B-143257, DEC. 19, 1960

B-143257: Dec 19, 1960

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

BUREAU OF MINES: FURTHER REFERENCE IS MADE TO YOUR LETTER OF JUNE 17. YOU STATE THAT IT IS YOUR ESTABLISHED PROCEDURE TO ROUTE SHIPMENTS AS REQUESTED BY YOUR COMMERCIAL CUSTOMERS. DUE TO A CLERICAL ERROR THE SHIPMENTS WERE ROUTED THROUGH THE BARSTOW. AS YOU HAVE POINTED OUT. COMMERCIAL SALES OF HELIUM BY THE BUREAU OF MINES ARE MADE UNDER THE AUTHORITY OF THE HELIUM ACT. ARE GOVERNED BY THE APPLICABLE REGULATIONS SET FORTH IN 30 CFR PART 1. WHICH WAS ACCEPTED BY THE GOVERNMENT. SINCE THIS WAS THE ONLY CONTRACT COPY FOR THE SALE OF HELIUM TO ACCOMPANY YOUR REQUEST FOR A DECISION. WE ASSUME THAT THE SHIPMENT WHICH MOVED IN NOVEMBER 1958 WAS UNDER A CONTRACT SIMILAR IN ALL RESPECTS TO THE ONE SUBMITTED.

B-143257, DEC. 19, 1960

TO JAMES T. LEWIS, AUTHORIZED CERTIFYING OFFICER, BUREAU OF MINES:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF JUNE 17, 1960, WHEREIN YOU REQUESTED OUR OPINION WHETHER THE VOUCHER DRAWN IN FAVOR OF THE TITANIUM METALS CORPORATION OF AMERICA IN THE AMOUNT OF $1,464, REPRESENTING EXCESS FREIGHT CHARGES PAID BY THE CORPORATION ON THREE TANK CARS OF HELIUM SHIPPED FROM THE BUREAU OF MINES, EXELL, TEXAS, HELIUM PLANT TO HENDERSON, NEVADA, DURING NOVEMBER 1958, MARCH 1959 AND MAY 1959, UNDER UNIFORM STRAIGHT BILLS OF LADING, MAY BE CERTIFIED FOR PAYMENT. THE EXCESS FREIGHT CHARGES RESULTED WHEN A CLERICAL ERROR ON THE PART OF THE GOVERNMENT CAUSED THE SHIPMENTS TO BE FORWARDED BY A ROUTE OTHER THAN THE ONE REQUESTED BY THE CONSIGNEE.

IN YOUR LETTER OF JUNE 17, 1960, YOU STATE THAT IT IS YOUR ESTABLISHED PROCEDURE TO ROUTE SHIPMENTS AS REQUESTED BY YOUR COMMERCIAL CUSTOMERS. IN THE INSTANT CASES TITANIUM HAD REQUESTED THAT ALL TANK CARS OF HELIUM SHIPPED TO THEIR HENDERSON, NEVADA, PLANT FROM YOUR EXELL, TEXAS, PLANT BE ROUTED BY THE PANHANDLE AND SANTA FE RAILWAY TO KERRICK, TEXAS, THE ATCHISON, TOPEKA, AND SANTA FE RAILWAY TO DENVER, COLORADO, AND THEN BY THE UNION PACIFIC TO HENDERSON. DUE TO A CLERICAL ERROR THE SHIPMENTS WERE ROUTED THROUGH THE BARSTOW, CALIFORNIA, JUNCTION POINT RATHER THAN DENVER, AS SPECIFIED BY THE PURCHASER. WE FIND THE APPLICABLE RATE OVER THE ROUTE REQUESTED BY TITANIUM TO BE $4.35 PER 100 POUNDS, MINIMUM WEIGHT 40,000 POUNDS, PRIOR TO MAY 15, 1959, AND $4.34 PER 100 POUNDS, MINIMUM WEIGHT 40,000, EFFECTIVE ON AND AFTER MAY 15, 1959, AND THAT THE RATE OVER THE ROUTE DESIGNATED BY THE BUREAU TO BE $5.57 PER 100 POUNDS, MINIMUM WEIGHT 40,000 POUNDS, PRIOR TO MAY 15, 1959, AND $5.56 PER 100 POUNDS, MINIMUM WEIGHT 40,000 POUNDS, EFFECTIVE ON AND AFTER MAY 15, 1959. THIS CONFIRMS TITANIUM'S CONTENTION THAT EXCESS FREIGHT CHARGES DUE TO MISROUTING AMOUNTED TO $488 PER CAR.

AS YOU HAVE POINTED OUT, COMMERCIAL SALES OF HELIUM BY THE BUREAU OF MINES ARE MADE UNDER THE AUTHORITY OF THE HELIUM ACT, AS AMENDED, 50 U.S.C. SECTION 164, AND ARE GOVERNED BY THE APPLICABLE REGULATIONS SET FORTH IN 30 CFR PART 1, SECTIONS 1.1 THROUGH 1.21. PURSUANT TO THE AUTHORITY OF THE CITED STATUTE AND REGULATIONS, TITANIUM SUBMITTED AN APPLICATION TO PURCHASE HELIUM, DATED FEBRUARY 23, 1959, WHICH WAS ACCEPTED BY THE GOVERNMENT, CULMINATING IN CONTRACT NO. 14-09-060 1885. SINCE THIS WAS THE ONLY CONTRACT COPY FOR THE SALE OF HELIUM TO ACCOMPANY YOUR REQUEST FOR A DECISION, WE ASSUME THAT THE SHIPMENT WHICH MOVED IN NOVEMBER 1958 WAS UNDER A CONTRACT SIMILAR IN ALL RESPECTS TO THE ONE SUBMITTED.

IN YOUR LETTER OF JUNE 17, 1960, YOU SAY THAT YOU HAVE NO CONTRACTUAL AGREEMENT WITH TITANIUM OR ANY OTHER COMMERCIAL CUSTOMER TO ROUTESHIPMENTS AS REQUESTED BY THE CUSTOMER, BUT SINCE HELIUM IS SHIPPED F.O.B. POINT OF ORIGIN, YOU FEEL THAT YOU ARE OBLIGATED TO ROUTE AS REQUESTED AND THAT THE PAYMENT OF TITANIUM'S CLAIM IS THEREBY APPROPRIATE. THE FACT THAT SHIPMENTS ARE MADE F.O.B. ORIGIN, AND THAT PURCHASERS ARE REQUIRED TO PAY TRANSPORTATION COSTS--- 30 CFR 1.3 (C/ -- WOULD INDICATE THAT DELIVERY WAS MADE AND THE SELLER'S PERFORMANCE COMPLETE WHEN THE TANK CARS WERE TENDERED TO THE CARRIER AT THE HELIUM PLANT. UPON READING CONTRACT NO. 14 -09-060-1885 AND CONSIDERING THE FACT THAT THE BUREAU REQUESTED SHIPPING INSTRUCTIONS FROM THE PURCHASER, HOWEVER, IT SEEMS CLEAR THAT IT WAS THE INTENTION OF THE PARTIES THAT DELIVERY TO THE BUYER BE A CONDITION TO THE CONTRACT OF SALE, I.E., PERFORMANCE ON THE SELLER'S SIDE WAS NOT COMPLETE UNTIL THE TANK CARS WERE SHIPPED AS INSTRUCTED AND TENDERED TO THE BUYER. BECAUSE OF THE ERROR WHICH RESULTED IN THE USE OF A ROUTE OTHER THAN THE ONE SPECIFIED BY THE BUYER, THE GOVERNMENT BREACHED THE CONTRACT OF SALE TO THE EXTENT THAT THE TRANSPORTATION COSTS EXCEEDED THE COSTS WHICH WOULD HAVE BEEN CHARGEABLE IF THE SHIPMENT WAS MADE OVER THE SPECIFIED ROUTE. THE VOUCHER INVOLVED MAY THEREFORE BE CERTIFIED FOR PAYMENT.

AS YOU REQUESTED IN YOUR LETTER OF JUNE 17, 1960, WE ARE RETURNING TO YOU WITH THE VOUCHER AND ITS SUPPORTING PAPERS THE COPIES YOU SUBMITTED OF THE LETTER DATED APRIL 11, 1960, FROM MR. L. J. WERNE OF THE NATIONAL LEAD COMPANY; THE THREE UNIFORM STRAIGHT BILLS OF LADING DATED NOVEMBER 21, 1958, MARCH 27, 1959, AND MAY 26, 1959; THE HELIUM ACT, 50 U.S.C. SECTIONS 161, 163-166, AND APPLICABLE REGULATIONS 30 CFR 1, CONTAINER CONTRACT NO. 1M-6842, DATED JUNE 1, 1951; AND HELIUM CONTRACT NO. 14-09-060-1885, DATED FEBRUARY 23, 1959.