STATEMENT OF THEODORE W. TAYLOR, DEPUTY COMMISSIONER, BUREAU OF INDIAN AFFAIRS, DEPARTMENT OF THE INTERIOR Mr. EDMONDSON. The Deputy Commissioner of the Bureau of Indian Affairs, Mr. Ted Taylor, is here, and we would like to ask Mr. Taylor to come forward. A question arose in the course of the hearings the other day about the existence of some geothermal leases on Indian lands. We were told there had been some experience with them. We would like to hear from you. I know you have had no time to prepare a statement on the subject. We would be interested in hearing what the Bureau of Indian Affairs' experience has been in this area. Is this the first time you have appeared before this subcommittee? Mr. TAYLOR. Yes, sir. Mr. EDMONDSON. We are pleased to have you with us. Mr. TAYLOR. We had two leases on Pyramid Lake Reservation. They were originally Mr. EDMONDSON. Where is that? Mr. TAYLOR. That is in Nevada, very close to Reno. A prospecting permit was negotiated in 1962, followed by two leases for two different parts of the Pyramid Lake area with Western Geothermal. The income from those leases was been $4,160. They have not put in any particular effort because on the drilling of three wells they found the steam was not hot enough for practical purposes, and last October they indicated their intention to terminate the leases and this process. The other lease is on the Sulphur Bank Rancheria in California. The lease was originally negotiated with the S. I. Corp. in 1964, and recently has been assigned to M. & T. Corp. There has been no drilling. Only 2 years are left on the 5-year period in which they have to prove out in order to continue the lease, so we could expect some immediate drilling in that area. Mr. EDMONDSON. Was the identical lease form used? Mr. TAYLOR. I have copies of the two Pyramid Lake ones, and they are identical. The man from California is in the audience. We do not have a copy of that lease. We requested it and it has not come in yet. We think it is similar. Mr. EDMONDSON. Can you tell us what the terms of the leases were and what the royalty is? Mr. TAYLOR. In the California lease, the rental per acre is $10, and that amounts to $500 a year because it is a 50-acre lease. It is a 122percent royalty on gross proceeds. Mr. EDMONDSON. Is there any provision for by product? Mr. TAYLOR. This includes all by-products. Mr. EDMONDSON. Ten percent on all returns from both steam and byproducts? Mr. TAYLOR. No 121%-percent royalty. Mr. EDMONDSON. So far there has been no production return on any of them, as I understand. Mr. TAYLOR. No, sir; there hasn't even been drilling on the California one yet. Mr. EDMONDSON. Would you supply for the committee a copy of the leases in each of the instances? Mr. TAYLOR. Yes, sir. Mr. EDMONDSON. It would be useful if we could have your comments or the comments of someone who is knowledgeable on this subject, as to the participation that took place when the offerings were made for the leases, whether there was competitive bidding of any type, whether, in your view, the leases that were used were leases that were satisfactory from the standpoint of both the Indian tribes and any constructive suggestions you might give us about improvements that are needed in those leases from the Government's standpoint and from the standpoint of future development. Mr. TAYLOR. I would be glad to. Mr. HOSMER. In the event steam was produced, what was the term? Mr. TAYLOR. Twenty-five years with option to renew for another 25 years. Mr. ASPINALL. How long have you been with the Bureau? Mr. TAYLOR. Since July 1, 1966. Mr. ASPINALL. What was your business before that time? Mr. TAYLOR. Before that, I was Assistant to the Secretary of the Smithsonian Institution. Mr. ASPINALL. Do you believe that the relationship between the Federal Government and the Indians of the United States is such that it is as important as the relationship between the Department of the Interior and the people, the owners of the public lands of the United States? Mr. TAYLOR. If I understand your question correctly, yes. Mr. ASPINALL. Would you care to hazard a guess why it is that the representatives of the Department of the Interior have been so loath to have leases on the public lands of the United States for the development of geothermal steam values, and yet they are willing to go ahead and follow this practice in regard to Indian lands? Mr. TAYLOR. I understand that question very clearly, and I think it would be unwise for me to answer, because I do not know the background on the other. I have heard about this problem. Mr. ASPINALL. Does it appear to be a fair question? Mr. TAYLOR. I certainly think it deserves a good answer. Mr. ASPINALL. I think the relationship between the Federal Government and the Indians perhaps is a closer relationship, ward-guardian relationship, than perhaps the relationship between representatives of the Department as far as the people's lands are concerned. They are both very close, but the Department of the Interior, of which you are a member, voluntarily and without very much to-do, has withdrawn 80 million-plus acres of land from any kind of development without trying to get to the leasing operation, and yet they have already entered into leases for Indian lands. Mr. TAYLOR. Of course, the chairman is more aware than I that the Indian lands are private lands in a sense, and we operate them for the benefit of the owners of that private land. Mr. ASPINALL. We operate the public lands of the United States for the benefit of the owners, too, all the people, a relationship that is no closer than that with the Indians. Thank you very much. Mr. EDMONDSON. I think the point the chairman is making is one I certainly would like to endorse. I think the Department of the Interior should have an obligation requiring of a lessee the same full measure of compensation for Indian lands that are used as is required on the public lands themselves. I cannot conceive of the Department of the Interior having the concept that it has a higher duty with regard to the public lands and what it gets out of their use and rental than it has with regard to the lands which it holds in trust for the Indians. In fact, personally, if I thought the Interior Department thought it had a lesser responsibility and less of a trust, I would be looking for some other department to be in charge of the Indian lands, because to me, in some quarters you might even be held to have a higher degree of responsibility on Indian lands than you do on the public lands. Mr. ASPINALL. That is right, Mr. Chairman. It may be a question of authority. Maybe the Department has definite authority in the one and no authority in the other. But this just does not seem quite practical or equitable to me. Mr. EDMONDSON. May I ask this further question suggested by Mr. Shafer. What are the limitations on your latitude with regard to geothermal steam leases for Indian lands with regard to acreage, terms, and royalties? Mr. TAYLOR. I am not sure we have any. The negotiation of these leases was on the basis of 25 U.S.C. 415, which covers our business lease activity. The provisions in that law limit the terms of years, but I do not know that there are any other limitations. Mr. EDMONDSON. It places no limitation on acreage or royalties that you know of? Mr. TAYLOR. I do not think the statute does. I think that concludes the hearings on this subject at this time. There have been some requests made, both of departmental witnesses and also the witnesses appearing for private companies and private developers, to supply information to the committee, and the record will be held open for the purpose of receiving that information. Ten days, I think, will be adequate to obtain that information. Included in that, of course, are the lease terms just requested from the Bureau of Indian Affairs people. If there is no further business to come before the subcommittee, the subcommittee stands adjourned. (Whereupon, at 11:50 a.m., the subcommittee adjourned.) (Information furnished to the committee subsequent to the hearings follows:) U.S. DEPARTMENT OF THE INTERIOR, Hon. WAYNE N. ASPINALL, Chairman, Committee on Interior and Insular Affairs, House of Representatives, Washington, D.C. DEAR MR. ASPINALL: We are pleased to comply with your request made during the course of the Committee's consideration of H.R. 5778, a bill "To authorize the Secretary of the Interior to make disposition of geothermal steam and associated geothermal resources, and for other purposes", and enclose herewith two copies each of the three geothermal steam leases affecting Indian trust lands under the jurisdiction of the Bureau of Indian Affairs. Two of the leases were made on lands within the Pyramid Lake Reservation, Nevada, following the granting of a prospecting permit (two copies also enclosed); the other lease was made on the Sulphur Bank Rancheria, California, without the benefit of a prospecting permit. The three leases were made with the advice, guidance and counseling of the Regional Mining Supervisor, U.S. Geological Survey, and with the approval of the Indian owners. The negotiations were amicable and the parties to each lease were satisfied with the lease terms. There have been no complaints. As the Committee was advised, the leases on the Pyramid Lake Reservation are in the process of being canceled through mutual agreement of the parties. The Rancheria lease has approximately two years remaining to effect production. Sincerely yours, Hon. WAYNE N. ASPINALL, T. W. TAYLOR, Deputy Commissioner. U.S. DEPARTMENT OF THE INTERIOR, Chairman, Committee on Interior and Insular Affairs, House of Representatives Washington, D.Ç. DEAR MR. ASPINALL: I wish to supplement my letter of June 20 transmitting copies of the three Geothermal leases on Indian lands. During the course of the hearings, Mr. Edmondson posed several questions relating to competitive bidding and improvement of our leases. I did not cover these in my letter of June 20 and now wish to do so. As to competitive bidding on these leases there was none. Competitive bidding is not required under our statutory authority (25 U.S.C. 415). Other than the lessee, there was no indicated interest. Only time and experience based on exploration, development, and marektability of the products and by-products can determine whether any changes in the terms and conditions of our leases will be needed. Sincerely yours, T. W. TAYLOR, Deputy Commissioner. U.S. DEPARTMENT OF THE INTERIOR, BUREAU OF INDIAN AFFAIRS SACRAMENTO AREA OFFICE, SACRAMENTO, CALIF. [Lease fee $15.00. Lease No. SBL-57. Contract No. 14-20-0550–1274] STEAM AND HOT WATER LEASE, SULPHUR BANK INDIAN RANCHERIA This indenture of lease, made and entered into this 18th day of May 1964, between the Area Director, Bureau of Indian Affairs, Sacramento, California, in behalf of the adult members of the Sulphur Bank Indian Rancheria, party of the first part, hereinafter called Lessors, and S. I. Corporation, a California corporation, whose address is 353 Sacramento Street, San Francisco 11, California, party of the second part, hereinafter called Lessee, under the provisions of the Act of August 9, 1955, as amended (69 Stat. 539; 25 U.S.C. 415) as implemented by Part 131-Leasing and Permitting of the Code of Federal Regulations, Title 25— Indians, and any amendments thereto relative to Business Leases on restricted Indian lands which by reference are made a part hereof. WITNESSETH A. Lessor.-In consideration of $1, receipt of which is hereby acknowledged, of the rent and royalty to be paid, and of the agreements of Lessee herein contained, grants and leases unto Lessee on an exclusive basis for the sole purpose of prospecting and exploring for and developing, drilling, extracting, removing, storing, producing, refining, otherwise processing or converting, using or selling products as follows: hot water, steam, by-products thereof, steam condensates 1 Changed by merger to: M. & T. Incorporated. produced, derived or obtained for generations of electrical or other power, (hereinafter called the products) the land described as follows: Those certain lands known as Sulphur Bank Indian Rancheria situate in the County of Lake, State of California, lying partly in the Northwest quarter of Section 5 and partly in the Northeast quarter of Section 6, Township 13 North, Range 7 West, Mount Diablo Base and Meridian, more particularly described as follows: Beginning at a point which bears North 0° 10' West 400.78 feet from a point that bears North 76° 10' West, distant 2559.3 feet from the center of Section 5, Township 13 North, Range 7 West, MDM; thence from the point of beginning along the South side of the existing road. North 89° 53' West, 657.9 feet, and South 86° 22' 30" West, 271.92 feet to a pipe monument set distant 15.0 feet East from the existing rock fence which encloses the buildings of the Indians living within the area; thence along a line running parallel and 15.0 feet distant from said rock fence, as follows: South 16° 46' 30" West, 132.58 feet; thence South 16° 24' 30'' West, 242.6 feet; thence South 21° 26' 30" West, 158.6 feet; thence South 61° 35' 30" West, 335.0 feet, more or less, to the low water line of Clear Lake; thence Northerly along said low water line, 1200 feet, more or less, to a point thereon that is situated South 20° 55′ West, from a point that is North 68° 42′ West 1965.79 feet from the point of beginning of this description; thence leaving said low water line, North 20° 55′ East 500.0 feet, more or less, to said point situated North 68° 42′ West from the point of beginning; thence North 75° 12′ East 307.67 feet; thence South 81° 04' East 864.97 feet; thence North 27° 33′ 30'' East 370.9 feet; thence North 31° 57' 30" West 207.69 feet; thence North 54° 44′ East 259.11; thence North 82° 52′ East 405.3 feet to a pipe monument, and thence South 0° 10′ East, 1362.02 feet to the point of beginning, containing approximately 50.0 acres, more of less. Lessee may occupy on a non-exclusive basis so much of the surface of the leased land as is necessary to carry on the work of exploring, prospecting for and developing and producing and utilizing the products, including plant sites for the generation of electrical or other power derived therefrom, and may use all roads and rights-of-way reasonably necessary for access, transmission and operations hereunder, provided Lessee assumes the responsibility for maintenance and repair necessitated by the increased use thereof. B. Term. This lessee shall extend for a period of five years from the date of its approval and continue thereafter provided products are produced in paying quantities for a total primary term of twenty-five (25) years. At the option of the Lessee, provided production is sustained in paying quantities, the lease may be renewed for an additional term of not to exceed twenty-five (25) years. C. Definition.-Area Director refers to the official in charge of the California Indian Agency, Sacramento, Calif. In consideration of the foregoing, the lessee agrees: 1. Royalty. To pay, or cause to be paid, to the Area Director for the use and benefit of Lessor, a royalty as follows: Twelve and one-half (12%) percent of the gross proceeds from the sale or other disposition of products (including by-products) derived or obtained from the leased land less cost of delivery if delivery is not made on the leased land, as supported by metering records and books of account which shall be maintained in accordance with usual industry practice, and which shall be available for reasonable inspection by Lessor or any of its authorized agents. The sales price of products hereunder shall be not less than fair market value of such products. Lessee shall have the right to comingle, for the purpose of utilizing, selling or processing the products produced from the leased land with products produced from other lands, and to meter or gauge the production from the leased land and to compute and pay Lessor royaly on the basis of such production as so determined. Lessee shall not be required to account to Lessor for or to pay any royalty on products produced by Lessee on the leased land which are not utilized, saved or sold, or which are used by Lessee in producing products hereunder. All royalty accruing for any month shall be due and payable before the twenty-fifth (25th) day of the following month, each payment to be accompanied by a supporting statement of gross receipts and metering records. 2. Annual Rental.-To pay, or cause to be paid to the Area Director for the use and benefit of Lessor, in advance, beginning with the date of approval of the lease by the Bureau of Indian Affairs, as annual rental, the sum of five hundred and no/100 dollars ($500.00) for the first lease year, and five hundred and no/100 dollars ($500.00) in advance of each anniversary date of the lease, |
