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[Senate Report 110-401]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 839
110th Congress                                                   Report
                                 SENATE
 2d Session                                                     110-401

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

 
            NORTHWESTERN NEW MEXICO RURAL WATER PROJECTS ACT

                                _______
                                

                 June 25, 2008.--Ordered to be printed

                                _______
                                

   Mr. Bingaman, from the Committee on Energy and Natural Resources, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 1171]

  The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 1171) to amend the Colorado River Storage 
Project Act and Public Law 87-483 to authorize the construction 
and rehabilitation of water infrastructure in Northwestern New 
Mexico, to authorize the use of the reclamation fund to fund 
the Reclamation Water Settlements Fund, to authorize the 
conveyance of certain Reclamation land and infrastructure, to 
authorize the Commissioner of Reclamation to provide for the 
delivery of water, and for other purposes, having considered 
the same, reports favorably thereon with an amendment and 
recommends that the bill, as amended, do pass.
  The amendment is as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE.

  (a) Short Title.--This Act may be cited as the ``Northwestern New 
Mexico Rural Water Projects Act''.
  (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title.
Sec. 2. Definitions.
Sec. 3. Compliance with environmental laws.
Sec. 4. No reallocation of costs.
Sec. 5. Interest rate.

   TITLE I--AMENDMENTS TO THE COLORADO RIVER STORAGE PROJECT ACT AND 
                           PUBLIC LAW 87-483

Sec. 101. Amendments to the Colorado River Storage Project Act.
Sec. 102. Amendments to Public Law 87-483.
Sec. 103. Effect on Federal water law.

              TITLE II--RECLAMATION WATER SETTLEMENTS FUND

Sec. 201. Reclamation Water Settlements Fund.

             TITLE III--NAVAJO-GALLUP WATER SUPPLY PROJECT

Sec. 301. Purposes.
Sec. 302. Authorization of Navajo-Gallup Water Supply Project.
Sec. 303. Delivery and use of Navajo-Gallup Water Supply Project water.
Sec. 304. Project contracts.
Sec. 305. Navajo Nation Municipal Pipeline.
Sec. 306. Authorization of conjunctive use wells.
Sec. 307. San Juan River Navajo Irrigation Projects.
Sec. 308. Other irrigation projects.
Sec. 309. Authorization of appropriations.

                  TITLE IV--NAVAJO NATION WATER RIGHTS

Sec. 401. Agreement.
Sec. 402. Trust Fund.
Sec. 403. Waivers and releases.
Sec. 404. Water rights held in trust.

SEC. 2. DEFINITIONS.

  In this Act:
          (1) Aamodt adjudication.--The term ``Aamodt adjudication'' 
        means the general stream adjudication that is the subject of 
        the civil action entitled ``State of New Mexico, ex rel. State 
        Engineer and United States of America, Pueblo de Nambe, Pueblo 
        de Pojoaque, Pueblo de San Ildefonso, and Pueblo de Tesuque v. 
        R. Lee Aamodt, et al.'', No. 66 CV 6639 MV/LCS (D.N.M.).
          (2) Abeyta adjudication.--The term ``Abeyta adjudication'' 
        means the general stream adjudication that is the subject of 
        the civil actions entitled ``State of New Mexico v. Abeyta and 
        State of New Mexico v. Arrellano'', Civil Nos. 7896-BB (D.N.M) 
        and 7939-BB (D.N.M.) (consolidated).
          (3) Acre-feet.--The term ``acre-feet'' means acre-feet per 
        year.
          (4) Agreement.--The term ``Agreement'' means the agreement 
        among the State of New Mexico, the Nation, and the United 
        States setting forth a stipulated and binding agreement signed 
        by the State of New Mexico and the Nation on April 19, 2005.
          (5) Allottee.--The ``allottee'' means a person that holds a 
        beneficial real property interest in a Navajo allotment that--
                  (A) is located within the Navajo Reservation or the 
                State of New Mexico;
                  (B) is held in trust by the United States; and
                  (C) was originally granted to an individual member of 
                the Nation by public land order or otherwise.
          (6) Animas-la plata project.--The term ``Animas-La Plata 
        Project'' has the meaning given the term in section 3 of Public 
        Law 100-585 (102 Stat. 2973), including Ridges Basin Dam, Lake 
        Nighthorse, the Navajo Nation Municipal Pipeline, and any other 
        features or modifications made pursuant to the Colorado Ute 
        Settlement Act Amendments of 2000 (Public Law 106-554; 114 
        Stat. 2763A-258).
          (7) City.--The term ``City'' means the city of Gallup, New 
        Mexico, or a designee of the City, with authority to provide 
        water to the Gallup, New Mexico service area.
          (8) Compact.--The term ``Compact'' means the Upper Colorado 
        River Basin Compact as consented to by the Act of April 6, 1949 
        (63 Stat. 31, chapter 48).
          (9) Contract.--The term ``Contract'' means the contract 
        between the United States and the Nation setting forth certain 
        commitments, rights, and obligations of the United States and 
        the Nation, as described in paragraph 6.0 of the Agreement.
          (10) Depletion.--The term ``depletion'' means the depletion 
        of the flow of the San Juan River stream system in the State of 
        New Mexico by a particular use of water (including any 
        depletion incident to the use) and represents the diversion 
        from the stream system by the use, less return flows to the 
        stream system from the use.
          (11) Draft impact statement.--The term ``Draft Impact 
        Statement'' means the draft environmental impact statement 
        prepared by the Bureau of Reclamation for the Project dated 
        March 2007.
          (12) Fund.--The term ``Fund'' means the Reclamation Waters 
        Settlements Fund established by section 201(a).
          (13) Hydrologic determination.--The term ``hydrologic 
        determination'' means the hydrologic determination entitled 
        ``Water Availability from Navajo Reservoir and the Upper 
        Colorado River Basin for Use in New Mexico,'' prepared by the 
        Bureau of Reclamation pursuant to section 11 of the Act of June 
        13, 1962 (Public Law 87-483; 76 Stat. 99), and dated May 23, 
        2007.
          (14) Nation.--The term ``Nation'' means the Navajo Nation, a 
        body politic and federally-recognized Indian nation as provided 
        for in section 101(2) of the Federally Recognized Indian Tribe 
        List of 1994 (25 U.S.C. 497a(2)), also known variously as the 
        ``Navajo Tribe,'' the ``Navajo Tribe of Arizona, New Mexico & 
        Utah,'' and the ``Navajo Tribe of Indians'' and other similar 
        names, and includes all bands of Navajo Indians and chapters of 
        the Navajo Nation.
          (15) Navajo-gallup water supply project; project.--The term 
        ``Navajo-Gallup Water Supply Project'' or ``Project'' means the 
        Navajo-Gallup Water Supply Project authorized under section 
        302(a), as described as the preferred alternative in the Draft 
        Impact Statement.
          (16) Navajo indian irrigation project.--The term ``Navajo 
        Indian Irrigation Project'' means the Navajo Indian irrigation 
        project authorized by section 2 of Public Law 87-483 (76 Stat. 
        96).
          (17) Navajo reservoir.--The term ``Navajo Reservoir'' means 
        the reservoir created by the impoundment of the San Juan River 
        at Navajo Dam, as authorized by the Act of April 11, 1956 
        (commonly known as the ``Colorado River Storage Project Act'') 
        (43 U.S.C. 620 et seq.).
          (18) Navajo nation municipal pipeline; pipeline.--The term 
        ``Navajo Nation Municipal Pipeline'' or ``Pipeline'' means the 
        pipeline used to convey the water of the Animas-La Plata 
        Project of the Navajo Nation from the City of Farmington, New 
        Mexico, to communities of the Navajo Nation located in close 
        proximity to the San Juan River Valley in the State of New 
        Mexico (including the City of Shiprock), as authorized by 
        section 15(b) of the Colorado Ute Indian Water Rights 
        Settlement Act of 1988 (Public Law 100-585; 102 Stat. 2973; 114 
        Stat. 2763A-263).
          (19) Non-navajo irrigation districts.--The term ``Non-Navajo 
        Irrigation Districts'' means--
                  (A) the Hammond Conservancy District;
                  (B) the Bloomfield Irrigation District; and
                  (C) any other community ditch organization in the San 
                Juan River basin in the State of New Mexico.
          (20) Partial final decree.--The term ``Partial Final Decree'' 
        means a final and binding judgement and decree entered by a 
        court in the stream adjudication, setting forth the rights of 
        the Nation to use and administer waters of the San Juan River 
        Basin in New Mexico, as set forth in Appendix 1 of the 
        Agreement.
          (21) Project participants.--The term ``Project Participants'' 
        means the City, the Nation, and the Jicarilla Apache Nation.
          (22) San juan river basin recovery implementation program.--
        The term ``San Juan River Basin Recovery Implementation 
        Program'' means the intergovernmental program established 
        pursuant to the cooperative agreement dated October 21, 1992 
        (including any amendments to the program).
          (23) Secretary.--The term ``Secretary'' means the Secretary 
        of the Interior, acting through the Commissioner of Reclamation 
        or any other designee.
          (24) Stream adjudication.--The term ``stream adjudication'' 
        means the general stream adjudication that is the subject of 
        New Mexico v. United States, et al., No. 75-185 (11th Jud. 
        Dist., San Juan County, New Mexico) (involving claims to waters 
        of the San Juan River and the tributaries of that river).
          (25) Supplemental partial final decree.--The term 
        ``Supplemental Partial Final Decree'' means a final and binding 
        judgement and decree entered by a court in the stream 
        adjudication, setting forth certain water rights of the Nation, 
        as set forth in Appendix 2 of the Agreement.
          (26) Trust fund.--The term ``Trust Fund'' means the Navajo 
        Nation Water Resources Development Trust Fund established by 
        section 402(a).

SEC. 3. COMPLIANCE WITH ENVIRONMENTAL LAWS.

  (a) Effect of Execution of Agreement.--The execution of the Agreement 
under section 401(a)(2) shall not constitute a major Federal action 
under the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et 
seq.).
  (b) Compliance With Environmental Laws.--In carrying out this Act, 
the Secretary shall comply with each law of the Federal Government 
relating to the protection of the environment, including--
          (1) the National Environmental Policy Act of 1969 (42 U.S.C. 
        4321 et seq.); and
          (2) the Endangered Species Act of 1973 (16 U.S.C. 1531 et 
        seq.).

SEC. 4. NO REALLOCATION OF COSTS.

  (a) Effect of Act.--Notwithstanding any other provision of law, the 
Secretary shall not reallocate or reassign any costs of projects that 
have been authorized under the Act of April 11, 1956 (commonly known as 
the ``Colorado River Storage Project Act'') (43 U.S.C. 620 et seq.), as 
of the date of enactment of this Act because of--
          (1) the authorization of the Navajo-Gallup Water Supply 
        Project under this Act; or
          (2) the changes in the uses of the water diverted by the 
        Navajo Indian Irrigation Project or the waters stored in the 
        Navajo Reservoir authorized under this Act.
  (b) Use of Power Revenues.--Notwithstanding any other provision of 
law, no power revenues under the Act of April 11, 1956 (commonly known 
as the ``Colorado River Storage Project Act'') (43 U.S.C. 620 et seq.), 
shall be used to pay or reimburse any costs of the Navajo Indian 
Irrigation Project or Navajo-Gallup Water Supply Project.

SEC. 5. INTEREST RATE.

  Notwithstanding any other provision of law, the interest rate 
applicable to any repayment contract entered into under section 304 
shall be equal to the discount rate for Federal water resources 
planning, as determined by the Secretary.

   TITLE I--AMENDMENTS TO THE COLORADO RIVER STORAGE PROJECT ACT AND 
                           PUBLIC LAW 87-483

SEC. 101. AMENDMENTS TO THE COLORADO RIVER STORAGE PROJECT ACT.

  (a) Participating Projects.--Paragraph (2) of the first section of 
the Act of April 11, 1956 (commonly known as the ``Colorado River 
Storage Project Act'') (43 U.S.C. 620(2)) is amended by inserting ``the 
Navajo-Gallup Water Supply Project,'' after ``Fruitland Mesa,''.
  (b) Navajo Reservoir Water Bank.--The Act of April 11, 1956 (commonly 
known as the ``Colorado River Storage Project Act'') is amended--
          (1) by redesignating section 16 (43 U.S.C. 620o) as section 
        17; and
          (2) by inserting after section 15 (43 U.S.C. 620n) the 
        following:
  ``Sec. 16. (a) The Secretary of the Interior may create and operate 
within the available capacity of Navajo Reservoir a top water bank.
  ``(b) Water made available for the top water bank in accordance with 
subsections (c) and (d) shall not be subject to section 11 of Public 
Law 87-483 (76 Stat. 99).
  ``(c) The top water bank authorized under subsection (a) shall be 
operated in a manner that--
          ``(1) is consistent with applicable law, except that, 
        notwithstanding any other provision of law, water for purposes 
        other than irrigation may be stored in the Navajo Reservoir 
        pursuant to the rules governing the top water bank established 
        under this section; and
          ``(2) does not impair the ability of the Secretary of the 
        Interior to deliver water under contracts entered into under--
                  ``(A) Public Law 87-483 (76 Stat. 96); and
                  ``(B) New Mexico State Engineer File Nos. 2847, 2848, 
                2849, and 2917.
  ``(d)(1) The Secretary of the Interior, in cooperation with the State 
of New Mexico (acting through the Interstate Stream Commission), shall 
develop any terms and procedures for the storage, accounting, and 
release of water in the top water bank that are necessary to comply 
with subsection (c).
  ``(2) The terms and procedures developed under paragraph (1) shall 
include provisions requiring that--
          ``(A) the storage of banked water shall be subject to 
        approval under State law by the New Mexico State Engineer to 
        ensure that impairment of any existing water right does not 
        occur, including storage of water under New Mexico State 
        Engineer File No. 2849;
          ``(B) water in the top water bank be subject to evaporation 
        and other losses during storage;
          ``(C) water in the top water bank be released for delivery to 
        the owner or assigns of the banked water on request of the 
        owner, subject to reasonable scheduling requirements for making 
        the release;
          ``(D) water in the top water bank be the first water spilled 
        or released for flood control purposes in anticipation of a 
        spill, on the condition that top water bank water shall not be 
        released or included for purposes of calculating whether a 
        release should occur for purposes of satisfying the flow 
        recommendations of the San Juan River Basin Recovery 
        Implementation Program; and
          ``(E) water eligible for banking in the top water bank shall 
        be water that otherwise would have been diverted and 
        beneficially used in New Mexico that year.
  ``(e) The Secretary of the Interior may charge fees to water users 
that use the top water bank in amounts sufficient to cover the costs 
incurred by the United States in administering the water bank.''.

SEC. 102. AMENDMENTS TO PUBLIC LAW 87-483.

  (a) Navajo Indian Irrigation Project.--Public Law 87-483 (76 Stat. 
96) is amended by striking section 2 and inserting the following:
  ``Sec. 2. (a) In accordance with the Act of April 11, 1956 (commonly 
known as the `Colorado River Storage Project Act') (43 U.S.C. 620 et 
seq.), the Secretary of the Interior is authorized to construct, 
operate, and maintain the Navajo Indian Irrigation Project to provide 
irrigation water to a service area of not more than 110,630 acres of 
land.
  ``(b)(1) Subject to paragraph (2), the average annual diversion by 
the Navajo Indian Irrigation Project from the Navajo Reservoir over any 
consecutive 10-year period shall be the lesser of--
          ``(A) 508,000 acre-feet per year; or
          ``(B) the quantity of water necessary to supply an average 
        depletion of 270,000 acre-feet per year.
  ``(2) The quantity of water diverted for any 1 year shall not exceed 
the average annual diversion determined under paragraph (1) by more 
than 15 percent.
  ``(c) In addition to being used for irrigation, the water diverted by 
the Navajo Indian Irrigation Project under subsection (b) may be used 
within the area served by Navajo Indian Irrigation Project facilities 
for the following purposes:
          ``(1) Aquaculture purposes, including the rearing of fish in 
        support of the San Juan River Basin Recovery Implementation 
        Program authorized by Public Law 106-392 (114 Stat. 1602).
          ``(2) Domestic, industrial, or commercial purposes relating 
        to agricultural production and processing.
          ``(3)(A) The generation of hydroelectric power as an incident 
        to the diversion of water by the Navajo Indian Irrigation 
        Project for authorized purposes.
          ``(B) Notwithstanding any other provision of law--
                  ``(i) any hydroelectric power generated under this 
                paragraph shall be used or marketed by the Navajo 
                Nation;
                  ``(ii) the Navajo Nation shall retain any revenues 
                from the sale of the hydroelectric power; and
                  ``(iii) the United States shall have no trust 
                obligation to monitor, administer, or account for the 
                revenues received by the Navajo Nation, or the 
                expenditure of the revenues.
          ``(4) The implementation of the alternate water source 
        provisions described in subparagraph 9.2 of the agreement 
        executed under section 401(a)(2) of the Northwestern New Mexico 
        Rural Water Projects Act.
  ``(d) The Navajo Indian Irrigation Project water diverted under 
subsection (b) may be transferred to areas located within or outside 
the area served by Navajo Indian Irrigation Project facilities, and 
within or outside the boundaries of the Navajo Nation, for any 
beneficial use in accordance with--
          ``(1) the agreement executed under section 401(a)(2) of the 
        Northwestern New Mexico Rural Water Projects Act;
          ``(2) the contract executed under section 304(a)(2)(B) of 
        that Act; and
          ``(3) any other applicable law.
  ``(e) The Secretary may use the capacity of the Navajo Indian 
Irrigation Project works to convey water supplies for--
          ``(1) the Navajo-Gallup Water Supply Project under section 
        302 of the Northwestern New Mexico Rural Water Projects Act; or
          ``(2) other nonirrigation purposes authorized under 
        subsection (c) or (d).
  ``(f)(1) Repayment of the costs of construction of the project (as 
authorized in subsection (a)) shall be in accordance with the Act of 
April 11, 1956 (commonly known as the `Colorado River Storage Project 
Act') (43 U.S.C. 620 et seq.), including section 4(d) of that Act.
  ``(2) The Secretary shall not reallocate, or require repayment of, 
construction costs of the Navajo Indian Irrigation Project because of 
the conveyance of water supplies for nonirrigation purposes under 
subsection (e).''.
  (b) Runoff Above Navajo Dam.--Section 11 of Public Law 87-483 (76 
Stat. 100) is amended by adding at the end the following:
  ``(d)(1) For purposes of implementing in a year of prospective 
shortage the water allocation procedures established by subsection (a), 
the Secretary of the Interior shall determine the quantity of any 
shortages and the appropriate apportionment of water using the normal 
diversion requirements on the flow of the San Juan River originating 
above Navajo Dam based on the following criteria:
          ``(A) The quantity of diversion or water delivery for the 
        current year anticipated to be necessary to irrigate land in 
        accordance with cropping plans prepared by contractors.
          ``(B) The annual diversion or water delivery demands for the 
        current year anticipated for non-irrigation uses under water 
        delivery contracts, including contracts authorized by the 
        Northwestern New Mexico Rural Water Projects Act, but excluding 
        any current demand for surface water for placement into aquifer 
        storage for future recovery and use.
          ``(C) An annual normal diversion demand of 135,000 acre-feet 
        for the initial stage of the San Juan-Chama Project authorized 
        by section 8.
  ``(2) The Secretary shall not include in the normal diversion 
requirements--
          ``(A) the quantity of water that reliably can be anticipated 
        to be diverted or delivered under a contract from inflows to 
        the San Juan River arising below Navajo Dam under New Mexico 
        State Engineer File No. 3215; or
          ``(B) the quantity of water anticipated to be supplied 
        through reuse.
  ``(e)(1) If the Secretary determines that there is a shortage of 
water under subsection (a), the Secretary shall respond to the shortage 
in the Navajo Reservoir water supply by curtailing releases and 
deliveries in the following order:
          ``(A) The demand for delivery for uses in the State of 
        Arizona under the Navajo-Gallup Water Supply Project authorized 
        by section 303 of the Northwestern New Mexico Rural Water 
        Projects Act, excluding the quantity of water anticipated to be 
        diverted for the uses from inflows to the San Juan River that 
        arise below Navajo Dam in accordance with New Mexico State 
        Engineer File No. 3215.
          ``(B) The demand for delivery for uses allocated under 
        paragraph 8.2 of the agreement executed under section 401(a)(2) 
        of the Northwestern New Mexico Rural Water Projects Act, 
        excluding the quantity of water anticipated to be diverted for 
        such uses under State Engineer File No. 3215.
          ``(C) The uses in the State of New Mexico that are determined 
        under subsection (d), in accordance with the procedure for 
        apportioning the water supply under subsection (a).
  ``(2) For any year for which the Secretary determines and responds to 
a shortage in the Navajo Reservoir water supply, the Secretary shall 
not deliver, and contractors of the water supply shall not divert, any 
of the water supply for placement into aquifer storage for future 
recovery and use.
  ``(3) To determine the occurrence and amount of any shortage to 
contracts entered into under this section, the Secretary shall not 
include as available storage any water stored in a top water bank in 
Navajo Reservoir established under section 16(a) of the Act of April 
11, 1956 (commonly known as the `Colorado River Storage Project Act').
  ``(f) The Secretary of the Interior shall apportion water under 
subsections (a), (d), and (e) on an annual volume basis.
  ``(g) The Secretary of the Interior may revise a determination of 
shortages, apportionments, or allocations of water under subsections 
(a), (d), and (e) on the basis of information relating to water supply 
conditions that was not available at the time at which the 
determination was made.
  ``(h) Nothing in this section prohibits the distribution of water in 
accordance with cooperative water agreements between water users 
providing for a sharing of water supplies.
  ``(i) Diversions under New Mexico State Engineer File No. 3215 shall 
be distributed, to the maximum extent water is available, in 
proportionate amounts to the diversion demands of contractors and 
subcontractors of the Navajo Reservoir water supply that are diverting 
water below Navajo Dam.''.

SEC. 103. EFFECT ON FEDERAL WATER LAW.

  Unless expressly provided in this Act, nothing in this Act modifies, 
conflicts with, preempts, or otherwise affects--
          (1) the Boulder Canyon Project Act (43 U.S.C. 617 et seq.);
          (2) the Boulder Canyon Project Adjustment Act (54 Stat. 774, 
        chapter 643);
          (3) the Act of April 11, 1956 (commonly known as the 
        ``Colorado River Storage Project Act'') (43 U.S.C. 620 et 
        seq.);
          (4) the Act of September 30, 1968 (commonly known as the 
        ``Colorado River Basin Project Act'') (82 Stat. 885);
          (5) Public Law 87-483 (76 Stat. 96);
          (6) the Treaty between the United States of America and 
        Mexico representing utilization of waters of the Colorado and 
        Tijuana Rivers and of the Rio Grande, signed at Washington 
        February 3, 1944 (59 Stat. 1219);
          (7) the Colorado River Compact of 1922, as approved by the 
        Presidential Proclamation of June 25, 1929 (46 Stat. 3000);
          (8) the Compact;
          (9) the Act of April 6, 1949 (63 Stat. 31, chapter 48);
          (10) the Jicarilla Apache Tribe Water Rights Settlement Act 
        (106 Stat. 2237); or
          (11) section 205 of the Energy and Water Development 
        Appropriations Act, 2005 (118 Stat. 2949).

              TITLE II--RECLAMATION WATER SETTLEMENTS FUND

SEC. 201. RECLAMATION WATER SETTLEMENTS FUND.

  (a) Establishment.--There is established in the Treasury of the 
United States a fund, to be known as the ``Reclamation Water 
Settlements Fund'', consisting of--
          (1) such amounts as are deposited to the Fund under 
        subsection (b); and
          (2) any interest earned on investment of amounts in the Fund 
        under subsection (d).
  (b) Deposits to Fund.--
          (1) In general.--For each of fiscal years 2009 through 2023, 
        the Secretary of the Treasury shall deposit in the Fund, if 
        available, $120,000,000 of the revenues that would otherwise be 
        deposited for the fiscal year in the fund established by the 
        first section of the Act of June 17, 1902 (32 Stat. 388, 
        chapter 1093).
          (2) Availability of amounts.--Amounts deposited in the Fund 
        under paragraph (1) shall be made available pursuant to this 
        section--
                  (A) without further appropriation; and
                  (B) in addition to amounts appropriated pursuant to 
                any authorization contained in any other provision of 
                law.
  (c) Expenditures From Fund.--
          (1) In general.--
                  (A) Expenditures.--Subject to subparagraph (B), for 
                each of fiscal years 2009 through 2028, the Secretary 
                may expend from the Fund an amount not to exceed 
                $120,000,000, plus the interest accrued in the Fund, 
                for the fiscal year in which expenditures are made 
                pursuant to paragraphs (2) and (3).
                  (B) Additional expenditures.--The Secretary may 
                expend more than $120,000,000 for any fiscal year if 
                such amounts are available in the Fund due to 
                expenditures not reaching $120,000,000 for prior fiscal 
                years.
          (2) Authority.--The Secretary may expend money from the Fund 
        to implement a settlement agreement approved by Congress that 
        resolves, in whole or in part, litigation involving the United 
        States, if the settlement agreement or implementing legislation 
        requires the Bureau of Reclamation to provide financial 
        assistance for, or plan, design, and construct--
                  (A) water supply infrastructure; or
                  (B) a project--
                          (i) to rehabilitate a water delivery system 
                        to conserve water; or
                          (ii) to restore fish and wildlife habitat or 
                        otherwise improve environmental conditions 
                        associated with or affected by, or located 
                        within the same river basin as, a Federal 
                        reclamation project that is in existence on the 
                        date of enactment of this Act.
          (3) Use for completion of project and other settlements.--
                  (A) Priorities.--
                          (i) First priority.--
                                  (I) In general.--The first priority 
                                for expenditure of amounts in the Fund 
                                during the entire period in which the 
                                Fund is in existence shall be for the 
                                purposes described in, and in the order 
                                of, clauses (i) through (iv) of 
                                subparagraph (B).
                                  (II) Reserved amounts.--The Secretary 
                                shall reserve amounts deposited into 
                                the Fund in accordance with subclause 
                                (I).
                          (ii) Other purposes.--Any amounts in the Fund 
                        that are not needed for the purposes described 
                        in subparagraph (B) may be used for other 
                        purposes authorized in paragraph (2).
                  (B) Completion of project.--
                          (i) Navajo-gallup water supply project.--
                                  (I) In general.--Subject to subclause 
                                (II), effective beginning January 1, 
                                2009, if, in the judgment of the 
                                Secretary on an annual basis the 
                                deadline described in section 
                                401(f)(1)(A)(ix) is unlikely to be met 
                                because a sufficient amount of funding 
                                is not otherwise available through 
                                appropriations made available pursuant 
                                to section 309(a), the Secretary shall 
                                expend from the Fund such amounts on an 
                                annual basis consistent with paragraphs 
                                (1) and (2), as are necessary to pay 
                                the Federal share of the costs, and 
                                substantially complete as expeditiously 
                                as practicable, the construction of the 
                                water supply infrastructure authorized 
                                as part of the Project.
                                  (II) Maximum amount.--
                                          (aa) In general.--Except as 
                                        provided under item (bb), the 
                                        amount expended under subclause 
                                        (I) shall not exceed 
                                        $500,000,000 for the period of 
                                        fiscal years 2009 through 2018.
                                          (bb) Exception.--The 
                                        limitation on the expenditure 
                                        amount under item (aa) may be 
                                        exceeded during the entire 
                                        period in which the Fund is in 
                                        existence.
                          (ii) Other new mexico settlements.--
                                  (I) In general.--Subject to subclause 
                                (II), effective beginning January 1, 
                                2009, in addition to the funding made 
                                available under clause (i), if in the 
                                judgment of the Secretary on an annual 
                                basis a sufficient amount of funding is 
                                not otherwise available through annual 
                                appropriations, the Secretary shall 
                                expend from the Fund such amounts on an 
                                annual basis consistent with paragraphs 
                                (1) and (2), as are necessary to pay 
                                the Federal share of the costs of 
                                implementing the Indian water rights 
                                settlement agreements entered into by 
                                the State of New Mexico in the Aamodt 
                                adjudication and the Abeyta 
                                adjudication, if such settlements are 
                                subsequently approved and authorized by 
                                an Act of Congress.
                                  (II) Maximum amount.--The amount 
                                expended under subclause (I) shall not 
                                exceed $250,000,000.
                          (iii) Montana settlements.--
                                  (I) In general.--Subject to subclause 
                                (II), effective beginning January 1, 
                                2009, in addition to funding made 
                                available pursuant to clauses (i) and 
                                (ii), if in the judgment of the 
                                Secretary on an annual basis a 
                                sufficient amount of funding is not 
                                otherwise available through annual 
                                appropriations, the Secretary shall 
                                expend from the Fund such amounts on an 
                                annual basis consistent with paragraphs 
                                (1) and (2), as are necessary to pay 
                                the Federal share of the costs of 
                                implementing Indian water rights 
                                settlement agreements entered into by 
                                the State of Montana with the Blackfeet 
                                Tribe, the Crow Tribe, or the Gros 
                                Ventre and Assiniboine Tribes of the 
                                Fort Belknap Indian Reservation in the 
                                judicial proceeding entitled ``In re 
                                the General Adjudication of All the 
                                Rights to Use Surface and Groundwater 
                                in the State of Montana'', if a 
                                settlement or settlements are 
                                subsequently approved and authorized by 
                                an Act of Congress.
                                  (II) Maximum amount.--
                                          (aa) In general.--Except as 
                                        provided under item (bb), the 
                                        amount expended under subclause 
                                        (I) shall not exceed 
                                        $350,000,000 for the period of 
                                        fiscal years 2009 through 2018.
                                          (bb) Exception.--The 
                                        limitation on the expenditure 
                                        amount under item (aa) may be 
                                        exceeded during the entire 
                                        period in which the Fund is in 
                                        existence.
                                          (cc) Other funding.--The 
                                        Secretary shall ensure that any 
                                        such funding shall be provided 
                                        in a manner that does not limit 
                                        the funding available pursuant 
                                        to clauses (i) and (ii).
                          (iv) Arizona settlement.--
                                  (I) In general.--Subject to subclause 
                                (II), effective beginning January 1, 
                                2009, in addition to funding made 
                                available pursuant to clauses (i), 
                                (ii), and (iii), if in the judgment of 
                                the Secretary on an annual basis a 
                                sufficient amount of funding is not 
                                otherwise available through annual 
                                appropriations, the Secretary shall 
                                expend from the Fund such amounts on an 
                                annual basis consistent with paragraphs 
                                (1) and (2), as are necessary to pay 
                                the Federal share of the costs of 
                                implementing an Indian water rights 
                                settlement agreement entered into by 
                                the State of Arizona with the Navajo 
                                Nation to resolve the water rights 
                                claims of the Nation in the Lower 
                                Colorado River basin in Arizona, if a 
                                settlement is subsequently approved and 
                                authorized by an Act of Congress.
                                  (II) Maximum amount.--
                                          (aa) In general.--Except as 
                                        provided under item (bb), the 
                                        amount expended under subclause 
                                        (I) shall not exceed 
                                        $100,000,000 for the period of 
                                        fiscal years 2009 through 2018.
                                          (bb) Exception.--The 
                                        limitation on the expenditure 
                                        amount under item (aa) may be 
                                        exceeded during the entire 
                                        period in which the Fund is in 
                                        existence.
                                          (cc) Other funding.--The 
                                        Secretary shall ensure that any 
                                        such funding shall be provided 
                                        in a manner that does not limit 
                                        the funding available pursuant 
                                        to clauses (i) and (ii).
                  (C) Reversion.--If the settlements described in 
                clauses (ii) through (iv) of subparagraph (B) have not 
                been approved and authorized by an Act of Congress by 
                December 31, 2014, the amounts reserved for the 
                settlements shall no longer be reserved by the 
                Secretary pursuant to subparagraph (A)(i) and shall 
                revert to the Fund for any authorized use, as 
                determined by the Secretary.
  (d) Investment of Amounts.--
          (1) In general.--The Secretary shall invest such portion of 
        the Fund as is not, in the judgment of the Secretary, required 
        to meet current withdrawals.
          (2) Credits to fund.--The interest on, and the proceeds from 
        the sale or redemption of, any obligations held in the Fund 
        shall be credited to, and form a part of, the Fund.
  (e) Transfers of Amounts.--
          (1) In general.--The amounts required to be transferred to 
        the Fund under this section shall be transferred at least 
        monthly from the general fund of the Treasury to the Fund on 
        the basis of estimates made by the Secretary of the Treasury.
          (2) Adjustments.--Proper adjustment shall be made in amounts 
        subsequently transferred to the extent prior estimates were in 
        excess of or less than the amounts required to be transferred.
  (f) Termination.--On September 30, 2028--
          (1) the Fund shall terminate; and
          (2) the unexpended and unobligated balance of the Fund shall 
        be transferred to the appropriate fund of the Treasury.

             TITLE III--NAVAJO-GALLUP WATER SUPPLY PROJECT

SEC. 301. PURPOSES.

  The purposes of this subtitle are--
          (1) to authorize the Secretary to construct, operate, and 
        maintain the Navajo-Gallup Water Supply Project;
          (2) to allocate the capacity of the Project among the Nation, 
        the City, and the Jicarilla Apache Nation; and
          (3) to authorize the Secretary to enter into Project 
        repayment contracts with the City and the Jicarilla Apache 
        Nation.

SEC. 302. AUTHORIZATION OF NAVAJO-GALLUP WATER SUPPLY PROJECT.

  (a) In General.--The Secretary, acting through the Commissioner of 
Reclamation, is authorized to design, construct, operate, and maintain 
the Project in substantial accordance with the preferred alternative in 
the Draft Impact Statement.
  (b) Project Facilities.--To provide for the delivery of San Juan 
River water to Project Participants, the Secretary may construct, 
operate, and maintain the Project facilities described in the preferred 
alternative in the Draft Impact Statement, including:
          (1) A pumping plant on the San Juan River in the vicinity of 
        Kirtland, New Mexico.
          (2)(A) A main pipeline from the San Juan River near Kirtland, 
        New Mexico, to Shiprock, New Mexico, and Gallup, New Mexico, 
        which follows United States Highway 491.
                  (B) Any pumping plants associated with the pipeline 
                authorized under subparagraph (A).
          (3)(A) A main pipeline from Cutter Reservoir to Ojo Encino, 
        New Mexico, which follows United States Highway 550.
                  (B) Any pumping plants associated with the pipeline 
                authorized under subparagraph (A).
          (4)(A) Lateral pipelines from the main pipelines to Nation 
        communities in the States of New Mexico and Arizona.
                  (B) Any pumping plants associated with the pipelines 
                authorized under subparagraph (A).
          (5) Any water regulation, storage or treatment facility, 
        service connection to an existing public water supply system, 
        power substation, power distribution works, or other 
        appurtenant works (including a building or access road) that is 
        related to the Project facilities authorized by paragraphs (1) 
        through (4), including power transmission facilities and 
        associated wheeling services to connect Project facilities to 
        existing high-voltage transmission facilities and deliver power 
        to the Project.
  (c) Acquisition of Land.--
          (1) In general.--The Secretary is authorized to acquire any 
        land or interest in land that is necessary to construct, 
        operate, and maintain the Project facilities authorized under 
        subsection (b).
          (2) Land of the project participants.--As a condition of 
        construction of the facilities authorized under this title, the 
        Project Participants shall provide all land or interest in 
        land, as appropriate, that the Secretary identifies as 
        necessary for acquisition under this subsection at no cost to 
        the Secretary.
          (3) Limitation.--The Secretary may not condemn water rights 
        for purposes of the Project.
  (d) Conditions.--
          (1) In general.--Except as provided in paragraph (2), the 
        Secretary shall not commence construction of the facilities 
        authorized under subsection (b) until such time as--
                  (A) the Secretary executes the Agreement and the 
                Contract;
                  (B) the contracts authorized under section 304 are 
                executed;
                  (C) the Secretary--
                          (i) completes an environmental impact 
                        statement for the Project; and
                          (ii) has issued a record of decision that 
                        provides for a preferred alternative; and
                  (D) the Secretary has entered into an agreement with 
                the State of New Mexico under which the State of New 
                Mexico will provide a share of the construction costs 
                of the Project of not less than $50,000,000, except 
                that the State of New Mexico shall receive credit for 
                funds the State has contributed to construct water 
                conveyance facilities to the Project Participants to 
                the extent that the facilities reduce the cost of the 
                Project as estimated in the Draft Impact Statement.
          (2) Exception.--If the Jicarilla Apache Nation elects not to 
        enter into a contract pursuant to section 304, the Secretary, 
        after consulting with the Nation, the City, and the State of 
        New Mexico acting through the Interstate Stream Commission, may 
        make appropriate modifications to the scope of the Project and 
        proceed with Project construction if all other conditions for 
        construction have been satisfied.
          (3) Effect of indian self-determination and education 
        assistance act.--The Indian Self-Determination and Education 
        Assistance Act (25 U.S.C. 450 et seq.) shall not apply to the 
        design, construction, operation, maintenance, or replacement of 
        the Project.
  (e) Power.--The Secretary shall reserve, from existing reservations 
of Colorado River Storage Project power for Bureau of Reclamation 
projects, up to 26 megawatts of power for use by the Project.
  (f) Conveyance of Title to Project Facilities.--
          (1) In general.--The Secretary is authorized to enter into 
        separate agreements with the City and the Nation and, on 
        entering into the agreements, shall convey title to each 
        Project facility or section of a Project facility authorized 
        under subsection (b) (including any appropriate interests in 
        land) to the City and the Nation after--
                  (A) completion of construction of a Project facility 
                or a section of a Project facility that is operating 
                and delivering water; and
                  (B) execution of a Project operations agreement 
                approved by the Secretary and the Project Participants 
                that sets forth--
                          (i) any terms and conditions that the 
                        Secretary determines are necessary--
                                  (I) to ensure the continuation of the 
                                intended benefits of the Project; and
                                  (II) to fulfill the purposes of this 
                                subtitle;
                          (ii) requirements acceptable to the Secretary 
                        and the Project Participants for--
                                  (I) the distribution of water under 
                                the Project or section of a Project 
                                facility; and
                                  (II) the allocation and payment of 
                                annual operation, maintenance, and 
                                replacement costs of the Project or 
                                section of a Project facility based on 
                                the proportionate uses of Project 
                                facilities; and
                          (iii) conditions and requirements acceptable 
                        to the Secretary and the Project Participants 
                        for operating and maintaining each Project 
                        facility on completion of the conveyance of 
                        title, including the requirement that the City 
                        and the Nation shall--
                                  (I) comply with--
                                          (aa) the Compact; and
                                          (bb) other applicable law; 
                                        and
                                  (II) be responsible for--
                                          (aa) the operation, 
                                        maintenance, and replacement of 
                                        each Project facility; and
                                          (bb) the accounting and 
                                        management of water conveyance 
                                        and Project finances, as 
                                        necessary to administer and 
                                        fulfill the conditions of the 
                                        Contract executed under section 
                                        304(a)(2)(B).
          (2) Effect of conveyance.--The conveyance of title to each 
        Project facility shall not affect the application of the 
        Endangered Species Act of 1973 (16 U.S.C. 1531 et seq.) 
        relating to the use of the water associated with the Project.
          (3) Liability.--
                  (A) In general.--Effective on the date of the 
                conveyance authorized by this subsection, the United 
                States shall not be held liable by any court for 
                damages of any kind arising out of any act, omission, 
                or occurrence relating to the land, buildings, or 
                facilities conveyed under this subsection, other than 
                damages caused by acts of negligence committed by the 
                United States, or by employees or agents of the United 
                States, prior to the date of conveyance.
                  (B) Tort claims.--Nothing in this section increases 
                the liability of the United States beyond the liability 
                provided in chapter 171 of title 28, United States Code 
                (commonly known as the ``Federal Tort Claims Act'').
          (4) Notice of proposed conveyance.--Not later than 45 days 
        before the date of a proposed conveyance of title to any 
        Project facility, the Secretary shall submit to the Committee 
        on Resources of the House of Representatives and to the 
        Committee on Energy and Natural Resources of the Senate notice 
        of the conveyance of each Project facility.
  (g) Colorado River Storage Project Power.--The conveyance of Project 
facilities under subsection (f) shall not affect the availability of 
Colorado River Storage Project power to the Project under subsection 
(e).
  (h) Regional Use of Project Facilities.--
          (1) In general.--Subject to paragraph (2), Project facilities 
        constructed under subsection (b) may be used to treat and 
        convey non-Project water or water that is not allocated by 
        subsection 303(b) if--
                  (A) capacity is available without impairing any water 
                delivery to a Project Participant; and
                  (B) the unallocated or non-Project water 
                beneficiary--
                          (i) has the right to use the water;
                          (ii) agrees to pay the operation, 
                        maintenance, and replacement costs assignable 
                        to the beneficiary for the use of the Project 
                        facilities; and
                          (iii) agrees to pay an appropriate fee that 
                        may be established by the Secretary to assist 
                        in the recovery of any capital cost allocable 
                        to that use.
          (2) Effect of payments.--Any payments to the United States or 
        the Nation for the use of unused capacity under this subsection 
        or for water under any subcontract with the Nation or the 
        Jicarilla Apache Nation shall not alter the construction 
        repayment requirements or the operation, maintenance, and 
        replacement payment requirements of the Project Participants.

SEC. 303. DELIVERY AND USE OF NAVAJO-GALLUP WATER SUPPLY PROJECT WATER.

  (a) Use of Project Water.--
          (1) In general.--In accordance with this Act and other 
        applicable law, water supply from the Project shall be used for 
        municipal, industrial, commercial, domestic, and stock watering 
        purposes.
          (2) Use on certain land.--
                  (A) In general.--Subject to subparagraph (B), the 
                Nation may use Project water allocations on--
                          (i) land held by the United States in trust 
                        for the Nation and members of the Nation; and
                          (ii) land held in fee by the Nation.
                  (B) Transfer.--The Nation may transfer the purposes 
                and places of use of the allocated water in accordance 
                with the Agreement and applicable law.
          (3) Hydroelectric power.--
                  (A) In general.--Hydroelectric power may be generated 
                as an incident to the delivery of Project water for 
                authorized purposes under paragraph (1).
                  (B) Administration.--Notwithstanding any other 
                provision of law--
                          (i) any hydroelectric power generated under 
                        this paragraph shall be used or marketed by the 
                        Nation;
                          (ii) the Nation shall retain any revenues 
                        from the sale of the hydroelectric power; and
                          (iii) the United States shall have no trust 
                        obligation or other obligation to monitor, 
                        administer, or account for the revenues 
                        received by the Nation, or the expenditure of 
                        the revenues.
          (4) Storage.--
                  (A) In general.--Subject to subparagraph (B), any 
                water contracted for delivery under paragraph (1) that 
                is not needed for current water demands or uses may be 
                delivered by the Project for placement in underground 
                storage in the State of New Mexico for future recovery 
                and use.
                  (B) State approval.--Delivery of water under 
                subparagraph (A) is subject to--
                          (i) approval by the State of New Mexico under 
                        applicable provisions of State law relating to 
                        aquifer storage and recovery; and
                          (ii) the provisions of the Agreement and this 
                        Act.
  (b) Project Water and Capacity Allocations.--
          (1) Diversion.--Subject to availability and consistent with 
        Federal and State law, the Project may divert from the Navajo 
        Reservoir and the San Juan River a quantity of water to be 
        allocated and used consistent with the Agreement and this Act, 
        that does not exceed in any 1 year, the lesser of--
                  (A) 37,760 acre-feet of water; or
                  (B) the quantity of water necessary to supply a 
                depletion from the San Juan River of 35,890 acre-feet.
          (2) Project delivery capacity allocations.--
                  (A) In general.--The capacity of the Project shall be 
                allocated to the Project Participants in accordance 
                with subparagraphs (B) through (E), other provisions of 
                this Act, and other applicable law.
                  (B) Delivery capacity allocation to the city.--The 
                Project may deliver at the point of diversion from the 
                San Juan River not more than 7,500 acre-feet of water 
                in any 1 year for which the City has secured rights for 
                the use of the City.
                  (C) Delivery capacity allocation to navajo nation 
                communities in new mexico.--For use by the Nation in 
                the State of New Mexico, the Project may deliver water 
                out of the water rights held by the Secretary for the 
                Nation and confirmed under this Act, at the points of 
                diversion from the San Juan River or at Navajo 
                Reservoir in any 1 year, the lesser of--
                          (i) 22,650 acre-feet of water; or
                          (ii) the quantity of water necessary to 
                        supply a depletion from the San Juan River of 
                        20,780 acre-feet of water.
                  (D) Delivery capacity allocation to navajo nation 
                communities in arizona.--Subject to subsection (c), the 
                Project may deliver at the point of diversion from the 
                San Juan River not more than 6,411 acre-feet of water 
                in any 1 year for use by the Nation in the State of 
                Arizona.
                  (E) Delivery capacity allocation to jicarilla apache 
                nation.--The Project may deliver at Navajo Reservoir 
                not more than 1,200 acre-feet of water in any 1 year of 
                the water rights of the Jicarilla Apache Nation, held 
                by the Secretary and confirmed by the Jicarilla Apache 
                Tribe Water Rights Settlement Act (Public Law 102-441; 
                106 Stat. 2237), for use by the Jicarilla Apache Nation 
                in the southern portion of the Jicarilla Apache Nation 
                Reservation in the State of New Mexico.
          (3) Use in excess of delivery capacity allocation quantity.--
        Notwithstanding each delivery capacity allocation quantity 
        limit described in subparagraphs (B), (C), and (E) of paragraph 
        (2), the Secretary may authorize a Project Participant to 
        exceed the delivery capacity allocation quantity limit of that 
        Project Participant if--
                  (A) delivery capacity is available without impairing 
                any water delivery to any other Project Participant; 
                and
                  (B) the Project Participant benefitting from the 
                increased allocation of delivery capacity--
                          (i) has the right under applicable law to use 
                        the additional water;
                          (ii) agrees to pay the operation, 
                        maintenance, and replacement costs relating to 
                        the additional use of any Project facility; and
                          (iii) agrees, if the Project title is held by 
                        the Secretary, to pay a fee established by the 
                        Secretary to assist in recovering capital costs 
                        relating to that additional use.
  (c) Conditions for Use in Arizona.--
          (1) Requirements.--Project water shall not be delivered for 
        use by any community of the Nation located in the State of 
        Arizona under subsection (b)(2)(D) until--
                  (A) the Nation and the State of Arizona have entered 
                into a water rights settlement agreement approved by an 
                Act of Congress that specifies the allocation of 
                Colorado River System water to which the use in Arizona 
                will be charged; and
                  (B) the Secretary has determined by hydrologic 
                investigation that sufficient water is reasonably 
                likely to be available to supply the use in the State 
                of Arizona from water of the Colorado River system 
                allocated to the State.
          (2) Accounting of uses in arizona.--Pursuant to paragraph 
        (1), any depletion of water from the San Juan River stream 
        system in the State of New Mexico that results from the 
        diversion of water by the Project for uses within the State of 
        Arizona (including depletion incidental to the diversion, 
        impounding, or conveyance of water in the State of New Mexico 
        for uses in the State of Arizona)--
                  (A) shall be accounted for as a part of the Colorado 
                River System apportionments to the State of Arizona; 
                and
                  (B) shall not increase the total quantity of water to 
                which the State of Arizona is entitled to use under any 
                compact, statute, or court decree.
  (d) Forbearance.--
          (1) In general.--Subject to paragraphs (2) and (3), during 
        any year in which a shortage to the normal diversion 
        requirement for any use relating to the Project within the 
        State of Arizona occurs (as determined under section 11 of 
        Public Law 87-483 (76 Stat. 99)), the Nation may temporarily 
        forbear the delivery of the water supply of the Navajo 
        Reservoir for uses in the State of New Mexico under the 
        apportionments of water to the Navajo Indian Irrigation Project 
        and the normal diversion requirements of the Project to allow 
        an equivalent quantity of water to be delivered from the Navajo 
        Reservoir water supply for municipal and domestic uses of the 
        Nation in the State of Arizona under the Project.
          (2) Limitation of forbearance.--The Nation may forebear the 
        delivery of water under paragraph (1) of a quantity not 
        exceeding the quantity of the shortage to the normal diversion 
        requirement for any use relating to the Project within the 
        State of Arizona.
          (3) Effect.--The forbearance of the delivery of water under 
        paragraph (1) shall be subject to the requirements in 
        subsection (c).
  (e) Effect.--Nothing in this Act--
          (1) authorizes the marketing, leasing, or transfer of the 
        water supplies made available to the Nation under the Contract 
        to non-Navajo water users in States other than the State of New 
        Mexico; or
          (2) authorizes the forbearance of water uses in the State of 
        New Mexico to allow uses of water in other States other than as 
        authorized under subsection (d).
  (f) Colorado River Compacts.--Notwithstanding any other provision of 
law--
          (1) water may be diverted by the Project from the San Juan 
        River in the State of New Mexico for use within New Mexico in 
        the lower basin, as that term is used in the Colorado River 
        Compact;
          (2) any water diverted under paragraph (1) shall be a part 
        of, and charged against, the consumptive use apportionment made 
        to the State of New Mexico by Article III(a) of the Compact and 
        to the upper basin by Article III(a) of the Colorado River 
        Compact; and
          (3) any water so diverted by the Project into the lower basin 
        within the State of New Mexico shall not be credited as water 
        reaching Lee Ferry pursuant to Articles III(c) and III(d) of 
        the Colorado River Compact.
  (g) Payment of Operation, Maintenance, and Replacement Costs.--
          (1) In general.--The Secretary is authorized to pay the 
        operation, maintenance, and replacement costs of the Project 
        allocable to the Project Participants under section 304 until 
        the date on which the Secretary declares any section of the 
        Project to be substantially complete and delivery of water 
        generated by, and through, that section of the Project can be 
        made to a Project participant.
          (2) Project participant payments.--Beginning on the date 
        described in paragraph (1), each Project Participant shall pay 
        all allocated operation, maintenance, and replacement costs for 
        that substantially completed section of the Project, in 
        accordance with contracts entered into pursuant to section 304, 
        except as provided in section 304(f).

SEC. 304. PROJECT CONTRACTS.

  (a) Navajo Nation Contract.--
          (1) Hydrologic determination.--Congress recognizes that the 
        Hydrologic Determination necessary to support approval of the 
        Contract has been completed.
          (2) Contract approval.--
                  (A) Approval.--
                          (i) In general.--Except to the extent that 
                        any provision of the Contract conflicts with 
                        this Act, Congress approves, ratifies, and 
                        confirms the Contract.
                          (ii) Amendments.--To the extent any amendment 
                        is executed to make the Contract consistent 
                        with this Act, that amendment is authorized, 
                        ratified, and confirmed.
                  (B) Execution of contract.--The Secretary, acting on 
                behalf of the United States, shall enter into the 
                Contract to the extent that the Contract does not 
                conflict with this Act (including any amendment that is 
                required to make the Contract consistent with this 
                Act).
          (3) Nonreimbursability of allocated costs.--The following 
        costs shall be nonreimbursable and not subject to repayment by 
        the Nation or any other Project beneficiary:
                  (A) Any share of the construction costs of the Nation 
                relating to the Project authorized by section 302(a).
                  (B) Any costs relating to the construction of the 
                Navajo Indian Irrigation Project that may otherwise be 
                allocable to the Nation for use of any facility of the 
                Navajo Indian Irrigation Project to convey water to 
                each Navajo community under the Project.
                  (C) Any costs relating to the construction of Navajo 
                Dam that may otherwise be allocable to the Nation for 
                water deliveries under the Contract.
          (4) Operation, maintenance, and replacement obligation.--
        Subject to subsection (f), the Contract shall include 
        provisions under which the Nation shall pay any costs relating 
        to the operation, maintenance, and replacement of each facility 
        of the Project that are allocable to the Nation.
          (5) Limitation, cancellation, termination, and rescission.--
        The Contract may be limited by a term of years, canceled, 
        terminated, or rescinded only by an Act of Congress.
  (b) City of Gallup Contract.--
          (1) Contract authorization.--Consistent with this Act, the 
        Secretary is authorized to enter into a repayment contract with 
        the City that requires the City--
                  (A) to repay, within a 50-year period, the share of 
                the construction costs of the City relating to the 
                Project, with interest as provided under section 5; and
                  (B) consistent with section 303(g), to pay the 
                operation, maintenance, and replacement costs of the 
                Project that are allocable to the City.
          (2) Contract prepayment.--
                  (A) In general.--The contract authorized under 
                paragraph (1) may allow the City to satisfy the 
                repayment obligation of the City for construction costs 
                of the Project on the payment of the share of the City 
                prior to the initiation of construction.
                  (B) Amount.--The amount of the share of the City 
                described in subparagraph (A) shall be determined by 
                agreement between the Secretary and the City.
                  (C) Repayment obligation.--Any repayment obligation 
                established by the Secretary and the City pursuant to 
                subparagraph (A) shall be subject to a final cost 
                allocation by the Secretary on project completion and 
                to the limitations set forth in paragraph (3).
          (3) Share of construction costs.--
                  (A) In general.--Subject to subparagraph (B), the 
                Secretary shall determine the share of the construction 
                costs of the Project allocable to the City and 
                establish the percentage of the allocated construction 
                costs that the City shall be required to repay pursuant 
                to the contract entered into under paragraph (1), based 
                on the ability of the City to pay.
                  (B) Minimum percentage.--Notwithstanding subparagraph 
                (A), the repayment obligation of the City shall be at 
                least 25 percent of the construction costs of the 
                Project that are allocable to the City, but shall in no 
                event exceed 35 percent.
          (4) Excess construction costs.--Any construction costs of the 
        Project allocable to the City in excess of the repayment 
        obligation of the City, as determined under paragraph (3), 
        shall be nonreimbursable.
          (5) Grant funds.--A grant from any other Federal source shall 
        not be credited toward the amount required to be repaid by the 
        City under a repayment contract.
          (6) Title transfer.--If title is transferred to the City 
        prior to repayment under section 302(f), the City shall be 
        required to provide assurances satisfactory to the Secretary of 
        fulfillment of the remaining repayment obligation of the City.
          (7) Water delivery subcontract.--The Secretary shall not 
        enter into a contract under paragraph (1) with the City until 
        the City has secured a water supply for the City's portion of 
        the Project described in section 303(b)(2)(B), by entering 
        into, as approved by the Secretary, a water delivery 
        subcontract for a period of not less than 40 years beginning on 
        the date on which the construction of any facility of the 
        Project serving the City is completed, with--
                  (A) the Nation, as authorized by the Contract;
                  (B) the Jicarilla Apache Nation, as authorized by the 
                settlement contract between the United States and the 
                Jicarilla Apache Tribe, authorized by the Jicarilla 
                Apache Tribe Water Rights Settlement Act (Public Law 
                102-441; 106 Stat. 2237); or
                  (C) an acquired alternate source of water, subject to 
                approval of the Secretary and the State of New Mexico, 
                acting through the New Mexico Interstate Stream 
                Commission and the New Mexico State Engineer.
  (c) Jicarilla Apache Nation Contract.--
          (1) Contract authorization.--Consistent with this Act, the 
        Secretary is authorized to enter into a repayment contract with 
        the Jicarilla Apache Nation that requires the Jicarilla Apache 
        Nation--
                  (A) to repay, within a 50-year period, the share of 
                any construction cost of the Jicarilla Apache Nation 
                relating to the Project, with interest as provided 
                under section 5; and
                  (B) consistent with section 303(g), to pay the 
                operation, maintenance, and replacement costs of the 
                Project that are allocable to the Jicarilla Apache 
                Nation.
          (2) Contract prepayment.--
                  (A) In general.--The contract authorized under 
                paragraph (1) may allow the Jicarilla Apache Nation to 
                satisfy the repayment obligation of the Jicarilla 
                Apache Nation for construction costs of the Project on 
                the payment of the share of the Jicarilla Apache Nation 
                prior to the initiation of construction.
                  (B) Amount.--The amount of the share of Jicarilla 
                Apache Nation described in subparagraph (A) shall be 
                determined by agreement between the Secretary and the 
                Jicarilla Apache Nation.
                  (C) Repayment obligation.--Any repayment obligation 
                established by the Secretary and the Jicarilla Apache 
                Nation pursuant to subparagraph (A) shall be subject to 
                a final cost allocation by the Secretary on project 
                completion and to the limitations set forth in 
                paragraph (3).
          (3) Share of construction costs.--
                  (A) In general.--Subject to subparagraph (B), the 
                Secretary shall determine the share of the construction 
                costs of the Project allocable to the Jicarilla Apache 
                Nation and establish the percentage of the allocated 
                construction costs of the Jicarilla Apache Nation that 
                the Jicarilla Apache Nation shall be required to repay 
                based on the ability of the Jicarilla Apache Nation to 
                pay.
                  (B) Minimum percentage.--Notwithstanding subparagraph 
                (A), the repayment obligation of the Jicarilla Apache 
                Nation shall be at least 25 percent of the construction 
                costs of the Project that are allocable to the 
                Jicarilla Apache Nation, but shall in no event exceed 
                35 percent.
          (4) Excess construction costs.--Any construction costs of the 
        Project allocable to the Jicarilla Apache Nation in excess of 
        the repayment obligation of the Jicarilla Apache Nation as 
        determined under paragraph (3), shall be nonreimbursable.
          (5) Grant funds.--A grant from any other Federal source shall 
        not be credited toward the share of the Jicarilla Apache Nation 
        of construction costs.
          (6) Navajo indian irrigation project costs.--The Jicarilla 
        Apache Nation shall have no obligation to repay any Navajo 
        Indian Irrigation Project construction costs that might 
        otherwise be allocable to the Jicarilla Apache Nation for use 
        of the Navajo Indian Irrigation Project facilities to convey 
        water to the Jicarilla Apache Nation, and any such costs shall 
        be nonreimbursable.
  (d) Capital Cost Allocations.--
          (1) In general.--For purposes of estimating the capital 
        repayment requirements of the Project Participants under this 
        section, the Secretary shall review and, as appropriate, update 
        the Draft Impact Statement allocating capital construction 
        costs for the Project.
          (2) Final cost allocation.--The repayment contracts entered 
        into with Project Participants under this section shall require 
        that the Secretary perform a final cost allocation when 
        construction of the Project is determined to be substantially 
        complete.
          (3) Repayment obligation.--The Secretary shall determine the 
        repayment obligation of the Project Participants based on the 
        final cost allocation identifying reimbursable and 
        nonreimbursable capital costs of the Project consistent with 
        this Act.
  (e) Operation, Maintenance, and Replacement Cost Allocations.--For 
purposes of determining the operation, maintenance, and replacement 
obligations of the Project Participants under this section, the 
Secretary shall review and, as appropriate, update the Draft Impact 
Statement that allocates operation, maintenance, and replacement costs 
for the Project.
  (f) Temporary Waivers of Payments.--
          (1) In general.--On the date on which the Secretary declares 
        a section of the Project to be substantially complete and 
        delivery of water generated by and through that section of the 
        Project can be made to the Nation, the Secretary may waive, for 
        a period of not more than 10 years, the operation, maintenance, 
        and replacement costs allocable to the Nation for that section 
        of the Project that the Secretary determines are in excess of 
        the ability of the Nation to pay.
          (2) Subsequent payment by nation.--After a waiver under 
        paragraph (1), the Nation shall pay all allocated operation, 
        maintenance, and replacement costs of that section of the 
        Project.
          (3) Payment by united states.--Any operation, maintenance, or 
        replacement costs waived by the Secretary under paragraph (1) 
        shall be paid by the United States and shall be 
        nonreimbursable.
          (4) Effect on contracts.--Failure of the Secretary to waive 
        costs under paragraph (1) because of a lack of availability of 
        Federal funding to pay the costs under paragraph (3) shall not 
        alter the obligations of the Nation or the United States under 
        a repayment contract.
          (5) Termination of authority.--The authority of the Secretary 
        to waive costs under paragraph (1) with respect to a Project 
        facility transferred to the Nation under section 302(f) shall 
        terminate on the date on which the Project facility is 
        transferred.
  (g) Project Construction Committee.--The Secretary shall facilitate 
the formation of a project construction committee with the Project 
Participants and the State of New Mexico--
          (1) to review cost factors and budgets for construction and 
        operation and maintenance activities;
          (2) to improve construction management through enhanced 
        communication; and
          (3) to seek additional ways to reduce overall Project costs.

SEC. 305. NAVAJO NATION MUNICIPAL PIPELINE.

  (a) Use of Navajo Nation Pipeline.--In addition to use of the Navajo 
Nation Municipal Pipeline to convey the Animas-La Plata Project water 
of the Nation, the Nation may use the Navajo Nation Municipal Pipeline 
to convey non-Animas La Plata Project water for municipal and 
industrial purposes.
  (b) Conveyance of Title to Pipeline.--
          (1) In general.--On completion of the Navajo Nation Municipal 
        Pipeline, the Secretary may enter into separate agreements with 
        the City of Farmington, New Mexico and the Nation to convey 
        title to each portion of the Navajo Nation Municipal Pipeline 
        facility or section of the Pipeline to the City of Farmington 
        and the Nation after execution of a Project operations 
        agreement approved by the Secretary, the Nation, and the City 
        of Farmington that sets forth any terms and conditions that the 
        Secretary determines are necessary.
          (2) Conveyance to the city of farmington or navajo nation.--
        In conveying title to the Navajo Nation Municipal Pipeline 
        under this subsection, the Secretary shall convey--
                  (A) to the City of Farmington, the facilities and any 
                land or interest in land acquired by the United States 
                for the construction, operation, and maintenance of the 
                Pipeline that are located within the corporate 
                boundaries of the City; and
                  (B) to the Nation, the facilities and any land or 
                interests in land acquired by the United States for the 
                construction, operation, and maintenance of the 
                Pipeline that are located outside the corporate 
                boundaries of the City of Farmington.
          (3) Effect of conveyance.--The conveyance of title to the 
        Pipeline shall not affect the application of the Endangered 
        Species Act of 1973 (16 U.S.C. 1531 et seq.) relating to the 
        use of water associated with the Animas-La Plata Project.
          (4) Liability.--
                  (A) In general.--Effective on the date of the 
                conveyance authorized by this subsection, the United 
                States shall not be held liable by any court for 
                damages of any kind arising out of any act, omission, 
                or occurrence relating to the land, buildings, or 
                facilities conveyed under this subsection, other than 
                damages caused by acts of negligence committed by the 
                United States or by employees or agents of the United 
                States prior to the date of conveyance.
                  (B) Tort claims.--Nothing in this subsection 
                increases the liability of the United States beyond the 
                liability provided under chapter 171 of title 28, 
                United States Code (commonly known as the ``Federal 
                Tort Claims Act'').
          (5) Notice of proposed conveyance.--Not later than 45 days 
        before the date of a proposed conveyance of title to the 
        Pipeline, the Secretary shall submit to the Committee on 
        Natural Resources of the House of Representatives and the 
        Committee on Energy and Natural Resources of the Senate, notice 
        of the conveyance of the Pipeline.

SEC. 306. AUTHORIZATION OF CONJUNCTIVE USE WELLS.

  (a) Conjunctive Groundwater Development Plan.--Not later than 1 year 
after the date of enactment of this Act, the Nation, in consultation 
with the Secretary, shall complete a conjunctive groundwater 
development plan for the wells described in subsections (b) and (c).
  (b) Wells in the San Juan River Basin.--In accordance with the 
conjunctive groundwater development plan, the Secretary may construct 
or rehabilitate wells and related pipeline facilities to provide 
capacity for the diversion and distribution of not more than 1,670 
acre-feet of groundwater in the San Juan River Basin in the State of 
New Mexico for municipal and domestic uses.
  (c) Wells in the Little Colorado and Rio Grande Basins.--
          (1) In general.--In accordance with the Project and 
        conjunctive groundwater development plan for the Nation, the 
        Secretary may construct or rehabilitate wells and related 
        pipeline facilities to provide capacity for the diversion and 
        distribution of--
                  (A) not more than 680 acre-feet of groundwater in the 
                Little Colorado River Basin in the State of New Mexico;
                  (B) not more than 80 acre-feet of groundwater in the 
                Rio Grande Basin in the State of New Mexico; and
                  (C) not more than 770 acre-feet of groundwater in the 
                Little Colorado River Basin in the State of Arizona.
          (2) Use.--Groundwater diverted and distributed under 
        paragraph (1) shall be used for municipal and domestic uses.
  (d) Acquisition of Land.--
          (1) In general.--Except as provided in paragraph (2), the 
        Secretary may acquire any land or interest in land that is 
        necessary for the construction, operation, and maintenance of 
        the wells and related pipeline facilities authorized under 
        subsections (b) and (c).
          (2) Limitation.--Nothing in this subsection authorizes the 
        Secretary to condemn water rights for the purposes described in 
        paragraph (1).
  (e) Condition.--The Secretary shall not commence any construction 
activity relating to the wells described in subsections (b) and (c) 
until the Secretary executes the Agreement.
  (f) Conveyance of Wells.--
          (1) In general.--On the determination of the Secretary that 
        the wells and related facilities are substantially complete and 
        delivery of water generated by the wells can be made to the 
        Nation, an agreement with the Nation shall be entered into, to 
        convey to the Nation title to--
                  (A) any well or related pipeline facility constructed 
                or rehabilitated under subsections (a) and (b) after 
                the wells and related facilities have been completed; 
                and
                  (B) any land or interest in land acquired by the 
                United States for the construction, operation, and 
                maintenance of the well or related pipeline facility.
          (2) Operation, maintenance, and replacement.--
                  (A) In general.--The Secretary is authorized to pay 
                operation and maintenance costs for the wells and 
                related pipeline facilities authorized under this 
                subsection until title to the facilities is conveyed to 
                the Nation.
                  (B) Subsequent assumption by nation.--On completion 
                of a conveyance of title under paragraph (1), the 
                Nation shall assume all responsibility for the 
                operation and maintenance of the well or related 
                pipeline facility conveyed.
          (3) Effect of conveyance.--The conveyance of title to the 
        Nation of the conjunctive use wells under paragraph (1) shall 
        not affect the application of the Endangered Species Act of 
        1973 (16 U.S.C. 1531 et seq.).
  (g) Use of Project Facilities.--The capacities of the treatment 
facilities, main pipelines, and lateral pipelines of the Project 
authorized by section 302(b) may be used to treat and convey 
groundwater to Nation communities if the Nation provides for payment of 
the operation, maintenance, and replacement costs associated with the 
use of the facilities or pipelines.
  (h) Limitations.--The diversion and use of groundwater by wells 
constructed or rehabilitated under this section shall be made in a 
manner consistent with applicable Federal and State law.

SEC. 307. SAN JUAN RIVER NAVAJO IRRIGATION PROJECTS.

  (a) Rehabilitation.--Subject to subsection (b), the Secretary shall 
rehabilitate--
          (1) the Fruitland-Cambridge Irrigation Project to serve not 
        more than 3,335 acres of land, which shall be considered to be 
        the total serviceable area of the project; and
          (2) the Hogback-Cudei Irrigation Project to serve not more 
        than 8,830 acres of land, which shall be considered to be the 
        total serviceable area of the project.
  (b) Condition.--The Secretary shall not commence any construction 
activity relating to the rehabilitation of the Fruitland-Cambridge 
Irrigation Project or the Hogback-Cudei Irrigation Project under 
subsection (a) until the Secretary executes the Agreement.
  (c) Operation, Maintenance, and Replacement Obligation.--The Nation 
shall continue to be responsible for the operation, maintenance, and 
replacement of each facility rehabilitated under this section.

SEC. 308. OTHER IRRIGATION PROJECTS.

  (a) In General.--Not later than 2 years after the date of enactment 
of this Act, the Secretary, in consultation with the State of New 
Mexico (acting through the Interstate Stream Commission) and the Non-
Navajo Irrigation Districts that elect to participate, shall--
          (1) conduct a study of Non-Navajo Irrigation District 
        diversion and ditch facilities; and
          (2) based on the study, identify and prioritize a list of 
        projects, with associated cost estimates, that are recommended 
        to be implemented to repair, rehabilitate, or reconstruct 
        irrigation diversion and ditch facilities to improve water use 
        efficiency.
  (b) Grants.--The Secretary may provide grants to, and enter into 
cooperative agreements with, the Non-Navajo Irrigation Districts to 
plan, design, or otherwise implement the projects identified under 
subsection (a)(2).
  (c) Cost-Sharing.--
          (1) Federal share.--The Federal share of the total cost of 
        carrying out a project under subsection (b) shall be not more 
        than 50 percent, and shall be nonreimbursable.
          (2) Form.--The non-Federal share required under paragraph (1) 
        may be in the form of in-kind contributions, including the 
        contribution of any valuable asset or service that the 
        Secretary determines would substantially contribute to a 
        project carried out under subsection (b).
          (3) State contribution.--The Secretary may accept from the 
        State of New Mexico a partial or total contribution toward the 
        non-Federal share for a project carried out under subsection 
        (b).

SEC. 309. AUTHORIZATION OF APPROPRIATIONS.

  (a) Authorization of Appropriations for Navajo-Gallup Water Supply 
Project.--
          (1) In general.--There is authorized to be appropriated to 
        the Secretary to plan, design, and construct the Project 
        $870,000,000 for the period of fiscal years 2009 through 2024, 
        to remain available until expended.
          (2) Adjustments.--The amount under paragraph (1) shall be 
        adjusted by such amounts as may be required by reason of 
        changes since 2007 in construction costs, as indicated by 
        engineering cost indices applicable to the types of 
        construction involved.
          (3) Use.--In addition to the uses authorized under paragraph 
        (1), amounts made available under that paragraph may be used 
        for the conduct of related activities to comply with Federal 
        environmental laws.
          (4) Operation and maintenance.--
                  (A) In general.--There are authorized to be 
                appropriated such sums as are necessary to operate and 
                maintain the Project consistent with this Act.
                  (B) Expiration.--The authorization under subparagraph 
                (A) shall expire 10 years after the year the Secretary 
                declares the Project to be substantially complete.
  (b) Appropriations for Conjunctive Use Wells.--
          (1) San juan wells.--There is authorized to be appropriated 
        to the Secretary for the construction or rehabilitation and 
        operation and maintenance of conjunctive use wells under 
        section 306(b) $30,000,000, as adjusted under paragraph (3), 
        for the period of fiscal years 2009 through 2019.
          (2) Wells in the little colorado and rio grande basins.--
        There are authorized to be appropriated to the Secretary for 
        the construction or rehabilitation and operation and 
        maintenance of conjunctive use wells under section 306(c) such 
        sums as are necessary for the period of fiscal years 2009 
        through 2024.
          (3) Adjustments.--The amount under paragraph (1) shall be 
        adjusted by such amounts as may be required by reason of 
        changes since 2008 in construction costs, as indicated by 
        engineering cost indices applicable to the types of 
        construction or rehabilitation involved.
          (4) Nonreimbursable expenditures.--Amounts made available 
        under paragraphs (1) and (2) shall be nonreimbursable to the 
        United States.
          (5) Use.--In addition to the uses authorized under paragraphs 
        (1) and (2), amounts made available under that paragraph may be 
        used for the conduct of related activities to comply with 
        Federal environmental laws.
          (6) Limitation.--Appropriations authorized under paragraph 
        (1) shall not be used for operation or maintenance of any 
        conjunctive use wells at a time in excess of 3 years after the 
        well is declared substantially complete.
  (c) San Juan River Irrigation Projects.--
          (1) In general.--There are authorized to be appropriated to 
        the Secretary--
                  (A) to carry out section 307(a)(1), not more than 
                $7,700,000, as adjusted under paragraph (2), for the 
                period of fiscal years 2009 through 2015, to remain 
                available until expended; and
                  (B) to carry out section 307(a)(2), not more than 
                $15,400,000, as adjusted under paragraph (2), for the 
                period of fiscal years 2009 through 2018, to remain 
                available until expended.
          (2) Adjustment.--The amounts made available under paragraph 
        (1) shall be adjusted by such amounts as may be required by 
        reason of changes since January 1, 2004, in construction costs, 
        as indicated by engineering cost indices applicable to the 
        types of construction involved in the rehabilitation.
          (3) Nonreimbursable expenditures.--Amounts made available 
        under this subsection shall be nonreimbursable to the United 
        States.
  (d) Other Irrigation Projects.--There are authorized to be 
appropriated to the Secretary to carry out section 308 $11,000,000 for 
the period of fiscal years 2009 through 2018.
  (e) Cultural Resources.--
          (1) In general.--The Secretary may use not more than 2 
        percent of amounts made available under subsections (a), (b), 
        and (c) for the survey, recovery, protection, preservation, and 
        display of archaeological resources in the area of a Project 
        facility or conjunctive use well.
          (2) Nonreimbursable expenditures.--Any amounts made available 
        under paragraph (1) shall be nonreimbursable.
  (f) Fish and Wildlife Facilities.--
          (1) In general.--In association with the development of the 
        Project, the Secretary may use not more than 4 percent of 
        amounts made available under subsections (a), (b), and (c) to 
        purchase land and construct and maintain facilities to mitigate 
        the loss of, and improve conditions for the propagation of, 
        fish and wildlife if any such purchase, construction, or 
        maintenance will not affect the operation of any water project 
        or use of water.
          (2) Nonreimbursable expenditures.--Any amounts expended under 
        paragraph (1) shall be nonreimbursable.

                  TITLE IV--NAVAJO NATION WATER RIGHTS

SEC. 401. AGREEMENT.

  (a) Agreement Approval.--
          (1) Approval by congress.--Except to the extent that any 
        provision of the Agreement conflicts with this Act, Congress 
        approves, ratifies, and confirms the Agreement (including any 
        amendments to the Agreement that are executed to make the 
        Agreement consistent with this Act).
          (2) Execution by secretary.--The Secretary shall enter into 
        the Agreement to the extent that the Agreement does not 
        conflict with this Act, including--
                  (A) any exhibits to the Agreement requiring the 
                signature of the Secretary; and
                  (B) any amendments to the Agreement necessary to make 
                the Agreement consistent with this Act.
          (3) Authority of secretary.--The Secretary may carry out any 
        action that the Secretary determines is necessary or 
        appropriate to implement the Agreement, the Contract, and this 
        section.
          (4) Administration of navajo reservoir releases.--The State 
        of New Mexico may administer water that has been released from 
        storage in Navajo Reservoir in accordance with subparagraph 9.1 
        of the Agreement.
  (b) Water Available Under Contract.--
          (1) Quantities of water available.--
                  (A) In general.--Water shall be made available 
                annually under the Contract for projects in the State 
                of New Mexico supplied from the Navajo Reservoir and 
                the San Juan River (including tributaries of the River) 
                under New Mexico State Engineer File Numbers 2849, 
                2883, and 3215 in the quantities described in 
                subparagraph (B).
                  (B) Water quantities.--The quantities of water 
                referred to in subparagraph (A) are as follows:

------------------------------------------------------------------------
                                                    Diversion  Depletion
                                                      (acre-     (acre-
                                                      feet/      feet/
                                                      year)      year)
------------------------------------------------------------------------
Navajo Indian Irrigation Project                      508,000   270,000
Navajo-Gallup Water Supply Project                     22,650    20,780
Animas-La Plata Project                                 4,680     2,340
Total                                                 535,330   293,120
------------------------------------------------------------------------

                  (C) Maximum quantity.--A diversion of water to the 
                Nation under the Contract for a project described in 
                subparagraph (B) shall not exceed the quantity of water 
                necessary to supply the amount of depletion for the 
                project.
                  (D) Terms, conditions, and limitations.--The 
                diversion and use of water under the Contract shall be 
                subject to and consistent with the terms, conditions, 
                and limitations of the Agreement, this Act, and any 
                other applicable law.
          (2) Amendments to contract.--The Secretary, with the consent 
        of the Nation, may amend the Contract if the Secretary 
        determines that the amendment is--
                  (A) consistent with the Agreement; and
                  (B) in the interest of conserving water or 
                facilitating beneficial use by the Nation or a 
                subcontractor of the Nation.
          (3) Rights of the nation.--The Nation may, under the 
        Contract--
                  (A) use tail water, wastewater, and return flows 
                attributable to a use of the water by the Nation or a 
                subcontractor of the Nation if--
                          (i) the depletion of water does not exceed 
                        the quantities described in paragraph (1); and
                          (ii) the use of tail water, wastewater, or 
                        return flows is consistent with the terms, 
                        conditions, and limitations of the Agreement, 
                        and any other applicable law; and
                  (B) change a point of diversion, change a purpose or 
                place of use, and transfer a right for depletion under 
                this Act (except for a point of diversion, purpose or 
                place of use, or right for depletion for use in the 
                State of Arizona under section 303(b)(2)(D)), to 
                another use, purpose, place, or depletion in the State 
                of New Mexico to meet a water resource or economic need 
                of the Nation if--
                          (i) the change or transfer is subject to and 
                        consistent with the terms of the Agreement, the 
                        Partial Final Decree described in paragraph 3.0 
                        of the Agreement, the Contract, and any other 
                        applicable law; and
                          (ii) a change or transfer of water use by the 
                        Nation does not alter any obligation of the 
                        United States, the Nation, or another party to 
                        pay or repay project construction, operation, 
                        maintenance, or replacement costs under this 
                        Act and the Contract.
  (c) Subcontracts.--
          (1) In general.--
                  (A) Subcontracts between nation and third parties.--
                The Nation may enter into subcontracts for the delivery 
                of Project water under the Contract to third parties 
                for any beneficial use in the State of New Mexico (on 
                or off land held by the United States in trust for the 
                Nation or a member of the Nation or land held in fee by 
                the Nation).
                  (B) Approval required.--A subcontract entered into 
                under subparagraph (A) shall not be effective until 
                approved by the Secretary in accordance with this 
                subsection and the Contract.
                  (C) Submittal.--The Nation shall submit to the 
                Secretary for approval or disapproval any subcontract 
                entered into under this subsection.
                  (D) Deadline.--The Secretary shall approve or 
                disapprove a subcontract submitted to the Secretary 
                under subparagraph (C) not later than the later of--
                          (i) the date that is 180 days after the date 
                        on which the subcontract is submitted to the 
                        Secretary; and
                          (ii) the date that is 60 days after the date 
                        on which a subcontractor complies with--
                                  (I) section 102(2)(C) of the National 
                                Environmental Policy Act of 1969 (42 
                                U.S.C. 4332(2)(C)); and
                                  (II) any other requirement of Federal 
                                law.
                  (E) Enforcement.--A party to a subcontract may 
                enforce the deadline described in subparagraph (D) 
                under section 1361 of title 28, United States Code.
                  (F) Compliance with other law.--A subcontract 
                described in subparagraph (A) shall comply with the 
                Agreement, the Partial Final Decree described in 
                paragraph 3.0 of the Agreement, and any other 
                applicable law.
                  (G) No liability.--The Secretary shall not be liable 
                to any party, including the Nation, for any term of, or 
                any loss or other detriment resulting from, a lease, 
                contract, or other agreement entered into pursuant to 
                this subsection.
          (2) Alienation.--
                  (A) Permanent alienation.--The Nation shall not 
                permanently alienate any right granted to the Nation 
                under the Contract.
                  (B) Maximum term.--The term of any water use 
                subcontract (including a renewal) under this subsection 
                shall be not more than 99 years.
          (3) Nonintercourse act compliance.--This subsection--
                  (A) provides congressional authorization for the 
                subcontracting rights of the Nation; and
                  (B) is deemed to fulfill any requirement that may be 
                imposed by section 2116 of the Revised Statutes (25 
                U.S.C. 177).
          (4) Forfeiture.--The nonuse of the water supply secured by a 
        subcontractor of the Nation under this subsection shall not 
        result in forfeiture, abandonment, relinquishment, or other 
        loss of any part of a right decreed to the Nation under the 
        Contract or this section.
          (5) No per capita payments.--No part of the revenue from a 
        water use subcontract under this subsection shall be 
        distributed to any member of the Nation on a per capita basis.
  (d) Water Leases Not Requiring Subcontracts.--
          (1) Authority of nation.--
                  (A) In general.--The Nation may lease, contract, or 
                otherwise transfer to another party or to another 
                purpose or place of use in the State of New Mexico (on 
                or off land that is held by the United States in trust 
                for the Nation or a member of the Nation or held in fee 
                by the Nation) a water right that--
                          (i) is decreed to the Nation under the 
                        Agreement; and
                          (ii) is not subject to the Contract.
                  (B) Compliance with other law.--In carrying out an 
                action under this subsection, the Nation shall comply 
                with the Agreement, the Partial Final Decree described 
                in paragraph 3.0 of the Agreement, the Supplemental 
                Partial Final Decree described in paragraph 4.0 of the 
                Agreement, and any other applicable law.
          (2) Alienation; maximum term.--
                  (A) Alienation.--The Nation shall not permanently 
                alienate any right granted to the Nation under the 
                Agreement.
                  (B) Maximum term.--The term of any water use lease, 
                contract, or other arrangement (including a renewal) 
                under this subsection shall be not more than 99 years.
          (3) No liability.--The Secretary shall not be liable to any 
        party, including the Nation, for any term of, or any loss or 
        other detriment resulting from, a lease, contract, or other 
        agreement entered into pursuant to this subsection.
          (4) Nonintercourse act compliance.--This subsection--
                  (A) provides congressional authorization for the 
                lease, contracting, and transfer of any water right 
                described in paragraph (1)(A); and
                  (B) is deemed to fulfill any requirement that may be 
                imposed by the provisions of section 2116 of the 
                Revised Statutes (25 U.S.C. 177).
          (5) Forfeiture.--The nonuse of a water right of the Nation by 
        a lessee or contractor to the Nation under this subsection 
        shall not result in forfeiture, abandonment, relinquishment, or 
        other loss of any part of a right decreed to the Nation under 
        the Contract or this section.
  (e) Nullification.--
          (1) Deadlines.--
                  (A) In general.--In carrying out this section, the 
                following deadlines apply with respect to 
                implementation of the Agreement:
                          (i) Agreement.--Not later than December 31, 
                        2009, the Secretary shall execute the 
                        Agreement.
                          (ii) Contract.--Not later than December 31, 
                        2009, the Secretary and the Nation shall 
                        execute the Contract.
                          (iii) Partial final decree.--Not later than 
                        December 31, 2012, the court in the stream 
                        adjudication shall have entered the Partial 
                        Final Decree described in paragraph 3.0 of the 
                        Agreement.
                          (iv) Fruitland-cambridge irrigation 
                        project.--Not later than December 31, 2015, the 
                        rehabilitation construction of the Fruitland-
                        Cambridge Irrigation Project authorized under 
                        section 307(a)(1) shall be completed.
                          (v) Supplemental partial final decree.--Not 
                        later than December 31, 2015, the court in the 
                        stream adjudication shall enter the 
                        Supplemental Partial Final Decree described in 
                        subparagraph 4.0 of the Agreement.
                          (vi) Hogback-cudei irrigation project.--Not 
                        later than December 31, 2018, the 
                        rehabilitation construction of the Hogback-
                        Cudei Irrigation Project authorized under 
                        section 307(a)(2) shall be completed.
                          (vii) Trust fund.--Not later than December 
                        31, 2019, the United States shall make all 
                        deposits into the Trust Fund under section 402.
                          (viii) Conjunctive wells.--Not later than 
                        December 31, 2019, the funds authorized to be 
                        appropriated under section 309(b)(1) for the 
                        conjunctive use wells authorized under section 
                        306(b) should be appropriated.
                          (ix) Navajo-gallup water supply project.--Not 
                        later than December 31, 2024, the construction 
                        of all Project facilities shall be completed.
                  (B) Extension.--A deadline described in subparagraph 
                (A) may be extended if the Nation, the United States 
                (acting through the Secretary), and the State of New 
                Mexico (acting through the New Mexico Interstate Stream 
                Commission) agree that an extension is reasonably 
                necessary.
          (2) Revocability of agreement, contract and authorizations.--
                  (A) Petition.--If the Nation determines that a 
                deadline described in paragraph (1)(A) is not 
                substantially met, the Nation may submit to the court 
                in the stream adjudication a petition to enter an order 
                terminating the Agreement and Contract.
                  (B) Termination.--On issuance of an order to 
                terminate the Agreement and Contract under subparagraph 
                (A)--
                          (i) the Trust Fund shall be terminated;
                          (ii) the balance of the Trust Fund shall be 
                        deposited in the general fund of the Treasury;
                          (iii) the authorizations for construction and 
                        rehabilitation of water projects under this Act 
                        shall be revoked and any Federal activity 
                        related to that construction and rehabilitation 
                        shall be suspended; and
                          (iv) this title and titles I and III shall be 
                        null and void.
          (3) Conditions not causing nullification of settlement.--
                  (A) In general.--If a condition described in 
                subparagraph (B) occurs, the Agreement and Contract 
                shall not be nullified or terminated.
                  (B) Conditions.--The conditions referred to in 
                subparagraph (A) are as follows:
                          (i) A lack of right to divert at the 
                        capacities of conjunctive use wells constructed 
                        or rehabilitated under section 306.
                          (ii) A failure--
                                  (I) to determine or resolve an 
                                accounting of the use of water under 
                                this Act in the State of Arizona;
                                  (II) to obtain a necessary water 
                                right for the consumptive use of water 
                                in Arizona;
                                  (III) to contract for the delivery of 
                                water for use in Arizona; or
                                  (IV) to construct and operate a 
                                lateral facility to deliver water to a 
                                community of the Nation in Arizona, 
                                under the Project.
  (f) Effect on Rights of Indian Tribes.--
          (1) In general.--Except as provided in paragraph (2), nothing 
        in the Agreement, the Contract, or this section quantifies or 
        adversely affects the land and water rights, or claims or 
        entitlements to water, of any Indian tribe or community other 
        than the rights, claims, or entitlements of the Nation in, to, 
        and from the San Juan River Basin in the State of New Mexico.
          (2) Exception.--The right of the Nation to use water under 
        water rights the Nation has in other river basins in the State 
        of New Mexico shall be forborne to the extent that the Nation 
        supplies the uses for which the water rights exist by 
        diversions of water from the San Juan River Basin under the 
        Project consistent with subparagraph 9.13 of the Agreement.

SEC. 402. TRUST FUND.

  (a) Establishment.--There is established in the Treasury a fund to be 
known as the ``Navajo Nation Water Resources Development Trust Fund'', 
consisting of--
          (1) such amounts as are appropriated to the Trust Fund under 
        subsection (f); and
          (2) any interest earned on investment of amounts in the Trust 
        Fund under subsection (d).
  (b) Use of Funds.--The Nation may use amounts in the Trust Fund--
          (1) to investigate, construct, operate, maintain, or replace 
        water project facilities, including facilities conveyed to the 
        Nation under this Act and facilities owned by the United States 
        for which the Nation is responsible for operation, maintenance, 
        and replacement costs; and
          (2) to investigate, implement, or improve a water 
        conservation measure (including a metering or monitoring 
        activity) necessary for the Nation to make use of a water right 
        of the Nation under the Agreement.
  (c) Management.--The Secretary shall manage the Trust Fund, invest 
amounts in the Trust Fund, and make amounts available from the Trust 
Fund for distribution to the Nation in accordance with the American 
Indian Trust Fund Management Reform Act of 1994 (25 U.S.C. 4001 et 
seq.).
  (d) Investment of the Trust Fund.--The Secretary shall invest amounts 
in the Trust Fund in accordance with--
          (1) the Act of April 1, 1880 (25 U.S.C. 161);
          (2) the first section of the Act of June 24, 1938 (25 U.S.C. 
        162a); and
          (3) the American Indian Trust Fund Management Reform Act of 
        1994 (25 U.S.C. 4001 et seq.).
  (e) Conditions for Expenditures and Withdrawals.--
          (1) Tribal management plan.--
                  (A) In general.--Subject to paragraph (7), on 
                approval by the Secretary of a tribal management plan 
                in accordance with the American Indian Trust Fund 
                Management Reform Act of 1994 (25 U.S.C. 4001 et seq.), 
                the Nation may withdraw all or a portion of the amounts 
                in the Trust Fund.
                  (B) Requirements.--In addition to any requirements 
                under the American Indian Trust Fund Management Reform 
                Act of 1994 (25 U.S.C. 4001 et seq.), the tribal 
                management plan shall require that the Nation only use 
                amounts in the Trust Fund for the purposes described in 
                subsection (b), including the identification of water 
                conservation measures to be implemented in association 
                with the agricultural water use of the Nation.
          (2) Enforcement.--The Secretary may take judicial or 
        administrative action to enforce the provisions of any tribal 
        management plan to ensure that any amounts withdrawn from the 
        Trust Fund are used in accordance with this Act.
          (3) No liability.--Neither the Secretary nor the Secretary of 
        the Treasury shall be liable for the expenditure or investment 
        of any amounts withdrawn from the Trust Fund by the Nation.
          (4) Expenditure plan.--
                  (A) In general.--The Nation shall submit to the 
                Secretary for approval an expenditure plan for any 
                portion of the amounts in the Trust Fund made available 
                under this section that the Nation does not withdraw 
                under this subsection.
                  (B) Description.--The expenditure plan shall describe 
                the manner in which, and the purposes for which, funds 
                of the Nation remaining in the Trust Fund will be used.
                  (C) Approval.--On receipt of an expenditure plan 
                under subparagraph (A), the Secretary shall approve the 
                plan if the Secretary determines that the plan is 
                reasonable and consistent with this Act.
          (5) Annual report.--The Nation shall submit to the Secretary 
        an annual report that describes any expenditures from the Trust 
        Fund during the year covered by the report.
          (6) Limitation.--No portion of the amounts in the Trust Fund 
        shall be distributed to any Nation member on a per capita 
        basis.
          (7) Conditions.--Any amount authorized to be appropriated to 
        the Trust Fund under subsection (f) shall not be available for 
        expenditure or withdrawal--
                  (A) before December 31, 2019; and
                  (B) until the date on which the court in the stream 
                adjudication has entered--
                          (i) the Partial Final Decree; and
                          (ii) the Supplemental Partial Final Decree.
  (f) Authorization of Appropriations.--There are authorized to be 
appropriated for deposit in the Trust Fund--
          (1) $6,000,000 for each of fiscal years 2009 through 2013; 
        and
          (2) $4,000,000 for each of fiscal years 2014 through 2018.

SEC. 403. WAIVERS AND RELEASES.

  (a) Claims by the Nation and the United States.--The Nation, on 
behalf of itself and members of the Nation (other than members in the 
capacity of the members as allottees), and the United States, acting 
through the Secretary and in the capacity of the United States as 
trustee for the Nation, shall each execute a waiver and release of--
          (1) all claims for water rights in, or for waters of, the San 
        Juan River Basin in the State of New Mexico that the Nation, or 
        the United States as trustee for the Nation, asserted, or could 
        have asserted, in the San Juan River adjudication or in any 
        other court proceeding;
          (2) all claims that the Nation, or the United States as 
        trustee for the Nation, has asserted or could assert for any 
        damage, loss, or injury to water rights or claims of 
        interference, diversion, or taking of water in the San Juan 
        Basin in the State of New Mexico that, regardless of whether 
        the damage, loss, or injury is unanticipated, unexpected, or 
        unknown--
                  (A) accrued at any time before or on the effective 
                date of the waiver and release under subsection (d); 
                and
                  (B) may or may not be more numerous or more serious 
                than is understood or expected; and
          (3) all claims of any damage, loss, or injury or for 
        injunctive or other relief because of the condition of or 
        changes in water quality related to, or arising out of, the 
        exercise of water rights.
  (b) Claims by the Nation Against the United States.--The Nation, on 
behalf of itself and its members (other than members in the capacity of 
the members as allottees), shall execute a waiver and release of--
          (1) all causes of action that the Nation or the members of 
        the Nation (other than members in the capacity of the members 
        as allottees) may have against the United States or any 
        agencies or employees of the United States, arising out of 
        claims for water rights in, or waters of, the San Juan River 
        Basin in the State of New Mexico that the United States 
        asserted, or could have asserted, in the stream adjudication or 
        other court proceeding;
          (2) all claims for any damage, loss, or injury to water 
        rights, claims of interference, diversion or taking of water, 
        or failure to protect, acquire, or develop water or water 
        rights for land within the San Juan Basin in the State of New 
        Mexico that, regardless whether the damage, loss, or injury is 
        unanticipated, unexpected, or unknown--
                  (A) accrued at any time before or on the effective 
                date of the waiver and release under subsection (d); 
                and
                  (B) may or may not be more numerous or more serious 
                than is understood or expected; and
          (3) all claims arising out of, resulting from, or relating in 
        any manner to the negotiation, execution or adoption of the 
        Agreement, the Contract, or this Act (including any specific 
        terms and provisions of the Agreement, the Contract, or this 
        Act) that the Nation may have against the United States or any 
        agencies or employees of the United States.
  (c) Reservation of Claims.--Notwithstanding subsections (a) and (b), 
the Nation and the members of the Nation (including members in the 
capacity of the members as allottees) and the United States, as trustee 
for the Nation and allottees, shall retain--
          (1) all claims for water rights or injuries to water rights 
        arising out of activities occurring outside the San Juan River 
        Basin in the State of New Mexico, subject to paragraphs 8.0, 
        9.3, 9.12, 9.13 and 13.9 of the Agreement;
          (2) all claims for enforcement of the Agreement, the 
        Contract, the Partial Final Decree, the Supplemental Partial 
        Final Decree, or this Act, through any legal and equitable 
        remedies available in any court of competent jurisdiction;
          (3) all rights to use and protect water rights acquired 
        pursuant to State law after the effective date of the waivers 
        and releases described in subsection (d);
          (4) all claims relating to activities affecting the quality 
        of water not related to the exercise of water rights; and
          (5) all rights, remedies, privileges, immunities, and powers 
        not specifically waived and released under the terms of the 
        Agreement or this Act.
  (d) Effective Date.--
          (1) In general.--The waivers and releases described in 
        subsection (a) shall be effective on the date on which the 
        Secretary publishes in the Federal Register a statement of 
        findings documenting that each of the deadlines described in 
        section 401(e)(1) have been met.
          (2) Deadline.--If the deadlines in section 401(e)(1)(A) have 
        not been met by the later of March 1, 2025, or the date of any 
        extension under section 401(e)(1)(B)--
                  (A) the waivers and releases described in subsection 
                (a) shall be of no effect; and
                  (B) section 401(e)(2)(B) shall apply.

SEC. 404. WATER RIGHTS HELD IN TRUST.

  A tribal water right adjudicated and described in paragraph 3.0 of 
the Partial Final Decree and in paragraph 3.0 of the Supplemental 
Partial Final Decree shall be held in trust by the United States on 
behalf of the Nation.

                         Purpose of the Measure

    The purpose of S. 1171 is to amend the Colorado River 
Storage Project Act and Public Law 87-483 to authorize the 
construction and rehabilitation of water infrastructure in 
Northwestern New Mexico, to authorize the use of the 
reclamation fund to fund the Reclamation Water Settlements 
Fund, to authorize the conveyance of certain Reclamation land 
and infrastructure, to authorize the Commissioner of 
Reclamation to provide for the delivery of water, and for other 
purposes.

                          Background and Need

    In 1975, the State of New Mexico initiated a general stream 
adjudication to determine the quantity and priority of water 
rights in the San Juan River basin in New Mexico (State of New 
Mexico v. United States of America, Civ. No. 75-184 (11th 
Judicial Dist.)). The San Juan River is a tributary of the 
Colorado River and flows through the northwest portion of the 
state. The adjudication has been pending for over thirty years, 
and S. 1171 would implement a settlement to resolve the Navajo 
Nation's water rights, the largest claims in the adjudication.
    The basis for the legislation is a settlement agreement 
executed by the Navajo Nation and the State of New Mexico on 
April 19, 2005, which requires Federal legislation to take 
effect. The agreement recognizes approximately 600,000 acre-
feet per year (afy) of water rights available to the Navajo 
Nation for agricultural, municipal, industrial, domestic, and 
stock watering purposes, in return for a waiver of additional 
water rights and associated liability claims. A majority of the 
Navajo rights that would be adjudicated through the settlement 
have been recognized by prior federal laws, some of which are 
now proposed for amendment by S. 1171. The most significant of 
these is Public Law 87-483 (1962) which authorized construction 
of the Navajo Indian Irrigation Project (NIIP). The water 
supply for NIIP is provided by Navajo Reservoir, a Bureau of 
Reclamation project authorized by the 1956 Colorado River 
Storage Project Act. Public Law 87-483 also recognized the 
existence of several other Navajo irrigation projects, 
encompassing approximately 11,000 acres. Notwithstanding the 
1962 law, NIIP has not been fully constructed. The settlement 
agreement and legislation amend Public Law 87-483 to allow the 
Navajo Nation to use the NIIP water supply for other purposes; 
establishes conditions that apply to any changes of use; and 
caps overall diversions of water for NIIP. There are also 
provisions specifically negotiated to protect existing water 
users in the basin.
    S. 1171 also provides the means to address an ongoing need 
for drinking water on the Navajo Reservation through the 
construction of the Navajo-Gallup Pipeline Project 
(``Project''). Authorization and construction of the Project is 
critical to the Navajo Nation, and integral to the Nation's 
agreement to waive additional claims to water. According to an 
analysis performed by the U.S. Bureau of Reclamation, over 40% 
of Navajo households rely on water hauling to meet daily water 
needs. Also, 40% of Navajo families have incomes below the 
poverty level, compared with less than 10% nationwide. The lack 
of infrastructure, economic development, and sustained poverty 
are all closely connected. A reliable water supply is essential 
for stimulating and sustaining economic development in the 
region. The Project, by itself, will not eliminate water 
hauling on the Reservation, but it will reduce it by providing 
a reliable water supply of good quality much closer to many 
Navajo communities. The Project will also hook into existing 
distribution systems. Ultimately, the Project is expected to 
serve in excess of 203,000 tribal members in 43 different 
Navajo communities.
    The Project will also serve other needs in New Mexico by 
providing a significant water supply to the city of Gallup, New 
Mexico, and, potentially, a smaller quantity to the Jicarilla 
Apache Tribe. Currently, Gallup relies on groundwater pumping 
to supply water to its residents. Due to falling water levels, 
the City anticipates significant shortages sometime between 
2010 and 2016. The construction of the Project is critical to 
provide a long-term sustainable water supply to Gallup which 
expects to have a population of 47,000 people by 2040.
    On March 30, 2007, the Bureau of Reclamation released a 
draft Environmental Impact Statement for the Navajo-Gallup 
Project which analyzes several alternatives for the Project. 
Another procedural hurdle was crossed in May 2006 when the 
Bureau of Reclamation issued a draft hydrologic determination 
finding that sufficient water exists from New Mexico's Upper 
Colorado River Basin allocation for Project needs through at 
least 2060. The Secretary of the Interior (Secretary) announced 
the approval of the hydrologic determination on June 8, 2007. 
Based on Reclamation's work, the Upper Colorado River 
Commission (representing Colorado, Wyoming, Utah, and New 
Mexico) approved a resolution in June 2006, supporting 
Congressional action to: (1) approve the Settlement Agreement; 
and (2) authorize the Navajo-Gallup Water Supply Project.

                          Legislative History

    S. 1171 was introduced in the Senate on April 19, 2007 by 
Senator Bingaman for himself and Senator Domenici, and referred 
to the Committee on Energy and Natural Resources. The full 
committee held a hearing on S. 1171 on June 27, 2007. (S. Hrg. 
110-148.) At its business meeting on May 7, 2008, the Committee 
on Energy and Natural Resources ordered S. 1171 favorably 
reported as amended.

                        Committee Recommendation

    The Committee on Energy and Natural Resources, in open 
business session on May 7, 2008, by voice vote of a quorum 
present, recommends that the Senate pass S. 1171, if amended as 
described herein.

                          Committee Amendment

    During the consideration of S. 1171, the Committee adopted 
a substitute amendment to improve the bill. The amendment 
incorporates a number of changes to several areas of the bill. 
The bill was amended to incorporate new definitions and to 
clarify that the new authorizations in S. 1171 would not result 
in a reallocation of costs under existing laws. There is also a 
new section that specifies the interest rate applicable to any 
new repayment contracts entered into by the Bureau of 
Reclamation.
    Title I is amended in several places. These changes include 
modifications that clarify how the bill would change existing 
law, certain rights and responsibilities of the Navajo Nation 
with respect to existing facilities; and how shortages would be 
addressed for water made available from Navajo Reservoir.
    Title II incorporates changes which have the effect of 
increasing the amount of funding available from the Reclamation 
Fund and the time frame for which such funding is available. 
The amendment also establishes a new set of priorities that 
will ensure that the Reclamation Fund can be used to implement 
certain settlements in New Mexico, Montana, and Arizona 
according to the time frame set out in Title II. The amendment 
also modifies how funds are invested before they are disbursed 
by the Secretary.
    The amendments to Title III are numerous with a majority 
being technical in nature, such as referring to the Project as 
the Navajo-Gallup Water Supply Project in all places in the 
bill. Other, more substantive changes include: (1) an increase 
in cost-share by the State of New Mexico; (2) clarifications to 
the authority of the Secretary to convey Project facilities to 
the Project participants; (3) modifications which specify the 
conditions under which the Project may deliver water to 
communities in Arizona; (4) the inclusion of more specific 
terms addressing project repayment and the responsibility for 
paying operation, maintenance, and replacement (OM&R) costs; 
and (5) new authorization of appropriations for the Secretary 
to pay a limited amount of OM&R for the Project.
    Finally, the amendment includes a number of technical 
changes to Title IV of the bill. It also deletes a provision 
related to a hydrographic survey and expressly incorporates the 
waiver and release of certain legal claims upon implementation 
of the settlement.

                      Section-by-Section Analysis

    Section 1 provides the short title of the Act and a table 
of contents.
    Section 2 provides the definition of key terms used in the 
Act.
    Section 3(a) states that the Secretary's execution of the 
Agreement shall not constitute a major federal action for 
purposes of the National Environmental Policy Act.
    Section 3(b) expressly requires the Secretary to comply 
with all federal environmental laws in carrying out the 
provisions of the Act. Specific reference is made to the 
Endangered Species Act (ESA), and it is noted that the San Juan 
Recovery Implementation Program (SJRIP) is a key factor in 
ensuring that the Navajo-Gallup Project can result in new 
depletions from the San Juan River system while maintaining 
compliance with the ESA. It is expected that the SJRIP, 
including the development of a programmatic biological opinion 
by the U.S. Fish and Wildlife Service, will help ensure that 
ESA compliance is maintained in the future notwithstanding the 
development of future water uses within the Colorado River 
apportionments made to the states of the Upper Colorado River 
Basin.
    Section 4(a) ensures that the Act will not result in a 
reallocation or reassignment of existing costs under the 
Colorado River Storage Project Act.
    Section 4(b) states that no power revenues under the 
Colorado River Storage Project Act will be used to pay for any 
costs associated with the Navajo Indian Irrigation Project or 
Navajo-Gallup Water Supply Project.
    Section 5 specifies the interest rate to be used for any 
repayment contract entered into under section 304 of the Act.

               TITLE I--AMENDMENTS TO THE COLORADO RIVER

    Section 101(a) amends the Colorado River Storage Project 
Act by adding the Navajo-Gallup Water Supply Project as a 
participating project.
    Section 101(b) amends the Colorado River Storage Project 
Act to authorize the Secretary to create a ``top water bank'' 
within the available capacity of Navajo Reservoir pursuant to 
specific criteria and conditions set forth in the provision.
    Section 102(a) amends section 2 of Public Law 87-483 by 
striking the existing provision and replacing it with a new 
section 2 that maintains the long-standing authorization for 
the Navajo Indian Irrigation Project (NIIP) but includes 
several new provisions. The revised section 2 specifically sets 
forth the quantity of water available for the project; 
authorizes additional uses of that water; authorizes the 
transfer of that water outside NIIP and the Navajo reservation 
under certain conditions, authorizes the use of NIIP facilities 
to transport non-NIIP water if capacity is available; and 
directs that the use of NIIP water for non-irrigation purposes 
will not result in a reallocation of construction costs of 
NIIP. The new authority to use the capacity of NIIP to convey 
water for non-irrigation purposes does not authorize the 
Secretary to construct any new features to NIIP that were not 
already authorized under the Act of June 13, 1962. Also, 
subsection (f) under the revised section 2 continues the 
deferral of construction costs under the original Act, 
notwithstanding the possible use of NIIP facilities to deliver 
non-irrigation water.
    Section 102(b) amends section 11 of P.L. 87-483 to add 
several new subsections. The first (subsection 11(d)) specifies 
how the Secretary is to determine and apportion shortages based 
on the prospective runoff originating above Navajo Reservoir 
and the available water in storage in Navajo Reservoir, 
including a provision that makes clear that the Secretary is to 
apply any shortage to the initial stage of the San Juan-Chama 
project against the full annual diversion demand of 135,000 
acre-feet. The second new subsection (subsection 11(e)) 
specifies the order in which the Secretary will curtail 
releases and deliveries from Navajo Reservoir. The remaining 
new provisions (subsection 11(f)-(i)) declare that the 
Secretary shall apportion water on an annual volume basis; 
recognize that water may be distributed pursuant to cooperative 
agreements; and address diversions associated with a specific 
New Mexico State Engineer permit.
    Section 103 disclaims any effect on certain specified 
Federal laws addressing water resources, unless expressly 
stated.

              TITLE II--RECLAMATION WATER SETTLEMENTS FUND

    Section 201(a) establishes the ``Reclamation Water 
Settlements Fund'' (Fund).
    Section 201(b) directs that certain revenues be deposited 
in the Fund and provides that those funds be available without 
further appropriation pursuant to the section.
    Section 201(c) specifies the conditions and criteria under 
which the Secretary of the Interior can expend money from the 
Reclamation Water Settlements Fund. First, the amounts 
available are specified. The purposes are also defined, which 
are to use the fund to implement a congressionally approved 
settlement agreement to the extent that the settlement requires 
the Bureau of Reclamation to provide financial assistance, or 
to plan, design, and construct certain types of projects. Only 
the settlement actions required to be carried out by the Bureau 
of Reclamation and which fit the specified criteria, are to be 
funded using the Fund. This subsection also specifies the 
priorities for spending from the Fund and directs the Secretary 
to reserve the specified quantities to ensure that a minimum of 
such funding is available in the event that appropriations are 
not sufficient to implement certain activities by the deadlines 
set forth in the settlement legislation. The first priority is 
funding to construct the Navajo-Gallup Water Supply Project. 
The second priority is the funding needed to help implement two 
other identified settlements in New Mexico. The third priority 
is the expenditure of funds to help implement three identified 
settlements in Montana. The fourth priority is the specified 
funding needed to help implement an identified settlement in 
Arizona. While other settlements may qualify for expenditures 
from the fund, the identified settlements will be the 
priorities subject to the requirement that Federal legislation 
is enacted to authorize such settlements by December 31, 2014.
    Section 201(d) directs the Secretary to invest the amounts 
in the Fund and retains the benefits of that investment in the 
Fund.
    Section 201(e) addresses timing and adjustments issues 
associated with transferring amounts to the Fund.
    Section 201(f) specifies that the Fund will terminate on 
September 30, 2028, and any balance will be returned to the 
appropriate fund in the Treasury, which includes the 
Reclamation Fund.

             TITLE III--NAVAJO-GALLUP WATER SUPPLY PROJECT

    Section 301 describes the purposes of Title III.
    Section 302(a) authorizes the Secretary, acting through the 
Commissioner of Reclamation to carry-out a range of activities 
to construct and operate the Navajo-Gallup Water Supply 
Project. Completion of the Project is one of the conditions 
required to implement the settlement of the Navajo Nation's 
water rights claims in the San Juan River basin.
    Section 302(b) authorizes the Secretary to construct, 
operate, and maintain a number of identified facilities 
associated with the Project.
    Section 302(c) authorizes the Secretary to acquire the 
property interests necessary to construct, operate, and 
maintain the Project, subject to the requirement that the 
Project Participants provide any ownership interest they have 
in such properties at no cost to the Secretary.
    Section 302(d) specifies a number of conditions that must 
be met before the Secretary is to commence construction of the 
Project. One of the conditions is the completion of an 
agreement with the State of New Mexico concerning its cost-
share associated with the Project. The Secretary will use any 
such funds provided by New Mexico pursuant to the Contributed 
Funds Act (43 U.S.C. 395) for the benefit of the Project. 
Section 302(d) also makes clear that the Secretary is 
authorized to construct the Project with appropriate 
modifications if the Jicarilla Apache Nation elects to not 
participate.
    Section 302(e) directs the Secretary to reserve a specified 
amount of power from the Colorado River Storage Project for use 
by the Project.
    Section 302(f) authorizes the Secretary to enter into 
agreements with the Navajo Nation and the City of Gallup to 
convey appropriate sections of the Project to those entities 
under certain conditions. The conveyance is not to affect 
application of the ESA, and the United States' liability for 
actions associated with the Project is limited as set forth in 
the subsection.
    Section 302(g) provides that any conveyance under 
subsection (f) will not affect the availability of power under 
subsection (e).
    Section 302(h) authorizes the use of Project facilities to 
treat and convey non-Project water supplies under specified 
conditions.
    Section 303(a) specifies the authorized uses of Project 
water, the place of use of such water supplies, and associated 
conditions.
    Section 303(b) authorizes the Project to divert specified 
quantities of water from Navajo Reservoir and the San Juan 
River subject to applicable state and Federal law. Subsection 
(b) also specifies the Project capacity available to each of 
the Project participants and authorizes deliveries in excess of 
the designated capacity under specified conditions. Included in 
the authorized capacity is a quantity of water available for 
use by the Navajo Nation in Window Rock, Arizona.
    Section 303(c) specifies the conditions that apply before 
the Project can deliver water to communities in the State of 
Arizona and how such water will be accounted for under the 
Colorado River Compact and other applicable law.
    Section 303(d) provides authority for the Navajo Nation to 
forbear the delivery of Navajo Reservoir water for uses in New 
Mexico so that an equivalent amount of water may be provided 
for Project uses in Arizona. The authority provided by 
subsection (d) is subject to several specified conditions 
including a water rights settlement agreement between the 
Navajo Nation and the State of Arizona, and a requirement that 
any such uses be accounted for as part of the Colorado River 
System apportionments to Arizona.
    Section 303(e) provides a disclaimer concerning the 
marketing of Project water or forbearance of the use of Project 
water by the Navajo Nation.
    Section 303(f) confirms the authority of the State of New 
Mexico to use its apportionment of Colorado River water in the 
lower Colorado River basin within New Mexico and the conditions 
associated with such use. The Upper Colorado River Commission 
approved this use of New Mexico's apportionment by a Resolution 
adopted June 17, 2003, entitled ``Use and Accounting of Upper 
Basin Water Supplied to the Lower Basin in New Mexico by the 
Proposed Project.''
    Section 303(g) authorizes the Secretary to pay the 
operation and maintenance costs of the Project for a limited 
amount of time as specified in the subsection.
    Section 304(a) directs the Secretary to enter into a 
Contract with the Navajo Nation for the delivery of Project 
water as a condition of the water rights settlement. The 
subsection notes that the Secretary has completed a hydrologic 
determination which is a necessary prerequisite for executing 
the Contract, and provides congressional ratification of the 
Contract so long as it is consistent with the Act. The 
subsection also specifies that certain identified construction 
costs shall be non-reimbursable by the Navajo Nation. Except as 
provided, the Nation shall be responsible for its share of the 
operation and maintenance costs of the Project.
    Section 304(b) authorizes the Secretary to enter into a 
repayment contract with the City of Gallup, New Mexico, which 
addresses repayment of allocable Project construction costs and 
the payment of operation and maintenance costs. The 
reimbursable portion of the City's construction cost repayment 
obligation is addressed, and prepayment of the City's 
construction cost obligation is also authorized subject to 
certain conditions. The subsection also requires that the City 
secure a water supply for its portion of the Project as a 
precondition to the Secretary executing the repayment contract.
    Section 304(c) authorizes the Secretary to enter into a 
repayment contract with the Jicarilla Apache Nation, which 
addresses repayment of allocable Project construction costs and 
the payment of operation and maintenance costs. The 
reimbursable portion of the Jicarilla Nation's construction 
cost repayment obligation is addressed, and prepayment of the 
Jicarilla Nation's construction cost obligation is also 
authorized subject to certain conditions.
    Section 304(d) directs the Secretary update the cost 
estimate in the draft environmental impact statement (DEIS), 
and to perform a final cost allocation when the Project is 
substantially complete to establish the Project Participants' 
final cost allocation.
    Section 304(e) directs the Secretary to update the DEIS as 
appropriate to determine the operation, maintenance, and 
replacement cost obligations of the Project Participants.
    Section 304(f) authorizes the Secretary to waive for a 
period of not more than 10 years, the Navajo Nation's 
obligation to pay for allocated operation, maintenance, and 
replacement (OM&R) costs associated with completed sections of 
the Project. Any waived costs shall be payable by the United 
States and non-reimbursable from the Navajo Nation. This 
provision will allow the Navajo Nation time to establish a rate 
base sufficient to take over full OM&R costs at the appropriate 
time set forth in the bill.
    Section 304(g) directs the Secretary to form a Project 
construction committee to address a number of issues affecting 
the cost of the Project.
    Section 305(a) authorizes the Navajo Nation to use the 
Navajo Nation Municipal Pipeline (Pipeline) to convey water 
other than the supplies authorized for use in association with 
the Animas-La Plata Project.
    Section 305(b) authorizes the Secretary to enter into 
agreements to convey title to appropriate sections of the 
Pipeline and associated property interests to the Navajo Nation 
and City of Farmington, New Mexico. The conveyance is not to 
affect application of the ESA, and the United States' liability 
for actions associated with the Project is limited as set forth 
in the subsection.
    Section 306(a) directs the Navajo Nation to prepare a 
groundwater development plan (Plan) with the Secretary for the 
wells authorized to be constructed in section 306.
    Section 306(b) authorizes the Secretary to construct or 
rehabilitate wells and related pipelines to supply a certain 
amount of groundwater to the Navajo Nation for municipal and 
domestic uses, consistent with the Plan and as a condition of 
the water rights settlement.
    Section 306(c) authorizes the Secretary to develop 
groundwater resources in the Little Colorado and Rio Grande 
basins in accordance with the Plan.
    Section 306(d) authorizes the Secretary to acquire 
necessary property interests in association with groundwater 
development, but does not authorize the condemnation of water 
rights.
    Section 306(e) requires the Secretary to execute the 
Agreement prior to commencing any construction activity 
associated with the wells.
    Section 306(f) directs the Secretary to convey to the 
Navajo Nation the title to any wells, related facilities, and 
other appropriate property interests upon substantially 
completing such facilities. The Secretary is authorized to pay 
OM&R for the wells and related facilities until conveyed to the 
Navajo Nation which should occur as soon as possible after 
completion.
    Section 306(g) authorizes the use of Project facilities to 
treat and convey groundwater to the Navajo Nation under 
specified conditions.
    Section 306(h) requires that the diversion and use of 
groundwater under section 306 be consistent with applicable 
Federal or state law.
    Section 307(a) directs the Secretary to rehabilitate two 
existing irrigation projects serving the Navajo Nation.
    Section 307(b) prohibits the Secretary from beginning any 
construction activity associated with the rehabilitation before 
the Agreement is executed.
    Section 307(c) specifies that the Navajo Nation will be 
responsible for OM&R of the rehabilitated facilities.
    Section 308(a) requires the Secretary, in consultation with 
identified entities, to study and make recommendations for 
rehabilitating or otherwise improving the water use efficiency 
of specified diversion and ditch facilities.
    Section 308(b) authorizes the Secretary to provide grants 
or enter into agreements to implement the projects identified 
under subsection (a).
    Section 308(c) identifies the required non-Federal cost-
share necessary to implement the rehabilitation projects and 
the form of such cost-share.
    Section 309(a) authorizes the appropriations necessary to 
plan, design, and construct the Navajo-Gallup Water Supply 
Project, including an appropriate inflation adjustment. The 
Project may also be constructed using the funds made available 
in Title II if appropriations are not sufficient to construct 
the Project by the identified deadline. Subsection (a) also 
authorizes appropriations for operating and maintaining the 
Project for a specified amount of time.
    Section 309(b) authorizes appropriations for constructing, 
rehabilitating, and for a 3-year period, operating and 
maintaining the wells and associated facilities identified in 
section 306(b)-(c). The amounts authorized for the wells in the 
San Juan River basin are to be appropriately adjusted for 
inflation.
    Section 309(c) authorizes appropriations for implementing 
the rehabilitation projects identified in section 307, 
including an appropriate adjustment for inflation.
    Section 309(d) authorizes appropriations for implementing 
section 308.
    Section 309(e) specifies the maximum percentage of 
appropriations that may be used for the protection of cultural 
resources under existing law, and that such appropriations are 
nonreimbursable.
    Section 309(f) specifies the maximum percentage of 
appropriations that may be used for the protection of fish and 
wildlife, and that such appropriations are nonreimbursable.

                  TITLE IV--NAVAJO NATION WATER RIGHTS

    Section 401(a) approves the water rights settlement 
agreement resolving the Navajo Nation's water rights claims in 
the San Juan River Basin in New Mexico and directs the 
Secretary to enter into the Agreement, including any amendments 
needed to make the Agreement consistent with the Act.
    Section 401(b) identifies the water supplies to be made 
available to the Navajo Nation under the Contract and declares 
certain rights and responsibilities associated with the use of 
that water.
    Section 401(c) authorizes the Navajo Nation to enter into 
subcontracts to lease water supplies available under the 
Contract to third parties within New Mexico under certain 
specified conditions, including approval by the Secretary and 
compliance with the Agreement and the Partial Final Decree.
    Section 401(d) authorizes the Navajo Nation to lease or 
otherwise transfer other water supplies available under the 
Agreement to another party within New Mexico under certain 
specified conditions, including compliance with the Agreement 
and the Partial Final Decree.
    Section 401(e) identifies the deadlines for completing a 
number of actions necessary to implement the settlement 
agreement with the Navajo Nation. It also authorizes extension 
of the deadlines and defines the rights of the Navajo Nation to 
terminate the Agreement if the deadlines are not substantially 
met. Subsection (e) also expressly declares that certain events 
or conditions are not cause to nullify or terminate the 
Agreement.
    Section 401(f) limits the effect of the Agreement, 
Contract, or Section on the rights of other Indian tribe or 
community with one specified exception.
    Section 402(a) establishes a ``Navajo Nation Water 
Resources Development Trust Fund'' consisting of certain 
identified funds.
    Section 402(b) authorizes specified uses of the Trust Fund 
by the Navajo Nation.
    Section 402(c) directs the Secretary to manage and 
distribute money from the Fund in accordance with the American 
Indian Trust Fund Management Reform Act.
    Section 402(d) directs the Secretary to invest amounts in 
the Trust Fund in a specified manner.
    Section 402(e) identifies a number of conditions for 
expenditures and withdrawals from the Trust Fund, including a 
Tribal management plan and the completion of certain actions 
associated with implementing the Agreement.
    Section 402(f) authorizes appropriations for the Trust 
Fund.
    Section 403(a) requires the Navajo Nation and United States 
to execute specified waivers and releases associated with the 
Navajo Nation's water rights claims in the San Juan River 
basin.
    Section 403(b) requires the Navajo Nation to execute a 
waiver and release of certain claims against the United States.
    Section 403(c) identifies certain rights and claims that 
the Navajo Nation and the United States on its behalf retain in 
association with the Agreement.
    Section 403(d) declares the conditions necessary for the 
waivers and releases to become effective and a deadline for 
satisfying those conditions.
    Section 404 declares that the water rights adjudicated to 
the Navajo Nation shall be held in trust by the United States.

                   Cost and Budgetary Considerations

    The Congressional Budget Office estimate of the costs of 
this measure has been requested but was not received at the 
time the report was filed. When the Congressional Budget Office 
completes its cost estimate, it will be posted on the internet 
at www.cbo.gov.

                      Regulatory Impact Evaluation

    In compliance with paragraph 11(b) of Rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
evaluation of the regulatory impact which would be incurred in 
carrying out S. 1171. The bill is not a regulatory measure in 
the sense of imposing Government-established standards or 
significant economic responsibilities on private individuals 
and businesses.
    No personal information would be collected in administering 
the program. Therefore, there would be no impact on personal 
privacy.
    Little, if any, additional paperwork would result from the 
enactment of S. 1171, as ordered reported.

                   Congressionally Directed Spending

    In accordance with paragraph 4(b) of rule XLIV of the 
Standing Rules of the Senate, the Committee provides the 
following identification of congressionally directed spending 
items contained in the bill, as reported:

------------------------------------------------------------------------
           Section                  Provision              Member
------------------------------------------------------------------------
309.........................  Authorization of      Senators Bingaman
                               appropriations.       and Domenici
402(f)......................  Authorization of      Senators Bingaman
                               appropriations.       and Domenici
------------------------------------------------------------------------

                        Executive Communications

    The testimony provided by the Department of the Interior at 
the committee hearing on June 27, 2007 on S. 1171 follows:

 Statement of Robert Johnson, Commissioner, Bureau of Reclamation, and 
Carl Artman, Assistant Secretary for Indian Affairs, Department of the 
                                Interior

    Chairman Bingaman and Ranking Member Domenici, we would 
like to thank you for the opportunity to appear today to 
present the Administration's views on S. 1171, the Northwestern 
New Mexico Rural Water Projects Act. The Department of the 
Interior's support for negotiated settlements as an approach to 
resolving Indian water rights remains strong. The 
Administration, however, has concerns that S. 1171 would 
increase mandatory spending, delay the full cost of the 
legislation beyond the 10 year Congressional scorekeeping 
window, not provide for adequate cost sharing by non-Federal 
interests, and likely include costs that exceed the Federal 
government's underlying liability. The Administration did not 
participate in the drafting of the water rights settlement 
embodied in S. 1171, and does not support a water settlement 
under these circumstances. For these reasons, the 
Administration opposes the cost and cannot support the 
legislation as written. We would like to work with Congress and 
all parties concerned in developing a settlement that the 
Administration can support.
    S. 1171 would amend Federal statutes that relate to the 
Bureau of Reclamation and the use of water in the Colorado 
River basin. Major provisions include: (1) Authorization for 
the Bureau of Reclamation to construct and operate a pipeline 
(formally titled the ``Northwestern New Mexico Rural Water 
Supply Project'', but generally known as the ``Navajo-Gallup 
Pipeline Project'') to bring water from the San Juan River to 
the eastern portion of the Navajo Reservation, the Jicarilla 
Apache Reservation, and the City of Gallup, New Mexico; (2) 
creation of a Reclamation Water Settlements Fund in the 
Treasury that could be used to fund activities under this bill 
and future Indian water rights settlements, to be funded by the 
diversion of revenues from the existing Reclamation Fund; (3) 
authorization for the Secretary of the Interior to reserve up 
to 26 megawatts of power from existing reservations of Colorado 
River Storage Project power for Bureau of Reclamation projects 
for use by the Northwestern New Mexico Rural Water Supply 
Project; and (4) authorization for the Secretary to 
rehabilitate existing irrigation projects, develop groundwater 
wells, and establish other funds for the benefit of the Navajo 
Nation. The bill also includes provisions that would resolve 
the Navajo Nation's Federal Indian reserved water rights claims 
in the San Juan River in New Mexico, although the United States 
was not party to the final negotiations on this issue.

                the role of the criteria and procedures

    The Administration has been actively engaged in the New 
Mexico water settlements. You will recall, Mr. Chairman, that 
Secretary Kempthorne committed during his confirmation to 
bringing his energy and concern to the pending water 
settlements in New Mexico. Consistent with this pledge, we have 
made it a high priority to better understand the complex issues 
that must be resolved in each of the proposed New Mexico 
settlements. Our water rights team has made several trips to 
New Mexico to visit with the Pueblos, Tribes, the State, local 
communities, water users, and other constituencies to these 
proposed settlements. A few months ago, at the Secretary's 
request, key officials from the Departments of Justice and the 
Interior and the Office of Management and Budget traveled to 
Navajo country to observe first-hand the difficult issues 
related to water delivery on the Reservation.
    Mr. Chairman and members, we are keenly aware of the needs 
in this area of the United States. On the Navajo Reservation, 
some people routinely haul water for 20-30 miles several times 
a week to provide for their basic household needs. Families 
must travel extended distances to do laundry because washing 
machines require water hookups which they do not have. There is 
no question that the Administration officials who traveled to 
the Reservation came away with powerful and indelible images as 
well as a better understanding of the needs of Reservation 
inhabitants seeking access to basic services that are taken for 
granted by all but a few Americans.
    Nonetheless, despite our understanding of the human needs 
on the Navajo Reservation, we firmly believe that the 
resolution of substantive and procedural problems raised by 
this bill will require the active involvement of all parties to 
the proposed settlement. It is important to have an open and 
full discussion on all aspects of the settlement, including the 
specific goals of the Navajo Nation and the State of New Mexico 
for the settlement of these claims and whether these goals can 
be met by alternative and potentially less expensive means. 
This settlement was developed largely without Federal 
involvement, and, consistent with Secretary Kempthorne's 
commitment to address these issues, we would welcome the 
opportunity to continue to engage with the Committee and 
proponents of this settlement to see if we can identify areas 
of common ground sufficient to move forward with the full 
support of the Administration.
    One of the first steps in this process, Mr. Chairman, is 
for us to acknowledge the three New Mexico settlement proposals 
that are now being advocated to Congress. While the Navajo 
settlement in the San Juan River is the subject of today's 
hearing, there are other settlements proposed in New Mexico, as 
well as in other western states, that require active Federal 
participation in negotiations. If enacted, the cost of S. 1171, 
alone, is estimated to exceed 1 billion dollars. If the other 
two proposals from New Mexico, Aamodt (involving the Pueblos of 
Nambe, Pojoaque, San Ildefonso, and Tesuque) and Abeyta 
(involving the Pueblo of Taos), about which the Administration 
also has raised serious concerns, were to be enacted as 
currently envisioned by their proponents, total expenditures 
for Indian water rights settlements in New Mexico alone are 
likely to exceed $1.5 billion.
    The Administration believes that the policy guidance found 
in the Criteria and Procedures for the Participation of the 
Federal Government in Negotiations for the Settlement of Indian 
Water Rights Claims (``Criteria'') (55 Fed. Reg. 9223 (1990)) 
provides a flexible framework in which we can evaluate the 
merits of this bill. The Criteria provide guidance on the 
appropriate level of Federal contribution to the settlements, 
incorporating consideration of calculable legal exposure plus 
costs related to Federal trust or programmatic 
responsibilities. In addition, the Criteria call for 
settlements to contain non-Federal cost-share proportionate to 
the benefits received by the non-Federal parties, and specify 
that the total cost of a settlement to all parties should not 
exceed the value of the existing claims as calculated by the 
Federal Government. As we have testified previously, the 
Criteria is a tool that allows the Administration to evaluate 
each settlement in its unique context while also establishing a 
process that provides guidance upon which proponents of 
settlements can rely.

              provisions of particular concern in s. 1171

    We would like in the remainder of this statement to provide 
a synopsis of substantive concerns regarding S. 1171. We will 
start with the high cost of this settlement. The Administration 
has concerns about the costs associated with this legislation, 
and currently opposes the nearly $1 billion financial 
commitment embodied in this bill. We are also concerned about 
the large number of authorizations that the bill contains, 
including the indefinite amount authorized for construction of 
the Navajo-Gallup Pipeline. We have not yet been able to fully 
analyze the costs of this legislation. In 2005, the Bureau of 
Reclamation estimated that the price of the Navajo-Gallup 
pipeline would be approximately $716 million. Reclamation is in 
the process of updating this appraisal-level price estimate to 
better reflect current construction conditions, and expects an 
upward adjustment to nearly $1 billion for this feature alone. 
In addition, S. 1171 would authorize Federal expenditures of 
$30 million for groundwater wells, $23 million for 
rehabilitation of Fruitland-Cambridge and Hogback-Cudei 
irrigation projects, $11 million for other irrigation projects, 
$5 million for hydrographic surveys, and $50 million to be 
placed in a Navajo Nation Water Resources Development Trust 
Fund to be used by the Navajo Nation for water facility 
construction and maintenance or implementation of water 
conservation measures.
    The Administration has serious concerns regarding the 
proposal contained in Title II of this bill to establish a 
``Reclamation Water Settlements Fund'' within the United States 
Treasury. Title II provides that revenues of up to $100 million 
a year for fiscal years 2018 through 2028, which is a time 
period outside the Congressional scorekeeping window, be 
diverted from the Reclamation Fund into the Water Settlements 
Fund. S. 1171 provides that moneys in the Water Settlements 
Fund would be available without further appropriation to fund 
water supply infrastructure authorized under this bill if there 
turns out to be insufficient funding available through the 
regular appropriations process to meet the funding and 
construction deadlines established in this bill. The second 
priority for the Water Settlements Fund would be to implement 
other Indian water rights settlements approved by Congress, 
including water supply infrastructure, rehabilitation of water 
delivery systems, fish and wildlife restoration or 
environmental improvement. The Reclamation Water Settlements 
Fund would terminate in 2030 and any remaining balance would be 
transferred to the General Fund of the Treasury.
    We believe the sponsors of this legislation are looking for 
stable mechanisms to ensure the availability of funding for 
Indian water rights settlements around the West. We are 
concerned, however, that this proposal would allow direct 
spending not subject to further appropriations for future 
settlements, preventing future Presidents and Congresses from 
setting their own priorities with regard to budgeting and 
appropriating Federal tax dollars. At the present time, use of 
monies from the Reclamation Fund are discretionary and subject 
to annual appropriations by Congress.
    While S. 1171 does require some cost-sharing in the form of 
a requirement for partial reimbursement of construction costs 
from the City of Gallup and the Jicarilla Apache Nation, it is 
limited. The City of Gallup and the Jicarilla Apache Nation 
would be required to repay the portion of the construction 
costs for the pipeline and associated facilities that the 
Secretary would allocate to them as their responsibility, but 
only to the extent of their ability to pay, or alternatively, a 
minimum of 25% of such allocated construction costs, within 50 
years of project completion.
    Project proponents assert that the Navajo-Gallup Pipeline 
Project would qualify as a rural water project under the rural 
water program being established by the Bureau of Reclamation 
pursuant to the Rural Water Supply Act of 2006 (P.L. 109-451), 
legislation which was passed in December of 2006. However, the 
proposed pipelines envisioned by this bill have not received 
the level of scrutiny that this newly established program will 
provide. Under the rural water program, each project must be 
investigated prior to authorization, and the Secretary must 
consider whether the non-Federal project entity has the 
capability to pay 100 percent of the costs associated with the 
operations, maintenance, and replacement of the facilities 
constructed or developed as part of the rural water supply 
project. The Secretary must also recommend an appropriate non-
Federal cost-share for the proposed rural water project based 
on the capability-to-pay of project sponsors, or at least 25% 
of total construction costs. The program allows the Secretary 
to consider deferring construction costs allocated to Indian 
tribes. Under this new program, the Secretary is to forward to 
Congress recommendations regarding whether or not the proposed 
rural water project should be authorized for construction based 
upon appraisal level and feasibility studies and the 
eligibility and prioritization criteria developed pursuant to 
the Rural Water Supply Act. The rural water program is intended 
to target communities of 50,000 inhabitants or fewer. The 
Secretary may require larger communities to pay a higher 
portion of project costs. Since Reclamation's rural water 
program is still under development, we have not evaluated the 
activities proposed in S. 1171 under the rural water project 
eligibility and prioritization criteria; these criteria are 
currently being developed by Reclamation. Upon development, we 
will actively evaluate whether this project would meet such 
criteria and could be recommended to Congress for authorization 
as a rural water project.
    We have identified a number of other concerns regarding 
this bill. These include potential interpretation conflicts 
concerning the Navajo Indian Irrigation Project; the timing of 
transfers of title to the Nation; the authorization of Federal 
grants to support the repair and rehabilitation of certain 
irrigation projects, and concern that this bill might give the 
State of New Mexico an inappropriate role in the operation of 
Federal facilities that are currently operated by the United 
States under the Colorado River Compact and Reclamation law. 
Also, the Department of Justice has concerns about the waivers 
and releases referred to in section 403. First, they are still 
reviewing these waivers and releases for adequacy. Second, 
waivers and releases should be stated in full in the 
legislation because they are critical to the finality of the 
agreements.
    We also note that the bill should require the Secretary of 
the Interior, rather than the Secretary of the Treasury, to 
invest amounts in the proposed Reclamation Water Settlements 
Fund, in order to make use of the investment expertise of 
Interior's Office of the Special Trustee for American Indians.

        comparing this bill with other water rights settlements

    Much has been said about the position taken by the 
Administration on water rights and other settlements over the 
past few years, suggesting that not supporting S. 1171 as 
written would be inconsistent with the positions we have taken 
on previously introduced water settlement bills. We want to 
squarely address these issues.
    First, we emphasize that each proposed settlement is 
unique. The Administration evaluates each proposed settlement 
individually. Just as we did with each of the water settlements 
that have been proposed in recent years, notably the Arizona 
Water Rights Settlement Act (P.L. 108-451), the Snake River 
Water Rights Settlement Act (P.L. 108-447), and the San Joaquin 
River settlement that is proposed in legislation pending in 
this Congress (S. 27 and H.R. 24), the Administration must 
evaluate this proposed settlement in its unique context to 
determine to what extent it is consistent with our programmatic 
objectives and our responsibility to American taxpayers as well 
as our responsibility to protect the interests of the Navajo 
Nation. All of these previous settlements encompassed multiple 
objectives, providing comprehensive solutions to multi-faceted 
problems.
    In the case of the Arizona Water Rights Settlement Act, the 
settlement resolved a dispute over the financial repayment 
obligation of Arizona water users for the Central Arizona 
Project (CAP), with significant amounts of money at stake. 
Federal representatives recognized that the CAP operational 
flexibility necessary to resolve the dispute could only be 
granted if sufficient legal and legislative protection was 
achieved to assure tribal access to, and use of, CAP project 
water. Enactment of the Indian water rights settlements in that 
Act was key to resolving larger legal issues involving CAP 
repayments by Arizona water users. Achieving final settlement 
of these larger issues made the legislation generally 
acceptable to the Administration, although our testimony did 
express concern about the cost of the settlement.
    The Snake River Settlement in Idaho entailed several 
complex Endangered Species Act components that allowed further 
water resources development to occur for the Nez Perce Tribe 
and other water users in a manner that also fulfilled the 
Department's obligation to protect and recover listed species.
    The other settlement that has been compared to this bill, 
the San Joaquin Restoration Program, is in fact not connected 
to any Indian water rights settlement. The San Joaquin 
Restoration Program implements a settlement of a lawsuit that 
had been ongoing for over eighteen years, where a Federal judge 
had concluded that Reclamation's operations violated a 
provision of California law. The San Joaquin restoration 
program also involves cost shares, authorizing up to $250 
million of new Federal appropriations but only as a match for 
non-Federal funding of the restoration costs. This means that 
the State of California and Friant water users are funding a 
significant portion of the restoration costs. Approximately 
$200 million of State bond funds for projects that will 
directly contribute to restoration efforts have already been 
approved by California voters.
    We wish to reiterate however that the Administration is 
committed to ensuring consistency with the Criteria and 
Procedures. The settlement of the Navajo claims to the San Juan 
River proposed in this bill has a high Federal cost without 
appropriate safeguards that carrying out the authorized 
activities would accomplish the goals and objectives of the 
proposed settlement. These kinds of analyses should be 
completed prior to the passage of such a large settlement 
proposal. In light of the goal of finality, it is especially 
troubling that this bill does not address the distribution 
systems that must be constructed before any water will actually 
reach the homes of those who need it.

                               conclusion

    The Administration and Secretary Kempthorne remain 
committed to supporting the Indian water right settlement 
process and ensuring that such settlements fulfill the Federal 
Government's responsibilities to Indian Tribes while also 
protecting the interests of the taxpaying public. The Bureau of 
Reclamation, the Secretary's Indian Water Rights Office, and 
many others in the Department are vigorously working to develop 
the information and documentation necessary to support a full 
and open discussion of this settlement. This includes already 
having developed a draft environmental impact statement on the 
proposed pipeline and completing the hydrologic determination 
on water availability in New Mexico. We expect to have an 
updated appraisal-level estimate of the costs of constructing 
the pipeline completed in the near future.
    The Administration hopes that the entities proposing this 
legislation, including the Navajo Nation, the City of Gallup, 
the State of New Mexico, and the Jicarilla Apache Nation, will 
agree to work together with us towards the common goal: a 
settlement that will ensure that the Navajo obtain a secure, 
economically beneficial water supply consistent with our 
obligations to the taxpaying public. A clean, reliable water 
supply is of utmost importance to the members of the Navajo 
Nation, as it is to all Americans, and the United States is 
committed to working towards achieving it. While much work 
remains ahead, we are hopeful that this hearing will assist in 
advancing a process that results in a successful outcome.
    Mr. Chairman, this completes our statement. We would be 
happy to answer any questions the Committee may have.

                        Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the bill S. 1171 as ordered reported, are shown as follows 
(existing law proposed to be omitted is enclosed in black 
brackets, new matter is printed in italic, existing law in 
which no change is proposed is shown in roman):

             Public Law 84-485, Chapter 203 (70 Stat. 105)

    AN ACT To authorize the Secretary of the Interior to construct, 
     operate, and maintain the Colorado River storage project and 
             participating projects, and for other purposes

    Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled, That, in 
order to initiate the comprehensive development of the water 
resources of the Upper Colorado River Basin, for the purposes, 
among others, of regulating the flow of the Colorado River, 
storing water for beneficial consumptive use, making it 
possible for the States of the Upper Basin to utilize, 
consistently with the provisions of the Colorado River Compact, 
the apportionments made to and among them in the Colorado River 
Compact and the Upper Colorado River Basin Compact, 
respectively, providing for the reclamation of arid and 
semiarid land, for the control of floods, and for the 
generation of hydroelectric power, as an incident of the 
foregoing purposes, the Secretary of the Interior is hereby 
authorized (1) to construct, operate, and maintain the 
following initial units of the Colorado River storage project, 
consisting of dams, reservoirs, powerplants, transmission 
facilities and appurtenant works; Curecanti, Flaming Gorge, 
Navajo (dam and reservoir only), and Glen Canyon: Provided, 
That the Curecanti Dam shall be constructed to a height which 
will impound not less than nine hundred and forty thousand 
acre-feet of water or will create a reservoir of such greater 
capacity as can be obtained by a high waterline located at 
seven thousand five hundred and twenty feet above mean sea 
level, and that construction thereof shall not be undertaken 
until the Secretary has, on the basis of further engineering 
and economic investigations, reexamined the economic 
justification of such unit and, accompanied by appropriate 
documentation in the form of a supplemental report, has 
certified to the Congress and to the President that, in his 
judgment, the benefits of such unit will exceed its costs; and 
(2) to construct, operate, and maintain the following 
additional reclamation projects (including power-generating and 
transmission facilities related thereto), hereinafter referred 
to as participating projects: Central Utah (initial phase and 
the Uintah unit), San Juan-Chama (initial stage), Emery County, 
Florida, Hammond, La Barge, Lyman, Navajo Indian, Paonia 
(including the Minnesota unit, a dam and a reservoir on Muddy 
Creek just above its confluence with the North Fork of the 
Gunnison River, and other necessary works), Animas La Plata, 
Dolores, Dallas Creek, West Divide, San Miguel, Seedskadee, 
Savery-Pot Hook, Bostwick Park, Fruitland Mesa, the Navajo-
Gallup Water Supply Project, Silt and Smith Fork: Provided 
further, That as part of the Glen Canyon Unit the Secretary of 
the Interior shall take adequate protective measures to 
preclude impairment of the Rainbow Bridge National Monument.
    Sec. 2. In carrying out further investigations of projects 
under the Federal reclamation laws in the Upper Colorado River 
Basin, the Secretary shall give priority to completion of 
planning reports on the Gooseberry, Eagle Divide, Bluestone, 
Battlement Mesa, Grand Mesa, Yellow Jacket, Basalt Middle Park 
(including the Troublesome, Rabbit Ear, and Azure units), Upper 
Gunnison (including the East River, Ohio Creek, and Tomichi 
Creek units), Lower Yampa (including the Juniper and Great 
Northern units), Upper Yampa (including the Hayden Mesa, 
Wessels, and Toponas units), and Sublette (including a 
diversion of water from the Green River to the North Platte 
River Basin in Wyoming), Ute Indian unit of the Central Utah 
Project, San Juan County (Utah), Price River, Grand County 
(Utah), Gray Canyon, and Juniper (Utah) participating projects: 
Provided, That the planning report for the Ute Indian unit of 
the Central Utah participating project shall be completed on or 
before December 31, 1974, to enable the United States of 
America to meet the commitments heretofore made to the Ute 
Indian Tribe of the Uintah and Ouray Indian Reservation under 
the agreement dated September 20, 1965 (Contract Numbered 14-
06-W-194). Said reports shall be completed as expeditiously as 
funds are made available therefor and shall be submitted 
promptly to the affected States, which in the case of the San 
Juan-Chama project shall include the State of Texas, and 
thereafter to the President and the Congress: Provided, That 
with reference to the plans and specifications for the San 
Juan-Chama project, the storage for control and regulation of 
water imported from the San Juan River shall (1) be limited to 
a single offstream dam and reservoir on a tributary of the 
Chama River, (2) be used solely for control and regulation and 
no power facilities shall be established, installed or operated 
thereat, and (3) be operated at all times by the Bureau of 
Reclamation of the Department of the Interior in strict 
compliance with the Rio Grande Compact as administered by the 
Rio Grande Compact Commission. The preparation of detailed 
designs and specification for the works proposed to be 
constructed in connection with projects shall be carried as far 
forward as the investigations thereof indicate is reasonable in 
the circumstances.
    The Secretary, concurrently with the investigations 
directed by the preceding paragraph, shall also give priority 
to completion of a planning report on the Juniper project.

           *       *       *       *       *       *       *

    Sec. 15. The Secretary of the Interior is directed to 
continue studies and to make a report to the Congress and to 
the States of the Colorado River Basin on the quality of water 
of the Colorado River.
    Sec. 16. (a) The Secretary of the Interior may create and 
operate within the available capacity of Navajo Reservoir a top 
water bank.
    (b) Water made available for the top water bank in 
accordance with subsections (c) and (d) shall not be subject to 
section 11 of Public Law 87-483 (76 Stat. 99).
    (c) The top water bank authorized under subsection (a) 
shall be operated in a manner that--
          (1) is consistent with applicable law, except that, 
        notwithstanding any other provision of law, water for 
        purposes other than irrigation may be stored in the 
        Navajo Reservoir pursuant to the rules governing the 
        top water bank established under this section; and
          (2) does not impair the ability of the Secretary of 
        the Interior to deliver water under contracts entered 
        into under--
                  (A) Public Law 87-483 (76 Stat. 96); and
                  (B) New Mexico State Engineer File Nos. 2847, 
                2848, 2849, and 2917.
    (d)(1) The Secretary of the Interior, in cooperation with 
the State of New Mexico (acting through the Interstate Stream 
Commission), shall develop any terms and procedures for the 
storage, accounting, and release of water in the top water bank 
that are necessary to comply with subsection (c).
    (2) The terms and procedures developed under paragraph (1) 
shall include provisions requiring that--
          (A) the storage of banked water shall be subject to 
        approval under State law by the New Mexico State 
        Engineer to ensure that impairment of any existing 
        water right does not occur, including storage of water 
        under New Mexico State Engineer File No. 2849;
          (B) water in the top water bank be subject to 
        evaporation and other losses during storage;
          (C) water in the top water bank be released for 
        delivery to the owner or assigns of the banked water on 
        request of the owner, subject to reasonable scheduling 
        requirements for making the release; and
          (D) water in the top water bank be the first water 
        spilled or released for flood control purposes in 
        anticipation of a spill, on the condition that top 
        water bank water shall not be released or included for 
        purposes of calculating whether a release should occur 
        for purposes of satisfying the flow recommendations of 
        the San Juan River Basin Recovery Implementation 
        Program.
    (e) The Secretary of the Interior may charge fees to water 
users that use the top water bank in amounts sufficient to 
cover the costs incurred by the United States in administering 
the water bank.
    Sec. [16] 17. As used in the Act--
          The terms ``Colorado River Basin'', ``Colorado River 
        Compact'', ``Colorado River System'', ``Lee Ferry'', 
        ``States of the Upper Division'', ``Upper Basin'', and 
        ``domestic use'' shall have the meaning ascribed to 
        them in article II of the Upper Colorado River Basin 
        Compact;
          The term ``States of the Upper Colorado River Basin'' 
        shall mean the States of Arizona, Colorado, New Mexico, 
        Utah, and Wyoming;
          The term ``Upper Colorado River Basin'' shall have 
        the same meaning as the term ``Upper Basin'';
          The term ``Upper Colorado River Basin Compact'' shall 
        mean that certain compact executed on October 11, 1948 
        by commissioners representing the States of Arizona, 
        Colorado, New Mexico, Utah, and Wyoming, and consented 
        to by the Congress of the United States of America by 
        Act of April 6, 1949 (63 Stat. 31);
          The term ``Rio Grande Compact'' shall mean that 
        certain compact executed on March 18, 1938, by 
        commissioners representing the States of Colorado, New 
        Mexico, and Texas and consented to by the Congress of 
        the United States of America by Act of May 31, 1939 (53 
        Stat. 785);
          The term ``Treaty with the United Mexican States'' 
        shall mean that certain treaty between the United 
        States of America and the United Mexican States, signed 
        at Washington, District of Columbia, February 3, 1944, 
        relating to the utilization of the waters of the 
        Colorado River and other rivers, as amended and 
        supplemented by the protocol dated November 14, 1944, 
        and the understandings recited in the Senate resolution 
        of April 18, 1945, advising and consenting to 
        ratification thereof.

           *       *       *       *       *       *       *

                    Public Law 87-483 (76 Stat. 96)

    AN ACT To authorize the Secretary of the Interior to construct, 
  operate, and maintain the Navajo Indian irrigation project and the 
 initial stage of the San Juan-Chama project as participating projects 
     of the Colorado River storage project, and for other purposes

    Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled, That, for 
the purposes of furnishing water for the irrigation of 
irrigable and arable lands and for municipal, domestic, and 
industrial uses, providing recreation and fish and wildlife 
benefits, and controlling silt, and for other beneficial 
purposes, the Congress approves as participating projects of 
the Colorado River storage project (Act of April 11, 1956, 70 
Stat. 105, as amended, 43 U.S.C. 620-620o) the Navajo Indian 
irrigation project, New Mexico, and the initial stage of the 
San Juan Chama project, Colorado-New Mexico. The Navajo Indian 
irrigation project and the initial stage of the San Juan-Chama 
project herein approved are substantially those described in 
the proposed coordinated report of the Acting Commissioner of 
Reclamation and the Commissioner of Indian Affairs, approved 
and adopted by the Secretary of the Interior on October 16, 
1957, as conditioned, modified, and limited herein.

NAVAJO INDIAN IRRIGATION PROJECT

           *       *       *       *       *       *       *

    [Sec. 2. Pursuant to the provisions of the Act of April 11, 
1956, as amended, the Secretary of the Interior is authorized 
to construct, operate, and maintain the Navajo Indian 
irrigation project for the principal purpose of furnishing 
irrigation water to approximately one hundred and ten thousand 
six hundred and thirty acres of land, said project to have an 
average annual diversion of five hundred and eight thousand 
acre-feet of water and the repayment of the costs of 
construction thereof to be in accordance with the provisions of 
said Act of April 11, 1956, as amended, including, but not 
limited to, section 4(d) thereof.]
    Sec. 2. (a) In accordance with the Act of April 11, 1956 
(commonly known as the `Colorado River Storage Project Act') 
(43 U.S.C. 620 et seq.), the Secretary of the Interior is 
authorized to construct, operate, and maintain the Navajo 
Indian Irrigation Project to provide irrigation water to a 
service area of not more than 110,630 acres of land.
    (b)(1) Subject to paragraph (2), the average annual 
diversion by the Navajo Indian Irrigation Project from the 
Navajo Reservoir over any consecutive 10-year period shall be 
the lesser of--
          (A) 508,000 acre-feet per year; or
          (B) the quantity of water necessary to supply an 
        average depletion of 270,000 acre-feet per year.
    (2) The quantity of water diverted for any 1 year shall not 
exceed the average annual diversion determined under paragraph 
(1) by more than 15 percent.
    (c) In addition to being used for irrigation, the water 
diverted by the Navajo Indian Irrigation Project under 
subsection (b) may be used within the area served by Navajo 
Indian Irrigation Project facilities for the following 
purposes:
          (1) Aquaculture purposes, including the rearing of 
        fish in support of the San Juan River Basin Recovery 
        Implementation Program authorized by Public Law 106--
        392 (114 Stat. 1602).
          (2) Domestic, industrial, or commercial purposes 
        relating to agricultural production and processing.
          (3)(A) The generation of hydroelectric power as an 
        incident to the diversion of water by the Navajo Indian 
        Irrigation Project for authorized purposes.
          (B) Notwithstanding any other provision of law--
                  (i) any hydroelectric power generated under 
                this paragraph shall be used or marketed by the 
                Navajo Nation;
                  (ii) the Navajo Nation shall retain any 
                revenues from the sale of the hydroelectric 
                power; and
                  (iii) the United States shall have no trust 
                obligation to monitor, administer, or account 
                for the revenues received by the Navajo Nation, 
                or the expenditure of the revenues.
          (4) The implementation of the alternate water source 
        provisions described in subparagraph 9.2 of the 
        agreement executed under section 401(a)(2) of the 
        Northwestern New Mexico Rural Water Projects Act.
    (d) The Navajo Indian Irrigation Project water diverted 
under subsection (b) may be transferred to areas located within 
or outside the area served by Navajo Indian Irrigation Project 
facilities, and within or outside the boundaries of the Navajo 
Nation, for any beneficial use in accordance with--
          (1) the agreement executed under section 401(a)(2) of 
        the Northwestern New Mexico Rural Water Projects Act;
          (2) the contract executed under section 304(a)(2)(B) 
        of that Act; and
          (3) any other applicable law.
    (e) The Secretary may use the capacity of the Navajo Indian 
Irrigation Project works to convey water supplies for--
          (1) the Navajo-Gallup Water Supply Project under 
        section 302 of the Northwestern New Mexico Rural Water 
        Projects Act; or
          (2) other nonirrigation purposes authorized under 
        subsection (c) or (d).
    (f)(1) Repayment of the costs of construction of the 
project (as authorized in subsection (a)) shall be in 
accordance with the Act of April 11, 1956 (commonly known as 
the ``Colorado River Storage Project Act'') (43 U.S.C. 620 et 
seq.), including section 4(d) of that Act.
    (2) The Secretary shall not reallocate, or require 
repayment of, construction costs of the Navajo Indian 
Irrigation Project because of the conveyance of water supplies 
for nonirrigation purposes under subsection (e).

           *       *       *       *       *       *       *

                                GENERAL

    Sec. 11. (a) No person shall have or be entitled to have 
the use for any purpose, including uses under the Navajo Indian 
irrigation project and the San Juan-Chama project authorized by 
sections 2 and 8 of this Act, of water stored in Navajo 
Reservoir or of any other waters of the San Juan River and its 
tributaries originating above Navajo Reservoir to the use of 
which the United States is entitled under these projects except 
under contract satisfactory to the Secretary and conforming to 
the provisions of this Act. Such contracts, which, in the case 
of water for Indian uses, shall be executed with the Navajo 
Tribe, shall make provision, in any year in which the Secretary 
anticipates a shortage, taking into account both prospective 
runoff originating above Navajo Reservoir and the available 
water in storage in Navajo Reservoir, for a sharing of the 
available water in the following manner: The prospective runoff 
shall be apportioned between the contractors diverting above 
and those diverting at or below Navajo Reservoir in the 
proportion that the total normal diversion requirement of each 
group bears to the total of all normal diversion requirements. 
In the case of contractors diverting above Navajo Reservoir, 
each such contract shall provide for a sharing of the runoff 
apportioned to said group in the same proportion as the normal 
diversion requirement under said contract bear to the total 
normal diversion requirements of all such contracts that have 
been made hereunder: Provided, That for any year in which the 
foregoing sharing procedure either would apportion to any 
contractor diverting above Navajo Reservoir an amount in excess 
of the runoff anticipated to be physically available at the 
point of his diversion, or would result in no water being 
available to one or more such contractors, the runoff 
apportioned to said group shall be reapportioned, as near as 
may be among the contractors diverting above Navajo Reservoir 
in the proportion that the normal diversion requirements of 
each bears to the total normal diversion requirements of the 
group. In the case of contractors diverting from or below 
Navajo Reservoir, each such contract shall provide for a 
sharing of the remaining runoff together with the available 
storage in the same proportion as then normal diversion 
requirement under said contract bears to the total normal 
diversion requirements under all such contracts that have been 
made hereunder.
    The Secretary shall not enter into contracts for a total 
amount of water beyond that which, in his judgment, in the 
event of shortage, will result in a reasonable amount being 
available for the diversion requirements for the Navajo Indian 
irrigation project and the initial stage of the San Juan-Chama 
project as specified in sections 2 and 8 of this Act.
    No long-term contract, except contracts for the benefit of 
the lands and for the purposes specified in sections 2 and 8 of 
this Act, shall be entered into for the delivery of water 
stored in Navajo Reservoir or of any other waters of the San 
Juan River and its tributaries, as aforesaid, until the 
Secretary has determined by hydrologic investigations that 
sufficient water to fulfill said contract is reasonably likely 
to be available for use in the State of New Mexico during the 
term thereof under the allocations made in articles III and XIV 
of the Upper Colorado River Basin compact, and has submitted 
such determination to the Congress of the United States and the 
Congress has approved such contracts: Provided, That nothing 
contained in the foregoing shall be construed to forbid the 
Secretary from entering into temporary water supply contracts 
in the San Juan River Basin for any year in which he determines 
that water legally available for use in the upper basin of the 
Colorado River system would otherwise not be used there and is 
not needed to fulfill the obligations of the upper division 
States with respect to delivery of water at Lee Ferry.
    (b) If contracts are entered into for delivery from storage 
in Navajo Reservoir of water not covered by subsection (a) of 
this section, such contracts shall be subject to the same 
provision for sharing of available water supply in the event of 
shortage as in the case of contracts required to be made 
pursuant to subparagraph (a) of this section.
    (c) This section shall not be applicable to the water 
requirements of the existing Fruitland, Hogback, Cudai, and 
Cambridge Indian irrigation projects, nor to the water required 
in connection with the extension of the irrigated acreages of 
the Fruitland and Hogback Indian irrigation projects in a total 
amount of approximately eleven thousand acres.
    (d)(1) For purposes of implementing in a year of 
prospective shortage the water allocation procedures 
established by subsection (a), the Secretary of the Interior 
shall determine the quantity of any shortages and the 
appropriate apportionment of water using the normal diversion 
requirements on the flow of the San Juan River originating 
above Navajo Dam based on the following criteria:
          (A) The quantity of diversion or water delivery for 
        the current year anticipated to be necessary to 
        irrigate land in accordance with cropping plans 
        prepared by contractors.
          (B) The annual diversion or water delivery demands 
        for the current year anticipated for non-irrigation 
        uses under water delivery contracts, including 
        contracts authorized by the Northwestern New Mexico 
        Rural Water Projects Act, but excluding any current 
        demand for surface water for placement into aquifer 
        storage for future recovery and use.
          (C) An annual normal diversion demand of 135,000 
        acre-feet for the initial stage of the San Juan-Chama 
        Project authorized by section 8.
    (2) The Secretary shall not include in the normal diversion 
requirements--
          (A) the quantity of water that reliably can be 
        anticipated to be diverted or delivered under a 
        contract from inflows to the San Juan River arising 
        below Navajo Dam under New Mexico State Engineer File 
        No. 3215; or
          (B) the quantity of water anticipated to be supplied 
        through reuse.
    (e)(1) If the Secretary determines that there is a shortage 
of water under subsection (a), the Secretary shall respond to 
the shortage in the Navajo Reservoir water supply by curtailing 
releases and deliveries in the following order:
          (A) The demand for delivery for uses in the State of 
        Arizona under the Navajo-Gallup Water Supply Project 
        authorized by section 303 of the Northwestern New 
        Mexico Rural Water Projects Act, excluding the quantity 
        of water anticipated to be diverted for the uses from 
        inflows to the San Juan River that arise below Navajo 
        Dam in accordance with New Mexico State Engineer File 
        No. 3215.
          (B) The demand for delivery for uses allocated under 
        paragraph 8.2 of the agreement executed under section 
        401(a)(2) of the Northwestern New Mexico Rural Water 
        Projects Act, excluding the quantity of water 
        anticipated to be diverted for such uses under State 
        Engineer File No. 3215.
          (C) The uses in the State of New Mexico that are 
        determined under subsection (d), in accordance with the 
        procedure for apportioning the water supply under 
        subsection (a).
    (2) For any year for which the Secretary determines and 
responds to a shortage in the Navajo Reservoir water supply, 
the Secretary shall not deliver, and contractors of the water 
supply shall not divert, any of the water supply for placement 
into aquifer storage for future recovery and use.
    (3) To determine the occurrence and amount of any shortage 
to contracts entered into under this section, the Secretary 
shall not include as available storage any water stored in a 
top water bank in Navajo Reservoir established under section 
16(a) of the Act of April 11, 1956 (commonly known as the 
``Colorado River Storage Project Act'').
    (f) The Secretary of the Interior shall apportion water 
under subsections (a), (d), and (e) on an annual volume basis.
    (g) The Secretary of the Interior may revise a 
determination of shortages, apportionments, or allocations of 
water under subsections (a), (d), and (e) on the basis of 
information relating to water supply conditions that was not 
available at the time at which the determination was made.
    (h) Nothing in this section prohibits the distribution of 
water in accordance with cooperative water agreements between 
water users providing for a sharing of water supplies.
    (i) Diversions under New Mexico State Engineer File No. 
3215 shall be distributed, to the maximum extent water is 
available, in proportionate amounts to the diversion demands of 
contractors and subcontractors of the Navajo Reservoir water 
supply that are diverting water below Navajo Dam.

           *       *       *       *       *       *       *

                                  
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