B-159559, AUG. 12, 1968

B-159559: Aug 12, 1968

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REQUESTS A DECISION AS TO WHETHER THE NAVY DEPARTMENT IS AUTHORIZED TO PAY A CLAIM FOR DAMAGE CAUSED BY NAVY PERSONNEL TO THE PROPERTY OF THE RYUKYU ELECTRIC POWER CORPORATION (REPC). THE ASSISTANT SECRETARY STATES THAT REPC WAS ESTABLISHED BY THE ARMY AS THE UNITED STATES CIVIL ADMINISTRATION OF THE RYUKYU ISLANDS (USCAR) ON JULY 8. THAT IT WAS ENTIRELY FINANCED FROM GOVERNMENT FUNDS. EXPRESSES THE VIEW THAT REPC IS AN INSTRUMENTALITY OF THE UNITED STATES GOVERNMENT AND THAT FUNDS FROM THE NAVY DEPARTMENT SHOULD NOT BE USED TO PAY THE CLAIM UNDER THE REASONING CONTAINED IN 25 COMP. THE DEPARTMENT OF THE ARMY EXPRESSED THE VIEW THAT THE REPC IS NOT AN AGENCY OF THE UNITED STATES GOVERNMENT.

B-159559, AUG. 12, 1968

TO MR. SECRETARY:

LETTER DATED MAY 28, 1968 (AND ENCLOSURES), FROM THE ASSISTANT SECRETARY OF THE NAVY, REQUESTS A DECISION AS TO WHETHER THE NAVY DEPARTMENT IS AUTHORIZED TO PAY A CLAIM FOR DAMAGE CAUSED BY NAVY PERSONNEL TO THE PROPERTY OF THE RYUKYU ELECTRIC POWER CORPORATION (REPC). THE CLAIM OF $344.47 AROSE ON MAY 25, 1967, WHEN TWO UNITED STATES MARINE CORPS PERSONNEL CAUSED A MOBILE CRANE TO ROLL INTO THE POWER LINES OF THE CORPORATION AT CAMP FOSTER, OKINAWA.

THE ASSISTANT SECRETARY STATES THAT REPC WAS ESTABLISHED BY THE ARMY AS THE UNITED STATES CIVIL ADMINISTRATION OF THE RYUKYU ISLANDS (USCAR) ON JULY 8, 1958, AND THAT IT WAS ENTIRELY FINANCED FROM GOVERNMENT FUNDS. EXPRESSES THE VIEW THAT REPC IS AN INSTRUMENTALITY OF THE UNITED STATES GOVERNMENT AND THAT FUNDS FROM THE NAVY DEPARTMENT SHOULD NOT BE USED TO PAY THE CLAIM UNDER THE REASONING CONTAINED IN 25 COMP. GEN. 49 AND REITERATED IN 44 COMP. GEN. 693.

THE ASSISTANT SECRETARY POINTS OUT THAT IN A LETTER DATED APRIL 18, 1968, THE DEPARTMENT OF THE ARMY EXPRESSED THE VIEW THAT THE REPC IS NOT AN AGENCY OF THE UNITED STATES GOVERNMENT, AND REFERRED TO OUR DECISION OF FEBRUARY 12, 1968, B-159559, WHEREIN WE HELD THAT REPC NEED NOT BE REGARDED AS A CORPORATION OF THE FEDERAL GOVERNMENT THAT WOULD BE SUBJECT TO FEDERAL PROCUREMENT STATUTES. THE ASSISTANT SECRETARY STATES THAT IT IS THE POSITION OF THE NAVY THAT THE QUESTION CONSIDERED IN OUR DECISION OF FEBRUARY 12 IS UNASSOCIATED WITH THE QUESTION WHICH ARISES WHEN THE ISSUE IS WHETHER CLAIMS OF ONE GOVERNMENT AGENCY SHOULD BE PAID BY FUNDS FROM ANOTHER GOVERNMENT AGENCY. HE FURTHER STATES THAT IT APPEARS FROM THE CHARTER THAT THE RYUKYU ELECTRIC POWER CORPORATION IS A UNITED STATES GOVERNMENT AGENCY WHICH WOULD RECEIVE FUNDS FROM THE NAVY DEPARTMENT IF THE ABOVE CLAIM IS PAID.

AS INDICATED IN THE ASSISTANT SECRETARY'S LETTER, THIS OFFICE HAS LONG HELD THAT FUNDS OF GOVERNMENT DEPARTMENTS AND AGENCIES ARE NOT AVAILABLE FOR THE PAYMENT OF CLAIMS FOR DAMAGES TO PROPERTY OF OTHER GOVERNMENT DEPARTMENTS AND AGENCIES. SUCH HOLDINGS HAVE BEEN BASED UPON THE PREMISE THAT OWNERSHIP OF PROPERTY IS IN THE GOVERNMENT AND NOT IN A PARTICULAR DEPARTMENT, AND THAT SINCE ANY REPAIRS OR REPLACEMENT WOULD BE FOR THE FUTURE USE AND BENEFIT OF THE LOANING DEPARTMENT, THE APPROPRIATION OF THE BORROWING AGENCY MAY NOT BE CHARGED WITH SUCH COSTS. SEE 25 COMP. GEN. 49 AND DECISIONS CITED THEREIN; B-137208, DECEMBER 16, 1958; AND 46 COMP. GEN. 586. THUS, IF REPC IS AN INSTRUMENTALITY OF THE UNITED STATES GOVERNMENT, APPROPRIATIONS OF THE NAVY WOULD NOT BE AVAILABLE TO PAY THE INSTANT CLAIM.

AS TO WHETHER REPC IS AN INSTRUMENTALITY OF THE UNITED STATES, IN OUR DECISION OF FEBRUARY 12, 1968, B-159559, IT IS STATED, IN PART, THAT:

"THE RYUKYU ISLANDS ARE NOT TERRITORIES OR POSSESSIONS OF THE UNITED STATES, AND THE POWERS OF THIS GOVERNMENT THEREIN ARE DERIVED SOLELY FROM THE PEACE TREATY WITH JAPAN, UNDER WHICH THIS COUNTRY HAS THE RIGHT TO EXERCISE ALL POWERS OF ADMINISTRATION, LEGISLATION AND JURISDICTION PENDING THE PLACING OF THE ISLANDS UNDER THE TRUSTEESHIP SYSTEM OF THE UNITED NATIONS. THE RYUKYU ELECTRIC POWER CORPORATION (REPC) WAS CHARTERED AND ESTABLISHED BY THE UNITED STATES CIVIL ADMINISTRATION OF THE RYUKYU ISLANDS UNDER CIVIL ADMINISTRATION ORDNANCE NO. 129, DATED FEBRUARY 26, 1954, TO ACQUIRE, MAINTAIN AND OPERATE ELECTRIC POWER SYSTEMS IN THE RYUKYU ISLANDS FOR THE GENERATION, TRANSMISSION, DISTRIBUTION AND SALE OF POWER FOR THE USE AND BENEFIT OF THE RYUKYU PEOPLE, FOR AGRICULTURAL AND INDUSTRIAL DEVELOPMENT, AND FOR OTHER PURPOSES. WHILE REPC HAS BEEN STATED TO BE AN INSTRUMENTALITY OF THE UNITED STATES CIVIL ADMINISTRATION OF THE RYUKYU ISLANDS (SUPPLEMENTAL APPROPRIATION ACT OF 1958, 71 STAT. 432), ITS STATUS IN THIS RESPECT ARISES FROM THE POSITION OF THE ADMINISTRATION AS THE GOVERNING BODY OF THE RYUKYUAN PEOPLE, AND WE DO NOT BELIEVE THAT IT FOLLOWS THAT THE CORPORATION IS NECESSARILY AN INSTRUMENTALITY OF THE UNITED STATES.

"WE ARE UNABLE TO FIND ANYTHING TO INDICATE THAT THE CORPORATION SHOULD BE REGARDED AS A CORPORATION OF THE UNITED STATES GOVERNMENT THAT WOULD BE SUBJECT TO THE FEDERAL PROCUREMENT STATUTES IN SUPPLYING ITS NEEDS. NOTE THAT REPC IS NOT NAMED AS BEING EITHER A WHOLLY OWNED GOVERNMENT CORPORATION OR A MIXED-OWNERSHIP GOVERNMENT CORPORATION UNDER THE GOVERNMENT CORPORATION CONTROL ACT, AS AMENDED, 31 U.S.C. 846 AND 856.

FURTHER, ALTHOUGH REPC IS AN INSTRUMENTALITY OF USCAR, THE BENEFICIAL OWNERSHIP OF THE ASSETS OF USCAR CORPORATIONS IS IN THE RYUKYUAN PEOPLE. IN THIS REGARD, IT SHOULD BE NOTED THAT IN CONNECTION WITH ITS REQUEST FOR A DECISION AS TO WHETHER AND TO WHAT EXTENT SECTION 1415 OF THE SUPPLEMENTAL APPROPRIATION ACT, 1953, 66 STAT. 662, WAS APPLICABLE TO CERTAIN ASSETS IN THE RYUKYU ISLANDS WHICH ARE AVAILABLE TO USCAR, THE DEPARTMENT OF THE ARMY ADVISED IN PARTINENT PART, AS FOLLOWS:

"B. THE MACHINATO POWER PLANT IS NOT YET COMPLETED. UPON COMPLETION THE POWER PLANT WILL BE TURNED OVER TO A PUBLIC CORPORATION. THE MILITARY FORCES WILL THEN LEASE THE PLANT OR OTHERWISE ARRANGE TO RETAIN CONTROL OF ITS MANAGEMENT AND OPERATION IN ORDER TO INSURE THE NECESSARY PROTECTION OF U.S. SECURITY INTERESTS. HOWEVER, THE ARRANGEMENT TO BE ENTERED INTO WILL ALSO ASSURE PAYMENT OF FULL COMPENSATION TO SUCH CORPORATION TO BE USED FOR THE EXCLUSIVE BENEFIT OF THE RYUKYUAN ECONOMY.'

ON THE BASIS OF THAT AND OTHER INFORMATION FURNISHED US BY THE ARMY, WE HELD IN B-114950, DATED AUGUST 17, 1953, CONCERNING PROCEEDS REALIZED FROM THE SALE OF "GOVERNMENT AND RELIEF IN OCCUPIED AREAS" (GARIOA) COMMODITIES, THAT: "* * * IT APPEARS CLEAR THAT WHILE ALL OF THE FUNDS INVOLVED ARE AVAILABLE TO THE UNITED STATES CIVIL ADMINISTRATION OF THE RYUKYUS (USCAR) WHICH IS AN AGENCY OF THE UNITED STATES, THEY ARE AVAILABLE TO IT SOLELY BECAUSE IT EXERCISED THE FUNCTIONS OF A LOCAL GOVERNMENT OF THE RYUKYUS AND THAT THE FUNDS ARE INTENDED AND USED FOR THE BENEFIT OF, AND ARE IN THE NATURE OF A TRUST ACCOUNT HELD FOR, THE RYUKYUAN PEOPLE AND ARE NOT AVAILABLE TO SUPPLEMENT FUNDS APPROPRIATED BY THE CONGRESS FOR GENERAL PURPOSES OF THE UNITED STATES OR MILITARY PURPOSES OF THE ARMY. UNDER THE CIRCUMSTANCES, THE SAID ASSETS DO NOT APPEAR TO BE FOREIGN CREDITS OWED TO OR OWNED BY THE UNITED STATES TREASURY- WITHIN THE MEANING OF SECTION 1415 OF THE SUPPLEMENTAL APPROPRIATION ACT, 1953, 66 STAT. 662, AND THAT PROVISION APPEARS INAPPLICABLE TO THE SAID ASSETS.'

IN LIGHT OF THE FOREGOING IT IS OUR VIEW THAT REPC IS NOT SUCH AN INSTRUMENTALITY OF THE UNITED STATES AS WOULD PRECLUDE THE NAVY FROM PAYING THE INSTANT CLAIM. CF. 46 COMP. GEN. 586. ACCORDINGLY, THE NAVY DEPARTMENT IS AUTHORIZED TO PAY THE CLAIM FOR DAMAGE CAUSED BY NAVY PERSONNEL TO THE PROPERTY OF REPC, IF NAVY APPROPRIATIONS ARE OTHERWISE PROPERLY AVAILABLE FOR SUCH PURPOSE.