The condition of the environment at US base lands will be the major battleground in upcoming negotiations between Bermuda and the United States.

Management Minister the Hon. Grant Gibbons sounded the alert in the House of Assembly yesterday while delivering a progress report on Bermuda's takeover of the bases.

He also indicated the US and Bermuda were tens of millions of dollars apart in any final deal that will be capped with the departure of the Americans by September 1, 1995.

Dr. Gibbons took aim at the $140-million value the Americans had placed on the lands being handed back to Bermuda.

"Although we are still some months away from agreement, there is one thing I believe we can predict with great certainty: Taking back the base lands will not result in Bermuda having to pay a United States Government bill of $140 million.'' Dr. Gibbons said Bermuda was still preparing its negotiating position, "as landlord'', to present to the United States. But he indicated the quality of lands would figure significantly in that position.

"We have firm views about what condition our land should be in when it is returned to us,'' he said. "And there may well be costs involved for the Americans in that area.'' Dr. Gibbons predicted the issue would lead to hard bargaining.

"The US position is bound to be that they are leaving us an asset for which they should be reimbursed,'' he said. "Equally, our position is bound to be that the circumstances are such that we should be reimbursed.

"It is from these two extremes that we are negotiating.'' Dr. Gibbons' statement -- his first to the House since being elected MP last summer -- also focussed on other aspects of the bases transition which he likened to the takeover of "another city''.

He expressed concern over base buildings and equipment, predicting their maintenance and insurance costs would be "one of our biggest headaches''.

He also raised the possibility of temporarily easing Bermuda's stringent building code to attract individuals and organisations which otherwise might "might be frightened off by getting the buildings up to code''.

The Minister characterised the question of how the base lands are going to be used as "a difficult one''.

"The Government is convinced the answer will come gradually, and that we may still be working on uses for base lands for some time,'' he said.

"Bermuda has benefitted greatly from its careful approach to planning and building. It would be a mistake, we believe, to rush into developing the base lands without giving the most careful thought both to planning matters and to what will be the best possible use for the lands.'' Dr. Gibbons revealed Government was advertising to hire a company to develop criteria to guide Bermuda in making decisions about proposals for future land use.

"This will ensure that when we judge proposals, we do so fairly, against a framework which is the same for all.'' He said Government believed the base lands should be used to develop and diversify the economy. He also cited uses for recreation, for Government buildings and for strengthening the Island's tourism product.

Dr. Gibbons used his statement to explain the need for hiring overseas firms "with knowledge and proven experience'' to help Bermuda with the bases transition.

And he underlined Government's commitment to involving Bermudians in the transition "to the greatest extent possible''. That was a key factor in Government's decision this week to contract Serco of Canada to run Bermuda's air services for the next five years.

"Serco's programme of Bermudianisation was more rapid and more aggressive than Allied's (the other candidate for the job),'' he said.