Indian Issues: Analysis of the Crow Creek Sioux and Lower Brule
Sioux Tribes' Additional Compensation Claims (19-MAY-06,
GAO-06-517).
From 1946 to 1966, the government constructed the Fort Randall
and Big Bend Dams as flood control projects on the Missouri River
in South Dakota. The reservoirs created behind the dams flooded
about 38,000 acres of the Crow Creek and Lower Brule Indian
reservations. The tribes received compensation when the dams were
built and additional compensation in the 1990s. The tribes are
seeking a third round of compensation based on a consultant's
analysis. The Congress provided additional compensation to other
tribes after two prior GAO reports. For those reports, GAO found
that one recommended approach to providing additional
compensation would be to calculate the difference between the
tribe's final asking price and the amount that was appropriated
by the Congress, and then to adjust it using the inflation rate
and an interest rate to reflect a range of current values. GAO
was asked to assess whether the tribes' consultant followed the
approach used in GAO's prior reports. The additional compensation
amounts calculated by the tribes' consultant are contained in
H.R. 109 and S. 374.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-06-517
ACCNO: A54360
TITLE: Indian Issues: Analysis of the Crow Creek Sioux and Lower
Brule Sioux Tribes' Additional Compensation Claims
DATE: 05/19/2006
SUBJECT: Comparative analysis
Compensation claims
Consultants
Dams
Economic analysis
Evaluation methods
Indian lands
Native American claims
South Dakota
Fort Randall Dam (SD)
Big Bend Dam (SD)
Missouri River
Crow Creek Sioux
Lower Brule Sioux
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GAO-06-517
* Contents
* Results in Brief
* Background
* Consultant's Compensation Analysis Differs from the Approach GAO
Previously Used for Other Tribes
* Consultant Used Various Settlement Proposals, Rather Than
Consistently Using the Tribes' Final Asking Prices
* Consultant Developed a Single Compensation Estimate for Each
Tribe, Rather Than a Range of Estimates
* Amounts Calculated by GAO Are Similar to the Amounts Received by
the Tribes in the 1990s
* Observations
* Consultant's Comments and Our Evaluation
* Scope and Methodology
* Map of Tribes and Dams on the Missouri River
* Timeline of Settlement Negotiations and Compensation for the Crow
Creek Sioux Tribe
* Timeline of Settlement Negotiations and Compensation for the Lower
Brule Sioux Tribe
* Comments from the Tribes' Consultant
* GAO Comments
* GAO Contact and Staff Acknowledgments
* PDF6-Ordering Information.pdf
* Order by Mail or Phone
Report to the Chairman, Committee on Indian Affairs, U.S. Senate
May 2006
INDIAN ISSUES
Analysis of the Crow Creek Sioux and Lower Brule Sioux Tribes' Additional
Compensation Claims
Contents
Tables
Figures
May 19, 2006Letter
The Honorable John McCain Chairman, Committee on Indian Affairs United
States Senate
Dear Mr. Chairman:
During a 20-year period, from 1946 to 1966, the federal government
constructed the Fort Randall and Big Bend Dams as flood control projects
on the Missouri River in South Dakota. Installation of the dams caused the
permanent flooding of approximately 38,000 acres of the Crow Creek Sioux
and Lower Brule Sioux Indian reservations. During the construction of the
two dams, the tribes entered into negotiations with the federal government
for compensation for their land that would be flooded by the reservoirs
created by the dams. The settlement negotiations for the Fort Randall Dam
stretched over several years, and the tribes put forward a number of
different settlement proposals. The settlement negotiations for the Big
Bend Dam were conducted in a much shorter time frame, but there still were
a number of settlement proposals and counterproposals. In both cases, the
tribes and the federal government were unable to reach a negotiated
settlement, and the Congress stepped in and imposed a legislative
settlement. For both dams, the legislative settlements to the tribes were
less than the amounts that they requested.
The settlement processes for the two dams spanned several
decades-beginning in 1958, when the Congress authorized the payment of
$2.6 million to the two tribes for damages and administrative expenses
related to the Fort Randall Dam.1 Regarding the Big Bend Dam, in 1962, the
Congress authorized the payment of about $7.7 million to the two tribes
for damages, rehabilitation (funds for improving the Indians' standard of
living), and related administrative expenses.2 However, the tribes did not
consider the compensation they received in 1958 and 1962 to be sufficient,
and they sought additional compensation to address the effects of both
dams. As a result, in 1996 and 1997, the Congress authorized the Crow
Creek Sioux and Lower Brule Sioux tribes additional compensation of $27.5
million and $39.3 million, respectively, through the establishment of
development trust funds for each tribe.3
In addition to the Crow Creek Sioux and Lower Brule Sioux tribes, other
Indian tribes in North and South Dakota also (1) lost land to flood
control projects on the Missouri River, (2) received compensation for
damages in the mid-1900s, and (3) requested and received additional
compensation in the 1990s or early 2000s. In 1992, 2000, and 2002, the
Congress authorized the payment of additional compensation, through the
establishment of development trust funds, to Indian tribes at five other
reservations for damages suffered from dam projects along the Missouri
River.4 Prior to the Congress authorizing additional compensation to
Indian tribes at three-Fort Berthold, Standing Rock, and Cheyenne River-of
these five other reservations, we were asked to review their additional
compensation claims. In 1991, we reported on the additional compensation
claims for the Three Affiliated Tribes of the Fort Berthold Reservation
and the Standing Rock Sioux tribe, and, in 1998, we reported on the
additional compensation claims for the Cheyenne River Sioux tribe.5 For
the tribes at these three reservations, we found the economic analyses
used to justify their additional compensation claims to be unreliable, and
we suggested that the Congress not rely on them as a basis for providing
the tribes with additional compensation.
As an alternative, we suggested that if the Congress determined that
additional compensation was warranted, it could determine the amount of
compensation by calculating the difference between the tribe's final
settlement proposal (referred to in this report as the tribe's "final
asking price") and the amount of compensation the Congress originally
authorized the tribes. We used the inflation rate and an interest rate to
adjust the difference to reflect a range of current values, using the
inflation rate for the lower end of the range and the interest rate for
the higher end. Using this approach, we calculated how much additional
compensation it would take today to make up for the difference between the
tribes' final asking prices and the original compensation provided. The
Congress authorized additional compensation to the tribes of the Fort
Berthold, Standing Rock, and Cheyenne River Indian reservations that was
within our suggested range of additional compensation for each tribe.
We were not asked by the Congress to review the additional compensation
claims for the Crow Creek Sioux and Lower Brule Sioux tribes in the 1990s.
The Crow Creek Sioux and Lower Brule Sioux tribes did not base their
additional compensation claims in the 1990s on an economic analysis as the
tribes did for the three other reservations that we reviewed. Rather, the
Crow Creek Sioux and Lower Brule Sioux tribes' consultant asserted that
since the tribes suffered the same type of damages as the Standing Rock
Sioux tribe, they should be provided with additional compensation
commensurate, on a per-acre basis, with the additional compensation
provided to the Standing Rock Sioux tribe in 1992.6
After the Crow Creek Sioux and Lower Brule Sioux tribes received their
additional compensation in 1996 and 1997, respectively, the Congress
authorized additional compensation for the Cheyenne River Sioux tribe of
$290.7 million, or about $2,800 per acre of land flooded. In 2003, the
Crow Creek Sioux and Lower Brule Sioux tribes hired a consultant to
determine if they were due additional compensation based on the method we
proposed in our two prior reports. As a result of the consultant's
analysis, the two tribes are currently seeking a third round of
compensation totaling an additional $226 million (in 2003 dollars) for the
land and resources
flooded by the reservoirs created by the Fort Randall and Big Bend Dams.7
The tribes assert that their new calculations for additional compensation,
using the alternative method we proposed in our two prior reports, will
bring them into parity with the additional compensation provided to the
other tribes on the Missouri River.
The additional compensation amounts the consultant recommended are
included in two bills pending in the 109th Congress, H.R. 109 and S. 374,
referred to as the Tribal Parity Act. Both the consultant's analysis and
the bills state that the compensation amounts are based on methodology
deemed appropriate by GAO. However, in July 2005, we requested that this
language be deleted from the bills because we had not analyzed the
proposed additional compensation for these two tribes, as we had for the
other tribes. As a result, you asked us to assess whether the tribes'
consultant followed the approach in our prior reports in calculating the
additional compensation amounts for the Crow Creek Sioux and Lower Brule
Sioux tribes.
To assess the consultant's methods and analysis for determining additional
compensation for the Crow Creek Sioux and Lower Brule Sioux tribes, we
used standard economic principles and the analysis we conducted in our two
prior reports on additional compensation. In order to ensure that we
obtained and reviewed all relevant data, we conducted a literature search
for congressional, agency, and tribal documents at the National Archives
and the Department of the Interior's library. We used original documents
to learn about the negotiation process and to identify the appraised land
prices and various proposed settlement amounts. As a result, we determined
that the data were sufficiently reliable for purposes of this report. We
met with the tribes' consultant to determine how he used the method we had
suggested the Congress use as the basis for granting additional
compensation to other tribes. We also met with representatives of the two
tribes on their reservations in South Dakota to (1) discuss the analysis,
actions taken with the compensation previously obtained, and plans for the
additional compensation amounts requested and (2) review any records they
might have on previous compensation negotiations. We performed our work
from October 2005 to April 2006 in accordance with generally accepted
government auditing standards. A more detailed discussion of our scope and
methodology is presented in appendix I.
Results in Brief
The Crow Creek Sioux and Lower Brule Sioux tribes' consultant differed
from the approach we used in our two prior reports in two ways: (1) by not
using the tribes' final asking prices as the starting point of the
analysis and (2) by providing a single estimate of additional compensation
instead of a range. During the settlement negotiations for the Fort
Randall and Big Bend Dams, as was the case with the negotiations for the
other dams that we have reviewed, the tribes made a number of settlement
proposals. In analyzing a request for compensation, it is critically
important to decide which settlement proposal to use to calculate the
difference between what the tribe asked for and what it finally received.
A small numerical difference in 1950s dollars can result in a large
difference today, once it is adjusted to reflect more current values. In
our prior reports, we used the tribes' final asking prices because we
believed that it represented the most up-to-date and complete information
and that their final position was more realistic than their initial asking
prices. In contrast, the tribes' consultant used selected numbers from a
variety of settlement proposals, several that were not from the tribes'
final asking prices. For example, for the rehabilitation component of the
tribes' settlement proposals, the consultant used $13.1 million from
settlement proposals in 1957, rather than $6.7 million from the tribes'
final rehabilitation proposals in 1961. While rehabilitation was the
largest component of the tribes' settlement proposals, it was not directly
related to the damage caused by the dams. Rehabilitation funding in the
1950s was intended to improve the tribes' standard of living and prepare
them for the termination of federal supervision. Finally, the tribes'
consultant calculated only the highest additional compensation dollar
value, rather than providing the Congress with a range of possible
additional compensation based on different adjustment factors.
Using the approach we followed in our prior reports, we determined in this
analysis that the additional compensation the Congress authorized for the
tribes in the 1990s was already at the high end or was above the range of
possible additional compensation. For the Crow Creek Sioux tribe, we
estimated that the difference-adjusted to account for inflation and
interest rates through 1996-would range from $6.5 million to $21.4
million, compared with the $27.5 million the Congress authorized for the
tribe in 1996. For the Lower Brule Sioux tribe, we estimated that the
adjusted difference would range from $12.2 million to $40.9 million,
compared with the $39.3 million the Congress authorized for the tribe in
1997. Although the additional compensation amounts enacted in 1996 and
1997 were not calculated using our approach, the amounts were generally
within the ranges we would have proposed. Our estimated amounts vary
significantly from the amounts calculated by the tribes' consultant. Our
estimated range for the two tribes combined is $18.7 million to $62.3
million. By contrast, the tribes' consultant calculated additional
compensation for the two tribes combined to be $292.3 million-$105.9
million for the Crow Creek Sioux tribe and $186.4 million for the Lower
Brule Sioux tribe (in 2003 dollars). There are two primary reasons for
this difference. First, a large difference occurs because we used the
tribes' final rehabilitation request from 1961 in our calculation, rather
than the tribes' rehabilitation requests from 1957, which the consultant
used. Second, our total dollar amounts, including the rehabilitation
amount, were adjusted to account for inflation and interest earned through
1996 and 1997 to compare them directly with the additional compensation
the Congress authorized for the two tribes at that time. The consultant,
however, adjusted for interest earned through 2003, before comparing his
estimate with the payments authorized in the 1990s.
Because the consultant's analysis was the basis for the tribes' additional
compensation claims and the consultant had asserted that the additional
compensation amounts were based on a methodology deemed appropriate by
GAO, we chose to provide the tribes' consultant with a draft of this
report for review and comment. In commenting on the draft report, the
tribes' consultant (1) acknowledged that he had made a calculation error
in his analysis, (2) proposed a range of additional compensation, and (3)
discussed the complex issues of "asking price" in the context of the Crow
Creek Sioux and Lower Brule Sioux tribes' request for additional
compensation. The consultant's proposed range of additional compensation
is based on four different alternatives, rather than the approach for a
range of additional compensation as we suggested in our report. We do not
believe that the consultant's four alternatives represent a sound approach
for establishing the range of additional compensation. Our approach is to
provide the Congress with a range of possible additional compensation
based on the difference between the amount the tribes believed was
warranted at the time of the taking and the final settlement amount. We
then adjusted the differences using the inflation rate for the lower end
of the range and the corporate bond rate for the higher end. The ranges of
additional compensation we calculated in the report were calculated in
exactly the same way we did in our 1991 and 1998 reports, and we believe
our approach is reasonable. Regarding the issue of the tribes' asking
prices, the consultant disagreed with our assumption that the tribes'
final asking prices were based on the most up-to-date and complete
information and that they were more realistic than their initial asking
prices. In our view, the drawn out negotiations for the Fort Randall Dam
and the amounts of the tribes' final asking prices do not support the
conclusion that the tribes simply capitulated and accepted whatever the
government offered. For example, for 12 of the 15 compensation components
shown in tables 5, 6, and 7 of our report, the tribes' final asking prices
were equal to, or higher than, their initial settlement proposals. We used
a reasonable, clearly defined, and consistent approach. As a result, we
did not make any changes to the report based on the consultant's comments.
See the "Consultant's Comments and Our Evaluation" section and appendix V
for the consultant's comment letter and our evaluation of these comments.
We recognize that compensation issues can be sensitive, complex, and
controversial. While our analysis does not support the additional
compensation amounts contained in H.R. 109 and S. 374, the Congress will
ultimately decide whether additional compensation should be provided, and
if so, how much it should be. Our analysis is intended to assist the
Congress in this regard.
Background
The Flood Control Act of 1944 established a comprehensive plan for flood
control and other purposes, such as hydroelectric power production, in the
Missouri River Basin.8 The Pick-Sloan Plan-a joint water development
program designed by the U.S. Army Corps of Engineers (the Corps) and the
Department of the Interior's (Interior) Bureau of Reclamation-included the
construction of five dams on the Missouri River, including the Garrison
Dam in North Dakota and the Oahe, Fort Randall, Big Bend, and Gavins Point
Dams in South Dakota. The construction of the Fort Randall Dam, located 7
miles above the Nebraska line in south-central South Dakota, began in May
1946 and was officially dedicated in August 1956. The dam is 160 feet
high, and the reservoir behind it, known as Lake Case, stretches 107 miles
to the northwest. (See fig. 1.)
Figure 1: The Fort Randall Dam and Lake Case (February 2006)
In September 1959, the Corps began work on the Big Bend Dam, which is
about 100 miles northwest of the Fort Randall Dam on land belonging to
both the Crow Creek Sioux and Lower Brule Sioux tribes. The Big Bend Dam
is 95 feet high and was completed in September 1966. The reservoir behind
the dam, known as Lake Sharpe, is 20 miles long. (See fig. 2.)
Figure 2: The Big Bend Dam and Lake Sharpe (July 1998)
The Crow Creek Sioux and Lower Brule Sioux tribes reside on reservations
located across the Missouri River from one another in central South
Dakota. The Crow Creek reservation includes about 225,000 acres, 56
percent of which is owned by the tribe or individual Indians. According to
the 2000 Census, the Crow Creek reservation has 2,199 residents, with the
majority residing in the community of Fort Thompson. The Lower Brule
reservation includes about 226,000 acres, 60 percent of which is owned by
the tribe or individual Indians. According to the 2000 Census, the Lower
Brule reservation has 1,355 residents, including several hundred who
reside in the community of Lower Brule. Both reservations include some
non-Indians, and both tribes have several hundred members who do not live
on the reservations. The major economic activities for both the Crow Creek
Sioux and Lower Brule Sioux tribes are cattle ranching and farming, and
both tribes provide guided hunting for fowl and other game. Each tribe
also operates a casino and a hotel. Both tribes are governed by a tribal
council under their respective tribal constitutions, and each tribal
council is led by a tribal chairman. The major employers on the
reservations are the tribes, the casinos, the Bureau of Indian Affairs,
and the Indian Health Service. In addition, the Lower Brule Sioux tribe
provides employment through the Lower Brule Farm Corporation, which is the
nation's number one popcorn producer. See appendix II for a map of the
Crow Creek and Lower Brule reservations and the locations of the
previously mentioned dams and reservoirs.
The construction of the Fort Randall Dam caused the flooding of more than
17,000 acres of Crow Creek and Lower Brule reservation land and the
displacement of more than 100 tribal families. After these two tribes
sustained major damage from this project, the construction of the Big Bend
Dam inundated over 20,000 additional acres of their reservations. This
flooding displaced more families, some of whom had moved earlier as a
result of flooding from the Fort Randall Dam. (See table 1.) Flooding from
the installation of both dams resulted in the loss of valuable timber and
pasture and forced families to move to less desirable land, which affected
their way of life.
Table 1: Acreage Lost and Families Displaced by the Fort Randall and Big
Bend Dams
Fort Big Bend
Randall Dam Dam
Tribe Acreage Number of families Acreage Number of
lost displaced lost families
displaced
Crow Creek 9,418 84 6,179 27
Sioux
Lower 7,997 35 14,299 62
Brule
Sioux
Total 17,415 119 20,478 89
Sources: House and Senate reports.
During the early 1950s, the Corps; Interior, through its Missouri River
Basin Investigations Unit (MRBI);9 and the tribes-represented through
tribal negotiating committees-developed their own estimates of the damages
caused by the Fort Randall Dam. Discussions and informal negotiating
conferences were held among the three parties in 1953 to try to arrive at
acceptable compensation for damages.10 At that point, the Fort Randall Dam
had been closed since July 1952 and portions of the reservations were
underwater. The MRBI's appraisal of damages was about $398,000 for Crow
Creek and about $271,000 for Lower Brule, which was higher than the Corps'
proposal.11 Both the MRBI appraisal and the Corps' proposal were
substantially lower than the tribes' settlement proposals, and the parties
were unable to reach settlement. The Corps planned to take the land by
condemnation, but in July 1954 decided against that action when the
Congress authorized and directed the Corps and Interior to jointly
negotiate separate settlements with the tribes.12 Meanwhile, the tribes
arranged to have settlement bills introduced in July 1954.13 These bills
requested $1.7 million for damages for the Crow Creek Sioux tribe and $2.5
million for damages for the Lower Brule Sioux tribe. Both of these bills
also contained requests for about $2.5 million each for rehabilitation
funds.14 The first formal negotiating conference was held among the
parties in November 1954, and further discussions continued over several
more years after the bills were introduced, but, again, the parties could
not reach settlement. In 1955, with negotiations stalled, the Corps
requested and obtained an official declaration of taking. The tribes-with
their lands now flooded-received funds based on the earlier MRBI appraisal
figures, with the understanding that negotiations for additional funds
would continue. The tribes continued to insist on receiving substantially
higher compensation amounts for damages, and additional funds for
rehabilitation, as part of the settlement. The amounts the tribes
requested for rehabilitation fluctuated in tribal settlement proposals
between 1954 and 1957, but both the Corps and the MRBI maintained that
rehabilitation funding was not within the scope of the negotiations.
In March 1958, each tribe's negotiating committee submitted new proposals
at compensation hearings for the Fort Randall Dam.15 The Crow Creek Sioux
tribe proposed compensation of about $2.2 million for damages and
administrative expenses related to the settlement, and the Lower Brule
Sioux tribe proposed compensation of about $1.8 million for damages and
administrative expenses.16 Neither proposal included funds for
rehabilitation because both tribes agreed with the government's request to
wait to procure these funds in the Big Bend Dam compensation request. In
May 1958, bills were introduced in the Congress with amounts that were
less than the tribes had proposed through their negotiating committees,
with the amount for direct damages from Fort Randall Dam construction
being substantially reduced.17 According to House reports, both the tribes
and the Corps agreed to the amounts proposed for damages.18 Later that
summer, amendments to the bills reduced the amount for indirect damages
for both tribes. In September 1958, the Congress authorized a payment of
about $1.5 million to the Crow Creek Sioux tribe, and almost $1.1 million
to the Lower Brule Sioux tribe. See table 2 for a summary of selected
settlement proposals related to the Fort Randall Dam.
Table 2: Selected Settlement Proposals for the Fort Randall Dam
Current year
dollars
Type of Tribes' House and Tribes' Tribes' House Payment
compensation, Senate bills, May authorized,
by tribe July 1954 bills, 1955 May 1957 Mar. 1958 1958c Sept. 1958d
request and 1957a request
requestb
Crow Creek
Sioux
Damages $1,699,419 $1,817,590 $2,105,021 $2,105,021 $2,019,220 $1,395,812
Administrative 0 100,000 100,000 100,000 100,000 100,000
expenses
Rehabilitation 2,560,000 5,686,036 6,715,311 0 0 0
Subtotal $4,259,419 $7,603,626 $8,920,332 $2,205,021 $2,119,220 $1,495,812
Lower Brule
Sioux
Damages $2,530,472 $1,497,397 $1,700,924 $1,560,902 $1,175,231 $976,523
Administrative 0 100,000 200,000 200,000 100,000 100,000
expenses
Rehabilitation 2,530,000 6,348,316 16,377,981 0 0 0
Subtotal $5,060,472 $7,945,713 $18,278,905 $1,760,902 $1,275,231 $1,076,523
Total $9,319,891 $15,549,339 $27,199,237 $3,965,923 $3,394,451 $2,572,335
Source: National Archives.
aH.R. 3544 and H.R. 3602, 84th Cong., 1st Sess., introduced on February 3,
1955, and S. 952 and S. 953, 84th Cong., 1st Sess., introduced on February
4, 1955; H.R. 6074 and H.R. 6125, 85th Cong., 1st Sess., introduced on
March 18, 1957, and March 19, 1957, respectively; and H.R. 6204, 85th
Cong., 1st Sess., and H.R. 6569, 85th Cong., 1st Sess., introduced on
March 20, 1957, and April 2, 1957, respectively.
bStatement and Estimates of the Crow Creek Sioux Tribe, Negotiating
Committee, May 17, 1957; Lower Brule Sioux Tribe Negotiating Committee's
Estimates and a Breakdown in Figures of All Damages Requested, May 10,
1957; and S. 2152, 85th Cong., 1st Sess., and H.R. 7758, 85th Cong., 1st
Sess., introduced on May 23, 1957 and May 24, 1957, respectively.
cH.R. 12663 and H.R. 12670, 85th Cong., 2nd Sess., introduced on May 23,
1958.
dCrow Creek, Pub. L. No. 85-916, 72 Stat. 1766 (1958); and Lower Brule,
Pub. L. No. 85-923, 72 Stat. 1773 (1958).
In contrast to the Fort Randall negotiations, the compensation for the
construction of the Big Bend Dam was granted quickly. In bills introduced
in March 1961, the Crow Creek Sioux tribe requested over $1 million for
damages and administrative expenses as a result of the Big Bend Dam
construction.19 The Lower Brule Sioux tribe requested close to $2.4
million for damages, administrative expenses, and a new school. In
addition, both tribes requested the rehabilitation funds that had not been
included in the Fort Randall Dam settlement-that is, the Crow Creek Sioux
tribe requested more than $4 million and the Lower Brule Sioux tribe
requested about $2.7 million. In June 1961, the government and the tribes
agreed to a reduction in direct damages, while the tribes requested an
increase to the amount for indirect damages, bringing the total amount of
compensation, including rehabilitation, requested by the Crow Creek Sioux
and Lower Brule Sioux tribes to about $4.9 million for each tribe.20 In
subsequent bills over the next year, however, the Congress lowered
indirect damages considerably and dropped the amount requested for a new
school for Lower Brule. The amounts requested for administrative expenses
and rehabilitation were also reduced. In October 1962, the Congress
authorized a payment of $4.4 million to the Crow Creek Sioux tribe and
about $3.3 million to the Lower Brule Sioux tribe. See table 3 for a
summary of selected settlement proposals related to the Big Bend Dam.
Table 3: Selected Settlement Proposals for the Big Bend Dam
Current year
dollars
Type of House House and U.S. and House Payment
compensation, bills, Senate tribal bills, authorized,
by tribe bills, proposed Oct. 1962d
Mar. 1960a amendments, Aug. 1961c
Mar. 1961b
June 1961
Crow Creek
Sioux
Damages $0 $915,924 $822,004e $564,302 $564,302
Administrative 125,000 125,000 125,000 125,000 75,000
Expenses
Rehabilitation 2,790,000 4,002,000 4,002,000 4,002,000 3,802,500
Subtotal $2,915,000 $5,042,924 $4,949,004 $4,691,302 $4,441,802
Lower Brule
Sioux
Damages $0 $1,895,908 $1,709,472e $1,225,715 $1,225,715
Administrative 125,000 125,000 125,000 125,000 75,000
expenses
New school 0 350,000 350,000 0 0
Rehabilitation 1,620,000 2,670,300 2,670,300 2,670,300 1,968,750
Subtotal $1,745,000 $5,041,208 $4,854,772 $4,021,015 $3,269,465
Total $4,660,000 $10,084,132 $9,803,776 $8,712,317 $7,711,267
Source: National Archives.
aH.R. 11214 and H.R. 11237, 86th Cong., 2nd Sess., introduced on March 16,
1960, and March 17, 1960, respectively. These bills included a placeholder
for damage amounts to be included at a later time.
bH.R. 5144 and H.R. 5165, 87th Cong., 1st Sess., introduced on March 2,
1961; and S. 1251 and S. 1252, 87th Cong., 1st Sess., introduced on March
8, 1961.
cH.R. 5144 and H.R. 5165, 87th Cong., 1st Sess., introduced on August 8,
1961.
dCrow Creek, Pub. L. No. 87-735, 76 Stat. 704 (1962); and Lower Brule,
Pub. L. No. 87-734, 76 Stat. 698 (1962).
eThe amounts included in the damages category reflect the direct costs the
tribes and government agreed on and the indirect costs proposed by the
tribes.
See appendixes III and IV for a timeline summary of the settlement
negotiations and compensation for the two dams for the Crow Creek Sioux
and Lower Brule Sioux tribes, respectively.
Tribes at five other reservations affected by flood control projects along
the Missouri River incurred losses ranging from about 600 acres to over
150,000 acres. These tribes received some compensation, primarily during
the 1950s, for the damages they sustained. However, beginning in the
1980s, some of these tribes began requesting additional compensation. The
Congress responded to their requests by authorizing the establishment of
development trust funds. (See table 4.) The tribes at the Fort Berthold,
Standing Rock, and Cheyenne River reservations received compensation
within the ranges we had suggested the Congress consider in our reviews of
the tribes' additional compensation claims. The ranges were based on the
current value of the difference between each tribes' final asking price
and the amount that the Congress authorized. We were not asked to review
the additional compensation claims for the Crow Creek Sioux and Lower
Brule Sioux tribes in the 1990s or for the Santee Sioux and Yankton Sioux
tribes in 2002.
Table 4: Additional Compensation Authorized by Congress for Tribes on the
Missouri River
Current year dollars in
millions
Tribe Dam(s) Acreage Year additional Additional
lost compensation
enacted compensation
authorized
Three Affiliated Tribes Garrison 152,360 1992a $149.2
of the Fort Berthold
Reservation
Standing Rock Sioux Oahe 55,994 1992a 90.6
Crow Creek Sioux Fort 15,597 1996b 27.5
Randall;
Big Bend
Lower Brule Sioux Fort 22,296 1997c 39.3
Randall;
Big Bend
Cheyenne River Sioux Oahe 104,420 2000d 290.7
Yankton Sioux Fort Randall 2,851 2002e 23.0
Santee Sioux Gavins Point 593 2002e 4.8
Source: GAO analysis of the additional compensation acts.
aPub. L. No. 102-575, title XXXV, 106 Stat. 4600, 4731 (1992).
bPub. L. No. 104-223, 110 Stat. 3026 (1996).
cPub. L. No. 105-132, 111 Stat. 2563 (1997).
dPub. L. No. 106-511, title I, 114 Stat. 2365 (2000). The development
trust fund for the Cheyenne River Sioux tribe will not be created until
the first day of the 11th fiscal year after enactment, or October 1, 2011.
ePub. L. No. 107-331, title II, 116 Stat. 2834, 2838 (2002). The
development trust funds for the Yankton Sioux and Santee Sioux tribes will
not be created until the first day of the 11th fiscal year after
enactment, or October 1, 2013.
Consultant's Compensation Analysis Differs from the Approach GAO
Previously Used for Other Tribes
The Crow Creek Sioux and Lower Brule Sioux tribes' consultant differed
from the approach we used in our prior reports. The consultant used a
variety of settlement proposals, instead of consistently using the tribes'
final asking prices, in calculating the difference between what the tribes
asked for and what the Congress authorized. As a result, the consultant's
proposed compensation estimates are higher than if he had consistently
used the tribes' final asking prices. In addition, the consultant provided
only the highest additional compensation value, rather than a range of
possible additional compensation from which the Congress could choose.
Consultant Used Various Settlement Proposals, Rather Than Consistently
Using the Tribes' Final Asking Prices
To arrive at an additional compensation estimate, the consultant did not
consistently use the tribes' final asking prices when calculating the
difference between what the tribes asked for and what they finally
received. In determining possible additional compensation for the tribes
at the Fort Berthold and Standing Rock reservations in 1991, and the
Cheyenne River reservation in 1998, we used the tribes' final asking
prices to calculate the difference between what the tribes asked for and
what they received. In our prior reports, we used the tribes' final
position because we believed that it represented the most up-to-date and
complete information, and that their final position was more realistic
than their initial asking prices. In contrast, the consultant used figures
from a variety of settlement proposals-several of which were not the
tribes' final asking prices-to estimate additional compensation for
damages (including direct and indirect damages), administrative expenses,
and rehabilitation. As a result, the consultant's estimate of the tribes'
asking prices in the late 1950s and early 1960s was about $7.7 million
higher than it would have been if he had consistently used the tribes'
final asking prices. Choosing which settlement proposal to use to
calculate the difference between what the tribe asked for and what it
finally received is critically important, because a small numerical
difference 50 years ago can result in a large difference today, once it is
adjusted to reflect more current values.
With respect to the Fort Randall Dam, the consultant used amounts from a
variety of settlement proposals for damages and administrative expenses.
To determine additional compensation, the consultant used a $2.2 million
settlement proposal by the Crow Creek Sioux tribe and a $2.6 million
settlement proposal by the Lower Brule Sioux tribe. (See table 5.) The
Crow Creek proposal was from May 1957, and was the same as the tribe's
final asking price requested about 1 year later, in February 1958.
However, the Lower Brule proposal was from the first compensation bill
introduced in the Congress in July 1954, almost 4 years before the tribe's
final asking price of about $1.8 million in March 1958--a difference of
more than $850,000.
Table 5: Comparison of the Settlement Figures Used by the Tribes'
Consultant Versus the Tribes' Final Asking Prices for the Fort Randall Dam
Current year
dollars
Type of Settlement Date of Tribes' Date of Difference
compensation, by figure used by settlement final final
tribe the tribes' figure asking asking
consultanta prices price
Crow Creek Sioux
Direct damages $641,588 May 1957 $641,588 Feb. $0
1958
Indirect damages 1,463,433 May 1957 1,463,433 Feb. 0
1958
Administrative 100,000 May 1957 100,000 Feb. 0
expenses 1958
Subtotal $2,205,021 $2,205,021 $0
Lower Brule
Sioux
Direct damages $739,904 July 1954 $771,998 Mar. ($32,094)
1958
Indirect damages 1,790,568 July 1954 788,904 Mar. 1,001,664
1958
Administrative 100,000 Feb. 1955 200,000 Mar. (100,000)
expenses 1958
Subtotal $2,630,472 $1,760,902 $869,570
Total $4,835,493 $3,965,923 $869,570
Sources: National Archives and the consultant's analysis.
aThe consultant's figures for the Crow Creek Sioux tribe were from H.R.
7758, 85th Cong., 1st Sess., (companion bill S. 2152) introduced on May
24, 1957. The consultant's damage figures for the Lower Brule Sioux tribe
were from H.R. 9832, 83rd Cong., 2nd Sess., (companion bill S. 3748)
introduced on July 8, 1954. The administrative expenses figure for Lower
Brule was from H.R. 3544, 84th Cong., 1st Sess., (companion bill S. 953)
introduced on February 3, 1955. The direct damages in H.R. 3544 were
reduced to $708,493.29, and the indirect damages were reduced to $788,904.
For the Big Bend Dam, the consultant also used amounts from different
settlement proposals for damages and administrative expenses. To determine
additional compensation, the consultant used amounts from congressional
bills introduced in March 1961 for direct damages, but used amounts from
proposed amendments to the bills in June 1961 for indirect damages. The
tribes' asking prices from June 1961 can be considered their final asking
prices because the proposed amendments are the last evidence of where the
tribes requested specific compensation (indirect damages) or agreed to a
compensation amount (direct damages). The consultant would have been more
consistent had he used both the indirect and direct damage settlement
figures in the proposed amendments from June 1961, rather than a mixture
of these figures. As a result, the total amount for damages the consultant
used to calculate the difference between what the tribes requested and
what it finally received is about $427,000 (in 1961 dollars) higher than
if the tribes' final asking prices from June 1961 had been used
consistently. (See table 6.)
Table 6: Comparison of the Settlement Figures Used by the Tribes'
Consultant Versus the Tribes' Final Asking Prices for the Big Bend Dam
Current year
dollars
Type of Settlement Date of Tribes' Date of Difference
compensation, by figure used by settlement final final
tribe the tribes' figure asking asking
consultanta prices price
Crow Creek Sioux
Direct damages $494,890 Mar. 1961 $355,000 June $139,890
1961
Indirect damages 467,004 June 1961 467,004 June 0
1961
Administrative 125,000 Mar. 1961 125,000 June 0
Expenses 1961b
Subtotal $1,086,894 $947,004 $139,890
Lower Brule
Sioux
Direct damages $1,111,910 Mar. 1961 $825,000 June $286,910
1961
Indirect damages 884,472 June 1961 884,472 June 0
1961
Administrative 125,000 Mar. 1961 125,000 June 0
expenses 1961b
New school 350,000 Mar. 1961 350,000 June 0
1961b
Subtotal $2,471,382 $2,184,472 $286,910
Total $3,558,276 $3,131,476 $426,800
Sources: National Archives legislative files and the consultant's
analysis.
aThe consultant used figures from H.R. 5165 (companion bill S. 1252) and
H.R. 5144 (companion bill S. 1251) for direct damages and administrative
expenses for the Crow Creek Sioux and Lower Brule Sioux tribes,
respectively. The figure for the new school for the Lower Brule Sioux
Tribe was also from H.R. 5144 (companion bill S. 1251). The figures for
indirect damages were from proposed amendments to these bills. An
Assistant Secretary for the Department of the Interior included a
composite of the recommended amendments of the Secretary of the Interior,
the Secretary of the Army, and the tribes to H.R. 5144 and H.R. 5165 in a
letter to the Chairman of the House, Subcommittee on Indian Affairs,
Committee on Interior and Insular Affairs, on June 16, 1961.
bThe tribes' final asking prices for administrative expenses and the new
school for the Lower Brule Sioux tribe were represented in congressional
bills introduced in March 1961. No changes were proposed to these figures
in the proposed amendments to the bills, so we assumed these figures
represented the tribes' final asking prices as of June 1961.
Lastly, the consultant did not use the tribes' final asking prices for the
rehabilitation component of the settlement payment. The consultant used a
$6.7 million rehabilitation figure that the Crow Creek Sioux tribe's
negotiating committee proposed in May 1957 and a $6.3 million
rehabilitation figure that was proposed in congressional bills in 1955 and
1957 for the Lower Brule Sioux tribe. (See table 7.) Both of these figures
were developed during the negotiations for the Fort Randall Dam. However,
the tribes agreed in their February and March 1958 proposals-their final
asking prices for the Fort Randall Dam-to defer consideration of their
rehabilitation proposals until after land acquisitions were made for the
construction of the Big Bend Dam. The Big Bend Dam's installation would
once again result in the flooding of their lands. In our view, the
consultant should have used the final rehabilitation figures proposed by
the tribes in 1961-that is, $4 million for the Crow Creek Sioux tribe and
$2.7 million for the Lower Brule Sioux tribe.
Table 7: Comparison of Rehabilitation Figures Used by the Tribes'
Consultant Versus the Tribes' Final Asking Prices
Current year
dollars
Rehabilitation Settlement Date of Tribes' Date of Difference
payment, by figure used by settlement final final
tribe the tribes' figure asking asking
consultanta prices price
Crow Creek Sioux $6,715,311 May 1957 $4,002,000 Mar. $2,713,311
1961
Lower Brule 6,348,316 Apr. 1957b 2,670,300 Mar. 3,678,016
Sioux 1961
Total $13,063,627 $6,672,300 $6,391,327
Sources: National Archives and the consultant's analysis.
aThe consultant's rehabilitation figure for the Crow Creek Sioux tribe was
from H.R. 7758, 85th Cong., 1st Sess., (companion bill S. 2152) introduced
on May 24, 1957. The figure was also presented by the tribe's negotiating
committee in May 1957. The consultant's rehabilitation figure for the
Lower Brule Sioux tribe was from H.R. 6569, 85th Cong., 1st Sess.,
introduced on April 2, 1957.
bThe same rehabilitation figure was also included in settlement proposals
from February 1955 (H.R. 3544 and S. 953) and March 1957 (H.R. 6074). As
shown in table 5, the damage settlement figures the consultant used were
from H.R. 9832 (companion bill S. 3748) in 1954, years earlier than the
date of the rehabilitation figure that was used. In 1954, H.R. 9832 and S.
3748 both included a rehabilitation figure of $2.53 million-over $3.8
million less than the figure the consultant used.
While rehabilitation was the largest component of the tribes' settlement
proposals, we believe it should be considered separately from the
comparison for damages because rehabilitation was not directly related to
the damage caused by the dams. Funding for rehabilitation, which gained
support in the late-1940s, was meant to improve the tribes' social and
economic development and prepare some of the tribes for the termination
of federal supervision.21 Funding for these rehabilitation programs came
from both the government and from the tribes themselves. From the
late-1940s through the early-1960s, the Congress considered several bills
that would have provided individual tribes with rehabilitation funding.
For example, between 1949 and 1950, the House passed seven bills for
tribes totaling more than $47 million in authorizations for rehabilitation
funding, and considered other bills, one of which would have provided $50
million to several Sioux tribes, including Crow Creek and Lower Brule.
Owing to opposition from tribal groups, the termination policy began to
lose support with the Congress in the late 1950s, and rehabilitation
funding for individual tribes during this time was most often authorized
by the Congress in association with compensation bills for dam projects on
the Missouri River. However, the granting of rehabilitation funding for
these tribes was inconsistent. Some tribes did not receive rehabilitation
funding along with compensation for damages, while others did. (See table
8.)
Table 8: Rehabilitation Payments Authorized by Congress for Tribes on the
Missouri River
Current year dollars
in millions
Tribe Year Total payment Rehabilitation Percentage
payment authorized payment authorized
enacted
Three Affiliated 1947 and $12.6 $0 0%
Tribes of the Fort 1949
Berthold Reservation
Cheyenne River Sioux 1954 10.6 5.2a 49
Yankton Sioux 1952 and 0.2 0 0
1954
Standing Rock Sioux 1958 12.2 7.0a 57
Santee Sioux 1958 0.05 0 0
Crow Creek Sioux 1958 and 5.9 3.8 64
1962
Lower Brule Sioux 1958 and 4.3 1.9 45
1962
Source: GAO analysis of the compensation acts.
aThese amounts include relocation and reestablishment funds authorized for
the tribes. For example, the Cheyenne River Sioux tribe expended $416,626
for relocating and reestablishing tribal members living in the area that
was flooded.
Consultant Developed a Single Compensation Estimate for Each Tribe, Rather
Than a Range of Estimates
In our two prior reports, we suggested that, for the tribes of Fort
Berthold, Standing Rock, and Cheyenne River, the Congress consider a range
of possible compensation based on the current value of the difference
between the final asking price of each tribe and the amount that it
received. In calculating the current value, we used two different rates to
establish a range of additional compensation. For the lower end of the
range, we used the inflation rate to estimate the amount the tribes would
need to equal the purchasing power of the difference. For the higher
range, we used an interest rate to estimate the amount the tribes might
have earned if they had invested the difference in Aaa corporate bonds as
of the date of the settlement.22 The consultant did not follow this
approach when he calculated the compensation estimates for the Crow Creek
Sioux and Lower Brule Sioux tribes. Instead, he used the corporate bond
rate to develop a single figure for each tribe, rather than a range.
The consultant justified using only the corporate bond rate to calculate
the compensation figures for the Crow Creek Sioux and Lower Brule Sioux
tribes by pointing out that the Congress authorized additional
compensation of $149.2 million for the tribes of Fort Berthold and $290.7
million for the Cheyenne River Sioux tribe in 1992 and 2000, respectively,
by using our estimates of the high end of the range for these tribes. The
consultant contended that if the Congress also uses the corporate bond
rate for the Crow Creek Sioux and Lower Brule Sioux tribes to determine
compensation, it would ensure parity with the amounts the tribes of Fort
Berthold and the Cheyenne River Sioux received. However, the Congress has
not always chosen to use the highest value in the ranges we estimated. For
example, in the case of the Standing Rock Sioux tribe, the Congress chose
to provide additional compensation of $90.6 million in 1992-an amount
closer to the lower end of the range we estimated.
Amounts Calculated by GAO Are Similar to the Amounts Received by the
Tribes in the 1990s
Using the approach we followed in our prior reports, which was based on
the tribes' final asking prices, we found that the additional compensation
the Crow Creek Sioux and Lower Brule Sioux tribes received in the 1990s
was either at the high end or above the range of possible additional
compensation. For both tribes, we calculated the difference between the
final asking prices and the compensation authorized in 1958 and 1962. We
then took the difference and adjusted it to account for the inflation rate
and the Aaa corporate bond rate through either 1996 or 1997 to produce a
possible range of additional compensation to compare it with the
additional compensation the Congress authorized for the tribes in 1996 and
1997. For the Crow Creek Sioux tribe, we estimated that the difference
adjusted to 1996 values for both dams would range from $6.5 million to
$21.4 million (see table 9), compared with the $27.5 million the Congress
authorized for the tribe in 1996. The $27.5 million in additional
compensation already authorized for the Crow Creek Sioux tribe is
therefore higher than the amount that we would have proposed in 1996 using
our approach.
Table 9: Estimate of Additional Compensation Range for the Crow Creek
Sioux Tribe
Current year
dollars
Additional
compensation
range(in
1996
dollars)
Type of Tribes' Payment Difference Low end High end
payment, by dam final authorized
asking (inflation (interest
prices (1958 and rate)c rate)d
(1958 and 1962)b
1961)a
Fort Randall
Dam
Damages $2,105,021 $1,395,812 $709,209 $3,848,314 $13,369,732
Administrative 100,000 100,000 0 0 0
expenses
Subtotal $2,205,021 $1,495,812 $709,209 $3,848,314 $13,369,732
Big Bend Dam
Damages $822,004 $564,302 $257,702 $1,338,508 $4,094,541
Administrative 125,000 75,000 50,000 259,701 794,433
expenses
Subtotal $947,004 $639,302 $307,702 $1,598, 209 $4,888,974
Rehabilitation $4,002,000 $3,802,500 $199,500 $1,036,206 $3,169,789
Total $7,154,025 $5,937,614 $1,216,411 $6,482,729 $21,428,495
Source: GAO analysis of National Archives legislative files and the
consultant's analysis.
aThe damages figure for the Fort Randall Dam is from the Statement and
Estimates of the Crow Creek Sioux Tribal Council and Negotiating
Committee, dated February 21, 1958, presented at a hearing on H.R. 10786
before the House Committee on Interior and Insular Affairs, Subcommittee
on Indian Affairs, March 25, 1958. The tribe's final asking price for the
damages caused by the Fort Randall Dam was embodied in H.R. 10786, 85th
Cong., 2nd Sess., (companion bill S. 3225) introduced on February 18,
1958. The administrative expenses figure for the Fort Randall Dam is from
H.R. 10786. The damage figure for the Big Bend Dam is from proposed
amendments to H.R. 5165, dated June 16, 1961, and the figures for
administrative expenses and rehabilitation are from H.R. 5165 (companion
S. 1252) because the tribes did not ask for any changes to these
components in the June 1961 proposed amendments.
bFort Randall Dam, Pub. L. No. 85-916, 72 Stat. 1766 (1958); and Big Bend
Dam, Pub. L. No. 87-735, 76 Stat. 704 (1962).
cData in this column reflect the annual inflation rate (consumer price
index for all items) from 1959 through 1996 for the Fort Randall Dam items
and from 1962 through 1996 for the Big Bend Dam items and rehabilitation.
dData in this column reflect the annual average rate of interest earned on
investments in Aaa corporate bonds from 1959 through 1996 for the Fort
Randall Dam items and from 1962 through 1996 for the Big Bend Dam items
and rehabilitation.
For the Lower Brule Sioux tribe, we estimated that the difference adjusted
to 1997 values for both dams would range from $12.2 million to $40.9
million (see table 10), compared with the $39.3 million the Congress
authorized for the tribe in 1997. The $39.3 million falls toward the high
end of the range that we would have proposed in 1997 using our approach.
Table 10: Estimate of Additional Compensation Range for the Lower Brule
Sioux Tribe
Current year
dollars
Additional
compensation
range (in
1997
dollars)
Type of Tribes' Payment Difference Low end High end
payment, by dam final authorized
asking (inflation (interest
prices (1958 and rate)c rate)d
(1958 and 1962)b
1961)a
Fort Randall
Dam
Damages $1,560,902 $976,523 $584,379 $3,243,892 $11,816,283
Administrative 200,000 100,000 100,000 555,101 2,022,024
expenses
Subtotal $1,760,902 $1,076,523 $684,379 $3,798,993 $13,838,307
Big Bend Dam
Damages $1,709,472 $1,225,715 $483,757 $2,570,431 $8,244,275
Administrative 125,000 75,000 50,000 265,674 852,109
expenses
New school 350,000 0 350,000 1,859,716 5,964,764
Subtotal $2,184,472 $1,300,715 $883,757 $4,695,821 $15,061,148
Rehabilitation $2,670,300 $1,968,750 $701,550 $3,727,669 $11,955,943
Total $6,615,674 $4,345,988 $2,269,686 $12,222,483 $40,855,398
Source: GAO analysis of National Archives legislative files and the
consultant's analysis.
aThe damages figure and administrative expenses for the Fort Randall Dam
are from the Lower Brule Proposed Program in Support of H.R. 6074, which
was presented at a hearing on H.R. 6074 before the House Committee on
Interior and Insular Affairs, Subcommittee on Indian Affairs, March 25,
1958. The tribe's final asking price for damages caused by the Fort
Randall Dam was embodied in H.R. 6074, 85th Cong., 1st Sess., introduced
on March 18, 1957. The damages figure for the Big Bend Dam is from
proposed amendments to H.R. 5144, dated June 16, 1961, and the figures for
administrative expenses and rehabilitation are from H.R. 5144 (companion
bill S. 1251) because there were no changes requested by the tribe to
these components in the June 1961 proposed amendments.
bFort Randall Dam, Pub. L. No. 85-923, 72 Stat. 1773 (1958); and Big Bend
Dam, Pub. L. No. 87-734, 76 Stat. 698 (1962).
cData in this column reflect the annual inflation rate (consumer price
index for all items) from 1959 through 1997 for the Fort Randall Dam items
and from 1962 through 1997 for the Big Bend Dam items and rehabilitation.
dData in this column reflect the annual average rate of interest earned on
investments in Aaa corporate bonds from 1959 through 1997 for the Fort
Randall Dam items and from 1962 through 1997 for the Big Bend Dam items
and rehabilitation.
Our estimates of additional compensation for the two tribes vary
significantly from the amounts calculated by the tribes' consultant. Our
estimated range for the two tribes combined is from about $18.7 million to
$62.3 million. The consultant calculated an additional compensation figure
for the two tribes of $292.3 million (in 2003 dollars)-that is, $105.9 for
the Crow Creek Sioux tribe and $186.4 for the Lower Brule Sioux
tribe-before subtracting the amounts received by the tribes in 1996 and
1997, respectively. There are two primary reasons for the difference
between our additional compensation amounts and the consultant's amounts.
o First, most of the difference is due to the different rehabilitation
cost figures that were used. For the difference between the tribes' asking
prices for rehabilitation and the amounts they actually received, we used
$901,450 and the consultant used about $7.3 million (in 1961 and 1957
dollars, respectively). Once the $901,450 is adjusted to account for
inflation and interest earned through 1996 and 1997, it results in a range
of additional compensation for rehabilitation for the two tribes combined
of about $4.8 million to $15.1 million. If the consultant's rehabilitation
figure of about $7.3 million is adjusted through 1996 and 1997, his total
for the two tribes is $120.9 million, or more than $105 million above our
high estimate.
o Second, our dollar values were adjusted to account for inflation and
interest earned only through 1996 and 1997 to compare them with what the
two tribes received in additional compensation at that time. The
consultant, however, adjusted for interest earned up through 2003. In
addition, he then incorrectly adjusted for the additional compensation the
tribes were authorized in the 1990s. Specifically, the consultant
subtracted the $27.5 million and $39.3 million authorized for the Crow
Creek Sioux and Lower Brule Sioux tribes in 1996 and 1997, respectively,
from his additional compensation totals without first making the different
estimates comparable. Since these amounts were in 1996 and 1997 dollar
values, versus the 2003 dollar values for his current calculations, it was
incorrect to subtract one from the other without any adjustment. In our
view, the consultant should have adjusted his current calculations through
1996 and 1997, depending on the tribe, and then should have subtracted the
additional compensation provided the tribes at that time. If there was any
remaining compensation due the tribes, the final step then would have been
to adjust it to reflect 2003 dollar values. Using this approach, the
additional compensation provided to the tribes in the 1990s would have
been subtracted from comparable dollar values.
Observations
The additional compensation already authorized for the Crow Creek Sioux
and Lower Brule Sioux tribes in 1996 and 1997, respectively, is consistent
with the additional compensation authorized for the other tribes on the
Missouri River. Rather than bringing the Crow Creek Sioux and Lower Brule
Sioux tribes into parity with the other tribes, the two bills under
consideration in the 109th Congress-H.R. 109 and S. 374-would have the
opposite effect. Providing a third round of compensation to the Crow Creek
Sioux and Lower Brule Sioux tribes, in the amounts proposed in the bills,
would catapult them ahead of the other tribes and set a precedent for the
other tribes to seek a third round of compensation. Our analysis does not
support the additional compensation amounts contained in H.R. 109 and S.
374. Notwithstanding the results of our analysis, the Congress will
ultimately decide whether additional compensation should be provided and,
if so, how much it should be. Our analysis will assist the Congress in
this regard.
Consultant's Comments and Our Evaluation
Because the consultant's analysis was the basis for the tribes' additional
compensation claims and the consultant had asserted that the additional
compensation amounts were based on a methodology deemed appropriate by
GAO, we chose to provide the tribes' consultant with a draft of this
report for review and comment. In commenting on the draft, the tribes'
consultant (1) acknowledged that he had made a calculation error in his
analysis, (2) proposed a range of additional compensation based on four
different alternatives, and (3) discussed the complex issues of "asking
price" in the context of the particular set of facts for the Crow Creek
Sioux and Lower Brule Sioux tribes. In addition, the consultant commented
"...that there has been no uniform or consistent approach, method,
formula, or criteria for providing additional compensation. . ." to the
seven tribes affected by Pick-Sloan dam projects on the Missouri River.
Specifically, the consultant pointed out that the Congress has provided
additional compensation to four tribes based on a per-acre analysis, while
only three tribes have received additional compensation within the ranges
we calculated in our two prior reports. As a result, the consultant
believes that there is a wide disparity in the total compensation that the
seven tribes have received from the Congress. As discussed in detail
below, we believe that our approach is reasonable, and we did not make any
changes to the report based on the consultant's comments. The tribes'
consultant provided written comments that are included in appendix V,
along with our specific responses.
To address the perceived disparity in the total compensation amounts
provided by the Congress, the consultant proposed four different
alternatives for calculating additional compensation for the Crow Creek
Sioux and Lower Brule Sioux tribes: (1) on a per-acre basis compared with
the Cheyenne River Sioux tribe, (2) the consultant's original proposal
(amended to correct for the calculation error), (3) on a per-acre basis
compared with the Santee Sioux tribe, and (4) calculations based on using
the tribes' highest asking prices. We do not believe that the consultant's
amended original proposal nor the three new alternatives represent a sound
approach for establishing the range of additional compensation. Our
approach is to provide the Congress with a range of possible additional
compensation based on the difference between the amount the tribes
believed was warranted at the time of the taking and the final settlement
amount. We then adjusted the differences using the inflation rate for the
lower end of the range and the corporate bond rate for the higher end. The
ranges of additional compensation we calculated in this report were
calculated in exactly the same way we did in our 1991 and 1998 reports,
and we believe our approach is reasonable. In our view, trying to compare
the total compensation for the tribes on a per-acre basis-which are two of
consultant's proposed alternatives-does not take into account the
differences of what each tribe lost. For example, even if the individual
resources such as timber, wildlife, and wild products would have all been
valued the same for all of the tribes, if one tribe lost more of one
resource than another, then their per-acre compensation values would be
different. Also, about half of the payments to four of the tribes were for
rehabilitation, which had no direct correlation to the acreage flooded by
the dams, and the consultant did not make the different dollar amounts
comparable before performing his per-acre calculations.
The tribes' consultant disagreed with our assumption that the tribes'
final asking prices were based on the most up-to-date and complete
information and that they were more realistic than their initial asking
prices. Specifically, the consultant noted that the tribes' final asking
prices "were made under conditions of extreme duress." We agree with the
consultant that the tribes were not willing sellers of their land at the
initial price that the government offered for their land. However, we
disagree that this factor invalidates the use of the tribes' final asking
prices. The drawn out negotiations for the Fort Randall Dam and the
amounts of the tribes' final asking prices do not support the conclusion
that the tribes simply capitulated and accepted whatever the government
offered. For example, for 12 of the 15 compensation components shown in
tables 5, 6, and 7 of our report, the tribes' final asking prices were
equal to, or higher than, their initial settlement proposals. We used a
clearly defined and consistent approach, whereas, in his analysis, the
consultant selected only certain numbers from a variety of tribal
settlement proposals without providing any justification. While the
tribes' consultant chose to use the Crow Creek Sioux tribes' offer from
May 1957, he did not use the Lower Brule Sioux tribes' offer from the same
time. Instead, the consultant chose to use the Lower Brule Sioux tribes'
initial offer from 3 years earlier-July 1954-without any explanation.
Furthermore, rather than consistently using the Lower Brule Sioux tribes'
July 1954 offer, the consultant used the tribes' rehabilitation offer from
April 1957, again without any explanation.
The tribes' consultant correctly points out that only three of the seven
tribes have received additional compensation consistent with the ranges
calculated in our two prior reports. Until this report, the Congress had
only asked us to review these three tribes' additional compensation
requests, and, each time, the Congress provided additional compensation
within the ranges we calculated. Furthermore, our two prior reports dealt
with the three highest tribal claims for additional compensation-all over
$90 million-whereas, the four tribes that obtained additional compensation
based on a per-acre calculation were all less than $40 million, and we
were not asked to review those requests. As noted in this report, although
the additional compensation already provided to the tribes in 1996 and
1997 was calculated on a per-acre basis, by coincidence, for the Lower
Brule Sioux tribe it was within the range we would have proposed and for
the Crow Creek Sioux tribe it was above our range. As such, should the
Congress rely on our analysis in this report and not provide these two
tribes a third round of compensation, then the additional compensation
provided to five of the seven tribes would generally be within the ranges
we have calculated, leaving only two tribes that would have had their
additional compensation calculated based on a per-acre analysis and not
analyzed by GAO. Accordingly, we believe our approach would provide more
consistency among the tribes.
It is important to note that both the consultant's analysis and the two
bills pending in the 109th Congress state that the additional compensation
amounts for the Crow Creek Sioux and Lower Brule Sioux tribes are based on
a methodology deemed appropriate by GAO. We do not believe our analysis
supports the additional compensation claims. We recognize that
compensation issues can be a sensitive, complex, and controversial.
Ultimately, it is up to the Congress to make a policy determination as to
whether additional compensation should be provided and, if so, how much it
should be. We amended our observations to reflect this reality.
We are sending copies of this report to interested congressional
committees, the Secretary of the Interior, the tribes' consultant, the
Crow Creek Sioux and Lower Brule Sioux tribes, and other interested
parties. We will also make copies available to others upon request. In
addition, the report will be available at no charge on the GAO Web site at
http://www.gao.gov .
If you or your staff have any questions about this report, please contact
me at (202) 512-3841 or [email protected] . Contact points for our Offices
of Congressional Relations and Public Affairs may be found on the last
page of this report. GAO staff who made major contributions to this report
are listed in appendix VI.
Robin M. Nazzaro Director, Natural Resources and Environment
Appendix I Scope and Methodology
To assess the consultant's methods and analysis for determining additional
compensation for the Crow Creek Sioux and Lower Brule Sioux tribes as a
result of the flooding of 38,000 acres of their land and resources by the
installation of the Fort Randall and Big Bend Dams, we used standard
economic principles and the analysis we conducted in our two prior reports
on additional compensation. We met with the tribes' consultant to
determine how he used the method that we suggested the Congress adopt as
the basis for granting additional compensation to other tribes and
reviewed additional information he provided on how he arrived at his
proposed compensation amounts.
In order to ensure that we obtained and reviewed all relevant data, we
conducted a literature search for congressional, agency, and tribal
documents at the National Archives and the Department of the Interior's
(Interior) library. We used original documents to learn about the
negotiation process and to identify the appraised land prices and various
proposed settlement amounts. As a result, we determined that these data
were sufficiently reliable for purposes of this report. Specifically, from
the National Archives, we reviewed legislative files containing proposed
House and Senate bills, public laws enacted, House and Senate reports, and
hearings held on compensation for the tribes. In addition, from Interior's
library, we obtained Missouri River Basin Investigations Unit documents to
review information on early damage estimates as a result of installation
of the Fort Randall Dam and on details regarding both informal and formal
negotiations between the federal government and the two tribes. We also
met with representatives of the two tribes on their reservations in South
Dakota to (1) discuss the analysis, the actions taken with the
compensation previously obtained, and plans for the additional
compensation amounts requested and (2) review any records they might have
on earlier compensation negotiations. The tribes, however, did not have
any documentation on tribal discussions or decisions regarding either
compensation negotiations or offers that took place in the 1950s and
1960s.
We performed our work from October 2005 to April 2006 in accordance with
generally accepted government auditing standards.
Appendix II Map of Tribes and Dams on the Missouri River
Appendix III Timeline of Settlement Negotiations and Compensation for the Crow Creek
Sioux Tribe
Appendix IV Timeline of Settlement Negotiations and Compensation for the Lower Brule
Sioux Tribe
Appendix V Comments from the Tribes' Consultant
The following are our comments on the Crow Creek Sioux and Lower Brule
Sioux tribes' consultant's letter dated April 27, 2006.
GAO Comments
1.The tribes' consultant did not calculate a range of additional
compensation as we suggested in our report. Our approach is to provide the
Congress with a range of possible additional compensation based on the
difference between the amounts the tribes believed was warranted at the
time of the taking and the final settlement amount. We then adjusted the
differences using the inflation rate for the lower end of the range and
the corporate bond rate for the higher end. In deciding not to calculate a
low-end value using the inflation rate, the consultant stated that
"...there is no precedent for Congress using the inflation rate as a basis
for any additional compensation it has awarded to the seven Tribes since
1992." While the consultant is correct in stating that the Congress has
not provided any tribe with additional compensation at the lowest value in
the ranges we have calculated, there is a precedent for the Congress
providing an amount less than the highest value. In 1992, the Congress
authorized $90.6 million in additional compensation for the Standing Rock
Sioux tribe, which was toward the low end of the possible compensation
range we calculated of $64.5 million to $170 million. Although the
Congress did not select the lowest value, having a lower value provided
the Congress with a range from which to select. We did not suggest that
the consultant should propose a range of additional compensation using
four different approaches.
2.Determining whether additional compensation is warranted is a policy
decision for the Congress to decide. Nonetheless, if the Congress relies
on our analysis in this report and does not provide a third round of
compensation to the Crow Creek Sioux and Lower Brule Sioux tribes, the
additional compensation provided to five of the seven tribes-the Cheyenne
River Sioux tribe, the Crow Creek Sioux tribe, the Lower Brule Sioux
tribe, the Standing Rock Sioux tribe, and the Three Affiliated Tribes of
the Fort Berthold Reservation-would generally fall within the ranges we
calculated using our approach, thereby leaving only two tribes-the Santee
Sioux tribe and the Yankton Sioux tribe-that would have had their
additional compensation calculated on a per-acre basis and not reviewed by
GAO. As a result, we believe using our approach, which is based on the
amounts that the tribes believed were warranted at the time of the taking,
would provide more consistency among the tribes, rather than less.
3.The tribes' consultant did not make the amounts from different years
comparable before making his per-acre calculations. The consultant did not
adjust the original compensation amounts from 1947 through 1962 before
adding them with the additional compensation amounts from 1992 through
2002. As a result, any comparisons made between the compensation amounts
of the Crow Creek Sioux and Lower Brule Sioux tribes and other tribes,
such as the Cheyenne River Sioux tribe or the Santee Sioux tribe, would be
inaccurate. For example, for the Lower Brule Sioux tribe, the consultant
added three amounts from 1958, 1962, and 1997 for a total of $43.6
million, without first adjusting the individual amounts to constant
dollars. More importantly, we do not believe that an aggregate per-acre
comparison among the tribes is appropriate. We agree with the tribes'
consultant that the tribes all suffered similar damages, but similar does
not mean exactly the same. Damages would have to be exactly the same among
all tribes for there to be equal total compensation on a per-acre basis,
and this was not the case. Products, such as buildings, timber, and
wildlife, were valued differently depending on type and some tribes lost
more of one resource than other tribes. As a result, their per-acre
compensation values would be different. Also, about half of the payments
to four of the tribes were for rehabilitation that was not directly linked
to the acreage flooded by the dams.
4.We disagree that the additional compensation authorized for the Cheyenne
River Sioux tribe in 2000 had a "skewing" effect on the additional
compensation provided to the four other tribes prior to that time. The
additional compensation authorized for the Cheyenne River Sioux tribe fell
within the range we calculated, as did the additional compensation
authorized for the Three Affiliated Tribes of the Fort Berthold
Reservation and the Standing Rock Sioux tribe. Our range was based on the
amount the Cheyenne Rive Sioux tribe believed was warranted at the time of
the taking. Furthermore, as our analysis in this report demonstrates,
although the Crow Creek Sioux and Lower Brule Sioux tribes were provided
with additional compensation in 1996 and 1997 based on a per-acre
analysis, the amounts were consistent with, or higher, than the ranges we
calculated in this report.
5.As the tribes' consultant noted in his comments, he did not use the
tribes' highest offers in every case in his original analysis because he
believed that some of those offers, such as the $16 million rehabilitation
figure requested by the Lower Brule Sioux tribe, were skewed by special
circumstances. However, the consultant uses these same highest asking
prices in his fourth alternative, even though he believed them to be too
unreasonable to include in his original analysis.
6.The tribes' consultant is correct in pointing out that we did not use
the exact phrase "final asking price" in our two prior reports. However,
the ranges we calculated in our 1991 and 1998 reports were based on the
final asking price of the tribes and their final settlements. We used the
phrase "at the time of the taking" as a general phrase to denote the time
period when the tribes' were negotiating with the government for
compensation for the damages caused by the dams. It is not intended to
refer to a specific date.
7.We disagree with the tribes' consultant that tribal members were forced
to relocate without funds for moving expenses. The tribes did receive
initial funds based on the Missouri River Basin Investigations Unit
appraisals to help cover relocation expenses 3 years before they made what
we refer to as their final asking prices in March 1958. In March 1955, the
Crow Creek Sioux tribe received $399,313 and the Lower Brule Sioux tribe
received $270,611 from the court, with the understanding that negotiations
between the tribes, the U.S. Army Corps of Engineers, and Interior would
continue until settlements were achieved. Tribal committees were formed to
plan relocation activities with these funds.
8.We disagree with the tribes' consultant regarding his characterization
of the rehabilitation portion of the payment the tribes received. We state
in this report that it should be considered separately from the comparison
of the dams because it was not directly related to the damage caused by
the dams. The tribes' consultant states that "...the Congress has
consistently demonstrated the understanding that funds for rehabilitation
were directly linked to the damages caused by the dams." We agree that
funding for rehabilitation became intertwined with compensation for the
dams, and we included rehabilitation in our analysis in this report, as
shown in tables 9 and 10, as we did for the Cheyenne River Sioux tribe and
the Standing Rock Sioux tribe. However, we disagree that rehabilitation is
directly linked to the damages caused by the dams for the following three
reasons. First, other tribes not affected by dam projects were also
provided with rehabilitation funding. Second, rehabilitation funding was
to improve the economic and social conditions of all tribal members, it
was not limited to only those members directly affected by the dams.
Third, it was clear during the negotiations that the government did not
consider rehabilitation funding to be compensation for the damages caused
by the dams. In addition, in this report, as in our 1998 report, we show
the breakout of each component in our analysis to provide the Congress
with the most complete information.
Appendix VI GAO Contact and Staff Acknowledgments
Robin M. Nazzaro, (202) 512-3841, [email protected]
In addition to the individual named above, Jeffery D. Malcolm, Assistant
Director; Greg Carroll; Timothy J. Guinane; Susanna Kuebler; and Carol
Herrnstadt Shulman made key contributions to this report. Also
contributing to the report were Omari Norman, Kim Raheb, and Jena Y.
Sinkfield.
(360643)
www.gao.gov/cgi-bin/getrpt? GAO-06-517 .
To view the full product, including the scope
and methodology, click on the link above.
For more information, contact Robin M. Nazzaro at (202) 512-3841 or
[email protected].
Highlights of GAO-06-517 , a report to the Chairman, Committee on Indian
Affairs, U.S. Senate
May 2006
INDIAN ISSUES
Analysis of the Crow Creek Sioux and Lower Brule Sioux Tribes' Additional
Compensation Claims
From 1946 to 1966, the government constructed the Fort Randall and Big
Bend Dams as flood control projects on the Missouri River in South Dakota.
The reservoirs created behind the dams flooded about 38,000 acres of the
Crow Creek and Lower Brule Indian reservations. The tribes received
compensation when the dams were built and additional compensation in the
1990s. The tribes are seeking a third round of compensation based on a
consultant's analysis.
The Congress provided additional compensation to other tribes after two
prior GAO reports. For those reports, GAO found that one recommended
approach to providing additional compensation would be to calculate the
difference between the tribe's final asking price and the amount that was
appropriated by the Congress, and then to adjust it using the inflation
rate and an interest rate to reflect a range of current values.
GAO was asked to assess whether the tribes' consultant followed the
approach used in GAO's prior reports. The additional compensation amounts
calculated by the tribes' consultant are contained in H.R. 109 and S. 374.
What GAO Recommends
GAO is not making any recommendations. The tribes' consultant commented
that he disagreed with our reliance on the tribes' final asking prices.
GAO believes its approach is reasonable.
The tribes' consultant differed from the approach used in prior GAO
reports by (1) not using the tribes' final asking prices as the starting
point of the analysis and (2) not providing a range of additional
compensation. First, in calculating additional compensation amounts, GAO
used the tribes' final asking prices, recognizing that their final
settlement position should be the most complete and realistic. In
contrast, the consultant used selected figures from a variety of tribal
settlement proposals. For example, for the rehabilitation component of the
tribes' settlement proposals, the consultant used $13.1 million from
proposals in 1957, rather than $6.7 million from the tribes' final
rehabilitation proposals in 1961. Second, the tribes' consultant
calculated only the highest additional compensation dollar value rather
than providing the Congress with a range of possible additional
compensation based on different adjustment factors, as in the earlier GAO
reports.
Based on calculations using the tribes' final asking prices, GAO's
estimated range of additional compensation is generally comparable with
what the tribes were authorized in the 1990s (see figure below). By
contrast, the consultant estimated about $106 million and $186 million for
Crow Creek and Lower Brule, respectively (in 2003 dollars). There are two
primary reasons for this difference. First, GAO used the tribes' final
rehabilitation proposals from 1961, rather than the 1957 proposals used by
the consultant. Second, GAO's dollar amounts were adjusted only through
1996 and 1997 to compare them directly with what the tribes received at
that time. The consultant, however, adjusted for interest earned through
2003, before comparing it with the payments authorized in the 1990s.
The additional compensation already authorized for the tribes in the 1990s
is consistent with the additional compensation authorized for other tribes
on the Missouri River. GAO's analysis does not support the additional
compensation amounts contained in H.R. 109 and S. 374.
GAO's Estimated Range of Additional Compensation Versus the Additional
Compensation the Tribes Were Authorized in the 1990s
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