B-120797, FEBRUARY 9, 1955, 34 COMP. GEN. 374

B-120797, FEBRUARY 9, 1955, 34 COMP. GEN. 374

IRRIGATION AND RECLAMATION PROJECTS - TRANSFER OF GOVERNMENT CONSTRUCTED HOUSING FACILITIES PERMANENT-TYPE HOUSING UNITS BUILT BY THE INTERIOR DEPARTMENT ON LAND DONATED BY THE COACHELLA VALLEY COUNTY WATER DISTRICT TO HOUSE FEDERAL EMPLOYEES WHILE WORKING ON A NOW COMPLETED CANAL IRRIGATION SYSTEM ARE NOT PART OF THE PROJECT WORKS AUTHORIZED TO BE TRANSFERRED TO THE DISTRICT WITHOUT CHARGE UNDER SECTION 5 OF THE ACT OF AUGUST 13, 1914, BUT SHOULD BE DISPOSED OF AS SURPLUS PROPERTY UNDER SECTION 203 OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949.

COMPTROLLER GENERAL CAMPBELL TO THE SECRETARY OF THE INTERIOR, FEBRUARY 9, 1955:

REFERENCE IS MADE TO LETTER DATED JULY 22, 1954, FROM THE ADMINISTRATIVE ASSISTANT SECRETARY, REQUESTING A DECISION AS TO WHETHER THIS OFFICE WOULD BE REQUIRED TO OBJECT TO A TRANSFER TO THE COACHELLA VALLEY COUNTY WATER DISTRICT OF THE CARE, OPERATION AND MAINTENANCE OF 25 PERMANENT-TYPE HOUSES ERECTED BY THE UNITED STATES IN CONNECTION WITH THE IRRIGATION WORKS OF THE COACHELLA DIVISION, ALL-AMERICAN CANAL SYSTEM.

IT APPEARS FROM THE LETTER AND OTHER INFORMATION BEFORE THIS OFFICE THAT THE HOUSES WERE CONSTRUCTED IN 1944 AT A COST OF $218,000. THE LAND USED WAS DONATED TO THE UNITED STATES BY THE DISTRICT AND THE DEEDS CONVEYING TITLE CONTAINED NO RESERVATION OR CONDITION HERE MATERIAL. THE HOUSES WERE USED BY PERSONNEL OF THE BUREAU OF RECLAMATION ENGAGED IN THE CONSTRUCTION OF BOTH THE CANAL AND THE DISTRIBUTION SYSTEM. IT APPEARS FURTHER THAT CONSTRUCTION OF THE DISTRIBUTION SYSTEM IS NOW COMPLETED AND THAT THE DISTRICT WILL HAVE ASSUMED THE CARE, OPERATION, AND MAINTENANCE OF ALL UNITS OF THE SYSTEM AND OF THE GREATER PART OF THE MAIN CANAL IN THE NEAR FUTURE. AT SUCH TIME ALL, OR VIRTUALLY ALL, OF THE HOUSES WILL NO LONGER BE NEEDED IN CONNECTION WITH THE ACTIVITIES BEING CONDUCTED DIRECTLY BY THE UNITED STATES THROUGH IT EMPLOYEES.

THE DISTRICT CONTENDS THAT, SINCE THE HOUSING PROJECT HAS SERVED ITS PURPOSE AND IS NO LONGER NEEDED OR USABLE FOR THE PURPOSES FOR WHICH CONSTRUCTED, AND SINCE THE CONSTRUCTION COSTS WERE PAID FOR WITH MONEY APPROPRIATED BY THE UNITED STATES FOR THE ALL-AMERICAN CANAL PROJECT, THE TWO PARCELS OF LAND WITH THE BUILDINGS THEREON SHOULD BE RECONVEYED TO THE DISTRICT. HOWEVER, THE DEPARTMENT'S LETTER STATES THAT RECONVEYANCE OF THE LAND OR THE HOUSES TO THE DISTRICT IS NOT CONTEMPLATED UNLESS SUCH RECONVEYANCE SHOULD BE INCIDENT TO A SALE OF THE PROPERTY TO THE DISTRICT. ALSO, IT IS STATED THAT THE ONLY TYPE OF "TRANSFER" WITH WHICH THE DEPARTMENT IS CONCERNED IS THE POSSIBLE TRANSFER OF THE USE AND CUSTODY OF THE HOUSING TO THE DISTRICT AS PART OF THE PROJECT WORKS, JUST AS MOST OF THE DISTRIBUTION WORKS HAVE BEEN TRANSFERRED TO IT. FURTHER, IT IS STATED THAT IT IS THE DEPARTMENT'S PRESENT INTENTION TO EFFECT SUCH A TRANSFER UNLESS THIS OFFICE SHOULD OBJECT BECAUSE OF THE PROVISIONS OF SECTION 203 OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED (40 U.S.C. 484). THESE PROVISIONS OF LAW DELEGATE TO THE ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION, SUPERVISION AND DIRECTION OVER THE DISPOSITION OF SURPLUS PROPERTY SUBJECT TO CERTAIN EXCEPTIONS THEREIN PROVIDED.

ON OCTOBER 15, 1934, THE UNITED STATES AND THE DISTRICT--- ACTING UNDER AUTHORITY OF THE BOULDER CANYON PROJECT ACT (43 U.S.C. 617-617T/- - ENTERED INTO THE FIRST OF TWO REPAYMENT CONTRACTS UNDER WHICH THE UNITED STATES AGREED TO CONSTRUCT THE COACHELLA MAIN CANAL AS WELL AS CAPACITY IN THE DIVERSION DAM ( IMPERIAL DAM) AND IN THE ALL-AMERICAN CANAL FOR THE COACHELLA DISTRICT AND THE IMPERIAL DISTRICT OF ULTIMATE COST TO THE COACHELLA DISTRICT AND THE IMPERIAL DISTRICT OF IMPERIAL DAM, THE ALL- AMERICAN CANAL AND THE COACHELLA MAIN CANAL WOULD BE $38,500,000. IT IS STATED IN THE LETTER OF YOUR DEPARTMENT THAT THE ALLOCATED SHARE OF THE DISTRICT OF SUCH AMOUNT, WHILE NOT FINALLY DETERMINED, WILL EXCEED $13 MILLION. UNDER THE SECOND REPAYMENT CONTRACT ENTERED INTO ON DECEMBER 22, 1947, BETWEEN THE UNITED STATES AND THE DISTRICT, THE UNITED STATES UNDERTOOK TO CONSTRUCT AN IRRIGATION DISTRIBUTION SYSTEM, PLUS CERTAIN FLOOD PROTECTIVE WORKS AND TO MAKE DRAINAGE INVESTIGATIONS AND STUDIES AT A TOTAL COST OF $18 MILLION, WHICH AMOUNT INCLUDED A NONREIMBURSABLE ESTIMATED AMOUNT OF $4,500,000 ALLOCATED TO PROTECTIVE WORKS FOR FLOOD CONTROL. THE CONTRACT STIPULATED THAT THE ULTIMATE COST TO THE DISTRICT FOR THE WORK TO BE PERFORMED BY THE UNITED STATES SHOULD IN NO EVENT EXCEED $13,500,000.

IT IS UNDERSTOOD FROM THE LETTER OF JULY 22, 1954, THAT THE DEPARTMENT IS OF THE VIEW THAT WHILE THERE IS NO LEGAL REQUIREMENT, CONTRACTUAL OR OTHERWISE, REQUIRING TRANSFER OF THE HOUSES TO THE DISTRICT, THE PROPOSED TRANSFER WOULD BE AUTHORIZED UNDER SECTION 5 OF THE ACT OF AUGUST 13, 1914, 43 U.S.C. 499. THAT SECTION PROVIDES:

WHENEVER ANY LEGALLY ORGANIZED WATER-USERS' ASSOCIATION OR IRRIGATION DISTRICT SHALL SO REQUEST, THE SECRETARY OF INTERIOR IS AUTHORIZED, IN HIS DISCRETION, TO TRANSFER TO SUCH WATER-USERS' ASSOCIATION OR IRRIGATION DISTRICT THE CARE, OPERATION, AND MAINTENANCE OF ALL OR ANY PART OF THE PROJECT WORKS, SUBJECT TO SUCH RULES AND REGULATIONS AS HE MAY PRESCRIBE.

IT IS STATED IN THE SUBMISSION THAT THE DEPARTMENT IS OF THE VIEW THAT IT IS ENTIRELY PROPER TO CONSIDER THE HOUSES AS PART OF THE "PROJECT WORKS," SUBJECT TO TRANSFER TO THE DISTRICT FOR CARE, OPERATION AND MAINTENANCE. ALSO, IT IS ASSERTED THAT IN THE DEPARTMENT'S VIEW, IT IS ENTIRELY WITHIN ITS DISCRETION TO DETERMINE THAT THE HOUSES SHOULD BE CONSIDERED AS PART OF THE PROJECT WORKS AND THAT AS SUCH THEY SHOULD BE TRANSFERRED TO THE DISTRICT FOR CARE, OPERATION, AND MAINTENANCE.

NOTWITHSTANDING SUCH VIEWS, THE SUBMISSION INDICATES THAT THE DEPARTMENT IS RELUCTANT TO EXERCISE THAT THE MAXIMUM TOTAL REPAYMENT OBLIGATION OF THE DISTRICT FOR ITS SHARE OF THE COST OF THE COACHELLA MAIN CANAL, JOINT WORKS AND DISTRIBUTION SYSTEM, AS INDICATED ABOVE, IS LIMITED TO APPROXIMATELY $26,500,000. IT IS POINTED OUT THAT, ASIDE FROM THE COSTS ALLOCATED TO FLOOD CONTROL, AN EXCESS OF NEARLY $4,200,000 HAS BEEN SPENT FOR COMPLETION OF THE DISTRIBUTION SYSTEM WHICH AMOUNT THE COURT IN THE CASE OF UNITED STATES V. COACHELLA VALLEY COUNTY WATER DISTRICT, 111 F.1SUPP. 172, HELD WAS NOT REIMBURSABLE BY THE DISTRICT. CONSEQUENTLY, THE DEPARTMENT IS HESITANT TO EFFECT THE PROPOSED TRANSFER, PARTICULARLY WHEN AN ALTERNATIVE PROCEDURE (DISPOSITION OF THE HOUSING AS SURPLUS PROPERTY UNDER THE FEDERAL PROPERTY ACT) AFFORDS AN OPPORTUNITY FOR RECOUPMENT BY THE GOVERNMENT OF AN APPRECIABLE AMOUNT OF THE EXCESS COSTS FOR COMPLETION OF THE DISTRIBUTION SYSTEM. IN CONCLUSION, IT IS STATED THAT WHILE THE RESULT TO BE ACHIEVED BY THE TRANSFER OF THE HOUSES TO THE DISTRICT MIGHT BE DESIRABLE FROM THE STANDPOINT OF EFFICIENT PERFORMANCE BY THE DISTRICT OF ITS OPERATING RESPONSIBILITIES, IT CANNOT BE SAID THAT SUCH TRANSFER IS ESSENTIAL THERETO.

"PROJECT WORKS" SUBJECT TO TRANSFER UNDER THE 1914 ACT, QUOTED ABOVE, ARE DEFINED IN BUREAU MANUAL, VOLUME XV, CHAPTER 6.8.20, AS MEANING "THE MAXIMUM FACILITIES CONSISTENT WITH GOOD OPERATING PRACTICES" IT IS STATED THAT IT IS DESIRABLE THAT THE CONTRACT HAVE A PROVISION PROVIDING FOR THE TRANSFER OF SUCH WORKS FOR OPERATION BY WATER USERS.

ARTICLE 8 OF THE ORIGINAL CONTRACT PROVIDES THAT THE IMPERIAL DAM, ALL- AMERICAN CANAL AND THE LAGUNA DAM WITH CERTAIN EXCEPTIONS NOT HERE MATERIAL SHALL BE STYLED "COMMON WORKS.' THE ARTICLE FURTHER PROVIDES, IN SUBSTANCE, THAT, UPON COMPLETION OF CONSTRUCTION OF ANY MAJOR UNIT, THE IMPERIAL IRRIGATION DISTRICT MAY ASSUME THE CARE, OPERATION, AND MAINTENANCE OF SAID "COMMON-WORKS" OR "MAJOR UNITS THEREOF" AND THAT THEREAFTER THE COACHELLA DISTRICT SHALL BEAR ITS PROPORTIONATE COST OF THE OPERATION AND MAINTENANCE OF THE WORKS THEREIN AGREED TO BE CONSTRUCTED BY THE UNITED STATES. AN EXAMINATION OF THE TWO CONTRACTS FAILS TO DISCLOSE ANY LANGUAGE PROVIDING FOR OR CONTEMPLATING THE CONSTRUCTION OF THE PERMANENT TYPE HOUSES EITHER AS PART OF THE "COMMON WORKS" SPECIFIED IN THE ORIGINAL CONTRACT OR OF THE AGREED CONSTRUCTION COVERED BY THE SUPPLEMENTAL CONTRACT.

ASSUMING THAT THE TWO CONTRACTS WERE EXECUTED IN ACCORDANCE WITH THE ABOVE PROVISIONS IN THE BUREAU MANUAL, THERE WOULD APPEAR TO BE CONSIDERABLE DOUBT AS TO THE PROPRIETY OF AN ADMINISTRATIVE DETERMINATION AT THIS TIME THAT THE HOUSES MAY BE REGARDED AS CONSTITUTING A PART OF THE "PROJECT WORKS," REQUIRED TO BE CONSTRUCTED UNDER THE TWO CONTRACTS. SUCH A DETERMINATION WOULD SEEM TO BE PROPER, PARTICULARLY IN VIEW OF THE STATEMENT IN THE SUBMISSION TO THE EFFECT THAT SUCH TRANSFER CANNOT BE REGARDED AS ESSENTIAL TO THE EFFICIENT PERFORMANCE BY THE DISTRICT OF ITS OPERATING RESPONSIBILITIES. FURTHERMORE, IT APPEARS FROM INFORMATION OBTAINED BY AUDITORS OF THIS OFFICE DURING AN EXAMINATION OF THE CORRESPONDENCE FILES AND RELATED RECORDS OF THE OFFICE OF THE REGIONAL DIRECTOR, REGION 3, BUREAU OF RECLAMATION, THAT HERETOFORE THE HOUSES HAVE NOT BEEN REGARDED AS PART OF THE "PROJECT WORKS.' ON THE CONTRARY, SUCH INFORMATION DISCLOSES THAT THE HOUSES HAVE BEEN CONSIDERED BY THE REGIONAL DIRECTOR TO BE A PART OF THE CONSTRUCTION FACILITIES,"IN NO SENSE APPURTENANT OR OTHERWISE NECESSARY TO THE OPERATION OR MAINTENANCE OF EITHER THE CANAL OR DISTRIBUTION SYSTEM.' SUCH EXAMINATION ALSO DISCLOSED THAT THE REGIONAL DIRECTOR--- APPARENTLY BASED ON AN OPINION OF THE REGIONAL COUNSEL--- HAS DETERMINED THAT THE DISPOSAL OF THE HOUSES AS SURPLUS PROPERTY WOULD BE IN THE BEST INTERESTS OF THE UNITED STATES.

IT IS THUS DOUBTFUL WHETHER THE HOUSING PROPERLY MAY BE CONSIDERED "A PROJECT WORK" WHICH IS AUTHORIZED TO BE TRANSFERRED TO THE DISTRICT UNDER THE 1914 ACT. ACCORDINGLY, AND CONSIDERING THAT THE ALTERNATE METHOD OF HANDLING THE DISPOSITION OF THE HOUSING APPEARS TO BE FREE FROM LEGAL OBJECTION AND AS INDICATED IN THE DEPARTMENT'S LETTER WILL BETTER SERVE THE INTERESTS OF THE UNITED STATES BY ENABLING IT TO RECOUP ITS NONREIMBURSABLE COSTS, THIS OFFICE WOULD BE REQUIRED TO OBJECT TO THE PROPOSED TRANSFER OF THE CARE, OPERATION AND MAINTENANCE OF THE 25 HOUSES TO THE DISTRICT.