Senate Report 107-287 - LEASE LOT CONVEYANCE ACT OF 2002

[Senate Report 107-287]
[From the U.S. Government Publishing Office]

Calendar No. 606
107th Congress Report
SENATE
2d Session 107-287

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LEASE LOT CONVEYANCE ACT OF 2002

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September 17, 2002.--Ordered to be printed

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Mr. Bingaman, from the Committee on Energy and Natural Resources,
submitted the following

R E P O R T

[To accompany H.R. 706]

The Committee on Energy and Natural Resources, to which was
referred the Act (H.R. 706) to direct the Secretary of the
Interior to convey certain properties in the vicinity of the
Elephant Butte Reservoir and the Caballo Reservoir, New Mexico,
having considered the same, reports favorably thereon without
amendment and recommends that the Act do pass.

PURPOSE OF THE MEASURE

The purpose H.R. 706 is to direct the Secretary of the
Interior to convey, for fair market value, property comprising
403 cabin sites within the Rio Grande Reclamation Project to
the Elephant Butte/Caballo Leaseholders Association, Inc., so
that the properties can then be conveyed to individual
leaseholders.

BACKGROUND AND NEED

The Rio Grande Reclamation Project was authorized by
Congress in 1905 (33 Stat. 814) as one of the first projects
initiated under the Reclamation Act of 1902. In the late 1940s,
the Bureau of Reclamation, which had acquired and reserved a
large amount of land for the project, began to lease a number
of small lots along the shoreline of Elephant Butte and Caballo
Reservoirs to the public on a short-term basis. Ultimately, the
leaseholders began to make significant and permanent
improvements to the land in order to secure the right to
continued use of the lots. The leaseholders, in order to ensure
their continued use of the lots and to protect the value of
their improvements, now seek to acquire their respective
properties for the fair market value. H.R. 706 would address
this concern by enabling the leased parcels to be conveyed to
the individual lessees.

LEGISLATIVE HISTORY

H.R. 706 was introduced by Representative Skeen on February
14, 2001. The bill was passed by the House of Representatives
on March 19, 2002. The Subcommittee on Water and Power held a
hearing on H.R. 706 on June 6, 2002. At the business meeting on
July 31, 2002, the Committee on Energy and Natural Resources
ordered H.R. 706, favorably reported.

COMMITTEE RECOMMENDATION

The Committee on Energy and Natural Resources, in open
business session on July 31, 2002, by a voice vote of a quorum
present, recommends that the Senate pass H.R. 706, as described
herein.

SECTION-BY-SECTION ANALYSIS

Section 1 provides the short title, the ``Lease Lot
Conveyance Act of 2002.''
Section 2 contains three findings by Congress related to
the Act.
Section 3 defines terms used in the Act.
Section 4, subsection (a) directs the Secretary of the
Interior to convey to the Elephant Butte/Caballo Leaseholders
Association, Inc. (purchaser), all right, title, and interest
of the United States in and to all real property (easements
included), comprising 403 cabin sites under the administrative
jurisdiction of the Bureau of Reclamation and located along the
Elephant Butte and Caballo Reservoirs.
Subsection (b) requires the purchaser to pay the United
States the fair market value of the properties conveyed under
the Act.
Section 5, subsection (a) requires the Secretary to impose
certain conditions for the conveyance including: (1) the
purchaser shall grant to each individual lessee an option to
purchase the property at fair market value or to continue
leasing the property; and (2) the purchaser shall pay
reasonable administrative costs incurred by the Secretary that
are incident to the conveyance.
Section (b) directs the Secretary to establish certain use
restrictions to maintain the unique character of the area in
the vicinity of the Reservoirs that are appurtenant to, and run
with each property, and are binding upon each subsequent owner
of each property. The restrictions must ensure that existing
public access to and along the Reservoirs' shoreline is not
obstructed; that adequate public access to and along the
Reservoirs' shoreline is maintained; and that the Secretary and
Irrigation Districts' operation of the Reservoirs does not
result in liability for either the United States or the
Irrigation Districts for damages incurred as a result of such
operation including damages for any loss of or enjoyment of the
property; and damages resulting from modifications or
construction of any Reservoir dam.
Subsection (c) directs the Secretary to convey the
properties under this Act as soon as possible after the date of
enactment and in accordance with all applicable law. If the
conveyance is not completed within one year of the date of
enactment of this Act, the Secretary shall submit a report to
the Congress explaining the reasons for not completing the
conveyance and the proposed date of completion.
Subsection (d) states that the terms of the conveyance
shall authorize the purchaser to require each lessee to
reimburse the purchaser for a proportionate share of the costs
incurred in completing the transactions, including any interest
charges.
Section 6 requires any lessee having a claim against the
purchaser after the conveyance, to promptly give written notice
of the claim to the purchaser within 20 days after the date the
lessee knew or should have known of such claim, or lose any
right to relief under the claim. If the lessee and purchaser
are unable to resolve the claim by mediation, the matter shall
be resolved by binding arbitration.
Section 7 states that no conveyance under the Act will
limit the authority or ability of the Secretary to fulfill the
duties of the Secretary under the Act of June 17, 1902 (32
Stat. 388, chapter 1093), and Acts supplemental to and
amendatory of that Act.

COST AND BUDGETARY CONSIDERATIONS

The following estimate of the cost of this measure has been
provided by the Congressional Budget Office.

U.S. Congress,
Congressional Budget Office,
Washington, DC, August 6, 2002.
Hon. Jeff Bingaman,
Chairman, Committee on Energy and Natural Resources,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 706, the Lease Lot
Conveyance Act of 2002.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Julie
Middleton (for the federal costs) and Marjorie Miller (for the
state and local impact).
Sincerely,
Barry B. Anderson
(For Dan L. Crippen, Director).
Enclosure.

H.R. 706--Lease Lot Conveyance Act of 2002

Summary: H.R. 706 would direct the Secretary of the
Interior to convey 403 cabin sites that are located along the
shores of the reservoirs in Elephant Butte State Park and
Caballo State Park in New Mexico to the Elephant Butte/Caballo
Leaseholders Association. As a condition of conveyance, the
association would pay the fair market value of the 403 sites,
minus any structural improvements that have been made by
current leaseholders. In addition, the association would have
to reimburse the federal government for administrative costs
associated with the conveyance.
Based on information from the Bureau of Reclamation, CBO
estimates that selling the properties under H.R. 706 would
result in additional receipts of about $20 million over the
2003-2007 period. Because the legislation would affect direct
spending, pay-as-you-go procedures would apply.
H.R. 706 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
The state of New Mexico manages these leases and retains the
lease payments to cover their costs. Should the property be
sold, the state would lose the lease income but also would
benefit from reduced costs. The net impact to the state
probably would not be substantial.
Estimated cost to the Federal Government: The estimated
budgetary impact of H.R. 706 is shown in the following table.
The costs of this legislation fall within budget function 300
(natural resources and environment).

----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-----------------------------------------------------
2002 2003 2004 2005 2006 2007
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CHANGES IN DIRECT SPENDING

Estimated budget authority................................ 0 0 -20 0 0 0
Estimated outlays......................................... 0 0 -20 0 0 0
----------------------------------------------------------------------------------------------------------------

Basis of estimate: For this estimate, CBO assumes that H.R.
706 will be enacted by the start of fiscal year 2003 and that
the conveyance of the properties would occur in 2004. According
to both the Elephant Butte/Caballo Leaseholders Association and
the Bureau of Reclamation, it will take at least one year to
survey and appraise the property before the land would convey.
Based on information provided by the Bureau of Reclamation,
CBO estimates that the association would purchase the property,
including easements and roads, from the federal government for
about $40,000 to $60,000 per lot, for a total of about $20
million for the 403 cabin sites.
Currently, these properties do not generate any receipts
for the federal government. The state of New Mexico manages the
property for recreation and leases the cabin sites to
individuals for temporary occupancy. The state uses the revenue
generated from the leases for administration and management of
the cabin sites and other types of park operations.
Pay-as-you-go considerations: The Balanced Budget and
Emergency Deficit Control Act sets up pay-as-you-go procedures
for legislation affecting direct spending or receipts. The net
changes in outlays that are subject to pay-as-you-go procedures
are shown in the following table:

--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
---------------------------------------------------------------------------------------
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in outlays.............................................. 0 0 -20 0 0 0 0 0 0 0 0
Changes in receipts............................................. Not applicable
--------------------------------------------------------------------------------------------------------------------------------------------------------

Intergovernmental and private-sector impact: H.R. 706
contains no intergovernmental or private-sector mandates as
defined in UMRA. The state of New Mexico manages these leases
and retains the lease payments to cover their costs. Should the
property be sold, the state would lose the lease income but
also would benefit from reduced costs. The net impact to the
state probably would not be substantial.
Previous CBO estimate: On March 5, 2002, CBO prepared a
cost estimate for H.R. 706 as ordered reported by the House
Committee on Resources on February 27, 2002. The two versions
of this legislation are identical, as are our cost estimates.
Estimate prepared by: Federal costs: Julie Middleton;
impact on state, local, and tribal governments: Marjorie
Miller; impact on the private sector: Lauren Marks.
Estimate approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis.

REGULATORY IMPACT EVALUATION

In compliance with paragraph 11(b) of rule XXVI of the
Standing Rules of the Senate, the Committee makes the following
evaluation of the regulatory impact which would be incurred in
carrying out H.R. 706. The bill is not a regulatory measure in
the sense of imposing Government-established standards or
significant economic responsibilities on private individuals
and businesses.
No personal information would be collected in administering
the program. Therefore, there would be no impact on personal
privacy.
Little, if any, additional paperwork would result from the
enactment of H.R. 706.

EXECUTIVE COMMUNICATIONS

The pertinent legislative report received by the Committee
from the Department of the Interior setting forth Executive
agency recommendation relating to H.R. 706 are set forth below:

U.S. Department of the Interior,
Office of the Secretary,
Washington, DC, August 8, 2002.
Hon. Jeff Bingaman,
Chairman, Committee on Energy and Natural Resources,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: This letter responds to your request for
the views of the Department of the Interior on H.R. 706, the
Elephant Butte Lease Lot Conveyance Act, as passed by the House
of Representatives and referred to the Senate (RFS). This
confirms the testimony of Mark A. Limbaugh, Director, External
& Intergovernmental Affairs, Bureau of Reclamation, before the
Committee on June 6, 2002.
The Department has no objections to H.R. 706 as passed by
the House of Representatives and referred to the Senate (RFS).
H.R. 706 provides for the transfer and disposal of 403
residential leased lots located on federal properties at
Elephant Butte and Caballo Reservoirs near Truth or
Consequences, New Mexico. In the late 1940s, small quarter-acre
and half-acre lots along the shoreline of Elephant Butte and
Caballo Reservoirs were made available for the public to lease
and occupy on a short-term basis. Individuals were permitted to
place tents, campers, or construct temporary structures on the
site for the duration of their stay. Although the original
intent of the lease lot program was to provide lots for part-
time recreational use, over time permanent structures and other
improvements have replaced initial recreational facilities with
many of the structures now used as full-time residences.
The Department supports efforts to convey certain
Reclamation lands and facilities to private entities--in
particular, those that are no longer necessary for managing
either the dam or the recreation areas. However, the Department
did not support H.R. 706 as introduced. In testimony before the
House Resources Committee on December 10, 2001, we raised
several concerns with H.R. 706 as introduced; for example, the
method by which fair market value would be determined,
disposition of proceeds from the sale of the leased lots, and
compliance with applicable laws prerequisite to conveyance.
Reclamation staff subsequently worked with the House
Resources Committee to develop acceptable legislative language.
The resulting Amendment in the Nature of a Substitute, offered
by Representative Calvert, addressed our most significant
concerns. Ultimately, those changes were adopted and passed by
the House of Representatives on March 19, 2002, and are
reflected in H.R. 706(RFS).
The Office of Management and Budget advises that there is
no objection to the presentation of this report from the
standpoint of the Administration's program.
Sincerely,
John W. Keys III,
Commissioner, Bureau of Reclamation.

CHANGES IN EXISTING LAW

In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, the Committee notes that no
changes in existing law are made by the bill H.R. 706, as
ordered reported.