B-161846, JULY 28, 1967, 47 COMP. GEN. 81

B-161846: Jul 28, 1967

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WHERE BOTH GRANTS WERE MATCHED BY THE STATE WITH THE SAME FUNDS. WAS MADE WITHOUT AUTHORITY AND IS WITHOUT LEGAL EFFECT. THE WATER POLLUTION CONTROL ACT UNDER WHICH THE PHS GRANT WAS MADE REQUIRING THE CITY TO PAY COSTS IN EXCESS OF THE GRANT. THEREBY WAIVING ITS RIGHT TO HAVE THE GRANTEE COMPLETE THE PROJECT WITHOUT FURTHER COST TO THE UNITED STATES. WOULD NOT SATISFY THE DEFINITION IN THE FEDERAL AIRPORT ACT THAT "PROJECT COSTS" ARE COSTS "WHICH WOULD NOT HAVE BEEN INCURRED OTHERWISE.'. THE PERTINENT FACTS AND CIRCUMSTANCES AS DISCLOSED BY THE ADMINISTRATOR'S LETTER ARE SET FORTH BELOW. IN JANUARY OF 1963 THE CITY OF JUNEAU WAS AWARDED A GRANT OF FEDERAL FUNDS FROM THE UNITED STATES PUBLIC HEALTH SERVICE (PHS) FOR CONSTRUCTION OF THE SEWAGE TREATMENT FACILITY.

B-161846, JULY 28, 1967, 47 COMP. GEN. 81

STATES - FEDERAL AID, GRANTS, ETC. - MORE THAN ONE GRANT FOR SAME PROJECT A FEDERAL AVIATION ADMINISTRATION (FAA) GRANT TO THE CITY OF JUNEAU, ALASKA, INCIDENT TO THE CONSTRUCTION OF A SEWAGE SYSTEM WHICH INCLUDED THE PERCENTAGE OF COST PROVIDED BY A PUBLIC HEALTH SERVICE (PHS) GRANT FOR THE FACILITY, WHERE BOTH GRANTS WERE MATCHED BY THE STATE WITH THE SAME FUNDS, WAS MADE WITHOUT AUTHORITY AND IS WITHOUT LEGAL EFFECT, EVEN THOUGH THE FEDERAL AIRPORT ACT DOES NOT PROHIBIT THE GRANT, THE WATER POLLUTION CONTROL ACT UNDER WHICH THE PHS GRANT WAS MADE REQUIRING THE CITY TO PAY COSTS IN EXCESS OF THE GRANT. THEREFORE, TO PERMIT FAA TO MAKE A GRANT FOR THE SAME PROJECT WOULD REQUIRE THE UNITED STATES TO CONTRIBUTE MORE THAN THE AMOUNT OF THE PHS GRANT, THEREBY WAIVING ITS RIGHT TO HAVE THE GRANTEE COMPLETE THE PROJECT WITHOUT FURTHER COST TO THE UNITED STATES, AND WOULD NOT SATISFY THE DEFINITION IN THE FEDERAL AIRPORT ACT THAT "PROJECT COSTS" ARE COSTS "WHICH WOULD NOT HAVE BEEN INCURRED OTHERWISE.'

TO THE SECRETARY OF TRANSPORTATION, JULY 28, 1967:

LETTER DATED JUNE 16, 1967, FROM THE ADMINISTRATOR, FEDERAL AVIATION ADMINISTRATION (FAA), CONCERNS A GRANT OF FUNDS BY FAA TO THE CITY OF JUNEAU, ALASKA, UNDER THE FEDERAL AIRPORT ACT, AS AMENDED, 49 U.S.C. 1101 ET SEQ.

THE PERTINENT FACTS AND CIRCUMSTANCES AS DISCLOSED BY THE ADMINISTRATOR'S LETTER ARE SET FORTH BELOW.

THE CITY OF JUNEAU, ALASKA, UNDERTOOK A CONSTRUCTION PROGRAM FOR IMPROVING THE SEWAGE SYSTEM SERVING THE MUNICIPAL AIRPORT AT THAT CITY. IN JANUARY OF 1963 THE CITY OF JUNEAU WAS AWARDED A GRANT OF FEDERAL FUNDS FROM THE UNITED STATES PUBLIC HEALTH SERVICE (PHS) FOR CONSTRUCTION OF THE SEWAGE TREATMENT FACILITY, WHICH IS A PART OF THE OVERALL CONSTRUCTION PROGRAM. THE PHS GRANT WAS MADE PURSUANT TO PUBLIC LAW 660, AS AMENDED (33 U.S.C. 466 ET SEQ.). IN ACCORDANCE WITH THAT LAW, A PHS AUDIT REPORT FOR THE PERIOD JANUARY 2, 1963, TO MAY 23, 1965, DETERMINED THAT ON THE BASIS OF 30 PER CENT OF ALLOWABLE COSTS THE CITY OF JUNEAU WAS ENTITLED TO A PHS GRANT IN THE AMOUNT OF $22,190.

SUBSEQUENTLY, IN JANUARY 1964, THE CITY OF JUNEAU ALSO APPLIED TO THE FAA FOR A GRANT OF FEDERAL FUNDS UNDER THE FEDERAL AIRPORT ACT, AND THE UNITED STATES BECAME OBLIGATED TO GRANT SUCH FUNDS IN MARCH 1964, BY VIRTUE OF A GRANT AGREEMENT ENTERED INTO BY THE FAA WITH THE CITY OF JUNEAU. THE PERTINENT PART OF THE PROJECT DESCRIPTION IN THE AGREEMENT STATES THAT THE GRANT IS TO BE USED TO "* * * CONNECT THE FIRE-RESCUE MAINTENANCE BUILDING TO A SEWAGE SYSTEM AND CONSTRUCT AN AIRPORT SEWAGE SYSTEM.'

ADDITIONAL PROVISIONS OF THE FAA AGREEMENT FIX THE MAXIMUM OBLIGATION OF THE UNITED STATES AT $25,400. SPECIAL CONDITION NO. 9 OF THE AGREEMENT LIMITS THE ELIGIBLE PROJECT COST OF THE AIRPORT SEWAGE SYSTEM TO 17.7 PER CENT OF THE ACTUAL COSTS OF THE ENTIRE AIRPORT SEWAGE SYSTEM. THIS FIGURE OF 17.7 PER CENT IS BASED ON THE RATIO OF SQUARE FOOTAGE OF THE FIRE- RESCUE MAINTENANCE BUILDING TO THE TOTAL SQUARE FOOTAGE OF THE BUILDING FLOOR SPACE AT THE AIRPORT BEING SERVED BY THE SEWAGE SYSTEM. ON FEDERAL- AID TO AIRPORT PROJECTS IN ALASKA, UNITED STATES PARTICIPATION IS LIMITED TO 62.5 PER CENT OF ELIGIBLE COSTS. ACCORDINGLY, UNDER THE FAA AGREEMENT AND THE FEDERAL AIRPORT ACT THE GOVERNMENT'S SHARE IN THE TOTAL ELIGIBLE COSTS OF THE PROJECT WAS LIMITED TO 62.5 PER CENT OF 17.7 PER CENT, WHICH AMOUNTS TO 11.06 PER CENT OF THE TOTAL COST.

THE PHS FIRST BECAME AWARE OF FAA PARTICIPATION IN 1965 WHEN IT CONDUCTED AN AUDIT IN CONNECTION WITH THE FEDERAL FUNDS AND OTHER FUNDS MADE AVAILABLE FOR CONSTRUCTION OF THE SEWAGE SYSTEM PROJECT. THE AUDIT REPORT PREPARED BY PHS AND AN OPINION BY THE PHS OFFICE OF THE GENERAL COUNSEL QUESTIONED THE PROPRIETY OF THE FAA GRANT TO THE CITY OF JUNEAU, ALASKA.

THE PARTICULAR QUESTION ARISES BY VIRTUE OF THE FACT THAT, AS EXPLAINED ABOVE, AFTER THE CITY OF JUNEAU ACQUIRED A GRANT FROM THE PHS FOR THE CONSTRUCTION OF THE SEWAGE TREATMENT FACILITY SERVING THE MUNICIPAL AIRPORT IN THAT CITY, IT SUBSEQUENTLY OBTAINED A GRANT OF FUNDS FROM THE FAA WHICH INCLUDED A PERCENTAGE OF THE COST OF THE SAME FACILITY FOR WHICH THE PHS HAD AWARDED ITS GRANT.

IN PART 11 OF THE PROJECT APPLICATION SUBMITTED TO THE FAA BY THE CITY OF JUNEAU THE CITY REPRESENTED THAT, AS THE SPONSOR, IT HAD ON DEPOSIT OR WAS IN A POSITION TO SECURE THE SUM OF $108,400, WHICH REPRESENTED THE SPONSOR'S ESTIMATED SHARE OF THE TOTAL PROJECT COSTS. HOWEVER, AS A PART OF THESE MATCHING FUNDS, THE CITY INCLUDED $30,795.11, WHICH IT REPRESENTED AS FUNDS RELATED TO THE PHS GRANT. THE ADMINISTRATOR STATES THAT IT APPEARS THAT THE SAME NON-FEDERAL FUNDS WERE PROBABLY USED TO "MATCH" BOTH THE PHS GRANT AND THE FAA GRANT.

THE ADMINISTRATOR POINTS OUT THAT IN 32 COMP. GEN. 561 (1953), WE HELD THAT NO PORTION OF FUNDS GRANTED UNDER ONE FEDERAL GRANT PROGRAM, NOR OF FUNDS USED BY THE APPLICANT TO MATCH SUCH AMOUNT, MAY BE USED TO MATCH FUNDS TO BE GRANTED UNDER ANOTHER FEDERAL GRANT PROGRAM. HE STATED THAT WHILE THE RULE LAID DOWN IN THAT DECISION WOULD APPEAR TO DICTATE AGAINST AN FAA GRANT TO THE CITY OF JUNEAU, HE CONSIDERED IT APPROPRIATE TO OBTAIN A DECISION FROM US, SINCE THE FAA HAS ALREADY PAID THE CITY, FEDERAL FUNDS IN ACCORDANCE WITH THE GRANT AGREEMENT, AND THE PROVISIONS OF THE FEDERAL AIRPORT ACT DO NOT EXPRESSLY PROHIBIT A GRANT UNDER THE CIRCUMSTANCES INVOLVED IN THE INSTANT CASE.

ACCORDINGLY, A DECISION IS REQUESTED AS TO WHETHER, UNDER THE APPLICABLE LAW, THE FAA HAD AUTHORITY TO LEGALLY OBLIGATE THE UNITED STATES TO GRANT ANY FUNDS TO THE CITY OF JUNEAU, ALASKA, IN ACCORDANCE WITH THE GRANT AGREEMENT INVOLVED, IF THE FUNDS THE CITY USED TO COMPLETE ITS SHARE OF THE PROJECT INCLUDED FUNDS USED TO "MATCH" AN EARLIER PHS GRANT OR FUNDS GRANTED BY PHS FOR THE SAME PROJECT.

AS INDICATED ABOVE, THE FAA GRANT WAS MADE IN CONNECTION WITH THE SAME PROJECT FOR WHICH THE EARLIER PHS GRANT WAS MADE. THE PHS GRANT WAS MADE PURSUANT TO THE PROVISIONS OF THE WATER POLLUTION CONTROL ACT, AS AMENDED, 33 U.S.C. 466 ET SEQ. 33 U.S.C. 466E AUTHORIZES GRANTS UP TO 30 PER CENT OF THE ESTIMATED REASONABLE COST OF THE PROJECT INVOLVED OR NOT EXCEEDING $1,200,000 WHICHEVER IS THE LESSER, PROVIDED THAT "THE GRANTEE AGREES TO PAY THE REMAINING COST" OF THE PROJECT. THUS, IT APPEARS THAT UNDER THE PHS GRANT THE CITY OF JUNEAU WAS REQUIRED TO PAY ALL COSTS OF THE PROJECT IN EXCESS OF THE AMOUNT OF THE PHS GRANT.

SINCE, PURSUANT TO THE STATUTE UNDER WHICH THE PHS GRANT WAS MADE THE CITY OF JUNEAU WAS REQUIRED TO AGREE TO PAY ALL THE REMAINING COSTS OF THE PROJECT, FAA WOULD HAVE NO LEGAL AUTHORITY TO MAKE A GRANT TO THE CITY TO PAY FOR ANY PART OF SUCH PROJECT, NOTWITHSTANDING THAT THE FEDERAL AIRPORT ACT DOES NOT EXPRESSLY PROHIBIT A GRANT UNDER THE CIRCUMSTANCES INVOLVED IN THE INSTANT CASE. IT LONG HAS BEEN RECOGNIZED AS A GENERAL RULE THAT OFFICERS OR AGENTS OF THE GOVERNMENT ARE WITHOUT AUTHORITY TO WAIVE OR SURRENDER GRATUITOUSLY ANY VESTED RIGHT OR INTEREST ACQUIRED BY THE UNITED STATES BY CONTRACT, OR OTHERWISE. SEE UNITED STATES V. AMERICAN SALES COMPANY, 27 F. 2D 389, AFFIRMED 32 F. 2D 141, CERTIORARI DENIED, 280 U.S. 574; PACIFIC HARDWARE COMPANY V. UNITED STATES, 49 CT. CL. 327; BAUSCH AND LOMB OPTICAL COMPANY V. UNITED STATES, 78 CT. CL. 584. WE ASSUME THAT AS PROVIDED BY LAW, PHS REQUIRED THE CITY OF JUNEAU (THE GRANTEE) TO AGREE TO PAY ALL THE COSTS OF THE PROJECT OVER AND ABOVE THE AMOUNT OF THE PHS GRANT. TO PERMIT FAA TO MAKE A GRANT FOR THE SAME PROJECT WOULD HAVE THE EFFECT OF THE UNITED STATES PAYING SOME OF THE COSTS OF THE PROJECT OVER AND ABOVE THE AMOUNT OF THE PHS GRANT. THIS WOULD RESULT, IN EFFECT, IN AN OFFICER OR AGENT OF THE UNITED STATES WAIVING A RIGHT OR INTEREST THE UNITED STATES HAD UNDER THE PHS GRANT, I.E. THE RIGHT TO HAVE THE GRANTEE COMPLETE THE PROJECT WITHOUT FURTHER COST TO THE UNITED STATES.

MOREOVER, SECTION 10 OF THE FEDERAL AIRPORT ACT, AS AMENDED, 49 U.S.C. 1109, PROVIDES THAT THE UNITED STATES SHARE PAYABLE ON ACCOUNT OF ANY APPROVED PROJECT UNDER THE ACT, SHALL NOT EXCEED CERTAIN PERCENTAGES OF "ALLOWABLE PROJECT COSTS OF THE PROJECT.' HOWEVER, THE TERM "PROJECT COSTS" IS DEFINED IN THE FEDERAL AIRPORT ACT, AS AMENDED, 49 U.S.C. 1101 (6), TO MEAN "ANY COSTS INVOLVED IN ACCOMPLISHING A PROJECT UNDER THIS CHAPTER * * * AND WHICH WOULD NOT HAVE BEEN INCURRED OTHERWISE.' INDICATED ABOVE, THE COSTS INCURRED IN CONNECTION WITH THE PROJECT FOR WHICH THE FAA GRANT WAS MADE WOULD HAVE BEEN INCURRED IN CONNECTION WITH THE PROJECT FOR WHICH THE PHS GRANT WAS MADE. THEREFORE, IT CANNOT BE SAID THAT THE PROJECT COSTS INCURRED IN CONNECTION WITH THE PROJECT FOR WHICH THE FAA GRANT WAS MADE WERE COSTS "WHICH WOULD NOT HAVE BEEN INCURRED OTHERWISE.' HENCE, THE COSTS INCURRED INCIDENT TO THE PROJECT FOR WHICH THE FAA GRANT WAS MADE MAY NOT BE CONSIDERED "PROJECT COSTS" UNDER THE FEDERAL AIRPORT ACT.

IN VIEW OF THE FOREGOING, IT MUST BE HELD THAT FAA WAS WITHOUT LEGAL AUTHORITY TO MAKE A GRANT TO THE CITY OF JUNEAU, ALASKA, FOR THE SAME PROJECT FOR WHICH PHS HAD PREVIOUSLY MADE A GRANT.