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[Senate Hearing 107-101]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 107-101

   TRUST LANDS AND RESOURCES OF THE CONFEDERATED TRIBES OF THE WARM 
                     SPRINGS RESERVATION OF OREGON

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

                                HEARING

                               BEFORE THE

                      COMMITTEE ON INDIAN AFFAIRS
                          UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                                   ON

                                 S. 266

 REGARDING THE USE OF THE TRUST LAND AND RESOURCES OF THE CONFEDERATED 
            TRIBES OF THE WARM SPRINGS RESERVATION OF OREGON

                               __________

                             JULY 24, 2001
                             WASHINGTON, DC

                                _______

                  U.S. GOVERNMENT PRINTING OFFICE
74-483                     WASHINGTON : 2002

____________________________________________________________________________
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                      COMMITTEE ON INDIAN AFFAIRS

                   DANIEL K. INOUYE, Hawaii, Chairman

            BEN NIGHTHORSE CAMPBELL, Colorado, Vice Chairman

FRANK MURKOWSKI, Alaska              KENT CONRAD, North Dakota
JOHN McCAIN, Arizona,                HARRY REID, Nevada
PETE V. DOMENICI, New Mexico         DANIEL K. AKAKA, Hawaii
CRAIG THOMAS, Wyoming                PAUL WELLSTONE, Minnesota
ORRIN G. HATCH, Utah                 BYRON L. DORGAN, North Dakota
JAMES M. INHOFE, Oklahoma            TIM JOHNSON, South Dakota
                                     MARIA CANTWELL, Washington

        Patricia M. Zell, Majority Staff Director/Chief Counsel

         Paul Moorehead, Minority Staff Director/Chief Counsel

                                  (ii)

  
                            C O N T E N T S

                              ----------                              
                                                                   Page
S. 266, text of..................................................     2
Statements:
    Blackwell, Sharon, deputy commissioner, Indian Affairs, 
      Department of the Interior.................................     5
    Goe, Douglas, Esquire, Ater Wynne, LLP.......................    12
    Inouye, Hon. Daniel K., U.S. Senator from Hawaii, chairman, 
      Committee on Indian Affairs................................     1
    Noteboom, James D., tribal attorney, Confederated Tribes of 
      the Warm Springs Reservation...............................     9
    Patt, Jr., Olney, chairman, Confederated Tribes of the Warm 
      Springs Reservation........................................     9
    Smith, Hon. Gordon, U.S. Senator from Oregon.................     7
    Tompkins, Robin, assistant general counsel, Portland General 
      Electric Co., Portland, OR.................................    10
    Wyden, Hon. Ron, U.S. Senator from Oregon....................    15

                                Appendix

Prepared statements:
    Blackwell, Sharon............................................    17
    Goe, Douglas.................................................    18
    Patt, Jr., Olney.............................................    19
    Tompkins, Robin..............................................    22
    Wyden, Hon. Ron, U.S. Senator from Oregon....................    23

 
TRUST LAND AND RESOURCES OF THE CONFEDERATED TRIBES OF THE WARM SPRINGS 
                         RESERVATION IN OREGON

                              ----------                              

                         TUESDAY, JULY 24, 2001

                                       U.S. Senate,
                               Committee on Indian Affairs,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10 a.m. in room 
485, Senate Russell Building, Hon. Daniel K. Inouye (chairman 
of the committee) presiding.
    Present: Senators Inouye, Akaka, and Campbell.

 STATEMENT OF HON. DANIEL K. INOUYE, U.S. SENATOR FROM HAWAII, 
             CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS

    The Chairman. The committee meets this morning to receive 
testimony on a bill which provides for the ratification by the 
Congress of an agreement between the Confederated Tribes of the 
Warm Springs Reservation, the Department of the Interior, and 
the Portland General Electric Co.. This agreement would provide 
the Warm Springs Tribes with the means to secure an ownership 
interest in the Pelton Project and become a co-applicant with 
the Portland General Electric Co. in the licensing process of 
the Federal Energy Regulatory Commission.
    [Text of S. 266 follows:]
      
      

  

    The Chairman. Is Senator Wyden or Senator Smith here?
    [No response.]
    The Chairman. If not, may I call upon the Deputy 
Commissioner for Indian Affairs, Department of the Interior, 
Sharon Blackwell.

 STATEMENT OF SHARON BLACKWELL, DEPUTY COMMISSIONER OF INDIAN 
              AFFAIRS, DEPARTMENT OF THE INTERIOR

    Ms. Blackwell. Good morning, Mr. Chairman, Mr. Vice 
Chairman and members of the committee.
    Thank you for the opportunity to present the views of the 
Department of the Interior on S. 266 entitled, ``The Use of 
Trust Land and Resources of the Confederated Tribes of the Warm 
Springs Reservation of Oregon.'' We have no objection to the 
enactment of S. 266 and include at the end of the statement 
suggested language that covers the Department's concerns 
regarding the authorities addressed in the legislation.
    As those testifying later can speak more directly about the 
project and its financing arrangements, I will briefly 
summarize the agreement that is the subject of this 
legislation. On April 12, 2000, the Confederated Tribes of the 
Warm Springs Reservation signed an agreement that created a 
process whereby the tribes would gain part ownership in the 
three dam Pelton Project partially situated on reservation land 
and would become a co-applicant with Portland General Electric 
before the FERC licensing proceedings. The agreement was 
approved by the Secretary of the Interior.
    We understand that the tribes plan to finance their 
participation in the project through the issuance of bonds. The 
tribes bonding counsel has asked the tribes to seek legislative 
approval of the agreement in order to provide an unqualified 
level of assurance that the agreement is proper, binding and 
will not be altered.
    The Department maintains that the Secretary of the Interior 
had all the necessary authority to approve the terms and the 
intent of the agreement under the provisions of the Federal 
Power Act. Under that act, the Secretary is given broad 
authority to ensure adequate protection and utilization of 
Federal reservations and FERC licenses. For example, under 16 
U.S.C. section 797(e), referred to generally as section 4(e), 
the Secretary provides FERC with license conditions to ensure 
that hydropower projects are consistent with the purposes of 
affected Indian reservations. In this regard, the Secretary of 
the Interior has approved agreements of a similar nature in the 
past without congressional approval and has the authority to do 
so in the future.
    The Department is also concerned that this legislation as 
proposed may effectually require other tribes to seek similar 
legislative approval of other settlement agreements needed to 
realize economic development opportunity. As a consequence, 
tribes with fewer political resources or less economic clout 
may be unable to meet the increased standard of contractual 
security sought by this legislation.
    The Department is also concerned that the legislation would 
amend 25 U.S.C. section 415(a) to provide the tribes with 99-
year leasing authority to account for the life of this 
agreement. Similar to our position regarding the Secretary's 
authority, the Department maintains that the Federal Power Act 
provides all the authority necessary for FERC license projects 
to occupy tribal lands for the term of the license. Thus, no 
leases of any term are required and the amendment of 25 U.S.C. 
section 415(a) is not necessary. Nevertheless, while the 
Federal Power Act does not require it, the Department has no 
objection to extending the tribes' leasing authority.
    In sum, the Department does not want to stand in the way of 
the tribes securing their necessary financing and potentially a 
more favorable financing arrangement. As such, we have no 
objection to S. 266. We do request, however, that the bill be 
amended to clarify that the Secretary is deemed authorized to 
take all actions necessary to approve and implement not only 
this agreement but all other such agreements entered into 
before this time and in the future pursuant to that authority 
of the Secretary under the Federal Power Act. We believe that 
this language will allow the Warm Springs Tribe the benefit of 
their agreement while preserving the Department's authority 
needed to ensure this opportunity for all other Indian tribes.
    This concludes my prepared statement. Specific language to 
address the Department's concern follows this statement and has 
been provided to the committee.
    I would be pleased to respond to any questions.
    [Prepared statement of Ms. Blackwell appears in appendix.]
    The Chairman. The Department of the Interior's position is 
that although legislation may not be necessary, this bill will 
not be objected to because it may cover whatever questions the 
court may?
    Ms. Blackwell. I believe that the intent of the legislation 
is to provide the tribes bonding counsel with what, in the 
opinion of the bonding counsel, will result in an unqualified 
bonding opinion. The Department has no objection to seeing the 
tribes achieve that. Our concern is related entirely to past 
agreements of a similar nature, that have been approved 
pursuant to the Federal Power Act and those that may be 
approved in the future.
    The Chairman. So with the suggested amendment, the 
Department would have no objection whatsoever?
    Ms. Blackwell. That's correct, Senator Inouye.
    The Chairman. Thank you.
    Mr. Vice Chairman.
    Senator Campbell. Thank you, Mr. Chairman.
    And the Confederated Tribes have no objection to your 
suggested language?
    Ms. Blackwell. I visited this morning with Chairman Patt 
and it may be that he will have a statement to make with regard 
to our suggestions.
    Senator Campbell. Do you have any input at all from the 
State?
    Ms. Blackwell. No; we have not.
    Senator Campbell. I'm not familiar with this project. Can 
you tell me in a nutshell the scope of it? I guess like all 
water projects, it provides irrigation of water and power to 
someone, is that right?
    Ms. Blackwell. The Portland General Electric Co. [PGE] owns 
three dams at the Pelton-Round Butte Hydroelectric Project. It 
is on the Deschutes River and it is approximately 100 miles 
from where the river flows into the Columbia.
    The Round Butte Dam is a big project, 440 feet tall. The 
Pelton Dam is 204 feet tall and then the deregulating dam, 
operated by the Warm Springs Tribe, is a smaller operation and 
about 40 feet tall. The project has about 427 megawatt 
capacity. PGE owns and operates the generators in the two 
larger, upstream dams. The tribe owns, operates and sells 
electricity from a 19 megawatt generator and a smaller, 
deregulating dam.
    Senator Campbell. I see. Thank you.
    Thank you, Mr. Chairman. I have no further questions.
    The Chairman. Thank you, Ms. Blackwell.
    The committee is most pleased to recognize the presence of 
the very distinguished Senator from Oregon, the Honorable 
Gordon Smith. Senator Smith, we would be most pleased to 
receive your testimony, sir.

    STATEMENT OF HON. GORDON SMITH, U.S. SENATOR FROM OREGON

    Senator Smith. Thank you, Mr. Chairman.
    I appreciate your willingness, and Senator Campbell, to 
hold this hearing to consider S. 266, a bill I introduced along 
with my colleague, Senator Wyden, regarding the use of the 
trust land and resources of the Confederated Tribes of the Warm 
Springs Reservation in Oregon.
    I would also like to extend a warm welcome to those 
witnesses who have traveled here today to testify on this 
bill--Olney Patt, Jr, the chairman of the Warm Springs Tribal 
Council; Robin Tompkins, general counsel, Portland General 
Electric; and Doug Goe, chairman of the Public Finance Group at 
Ater Wynne.
    This legislation is vital to ensuring that all the 
provisions of the April 12, 2000 agreement between the 
Confederated Tribes of the Warm Springs Reservation and PGE are 
valid and have Federal approval. Under this agreement, the 
tribes and PGE will seek a joint Federal Power license for the 
Pelton-Round Butte Hydroelectric Project on the Deschutes River 
in Oregon.
    This agreement and this legislation were both negotiated 
with great care. The tribes are seeking this legislation to 
ensure that the agreement in its entirety is valid and can 
serve as the basis for financing to purchase its interest in 
the project on January 1, 2002. This historic agreement is good 
for all the parties involved and will benefit the ratepayers of 
Oregon in years to come. It is an innovative approach to the 
often contentious issue surrounding the relicensing of 
hydroelectric facilities on or adjacent to Indian lands.
    I also want to congratulate the tribes for responding to 
and resolving the concerns of county officials in Jefferson 
County, OR who are concerned about the loss of property tax 
revenue to the county under this new agreement. That issue has 
been resolved. It is my understanding local officials are 
strongly supportive of this agreement and this legislation.
    There is, however, a need to move this legislation in an 
expeditious manner. The legislation must be enacted before the 
end of this session so the tribes can put together the 
financing to purchase their share of the project by January 1, 
2002. I realize that the legislation has been substantially 
rewritten on the House side and there are a few issues still to 
be resolved with that redraft. In fact, staff are meeting with 
stakeholders after this hearing to try and reach a consensus on 
the bill on that side of the Hill. As the principal sponsor of 
the Senate bill, I am happy to have the new language, once 
agreed upon by the parties, substituted for the bill that I 
have introduced.
    Mr. Chairman, again, I thank you for your leadership on 
this issue and Senator Campbell as well. I am hopeful that this 
consensus legislation can move in the near future. Thank you in 
advance for your consideration of it.
    I would be happy to answer any questions.
    The Chairman. Thank you very much, Senator Smith.
    This is a historic moment because it should serve as a 
model for Indian nations and interested parties in getting 
together and I congratulate you on coming forth with this bill.
    I have been advised that the parties you represent will be 
meeting this afternoon to work out the language and if an 
agreement is reached, the vice chairman and I would be very 
glad to set up a markup for this measure next Tuesday, July 31.
    Senator Smith. Wonderful. I thank you for that. I would 
just add parenthetically that I am very gratified by this 
agreement in that it brings together the interest of the 
general community and ties them to the interest of the tribal 
community and gives the tribe a financial stake in these 
contentious issues around hydroelectric power, around fish, and 
all these competing values that are all valuable and it puts 
everyone at the table with a stake in the outcome to make sure 
our obligation to people to provide electric power and our 
obligation to fish and wildlife will be well served by the 
tribes having a place in this very important deal.
    The Chairman. Senator Campbell.
    Senator Campbell. I just want to commend both Senators for 
this bill. In the history of the American West, the discussion 
of the use of water and power has not always been a friendly 
discussion between tribes and non-Indians or tribes and States. 
The money, the millions if not hundreds of millions of dollars 
that have gone into litigation fighting out those problems 
through courts to my way of thinking is something we have to 
get away from. I think this kind of legislation in which the 
parties agree and in which all can share the benefits of the 
project is definitely the way to go. I just wanted to tell you 
that for the record.
    Senator Smith. Thank you, Senator Campbell. I agree with 
you. I think in our history in interior matters, we take water 
and power projects at the tribes rather than with the tribes. 
This is breaking new ground and it's a credit to the parties 
and this committee that such legislation could come forward.
    The Chairman. Thank you very much, sir.
    Now may I call upon the chairman of the Confederated Tribes 
of the Warm Springs Reservation, Warm Springs, OR, Olney Patt, 
Jr.; the assistant general counsel, Portland General Electric 
Co., Portland, OR, Robin Tompkins; and Douglas Goe, Esq., 
Portland.
    Mr. Chairman, welcome, sir.

 STATEMENT OF HON. OLNEY PATT, Jr., CHAIRMAN, THE CONFEDERATED 
  TRIBES OF THE WARM SPRINGS RESERVATION, ACCOMPANIED BY JIM 
               NOTEBOOM, ESQUIRE, TRIBAL ATTORNEY

    Mr. Patt. I am Olney Patt, Jr., tribal council chairman of 
the Confederated Tribes of the Warm Springs Reservation of 
Oregon. To my left is tribal attorney, Jim Noteboom.
    I am pleased to appear before the committee today to 
express our strong support for S. 266, a bill essential to our 
purchase of one-third or more of the Pelton Hydroelectric 
Project. Section 1 of the bill provides the Secretary of the 
Interior with authority to approve leases of up to 99 years for 
trust land on our reservation and land held in trust for our 
tribe. This authority will help give our tribe greater 
flexibility in managing our land for economic and other 
development. Section 2 provides the Secretary of the Interior 
with clear authority to approve the use of Warm Springs Trust 
Land resources and other assets in our purchase of an interest 
in Pelton Project. As Mr. Goe, our bond counsel, will discuss a 
little later, this express authority is necessary for the bonds 
that will finance our purchase.
    The 440 megawatt Pelton Hydroelectric Project is a series 
of three dams across the Deschutes River that forms the eastern 
boundary of the Warm Springs Reservation in central Oregon. 
Portland General Electric Co. represented here today by their 
general counsel, Robin Tompkins, owns the project with the 
exception of a 19 megawatt generator and the reregulating dam 
owned by the tribe.
    About one-third of the project is on the Warm Springs Trust 
land for which the tribe has been receiving about $11-million a 
year in rent. Clearly the project is a key economic resource to 
Warm Springs and one in which we would prefer to be owners 
rather than recipients of rent.
    The FERC license for the project expires this December 31 
and both the tribe and PGE submitted competing applications for 
the new license. Rather than compete, the parties realize it 
would be far better to join forces and after lengthy 
negotiations, we arrived at a global settlement agreement 
whereby the tribe will purchase a one-third interest in the 
project this December 31 with options through the year 2037 to 
buy a majority interest.
    Because this agreement involves the use of Warm Springs 
Trust Land, resources and other assets for the project, the 
Department of the Interior was a full party to the 
negotiations. One of the issues we examined was the adequacy of 
Interior's authority to approve the use of those trust assets 
for the agreement. Interior believes its existing authority is 
sufficient and on April 12, 2000, all three parties, Interior, 
the tribes and PGE signed the agreement.
    There is a high likelihood that there is legal authority 
under existing Federal law for this agreement but there is not 
absolute certainty and the lenders who will finance our Pelton 
purchase will require legal certainty, particularly for the 
revenue bonds we expect to use. So S. 266 seeks to establish 
that certainty and is essential for our going to the bond 
market to secure the $30 million we need by December 31 for the 
project.
    Accordingly, section 2 of S. 266 seeks to do four things. 
First, it provides the needed clear and specific Federal 
approval of the use of Warm Springs trust land, resources and 
other assets in the project. Second, it limits the scope of 
that authority to just that needed for the use of our land, 
resources and other assets as described in the agreement. 
Third, it seeks to make certain that the funds the tribes 
receive from the sale of power from the project can be securely 
pledged to repay the bondholders. Fourth, it seeks to assure 
this particular bill is not to create inference regarding 
Interior's current authorities so they remain fully in tact and 
effective.
    Mr. Chairman, counterpart legislation has been introduced 
in the House and the Resources Committee has suggested some 
refinements to further clarify the legislation. We have been 
working with the House committee staff and the Oregon 
delegation on those refinements and hope to reach resolution in 
the next few days. We look forward to discussing those 
revisions with this committee so that if they are acceptable, 
S. 266 may be taken to mark up before Congress adjourns for its 
August recess.
    Thank you. That concludes my statement and I would be happy 
to respond to any questions.
    [Prepared statement of Mr. Patt appears in appendix.]
    The Chairman. Thank you very much, Mr. Chairman.
    May I call upon the assistant general counsel, Ms. 
Tompkins.

    STATEMENT OF ROBIN TOMPKINS, ASSISTANT GENERAL COUNSEL, 
                   PORTLAND GENERAL ELECTRIC

    Ms. Tompkins. Thank you, Mr. Chairman.
    I am Robin Tompkins, assistant general counsel of Portland 
General Electric Co. in Portland, OR.
    I am genuinely pleased to have this opportunity to testify 
to the U.S. Senate Committee on Indian Affairs regarding S. 266 
and share with you the views of our company on this important 
legislation.
    This bill, and the companion legislation in the U.S. House 
of Representatives, address the use of trust land on the Warm 
Springs Reservation of Oregon. I want to begin by commending 
Senators Ron Wyden and Gordon Smith for proposing this 
legislation and for their support of this historic agreement 
between the Confederated Tribes of the Warm Springs Reservation 
of Oregon and Portland General Electric regarding the ownership 
and operation of the Pelton-Round Butte Hydroelectric Project 
in central Oregon.
    The passage of this bill will help bring closure to almost 
5 years of negotiations between the parties and the resulting 
review by various Federal agencies which include the Department 
of the Interior and the Federal Energy Regulatory Commission. 
The negotiated settlement between PGE and the tribes has the 
full support of the Oregon congressional delegation and the 
bipartisan leadership of Senators Wyden and Smith have been 
essential.
    The Pelton-Round Butte Project is located on the Deschutes 
River in central Oregon. It is one of the most important 
sources of electricity in the State of Oregon, supplying 
electric power to over 300,000 Oregon families. The project 
consists of three dams--the Pelton Dam, the Round Butte Dam and 
the reregulating dam. The project commenced operation in 1957 
with construction of the first of the three dams and became 
fully operational in 1964.
    The Federal Power Commission in the State of Oregon issued 
PGE a license for the construction and operation of the project 
based on an agreement between PGE and the tribes which included 
the ability of the tribes to install generating facilities at 
the reregulating dam. The dam and the reservoirs are located 
partly on tribal lands as you previously heard.
    During the first term of the 50-year license, PGE was the 
sole owner and operator of the project. In the mid-1980's, the 
tribes became a co-licensee. Pursuant to the Federal Power Act, 
PGE has made annual rent payments to the tribes for the use of 
their tribal land. During the relicensing process, PGE and the 
tribes both applied to compete for ownership for the project. 
This arduous and competitive relationship existed until the 
parties negotiated the settlement of their differences and 
joined together to own and operate this valuable and important 
resource. The settlement that was reached called for PGE and 
the tribes to become joint licensees of the project.
    As the chairman of the Confederated Tribes just reported, 
for the first 20 years of the project, beginning at the end of 
2001, the tribes will own a one-third share of the project and 
then will have the opportunity to buy an additional share of 
the project and eventually become the majority owner.
    This agreement accomplishes several important goals of PGE 
and the tribes. For the tribes, the settlement will grant the 
tribes a strong ownership position in the project and ensure 
many economic benefits far into the future. It will also enable 
them to exert more influence over environmental, cultural and 
recreational resources of the Deschutes River Basin. Most 
importantly for PGE, the agreement will preserve the value of 
the project for PGE customers.
    The settlement negotiations have been lengthy and arduous 
but the hard work has been productive. The results of these 
consultations is a victory for PGE and the tribes but most 
importantly for the people of Oregon.
    This legislation is necessary to ensure beyond all 
certainty that there is legal authority for the settlement 
agreement. As members of the committee know, the United States 
must consent to the lease, sale or other conveyance of tribal 
trust lands, resources and other assets. This legislation and 
the companion bill introduced in the House of Representatives 
ensures legal certainty to this historic agreement.
    The lender who will finance the purchase of the tribe's 
interest in the project will require absolute authority in 
order to carryout the terms of the settlement agreement.
    S. 266 addresses these concerns. First, the legislation 
confers authority on the Secretary of the Interior to approve 
leases of up to 99 years for trust lands on the Warm Springs 
Reservation and lands held in trust for the tribes. Second, the 
bill provides for specific approval of the lands and other 
resources owned by the tribes. The legislation also grants 
express authority to the Secretary of the Interior to execute 
and carry out these terms of the agreement. The bill further 
ensures that no Federal law would render the agreement 
unenforceable or impede the ability of the tribes to pledge the 
revenues it receives from the sale of its power. Third, the 
bill specifies that the legislation does not apply to any 
provision other than those that deal with tribal lands and does 
not affect any other Federal or State agency's authority to 
approve this agreement. Fourth, the bill states this 
legislation does not require the Department of the Interior to 
seek legislative approval for similar agreements with other 
tribes.
    This legislation is a critical and necessary component of 
this relicensing process. Its enactment will be a final step in 
a historic and significant agreement between Portland General 
Electric and the tribes and on behalf of PGE, I urge its speedy 
passage.
    Thank you.
    [Prepared statement of Ms. Tompkins appears in appendix.]
    The Chairman. Thank you very much, Ms. Tompkins.
    Mr. Goe.

         STATEMENT OF DOUGLAS GOE, ESQ., ATER WYNNE LLP

    Mr. Goe. Mr. Chairman, my name is Doug Goe. I am bond 
counsel and chair the Public Finance Group of Ater Wynne in 
Portland, OR. We serve as bond counsel to the Warm Springs 
Tribe and to the States of Oregon and Washington and local 
governments throughout the western United States.
    In addition to serving as bond counsel to the Warm Springs 
Tribe on a national basis, we serve as bond counsel to many 
other Indian nations including the Yakima Nation in Washington, 
the Nez Perce Tribe in Idaho, the Seminole Tribe in Florida and 
the Navajo Nation in Arizona, New Mexico, and Utah.
    Nationally recognized bond counsel are lawyers who work 
with State, local, and tribal governments in financing the 
whole range of public projects. As a necessary component of our 
role, we must analyze the Federal tax, the securities and 
administrative law and the substantive underlying legal 
principles governing the type of project being financed.
    I appreciate this opportunity to testify today on why S. 
266 is necessary for the Warm Springs Tribe to issue revenue 
bonds to finance its acquisitions of its interests in the 
Pelton and Round Butte Projects.
    A key point in understanding why the legislation is 
necessary is that the bonds being issued are revenue bonds. 
That is, they will be secured solely by the revenues the tribe 
derives from selling its power generated by the dams. In the 
event those revenues are not available for whatever reason, 
bond investors will lose their investment.
    Revenue bond investors are extremely conservative. They are 
conservative because bonds, as you know, are a form of debt 
instrument in which the only return to investors is the 
interest rate. In contrast to the NASDAQ and other stock 
markets where investors can realize a huge up side return--we 
hope the markets will return to those kind of days--bond 
investors have no up side.
    Since the 1800's, the bond market has required an 
unqualified opinion of bond counsel before they will purchase 
the bonds. The bond counsel opinion must say that the bonds 
were legal, valid and binding obligations of the government 
issuing the bonds. In the case of revenue bonds, which are not 
backed by the taxing power or other resources of the government 
issuing the bonds, investors require an additional opinion that 
the pledge of revenues securing the revenue bonds is valid and 
superior to all other liens or encumbrances.
    After an extensive review of the applicable Federal 
statutes and case law, we have concluded that we cannot render 
an unqualified opinion without S. 266 because we do not find 
any express authority in Federal law for the Secretary of the 
Interior to have executed the long term global settlement and 
compensation agreement.
    We also think there is an issue under section 10(e) of the 
Federal Power Act whether compensation for use of the tribes' 
lands should be payable to the United States in trust for the 
benefit of the tribes instead of being paid directly to the 
tribes as provided in the global settlement agreement.
    A related concern is that a Federal court would consider 
the proceeds of the sale of the electricity from the Pelton 
Project to be trust funds payable for the benefit of the tribes 
and therefore, the revenues pledged to bondholders cannot be 
used to pay principal and interest on the bonds.
    While at the same time we concede there are good arguments 
for why these issues raised could be resolved in favor of the 
Department of the Interior, Portland General Electric Co. and 
the tribes and bondholders, these issues are not free from 
doubt. Therefore, the unqualified opinion standard of absolute 
certainty cannot be met.
    We have discussed these matters extensively with the 
tribes' underwriter, the firm of Salomon Smith Barney and its 
counsel, Orrick Herrington and Sutcliffe, the leading bond 
counsel firm in the United States and Orrick has advised us as 
well that they would not be in a position to render an 
unqualified opinion given the state of the law.
    They, with us, have advised the tribes that S. 266 is 
absolutely necessary for the tribes to obtain bond financing 
for this project. The essential elements that we think are 
required in the legislation are: congressional approval to the 
global settlement agreement, ensuring the Secretary has the 
authority to sign and implement the agreement; and that it is a 
legal, valid and binding agreement with respect to all parties.
    S. 266 also must make clear the authority of the tribe to 
pledge revenues from the project and that such pledge will not 
violate section 10(e) of the Federal Power Act or any other 
provision of Federal law.
    We support S. 266 and urge its prompt consideration and 
approval by the committee and its prompt passage on the Senate 
floor.
    I very much appreciate the committee's time and attention 
and would be pleased to address any questions you might have.
    [Prepared statement of Mr. Goe appears in appendix.]
    The Chairman. Thank you.
    Before proceeding, I would like to apologize for not 
announcing that Senator Ron Wyden has been at another committee 
hearing and he just walked in. I was just extending your 
apologies but I am glad you are here.
    First, I just announced that all the parties are having a 
conference this afternoon. If the conference is successful in 
coming forth with an agreement, this committee is prepared to 
bring this matter up for a markup 1 week from now. If that is 
the case, we may be able to consider this measure before the 
recess begins.
    Are there any contentious provisions in this measure that 
might delay this agreement?
    Mr. Goe. If I might, I don't really think so. I think we 
are down to the lawyers talking about some very important words 
in the legislation and there have been some issues raised on 
the House side that we are working diligently with the House to 
resolve. I would say the House staff came back with a few 
changes in their markup of the bill. We had only very few word 
changes, very important word changes in terms of restoring what 
was in the Senate version but I think we are down to a very few 
words.
    I certainly would hope that later this morning and this 
afternoon, we would be able to resolve those issues.
    The Chairman. Are there any substantive or important 
material differences between the Senate bill and the House 
bill, Mr. Chairman?
    Mr. Noteboom. I don't believe there are important 
substantive differences. Each try and accomplish the same 
thing, obtain Federal approval and not adversely impact any 
other situation with an Indian tribe outside of this 
legislation. Both accomplish the same fundamental purpose, just 
in slightly different ways.
    The Chairman. I gather this bill is necessary in the eyes 
of the bond counsel because without this you may not be able to 
go through with this agreement?
    Mr. Goe. That is correct, Mr. Chairman.
    The Chairman. Is that the understanding of the tribes?
    Mr. Noteboom. Yes; in addition, I think it is important to 
stress that this is not only important to bond counsel but to 
the tribes and the PGE because the agreement is potentially 50-
plus years long and we have had a history of differences in the 
past. We've worked very hard to ensure this agreement will 
endure for the entire time and we will not have those 
differences arise again.
    The Chairman. So this bill is necessary to clarify that 
term limitation issue?
    Mr. Noteboom. Yes; it is.
    The Chairman. Ms. Tompkins, I note in your testimony that 
the tribal nation will have one-third interest for the first 20 
years?
    Ms. Tompkins. That is correct.
    The Chairman. During that period, while PGE has the 
majority interest, will you continue to confer and consult with 
the tribes on matters of culture and environment?
    Ms. Tompkins. Yes; not only is there an operations 
agreement where both parties work through operational issues 
related to the project, but the tribal representatives have a 
unique standing in that they also have a big say in both 
natural resources and cultural issues. As we move through the 
relicensing process, the tribes wear two hats. They will not 
only be project owners but they are sort of an agency that 
oversees, gives recommendations and input into significant 
cultural and fishery related issues.
    We have worked successfully over the past few years as we 
have transitioned from say a landlord/tenant relationship to 
more of a partnership relationship. Now that we have this 
codified in this agreement, I think all parties can represent 
that we are working strong as partners and will always try to 
address each others' issues in a very productive manner so that 
we come out with the best solutions for the people of the State 
of Oregon.
    The Chairman. On behalf of the committee, may I 
congratulate all of you for coming forth with this agreement. 
It is a historic moment. It is a model agreement which should 
give guidance to other Indian tribes and utility companies that 
hope to come forth with similar agreements on tribal lands. I 
think many tribes are watching this process. Congratulations 
and thank you very much.
    The Chairman. May I now call upon the author of the measure 
that will make all this possible, the very distinguished 
Senator from Oregon, Senator Wyden.

        STATEMENT OF HON. RON WYDEN, U.S. SENATOR OREGON

    Senator Wyden. Thank you, Mr. Chairman, and I will be very 
brief.
    I want to express my thanks to you for your thoughtfulness. 
You have one of the busiest schedules of any member of the U.S. 
Senate and yet you have continually made time for this Senator 
and for important issues for our State. I just want to express 
my gratitude to you for all the thoughtfulness you have shown 
me.
    I think you are absolutely right. This is precedent-setting 
work, what the tribes have done in our home State with PGE and 
with the Department of the Interior. I think they have outlined 
they have a number of technical issues yet to go but it is 
something that could serve as a model for this country. You 
better than anyone else in the U.S. Senate knows how 
contentious these issues can be in local communities. There are 
few issues that seem to polarize communities more than these 
sorts of questions. Yet, what we have been able to do in Oregon 
is what you have done in the U.S. Senate again and again and 
that's to bring folks together and say, let's get beyond this 
polarizing business, beyond the bickering and find the common 
ground.
    I have a prepared statement and with your indulgence if 
that could be a part of the record, I would appreciate it. Just 
know of my profound gratitude to you for this and for all the 
help you have given me as a relatively new member of the 
Senate.
    [Prepared statement of Senator Wyden appears in appendix.]
    The Chairman. I thank you for your kind words but we are 
here because of this measure which we feel will set the tone 
for Indian country, especially those tribes with energy 
resources on their lands. They are looking for guidance and I 
think this is the type of guidance that should help everyone 
concerned. So once again, congratulations, sir.
    Senator Wyden. Thank you.
    The Chairman. We will try our best to have this matter 
marked up 1 week from today. It should be on the floor for 
consideration before we begin our August recess.
    Senator Wyden. That would be very welcome news to the 
people of my State and we are very appreciative.
    The Chairman. We do not want any brownouts there. 
[Laughter.]
    Thank you very much.
    With that, the hearing is in recess.
    [Whereupon, at 10:55 a.m., the committee was recessed, to 
reconvene at the call of the Chair.]
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                            A P P E N D I X

                              ----------                              

              Additional Material Submitted for the Record

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

   Prepared Statement of M. Sharon Blackwell, Deputy Commissioner of 
       Indian Affairs, Department of the Interior, Washington, DC

    Good morning, Mr. Chairman and Members of the Committee. Thank you 
for the opportunity to present the views of the Department of the 
Interior [Department] on S. 266, a bill, ``Regarding the use of the 
trust land and resources of the Confederated Tribes of the Warm Springs 
Reservation of Oregon.'' We have no objection to the enactment of S. 
266, and include at the end of this statement suggested language that 
covers the Department's concerns regarding the authorities addressed in 
the legislation.
    On April 12, 2000, the Confederated Tribes of the Warm Springs 
Reservation [Tribes] signed an agreement that created a process whereby 
the Tribes would gain part ownership in the three dam Pelton Project 
partially situated on Reservation land and would become a co-applicant 
with Portland General Electric in the Federal Energy Regulatory 
Commission [FERC] licensing process. The Agreement was approved by the 
Secretary of the Interior. We understand that the Tribes plan to 
finance their participation in the Project through the issuance of 
bonds. The Tribes bonding counsel has asked the Tribes to seek 
legislative ``approval'' of the Agreement to provide an ``unqualified'' 
level of assurance that the Agreement is proper, binding, and will not 
be altered.
    The Department maintains that the Secretary had all the necessary 
authority to approve the terms and intent of the Agreement under the 
Federal Power Act [FPA]. The Secretary is given broad authority under 
the FPA to ensure adequate protection and utilization of Federal 
reservations in FERC licenses. For example, under 16 U.S.C. Section 
797(e), also known as Section 4(e), the Secretary provides FERC with 
license conditions to ensure that hydropower power projects are 
consistent with the purposes of affected Indian reservations. In this 
regard, the Secretary has approved agreements of a similar nature in 
the past without Congressional approval, and has the authority to do so 
in the future.
    The Department is also concerned that this legislation, as 
proposed, may effectually require other tribes to seek similar 
legislative approval of other settlement agreements needed to realize 
economic development opportunities. As a consequence tribes with fewer 
political resources or less economic clout may be unable to meet the 
increased standard of contractual security sought by this legislation.
    Finally, we note that this legislation would amend 25 U.S.C. 
Section 415(a) to provide the Tribes 99-year leasing authority to 
account for the life of the Agreement. Similar to our position 
regarding the Secretary's authority, the Department maintains that the 
FPA provides all the authority necessary for FERC licensed projects to 
occupy tribal lands for the term of the license. Thus, no leases of any 
term are required, and amendment of 25 U.S.C. Section 415(a) is not 
necessary. Nevertheless, while FPA does not require it, the Department 
has no objection to extending the Tribes leasing authority.
    In sum, the Department does not want to stand in the way of the 
Tribes securing their necessary financing, and, potentially, a more 
favorable financing arrangement. As such, we have no objection to S. 
266. We do request, however, that the bill be amended to clarify that 
the Secretary is deemed authorized to take all actions necessary to 
approve and implement not only this Agreement, but all other such 
agreements entered into previously, and in the future, pursuant to the 
Secretary's authority under the FPA. We believe that this language will 
allow the Warm Springs Tribes the benefit of their Agreement, while 
preserving the Department's authority needed to ensure this opportunity 
for all other Indian Tribes. This concludes my prepared statement. 
Specific language to address the Department's concerns follows this 
statement. I would be pleased to respond to any questions the Committee 
may have.
    Specifically, the Administration requests that section 2(a) be 
amended to read as follows:
    (a) APPROVAL OF AGREEMENT--The use of tribal lands, resources and 
other assets described in the Long-Term Global Settlement and 
Compensation Agreement [in this section referred to as the`Agreement'] 
dated April 12, 2000, between the Department of the Interior, the 
Confederated Tribes of the Warm Springs Reservation of Oregon, and the 
Portland General Electric Company, is approved, and the Secretary of 
the Interior, pursuant to the authority provided to the Secretary in 
the Federal Power Act, shall be deemed authorized to take all actions 
necessary to approve and implement the Agreement, and any other similar 
agreement involving an Indian Tribe heretofore or hereafter approved or 
implemented by the Secretary pursuant to the Secretary's authority 
under the Federal Power Act. No Federal law regarding tribal lands, 
resources, or other assets shall be deemed----
    No. 1, to render the Agreement unenforceable or void against the 
parties; or
    No. 2, to prevent, prohibit, supersede, impair, restrict, or 
otherwise hinder any pledger encumbrance by the Tribes of the sums that 
may be paid to or received by or on the account of the Tribes in 
connection with the Agreement.
                                 ______
                                 

Prepared Statement of Douglas E. Goe, Chair, Public Finance Group Ater 
 Wynne LLP and Bond Counsel to Confederated Tribes of the Warm Springs 
                          Reservation, Oregon

    Mr. Chairman, members of the committee, my name is Doug Goe.
    I am a bond counsel and the chair of the Public Finance Group of 
Ater Wynne LLP. We serve as bond counsel to the Warm Springs Tribe, to 
the States of Oregon and Washington and local governments throughout 
the western United States. We also serve as bond counsel to tribal 
governments on a national basis. For example, in addition to serving as 
bond counsel to the Warm Springs Tribe, we have served as bond counsel 
to the Yakima Nation in Washington, the Nez Perce Tribe in Idaho, the 
Navajo Nation in Arizona, New Mexico and Utah, and the Seminole Tribe 
in Florida. Nationally recognized bond counsel are lawyers who work 
with state, local and tribal governments in financing all types of 
public projects. As a necessary component of our role, we must analyze 
the applicable provisions of Federal, State and tribal tax, securities 
and administrative law and the substantive law governing the type of 
project being financed.
    I appreciate the opportunity to testify today on why S. 266 is 
necessary for the Warm Springs Tribe to issue revenue bonds to finance 
its acquisition of certain interests in the Pelton and Round Butte 
hydroelectric project. A key point in understanding why the legislation 
is necessary is that the bonds being issued are revenue bonds that will 
be secured solely by the revenues the Tribe derives from selling its 
share of power generated by the dams. In the event those revenues are 
not available for whatever reason, bond investors will lose their 
investment.
    No. 1. Revenue Bond Investors are Very Conservative. Bond investors 
are very conservative because bonds are a form of debt instrument under 
which the only return to investors is an interest rate. In contrast to 
the Nasdaq and other stock markets where investors can realize a huge 
upsides and downside return, bond investors have no upside.
    Since the 1800's, the bond market has demanded an unqualified 
opinion of nationally recognized bond counsel to the effect that the 
bonds they are purchasing are legal, valid and binding obligations. In 
the case of revenue bonds which are not backed by the taxing power or 
other resources of the entity issuing the bonds, investors require an 
additional opinion that the pledge of ``revenues'' securing the revenue 
bonds is valid and superior to all other liens or encumbrances.
    No. 2. Unqualified Opinion Standard Cannot Be Met Without S. 266. 
After extensive research of applicable Federal statutes and case law, 
we have concluded that we cannot render an unqualified opinion without 
S. 266 because we do not find any express authority in Federal law for 
the Secretary of the Interior to have executed the Long-Term Global 
Settlement and Compensation Agreement dated as of April 12, 2000 among 
the Tribes, the Department of the Interior and Portland General 
Electric Company [the ``Global Settlement Agreement''].
    We also think that there is an issue under section 10(e) of the 
Federal Power Act whether compensation for use of the Tribes' lands 
should be payable to the United States in trust for the benefit of the 
Tribe instead of being paid directly to the Tribe as provided in the 
Global Settlement Agreement. A related concern is that a Federal court 
would consider the proceeds of the sale of electricity from the Pelton 
Project as trust funds payable to the United States for the benefit of 
the Tribe and that, therefore, the revenues pledged to bondholders 
cannot be used to pay principal and interest on the bonds.
    Time does not permit me to get into detail regarding other Federal 
law issues. We think that there are good arguments for why these issues 
we raised could be resolved in favor of the Department of the Interior, 
the Tribe, PGE and bondholders. However, the issues are not free from 
doubt. Therefore, the unqualified opinion standard of absolute 
certainty cannot be met.
    No. 3. Bond Underwriters Refuse to Purchase Bonds Without Opinion. 
We have discussed these matters extensively with the Senior Managing 
Underwriter of the Tribes' bonds, Salomon Smith Barney and their 
counsel, Orrick Herrington and Sutcliffe. Orrick Herrington is the 
leading bond counsel firm in the United States. Orrick has told us that 
they, too, would not give an unqualified opinion because of the Federal 
law issues. Salomon has refused to take anything but an ``unqualified 
opinion'' on these issues. They have advised the Tribe, as have we, 
that S. 266 is absolutely necessary for the Tribe to obtain bond 
financing for the project.
    No. 4. Essential Elements of S. 266. The essential elements that we 
think are required in the legislation is congressional approval of the 
Global Settlement Agreement insuring that the Secretary has the 
authority to sign and implement the agreement and that it is a legal, 
valid and binding agreement with respect to all parties. S. 266 also 
must make clear that the authority of the Tribe to legally pledge 
revenues from the Project and that such pledge will not violate section 
10(e) of the Federal Power Act or any other provision of Federal law.
    We support S. 266, and urge it's prompt consideration and approval 
by the Committee, and its prompt passage on the Senate floor.
    Thank you for the committee's time and attention. I would be 
pleased to answer any questions.
                                 ______
                                 

Prepared Statement of Olney Patt, Jr., Chairman, Confederated Tribes of 
                  the Warm Springs Reservation, Oregon

    Mr. Chairman, members of the committee, I am Olney Patt, Jr., 
Chairman of the Tribal Council of the Confederated Tribes of the Warm 
Springs Reservation of Oregon. The Tribe appreciates your having 
scheduled this hearing on S. 266, and it is my pleasure to present 
today the views of the Warm Springs Tribe on this legislation regarding 
the use of trust land and resources on our Reservation.
    In summary, the Warm Springs Tribe strongly supports S. 266, and 
urge that, with the adoption of clarifying revisions soon to be 
finalized among the Oregon Delegation sponsors of the legislation, the 
committee approve, and the Senate pass, this essential legislation as 
soon as possible.
    S. 266 provides for Federal approval of an historic Agreement 
reached on April 12, 2000, between the Confederated Tribes of the Warm 
Springs Reservation of Oregon, Portland General Electric Company [PGE], 
and the U.S. Department of the Interior. This Agreement is important 
not only to the parties, but to all the citizens of Oregon, because of 
the responsible way in which it deals with the ownership of one of the 
State's most important resources, the Pelton-Round Butte Hydroelectric 
Project. It also provides a model for the rest of the country to 
demonstrate how the United States, Indian tribes and electric utilities 
can work together to solve the often contentious issues surrounding 
hydroelectric projects and the use of Indian lands.
    The Pelton-Round Butte Hydroelectric Project is a 440-megawatt 
project consisting of three dams and generation units on the Deschutes 
River in Central Oregon. About one third of the Project lands are 
located on the Warm Springs Indian Reservation. Currently, PGE owns and 
operates the two larger dams and their generating facilities while the 
Tribe owns and operates the 19 megawatt generating facility located in 
the Re-regulating Dam. Today, PGE pays approximately $11 million in 
annual rental charges to the Tribe for the use of our land.
    Beginning in the summer of 1998, representatives of the Tribes and 
PGE commenced negotiations to attempt to reach a settlement on all 
issues between us relating to ownership and operation of the Pelton 
Project. Because of the trust responsibility of the Department of the 
Interior to the Tribe, Department representatives participated in the 
negotiations. On April 12, 2000, Interior, Tribal, and PGE 
representatives signed the Long-term Global Settlement and Compensation 
Agreement and its Included Agreements that is the subject of S. 266.
    The key elements of the Agreement are:
    No. 1. On January 1, 2002 the Tribe will purchase from PGE at its 
net book value a 33.33-percent interest in the Project. The Tribe has 
the option to purchase an additional 16.66 percent interest on January 
1, 2022, as well as a further option to purchase a controlling .02 
percent interest in the Project no later than 2037. The length of the 
Agreement is approximately 50 years, with flexibility to run a little 
longer or shorter depending upon when the new FERC license for the 
Project is actually issued, and the length of the license itself, which 
can be from 35 years to 50 years. To provide for our purchase of our 
share of the Project and to cover the costs of Project modifications 
anticipated under the new license, Warm Springs must secure 
approximately $30 million from the bond market by January 1, 2002.
    No. 2. PGE will operate the Project and be guided by an Operating 
Committee composed of representatives of the Tribe and PGE as owners.
    No. 3. The Tribe has the option to sell its share of the power to 
PGE or on the open market.
    No. 4. The Agreement settles all disputes between the parties and 
establishes the compensation to be paid to the Tribe for the use of its 
lands and resources throughout the period of the entire license.
    One of the central issues that the parties have been concerned 
about since the inception of the negotiations is the legal authority 
for the Agreement. As a general principle of Federal Indian law, the 
United States must consent to the lease, sale, or other conveyance of 
tribal trust lands, resources, or other assets. Although there is a 
high likelihood that there is legal authority under existing Federal 
law for this Agreement, there is not absolute certainty. And, because 
the economic consequences to the parties would be so serious if it were 
ever to be held that there is no legal authority for the Agreement, and 
because the lenders who will finance the Tribe's purchase of Project 
interests will require legal certainty, it is essential to the Tribe 
and PGE that all questions regarding authority for the Agreement be 
resolved definitively.
    Briefly, these are the issues that gave the Tribes and PGE pause 
regarding legal authority:
    No. 1. Under 25 U.S.C. Sec.  415(a), the Warm Springs Tribe only 
has leasing authority for trust lands of 25 years with an option for a 
25-year renewal. The Agreement at hand committing Tribal resources and 
land extends beyond those periods and beyond just the lease of land. 
The 99 year lease authority, as provided in section 1 of S. 266, could 
provide sufficient time for a lease of land, but is not broad enough in 
scope to cover the full range of Warm Springs resources and assets 
involved in the Project.
    No. 2. Section 17 of the Indian Reorganization Act of 1934 [25 
U.S.C. Sec.  477] under which the Warm Springs Tribe is organized 
limits leases of Indian lands to 25 years.
    No. 3. The general right of way statute dealing with Indian lands 
(25 U.S.C. Sec.  323) is made inapplicable by the provisions of 25 CFR 
Sec.  169.2(c), which provides that the right of way regulations do not 
apply to hydroelectric projects licensed under the Federal Power Act on 
Indian reservations.
    No. 4. The Indian Non-intercourse Act (25 U.S.C. 177) generally 
requires that all leases and other conveyances of tribal lands have 
specific Federal authority, of which the foregoing are examples.
    No. 5. The revenues the Tribe will receive from the sale of power 
from its portion of the Project are the proceeds of Tribal trust assets 
and Federal consent may be required to make a pledge of those revenues 
legally binding on the Tribe.
    No. 6. Although 16 U.S.C. 803(e) provides for the payment of annual 
charges for the use of Indian lands in connection with hydroelectric 
projects, there is no express authority in that section for the actual 
lease of those lands. Similarly, 16 U.S.C. 797(e) regarding the 
Secretary's conditioning authority does not contain the express 
authority required.
    The parties believe that if a court were faced with the question of 
whether or not there was Federal authority for this Agreement, it would 
answer in the affirmative. However, because of the length, complexity 
and magnitude of the Agreement, its uniqueness, and some ambiguities on 
the face of existing statutes granting authority, it is important that 
such doubt be removed and this can best be done by specific Federal 
legislation tailored to this Agreement.
    S. 266 does the following:
    No. 1. Section 1(a) confers authority on the Interior Secretary to 
approve leases of up to 99 years for trust land on the Warm Springs 
Reservation and land held in trust for the Warm Springs Tribes, similar 
to authority that has been conferred for many other tribes.
    No. 2. Section 2(a) provides specific Federal approval for the use 
of our Tribal lands, resources, or other Tribal assets described in the 
Agreement. It ratifies and confirms the authority of the parties, which 
include the Interior Secretary, to sign the Agreement, the actual 
signing of the Agreement, and its distribution among the parties. It 
also deems the Secretary as authorized to approve and carry out the 
agreement. This particular sentence would confer upon the Secretary 
sufficient authority to approve and implement the Agreement in the 
event the Secretary's current authority, despite ratification and 
confirmation, is determined to be lacking. Finally, Section 2(a) 
provides that no Federal law, such as those discussed earlier in this 
testimony, would render the Agreement unenforceable or impede the 
ability of the Tribe to pledge the revenues that it receives from the 
sale of power to pay bondholders.
    No. 3. Section 2(b)(1) makes it clear that the legislation does not 
apply to any provisions of the Agreement other than those dealing with 
Tribal lands, resources, or other assets. It also makes it clear that 
it does not affect the normal Federal and State regulatory approvals 
that would be required for an agreement of this type.
    No. 4. Section 2(b)(2) is included to address a concern of the 
Department of the Interior that the legislation not, by implication, 
cast any doubt on current authorities relied upon by Interior to 
approve the Agreement. Interior Department personnel were regularly 
consulted while S. 266 was being drafted, and this language to 
safeguard Interior's authorities was included in the bill at their 
direct request. By fully preserving Interior's authorities, this 
provision also eliminates any concern about similar agreements needing 
legislative approval.
    S. 266 will not only give the parties to the Agreement the 
necessary assurances that they need about the authority for this 
Agreement, it will provide the lenders that finance the Tribes' 
purchase of Project interests from Portland General Electric assurance 
that there are no legal impediments to the pledge of revenues the Tribe 
receives from the sale of power from the Project to the lenders.
    S. 266 is the result of extensive discussion and collaboration 
between ourselves, PGE, the Interior Department, and Congressional 
personnel in the Oregon Delegation and on this Committee. At the time 
S. 266 was introduced, a House companion bill, H.R. 483, was also 
introduced by all five members of the Oregon House Delegation. The only 
difference between S. 266 and H.R. 483 is the addition of an April 12, 
2000 effective date at the end of the House bill. Otherwise in the 
House, Resources Committee personnel have carefully evaluated H.R. 483, 
and have suggested several revisions to clarify the legislation. These 
revisions are under discussion with the Oregon Delegation, and we 
expect to have them settled in the next few days. They do not change 
the substance of the legislation, and basically fine tune its language. 
We hope that the Senate Indian Affairs Committee will be able to adopt 
these revisions, and incorporate them in approving S. 266.
    We expect the revisions will make the legislation more explicit 
that nothing in this legislation is to create any inference whether the 
Secretary of the Interior did or did not have authority to sign and 
implement the Global Settlement Agreement. The effect of this revision 
is to essentially neutralize this legislation from having any effect on 
the Department's authorities regarding the use of tribal resources for 
hydro projects.
    By very clearly safeguarding Interior's authorities, the revision 
will further quell any question about whether this legislation will 
prompt other legislation for similar projects involving tribal 
resources. By basically removing this particular legislation from 
having any impact on the Interior Department's authorities, those 
authorities remain intact and unaltered for any future projects. In 
addition, there are several factors that make this Agreement truly 
unique and make it unlikely that a similar situation requiring Federal 
legislative approval will arise in the future. They include:
    No. 1. The Agreement involves a tribe's purchase of a part of a 
hydroelectric project located on its reservation from an existing 
licensee. The only other hydroelectric project of similar magnitude on 
an Indian reservation is the Kerr Project in Montana, and in that case 
the Tribe and the Montana Power Company reached a joint ownership 
agreement approximately 15 years ago.
    No. 2. The purchase involves bond financing by the Tribe which 
requires an unqualified opinion from bond counsel regarding the 
enforceability of the underlying agreement, thereby increasing the 
level of certainty needed regarding enforceability.
    No. 3. The agreement has some highly unique aspects that are 
unlikely to be present in other agreements, such as settling license 
ownership beyond the term of the next license, settling compensation to 
the Tribe in the form of a share of the power output from the project 
rather than a dollar amount that can be adjusted over time, and 
defining PGE's liability for Treaty rights claims by the Tribe.
    In summary, the uniqueness, length, breadth and complexity of the 
Agreement are the reasons that legislation is required to approve it. 
We are aware of no similar situations that would require legislative 
approval.
    We anticipate that Senators Smith and Wyden will convey the 
revisions to the Committee in the next few days, and ask the Committee 
to adopt them when S. 266 is marked-up.
    We urge the committee's prompt consideration and approval of S. 
266, and its prompt passage on the Senate floor.
    Thank you for the committee's time and attention. I would be 
pleased to answer any questions.
                                 ______
                                 

   Prepared Statement of Robin Tompkins, Assistant General Counsel, 
              Portland General Electric Co., Portland, OR

    Mr. Chairman, members of the Committee on Indian Affairs, I am 
Robin Tompkins, Assistant General Counsel of Portland General Electric 
Company of Portland, Oregon [PGE]. I am pleased to have this 
opportunity to testify to the U.S. Senate Committee on Indian Affairs 
regarding S. 266 and share with you the views of our company on this 
important legislation. This bill and the companion legislation in the 
U.S. House of Representatives address the use of trust land on the Warm 
Springs Reservation of Oregon.
    I want to begin my testimony by commending Senators Ron Wyden and 
Gordon Smith for proposing this legislation and for their support of 
this historic agreement between the Confederated Tribes of the Warm 
Springs Reservation of Oregon (``Tribes'') and Portland General 
Electric regarding the ownership and operation of the Pelton Round 
Butte Hydroelectric Project (``Project'') in central Oregon. The 
passage of this bill will help bring closure to almost 5 years of 
negotiations between the parties and the resulting review by various 
Federal agencies, which included the Department of the Interior and the 
Federal Energy Regulatory Commission. The negotiated settlement between 
PGE and the Tribes has the full support of the Oregon congressional 
delegation, and the bipartisan leadership of Senators Wyden and Smith 
has been essential.
    The Pelton Round Butte project is located on the Deschutes River in 
central Oregon. It is one of the most important sources of electricity 
in the State of Oregon, supplying electric power to over 300,000 Oregon 
families. The Project consists of three dams, the Pelton Dam, the Round 
Butte Dam and the. Re-regulating Dam. The Project commenced operation 
in 1957 with the construction of the first of the three dams and became 
fully operational in 1964. The Federal Power Commission and the State 
of Oregon issued PGE a license for the construction and operation of 
the Project based on an agreement between PGE and the Tribes, which 
included the ability of the Tribes to install generating facilities at 
the Re-regulating Dam. The dams and their reservoirs are located partly 
on tribal lands.
    During the first term of the 50-year license, PGE was the sole 
owner and operator of the Project. In the mid-1980's the Tribes became 
a co-licensee. Pursuant to the Federal Power Act, PGE has made annual 
payments to the Tribes for the use of their tribal lands.
    During the relicensing process, PGE and the Tribes both applied for 
complete ownership of the Project. This arduous and competitive 
relationship existed until the parties negotiated a settlement of their 
differences and joined together to own and operate this valuable and 
important resource. The settlement that was reached called for PGE and 
the Tribes to become joint licensees of the Project. For the first 20 
years of the Project, beginning at the end of 2001, the Tribes will own 
one-third of the Project. Then the Tribes will have the opportunity to 
buy an additional share of the Project, eventually becoming the 
majority owner.
    This agreement accomplishes several important goals of PGE and the 
Tribes. For the Tribes, the settlement will grant the Tribes a strong 
ownership position in the Project and insure many economic benefits far 
into the future. It will also enable them to exert more influence over 
the environmental, cultural and recreational resources of the Deschutes 
River basin. Most importantly for PGE, the agreement will preserve the 
value of the Project for PGE customers. The settlement negotiations 
have been lengthy and arduous, but the hard work has been productive. 
The result of these consultations is a victory for PGE, for the Tribes 
and most importantly for the people of Oregon.
    This legislation is necessary to insure beyond all certainty that 
there is legal authority for the settlement agreement. As members of 
the committee know, the United States must consent to the lease, sale 
or other conveyance of tribal trust lands, resources, or other assets. 
This legislation and the companion bill introduced in the House of 
Representatives ensures legal certainty to this historic agreement. The 
lender who will finance the purchase of PGE's interests in the Project 
will require absolute authority in order to carry out the terms of the 
settlement agreement. Mr. Chairman, S. 266 addresses these concerns.
    First, the legislation confers authority on the Secretary of the 
Interior to approve leases of up to 99 years for trust lands on the 
Warm Springs Reservation and land held in trust for the Tribes.
    Second, the bill provides for specific approval for the use of land 
and other resources owned by the Tribes. The legislation also grants 
express authority to the Secretary of the Interior to execute and carry 
out the terms of the agreement. The bill further ensures that no 
Federal law would render the agreement unenforceable or impede the 
ability of the Tribes to pledge the revenues it receives from the sale 
of its power.
    Third, the bill specifies that the legislation does not apply to 
any provisions other than those that deal with tribal lands and does 
not affect any other Federal or State agencies' authority to approve 
this agreement.
    Fourth, the bill states that this legislation does not require the 
Department of the Interior to seek Federal legislative approval for 
similar agreements with other tribes.
    Mr. Chairman, this legislation is a critical and necessary 
component of the relicensing process. Its enactment will be a final 
step in a historic and significant agreement between PGE and the 
Tribes, and on behalf of PGE, I urge its speedy passage.
    Thank you.
                                 ______
                                 

     Prepared Statement of Hon. Ron Wyden, U.S. Senator from Oregon

    Mr. Chairman, thank you for the opportunity to speak in support of 
S. 266, the Pelton Dam Agreement legislation, that I have cosponsored 
with my friend and colleague, Senator Smith of Oregon. I appreciate the 
time that you and your staff have invested in this important bill.
    This legislation sanctions an historic agreement between the 
Confederated Tribes of the Warm Springs, Portland General Electric 
Company and the U.S. Department of the Interior: The use of tribal 
lands, resources, and other assets for economic development as 
described in the Long-Term Global Settlement and Compensation Agreement 
(Pelton Dam Agreement). The bill ratifies authorization, execution, and 
delivery of the Agreement and authorizes the Secretary of the Interior 
to take necessary actions to approve and implement it. The bill also 
extends the Warm Springs Tribes a 99-year lease authority for any 
restricted lands on their reservation held in trust for them by the 
BIA.
    S. 266 is supported by all the local parties to the Agreement, as 
well as the local county commissioners. I worked with Senator Smith to 
carefully craft this legislation because it is a good example of how 
contentious issues can be solved when the parties are willing to work 
together.
    The Agreement sets the joint ownership and operation of the Pelton-
Round Butte Hydroelectric Project located in Jefferson County, Oregon, 
on the Deschutes River. But, this process has also recognized, in a 
side agreement, the needs of the county and other local folks for 
potential lost tax revenue resulting from the Agreement joint 
ownership.
    I applaud the efforts, begun in 1998, of the folks here today to 
testify on this legislation, and urge the committee to move this bill 
as soon as possible.

                               

      
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