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6 20 in-state leasing subject to Colorado procedural law, and for out-of- state leasing subject to' a judicial determination of the tribes' rigl).t to do so given the "Law of the River" and Colorado's anti-export statute: In other words, there was to be no guarantee, either in the agreement or in the legislation, that the tribes would be able to lease out-of-state, but neither would there be aprohibiti()n, If the right to lease out-of-state the water provided by this settle- ment is established by the tribes judicially, we expect that at least two benefits would result: -For the tribes, water from the settlement would become a source of capital to plan and develop reservation economies. -For the United States, Indian water leasing would establish an , improved potential for the, economic use of project water and thereby enhance project repayment. The Decem):Jer 10, 1986, Final Settlement Agreement requires legislation to implement some of its provisions. The agreement also provides that before the settlement can become effective, the State of Colorado, the tribes and the United States must each certify that the legislation is satisfactory, In the months following approval of the settlement agreement", we worked with the non-Federal parties to draft that imple~entinglegislation,Concern by the non-Federal parties that the implementing legislation, be introduced in time for enac,tment by the 100th Congress led to the introduction of S. 1415 and H.R. 2642 befare we had come to full ,agreement on certain of its provisions. In addition to those unresolved issues, S. 1415 and H~R. 2642 introduce some new issues which we have not had an op- portunity to discuss with the non-Federal parties, and change some language we had,previously agreed upon, We have enclosed a back- ground memorandum which presents the key differences between the most recent negotiating draft and S, 1415, It is our belief that S. 1415 could be an appropriate legislative framework within which to implement the Final Settlement Agree- ment if it were conformed generally to the Federal negotiating po- sition as discussed in the enclosure to this letter. We do believe that certain provisions of this negotiating draft (e.g., sections 4 and 5) are more important, and therefore less open to subsequent nego- tiations between the parties, than others, In summary, we'are persuaded that further meetings of the par- ,ties are necessary before the responsible Senate committees com- plete their work on S. 1415. We would be pleased to participate in any efforts that your Committee might undertake to facilitate the resolution of these issues. We currently anticipate that negotiations among the parties will resume by mid-October. A similar letter has been sent to Senators Armstrong, Bingaman, Wirth, Domenici, and Inouye. The Office of Maftagement and BUdget has advised that there is no objection to the presentation of this report from the standpoint of the Administration's program; , Sincerely, WAYNE N. MARCHANT, Acting Assistant Secretary. Enclosure,