B-124266, SEP. 7, 1955

B-124266, SEP. 7, 1955

TO MR. J. C. WESTBROOK, AUTHORIZED CERTIFYING OFFICER, ATOMIC ENERGY COMMISSION:

REFERENCE IS MADE TO YOUR LETTER DATED JANUARY 6, 1955, RECEIVED JUNE 10, 1955, REQUESTING A DECISION AS TO WHETHER CERTIFICATION IS AUTHORIZED ON BUREAU VOUCHER NO. C5-4260, SCHEDULE NO. 368, PROPOSING PAYMENT OF THE SUM OF $4,077.50 TO THE VANADIUM CORPORATION OF AMERICA AS REFUND OF CERTAIN ROYALTIES PAID TO THE ATOMIC ENERGY COMMISSION BETWEEN SEPTEMBER 1, 1951, AND JUNE 1, 1953, UNDER CONTRACT NO. AT/49 1/-305.

ACCORDING TO THE INFORMATION SET FORTH IN YOUR LETTER AND ITS ACCOMPANYING DOCUMENTS, THE CONTRACTOR WAS AUTHORIZED TO CARRY ON MINING OPERATIONS IN CERTAIN AREAS OF TRIBAL INDIAN LANDS UNDER LEASE TO THE COMMISSION FROM THE NAVAJO TRIBE OF INDIANS. THE CONTRACTOR AGREED TO PAY THE COMMISSION A ROYALTY OF 20 PERCENT OF THE VALUE OF THE ORE PRODUCED, LESS A ROYALTY OF APPROXIMATELY 10 PERCENT TO BE PAID TO THE NAVAJO TRIBE. HOWEVER, THE ORE DEPOSITS WERE IN SOME INSTANCES TOO SMALL TO WARRANT A COMPANY OPERATION, AND, AS PART OF A VERBAL UNDERSTANDING REACHED DURING THE EARLY PART OF THE YEAR 1951 CONCERNING A PROPOSED EXPANSION OF THE CONTRACTOR'S FACILITIES AND THE LEASE OF ADDITIONAL LANDS FROM THE COMMISSION, IT WAS AGREED THAT, SUBSEQUENT TO AUGUST 1, 1951, THE SUBMARGINAL ORE BODIES LOCATED ON INDIAN TRIBAL LANDS COULD BE WORKED BY MEMBERS OF THE NAVAJO TRIBE UNDER SUBLEASES; THAT A ROYALTY OF 10 PERCENT ON THE VALUE OF THE ORE SO PRODUCED WOULD BE PAID TO THE NAVAJO TRIBE; AND THAT, WITH RESPECT TO SUCH PRODUCTION, THE COMMISSION WOULD WAIVE ITS OVERRIDING ROYALTY.

THE SUBSTANCE OF THE UNDERSTANDING REACHED WAS INCORPORATED IN A LETTER DATED JULY 18, 1951, FROM THE COMMISSION, AND ACCEPTED BY THE CONTRACTOR BY LETTER OF JULY 19, 1951. PURSUANT TO THAT UNDERSTANDING, YOU STATE THAT THE CONTRACTOR EXPANDED ITS FACILITIES AND ARRANGED FOR THE CONDUCT OF MINING OPERATIONS BY MEMBERS OF THE NAVAJO TRIBE. BY SUPPLEMENTAL AGREEMENT NO. 3 TO THE CONTRACT, ENTERED INTO ON DECEMBER 17, 1953, AND MADE EFFECTIVE AS OF JULY 1, 1953, THE TERMS OF THE UNDERSTANDING ABOVE REFERRED TO WERE FORMALLY INCORPORATED INTO THE CONTRACT, AND IT WAS SPECIFICALLY PROVIDED THAT THE COMMISSION WOULD WAIVE ROYALTY PAYMENTS ON ORE PRODUCED FROM DEPOSITS WORKED BY MEMBERS OF THE NAVAJO TRIBE SUBSEQUENT TO AUGUST 1, 1951.

ALTHOUGH THE MAKING OF RETROACTIVE AMENDMENTS TO A CONTRACT SOMETIMES INVOLVES THE QUESTION OF WHETHER OR NOT AN AMENDMENT IS SUPPORTED BY A VALID CONSIDERATION MOVING TO THE GOVERNMENT, THE REPORTED CIRCUMSTANCES OF THE INSTANT CASE APPEAR SUFFICIENT TO SHOW THAT THE RETROACTIVE FEATURES OF SUPPLEMENTAL AGREEMENT NO. 3 CONSTITUTED NO MORE THAN A FORMAL RECOGNITION OF OBLIGATIONS ASSUMED BY THE GOVERNMENT WHEN IT INFORMALLY APPROVED CERTAIN PROPOSALS MADE BY THE CONTRACTOR DURING THE EARLY PART OF THE YEAR 1951. THERE WAS AT THAT TIME NO DATE FIXED FOR THE COMMENCEMENT OF THE ACTUAL WORK OF EXPANDING THE FACILITIES OF THE CONTRACTOR, BUT THE COMMISSION'S LETTER OF JULY 18, 1951, CLEARLY SHOWS THAT AS A PART OF THE ENTIRE NEW ARRANGEMENT THE PROPOSED ROYALTY ADJUSTMENT WOULD BE MADE EFFECTIVE AS OF AUGUST 1, 1951. THE FIXING OF THAT DATE IN SUPPLEMENTAL AGREEMENT NO. 3 APPEARS TO BE FULLY IN ACCORD WITH THE INTENTION OF THE PARTIES, NOTWITHSTANDING THE GENERAL STATEMENT IN THE AGREEMENT WHICH PURPORTS TO MAKE ALL OF ITS PROVISIONS EFFECTIVE AS OF JULY 1, 1953.

ACCORDINGLY, THE VOUCHER, WHICH IS RETURNED HEREWITH, MAY PROPERLY BE CERTIFIED FOR PAYMENT, IF OTHERWISE CORRECT.