[Senate Report 107-301]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 638
107th Congress                                                   Report
                                 SENATE
 2d Session                                                     107-301

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



 
A BILL TO APPROVE THE SETTLEMENT OF THE WATER RIGHTS CLAIMS OF THE ZUNI 
     INDIAN TRIBE IN APACHE COUNTY, ARIZONA AND FOR OTHER PURPOSES

                                _______
                                

                October 8, 2002.--Ordered to be printed

                                _______
                                

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

                              R E P O R T

                         [To accompany S. 2743]

    The Committee on Indian Affairs, to which was referred the 
bill (S. 2743) to approve the settlement of the water rights 
claims of the Zuni Indian Tribe in Apache County, Arizona and 
for other purposes, having considered the same, reports 
favorably thereon with an amendment in the nature of a 
substitute and recommends that the bill (as amended) do pass.

                                PURPOSE

    The purpose of the bill is to resolve all claims in the 
Zuni Indian Tribe to water rights in the Little Colorado River 
basin and elsewhere in Arizona and to provide resources to 
restore riparian wetlands on the Zuni Heaven Reservation that 
are of great religious and cultural significance to the tribe 
and its members.

                               BACKGROUND

    Congress considered the history of the Zuni Indian Tribe in 
detail when it enacted the Zuni Claims Settlement Act of 1990, 
P.L. 101-486 (104 Stat. 1174). As the House Committee on 
Interior and Insular Affairs noted in its report, H. Rep. 101-
727, 101st Cong., 2nd Sess. (1990), on a companion bill (H.R. 
4143) to the legislation that was enacted into law (S. 2203), 
the Zuni Tribe and its probable ancestors-the Anasazi and 
Mogollon--inhabited an area as large as 15 million acres in 
what is now the States of Arizona and New Mexico. This area was 
inhabited as early as 5000 B.C., and between 1250 A.D. and 1540 
A.D. large pueblos were constructed in this area. By 1450 A.D., 
this was a cultural and economic center for the Zuni, who used 
the entire 15 million areas for hunting, gathering, and farming 
as well as other life-sustaining activities.
    Spanish explorers learned of the Zuni and the ``Kingdom of 
Cibola'' in the late 1530s, and the first major contract with 
Europeans took place when Coronado's expedition encountered the 
Zuni as he searched for Cibola's ``Seven Cities of Gold.'' 
Spanish missionaries recorded the cultivation of corn by the 
Zuni in 1581, and an expedition in 1583 noted the Zuni's 
irrigation and hunting practices. In 1598, Spain officially 
recognized the Zuni Province when the Zuni acknowledged Spanish 
sovereignty over them. Under Spanish law, the Zuni retained 
ownership of their lands and were treated as autonomous and 
self-governing notwithstanding the overriding sovereignty of 
Spain. The Zuni maintained their autonomy under the government 
of Mexico after that nation achieved its independence from 
Spain in 1821.
    The 1848 Treaty of Guadalupe Hidalgo offered the Zuni the 
same legal protections they had received under Spanish and 
Mexican rule. Subsequently, however, the Zuni were deprived of 
all but about 3% of the land they had earlier controlled. In 
1877, the Zuni Reservation was established by executive order, 
consisting of 408,000 acres of land in McKinley and Valencia 
Counties in western New Mexico. Notwithstanding this diminution 
of their lands, the Zuni have continued to make religious 
pilgrimages from their reservation in New Mexico to the area 
now included within the Zuni Heaven Reservation in Arizona. \1\
---------------------------------------------------------------------------
    \1\ See, United States on behalf of the Zuni Tribe of New Mexico v. 
Platt, 730 F. Supp. 318, 318-21 (D. N.M. 1990).
---------------------------------------------------------------------------
    The Zuni Heaven Reservation was recognized by statute in 
1984, P.L. 98-408, 98 State. 1533 (1984), as amended by P.L. 
101-486, 104 Stat. 1174 (1990), to protect long-standing 
religious and subsistence activities by the Zuni Indian Tribe 
on certain lands in Apache County, Arizona, located upstream of 
the confluence of the Little Colorado and Zuni Rivers. The 
rights of all water users in the basin of the Little Colorado 
River in Arizona have been in litigation since 1979 before the 
Superior Court of the State of Arizona in and for the County of 
Apache in an action encaptured In re The General Adjudication 
of All Rights to Use Water in the Little Colorado River. Public 
policy favors the resolution of such claims by means of 
negotiated settlements, rather than through lenghty and costly 
litigation.
    After more than four years of negotiations amongst 
representative of the United States, the Zuni Tribe, the State 
of Arizona, the Salt River Project, Tucson Electric Power 
Company, local irrigation companies, and neighboring non-Indian 
communities located in the Little Colorado River basin, on June 
7, 2002, the parties entered into a settlement agreement 
(Settlement Agreement) to resolve all of the tribe's claims to 
water rights, to assist the tribe in acquiring surface water 
rights, to provide for the tribe's use of groundwater, and to 
provide for the restoration of riparian wetlands of great 
cultural and religious significance to the tribe. The proposed 
legislation ratifies and confirms that Settlement Agreement, 
and authorizes the appropriation of funds necessary to carry 
out its terms. The legislation also approves, ratifies, and 
confirms various related agreements among the parties.
    Because of the unique nature of the Zuni Heaven Reservation 
and the purposes for which it was established, the terms of the 
Settlement Agreement and the provisions of S. 2743 which seek 
to implement the Settlement Agreement in some instances 
represent a departure from standard principles of Federal-
Indian law. The Committee recognizes these unique circumstances 
and the history which gives rise to them, and further 
recognizes that the provisions of the Settlement Agreement and 
the implementing legislation are intended to address the 
uniquecircumstances as well as the respective positions of the parties 
to the Settlement Agreement, and are not intended to establish a 
precedent for other settlements of tribal claims to land and water 
rights.

                          LEGISLATIVE HISTORY

    S. 2743 was introduced on July 17, 2002, by Senator Kyl, 
for himself and Senator McCain, and was referred to the 
Committee on Indian Affairs. The Committee held a hearing on S. 
2743 on July 18, 2002. On October 1, 2002, the Committee, by 
voice vote, ordered the bill favorably reported to the Senate 
with an amendment in the nature of a substitute, with the 
recommendation that the Senate do pass S. 2743 as reported.

            COMMITTEE RECOMMENDATION AND TABULATION OF VOTE

    The Committee on Indian Affairs, in an open business 
meeting on October 1, by voice vote approved S. 2743, with an 
amendment in the nature of a substitute, and ordered the bill, 
as amended, to be reported favorably to the Senate.

                      SECTION-BY-SECTION ANALYSIS

Section 1.--Short title

    Section 1 cites the short title of the bill as the Zuni 
Indian Tribe Water Rights Settlement Act of 2002.

Section 2.--Findings and purposes

    Section 2(a) sets forth 9 Congressional findings that 
provide the rationale and basis for the decision by all 
parties, including the United States, to resolve the tribal 
water claims by negotiated settlement.
    Section 2(b) describes the purposes of S. 2743, which 
include to approve, ratify, and confirm the Settlement 
Agreement entered into by the tribe and neighboring non-
Indians, to authorize and direct the Secretary of the Interior 
(Secretary) to execute and perform the Settlement Agreement and 
related waivers, to authorize and direct the United States to 
take legal title to certain lands and to hold such lands in 
trust for the benefit of the tribe, and to authorize the 
actions, agreements, and appropriations as provided for in the 
Settlement agreement S. 2743.

Section 3.--Definitions

    Section 3 provides 11 definitions for terms employed in the 
bill. These terms are: ``Eastern LCR Basin,'' ``Fund,'' 
``Intergovernmental Agreement,'' ``Pumping Protection 
Agreement,'' ``Reservation'' or ``Zuni Heaven Reservation,'' 
``Secretary,'' ``Settlement Agreement,'' ``SRP,'' ``TEP,'' 
``Tribe,'' ``Zuni Indian Tribe,'' or ``Zuni Indian Tribe,'' and 
``Zuni Lands.''

Section 4.--Authorizations, ratifications, and confirmations

    Section 4(a) approves, ratifies, confirms, and declares to 
be valid the Settlement Agreement, to the extent it does not 
conflict with the provisions of S. 2743. It also authorizes and 
directs the Secretary to execute the Settlement Agreement and 
any necessary amendments thereto to make the Settlement 
Agreement consistent with this legislation.
    Section 4(b) authorizes the appropriation, to the Zuni 
Indian Tribe Water Rights Fund established in Sec. 6(a), 
$19,250,000, to be allocated by the Secretary as follows: 
$3,500,000 in FY 2004 for the acquisition of at least 2,350 
acre-feet per year of water rights and associated lands and for 
related activities, the acquisition to be completed by the 
deadline set forth in Sec. 9(b), and $15,750,000, to be 
appropriated in three equal installments in FY 2004, 2005, and 
2006, to restore, rehabilitate, and maintain the Zuni Heaven 
Reservation, including the Sacred Lake, wetlands, and riparian 
acreas. The Committee has been advised by the parties that in 
the event the deadline set forth in the Settlement Agreement is 
in conflict with the schedule of funding set forth in this 
subsection, the Settlement Agreement will be amended to conform 
to the provisions of S. 2743.
    Section 4(c) provides that, except as provided in Sec. 9, 
the following three agreements, including amendments, are 
approved, ratified, confirmed, and declared to be valid: the 
agreement between the Salt River Project Agricultural 
Improvement and Power District, the tribe, and the United 
States on behalf of the tribe dated June 7, 2002; the agreement 
between Tucson Electric Power Company,the tribe, and the United 
States on behalf of the tribe dated June 7, 2002; and the agreement 
between the Arizona State Land Department, the tribe, and the United 
States on behalf of the tribe dated June 7, 2002.

Section 5.--Trust lands

    Section 5(a) provides that, upon satisfaction of conditions 
set forth in paragraph 6.2 of the Settlement Agreement and the 
requirements of Sec. 9(a), the Secretary shall take the legal 
title to certain lands identified in this subsection into trust 
for the benefit of the tribe.
    Section 5(b) provides that, following the acquisition by 
the tribe of certain lands identified in this subsection and 
upon satisfaction of conditions set forth in paragraph 6.2 of 
the Settlement Agreement and the requirements of Sec. 9(a), the 
Secretarys shall take the legal title to those lands into trust 
for the benefit of the tribe.
    Section 5(c) provides that, following the acquisition by 
the tribe of certain lands identified in this subsection and 
upon satisfaction of conditions set forth in paragraph 6.2 of 
the Settlement Agreement and the requirements of Sec. 9(a), the 
Secretary shall take the legal title to those lands into trust 
for the benefit of the tribe and shall make such lands part of 
the Zuni Indian Tribe Reservation.
    Section 5(d) provides that the Secretary shall have no 
discretion regarding the acquisitions described in subsection 
(a), (b), and (c).
    Section 5(e) provides that no lands within Arizona, other 
than the land described in subsection (a), (b), and (c), shall 
hereafter be taken into trust by the United States for the 
benefit of the tribe except by authority of an Act of Congress 
enacted after the date of enacted of this legislation and 
specifically authorizing the taking of lands into trust for the 
benefit of the tribe.
    Section 5(f) provides that any written certification by the 
Secretary under subparagraph 6.2.B of the Settlement Agreement 
constitutes final agency action under the Administrative 
Procedures Act and is reviewable as provided under chapter 7 of 
title 5, United States Code.
    Section 5(g) provides that lands taken into trust pursuant 
to subsection (a), (b), or (c) shall not have Federal reserved 
rights to surface water or groundwater.
    Section 5(h) provides that water rights and uses for lands 
taken into trust pursuant to subsections (a) or (c) must be 
determined under subparagraph 4.1.A and article 5 of the 
Settlement Agreement. The tribe retains any rights or claims to 
water associated with lands taken into trust pursuant to 
subsection (b) under State law, subject to the terms of the 
Settlement Agreement.
    Section 5(i) provides that water rights appurtenant to 
lands taken into trust pursuant to subsections (a), (b), or (c) 
shall not be subject to forfeiture and abandonment.
    Section 5(j) provides that, with respect to lands taken 
into trust pursuant to subsection (a) and (b), the tribe shall 
make payments in lieu of all current and future State, county, 
and local ad valorem property taxes that would otherwise be 
applicable to those lands if they were not in trust.
    Section 5(k) provides that the tribe is authorized to enter 
the Intergovernmental Agreement with Apache County, Arizona, 
and the State of Arizona identified in Sec. 3(3) and any 
intergovernmental agreement required to be entered into by the 
tribe under the terms of the Intergovernmental Agreement. The 
scope of the intergovernmental agreements to be entered into by 
the tribe under the terms of the Intergovernmental Agreement is 
as set forth in subparagraph 6.2.A of the Settlement Agreement.
    Section 5(l) provides that the Secretary shall acknowledge 
the terms of any intergovernmental agreement entered into by 
the tribe under this section and shall not, in any 
administrative or judicial action, seek to abrogate the terms 
of any such intergovernmental agreement consistent with 
subparagraph 6.2.A of the Settlement Agreement and S. 2743. The 
subsection further provides that if the United States is 
permitted to intervene in a judicial action commenced during a 
dispute over any intergovernmental agreement entered under this 
section, the United States shall not remove the action to the 
Federal courts, except that the United States may seek removal 
if the action concerns the Secretary's action regarding the 
issuance of rights-of-way under Sec. 8(c), the authority of a 
Federal agency to administer programs or the issuance of a 
permit under the Federal Water Pollution ControlAct (33 U.S.C. 
Sec. Sec. 1251 et seq.), the Safe Drinking Water Act (42 U.S.C. 
Sec. Sec. 300f et seq.), the Clean Air Act (42 U.S.C. Sec. Sec. 7401 et 
seq.), or any other Federal law specifically addressed in 
intergovernmental agreements, or if the intergovernmental agreement is 
inconsistent with a Federal law for the protection of civil rights, 
public health, or welfare.
    Section 5(m) provides that nothing in this legislation 
shall be construed to affect the application of the Act of May 
25, 1918 (25 U.S.C. Sec. 211) within the State of Arizona. 
Section 5(m) does not affect the application of Jicarilla 
Apache Tribe v. State of New Mexico, 742 F. Supp. 1487 (D. N.M. 
1990), in the State of New Mexico, or the application of 
Masayesva v. Zah, 792 F. Supp. 1165 (D. Ariz. 1992), in the 
State of Arizona.
    Section 5(n) provides that nothing in this section repeals, 
modifies, amends, changes, or otherwise affects the Secretary's 
obligation to the tribe pursuant to P.L. 98-408, 98 Stat. 1533, 
as amended by the Zuni Claims Settlement Act of 1990, P.L. 101-
486, 104 Stat. 1174.

Section 6.--Development fund

    Section 6(a) establishes the Zuni Indian Tribe Water Rights 
Development Fund (Fund) in the Treasury of the United States, 
to be managed and invested by the Secretary and to consist of 
funds appropriated under section 4(b), the appropriation to be 
contributed by the State of Arizona pursuant to paragraph 7.6 
of the Settlement Agreement, and any other funds paid to the 
Secretary on behalf of the Zuni Tribe pursuant to the 
Settlement Agreement.
    Section 6(b) provides that the Secretary, in the 
management, investment, and disbursement of the Fund, shall 
comply with the American Indian Trust Fund Management Reform 
Act of 1994 (25 U.S.C. Sec. Sec. 4001 et seq.) (Trust Fund 
Reform Act), S. 2743, and the Settlement Agreement.
    Section 6(c) provides that investment of the assets of the 
Fund by the Secretary shall comply with the Act of April 1, 
1880 (25 U.S.C. Sec. 161), the first section of the Act of June 
24, 1938 (25 U.S.C. Sec. 162a), and subsection (b).
    Section 6(d) provides that funds appropriated pursuant to 
Sec. 4(b)(2) and funds contributed by the State of Arizona 
pursuant to paragraph 7.6 of the Settlement Agreement shall be 
available for expenditure or withdrawal only after the 
requirements of Sec. 9(a) have been met.
    Section 6(e) provides that the tribe may make withdrawals 
from the Fund only after the Secretary has approved a tribal 
management plan as described in the Trust Fund Reform Act which 
requires that funds be spent only for the purposes set forth in 
Sec. 4(b). The Secretary is authorized to take judicial or 
administrative action to enforce the requirement that the 
assets of the Fund be used only in accordance with the 
provisions of S. 2743. Neither the Secretary or the Secretary 
of the Treasury shall have any liability for the expenditure or 
investment of monies withdrawn from the Fund (the inclusion of 
this provision is not intended to suggest, however, that 
existing law does not fully protect the United States from 
liability under these circumstances, as it is the Committee's 
view that 25 U.S.C. Sec. 4022(c) would provide such 
protection). The tribe is to submit an expenditure plan for 
approval by the Secretary as to any monies held in the Fund 
that are not withdrawn pursuant to this subsection. The plan is 
to describe the manner in which, and the purposes for which, 
such monies will be used. The Secretary is to approve the 
tribal management plan if the Secretary determines that the 
plan is reasonable and is consistent with the provisions of S. 
2743. The tribe is to submit to the Secretary an annual report 
describing all expenditures from the Fund during the period of 
the report.
    Section 6(f) provides that notwithstanding subsection (e), 
funds authorized to be appropriated pursuant to Sec. 4(b)(1) 
shall be available for use upon appropriation in accordance 
with Sec. 4(b)(1) and shall be distributed by the Secretary to 
the tribe upon receipt by the Secretary of a written notice 
from the tribe and a tribal council resolution describing the 
purposes for which the funds will be used. In the event the 
requirements of Sec. 9(a) are not met and the Settlement 
Agreement becomes null and void pursuant to Sec. 9(a), the 
United States may set off any funds expended or withdrawn from 
the amount appropriated pursuant to Sec. 4(b)(1), together with 
any accrued interest, against any claims asserted by the tribe 
against the United States relating to water rights of the Zuni 
Heaven Reservation. Any water rights acquired with funds 
described in this subsection are to be credited against any 
water rights secured for the Zuni Heaven Reservation by the 
tribe, or by the United States on behalf of the tribe, in the 
Little Colorado River General Stream Adjudication or in any 
future settlement of claimsfor those water rights.
    Section 6(g) provides that no part of the Fund shall be 
distributed on a per capita basis to members of the tribe.

Section 7.--Claims extinguishment; waivers and releases

    Section 7(a) provides that the benefits realized by the 
tribe and its members under this legislation, including 
retention of any claims and rights, shall constitute full 
satisfaction of all members' claims for water rights under 
Federal, State, and other laws (including claims rights in 
groundwater, surface water, and effluent) for Zuni Lands (as 
defined in Sec. 3(11)) from time immemorial through the 
effective date set forth in Sec. 9(a), and for injuries during 
that period to such rights (including also claims for damages 
for deprivation of water rights and for changes to underground 
water tables) under Federal, State, and other laws. The 
legislation is not intended to recognize or establish any right 
of a member of the tribe to water on the Zuni Heaven 
Reservation.
    Section 7(b) authorizes the tribe, on behalf of itself and 
its members, and the Secretary, on behalf of the United States 
in its capacity as trustee for the tribe and its members, as 
part of their obligations under the Settlement Agreement, to 
execute a waiver and release of claims against the State of 
Arizona, any agency or political subdivision thereof, or any 
other person under Federal, State, or other law, for: (1) past, 
present, and future claims (from time immemorial to the 
effective date set forth in Sec. 9(a) and any time thereafter) 
to water rights (including groundwater, surface water, and 
effluent) for Zuni Lands, except as provided in article 5 of 
the Settlement Agreement; (2) past and present claims (to the 
effective date set forth in Sec. 9(a)) for injuries to water 
rights (including also claims for damages for deprivation of 
water rights and changes to underground water tables); and (3) 
past, present, and future claims for water rights and injuries 
to water rights (including also claims for damages for 
deprivation of water rights and changes to underground water 
tables) for lands outside of the Zuni Lands but located within 
the Little Colorado River basin in Arizona and based upon 
aboriginal occupancy of lands by the tribe and its 
predecessors.
    Section 7(c) authorities the tribe, as part of the 
performance of its obligations under the Settlement Agreement, 
to execute a waiver and release (subject to paragraphs 11.4 and 
11.6 of the Settlement Agreement) for claims against the United 
States (acting in its capacity as trustee for the tribe and its 
members or otherwise acting on their behalf), its agencies, 
officials, and employees, for: (1) past, present, and future 
claims (from time immemorial to the effective date set forth in 
Sec. 9(a) and any time thereafter) to water rights for Zuni 
lands (including groundwater, surface water, and effluent) and 
any claims for damages for deprivation of such water rights; 
(2) past and present claims (to the effective date set forth in 
Sec. 9(a)) for injuries to and deprivation of such water rights 
for Zuni Lands; and (3) past, present, and future claims for 
water rights (including groundwater, surface water, and 
effluent) as well as for injuries to and claims for deprivation 
of such water rights for lands outside the Zuni Lands but 
located within the Little Colorado River basin in Arizona and 
based upon aboriginal occupancy of lands by the tribe and its 
predecessors.
    Section 7(d)(1) authorizes the tribe, on behalf of itself 
and its members, to waive and release all claims against the 
State of Arizona, its agencies and political subdivisions, and 
any other person under Federal, State, or other law for claims 
of interference with the trust responsibility of the United 
States to the tribe arising out of the negotiation of the 
Settlement Agreement or S. 2743, as well as all claims against 
those same entities (subject to paragraphs 11.4, 11.6, and 11.7 
of the Settlement Agreement) for past and present claims, 
including natural resource damage claims under the 
Comprehensive Environmental Response, Compensation, and 
Liability Act of 1980 (42 U.S.C. Sec. Sec. 9601 et seq.) 
(CERCLA), the Oil Pollution Act of 1990 (33 U.S.C. 
Sec. Sec. 2701 et seq.) (OPA), or any other applicable statute, 
for injury to water quality accruing from time immemorial 
through the effective date set forth in Sec. 9(a) for lands 
within the Little Colorado River basin in the State of Arizona. 
The tribe is also authorized to waive future claims, including 
natural resource claims under CERCLA, OPA, or any other 
applicable statute, for lands within the Eastern Little 
Colorado River [LCR] basin (as defined in Sec. 3(1) caused by 
the lawful diversion or use of surface water, the lawful 
withdrawal of water (except within the Zuni Protection Area as 
provided in article 5 of the Settlement Agreement), the 
parties' performance of any obligations under the Settlement 
Agreement, the discharge of oil associated with routine 
physical or mechanical maintenance of wells or diversion 
structures not inconsistent with applicable law, the discharge 
of oil associated with routine start-up and operation of well 
pumps not inconsistent with applicable law, or any combination 
thereof.
    Section 7(d)(2) authorizes the tribe, on behalf of itself 
and its members, to waive its right to request that the United 
States bring any claims for injuries to water quality under the 
natural resource damage provisions of CERCLA, OPA, or any other 
applicable statute, for lands within the Little Colorado River 
basin in the State of Arizona accruing from time immemorial 
through the effective date set forth in Sec. 9(a), as well as 
future claims for injuries or threat of injuries to water 
quality under the natural resource damage provisions of CERCLA, 
OPA, or any other applicable statute, for lands within the 
Eastern LCR basin caused by the lawful diversion or use of 
surface water, the lawful withdrawal of water (except within 
the Zuni Protection Area as provided in article 5 of the 
Settlement Agreement), the parties' performance of any 
obligations under the Settlement Agreement, the discharge of 
oil associated with routine physical or mechanical maintenance 
of wells or diversion structures not inconsistent with 
applicable law, the discharge of oil associated with routine 
start-up and operation of well pumps not inconsistent with 
applicable law, or any combination thereof.
    Section 7(d)(3) provides that notwithstanding the waivers 
of future water quality claims authorized in paragraphs (1)(B) 
and (2)(B) of this subsection, the tribe, on behalf of itself 
and its members, retains any statutory claims for injury or 
threat of injury to water quality under CERCLA and OPA as 
described in subparagraphs 11.4(D)(3) and (4) of the Settlement 
Agreement that accrue at least 30 years after the effective 
date set forth in Sec. 9(a).
    Section 7(e) provides that the United States, as part of 
the performance of its obligations under the Settlement 
Agreement, waives and releases past and present claims (subject 
to the limitations set forth in paragraphs 11.4, 11.6, and 11.7 
of the Settlement Agreement) against the State of Arizona, its 
agencies and political subdivisions, and any other entity for: 
past and present common law claims accruing from time 
immemorial to the effective date set forth in Sec. 9(a) arising 
for or relating to water quality in which the injury asserted 
is to the tribe's interest in water, trust land, and natural 
resources in the Little Colorado River basin in the State of 
Arizona; and all past and present natural resource damage 
claims accruing through the effective date set forth in 
Sec. 9(a) based on injury or threat to natural resources in the 
Little Colorado River basin in Arizona, but only for those 
cases in which the United States, or any Federal official, 
would act on behalf of the tribe as a natural resource trustee 
pursuant to the Natural Resource Contingency Plan as set forth 
in 40 CFR Sec. 300.600(b)(2) on the effective date of this 
legislation under Sec. 9(a). This subsection further provides 
that the United States, subject to the retentions set forth in 
paragraphs 11.4, 11.6, and 11.7 of the Settlement Agreement, 
also waives and releases future common law claims against the 
State of Arizona, its agencies and political subdivisions, and 
any other entity arising from or relating to water quality in 
which the injury asserted is to the tribe's interest in water, 
trust land, and natural resources in the Eastern LCR basin in 
Arizona accruing after the effective date described in 
Sec. 9(a) and caused by the lawful diversion or use of surface 
water, the lawful withdrawal of water (except within the Zuni 
Protection Area as provided in article 5 of the Settlement 
Agreement), the parties' performance of any obligations under 
the Settlement Agreement, the discharge of oil associated with 
routine physical or mechanical maintenance of wells or 
diversion structures not inconsistent with applicable law, the 
discharge of associated with routine start-up and operation of 
well pumps not inconsistent with applicable law, or any 
combination thereof.
    Section 7(f) provides that, subject to subsection (b) and 
(e), nothing in S. 2743 or the Settlement Agreement affects any 
right of the United States, or the State of Arizona, to take 
any actions (including enforcement actions) under any laws 
(including regulations) relating to human health, safety, and 
the environment.

Section 8.--Miscellaneous provisions

    Section 8(a) provides for the waiver of the sovereign 
immunity of the United States and the Tribe (except as to 
claims for money damages not specifically provided for in the 
Settlement Agreement) in the event any party to the Settlement 
Agreement or a Pumping Protection Agreement files a lawsuit 
only relating to the interpretation or enforcement of this 
legislation, certain agreements identified in Sec. 4(c), or a 
Pumping Protection Agreement. this subsection also provides for 
a waiver of Federal and tribal immunity, with the same 
limitation, if a landowner or water user in the Little Colorado 
River basin in Arizona files a lawsuit only relating to 
directly to the interpretation or enforcement of Article 11 of 
the Settlement Agreement, the rights of de minimis users in 
subparagraph 4.2.D of the Settlement Agreement, or the rights 
of underground water users under Article 5 of the Settlement 
Agreement. The tribe is authorized to waive its sovereign 
immunity from suit in the superior Court of Apache County, 
Arizona (except with claims for monetary awards not 
specifically authorized in the Intergovernmental Agreement) for 
the limited purposes of enforcing the terms ofthe 
Intergovernmental Agreement and any intergovernmental agreement 
required to be entered into by the tribe under the terms of the 
Intergovernmental Agreement. Although the text of the legislation does 
not address the issue of a waiver of the sovereign immunity of the 
State of Arizona, the waiver of tribal sovereign immunity set forth 
herein is grounded in assurances made to the Committee that the tribe 
has adequate and reciprocal judicial remedies against the State. The 
Committee views S. 2743 as a contract, and the availability to the 
tribe of such remedies is a basic assumption of that contract.
    Section 8(b) provides that, with respect to water rights 
made available under the Settlement Agreement and used on the 
Zuni Heaven Reservation, such rights shall be held in trust by 
the United States in perpetuity and shall not be subject to 
forfeiture or abandonment. The subsection further provides that 
State law shall not apply to water uses on the Zuni Heaven 
Reservation, and that water rights and uses on the Zuni Heaven 
Reservation shall not be subject to State law or regulation, 
except that the court with jurisdiction over the decree entered 
pursuant to the Settlement Agreement or the Norviel Decree 
Court may assess administrative fees for delivery of this 
water.
    Section 8(c) provides that land taken into trust pursuant 
to Sec. Sec. 5(a) and 5(b) shall be subject to existing 
easements and rights-of-way and that, notwithstanding any other 
provision of law, the Secretary, in consultation with the 
tribe, shall grant additional rights-of-way or expansions of 
existing rights-of-way for roads, utilities, and other 
accommodations to adjoining landowners if the proposed right-
of-way: (1) is necessary to the needs of the applicant; (2) 
will not cause significant and substantial harm to the Tribe's 
wetland restoration project or religious practices; and (3) 
will comply with the procedures in part 169 of title 25, Code 
of Federal Regulations (where not inconsistent with this 
subsection) and with other generally applicable Federal laws 
unrelated to the acquisition of interests across trust lands.
    Section 8(d) provides that the United States shall not seek 
reimbursement of costs arising out of the implementation of S. 
2743 or of the Settlement Agreement against any Indian-owned 
land within the tribe's Reservation, or make any assessment 
against such lands in regard to such costs.
    Section 8(e) provides that, except as provided in paragraph 
5.3 of the Settlement Agreement (recognizing the tribe's use of 
1,500 acre-feet per annum of groundwater), neither S. 2743 nor 
the Settlement Agreement create any vested right to groundwater 
under Federal or State law, or any priority to the use of 
groundwater under Federal or State law that would be superior 
to any other right or use of groundwater. Notwithstanding this 
limitation, the rights of parties to the intergovernmental 
agreements referred to Sec. Sec. 4(c)(1), (2), or (3) and in 
paragraph 5.8 of the Settlement Agreement, as among themselves 
shall be as stated in those agreements.
    Section 8(f) provides that nothing in the Settlement 
Agreement or in S. 2743 quantifies or otherwise affects the 
water rights, claims, or entitlements to water of any Indian 
tribe, band, or community, other than the Zuni Indian Tribe.
    Section 8(g) provides that execution of the Settlement 
Agreement shall not constitute major Federal action under the 
National Environmental Policy Act, 42 U.S.C. Sec. Sec. 4321 et 
seq. (NEPA), however the Secretary shall comply with NEPA and 
shall carry out any other necessary compliance during the 
implementation of this settlement.

Section 9.--Effective date for waiver and release authorizations

    Section 9(a) provides that the waiver and release 
authorizations contained in Sec. Sec. 7(b) and 7(c) shall 
become effective as of the date the Secretary publishes in the 
Federal Register a statement of all of the following findings: 
(1) that this legislation has been enacted in a form approved 
by the parties in paragraph 3.1.A of the Settlement Agreement; 
(2) that the funds authorized by Sec. 4(b) have been 
appropriated and deposited into the Fund; (3) that the State of 
Arizona has appropriated and deposited into the Fund the amount 
required by paragraph 7.6 of the Settlement Agreement; (4) that 
the tribe has either purchased or acquired the right to 
purchase at least 2,350 acre-feet per annum or surface water 
rights, or waived this condition pursuant to paragraph 3.2 of 
the Settlement Agreement; (5) that, pursuant to subparagraph 
3.1.D of the Settlement Agreement, the severance and transfer 
of surface water rights that the tribe owns or has a right to 
purchase have been conditionally approved, or that the tribe 
has waived this condition as provided in paragraph 3.2 of the 
Settlement Agreement; (6) that, pursuant to subparagraph 3.1.E 
of the Settlement Agreement, the tribe and Lyman Water Company 
have executed an agreement relating to the severance and 
transfer ofsurface water rights acquired by the tribe and the 
United States, the pass-through, use, or storage of the tribe's surface 
water rights in Lyman Lake, and the operation of Lyman Dam; (7) that, 
pursuant to subparagraph 3.1.F of the Settlement Agreement, all parties 
to the Settlement Agreement have agreed and stipulated to certain 
Arizona Game and Fish abstracts of water uses; (8) that, pursuant to 
subparagraph 3.1.G of the Settlement Agreement, all parties to the 
Settlement Agreement have agreed to the location of an observation well 
and that well has been installed; (9) that, pursuant to subparagraph 
3.1.H of the Settlement Agreement, the tribe, Apache County, Arizona, 
and the State of Arizona have executed an Intergovernmental Agreement 
that satisfies all of the conditions in paragraph 6.2 of the Settlement 
Agreement; (10) that the tribe has acquired title to a particular 
section of land adjacent to the Zuni Heaven Reservation; (11) that the 
Settlement Agreement has been modified if and to the extent that it is 
in conflict with this legislation and such modification has been agreed 
to by all the parties to the Settlement Agreement; and (12) that a 
court of competent jurisdiction has approved the Settlement Agreement 
by a final judgment and decree.
    Section 9(b) provides that if the publication in the 
Federal Register required under subsection (a) has not occurred 
by December 31, 2006, Sec. Sec. 4 and 5, and any agreements 
entered into pursuant thereto (including the Settlement 
Agreement and the Intergovernmental Agreement) shall not 
thereafter be effective and shall be null and void. This 
subsection further provides that any funds and the interest 
accrued thereon appropriated pursuant to Sec. 4(b)(2) shall 
revert to the Treasury, and any funds and the interest accrued 
thereon appropriated pursuant to paragraph 7.6 of the 
Settlement Agreement shall revert to the State of Arizona.

                   COST AND BUDGETARY CONSIDERATIONS

    At the time of filing this report, the cost estimate of the 
Congressional Budget Office on S. 2743 had yet been received. 
Compliance with Senate Rule XXVI, paragraph 11(a) is therefore 
impracticable at this time.

                        EXECUTIVE COMMUNICATIONS

    The Committee received written testimony for the Bureau of 
Indian Affairs, Department of the Interior, for the hearing on 
S. 2743 held on July 18, 2002. The written testimony from the 
Administration is set forth below:

     Statement of Neal McCaleb, Assistant Secretary--Indian Affairs

    Good morning. Mr. Chairman and members of the Committee. I 
am Neal McCaleb, Assistant Secretary for Indian Affairs at the 
Department of the Interior. I appreciate the opportunity to 
appear before this Committee to discuss S. 2743, a bill to 
authorize a water rights settlement for the Zuni Heaven 
Reservation, in northeastern Arizona.
    The Administration generally supports the bill but has some 
concerns with certain provisions. The Administration has 
concluded, however, that the unique context presented by the 
Zuni lands in Arizona may warrant provisions of this nature 
with some modifications. For three reasons, the Zuni Settlement 
presents a unique situation. First, the tribal lands at issue 
are primarily for ceremonial use and generally will not be used 
as a homeland or to accommodate tribal members. Second, the 
water rights and land area involved are relatively small. 
Finally, the Settlement provides a benefit by allowing 
additional lands to be taken into trust and provides 
accompanying water rights. Based on the consideration of these 
unique circumstances, the Administration supports S. 2743 in 
concept. In general, many of the provisions found in S. 2743 
are the exception rather than the rule and may not necessarily 
be appropriate in other Indian water settlements.
    In general, the settlement reached by the parties is the 
product of a cooperative effort over the last five years among 
the Zuni Tribe, the State of Arizona, the United States, the 
Salt River Project and many other local water users. This 
effort was aided greatly by the work of the Honorable Michael 
C. Nelson, Presiding Judge for Apache County Superior Court, 
who has mediated the settlement discussions. The Settlement 
Agreement has been signed by the Tribe and is pending formal 
signature by the other parties.
Background
    The Little Colorado River (LCR) Basin covers an area of 
approximately 17.2 million acres or 26,964 square miles in 
northeastern Arizona and northwestern New Mexico. The main stem 
of the Little Colorado River is entirely in Arizona. Therefore, 
this adjudication deals only with claims inside the borders of 
Arizona. Five different Indian tribes have reservations, or 
pending claims to reservation lands, within the Basin: the 
Navajo Nation, Hopi Tribe, Zuni Tribe, San Juan Southern Paiute 
Tribe and the White Mountain Apache Tribe.
    The settlement agreement at issue here concerns only the 
Zuni Tribe's relatively small water right claims at the Zuni 
Heaven Reservation located in the south eastern section of the 
Basin, at the confluence of the Zuni and Little Colorado 
Rivers. Zuni Heaven is a unique reservation created fairly 
recently to accommodate the religious and cultural practices of 
the Zuni. The main Zuni reservation, in contrast, is located in 
New Mexico. The majority of the Zuni members reside on the main 
reservation.
    According to Zuni religious beliefs, a lake formerly 
located on the Zuni Heaven Reservation is a window into heaven. 
That lake and the surrounding wetlands disappeared in recent 
history due to upstream diversions and groundwater pumping in 
the surrounding areas. The Settlement provides the Tribe with 
the water and land to restore the lake for use in future 
religious ceremonies.
    The Zuni Heaven Reservation was established by Congress in 
1984 through Public Law 98-498 and expanded in 1990 through 
Public Law 101-486 to further the religious and cultural needs 
of the Tribe. That legislation established the land base of the 
Reservation within the Tribe's aboriginal territory and 
facilitated the Tribe's regular pilgrimage from New Mexico to 
Arizona by authorizing the United States to obtain easements 
along the pilgrimage route.
    Since 1979, water rights in the Little Colorado river basin 
have been the subject of an Arizona state general stream 
adjudication. The United States file a water rights claim on 
behalf of the Zuni Tribe in the state proceeding for water 
rights to Zuni Heaven. Mirroring most general stream 
adjudications, the litigation has moved very slowly. 
Recognizing that the Zuni claims lent themselves to settlement, 
the parties devoted significant effort to negotiations. The 
Settlement Agreement and S. 2743, which would ratify that 
agreement, are the fruits of that negotiation.
The draft legislation (S. 2743)
    S. 2743 approves and authorizes federal participation in 
the main settlement agreement, which includes three subsidiary 
agreements with individual parties. When fully implemented, 
this agreement would constitute a final settlement of the water 
rights claims of the Zuni Tribe and the United States' claims 
on behalf of Zuni. The settlement agreement will secure a water 
budget of approximately 5,500 acre-feet per year, including 
both surface water and groundwater, for the rehabilitation and 
restoration of the Sacred Lake, wetlands and riparian areas of 
the Reservation. The surface water component of this water 
budget would be secured through the purchase of state law base 
water rights from willing sellers, as well as through flood 
flows of the Little Colorado River. To supplement surface flows 
in times of drought and to allow for the initiation of 
restoration activities while surface water rights are acquired, 
the settlement provides for a groundwater right of 1,500 acre 
feet per year.
    The settlement involves significant cost sharing and 
cooperation among the federal government and the state and 
local parties. The Tribe's non-Indian neighbors have agreed to 
assist in the acquisition of water rights, to store surface 
water supplies for the Tribe, and to make other contributions 
to carry out the settlement. In addition, some water supplies 
for the settlement will be secured through up to $6 million in 
water protection grants funded by the State of Arizona. The 
federal contribution of $19.25 million to the settlement would 
be authorized. These federal funds would be used for the 
acquisition of water rights, as well as other actions necessary 
to restore the Sacred Lake, the wetlands and riparian areas of 
the Zuni Heaven Reservation.
    We believe the federal contribution contemplated in S. 2743 
is appropriate to facilitate resolution of the Zuni Tribe's 
claims. The settlement is designed to release the United States 
from any potential damage claims that might be asserted by the 
Tribe and to relieve the government of the obligation to 
litigate, at significant cost and over many years, the Tribe's 
water rights claims. At the same time, a final resolution of 
the Tribe's water rights claims would provide certainty to its 
neighbors, enabling them to plan and make necessary investments 
based on the assurance that they have secure and stable water 
rights.
Concerns with the draft legislation
    The Administration in concept supports the settlement set 
forth in S. 2743, but has a few areas of concern with the bill 
as drafted. We are committed to working with the Committee, 
Senator Kyl, and the settlement parties during the upcoming 
August recess in this regard to reach a mutually agreeable 
solution.
    We believe through working with the Committee and Senator 
Kyl, we can improve the following areas of the bill: Our first 
area of concern are the water quality waivers. The broad 
waivers within S. 2743 need to be clarified to avoid future 
litigation regarding the distinction between the sovereign 
capacity and trust capacity of the United States and to 
safeguard the authority of the United States enforcement 
authority. Second, the provisions regarding rights-of-way 
across tribal trust land conflict with established law and may 
lead to unnecessary litigation. Third, the United States 
opposes any additional waiver of its sovereign immunity as 
there exist sufficient avenues to address the interpretation or 
enforcement of S. 2743. Fourth, S. 2743 raises a concern 
regarding the authority of the United States to remove actions 
to a federal court. Finally, S. 2743 treats land taken into 
trust as state lands for purposes of environmental regulation 
and permitting, contrary to current law and practice. The 
United States believes, however, that the intentions of the 
parties to the Settlement Agreement can be addressed thorough 
alternative language while reducing litigation risk.
Conclusion
    Negotiated agreements among Indian tribes, states, local 
parties, and the federal government, in general, are the most 
effective way to resolve reserved water right claims in a 
manner that secures tribal rights to assured water supplies for 
present and future generations while at the same time providing 
for sound management of an increasingly scare resource. The 
known benefits of settlement generally outweigh the 
uncertainties that are inherent in litigation to the Tribe, the 
state, other interested parties and the United States. On 
balance, the very unique circumstances of the Zuni and their 
lands and the benefits of this settlement, with certain 
modifications, outweigh concerns regarding these unusual 
aspects of this settlement.
    We appreciate Senator Kyl's commitment to working with us 
and look forward to working closely with the Committee and the 
settlement parties to refine and clarify the language of S. 
2743 to ensure that this legislation can be enacted into a law 
that advances the interests of all parties.

    On August 15, 2002, the Committee submitted several 
questions to the Secretary of the Interior regarding the 
proposed legislation, and on September 20, 2002, the 
Administration submitted its response to the Committee's August 
15, 2002, letter. The Committee's questions and the 
Administration's response are set forth below:

                                       U.S. Senate,
                               Committee on Indian Affairs,
                                   Washington, DC, August 15, 2002.
Hon. Gale Norton,
Secretary, Department of the Interior,
Washington, DC.
    Dear Secretary Norton: I am writing to enclose questions 
from the U.S. Senate Committee on Indian Affairs in following 
up to the Committee's hearing on S. 2743, a bill to approve the 
settlement of water rights claims of the Zuni Indian Tribe in 
Apache County, Arizona, and for other purposes.
    The Committee would very much appreciate the Department's 
views on the legal issues implicated by a number of provisions 
of the bill.
            Sincerely,
                                          Daniel K. Inouye,
                                                          Chairman.
    Enclosure.

                      Questions Regarding S. 2473


1. Section 5(j)

    Section 5 of the proposed legislation directs that certain 
lands shall be taken into trust by the United States on behalf 
of the Zuni Tribe. Section 5(j)(1) provides that ``such lands 
shall not be considered lands within an Indian reservation or 
lands owned or held by any Indian for the purposes of Article 
20, paragraph 5 of the Arizona Constitution, for the purpose of 
paying in lieu taxes pursuant to this subsection and the 
Intergovernmental Agreement between the Zuni Tribe, Apache 
County, Arizona, and the State of Arizona.'' Section 5(j)(2) 
provides that ``the Zuni Tribe shall make payments in lieu of 
all current and future State, county, and local ad valorem 
property taxes that would otherwise be applicable to those 
lands if they were not in trust.''
    Article 20, paragraph 5, of the Constitution of the State 
of Arizona provides in relevant part that ``no taxes shall be 
imposed by this State on any lands or other property within an 
Indian reservation owned or held by any Indian; but nothing 
herein shall preclude the State from taxing as other lands and 
other property are taxed, any lands and other property outside 
of an Indian Reservation owned or held by any Indian, save and 
except lands as have been granted or acquired as aforesaid, or 
as may be granted or confirmed to any Indian or Indians under 
any act of Congress.''
    Congress certainly has the authority to allow a state to 
tax Indian lands that would otherwise be free from tax, and it 
can authorize states to impose payments in lieu of taxes as S. 
2743 does in Section 5(j)(2). Congress can also determine 
whether or not particular lands shall be considered ``lands 
within an Indian reservation or lands owned or held by any 
Indian'' for purposes of Federal law. It does not however 
appear that Congress holds the power, under the Constitution, 
to direct the State of Arizona to characterize these lands in 
any particular manner for purposes of determining the 
applicability of provisions of the Arizona Constitution, as 
Section 5(j)(1) purports to do, where none of the possible 
interpretations would infringe on any Federal law or right. 
While Congress can authorize Arizona to impose such a burden on 
Indian lands, it cannot override a prohibition on the exercise 
of such authority set forth in state law, if such exists, 
because ``to the extent that a claimed bar to state 
jurisdiction * * * is premised on the [] state Constitution[], 
that is a question of state law over which the state courts 
have binding authority.'' Arizona v. San Carlos Apache Tribe of 
Arizona, 463 U.S. 545, 561 (1983). The present wording of 
Section 5(j)(1) thus appears to intrude impermissibly into an 
area of state authority.
    Question. In light of the above, is it the position of the 
United States that the proposed language of section 5(j)(1) is 
consistent with all constitutional limitations on the power of 
Congress?
    Question. If Section 5(j)(1) as drafted is constitutionally 
inform, is substitute language (``notwithstanding the 
provisions of the Arizona Enabling Act * * *'' or some similar 
language?) necessary to authorize the State of Arizona and its 
political subdivisions to require the Zuni Tribe to make 
payments in lieu of taxes on theselands (assuming but not 
determining that such authority would exist under Arizona law), or is 
the present language of Section 5(j)(2) sufficient to provide such 
authority?

2. Sections 5(k), 5(l)

    Section 5(k) authorizes the Zuni Tribe to enter into an 
Intergovernmental Agreement with the State of Arizona and 
Apache County and ``any intergovernmental agreement required to 
be entered into by the Tribe under the terms of the 
Intergovernmental Agreement.'' Section 5(l) provides that the 
Secretary of the Interior shall ``acknowledge the terms'' of 
these agreements and prohibits the Secretary from seeking to 
abrogate their terms. Nothing in Section 5(k) limits the scope 
of the subject matter of these agreements. These documents have 
not been made available to the Committee, and it is unclear 
whether any binding agreement has yet been executed by the 
parties as to their content. Congressional authorization of the 
execution of these Intergovernmental Agreements, in advance of 
any final determination of their scope and contents, could 
deprive Congress of the ability to review Intergovernmental 
Agreements that, as ultimately negotiated by the parties, may 
have an impact on tribal lands or resources to which the United 
States hold legal title.
    Question. Please provide copies of any agreements to be 
authorized by section 5(k), including evidence, if available, 
that the parties have entered into binding agreements as to 
their terms.
    Question. If the parties to the agreements to be authorized 
by section 5(k) have not yet entered into binding agreements as 
to their terms, please identify any legally binding 
restrictions upon which Congress can rely to insure that its 
advance approval of agreements the terms of which are yet to be 
established does not subject the Zuni Tribe to the risk that 
other prospective parties to these agreements will refuse to 
bargain in good faith. Alternatively, please propose new 
statutory language that would preclude such a result.

3. Section 5(l)

    Section 5(l)(3) prohibits the United States from removing 
an action to Federal court if the United States intervenes in 
an action regarding an intergovernmental agreement. The effect 
of this provision is closely linked to issues of sovereign 
immunity addressed below with regard to section 8(a), and 
questions regarding removal appear with the discussion of that 
provision.

4. Section 6(e)

    Section 6(e) of the bill provides that neither the 
Secretary of the Interior nor the Secretary of the Treasury 
shall have any liability ``for the expenditure of investment of 
the monies withdrawn'' by the tribe from the Water Rights 
Development Fund. No mention is made of the liability of the 
United States itself.
    Question. Is the language insulating the two Secretaries 
from liability also intended to protect the United States from 
liability and, if so, does it in fact have that effect?
    Question. Does 25 U.S.C. 4022(c) already provide the 
protection from liability Section 6(e) is intended to provide?

5. Section 7(b)

    Section 7(b)(5) waives the claims of the Zuni Tribe and of 
the United States in its capacity as trustee for the tribe for 
certain ``future claims for injuries to water quality'' 
accruing after the effective date of the legislation.
    Question. Does the waiver of certain future claims for 
injuries to water quality contained in section 7(b), or any 
other provision of the bill, limit the authority of the 
Environmental Protection Agency, or any other Federal agency, 
to regulate water quality under the Clean Water Act or other 
legal authority or to seek compensation for damages to natural 
resources? If not, is the present language narrowly tailored 
and does it express that intention with sufficient clarity and 
specificity?
    Question. What precedents exist in other legislation for a 
statutory waiver for future claims of this kind?

6. Section 7(c)(5)

    Section 7(c)(5) of the bill authorizes the tribe to waive 
``claims for breach of the trust responsibility of the United 
States to the Zuni Tribe arising out of the negotiation of the 
Settlement Agreement or this Act.''
    The Restatement (Second) of Trust, 216(2) states that ``The 
consent of the beneficiary does not preclude him from holding 
the trustee liable for a breach of trust, if * * * (b) the 
beneficiary, when he gave his consent, did not know of his 
rights and of the material facts which the trustee knew or 
should have known and which the trustee did not reasonably 
believe that the beneficiary knew[.]'' Furthermore, ``where the 
trustee has an adverse interest in the transaction, the consent 
of the beneficiary does not preclude him from holding the 
trustee liable for a breach of trust not only under the 
circumstances stated in Subsection (2), but also if the 
transaction to which the beneficiary consented involved a 
bargain which was not fair and reasonable.'' Id., 216(3).
    S. 2743 does not identify any particular breaches of trust 
that may have occurred or that may occur in the course of the 
negotiation of the Settlement Agreement or the enactment of 
this legislation, and it is not evident that any particular 
actions by the United States have beenbrought to the attention 
of the tribe as potentially giving rise to a breach of trust action 
against the United States in this regard. Under these circumstances, it 
is not immediately apparent whether the proposed waiver would have any 
effect, as a demand for a general waiver of this sort, not limited to 
particular identified circumstances giving rise to the need for such a 
waiver, might well be inconsistent with the United States' trust 
responsibilities to the tribe.
    Question. Please identify representative published judicial 
opinions in which the Department is or has been involved in 
which the validity of such a waiver of liability as to 
undisclosed breaches of trust has been upheld or rejected. If 
no published opinion is available adopting one or the other of 
these positions, please identify relevant unpublished opinions 
and provide copies for the use of the Committee.
    Question. Please identify any particular circumstances or 
any general public policy justifying the proposed waiver of 
liability for unspecified breaches of trust with regard to the 
negotiation of the Settlement Agreement and the enactment of 
the proposed legislation that is now included in S. 2743.

7. Section 8(a)

            Waiver of Federal and tribal sovereign immunity
    Section 8(a)(1) of the bill waives the sovereign immunity 
of the United States and the tribe (except as to claims for 
money damages) to allow other parties to this settlement 
agreement to enforce certain rights against the United States 
and the Zuni Tribe. This provision does not specify, however, 
whether the waiver is applicable in state court as well as in 
Federal court. Section 8(a)(2) allows the tribe to waive its 
sovereign immunity (except with regard to money damages) in a 
particular state court for the purposes of enforcing various 
intergovernmental agreements. Waivers of sovereign immunity are 
interpreted narrowly. Accordingly, it could perhaps be argued 
that in the absence of any explicit mention of a waiver of 
immunity in state court, section 8(a)(1) should be interpreted 
as allowing suit to be brought in Federal court only. Cf. 
Atascadero State Hospital v. Scanlon, 473 U.S. 234, 241 (1985) 
(``in order for a state statute or constitutional provision to 
constitute a waiver of Eleventh Amendment immunity, it must 
specify the State's intention to subject itself to suit in 
federal court'').
    Question. If it is intended that Section 8(a)(1) waives 
sovereign immunity to allow suits to be brought in state court, 
should the text be modified to make it explicit that state 
court jurisdiction is contemplated?
            Waiver of tribal immunity to allow suits in State court
    The McCarran Amendment, 43 U.S.C. Sec. 666, has been 
interpreted as subjecting tribal water rights to the 
jurisdiction of state courts under certain circumstances. In 
general, however, public policy disfavors the adjudication of 
tribal rights in state courts. For the reason stated above, the 
extent to which S. 2743 would expand state court jurisdiction 
over tribal rights is unclear; nevertheless it appears that at 
least some limitation on the ability the tribe would otherwise 
have to litigate its rights in Federal court is contemplated 
beyond that imposed by the McCarran Amendment itself.
    Question. If it is indeed the intent that state court 
jurisdiction be extended over tribal rights beyond that granted 
in the McCarran Amendment, what public policy supports that 
extension of state authority?
            Waiver of State sovereign immunity
    Section 8(a)(1) of the bill waives the sovereign immunity 
of the United States and the Zuni Tribe to allow other parties 
to the settlement agreement to enforce certain rights against 
the United States and the tribe. There is, however, no 
reciprocal provision that waives the sovereign immunity of the 
State of Arizona to allow the tribe to enforce its rights 
against the State or its agencies. Although the Zuni Tribe's 
attorney did not express concerns about the tribe's ability to 
enforce its rights against the State based on existing law, the 
testimony of the Deputy Attorney General of the State of 
Arizona was contradictory as to whether or not the tribe could 
obtain judicial relief against the State. Furthermore, even if 
current Arizona law clearly allows the tribe all necessary 
enforcement rights in the courts of the State, changes in 
Arizona law could hinder the tribe's ability to enforce such 
rights in the future. Any waiver of tribal immunity should be 
fully reciprocated by the State, both now and in the future, 
and consideration should be given to whether the wavier should 
apply in the Federal courts.
    While Congress cannot unilaterally abrogate the Eleventh 
Amendment immunity of the State of Arizona, Seminole Tribe of 
Florida v. Florida, 517 U.S. 44 (1996), it can condition the 
granting of a benefit on the waiver of such immunity by the 
State where, as here, the waiver is germane to the purpose of 
giving the benefit. South Dakota v. Dole, 483 U.S. 203 (1987). 
The State of Arizona will receive substantial benefits with the 
enactment of this legislation, in that it will receive certain 
authority over Indian lands that would otherwise be denied to 
it and will achieve the extinguishment of tribal claims to 
water that could otherwise be asserted against it. Under such 
circumstances, Congress can require the State to offer an 
irrevocable waiver of its sovereign immunity as a condition of 
receiving the benefits provided under this legislation.
    Question. What additional language would be necessary to 
ensure that the tribe's right to enforce its rights against the 
State of Arizona in all appropriate courts is not restricted by 
the State's sovereign immunity, either now or in the future?
            Non-water related matters in intergovernmental agreements
    Although the Committee staff has not been provided with 
drafts of the intergovernmental agreements, it may be that some 
provisions of these agreements may relate to matters that are 
not directly related to the water rights issues that are the 
subject of the general stream adjudication inthe Apache County 
court. The language in section 5(l)(3) prohibiting the United States 
from seeking Federal court removal of litigation over such 
intergovernmental agreements indicates that at least some such cases 
will be litigated in the Arizona courts. Even if it is considered 
desirable to extend the waiver of tribal or Federal sovereign immunity 
beyond that provided by the McCarran Amendment to allow all water-
related issues to be litigated in the state courts, that does not 
necessarily mean that matters that do not directly relate to water 
rights should also be litigated in those courts.
    Question. What matters not relating directly to water 
rights, if any, are to be addressed in intergovernmental 
agreements executed pursuant to the proposed legislation?
    Question. If matters not directly relating to water rights 
are to be litigated in the Arizona courts, what policy 
considerations justify this limitation on the right the tribe 
would otherwise have to litigate those issues in Federal court?
            Federal removal
    If the United States intervenes in an action regarding a 
dispute over an intergovernmental agreement executed pursuant 
to section 5, section 5(l)(3) prohibits the United States from 
removing that action to Federal court. Section 8(a), on the 
other hand, imposes no restriction on the right of the United 
States to remove actions to Federal court.
    Question. If it is intended that all litigation on matters 
set forth in section 8(a) is to take place in the Apache County 
court, should section 8(a) be modified to impose restrictions 
on the right of the United States to seek removal to Federal 
court if an action described in that subsection is filed 
against it?

8. Section 8(b)

    Section 8(b)(1)(F)(i) requires the Zuni Tribe to adopt a 
tribal water code ``that is reasonably equivalent to State 
water law (including statutes relating to dam safety and 
groundwater management)[.]'' Section 8(b)(1)(F)(ii), in turn, 
provides that until a tribal water code is adopted, the 
Secretary, in consultation with the State, ``shall administer 
water use and water regulation'' on particular lands. While it 
is apparently the intent of the parties that ``dam safety'' 
would be regulated by the Secretary until such time as the 
tribal water code is adopted, regulation of ``dam safety'' is 
not unambiguously included within the authority over ``water 
use and water regulation'' granted to the Secretary in section 
8(b)(1)(F)(ii).
    Does section 8(b)(1)(F)(ii) need to be amended to more 
closely track the language of section 8(b)(1)(F)(i) with regard 
to ``dam safety'' so as to ensure that no gap in regulatory 
authority exists until the tribal water code is adopted, or is 
it necessary to include an explicit reference to dam safety in 
section 8(b)(1)(F)(ii)?

9. Section 8(c)

    Section 8(c) provides that the United States and the Zuni 
Tribe ``shall not unreasonably withhold consent for easements 
and rights-of-way for roads, utilities, and other necessary 
accommodations for adjoining landowners across [certain of its] 
lands * * * unless such easements and rights-of-way will cause 
significant and substantial harm to the Tribe's wetland 
restoration project or religious practices.''
    This provision does not provide any limiting principle to 
define the tribe's obligations and could be interpreted to 
impose substantial burdens on the tribe's lands. The Zuni 
Governor's testimony indicated that he viewed this as a simple 
matter of ``neighborliness'' to accommodate purely local uses 
by existing adjoining landowners whose properties would 
otherwise be landlocked. The effect of the present broad 
language, however, is not limited to such matters and could, 
for example, require the tribe to acquiesce in the construction 
of major regional transportation corridors (highways, power 
lines, pipelines, etc.) across its lands, since the State or a 
gas or electric utility could become an ``adjoining landowner'' 
at some time in the future through purchase of adjoining lands 
or by the exercise of the power of eminent domain. There does 
not seem to be any justification for subjecting the tribe's 
sovereignty and property rights to such a limitation, unlike 
other tribal landowners. Nor does it seem desirable to restrict 
the authority of the Secretary of the Interior to exercise 
discretion in approving such potential future uses.
    Question. Would it not be desirable to modify section 8(c) 
to place reasonable limits on the scope of this obligation so 
that the tribe is not permanently subjected to an unbounded and 
unreciprocated duty to provide others with access across its 
lands for uses that cannot now be anticipated?
                                ------                                

                        Department of the Interior,
                                   Office of the Secretary,
                                Washington, DC, September 20, 2002.
Hon. Daniel K. Inouye,
Chairman, Committee on Indian Affairs,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: Enclosed are the Administration's 
response to questions submitted following the July 18, 2002, 
hearing on S. 2743, Zuni Heaven Water Rights Settlement Act.
    Thank you for the opportunity to provide this material to 
the Committee.
            Sincerely,
                                     Jane M. Lyder,
                             Legislative Counsel, Office of
                                               Legislative Affairs.
    Enclosure.

     Administration Response to Indian Affairs Committee Questions


1. Section 5(j)

    Question. In light of the above, is the position of the 
United States that the proposed language of section 5(j)(1) is 
consistent with all constitutional limitations on the power of 
Congress?
    Section 5(j)(1) of S. 2743 as introduced is 
constitutionally infirm. Under the U.S. Constitution, Congress 
has the legislative power to regulate commerce with the Indian 
tribes, but has no power to direct a State on how the State 
shall construe the State's constitution, which Section 5(j)(1) 
purports to do.
    Question. If Section 5(j)(1) as drafted is constitutionally 
infirm, is substitute language (``notwithstanding the 
provisions of the Arizona Enabling Act * * *'' or some similar 
language?) necessary to authorize the State of Arizona and its 
political subdivisions to require the Zuni Tribe to make 
payments in lieu of taxes on these lands (assuming but not 
determining that such authority would exist under Arizona law), 
or is the present language of Section 5(j)(2) sufficient to 
provide such authority?
    Section 5(j)(2) would direct the Zuni Tribe to make certain 
payments to States, counties, and localities in lieu of taxes 
that would otherwise have been applicable with respect to the 
land. Section 5(j)(2) is consistent with the legislative power 
of Congress under the Constitution to regulate commerce with 
Indian tribes. Section 5(j)(2) would not expand or contract the 
power of Arizona or its political subdivisions to impose or 
collect taxes, would not pre-empt Section 20 of the Arizona 
Constitution, and would not constitute the consent of the 
United States for purposes of Section 20 of the Arizona 
Enabling Act (Act of Congress of June 20, 1910). In other 
words, section 5(j)(2) appears to be sufficient to bind the 
Tribe to its agreement to make payments in lieu of taxes to the 
extent taxes would otherwise be owed under Arizona law if the 
land had not been taken into trust under this bill.

2. Sections 5(k), 5(l)

    Question. Please provide copies of any agreements to be 
authorized by section 5(k), including evidence, if available, 
that the parties have entered into binding agreements as to 
their terms.
    To the best of our knowledge, the parties have not entered 
into any intergovernmental agreements.
    Question. If the parties to the agreements to be authorized 
by section 5(k) have not yet entered into binding agreements as 
to their terms, please identify any legally binding 
restrictions upon which Congress can rely to insure that its 
advance approval ofagreements the terms of which are yet to be 
established does not subject the Zuni Tribe to the risk that other 
prospective parties to these agreements will refuse to bargain in good 
faith. Alternatively, please propose new statutory language that would 
preclude such a result.
    By our reading, sections 5(k) and 5(l) have four effects. 
First, section 5(k) authorizes the Tribe to enter into certain 
intergovernmental agreements, but otherwise expresses no 
congressional intent with respect to the content of these 
agreements. Second, section 5(l)(1) requires the Secretary of 
the Interior to acknowledge the terms of any intergovernmental 
agreement. Under the bill, the United States will not be a 
party to these agreements and any acknowledgment does not bind 
the Secretary to the terms of the agreements, but merely 
requires that she take notice of the agreements under the 
procedures for taking these lands into trust.
    Third, Section 5(l)(2) of the bill states that the 
Secretary of the Interior ``shall not seek to abrogate, in any 
administrative or judicial action, the terms of any 
intergovernmental agreement that are consistent with 
subparagraph 6.2.A of the Settlement Agreement and this Act.'' 
This section limits its affect to the particular provisions set 
forth in subparagraph 6.2A of the settlement agreement. 
Subparagraph 6.2A delineates the operative provisions to be 
contained in any intergovernmental agreement. In this way, the 
Secretary is only bound to those provisions currently set forth 
in the settlement agreement, rather than being subject to 
unknown future provisions. In the same manner, subparagraph 
6.2A provides certainty to the Tribe and the other parties as 
to the operative provisions of any intergovernmental agreement, 
thus limiting the extent of the future negotiations concerning 
these agreements.
    Fourth, section 5(l)(3) of the bill provides that if the 
United States becomes a party-intervenor in a judicial action 
commenced during a dispute over any intergovernmental agreement 
entered into under the legislation, the United States cannot 
remove the judicial action to a Federal court. The 
Administration recommends that section 5(l)(3) be deleted from 
the bill. Federal policy, expressed in existing removal 
statutes, that allow the United States to litigate in Federal 
courts, should not be overridden by the bill.

3. Section 5(l)

    This section did not direct a question to the Department 
for response. With respect to the removal provision in section 
5(l)(3), see the above discussion.

4. Section 6(e)

    Question. Is the language insulating the two Secretaries 
from liability also intended to protect the United States from 
liability and, if so, does it in fact have that effect?
    We believe that the intent of section 6(e) is to protect 
the United States from liability after moneys are withdrawn by 
the Tribe. This language mirrors section 11(f) of the Shivwits 
Band of the Paiute Indian Tribe of Utah Water Rights Settlement 
Act, Public Law 106-263, 114 Stat. 737 (2000), and section 
104(b)(2)(A) of the Chippewa Cree Tribe of the Rocky Boy's 
Reservation Indian Reserved Water Rights Settlement and Water 
Supply Enhancement Act, Public Law 106-163, 113 Stat. 1778 
(1999).
    Question. Does 25 U.S.C. Sec. 4022(c) already provide the 
protection from liability Section 6(e) is intended to provide?
    Section 6(e) and 25 U.S.C. Sec. 4022(c) may provide similar 
protection, however, section 6(e) would mirror provisions that 
the Congress determined were necessary in previous Indian water 
settlements and would ensure that no additional liability would 
attach to the United States as a result of the Zuni Heaven 
settlement.

5. Section 7(b)

    Question. Does the waiver of certain future claims for 
injuries to water quality contained in section 7(b), or any 
other provision of the bill, limit the authority of the 
Environmental Protection Agency, or any other Federal agency, 
to regulate water quality under the Clean Water Act or other 
legal authority or to seek compensation for damages to natural 
resources? If not, is the present language narrowly tailored 
and does it express that intention with sufficient clarity and 
specificity?
    Section 7(b) as currently drafted can be read as limiting 
the Environmental Protection Agency's enforcement authority. 
Based on revisions to this section made by the parties during 
the August recess, all authorities of the Environmental 
Protection Agency and other federal agencies under the Clean 
Water Act or any other federal statute have been preserved. A 
limited future waiver of claims under the natural resource 
damages provisions of CERCLA is included in the new language. 
This waiver is limited, however, to those natural resource 
damage claims, caused by a defined list of otherwise lawful 
activities, that the Zuni Tribe could have brought itself or 
requested the United States to bring on its behalf as a natural 
resource trustee. This provision does not affect the United 
State authority to bring natural resources damage claims in 
other contexts as a natural resource trustee. The intent of 
this provision is to protect water users who are otherwise 
complying with the law from claims for natural resource damages 
brought by the Tribe or by the United States as a natural 
resource trustee on its behalf. However, even the limited 
waiver of the United States's authorities is troubling in this 
context. This provision departs from current Indian law and 
policy. We concluded that the unique nature of this 
settlement--particularly that the Zuni lands in Arizona 
involved in this settlement will not be used as a homeland, 
that the lands at issue are primarily for ceremonial use, that 
the water rights and land involved is relatively small and the 
fact that the Tribe negotiated and supports the agreement--
weighs in favor of departure from otherwise settled law and 
policy.
    Question. What precedents exist in other legislation for a 
statutory waiver for future claims of this kind?
    We are unaware of any precedent for these sorts of water 
quality waivers. These waivers are workable in this settlement 
because of the unique context of the Zuni lands in Arizona.

6. Section 7(c)(5)

    Question. Please identify representative published judicial 
opinions in which the Department is or has been involved in 
which the validity of such a waiver of liability as to 
undisclosed breaches of trust has been upheld or rejected. If 
no published opinion is available adopting one or the other of 
these positions, please identify relevant unpublished opinions 
and provide copies for the use of the Committee.
    Since 1993, every Indian water rights settlement entered 
into by the United States has included such a waiver, including 
section 9.4 of the Shivwits Band of the Paiute Indian Tribe of 
Utah Water Rights Settlement Agreement, ratified by the 
Shivwits Band of the Paiute Indian Tribe of Utah Water Rights 
Settlement Act, Public Law 106-263, 114 Stat. 737 (2000), 
section 5(c) of the Chippewa Cree Tribe of the Rocky Boy's 
Reservation Indian Reserved Water Rights Settlement and Water 
Supply Enhancement Act, Public Law 106-163, 113 Stat. 1778 
(1999), and the Confederated Tribes of the Warm Springs 
Reservation Indian Water Rights Settlement Agreement (Nov. 
1997) (settled without federal legislation).
    Question. Please identify any particular circumstances or 
any general public policy justifying the proposed waiver of 
liability for unspecified breaches of trust with regard to the 
negotiation of the Settlement Agreement and the enactment of 
the proposed legislation that is now included in S. 2743.
    The provisions of the proposed settlement of the Zuni 
Tribe's water rights claims represent agreements that have been 
reached between the Zuni Tribe and the state parties. The 
general willingness of the Administration to support agreements 
reached between the Tribe and its neighbors is consistent with 
the cornerstone of modern Indian law and policy to facilitate 
tribal self-determination by ``giv[ing] the Indians control of 
their own affairs and their own property.'' See Mescalero 
Apache Tribe v. Jones, 411 U.S. 145, 152 (1973) (quoting 78 
Cong. Rec. 11,125 (1934) (Rep. Howard)). Along with such 
control and self-determination comes the need to take 
responsibility for agreements entered into and decisions made. 
The policy of including these waivers in Indian water 
settlements over the last decade is consistent with this 
responsibility.

7. Section 8(a)

    Question. If it is intended that Section 8(a)(1) waives 
sovereign immunity to allow suits to be brought in state court, 
should the text be modified to make it explicit that state 
court jurisdiction is contemplated?
    The Administration objects to that portion of Section 
8(a)(1) that waives the sovereign immunity of the United States 
and purports to make the U.S. subject to suit in state courts. 
With respect to the jurisdiction of state courts, State law 
defines the jurisdictions of State courts. State courts of 
general jurisdiction would have the authority, if otherwise 
applicable sovereign immunity is waived, to exercise 
jurisdiction of the claims Section 8 addresses. Along the same 
lines, we note that the waiver in S. 2743 does not broaden the 
McCarren Amendment's waiver of the United States' sovereign 
immunity in state court.
    Question. If it is indeed the intent that state court 
jurisdiction be extended over tribal rights beyond that granted 
in the McCarren Amendment, what public policy supports that 
extension of state authority?
    The United States does not support the broad waiver of 
sovereign immunity in S. 2743. We believe that existing 
statutory waivers of the United States' sovereign immunity are 
sufficient to ensure that the United States is accountable for 
agreements entered into in this settlement concerning tribal 
rights.
    Question. What additional language would be necessary to 
ensure that the tribe's right to enforce its rights against the 
state of Arizona in all appropriate courts is not restricted by 
the State's sovereign immunity, either now or in the future?
    This question perhaps should be directed to the State of 
Arizona.
    Question. What matters not relating to water rights, if 
any, are to be addressed in intergovernmental agreements 
executed pursuant to the proposed legislation?
    The provisions to be addressed in the intergovernmental 
agreements are set forth in subparagraph 6.2A of the Settlement 
Agreement, and include payment of in lieu of taxes; provisions 
related to rights-of-way; wildlife management; agreements by 
the Tribe with respect to the delegation of programs under 
federal environmental statutes; tribal waiver of sovereign 
immunity; recognition of Zuni religious practices by the State 
and local governments and their agreement not to unreasonably 
withhold any necessary approvals for activities on Zuni fee 
lands related to the Tribe's religious practices.
    Question. If matters not directly relating to water rights 
are to be litigated in the Arizona courts what policy 
considerations justify this limitation on the right the tribe 
would otherwise have to litigate those issues in Federal court?
    The removal authority of the United States in S. 2743 was 
modified during the August recess to allow removal by the 
United States where federal issues are raised. The remaining 
provisions were agreed to by the Zuni Tribe and the State 
parties.
    Question. If it is intended that all litigation on matters 
set forth in section 8(a) is to take place in the Apache County 
court, should section 8(a) be modified to impose restrictions 
on the right of the United States to seek removal to Federal 
court if an action described in that subsection is filed 
against it?
    The removal authority of the United States in S. 2743 was 
modified during the August recess to allow removal by the 
United States where federal issues are raised. The remaining 
provisions were agreed to by the Zuni Tribe and the State 
parties.

8. Section 8(b)

    Question. Does section 8(b)(1)(F)(ii) need to be amended to 
more closely track the language of section 8(b)(1)(F)(i) with 
regard to ``dam safety'' so as to ensure that no gap in 
regulatory authority exists until the tribal water code is 
adopted or is it necessary to include an explicit reference to 
dam safety in section 8(b)(1)(F)(ii)?
    The intent of that provision appears to be that the 
Secretary's authority would cover all water related matters on 
these lands.

9. Section 8(c)

    Question. Would it not be desirable to modify section 8(c) 
to place reasonable limits on the scope of this obligation so 
that the Tribe is not permanently subjected to an unbounded and 
unreciprocated duty to provide others with access across its 
lands for uses that cannot now be anticipated?
    We agree that modifications to the current language of 
section 8(c) are needed. During the August recess, we worked 
out new language for the rights-of-way provision. The new 
right-of-way provision clarifies that existing federal 
regulations with respect to the granting of rights-of-way will 
remain in place, with the exception that the Zuni Tribe has 
agreed to limit its objections to rights-of-way so long as they 
do not substantially or significantly harm the Tribe's wetlands 
rehabilitation project and the Tribe's uses of the land for 
cultural and religious practices. This protects the Zuni from 
significant impacts to their lands. Pursuant to these 
modifications, the Secretary would retain authority to grant 
rights-of-way. The Tribe would need to inform the Secretary 
about encroachment on its cultural and religious practices. 
This process is not intended to allow the United States to 
second guess the religious beliefs of the Zuni or to require 
detailed or public inquiry into the nature of those beliefs.

                      REGULATORY IMPACT STATEMENT

    Paragraph 11(b) of rule XXVI of the Standing Rules of the 
Senate requires that each report accompanying a bill evaluate 
the regulatory paperwork impact that would be incurred in 
carrying out the bill. The Committee believes that the 
regulatory impact of S. 2743 will be minimal.

                        CHANGES IN EXISTING LAW

    In compliance with subsection 12 of rule XXVI of the 
Standing Rules of the Senate, the Committee finds that the 
enactment of S. 2743 will not result in any changes in existing 
law.

                                
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