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missioner of Indian Affairs for final action. It is requested that this budget be submitted in time to reach the Commissioner September 15, 1955, which will permit time to obtain the general council's action as we understand the general council is scheduled to meet during the month of August.

7. It will be the responsibility of the tribal committee to observe and comply with the following requirements:

(a) Maintain records of meetings with the management specialists and keep the Klamath General Council informed of what transpired at such meetings. It shall also be the duty of the tribal committee to bring before the management specialists such suggestions as may be made by the tribe in general council.

(b) If it becomes necessary for the tribal committee to examine the Klamath Agency records, the superintendent or his designated representatives will honor such requests as are approved by the management specialists subject to the following conditions: The tribal committee will be given access to accounting documents evidencing collection and disbursement of tribal funds, but will not need nor is to have access to individual Indian money accounts, personnel records, welfare, or medical case records, Washington or area office correspondence. Agency employees are being advised they may assist the tribal committee or any member thereof, but only if the committee has first secured the prior approval of the superintendent or his designated representative to assure that there will be no interference with the performance of regular duties and responsibilities.

I am sure that in the next few months there will be many ways in which the tribal committee can be of real service to the management specialists and the general council in working out plans for carrying out the requirements of Public Law 587. Sincerely yours,

CLARENCE A. Davis, Acting Secretary of the Interior.

DEPARTMENT OF THE INTERIOR,

BUREAU OF INDIAN AFFAIRS,

Washington, D. C., October 14, 1955. Mr. T. B. WATTERS, Chairman, Management Specialists,

Klamath Indian Tribe, Klamath Falls, Oreg.

(Through: Area Director, Portland.) DEAR MR. WATTERS : This will refer to departmental letter of August 11, 1955, which outlined the functions and responsibilities of the Klamath three-man tribal committee.

It has been administratively determined that no changes will be made in the above-mentioned letter. Accordingly, reference is made to paragraph No. 3 which states in part "nor does the tribal committee have the right or authority to sit in on any meetings of the management specialists except upon the request of the managers." With this in mind, we believe it advisable for your office to establish a schedule of regular meeting dates with the tribal committee. It is of course understood that other meetings may necessarily be called from time to time. However, by having an advance release of scheduled meetings it will afford an opportunity to the committee to plan accordingly. Your comments on this proposal will be appreciated. Sincerely yours,

GLENN L. EMMONS, Commissioner.

DEPARTMENT OF THE INTERIOR,

BUREAU OF INDIAN AFFAIRS,

Washington, D. C., October 14, 1955. Messrs. WADE CRAWFORD, SELDON KIRK, and LAURENCE WITT, Klamath Tribal Committee,

Klamath Agency, Oreg. DEAR MESSRS. CRAWFORD, KIRK, and WITT: Under date of October 7, 1957, we acknowledged receipt of your undated letter transmitting to this office a combined budget for the three-man tribal committee and the advisory investigating committee. At that time you were advised that your transmittal was being given immediate attention and your committee should expect a reply shortly.

This letter is written to set forth the reasons why the budget as submitted is not approved by this office. Primarily the budget for the three-man tribal committee does not comply with departmental letter of August 11, 1955, and the budget for the advisory investigating committee does not comply with Bureau letter of August 11, 1955.

To avoid any confusion or misinterpretation, comments on the budgets for each committee are outlined separately :

BUDGET FOR THREE-MAN TRIBAL COMMITTEE

1. A special budget, not combined with any other committee budget, is required and should be submitted accordingly.

2. This budget must be prepared in consultation with the management specialists, as provided in paragraph 6 (c) of departmental letter dated August 11, 1955.

3. The budget must be submitted through the Klamath General Council for appropriate action by that body and channeled through the agency and area offices and then forwarded to this office for final action, as also provided in pararaph 6 (c).

BUDGET FOR ADVISORY INVESTIGATING COMMITTEE 1. A special budget, not combined with any other committee budget, is required and is to be submitted accordingly.

2. This budget should be submitted through the Klamath General Council for appropriate action by that body and then forwarded through regular channels to this office for final action.

Your transmittal included a copy of the Klamath General Council Resolution of January 18, 1955, together with Mr. Cohn's opinion on the legality of the resolution. Apparently you rely on the last sentence of this opinion which states “The superintendent should, therefore, in accordance with existing Federal regulations, comply with the resolution relative to the paying out of tribal funds the per diem, salary and expenses of the committee.” This matter was taken up with the Solicitor's Office here and it has been determined that the above-quoted conclusion by Mr. Cohn has been given a meaning by your committee which is inconsistent with existing law and regulations because it takes away from the Secretary the discretion of approving or disapproving a particular expenditure of tribal funds. We wish to advise that the authority to approve expenditures of tribal funds rests with the Secretary of the Interior and it cannot be delegated to the tribe under existing law.

After Mr. Cohn's opinion was written on February 17, 1955, the Acting Secretary ordered a referendum election to select three members of the tribe for the particular purposes contained in departmental letter of August 11, 1955. The Secretary obviously is not going to authorize the tribal committee to form conflicting functions or to exercise broader powers than it was set up to have, solely for the reason that an earlier tribal resolution created a committee to carry out an investigative function. The budget that will be approved for the tribal committee will be a budget prepared in consultation with the management specialists and submitted by the committee to the Klamath General Council for its consideration and approval. The budget submitted that committee will be a budget as a single unit as distinguished from a combined committee not authorized by the Secretary. After consideration and if approved by the Klamath General Council, the council will forward the budget to the superintendents of the Klamath agency for submission to this office through the area office. The money the members of the tribal committee spend will be spent only in furtherance of those purposes authorized by the Secretary in creating the committee.

On the other hand a tribal investigating committee may have certain warranted expenses which have no direct relation to the functions of the tribal committee. Therefore, it is required that the investigating committee submit a budget proposing the expenses it will need to carry out its functions. This budget will be submitted by the investigating committee to the Klamath General Council for its consideration and approval. After consideration and if approved by the Klamath General Council the council will submit the budget to the superintendent of the Klamath agency for submission to this office through the area office. The approval of this budget will rest on the Secretary's discretion as to both amount of money and as to the purpose for which it is to be spent.

The combined budget your committee submitted is accordingly returned herewith with a request that it be revised, divided and resubmitted, pursuant to the instructions set out in Department letter of August 11 and Bureau letter of same date. Sincerely yours,

GLENN L. EMMONS, Commissioner.

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DEPARTMENT OF THE INTERIOR,

BUREAU OF INDIAN AFFAIRS,

Washington, D. C., November 30, 1956. CHAIRMAN, Klamath Tribal Executive Committee,

Klamath Indian Agency, Klamath Agency, Oreg.

(Through : Area Director, Portland.) MY DEAR SIR: In accordance with the request set forth in the unnumbered resolution adopted by the Klamath committee on October 30, 1956, that the Secretary of the Interior disband and dissolve the Klamath 3-man tribal Committee, I am hereby withdrawing my approval of the authority of said committee to act as a representative body of the tribe, pursuant to paragraph 14 of the management specialists' contract approved May 9, 1955.

However, in view of the requirements of paragraph 14 of said contract that I approve a representative body of the tribe to act in a liaison capacity between the tribe and the management specialists, it appears desirable that there continue in existence such a representative body. If the tribal executive committee will undertake to act as the representative body called for by the contract, either as a whole or through such members of the executive committee as may be specially designated, I will be glad to consider, upon presentation of the appropriate resolution, the approval of such representative body to act in this capacity. Sincerely yours,

F. E. WORMSER,
Acting Secretary of the Interior.

UNITED STATES SENATE,
COMMITTEE ON INTERIOR AND INSULAR AFFAIRS,

November 1, 1957. Hon. RICHARD L. NEUBERGER,

United States Senate, Washington, D. C. DEAR SENATOR NEUBERGER : The attached analysis of proposals to solve the problems relative to forest conservation raised by Public Law 587 is presented in response to your request.

Thirty-four witnesses appeared. Three made general statements that did not address themselves to S. 2047 or alternatives. Three Indian witnesses did not have fixed positions. The remaining 28 witnesses had definite views. There were 23 for Federal purchase, 1 for a combination of Federal and private purchase and 4 for private sale. The witnesses suggested these four alternatives :

1. Let the timber sale for withdrawing members take effect in 1958 as provided in Public Law 587;

2. Amend the law to extend the time for timber disposal ;

3. Amend the law to provide for sale to private buyers who would be required to practice sustained yield forestry;

4. Amend the law to place the land in Federal management as provided by S. 2047. If the timber is sold in the 2-year period provided under Public Law 587, the amount available to cut may temporarily exceed demand. Timber prices may be depressed, the Indians' realization reduced, and, possibly, the saleability of adjacent Federal timber adversely affected. An extension of the law to provide for orderly liquidation over a 10- to 20-year period would insure a better income to the Indians.

Under either the first or second alternative the extension of the timber-payment period over several years could reduce the discount for cash.

The discount for the assumption of market and ownership risks could only be canceled if the Indians held the timber and offered it in amounts the market could absorb annually over the best liquidation period. Neither of these two alternatives insures that conservation goals will be met, and, in fact, under both the liquidation purchaser would have a bidding advantage over one who desired to practice sustained-yield forestry.

The third alternative suggested would protect the existing sustained-yield program by placing the reservation in private forest industry ownership. The proposal recommends use of a sustainel-yield covenant in the deeds thus ruling out the liquidation buyer. It calls for payment to the Indians, by the Federal Government, of the difference between the sustained-yield price and the liquidation value in order to fairly compensate the Indians. This proposal also recommends that lands not bought by private parties be purchased by the Government. The Weyerhaeuser Timber Co., in presenting this proposal, clearly demonstrated that special financial and legal provisions would be needed to insure private sustained-yield forestry. It also focused attention upon the dimension of the conservation problems posed by Public Law 587. Certain factors must be considered in assessing its acceptability over S. 2047. Since the Government would have to pay the Indians the difference between the sustained-yield bid of private parties and the liquidation value the unrecoverable cost may be greater to the Government than if it purchased the reservation. This plan would regulate cutting on the lands purchased by private parties. The number of private bidders may be reduced.

The fourth alternative is to proceed along the lines of S. 2047 and have the Federal Government purchase the reservation. This plan would insure achievement of the conservation goals set by the third proposal and it might be possible to do so at less cost to the Federal Government. It would net the Indians as much as either the second or third proposal and would avoid the financial catastrophe of the first alternative. The Government might find it desirable to assess the national and local benefits and to pro rate to each level of Government the difference between the recoverable Federal investment and the amount paid the Indians. If the timber were placed on the tax roll either under sustained yield or for liquidation, local taxes would be substantially less than the 25 percent in-lieu payments. The unrecoverable portion of the Federal cost could be measurably reduced by considering some part of this difference as the local contribution for benefits received from Federal purchase. This course could not be followed if the third alternative were adopted.

A return of less than 2 percent on the sustained-yield value can be earned by this timber. If the reservation were purchased at its liquidation value for operation under a sustained-yield program, the rate of return would be even less. The low-earning capacity of the timber indicates that Federal purchase would be in accord with the thory that projects which do not assure normally profitable operation may properly be undertaken by the Government.

Federal purchase would insure all the conservation goals without resorting to regulating cutting on private lands. It would also provide broad benefits of wildlife management, recreation, and water conservation that could not be as definitely insured by private ownership.

Because the official appraisal has not been made available, all of the figures used are for example purposes and do not purport to be indications of the actual value of the Klamath Reservation.

There may be other alternatives but, to date, they have not been presented to the committee for consideration. Sincerely yours,

ROBERT E. WOLF,
Forestry Consultant.

ANALYSIS OF PROPOSALS FOR IMPLEMENTING TERMINATION FOR THE KLAMATH

RESERVATION

INTRODUCTION

It is a stark reality that experience to date under Public Law 587 demonstrates that neither the Klamath people nor anyone associated with the problem has produced a solution built around the Klamaths, for and by themslves, retaining and managing this great resource which they have inherited. The termination program has revealed that perhaps three-fourths of the Klamaths want to liquidate their forest factory for cash, while one-fourth may want to stay in and continue a program with annual payments. Even for this latter group the Management Specialists and the Klamaths apparently concur that these people cannot manage their property themselves. Thus it is proposed that a private trustee take over the management of the property for those who elect not to liquidate their timber.

The outlook is that sound conservation programs, which have brought yearly dividends such as many people receive from inherited stock or other family investments, will be forsaken by the majority for liquidation.

PROPOSAL UNDER PUBLIC LAW 587 FOR THOSE KLAMATHS WHO WISH TO REMAIN IN

AN ORGANIZATION

The Management Specialists have found that the Indians who would remain in a sustained-yield organization desired the services of a manager. A private trust has been suggested because under existing law substantial tax advantages could be obtained.

The proposed trust agreement would direct the trustees to achieve a relatively constant income for the Indians and for that purpose they are allowed to invade the forest principal. Thus the trustee is only admonished to try to operate on sustained-yield. He may also sell, mortgage, or dispose of property. The private trust would provide for less member control than the Indians have under the Government trust, although the tribal executive committee is retained on a bobtailed basis. At 5-year intervals the members can vote to abolish the trust.

TRUST AGREEMENT-THREE PROBLEMS

Three problems appear in the trust agreement. It is proposed that the trustee have an unlimited right to invade the principal to maintain income. Based upon one-fourth of the Klamaths joining the trust, the management plan envisions that until 1965 income for remaining members will be about $770,000 a year and thereafter it will drop to $660,000 annually. This would mean that at that time the principal would start to be invaded and "sustained yield" junked. If, in fact, it is the desire of the remaining members to achieve the equivalent of stock dividends despite the swings in the economic cycle or required changes in the allowable cut, it would be well to amend the agreement to preserve the forest capital except as necessary to harvest epidemic forest capital losses. Were such a harvest to occur it would be for the members to determine whether they wished to recompute the allowable cut and accept a somewhat lower cut to achieve a restoration of growing stock or decide to merely recompute the cut but not reduce it enough to restore the forest capital to optimum growth levels.

Secondly, the trust expires when the last original member dies. Thus the trust may constitute only a delayed liquidation plan operated principally for the benefit of the original members. Under such a program consideration must be given to whether pro rata distribution of income is the goal, or whether, as each member dies, he can pass his share on. If it is the former course, the purpose of the trust will be to virtually complete the liquidation of the principal at the end of the trust period leaving for division among their heirs only the residual land values. If it is the latter, at the time when the last remaining member dies the estate of all the heirs will be subject to dissolution as a trust and either liquidated or placed under some other type of management.

Third, is that no provision is made for the remaining members or their heirs to develop a plan to take over the operation of the property free from trust status. The tax-free feature of the trust would mitigate against the members desiring to enter into a less favorable financial arrangement and might impel a tax-free liquidation by the remaining members and their heirs at a later date as the close of the trust period approached.

It is significant to note that the agreement does not develop a sustained-yield covenant between the trustee and the remaining members. This is covered in a vague way without any effort to define precisely the goal of management.

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