A-53811, JANUARY 16, 1936, 15 COMP. GEN. 614

A-53811: Jan 16, 1936

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THE CARRIER REQUESTED THE REMAINING 21 CENTS ON THE BASIS THAT THE RATE FROM PORTLAND TO PASCO WAS LIMITED BY TARIFF SO AS TO APPLY BETWEEN SAID POINTS ONLY VIA THE SPOKANE. IT WAS HELD THAT INSOFAR AS THE TARIFF MAY HAVE LIMITED THE APPLICATION OF THE RATE SO AS TO MAKE IT APPLY VIA THE SPOKANE. WERE PROPERLY SUBJECT TO DEDUCTION FOR LAND GRANT ON THE BASIS OF THE LAND-GRANT PERCENTAGE APPLICABLE VIA THE ORIGINAL AIDED LINE THROUGH TACOMA. TO THIS OFFICE STATED: AS THE AMOUNTS WE ARE OUTSTANDING ON THESE BILLS ARE SO SMALL. WE ARE ACCEPTING YOUR SETTLEMENT AS FINAL AND WITHDRAW OUR CLAIM FOR ADDITIONAL REVENUE. THESE AMOUNTS HAVE BEEN WRITTEN OFF OUR BOOKS AND OUR FILE IS HEREBY CLOSED.

A-53811, JANUARY 16, 1936, 15 COMP. GEN. 614

TRANSPORTATION - LAND-GRANT DEDUCTIONS - SUBSTITUTION FOR ORIGINAL LAND GRANT ROUTE THE SUBSTITUTION BY A RAILWAY COMPANY OF A DIFFERENT ROUTE BETWEEN CERTAIN POINTS FOR THE ORIGINAL LAND-GRANT ROUTE BETWEEN SAID POINTS DOES NOT OPERATE TO DEPRIVE THE GOVERNMENT OF THE RIGHT OF DEDUCTION FOR LAND GRANT ON THE BASIS OF THE LAND-GRANT RATIO APPLICABLE TO THE ORIGINAL ROUTE.

COMPTROLLER GENERAL MCCARL TO THE SPOKANE, PORTLAND, AND SEATTLE RAILWAY CO., JANUARY 16, 1936:

YOUR LETTER OF NOVEMBER 18, 1935, REQUESTED RECONSIDERATION OF DECISION OF FEBRUARY 13, 1934, WHICH DISALLOWED A CLAIM FOR 21 CENTS FOR TRANSPORTATION OF A SHIPMENT FROM LOS ANGELES, CALIF., TO PASCO, WASH.,UNDER BILL OF LADING A-384740, SEPTEMBER 2, 1932. THE CARRIER ORIGINALLY CLAIMED $9.21 ON THE BASIS OF A COMBINATION OF RATES TO AND BEYOND TACOMA, WASH., LESS LAND GRANT VIA SAID ROUTE. THE DISBURSING CLERK PAID $9 ON THE BASIS OF A COMBINATION OF RATES TO AND BEYOND PORTLAND, OREG.; THE PORTLAND-PASCO FACTOR BEING SUBJECT TO LAND-GRANT DEDUCTION OF 50 PERCENT AS VIA THE NORTHERN PACIFIC LAND-GRANT LINE BETWEEN SAID POINTS. THE CARRIER REQUESTED THE REMAINING 21 CENTS ON THE BASIS THAT THE RATE FROM PORTLAND TO PASCO WAS LIMITED BY TARIFF SO AS TO APPLY BETWEEN SAID POINTS ONLY VIA THE SPOKANE, PORTLAND AND SEATTLE RY. WHICH HAD BEEN CONSTRUCTED WITHOUT AID OF CONDITIONAL LAND GRANTS. DECISION OF FEBRUARY 13, 1934, IT WAS HELD THAT INSOFAR AS THE TARIFF MAY HAVE LIMITED THE APPLICATION OF THE RATE SO AS TO MAKE IT APPLY VIA THE SPOKANE, PORTLAND AND SEATTLE RY. ONLY AND NOT VIA THE LAND-GRANT LINE OF THE NORTHERN PACIFIC RY. VIA TACOMA, WASH., IT MUST BE VIEWED THAT THE SPOKANE, PORTLAND AND SEATTLE RY. BEING A LINE USED IN LIEU OF THE NORTHERN PACIFIC LAND-GRANT LINE BETWEEN PORTLAND AND PASCO VIA TACOMA THE CHARGES VIA THE SPOKANE, PORTLAND AND SEATTLE RY. WERE PROPERLY SUBJECT TO DEDUCTION FOR LAND GRANT ON THE BASIS OF THE LAND-GRANT PERCENTAGE APPLICABLE VIA THE ORIGINAL AIDED LINE THROUGH TACOMA, WASH., CITING 3 COMP. GEN. 267. THE CARRIER THEN BY LETTER OF FEBRUARY 21, 1934, TO THIS OFFICE STATED:

AS THE AMOUNTS WE ARE OUTSTANDING ON THESE BILLS ARE SO SMALL, WE ARE ACCEPTING YOUR SETTLEMENT AS FINAL AND WITHDRAW OUR CLAIM FOR ADDITIONAL REVENUE. WE DO NOT, HOWEVER, ACCEPT THIS AS A PRECEDENT FOR ANY FUTURE SETTLEMENTS OF LIKE NATURE AND SHALL INSIST THAT RATES VIA NO.PAC.RY. BE USED WHEN USING THAT LINE'S LAND GRANT. THESE AMOUNTS HAVE BEEN WRITTEN OFF OUR BOOKS AND OUR FILE IS HEREBY CLOSED.

IT APPEARS THEREFORE THAT THE CLAIM FOR 21 CENTS INVOLVED IN THE DECISION IS PROPERLY CONSIDERED AS CLOSED, NOTWITHSTANDING WHICH, YOUR LETTER OF NOVEMBER 18, 1935, REQUESTS FURTHER CONSIDERATION WHICH WILL BE ACCORDED INASMUCH AS THE QUESTION INVOLVED IS ONE OF RECURRING APPLICATION IN CONNECTION WITH OTHER SHIPMENTS.

BY THE ACT OF JULY 2, 1864, 13 STAT. 365, THE NORTHERN PACIFIC R.R.CO., THE PREDECESSOR OF THE NORTHERN PACIFIC RY.CO., WAS AUTHORIZED "TO LAY OUT, LOCATE, CONSTRUCT, FURNISH, MAINTAIN, AND ENJOY A CONTINUOUS RAILROAD AND TELEGRAPH LINE" FROM A POINT ON LAKE SUPERIOR IN THE STATE OF MINNESOTA, OR WISCONSIN, TO A POINT ON PUGET SOUND VIA THE MOST ELIGIBLE RAILROAD ROUTE, AS SHOULD BE DETERMINED BY THE COMPANY, WITHIN THE TERRITORY OF THE UNITED STATES, ON A LINE NORTH OF THE FORTY-FIFTH DEGREE OF LATITUDE. SAID ACT MADE EXTENSIVE GRANTS OF LAND TO AID IN THE CONSTRUCTION OF SAID RAILROAD AND TELEGRAPH LINE AND "TO SECURE THE SAFE AND SPEEDY TRANSPORTATION OF THE MAILS, TROOPS, MUNITIONS OF WAR, AND PUBLIC STORES OVER THE ROUTE OF SAID LINE OF RAILWAY.' THE OBJECT OF THE ACT WAS STATED IN SECTION 20 TO BE "TO PROMOTE THE PUBLIC INTEREST AND WELFARE BY THE CONSTRUCTION OF SAID RAILROAD AND TELEGRAPH LINE AND KEEPING THE SAME IN WORKING ORDER AND TO SECURE TO THE GOVERNMENT AT ALL TIMES (BUT PARTICULARLY IN TIME OF WAR) THE USE AND BENEFITS OF THE SAME FOR POSTAL, MILITARY, AND OTHER PURPOSES," AND SECTION 11 PROVIDED:

THAT SAID NORTHERN PACIFIC RAILROAD, OR ANY PART THEREOF, SHALL BE A POST ROUTE AND A MILITARY ROAD, SUBJECT TO THE USE OF THE UNITED STATES, FOR POSTAL, MILITARY, NAVAL, AND ALL OTHER GOVERNMENT SERVICE, AND ALSO SUBJECT TO SUCH REGULATIONS AS CONGRESS MAY IMPOSE RESTRICTING THE CHARGES FOR SUCH GOVERNMENT TRANSPORTATION.

BY JOINT RESOLUTION OF APRIL 10, 1869, 16 STAT. 57, THE COMPANY WAS AUTHORIZED---

* * * TO EXTEND ITS BRANCH LINE FROM A POINT AT OR NEAR PORTLAND, OREGON, TO SOME SUITABLE POINT ON PUGET SOUND * * * AND ALSO TO CONNECT THE SAME WITH ITS MAIN LINE WEST OF THE CASCADE MOUNTAINS IN THE TERRITORY OF WASHINGTON; SAID EXTENSION BEING SUBJECT TO ALL THE CONDITIONS AND PROVISIONS * * * CONFERRED BY THE ACT INCORPORATING SAID COMPANY * * *.

PURSUANT TO THE AUTHORITY THUS CONFERRED AND WITH THE AID OF GRANTS OF LANDS SO MADE A RAILROAD LINE WAS CONSTRUCTED BETWEEN THE POINTS NOTED, AS A CONSEQUENCE OF WHICH THERE BECAME AVAILABLE BETWEEN SPOKANE, WASH., AND PORTLAND, OREG.; FACILITIES FOR TRANSPORTATION VIA THE AIDED LINE CONSTRUCTED THROUGH TACOMA, WASH. IN ACCORDANCE WITH THE SUBSEQUENT LEGISLATION CHARGES FOR THE TRANSPORTATION OF GOVERNMENT PROPERTY OVER SAID LINE WERE RESTRICTED TO 50 PERCENT OF THE CHARGES APPLICABLE FOR LIKE SERVICE TO THE PUBLIC AT LARGE. ACT OF JUNE 7, 1924, 43 STAT. 477, 486.

PRIOR TO OCTOBER 1, 1910, THERE WERE AVAILABLE VIA THE NORTHERN PACIFIC LAND-GRANT LINE THROUGH PASCO AND TACOMA, WASH., THROUGH RATES TO PORTLAND, OREG., WHICH WERE THE SAME AS THROUGH RATES FROM THE SAME POINTS VIA THE NORTHERN PACIFIC RY. TO PASCO AND THE SPOKANE, PORTLAND AND SEATTLE RY. BEYOND. AFTER THE ACQUISITION AND CONTROL OF THE SPOKANE, PORTLAND AND SEATTLE RY. BY THE NORTHERN PACIFIC RY. AND GREAT NORTHERN RY., HOWEVER, THE TARIFFS WERE CHANGED SO AS TO ELIMINATE THE APPLICATION, IN CERTAIN INSTANCES AT LEAST, OF THE THROUGH RATES VIA THE NORTHERN PACIFIC LAND-GRANT LINE THROUGH TACOMA. THE RESULT, THEREFORE, WAS THE SUBSTITUTION OF THE SPOKANE, PORTLAND AND SEATTLE RY. FROM PASCO TO PORTLAND IN LIEU OF THE LAND GRANT LINE OF THE NORTHERN PACIFIC THROUGH TACOMA FOR TRANSPORTATION BETWEEN PASCO AND PORTLAND ON THE BASIS OF PUBLISHED THROUGH RATES. IN ACCORDANCE WITH THE LONG LINE OF DECISIONS OF THE ACCOUNTING OFFICERS, DATING AS FAR BACK AS 1888 AND SUSTAINED SUBSEQUENTLY IN UNITED STATES V. THE NORTHERN PACIFIC RY.CO., 30 FED./2D) 655 (REHEARING DENIED 30 FED./2D) 698) TO THE EFFECT THAT WHERE A LAND GRANT ROUTE IS ESTABLISHED AND MADE SUBJECT TO DEDUCTION FOR GOVERNMENT TRANSPORTATION, AN ALTERNATE ROUTE ESTABLISHED BY THE SAME COMPANY IS SUBJECT TO DEDUCTION ON ACCOUNT OF LAND GRANT ACCORDING TO THE LAND-GRANT RATIO ESTABLISHED UPON THE ORIGINAL COMPLETION OF THE ROAD, THE COMPTROLLER OF THE TREASURY IN APPEAL NO. 30399, FEBRUARY 6, 1920, DECIDED THAT THE RATE PUBLISHED BY TARIFF AS APPLICABLE VIA THE SPOKANE, PORTLAND AND SEATTLE RY. FROM PASCO TO PORTLAND IN CONNECTION WITH A SHIPMENT ORIGINATING AT PENDLETON, OREG., WAS SUBJECT TO DEDUCTION FOR LAND GRANT ON THE BASIS OF THE LAND-GRANT RATIO VIA THE NORTHERN PACIFIC RY. FROM PASCO TO PORTLAND THROUGH TACOMA. LIKEWISE IN 3 COMP. GEN. 267, IT WAS HELD WITH RESPECT TO A SHIPMENT FROM SPOKANE, WASH., TO ROSEBURG, OREG., THAT A TARIFF PROVISION RESTRICTING APPLICATION OF THE THROUGH RATE SO AS TO MAKE IT APPLICABLE VIA THE NORTHERN PACIFIC TO PASCO AND THE SPOKANE, PORTLAND AND SEATTLE TO PORTLAND BUT NOT VIA THE NORTHERN PACIFIC LAND- GRANT LINE FROM PASCO TO PORTLAND THROUGH TACOMA COULD NOT OPERATE TO DEPRIVE THE GOVERNMENT OF THE RIGHT TO DEDUCTION FOR LAND GRANT ON THE BASIS OF THE LAND GRANT RATIO APPLICABLE VIA THE NORTHERN PACIFIC THROUGH TACOMA. THAT DECISION WAS FOLLOWED IN THE INSTANT MATTER AS NOTED IN THE DECISION OF FEBRUARY 13, 1934.

THE PRESENT SUBMISSION URGES THAT THE SPOKANE, PORTLAND AND SEATTLE RY., ALTHOUGH ITS CAPITAL STOCK IS JOINTLY OWNED BY THE NORTHERN PACIFIC AND GREAT NORTHERN RAILWAY COMPANIES IS INDEPENDENTLY OPERATED, MAKES ITS OWN RATES, AND REPORTS TO THE INTERSTATE COMMERCE COMMISSION EXACTLY AS DO OTHER RAILWAY COMPANIES WHICH HAVE A GREAT NUMBER OF STOCKHOLDERS; THAT ITS INDEPENDENT OPERATION IS A PRACTICAL NECESSITY WHICH ARISES FROM THE ALLEGED CONFLICTING INTEREST OF THE TWO COMPANIES OWNING THE CAPITAL STOCK; AND THAT THERE IS NO BASIS FOR THE BELIEF THAT ITS LINE FROM SPOKANE TO PORTLAND IS OPERATED AS A PART OF THE NORTHERN PACIFIC R.R. OR AS A PART OF THE GREAT NORTHERN R.R.; THAT THE CASUAL REFERENCE IN CERTAIN REPORTS OF THE INTERSTATE COMMERCE COMMISSION TO THE EFFECT THAT THE SPOKANE, PACIFIC AND SEATTLE RY. IS PROPERLY TO BE CONSIDERED AS PART OF THE NORTHERN PACIFIC AND GREAT NORTHERN SYSTEMS OCCUR IN CONNECTION WITH GENERAL RATE ADJUSTMENTS AND THAT THE QUESTION OF THE EXTENT TO WHICH THE SPOKANE, PORTLAND AND SEATTLE RY. WAS SEPARATELY AND INDEPENDENTLY OPERATED WAS NOT PRESENTED.

THE FACT, HOWEVER, IF IT BE A FACT, THAT THE PHYSICAL OPERATION OF THE SPOKANE, PORTLAND AND SEATTLE RY. MAY BE ACCOMPLISHED THROUGH THE SERVICES OF ITS OWN EMPLOYEES AND EQUIPMENT AS DISTINGUISHED FROM THE EMPLOYEES AND EQUIPMENT OF THE PARENT COMPANIES DOES NOT REMOVE THE FACT THAT AS A CONSEQUENCE OF ITS PROPRIETARY INTERESTS IN THE SPOKANE, PORTLAND AND SEATTLE RY., THE NORTHERN PACIFIC RY. HAS ELIMINATED SERVICE OVER ITS LAND -GRANT LINE FROM PASCO TO PORTLAND ON THE BASIS OF PUBLISHED THROUGH RATES BETWEEN SAID POINTS AND HAS SUBSTITUTED IN LIEU OF SERVICE AT SAID RATES VIA SAID LINE SERVICE VIA THE SPOKANE, PORTLAND AND SEATTLE RY. AS A SUBSIDIARY. IN OTHER WORDS, WHATEVER MAY BE THE EXTENT OF THE INDEPENDENT OPERATION OF THE SPOKANE, PORTLAND AND SEATTLE RY. AS A SEPARATE CORPORATE ENTITY SUCH SEPARATE OPERATION DOES NOT GO TO THE EXTENT OF MAKING SAID LINE COMPETITIVE WITH THE NORTHERN PACIFIC BETWEEN THE ABOVE-MENTIONED POINTS. THAT THIS IS TRUE APPEARS EVIDENT FROM THE FOLLOWING QUOTATION FROM THE GENERAL FREIGHT AGENT OF THE NORTHERN PACIFIC RY., APPEARING IN A RECONSIDERATION OF APPEAL 30399, APRIL 6, 1920, BY THE COMPTROLLER OF THE TREASURY:

IN 1910 THERE WERE TWO ROUTES FROM PASCO AND WALLULA JCT. TO PORTLAND, ONE VIA THE DIRECT LINE OF THE OREGON RAILWAY AND NAVIGATION COMPANY AND THE OTHER VIA THE INDIRECT LINE OF THE NORTHERN PACIFIC VIA TACOMA. THE APPLICATION OF THE SAME RATE IN 1910 FROM PASCO TO PORTLAND VIA TACOMA AS MADE VIA THE DIRECT LINE OF THE O.R.R. AND N. WAS ON A SUBNORMAL BASIS AND MADE TO MEET THE COMPETITIVE RATES ON THE OREGON RAILWAY AND NAVIGATION CO. AFTER THE COMPLETION OF THE SPOKANE, PORTLAND AND SEATTLE RY. FROM PASCO TO PORTLAND, THE NORTHERN PACIFIC USED THE LATTER ROUTE AND CANCELLED THE RATE VIA THE INDIRECT ROUTE THROUGH TACOMA. HAD WE NOT VOLUNTARILY ELECTED TO MEET THE RATE OF THE DIRECT LINE IN 1910, THE GOVERNMENT WOULD HAVE PAID THE FULL TARIFF RATE VIA TACOMA TO PORTLAND LESS LAND GRANT DEDUCTION AND THE RATE BEYOND OR THE FULL TARIFF RATE WALLULA JCT.

ON THE QUESTION OF THE ALLEGED CONFLICTING INTEREST OF THE NORTHERN PACIFIC AND GREAT NORTHERN AS JOINT OWNERS, THERE IS FOR CONSIDERATION THE COMMON PURPOSE OF THE TWO LINES IN ACQUIRING THE SPOKANE, PORTLAND AND SEATTLE RY.'TO INCREASE THEIR CAPACITY FOR HANDLING TRAFFIC BETWEEN SPOKANE AND THE PACIFIC COAST AND TO SECURE A MORE DIRECT AND CONVENIENT ENTRANCE TO THE CITY OF PORTLAND THAN THEY HAD" AND THE FOLLOWING APPEARING IN 59 I.C.C. 321, 341:

* * * IN THIS CONNECTION IT MAY BE OBSERVED THAT WHILE THE SPOKANE, PORTLAND AND SEATTLE DOES NOT REACH PUGET SOUND, AND WHILE THE GREAT NORTHERN DOES NOT REACH PORTLAND, THE SPOKANE, PORTLAND AND SEATTLE IS CONTROLLED JOINTLY BY THE GREAT NORTHERN AND THE NORTHERN PACIFIC, AND THE VICE-PRESIDENT OF THE NORTHERN PACIFIC TESTIFIED THAT IT IS USED BY THESE COMPANIES "AS THEY WOULD USE THEIR OWN LINE.' IN PORTLAND CHAMBER OF COMMERCE V. O.R.R. AND N. CO., 19 I.C.C. 265, 283, WE SAID THAT THE SPOKANE, PORTLAND AND SEATTLE "MUST PROPERLY BE CONSIDERED A PART OF THE NORTHERN PACIFIC AND GREAT NORTHERN SYSTEMS RATHER THAN AS AN INDEPENDENT LINE," AND IT WAS SO CONSIDERED IN THE SECOND ASTORIA CASE.

IN VIEW OF THESE FACTS IT APPEARS EVIDENT THAT THE LINE OF THE SPOKANE, PORTLAND AND SEATTLE RY. FROM PASCO TO PORTLAND IS USED AS A SUBSTITUTE IN LIEU OF THE NORTHERN PACIFIC LAND-GRANT LINE BETWEEN SAID POINTS VIA TACOMA AND AS SO USED IS TO BE REGARDED AS SUBJECT TO DEDUCTION FOR LAND GRANT ON THE SAME PERCENTAGE BASIS AS IS APPLICABLE BETWEEN SAID POINTS VIA THE NORTHERN PACIFIC LAND-GRANT LINE THROUGH TACOMA. SEE UNITED STATES V. NORTHERN PACIFIC RAILWAY, SUPRA. THE CASE OF THE NORTHERN PACIFIC RAILWAY COMPANY V. ADAMS COUNTY ET AL., 1 FED.SUPP. 163, CITED IN CONNECTION WITH THE PRESENT SUBMISSION, HAS BEEN EXAMINED BUT THE FACT THAT THE PROPERTY OF THE SPOKANE, PORTLAND AND SEATTLE RY.CO. WAS HELD THEREIN PROPERLY FOR CONSIDERATION SEPARATELY AND APART FROM THE PROPERTY OF THE PARENT COMPANIES FOR TAX ASSESSMENT PURPOSES IS NOT VIEWED AS MATERIAL IN THE PRESENT MATTER.