[Federal Register Volume 62, Number 35 (Friday, February 21, 1997)]
[Proposed Rules]
[Pages 7966-7969]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-4333]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 175


Revitalizing Base Closure Communities and Community Assistance

AGENCY: Department of Defense, Office of the Deputy Under Secretary of 
Defense (Industrial Affairs and Installations).

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: This part promulgates policies and procedures for implementing 
section 2837 of the National Defense Authorization Act for FY96 
concerning the Federal agency lease back of property transferred to 
Local Redevelopment Authorities (LRAs) at installations approved for 
closure or realignment.

DATES: Comments must be received by April 22, 1997.

ADDRESSES: Comments must be forwarded to the Base Closure and Community 
Reinvestment Office, 400 Army-Navy Drive, Suite 200, Arlington,

[[Page 7967]]

VA 22202 (email: base--reuseacq.osd.mil).

FOR FURTHER INFORMATION CONTACT: Jennifer Atkin, Base Closure and 
Community Reinvestment Office, 400 Army-Navy Drive, Suite 200, 
Arlington, VA 22202, telephone (703) 604-2400.

SUPPLEMENTARY INFORMATION:

Background Information

    Large parcels of surplus BRAC property are frequently conveyed to 
an LRA for use in accordance with the LRA's redevelopment plan. Because 
Federal users have priority claim on this property, small parcels or 
even individual buildings within or adjacent to the large parcel may be 
claimed by a Federal entity. These Federal uses are included as part of 
the LRA's redevelopment plan and are compatible with the proposed use 
of the surrounding property. Should the Federal entity depart at some 
point in the future, however, the property would be disposed of by the 
General Service Administration in accordance with the Federal Real 
Property and Administrative Services Act. This subsequent Federal 
action could disrupt local economic recovery efforts by requiring the 
community to go through another lengthy Federal real property disposal 
process, and could result in uses that are incompatible with the 
community's redevelopment plans.
    Congress recognized that this piecemeal approach could be harmful 
to long-range planning and development opportunities and changed the 
law to enable more community control over redevelopment while still 
allowing the Federal government the ability to utilize government 
property without additional costs. Section 2837 of the National Defense 
Authorization Act for FY 1996 (Pub. L. 104-106) amends the Defense Base 
Closure and Realignment Act of 1990 (Pub. L. 101-510, 10 U.S.C. 2687 
note) to allow base closure property that is still needed by the 
Department of Defense or another Federal agency to be transferred to an 
LRA, provided the LRA leases the property back to the Federal entity. 
The lease cannot require rental payments.

Applicability

    The ``leaseback'' is a new authority, not a new requirement. 
Ultimately, the decision whether to transfer property under this 
authority rests with the military department keeping in mind that the 
Department of Defense cannot require Federal agencies to give up right 
of ownership in order for the LRA to take advantage of a leaseback of 
the property. If a leaseback is requested by the LRA, however, Federal 
agencies are urged to give full consideration to leasing instead of 
owning the property.
    This authority can be used to transfer property at BRAC 91, 93, and 
95 sites. In addition, it can be used to transfer property needed by 
existing Federal tenants or Federal departments or agencies desiring to 
locate onto the property. Military Departments can only transfer 
property and then lease it back if they are acting as an executive 
agent on behalf of a Defense Agency or if the Secretary of the Military 
Department certifies that the transaction is in the best interest of 
the Military Department and consistent with the recommendations of the 
Base Closure Commission.

Lease Arrangements

    If an LRA desires a leaseback of property, it will be the 
responsibility of the LRA to offer the Federal department or agency 
lease arrangements that encourage choosing the leaseback option. The 
goal should be offer terms that afford the Federal department or agency 
rights as close to those associated with ownership of the property as 
is practicable. Subject to the requirements outlined in this rule 
(including a prohibition against charging rental payments), the LRA and 
Federal entity have significant latitude to negotiate a lease that is 
beneficial to both parties and are encouraged to be creative in 
establishing the lease parameters.

Conveyance Process

    This rule establishes two options for conveyance of leaseback 
property to an LRA: (1) Conveyance as part of an Economic Development 
Conveyance (EDC) using the existing EDC procedures, and (2) conveyance 
of property not associated with an EDC using procedures established in 
this rule. In this case, the LRA will be required to show how a 
leaseback is necessary for the long-term economic redevelopment of the 
installation property.

Statement of Determination and Certifications

Executive Order 12866, ``Regulatory Planning and Review''

    It has been determined that this rule is not a significant 
regulatory action as defined under section 3(f)(1) through 3(f)(4) of 
Executive Order 12866.

Public Law 96-354, ``Regulatory Flexibility Act'' (5 U.S.C. 601)

    It has been determined that this rule will not have a significant 
economic impact on a substantial number of small entities.

Public Law 104-13, ``Paperwork Reduction Act of 1995'' (44 U.S.C. 
Chapter 35)

    It has been certified that this rule does not impose any reporting 
or recordkeeping requirements.

List of Subjects in 32 CFR Part 175

    Community development, Government employees, Military personnel, 
Surplus government property.

    Accordingly, 32 CFR part 175 is proposed to be amended to read as 
follows:

PART 175--[AMENDED]

    1. The authority citation for 32 CFR part 175 continues to read as 
follows:

    Authority: 10 U.S.C. 2687 note.

    2. Section 175.3 is proposed to be amended by adding a new 
paragraph (l) to read as follows:


Sec. 175.3  Definitions.

* * * * *
    (1) Similar use. A use that is comparable to or essentially the 
same as the use under the original lease.
* * * * *
    3. Sections 175.4, 175.5, and 175.6 are proposed to be revised to 
read as follows:


Sec. 175.4  Policy.

    It is DoD policy to help communities impacted by base closures and 
realignments achieve rapid economic recovery through effective reuse of 
the assets of closing and realigning bases--more quickly, more 
effectively, and in ways based on local market conditions and locally 
developed reuse plans. This will be accomplished by quickly ensuring 
that communities and the Military Departments communicate effectively 
and work together to accomplish mutual goals of quick property disposal 
and rapid job generation. This part does not create any rights or 
remedies and may not be relied upon by any person, organization, or 
other entity to allege a denial of any rights or remedies other than 
those provided by Title XXIX of Pub. L. 103-160, Pub. L. 103-421, or 
Title XXVIII of Pub. L. 104-106.


Sec. 175.5  Responsibilities.

    (a) The Deputy Under Secretary of Defense (Industrial Affairs and 
Installations), after coordination with the General Counsel of the 
Department of Defense and other officials as appropriate, may issue 
guidance

[[Page 7968]]

through the publication of a manual or other such document as may be 
necessary to implement laws, directives and instructions on the 
retention or disposal of real and personal property at closing or 
realigning bases.
    (b) The Heads of the DoD Components shall ensure compliance with 
this part and guidance issued by the Assistant Secretary of Defense for 
Economic Security and the Deputy Under Secretary of Defense (Industrial 
Affairs and Installations) on revitalizing base closure communities.


Sec. 175.6  Delegations of authority.

    (a) The authority provided by sections 202 and 203 of the Federal 
Property and Administrative Services Act of 1949, as amended (40 U.S.C. 
483 and 484) for the utilization and disposal of excess and surplus 
property at closing and realigning bases has been delegated by the 
Administrator, GSA, to the Secretary of Defense by delegations dated 
March 1, 1989; October 9, 1990; September 13, 1991; and, September 1, 
1995.\1\ Authority under these delegations has been previously 
delegated to the Secretaries of the Military Departments, who may 
delegate this authority further.
---------------------------------------------------------------------------

    \1\1 Available from the Base Closure and Community Reinvestment 
Office, 400 Army Navy Drive, Suite 200, Arlington, VA 22202, email: 
``[email protected]''
---------------------------------------------------------------------------

    (b) Authorities delegated to the Deputy Under Secretary of Defense 
(Industrial Affairs and Installations) \2\ by Sec. 174.5 are hereby 
redelegated to the Secretaries of the Military Departments, unless 
otherwise provided within this part or other DoD directive, 
instruction, manual, or regulation. These authorities may be delegated 
further.
---------------------------------------------------------------------------

    \2\ A Deputy Secretary of Defense memorandum of May 15, 1996, 
``OUSD (Acquisition and Technology Reorganization'' disestablished 
the office of the Assistant Secretary of Defense for Economic 
Security and established the office of the Deputy Under Secretary of 
Defense (Industrial Affairs and Installations). Copies are available 
from the Base Closure and Community Reinvestment Office, 400 Army 
Navy Drive, Suite 200, Arlington, VA 22202, email: ``base_
[email protected]''
---------------------------------------------------------------------------

    4. Section 175.7 is proposed to be amended by revising paragraphs 
(a)(13)(i), (d)(3)(i), and by adding paragraph (k) to read as follows:


Sec. 175.7  Procedures.

* * * * *
    (a) * * *
    (13) * * *
    (i) In unusual circumstances, extensions beyond six months can be 
granted by the Deputy Under Secretary of Defense (Industrial Affairs 
and Installations).
* * * * *
    (d) * * *
    (3) * * *
    (i) In the event there is no LRA recognized by DoD and/or if a 
redevelopment plan is not received from the LRA within 15 months from 
the determination of surplus under paragraph (a)(13) of this section, 
(unless an extension of time has been granted by the Deputy Under 
Secretary of Defense (Industrial Affairs and Installations)), the 
applicable Military Department shall proceed with the disposal of 
property under applicable property disposal and environmental laws and 
regulations.
* * * * *
    (k) Leaseback of property at base closure and realignment sites. 
(1) 10 U.S.C. 2687 note (BRAC 1990), as added by section 2837 of Pub. 
L. 104-106, gives the Secretary of Defense the authority to transfer 
property that is still needed by a Federal Department or Agency to an 
LRA provided the LRA agrees to lease the property back to the Federal 
Department or Agency in accordance with all statutory and regulatory 
guidance. The purpose of this authority, hereinafter referred to as a 
``leaseback'', is to enable the LRA to obtain ownership of the property 
pursuant to the BRAC process while still ensuring that the Federal need 
for use of the property is accommodated.
    (2) Subject to BRAC 1990 and this part, the decision whether to 
transfer property pursuant to a leaseback rests with the relevant 
military department. However, a military department may only transfer 
property via a leaseback if the Federal entity that needs the property 
agrees to the leaseback arrangement.
    (3) If for any reason property cannot be transferred pursuant to a 
leaseback (e.g., the relevant Federal Agency prefers ownership, the LRA 
and the Federal entity cannot agree on terms of the lease, or the 
military department determines that a leaseback would not be in the 
Federal interest), such property shall remain in Federal ownership 
unless and until the relevant landholding entity determines that it is 
surplus pursuant to the Federal Property Management Regulations.
    (4) If a building or structure is proposed for transfer under this 
authority, that which is leased back to the Federal Department or 
Agency may be all or a portion of that building or structure.
    (5) The leaseback authority may be used at all installations 
approved for closure or realignment under BRAC 1990.
    (6) Transfers under this authority must be to an LRA.
    (7) Transfers under this authority may be by lease in furtherance 
of conveyance or deed. A lease in furtherance of conveyance is 
appropriate only in those circumstances where deed transfer cannot be 
accomplished because the requirements of the Comprehensive 
Environmental Response, Compensation, and Liability Act (CERCLA) (42 
U.S.C. 9601, et seq.) for such transfer have not been met. The lease in 
furtherance of conveyance or accompanying contract shall include a 
provision stating that the LRA agrees to take title to the property 
when requirements for the transfer have been satisfied.
    (8) The leaseback authority can be used to transfer property that 
is needed either by existing Federal tenants or by Federal Departments 
or Agencies desiring to locate onto the property after operational 
closure. The Military Department that is closing or realigning the 
installation may not transfer property to an LRA under this authority 
and lease it back unless:
    (i) The Military Department is acting in an Executive Agent 
capacity on behalf of a Defense Agency that certifies that a leaseback 
is in the interest of that Defense Agency; or,
    (ii) The Secretary of the Military Department certifies that a 
leaseback is in the best interest of the Military Department and that 
use of the property by the Military Department is consistent with the 
obligation to close or realign the installation in accordance with the 
recommendations of the Defense Base Closure and Realignment Commission.
    (9) Property eligible for a leaseback is not surplus because it is 
still needed by a Federal entity. However, notwithstanding that the 
property is not surplus and that the LRA would not otherwise have to 
include such property in its redevelopment plan, the LRA should include 
the proposed leaseback of property in its redevelopment plan, taking 
into account the planned Federal use of such property.
    (10) The terms of the LRA's lease to the Federal entity should 
afford the Federal Department or Agency rights as close to those 
associated with ownership of the property as is practicable. The 
requirements of the General Services Acquisition Regulation (GSAR) (48 
CFR part 570) are not applicable to the lease, but provisions in the 
GSAR may be used to the extent they are consistent with this Part. The 
terms of the lease are negotiable subject to the following:
    (i) The lease shall be for a term of no more than 50 years, but may 
provide for options for renewal or extension of the term at the request 
of the Federal

[[Page 7969]]

Department or Agency concerned. The lease term should be based on the 
needs of the Federal entity.
    (ii) The lease, or any renewals or extensions thereof, shall not 
require rental payments.
    (iii) The lease shall not require the Federal Government to pay the 
LRA or other local government entity for municipal services including 
fire and police protection.
    (iv) The Federal Department or Agency concerned may be responsible 
for services such as janitorial, grounds keeping, utilities, capital 
maintenance, and other services normally provided by a landlord. 
Acquisition of such services by the Federal Department or Agency is to 
be accomplished through the use of Federal Acquisition Regulation 
procedures or otherwise in accordance with applicable statutory and 
regulatory requirements.
    (v) The lease shall include a provision prohibiting the LRA from 
transferring ownership rights to another entity during the term of the 
lease, other than one of the political jurisdictions that comprise the 
LRA, without the written consent of the Federal Department or Agency 
occupying the leaseback property.
    (vi) The lease shall include a provision specifying that if the 
Federal Department or Agency concerned no longer needs the property 
before the expiration of the term of the lease, the remainder of the 
lease term may be satisfied by the same or another Federal Department 
or Agency using the leased property for a use similar to the use under 
the lease.
    (A) The General Services Administration shall assist with 
identifying other Federal interest in leasing the property.
    (B) Prior to exercising such provision, the Federal Department or 
Agency shall consult with the LRA concerned, or the elected body with 
jurisdiction over the property if the LRA no longer exists.
    (vii) The terms of the lease shall provide that the Federal 
Department or Agency may repair, improve, and maintain the property at 
its expense without the approval of the LRA.
    (11) Conveyance to an LRA under this authority shall be in one of 
the following ways:
    (i) Lease back property that is to be conveyed under an Economic 
Development Conveyance (EDC) shall be conveyed as part of the EDC in 
accordance with the existing EDC procedures and 
Sec. 175.7(k)(11)(ii)(B)(4). The LRA shall submit the following in 
addition to the application requirements outlined in Sec. 175.7(e)(5):
    (A) A description of the parcel or parcels the LRA proposes to have 
transferred to it and then to lease back to a Federal Department or 
Agency;
    (B) A written statement signed by an authorized representative of 
the Federal entity that it agrees to accept a leaseback of the 
property; and,
    (C) A statement explaining why a leaseback is necessary for the 
long-term economic redevelopment of the installation property.
    (ii) Leaseback property not associated with property to be conveyed 
under an EDC shall be conveyed in accordance with the following 
procedures:
    (A) As soon as possible after the LRA's submission of its 
redevelopment plan to the DoD and HUD, the LRA shall submit a request 
for a leaseback to the Military Department. The Military Department may 
impose additional requirements as necessary, but at a minimum, the 
request shall contain the following:
    (1) A description of the parcel or parcels the LRA proposes to have 
transferred to it and then to lease back to a Federal Department or 
Agency;
    (2) A written statement signed by an authorized representative of 
the Federal entity that it agrees to accept a leaseback of the 
property; and,
    (3) A statement explaining why a leaseback is necessary for the 
long-term economic redevelopment of the installation property.
    (B) The transfer may be for consideration at or below the estimated 
present fair market value. In those instances in which the property is 
conveyed for consideration below the estimated present fair market 
value, the Military Department shall prepare a written explanation of 
why the estimated present fair market value was not obtained.
    (1) In a rural area, the transfer shall comply with 
Sec. 175.7(f)(5).
    (2) Payment may be in cash or in-kind.
    (3) The Military Department shall determine the estimated present 
fair market value of the property before transfer under this authority.
    (4) The exact amount of consideration, or the formula to be used to 
determine that consideration, as well as the schedule for payment of 
consideration must be agreed upon in writing before transfer under this 
authority.

    Dated: February 18, 1997.
L.M. Bynum,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 97-4333 Filed 2-20-97; 8:45 am]
BILLING CODE 5000-04-M