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[Senate Report 110-502]
[From the U.S. Government Publishing Office]

                                                      Calendar No. 1080
110th Congress                                                   Report
                                 SENATE
 2d Session                                                     110-502

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TO DIRECT THE SECRETARY OF THE INTERIOR TO PROVIDE A LOAN TO THE WHITE 
MOUNTAIN APACHE TRIBE FOR USE IN PLANNING, ENGINEERING, AND DESIGNING A 
                      CERTAIN WATER SYSTEM PROJECT

                                _______
                                

   September 24 (legislative day, September 17, 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. 3128]

    The Committee on Indian Affairs, to which was referred the 
bill (S. 3128) to direct the Secretary of the Interior to 
provide a loan to the White Mountain Apache Tribe for use in 
planning, engineering, and designing a certain water system 
project, having considered the same, reports favorably thereon 
with an amendment in the nature of a substitute and recommends 
that the bill, as amended, do pass.

                                PURPOSE

    The purpose of S. 3128 is to authorize a Federal loan to 
the White Mountain Apache Tribe for the planning, engineering, 
and design of a dam, reservoir, and pipeline, which will be 
used to provide drinking water to the Tribe.

                         BACKGROUND AND HISTORY

    S. 3128 authorizes and directs the Secretary of the 
Interior to provide a Federal loan to the White Mountain Apache 
Tribe for the planning, engineering, and design of the Miner 
Flat Project, which will be used to provide drinking water to 
the Tribe. The Tribe, which is located on the Fort Apache 
Indian Reservation in Arizona, has approximately 15,000 
members. The majority of the Reservation's residential areas 
are served by a relatively small well field, but production 
from the wells has declined significantly over the last few 
years. As a result, the Tribe has experienced drinking water 
shortages during the summer months. In order to temporarily 
alleviate this drinking water shortage, the Tribe has 
constructed a small diversion project on the north fork of the 
White River. This diversion project, however, is only a 
temporary solution. The Miner Flat Project, consisting of a 
small dam, reservoir and pipeline, has been determined to be 
the best option to meet the Tribe's basic drinking water needs 
and is estimated to cost approximately $128 million.
    Although funding from the Arizona Water Settlements Act is 
available to assist with the Tribe's planning efforts for the 
Miner Flat Project, the funds are not available until the year 
2013. Delaying planning, engineering, and design efforts until 
2013 would not only delay the Project's completion, but would 
also increase overall Project costs due to inflation. The 
Federal loan authorized by S. 3128 will allow Project 
construction to begin more quickly and keep inflationary costs 
to a minimum, potentially saving millions of dollars. Funding 
for the construction of the project will be an essential part 
of the settlement of the Tribe's water claims in Arizona.
    The United States, in its capacity as trustee for the White 
Mountain Apache Tribe, filed claims to water in two Arizona 
adjudication proceedings and asserted the right to water 
associated with the headwaters of the Salt River. These claims 
are pending and will ultimately be decided by the courts. The 
Salt River, the headwaters of which originate on the Fort 
Apache Reservation, serves as a water source for many of 
Arizona's water users. Over the past several years, Salt River 
Project, Roosevelt Water Conservation District, several other 
irrigation districts, and many Arizona cities have engaged in 
water rights settlement negotiations with the Tribe with the 
goal of permanently quantifying the Tribe's water rights and 
eliminating water supply uncertainty associated with the 
pending adjudication proceedings. The settlement of the Tribe's 
claims is nearly finalized.
    On September 11, 2008, Senator Kyl introduced the White 
Mountain Apache Tribe Water Rights Quantification Act (S. 3473) 
to permanently quantify the Tribe's water rights. The 
quantification legislation, among other things, confirms the 
Tribe's settlement and authorizes federal funding for the 
construction of the Miner Flat Project. S. 3128 facilitates 
settlement of the Tribe's water rights by providing loan funds 
of $9.8 million to allow the Tribe to further the Miner Flat 
Project's planning, design, and engineering work.

                          LEGISLATIVE HISTORY

    S. 3128 was introduced on June 12, 2008 by Senator Kyl and 
was referred to the Committee on Indian Affairs. On September 
23, 2008, the Committee ordered the bill favorably reported to 
the Senate with the recommendation that the Senate do pass S. 
3128 with an amendment in the nature of a substitute.

                        SUMMARY OF THE AMENDMENT

    During an open business meeting on September 23, 2008, the 
Committee considered and approved an amendment in the nature of 
a substitute to S. 3128. In the underlying version of S. 3128, 
the loan for the Miner Flat Project would be repaid from the 
funds set aside in the Arizona Water Settlements Act for future 
Indian water settlements (see P.L. 108-451, Sec. 107). The 
proposed amendment in the nature of a substitute would make the 
loan repayable over a term of 25 years and strike the repayment 
provision relating to the funding in the Arizona Water 
Settlements Act.

                      SECTION-BY-SECTION ANALYSIS

Sec. 1. Short title

    Section 1 cites the short title of the bill as the White 
Mountain Apache Tribe Rural Water System Loan Authorization 
Act.

Sec. 2. Definitions

    Section 2 provides three definitions for terms used in the 
bill. These terms are: ``Miner Flat Project,'' ``Secretary,'' 
and ``Tribe.''

Sec. 3. Miner Flat Project loan

    Section 3(a) authorizes and directs the Secretary to loan 
to the White Mountain Apache Tribe $9,800,000, adjusted, as 
appropriate, based on ordinary fluctuations in engineering cost 
indices, to carry out the planning, engineering, and design of 
the Miner Flat Project. The loan is subject to the availability 
of appropriations.
    Section 3(b) provides the terms and conditions of the 
federal loan at a zero percent interest rate with a repayment 
term of 25 years, beginning on January 1, 2013.
    Section 3(c) directs the Secretary, subject to section 4, 
to administer the planning, engineering, and design of the 
Miner Flat Project.

Sec. 4. Planning, engineering, and design

    Section 4(a) directs the Secretary to offer to enter into a 
cooperative agreement with the Tribe no later than 90 days 
after the Act's enactment. It provides that the cooperative 
agreement shall address the parties' rights, responsibilities 
and liabilities in relation to the planning, engineering, and 
design of the Miner Flat Project and shall require compliance 
with all federal environmental laws. Section 4(b) provides that 
the Indian Self-Determination and Education Assistance Act's 
requirements apply to the Miner Flat Project planning, 
engineering, and design activities.

Sec. 5. Authorization of appropriations

    Section 5 authorizes the appropriation of sums as are 
necessary to carry out the Act.

                        COMMITTEE RECOMMENDATION

    On September 23, 2008, the Committee on Indian Affairs 
convened a business meeting to consider S. 3128, and other 
measures. During the business meeting, the Committee voted, by 
a voice vote, to report S. 3128 favorably, with an amendment, 
to the full Senate with a recommendation that it do pass.

                   COST AND BUDGETARY CONSIDERATIONS

    On September 24, 2008, the Committee transmitted this bill 
to the Congressional Budget Office and requested it to conduct 
an estimate of the costs incurred in carrying out its 
provisions. The Committee will publish in the Congressional 
Record information on 5-year projections for S. 3128 when such 
information is available from the Congressional Budget Office.

                      REGULATORY IMPACT STATEMENT

    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 that would be incurred in 
carrying out S. 3128. The Committee believes that the 
regulatory impact of S. 3128 will be minimal.

                        EXECUTIVE COMMUNICATIONS

    There have been no executive communications received by the 
Committee with regards to this legislation. However, on 
Thursday, September 11, 2008, testimony was provided by Mr. 
Kris Polly from the U.S. Department of the Interior to the 
Senate Committee on Indian Affairs hearing on S. 3128. Mr. 
Polly stated that until a final settlement of the Tribe's 
claims has been reached and enacted by Congress, the Department 
does not support the Federal government providing consideration 
for, or a contribution to a possible future litigation 
settlement. Mr. Polly stated that this would essentially 
authorize loan forgiveness as no non-Federal contributions 
would be repaid to the United States Treasury. The Department 
believes that the need for reliable and safe drinking water on 
the Reservation is not in question and the project proposed by 
the Tribe may be the best way to address the need. However, the 
Department stated that more analysis needed to be done to 
determine the best course of action. As such, the 
Administration testified that S. 3128 is premature. Ultimately, 
the Administration did not support the bill but has stated that 
it is committed to working with the Tribe and other settlement 
parties to reach a final and fair settlement of the Tribe's 
water rights claims.
    Chairman Dorgan, at the request of Senator Kyl, offered an 
amendment at the September 11, 2008 business meeting, which was 
adopted by voice vote and intended to address the concerns of 
the Department.

                        CHANGES IN EXISTING LAW

    In compliance with subsection 12 of Rule XXVI of the 
Standing Rules of the Senate, the Committee finds that the 
enactment of S. 3128 will not result in any changes in existing 
law.

                                  
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