Some Indian reservations have a mixture of Indian and non-Indian  residents. Some Unique Issues that May Affect Economic Activity in Indian Country

Our prior work has highlighted five broad categories of unique issues that  have the potential to create uncertainty for tribes or, in some cases,  private companies wishing to pursue economic activities on Indian  reservations. Land in Trust Issues May Create Uncertainty

Having a land base is essential for many tribal economic development  activities such as agriculture, grazing, timber, energy development, and  gaming. Tribal Environmental Standards May Create Uncertainty

The Clean Water Act, Safe Drinking Water Act, and Clean Air Act authorize  the Environmental Protection Agency (EPA) to treat Indian tribes in the  same manner as it does states, referred to as TAS (treated as states), for  the purposes of implementing these laws on tribal lands. On the other hand, in some cases, states  are concerned that tribes with program authority may impose standards  that are more stringent than the state’s, resulting in a patchwork of  standards within the state and potentially hindering the state’s economic  development plans. We have reported on tax provisions regarding (1) the  uncertainties that tribes faced regarding the types of activities that they  could finance with tax-exempt bonds and (2) the impact of accelerated  depreciation provisions. However, in  June 2008, we reported that there were insufficient data to identify users  of the provision and assess whether the provision had increased economic  development on Indian reservations. Obtaining Rights-of-Way Across Indian Land Can Involve Uncertainty

Securing rights-of-way across Indian lands is an important component of  providing Indian lands with the critical infrastructure needed to support  economic activity. In January 2006, we reported that according to several  telecommunications service providers and tribal officials, obtaining a  right-of-way through Indian lands is a time-consuming and expensive  process that can impede service providers’ deployment of  telecommunications infrastructure. Certain Issues Related to the Legal Status of Tribes May Complicate the Resolution of Disputes

The unique legal status of tribes has resulted in a complex set of rules that  may affect economic development efforts. However, sovereign immunity  may influence a private company’s decision to contract with an Indian  tribe and the limitations imposed by federal law on Indian tribes’ civil  jurisdiction over non-Indians on Indian reservations may create  uncertainties regarding where lawsuits arising out of those contracts can  be brought. Special Provisions for Gaming and Small Business Contracting

In contrast to the unique issues that can cause uncertainty or pose  challenges to economic activity in Indian country, tribes can take  advantage of special provisions for gaming and small business contracting. In addition, in 1986, a law was enacted that allowed Alaska Native  corporation (ANC)-owned businesses to participate in the Small Business  Administration’s (SBA) 8(a) program—one of the federal government’s  primary means for developing small businesses owned by socially and  economically disadvantaged individuals. In April 2006, we reported on the use of  special procurement advantages by ANCs, and found that 8(a) obligations  to firms owned by ANCs increased from $265 million in fiscal year 2000 to  $1.1 billion in 2004. We have  ongoing work looking at the use of these special procurement advantages  by ANCs, tribes, and NHOs. Economic Development: Federal Assistance Programs for American  Indians and Alaska Natives.
Why GAO Did This Study

Indian tribes are among the most economically distressed groups in the United States. In 2008, the U.S. Census Bureau reported that the poverty rate among American Indian and Alaska Natives was almost twice as high as the population as a whole--27 percent compared with 15 percent. Residents of tribal lands often lack basic infrastructure, such as water and sewer systems, and sufficient technology infrastructure. Without such infrastructure, tribal communities often find it difficult to compete successfully in the economic mainstream. This testimony statement summarizes GAO's observations on (1) five broad categories of unique issues that may create uncertainty and therefore affect economic activity in Indian country and (2) tribes' use of special gaming and small business contracting provisions. It is based on prior GAO reports.

What GAO Found

GAO's previous work has identified five broad categories of unique issues that may create uncertainty for tribes or, in some cases, private companies wishing to pursue economic activities on Indian reservations. Accruing land in trust. Having a land base is essential for tribal economic development activities such as agriculture, energy development, and gaming. However, a February 2009 Supreme Court decision has raised uncertainty about the process for taking land in trust for tribes and their members. Tribal environmental standards. The Clean Water Act, Safe Drinking Water Act, and Clean Air Act authorize the Environmental Protection Agency to treat Indian tribes in the same manner as states. In some cases, however, states are concerned that tribes with this authority may impose standards that are more stringent than the state standards, which could result in a patchwork of standards within the state and potentially hinder economic activity. Indian tax provisions. Tribes face uncertainties regarding the types of activities that they can finance with tax-exempt bonds. Also, in 2008, GAO reported that there were insufficient data to (1) identify the users of a tax provision that allows for accelerated depreciation of certain property used by businesses on Indian reservations and (2) assess whether the provision had increased economic development on Indian reservations. Obtaining rights-of-way. Securing rights-of-way across Indian land is important in providing Indian lands with the infrastructure needed to support economic activity. In 2006, GAO reported that obtaining rights-of-way through Indian lands was a time-consuming and expensive process. Legal status of tribes. The unique legal status of tribes has resulted in a complex set of rules that may affect economic activities. For example, Indian tribes have sovereign immunity, which can influence a business's decision to contract with a tribe. Also, the limitations imposed by federal law on Indian tribes' civil jurisdiction over non-Indians on Indian reservations can create uncertainties over where lawsuits arising out of contracts with tribes can be brought. In contrast to these unique issues that may pose challenges to economic activity in Indian country, some Indian tribes have taken advantage of special provisions for gaming and small business contracting. The National Indian Gaming Commission reports that tribal gaming operations generated $26.5 billion in revenue for 2009. However, not all tribes have gaming operations and the majority of the revenue is generated by a fraction of the operations. Similarly, Alaska Native Corporations (ANC) have been granted special procurement advantages. In 2006, GAO reported that obligations to firms owned by ANCs that participated in the Small Business Administration's 8(a) program increased from $265 million in fiscal year 2000 to $1.1 billion in 2004. We have ongoing work looking at the use of these special procurement advantages. This testimony statement contains no new recommendations.