Mr. COBURN. Assuming you came to an agreement as to the terms of the sustained yield management plan, what would be the penalty for failure to abide by the plan?

I mean, what redress would the Government or the Indians have against the purchaser?

Mr. MATHIS. Frankly, Mr. Coburn, I have not gone that far in my thinking because my attitude was that if my people say they will agree to do a certain thing, they will do it.

Mr. COBURN. You would rely entirely on the fact that you have an agreement?

Mr. MATHIS. Absolutely.

Mr. COBURN. A contract is a contract?

Mr. MATHIS. Surely.

Mr. COBURN. That would be the end of it?

Mr. MATHIS. The penalty angle would not occur to me. I think that would occur to the party selling.

Mr. COBURN. Is your client interested in purchasing the marsh lands along with the timberlands?

Mr. MATHIS. I think not because I suggested to him that if it were all sold in one block, and he were required to purchase the marshlands, that it would make his bid more attractive to incorporate a statement in it or an agreement in it that he would rededicate those lands for the use of the Indians.

Mr. COBURN. If he had to purchase it?

Mr. MATHIS. If he had to purchase it.

Mr. COBURN. But he is not interested in purchasing it?
Mr. MATHIS. He is not interested in purchasing it.

Mr. COBURN. Would you have any objection to the land being acquired and used as a National Wild Life Refuge?

Mr. MATHIS. Let me correct my statement. I am not positive that he is not interested. I do not think he is. I feel confident that he would have no objection to those lands being used as a wild life refuge or game preserve.

Mr. COBURN. If your assumption that he does not want them is

correct.

Mr. MATHIS. I think that is correct too.

Mr. COBURN. Would he be willing to grant the Federal Government a right of first refusal to any land that he saw fit to acquire and then sell?

Mr. MATHIS. I have not discussed that with him, Mr. Coburn.

Mr. COBURN. I assume that your client would probably want to cruise this timber himself before he came up with a firm offer. Is that correct?

Mr. MATHIS. Yes, sir. When I called him last week to clear the letter that I wrote to the chairman of this committee he apparently misunderstood me in my opening conversation and thought that I was ready for him to send a cruising team out there to look the land over. I had to correct him. I said, "No, we are not ready for that. The land I do not believe is in such a position that you can enter a bid on it at this time."

Mr. COBURN. Are you in a position to say whether or not you would accept as a basis for negotiations the appraisal figures that are shortly to be submitted by the Western Timber Service, Inc.?

Mr. MATHIS. I prefer not to comment on that because I have not seen it.

Mr. COBURN. I believe you mentioned in your testimony that there were two appraisals made.

Mr. MATHIS. It is my understanding that 2 appraisals have been made in the past, or there have been 2 estimates on the timber. I think 1 was several years ago, and 1 was to be completed last year. Mr. COBURN. Both by the Government or quasi-Government agencies?

Mr. MATHIS That is right, either by the Government or under Government supervision.

Mr. COBURN. Has your client given any thought to the question of the hunting and fishing rights of the Indians?

Mr. MATHIS. No, sir. Things like that that you are questioning me about now are the reason I put in my letter that agreement can be reached on other necessary factors. I might have said "other necessary and incidental factors," or things of that kind.

Mr. COBURN. You consider these incidental?

Mr. MATHIS. I consider these would be part of the details of the transaction.

You would have to consider each one. I would have to leave that up to the client. I have not discussed these things with them.

Mr. COBURN. Could you briefly summarize then for the record and for the subcommittee just what it is you are offering to do?

Mr. MATHIS. I do not believe Mr. Coburn that I am offering to do anything. I am stating for the record that I do have a client of financial substance who is able financially to undertake this transaction or to purchase all or a substantial part of the tribal lands and timber, provided that the restrictions and limitations placed upon it by statute in the invitations to bid are acceptable to him.

If he can buy this timber at a fair market value I think he would certainly put a bid in on it.

Mr. COBURN. You do not have any idea of what the fair market value is?

Mr. MATHIS. Frankly, I do not. I have not studied that angle. I would leave that entirely up to him. I am not a timber man.

Mr. COBURN. That is all I have.

The CHAIRMAN. Mr. Gamble.

Mr. GAMBLE. Mr. Mathis, in the letter which you sent to the Secretary on February the 6th, in the last paragraph, there appears this

sentence:

In any event, the purpose of this letter is to inform you that we still represent this party and that he is presently interested in purchasing the Klamath forest and tribal lands for cash provided that a fair value can be established and agreement can be reached on other necessary factors.

Does your principal, so far as you know, if given an opportunity to bid on a very substantial portion or all of this timberland, intend to pay cash so that all of these Indians will receive payment within a reasonable time, 30, 60 days, or something of that nature?

Mr. MATHIS. In discussing this transaction with my client it has been understood at all times that whatever bid he put in on all or part

of the lands that he would be required to pay cash, all cash with the transaction.

Senator NEUBERGER. By cash you mean there would be no holdback, that he would have to put up the full price at the time of purchase. Is that correct?

Mr. MATHIS. That is correct. We did not anticipate any installment purchase.

If the price was $100,000 and our bid was that and it was accepted, when we got the conveyance we would pay the $100,000.

Senator NEUBERGER. I want to ask you a couple of questions about this sustained yield matter. You said that your principal did not regard the enforcement clause as feasible or fair. If sustained yield were not practiced, by what means do you think that it should be enforced so that compliance would be assured?

Mr. MATHIS. Let me go back to the first part of your question, please.

I did not intend to quote my client directly on that because I have not discussed the details of this clause with him. I intended to say that I believe that he would not like that provision in the bill.

Senator NEUBERGER. And you, yourself, objected to the form of the clause in analyzing the legislation?

Mr. MATHIS. Yes.

Senator NEUBERGER. Inasmuch as you object to the forfeiture clause of the legislation that is before us, S. 3051, how would you favor that the sustained yield provision would be made operable and would be enforced in case they are in violation?

What compulsion, in other words, would there be on the operator to practice sustained yield?

Mr. MATHIS. As I answered a similar question to Mr. Coburn a moment ago, I have given very little thought to a forfeiture provision for not complying with the sustained yield operation, my thought being that in dealing with people of financial integrity, I did not feel that they needed a penalty clause to have them do what good business principles dictated they should do.

Their timberland is presently on a sustained yield basis, and I think most of the large timber ownerships operate on that basis now.

Senator NEUBERGER. Conditions might arise which might make hasty liquidation feasible and profitable under certain circumstances. You and I both recognize that. These things can occur. I am certainly openminded about this, and I felt that your objection to the forfeiture clause was certainly sincere on your part, but I just wonder how sustained yield would be enforced, if there were not some provision such as this.

Mr. MATHIS. I was more or less expressing a general objection to that provision in the bill. I had not given much thought to the penalty provision. Perhaps it could be enforced by injunction. The courts are available to enforce contractual agreements.

The forfeiture of the entire property by reason of the breach of one provision of the sustained yield covenant, let us say, is a rather severe and drastic penalty when it might have only affected a few acres. You might have required the forfeiture of a few thousand acres to the Government and a man would have no difficulty if that were required. Perhaps there could be a sliding penalty.

I think there are a number of ways that a penalty clause could be worked out that would be feasible, but complete forfeiture of the fee title seems to be the most severe and drastic penalty that could be placed upon a conveyance of this kind.

Senator NEUBERGER. We have been talking about the entire Klamath Forest in our conversation with you, Mr. Mathis. I am sure you realize that were your principal to purchase the entire forest, he would have to do so in blocks in competition with anybody who saw fit to match his price.

In other words, the entire vast forest, with its very great value would not be put in one huge chunk. It would be put up in smaller sections even though they might themselves be sizeable under the terms of S. 3051, but the entire forest could not be purchased at one fell swoop. I am sure you realize that.

Mr. MATHIS. I realize that.

Senator NEUBERGER. Let me ask you this, if I may: Suppose the other bill passed, S. 2047, and these timberlands were added to the contiguous national forest. Do you think your principal would be interested in bidding upon them if they were just put up for sale under the usual and routine methods of the Forest Service in opening up various tracts of timber stumpage for bid?

Mr. MATHIS. I am not too familiar with that procedure Mr. Chairman, but I seriously doubt if my people would be interested in buying this in small parcels.

Mr. COBURN. I think he misunderstood your question, in that, under the Forest Service, assuming that S. 2047 is enacted and the Federal Government acquires these lands and they are managed by the Forest Service and stop me, Mr. Chairman, if I am wrong-as I got the chairman's question, under those circumstances, would your company be interested in going in and buying the timber from the Forest Service and not buying individual tracts of land?

Senator NEUBERGER. In other words, the Forest Service just opens up the stumpage, but the land remains the property of the United States Government.

Mr. MATHIS. My client would not be at all interested in that. If he could not buy the land and operate the forest on a sustained-yield basis under his own methods of operation or substantially the methods he follows, he would not be interested.

Mr. COBURN. It is possible that a forfeiture of the land back to somebody would not be so severe a penalty under certain circumstances, and certainly I do not wish to imply that they would apply to your client, but it is conceivable that a timber operator interested solely in taking advantage, say, of a market situation under the terms of S. 3051, might purchase block A, with a penalty of a forfeiture in case he did not follow sustained-yield management, but his main interest in it is getting that timber.

If he says, "I will go in and sell it and get a quick value back; the timber is the only thing of value to me anyway," is that conceivable? Mr. MATHIS. Yes, that is conceivable. My view is toward purchasing a large part of this rather than a man purchasing a thousand acres. Then forfeiture would not be much of a penalty because he would be buying for the timber anyway.

Mr. COBURN. He could do that under the administration bill, S.

3051.

Mr. MATHIS. Yes, he could.

Mr. WOLF. There are several thousand timber operators who do such purchasing. Has your client any experience in purchasing timber from the National Government?

Mr. MATHIS. That I don't know. I have never asked him.

Mr. WOLF. So you have no way of knowing whether he understands and I take it you do not understand-the operation of the national forest in detail?

Mr. MATHIS. No. My client probably has purchased some timber from the Government under the Forest Service. I am confident that he has, but I have no such information.

Mr. GAMBLE. This subcommittee has two bills now pending before it. It is conceivable that neither one of the bills would be enacted. If that is the case, this timber property will have to be sold under the provisions of Public Law 587 as it is now on the statute books. Could you tell the committee whether or not your principal intends to submit a bid to the Management Specialists who are charged with selling the property on the entire reservation?

Mr. MATHIS. Not until they have cruised and checked it themselves. I am not in a position to answer that.

Mr. GAMBLE. As the law now stands, the managers will put these properties up in blocks and dispose of them. If your principal is interested in obtaining the entire forest property as you have indicated in your letter to the chairman, it would be necessary for him to go to the Management Specialists and I presume make them an offer for the entire block rather than waiting for the individual pieces to be put up for sale.

Mr. MATHIS. That brings to mind a question that I had an incomplete answer on-what conclusions, if any, did I reach in my conversation with Mr. Chilson.

When I left Mr. Chilson's office, I concluded that in all probability the land would be sold under existing public law; that if my people were going to bid on it that it was my duty to get a copy of the current appraisal as soon as possible and get it in their hands; that they would then set up their cruising teams and their timber people to look over the property and come back so that they would be in a position to make a bid.

We intended to follow that procedure and bid on the property, all or part of it, but because the Secretary told us that unless there would be new legislation he would be compelled to set it under the present law, we have been following that procedure or that outline since I left Mr. Chilson's office.

I reported back to my clients, and I told them that that was the procedure. I told them I would keep them advised and I would get this appraisal as soon as possible. Mr. Chilson told me he thought it would seen be available.

I have not been able to get a copy of it. Mr. Grorud has attempted to get a copy for me and I have not been able to get anything to send my client.

Senator NEUBERGER. In other words, when you left Secretary Chilson's office, you were under the impression that so far as the Department of the Interior was concerned, the timber would be sold under the existing law, Public Law 587?

98089-58-pt. 2-16