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CROW-MONTANA WATER RIGHT-COAL SEVERANCE TAX SETTLEMENT (LC 1 AND LC 2)

to be considered in a Special Session of the Montana Legislature
June 15, 16, 1999

BACKGROUND of the SETTLEMENT

In the fall of 1998, officials from the Crow Tribe approached Governor Racicot and Attorney General Mazurek with a proposal for a comprehensive settlement of three important issues that have gone unresolved for decades: tribal water rights, coal severance tax litigation and "Section 2" land ownership. The Tribe hoped that a settlement package involving the first two issues could be brought to the 1999 Legislature for approval.

Since December, the Montana Reserved Water Rights Compact Commission and the Crow Tribe, working closely with the negotiating team for the United States, have engaged in intensive negotiations on the water rights issues. In April, the Tribe and the Compact Commission finalized a compact which provides for a significant water right for the Tribe while protecting the rights of all existing water users. At the same time, the Governor and Attorney General negotiated a final settlement of the contentious coal tax litigation. These two agreements will now be brought to a special session of the Montana Legislature for ratification, the first step in an approval process that will include Congressional authorization, a Crow tribal secret ballot referendum and ultimately approval by the Montana Water Court. The "Section 2" issue will be negotiated by the Tribe and United States and included in the Congressional settlement package.

CROW WATER RIGHTS COMPACT (LC 1)

In general, the compact:

  • provides water from surface flow, groundwater and storage for the Crow Tribe for existing and future tribal water needs. (Article III)
  • provides protection for all state and tribal current water users in the affected water basins from the Tribe's future exercise of its water rights; also protects the local conservation districts' right to future water use. (Article III)
  • "closes" certain basins and sub-basins to new water appropriations under State law; small domestic and stock uses, as well as changes and transfers of water rights, can continue. (Article III)
  • creates an administrative process for resolution of any future disputes between Tribal and non-Tribal water users. (Article IV)
  • authorizes the State to pay the Tribe $15 million in consideration for the Tribe's dismissal of the coal severance lawsuit and for the State's "cost-share" for the water rights settlement. (Article VI)

IMPLEMENTATION OF THE CROW COAL SEVERANCE TAX SETTLEMENT AND WATER RIGHTS COMPACT (LC 2) AND STATE CONTRIBUTIONS TO SETTLEMENT

LC 1, the Crow Water Rights Compact, authorizes the State of Montana to pay the Crow Tribe $15 million in annual installments over a period of 10 years to a fund "dedicated to economic development and water and sewer infrastructure within the Reservation." The Compact makes it clear that the State is contributing this money to (1). settle the long-standing coal severance tax dispute and (2). provide the State's "cost-share" for settling the water rights of the Tribe.

LC 2 implements these two settlements. It authorizes the first two payments of $1.5 million in FY 2000 and $1.5 million in FY 2001 from the general fund. It provides that the funds will be paid into an escrow account. The funds, together with any interest earned, will be transferred to the Tribe when the following conditions occur:

1. the Compact has been approved by the Congress of the United States in a form satisfactory to the Compact Commission;

2. the Compact has been approved by the Crow Tribe;

3. the Compact has been approved by the Water Court; and

4. the Tribe and the U.S. file the necessary paperwork to dismiss the coal severance tax case.

LC2 also authorizes the Governor and Attorney General to agree that any future State production taxes on the Tribe's coal will be paid to the Tribe.

CROW TRIBAL WATER RIGHT

BIGHORN RIVER

  • 500,000 AFY of natural flow of the river including groundwater for existing and future Tribal uses.
  • The United States will allocate 300,000 AFY of storage in Bighorn Lake to the Tribe.
  • All of the rights for future Tribal development can be developed only if there is no adverse effect on current tribal and non-tribal water uses.
  • The State will not issue any new appropriations on this river, down to the confluence of the Yellowstone River, once the legislature ratifies this compact, however, new small domestic and stock uses as well as changes and transfers can continue. Local conservation districts can also develop their water reservations.
  • A management plan will be developed by the Tribe, State and United States for instream flows and lake levels.

LITTLE BIGHORN RIVER and PRYOR CREEK

  • The Tribe may use all available surface and groundwater on the Reservation not needed to satisfy current water uses.
  • In both basins the State will not issue any new appropriations once the legislature ratifies this Compact, however, new small domestic and stock uses as well as changes and transfers can continue.

ROSEBUD CREEK

  • The Tribe may use all available surface and groundwater on the Reservation not needed to satisfy all current downstream uses provided for in the Northern Cheyenne Compact and certain portions of the Northern Cheyenne Tribal Water Right are protected.
  • The basin will be closed to new appropriations under state law on the Reservation.

BITTER CREEK, BLUE CREEK, BLUEWATER CREEK, COTTONWOOD CREEK, DRY CREEKS (TONGUE RIVER BASIN AND YELLOWSTONE BASIN), FIVE MILE CREEK, FLY CREEK, SAGE CREEK, SARPY CREEK, SQUIRREL CREEK, TANNER CREEK and YOUNG'S CREEK

  • The Tribe may use all available surface and groundwater on the Reservation not needed to satisfy current water users.
  • The portion of these drainages on the Crow Reservation will be closed to new appropriations under State law, however, new small domestic and stock uses as well as changes and transfers can continue.

CEDED STRIP

  • The Crow Tribe will have the right to use 47,000 AFY from any water source on lands or interests on the ceded strip which Congress restored to the Tribe or on any lands acquired and held in trust for the Tribe. If the water source is the Bighorn River, the amount developed shall be deducted from the on-Reservation water allocated to the Tribe from the river. No more than 7,000 AFY can be diverted in any one month.

ADMINISTRATION/DISPUTE RESOLUTION

  • The Tribe will administer the Tribal water right. The State will administer water rights recognized under state law. The BIA Project will use part of the Tribal water right and will continue to be administered by the BIA under applicable federal law.
  • All tribal development, either on the Reservation or on the Ceded Strip, will be reviewed by the Tribe and the Montana Department of Natural Resources and Conservation to determine if it will impact any current water users. Any unresolved disputes will be referred to the Crow-Montana Compact Board.

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Last Modified:
7/16/2008 8:42:40 AM