within the boundaries of the reservation. Title to any land purchased by an individual Indian, or by a tribe if the land is outside the boundaries of the reservation, shall be taken in the name of the purchaser without any restriction on alienation, control, or use, unless the Secretary makes the determination referred to in subsection 10 (b) with respect to an individual Indian.

SEC. 5. (a) In order to assist tribes that wish to purchase land offered for sale under the provisions of this Act, the Secretary of the Interior is authorized to make a loan to any tribe under the conditions stated below, provided the tribe does not have funds available in an amount that is adequate to make the purchase and is unable to obtain a loan from other sources. Such loan shall be made from the revolving funds referred to in section 9 of this Act.

(b) The amount of the loan shall not exceed the appraised value of the land plus the value of any other property the tribe may mortgage or pledge as security for the loan.

(c) The tribe shall give to the United States a mortgage on the land purchased with the loan, and on any other tribal property which the Secretary deems necessary to secure the loan adequately.

(d) The loan shall be for a term of not to exceed twenty-five years, and shall bear interest at a composite rate consisting of (1) a rate equal to the current average market yield on outstanding marketable obligations of the United States of comparable maturities during the month preceding the month in which the loan is made, as such rate is determined by the Secretary of the Treasury, plus (2) a rate, to cover losses and administrative expenses, determined by the Secretary of the Interior, which rate shall be not less than one-half of 1 per centum and not more than 1 per centum. The loan need not require repayment in equal installments, but it shall require repayment according to a schedule that will fully amortize the loan within the time specified. In the event of a default in the repayment of the loan, the Secretary of the Interior shall take such action as he deems necessary to protect the interests of the United States. If during the period of repayment the tribe is awarded a money judgment against the United States in excess of the unpaid balance of the loan, the entire unpaid balance shall be collected from the appropriation to satisfy the judgment.

(e) Before a loan is made the tribe shall submit for approval of the Secretary of the Interior a master plan for the use of all lands to be purchased. Any tribe preparing a plan may call upon the Secretary for technical assistance, and the Secretary shall render such assistance as may be necessary. Such plan shall include provision for consolidation of holdings of the tribe, or acquisition of sufficient lands in conjunction with those held to permit reasonable economic utilization of the land and repayment of the loan. The Secretary shall not approve a tribal plan unless it is agreed to by a majority of adult tribal members, both on and off the reservation, who vote in a referendum for that purpose. Such plan may be revised from time to time with the approval of the Secretary, but without the need for a referendum.

(f) The cost of managing any land purchased by a tribe pursuant to this Act shall be borne by the tribe and not by the United States.

SEC. 6. Any tribe that adopts, with the approval of the Secretary of the Interior, a plan pursuant to subsection 5(e) of this Act, or any other plan that does not involve a loan from the United States but which provides for the consolidation, management, use, or disposition of tribal land, is hereby authorized, with the approval of the Secretary of the Interior, to sell any tribal land or other property in furtherance of such plan.

SEC. 7. The Secretary of the Interior shall approve no plan pursuant to this Act that contains any provision that will prevent or delay a termination of Federal trust responsibilities with respect to the land during the term of the plan.

SEC. 8. Nothing in this Act shall repeal any authority to sell trust or restricted land that is conferred by any other provisions of law.

SEC. 9. (a) All funds that are now or hereafter a part of the revolving fund authorized by the Act of June 18, 1934 (48 Stat. 986), the Act of June 26, 1936 (49 Stat. 1968), and the Act of April 19, 1950 (64 Stat. 44), as amended and supplemented, including sums received in settlement of debts of livestock pursuant to the Act of May 24, 1950 (64 Stat. 190), sums collected in repayment of loans heretofore or hereafter made, and sums collected as interest or other charges on loans made, shall hereafter be available for loans to organizations of Indians, Eskimos, and Aleuts (hereinafter referred to as Indians), having a

form of organization that is satisfactory to the Secretary, and to individual Indians of one-quarter degree or more of Indian blood who are not members of or eligible for membership in an organization that is making loans to its members, for any purpose that will promote the economic development of such organizations and their members, or the individual Indian borrowers.

(b) The appropriation authorization in section 10 of the Act of June 18, 1934 (48 Stat. 986), is hereby amended by increasing it from $10,000,000 to $50,000,000.

SEC. 10. (a) In order to prevent the problem of multiple ownership of undivided interests in Indian trust and restricted land from growing as rapidly as it has grown in the past, and at the same time protect the land ownership interests of Indians who need special protection, the provisions of this section shall apply notwithstanding any other provision of law.

(b) In any case of transfer of title to Indian trust or restricted land or an interest therein by inheritance or devise, the title shall pass by operation of law in a nontrust and unrestricted status unless the Secretary of the Interior determines before the close of the probate proceeding that the Indian heir or devisee lacks ability, knowledge, experience, and judgment to manage his business affairs with such reasonable degree of prudence and wisdom as will be apt to prevent him from losing his property or the benefits thereof.

(c) The Secretary of the Interior shall not approve any acquisition by an Indian of title to land or an interest in land in a trust or restricted status unless he makes the determination referred to in subsection (b) of this section.

(d) The Secretary of the Interior shall not extend by a general order applicable to a class of Indians a trust period that would otherwise expire on or after January 1, 1964, and a trust period that expires prior to such date shall not be extended beyond that date by a general order. After January 1, 1964, a trust period shall be extended only by an order applicable to specified individual Indians and only on the basis of the determination referred to in subsection (b) of this section. Any extension of a trust period on an individual basis after January 1, 1964, may be for such term of years as the Secretary of the Interior deems appropriate, for the life of the individual, or until the individual reaches the age of 21, subject to the right to terminate the trust in accordance with the provisions of this Act or any amendment thereof or supplement thereto.

(e) Any trust or restrictions on the title of an individual Indian that do not extend for a stated number of years or for an ascertainable term shall terminate on January 1, 1964, unless extended by the Secretary of the Interior in accordance with subsection (d) of this section.

(f) The Secretary of the Interior shall review, as rapidly as possible, each trust or restriction on title to land or an interest in land that extends beyond January 1, 1964, and he shall terminate the trust or restriction on title unless he makes the determination referred to in subsection (b) of this section. Thereafter, the Secretary of the Interior shall continue to make such reviews in order to keep his determinations current.

(g) If the Secretary of the Interior terminates the trust or the restrictions on title to land or an interest in land owned by an Indian (and for this purpose a failure to extend a trust period shall not be regarded as a termination), the Indian may apply to the United States district court for the district in which the land is located for an order setting aside the Secretary's action, and the court shall have jurisdiction to issue such order if, in its judgment, the Indian does not meet the standard referred to in subsection (b) of this section.

(h) The Secretary of the Interior is authorized to issue such orders, documents, or evidences of title as he may deem appropriate to carry out the provisions of this section.

SEC. 11. This Act shall become effective six months after the date of enactment. During this interim period, the Secretary of the Interior shall notify each Indian tribe of the rights afforded by this Act in order that the tribe may make its plan for consolidating Indian holdings. Upon the conclusion of each Indian probate proceeding after the date of this Act, the Secretary shall also notify each Indian heir of the rights afforded by this Act.

DEPARTMENT OF THE INTERIOR,

Hon. CLINTON P. ANDERSON,

OFFICE OF THE SECRETARY, Washington, D.C., July 10, 1961.

Chairman, Committee on Interior and Insular Affairs,

U.S. Senate, Washington, D.C.

DEAR SENATOR ANDERSON: Your committee has requested a report on S. 1392, a bill relating to the Indian heirship land problem.

We recommend that in lieu of S. 1392 Congress enact a bill along the lines of the enclosed substitute draft. The principal provisions of the substitute draft and the manner in which they differ from S. 1392 are as follows:

1. The substitute draft states a general policy with respect to the use and management of Indian trust and restricted lands. That policy is to use the lands productively for the support and advancement of the Indian beneficiaries. Although there should be no question about this policy, we feel that it needs to be stated and emphasized. When seeking a solution to the heirship problem it is important that we find a solution that will allow the land to be used by the Indians to the maximum extent feasible.

2. One part of the heirship problem relates to economically unproductive lands. Multiple ownership of a tract of land often interferes with its productive use, with the result that the land is either unused or ineffectively used. Land in this status contributes little or nothing to the welfare of the Indian owners.

The substitute draft provides that such unproductive land can be sold by the Secretary to the tribe that occupies the reservation where the land is located. The sale would require the consent of none of the multiple owners. The sale would be for the appraised fair market value, and payment would be in installments over a period of years out of income from the land, with a minimum annual payment required to be made out of tribal income generally.

This provision would accomplish three things:

(a) The Indian owners who are now receiving little or no benefit from the land will be benefited when the tribe puts the land to a productive use. Although the payout period may be spread over a number of years, the individual Indians will receive some income from the land and they are receiving none now.

(b) The tribe will be in a position to consolidate land use areas into economic units and make a much more productive use of the land than is possible under present circumstances.

(c) The procedure will require no appropriation of Federal funds.

S. 1392 would meet this part of the heirship problem by authorizing Federal loans to tribes that want to purchase heirship lands that are offered for sale. The loans would be for 25 years and bear interest. We believe that it is unnecessary and undesirable to draw upon the Federal Treasury for this purpose. Acquisition by a tribe under an installment payment contract with the seller is a more reasonable approach in the case of lands that are not now productive.

3. A second part of the heirship problem relates to the lack of adequate tools for Federal administration of land in multiple ownership-i.e., for trust conservation of assets. At the present time a number of different statutes specify different rules with respect to the consent required from multiple owners before the land can be leased, the timber sold, or a right-of-way granted.

The substitute draft cuts through this confusing and difficult administrative system by providing that if a lease, timber sale, or right-of-way is otherwise authorized by law, and the need for obtaining the consent of multiple owners is interfering with the effective use of the land, the Secretary may execute the lease, timber sale, or right-of-way without the consent of the Indian owners.

We believe that this is an essential administrative tool for any trustee. It is not logical to impose upon the Secretary a trust responsibility for managing Indian land and at the same time deny him the authority to take ordinary prudent action when ownership interests become fractionated.

This provision does not authorize leases for any purpose or for any term that is different from those authorized by other law. It relates only to the consent of the multiple owners.

S. 1392 contains no comparable provision, and a provision of this kind is needed from the standpoint of an attack on the Federal management problem.

4. A third part of the heirship problem relates to the partition and sale of heirship lands when they are not idle and unproductive (or, if idle, the tribe does not want to buy them).

(a) The substitute draft authorizes administrative partition or sale by the Secretary upon the application of Indians who own a majority interest in the lands.

S. 1392 authorizes such action upon application of any one owner.

We believe that in an administrative proceeding by the Secretary, who has a trust responsibility to all of the owners, the majority principle is the more reasonable one. In a judicial proceeding, however, we agree that the normal State rule which allows any one owner to start the proceedings should apply. That is our comment No. 4 below.

(b) The substitute draft authorizes the administrative partition or sale only if it would be in the best interests of the Indian owners and not detrimental to. the local Indian community.

S. 1392 requires the partition or sale unless the Secretary finds and reports to Congress the basis for his findings that the partition or sale would not be in the best interests of the Indian owners. The bill does not refer to the detrimental effect on the local Indian community.

We believe the substitute draft represents the more reasonable approach. (c) The substitute draft gives the tribe a preferred right to purchase at the appraised value.

S. 1392 contains a more detailed sales procedure that gives a first preference to the coowners, and allows the tribe to compete for the acquisition of the land in an auction.

We believe the substitute draft represents the preferable approach in that it assures the individual Indian owners of a fair price and also recognizes the legitimate interest of the tribe in acquiring the land at a fair price.

5. In connection with the administrative partition, sale, and lease authority, there is the problem of the non-Indian owner of an unrestricted interest. This problem has two aspects:

(a) In the case of administrative partitions, sales, and leases, the substitute draft provides that the Secretary may partition, sell, or lease the non-Indian interests along with the Indian interests. We believe that the undivided nature of the Indian and non-Indian interests gives Congress sufficient power to legislate in this way.

S. 1392 provides that the Secretary may sell the non-Indian interest only if he obtains a power of attorney from the owner. We believe that this is a less desirable procedure.

(b) In the case of judicial partitions and sales, the substitute draft permits the action to be started by any one of the non-Indian owners. Inasmuch as the non-Indian may not initiate the administrative procedure through the Secretary, he will have no recourse unless he is allowed to go into court. This permission is qualified, however, by the requirement that the Secretary must first determine that a judicial sale will not affect adversely the interests of the Indians. S. 1392 does not provide for judicial sales.

6. S. 1392 authorizes an increase in the appropriation for the Indian revolving loan fund from $10 to $50 million, and authorizes loans to be made to tribes for the purchase of heirship lands that may be offered for sale.

We have already recommended in our report on S. 1540 that the limitation on the appropriation authorization be removed entirely, and that the size of the fund be controlled by the usual budgetary and appropriation process.

We also feel that there is no need to spell out in the present bill the details governing loans for land acquisition. Our present authority is broad, and we have made land acquisition loans in the past. If Congress wishes to consider the desirability of limiting loans for that purpose, we recommend that the subject be handled separately as an amendment to the loan authority rather than as a part of this bill. The authority to sell unproductive heirship tracts to the tribe on a deferred payment plan, and the authority to partition or sell other heirship tracts should not be tied to a Federal loan fund to finance tribal acquisitions.

7. S. 1392 provides in section 9(a) for consolidating the general revolving loan fund and the two special accounts for the Oklahoma Indians and the NavajoHopi Indians and for some technical amendments to the language relating to

loans. We endorse this provision, but we have not included it in our substitute draft because it is extraneous to the main subject of heirship.

8. S. 1392 also contains in section 10 detailed provisions regarding administrative extensions of trust periods by general order, requiring trust periods to be extended only on the basis of individual determinations of incompetency, and providing for the inheritance of undivided interests in a trust status only on the basis of individual determinations of incompetency.

These provisions are drastic. Their impact would be difficult to anticipate in detail, but they clearly would involve a major change in Federal Indian policy. We feel that much more study and consideration should be given to the subject before legislation is contemplated. We therefore strongly recommend that this subject not be included in the proposed legislation now under consideration with respect to heirship lands.

By way of conclusion, we wish to point out that the enactment of the substitute draft bill will not result in an overnight solution to the heirship problem. We believe, however, that it will permit a giant stride to be taken in that direction. 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,

JOHN A. CARVER, Jr., Assistant Secretary of the Interior.

A BILL To put to more productive use idle Indian lands now in multiple ownership status, 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 1. DEFINITIONS.-As used in this Act, the following definitions shall govern:

(a) "Secretary" shall mean the Secretary of the Interior.

(b) "Fractionation" shall mean the results of the process by which the beneficial interest in Indian trust lands and restricted lands has been divided among numerous owners.

(c) "Trust lands" shall mean any real property in which any interest is held by the United States in trust for the use and benefit of an Indian or Indian tribe.

(d) "Restricted lands" shall mean any real property in which any interest is vested in an individual Indian or Indian tribe subject to a restriction against alienation without the approval of the Secretary.

(e) "Indian tribe" or "tribe" shall include any recognized tribe, band, group, community, or pueblo of Indians.

SEC. 2. POLICY.-It is hereby declared to be the public policy of the United States that Indian trust lands and Indian restricted lands shall be used productively for support and advancement of the trust beneficiaries. The Congress finds that the historical system of allotments to individual tribal members constitutes an impediment to full productivity and effective management when fractionation of ownership interests has occurred through descent and distribution to multiple heirs. It is the purpose of this Act to promote the consolidation of such interests through acquisition and management by the tribes of the beneficial interests held by individual Indians. The Secretary of the Interior is authorized and directed to take such action and to devise such plans or programs under the provisions of this Act as will give effect to the policy expressed herein.

SEC. 3. CONSOLIDATION OF UNPRODUCTIVE TRACTS.-Whenever the Secretary determines that any trust or restricted lands located within the boundaries of an Indian reservation are idle or economically unproductive because of fractionation of ownership interests or because tracts are so small or so isolated that their economic use is impeded, he is authorized to sell and convey to the tribe occupying the reservation, with the consent of the tribe, the complete beneficial interest in such lands, including any unrestricted interests. Title acquired by such action shall be taken either in an unrestricted status, a restricted status, or a trust status, depending on the prevailing title status of other lands within the reservation. Restricted and trust lands shall not be subject to taxation or