m: 605-3 Mam? Budding Vq? shun .D C. 20 40 As Eatneg) gm; in? .4- "b DRAFT Memorandum To: William P. Pendley Assistant Secretary - Energy and Minerals From: Ken Smith Assistant Secretary - Indian Affairs BIA has learned that HMS intends to implement regulations proposed in September, l983 which would allow oil companies two months after the month of production within which to report and pay Indian royalties. Thus, companies would have a maximum period of ninety-twp days from actual productioa within which to pay for that production. BIA strongly opposes this proposal. The current, one month payment provision, has been in federal regulations at least since l957. Most of the 2l,000 existing Indian leases rely on this provision. A few have separate. explicit payment provisions. but even these may be considered superseded by a change of regulations. BIA sees no reason for the change. When the existing regulations were implemented, few companies had computerized accounting systems. Now, most companies do. Thus companies should be able to pay in a more speedy. not a slower. fashion. It will be very difficult to explain this change satisfactorily to the Indian people. As you may be aware. thousands of allottees have had their royalties suspended while HMS implemented its new acc0unting system. Many accounts are still not caught up. To suspend royalties for another month, probably in mid- winter, when the change of regulations takes place, would work a tremendOus hardship and create a great deal of criticism. Unlike the federal government, Indian tribes and allottees depend on payments of royalties to meet basic expenses. we estimate that it would cost Indians an excess of four million dollars per year in lost interest should the proposed changes be implemented. while this amount seems small in relation to federal revenues, it is Substantial in relation to tribal and individual Indian incomes. Further, the change seems tb fly in the face bf Administration pblicy. Generally this pelicy is aimed at nbtaining federal payments in a meet timely and efficient fashiem The ?eet tea the federal gnvernrneni', and state sharing in federal rbyalties. for delayed payments would, cf cburse. be far greater than the cast ta indians. For example, a late and repert noted that about 1.2 billibn dollars had been cplletted in federal nil and gas rdyalties in I?ll. ?f this ampunt. abbut 25: was received late. GAD nbted with that, ?Ta the extent that the delayed payments caused additional by the DepartmEnt 0f TreasuryI they generated additienal interest {Repert by the Cantreller General to "Oil and Gas Royalty Cnllectidns - Seripus Financial Manage- ment Freblems Heed Ebngressienal Attentidn," April l3, l?l?l. It Hduld net appear that the federal gbvernment shduld be taking actidns which increase its interest at this time. Also. as far as Indian lands are cdncerned, it must be remembered that the Secretary?s discretibn is limited by his trust Indians have sued successfully where Secretarial actibn has been viewed as adverse to the best interests df the Indians and law suits cpuld Hell result ?rem the pre? pesed change. eltheugh HHS representatives reperted to us that few adverse Ebmments had been received an the change. bur survey bf affected tribes and ?ndividuals. has revealed very nppesitibn. He urge that the pr?p?sed change be abandbned. If yen like to discuss this further. please cdntact the undersigned. PETITION To: Honorable Kenneth Snith. Assistant Secretary for the Interior for Indian Affairs Rom: Indim Allottees in the Anadarko Area. Oklahana Ne Indian Allottees iron the seven tribes of the Anadarko Area protest proposed regulations which will give oil and gas carpanies operating on our lands additional time to pay the royalties they we us. These regulations are about to be issued in final form by the Minerals Management Service and we insist that you. our trustee. intervene and prevent this. We have suffered from non-paynent of royalties for months. Many of us have lost our cars and other property while the goverrment failed for months and months to collect or disburse millions of dollars in royalties belonging to us. Now, just as we are beginning to get some of these back royalties and pay our bills and living costs, the government proposes to cut off our royalties again so oil carpanies can take 60 days. instead of 30 days, from production to pay us. We are poor people. You should not force LE to make interest free loans to oil ompanies. The thirty day payment period has been required for decades. We all signed our leases believing we would be paid thirty days after production. There is no reason to change this provision and hurt us to benefit cmpanies. In past decades when carpanies had nothing but pen and ink to compute payments and write checks, the law required them to pay us in thirty days. Now that tiny have ourputers and are able to pay faster, the allows them to pay us slower. If you permit these new regulations our royalties will be cut off in the middle of winter. How will we pay for our food and homing and fuel. Do you think, Mr. Secretary. that our creditors are as lenient with us as you propose to be with the oil oatpanies? No! Our mortgages and car payments are due every month. We must pay for our groceries when we buy them -- not sixty to ninety days later. You are our trustee. You are responsible to treat us, at least fairly. We petition you: Put a stop to this give away of our money to oil ompanies. Respect the provisions of our leases. Require payment of royalties within 30 days? Nanc Tribe . Address I. 444,)! 7/ 2. QC/Aumk?m 7T) (?11m al'nlamdq/ 100 601 85? Changu?l/I - 1/ 1/ I ?17, 5? i (11.4 1?