Indian Programs

The Bureau of Indian Affairs (BIA) has jurisdiction over roughly 56 million acres of Indian-owned land that is held in trust by the federal government. In 1997, tribes and individual Indians received more than $104 million from 102,000 leases involving farming, livestock grazing, business development, and residential use. Members of Congress have raised concerns about how the rent for this land is set and how rent appraisals may affect the ability of Indians to lease their land and of lessees to rent it. This report discusses (1) how BIA uses appraisals and other methods to establish the lease value of Indian land; (2) how its appraisal methods compare with those of other federal and state agencies and of private appraisers and what other methods are used to value federal, state, and private leases; (3) impediments to leasing Indian trust land; (4) what alternatives to appraisals have been used to establish the lease value of Indian land, including any changes in federal laws and regulations that would be required; and (5) BIA's efforts to improve its appraisal methods. GAO also provides information on the leasing of Indian trust land, the residential leases of Indian trust and other land, and the acreage in Indian irrigation projects.

GAO noted that: (1) the Bureau relies mostly on appraisals to ensure that Indian land is leased for a fair annual rental; (2) however, the Bureau has not defined fair annual rental and does not have a clear policy on how that amount should be determined; (3) GAO found no statutory or regulatory requirement that appraisals be used to establish lease values; (4) under certain circumstances, some Bureau offices use other methods in addition to appraisals; (5) the standards and methods that apply to Bureau appraisers also apply to other appraisers, including other federal, state, and private appraisers; (6) however, managers of other lands also use other methods to establish lease values; (7) according to several private appraisers GAO spoke to, the rents for agricultural leases on private land are often not set by appraisal; (8) however, leases for other uses on private land, such as business uses, may be valued by appraisal; (9) appraisal amounts were considered a particular problem because of Bureau officials' reluctance to approve leases for less than the appraised value; (10) in addition, while Bureau and other appraisers stated that there is no standard for the amount of time it should take to prepare or review an appraisal, some Indian communities expressed frustration with the time taken by the Bureau's processes; (11) in addition to appraisals, other methods are available for establishing lease values in some circumstances; (12) such other methods include advertising for competitive lease bids, conducting market surveys, and applying fee schedules or formulas; (13) laws and regulations do not require the use of appraisals to establish lease values and would not need to be changed for the Bureau to adopt these or other alternative methods to establish rents for leases; (14) Bureau officials said a more comprehensive review of laws, regulations, and court cases would need to be conducted before Bureau-wide changes would be considered; (15) the Department of the Interior is reviewing the Bureau's use of appraisals and is considering improvements to the Bureau's processes; (16) proposed improvements include training realty staff on the circumstances under which appraisals should be requested to limit the number of unnecessary appraisals and automating and thus streamlining the valuation processes for certain types of real estate transactions; and (17) the improvement plan also includes a recommendation that the Bureau develop a system for tracking appraisals to allow more effective use of appraisal resources.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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