B-129000, MAR. 28, 1957

B-129000: Mar 28, 1957

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ASSISTANT TO VICE PRESIDENT: REFERENCE IS MADE TO YOUR LETTER. MOBILE AND OHIO RAILROAD COMPANY ORIGINALLY CLAIMED AND WAS PAID TRANSPORTATION CHARGES BASED UPON THE GROSS COMMERCIAL RATES WITHOUT LAND-GRANT DEDUCTIONS. IT WAS DETERMINED THAT LAND-GRANT DEDUCTIONS WERE PROPERLY APPLICABLE TO THIS SHIPMENT. ADMINISTRATIVE ADJUSTMENT WAS MADE ACCORDINGLY. IT IS YOUR CONTENTION. THAT LAND-GRANT DEDUCTIONS WERE NOT APPLICABLE BECAUSE THE SHIPMENT MOVED AFTER LEND-LEASE WAS TERMINATED. YOU ASSERT THAT LEND-LEASE WAS TERMINATED FOR THE REASON THAT IT WAS NO LONGER NECESSARY FOR THE DEFENSE OF THE UNITED STATES. MATERIALS FURNISHED THEREAFTER TO FOREIGN GOVERNMENTS BY THE UNITED STATES UNDER LEND-LEASE WERE NOT FURNISHED FOR NAVAL OR MILITARY USE WITHIN THE SCOPE OF SECTION 321 (A).

B-129000, MAR. 28, 1957

TO MR. E. A. REYNOLDS, ASSISTANT TO VICE PRESIDENT:

REFERENCE IS MADE TO YOUR LETTER, WRITTEN UNDER YOUR FILE NO. 215 17, CONCERNING THE CLAIM OF THE GULF, MOBILE AND OHIO RAILROAD COMPANY (THEIR SUPPLEMENTAL BILL NO. 134040-A) FOR REFUND OF $52.14, REPRESENTING DEDUCTIONS MADE ADMINISTRATIVELY FOR LAND GRANT ON SHIPMENTS OF HARDWOOD LUMBER SECURED FOR THE UNITED KINGDOM UNDER LEND LEASE AND TRANSPORTED FROM ONTONAGON, MICHIGAN, TO MOBILE, ALABAMA, UNDER GOVERNMENT BILL OF LADING NO. DA-TPS-1471130, DATED JUNE 4, 1946.

THE GULF, MOBILE AND OHIO RAILROAD COMPANY ORIGINALLY CLAIMED AND WAS PAID TRANSPORTATION CHARGES BASED UPON THE GROSS COMMERCIAL RATES WITHOUT LAND-GRANT DEDUCTIONS. IN THE SUBSEQUENT AUDIT OF THE CARRIER'S BILL BY OUR TRANSPORTATION DIVISION, IT WAS DETERMINED THAT LAND-GRANT DEDUCTIONS WERE PROPERLY APPLICABLE TO THIS SHIPMENT, AND ADMINISTRATIVE ADJUSTMENT WAS MADE ACCORDINGLY.

IT IS YOUR CONTENTION, HOWEVER, THAT LAND-GRANT DEDUCTIONS WERE NOT APPLICABLE BECAUSE THE SHIPMENT MOVED AFTER LEND-LEASE WAS TERMINATED. YOU ASSERT THAT LEND-LEASE WAS TERMINATED FOR THE REASON THAT IT WAS NO LONGER NECESSARY FOR THE DEFENSE OF THE UNITED STATES, AND THAT, CONSEQUENTLY, MATERIALS FURNISHED THEREAFTER TO FOREIGN GOVERNMENTS BY THE UNITED STATES UNDER LEND-LEASE WERE NOT FURNISHED FOR NAVAL OR MILITARY USE WITHIN THE SCOPE OF SECTION 321 (A), TRANSPORTATION ACT OF 1940, 54 STAT. 898, 954; 49 U.S.C. 65, 1940 EDITION. HOWEVER, ALTHOUGH LEND-LEASE WAS TERMINATED AS A WEAPON FOR THE DEFENSE OF THE UNITED STATES, AUTHORITY TO CARRY OUT LEND-LEASE COMMITMENTS ENTERED INTO PRIOR TO JUNE 30, 1946, WAS EXTENDED TO JUNE 30, 1949, BY THE ACT OF APRIL 16, 1945, 59 STAT. 52; 22 U.S.C. 412.

SECTION 321 (A) OF THE TRANSPORTATION ACT OF 1940, PROVIDED THAT---

"* * * THE FULL APPLICABLE COMMERCIAL RATES, FARES, OR CHARGES SHALL BE PAID FOR TRANSPORTATION BY ANY COMMON CARRIER * * * OF ANY PERSONS OR PROPERTY FOR THE UNITED STATES, OR ON ITS BEHALF EXCEPT THAT THE FOREGOING PROVISIONS SHALL NOT APPLY TO THE TRANSPORTATION OF MILITARY OR NAVAL PROPERTY OF THE UNITED STATES MOVING FOR MILITARY OR NAVAL AND NOT FOR CIVIL USE * * *.'

THERE DOES NOT APPEAR TO BE ANY QUESTION THAT THE MATERIAL WHICH MOVED UNDER GOVERNMENT BILL OF LADING NO. DA-TPS-1471130 WAS PROPERTY OF THE UNITED STATES. MATERIAL SHIPPED BY THE UNITED STATES MAY BE MILITARY OR NAVAL PROPERTY OF THE UNITED STATES, WHETHER OR NOT IT IS SECURED BY A MILITARY OR NAVAL DEPARTMENT, AND MAY MOVE FOR A MILITARY OR NAVAL USE, WHETHER OR NOT INTENDED FOR THE DIRECT USE OF A MILITARY OR NAVAL DEPARTMENT OF THE UNITED STATES. SEE NORTHERN PACIFIC RY. V. UNITED STATES, 330 U.S. 248. THE MILITARY OR NAVAL CHARACTER OF THE MATERIAL IS DETERMINED BY THE USE FOR WHICH IT IS PRIMARILY INTENDED. ON PAGE 254 OF THE NORTHERN PACIFIC RY. CASE PROPERTY FOR A MILITARY OR NAVAL USE IS DEFINED AS---

"* * * ALL PROPERTY CONSUMED BY THE ARMED FORCES OR BY THEIR ADJUNCTS, ALL PROPERTY WHICH THEY USE TO FURTHER THEIR PROJECTS; ALL PROPERTY WHICH SERVES THEIR MANY NEEDS OR WANTS IN TRAINING OR PREPARATION FOR WAR, IN COMBAT, IN MAINTAINING THEM AT HOME OR ABROAD, IN THEIR OCCUPATION AFTER VICTORY IS WON.'

AFTER THE VICTORY IN EUROPE AND IN JAPAN THE UNITED KINGDOM WAS ENGAGED WITH THE UNITED STATES AND OTHER ALLIES IN THE OCCUPATION OF DEFEATED COUNTRIES, AND THE INVASION AND OCCUPATION OF A TERRITORY BY A HOSTILE ARMY IS AN INCIDENT OF WAR AND A MILITARY OPERATION. SEE ARTICLE 42, ET SEQ., HAGUE CONVENTION OF 1907, 36 STAT. 2306; 31 COMP. GEN. 629.

THE MATERIALS SHIPPED IN THIS INSTANCE WERE ADMINISTRATIVELY DETERMINED TO BE 81 PERCENT MILITARY IN CHARACTER. THE PROPOSED MILITARY USAGE OF THE 81 PERCENT DESIGNATED AS MILITARY IS ITEMIZED ON THE INVOLVED LEND- LEASE REQUISITION AS 22 PERCENT FOR EQUIPMENT AND STORES OF THE NAVY, THE WAR OFFICE, AND THE AIR MINISTRY; 13 PERCENT FOR NAVY SHIPBUILDING AND REPAIRS; 4 PERCENT FOR PONTOONS, STORMBOATS, ETC., OF THE WAR OFFICE; 2 PERCENT FOR AIRBORNE LIFEBOATS AND RESCUE LAUNCHES OF THE AIR MINISTRY; 20 PERCENT FOR AMMUNITION BOXES AND CASES FOR TECHNICAL EQUIPMENT FOR THE MINISTRY OF SUPPLY; AND, FINALLY, ANOTHER 20 PERCENT FOR THE MINISTRY OF SUPPLY FOR THE MAINTENANCE AND CONSTRUCTION OF SERVICE VEHICLES.

THE DESIGNATED USES APPEAR TO BE CLEARLY MILITARY IN CHARACTER. THE UNITED KINGDOM WAS JOINED WITH THE UNITED STATES IN A MILITARY OPERATION. THEREFORE, IT APPEARS THAT THE LEND-LEASE MATERIALS SHIPPED IN THIS CASE WERE MILITARY OR NAVAL PROPERTY OF THE UNITED STATES MOVING FOR A MILITARY OR NAVAL AND NOT A CIVIL USE WITHIN THE MEANING OF SECTION 321 (A) OF THE TRANSPORTATION ACT OF 1940. IT APPEARS, THEREFORE, THAT THE AUDIT ACTION TAKEN BY OUR TRANSPORTATION DIVISION WAS CORRECT, AND IT IS, ACCORDINGLY, SUSTAINED.