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

======================================================================



 
                    LEASE LOT CONVEYANCE ACT OF 2002

                                _______
                                

               September 17, 2002.--Ordered to be printed

                                _______
                                

   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
----------------------------------------------------------------------------------------------------------------
                                           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.