B-134620, APR. 15, 1958

B-134620: Apr 15, 1958

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UNITED STATES ATOMIC ENERGY COMMISSION: REFERENCE IS MADE TO THE COMMISSION'S LETTER OF DECEMBER 6. SOME 900 GOVERNMENT-OWNED LOTS WERE LEASED TO FOUR COMPANIES FOR TERMS OF 50 YEARS. THESE COMPANIES SOUGHT AND OBTAINED MORTGAGE INSURANCE ON THE 900 HOMES WHICH WERE BUILT UNDER TITLES VIII AND IX OF THE NATIONAL HOUSING ACT. WHILE A FEW OF THE HOUSES HAVE BEEN SOLD INDIVIDUALLY TO TENANTS. THE GREAT MAJORITY ARE STILL BEING RENTED BY THE BUILDERS. THERE WOULD APPEAR TO BE NO DOUBT THAT THE FOUR COMPANIES INVOLVED OPERATE THESE PROJECTS AS "BUSINESSES" IN THE SENSE THAT THEY HAVE INVESTED CAPITAL AND ARE REALIZING PROFITS FROM THE RENTALS CHARGED. THE QUESTION WHICH HAS ARISEN AS TO WHETHER THEY ARE OPERATING "COMMERCIAL BUSINESSES" WITHIN THE MEANING OF SECTION 161 E OF THE ATOMIC ENERGY ACT STEMS FROM THE FACT THAT THE LEGISLATIVE HISTORY OF THAT SECTION MAKES NO MENTION OF RENTAL PROJECTS.

B-134620, APR. 15, 1958

TO CHAIRMAN, UNITED STATES ATOMIC ENERGY COMMISSION:

REFERENCE IS MADE TO THE COMMISSION'S LETTER OF DECEMBER 6, 1957, REQUESTING OUR OPINION WHETHER THE AUTHORIZATION GRANTED THE COMMISSION BY SECTION 161, E OF THE ATOMIC ENERGY ACT OF 1954, AS AMENDED, TO ADJUST THE TERMS OF LEASES, LICENSES, AND CONCESSION AGREEMENTS FOR THE OPERATION OF "COMMERCIAL BUSINESSES" AT COMMUNITIES OWNED BY THE COMMISSION, INCLUDES AUTHORITY TO ADJUST THE TERMS OF LEASES OF GOVERNMENT-OWNED LAND USED FOR RESIDENTIAL HOUSING PROJECTS UNDER TITLES VIII AND II OF THE NATIONAL HOUSING ACT, AS AMENDED.

FOR THE PURPOSE OF ENABLING CONSTRUCTION AND RENTAL OF HOUSING AT OAK RIDGE, TENNESSEE, SOME 900 GOVERNMENT-OWNED LOTS WERE LEASED TO FOUR COMPANIES FOR TERMS OF 50 YEARS. THESE COMPANIES SOUGHT AND OBTAINED MORTGAGE INSURANCE ON THE 900 HOMES WHICH WERE BUILT UNDER TITLES VIII AND IX OF THE NATIONAL HOUSING ACT. WHILE A FEW OF THE HOUSES HAVE BEEN SOLD INDIVIDUALLY TO TENANTS, THE GREAT MAJORITY ARE STILL BEING RENTED BY THE BUILDERS. THERE WOULD APPEAR TO BE NO DOUBT THAT THE FOUR COMPANIES INVOLVED OPERATE THESE PROJECTS AS "BUSINESSES" IN THE SENSE THAT THEY HAVE INVESTED CAPITAL AND ARE REALIZING PROFITS FROM THE RENTALS CHARGED.

THE QUESTION WHICH HAS ARISEN AS TO WHETHER THEY ARE OPERATING "COMMERCIAL BUSINESSES" WITHIN THE MEANING OF SECTION 161 E OF THE ATOMIC ENERGY ACT STEMS FROM THE FACT THAT THE LEGISLATIVE HISTORY OF THAT SECTION MAKES NO MENTION OF RENTAL PROJECTS. THE LEASES, LICENSES, AND CONCESSION AGREEMENTS WHICH WERE DISCUSSED SPECIFICALLY WERE ALL RELATIVELY SHORT-TERM AGREEMENTS COVERING FACILITIES FOR THE OPERATION OF STORES AND OTHER MERCANTILE-TYPE ESTABLISHMENTS.

IT IS OUR OPINION THAT EVEN THOUGH NO MENTION WAS MADE OF THE TYPE OF LEASES HERE INVOLVED DURING THE CONSIDERATION AND DISCUSSION OF SECTION 161 E AND THE AMENDMENT THERETO, THE LANGUAGE OF THE SECTION FAIRLY INCLUDES SUCH LEASES WITHIN ITS SCOPE. OPERATION OF A RENTAL HOUSING PROJECT COMPRISING A SUBSTANTIAL NUMBER OF HOUSES CLEARLY IS A "BUSINESS.' ALL THE REASONS WHICH IMPELLED THE CONGRESS TO AUTHORIZE READJUSTMENT OF AGREEMENTS TO OPERATE "COMMERCIAL BUSINESSES" WOULD SEEM TO APPLY WITH EQUAL FORCE TO OPERATORS OF SUCH RENTAL PROJECTS. WE DO NOT BELIEVE THAT THE USE OF THE WORD "COMMERCIAL" WAS INTENDED TO DISCRIMINATE AGAINST THOSE COMPANIES OPERATING RENTAL PROJECTS.

ACCORDINGLY, YOU ARE ADVISED IT IS OUR VIEW THAT THE COMMISSION IS AUTHORIZED TO ADJUST THE TERMS OF THE LEASES INVOLVED, ASSUMING, OF COURSE, THAT IT CONSIDERS SUCH ADJUSTMENT NECESSARY TO MAKE THE LEASE TERMS FAIR AND REASONABLE.