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[Senate Report 108-397]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 787
108th Congress                                                   Report
                                 SENATE
 2d Session                                                     108-397

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

 
PROVIDING FOR EQUITABLE COMPENSATION TO THE SPOKANE TRIBE OF INDIANS OF 
 THE SPOKANE RESERVATION FOR THE USE OF TRIBAL LAND FOR THE PRODUCTION 
     OF HYDROPOWER BY THE GRAND COULEE DAM, AND FOR OTHER PURPOSES

                                _______
                                

                October 8, 2004.--Ordered to be printed

                                _______
                                

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

                              R E P O R T

                         [To accompany S. 1438]

    The Committee on Indian Affairs, to which was referred the 
bill (S. 1438) to provide for equitable compensation to the 
Spokane Tribe of Indians of the Spokane Reservation in 
settlement of claims of the tribe concerning the contribution 
of the tribe to the production of hydropower by the Grand 
Coulee Dam, and for other purposes, having considered the same, 
reports favorably thereon with an amendment in the nature of a 
substitute with an amendment to the title and recommends that 
the bill, as amended, do pass.

                                Purpose

    The purpose of S. 1438 is to provide equitable compensation 
to the Spokane Tribe for a fair share of the annual hydropower 
revenues for the use of tribal lands for the generation of 
hydropower by the Grand Coulee Dam, located on the main stem of 
the Columbia River in northcentral Washington State. The Tribe 
has received compensation in the amount of $4,700 for the loss 
of tribal lands taken for the construction of the Dam, an 
amount that is inadequate to properly compensate the Tribe for 
its losses and that is not comparable to the payments made to 
the neighboring Confederated Tribes of the Colville Reservation 
for their loss of similar tribal lands for the construction and 
operation of the Dam.

                               Background

             PLANNING AND CONSTRUCTION OF GRAND COULEE DAM

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

                   PAYMENT OF COMPENSATION TO TRIBES

    Under the Act of June 29, 1940, Pub. L. No. 76-690 
(codified as amended at 16 U.S.C. Sec. Sec. 835d-835h), in aid 
of the construction of the Grand Coulee Dam project, Congress 
granted to the United States ``all the right, title, and 
interest of the Indians in and to the tribal and allotted lands 
within the Spokane and Colville Reservations . . . as may be 
designated therefor by the Secretary of the Interior from time 
to time. . . .'' This Act also provided that the Secretary of 
the Interior was to determine the amount of ``just and 
equitable compensation for the tribal lands taken.'' Id., 
codified as amended at 16 U.S.C. Sec. 835e.
    At the time the Dam project came under Federal 
administration, the United States recognized that the Spokane 
Tribe and the Confederated Tribes of the Colville Reservation 
had compensable interests that would be injured by the project, 
including interests in the development of hydropower, in a 
salmon fishery vital to the tribes which would be destroyed by 
the dam construction, and in tribal lands already identified as 
potential hydropower sites that would be inundated as a result 
of the construction of the Grand Coulee Dam.
    Pursuant to the Secretary of the Interior's determination, 
the Spokane Tribe was paid $4,700 in compensation, and the 
Confederated Tribes of the Colville Reservation were paid 
$63,000 in compensation. The Committee received testimony at 
its hearing on October 2, 2003, to the effect that the original 
payments made to the tribes were not in fact adequate to 
provide them with ``just and equitable compensation'' and were 
not comparable to the payments which would have been made had 
the Dam been constructed under the authority of the Federal 
Power Act.
    The Confederated Tribes of the Colville Reservation pursued 
additional claims for the loss of their fisheries, and in 1978 
settled those claims for about $3,300,000. The Confederated 
Tribes also initiated litigation under the Indian Claims 
Commission Act of 1946, Pub. L. No. 79-726 (ICCA), and secured 
a judicial determination that under the ``fair and honorable 
dealings'' standard of the ICCA they could assert a claim for 
compensation for the water power values of lost tribal lands 
(i.e., a share of hydropower revenues generated by the Dam from 
the use of the tribal lands). Confederated Tribes of the 
Colville Reservation v. United States, 964 F.2d 1102 (Fed. Cir. 
1992). In 1994, Congress ratified an agreement between the 
Confederated Tribes of the Colville Reservation and the United 
States providing for payment of damages and annual installments 
of $15,250,000 in perpetuity, adjusted annually, based on 
revenues from the sale of electric power generated by the Grand 
Coulee Dam project. Confederated Tribes of the Colville 
Reservation Grand Coulee Dam Settlement Act, Pub. L. No. 103-
436, 108 Stat. 4577 (November 2, 1994) (``Confederated Tribes 
Act'').
    Although the Spokane Tribe litigated certain other issues 
under the ICCA, it did not litigate its claims regarding loss 
of water power values in that forum or elsewhere. Nevertheless, 
legal opinions issued by the Office of the Solicitor of the 
Department of the Interior, a Task Force Study conducted from 
1976 to 1980 at the direction of the Senate Committee on 
Appropriations, and hearings at the time of the enactment of 
the Colville Confederated Tribes Act all recognized that the 
Spokane Tribe suffered injuries similar in nature to those 
suffered by the Colville Confederated Tribes. It was also 
recognized that the Spokane Tribe and would have a claim to 
compensation that is legally comparable to that of the Colville 
Confederated Tribes were it not for the five-year statute of 
limitations applicable under the ICCA that the United States 
contends bars the Spokane Tribe from bringing a civil action 
for damages under that Act or under any other provision of law.
    As the General Accounting Office testified before the 
Committee:

        A reasonable case can be made to settle the Spokane 
        tribe's case along the lines of the Colville 
        settlement--a one-time payment from the U.S. Treasury 
        for past lost payments for water power values and 
        annual payments primarily from Bonneville. Bonneville 
        continues to earn revenues from the Spokane reservation 
        lands used to generate hydropower. However, unlike the 
        Colville tribes, the Spokane tribe does not benefit 
        from these revenues. The Spokane tribe does not benefit 
        because it missed its filing opportunity before the 
        Indian Claims Commission. At that time it was pursuing 
        other avenues to win payments for the value of its land 
        for hydropower. These efforts would ultimately fail. 
        Without congressional action, it seems unlikely that a 
        settlement for the Spokane tribe will occur.\1\
---------------------------------------------------------------------------
    \1\ Testimony of Robert A. Robertson, United States General 
Accounting Office, October 2, 2003, before the Senate Committee on 
Indian Affairs, at 3, reprinted in S. Hrg. 108-375, at 64.

    Testimony was received by the Committee from Tribal 
Chairman Warren Seyler indicating that, while the Spokane Tribe 
failed to assert its claim in a timely manner, that failure may 
be considered excusable because it resulted in part from the 
failure of the Bureau of Indian Affairs to carry out its 
advisory responsibilities under the ICCA and because the 
Commissioner of Indian Affairs hindered the Spokane Tribe in 
retaining counsel necessary to fully investigate its potential 
claims and to represent the Tribe in asserting its claims under 
the ICCA. Accordingly, the Spokane Tribe has not received just 
and equitable compensation for its losses relating to the 
salmon fishery on which the Tribe was economically dependent, 
the inundation of identified hydropower sites that the Tribe 
could itself have developed, and the loss for the ongoing 
revenue stream the Tribe would have received under the Federal 
Power Act if the project had not been put under Federal 
administration. The lands lost by the Spokane Tribe were equal 
to more than 39% of the Colville tribal lands lost to 
construction and operation of the Grand Coulee Dam and 
associated reservoir.

                    SUMMARY OF PROVISIONS OF S. 1438

    Under the proposed legislation, the Spokane Tribe would be 
compensated for the use of its lands for the production of 
hydropower by the Grand Coulee Dam under a formula based in 
part on that by which the Confederated Tribes of the Colville 
Reservation were compensated in the Confederated Tribes of the 
Colville Reservation Grand Coulee Dam Settlement Act, Pub. L. 
103-436, 108 Stat. 4577 (November 2, 1994). The Spokane Tribe 
lost lands equivalent in areato 39% of the lands lost by the 
Colville Confederated Tribes, and a settlement based solely on this 
factor would result in payments to the Spokane Tribe equal to 39% of 
the payments made to the Confederated Colville Tribes; this percentage 
has been reduced to 29%, however, in recognition of the fact that 
certain lands located within, as well as contiguous to, the boundaries 
of the Spokane Indian Reservation taken for construction of the Grand 
Coulee Dam are to be restored to the Spokane Tribe under the terms of 
this legislation.
    Under S. 1438, an interest-bearing settlement fund account 
would be establishment in the Treasury to be known as the 
Spokane Tribe of Indians Settlement Fund. Subject to the 
availability of appropriations, for fiscal year 2006, the 
Secretary would deposit $17,800,000 into the Fund, and for each 
of the four fiscal years thereafter, the Secretary would 
deposit into the Fund the sum of $12,800,000. These funds would 
be held in trust by the Secretary, unless and until the Spokane 
Business Council submits a written request to the Secretary 
asking that all or part of the Fund be paid to the Spokane 
Business Council. In the event such a request is made, 
$5,000,000 of the initial deposit would be used for the 
planning, design, construction, equipping, and operation and 
maintenance of a Cultural Resource Repository and Interpretive 
Center to house burial remains, funerary objects, and other 
cultural resources affected by the operation of the Grand 
Coulee Dam and to provide an educational facility addressing 
the culture and history of the Spokane Tribe. Of the remaining 
assets of the Fund, 25% would be used by the Spokane Business 
Council for discretionary purposes of general benefit to 
members of the Spokane Tribe, while 75% would be used by the 
Council to carry out resource development, credit, scholarship, 
or reserve, investment, and economic development programs.
    Additionally, on March 1, 2007, the Administrator of the 
Bonneville Power Administration (``Administrator'') would pay 
the Spokane Tribe an amount equal to 29% of the annual payment 
due to the Colville Confederated Tribes under Sec. 5(b) of the 
Colville Confederated Tribes Act for the 2005 and 2006 fiscal 
years. On or before March 1 of each year thereafter, the 
Administrator would make annual payments to the Tribe equal to 
29% of the Colville payment for the previous fiscal year. Upon 
payment to the Tribe, these funds could be used or invested by 
the Spokane Business Council in the same manner and for the 
same purposes as other Spokane Tribe governmental funds.
    Expenditure of funds transferred to the Tribe by the 
Administrator would not require approval by the Secretary of 
the Interior or the Administrator, and these officials would 
have no trust responsibility for the investment, 
administration, or expenditure of those funds.
    The Administrator would be authorized to deduct certain 
sums ($2,600,000 in fiscal year 2007 and $1,300,000 each fiscal 
year thereafter in which payments are made to the Spokane 
Business Council) from the interest otherwise payable to the 
Secretary of the Treasury from ``net proceeds'' as defined in 
section 13 of the Federal Columbia River Transmission Act, 16 
U.S.C. Sec. 838k, subject to certain limitations.
    The Secretary of the Interior would be directed to transfer 
administrative jurisdiction for certain lands along the shores 
of the Columbia River and the Spokane River and its reservoirs, 
and located within as well as contiguous to the exterior 
boundaries of the Spokane Indian Reservation, to the Bureau of 
Indian Affairs. Such lands are to be held in trust for the 
Spokane Tribe and to be included within the Spokane Indian 
Reservation as those Reservation lands were originally held for 
the Tribe, subject to a reservation of rights and easement on 
behalf of the United States regarding such use of these lands 
as is necessary for the operation of the Columbia Basin Project 
and existing recreational facilities owned or permitted by the 
United States. The lands would also be subject to the execution 
of a memorandum of agreement between the relevant agencies of 
the Department of the Interior and the Spokane Tribe to provide 
for the coordination of such activities.
    The making of the prescribed payments by the Secretary of 
the Interior and the Administrator, together with the 
restoration of ownership and the taking of the specified land 
into trust and added to the Reservation on behalf of the 
Spokane Tribe, would constitute full satisfaction of the 
Spokane Tribe's claims for past and continued use of tribal 
lands and to a fair share of hydropower revenues generated as a 
result of the use of those lands.
    The bill would authorize the appropriation of such funds as 
are necessary to accomplish its purpose.

                       Explanation of Amendments

    The title of S. 1438 has been amended to more properly 
reflect the scope of the claims that are to be resolved by this 
legislation.
    The substitute amendment contains numerous changes from the 
bill as introduced. The legislative findings have been 
substantially rewritten, and six of the nine definitions are 
new.
    The amount of the payments to be made into the Spokane 
Tribe of Indians Settlement Fund is substantially reduced from 
that set forth in the bill as introduced (to a total of 
$69,000,000, paid over 5 years), and the amount of annual 
payments to be made to the Spokane Tribe is reduced below the 
rate originally proposed (now 29% of the analogous payments 
made to the Confederated Tribes of the Colville Reservation, a 
reduction from 39.4% in the bill as introduced), in recognition 
of the restoration of lands, both within the Reservation and 
ceded land contiguous to the Reservation, previously taken from 
the Spokane Tribe. The provisions of sections 5 and 6 of the 
bill as introduced (``Settlement Fund Account'' and ``Use and 
Treatment of Settlement Funds,'' respectively) have been 
modified and rearranged as sections 5, 6, and 7 (``Settlement 
Fund,'' ``Payments by the Administrator,'' and ``Treatment 
After Funds are Paid'').
    Provisions contained in the substitute amendment regarding 
the effect of this legislation on interest payments payable to 
the Treasury of the United States by the Bonneville Power 
Administration (Section 8, ``Repayment Credit,'' authorizing 
the Administrator to deduct certain sums from annual payments 
of interest made to the U.S. Treasury) and the transfer from 
theBureau of Reclamation to the Bureau of Indian Affairs of 
certain lands along the shoreline of the reservoir behind Grand Coulee 
Dam to be held in trust for the Spokane Tribe as part of the Spokane 
Indian Reservation (Section 9, ``Transfer of Administrative 
Jurisdiction,'') are new and were not included in the legislation as 
introduced.
    Section 7 (``Satisfaction of Claims'') of the original 
legislation has been amended and renumbered as section 10.

                          Legislative History

    The Congress considered settlement proposals relating to 
the Spokane Tribe's claims in the 106th Congress (S. 1525 and 
H.R. 2664) and in the 107th Congress (S. 2567 and H.R. 4859). 
In the 108th Congress, S. 1438 was introduced on July 22, 2003, 
by Senator Cantwell, for herself and Senators Inouye and 
Murray, and was referred to the Committee on Indian Affairs. 
Related legislation, H.R. 1753, sponsored by Representative 
George Nethercutt and cosponsored by Representatives Norman 
Dicks and Dale Kildee, is now pending in the House of 
Representatives. The Senate Committee on Indian Affairs held a 
hearing on S. 1438 on October 2, 2003, and received testimony 
or written statements from Sen. Cantwell, Sen. Murray, Steven 
G. Hickok, Deputy Administrator, Bonneville Power 
Administration, Warren Seyler, Chairman, Spokane Tribal 
Business Council (accompanied by Howard Funke, Esq., Funke and 
Work Law Offices, Coeur d' Alene, Idaho, and Charles E. Pace, 
President and CEO, Regional Services, Challis, Idaho), and 
Robert A. Robinson, Managing Director, Natural Resources and 
Environment, General Accounting Office. S. Hrg. 108-375. A 
similar hearing on H.R. 1753 was held on the same day before 
the Water and Power Subcommittee of the House Resource 
Committee.

            Committee Recommendation and Tabulation of Vote

    The Committee on Indian Affairs, in an open business 
session on September 22, 2004, adopted an amendment to the 
title and an amendment in the nature of a substitute to S. 1438 
by voice vote and ordered the bill, as amended, reported 
favorably to the Senate.

                      Section-by-Section Analysis

Section 1--Short title

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

Section 2--Findings

    Section 2 states that Congress finds that--
    (1) From 1927 to 1931, at the direction of Congress, the 
Corps of Engineers investigated the Columbia River and its 
tributaries to determine sites at which power could be produced 
at low cost.
    (2) Under section 10(e) of the Federal Power Act (16 U.S.C. 
Sec. 803(e)), when licenses are issued involving tribal land 
within an Indian reservation, a reasonable annual charge shall 
be fixed for the use of the land, subject to the approval of 
the Indian tribe having jurisdiction over the land.
    (3) In August 1933, the Columbia Basin Commission, an 
agency of the State of Washington, received a preliminary 
permit from the Federal Power Commission for water power 
development at the Grand Coulee site.
    (4) Had the Columbia Basin Commission or a private entity 
developed the site, the Spokane Tribe would have been entitled 
to a reasonable annual charge for the use of the land.
    (5) In the mid-1930s, the Federal Government, which is not 
subject to the licensing requirements of the Federal Power Act 
(16 U.S.C. Sec. 792 et seq.), federalized the Grand Coulee Dam 
project and began construction of the Grand Coulee Dam.
    (6) When the Grand Coulee Dam project was federalized, the 
Federal Government recognized that development of the project 
affected the interests of the Spokane Tribe and the 
Confederated Tribes of the Colville Reservation and that it 
would be appropriate for the Spokane and Colville Tribes to 
receive a share of the revenue from the disposition of power 
produced at Grand Coulee Dam.
    (7) In the Act of June 29, 1940 (16 U.S.C. Sec. 835d et 
seq.), Congress granted to the United States, in aid of the 
construction, operation, and maintenance of the Columbia River 
project, all the right, title, and interest of the Spokane 
Tribe and the Colville Tribes in and to tribal and allotted 
land within the Spokane and Colville Reservations, as 
designated by the Secretary of the Interior from time to time, 
and other interests in such land as required and as designated 
by the Secretary for certain construction activities undertaken 
in connection with the project and provided that compensation 
for the land and other interests was to be determined by the 
Secretary in such amounts as the Secretary determined to be 
just and equitable.
    (8) Pursuant to that Act, the Secretary paid $4,700 to the 
Spokane Tribe and $63,000 to the Confederated Tribes of the 
Colville Reservation.
    (9) In 1994, following litigation under the Act of August 
13, 1946, commonly known as the Indian Claims Commission Act 
(60 Stat. 1049, chapter 959; former 25 U.S.C. Sec. Sec. 70 et 
seq.), Congress ratified the Colville Settlement Agreement, 
which required a paymentof $53,000,000 for past use of the 
Colville Tribes' land and, for continued use of the Colville Tribes' 
land, annual payments of $15,250,000, adjusted annually based on 
revenues from the sale of electric power from the Grand Coulee Dam 
project and transmission of that power to the Bonneville Power 
Administration.
    (10) The Spokane Tribe, having suffered harm similar to 
that suffered by the Colville Tribes, did not file a claim 
within the Indian Claims Commission Act's 5-year statute of 
limitations.
    (11) Neither the Colville Tribes nor the Spokane Tribe 
filed claims for compensation for use of their land with the 
Claims Commission before August 13, 1951, but both Tribes filed 
unrelated land claims prior to August 13, 1951.
    (12) In 1976, over objections by the United States, the 
Colville Tribes were successful in amending their 1951 Claims 
Commission land claims to add their Grand Coulee claim.
    (13) The Spokane Tribe had no such claim to amend, having 
settled its Claims Commission land claims with the United 
States in 1967.
    (14) The Spokane Tribe has suffered significant harm from 
the construction and operation of Grand Coulee Dam.
    (15) Spokane tribal acreage taken by the United States for 
the construction of Grand Coulee Dam equaled approximately 39 
percent of Colville tribal acreage taken for construction of 
the dam.
    (16) The payments and land transfers made pursuant to this 
Act constitute fair and equitable compensation for the past and 
continued use of Spokane tribal land for the production of 
hydropower at Grand Coulee Dam.
    (17) By vote of the Spokane tribal membership, the Spokane 
Tribe has resolved that the payments and land transfers made 
pursuant to this Act constitute fair and equitable compensation 
for the past and continued use of Spokane Tribal land for the 
production of hydropower at Grant Coulee Dam.

Section 3--Purpose

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

Section 4--Definitions

    Section 4 provides definitions for the terms 
``Administrator,'' ``Colville Settlement Agreement,'' 
``Colville Tribes,'' ``Computed Annual Payment,'' 
``Confederated Tribes Act,'' ``Fund,'' ``Secretary,'' ``Spokane 
Business Council,'' and ``Spokane Tribe.''

Section 5--Settlement fund

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

Section 6--Payments by the Administrator

    Section 6(a) provides that on March 1, 2007, the 
Administrator shall pay to the Spokane Tribe the amount that is 
equal to 29 percent of the Computed Annual Payment for fiscal 
year 2005, adjusted to reflect the change in the Consumer Price 
Index for all urban consumers published by the Department of 
Labor, from the date on which the payment for fiscal year 2005 
was made to the Colville Tribes to the date on which payment is 
made to the Spokane Tribe under this provision, and the amount 
that is equal to 29 percent of the Computed Annual Payment for 
fiscal year 2006.
    Section 6(b) provides that on or before March 1, 2008, and 
March 1 of each year thereafter, the Administrator shall pay to 
the Spokane Tribe the amount that is equal to 29 percent of the 
Computed Annual Payment for the previous fiscal year.

Section 7--Treatment after funds are paid

    Section 7(a) provides that payments made to the Spokane 
Business Council of Spokane Tribe under section 5 or 6 may be 
used or invested by the Spokane Business Council in the same 
manner and for the same purposes as other Spokane Tribe 
governmental funds.
    Section 7(b) provides that neither the Secretary nor the 
Administrator shall have any trust responsibility for the 
investment, supervision, administration, or expenditure of any 
funds after the date on which the funds are paid to the Spokane 
Business Council under section 5 or 6.
    Section 7(c) provides that the payments of all funds to the 
Spokane Business Council and Spokane Tribe under sections 5 and 
6, and the income generated by the funds, shall be treated in 
the same manner as payments under section 6 of the Saginaw 
Chippewa Indian Tribe of Michigan Distribution of Judgment 
Funds Act (100 Stat. 677).
    Section 7(d) provides that after the date on which funds 
are paid to the Spokane Business Council or Spokane Tribe under 
section 5 or 6, the funds shall constitute Spokane Tribe 
governmental funds and shall be subject to an annual tribal 
government audit.

Section 8--Repayment credit

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

Section 9--Transfer of administrative jurisdiction

    Subsection 9(a) provides that the Secretary of the Interior 
shall transfer administrative jurisdiction from the Bureau of 
Reclamation to the Bureau of Indian Affairs over all land 
acquired by the United States under the Act of June 29, 1940 
(16 U.S.C. Sec. 835d), that is located within the exterior 
boundaries of the Spokane Indian Reservation established 
pursuant to the Executive Order of January 18, 1881, and all 
land on the south bank of the Spokane River that extends 
westerly from Little Falls Dam to the confluence of the Spokane 
River and the Columbia River and that is located at or below 
contour elevation 1290 feet above sea level.
    Subsection 9(b) provides that all land transferred under 
this section shall be held in trust for the benefit and use of 
the Spokane Tribe and shall become part of the Spokane Indian 
Reservation.
    Subsection 9(c) provides that the United States reserves a 
perpetual right, power, privilege, and easement over the land 
transferred under this section to carry out the Columbia Basin 
Project under the Columbia Basin Project Act (16 U.S.C. 
Sec. Sec. 835 bet seq.), further including the right to 
operate, maintain, repair, and replace boat ramps, docks, and 
other recreational facilities owned or permitted by the United 
States and existing on the date of enactment of this Act, and 
further providing that the cognizant agencies of the Department 
of the Interior shall enter into a memorandum of understanding 
with the Spokane Tribe to provide for coordination in applying 
this subsection.

Section 10--Satisfaction of claims

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

Section 11--Authorization of appropriations

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

                   Cost and Budgetary Considerations

    The cost estimate for S. 1438, as amended, as provided by 
the Congressional Budget Office, is set forth below:

                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC, October 7, 2004.
Hon. Ben Nighthorse Campbell,
Chairman, Committee on Indian Affairs,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared to the enclosed cost estimate for S. 1438, the Spokane 
Tribe of Indians of the Spokane Reservation Grand Coulee Dam 
Equitable Compensation Settlement Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Mike Waters.
            Sincerely,
                                      Elizabeth M. Robinson
                               (For Douglas Holtz-Eakin, Director).
    Enclosure.

S. 1438--Spokane Tribe of Indians of the Spokane Reservation Grand 
        Coulee Dam Equitable Compensation Settlement Act

    Summary: S. 1438 would establish and authorize funds to be 
appropriated to the Spokane Tribe of Indians Settlement Fund 
(``the Fund'') to compensate the Spokane Tribe of Indians for 
the use of its land by the Grand Coulee Dam project in 
Washington. Starting in 2007, the bill would require the 
Bonneville Power Administration (BPA) to make annual payments 
to the tribe from receipts generated from the sale of 
electricity. Those payments of the tribe would be offset by 
increases in the rates charged to BPA's customers for 
electricity sales, and thus would result in no net cost to the 
government. Under the bill, BPA would be relieved from making 
certain interest payments to the Treasury for funds borrowed on 
BPA's behalf. CBO estimates that provision would reduce 
receipts collected by BPA by $12 million over the 2007-2014 
period, and by $1.3 million a year after 2014. (Those effects 
constitute an increase in direct spending.)
    Assuming appropriation of the necessary amounts, CBO 
estimates that implementing the bill would add $56 million to 
discretionary costs over the 2005-2009 period to fund the 
Spokane Tribe of Indians Settlement Fund, and an additional $13 
million in 2010. S. 1438 contains no intergovernmental or 
private-sector mandates as defined in the Unfunded Mandates 
Reform Act (UMRA). The payments authorized by this bill would 
benefit the Spokane Tribe.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of S. 1438 is shown in the following table. 
The costs of this legislation fall within budget functions 450 
(community and regional development) and 270 (energy).

----------------------------------------------------------------------------------------------------------------
                                                          By fiscal year, in millions of dollars--
                                           ---------------------------------------------------------------------
                                             2005   2006   2007   2008   2009   2010   2011   2012   2013   2014
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

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

                                           CHANGES IN DIRECT SPENDING

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

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

Spending subject to appropriation

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

Direct spending

    S. 1436 would require BPA to make annual payments to the 
Spokane Tribe. Under the bill such payments would be made for 
many decades--as long as electricity is generated at the Grand 
Coulee Dam and sold by BPA. Under the bill this payment would 
be 29 percent of the annual payment BPA currently makes to the 
Colville Tribe. Such payments would begin in 2007 and would 
total about $5 million per year, except in 2007 when BPA would 
be required to make two payments. BPA is a cost-recovery agency 
that charges its customers for electricity. Because it is 
scheduled to change its rates in 2007, this payment to the 
tribe would become part of BPA's cost structure and would be 
offset by an increase in the new electricity rates that the 
agency plans to impose in 2007. Thus, this annual payment to 
the tribe would result in no net cost to the government.
    The bill also would allow BPA reduce the amount of interest 
costs that it transfers to the U.S. Treasury for funds borrowed 
to construct BPA's infrastructure. The bill would authorize BPA 
to forgo interest payments of $2.6 million in 2007, and $1.3 
million each year thereafter for many decades--as long as 
electricity is generated at the Grand Coulee Dam and sold by 
BPA. As a cost-recovery agency, BPA would reduce it's annual 
collections from electricity rate payers by the amount of these 
forgone interest payments. Thus, CBO estimates that BPA 
collections, which are recorded in the budget as offsetting 
receipts, would be reduced by $2.6 million in 2007 and about 
$12 million over the 2007-2014 period.
    Intergovernmental and private-sector impact: S. 1438 
contains no intergovernmental or private-sector mandates as 
defined in UMRA. The payments authorized by this bill would 
benefit the Spokane Tribe.
    Estimate prepared by: Federal Costs: Lisa Cash Driskill and 
Mike Waters. Impact on State, Local, and Tribal Governments: 
Marjorie Miller. Impact on the Private Sector: Selena Caldera.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                        Executive Communications

    The Committee has not received any communications from the 
Executive Branch regarding S. 1438.

                    Regulatory and Paperwork Impact

    Paragraph 11(b) of rule XXVI of the Standing Rules of the 
Senate requires each report accompanying a bill to evaluate the 
regulatory and paperwork impact that would be incurred in 
carrying out the bill. The Committee finds that the regulatory 
and paperwork impact of S. 1438, as amended, should be minimal.

                        Changes in Existing Law

    In compliance with subsection 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the bill are required to be set forth in the accompanying 
Committee report.
    The Administrator of the Bonneville Power Administration 
currently makes annual interest payments to the Secretary of 
the Treasury from ``net payments'' as defined in section 13 of 
the Federal Columbia River Transmission System Act (16 U.S.C. 
Sec. 838k). Section 8 of S. 1438 provides that the 
Administrator shall deduct $2,600,000 from those payments in 
Fiscal Year 2007 and shall deduct $1,300,000 from those 
payments in each subsequent fiscal year in which a payment is 
made to the Spokane Tribe pursuant to section 6 of S. 1438.

                                  
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