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                                                      Calendar No. 182
116th Congress     }                                    {       Report
                                 SENATE
 1st Session       }                                    {       116-79

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



 
  TO APPROVE THE SETTLEMENT OF THE WATER RIGHTS CLAIMS OF THE NAVAJO 
                 NATION IN UTAH, AND FOR OTHER PURPOSES

                                _______
                                

               September 9, 2019.--Ordered to be printed

                                _______
                                

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

                              R E P O R T

                         [To accompany S. 1207]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Indian Affairs, to which was referred the 
bill (S. 1207) to approve the settlement of the water rights 
claims of the Navajo Nation in Utah, and for other purposes, 
having considered the same, reports favorably thereon without 
amendment, and recommends that the bill do pass.

                                PURPOSE

    The Navajo Utah Water Rights Settlement Act of 2019, as 
amended, would settle the Navajo Nation (Nation) water claims 
in the State of Utah (State) and authorize and implement the 
Nation & State Settlement Agreement to quantify 81,500 acre-
feet per year of surface and groundwater from the Upper 
Colorado River Basin in Utah.

                               BACKGROUND

    The Navajo Nation's reservation extends over 27,000 square 
miles across the states of Arizona, New Mexico, and Utah. 
Tribal citizens residing on the Utah portion of the 
reservation, approximately 1,927 square miles, rely upon the 
San Juan River and its tributaries and groundwater to meet 
present water use demands. For example, a significant 
percentage of residents in the Utah portion of the reservation 
must haul water to meet domestic needs, since groundwater wells 
on the eastern half of the reservation exceed safe drinking 
water limits for arsenic and water quality standards for Total 
Dissolved Solids and pH.
    The reserved water rights of the Navajo Nation in Utah were 
subject to the general stream adjudication in the Seventh 
Judicial District in and for Grand County, Utah, commonly known 
as the Southeastern Colorado River General Adjudication. In 
lieu of asserting claims through the adjudication, in August 
2003, the Nation and the Governor of the State of Utah executed 
a Memorandum of Agreement to commence settlement discussions to 
quantify the Nation's water rights.
    The Nation and the State reached a general agreement 
concerning a proposed water rights settlement in 2010. In 2013, 
the Secretary of the Interior appointed a federal negotiations 
team to negotiate terms of a settlement, with the goal of 
resolving all the Nation's potential reserved water rights 
claims in Utah. The federal negotiation team finalized the 
terms of the Settlement Agreement in 2015, subject to the 
approval of Congress. The State memorialized its support for 
the Settlement Agreement by a Senate resolution, with the 
concurrence of the Governor of Utah, on July 15, 2015, and the 
Navajo Nation Council approved the Settlement Agreement on 
January 16, 2016.

                          NEED FOR LEGISLATION

    In 1908, the U.S. Supreme Court held in Winters v. United 
States that when Congress set aside lands for a reservation, it 
impliedly reserved sufficient water for Indian tribes to 
fulfill the purpose of creating the reservation. However, 
Winters did not set forth a method to quantify water rights 
beyond ``sufficient water to fulfill the reservation's 
purpose.'' In 1963, the U.S. Supreme Court established a method 
for quantifying agricultural water rights in Arizona v. 
California, adopting the practicably irrigable acreage 
standard.\1\ Collectively, these two cases established that 
Indian reserved water rights may be asserted at any time, are 
not lost through nonuse, and are paramount to water rights 
later perfected under state law.
---------------------------------------------------------------------------
    \1\This standard is used to determine how much state water Indian 
reservations should receive by determining how many acres of the 
reservation could be reasonably or practically irrigated.
---------------------------------------------------------------------------
    While many Indian reservations were established for the 
purpose of settling Indian people into agricultural 
communities, the Federal Government never invested sufficient 
resources into water-delivery systems to fulfill that purpose. 
In order to fulfill the United States' trust responsibility to 
Indian tribes and authorize federal funding to the federal cost 
share of a settlement, Congress plays an integral role in the 
Indian water rights settlements.

                              BILL SUMMARY

    The bill, as amended, would authorize a negotiated 
settlement agreement of the Nation's reserved water rights 
claim with the State. The bill authorizes $198,300,000 from the 
federal government to fund the Navajo Water Development Trust 
Fund (Fund). This Fund would be used by the Nation to plan, 
design, and construct approved water development projects. The 
State would contribute $8,000,000 into the Fund, in 
installments, in each of the three years following the 
execution of the agreement by the Secretary.
    The bill also authorizes $11,100,000 from the federal 
government to be deposited into the Navajo Operations, 
Maintenance, and Repair (OM&R) trust account for the Nation's 
approved water development projects. An additional $1,000,000 
will be authorized from the federal government to fund 
programmatic costs, including the preparation of a hydrographic 
survey of historic and existing water uses on the Nation to be 
filed with the adjudication court. Finally, the bill will 
allocate 81,500 acre-feet per year from the San Juan River in 
the State of Utah to the Nation, which would come out of the 
State of Utah's undeveloped apportionment from the Colorado 
River. The bill would allow the Nation to exchange or lease 
water within the State of Utah, but prohibits exchanges or 
leases of the San Juan River blow Lee's Ferry.
    The bill uses a fund-based approach to resolving Indian 
water rights settlements.\2\ This approach replaces the 
Department of the Interior's construction obligations with a 
water development fund for the Navajo Nation to use to build 
water projects on an as-needed basis. The Department of the 
Interior, with the agreement of settlement parties, indicated 
the goal of the trust fund approach was to avoid potential cost 
overruns related to planning, design, and construction of 
several water development projects. Consistent with this 
approach, the Nation will be required to submit requests to 
withdraw funds from the trust fund to the Secretary of the 
Interior, subject to the Secretary's approval of an expenditure 
plan. The United States will be indemnified against any future 
liability for the expenditure or investment of any amounts 
withdrawn from the Fund. The Committee understands the benefits 
of a trust fund for this settlement. The Committee looks 
forward to working with the Administration on future 
settlements to determine the most efficient, cost-effective 
means of funding infrastructure to deliver water to Indian 
tribes in order to implement water settlements.
---------------------------------------------------------------------------
    \2\Alan Mikkelsen, U.S. Dep't of the Interior, Bureau of 
Reclamation, Stephen E. Boyd, U.S. Dep't of Justice, Letter to House 
Committee on Natural Resources (Sept. 7, 2018).
---------------------------------------------------------------------------

                          LEGISLATIVE HISTORY

    On April 11, 2019, Senator Romney introduced S. 1207. The 
bill was referred to the Indian Affairs Committee. The 
Committee did not hold a legislative hearing on this bill. On 
May 15, 2019, by voice vote, the Committee ordered the bill, 
without amendment, to be reported favorably to the Senate. On 
January 17, 2019, a House companion bill was introduced, H.R. 
664.
    Prior Congresses. In the 115th Congress, Senator Hatch 
introduced S. 664, on March 15, 2017. The bill was referred to 
the Indian Affairs Committee. On December 6, 2017, the 
Committee held a legislative hearing on the bill.
    In the Department of the Interior's written testimony, the 
Deputy Commissioner of the Bureau of Reclamation, Alan 
Mikkelsen stated:
          ``The Department supports the goals of the 
        settlement, which include quantifying the reserved 
        water rights attached to the Utah portion of the Navajo 
        reservation and facilitating the development of 
        essential municipal water systems that will provide a 
        reliable quantity and quality water supply for the 
        communities within the Reservation, which currently 
        lacks the sort of basic services that most Americans 
        take for granted. The Department is working with the 
        Nation and sponsor of S. 664 to ensure this bill meets 
        these goals while adhering to the Criteria and 
        Procedures that guide the Department's participation in 
        Indian water rights settlements.''
    On October 3, 2018, by voice vote, the Committee ordered 
the bill, as amended, to be reported favorably to the Senate.
    Amendments. One amendment, in the nature of a substitute, 
was offered by Senator Hoeven, on behalf of Senator Hatch. This 
substitute amendment did the following:
    The substitute amendment addressed concerns raised by the 
Department of the Interior regarding cost overruns. 
Historically, cost overruns have delayed full implementation of 
Indian water rights settlements. The Department of the Interior 
preferred a trust fund for this settlement in order to shift 
the cost uncertainty risk onto the Nation and increase the 
Nation's flexibility on how to development projects to meet 
their immediate needs. Additionally, the substitute amendment--
           Establishes the Navajo Water Development 
        Trust Fund and the Navajo OM&R Account. The Navajo 
        Water Development Trust Fund is authorized to receive 
        $198.3 million from the federal government and the 
        Navajo OM&R Account is authorized to receive $11.1 
        million from the federal government;
           Stipulates that depletions that occur on 
        allotted land are accounted for as a depletion by the 
        Nation, including any water use existing on an 
        allotment as of the date of the enactment of the bill, 
        reasonable domestic and stock water uses, and any water 
        rights that may be decreed in the general stream 
        adjudication.
           Prohibits the Nation from infringing upon 
        the reasonable domestic and stock water use of an 
        allottee.
           Preserves the rights of public domain 
        allottees to make claims in the general stream 
        adjudication;
           Requires that off-reservation usage and 
        leasing be in accordance with the agreement and 
        approved by the Secretary of the Interior,
           Specifies that if a conflict exists between 
        the bill and the settlement agreement that the text of 
        the bill will control; and
           Makes other grammatical and technical 
        changes to the bill.
    In the 114th Congress, Senator Hatch introduced S. 3482, on 
November 17, 2016. The bill was referred to the Committee. No 
further action was taken.

                      SECTION-BY-SECTION ANALYSIS

    Section 1. Short Title. ``Navajo Utah Water Rights 
Settlement Act of 2019.''
    Section 2. Purposes. The primary purpose of the Act is to 
authorize and implement the Navajo Nation/State of Utah 
Settlement Agreement and to permanently settle the Navajo 
Nation's water rights claims in Utah.
    Section 3. Definitions. This section provides definitions 
to key terms in the Act.
    Section 4. Ratification of Agreement. This section states 
that Congress ratifies the Settlement Agreement, which would 
quantify the water rights of the Navajo Nation in Utah and 
establish the conditions that must be met to make the Agreement 
effective, including funding for water development on the 
Navajo Reservation in Utah. In addition, Congress authorizes 
and directs the Secretary of the Interior to execute the 
Settlement Agreement on behalf of the United States and to 
amend the Agreement as necessary to conform to the Act.
    Section 5. Navajo Water Rights. This section states that 
Congress confirms that the Navajo Nation shall have the right 
to use and deplete up to 81,500 acre-feet per year from water 
sources in Utah, and that these rights are held in trust by the 
United States and are not subject to forfeiture or abandonment. 
Further, the water rights of allottees on or adjacent to the 
Reservation in Utah must be satisfied out of the Nation's 
rights. The Nation may allocate, distribute, and lease its 
water rights for off-reservation use in accordance with the 
agreement, with the approval of the Secretary of the Interior. 
But the Nation is prohibited from objecting in the general 
stream adjudication or any other applicable forum to the 
quantification of reasonable domestic and stock uses of the 
water from this settlement on an allotment.
    Section 6. Navajo Trust Accounts. This section sets forth 
that, using the appropriations authorized in Section 7, the 
Secretary of the Interior is authorized to establish the Navajo 
Utah Settlement Trust Fund (Fund) that includes two accounts, 
to plan, design, and construct the water diversion and delivery 
of the Navajo water development projects.
    Section 7. Authorization of Appropriations. This section 
authorizes appropriations of $198,300,000 to the Fund for the 
planning, design and construction of approved water development 
projects, and within that Fund, authorizes appropriations of 
$11,100,000 for the Navajo OM&R Account of the Fund. 
Additionally, the bill authorizes $1,000,000 to fund 
programmatic costs, including the preparation of a hydrographic 
survey of historic and existing water uses on the Reservation 
to be filed with the adjudication court. The State shall 
contribute $8,000,000 to the Secretary of the Interior for 
deposit into the Fund.
    Section 8. Conditions Precedent. This section establishes 
conditions that must be met for the settlement and the waivers 
to become effective, including the appropriation of funds 
authorized in Section 7, the execution of the waivers, and the 
entry of a final judgment and decree by the adjudication court. 
The Settlement Agreement and S. 1207 will be voided if these 
conditions do not occur by October 31, 2030, unless the parties 
to the Agreement extend the deadline.
    Section 9. Waivers and Releases. This section dictates the 
waivers and releases that must be executed in order for the 
settlement to be binding and effective. Because tribal water 
rights are held in trust by the United States, Congress must 
affirmatively state what claims are settled and disposed of by 
the Act.
    Section 10. Miscellaneous Provisions. This section sets 
forth the expression of Congress' intent that nothing in this 
Act shall establish a standard for the qualifications of the 
water rights of any other tribe or to quantify or adversely 
affect the water rights of any tribe other than the Navajo 
Nation.
    Section 11. Relation to Allottees. This section clarifies 
that nothing in this Act or the agreement shall affect the 
rights or claims of allottees, or the United States, acting in 
capacity as trustee for or on behalf of allottees, for water 
rights or damages related to lands allotted by the United 
States to allottees.
    Section 12. Antideficiency. This section states that the 
United States shall not be liable for any failure to carry out 
any obligation or activity authorized by this Act if adequate 
appropriations are not provided expressly by Congress to carry 
out the purposes of this Act.

                   COST AND BUDGETARY CONSIDERATIONS

    Bill Summary: S. 1207 would secure up to 81,500 acre-feet 
of water annually for the Navajo Nation in Utah by ratifying a 
settlement among the federal government, the State of Utah, and 
the Navajo Nation. CBO estimates that the bill would authorize 
the appropriation of $241 million (including adjustments to 
account for inflation and interest earnings) to capitalize the 
Navajo Utah Settlement Trust Fund, an interest-bearing fund 
established under the bill that would be administered by the 
Department of the Interior. After the parties have satisfied 
certain conditions, the federal government would transfer 
ownership of the fund (including any appropriated interest 
earnings) to the nation for constructing projects to deliver 
water to the Navajo reservation in Utah. The bill also would 
direct the Bureau of Reclamation (BOR) to survey water use on 
the reservation.
    Estimated Federal cost: The estimated budgetary effect of 
S. 1207 is shown in Table 1. The costs of the legislation fall 
within budget function 300 (natural resources and environment).

                                TABLE 1.--ESTIMATED BUDGETARY EFFECTS OF S. 1207
----------------------------------------------------------------------------------------------------------------
                                                               By fiscal year, millions of dollars
                                                ----------------------------------------------------------------
                                                   2019     2020     2021     2022     2023     2024   2019-2024
----------------------------------------------------------------------------------------------------------------
Navajo Utah Settlement Trust Fund
    Estimated Authorization....................        0       16       50       51       53       54        224
    Estimated Outlays..........................        0        0        0        0        0      224        224
Interest Appropriated to the Navajo Utah
 Settlement Trust Fund
    Estimated Authorization....................        0        0        1        3        5        7         17
    Estimated Outlays..........................        0        0        0        0        0       17         17
Survey of Water Use
    Estimated Authorization....................        0        1        0        0        0        0          1
    Estimated Outlays..........................        0        *        1        *        0        0          1
Total Changes
    Estimated Authorization....................        0       17       51       54       58       61        242
    Estimated Outlays..........................        0        *        1        *        0      241        242
----------------------------------------------------------------------------------------------------------------
Components may not sum to totals because of rounding; * = between zero and $500,000.

    Basis of estimate: For this estimate, CBO assumes that S. 
1207 will be enacted by the end of 2019. The bill would 
authorize the appropriation of specific amounts but does not 
specify the year in which any appropriation should be provided. 
CBO has estimated the necessary amounts for each year using 
information from BOR and assumes that by 2024 all of the 
following conditions would be met:
           The parties would have finalized and 
        executed the settlement, including amendments required 
        to conform to provisions of S. 1207;
           The State of Utah would have contributed $8 
        million to the trust fund and enacted certain necessary 
        legislation;
           All parties would have executed waivers and 
        releases of claims as required under the bill; and
           The courts would have confirmed the water 
        rights of the Navajo Nation in accordance with the 
        bill.
    In addition, CBO assumes that the amounts authorized in 
order to capitalize the fund (with adjustments to account for 
anticipated inflation, as required by the bill) would be 
appropriated over the 2020-2024 period. In 2024, BOR would 
publish a statement of findings in the Federal Register that 
the bill's conditions have been met and ownership of the trust 
fund would be transferred to the Navajo Nation.
    Spending subject to appropriation: S. 1207 would authorize 
the appropriation of $224 million (including adjustments to 
account for inflation) in capital, an estimated $17 million in 
accrued interest, and $1 million for a survey of water use over 
the 2019-2024 period. Assuming appropriation of those amounts, 
CBO estimates that the bill would cost $242 million over the 
same period (see Table 1).
    Navajo Utah Settlement Trust Fund. S. 1207 would establish 
the Navajo Utah Settlement Trust Fund, consisting of two 
interest-bearing accounts: the Navajo Water Development 
Projects Account and the Navajo Operation, Maintenance, and 
Replacement (OM&R) Account. To capitalize those accounts, the 
bill would authorize appropriation of $198 million for 
constructing water projects and $11 million for OM&R, for a 
total of $209 million. Because the bill requires adjustments 
for inflation, CBO estimates that the total amount would rise 
to $224 million for the 2020-2024 period.
    Under the bill, the federal government would retain 
ownership of amounts deposited into the trust fund until 2024, 
when all the settlement conditions are expected to be 
satisfied. Deposited amounts could be credited with interest 
earnings if those earnings are appropriated to the trust fund. 
In 2024, the federal government would transfer ownership of the 
trust fund to the Navajo Nation; the amount transferred 
(including any appropriated interest earnings) would be 
considered a federal expenditure. Based on projections of 
interest rates and assumptions concerning the timing of 
appropriations, CBO estimates that interest earnings would 
total $17 million. Accordingly, CBO estimates that the total 
amount transferred would be $241 million.
    The federal government would retain fiduciary 
responsibility over the funds until they are needed by the 
Navajo Nation to plan, design, construct, and maintain water 
projects, but those subsequent actions would not affect the 
federal budget.
    Survey of Water Use. S. 1207 would authorize the 
appropriation of $1 million to implement the bill and to survey 
historical and current water use on the portion of the Navajo 
reservation in Utah. CBO estimates that the survey would take 
about three years to complete and would cost $1 million over 
the 2019-2024 period.
    Nonbudgetary effects: Once the settlement is finalized and 
executed by the parties, S. 1207 would require the State of 
Utah to contribute $8 million to the trust fund in three 
installments. CBO estimates that the state would pay $2.67 
million in 2021, 2022, and 2023 and that those amounts would be 
transferred to the Navajo Nation in 2024, when all the 
settlement conditions are expected to be satisfied. Generally, 
when the federal government takes control of assets that belong 
to others, those amounts are considered nonbudgetary and their 
collection and disbursement do not affect the deficit.
    Mandates: Contains intergovernmental mandates as defined in 
the Unfunded Mandates Reform Act (UMRA). CBO cannot determine 
whether the cost of those mandates would exceed the annual 
threshold established in UMRA ($82 million in 2019, adjusted 
annually for inflation).
    The mandates would arise from several of the bill's 
requirements:
           Ratification of the Navajo Water Rights 
        Settlement Agreement to the extent that the agreement 
        does not conflict with the bill's provisions. Because 
        that agreement has not been finalized by the Navajo 
        Nation and the State of Utah, actions the parties could 
        take to complete the agreement would be limited to 
        those allowed under the bill. Such a restriction is a 
        mandate under UMRA.
           A requirement that the State of Utah to 
        contribute $8 million to the Navajo Utah Settlement 
        Trust Fund. That amount is below the UMRA threshold.
           Prohibition of the Navajo Nation from 
        raising claims to certain water rights or for damage to 
        water, land, and other resources resulting from the 
        loss of water or water rights.
    In addition to the cost of the state's payment to the trust 
fund, there would be a tribal mandate that would involve the 
forgone value of awards and settlements of claims that the 
Navajo Nation could not raise. Because both the number of 
claims that could be barred or terminated and the value of 
forgone compensation stemming from those claims are uncertain, 
CBO has no basis for estimating the mandates' costs. Therefore, 
CBO cannot determine whether the cost of the intergovernmental 
mandate would exceed the annual threshold.
    S. 1207 contains no private-sector mandates as defined in 
UMRA.
    Estimate prepared by: Federal Costs: Aurora Swanson, 
Mandates: Rachel Austin.
    Estimate reviewed by: Kim P. Cawley, Chief, Natural and 
Physical Resources; Susan Willie, Chief, Mandates Unit; Theresa 
Gullo, Assistant Director for Budget Analysis.

                        EXECUTIVE COMMUNICATIONS

    The Committee has received no communication from the 
Executive Branch regarding S. 1207.

               REGULATORY AND PAPERWORK IMPACT STATEMENT

    Paragraph 11(b) of rule XXVI of the Standing Rules of the 
Senate requires each report accompanying a bill to evaluate the 
regulatory and paperwork impact that would be incurred in 
carrying out the bill. The Committee believes that S. 1207 will 
have a minimal impact on regulatory or paperwork requirements.

                        CHANGES IN EXISTING LAW

    On February 6, 2019, the Committee unanimously approved a 
motion to waive subsection 12 of rule XXVI of the Standing 
Rules of the Senate. In the opinion of the Committee, it is 
necessary to dispense with subsection 12 of rule XXVI of the 
Standing Rules of the Senate to expedite the business of the 
Senate.

                                  [all]