B-34724, JUNE 26, 1943, 22 COMP. GEN. 1133

B-34724: Jun 26, 1943

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1943: I HAVE YOUR LETTER OF MAY 21. THAT SPECIFIC AUTHORITY TO INSURE SUCH PROPERTY IS CONTAINED IN SECTION 304 THEREOF. IN A NUMBER OF OTHER INSTANCES THE PROJECTS HAVE BEEN LEASED TO NON-FEDERAL PUBLIC AND PRIVATE AGENCIES SUBJECT TO THE FOLLOWING COVENANT IN THE LEASE ON THE PART OF THE LESSEE: "IT WILL PROCURE AND MAINTAIN FOR THE BENEFIT OF THE GOVERNMENT SUCH INSURANCE COVERING THE RISKS TO WHICH THE LEASED PROPERTY IS EXPOSED AS IS CUSTOMARILY CARRIED IN CONNECTION WITH SIMILAR FACILITIES LOCATED IN THE SAME OR A COMPARABLE AREA. THE SUM FOR WHICH THIS COMPANY IS LIABLE PURSUANT TO THIS POLICY SHALL BE PAYABLE SIXTY DAYS AFTER DUE NOTICE. SATISFACTORY PROOF OF THE LOSS HAVE BEEN RECEIVED BY THIS COMPANY IN ACCORDANCE WITH THE TERMS OF THIS POLICY.

B-34724, JUNE 26, 1943, 22 COMP. GEN. 1133

INSURANCE - USE OF PROCEEDS FOR REPAIR OR REPLACEMENT OF DAMAGED OR DESTROYED PROPERTY IN VIEW OF THE PROVISIONS OF THE ACT OF OCTOBER 10, 1940, AS AMENDED, WHICH AUTHORIZE THE INSURING OF FEDERALLY OWNED WAR PUBLIC WORKS FACILITIES CONSTRUCTED OR ACQUIRED UNDER AUTHORITY OF THE SAID ACT, AND WHICH EVINCE THE INTENT OF THE CONGRESS THAT THE PROGRAM BE AS SELF- SUSTAINING AS POSSIBLE, INSURANCE PROCEEDS MAY BE USED FOR THE REPAIR OR REPLACEMENT OF DAMAGED OR DESTROYED FACILITIES, AND NEED NOT BE COVERED INTO THE TREASURY AS MISCELLANEOUS RECEIPTS IN ACCORDANCE WITH THE PROVISIONS OF SECTION 3617, REVISED STATUTES.

COMPTROLLER GENERAL WARREN TO FEDERAL WORKS ADMINISTRATOR, JUNE 26, 1943:

I HAVE YOUR LETTER OF MAY 21, 1943, SUBMITTING FOR DECISION THE QUESTION AS TO THE AUTHORITY TO USE THE PROCEEDS OF CERTAIN INSURANCE POLICIES FOR THE RECONSTRUCTION OR REPLACEMENT OF DAMAGED OR DESTROYED WAR PUBLIC WORKS FACILITIES. YOUR SUBMISSION POINTS OUT THAT SUCH FACILITIES HAD BEEN CONSTRUCTED UNDER THE AUTHORIZATION CONTAINED IN TITLE II OF THE SO-CALLED LANHAM ACT, 54 STAT. 1125, 1127, AS AMENDED, AND THAT SPECIFIC AUTHORITY TO INSURE SUCH PROPERTY IS CONTAINED IN SECTION 304 THEREOF, WHICH PROVIDES:

NOTWITHSTANDING ANY OTHER PROVISIONS OF LAW, WHETHER RELATING TO THE ACQUISITION, HANDLING, OR DISPOSAL OF REAL OR OTHER PROPERTY BY THE UNITED STATES OR TO OTHER MATTERS, * * * BY MEANS OF GOVERNMENT PERSONNEL, SELECTED QUALIFIED PRIVATE AGENCIES, OR PUBLIC AGENCIES (A) TO DEAL WITH, MAINTAIN, OPERATE, ADMINISTER, AND INSURE; (B) TO PURSUE TO FINAL COLLECTION BY WAY OF COMPROMISE OR OTHERWISE, ALL CLAIMS ARISING THEREFROM; (C) TO RENT, LEASE, EXCHANGE, SELL FOR CASH OR CREDIT, AND CONVEY THE WHOLE OR ANY PART OF SUCH PROPERTY AND TO CONVEY WITHOUT COST PORTIONS THEREOF TO LOCAL MUNICIPALITIES FOR STREET OR OTHER PUBLIC USE: PROVIDED, THAT ANY SUCH TRANSACTION SHALL BE MADE UPON SUCH TERMS, INCLUDING THE PERIOD OF ANY LEASE, AS MAY BE DEEMED BY THE ADMINISTRATOR TO BE IN THE PUBLIC INTEREST: * * *

YOUR LETTER THEN STATES:

PURSUANT TO THE AUTHORITY GRANTED BY THE FOREGOING SECTION, THE ADMINISTRATOR HAS INSURED A CONSIDERABLE NUMBER OF FEDERALLY CONSTRUCTED WAR PUBLIC WORKS FACILITIES. IN A NUMBER OF OTHER INSTANCES THE PROJECTS HAVE BEEN LEASED TO NON-FEDERAL PUBLIC AND PRIVATE AGENCIES SUBJECT TO THE FOLLOWING COVENANT IN THE LEASE ON THE PART OF THE LESSEE:

"IT WILL PROCURE AND MAINTAIN FOR THE BENEFIT OF THE GOVERNMENT SUCH INSURANCE COVERING THE RISKS TO WHICH THE LEASED PROPERTY IS EXPOSED AS IS CUSTOMARILY CARRIED IN CONNECTION WITH SIMILAR FACILITIES LOCATED IN THE SAME OR A COMPARABLE AREA, IN FORM AND AMOUNTS REASONABLY SUFFICIENT TO PROTECT THE GOVERNMENT'S FINANCIAL INTEREST IN THE LEASED PROPERTY, AND SUBJECT TO THE FOLLOWING CONDITIONS:

"/1) THE KINDS AND AMOUNTS OF INSURANCE AND THE INSURERS SHALL BE SUBJECT TO APPROVAL OF THE GOVERNMENT,

"/2) THE INSURANCE SHALL BE MADE PAYABLE TO THE GOVERNMENT AS THE INSURED,

"/3) THE INSURANCE POLICIES SHALL BE DELIVERED PROMPTLY TO THE GOVERNMENT,

"/4) THE LESSEE SHALL NOTIFY THE PROPER INSURANCE COMPANIES AND THE GOVERNMENT PROMPTLY OF ANY LOSS OR DAMAGE TO THE LEASED PROPERTY.

"/5) IN THE EVENT OF ANY LOSSES COVERED BY SUCH INSURANCE THE GOVERNMENT MAY, AT ITS OPTION, APPLY ANY INSURANCE PROCEEDS RECEIVED DURING THE TERM OF THIS LEASE TO THE REPAIR, RESTORATION OR REPLACEMENT OF THE LEASED PROPERTY, OR ANY PORTION THEREOF, DAMAGED OR DESTROYED.'

THE USUAL FORM OF POLICY INSURING AGAINST LOSS OR DAMAGE BY FIRE OR OTHER CATASTROPHE CONTAINS A PROVISION SIMILAR TO THE FOLLOWING:

"THIS COMPANY SHALL NOT BE LIABLE BEYOND THE ACTUAL CASH VALUE OF THE PROPERTY AT THE TIME ANY LOSS OR DAMAGE OCCURS, AND THE LOSS OR DAMAGE SHALL BE ASCERTAINED OR ESTIMATED ACCORDING TO SUCH ACTUAL CASH VALUE,WITH PROPER DEDUCTION FOR DEPRECIATION HOWEVER CAUSED, AND SHALL IN NO EVENT EXCEED WHAT IT WOULD THEN COST THE INSURED TO REPAIR OR REPLACE THE SAME WITH MATERIAL OF LIKE KIND AND QUALITY; SAID ASCERTAINMENT OR ESTIMATE SHALL BE MADE BY THE INSURED AND THIS COMPANY, OR, IF THEY DIFFER, THEN BY APPRAISERS, AS HEREINAFTER PROVIDED; AND, THE AMOUNT OF LOSS OR DAMAGE HAVING BEEN THUS DETERMINED, THE SUM FOR WHICH THIS COMPANY IS LIABLE PURSUANT TO THIS POLICY SHALL BE PAYABLE SIXTY DAYS AFTER DUE NOTICE, ASCERTAINMENT, ESTIMATE, AND SATISFACTORY PROOF OF THE LOSS HAVE BEEN RECEIVED BY THIS COMPANY IN ACCORDANCE WITH THE TERMS OF THIS POLICY. SHALL BE OPTIONAL, HOWEVER, WITH THIS COMPANY TO TAKE ALL, OR ANY PART, OF THE ARTICLES AT SUCH ASCERTAINED OR APPRAISED VALUE, AND ALSO TO REPAIR, REBUILD, OR REPLACE THE PROPERTY LOST OR DAMAGED WITH OTHER OF LIKE KIND AND QUALITY WITHIN A REASONABLE TIME ON GIVING NOTICE, WITHIN THIRTY DAYS AFTER THE RECEIPT OF THE PROOF HEREIN REQUIRED, OF ITS INTENTION SO TO DO; BUT THERE CAN BE NO ABANDONMENT TO THIS COMPANY OF THE PROPERTY DESCRIBED.'

THE GENERAL RULE HAS PREVAILED IN THE GOVERNMENT FOR MANY YEARS THAT, IN THE ABSENCE OF A STATUTE AUTHORIZING THE PAYMENT OF INSURANCE PREMIUMS, APPROPRIATED MONEYS ARE NOT AVAILABLE FOR INSURANCE PREMIUMS ON GOVERNMENT -OWNED PROPERTY, THE GOVERNMENT ITSELF ASSUMING THE RISKS AGAINST LOSSES IN THAT RESPECT. 17 COMP. GEN. 419, 421. IT CAN BE ASSUMED, THEREFORE, THAT THE SPECIAL AUTHORIZATION GRANTED TO THE FEDERAL WORKS ADMINISTRATOR BY SECTION 304 OF THE LANHAM ACT TO INSURE FEDERALLY-OWNED WAR PUBLIC WORKS FACILITIES WAS NOT FOR THE SOLE PURPOSE OF PERMITTING REIMBURSEMENT TO THE GOVERNMENT FOR LOSSES. THE LANHAM ACT WAS PASSED BY THE CONGRESS TO PROVIDE FOR THE CONSTRUCTION OF COMMUNITY FACILITIES TO REMEDY AN ACUTE SHORTAGE OF SUCH FACILITIES NECESSARY FOR THE HEALTH, SAFETY AND WELFARE OF PERSONS ENGAGED IN NATIONAL DEFENSE ACTIVITIES SO SERIOUS AS TO IMPEDE NATIONAL DEFENSE ACTIVITIES. BECAUSE OF THEIR RELATION TO THE WAR EFFORT IT IS OF THE UTMOST IMPORTANCE THAT THESE FACILITIES BE MAINTAINED AND KEPT AVAILABLE THROUGH PROMPT REPAIR OR REPLACEMENT IN THE EVENT OF DAMAGE OR LOSS. THE AUTHORITY IN THE FEDERAL WORKS ADMINISTRATOR TO INSURE THESE PROPERTIES PERMITS THESE PROJECTS TO BE MAINTAINED IN OPERATION DURING THE PERIOD OF THE WAR EMERGENCY WITHOUT THE NECESSITY OF RETURNING TO THE CONGRESS FOR ADDITIONAL FUNDS FOR RECONSTRUCTION OR REPLACEMENT WHENEVER THERE IS DAMAGE OR LOSS.

THE RIGHT TO INSURE MUST OF NECESSITY CARRY WITH THE RIGHT TO USE THE INSURANCE PROCEEDS TO EFFECT THE PURPOSE OF THE INSURANCE. THIS PURPOSE WOULD BE DEFEATED IN SO FAR AS THE PURPOSE OF THE LANHAM ACT IS CONCERNED IF THE ADMINISTRATOR WAS UNABLE TO AVAIL HIMSELF OF THE PROCEEDS OF INSURANCE PROVIDED FOR THE WAR PUBLIC WORKS FACILITIES CONSTRUCTED WITH LANHAM ACT FUNDS. IT IS SUBMITTED THAT THE CLEAR INTENT OF THE CONGRESS IN AUTHORIZING THE ADMINISTRATOR TO INSURE FEDERAL WAR PUBLIC WORKS FACILITIES WAS TO ENABLE HIM TO USE THE PROCEEDS OF INSURANCE TO MAINTAIN THESE FACILITIES DURING THE PERIOD OF THEIR NEED.

SECTION 3617, REVISED STATUTES, 31 U.S.C. 484, REQUIRES THAT THE GROSS AMOUNT OF ALL MONEYS RECEIVED FROM WHATEVER SOURCE FOR THE USE OF THE UNITED STATES (WITH CERTAIN EXCEPTIONS NOT INVOLVED HERE) SHALL BE DEPOSITED AND COVERED INTO THE TREASURY AS MISCELLANEOUS RECEIPTS. ADMITTEDLY, HOWEVER, THE TERMS OF THIS PROVISION OF LAW ARE GENERAL IN SCOPE AND SHOULD RECEIVE A SENSIBLE CONSTRUCTION WITH RESPECT TO ANY PARTICULAR FORM OF INCOME OR RECEIPT. THE QUESTION FOR DETERMINATION HERE WOULD APPEAR TO BE WHETHER BY REASON OF THE PURPOSE OR PROVISIONS OF THE LANHAM ACT, THE INHERENT NATURE OF INSURANCE, OR OTHER FACTORS HAVING A MATERIAL BEARING ON THE MATTER, IT REASONABLY MAY BE CONCLUDED THAT IT WAS THE INTENT OF THE CONGRESS THAT THE PROCEEDS OF INSURANCE ON WAR PUBLIC WORKS FACILITIES CONSTRUCTED OR ACQUIRED UNDER SAID ACT MIGHT BE USED FOR THE RECONSTRUCTION OR REPLACEMENT OF SUCH FACILITIES.

THE PAYMENTS RECEIVED FROM THE INSURERS IN THESE CASES ARE SOMEWHAT ANALOGOUS TO MONEYS RECEIVED FROM PRIVATE SOURCES IN COMPENSATION FOR DAMAGE TO OR LOSS OF GOVERNMENT PROPERTY. IN FACT, WHERE PROPERTY IS COVERED BY INSURANCE, IT WELL MAY BE THAT THE GOVERNMENT WILL FIRST BE MADE WHOLE FOR DAMAGE THERETO OR LOSS THEREOF BY THE INSURANCE COMPANY, WHICH THEN WILL COLLECT FROM THE PERSON RESPONSIBLE FOR THE DAMAGE OR LOSS --- UNDER ITS RIGHT OF SUBROGATION--- THE EXACT AMOUNT PREVIOUSLY PAID THE GOVERNMENT. IN SUCH CASE, THE ANALOGY IS EVEN CLOSER. HOWEVER, AS TO AMOUNTS PAID AS DAMAGES, THE DECISIONS OF THE ACCOUNTING OFFICERS OF THE GOVERNMENT HAVE BEEN MANY AND CONSISTENT TO THE EFFECT THAT MONEYS SO RECEIVED MUST BE COVERED INTO THE TREASURY AS MISCELLANEOUS RECEIPTS. COMP. DEC. 87, AND DECISIONS CITED THEREIN; 20 ID. 349; 22 ID. 379; 3 COMP. GEN. 808; 5 ID. 928, AND DECISIONS CITED THEREIN; 15 ID. 683.

HOWEVER, APPARENTLY, THE MATTER OF INSURANCE PROCEEDS HAS BEEN CONSIDERED --- AT LEAST UNDER CERTAIN CIRCUMSTANCES--- AS IN A DIFFERENT CATEGORY FROM REPARATION PAYMENTS FOR DAMAGES. IN A DECISION DATED JULY 24, 1931 (A-37543), IT WAS STATED:

THE RULE IS THAT WHERE GOVERNMENT VESSELS UNDER CONSTRUCTION ARE REQUIRED TO BE INSURED FOR THE BENEFIT OF THE UNITED STATES TO COVER LOSSES OF FIRE AND ACCIDENT, THE PROCEEDS OF THE INSURANCE WHEN PAID TO THE GOVERNMENT SHOULD BE DEPOSITED IN THE UNITED STATES TREASURY TO THE CREDIT OF THE APPROPRIATION UNDER WHICH THE CONSTRUCTION WORK WAS PERFORMED. IN THIS CONNECTION SEE 20 COMP. DEC. 32.

THE NECESSITY FOR SPECIFIC STATUTORY AUTHORITY TO EXPEND APPROPRIATED FUNDS FOR INSURANCE PREMIUMS PRIMARILY IS BASED UPON A LONG ESTABLISHED POLICY OF THE GOVERNMENT TO ASSUME ITS OWN RISKS OF LOSS--- THE THEORY BEING THAT THE MAGNITUDE OF ITS RESOURCES CONSTITUTES SUCH PRACTICE MORE ADVANTAGEOUS IF ONLY FROM THE STANDPOINT OF ECONOMY OF THE ADMINISTRATION OF GOVERNMENT. SEE 16 COMP. GEN. 453; 19 ID. 211; 21 ID. 928. SO THAT WHEN THE CONGRESS CHOOSES TO DEVIATE FROM THAT POLICY IT WOULD SEEM THAT THE REASONS AND MOTIVES FOR SUCH DEVIATION MAY HAVE CONSIDERABLE BEARING IN THE SOLUTION OF PROBLEMS CONNECTED WITH THE AUTHORITY GRANTED. HOUSE REPORT NO. 2923 ON THE BILL ( H.R. 10412) WHICH SUBSEQUENTLY BECAME THE ACT OF OCTOBER 14, 1940, SUPRA, EXPLAINS SUCH REASONS AND MOTIVES AS FOLLOWS:

* * * SPECIFIC POWER TO INSURE THESE PROPERTIES IS GRANTED, BECAUSE IT IS CONTEMPLATED THAT MANY, IF NOT ALL, OF THE BUILDINGS WILL BE FRAME CONSTRUCTION, THUS CONSTITUTING A SPECIAL RISK DIFFERING IN ITS NATURE FROM THE RISK OF USUAL GOVERNMENTAL BUILDING. * * * THIS EXPLANATION AFFORDS LITTLE, IF ANY, ASSISTANCE FOR PRESENT PURPOSES. IT IS A MATTER OF COMMON KNOWLEDGE THAT THE AMOUNT OF AN INSURANCE PREMIUM IS USUALLY COMMENSURATE WITH THE RISK COVERED BY THE POLICY; AND, CONSEQUENTLY, THERE WOULD APPEAR TO BE NO MORE REASON OR NECESSITY FOR THE GOVERNMENT TO INSURE AGAINST "SPECIAL RISKS" THAN ORDINARY RISKS. THEREFORE, IT WOULD SEEM QUITE PROPER--- AS INDICATED IN YOUR LETTER--- TO INQUIRE IF THE CONGRESS DID NOT HAVE A MORE PARTICULAR PURPOSE IN MIND IN PROVIDING THE ADMINISTRATOR WITH AUTHORITY TO INSURE IN SAID SECTION 304.

SECTION 303 OF THE ACT, AS AMENDED, PROVIDES:

MONEYS DERIVED FROM RENTAL OR OPERATION OF PROPERTY ACQUIRED OR CONSTRUCTED UNDER THE PROVISIONS OF THIS ACT SHALL BE RETURNED TO THE APPROPRIATION AUTHORIZED BY THIS ACT AND SHALL BE AVAILABLE FOR EXPENSES OF OPERATION AND MAINTENANCE INCLUDING ADMINISTRATIVE EXPENSES IN CONNECTION THEREWITH, AND THE UNOBLIGATED BALANCE OF THE MONEYS SO DEPOSITED SHALL BE COVERED INTO THE TREASURY AT THE END OF EACH FISCAL YEAR AS MISCELLANEOUS RECEIPTS. WHETHER MONEYS RECEIVED UNDER INSURANCE POLICIES ON SUCH PROPERTY PROPERLY MAY BE DEEMED "MONEYS DERIVED FROM RENTAL OR OPERATION" OF THE PROPERTY IS OPEN TO QUESTION. HOWEVER, THE FACT THAT INCOME RECEIVED FROM AUTHORIZED DEALINGS WITH THE PROPERTY IS EXCEPTED FROM THE REQUIREMENT OF SECTION 3617, REVISED STATUTES, SUPRA, AND IS MADE AVAILABLE FOR OPERATION AND MAINTENANCE EXPENSES SEEMS INDICATIVE OF AN INTENT ON THE PART OF THE CONGRESS THAT THE PROGRAM, ONCE LAUNCHED WITH AN APPROPRIATION SHOULD BE CARRIED ON WITH THE LEAST POSSIBLE NECESSITY FOR ADDITIONAL APPROPRIATIONS. IN OTHER WORDS, THAT THE PROJECT OR PROGRAM SHOULD BE, INSOFAR AS POSSIBLE, SELF-SUPPORTING OR SELF-SUSTAINING. CERTAINLY, THE PROPOSED USE OF INSURANCE PROCEEDS TO REPLACE OR REPAIR DAMAGED PROPERTY WOULD BE IN LINE WITH SUCH EXPRESSION OF INTENT.

WHERE DAMAGE OR LOSS OCCURS, AND THE INSURER ELECTS UNDER AN OPTION EXPRESSLY RESERVED IN THE POLICY TO REPAIR OR REPLACE SUCH DAMAGE OR LOSS, RATHER THAN TO MAKE PAYMENT DIRECT TO THE GOVERNMENT IN CASH, THE NET EFFECT OF THE INSURANCE COVERAGE IS TO CONSERVE THE AVAILABLE APPROPRIATION TO THE EXTENT OF THE COST OF SUCH REPAIRS OR REPLACEMENTS, UNLESS IT BE HELD THAT IN THE EVENT OF SUCH ELECTION AN AMOUNT EQUAL TO THE VALUE OF THE REPAIRS OR REPLACEMENTS MUST BE PAID FROM SUCH APPROPRIATION INTO THE GENERAL FUND OF THE TREASURY AS MISCELLANEOUS RECEIPTS. SEE 20 COMP. DEC. 349, 2 COMP. GEN. 599; 8 ID. 632. CF. 3 COMP. GEN. 27. WHERE FUNDS HAVE BEEN APPROPRIATED FOR THE SPECIFIC PURPOSE OF REPAIRING OR REPLACING CERTAIN PROPERTY, A FAILURE TO TRANSFER SUCH AN AMOUNT MIGHT BE DEEMED AN UNAUTHORIZED AUGMENTATION OF THE APPROPRIATED FUNDS. SEE 9 COMP. DEC. 174; 14 ID. 87; 5 COMP. GEN. 928. HOWEVER, THAT IS NOT THE INSTANT CASE. WHILE THE LANHAM ACT EXPRESSLY AUTHORIZES THE REPAIR OF THE PROPERTY IN QUESTION, IT APPEARS THAT FUNDS ARE APPROPRIATED IN A LUMP SUM FOR THE PURPOSE OF CARRYING OUT THE WHOLE PROGRAM WITHOUT REGARD TO THE PARTICULAR PHASES THEREOF. SEE 21 COMP. DEC. 632. CF. 8 COMP. GEN. 615. HENCE, IT WOULD SEEM REASONABLE TO ATTRIBUTE TO THE GRANT OF AUTHORITY TO INSURE, THE PURPOSE OF PLACING THE PROGRAM IN A POSITION OF BEING AS SELF SUSTAINING AS POSSIBLE. ACCORDINGLY, THERE APPEARS SOUND BASIS FOR CONCLUDING THAT IT WAS THE INTENT OF THE CONGRESS THAT THE PROCEEDS OF THE INSURANCE HERE IN QUESTION MIGHT BE USED "TO EFFECT THE PURPOSE OF THE INSURANCE"--- NAMELY THE REPAIR OR REPLACEMENT OF THE PROPERTY DAMAGED. HOWEVER, IT IS NOT TO BE UNDERSTOOD THAT SUCH RIGHT IS A NECESSARY INCIDENCE OF SPECIFIC LEGISLATIVE AUTHORITY TO INSURE. FOR EXAMPLE, UNDER THE FACTS INVOLVED IN A DECISION OF THIS OFFICE DATED FEBRUARY 6, 1925 (A-7119), IT APPEARED THAT WHILE THE LEGISLATION (ACT OF MARCH 28, 1908, 35 STAT. 51) AUTHORIZED THE CONSTRUCTION AND OPERATION OF A SAWMILL, ITS TERMS CONTEMPLATED THAT SUCH OPERATION SHOULD TERMINATE AND THE MILL BE SOLD WHEN CERTAIN DESCRIBED TIMBER HAD BEEN CONVERTED INTO LUMBER. THIS OFFICE HELD THAT UNDER SUCH CIRCUMSTANCES NO PORTION OF THE PLANT WHICH HAD BEEN DESTROYED BY FIRE- - SOME FIFTEEN YEARS AFTER THE ENACTMENT OF THE LEGISLATION--- COULD BE REPLACED, EVEN THOUGH INSURANCE PROCEEDS WERE AVAILABLE FOR SUCH WORK, UNLESS THE CONGRESS SPECIFICALLY SO DIRECTED. WHILE AUTHORITY TO INSURE WAS NOT CONTAINED IN SAID ACT, IT WOULD SEEM DOUBTFUL THAT THE CONCLUSION REACHED IN THE DECISION WOULD HAVE BEEN DIFFERENT HAD AUTHORITY TO INSURE BEEN GRANTED.

YOUR LETTER DESCRIBES THREE METHODS BELIEVED TO BE PROPER IN PROVIDING FOR THE REPLACEMENT OR REPAIR OF THE PROPERTY IN QUESTION, WHICH ARE SPECIFICALLY AS FOLLOWS:

1. REPLACEMENT OR RECONSTRUCTION BY THE INSURER, THE INSURER LETTING ALL CONTRACTS AND MAKING ALL PAYMENTS.

2. REPLACEMENT OR RECONSTRUCTION BY THE GOVERNMENT, THE GOVERNMENT LETTING ALL CONTRACTS, EITHER IN ITS NAME OR JOINTLY WITH THE INSURER, BUT PROVIDING FOR ALL PAYMENTS TO BE MADE BY THE INSURER.

3. REPLACEMENT OR RECONSTRUCTION BY THE GOVERNMENT, THE GOVERNMENT LETTING ALL CONTRACTS AND MAKING ALL PAYMENTS FROM THE PROCEEDS OF INSURANCE RECEIVED FROM THE INSURER AND DEPOSITED IN THE TREASURY IN A SPECIAL ACCOUNT TO BE AVAILABLE TO THE ADMINISTRATOR SOLELY FOR SUCH REPLACEMENT OR RECONSTRUCTION.

IN VIEW OF THE CONCLUSION ABOVE REACHED AS TO THE AVAILABILITY OF THE INSURANCE PROCEEDS FOR SUCH WORK, AND IN VIEW OF THE BROAD AUTHORITY VESTED IN THE ADMINISTRATOR BY SECTION 304 OF THE SAID LANHAM ACT, AS AMENDED, SUPRA, THIS OFFICE IS NOT REQUIRED TO OBJECT TO ANY ONE OF THESE METHODS. IT IS ASSUMED, HOWEVER, THAT--- TO THE EXTENT POSSIBLE--- THE ADMINISTRATOR WILL SELECT IN EACH INSTANCE THE METHOD WHICH APPEARS BEST SUITED TO THE PUBLIC INTEREST.