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    "localId": "1103398",
    "label": "Mineral Leases and Royalties",
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    "id": "1103398",
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    "contentType": "document",
    "title": "Mineral Leases and Royalties",
    "citationUrl": "https://catalog.archives.gov/id/1103398",
    "collections": [
        "Bradley H. Patterson Files (Ford Administration)",
        "Bradley Patterson's Native American Programs Files"
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    "subjects": [
        "Minerals",
        "Indians of North America"
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    "coverageEndDate": {
        "logicalDate": "1975-08-01",
        "month": 8,
        "year": 1975
    },
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        "logicalDate": "1975-08-01",
        "month": 8,
        "year": 1975
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{
    "seq": 1,
    "pageIndex": 0,
    "type": "document",
    "url": "https://s3.amazonaws.com/NARAprodstorage/opastorage/live/98/1033/1103398/content/library/document/0142/1103398.pdf",
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    "ocrText": "The original documents are located in Box 4, folder \"Mineral Leases and Royalties\" of the\nBradley H. Patterson Files at the Gerald R. Ford Presidential Library.\nCopyright Notice\nThe copyright law of the United States (Title 17, United States Code) governs the making of\nphotocopies or other reproductions of copyrighted material. Gerald Ford donated to the United\nStates of America his copyrights in all of his unpublished writings in National Archives collections.\nWorks prepared by U.S. Government employees as part of their official duties are in the public\ndomain. The copyrights to materials written by other individuals or organizations are presumed to\nremain with them. If you think any of the information displayed in the PDF is subject to a valid\ncopyright claim, please contact the Gerald R. Ford Presidential Library.\nRe: Indian affairs 8/1\nOIH\nTM\nAMERICANS for INDIAN OPPORTUNITY\n1816 JEFFERSON PLACE. N.W., WASHINGTON D.C. 20036\n(202) 466-8420\nLaDonna Harris\nAugust 5, 1975\nPresident\nBOARD OF DIRECTORS\nI. W. Abel\nLionel Bordeaux. Signs\nEdgar Bowen. Com-Oregon\nTerry Brown. Karek\nLee Back\nThe\nno\nPrice M. Cobbs. M.D.S.\nEugene Crawford. Stearity\nAda Deer. Menominez\nJack Edma. Sheehene\nThe Honorable Gerald Ford\nBlackfeet\nThe White House\nCoy G. Eklund\nRoy George.\nWashington, D.C. 20500\nLaDonna Harris: Commerche\nThe Honorable Williams L Hensley,\nEsidmo\nDear President Ford:\nRev. Theodore M.\nHasburgh.\nC.S.C.\nMinerva Jenkins Apachers\nI am absolutely outraged by the reports in the\nForrest Kassanavoid,\nCommacher\nYvonne Knight. Pones\nenclosed article from the New York Times indicating\nLouis LaRose. Winnebego\nthat the Interior Departments Audit and Investigation\nDavid Lester. Creek\nOffice has concluded that Indian tribes are not\nDemis Limberhand. Northern\nCheyenne\nreceiving \"all royalty payments due them\" for\nPhilip Martin.\nleases on their reservations.\nGrace McCullah Namehas\nN. Scott Momaday. Klower\nJerry Muskrat. Cherelore\nWe shall appreciate receiving an immediate\nJoe Dan Osceola. Sominate\nMorgen Otts.\nreport of the tribes and the amounts of money\nApache-Arapaho-Kieesc\nMaria Tallchief Pascher, Ourge\nthey have been denied and your plans for restitution\nElma Patterson: Tuscarere\nincluding interest on the money due and not paid\nJack Rushing. Creek\nto them.\nJoe S. Sando. Jemes\nVickie Santana. Southern\nPiegan-Blockfeet\nW.J. Strickland. Lumbee\nOur studies of the leases made by the Federal\nJames A. White. Menomines\nGovernment for Indian resources reveal that they are\namong the poorest in the world to begin with. To\nfind that even their meager terms are not being\nmet is simply outrageous.\nWe shall appreciate hearing from you at your\nearliest convenience.\nSincerely,\nLaDonna Harris-\nPresident\nCC: Senator Jackson\nSenator Abourezk\nGERALD 8 FORD LIBRA\nDigitized from Box 4 of the Bradley H. Patterson Files at the Gerald R. Ford Presidential Library\n9\nAIO\nAMERICANS for INDIAN OPPORTUNITY\n1816 JEFFERSON PLACE. N.W.. WASHINGTON D.C. 20036\n(202) 466-8420\nAugust 13, 1975\nLaDonna Harris\nPresident\nence-\nBOARD OF DIRECTORS\nI. W. Abel\nLionel Bordeaux, Sioux\nEdgar Bowen, Coos-Oregon\nTerry Brown, Karok\nLee Buck\nThe Honorable Gerald R. Ford\nPrice M. Cobbs, M.D.\nThe White House\nEugene Crawford, Sioux\nAda Deer, Menominee\nWashington, D.C. 20500\nJack Edmo. Shoshone-Bannock.\nBlackfeet\nCoy G. Eklund\nDear President Ford:\nRoy George. Nooksack\nLaDonna Harris, Comanche\nThe Honorable William L. Hensley,\nEskimo\nDue to my negligence, I did not put in the enclosure\nRev. Theodore M. Hesburgh,\nC.S.C.\nwith our President's letter to you on August 5, 1975,\nMinerva Jenkins, Apache\nForrest Kassanavoid, Comanche\nwhich was an article from the New York times concerning\nYvonne Knight. Ponca\nroyalty payments to Native Americans on their leases.\nLouis LaRose. Winnebago\nDavid Lester, Creek\nDennis Limberhand, Northern\nCheyenne\nPlease accept my deepest apologies.\nPhilip Martin. Choctaw\nGrace McCullah, Navaho\nN. Scott Momaday. Kiowa\nSincerely yours,\nJerry Muskrat. Cherokee\nJoe Dan Osceola. Seminole\nMorgan Otis.\nApache-Arapaho-Kiowa\nMaria Tallchief Paschen, Osage\nElma Patterson, Tuscarora\nCharlene Kepher\nJack Rushing, Creek\nJoe S. Sando. Jemez\nCharlene Nephew\nVickie Santana, Southern\nPiegan-Blackfeet\nSecretary to LaDonna Harris\nW. J. Strickland, Lumbee\nJames A. White. Menominee\nPresident\nEnclosure\nGERALD FORD\nTHE\nNEW\nYORK\nTIMES,\nSUNDAY,\nJULY\n27,\n1975\nU.S. Failing to Get Its\nDue in Oil Royalties\nProblem Is\nFor example, it found that\nRather the failure of the\nundervaluation of gas pro-\nGovernment to get all the\nduction in just one year by\nroyalty income it could and\nthe Northern Rocky Moun-\nshould receive was set down\nPinpointed\ntain area offices cost the\nto an inexport accounting\nGovernment $136,000 in roy-\nsystem and imprecise report-\nAs Official\nalties, and that \"the real\ning procedures that often led\nloss is probably several times\nto company errors and delays\nthat figure.\"\nin payments.\nIneptitude\nAgain it discovered that\nThere was an oblique sug-\na postaudit by just one of\ngestion that the Geological\nthe Geological Survey's six\nSurvey, an agency made up\narea offices that covered\nlargely of scientists and en-\nBy E. W. KENWORTHY\nonly 10 per cent of the ac-\ngineers, was more interested\ncounts under its supervision\nin oil exploration and devel-\nproduced $362,000 in added\nopment than in collecting\nWASHINGTON-The Unit-\nroyalties.\nroyalties, and that therefore\ned States Government is not\nThe highly critical report\nthe survey should be relieved\ngetting full value from on-\ncomes at a time when the\nof the latter responsibility.\nshore gas and oil leases on\nGeological Survey has been\nIn commenting on the un-\nFederal lands, according to\nunder fire on other fronts.\nderstaffing of the Royalty\na review of the royalty ac-\nIts expertise has been called\nAccounting System, which\ncounting system by the Inte-\nin question by oil company\nhas only 54 employes, and\nrior Department's Office of\ngeologists who have regarded\nits lack of expertise, the\nAudit and Investigation.\nthe survey's estimates of the\nreport said that interview\nNor, the study concludes,\nnation's undiscovered, re-\nsuggested this was due to \"a\nare Indian tribes receiving\ncoverable oil as highly opti-\nnegative attitude on the part\n\"all royalty payments due\nmistic and unrealistic.\nof management.\"\nthem\" for leases granted on\nIn the early 1960's the\nA scientific organization,\ntheir reservations-a finding\nsurvey's estimate ranged\nthe report said, had a tenden-\nthat the Office of Audits\nfrom 400 billion to 590 billion\ncy is \"underestimate the me-\nsays raises questions about\nbar.els. Last year, however,\nportance of other disciplines\nthe Interior Department's\nVincent E. McKelvey, the\nor to relogate other disci-\nproper discharge of its \"trust\nsurvey's director, estimated\nplines to minor roles.\"\nresponsibility.\"\nit to be 200 billion to 400\nIf this was putting it mild-\nThese conclusions were\nbillion barrels. And a few\nly, the report also put it\nreached after an investiga->\nweeks ago, the estimate was\nbluntly when it said: \"The\ndropped to 50 billion to 127\nConservation Division [of the\ntion lasting from March to\nDecember last year of royal-\nbillion barrels-roughly the\nsurvey] has never come to\nty collections, which, under\nestimate of oil company and\ngrips with the issues of es-\nthe 1920 Mineral Leasing\nindependent geologists.\ntablishing fair product value\nAct, are the responsibility\nIn another area, the Gener-\nand verifying production vol-\nof the Interior Department's\nal Accounting Office dis-\nume.\" Royalty payments are\nclosed that several high level\nbased on volume of output.\nUnited States Geological\nNevertheless, the report\nSurvey.\nsurvey officials were stock-\ncredited the Conservation\nThe report found that the\nholders in companies affect-\nvision with recognizing the\nlosses sustained by the Fed-\ned by actions of the survey.\nshortcomings in royally of-\neral Government, the states\nThere have been com-\nTection and requesting the\nwith which Federal income\nplaints 0.1 Capitol Hill and\nstudy.\nis sháred, and Indian tribes\nfrom consumer and environ-\nFurthermore, in a lengthy\nwere attributable to the Geo-\nmental organizations for a\ncomment on the audit report,\nlogical Survey's undervalua-\nlong time that the upper\nthe Conservation Division en-\ntion of oil and gas pro-\nechelons of the Geologic Sur-\ndorsed many of the recom-\nduction, inadequate and\nvey were too heavily staffed\nFORD\nmendations made. For CX-\nconfusing reporting proce-\nwith scientists and engineers\nample, the division. under\ndures on production and\nwho had come from the oil\ndirection of Russell Wayland,\nsales by oil companies, de-\nand gas industries or who\nsaid: \"We agree that there\nlayed royalty payments, poor-\nintended to go into such em-\nis a need to expand the pres-\naccounting procedures, fail-\nployment after Government\nent accounting staff and\nure to conduct reviews of\nservice.\nthat\nmore professional\ncompany reports and staff\nHowever, there was not\naccountants should be\ndeficiencies in both \"exper-\nthe slightest suggestion in\nhired.\"\ntise and numbers.\"\nthe audit report of any collu-\nThe survey now adminis-\nThe report said that it was\nsion between officers in the\nters 12,386 leases on Federal\nimpossible to put a figure\nsurvey's Royalty Accounting\nand Indian lands, involving\non the total losses, but there\nSystem and oil and gas pro-\n31,399 producing oil and gas\nwas reason to believe them\nducers. Nor was any\nwells.\n\"significant,\" probably on\nevidence adduced of deliber-\nUnder the law and regula-\nthe order of several million\nate cheating of the Govern-\ntions, lessees winning com-\ndollars a year.\nment by the companies.\npetitive bids pay from 12½\nto 25 per cent royalty on\nand 10 per cent to the Feder-\n\"strictly through the gener-\nAmong the\noil and either 12½ or 16\nal Treasury.\nosity of the purchaser. Area\ntions of the audit team\n2/3 per cent on gas produced\nAmong the practices un-\noffices receive such state-\nstandardized and timply\nfrom the leases. The royalty\ncovered by the review, un-\nments for only about 70 to\nporting, \"meaningful\nrate depends on the daily\ndervaluation occurred when a\n80 per cent of the leases.\nties\" for reporting of royal-\naverage production per well\nsimple sales price was taken.\nFurthermore, the study said,\nties due and for late\n-the greater the production,\nthe higher the rate.\nThe supervisor of each\nwere often the same compa-\nments (present penalties\nGeological Survey area of\nny, \"which makes the control\ndescribed as \"meaning\nThe leases are sold in com-\nfice, on the basis of produc-\nmechanism unreliable.\"\nseparate accounting for\npetitive bidding when they\ntion reports by the lessees,\nThis confused reporting\ntiple interests in a lease and\ncontain Reological structures\nis empowered to set the\nindicative of oil and gas\nsystem is further fragmented\nfrequent reviews of accounts.\nvalue on which royalties are\nwhere a lease is held by\nMost important, however,\npotential. On non-competi-\nto be paid.\nseveral companies - all of\nwere the personnel recom-\ntive leases-those on un-\nknown geologic structures-\nIn setting an \"estimated\nwhich are permitted to file\nmendations: a 37-person in-\nthe production royalty is\nreasonable value,\" the super-\nseparate reports on their pro-\ncrease in staff (eight nc-\nvisor is required to consider\nportional ownership of pro-\ncountants and 29, clerks);\nduction and royalties due.\ncreation of a team compris-\n12½ per cent on both oil\n\"the highest price paid for\nThe area offices then com-\ning a lawyer, an engineer, an\nand gas.\na part or a majority of pro-\npound the confusion by accu-\naccountant and an economist\nTotal royalty proceeds are\nduction of like quality in\nmulating all the separate\nto be responsible for value\nnot peanuts-smounting as\nthe same field, to the price\nownership statements into\ntion of production in all\nthey did to $220-million in\nreceived by the lessee, to\none \"balance carry-forward\nareas, and appointment inf A\nposted prices and to other\namount\" for the whole lease.\nsystems manager to oversee\n1974. This was nearly double\nrelevant matters.\"\n\"As a result,\" the report\nall aspects of a centralized\nthe 1973 figure because of\nThus the value for royalty\nsaid, \"the statement becomes\nroyalty accounting system\nthe sharp rise in the price\nno one official is now in\ncomputation is not necessar-\nalmost meaningless to the\nof now oil following the Arab\nlease interest holders and the\ncharge, the report\nily the sales price received\nembargo imposed late in\nThe estimated cost inr\nby the producer. However,\nGeological Survey because\n1973 and the subsequent\nthe review found that with\nneither can readily differen-\nadded positions was\nsurge in the price of import-\ntiate which portion of the\na year.\nfew exceptions, the Geolog-\ned oil. or this amount, $33.4-\nThat said, the Office of\nical Survey computed royal-\naccount balance carry-for-\nmillion went to Indian tribes.\nAudit and Investigation has\nties on the sale price. It par-\nward applies to each lease\nThe Federal income split\ninterest.\nturned to investigating off\nticularly noted that, in setting\nis 37.5 per cent to the states\nThe upshot was that \"de-\nshore practices, conducting\ngas values, area offices gave\nwhere the leases lie, to be\n\"virtually no consideration\"\nlinquent balances were al-\na study of royalty collections\nused for schools and high-\nfrom leases on the outer con-\nto area prices established by\nlowed to accumulate until\nways; 52.5 per cent to the\ntinental shelf.\nthe Federal Power Commis-\nthe Geological Survey deter-\nFederal Reclamation Fund,\nsion for sale of natural gas\nmined royalties due from\nin interstate commerce.\neach lease interest and sub.\nThe review gave two\nmitted appropriate billings.\"\ncauses for this situation-\nIn some cases, the study said,\nlack of established guidelines\n\"years may elapse\" between\nfor area offices and lack of\nthe account reviews.\ncapable staff.\nThis situation was respon-\nAs to reporting procedures,\nsible, the report stated, for\nthe review found that \"infor-\nthe large amount of late pay-\nmation needed is not always\nments, although it added that\nrequired to be submitted and\nmany companies had become\nthe information that is re-\n\"somewhat lax\" about mak-\nquired is not always submit:\ning payments within the re-\nted, or sometimes not sub.\nquired month after produc-\nmitted on time and ofter\ntion. The total overdue\nsubmitted in a. nonstandarc\namount in December, 1973,\nformat.\"\nwas $3.3-million, which re-\nsulted in interest loss to the\nData, the review went on\ncomes in \"from differen\nGovernment for the year of\n$104,000.\nsources at different times\nduring the month.\" Thus, the\noperator may submit a pro-\nduction report; the lease\nholder may submit a sales\nthe lessee and the purchaser\nand royalty report, and the\nvarious purchasers may, or\nmay not, submit statements\nof their purchases.\nThe purchasers' statements\nFORD\nare the only method that\nthe Geological Survey has\nof verifying the producer's\nstated sales volumes and\nLIBRAN\nvalues. The trouble is that\nthe purchasers' statements\nare not required and are sup-\nplied, as the àudit stated,\nAIÓ\nAMERICANS for\nINDIAN OPPOR TUNITY\n1816 JEFFERSON PLACE, N.W., WASHINGTON, D.C. 20036\n(202) 466-8420\nThe Honorable Gerald Ford\nThe White House\nWashington, D.C. 20500"
}