S. 563, Ohkay Owingeh Rio Chama Water Rights Settlement Act of 2025

Bill Summary

S. 563 would secure Pueblo Water Rights for the Ohkay Owingeh Pueblo by ratifying the Ohkay Owingeh Rio Chama Water Rights Settlement reached in 2023 by Ohkay Owingeh, the State of New Mexico, and other parties.

The bill would appropriate funds to capitalize the Ohkay Owingeh Water Rights Settlement Trust Fund, which would be credited with interest during the period in which the trust fund is administered by the Department of the Interior (DOI) and made available to the Pueblo for specified uses.

Estimated Federal Cost

The estimated budgetary effect of S. 563 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 and the specified amounts deposited into the trust fund in fiscal year 2026.

Using information from DOI and based on the bill’s specifications, CBO expects that the following conditions will be met by July 1, 2038:

• The settlement, including amendments required to conform to the bill, will be final and executed;
• All waivers and releases of claims required under the bill will be executed; and
• All appeals will have been exhausted and the courts will have approved the agreement as binding on all parties.

If those conditions are met, CBO expects that DOI will publish findings in the Federal Register for the settlement, stating that the bill’s conditions have been met and that ownership of the trust fund is to be transferred.

Direct Spending

CBO estimates that enacting the bill would increase direct spending by $90 million over the 2026-2036 period and $1.3 billion after 2036.

S. 563 would establish the Ohkay Owingeh Water Rights Settlement Trust Fund and would appropriate $745 million to capitalize it. The bill also would appropriate additional amounts to account for inflation over the period from June 2023 until those amounts are deposited into the fund. Based on the assumption that the bill will be enacted in fiscal year 2026, CBO estimates that the appropriation to account for inflation would be $93 million; thus, we estimate that the appropriation for the fund would total $838 million.

The amounts deposited in the trust fund would be credited with interest. Based on the interest rates that underly CBO’s projections for the February 2026 baseline, CBO estimates that $421 million would be credited to the trust fund over the 2026-2036 window. (Additional amounts would be credited after 2036 until the trust fund is transferred to the tribe.) The federal government would retain ownership of the amounts in the fund and the interest credited on that amount until 2038. At that time, CBO expects that all settlement conditions will be satisfied and DOI would transfer ownership of the fund to the Pueblo. The Pueblo would have immediate access to $100 million from the trust fund to spend on specified purposes related to water production, treatment, or delivery infrastructure. Based on the expectation that the settlement will be finalized in 2038 and the assumption that spending on specified activities would continue until that time, CBO estimates that the Pueblo would spend $90 million over the 2026-2036 period and $10 million in 2037.

In addition, and based on the outlay timing for the $100 million available to the Pueblo, CBO estimates that the interest credited on that amount would total $31 million over the 2026-2036 period.

When the federal government transfers ownership of the trust fund to the Pueblo, the amount transferred (including credited interest) would be considered a federal expenditure. Based on the assumption that all of the conditions would be met by 2038, CBO estimates that the following amounts would be transferred to the Pueblo in 2038:

• $738 million (the total amount originally deposited minus the $100 million spent from the amount that was made immediately available),
• $421 million (total interest credited to the fund from 2026-2036, including $31 million credited for the $100 million that was immediately available),
• $93 million (the amount of interest CBO estimates would be credited to the fund from 2037 through the transfer in 2038).

In total, CBO estimates that the total amount transferred in 2038 would round to $1.3 billion.

The federal government would retain fiduciary responsibility over the trust fund until the Pueblo is ready to plan, design, construct, and maintain water projects; those subsequent actions would not affect the federal budget.

Spending Subject to Appropriation

The department also would incur costs to oversee environmental and technical compliance for water projects constructed by the Pueblo. Based on the average costs to oversee activities for other water settlements, CBO estimates the cost of those activities would be less than $500,000 in any year and would total $1 million over the 2026-2031 period; any related spending would be subject to the availability of appropriated funds.

Nonbudgetary Effects

The settlement would require New Mexico to contribute $131 million. If the federal government takes control of assets that belong to other entities, those amounts are generally considered nonbudgetary and their collection and disbursement do not affect the deficit.

Uncertainty

This estimate is subject to uncertainty because the amount of interest credited to the fund would depend on interest rates over the next 12 years. If interest rates are higher or lower than CBO currently projects, the amount of credited interest transferred to the tribe would be correspondingly more or less than CBO estimates.

In addition, the timing of when all settlement conditions are satisfied will affect the amount of interest credited to the fund. S. 563 would allow the parties to delay finalization of the settlement if additional time is needed to satisfy the required conditions. If settlement conditions are satisfied later or earlier than CBO expects, the amount of credited interest would be correspondingly more or less than CBO estimates.

Finally, the bill would provide the Pueblo with immediate access to $100 million from the trust fund and any interest earned on that amount before the settlement conditions are finalized. If spending occurs more slowly or quickly than CBO estimates, interest credited to the fund would be correspondingly more or less than we estimated.

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. 563 would not increase net direct spending by more than $2.5 billion in any of the four consecutive 10-year periods beginning in 2037.

CBO estimates that enacting S. 563 would not increase on‑budget deficits by more than $5 billion in any of the four consecutive 10-year periods beginning in 2037.

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
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