A-95064, MAY 26, 1938, 17 COMP. GEN. 1003

A-95064: May 26, 1938

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IS TO BE EXPENDED FOR WORK UNDER EACH PARTICULAR PROJECT. DETERMINED * * * THAT NOT LESS THAN 25 PERCENTUM OF THE GRANT OR LOAN IS TO BE EXPENDED FOR WORK. " THAT PERCENTAGE OF THE AGGREGATE ALLOTMENT IS EXCLUSIVELY AVAILABLE FOR WORK AND MAY NOT BE EXPENDED FOR ANY OTHER PURPOSE. IT IS NOT MANDATORY THAT AT LEAST 25 PERCENT OF THE AMOUNT ALLOCATED FOR THE PROJECT BE EXPENDED FOR WORK IF NOT NECESSARY TO THE COMPLETION OF THE PROJECT. IS AS FOLLOWS: YOUR DECISION IS REQUESTED UPON CERTAIN QUESTIONS WHICH HAVE ARISEN IN CONNECTION WITH THIS ADMINISTRATION'S PROJECT FOR THE CONSTRUCTION OF A CEMENT PLANT AT CATANO. WHICH IS BEING CARRIED OUT UNDER AN ALLOTMENT MADE BY THE PRESIDENT FROM FUNDS MADE AVAILABLE UNDER SECTION 1 (G) OF THE EMERGENCY RELIEF APPROPRIATION ACT OF 1935.

A-95064, MAY 26, 1938, 17 COMP. GEN. 1003

PROJECTS - LOANS OR GRANTS OF EMERGENCY RELIEF FUNDS - WORK EXPENDITURE LIMITATION WHERE, PURSUANT TO AUTHORITY IN THE EMERGENCY RELIEF ACT OF 1935, FOR ALLOTMENTS FOR "LOANS OR GRANTS * * * FOR PROJECTS * * * WHERE, IN THE DETERMINATION OF THE PRESIDENT, NOT LESS THAN TWENTY-FIVE PERCENTUM OF THE LOAN OR THE GRANT, OR THE AGGREGATE THEREOF, IS TO BE EXPENDED FOR WORK UNDER EACH PARTICULAR PROJECT," THE PRESIDENT IN ALLOCATING FUNDS FOR A PARTICULAR PROJECT ,DETERMINED * * * THAT NOT LESS THAN 25 PERCENTUM OF THE GRANT OR LOAN IS TO BE EXPENDED FOR WORK," THAT PERCENTAGE OF THE AGGREGATE ALLOTMENT IS EXCLUSIVELY AVAILABLE FOR WORK AND MAY NOT BE EXPENDED FOR ANY OTHER PURPOSE, BUT IT IS NOT MANDATORY THAT AT LEAST 25 PERCENT OF THE AMOUNT ALLOCATED FOR THE PROJECT BE EXPENDED FOR WORK IF NOT NECESSARY TO THE COMPLETION OF THE PROJECT, AND LABOR USED IN FABRICATING MACHINERY SPECIFICALLY FOR WORK IN CONSTRUCTING OR EQUIPPING THE PROJECT FROM THE ALLOTMENT THEREFOR AND UNDER THE SAME DIRECTION OR SUPERVISION AS OTHER WORK ON THE PROJECT, MAY BE INCLUDED AS WORK ON THE PROJECT.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE ADMINISTRATOR, PUERTO RICO RECONSTRUCTION ADMINISTRATION, MAY 26, 1938:

YOUR LETTER OF MAY 18, 1938, IS AS FOLLOWS:

YOUR DECISION IS REQUESTED UPON CERTAIN QUESTIONS WHICH HAVE ARISEN IN CONNECTION WITH THIS ADMINISTRATION'S PROJECT FOR THE CONSTRUCTION OF A CEMENT PLANT AT CATANO, PUERTO RICO, WHICH IS BEING CARRIED OUT UNDER AN ALLOTMENT MADE BY THE PRESIDENT FROM FUNDS MADE AVAILABLE UNDER SECTION 1 (G) OF THE EMERGENCY RELIEF APPROPRIATION ACT OF 1935.

SAID SECTION MAKES AVAILABLE $900,000,000 FOR LOANS OR GRANTS FOR PROJECTS OF STATES, TERRITORIES, POSSESSIONS INCLUDING SUBDIVISIONS OR AGENCIES THEREOF "WHERE IN THE DETERMINATION OF THE PRESIDENT NOT LESS THAN TWENTY-FIVE PERCENTUM OF THE LOAN OR GRANT ON THE AGGREGATE THEREOF IS TO BE EXPENDED FOR WORK UNDER EACH PARTICULAR PROJECT.' IN CONNECTION WITH THE ABOVE QUOTED PROVISION IT HAS BECOME NECESSARY FOR ME TO KNOW:

(1) WHETHER IT IS MANDATORY UPON THE AGENCY UNDER THE SUPERVISION OF WHICH THE PROJECT IS PROSECUTED TO EXPEND AT LEAST TWENTY-FIVE (25) PERCENT OF THE AMOUNT ALLOTTED TO THE PROJECT FOR WORK THEREON.

(2) IF IT IS MANDATORY UPON THE AGENCY TO REQUIRE THE EXPENDITURE OF SUCH AMOUNT, WHETHER EXPENDITURES FOR LABOR USED IN FABRICATING MACHINERY FOR THE PROJECT MAY BE INCLUDED AS WORK UNDER THE PROJECT.

IN REGARD TO THE FIRST OF THESE QUESTIONS I SHOULD LIKE TO CALL TO YOUR ATTENTION THAT THE ACT PROVIDES THAT THE LOAN OR GRANT IS PERMISSIBLE UNDER SAID SECTION 1 (G) WHERE "IN THE DETERMINATION OF THE PRESIDENT 25 PERCENT SHALL BE EXPENDED FOR WORK UPON THE PROJECT," BUT THAT IT IS NOWHERE THEREIN EXPRESSLY PROVIDED THAT SUCH PERCENTAGE ACTUALLY SHALL BE EXPENDED FOR WORK. A STRICT GRAMMATICAL CONSTRUCTION OF THIS PHRASE WOULD APPEAR MERELY TO CALL FOR A DECISION BY THE PRESIDENT THAT THE REQUIRED PERCENTAGE OF THE LOAN OR GRANT WOULD BE SO EXPENDED AND NOT TO MAKE IT MANDATORY UPON HIM OR HIS REPRESENTATIVES TO SEE THAT SUCH PERCENTAGE WAS IN FACT EXPENDED. FURTHERMORE, THE LEGISLATIVE HISTORY OF THE ACT INDICATES THAT CONGRESS DID IN FACT INTEND THE PHRASE TO BE CONSTRUED IN THIS MANNER. MR. BUCHANAN, THE CONFERENCE MANAGER FOR THE HOUSE, STATED THAT A PROVISION OF AN EARLIER DRAFT OF THE ACT WHICH STIPULATED THAT A CERTAIN PERCENTAGE OF THE ALLOTMENT "MUST" BE SPENT FOR WORK HAD BEEN STRICKEN AND THE PRESIDENT ALONE HAD BEEN GIVEN THE POWER TO DETERMINE WHETHER THE PROJECT WOULD BE ELIGIBLE IN SO FAR AS A QUESTION OF THE AMOUNT TO BE EXPENDED ON WORK WAS CONCERNED. 79 CONG.REC.PP. 5322 5323. IN THE COURSE OF THE DEBATE ON THE BILL, MR. BUCHANAN IN ANSWER TO A QUESTION WHETHER IT WOULD BE MANDATORY UPON THE PRESIDENT TO INSIST THAT TWENTY-FIVE PERCENT OF THE ALLOTMENT BE USED IN LABOR, REPLIED: "IT IS MANDATORY UPON HIM TO DETERMINE THAT THERE WILL BE AT LEAST 25 PERCENT OF WORK UPON THE PROJECT.' IBID.P. 5323. IT IS, THEREFORE, SUBMITTED THAT WHERE THE PRESIDENT HAS MADE AN ALLOTMENT UNDER SAID SECTION 1 (G) AFTER A DETERMINATION BY HIM THAT THE REQUIRED PERCENTAGE OF SAID ALLOTMENT WILL BE EXPENDED UPON WORK, THE AGENCY CHARGED WITH SUPERVISION OF THE PROJECT NEED NOT REQUIRE THAT SUCH AN AMOUNT BE ACTUALLY SO EXPENDED IF IT FINDS THAT THE PROJECT DOES NOT IN FACT REQUIRE THIS AMOUNT OF WORK.

THE ANSWER TO THE SECOND QUESTION IS DEPENDENT UPON THE PROPER INTERPRETATION OF THE PHRASE ,WORK UNDER EACH PARTICULAR PROJECT.' THIS WOULD APPEAR TO INCLUDE NOT ONLY WORK ACTUALLY PERFORMED AT THE SITE OF THE PROJECT, BUT WORK WHEREVER PERFORMED WHEN SUCH WORK IS IN FURTHERANCE OF THE PROJECT. THE FIRST HOUSE AND SENATE CONFERENCE ON THE RELIEF ACT OF 1935 RECOMMENDED THAT THE PROVISION IN REGARD TO LOANS OR GRANTS FOR PROJECTS OF STATES AND OTHER GOVERNMENTAL UNITS CONTAIN A PROVISION REQUIRING THAT A CERTAIN PERCENTAGE OF THE LOAN OR GRANT SHOULD BE EXPENDED FOR "DIRECT WORK.' SENATOR GLASS IN A LETTER TO ME, WHICH HE READ ON THE FLOOR OF THE SENATE, STATED THAT THIS PROVISION WOULD NOT REQUIRE THAT SUCH PERCENTAGE BE EXPENDED AT THE SITE OF THE PROJECT BUT THAT "DIRECT WORK" WOULD INCLUDE WORK ON THE FABRICATION OF MACHINERY USED UPON THE PROJECT EVEN THOUGH SUCH FABRICATION WAS AT A PLACE OTHER THAN THE SITE OF THE PROJECT. IBID., P. 4921. NEVERTHELESS, IN ORDER TO SATISFY CERTAIN MEMBERS OF CONGRESS WHO FEARED THAT THE INTERPRETATION GIVEN BY SENATOR GLASS MIGHT NOT BE FOLLOWED BY THE COURTS OR THE ACCOUNTING OFFICERS OF THE GOVERNMENT, THE PROVISION WAS REWORDED SO AS TO OMIT THE WORD "DIRECT" AND MR. BUCHANAN STATED IN THE CONFERENCE REPORT TO THE HOUSE THAT THIS WAS DONE EXPRESSLY FOR THE PURPOSE OF AVOIDING A CONSTRUCTION WHICH WOULD REQUIRE TWENTY-FIVE PERCENT OF AN ALLOTMENT TO BE EXPENDED AT THE SITE OF THE PROJECT. IBID., P. 5323. IT IS, THEREFORE, SUBMITTED THAT MY SECOND QUESTION SHOULD BE ANSWERED IN THE AFFIRMATIVE.

I SHALL APPRECIATE A PROMPT REPLY GIVING YOUR FORMAL DECISION ON THE FIRST QUESTION. IF UNDER THAT DECISION THIS ADMINISTRATION MUST REQUIRE THE EXPENDITURE OF A CERTAIN PERCENTAGE FOR WORK ON THE PROJECT, IT WILL ALSO BE NECESSARY TO HAVE YOUR DECISION ON THE SECOND QUESTION.

SECTION 1 (G) OF THE EMERGENCY RELIEF ACT OF APRIL 8, 1935, 49 STAT. 115- 116, AUTHORIZED ALLOTMENTS FOR---

* * * LOANS OR GRANTS, OR BOTH, FOR PROJECTS OF STATES, TERRITORIES, POSSESSIONS, INCLUDING SUBDIVISIONS AND AGENCIES THEREOF, MUNICIPALITIES, AND THE DISTRICT OF COLUMBIA, AND SELF-LIQUIDATING PROJECTS OF PUBLIC BODIES THEREOF, WHERE, IN THE DETERMINATION OF THE PRESIDENT, NOT LESS THAN TWENTY-FIVE PERCENTUM OF THE LOAN OR THE GRANT, OR THE AGGREGATE THEREOF, IS TO BE EXPENDED FOR WORK UNDER EACH PARTICULAR PROJECT, $900,000,000. * * *

PRESIDENTIAL LETTER NO. 1218, DATED DECEMBER 7, 1935, TO THE SECRETARY OF THE TREASURY, IS AS FOLLOWS:

BY VIRTUE OF THE AUTHORITY VESTED IN ME UNDER THE EMERGENCY RELIEF APPROPRIATION ACT OF 1935, APPROVED APRIL 8, 1935, IT IS REQUESTED THAT THE FOLLOWING FUNDS BE TRANSFERRED FROM THE APPROPRIATION MADE IN SAID ACT TO THE DEPARTMENT OF THE INTERIOR, PUERTO RICO RECONSTRUCTION ADMINISTRATION, FOR THE PURPOSES INDICATED BELOW:

AMOUNT: $850,000.

PURPOSE: FOR FINANCING BY WAY OF A GRANT OR LOAN A PROJECT OF THE TERRITORY OF PUERTO RICO FOR THE CONSTRUCTION OF A CEMENT PLANT AT AGUADILLA OR CATANO. SUBJECT TO THE APPLICATION OF TITLE III OF THE TREASURY AND POST OFFICE APPROPRIATION ACT, FISCAL YEAR 1934, TO THE ACQUISITION OF ARTICLES, MATERIALS, AND SUPPLIES FOR USE IN CARRYING OUT SUCH PROJECTS. (O.P. NO. 5-222.)

I HAVE DETERMINED WITH RESPECT TO THE ABOVE PROJECT THAT NOT LESS THAN 25 PERCENTUM OF THE GRANT OR LOAN IS TO BE EXPENDED FOR WORK.

THE ALLOCATION FOR THE CEMENT PLANT WAS LATER INCREASED BY $300,000 IN PRESIDENT'S LETTER 1960 DATED FEBRUARY 4, 1937.

THIS LOAN OR GRANT TOGETHER WITH OTHER ALLOTMENTS MADE BY THE PRESIDENT UNDER AUTHORITY OF THE EMERGENCY RELIEF ACT OF 1935 FOR PROJECTS IN PUERTO RICO WERE INCLUDED IN THE SPECIAL FUND CREATED BY THE ACT OF FEBRUARY 11, 1936, 49 STAT. 1135,"TO PROVIDE RELIEF AND WORK RELIEF AND TO INCREASE EMPLOYMENT IN PUERTO RICO.' THE LIMITATIONS ON EXPENDITURE APPEARING IN THE RELIEF ACTS WERE NOT REPEALED. SEE LETTER TO YOU DATED AUGUST 6, 1936, A-72833.

THE PRIMARY PURPOSE OF THE RELIEF ACT AND OF THE ACT ESTABLISHING THE SPECIAL FUND WAS TO INCREASE EMPLOYMENT. THE CONGRESS CLEARLY SOUGHT TO INSURE THAT NOT LESS THAN 25 PERCENTUM OF A LOAN OR GRANT MADE BY THE PRESIDENT PURSUANT TO SECTION 1 (G) OF THE RELIEF ACT WOULD BE EXPENDED FOR WORK OR LABOR. IN PURSUANCE OF THIS PURPOSE THE PRESIDENT DETERMINED WITH RESPECT TO THE PROJECT FOR A CEMENT PLANT AT AGUADILLA OR CATANO, PUERTO RICO,"THAT NOT LESS THAN TWENTY-FIVE PERCENTUM OF THE LOAN OR GRANT IS TO BE EXPENDED FOR WORK.' THIS STATUTORY RESTRICTION OR LIMITATION, WHILE DIRECTED TO THE PRESIDENT AS YOU SUGGEST, WAS ADOPTED BY THE PRESIDENT IN HIS LETTER OF AUTHORIZATION PURSUANT TO THE STATUTE AND HAS THE FORCE AND EFFECT OF LAW. THE STATUTE TOGETHER WITH THE PRESIDENT'S AUTHORIZATION, IN EFFECT, FIXED THE MAXIMUM LIMITATION OF 75 PERCENT THAT MAY BE EXPENDED ON THE PROJECT FOR PURPOSES OTHER THAN WORK OR LABOR, SUCH AS MATERIAL, EQUIPMENT, AND SUPPLIES.

THEREFORE AS TO QUESTION (1) IT MAY BE STATED THAT WHILE IT IS NOT MANDATORY THAT AT LEAST 25 PERCENT OF THE AMOUNT ALLOCATED FOR THE PROJECT BE EXPENDED FOR WORK IF NOT NECESSARY TO THE COMPLETION OF THE PROJECT, THAT PERCENTAGE OF THE AGGREGATE ALLOTMENT FOR THE CEMENT PLANT IS EXCLUSIVELY AVAILABLE FOR WORK AND MAY NOT BE EXPENDED FOR ANY OTHER PURPOSE.

WITH RESPECT TO QUESTION (2) IT MUST BE HELD THAT IF THE MACHINERY IS FABRICATED SPECIFICALLY FOR WORK IN CONSTRUCTING OR EQUIPPING THE CEMENT PLANT FROM FUNDS ALLOTTED BY THE PRESIDENT FOR THE CEMENT PLANT, AND UNDER THE SAME DIRECTION OR SUPERVISION AS OTHER WORK ON THE PROJECT, THE LABOR USED IN FABRICATING THE MACHINERY MAY BE INCLUDED AS WORK ON THE PROJECT. HOWEVER, IF THE MACHINERY IS PURCHASED OR FABRICATED EITHER BY THE GOVERNMENT UNDER OTHER AUTHORITY, OR COMMERCIALLY, THE LABOR COST MAY NOT BE CREDITED AS WORK ON THE PROJECT.