S. 565 — Navajo Nation Rio San José Stream System Water Rights Settlement Act of 2025

This section designates the Act as the "Navajo Nation Rio San José Stream System Water Rights Settlement Act of 2025" and sets forth the table of contents.

This section states the purposes of the Act: (1) to achieve a fair, equitable, and final settlement of all claims to water rights in the Rio San José Stream System adjudication (“State of New Mexico, ex rel. State Engineer v. Kerr-McGee, et al.,” Nos. D–1333–CV–1983–00190 and D–1333–CV–1983–00220 (consolidated), Thirteenth Judicial District Court, New Mexico) for the Navajo Nation and the United States as trustee; (2) to authorize, ratify, and confirm the Agreement entered into by the Navajo Nation, the State of New Mexico, and other parties, to the extent consistent with this Act; (3) to authorize and direct the Secretary to execute the Agreement and take necessary actions to implement it; and (4) to authorize funds necessary for implementation.

This section defines terms used in the Act, including “Acequia” (i.e., nine specified irrigation districts and associations), “Adjudication” (i.e., a specified New Mexico state court water rights case), “Agreement” (i.e., the May 13, 2022, Rio San José Stream System settlement agreement, as amended June 11, 2024), “Allotment” and “Allottee” (i.e., trust land parcels and their Indian beneficiaries in the Rio San José Stream System or Rio Puerco Basin), “Decree Court” (i.e., the Thirteenth Judicial District Court of New Mexico), “Enforceability Date” (i.e., the date specified in section 8), “Navajo Nation” and “Navajo Nation Lands” (i.e., the tribe and its trust or fee lands in the relevant basins, excluding allotments), “Navajo Nation Water Code” and “Navajo Nation Water Use Permit,” “Navajo Nation’s Water Rights” (i.e., specified stream system and basin rights, excluding certain pre-2000 allotment patents under repealed 25 U.S.C. 331), “Navajo Partial Final Judgment and Decree,” “Navajo Trust Fund,” and “Rio Puerco Basin.”

This section ratifies a specified Agreement with the Navajo Nation, as modified by this Act and to the extent consistent with the Act; authorizes and directs the Secretary of the Interior to execute the Agreement; and permits post-execution modifications consistent with the Act without further congressional approval under 25 U.S.C. 177 (i.e., the statute invalidating conveyances of tribal lands absent a treaty or congressional ratification). The section requires the Secretary and Navajo Nation, in implementing the Agreement and Act, to comply with the Endangered Species Act of 1973, National Environmental Policy Act of 1969, and other applicable environmental laws; directs the Navajo Nation to prepare necessary environmental documents subject to independent Secretarial evaluation, review, and responsibility for accuracy; deems Agreement execution not a major federal action under NEPA; and allocates compliance costs to Navajo funds except for inherently federal functions (which remain the Secretary's responsibility).

This section declares the Navajo Nation’s water rights to be held in trust by the United States on behalf of the Nation, protects them from forfeiture, abandonment, or other loss (including state-law based rights acquired after a specified date and non-use by any water user), authorizes their use subject to the settlement agreement and this Act, and excludes water rights for allotments while protecting allottee rights and requiring the Nation to recognize reasonable domestic, stock, and irrigation uses on allotments. The section further authorizes the Navajo Nation to allocate, distribute, and lease its water rights—(1) for use on Navajo lands in accordance with the settlement agreement, this Act, and applicable federal law including the Long-Term Leasing Act (25 U.S.C. 415), which generally authorizes leases of restricted Indian lands for up to 25 years (with longer terms for specified reservations including the Navajo Reservation); and (2) for use off Navajo lands subject to Secretary of the Interior approval, with a maximum lease term of 99 years (including renewals). (Thus, the Nation may not permanently alienate the water rights.)

This section establishes the Navajo Nation Rio San José Water Rights Settlement Trust Fund—managed, invested, and distributed by the Secretary of the Interior consistent with the first section of the Act of June 24, 1938 (25 U.S.C. 162a), the American Indian Trust Fund Management Reform Act of 1994 (25 U.S.C. 4001 et seq.), and this section—consisting of amounts deposited pursuant to section 7(a) plus investment earnings, to remain available until expended, withdrawn, or reverted to the Treasury, and containing (1) the Navajo Nation Water Rights Settlement Account and (2) the Navajo Nation Operations and Maintenance Account. Amounts in the trust fund, including investment earnings, become available to the Navajo Nation on the enforceability date, except that up to $15 million from the Water Rights Settlement Account is available immediately for feasibility studies, planning, design, environmental compliance, and installation of groundwater wells and infrastructure to meet Navajo water needs. The Navajo Nation may withdraw funds via (1) a tribal management plan approved by the Secretary under the 1994 Act, requiring expenditures consistent with this Act, or (2) an approved expenditure plan detailing uses consistent with this Act; the Secretary may enforce compliance judicially or administratively, with judicial review limited to the Administrative Procedure Act. Funds from the Water Rights Settlement Account may be used only to acquire water rights or supplies and for related planning, permitting, and design.

This section provides mandatory appropriations to the Secretary of $200,271,000 for deposit in the Navajo Nation Water Rights Settlement Account and $23,000,000 for deposit in the Navajo Nation Operations and Maintenance Account, both established under section 6(b) and available until expended, withdrawn, or reverted to the general fund of the Treasury. The section authorizes adjustments to these amounts for ordinary cost fluctuations (per the Bureau of Reclamation Construction Cost Index–Composite Trend, indexed from October 1, 2021) and unforeseen construction cost changes due to market volatility, to be repeated until fully appropriated. The section further requires the State to contribute $3 million (as adjusted for inflation per the Agreement) to the Bluewater Toltec Irrigation District and Acequia Madre del Ojo del Gallo, plus any additional funding required under Article 17.12.4 of the Agreement.

This section establishes the enforceability date of the agreement as the date on which the Secretary publishes in the Federal Register a statement of findings that the following conditions have been met: (1) the agreement has been amended, to the extent necessary, to conform with this Act, and executed by all parties including the United States; (2) all amounts appropriated under section 7(a) have been deposited in designated accounts of the Navajo Trust Fund; (3) the state has provided $3 million under section 7(c)(1) into appropriate accounts or entered into a funding agreement with intended beneficiaries and enacted legislation authorizing leases of a Navajo Nation water right for up to 99 years, including renewals; (4) the decree court has approved the agreement and entered the Navajo partial final judgment and decree; and (5) the waivers and releases under section 9 have been executed by the Navajo Nation and the Secretary.

This section requires the Navajo Nation and the United States, acting as trustee for the Nation (excluding allottees), to waive and release all claims for water rights in the Rio San José Stream System asserted or assertable before the enforceability date (except as recognized in the settlement agreement and Act) and related damages against agreement parties, including signatory acequia members and parciantes. It further requires the Navajo Nation to waive claims against the United States arising before the enforceability date for (1) U.S.-asserted water rights in the stream system (except as recognized), (2) foregone benefits from non-Navajo water use, (3) damage to water, land, or resources due to water loss, (4) failures to maintain irrigation or provide water systems on Navajo lands, (5) irrigation project operations, (6) dam safety, (7) litigation, and (8) settlement negotiations. The waivers take effect on the enforceability date but retain Navajo and U.S. claims for (1) post-enforceability enforcement of recognized rights, (2) water quality and environmental claims under CERCLA, SDWA, and CWA; (3) post-enactment water rights; (4) non-water-related damages to land or resources; (5) rights in other basins; and (6) unspecified rights, remedies, or immunities. The section clarifies that the agreement and Act do not affect governmental sovereignty (except as in §11) or U.S. sovereign activities authorized by law.

This section establishes that the benefits provided under the Act constitute complete replacement for, substitution of, and full satisfaction of any claims of the Navajo Nation against the United States that are waived and released pursuant to section 9(b).

This section gives the consent of the United States—with the consent of the Navajo Nation—to the jurisdiction of the District Court for the Thirteenth Judicial District of New Mexico (and the New Mexico Court of Appeals and Supreme Court on appeal) solely for judicial review, based on the administrative record, of Navajo Nation Water Use Permit decisions under the Agreement. Such review is limited to determining whether the decision (1) is supported by substantial evidence; (2) is not arbitrary, capricious, or contrary to law; (3) is in accordance with the Agreement or Navajo Partial Final Judgment and Decree; or (4) shows fraud or action outside the Navajo Nation's authority. The section further requires New Mexico courts to give full faith and credit to qualifying provisions of the Navajo Nation Water Code or Navajo water law; to certify questions on other Navajo Nation law interpretations to Navajo Nation courts (except for standards in Article 17.10.6 of the Agreement); and preserves the Decree Court's jurisdiction to interpret and enforce the Agreement.

This section states that (1) nothing in the Act waives the sovereign immunity of the United States; (2) nothing in the Act quantifies or diminishes any land or water right, or claim or entitlement to land or water, of any Indian tribe, band, Pueblo, or community other than the Navajo Nation; (3) nothing in the Act affects any provision of law (including regulations) in effect on the day before enactment with respect to pre-enforcement review of any federal environmental enforcement action; and (4) in the event of a conflict between the Agreement and the Act, the Act controls.

This section provides that nothing in the Act or Agreement affects the water rights or damage claims of allottees—or the United States acting as trustee for allottees—relating to lands allotted by the United States. It directs separate adjudication of water rights for allotments patented under section 1 (25 U.S.C. §331, repealed) or section 4 (25 U.S.C. §334) of the Indian General Allotment Act (as in effect before the Indian Land Consolidation Act Amendments of 2000), excluding such rights from the Navajo Nation’s water rights and the Navajo Partial Final Judgment and Decree. (Thus, adjudicated allotment water rights are not subject to restrictions or conditions on the Navajo Nation’s water rights unless the allotment becomes Navajo Nation land.) It further authorizes allottees or the United States as trustee to assert water rights claims in the Rio San José Stream System or Rio Puerco Basin.

This section authorizes the Navajo Nation to expand the service area of the Navajo-Gallup Water Supply Project—a Bureau of Reclamation project authorized by P.L. 111-11 to deliver San Juan River water to the Navajo Nation in northwestern New Mexico and the city of Gallup—to its communities in the Rio San José Basin in New Mexico. If the Bureau of Reclamation holds title to project facilities when water supply begins, the Navajo Nation must (1) obtain the Reclamation Commissioner's written approval of the final design for connection and related facilities and (2) coordinate construction of those facilities with the Commissioner.

This section provides an antideficiency protection, stating that the United States is not liable for any failure to carry out obligations or activities authorized by the Act—including under the Agreement—if Congress does not expressly appropriate adequate funds for such purposes.