[Senate Report 109-200]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 317
109th Congress                                                   Report
                                 SENATE
 1st Session                                                    109-200

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



 
 SPOKANE TRIBE OF INDIANS OF THE SPOKANE RESERVATION GRAND COULEE DAM 
                 EQUITABLE COMPENSATION SETTLEMENT ACT

                                _______
                                

                December 8, 2005.--Ordered to be printed

 Filed under authority of the order of the Senate of November 18, 2005

                                _______
                                

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

                              R E P O R T

                         [To accompany S. 881]

    The Committee on Indian Affairs, to which was referred the 
bill (S. 881), to provide for equitable compensation to the 
Spokane Tribe of Indians of the Spokane Reservation for the use 
of tribal land for the production of hydropower by the Grand 
Coulee Dam, 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. 881 is to provide equitable compensation 
to the Tribe for the past and continued use of tribal lands for 
the generation of hydropower by the Grand Coulee Dam, located 
on the main stem of the Columbia River in the State of 
Washington. The Tribe has received compensation in the amount 
of only $4,700 for the loss of its tribal lands taken for the 
construction of that dam, an amount that is not comparable to 
the payments that have been made and that will continue to be 
made to the neighboring Confederated Tribes of the Colville 
Reservation under the terms of a congressionally approved 
settlement with the United States for losses sustained by those 
tribes as a result of the construction and operation of the 
dam.

                               BACKGROUND

I. Planning and construction of Grand Coulee Dam

    Planning for the construction of the Grand Coulee Dam began 
during the period from 1927 to 1931, when the Army Corps of 
Engineers, at the direction of Congress, investigated the 
Columbia River and its tributaries to identify sites at which 
dams could be constructed to produce hydroelectric power at low 
cost. The Corps recommended that dams be constructed at a 
number of sites, including the current site of the Grand Coulee 
Dam.
    The Corps recommended that construction of Grand Coulee Dam 
be undertaken by local governments or private utilities under 
the authority of the Federal Power Act, 16 U.S.C. 
Sec. Sec. 791a et seq. Section 10(e) of that Act (16 U.S.C. 
Sec. 803(e)) requires a licensee using Indian lands to pay to 
the Indian tribe an annual payment for the use of its land. In 
1933, an agency of the State of Washington was issued a 
preliminary permit to construct a dam at the Grand Coulee site 
by the Federal Power Commission. Several years later, however, 
the Federal government assumed control of the project. Federal 
dam projects were not subject to the Federal Power Act.

II. Payment of compensation to tribes

    Under the Act of June 29, 1940, Pub. L. No. 76-690 
(codified as amended at 16 U.S.C. Sec. Sec. 835d-835h), in aid 
of the construction of the Grand Coulee Dam project, Congress 
granted to the United States ``all the right, title, and 
interest of the Indians in and to the tribal and allotted lands 
within the Spokane and Colville Reservations * * * as may be 
designated therefor by the Secretary of the Interior from time 
to time. * * * '' This Act also provided that the Secretary of 
the Interior was to determine the amount of ``just and 
equitable compensation for the tribal lands taken.'' Id., 
codified, as amended, at 16 U.S.C. Sec. 835e.
    At the time the Grand Coulee Dam project came under Federal 
administration, the United States recognized that the Tribe and 
the Confederated Tribes of the Colville Reservation had 
compensable interests that would be injured by the project, 
including interests in the development of hydropower, in a 
salmon fishery vital to the tribes which would be destroyed by 
the dam construction, and in tribal lands already identified as 
potential hydropower sites that would be inundated as a result 
of the construction of the Grand Coulee Dam.
    Pursuant to the Secretary of the Interior's determination, 
the Tribe was paid $4,700 in compensation and the Confederated 
Tribes of the Colville Reservation were paid $63,000. On 
October 2, 2003, the Committee received testimony at a hearing 
on S.1438 \1\ to the effect that for decades the two tribes had 
gone without adequate compensation and had not received the 
compensation to which they would have been entitled had the Dam 
been constructed under the authority of the Federal Power Act.
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    \1\ Similar legislation introduced by Senator Cantwell (with 
Senators Inouye and Murray as cosponsors) in the 108th Congress. S. 
1438 was passed by the Senate with an amendment on November 19, 2004.
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    The Confederated Tribes of the Colville Reservation 
asserted various claims before the Indian Claims Commission 
under the Indian Claims Commission Act of 1946, Pub. L. 79-726 
(``ICCA''). However, in addition to their ICCA land claims, the 
Colville Tribes sought and obtained, in 1978, an award of 
$3.257 million for the loss of fisheries as a result of the 
Grand Coulee Dam project, and about 15 years later negotiated a 
settlement with the United States of their claim for hydropower 
losses resulting from the Dam under the fair and honorable 
dealings standard of the ICCA.\2\ In 1994, Congress approved 
the settlement agreement, which provided for a compromise final 
judgment in the amount of $53,000,000 and annual installments 
in perpetuity to be made by the Bonneville Power Administration 
(``BPA'') as set forth in the Settlement Agreement between the 
Confederated Tribes and the United States.\3\ See, Confederated 
Tribes of the Colville Reservation Grand Coulee Dam Settlement 
Act, Pub. L. No. 103-436, 108 Stat. 4577 (November 2, 1994) 
(``Colville Confederated Tribes Act'').
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    \2\ See, written testimony of Peter R. Steenland, Appellate Section 
Chief, Environment and Natural Resources Division, United States 
Department of Justice, dated August 2, 1994, presented at the hearing 
held on that date on H.R. 4757, the Confederated Tribes of the Colville 
Reservation Grand Coulee Dam Settlement Act, before the Subcommittee on 
Oversight and Investigations, House Committee on Resources. See, also, 
Confederated Tribes of the Colville Reservation v. United States, 964 
F. 2d 1102 (Fed. Cir., 1992).
    \3\ Under the 1994 Colville Settlement Agreement, the annual 
installments payable by BPA from revenues derived from power generated 
by the Grand Coulee Dam Project are equal to $15,250,000, subject to an 
annual adjustment under a formula set forth in section 2 of the 
Agreement. See, H. Rept. 103-685.
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    Although the Spokane Tribe litigated certain issues under 
the ICCA, it did not litigate its claims for loss of water 
power values in that forum or elsewhere.\4\ Nevertheless, a 
1976 legal memorandum issued by the Office of the Solicitor of 
the Department of the Interior discussed the claims of the 
Tribe and the Colville Tribes for lost hydropower values in 
relation to the construction of the Grand Coulee Dam, and in 
reaching the conclusion that the claims of the two tribes had 
merit, the memorandum did not contend or suggest that the 
Spokane Tribe's claim was weaker than, or legally 
distinguishable from, that of the Confederated Tribes.\5\ It 
appears that the Spokane Tribe would have a claim to 
compensation that is legally comparable to that of the Colville 
Confederated Tribes but for the five-year statute of 
limitations applicable to claims under the ICCA.\6\
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    \4\ In his written testimony submitted to the Committee at its 
hearing on S. 1438 held on October 2, 2003, the Spokane Tribe's 
Chairman, Warren Seyler, contended that, while the tribe had failed to 
assert claims under the ICCA for loss of water power values as a result 
of the Grand Coulee Dam project, certain obstacles unique the Tribe 
made the task of filing claims under the ICCA ``unusually difficult''--
such as Bureau of Indian Affairs' failure to carry out its advisory 
responsibilities under the ICCA by giving the Tribe adequate notice of 
its rights to assert claims under the Act (Mr. Seyler stated that they 
learned of that from neighboring tribes ``only months before the 1951 
filing deadline'') and delay on the part of the Commissioner of Indian 
Affairs in approving the Tribe's contract with legal counsel, ``costing 
our Tribe much critical time.''
    \5\ Memorandum to the Solicitor from Lawrence A. Aschenbrenner, 
Acting Associate Solicitor, Division of Indian Affairs, United States 
Department of Interior (1976), Reimbursement to the Colville and 
Spokane Tribes for Construction of the Grand Coulee and Chief Joseph 
Dams.
    \6\ Under section 12 of the Indian Claims Commission Act, Pub. L. 
No. 79-726 (60 Stat. 1049), claims must have been filed with the 
Commission not later than 5 years after the approval of the Act--i.e., 
within 5 years after August 13, 1946.
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                    SUMMARY OF PROVISIONS OF S. 881

    Under the proposed legislation, the Spokane Tribe would be 
compensated for the use of its lands for the production of 
hydropower by the Grand Coulee Dam under a formula based in 
part on that by which the Confederated Tribes of the Colville 
Reservation were compensated in the Confederated Tribes of the 
Colville Reservation Grand Coulee Dam Settlement Act, Pub. L. 
103-436, 108 Stat. 4577 (November 2, 1994). The Spokane Tribe 
has contended that it lost lands equivalent in area to 39.4% of 
the lands lost by the Colville Confederated Tribes, and that a 
settlement based solely on this claimed percentage would 
justify payments to the Spokane Tribe equal to 39.4% of the 
payments made to the Confederated Colville Tribes. In S. 881, 
this percentage has been reduced to 29% with the Tribe's 
agreement, in recognition in part of the fact that certain 
lands located within, as well as contiguous to, the boundaries 
of the Spokane Indian Reservation taken for construction of the 
Grand Coulee Dam would be restored or transferred to the Tribe 
under section 9 of the bill.
    Under section 5 of S. 881, an interest-bearing settlement 
fund account would be established in the Treasury to be known 
as the Spokane Tribe of Indians Settlement Fund. From amounts 
appropriated pursuant to section 11 of the bill, for fiscal 
year 2006, the Secretary of Interior would deposit $17,800,000 
into the Fund, and for each of the four fiscal years 
thereafter, the Secretary would deposit into the Fund the sum 
of $12,800,000. These funds would be held in trust by the 
Secretary unless and until the Spokane Business Council 
submitted a written notice to the Secretary of a resolution 
requesting that all or portion of the amounts in the Fund be 
paid to the Spokane Business Council. Of the initial deposit, 
$5,000,000 must be used by the Business Council for the 
planning, design, construction, equipping, and operation and 
maintenance of a Cultural Resource Repository and Interpretive 
Center to house cultural resources affected by the operation of 
the Grand Coulee Dam and to provide an educational facility 
addressing the culture and history of the Spokane Tribe. Of the 
remaining amounts deposited in the Fund (including earned 
interest), 25% may be used by the Spokane Business Council for 
discretionary purposes of general benefit to members of the 
Spokane Tribe, while 75% may be used by the Business Council to 
carry out resource development, credit, scholarship, or 
reserve, investment, and economic development programs.
    Under section 6 of S. 881, on March 1, 2007, the 
Administrator of the BPA (``Administrator'') must pay the Tribe 
an amount equal to 29% of the computed annual payment due to 
the Colville Confederated Tribes under Sec. 5(b) of the 
Colville Confederated Tribes Act for fiscal years 2005 and 2006 
(with the amount for 2005 to be adjusted to reflect the change 
in the Consumer Price Index published by the Department of 
Labor), and on or before March 1 of each year thereafter, the 
Administrator must make annual payments to the Tribe equal to 
29% of the payment for the previous fiscal year pursuant to the 
Colville Settlement Agreement. The Administrator is required to 
make commensurate annual cost reductions to recover each 
payment to the Tribe.
    Under the terms of section 7 of S. 881, upon payment to the 
Tribe, the sections 5 and 6 funds could be used or invested by 
the Spokane Business Council in the same manner and for the 
same purposes as other Spokane Tribe governmental funds. 
Expenditure of funds transferred to the Tribe by the 
Administrator would not require approval by the Secretary of 
the Interior or the Administrator, and neither the Secretary 
nor the Administrator has a trust responsibility for the 
investment, supervision or administration of any of the funds 
once they have been transferred to the Tribe pursuant to 
section 5 or 6. Further, under section 7(c) of S. 881, the 
payment of funds under sections 5 and 6, together with interest 
and income generated by the funds, are to be treated in the 
same manner as payments under section 6 of the Saginaw Chippewa 
Tribe of Michigan Distribution of Judgment Funds Act (100 Stat. 
677).\7\
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    \7\ Pub. L. 99-346 (June 30, 1986). Section 6 of the Saginaw 
Chippewa Act provides that distributions of certain funds paid to that 
tribe under that Act to its enrolled members are not subject to 
Federal, State or local income taxes and that such distributions may 
not be used as a basis for denying or reducing (1) financial assistance 
or other benefits under the Social Security Act to such tribal member 
or the member's household, or (2) any other Federal financial 
assistance or benefit to which the tribal member or member's household 
may be otherwise entitled.
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    Section 8 authorizes the Administrator to deduct certain 
sums ($2,600,000 in fiscal year 2007 and $1,300,000 each fiscal 
year thereafter in which payments are made under section 6) 
from the interest otherwise payable to the Secretary of the 
Treasury from ``net proceeds'' as defined in section 13 of the 
Federal Columbia River Transmission Act, 16 U.S.C. Sec. 838k, 
subject to certain limitations and requirements described in 
section 8(b) of the bill.
    Under section 9 of S. 881, the Secretary of the Interior is 
directed to transfer administrative jurisdiction from the 
Bureau of Reclamation to the Bureau of Indian Affairs for 
certain lands located within the exterior boundaries of the 
Spokane Indian Reservation as well as certain lands along the 
south bank of the Spokane River. Such lands are to be held in 
trust for the Tribe and included within the Spokane Indian 
Reservation, subject to a reservation of rights and easement on 
behalf of the United States to carry out the Columbia Basin 
Project, including the operation, maintenance, repair and 
replacement of boat ramps, docks and other recreational 
facilities owned or permitted by the United States and existing 
on the enactment of the Act. Any land transferred under section 
9 that was, before the date of enactment of the Act, included 
in the Lake Roosevelt National Recreation Area would remain 
part of the Recreation Area and remain under the administrative 
authority or responsibility of the National Park Service. 
Section 9 also requires ``cognizant agencies of the Department 
of the Interior'' to enter into a memorandum of understanding 
with the Tribe to provide for the coordination in the 
application of section 9(c).\8\
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    \8\ S. 881 does not provide a deadline for the transfer of 
administrative jurisdiction over the subject lands from the Bureau of 
Reclamation to the Bureau of Indian Affairs, but the Committee 
interprets this section to mean that the transfer will occur within a 
reasonable time. The Committee encourages the cognizant agencies to 
negotiate and execute the memorandum of understanding prior to the 
actual transfer of jurisdiction, even though the bill does not 
expressly require that the memorandum of understanding be executed 
before the transfer. The Committee has been informed that the Tribe has 
no objection to and supports the direct involvement of the State of 
Washington, Stevens County, and Lincoln County in the development of 
the memorandum of understanding. The Committee anticipates that the 
State's participation in the memorandum of understanding would be the 
best way to clarify and resolve a range of possible jurisdictional 
issues, if any, that might arise. Further, the Committee does not 
interpret section 9 of S. 881 to have any effect on the status of real 
property on the south bank of the Spokane River that may belong to the 
State or Lincoln County--if indeed the State or county own or claim to 
own any such real property.
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    Section 10 provides that the making of the prescribed 
payments under sections 5 and 6, together with the restoration 
of ownership in trust under section 9, constitute full 
satisfaction of the Tribe's claims to a fair share of annual 
hydropower revenues generated by the Grand Coulee Dam Project 
for the past and continued use of the land of the Tribe for the 
production of hydropower at the Grand Coulee Dam.
    Section 11 of S. 881 authorizes the appropriation of such 
funds as are necessary to accomplish the Act, and section 12 
provides that nothing in this Act establishes any precedent or 
is binding on the Southwestern Power Administration, Western 
Area Power Administration, or Southeastern Power 
Administration.

                          LEGISLATIVE HISTORY

    Settlement bills relating to the Tribe's claims were 
introduced in the 106th Congress (S. 1525 and H.R. 2664), in 
the 107th Congress (S. 2567 and H.R. 4859), and in the 108th 
Congress (S. 1438 and H.R. 1753). On October 2, 2003, the 
Senate Indian Affairs Committee held a hearing on S. 1438, and 
on the same date the Water and Power Subcommittee of the House 
Resources Committee held a hearing on H.R. 1753. In the 109th 
Congress, S. 881 was introduced on April 21, 2005, by Senator 
Cantwell, for herself and Senators Dorgan, Murray and Inouye, 
and was thereafter referred to the Committee on Indian Affairs. 
H.R. 1797, related legislation introduced by Representative 
Cathy McMorris and cosponsored by Representatives Norman Dicks, 
Dale Kildee and Jay Inslee, was passed by the House of 
Representatives on July 25, 2005.

            COMMITTEE RECOMMENDATION AND TABULATION OF VOTE

    The Committee on Indian Affairs, in an open business 
session on June 29, 2005, by voice vote ordered that S. 881 be 
reported favorably to the Senate, without amendment.

                      SECTION-BY-SECTION ANALYSIS

Section 1--Short title

    Section 1 states that the Act may be cited as the ``Spokane 
Tribe of Indians of the Spokane Reservation Grand Coulee Dam 
Equitable Compensation Settlement Act.''

Section 2--Findings

    Section 2 states 17 findings made by Congress that detail 
the background to and reasons for this legislation.

Section 3--Purpose

    Section 3 states that the purpose of this Act is to provide 
fair and equitable compensation to the Tribe for the use of its 
land for the generation of hydropower by the Grand Coulee Dam.

Section 4--Definitions

    Section 4 provides definitions for various terms used in 
the Act.

Section 5--Settlement fund

    Section 5(a) provides for the establishment in the Treasury 
of the United States of an interest-bearing trust fund to be 
known as the ``Spokane Tribe of Indians Settlement Fund,'' 
consisting of amounts deposited in the Fund under subsection 
(b) and any interest earned on investment of amounts in the 
Fund.
    Section 5(b) provides that, from amounts made available 
under section 11, for fiscal year 2006, the Secretary shall 
deposit in the Fund $17,800,000, and for each of the 4 fiscal 
years thereafter, the Secretary shall deposit in the Fund 
$12,800,000.
    Section 5(c) provides that the Fund shall be maintained and 
invested by the Secretary in accordance with the Act of June 
24, 1938 (25 U.S.C. Sec. 162a).
    Section 5(d) provides that at any time after funds are 
deposited into the Fund, the Spokane Business Council may 
submit to the Secretary written notice of the adoption by the 
Spokane Business Council of a resolution, requesting that the 
Secretary pay all or a portion of the amounts in the Fund to 
the Spokane Business Council, and provides further that not 
later than 60 days after receipt of such a notice, the 
Secretary shall pay the amount requested to the Spokane 
Business Council.
    Section 5(e) provides that, of the initial deposit under 
subsection (b)(1), $5,000,000 shall be used by the Spokane 
Business Council for the planning, design, construction, 
equipping, and continuing operation and maintenance of a 
Cultural Resource Repository and Interpretive Center to house, 
preserve, and protect the burial remains, funerary objects, and 
other cultural resources affected by the operation of the Grand 
Coulee Dam, and provide an interpretive and educational 
facility regarding the culture and history of the Tribe. The 
funding of these activities does not, however, alter or affect 
any authority, obligation, or responsibility of the United 
States under the Native American Graves Protection and 
Repatriation Act (25 U.S.C. Sec. Sec. 3001 et seq.), the 
Archaeological Resources Protection Act (16 U.S.C. 
Sec. Sec. 470aa et seq.), the National Historic Preservation 
Act (16 U.S.C. Sec. Sec. 470 et seq.), or the National 
Environmental Policy Act of 1969 (42 U.S.C. Sec. Sec. 4321 et 
seq.). Of all other amounts deposited in the Fund (including 
interest generated on these amounts), 25 percent shall be 
reserved by the Spokane Business Council and used for 
discretionary purposes of general benefit to all members of the 
Tribe, and 75 percent shall be used by the Spokane Business 
Council to carry out resource development programs, credit 
programs, scholarship programs, or reserve, investment, and 
economic development programs.

Section 6--Payments by the Administrator

    Section 6(a) provides that on March 1, 2007, the 
Administrator shall pay to the Tribe the amount that is equal 
to 29 percent of the Computed Annual Payment for fiscal year 
2005, adjusted to reflect the change in the Consumer Price 
Index for all urban consumers published by the Department of 
Labor, from the date on which the payment for fiscal year 2005 
was made to the Colville Tribes to the date on which payment is 
made to the Tribe under this provision, and the amount that is 
equal to 29 percent of the ``Computed Annual Payment'' for 
fiscal year 2006.\9\
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    \9\ ``Computed Annual Payment'' is a term defined in section 4 of 
S. 881 that refers to the annual payment to the Confederated Tribes of 
the Colville Reservation pursuant to their Settlement Agreement with 
the United States. See footnote 3, above.
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    Section 6(b) provides that on or before March 1, 2008, and 
March 1 of each year thereafter, the Administrator shall pay to 
the Tribe the amount that is equal to 29 percent of the 
Computed Annual Payment for the previous fiscal year.
    Section 6(c) provides that pursuant to the payment schedule 
in subsection (b), the Administrator shall make commensurate 
cost reductions in expenditures on an annual basis to recover 
each payment to the Tribe. This specific cost reduction plan 
will be included in the annual budget submitted to Congress.

Section 7--Treatment after funds are paid

    Section 7(a) provides that payments made to the Spokane 
Business Council or the Spokane Tribe under section 5 or 6 may 
be used or invested by the Spokane Business Council in the same 
manner and for the same purposes as other Tribe governmental 
funds.
    Section 7(b) provides that neither the Secretary nor the 
Administrator shall have any trust responsibility for the 
investment, supervision, administration, or expenditure of any 
funds after the date on which the funds are paid to the Spokane 
Business Council or Tribe under section 5 or 6.
    Section 7(c) provides that the payments of all funds to the 
Spokane Business Council and Spokane Tribe under sections 5 and 
6, and the interest and income generated by the funds, shall be 
treated in the same manner as payments under section 6 of the 
Saginaw Chippewa Indian Tribe of Michigan Distribution of 
Judgment Funds Act (100 Stat. 677). Section 6 of the Saginaw 
Chippewa Act provides that distributions of certain funds paid 
to that tribe under the Act to its enrolled members are not 
subject to Federal, State or local income taxes and that such 
distributions may not be used as a basis for denying or 
reducing (1) financial assistance or other benefits under the 
Social Security Act to such tribal member or the member's 
household, or (2) any other Federal financial assistance or 
benefit to which the tribal member or member's household may be 
otherwise entitled.
    Section 7(d) provides that after the date on which funds 
are paid to the Spokane Business Council or to the Tribe under 
section 5 or 6, the funds shall constitute Spokane Tribe 
governmental funds and shall be subject to an annual tribal 
government audit.

Section 8--Repayment credit

    Section 8(a) provides that the Administrator shall deduct 
from the interest payable to the Secretary of the Treasury from 
net payments (as defined in section 13 of the Federal Columbia 
River Transmission System Act (16 U.S.C. Sec. 838k)) $2,600,000 
in fiscal year 2007 and $1,300,000 in each subsequent fiscal 
year in which the Administrator makes a payment under section 
6.
    Section 8(b)(1) provides that except as provided in 
paragraphs (b)(2) and (b)(3), each deduction made under this 
section shall be a credit to the interest payments otherwise 
payable by the Administrator to the Secretary of the Treasury 
during the fiscal year in which the deduction is made, and 
shall be allocated pro rata to all interest payments on debt 
associated with the generation function of the Federal Columbia 
River Power System that are due during the fiscal year. Section 
8(b)(2) provides that if, in any fiscal year, the deduction is 
greater than the amount of interest due on debt associated with 
the generation function for the fiscal year, the amount of the 
deduction that exceeds the interest due on debt associated with 
the generation function shall be allocated pro rata to all 
other interest payments due during the fiscal year. Section 
8(b)(3) provides that to the extent that a deduction exceeds 
the total amount of interest described in paragraphs (1) and 
(2), the deduction shall be applied as a credit against any 
other payments that the Administrator makes to the Secretary of 
the Treasury.

Section 9--Transfer of administrative jurisdiction and restoration of 
        ownership of land

    Subsection 9(a) provides that the Secretary of the Interior 
shall transfer administrative jurisdiction from the Bureau of 
Reclamation to the Bureau of Indian Affairs over all land 
acquired by the United States under the Act of June 29, 1940 
(16 U.S.C. Sec. 835d), that is located within the exterior 
boundaries of the Spokane Indian Reservation established 
pursuant to the Executive Order of January 18, 1881, and all 
land on the south bank of the Spokane River that extends 
westerly from Little Falls Dam to the confluence of the Spokane 
River and the Columbia River and that is located at or below 
contour elevation 1290 feet above sea level.
    Subsection 9(b) provides that all land transferred under 
this section shall be held in trust for the benefit and use of 
the Tribe and shall become part of the Spokane Indian 
Reservation.
    Subsection 9(c)(1) provides that the United States reserves 
a perpetual right, power, privilege, and easement over the land 
transferred under this section to carry out the Columbia Basin 
Project under the Columbia Basin Project Act (16 U.S.C. 
Sec. Sec. 835 et seq.). Subsection 9(c)(2) provides further 
that the rights reserved include the right to operate, 
maintain, repair, and replace boat ramps, docks, and other 
recreational facilities owned or permitted by the United States 
and existing on the date of enactment of this Act. Subsection 
9(c)(3) provides that land transferred under this section that, 
before the date of enactment of this Act, was included in the 
Lake Roosevelt National Recreation Area shall remain part of 
the Recreation Area, and provides further that nothing in this 
section shall affect the authority or responsibility of the 
National Park Service to administer the Lake Roosevelt National 
Recreation Area under the Act of August 25, 1916 (39 Stat. 535, 
chapter 408; 16 U.S.C. Sec. 1 et seq.). Subsection 9(c)(4) 
provides that the cognizant agencies of the Department of the 
Interior shall enter into a memorandum of understanding with 
the Spokane Tribe to provide for coordination in applying this 
subsection.

Section 10--Satisfaction of claims

    Section 10 provides that payments by the Secretary under 
section 5 and the Administrator under section 6 and transfer of 
administrative jurisdiction to the Bureau of Indian Affairs and 
restoration of ownership of land in trust and added to the 
Reservation under section 9 constitute full satisfaction of the 
claim of the Tribe to a fair share of the annual hydropower 
revenues generated by the Grand Coulee Dam project for the past 
and continued use of the land of the Spokane Tribe for the 
production of hydropower at Grand Coulee Dam.

Section 11--Authorization of appropriations

    Section 11 authorizes the appropriation of such funds as 
are necessary to carry out this Act.

Section 12--Precedent

    Section 12 provides that nothing in this Act establishes 
any precedent or is binding on the Southwestern Power 
Administration, Western Area Power Administration, or 
Southeastern Power Administration.

                   COST AND BUDGETARY CONSIDERATIONS

    The cost estimate for S. 881, as provided by the 
Congressional Budget Office, is set forth below:

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, July 7, 2005.
Hon. John McCain,
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. 881, the Spokane 
Tribe of Indians of the Spokane Reservation Grand Coulee Dam 
Equitable Compensation Settlement Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Mike Waters.
            Sincerely,
                                               Douglas Holtz-Eakin.
    Enclosure.

S. 881--Spokane Tribe of Indians of the Spokane Reservation Grand 
        Coulee Dam Equitable Compensation Settlement Act

    Summary: S. 881 would establish and authorize funds to be 
appropriated to the Spokane Tribe of Indians Settlement Fund to 
compensate the Spokane Tribe of Indians for the use of its land 
by the Grand Coulee Dam project in Washington. Starting in 
2007, the bill would require the Bonneville Power 
Administration (BPA) to make annual payments to the tribe from 
receipts generated from the sale of electricity. Those payments 
to the tribe would be offset by increases in the rates charged 
to BPA's customers for electricity sales, and thus would result 
in no net cost to the government. Under the bill, BPA also 
would be relieved from making certain interest payments to the 
Treasury for funds borrowed on BPA's behalf. CBO estimates that 
provision would reduce receipts collected by BPA by $13 million 
over the 2007-2015 period, and by $1.3 million per year after 
2015. (Those effects constitute an increase in direct 
spending.)
    Assuming appropriation of the necessary amounts, CBO 
estimates that implementing the bill would cost $69 million 
over the 2006-2010 period for payments into the Spokane Tribe 
of Indians Settlement Fund. S. 881 contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act (UMRA). The payments authorized by 
this bill would benefit the Spokane Tribe.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of S. 881 is shown in the following table. The 
costs of this legislation fall within budget functions 450 
(community and regional development) and 270 (energy).

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                        By fiscal year, in millions of dollars--
                                                               -----------------------------------------------------------------------------------------
                                                                  2006     2007     2008     2009     2010     2011     2012     2013     2014     2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Payments to Spokane Tribe Settlement Fund Account:
    Authorization level.......................................       18       13       13       13       13        0        0        0        0        0
    Estimated Outlays.........................................       18       13       13       13       13        0        0        0        0        0

                                                               CHANGES IN DIRECT SPENDING

Interest Credits for BPA:
    Estimated Budget Authority................................        0        3        1        1        1        1        1        1        1        1
    Estimated Outlays.........................................        0        3        1        1        1        1        1        1        1        1
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Basis of estimate: For this estimate, CBO assumes that the 
bill will be enacted by the end of fiscal year 2005 and that 
the authorized amounts will be appropriated for each year.

Spending Subject to Appropriation

    This bill would authorize the appropriation of payments to 
the Spokane Tribe as compensation for land taken to build the 
Grand Coulee Dam. The bill would authorize the appropriation of 
$18 million in 2006 and $13 million annually over the 2007-2010 
period to a new tribal trust fund. Thus, CBO estimates that 
implementing the bill would cost $18 million in 2006 and $69 
million over the 2006-2010 period.
    Payments to certain trust funds that are held and managed 
in a fiduciary capacity by the Federal Government on behalf of 
Indian tribes are treated as payments to a nonfederal entity. 
As a result, CBO expects that the entire amount deposited to 
the fund in any year would be recorded as budget authority and 
outlays in that year. Because the trust funds would be 
nonbudgetary, the subsequent use of such funds by the tribe 
would not affect Federal outlays.

Direct Spending

    S. 881 would require BPA to make annual payments to the 
Spokane Tribe. Under the bill, such payments would be equal to 
29 percent of the annual payment BPA currently makes to the 
Colville Tribe. The payments would begin in 2007 and would 
total about $5 million per year, except in 2007 when BPA would 
be required to make two payments. Payments would continue so 
long as electricity continues to be generated at the Grand 
Coulee Dam. Although the bill would require that the payments 
be offset by commensurate cost reductions, CBO expects that 
these payments would contribute to an increase in costs to the 
agency. Because BPA is a cost-recovery agency that charges its 
customers for the electricity it generates, CBO assumes that 
these payments to the tribe would become part of BPA's cost 
structure and would be offset by an increase in the new 
electricity rates that the agency plans to impose in 2007. 
Thus, this annual payment to the tribe would result in no net 
cost to the government.
    The bill also would allow BPA to reduce the amount of 
interest costs that is transfers to the U.S. Treasury for funds 
borrowed to construct BPA's infrastructure. The bill would 
authorize BPA to forgo interest payments of $2.6 million in 
2007 and $1.3 million each year thereafter for as long as 
payments are made to the tribe. As a cost-recovery agency, BPA 
would reduce its annual collections from electricity ratepayers 
by the amount of these forgone interest payments. Thus, CBO 
estimates that BPA collections, which are recorded in the 
budget as offsetting receipts, would be reduced by $2.6 million 
in 2007 and about $13 million over the 2007-2015 period.
    Intergovernmental and private-sector impact: S. 881 
contains no intergovernmental or private-sector mandates as 
defined in UMRA. The payments authorized by this bill would 
benefit the Spokane Tribe.
    Previous CBO estimate: On June 16, 2005, CBO transmitted a 
cost estimate for H.R. 1797, the Spokane Tribe of Indians of 
the Spokane Reservation Grand Coulee Dam Equitable Compensation 
Settlement Act, as ordered reported by the House Committee on 
Resources on May 18, 2005. The two versions of the legislation 
are similar, and our cost estimates over the 2006-2015 period 
are the same.
    Estimate prepared by: Federal Costs: Mike Waters, Lisa Cash 
Driskill, Julie Middleton, and Jimin Chung. Impact on State, 
local and Tribal governments: Marjorie Miller. Impact on the 
Private Sector: Selena Caldera.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                    REGULATORY AND PAPERWORK IMPACT

    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 believes that the 
regulatory and paperwork impact of S. 881 should be minimal.

                        EXECUTIVE COMMUNICATIONS

    The Committee received the following communication, dated 
June 28, 2005, from the Department of the Interior regarding S. 
881:

                   U.S. Department of the Interior,
                                     Bureau of Reclamation,
                                     Washington, DC, June 28, 2005.
Hon. John McCain,
Chairman, Committee on Indian Affairs,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: This letter sets forth the views of the 
Department of the Interior on S. 881, ``Spokane Tribe of 
Indians of the Spokane Reservation Grand Coulee Dam Equitable 
Compensation Settlement Act''. The Administration opposes the 
bill.
    S. 881 would provide compensation to the Spokane Tribe for 
the use of its land for the generation of hydropower by the 
Grand Coulee Dam. Specifically, S. 881 would require the 
Secretary of the Interior to deposit $69 million over 5 years, 
$17,800,000 for fiscal year 2006 and $12,800,000 for the 
following 4 fiscal years, into a trust fund held by the U.S. 
Treasury for the Spokane Tribe. S. 881 would also transfer land 
and administrative jurisdiction from the Bureau of Reclamation 
to Bureau of Indian Affairs for the Spokane Tribe. The land 
transferred would be held in trust for the Spokane Tribe and 
would become part of the reservation.
    The Administration has several issues with this bill. 
First, the Spokane Tribe has not brought forward a legal claim 
that would warrant this type of settlement and there is no 
legal claim pending. The Administration questions whether the 
Tribe has or could bring any legal claim that would entitle it 
to compensation as contemplated under the bill. In light of the 
lack of any pending legal claim and the lack of Administration 
support for this legislation, the Administration does not 
believe this legislation is currently justified as a settlement 
of claims. The Administration therefore believes it would be 
premature to assume that future budget proposals will recommend 
discretionary appropriations at the levels proposed in the 
bill. Regardless, the Administration has been working with the 
Spokane Tribe to address the Tribe's concerns. However, no 
agreement has been reached to date. The Administration believes 
these negotiations should continue.
    Second, the Department is concerned with transferring land 
and jurisdiction from the Bureau of Reclamation to the Bureau 
of Indian Affairs for the Tribe absent a prior written 
agreement to fully address future management responsibilities. 
While under the present draft Reclamation would be granted a 
perpetual easement to operate the Columbia Basin Project, it is 
imperative that the parties specifically reach agreement on the 
details of the lands and easement rights involved and how the 
transferred areas will be managed prior to the passage of this 
legislation. At a minimum, such an agreement should be required 
prior to the actual transfer taking place.
    Third, both the Executive and the Judicial Branches are 
faced with the question of Congress' intent when it puts land 
into trust status. What specific duties are required of the 
Secretary, administering the trust on behalf of the United 
States, with respect to trust lands? Tribes and individual 
Indians frequently assert that the duty is the same as that 
required of a private trustee. Yet, under a private trust, the 
trustee and the beneficiary have a legal relationship that is 
defined by private trust default principles and a trust 
instrument that defines the scope of the trust responsibility. 
Congress, when it establishes a trust relationship, should 
provide the guideposts for defining what that relationship 
means.
    Much of the current trust controversy stems from the 
absence of clear guidance as to the parameters, roles, and 
responsibilities of the trustee and the beneficiary. As 
Trustee, the Secretary may face a variety of issues, including 
land use and zoning. Accordingly, the Secretary's trust 
responsibility to manage the land should be addressed with 
clarity and precision. Congress should decide these issues, not 
the courts.
    Along these lines, the pending litigation-related 
assertions and claims made against the Department regarding its 
stewardship of trust properties suggest the need to identify 
and mitigate current programmatic weaknesses before becoming 
obligated with new responsibilities for additional lands that 
may be taken into trust. The broad claims for historical 
accounting, trust mismanagement, Indian assertions of unfunded 
mandates and trust responsibilities and the presence of 
statutory requirements that require funding for activities with 
little commensurate advantage for Indian beneficiaries suggest 
the need for a critical evaluation of any activity designed to 
take additional lands into trust until after these other 
situations are addressed materially.
    When we are required to transfer federal lands and then 
take the land into trust, Congress potentially is subjecting 
the United States to new responsibilities and it should clearly 
state what those responsibilities are.
    The Office of Management and Budget has advised that there 
is no objection to the presentation of this report from the 
standpoint of the Administration's program.
            Sincerely,
                                          John W. Keys III,
                                                      Commissioner.

                        CHANGES IN EXISTING LAW

    In compliance with subsection 12 of rule XXVI of the 
Standing Rules of the Senate, the Committee finds that S. 881 
makes no changes to existing law.