B-3494, MAY 17, 1939, 18 COMP. GEN. 864

B-3494: May 17, 1939

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TRANSPORTATION - MAILS - SPECIAL CONTRACTS - RAIL ABANDONMENT AND SUBSTITUTED BUS SERVICE THE POSTMASTER GENERAL IS AUTHORIZED BY STATUTE TO PERMIT RAILROAD AND ELECTRIC CAR COMPANIES TO PROVIDE MAIL TRANSPORTATION BY MOTOR VEHICLES ON HIGHWAYS IN LIEU OF SERVICE BY TRAIN PROVIDED THE COMPENSATION PAID FOR SUCH MOTOR-VEHICLE SERVICE IS NOT IN EXCESS OF THE RATE THAT WOULD BE ALLOWABLE IF THE SERVICE WERE BY RAILROAD OR ELECTRIC CAR. THE FACT THAT MAIL CARRIAGE BY A RAILROAD IS PROVIDED FOR UNDER A SPECIAL CONTRACT AUTHORIZED BY LAW AT RATES HIGHER THAN THOSE FIXED BY THE INTERSTATE COMMERCE COMMISSION DOES NOT MAKE LEGALLY OBJECTIONABLE A RENEWAL OF THE SPECIAL CONTRACT WHERE REGULAR SERVICE OVER A PORTION OF THE RAILROAD IS ABANDONED AND MAIL SERVICE IS TO BE PERFORMED BY BUS FOR THE ABANDONED PORTION.

B-3494, MAY 17, 1939, 18 COMP. GEN. 864

TRANSPORTATION - MAILS - SPECIAL CONTRACTS - RAIL ABANDONMENT AND SUBSTITUTED BUS SERVICE THE POSTMASTER GENERAL IS AUTHORIZED BY STATUTE TO PERMIT RAILROAD AND ELECTRIC CAR COMPANIES TO PROVIDE MAIL TRANSPORTATION BY MOTOR VEHICLES ON HIGHWAYS IN LIEU OF SERVICE BY TRAIN PROVIDED THE COMPENSATION PAID FOR SUCH MOTOR-VEHICLE SERVICE IS NOT IN EXCESS OF THE RATE THAT WOULD BE ALLOWABLE IF THE SERVICE WERE BY RAILROAD OR ELECTRIC CAR, AND THE FACT THAT MAIL CARRIAGE BY A RAILROAD IS PROVIDED FOR UNDER A SPECIAL CONTRACT AUTHORIZED BY LAW AT RATES HIGHER THAN THOSE FIXED BY THE INTERSTATE COMMERCE COMMISSION DOES NOT MAKE LEGALLY OBJECTIONABLE A RENEWAL OF THE SPECIAL CONTRACT WHERE REGULAR SERVICE OVER A PORTION OF THE RAILROAD IS ABANDONED AND MAIL SERVICE IS TO BE PERFORMED BY BUS FOR THE ABANDONED PORTION, IF THE COMPENSATION TO BE PAID FOR THE SUBSTITUTED BUS SERVICE IS NOT TO BE IN EXCESS OF THE PRO RATA PORTION OF THE RATES PROVIDED UNDER THE SPECIAL CONTRACT AND IT IS ADMINISTRATIVELY DETERMINED THAT RENEWAL ON THAT BASIS IS IN THE INTEREST OF THE UNITED STATES.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE POSTMASTER GENERAL, MAY 17, 1939:

I HAVE YOUR LETTER OF MAY 1, 1939, AS FOLLOWS:

THIS DEPARTMENT HAS A SPECIAL RAILROAD CONTRACT WITH THE RIO GRANDE SOUTHERN RAILROAD COMPANY FOR THE CARRIAGE OF MAILS ON TRAINS OR MOTORCARS OPERATED OVER ITS RAILS, FROM RIDGWAY VIA INTERMEDIATE POST OFFICES TO DURANGO, COLORADO, A DISTANCE OF 169.89 MILES AND BACK, FOR THE PERIOD FROM JULY 1, 1938, TO JUNE 30, 1939, AT THE RATE OF $36,800 PER ANNUM. THIS CONTRACT IS IN EFFECT THE RENEWAL OF SIMILAR CONTRACTS AT THE SAME RATE OF PAY WHICH HAD BEEN AUTHORIZED ON A YEARLY BASIS COVERING A CONTINUOUS PERIOD OF APPROXIMATELY NINE YEARS. A COPY OF THE CURRENT CONTRACT AND A SECTION OF THE POST ROUTE MAP SHOWING THE LOCATION OF THE RAILROAD ARE INCLOSED.

THESE CONTRACTS WERE AUTHORIZED UNDER THE AUTHORITY CONTAINED IN 39 U.S.S. 565 WHICH READS AS FOLLOWS:

"THE POSTMASTER GENERAL IS AUTHORIZED TO MAKE SPECIAL CONTRACTS WITH THE RAILROAD COMPANIES FOR THE TRANSPORTATION OF THE MAILS WHERE IN HIS JUDGMENT THE CONDITIONS WARRANT THE APPLICATION OF HIGHER RATES THAN THOSE HEREIN SPECIFIED, AND MAKE REPORT TO CONGRESS OF ALL CASES WHERE SUCH SPECIAL CONTRACTS ARE MADE AND THE TERMS AND REASONS THEREFOR.'

THE DEPARTMENT IS NOW ADVISED BY THE RECEIVER OF THE COMPANY THAT THE CONDITIONS OF THE EQUIPMENT AND ROADBED ARE SUCH THAT HE WILL BE UNABLE TO CONTINUE THE PRESENT OPERATION LONGER THAN FOUR OR FIVE MONTHS, AND THAT HE HAD DECIDED TO CONSIDER ABANDONING THE PART OF THE LINE BETWEEN RICO AND VANCE JUNCTION, 28.44 MILES, AND REQUEST A LOAN OF EITHER $50,000 OR $100,000 FROM THE RECONSTRUCTION FINANCE CORPORATION WITH THE VIEW TO REHABILITATING AND OPERATING THE REMAINDER OF THE LINE. HE ALSO STATED THAT BEFORE THE R.F.C. WOULD CONSIDER OR EVEN MAKE AN INVESTIGATION TO DETERMINE WHETHER SUCH A LOAN WAS FEASIBLE, IT WOULD BE NECESSARY TO DETERMINE WHETHER OR NOT THE POST OFFICE DEPARTMENT WOULD CONTINUE THE SPECIAL CONTRACT OR RENEW IT FOR THE NEXT FISCAL YEAR WITH A PRO RATA REDUCTION FOR THE MILEAGE ABANDONED IN THE EVENT HE WAS SUCCESSFUL IN SECURING AN ORDER FROM THE INTERSTATE COMMERCE COMMISSION TO ABANDON THAT PART OF THE LINE.

THE RECEIVER FURTHER STATED THAT IF HE WAS SUCCESSFUL IN SECURING A LOAN AND PERMISSION TO ABANDON THAT PART OF THE LINE BETWEEN RICO AND VANCE JUNCTION, IT WAS HIS INTENTION TO HANDLE PASSENGERS AND MAIL BETWEEN DURANGO AND RICO IT WAS HIS INTENTION TO HANDLE PASSENGERS BETWEEN DURANGO AND RICO AND RIDGWAY AND VANCE JUNCTION BY MOTORBUSES OVER THE HIGHWAY AND OPERATE STEAM TRAINS BETWEEN THESE POINTS FOR THE HANDLING OF FREIGHT ONLY ON SUCH SCHEDULE AS THE FREIGHT BUSINESS WARRANTED, BUT THAT HE WOULD BE WILLING TO OPERATE THE BUSES CARRYING THE PASSENGERS AND MAIL ON ANY SCHEDULE DESIRED BY THE POST OFFICE DEPARTMENT. THE ONLY OFFICE LOCATED BETWEEN RICO AND VANCE JUNCTION IS OPHIR, AND THE RECEIVER ADVISED THAT THE COMPANY WOULD BE WILLING TO CONTINUE TO HANDLE THE MAIL INTO AND OUT OF THAT POST OFFICE BY MOTOR VEHICLE OR HORSEBACK.

IT IS THE INTENTION OF THE DEPARTMENT TO RENEW THE PRESENT CONTRACT FROM JULY 1, 1939, AND CONTINUE THE SERVICE IN EFFECT SO LONG AS THE MAILS ARE CARRIED OVER THE RAILS, BUT THERE MAY BE SOME QUESTION AS TO WHETHER IT HAS LEGAL AUTHORITY TO ACCEPT MAIL TRANSPORTATION WHICH WOULD BE PERFORMED IN MOTORBUSES OVER THE HIGHWAY IN LIEU OF SERVICE OVER THE RAILS UNDER A SPECIAL RAILROAD CONTRACT. IN THIS CONNECTION ATTENTION IS KINDLY DIRECTED TO THE PROVISIONS CONTAINED IN 39 U.S.C. 541A WHICH READS AS FOLLOWS, AND UNDER WHICH THE POSTMASTER GENERAL IS AUTHORIZED, IN HIS DISCRETION, TO PERMIT RAILROAD COMPANIES TO PROVIDE MAIL TRANSPORTATION BY MOTOR VEHICLE OVER HIGHWAYS IN LIEU OF SERVICE BY TRAIN UNDER CERTAIN CONDITIONS:

"THE POSTMASTER GENERAL IS HEREBY AUTHORIZED, IN HIS DISCRETION, TO PERMIT RAILROAD AND ELECTRIC-CAR COMPANIES TO PROVIDE MAIL TRANSPORTATION BY MOTOR VEHICLE OVER HIGHWAYS IN LIEU OF SERVICE BY TRAIN, THE COMPENSATION FOR SUCH SERVICE TO BE AT A RATE NOT IN EXCESS OF THE RATE THAT WOULD BE ALLOWED FOR SIMILAR SERVICE BY RAILROAD OR ELECTRIC CAR, PAYMENT THEREFOR TO BE MADE FROM THE APPROPRIATE APPROPRIATION FOR RAILROAD TRANSPORTATION AND MAIL MESSENGER SERVICE OR ELECTRIC AND CABLE CAR SERVICE" (ACT OF FEB. 15, 1933, PUBLIC, NO. 350).

THE POSTMASTER GENERAL HAS AUTHORIZED RAILROAD SERVICE UNDER THE PROVISIONS OF THIS STATUTE, BUT IN NO CASE HAS PAYMENT BEEN AUTHORIZED IN EXCESS OF THE RATES FIXED BY THE INTERSTATE COMMERCE COMMISSION FOR SIMILAR SERVICE BY RAILROAD.

THE CONTINUANCE OF OPERATION OF THIS RAILROAD APPEARS TO BE OF VITAL IMPORTANCE TO THIS SECTION OF THE STATE OF COLORADO, AND ON THAT ACCOUNT THIS DEPARTMENT WOULD BE WILLING TO ENTER INTO A SPECIAL RAILROAD CONTRACT AND ACCEPT TRANSPORTATION BY MOTORBUSES IN LIEU OF SERVICE BY TRAIN, THE RATE OF PAY UNDER AGREEMENT TO BE PRO RATA OF THE PRESENT PAY ON THE BASIS OF THE REDUCED MILEAGE, IN THE EVENT THE RECEIVER IS ABLE TO ACCOMPLISH THE CHANGES HE PROPOSES.

IT WILL BE APPRECIATED IF WE MAY HAVE YOUR OPINION AS TO WHETHER OR NOT THERE IS ANY LEGAL OBJECTION TO HANDLING THE MATTER AS ABOVE INDICATED. REPLY AT AS EARLY A DATE AS MAY BE PRACTICABLE IS REQUESTED.'

UNDER THE ACT OF FEBRUARY 15, 1933, 47 STAT. 809, YOU ARE AUTHORIZED TO PERMIT RAILROAD AND ELECTRIC-CAR COMPANIES TO PROVIDE MAIL TRANSPORTATION BY MOTOR VEHICLES ON HIGHWAYS IN LIEU OF SERVICE BY TRAIN PROVIDED THE COMPENSATION PAID FOR SUCH MOTOR-VEHICLE SERVICE IS NOT IN EXCESS OF THE RATE THAT WOULD BE ALLOWABLE IF THE SERVICE WERE BY RAILROAD OR ELECTRIC CAR.

WITH RESPECT TO THE PRESENT MATTER IT IS UNDERSTOOD THE PRESENT CONTRACT WITH THE RIO GRANDE SOUTHERN RAILROAD CO. IS A SPECIAL CONTRACT UNDER SECTION 565, TITLE 39, U.S.C. QUOTED IN YOUR LETTER, AT HIGHER RATES THAN THOSE FIXED BY THE INTERSTATE COMMERCE COMMISSION, AND THAT IT IS FOR A PORTION OF THE SERVICE HERETOFORE PERFORMED BY THE RAILROAD COMPANY UNDER THIS CONTRACT THAT THE BUS SERVICE IS TO BE SUBSTITUTED. IF SUCH ARE THE FACTS, AND THE COMPENSATION TO BE PAID FOR THE SUBSTITUTED BUS SERVICE IS NOT TO BE IN EXCESS OF THE PRO RATA PORTION OF THE RATES PROVIDED FOR UNDER THE SPECIAL CONTRACT OTHERWISE AUTHORIZED BY LAW, AND YOU DETERMINE THAT RENEWAL ON THAT BASIS IS IN THE INTEREST OF THE UNITED STATES, THE FACT THAT THE TOTAL COMPENSATION TO BE PAID ON SUCH PRO RATA BASES WOULD BE AT A RATE IN EXCESS OF RATES FIXED BY THE INTERSTATE COMMERCE COMMISSION FOR THE KIND OF SERVICE AND THE MILEAGE INVOLVED WOULD NOT REQUIRE THAT THIS OFFICE REGARD SUCH RENEWAL CONTRACT AS ILLEGAL.