A-74035, A-75424, JUNE 30, 1936, 15 COMP. GEN. 1144

A-74035,A-75424: Jun 30, 1936

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FOR INDIAN TRIBES WHO ARE WARDS OF THE GOVERNMENT. AS FOLLOWS: YOUR OPINION IS REQUESTED IN REGARD TO MATTERS PERTAINING TO THE OPERATION BY THE INDIAN SERVICE OF SAWMILLS ON THE MENOMINEE AND RED LAKE INDIAN RESERVATIONS. THE SAWMILL ON THE MENOMINEE RESERVATION IN WISCONSIN IS OPERATED PURSUANT TO THE ACT OF MARCH 28. THE RED LAKE SAWMILL IN MINNESOTA IS OPERATED PURSUANT TO THE ACT OF MAY 18. IN THE PAST THESE SAWMILLS HAVE SOLD LUMBER F.O.B. THE GENERAL PRACTICE OF THE LUMBER INDUSTRY IS TO SELL ITS PRODUCTS ON A DELIVERED BASIS. WHICH IS ADDED TO THE SALE VALUE OF THE LUMBER. THE BUYER IS INTERESTED PRIMARILY IN THE DELIVERED PRICE AND DOES NOT WISH TO UNDERTAKE THE CALCULATION OF FREIGHT RATES FROM VARIOUS POINTS.

A-74035, A-75424, JUNE 30, 1936, 15 COMP. GEN. 1144

INDIAN SAWMILLS - SALE AND TRANSPORTATION OF PRODUCTS - PURCHASES FOR INDIAN AGENCIES WITHOUT ADVERTISING - LAND-GRANT RATES PURCHASE OF THE PRODUCTS OF THE MENOMINEE AND RED LAKE SAWMILLS FOR USE AT INDIAN AGENCIES MAY BE MADE IN THE DISCRETION OF THE SECRETARY OF THE INTERIOR WITHOUT CONFORMITY WITH THE PROVISIONS OF SECTION 3709, REVISED STATUTES. AMOUNTS IN EXCESS OF LAND-GRANT RATES AVAILABLE TO THE UNITED STATES MAY NOT BE PAID RAILROADS FOR TRANSPORTATION OF SUPPLIES, ETC., FOR INDIAN TRIBES WHO ARE WARDS OF THE GOVERNMENT. LUMBER PRODUCTS OF THE MENOMINEE AND RED LAKE SAWMILLS SOLD COMMERCIALLY TO PRIVATE DEALERS F.O.B. DESTINATION MAY BE SHIPPED ON GOVERNMENT BILL OF LADING, BUT PRICES OF LUMBER SO SOLD SHOULD BE COMPUTED ON THE BASIS OF COMMERCIAL RATHER THAN LAND-GRANT FREIGHT RATES.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF THE INTERIOR, JUNE 30, 1936:

CONSIDERATION HAS BEEN GIVEN TO YOUR LETTER OF APRIL 16, 1936, AS FOLLOWS:

YOUR OPINION IS REQUESTED IN REGARD TO MATTERS PERTAINING TO THE OPERATION BY THE INDIAN SERVICE OF SAWMILLS ON THE MENOMINEE AND RED LAKE INDIAN RESERVATIONS.

THE SAWMILL ON THE MENOMINEE RESERVATION IN WISCONSIN IS OPERATED PURSUANT TO THE ACT OF MARCH 28, 1908 (35 STAT. 51), AS AMENDED. THE RED LAKE SAWMILL IN MINNESOTA IS OPERATED PURSUANT TO THE ACT OF MAY 18, 1916 (39 STAT. 137). IN THE PAST THESE SAWMILLS HAVE SOLD LUMBER F.O.B. MILL TO THE LUMBER TRADE AND TO CONSUMERS. THE GENERAL PRACTICE OF THE LUMBER INDUSTRY IS TO SELL ITS PRODUCTS ON A DELIVERED BASIS; I.E., THE VENDOR PAYS THE FREIGHT, WHICH IS ADDED TO THE SALE VALUE OF THE LUMBER. THE BUYER IS INTERESTED PRIMARILY IN THE DELIVERED PRICE AND DOES NOT WISH TO UNDERTAKE THE CALCULATION OF FREIGHT RATES FROM VARIOUS POINTS. FURTHERMORE, LUMBER VARIES IN WEIGHT, SO THAT THE BUYER DOES NOT KNOW EXACTLY WHAT THE COST OF LUMBER WILL BE UNLESS IT IS BOUGHT ON A DELIVERED BASIS. IN ORDER TO PUT THE MENOMINEE AND RED LAKE SAWMILLS ON A BETTER COMPETITIVE BASIS WITH OTHER MILLS IT IS PLANNED TO AUTHORIZE THE INDIAN SAWMILLS TO QUOTE DELIVERED PRICES ON THEIR PRODUCTS.

THIS WILL REQUIRE THE MANAGERS OF THE RESPECTIVE MILLS TO ISSUE BILLS OF LADING PAYABLE FROM THE TRIBAL FUNDS WHICH ARE MADE AVAILABLE BY THE ACTS OF CONGRESS CITED ABOVE FOR THE MAINTENANCE AND OPERATION OF THESE ENTERPRISES. CONSIDERABLE DOUBT HAS ARISEN, HOWEVER, AS TO WHETHER COMMERCIAL OR GOVERNMENT BILLS OF LADING SHOULD BE USED IN MAKING SHIPMENTS TO VENDEES, AND YOUR DETERMINATION OF THIS QUESTION WILL BE APPRECIATED.

OWING TO A CONSTRUCTION PROGRAM THAT IS BEING CARRIED ON BY THE INDIAN SERVICE AT THE PRESENT TIME, THERE IS A DEMAND AT MANY OF THE AGENCIES FOR LUMBER OF ALL KINDS, MUCH OF WHICH COULD BE SUPPLIED BY THE MENOMINEE AND RED LAKE MILLS. TO MEET THIS DEMAND IT HAS BEEN THE PRACTICE TO INVITE BIDS FROM LUMBER DEALERS WHERE THE AMOUNT INVOLVED WAS $100 OR MORE AND TO AWARD CONTRACTS TO THE LOWEST BIDDERS. THIS HAS RESULTED IN DEPRIVING THE INDIAN MILLS IN QUESTION OF MUCH OF THIS BUSINESS, OWING TO THE FACT THAT THEY HAVE SELDOM BEEN ABLE TO MEET THE LOW BIDS. SECTION 47, CHAPTER 2, TITLE 25, U.S.C. PROVIDES:

"47. EMPLOYMENT OF INDIAN LABOR AND PURCHASE OF PRODUCTS OF INDIAN INDUSTRY. SO FAR AS MAY BE PRACTICABLE INDIAN LABOR SHALL BE EMPLOYED, AND PURCHASES OF THE PRODUCTS OF INDIAN INDUSTRY MAY BE MADE IN OPEN MARKET IN THE DISCRETION OF THE SECRETARY OF THE INTERIOR. (APR. 30, 1908, C. 153, 35 STAT. 71; JUNE 25, 1910, C. 431, SEC. 23, 36 STAT. 861. SEE SECTIONS 93 AND 472 OF THIS TITLE)"

IT WOULD APPEAR THAT UNDER THIS PROVISION IT WOULD BE PROPER FOR AGENCIES UNDER THE JURISDICTION OF THIS DEPARTMENT TO PURCHASE LUMBER MANUFACTURED AT THE MENOMINEE AND RED LAKE MILLS WITHOUT REGARD TO SECTIONS 3709 AND 3744 OF THE REVISED STATUTES OR TO THE LIMITATION IMPOSED BY THE ACT OF JANUARY 12, 1927 (44 STAT. 936). I SHALL BE GLAD TO HAVE YOUR OPINION ON THESE QUESTIONS AT AN EARLY DATE.

SECTION 47, TITLE 25, U.S. CODE, IS TAKEN FROM SECTION 23 OF THE ACT OF JUNE 25, 1910 (36 STAT. 861), WHICH PROVIDES---

THAT HEREAFTER THE PURCHASE OF INDIAN SUPPLIES SHALL BE MADE IN CONFORMITY WITH THE REQUIREMENTS OF SECTION THIRTY-SEVEN HUNDRED AND NINE OF THE REVISED STATUTES OF THE UNITED TATES: PROVIDED, THAT SO FAR AS MAY BE PRACTICABLE INDIAN LABOR SHALL BE EMPLOYED, AND PURCHASE OF THE PRODUCTS OF INDIAN INDUSTRY MAY BE MADE IN OPEN MARKET IN THE DISCRETION OF THE SECRETARY OF THE INTERIOR. ALL ACTS AND PARTS OF ACTS IN CONFLICT WITH THE PROVISIONS OF THIS SECTION ARE HEREBY REPEALED.

IT THUS APPEARS THAT THE STATUTE IN QUESTION IS FOR APPLICATION ONLY WHEN THE PRODUCTS OF INDIAN LABOR OR INDUSTRY ARE PURCHASED FOR INDIAN PURPOSES. ACCORDINGLY, WITH THE UNDERSTANDING THAT THE AGENCIES REFERRED TO IN YOUR SUBMISSION, TO WHOM LUMBER IS FURNISHED, ARE INDIAN AGENCIES THE PURCHASE FOR SUCH AGENCIES OF THE PRODUCTS OF THE MENOMINEE AND RED LAKE SAWMILLS WITHOUT CONFORMITY WITH THE PROVISIONS OF SECTION 3709, REVISED STATUTES, MAY BE MADE WITHIN THE SOUND DISCRETION OF THE SECRETARY OF THE INTERIOR.

WITH RESPECT TO THE SHIPMENT OF LUMBER FROM THE MENOMINEE AND RED LAKE SAWMILLS WHICH WERE ESTABLISHED UNDER THE CITED ACTS OF MARCH 28, 1908, AND MAY 18, 1916, RESPECTIVELY, THERE ARE BEFORE THIS OFFICE (A 75424) VOUCHERS NOS. 333 AND 334 IN THE OCTOBER 1935 ACCOUNTS OF H. W. JOHANNES, SPECIAL DISBURSING AGENT NEOPIT, WIS., WHEREON PAYMENTS WERE MADE TO THE M.ST.P. AND S.M. RY. CO., COVERING SHIPMENT OF SUPPLIES TO THE MENOMINEE INDIAN MILLS. NOTWITHSTANDING THAT THE PAYMENTS FOR THE TRANSPORTATION WERE MADE FROM "MENOMINEE 4 PERCENT FUND 5T124.06," THE DISBURSING CLERK DID NOT DEDUCT LAND-GRANT, AND IN REPLY TO AN EXCEPTION MADE BY THIS OFFICE IN THE ACCOUNTS OF THE DISBURSING OFFICER BY REASON OF SUCH FAILURE IT IS STATED THAT THE MENOMINEE INDIAN MILLS HAD NEVER BEEN PERMITTED USE GOVERNMENT BILLS OF LADING AS IT HAD BEEN RULED BY THE DEPARTMENT OF THE INTERIOR THAT SUCH INDIAN MILLS WERE NOT ENTITLED TO BENEFIT OF ANY LAND- GRANT RATES; REFERENCE IN THAT CONNECTION BEING MADE TO A LETTER OF SEPTEMBER 7, 1926, FROM THE OFFICE OF INDIAN AFFAIRS, INTERIOR DEPARTMENT, TO THE EFFECT THAT FULL COMMERCIAL RATES ARE PAID FOR FREIGHT TRANSPORTATION ON SHIPMENTS TO THE MENOMINEE INDIAN MILLS.

THE ACT OF APRIL 30, 1908, 35 STAT. 70, 73, MAKING APPROPRIATION FOR THE PURCHASE OF MATERIAL, SUPPLIES, ETC., FOR THE INDIAN SERVICE CONTAINED A PROVISO IN PERTINENT PART:

THAT HEREAFTER PAYMENT FOR TRANSPORTATION OF INDIAN GOODS AND SUPPLIES SHALL INCLUDE ALL INDIAN TRANSPORTATION LAWFULLY DUE SUCH LAND-GRANT RAILROADS AS HAVE NOT RECEIVED AID IN GOVERNMENT BONDS (TO BE ADJUSTED IN ACCORDANCE WITH THE DECISIONS OF THE SUPREME COURT IN CASES DECIDED UNDER SUCH LAND-GRANT ACTS), BUT IN NO CASE SHALL MORE THAN FIFTY PERCENTUM OF FULL AMOUNT OF SERVICE BE PAID TO SAID LAND GRANT ROADS: PROVIDED, THAT SUCH COMPENSATION SHALL BE COMPUTED UPON THE BASIS OF THE TARIFF OR LOWER SPECIAL RATES FOR LIKE TRANSPORTATION PERFORMED FOR THE PUBLIC AT LARGE, AND SHALL BE ACCEPTED AS IN FULL FOR ALL DEMANDS FOR SUCH SERVICE: PROVIDED FURTHER, THAT HEREAFTER IN EXPENDING MONEY APPROPRIATED FOR THIS PURPOSE A RAILROAD COMPANY WHICH HAS NOT RECEIVED AID IN BONDS OF THE UNITED STATES, AND WHICH OBTAINED A GRANT OF PUBLIC LANDS TO AID IN THE CONSTRUCTION OF ITS RAILROAD ON CONDITION THAT SUCH RAILROAD SHOULD BE A POST ROUTE AND MILITARY ROAD, SUBJECT TO THE USE OF THE UNITED STATES FOR POSTAL, MILITARY, NAVAL, AND OTHER GOVERNMENT SERVICES, AND ALSO SUBJECT TO SUCH REGULATIONS AS CONGRESS MAY IMPOSE, RESTRICTING THE CHARGE FOR SUCH GOVERNMENT TRANSPORTATION, HAVING CLAIMS AGAINST THE UNITED STATES FOR TRANSPORTATION OF INDIAN GOODS AND SUPPLIES OVER SUCH AIDED RAILROADS, SHALL BE PAID OUT OF THE MONEYS APPROPRIATED FOR SUCH PURPOSE ONLY ON THE BASIS OF SUCH RATE FOR THE TRANSPORTATION OF SUCH INDIAN GOODS AND SUPPLIES AS THE SECRETARY OF THE INTERIOR SHALL DEEM JUST AND REASONABLE UNDER THE PROVISIONS SET FORTH HEREIN, SUCH RATE NOT TO EXCEED FIFTY PERCENTUM OF THE COMPENSATION FOR SUCH GOVERNMENT TRANSPORTATION AS SHALL AT THAT TIME BE CHARGED TO AND PAID BY PRIVATE PARTIES TO ANY SUCH COMPANY FOR LIKE AND SIMILAR TRANSPORTATION; AND THE AMOUNT SO FIXED TO BE PAID SHALL BE ACCEPTED AS IN FULL FOR ALL DEMANDS FOR SUCH SERVICE.

THE CITED ACTS OF MARCH 28, 1908, AND MAY 18, 1916, WITH RESPECT TO THE MENOMINEE AND RED LAKE INDIAN SAWMILLS SPECIFICALLY PROVIDED THAT THE EXPENSES OF THEIR OPERATION "AND ALL OTHER NECESSARY EXPENSES" SHOULD BE PAID OUT OF THE FUNDS OF THE INDIAN TRIBES CONCERNED. THE SPECIFIC TERMS OF THE ABOVE-QUOTED ACT OF APRIL 30, 1908, REQUIRE THAT THERE BE NOT PAID TO THE RAILROAD ANY AMOUNT IN EXCESS OF THE LAND GRANT RATE OTHERWISE AVAILABLE TO THE UNITED STATES IN THE TRANSPORTATION OF SUPPLIES, ETC., FOR THE INDIAN TRIBES FOR WHICH THE UNITED STATES IS CHARGED WITH RESPONSIBILITY; THAT IS, FOR INDIAN TRIBES WHO ARE WARDS OF THE GOVERNMENT AND THE MEMBERS OF WHICH HAVE NOT RECEIVED CERTIFICATES OF COMPETENCY AS PROVIDED BY LAW. THAT IS TO SAY, LAND-GRANT SHOULD HAVE BEEN DEDUCTED ON VOUCHERS 333 AND 334 IN THE OCTOBER 1935 ACCOUNTS OF H. W. JOHANNES AND FROM ALL OTHER VOUCHERS ON WHICH PAYMENTS ARE MADE FOR TRANSPORTATION OF ANY SUPPLIES AND MATERIALS, INCLUDING LUMBER, TO OR BETWEEN INDIAN RESERVATIONS OR BETWEEN UNITED STATES WAREHOUSES OR OTHER GOVERNMENT BUILDINGS, POSTS AND STATIONS TO THE INDIAN AGENCY, WHETHER FOR THE USE OF THE UNITED STATES, ON THE ONE HAND, OR OF SUCH INDIANS ON THE OTHER.

WHERE THESE INDIAN MILLS SELL LUMBER COMMERCIALLY TO PRIVATE DEALERS WITH DELIVERY F.O.B. DESTINATION NO REASON NOW APPEARS WHY, IF ADVANTAGEOUS OR DESIRABLE, THE LUMBER MAY NOT BE SHIPPED ON A GOVERNMENT BILL OF LADING, BUT THE PRICES OF LUMBER SO SOLD AND FOR DELIVERY AT DESTINATION SHOULD BE COMPUTED ON THE BASIS OF COMMERCIAL FREIGHT RATES AS THE QUESTION WHETHER PAYMENT FOR SUCH TRANSPORTATION FROM THE INDIAN MILLS TO COMMERCIAL DESTINATION SHOULD BE AT COMMERCIAL OR LAND-GRANT RATES WILL BE FOR DETERMINATION ON THE BASIS OF THE FACTS IN A PARTICULAR CASE, INCLUDING THE ROUTES USED FOR THE TRANSPORTATION, THE LAND-GRANT STATUTES INVOLVED, ETC. ..END :