B-122254, NOV. 8, 1956

B-122254: Nov 8, 1956

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TO THE SECRETARY OF THE INTERIOR: REFERENCE IS MADE TO LETTER OF AUGUST 16. TO CENTRAL TO THE EFFECT THAT FISCAL YEAR 1954 FUNDS WERE AVAILABLE TO IMPLEMENT THE ABOVE REFERRED-TO CONTRACTS. ARE CONCURRED IN BY YOUR DEPARTMENT. CERTAIN MATERIAL IS SUBMITTED IN SUPPORT THEREOF. THE FACTS IN THE CASE ARE AS FOLLOWS: ON JANUARY 19. AGREED TO MAINTAIN AND OPERATE THE TRANSMISSION SYSTEM FOR THE SAME PERIOD OF TIME AND TO PAY CENTRAL RENTAL THEREON IN ACCORDANCE WITH CERTAIN FORMULAS DEFINED IN THE CONTRACT WHICH WERE DESIGNED TO AMORTIZE DURING THE PERIOD OF THE LOAN THE ACTUAL COST OF THE TRANSMISSION SYSTEM TO CENTRAL. UNDER THE SECOND CONTRACT (ISPA-306) THE GOVERNMENT WAS TO BUY THE ENTIRE OUTPUT OF THE STEAM ELECTRIC GENERATOR PLANT TO BE CONSTRUCTED BY CENTRAL.

B-122254, NOV. 8, 1956

TO THE SECRETARY OF THE INTERIOR:

REFERENCE IS MADE TO LETTER OF AUGUST 16, 1956, FROM THE ADMINISTRATIVE ASSISTANT SECRETARY, CONCERNING THE CLAIM OF THE CENTRAL ELECTRIC POWER COOPERATIVE AGAINST THE SOUTHWESTERN POWER ADMINISTRATION, DEPARTMENT OF THE INTERIOR, FOR FISCAL YEAR 1954, UNDER CONTRACTS NOS. ISPA-305 AND 306. THE LETTER, IN EFFECT, REQUESTS THAT WE RECONSIDER THE CONCLUSION REACHED IN LETTER DATED APRIL 6, 1956, TO CENTRAL TO THE EFFECT THAT FISCAL YEAR 1954 FUNDS WERE AVAILABLE TO IMPLEMENT THE ABOVE REFERRED-TO CONTRACTS. THE ASSISTANT SECRETARY STATES THAT, AFTER REVIEW AND STUDY OF THE QUESTIONS INVOLVED, THE VIEWS SET FORTH BY THE ADMINISTRATOR OF THE SOUTHWESTERN POWER ADMINISTRATION IN HIS LETTER OF JUNE 13, 1956, ARE CONCURRED IN BY YOUR DEPARTMENT, AND CERTAIN MATERIAL IS SUBMITTED IN SUPPORT THEREOF.

THE FACTS IN THE CASE ARE AS FOLLOWS:

ON JANUARY 19, 1950, CENTRAL ENTERED INTO TWO CONTRACTS WITH THE GOVERNMENT, ACTING THROUGH THE ADMINISTRATOR OF THE SOUTHWESTERN POWER ADMINISTRATION. THE FIRST CONTRACT (ISPA-305) PROVIDED THAT CENTRAL SHOULD CONSTRUCT--- OUT OF FUNDS LOANED BY THE RURAL ELECTRIFICATION ADMINISTRATION--- AND LEASE TO THE GOVERNMENT FOR A PERIOD OF 40 YEARS AN ELECTRIC TRANSMISSION SYSTEM. THE GOVERNMENT, IN TURN, AGREED TO MAINTAIN AND OPERATE THE TRANSMISSION SYSTEM FOR THE SAME PERIOD OF TIME AND TO PAY CENTRAL RENTAL THEREON IN ACCORDANCE WITH CERTAIN FORMULAS DEFINED IN THE CONTRACT WHICH WERE DESIGNED TO AMORTIZE DURING THE PERIOD OF THE LOAN THE ACTUAL COST OF THE TRANSMISSION SYSTEM TO CENTRAL. UNDER THE SECOND CONTRACT (ISPA-306) THE GOVERNMENT WAS TO BUY THE ENTIRE OUTPUT OF THE STEAM ELECTRIC GENERATOR PLANT TO BE CONSTRUCTED BY CENTRAL--- ALSO OUT OF THE REA LOAN--- AND THE GOVERNMENT WAS TO SELL TO CENTRAL SURPLUS ELECTRIC POWER AND ENERGY GENERATED AT THE GOVERNMENT'S HYDROELECTRIC PLANTS IN THE AREA. THIS CONTRACT ALSO PROVIDED FOR MONTHLY PAYMENTS BY THE GOVERNMENT TO CENTRAL FOR THE ELECTRIC OUTPUT OF THE STEAM GENERATING PLANT AT A RATE WHICH WOULD AMORTIZE CENTRAL'S LOAN (ON ACCOUNT OF THE GENERATING PLANT) AND ALSO COVER OTHER COSTS INCURRED BY CENTRAL INCIDENT TO THE OPERATION AND MAINTENANCE OF SUCH PLANT. EACH OF THE CONTRACTS CONTAINED A PROVISION TO THE EFFECT THAT OPERATION OF THE CONTRACT WAS CONTINGENT ON THE CONGRESS MAKING THE NECESSARY APPROPRIATIONS TO ENABLE THE GOVERNMENT TO CARRY OUT THE PROVISIONS OF THE AGREEMENT. THE TRANSMISSION SYSTEM OF CENTRAL WAS COMPLETED PRIOR TO JUNE 30, 1953, AND PURSUANT TO THE CONTRACT CENTRAL DELIVERED THE SYSTEM TO SOUTHWESTERN AND STARTED PURCHASING ELECTRIC POWER AND ENERGY FROM SOUTHWESTERN.

THE ACT OF JULY 31, 1953, 67 STAT. 262, MAKING APPROPRIATIONS FOR THE DEPARTMENT OF THE INTERIOR FOR THE FISCAL YEAR ENDING JUNE 30, 1954, PROVIDED THAT:

"NOT TO EXCEED $1,200, SHALL BE AVAILABLE DURING THE CURRENT FISCAL YEAR FROM THE CONTINUING FUND FOR ALL COSTS IN CONNECTION WITH THE PURCHASE OF ELECTRIC POWER AND ENERGY, AND RENTALS FOR THE USE OF TRANSMISSION FACILITIES.'

THE STATEMENT OF THE HOUSE MANAGERS ACCOMPANYING THE CONFERENCE REPORT (H.REPT. 947, 83D CONGRESS) ON THE ABOVE-CITED APPROPRIATION ACT READS, IN PERTINENT PART, AS FOLLOWS:

"AMENDMENT NO. 6: APPROPRIATES $1,200,000 INSTEAD OF $150,000 AS PROPOSED BY THE HOUSE AND $2 MILLION AS PROPOSED BY THE SENATE.

"NONE OF THE FUNDS ALLOWED ARE TO BE USED FOR THE PURPOSE OF IMPLEMENTING EXISTING CONTRACTS WITH REA COOPERATIVES WHICH PROVIDE FOR THE LEASE- PURCHASE OF TRANSMISSION OR GENERATING FACILITIES. THE FUNDS MAY BE USED ONLY FOR THE PURCHASE OF ELECTRIC POWER AND ENERGY AND THE PAYMENT OF WHEELING SERVICE CHARGES AT RATES AND IN AMOUNTS COMPARABLE TO THOSE PAID IN THE SOUTHWESTERN POWER ADMINISTRATION AREA UNDER EXISTING CONTRACTS BASED ONLY ON USE VALUE RECEIVED WITH NO ADDITIONAL ALLOWANCE FOR PURCHASE OR LEASE OF FACILITIES. SUCH ARRANGEMENTS MAY BE MADE WITH REA COOPERATIVES IN THE AREA BUT NO FUNDS FOR THIS PURPOSE ARE TO BE AVAILABLE AFTER FEBRUARY 28, 1954.'

ON THE BASIS OF THE HOUSE MANAGERS' STATEMENT, SOUTHWESTERN DETERMINED THAT NO FUNDS WERE APPROPRIATED TO CARRY OUT THE TERMS OF CONTRACTS NOS. ISPA-305 AND 306 AND AN INTERIM CONTRACT WAS ENTERED INTO BETWEEN CENTRAL AND SOUTHWESTERN ON NOVEMBER 3, 1953. CENTRAL EVIDENTLY ENTERED INTO THE INTERIM CONTRACT ONLY BECAUSE SOUTHWESTERN HAD REFUSED TO MAKE PAYMENTS UNDER THE OTHER CONTRACTS.

CENTRAL FILED A SUIT ON OCTOBER 15, 1953, IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA, IN WHICH IT PETITIONED THE COURT FOR SUMMARY JUDGMENT TO DIRECT "THAT THE DEFENDANTS NOT REFUSE OR FAIL TO CARRY OUT THE TERMS OF SUCH CONTRACTS (ISPA-305 AND 306) WITH THE PLAINTIFF FOR THE REASON THAT CONGRESS HAS FAILED TO OR REFUSED TO APPROPRIATE FUNDS" FOR THE FISCAL YEAR 1954 OUT OF WHICH THE OBLIGATIONS INCURRED UNDER THE CONTRACTS MIGHT LEGALLY BE PAID. THE DISTRICT COURT GRANTED CENTRAL'S MOTION FOR A SUMMARY JUDGMENT ON MARCH 29, 1954. THE GOVERNMENT APPEALED FROM THE JUDGMENT OF THE COURT AND ON APRIL 7, 1955, THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA, IN AN OPINION REPORTED IN 223 F.2D 623, REVERSED THE JUDGMENT OF THE DISTRICT COURT. THIS REVERSAL WAS NOT ON THE MERITS OF THE CASE BUT WAS, IN EFFECT, ON THE BASIS THAT THE DISTRICT COURT LACKED JURISDICTION--- SINCE THE GOVERNMENT HAD NOT CONSENTED TO BE SUED--- ON SUCH A MATTER IN THE DISTRICT COURTS.

THE CLAIMS AND COUNTERCLAIMS OF CENTRAL AND SOUTHWESTERN WERE SUBMITTED TO US FOR DIRECT SETTLEMENT BY THE SOUTHWESTERN POWER ADMINISTRATION ON DECEMBER 3, 1954. BY OUR CLAIMS DIVISION'S SETTLEMENT DATED DECEMBER 1, 1955, THERE WAS FOUND DUE CENTRAL--- IN CONNECTION WITH THE ABOVE REFERRED -TO CONTRACTS--- THE SUM OF $493,939.96 ON ACCOUNT OF RENTAL PAYMENTS FOR THE PERIOD AUGUST 1952 TO JUNE 1953, UNDER CONTRACT NO. ISPA-305 ($66,112.67), AND PAYMENT FOR PURCHASE OF POWER AND WHEELING SERVICE CHARGES FOR THE PERIOD JULY 1, 1953 THROUGH JUNE 30, 1954, UNDER INTERIM ELECTRIC SERVICE AGREEMENT NO. 14-02-001-658 ($427,827.29). THE FULL AMOUNT ALLOWED WAS DEPOSITED INTO THE TREASURY TO COLLECT FOR POWER SOLD BY SOUTHWESTERN TO CENTRAL.

IN EXPLANATION OF SETTLEMENT IT WAS STATED, IN PART THEREIN, AS FOLLOWS:

"AMOUNTS DUE BETWEEN THE CLAIMANT AND THE SOUTHWESTERN POWER ADMINISTRATION AFTER JUNE 30, 1953, MAY NOT BE COMPUTED UNDER THE TERMS OF CONTRACTS ISPA 305 AND 306 BECAUSE APPROPRIATED FUNDS ARE NOT AVAILABLE FOR IMPLEMENTATION OF THE CONTRACTS AFTER THAT DATE. COMPUTATION OF THE AMOUNTS DUE FROM EACH PARTY TO THE OTHER FOR THE PERIOD JULY 1, 1953, THROUGH JUNE 30, 1954, HAS BEEN MADE, THEREFORE, IN ACCORDANCE WITH THE INTERIM AGREEMENT OF NOVEMBER 3, 1953, NO. -02 001-658.'

CENTRAL, BY LETTER DATED DECEMBER 12, 1955, REQUESTED THAT THE CONCLUSION THAT THERE WAS NO APPROPRIATION TO CARRY OUT CONTRACTS NOS. ISPA-305 AND 306 BETWEEN IT AND SOUTHWESTERN FOR THE PERIOD JULY 1, 1953, TO JUNE 30, 1954, BE REVIEWED AND FURTHER REQUESTED THAT AMOUNTS OF MONEY DUE AND PAYABLE BY CENTRAL AND SOUTHWESTERN FOR SUCH PERIOD BE RECOMPUTED ON THE BASIS OF THE TERMS OF THE TWO CITED CONTRACTS, RATHER THAN ON THE BASIS OF THE INTERIM CONTRACT NO. 14-02-001-658, DATED NOVEMBER 3, 1953. UPON CAREFUL CONSIDERATION OF THE MATTER, WE DETERMINED THAT APPROPRIATED FUNDS WERE AVAILABLE TO IMPLEMENT CONTRACTS NOS. ISPA-305 AND 306 AND SO NOTIFIED CENTRAL BY LETTER OF APRIL 6, 1956. AS INDICATED ABOVE, YOUR DEPARTMENT HAS REQUESTED RECONSIDERATION OF THIS CONCLUSION.

DURING THE YEARS 1949 AND 1950, THE UNITED STATES (ACTING THROUGH SOUTHWESTERN) ENTERED INTO SIMILAR CONTRACTS WITH FOUR OTHER GENERATING AND TRANSMISSION COOPERATIVES, NAMELY, N.W. ELECTRIC POWER COOPERATIVE, INC., KAMO ELECTRIC COOPERATIVE, INC., WESTERN FARMERS ELECTRIC POWER COOPERATIVE AND SHO-ME POWER CORPORATION. TWO OF THESE COOPERATIVES, N.W. ELECTRIC POWER COOPERATIVE, INC., AND WESTERN FARMERS ELECTRIC POWER COOPERATIVE HAVE FILED CLAIMS WITH SOUTHWESTERN, SIMILAR TO CENTRAL-S, WHICH SOUTHWESTERN TRANSMITTED HERE FOR OUR "INFORMATION.'

IT IS ARGUED IN THE ABOVE REFERRED-TO LETTER OF SOUTHWESTERN, DATED JUNE 13, 1956, AND IN THE BRIEF OF YOUR DEPARTMENT, TRANSMITTED WITH THE ADMINISTRATIVE ASSISTANT SECRETARY'S LETTER THAT:

(1) THERE WERE NO FUNDS MADE AVAILABLE IN FISCAL YEAR 1954, TO IMPLEMENT THE CONTRACTS IN QUESTION;

(2) THERE WAS NO PERFORMANCE BY SOUTHWESTERN OR THE COOPERATIVES DURING FISCAL YEAR 1954 UNDER SUCH CONTRACTS, SO THAT IT WILL BE IMPOSSIBLE TO MAKE AN ACCURATE ACCOUNTING BETWEEN SOUTHWESTERN AND THE COOPERATIVES UNDER THE LEASE-PURCHASE CONTRACTS;

(3) OUR DECISION OF APRIL 6, 1956, CANNOT BE RECONCILED WITH OUR PREVIOUS DECISIONS BEARING ON THE SAME QUESTIONS;

(4) PROPOSED AMENDMENTS TO THE LEASE-PURCHASE CONTRACTS WILL GIVE THE COOPERATIVE ECONOMIC BENEFITS AND ADVANTAGES EQUAL TO OR GREATER THAN THOSE GRANTED THE COOPERATIVES UNDER THE ORIGINAL CONTRACTS.

IT IS STATED IN THE BRIEF IN CONCLUSION THAT UNDER PRESENT CIRCUMSTANCES YOUR DEPARTMENT DOES NOT BELIEVE THE CLAIMS OF THE COOPERATIVES SHOULD BE PAID OR ALLOWED.

IN SUPPORT OF THE ARGUMENT CONCERNING THE AVAILABILITY OF FUNDS, IT IS CONTENDED, IN EFFECT, THAT IT WAS CLEAR TO SOUTHWESTERN THAT THE AMOUNT MADE AVAILABLE BY THE CONGRESS IN THE ,CONTINUING FUND" FOR FISCAL YEAR 1954 WAS NOT SUFFICIENT TO IMPLEMENT THE LEASE-PURCHASE CONTRACTS AND THAT, HENCE, SOUTHWESTERN HAD NO ALTERNATIVE BUT TO LOOK TO THE LEGISLATIVE HISTORY AND THE DIRECTIONS OF THE CONGRESSIONAL COMMITTEES ACCOMPANYING THE BILL, INCLUDING THE STATEMENT OF THE HOUSE MANAGERS, FOR GUIDANCE. IT IS ALSO CONTENDED THEREIN THAT A READING OF THE CONGRESSIONAL DEBATE OF YOUR 1954 APPROPRIATION ACT WILL LEAVE NO QUESTION THAT BOTH THE HOUSE AND THE SENATE UNDERSTOOD THE PURPOSE OF THE HOUSEMANAGERS' STATEMENT AND THAT IT WAS INTENDED TO LIMIT THE APPROPRIATION SO THAT SOUTHWESTERN WOULD BE UNABLE TO IMPLEMENT THE LEASE- OPTION CONTRACTS. IT IS FURTHER CONTENDED THAT "THERE SEEMS TO BE ONLY ONE CONCLUSION, AND THAT IS WHEN THE CONFERENCE REPORT WAS APPROVED, THE CONGRESS ALSO APPROVED THE ACCOMPANYING STATEMENT OF THE HOUSE MANAGERS THEREBY ADOPTING AS THE LANGUAGE OF THE CONGRESS ITSELF THE STATEMENT WITH REFERENCE TO THE $1,200,000.'

CONCERNING THE AMOUNT MADE AVAILABLE IN THE CONTINUING FUND, WE WOULD LIKE TO POINT OUT THAT THE LEGISLATIVE HISTORY OF YOUR FISCAL YEAR 1954 APPROPRIATION ACT DISCLOSES THAT $1,200,000 WAS CONSIDERED SUFFICIENT TO IMPLEMENT THE GENERATING AND TRANSMISSION CONTRACTS FOR AN 8-MONTH PERIOD, DURING WHICH PERIOD IT APPEARS TO HAVE BEEN CONTEMPLATED THAT A FINAL SOLUTION OF THE POWER PROBLEM IN THE AREA INVOLVED WOULD BE REACHED. SEE 99 CONG.REC. 9936. WE AGREE THAT A READING OF THE DEBATE UPON THE APPROPRIATION PROVISION INVOLVED LEAVES NO QUESTION THAT BOTH THE HOUSE AND SENATE UNDERSTOOD THE PURPOSE OF THE HOUSE MANAGERS' STATEMENT AND THAT THE STATEMENT WAS INTENDED (BY ITS AUTHORS, SOME OF THE HOUSE CONFEREES) TO LIMIT THE APPROPRIATION SO THAT SOUTHWESTERN WOULD BE UNABLE TO IMPLEMENT THE LEASE-PURCHASE CONTRACTS. HOWEVER, WE DO NOT AGREE WITH THE CONCLUSION THAT WHEN THE CONFERENCE REPORT WAS APPROVED THE CONGRESS ALSO APPROVED THE ACCOMPANYING STATEMENT OF THE HOUSE MANAGERS "THEREBY ADOPTING AS THE LANGUAGE OF THE CONGRESS ITSELF THE STATEMENT WITH REFERENCE TO THE $1,200,000.' WHILE THE "STATEMENT OF THE MANAGERS ON THE PART OF THE HOUSE" ACCOMPANIED THE CONFERENCE REPORT AND THE CONFERENCE REPORT WAS AGREED TO BY BOTH HOUSES, THERE IS NOTHING IN THE LEGISLATIVE HISTORY TO INDICATE THAT THE CONGRESS APPROVED OR ADOPTED THE STATEMENT BY THE HOUSE MANAGERS. IN FACT, SUCH HISTORY DISCLOSES THAT SOME MEMBERS OF THE SENATE AND HOUSE QUESTIONED THE EFFECT OF THE HOUSE MANAGERS' STATEMENT. IN THIS CONNECTION, NOTE THE FOLLOWING STATEMENTS MADE ON THE FLOOR OF THE HOUSE AND SENATE DURING THE DEBATE ON THE CONFERENCE REPORT, AS CONTAINED IN THE CONGRESSIONAL RECORD, VOLUME 99, PAGES 9937, 9938, 9995, AND 9996, RESPECTIVELY:

"MR. MONRONEY. THE CONTINGENCIES INVOLVED ARE BEFORE THE SENATE ONLY BECAUSE THEY ARE WRITTEN INTO THE HOUSE REPORT, NOT INTO THE BILL ITSELF, WHICH, OF COURSE, AS THE STATUTORY LAW WILL CONTROL. * * *

"MR. MONRONEY. * * *

"AS THE JUNIOR SENATOR FROM OKLAHOMA READS THE HOUSE REPORT, WHILE IT HAS A BEARING ON THE LEGISLATION, IT IS NOT STATUTORY LAW. * * *

"MR. MAGNUSON. SO THAT THE RECORD MAY BE CLEAR, THE STATEMENT OF THE HOUSE MANAGERS IS NOT BINDING UPON THE SENATE. THE SENATE HAS NOT AGREED TO IT. IT IS MERELY A STATEMENT ON THE PART OF THE MANAGERS OF THE HOUSE.

"MR. RAYBURN. * * *

"I CALL ATTENTION TO THE LANGUAGE IN THE BILL AND THE LANGUAGE HERE, TO SEE WHICH ONE OF THESE WILL BE THE LAW. THE GENTLEMAN HAS READ THE WORDING IN THE BILL AND THEN HE HAS READ THIS STATEMENT OF THE CONFEREES. WHICH ONE OF THESE IS GOING TO BE THE LAW? IT IS WHAT THE CONFEREES SAY THEY WANT DONE OR WHAT IS GOING TO BE THE LAW?

"MR. RAYBURN. WE WOULD LIKE THE LANGUAGE OF THE BILL TO BE THE LAW AND NOT SOME STATEMENT MADE BY A BUNCH OF CONFEREES.'

IT APPEARS FROM THE QUOTED STATEMENTS THAT SOME MEMBERS OF THE HOUSE AND SENATE DID NOT CONSIDER THE STATEMENT OF THE HOUSE MANAGERS AS BINDING ON THE CONGRESS. THUS, IT IS DOUBTFUL WHETHER THE AGREEMENT TO THE CONFERENCE REPORT INDICATES THE CONGRESS AGREED WITH THE STATEMENT OF THE HOUSE MANAGERS OR WHETHER IT CONSIDERED THE STATEMENT NOT TO BE A PART OF THE LAW AND INEFFECTIVE.

ALSO, WE WOULD LIKE TO POINT OUT THAT THE LANGUAGE USED IN THE "CONTINUING FUND" PROVISION IN YOUR FISCAL YEAR 1954 APPROPRIATION FISCAL YEAR (1953) AND WE UNDERSTAND THAT THE "CONTINUING UND" WAS USED DURING THE FISCAL YEAR 1953, TO IMPLEMENT CONTRACTS ISPA-305 AND 306 WITH CENTRAL. TO CONTEND THAT THE SAME LANGUAGE USED IN THE APPROPRIATIONS FOR TWO SUCCEEDING YEARS MEANS SOMETHING ENTIRELY DIFFERENT ONLY COULD BE JUSTIFIED BY CONCLUDING THAT THE CONFERENCE REPORT WHICH AS WE INDICATED A2 E DOES NOT APPEAR TO BE THE CASE.

FURTHER, AS INDICATED ABOVE, THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA HELD THAT THE $1,200,000 MADE AVAILABLE IN THE "CONTINUING FUND" FOR FISCAL YEAR 1954, WAS AVAILABLE TO CARRY OUT THE PROVISIONS OF CONTRACTS ISPA-305 AND 306. WHILE THE JUDGMENT OF THE DISTRICT COURT WAS REVERSED BY THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA, THE REVERSAL WAS NOT ON THE MERITS, THAT IS, NOT ON THE QUESTION OF THE AVAILABILITY OF THE FUNDS, BUT WAS ON THE GROUND THAT THE DISTRICT COURT LACKED JURISDICTION SINCE THE GOVERNMENT HAD NOT CONSENTED TO BE SUED. IT IS UNDERSTOOD THAT THE THREE JUDGES WHO HEARD THE APPEAL INDICATED ORALLY THAT THEY ALSO CONSIDERED THE FUNDS AVAILABLE TO IMPLEMENT THE LEASE-PURCHASE CONTRACTS.

THE LANGUAGE USED BY THE CONGRESS IN THE "CONTINUING FUND" PROVISION IN YOUR FISCAL YEAR 1954 APPROPRIATION ACT IS CLEAR, POSITIVE, AND UNAMBIGUOUS. THERE IS NOTHING IN THE LANGUAGE RESTRICTING THE USE OF THE FUND TO THE PURCHASE OF ELECTRICAL ENERGY AND PAYMENT OF WHEELING SERVICE CHARGES. IT IS SPECIFICALLY PROVIDED THEREIN THAT THE "CONTINUING FUND" IS TO BE AVAILABLE FOR "RENTALS FOR THE USE OF THE TRANSMISSION FACILITIES," AND IT APPEARS THAT THIS WOULD INCLUDE RENT TO BE PAID THE COOPERATIVES BY SOUTHWESTERN FOR LEASE OF THE TRANSMISSION LINES. HAD THE CONGRESS INTENDED TO RESTRICT THE USE OF THE FUNDS OF SOUTHWESTERN SO AS TO NULLIFY THE LEASE-PURCHASE CONTRACTS, EFFECTIVE JULY 1, 1953, IT COULD HAVE DONE SO BY USE OF APPROPRIATE LANGUAGE IN THE ACT ITSELF. ALTHOUGH THE STATEMENT OF THE HOUSE MANAGERS ACCOMPANYING THE CONFERENCE REPORT MAY INDICATE AN INTENT ON THE PART OF SOME MEMBERS OF THE HOUSE CONFEREES TO PROHIBIT USE OF THE FUNDS IN QUESTION FOR IMPLEMENTING THE LEASE PURCHASE CONTRACTS, SUCH A PROVISION WAS NOT ENACTED INTO LAW. ANY INCONSISTENCY BETWEEN THE LANGUAGE USED IN A STATEMENT ON THE PART OF THE HOUSE MANAGERS ACCOMPANYING A CONFERENCE REPORT AND THE LANGUAGE USED IN A BILL AS ENACTED INTO LAW BY THE CONGRESS MUST BE RESOLVED IN FAVOR OF THE LANGUAGE USED IN THE LAW. CF. PENNSYLVANIA R.R.CO. V. INTERNATIONAL COAL CO., 230 U.S. 184; CAMINETTI V. UNITED STATES, 242 U.S. 470, 490; WISCONSIN R.R. V. CHICAGO, BURLINGTON AND QUINCY R.R.CO., 257 U.S. 563.

THE LANGUAGE OF THE ACT ITSELF BEING CLEAR, ANY DOUBT ARISING ONLY FROM THE EFFECTS, IF ANY, TO BE GIVEN TO THE STATEMENT IN THE CONFERENCE REPORT WHICH IT IS DOUBTFUL WHETHER THE CONGRESS ADOPTED, THERE SEEMS PARTICULARLY TO BE APPOSITE HERE THE LANGUAGE USED BY THE COURT IN THE WISCONSIN R.R. CASES CITED ABOVE, AT PAGE 589, AS FOLLOWS:

"* * * COMMITTEE REPORTS AND EXPLANATORY STATEMENTS OF MEMBERS IN CHARGE MADE IN PRESENTING A BILL FOR PASSAGE HAVE BEEN HELD TO BE A LEGITIMATE AID TO THE INTERPRETATION OF A STATUTE WHERE ITS LANGUAGE IS DOUBTFUL OR OBSCURE. * * * BUT WHEN TAKING THE ACT AS A WHOLE, THE EFFECT OF THE LANGUAGE USED IS CLEAR TO THE COURT, EXTRANEOUS AID LIKE THIS CAN NOT CONTROL THE INTERPRETATION. * * * SUCH AIDS ARE ONLY ADMISSIBLE TO SOLVE DOUBT AND NOT TO CREATE IT. * * *"

MOREOVER, THE SUPREME COURT IN EX PARTE COLLETT, 337 U.S. 55, 61, IN APPLYING A SIMILAR RULE STATED:

"* * * THE SHORT ANSWER IS THAT THERE IS NO NEED TO REFER TO THE LEGISLATIVE HISTORY WHERE THE STATUTORY LANGUAGE IS CLEAR. "THE PLAIN WORDS AND MEANING OF A STATUTE CANNOT BE OVERCOME BY A LEGISLATIVE HISTORY WHICH, THROUGH STRAINED PROCESSES OF DEDUCTION FROM EVENTS OF WHOLLY AMBIGUOUS SIGNIFICANCE, MAY FURNISH DUBIOUS BASES FOR INFERENCE IN EVERY DIRECTION.' GEMSCO V. WALLING, 324 U.S. 244, 260 (1945). THIS CANON OF CONSTRUCTION HAS RECEIVED CONSISTENT ADHERENCE IN OUR DECISION.'

IN VIEW OF THE FOREGOING, WE CONCLUDE, UPON REVIEW, THAT FUNDS MADE AVAILABLE TO SOUTHWESTERN IN ITS "CONTINUING FUND" FOR THE FISCAL YEAR 1954 ARE AVAILABLE TO IMPLEMENT THE LEASE-PURCHASE CONTRACTS WITH THE COOPERATIVES.

THIS CONCLUSION MAKES IT NECESSARY TO NOW CONSIDER THE FOLLOWING STATEMENT CONTAINED IN THE BRIEF OF YOUR DEPARTMENT.

"IN CONFORMITY WITH THE CLEAR INTENT OF CONGRESS, NEITHER SOUTHWESTERN POWER ADMINISTRATION, CENTRAL ELECTRIC POWER COOPERATIVE, NOR ANY OF THE OTHER GENERATING AND TRANSMISSION COOPERATIVES HAVING LEASE OPTION CONTRACTS AND ACCOMPANYING POWER CONTRACTS WITH THE SOUTHWESTERN POWER ADMINISTRATION, PERFORMED ANY ACTS OR FULFILLED ANY OBLIGATIONS UNDER SUCH CONTRACTS DURING THE PERIOD IN QUESTION. THE OPERATIONS AND BUSINESS CONDUCTED BY THE SOUTHWESTERN POWER ADMINISTRATION WITH THE GENERATING AND TRANSMISSION COOPERATIVES WERE PERFORMED IN ACCORDANCE WITH AND UNDER THE PROVISIONS OF INTERIM CONTRACT. * * *"

THIS ISSUE (OF PERFORMANCE) WAS RAISED FOR THE FIRST TIME AFTER WE HAD DETERMINED THAT FUNDS WERE AVAILABLE TO IMPLEMENT CENTRAL'S LEASE PURCHASE CONTRACT. NO SUCH ALLEGATIONS WERE MADE WHEN THE CLAIMS WERE SENT HERE BY THE ADMINISTRATOR AND CERTIFYING OFFICER OF SOUTHWESTERN, MR. DOUGLAS G. WRIGHT, FOR DIRECT SETTLEMENT. CENTRAL ALLEGES IN A BRIEF SUBMITTED HERE, A COPY OF WHICH IS ATTACHED, AT PAGE 2, THAT AT A CONFERENCE WITH DEPARTMENT OF THE INTERIOR OFFICIALS THEY WERE ADVISED THAT SOUTHWESTERN "COULD NOT AT THAT TIME PAY CENTRAL ITS OBLIGATIONS UNDER THE AGREEMENTS BUT WOULD DO SO PROMPTLY IF THERE WAS A DETERMINATION THAT THERE WAS AN APPROPRIATION AND THAT THE AGREEMENTS WERE ENFORCED. (IT WAS AGREED BY SPA THAT THE ONLY REASON IT WAS NOT CARRYING OUT ITS OBLIGATIONS UNDER THE AGREEMENTS WAS BECAUSE, IN ITS OPINION, THERE WAS NO APPROPRIATION).'

IT IS STATED IN YOUR DEPARTMENT'S BRIEF, IN CONNECTION WITH CONTRACT PERFORMANCE, THAT UNDER THE LEASE-OPTION CONTRACT WITH CENTRAL (ISPA 305) THE COOPERATIVE WAS TO LEASE THE TRANSMISSION FACILITIES TO THE GOVERNMENT AND THE GOVERNMENT WAS REQUIRED TO TAKE PHYSICAL POSSESSION, OPERATE, MAINTAIN, REPAIR AND PROVIDE CAPITAL PLACEMENTS FOR THE ENTIRE TRANSMISSION SYSTEM OF THE COOPERATIVE. IT IS ALSO REPORTED THAT UNDER THE SAID CONTRACT THE GOVERNMENT WAS PERMITTED TO USE ALL THE CAPACITY OF THE TRANSMISSION SYSTEM NOT REQUIRED TO SERVE CENTRAL'S LOAD FOR SERVICE TO OTHER CUSTOMERS OF THE GOVERNMENT. WE ARE ADVISED FURTHER THAT, UNDER THE INTERIM CONTRACTS, THE GOVERNMENT DID NOT MAINTAIN, OPERATE, REPAIR, OR REPLACE OR MAKE CAPITAL REPLACEMENTS UPON OR TO THE TRANSMISSION FACILITIES AND THAT THE GOVERNMENT DID NOT CONSIDER FACILITIES AVAILABLE TO IT FOR SERVING NEW CUSTOMERS AND DID NOT ADD NEW CUSTOMERS DURING THE PERIOD.

IT IS TRUE THAT SOUTHWESTERN DID NOT MAINTAIN, OPERATE, REPAIR, OR REPLACE, OR MAKE CAPITAL REPLACEMENTS UPON THE TRANSMISSION FACILITIES. HOWEVER, THIS CANNOT BE BLAMED ON CENTRAL SINCE SOUTHWESTERN ON ITS OWN INITIATIVE CEASED TO OPERATE AND MAINTAIN THE LINES. HENCE, CENTRAL APPARENTLY TOOK OVER AND OPERATED THE LINES AS PROVIDED BY THE DEFAULT CLAUSE OF THE LEASE-PURCHASE AGREEMENT. FURTHER, ALTHOUGH SOUTHWESTERN MAY NOT HAVE CONSIDERED FACILITIES AVAILABLE TO IT FOR SERVING NEW CUSTOMERS AND DID NOT ADD NEW CUSTOMERS DURING THE PERIOD IN QUESTION, IT APPEARS IT COULD HAVE DONE SO UNDER THE INTERIM AGREEMENT HAD IT WISHED. THIS AGREEMENT PROVIDES, IN SECTION 3, AS FOLLOWS:

"/A) THE COOPERATIVE SHALL TRANSMIT FOR THE GOVERNMENT OVER ITS TRANSMISSION SYSTEM SUCH AMOUNTS OF HYDROELECTRIC POWER AND ENERGY AS THE GOVERNMENT REQUIRES FOR THE SERVICE OF ANY OF ITS CUSTOMERS, INCLUDING THE COOPERATIVE, AND SUCH AMOUNTS OF ENERGY AS THE GOVERNMENT PURCHASES FROM THE COOPERATIVE. SUCH HYDROELECTRIC POWER AND ENERGY SHALL BE FURNISHED BY THE GOVERNMENT AND RECEIVED BY THE COOPERATIVE AT THE POINT OF INTERCONNECTION BETWEEN THE GOVERNMENT'S FACILITIES AT THE BULL SHOALS DAM PROJECT AND THE COOPERATIVE'S TRANSMISSION SYSTEM, AND SHALL BE DELIVERED BY THE COOPERATIVE TO ANY POINT OR POINTS DESIGNATED BY THE GOVERNMENT ON THE COOPERATIVE'S TRANSMISSION SYSTEM, AT SUCH VOLTAGE OR VOLTAGES AS ARE MUTUALLY AGREEABLE TO THE PARTIES RETO.'

IT IS CLEAR THAT, UNDER THE ABOVE-QUOTED PROVISION, THE COOPERATIVE WAS REQUIRED TO TRANSMIT FOR THE GOVERNMENT SUCH AMOUNTS OF POWER AND ENERGY AS THE GOVERNMENT REQUIRED FOR THE SERVICE OF ,ANY OF ITS CUSTOMERS.' THERE APPEARS TO BE NO RESTRICTION IN THE PROVISION ON THE TYPE OF CUSTOMERS, WHETHER THEY WERE OLD OR NEW. ALSO, WHILE IT MAY BE THAT THE SERVICES RENDERED BETWEEN SOUTHWESTERN AND CENTRAL COULD HAVE BEEN DIFFERENT UNDER THE INTERIM CONTRACT THAN UNDER THE EXISTING CONTRACTS, IT IS UNDERSTOOD THAT THE SERVICES THAT ACTUALLY WERE RENDERED WERE THE SAME AS WOULD HAVE BEEN RENDERED UNDER ISPA-305 AND 306 EXCEPT THAT CENTRAL OPERATED AND MAINTAINED THE LINES RATHER THAN SOUTHWESTERN. NOTE, IN CONNECTION WITH THE QUESTION OF PERFORMANCE, THE FOLLOWING STATEMENT MADE BY CENTRAL IN ITS BRIEF (PAGES 5 AND 6):

"* * * THE OPERATION OF THE LINES NOW AND DURING THE FISCAL YEAR 1954 HAS BEEN IDENTICAL WITH THE OPERATION OF THE LINES BY SPA. THE ENTIRE TRANSMISSION SYSTEM WAS IN OPERATION CONTINUOUSLY. ITS CAPACITY WAS UNCHANGED. THE CAPACITY IN THE LINES IN EXCESS OF CENTRAL'S USE WAS IN EXCESS OF THE REQUIREMENTS OF SPA, AND WAS AT ALL TIMES AVAILABLE TO SPA.

"UNDER EITHER THE LEASE AGREEMENT OR THE INTERIM AGREEMENT SPA HAD FULL RIGHT TO SERVE ANY OTHER CUSTOMER OF THE GOVERNMENT. AT NO TIME DID THE GOVERNMENT ASK TO SERVE ANY CUSTOMER WITHOUT RECEIVING FULL AND IMMEDIATE APPROVAL OF CENTRAL.

"CENTRAL STARTED COMMERCIAL OPERATION OF ITS GENERATING PLANT ON NOVEMBER 21, 1953 (SEE ATTACHED LETTERS DATED DECEMBER 1, 1953 AND DECEMBER 15, 1953) AT WHICH TIME CENTRAL PROPOSED TO OPERATE THE PLANT AT ITS FULL CAPACITY OF 15,000 KILOWATTS. SPA CONCURRED IN THIS METHOD OF OPERATION AND CONTINUALLY INSISTED THAT CENTRAL OPERATE ITS POWER PLANT AT CAPACITY. (SEE ATTACHED LETTERS DATED JANUARY 20 AND APRIL 20, 1954). ALL TIMES THE POWER PLANT WAS OPERATED AT ITS MAXIMUM CAPACITY WITH THE FULL KNOWLEDGE OF AND AT THE REQUEST OF SPA. THIS WAS THE MAXIMUM PERFORMANCE THAT COULD HAVE BEEN HAD EITHER BY CENTRAL OR SPA.

"* * * WHEN SPA CEASED TO OPERATE THE LINES CENTRAL, OF NECESSITY, HAD TO TAKE OVER IN ORDER TO ASSURE CONTINUITY OF SERVICE TO CENTRAL'S CONSUMERS AND ALSO TO THE CONSUMERS OF SPA. THE PLANT WAS OPERATED TO CAPACITY. NEITHER SPA NOR CENTRAL NOR A COMBINATION OF BOTH COULD DO NO MORE. * *

IN ANY EVENT, WHEN OUR HOLDING THAT THE FUNDS IN QUESTION ARE AVAILABLE TO IMPLEMENT THE EXISTING CONTRACTS (ISPA-305 AND 306 IS CONSIDERED, TOGETHER WITH THE PROVISIONS OF ARTICLE VI (B) OF CONTRACT ISPA-305, AS AMENDED, IT APPEARS THAT CENTRAL IS ENTITLED TO BE PAID TO THE EXTENT THAT THE AMOUNTS APPROPRIATED PERMIT UNDER THE PROVISIONS OF THE SAID CONTRACT. THE ARTICLE PROVIDES, IN PERTINENT PART, THAT IF THE GOVERNMENT DEFAULTS FOR ANY REASON OTHER THAN FAILURE OF THE CONGRESS TO APPROPRIATE NECESSARY FUNDS, AND SUCH DEFAULT CONTINUES FOR 30 DAYS OR MORE AFTER NOTICE IN WRITING SHALL HAVE BEEN GIVEN THE GOVERNMENT, THE COOPERATIVE MAY TAKE POSSESSION OF SUCH FACILITIES AND OPERATE AND MAINTAIN THEM AS LONG AS THE DEFAULT CONTINUES. IT FURTHER PROVIDES, IN CASE OF DEFAULT BY THE GOVERNMENT FOR A REASON OTHER THAN LACK OF APPROPRIATIONS, THAT--- * * THE GOVERNMENT SHALL BE LIABLE TO THE COOPERATIVE FOR, AND COOPERATIVE SHALL BE ENTITLED TO RECEIVE FROM GOVERNMENT, THE ADDITIONAL OPERATION AND MAINTENANCE EXPENSES INCURRED BY COOPERATIVE BY REASON THEREOF IN ADDITION TO THE RENTAL PAYMENTS PROVIDED IN ARTICLE V HEREOF. GOVERNMENT SHALL HAVE THE RIGHT AT ANY TIME DURING THE TERM OF THIS AGREEMENT TO CORRECT ANY SUCH DEFAULT ON ITS PART, RETAKE POSSESSION OF THE LEASED FACILITIES, AND RESUME THE OPERATION AND MAINTENANCE THEREOF UNDER THE TERMS OF THIS AGREEMENT. DURING THE PERIOD OF ANY SUCH DEFAULT ON THE PART OF GOVERNMENT AND SUBJECT TO THE PROVISIONS OF THIS AGREEMENT WITH RESPECT TO RESERVATION OF CAPACITY, THE COOPERATIVE SHALL PERMIT GOVERNMENT TO SERVE OVER SUCH TRANSMISSION FACILITIES THEN EXISTING CUSTOMERS OF GOVERNMENT PREVIOUSLY SERVED BY GOVERNMENT OVER SUCH TRANSMISSION FACILITIES, AND THE RENTAL PAYMENTS AND ADDITIONAL OPERATION AND MAINTENANCE EXPENSES SHALL BE TREATED AS COMPENSATION TO COOPERATIVE FOR THE USE OF COOPERATIVE'S TRANSMISSION SYSTEM FOR THAT PURPOSE.'

SINCE THE GOVERNMENT DEFAULTED FOR A REASON OTHER THAN LACK OF APPROPRIATIONS AND CONTINUED TO USE THE TRANSMISSION FACILITIES, IT APPEARS THAT THE COOPERATIVE IS ENTITLED (WITHIN THE LIMITS OF THE AVAILABLE FUNDS) TO ANY OPERATION AND MAINTENANCE EXPENSES IT INCURRED PLUS THE RENTAL PAYMENTS PROVIDED BY ARTICLE V.

AS TO THE IMPOSSIBILITY OF MAKING AN ACCURATE ACCOUNTING BETWEEN THE BENEFITS RECEIVED BY CENTRAL UNDER THE INTERIM AGREEMENT AND THE ACTUAL BENEFITS IT WOULD HAVE RECEIVED UNDER THE ORIGINAL CONTRACTS, NOTE THE FOLLOWING SAVINGS PROVISION IN SECTION 17 OF THE INTERIM CONTRACT:

"* * * PROVIDED, THAT IF, DURING THE EFFECTIVE TERM OF THIS AGREEMENT, THE AFOREMENTIONED AGREEMENTS OF JANUARY 9, 1950, AS AMENDED, BECOME OPERATIVE BY REASON OF THE DECISION OF A COURT OF GENERAL JURISDICTION, THIS INTERIM AGREEMENT SHALL BE VOID AB INITIO, AND THE RIGHTS AND OBLIGATIONS OF THE GOVERNMENT AND THE COOPERATIVE SHALL, IN ALL RESPECTS, BE CONSTRUED AND ADJUSTED RETROACTIVELY TO JULY 1, 1953, TO CONFORM TO AND COMPLY WITH THE PROVISIONS OF THE SAID AGREEMENTS OF JANUARY 9, 1950, AS AMENDED.'

IT APPEARS TO HAVE BEEN CONTEMPLATED BY THE PARTIES TO THE INTERIM CONTRACT THAT IF FUNDS WERE SUBSEQUENTLY HELD TO BE AVAILABLE TO IMPLEMENT THE LEASE-PURCHASE CONTRACTS, THE AMOUNTS DUE FROM SOUTHWESTERN AND CENTRAL TO EACH OTHER WERE TO BE COMPUTED FROM JULY 1, 1953, UNDER SUCH EXISTING CONTRACTS. A LETTER DATED DECEMBER 3, 1954, FROM DOUGLAS G. WRIGHT, AUTHORIZED CERTIFYING OFFICER (AND ADMINISTRATOR), OF THE SOUTHWESTERN POWER ADMINISTRATION TO THE ACTING COMPTROLLER GENERAL, DISCLOSES THAT SOUTHWESTERN WAS ABLE TO PREPARE A "PRO FORMA STATEMENT" REFLECTING A TENTATIVE BALANCE DUE CENTRAL FROM SOUTHWESTERN UNDER CONTRACTS NOS. ISPA-305 AND 306. IT IS STATED THEREIN THAT "THE COOPERATIVE HAS NOT SUBMITTED TO THIS OFFICE ANY STATEMENT SETTING FORTH THE NET AMOUNT THEY BELIEVE IS DUE THEM. HOWEVER, I BELIEVE EXHIBIT I-2 REFLECTS FAIRLY THE NET AMOUNT THE COOPERATIVE WILL CONTEND FOR.' SUBSEQUENTLY, BY LETTER DATED OCTOBER 26, 1955, THE ACTING ADMINISTRATOR TRANSMITTED TO OUR CLAIMS DIVISION THE BILLINGS OF THE COOPERATIVE UNDER CONTRACTS ISPA-305 AND 306 FOR THE PERIOD JULY 1, 1953, THROUGH JUNE 30, 1954, WITH THE ADVICE THAT SUCH STATEMENTS SHOULD BE TAKEN INTO ACCOUNT IN SETTLING THE CLAIMS AND COUNTERCLAIMS BETWEEN CENTRAL AND SOUTHWESTERN. NO QUESTION WAS RAISED THEREIN AS TO THE CORRECTNESS OF CENTRAL'S BILLINGS OR AN INABILITY TO COMPUTE AMOUNTS DUE AND PAYABLE UNDER CONTRACTS ISPA- 305 AND 306, IF FISCAL YEAR 1954 FUNDS WERE HELD AVAILABLE TO IMPLEMENT SUCH CONTRACTS. LETTER OF JUNE 13, 1956, LAST PARAGRAPH, FROM THE ADMINISTRATOR, SOUTHWESTERN POWER ADMINISTRATION, TO OUR CLAIMS DIVISION, DISCLOSES THAT SOUTHWESTERN WAS ABLE TO COMPUTE AMOUNTS DUE IT FROM CENTRAL FOR FISCAL YEAR 1954 UNDER THE LEASE-PURCHASE CONTRACTS, ALTHOUGH IT IS STATED THEREIN "THAT SUCH BILLINGS ARE NOT APPROVED BY THIS OFFICE NOR IS THEIR SETTLEMENT RECOMMENDED.' THE ADMINISTRATOR ALSO RETURNED CENTRAL'S BILLINGS COMPUTED UNDER THE LEASE-PURCHASE CONTRACTS AND DID NOT QUESTION THE ACCURACY OF SUCH BILLINGS. FROM THE FOREGOING, IT APPEARS IT IS POSSIBLE TO DETERMINE AMOUNTS DUE AND OWING BETWEEN CENTRAL AND SOUTHWESTERN FOR FISCAL YEAR 1954 UNDER CONTRACTS ISPA-305 AND 306.

CONCERNING THE STATEMENT IN THE LETTER OF JUNE 13, 1956, FROM SOUTHWESTERN TO OUR CLAIMS DIVISION, THAT THE STATEMENT IN LETTER DATED APRIL 25, 1956, FROM OUR CLAIMS DIVISION TO SOUTHWESTERN, TO THE EFFECT THAT AMOUNTS DUE AND OWING BETWEEN CENTRAL AND SOUTHWESTERN MAY BE PAID IN ACCORDANCE WITH THE TERMS OF CONTRACTS ISPA-305 AND 306, CANNOT BE RECONCILED WITH PREVIOUS DECISIONS (35 COMP. GEN. 156 AND B 125127, FEBRUARY 14, 1956) OF THE COMPTROLLER GENERAL BEARING ON THE SAME QUESTION, IT IS POINTED OUT THAT IT WAS NOT NECESSARY TO PASS ON THE QUESTION OF THE AVAILABILITY OF FUNDS TO IMPLEMENT THE LEASE PURCHASE CONTRACTS IN FISCAL YEAR 1954 IN SUCH DECISIONS.

AS TO THE CONTENTION IN YOUR DEPARTMENT'S BRIEF THAT THE PROPOSED AMENDMENTS TO THE ORIGINAL CONTRACTS WILL GIVE THE COOPERATIVES ECONOMIC BENEFITS AND ADVANTAGES EQUAL TO OR GREATER THAN THOSE GRANTED THE COOPERATIVES UNDER THE ORIGINAL CONTRACTS, WE SHOULD LIKE TO POINT OUT THREE THINGS: (1) THE ORIGINAL CONTRACTS CALL FOR MONTHLY PAYMENTS; (2) THE PROPOSED AMENDMENTS ARE NOT RETROACTIVE; AND (3) PAYMENTS IN FUTURE FISCAL YEARS UNDER EITHER THE ORIGINAL CONTRACTS OR THE PROPOSED AMENDMENTS THERETO ARE CONDITIONED UPON APPROPRIATIONS BEING MADE BY THE CONGRESS.

THE FAILURE OF SOUTHWESTERN TO IMPLEMENT DURING THE FISCAL YEAR 1954 THE ORIGINAL CONTRACTS WITH THE COOPERATIVES APPEARS TO HAVE BEEN DUE TO ITS ERRONEOUS BELIEF THAT NO PART OF THE APPROPRIATION FOR THAT YEAR WAS AVAILABLE THEREFOR. BUT FOR SUCH ERRONEOUS CONCLUSION, THE APPROPRIATION OF $1,200,000 LESS AMOUNTS NECESSARY FOR OTHER OBJECTS WOULD HAVE BEEN USED FOR SUCH PURPOSE. IT THUS WOULD APPEAR EQUITABLE AND PROPER TO NOW USE THE REMAINING AMOUNT IN THAT FUND, NOT OTHERWISE OBLIGATED, TO SATISFY THE AMOUNTS DUE THE COOPERATIVES UNDER THE CONTRACTS. THIS WOULD IN EFFECT IMPLEMENT THEM TO THE EXTENT OF THE APPROPRIATION MADE AVAILABLE THEREFOR.

INASMUCH AS SOUTHWESTERN WAS ABLE TO COMPUTE THE AMOUNT DUE IT FROM CENTRAL FOR FISCAL YEAR 1954, UNDER CONTRACTS ISPA-305 AND 306, AND SINCE IT DOES NOT CONTEND THAT CENTRAL'S BILLINGS ARE ERRONEOUS OR INCORRECT AS COMPUTED UNDER SUCH CONTRACTS, IT APPEARS THAT CONSIDERATION SHOULD BE GIVEN TO SETTLEMENT OF CENTRAL'S CLAIM ON THE BASIS OF THESE BILLINGS UNLESS THERE ARE SPECIFIC MISTAKES IN THE BILLINGS.

AS TO WESTERN FARMERS ELECTRIC POWER COOPERATIVE AND N.W. ELECTRIC POWER COOPERATIVE, THEIR CLAIMS AS INDICATED ABOVE WERE FORWARDED HERE BY SOUTHWESTERN FOR INFORMATION ONLY AND NOT FOR DIRECT SETTLEMENT BY US AS WAS CENTRAL'S CLAIM. HOWEVER, YOUR DEPARTMENT'S BRIEF REFERS TO THE CLAIMS OF THE LATTER TWO COOPERATIVES AND IT IS STATED THEREIN THAT SIMILAR CONDITIONS EXISTED AS TO THESE TWO COOPERATIVES. ASSUMING THAT THE LEASE-PURCHASE CONTRACTS WITH THESE TWO COOPERATIVES CONTAINED THE SAME PROVISIONS IN GENERAL, AS THOSE IN ISPA-305 AND 306, IT WOULD APPEAR THAT THESE COOPERATIVES WOULD BE ENTITLED TO PAYMENT ON THE SAME GROUNDS AS CENTRAL. WHILE SOME OF THEIR FACILITIES WERE NOT ACCEPTED OR APPROVED BY THE GOVERNMENT, AS PROVIDED IN THE CONTRACTS, NEITHER WERE SUCH FACILITIES REJECTED. THE GOVERNMENT WAS AT FAULT HERE SINCE APPARENTLY IT REFUSED TO INSPECT THE FACILITIES OR PERFORM OTHER ACTS REQUIRED BY OR PROVIDED FOR IN THE CONTRACTS IN THE MISTAKEN BELIEF THAT FUNDS WERE NOT AVAILABLE TO IMPLEMENT SUCH CONTRACTS. MOREOVER, SINCE THE CONTRACTS WERE REACTIVATED IN FISCAL YEAR 1956, IT IS ASSUMED THAT THE FACILITIES THAT WERE COMPLETED IN 1954 HAVE NOW BEEN APPROVED AND ACCEPTED BY THE GOVERNMENT. THUS, IT APPEARS THAT THESE TWO COOPERATIVES ARE ENTITLED TO PAYMENT ON THE SAME BASIS AS CENTRAL.

UNDER THE CONTRACTS, THE COOPERATIVES ARE TO BE PAID MONTHLY ON THE BASIS OF ESTIMATED BILLINGS WITH AN ADJUSTMENT AT THE END OF THE FISCAL YEAR SO AS TO PLACE THE PARTIES ON AN ACTUAL-COST BASIS. SINCE THERE IS NOT A SUFFICIENT AMOUNT AVAILABLE IN THE "CONTINUING FUND" FOR THE FISCAL YEAR 1954, TO PAY THE FULL AMOUNT OF THE CLAIMS, IT WOULD APPEAR PAYMENT THEREOF SHOULD BE MADE ON THE SAME BASIS AS THOUGH FUNDS HAD BEEN CONSIDERED AVAILABLE TO IMPLEMENT THE LEASE PURCHASE CONTRACTS DURING FISCAL YEAR 1954. IN OTHER WORDS, UNDER THE CONTRACT PROVISIONS EACH COOPERATIVE WOULD HAVE BILLED SOUTHWESTERN MONTHLY AND WOULD HAVE BEEN PAID MONTHLY UNTIL THE APPROPRIATED AMOUNT NOT NECESSARY FOR OTHER OBJECTS WAS EXHAUSTED. THEREFORE, IN DETERMINING THE AMOUNTS DUE THE CLAIMANTS, IT WOULD APPEAR THE SAME PROCEDURE SHOULD BE FOLLOWED THAT IS TO SAY, THE CLAIMS WOULD BE FOR SETTLEMENT ON THE BASIS OF THE AMOUNTS THAT WOULD HAVE ACCRUED TO THE CLAIMANTS MONTHLY UNDER THE CONTRACTS TO THE EXTENT OF AVAILABLE FUNDS. IN ANY MONTH WHERE THERE ARE NOT SUFFICIENT FUNDS AVAILABLE TO PAY FULL AMOUNTS DUE, THE CLAIMANTS WILL BE PAID ON A PRO RATA BASIS. THEREFORE, IT IS REQUESTED THAT YOU FURNISH US MONTHLY BILLINGS SHOWING AMOUNTS DUE SOUTHWESTERN FROM EACH OF THE COOPERATIVES INVOLVED FOR THE PERIOD JULY 1, 1953, TO JUNE 30, 1954, UNDER THE LEASE- PURCHASE CONTRACTS AND MONTHLY BILLINGS OF AMOUNTS DUE THE COOPERATIVES FROM SOUTHWESTERN FOR THE SAME PERIODS UNDER THE SAME CONTRACTS CALLING TO OUR ATTENTION ANY ERRORS THEREIN. THESE BILLINGS WILL BE NECESSARY IN ORDER TO SETTLE THE CLAIMS ON THE BASIS INDICATED ABOVE. IT WILL BE APPRECIATED IF THE AMOUNT DUE EACH INVOLVED COOPERATIVE TO THE EXTENT OF THE FUNDS AVAILABLE IS COMPUTED AND INFORMATION FURNISHED AS TO ANY PREVIOUS PAYMENTS MADE FOR THE INVOLVED PERIOD. ALSO, WE WOULD APPRECIATE ANY COMMENT YOU CARE TO MAKE AS TO SUCH PROPOSED BASIS OF ADJUSTMENT.

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