76TH CONGRESS 3d Session } SENATE { REPORT SALE OF INDIAN FORESTRY PRODUCTS WITHOUT COMPLIANCE WITH SECTION 3709, REVISED STATUTE APRIL 24, 1940.-Ordered to be printed Mr. THOMAS of Oklahoma, from the Committee on Indian Affairs, submitted the following REPORT [To accompany S. 2983] The Committee on Indian Affairs, to whom was referred the bill (S. 2983) providing authority for the sale of lumber and other forest products obtained from the forests on Indian reservations by Indian enterprises, having had same under consideration, report thereon with the recommendation that it do pass without amendment. This proposed legislation was suggested by the Secretary of the Interior in a communication, dated August 26, 1939, addressed to the President of the Senate, who referred the same to your committee for consideration, and, in accord with the request of the Secretary of the Interior, your committee authorized the introduction of a bill in identical form to the draft of the proposed bill submitted by him, thereupon a bill (S. 2983) was introduced which was thereafter referred to your committee for further consideration. A full explanation of the purpose of this proposed legislation is contained in the said communication of the Secretary of the Interior, dated August 26, 1939, a copy of which is attached hereto and made a part of this report, as follows: The PRESIDENT OF THE SENATE. THE DEPARTMENT OF THE INTERIOR, SIR: There is enclosed herewith a copy of a proposed bill which would authorize the sale of lumber and other forest products obtained from the forests on Indian reservations under such regulations as the Secretary of the Interior may prescribe. Such legislation is desirable in order to clarify the procedure to be followed in making sales of lumber and other forest products manufactured or produced on Indian reservations. The necessity of making sales of these products is increasing as more small Indian enterprises dealing with forest products are established. Most of these sales are made locally as the opportunity arises when customers are in the market for small quantities of lumber. Sales are made at market prices. Two or more customers rarely desire the same quantity, size, and grade of lumber so that nothing would be gained in advertising, for only one bid would usually be received. Furthermore, if more than one bid is received the desire is to be able to sell to all customers rather than just the high bidder. The time element involved in advertising for bids would discourage many prospective purchasers. In 1929 the following question was presented to the Comptroller General of the United States: "May we, in the absence of any law which requires advertising for bids, continue to make sales of stock or other property at private sale when, in the judgment of the superintendent or other field officer, greater financial returns will result to the Government by so doing?" The Comptroller General replied to this question on October 22, 1929, as follows: "it may be stated that the Government, in disposing of property belonging to Indian schools, tribes, and individual Indians, acts in a fiduciary relation and must exercise as great, if not greater, care in that respect as it would in disposing of its own property. The requirement that every effort must be made to secure the maximum amount of receipts is applicable, therefore, whether the property to be disposed of is Government-owned or the property of Indians. It is for this purpose that competition is ordinarily required as constituting the recognized procedure for obtaining the highest prices available, but if the conditions in a particular instance are such as to render competition useless, the necessity therefor disappears. "With respect to the disposition of small lots or single animals locally, it would appear from the explanation of the Commissioner of Indian Affairs that in some instances better prices have been obtained in the past by private sale to individual buyers, as they appeared from time to time, than by advertising for bids for sales to take place at a set time. Owing to the particular circumstances surrounding the disposition of such property, compliance with the requirement that advertising be had or competitive bids requested will not be necessary when facts are disclosed showing that the private sale without advertising was more advantageous to the owner. "Where it is impracticable to obtain a written contract for the cash sale of grain or stock or other property, there should be filed in this office a signed memorandum describing briefly the property sold and the agreed sale price." Considerable doubt still exists with regard to the requirements relating to the sale of Indian property. The act of March 28, 1908 (35 Stat. 51), as amended by the act of May 18, 1916 (39 Stat. 157), authorizes the sale of lumber and other forest_products obtained from the forests of the Menominee Indian Reservation in Wisconsin under regulations prescribed by the Secretary of the Interior. Similar authority is contained in the act of May 18, 1916 (39 Stat. 137), with respect to the logging and milling operations on the Red Lake Indian Reservation in Minnesota. Experience has justified the authority given to the Secretary of the Interior to establish regulations governing the sale of lumber and other forest products on these two reservations without the requirement of advertising for bids. The Menominee and the Red Lake Indian Reservations are the only two which have specific authority in regard to the sale of lumber and the proposed bill, if enacted, would simply extend similar authorization to other reservations on which logging and milling operations may be conducted by or on behalf of Indians. The Acting Director of the Bureau of the Budget has advised that there is no objection to the presentation of the proposed legislation to the Congress. Respectfully, 76TH CONGRESS 3d Session } SENATE { REPORT No. 1502 AMENDING PUBLIC LAW NO. 96, SEVENTY-FIFTH CONGRESS APRIL 24, 1940.-Ordered to be printed Mr. THOMAS of Oklahoma, from the Committee on Indian Affairs, submitted the following REPORT [To accompany H. R. 5918] The Committee on Indian Affairs, to whom was referred the bill (H. R. 5918) amending Public Law No. 96 of the Seventy-fifth Congress, being an act entitled "An act amending section 2 of Public Law No. 716 of the Seventy-fourth Congress," being an act entitled "An act to relieve restricted Indians whose lands have been taxed or have been lost by failure to pay taxes and for other purposes," having had same under consideration, report thereon with the recommendation that it do pass without amendment. This bill has been considered by the Committee on Indian Affairs of the House of Representatives; on April 9, 1940, that committee. submitted its report (H. Rept. No. 1941) to the House, recommending its passage, and on April 15, 1940, it passed the House. A full explanation of the purpose of the proposed legislation is contained in said House Report No. 1941, a copy of which is appended hereto and made a part of this report. [H. Rept. No. 1941, 76th Cong., 3d sess.] The Committee on Indian Affairs, to whom was referred the bill (H. R. 5918) amending Public Law No. 96 of the Seventy-fifth Congress, being an act entitled "An act amending section 2 of Public Law No. 716 of the Seventy-fourth Congress, being an act entitled 'An act to relieve restricted Indians whose lands have been taxed or have been lost by failure to pay taxes and for other purposes,' having considered the same, report favorably thereon without amendment and recommend that the bill do pass. STATEMENT OF FACTS By the act of June 20, 1936, Public, No. 716, said legislation exempted certain Indian-owned lands, purchased with restricted funds of the Indians. It was discovered that this legislation was inadvertently and improvidently passed, and that large amounts of valuable property, such as business buildings, ordinarily taxable, were relieved from taxation. The most outstanding example, and the only instance in which any dispute has arisen, was in Osage County, Okla., where property to the extent of between one and two million dollars was exempted. As a result, the next session of Congress, in 1937, passed Public, No. 96, repealing the said act of 1936, insofar as it had such effect. The instant bill, H. R. 5918, is designed to correct the situation existing between the date of the original legislation, Public, No. 716, and the repealing act, Public, No. 96. If the current bill, H. R. 5918, is passed and approved, the said real estate which was taxable up to the act of 1936, and has been taxable since the act of 1937, will be taxable for the interim between the passage of the two mentioned statutes, and it will settle any dispute as to the taxability of the said real estate in the interim. The Interior Department has not seen fit to approve the legislation, but the committee is determined that, since the said real estate was taxable prior to the time of the act of 1936, and has been taxable since the act of 1937, fairness and justice require that its taxable nature in the interim between the said two acts be clarified and determined. The letter from the Secretary of the Interior, submitting his report on this proposed legislation, follows: Hon. WILL ROGERS, DEPARTMENT OF THE INTERIOR, Chairman, Committee on Indian Affairs, House of Representatives. MY DEAR MR. CHAIRMAN: Further reply is made to your request of April 24 for a report on H. R. 5918, a bill amending Public Law No. 96 of the Seventyfifth Congress, being an act entitled "An act amending section 2 of Public Law No. 716 of the Seventy-fourth Congress, being an act entitled 'An act to relieve restricted Indians whose lands have been taxed or have been lost by failure to pay taxes and for other purposes.' For the reasons hereinafter stated, it is recommended that the proposed legisation be not enacted. Section 2 of the act of June 20, 1936 (49 Stat. 1542), Public, No. 716, Seventyfourth Congress, exempts from taxation all lands purchased for Indians with trust funds, provided the title is held subject to the usual restrictions against alienation. Section 2 was amended by the act of May 19, 1937 (50 Stat. 188), Public, No. 96, Seventy-fifth Congress, to provide that Indian owners may select with the approval of the Secretary of the Interior purchased agricultural and grazing land not exceeding 160 acres, or city property not exceeding in cost $5,000, to be designated as a tax-exempt homestead. H. R. 5918, by adding a new paragraph, section 3, to the act of June 20, 1936, as amended by the act of May 19, 1937, would make the act of May 19, 1937, effective as of June 6, 1936, and would be declaratory of the intent of Congress and the meaning of section 2 of the act of June 20, 1936. The date June 6, 1936, in line 4, page 2, is an error, and should be corrected to June 20, 1936. H. R. 5918 would also add a new section for the apparent purpose of limiting the tax exemption to lands selected as homesteads under the act of May 19, 1937, and of providing that all other lands purchased for Indians with trust funds shall be taxable as of June 20, 1936. The provisions contained in section 2 of the acts of June 20, 1936, and May 19, 1937, were designed to bring a partial measure of relief to Indians who purchased taxable lands with trust funds and took title by restricted deed. The bill would take away from these Indians the exemption from taxation given them by Congress in the act of June 20, 1936, and would restrict the exemption for the 11 months involved, to the limitations in the act of May 19, 1937. There is a fundamental objection, of course, to retroactive legislation. In the event, however, that the bill is given consideration, it seems to me that it would be clarified by striking out all after the enacting clause and inserting the following: "SEC. 1. That the Act of May 19, 1937 (50 Stat. 188), amending section 2 of the Act of June 20, 1936 (49 Stat. 1542), shall be defined and construed to be effective as of June 20, 1936. "SEC. 2. That all lands heretofore purchased for individual Indians from their restricted or trust funds in excess of the areas or values set forth in the Act of May 19, 1937, are hereby declared to be subject to such taxes as may have been levied under the laws of the State in which said lands are situate: Provided, however, That no penalties, interest, or costs otherwise accruing on taxes levied subsequent to June 20, 1936, shall be imposed or collected." If amended as suggested a suitable heading for the amended bill would be: "A bill to limit the nontaxability of lands purchased for individual Indians out of their trust or restricted funds.' " The Director of the Bureau of the Budget has advised me that there is no objection to the presentation of this report to the Congress. Sincerely yours, HAROLD L. ICKES, Secretary of the Interior. The act of June 20, 1936, referred to in this report is as follows: "[PUBLIC-No. 716-74TH CONGRESS] "[H. R. 7764] "AN ACT To relieve restricted Indians whose lands have been taxed or have been lost by failure to pay taxes, and for other purposes "Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That there is hereby authorized to be appropriated, out of any money in the Treasury of the United States not otherwise appropriated, the sum of $25,000, to be expended under such rules and regulations as the Secretary of the Interior may prescribe, for payment of taxes, including penalties and interest, assessed against individually owned Indian land the title to which is held subject to restrictions against alienation or encumbrance except with the consent or approval of the Secretary of the Interior, heretofore purchased out of trust or restricted funds of an Indian, where the Secretary finds that such land was purchased with the understanding and belief on the part of said Indian that after purchase it would be nontaxable, and for redemption or reacquisition of any such land heretofore or hereafter sold for nonpayment of taxes. "SEC. 2. All lands the title to which is now held by an Indian subject to restrictions against alienation or encumbrance except with the consent or approval of the Secretary of the Interior, heretofore purchased out of trust or restricted funds of said Indian, are hereby declared to be instrumentalities of the Federal Government and shall be nontaxable until otherwise directed by Congress. "Approved, June 20, 1936." In compliance with paragraph 2a of rule XIII of the Rules of the House of Representatives, changes of the law made by the bill are shown as follows (new matter is printed in italics; existing law in which no change is proposed is shown in roman): "PUBLIC-No. 96-75TH CONGRESS] "AN ACT amending section 2 of Public Law Numbered 716 of the Seventy-fourth Congress, being an Act entitled 'An Act to relieve restricted Indians whose lands have been taxed or have been lost by failure to pay taxes, and for other purposes.' "Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 2 of Public Law Numbered 716 of the Seventy-fourth Congress, being an Act entitled 'An Act to relieve restricted Indians whose lands have been taxed or have been lost by failure to pay taxes, and for other purposes', is hereby amended to read as follows: "SEC. 2. All homesteads, heretofore purchased out of the trust or restricted funds of individual Indians, are hereby declared to be instrumentalities of the Federal Government and shall be nontaxable until otherwise directed by Congress: Provided, That the title to such homesteads shall be held subject to restrictions against alienation or encumbrance except with the approval of the Secretary of the Interior: And provided further, That the Indian owner or owners shall select, with the approval of the Secretary of the Interior, either the agricultural and grazing lands, not exceeding a total of one hundred and sixty acres, or the village, town, or city property, not exceeding in cost $5,000, to be designated as a homestead. "SEC. 3. This Act (Public Law Numbered 96 of the Seventy-fifth Congress) shall be effective as of June 6, 1936, and shall be declaratory of the intent of Congress and the meaning of section 2 of said Public Law Numbered 716 of the Seventy-fourth Congress. 8. 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