Indian Issues

In 1948, the federal government began building the Oahe Dam to help control floods on the Missouri River. The reservoir created by the dam flooded more than 100,000 acres on the Cheyenne River Reservation. In the 1950s, Congress directed that the tribe be paid $10.6 million for damages and rehabilitation. However, in 1993, the Cheyenne River Sioux Tribal Council unanimously passed a resolution stating the tribe had not been adequately compensated for the damages resulting from the flood control project. The tribe hired a consultant to prepare a new economic analysis of the damages, which was published in July 1994. The consultant used two approaches to estimate the amount of additional compensation due to the Cheyenne River Sioux: The primary approach recalculated the value of the tribe's losses, while the secondary approach generally mirrored an alternative approach that GAO had proposed in a 1991 report evaluating other tribes' claims for additional compensation because of damages resulting from flood control projects on the Missouri River. (See GAO/RCED-91-77. May 1991.) In that report, GAO suggested that Congress consider using the tribes' requests for compensation when the land was taken as a starting point for calculating additional compensation. This report assesses the two approaches and makes suggestions for developing ranges of values under the second approach and for separating the values for damages from the values for rehabilitation.

GAO noted that: (1) the consultant's primary approach, which produced an estimate of $300.7 million in additional compensation, relies on questionable assumptions about the value of the tribe's losses in the 1950s; (2) the consultant's secondary approach, which produced an estimate of $279.1 million, was used to support the primary approach; (3) like the approach GAO proposed in 1991, it uses the tribe's 1954 request as a basis for calculating additional compensation; (4) however, it provides a single figure for additional compensation, rather than a range such as GAO proposed in 1991; (5) in addition, it includes an amount for rehabilitation as well as an amount for damages, while the primary approach provides only for damages; (6) neither of the consultant's approaches includes an amount for administrative expenses; (7) the extent to which the tribe should receive additional compensation for damages--and whether the tribe should receive additional payments for rehabilitation and administrative expenses--is a policy question for Congress to decide; (8) to provide Congress with information for such decision-making, GAO used its 1991 approach to calculate ranges for damages ($32.3 million to $120.1 million), rehabilitation ($45.8 million to $170.1 million), and administrative expenses ($0.1 million to $0.5 million); (9) specifically, for each of these factors, GAO subtracted the amounts that the tribe received from the amounts that it requested (or paid, in the case of administrative expenses) and multiplied the resulting differences by the inflation rate, thereby obtaining the lower value for each range; (10) similarly, GAO multiplied these differences by the corporate bond rate to obtain the upper value for each range; and (11) through this approach, GAO calculated separate ranges for Congress to consider in deciding on the type and amount of any additional payments.