B-153261, SEP. 30, 1965

B-153261, SEP. 30, 1965

TO MR. WESLEY MARX:

YOUR LETTER OF SEPTEMBER 2, 1965, REQUESTS TO BE "INFORMED OF THE REASONING WHICH OVER-RULED THE STAND TAKEN BY THE DEPARTMENT OF THE INTERIOR AND ITS BUREAU OF LAND MANAGEMENT" WITH RESPECT TO THE CLAIM OF THE COLLIER CARBON AND CHEMICAL CORPORATION IN THE AMOUNT OF $172,286 FOR REIMBURSEMENT OF LEASE RENTALS, DAMAGES AND OTHER EXPENSES PAID AND INCURRED BY THE CLAIMANT INCIDENT TO SIX OUTER CONTINENTAL SHELF PHOSPHATE LEASES FOR OFF-SHORE MINERAL LANDS.

BEFORE THE EXECUTION OF THE LEASES COLLIER HAD BEEN INFORMED BY THE BUREAU OF LAND MANAGEMENT (BLM), DEPARTMENT OF THE INTERIOR, THAT THE DEPARTMENT OF THE NAVY HAD "CLEARED" AND APPROVED THE SITE FOR LEASING. COLLIER CONTENDED THAT IT WAS UNAWARE OF THE PRESENCE OF LIVE, UNEXPLODED SHELLS IN THE LEASED AREA UNTIL AFTER THE EXECUTION OF THE LEASES; THAT NAVY'S KNOWLEDGE OF THE PRESENCE OF THE UNEXPLODED SHELLS WAS ATTRIBUTABLE TO BLM AND THAT THE LEASED AREA COULD NOT BE PRUDENTLY MINED, CONSISTENT WITH PROPER SAFEGUARDS TO LIFE AND PROPERTY WITH THE DUTIES IMPOSED ON COLLIER UNDER LEASES AS TO HEALTH AND SAFETY OF THE WORKMEN.

ON THE OTHER HAND, BLM CONTENDED THAT COLLIER KNEW OR BY THE EXERCISE OF REASONABLE DILIGENCE SHOULD HAVE KNOWN OF THE HAZARDS SINCE THE AREA HAD BEEN USED AS A BOMBING AND GUNNERY RANGE FOR 20 YEARS. IT WAS STATED THAT THIS INFORMATION WAS NOT CLASSIFIED AND THAT IT WAS COMMON KNOWLEDGE. ALSO, IT WAS POINTED OUT THAT COLLIER WHILE CONDUCTING EXPLORATORY OPERATIONS BEFORE EXECUTION OF THE LEASES HAD BEEN NOTIFIED BY NAVY TO VACATE THE AREA PRIOR TO COMMENCEMENT OF TARGET PRACTICE. AS TO THE "CLEARANCE" GIVEN BY NAVY IT WAS EXPLAINED THAT THE GRANTING OF SAME WAS NOT FOR THE PURPOSE OF ASSURING CLAIMANT AS TO THE SAFETY OF THE AREA BUT WAS BASED ON ASSURANCES THAT AFTER CERTAIN STIPULATIONS HAD BEEN INSERTED IN THE LEASES THE CLAIMENT'S ACTIVITIES WOULD NOT BE PREJUDICIAL TO NATIONAL SECURITY.

THE GENERAL RULE IS, OF COURSE, THAT IN THE ABSENCE OF FRAUD OR CONCEALMENT ON THE PART OF THE LESSOR THERE IS NO IMPLIED COVENANT THAT THE PREMISES LEASED ARE FIT OR SUITABLE FOR THE PURPOSES FOR WHICH THEY ARE LEASED AND THAT THE TENANT TAKES THEM AS HE FINDS THEM. ALSO, IT HAS BEEN HELD THAT A LESSEE ORDINARILY IS NOT EXCUSED FROM PERFORMANCE BECAUSE OF SUBSEQUENT IMPOSSIBILITY OF PERFORMANCE RESULTING FROM THE HAPPENING OF SOME ACT OR SITUATION NOT WITHIN THE CONTEMPLATION OF THE PARTIES. WITH RESPECT TO THE MATTER OF NOTICE OF THE HAZARDS ATTRIBUTED TO COLLIER BY BLM AND NAVY IT HAS BEEN HELD THAT ONE IS CHARGEABLE WITH CONSTRUCTIVE NOTICE WHERE HAVING THE MEANS OF KNOWLEDGE HE DOES NOT USE THEM.

WHILE THE FOREGOING RULES WERE CONSIDERED IT WAS CONCLUDED THAT THEY WERE NOT FOR APPLICATION IN THIS INSTANCE. IN THIS REGARD, COLLIER CONSISTENTLY DENIED IT HAS ANY ACTUAL NOTICE OF THE PRESENCE OF UNEXPLODED SHELLS PRIOR TO THE EXECUTION OF THE LEASES AND NAVY STATED THAT IT HAD NO INFORMATION THAT WOULD CAST ANY DOUBT ON THIS STATEMENT. THE BUREAU OF LAND MANAGEMENT MADE NO AFFIRMATIVE STATEMENT IN THAT RESPECT. IN THAT REGARD IN AN AFFIDAVIT EXECUTED BY A REPRESENTATIVE OF THE COMPANY WHICH PERFORMED THE UNDERWATER EXPLORATORY WORK FOR COLLIER, REFERENCE WAS MADE TO CONTACTS AND CORRESPONDENCE WITH THE CORPS OF ENGINEERS AND THE UNITED STATES NAVY COMMANDANT, 11TH NAVAL DISTRICT, CONCERNING THE EXPLORATORY OPERATIONS PRIOR TO THE EXECUTION OF THE LEASES. THE AFFIDAVIT STATED THAT NAVY ADVISED THAT NO APPROVAL FOR THE SURVEY WAS NECESSARY BUT THAT THE INFORMATION WOULD BE MADE AVAILABLE TO THE NAVAL UNITS OPERATING IN THE AREA; THAT NEITHER NAVY'S LETTER NOR ANY OTHER LETTER RECEIVED BY THE COMPANY MENTIONED THE PRESENCE OF PROJECTILES IN THE LEASED AREA; AND THAT THE COMPANY HAD NO KNOWLEDGE OF THE EXISTENCE OF LIVE SHELLS ON THE OCEAN FLOOR OF THE LEASED AREA UNTIL AFTER THE EXECUTION OF THE LEASES.

THE ARGUMENTS BY NAVY AND BLM THAT COLLIER HAD CONSTRUCTIVE NOTICE, IMPLIED NOTICE, OR INQUIRY NOTICE OVERLOOKED THE ADMITTED FACT THAT BEFORE COLLIER EXECUTED THE LEASES IT HAD BEEN INFORMED THAT NAVY HAD "CLEARED" AND APPROVED THE SITE FOR LEASING. NOTWITHSTANDING THE SUBSEQUENT EXPLANATION THAT THE CLEARANCE WAS NOT FOR THE PURPOSE OF ASSURING COLLIER THAT THE AREA WAS SAFE FOR MINING OPERATIONS BUT RATHER THAT COLLIER'S ACTIVITIES WOULD NOT BE PREJUDICIAL FOR NATIONAL SECURITY THE CLEARANCE, UNEXPLAINED, WAS REGARDED AS FURNISHING A REASONABLE BASIS FOR COLLIER TO CONCLUDE AS IT DID THAT THE AREA COULD BE MINED SAFELY. VIEWED IN THAT LIGHT IT WAS CONCLUDED THAT THERE WAS NO DUTY ON COLLIER TO MAKE INQUIRY AS TO ANY UNEXPLODED PROJECTILES, DESPITE ANY CLAIMED CONSTRUCTIVE NOTICE TO COLLIER.

IT HAS BEEN HELD THAT THE DOCTRINE OF PRESUMPTIVE OR IMPUTED NOTICE IS TO BE APPLIED WITH CAUTION ON ACCOUNT OF THE ELEMENTS CONSTITUTING SAME AND THAT IT IS ONLY RESORTED TO OUT OF NECESSITY AND THEN WITH RELUCTANCE. OUR OFFICE CONCLUDED THAT THE DOCTRINE WAS NOT FOR APPLICATION IN THIS INSTANCE. WE FELT THAT THERE SHOULD HAVE BEEN PRIOR AFFIRMATIVE DISCLOSURE OF THE EXISTING HAZARDS. COMPARE IN THIS REGARD SECTION 101- 47.401-4 GENERAL SERVICES ADMINISTRATIVE PUBLIC CONTRACTS AND PROPERTY MANAGEMENT REGULATIONS, 29 F.R. 16141 (41 C.F.R. 101-47.401-4) WITH RESPECT TO THE EXTREME CARE REQUIRED IN THE DECONTAMINATION OF EXCESS AND SURPLUS PROPERTY INCIDENT TO THE MANAGEMENT AND DISPOSAL OF SAME IN ORDER TO PREVENT SUCH PROPERTIES BECOMING A HAZARD TO THE GENERAL PUBLIC.

THE RECORD ESTABLISHED AFFIRMATIVE UNSUCCESSFUL EFFORTS ON THE PART OF COLLIER THROUGH CONTACTS WITH 90 MANUFACTURERS AND RESEARCH FIRMS ENGAGED IN UNDERSEA TECHNOLOGY TO DETERMINE WHETHER A TIMELY AND ECONOMICAL SYSTEM COULD BE DEVELOPED TO DETECT THE SHELLS WITHOUT PICKING THEM UP. ALSO, THE RECORD ESTABLISHED THAT COLLIER WAS UNAWARE OF ANY FEASIBLE METHOD OF LOCATING RANDOMLY SCATTERED OBJECTS IN DEEP WATER, 150 FEET OR MORE.

THE FOREGOING RECORD FURNISHED THE BASIS OF THE ALLOWANCE OF COLLIER'S CLAIM IN THE AMOUNT OF $137,120 ($15,120 FOR RENTALS AND $122,000 AS BONUS MONIES PAID FOR THE LEASES). THE DISALLOWANCE OF THE BALANCE OF THE AMOUNT CLAIMED, NAMELY, $35,166 FOR DAMAGES, WAS SUSTAINED.

AS TO THE BEARING THE INVOLVED CLAIM MIGHT HAVE "ON FUTURE SUCH INCIDENTS ON THE OCEAN RONTIER" YOU MAY BE ADVISED THAT EACH CLAIM MUST, OF COURSE, BE CONSIDERED ON ITS OWN MERITS.