B-184526 August 11, 1975

B-184526: Aug 11, 1975

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Lee: We are in receipt of your letter of July 3. As you have noted. Our Office has in the past taken the view that arbitration is illegal. 32 Comp. It has been held that there is no legal objection to such contract provisions where no question of legal liability is involved and where the determination provided for does not have the effect of imposing additional obligations upon the Government. 20 Comp. In that the monies generally to flow under the contract will be revenues to the United States rather than a cost incurred by the United States. Sec 20 (1970) does state that the concassioner's possessory interest shall not be extinguished without just compensation. this is reflected in clasuse 12 (a) (2) of the contract and would indicate that in certain circumstances monies appropriated by the Congress for the functioning of the National Park Service may be utilized in making a concessioner whole.

B-184526 August 11, 1975

The Honorable Rex E. Lee Assistant Attorney General Civil Division Department of Justice

Attention: Susan Linden, Esq.

Dear Mr. Lee:

We are in receipt of your letter of July 3, 1975 (154-210-75), requesting a litigation report with regard to the case of Eldorado Canyon Rasort, Inc. v. United States, Court of Claims No. 210-75.

With references to your question concerning section 12 of the agreement between the parties, as you have noted, our Office has in the past taken the view that arbitration is illegal. 32 Comp. Gen. 333 (1953); 19 id. 700 (1940). However, indiscussing the propriety of the National Park Service's use of this provision, our Office stated in B-139496, June 26, 1959, that:

"* * * the rule would not appear for application to the provisions for arbitration contained in sections 9 and 12 of the National Park Service concession computes arising in the negotiation of franchise fees and (2) the arbitration of disputes arising in the determination of the amount of compensation for concessioner possessory interest. Thus, the contemplated duties of the arbitrators would appear to be more in the nature of appraisers than of artibrators. It has been held that there is no legal objection to such contract provisions where no question of legal liability is involved and where the determination provided for does not have the effect of imposing additional obligations upon the Government. 20 Comp. Gen. 93; 22 Comp. Gen. 140; B-28092, October 11, 1944. it necessarily follows that no further question need to be raised regarding the matter."

In the instant situation, there appears to be no reason to depart form this conclusion and, therefore, we see no objection to proceedings under section 12 of the contract.

With regard to the question of whether or not agreements under 16 U.S.C. Secs. 1,2-4, and 20 (1970) involve appropriated funds, we note that per se they do not, in that the monies generally to flow under the contract will be revenues to the United States rather than a cost incurred by the United States. However, it should also be noted that 16 U.S.C. Sec 20 (1970) does state that the concassioner's possessory interest shall not be extinguished without just compensation. this is reflected in clasuse 12 (a) (2) of the contract and would indicate that in certain circumstances monies appropriated by the Congress for the functioning of the National Park Service may be utilized in making a concessioner whole.

Section 1491 of title 28 of the United States Code (1970) gives the Court of Claims jurisdiction to render judgement upon any claim against the United States founded upon the Constitution, an act of congress, any regulation of an executive department, or upon any expressed or implied contract with the United States, so long as the matter does not sound in tort. While the Court of Claims stated in Kyer v. United States, 369 F.2d 714 (Ct. Cl. 1966) that to be actionable in that court a contract must be one which in the contemplation of the Congress could obligate public monies, it indicated in Corgino v. United States, 488 F.2d 1008 (Ct. Cl. 1973) that it was not the intention of Kyer to exclude from section 1491 suits for the breach of contracts where in the course of the contract payments were intended to flow into, not out of the public treasury. While the court recognized that literally such a contract is not one which could have been satisfied out of appropriated funds, it conceded that it was not of the type which was inteded to be excluded from section 1491. Thus, in the instant case, while this is a contract generally involving the inflow of funds to the government, unlike the situation in Kyer, it is one wherein the contract made is directly between the plaintiff and the agency of the United States Government which is supported by appropriations. Indeed, we agree with the court that the jurisdicitional question here at issue is very similar to that involving breach of timber sale contracts. We note in passing that the Court of Claims does exercise jurisdiction over breaches of timber sale contracts, see Everett Plywood Corporation v. United States, Ct. Cl. No. 743-71, Fedbruary 19, 1975, and that in the past it has heard cases involving breach of concession contracts. See, e.g., A.R.S. Inc. et al. v United States, 157 Ct. Cl. 71 (1962).

With regard to your last question regarding any limitation imposed upon the compensation due the plaintiff to the revenue generated by the resort activity itself, we note that, unlike the situation set out in the Corbino case, the statute here in question seems to impose no such limitation. The relevant statute in Corbino, 40 U.S.C. Sec 310 (1970), stated that no costs or claim shall be chargeable to the United States in dealing with the property there in question which was not paid from such monies realized from the property itself. Again, our reading of the relevant portions of title 16 of the United States Code discloses no similar limitation upon recovery.

In accordance with your request, we have also checked our files to see if there are any claims outstanding against the plantiff and have found none. If our Office can be of any further assistance in this matter, please contact Alan I. Saltman, staff attorney, on 386-6416.

Sincerely yours,

Paul G. Dumbling General Counsel