A-24208, AUGUST 30, 1928, 8 COMP. GEN. 96

A-24208: Aug 30, 1928

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SUCH DISPUTES ARE TO BE DETERMINED IN ACCORDANCE WITH THE STATUTES FOR THE SETTLEMENT OF DISPUTES WITH THE UNITED STATES. 1928: THERE IS BEFORE THIS OFFICE FOR CONSIDERATION AN OPTION AGREEMENT NO. IS AUTHORIZED. * * * IT WILL BE NOTED THAT THE TERMS OF THE STATUTE DO NOT SPECIFICALLY AUTHORIZE THE DETERMINATION OF THE RIGHTS OF THE UNITED STATES BY A BOARD OF ARBITRATION. " IS SUFFICIENT TO AUTHORIZE A PROVISION IN CONTRACTS WITH THE GAS PRODUCING COMPANY FOR THE APPOINTMENT OF A BOARD OF ARBITRATORS. THIS VIEW IS NOT CORRECT. WHEREIN IT IS POINTED OUT THAT UNDER SECTION 3681. BOARDS OF ARBITRATION ARE PROHIBITED IN THE DETERMINATION OF THE RIGHTS OF THE UNITED STATES. A SIMILAR QUESTION WAS BEFORE THE CIRCUIT COURT FOR THE DISTRICT OF MASSACHUSETTS IN UNITED STATES.

A-24208, AUGUST 30, 1928, 8 COMP. GEN. 96

CONTRACTS - DISPUTES - BOARDS OF ARBITRATION THE ACT OF FEBRUARY 15, 1928, 45 STAT. 104, FOR THE ACQUISITION OF LEASES, SITES, AND RIGHTS OF WAY "UNDER TERMS CUSTOMARY IN THE OIL AND GAS INDUSTRY" DOES NOT AUTHORIZE A STIPULATION IN CONTRACTS FOR THE SUBMISSION OF DISPUTES TO A BOARD OF ARBITRATION, BUT SUCH DISPUTES ARE TO BE DETERMINED IN ACCORDANCE WITH THE STATUTES FOR THE SETTLEMENT OF DISPUTES WITH THE UNITED STATES.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF COMMERCE, AUGUST 30, 1928:

THERE IS BEFORE THIS OFFICE FOR CONSIDERATION AN OPTION AGREEMENT NO. CIM -94, DATED MAY 17, 1927, AND AN OPERATING AGREEMENT NO. CIM-94, OF THE SAME DATE, BETWEEN WILLIAM P. MACCRACKEN, JR., ACTING SECRETARY OF COMMERCE, FOR AND ON BEHALF OF THE UNITED STATES, AND THE AMARILLO OIL CO., A CORPORATION ORGANIZED UNDER THE LAWS OF THE STATE OF TEXAS, MAKING PROVISION FOR "PROCESSING FOR HELIUM EXTRACTION THE HELIUM BEARING NATURAL GAS PRODUCED FROM THE AREA KNOWN AS THE CLIFF SIDE STRUCTURE," AND CONTAINING A PROVISION THAT IN EVENT OF DISAGREEMENT BETWEEN THE PARTIES AS TO THE FAIR MARKET VALUE OF CERTAIN GAS RIGHTS AND THE COST OF DRILLING WELLS, THE MATTER SHOULD BE DETERMINED BY AN ARBITRATION BOARD OF THREE MEMBERS, ONE MEMBER TO BE APPOINTED BY THE COMPANY, ONE MEMBER TO BE APPOINTED BY THE DEPARTMENT OF COMMERCE, AND THE THIRD TO BE CHOSEN BY THE TWO SO APPOINTED.

BY LETTER OF JULY 23, 1928, THIS OFFICE REQUESTED CITATION OF AUTHORITY FOR THIS STIPULATION IN THE CONTRACTS AND BY LETTER DATED JULY 26, 1928, THE ACTING DIRECTOR OF THE BUREAU OF MINES CITED A PROVISION IN THE ACT OF FEBRUARY 15, 1928, 45 STAT. 104, AS FOLLOWS:

* * * THE ACQUIREMENT OF LEASES, SITES, AND RIGHTS OF WAY UNDER TERMS CUSTOMARY IN THE OIL AND GAS INDUSTRY, INCLUDING OBLIGATIONS TO PAY RENTAL IN ADVANCE AND TO PAY DAMAGES TO LANDS, CROPS, AND STRUCTURES ARISING OUT OF THE GOVERNMENT'S OPERATIONS, IS AUTHORIZED. * * *

IT WILL BE NOTED THAT THE TERMS OF THE STATUTE DO NOT SPECIFICALLY AUTHORIZE THE DETERMINATION OF THE RIGHTS OF THE UNITED STATES BY A BOARD OF ARBITRATION. IT SEEMS TO BE THE VIEW OF THE DIRECTOR OF THE BUREAU OF MINES THAT THE PHRASE "UNDER TERMS CUSTOMARY IN THE OIL AND GAS INDUSTRY," IS SUFFICIENT TO AUTHORIZE A PROVISION IN CONTRACTS WITH THE GAS PRODUCING COMPANY FOR THE APPOINTMENT OF A BOARD OF ARBITRATORS. THIS VIEW IS NOT CORRECT. SEE 7 COMP. GEN. 541, WHEREIN IT IS POINTED OUT THAT UNDER SECTION 3681, REVISED STATUTES, AND SECTION 9 OF THE ACT OF MARCH 4, 1909, 35 STAT. 1027, BOARDS OF ARBITRATION ARE PROHIBITED IN THE DETERMINATION OF THE RIGHTS OF THE UNITED STATES. AS EARLY AS OCTOBER, 1845, A SIMILAR QUESTION WAS BEFORE THE CIRCUIT COURT FOR THE DISTRICT OF MASSACHUSETTS IN UNITED STATES, V. AMES, 24 FEDERAL CASES 785, 790. THE COURT THERE SAID:

IT IS OUR DUTY TO TAKE NOTICE THAT NO ACT OF CONGRESS HAS GRANTED ANY AUTHORITY TO ANY ARBITRATORS IN CASES LIKE THIS; AND HENCE, THOUGH THE FORMER DISTRICT ATTORNEY SPEAKS IN THE AWARD AS IF AUTHORIZED TO SUBMIT THIS CASE, HE DOUBTLESS MEANS THAT HE WAS "AUTHORIZED" BY THE SOLICITOR OF THE TREASURY OR WAR DEPARTMENT TO DO SO, AND NOT BY ANY SPECIAL LAW. WE ARE BOUND TO KNOW THAT NEITHER HE NOR THEY WERE AUTHORIZED BY ANY LAW FOR THAT PURPOSE, IT FOLLOWS, THAT ANY ARRANGEMENT BY THE SOLICITOR OF THE TREASURY, OR BY THE WAR DEPARTMENT, OR BY THE DISTRICT ATTORNEY, TO REFER SUCH A CLAIM, IS NOT BINDING. U.S. V. NICOLL (CASE NO. 15879). SUCH SUBMISSIONS AND AWARDS ARE SOMETIMES USEFUL, AS THEY MAY BE AFTERWARDS ACCEPTED AND VOLUNTARILY ENFORCED BY THE PROPER AUTHORITY, AS A GUIDE TO WHAT IS SUPPOSED TO BE NEARLY RIGHT AND SAFE; BUT I CAN SEE NO LEGAL GROUND ON WHICH THEIR EXECUTION CAN BE COMPELLED BY A COURT OF LAW. THE CASE OF THE DISPUTED TITLE TO THE PEA-PATCH IN THE DELAWARE BAY, IS FAMILIAR TO MANY OF US, WHERE A MOST INCONVENIENT DELAY HAS OCCURRED IN AUTHORIZING A REFERENCE OF THE DISPUTE BY A SPECIAL ACT OF CONGRESS, IT BEING CONCEDED ON ALL HANDS THAT NO AUTHORITY ALREADY EXISTED FOR MAKING SUCH A REFERENCE. * * *

AS POINTED OUT IN THE DECISION 7 COMP. GEN. 541, THE BUDGET AND ACCOUNTING ACT OF JUNE 10, 1921, 42 STAT. 23, 27, HAS MADE AMPLE PROVISION FOR THE DETERMINATION OF CLAIMS AGAINST THE UNITED STATES ARISING OUT OF CONTRACTS AND WHERE SUCH DETERMINATIONS ARE NOT SATISFACTORY TO CLAIMANTS, THE JUDICIAL CODE, MARCH 3, 1911, 36 STAT. 1135-1143, HAS MADE PROVISION FOR THE INSTITUTION OF SUITS AGAINST THE UNITED STATES FOR JUDICIAL DETERMINATION OF CLAIMS. IN VIEW OF THESE SPECIFIC STATUTES AND THE DECISIONS OF THE COURTS AS TO THE LACK OF AUTHORITY IN ADMINISTRATIVE OFFICERS OF THE GOVERNMENT TO AGREE TO THE APPOINTMENT OF BOARDS OF ARBITRATION TO DETERMINE THE CONTRACT OR OTHER RIGHTS OF THE UNITED STATES, IT MUST BE CONCLUDED THAT THE GENERAL LANGUAGE IN THE ACT OF FEBRUARY 15, 1928, FOR THE ACQUISITION OF LEASES, ETC., "UNDER TERMS CUSTOMARY IN THE OIL AND GAS INDUSTRY" DOES NOT AUTHORIZE A STIPULATION IN CONTRACTS WITH GAS-PRODUCING COMPANIES FOR THE APPOINTMENT OF BOARDS OF ARBITRATION. IT MAY BE SAID THAT BOARDS OF ARBITRATION ARE FREQUENTLY PROVIDED FOR IN VARIOUS KINDS OF CONTRACTS BETWEEN PRIVATE PARTIES AND THAT SOME OF THE STATES HAVE ENACTED STATUTES FOR THE APPOINTMENT OF ARBITRATORS AND THE ENFORCEMENT OF THEIR AWARDS BUT IT CAN NOT BESAID THAT SUCH A CUSTOM AFFORDS ANY AUTHORITY FOR THE ESTABLISHING OF BOARDS OF ARBITRATION TO DETERMINE THE RIGHTS OF THE GOVERNMENT UNDER CONTRACTS GENERALLY, AND THE ACT OF FEBRUARY 15, 1928, DOES NOT AUTHORIZE THE APPOINTMENT OF BOARDS OF ARBITRATORS TO DETERMINE THE RIGHTS OF THE UNITED STATES UNDER LEASES OF OIL AND GAS LANDS.

ACCORDINGLY, YOU ARE ADVISED THAT SHOULD ANY DISPUTES ARISE BETWEEN THE DEPARTMENT OF COMMERCE AND THE AMARILLO OIL CO. SUCH DISPUTES SHOULD NOT BE SUBMITTED TO A BOARD OF ARBITRATION BUT SHOULD BE SUBMITTED TO THIS OFFICE FOR SETTLEMENT OR THE PARTIES PERMITTED TO PROCEED TO A JUDICIAL DETERMINATION THEREOF.