through the deposit to their account in the United States Treasury of their proportionate share of the deductions from stumpage receipts made for administrative expenses. Tribal participation funds are administered by the Bureau in the same manner as are appropriated funds. This procedure, authorized under existing regulations, enables the tribes to take an important part in business management.

The Department welcomes greater participation by Indian tribal councils and other representative groups in formulating realistic working plans for timber management on the respective reservations. While basic policies and procedures are prescribed by law and regulations, most of the management program is developed at the reservation level. Tribal councils are given adequate opportunity to express their thoughts and desires in regard to various forestry programs. In line with the Bureau's efforts to prepare the Indians to assume the management of their own affairs, tribal councils are urged to make greater contributions toward the planning of forestry programs. It does not appear, however, that revision of the regulations is necessary to accomplish this.

Indians are participating in the management of their timber resources through Indian logging and milling operations. These business operations have been encouraged in conformity with the objective of Indian forest management stated in section 141.1 (c) of the regulations. During the calendar year 1957 a total of more than 80 million feet of Indian-owned stumpage, valued at nearly $12 million was purchased by Indians under contract throughout the United States. of this timber was processed in Indian sawmills.

Most

The

Some of the timber purchased by Indians has been sold under the provisions of title 25, Code of Federal Regulations, section 141.17. Sales of stumpage not exceeding $5,000 in value have been made without advertising for the express purpose of encouraging the establishment of individual Indian businesses. Colville Reservation in Washington provides an example of this type of individual enterprise. In 1946 a tribal council resolution set aside one small drainage and divided it into several compartments. The timber on these areas was contracted to tribal members who were interested in conducting logging operations. The operators were successful and additional units were established as the first areas were cut out. By 1953 it was apparent that the Indian logging operators were well established and no longer required the assistance of sales made without advertising. Subsequent council resolutions have set aside an area of considerable size within which all timber sales will be advertised with bidding restricted to enrolled members of the Colville Tribe.

The Bureau has a responsibility to the tribes to make sure that restricted sales result in a reasonable return for the stumpage. Encouragement of restricted sales under present conditions could easily result in a reduced income to the tribe while benefiting a relatively few members. In spite of the fact that this has been brought to the attention of the Indians through their tribal governing bodies, the councils in some instances have continued to advocate restricted bidding. Full control of the management of timber resources by the Indians, in these cases, might well result in stumpage rates lower than those that the report on Federal timber sales policies finds adequate.

In summary, the Department concurs wholeheartedly with the recommendation of the committee that individual tribal members who live away from their reservations should be given an opportunity to express themselves with regard to the selection of persons to represent them on the tribal governing body. The Bureau does, at every opportunity, encourage the tribal members responsible for developing tribal election procedures to include in those procedures some means whereby the tribal members living away from their reservations may vote by absentee ballot. We should like to point out, however, that except for the Osage Tribes (71 Stat. 471) the Bureau of Indian Affairs is without statutory authority to prescribe procedures governing the election of representatives to tribal governing bodies. Therefore, in offering our suggestions relating to tribal election procedures we realize that the tribe is not obligated to incorporate them into their procedures if they choose not to do so.

Tribal councils generally are not given the authority by the individual tribal members to represent them in dealing with individually owned property.

The Department agrees with the concept of encouraging and developing greater opportunities for individual Indian participation in the management of his or her own affairs. Basically, in the conduct of timber sales the Indian allottee is advised of the minimum stumpage price as established by an appraisal. Upon receipt of bid quotations the Secretary or his representative negotiates a contract serving the best interest of the Indian. In subsequent stumpage price adjust

ments, every practicable effort is made to keep the allottee informed, which is generally done through the tribal governing body. We have found from practical experience that the average Indian owner keeps in fairly close contact with the local agency office concerning the status of any transactions affecting his interest. The principle of consultation with Indians lies at the heart of all our actions with the Indian people, and our objectives are aimed at formulating and establishing a process whereby the procedure may provide maximum business participation by the Indians.

There has been no provision in the contracts for consultation with individual allottees concerning stumpage adjustments. Each allottee has had the privilege of either signing or not signing powers of attorney for the sale of his timber through contracts entered into for and in his behalf, usually by the Superintendent. The Superintendent has acted to include these allotment contracts under a general contract which authorizes the approving officer to adjust stumpage rates. It has been the policy of the Bureau to consult with tribal officials in these matters in an attempt to obtain a reflection of individual desires.

It will be of interest to the committee to learn that although most of the allottees on the Quinault Reservation were quite anxious to sell their timber, more than a year was required to assemble sufficient powers of attorney to make the sales. This was because they are widely dispersed throughout the country. Consulta tion with each of these allottees in connection with stumpage adjustments would present almost insuperable difficulties, and would serve no good purpose. allottee committee, as discussed above appears to be the best solution.

Recommendation F-8

An

The entire question of timber sale deductions is being studied at the secretarial level, to determine whether there should be any change in current policies and practices and, if so, whether amendatory legislation is desirable. At present, the timber sale deductions are made pursuant to the act of February 14, 1920, as amended (25 U. S. C. 413), which authorizes the Secretary of the Interior, in his discretion and under such rules and regulations as he may prescribe, to collect reasonable fees to cover the cost of any and all work performed for Indian tribes or individual Indians. The fees are to be paid by the vendees or lessees, or deducted from the proceeds of sales or other sources of revenue.

At the time of the joint committee investigation, the Secretary's regulations with respect to timber sales, pursuant to the foregoing act provided (25 C. F. R. 61.25): "Deduction for administrative purposes. In all sales of timber from either allotted or unallotted land a sufficient deduction will be made from the gross proceeds to cover the cost of examining, supervising, advertising, collecting, disbursing, accounting, marketing, scaling, caring for the slash, and protecting from fire the timber and young growth left standing on the land being logged or upon adjacent land. Unless special instructions have been given by the Commissioner of Indian Affairs as to the amount of the deduction or the manner in which it is to be made, 10 percent of the gross amount received for the timber sold under regular supervision from allotted or from unallotted land will be deducted by the Superintendent to cover administrative expenses as required by the act of February 14, 1920 (41 Stat. 415; 25 U. S. C. 413), as amended. When timber on either allotted or unallotted land is sold for a lump sum on an estimate in such a manner that no administration by the Indian Service subsequent to the sale is required, a deduction of 5 percent of the sale price will be made to cover the cost of estimating the timber and effecting the sale."

The revised regulations, now being reviewed for approval, provide:

"141.18 Deductions for administrative expenses. In sales of timber from either allotted or unallotted lands a reasonable deduction shall be made from the gross proceeds to cover in whole or in part the cost of managing and protecting the forest lands, including the cost of timber sale administration, but not including the costs that are paid from funds appropriated specifically for fire suppression or forest-pest control. Unless special instructions have been given by the Secretary as to the amount of the deduction, or the manner in which it is to be made, there shall be deducted 10 percent of the gross amount received for timber sold under regular supervision, and 5 percent when the timber is sold in such a manner that little or no administration by the Indian Bureau is required subsequent to the sale."

When the study of this question, mentioned above, is completed it can be determined whether new legislation is needed and whether the regulations should be revised.

The question of timber-sale deductions was covered exhaustively before the Senate Subcommittee on Indian Affairs in its investigation of Quinault Reserva

tion timber sales (S. Rept. No. 971, 85th Cong., 1st sess.). The published record of those hearings, and subsequent correspondence with the main committee are therefore made a part of this report, by reference.

Recommendation F-9

This recommendation is in harmony with the objectives to be sought in the management of Indian forests as expressed in title 25, Code of Federal Regulations, section 141.1. Among these objectives are the preservation of Indian forests in a perpetually productive state, regulation of the cut, the development of Indian forests by the Indian people, and open-market sale of harvestable timber that is in excess to practicable development needs of the Indians.

The regulations in effect at the time of the committee investigation were relatively inflexible and provided only three procedures for an allottee who wished to harvest timber from his own allotment; namely, (1) entering into a partnership agreement with another person who, in turn, would contract for the purchase of the stumpage, or (2) cutting timber under a permit in which case he could cut no more than $100 worth of stumpage in any year, or (3) cutting timber for his own personal use, but not for sale, such as house logs, fencing, etc.

The regulations now under consideration for approval will authorize an Indian having sole beneficial interest in an allotment to cut and sell timber from his allotment under a special form of permit. The permit will incorporate provisions for payment of administrative fees by the allottee; and for a special deposit by the allottee, to finance any work needed to offset damage to the land or timber caused by the allottee's failure to comply with provisions of the permit.

The proposed new regulations are an improvement, but not a complete solution. Many proposals have been considered to attain the objective of giving the individual Indian greater freedom of action in the harvest of his timber, but none has yet been devised that is completely satisfactory to all concerned.

A solution is complicated by the differences in objectives of many Indians, in regard to their trust allotted timber, and the objectives appearing in the Code of Federal Regulations, as outlined above. The broad objective of the Bureau is to manage Indian timber to produce a maximum sustained income for the owners. This objective is unquestionably well founded when the welfare of a large group of people is considered. When applied to an individually owned allotment, there may be considerable differences of opinion as to its advisability, and it is at this point that compromises with the broad objectives may be desirable.

On page 34, part II, of the Report on Federal Timber Sales Policies, the following statement appears: "Neither of these plans [patents-in-fee and supervised sales] include provisions to help the Indian develop a method of forest management." There is little evidence that the Indian's desire to operate his own timber stems from a lack of confidence in the Bureau's management methods as they affect the sustained yield of the timber. Rather, the facts point toward the desire of the allotment owner to liquidate his timber as quickly as possible. Essentially, the Indian's dissatisfaction is with the objective of managing his timber for a sustained periodic income, even though the total of such income may far exceed the current liquidation value.

The regulations defining the trustee responsibilities of the Secretary of the Interior over Indian forests clearly limit the development of timber, whether by Indians or non-Indians, to methods providing sustained yield. This the Bureau accomplishes through its timber sales program in which all development activities are supervised. If Indian allottees are authorized to develop their own timber either some means must be found whereby the sustained-yield management of the timber is insured and the Secretary is enabled to continue to fulfill his responsibilities, or the sustained-yield requirements on Indian timber must be relaxed. The proposed new regulations were drafted with this situation in mind.

The basic objectives of the allotment owner should be analyzed in attempting to find a solution to the problem. The desire to sell all of the timber, rather than a portion of it, has been mentioned.

Timing of the sale is important to the individual. A comprehensive development plan for a reservation may schedule a given allotment for cutting in 5 years, based on the condition of the timber and other considerations. The allotment owner would like to sell the timber now. The difficulties of planning a reservation timber sales program to meet individual schedules on several hundred allotments (2,000 allotments on the Quinault Reservation) can be easily seen.

Allottees frequently believe that they could receive a higher return for their timber if allowed to sell it themselves. In some cases, this is undoubtedly true. The subsidizing of an allottee owning low quality timber by the allottee owning

higher quality timber has been discussed in connection with other committee recommendations.

The average Indian allottee may not be sufficiently informed on timber sale problems to protect himself adequately in selling his own timber. The pitfalls in such an enterprise may be varied and complicated. The supervision of timber sales on trust land, therefore, could not be turned over to the Indian owners without increasing the complexities of trusteeship. As long as the land remains in trust, the Secretary is responsible for the welfare of the owner-even when the welfare is endangered as a result of action by the Indian himself.

It would appear that a patent-in-fee, issued at the request of a competent Indian, provides the most workable solution under present regulations for the Indian who wants either to liquidate all of his timber or who wants to continue the management of the timber to suit his own needs. The individual, once a patent is issued, is entirely free of restrictions other than those that apply to all private landowners. The same services are available to the Indian as to all others in regard to the development of management policies. These include advice and assistance from extension foresters, State universities, private consulting foresters, and others.

The pooling of allotments was suggested to the Quinault Indians more than 10 years ago. The proposal provided that each allottee would receive annual income in proportion to his share of the total value of the pooled timber. Receipts from stumpage would have been distributed in this proportion regardless of which allotment was being cut. The advantages to the owner of the allotments that would have been cut last were obvious, but the owners of more advantageously located tracts were more interested in immediate full payment than in subsidizing their less fortunate neighbors. The proposal received only one-sided approval and was abandoned.

Pooling of allotments provides no solution for the individuals wanting total liquidation as opposed to periodic income.

The staff report suggests, at pages 68 and 69, that better utilization and realization on existing values might be secured were the Indians to market their own timber. The report also suggests that the procedure would require astute business management on the part of the Indians, and that some additional financing would be necessary. There is the further suggestion that the Bureau of Indian Affairs, in cooperation with the Indians, could accept bids from contract loggers to log the timber to specification.

These possibilities have not been overlooked, the most highly developed examples being the Indian enterprise sawmill operations on the Menominee, Red Lake, and Navajo Reservations. These are good sized commercial sawmills, operated with tribal funds under trustee supervision by the Federal Government. A less ambitious operation is found on the Fort Apache Reservation where a tribal enterprise has let a contract for logging tribal timber and sawing it into rough lumber. This lumber is then finished and sold by the tribal enterprise.

Less ambitious plans could be developed covering tribal timber or a pooling of allotted timber, along the lines suggested in the staff report. The pooling of allotments would inject difficulties, not entirely insurmountable, because of the Government's obligation to see that the interest of each allottee is safeguarded. Recommendation F-10

The Indian Bureau is in general agreement with the foregoing recommendstion, as indicated by the statements under "B. Acess," and "C. Access Roads," above. The whole question of access to Indian timber, the present problems, and the problems that may be developing is under study. The following comments outline some of the problems to be resolved.

Timber access roads in connection with the harvesting of tribal timber do not present an exceedingly difficult problem. The consent of the tribal governing bodies would be necessary as well as the consent of any allottees who may be involved. The question of whether or not to construct access roads, the cost of which must be reimbursed from timber sales, is naturally one which must be considered by the Indians. There are indications that some tribes would not agree to an access road program unless the construction was nonreimbursable. A specific consideration of access roads on the Quinault Indian Reservation would be confined largely to the so-called Queets unit since other areas are under contract. An access road into this area raises numerous and varied complica tions. This unit is almost entirely allotted land and would require consent and agreement from each allottee who might be affected to provide for the propor tionate share of reimbursement of the cost of construction. The most logical method of reimbursement would be through the deductions from timber sale

receipts. As long as the allotments remain in trust status this could be readily accomplished. If fee patents were issued, the individuals could then make their own arrangements for the sale of timber and the Bureau would no longer be in a position to collect for the access road construction unless agreement were reached for use of the road and payment of tolls.

If it were possible to arrive at an agreement on road construction with all of the allottees, the rise and fall of stumpage values would affect the stumpage return of different individuals. With a road constructed in advance of logging, the costs would be fixed and it would be necessary to assign the cost per thousand boardfeet to the timber to be hauled over the road. With high stumpage rates the cost per thousand board-feet would be relatively low and with low stumpage rates relatively high.

There is also the problem of timberlands which are not in Indian ownership. It would be necessary to obtain the consent of such owners to assess their timber to assist in payment of road construction.

The construction of an access road into the Queets unit would not entirely solve the access problem since there would still be many allotments over which rightof-way would be required to reach the access road. The access road would be most advantageous for those allottees whose lands are located on or near it. All others would still be plagued with right-of-way problems but not to the extent under present circumstances.

The Department's position on access roads has been and will be made known in connection with its reports on legislation concerning access roads.

G. RESTRICTIONS AFFECTING THE SALE OF TIMBER

FINDINGS AND CONCLUSIONS

The joint committee finds that full and effective competition among prospective purchasers of Federal timber may be adversely affected by: 1. Size, timing, location, and length of sales;

2. Financial requirements;

3. Allocation of timber supply to selected companies, communities and areas.

In some areas these factors have placed the small operator at a definite disadvantage in competing for Federal timber. Some of these factors have also resulted in financial loss to the Government and more particularly to the Indian people for whom the Government acts as trustee.

Size, length, timing, and financial terms

The joint committee finds that in the Pacific Northwest more bidders participate in small sales (those under 25 million board-feet) than in the so-called large sales. Further, in the case of small sales there are fewer one-bid sales and a larger increase of bid price over the appraised value. In addition, larger sales are beyond the financial reach of the smaller firms which are thus effectively barred from participating in the bidding. On the other hand, larger companies often do bid upon the smaller sales. Very large long-term sales are often marked by a decided lack of competition.

The absence of an annual timber-sales program, given wide publicity, often acts as a deterrent to competition because all interested parties are not fully informed of size, time, and location of prospective Government timber sales. The timber sale programs of the agencies are not coordinated.

We also find that the agencies apply somewhat different financial requirements to sales of similar size. The Forest Service has developed a method for setting installment payments so that these payments