Background Indian Health Service IHS was established within the Public Health Service in 1955 in order to meet federal treaty obligations to provide health services to members of federally recognized AI/AN tribes primarily in rural areas on or near reservations. IHS oversees its provision of health care services through a decentralized system of 12 area offices, which are led by area directors and located in 12 geographic areas. IHS’s headquarters office is responsible for setting national health care policy, ensuring the delivery of quality comprehensive health services, and advocating for the health needs and concerns of AI/AN people. The area offices are responsible for monitoring federally operated IHS facilities’ operations and finances, and providing guidance and technical assistance. IHS’s 12 area offices oversee 168 service units which provide care at the local level through a total of 742 federally operated and tribally operated hospitals, health centers, and other health facilities. The types of services offered by these facilities vary, but most commonly include primary care and emergency care, as well as some ancillary and specialty services. Table 1 displays the number of federally operated and tribally operated facilities as of February 2019. PRC Program If federally operated or tribally operated facilities are unable to provide needed care, they may contract for health services from private providers through the PRC program. Patients must meet certain eligibility and administrative requirements in order to qualify for this care—including having exhausted all other health care resources available to them and living on a federally recognized Indian reservation or within a designated PRC delivery area. The PRC program is funded through the annual appropriations process and administered at the local level by individual PRC programs that are often affiliated with local facilities. Individual PRC programs may be federally or tribally administered, and as of fiscal year 2018, IHS administered 39 percent of PRC appropriations, and tribes administered the remaining 61 percent. PRC funding is limited and has traditionally been reserved for the most critical cases. IHS has established five medical priority levels. Funds permitting, federally administered PRC programs first pay for all of the highest priority services, and then all or some of the lower priority services. IHS’s five PRC medical priority levels are 1. Emergent and acutely urgent care services, which include treatment for threats to life, limb, or senses; 2. Preventive care services, which include prenatal care and 3. Primary and secondary care services, which include scheduled ambulatory services for nonemergent conditions, and specialty consultations; 4. Chronic tertiary and extended care services, which include rehabilitation care, skilled nursing facility care, and organ transplants; and 5. Excluded services, which include cosmetic and experimental procedures. PPACA Health Coverage Expansion Provisions for AI/AN Beginning in 2014, PPACA allowed states to expand Medicaid eligibility to non-elderly, non-pregnant adults who are not eligible for Medicare and whose income does not exceed 133 percent of the federal poverty level. As of September 2018, there were 32 “expansion states”—those states including the District of Columbia that chose to expand Medicaid eligibility to this additional adult population—and 19 “non-expansion states”—those that had not expanded Medicaid eligibility. PPACA also required the establishment of health insurance exchanges in 2014—marketplaces where individuals may compare and select among health insurance plans offered by participating private insurers. PPACA included a number of provisions that reduced these plans’ costs— including premiums and cost-sharing, such as deductibles and copayments—for eligible enrollees, including certain AI/AN. Health Insurance Coverage and Third- Party Collections at Federally Operated IHS Facilities Increased from 2013 to 2018; Tribal Facility Officials Also Reported Increases IHS Data Show Increase in Percent of Patients with Health Insurance Coverage at Federally Operated IHS Facilities from 2013 through 2018 Our analysis of IHS data shows that from fiscal year 2013 through fiscal year 2018, the percent of patients at 73 federally operated IHS hospitals and health centers who reported having health insurance coverage increased an average of 14 percentage points, from 64 percent in fiscal year 2013 to 78 percent in fiscal year 2018. The majority of coverage gains occurred in fiscal years 2014 through 2016 (see fig. 1). Patients at federally operated IHS facilities reported obtaining health insurance coverage from several sources. The largest increase in coverage occurred among those reporting Medicaid coverage. On average, 41 percent of IHS patients in fiscal year 2013 reported they had coverage through Medicaid at some point during the year; this number increased to 53 percent in fiscal year 2018. In comparison, the percent of patients at each facility who reported having Medicare and the percent who reported having private insurance at some point during the year each increased an average of two percentage points from fiscal years 2013 to 2018. (See fig. 2.) While the average percent of patients reporting health care coverage increased across all federally operated IHS facilities, our analysis of IHS data showed substantial variation in the magnitude of these increases. Specifically, from fiscal year 2013 through fiscal year 2018, increases at each of the 73 facilities ranged from a low of 2 to a high of 31 percentage points. Forty-four federally operated IHS facilities experienced an increase in the percent of patients with coverage over this time period of more than 10 percentage points (see fig. 3). Our analysis of IHS data shows that federally operated IHS facilities in states that expanded Medicaid had larger increases in health insurance coverage compared with such facilities in states that had not expanded Medicaid. Specifically, federally operated IHS facilities in Medicaid expansion states experienced an average 17 percentage point increase in patients reporting any form of health coverage, compared with an average 8 percentage point increase at federally operated IHS facilities in states that did not expand Medicaid. However, these increases in coverage were not spread evenly among the facilities. (See fig. 4.) IHS officials we interviewed also reported that a variety of factors in addition to Medicaid expansion likely affected the number of patients at federally operated IHS facilities who reported having health insurance coverage. Specifically, officials we interviewed at all of the 11 selected federally operated IHS facilities cited efforts at their facilities that helped increase coverage, such as increasing the number of onsite patient benefits coordinators to help enroll patients in all forms of health coverage and enhancing efforts to ensure that all patients were screened for coverage. For example, one federally operated IHS facility reported renovating its office to, among other things, move the patient benefits coordinator near the waiting room, which allowed patients to be immediately screened after walking in for an appointment. Officials we interviewed at nearly all of the selected federally operated IHS facilities also noted that their outreach and education efforts about the importance of health insurance coverage may have helped to increase enrollment. Officials we interviewed at all of the selected federally operated IHS facilities said they were engaged in such activities which included broadcasting public service announcements, posting newspaper advertisements, and promoting insurance during community events. Officials from most of the 12 IHS area offices also reported collaborating with tribes to conduct outreach and education to enhance enrollment. Officials at many IHS area offices also noted that external factors may have also played a role in increasing coverage levels, such as improvements in the local economy, which officials said led to increases in the number of patients with private health insurance. Additionally, entities outside of IHS also implemented initiatives to increase coverage for patients at federally operated IHS facilities. For example, IHS officials stated that some patients obtained health insurance through the health insurance exchanges, and in some cases, the tribe paid all premiums, coinsurance, and deductibles for these plans. In addition, a number of area Indian health boards worked together to develop a train-the-trainer program to disseminate information and resources to encourage enrollment and share information on the benefits of having health coverage. Total Third-Party Collections at Federally Operated IHS Facilities Increased 51 Percent from Fiscal Years 2013 through 2018 Third-party collections across all federally operated IHS facilities increased 51 percent from fiscal year 2013 through fiscal year 2018, according to our analysis of IHS data. Specifically, total third-party collections increased from $708 million in fiscal year 2013 to about $1.07 billion in fiscal year 2018 while the number of patients seeking care remained constant. Medicaid collections accounted for 65 percent of the total $360 million increase, though collections from Medicare, private insurance, and Veterans Affairs also increased during this period. For example, Medicaid collections grew 47 percent, from $496 million in fiscal year 2013 to $729 million in fiscal year 2018. (See fig. 5.) While third-party collections at federally operated IHS facilities collectively increased from fiscal year 2013 through 2018, there was significant variation in changes for individual facilities. IHS officials we interviewed noted several reasons why third-party collections may vary over time and by location, including the size of the facility and any changes in the number of providers, patients, or business office staff that process billing and collections; the ability to collect payment from certain tribal health insurance, which may opt to not pay for services provided to enrolled members; and the number of patients enrolled in Medicaid managed care plans, which may identify IHS facilities as out-of-network providers and not pay for covered services. IHS and federally operated facility officials we interviewed noted that gains in health insurance coverage during this time period contributed to increases in collections. In addition, officials we interviewed from most of the 12 area offices and 11 selected federally operated IHS facilities described steps they took to enhance collections. More specifically, officials from seven area offices discussed initiating steps to improve billing and collections functions for federally operated IHS facilities in their area; at one area office this involved creating a new area-level position focused on revenue enhancement at federally operated IHS facilities. Additionally, officials we interviewed at six federally operated IHS facilities identified steps they took to enhance the accuracy and efficiency of facilities’ collections, noting efforts such as improving training related to coding and billing. For example, officials at one of these facilities described convening a team to review why all claims related to a specific service were being rejected. The team then instituted changes to their billing procedures that resulted in the facility collecting payments for these services. Officials from Selected Tribally Operated Facilities and Tribal Organizations Described Increases in Health Insurance Coverage and Third-Party Collections at Some Tribal Facilities Officials we interviewed at selected tribally operated facilities and tribal organizations—including national tribal organizations and area Indian health boards—described increases in health insurance coverage and collections at some tribally operated facilities that occurred from 2013 through 2018. Specifically, some tribal organization officials reported increases in coverage at facilities located in states that had expanded their Medicaid programs, compared with those that had not. For example, officials at one tribally operated facility noted that the percent of their patients with health coverage increased by 10 percentage points from 2013 to 2018. Similar to federally operated IHS facilities, officials we interviewed from some tribally operated facilities said they focused on screening patients for coverage at the time of service, including by increasing the number of patient benefits coordinators and always having staff available to help enroll patients in coverage. These officials also noted that they conducted outreach and enrollment activities to inform patients of the importance of having coverage and benefitting from outreach and education activities conducted directly by local tribes, including through messages that emphasized the importance of coverage for the tribe and tribally operated facility. Officials from a national tribal organization told us that one tribally operated facility placed stickers on all equipment purchased with third- party collections as a way to educate patients about the benefits of having health insurance coverage and to encourage further enrollment in coverage. Officials we interviewed at selected tribally operated facilities and national tribal organizations also described increases in third-party collections that occurred from 2013 through 2018 at many tribally operated facilities— particularly those located in Medicaid expansion states. For example, officials from one tribally operated facility told us that they anticipated that their third-party collections for 2018 would be more than twice the amount they collected for 2013. Similar to federally operated IHS facilities, officials we interviewed from some tribally operated facilities noted that their facilities had enhanced collections by making improvements to their billing processes and taking steps to increase patient volume. For example, officials at one tribally operated facility said they recently began allowing non-tribal members to receive care at their facility—an option available to tribally operated facilities but not to federally operated IHS facilities—as a way to increase third-party collections and bolster the facility’s long-term sustainability. Some officials also noted that not all tribally operated facilities experienced increases in collections, in part because of decreases or limitations in the number of providers, patients, or business office staff that process billing and collections. Similar to federally operated IHS facilities, officials from tribally operated facilities noted that the enrollment of patients in Medicaid managed care plans also reduced their ability to collect payment for covered services because these plans often identify the facilities as out-of-network providers and therefore do not pay for covered services provided onsite. Increases in Coverage and Collections Reportedly Helped Selected Federally Operated and Tribally Operated Facilities to Continue Operations and Expand Services Officials we interviewed from selected federally operated and tribally operated facilities stated that increases in coverage and third-party collections helped them to (1) continue their facilities’ operations, (2) expand the services they offer onsite at their facilities, and (3) expand the services they cover offsite through IHS’s PRC program. Continued Operations Officials we interviewed from all 17 selected federally operated and tribally operated facilities noted that they used increased third-party collections to fund their continued operations. Even as officials we interviewed from nearly all of the 11 selected federally operated IHS facilities reported that their facilities’ third-party collections had grown from fiscal years 2013 to 2018, officials from most of these facilities also said they relied more heavily on these collections to support their continued operations. Officials we interviewed from all of the IHS area offices told us that third-party collections provide a vital source of funding for federally operated IHS facilities in their area. These collections allowed them to maintain a level of operations that would otherwise be challenging, for reasons such as increasing costs of payroll and of maintaining an aging infrastructure. In addition, officials we interviewed from most of the selected federally operated IHS facilities reported using third-party collections to fund a substantial and increasing portion of their payroll costs. Officials at many of the IHS area offices and most of the selected federally operated IHS facilities we interviewed also reported using third-party collections to ensure that their facility met all required standards, including those required for ongoing accreditation, or to undertake any needed maintenance such as by repairing roofs and heating systems. Some of these officials also reported using third-party collections to repair or replace medical equipment that was broken or had exceeded its intended lifespan. Table 2 displays examples of how selected federally operated and tribally operated facilities reported using third-party collections. Expanded Services Onsite Officials we interviewed from most of the 17 selected federally operated and tribally operated facilities told us they used increased third-party collections to expand the volume or scope of services they offered onsite as a way to better meet patients’ medical needs. With respect to increasing the volume of services provided, officials at most of these facilities said they added providers and medical equipment to provide patients with more timely access to services. In one example, officials from a federally operated IHS hospital said they added about 30 additional nurses from 2013 to 2018 as a result of increased third-party collections. As a result of increases in the number of providers at their facilities, officials we interviewed from several federally operated IHS facilities said they were able to schedule appointments for patients more quickly, which reduced wait times for an appointment—including two facilities that reported being able to newly offer same-day appointments. Officials from facilities that expanded the scope of services provided said they did so by adding new specialties, such as behavioral health and dentistry, purchasing new medical equipment such as hospital beds, dental chairs, and magnetic resonance imaging machines, and funding health promotion and education activities such as those related to diabetes education. (See fig. 6.) To support efforts to expand services and bolster their sustainability, officials from most of the 17 federally operated and tribally operated facilities said they used third-party collections to offer more competitive salaries and bonuses for providers. In addition, officials from a few of the 12 IHS area offices told us that federally operated facilities in their area used third-party collections to fund projects to construct nearby housing for providers. In another example, officials from a national tribal organization noted that the use of third-party collections to enhance provider salaries at one facility led to a decrease in provider turnover from about 40 percent prior to 2014 to 14 percent in 2018. In addition, officials from many of the IHS area offices told us that some federally operated facilities in their area reported using third-party collections accumulated over multiple years to make investments in expanding their facilities to provide the space necessary to support these additional services. For example, according to IHS officials, one federally operated IHS facility reported using $7 million in third- party collections to fund an over 11,000 square foot expansion to house an expanded emergency room and a new urgent care clinic; two federally operated IHS facilities reported using third-party collections to purchase modular buildings to provide medical services such as audiology, behavioral health, and dental services; and one federally operated IHS facility reported saving third-party collections for six years to fund the construction of a new 23,000 square foot building to provide additional space for an increased volume of services, including dental, optometry and physical therapy services, and to pay for the new medical equipment to support these services (see fig. 7). Officials from some IHS area offices stated that the extent to which federally operated IHS facilities in their area invested in expanding onsite services largely depended on the level of facilities’ third-party collections. Specifically, facilities experiencing larger increases in collections, such as larger facilities or those located in Medicaid expansion states, were able to invest more heavily in an expansion of onsite services compared to those that had lower increases in collections, according to these officials. To identify their facilities’ needs, officials from federally operated and tribally operated facilities reported using a variety of approaches. For example, officials from three IHS area offices and one tribally operated facility said they analyzed PRC data to identify the services that patients were obtaining through that program, and worked to bring those services onsite. Officials from two federally operated IHS facilities also noted that they incorporated local tribal input as they identified local needs and projects to fund. For example, these officials told us that their facilities were in the process of adding new specialty services onsite, including acupuncture, chiropractor, and eye clinic services, at the request of their local tribes. The recent growth in third-party collections has made it possible for many federally operated IHS facilities to consider funding a range of projects, and IHS officials said they relied on established procedures to fund these projects. According to IHS officials, local facility officials draft annual spending proposals to identify the resources, including third-party collections, that they would like to use to address their facilities’ needs. These proposals are provided to each facility’s governing board for review; the governing board is comprised of area office and facility officials whose top priority is maintaining accreditation and ensuring patient safety at each facility, according to IHS officials. Once these basic needs are met, IHS officials told us that facilities may begin to identify and fund projects to expand access to health services. Expanding Services Offsite Officials from IHS, as well as some of the 17 selected federally operated and tribally operated facilities, told us that increased coverage and collections allowed for an expansion in the complexity of services provided offsite through the PRC program. Specifically, officials reported that an increase in the percent of patients with health insurance, coupled with facilities’ enhanced onsite services, has led PRC programs to be able to expand the level of care that they can offer. For example, they stated that increases in the health insurance coverage of patients have led to a smaller percent of patients needing to access PRC, since patients may use their coverage to obtain needed services directly from other private providers. In addition, an expansion of available services onsite at federally operated and tribally operated facilities resulting from increased collections reduced the need for some patients to use PRC. From 2013 through 2018, most IHS-administered PRC programs moved from covering only the most acute and emergent cases to funding nearly all types of care covered through the PRC program, according to our analysis of IHS data and interviews with agency officials. Specifically, IHS officials we interviewed told us that prior to 2014, most PRC programs administered by the agency were only able to fund care for the most acute and emergent cases—referred to as priority level 1. Our analysis of IHS data showed that these PRC programs were increasingly able to fund additional medical priority levels of care each year from fiscal year 2015— the first year that such data were available—through fiscal year 2018, with most IHS-administered programs funding care through priority level 4 in fiscal year 2018. (See fig. 8.) Officials we interviewed at some of the 17 selected federally operated and tribally operated facilities that had been able to both expand services onsite and offsite through PRC funds told us that these changes have made a large impact on patients’ health and quality of life. For example, officials at some federally operated IHS facilities reported that having more providers onsite has allowed them to offer patients more rapid access to care, and officials from some tribally operated facilities reported that an expansion of onsite services has allowed them to serve more patients. Officials at some of the selected federally operated and tribally operated facilities reported that an expansion of onsite services has also reduced the need for some patients to travel long distances to obtain diagnostic services and specialty care through the PRC program. In addition, officials from two IHS area offices noted that PRC has been able to pay for services such as patients’ long-awaited knee and hip replacements, which have enabled patients to return to normal activities of life and reduce their need for pain management. Agency Comments We provided a draft of this report for review and comment to the Secretary of Health and Human Services. The Department did not have any comments on the draft report. As agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies to the Secretary of the Department of Health and Human Services and other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov. If you or your staff have any questions about this report, please contact me at (202) 512-7114 or farbj@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix II. Appendix I: Estimated Health Insurance Coverage of the American Indian and Alaska Native Population, 2013 through 2017 In the years since the Patient Protection and Affordable Care Act (PPACA) authorized states to expand access to Medicaid and offer health insurance through the exchanges in 2014, the percent of American Indian and Alaska Native (AI/AN) in the general population with health insurance has increased. Specifically, according to an analysis of U.S. Census Bureau’s American Community Survey data, the percent of nonelderly AI/ANs with health insurance coverage increased from 70 percent in 2013 to 78 percent in 2017. (See fig. 9.) While the estimated percent of AI/AN nationwide reporting health insurance coverage increased from 2013 to 2017, these increases in coverage were not evenly distributed among the states, according to an analysis of U.S. Census Bureau’s American Community Survey data. The estimated percent of AI/AN reporting health insurance increased more in states that expanded Medicaid compared to those that did not. (See fig. 10.) Appendix II: GAO Contact and Staff Acknowledgments GAO Contact Staff Acknowledgments In addition to the contact named above, Kristi Peterson, Assistant Director; Patricia Roy, Analyst-in-Charge; Michelle Duren; and Lisa Rogers made key contributions to this report. Also contributing were Todd Anderson, Krister Friday, Ethiene Salgado-Rodriguez, and Emily Wilson Schwark. Related GAO Products Tribal Consultation: Additional Federal Actions Needed for Infrastructure Projects. GAO-19-22. Washington, D.C.: March 20, 2019. Indian Health Service: Spending Levels and Characteristics of IHS and Three Other Federal Health Care Programs. GAO-19-74R. Washington, D.C.: December 10, 2018. Indian Health Service: Considerations Related to Providing Advance Appropriation Authority. GAO-18-652. Washington, D.C.: September 13, 2018. Indian Health Service: Agency Faces Ongoing Challenges Filling Provider Vacancies. GAO-18-580. Washington, D.C.: August 15, 2018. High-Risk Series: Progress on Many High-Risk Areas, While Substantial Efforts Needed on Others. GAO-17-317. Washington, D.C.: February 15, 2017. Indian Health Service: Actions Needed to Improve Oversight of Quality of Care. GAO-17-181. Washington, D.C.: January 9, 2017. Indian Health Service: Actions Needed to Improve Oversight of Patient Wait Times. GAO-16-333. Washington, D.C.: March 29, 2016. Indian Health Service: Opportunities May Exist to Improve the Contract Health Services Program. GAO-14-57. Washington, D.C.: December 11, 2013. Indian Health Service: Most American Indians and Alaska Natives Potentially Eligible for Expanded Health Coverage, but Action Needed to Increase Enrollment. GAO-13-553. Washington, D.C.: September 5, 2013. Indian Health Service: Increased Oversight Needed to Ensure Accuracy of Data Used for Estimating Contract Health Service Need. GAO-11-767. Washington, D.C.: September 23, 2011. Indian Health Service: Updated Policies and Procedures and Increased Oversight Needed for Billings and Collections from Private Insurers. GAO-10-42R. Washington, D.C.: October 22, 2009. Indian Health Service: Health Care Services Are Not Always Available to Native Americans. GAO-05-789. Washington, D.C.: August 31, 2005.


Background Indian Tribes and Tribal Land Types As of May 2019, the federal government recognized 573 Indian tribes as distinct, independent political communities with certain powers of sovereignty and self-government, including power over their territory and members. The tribes can vary greatly in terms of their culture, language, population size, land base, location, and economic status. As of the 2010 U.S. Census, about 21 percent, or 1.1 million, of all American Indians lived on tribal lands. Tribal lands include many land types (see table 1). According to BIA, the federal government holds about 46 million acres in trust for tribes (tribal trust land) and more than 10 million acres in trust for individual Indians (individual trust land). Some tribes also have reservations. According to BIA, there are approximately 326 Indian land areas in the United States administered as federal Indian reservations (including reservations, pueblos, rancherias, missions, villages, and communities). The land within the reservation may include a mixture of tribal trust land, individual trust land, restricted fee land, allotments, and land without trust or restricted status (that is, fee- simple land), which may be owned by tribes, individual Indians, or non- Indians. Agricultural Activity on Tribal Lands Agricultural producers (farmers, ranchers, or producers or harvesters of aquatic products) on tribal lands can be individual tribal members, the tribe itself, or non-Indians who lease the land from the tribe or Indian owner. According to USDA’s 2012 Census of Agriculture, about 75 percent of farms and ranches on 76 selected Indian reservations were operated by agricultural producers that identified as American Indian or Alaska Native (see table 2). On these reservations, Indian producers held 61 percent of total farm and ranch acreage. However, the total market value of agricultural products sold from Indian-operated farms and ranches was just over a tenth of that of non-Indian operated farms and ranches on the 76 selected reservations. In 2011, USDA, which operates several agricultural programs targeted to traditionally underserved populations, settled a class action lawsuit brought by Native American farmers and ranchers for $760 million (Keepseagle v. Vilsack). The lawsuit alleged that USDA discriminated against Native Americans in its farm loan and farm loan servicing programs. In 2018, $266 million of the remaining settlement proceeds were used to establish the Native American Agriculture Fund. The Fund will begin awarding grants in 2019 to fund the provision of business assistance, agricultural education, technical support, and advocacy services to Native American farmers and ranchers. Agricultural Credit and the Farm Credit System Like other businesses, agricultural producers generally require financing to acquire, maintain, or expand their farms, ranches, or agribusinesses. Types of agricultural loans as categorized by their purpose or maturity may vary by lender but generally include the following: Short-term loans. These loans are used for operating expenses and match the length and anticipated production value of the operating or production cycle. They are typically secured by the product (crops or livestock). Intermediate-term loans. These loans are typically used to finance depreciable assets such as equipment, which serves as the loan collateral. The loan terms usually range from 18 months to 10 years. Long-term loans. These loans are used to acquire, construct, and develop land and buildings with terms longer than 10 years. They are secured by real estate and may be called real estate loans. Several types of lenders provide credit to U.S. agricultural producers. According to USDA’s Economic Research Service, in 2017, FCS and commercial banks provided most agricultural credit in the United States, with respective market shares of 40 and 41 percent. USDA’s Farm Service Agency—a lender that focuses on assistance to beginning and underserved farmers and ranchers and also guarantees the repayment of loans made by other lenders—provided 3 percent, and the remainder was provided by individuals, life insurance companies, and other lenders. FCS is a government-sponsored enterprise, established in 1916 to provide sound, adequate, and constructive credit to American farmers and ranchers. FCS is regulated by FCA, an independent federal agency. FCS’s statutory mission includes being responsive to the needs of all types of creditworthy agricultural producers, and in particular, young, beginning, and small farmers and ranchers. According to FCA, FCS is not statutorily mandated to focus on providing financial opportunities to any other group. FCS lends money to eligible agricultural producers primarily through its 69 lending associations (FCS associations), which are funded by its four banks (FCS banks). All are cooperatives, meaning that FCS borrowers have ownership and control over the organizations. As of 2017, FCS had approximately $259 billion in loans outstanding, of which 46 percent were long-term real estate-based loans; 20 percent were short- and intermediate-term loans (such as for farm equipment or advance purchases of production inputs); and 16 percent were for agribusiness activities, such as agricultural processing and marketing. FCS associations are not evaluated under the Community Reinvestment Act, which requires certain federal banking regulators to assess whether financial institutions they supervise are meeting the credit needs of the local communities. FCS receives certain tax exemptions at the federal, state, and local level. Limited Data Are Available on Agricultural Credit Needs of Indian Tribes and Their Members Data on Agricultural Credit Needs for Tribes and Their Members Are Limited Little data exists on the credit needs of tribes and their members. One measure of unmet credit needs is the difference between the amount applied for and the amount received. However, we could not determine the amount of agricultural credit that Indian tribes and their members applied for or received. These data were limited in part because federal regulations historically have prohibited lenders from asking about the race of applicants for nonresidential loans, including agricultural loans. Additionally, even if data were available, the unmet need could be greater than that indicated by information on those who may have applied for and did not receive credit. Four tribal stakeholders and experts told us that tribal members may choose not to apply for agricultural credit because they were directly discouraged by loan officers, had problems completing paperwork, or had heard of other tribal members being denied loans. Two tribal agricultural experts told us that on some level, the agricultural credit needs of Indian tribes and their members are the same as other agricultural producers’ credit needs. In particular, tribal stakeholders and experts told us that the tribal members need short-term loans for operating expenses and intermediate-term loans for equipment. One difference between the agricultural credit needs of tribal members and other producers is that tribal members may have a greater unmet need for long-term loans, which are typically secured by real estate, because of difficulties in using tribal lands as collateral, as discussed later in this report. Credit needs vary based on the type of operation or borrower. Type of operation. Some tribal stakeholders we interviewed told us that members of their tribes were more likely to participate in ranching than farming, partly because farming has higher start-up costs. For example, one tribal agricultural expert told us a rancher can start with a few head of cattle and grow the herd over time, but a beginning farmer may need to purchase equipment. Additionally, several tribal stakeholders told us that land on their reservations was more suitable for ranching than farming. Type of borrower. Some tribes have agricultural businesses, which have credit needs different from those of individual tribal members, according to experts and BIA officials we interviewed. For example, they may be greater or more complex. According to an expert and a tribal stakeholder, established agricultural businesses likely would be able to receive credit from commercial lenders because they have more resources to pledge as collateral or stronger credit histories. Additionally, if a tribe has other profitable businesses, it likely will have less difficulty obtaining credit or financing agriculture with those other resources than those without such resources. According to tribal stakeholders, experts, and BIA officials we interviewed, tribal members who obtain agricultural credit likely receive it from USDA’s Farm Service Agency, other USDA programs, or Native CDFIs. Some tribal members receive agricultural credit from local private lenders, but they are typically larger, more established borrowers. One expert told us that tribal members who are smaller or beginning agricultural producers and cannot access commercial banks instead may borrow money from family members. A 2017 report found that Native business owners were less likely than other business owners to obtain start-up capital from banks. Some experts we interviewed cited Native CDFIs as growing providers of agricultural credit to tribal members. A 2014 survey of 41 Native CDFIs— credit unions, community banks, and loan funds—found more than 40 percent provided credit and training to farmers and ranchers. In total, these CDFIs made almost $6 million in agricultural loans annually. However, Native CDFIs are limited in how much agricultural credit they can provide. In the 2014 survey, 56 percent of the Native CDFIs that made agricultural loans reported not having enough capital for such loans, with a total unmet need of at least $3 million in the previous year. One Native CDFI we interviewed said its agricultural loans averaged about $100,000 per borrower, and another said its operating loans were about $50,000–$75,000 and its intermediate-term loans about $100,000. Stakeholders See Potential for Growth of Agricultural Activity on Tribal Lands That Could Require Access to Credit Selected literature we reviewed and interviews with some tribal stakeholders found that tribes have a growing interest in agriculture, motivated by concerns over tribal members’ access to food, health, and employment opportunities. Food access. A 2014 USDA study found that about 26 percent of individuals in tribal areas lived within 1 mile of a supermarket, compared to about 59 percent of all Americans. Health. According to the Centers for Disease Control and Prevention, American Indians and Alaska Natives have higher rates of obesity and diabetes than white Americans. Employment. A 2014 Interior report found that, on average, only about 50 percent of Native American adults in tribal statistical areas were employed either full or part-time. Two commissioned reports on tribal agriculture say that Indian tribes’ vast land base represents an untapped opportunity for tribes to increase agricultural production, including growing their own healthful foods and economic development. But, as previously discussed, for reservations featured in USDA’s 2012 Census of Agriculture, non-Indian producers received a large share of the agricultural revenue. Additionally, the agricultural products grown on tribal lands typically do not feed tribal members and instead are sold into the general agriculture commodity system. Furthermore, these reports and experts we interviewed noted that the growth of agriculture on tribal lands could require access to credit. For example, one tribal agriculture expert told us some tribes are interested in transitioning to “value-added” agriculture, which aims to help the community that produces raw agricultural materials capture the value of the products as they progress through the food supply chain (for example, by processing crops they grow or transitioning to more profitable products, such as organic). Value-added agriculture initiatives might require building facilities or acquiring more expensive inputs, and tribes likely would need financing to support these initiatives. According to some experts and a study we reviewed, if tribes and their members cannot access affordable credit, it could limit the growth of these initiatives. Stakeholders Reported That Tribes and Their Members Face Multiple Barriers to Obtaining Agricultural Credit on Tribal Lands Tribes and their members face several barriers to obtaining agricultural credit, including land tenure issues, administrative challenges, lenders’ legal concerns, and loan readiness issues. As a result, there is limited commercial lending on tribal lands. Land Tenure Issues May Present Hurdles to Obtaining Agricultural Credit Ten tribal stakeholders and experts we interviewed cited difficulties in using tribal lands as collateral as a barrier to obtaining credit because of federal laws or other constraints. Tribal trust and restricted fee lands. Federal law generally prohibits lenders from obtaining an ownership interest in tribal trust and restricted fee lands. As a result, tribes are not able to use their 46 million acres of tribal trust or restricted fee lands as collateral for a loan. However, tribes can lease such lands to other parties, including a tribal business or tribal member who wishes to use the land for agricultural purposes (lessees). These lessees can then pledge their “leasehold interest” in the lands as collateral for a loan, but may face challenges in doing so. For example, in general, leases of tribal trust and restricted fee lands must be approved by BIA and comply with its leasing regulations, which stipulate that agricultural leases generally have a maximum term of 10 years. While BIA generally allows leased tribal trust and restricted fee lands to be subject to a leasehold mortgage, three tribal stakeholders and experts we interviewed said that BIA’s maximum term for agricultural leases often was insufficient for obtaining an agricultural loan. Individual trust and restricted fee lands. Unlike tribal trust and restricted fee lands, the owners of individual trust and restricted fee lands can use these lands as collateral for a loan with permission of the Secretary of the Interior. However, many tracts of individual trust and restricted fee lands are allotments with fractionated ownership. According to nine tribal stakeholders and experts we interviewed, fractionated land is a barrier to agricultural activity and obtaining credit. Fractionated land occurs when an allottee dies without a will and ownership is divided among all the heirs, but the land is not physically divided. Thus, multiple owners (in some cases thousands) can have an ownership interest in the land and may have different ideas about how the land should be used. Interior estimated that out of the 92,000 fractionated tracts (representing more than 10 million acres), more than half generated no income in 2006–2011. For agricultural leases and leasehold mortgages on fractionated lands, BIA regulations require consent from owners of a majority interest in such lands. However, according to Interior, some allotments have thousands of co-owners, some of whose whereabouts are unknown, which could make it difficult to obtain their permission for an agricultural lease or a leasehold mortgage. Additionally, as a result of allotment, many Indian reservations contain different land ownership types, creating a “checkerboard” pattern of lands that can make the establishment and financing of large-scale agricultural projects difficult. For example, in addition to tribal and individual trust and restricted fee lands, reservations also may include lands that passed out of trust during the allotment period and were bought by non-Indians. Thus, multiple tracts within a large-scale agricultural project may need to be leased and financed separately because they have different owners and may be subject to different laws. This can also make legal jurisdiction unclear, which is a concern for private lenders financing projects on such lands, as discussed below. Experts and tribal stakeholders we interviewed reported that the barriers to collateralizing various types of tribal lands make it difficult for tribes and tribal members to access different types of agricultural loans. Most long- term loans—typically used for larger projects—generally need to be secured by real estate, which make these inaccessible to tribes and tribal members who do not have land that can be encumbered. For example, an Indian agricultural producer who operates on trust land and wants to build an agricultural facility for a value-added operation may not be able to obtain a long-term loan unless he or she has other unrestricted land to pledge as collateral. In addition, according to the former Executive Director of the Intertribal Agriculture Council, when most agricultural producers face economic distress, they can pledge land as security and receive an extended period of time (20–40 years) to pay off the debt. Tribal members may not have that option, making it difficult to obtain credit in an emergency (such as adverse weather). In addition, according to a tribal agriculture expert and three tribal stakeholders, tribal trust land is not counted as an asset on balance sheets, which may affect an agricultural lender’s assessment of a borrower’s creditworthiness for various types of loans. Administrative Process Delays May Deter Lenders and Borrowers Processes at Interior—particularly at BIA—can increase the amount of time it takes to obtain a loan, which can discourage both lenders and borrowers, according to tribal stakeholders and experts. Most of the tribal stakeholders and experts we interviewed told us that tribal members often encounter delays when seeking necessary documentation from BIA. For example, for loans involving trust or restricted fee lands, BIA needs to provide a title status report to the lender that identifies the type of land ownership and current owners. Two tribal stakeholders told us that BIA takes months to produce a certified title status report. By that time, the growing season could be over. A representative from a Native CDFI serving a tribe in the Great Plains said it can take years to receive these reports. BIA reported that in fiscal year 2017, it certified 95 percent of land titles within 48 hours. However, BIA’s performance on this measure has varied considerably over the last several years, and BIA officials told us that it can take significantly longer to process title status reports for complicated cases. Tribal members also can encounter administrative challenges at other points in the process. One Native CDFI representative told us she found out that BIA did not record a leasehold mortgage when the CDFI attempted to foreclose on the loan, which almost prevented the CDFI from recovering the loan collateral. In other cases, Interior’s Appraisal and Valuation Services Office might need to conduct an appraisal, such as for an agricultural lease. According to Interior policy, these appraisals should be completed within 60 days, but one tribal economic development expert said they routinely take much longer. Lenders Reported Having Legal Concerns about Recovering Collateral Involving Tribal Lands As a result of the unique legal status of tribes, some lenders, including FCS associations, reported concerns about their ability to recover loan collateral if the borrower defaulted on a loan involving tribal lands. Seven of the 11 FCS associations we contacted told us that they had legal concerns of this nature, and six of the associations said they had experienced the issues themselves. These concerns primarily arise from the following issues: Tribal sovereign immunity. Tribes are distinct, independent political communities with certain inherent powers of self-government and, as a result of this sovereignty, have immunity from lawsuits. A lender cannot sue to enforce the terms of a loan agreement with a tribe unless the tribe waives its sovereign immunity in connection with the agreement. Private lenders therefore might be hesitant to make a loan because they would not be able to sue the tribe if any disputes arose. We previously reported that tribes may waive sovereign immunity in agreements or contracts on a case-by-case basis and some tribes have formed separate companies to conduct business that are not immune from lawsuits. However, tribal government officials may decide that waiving the tribe’s sovereign immunity for purposes of enforcing the loan agreement is not in the tribe’s best interest. Additionally, tribal sovereign immunity would not bar lenders from seeking to foreclose on loans made to individual tribal members. Legal jurisdiction. Loans made to Indian tribes or their members and secured by tribal lands or collateral located on tribal lands may be subject to tribal laws, rather than state laws. In addition, it is sometimes unclear whether federal, state, or tribal courts would have jurisdiction in the event of a default or foreclosure. If tribal laws govern but do not adequately provide for the lender’s foreclosure, or if there is not a legal forum to hear the foreclosure lawsuit, lenders may be unable to recover the loan collateral. To address these types of concerns, some tribes have adopted secured transaction codes modeled after the Uniform Commercial Code, which can help to assure lenders of their ability to recover collateral in the event of default. Unfamiliarity with tribal laws. Laws and court systems vary among the nation’s 573 tribes, making it more difficult and costly for lenders to learn tribal laws. For example, one FCS association noted that it has many federally recognized tribes in its region, each of which may have different laws. If lenders have concerns regarding their ability to recover loan collateral in the event of a default, lenders may not make loans involving tribal lands due to concerns that the loan would not meet safety and soundness requirements. Potential Borrowers May Need Assistance with Loan Readiness Five tribal stakeholders we interviewed said some tribal members may need assistance—such as credit repair and technical assistance for loan applications—to become ready for agricultural loans. Some tribal members have no credit history, which can be a barrier to obtaining a loan. One study found that compared to off-reservation counterparts, reservation residents were more likely to have no credit history and when credit scores were available, they were lower on average. Many Native CDFIs provide credit builder or credit repair products to help tribal members qualify for larger loans, such as small business loans. Four tribal stakeholders we interviewed said members of their tribes sometimes need technical assistance to complete the paperwork required for agricultural loans, such as a business plan. One tribal member who owns a ranch told us that the first time he tried to apply for a loan, he had trouble completing the required paperwork and ultimately chose not to apply. He felt tribal members seeking credit would benefit from assistance in completing loan applications. One Native CDFI representative told us that her organization provides technical assistance to its borrowers to help them complete loan paperwork but noted that commercial lenders often did not provide these services. Barriers Have Limited Commercial Lending on Tribal Lands We and others have noted that the barriers described above have depressed commercial lending on tribal lands. In 2010, we found that banks were reluctant to do business on tribal lands because of the cumbersome procedures and their lack of experience. More recently, a report for the Department of Housing and Urban Development surveying lenders found that BIA processing times were a major challenge in making mortgage loans involving tribal lands. A Native CDFI representative told us that lenders have little incentive to engage in a lengthy underwriting process, particularly if the loan is for a small amount and if other potential borrowers have less complicated circumstances. Some experts have described tribal lands as “credit deserts.” For example, one study of three different areas of tribal lands found that few financial institutions or automated teller machines were located on these reservations. One Native CDFI representative told us that in her experience, many people on her reservation never had a bank account. She noted that when people do not have a bank account, it can be challenging for them to see themselves as potential borrowers. Similarly, our analysis found that the land tenure issues, administrative process delays, lenders’ legal concerns, and loan readiness issues can make agricultural loans involving tribal lands more time-consuming and costly to underwrite. For example, one FCS association told us that loans involving tribal lands require specialized legal analysis, which may be an additional expense that it would not incur for otherwise comparable loans. These same issues can increase a lender’s exposure to the risks inherent in agricultural lending because they can affect the borrower’s ability to repay the loan, the adequacy of the collateral to secure the loan, and the lender’s ability to recover the collateral in the event of a default. According to FCA, consistent with the purposes of the Farm Credit Act of 1971, the ability of a lender to collect loans is an important element of the institution’s safety and soundness, and the continued availability of credit. Finally, some stakeholders said they believe that discrimination also contributes to the lack of commercial lending on tribal lands. Four experts, a tribal stakeholder, and a BIA representative told us that they believe that some commercial lenders do not want to make loans involving tribal lands because of bias. As previously discussed, the plaintiffs in the Keepseagle case that USDA settled for $760 million alleged that USDA discriminated against Native American farmers and ranchers in certain programs. According to a tribal economic development expert, tribal members who face discrimination or other negative experiences with commercial lenders may share these experiences with other tribal members and deter them from applying for credit. FCS Laws Allow for Lending on Tribal Lands, and Some FCS Associations Reported Lending to Tribes or Tribal Members We found that FCS generally has authority to make loans involving tribal lands. Of the 11 FCS associations we contacted with tribal lands in their territories, some reported that they had recently made loans to Indian tribes or their members, and their outreach to these populations included support for agricultural education. FCS Laws Allow for Lending on Tribal Lands Generally, FCS has authority to provide a broad range of credit services to eligible agricultural producers, which may include tribes, tribal businesses, and individual tribal members operating on various types of tribal lands. However, borrowers must meet various eligibility and underwriting criteria that are required by law. For example, applicants for agricultural loans must be determined to be eligible borrowers, which means they must own agricultural land or be engaged in the production of agricultural products, including aquatic products. Also, long-term real estate loans (which have terms of up to 40 years) made by FCS institutions must be secured by a first-position lien on interests in real estate, thus enabling FCS to obtain ownership or control of the land in the event of default. FCA has determined that this statutory requirement can be satisfied, for example, with leasehold interests in real estate—such as that held by a tribal member leasing reservation land from a tribe—provided that the lease grants the borrower significant rights to the land, and the loan is made on a safe and sound basis. As noted earlier, BIA regulations often limit agricultural leases of tribal lands to a term of up to 10 years. In such cases, FCS associations similarly may limit the term of the related loan (to less than 10 years). According to FCA, when loans are for shorter terms than the leases, the FCS association’s first lien is preserved, as required by law, and the loan is prudent from a safety and soundness perspective. FCA has not issued written guidance indicating whether interests in other types of tribal lands—such as individual trust or restricted fee lands—also satisfy the requirement for a first-position lien on interests in real estate. However, FCA has the authority to determine what types of interests in real estate will satisfy this requirement. Also, according to FCA, there is no statutory requirement that short- and intermediate-term loans be secured with interests in real estate; such loans instead can be secured by other collateral, such as equipment, crops, livestock, and business revenues. In addition to making direct loans to agricultural producers, FCS has authority to lend to non-FCS institutions, such as commercial banks and credit unions, which in turn make agricultural loans to FCS-eligible borrowers. These other financing institutions are known as OFIs. According to FCA, the OFI lending authority allows FCS banks to fulfill their mission as a government-sponsored enterprise by enhancing the liquidity of OFIs, thereby lowering the cost of agricultural credit. As noted earlier, FCS is required to establish programs to serve young, beginning, and small farmers and ranchers, but it is not statutorily mandated to focus on providing financial opportunities to any other group of eligible agricultural producers. Notwithstanding the authorities described above, FCS must comply with other applicable laws and requirements. For example, FCS institutions are subject to safety and soundness oversight by FCA, including with respect to loan underwriting. FCS institutions also must comply with applicable federal, state, and tribal laws governing any tribal lands or property thereon used as loan collateral. FCS associations may obtain Farm Service Agency guarantees on loans to borrowers who otherwise may not meet FCS underwriting requirements. However, by law, loans made by FCS associations are not eligible for a similar BIA loan guarantee program. Some FCS Associations Reported Lending to Indian Tribes or Their Members, and Selected Associations’ Outreach to These Populations Included Education Lending Based on information from selected FCS associations located near tribal lands, some FCS associations have lent to Indian tribes or their members in the last 2 years. Of the 11 FCS associations we contacted with tribal lands in their territories, representatives of eight told us they had loaned to tribes or their members in the last 2 years—primarily to individual tribal members. We made the following observations based on the associations’ responses: Limited data on lending amounts. Representatives of 10 of the 11 FCS associations we queried stated that they either do not collect or do not maintain data on lending to specific racial populations, thus making it difficult to provide more detailed information on lending to Indian tribes and their members. However, four representatives provided estimates of their recent lending to this population on tribal lands. One association cited more than $25 million in total loans outstanding to a small number of tribes and tribal entities. Another association reported making about $5.5 million in new loans to tribes or their members on tribal lands in the last 2 years. A third reported a $3 million revolving line of credit to a family farm, and the fourth said it had made approximately $150,000 in five separate loans to two tribal members. Loan purposes. Seven associations reported on the type of credit they extended to Indian tribes and their members on tribal lands. In general, they made short-term operating loans and short- and intermediate-term loans for the purchase or refinance of items such as machinery and equipment, livestock, vehicles, or buildings and improvements. Two associations also reported making long-term real estate loans. The other association that reported lending to tribes or their members did not report on the types of loans it made. Type of collateral. Representatives of the eight associations that reported lending to tribes or their members all indicated that the associations secured loans with personal property, such as crops, livestock, or equipment. In addition, the associations that reported making real estate loans said they secured the loans with fee-simple land. Representatives of three FCS associations said they had not loaned to Indian tribes in the past 2 years. One association had not received any credit applications from tribal members, and another could not say if it had served tribal members because of a lack of racial data on borrowers. The third association had not provided loans to tribal members in the past 2 years, but the representative stated that it provided several letters of credit to guarantee the payments of BIA leases on tribal land. Although the FCS associations we contacted stated they have the resources to lend to tribes and their members on tribal lands, a few key factors affect their lending decisions. Representatives of all 11 FCS associations stated their associations had adequate financial capacity and resources to make potentially more complicated or time-consuming loans, such as those involving tribal lands. In general, they stated that the factors they consider in deciding whether to loan to Indian tribes or their members on tribal lands are the same as for any comparable loan—for example, creditworthiness, loan purpose, and the ability to secure a lien on collateral. However, as described earlier, some FCS association representatives described challenges related to tribal law, jurisdiction, tribal sovereign immunity, and recovery of collateral as complicating the lending process to Indian tribes and their members on tribal lands. Although three of the 11 FCS associations we queried reported making loans to tribes that had waived their sovereign immunity for those contracts, most loans the associations reported were to individual tribal members and secured by personal property or fee-simple land. According to two tribal stakeholders we interviewed, Indian tribes or tribal members who received loans from FCS or other commercial lenders may have larger agricultural operations, a longer credit history, and property that can be more easily used as collateral. For example, an established rancher may be able to secure operating loans with his or her cattle herd or interests in fee-simple land, thus preventing the need to rely on trust land as collateral. Outreach At the national level, FCS—through its trade association, the Farm Credit Council—conducts and facilitates outreach to tribes and tribal stakeholder groups. According to a representative of the Farm Credit Council, the Council and representatives of associations with tribal lands in their territories participate in an informal FCS working group focused on outreach and lending on tribal lands. One association representative described the group as sharing examples of lending success or reasons for missed opportunities; local, regional or national sponsorship opportunities; local or regional agricultural education events; and relevant legal proceedings, such as the Keepseagle settlement. At the institution level, FCS associations must prepare annual marketing plans describing, among other things, how they will be responsive to the credit needs of all eligible and creditworthy agricultural producers in their respective territories, with a focus on diversity and inclusion. The marketing plan must detail strategies and actions to market their products and services to potential borrowers who may not have been considered previously for reasons other than eligibility or creditworthiness. However, FCS associations are not required to achieve specific outcomes or quantifiable results. Our nongeneralizable review of the marketing plans of the 11 selected FCS associations with tribal lands in their territories and our analysis of their written responses to our queries for additional information found that outreach to tribes and their members focused on educational and charitable initiatives and direct marketing about agricultural lending, or did not directly target tribal populations. Seven of the 11 associations discussed actual or planned outreach to Indian tribes or their members in their marketing plans or written responses. Four of those seven associations cited financial support of specific agricultural education activities for tribes and their members. Two associations reported making charitable donations that benefited tribal members. Four of the seven associations reported direct marketing to potential tribal borrowers. However, in one case, the marketing was a one-time conversation with a tribe regarding financing for a new facility. The other three associations reported that they called potential Indian borrowers, sought referrals from existing tribal member customers, or conducted meetings with tribal government officials. In general, the four remaining associations, in their marketing plans and written responses, addressed outreach to minority producers through broader methods, such as participation in ethnic group organizations or through inclusion in the association’s overall outreach and marketing efforts. In addition, five of the 11 associations discussed outreach to minority producers in conjunction with their statutorily-mandated outreach to young, beginning, and small farmers. According to FCA officials, FCA’s guidance on providing credit to young, beginning, and small farmers, as well as to local food producers, would be broadly applicable to socially disadvantaged or minority populations that fall within the program definitions. Most of the tribal stakeholders with whom we spoke either were not familiar with FCS or did not know of the tribe or any of its members receiving FCS loans. One Native CDFI representative noted that although he was not familiar with any members of his tribe receiving FCS loans, he thought other nearby tribes or their members had worked with FCS. FCA also encouraged FCS associations to develop underwriting procedures to facilitate lending on Indian reservations. FCA identified one FCS association that developed such procedures, and another one of the associations we queried noted that they had such procedures. The first association provided an overview of its procedures, which identified links to information on borrower and collateral eligibility and actions that require BIA approval, among other topics. According to representatives of the second association, its procedure manual directs loan officers to treat tribal members’ applications for loans secured by personal property the same as any other applications. In addition, they said the manual contains instructions for working with BIA for real estate loans to tribal members on trust land and for making direct loans to tribes. Stakeholders Discussed Lender Partnerships, Loan Guarantees, and Other Options to Improve Agricultural Credit Access on Tribal Lands Our review of literature and interviews with experts, tribal stakeholders, FCS associations, Farm Credit Council representatives, and FCA officials identified the following options for improving access to agricultural credit on tribal lands. Partnerships with local lenders. Tribal economic development experts and tribal stakeholders cited the importance of commercial or government lenders partnering with Native CDFIs and other Indian- owned lenders, which are the most capable of navigating the challenges related to Indian agricultural credit. According to these experts and stakeholders, if larger commercial or government lenders worked with Native CDFIs or other tribal lenders (such as tribal banks or economic development corporations) to provide funds or conduct outreach, the tribal organizations could more efficiently reach Indian tribes and their members. They noted these organizations are familiar with tribal members and the administrative processes for obtaining loans on tribal land. Partnership with tribal lenders and other tribal businesses also could support tribes’ efforts to improve members’ loan readiness, according to literature we reviewed and a tribal economic development expert and a Native CDFI representative we interviewed. Commercial and government lenders may need to clarify whether tribal lenders with which they might partner meet their lending requirements. For example, although FCS banks have authority to lend to OFIs, which in turn can lend to FCS-eligible borrowers, only certain types of CDFIs may qualify as OFIs. In addition, this authority does not extend to long-term funding, and thus cannot be used to fund agricultural real estate loans made by OFIs. One FCS bank that commented on a 2004 FCA rule noted the latter statutory limitation as a major impediment to OFI program expansion. Flexibility with collateral requirements. As noted earlier, multiple stakeholders we interviewed discussed the challenges related to collateralizing trust land. In addition, FCA officials cited the need for a statutory change or clarification of the requirement that long-term loans made by FCS be secured by a first lien on interests in real estate. They said that by removing or clarifying this requirement, lenders would have authority to provide larger, longer-term loans to creditworthy tribes or tribal members who cannot mortgage their tribal lands. Guarantees. Some stakeholders we interviewed mentioned loan guarantees as an option to improve access to agricultural credit on tribal lands. For instance, FCA officials and Farm Credit Council representatives told us they had spoken with leadership of the Native American Agriculture Fund (created as part of the Keepseagle settlement) regarding the potential establishment of a loan guarantee fund, such as a first-loss fund, which would step in to purchase a loan in default (thus substantially reducing credit risk to the lender). In addition, three of the 11 FCS associations we queried identified guarantees as a possible way to increase FCS lending to Indian tribes and their members on tribal lands. FCS associations still face challenges in using guarantees. With regard to the first-loss loan guarantee fund, FCS associations still must adhere to the FCS statutory requirement for a first-position lien on interests in real estate for long-term loans. According to an FCA official, although the first-loss loan guarantee fund could mitigate repayment risk, a statutory change or clarification would be necessary for FCS associations to accept guarantees in lieu of real estate for long-term loans. And as noted earlier, FCS loans are statutorily ineligible for BIA’s loan guarantee program. Two FCS associations noted that removal of this restriction could increase FCS lending on tribal lands. Finally, FCA officials stated that challenges FCS associations face in making loans involving tribal lands also can extend to Farm Service Agency guarantees on those loans. In other words, to obtain such guarantees, FCS associations must navigate issues around land tenure, legal jurisdiction, and tribal laws. Tribal options. In addition, stakeholders discussed the following tribal actions that could increase credit access for tribes and their members: Representatives of two FCS associations noted that waivers of sovereign immunity (limited to specific contracts) by tribes may increase lending involving tribal lands, as it helps to enable lenders to enforce the terms of loans made to tribes. According to the Office of the Comptroller of the Currency, some banks have negotiated limited waivers of sovereign immunity (restricted to a specific transaction). As noted earlier, tribes may decide that waiving sovereign immunity is not in their best interest. In addition to the limited waivers of sovereign immunity, representatives of three FCS institutions stated that increased adoption of uniform commercial laws (such as the Uniform Commercial Code) by tribes could increase lending involving tribal lands. One tribal economic development expert told us that tribes that adopted their own leasing regulations under the HEARTH Act have seen substantially increased economic development. As noted earlier, the HEARTH Act provides tribes with greater flexibility to enter into leases for agriculture or other purposes. Once a tribe’s leasing regulations have been approved by the Secretary of the Interior, tribes may negotiate and enter into agricultural leases with 25-year terms without further approval by the Secretary. The combination of longer lease terms and the ability to conduct business outside of the BIA approval process can expedite the process of obtaining a leasehold mortgage on tribal trust and restricted fee land. As of May 1, 2019, the Secretary had approved agricultural leasing regulations for seven tribes under the HEARTH Act. Agency Comments We provided a draft of this report to FCA, Interior, and USDA for review and comment. FCA and USDA provided technical comments, which we incorporated as appropriate. In comments provided in an email, Interior officials noted that efforts to simplify the Secretary of the Interior’s approval process could provide faster mortgage determinations and thus may result in expanded lending and production opportunities for Indian agricultural producers. We are sending copies of this report to the appropriate congressional committees, the Chairman and Chief Executive Officer of the Farm Credit Administration, the Secretary of the Interior, and the Secretary of Agriculture. In addition, the report is available at no charge on the GAO website at http://www.gao.gov. If you or your staff have any questions about this report, please contact me at (202) 512-8678 or cackleya@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix II. Appendix I: Objectives, Scope, and Methodology Our objectives in the report were to describe (1) what is known about the agricultural credit needs of Indian tribes and their members on tribal lands, (2) the barriers stakeholders and experts identified that Indian tribes and their members on tribal lands face in obtaining agricultural credit to meet their needs, (3) the Farm Credit System’s (FCS) lending authority and lending and outreach activities on tribal land, and (4) suggestions stakeholders have discussed to improve access to agricultural credit on tribal lands. For the purpose of this report, we use the term “tribal lands” to refer to reservations (including all land within the reservations’ boundaries), trust land, allotments, and restricted fee land. In general, our report focuses on the agricultural credit needs of tribes and their members in the lower 48 states. To describe what is known about the agricultural credit needs of Indian tribes and their members on tribal lands, we explored various potential data sources on agricultural loans that Indian tribes and their members applied for or received. We reviewed available data from the Consumer Financial Protection Bureau and Department of Agriculture (USDA). For example, we obtained borrower-reported loan data from USDA’s Agricultural Resource Management Survey, but for several data fields related to Indian producers on tribal lands, sample sizes were too small or the coefficients of variation were too high to produce reliable estimates. We also reviewed provisions of the Equal Credit Opportunity Act, federal regulations, and other legal documentation pertaining to collection of data regarding the personal characteristics of applicants for nonresidential loans. To describe what is known about Indian tribes and their members’ agricultural credit needs and the barriers they face in obtaining agricultural credit, we conducted a literature review. We conducted searches of various databases, such as EBSCO, ProQuest, Google Scholar, and Westlaw to identify sources such as peer-reviewed academic studies; law review articles; trade and industry articles; reports from government agencies, nonprofits, and think tanks; and Congressional transcripts related to tribal agriculture, barriers to accessing credit on tribal lands, and FCS. We identified additional materials through citations in literature we reviewed. In addition, we reviewed statutes and the Department of the Interior’s Bureau of Indian Affairs’ (BIA) regulations related to use and ownership of tribal lands, including leasing. To describe FCS’s authority and lending and outreach activities on tribal lands, we reviewed statutes and regulations governing FCS, as well as written guidance issued by the Farm Credit Administration (FCA). We also reviewed the marketing plans of a nongeneralizable sample of 11 FCS associations (16 percent of the 69 FCS associations that lend directly to agricultural producers) whose territories included large tribal land areas with high levels of agricultural activity, including the tribes we interviewed (described below). We selected an additional FCS association but on closer review realized it did not have a significant amount of tribal land in its territory; we therefore excluded this association from our analysis. For comparison purposes, we also reviewed three marketing plans from FCS associations that did not have significant tribal populations in their territories. In addition to reviewing the marketing plans, we sent the 11 FCS associations a questionnaire about their lending and outreach to tribes and their members and any challenges in making loans involving tribal lands. We also asked these associations about any suggestions to improve access to agricultural credit on tribal lands. We received responses from all 11 FCS associations, and followed up with some associations to clarify information they provided. While the sample allowed us to learn about many important aspects of FCS associations’ lending and outreach to tribes and their members on tribal lands, it was designed to provide anecdotal information, not findings that would be representative of all of 69 FCS lending associations. To address all four objectives, we attempted to interview representatives of six tribes. First, we selected these tribes to represent five regions (Great Plains, Rocky Mountain, Northwest, Southwest) and a state (Oklahoma) that—according to experts we interviewed—have tribes engaged in agricultural activity. Within these regions, we generally selected large tribal land areas that have high levels of agricultural activity, as indicated by the USDA 2012 Census of Agriculture data. Specifically, we selected tribes based on number of farms, land in farms, and market value of agricultural products. In addition, we selected one of the six tribes because two experts recommended that we speak with them. For the six tribes, we contacted tribal government leaders and employees of the relevant government offices, such as the agriculture or tribal lands departments. For two of the six tribes, we interviewed employees of the tribal agriculture department. One of these interviews also included representatives of the Native Community Development Financial Institution (Native CDFI) that serves the reservation. For the third tribe, we received written responses from a tribal farm. For the fourth tribe, we interviewed a representative of the Native CDFI that serves the reservation. For this series of interviews, we only received information relating to four tribes. We did not obtain meetings with relevant tribal government officials for the last two tribes. We also contacted farms or Native CDFIs associated with an additional three tribes based on USDA data or recommendations from experts we interviewed. For one of these tribes, we interviewed a tribal farm employee and a representative of the tribe’s community development corporation. For the second tribe, we interviewed a tribal farm employee. For the third tribe, we interviewed a representative of the Native CDFI that serves the reservation. In summary, we interviewed employees of two tribal agriculture departments, employees of three tribal farms, and representatives of three Native CDFIs and one tribal community development corporation. Throughout this report, we refer to tribal government employees, tribal farm employees, or representatives of Native CDFIs or community development corporations serving a tribe as “tribal stakeholders.” Although the information we obtained from the tribal agriculture employees allowed us to provide anecdotal tribal perspectives, it is not generalizable to the 573 federally recognized Indian tribes. In addition, the views of tribal farm employees and Native CDFI and community development corporation representatives cannot be generalized to tribes but illustrate views on needs, barriers, and other issues from the perspectives of the organizations. In addition, for all four objectives, we interviewed the following: Experts on agricultural and economic development on tribal lands. We interviewed subject matter experts on tribal agriculture and economic development from various organizations, including advocacy and academia. Specifically, we interviewed representatives of the following organizations: the Center for Indian Country Development at the Federal Reserve Bank of Minneapolis, First Nations Oweesta Corporation, the Indian Land Tenure Foundation, the Indigenous Food and Agriculture Initiative at the University of Arkansas, the Intertribal Agriculture Council, and the Native American Agriculture Fund. We selected these organizations based on relevant publications, testimonies before Congress, or recommendations from other experts. These organizations work with a number of tribes and thus could speak to general trends or commonalities in tribal agriculture and economic development. Throughout the report, we refer to the representatives of these organizations as “experts.” Agency and trade group representatives. We interviewed officials from FCA, USDA (including the Farm Service Agency, Economic Research Service, and National Agricultural Statistics Service), and BIA. We also interviewed representatives of the Farm Credit Council, the national trade association for the Farm Credit System. We conducted this performance audit from December 2018 to May 2019 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. Appendix II: GAO Contact and Staff Acknowledgments GAO Contact Staff Acknowledgements In addition to the contact named above, Karen Tremba (Assistant Director), Lisa Reynolds (Analyst in Charge), Miranda Berry, Tom Cook, Anne-Marie Fennell, John Karikari, Marc Molino, Kirsten Noethen, Barbara Roesmann, Jeanette Soares, and Farrah Stone made significant contributions to this report.