B-73381, FEBRUARY 13, 1948, 27 COMP. GEN. 452

B-73381: Feb 13, 1948

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IS NOT A BAR TO THE EXECUTION BY THE COMMISSION OF LONG-TERM OPERATING-DIFFERENTIAL SUBSIDY AGREEMENTS. 1948: I HAVE THE LETTER DATED FEBRUARY 4. IF SUCH BOND IS REQUIRED BY THE COMMISSION. EXPENDITURES FOR THE OPERATING-DIFFERENTIAL SUBSIDY PROGRAM AND OTHER PROGRAMS CARRIED ON BY THE COMMISSION ARE MADE FROM THE CONSTRUCTION FUND ESTABLISHED UNDER AUTHORITY OF SECTION 206. WAS A REVOLVING FUND. FURTHER APPROPRIATIONS BY CONGRESS TO REPLENISH SAID FUND ARE HEREBY AUTHORIZED. THIS EFFECT WAS ACCOMPLISHED BY THE INCLUSION OF THE FOLLOWING LANGUAGE: THE CONSTRUCTION FUND ESTABLISHED BY THE MERCHANT MARINE ACT. IT IS UNDERSTOOD FROM THE VICE CHAIRMAN'S LETTER THAT DOUBTS RAISED BY THESE PROVISIONS AND THE PROVISIONS OF THE SO-CALLED ANTI-DEFICIENCY ACT.

B-73381, FEBRUARY 13, 1948, 27 COMP. GEN. 452

MARITIME COMMISSION - OPERATING-DIFFERENTIAL SUBSIDIES - LONG-TERM AGREEMENT AUTHORITY THE UNITED STATES MARITIME COMMISSION BEING SPECIFICALLY AUTHORIZED BY SECTION 603 (A) OF THE MERCHANT MARINE ACT OF 1936, AS AMENDED, TO ENTER INTO OPERATING-DIFFERENTIAL SUBSIDY AGREEMENTS FOR PERIODS NOT TO EXCEED 20 YEARS, THE ANTI-DEFICIENCY ACT (SECTION 3679, REVISED STATUTES), PROHIBITING THE INVOLVEMENT OF THE GOVERNMENT IN ANY CONTRACT OR OBLIGATION FOR THE FUTURE PAYMENT OF MONEY IN EXCESS OF APPROPRIATIONS UNLESS AUTHORIZED BY LAW, IS NOT A BAR TO THE EXECUTION BY THE COMMISSION OF LONG-TERM OPERATING-DIFFERENTIAL SUBSIDY AGREEMENTS. OTHER THAN TO LIMIT THE SUM THAT THE UNITED STATES MARITIME COMMISSION MAY EXPEND IN THE CURRENT FISCAL YEAR UNDER THE OPERATING DIFFERENTIAL SUBSIDY PROGRAM, THE PROVISIONS OF THE INDEPENDENT OFFICES APPROPRIATION ACT, 1948, CHANGING THE FUND USED FOR THE PURPOSES OF THE PROGRAM FROM A REVOLVING FUND--- ESTABLISHED UNDER THE AUTHORITY OF SECTION 206 OF THE MERCHANT MARINE ACT OF 1936, AS AMENDED--- TO AN ANNUAL APPROPRIATION PLACE NO LIMITATION ON THE AUTHORITY OF THE COMMISSION UNDER SECTION 603 (A) OF THE LATTER ACT TO ENTER INTO LONG TERM OPERATING-DIFFERENTIAL SUBSIDY AGREEMENTS.

ACTING COMPTROLLER GENERAL YATES TO THE CHAIRMAN, UNITED STATES MARITIME COMMISSION, FEBRUARY 13, 1948:

I HAVE THE LETTER DATED FEBRUARY 4, 1948, FROM THE VICE CHAIRMAN, U.S. MARITIME COMMISSION, OUTLINING CERTAIN PROBLEMS RELATING TO THE AUTHORITY OF THE MARITIME COMMISSION TO ENTER INTO LONG-RANGE OPERATING DIFFERENTIAL SUBSIDY AGREEMENTS UNDER AUTHORITY OF SUBSECTION 603 (A) OF THE MERCHANT MARINE ACT OF 1936, AS AMENDED, 49 STAT. 2002, 46 U.S.C. 1173. THIS SUBSECTION PROVIDES AS FOLLOWS:

IF THE COMMISSION APPROVES THE APPLICATION, IT MAY ENTER INTO A CONTRACT WITH THE APPLICANT FOR THE PAYMENT OF AN OPERATING DIFFERENTIAL SUBSIDY DETERMINED IN ACCORDANCE WITH THE PROVISIONS OF SUBSECTION (B) OF THIS SECTION, FOR THE OPERATING OF SUCH VESSEL OR VESSELS IN SUCH SERVICE, ROUTE, OR LINE FOR A PERIOD NOT EXCEEDING TWENTY YEARS, AND SUBJECT TO SUCH REASONABLE TERMS AND CONDITIONS, CONSISTENT WITH THIS ACT, AS THE COMMISSION SHALL REQUIRE TO EFFECTUATE THE PURPOSE AND POLICY OF THIS ACT, INCLUDING A PERFORMANCE BOND WITH APPROVED SURETIES, IF SUCH BOND IS REQUIRED BY THE COMMISSION.

EXPENDITURES FOR THE OPERATING-DIFFERENTIAL SUBSIDY PROGRAM AND OTHER PROGRAMS CARRIED ON BY THE COMMISSION ARE MADE FROM THE CONSTRUCTION FUND ESTABLISHED UNDER AUTHORITY OF SECTION 206, MERCHANT MARINE ACT OF 1936, AS AMENDED, 49 STAT. 1987, 46 U.S.C. 1116, WHICH, PRIOR TO THE ENACTMENT OF THE INDEPENDENT OFFICES APPROPRIATION ACT OF 1948, WAS A REVOLVING FUND. THE SECTION ESTABLISHING THE FUND PROVIDED AS FOLLOWS:

ALL SUMS OF MONEY NOW IN THE CONSTRUCTION LOAN FUND CREATED BY SECTION 11 OF THE MERCHANT MARINE ACT, 1920, AS AMENDED, TOGETHER WITH THE PROCEEDS OF ALL DEBTS, CHOSES IN ACTION, AND THE PROCEEDS OF ALL NOTES, MORTGAGES, AND OTHER EVIDENCES OF INDEBTEDNESS, HEREBY TRANSFERRED TO THE COMMISSION, AND ALL OF THE PROCEEDS OF SALES OF SHIPS AND SURPLUS PROPERTY HERETOFORE OR HEREAFTER MADE, INCLUDING PROCEEDS OF NOTES OR OTHER EVIDENCES OF DEBT TAKEN THEREFOR AND THE INTEREST RECEIVED THEREON, SHALL BE DEPOSITED IN THE TREASURY OF THE UNITED STATES AND THERE MAINTAINED AS A REVOLVING FUND, HEREIN DESIGNATED AS THE CONSTRUCTION FUND, AND SHALL BE CONTROLLED AND EMPLOYED BY THE COMMISSION UNDER THE PROVISIONS OF TITLES IV, V, VI, AND VII, OF THIS ACT SHALL BE DEPOSITED IN ITS CONSTRUCTION FUND, AND ALL DISBURSEMENTS MADE BY THE COMMISSION UNDER AUTHORITY OF SAID TITLES SHALL BE PAID OUT OF SAID FUND. FURTHER APPROPRIATIONS BY CONGRESS TO REPLENISH SAID FUND ARE HEREBY AUTHORIZED.

THE INDEPENDENT OFFICES APPROPRIATION ACT, 1948, PUBLIC 269, 80TH CONGRESS, APPROVED JULY 30, 1947, 61 STAT. 603, IN EFFECT CHANGED THE CONSTRUCTION FUND FROM A REVOLVING FUND TO AN ANNUAL APPROPRIATION AND LIMITED THE AMOUNT THAT MIGHT BE OBLIGATED FOR PAYMENT THEREFROM FOR OPERATING-DIFFERENTIAL SUBSIDIES DURING THE FISCAL YEAR 1948 TO $10,000,000. THIS EFFECT WAS ACCOMPLISHED BY THE INCLUSION OF THE FOLLOWING LANGUAGE:

THE CONSTRUCTION FUND ESTABLISHED BY THE MERCHANT MARINE ACT, 1936, SHALL BE AVAILABLE DURING THE FISCAL YEAR 1948 FOR ADMINISTRATIVE EXPENSES OF THE UNITED STATES MARITIME COMMISSION, INCLUDING PERSONAL SERVICES AT THE SEAT OF GOVERNMENT; PRINTING AND BINDING; NEWSPAPERS AND PERIODICALS, NOT TO EXCEED $2,000; PURCHASE OF ONE PASSENGER MOTOR VEHICLE AT NOT TO EXCEED 1,500; PROVIDED, THAT THE FOLLOWING LIMITATIONS SHALL APPLY TO OBLIGATIONS FROM SUCH FUND:

OPERATING-DIFFERENTIAL SUBSIDIES, $10,000,000;

EXCEPT AS HEREINBEFORE PROVIDED NO OBLIGATION SHALL BE INCURRED AGAINST SUCH CONSTRUCTION FUND DURING THE FISCAL YEAR 1948 AND THE EXPENDITURES FROM SUCH FUND DURING THE FISCAL YEAR 1948 SHALL NOT EXCEED $208,206,774.

THE BALANCE OF SUCH FUND IN ADDITION TO SUCH AMOUNT OF $208,206,774, AS OF JUNE 30, 1947, SHALL BE CARRIED TO THE SURPLUS FUND AND COVERED INTO THE TREASURY. ALL RECEIPTS WHICH OTHERWISE WOULD BE DEPOSITED TO THE CREDIT OF SUCH CONSTRUCTION FUND DURING THE FISCAL YEAR 1948 SHALL BE COVERED INTO THE TREASURY AS MISCELLANEOUS RECEIPTS.

IT IS UNDERSTOOD FROM THE VICE CHAIRMAN'S LETTER THAT DOUBTS RAISED BY THESE PROVISIONS AND THE PROVISIONS OF THE SO-CALLED ANTI-DEFICIENCY ACT, SECTION 3679, REVISED STATUTES, 31 U.S.C. 665, MAY ADVERSELY AFFECT THE CONSTRUCTION OF VESSELS UNDER THE CONSTRUCTION-DIFFERENTIAL SUBSIDY PROVISIONS OF TITLE V OF THE MERCHANT MARINE ACT OF 1936, AS AMENDED. UNDER THE PROVISIONS OF THAT TITLE THE PURCHASERS OF VESSLES ARE REQUIRED TO INVEST SUBSTANTIAL SUMS OF MONEY, AMOUNTING TO 50 PERCENT OR MORE OF THE COST OF THE NEW VESSELS, AND IT IS UNDERSTOOD OPERATORS ARE RELUCTANT TO UNDERTAKE SUCH LARGE FINANCIAL COMMITMENTS AS LONG AS THERE IS DOUBT AS TO THE AUTHORITY OF THE MARITIME COMMISSION TO ENTER INTO LONG-RANGE OPERATING-DIFFERENTIAL SUBSIDY AGREEMENTS COVERING A SUBSTANTIAL PORTION OF THE LIFE OF THE NEW VESSEL. THE LETTER THEREFORE REQUESTS A DECISION AS TO THE FOLLOWING SPECIFIC QUESTIONS:

1. WHETHER OR NOT, APART FROM ANY QUESTION RAISED BY THE INDEPENDENT OFFICES APPROPRIATION ACT, 1948, THE COMMISION HAS AUTHORITY, WITHOUT OBTAINING ANY FURTHER OBLIGATIONAL AUTHORITY, TO ENTER INTO LONG-TERM OPERATING-DIFFERENTIAL SUBSIDY CONTRACTS (EITHER BY WAY OF ORIGINAL CONTRACTS OR EXTENSION OF EXISTING CONTRACTS) WHICH WILL CREATE MONETARY OBLIGATIONS AGAINST THE UNITED STATES, COVERING THE PERIOD OF SUCH CONTRACTS; AND

2. IN THE EVENT THAT YOU ANSWER QUESTION NO. 1 IN THE AFFIRMATIVE, WHETHER OR NOT THE ENACTMENT OF THE INDEPENDENT OFFICES APPROPRIATION ACT, 1948, TAKING INTO ACCOUNT, HOWEVER, THE RECENT CLARIFICATION OF THE INTENT AND PURPOSE OF SUCH ACT AS EXPRESSED BY THE APPROPRIATIONS COMMITTEE OF THE HOUSE OF REPRESENTATIVES, WOULD REQUIRE ANY MODIFICATION OF YOUR VIEWS.

THE FIRST QUESTION INVOLVES THE PROVISIONS OF THE SO-CALLED ANTI DEFICIENCY ACT, SUPRA, WHICH ARE IN PART AS FOLLOWS:

NO EXECUTIVE DEPARTMENT OR OTHER GOVERNMENT ESTABLISHMENT OF THE UNITED STATES SHALL * * * INVOLVE THE GOVERNMENT IN ANY CONTRACT OR OTHER OBLIGATION FOR THE FUTURE PAYMENT OF MONEY IN EXCESS OF SUCH APPROPRIATIONS UNLESS SUCH CONTRACT OR OBLIGATION IS AUTHORIZED BY LAW. * * ALL APPROPRIATIONS MADE FOR CONTINGENT EXPENSES OR OTHER GENERAL PURPOSES, EXCEPT APPROPRIATIONS MADE IN FULFILLMENT OF CONTRACT OBLIGATIONS EXPRESSLY AUTHORIZED BY LAW, OR FOR OBJECTS REQUIRED OR AUTHORIZED BY LAW WITHOUT REFERENCE TO THE AMOUNTS ANNUALLY APPROPRIATED THEREFOR, SHALL, ON OR BEFORE THE BEGINNING OF EACH FISCAL YEAR, BE SO APPORTIONED BY MONTHLY OR OTHER ALLOTMENTS AS TO PREVENT EXPENDITURES IN ONE PORTION OF THE YEAR WHICH MAY NECESSITATE DEFICIENCY OR ADDITIONAL APPROPRIATIONS TO COMPLETE THE SERVICE OF THE FISCAL YEAR FOR WHICH SAID APPROPRIATIONS ARE MADE * * *.

IT MAY BE SEEN THAT THE PROHIBITION AGAINST INVOLVING THE GOVERNMENT IN CONTRACTS OR OBLIGATIONS FOR THE FUTURE PAYMENT OF MONEY IN EXCESS OF APPROPRIATIONS APPLIES ONLY WHERE SUCH CONTRACTS OR OBLIGATIONS ARE NOT AUTHORIZED BY LAW. THE MERCHANT MARINE ACT OF 1936, AS AMENDED, SPECIFICALLY AUTHORIZES THE MARITIME COMMISSION TO ENTER INTO CONTRACTS FOR EXTENDED PERIODS--- IN THE CASE OF OPERATING-DIFFERENTIAL SUBSIDY AGREEMENTS FOR PERIODS NOT TO EXCEED 20 YEARS. IT THUS APPEARS THAT THE ANTI-DEFICIENCY ACT IS NO BAR TO THE EXECUTION BY THE MARITIME COMMISSION OF LONG-TERM OPERATING-DIFFERENTIAL SUBSIDY AGREEMENTS.

WITH RESPECT TO THE SECOND QUESTION RAISED IN THE VICE CHAIRMAN'S LETTER, THE EFFECT OF THE LANGUAGE CONTAINED IN THE INDEPENDENT OFFICES APPROPRIATION ACT, 1948, UPON THE AUTHORITY OF THE UNITED STATES MARITIME COMMISSION TO CONTRACT WITH RESPECT TO OPERATING-DIFFERENTIAL SUBSIDIES, WAS CONSIDERED BY THE COMMITTEE ON APPROPRIATIONS, HOUSE OF REPRESENTATIVES, AND, AS WAS POINTED OUT IN SAID LETTER, THAT COMMITTEE EXPRESSED ITSELF IN HOUSE REPORT NO. 1288, DATED JANUARY 30, 1948, AS FOLLOWS:

THE COMMITTEE IS INFORMED THAT THERE HAS BEEN SOME DISAGREEMENT BETWEEN THE BUREAU OF THE BUDGET AND THE MARITIME COMMISSION AS TO THE EFFECT ON THE CONTRACTING POWERS OF THE MARITIME COMMISSION OF THE ACTION OF THE CONGRESS ON MARITIME COMMISSION FUNDS IN CONNECTION WITH THE 1948 ACT, WITH PARTICULAR REFERENCE TO OPERATING-DIFFERENTIAL SUBSIDIES. THE ONLY PURPOSE OF THE COMMITTEE IN ITS RECOMMENDATION TO THE HOUSE WAS TO RESTRICT THE FUNDS OF THE MARITIME COMMISSION TO AN ANNUAL BUDGET BASIS AND THEREBY TO SECURE ADEQUATE ACCOUNTING AND BUDGETARY CONTROL. THE LANGUAGE OF THE APPROPRIATION ACT FOLLOWED ALMOST VERBATIM THE LANGUAGE REPORTED BY THE COMMITTEE ON APPROPRIATIONS TO THE HOUSE IN INITIATING THE BILL. IN THE DRAFTING OF SUCH LANGUAGE, THERE WAS NO INTENTION TO CHANGE- -- EITHER TO LIMIT OR TO EXPAND--- THE CONTRACTING POWERS OF THE MARITIME COMMISSION WITH RESPECT TO SUCH SUBSIDIES EXCEPT FOR THE AMOUNT THAT MAY BE OBLIGATED FOR PAYMENT DURING THE FISCAL YEAR 1948.

IT APPEARS CLEAR THAT THE CONGRESSIONAL INTENT IS THAT THE MARITIME COMMISSION SHOULD CONTINUE TO EXERCISE ITS POWER TO ENTER INTO OPERATION- DIFFERENTIAL SUBSIDY AGREEMENTS UNDER THE PROVISIONS OF 603 (A) OF THE MERCHANT MARINE ACT OF 1936, AS AMENDED, SUBJECT ONLY TO THE LIMITATION THAT SUCH AGREEMENTS CANNOT BE ENTERED INTO DURING ANY GIVEN FISCAL YEAR WHICH WOULD OBLIGATE THE COMMISSION TO THE PAYMENT DURING SUCH FISCAL YEAR OF A SUM IN EXCESS OF THAT PROVIDED FOR THE SAME PERIOD--- IN THE FISCAL YEAR 1948, FOR EXAMPLE, THE SUM OF $10,000,000.

IT IS RECOGNIZED THAT CERTAIN LANGUAGE IN THE 1948 APPROPRIATION ACT INVOLVED AFFORDS SOME BASIS FOR A CONTRARY VIEW. FOR THAT REASON AND IN ORDER THAT THERE MAY BE NO DOUBT OF THE CONGRESSIONAL INTENT IN CONNECTION WITH FUTURE FISCAL YEAR APPROPRIATIONS, IT IS SUGGESTED THAT AN ATTEMPT BE MADE TO HAVE THE LANGUAGE CLARIFIED IN THE APPROPRIATION ACTS FOR 1949 AND SUBSEQUENT FISCAL YEARS.