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[Senate Report 110-450]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 948
110th Congress                                                   Report
                                 SENATE
 2d Session                                                     110-450

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

 
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

                                _______
                                

               September 9, 2008.--Ordered to be printed

                                _______
                                

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

                              R E P O R T

                         [To accompany S. 2494]

    The Committee on Indian Affairs, to which was referred the 
bill (S. 2494) to provide for equitable compensation to the 
Spokane Tribe of Indians of the Spokane Reservation for the use 
of tribal land for the production of hydropower by the Grand 
Coulee Dam, and for other purposes, having considered the same, 
reports favorably thereon without amendment and recommends that 
the bill do pass.

                                PURPOSE

    The purpose of S. 2494 is to provide equitable compensation 
to the Spokane Tribe for the past and continued use of tribal 
lands for the generation of hydroelectric power by the Project, 
located on the main stem of the Columbia River in the State of 
Washington. The Tribe received compensation in the amount of 
$4,700 for the loss of its tribal lands taken for the 
construction of the Project. S. 2494 would provide additional 
compensation to the Tribe to better reflect the Tribe's losses, 
reflect the hydroelectric power value of the lands taken, and 
be comparable to the payments made to the neighboring 
Confederated Tribes of the Colville Reservation (Colville 
Tribes) under the terms of a congressionally approved 
settlement with the United States for the loss of similar 
tribal lands for the construction and operation of the Project.

                               BACKGROUND

I. Planning and construction of Grand Coulee Dam and hydroelectric 
        project

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

II. Payment of compensation to tribes

    Under the Act of June 29, 1940, in aid of construction of 
the 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. . . .'' See, 16 U.S.C. Sec. 835d-h. 
This Act also provided that the Secretary of the Interior was 
to determine an amount of ``just and equitable compensation for 
the tribal lands taken.'' See, 16 U.S.C. Sec. 835e.
    The United States recognized that the Spokane Tribe and the 
Colville Tribes had compensable interests that would be injured 
by the Project. These interests included the development of 
hydroelectric power, a salmon fishery vital to the tribes which 
would be destroyed by project construction, and the inundation 
of tribal lands already identified as potential hydroelectric 
power sites. See, Id.
    Pursuant to the Secretary of the Interior's determination 
under the Act of June 29, 1940, the Tribe was paid $4,700 in 
compensation and the Colville Tribes were paid $63,000. On two 
occasions, October 2, 2003 and May 15, 2008, the Committee 
received testimony to the effect that the original payments 
made to the tribes, $4,700 and $63,000 respectively, were not 
adequate compensation to provide the tribes with ``just and 
equitable compensation'' as required by the Act of June 29, 
1940, and that for decades the two tribes had gone without the 
type of compensation to which they would have been entitled had 
the Project been licensed under the authority of the Federal 
Power Act.
    The Spokane Tribe and the Colville Tribes asserted various 
claims before the Indian Claims Commission (ICC) under the 
Indian Claims Commission Act of 1946, Pub. L. 79-726 (ICCA). 
The Colville Tribes eventually asserted two claims related to 
the Project under the ICCA. First, the Colville Tribes pursued 
a claim for the loss of their fisheries as a result of the 
Project and in 1978 settled for $3,257,000. Second, the 
Colville Tribes sought compensation for the hydroelectric power 
value of the lost tribal lands. Pursuant to this litigation, 
the Colville Tribes secured a judicial determination that under 
the ``fair and honorable dealings'' standard of the ICCA, they 
could assert a claim for compensation for the hydroelectric 
power value of the lost tribal lands.\1\ In 1994, Congress 
ratified a settlement agreement between the Colville Tribes and 
the United States providing for payment of $53,000,000 million 
in damages and annual installments of $15,250,000 in 
perpetuity, adjusted annually based on revenues from the sale 
of hydroelectric power generated by the Grand Coulee 
project.\2\
---------------------------------------------------------------------------
    \1\Confederated Tribes of the Colville Reservation v. United 
States, 964 F. 2d 1102 (Fed. Cir. 1992).
    \2\Confederated Tribes of the Colville Reservation Grand Coulee Dam 
Settlement Act, Pub. L. No. 103-436, 108 Stat. 4577 (Nov. 2, 1994) 
(Colville Tribes Settlement Act).
---------------------------------------------------------------------------
    Although the Spokane Tribe settled certain other issues 
under the ICC, it did not file claims for loss of hydroelectric 
power values before the ICCA or any other judicial forum. 
Rather, the Tribe testified that it believed that the United 
States was already planning, albeit belatedly, to appropriately 
compensate the Tribe as required by the Act of June 29, 1940 
authorizing the Project and requiring ``just and equitable 
compensation for the tribal lands taken.'' The Tribe's 
testimony is supported by numerous records, beginning in the 
1930's and then resuming in the 1970's, of high-level agency 
discussions, Solicitor's Office Opinions and memoranda, 
interagency proposals and memoranda, congressional findings, 
hearings, and directives--including a Task Force Study from 
1976 to 1980 at the direction of the Senate Committee on 
Appropriations, and negotiations with the two tribes regarding 
adequate compensation for the use of tribal lands to generate 
hydroelectric power by the Project.
    These historical and legal records often treat the legal 
basis for the Spokane Tribe's claim as the same or comparable 
to the claims eventually filed by the Colville Tribes under the 
ICCA. The only difference between the claims of the two tribes 
is that the Spokane Tribe, relying on discussions with the 
United States regarding the requirements of the Act of June 29, 
1940, and the ICCA, did not file a claim under the ICCA within 
its five-year statute of limitations.
    Based on these circumstances, the General Accounting Office 
(GAO) previously testified before the Committee that it would 
be reasonable to settle with the Spokane Tribe in the same 
manner as the settlement with the Colville Tribes. The GAO 
testified:

          A reasonable case can be made to settle the Spokane 
        tribe's case along the lines of the Colville 
        settlement--a one-time payment for the U.S. Treasury 
        for past lost payments for water power values and 
        annual payments primarily from Bonneville. Bonneville 
        continues to earn revenues from 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.\3\

    \3\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.

    Accordingly, without congressional legislation, the Spokane 
Tribe may not receive just and equitable compensation for its 
losses relating to the salmon fishery on which the Tribe was 
economically dependent, the inundation of identified 
hydroelectric power sites that the Tribe could have itself 
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.

                    SUMMARY OF PROVISIONS OF S. 2494

    Under the proposed legislation, the Spokane Tribe would be 
compensated for the use of its lands for the production of 
hydroelectric power by the Grand Coulee Dam under a formula 
based in part on that by which the Colville Tribes 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 area to 39 
percent of the lands lost by the Colville Tribes.\4\ A 
settlement based solely on this factor would result in payments 
to the Spokane Tribe equal to 39 percent of the payments made 
to the Colville Tribes. However, the Spokane Tribe agreed to 
reduce this percentage to 29 percent, in recognition of the 
fact that certain lands located within the boundaries of the 
Spokane Reservation taken for the construction of the Project 
are to be restored to the Spokane Tribe under the terms of this 
legislation.
---------------------------------------------------------------------------
    \4\See, Written Testimony of Richard Sherwood, Chairman, Spokane 
Tribe of Indians: Hearing before the Senate Committee on Indian 
Affairs, 110th Cong. 12 (May 15, 2008).
---------------------------------------------------------------------------
    Under S. 2494, an interest-bearing settlement fund account 
would be established in the Treasury to be known as the Spokane 
Tribe of Indians Settlement Fund. Subject to the availability 
of appropriations the Secretary would deposit in the Fund 
$23,900,000 for fiscal year 2008, and for each of the four 
fiscal years thereafter $18,900,000. 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 Project and 
to provide an educational facility addressing the culture and 
history of the Tribe. Of the remaining assets of the Fund, 25 
percent would be used by the Spokane Business Council for 
discretionary purposes of general benefit to members of the 
Tribe, and 75 percent for resource development, credit, 
scholarship, or reserve, investment, and economic development 
programs.
    Additionally, on March 1, 2008, the Administrator of the 
Bonneville Power Administration (Administrator) would pay the 
Tribe an amount equal to 29 percent of the annual payment due 
to the Colville Tribes under Sec. 5(b) of the Colville Tribes 
Settlement Act for fiscal year 2007. On or before March 1 of 
each year thereafter, the Administrator would make annual 
payments to the Tribe equal to 29 percent of the Colville 
Tribes payment for the previous fiscal year. These funds, upon 
payment to the Tribe, could be used or invested by the Spokane 
Business Council in the same manner and for the same purposes 
as other Spokane Tribe government 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 ($1,300,000 in each fiscal year 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 within the 
exterior boundaries of the Spokane Indian Reservation to the 
Bureau of Indian Affairs. Such lands would be held in trust for 
the benefit of the Spokane Tribe and remain a part of the 
Spokane Indian Reservation, subject to a reservation of rights 
and easement on behalf of the United States regarding use of 
these lands as is necessary for the operation of the Columbia 
Basin Project, which includes Grand Coulee Dam, and existing 
recreational facilities owned or permitted by the United 
States. The lands would also be subject to the execution of a 
memorandum of understanding between the relevant agencies of 
the Department of the Interior and the Tribe. Finally, nothing 
in section 9 or in the transfer of such lands would establish 
or affect the location of the boundary between the Spokane 
Indian Reservation and the Colville Reservation along the 
Columbia River.
    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 on behalf of the 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 
hydroelectric 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.
    The bill does not establish any precedent or is binding 
upon the Southwestern Power Administration, Western Area Power 
Authority, or Southeastern Power Administration.

                      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 provides findings made by Congress that describe 
the background and reasons for this legislation. These findings 
describe the history of site selection and development of the 
Project, the relationship between the Project and jurisdiction 
of the Federal Power Act, recognition by the federal government 
of a need to compensate the tribes, the differing experiences 
of the tribes working with the United States and seeking claims 
pursuant to the Indian Claims Commission Act, the harm suffered 
by the Spokane Tribe in comparison to the harm suffered by the 
Colville Tribes, and the Spokane Tribe's commitment to resolve 
its claims through this legislation.

Section 3. Purpose

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

Section 4. Definitions

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

Section 5. Settlement fund

    Section 5(a) establishes an interest-bearing settlement 
fund account in the Treasury of the United States to be know 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 2008, the Secretary shall 
deposit in the Fund $23,900,000, and for each of the 4 fiscal 
years thereafter, the Secretary shall deposit in the Fund 
$18,900,000.
    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 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 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 and funerary and 
cultural resources affected by the operation of the Grand 
Coulee Dam, and provide an interpretive and educational 
facility regarding the culture and history of the Spokane 
Tribe. The section also provides that the funding of these 
activities does not alter or affect any authority, obligation, 
or responsibility of the United States under the Native 
American Graves Protection and Repatriation Act (25 U.S.C. 
Sec. Sec. 3001 et seq.), the Archaeological Resources 
Protection Act (16 U.S.C. Sec. Sec. 470aa et seq.), the 
National Historic Preservation Act (16 U.S.C. Sec. Sec. 470 et 
seq.), or the National Environmental Policy Act of 1969 (42 
U.S.C. 4321 et seq.). Of all other amounts deposited in the 
Fund (including interest generated on those 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, 2008, the 
Administrator shall pay to the Tribe an amount equal to 29 
percent of the Computed Annual Payment for fiscal year 2007.\5\
---------------------------------------------------------------------------
    \5\``Computed Annual Payment'' is defined in section 4 of the bill 
as the payment calculated under paragraph 2.b. of the Colville 
Settlement Agreement, without regard for any increase or decrease in 
the payment under section 2.d. of the agreement.
---------------------------------------------------------------------------
    Section 6(b) provides that not later than March 1, 2009, 
and March 1 of each year thereafter, the Administrator shall 
pay the Tribe an amount equal to 29 percent of the Computed 
Annual Payment for the preceding fiscal year.
    Section 6(c) provides that in accordance with the payment 
schedule described in subsection (b), the Administrator shall 
make commensurate cost reductions in expenditures, on an annual 
basis, to recover each payment to the Tribe under this section. 
This section also provides that this cost reduction plan shall 
be included in the annual budget submitted by the Administrator 
to Congress.

 Section 7. Treatment after funds are paid

    Section 7(a) provides that payments made to the Spokane 
Business Council or Spokane Tribe under section 5 or 6 may be 
used or invested by the Business Council in the same manner and 
for the same purposes as the Tribe's other governmental funds.
    Section 7(b) provides that neither the Secretary nor the 
Administrator shall have any trust responsibility for the 
investment, supervision, administration, or expenditure of any 
funds after the date on which the funds are paid to the Spokane 
Business Council or Spokane Tribe under section 5 or 6.
    Section 7(c) provides that the payments of all funds to the 
Spokane Business Council and Spokane Tribe under sections 5 and 
6, and the interest and income generated by the funds, shall be 
treated in the same manner as payments under section 6 of the 
Saginaw Chippewa Indian Tribe of Michigan Distribution of 
Judgment Funds Act (100 Stat. 677).\6\
---------------------------------------------------------------------------
    \6\Section 6 of the Saginaw Chippewa Act provides that 
distributions of certain funds paid to that tribe under the Act to its 
enrolled members are not subject to Federal, State, or local income 
taxes and that such distributions may not be used as a basis for 
denying or reducing (1) financial assistance or other benefits under 
the Social Security Act to such tribal member or the member's 
household, or (2) any other Federal financial assistance or benefit to 
which the tribal member or member's household may be otherwise 
entitled.
---------------------------------------------------------------------------
    Section 7(d) provides that after the date on which funds 
are paid to the Spokane Business Council or 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 the Administrator shall deduct 
from the interest payable to the Secretary of the Treasury from 
net proceeds (as defined in section 13 of the Federal Columbia 
River Transmission System Act (16 U.S.C. Sec. 838k)) in fiscal 
year 2008, $1,300,000; and in each subsequent fiscal year in 
which the Administrator makes a payment under section 6, 
$1,300,000.
    Section 8(b)(1) provides that except as provided in 
paragraphs (2) and (3), each deduction made under this section 
shall be a credit to the interest payments otherwise payable by 
the Administrator to the Secretary of the Treasury during the 
fiscal year in which the deduction is made, and shall be 
allocated pro rata to all interest payments on debt associated 
with the generation function of the Federal Columbia River 
Power System that are due during the fiscal year. Section 
8(b)(2) provides that if, in any fiscal year, the deduction is 
greater than the amount of interest due on debt associated with 
the generation function for the fiscal year, the amount of the 
deduction that exceeds the interest due on debt associated with 
the generation function shall be allocated pro rata to all 
other interest payments due during the fiscal year. Section 
8(b)(3) provides that to the extent that a deduction exceeds 
the total amount of interest described in paragraphs (1) and 
(2), the deduction shall be applied as a credit against any 
other payments that the Administrator makes to the Secretary of 
the Treasury.

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

    Section 9(a) provides that the Secretary 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.
    Section 9(b)(1) provides that all land transferred under 
this section shall be held in trust for the benefit and use of 
the Tribe and shall remain part of the Spokane Indian 
Reservation.
    Section 9(b)(2) provides that the Federal trust 
responsibility for all land transferred under this section 
shall be the same as the responsibility for other tribal land 
held in trust within the Spokane Indian Reservation.
    Section 9(c) provides that nothing in this section 
establishes or affects the precise location of the boundary 
between the Spokane Indian Reservation and the Colville 
Reservation along the Columbia River and Lake Roosevelt. Any 
unresolved issues relating to the Tribes' common Reservation 
boundary would not be affected in any way by the proposed 
legislation; however, the Committee does recommend that all 
such issues be resolved through further negotiations between 
the two tribal sovereigns.
    Section 9(d)(1) provides that the United States reserves a 
perpetual right, power, privilege, and easement over the land 
transferred under this section to carry out the Columbia Basin 
Project under the Columbia Basin Project Act (16 U.S.C. 
Sec. Sec. 835 et seq.). Section 9(d)(2) provides further that 
the rights reserved under paragraph (1) further include the 
right to operate, maintain, repair, and replace boat ramps, 
docks, and other recreational facilities owned or permitted by 
the United States and existing on the date of enactment of this 
Act. Section 9(d)(3) provides that land transferred under this 
section that, before the date of enactment of this Act, was 
included in the Lake Roosevelt National Recreation Area shall 
remain part of the Recreation Area, and further provides that 
nothing in this section shall affect the authority or 
responsibility of the National Park Service to administer the 
Lake Roosevelt National Recreation Area under the Act of August 
25, 1916 (39 Stat. 535, chapter 408; 16 U.S.C. Sec. Sec. 1 et 
seq.). Section 9(d)(4) provides that the cognizant agencies of 
the Department of the Interior shall enter into a memorandum of 
understanding with the 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 by the Administrator under section 6 and 
restoration of ownership of land in trust under section 9 
constitute full satisfaction of the claim of the Tribe to a 
fair share of the annual hydropower revenues generated by the 
Grand Coulee Dam project for the past and continued use of land 
of the Tribe for the production of hydropower at the Dam.

Section 11. Authorization of appropriations

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

Section 12. Precedent

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

                          LEGISLATIVE HISTORY

    Settlement bills relating to the Tribe's claims were 
introduced in the past five Congresses. At different times, 
some of these bills passed the Senate and the House, but not in 
the same Congress. Bills were introduced in the 106th Congress 
(S. 1525 and H.R. 2664), in the 107th Congress (S. 2567 and 
H.R. 4859), in the 108th Congress (S. 1438 and H.R. 1753), and 
in the 109th Congress (S. 881 and H.R. 1797). In the 110th 
Congress, Senator Cantwell introduced S. 2494 for herself and 
Senators Inouye and Murray on December 17, 2007.
    Two rounds of hearings have also been held on these bills. 
On October 2, 2003, the Senate Committee on Indian Affairs held 
a hearing on S. 1438, and on the same date, the Water and Power 
Subcommittee of the House Committee on Natural Resources held a 
hearing on H.R. 1753. On May 15, 2008, the Senate Committee on 
Indian Affairs held a hearing on S. 2494.

            COMMITTEE RECOMMENDATION AND TABULATION OF VOTE

    On June 19, 2008, the Committee on Indian Affairs convened 
a business meeting to consider S. 2494 and other measures. The 
Committee voted to have the bill favorably reported without 
amendment.

                   COST AND BUDGETARY CONSIDERATIONS

    The cost estimate for S. 2494, as calculated by the 
Congressional Budget Office, is set forth below:

S. 2494--Spokane Tribe of Indians of the Spokane Reservation Grand 
        Coulee Dam Equitable Compensation Settlement Act

    Summary: S. 2494 would provide compensation to the Spokane 
Tribe of Indians for the use of tribal lands to generate 
hydroelectric power by the Grand Coulee Dam. The bill would 
require the Bonneville Power Administration (BPA) to make 
annual payments to the tribe from receipts generated from the 
sale of electricity. Those payments to the tribe would be 
offset by increases in the rates charged to BPA's customers for 
electricity, and thus would result in no net cost to the 
government. Under the bill, BPA also would be relieved from 
making certain interest payments to the Treasury. CBO estimates 
that provision would reduce interest payments received by the 
Treasury by $13 million over the 2009-2018 period and by $1.3 
million per year after 2018. (Those effects constitute an 
increase in direct spending.) Finally, the bill would create 
the Spokane Tribe of Indians Settlement Fund as compensation 
for land taken to build the Grand Coulee Dam. CBO estimates 
that implementing this provision would cost $76 million over 
the 2009-2012 period, assuming appropriation of the authorized 
amounts.
    S. 2494 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments.
     Estimated cost to the Federal Government: The estimated 
budgetary impact of S. 2494 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, in millions of dollars--
                                                             -------------------------------------------------------------------------------------------
                                                               2009   2010   2011   2012   2013   2014   2015   2016   2017   2018  2009-2013  2009-2018
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Payments to Spokane Tribe Settlement Fund Account:
     Authorization Level....................................     19     19     19     19      0      0      0      0      0      0        76         76
     Estimated Outlays......................................     19     19     19     19      0      0      0      0      0      0        76         76

                                                               CHANGES IN DIRECT SPENDING

Interest Credits for BPA:
    Estimated Budget Authority..............................      1      1      1      1      1      1      1      1      1      1         7         13
    Estimated Outlays.......................................      1      1      1      1      1      1      1      1      1      1         7         13
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Amounts may not sum to totals because of rounding.

    Basis of estimate: For this estimate, CBO assumes that the 
bill will be enacted by the beginning of 2009 and that the 
authorized amounts will be appropriated beginning that year.

Spending subject to appropriation

    S. 2494 would create the Spokane Tribe of Indians 
Settlement Fund as compensation for land taken to build the 
Grand Coulee Dam. The bill would authorize the appropriation of 
$18.9 million annually over the 2009-2012 period to that new 
tribal trust fund. The Secretary of the Interior would be 
required to invest those amounts in government securities until 
those funds are expended. CBO estimates that implementing the 
bill would cost $76 million over the 2009-2012 period.
    Payments to certain tribal 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. Subsequently, the trust 
fund would be nonbudgetary, and any use of such funds and 
interest payments to the tribes would have no effect on the 
federal budget.

Direct spending

    S. 2494 would require BPA to make annual payments to the 
Spokane Tribe. Under the bill, such payments would equal 29 
percent of the annual payment BPA currently makes to the 
Colville Tribe. For this estimate, CBO assumes that payments to 
the Spokane Tribe would begin in 2009 and would average about 
$6 million per year. Payments would continue so long as 
electricity continues to be generated at the Grand Coulee Dam. 
Although the bill would require that the payments be offset by 
commensurate cost reductions, CBO expects that those payments 
would contribute to an increase in costs to the agency. Because 
BPA is a cost-recovery agency that charges its customers for 
the electricity it generates, CBO expects that those payments 
to the tribe would become part of BPA's cost structure and 
would be offset by an increase in the new electricity rates 
that the agency plans to impose in 2009. Thus, this annual 
payment to the tribe would result in no net cost to the 
government.
    The bill also would allow BPA to reduce the amount of 
interest that it pays to the U.S. Treasury for funds borrowed 
to construct BPA's infrastructure. The bill would authorize BPA 
to forgo interest payments of $1.3 million a year for as long 
as payments are made to the tribe. Thus, CBO estimates that 
enacting this provision would increase the Treasury's outlays 
for net interest by $13 million over the 2009-2018 period.
    Intergovernmental and private-sector impact: S. 2494 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on state, local, or 
tribal governments. The payments authorized by this bill would 
benefit the Spokane Tribe.
    Estimate prepared by: Federal costs: Leigh Angres and 
Kathleen Gramp; Impact on state, local, and tribal governments: 
Melissa Merrell; Impact on the private sector: MarDestinee 
Perez.
    Estimate approved by: Theresa Gullo Deputy Assistant 
Director for Budget Analysis.

               REGULATORY AND PAPERWORK IMPACT STATEMENT

    Paragraph 11(b) of rule XXVI of the Standing Rules of the 
Senate requires that each report accompanying a bill evaluate 
the regulatory and paperwork impact that would be incurred in 
carrying out the bill. The Committee has concluded that the 
regulatory and paperwork impacts of S. 2494 should be de 
minimus.

                        EXECUTIVE COMMUNICATION

    At a May 15, 2008, hearing, the Department of the Interior 
testified in opposition to S. 2494. The Department questioned 
whether awarding such a settlement was warranted because the 
Tribe had not brought a legal claim against the United States. 
The Department also provided written testimony that stated:

          ``The Department is also concerned with transferring 
        land and jurisdiction from the Bureau of Reclamation to 
        the Bureau of Indian Affairs for the Tribe absent a 
        prior written agreement to fully address Reclamation's 
        and National Park Service's future ability to manage 
        Grand Coulee Dam, Lake Roosevelt, and the Columbia 
        Basin Project. Such a written agreement should clearly 
        address a number of issues associated with transferring 
        land into trust status, such as future liability for 
        damages from shoreline erosion and heavy metal 
        contamination in sediments from upstream mining, as 
        well as issues related to land and recreation 
        management, including consideration of the existing 
        five-party Lake Roosevelt Cooperative Management 
        Agreement. While under the present draft Reclamation 
        would be granted a perpetual easement to operate the 
        Columbia Basin Project, it is imperative that the 
        parties specifically reach agreement on the details of 
        the lands and easement rights involved and how the 
        transferred areas will be managed prior to the passage 
        of this legislation. At a minimum, such an agreement 
        should be required prior to the actual transfer taking 
        place.''

    In addition, the views of the Administration on S. 2489 as 
introduced were provided in a letter from George Skibine, 
Deputy Assistant Secretary for Policy and Economic 
Development--Indian Affairs, United States Department of the 
Interior, dated June 18, 2008, and are set forth below:

                        Department of the Interior,
                                   Office of the Secretary,
                                     Washington, DC, June 18, 2008.
Hon. Byron L. Dorgan,
Chairman, Committee on Indian Affairs,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The following sets forth the views of 
the Department of the Interior on S. 2494, the ``Spokane Tribe 
of Indians of the Spokane Reservation Grand Coulee Dam 
Equitable Compensation Settlement Act''. The Department opposes 
the bill. The Administration has worked with the Spokane Tribe 
over the last several years on this issue. We believe 
negotiations to correct several serious issues should continue.
    S. 2494 would provide compensation to the Spokane Tribe for 
the use of its land for the generation of hydropower by the 
Grand Coulee Dam. Specifically, S. 2494 would require the 
Secretary of the Interior, subject to the availability of 
appropriations, to deposit $99.5 million over five years, 
$23,900,000 for fiscal year 2008 and $18,900,000 for the 
following four fiscal years, into a trust fund held in the U.S. 
Treasury and maintained and invested by the Secretary of the 
Interior for the Spokane Tribe to be known as the ``Spokane 
Tribe of Indians Settlement Fund''. S. 2494 would also transfer 
certain land and administrative jurisdiction from the Bureau of 
Reclamation (BOR) to Bureau of Indian Affairs (BIA) for the 
Spokane Tribe. The land transferred would be held in trust for 
the Spokane Tribe and would become part of the reservation.
    The Spokane Tribe has not brought forward a legal claim 
that would warrant this type of settlement. The Administration 
questions whether the Tribe has or could bring any legal claim 
that would entitle it to compensation as contemplated under the 
bill. In light of the lack of any pending legal claim, the 
Administration does not believe this legislation is currently 
justified as a settlement of claims.
    The Department is also concerned with transferring land and 
jurisdiction from the Bureau of Reclamation to the Bureau of 
Indian Affairs for the Tribe absent a prior written agreement 
to fully address Reclamation's and National Park Service's 
future ability to manage Grand Coulee Dam, Lake Roosevelt, and 
the Columbia Basin Project. Such a written agreement should 
clearly address a number of issues associated with transferring 
land into trust status, such as future liability for damages 
from shoreline erosion and heavy metal contamination in 
sediments from upstream mining, as well as issues related to 
land and recreation management, including consideration of the 
existing five-party Lake Roosevelt Cooperative Management 
Agreement. While under the present draft Reclamation would be 
granted a perpetual easement to operate the Columbia Basin 
Project, it is imperative that the parties specifically reach 
agreement on the details of the lands and easement rights 
involved and how the transferred areas will be managed prior to 
the passage of this legislation. At a minimum, such an 
agreement should be required prior to the actual transfer 
taking place.
    The Office of Management and Budget has advised that there 
is no objection to the presentation of this report from the 
standpoint of the Administration's program.
            Sincerely,
                                         George T. Skibine,
   Deputy Assistant Secretary for Policy and Economic Development--
                                                    Indian Affairs.

                        CHANGES IN EXISTING LAW

    In compliance with subsection 12 of rule XXVI of the 
Standing Rules of the Senate, the Committee states that the 
enactment of S. 2494 makes no changes to existing law.

                                  
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