B-5245, SEPTEMBER 9, 1939, 19 COMP. GEN. 333

B-5245: Sep 9, 1939

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" IS NOT AVAILABLE FOR PURCHASE FROM A POWER AND LIGHT COMPANY OF ELECTRIC TRANSMISSION LINES. AS FOLLOWS: THERE IS HEREBY SUBMITTED FOR DECISION THE QUESTION AS TO WHETHER THE SECRETARY OF THE NAVY IS AUTHORIZED TO PURCHASE FROM THE JERSEY CENTRAL POWER AND LIGHT COMPANY CERTAIN ELECTRICAL INSTALLATIONS AND EQUIPMENT SITUATED ON THE UNITED STATES NAVAL AIR STATION. FLEET AND ALL OTHER AVIATION ACTIVITIES * * *" IT HAS BEEN ADMINISTRATIVELY DETERMINED BY THE NAVY DEPARTMENT THAT THE ACQUISITION OF TITLE TO THIS PROPERTY WILL BE IN THE INTERESTS OF THE GOVERNMENT. HISTORY OF THE PROPERTY ARE DISCLOSED BY LETTER FROM THE SECRETARY OF THE NAVY TO THE CHAIRMAN. FROM WHICH THE FOLLOWING IS QUOTED: "FURTHER REFERENCE IS MADE TO THE COMMITTEE'S COMMUNICATION OF JUNE 7.

B-5245, SEPTEMBER 9, 1939, 19 COMP. GEN. 333

APPROPRIATIONS - FISCAL YEAR - APPLICABILITY OF MAINTENANCE, REPAIR, AND OPERATION PROVISION TO SUBSTANTIAL PROPERTY IMPROVEMENTS THE ANNUAL APPROPRIATION IN THE NAVAL APPROPRIATION ACT OF MAY 25, 1939, 53 STAT. 774, UNDER THE HEADING " AVIATION, NAVY," PROVIDING, AMONG OTHER OBJECTS,"FOR MAINTENANCE, REPAIR, AND OPERATION OF * * * AIR STATIONS," IS NOT AVAILABLE FOR PURCHASE FROM A POWER AND LIGHT COMPANY OF ELECTRIC TRANSMISSION LINES, TRANSFORMERS, SUBSTATIONS AND OTHER ELECTRIC APPARATUS INSTALLED AT A NAVAL AIR STATION AND CONSTITUTING SUBSTANTIAL PROPERTY IMPROVEMENTS, EXPENDITURES UNDER SUCH AN ANNUAL PROVISION BEING LIMITED GENERALLY TO CURRENT MAINTENANCE AND OPERATING EXPENSES AND REPAIRS, AND IT BEING CLEAR FROM THE NUMEROUS SPECIFIC PROVISIONS IN THE APPROPRIATIONS FOR " PUBLIC WORKS, BUREAU OF YARDS AND DOCKS" FOR IMPROVEMENTS OF THIS CHARACTER THAT WHEN THE CONGRESS INTENDS TO AUTHORIZE THE CONSTRUCTION, IMPROVEMENT, OR EXTENSION OF ELECTRIC POWER FACILITIES AT NAVAL YARDS AND STATIONS, IT DOES SO BY SPECIFIC APPROPRIATIONS FOR SUCH PURPOSES UNDER THE BUREAU OF YARDS AND DOCKS.

COMPTROLLER GENERAL BROWN TO THE SECRETARY OF THE NAVY, SEPTEMBER 9, 1939:

CONSIDERATION HAS BEEN GIVEN THE QUESTION SUBMITTED IN YOUR LETTER OF JULY 26, 1939, AS FOLLOWS:

THERE IS HEREBY SUBMITTED FOR DECISION THE QUESTION AS TO WHETHER THE SECRETARY OF THE NAVY IS AUTHORIZED TO PURCHASE FROM THE JERSEY CENTRAL POWER AND LIGHT COMPANY CERTAIN ELECTRICAL INSTALLATIONS AND EQUIPMENT SITUATED ON THE UNITED STATES NAVAL AIR STATION, LAKEHURST, NEW JERSEY, AND MORE FULLY HEREINAFTER DESCRIBED, USING FOR THAT PURPOSE FUNDS MADE AVAILABLE BY THE PROVISION OF THE NAVAL APPROPRIATION ACT OF MAY 25, 1939 ( PUBLIC NO. 90, 76TH CONGRESS), WHICH READS IN PART AS FOLLOWS:

" AVIATION. NAVY: FOR NAVIGATIONAL, PHOTOGRAPHIC, AEROLOGICAL, RADIO, AND MISCELLANEOUS EQUIPMENT, INCLUDING REPAIRS THERETO, FOR USE WITH AIRCRAFT BUILT OR BUILDING ON JUNE 30, 1939, $1,500,000; FOR MAINTENANCE, REPAIR, AND OPERATION OF AIRCRAFT FACTORY, AIR STATIONS, FLEET AIR BASES, FLEET AND ALL OTHER AVIATION ACTIVITIES * * *"

IT HAS BEEN ADMINISTRATIVELY DETERMINED BY THE NAVY DEPARTMENT THAT THE ACQUISITION OF TITLE TO THIS PROPERTY WILL BE IN THE INTERESTS OF THE GOVERNMENT. THE CHARACTER, STATUS, AND HISTORY OF THE PROPERTY ARE DISCLOSED BY LETTER FROM THE SECRETARY OF THE NAVY TO THE CHAIRMAN, COMMITTEE ON CLAIMS, UNITED STATES SENATE, OF EVEN DATE, FROM WHICH THE FOLLOWING IS QUOTED:

"FURTHER REFERENCE IS MADE TO THE COMMITTEE'S COMMUNICATION OF JUNE 7, 1939, REFERRING THE BILL S. 2552,"FOR THE RELIEF OF THE JERSEY CENTRAL POWER AND LIGHT COMPANY.'

"THIS BILL AUTHORIZES AND DIRECTS THE SECRETARY OF THE TREASURY "TO PAY OUT OF ANY MONEY IN THE TREASURY, NOT OTHERWISE APPROPRIATED, TO THE JERSEY CENTRAL POWER AND LIGHT COMPANY, THE SUM OF $35,000.00 IN FULL SETTLEMENT OF ALL CLAIMS AGAINST THE UNITED STATES ON ACCOUNT OF INSTALLATION OF TRANSMISSION LINES, TRANSFORMERS, SUBSTATIONS, AND OTHER ELECTRICAL APPARATUS ON THE NAVAL AIR STATION, LAKEHURST, NEW JERSEY, BY AGREEMENT WITH THE NAVY DEPARTMENT * * *.'

"AS EARLY AS MARCH 1931, THE COMMANDING OFFICER, NAVAL AIR STATION, LAKEHURST, NEW JERSEY, INFORMED THE BUREAU OF AERONAUTICS THAT THE ARRIVAL OF THE U.S.S. AKRON WOULD CAUSE AN APPRECIABLE ADDITION TO THE ELECTRIC POWER LOAD OF THE STATION. AGAIN ON JANUARY 15, 1932, HE ADVISED THAT THE ELECTRICAL GENERATING EQUIPMENT TO THE STATION POWER PLANT WOULD SOON BE TOO SMALL TO HANDLE THE LOAD. WITH THE SITUATION IN MIND, HE STATED THAT THE JERSEY CENTRAL POWER AND LIGHT COMPANY WAS ASKED TO SUBMIT A PROPOSAL FOR FURNISHING ELECTRIC ENERGY TO THE STATION. AT THAT TIME, HOWEVER, THE RATES AND VARIOUS CHARGES SUBMITTED BY THE COMPANY WERE CONSIDERED ENTIRELY UNSATISFACTORY.

"A PLAN WAS THEN DEVELOPED FOR INCREASING THE GENERATING CAPACITY OF THE STATION PLANT BY THE INSTALLATION OF USED DIESEL ENGINES AND GENERATORS. BEFORE GOING TO THE EXPENSE OF THIS INSTALLATION IT WAS DECIDED TO MAKE ANOTHER EFFORT TO SECURE FAVORABLE RATES FROM THE JERSEY CENTRAL POWER AND LIGHT COMPANY WITH THE RESULT THAT THE COMPANY OFFERED TO ENTER INTO AN AGREEMENT TO MAKE, AT ITS OWN EXPENSE, THE NECESSARY EXTENSION TO ITS POWER SERVICES TO CONNECT TO THE PLANT OF THE NAVAL AIR STATION AND TO FURNISH ELECTRICAL ENERGY UNDER ITS REGULAR WHOLESALE POWER SCHEDULES, SUBJECT HOWEVER, TO THE CONDITION THAT IN NO EVENT WILL THE NET CHARGE TO THE STATION FOR ENERGY EXCEED 1 1/2 CENTS PER KILOWATT HOUR. UNDER FAVORABLE CONDITIONS OF LOAD, THE NET CHARGE TO THE STATION WAS CONSIDERED TO AMOUNT TO LESS THAN 1 CENT PER KILOWATT HOUR.

"THE OFFER OF THE JERSEY CENTRAL POWER AND LIGHT COMPANY WAS ACCEPTED AND ON NOVEMBER 8, 1932, THE SECRETARY OF THE NAVY ISSUED A REVOCABLE PERMIT GRANTING THE COMPANY THE PRIVILEGE OF EXTENDING ITS FACILITIES, WITHOUT EXPENSE TO THE GOVERNMENT, INTO THE NAVAL AIR STATION FOR THE PURPOSES OF FURNISHING ELECTRIC ENERGY TO THE STATION UNDER THE TERMS OF THE ABOVE- MENTIONED ORDER. PARTICULAR REFERENCE IS MADE TO THE FOLLOWING SPECIFIC CONDITIONS OF THIS REVOCABLE PERMIT WHICH WERE ACCEPTED BY THE JERSEY CENTRAL POWER AND LIGHT COMPANY, AND PURSUANT TO WHICH THE COMPANY'S LINE WAS COMPLETED ON JANUARY 16, 1933:

" "2. IF THE POWER COMPANY SHALL AT ANY TIME DESIRE TO MAKE ANY CHANGE IN THE AFORESAID FACILITIES, IT SHALL FIRST OBTAIN THE WRITTEN CONSENT OF THE GOVERNMENT, THE COST OF ALL LABOR AND MATERIAL REQUIRED FOR MAKING SUCH CHANGES TO BE BORNE BY THE POWER COMPANY. THE POWER COMPANY HERETO SHALL, AT ITS OWN RISK, COST, AND EXPENSE, KEEP AND MAINTAIN IN GOOD ORDER, REPAIR, AND CONDITION THE AFORESAID FACILITIES AND SHALL PROMPTLY REPLACE OR REPAIR ANY DEFECTIVE EQUIPMENT UPON REQUEST OF THE GOVERNMENT.

" "4. THE POWER COMPANY, AT ITS SOLE EXPENSE, WILL INSTALL AND MAINTAIN THE SAID FACILITIES IN PROPER AND SAFE CONDITION, AT ALL TIMES, TO THE SATISFACTION OF THE UNITED STATES OR ITS AUTHORIZED REPRESENTATIVE.

" "6. THE UNITED STATES SHALL NOT UNDER OR BY REASON OF THIS PERMIT OR BY REASON OF ANYTHING CONTAINED HEREIN INCUR ANY EXPENSE OR LIABILITY WHATEVER OCCASIONED BY INJURY TO THE SAID FACILITIES CAUSED BY ANY PROJECT UNDERTAKEN PURSUANT TO LAW, AND THE SAID POWER COMPANY WILL HOLD AND SAVE THE GOVERNMENT HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS OF ANY NATURE OR KIND THAT MAY ARISE FROM ANYTHING CONNECTED WITH OR GROWING OUT OF THIS PERMIT NOT ATTRIBUTABLE TO ANY ACT OF THE UNITED STATES, ITS OFFICERS OR AGENTS.'

"FOLLOWING A REDUCTION OF STATION ACTIVITIES, DUE TO THE DEPARTURE OF THE MACON, THE POWER COMPANY URGING THAT IT WAS NOT GETTING A FAIRRETURN ON ITS INVESTMENT, PROPOSED THAT THE GOVERNMENT BUY THE INSTALLATION AT THE ORIGINAL COST PRICE OF $42,079.40. THE COMPANY SET FORTH IN ITS PROPOSAL THAT, ON ENTERING INTO ITS ORIGINAL CONTRACT WITH THE GOVERNMENT, IT HAD "WAIVED THE QUESTION OF INVESTMENT ON LANDS OTHER THAN ITS OWN, AND CONSTRUCTED UNDER A PERMIT ISSUED BY THE SECRETARY OF THE NAVY NECESSARY LINES, SUBSTATIONS, TRANSFORMERS, CABLES, ET CETERA * * * HAVING BEEN PERSUADED TO MAKE THE INVESTMENT IN THE BELIEF THAT EVENTUALLY THE NAVY WOULD PURSUE ITS GENERAL POLICY AND ACQUIRE THIS EQUIPMENT WHICH WAS LOCATED WITHIN ITS RESERVATION.'

"IN THE SEVENTY-THIRD CONGRESS, SENATOR KEAN, OF NEW JERSEY, INTRODUCED BILL S. 2765 " TO AUTHORIZE THE SECRETARY OF THE NAVY TO PURCHASE CERTAIN PRIVATELY OWNED PROPERTY LOCATED AT THE NAVAL AIR STATION, LAKEHURST, NEW JERSEY" BEING THE SAME PROPERTY NOW UNDER CONSIDERATION. ON MARCH 15, 1934, THE ASSISTANT SECRETARY OF THE NAVY WROTE THE CHAIRMAN OF THE SENATE NAVAL AFFAIRS COMMITTEE OPPOSING THE PASSAGE OF THIS BILL, SETTING FORTH THAT "IT IS NOT BELIEVED THAT THE GOVERNMENT IS UNDER ANY OBLIGATION TO BUY THE INSTALLATION FROM THE COMPANY; " NOR DID IT OTHERWISE APPEAR AT THAT TIME TO BE IN THE INTEREST OF THE GOVERNMENT TO ACQUIRE IT.

"SUBSEQUENTLY, HOWEVER, IN VIEW OF AN ADDITIONAL 5 PERCENT OFFERED BY THE POWER COMPANY TO CONSUMERS WHO OWN THEIR ELECTRICAL EQUIPMENT, IT WAS ADMINISTRATIVELY DETERMINED "TO BE DESIRABLE THAT THIS EQUIPMENT BE OWNED BY THE GOVERNMENT.'

"IT SHOULD BE OBSERVED THAT WHILE SENATOR KEAN'S ORIGINAL BILL (S. 2765) AUTHORIZED THE SECRETARY OF THE NAVY TO PURCHASE THE SUBJECT PROPERTY AT A PRICE NOT TO EXCEED $42,079.40, THE BILL NOW UNDER CONSIDERATION "AUTHORIZES AND DIRECTS THE SECRETARY OF THE TREASURY TO PAY * * * TO THE JERSEY CENTRAL POWER AND LIGHT COMPANY THE SUM OF $35,000.00 IN FULL SETTLEMENT OF ALL CLAIMS AGAINST THE UNITED STATES ON ACCOUNT OF INSTALLATION OF TRANSMISSION LINES, TRANSFORMERS, SUBSTATIONS, AND OTHER ELECTRIC APPARATUS ON THE NAVAL AIR STATION, LAKEHURST, NEW JERSEY, BY AGREEMENT WITH THE NAVY DEPARTMENT.'

"IN VIEW OF THE EXTRA SAVINGS WHICH IT NOW APPEARS WILL BE AVAILABLE TO THE GOVERNMENT THROUGH LOWER POWER RATES, AND INASMUCH AS IT HAS BEEN ADMINISTRATIVELY DETERMINED THAT IT IS OTHERWISE IN THE INTEREST OF THE GOVERNMENT TO OWN ALL MATERIALS AND EQUIPMENT AT ITS NAVAL STATIONS, THE NAVY DEPARTMENT WOULD NOW FAVOR THE PURCHASE OF THIS PROPERTY AT ITS FAIR MARKET VALUE, DUE CONSIDERATION BEING GIVEN TO THE MATTERS OF DEPRECIATION AND INVENTORY. IN THIS CONNECTION, IT IS SHOWN ON THE NAVY DEPARTMENT'S RECORDS THAT SINCE THE ORIGINAL INVENTORY WAS MADE, ONE 500 KV.-A. TRANSFORMER HAS BEEN REMOVED AND IT MAY BE PRESUMED THAT ALL OF THE PROPERTY HAS DETERIORATED TO A GREATER OR LESSER EXTENT SINCE ITS ACQUISITION BY THE POWER COMPANY.

"THE NAVY DEPARTMENT CANNOT, HOWEVER, RECOGNIZE OR ADMIT THAT THE JERSEY CENTRAL POWER AND LIGHT COMPANY HAS ANY " CLAIM" AGAINST THE GOVERNMENT IN RELATION TO SUCH PROPERTY, OR THAT, IRRESPECTIVE OF ANY EQUITABLE CONSIDERATIONS WHICH MAY BE INVOLVED, THE GOVERNMENT IS UNDER ANY LEGAL OBLIGATION TO THE POWER COMPANY IN THE PREMISES, EXCEPT, OF COURSE, ITS OBLIGATION TO PAY THE POWER COMPANY FOR CURRENT USED UNDER THE TERMS OF ITS CONTRACT WITH THE COMPANY. FOR THAT REASON, THE NAVY DEPARTMENT DOES NOT CONSIDER THAT IT CAN, WITH CONSISTENCY, RECOMMEND THE ENACTMENT OF BILL S. 2552.

"HOWEVER, IT IS THE DESIRE OF THE NAVY DEPARTMENT THAT THIS PROPERTY BE ACQUIRED BY THE GOVERNMENT FOR A FAIR CONSIDERATION AT THE EARLIEST PRACTICABLE DATE AND TO THAT END THE COMPTROLLER GENERAL IS BEING ASKED FOR HIS OPINION AS TO WHETHER OR NOT IT MAY BE PURCHASED FROM FUNDS NOW AVAILABLE TO THE NAVY DEPARTMENT.

"UPON RECEIPT OF THE COMPTROLLER GENERAL'S DECISION IN THE PREMISES THE NAVY DEPARTMENT WILL INFORM YOU FURTHER AS TO ITS RECOMMENDATIONS ON THE BILL S. 2552.'

IT WOULD APPEAR FROM THE FOREGOING THAT THE USE OF FUNDS FROM THE APPROPRIATION ABOVE REFERRED TO WOULD BE AUTHORIZED FOR THE ACQUISITION OF THE SUBJECT PROPERTY, BUT BEFORE MAKING FURTHER ANSWER TO THE CHAIRMAN OF THE CLAIMS COMMITTEE OF THE SENATE, THE DECISION OF THE COMPTROLLER GENERAL IS DESIRED.

THE CITED APPROPRIATION " AVIATION, NAVY" IS AN ANNUAL APPROPRIATION MAKING PROVISION, AMONG OTHER OBJECTS,"FOR MAINTENANCE, REPAIR, AND OPERATION OF * * * AIR STATIONS.' EXPENDITURES UNDER SUCH AN ANNUAL PROVISION WOULD BE LIMITED GENERALLY TO CURRENT MAINTENANCE AND OPERATING EXPENSES AND REPAIRS, WHICH WOULD NOT INCLUDE THE COST OF CONSTRUCTION OR ACQUISITION OF SUBSTANTIAL PROPERTY IMPROVEMENTS, SUCH AS HERE INVOLVED, AND NO OTHER PROVISION IS FOUND UNDER THE CITED APPROPRIATION WHICH MIGHT BE VIEWED AS AUTHORIZING THE PROPOSED EXPENDITURE.

THAT THE CONGRESS DID NOT INTEND THIS APPROPRIATION TO BE USED FOR SUCH PURPOSES IS SHOWN BY THE NUMEROUS SPECIFIC PROVISIONS CONTAINED IN THE APPROPRIATIONS FOR " PUBLIC WORKS, BUREAU OF YARDS AND DOCKS" FOR IMPROVEMENTS OF THIS CHARACTER. FOR EXAMPLE, IN THE NAVAL APPROPRIATION ACT OF MAY 25, 1939, PUBLIC NO. 90, CITED IN YOUR LETTER, THERE APPEAR UNDER THE APPROPRIATION FOR " PUBLIC WORKS, BUREAU OF YARDS AND DOCKS" SPECIFIC ITEMS FOR "ADDITIONAL POWER GENERATION AND DISTRIBUTION" AT THE PORTSMOUTH NAVY YARD; "ADDITIONAL POWER GENERATION FOR NEW SHIP CONSTRUCTION" AT THE NEW YORK NAVY YARD; "ACCESSORIES FOR NEW SHIP CONSTRUCTION AND POWER/SERVICE LINES" AT PHILADELPHIA NAVY YARD; "IMPROVEMENT OF POWER PLANT" AT THE NAVAL ACADEMY; "EXTENSION OF POWER DISTRIBUTION FOR NAVAL ORDNANCE CONSTRUCTION" AT THE WASHINGTON NAVY YARD; "ADDITIONAL POWER GENERATION AND DISTRIBUTION FOR NEW SHIP CONSTRUCTION" AT THE NORFOLK NAVY YARD; "IMPROVEMENT OF FACILITIES AND ELECTRIC SYSTEM" AT THE NEW LONDON SUBMARINE BASE; AND "IMPROVEMENT OF ELECTRO-DISTRIBUTION SYSTEM" AT THE NEWPORT NAVAL TORPEDO STATION, AND UNDER THE SAME APPROPRIATION TITLE FOR THE LAST FISCAL YEAR, 52 STAT. 238, THERE WAS INCLUDED, AMONG OTHERS, A SPECIFIC ITEM FOR " IMPROVEMENT OF POWER PLANT" AT THE PENSACOLA NAVAL AIR STATION.

IN VIEW OF THESE PROVISIONS, IT SEEMS CLEAR THAT WHERE THE CONGRESS INTENDS TO AUTHORIZE THE CONSTRUCTION, IMPROVEMENT, OR EXTENSION OF ELECTRIC-POWER FACILITIES AT NAVAL YARDS AND STATIONS, INCLUDING NAVAL AIR STATIONS, IT DOES SO BY SPECIFIC APPROPRIATIONS FOR SUCH PURPOSES UNDER THE BUREAU OF YARDS AND DOCKS, AND, THEREFORE, THAT THE CITED GENERAL APPROPRIATION FOR " AVIATION, NAVY" UNDER THE BUREAU OF AERONAUTICS WAS NOT INTENDED TO BE, AND IS NOT, AVAILABLE FOR SUCH IMPROVEMENTS. AS SUCH APPROPRIATION IS NOT AVAILABLE FOR THE CONSTRUCTION OF SUCH FACILITIES, IT NECESSARILY FOLLOWS THAT IT IS NOT AVAILABLE FOR THEIR PURCHASE AFTER CONSTRUCTION.