B-82871, FEBRUARY 23, 1949, 28 COMP. GEN. 476

B-82871, FEBRUARY 23, 1949, 28 COMP. GEN. 476

PROPERTY - PUBLIC - DAMAGE OR LOSS INSURANCE PAYMENTS - DISPOSITION OF PROCEEDS WHERE, UNDER INSURANCE POLICIES REQUIRED TO BE CARRIED BY LESSEES OF EXCESS GOVERNMENT INDUSTRIAL PROPERLY LEASED UNDER SECTION 6 OF THE NATIONAL INDUSTRIAL RESERVE ACT OF 1948, THE INSURER RESERVES THE OPTION TO REPAIR OR RESTORE ANY OF THE INSURED PROPERTY LOST OR DAMAGED AS A RESULT OF FIRE, ETC., OR IN LIEU THEREOF TO PAY DIRECTLY TO THE GOVERNMENT THE CASH PROCEEDS OF SUCH INSURANCE, THE PROCEEDS OF ANY INSURANCE OR ANY AMOUNT EQUAL TO THE COST OF REPAIRS OR REPLACEMENTS TO SUCH PROPERTY MUST BE COVERED INTO THE TREASURY AS MISCELLANEOUS RECEIPTS IN THE ABSENCE OF A PROVISION IN SECTION 6 WHICH RENDERS INAPPLICABLE TO THE MISCELLANEOUS RECEIPT DEPOSITING REQUIREMENTS OF SECTION 3617, REVISED STATUTES. COMP. GEN. 1133; 24 ID. 847; 27 ID. 352, DISTINGUISHED.

COMPTROLLER GENERAL WARREN TO THE ADMINISTRATOR, FEDERAL WORKS AGENCY, FEBRUARY 23, 1949:

THERE HAS BEEN CONSIDERED YOUR LETTER OF JANUARY 7, 1949, STATING THAT, IN CONNECTION WITH THE ADMINISTRATION OF THE NATIONAL INDUSTRIAL RESERVE ACT OF 1948, APPROVED JULY 2, 1948, 62 STAT. 1225, CERTAIN EXCESS INDUSTRIAL PROPERTY WILL BE LEASED TO INDUSTRIAL AND COMMERCIAL ORGANIZATIONS PURSUANT TO THE AUTHORITY CONTAINED IN SECTION 6 OF THE SAID ACT, 62 STAT. 1226, WHICH READS AS FOLLOWS:

SEC. 6. SUBJECT TO PROVISIONS OF SECTION 7 HEREOF, THE FEDERAL WORKS AGENCY IS HEREBY AUTHORIZED AND DIRECTED TO ACCEPT THE TRANSFER TO IT OF SUCH EXCESS INDUSTRIAL PROPERTY AS IS DIRECTED TO BE TRANSFERRED TO IT UNDER SECTION 4 HEREOF AND, AS AND WHEN DIRECTED OR AUTHORIZED BY THE SECRETARY OF DEFENSE PURSUANT TO SECTION 7 HEREOF, TO UTILIZE, MAINTAIN, PROTECT, REPAIR, RESTORE, RENOVATE, LEASE, OR DISPOSE OF SUCH PROPERTY. NOTWITHSTANDING SECTION 321 OF THE ACT OF JUNE 30, 1932 (47 STAT. 412; U.S.C., TITLE 40, SEC. 303 (B) (, ANY LEASE MAY PROVIDE FOR THE RENOVATION, MAINTENANCE, PROTECTION, REPAIR, AND RESTORATION BY THE LESSEE, OF THE PROPERTY LEASED, OR OF THE ENTIRE UNIT OR INSTALLATION WHEN A SUBSTANTIAL PART THEREOF IS LEASED, AS PART OR ALL OF THE CONSIDERATION FOR THE LEASE OF SUCH PROPERTY.

YOU STATE THAT IT IS CONSIDERED NECESSARY THAT SUCH LEASES PROVIDE THAT THE LESSEE CARRY ADEQUATE INSURANCE COVERAGE TO PROTECT THE PROPERTY AGAINST LOSS OR DAMAGE AS A RESULT OF FIRE, C., THE PREMIUMS THEREFOR TO BE PAID BY THE LESSEE BUT THAT, UNDER AN EXPRESS PROVISION IN THE INSURANCE POLICIES, THE INSURER RESERVES THE OPTION TO REPAIR OR RESTORE ANY OF THE INSURED PROPERTY SO DAMAGED OR IN LIEU THEREOF TO PAY DIRECTLY TO THE GOVERNMENT THE CASH PROCEEDS OF SUCH INSURANCE. IN THIS CONNECTION, YOU REQUEST TO BE ADVISED AS TO WHETHER AN AMOUNT EQUAL TO THE COST OF REPAIR OR REPLACEMENT MUST BE PAID FROM THE AVAILABLE APPROPRIATION INTO THE GENERAL FUND OF THE TREASURY AS MISCELLANEOUS RECEIPTS IN THOSE CASES IN WHICH THE INSURER ELECTS TO REPAIR OR RESTORE THE DAMAGED PROPERTY IN LIEU OF A CASH PAYMENT, AND, ALSO, WHETHER, IN THE EVENT THE INSURER ELECTS TO MAKE A CASH PAYMENT DIRECTLY TO THE GOVERNMENT IN LIEU OF SUCH REPAIR OR RESTORATION, SUCH CASH PAYMENT MUST BE DEPOSITED INTO THE TREASURY AS MISCELLANEOUS RECEIPTS.

YOUR QUESTION IN THE MATTER ARISES BECAUSE OF SECTION 3617, REVISED STATUTES, WHICH REQUIRES THAT THE GROSS AMOUNT OF ALL MONEYS RECEIVED FROM WHATEVER SOURCE FOR THE USE OF THE UNITED STATES (WITH CERTAIN EXCEPTIONS NOT INVOLVED HERE) SHALL BE DEPOSITED AND COVERED INTO THE TREASURY AS MISCELLANEOUS RECEIPTS.

THE FOREGOING PROVISION OF LAW HAS BEEN THE SUBJECT OF NUMEROUS DECISIONS OF THIS OFFICE AND THE RULE IS WELL ESTABLISHED THAT, IN THE ABSENCE OF AN EXPRESS PROVISION TO THE CONTRARY OR AN OTHERWISE CLEARLY DEFINED INTENT ON THE PART OF THE CONGRESS, SUCH FUNDS SHOULD BE COVERED IN AS MISCELLANEOUS RECEIPTS.

ADMITTEDLY, THE NATIONAL INDUSTRIAL RESERVE ACT OF 1948 CONTAINS NO PROVISION SPECIFICALLY EXEMPTING SUCH FUNDS FROM THE REQUIREMENTS OF SAID SECTION 3617. THE PROVISIONS OF SECTION 6 OF THE SAID ACT ARE SIMILAR TO THE PROVISIONS OF SECTION 1 OF THE ACT APPROVED AUGUST 5, 1947, 61 STAT. 774, AND EXCERPTS FROM THE VARIOUS COMMITTEE REPORTS AND COMMITTEE HEARINGS WITH REFERENCE TO SUCH EARLIER ACT ARE QUOTED IN YOUR LETTER IN SUPPORT OF YOUR BELIEF THAT SECTION 3617, REVISED STATUTES, IS NOT APPLICABLE TO THE FUNDS CONSIDERED HEREIN. IN FURTHER SUPPORT OF SUCH BELIEF YOU CITE DECISIONS OF THIS OFFICE APPEARING IN 22 COMP. GEN. 1133, 24 ID. 847, AND 27 ID. 352.

THOSE PORTIONS OF THE COMMITTEE HEARINGS AND REPORTS QUOTED IN YOUR LETTER REFER PRIMARILY TO THE AUTHORITY TO ENTER INTO SUCH LEASES AND TO INCLUDE THEREIN PROVISIONS FOR MAINTENANCE, PROTECTION, REPAIR, AND RESTORATION BY THE LESSEE AS A PART OR ALL OF THE CONSIDERATION FOR THE LEASE OF SUCH PROPERTY. THE INCLUSION OF SUCH PROVISION IN THE SAID LEASES WAS SAID TO BE NECESSARY IN ORDER THAT EACH PLANT COULD BE PLACED ON A SELF-MAINTAINING BASIS. A THOROUGH READING OF SUCH HEARINGS AND COMMITTEE REPORTS INDICATES THAT THERE WERE CONSIDERED THEREIN ONLY SUCH REPAIRS AND REPLACEMENTS AS WOULD BE REQUIRED OF THE LESSEE AND NOT THOSE REPAIRS AND REPLACEMENTS OCCASIONED BY FIRE, ETC., FOR WHICH THE INSURER IS LIABLE UNDER INSURANCE CONTRACTS. A HOLDING THAT THE PROCEEDS OF SUCH INSURANCE POLICIES ARE REQUIRED TO BE COVERED INTO THE TREASURY AS MISCELLANEOUS RECEIPTS, THEREBY NECESSITATING FURTHER APPROPRIATION BY THE CONGRESS, WOULD NOT NECESSARILY DEFEAT THE DESIRE OF THE CONGRESS THAT EACH PLANT BE ON A SELF-MAINTAINING BASIS. IN OTHER WORDS, IT APPEARS TO HAVE BEEN THE DESIRE OF THE CONGRESS THAT RECEIPTS COVERED INTO THE TREASURY RESULTING FROM SUCH LEASING PROGRAM SHOULD APPROXIMATE, IN SO FAR AS POSSIBLE, THE AMOUNTS APPROPRIATED BY THE CONGRESS FOR THE CARE, PROTECTION, REPAIR, AND RESTORATION OF SUCH PROPERTY. THERE IS NO INDICATION THAT THE FUNDS AUTHORIZED TO BE APPROPRIATED THEREIN WERE TO PARTAKE OF THE NATURE OF A REVOLVING FUND SO AS NOT TO REQUIRE THE APPROPRIATION OF ADDITIONAL AMOUNTS.

THE CIRCUMSTANCES PRESENT IN THE CASES CITED IN YOUR SUBMISSION ARE CLEARLY DISTINGUISHABLE FROM THE FACTS IN THE PRESENT SITUATION. SECTION 303 OF THE SO-CALLED LANHAM ACT, 54 STAT. 1125, 1127, AS AMENDED, UNDER CONSIDERATION IN 22 COMP. GEN. 1133 AND 27 ID. 352, PROVIDES IN EFFECT THAT MONEYS DERIVED FROM RENTAL OR OPERATION OF PROPERTY ACQUIRED OR CONSTRUCTED UNDER THE PROVISIONS OF THAT ACT SHALL BE RETURNED TO THE APPROPRIATION AUTHORIZED THEREIN AND REMAIN AVAILABLE FOR EXPENSES OF OPERATION AND MAINTENANCE. SIMILARLY, SECTION 6 (B) OF THE LEND-LEASE ACT, AS AMENDED (22 U.S.C. 415), CONSIDERED IN 24 COMP. GEN. 847, PROVIDES AS FOLLOWS:

(B) ALL MONEY AND ALL PROPERTY WHICH IS CONVERTED INTO MONEY RECEIVED UNDER SECTION 412 FROM ANY GOVERNMENT SHALL, WITH THE APPROVAL OF THE DIRECTOR OF THE BUDGET, REVERT TO THE RESPECTIVE APPROPRIATION * * * AND SHALL BE AVAILABLE FOR EXPENDITURE FOR THE PURPOSE FOR WHICH SUCH EXPENDED FUNDS WERE APPROPRIATED BY LAW * * *.

THE NATIONAL INDUSTRIAL RESERVE ACT OF 1948, CONSIDERED HEREIN, CONTAINS NO PROVISION SIMILAR TO THOSE CONSIDERED IN THE DECISIONS DISCUSSED ABOVE, NOR DOES IT CONTAIN ANY PROVISION PERMITTING THE REIMBURSEMENT OF ANY APPROPRIATIONS AUTHORIZED THEREIN. ACCORDINGLY, SINCE THERE APPEARS NOTHING IN THE STATUTE HERE INVOLVED WHICH EITHER SPECIFICALLY OR BY NECESSARY IMPLICATION MAY BE CONSIDERED AS RENDERING INAPPLICABLE THE REQUIREMENTS OF SECTION 3617, REVISED STATUTES, IT MUST BE HELD THAT THE PROCEEDS OF ANY INSURANCE OR ANY AMOUNT EQUAL TO THE COST OF THE REPAIRS OR REPLACEMENTS TO ANY PROPERTY SO INSURED MUST BE COVERED INTO THE TREASURY AS MISCELLANEOUS RECEIPTS.