[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]





                        H.R. 706 and H.R. 1870

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

                       LEGISLATIVE FIELD HEARING

                               before the

                    SUBCOMMITTEE ON WATER AND POWER

                                 of the

                         COMMITTEE ON RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                               __________

                 December 10, 2001 in Las Vegas, Nevada

                               __________

                           Serial No. 107-77

                               __________

           Printed for the use of the Committee on Resources



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                         COMMITTEE ON RESOURCES

                    JAMES V. HANSEN, Utah, Chairman
       NICK J. RAHALL II, West Virginia, Ranking Democrat Member

Don Young, Alaska,                   George Miller, California
  Vice Chairman                       Edward J. Markey, Massachusetts
W.J. ``Billy'' Tauzin, Louisiana     Dale E. Kildee, Michigan
Jim Saxton, New Jersey               Peter A. DeFazio, Oregon
Elton Gallegly, California           Eni F.H. Faleomavaega, American 
John J. Duncan, Jr., Tennessee           Samoa
Joel Hefley, Colorado                Neil Abercrombie, Hawaii
Wayne T. Gilchrest, Maryland         Solomon P. Ortiz, Texas
Ken Calvert, California              Frank Pallone, Jr., New Jersey
Scott McInnis, Colorado              Calvin M. Dooley, California
Richard W. Pombo, California         Robert A. Underwood, Guam
Barbara Cubin, Wyoming               Adam Smith, Washington
George Radanovich, California        Donna M. Christensen, Virgin 
Walter B. Jones, Jr., North              Islands
    Carolina                         Ron Kind, Wisconsin
Mac Thornberry, Texas                Jay Inslee, Washington
Chris Cannon, Utah                   Grace F. Napolitano, California
John E. Peterson, Pennsylvania       Tom Udall, New Mexico
Bob Schaffer, Colorado               Mark Udall, Colorado
Jim Gibbons, Nevada                  Rush D. Holt, New Jersey
Mark E. Souder, Indiana              James P. McGovern, Massachusetts
Greg Walden, Oregon                  Anibal Acevedo-Vila, Puerto Rico
Michael K. Simpson, Idaho            Hilda L. Solis, California
Thomas G. Tancredo, Colorado         Brad Carson, Oklahoma
J.D. Hayworth, Arizona               Betty McCollum, Minnesota
C.L. ``Butch'' Otter, Idaho
Tom Osborne, Nebraska
Jeff Flake, Arizona
Dennis R. Rehberg, Montana

                   Allen D. Freemyer, Chief of Staff
                      Lisa Pittman, Chief Counsel
                    Michael S. Twinchek, Chief Clerk
                 James H. Zoia, Democrat Staff Director
                  Jeff Petrich, Democrat Chief Counsel
                                 ------                                

                    SUBCOMMITTEE ON WATER AND POWER

                   KEN CALVERT, California, Chairman
            ADAM SMITH, Washington, Ranking Democrat Member

 Richard W. Pombo, California        George Miller, California
George Radanovich, California        Peter A. DeFazio, Oregon
Greg Walden, Oregon,                 Calvin M. Dooley, California
  Vice Chairman                      Grace F. Napolitano, California
Michael K. Simpson, Idaho            James P. McGovern, Massachusetts
J.D. Hayworth, Arizona               Hilda L. Solis, California
C.L. ``Butch'' Otter, Idaho          Brad Carson, Oklahoma
Tom Osborne, Nebraska
Jeff Flake, Arizona
                                 ------                                
                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on December 10, 2001................................     1

Statement of Members:
    Calvert, Hon. Ken, a Representative in Congress from the 
      State of California........................................     1
    Gibbons, Hon. Jim, a Representative in Congress from the 
      State of Nevada............................................     3
        Prepared statement of....................................     4
    Skeen, Hon. Joe, a Representative in Congress from the State 
      of New Mexico..............................................     2
        Prepared statement of....................................     3

Statement of Witnesses:
    Keys, John W., III, Commissioner, Bureau of Reclamation, U.S. 
      Department of the Interior.................................     5
        Prepared statement on H.R. 706...........................     7
        Prepared statement on H.R. 1870..........................     8
    Mackedon, Mike, City Attorney, City of Fallon, Nevada........     9
    Mowles, Sherry, El Paso, Texas...............................    17
        Prepared statement on H.R. 706...........................    18
    Tedford, Hon. Ken, Mayor, City of Fallon, Nevada, prepared 
      statement..................................................    11
    Ward, Charles C., President, Elephant Butte/Caballo 
      Leaseholders Association...................................    12
        Prepared statement on H.R. 706...........................    15

 
    LEGISLATIVE HEARING ON 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; AND H.R. 1870, 
 TO PROVIDE FOR THE SALE OF CERTAIN REAL PROPERTY WITHIN THE NEWLANDS 
           PROJECT IN NEVADA, TO THE CITY OF FALLON, NEVADA.

                              ----------                              


                       Monday, December 10, 2001

                     U.S. House of Representatives

                    Subcommittee on Water and Power

                         Committee on Resources

                           Las Vegas, Nevada

                              ----------                              

    The Subcommittee met, pursuant to call, at 11 a.m., the 
Commission Chambers, Clark County Government Center located at 
500 South Grand Central Parkway, Las Vegas, Nevada, Hon. Ken 
Calvert [Chairman of the Subcommittee] presiding.

  STATEMENT OF HON. KEN CALVERT, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF CALIFORNIA

    Mr. Calvert [presiding]. Hearing will come to order. It is 
delightful to be here in Las Vegas, Nevada. It is a beautiful 
facility that they have built here since the last time I had a 
hearing here.
    First, we will have a field hearing on H.R. 706 and H.R. 
1870. Many of the early reclamation projects were constructed 
at a time when there were no local communities and utilities 
nearby. As the West became more populated and the urbanization 
of these areas, the Bureau of Reclamation now owns and operates 
public facilities and land that would be owned or operated and 
funded by private corporations or a local government agency if 
they were constructed today.
    The Department of Interior has announced that reclamation 
would transfer responsibly for a significant number of 
facilities to state, local governments and other entities. To 
date, few of them have been forwarded to the Congress and 
passed. Transfers of these facilities out of Federal ownership 
remains a high priority, and expeditious steps must be found to 
facilitate them.
    I look forward to hearing from our witnesses today 
regarding two land transfer bills, one in Nevada and the other 
in New Mexico. But before we go into that, we have the 
gentleman from New Mexico who is senior member of the House and 
an appropriator, Interior Appropriations Chairman, Mr. Joe 
Skeen. Would you like to have an opening statement?

 STATEMENT OF THE HON. JOE SKEEN, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF NEW MEXICO

    Mr. Skeen. Mr. Chairman, I want to take the opportunity to 
extend my very warm regards to you for holding this hearing 
today. I know how busy the Subcommittee is, especially with 
respect to the, quote, ``little California'' bill. My intent is 
to keep my testimony short so that the witnesses seated next to 
me have the opportunity to explain to you and the members of 
this fine Subcommittee the Elephant Butte story.
    The Elephant Butte Reservoir story begins in the 1930's as 
the Government offered people the opportunity to build 
recreational homes on land leased from the U.S. Bureau of 
Reclamation. The covenants in the lease agreements required 
leaseholders to make substantial investments on the 400 sites 
released under the program. It was every leaseholder's hope 
that the Government would someday privatize the leased land and 
offer it for sale through a purchase option. Unfortunately, 
this has not yet happened. The Bureau, throughout most of the 
20th Century, apparently felt that someday they might need this 
land if the dams were ever modified or enlarged. Needless to 
say, we now believe that modifications or enlargement will 
never occur.
    While legislation enacted by Congress in 1984 allowed the 
leaseholders of Lake Sumner--another Bureau of Reclamation 
project where recreational homes existed--the opportunity to 
purchase their lots, the residents of Elephant Butte remain in 
a lease-only situation. Despite my previous efforts, including 
the introduction of prior year legislation, and established 
patterns of Government transfers, we appear before you to make 
our request once again.
    There are three issues that had to be resolved with the 
Bureau of Reclamation in order to facilitate a successful 
transfer. These include property appraisals, the number of lots 
that would be sold, and the issue of where the money would go. 
My bill, H.R. 706, addresses each of these issues in a fair and 
equitable manner. In effect, current leaseholders would have 
the opportunity to purchase the land on which their homes 
currently exist at an unimproved, lakefront property appraised 
value. Proceeds would be deposited in the reclamation fund on 
behalf of the Rio Grande Project and would be distributed under 
existing statues. Finally, the bill guarantees continued public 
access to water.
    This legislation is carefully crafted to resolve these 
issues. We must not lose track of the fact that this is really 
a story about people, their lives and the role of the 
Government in the settling of the West. In closing, Mr. 
Chairman, I would like you and the Committee to do what is 
right by passing this legislation, and you are known for your 
fairness. It is time that we offer these fine people the 
opportunity to purchase the land that many have leased for over 
60 years.
    I would like my statement to be--
    Mr. Calvert. Without objection, the full statement will be 
entered into the record.
    Mr. Skeen. Thank you.
    [The prepared statement of Mr. Skeen follows:]

  Statement of Hon. Joe Skeen, a Representative in Congress from the 
                          State of New Mexico

    Mr. Chairman, I want to take this opportunity to extend my very 
warm regards to you for holding this hearing today. I know how busy the 
subcommittee is, especially with respect to the ``little California'' 
bill. My intent is to keep my testimony short so that the witnesses 
seated next to me have the opportunity to explain to you and the 
members of this fine subcommittee the Elephant Butte Story.
    The Elephant Butte Reservoir story begins in the 1930's as the 
Government offered people the opportunity to build recreational homes 
on land leased from the U.S. Bureau of Reclamation. The covenants in 
the lease agreements required leaseholders to make substantial 
investments on the four-hundred sites released under the program. It 
was every leaseholder's hope that the Government would someday 
privatize the leased land and offer it for sale through a purchase 
option. Unfortunately, this has not yet happened. The Bureau, 
throughout most of the 20th Century, apparently felt that someday they 
might need this land if the dams were ever modified or enlarged. 
Needless to say, we now believe that modifications or enlargement will 
never occur.
    While legislation enacted by Congress in 1984 allowed the 
leaseholders of Lake Sumner (another Bureau of Reclamation project 
where recreational homes existed), the opportunity to purchase their 
lots, the residents of Elephant Butte remain in a lease-only situation. 
Despite my previous efforts, including the introduction of prior year 
legislation, and established patterns of Government transfers, we 
appear before you today to make our request once again.
    There are three issues that had to be resolved with the Bureau of 
Reclamation in order to facilitate a successful transfer. These include 
property appraisal, the number of lots that would be sold, and the 
issue of where the money would go. My bill, H.R. 706 addresses each of 
these issues in a fair and equitable manner. In effect, current 
leaseholders would have the opportunity to purchase the land on which 
their homes currently exist at an unimproved, lakefront-property 
appraised value. Proceeds would be deposited in the reclamation fund on 
behalf of the Rio Grande Project and would be distributed under 
existing statues. Finally, the bill guarantees continued public access 
to the water.
    This legislation is carefully crafted to resolve these issues. We 
must not lose track of the fact that this is really a story about 
people, their lives, and the role of the Government in the settling of 
the west. In closing Mr. Chairman, I ask you and the committee to do 
what is right by passing this legislation. It is time that we offer 
these fine people the opportunity to purchase the land that many have 
leased for over sixty years.
                                 ______
                                 
    Mr. Calvert. And we thank the Chairman for coming out here 
today to offer some assistance on good legislation. And with 
that, also we have up today H.R. 1870 that is sponsored by the 
gentleman from Nevada, whose home State we are in, and we are 
grateful for your wonderful hospitality. And if you would like 
to speak to H.R. 1870, you are recognized.

  STATEMENT OF HON. JIM GIBBONS, A REPRESENTATIVE IN CONGRESS 
                    FROM THE STATE OF NEVADA

    Mr. Gibbons. Thank you very much. Mr. Chairman, thank you 
and I want to welcome you. I want to welcome my colleague, Mrs. 
Napolitano, from California here was as well, as well as my 
good friend Mr. Skeen from New Mexico. And I want to thank you 
for having this hearing today and having this hearing in Nevada 
on this piece of legislation, as part of your Committee's field 
hearing that you are holding today.
    H.R. 1870 is a bill to provide the city of Fallon, Nevada 
the exclusive right to purchase approximately 6.3 acres of 
public land located in the downtown area of that city. The 
Fallon Rail Freight Loading Facility Transfer Act--if you can 
say that quickly, you are better than I am--will enable the 
city of Fallon to make the necessary long-term investments to 
ensure the future viability of this important municipal asset.
    Now, the city of Fallon is a rural, agricultural community 
of 8,700 residents located in northern Nevada, approximately 70 
miles east of Reno. Since 1984, the city has leased 
approximately 6.3 acres of property from the U.S. Bureau of 
Reclamation that it utilizes as a rail freight yard and loading 
facility. The city, the State of Nevada, the U.S. Department of 
Transportation and the Southern Pacific Railroad have all 
collectively invested a significant amount of money in this 
facility, thus providing approximately 400 jobs in that 
community.
    On January 1, 2000, the long-term lease agreement between 
the city of Fallon and the Bureau of Reclamation expired. It 
was not terminated; it simply expired. And as negotiations 
began for a new long-term lease, the city of Fallon and the 
Bureau came to the conclusion that it would be in the best 
interest of both parties to have ownership of this property 
transferred to the city of Fallon. The city would be able to 
make those long-term investments to a facility that it owned 
without having to worry about renegotiating new leases and the 
possibility of losing access to the property at some future 
date.
    The Bureau of Reclamation would be able to divest itself 
from an asset that no longer serves a purpose to its core 
mission allowing more of its scarce resources then to be 
focused on the traditional roles of the Bureau of Reclamation. 
Of course, Mr. Chairman, this transfer will be contingent on 
the satisfactory conclusion of all necessary environmental 
reviews and will be purchased by the city at fair market value. 
The Fallon Rail Freight Loading Facility Transfer Act is a win-
win situation for all of the affected parties.
    And, finally, Mr. Chairman, this bill has strong support 
from Nevada's bipartisan congressional delegation. Along with 
the city of Fallon, we look forward to further consideration of 
this legislation and, ultimately, its passage. And again, Mr. 
Chairman, welcome to Nevada and thank you for providing the 
city of Fallon and Nevada with this opportunity.
    [The prepared statement of Mr. Gibbons follows:]

 Statement of the Hon. Jim Gibbons, a Representative in Congress from 
                          the State of Nevada

    Mr. Chairman, welcome back to my home state of Nevada. I want to 
thank you for allowing this legislation, H.R. 870, to be considered 
today as part of your committee's field hearing.
    H.R. 1870 is a bill to provide the City of Fallon, Nevada the 
exclusive right to purchase approximately 6.3 acres of public land 
located in the downtown area of the City.
    The Fallon Rail Freight Loading Facility Transfer Act will enable 
the City of Fallon to make the necessary long-term investments to 
ensure the future viability of this important municipal asset.
    Fallon is a rural, agricultural community of 8,700 residents 
located in northern Nevada--approximately 70 miles east of Reno.
    Since 1984 the City has leased approximately 6.3 acres of property 
from the U. S. Bureau of Reclamation that it utilizes as a rail freight 
yard and loading facility.
    The City, the State of Nevada, the U.S. Department of 
Transportation and the Southern Pacific Railroad have collectively 
invested a significant amount of money in this facility--thus providing 
over 400 jobs in the community.
    On January 1, 2000 the long-term lease agreement between the City 
of Fallon and the Bureau of Reclamation expired.
    As negotiations began for a new long term lease, the City of Fallon 
and the Bureau came to the conclusion that it would be in the best 
interest of both parties to have ownership of this property transferred 
to the City of Fallon.
    The City would be able to make long-term investments to a facility 
that it owned without having to worry about renegotiating new leases 
and the possibility of losing access to the property.
    The Bureau of Reclamation would be able to divest itself from an 
asset that no longer serves a purpose to its core mission allowing more 
of its scarce resources to be focused on the traditional roles of the 
Bureau.
    Of course, this transfer will be contingent on the satisfactory 
conclusion of all necessary environmental reviews and will be purchased 
by the City at fair market value.
    The Fallon Rail Freight Loading Facility Transfer Act is a win-win 
situation for all of the affected parties.
    Finally, Mr. Chairman, this bill has strong support from Nevada's 
bipartisan congressional delegation. Along with the City of Fallon, we 
look forward to further consideration of this legislation, and 
ultimately, its passage.
    Again, Mr. Chairman, welcome to Nevada--and thank you for providing 
the City of Fallon with this opportunity.
                                 ______
                                 
    Mr. Calvert. I thank the gentleman. And with that, I think 
we will get into our first panel. And we are pleased that 
Commissioner John Keys is with us today, with the Bureau of 
Reclamation, Department of Interior. And, Mr. Keys, you are 
recognized. We are on a 5-minute rule here. I don't think we 
are that strict about that. We will try to keep the testimony 
to about 5 minutes, and we will have more time for questions.

     STATEMENT OF JOHN W. KEYS III, BUREAU OF RECLAMATION, 
                     DEPARTMENT OF INTERIOR

    Mr. Keys. Mr. Chairman, thank you very much. It is a 
pleasure to be here with you today and to testify on H.R. 706 
and 1870. I would ask that my full statements on both of these 
bills be included in the record.
    Mr. Calvert. Without objection, so ordered.
    Mr. Keys. Mr. Chairman, H.R. 706 provides for the 
conveyance to private ownership of 403 residential lots at 
Elephant Butte and Caballo Reservoirs in New Mexico. The 
Department supports this legislation with a few technical 
modifications.
    In the late 1940's, quarter- and half-acre lots along 
Elephant Butte and Caballo Reservoir shorelines were made 
available for public lease on a short-term basis for part-time 
recreational use. There are 348 lots at Elephant Butte and 55 
lots at Caballo. Over time, the temporary structures that were 
put there became permanent, and the leaseholders want to 
purchase and acquire title to the individual leased lands. The 
Bureau of Reclamation has done a resource management plan for 
the two reservoirs and has done the necessary environmental 
impact statement for that plan.
    As I said earlier, the Department supports H.R. 706 with a 
few modifications. The first one is there is a few of those 
lots that may create some inholdings and may be needed for 
future consideration. We are certainly willing to work with the 
leaseholders and with you on determining which ones of those 
and how significant that is. The second issue is fair market 
value. As the lands are really used, should be used for their 
valuation. Proceeds from the sales of the lots should be 
properly credited, and time limits and the costs of surveys and 
appraisals need to be revisited. We will look forward to 
working with you on accomplishing these few technical changes 
and then the passage of the legislation and conveyance of those 
lots at the two reservoirs.
    H.R. 1870 provides for the conveyance of the 6.3 acres of 
land, otherwise known as the Fallon Freight Loading Facility or 
the Fallon Freight Yards, within the Newlands Project in Nevada 
to the city of Fallon. Since the facilities no longer serve the 
needs of the project, the Bureau supports the conveyance. The 
Department supports H.R. 1870 with a few technical 
modifications also.
    The Fallon Freight Yard was acquired by the Bureau of 
Reclamation for the Newlands Project in 1920. The acquisition 
cost was allocated to the Truck E. Carson Irrigation District 
who has since repaid that obligation. For many years, the city 
of Fallon leased the facilities for industrial uses. While that 
lease was terminated in January of 2001, the city wants to 
acquire the lands, and we certainly support that. Truckee-
Carson Irrigation District, the project beneficiary, has stated 
that it doesn't want or need those lands for its operation.
    As I said before, the Department supports H.R. 1870 with a 
few technical clarifications. The first of those is the 
Comprehensive Environmental Response Compensation and Liability 
Act--most of us that work with that call it CERCLA--and 
reclamation policy that requires that all liability issues, 
including environmental liability, be resolved before title 
transfer. We have conducted a Phase I site assessment and 
identified 13 conditions on those lands that need to be further 
investigated and cleaned up. The Phase II assessment must be 
done and then accomplished. We have a contract and a work plan, 
and we are working with Fallon to get that done. The conveyance 
should not be done until these conditions are resolved.
    Second, since Truckee-Carson Irrigation District has repaid 
the allocated costs for these lands, we feel that the proceeds 
from the sale should go to reimburse the Newlands Project. 
Third, some details of the appraisals need to be worked out, 
and, fourth, since the leases ran out, the city of Fallon has 
leased some of those lands to another company, there were some 
funds involved, and we are working with them to get that 
straightened out. And, certainly, I don't see any problem with 
any of those.
    Mr. Chairman, in summary, Reclamation strongly supports 
transferring ownership of all of these facilities--at Elephant 
Butte, at Caballo and at the Fallon Freight Yard--with the 
above-mentioned modifications or some work on those. We would 
look forward to resolving the issues and then completing the 
transfers. Look forward to working with you and your staffs on 
the legislation, and I would certainly answer any questions 
that you might have.
    [The prepared statements of Mr. Keys follow:]

 Statement of John W. Keys, III, Commissioner, Bureau of Reclamation, 
              U.S. Department of the Interior on H.R. 706

    Mr. Chairman and members of the Subcommittee, I am John Keys. I am 
Commissioner of the U.S. Bureau of Reclamation (Reclamation). I 
appreciate the opportunity to appear today to present the 
Administration's views on H.R. 706, the Lease Lot Conveyance Act of 
2001. H.R. 706 provides for the transfer and disposal of 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 the years permanent structures and other 
improvements have replaced initial recreational facilities with many of 
the structures now used as full-time residences.
    H.R. 706, as introduced, would convey ownership of 403 lease lots 
at Elephant Butte and Caballo Reservoirs to the lessees for ``fair 
market value.'' However, rather than appraise these lots at their 
actual value the legislation requires that the lease lots be appraised 
as unimproved land, as though they were vacant building lots, and the 
proceeds be deposited in the Reclamation Fund on behalf of the Rio 
Grande Project and made immediately available to the subject Irrigation 
Districts under subsection I of the Fact Finders Act.
    The Administration supports the effort to convey certain lands and 
facilities to private entities--in particular, those that are no longer 
necessary for managing either the dam or the recreation areas. However, 
we have concerns about a number of provisions in the bill, and cannot 
support it as currently written. We would appreciate the opportunity to 
work with the Committee to address the various technical provisions 
necessary to facilitate this land transfer.
    Section 7 should be modified to direct proceeds from the sale of 
lots on acquired lands to the Reclamation Fund pursuant to existing 
laws and of lots on withdrawn lands to the general Treasury pursuant to 
existing law. Approximately 57 percent of the land in question is 
public land that was withdrawn from the public domain for the project 
by the Bureau of Reclamation from the Bureau of Land Management and as 
such, the districts have not paid anything toward acquisition costs. 
The remaining 43 percent of the lots are located on lands acquired by 
the Bureau of Reclamation for construction of the Project. However, in 
1937 the Districts were relieved of their obligation to repay any 
portion of the costs of acquired lands or the cost of constructing 
Elephant Butte Dam and Reservoir and all payments made up to that time 
were returned to the districts as credit. All costs of constructing 
Caballo Dam and Reservoir were charged to flood control. Also, in 
continuing litigation during the past 10 years, Reclamation has 
contended that these revenues, as well as other similar project 
revenues, are not one of the three types of revenues covered by 
subsection I Since the proceeds of this sale would not be credited or 
subject to treatment under subsection I, the reference to this 
subsection is inappropriate and should be deleted. We believe the bill 
should be amended to clarify issues regarding the disposal of withdrawn 
(as distinct from acquired) lands, and would like to work with the 
Committee to develop legislative language.
    Section (3)(1), as drafted requires that the lots be appraised as 
if they are unimproved lands. Since the existing lots are prime 
lakefront recreational home sites, are the only such properties in this 
area of southern New Mexico and have fully developed roads and access 
to all necessary utilities to sustain full-time residency, such an 
appraisal would seriously understate their value. This section should 
be modified to require that fair market value be established by an 
appraisal in conformance with the Uniform Appraisal Standards for 
Federal Land Acquisitions and with currently accepted industry 
appraisals techniques.
    Other issues that merit further consideration are the time limits 
contained in this act and the need to include administrative, survey 
and appraisal costs for conveyance of the lots from the government to 
the purchaser in Section (5)(a)(2), Administrative Costs. Surveys could 
take from 3 to 6 months to complete and appraisals requiring sufficient 
time for review and approval would take another 4 to 5 months, most 
likely exceeding the timing proposed in Section 5(d). These survey and 
appraisal costs should be borne by the beneficiaries.
    In summary, while Reclamation generally supports legislation to 
privatize certain leased lots at Elephant Butte and Caballo Reservoirs, 
we have concerns about some provisions in H.R. 706, and the 
Administration cannot support it as written. We would appreciate the 
opportunity to work with the Committee to address these concerns.
                                 ______
                                 

 Statement of John W. Keys, III, Commissioner, Bureau of Reclamation, 
              U.S. Department of the Interior on H.R. 1870

    I am John Keys, Commissioner of the Bureau of Reclamation, and I am 
here today to present the Administration=s views on H.R. 1870, the 
Fallon Rail Freight Loading Facility Transfer Act. This bill provides 
for the sale of about 6.3 acres of real property within the Newlands 
Project, Nevada, to the city of Fallon, Nevada. Reclamation supports 
conveyance of this acreage to the city of Fallon; however, four issues 
B credit of sale proceeds, appraisal, liability, payment to Reclamation 
of certain revenues B remain to be addressed. We cannot support the 
bill as written, but we look forward to working with the Subcommittee 
to resolve these issues so the work of conveying this land to the city 
of Fallon can proceed.
    The land to be conveyed to the city of Fallon is part of the 
Newlands Project. It was acquired in 1920 by the United States 
government. The proceeds of the sale of this land to the city of Fallon 
should reimburse the Newlands Project. Therefore, Section 2(b) of H.R. 
1870 should be amended to state that the amount paid by the city of 
Fallon should be credited to the Newlands Reclamation Project fund in 
the Treasury, in accordance with section 204(c), of the Federal 
Property and Administrative Services Act of 1949 (40 U.S.C. 485(c)).
    The fair market value of the real property should be determined by 
an independent appraiser approved by the Commissioner of Reclamation, 
in accordance with regulations concerning disposal of real property. 
[43 CFR 402.6] H.R. 1870 should be amended to state that the appraisal 
under section (b) be conducted at the city of Fallon=s expense by an 
independent appraiser approved by the Commissioner of Reclamation.
    As required by law (the Comprehensive Environmental Response, 
Compensation, and Liability Act (CERCLA), as amended, 42 U.S.C. ' 9601 
et seq.) and Reclamation policy, all liability issues, including 
environmental liability, need to be resolved before conveyance of title 
to the city. The city of Fallon leased this land for some time--its 
lease was terminated on January 31, 2001. During the lease period, the 
city of Fallon used the site for various purposes, including: storage 
of electrical equipment such as transformers and capacitors; storage of 
gasoline and diesel fuel; and construction and operation of a truck to 
railroad transfer structure. A Phase I Environmental Site Assessment 
(completed under contract by Tetra Tech Environmental Management, Inc., 
in accordance with ASTM Practice E 1527) revealed 13 recognized 
environmental conditions that will need to be investigated and, if 
verified, cleaned up. Reclamation is working with the city of Fallon on 
a work plan to perform this investigation.
    Finally, the city of Fallon must pay to Reclamation revenues it has 
improperly received from Premier Chemical, the company using the Fallon 
Rail Freight Loading Facility for freight loading purposes. Since April 
3, 2001, the city of Fallon has had no legal interest in the property; 
nonetheless it has received revenues from Premier Chemical for its use 
of the property. In a recent conversation with the Reclamation manager 
in Carson City, the city has committed to promptly pay those revenues 
to Reclamation.
    In summary, Reclamation supports the proposed conveyance, but 
cannot support the bill until certain technical modifications are made. 
H.R. 1870 should be amended to address the four issues listed above 
with special attention to the condition that the conveyance shall not 
occur until the Commissioner of Reclamation certifies that all 
liability issues relating to the property (including issues of 
environmental liability) and all revenue issues relating to revenue 
improperly retained by the city of Fallon have been resolved.
                                 ______
                                 
    Mr. Calvert. I thank the gentleman. If it is OK with the 
Commissioner, I think we will go ahead and recognize the second 
panel, and then we can open it for questions for everybody to 
participate.
    In panel two, we have several witnesses. Mike Mackedon will 
be speaking on H.R. 1870. He is the city attorney, the city of 
Fallon. We have Charles C. Ward from Elephant Butte, New 
Mexico, and Mrs. Sherry Mowles, both of which will be speaking 
toward H.R. 706. With that, Mike, you are recognized. Again, we 
are on a 5-minute rule, more or less, and you may begin any 
time you like.

  STATEMENT OF MIKE MACKEDON, CITY ATTORNEY, CITY OF FALLON, 
                             NEVADA

    Mr. Mackedon. Thank you, Mr. Chairman. It is a pleasure for 
me to be here, but as you have indicated, I am here to speak 
and give the testimony of Mayor Ken Tedford who could not be 
here for himself today. But I am knowledgeable on this matter 
and be able to answer questions after I have read his 
statement. This is the statement he would have given had he 
been here, and I am quite sure it will fall within the 5-minute 
category.
    Chairman Calvert, members of the Subcommittee, my name is 
Ken Tedford--and that is the Mayor of the city of Fallon. Had 
he been here today, he would have told you how pleased he would 
have been to have the opportunity to appear before the 
Subcommittee and to testify in favor of the passage of H.R. 
1870. He says in the statement, ``I am particularly mindful 
that this hearing is being held at a time when the Congress and 
our Nation's leadership face unique and extraordinary 
challenges and, yet continues to do the people's business in 
the face of those challenges.'' And he thanks you.
    If enacted into law, H.R. 1870 will enable the city of 
Fallon to acquire, through purchase at appraised value, a 6-
acre parcel of federally owned land that the city leased from 
the Bureau of Reclamation originally in 1984. This parcel is 
located, as our congressman has told you, entirely within the 
corporate limits of the city itself.
    The city is aware that the U.S. Government, through the 
U.S. Reclamation Service, predecessor of the Bureau of 
Reclamation, acquired the freight yard property in 1920. It 
appears that from 1920 until the mid-1980's the Bureau of 
Reclamation conducted operations thereon related to the 
Newlands Project, which included but were not limited to the 
electrical generation and distribution utility, which was 
operated by the Bureau of Reclamation and the Truckee-Carson 
Irrigation District.
    Federal use of the property ended in the early 1980's. And 
I think, in truth, that the Federal use of the properties 
probably ended in 1968 or 1969, although Federal ownership was 
discontinued--or has continued, I should say. But it was in 
1968, I believe, that the Bureau of Reclamation and the 
Truckee-Carson Irrigation District discontinued the operation 
of its electrical utility, outgrew the need for this particular 
yard. And from that point forward, the property has been used, 
although owned by the Bureau of Reclamation, but used by the 
parties, including the city of Fallon.
    The lease anticipated--that is the lease with the city--
construction of the present railroad loading facility, which 
was accomplished in 1990 by virtue of lease between the city 
and the Bureau of Reclamation. That was a 10-year lease.
    Earlier this year, during negotiations to extend the city's 
lease of the property, which has not been concluded, the Bureau 
advised the city that it was their preference that the city 
assume fee ownership of the property rather than continuing to 
lease it. The city manifested the same intent. This is the 
city's desire, and as a result, we asked Representative Jim 
Gibbons to introduce this legislation to authorize the Bureau 
to sell the parcel to the city. We believe a companion measure 
has been introduced in the Senate by our Senator Harry Reid.
    The city's construction and operation of the freight yard 
facility under a lease arrangement has been financially 
encouraged and supported by the State of Nevada and the 
Southern Pacific Railroad, pursuant to an operating agreement 
dated July 5, 1990. The United States Department of 
Transportation also participated financially through the 
operation agreement, funding certain grants designed to assist 
and promote local railroad service.
    Accordingly there is a significant financial investment in 
the freight yard facility by Federal and state governments and 
private industry. The city has expended approximately $150,000, 
the State of Nevada approximately $75,000, and the U.S. 
Department of Transportation approximately $500,000. 
Additionally, Southern Pacific Railroad has funded capital 
improvements to upgrade and maintain approximately 20 miles of 
track necessary for the operation of the facility. Accordingly, 
the combined investment in this facility is well in excess of 
$1 million. This cooperative funding demonstrates the 
importance to the community and the State for the continued 
viable operation of this facility by the city.
    For more than 10 years the freight yard facility has served 
as an anchor for the railroad spur which extends through the 
city limits. The railroad spur would have been discontinued and 
taken out of service were it not for this facility. And very 
importantly, the facility serves as a railhead for a mining 
company located in the small town of Gabbs, 70 miles to the 
east and south of Fallon. Mining is that community's only 
industry, and maintaining a railhead is essential to the 
economy of the town.
    I should say, or the Mayor would tell you, that the revenue 
that the city might receive from the freight yard facility and 
the rent that it has paid to the Bureau for the use of the 
property are insignificant as compared to the regional economy 
that the facility and the railroad spur generate and support.
    I should tell you that since the railroad spur was improved 
and this facility was developed, a number of other companies 
have now located and are using this facility. So it has 
fulfilled--this is an occasion where the project that was the 
joint project of the Federal Government, the State of Nevada 
and the city, has worked very well for our economy.
    Before concluding, Mr. Chairman, I would like to touch 
briefly on the environmental condition of the property. Because 
the property has been used for industrial purposes for more 
than 75 years--for the bulk of that time as an electrical 
utility maintenance, storage and operations area--we and the 
Bureau both believe that an environmental assessment should be 
completed prior to a transfer. To that end, Phase I and Phase 
II environmental assessments have been completed. Soil samples 
have been taken, a laboratory analyses conducted. While things 
generally look good, or we believe they do, from the 
information we have, additional investigation is clearly 
necessary and needs to be completed before it can be determined 
if the property is environmentally clean or whether some sort 
of remediation will be required and how that cost of 
remediation should be allocated.
    This concludes the Mayor's statement. I would be happy to 
answer questions when that opportunity comes.
    [The prepared statement of Mayor Ken Tedford follows:]

          Statement of Hon. Ken Tedford, Mayor, Fallon, Nevada

    Chairman Calvert, Members of the subcommittee, my name is Ken 
Tedford and I am here today in my capacity as the Mayor of the City of 
Fallon, Nevada. I am pleased to have this opportunity to appear before 
the subcommittee and testify in favor of the passage of H.R. 1870. I am 
particularly mindful that this hearing is being held at a time when the 
Congress and our Nation's leadership face unique and extraordinary 
challenges and, yet, you continue to do the people's business in the 
face of these challenges. Thank you.
    If enacted into law, H.R. 1870 will enable my City to acquire 
through purchase at appraised value a six (6) acre parcel of federally 
owned land that the City currently leases from the Bureau of 
Reclamation. This parcel is located inside the corporate limits of the 
City. The City is aware that the United States government, through the 
U.S. Reclamation Service, predecessor of the Bureau of Reclamation, 
acquired the freight yard property in 1920. It appears that from 1920 
until the mid-1980's the Bureau of Reclamation conducted operations 
thereon related to the Newlands Project, including but not limited to 
the electric generation and distribution utility operated by the Bureau 
of Reclamation and the Truckee-Carson Irrigation District. Federal use 
of the property ended in the early 1980's. The first agreement for the 
City's use of the property was a five (5) year lease in 1984 between 
the Bureau of Reclamation and the City. That lease anticipated 
construction of the present railroad loading facility, which was 
accomplished pursuant to the 1990 lease between the City and the Bureau 
of Reclamation.
    Earlier this year, during negotiations to extend the City's lease 
of the property, the Bureau advised the City that it was their 
preference that the City assume fee ownership of the property rather 
than continuing to lease it. This is the City's desire as well. As a 
result, we asked Representative Jim Gibbons to introduce this 
legislation to authorize the Bureau to sell the parcel to the City. A 
companion measure has been introduced in the Senate by Senator Harry 
Reid.
    The City's construction and operation of the freight yard facility 
under the existing lease has been financially encouraged and supported 
by the State of Nevada and the Southern Pacific Railroad pursuant to an 
Operating Agreement dated July 5, 1990. The United States Department of 
Transportation also participated financially through the Operation 
Agreement, funding certain grants designed to assist and promote local 
railroad service. Accordingly there is a significant financial 
investment in the freight yard facility by federal and state 
governments and private industry. The City of Fallon has expended 
approximately $150,000.00, the State of Nevada has expended 
approximately $75,000.00, and the U.S. Department of Transportation has 
expended approximately $500,000.00 on the facility. Additionally, 
Southern Pacific Railroad has funded capital improvements to upgrade 
and maintain approximately 20 miles of track necessary for the 
operation of the facility. Accordingly the combined investment in this 
facility is well in excess of $1,000,000.00. This cooperative funding 
demonstrates the importance to the community and the State of Nevada 
for the continued viable operation of this facility by the City of 
Fallon.
    For more than ten years the freight yard facility has served as an 
anchor for the railroad spur which extends through the City limits. The 
railroad spur would have been discontinued and taken out of service 
were it not for this facility. The facility serves as a railhead for a 
mining company located in the small town of Gabbs, seventy miles to the 
east and south of Fallon. Mining is that community's only industry and 
maintaining a railhead is essential to the economy of the town.
    The revenue that the City receives from the freight yard facility 
and the rent that it pays to the Bureau of Reclamation for the use of 
the property are insignificant as compared to the regional economy that 
the facility and the railroad spur generate and support.
    Before concluding, Mr. Chairman, I would like to touch briefly on 
the environmental condition of the property. Because the property has 
been used for industrial purposes for more than 75 years--for the bulk 
of that time as an electrical utility maintenance, storage and 
operations area--we the Bureau both believe that an environmental 
assessment should be completed prior to a transfer. To that end, Phase 
I and Phase II Environmental Site Assessments have been completed at 
the site. Soil samples have been taken and laboratory analyses 
conducted. While things generally look good, some additional 
investigations will need to be completed before it can be determined if 
the property is environmentally clean or whether some sort of 
remediation will be required.
    Mr. Chairman, this concludes my statement but I would be happy to 
answer any questions that you or the other Members may have. Thank you 
again for allowing me to testify in support of this legislation.
                                 ______
                                 
    Mr. Calvert. Appreciate the gentleman's testimony.
    Mr. Mackedon. Thank you.
    Mr. Calvert. Next, Mr. Charles C. Ward, from Elephant 
Butte, New Mexico in regards to H.R. 706. Mr. Ward, you are 
recognized.

    STATEMENT OF CHARLES C. WARD, PRESIDENT, ELEPHANT BUTTE/
               CARBALLO LEASEHOLDERS ASSOCIATION

    Mr. Ward. Thank you, Mr. Chairman. Mr. Chairman and 
distinguished Committee members, my name is Charlie Ward. I am 
the president of the Leaseholders' Association at Caballo and 
Elephant Butte Reservoirs. I have with me here today two 
members of our Board of Directors: Mr. Mike Mowles and Mr. 
Jerry Stagner.
    Mr. Mowles is one of the leaseholders whose lease lot was 
not recommended for privatization in the draft resource 
management plan and the environmental impact statement. Mr. 
Stagner is not a leaseholder, but he is one of the civic 
leaders of our community and has volunteered to serve on our 
board. He is the president of the State Bank, a member of the 
Economic Development Committee and a member of the Work Force 
Development Board of Truth or Consequences, New Mexico, which 
is a companion town to Elephant Butte.
    We are here today representing the leaseholders of Elephant 
Butte and Caballo Reservoirs. Thank you for allowing us the 
opportunity to address your Committee on behalf of the Elephant 
Butte and Caballo Leaseholders' Association. And I think that 
is extremely important. We appreciate you taking the time out 
in a year that we have had a lot of unusual events happening in 
Washington, D.C. And we are very proud of our Congress for 
carrying on the business under these trying conditions.
    Our association is a non-profit organization formed to 
achieve the purchase of what are referred to as the lease lots 
at Elephant Butte and Caballo Reservoirs. On behalf of the 
association, I would like to thank Representative Joe Skeen for 
his continued support of our efforts to privatize the lots we 
are leasing and for introducing H.R. 706, The Lease Lot 
Conveyance Act, which allows for the privatization of the lease 
lots. Senator Dominici has also assured us of his support and 
has given us his commitment to introduce a companion bill in 
the Senate.
     We would also like to take this opportunity to thank 
Senator Bingaman and Representatives Wilson and Udall, of the 
State of New Mexico, for their support of the legislation. 
Also, our thanks is extended to the Bureau of Reclamation, in 
particular, Mr. Clay McDermeit, who invited our association to 
have a representative on the Working Group Committee, formed to 
provide input into the resource management plan and the 
environmental impact statement. I would say that plan is in its 
final phases now.
    Although the final documents have not been released, the 
draft plan and the EIS released for comments recommended only 
378 of the 400 lease lots be privatized. However, our 
association supports H.R. 706, introduced by Representative 
Skeen, which provides for the privatization of all the lease 
lots. These lease lots are in the State of New Mexico, along 
the shores of Elephant Butte and Caballo Reservoirs. The 
Elephant Butte Reservoir was dedicated in 1916 and is near the 
small community of Truth or Consequences, New Mexico. As time 
has progressed, a small community of homes and businesses have 
resulted in New Mexico's 101st city, Elephant Butte, 
incorporated in 1999.
    Caballo Reservoir was built around 1930 as a flood control 
and holding area. It is about 15 miles south of Truth or 
Consequences. The reservoirs are about 2 hours to the south of 
Albuquerque and about 2 hours to the north of El Paso, Texas, 
which are the closest, largest cities in our area.
    The first lease lots became available in the 1940's. In 
spite of the $10 per year lease fee, it took a good 40 years 
before all lots were leased. In those times, lessees were avid 
fishermen or people who treasured the quiet and solitude the 
reservoirs offered. The leaseholders pioneered the development 
of these lease lots, actually encouraged to do so by the 
Government. In leases of old, leaseholders were told unless 
improvements were made to the lots, the leases would revert 
back to the Government. Leaseholders got busy and established 
roads, poured foundations for their cabins or trailers, brought 
in electricity and either had water piped in or drilled wells. 
Drainage and retaining walls were built, septic tanks were 
installed and other upgrades were made including utilities. All 
of these improvements were a result of the sweat, labor and 
equity of the leaseholders.
    It is important to note, all improvements were approved by 
the Government, and, insofar as we know, no funds whatsoever 
have been expended by the State of New Mexico nor the Federal 
Government for the benefit of the lease lots. However, Sierra 
County does maintain roads for public access to the beaches.
    Some leaseholders have improved their lease lots, and even 
built homes, but the majority of lease lots still reflect the 
general populations' status of retiree or those on a limited 
income. Original cabins have been upgraded or replaced with 
manufactured homes.
    Collectively, we now feel somewhat threatened for two 
reasons. First of all, the State of New Mexico has increased 
our lease fees, and as time progresses we must anticipate even 
more increases. Leaseholders fear they will be priced out of 
their homes. These are the people who moved here because of 
affordability, many of whom are considered to be at poverty 
level or below. More than 75 percent of the lease lot holders 
are over age 55, and about 70 percent of these are over age 65. 
The majority of these senior citizens are on fixed incomes. 
Most are retired and having an affordable place to live, on 
land they themselves have worked and nurtured, is an 
opportunity they should be secure in.
    Second, our hold on the lease lots we call home is tenuous, 
at best. We are all acutely aware we can be removed at any time 
due to a clause in our lease agreement which states, if the 
Government determines there is a greater need for these lots, 
they can give us a 60-day notice, and we must return our lease 
lots to their original condition.
    There are 403 lots, but far more people will be affected by 
the outcome of this legislation. Every lease lot has a family 
associated with it and is often used by several generations. 
There are many families in which the father acquired the lot. 
He raised his kids with the Butte as an integral part of their 
upbringing. That tradition continues today in the lives of his 
grandkids and great grandkids. Every lot touches the lives of a 
family, and many hundreds of people call these lots home.
    Elephant Butte and Caballo Reservoir boundaries, including 
the lakes, encompass approximately 78,000 acres. The lease lots 
occupy only approximately 250 acres, or 0.3 percent, of the 
land within the area. Therefore, more than 99.5 percent, or 
77,750 acres, of the area are, and will be, available for full 
public utilization. These lots are not an issue with regard to 
public recreation. There are more than 200 miles of shoreline 
available for public utilization around the two reservoirs. 
Lease lots do not encroach upon or otherwise affect public 
utilization of shorelines around the reservoirs.
    Currently, the majority of leaseholders are reluctant to 
make major improvements on their lease lots due to the land 
title questions. Private ownership of lease lots will not only 
sustain existing economic conditions, but will also provide 
owners the security to invest in permanent structure and 
improvements. It will add needed jobs to the community, 
increase economic stability, increase revenue to the county 
through property taxes and to the surrounding community through 
gross receipts taxes.
    Truth or Consequences, Williamsburg, Caballo and Elephant 
Butte have grown and are prospering with the increased 
population. If leases are terminated, a significant negative 
impact to the local economy and loss of sustainability will 
occur. Most significantly, a large number of elderly people, 
many of whom cannot afford to live elsewhere, would be uprooted 
or displaced.
    The important point I want to make today is our 
association, the State of New Mexico, its congressional 
delegation and the surrounding communities, as reflected in 
Representative Skeen's bill, believe all the lease lots should 
be privatized. We believe all the lots are equally important to 
those currently leasing them. There is no effect to the public 
by allowing the lots to be purchased by their leaseholders. In 
the past four to five decades, these lots have been leased, 
there has been no conflict with public users and no loss of use 
by the public. Therefore, we encourage you to pass 
Representative Skeen's bill, as written, to include 
privatization of the 403 lease lots.
    Our process has been long and arduous. We have been working 
for more than two decades toward the purchase of our lots. It 
is impossible to condense into a 5-minute presentation lifetime 
experiences such as a kid's first fish, a widow living on a 
fixed income or a neighbor whose wife is in the final stages of 
cancer.
    We are thankful to finally be before you today and thank 
you for your time, and hopefully for your support of 
Representative Skeen's bill, 706. Please feel free to ask me or 
one of the other board members any questions you might have. We 
would be happy to answer those, and I would like to say that we 
would be happy to cooperate with you Committee or the Bureau of 
Reclamation in any changes that might be necessary. Thank you, 
Mr. Chairman.
    [The prepared statement of Mr. Ward follows:]

    Statement of Charles C. Ward, President, Elephant Butte/Caballo 
                        Leaseholders Association

    Mr. Chairman and distinguished Committee Members, my name is 
Charlie Ward, I am the president of the Elephant Butte/Caballo 
Leaseholder's Association. I have with me today two members of our 
board of directors: Mr. Mike Mowles and Mr. Jerry Stagner.
    Mr. Mowles is one of the leaseholders whose lease lot was not 
recommended for privatization in the draft resource management plan and 
the environmental impact statement. Mr. Stagner is not a leaseholder 
but he is one of the civic leaders of our community and has volunteered 
to serve on our board. He is the president of the State National Bank, 
a member of the economic development committee and a member of the work 
force development board.
    We are here today representing the leaseholders of Elephant Butte 
and Caballo Reservoirs. Thank you for allowing us the opportunity to 
address your Committee on behalf of the Elephant Butte/Caballo 
Leaseholders Association. Our association is a non-profit organization 
formed to achieve the purchase of what are referred to as the lease 
lots at Elephant Butte and Caballo Reservoirs.
    On behalf of the association, I would like to thank Representative 
Joe Skeen for his continued support of our efforts to privatize the 
lots we are leasing, and for introducing H.R. 706, the Lease Lot 
Conveyance Act, which allows for the privatization of the lease lots. 
Senator Dominici has, also, assured us of his support and has given us 
his commitment to introduce a companion bill in the Senate. We would 
also like to take this opportunity to thank Senator Bingaman and 
Representatives Wilson and Udall for their support of this legislation. 
Also, our thanks is extended to the Bureau of Reclamation, in 
particular Clay McDermeit, who invited our association to have a 
representative on the working group committee formed to provide input 
into the resource management plan and the environmental impact 
statement.
    Although the final documents have not been released, the draft plan 
and the EIS released for comments recommended only 378 of 403 lease 
lots be privatized. However, our association supports H.R. 706, 
introduced by Representative Skeen, which provides for the 
privatization of all the lease lots.
    These lease lots are in the State of New Mexico, along the shores 
of Elephant Butte and Caballo Reservoirs. Elephant Butte Reservoir was 
dedicated in 1916 and it is near the small community of Truth or 
Consequences, New Mexico. As time has progressed, a small community of 
homes and businesses have resulted in New Mexico's 101st city, Elephant 
Butte, incorporated in 1999.
    Caballo Reservoir was built around 1930 as a flood control and 
holding area. It is about 15 miles south of Truth or Consequences. The 
reservoirs are about two hours to the south of Albuquerque, New Mexico 
and about two hours north of El Paso, Texas, which are the closest 
large cities to our area.
    The first lease lots became available in the 1940's. In spite of 
the $10.00 a year lease fee, it took a good 40 years before all of the 
lots were leased. In those times, lessees were avid fishermen or people 
who treasured the quiet and solitude the reservoirs offered.
    The lease holders pioneered the development of these lease lots, 
actually encouraged to do so by the government. In leases of old, lease 
holders were told unless improvements were made to the lots, the leases 
would revert back to the government. Leaseholders got busy and 
established roads, poured foundations for their cabins or trailers, 
brought in electricity and either had water piped in or drilled wells. 
Drainage and retaining walls were built, septic tanks were installed 
and other upgrades were made including utilities. All of these 
improvements were a result of the sweat, labor and equity of the lease 
holders.
    It is important to note, all improvements were approved by the 
government, and, insofar as we know, no funds whatsoever have been 
expended by the state of New Mexico nor the Federal government for the 
benefit of the lease lots. However, Sierra County does maintain roads 
for public access to the beaches.
    Some lease holders have improved their lease lots, and even built 
homes, but the majority of lease lots still reflect the general 
populations'' status of retiree or those on a limited income. Original 
cabins have been upgraded or replaced with manufactured homes.
    Collectively, we now feel threatened for two reasons. First of all, 
the State of New Mexico has increased our lease fees and as time 
progresses, we must anticipate even more increases. Leaseholders fear 
they will be ``priced out'' of their homes.
    These are the people who moved here because of affordability; many 
of who are considered to be at poverty level or below. More than 75 
percent of the lease lot holders are over age 55, and about 70 percent 
of these are over age 65. The majority of these senior citizens are on 
fixed incomes. Most are retired, and having an affordable place to 
live, on land they themselves have worked and nurtured, is an 
opportunity they should be secure in.
    Secondly, our hold on the lease lots we call ``home'' is tenuous, 
at best. We are all acutely aware we can be removed at any time due to 
a clause in our lease agreement which states, if the government 
determines there is a greater need for these lots, they can give us a 
60 day notice and we must return our lease lots to their original 
condition.
    There are 403 lots, but far more people will be affected by the 
outcome of this legislation. Every lease lot has a family associated 
with it and is often used by several generations. There are many 
families in which the father acquired the lot. He raised his kids with 
``the butte'' as an integral part of their upbringing. That tradition 
continues today in the lives of his grandkids and great grandkids. 
Every lot touches the lives of a family. Many hundreds of people call 
these lots home.
    Elephant Butte and Caballo Reservoir's boundaries, including the 
lakes, encompass approximately 78,000 acres. The lease lots occupy only 
250 acres, or 0.3 percent of the land within this area. Therefore, more 
than 99.5 percent, or 77,750 acres of the area are, and will be, 
available for full public utilization. The lease lots are not an issue 
with regard to public recreation.
    There are more than 200 miles of shoreline available for public 
utilization around the two reservoirs. Lease lots do not encroach upon 
or otherwise affect public utilization of shorelines around the 
reservoirs.
    Currently, the majority of leaseholders are reluctant to make major 
improvements on their lease lots due to the land title questions. 
Private ownership of lease lots will not only sustain existing economic 
conditions, but will also provide owners the security to invest in 
permanent structure and improvements. It will add needed jobs to the 
community, increase economic stability, increase revenue to the county 
through property taxes and to the surrounding community through gross 
receipts taxes.
    Truth or Consequences, Williamsburg, Caballo and Elephant Butte 
have grown and are prospering with the increased population. If leases 
are terminated, a significant negative impact to the local economy and 
loss of sustainability will occur. Most significantly, a large number 
of elderly people, many of whom cannot afford to live elsewhere, would 
be uprooted or displaced.
    The important point I want to make today is our association, the 
State of New Mexico, its Congressional delegation and the surrounding 
communities, as reflected in Representative's Skeen's bill, believes 
all the lease lots should be privatized. We believe all the lots are 
equally important to those currently leasing them. There is no effect 
to the public by allowing the lots to be purchased by their lease 
holders. In the past 4 to 5 decades these lots have been leased, there 
has been no conflict with public users and no loss of use by the 
public. Therefore, we encourage you to pass Representative Skeen's 
bill, as written, to include privatization of 403 lease lots.
    Our process has been long and arduous. We have been working for 
more than 2 decades towards the purchase of our lots. It is impossible 
to condense into a five minute presentation lifetime experiences such 
as a kid's first fish, a widow living on a fixed income or a neighbor 
whose wife is in the final stages of cancer.
    We are thankful to finally be before you today, and thank you for 
your time, and hopefully for your support of Representative Skeen's 
bill, 706. Please feel free to ask me or one of the other board members 
any questions you might have. We would be happy to answer your 
questions.
                                 ______
                                 
    Mr. Calvert. I thank the gentleman for his testimony, and I 
am sure we will have some questions. Next, Mrs. Sherry Mowles--
is that how it is pronounced? Sherry, you are recognized for 5 
minutes.

           STATEMENT OF SHERRY MOWLES, EL PASO, TEXAS

    Ms. Mowles. Mr. Chairman, and honorable Committee members, 
I would like to submit my full statement into the hearing 
record. Thank you for giving me--
    Mr. Calvert. Without objection, so ordered.
    Ms. Mowles. --this opportunity. I am Sherry Mowles, and I 
have spent my entire life in the Rio Grande Valley where my 
husband and I own a home on land that is leased from the 
Government. I have my Master's Degree in architecture with an 
emphasis on planning, park design and historic presentation 
from the University of New Mexico with a special emphasis on 
planning, park design, and historic preservation.
    The BoR November 19, 1999 Resource Management Plan 
recommends, ``that all present leaseholders be provided the 
opportunity to secure a lease lot through privatization. Three 
hundred and seventy-eight could remain at their present 
location and secure ownership of that lot. The remaining 25 
could obtain ownership of a relocated lot,'' the keyword being 
``relocated.'' With the release of RMP, 25 leaseholders were 
left with homes no one would purchase on land no one would pay 
to transfer.
    The majority of these families are retired, on fixed 
incomes, and this is their only home. These families cannot 
afford to purchase another lot, make site improvements and 
build another home while still paying a mortgage on their 
existing ``phased out'' home. Our home is one of the first of 
the 25 to be phased out, and I was chosen by these 25 families 
to represent them here today.
    First of all, I would like to explain why lease lot holders 
made significant investments and built homes on land they 
leased from the Government; the Government's role in this 
matter, and why we thought all lots would someday be 
privatized. As Mr. Ward mentioned, the lease lot program began 
in the 1930's to promote recreation in the area. The leasehold 
regulation, Attachment A, required lessees to make significant 
investments within 1 year or risk termination of the lease. The 
agreement required permanent construction built to code, 
landscaped and minimum square footages. The Bureau of 
Reclamation approved all building permits and allowed the 
leases to be easily renewed or transferred.
    Second, in previous legislation, specifically Lake Sumner 
in New Mexico, and Canyon Ferry, all lease lots were 
privatized. Congressman Skeen introduced H.R. 1232, which 
afforded all of the leaseholders in our area to purchase our 
lease property. Due to a dispute over where the revenue would 
be allocated, not the lease lots, it did not pass. We 
especially had no reason to believe any lots would be excluded 
when it came to privatization.
    I have read the RMP and the documents it referenced, 
attended public hearings and presented boards diagraming 
inaccuracies in reference to these 25 excluded lots. These 
inaccuracies have not been addressed. The RMP says that these 
lots might be needed for future recreation, yet they do not 
meet the recreational development criteria defined in the RMP.
    These homes do not impede public access or water operations 
in any way. They are not located on the shore where recreation 
occurs. All lots are inspected annually for compliance with 
State and Federal environmental standards. Any necessary 
improvements are paid for by the leaseholders. The RMP states 
that the homes on Water Tank Hill are isolated and difficult to 
access, yet the whole area is directly adjacent to State 
Highway 51. My door is less than 50 feet, and we are less than 
two miles from Truth or Consequences, population 6,000.
    Furthermore, we are puzzled by the fact as to how 25 minute 
homes that occupy less 10 acres are at issue. My lot is one-
eighth of an acre, or 5,100 square feet. The support of New 
Mexico for all lots to be privatized is overwhelming. Our 
representatives in Washington, the state legislature, Governor, 
lieutenant Governor, Sierra and Socorro County officials, 
numerous private organizations and Congressman Skeen and Jim 
Hughes, whom we are proud to have represent us.
    These 25 families, like their neighbors, have significant 
financial and emotional investments at stake. We ask for one 
thing, and that is to be provided the equal opportunity, as our 
neighbors, to purchase the property at fair market value, which 
the foundation of our families and homes lie. Please recommend 
support for H.R. 706, the Lease Lot Conveyance Act, which 
includes privatization of all 403 lots, with none being 
excluded. And I would be happy to answer any questions, and I 
have two boards, if I could take a minute to show.
    Mr. Calvert. Go ahead.
    Ms. Mowles. On this board here, the RMP states that the 
homes at Water Tank Hill are rustic cabins or temporary 
structures, yet the document referenced in the RMP states that 
they are New Mexico cultural resources and are possibly 
eligible for the National Historic Register. Many of the 25 
homes are important to the history of the New Mexico. Some of 
them were built before the lake was built in the late 1800's.
    And here are some pictures from the museum. And here is a 
home that originally was built in the late 1800's, and it is 
surrounded by lots recommended for privatization. It is 
approximately 300 feet away from the other homes. I think there 
are over 250, and it is no closer--this home is no closer to a 
shore than these homes are, but it hasn't been recommended for 
privatization. And none of these homes are temporary 
structures. They have been there for a long time with permanent 
puttings and are part of the history of the area.
    [The prepared statement of Ms. Mowles follows:]

       Statement of Sherry Mowles, Leaseholder at Elephant Butte

    Mr. Chairman, and honorable committee members, I would like to 
submit my full statement into the hearing record. I appreciate this 
opportunity and thank you for inviting me to speak. My name is, Sherry 
Mowles, and I have spent my entire life in the Rio Grande Valley. I 
have my Master's Degree in Architecture from the University of New 
Mexico with a special emphasis on planning, park design, and historic 
preservation. I received an Award of Honor at the International Urban 
Studies and Architecture Seminar in New York City and an American 
Society of Landscape Architects Award for a park in Gallup, New Mexico. 
My husband and I own a home located on land that is leased from the 
government at Elephant Butte Reservoir. On November 19, 1999 the Bureau 
of Reclamation released the Elephant Butte and Caballo Reservoirs 
Resource Management Plan Draft Environmental Impact Statement 
(hereafter referenced as the RMP). The RMP included recommendations 
``that all present leaseholders be provided the opportunity to secure a 
lease lot through privatization...a total of 378 could remain at their 
present location and secure ownership of that lot through 
privatization. The remaining 25 could obtain ownership of a RELOCATED 
lot through privatization.'' The key word in this statement is 
RELOCATED. With the release of this document 25 leaseholders were left 
with homes no one would purchase located on land no one would pay to 
transfer. The majority of these families are retired, on fixed incomes, 
and this is their only home. The emotional and financial impact has 
been devastating. These families cannot afford to purchase another lot 
and build another home while still paying a mortgage on their existing 
``phased out'' home. My home is one of the first, of the twenty-five, 
to be phased out. I have been chosen by these twenty-five families to 
represent them here today.
    First of all, I would like to explain why lease lot holders made 
significant investments and built homes on land that is leased from the 
government; the government's role in this matter, and why we thought 
all lots would someday be privatized. As Mr. Ward mentioned, the lease 
lot program began in the 1930's to promote recreation in the area. The 
governments Leasehold Regulations Attachment ``A'', requires lessees to 
make significant investments within one year or risk possible 
termination of their lease. The agreement requires all buildings to be 
built to code, to be permanent structures with minimum square footage 
(no temporary buildings or coverings),to be landscaped, etc. The Bureau 
of Reclamation approved all building permits and allowed the leases to 
be easily renewed or transferred. See Attachment A.
    Secondly, in previous legislation, specifically Lake Sumner, New 
Mexico, and Canyon Ferry, Montana, ALL lease lots were privatized. The 
Lake Sumner Transfer Title in 1991 allowed leaseholders to buy their 
20,000 square foot lots. Canyon Ferry lots are being privatized and 
many of these lots are located directly on the water. None of the 
twenty-five homes within this proposal are located on the water. 
Congressman Skeen introduced H.R. 1232, the Reclamation Facilities 
Transfer Act, which afforded all the leaseholders in the Elephant Butte 
and Caballo Reservoir areas the opportunity to purchase the property 
our homes are located on. Due to a dispute over where the revenue would 
be allocated, the legislation did not pass. We had no reason to believe 
any lots would be excluded when it came to privatization.
    I have read the RMP and many of the documents it referenced, which 
was written by an environmental engineering firm located in Utah. I 
attended the public hearings and presented boards diagraming 
inaccuracies in reference to these twenty-five lease lots. The Bureau 
of Reclamation has not addressed these inaccuracies.
    1. These homes do not impede public access or water operations in 
any way. They are not located on the shore where recreation occurs. 
There are 200 miles of shoreline available and these lots are adjacent 
to .001%.
    2. The RMP says that these lots are going to be needed for future 
recreation. These lots do not even meet the Recreational Development 
Criteria defined in the RMP on page 2-5. The RMP states ``any ONE or 
more of the following resource factors made an area less suitable for 
development of recreational facilities.'' Most of the lots do not meet 
three out of the seven criteria.
    3. The area these twenty-five lots occupy is negligible. The 
Bureau of Reclamation has 78,000 acres of land. The twenty-five lots 
comprise less than 10 acres or approximately .0015% of the total land 
acreage. My lot is 1/8th of an acre or 5,100 square feet.
    4. The RMP states on page 3-92 that the homes in my area, Water 
Tank Hill, are ``isolated and difficult to access.--My neighbors home 
is located on State Highway 51 and the rest of our homes are less than 
60 ft. from the highway. They are less than two miles from Truth or 
Consequences, population 7,500. See Attachment B.
    5. The homes at Three Sisters are all located on a paved road.
    6. Cow Camp is 300 paces from the lots the RMP has recommended for 
privatization. This is also one area where lots would be offered for 
the twenty-five to relocate. Unfortunately, the house at Cow Camp 
cannot be moved. The Bureau of Reclamation approved a recent $ 20,000 
dollar addition to that house. See Attachment C.
    7. All lots are inspected annually for compliance with state and 
federal environmental standards. Any necessary improvements are paid 
for by the leaseholders.
    8. The RMP states that the homes in our area, Water Tank Hill, are 
``rustic cabins or removable structures.'' Not only are all of our 
homes permanent, but according to the document referenced in the RMP 
``Class III Cultural Resources Survey of Elephant Butte'', these homes 
are New Mexico Cultural Resources and are possibly eligible for the 
National Historic Register. See Attachment D.
    9. Many of these twenty-five homes were built before the lease lot 
program began and are an important part of the history of the area. 
One, recently restored, is on the State Historic Register and had been 
nominated for the National Historic Register. See Attachment E.
    10. The RMP proposes four alternatives. In alternatives A; B and D 
all lease lots are treated equally. The RMP states on page 2-6 [that 
in] each alternative the major goals and objectives are met.'' Yet, 
they selected the only Alternative where 25 lease lots are not treated 
fairly.
    11. Increased valuation of the lease lots is primarily due to 
capital investment and labor by the leaseholder. The government has not 
spent any money on the lease lot improvements.
    The support of New Mexico for ALL lots to be privatized has been 
overwhelming. Last summer I met with the New Mexico Representatives 
offices in Washington, where they all voiced their support. We have 
received a letter of support from Bill Richardson. The New Mexico State 
Legislature supporting the privatization of ALL lease lots passed a 
1999 and 2000 Memorial. We have letters of support from the Governor 
and Lieutenant Governor of New Mexico, and from Sierra and Socorro 
county officials. Many organizations support us including the Cattle 
Growers Association, Wool Growers Association, Coalition of Counties, 
and the Southwest Environmental Association. Numerous supportive 
articles have run in local newspapers. Our greatest support has come 
from Congressman Skeen, Jim Hughes, and their office, whom we are proud 
to have representing us here in Washington.
    These families like their neighbors, all have significant financial 
and emotional investments at stake. We love this land; many of the 
families were here before anyone else was interested in the properties. 
Lessees often assist stranded campers and boaters, administer first 
aid, and give tips to visitors on good fishing and camping spots. My 
children and I routinely pick up any trash that is left in our 
surrounding area.
    Privatization will not only benefit the leaseholders but the 
economic stability of the surrounding community, which is the second 
poorest county in New Mexico, and supports all lots being privatized. 
The increased tax base would benefit Sierra County.
    Water operations and recreation are important to this area, and our 
homes do not interfere with these operations. The land they occupy is 
negligible. We ask for one thing, and that is to be provided the same 
opportunity as our neighbors to purchase, at fair market value the 
property on which the foundations of our families and homes lay. Please 
recommend support for H.R. 706 the Lease Lot Conveyance Act and allow 
these families security and serenity.
                                 ______
                                 
    Mr. Calvert. OK. Thank you. Thank you for your testimony. I 
think we may give an opportunity for Mr. Keys to respond to--
you indicated your support of this legislation. Are you 
supportive of privatization of all of these properties, 
including this 25 that Mrs. Mowles has referred to?
    Mr. Keys. Mr. Chairman, the 378 lots, there is no question 
that we would support the transfer to private ownership. The 
other 25, we would certainly be willing to work with you and 
those folks to try to make that happen.
    Mr. Calvert. OK. Well, that is encouraging. Because it 
would seem to me, based upon this testimony, there is no 
reason, as far as a hazard to the property or any encroachment 
on the reservoir, any real reason for this not to go forward, 
to be privatized.
    Mr. Keys. Mr. Chairman, I think at times we are victims of 
looking too far in the future. At times we try to figure what 
if a development has to be expanded or that sort of thing, and 
I think some of our folks may have been looking too far into 
the future to say at some time there may be a need there or 
those inholdings that are created there may be a problem. We 
are certainly willing to work with you and those folks to make 
that happen.
    Mr. Calvert. Good. Another question I have regarding the 
city of Fallon. One indication, I guess, if there is a problem, 
would be any environment assessments that is taking place right 
now, both the--you indicated there was a Phase I and a Phase 
II, and there was little or no problem, or is there a problem?
    Mr. Keys. Mr. Chairman, Phase I environmental site review 
has been done. There were 13 separate things that needed to be 
looked at. Certainly, as the mayor said, they don't look to be 
serious, but still we need to do the site II evaluation and 
carry forth. We have the contractor lined up who has presented 
a plan to do that.
    Mr. Calvert. I guess the next question would be who is 
responsible for the cost of any clean-up? Is there a shared 
responsibility, since it seems there have been several 
leaseholders over a period of time or is the Federal Government 
taking that responsibility?
    Mr. Keys. Mr. Chairman, my understanding is that it is a 
shared responsibility between the Government and the city.
    Mr. Calvert. If you would like to respond to that, Mr. 
Mackedon.
    Mr. Mackedon. I think that is correct.
    Mr. Calvert. OK. So there is no dispute on how that shared 
responsibility would take place, that you pretty much have an 
understanding of the percentages and costs and--
    Mr. Mackedon. Well, there is room for dispute there, I 
suppose, because we haven't completely--I have indicated we 
have done Phase II, and I believe that we have--that is 
technically accurate. We have--I say we, neither the Bureau nor 
the city has proceeded to go underground here, which clearly 
needs to be done, but there are--it has got a fairly 
complicated history, not nearly as complicated as some 
properties. The information we have now I think would lead us 
to believe that we are going to be successful with remediation 
and relatively soon. Who shares will depend on--hasn't been 
settled because we don't know whether there is contamination of 
a serious nature and when it might have occurred and who the 
responsible parties are. But the idea that it is a shared 
responsibility I think is correct.
    Mr. Calvert. I guess the last comment I would make, I don't 
know if it is necessary at this point to have that pinned down 
as far as remediation. This legislation could go through, be 
enacted and the transfer take place, and within that transfer 
can have that detailed as far as who is responsible and the 
shared costs and responsibilities of that, what your intent is 
going to be.
    Mr. Mackedon. I agree with that.
    Mr. Calvert. We would like to get this taken care of, and 
then we will just work on that.
    Mr. Mackedon. The city would not want to receive the 
property until it was clean. I am sure the Bureau wouldn't want 
to transfer it until it was clean. And if we could not come to 
terms on that, then--that doesn't affect the principle of 
whether they should support the transfer, which I think the 
Committee should do.
    Mr. Calvert. I understand. Mr. Skeen, you are recognized.
    Mr. Skeen. I just want to thank Mr. Keys for his 
willingness to work with us on the legislation. We will work 
closely with the Bureau of Reclamation. I have no further 
questions this afternoon. It has been a marvelous working day.
    Mr. Calvert. Good. All right. Thank you very much. Oh, he 
needs to change his tape, so we will recess here for just a 
minute while he changes tapes. Ms. Napolitano?
    Ms. Napolitano. Thank you, Mr. Chairman. I was interested 
in the testimony that was given by you in regard to the use of 
the property, and of course the issue is whether or not it is 
going to be cleaned up before the transfer is effective. There 
was a staging area, am I correct, and they had transformers, so 
it was electrical use and--it was several uses of that property 
and there were companies utilizing the property. Am I correct?
    Mr. Mackedon. Yes.
    Ms. Napolitano. OK. And were there lease payments or were 
there rental payments from these other companies, and to whom, 
what amounts, and where did that money go to?
    Mr. Mackedon. That raises the issue of how rent was paid 
and during what term. The city had no--did not occupy the 
property and had no relation to the property prior to 1984. I 
believe between 1968 and 1984 there were agreements between the 
Truckee-Carson Irrigation District and the Bureau and Sierra 
Pacific Power Company, by way of example. I have no knowledge 
nor do I think it is important to your question, but I want to 
make it clear for the record--
    Ms. Napolitano. Prior to that, understood.
    Mr. Mackedon. --yes, what that--from 1984 until most 
recently, the city leased the property under a written 
agreement from the Bureau of Reclamation, and the city paid an 
annual lease to the Bureau of Reclamation, and the city 
received rental income essentially from one revenue source, 
that is Premier Trucking Company. That is who has it now. So 
the city paid an annual rental payment to the Bureau and 
received the rental payments from the use of a loading 
facility.
    Our lease was expired, we were a tenant, as we saw it, 
holding over. We continued to receive the payments from the 
trucking company. We received a letter then from the--because 
we couldn't agree on one term of the lease, and that still 
isn't settled, we received a demand from the Bureau for the 
payment of the past year's rent, and we paid it. Now we are on 
another year, it is still not settled in terms of the lease, 
and the question--and the trucking company has continued to pay 
the city. And here, very recently, the Bureau has asked, 
saying, ``Well, that is improper or illegal for you, as a city, 
to continue to receive these payments.'' I think that is--I 
don't agree with that characterization, because we believe we 
were entitled to a lease, and they didn't provide the lease.
    That debate aside, we either owe the Bureau--we either 
reimburse the Bureau for the revenues that we have received 
from the trucking company since the lease was terminated in the 
mind of the Bureau and don't pay rent or we receive the 
revenues and pay rent. We clearly are not trying to have it 
both ways. And the revenues--our rent was about $9,000 a year. 
The revenues are a little more than that. So it is--
    Ms. Napolitano. How much more?
    Mr. Mackedon. Well, I think it is--I have the numbers here, 
but I think it is about $11,000 in some year, or $13,000. What 
the spur has done is generated--what the freight yard has done 
has been the anchor for the railroad 20-mile line, and we have 
other--SMI Joyce has now come to town, and there is the 400 
jobs that our congressman--
    Ms. Napolitano. No, I understand the connection. I am not 
concerned, I am trying to figure out how much revenue the city 
is actually generating.
    Mr. Mackedon. Oh, we can report that to the Committee 
through the congressman without any problem.
    Ms. Napolitano. Mr. Keys?
    Mr. Keys. Mr. Chairman, Ms. Napolitano, we are comfortable 
with what is going on here.
    Ms. Napolitano. OK.
    Mr. Keys. We are negotiating with those folks. Certainly, 
it is something that we can clean up before the title transfer 
goes ahead.
    Ms. Napolitano. OK. That is it.
    Mr. Calvert. Thank you. Mr. Gibbons?
    Mr. Gibbons. Thank you, Mr. Chairman, and, again, thank all 
of your for your testimony here today. Appreciate you taking 
the time out of your busy schedules to be here for us.
    Mr. Keys, I have read your statement, and it looks like, 
and from your testimony, that you are very willing to work with 
the city of Fallon, and the city of Fallon has indicated its 
willingness to work with you. I guess my question is, reading 
your testimony, you can support the bill if technical 
amendments are made. Can your office provide my office with 
those technical amendments that you want to be made to this 
bill within, say, the next 30 to 60 days?
    Mr. Keys. Mr. Chairman, Mr. Gibbons, we could give them to 
you tomorrow, because we have been working closely with this 
thing, and we know what it would take to do that. So I would 
tell you that we could have them to you by the first of the 
year with no problem.
    Mr. Gibbons. OK. Well, then we will expect to see your 
suggested amendments to this bill around the first of the year.
    Mr. Keys. Yes, sir. And those changes certainly are 
something that we would work with the city of Fallon to be sure 
that they were OK with them.
    Mr. Gibbons. OK. Mr. Mackedon, I know the lease is outside, 
literally, the consideration of this bill, because this is a 
transfer of title and interest. My thought to you was, is 
during the time the evolution of this, from the end or the 
expiration of the original lease that the city had and the 
Bureau of Reclamation, there seemed to have been some 
conditions that were attempted to be imposed upon the city 
which were less than satisfactory to the city, and I presume 
that it is with the issue of liability. Can you explain some of 
those issues of liability that the city disagreed with that 
perhaps the lease suggested that brought us to the point where 
we now are in this point where we have to consider the transfer 
of title rather than the lease of this property?
    Mr. Mackedon. Thank you, Congressman Gibbons. Quickly, I 
think I characterize it correctly when I say that the city was 
prepared to enter into a lease agreement and proposed to enter 
into a lease agreement 6 months prior to the expiration of the 
other agreement. After we had negotiated and discussed this 
with the Bureau, there was one clause that, for very important 
reasons to the city, we felt--or the mayor and council felt it 
could not agree with. And without reading--there has been 
variations of it--generally speaking, where the point of 
disagreement occurred was this: Is that the lease--backing up 
the prior lease--by the terms of the prior lease, the city was 
entitled, the phrase, to a new lease, and that is about as 
technical and fine as it was written. We could have expected 
more maybe on both sides, but that is how it read, and we were 
obligated as a city to notify the Bureau 6 months prior to the 
expiration of that lease that we intended to renew, and we 
expected to renew.
    It came down to one clause, and that clause required the 
city of Fallon to abide by all environmental rules and certain 
other conditions of the Federal, State and local--all 
applicable Federal, State and local laws and regulations and 
reclamation policies and instructions, existing or after 
promulgated, concerning any hazardous material that would be 
used, produced, transferred, stored and disposed of on or in 
lands, waters or facilities owned by the United States or 
administered by Reclamation.
    Mr. Gibbons. So Mr. Mackedon, let me explain that what that 
clause required you to do is be responsible for environmental 
conditions outside of the property as the subject of this 
because of the vague, broad language of lands owned by the 
United States, which could mean 110,000 square miles of Nevada.
    Mr. Mackedon. Well, I don't whether it could, but that--
    Mr. Gibbons. Theoretically.
    Mr. Mackedon. --but that is literally where we are. But our 
point was that we certainly were obligated and would certainly 
sign an agreement that obligated us to meet all those laws and 
rules as to our use and occupation of this property.
    Mr. Gibbons. So you weren't necessarily unwilling to enter 
the lease, and you didn't expect to get anything from the 
Government. There was a justifiable and bona fide disagreement 
as to the interpretation of terms of this lease that was 
provided by you.
    Now, the lease they provided you to sign, was that a take 
it or leave it lease?
    Mr. Mackedon. Well, the latest indication would be it 
sounds like take it or leave it, but I have heard from Mr. Keys 
today that--
    Mr. Gibbons. But up until that time--I mean I have actually 
got the letter.
    Mr. Mackedon. You have read the letter and the proposed 
lease.
    Mr. Gibbons. And so they did say, ``You must immediately 
sign this lease,'' and they provided you with the lease. And 
that is where we are today.
    Mr. Mackedon. That is where we are today.
    Mr. Gibbons. So I think what we have got here, Mr. 
Chairman, is two parties willing to enter into an agreement 
that I think is in the best interest of both parties, the 
transfer of title and interest for fair market value, based on 
certain conditions, technical requirements, that both the city 
and the Bureau of Reclamation are willing to look at and 
negotiate in good faith. And I think once we work those 
problems out, that we will have a bill that this Committee can 
act on. And I want to thank you again and thank both of you for 
being here today.
    Mr. Calvert. Thank the gentleman. In closing, I think that 
H.R. 1870 and H.R. 706 are both bills that are worthy of 
passage. I pledge to work with both Mr. Skeen and Mr. Gibbons 
and the Administration to make the technical modifications that 
are necessary, and we will move this legislation as soon as 
possible to the President for execution. So hopefully we can do 
that the first part of next year, and the good people of New 
Mexico and the good people of Nevada will have a couple less 
problems to worry about.
    Ms. Napolitano. Mr. Chair?
    Mr. Calvert. The gentlelady from California.
    Ms. Napolitano. Thank you, Mr. Chair. I had some questions 
in regard to the--actually, the 706, the New Mexico property.
    Mr. Calvert. The gentlelady is recognized.
    Ms. Napolitano. Thank you. One of the things that I had not 
heard, because I heard a lot that the major portion of the 
current people living on those properties are elderly, fixed 
income. Can you give me a percentage of how many of them are?
    Mr. Mackedon. Yes. We did a survey. It has been about 5 
years ago. We sent out a questionnaire to all the people. It 
came in that for elderly there is like--I think it is 75--let 
me go back to my notes here. It is around 75 percent--75 
percent are over age 55. And of those 75 percent, 70 percent of 
those are over age 65. So they will run from the late 50's up 
into the 90's. We have a few in that age. But there is--so of 
the 403 lease lots, we would expect to see about 300 of those 
would be senior citizens.
    Ms. Napolitano. And the others?
    Mr. Mackedon. The others would be a distribution of some 
relatively young people and up to the 55, 60 years old.
    Ms. Napolitano. Because 55 is still young.
    Mr. Mackedon. Well, it is really getting--
    Ms. Napolitano. Once you turn 65, I am telling you, 55 is 
young.
    Mr. Mackedon. --it is young for me.
    [Laughter.]
    Ms. Napolitano. Other question would be is what are the 
yearly lease costs?
    Mr. Mackedon. They vary from lot to lot, but currently I 
would say the average is probably in the $500 to $550.
    Ms. Napolitano. Per?
    Mr. Mackedon. Per year. So they are relatively modest, but 
that is your--you are talking about a county which the--I don't 
have the specific numbers, but the median income for Sierra 
County is very, very low. It is in the--around $18,000 per 
year. And for the least productive--not productive, but the 
poorest county, we are No. 1--I mean No. 2. The county up 
North, Mora County, I believe it is, they are the poorest; we 
are second in line. That doesn't say everybody who is on lease 
lots are in that condition--that category, but the majority are 
drawing Social Security. Some of them have a little bit of 
supplemental retirement. And there are some there that are 
probably relatively wealthy. So it doesn't mean that--
    Ms. Napolitano. Yes. It changes. Then the question would be 
what would happen after the death of those individuals that 
would be given the right to that land, to purchase that land?
    Mr. Mackedon. I am sorry?
    Ms. Napolitano. If an individual--you say that a number of 
them are in their 70's. After their death, what happens to that 
property, and what would be the sale value of that property?
    Mr. Mackedon. Well, it would depend on the improvements 
that they have made, but the property--of course, if you got a 
clear title to the property, a deed of trust, it would be just 
like any other private property. It would be sold on the open 
market for whatever the market value is. And as the legislation 
is written, we will pay the fair market value for the 
unimproved land, because that is what we are buying is the 
unimproved--the improvements on there is--
    Ms. Napolitano. Without the property, in other words, just 
the land, basically.
    Mr. Mackedon. Yes. Just the land, yes.
    Ms. Napolitano. There was a statement that I read that 
indicated that the leaseholders sold their property. They 
couldn't have sold the property; they sold the improvements.
    Mr. Mackedon. Improvements on the property, yes.
    Ms. Napolitano. OK.
    Mr. Mackedon. Yes. So we have no--there is no one on the 
lease lot that has a title or deed to their property. All you 
have is the lease agreement between the--the lease is--the land 
is leased now from the Bureau of Reclamation to the State of 
New Mexico, and it is part of the State park, and I believe 
that lease runs through 2023, I think is correct. And we pay 
our lease fee to the State of New Mexico, and they have a lease 
agreement between them and the Federal Government.
    Ms. Napolitano. And I guess I am fishing. I am trying to, 
in my mind, establish something that--because I hopefully will 
be retiring again one of these days, and the fact that you have 
individuals who have done great improvements on the property, 
on lease property, knowing full well that the Government could 
well reclaim them at any moment, being able to pay $500 a year 
for their lease and be able to have their estate sell it for 
$20,000, $30,000, $50,000, I have no idea with the loans would 
be worth. Any of that money going to be assigned to the general 
fund for the increase in the benefit of the sale of that land?
    Mr. Mackedon. Currently, no. That would be a transaction 
between two parties, two private parties.
    Ms. Napolitano. In other words, it would go back to the 
estate or the people--
    Mr. Mackedon. That is correct, ma'am.
    Ms. Napolitano. OK. Thank you. I just want to clarify that.
    Mr. Calvert. Well, we certainly thank all of you for coming 
out on such a fine day. We will try to expedite this 
legislation as soon as possible. We are going to recess for 
about a half an hour and get into something probably a little 
more controversial--the Colorado River. With that, good day.
    Mr. Keys. Mr. Chairman, thank you very much for allowing us 
to be here.
    [Whereupon, at 12:05 p.m., the Subcommittee was recessed, 
to reconvene at 12:30 p.m.]

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