S. 562, Rio San José and Rio Jemez Water Settlements Act of 2025

Bill Summary

S. 562 would secure about 30,000 acre-feet of water annually for four Pueblo tribes in New Mexico by ratifying two agreements:

• The Rio San José Stream System Water Rights Local Settlement Agreement, reached in 2022 between the Pueblo of Acoma, the Pueblo of Laguna, the Navajo Nation, the State of New Mexico, and other parties, would secure 20,200 acre-feet of water annually for the Pueblos of Acoma and Laguna.
• The Pueblos of Jemez and Zia Water Rights Settlement Agreement, reached in 2022 between the Pueblo of Jemez, the Pueblo of Zia, the State of New Mexico, and other parties, would secure 9,800 acre-feet of water annually for those tribes.
• The bill would appropriate specific amounts to capitalize five different trust funds and those trust funds would be credited with interest during the period they are administered by the Department of the Interior (DOI). Once the parties to the settlements have satisfied specified conditions, the federal government would transfer ownership of each trust fund, including any interest credited to the fund, to the relevant tribe for use in developing, constructing, and maintaining water projects.

Estimated Federal Cost

The estimated budgetary effect of S. 562 is shown in Table 1. The costs of the legislation fall within budget function 300 (natural resources and environment).

Basis of Estimate

For this estimate, CBO assumes that the bill will be enacted before the end of fiscal year 2025 and that the specified amounts will be deposited into the trust funds by the end of the fiscal year.

Using information from DOI about requirements in the bill, CBO expects that the following conditions would be met five years after enactment:

• All settlements, including amendments required to conform to the bill, would be final and executed;
• All waivers and releases of claims required under the bill would be executed;
• All appeals would have been exhausted and the courts would have approved agreements as binding on all parties; and
• The State of New Mexico would have contributed to or entered into funding agreements for the required amounts.

CBO expects that DOI would publish findings in the Federal Register for each settlement, stating that the bill’s conditions have been met and that ownership of the trust funds is to be transferred.

Direct Spending

CBO estimates that enacting S. 562 would increase direct spending by $1.8 billion over the 2025-2035 period.

Pueblos of Acoma and Laguna Settlement Trust Funds. Title I would establish one trust fund for each tribe and a third fund for the benefit of both tribes. The amounts in the trust funds would be capitalized with appropriations totaling $850 million, distributed as follows:

• $312 million for the Pueblo of Acoma Settlement Trust Fund, consisting of the Water Rights Settlement Account ($296 million), a Water Infrastructure Operations and Maintenance Account ($14 million), and a Feasibility Studies Settlement Account ($2 million);
• $493 million for the Pueblo of Laguna Settlement Trust Fund, consisting of the Water Rights Settlement Account ($464 million), a Water Infrastructure Operations and Maintenance Account ($26 million), and a Feasibility Studies Settlement Account ($3 million); and
• $45 million for the Acomita Reservoir Works Trust Fund, consisting of the Water Rights Settlement Account.

Title I would appropriate whatever amounts are necessary to account for inflation from October 2021 through the time those amounts are deposited into each trust fund. Based on the assumption that the bill will be enacted by the end of 2025, CBO estimates that the amount for inflation would be $119 million; thus, we estimate that the appropriations for those trust funds would total $969 million.

Of those amounts, the Acoma and Laguna Pueblos would have immediate access to $86 million ($80 million specified as available and $6 million from the inflation adjustment) to use for feasibility studies, installing groundwater wells, and construction projects to rehabilitate and expand the Acomita reservoir, dam, and water conveyance infrastructure. The federal government would retain ownership of the remaining amounts until 2030, when CBO expects that all settlement conditions will be satisfied. Interest would be credited to the deposited amounts.

When the federal government transfers ownership of the trust funds to the tribes, those transfers (including credited interest) would be considered federal expenditures. Based on CBO’s projections of interest rates and on an assumption that all conditions will be met by 2030, CBO estimates that $1.1 billion would be transferred in 2030; $167 million of that amount would be for interest credited to the trust funds. On that basis, CBO estimates that enacting title I would increase direct spending by $1.1 billion over the 2025-2035 period.

The federal government would retain fiduciary responsibility over the trust funds until the tribes are ready to acquire water rights and to plan, design, build, and maintain water projects; those subsequent actions would not affect the federal budget.

Pueblos of Jemez and Zia Settlement Trust Funds. Title II would establish an interest-bearing trust fund for each tribe, capitalized with appropriations of $290 million for the Pueblo of Jemez Settlement Trust Fund and $200 million for the Pueblo of Zia Settlement Trust Fund. Title II would appropriate whatever amounts are necessary to account for inflation from October 2021 through the time those amounts are deposited into each fund. Based on the assumption that the bill will be enacted by the end of 2025, CBO estimates that amount for inflation would be $69 million; thus, we estimate that the appropriation for those trust funds would total $559 million.

Under the bill, the Jemez and Zia Pueblos would have immediate access to $50 million for developing economic water plans, preparing environmental documents, and designing and installing groundwater wells. (The bill does not specify that the inflation adjustment would be available so CBO estimates that amount would not be immediately available.) The federal government would retain ownership of the remaining amounts until 2030, when CBO expects that all settlement conditions will be satisfied. Interest would be credited to the deposited amounts.

When the federal government transfers ownership of the trust funds to the tribes, those transfers (including credited interest) would be considered federal expenditures. Based on CBO’s projections of interest rates and the assumption that all of the conditions will be met by 2030, CBO estimates that $603 million would be transferred to the tribes in 2030; $94 million would be for interest credited to the account. Accordingly, CBO estimates that enacting title II would increase direct spending by $653 million over the 2025-2035 period.

The federal government would retain fiduciary responsibility over the contents of the trust funds until the money is needed by the tribes to design, rehabilitate, and construct water projects for domestic, municipal, and agricultural use; those subsequent actions would not affect the federal budget.

Spending Subject to Appropriation

DOI would incur administrative costs to implement S. 562, such as overseeing environmental and technical compliance during construction projects. Using information about average costs for other water settlements, CBO estimates that the annual cost of those activities would be less than $500,000 and would total $2 million over the 2025-2030 period; any related spending would be subject to the availability of appropriated funds.

Nonbudgetary Effects

The settlements would require New Mexico to contribute $36 million for the Pueblos of Acoma and Laguna Water Rights Settlement and $20 million for the Pueblos of Jemez and Zia Water Rights Settlement. Generally, when the federal government takes control of assets that belong to other entities, those amounts are considered nonbudgetary and their collection and disbursement does not affect the deficit.

Uncertainty

This estimate is subject to uncertainty because the amount of interest credited to each fund will depend on when the water settlements are finalized. S. 562 allows the parties to delay the finalization of the settlements if additional time is needed to satisfy the required conditions. Thus, interest credited to the funds could be lower if the settlements are finalized earlier than CBO anticipates or higher if those settlements are finalized after 2030.

Pay-As-You-Go Considerations

The Statutory Pay-As-You-Go Act of 2010 establishes budget-reporting and enforcement procedures for legislation affecting direct spending or revenues. The net changes in outlays that are subject to those pay-as-you-go procedures are shown in Table 2.

Increase in Long-Term Net Direct Spending and Deficits

CBO estimates that enacting S. 562 would not increase net direct spending or on-budget deficits in any of the four consecutive 10-year periods beginning in 2036.

Mandates

The bill contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act.

Estimate Prepared By

Federal Costs: Alaina Rhee

Mandates: Erich Dvorak

Estimate Reviewed By

Ann E. Futrell
Acting Chief, Natural and Physical Resources Cost Estimates Unit

Kathleen FitzGerald 
Chief, Public and Private Mandates Unit

H. Samuel Papenfuss 
Deputy Director of Budget Analysis

Estimate Approved By