United States General Accounting Office

GAO Report to Congressional Requesters

May 1997 INDIAN PROGRAMS

BIA’s Management of

the Wapato Irrigation

Project

GAO/RCED-97-124

GAO United States

General Accounting Office

Washington, D.C. 20548

Resources, Community, and

Economic Development Division

B-276157 

May 28, 1997

The Honorable Slade Gorton

Chairman

The Honorable Robert C. Byrd

Ranking Minority Member

Subcommittee on Interior and

 Related Agencies

Committee on Appropriations

United States Senate

The Honorable Patty Murray

United States Senate

The Honorable Richard Hastings

House of Representatives

In the late 1800s, the Congress began authorizing funds for the

construction of Indian irrigation projects. Such projects were constructed

primarily to enhance the economic development of Indian reservations or

to meet federal legal obligations. Currently, the Bureau of Indian Affairs

(BIA) administers over 70 projects that deliver water to about 1 million

acres of reservation land.

The Wapato Irrigation Project is located within the boundaries of the

Yakama1

 Indian Reservation in Yakima County, Washington, and irrigates

about 142,000 acres. Some of the irrigated land is held in trust for

individual Indian landowners and for the Yakama Indian Nation by the

United States, and some is privately owned. The costs of operating and

maintaining the project, which BIA has designated as self-sustaining, are to

be covered by annual assessments against all irrigable acres. Individual

Indian landowners may pay the assessment themselves or lease their lands

to lessees who agree to pay the assessment. Alternatively, BIA may lease

lands on behalf of the Indian landowners. Neither the Indian landowners

nor BIA is required to lease Indian trust lands. BIA does not lease privately

owned (nontrust) land.

The project has contributed substantially to the local economy. In 1994,

the total market value of crops raised on land irrigated by the project was

$152 million. Over the years, however, the project has fallen into disrepair,

1

P.L. 103-434, title XII, section 1204(g), dated Oct. 31, 1994, changed the spelling of the Yakima Indian

Nation back to the original spelling of Yakama. The spelling of the county’s name was not changed.

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and many irrigated acres are idle (not in agricultural production).

Estimates of the costs to repair the project and bring it up to operating

standards range from about $100 million to $200 million.

The Senate Committee on Appropriations is concerned about the viability

of the project in light of reports issued by the Department of the Interior’s

Office of Inspector General that found significant problems with the

project’s management.2

 To supplement this work, you asked us to further

investigate (1) the key reasons for the project’s idle acreage and the steps

that can be taken to return these lands to production, (2) the principal

reasons why operation and maintenance assessments for the project are

past due, and (3) the obstacles that BIA will face in trying to collect the past

due operation and maintenance assessments.

Results in Brief BIA officials estimate that approximately 30,000 acres, or 21 percent of the

project’s acreage, are currently idle. These lands are out of production for

a variety of reasons, including changing farm economics and poor soil

conditions. In addition, BIA has not often exercised its authority to grant

leases on behalf of Indian landowners who have not leased the lands

themselves. In 1996, BIA decided to exercise its authority to grant leases

more often and began marketing the idle lands more extensively.

Over the last decade, uncollected operation and maintenance assessments

have accumulated to a total of $7.3 million, excluding interest, penalties,

and fees. BIA’s practice of deferring the collection of operation and

maintenance assessments for idle trust land is the main reason why

assessments are past due. Deferred collections on idle trust land account

for $5.5 million in past due assessments. The remaining $1.8 million in past

due assessments consists of delinquent payments from lessees of Indian

trust land and from owners of nontrust land. BIA has not aggressively

attempted to recover any of the $7.3 million in past due assessments.

The biggest obstacle to the collection of past due assessments is BIA’s

belief that assessments on idle trust land are not justified. Moreover,

because BIA has not collected past due assessments in a timely manner,

federal and state statutes of limitations preclude the agency from using

certain methods to collect the older assessments. For example, the federal

statute of limitations for using administrative offsets, such as deductions

2

Indian Irrigation Projects, Bureau of Indian Affairs (Rpt. No. 96-I-641, Mar. 29, 1996), Wapato

Irrigation Project, Bureau of Indian Affairs (Rpt. No. 95-I-1402, Sept. 30, 1995), and Operation and

Maintenance Assessments of Indian Irrigation Projects, Bureau of Indian Affairs (Rpt. No. 88-42,

Feb. 3, 1988).

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from federal income tax refunds, is 10 years. When BIA has collected past

due assessments through land sales, it has not, since August 1991, returned

the funds to the project as required by law. Instead, it has deposited the

funds in special accounts, anticipating that the past due assessments

would eventually be canceled and the funds could then be returned to the

landowners. As of December 1996, the balance in the special accounts was

about $103,000.

Background The Wapato Irrigation Project is one of the oldest and largest irrigation

projects operated by BIA. The project consists of three

units—Wapato-Satus, Toppenish-Simcoe, and Ahtanum—and irrigates

approximately 142,000 acres. The Wapato-Satus Unit accounts for about

95 percent of the total acreage within the project. Ownership of the

142,000 acres is split between Indians and non-Indians; Indians own

55 percent, and non-Indians own the remaining 45 percent. The title to the

Indian-owned land is held in trust for individual Indians and the Yakama

Indian Nation by the United States.3

 Most of the project’s acreage held in

trust is leased to non-Indians for agricultural purposes. See appendix I for

a map of the project.

The project is operated and maintained by BIA’s Wapato Irrigation Project

Office, located in Wapato, Washington. BIA’s Yakama Agency Office,

Branch of Real Estate Services, located in Toppenish, Washington, has the

authority to lease Indian trust land within the project on behalf of

individual Indians. See appendix II for an organizational chart showing

these BIA offices. The Yakama Indian Nation handles the negotiation of

leases for tribal trust land. Private landowners farm or lease nontrust land

within the project.

In 1960, BIA classified the project as self-sustaining; that is, BIA considered

the project’s lands capable of supporting the full amount of the project’s

annual operation and maintenance costs. Therefore, BIA’s regulations

require that all irrigable lands within the project be assessed annual

operation and maintenance charges that cover the full costs of delivering

water, including the day-to-day operation and maintenance costs plus an

allowance for rehabilitation and replacement as necessary. The total

estimated annual costs are to be divided by the total number of irrigable

3

Originally, all of the Yakama Indian Reservation was owned by the Yakama Indian Nation. Over time,

portions of the reservation were allotted to individual Indians or sold to non-Indians. For more

detailed information on land ownership on Indian reservations, including the Yakama Indian

Reservation, see Indian Programs: Profile of Land Ownership at 12 Reservations (GAO/RCED-92-96BR,

Feb. 10, 1992).

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acres to determine the annual assessment rate. The base assessment rate

for the Wapato-Satus Unit for 1996 was $40 per acre.4

The project’s operation and maintenance problems are well documented.

Since 1990, BIA, the Yakama Indian Nation, the Bureau of Reclamation, and

the Department of the Interior’s Office of Inspector General have issued at

least seven reports on the project’s deteriorated physical condition. In its

1995 report on the project, the Inspector General recommended, among

other things, that BIA (1) develop assessment rates for the project that fully

cover the costs of properly operating and maintaining it and of

rehabilitating or replacing its infrastructure; (2) comply with the

Department of the Interior’s billing regulations and procedures, which

require that all owners or users of water on the project’s lands be billed an

annual assessment charge; and (3) enforce debt collection procedures. BIA

generally concurred with these recommendations and, in August 1995,

established a task force to address the Inspector General’s findings and

recommendations, set forth in reports that go back to 1988. The task force

is implementing these recommendations at 3 BIA power projects and 18

Indian irrigation projects, including the Wapato Irrigation Project. As of

March 31, 1997, the task force’s work was still ongoing.

Factors Contributing

to Idle Trust Land

BIA officials estimate that approximately 21 percent of the project’s

acreage is idle. Changing farm economics, poor soil conditions, BIA’s past

leasing practices, and high appraised rental values have contributed to

keeping these lands out of productive use. BIA revised its leasing practices

in 1996, in an effort to move the idle lands into productive use.

Changing Farm Economics

and Physical Deficiencies

Over time, the project’s farm economy has deteriorated. In the early to

mid-1980s, high interest rates and low crop prices further depressed the

project’s farm economy. Some farmers had to reduce operations, while

others—particularly small “mom and pop” operators—quit farming

altogether. According to project officials, about 30,000 acres—or about

21 percent of the land served by the project—were idle in 1996, including

24,000 acres of Indian trust land and 6,000 acres of nontrust land.

The inventory of idle trust land includes small and isolated parcels, parcels

with poor-quality soil, and parcels with poor drainage—all of which limit

their leasing potential. The size of a typical parcel on the reservation is 80

4

Because of the lower cost of providing irrigation water for the two smaller units—Toppenish-Simcoe

and Ahtanum—the 1996 assessment rate for these two units was $10 per acre.

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acres for irrigated agricultural land. The farmable area of some parcels is

reduced by features such as irrigation canals, residences, and uneven

terrain (gullies and steep slopes).

Over the project, the soil varies in quality, depth, and drainage, from

shallow, gravelly soil in the floodplain of the nearby Yakima River to

richer, deeper soil near the foothills. Several studies issued during the past

10 years have found severe soil limitations associated with portions of the

project’s idle land. BIA has identified about 8,000 acres of idle trust land

with high alkaline or saline content or excessive gravel that would

preclude the growth of some crops or require reclamation practices to

make the land productive. Where remediation is feasible, repeated

leaching and draining would be required to reduce the soil’s alkalinity or

salinity.

BIA’s Leasing and

Appraisal Practices

Although BIA generally has no control over the economic and physical

factors that have contributed to the idling of trust land, it does have more

authority than it has exercised, until recently, over the leasing process.

Specifically, the Superintendent of BIA’s Yakama Agency Office has the

authority to grant leases on behalf of individual Indian landowners, but

former superintendents did not often exercise this authority. The current

superintendent, appointed in October 1996, plans to exercise his authority

more often. However, the lands’ unrealistically high appraised rental

values pose an obstacle to leasing. BIA has also expanded its advertising of

idle lands available for lease.

Individual Indian landowners have the authority to grant leases on their

land. A new lease agreement can be entered into starting 1 year before an

existing lease expires. If, after 3 months, the individual landowner or

landowners have not negotiated a new lease, BIA can begin acting on the

landowner’s or landowners’ behalf, advertising the available land and

trying to find a lessee. If a lessee is found, the superintendent can choose

either to obtain the consent of the landowner(s)—who thereby grant the

lease—or to grant the lease on behalf of the landowner(s). Former

superintendents sought to obtain the consent of Indian landowners rather

than exercise their authority to grant leases.

Obtaining the consent of a parcel’s Indian landowner(s) can be

burdensome because the ownership of many parcels on the Yakama

Indian Reservation is highly fractionated. As we reported in

February 1992, over one-third (2,236) of the reservation’s parcels had

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multiple owners, while just under two-thirds (3,823) had a single

owner—usually the Yakama Indian Nation.5

 For example, the most highly

fractionated parcel had 162 owners. To lease fractionated parcels, BIA

formerly obtained the approval of owners representing a majority of the

interests in the parcel. To prevent land from remaining idle when BIA is

unable to locate enough landowners to obtain their consent to lease a

parcel, the current superintendent has decided to exercise his authority to

grant a lease on behalf of the Indian landowners.

The superintendent is generally required to lease Indian trust land at its

“present fair annual rental value.” According to the superintendent, he

relies on appraisals prepared by BIA’s Portland Area Office’s Real Estate

Service Team to determine the property’s present fair annual rental value.

However, the appraisals for idle trust properties do not take into account

the fact that some idle lands require rehabilitation. For example, land that

is idle for a number of years becomes overgrown with weeds and other

vegetation; such land requires work before it can be cultivated.

Nevertheless, BIA appraises the idle land at the same value as land that is

being actively farmed, not taking into account the investment needed to

reclaim the land. As a result, the appraised values for idle lands often

exceed the rents that farmers are willing to pay. The superintendent stated

that he is reluctant to grant or approve leases at significantly less than the

appraised values and noted that the current appraised rental values for

idle lands present an obstacle to his leasing these lands in the future.

In the past, BIA’s limited advertising of idle trust land also restricted leasing

opportunities. The agency’s former marketing strategy was limited to

“word of mouth” and advertising in local newspapers. In 1996, BIA’s

Yakama Agency Office expanded its advertising of trust land available for

lease to newspapers in Seattle, Portland, and Spokane. However, the 1996

bid cycle still produced very limited results. Only about 88 of the 632

advertised irrigated parcels within the Wapato-Satus Unit received bids.

The office is planning to continue expanding its advertising, perhaps to

additional newspapers, trade journals, and the Internet.

Factors Contributing

to Past Due

Assessments

BIA’s practice of deferring the collection of operation and maintenance

assessments from the owners of idle trust land is the main reason why

assessments for the project are past due. In addition, some lessees of

Indian trust land and some owners of nontrust land have not paid their

assessment bills. Finally, BIA has not aggressively attempted to collect the

5

See footnote 3.

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assessments owed. As a result, past due assessments have accumulated,

totaling $7.3 million—excluding interest, penalties, and fees—over the life

of the project. However, through 1984, the project received annual

appropriations from the Congress to cover the uncollected assessments.

Since fiscal year 1984, when the Congress authorized the establishment of

an interest-bearing account for collections, the project has earned

$3.6 million in interest from its operation and maintenance collections to

partially offset the uncollected assessments. However, neither the

appropriations nor the interest earnings canceled the past due

assessments.

BIA’s Deferral of

Collections and Practice of

Not Taking Aggressive

Collection Action

Deferred collections on idle trust land account for $5.5 million of the total

$7.3 million in past due assessments, some of which date as far back as

1926. BIA assumed that because the land was not being leased, the Indian

landowners would not be able to pay their assessments. According to BIA’s

manual, when assessable Indian trust land is idle and assessments are

“impossible” to collect during the current irrigation season, bills “shall be

prepared and kept on file.” The Department of the Interior’s Inspector

General reported in 1995 that BIA did not provide any analysis to support

its assumption that operation and maintenance assessments for idle trust

land were uncollectible.6 BIA prepares assessment bills for the idle trust

land but does not mail them to the Indian landowners. Past due

assessments become a lien against the Indian trust land, and their

collection is deferred until the land is sold.

The remaining $1.8 million of the total $7.3 million in past due assessments

consists of delinquent payments from lessees of Indian trust land and from

owners of nontrust land. Currently, the lessees of Indian trust land owe

about $1.2 million and the owners of nontrust lands owe about

$0.6 million. Table 1 breaks down the past due assessments owed by the

owners of idle trust land, the lessees of trust land, and the owners of

nontrust land.

6

See footnote 2.

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Table 1: Past Due Assessments at the

Project Through Fiscal Year 1996

Year

Owners of idle

trust land

Lessees of

trust land

Owners of

nontrust land Total

1926-84 $555,761 $84,629 $8,937 $649,327

1985-96 4,977,065 1,071,351 567,616 6,616,032

Total $5,532,826 $1,155,980 $576,553 $7,265,359

Note: Data are as of Feb. 28, 1997.

Source: BIA.

BIA has not aggressively attempted to collect the $7.3 million in past due

assessments. BIA has collected past due assessments only when idle trust

land has been sold but has not, since August 1991, applied these

collections to the project’s operation and maintenance. Additionally, BIA

has made little effort to collect past due assessments from delinquent

lessees or nontrust landowners.

Funds Received to Mitigate

Past Due Assessments

Through 1984, the Congress annually appropriated funds to cover

uncollected assessments at the project. However, after 1984, the Congress

stopped appropriating supplemental operating funds for Indian irrigation

projects that were classified as fully self-sustaining. To replace these

appropriations and enable the projects to cover their unpaid assessments,

the Congress authorized BIA to deposit the annual operation and

maintenance collections from the projects into interest-bearing accounts.7

These deposits were to earn interest until they were withdrawn and

expended for operation and maintenance purposes.

BIA first began depositing operation and maintenance collections from

Indian irrigation projects into interest-bearing accounts on November 10,

1983. Over the 13-year period from fiscal year 1984 through fiscal year

1996, these deposits generated approximately $3.6 million in interest for

the project. However, the deposits have not earned enough interest to

cover all of the past due assessments. See appendix III for a graph

comparing the cumulative past due assessments with the cumulative

interest earned on the collected assessments from 1984 through 1996.

7

P.L. 98-146, 97 Stat. 929, dated Nov. 4, 1983.

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Obstacles to

Collecting Past Due

Assessments

The major obstacle to collecting the past due assessments for the project

is BIA’s belief that the charges are not justified. Furthermore, by not

collecting past due assessments in a timely manner, BIA has severely

limited its ability to collect older assessments, whose collection may be

unenforceable under federal and state statutes of limitations. Because BIA

has viewed the past due assessments as not justified or not collectible, it

has occasionally forgiven portions of these assessments. Finally, when BIA

has collected past due assessments through Indian land sales, it has

deposited these collections into special accounts, rather than returning the

funds to the project as required by federal law.

BIA’s Belief That Charges

for Idle Trust Land Are Not

Justified

BIA has chosen not to collect past due assessments for idle trust land

because it believes the charges are not justified. BIA argues that

assessments for idle trust land are not justified because, in its view,

(1) Indian landowners with idle trust land are not able to pay their

assessments and (2) land that is physically incapable of producing crops

should have been removed from the project’s assessable acreage and not

assessed in the first place.

BIA maintains that Indian landowners are not able to pay their assessments

when their lands are idle. The 1914 law that authorized BIA to fix annual

operation and maintenance assessments states that they “shall be

reimbursable where the Indians have adequate funds to repay the

Government. . . .” For idle trust land, BIA has concluded that the Indian

landowners do not have “adequate funds” to pay their assessments, and it

has therefore deferred any collection action until such time as funds

become available. However, as the Department of the Interior’s Inspector

General reported in 1995, BIA has not documented its assumption that the

owners of idle lands are unable to pay their assessments.

In addition, BIA argues that some of the charges are not justified because

idle land physically incapable of producing crops has not been removed

from the project’s assessable acreage. According to BIA’s manual, land

physically incapable of producing crops through the use of irrigation water

provided by the project should not be assessed an operation and

maintenance charge. The manual requires the temporary or permanent

removal of such land from the project’s assessable acreage. BIA’s Yakama

Agency Office has identified about 8,000 acres of idle trust land that have

physical deficiencies that would limit their ability to produce crops.

However, these lands continue to be assessed operation and maintenance

charges.

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Because the project received annual appropriations from the Congress

through 1984 to offset the uncollected assessments, BIA had no incentive to

remove from the project the idle acreage that was incapable of producing

crops. Keeping the project’s assessable acreage at the highest possible

level meant that the assessments for all landowners were lower because

the project’s costs were spread over more acres.8

Although BIA received congressional appropriations to offset the

uncollected assessments, the assessments owed by the project’s

landowners remained as debts on their lands. Under legislation passed in

1961, land within the Wapato-Satus Unit cannot be redesignated or

removed for a “higher use” until all debts on it have been paid in full.9

According to BIA’s Portland Area Office’s policy, no land within the project

can be redesignated or removed for any purpose until all debts on it have

been paid in full. Because landowners have generally refused to pay the

past due assessments, idle land incapable of producing crops remains in

the project, accumulating more debt. In some cases, the assessments owed

on idle property exceed the property’s value. BIA and the landowners are at

a standoff. BIA will not remove the land from the project until the debts

have been paid.

Statutes of Limitations for

Debt Collection

Delays in the collection of past due assessments have severely limited BIA’s

ability to recover about $1.8 million in older assessments, or about 25

percent of the total $7.3 million owed. BIA is still carrying past due

assessments on the project’s books from as far back as 1926. To collect

past due assessments from the owners of idle trust land, BIA has the option

of using administrative offsets, such as deductions from federal income

tax refunds or from the paychecks of federal employees. However, the

federal statute of limitations for collecting debts by using administrative

offsets is 10 years. Of the $5.5 million in past due assessments on idle trust

land, $1.2 million, or over 20 percent, is 10 years old or older.

To collect past due assessments from a lessee, BIA can take the lessee to

court. However, the federal statute of limitations for enforcing collections

in court against a lessee under a lease contract is 6 years. Of the

$1.2 million in past due assessments on leased trust land, almost

$0.5 million, or over 40 percent, is more than 6 years old.

8

BIA has also been reluctant to remove land from the project’s assessable acreage for fear that the

removal might eventually result in a decrease in the water entitlement for the Yakama Indian

Reservation.

9

P.L. 87-316, section 6 (75 Stat. 680), dated Sept. 26, 1961.

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Finally, to collect past due assessments from a private landowner, BIA can

foreclose to enforce a lien on the property. In the state of Washington, the

statute of limitations for foreclosing on privately owned land is 6 years. Of

the $0.6 million in past due assessments on nontrust land, about

$0.1 million, or over 15 percent, is more than 6 years old.

Because BIA believes that the past due assessments are not justified or not

collectible, it has occasionally chosen to forgive rather than collect some

of these assessments. Past due assessments were canceled selectively four

times for Indian landowners under a 1932 act and three times for

non-Indian landowners under a 1936 act. For example, under these actions

past due assessments were canceled because (1) the quality of the soil was

poor, (2) drainage of the land was inadequate, or (3) the older assessments

were uncollectible. Since 1942, a total of almost $360,000 in past due

assessments has been canceled. See appendix IV for more information on

the cancellation actions taken.

Starting in about 1991, BIA began planning a fifth cancellation request for

Indian landowners, which was officially submitted to the Deputy

Commissioner of Indian Affairs in July 1995. In this request, BIA’s Portland

Area Director proposed to cancel about $2.3 million in assessments that

were more than 6 years old, plus accrued interest, penalties, and fees. The

request was returned to the Portland Area Office in August 1995. It will be

reconsidered after the BIA task force established to implement the

Inspector General’s recommendations has finished reconciling the

project’s past due accounts.

Assessments Collected

Through Land Sales Not

Returned to the Project

When Indian trust land with past due assessments is sold, BIA is required to

collect the past due assessments from the proceeds of the sale and apply

the collections to the project. Under federal law, the funds collected from

the sale proceeds of Indian trust land must be used to satisfy the project’s

debt. In August 1991, BIA stopped complying with this requirement when it

began depositing such collections in a special account, anticipating that

the past due assessments would eventually be canceled and that it would

then return the funds to the landowners. BIA had no authority to make

these deposits. As of December 1996, the balance in two such special

accounts was about $103,000.

Conclusions The project’s idle acreage, past due assessments, and insufficient

collections have contributed to, but are not the main cause of, the

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project’s deteriorated condition. Even if all of the past due assessments

were collected, they would constitute only a small fraction of the

estimated $100 million to $200 million needed to repair the project. The

Department of the Interior’s Inspector General has already recommended,

in its 1995 report, that BIA develop appropriate assessment rates, bill

annual assessment charges, and enforce debt collection procedures.

Implementing the Inspector General’s recommendations can go a long way

toward correcting the project’s problems; however, our work disclosed

additional problems. The appraised rental values for idle trust land, which

do not recognize the costs of rehabilitation, pose an obstacle to leasing

and discourage the economic activity that is ultimately necessary to

support the project. The project can no longer afford to assess operation

and maintenance charges on land that is physically incapable of producing

crops and then cancel the unpaid assessments as has been done seven

times in the past. Removing this land from the project’s assessable acreage

is an essential step in developing appropriate assessment rates.

Recommendations To facilitate the leasing of idle trust land, we recommend that the

Secretary of the Interior direct the Assistant Secretary for Indian Affairs to

develop a process that estimates the fair market rental value for the idle

land, taking into account the cost of the rehabilitation required to bring the

land back into productive use.

To ensure that the costs of operating and maintaining the project are

assessed against acreage that is physically capable of producing crops, we

recommend that the Secretary of the Interior direct the Assistant Secretary

for Indian Affairs to remove land that is incapable of producing crops from

the project’s assessable acreage.

We also recommend that the Secretary of the Interior direct the Assistant

Secretary for Indian Affairs to apply the past due assessments collected

through land sales to the project as required by law and to liquidate the

special accounts.

Agency Comments

and Our Evaluation

We provided copies of a draft of this report to BIA for its review and

comment. We met with BIA officials, including the Deputy Commissioner

for Indian Affairs, and other Department of the Interior officials, who

agreed with the report’s recommendations. However, they said that the

draft report did not acknowledge BIA’s progress in implementing the

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Inspector General’s recommendations. They also provided some minor

clarifications, which we incorporated into the report where appropriate.

We agree that BIA has begun implementing a number of corrective actions

to address the Inspector General’s recommendations and other

management weaknesses at Indian irrigation projects. However, fully

implementing these corrective actions will be a multiyear effort, and the

agency’s efforts have not yet resulted in any significant changes in the

project’s management. BIA has worked hard over the past year to obtain

current information on landownership and addresses for the project’s

billing system, but bills were not mailed to Indian landowners with idle

trust land for the 1997 irrigation season. BIA plans to mail bills to all of the

project’s landowners for the 1998 irrigation season. BIA still does not plan

to collect the $7.3 million in past due assessments. The task force

implementing the Inspector General’s recommendations plans to

recommend that all of the past due assessments be canceled either

because they are uncollectible or because trying to collect them would not

be cost-effective.

We conducted our review from October 1996 through April 1997 in

accordance with generally accepted government auditing standards. We

did not independently verify the data BIA provided on the project’s idle

acreage and past due assessments. A detailed discussion of our scope and

methodology is contained in appendix V.

We are sending copies of this report to the appropriate congressional

committees, the Secretary of the Interior, the Assistant Secretary for

Indian Affairs, and other interested parties. We will also make copies

available to others upon request.

Please call me at (202) 512-3841 if you or your staff have any questions

about this report. Major contributors to this report are listed in appendix

VI.

Barry T. Hill

Associate Director, Energy,

 Resources, and Science Issues

Page 13 GAO/RCED-97-124 Wapato Irrigation Project
Contents

Letter 1

Appendix I 

Map of the Wapato

Irrigation Project

16

Appendix II 

Organization Chart for

BIA’s Portland Area

17

Appendix III 

Cumulative Interest

Earned Versus

Cumulative Past Due

Operation and

Maintenance

Assessments

18

Appendix IV 

Cancellation Actions

for the Wapato

Irrigation Project

19

Cancellation Actions for Indians 19

Cancellation and Deferment Actions for Non-Indians 20

Appendix V 

Objectives, Scope,

and Methodology

22

Appendix VI 

Major Contributors to

This Report

24

Tables Table 1: Past Due Assessments at the Project Through Fiscal Year

1996

8

Page 14 GAO/RCED-97-124 Wapato Irrigation Project
Contents

Table IV.1: Cancellation Actions for Indians 19

Table IV.2: Cancellation and Deferment Actions for Non-Indians 21

Abbreviations

BIA Bureau of Indian Affairs

GAO General Accounting Office

Page 15 GAO/RCED-97-124 Wapato Irrigation Project
Appendix I 

Map of the Wapato Irrigation Project

Wapato - Satus Unit

Toppenish -

Simcoe Unit

Ahtanum Unit

Satus

No. 1

Satus

No. 3

Satus

No. 2

Toppenish Creek

Ahtanum Creek

Yakima River

Simcoe Creek

South Fork

Yakama

Indian

Reservation

Wapato

Irrigation

Project

Toppenish Creek

Simcoe Creek

Toppenish

Wapato BIA Yakama

Agency Office

BIA Wapato

Irrigation Project Office

Washington State

Satus Creek

Source: GAO’s adaptation of a map provided by the Bureau of Indian Affairs (BIA).

Page 16 GAO/RCED-97-124 Wapato Irrigation Project
Appendix II 

Organization Chart for BIA’s Portland Area

Office of the Project Administrator

Office of the Administrative Officer

Branch of Irrigation Operation

Branch of Irrigation Maintenance 

Services

Portland Area Office -

Office of the Area Director

Division of Administration and

 Human Services

Administration Team

Administration (Financial) Team

Tribal and Area Support Team

Road Construction and

 Maintenance Team

Division of Trust and Ecosystem

 Management Services

Resources Management Team

Resources Regulatory and

 Compliance Team

Real Estate Service Team

11 other agencies and

 2 field stations

Office of the Superintendent

Branch of Administration

Branch of Forestry Administration Section

Branch of Facility Management

Branch of Land Services

Branch of Real Estate Services

Branch of Reservation Programs

Branch of Roads

Branch of Social Services

Wapato Irrigation Project Yakama Agency

Note: Bolding added to emphasize offices discussed in the report.

Source: GAO’s adaptation based on information provided by BIA.

Page 17 GAO/RCED-97-124 Wapato Irrigation Project
Appendix III 

Cumulative Interest Earned Versus

Cumulative Past Due Operation and

Maintenance Assessments

1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996

0

1

2

3

4

5

6

7

Years

Dollars in millions

Cumulative interest earned

Cumulative past due operation and maintenance assessments

a b a a c

aBIA’s estimate of the interest earned by the project is based on the total interest earned for all

Indian irrigation projects.

bThe $649,327 in cumulative past due assessments for 1926 through 1984 is not included in this

graph. The Congress annually appropriated funds through 1984 to cover uncollected

assessments at the project.

cP.L. 102-497, section 7, authorized the Secretary of the Interior to spend up to $1.3 million to

operate and maintain the project from funds originally collected to repay the project’s

construction costs. This $1.3 million emergency operation and maintenance authorization is not

included in the graph.

Source: BIA.

Page 18 GAO/RCED-97-124 Wapato Irrigation Project
Appendix IV 

Cancellation Actions for the Wapato

Irrigation Project

Portions of the project’s past due assessments have been canceled seven

times. Table IV.1 shows the four cancellation orders for past due

assessments on Indian lands that were issued under a 1932 act. Table IV.2

shows the three cancellation orders for past due assessments on

non-Indian lands that were issued under a 1936 act.

Cancellation Actions

for Indians

An act of July 1, 1932 (25 U.S.C. 386a), referred to as the Leavitt Act,

provided the authority for canceling past due operation and maintenance

assessments owed by Indians. Specifically, the act authorized and directed

the Secretary of the Interior to “adjust or eliminate reimbursable charges

of the Government of the United States existing as debts against individual

Indians or tribes of Indians in such a way as shall be equitable and just in

consideration of all the circumstances under which such charges were

made. . . .” The act also canceled construction charges that had been

assessed in accordance with the provisions of BIA’s fiscal year 1921

appropriations act of February 14, 1920 (41 Stat. 409), and deferred all

future construction charges as long as the land remained Indian-owned.

The Secretary was required to report actions taken under the act to the

Congress. The actions were not effective until either they were approved

by the Congress or 60 legislative days had elapsed. Table IV.1 summarizes

the four debt cancellation orders for past due assessments on Indian lands

at the project under the 1932 act.

Table IV.1: Cancellation Actions for

Indians

Date of cancellation order

Operation and

maintenance

assessments canceled

Acres removed from the

project’s assessable

acreage

January 4, 1957 $54,796 210

January 14, 1957 4,062 99

June 29, 1961 83,111 678

June 27, 1972 188,644 0

Total $330,613 987

Source: National Archives and the Department of the Interior.

Table IV.1 does not show any cancellations for construction charges or

penalties. The 1932 act permanently deferred the assessment of all future

construction charges on Indian-owned land as long as the land remained

Indian-owned. The act also canceled past uncollected construction

charges against Indian-owned lands. Therefore, no further forgiveness of

construction charges was necessary for Indian-owned lands. Up through

Page 19 GAO/RCED-97-124 Wapato Irrigation Project
Appendix IV 

Cancellation Actions for the Wapato

Irrigation Project

1991, BIA did not assess penalties on debts owed by Indians at the project.

Although BIA subsequently assessed penalties retroactively on uncollected

Indian assessments, all of the assessments shown in table IV.1 were

canceled before BIA started assessing penalties against Indian landowners.

Cancellation and

Deferment Actions for

Non-Indians

An act of June 22, 1936 (25 U.S.C. 389, 389a-e), authorized and directed the

Secretary of the Interior to investigate whether non-Indian landowners

were

“unable to pay irrigation charges, including construction, maintenance, and operating

charges, because of inability to operate such lands profitably by reason of lack of fertility

of the soil, inadequacy of water supply, defects of irrigation works, or for any other causes.

Where the Secretary finds that said landowners are unable to make payment due to the

existence of such causes, he may adjust, defer, or cancel such charges, in whole or in part,

as the facts and conditions warrant.”

The act authorized the Secretary to enter into repayment contracts for

deferred debts, under which payments could be made over 10 years. Table

IV.2 summarizes the three cancellation orders for past due assessments on

non-Indian lands at the project under the 1936 act.

Page 20 GAO/RCED-97-124 Wapato Irrigation Project
Appendix IV 

Cancellation Actions for the Wapato

Irrigation Project

Table IV.2: Cancellation and Deferment

Actions for Non-Indians Year of cancellation order

1942a 1958b 1962c Total

Debts canceled

Construction $8,673 $1,071 $159 $9,903

Operation and maintenance 4,741 21,023 2,500 28,263

Penalties 1,959 13,606 1,836 17,401

Total $15,372 $35,701 $4,495 $55,568

Debts deferred

Construction $0 $11,937 $5,603 $17,540

Operation and maintenance 0 1,827 3,432 5,260

Penalties 0 88 1,321 1,409

Total $0 $13,852 $10,356 $24,208

Acres removed from the

project’s assessable

acreage 386 233 78 697

Note: Totals may not add because of rounding.

aCancellation order dated Sept. 9, 1942. Approved Dec. 24, 1942, by 56 Stat. 1081.

bCancellation order dated May 14, 1958. Approved Sept. 16, 1959, by P.L. 86-281 (73 Stat. 564).

cCancellation order dated Sept. 12, 1962. Approved Oct. 28, 1963, by P.L. 88-159 (77 Stat. 278).

Source: National Archives.

Page 21 GAO/RCED-97-124 Wapato Irrigation Project
Appendix V 

Objectives, Scope, and Methodology

Senate Report 104-319, which accompanied the fiscal year 1997

appropriations bill for the Department of the Interior and related agencies,

directed the General Accounting Office to conduct an audit and provide

recommendations on BIA’s operation and management of the Wapato

Irrigation Project. Subsequently, through discussions with various

congressional offices, we agreed to determine (1) the key reasons for the

project’s idle acreage and the steps that can be taken to return these lands

to production, (2) the principal reasons why operation and maintenance

assessments for the project are past due, and (3) the obstacles that BIA will

face in trying to collect the past due operation and maintenance

assessments.

We conducted audit work primarily at BIA’s Portland Area Office, Yakama

Agency Office, and Wapato Irrigation Project Office. At each location, we

interviewed responsible managers and staff and reviewed studies, reports,

correspondence, and data related to the three objectives of this report. We

toured the project with project officials and BIA soil scientists to observe

some of the project’s idle acreage and facilities. We also contacted officials

from BIA’s Central Office, the Yakama Indian Nation, the Bureau of

Reclamation, the Department of the Interior’s Office of Inspector General

and Office of the Solicitor, and the task force established by BIA to

implement the Inspector General’s recommendations—the Power and

Irrigation Reconciliation Team.

To determine the extent of the project’s idle acreage, we obtained BIA

reports estimating the number of idle acres. We relied on estimates of the

project’s idle acreage provided by BIA officials and did not independently

verify the number of idle acres. To determine the reasons for the project’s

idle acreage, we interviewed officials at BIA’s Portland Area Office, Yakama

Agency Office, and Wapato Irrigation Project Office, as well as

representatives of the Yakama Indian Nation. Because BIA is not involved

in managing or leasing nontrust land within the project, limited

information was available on the number of idle nontrust acres and the

reasons for this idle acreage. We also reviewed reports on Indian irrigation

projects issued by the Department of the Interior’s Office of Inspector

General and by BIA. We reviewed recommendations from these prior

reports and evaluated the steps that have been taken or proposed to return

the land to productive use.

To determine the principal reasons why operation and maintenance

assessments for the project are past due, we examined BIA’s policies and

procedures for determining operation and maintenance assessment rates

Page 22 GAO/RCED-97-124 Wapato Irrigation Project
Appendix V 

Objectives, Scope, and Methodology

and for billing and collecting assessments from landowners. We obtained a

summary report of the past due operation and maintenance assessments

from BIA’s Irrigation and Power Liaison and Compliance Section, located in

Albuquerque, New Mexico, and asked agency officials to describe why the

unpaid balance had increased to $7.3 million, excluding interest, penalties,

and fees. In addition, we interviewed the Western Regional Audit

Supervisor for the Department of the Interior’s Office of Inspector

General, located in Sacramento, California, and reviewed audit

workpapers from the Inspector General’s prior reviews of the project. We

relied on the information provided by BIA and did not independently verify

the accuracy of any of the accounting data.

To obtain information on why the Congress stopped appropriating funds

to cover the uncollected assessments for the project, we reviewed

congressional documents for the Department of the Interior’s fiscal year

1984 appropriation. We also reviewed the budget justifications that BIA

submitted to the Congress from fiscal year 1983 through fiscal year 1987.

We did not attempt to determine whether each year’s appropriation was

sufficient to cover that year’s collection shortfall. We obtained information

on the interest earned from the project’s deposits of operation and

maintenance collections from BIA’s Irrigation and Power Liaison and

Compliance Section.

To determine the obstacles that BIA will face in trying to collect the past

due operation and maintenance assessments, we reviewed laws,

regulations, and opinions of the Department of the Interior’s Office of the

Solicitor. We also examined some steps taken to collect past due

assessments and the extent to which these steps have succeeded. In

addition, we discussed debt collection issues with the Department of the

Interior’s Office of the Solicitor in Portland, Oregon, and our own Office of

the General Counsel. We reviewed project files and congressional files at

the National Archives to obtain detailed information on the prior actions

taken to cancel past due assessments for the project.

Page 23 GAO/RCED-97-124 Wapato Irrigation Project
Appendix VI 

Major Contributors to This Report

Energy, Resources,

and Science Issue

Area

Paul Grace

James Hunt

Sterling Leibenguth

Jeffery Malcolm

Office of the General

Counsel

Alan R. Kasdan

(141005) Page 24 GAO/RCED-97-124 Wapato Irrigation Project
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