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A provision in the legislation states, “The conveyancing instruments shall provide for a forfeiture and a reversion of title to the lands to the United States * * * in the event of a breach of such conditions." These conditions refer to a 75-year plan of management as approved by the United States. It is obvious that a potential purchaser would not only be reluctant to place his operations under the control of the Government for 75 years but would consider grossly inequitable the confiscation of his property for some, perhaps minor, infraction of the rules. Not only is sustained-yield management of timber required under the conditions, but also required is the conservation of soil and water resources, giving rise to greater risk of violating Government edict. Since control over the lands will continue for a period of 75 years, conditions and circumstances which prevail at the outset would most certainly change as would, from time to time, the law enforcing officers. It would take both a most benevolent administration and a most circumspect private operator to prevent a situation arising, sooner or later, which would lead to forfeiture proceedings. The hazard to the individual purchaser because of Government dictation is great, but the penalty for an alleged malpractice is even greater. It is very doubtful that any private individual or company would be willing to acquire timberlands under such conditions.

In conclusion, S. 3051 in our opinion would seriously, if not entirely, discourage the competitive sale of the available Klamath timberlands to private enterprise. The final results of its enactment would be acquisition by the Federal Government of most, if not all, of the Klamath timberlands subject to sale. This would suggest that if S. 3051 is enacted, the Congress would be called upon soon thereafter to appropriate a very large sum to pay for Federal acquisition. S. 3051, therefore, should be carefully reviewed from the standpoint of whether or not the Congress would appropriate such a large sum at a time when the demands for defense are so critical and maximum economy in nondefense expenditures is so imperative.

We believe that S. 3051 is not in the best interest of the public, including the Indian owners, and we urge that it not be given favorable consideration.

We will appreciate having this letter made a part of the record of the hearings on this measure. Copies are being sent to other members of your subcommittee for their information. Sincerely,

A. Z. NELSON, Director, Forestry, Economics, and Statistics Division

LANE COUNTY SCHOOL DISTRICT No.52,

Eugene, Oreg., February 11, 1958. Senator RICHARD NEUBERGER,

Senate Building, Washington, D.O. DEAR MR. NEUBERGER: In the early part of January I wrote you concerning the termination of the Klamath Indian Agency. Your reply indicated that you also were concerned.

I suggested in my January letter that an economic adviser and counselor be furnished for the purpose of helping the Indian invest his money wisely and that religious or fraternal groups be contacted to help find jobs and provide social life for the Indian in his new location. Your reply indicated to me that you and the Interior Department did not have all the answers. I don't either but I have an additional idea or two. As briefly as possible those ideas are listed below.

1. A period of possibly 10 or more years should be used to liquidate the Klamath Reservation.

2. Families now capable of managing their own affairs should be the first separated from wardship. This separation should take place after satisfactory arrangement has been made of their financial affairs and their situation gives them a chance to make good on their own. This process to be continued as rapidly as possible.

3. Ten to 20 percent of the appraised value of the reservation should be set aside to provide for population increase over the period of liquidation.

4. Children resulting from Indian marriage to whites after January 1, 1959 not considered Indians or wards of the Government.

5. Education among Indians should be encouraged and an educational adviser furnished. This person might also be the financial adviser.

6. When families are ready to go on their own the Government pay them according to the appraised value of the reservation. To me it seems better to keep the reservation as is than to liquidate the reservation without reasonable preparation on the part of the Indians. For most of them to become welfare cases within a few years will be of no advantage. I do thank you for your time and consideration. Sincerely,

PHILIP M. BERG.

ANALYTICAL STUDY OF S. 3051, 85TH CONGRESS By Mollie Z. Margolin, American Law Division, The Library of Congress

Legislative Reference Service S. 3051, 85th Congress (sec. 1) adds a new section (sec. 28) to the Klamath Termination Act of August 13, 1954 (68 Stat. 718) to provide as follows:

(A) SUMMARY OF PROVISION

The tribal lands that comprise the Klamath Indian Forest and the Klamath Marsh shall be designated by the Secretary of the Interior and by the Secretary of Agriculture. Effect of provision

This provision creates no new rights or obligations. It merely seeks to have the boundaries of the tribal forest and of the tribal marshlands formally defined and made a matter of public record.

(B) SUMMARY OF PROVISION

The Secretary of the Interior and the Secretary of Agriculture, jointly, shall divide into appropriate units the portion of the Klamath Indian Forest which is selected by the Management Specialists to be sold in order to pay the members who elect to withdraw from the tribe. These units shall be offered for sale to private enterprise, on the basis of competitive bids. The minimum price which may be accepted is the value set for this land by the official appraisal approved by the Secretary of the Interior, which shall be based on the assumption that 70 percent of the forest would be thrown on the market at once, would be sold by August 13, 1960, and would be sold without any restrictions as to its use.

The deeds which will be given to the purchasers of each unit shall contain a covenant restricting the use of such land according to specified sustained-yield plans, including provisions for conservation of soil and water resources, for a period of 75 years, such covenants to run with the land. There is to be no reduction in the price of the land by reason of this covenant.

In the event of a breach of such conditions by a grantee or any of his successors in interest, the deed shall provide for a forfeiture of title in the lands by the grantee or his successor in interest, and for a reversion of said title to the United States not in trust for or subject to Indian use, but to become national forest lands. Effect of provision

Sale of forest lands under section 5 (a) (3).-Section 5 of the Klamath Termination Act provides that each member of the Klamath Indian Tribe shall be given an opportunity to elect to either withdraw from the tribe and have his interest in tribal property converted into money and paid to him or to remain in the tribe and participate in a tribal-management plan. Since approximately 90 percent of the Klamath tribal property consists of forest and marshlands, and since, according to a 1955 survey conducted by the Stanford Research Institute among tribal members on the Klamath Reservation, it appears that about 70 percent of the members may elect to withdraw, it is probable that a major portion of the Klamath Indian Forest may have to be sold to pay these members who elect to withdraw.

Appropriate units.-A prospective purchaser of a unit of this forest land would be faced with the fact that "a sustained yield timber-growing investment in the Klamath Basin is one that offers very small annual dividends when consideration is given to the large values of the timber which must be invested in the venture. If the owner of the * * * property also operates a mill that utilizes the forest resources being grown, the annual returns from the overall timber-growing-utilization undertaking may become a relatively profitable un. dertaking” (tentative Management Plan, as revised August 1957, p. 72).

The Government must also consider the fact that “the Management Specialists who have responsibility for sales of these units, are obligated under the law to obtain on behalf of withdrawing members the greatest possible returns from tbese sales. This obligation means that a sizable portion of the area to be sold would have to be sold in small-sized units in order to obtain the greatest amount of competition possible. It is doubtful that such small units, within themselves, can furnish a sustained cut for even the smallest of sawmills" (from a letter of September 26, 1957, from the Secretary of the Interior to Senator Neuberger as chairman of the Senate Subcommittee on Indian Affairs).

The Secretary of the Interior, in a letter of January 13, 1958, to the President of the Senate, further pointed out that there are two major difficulties involved in maintaining a sustained-yield program for these lands. One is that Federal enforcement of a sustained-yield agreement will present administrative probleins. These, he claims, will be minimized if the lands that are to be sold ale offered for sale in a comparatively small number of units, for example, 10 to 15, containing relatively large acreages. The other is the possibility that private industry may not be willing to pay the full market value of the land if it is subjected to a sustained-yield requirement.

Also, in connection with the size of the units, evidence has been offered in the hearings on S. 2047, 85th Congress, to the effect that if the majority of timber should get into the hands of a few large operators, the 5 or 6 small mills which are able to operable in the area under present conditions, will eventually be eliminated, constituting a blow at the principle of small business (p. 27). All these factors must be weighed in arriving at “appropriate units."

Market value.-Although the bill states that the purchase price paid by the grantee shall be deemed to represent the full appraised market value of the lands, undiminished by the right of reversion retained by the United States, is that really so in effect ?

The bill does provide that the realization value of the units involved shall be determined as if 70 percent of the forest were offered for sale without limitations, to be sold in about 2 years. However, the bill does not provide that ihe price must be determined as if that 70 percent were offered in small units. The competition among 1,000 or more buyers would indeed be greater than that among 10 or 15 buyers. This may amount to a sizable reduction in price.

Section 28 (h) of S. 3051 provides that the United States shall maintain roads which are located on tribal lands sold under this act. This provision is not limited to access roads needed by the United States, but is made applicable to all roads located on the land at the time of sale. In arriving at a “realization value” of each unit offered for sale, the appraisers could not have taken into consideration this service which the United States would furnish to the purchasers under S. 3051 since this bill was not presented before January 16, 1958. In effect, this service rendered by the United States, without an increase in the price of the unit, amounts to a reduction in the price of the land.

Furthermore, one of the purposes of S. 469, 85th Congress, which was enacted into Public Law 85–132, amending the Klamath Termination Act, was to halt the sales of land until Congress was able to arrive at another method of sale which would “(2) prevent forced sales of Klamath tribal timberlands in quantities and at times that will unreasonably depress the market” (H. R. Rept. 379, 85th Cong., p. 78). Yet the minimum price set by S. 3051 is as though 70 percent of the forest land would be thrown upon the market at once. This is a true reflection of conditions, for 70 percent probably will be thrown upon the market, but it was the intent of S. 469 that this situation be prevented. S. 3051, by the sustainedyield plan will prevent the depression of the timber market, but it contains no provision for preventing the depression of the timber land market so that the Indians will a better price for their land.

Sustained-yield covenant.The covenant by the grantee, to manage the forest lands which he purchases, according to a specified sustained-yield plan, will be included in the deed, will form a "covenant running with the land” and will be binding on the grantee and his successors in interest for 75 years. Validity of restrictive covenant

Such a condition in the deed would be valid.--"* * * The owner of property has a right to dispose of it with a limited restriction on its use, however much the restriction may affect the value or nature of the estate. Repugnant conditions

98089-58-pt. 2

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are those which tend to the utter subversion of the estate, such as prohibit entirely the alienation or use of the property. * * * Its subjection to particular uses [is] not subversive of the estate * * * [It does] not destroy or limit its alienable or inheritable character (Sheppard's Touchstone, 129, 131). The reports are full of cases where conditions imposing restrictions to which property conveyed in fee may be subjected have been upheld * * (Corell v. Springs Co., 1879, 100 U. S. 55, 57, and cages cited therein).

I lowever, whether the United States will be able to enforce the covenant or enforce a reversion of title to itself upon breach of this covenant is open to question.

In order that a covenant may run with the land there must be (1) observance of the formalities requisite to the making of a technical covenant or promise under seal; (2) an intention of the parties that the covenant should so run; (3) a promise of such kind that it may be held “to touch or concern the land”; and (4) “privity of estate” (Charles Edward Clark, Real Covenants and Other Interests Which Run With Land (1929), p. 119).

The first two requirements are met by S. 3051. The third is designed to establish some degree of connection between the covenant and certain realty, and it necessitates, as a scientific method of test, the measuring of the legal relations of the parties with and without the covenant. If the promisor's legal relations, in connection with the land in question, and not merely as an individual, are lessened or materially modified, the burden "touches or concerns” the land ; if the promisee's legal relations of like kind are increased or materially modified, the benefit "touches or concerns” the land (Id. pp. 119-120). S. 3051 also meets this test. The promisor in this case is the purchaser whose legal relations in connection with the land are lessened in that he is restricted to use the land under a sustained-yield plan. The promisee in this case is the Klamath Tribe which is really the grantor of this land since the United States merely holds the title to such land in trust for the Klamath Indians. Their legal relations with the land are increased since they benefit by the restriction in the grant, in that it helps the economy of the area, rendering their other land more valuable.

It is point (4) which presents the problem. Privity of estate is lacking as far as the United States is concerned. Privity of estate requires succession to the estate in the land of one of the parties to the covenant. When a unit of forest land will have been sold, the United States, in transferring to the purchaser the title of which it held in trust for the Indians, will not succeed to any estate in the land which was held by the Indians, and therefore there will be no privity of estate with the original covenantee as is required (Id., p. 94).

Furthermore, should the title of a unit sold eventually revert to the United States because of a breach of the covenant, the United States would own a parcel of land for which it has paid no consideration either to the covenantor or covenantee, and a court may hold that the United States has unduly profited from a transaction which it conducted as trustee for the Klamath Tribe which was its cestui que trust. Although the good intentions of the United States are indisputable, the court will have to decide whether the duties of the Federal Government to preserve the economy of the entire Klamath Basin should outweigh the duty of loyalty on the part of a trustee to its cestui que trust in obtaining the reversion of trust property to itself rather than to its cestui que trust. For a general discussion of the subject of loyalty duties of trustees, see Bogert, Trusts and Trustees, sec. 543.)

(C) SUMMARY OF PROVISION

After January 1, 1960, the Secretary of Agriculture shall purchase any forests units which have been offered for sale and have not been purchased by private industry, which he thinks are suitable for national forest administration, The purchase price shall be the minimum price set for such unit under subsection (b) above, and an appropriation to cover such purchases is authorized.

Any forest unit offered for sale which has not been purchased either by private industry or by the Secretary of Agriculture for national forest land, shall be offered for sale without the covenant restricting its use to a sustained-yield plan. Effect of provision

If private industry refuses to purchase the units of forest land subject to the sustained yield restriction, at the price set for same by Congress then "Federal acquisition of the part of the forest that must be sold under the present Termination Act, would accomplish the conservation objective without infringing the rights of the Indians" (letter of Jan. 13, 1958, from the Secretary of the Interior to the President of the Senate, p. 3).

As to the validity of Federal purchase, the Indians have continuously been ceding lands to the Federal Government, for a consideration, and the courts have consistently upheld the validity of same. As recently as June 21, 1906, the Klamath and Modoc Tribes and the Yahooskin Band of Snake Indians ceded a portion of their reservation in Oregon to the Federal Government in return for payment of $537,007 (34 Stat. 367, ch. 3504).

In the hearings on S. 2047, 85th Congress, testimony was offered that the Klamath Indians and the other residents of Klamath Falls, Oreg., strongly prefer Federal purchase to other means of termination.

(D) SUMMARY OF PROVISION

If at any later time, the Klamath Tribe shall offer for sale, other than to members of the tribe, any forest lands which it shall have retained, such lands must first be offered for sale to the Secretary of Agriculture who shall be given 12 months in which to accept such offer and purchase the lands for national forest. No tribal lands shall be sold at a price lower than that for which they were offered to the Secretary of Agriculture without first being reoffered to him. Effect of provision

This provision seeks to protect the remaining tribal lands which do not have to be sold before 1960 but which will remain with the estimated 30 percent of the members who will choose to remain in the tribe.

Under the Tentative Management plan, an election to terminate the trust over the remaining tribal property may be held every 5 years. If the beneficiaries shall, in 5 years, vote for a termination of the trust and a distribution of the trust assets (pars. 15, 16, and 18 of plan), there will be no duplication of the present problems. The land will first be offered to the Secretary of Agriculture.

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The lands which comprise the Klamath Marsh shall be selected as part of the property to be sold to pay members who withdraw from the tribe. Such land shall not be offered for sale to private enterprise but shall immediately be acquired by the United States. The price to be paid for same shall be the realization value shown on the appraisal referred to in subsection (b) above. Appropriation for said compensation is authorized, and said lands are to be administered as the Klamath Forest National Wildlife Refuge. Effect of provision

As has been pointed out by the Secretary of the Interior (letter of January 13, 1958, supra), “the marsh on the Klamath Reservation is the most important marsh to waterfowl that is left unprotected in the Nation.” Federal acquisition will protect this. It should be pointed out that the Klamath Marsh consists of about 21,000 acres of tribally owned lands, 15,000 of which is too wet for grazing, and is used as a nesting area for waterfowl. However, the remaining 6,000 acres are classed as dry marsh, on which it is possible to graze large numbers of livestock during most grazing seasons (excerpt from report of the Management Specialists, hearings on S. 2047, 85th Cong., p. 75). S. 3051 apparently contemplates Federal acquisition of the entire 21,000 acres to be operated as a national wildlife refuge.

(F) SUMMARY OF PROVISION

Any Klamath Indian who has been occupying since December 31, 1956, a homesite on forest land which will be acquired by the Secretary of Agriculture will be entitled to continue to occupy a homesite for his lifetime a reasonable acreage of such site, under regulations of the Secretary of Agriculture. Effect of provision

This provision is in line with Federal policy to open to homestead entry, lands in national forests which in the opinion of the Secretary of Agriculture may be occupied for agricultural purposes without injury to the national forests and which are not needed for public purposes. The Secretary of Agriculture has authority under existing law, to open such lands to homestead settlement and entry, in tracts not exceeding 160 acres in area, and not exceeding 1 mile in length (16 U. S. C. sec. 506).

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