B-123415, JUN. 17, 1955

B-123415: Jun 17, 1955

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THE SECOND CONTRACT (ISPA-306) PROVIDED THAT THE GOVERNMENT WAS TO BUY THE ENTIRE OUTPUT OF A STEAM ELECTRIC GENERATING PLANT TO BE CONSTRUCTED BY CENTRAL AND THE GOVERNMENT WAS TO SELL TO CENTRAL ELECTRIC POWER AND ENERGY FOR THE USE OF CENTRAL'S MEMBERS FOR THE FORTY-YEAR PERIOD. BOTH CONTRACTS CONTAINED AN IDENTICAL PROVISION TO THE EFFECT THAT THE EXPENDITURE OF FUND BY THE GOVERNMENT UNDER THE CONTRACTS WAS EXPRESSLY CONDITIONED AND CONTINGENT ON THE CONGRESS MAKING THE NECESSARY APPROPRIATIONS TO CARRY OUT THE PROVISIONS OF THE AGREEMENTS. THAT PROVISION WAS TO THE EFFECT THAT NO OBLIGATION CONTAINED IN THE AGREEMENTS FOR THE FUTURE PAYMENT OF MONEY BY THE GOVERNMENT SHOULD BE BINDING UPON.

B-123415, JUN. 17, 1955

TO THE ADMINISTRATOR AND AUTHORIZED CERTIFYING OFFICER, SOUTHWESTERN POWER ADMINISTRATION:

YOUR LETTER OF MARCH 22, 1955, TRANSMITTED THREE INVOICES OF THE CENTRAL ELECTRIC POWER COOPERATIVE IN THE AMOUNT OF $43,780 EACH, FOR A TOTAL OF $131,340, REPRESENTING AMOUNTS CLAIMED AS COMPENSATION FOR THERMAL ELECTRIC ENERGY AND FOR TRANSMISSION OF POWER AND ENERGY FURNISHED UNDER CONTRACT NO. 14-02-001-704, DATED JANUARY 11, 1955. YOU REQUEST A DECISION AS TO WHETHER THE CLAIMS MAY BE CERTIFIED FOR PAYMENT.

IT APPEARS THAT IN 1950 THE CLAIMANT, HEREINAFTER REFERRED TO AS CENTRAL, ENTERED INTO TWO CONTRACTS WITH THE GOVERNMENT, ACTING THROUGH THE SOUTHWESTERN POWER ADMINISTRATION. THE FIRST CONTRACT (ISPA-305) PROVIDED THAT CENTRAL SHOULD CONSTRUCT AND LEASE TO THE GOVERNMENT FOR A PERIOD OF 40 YEARS AN ELECTRIC TRANSMISSION SYSTEM, AND THE GOVERNMENT, IN TURN, AGREED TO MAINTAIN AND OPERATE THE SYSTEM FOR THE SAME PERIOD OF TIME. THE SECOND CONTRACT (ISPA-306) PROVIDED THAT THE GOVERNMENT WAS TO BUY THE ENTIRE OUTPUT OF A STEAM ELECTRIC GENERATING PLANT TO BE CONSTRUCTED BY CENTRAL AND THE GOVERNMENT WAS TO SELL TO CENTRAL ELECTRIC POWER AND ENERGY FOR THE USE OF CENTRAL'S MEMBERS FOR THE FORTY-YEAR PERIOD. BOTH CONTRACTS CONTAINED AN IDENTICAL PROVISION TO THE EFFECT THAT THE EXPENDITURE OF FUND BY THE GOVERNMENT UNDER THE CONTRACTS WAS EXPRESSLY CONDITIONED AND CONTINGENT ON THE CONGRESS MAKING THE NECESSARY APPROPRIATIONS TO CARRY OUT THE PROVISIONS OF THE AGREEMENTS, AND THAT IN CASE THE CONGRESS FAILED TO MAKE SUCH APPROPRIATIONS CENTRAL RELEASED THE GOVERNMENT FROM ALL LIABILITY DUE TO THE INABILITY OF THE GOVERNMENT TO PERFORM THE AGREEMENTS. ALSO, THAT PROVISION WAS TO THE EFFECT THAT NO OBLIGATION CONTAINED IN THE AGREEMENTS FOR THE FUTURE PAYMENT OF MONEY BY THE GOVERNMENT SHOULD BE BINDING UPON, OR ENFORCEABLE AGAINST, THE GOVERNMENT UNLESS AND UNTIL THE CONGRESS FIRST APPROPRIATED FUNDS OUT OF WHICH SUCH OBLIGATIONS COULD BE LEGALLY PAID.

THE TRANSMISSION SYSTEM WAS COMPLETED BY CENTRAL PRIOR TO JUNE 30, 1953, AND PURSUANT TO THE CONTRACTS, CENTRAL DELIVERED IT TO THE SOUTHWESTERN POWER ADMINISTRATION AND STARTED PURCHASING ELECTRIC POWER AND ENERGY FROM SOUTHWESTERN. BECAUSE OF DOUBT AS TO WHETHER THE FUNDS APPROPRIATED FOR THE FISCAL YEAR ENDED JUNE 30, 1954, COULD BE USED FOR THE PAYMENT OF THE OBLIGATIONS OF THE GOVERNMENT UNDER CONTRACTS NOS. ISPA-305 AND ISPA-306, NO PAYMENTS WERE MADE TO CENTRAL FOR THE FISCAL YEAR 1954. CENTRAL FILED A SUIT ON OCTOBER 15, 1953, IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA IN WHICH IT PETITIONED THE COURT FOR SUMMARY JUDGMENT TO DIRECT THAT "THE DEFENDANTS NOT REFUSE OR FAIL TO CARRY OUT THE TERMS OF SAID CONTRACTS WITH THE PLAINTIFF FOR THE REASON THAT CONGRESS HAS FAILED OR REFUSED TO APPROPRIATE FUNDS" FOR THE FISCAL YEAR 1954 OUT OF WHICH THE OBLIGATIONS INCURRED UNDER THE CONTRACTS MIGHT BE LEGALLY PAID. THE DISTRICT COURT GRANTED PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT ON MARCH 29, 1954. THE GOVERNMENT APPEALED FROM THE JUDGMENT OF THE COURT AND ON APRIL 7, 1955, THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT REVERSED THE JUDGMENT OF THE DISTRICT COURT. IN THE MEANTIME, AND IN VIEW OF THE LITIGATION THEN PENDING, THE GOVERNMENT AND CENTRAL ENTERED INTO AN "INTERIM ELECTRIC SERVICE AGREEMENT" ON JANUARY 11, 1955, (CONTRACT NO. 14-02-001-704) FOR THE PERIOD FROM NOVEMBER 1, 1954, TO JANUARY 31, 1955, UNDER WHICH THE GOVERNMENT AGREED TO SELL AND DELIVER TO CENTRAL CERTAIN AMOUNTS OF ELECTRIC POWER CAPACITY IN THE MANNER AND AT THE RATES AGREED UPON IN SECTION 1 OF THE AGREEMENT. ALSO, UNDER SECTION 3 OF THE AGREEMENT CENTRAL AGREED TO SELL AND DELIVER TO THE GOVERNMENT CERTAIN AMOUNTS OF THERMAL ELECTRIC ENERGY, AND TO FURNISH TO THE GOVERNMENT TRANSMISSION LINE SERVICES. IN COMPENSATION FOR THE ELECTRIC ENERGY AND TRANSMISSION LINE SERVICES, SECTION 5 PROVIDED THAT THE GOVERNMENT PAY CENTRAL THE AMOUNT OF $43,780 EACH MONTH. THE INVOICES TRANSMITTED WITH YOUR LETTER COVER THE CLAIM OF CENTRAL FOR POWER AND TRANSMISSION LINE SERVICES FURNISHED THE GOVERNMENT FOR THE MONTHS OF NOVEMBER AND DECEMBER 1954, AND JANUARY 1955.

YOU INDICATE IN YOUR LETTER THAT THE MANAGEMENT OF CENTRAL HAS STATED A WILLINGNESS TO PAY THE AMOUNT DUE THE GOVERNMENT UNDER CONTRACT NO. 14-02- 001-704, PROVIDED THE GOVERNMENT PROCESS CENTRAL'S CLAIMS UNDER THAT CONTRACT FOR PAYMENT. YOUR DOUBT IN THE MATTER ARISES BECAUSE OF THE "STATUS OF CONTRACTS ISPA 305, ISPA-306, AND 14-02-001-658"--- THE LATTER CONTRACT BEING AN INTERIM SERVICE AGREEMENT FOR 1953--- AND BECAUSE OF THE FACT THAT WE ADVISED YOU ON JANUARY 28, 1955, THAT NO ACTION WOULD BE TAKEN ON THE CLAIMS TRANSMITTED WITH YOUR LETTER OF DECEMBER 3, 1954, UNTIL THE ISSUES INVOLVED IN THE LITIGATION FINALLY WERE ADJUDICATED.

THE CLAIMS INVOLVED IN YOUR SUBMISSION OF DECEMBER 3, 1954, CONCERNED TRANSACTIONS BETWEEN CENTRAL AND THE GOVERNMENT DURING THE FISCAL YEAR 1954 AND THE QUESTION OF THE AVAILABILITY OF FUNDS APPROPRIATED FOR THAT FISCAL YEAR WAS FOR CONSIDERATION IN THAT CASE. IN THE INSTANT MATTER, THERE IS FOR CONSIDERATION THE PROVISIONS OF THE ACT OF JULY 1, 1954, 68 STAT. 361, MAKING APPROPRIATIONS FOR THE DEPARTMENT OF THE INTERIOR FOR THE FISCAL YEAR ENDING JUNE 30, 1955. INCLUDED IN THE VARIOUS AMOUNTS APPROPRIATED WAS AN ITEM OF $1,765,000 FOR NECESSARY EXPENSES OF OPERATION AND MAINTENANCE OF POWER TRANSMISSION FACILITIES AND OF MARKETING ELECTRIC POWER AND ENERGY PURSUANT TO THE PROVISIONS OF SECTION 5 OF THE FLOOD CONTROL ACT OF 1944 (16 U.S.C. 825A) AS APPLIED TO THE SOUTHWESTERN POWER AREA. ALTHOUGH THE LANGUAGE OF THE APPROPRIATION ACT DOES NOT APPEAR TO HAVE ANY BEARING ON THE PROPRIETY OF PAYMENT OF THE INSTANT CLAIM, REFERENCE TO PAGE 7 OF HOUSE OF REPRESENTATIVES REPORT NO. 1926, 83RD CONGRESS, BEING THE CONFERENCE REPORT ON THE INTERIOR DEPARTMENT APPROPRIATION BILL, 1955, DISCLOSES THE FOLLOWING:

"AMENDMENT NO. 2: APPROPRIATES $1,765,000 INSTEAD OF $625,000 AS PROPOSED BY THE HOUSE AND $2,337,000 AS PROPOSED BY THE SENATE. OF THE AMOUNT RECOMMENDED BY THE CONFERENCE COMMITTEE, $1,140,000 IS FOR THE PURPOSE OF IMPLEMENTING "INTERIM" CONTRACTS BETWEEN THE SOUTHWESTERN POWER ADMINISTRATION AND CERTAIN GENERATING AND TRANSMITTING COOPERATIVES IN THE AREA. ITS EXPENDITURE IS LIMITED TO MARCH 1, 1955, UNLESS PERMANENT CONTRACTS HAVE BEEN COMPLETED BY THAT TIME. THE COMMITTEE URGENTLY INSISTS THAT PERMANENT CONTRACTS BE COMPLETED BETWEEN THE SOUTHWESTERN POWER ADMINISTRATION, THE RURAL ELECTRIC GENERATING AND TRANSMITTING COOPERATIVES, AND PRIVATE ELECTRICAL UTILITIES IN THE AREA AT THE EARLIEST POSSIBLE DATE, SO THAT THIS APPROPRIATION FOR ,INTERIM" CONTRACTS WILL BE SUFFICIENT TO CARRY THROUGH THE PERIOD OF BOTH CONTRACT NEGOTIATIONS AND CONSTRUCTION OF NECESSARY PHYSICAL CONNECTIONS.

"THE COMMITTEE FURTHER RECOGNIZES THAT CERTAIN LAWSUITS ARE PENDING IN REGARD TO THE RIGHT OF THE FEDERAL GOVERNMENT TO PURCHASE ELECTRIC POWER AND ENERGY FROM STEAM PLANTS BUILT BY GENERATING AND TRANSMITTING COOPERATIVES WITH FUNDS BORROWED FROM THE RURAL ELECTRIFICATION ADMINISTRATION FOR RESALE BY IT TO OTHERS, AND THE RIGHT OF THE FEDERAL GOVERNMENT TO LEASE, IN THEIR ENTIRETY, CERTAIN TRANSMISSION SYSTEMS CONSTRUCTED WITH RURAL ELECTRIFICATION FUNDS, AND ULTIMATELY TO PURCHASE SAME. THEREFORE, THE ACTION OF THE CONFERENCE COMMITTEE, IN MAKING THE ABOVE RECOMMENDATIONS, IS NOT INTENDED TO PREJUDGE THE VALIDITY OF SAID CONTRACTS BETWEEN SOUTHWESTERN POWER ADMINISTRATION AND THE VARIOUS RURAL- ELECTRIC COOPERATIVES, NOR DEEMED TO BE CONGRESSIONAL INTERPRETATION OF APPLICABLE LAW.'

IT HAS LONG BEEN SETTLED THAT THE COURTS IN CONSTRUING A STATUTE SEEK ONLY THAT INTERPRETATION WHICH "CARRIES INTO EFFECT THE TRUE INTENT AND OBJECT OF THE LEGISLATURE IN THE ENACTMENT.' MINOR V. MECHANICS BANK, 1 PETERS 46, 64. ALTHOUGH THE LANGUAGE OF THE APPROPRIATION ACT INVOLVED DOES NOT AFFORD ANY CLUE AS TO THE AVAILABILITY OF THE APPROPRIATION FOR PAYMENT OF THE CLAIMS TRANSMITTED WITH YOUR LETTER, THE LANGUAGE OF THE CONFERENCE REPORT, QUOTED ABOVE, MAKES IT ABUNDANTLY CLEAR THAT THE AMOUNT OF $1,140,000 WAS APPROPRIATED FOR PAYMENTS UNDER INTERIM CONTRACTS BETWEEN THE SOUTHWESTERN POWER ADMINISTRATION AND COOPERATIVES IN THE SOUTHWESTERN AREA.

ACCORDINGLY, SINCE THE INVOICES TRANSMITTED WITH YOUR LETTER AROSE UNDER SUCH AN INTERIM CONTRACT AND COVER THE PERIOD FROM NOVEMBER 1, 1954, TO JANUARY 30, 1955, ONLY, THE INVOICES, WHICH ARE RETURNED HEREWITH, MAY BE CERTIFIED FOR PAYMENT IF OTHERWISE CORRECT.