Primarily during the 1950s, these tribes received some compensation for their losses. Secondary Approach Relies on Tribe’s 1954 Request

The consultant’s secondary approach, which relies on the tribe’s 1954 request for compensation, is generally consistent with the alternative approach we proposed in our 1991 report except that it provides a single figure rather than a range for additional compensation. In addition, it includes an amount for rehabilitation as well as for damages. Consultant Developed a Single Estimate Rather Than a Range for Additional Compensation

In our 1991 report, we suggested that, for Fort Berthold and Standing Rock, the Congress consider a range of additional compensation based on the present value of the difference between the amount that each tribe requested and the amount that it received. Specifically, he subtracted the $10.5 million authorized in 1954 (excluding administrative expenses) from the tribe’s $23.5 million settlement proposal and, using the prime rate, adjusted the $13.0 million difference to its 1996 value, thereby arriving at a second estimate of $279.1 million. Consultant’s Estimate Included an Amount for Rehabilitation

In contrast to the consultant’s primary approach, which calculates an amount only for damages, the secondary approach covers both damages and rehabilitation. With this adjustment, the secondary approach would include the same factors as the primary approach. However, the adjusted second estimate of $119.2 million would no longer support the first estimate of $300.7 million. Our Analysis Calculates Separate Ranges for Damages, Rehabilitation, and Administrative Expenses

To provide the Congress with more detailed information for deciding on an appropriate amount for additional payment, we calculated separate ranges for damages, rehabilitation, and administrative expenses, using the categories of payment authorized for the Cheyenne River Sioux tribe in 1954 (see table 2). The corporate bond rate, which produced the upper value, indicates how much the tribe might have earned by investing the same additional payment in bonds issued by the private sector. The need for and amount of any additional payment to the tribe for any of the items shown in table 2 is a policy question for the Congress to decide. September 16 Construction of the Oahe dam begins. On the basis of the consultant’s analysis, the tribe is requesting about $300 million in additional compensation. GAO Comments

1. 4. 6. 7. 8.
Why GAO Did This Study

Pursuant to a congressional request, GAO assessed a private consultant's economic analysis of compensation due to the Cheyenne River Sioux Tribe for the construction of the Oahe dam on tribal lands.

What GAO Found

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.