B-119819, DEC 1, 1954

B-119819, DEC 1, 1954

PRECIS-UNAVAILABLE

ADMINISTRATOR OF GENERAL SERVICES:

REFERENCE IS MADE TO YOUR LETTER OF APRIL 20, 1954, REFERRING TO FIVE INDUSTRIAL FACILITIES CONSTRUCTED BY THE RECONSTRUCTION FINANCE CORPORATION DURING WORLD WAR II FOR NATIONAL DEFENSE PURPOSES WHICH ARE NOW BEING USED AND OCCUPIED UNDER INDUSTRIAL PERMITS GRANTED TO VARIOUS BRANCHES OF THE ARMED SERVICES. THE PERMITTEES NOW DESIRE TO SECURE PERMANENT JURISDICTION OF SUCH FACILITIES.

FOUR OF THE FACILITIES IN QUESTION WERE DECLARED SURPLUS BY RECONSTRUCTION FINANCE CORPORATION IN 1946 AND ACCEPTED BY THE WAR ASSETS ADMINISTRATION OR ITS PREDECESSOR, THE WAR ASSETS CORPORATION, IN 1946 AND 1947. THE RECONSTRUCTION FINANCE CORPORATION HAS EXECUTED AND DELIVERED TO YOUR ADMINISTRATION DEEDS TRANSFERRING LEGAL TITLE TO EACH OF THE FOUR INSTALLATIONS TO THE UNITED STATES. ADVICE IS REQUESTED AS TO WHETHER GENERAL SERVICES ADMINISTRATION MAY TRANSFER THESE FACILITIES TO THE REQUESTING BRANCHES OF THE ARMED SERVICES WITHOUT REGARD TO THE PROVISO IN PUBLIC LAW 522, 82ND CONGRESS RELATING TO REIMBURSEMENT OF FAIR VALUE. THE FIFTH FACILITY, WHILE STATED TO BE ACTUALLY EXCESS TO THE REQUIREMENTS OF THE RECONSTRUCTION FINANCE CORPORATION, HAS NOT BEEN SO DECLARED AND REMAINS UNDER THE JURISDICTION OF THAT CORPORATION SUBJECT TO A PERMIT ISSUED TO THE DEPARTMENT OF THE AIR FORCE. ADVICE IS REQUESTED AS TO WHETHER SIMILAR ACTION MAY BE TAKEN IN THIS CASE UPON RECEIPT OF A REPORT FROM THE RECONSTRUCTION FINANCE CORPORATION THAT SUCH PROPERTY IS EXCESS TO ITS NEEDS.

THE FOUR INSTALLATIONS FIRST MENTIONED ABOVE WERE DECLARED "SURPLUS PROPERTY" UNDER THE PROVISIONS OF THE SURPLUS PROPERTY ACT OF 1944 THEN IN FORCE, WHICH DEFINED "SURPLUS PROPERTY" AS "ANY PROPERTY WHICH HAS BEEN DETERMINED TO BE SURPLUS TO THE NEEDS AND RESPONSIBILITIES OF THE OWNING AGENCY" (ACT OF OCTOBER 3, 1944, 58 STAT. 767, AS AMENDED, 50 APP. U.S.C. 1946 ED. 1612). HOWEVER, THAT ACT DID NOT PROVIDE FOR SEPARATE CATEGORY KNOWN AS "EXCESS PROPERTY," AND IT SEEMS APPARENT THAT SUCH ORIGINAL DETERMINATION IS NOT CONCLUSIVE AS TO THE CATEGORY INTO WHICH SUCH FACILITIES FALL UNDER THE PROVISIONS OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949 NOW IN FORCE. THE LATTER ACT DEFINES "EXCESS PROPERTY" AS "ANY PROPERTY UNDER THE CONTROL OF ANY FEDERAL AGENCY WHICH IS NOT REQUIRED FOR ITS NEEDS AND THE DISCHARGE OF ITS RESPONSIBILITIES, AS DETERMINED BY THE HEAD THEREOF," AND "SURPLUS PROPERTY" AS "ANY EXCESS PROPERTY NOT REQUIRED FOR THE NEEDS AND THE DISCHARGE OF THE RESPONSIBILITIES OF ALL FEDERAL AGENCIES, AS DETERMINED BY THE ADMINISTRATOR" (ACT OF JUNE 30, 1949, 63 STAT. 378, AS AMENDED, 40 U.S.C. 1952 ED. 472). IN VIEW OF THE CIRCUMSTANCES SURROUNDING THESE FOUR FACILITIES AS SET OUT IN YOUR LETTER OF APRIL 20, 1954, THEY OBVIOUSLY CANNOT BE CLASSIFIED AS "SURPLUS PROPERTY" UNDER THE ACT CURRENTLY IN FORCE, BUT PROPERLY MAY BE CONSIDERED AS "EXCESS PROPERTY" THEREUNDER AND BE HANDLED AND DISPOSED OF ACCORDINGLY.

PUBLIC LAW 522, 82ND CONGRESS, 66 STAT. 593, 40 U.S.C. 483(A), PROVIDES IN PERTINENT PART AS FOLLOWS:

"(A) IN ORDER TO MINIMIZE EXPENDITURES FOR PROPERTY, THE ADMINISTRATOR SHALL PRESCRIBE POLICIES AND METHODS TO PROMOTE THE MAXIMUM UTILIZATION OF EXCESS PROPERTY BY EXECUTIVE AGENCIES, AND HE SHALL PROVIDE FOR THE TRANSFER OF EXCESS PROPERTY AMONG FEDERAL AGENCIES AND TO THE ORGANIZATIONS SPECIFIED IN SECTION 109(F). THE ADMINISTRATOR, WITH THE APPROVAL OF THE DIRECTOR OF THE BUREAU OF THE BUDGET, SHALL PRESCRIBE THE EXTENT OF REIMBURSEMENT FOR SUCH TRANSFERS OF EXCESS PROPERTY: PROVIDED, THAT REIMBURSEMENT SHALL BE REQUIRED OF THE FAIR VALUE, AS DETERMINED BY THE ADMINISTRATOR, OF ANY EXCESS PROPERTY TRANSFERRED WHENEVER NOT PROCEEDS ARE REQUESTED PURSUANT TO SECTION 204(B) OR WHENEVER EITHER THE TRANSFERER OR THE TRANSFEREE AGENCY (OR THE ORGANIZATIONAL UNIT AFFECTED) IS SUBJECT TO THE GOVERNMENT CORPORATION CONTROL ACT (59 STAT. 597, 31 U.S.C. 841) ***".

AS REPORTED IN OFFICE LETTER OF JUNE 22, 1954 TO YOU, IN VIEW OF THE INTEREST OF THE BUREAU OF THE BUDGET AND OF THE RECONSTRUCTION FINANCE CORPORATION IN THE MATTER, THE COMMENTS OF SUCH AGENCIES WERE REQUESTED AND NOW HAVE BEEN OBTAINED.

THE LEGISLATIVE HISTORY OF PUBLIC LAW 522 INDICATES THAT THE PROVISO REQUIRING REIMBURSEMENT OF THE FAIR VALUE OF EXCESS PROPERTY TRANSFERRED WHERE EITHER THE TRANSFERER OR TRANSFEREE AGENCY IS SUBJECT TO THE GOVERNMENT CORPORATION CONTROL ACT WAS INSERTED TO MAINTAIN THE INTEGRITY OF THE CORPORATE ACCOUNTS; THAT IS, TO PREVENT THE IMPAIRMENT OF THE CAPITAL ASSETS OF A CORPORATION DISPOSING OF EXCESS PROPERTY OR THE UNJUST ENRICHMENT OF A CORPORATION RECEIVING SUCH EXCESS PROPERTY. HOWEVER, THE GOVERNMENT CORPORATIONS APPROPRIATION ACT, 1949, 62 STAT. 1183, 1187, CONTAINS A PROVISO, AS FOLLOWS:

"*** PROVIDED FURTHER, THAT THE SECRETARY OF THE TREASURY IS HEREBY AUTHORIZED AND DIRECTED TO CANCEL NOTES OF THE RECONSTRUCTION FINANCE CORPORATION IN THE AMOUNT OF $9,313,736,531, PLUS THE INTEREST ACCRUED THEREON SUBSEQUENT TO JUNE 30, 1947, THE FOREGOING STATED AMOUNT REPRESENTING UNRECOVERED COSTS TO THE CORPORATION AS OF JUNE 30, 1947, IN ITS NATIONAL DEFENSE, WAR, AND RECONVERSION ACTIVITIES, AND ANY AMOUNTS RECOVERED BY THE CORPORATION WITH RESPECT TO THESE ACTIVITIES SUBSEQUENT TO JUNE 30, 1947, SHALL, AFTER DEDUCTION OF RELATED EXPENSES, BE DEPOSITED IN THE TREASURY AS MISCELLANEOUS RECEIPTS: ***". THIS PROVISO WAS INTENDED TO RELIEVE THE RECONSTRUCTION FINANCE CORPORATION OF THE COSTS OF ITS WARTIME ACTIVITIES - INCLUDING THE COSTS OF CONSTRUCTION OF THE FIVE INDUSTRIAL FACILITIES HERE IN QUESTION. IT IS SPECIFICALLY PROVIDED THEREIN THAT ANY AMOUNTS SUBSEQUENTLY RECOVERED WITH RESPECT TO SUCH ACTIVITIES WILL NOT BE CREDITED TO THE RECONSTRUCTION FINANCE CORPORATION BUT WILL BE DEPOSITED INTO THE TREASURY AS MISCELLANEOUS RECEIPTS. HENCE IT IS APPARENT THAT THE PURPOSE PROPOSED TO BE EFFECTED BY THE QUOTED PORTION OF PUBLIC LAW 522 WOULD NOT NECESSITATE THE PAYMENT BY THE ARMED SERVICES OF FAIR VALUE FOR THE FACILITIES HERE INVOLVED SINCE ANY SUMS PAID BY THE TRANSFEREES THEREFOR WOULD NOT BE CREDITED TO THE RECONSTRUCTION FINANCE CORPORATION. THUS THE TRANSFER OF THE PROPERTIES WITHOUT REIMBURSEMENT IN NO WAY WOULD IMPAIR THE CAPITAL STRUCTURE OF THE RECONSTRUCTION FINANCE CORPORATION OR ITS SUCCESSOR LIQUIDATING AGENCY. COPIES OF LETTER DATED NOVEMBER 1, 1954 FROM THE DIRECTOR, BUREAU OF THE BUDGET AND LETTER DATED AUGUST 31, 1954 FROM MR. LAURENCE B. ROBBINS, ASSISTANT TO THE SECRETARY OF THE TREASURY, INTERPOSING NO OBJECTION TO THE TRANSFER OF SUCH PROPERTIES WITHOUT REIMBURSEMENT, ARE ATTACHED.

ACCORDINGLY, BOTH QUESTIONS ARE ANSWERED IN THE AFFIRMATIVE.