B-142202, MAY 11, 1960

B-142202, MAY 11, 1960

TO HONORABLE FRANKLIN FLOETE, ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF MARCH 2, 1960, WITH ENCLOSURES, REQUESTING OUR ADVICE ON THE REQUEST OF THE KENAI CHROME COMPANY FOR RELIEF UNDER THE PURCHASE PROGRAM FOR DOMESTIC CHROME ORE AND CONCENTRATES AT GRANTS PASS, OREGON.

PURSUANT TO THE AUTHORITY CONTAINED IN 40 U.S.C. 486 (C), REGULATIONS WERE ISSUED TO IMPLEMENT THE STATUTORY DIRECTION IN 50 U.S.C. 98B TO THE ADMINISTRATOR OF GENERAL SERVICES TO MAKE PURCHASES OF STRATEGIC AND CRITICAL MATERIALS FOR STOCKPILING PURPOSES. IN CONSONANCE THEREWITH, THE DOMESTIC CHROME PROGRAM WAS ESTABLISHED BY REGULATION APPEARING IN SECTIONS 99.101 THROUGH 99.110 OF TITLE 44 OF THE CODE OF FEDERAL REGULATIONS. SECTION 99.104 OF THE REGULATION, AS AMENDED, PROVIDED THAT THE PROGRAM WOULD TERMINATE AS OF JUNE 30, 1959, WITH THE PROVISO THAT THE ADMINISTRATOR MAY TERMINATE THE PROGRAM AS OF THE DATE WHEN THE GOVERNMENT HAS RECEIVED AND ACCEPTED 200,000 TONS OF CHROME ORE AND/OR CONCENTRATES UNDER THE PROGRAM. SUBSECTIONS (A) AND (B) OF SECTION 99.110, WHICH WERE ADDED BY AMENDMENT NO. 5 OF AUGUST 6, 1956, PROVIDE AS FOLLOWS:

"SEC. 99.110 CAR-LOAD SHIPMENTS. (A) ANY PRODUCER PROPOSING TO DELIVER TO THE GOVERNMENT UNDER THE PROVISIONS OF THIS PART, AS AMENDED, CHROME ORE OR CONCENTRATES, IN ONE OFFERING, CONSISTING OF ONE OR MORE RAILROAD CARLOADS (AS USED IN THIS SECTION CARLOAD MEANS THE QUANTITY CARRIED IN ONE RAILROAD CAR EQUALING OR EXCEEDING THE MINIMUM TONNAGE WHICH CAN BE MOVED AT THE LOWEST TRANSPORTATION RATE) SHALL NOTIFY THE GOVERNMENT OF THE INTENDED DELIVERY AND REQUEST SHIPPING INSTRUCTIONS. SUCH NOTICE SHALL STATE THE APPROXIMATE QUANTITY PROPOSED TO BE DELIVERED, THE APPROXIMATE DATE OF DELIVERY, AND THE PROPOSED SHIPPING POINT (AS USED IN THIS SECTION SHIPPING POINT MEANS THE LOCATION AT WHICH THE PRODUCER WILL MAKE DELIVERY F.O.B. RAILROAD CARS). PRODUCERS IN THE STATES OF CALIFORNIA, NEVADA, AND ARIZONA SHALL ADDRESS SUCH NOTICE OF DELIVERY TO THE REGIONAL COMMISSIONER, GENERAL SERVICES ADMINISTRATION, SAN FRANCISCO 3, CALIFORNIA. PRODUCERS IN THE STATES OF WASHINGTON, OREGON, IDAHO, MONTANA, AND THE TERRITORY OF ALASKA SHALL ADDRESS SUCH NOTICE OF DELIVERY TO THE REGIONAL COMMISSIONER, GENERAL SERVICES ADMINISTRATION, SEATTLE 4, WASHINGTON.

"/B) SHIPPING INSTRUCTIONS SHALL BE ISSUED TO THE PRODUCER BY THE GOVERNMENT. OFFERINGS MADE PURSUANT TO THIS SECTION SHALL BE DELIVERED, AT THE EXPENSE OF THE PRODUCER, F.O.B., RAILROAD CARS AT THE SHIPPING POINT DESIGNATED BY THE GOVERNMENT; TYPE OF RAILROAD CAR TO BE DESIGNATED BY THE GOVERNMENT. FRACTIONAL CARLOAD WILL NOT BE ACCEPTED. CHARGES INCURRED DUE TO RAILWAY CARS BEING LOADED IN EXCESS OF THE MAXIMUM LIMIT SHALL BE FOR THE ACCOUNT OF THE PRODUCER.'

IT WAS DETERMINED EARLY IN 1958 THAT THE PROGRAM SHOULD BE TERMINATED WHEN THE SPECIFIED QUANTITY OF 200,000 TONS HAD BEEN REACHED. ACCORDINGLY, GSA/SAN FRANCISCO WAS AUTHORIZED TO CONTROL THE PROGRAM BY TONNAGE ADJUSTMENTS SO THAT PORTIONS OF THE CARLOAD PROGRAM HANDLED BY GSA/SAN FRANCISCO AND GSA/SEATTLE, AS WELL AS THE GRANTS PASS PORTION, COULD BE TERMINATED AT ABOUT THE SAME TIME.

KENAI WAS ADVISED BY LETTER DATED MARCH 26, 1958, THAT THE PROGRAM WAS EXPECTED TO BE COMPLETED ABOUT JUNE 30, 1958, AND KENAI WAS REQUESTED TO ADVISE GSA AS TO THE QUANTITY AND PROBABLE DATE OF ARRIVAL IN SEATTLE OF ANY ANTICIPATED DELIVERIES PRIOR TO JUNE 30. KENAI ADVISED GSA BY LETTER OF APRIL 10, 1958, OF THE TRANSPORTATION PROBLEMS ARISING OUT OF THE LONG WATER HAUL FROM ITS ALASKA PLANT TO THE RAILHEAD DELIVERY POINT IN SEATTLE, AND STATED THAT IT PRESENTLY HAD 1,000 LONG TONS AT ITS LANDING SITE. KENAI REQUESTED A FIRM COMMITMENT UNDER WHICH IT COULD DELIVER 2,000 LONG TONS PROBABLY ON JUNE 30 OR JULY 1. ON MAY 1, 1958, GSA/SEATTLE ADVISED KENAI THAT GSA/WASHINGTON HAD DISAPPROVED KENAI'S COMMITMENT REQUEST FOR UP TO 2,000 TONS AGAINST THE 200,000-TON QUOTA. ALSO, KENAI WAS ADVISED ON MAY 2, 1958, THAT TO QUALIFY UNDER THE PROGRAM THE CHROME MUST BE DELIVERED STATESIDE PRIOR TO EXHAUSTION OF THE QUOTA, AND THAT ALL REMAINING DELIVERIES UNDER THE PROGRAM MUST BE ACCEPTED ON A "FIRST COME, FIRST-SERVED" BASIS AT THE POINT OF DELIVERY WITH NO EXCEPTION.

BY NOTICE DATED MAY 14, 1958, ALL SHIPPERS UNDER THE PROGRAM WERE ADVISED OF THE EARLY TERMINATION OF THE PROGRAM; THAT AS OF MAY 9, 1958, ONLY 5,800 LONG DRY TONS REMAINED TO BE PURCHASED; AND THAT IN ORDER TO CLOSE OUT THE PROGRAM IN AN ORDERLY MANNER, IT WAS NECESSARY, BEGINNING IMMEDIATELY, FOR ALL SHIPPERS TO CLEAR WITH THE PROPER GSA OFFICE BEFORE MAKING DELIVERY. THE NOTICE FURTHER STATED THAT THE DESIGNATED GSA OFFICE WOULD DIRECT THE PRODUCER TO LOAD AND SHIP OR ADVISE THAT THE PROGRAM HAS CLOSED. ALSO, THE NOTICE ADVISED THAT IT WAS INTENDED THAT ALL ACCEPTANCES WOULD BE ON A DAY-TO-DAY BASIS, AND THAT CONSIDERATION SHOULD BE GIVEN TO MINING ONLY ENOUGH ORE TO PERMIT SHIPMENT NOT LATER THAN JUNE 6, 1958, ALTHOUGH GSA COULD GUARANTEE TO ACCEPT ONLY ORE FOR WHICH PURCHASE ARRANGEMENTS HAD BEEN MADE.

BY TELEGRAM DATED MAY 16, 1958, KENAI REQUESTED SHIPPING INSTRUCTIONS FOR APPROXIMATELY 1,300 LONG TONE ARRIVING ABOUT JUNE 2 AT SEATTLE. AS OF MAY 16, 1958, THE TONNAGE REMAINING AVAILABLE FOR PURCHASE WITHIN THE 200,000- TON QUOTA WAS 3,172 TONS. ON MAY 19, 1958, GSA/SEATTLE ADVISED KENAI OF THE CANCELLATION OF ITS 1,300-TON ALLOTMENT, APPARENTLY ON THE BASIS THAT DELIVERY COULD NOT BE MADE PRIOR TO THE TIME THE QUOTA WOULD BE FILLED. THE LAST AUTHORIZATION TO DELIVERY AT GRANTS PASS DEPOT WAS MADE ON JUNE 13, 1958, AND THE LAST OF THE AUTHORIZED DELIVERIES REACHED THE DEPOT ON JUNE 19.

KENAI REQUESTED EQUITABLE RELIEF FROM THE OFFICE OF CIVIL AND DEFENSE MOBILIZATION, SUGGESTING THAT THE PROGRAM BE AMENDED TO PROVIDE FOR THE ACCEPTANCE OF THE 1,300 TONS TENDERED BY IT, OR THAT SOME OTHER MEANS COULD BE FOUND THROUGH CONTRACT OR OTHERWISE TO PURCHASE THE MATERIAL AT THE PROGRAM PRICE. HOWEVER, RELIEF COULD NOT BE GRANTED SINCE THERE WAS NO LONGER ANY DEFENSE NEED WHICH COULD SUPPORT THE PURCHASE OF ADDITIONAL CHROME. HENCE, THERE APPEARED NO BASIS UPON WHICH FURTHER ACTION COULD BE TAKEN UNLESS KENAI'S CLAIM COULD BE SUPPORTED AS A MATTER OF LAW.

WE AGREE WITH THE CONCLUSION IN THE MEMORANDUM ACCOMPANYING YOUR LETTER THAT THE REGULATION CONSTITUTED A CONTINUING OFFER BY GSA TO PURCHASE, AT THE PROGRAM PRICE, DOMESTIC CHROME ORE AND CONCENTRATES MEETING THE REQUIREMENTS OF THE REGULATION. SEE RADIUM MINES, INC. V. UNITED STATES, 139 C.CLS. 144. ALSO, WE BELIEVE THAT UNDER THE PROVISIONS OF SECTION 99.110 OF THE REGULATION, AS AMENDED, THE ACTION OF KEMAI IN NOTIFYING GSA OF AN INTENDED DELIVERY DATE AND REQUESTING SHIPPING INSTRUCTIONS CONSTITUTED AN ACCEPTANCE OF THE GOVERNMENT'S CONTINUING OFFER TO BUY.

IN VIEW THEREOF, AND THE ADDITIONAL REASONS SET OUT IN THE ACCOMPANYING MEMORANDUM, WE AGREE THAT GSA SHOULD HAVE ISSUED THE REQUESTED SHIPPING INSTRUCTIONS AND PERMITTED DELIVERY OF THE MATERIAL. ACCORDINGLY, WE CONCUR IN THE PROPOSAL TO NEGOTIATE AND CONCLUDE A SETTLEMENT WITH KENAI AS CONTAINED IN THE NEXT TO THE LAST PARAGRAPH OF YOUR LETTER. WE WOULD APPRECIATE BEING ADVISED AS TO THE TERMS OF THE SETTLEMENT AND OF ITS SATISFACTORY CONCLUSION.