Mr. WEYERHAEUSER. Well, I guess I am wearing my hat as a resident of the East when I make the statement then that if I were approached with that proposition I would certainly choose our alternate. Now, if I were a man who lived in Klamath Falls, I might be very much tempted to choose the opposite. Mr. WOLF. I just had one other question. If your proposal were not adopted, and if S. 2047 were not adopted, you would still want to see the Klamath termination act extended so that liquidation wasn't forced over this 18-month period? Mr. WEYERHAEUSER. Yes. I believe that we feel that the shortterm liquidation is by all order the poorest solution and the shorter the term the poorer the solution. Senator NEUBERGER. We are all agreed that something has to be done about the liquidation period provided for in the existing law. I don't think there is any question about that in our minds. Is that true, Mr. Weyerhaeuser? Mr. WEYERHAEUSER. That is certainly our position. Mr. WOLF. Would you support Federal acquisition in lieu of the liquidation if your proposal were not adopted? Mr. WEYERHAEUSER. I can only answer that by saying that we are, and in our whole presentation I hope I have given the impression that we are fully behind sustained yield no matter how it may be achieved. We are fully behind private particpation and operation of timberland and timber, and we believe that we have presented an alternate that will provide for that vehicle. If under this proposal private owners fail to raise the capital, pay the bid price, we have provided a vehicle for the, we think, suggestion as to how the land will pass into Federal ownership. We believe that is the first approach. Failing that, you are asking us to choose between two premises which we disagree with and I can't answer that question. Mr. WOLF. But suppose Senator Neuberger gets a bill before the committee based on your proposition and the other members of the committee refuse to go along with him and say this Federal purchase is the answer? Mr. WEYERHAEUSER. You are asking me then for our second alternate proposal, which I haven't presented in detail. I am not prepared to say at this moment. We think that this is a reasonable proposal and we hope that the Senate and others will view it as such and work for its adoption. Senator NEUBERGER. I just want to say this before Mr. Weyerhaeuser leaves the stand. We certainly appreciate your coming here today. You have presented a most thoughtful and challenging proposal and I am sure it is going to receive a great deal of discussion and consideration. I wish to announce this for the record, that before we conclude this afternoon, if they wish to do so, I am going to ask Mr. Boyd Jackson and Mr. Wade Crawford to take 10 minutes each at the conclusion of our hearing this afternoon, representing different groups of Indians on the Klamath Reservation, to comment very briefly on their opinion of the proposal which Mr. Weyerhaeuser has submitted. Mr. Weyerhaeuser, we thank you very much for coming. We thank you, Mr. Örr, for being with him, and we do appreciate your being with us today. (At this point the chairman directed that the following letter and chart be made a part of the record :) Hon. RICHARD L. NEUBERGER, WEYERHAEUSER TIMBER Co., Tacoma, Wash., October 21, 1957. Senate Office Building, Washington, D. C. DEAR SENATOR: Thank you for your letter of October 16. We appreciated the the opportunity to present our views to your subcommittee. We are attaching, with the request that it be made part of our statement, a chart showing the present value of money to be received in the future. This chart demonstrates more graphically than words the reason why timber to be cut over a period of years is worth less than timber to be cut immediately. At the conclusion of the hearing in Portland, it was unclear to me whether you expected us to respond to a question you asked me at the conclusion of my testimony. To clarify my understanding of your inquiry it will be helpful to recall its context. In our principal statement we pointed out that there are three values for the Klamath timber-retail value, wholesale value, and liquidation value. The retail value is the aggregate amount that the Indians might receive if they sold the timber in small quantities over a 20- or 30-year period, thus avoiding a situation of oversupply and a resulting depression of prices. The wholesale value is the aggregate price that might be received if the 4 plus billion feet of timber were offered for sale in the brief period of 1 or 2 years, or even 4 or 5 years. Industry experience indicates a discount of around 50 percent. Sustained-yield value is the amount that would be realized if purchasers were required to practice sustained-yield forestry. This value would be somewhat less than the liquidation value because of the longer period over which the timber must be held. We suggested that the Government should impose sustained-yield cutting requirements on the tribal property and that it compensate the Indians for the reduction in value caused by such restriction. This would be the difference between sustained-yield value and liquidation value. You asked for my opinion as to the amount of money the Government would have to pay the Indians under our proposal. Since I had already mentioned the wholesale value discount, I interpret your inquiry as asking for our opinion regarding the sustained-yield value of the timber. Accordingly, I replied that a detailed analysis of the data regarding timber volumes, species, growth rates, and site classifications would be necessary. According to Mr. Wilcox' statement, most or all of this information will be contained in the appraisal. It was then suggested that, upon release of the appraisal, we advise you of our opinion about sustained-yield value. We We do not think it is appropriate for us to furnish such an opinion to you. are a prospective purchaser of the Indian timber. Consequently, any opinion expressed by us would be given little weight. We understand that the appraisal will include a sustained-yield value. I suggested that perhaps we could have some independent forestry consultant review the appraisal data and come up with a figure. As Mr. Wilcox pointed out, this would involve the balancing of one expert opinion against another expert opinion-and in a field where reasonable men can disagree. As a check on the appraisers' estimate of value, we feel sure that the Forest Service could give you its estimate of what it could afford to pay for this property as an investment. With annual gross revenues of less than $3 million, and with expenses for timber management of 20 percent of gross revenues, and in lieu taxes of 25 percent of gross revenues, the Forest Service will certainly not be able to justify any greater payment than private industry could afford to pay. Consequently, we think their opinion would provide a realistic check on the methods of the appraisers. Very truly yours, GEORGE H. WEYERHAEUSER, Assistant to Executive Vice President. The following chart and table illustrate the relationship of the present PRESENT VALUE OF LEVEL ANNUAL PAYMENTS RELATED TO TOTAL PAYMENTS AT VARIOUS INTEREST RATES ་ 100 2 2 2 60 60 4% 50 50 Senator NEUBERGER. For the information of everybody here, we will follow the schedule which we followed in Klamath Falls. We will go until approximately 12:30 this morning, and take a recess then until 2 o'clock. The next witness will be the Honorable Lyle F. Watts, former Chief of the United States Forest Service, who is now a resident of Portland. Mr. Watts, we are very grateful that you have taken the time to come here today and give us your views. STATEMENT OF LYLE F. WATTS, FORMER CHIEF OF THE UNITED STATES FOREST SERVICE Mr. WATTS. Mr. Chairman, my name is Lyle F. Watts. I live at 1426 Northeast Thompson Street, Portland, Oreg. My entire active career was spent in public forestry work, 38 years with the United States Forest Service. I retired from the Forest Service on June 30, 1952. I represent only myself in making this statement. My statement has to do only with the disposal of the tribal lands owned by the Klamath Indian Tribe. I have been on the reservation several times since 1939, when I first came to Portland. Some 3 years ago, I reviewed the management plan then in effect for the area. statistics I will use are largely from that review. The The area of tribal lands exceeds 813,000 acres. Of this more than 700,000 acres are commercial timberlands. About 70,000 acres are marshlands. The balance is farm, grazing, and noncommercial timberland. It is assumed that the bulk of these lands will be disposed of on request of the Indians for their share of the tribal assets in cash as provided in Public Law 587. The estimated volume of timber 12 inches in diameter breast high and larger exceeds 4 billion board-feet. Of this about 14 billion is in virgin timber. More than 234 billion is in thrifty trees left to grow after selective logging on areas cut over in timber sales to date. About 414 billion board-feet has been sold and removed since 1913. The allowable annual cut during the present decade slightly exceeds 80 million board-feet per year. The large increase in timber values during the past 15 years, the very great improvement in utilization, and the present market for pulpwood should increase the estimated salable volume and the allowable annual cut materially. First, with regard to the marshland. Some 17,000 acres of this is under water year long and provides an important nesting area for waterfowl. The balance of the marsh-53,000 acres-is heavily used as a resting and feeding area for geese during migration. The entire marsh is of great value to the Pacific flyway. During the summer much of the marsh is suitable for grazing by cattle. Strictly controlled, such use by cattle is compatible with use by waterfowl. It is wholly unlikely that such strict control would be maintained if the marshlands were in private ownership. The entire 70,000 acres should be in Federal ownership as a waterfowl refuge. Use by cattle under permit could be permitted. If mutually desirable to the Fish and Wildlife Service and to the State game department, actual administration by the State could be contracted for. Now, as to the timberland in question. The welfare of the Klamath Basin and of the Nation requires that these lands continue to be managed under sustained yield. No plan of disposal should be adopted which would permit quick liquidation or destructive cutting of this timber. Under Oregon law, short-term operators could cut all merchantable trees, except 4 trees, 12 inches in diameter, breast high, per acre which must be left for seed. Thus not only the virgin timber area but also the selectively cut area could be just about ruined, practically clear cut. The area should be under multiple-use management whereby timber, grazing, big game, and recreation uses would be coordinated. Watershed values are high and should be fully protected. Several proposals for disposal have been proposed. I want to comment briefly on some of them. (1) Acquisition and operation by some form of tribal corporation: I believe this type of disposal is under consideration for the Menominee lands in Wisconsin. As a minimum, Congress should specify that sustained-yield management will be strictly enforced. Frankly, I see little to recommend this outcome. The pressure from members of the tribe to overcut to get more money annually would be very heavy. The likelihood of a fully competent board of control would be small. A high percentage of the tribal members would insist on receiving cash for their share rather than accept stock in a corporation. Just how a tribal corporation would raise the cash to pay for this is problematical. (2) Sale to private timber operators: If sustained-yield management is desired for these lands, they would have to be sold in very large blocks. The fact that more than half the area has already been selectively logged over and that growth per acre in ponderosa pine is very low complicates this proposal. Small sawmill operators do not have the finances to purchase sufficient area to operate on sustained yield. In addition, I can conceive of no practical stipulation in the deed to insure proper permanent management on sustained yield. Let me say right here that sustained yield means many things to many people. You would have to be specific in the law you would draft to cover that. I have had some little experience with regard to public regulation of cutting on private land, and I am sure there are some timber people who might smile about that, and I want to say that intriguing as was Mr. Weyerhaeuser's proposal, it goes far beyond the Pierce bill, Mr. Senator. The Pierce bill did not require sustained yield cutting at all. All that it required was good silviculture on the private land cut over. Under the Pierce bill, if it were in effect, you could have cut all of the Klamath Falls Reservation in 10 years, if you wished, provided you followed good silvicultural practice. That is all the Pierce bill required. One of the difficult things under sale to private ownership with a sustained yield qualification is that it would just simply squeeze out the small operators. (3) Buying this land from the reservation: Sale to the State of Oregon is another proposal that has been made. It has much in its favor. The State has a very real interest in keeping this land under |