B-125156, JUNE 27, 1956, 35 COMP. GEN. 715

B-125156, JUNE 27, 1956, 35 COMP. GEN. 715

LEASES - REPAIRS AND IMPROVEMENTS - PERMANENT IMPROVEMENTS - PROHIBITION ALTHOUGH EXPENDITURES FOR IMPROVEMENTS AND ALTERATIONS TO UNIMPROVED PRIVATE PROPERTY LEASED BY THE GOVERNMENT FOR OPEN STORAGE OF STOCKPILE MATERIALS DO NOT CONTRAVENE THE RULE THAT APPROPRIATED FUNDS MAY NOT BE USED FOR THE PERMANENT IMPROVEMENT OF PRIVATE PROPERTY, PROVIDED THE COST IS NOT EXTRAVAGANT OR DISPROPORTIONATE TO THE GOVERNMENT NEEDS, EXPENDITURES FOR THE CONSTRUCTION OF PERMANENT-TYPE WAREHOUSES AND TANK STORAGE FACILITIES ON SUCH LEASED LAND MAY NOT BE AUTHORIZED IN THE ABSENCE OF SPECIFIC LEGISLATION.

TO THE ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION, JUNE 27, 1956:

REFERENCE IS MADE TO YOUR LETTER OF APRIL 9, 1956, CONTAINING COMMENTS RELATING TO OUR LETTER OF OCTOBER 21, 1955, IN WHICH WE QUESTIONED THE LEGAL AUTHORITY FOR THE CONSTRUCTION OF IMPROVEMENTS OF A PERMANENT CHARACTER AT A COST IN EXCESS OF $11,000,000 ON PRIVATELY OWNED PROPERTY LEASED TO THE GOVERNMENT. THESE IMPROVEMENTS ARE OF TWO CATEGORIES, NAMELY, IMPROVEMENTS TO UNIMPROVED LANDS LEASED FOR OPEN STORAGE OF STOCKPILING MATERIALS, AND CONSTRUCTION OF GOVERNMENT-OWNED PERMANENT-TYPE WAREHOUSES ON LEASED LANDS.

IT IS STATED IN YOUR LETTER THAT SECTION 3 (B) OF THE STRATEGIC AND CRITICAL MATERIALS STOCK PILING ACT, 60 STAT. 597, 50 U.S.C. 98B (B), WHICH PROVIDES FOR THE STORAGE, SECURITY, AND MAINTENANCE OF STRATEGIC AND CRITICAL MATERIALS FOR STOCKPILING PURPOSES ON MILITARY OR NAVAL RESERVATIONS, OR OTHER LOCATIONS, IS AUTHORITY, IN THE OPINION OF YOUR ADMINISTRATION, FOR THE USE OF APPROPRIATED STOCKPILE FUNDS TO THE EXTENT NECESSARY TO PROVIDE PROPER STORAGE FOR STOCKPILE MATERIALS EVEN THOUGH SUCH MATERIALS MAY BE STORED ON LEASED LAND. THE FURTHER OPINION IS EXPRESSED THAT THE RESPONSIBILITY TO PROVIDE FOR STORAGE ON MILITARY AND NAVAL RESERVATIONS "OR OTHER LOCATIONS" CARRIES WITH IT AUTHORITY TO DISCHARGE THE RESPONSIBILITY AT SUCH OTHER LOCATIONS IN THE MANNER WHICH HAS BEEN FOLLOWED UNLESS IT IS PROHIBITED BY ANY APPLICABLE STATUTORY RESTRICTIONS, NONE OF WHICH ARE KNOWN INSOFAR AS THE QUESTIONED CASES ARE CONCERNED.

THE AUTHORITY TO STORE STOCKPILE MATERIALS ON LEASED PREMISES, AS SUCH, IS NOT QUESTIONED BY OUR OFFICE, BUT THE QUESTION GOES TO THE AUTHORITY TO USE APPROPRIATED FUNDS FOR THE CONSTRUCTION OF IMPROVEMENTS OF A PERMANENT CHARACTER ON PRIVATELY OWNED PROPERTY LEASED TO THE GOVERNMENT. IT IS WELL-ESTABLISHED RULE THAT APPROPRIATED FUNDS MAY NOT ORDINARILY BE USED FOR THE PERMANENT IMPROVEMENT OF PRIVATE PROPERTY UNLESS SPECIFICALLY AUTHORIZED BY LAW. SEE 15 COMP. GEN. 761; 20 ID. 927, 29 ID. 279. THIS RULE IS BASED UPON THE FACT THAT NO GOVERNMENT OFFICIAL, IN THE ABSENCE OF SPECIFIC LEGISLATION, IS AUTHORIZED TO GIVE AWAY GOVERNMENT PROPERTY.

THE LEASES FOR OPEN STORAGE SPACE INVOLVED UNIMPROVED LAND UPON WHICH WORK WAS PERFORMED SUCH AS GRADING, CONSTRUCTION AND RELOCATION OF RAILROAD TRACKS, SURFACING WITH PRESSED STONE OR CONCRETE, ERECTION OF PROTECTIVE FENCING, AND CONSTRUCTION OF SMALL SHELTER SHEDS OR OTHER REMOVABLE FACILITIES. RENTAL WAS NOMINAL AND IN NO CASE WAS THE LESSOR OBLIGATED BY THE LEASE TO PREPARE THE SITE FOR STORAGE. IT APPEARS FROM THE RECORD THAT SUCH SURFACING WAS ESSENTIAL TO ACCOMPLISH THE PURPOSE FOR WHICH THE LAND WAS LEASED, AND THEREFORE IN THE GOVERNMENT'S INTEREST. ALSO, WITH THE POSSIBLE EXCEPTION OF THE GRADING, THE WORK DONE DOES NOT RESULT IN A PERMANENT IMPROVEMENT TO THE LEASED LAND INSOFAR AS THE LESSOR IS CONCERNED. UNDER THESE CIRCUMSTANCES, THERE DOES NOT APPEAR TO BE A GIVING AWAY OF GOVERNMENT PROPERTY SO AS TO REQUIRE THE INVOKING OF THE GENERAL RULE. ACCORDINGLY, AND IN VIEW OF THE RESPONSIBILITY PLACED UPON YOUR ADMINISTRATION TO PROVIDE FOR THE STORAGE OF STOCKPILE MATERIALS, NO FURTHER QUESTION WILL BE RAISED AS TO THE LEGAL AUTHORITY FOR THE ALTERATIONS TO THE OPEN STORAGE FACILITIES PROVIDED, OF COURSE, THAT THE COST OF THE ALTERATIONS ARE NOT EXTRAVAGANT OR DISPROPORTIONATE TO THE NEEDS TO WHICH THE FACILITIES ARE INTENDED TO BE PUT BY THE GOVERNMENT.

THE SECOND CATEGORY CONCERNS THE ERECTION OF PERMANENT-TYPE WAREHOUSES AND TANK STORAGE FACILITIES ON LEASED LAND, LOCATED AT HARAHAN, LOUISIANA, WARREN, OHIO, AND HAMMOND, INDIANA. THE LEASES ARE FOR PERIODS OF 3 TO 5 YEARS WITH OPTIONS TO THE GOVERNMENT TO RENEW FOR THREE SUCCESSIVE PERIODS OF 5 YEARS EACH, AND IT IS RECOGNIZED IN YOUR LETTER THAT THE BUILDINGS HAVE A LIFE EXPECTANCY CONSIDERABLY BEYOND THE PERIOD THE GOVERNMENT HAS CONTROL OF THE LAND. SINCE THERE IS NOTHING IN SECTION 3 (B) OF THE STRATEGIC AND CRITICAL MATERIAL STOCK PILING ACT WHICH AUTHORIZES THE ERECTION OF PERMANENT-TYPE STRUCTURES ON LEASED PROPERTY, NOR ANY INDICATION IN THE LEGISLATIVE HISTORY OF THE ACTS MAKING APPROPRIATIONS FOR STORAGE FACILITIES THAT WAREHOUSES AND TANK STORAGE FACILITIES WERE TO BE CONSTRUCTED ON LEASED PREMISES, THE GENERAL RULE THAT APPROPRIATED FUNDS MAY NOT BE USED FOR PERMANENT IMPROVEMENTS TO PRIVATE PROPERTY IS APPLICABLE. SEE IN THIS CONNECTION 6 COMP. DEC. 295. IT WILL THEREFORE BE NECESSARY THAT A FACTUAL REPORT WITH RESPECT TO THE CONSTRUCTION OF THESE FACILITIES WITH APPROPRIATE COMMENT THEREON BE INCLUDED IN OUR AUDIT REPORT TO THE CONGRESS ON STOCKPILING ACTIVITIES.