A-88272, AUGUST 19, 1937, 17 COMP. GEN. 176

A-88272: Aug 19, 1937

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AGRICULTURAL COMMODITIES OR PRODUCTS - PURCHASE BY SECRETARY OF AGRICULTURE AND DISTRIBUTION TO PUBLIC OR NON-PROFIT AGENCIES - APPROPRIATION AVAILABILITY PAYMENT IS AUTHORIZED FROM FUNDS PROVIDED UNDER SECTION 32 OF THE ACT OF AUGUST 24. IF DETERMINED BY THE SECRETARY THAT THE PROPOSED PROCEDURE CONSTITUTES DIVERSION OF SUCH COMMODITIES OR PRODUCTS FROM THE NORMAL CHANNELS OF TRADE AND COMMERCE AND IS DESIGNED TO ENCOURAGE THEIR DOMESTIC CONSUMPTION. AGRICULTURAL COMMODITIES AND PRODUCTS THEREOF HAVE BEEN DIVERTED FROM THE NORMAL CHANNELS OF TRADE AND COMMERCE THROUGH VARIOUS PUBLIC AND NONPROFIT AGENCIES INTO TYPES OF DOMESTIC CONSUMPTION WHICH CONSTITUTES NEW USES FOR SUCH COMMODITIES AND PRODUCTS.

A-88272, AUGUST 19, 1937, 17 COMP. GEN. 176

AGRICULTURAL COMMODITIES OR PRODUCTS - PURCHASE BY SECRETARY OF AGRICULTURE AND DISTRIBUTION TO PUBLIC OR NON-PROFIT AGENCIES - APPROPRIATION AVAILABILITY PAYMENT IS AUTHORIZED FROM FUNDS PROVIDED UNDER SECTION 32 OF THE ACT OF AUGUST 24, 1935, 49 STAT. 774, AS AMENDED BY THE ACT OF JUNE 28, 1937, 50 STAT. 323, FOR THE PURCHASE OF AGRICULTURAL COMMODITIES OR PRODUCTS BY THE SECRETARY OF AGRICULTURE, AND DELIVERY, FREE OF CHARGE, TO PUBLIC OR NON- PROFIT AGENCIES FOR EXPERIMENTAL PURPOSES IN DEVELOPING NEW USES FOR THE COMMODITIES OR PRODUCTS, IF DETERMINED BY THE SECRETARY THAT THE PROPOSED PROCEDURE CONSTITUTES DIVERSION OF SUCH COMMODITIES OR PRODUCTS FROM THE NORMAL CHANNELS OF TRADE AND COMMERCE AND IS DESIGNED TO ENCOURAGE THEIR DOMESTIC CONSUMPTION.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF AGRICULTURE, AUGUST 19, 1937:

THERE HAS BEEN RECEIVED YOUR LETTER OF AUGUST 11, 1937, AS FOLLOWS:

THE AGRICULTURAL ADJUSTMENT ADMINISTRATION CONTEMPLATES THE EXECUTION OF PROGRAMS DESIGNED TO ENCOURAGE THE DOMESTIC CONSUMPTION OF AGRICULTURAL COMMODITIES AND PRODUCTS THEREOF IN ACCORDANCE WITH THE PROVISIONS OF CLAUSE (2) OF SECTION 32 OF PUBLIC, NO. 320, 74TH CONGRESS, APPROVED AUGUST 24, 1935, AS AMENDED, AND OF PUBLIC, NO. 165, 75TH CONGRESS, APPROVED JUNE 28, 1937, BY DIVERTING SUCH COMMODITIES AND PRODUCTS THEREOF FROM THE NORMAL CHANNELS OF TRADE AND COMMERCE BY THE PAYMENT OF BENEFITS OR INDEMNITIES, OR BY OTHER MEANS.

DURING THE PAST TWO FISCAL YEARS, AGRICULTURAL COMMODITIES AND PRODUCTS THEREOF HAVE BEEN DIVERTED FROM THE NORMAL CHANNELS OF TRADE AND COMMERCE THROUGH VARIOUS PUBLIC AND NONPROFIT AGENCIES INTO TYPES OF DOMESTIC CONSUMPTION WHICH CONSTITUTES NEW USES FOR SUCH COMMODITIES AND PRODUCTS. UNDER THIS TYPE OF PROGRAM CONTRACTS HAVE BEEN ENTERED INTO WITH PUBLIC OR PRIVATE ENTITIES TO DIVERT AGRICULTURAL COMMODITIES AND PRODUCTS THEREOF IN ACCORDANCE WITH THE FOLLOWING PLAN:THE ENTITY UNDER CONTRACTUAL ARRANGEMENT WITH THE SECRETARY OF AGRICULTURE PURCHASED THE AGRICULTURAL COMMODITY OR PRODUCT THEREOF IN SUCH QUANTITIES AND PRICES AND AT SUCH TIMES AS THE SECRETARY DIRECTED. THE ENTITY THEREAFTER HANDLED THE COMMODITIES OR PRODUCTS AND DEFRAYED ALL TRANSPORTATION COSTS AND THEREAFTER SOLD THE COMMODITIES. IN THE EVENT THAT THE PROCEEDS OF THE SALE OF THE COMMODITIES OR PRODUCTS WERE LESS THAN THE PURCHASE PRICE PLUS TRANSPORTATION AND OTHER COSTS, THE ENTITY WAS, UNDER THE AUTHORITY SET FORTH IN CLAUSE (2) OF SECTION 32, INDEMNIFIED FOR THE DIFFERENCE.

EXPERIENCE INDICATES THAT THE METHOD OF DIVERSION OUTLINED ABOVE PROVIDED AN EFFECTIVE MEANS OF ENCOURAGING THE DOMESTIC CONSUMPTION OF AGRICULTURAL COMMODITIES AND PRODUCTS THEREOF AND, IN VIEW OF THIS EXPERIENCE, IT IS CONTEMPLATED THAT OTHER SIMILAR PROGRAMS WILL BE UNDERTAKEN IN THE NEAR FUTURE. THE PLAN OF PROCEDURE UNDER SOME OF THE CONTEMPLATED PROGRAMS, PARTICULARLY COTTON AND COTTON PRODUCTS, WILL, HOWEVER, NECESSITATE A SLIGHT ADMINISTRATIVE DEPARTURE FROM THE TYPE OF PROGRAM OUTLINED ABOVE, IN THAT, UNDER SOME OF THE CONTEMPLATED PROGRAMS, PURCHASES WILL BE MADE BY THE SECRETARY. THE PURCHASE PRICE AND OTHER EXPENSES INCIDENTAL TO THE PROGRAM, INCLUDING TRANSPORTATION COSTS, WILL BE PAID FROM AVAILABLE FUNDS APPROPRIATED BY SECTION 32. THE PURCHASED COMMODITIES AND PRODUCTS WILL BE USED BY PUBLIC AND NONPROFIT AGENCIES FOR A NUMBER OF VARYING NEW USES, THE DISPOSITION OF THE COMMODITIES OR PRODUCTS BEING SUCH THAT THEY WILL BE DIVERTED FROM THE NORMAL CHANNELS OF TRADE AND COMMERCE.

IF THE OBJECTIVES OF THE CONTEMPLATED PROGRAMS LAST OUTLINED ABOVE WERE TO BE ACCOMPLISHED BY THE PAYMENT OF INDEMNITIES, SUCH INDEMNITIES WOULD HAVE TO BE SUBSTANTIALLY EQUIVALENT TO THE COST OF THE COTTON OR COTTON PRODUCTS, PLUS THE INCIDENTAL EXPENSES. PAYMENT OF INDEMNITIES IN THE CONTEMPLATED PROGRAMS IS NOT, HOWEVER, THE MOST ECONOMICAL WAY OF ACCOMPLISHING THE DIVERSION. THE PURCHASE BY THE SECRETARY OF AGRICULTURE OF COTTON OR COTTON PRODUCTS WOULD RESULT IN A MARKED SAVING TO THE UNITED STATES, SINCE THE SECRETARY IS IN A POSITION TO MAKE SUCH PURCHASES CHEAPER AND MORE EFFECTIVELY THAN ANY NONGOVERNMENT ENTITY WHICH WOULD BE UTILIZED UNDER THE CONTEMPLATED PROGRAMS. ADMINISTRATIVE EXPENSES WOULD, MOREOVER, BE SUBSTANTIALLY LESS. IN VIEW OF THE WELL-ESTABLISHED ACCOUNTING PRINCIPLE THAT, WHERE ADMINISTRATIVE ACTION OF ONE SORT WILL RESULT IN A SAVING TO THE UNITED STATES AND ANOTHER TYPE OF ADMINISTRATIVE ACTION WOULD NOT, THE FIRST IS DESIRABLE IF BOTH ARE LEGALLY AUTHORIZED, IT SEEMS READILY APPARENT THAT THE PURCHASE BY THE SECRETARY OF AGRICULTURE OF COTTON OR PRODUCTS THEREOF AND THE DIVERSION OF THEM FROM THE NORMAL CHANNELS OF TRADE AND COMMERCE BY VARIOUS TYPES OF ENTITIES, AS OUTLINED ABOVE, IS HIGHLY DESIRABLE BOTH FROM THE POINT OF VIEW OF ADMINISTRATIVE POLICY AND ECONOMY.

SINCE THE SECRETARY IS BY LAW PERMITTED TO INDEMNIFY DIVERTERS OF AGRICULTURAL COMMODITIES AND PRODUCTS THEREOF, IN ORDER TO ENCOURAGE CONSUMPTION THEREOF, AND SINCE, AS POINTED OUT ABOVE, IT IS, IN THE EXECUTION OF SOME OF THE CONTEMPLATED PROGRAMS, MORE ECONOMICAL TO BUY THE PRODUCT AND HAVE IT DIVERTED THAN TO PAY INDEMNITIES AFTER DIVERSION, YOUR OPINION IS REQUESTED REGARDING THE DIVERSION OF AGRICULTURAL COMMODITIES AND PRODUCTS THEREOF BY PURCHASE FOR DIVERSION RATHER THAN BY THE PAYMENT OF AN INDEMNITY OF THE PURCHASE PRICE.

THERE IS ATTACHED HERETO FOR YOUR INFORMATION A MEMORANDUM OF LAW PREPARED IN THE OFFICE OF THE SOLICITOR OF THE DEPARTMENT OF AGRICULTURE TREATING OF THE LEGAL ASPECTS OF THE QUESTION HEREIN PROPOUNDED.

CLAUSE 2 OF SECTION 32 OF THE ACT OF AUGUST 24, 1935, 49 STAT. 774, AS AMENDED, AUTHORIZES THE SECRETARY OF AGRICULTURE TO USE CERTAIN FUNDS TO "/2) ENCOURAGE THE DOMESTIC CONSUMPTION OF SUCH COMMODITIES OR PRODUCTS BY DIVERTING THEM, BY THE PAYMENT OF BENEFITS OR INDEMNITIES OR BY OTHER MEANS, FROM THE NORMAL CHANNELS OF TRADE AND COMMERCE," AND FURTHER PROVIDES:

DETERMINATIONS BY THE SECRETARY AS TO WHAT CONSTITUTES DIVERSION AND WHAT CONSTITUTES NORMAL CHANNELS OF TRADE AND COMMERCE * * * SHALL BE FINAL. THE SUMS APPROPRIATED UNDER THIS SECTION SHALL BE EXPENDED FOR SUCH ONE OR MORE OF THE ABOVE SPECIFIED PURPOSES, AND AT SUCH TIMES, IN SUCH MANNER, AND IN SUCH AMOUNTS AS THE SECRETARY OF AGRICULTURE FINDS WILL EFFECTUATE SUBSTANTIAL ACCOMPLISHMENT OF ANY ONE OR MORE OF THE PURPOSES OF THIS SECTION.

THE ACT OF JUNE 28, 1937, PUBLIC, NO. 165, 50 STAT. 323, CONTAINS A PROVISION AS FOLLOWS:

IN CARRYING OUT CLAUSE (2) OF SECTION 32, THE FUNDS APPROPRIATED BY SAID SECTION MAY BE USED FOR THE PURCHASE, WITHOUT REGARD TO THE PROVISIONS OF EXISTING LAW GOVERNING THE EXPENDITURE OF PUBLIC FUNDS, OF AGRICULTURAL COMMODITIES AND PRODUCTS THEREOF, AND SUCH COMMODITIES, * * * MAY BE DONATED FOR RELIEF PURPOSES.'

THERE APPEAR TO BE INVOLVED TWO LEGAL QUESTIONS: (1) WHETHER THE PURCHASE OF AGRICULTURAL COMMODITIES FOR DELIVERY FREE OF CHARGE TO PUBLIC AND NONPROFIT AGENCIES FOR THE PURPOSES STATED IN YOUR SUBMISSION COMES WITHIN THE PHRASE "BY OTHER MEANS" IN CLAUSE 2 OF SECTION 32 OF THE ACT OF AUGUST 24, 1935, AND (2) WHETHER THE SPECIFIC AUTHORIZATION IN THE ACT OF JUNE 28, 1937, SUPRA, FOR THE PURCHASE OF AGRICULTURAL COMMODITIES TO BE "DONATED FOR RELIEF PURPOSES" WOULD PRECLUDE SUCH PURCHASES FOR THE PURPOSE OF TURNING THE COMMODITIES OVER TO THE AGENCIES REFERRED TO IN YOUR LETTER FREE OF CHARGE. THE FIRST QUESTION INVOLVES A CONSIDERATION OF THE RULE OFEJUSDEM GENERIS AND THE SECOND THE RULE OF EXPRESSIO UNIUS EST EXCLUSIO ALTERIUS.

AS TO THE FIRST QUESTION, THE RULE OF EJUSDEM GENERIS APPEARS NOT FOR APPLICATION HERE BECAUSE THE PROVISION FOR "PAYMENT OF BENEFITS OR INDEMNITIES" WOULD APPEAR TO EXHAUST THAT GENUS, AND UNLESS THE PHRASE "OR BY OTHER MEANS" BE INTERPRETED TO INCLUDE OTHER MEANS OF DIVERSION THAN BY PAYMENT OF BENEFITS OR INDEMNITIES IT WOULD BE INOPERATIVE--- A RESULT WHICH MUST BE AVOIDED, IF POSSIBLE. UNITED STATES V. MESCALL, 215 U.S. 26, AND MASON V. UNITED STATES, 260 U.S. 545. CONSEQUENTLY, IN VIEW OF THE PROVISIONS OF LAW HEREINBEFORE QUOTED, IT WOULD SEEM CLEAR THAT THE PHRASE "BY OTHER MEANS" WAS NOT INTENDED TO BE AND IS NOT LIMITED TO MEANS OF A LIKE CLASS WITH PAYMENTS OF BENEFITS OR INDEMNITIES BUT INCLUDES ANY REASONABLE MEANS OF DIVERSION FROM THE USUAL CHANNELS OF TRADE AND COMMERCE THAT WILL TEND TO ENCOURAGE DOMESTIC CONSUMPTION OF THE AGRICULTURAL COMMODITIES OR PRODUCTS.

WITH REFERENCE TO THE SECOND QUESTION, WHILE THE SPECIFIC AUTHORIZATION TO MAKE PURCHASES TO BE DONATED FOR RELIEF PURPOSES WOULD PRECLUDE THE MAKING OF PURCHASES TO BE DONATED FOR OTHER PURPOSES IT WOULD APPEAR THAT THE PROPOSED DELIVERY OF THE AGRICULTURAL COMMODITIES OR PRODUCTS TO PUBLIC AND NONPROFIT AGENCIES FOR THE DEVELOPMENT OF NEW USES FOR SUCH AGRICULTURAL COMMODITIES OR PRODUCTS IS NOT, IN FACT, A DONATION--- THE DELIVERY BEING SUBJECT TO THE REQUIREMENT THAT THE AGENCY TO WHICH IT IS MADE SHALL USE THE COMMODITY OR PRODUCT FOR A SPECIFIC PURPOSE DESIGNED TO ENCOURAGE DOMESTIC CONSUMPTION BY THE DEVELOPMENT OF NEW USES FOR SUCH COMMODITIES OR PRODUCTS.

ANSWERING THE QUESTION SPECIFICALLY, I HAVE TO ADVISE THAT IF THE SECRETARY OF AGRICULTURE DETERMINES THAT THE PLAN PROPOSED IN THE ABOVE- QUOTED LETTER CONSTITUTES DIVERSION OF AGRICULTURAL COMMODITIES OR PRODUCTS FROM THE NORMAL CHANNELS OF TRADE AND COMMERCE, AND IS DESIGNED TO ENCOURAGE DOMESTIC CONSUMPTION THEREOF, THIS OFFICE IS NOT REQUIRED TO OBJECT TO OTHERWISE PROPER PAYMENTS FROM FUNDS PROVIDED UNDER SECTION 32 OF THE ACT OF AUGUST 24, 1935, AS AMENDED, FOR THE PURCHASE AND DELIVERY, FREE OF CHARGE, OF SUCH AGRICULTURAL COMMODITIES OR PRODUCTS TO PUBLIC AND NONPROFIT AGENCIES TO BE USED FOR EXPERIMENTAL PURPOSES IN DEVELOPING NEW USES FOR THE COMMODITIES OR PRODUCTS.