[Senate Report 106-200]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 297
106th Congress                                                   Report
                                 SENATE
 1st Session                                                    106-200

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



 
  CHIPPEWA CREE TRIBE OF THE ROCKY BOY'S RESERVATION INDIAN RESERVED 
                  WATER RIGHTS SETTLEMENT ACT OF 1999

                                _______
                                

                October 26, 1999.--Ordered to be printed

                                _______
                                

   Mr. Campbell, from the Committee on Indian Affairs, submitted the 
                               following

                              R E P O R T

                         [To accompany S. 438]

    The Committee on Indian Affairs, to which was referred the 
bill (S. 438) to provide for the settlement of the water rights 
claims of the Chippewa Cree Tribe of the Rocky Boy's 
Reservation, and for other purposes. Having considered the 
same, reports favorably thereon without amendment and 
recommends that the bill do pass.

                                purpose

    The purpose of S. 438 is to provide for the settlement of 
the water rights claims of the Chippewa-Cree Tribe (Tribe) and 
those who may claim water rights through the Tribe, by 
ratifying the Water Rights Compact (Compact) entered into by 
the Chippewa-Cree Indian Tribe of the Rocky Boy's Reservation 
and the State of Montana, and to authorize the federal actions 
and appropriations necessary to implement the Compact and to 
provide for the federal contribution to the development of 
tribal water resources, including an appropriate federal 
contribution towards the importation of additional off-
reservation sources of domestic water supply. The Compact and 
S. 438 provide for the settlement of all water rights claims 
brought by the United States on behalf of the Tribe in a 
general stream adjudication initiated by the State of Montana 
(State) in 1979.

                               background

    Following decades of unsuccessful efforts to establish a 
reservation for Chippewa and Cree Indians in Montana, the 
Congress in 1916 set aside some 56,000 acres of the abandoned 
Fort Assiniboine Military Reserve for the Chippewa and Cree 
Bands of Chief Rocky Boy. The land is located 50 miles south of 
the Canadian border in the Bearpaw Mountains, with portions 
extending onto the plains between the mountains and the Milk 
River in north-central Montana. However, because the land is of 
generally poor quality for farming and lacks adequate water, 
the Tribe and the United States sought to enlarge the 
Reservation to make it a viable homeland for the Tribe.
    In the 1930's and 1940's, the United States purchased or 
withdrew from the public domain approximately 45,000 acres of 
land that was added to the Reservation. Two-thirds of this 
land, however, was acquired under a federal program designed to 
retire from commercial production submarginal quality lands and 
could not sustain viable farming operations. Acquisition of 
much of this land occurred over the objections of the Tribe and 
the local BIA Superintendent. Recognizing that this was 
insufficient to sustain the Tribe and its members, in 1938 the 
United States produced a detailed plan which contemplated 
adding more than 600,000 acres to the Reservation with access 
to the Milk River irrigation system. This plan was never 
implemented.
    The Rocky Boy's Reservation currently totals 120,000 
unallotted acres which are home to over 3,000 tribal members 
whose unemployment rate is estimated to be 70 percent. The land 
is arid, receiving about 12 inches of average annual rainfall. 
Two drainages--Big Sandy Creek and its tributaries and Beaver 
Creek--arise on and flow through the Reservation and private 
farm and ranch land before reaching the Milk River. Land use in 
the area is primarily for grazing and growing hay.
    In 1979, the State of Montana initiated in the State's 
Water Court a general adjudication of all rights to water, both 
surface and underground, within the State of Montana, and the 
United States filed claims to water on behalf of the Chippewa 
Cree Tribe of the Rocky Boy's Reservation. In 1983, the Court 
stayed the litigation pending the outcome of negotiations among 
the State, the Tribe and the United States to settle the 
Tribe's claims. On April 14, 1997, after more than four years 
of negotiations, the State and the Tribe entered into a Water 
Rights Compact. The Montana State Legislature subsequently 
approved the Compact.\1\ For the Compact and the settlement to 
become effective, Congress must enact implementing legislation 
and the Montana Water Court must enter and approve an 
appropriate decree.
---------------------------------------------------------------------------
    \1\ 85-20-601 Montana Code Annotated (1997).
---------------------------------------------------------------------------
    As noted in a preceding paragraph, for the Rocky Boy's 
settlement to become effective, the Congress must enact 
legislation to ratify the Compact and authorize the Federal 
actions and appropriations necessary to implement fully the 
settlement.
    Including S. 438, the Committee has reported legislation 
that has been enacted to settle the water rights claims of 22 
Indian tribes, bands, and communities since 1978.\2\ In each 
case, the time needed to negotiate a settlement and to enact 
the necessary ratifying legislation has varied, reflecting the 
unique history and circumstances of each Reservation, the 
complexity of the issues and problems presented, and the 
difficulties inherent in trying to negotiate solutions that not 
only ensure the Tribe's long term economic benefits from a 
secure water supply but also are cost-effective, workable, fair 
and acceptable to all parties. The provisions of each 
settlement also vary to a significant degree.
---------------------------------------------------------------------------
    \2\ For a comprehensive list of settlement acts, see Checchio and 
Colby, ``Indian Water Rights: Negotiating the Future, ``Water Resources 
Research Center, The University of Arizona College of Agriculture, pp. 
4-5 (1993).
---------------------------------------------------------------------------
    Tribes whose water rights settlements have been implemented 
include the Ak-Chin, Salt River Pima-Maricopa, Fort McDowell 
and Yavapai-Prescott Indian communities in Arizona; the Pyramid 
Lake and Fallon Paiute Tribes in Nevada; the Seminole Tribe of 
Florida; the Shoshone-Bannock Tribes of the Fort Hall 
Reservation in Idaho; the Northern Cheyenne Tribe in Montana, 
and the Jicarilla Apache Tribe in New Mexico. Tribes whose 
settlements have not been implemented, for reasons unique to 
each, include the Tohono O'Odham Nation and San Carlos Apache 
Tribe in Arizona, the Ute Mountain and Southern Ute Tribes in 
Colorado, the La Jolla, Rincon, San Pasquale, Pauma, and Pala 
Bands of Mission Indians in California; and the Northern Ute 
Tribe of the Uintah & Ouray Reservation in Utah.
    In every case, settlement of a tribe's water rights, 
whether or not it includes funding from Federal, State, and/or 
local sources, necessarily benefits a tribe's economic 
circumstances. The extent of those benefits, however, is 
largely dependent upon the same panoply of factors that 
typically affect economic development anywhere, including 
location, availability of resources, stability of local 
government, access to capital, and cultural attitudes towards 
development. Thus, a water rights settlement by itself is not a 
panacea for economic development for any tribe. It is clear 
that all of the tribes whose settlements have been fully 
implemented are utilizing their water and other benefits 
secured to them by those settlements, and are advancing the 
development and diversification of their respective tribal 
economies. The Committee fully expects that the provisions of 
S. 438, if enacted, will go a long way toward securing the long 
term economic well-being of the Chippewa Cree Tribe of the 
Rocky Boy's Reservation in Montana.

                     summary of compact provisions

    The Compact quantifies the Tribe's Water Right \3\ at 
20,000 acre-feet. Half of this amount would be from sources on 
the Reservation, most of which is to be realized from the 
repair and enlargement of Bonneau Dam. The other 10,000 acre-
feet would be allocated from Lake Elwell behind Tiber Dam, a 
federal reclamation project approximately 50 miles from the 
Reservation on the Marias River.
---------------------------------------------------------------------------
    \3\ The term ``Tribal Water Right'' is defined in both the Compact 
and by S. 438.
---------------------------------------------------------------------------
    The Compact provides for a variety of Tribal and State 
actions to mitigate the impacts of the exercise of the Tribe's 
water right on off-Reservation water uses. The Tribe would 
administer the Tribal Water Right; however, any use of transfer 
of any portion of the Tribal Water Right off the Tribe's 
Reservation must be in compliance with State law. The Compact 
establishes a Compact Board to deal with any disputes between 
users of the Tribal Water Right and users of water rights 
recognized under State law. Decisions by the Board, which would 
be comprised of a tribal member, an off-Reservation water user, 
and a third member chosen by the first two, could be appealed 
to a court of competent jurisdiction. On appeal, the hearing 
would be a trial de novo.

                        the need for legislation

    Without a settlement of the tribal water claims, the United 
States would continue to participate in the general stream 
adjudication as the legal trustee for the Chippewa Cree Tribe. 
The tribe would also participate in the proceeding. Economic 
development on the Reservation would be stymied until the 
results of the proceeding defined the exact nature of the 
Tribe's water right. This would place a concomitant constraint 
on the tribe's sovereign authority. As the Court of Appeals for 
the 10th Circuit recognized, tribal control of water, land, 
mineral resources and recognition of governmental jurisdiction, 
are the core components of tribal sovereign authority. City of 
Albuquerque v. Browner, 97 F.3d 415 (10th Cir. 1996).
    In addition, until the adjudication is completed, the 
State's own ability to plan for the use and development of 
regional water resources would be more difficult or even 
impossible. This is especially problematic in a water short 
region such as north central Montana.
    Finally, as with other Indian tribes, the outcome of the 
litigation might hand the Chippewa Cree Tribe a Pyrrhic 
victory. For example, the rights recognized in the general 
stream adjudication may be the most difficult, controversial, 
or difficult to develop. In a letter to Senate Indian Affairs 
Committee (SCIA) Chairman Campbell from David J. Hayes, 
Counselor to the Secretary of Interior, the Department 
indicated its agreement with this concern. ``The Department 
agrees that litigation can result in circumstances in which 
tribes achieve a legal recognition of their water rights, but 
may be unable to obtain wet water and recognize economic value 
from their water rights.'' The letter continues on to state: 
``The Chippewa Cree settlement is a success in this regard.''

                         summary of provisions

    Short title. Section 1 provides a short title for S. 438, 
Chippewa Cree Tribe of the Rocky Boy's Indian Water Rights 
Settlement Act of 1999.
    Findings. Section 2 provides the background for S. 438. 
These include: the federal policy of employing the negotiated 
settlement of tribal water rights claims as a means of 
promoting tribal sovereignty and economic self-sufficiency; 
additional water supplies are needed to establish a permanent, 
sustainable, and sovereign homeland for the Tribe.
    Purposes. Section 3 includes the purposes of S. 438. These 
purposes include: achieving a fair, equitable, and final 
settlement of water rights claims of both the Chippewa Cree 
Tribe and the United States on behalf of the Tribe; approving, 
ratifying, and confirming the Compact, except as modified in 
this Act, and providing the funding and authorization necessary 
for implementation of the Compact; authorizing the Secretary to 
execute and implement the Compact, including the completion of 
projects required by the Compact, both on and off the Rocky 
Boy's Indian Reservation; authorizing feasibility studies to 
enhance water supplies in north central Montana; and providing 
authority for appropriation of funds for the implementation of 
the Compact.
    Definitions. Section 4 provides definitions for fifteen 
terms used in S. 438. Among the key terms defined in this 
section is the term ``Tribal Water Right.'' The ``Rule of 
Construction'' employed in the definition is more than simple 
disclaimer. As the Indian Affairs Committee pointed out in a 
1983 staff memorandum addressing Eastern land claims: ``In 
negotiating the Nonintercourse Act claims, the parties bargain 
for an agreement with which they can live in the future.'' As a 
result, ``[a] settlement in the end usually bears little 
relation to the positions set forth in the initial complaints 
and answers in the case.'' This memorandum criticized an 
approach to settlement negotiations that would tie the terms of 
any settlements to the nature of the claims asserted in 
litigation, pointing out that this would ``deprive the 
negotiations of their flexibility.'' \4\
---------------------------------------------------------------------------
    \4\ S. Hrng. 98-877, p. 31, quoting Staff Memorandum--The Veto of 
S. 366, The Mashantucket Pequot Indian Claims Settlement Act, April 11, 
1983.
---------------------------------------------------------------------------
    With respect to the Rocky Boy's Indian Water Rights 
Settlement, as with more other settlements, the nature of the 
water rights recognized by the settlement may bear little or no 
relationship to the rights the tribe may have acquired if the 
tribal and federal claims were adjudicated in court. If the 
Committee or Congress were to insist that settlements 
approximate the potential outcome of litigation, this would 
discourage settlements, rob the negotiation process of 
flexibility, and thereby eliminate the most valuable incentive 
to resolve such conflicts through negotiations. By employing 
the phrase ``Tribal Water Right'' to refer to all of the tribal 
water rights recognized by the Compact and confirmed by S. 438, 
the parties ensure that all of the protections sought by the 
State and the Tribe from adverse water and all negotiated 
mechanisms for resolution of dispute apply to all water sources 
included in the settlement of claims. For this reason, the rule 
of construction employed in the definition attests to the sui 
generis nature of tribal right to water under the Compact and 
S. 438, including the attributes of its administration.

Ratification of the Compact and entry of decree

    Subsection 5(a) approves, ratifies, and confirms the 
Compact entered into by the Chippewa Cree Tribe of the Rocky 
Boy's Reservation and the State of Montana on April 14, 1997, 
except to the extent that it is modified by S. 438 and to the 
extent it does not conflict with S. 438. It also directs the 
Secretary to execute and implement the Compact, and any 
amendments signed to by the parties or which are necessary to 
bring the Compact into conformity with S. 438, and to take such 
other actions as necessary to implement the Compact.
    Subsection (b) provides that the United States and the 
State of Montana, either jointly or individually, shall enter 
and approve the decree attached as Appendix 1 to the Compact or 
any amended version of such a decree agreed to by the United 
States, the Tribe, and the State of Montana. This subsection 
also recognizes that circumstances not immediately relevant to 
this Compact may prevent the effective filing of such a decree 
in Montana State Court. For example, if, for some reason, it 
was determined that the state court adjudication does not 
constitute a McCarran Act proceeding under 43 U.S.C. Sec. 666, 
questions could be raised about whether this proceeding could 
result in a full and final adjudication of this case. The 
parties have indicated that they do not wish for such an 
unintended result to impede or prevent the implementation of 
this agreement. By providing that they may resort to federal 
court, the Compact provides a mechanism for addressing and 
neutralizing such an occurrence.
    Another contingency addressed by the Compact and S. 438 
concerns the absence of a final decree or the setting of the 
decree by an appropriate court. While the Committee is not 
aware of any reasons that this may occur, prudence dictates a 
need to address this possibility. If this was to occur, the 
Tribe would be required to return all unexpended funds 
appropriated pursuant to this Act, the Tribe would retain all 
of its rights to withdraw from the Compact pursuant to Art. 
VII.A.3, and the release of claims executed by the Tribe shall 
become null and void.

Use and transfer of Tribal Water Right

    Subsection 6(a) provides that pursuant to the terms of the 
Compact, the Secretary shall administer and enforce the Tribal 
Water Right until a water code is adopted by the Tribe and 
approved.
    Subsection (b) provides that to the extent that any tribal 
member has an entitlement to reserved water rights, these shall 
be satisfied solely from the water secured by the Tribe by the 
Compact. In addition, the use and enjoyment of such rights 
shall be governed by the provisions of the Compact. After a 
water code is approved and adopted, the Tribe has the right to 
administer these water uses pursuant to the terms of the 
Compact. In addition, this provision attests to the deference 
that should be paid to tribes with respect to the regulation of 
on-Reservation resources. Because there are not allotments on 
the Chippewa Cree Reservation, the provision does not address 
the more difficult question of the appropriate level of 
protection of allottee interests.
    Subsection (c) provides for the temporary transfer of the 
Tribal Water Right. In many instances, the question of off-
Reservation use of tribal water rights secured pursuant to a 
negotiated settlement has proven to be one of the most 
controversial elements of water rights settlements, sometimes 
pitting the interests of the state where the tribe is located 
against the interest of neighboring states. That is not the 
case with this settlement for two related reasons. First, the 
negotiations have produced terms concerning the administration 
and use of the Tribal Water Right that resolve all of the 
anticipated questions that could threaten important State or 
Tribal interests. These terms neutralize issues that might 
otherwise make it impossible for the parties to address whether 
or not the water incorporated into the settlement can be used 
or leased off-Reservation. This settlement is thus preferable 
to the approach taken when these issues cannot be resolved. In 
these cases, the issue is often left unaddressed, leaving open 
the prospect that it may become the subject of subsequent 
litigation, which is inconsistent with one of the primary 
purposes of negotiated settlements, which is to seek to promote 
certainty with respect to the use and administration of water. 
This uncertainty is especially significant when the unresolved 
issue involves off-Reservation leasing, because this issue 
remains controversial.
    Second, the State and the Tribe are in agreement that the 
off-Reservation use of the Tribal Water Right, within the terms 
and conditions of the Compact, are in the best interest of both 
the State and the Tribe. In one of their submissions to the 
Committee the State made the following points:

          The leasing of Tribal water is uniquely tailored to 
        meet the needs of Montana citizens. The ability of the 
        Tribe to lease water is a benefit to the State of 
        Montana as well as the Tribe. By far the largest use of 
        water in Montana is irrigated agriculture. With a 
        population of less than 1 million, Montana has no urban 
        centers. Its larger towns: Billings, Helena, Great 
        Falls and Missoula are located on the Yellowstone, the 
        Missouri and Clark Fork Rivers. There is no shortage of 
        water for any reasonable projections of urban growth. 
        Nor do the neighboring states of Idaho, Wyoming and 
        North and South Dakota, need to turn to Montana as a 
        source for water development.
          However, for irrigation agriculture in the Milk 
        River, the basin in which the Rocky Boy's Reservation 
        is located, water allocation is at capacity. The Milk 
        River Project was one of the first Reclamation Projects 
        authorized by Congress, because even in the early 
        1900's the water supply was inadequate. The Milk River 
        has been closed to new permits for water use for 
        irrigation under state law since 1983. There are four 
        Indian Reservations and numerous Indian allotments in 
        the Milk River Valley to further stretch these limited 
        resources. Short of importing water from another basin, 
        the only means to maintain the flexibility to develop 
        new irrigation in the future off Reservation is to 
        allow leasing of tribal water, particularly water from 
        tribes. It is also important to note that the Tribe 
        gets no more than other Montana citizens. Under Montana 
        law, any water user has the right to sell or lease 
        their water right.

    As this statement makes clear, the unique geographic and 
jurisdiction factors that form the context for this settlement 
induce both the State and the Tribe to explicitly provide for 
off-Reservation use of the Tribal Water Right. To the extent 
that such activity might threaten State interests, specific 
provisions are included in both the Compact and S. 438. For 
example, the Compact does not provide for transfers out of the 
Missouri River drainage. In addition, if the Tribe receives a 
good faith offer to transfer water out of the Milk River 
drainage, the Tribe agrees to allow water users in the Milk 
River drainage to acquire such rights at the same price and on 
the same terms and conditions as those contained in the offer. 
Finally, any federal interests in such transactions are 
addressed by the provision of S. 438 that prohibits the 
permanent alienation of any portion of the Tribal Water Right 
and the provision requiring Secretarial approval of any service 
contract, lease, or exchange of the Tribal Water Right.

Feasibility studies authorization

    Section 7 directs the Secretary of Interior to conduct two 
studies through the Bureau of Reclamation. Subsection (a) 
establishes that the Secretary, through the Bureau of 
Reclamation, shall perform a municipal, rural, and industrial 
(MR&I) feasibility study to assess water and related resources 
in north central Montana and evaluate alternatives for a 
municipal, rural, and industrial supply for the Rocky Boy's 
Reservation. One of the alternatives to be studied includes the 
releasing of some or all of the Tribe's Tiber Reservoir 
allocation into the Missouri River System for later diversion, 
treatment, and delivery to the Rocky Boy's Reservation. The 
MR&I feasibility study shall utilize existing studies by both 
federal and non-federal sources. In addition, it should be 
planned and conducted with other federal agencies, the State, 
and the Tribe.
    Subsection (b) provides that none of the parties to the 
settlement are obligated to accept or participate in a 
potential off-Reservation water supply system identified in the 
MR&I feasibility study.
    Subsection (c) provides that the Secretary, through the 
Bureau of Reclamation, shall conduct a regional feasibility 
study of water and related resources in north-central Montana 
in order to determine the limitations of those resources and 
how those resources can be managed to best serve the needs of 
the citizens of Montana. Funds provided in the Fiscal Year 1999 
Energy and Water Appropriations Act, PL. 105-245, may be used 
for the regional study. The regional study is to provide the 
following: (1) evaluate existing and potential water supplies, 
uses, and management; (2) identify major water-related issues, 
including environmental, water supply, and economic issues; (3) 
evaluate opportunities to resolve these issues and; (4) 
evaluate options for implementation of resolutions to the 
issues. The legislation addresses the regional and 
international impact of the feasibility study and requires that 
it be planned and conducted in consultation with all affected 
interests, including Canada.

Tiber Reservoir allocation

    Section 8 directs the Secretary to permanently allocate to 
the Tribe, without cost to the Tribe, 10,000 acre-feet per year 
of stored water from the Bureau of Reclamation's right to water 
from Lake Elwell, Lower Marias Unit, Upper Division, Pick-Sloan 
Missouri Basin Program, Montana. This amount will be measured 
at the outlet works of the dam or at a diversion point from the 
reservoir. This allocation shall become effective when the 
decree referred to in Section 5 is final. The Secretary is to 
enter into an agreement with the Tribe with the terms of the 
allocation, including the use or temporary transfer of the 
allocation stored in Lake Elwell, subject to the terms and 
conditions of the Compact and S. 438. The water allocated by 
Section 8 shall be subject to the prior reserved rights, if 
any, of any Indian Tribe, or person claiming water through any 
Indian tribe.
    Subsection (b) provides that the Tribe has the right to 
devote the water allocated by Section 8 to any use, subject to 
the limitations and conditions in the Compact and S. 438. This 
includes the use, temporary delivery, or transfer of the water 
allocated by Section 8. Such an agreement is subject to the 
approval of the Secretary and no such agreement may permanently 
alienate any portion of the tribal allocation.
    Subsection (c) provides that the United States retains the 
right to use, as authorized, all the remaining storage in Lake 
Elwell after the allocation of 10,000 acre-feet per year (af/y) 
to the Tribe as required by S. 438.
    Subsection (d) provides that the United States shall have 
no responsibility or obligation to provide any facility for the 
transport of water allocated by Section 8 to the Rocky Boys 
Reservation or to any other location. Except for the 
contribution required by Section 11, the United States shall 
not be required to bear the cost of developing or delivering 
the water allocated by Section 8. Although Congress may not 
prohibit the Tribe from seeking additional, programmatic or 
non-programmatic assistance with water development projects, if 
enacted, S. 438 does represent the view of the Department, the 
SCIA, and this Congress that the amounts provided under S. 438 
represent an adequate federal contribution to the Tribe's water 
development.
    Subsection (e) provides that the provisions of this section 
concerning the allocation of water resources from Tiber 
Reservoir is not to be construed as precedent in the litigation 
or settlement of other Indian water rights claims.

On-Reservation water resources development

    Section 9(a) provides for the development of on-Reservation 
water resource development. Specifically, the Secretary, 
through the Bureau of Reclamation, is authorized and directed 
to plan, construct, and design or to provide for the 
construction as provided in Section 9, for the following 
projects: Bonneau Dam and Reservoir Enlargement; East Fork of 
Beaver Creek Dam Repair and Enlargement; Brown's Dam 
Enlargement; Tows Ponds' Enlargement; and such other water 
development projects as the Tribe shall from time to time 
consider appropriate.
    Subsection (b) provides that the Secretary shall, at the 
Tribe's request, enter into an agreement, or modify an existing 
agreement pursuant to Title IV of the Indian Self-Determination 
and Education Assistance Act, which provides for the Tribe to 
plan, design, or construct all of the projects authorized by 
Section 9.
    Subsection (c) finds that the Secretary, through the Bureau 
of Reclamation, has entered into an agreement with Tribe 
pursuant to the Title IV of the Indian Self-Determination and 
Education Assistance Act, which defines and limits the Bureau's 
administration of the projects authorized by Section 9, 
establishes the standards for their construction, and other 
purposes necessary to implement this section. This agreement 
shall be effective when the Tribe exercises its rights under 
subsection 9(b).

Chippewa Cree Indian Reserved Water Rights Settlement Trust Fund

    Section 10(a) establishes the Chippewa Cree Indian Reserved 
Water Rights Settlement Trust Fund in the Treasury of the 
United States and provides that the proceeds of the Fund are to 
be available to the Secretary to manage and invest on behalf of 
the Tribe in accordance with the Act. These funds shall be made 
available from the Fund without fiscal year limitation. The 
fund is to consist of the amounts authorized to be appropriated 
under section 11(c) and other funds that may be transferred or 
credited to the Fund. Pursuant to the provisions of the 
American Indian Trust Fund Management Reform Act of 1994, P.L. 
103-412 (25 U.S.C. 4001 et seq.), with the approval of the 
Secretary, the Tribe may withdraw monies from the Fund and 
deposit these funds in an appropriate financial institution. 
The Fund shall include the following accounts: the Tribal 
Compact Administration Account, the Economic Development 
Account, and the Future Water Supplies Facilities Account.
    Subsection (b) provides that consistent with the Trust Fund 
Management Reform Act, the Secretary shall manage and invest 
the proceeds in the Fund. Similarly, pursuant to the Trust Fund 
Management Reform Act, to the extent that the Tribe exercises 
its prerogative to withdraw the Fund from the Treasury, neither 
the Secretary nor the Secretary of the Treasury shall retain 
any oversight over the accounting, disbursement, or investment 
of the Fund, except as provided in the withdrawal plan.\5\ Any 
withdrawal plan approved by the Secretary shall provide for the 
creation of those accounts established by Section 10(a), 
specifically the Compact Administration, Economic Development, 
and Economic Development Accounts. Any withdrawal plan shall 
also include the requirements contained in Section 10(c).
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    \5\ 25 U.S.C. Sec. 4022(c) states: ``Beginning on the date the 
funds are withdrawn pursuant to this section, any trust responsibility 
or liability of the United States with respect to such funds shall 
cease except as provided for in section 4027 of this title.''
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    Subsection (c) provides that except for $400,000 of the 
principal from the Fund for capital expenditures in connection 
with Tribal Compact Administration, the Tribe may only use the 
interest accrued to the Tribal Compact Administration Account 
to fulfill its obligations for Tribal Compact Administration. 
The interest from the Compact Administration account will 
provide a revenue stream to fund ongoing administrative 
activities by the Tribe. Both principal and accrued interest 
shall be available to the Tribe for expenditure from the 
Economic Development Account pursuant to an economic 
development plan approved by the Secretary. With respect to the 
Future Water Supply Facilities Account, the Tribe may access 
both principal and accrued interest for use on a water supply 
plan approved by the Secretary.
    Subsection (d) makes clear that certain federal laws 
regarding the investment and management of trust funds are 
applicable to the Fund established by S. 438. Whether the Fund 
is maintained by the Secretary or by the Tribe pursuant to the 
Trust Fund Reform Act, the entity managing the Fund will ensure 
that each of the three accounts receives its proportionate 
share of interest.
    Subsection (e) provides that if the Tribe does not withdraw 
the Fund from the Treasury, the Secretary is to enter into an 
agreement providing for the use of the Funds pursuant to the 
tribal economic development and water supply plans referred to 
in Section 10(c).
    Subsection (f) prohibits the distribution of the Fund on a 
per capita basis.

Authorization of appropriations

    Section 11 provides for the authorization of 
appropriations. With respect to the funds appropriated in the 
Fiscal Year 1999 Energy and Water Appropriations Act, PL. 105-
245, $500,000 is to be spent for the MR&I study and $500,000 
for the regional study. In addition, section 11 authorizes the 
appropriation of $3,000,000 in fiscal year 2000, of which, 
$500,000 is to be used for the MR&I feasibility study and 
$2,500,000 for the regional study. Subsection (c) provides for 
the authorization of the appropriation of $21,000,000 for the 
Fund, of which, $3,000,000 is allocated to Tribal Compact 
Administration, $3,000,000 for the Economic Development 
Account, and $2,000,000 for the Future Water Supplies Facility 
Account, all in the fiscal year 2000 budget. In the next two 
fiscal years, appropriations of $8,000,000 and $5,000,000 are 
authorized to be appropriated for the Future Water Supplies 
Facility Account.
    With respect to on-Reservation water development, 
subsection 11(d) provides for authorization of appropriations 
for the Bureau of Reclamation, within the Department of 
Interior, of $13,000,000 in fiscal year 2000 for the planning, 
design, and construction of Bonneau Dam enlargement, $8,000,000 
in the subsequent year for the East Fork Dam and Reservoir 
enlargement of which $4,000,000 shall be used for East Fork Dam 
and Reservoir enlargement and $2,000,000 for Brown's Dam and 
Reservoir enlargement, and $2,000,000 for the Tows Ponds 
enlargement. In the next fiscal year, $3,000,000 is authorized 
to be appropriated for the planning, design, and construction 
of such other water resource developments as the Tribe, with 
the approval of the Secretary may decide is appropriate or for 
the completion of the projects described in section 
11(d)(1)(A&B). Unexpended balances are first to be applied for 
the completion of the specified projects and then for other 
water development projects on the Reservation.
    Subsection (e) provides for an authorization of an 
appropriation of $1,000,000 in fiscal year 2000 for the 
administrative costs of the Bureau of Reclamation. The Bureau 
is to minimize the administrative costs under the Act to avoid 
costs in excess of this amount. However, the Bureau may use 
funds authorized for appropriation under subsection 11(d) for 
costs that exceed $1,000,000, but before it does so, the Bureau 
of Reclamation is to exercise its best efforts to minimize and 
try to avoid expenditures of more than $1,000,000.
    Subsection (f) addresses the availability of the amounts 
appropriated to the Fund. The amounts appropriated for the MR&I 
and the regional feasibility study pursuant to Section 11(a) 
are deemed to be available for use as of the day of their 
appropriation. In addition, the amounts authorized for these 
studies by Section 11(b) are also available for use upon 
appropriation. Also, the amounts authorized for appropriation 
for Tribal Compact Administration by Section 11(c)(1) are 
available for immediate use, subject to the limitation on the 
use of these funds contained in Section 10(c)(1). However, with 
respect to the amounts appropriated pursuant to Section 11(c) 
and 11(d)(2)&(3), these proceeds are not to be available for 
expenditure until the requirements of Section 5(b) are met, 
producing a Final decree, and the Tribe has executed the waiver 
and release required by 13(c).
    Subsection (g) addresses the contingency that the approval 
of the Compact becomes null and void under Section 5(b). That 
section provides that the approval of the Compact will become 
null and void if the decree to be filed by the Tribe, the 
United States, or the State does not become final within 3 
years or if it is set aside by an appropriate court. In that 
case, within 12 months all unexpended funds, whether they are 
held by the Tribe, the Secretary, or a private institution, 
shall revert to the general fund of the Treasury. This 
requirement is to be included in any annual funding agreement, 
withdrawal plan, or any other agreement providing for the 
withdrawal or transfer of Fund by the Tribe.
    Subsection (h) provides that any funds appropriated 
pursuant to this Act are to be available without fiscal year 
limitation.

State contribution to settlement

    Section 12 addresses the State Contribution to the 
Settlement. Montana House Bill 6 of the 55th Legislative 
Session (1997) appropriated $150,000 for the following 
purposes: water quality discharge monitoring wells and 
monitoring program; diversion structure on Big Sandy Creek; a 
conveyance structure on Box Elder Creek; and the purchase of 
contract water from Lower Beaver Creek Reservoir.

Miscellaneous provisions

    Subsection 13(a) addresses the fact that the compact 
authorizes the Tribe to withdraw from the Compact if several 
events either occur or fail to occur within specified time-
frames. This section makes clear that most of the terms and 
conditions of Article VII.A.3 of the Compact are superseded by 
S. 438. With the Tribe's consent, its ability to withdraw from 
the Compact is limited to the terms of S. 438. Specifically, if 
the Compact becomes null and void under Section 5(b), the Tribe 
shall have the right to exercise its authority to withdraw 
pursuant to Article VII.A.3 of the Compact. With respect to the 
Tribe's release of claims against the United States, this 
waiver is not effective until the appropriation of funds is 
completed and the decree is Final as provided in Section 5(b) 
of S. 438. the broad range of claims to be addressed by the 
Tribe's waiver are described in section 13(c)(2). If the waiver 
does not become effective pursuant to the terms of S. 438, the 
United States is entitled to an offset against any claim 
against the United States, as well as funds transferred to the 
Tribe and any accrued interest, which are not returned to the 
United States pursuant to Section 11(g).
    Subsection 13(b) provides that S. 438 should not be 
construed to waiver the sovereign immunity of the United States 
except to the extent that this immunity is already waived by 
the McCarran Act, 43 U.S.C. Sec. 666.
    Subsection 13(d) provides that other Indian Tribes are held 
harmless by S. 438.
    Subsection 13(e) provides that the Secretary is to comply 
with any applicable environmental laws in implementing the 
Compact.
    Subsection 13(f) provides that the Secretary's execution of 
the Compact is not a major federal action under the National 
Environmental Policy Act, 42 U.S.C. 3221 et seq. The 
Department's position on this issue is addressed in the 
Department's August 31, 1998 letter on an identical provision 
in S. 1899, the Chippewa Cree Settlement bill approved by the 
Committee during the 105th Congress. A copy of this letter is 
included in the section on Executive Communications.
    Section 13(g) provides that S. 438 does not alter the trust 
responsibility of the United States or limit the Tribe's 
ability to seek additional authorizations or appropriations.
    Subsection (h) provides that S. 438 is not to serve as a 
precedent for either litigation or the interpretation or 
administration of other water rights settlements.

                          legislative history

    In the 105th Congress, the Committee approved a nearly 
identical bill, S. 1899 which was reported as an amendment in 
the nature of a substitute to S. 1771. It was not taken up by 
the full Senate before the 105th Congress adjourned sine die.
    In the 106th Congress, S. 438 was introduced on February 
22, 1999 by Senator Burns, for himself and Senator Baucus. Upon 
introduction, S. 438 was referred to the Committee on Energy 
and Natural Resources. Subsequently, by unanimous consent, S. 
438 was discharged from that Committee and referred to the 
Senate Committee on Indian Affairs, with instructions that at 
such time as the Committee on Indian Affairs reports the 
measure, it be referred to the Committee on Energy and Natural 
Resources for a period not to exceed 60 calendar days, and that 
if that Committee does not report the measure prior to the 
expiration of the 60-calendar day period, it is discharged from 
further consideration and the S. 438 will be placed on the 
Senate calendar.

            committee recommendation and tabulation of vote

    In an open business session on June 30, 1999, the Committee 
on Indian Affairs, by voice vote, ordered the bill reported to 
the Senate, with the recommendation to pass S. 438.

                      section-by-section analysis

Section 1. Short title

    Section 1 cites the short title of the bill as the Chippewa 
Cree Tribe of the Rocky Boy's Reservation Indian Reserved Water 
Rights Settlement Act of 1999.

Section 2. Findings

    Section 2 provides nine Congressional findings that provide 
the rationale and basis for the decision by all the parties, 
including the United States, to resolve the tribal water claim 
by negotiated settlement.

Section 3. Purposes

    Section 3 describes the bill's purposes, which include 
achieving a fair, equitable, and final settlement of the water 
rights claims of the Chippewa Cree Tribe and the United States 
for the benefit of the Chippewa Cree Tribe; approving--except 
as modified--the Chippewa Cree-Montana Water Rights Compact 
between the Chippewa Cree Tribe and the State of Montana; and 
authorizing and directing the appropriate federal bureaus to 
implement the Compact pursuant to the provisions of S. 438.

Section 4. Definitions

    Section 4 provides fifteen definitions for terms employed 
in the bill. These terms are: ``Compact,'' ``Final,'' ``Fund,'' 
``Indian tribe,'' ``MR&I Feasibility Study,'' ``Missouri River 
System,'' ``Reclamation Law,'' ``Rocky Boy's Reservation,'' 
``Secretary,'' ``Towe Ponds,'' ``Tribal Compact 
Administration,'' ``Tribal Water Code,'' ``Tribal Water 
Right.''

Section 5. Ratification of Compact and entry of decree

    Section 5 approves, ratifies, and confirms the compact 
between the Chippewa Cree Tribe and the State of Montana, 
except to the extent that the Compact conflicts with the bill. 
It also directs the Secretary of Interior to execute and 
implement the Compact and approves the filing of an appropriate 
decree in Montana Water Court, and provides for the contingency 
in the event the court does not approve the decree.

Section 6. Use and transfer of the Tribal Water Right

    Section 6 provides that until a tribal water code is 
approved by the Secretary of Interior, the Secretary shall 
administer and enforce the Tribal Water Right. It also provides 
that the reserved water rights of individual tribal members, if 
any, are to be satisfied from the water secured by the Tribe by 
the Compact and administered by the Tribe under the tribal 
water code.

Section 7. Feasibility studies authorized

    Section 7 authorizes and directs the Secretary of Interior, 
through the Bureau of Reclamation, to perform both a Municipal, 
Rural, and Industrial (MR&I) and regional feasibility study of 
water and related resources in north-central Montana. The MR&I 
study is to include the feasibility of releasing water from 
Tiber Reservoir into the Missouri River for diversion into a 
treatment and delivery system for the Rocky Boy's Reservation. 
The bill does not require the United States, the Chippewa Cree 
Tribe, or the State of Montana to participate in any system 
identified in the MR&I feasibility study.

Section 8. Tiber Reservoir allocation

    Section directs the Secretary of Interior to permanently 
allocate 10,000 af/y of water from the Tiber Reservoir, and 
Lake Elwell to the Chippewa Cree Indian Tribe. The allocation 
is to become effective when specified conditions are met. 
Subject to the limitations and conditions included in the 
Compact, the Tribe may enter into contracts, leases, exchanges, 
or other agreements providing for the temporary use of water 
allocated by this section. Section 8 also circumscribes the 
federal responsibility to provide for the construction of any 
facility to develop and deliver water to the Rocky Boy's 
Reservation. Section 8 also provides that the provisions of 
this section are not to be considered as precedent in the 
litigation or settlement of other Indian water rights claims.

Section 9. On-Reservation water resources development

    Section 9 directs the Secretary, through the Bureau of 
Reclamation, to plan, design, and construct a series of water 
development projects on the Rocky Boys Reservation. The section 
also references the Indian Self Determination and Education 
Assistance Act of 1975, 25 U.S.C. Sec. 450 et seq., as amended, 
and directs the Secretary to enter into an agreement or 
renegotiated agreement, to provide for tribal implementation of 
planning, design, and construction activities.
    The Committee understands that the Tribe and the Department 
of Interior will have completed this agreement before the bill 
becomes law. The Committee considers this agreement a very 
important element of the Tribe's right under the settlement. 
This agreement ensures that the Tribe's right to define the 
Bureau of Reclamation's administration of the authorized 
projects, establish standards for project construction, and 
fulfill other purposes of the bill relating to the Bureau can 
be addressed in a comprehensive fashion. Without this 
agreement, these issues would need to be addressed and resolved 
on an issue-by-issue basis, which would delay implementation of 
the agreement and frustrate important Congressional objectives.
    Finally, because this contract would address Department of 
Interior activities that do not involve the Bureau of Indian 
Affairs or the Indian Health Service, the moratorium imposed on 
new or expanded self-governance and self-determination compacts 
by P.L. 105-277, October 21, 1998, would not apply to this 
section.

Section 10. Chippewa Cree Indian Reserved Water Rights Settlement Trust 
        Fund

    Section 10 establishes the Chippewa Cree Indian Reserved 
Water Rights Settlement Trust Fund in the Treasury of the 
United States, from which funds may be withdrawn pursuant to 
provisions of the bill and the American Indian Trust Fund 
Management Reform Act of 1994. The Fund is to be managed 
pursuant to the bill and applicable federal laws that address 
the Secretary's management of trust funds including 25 U.S.C. 
Sec. Sec. 161, 161a, and 162a.

Section 11. Authorization of appropriations

    Section 11 authorizes the appropriations to implement the 
provisions of the bill, including the feasibility studies, 
tribal compact administration, tribal economic development, on-
Reservation water development, and future water supplies. This 
section also addresses when appropriated funds are available 
for expenditure.

Section 12. State contribution to settlement

    Section 12 defines the contributions that the State of 
Montana will make to the Settlement.

Section 13. Miscellaneous provisions

    Section 13 provides that in exchange for the benefits of 
the act, the Tribe shall not exercise the rights set forth in 
specified portions of the Compact, except as provided. The bill 
is not to be interpreted as a waiver of federal sovereign 
immunity, except to the extent provided by 43 U.S.C. Sec. 666. 
Section 13 also provides for the waiver of tribal claims 
against the United States. Section 13 also addresses certain 
environmental statutes.

               congressional budget office cost estimate

    The cost estimate for S. 438 as calculated by the 
Congressional Budget Office, is set forth below:
                                     U.S. Congress,
                               Congressional Budget Office,
                                 Washington, DC, September 8, 1999.
Hon. Ben Nighthorse Campbell,
Chairman, Committee on Indian Affairs,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 438, the Chippewa 
Cree Tribe of the Rocky Boy's Reservation Indian Reserved Water 
Rights Settlement Act of 1999.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Megan Carroll 
(for federal costs) and Marjorie Miller (for the impact on 
state, local, and tribal governments).
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

S. 438--Chippewa Cree Tribe of the Rocky Boy's Reservation Indian 
        Reserved Water Rights Settlement Act of 1999

    Summary: S. 438 would approve and ratify the water rights 
settlement agreement entered into by the Chippewa Cree Tribe of 
the Rocky Boy's Reservation and the state of Montana on April 
14, 1997. The bill would authorize appropriations for the 
Department of Interior (DOI) to implement the agreement, but 
most of these funds could not be spent until the agreement is 
approved by the Montana Water Court. S. 438 would create the 
Chippewa Cree Indian Reserved Water Rights Settlement Trust 
Fund and would allow the tribe to spend most amounts deposited 
to the fund (including interest earnings) without further 
appropriation. The bill also would authorize funding for the 
Bureau of Reclamation to conduct two feasibility studies and 
several on-reservation water development projects. (That amount 
includes $1 million for 1999 which has already been provided 
for the current year.) In addition, S. 438 would require the 
bureau to permanently allocate 10,000 acre-feet per year of 
stored water to the tribe.
    Based on information from DOI, CBO estimates that 
implementing S. 438 cost $48 million over the 2000-2004 period, 
assuming the appropriation of the authorized amounts. Enacting 
S. 438 could eventually affect direct spending (including 
offsetting receipts); therefore, pay-as-you-go procedures would 
apply. CBO estimates, however, that any such impact would not 
be significant over the next 10 years. S. 438 contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act (UMRA). Any costs resulting from 
the settlement agreement would be incurred voluntarily by the 
state and tribal governments as parties to that agreement.
    Estimated cost to the Federal Government: The estimated 
impact of S. 438 on discretionary spending is shown in the 
following table. CBO estimates that the bill could affect 
future offsetting receipts, but that any such effects would not 
be significant over the 2000-2004 period. The costs of this 
legislation fall within budget functions 300 (natural resources 
and environment) and 450 (community and regional development).

----------------------------------------------------------------------------------------------------------------
                                                                  By fiscal year, in millions of dollars--
                                                           -----------------------------------------------------
                                                              1999     2000     2001     2002     2003     2004
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION

Spending Under Current Law:
    Budget Authority \1\..................................        1        0        0        0        0        0
    Estimated Outlays.....................................        1        0        0        0        0        0
Proposed Changes:
    Authorization Level...................................        0       25       16        8        0        0
    Estimated Outlays.....................................        0       11        9       13       11        4
Spending Under S. 438:
    Authorization Level \1\...............................        1       25       16        8        0        0
    Estimated Outlays.....................................        1       11        9       13       11        4
----------------------------------------------------------------------------------------------------------------
\1\ The 1999 level is the amount appropriated to the bureau for preauthorization feasibility studies related to
  the settlement in that year.

            Spending subject to appropriation
    Although S. 438 would authorize specific amounts for each 
fiscal year, most of the funds could not be spent until the 
Montana Water Court has approved the settlement agreement 
between the tribe and the state of Montana. S. 438 requires at 
least one of the parties to petition the court within 180 days 
of enactment to approve the settlement. Unless the court offers 
final approval of the settlement within three years of the date 
when this petition is filed, all unexpended funds provided to 
implement S. 438 would be returned to the Treasury.
    Based on information from the tribe, the state, and DOI, 
CBO estimates that the settlement would be approved during 
fiscal year 2002, assuming the bill is enacted by the beginning 
of fiscal year 2000. For purposes of this estimate, CBO assumes 
that the amounts authorized for each year would be appropriated 
as specified in the bill, but that any federal funding 
contingent upon the approval of the settlement agreement would 
not be spent before 2002. For purposes of this estimate, we 
assume that outlays would occur at historical rates once the 
funds are released.
    Chippewa Cree Indian Reserved Water Rights Settlement Trust 
Fund. S. 438 would authorize appropriations totaling $21 
million over the 2000-2002 period to be deposited in the 
Chippewa Cree Indian Reserved Water Rights Settlement Trust 
Fund. Starting in fiscal year 2000, the federal budget will 
exclude trust funds that are held and managed in a fiduciary 
capacity by the federal government on the behalf of Indian 
tribes. Hence, deposits to the trust fund established under 
this bill would be treated as payments to a nonfederal entity. 
As a result, the entire amount appropriated to the fund in any 
fiscal year would be recorded as an outlay in that year.
    Once funds are deposited, the tribe could either withdraw 
the money (subject to DOI approval) and invest it in a private 
financial institution or leave it in the Treasury where it 
would earn simple interest at a specified rate. Most of the 
amounts in the fund would become available to the tribe upon 
final approval of the settlement agreement. Because the trust 
fund would be nonbudgetary, such restrictions on the tribe's 
use of the trust fund would not impact the timing of federal 
outlays.
    Feasibility Studies. S. 438 would authorize appropriations 
of $1 million in 1999 and $3 million in 2000 for the bureau to 
conduct two feasibility studies. The use of these funds would 
not be contingent on the approval of the settlement agreement. 
According to the bureau, the $1 million authorized for 1999 has 
already been appropriated for feasibility studies related to 
the settlement. CBO estimates that the amounts authorized for 
2000 would be sufficient to cover the remaining costs of these 
studies.
    Water Development Projects. S. 438 would authorize 
appropriations totaling $24 million over the 2000-2002 period 
for the bureau to implement several on-reservation water 
development projects. None of these funds could be spent until 
the settlement agreement is approved. Based on information from 
the bureau, CBO estimates that once the funds become available, 
the agency would spend the accumulated appropriations at 
historical rates.
            Direct spending (including offsetting receipts)
    Effective upon the date when the Montana Water Court 
approves the settlement agreement. S. 438 would require the 
bureau to permanently allocate 10,000 acre-feet per year of 
water to the tribe. The tribe could devote the water to any use 
within or outside of the reservation and would bear the cost of 
developing and transporting the water. According to the bureau, 
the allocation to the tribe would not affect other users over 
the 2000-2004 period. Because the allocation would reduce the 
amount of a marketable resource currently owned by the federal 
government, this provision could eventually reduce offsetting 
receipts; thus, pay-as-you-go procedures would apply. CBO 
estimates, however, that any such impact would not be 
significant in the foreseeable future.
    Pay-as-you-go considerations: The Balanced Budget and 
Emergency Deficit Control Act sets up pay-as-you-go procedures 
for legislation affecting direct spending or receipts. Enacting 
S. 438 eventually could reduce offsetting receipts (a credit 
against direct spending) that might have been collected if the 
water allocated to the tribe had been contracted to some other 
use. Thus, pay-as-you-go procedures would apply, but CBO 
estimates that any such impact would not be significant over 
the next 10 years.
    Estimated impact on state, local, and tribal governments: 
S. 438 contains no intergovernmental mandates as defined in 
UMRA. Any costs resulting from the settlement agreement would 
be incurred voluntarily by the state and tribal governments as 
parties to that agreement. The tribe has agreed to release the 
United States from all claims relating to its water rights in 
exchange for the benefits to be provided by this bill. This 
state of Montana has agreed to make financial contributions 
totaling $550,000 for various activities in support of the 
settlement.
    Estimated impact on the private sector: This bill contains 
no new private-sector mandates as defined in UMRA.
    Estimate prepared by: Federal costs: Megan Carroll, impact 
on state, local, and tribal governments: Marjorie Miller.
    Estimate approved by: Paul N. Van de Water, Assistant 
Director for Budget Analysis.

                      regulatory impact statement

    Paragraph 11(b) of rule XXVI of the Standing Rules of the 
Senate requires each report accompanying a bill to evaluate the 
regulatory and paperwork impact that would be incurred in 
carrying out the bill. The Committee has concluded that 
enactment of S. 438 will create only de minimis regulatory or 
paperwork impacts.

                        executive communications

    During the 105th Congress, the Committee received a letter 
from the Department of Interior concerning a similar measure, 
S. 1899, which is reprinted below.
                        Department of the Interior,
                                   Office of the Secretary,
                                   Washington, DC, August 31, 1998.
Hon. Ben Nighthorse Campbell,
Chairman, Committee on Indian Affairs,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: This letter responds to the questions 
presented in your July 9, 1998, letter to Robert Anderson 
concerning the Department of the Interior's view on S. 1899, 
the Chippewa Cree of the Rocky Boy's Reservation Indian 
Reserved Water Rights Settlement Act of 1998 (the Act).

Question 1

    Section 13(f) of the bill states: ``[e]xecution of the 
Compact by the Secretary as provided for in this Act shall not 
constitute a major Federal Action under the National 
Environmental Policy Act.''
    (a) Does this mean that the full range of environmental 
impacts that may ensue as a result of the decision to become a 
party to the Compact will not be analyzed, pursuant to the NEPA 
process, prior to the Secretary's execution of the agreement?
    (b) If the Secretary signs the Compact before complying 
with NEPA, does this mean that [the] Secretary will not, in the 
manner established by NEPA, consider the entire range of 
options for meeting the objectives of the Compact?

Response to question 1

    In our view, the language of section 13(f) allows the 
Secretary to take the ministerial action of executing the 
Compact but does not in any way diminish the Department's 
responsibility to comply with NEPA or other environmental 
statutes as particular actions are taken to implement the 
Compact. The controlling provision of S. 1899 with respect to 
NEPA and environmental compliance is Section 13(e) which 
provides:

          (e) Environmental Compliance.--In implementing the 
        Compact, the Secretary shall comply with all aspects of 
        the National Environmental Policy Act of 1969 (42 
        U.S.C. 4321 et seq.), and the Endangered Species Act 
        (16 U.S.C. 1531 et seq.), and all other applicable 
        environmental acts and regulations.

    Reading Sections 13(e) and (f) together, the Department 
believes that formal analysis under NEPA is not required prior 
to execution of the Compact, but rather that full NEPA and 
other environmental compliance is required prior to 
implementation of any particular element of the Compact or 
Settlement Act, including the construction of the various on-
Reservation water enhancement projects. For example, the 
Department commenced the NEPA analysis required in connection 
with the enlargement of Bonneau Dam.
    Departmental policy requires that potential environmental 
impacts be identified and analyzed as early as possible in the 
water rights negotiation process. It is for this reason that 
federal negotiation teams are composed not only of 
representatives from the Bureau of Indian Affairs, but also of 
representatives from the Fish and Wildlife Service, the Bureau 
of Land Management and other agencies. During negotiation of 
the Chippewa Cree Compact, the federal team and the other 
parties were careful to consider the possible environmental 
consequences of various Compact provisions, in large part 
because of the awareness that the failure to do so could cause 
significant problems in settlement implementation. We believe 
that this is a responsible and proper practice during 
negotiation. Moreover, we believe that it is more appropriate 
for full NEPA, Endangered Species Act and other environmental 
compliance processes to be carried out at the implementation 
stage when actions are not merely contemplated in theory, but 
actually proposed.
    As a final matter, the Committee should be aware that the 
provisions contained in Sections 13 (e) and (f) are not unique 
to this Indian water rights settlement. Similar provisions are 
contained in other Indian water rights settlements such as the 
Jicarilla Apache Tribe Water Rights Settlement Act, Pub. L. No. 
102-441, Sec. 9, 106 Stat. 2241 (1992); the San Carlos Apache 
Tribe Water Rights Settlement Act of 1992, Pub. L. No. 102-575, 
Sec. 3709, 106 Stat. 4749; and the Northern Cheyenne Indian 
Reserved Water Rights Settlement Act of 1992, Pub. L. No. 102-
374, Sec. 11, 106 Stat. 1193.
    Our experience has been that such provisions are fully 
consistent with the letter and spirit of NEPA. For example, in 
the implementation of the Northern Cheyenne Settlement Act, the 
Secretary interpreted the Act to require that the NEPA process 
take into account certain minimum elements included in the 
settlement (i.e., delivering to the Tribe, from any source, a 
particular quantity of water specified in the Compact). In 
conducting the NEPA analysis under those broad parameters, the 
Secretary reviewed alternatives to accomplish the settlement 
elements and ultimately concluded that the repair and 
enlargement of Tongue River Dam was the best alternative to 
satisfy the settlement.
    We contemplate that a similar course of action will be 
followed in implementation of the Chippewa Cree settlement. The 
settlement contemplates the repair and enlargement of four 
existing water facilities and the construction of additional 
water development projects on the Rocky Boy's Reservation in 
order to secure and put to use the water quantities provided in 
the Compact. In carrying out environmental compliance under 
section 13(e) of the proposed Act, the Secretary will be 
obligated to look at the full range of alternatives which can 
fulfill all the settlement elements, regardless of whether such 
alternatives are included in the Compact or the Settlement Act.
    In sum, we do not read Sections 13 (e) and (f) of S. 1899 
to, in any way, absolve the Secretary of his obligation to 
follow the mandates of federal environmental law.

Question 2

    As you are well aware, asserting reserved rights claims in 
court involves a great deal of risk and cost. In addition, a 
tribe may ``prevail'' and acquire a legal right to water in 
circumstances where economic and other factors may, as a 
practical matter, preclude use of such water by the tribe. Are 
these factors that the Department would consider in deciding 
whether to support a water rights settlement that supplied a 
tribe with a ``wet'' water supply instead of protracted 
litigation over reserved rights?

Response to question 2

    The Department takes the potential outcome of litigation 
into consideration in deciding whether to support a settlement. 
The Department agrees that litigation can result in 
circumstances in which tribes achieve legal recognition of 
their water rights, but may be unable to put those rights to 
use immediately. It is precisely such situations that Indian 
water rights settlements are designed to avoid.
    The goal sought by the Department in crafting any 
settlement, including the Chippewa Cree settlement, is to 
secure a final and permanent water right which can be put to 
use by the tribe. We fully support the concept that Indian 
tribes should be able to obtain wet water and recognize 
economic value from their water rights. We strive to include 
provisions in every settlement that will allow tribes to 
realize these important benefits.
    The Chippewa Cree settlement is a success in this regard. 
The Tribe will be able immediately to enhance on-Reservation 
water supplies to address existing irrigation and domestic 
water needs. The establishment of the Future Water Supply 
Account within the Chippewa Cree Indian Water Rights Settlement 
Fund will assist the Tribe in securing the delivery of 
additional water supplies when the need for water arises in the 
future. In addition to these provisions which will allow the 
Tribe to obtain, and immediately put to use, ``wet'' water, S. 
1899 also provides the Tribe with the additional flexibility of 
marketing settlement water in the event that a market for such 
water develops.

Conclusion

    We hope that our responses to the Committee's questions 
will be of assistance to you and the Committee as you further 
consider the enactment of S. 1899. The Chippewa Cree Tribe and 
the State of Montana have labored in good faith for many years 
negotiating the settlement contained in S. 1899. We urge the 
Committee to act favorably upon it so that settlement benefits 
can be realized. If the Committee has further questions, we 
would be pleased to respond.
            Sincerely,
                                    David J. Hayes,
                                        Counselor to the Secretary.

                         Effect on Existing Law

    In compliance with subsection 12 of rule XXVI of the 
Standing Rules of the Senate, the Committee notes that the bill 
will not make any changes in existing law.

                                  
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