
        in 1992 by the Bureau of Reclamation. One well drilled near the 
        GCW resort in 1992 targeted the deep regional R-Aquifer. The 
        well was deepened in 1999 (Watt, 2000). That well (GCW-1) 
        encountered groundwater only in the Tapeats Sandstone. The 
        shallower Redwall and Muav Formations were unsaturated. The 
        well is equipped with an oilfield-type pumping unit but is 
        currently unused due to low water quality and low yield (15-26 
        gpm).

    NRCE was contracted in 2005 to investigate and evaluate all 
        possible water supply options for the resort. The preferred 
        alternative recommended diversion from the Colorado River. 
        Groundwater development options were judged to be infeasible 
        for a variety of reasons, but primarily because of their 
        inability to supply the sustainable yield required by the Grand 
        Canyon West resort at a reasonable overall project cost.

    DOWL (2013) further assessed a few Colorado River 
        alternatives considered in the NRCE study. Groundwater 
        development alternatives were judged to be infeasible in this 
        study for the same reasons as the 2005 study by NRCE.

Alluvial-Volcanic Aquifers
    Description: The main alluvial-volcanic aquifers are in the 
northern Aubrey Valley around Frazier Wells (eastern part of the 
Reservation), Westwater Canyon, Peach Springs-Truxton Wash Valley, and 
elsewhere along the southwest flank of the Hualapai Plateau (e.g. Horse 
Flat area and the upper Milkweed Canyon). The alluvial-volcanic 
aquifers have areal extents that are limited by the valleys and washes 
that contain them. The volume of stored groundwater is similarly 
limited. Depth to water is generally shallow, typically less than 500 
feet below ground level, and well yields of up to 170 gallons per 
minute have been reported. Water from these aquifers is generally 
acceptable for domestic use.

    The Santa Fe Railroad drilled 6 fairly shallow wells within 
        Peach Springs between 1903 and 1922. The Hualapai Tribe 
        acquired use of water from the railroad spring-fed water system 
        between 1931 and 1954. One well near the town is currently 
        used.

    The USGS conducted a study in 1942 to assist location of 
        prospective sites for development of stock water supply on the 
        Hualapai Reservation (Peterson, 1942). In addition to a 
        hydrogeological characterization of the region, the study 
        inventoried numerous existing wells and stock ponds. Peterson 
        recommended 18 sites across the Reservation for drill-testing.

    N. J. Devlin evaluated the Peach Springs water system in 
        1973 and considered possibilities for development of additional 
        water supplies for the town. Devlin recommended further 
        development of the aquifer contained in the lake beds of 
        Truxton Valley. Development of other springs and other 
        exploration areas were judged to have low potential.

    The Indian Health Service drilled two wells in Truxton 
        Valley in 1972 to provide additional water supply for Peach 
        Springs. A third well was drilled in 1976 by the IHS in Truxton 
        Valley near the wells drilled in 1972. These wells currently 
        supply all of the water needs for the town of Peach Springs.

    The Bureau of Reclamation drilled an unsuccessful hole into 
        Cenozoic volcanics near the head of Milkweed Canyon in 1975. A 
        second successful well in Westwater Canyon alluvium and 
        volcanics was completed in 1975. This well currently provides 
        most of the water to Grand Canyon West via a 30-mile pipeline.

    A well drilled in the Frazier Wells area in the eastern 
        part of the Reservation serves a fish-rearing facility. An 
        additional two boreholes were completed in the shallow alluvial 
        aquifer in the Frazer Wells area in an effort by the Tribe to 
        develop additional groundwater supply. Both wells were dry and 
        were abandoned.

    Regional hydrogeological mapping by Richard Young (State 
        University of New York at Geneseo) focused on the Tertiary 
        volcano-sedimentary aquifer in the area of Westwater Canyon 
        near the well drilled by the Bureau of Reclamation (Young, R. 
        A., 1987, 1991, 1992, 2007). Stantec (2009) estimated the safe 
        yield of this aquifer to be approximately 600 afy. Further 
        development of this aquifer is prohibited by tribal policy as 
        it would likely reduce spring flow (considered to be a cultural 
        resource) in its discharge area.

    NRCE conducted an evaluation of the groundwater supply for 
        the town of Peach Springs in 2011. That study included an 
        inventory of wells in the sub-regional area, a comprehensive 
        review of the regional geology, an evaluation of hydrologically 
        attractive areas for development of additional groundwater 
        supplies in the southern part of the Reservation, and made some 
        specific recommendations for exploratory evaluation of both the 
        R-Aquifer and alluvialvolcanic aquifers. The adequacy of 
        natural aquifer recharge to support existing and future water 
        needs was also assessed.

    The Chairman. I apologize. I should have said President 
Begaye and Chairman Clarke. I just wanted to correct the 
record.
    Lieutenant Governor Cox, do you have any initial comments?

STATEMENT OF HON. SPENCER J. COX, LIEUTENANT GOVERNOR, STATE OF 
                              UTAH

    Mr. Cox. I would just say in my small town, we have a 
saying that whiskey is for drinking and water should be for 
fighting.
    Mr. Chairman, I am so grateful that we are not fighting 
about this one because it has been 15 years, a long time. It 
has been a wonderful relationship. We appreciate President 
Begaye and his leadership in making this happen. The entire 
State of Utah is in full support of this bill and this 
settlement.
    Thank you.
    [The prepared statement of Mr. Cox follows:]

 Prepared Statement of Hon. Spencer J. Cox, Lieutenant Governor, State 
                                of Utah
    Mr. Chairman and members of the Committee, thank you for the 
opportunity to testify today and to highlight an important example of 
two groups with sometimes differing interests coming together to find a 
solution to a critical challenge.
    Utah is one of the driest states in the Nation. Water is our 
lifeblood. Generally, water rights in Utah may only be created under 
state law. We recognize, however, that properly-established, federally-
reserved water rights, particularly tribal rights, are an important 
exception to that rule. We have committed to use negotiation rather 
than litigation as our preferred method of resolving reserved right 
claims. Such negotiations require commitment, patience, and trust.
    We have developed a high level of trust with the Navajo Nation as 
we have worked together for nearly 15 years to develop a reasonable and 
equitable resolution of water right claims for the portion of the 
Nation located within Utah's borders. This settlement is tremendously 
important to Utah because it fits within the structure of the Colorado 
River compacts, protects state-based water rights, and improves life 
for Utah Navajos.
    With these facts in mind, we wholeheartedly support Senator Hatch's 
Senate Bill 664 which embodies the Utah/Navajo Settlement and we ask 
you to quickly pass the bill.
    The following principles guided Utah in its settlement discussions 
with the Navajo Nation:

    Protecting existing water right commitments, including 
        those dictated by the structure and language of the Colorado 
        River compacts, the Law of the Colorado River generally, and 
        water rights established under Utah law;

    Providing finality with respect to the amount of Utah's 
        Colorado River allocation available for appropriation under 
        Utah law;

    Improving economic opportunities and quality of life for 
        citizens of the Nation who live in Utah, many of whom lack 
        basic necessities; including safe drinking water and water for 
        agriculture and industry,

    Respecting neighboring sovereigns, both the Nation and 
        sister states; and

    Promoting positive outcomes from negotiation which would be 
        unattainable through litigation;

    The agreement Senate Bill 664 embodies was initially negotiated 
between Utah and the Nation. Confident a settlement could be achieved, 
in 2007 the sovereigns petitioned the Department of Interior for the 
appointment of a federal negotiating team. The Department appointed a 
team in 2013. Review of the settlement by members of that team has 
resulted in helpful input.
    The Utah Legislature expressed support for the settlement by 
passing legislation in 2012 which established a water right settlement 
fund for Utah's monetary contribution toward the settlement. The State 
legislature has put $2 million in that fund with the understanding that 
additional, necessary funds will come from the State's ``rainy-day'' 
fund.
    We recognize funding for this settlement must compete for limited 
federal resources with other pressing needs. Nevertheless, we believe 
the settlement is essential for success of the Navajo Nation in Utah. 
The State and the Nation agree that the contemplated expenditure of 
about $200M of federal funds to achieve the settlement is both 
justified and appropriate. Both parties also agree that the appropriate 
State share for the settlement is $8M and Utah proposes to contribute 
that amount.
    The settlement fits within the structure of the Colorado River 
compacts and protects existing Utah water right commitments. It also 
ensures the United States' compliance with its trust obligation to the 
Navajo Nation and provides important, related waivers of liability 
regarding water rights and past water resource development. The 
settlement is fair, reasonable, and equitable to all parties. It 
benefits Utah, the Navajo Nation, and all states in the Colorado River 
Basin.
    This bill, and the process that led to it, is the essence of 
cooperative federalism. The state and tribal governments, with input 
and assistance from the federal government, have worked together to 
find an equitable solution to pressing challenges. This is the kind of 
agreement we should celebrate and try to do more often. Again, we 
recommend the Committee act favorably on this bill.
    And with that Mr. Chairman, I'm happy to answer any questions.

    The Chairman. Mr. Buschatzke, any opening comments before 
we proceed with some questions?

STATEMENT OF THOMAS BUSCHATZKE, DIRECTOR, ARIZONA DEPARTMENT OF 
                        WATER RESOURCES

    Mr. Buschatzke. Chairman Hoeven, Vice Chairman Udall, and 
Senator Flake, I too want to express my support to the Hualapai 
Tribe and the rest of the State parties who have helped us to 
negotiate this settlement. It is really important to the State 
of Arizona.
    It is one in a line of settlements the State has been able 
to work through with tribes in the State. I think it is a great 
step forward.
    Thank you.
    [The prepared statement of Mr. Buschatzke follows:]

 Prepared Statement of Thomas Buschatzke, Director, Arizona Department 
                           of Water Resources
I. Introduction
    My name is Thomas Buschatzke. I am the Director of the Arizona 
Department of Water Resources. Thank you for the opportunity to testify 
on behalf of the State of Arizona on S. 1770, the Hualapai Tribe Water 
Rights Settlement Act of 2017. The State of Arizona strongly supports 
S. 1770.
II. Importance of settling Indian water rights claims in Arizona
    There are 22 federally recognized Indian tribes within the State of 
Arizona. The total population of all Indian tribes in Arizona as of 
2010 was 234,891, which is the third highest among all states. The 
total area of all Indian reservations in Arizona is approximately 20 
million acres, which is second only to Alaska. Arizona ranks first 
among all states in the percentage of tribal land in the state--27.7 
percent.
    Half of the 22 federally recognized Indian tribes in Arizona still 
have unresolved water rights claims. Resolving these claims through 
settlement is a strategic priority for the State, not only because it 
will avoid the cost and uncertainty of litigating the claims, but it 
will provide certainty to all water users in the state regarding 
available water supplies in the most expeditious manner possible. In 
many cases, a settlement will also provide the tribe with funding to 
construct the infrastructure necessary to put its water supplies to 
beneficial use.
III. Hualapai Tribe's water rights claims
    The Hualapai Tribe is one of the eleven Indian tribes in Arizona 
with unresolved water rights claims. The Tribe's main reservation 
covers approximately one million acres in the northwestern portion of 
the state. The Colorado River forms the northern boundary of the 
reservation, and the Grand Canyon National Park is located immediately 
north of the reservation. The Tribe also has reservation and trust 
lands south of its main reservation in the Bill Williams River 
watershed.
    The Tribe has asserted claims for both groundwater and surface 
water for its reservation and trust lands. The Tribe's claims include a 
claim to water from the Colorado River, a critical water supply for 
agricultural, municipal and industrial water users along the Colorado 
River, as well as water users in Central Arizona using Colorado water 
delivered through the Central Arizona Project (CAP).
    The Tribe claims a right to Colorado River water for domestic, 
municipal and industrial uses on its reservation and trust lands, 
including use at Grand Canyon West. Grand Canyon West is a major 
tourist attraction located adjacent to the Grand Canyon on the Tribe's 
main reservation. One of the main features of Grand Canyon West is the 
Skywalk, a glass walkway overhanging the Grand Canyon where tourists 
can walk out and look through the glass walkway to the bottom of the 
Canyon.
IV. Settlement Negotiations with Hualapai Tribe
    In late 2011, the State of Arizona and several other major water 
users in the state (collectively referred to as the ``State Parties'') 
began negotiating with the Hualapai Tribe for a comprehensive 
settlement of the Tribe's water rights claims. The United States 
participated in the settlement negotiations through a negotiating team 
appointed by the Secretary of the Interior.
    Early in the settlement negotiations, the Tribe and State Parties 
agreed that as part of a comprehensive settlement of the Tribe's 
claims, the Tribe should receive an allocation of CAP water from the 
volume of Non-Indian Agricultural (NIA) priority CAP water set aside 
for future Indian water rights settlements in Arizona in the Arizona 
Water Settlements Act of 2004 (Public Law 108-451). The Tribe and the 
State Parties also agreed that the settlement should include an 
authorization by Congress of an appropriation of monies to construct a 
pipeline to carry the CAP water from the Colorado River to Peach 
Springs, the Tribe's main residential center, and Grand Canyon West.
V. Hualapai Phase 1 Settlement
    In late 2012, the parties agreed to bifurcate the settlement into 
two phases, with Phase 1 consisting of a limited settlement of the 
Tribe's water rights claims in the Bill Williams River watershed and 
Phase 2 consisting of a comprehensive settlement of all the Tribe's 
water rights claims in Arizona, including the Tribe's claims to water 
for its main reservation. The settlement was bifurcated so that Phase 1 
could become effective as soon as possible without waiting for the 
comprehensive settlement to be negotiated. Finalization of the Phase 1 
settlement by the end of 2015 was necessary to expedite a water rights 
transfer as part of the settlement, resulting in benefits to a state 
party, the federal government and the environment.
    The Phase 1 settlement was approved by Congress in December 2014 
and became law on December 16, 2014 (Public Law No: 113-223). The 
settlement became effective in December 2015 after all the conditions 
for the settlement were met.
    Although the Phase 1 settlement was not a comprehensive settlement 
of the Tribe's water rights claims, it included provisions designed to 
facilitate a comprehensive settlement that would include an allocation 
of NIA priority CAP water to the Tribe and the construction of a 
pipeline to carry the water to the Tribe's reservation. Those 
provisions are the following:

        1.  The settlement agreement provides that Freeport Minerals 
        Corporation (``Freeport''), one of the State Parties, will 
        transfer $1 million to the Tribe as a contribution toward the 
        cost of the Tribe's study of water project alternatives for its 
        main reservation.

        2.  The settlement agreement provides that Freeport will 
        contribute money to the Hualapai Tribe Economic Development 
        Fund. Both the settlement agreement and the legislation 
        approving the settlement provide that the money may be used 
        only for the purpose of facilitating settlement of the claims 
        of the Tribe for rights to Colorado River Water by enabling the 
        Tribe to acquire Colorado River water rights with the intent to 
        increase the security of the Tribe's water rights, and to 
        otherwise facilitate the use of water on the Tribe's 
        reservation.

        3.  Both the settlement agreement and the legislation approving 
        the settlement provide that Freeport's contribution to the 
        Hualapai Tribe Economic Development fund shall be considered a 
        non-federal contribution that counts toward any non-Federal 
        contribution associated with a settlement of the claims of the 
        Tribe for rights to Colorado River water.

    Before the Phase 1 settlement agreement became effective, Freeport 
transferred $1 million to the Tribe for the study of water project 
alternatives. After the Phase 1 settlement became effective, Freeport 
made a multi-million dollar contribution to the Hualapai Tribe Economic 
Development Fund for the purposes described above.
VI. Hualapai Phase 2 Settlement
    During negotiations for a Phase 2 settlement, the Tribe contracted 
with an engineering firm to conduct a study of alternative projects to 
bring water from the Colorado River to Peach Springs and Grand Canyon 
West on the Tribe's reservation. The Tribe paid for the study in 
substantial part with the $1 million that Freeport contributed for that 
purpose as part of the Phase 1 settlement. The study concluded that the 
most feasible project was a pipeline carrying Colorado River water from 
Diamond Creek, located near the southeastern portion of the Tribe's 
reservation, to Peach Springs and then on to Grand Canyon West, a total 
of 70 miles.
    In June 2016, the Tribe and the State Parties agreed to the terms 
of a Phase 2 settlement. The key terms of the settlement are the 
following:

        1.  The Tribe will receive an allocation of 4,000 acre-feet per 
        year of NIA priority CAP water from the volume of NIA priority 
        CAP water set aside for future Indian water rights settlements 
        in the Arizona Water Settlements Act of 2004.

        2.  The United States and the State of Arizona will each firm 
        557.50 acre-feet per year of the Tribe's NIA priority CAP water 
        to the equivalent of the higher priority CAP municipal and 
        industrial priority water during water shortages.

        3.  The Secretary of the Interior, acting through the 
        Commissioner of the Bureau of Reclamation, will plan, design, 
        and construct the Hualapai Water Project, which includes a 
        pipeline to convey not less than 3,414 acre-feet per year of 
        Colorado River water from Diamond Creek to Peach Springs and 
        Grand Canyon West for municipal, commercial, and industrial 
        uses. Congress will authorize an appropriation of $134.5 
        million for construction of the Project, $32 million for 
        operation, maintenance and replacement costs by the Tribe, and 
        $7 million for use by the Secretary of the Interior in 
        operating the water project before title is conveyed to the 
        Tribe and to provide technical assistance to prepare the Tribe 
        for the operation of the Project.

        4.  The Tribe will have the right to use all groundwater under 
        and surface water on its reservation and trust lands.

        5.  Certain lands adjacent to the Tribe's reservation will be 
        brought into reservation status and certain lands owned in fee 
        by the Tribe near its reservation will be held in trust for the 
        Tribe by the Secretary of the Interior. No additional lands may 
        be brought into trust for the Tribe without approval by 
        Congress.

        6.  The Tribe, the United States and the State Parties will 
        execute mutual waivers of claims for water rights and injury to 
        water rights.

    A bill approving and authorizing the Phase 2 settlement was 
introduced in Congress by Senator Jeff Flake on September 8, 2016 (S. 
3300), with Senator John McCain as a co-sponsor. The bill was heard by 
the Senate Committee on Indian Affairs on September 14, 2016, but no 
further action was taken on the bill. On September 7, 2017, Senator 
Flake reintroduced the bill with minor changes, again with Senator 
McCain as a co-sponsor. The reintroduced bill, S. 1770, is before you 
today.
VII. The State of Arizona Supports S. 1770
    The State of Arizona strongly supports S. 1770. The State believes 
the Phase 2 settlement authorized by the bill is a reasonable and fair 
settlement that will benefit the Hualapai Tribe, the State of Arizona, 
Arizona water users and the United States.
A. Hualapai Tribe
    For the Hualapai Tribe, the settlement provides a renewable water 
supply and the infrastructure to convey that water supply from the 
Colorado River to critical areas on the Tribe's reservation. Because 
there are no significant surface water streams on the reservation, 
water from the Colorado River is the only renewable water supply 
available to the Tribe. The water supply will serve the Tribe's main 
population center at Peach Springs, which is currently served 
groundwater from wells that are experiencing declining water levels. 
The water supply will also serve Grand Canyon West, the only viable 
economic development area on the Tribe's reservation. Grand Canyon West 
is currently served groundwater from a low-production well 
approximately 35 miles away.
    A pipeline to bring Colorado River water to Grand Canyon West is 
essential for further economic development on the Tribe's reservation. 
The Tribe's reservation is in a location with breathtaking views of the 
west rim of the Grand Canyon. This provides the Tribe with a unique 
asset that is a significant economic development resource. Currently, 
approximately one million visitors come to Grand Canyon West each year 
to walk on the Skywalk and experience the views of the Grand Canyon. 
The Tribe would like to further develop Grand Canyon West to include 
additional tourist attractions that would significantly increase the 
number of visitors each year. However, development at Grand Canyon 
West, and the annual number of visitors, is essentially capped at 
current levels due to the lack of additional water supplies for the 
area. Construction of a pipeline to bring Colorado River to Grand 
Canyon West would remove that cap and allow the Tribe to fully utilize 
the unique asset on its reservation for economic development.
    In addition, the current lack of water supplies prevents the Tribe 
from constructing housing near Grand Canyon West for the employees who 
work there. As a result, most of those employees live in Peach Springs 
and drive to work each day over a dirt road. The travel time is two 
hours each way in good weather, for a total travel time of four hours 
each day. Travel time is significantly longer in wet or snowy 
conditions. Construction of a pipeline to carry Colorado River water to 
Grand Canyon West would allow the Tribe to construct a residential 
community near Grand Canyon West where its employees can live. Housing 
closer to Grand Canyon West will benefit the employees and their 
families who would have more time together.
B. State of Arizona and Arizona Water Users
    For the State of Arizona, the settlement is a major step toward 
resolving the outstanding water rights claims of Indian tribes in the 
state. Resolving the Hualapai Tribe's claims through settlement will 
avoid the costs and risks associated with litigating the claims and 
will provide certainty to water users in the state. Perhaps the main 
risk to water users in the state from litigating the Tribe's claims is 
a risk to their Colorado River water supplies. As mentioned previously, 
the Tribe's reservation is located adjacent to the Colorado River and 
the Tribe has asserted claims to water from the River. The Colorado 
River supplies the Tribe will receive through the settlement will not 
affect the Colorado River entitlements of other water users in the 
State because the Tribe will receive a portion of the NIA priority CAP 
water being held by the Secretary of the Interior for Indian water 
settlements in the state.
    Another benefit to the State of Arizona is that the settlement will 
provide the Tribe with a renewable water supply to replace its current 
groundwater pumping. Use of renewable water supplies instead of 
groundwater is consistent with the State's policy of preserving 
groundwater supplies for times of drought. Additionally, because the 
aquifer beneath the Tribe's reservation extends to areas off the 
reservation, the Tribe's use of a renewable water supply will help 
preserve groundwater supplies not just for the Tribe, but for non-
tribal water users in the region. This is especially important in this 
area of the state, where the groundwater supplies are limited and there 
is minimal groundwater recharge.
C. United States
    For the United States, the settlement will avoid the costs and 
risks to the United States associated with litigating the Tribe's water 
rights claims. The risks include the possibility that the Tribe would 
prevail in an action in the Court of Federal Claims to recover damages 
against the United States for failing to protect its water rights in 
the Arizona v. California litigation.
    In addition to avoiding the costs and risks of litigation, the 
settlement would likely result in a significant economic benefit to the 
United States Treasury. The Tribe contracted with Professor Joseph P. 
Kalt, Ford Foundation Professor (Emeritus) of International Political 
Economy at the John F. Kennedy School of Government at Harvard 
University, to prepare a report on the economic benefits of a pipeline 
to carry Colorado River water to Grand Canyon West. In his report, 
Professor Kalt concluded that the pipeline would result in 
significantly more visitors to Grand Canyon West, and that over a 50-
year period, the benefits to the United States from increased federal 
tax revenues resulting from the additional visitors would greatly 
exceed the federal outlays for construction, operation, and maintenance 
of the pipeline. Professor Joseph P. Kalt, Economic Impact of the 
Hualapai Water Rights Settlement and Proposed Diamond Creek Pipeline, 
July 16, 2017.
VIII. Issues Raised by the Department of the Interior with the 2016 
        Bill and Phase 2 Settlement
    On September 14, 2016, the previous administration provided this 
Committee with a statement (``Statement'') of its position on the bill 
introduced in 2016 (S. 3300). The statement raised several issues with 
the bill and with the Phase 2 settlement. I would like to address two 
of those issues.
A. Non-Federal Contribution
    In its Statement, the Department of the Interior stated that ``the 
State Parties have failed to make earnest efforts to provide for 
adequate cost-sharing relative to the benefits they will receive in 
this Indian water rights settlement.'' The State of Arizona disagrees 
with this statement. As previously mentioned, Freeport made a multi-
million dollar contribution to the Hualapai Tribe Economic Development 
Fund as part of the Phase 1 settlement. The Tribe may use this money 
only for the purpose of facilitating settlement of its claims for 
rights to Colorado River Water by enabling it to acquire Colorado River 
water rights to increase the security of the Tribe's water rights, and 
to otherwise facilitate the use of water on the Tribe's reservation.
    As required by the federal legislation approving the Phase 1 
settlement, Freeport's financial contribution to the Hualapai Tribe 
Economic Development Fund must be considered a non-federal contribution 
towards the Phase 2 settlement. Freeport's payment of $1 million to the 
Hualapai Tribe to use toward a study of water project alternatives to 
bring water to the Tribe's reservation should also be considered a non-
federal contribution because it was made for the purpose of 
facilitating the Phase 2 settlement.
    In addition to Freeport's large financial contribution, the State 
of Arizona has agreed to firm 557.5 acre-feet of the Tribe's 4,000 
acre-feet per year allocation of NIA priority CAP water to the 
equivalent of CAP municipal and industrial priority during water 
shortages until 2108. The State estimates the cost to firm this water 
at $3.2 million dollars.
    Finally, the Tribe has agreed to pay the cost of constructing an 
electric transmission line to supply power to pump the water through 
the pipeline. The Tribe's consultant estimates this cost at 
approximately $40 million. Although this is not a contribution by a 
State Party, it is a contribution that should be considered when 
evaluating the percentage of the costs of the settlement that the 
federal government will not be paying because of non-federal 
contributions.
    The financial contributions that will be made to this settlement by 
Freeport and the State of Arizona are very substantial. The State 
firmly believes that these contributions show that the State Parties 
have made an ``earnest effort'' to provide for adequate cost-sharing 
relative to the benefits they will receive from the settlement. When 
the $40 million contribution by the Tribe is added to the State 
Parties' contribution, the non-federal contributions to the settlement 
are more than adequate.
B. CAP Fixed OM&R Charges
    The Department of the Interior also expressed opposition to the 
provision in the bill requiring the Tribe to pay a CAP fixed OM&R 
charge for the use of NIA priority CAP water on the Tribe's 
reservation. This charge is an annual charge assessed against all users 
of CAP water based on the amount of CAP water they use. The charge is 
used by the Central Arizona Water Conservation District (CAWCD) to pay 
its fixed costs in operating the Central Arizona Project. The 
Department stated that it did not support the charge because it 
believed it amounted to a double charge to be paid by the Tribe for 
water deliveries--the Tribe's OM&R costs to bring the water to its 
reservation through the pipeline to be constructed on the reservation, 
and the CAP fixed OM&R charge. The State of Arizona disagrees with the 
Department's position on this issue.
    First, the Colorado River water the Tribe will receive in this 
settlement is legally classified as CAP water. It is appropriate for 
all users of CAP water to pay the CAP fixed OM&R charge because without 
proper operation, maintenance and replacement of the CAP, there would 
be no CAP canal and no CAP water.
    Second, the Tribe's payment of CAP fixed OM&R would not amount to a 
double charge. All users of CAP water are responsible for paying the 
expenses relating to their own delivery systems, as well as CAP fixed 
OM&R charges relating to the CAP system. These are separate and 
distinct charges.
    Third, the Department's argument that the Tribe will not use the 
CAP canal to bring its CAP water to its reservation misses the point. 
The settlement reduces the water supply that otherwise would be 
available to be diverted through the CAP and used for other purposes, 
so the Tribe should pay the CAP fixed OM&R charge for the CAP water it 
receives. If the Tribe were relieved of the requirement to pay the 
charge, the reduced supply in the CAP system would cause an increase in 
the charges assessed against all other CAP users, including other 
Indian tribes that receive CAP water. It is important to retain the 
provision in the bill to avoid this inequitable result.
    Moreover, the Tribe has the ability to use the CAP canal in the 
future to carry its CAP water for storage in central Arizona or for use 
pursuant to a water exchange or lease. The Tribe should therefore be 
required to help pay the fixed costs of operating, maintaining and 
replacing the CAP.
    Finally, it is important to note that the Tribe agreed to pay the 
CAP fixed OM&R charge during the negotiations for the Phase 2 
settlement in return for the benefits it will receive through the 
settlement. It is also important to note that payment of the charge by 
the Tribe will not impose any additional costs on the federal 
government. For those reasons, it is not inequitable to either the 
Tribe or the Federal Government to retain the provision in the bill.
IX. Conclusion
    The State of Arizona strongly supports S. 1770, the Hualapai Tribe 
Water Rights Settlement Act of 2017. The bill is important to the State 
of Arizona because it authorizes a comprehensive settlement of the 
Hualapai's Tribe's water rights claims, including its claims to the 
Colorado River--a critical water supply for water users in the state. 
Settlement of the Tribe's water rights claims is an important step in 
achieving the State's goal of settling all outstanding Indian water 
rights claims in the state. Settlement of the claims will avoid the 
costs and risks of litigation, and will provide certainty to water 
users in the state.
    The settlement will provide significant benefits to the Hualapai 
Tribe in return for settling its water rights claims. The settlement 
will allow the Tribe to replace its groundwater use with a renewable 
water supply, consistent with the State's policy of preserving non-
renewable groundwater supplies for use during drought conditions. The 
settlement will allow the Tribe to maximize economic development on the 
reservation by providing the water necessary for expansion of 
development at Grand Canyon West. The Tribe will also have sufficient 
water to construct a residential community near Grand Canyon West so 
that employees will no longer be required to endure a daily commute of 
two-hours to work and two-hours back to their homes.
    Finally, the settlement will provide significant benefits to the 
United States. The settlement will avoid the costs and risks to the 
United States of litigating the Tribe's water rights claims. It will 
also provide a significant financial benefit to the United States 
Treasury through increased tax revenues resulting from the Tribe's 
expansion of Grand Canyon West. The financial benefits that the United 
States will receive through the settlement will greatly exceed the 
costs that the United States will incur in constructing a pipeline to 
bring water from the Colorado River to the Tribe's reservation.

    The Chairman. Again, thanks to all of our witnesses for 
being here.
    I would open with a question for Mr. Buschatzke. In Mr. 
Mikkelsen's testimony, he points out that ``Parties can and 
should contribute commensurate share of the costs of the 
settlement in return for benefits they receive.''
    He notes, the State of Montana and that they have 
contributed millions of dollars in appropriated settlement 
funds to the Montana Indian Water Rights Settlement.
    My question, has the State of Arizona decided how much of 
their money should be contributed or will be contributed to the 
Indian water rights settlement?
    Mr. Buschatzke. Chairman Hoeven, the total non-Federal 
contribution from within the State of Arizona among the State 
parties, including the State itself, is about 30 percent 
compared to the Federal appropriation. We think that is a 
pretty significant contribution.
    The State of Arizona itself is putting $3.2 million towards 
furthering of non-Indian agricultural CAP water. The threshold 
for meeting the criteria for a reasonable split between Federal 
and non-Federal is a little unclear.
    I would note that in Mr. Mikkelsen's testimony on S. 664, 
the total contribution from the State of Utah was about 8 
percent compared to the appropriation. I think from the 
perspective of the State of Arizona and the State parties, our 
non-Federal contributions are significant and do come up with a 
fair and reasonable mixture between non-Federal and Federal.
    The Chairman. I would ask President Begaye for his thoughts 
on that same issue.
    Mr. Begaye. I just want to say that this bill will provide 
water to 40 percent that do not have water in the State of 
Utah, members of my Nation. We have waited years for the 
opportunity to be able to say to Utah Navajos that this 
settlement will give all of our Utah Navajos water.
    Right now, many of them do haul water. A lot of the 
contamination that is up there they deal with on a daily basis. 
To have this settlement done and providing water to all of our 
Utah Navajos is something we are looking forward to. The 
quality of water will be there.
    Thank you.
    The Chairman. Lieutenant Governor Cox, in your testimony, 
you state the settlement proposed by S. 664 is fair, reasonable 
and equitable to all parties. You went on to say that this bill 
benefits all States in the Colorado River Basin.
    Talk about that a bit in terms of the big picture and how 
it benefits all the States?
    Mr. Cox. In the big picture, it gives us some certainty 
when it comes to the water rights in the Colorado River Basin 
by finally putting to bed this outstanding claim. Within the 
water rights already reserved for the State of Utah, it gives 
us an opportunity to have certainty while protecting existing 
water rights. We are now able to ensure the water rights of the 
Navajos as well.
    One thing I would add to your previous question, Mr. 
Chairman, is that none of the infrastructure that is 
contemplated with the proceeds of this bill would be used for 
non-Indian rights. Unlike the Arizona bill, this is 100 percent 
for the Navajo Nation and those in need.
    The State of Utah has already set aside $2 million for this 
project and has committed to set aside another $6 million in 
addition for a total of $8 million, again 100 percent going to 
bringing drinking water to the Navajos in Utah.
    The Chairman. Thank you, Lieutenant Governor.
    Commissioner Mikkelsen, from the perspective of the Bureau, 
your thoughts on these settlements in terms of support and 
benefit?
    Mr. Mikkelsen. Mr. Chairman, thank you.
    We do not have a formula to determine whether State or 
local cost share is sufficient, but we must be mindful of what 
funding the Federal Government can provide in assisting 
communities to resolve these longstanding disputes.
    We have not made a determination on such for the Navajo-
Utah settlement. However, just as a general matter, the higher 
the State and local contribution, the better.
    The Chairman. Thank you.
    Again, I would like to thank all of the witnesses for being 
here today and turn to Vice Chairman Udall.
    Senator Udall. Thank you, Mr. Chairman. Thank you for 
holding this very important hearing.
    Mr. Mikkelsen, it has been brought to my attention that S. 
1770 has a reference to an outdated statute from 1918 that 
deals with reservation lands. That statute is 25 U.S.C. 211. It 
says ``No Indian reservation shall be created, nor shall any 
additions be made to one, within the limits of the States of 
New Mexico and Arizona except by an act of Congress.''
    If you go back and read the Congressional Record from 1918 
when this was proposed, the intent is very clear that Senators 
at the time wanted to restrict Native Americans from acquiring 
land.
    Mr. Chairman, I would like to include this legislative 
history in today's Committee record.
    The Chairman. Without objection.
    [The referenced information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    
    
    Senator Udall. Mr. Mikkelsen, do you feel it is appropriate to cite 
this statute in S. 1770? Is it needed to accomplish the bill's goals?
    Mr. Mikkelsen. Mr. Chairman, Senator, thank you.
    We are aware of the Section 211 language in this bill and have had 
several conversations with tribes about this language. This 
Administration has concerns about citing Section 211 in this bill.
    Senator Udall. Do you basically consider this an obsolete provision 
that should just be ignored?
    Mr. Mikkelsen. Again, we have concerns about citing Section 211 and 
we have not reached any determinations beyond that at this time, sir.
    Senator Udall. Will you give me in writing the opinion of the 
department in consultation with your solicitor as to how you feel about 
this specific provision?
    Mr. Mikkelsen. Certainly.
    Senator Udall. Thank you very much.
    As I understand it, the Navajo-Utah project could be the first of 
its kind project where the Federal Government gives the money directly 
to the tribe to plan, design and construct the water project as opposed 
to Congress giving the funds to the Bureau of Reclamation and they 
would do those activities.
    President Begaye, can you please describe for the Committee why the 
tribe prefers planning and constructing the project itself versus 
Reclamation constructing the project for the tribe?
    Mr. Begaye. What is really important in this situation with that is 
by Navajo Nation constructing the project, we use Navajo purpose, 
meaning that unemployment being at 46 percent, we would be able to 
address much of that by using Navajo people to construct any of the 
construction that will be taking place. That is one that is really 
important to us, that we put our Navajo people to work using these 
dollars.
    Secondly, we would be able to use our own Navajo Nation laws. That 
is also important to us because we have assumed authority over our 
surface land, so any type of archeological or clearances, we will be 
able to use Navajo Nation laws in that regard.
    We can expedite the process of any kind of construction that may 
take place. It is important as a sovereign Nation that we are able to 
do that, employ our people and use our laws in order to build and 
construct any kind of construction that may take place in relationship 
to this. That is really important to us.
    Thank you.
    Senator Udall. Thank you, President Begaye.
    Mr. Mikkelsen, is this model where Congress provides planning and 
construction dollars directly to tribes the new normal? What are the 
implications of this new model to the Federal trust responsibility?
    Mr. Mikkelsen. Each Indian water rights settlement is unique in its 
own way so it is difficult to say broadly that this is the new 
direction of Indian water rights settlements. However, that being said, 
we are confronting serious cost gaps on specific projects included in 
recent settlements. This has underscored the problems inherent in 
trying to estimate costs on projects at a conceptual level.
    A fund-based settlement allows the tribes to make the decisions on 
the kinds of projects that best fit their needs as noted by the 
President.
    Senator Udall. Thank you so much.
    We are now five minutes into a vote. I have a number of other 
questions. I will submit those to you for the record and hope you will 
get back to us promptly on those.
    Thank you, Mr. Chairman.
    The Chairman. Senator Flake.
    Senator Flake. Thank you, Mr. Chairman. I will be as brief as I 
can.
    Mr. Buschatzke, can you clarify a response given to an earlier 
question? Will any of the infrastructure contemplated in the bill, the 
Hualapai bill, serve non-Indian entities?
    Mr. Buschatzke. Senator Flake, the entire breadth of that bill does 
create infrastructure to deliver water exclusively to the Hualapai 
Tribe and on the reservation itself.
    Senator Flake. Exclusively to the Hualapai, no non-Indian uses. 
Thank you.
    Mr. Mikkelsen, thanks for your leadership for the Bureau of 
Reclamation and services as chair of the Working Group on Indian Water 
Rights Settlements. I am pleased with the commitments we have received 
from Secretary Zinke to work with me to advance the settlement. I 
appreciate the work the working group has done.
    I am a bit troubled, however, that despite these commitments we 
continue to see old concerns raised that were raised and addressed 
during the last Administration. The Administration's position is 
additional non-Federal contributions are required but to the best of my 
knowledge, the Administration has not set a required threshold for 
State parties.
    As I have said before, I think the non-Federal contributions in the 
settlement are larger than other completed or pending settlements. Will 
the department work with State parties to better define a threshold for 
non-Federal contributions it thinks is appropriate?
    Mr. Mikkelsen. The answer to that question is obviously yes. We 
will work with all the parties to advance these settlements.
    Senator Flake. Dr. Clarke, you make a very compelling case for what 
this settlement means for the economy of the Hualapai people. I 
appreciated the study that Professor Kalt produced. I was impressed by 
the economic benefits that it showed for the tribe, the State and the 
region.
    Have you had a chance to explain the tribe's perspective and 
Professor Kalt's study to the OMB?
    Mr. Clarke. No, we have not. We have asked for numerous meetings 
with OMB and we have been turned away. We would still like to meet with 
them to provide them with this opportunity to show what Professor Kalt 
has given us.
    Senator Flake. Very briefly, what are some of the economic benefits 
that will accrue to the tribe?
    Mr. Clarke. The economic benefits are going to be that we want to 
provide numerous jobs, over 10,000 jobs. At this time, I would like to 
defer this question to Professor Kalt.
    Mr. Kalt. Senator, I won't recap my entire study but in a nutshell, 
while the Hualapai Water Rights Settlement arises in the context of an 
Indian water rights dispute, it actually economically should be viewed 
as a regional economic development project.
    The current water situation is such that not only is the Hualapai 
Tribe and its population being capped by limited water supplies, but 
the very successful and growing economic development occurring 
particularly with the tribe's Grand Canyon West Tourism Development 
Enterprise, it is reaching its maximum given the water supplies that 
are available.
    Removing that cap via the settlement would produce substantial net 
benefits, not only to the United States GDP, but also to the Federal 
Government. Even from a Federal perspective, my research, using 
modeling routinely employed by Federal agencies, for example, in 
studying their impacts, my research finds this project would pay off 
the Federal appropriation of roughly $173 million in less than three 
years and have 47 years of benefits if you have a 50-year life to a 
pipeline.
    This is a net positive for the Nation. It is a regional economic 
development project in its economic instance. It happens to arise in 
this case in the context of an Indian water rights settlement.
    Senator Flake. Thank you.
    Thank you, Director Buschatzke, the State has done very good work. 
There is a great partnership between the tribes and the State and with 
our office will have to try to advance this settlement and others.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Flake.
    I want to thank all of the witnesses for being here today. I 
apologize that we had to move through this as quickly as we did because 
of the votes. I think your being here and the information you provided 
is very important and very helpful for the process.
    Vice Chairman, do you have anything else?
    Senator Udall. I would just thank the witnesses very much. We 
really appreciate it.
    The Chairman. With that, the hearing record will be open for two 
weeks.
    Again, thanks to our witnesses for being here.
    We are adjourned.
    [Whereupon, at 3:15 p.m., the Committee was adjourned.]

                            A P P E N D I X

 Prepared Statement of Prof. Joseph P. Kalt, Co-Director, The Harvard 
Project on American Indian Economic Development, John F. Kennedy School 
                   of Government, Harvard University
    Thank you for the opportunity to submit this testimony concerning 
S. 1770, the Hualapai Tribe Water Rights Settlement Act of 2017. My 
name is Joe Kalt and I am the Ford Foundation Professor (Emeritus) of 
International Political Economy at the John F. Kennedy School of 
Government, Harvard University and co-director of The Harvard Project 
on American Indian Economic Development. For more than 30 years, the 
Harvard Project on American Indian Economic Development has been 
engaged in research into the sources of, and impediments to, sustained 
economic development on America's Indian reservations.
    I have been asked by the Hualapai Tribe to examine the regional 
economic implications of the proposed settlement of the Tribe's water 
rights claims, as this settlement is set out in S. 1770. The 
centerpieces of the settlement are: (1) the proposed federally-funded 
construction of a 70-mile pipeline that would divert Colorado River 
water at Diamond Creek on the Hualapai reservation to the Hualapai 
Tribe's principal residential community at Peach Springs, Arizona, and 
to the Tribe's world-class tourist development on the south rim of the 
Grand Canyon at Grand Canyon West; and (2) provision of a maximum of 
4,000 acre feet of low priority Central Arizona Project (CAP) Non-
Indian Agricultural water for use on the reservation. Under the 
settlement, the federal outlays for construction, operation, and 
maintenance of the Pipeline are calculated to be $173.5 million.
    I find that this expenditure would pay for itself many times over 
in terms of any metric of relevance. Specifically, in terms of jobs and 
worker income, business revenues and gross domestic product, and state, 
local and federal tax collections, the cost to the Federal Government 
of building the Pipeline would be swamped by the benefits that the 
expansion of adequate water supplies via the Pipeline would generate. 
These results are set out in detail in my report to the Tribe, attached 
hereto.
    The reasons for the overwhelmingly positive payoffs of the proposed 
Hualapai water rights settlement are straightforward. First, without 
the additional water supplies that the Diamond Creek Pipeline would 
deliver, the Hualapai Tribe is effectively maxed out in its ability to 
accommodate further growth in its onreservation population because its 
current water supplies will not support the housing and related 
infrastructure that the Tribe's citizens will need. This portends 
forcing increasing numbers of Hualapai citizens to live off-
reservation.
    Second, with critical implications for the entire regional economy 
of northwest Arizona and southern Nevada and at the heart of the 
federal and overall US public's interest in the settlement, existing 
water supplies and sources are insufficient to support further economic 
development of the Hualapai Tribe's thusfar highly successful Grand 
Canyon West tourism enterprise. Grand Canyon West, with its iconic 
Skywalk overlook at the western reaches of the Grand Canyon, currently 
enables approximately 1.1 million tourists per year to visit and 
experience the Grand Canyon. Foreign visitors to the United States, 
many of whom utilize Las Vegas as a ``jumping off'' point, make up a 
very large portion of Grand Canyon West's patrons. The visitors to 
Grand Canyon West spend their money on locally-provided travel and 
tourism services. This has proven to be a tremendous boon to the 
regional economy, with the Hualapai Tribe's Grand Canyon Resort 
Corporation (which owns Grand Canyon West) employing more than 1,500 
workers. More than 550 of these workers are non-Hualapai, and the Tribe 
is now the second largest employer in Mohave County, Arizona.
    The consuming public of the United States and beyond has a strong 
and growing demand for the recreational and tourism experiences that 
Hualapai enterprises produce: Paralleling the experience of the United 
States' National Park Service at Grand Canyon National Park, 
visitorship at Grand Canyon West has skyrocketed in recent years. 
Allowing inadequate water supplies at Hualapai to now choke off demand 
at Grand Canyon West will demonstrably and severely harm not only the 
Hualapai Tribe, but also the recreational tourism industry and the 
workers and suppliers who support that industry in Arizona, Nevada and, 
ultimately, the nation.
    While the proposed Diamond Creek pipeline arises in the context of 
an Indian water rights settlement, in its economic essentials, the 
Pipeline is properly viewed as a region-wide economic infrastructure 
project. Such projects are in the national economic interest when they 
support economic growth and activity with net economic benefits for the 
nation which exceed project costs. This is decidedly the case here.
    My research finds that building the Diamond Creek Pipeline and 
supplying the much-needed water it will carry to the region will create 
and sustain decades of economic growth and development for Hualapais 
and non-Hualapais alike. Using standard and widely-accepted tools of 
regional economic impact modeling of the same type routinely used by 
federal agencies in assessing the impacts of those agencies' spending, 
I find that over a useful pipeline life of at least fifty years, and 
expressed in terms of net present value, the growth in visitorship and 
economic development made possible by the Pipeline would support an 
average of more than 10,100 American jobs per year, nearly $1.5 billion 
in federal tax revenues in present value, over $6.2 billion in income 
for US workers in present value, and more than $9.3 billion in gross 
domestic product (GDP) for the United States (in present value). These 
results are summarized in Figure 1.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    The job and value generation that would be supported by the Diamond 
Creek Pipeline would accrue to the benefit of the US economy as a 
whole, with the most concentrated impacts occurring in Arizona and 
southern Nevada. The human results would be substantial improvement in 
economic conditions for Hualapai and non-Hualapai citizens alike. For 
the federal government, the Pipeline would be a substantial net revenue 
generator. Looking at the net present value of federal tax revenues on 
a levelized basis (i.e., treating the federal tax receipts generated 
over the life of the pipeline like an annual mortgage payment made to 
the Federal Government), the settlement would result in $58 million in 
annual levelized federal tax collections. Economically, this means that 
the settlement would have an effective ``payback'' period of only 3 
years, leaving decades of continuing federal tax collections after 
paying off the $173.5 million federal cost of the settlement. The 
proposed Hualapai water rights settlement would be a net benefit to the 
U.S. taxpayer.
    Upon reflection, the foregoing economic impacts of the proposed 
settlement should not be surprising. The very positive effects that the 
proposed settlement would have for the federal treasury and the U.S. 
economy as a whole arise because the Diamond Creek Pipeline would 
ultimately enable far greater numbers of U.S. and non-U.S. consumers to 
enjoy resources that can be supplied by the Hualapai Tribe. Those 
resources take the form of the scenic wonder that is the Grand Canyon 
and the experiences the Tribe's tourism enterprises create around that 
scenic wonder. If current water supply constraints at Hualapai are 
allowed to cap the Tribe's economic development, the Tribe's--and the 
nation's--resource that is the Grand Canyon will have much of its 
productive potential for the consuming public untapped. Economics would 
say that failure to adopt the settlement and build the Diamond Creek 
Pipeline would leave an incredible and durable national resource 
``underemployed'' in serving the wants and desires of the consuming 
public. The consuming public and the many parts of the U.S. economy 
that directly and indirectly undergird the Hualapais' tourism economy 
will be the losers if the Diamond Creek Pipeline project does not go 
forward.
    In short, the nature of the resource that is the Grand Canyon is 
such that the most basic economic ``outputs'' that visitors seek--i.e., 
the vistas, the cultural impact, and the other experiences that the 
Grand Canyon ``produces''--can be ``reused'' or ``re-consumed'' by 
visitors again and again, one consumer after another, at effectively 
little or no incremental cost. The only costs are the costs of enabling 
consumers to be at Grand Canyon West with the kind of tourism support 
services (lodging, meals, the Skywalk, etc.) provided by the Hualapai 
Tribe and made possible by an adequate water supply. We know from the 
willingness of consumers to pay on the order of $100 per day for more 
than a million tickets per year that expanding the ability of consumers 
to experience the Grand Canyon yields tremendous economic value. The 
proposed Diamond Creek Pipeline project has the capacity to do just 
that--and thus yield benefits which far exceed the costs to the 
Hualapai Tribe, the regional economy, the national economy, and state, 
local, and federal governments that far outweigh its costs. When we 
look for infrastructure projects which can benefit the nation and its 
economy, the Diamond Creek Pipeline is precisely the kind of project we 
should be looking for.
        *The report, Economic Impact of the Hualapai Water Rights 
        Settlement and Proposed Diamond Creek Pipeline has been 
        retained in the Committee files.*
        
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
        
                                 ______
                                 
  Prepared Statement of Alfred Bennett III, Shiprock/Northern Agency, 
                             Navajo Nation
    I'm Alfred Bennett 3rd of Shiprock, New Mexico, Shiprock/Northern 
Agency, Navajo Nation. Part of the Shiprock Agency extends into 
Southern Utah.First of all I'm against S.664 because it is not in the 
best interest of my People as a whole. Your version has it as a final 
work, but it is a proposed legislation from our Council (legislation 
no. 0412-15 Approving the ``Proposed'' Navajo Utah Water Rights 
Settlement Agreement 01/26/2016 passed yea 13 nay 07 not voting 04).As 
in past Anglo-Native American histories all agreements & treaties has 
always been changed or broken to take advantage of the different Native 
Nations thru out history. So this agreement is an example of what has 
happen in the past. I can say our Navajo President was out of line by 
agreeing to this ``Proposed'' settlement. The reason is that he is 
giving away our claims of 60+or- miles of water of the Big Colorado 
River/Lake Powell in Utah for nothing. The U.S.Government has not even 
finish constructing the 12 farm blocks in the 1962 Navajo Indian 
Irrigation Project (NIIP) Act, but they did finish the Rio Chama 
diversion tunnel under the Continental Divide in New Mexico in the 
1970s. They even enlarged the tunnel during construction. Which our 
leaders are now in Washington D.C. requesting money to finish this 
project. This delay cost us hundreds of thousands or millions of acre 
feet of water per year. Only God knows! The priority date is also wrong 
because there were Navajos hiding out in the canyons of southern Utah 
who never surrendered and went to Ft.Sumner/Bosque Redondo and signed 
the Treaty of 1868. The Navajo water rights priority date on this 
agreement should be 1866 not what is in S.664! There is no real goal & 
timetables in this agreement and no Environmental Impact Statement 
(EIS) that I have seen. Mr. Chairman and Committee members thank you 
for your time and blessing to all. Vote no until we are truly 
compensated for our losses of the past.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. Tom Udall to 
                             Alan Mikkelsen
    Question 1. Funding for Indian water rights settlements can often 
include a mix of discretionary spending and mandatory spending, as you 
know. Mandatory funds are an increasingly important part of the 
spending equation, given Interior's budget constraints.
    This falls against the backdrop of growing backlog of ``authorized 
but unfunded'' settlements, potentially as large $1 billion dollars as 
of FY2016, as Interior asserted at a 2016 hearing before the House 
Committee on Natural Resources. \1\
---------------------------------------------------------------------------
    \1\ Testimony of John Bezdek, Senior Advisor to the Deputy 
Secretary of the U.S. Department of the Interior, in U.S. Congress, 
House Natural Resources Committee, Subcommittee on Water and Power, 
Legislative Hearing on Water Settlements, 110 Congress, 2nd sess., May 
24, 2016, available at http://democrats-naturalresources.house.gov/
irno/media/doc/testimonvbezdek.pdf
---------------------------------------------------------------------------
    a. The department did not specify the methodology for the figure 
referenced above (i.e., whether it includes expenditures that have been 
foregone when they were initially expected to take place and/or those 
that are planned for obligation in future years). Please provide a list 
of projects referenced in the testimony that remain ``authorized but 
unfunded.''

    b. Please provide a list of Indian water rights settlements in 
which Congress provided direct/mandatory funds, the amount of mandatory 
appropriations versus discretionary appropriations, and any remaining 
amounts necessary relative to the authorization ceiling.
    Answer. The following tables provide a list of Indian water rights 
settlements that are currently authorized, but have not been fully 
funded or have on-going, statutorily mandated costs. As requested, the 
tables distinguish between mandatory and discretionary appropriations.

                                                     Table 1
----------------------------------------------------------------------------------------------------------------
                                                 Source of                        Appropriated      Balance to
                 Settlement                       Funding       Estimated Cost  through 9/30/17      Complete
----------------------------------------------------------------------------------------------------------------
Aamodt Litigation                                Construction       65,287,000       29,266,993       36,020,007
                                                   Trust Fund       37,500,000       37,500,000                0
                                                    Mandatory       73,100,000       56,400,000       16,700,000
                                                        Total      175,887,000      123,166,993       52,720,007
----------------------------------------------------------------------------------------------------------------
Crow                                             Construction      198,139,000       36,152,413      161,986,587
                                                   Trust Fund                0                0                0
                                                    Mandatory      277,935,000      277,935,000                0
                                                        Total      476,074,000      314,087,413      161,986,587
----------------------------------------------------------------------------------------------------------------
Navajo-Gallup                                    Construction      771,593,000      432,717,449      338,875,551
                                                   Trust Fund       50,000,000       41,978,000        8,022,000
                                                    Mandatory      680,000,000      180,000,000      500,000,000
                                                        Total    1,501,593,000      654,695,449      846,897,551
----------------------------------------------------------------------------------------------------------------
  Pechanga                                       Construction                0                0                0
                                                   Trust Fund       37,166,000          400,000       36,766,000
                                                    Mandatory                0                0                0
                                                        Total       37,166,000          400,000       36,766,000
----------------------------------------------------------------------------------------------------------------
Blackfeet                                        Construction      246,500,000                0      246,500,000
                                                   Trust Fund      234,290,000          800,000      233,490,000
                                                    Mandatory                0                0                0
                                                        Total      480,790,000          800,000      479,990,000
----------------------------------------------------------------------------------------------------------------
Federal Total                                    Construction    1,281,519,000      498,136,855      783,382,145
                                                   Trust Fund      358,956,000       80,678,000      278,278,000
                                                    Mandatory    1,031,035,000      514,335,000      516,700,000
                                                Federal Total    2,671,510,000    1,093,149,855    1,578,360,145
----------------------------------------------------------------------------------------------------------------


    Table 2

                Other Ongoing: IWRS Settlements--Federal
------------------------------------------------------------------------
                                                         Appropriated in
                                                             FY 2017
------------------------------------------------------------------------
Ak Chin                                                       15,735,000
Animas La-Plata                                                2,652,000
Nez Perce                                                      5,184,000
Pyramid Lake                                                     142,000
San Carlos Apache                                              1,550,000
------------------------------------------------------------------------
    Total Other                                               25,263,000
------------------------------------------------------------------------


         Note: Table 2 lists the FY2017 appropriated funding for those 
        enacted settlements with ongoing costs but no authorization 
        ceiling. That funding provides for a variety of activities. 
        Funding for the Ak Chin and Animas La Plata water rights 
        settlements will predominantly provide for ongoing operations 
        and maintenance (O&M) costs for completed water projects. 
        Funding for the Nez Perce water rights settlement will allow 
        for annual leasing of water from willing sellers to augment the 
        flow of the Snake River. Funding appropriated for the Pyramid 
        Lake water rights settlement will be used to cover the Federal 
        portion of the preparation and implementation of the Truckee 
        River Operating Agreement (TROA). For the San Carlos Apache 
        water rights settlement, the annual appropriations will be used 
        to continue planning, designing, and completing pre-
        construction activities for a project to deliver 12,000 acre-
        feet of allocated Central Arizona Project (CAP) water.

    Question 2. In 2014, The Bureau of Reclamation's Upper Colorado 
Region and Lower Colorado Region, in collaboration with the 10 member 
tribes of the Colorado River Basin Tribes Partnership commenced the 
Colorado River Basin Ten Tribes Partnership Tribal Water Study to build 
on the technical foundation of the Colorado River Basin Water Supply 
and Demand Study. Please provide a status update on Tribal Water Study?
    Answer. The Colorado River Basin Ten Tribes Partnership Tribal 
Water Study is nearly complete. The Study's Draft Report has been 
reviewed by the member tribes of the Ten Tribes Partnership and is 
currently under review by DOI and Reclamation. We anticipate the 
Study's Final Report will be published in 2018.

    Question 3. What are the Department's views regarding the 
applicability of 25 USC 211 in S. 1770? (Question posed during hearing)
    Answer. Enacted in 1918 (40 Stat. 570), the statute placed certain 
limitations on the creation of Indian reservations in New Mexico and 
Arizona. However, it has been the longstanding position of the 
Department that, following the enactment of the Indian Reorganization 
Act (25 USC 5101 et seq.) in 1934, Section 211 does not limit the 
addition to (or creation of) Indian reservations when done consistent 
with Congressional enactments such as the IRA. That position has been 
confirmed by the Interior Board of Indian Appeals and a federal 
district court. Accordingly, the Department does not believe its 
citation in the pending legislation would be relevant or useful, but 
would instead be unnecessary and potentially create confusion regarding 
applicable authorities.
                                 ______
                                 
Response to Written Questions Submitted by Hon. Catherine Cortez Masto 
                           to Alan Mikkelsen
    Question 1. The Bureau of Reclamation, like so many other agencies 
within the Federal Government, have dealt with shortfalls in budgetary 
funding, which has hurt our government's ability, at times, to partner 
effectively with necessary stakeholder, and have sometimes inflicted 
negative impacts on our public lands, natural resources, and 
conservation programs.
    Do you believe more funding would allow the Interior Department to 
be a better partner to industry and the taxpayer?
    Answer. The Administration is committed to making the tough 
decisions that will lead to a balanced budget. At the same time, 
Reclamation remains fully committed to upholding Reclamation's mission 
to deliver water and power in an economically and environmentally 
sustainable manner in the interest of the American public. We must 
continue to prioritize our resources in order to ensure we uphold 
Reclamation's mission and remain vigilant stewards of taxpayer money.

    Question 2. The recent budget request for the Bureau of Reclamation 
is $1.1 billion, a cut of $209 million. The request proposes cuts for 
WaterSMART grants [the 50/50 cost share funding program used by 
irrigation/water districts, Tribes, and States can to quickly implement 
projects that conserve and use water more efficiently--and helping to 
increase use of renewable energy and protect fragile environment], 
water recycling and reuse projects, drought response, and rural water 
projects. The state of Nevada gets the least rainfall than any other 
state in the Nation so we have to be incredibly mindful of persistent 
drought conditions as well as infrastructure improvements.
    a. Do you believe these cuts Will undermine these successful 
programs that help Nevada and other locations in the West respond to 
drought conditions in innovative ways?
    Answer. The President's FY 2018 budget proposes to balance program 
priorities. WaterSMART grants, water recycling and drought response 
activities allow Reclamation to assist local communities in their need 
to address current and future water shortages. In addition to those 
activities, rural water projects help build strong, secure communities 
and are important to supporting the livelihood of local economies. In 
order to ensure Reclamation continues to deliver water and generate 
hydropower into the future, we must work to carryout Reclamation's 
mission in an efficient and sustainable manner.

    b. The Bureau of Reclamation operates significant facilities in 
both the Upper and Lower Colorado River Regions. How will these budget 
cuts affect needed rehabilitation of aging water delivery 
infrastructure in both regions?
    Answer. As Reclamation's assets continue to get older, there is a 
growing need to monitor and rehabilitate Reclamation's infrastructure. 
It is essential that Reclamation maintain and improve its existing 
infrastructure in order to deliver reliable water and power, ensure 
system reliability and maintain safety and sustained water 
conservation. Reclamation's annual budget includes the best yearly 
representations of the appropriated funds needed for maintenance at 
Reclamation facilities. When funding is not available from revenues, 
customers or other federal agencies, Reclamation aims to strategically 
leverage its appropriated funds to ensure the delivery of water and 
power benefits.

    c. In rural communities, the availability of funding and resources 
to meet treatment standards and improve water reuse is more 
challenging. Do you believe that funding cuts will undermine your 
administration of these programs, if you are confirmed?
    Answer. The WaterSMART program assists entities as they plan for 
and implement actions to increase water supply reliability and maintain 
economic productivity in the western United States in the face of 
serious water challenges brought on by wide-spread drought, increased 
populations, aging infrastructure, and environmental requirements. The 
Department requested $59.1 million in funding for this program in the 
FY18 budget.

    Question 3. Most people know the Colorado River is the economic 
engine of the southwest and supplies drinking water to 36 million 
Americans, and that the use of that water outstrips supply. The seven 
states, water users, federal agencies and even the country of Mexico 
have a history of close cooperation, which has become ever more 
important as drought and increased water demands have left the two big 
reservoirs, Lakes Powell and Mead, at all-time lows.
    Projections show that if no action is taken to reduce water use, 
usage restrictions could devastate the environment, cripple our 
communities and agriculture, and stall the economy.
    Several years ago, four large municipal water suppliers (Denver, 
Las Vegas, Phoenix and southern California) partnered with the U.S. 
Bureau of Reclamation on a pilot $11 million ``system conservation'' 
program. This System Conservation Program (SCP) pays water users to 
conserve and dedicate extra water to storage in Lakes Powell or Mead.
    The program has successfully demonstrated that farmers and ranchers 
want to participate in programs that provide for temporary, compensated 
and voluntary reductions of water use. Now demand from farmers and 
ranchers is so high that the program can only afford one in four 
requests. In 2016, the Senate voted 77 to 23 to authorize 
appropriations up to an additional $50 million for SCP, and it was 
included in the Water Infrastructure Improvements for the Nation (WIIN) 
Act.
    Can you say whether the Bureau of Reclamation will continue and 
expand this market-based program that compensates farmers and ranchers 
for voluntarily conserving water?
    Answer. Reclamation is currently investing significant effort to 
contend with the long-term impacts of the multi-year drought in the 
Colorado River Basin, which, among Colorado River
    water conservation activities, includes the Pilot System 
Conservation Program. The System Conservation Program was conceived by 
the funding entities and Reclamation as a 2-year program to test the 
viability of voluntary, compensated, water conservation projects that 
reduce consumptive use and create ``system water'' to assist with 
maintaining storage in Lakes Powell and Mead. Although Reclamation is 
currently operating under a continuing resolution for 2018 and 
Reclamation's 2018 budget is uncertain, Reclamation has obtained 
commitments for additional funding from the non-federal partners and 
additional conservation projects will be implemented for the fourth 
consecutive year. Under the Consolidated and Further Continuation 
Appropriations Act, 2015, Public Law No 113-235, Section 206 (128 Stat. 
2312), the Secretary of the Interior is required to submit to Congress 
by September 30, 2018, a report evaluating the effectiveness of the 
pilot projects and making a recommendation whether the activities 
undertaken by the pilot projects should continue. Reclamation continues 
to work with funding entities to determine the future of the program.

    Question 4. Regarding the Colorado River, the years-long drought in 
the West have taken a toll on our water resources, as you know. Both 
the Lower Basin states and the Upper Basin States are working to 
develop Drought Contingency Plans (DCP) to improve water management in 
way that stabilizes reservoir levels. Lake Mead is one of the two 
largest storage reservoirs on the Colorado River system. Lake Mead 
water levels are important to Nevada because they determine whether a 
shortage is declare on the Colorado River. If a shortage is declared, 
Nevada would see a reduction in its water supply. The proposed DCP 
specifies voluntary reductions for each of the Lower Basin states in 
order to protect the water in Lake Mead. Meanwhile, the Upper Basin 
States are reviewing the DCP and developing actions of their own as 
well. If an agreement were to be implemented, my constituents 
especially would have greater certainty about the longer-term 
reliability of the Colorado River, supporting the economic and 
environmental health of southern Nevada.
    Will you exercise your authority and leadership to help the states 
finalize their DCPs, work with them on the legislation necessary to 
implement it, and then help them make implementation successful? We 
need your help to make finalizing the DCP a priority.
    Answer. Reclamation continues to be engaged in ongoing 
conversations regarding the development of Drought Contingency Plans in 
the Lower and Upper Colorado River Basins. We are encouraged by the 
diligent efforts of all the Basin States in working toward final 
agreement on their Drought Contingency Plans and to work within 
available water supplies. Reclamation has conducted modeling that 
indicates that the current plans proposed by the States would benefit 
both the Upper and Lower Basin states. Reclamation and Interior have 
actively participated in negotiations between the states and between 
the basins, have suggested solutions and have encouraged the States to 
finalize their plans. We look forward to continuing our work throughout 
the Colorado River Basin to develop plans that prevent Lake Mead and 
Lake Powell from reaching critically low elevations.

    Question 5. A March 2016 Reclamation study says, ``One of the 
greatest challenges we face is dealing with the impacts of climate 
change on our nation's water. . . We need to continue to develop 
collaborative strategies across each river basin to ensure that our 
nation's water and power supplies, agricultural activities, ecosystems, 
and other resources all have sustainable paths forward.''
    Specifically in regards to the Colorado River Basin, the report 
projects that the growing threat of climate change impacts the region 
saying that reductions in spring and early summer runoff could 
translate into a drop in water supply for meeting irrigation demands 
and adversely impact hydropower operations at reservoirs.
    Obviously, climate change impacts play a large factor in the 
further work to be done on water settlements. Can you describe the 
challenges climate change poses to this process and how Reclamation 
takes these issues into consideration?
    Answer. Reclamation is at the forefront of dealing with changing 
conditions in the Colorado River Basin, whether due to the highly 
variable flows into the Basin, the ongoing 18 year historic drought, or 
the growing demands on Colorado River water supplies from competing 
interests. As mentioned above, Reclamation is actively involved with 
the Basin States through Drought Contingency Planning to address short 
and long term solutions for the basin to work within the Law of the 
River and the water supplies available during the current drought and 
potential long-term supplies.