Calendar No. 1312

91st Congress SENATE Report

2nd Session No. 91-1293

TO RELEASE AND CONVEY THE REVERSIARY INTERST OF THE UNITED STATES IN CERTAIN REAL PROPERTY KNOWN AS THE MCNARY DAM TOWNSITE, UMATILLA COUNTY, OREG.

October 8, 1970.-Ordered to be printed

Mr. Hatfield, from the Committee on Interior and Insular Affairs, submitted the following

REPORT

[To accompany H.R. 13601]

The Committee on Interior and Insular Affairs, to which was referred the bill (H.R. 13601) to release and convey the reversionary interest of the United States in certain real property known as the McNary Dam Townsite, Umatilla County Oreg., Having considered the same, reports favorably theron without amendment and recommends that the bill do pass.

PURPOSE

The purpose of H.R. 13601 is to release the reversionary interest, if any, of the Unite States, in 344 acres of land that were surplus to the needs of the United States and were conveyed to the Umatilla Tribe in Oregon under a 1957 statue.

BACKGROUND

The lands had originally been withdrawn from the public domain and developed as a townsite by the Army when the McNary Dam was built. When the lands became surplus, they were conveyed to the Indians for the purpose of stimulating industrial development near the reservation. In accordance with the provisions of the 1957 statute, the tribe leased the land for this purpose to the present owners of record, Robert and Marcia Schultz and William and Lynette Schultz. The lease gave the lessee an option to purchase the land at the end of the 5-year term of the lease. This option was exercised and the land was conveyed by the tribe to the Shultzes in 1964 after negotiating a new enforceable employment agreement.

The 1957 statute under which the land was conveyed from the United States to the tribe provided for a reversion of the title to the United States if the tribe failed to use the property for industrial development purposes. The Department did not construe this reversionary provision to apply to the conveyance by the tribe to the Shultzes, and the deed of conveyance did not contain a reversionary provision. The title companies later expressed doubts about this interpretation, and the pending bill is needed to clear the title by releasing any reversionary interest the United States may have.

The Shultzes paid $150,000 for the property, which was $40,800 less than its appraised value at the time of the lease. The reduction was based on the belief by the Department at the time of the lease that the reversionary provision in the 1957 statute would apply, and the $50,800 was the value assigned to the reversionary provision did not apply and it required the tribe to convey the property to the Shultzes without including any restriction in the deed. Now, it is uncertain whether the reversionary provision in the 1957 statute does or does not apply, as a matter of law, and the bill releases any reversionary interest the United States may have.

COST

Enactment of the bill will involve an additional Federal expenditure.

COMMITTEE ROCOMMENDATION

The Senate Interior and Insular Affairs Committee recommends that the bill be enacted.

DEPARTMENTAL REPORT

The favorable report of the Department of the Interior to the House Interior and Insular Affairs Committee follows:

U.S. Department of the Interior,

Office of the Secretary,

Washington, D.C., April 28, 1970.
Hon. Wayne N. Aspinall,

Chairman, committee on Interior and Insular Affairs, House of Representatives, Washington, D.C.

DEAR MR. CHAIRMAN: This is in response to your request for the views of this Department on H.R. 13601, a bill to release and convey the reversionary interest of the United States in certain real property known as the McNary Dam Townsite, Umatilla County, Oreg.

The bill releases and conveys to the owners of record the reversionary interest of the United States in approximately 344.15 acres of land, known as McNary Dam Townsite, lying in sections 10, 11, 14, and 15, T. 5 N., R. 28 E., Willamette meridian, Umatilla County, Oreg., which had heretofore been conveyed by the United States to the Confederated Tribes of the Umatilla Reservation in Oregon and reconveyed by the tribes to Robert and Marcia Schultz and William and Lynette Schultz under authority of the act of August 28, 1957 (71 Stat. 468).

In 1949 public lands in Oregon and Washington were withdrawn from appropriation under public land laws and reserved for use in construction of the McNary (Umatilla) Dam and Reservoir project in the Columbia River under the supervision of the Department of the Army. In connection with this project, the Department of the Army constructed the McNary Townsite for use primarily for housing and related activities during the construction period. The lands were improved with various types of buildings and structures.

In 1954 they were declared surplus to the needs of the Army. Because substantial changes in the lands made them not suitable for return to the public domain, they were turned over to the General Services Administration for disposition. The lands were quitclaimed to the Confederated Tribes of Umatilla Indians under the act of August 27, 1957.

The conveyance was made to the Indian tribes for the purpose of stimulating industrial development near the Indian reservation. The deed to the tribes contains a reversionary clause as required by section 3 of the 1957 act which provides that “Any transfer of title to surplus property pursuant to this Act shall provide for a reversion of title to the United States if the Secretary of the Interior finds that the property (sic) is not being used in accordance with the provisions of the Act.”

On February 18, 1959, the tribes negotiated a 5-year lease, with right to renew for two 5-year terms, with the William Schultz Corp., also known as Econo-Built Corp., for the purpose of manufacturing mobile homes. Section 2 of the lease provided the industrial enterprise would employ Indians in large numbers.

Also, the lease provided that the lessee would have an option to purchase the premises at the end of the lease term at its appraised value as of the date of the lease. Apparently, because of the misinterpretation of the reversionary provision contained in the law and the deed limiting the use of the property, 25 percent was deducted from the appraised value making the purchase price $150,000.

Before the expiration of the lease term, the developer encountered certain difficulties and the tribes asserted that the property should revert to the United States because the lessee-developer had breached the terms of the lease; however, it was concluded that the reversionary provision applies only to the transfer of title to surplus property of the United States, and not to the transfer of tribal property.

The lessees gave written notice on October 1, 1963, to the tribes of their intention to exercise their option to purchase the property at the expiration of the lease contract. The Secretary of the Interior advised the tribes that they must “quitclaim” the property to the lessees.

As the tribes were concerned over the apparent failure of the act to impose upon the lessees a continuing obligation to employ Indians after the tribes conveyed the property to the lessees as purchaser, an enforceable employment agreement was negotiated with the purchaser. The tribes were successful in securing the employment agreement and the deed was approved on June 29, 1964, and thereafter delivered to the Schultzes.

The deed received by the Schultzes contains no restrictions per se, and conveys all that the tribes could give. Whatever limitations there may be on the Schultzes title are those imposed by the Congress under the provisions of the act of August 28, 1957, and if the Congress wishes to remove such limitations by the enactment of this bill, we believe that it should require as a condition to the removal of such limitations, the payment of the $50,800 that was deducted from the original purchase price because of the limitation on the title. We believe that such a requirement would be fair and equitable. This requirement could be imposed by amending the bill by striking the period at the end of line 2, page 2, and adding the words, “such release and conveyance to be effective upon the proof of payment of $5-,800 to the Treasury of the United States.” If this amendment is adopted, we would have no objection top the enactment of the bill.

The Bureau of the Budget has advised that there is no objection to the presentation of this report from the standpoint of the administration’s program.

Sincerely yours,

HARRISON LOESCH,

Assistant Secretary of the Interior.