A-93056, MARCH 22, 1938, 17 COMP. GEN. 768

A-93056: Mar 22, 1938

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PROVIDING THAT THE SECRETARY OF AGRICULTURE "SHALL PAY TO THE COUNTY IN WHICH ANY LAND IS HELD BY THE SECRETARY UNDER THIS TITLE. IS AS FOLLOWS: THERE IS SUBMITTED FOR YOUR CONSIDERATION THE DETERMINATION OF THE MEANING OF THE TERM "NET REVENUE" AS EMPLOYED IN SECTION 33. THE SECRETARY SHALL PAY TO THE COUNTY IN WHICH ANY LAND IS HELD BY THE SECRETARY UNDER THIS TITLE. IN CASE THE LAND IS SITUATED IN MORE THAN ONE COUNTY. PAYMENTS TO COUNTIES UNDER THIS SECTION SHALL BE MADE ON THE CONDITION THAT THEY ARE USED FOR SCHOOL OR ROAD PURPOSES. THE QUESTION AT ISSUE IS WHETHER "NET REVENUE" IS TO BE CONSTRUED AS THAT AMOUNT REMAINING AFTER DEDUCTION OF ANY APPLICABLE REFUNDS MADE AGAINST THE GROSS AMOUNT RECEIVED.

A-93056, MARCH 22, 1938, 17 COMP. GEN. 768

RETIREMENT OF SUBMARGINAL LAND - FEDERAL PERCENTAGE PAYMENTS TO COUNTIES BASED ON USE OF LAND - ,NET REVENUES" DEFINED THE TERM "NET REVENUES" AS USED IN SECTION 33, TITLE III, OF THE BANKHEAD -JONES FARM TENANT ACT, 50 STAT. 526, PROVIDING THAT THE SECRETARY OF AGRICULTURE "SHALL PAY TO THE COUNTY IN WHICH ANY LAND IS HELD BY THE SECRETARY UNDER THIS TITLE, 25 PERCENTUM OF THE NET REVENUES RECEIVED * * * FROM THE USE OF THE LAND," HAS REFERENCE TO THE GROSS RECEIPTS FROM RENTS, CONCESSIONS, LICENSES, AND OTHER SOURCES INCIDENT TO THE USE OF THE LANDS REDUCED ONLY BY APPLICABLE REFUNDS, ADJUSTMENTS, ETC., RATHER THAN INCOME AFTER DEDUCTING EXPENSES, ETC.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF AGRICULTURE, MARCH 22, 1938:

YOUR LETTER OF MARCH 1, 1938, IS AS FOLLOWS:

THERE IS SUBMITTED FOR YOUR CONSIDERATION THE DETERMINATION OF THE MEANING OF THE TERM "NET REVENUE" AS EMPLOYED IN SECTION 33, TITLE III, OF THE BANKHEAD-JONES FARM TENANT ACT QUOTED HEREWITH.

"SEC. 33. AS SOON AS PRACTICABLE AFTER THE END OF EACH CALENDAR YEAR, THE SECRETARY SHALL PAY TO THE COUNTY IN WHICH ANY LAND IS HELD BY THE SECRETARY UNDER THIS TITLE, 25 PERCENTUM OF THE NET REVENUES RECEIVED BY THE SECRETARY FROM THE USE OF THE LAND DURING SUCH YEAR. IN CASE THE LAND IS SITUATED IN MORE THAN ONE COUNTY, THE AMOUNT TO BE PAID SHALL BE DIVIDED EQUITABLY AMONG THE RESPECTIVE COUNTIES. PAYMENTS TO COUNTIES UNDER THIS SECTION SHALL BE MADE ON THE CONDITION THAT THEY ARE USED FOR SCHOOL OR ROAD PURPOSES, OR BOTH. THIS SECTION SHALL NOT BE CONSTRUED TO APPLY TO AMOUNTS RECEIVED FROM THE SALE OF LAND.' (50 STAT. 526.)

THE QUESTION AT ISSUE IS WHETHER "NET REVENUE" IS TO BE CONSTRUED AS THAT AMOUNT REMAINING AFTER DEDUCTION OF ANY APPLICABLE REFUNDS MADE AGAINST THE GROSS AMOUNT RECEIVED, OR WHETHER IT IS TO BE VIEWED AS NET INCOME, AND IF SO, WHAT CLASS OF EXPENDITURES MAY BE PROPERLY CHARGEABLE AGAINST THE TOTAL REVENUE RECEIVED ON PROJECTS DEVELOPED UNDER THIS ACT. INTERPRETATION OF THE WORDING IS REQUESTED IN ORDER THAT THE CORRECT AMOUNT TO BE PAID TO COUNTIES UNDER THE PROVISIONS OF THE ACT MAY BE READILY DETERMINED.

TITLE III OF THE ACT IN QUESTION IS ENTITLED "RETIREMENT OF SUBMARGINAL LAND" AND ITS GENERAL PURPOSE IS SET FORTH IN SECTION 31 AS FOLLOWS:

THE SECRETARY IS AUTHORIZED AND DIRECTED TO DEVELOP A PROGRAM OF LAND CONSERVATION AND LAND UTILIZATION, INCLUDING THE RETIREMENT OF LANDS WHICH ARE SUBMARGINAL OR NOT PRIMARILY SUITABLE FOR CULTIVATION, IN ORDER THEREBY TO CORRECT MALADJUSTMENTS IN LAND USE, AND THUS ASSIST IN CONTROLLING SOIL EROSION, REFORESTATION, PRESERVING NATURAL RESOURCES, MITIGATING FLOODS, PREVENTING IMPAIRMENT OF DAMS AND RESERVOIRS, CONSERVING SURFACE AND SUBSURFACE MOISTURE, PROTECTING THE WATERSHEDS OF NAVIGABLE STREAMS, AND PROTECTING THE PUBLIC LANDS, HEALTH, SAFETY, AND WELFARE.

TO EFFECTUATE THE PROGRAM REFERRED TO, THE SECRETARY OF AGRICULTURE IS GIVEN VARIOUS POWERS IN SECTION 32, SUCH AS, TO ACQUIRE LANDS OR INTERESTS THEREIN BY PURCHASE, GIFTS, ETC.; TO PROTECT, IMPROVE, DEVELOP, AND ADMINISTER THE PROPERTY SO ACQUIRED; TO DISPOSE OF SUCH PROPERTY WITH OR WITHOUT CONSIDERATION; TO GRANT LICENSES, EASEMENTS, ETC., UPON SUCH PROPERTY UPON SUCH TERMS AS HE DEEMS REASONABLE; AND OTHERWISE TO COOPERATE WITH PUBLIC AGENCIES IN DEVELOPING PLANS OF LAND UTILIZATION, LAND CONSERVATION, ETC., AND TO MAKE RULES AND REGULATIONS FOR USE AND OCCUPANCY OF PROPERTY ACQUIRED, ETC.

IN ADDITION TO SECTION 33 QUOTED IN YOUR SUBMISSION, TITLE III CONTAINS AN ADDITIONAL SECTION IN WHICH IT IS PROVIDED:

TO CARRY OUT THE PROVISIONS OF THIS TITLE, THERE IS AUTHORIZED TO BE APPROPRIATED NOT TO EXCEED $10,000,000 FOR THE FISCAL YEAR ENDING JUNE 30, 1938, AND NOT TO EXCEED $20,000,000 FOR EACH OF THE TWO FISCAL YEARS THEREAFTER.

UNDER THE SPECIFIC TERMS OF SECTION 33 THE COUNTIES IN WHICH THE RETIRED LANDS ARE LOCATED SHALL BE PAID, FOR SCHOOL AND ROAD PURPOSES, OR BOTH, AS SOON AS PRACTICABLE AT THE END OF EACH CALENDAR YEAR, 25 PERCENT OF THE "NET REVENUES" RECEIVED FOR THE USE OF THE LAND DURING SUCH YEAR, THE SECTION NOT TO APPLY TO AMOUNTS RECEIVED FROM THE SALE OF LAND. THE LEGISLATIVE HISTORY OF THIS SECTION DISCLOSES THAT SAID PAYMENTS TO THE COUNTIES WERE TO BE IN LIEU OF TAXES ON THE LANDS RETIRED OR WITHDRAWN FROM PRIVATE OWNERSHIP. (SEE CONGRESSIONAL RECORD, VOL. 81, PT. 6, P. 6478). IT APPEARS ALSO FROM THE HEARINGS AND DEBATES ON THE BILL PRIOR TO ITS ENACTMENT INTO LAW THAT THE PAYMENT OF THIS PERCENTAGE WAS VARIOUSLY REFERRED TO AS 25 PERCENT OF THE GROSS NET RECEIPTS OR OF NET REVENUES RECEIVED FOR THE USE OF THE LANDS, THUS CLEARLY INDICATING THAT THE TERM "NET REVENUES" USED IN THE SECTION WAS INTENDED TO REFER TO RECEIPTS, RATHER THAN INCOME AFTER DEDUCTING EXPENSES, ETC. APPARENTLY THE THEORY UPON WHICH THE TERMS OF THE SECTION ARE BASED IS THAT WITH THE FUNDS AUTHORIZED TO BE APPROPRIATED UNDER SECTION 34 THE GOVERNMENT SHOULD ACQUIRE, DEVELOP, AND IMPROVE THE SUBMARGINAL LANDS, AND AFTER SUCH ACQUISITION, DEVELOPMENT, AND IMPROVEMENT THE NET REVENUES DERIVED FROM THE USE OF THE LANDS, THAT IS TO SAY, THE GROSS RECEIPTS, LESS REFUNDS, ADJUSTMENTS, ETC., SHOULD BE DIVIDED ON THE BASIS THAT 25 PERCENT WAS TO BE PAID TO THE COUNTY OR COUNTIES IN WHICH THE LANDS ARE LOCATED, APPRARENTLY IN LIEU OF TAXES, AND 75 PERCENT KEPT BY THE GOVERNMENT, APPARENTLY IN RETURN FOR DEVELOPMENT, IMPROVEMENT, MAINTENANCE, ETC. THE PROVISION IN THE SECTION THAT THE 25 PERCENT PAYMENTS TO THE COUNTIES SHALL NOT APPLY TO PROCEEDS FROM THE SALE OF THE LAND HAS PARTICULAR SIGNIFICANCE ALSO. THE APPARENT INTENT OF THE PROVISION IS THAT FOR THE AMOUNT PAID BY THE GOVERNMENT FOR THE PURCHASE OF THE LAND THERE IS NO RETURN UNTIL THE LAND IS SOLD, BUT IN THE EVENT OF SALE THE PROCEEDS THEREOF MUST BE CONSIDERED ON THE BASIS OF A RETURN TO THE GOVERNMENT OF THE AMOUNT ORIGINALLY INVESTED IN THE PURCHASE OF THE LAND.

CONSIDERED ON THE BASIS AS HEREIN SET FORTH I HAVE TO ADVISE THAT THE TERM "NET REVENUES" USED IN SECTION 33, SUPRA, MUST BE CONSTRUED AS HAVING REFERENCE TO THE GROSS RECEIPTS FROM RENTS, CONCESSIONS, LICENSES, AND OTHER SOURCES INCIDENT TO THE USE OF THE LANDS ACQUIRED UNDER TITLE III OF THE ACT, WHILE IN GOVERNMENT OWNERSHIP, REDUCED ONLY BY ANY APPLICABLE REFUNDS, ADJUSTMENTS, ETC. ..END :