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The state is expected to settle its dispute with the Lower Elwha Klallam tribe over the future of an ancient tribal village that was unearthed during the state’s Hood Canal Bridge project, the Peninsula Daily News reported Sunday.

Details of the agreement were not revealed, but the newspaper reported that the tribe, state and the city and port of Port Angeles were to sign off on the agreement Monday, pending approval by both the Lower Elwha Tribal Council and the Port Angeles City Council.

An agreement would end a painful chapter in the tribe’s history — and a troublesome one for the state Department of Transportation, which had planned a dry dock at the 22.5-acre waterfront site for construction of new bridge pontoons for its Hood Canal Bridge project.

The project was shut down in late 2004 at the tribe’s insistence after hundreds of ancient remains and thousands of artifacts were found as the site of the Tse-whit-zen village was unearthed. The estimated cost of the error: $87 million.

As a result, the state has hired a team of experts to check out the area around Seattle’s Alaskan Way Viaduct, expected to be the site of an extensive retrofit or rebuild in the next decade or so. The team is poring over geologic records, picking through core samples and studying 120-year-old maps, documenting extensive man-made changes to the downtown Seattle shoreline and looking for signs of earlier occupation, The Seattle Times reported Sunday.

A tunnel would pose the greatest risk of uncovering archaeological deposits, but even a new elevated roadway could do it. Giant new footings would be needed, and preliminary estimates say shafts may be as big as 14 feet wide and 150 feet deep.

The ancient village at the site of downtown Port Angeles was razed and buried in the 1920s to make way for a sawmill. Archaeologists say Tse-whit-zen is the largest ever discovered in Washington state.

In early June, a report released by the state Joint Legislative Audit Review Committee criticized the Transportation Department for mishandling the project.

When informal talks between the tribe and state failed to resolve the future of the site, Gov. Chris Gregoire called for formal negotiations in December. Discussions began in March, with mediator John Bickerman of Washington, D.C., keeping details closely guarded.

Last week, word of an imminent agreement came from several sources as the port assembled information and the Port Angeles City Council met repeatedly in executive sessions, the Peninsula Daily News reported.

Larry G. Williams, Port Angeles’ deputy mayor, said Saturday he couldn’t reveal the substance of the proposal.

“It looks promising,” Bickerman said. “I think all the parties worked very hard, and I’m delighted that it is working out.”

The settlement is expected to determine the future of the site near the crook of Ediz Hook, and outline plans for developing the rest of the Port Angeles waterfront. Developmemnt plans exclude the old Rayonier pulp mill site, part of which includes YInnis, another Klallam village.

City officials have expressed concern that other Indian burial sites could stymie waterfront development.

If approved, the settlement is expected to:

_Arrange for disposition for 20,000 cubic yards of earth dug up early in construction and trucked to a site west of town. Last year, the tribe sued the state for return of the dirt, which may contain artifacts and skeletal remains.

_Withdraw the state’s counterclaims against the Lower Elwha.

_Divide the former graving yard site among the tribe and other entities, probably the state and the port.

_Return the Tse-whit-zen cemetery, built along a 19th century tide line, to its preindustrial condition.

_Provide a site for a possible cultural centery and museum for artifacts removed from Tse-whit-zen and now stored for the tribe at the Burke Museum in Seattle.