SEC. 19. Effective on the date of the proclamation provided for in section 18 of this Act, all powers of the Secretary or other officer of the United States to take, review, or approve any action under the constitution and bylaws of the tribes are hereby terminated. Any powers conferred upon the tribes by such constitution which are inconsistent with the provisions of this Act are hereby terminated. Such termination shall not affect the power of the tribes to take any action under their constitution and bylaws that is consistent with this Act without the participation of the Secretary or other officer of the United States. SEC. 20. The Secretary is hereby authorized and directed to transfer title to cemeteries within the Colville Reservation to any organization authorized by the tribes and approved by him. In the event such an organization is not formed by the tribes within eighteen months following the date this section becomes effective, the Secretary is directed to perfect the organization of a nonprofit entity empowered to accept title and maintain said cemeteries.

SEC. 21. The Secretary is authorized to set off against any indebtedness payable to the tribes or to the United States by any individual member of the tribes or payable to the United States by the tribes any funds payable to such individual or tribes under this Act and to deposit the amounts set off to the credit of the tribes or the United States, as the case may be.

SEC. 22. Nothing contained in this Act shall deprive the tribes or their constituent parts of any right, privilege, or benefit granted by the Act of August 13, 1946 (60 Stat. 1049).

SEC. 23. Nothing in this Act shall abrogate any valid lease, permit, license, right-of-way, lien, or other contract heretofore approved. Whenever any such instrument places in or reserves to the Secretary any powers, duties, or other functions with respect to the property subject thereto, the Secretary may transfer such functions, in whole or in part, to any Federal agency with the consent of such agency and may transfer such functions, in whole or in part, to a State agency with the consent of such agency and the other party or parties to such instrument.

SEC. 24. The Secretary is authorized to issue rules or regulations necessary to effectuate the purposes of this Act, and may in his discretion provide for tribal referendums on matters pertaining to management or disposition or tribal assets. SEC. 25. All Acts or parts of Acts inconsistent with this Act are hereby repealed insofar as they affect the tribes or their members.

SEC. 26. If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the remainder of the Act and the application of such provision to other persons or circumstances shall not be affected thereby. SEC. 27. Prior to the issuance of a proclamation in accordance with the provisions of section 18 of this Act, the Secretary is authorized to undertake, within the limits of available appropriations, a special program of education and training designed to help the members of the tribes to earn a livelihood, to conduct their own affairs, and to assume their responsibilities as citizens without special services because of their status as Indians. Such program may include language training, orientation in non-Indian community customs and living standards, vocational training and related subjects, transportation to the place of training or instruction, and subsistence during the course of training or instruction. For the purposes of such program the Secretary is authorized to enter into contracts or agreements with any Federal, State, or local governmental agency, corporation, association, or person. Nothing in this section shall preclude any Federal agency from undertaking any other program for the education and training of Indians with funds appropriated to it.

SEC. 28. Nothing in this Act shall affect the authority to make timber sales otherwise authorized by law prior to the termination of Federal control over such timber. If title to any of the lands comprising the Colville Indian forest is purchased by the United States, the administration of any outstanding timber sales contracts thereon entered into by the Secretary of the Interior as trustee for the tribes shall be administered by the Secretary of Agriculture.

SEC. 29. All sales of tribal lands pursuant to this Act on which roads are located shall be made subject to the right of the United States and its assigns to maintain and use such roads.

SEC. 30. Any person whose name appears on the final roll of the tribes who has, since July 24, 1961, continuously resided on any forest lands purchased by the United States by this Act shall be entitled to occupy and use as a homesite for his lifetime a reasonable acreage of such lands as determined by the Secretary of Agriculture, subject to such regulations as the Secretary of Agriculture may issue to safeguard the administration of the national forest.

SEC. 31. The costs required by this Act may be paid from tribal funds which are hereby made available for such purpose subject to full reimbursement by the United States and the appropriation of funds for that purpose is hereby authorized.

U.S. DEPARTMENT OF THE INTERIOR,

OFFICE OF THE SECRETARY, Washington, D.C., April 2, 1965.

Hon. HENRY M. JACKSON,

Chairman, Committee on Interior and Insular Affairs,
U.S. Senate, Washington, D.C.

DEAR SENATOR JACKSON: This responds to your request for a report on S. 1413, a bill to provide for the termination of Federal supervision over the property of the Confederated Tribes of Colville Indians located in the State of Washington and the individual members thereof, and for other purposes.

The Department has no objection to the enactment of the bill if it is amended to require a favorable vote of a majority of the adult members of the tribe, rather than a majority of those voting, and if it is further amended as indicated in the enclosed appendix.

The position of the Department of the Interior is that severance of the Federal trusteeship is not objectionable if it is done by mutual consent. S. 1413 provides for a referendum, and is therefore consistent with this policy of the Department.

Experience with previous terminations, however, leads us to recommend a number of perfecting amendments, which are contained in the attached appendix. Two of them are of sufficient important to warrant special mention. The bill as drafted does not specify the size of the electorate which is to determine the future of the Colville Tribes and their valuable estate. In a matter of this importance, it seems to us that a substantial number of the tribal members ought to express their views and that the legislation should specify the necessary number. We recommend that a majority of the adult enrolled members ought to vote affirmatively for liquidation before the decision is made so to do.

Furthermore, the method of evaluating so large a forest ought to be specified in the legislation. We interpret the language referring to "an appraisal of the fair market value" to mean the cash value of a clear cut, spread over 10 years, undiscounted, and have so stated in a proposed amendment.

Although we accede to the desire of the Congress to refer the future of the reservation to the Colville members, we think it is important that the members know of the existence of an alternative to liquidation.

We have for some time been developing a proposal to develop a forest products enterprise at Colville that will satisfy the legitimate desire of the tribal members both on and off the reservation for income; keep the forest intact and operated on sound conservation principles; vest the interests of each tribal member so that his share of the tribal estate may be devised or bequeathed; provide maximum employment for those members of the tribes who prefer rural to urban living; and provide revenues for the cost of local government. This proposed plan is summarized here, and a more complete description will be provided at the hearing on the bill.

In broad outline, the plan is as follows:

An investment by a Federal loans of $12 million for plant construction, and $1,850,000 for working capital.

At a cutting rate of 120 million board feet per year, gross revenues of $17,784,000 would result from sales of logs, lumber, plywood, and chips.

With estimated costs of $15,742,000 and assuming present tax advantages accorded conventional tribal enterprises, net profit would be $2,042,000.

Added to this profit would be $1,912,000 from sale of stumpage, making a total of $3,934,000. A reserve for debt repayment of $480,000 would leave $3,454,000 for per capita payments of about $700.

In addition, an estimated 600 jobs would be available in the forests and the mill complex.

For such an enterprise to succeed, it would be necessary in our opinion for the Federal trust to remain and for the enterprise to be free of Federal taxation.

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The objection of the proponents of liquidation to the present situation are based primarily, we believe, on the following considerations:

1. The low yield of dividend income from the present forest operations. Standing timber is being sold for about $2 million. Only $718,000 are being distributed per capita as dividend income. Based on rough estimates of $100 million as the value of the Colville forest, this is a yield of less than 1 percent. By an integrated forest products system and future stumpage sales, we believe this could be raised to 3.5 percent without liquidating tribal holdings as this bill contemplates.

2. Many Colville individuals fear that their children will in time lose their membership in the tribe and, understandably, prefer to receive their share of the tribal estate in cash now. Closing the rolls would have the effect of vesting the tribal property rights as individual rights and thus the operation of the forest products enterprise could provide both of these desirable goals. Legislation to close the rolls would of course be necessary.

3. Continued supervision of tribal affairs by the Bureau of Indian Affairs is objectionable to many Colville tribal members, as well as to Members of Congress. Continuation of this supervision is not essential to the development of the forest enterprise. Private management by contract is entirely feasible, we believe, and our plan provides for a 15 percent cost allowance for this purpose.

4. Continued functioning of the tribal government in apparent competition with the governments of Okanogan and Ferry Counties is objectionable to many people. The counties' 25 percent share of stumpage from a national forest would amount to about $500,000.

5. Of major concern to the Department and the Congress will be the future wellbeing of the 2,900 members of the Colville Tribes who are also local residents of the reservation and therefore of Okanogan and Ferry Counties. If the bill is enacted and the referendum results in liquidation, they will receive substantial sums of cash.

As a group of human beings, what are their characteristics? What are their problems? Will cash relieve them? If not, what is their future?

Conditions of life among the reservation residents are well known. They were well described in a Stanford Research Institute study of 1960, and have been brought up to date by the Division of Indian Health; by employment studies of committees of the Congress; and by data made necessary for the administration of the Area Redevelopment Act.

In summary, this is a group which has many of the characteristics associated with poverty. The reservation labor force numbers approximately 650, of which about 50 percent are regularly unemployed. The average family income in 1963 was $2,800. Included in this sum is an average $1,290 from per capita payments and land leases.

Two-thirds of those on or adjacent to the reservation are one-half or more Indian blood quantum.

An average of 20 percent of the 2,900 residents have graduated from high school.

Since 1935, the public schools have provided for the educational needs of Colville Reservation children under Johnson-O'Malley contracts. Nevertheless, 56 Colville children were attending Bureau of Indian Affairs schools in the academic year 1963-64. Under Bureau criteria, this indicates a poor home environment, for were it not so the children would be going to public school.

The last complete housing survey of the Colville Reservation was made in 1958 by the Division of Indian Health of the Public Health Service. Only 82 of a total of 625 houses met standards set by the division's sanitary engineers. One hundred twenty-two are unfit for human habitation. One hundred sixty-one houses required major repairs; 260 needed minor repairs. Under authority of the Indian Sanitation Act, the Division of Indian Health has since done much to improve sanitation, and individual Indians have added extra rooms and bathrooms, but most of the housing on Colville Reservation must still be described as seriously substandard with respect to congestion, construction, sanitation, and heat. The programs of the Public Housing Administration for low-rent public housing and mutual-aid construction have been discussed with the Colville tribal government but they have not formed the necessary tribal housing authority, we believe because they anticipate termination.

The health status of the Colville Indians will be the subject of a separate report by the Division of Indian Health. We are, however, generally aware of the poor health of this population and feel that it should be taken into account in planning for the future.

We point to the unemployment, the lack of education, and poor housing, the low income, and the lack of sophistication of the 2,900 reservation residents because we feel that we have an obligation to alert this committee to a likely repetition of the Menominee experience. Although the Menominee tribal enterprise has been successful, the social needs of the Menominee population generally similar in their characteristics to the Colville population-are so great that the county has been forced to turn to the State for additional assistance in the years since termination.

It is our belief that liquidation and the distribution of cash will not in themselves solve the problems of poverty at Colville. Neither will the development of a forest enterprise in and of itself. The roots of poverty go deeper than the absence of economic development or the perennial cash shortage of poor people everywhere. If this bill is enacted into law and the referendum is affirmative, the annual income will be replaced by the distribution of a substantial sum in cash. The cash hunger of poor people is great, and the cash for many of them will not last long. At that point the welfare costs to Okanogan and Ferry Counties will begin to mount, just as they have for Menominee County and there will be a demand for State and Federal welfare aids.

If the referendum should fail, we hope the Congress and the tribes would jointly agree to a program of integrated forest products development. The start of such a program has been too long delayed and has already contributed to the dissatisfaction with the present situation, which is shared by all who participate in it.

It would be unrealistic to suggest that such development would by itself relieve the conditions of poverty which characterize this and many other rural situations. This Department anticipates a demand for State and Federal aid for the relief of poverty for many years to come in the Colville Reservation and adjacent areas. If the outcome of this legisltion should be a continuation of the Federal trust, it becomes this Department's responsibility, in association with other Government agencies, such as the Office of Economic Opportunity, to devise antipoverty programs. If the trust should be dissolved, it is our recommendation that any new Federal aid program be made the responsibility of other Government agencies. The Bureau of the Budget has advised that there is no objection to the presentation of this report from the standpoint of the administration's program. Sincerely yours,

I. PERFECTING AMENDMENTS

STEWART UDALL, Secretary of the Interior.

1. On page 1, lines 4 and 5, delete "number of adult members of the tribes voting in a referendum" and substitute "enrolled adult members of the tribes",

This change requires a majority vote of all enrolled adults rather than a majority of those voting.

2. On page 4, in line 13, delete "land and"; and on line 14 after "to" insert "trust or restricted Indian".

This change restricts the requirement with respect to land records to Indian lands.

3. On page 4, lines 23 and 24, delete "by three qualified independent appraisers"; and on page 5, lines 4 to 6, delete "The Secretary shall determine fair market value by averaging the three appraisals".

This change deletes the requirement that the determination of fair market value be made by averaging the appraisals of three independent appraisers. This procedure cannot be expected to achieve a result which would represent the judgment of any one of the experts in the field of evaluation. The tribes might well allege that the acceptance of any value less than the highest figure would be prima facie evidence of payment of less than fair market value. Furthermore, with a property as extensive and as varied in its value aspects as the tribal estate at Colville, it is unrealistic to anticipate the employment of any single appraiser qualified to prepare appraisals of all of the various parts of the total estate. There are forests, rangelands, dry farmlands, irrigated agricultural lands, unexplored mineral resources, recreational potential, industrial and townsite potential.

The Secretary of the Interior should be given broad authority to appraise the units designated under the previous subsection. This would enable the employment of experts, as needed, qualified in the evaluation of diverse land types, and the employment of coordinative appraisal expertness to arrive at a single document, estimate of fair market value for the tribal estate, by units.

For the purpose of evaluating the timber assets of the reservation, the bill defines "fair market value" to be the market price that would be realized if the sale of the timber assets were made over a period of 10 years. This definition is a departure from the normally recognized definition of "fair market value." We do not object. In fact we believe it is a step in the direction of assuring to the Colville Indians a realization of the values which they impart to their tribal holdings over and above those normally associated with this terminology in the world of commerce. If the bill is enacted, we will interpret the language to mean that the value of timber would be the total of the prices that would be realized if the sales were made on the open market, over a 10-year period of time with no restrictions, either implied or otherwise, on cutting. This would not include the discounting of future returns to their values at the date of the appraisal. It is assumed, too, that the property would be tax free during the 10-year period and that it would be divided into marketable units that would bring maximum returns. The value would also include the value of forest growth that is estimated would occur during the theoretical 10-year period in which the sales were being made.

4. On page 5, line 9, amend subsection (c) to read:

"(c) determine the value of tribal mineral rights (including oil and gas), but the determination necessarily need not conform to the geographical boundaries of the surface units."

Subsection (c) provides for a determination of the value of tribal mineral rights in each unit. The mineral resources of the Colville Reservation have not been explored in depth. There is currently well-defined interest in the exploration for and development of such minerals. Substantial mining interests are presently active in this field. It is recommended that the appraisals of minerals not be, of necessity, identified with or tied geographically to the boundaries of surface units. As a very practical matter there may be no real correlation. It would be within the discretion of the appraisers and the Secretary to outline practical salable units of mineral rights independently of such surface units. 5. On page 5, lines 12 and 13, change the beginning words to read:

"(e) cause a summary of said appraisal to be delivered to all adult enrolled members ***

The present language directs that copies of the appraisal reports be delivered to all adult enrolled members of the tribe. This would entail the duplication of thousands of copies of voluminous detailed technical reports at great expense. This requirement should be amended to provide for notification to the membership of the total estimates of the value of the tribal estate. This information should serve, adequately, the purpose intended. Furthermore, it would be against the best interests of the Indian people to distribute publicly these estimates of value together with their detailed documentation. Much of the information contained in the details of an apprasisal report are and should be maintained as confidential data.

6. On page 7, line 6, after "guardian" insert "or any person designated by the Secretary."

This change will permit, for example, the designation of an administrator to act on behalf of heirs.

7. On page 9, line 1, change "four" to "seven".

Our experience shows that four is too short a time to complete the actions required by the act.

8. On page 8, line 22, add the following sentence:

"Any tribal forest lands sold under this authority shall be purchased by the Secretary of Agriculture in accordance with the provisions of subsection 6(f)."

We believe that any sale of tribal forest lands that is made under section 7 should be made to the Secretary of Agriculture.

9. On page 10, line 21, and again on line 25, delete "at not less than the appraised value thereof".

The requirement that the Secretary sell individual lands "at not less than the appraised value thereof" is an unduly restrictive limitation. The Secretary should have latitude to sell if an offer closely approximates or is not inconsistent with the appraised value.

10. On page 11, line 16, delete all of section 10, and renumber all succeeding sections.

Section 10 makes State law rather than Federal law applicable to the probate of trust or restricted property of Indians who die 6 months or more after the date the section becomes effective. The Bureau of Indian Affairs would com