At that time, the Spokane tribe, as well as the Colville tribes,  were pursuing other avenues for compensation of water power values. Under the settlement with the Colville tribe,  Bonneville has made annual payments since 1996 that have ranged from  about $14 million to $21 million. Using this rule, we estimate that a settlement with Spokane that is  equivalent to 40 percent of the Colville settlement would lead to an  increase in rates of less than 20 cents per month per household for a typical  household relying solely on power from Bonneville, or a 0.5 percent  increase in rates over current levels. Although the magnitude of the rate increase necessary to fund a settlement  with the Spokane tribe would be small, it comes at a time when  Bonneville’s customers have recently faced large rate increases. On October 1, 2003,  Bonneville raised its rates a further 2.2 percent. Therefore, because the bulk of  Bonneville’s obligations in any settlement similar to the Colville settlement  will occur in the future, Bonneville’s current financial difficulties should  not unduly influence current discussions about how to compensate the  Spokane tribe. A Reasonable Case Can Be Made for Adopting the Colville Model in Allocating Any Costs Associated with a Settlement for the Spokane Tribe

A reasonable case can be made for having Bonneville and the U.S. Treasury  allocate any costs for the Spokane tribe’s claims along the lines agreed to  for the Colville tribes. Under  the Federal Water Power Act of 1920, licenses for the development of  privately owned hydropower projects should include a “reasonable annual  charge” for the use of Indian lands.Originally, the Grand Coulee site was  licensed, and the Spokane tribe expected to receive annual payments for its  lands used for the project. However, the license was cancelled when the  federal government took over the project (federalized the project). This  settlement was a compromise to split the costs between Bonneville and the  U.S. Treasury. Bonneville is primarily paying the recurring annual  payments, and the U.S. Treasury’s Judgment Fund provided the one-time  lump sum payment in settlement of the past annual payments—$53  million. Nevertheless, since Bonneville collects the annual revenues for the  electricity generated by the dam, it could be argued that Bonneville should  make annual payments to the Spokane tribe out of those revenues, as it  does for the Colville tribes; the U.S. Treasury would then pay a lump sum to  settle any claims for past years. 1753, and previous House and Senate settlement proposals introduced  in the 106th and 107th Congresses directed the settlement costs to be split  between Bonneville and the U.S. Treasury. In conclusion, since the Spokane tribe missed its opportunity to file claims  with the Indian Claims Commission for its fisheries and water power  values, it is unlikely that the tribe’s claims and any associated settlement or  final resolution will move forward in any meaningful way without some  form of congressional intervention.
Why GAO Did This Study

The Grand Coulee Dam was constructed on the Columbia River in northeastern Washington State from 1933 to 1942. The reservoir behind the dam covers land on the Colville Reservation along the Columbia River and land on the adjacent Spokane Reservation along both the Columbia and Spokane rivers. Under a 1940 act, the federal government paid $63,000 and $4,700 to the Colville and Spokane tribes, respectively, for the land used for the dam and reservoir. Subsequently, the Colville tribes pursued additional claims for their lost fisheries and for "water power values" and in 1994 were awarded a lump sum payment of $53 million and, beginning in 1996, annual payments that have ranged between $14 million to $21 million. The Spokane tribe is currently pursuing similar claims. S. 1438, introduced in July 2003, is a proposed legislative settlement for the Spokane tribe's claims. While settlement proposals introduced in the 106th and 107th Congresses directed the settlement costs to be split between Bonneville and the Treasury, S. 1438 provides that the settlement be paid entirely from the Treasury. This statement for the record addresses the (1) impact of a settlement on Bonneville if the costs were split between Bonneville and the Treasury and (2) possible allocation of these costs between Bonneville and the Treasury.

What GAO Found

A settlement with the Spokane tribe along the lines provided to the Colville tribes would likely necessitate a small increase in Bonneville's rates for power. While the rate increase would amount to less than 20 cents per month per household, it comes at a time when (1) Bonneville's customers have already absorbed rate increases, including those announced on October 1, 2003, of over 40 percent and (2) the economy of the northwestern region, Bonneville's primary service area, is experiencing difficulties. However, the bulk of Bonneville's obligations in any settlement similar to the Colville settlement will occur in the future, when the conditions causing Bonneville's current financial difficulties--such as costly long-term contracts to purchase power from other suppliers--will probably have abated. Therefore, Bonneville's current financial difficulties should not unduly influence current discussions about how to compensate the Spokane tribe. A reasonable case can be made to settle the Spokane tribe's case along the lines of the Colville settlement--a one-time payment from the U.S. Treasury for past lost payments for water power values and annual payments primarily from Bonneville. Bonneville continues to earn revenues from the Spokane Reservation lands used to generate hydropower. However, unlike the Colville tribes, the Spokane tribe does not benefit from these revenues. Spokane does not benefit because it missed its filing opportunity before the Indian Claims Commission. At that time, it was pursuing other avenues to win payments for the value of its land for hydropower. These efforts would ultimately fail. Without congressional action, it seems unlikely that a settlement for the Spokane tribe will occur.