Tribal lands vary dramatically in size, demographics, and location. They range in size from the Navajo Nation, which consists of about 24,000 square miles, to some tribal land areas in California comprising less than 1 square mile. Over 176,000 American Indians live on the Navajo reservation, while other tribal lands have fewer than 50 Indian residents. Some Indian reservations have a mixture of Indian and non-Indian residents. In addition, most tribal lands are rural or remote, although some are near metropolitan areas. The federal government has consistently recognized Indian tribes as distinct, independent political communities with inherent powers of a limited sovereignty which has never been extinguished. To help manage tribal affairs, tribes have formed governments or subsidiaries of tribal governments including schools, housing, health, and other types of corporations. The United States has a trust responsibility to recognized Indian tribes and maintains a government-to-government relationship with those tribes. As of October 2010, there were 565 federally recognized tribes—340 in the continental United States and 225 in Alaska. According to tribal officials and government agencies, conditions on and around tribal lands—including the lack of technology infrastructure such as telecommunications lines—generally make successful economic development more difficult. In addition, a 1999 Economic Development Administration (EDA) study that assessed the state of infrastructure in American Indian communities found that these communities also had other disadvantages that made successful business development more difficult. This study found that the high cost and small markets associated with investment in Indian communities continued to deter widespread private sector involvement. To help address the needs of Indian tribes, various federal agencies provide assistance, including economic development assistance. The Bureau of Indian Affairs (BIA) in the Department of the Interior is charged with the responsibility of implementing federal Indian policy and administering the federal trust responsibility for about 2 million American Indians and Alaska Natives. BIA assists tribes in various ways, including providing for social services, developing and maintaining infrastructure, and providing education services. BIA also attempts to help tribes develop economically by, for example, providing resources to administer tribal revolving loan programs and guaranteed loan programs to improve access to capital in tribal communities. In addition to the support provided by BIA, other agencies with significant programs for tribes include the Department of Health and Human Services, which provides funding for the Head Start Program and the Indian Health Service; the Department of Housing and Urban Development, which provides support for community development and housing-related projects; and the Department of Agriculture, which provides support for services pertaining to food distribution, nutrition programs, and rural economic development. 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. Some of the issues that we have identified during our past work include (1) accruing land in trust for tribes and individual tribal members, (2) tribal environmental standards, (3) Indian tax provisions, (4) obtaining rights-of-way, and (5) certain legal issues that arise from the unique legal status of tribes. In addition to these five issues there may be others, such as access to financing, which may also hinder economic activity on Indian reservations. The five broad categories should only be considered as illustrative of some of the unique circumstances that exist in Indian country, which tribes or other business entities will need to take into account when they consider undertaking economic activities on tribal lands. Having a land base is essential for many tribal economic development activities such as agriculture, grazing, timber, energy development, and gaming. Since the early days of colonization, Indian lands have diminished significantly, in large part because of federal policy. By 1886, Indian lands had been reduced to about 140 million acres, largely on reservations west of the Mississippi River. Federal policy encouraging assimilation in the late 1800s and early 1900s further reduced Indian lands by two-thirds, to about 49 million acres by 1934. In 1934, however, the enactment of the Indian Reorganization Act changed the government’s Indian policy to encourage tribal self-governance. Section 5 of the act provided the Secretary of the Interior with discretionary authority to take land in trust on behalf of Indian tribes or their members. Trust status means that the federal government holds title to the land in trust for tribes or individual Indians. Once land is taken in trust it is no longer subject to state and local property taxes and zoning ordinances. In 1980, Interior established a regulatory process intended to provide a uniform approach for taking land in trust. Under the regulations, tribes or individual Indians who purchase or own property on which they pay property taxes can submit a written request to the Secretary of the Interior to have the land taken in trust; if approved, the ownership status of the property would be converted from taxable status to nontaxable Indian trust status. Some state and local governments support the federal government’s taking additional land in trust for tribes or individual Indians, while others strongly oppose it because of concerns about the impacts on their tax base and jurisdictional control. Since 1934, the total acreage held in trust by the federal government for the benefit of tribes and their members has increased from about 49 million to about 54 million acres. We reported in July 2006 that BIA generally followed its regulations for processing land in trust applications from tribes and individual Indians to take land into trust, but had no deadlines for making decisions on these applications. BIA generally responded to our recommendations to improve the processing of such applications, but this issue continues to create uncertainty in Indian country, in part, because of a February 24, 2009, Supreme Court decision and ongoing litigation. The Supreme Court held that the Indian Reorganization Act only authorizes the Secretary of the Interior to take land into trust for a tribe or its members if that tribe was under federal jurisdiction when the law was enacted in 1934. The court did not define what constituted being under federal jurisdiction but did find that a particular tribe, which was not federally recognized until 1983, was not under federal jurisdiction in 1934. It is not clear how many tribes or pending land in trust applications will be affected by this decision, but the decision raises a question about the Secretary’s authority to take land in trust for the 50 tribes that have been newly recognized since 1960 and their members. The Secretary’s decisions to take land in trust for two of these tribes—the Match-e-be-nash-she-wish Band of Potawatomi Indians of Michigan and the Cowlitz Indian tribe of Washington—have been challenged in court. Having or securing the land does not lead to economic development if that land sits idle. In the past we have reported on concerns about idle Indian lands and BIA’s process for leasing Indian lands, but we have not done any recent work on these issues. 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 one hand, tribes want to be treated as states and assume program responsibilities to protect their environmental resources because they are sovereign governments and have specific knowledge of their environmental needs. Tribes also generally believe that TAS status and program authority are important steps in addressing the potential impacts of economic development affecting their land. 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. In October 2005, we reported that since 1986, when Congress amended the first of the three environmental laws to allow TAS status for tribes, a number of disagreements between tribes, states, and municipalities had arisen, over land boundaries, environmental standards, and other issues. The disagreements had been addressed in various ways, including litigation, collaborative efforts, and changes to federal laws. For example, in City of Albuquerque v. Browner, the city challenged EPA’s approval of the nearby Pueblo of Isleta tribe’s water quality standards, which are more stringent than those of New Mexico. EPA’s approval was upheld. In other disagreements, some tribes and states have addressed the issues more collaboratively. For example, the Navajo Nation and the Arizona Department of Environmental Quality entered into a cooperative agreement that, among other things, recognizes the jurisdiction of the Navajo Nation within its reservation and establishes a plan to share the cost of pilot projects. Regarding the use of federal legislation to address disagreements, a federal statute enacted in August 2005, requires Indian tribes in Oklahoma to enter into a cooperative agreement with the state before EPA can approve a tribe’s TAS request. At the time of our October 2005 report, the Pawnee Nation was the only Oklahoma tribe that had been awarded TAS status to set its own water quality standards, and we have not conducted any more recent work on this issue. The tax code has also been used to promote economic activity in Indian country. 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. In September 2006, we reported on Indian tribal governments’ use of tax- exempt bonds under section 7871(c) of the Internal Revenue Code. Section 7871(c), which was originally enacted in 1983, generally limits the use of tax-exempt bonds by Indian tribal governments to the financing of certain activities that constitute “essential government functions.” In 1987, section 7871(e) was added to the code to limit the essential governmental functions standard further to provide that an essential governmental function does not include any function which is not customarily performed by state and local governments with general taxing powers. To date the Internal Revenue Service has not issued regulations defining essential government function.