[Senate Report 108-272]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 527
108th Congress                                                   Report
                                 SENATE
 2d Session                                                     108-272
======================================================================


 
                    LEASE LOT CONVEYANCE ACT OF 2002

                                _______
                                

                  May 20, 2004.--Ordered to be printed

                                _______
                                

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

                              R E P O R T

                         [To accompany S. 1791]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 1791) to amend the Lease Lot Conveyance 
Act of 2002 to provide that the amounts received by the United 
States under that Act shall be deposited in the reclamation 
fund, and for other purposes, having considered the same, 
reports favorably thereon without an amendment and recommends 
that the bill do pass.

                         Purpose of the Measure

    S. 1791 would amend the Lease Lot Conveyance Act of 2002 
(Public Law 107-335) to provide that the amounts received by 
the United States under that Act shall be deposited in the 
Reclamation Fund and made immediately available to the 
applicable irrigation districts as net profits.

                          Background and Need

    The Lease Lot Conveyance Act of 2002 directs the Secretary 
of Interior to convey property comprising 403 cabin sites 
(located along the western portion of the reservoirs in 
Elephant Butte State Park and Caballo State Park, New Mexico) 
under the administrative jurisdiction of the Bureau of 
Reclamation to the Elephant Butte/Caballo Leaseholders 
Association, Inc., for fair market value. The act is vague with 
regard to the disposition of proceeds collected from the sale 
of the lands. The purpose of S. 1791 is to amend the Act to 
direct the Secretary of the Interior to deposit such proceeds 
into the Reclamation Fund for the benefit of the Elephant Butte 
Irrigation District and El Paso County Water Improvement 
District #1.

                          Legislative History

    S. 1791 was introduced by Senators Domenici and Bingaman on 
October 28, 2003 and was referred to the Energy and Natural 
Resources Committee on October 28, 2003. The Subcommittee on 
Water and Power held a hearing on S. 1791 on March 25, 2004. 
The Committee on Energy and Natural Resources ordered the bill 
favorably reported on April 28, 2004.

            Committee Recommendation and Tabulation of Votes

    The Senate Committee on Energy and Natural Resources, in an 
open business session on April 28, 2004, by unanimous voice 
vote of a quorum present, recommends that the Senate pass S. 
1791.

                      Section-by-Section Analysis

    Section 1 of S. 1791 amends section 4(b) of the Lease Lot 
Conveyance Act of 2002 (Public Law 107-335; 116 Stat. 2879) to 
provide that amounts received by the United States under the 
Act shall be deposited by the Secretary of the Interior in the 
Reclamation Fund on behalf of the Rio Grande Project and that 
amounts deposited shall be made immediately available to the 
applicable irrigation districts in accordance with section 4(1) 
of the Act of December 5, 1924 (commonly known as the Fact 
Finder's Act; 43 U.S.C. 501).

                   Cost and Budgetary Considerations

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

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 11, 2004.
Hon. Pete V. Domenici,
Chairman, Committee on Energy and Natural Resources,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 1791, a bill to 
amend the Lease Lot Conveyance Act of 2002 to provide that 
amounts received by the United States under the act shall be 
deposited in the reclamation fund, and for other purposes.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Julie 
Middleton.
            Sincerely,
                                       Douglas Holtz-Eakin,
                                                          Director.
    Enclosure.

S. 1791--A bill to amend the Lease Lot Conveyance Act of 2002 to 
        provide that amounts received by the United States under the 
        Act shall be deposited in the reclamation fund, and for other 
        purposes

    Summary: S. 1791 would authorize the Secretary of the 
Interior to make proceeds from the sale of 403 cabin sites 
located in the Elephant Butte and Caballo State Parks in New 
Mexico available to the Elephant Butte Irrigation District and 
El Paso County Water Improvement District No. 1. Under this 
bill, the districts would be able to use the proceeds from 
cabin site sales for annual project repayment costs, for annual 
operations and maintenance costs, and for any other purpose.
    Enacting this bill would authorize the expenditure of 
receipts from the sale of certain cabin sites. Based on 
information from the Bureau of Reclamation, CBO estimates that 
the additional direct spending would amount to $1 million 
annually over the 2005-2014 period. Enacting the bill would not 
affect federal revenues.
    S. 1791 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments. Enacting this legislation would benefit the 
affected irrigation districts in New Mexico.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of S. 1791 is shown in the following table. 
The costs of this legislation fall within budget function 300 
(natural resources and environment).

----------------------------------------------------------------------------------------------------------------
                                                       By fiscal year, in millions of dollars--
                                    ----------------------------------------------------------------------------
                                      2004   2005   2006   2007   2008   2009   2010   2011   2012   2013   2014
----------------------------------------------------------------------------------------------------------------
                                           CHANGES IN DIRECT SPENDING

Estimated Budget Authority.........      0      1      1      1      1      1      1      1      1      1      1
Estimated Outlays..................      0      1      1      1      1      1      1      1      1      1      1
----------------------------------------------------------------------------------------------------------------

    Basis of estimate: For this estimate, CBO assumes that S. 
1791 will be enacted near the end of fiscal year 2004. Under 
this bill, the proceeds from the sale of the 403 cabin sites at 
Elephant Butte and Caballo State Parks in New Mexico would be 
made available to the Elephant Butte Irrigation District and El 
Paso County Water Improvement District No. 1. When the sales 
are complete, proceeds are expected to amount to about $15 
million. The districts would be able to use the proceeds, 
first, as a credit toward the annual repayment contract with 
the federal government, second, as a credit toward annual 
operations and maintenance costs for the Rio Grande Project, 
and, finally, for any other project purpose. Under current law, 
the proceeds from the sale of the cabin sites would be 
deposited into the Reclamation Fund and would not be available 
to the districts.
    Currently, the districts do not have any outstanding 
repayment contracts. Together, the districts pay a total of 
$540,000 annually for operations and maintenance costs 
associated with the Rio Grande Project. For this estimate, CBO 
assumes that the Bureau of Reclamation would apply the proceeds 
from the sale of the cabin sites to the districts' annual 
operations and maintenance obligations. Based on information 
from the bureau, CBO estimates that enacting this bill would 
result in additional direct spending of about $1 million 
annually over the 2005-2014 period.
    Intergovernmental and private-sector impact: S. 1791 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on state, local, or 
tribal governments. Enacting this legislation would benefit the 
affected irrigation districts in New Mexico.
    Estimate prepared by: Federal Costs: Julie Middleton. 
Impact on State, Local, and Tribal Governments: Marjorie 
Miller. Impact on the Private Sector: Patrice Gordon.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                      Regulatory Impact Evaluation

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
evaluation of the regulatory impact which would be incurred in 
carrying out S. 1791. The bill is not a regulatory measure in 
the sense of imposing Government-established standards or 
significant responsibilities on private individuals and 
businesses.
    No personal information would be collected in administering 
the program. Therefore, there would be no impact on personal 
privacy.
    Little, if any, additional paperwork would result from the 
enactment of S. 1791.

                        Executive Communications

    On April 30, 2004, the Committee on Energy and Natural 
Resources requested legislative reports from the Department of 
the Interior and the Office of Management and Budget setting 
forth executive views on S. 1791. These reports had not been 
received at the time the report on S. 1791 was filed. When the 
reports become available, the Chairman will request that they 
be printed in the Congressional Record for the advice of the 
Senate. The testimony provided by the Department of the 
Interior at the Committee hearing follows:

 Statement of John W. Keys, III, Commissioner, Bureau of Reclamation, 
                       Department of the Interior

    Madam Chairman and Members of the Subcommittee, I am John 
W. Keys, III, Commissioner of the U.S. Bureau of Reclamation 
(Reclamation). I am pleased to be here today to present the 
views of the Department of the Interior on S. 1791, a bill to 
amend the Lease Lot Conveyance Act of 2002 to provide that the 
amounts received by the United States under that act shall be 
deposited in the Reclamation Fund.
    On December 16, 2002, the President signed into law the 
Lease Lot Conveyance Act of 2002 (P.L. 107-335) which provides 
for the conveyance of 403 lease lots at Elephant Butte and 
Caballo Reservoirs to the Elephant Butte/Caballo Leaseholders 
Association, Inc. (Association). Reclamation has been working 
closely with the Association to carry out the objectives of 
P.L. 107-335.
    Madam Chairman, the Department cannot support S. 1791. In 
previous testimony on H.R. 706, the Lease Lot Conveyance Act of 
2002, I spoke in opposition to a similar provision in that 
legislation which would have required the proceeds derived from 
the sale of the lots to ``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 bill was subsequently amended, 
remaining silent on the issue and leaving in place existing law 
as to the general disposition of the funds derived from the 
sale of the leased lots.
    Existing law provides that the proceeds from the sale of 
lands withdrawn from the public domain be deposited as a 
general credit to the Reclamation Fund and that proceeds from 
the sale of acquired lands be deposited into the Reclamation 
Fund as a credit to the project for which those lands were 
acquired.
    The proposed amendment would direct all funds, from both 
acquired lands and withdrawn public lands, to be deposited in 
the Reclamation Fund as a credit to the project and immediately 
made available to the irrigation districts. The Department 
believes the proceeds from the sale of the leased lots should 
be disposed of consistent with existing law.
    In continuing litigation during the past 13 years, 
Reclamation has contended that these revenues, as well as other 
similar project revenues, are not of the types of revenues 
covered by Subsection 4(i) of the Fact Finder's Act. The 10th 
Circuit Court of Appeals has ruled that Subsection 4(i), as 
amended by the Haden-O'Mahoney amendment (43 U.S.C. 
Sec. Sec. 391a-1, 392a), provides credits for revenues derived 
from only two specific sources: leasing of project grazing and 
farm lands; and the sale or use of town sites. Revenue from the 
sale of these lots does not derive from either of these 
specific sources, insomuch as the lease lots are being sold not 
leased, and ``town sites'' is a legal term of art applying only 
to town sites which were created under the Town Sites and Power 
Development Act of 1906 (34 Stat. 116; 43 U.S.C. Sec. 561, et 
seq.). The Districts are not currently entitled to receive 
Subsection 4(i) benefits from any sources other than those two 
specific sources listed above. In addition to amending the 
Conveyance Act, Section 1(2)(B) of the proposed bill would 
amend Subsection 4(i) of the Fact Finders Act to provide these 
Districts with a unique benefit. We are concerned that the 
amendment would set a precedent and encourage other districts 
to seek benefits under the Fact Finders Act that are otherwise 
not provided.
    Also important to this case is that a small portion of the 
lease lots are located on public land that was withdrawn from 
the public domain for the project by Reclamation. As such, the 
Districts have never paid anything toward acquisition cost for 
these lands. The remainder of the lots are located on lands 
acquired out of private ownership by Reclamation for 
construction of the Project. Originally, the Districts' cost of 
purchasing these lands was included in the Districts' repayment 
obligation. However, in 1937 the Districts were relieved of 
their obligation to repay any portion of the cost of these 
acquired lands and the cost of constructing Elephant Butte Dam 
and Reservoir. All payments made by the Districts prior to that 
time were returned to them as credits toward their remaining 
repayment obligation. All costs of constructing Caballo Dam and 
Reservoir were deemed non-reimbursable by the Districts and 
charged to flood control. In light of this history, the 
proposed amendment would make available to the respective 
irrigation districts funds from the sale of lands to which they 
have no legal right, and where the federal government has borne 
all the associated costs.
    In summary, while the Department supported the original 
Lease Lot Conveyance Act of 2002 as it was passed and signed 
into law, we cannot support passage of S. 1791 for the reasons 
stated above.
    That concludes my testimony, Madam Chairman. I would be 
happy to answer any questions the Subcommittee may have.

                        Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the bill, S. 1791, as ordered reported, are shown as follows 
(existing law proposed to be omitted is enclosed in black 
brackets, new matter is printed in italic, existing law in 
which no change is proposed in shown in roman):

                    LEASE LOT CONVEYANCE ACT OF 2002


                     P.L. 107-335 (116 Stat. 2878)


SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Lease Lot Conveyance Act of 
2002''.

           *       *       *       *       *       *       *


SEC. 4. CONVEYANCE OF PROPERTIES.

    (a) In General.--The Secretary shall convey to the 
Purchaser in accordance with this Act, subject to valid 
existing rights, all right, title, and interest of the United 
States in and to the Properties and all appurtenances thereto, 
including specifically easements for
          (1) vehicular access to each Property;
          (2) drainage; and
          (3) access to and the use of all ramps, retaining 
        walls, and other improvements for which access is 
        provided under the leases that apply to the Properties 
        as of the date of the enactment of this Act.
    (b) Consideration.--[As consideration]
          (1) In general.--As consideration for any conveyance 
        under this section, the Secretary shall require the 
        Purchaser to pay to the United States fair market value 
        of the Properties.
          (2) Use.--Amounts received under paragraph (1) shall 
        be--
                  (A) deposited by the Secretary, on behalf of 
                the Rio Grande Project, in the reclamation fund 
                established under the first section of the Act 
                of June 17, 1902 (43 U.S.C. 391); and
                  (B) made immediately available to the 
                Irrigation Districts, to be credited in 
                accordance with section 4(I) of the Act of 
                December 5, 1924 (43 U.S.C. 501).

                                  
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