B-136758, JUL. 28, 1958

B-136758: Jul 28, 1958

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TO THE SECRETARY OF THE INTERIOR: REFERENCE IS MADE TO YOUR LETTER OF JULY 3. CONSIDERATION HAS BEEN GIVEN TO THE AMENDMENT OF THESE CONTRACTS TO PROVIDE FOR THE PLACEMENT OF CERTAIN SECTIONS OF TELEPHONE LINES UNDERGROUND AND YOU REQUEST ADVICE AS TO WHETHER OUR OFFICE CONCURS IN THE EMPLOYMENT OF PROCEDURES AND NEGOTIATION TECHNIQUES WHICH WILL LEAD TO THE EXECUTION OF CONTRACT DOCUMENTS WITHIN THE FRAMEWORK OF THE SUGGESTED PLAN OUTLINED IN YOUR LETTER. FOR SEVERAL YEARS BEFORE THE CONTRACTS WERE ENTERED INTO WITH THE MOUNTAIN STATES TELEPHONE AND TELEGRAPH COMPANY. THE TELEPHONE AND TELEGRAPH COMMUNICATION SERVICES IN YELLOWSTONE NATIONAL PARK WERE PROVIDED THROUGH COMMUNICATION FACILITIES OWNED JOINTLY AND SEVERALLY BY THE NATIONAL PARK SERVICE AND THE YELLOWSTONE PARK COMPANY.

B-136758, JUL. 28, 1958

TO THE SECRETARY OF THE INTERIOR:

REFERENCE IS MADE TO YOUR LETTER OF JULY 3, 1958, WITH ENCLOSURES, RELATIVE TO CONTRACTS NOS. 14-10-243-261 AND 14-10-243-262, ENTERED INTO ON MARCH 6, 1957, BY THE SUPERINTENDENT OF YELLOWSTONE NATIONAL PARK WITH THE MOUNTAIN STATES TELEPHONE AND TELEGRAPH COMPANY, A COLORADO CORPORATION. CONSIDERATION HAS BEEN GIVEN TO THE AMENDMENT OF THESE CONTRACTS TO PROVIDE FOR THE PLACEMENT OF CERTAIN SECTIONS OF TELEPHONE LINES UNDERGROUND AND YOU REQUEST ADVICE AS TO WHETHER OUR OFFICE CONCURS IN THE EMPLOYMENT OF PROCEDURES AND NEGOTIATION TECHNIQUES WHICH WILL LEAD TO THE EXECUTION OF CONTRACT DOCUMENTS WITHIN THE FRAMEWORK OF THE SUGGESTED PLAN OUTLINED IN YOUR LETTER.

FOR SEVERAL YEARS BEFORE THE CONTRACTS WERE ENTERED INTO WITH THE MOUNTAIN STATES TELEPHONE AND TELEGRAPH COMPANY, THE TELEPHONE AND TELEGRAPH COMMUNICATION SERVICES IN YELLOWSTONE NATIONAL PARK WERE PROVIDED THROUGH COMMUNICATION FACILITIES OWNED JOINTLY AND SEVERALLY BY THE NATIONAL PARK SERVICE AND THE YELLOWSTONE PARK COMPANY, A PARK CONCESSIONAIRE, AND THE CONNECTING LONG DISTANCE SERVICE HAD BEEN PROVIDED THROUGH COMMUNICATION FACILITIES OWNED, MAINTAINED AND OPERATED BY THE AMERICAN TELEPHONE AND TELEGRAPH COMPANY.

THE MOUNTAIN STATES TELEPHONE AND TELEGRAPH COMPANY UNDERTOOK TO PURCHASE ALL SUCH FACILITIES AND TO PROVIDE TELEPHONE SERVICE WITHIN THE PARK AND ADJACENT AREAS, SUBJECT TO AND IN ACCORDANCE WITH THE COMPANY'S LAWFULLY ESTABLISHED TARIFFS IN THE STATES IN WHICH THE SERVICE WOULD BE FURNISHED. THE COMPANY ENTERED INTO AGREEMENTS WITH THE YELLOWSTONE PARK COMPANY AND THE AMERICAN TELEPHONE AND TELEGRAPH COMPANY FOR THE PURCHASE OF THE FACILITIES OWNED BY THEM AT THE RESPECTIVE SALE PRICES OF $135,000 AND $76,862. UNDER THE TERMS OF CONTRACT NO. 14-10-243-261, IT AGREED TO PURCHASE THE GOVERNMENT-OWNED FACILITIES AT A PRICE OF $339,306, MAKING A TOTAL OF $551,168 FOR ALL TELEPHONE FACILITIES WHICH IT AGREED TO PURCHASE. ONLY THE PURCHASE PRICE TO BE PAID TO THE GOVERNMENT REMAINS UNPAID.

CONTRACT NO. 14-10-243-262, DESIGNATED AS A TELEPHONE OPERATIONS AGREEMENT, COVERS THE FURNISHING OF TELEPHONE SERVICE IN THE PARK FOR A PERIOD OF 20 YEARS AND THEREAFTER UNTIL TERMINATED BY EITHER PARTY UPON GIVING ONE YEAR'S NOTICE IN WRITING TO THE OTHER PARTY. AS STATED IN YOUR LETTER, THE TWO AGREEMENTS WITH THE GOVERNMENT WERE EXECUTED CONCURRENTLY AND ARE INTERRELATED TO SUCH A DEGREE THAT THE OPERATIONS AGREEMENT IS DEPENDENT UPON THE EXECUTION OF THE PURCHASE AND SALE AGREEMENT. THE TELEPHONE SYSTEM WAS PLACED IN SERVICE ON JUNE 1, 1958, AND THE TELEPHONE COMPANY IS REQUIRED BY THE TERMS OF THE SALE AGREEMENT TO MAKE PAYMENT OF THE AMOUNT OF $339,306 WITHIN 60 DAYS FOLLOWING THE IN-SERVICE DATE.

UNDER SECTION 5 OF THE SERVICE AGREEMENT, GRANTS ARE MADE TO THE COMPANY OF RIGHTS-OF-WAY FOR CONSTRUCTION, INSTALLATION, OPERATION, REPAIR, REPLACEMENT AND MAINTENANCE OF WIRES, CABLES AND OTHER ELECTRICAL CONDUCTORS, POLES, CONDUITS, ETC.; AND SUBSECTION (E) OF SECTION 5 PROVIDES, IN PERTINENT PART, THAT "WHENEVER PRACTICABLE THE TELEPHONE COMPANY WILL ARRANGE FOR JOINT USE OF RIGHTS-OF-WAY AND JOINT CONSTRUCTION WITH OTHER UTILITIES NOW SERVING OR HEREAFTER AUTHORIZED TO SERVE THE SAME AREA.'

IT IS REPORTED THAT, SHORTLY AFTER THE AGREEMENTS WERE ENTERED INTO WITH THE MOUNTAIN STATES TELEPHONE AND TELEGRAPH COMPANY. NEGOTIATIONS WERE INITIATED BY THE PARK SERVICE WITH THE MONTANA POWER COMPANY TO PROVIDE ELECTRIC POWER SERVICES IN YELLOWSTONE NATIONAL PARK. PURSUANT TO ITS STATUTORY DUTY TO PRESERVE THE PARK IN AS NEARLY ITS NATURAL CONDITION AS POSSIBLE, THE PARK SERVICE REQUIRES THAT THE PROPOSED POWER LINES OCCUPY CERTAIN PORTIONS OR SECTIONS OF THE RIGHTS-OF-WAY USED FOR THE TELEPHONE SYSTEM. IN CONNECTION WITH A COMPLAINT MADE BY THE TELEPHONE COMPANY, IT WAS DETERMINED BY YOUR DEPARTMENT (1) THAT INTERFERENCE OF TELEPHONE SERVICE ON OPEN WIRE LINES LOCATED IN CLOSE PROXIMITY TO OVERHEAD POWER LINES WOULD DISRUPT TELEPHONE SERVICE BETWEEN SEVERAL POINTS IN THE PARK; AND (2) THAT THE GOVERNMENT'S INTERESTS WOULD BEST BE SERVED BY INSTALLING THE TELEPHONE CIRCUITS UNDERGROUND, THEREBY PERMITTING THE JOINT USE OF THE SAME RIGHT-OF-WAY BY POWER LINES AND AVOIDING THE NECESSITY FOR CLEARING ANOTHER RIGHT OF-WAY ABOVE GROUND.

THE COST OF PLACING THE TELEPHONE LINES UNDERGROUND HAS BEEN ESTIMATED BY THE COMPANY TO BE $300,000, INCLUDING A LOSS OF APPROXIMATELY $249,469 ON FACILITIES PURCHASED BUT WHICH COULD NOT BE INTEGRATED INTO THE PROPOSED UNDERGROUND TELEPHONE SYSTEM. THE QUESTION AROSE AS TO WHETHER THE UNITED STATES WOULD BE UNDER ANY OBLIGATION TO THE TELEPHONE COMPANY IN THE MATTER BECAUSE OF THE PROVISION IN THE SERVICE AGREEMENT RESPECTING THE JOINT USE OF RIGHTS OF-WAY WHENEVER PRACTICABLE.

THE DEPARTMENT'S SOLICITOR HAS EXPRESSED A DOUBT AS TO THE APPLICATION OF SUCH A PROVISION TO A SITUATION OF THE TYPE HERE INVOLVED WHERE THE TELEPHONE COMPANY WOULD BE REQUIRED TO RELOCATE ITS LINE UNDERGROUND IN ORDER TO PERMIT THE USE OF THE SAME RIGHT-OF-WAY FOR A HIGH VOLTAGE POWER LINE. ALSO, YOUR LETTER INVITES ATTENTION TO THE FACT THAT THE CONTRACT OF SALE COVERING THE GOVERNMENT-OWNED FACILITIES CONTAINS A PROVISION THAT THE PURCHASE PRICE MAY BE ADJUSTED AT THE WRITTEN REQUEST OF EITHER PARTY MADE NOT MORE THAN 15 DAYS AFTER THE IN-SERVICE DATE, TO REFLECT ADDITIONS TO, REPLACEMENTS, RETIREMENTS OR DESTRUCTION OF OR DAMAGE TO THOSE PORTIONS OF THE FACILITIES DESCRIBED IN THE CONTRACT SCHEDULE AS USEFUL TO THE TELEPHONE COMPANY, WHICH MIGHT OCCUR BETWEEN OCTOBER 19, 1956, AND THE IN-SERVICE DATE, EXCEPT ADDITIONS AND RETIREMENTS MADE PURSUANT TO THE PROVISIONS OF SECTION 4 OF THE CONTRACT OF SALE.

IN THE CIRCUMSTANCES, YOU STATE THAT A PLAN HAS BEEN SUGGESTED WHEREBY ALL PARTIES CONCERNED WOULD ASSUME A PROPORTIONATE SHARE OF THE NONRECOVERABLE COSTS OCCASIONED BY THE ABANDONMENT AND REMOVAL OF A PORTION OF THE EXISTING OPEN WIRE TELEPHONE FACILITIES AND THE INSTALLATION OF AN UNDERGROUND SYSTEM. THIS PLAN IS DESCRIBED IN YOUR LETTER AS FOLLOWS:

"1. THE NATIONAL PARK SERVICE, AMERICAN TELEPHONE AND TELEGRAPH COMPANY, AND THE YELLOWSTONE PARK COMPANY, RESPECTIVELY, WILL ABSORB OR REIMBURSE THE MOUNTAIN STATES TELEPHONE AND TELEGRAPH COMPANY THAT PORTION OF THE FUNDS ($249,469) PREVIOUSLY RECEIVED WHICH ARE NONRECOVERABLE DUE TO THE PROPOSED CHANGE FROM OVERHEAD TO UNDERGROUND CONSTRUCTION.

"2. THE TELEPHONE COMPANY WILL ABSORB THE COST IN THE AMOUNT OF $60,920 FOR THE REMOVAL OF THE UNUSABLE PORTION OF THE EXISTING OVERHEAD TELEPHONE PLANT, THE EXPENSES PREVIOUSLY INCURRED FOR TREE TRIMMING AND RETRANSPOSING THE EXISTING OVERHEAD CIRCUITS.'

IT IS INDICATED IN YOUR LETTER THAT THE GOVERNMENT'S SHARE OF THE COST INVOLVED WOULD, UNDER THIS PLAN, AMOUNT TO $151,982. THAT FIGURE APPEARS TO HAVE BEEN ARRIVED AT ON THE BASIS THAT THE COMPANY'S APPARENT LOSS OF $249,469 ON THE PURCHASE OF THE FACILITIES SHOULD BE APPORTIONED BETWEEN THE GOVERNMENT, THE YELLOWSTONE PARK COMPANY AND THE AMERICAN TELEPHONE AND TELEGRAPH COMPANY IN SUBSTANTIALLY THE SAME RATIOS AS THE RESPECTIVE PURCHASE PRICES BEAR TO THE TOTAL ACQUISITION COST OF $551,168.

IT IS, OF COURSE, A WELL-ESTABLISHED RULE THAT AGENTS AND OFFICERS OF THE GOVERNMENT HAVE NO AUTHORITY TO GIVE AWAY THE MONEY OR PROPERTY OF THE UNITED STATES, OR TO WAIVE CONTRACTUAL RIGHTS WHICH HAVE ACCRUED TO THE UNITED STATES OR TO MODIFY EXISTING CONTRACTS WITHOUT A COMPENSATING BENEFIT TO THE GOVERNMENT. HOWEVER, OUR OFFICE HAS CONSISTENTLY HELD THAT CONTRACTING OFFICERS MAY LEGALLY MODIFY EXISTING CONTRACTS IN THE INTEREST OF THE UNITED STATES AND IT IS OUR VIEW THAT THE FACTS OF THE INSTANT CASE ARE SUFFICIENT TO WARRANT THE CONCLUSION THAT THE CONTRACTOR MAY BE GRANTED AN EQUITABLE ADJUSTMENT IN THE SALE PRICE OF THE GOVERNMENT-OWNED FACILITIES. EVIDENTLY THE PARTIES CONTEMPLATED THAT SOME ADJUSTMENTS WOULD BE MADE IN THE SALE PRICE FOR RETIREMENT OF PROPERTY NOT USEFUL TO THE COMPANY, AND RETIREMENTS NECESSITATED BY ACHANGE IN PLANS TO ACCOMMODATE ANOTHER FACILITY USING THE SAME RIGHTS-OF-WAY WOULD SEEM PROPERLY FOR CONSIDERATION IN THE MAKING OF ANY SUCH ADJUSTMENT IN THE SALE PRICE. CONSIDERING ALSO THE PROVISIONS OF PARAGRAPH 5 (J) OF THE TELEPHONE SERVICE AGREEMENT, AND SINCE THE SUGGESTED ADJUSTMENT APPEARS TO BE REASONABLE AND CLEARLY IN THE INTEREST OF THE GOVERNMENT, YOU ARE ADVISED THAT WE HAVE NO OBJECTION TO SETTLEMENT OF THE MATTER ON THE BASIS OUTLINED.

THE DOCUMENTS AND CORRESPONDENCE FORWARDED WITH YOUR LETTER ARE RETURNED HEREWITH.