US Code
CHAPTER 159— REAL PROPERTY; RELATED PERSONAL PROPERTY; AND LEASE OF NON-EXCESS PROPERTY
§ 2688. Utility systems: conveyance authority

(a) Conveyance Authority.—The Secretary of a military department may convey a utility system, or part of a utility system, under the jurisdiction of the Secretary to a municipal, private, regional, district, or cooperative utility company or other entity. The conveyance may consist of all right, title, and interest of the United States in the utility system or such lesser estate as the Secretary considers appropriate to serve the interests of the United States.
(b) Selection of Conveyee.—(1) If more than one utility or entity referred to in subsection (a) notifies the Secretary concerned of an interest in a conveyance under such subsection, the Secretary shall carry out the conveyance through the use of competitive procedures.
(2) Notwithstanding paragraph (1), the Secretary concerned may use procedures other than competitive procedures, but only in accordance with subsections (a), (b), (d), and (e) of section 3204 of this title, to select the conveyee of a utility system (or part of a utility system) under subsection (a).
(3) With respect to the solicitation process used in connection with the conveyance of a utility system (or part of a utility system) under subsection (a), the Secretary concerned shall ensure that the process is conducted in a manner consistent with the laws and regulations of the State in which the utility system is located to the extent necessary to ensure that all interested regulated and unregulated utility companies and other interested entities receive an opportunity to acquire and operate the utility system to be conveyed.
(c) Consideration.—(1) The Secretary concerned may require as consideration for a conveyance under subsection (a) an amount equal to the fair market value (as determined by the Secretary) of the right, title, or interest of the United States conveyed. The consideration may take the form of—(A) a lump sum payment; or
(B) a reduction in charges for utility services provided by the utility or entity concerned to the military installation at which the utility system is located.
(2) If the utility services proposed to be provided as consideration under paragraph (1) are subject to regulation by a Federal or State agency, any reduction in the rate charged for the utility services shall be subject to establishment or approval by that agency.
(d) Contracts for Utility Services.—(1) Except as provided in paragraph (2), a contract for the receipt of utility services as consideration under subsection (c), or any other contract for utility services entered into by the Secretary concerned in connection with the conveyance of a utility system under this section, may be for a period not to exceed 10 years.
(2) The Secretary concerned may authorize a contract for utility services described in paragraph (1) or the renewal of such a contract to have a term in excess of 10 years, but not to exceed 50 years, if the Secretary concerned determines that a contract for a longer term will be cost effective. The determination of cost effectiveness shall be made using a business case analysis that includes an independent estimate of the level of investment that should be required to maintain adequate operation of the utility system over the proposed term of the contract or contract renewal. The business case analysis must also demonstrate how a privatized system will operate in a manner consistent with subsection (g)(3). A renewal of a contract pursuant to this paragraph may be entered into only within the last five years of the existing contract term.
(e) Treatment of Payments.—(1) A lump sum payment received under subsection (c) shall be credited, at the election of the Secretary concerned—(A) to an appropriation of the military department concerned available for the procurement of the same utility services as are provided by the utility system conveyed under this section;
(B) to an appropriation of the military department available for carrying out energy savings projects or water conservation projects; or
(C) to an appropriation of the military department available for improvements to other utility systems.
(2) Amounts so credited shall be merged with funds in the appropriation to which credited and shall be available for the same purposes, and subject to the same conditions and limitations, as the appropriation with which merged.
[(f) Repealed. Pub. L. 112–81, div. A, title X, § 1061(21)(C), Dec. 31, 2011, 125 Stat. 1584.]
(g) Additional Terms and Conditions.—(1) The Secretary concerned may require such additional terms and conditions in connection with a conveyance under subsection (a) as the Secretary considers appropriate to protect the interests of the United States.
(2) The Secretary concerned shall require in any contract for the conveyance of a utility system (or part of a utility system) under subsection (a) that the conveyee manage and operate the utility system in a manner consistent with applicable Federal and State regulations pertaining to health, safety, fire, and environmental requirements.
(3) The Secretary concerned shall require in any contract for the conveyance of a utility system (or part of a utility system) under subsection (a) that the conveyee manage and operate the utility system in a manner consistent with energy resilience and cybersecurity requirements and associated metrics provided to the conveyee to ensure that the reliability of the utility system meets mission requirements.
(4) The Secretary of Defense, in consultation with the Secretaries of the military departments, shall include in the installation energy report submitted under section 2925(a) 11 See References in Text note below. of this title a description of progress in meeting energy resilience metrics for all conveyance contracts entered into pursuant to this section.
(h) Assistance for Construction, Repair, or Replacement of Utility Systems.—In lieu of carrying out a military construction project to construct, repair, or replace a utility system, the Secretary concerned may use funds authorized and appropriated for the project to facilitate the conveyance of the utility system under this section by making a contribution toward the cost of construction, repair, or replacement of the utility system by the entity to which the utility system is being conveyed.
(i) Utility System Defined.—(1) In this section, the term “utility system” means any of the following:(A) A system for the generation and supply of electric power.
(B) A system for the treatment or supply of water.
(C) A system for the collection or treatment of wastewater.
(D) A system for the generation or supply of steam, hot water, and chilled water.
(E) A system for the supply of natural gas.
(F) A system for the transmission of telecommunications.
(2) The term “utility system” includes the following:(A) Equipment, fixtures, structures, and other improvements utilized in connection with a system referred to in paragraph (1).
(B) Real property, easements, and rights-of-way associated with a system referred to in that paragraph.
(j) Conveyance of Additional Utility Infrastructure After Conveyance of a Utility System.—(1) Upon conveyance of a utility system, the Secretary of a military department may convey additional utility infrastructure under the jurisdiction of the Secretary on a military installation to a utility or entity to which a utility system for the installation has been conveyed under subsection (a) if the Secretary determines that—(A) the additional utility infrastructure cannot operate without being a part of the conveyed utility system or operation of the additional utility infrastructure by the utility or entity would be in the best interest of the Government; and
(B) the military department receives as consideration an amount for the utility infrastructure determined in the same manner as the consideration the Secretary could require under subsection (c) for a conveyance under subsection (a).
(2) The conveyance under this paragraph may consist of all right, title, and interest of the United States or such lesser estate as the Secretary considers appropriate to serve the interests of the United States.
(k) Improvement of Conveyed Utility Systems.—In the case of a utility system that is conveyed under this section and that only provides utility services to a military installation, the Secretary concerned may use amounts authorized to be appropriated for military construction to improve the reliability, resilience, efficiency, physical security, or cybersecurity of the utility system.
(l) Limitation.—This section shall not apply to projects constructed or operated by the Army Corps of Engineers under its civil works authorities.

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