S. 564, Zuni Indian Tribe Water Rights Settlement Act of 2025

Bill Summary

S. 564 would secure water rights for the Zuni Indian Tribe of New Mexico by ratifying a 2023 settlement agreement between the tribe, the State of New Mexico, the New Mexico state engineer, and the federal government in its capacity as the tribe’s trustee.

The bill would establish and appropriate funds to capitalize two accounts within the Zuni Tribe 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). Once the parties to the settlement have met specified conditions, the federal government would transfer ownership of the trust fund, including any interest credited to the fund, to the tribe for use in constructing and maintaining water projects. At that time, DOI also would be directed to transfer specific federal land to be held in trust for the Zuni Tribe.

Estimated Federal Cost

The estimated budgetary effects of S. 564 are 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, 2030:

• 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.

CBO expects that DOI will publish a notice of the settlement in the Federal Register, 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 $944 million over the 2026-2036 period. When the federal government transfers ownership of the trust fund to the Zuni Tribe, the amount transferred (including credited interest) would be considered a federal expenditure. The bill would make $50 million from the trust fund immediately available to the tribe. Accordingly, CBO estimates that the remaining $894 million would be transferred from the trust fund to the tribe in 2030 when all conditions would have been met.

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

Zuni Tribe Settlement Trust Fund. S. 564 would establish a trust fund consisting of two interest-bearing accounts: the Zuni Tribe Water Rights Settlement Trust Account and the Zuni Tribe Operation, Maintenance, and Replacement Trust Account. The bill would appropriate $685 million to capitalize those accounts—$655.5 million for the first account and $29.5 million for the second.

Additional amounts also would be appropriated to account for inflation over the period from 2022 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 $139 million; thus, we estimate that the appropriation for the fund would total $824 million.

Under the bill, $50 million would be immediately available from the trust fund for the tribe to plan, permit, design, and operate water projects. Based on CBO’s assumptions that the settlement will be final by 2030 and that spending for specified activities would continue until then, we estimate that the tribe would spend that full amount over the 2026-2029 period.

Interest Credited to the Trust Fund. Using the interest rates that underlie CBO’s February 2026 baseline projections and assuming that all conditions would be met by 2030, we estimate that $120 million in interest would be credited to the trust fund over the 2026-2030 period.

Land in Trust. S. 564 would immediately impose restrictions on the management of federal land within the boundaries of the Zuni Salt Lake and Sanctuary, including approximately 92,000 acres of land managed by the Bureau of Land Management (BLM) and any land acquired after the bill’s enactment. In addition, DOI would be directed to transfer that land to be held in trust for the tribe in 2030, when CBO expects that all settlement conditions will be satisfied.

Using information from BLM, CBO estimates that, starting in 2026, enacting the federal land management restrictions would decrease offsetting receipts (and thus increase direct spending) because BLM would no longer collect fees for grazing or rights-of-way on that land. Using information from the agency about those fees, CBO estimates that the increase in direct spending would be less than $500,000 in any year and over the 2026-2036 period.

Spending Subject to Appropriation

BLM and DOI also would incur costs under S. 564 both to oversee the tribe’s compliance with environmental and technical standards and to complete the land transfer. Using information from the agencies about average costs for similar activities, CBO estimates that the cost 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 agreement requires New Mexico to contribute $1.25 million to support the settlement. 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. 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. 564 would allow the parties to delay finalizing 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 Zuni Tribe with immediate access to $50 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 estimate.

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 1.

Increase in Long-Term Net Direct Spending and Deficits

CBO estimates that enacting S. 564 would not increase net direct spending or on-budget deficits 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