In implementing the Flood Control Act of 1944, the U.S. Army Corps of Engineers (Corps) constructed a number of dams on the Missouri River in North Dakota and South Dakota. The construction of the Oahe dam, located 6 miles northwest of Pierre, South Dakota, began on September 16, 1948. President Kennedy officially dedicated the dam on August 17, 1962. At the maximum water level of 205 feet, the reservoir behind the dam stretches 231 miles from just northwest of Pierre, South Dakota, to just south of Bismarck, North Dakota. See figure 1 for a picture of the dam and appendix I for a map of the dam and reservoir. The Cheyenne River Sioux lost 104,420 acres to flooding when the Oahe reservoir was created. The Corps; the Department of the Interior, through the Missouri River Basin Investigations Unit (MRBI); and the tribe each developed estimates of the damages caused by this project. The Corps’ estimate provided only for direct damages; that is, it included values primarily for the land and improvements in the taking area. MRBI’s and the tribe’s estimates provided for both direct and indirect damages. The indirect damages included values for the loss of such things as timber, wildlife, and wild products (fruits, berries, and herbs) in the taking area. (See app. II for more information on the Corps’, MRBI’s, and the tribe’s damage estimates.) In 1952, the tribe developed a damage estimate for an initial settlement proposal, which it revised upward in 1954. The 1952 proposal sought specific dollar amounts for direct damages, indirect damages, and rehabilitation, as well as unspecified amounts for the relocation and reestablishment of tribal members in the taking area and for tribal administrative expenses related to the settlement, among other things. The 1954 proposal requested $10,930,871 for direct and indirect damages and $12,599,432 for rehabilitation. Later that year, the Congress authorized a total payment of $10,644,014 to the Cheyenne River Sioux, including (1) $5,384,014 for the land, improvements, and all other claims related to the project (direct and indirect damages); (2) $5,160,000 for the rehabilitation of tribal members residing on the reservation and for the relocation and reestablishment of tribal members living in the taking area; and (3) $100,000 for tribal administrative expenses related to the settlement. Tribes at four other reservations affected by flood control projects along the Missouri River incurred losses ranging from about 16,000 acres to over 150,000 acres. Primarily during the 1950s, these tribes received some compensation for their losses. However, starting in the 1980s they began requesting additional amounts ranging from $27.5 million to $342.9 million. The Congress responded to their requests by authorizing or proposing the establishment of development trust funds for them. Specifically, in 1992, it authorized a $149.2 million fund for the Fort Berthold Reservation and a $90.6 million fund for the Standing Rock Reservation. In 1996, it authorized a $27.5 million fund for the Crow Creek Reservation. A legislative proposal would establish a $39.3 million fund for the Lower Brule Reservation. (See app. III for a table summarizing information on these four reservations and Cheyenne River.) Under his primary approach, the consultant recalculated the value of the tribe’s losses for lost timber, wildlife, wild products, and agricultural production. He estimated that the total value of the losses, as of January 1, 1955, was $19.4 million. After subtracting the $5.4 million authorized as damage compensation for the tribe in 1954, the consultant applied the annual prime rate to adjust the unpaid damages of $14.0 million to 1996 values, arriving at a total claim for additional damage compensation of $300.7 million. In calculating this estimate, the consultant made a number of questionable assumptions. Among the more important of these are the (1) choice of a discount rate for valuing the tribe’s future losses, (2) estimate of timber harvest levels, (3) estimate of wildlife resource values, and (4) estimate of the tribe’s consumer surplus—that is, the value to the tribe, above and beyond the market value, of the resources that were lost in the taking. Historical information available on the damage estimates prepared in the 1950s raises questions about the discount rate used by the consultant. To value the future annual income lost to the tribe because of the taking, he selected the 1955 prime interest rate of 2.79 percent (net of inflation) as the discount rate. The discount rate is used to determine the present value of a stream of annual income. A key question in evaluating the consultant’s selection of a discount rate is whether it accurately reflects the discount rate that the tribe would have used in the 1950s. Historical documents indicate that the tribe and MRBI used a 4-percent discount rate. Moreover, the tribe requested that its settlement draw interest at 5 percent. This information suggests that the tribe’s discount rate was higher than the prime rate assumed by the consultant. As the discount rate increases, the value of future earnings decreases. For example, the consultant estimated the value of the tribe’s lost annual agricultural production as of January 1955 at $193,194. Assuming that this annual loss would continue in perpetuity, the consultant used a 2.79-percent discount rate to calculate a present value of $6,924,516 for the tribe’s total agricultural production losses. If the consultant had used a 4-percent discount rate, the same annual loss of $193,194 would have had a present value of $4,829,850—a reduction of $2,094,666, or about 30 percent. Similarly, if the consultant had applied the 4-percent discount rate to his entire analysis (losses for timber, wildlife, wild products, and agricultural production), he would have arrived at a total damage estimate of $13.5 million in 1955—a figure that is about 30 percent lower than his total damage estimate of $19.4 million. The consultant did not adequately justify the harvest levels for timber that he used in his damage calculations. His total damage estimate for timber exceeded both the tribe’s and MRBI’s estimates. Specifically, for different timber resources (e.g., logs, poles, posts, and cordwood), he used harvest levels that exceeded, by 12 to 199 percent, the sustainable levels calculated by MRBI. The tribe developed two timber estimates—one in 1952 for $900,000 and the other in 1954 for $2,444,125. Because we were unable to find any detailed calculations showing how the tribe arrived at these estimates, we cannot compare the tribe’s methodology with MRBI’s or the consultant’s. MRBI based its timber damage estimate on sustainable harvest levels—that is, on the harvest levels that could be maintained in perpetuity, taking into account the growth rate for new trees. MRBI used sustainable levels rather than actual levels—which, on average, had significantly exceeded sustainable levels from 1942 through 1951—because it assumed that the same losses would occur every year in perpetuity. The Cheyenne River Reservation’s timber resources could not have supported the use of higher harvest levels in perpetuity; if harvesting had continued at recent levels, the reservation would quickly have run out of trees. MRBI’s total damage estimate for timber was $689,625. In developing his damage estimate for timber, the consultant did not use MRBI’s sustainable harvest levels. For example, in calculating the damage estimate for cordwood, he assumed that 400 households would each need 11.3 cords of wood annually, or a total of 4,520 cords per year, for heating and cooking. Since the tribe lost 90 percent of its timber as a result of the taking, he calculated an annual loss for cordwood of 4,068 cords. However, he did not present any evidence that the timber supply in the taking area could sustain this level of harvesting in perpetuity. Table 1 compares MRBI’s sustainable harvest levels with the consultant’s harvest levels. The consultant’s total damage estimate for timber was $3,507,204. The consultant did not adequately justify the values for wildlife that he used in his calculations. His total damage estimate for wildlife exceeded both the tribe’s and MRBI’s estimates. In both its 1952 and 1954 settlement proposals, the tribe presented a combined damage estimate for wildlife and wild product losses—$1,857,000 in 1952 and $1,857,500 in 1954. Because we were unable to find any detailed calculations showing how the tribe arrived at these estimates, we cannot compare the tribe’s methodology with MRBI’s or the consultant’s. Nor can we separate the tribe’s values for wildlife and wild products, as MRBI and the consultant separated theirs. “The value of game to the Indian people undoubtedly is less than the amount sportsmen spend for hunting game. Reservation Indians probably are more skilled hunters than the average sportsmen, use less costly equipment, and no hotel bills or long distance travel are incident to their hunting activities. Sportsmen’s expenditures therefor are not considered a sound basis for arriving at the value of game to Indians. The loss to Indians from the destruction of wildlife is taken to be the value to them of the annual wildlife harvest which they obtain. This value may be measured by the additional amounts which the Indians will have to pay for food to replace that previously supplied by the destroyed wildlife resources.” MRBI’s values were about 50 percent lower than the FWS report’s values for big game (deer) and about 70 percent lower for upland game (e.g., pheasants, rabbits, and squirrels).