A-70176, MARCH 23, 1936, 15 COMP. GEN. 832

A-70176: Mar 23, 1936

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ARE AUTOMATICALLY INVALIDATED BY SECTION 12 OF THE BITUMINOUS COAL CONSERVATION ACT OF 1935. IF THE PRICES THEREUNDER ARE BELOW THE MINIMUM PRICE FOR CURRENT SALE AS AT MAY 27. BIDS WERE RETURNABLE TO THE OFFICE OF THE QUARTERMASTER. ON 23D JULY 1935 AWARD AND CONTRACT NOM. 18704 WAS MADE TO THE LOGAN AND KANAWHA COAL COMPANY COVERING TWO ITEMS OF COAL UNDER THIS SCHEDULE FOR SHIPMENT TO THE MARINE BARRACKS. SHIPMENTS OF COAL UNDER THIS CONTRACT COMMENCED 27 JULY AND HAVE SINCE CONTINUED AT A RATE OF APPROXIMATELY SIX TO TWELVE CARLOADS PER WEEK AS LOCAL REQUIREMENTS DICTATED. REQUESTING THAT AN AFFIDAVIT BE FURNISHED TO SUPPORT VOUCHERS FOR PAYMENT OF COAL DELIVERED UNDER THIS CONTRACT TO SHOW THAT THERE WERE NO VIOLATIONS OF THE ABOVE REFERRED TO SECTION 12 OF THE GUFFEY LAW.

A-70176, MARCH 23, 1936, 15 COMP. GEN. 832

COAL CONTRACTS - BITUMINOUS COAL CONSERVATION ACT, 1935 - MINIMUM PRICE PROVISION SECTION 12 OF THE BITUMINOUS COAL CONSERVATION ACT OF 1935, 49 STAT. 1006, PROVIDING, WITH CERTAIN EXCEPTIONS ENUMERATED THEREIN, THAT NO COAL MAY BE DELIVERED UNDER A CONTRACT MADE PRIOR TO THE EFFECTIVE DATE OF THE ACT AT A PRICE BELOW THE MINIMUM PRICE AT THE TIME OF DELIVERY AS ESTABLISHED PURSUANT TO PART II OF SECTION 4 OF SAID ACT, APPLIES TO PRICES AND CONTRACTS OF PRODUCERS ONLY. COAL CONTRACTS WITH PRODUCERS MADE SUBSEQUENT TO OCTOBER 2, 1933, AND PRIOR TO AUGUST 30, 1935, ARE AUTOMATICALLY INVALIDATED BY SECTION 12 OF THE BITUMINOUS COAL CONSERVATION ACT OF 1935, 49 STAT. 1006, IF THE PRICES THEREUNDER ARE BELOW THE MINIMUM PRICE FOR CURRENT SALE AS AT MAY 27, 1935, UNDER THE FORMER BITUMINOUS COAL CODE PURSUANT TO THE NATIONAL INDUSTRIAL RECOVERY ACT, AND ALSO BELOW THE MINIMUM PRICE ESTABLISHED UNDER THE BITUMINOUS COAL CONSERVATION ACT.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF THE NAVY, MARCH 23, 1936:

CONSIDERATION HAS BEEN GIVEN YOUR REQUEST OF JANUARY 16, 1936, FOR DECISION ON QUESTIONS STATED IN LETTER OF JANUARY 10, 1936, FROM THE MAJOR GENERAL COMMANDANT, UNITED STATES MARINE CORPS, AS FOLLOWS:

EARLY IN JULY 1935 THE QUARTERMASTER, MARINE CORPS, ADVERTISED UNDER SCHEDULE NO. 30 FOR BIDS COVERING CERTAIN ITEMS OF BITUMINOUS COAL FOR DELIVERY TO MARINE CORPS STATIONS. BIDS WERE RETURNABLE TO THE OFFICE OF THE QUARTERMASTER, WASHINGTON, D.C., ON OR BEFORE 11:00 O-CLOCK, 15 JULY 1935. ON THE BASIS OF THE OPENING OF THE BIDS RECEIVED UNDER THIS SCHEDULE, ON 23D JULY 1935 AWARD AND CONTRACT NOM. 18704 WAS MADE TO THE LOGAN AND KANAWHA COAL COMPANY COVERING TWO ITEMS OF COAL UNDER THIS SCHEDULE FOR SHIPMENT TO THE MARINE BARRACKS, PARRIS ISLAND, S.C., PRICE BASED ON F.O.B. MINES. SHIPMENTS OF COAL UNDER THIS CONTRACT COMMENCED 27 JULY AND HAVE SINCE CONTINUED AT A RATE OF APPROXIMATELY SIX TO TWELVE CARLOADS PER WEEK AS LOCAL REQUIREMENTS DICTATED.

SECTION 12 OF PUBLIC ACT 402, APPROVED AUGUST 30, 1935, KNOWN AS THE "GUFFEY ACT," READS AS FOLLOWS:

"NO COAL MAY BE DELIVERED UPON A CONTRACT MADE PRIOR TO THE EFFECTIVE DATE OF THIS ACT AT A PRICE BELOW THE MINIMUM PRICE AT THE TIME OF DELIVERY UPON SUCH CONTRACT, AS ESTABLISHED PURSUANT TO PART II OF SECTION 4 OF THIS ACT, AND SUCH CONTRACT SHALL BE INVALID AND UNENFORCEABLE: PROVIDED, THAT THIS PROHIBITION SHALL NOT APPLY (A) TO A LAWFUL AND BONA FIDE WRITTEN CONTRACT ENTERED INTO PRIOR TO OCTOBER 2, 1933; NOR (B) TO A LAWFUL AND BONA FIDE WRITTEN CONTRACT ENTERED INTO SUBSEQUENT TO THAT DATE AND PRIOR TO MAY 27, 1935, AT NOT LESS THAN THE MINIMUM PRICE CURRENT AS PUBLISHED UNDER THE CODE OF FAIR COMPETITION FOR THE BITUMINOUS COAL INDUSTRY, PURSUANT TO THE NATIONAL INDUSTRIAL RECOVERY ACT, AT THE TIME OF MAKING OF SUCH CONTRACT; NOR (C) TO A LAWFUL AND BONA FIDE WRITTEN CONTRACT ENTERED INTO ON OR AFTER MAY 27, 1935, AND PRIOR TO THE DATE OF THE APPROVAL OF THIS ACT, AT NOT LESS THAN THE MINIMUM PRICE FOR CURRENT SALE AS PUBLISHED UNDER SAID CODE OF FAIR COMPETITION, AS AT MAY 27, 1935.'

ON 7 NOVEMBER, THE DISBURSING ASSISTANT QUARTERMASTER, MARINE CORPS, ADDRESSED A LETTER TO THE CONTRACTOR (THE LOGAN AND KANAWHA COAL COMPANY), REQUESTING THAT AN AFFIDAVIT BE FURNISHED TO SUPPORT VOUCHERS FOR PAYMENT OF COAL DELIVERED UNDER THIS CONTRACT TO SHOW THAT THERE WERE NO VIOLATIONS OF THE ABOVE REFERRED TO SECTION 12 OF THE GUFFEY LAW. REPLYING TO THIS REQUEST, THE LOGAN AND KANAWHA COAL COMPANY ON 8 NOVEMBER STATED THAT AS THE INVITATION FOR BIDS FOR THIS COAL WAS ISSUED AFTER THE ANNULMENT OF THE N.R.A. ON 27TH MAY, AT A PERIOD WHEN NO CODE PRICES WERE IN EFFECT, THE PRICES STATED IN THE CONTRACT WERE BELOW THE MINIMUM CODE PRICES EFFECTIVE PRIOR TO MAY 27TH, AND STATED FURTHER THAT THE CONTRACTOR WAS WILLING TO AMEND HIS CONTRACT ON THE BASIS OF CODE PRICES IN EFFECT PRIOR TO MAY 27TH. REPLYING TO THIS LETTER, ON 11TH NOVEMBER 1935 THE CONTRACTOR WAS REQUESTED TO SUBMIT A DEFINITE STATEMENT AS TO WHETHER OR NOT THE PRICES COVERED IN THE CONTRACT ARE LESS THAN THE MINIMUM PRICES FOR CURRENT SALE AS PUBLISHED UNDER THE CODE OF FAIR COMPETITION AS OF 27TH MAY 1935. REPLYING TO THIS LATTER REQUEST, ON 19TH DECEMBER THE CONTRACTOR STATED SPECIFICALLY THAT THE PRICES NAMED IN THE CONTRACT WERE BELOW THOSE FORMERLY AUTHORIZED UNDER THE BITUMINOUS COAL CODE AND FURTHER STATED THAT,"NOTWITHSTANDING, THERE WAS NO GOVERNMENTAL REGULATION AS TO PRICE AND WE WERE DULY AWARDED THE BUSINESS. MERELY BECAUSE OF SUBSEQUENT FEDERAL REGULATION WE CANNOT CONSIDER CANCELLATION OF CONTRACT WHICH WAS AWARDED TO .'

THE ADVERTISEMENT FOR BIDS HAVING BEEN ISSUED SUBSEQUENT TO MAY 27, 1935, AND CONTRACT MADE PRIOR TO AUGUST 30TH, 1935, THE CASE IN QUESTION IS COVERED IN SECTION 12 OF PUBLIC ACT 402 ABOVE QUOTED, READING AS FOLLOWS:

"NOR (C) TO A LAWFUL AND BONA FIDE WRITTEN CONTRACT ENTERED INTO ON OR AFTER MAY 27, 1935, AND PRIOR TO THE DATE OF THE APPROVAL OF THIS ACT, AT NOT LESS THAN THE MINIMUM PRICE FOR CURRENT SALE AS PUBLISHED UNDER SAID CODE OF FAIR COMPETITION, AS AT MAY 27, 1935.'

THE CONTRACT HEREIN MENTIONED IS CONSIDERED TO BE A LEGAL CONTRACT BETWEEN THE UNITED STATES GOVERNMENT AND THE LOGAN AND KANAWHA COAL COMPANY, HAVING BEEN DULY EXECUTED. THE PERIOD UNDER WHICH COAL IS TO BE DELIVERED UNDER THIS CONTRACT RUNS FROM DATE OF CONTRACT TO JUNE 30, 1936, DELIVERIES RUNNING CURRENT TO REQUIREMENTS AT THE RATE OF FROM SIX TO TWELVE CARLOADS PER WEEK. THE SUPPLY OF COAL CARRIED ON HAND AT THE POWER PLANT, MARINE BARRACKS, PARRIS ISLAND, S.C., IS NOT MORE THAN FROM THIRTY TO SIXTY DAYS. THEREFORE AN EARLY DECISION IS REQUESTED ON THE FOLLOWING:

(A) IS THE MARINE CORPS AUTHORIZED TO RECEIVE, AND PAY THE CONTRACTOR FOR, COAL UNDER THIS CONTRACT AT THE PRICES STATED IN THE CONTRACT?

(B) SHOULD THE QUARTERMASTER, UNDER THE LAW, CANCEL THE CONTRACT AND RE- ADVERTISE FOR THE COAL REQUIREMENTS COVERED BY THIS CONTRACT AND MAKE A NEW CONTRACT PRESUMABLY AT A HIGHER PRICE THAN STIPULATED IN THE EXISTING CONTRACT?

(C) IS THE QUARTERMASTER AUTHORIZED TO AMEND THE EXISTING CONTRACT TO INCREASE THE PRICE PER TON TO THAT OF THE PRICE STATED IN THE CODE OF FAIR COMPETITION PRIOR TO MAY 27TH, 1935, FOR THIS PARTICULAR KIND OF COAL?

2. COPIES OF SCHEDULE NO. 30, LETTER OF AWARD OF 23 JULY 1935 AND CONTRACT NOM-18704, TOGETHER WITH COPIES OF THE CORRESPONDENCE ABOVE REFERRED TO, ARE INCLOSED HEREWITH FOR THE INFORMATION OF THE COMPTROLLER GENERAL.

THE BITUMINOUS COAL CONSERVATION ACT OF 1935, APPROVED AUGUST 30, 1935, 49 STAT. 991, RELATES PRIMARILY TO PRODUCERS OF BITUMINOUS COAL. THE CODE TO BE FORMULATED UNDER SECTION 4 IS A PRODUCERS' CODE, AND THE PRICES, MINIMUM AND MAXIMUM, TO BE ESTABLISHED UNDER PART II OF SAID SECTION ARE PRODUCERS' PRICES. SECTION 12, QUOTED IN LETTER OF THE MAJOR GENERAL COMMANDANT, PROVIDES THAT WITH THE EXCEPTIONS THEREIN ENUMERATED NO COAL MAY BE DELIVERED UPON A CONTRACT MADE PRIOR TO THE EFFECTIVE DATE OF THE ACT AT A PRICE BELOW THE MINIMUM PRICE AT THE TIME OF DELIVERY UPON SUCH CONTRACT AS ESTABLISHED PURSUANT TO PART II OF SECTION 4, AND THAT SUCH CONTRACTS SHALL BE INVALID AND UNENFORCEABLE. MANIFESTLY, THIS PROHIBITION LIKEWISE APPLIES AND HAS REFERENCE TO PRICES AND CONTRACTS OF PRODUCERS, ONLY, AND DOES NOT PRECLUDE CONTINUANCE OF GOVERNMENT CONTRACTS ENTERED INTO PRIOR TO AUGUST 30, 1935, WITH INDEPENDENT DEALERS WHO ARE NOT PRODUCERS--- BONA FIDE BROKERS, JOBBERS, COMMISSION MERCHANTS, WHOLESALERS OR RETAILERS--- REGARDLESS OF THE PRICES NAMED THEREIN.

EVEN IN THE CASE OF CONTRACTS WITH PRODUCERS MADE SUBSEQUENT TO OCTOBER 2, 1933, AND PRIOR TO AUGUST 30, 1935, THE FACT THAT THE CONTRACT PRICES ARE BELOW THE MINIMUM PRICE PUBLISHED UNDER THE CODE OF FAIR COMPETITION PURSUANT TO THE NATIONAL INDUSTRIAL RECOVERY ACT WILL NOT BE PERTINENT UNLESS IT FIRST APPEARS THAT SUCH CONTRACT PRICES ARE BELOW THE MINIMUM PRICES ESTABLISHED PURSUANT TO THE PROVISIONS OF THE BITUMINOUS COAL CONSERVATION ACT OF 1935.

IN THE EVENT THE LOGAN AND KANAWHA COAL COMPANY IS IN FACT THE MERE SELLING AGENT OF THE PRODUCER, AS INDICATED IN THE CONTRACT, RATHER THAN AN INDEPENDENT DEALER, IT WILL BE NECESSARY UPON THE ESTABLISHMENT OF MINIMUM PRICES PURSUANT TO THE ACT TO DETERMINE WHETHER THE PRICES FIXED IN THE CONTRACT OF JULY 24, 1935, ARE BELOW SUCH MINIMUM PRICES, AND IF SO, AND THE CONTRACT PRICES ARE IN FACT BELOW, ALSO, THE MINIMUM PRICE FOR CURRENT SALE AS AT MAY 27, 1935, UNDER THE FORMER BITUMINOUS COAL CODE PURSUANT TO THE NATIONAL INDUSTRIAL RECOVERY ACT, THE CONTRACT WILL AUTOMATICALLY BE INVALIDATED AND THE NEEDS OF THE GOVERNMENT FOR THE BALANCE OF THE CONTRACT PERIOD FROM AND AFTER THE DATE MINIMUM PRICES ARE ESTABLISHED WILL BE FOR READVERTISEMENT.

IN THIS CONNECTION, IT APPEARS THAT THE COAL TO BE DELIVERED UNDER THE CONTRACT IN QUESTION WAS TO BE PRODUCED BY THE P.V. AND K. COAL CO. AT A MINE IN HARLAN COUNTY, KY. IT HAS BEEN ASCERTAINED INFORMALLY FROM THE NATIONAL BITUMINOUS COAL COMMISSION THAT MINIMUM PRICES HAVE NOT BEEN ESTABLISHED FOR THE DISTRICT IN WHICH HARLAN COUNTY, KY., IS INCLUDED. THERE APPEARS NO REASON FOR QUESTIONING THE CONTRACT AT THIS TIME BY REASON OF ANY PROVISION IN THE SAID ACT OF AUGUST 30, 1935.