B-121997, JANUARY 31, 1955, 34 COMP. GEN. 353

B-121997: Jan 31, 1955

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

LICENSES - FEES - PRIORITY OF APPLICATION TO PENALTIES PAYMENTS RECEIVED BY THE FEDERAL POWER COMMISSION WHICH ARE INSUFFICIENT TO COVER BOTH ANNUAL LICENSE FEES AND DELINQUENT PAYMENT PENALTIES ASSESSED UNDER SECTION 17 (B) OF THE FEDERAL POWER ACT SHOULD BE APPLIED FIRST TO THE PENALTIES DUE AND THEN THE REMAINDER. 1955: REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 3. REQUESTING AN OPINION AS TO THE PROPER TREATMENT OF PARTIAL PAYMENTS MADE BY LICENSEES WHO ARE INDEBTED TO THE UNITED STATES BOTH FOR ANNUAL CHARGES UNDER THEIR LICENSES AND FOR PENALTIES ASSESSED FOR DELINQUENCY IN PAYMENT OF SUCH CHARGES. THE SPECIFIC QUESTION PRESENTED IS WHETHER PAYMENTS WHICH ARE NOT SUFFICIENT TO COVER BOTH ANNUAL CHARGES DUE AND DELINQUENT PAYMENT PENALTIES DUE SHOULD BE APPLIED FIRST TO PENALTIES DUE AND THE REMAINDER.

B-121997, JANUARY 31, 1955, 34 COMP. GEN. 353

LICENSES - FEES - PRIORITY OF APPLICATION TO PENALTIES PAYMENTS RECEIVED BY THE FEDERAL POWER COMMISSION WHICH ARE INSUFFICIENT TO COVER BOTH ANNUAL LICENSE FEES AND DELINQUENT PAYMENT PENALTIES ASSESSED UNDER SECTION 17 (B) OF THE FEDERAL POWER ACT SHOULD BE APPLIED FIRST TO THE PENALTIES DUE AND THEN THE REMAINDER, IF ANY, TO THE ANNUAL FEES.

ASSISTANT COMPTROLLER GENERAL WEITZEL TO THE CHAIRMAN, FEDERAL POWER COMMISSION, JANUARY 31, 1955:

REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 3, 1954, REQUESTING AN OPINION AS TO THE PROPER TREATMENT OF PARTIAL PAYMENTS MADE BY LICENSEES WHO ARE INDEBTED TO THE UNITED STATES BOTH FOR ANNUAL CHARGES UNDER THEIR LICENSES AND FOR PENALTIES ASSESSED FOR DELINQUENCY IN PAYMENT OF SUCH CHARGES. THE SPECIFIC QUESTION PRESENTED IS WHETHER PAYMENTS WHICH ARE NOT SUFFICIENT TO COVER BOTH ANNUAL CHARGES DUE AND DELINQUENT PAYMENT PENALTIES DUE SHOULD BE APPLIED FIRST TO PENALTIES DUE AND THE REMAINDER, IF ANY, TO ANNUAL CHARGES, OR VICE VERSA.

SECTION 17 (B) OF THE FEDERAL POWER ACT, 16 U.S.C. 810 (B), UNDER WHICH THE PENALTIES ARE ASSESSED, IS AS FOLLOWS:

IN CASE OF DELINQUENCY ON THE PART OF ANY LICENSEE IN THE PAYMENT OF ANNUAL CHARGES A PENALTY OF 5 PERCENTUM OF THE TOTAL AMOUNT SO DELINQUENT MAY BE ADDED TO THE TOTAL CHARGES WHICH SHALL APPLY FOR THE FIRST MONTH OR PART OF MONTH SO DELINQUENT WITH AN ADDITIONAL PENALTY OF 3 PERCENTUM FOR EACH SUBSEQUENT MONTH UNTIL THE TOTAL OF THE CHARGES AND PENALTIES ARE PAID OR UNTIL THE LICENSE IS CANCELED AND THE CHARGES AND PENALTIES SATISFIED IN ACCORDANCE WITH LAW.

AN EXAMINATION OF THE LEGISLATIVE HISTORY OF THE FEDERAL POWER ACT OF AUGUST 26, 1935, 49 STAT. 838, 845, WHICH ADDED SECTION 17 (B) TO THE FEDERAL WATER POWER ACT, HAS FAILED TO DISCLOSED ANY INFORMATION BEARING DIRECTLY ON THE QUESTION PRESENTED. HOWEVER, IT IS INDICATED THAT THE SOLE PURPOSE OF PROVIDING THE PENALTY WAS TO ASSIST THE COMMISSION IN THE COLLECTION OF ANNUAL CHARGES. THUS, ON PAGE 46 OF SENATE REPORT NO. 621, 74TH CONGRESS, DATED MAY 13, 1935, TO ACCOMPANY S. 2796, IT IS STATED THAT "1THE COMMISSION HAS HAD DIFFICULTY IN THE COLLECTION OF SMALL SUMS, AND THIS PENALTY SHOULD BE OF GREAT ASSISTANCE IN SECURING ENFORCEMENT.'

THE WORDING OF SECTION 17 (B), WHICH APPLIES A PENALTY OF THREE PERCENTUM OF THE DELINQUENT ANNUAL CHARGES FOR EACH SUBSEQUENT MONTH UNTIL THE TOTAL OF THE CHARGES AND PENALTIES ARE PAID, APPEARS TO REQUIRE APPLICATION OF PARTIAL PAYMENTS AGAINST THE PENALTIES FIRST. THE APPLICATION OF SUCH PAYMENTS AGAINST THE DELINQUENT ANNUAL CHARGES FIRST COULD RESULT IN THE EXTINGUISHING OF SUCH CHARGES WHILE UNPAID PENALTIES WERE STILL OUTSTANDING, THUS PRESENTING A SITUATION WHERE SECTION 17 (B) PERMITTED THE ASSESSMENT, SINCE THE ONLY BASIS AGAINST WHICH THE ADDITIONAL PENALTIES COULD BE ASSESSED UNDER SECTION 17 (B/-- THE DELINQUENT ANNUAL CHARGES--- HAD BEEN EXTINGUISHED. THE CONGRESS OBVIOUSLY COULD NOT HAVE INTENDED SUCH A RESULT.

ALSO, IT SEEMS APPARENT THAT THE PURPOSE OF THE PENALTY WOULD BEST BE ACHIEVED BY APPLYING PARTIAL PAYMENTS AGAINST THE PENALTY FIRST AND THE BALANCE, IF ANY, AGAINST THE ANNUAL CHARGES. TO DO OTHERWISE, COULD RESULT IN A SITUATION WHERE A LICENSEE WOULD HAVE PAID ALL THE DELINQUENT ANNUAL CHARGES AND NONE OF THE PENALTIES, LEAVING THE COMMISSION WITH NO RECOURSE AGAINST A REFUSAL TO PAY THE PENALTIES OTHER THAN REVOKING THE LICENSE, THUS NEGATING THE INTENDED COERCIVE EFFECT OF THE PENALTIES.

ACCORDINGLY, IT IS THE OPINION OF THIS OFFICE THAT PARTIAL PAYMENTS MADE BY LICENSEES WHO ARE INDEBTED TO THE UNITED STATES FOR BOTH ANNUAL CHARGES UNDER THEIR LICENSES AND FOR PENALTIES FOR DELINQUENCY IN PAYMENT OF SUCH ANNUAL CHARGES SHOULD BE APPLIED FIRST AGAINST THE PENALTIES DUE AND THE REMAINDER, IF ANY, AGAINST THE ANNUAL CHARGES.