103rd Congress, 2d Session } HOUSE OF REPRESENTATIVES {Report 103-685

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CONFEDERATED TRIBES OF THE COLVILLE RESERVATION
GRAND COULEE SETTLEMENT ACT

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August 8, 1994. --Committed to the Committee of the Whole House on the State of the Union and ordered to be printed

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Mr. Miller of California, from the Committee on Natural Resources, submitted the following

REPORT

[To accompany H.R. 4757]

[Including cost estimate of the Congressional Budget Office]

The Committee on Natural Resources, to whom was referred the bill (H.R. 4757) to provide for the settlement of the claims of the Confederated Tribes of the Colville Reservation concerning their contribution to the production of hydropower by the Grand Coulee Dam, and for other purposes, having considered the same, report favorably thereon without amendment and recommend that the bill do pass.

PURPOSE

The purpose of H.R. 4757 is to approve and ratify the Settlement Agreement entered into by the United States and the Tribes and to direct the Bonneville Power Administration to carry out its obligations under the Settlement Agreement.

BACKGROUND AND NEED

In June 1994 the Administration officially transmitted to the Congress enabling legislation for a settlement of the Colville Tribes' claim against the United States for the use of their lands by the reservoir from the Grand Coulee Dam. The Administration bill was introduced on July 14, 1994, (H.R. 4757) by Representative Miller of California and referred to the Committee on Natural Resources.

H.R. 4757 provides for a one-time payment of $53 million from Justice Department settlement funds, along with annual payments to be made by the Bonneville Power Administration for the life of the Grand Coulee facility. Members of the Colville Tribes (hereafter "the Tribes") have voted overwhelmingly in support of the settlement.

The Grand Coulee Dam project was initiated by the Columbia Basin Commission, an agency of the State of Washington. The State applied for and received in 1933 a preliminary Federal Power Act permit from the Federal Power Commission (now the Federal Energy Regulatory Commission) for power development of the Grand Coulee site. Under Section 10 (e) of the Federal Power Act, any licensee using Indian lands must pay to the Indian tribe an annual payment for the use of its land. The Grand Coulee Dam received its first funding and began construction under a Power Act permit, which would have required that the Tribes receive annual payments for their contribution to power.

Subsequently, the Grand Coulee project was federalized, and the Federal Government, which is not subject to the Federal Power Act, including the Section 10 (e) annual payment requirement, took over work on the dam. The Tribes then expressed grave concerns over their future if they did not receive the compensation provided under the Federal Power Act. Subsequently, the Secretary of Interior, Harold Ickes, endorsed a series of letters directing that steps be taken to provide the Tribes a reasonable revenue steam for the use of their lands for the Grand Coulee power and reservoir sites.

Grand Coulee was completed in 1942 but the Federal Government did not live up to the commitments made to the Tribes. Instead, the Interior Department paid the Tribes about $63,000 for their flooded lands and made no payments from power revenues.

The Tribes sued the United States in 1952. Over the years, many of the claims relating to this matter have been extinguished, including the loss of the Tribes' fishery and land. However, their claim to an annual share of power revenues due to the use of their land for power purposes was not ruled on until 1990 when the U.S. Claims Court dismissed the claim on the ground that the United States' navigational servitude in the Columbia River insulated the U.S. from any liability to the Tribes. In April 1992 the U.S. Court of Appeals for the Federal Circuit reversed the trial court in a unanimous decision. The Court of Appeals held that the government's navigational servitude did extinguish the Tribes' legal claims but was not a defense to the Tribes' claim that the "Fair and honorable dealing" clause of the Indian Claims Commission Act has been violated. The case was remanded back to the trial court for consideration consistent with this ruling.

Settlement discussions between the Tribes, the Justice Department and the Bonneville followed and in early 1994, agreement was reached between the Tribes and the United States. H.R. 4757 settles the Tribe's claim which is currently pending in the Federal Court of Claims. After enactment, the Tribe will receive a lump sum payment of $53 million from Justice Department settlement funds. This lump sum payment will not be reimbursable (i.e. a rate payer responsibility) by the Bonneville Power Administration.

The bill also requires Bonneville to make annual payments of a share of Grand Coulee power revenues to the Tribe. The specifics of the annual payments are included in the Settlement Agreement itself, which is referenced in the bill. The agreement requires Bonneville to make the first annual payment of $15.25 million no later than March 1, 1996. Thereafter, Bonneville is required to make comparable annual payments to the Tribes in accordance with a formula contained in the settlement agreement.

Until the year 2000, the annual payments are fully reimbursable by Bonneville. In the year 2000 and thereafter Bonneville will receive a credit against its Treasury debt equal to 26 percent of the annual payment. This means that 74 percent of these annual payments will be the responsibility of Bonneville and its ratepayers and 26 percent will be the responsibility of taxpayers.

Spokane Tribe

The Committee is aware that the Spokane Tribe, whose lands were also inundated by the Grand Coulee Reservoir, has suffered a harm that is identical in many respects to the harm suffered by the Colville Tribes. However, according to the testimony of the Spokane Tribe, unlike the Colville, the Spokane do not have a legal claim against the United States because they failed to file a claim for the use of their land for power purposes under the "fair and honorable dealings" clause of the Indian Claims Commission Act prior to the 1951 filing deadline. Nevertheless, based on the facts provided to the Committee to date, the Committee believes that the Spokane have a moral claim and requests that the Department of the Interior and the Justice Department work with the Spokane Tribe to develop a means to address the Spokane's claim. The Committee believes that the Spokane's claim should be addressed on its own merits.

Sharing of payments between Bonneville and the Treasury general fund.

Under the settlement agreement, the Tribes will receive a lump sum of $53 million for past use of tribal lands for power purposes, payable by the Judgment Fund, and annual payments with a present value of approximately $513 million for continued use of tribal lands, payable by the bonneville Power Administration. The Administration has proposed that, beginning in fiscal year 2000, the Bonneville Power Administration will receive a credit on its Treasury debt payments equal to 26 percent of each annual payment to the Tribes. Together with the lump sum payment, the credit results in the Treasury's general fund revenues assuming responsibility for 30 percent of the total value of the settlement, with Bonneville ratepayers paying 70 percent instead of 90 percent.

The Administration has testified that this division of responsibility is fair and appropriate. Bonneville was not named as a defendant in the Colville's lawsuit. However, Bonneville's decision to enter into the settlement discussions helped allow the settlement to proceed. The Tribes were unwilling to settle the case unless they received annual payments in addition to a lump sum. The Judgment Fund, from which a settlement with the United States would ordinarily be paid, is without authority to provide for annual pavements Without Bonneville's participation it would have been difficult to reach an agreement with the Tribes. Had the case gone to trial, the United States Treasury would have faced substantial legal exposure. Bonneville's successful negotiation of the annual payment reduced contention over the lump sum, allowing the government to negotiate a smaller lump sum payment.

SECTION-BY-SECTION ANALYSIS

Section 1

The Act's short title is the "Confederated Tribes of the Colville Reservation Grand Coulee Damn Settlement Act."

Section 2

This section defines the terminology used throughout the Act. The definitions are as follows:

(1) "Administrator" means the Administrator of the Bonneville Power Administration.
(2) "Bonneville Power Administration" means the Bonneville Power Administration of the Department of Energy or any successor Agency, Corporation, or entity that markets power produced at the Dam. This definition ensures that any successor to the Bonneville Power Administration is also governed by the terms of the Act.
(3) "Dam" means the Grand Coulee Dam operated by the Bureau of Reclamation of the Department of the Interior, the power form which is marketed by the Bonneville Power Administrator of the Department of Energy.
(4) "Confederated Tribes v. United States" means the case pending before the United States Court of Claims arising from the claim filed with the Indian Claims Commission with the docket number 181-D that was transferred to the United States Court of Claims pursuant to the Federal Courts Improvement Act of 1982 (96 Stat. 25) as Confederated Tribes v. United States, (20 Cl. Ct. 31);
(5) "Minor" means a child who has not attained the age of 18.
(6) "Secretary" means the Secretary of the Interior.
(7) "Settlement Agreement" means the Settlement Agreement entered into between the United States and the Tribe to settle the claims of the Tribe in Docket 181-D for the Indian Claims Commission, which docket has been transferred to the United States Court of Federal Claims.
(8) "Tribe" means the Confederated Tribes of the Colville Reservation, a federally recognized Indian Tribe.

Section 3

This section makes five findings and establishes two purposes for the Act. In subsection (a) it is found that there is pending before the United States Court of Federal Claims a suit by the Confederated Tribes of the Colville Reservation against the United States under the "fair and honorable dealings" clause of the Indian Claims Commission Act. Although the matter is in dispute, the potential liability of the United States is substantial.

The Tribe's claim alleges that the United States has used reservation land in the generation of hydropower since the construction of Grand Coulee Dam, and that the United States will continue to use such reservation land so long as the dam generates electric power. The claim further alleges that the United States promised to compensate the Tribe for the land's contribution to the generation of hydropower and has not done so. The proposed settlement will provide reasonable compensation for the past power generation, and also provides a fair and equitable method to compensate the Tribe for future generations. The proposed settlement will settle all claims of the Tribe that were or could have been brought against the United States in the pending lawsuit.

Subsection (b) establishes the purposes of the Act. These purposes are to approve and ratify the proposed settlement agreement and to authorize and direct the Bonneville Power Administration to carry out its obligations under the agreement. Under the proposed agreement, the Bonneville Power Administration will make annual payments to the Tribe for future use of reservation lands. The first payment of $15,250,000 is due March 1, 1996. Subsequent annual payments will be based on the generation of Grand Coulee Dam and the Bonneville Power Administration's average sales price for power. The Tribe has the option of taking a minimum payment of $15,250,000, with any underrun produced by the payment formula treated as a loan to be deducted from subsequent payments that exceed $15,250,000. The proposed settlement also provides for minimum and maximum payments based on changes in Bonneville Power Administration's sales price for power and the consumer price index. This provision ensures that over time the annual payment does not change by an amount that is substantially greater or less than the rate of inflation.

Section 4

This section approves and ratifies the proposed settlement agreement. In addition, the section directs the Bonneville Power Administration to make the annual payments provided for in the proposed settlement agreement and this Act and to carry out its other obligations under the settlement agreement. The section also provides that the United States will join the Tribe's motion in Confederated Tribes of the Colville Reservation v. United States, Indian Claims Commission Docket 181-D, for the entry of a compromise final judgment in the amount of $53,000,000. This judgment will compensate the Tribe for all past use of reservation lands in the generation of hydropower at Grand Coulee Dam, from the time of the construction of Grand Coulee Dam until the entry of judgment. The judgment will be paid from funds appropriated pursuant to section 1304 of title 31, United States Code, and is not reimbursable by the Bonneville Power Administration.

Section 5

This section provides that the judgment of $53,000,000, when paid, shall be deposited in the Treasury of the United States, and principal and interest on the judgment credited to the account of the Tribe. These funds may be expended by the tribal governing body for any purpose pursuant to a distribution plan developed by the Tribe and approved by the Secretary of the Interior pursuant to section 3 of Public Law 93-134 (25 U.S.C. 1403).

This section also provides that the annual payments provided for by the proposed settlement agreement shall be made directly to the Tribe, and may be used in the same manner as any other income received by the Tribes from the sale or lease of natural resources.

Section 6

This section provides that beginning with fiscal year 2000, the Administrator shall deduct from the interest payable to the United States Treasury from net proceeds--as defined in Section 13 of the Federal Columbia River Transmission System Act, an amount equal to 26 percent of the payment made to the Tribe for previous fiscal year. The deduction shall be a credit to the interest otherwise payable by the Administrator to the Treasury, and shall be allocated pro rata to all interest payments on debt associated with the generation function that are due during the fiscal year in which the deduction is made. If the amount of the deduction exceeds these interest payments, then the excess shall be allocated pro rata to any other interest payments that are due during the fiscal year.

Section 7

This section contains miscellaneous provisions regarding the treatment of the payments after they are received by the Tribe. The section provides that the funds, the interest or investment income received or earned on the funds, and payments made by the Tribe or the Secretary of the Interior to Tribal members, including interest or investment income on these payments when they are held in trust for the members, will not be subject to levy, execution or forfeiture, garnishment, lien encumbrance, or seizure, or taxation by the federal government or a State, or Political subdivision of a State. The funds, the interest earned or received on the fund, and any payment authorized by the Secretary of the Interior to be made from the funds to Tribal members may not be used as a basis for denying or reducing funds to the Tribe or its members under any federal or federally funded program. The Act and the proposed settlement agreement do not affect the trust responsibility of the United States and its agencies to the Tribe and members of the Tribe. Funds paid or deposited to the credit of the Tribe and the interest earned or received on those funds are not taxable; nor is such a payment or deposit a taxable event; nor is a payment authorized by the Tribe or the Secretary of the Interior to be made from those funds to Tribal members taxable to the recipient.

LEGISLATIVE HISTORY AND RECOMMENDATIONS

H.R. 4757 was introduced on July 14, 1994 by Representative Miller of California and was referred to the Committee on Natural Resources. The Subcommittee on Oversight and Investigations of the Committee on Natural Resources held a hearing on H.R. 4757 on August 2, 1994. ON August 5, 1994, the Committee considered H.R. 4757 and ordered it to be reported to the House (without amendment), by voice vote.

CHANGES IN EXISTING LAW

If enacted, H.R. 4757 will make no changes in existing law. No specific oversight activities were undertaken by the Committee and no recommendations were submitted to the Committee pursuant to rule X, clause 2 (b)(2).

INFLATIONARY IMPACT; COST; AND BUDGET ACT COMPLIANCE

Enactment of H.R. 4757 will have no inflationary impact. The cost and budgetary analysis of H.R. 4757, as evaluated by the Congressional Budget Office is set forth below:

U.S. CONGRESS,
CONGRESSIONAL BUDGET OFFICE
Washington, DC, August 5, 1994.

HON. GEORGE MILLER,
Chairman, Committee on Natural Resources,
House of Representatives, Washington, DC.

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 4757, the Confederated Tribes of the Colville Reservation Grand Coulee Dam Settlement Act.

H.R. 4757 would affect direct spending. Therefor, pay-as-you-go procedures would apply to the bill.

If you wish further details on this estimate, we will be pleased to provide them.

Sincerely,

ROBERT D. REISCHAUER, Director

 

CONGRESSIONAL BUDGET OFFICE--COST ESTIMATE

1. Bill number: H.R. 4757.
2. Bill title: Confederated Tribes of the Colville Reservation Grand Coulee Dam Settlement Act.
3. Bill status: As ordered reported by the House Committee on Natural Resources on August 5, 1994.
4. Bill purpose: H.R. 4757 would approve and ratify a settlement agreement entered into by the Department of Justice, the Bonneville Power Administration (BPA), and the Confederated Tribes of the Colville Reservation. The settlement agreement is designed to provide compensation for the past use of the Tribe's reservation land in connection with the generation of electric power at Grand Coulee Dam, and would establish a method to ensure that the tribe will be compensated for future use of its land.

5. Estimated cost to the Federal Government:

(by fiscal year, in millions of dollars)

1995

1996

1997

1998

1999

Direct Spending

Budget Authority

0

0

0

0

0

Outlays

0

0

0

0

0

The budgetary impacts of this bill fall within budget functions 450 and 270.

Basis of estimate: Under the settlement agreed to by the U.S. government, the tribe would receive a lump-sum payment of $53 million from the Claims and Judgments Fund. Thus, the bill would not create a new obligation of the U.S. Government, but would simply ratify a commitment already made. Consequently, enactment of the bill would not cause an increase in direct spending from the Claims and Judgments Fund.

H.R. 4757 also would direct the BPA to pay the tribe $15 million annually, adjusted for escalation in the price of electricity generated by the dam. Over the 1995 - 1999 period we estimate that BPA would pay the tribe an average of $16.5 million per year and that this cost would be offset by additional receipts from the sale of power so as to result in no net cost over this period. Beginning in the year 2000, however, the legislation would direct BPA to offset 26 percent of its payments to the tribe with a reduction in BPA's interest payments to the Treasury. This interest payment credit would result in a loss of receipts of the Treasury of about $4.8 million annually beginning in 2000.

6. Pay-as-you-go considerations: Section 252 of the Balanced Budget and Emergency Deficit Control Act of 1985 sets up pay-as-you-go procedures for legislation affecting direct spending or receipts through 1998. CBO estimates that enactment of H.R. 4757 would affect direct spending, but would result in no net change in outlays. The estimated pay-as-you-go impact is shown in the following table.

(By fiscal year, in millions of dollars)

1994

1995

1996

1997

1998

Change in outlays

0

0

0

0

0

Change in receipts

N/A

N/A

N/A

N/A

N/A

7. Estimated cost to State and local governments: None.
8. Estimated comparison: None.
9. Previous CBP estimate: None.
10. Estimate prepared by: Kim Cawley and Rachael Robertson.
11. Estimate approved by: C.G. Nuckols, Assistant Director for Budget Analysis.