B-126193, JAN. 27, 1956

B-126193, JAN. 27, 1956

TO THE HONORABLE SECRETARY OF THE INTERIOR:

REFERENCE IS MADE TO LETTER OF THE ADMINISTRATIVE ASSISTANT SECRETARY DATED NOVEMBER 25, 1955, RELATIVE TO CONTRACT NO. I-101-IND 221, DATED NOVEMBER 8, 1922, AND TO THE MODIFICATION OF SUCH CONTRACT, EXECUTED ON AUGUST 20, 1936, BY THE OZETTE RAILWAY COMPANY AND THE SUPERINTENDENT OF THE TAHOLAH INDIAN SCHOOL ACTING FOR AND IN BEHALF OF THE QUINAIELT TRIBE OF INDIANS, FOR SALE OF TIMBER FROM THE TRIBAL RESERVATION TO THE SAID COMPANY.

AS INDICATED IN THE LETTER, MODIFICATION OF THE ORIGINAL CONTRACT WAS AUTHORIZED BY THE ACT OF JUNE 6, 1934, 48 STAT. 910, SECTION 4 OF WHICH PROVIDED AS FOLLOWS:

"THAT ANY MODIFICATION OF THE CONTRACT WITH THE OZETTE RAILWAY COMPANY SHALL STIPULATE THAT THAT COMPANY SHALL HAUL LOGS OF OTHER TIMBER OWNERS ON ITS RAILROAD LINE, AS FREIGHT, FOR SUCH OTHER OWNERS WITH ITS ORDINARY EQUIPMENT AND AT REASONABLE CHARGES WHEN SUCH LOGS ARE TENDERED TO IT AT PLACES ON ITS RAILROAD LINE DESIGNATED BY SUCH COMPANY; AND ITS RAILROAD SHALL BE, AND BECOME, A COMMON-CARRIER RAILROAD AND BE EXTENDED TO THE HOH RIVER AND BE A COMMON-CARRIER RAILROAD FOR ITS ENTIRE LENGTH.'

AS EXECUTED, THE MODIFICATION DATED AUGUST 20, 1936, CONTAINS A CLAUSE WHICH IS SUBSTANTIALLY A RESTATEMENT OF SECTION 4 ABOVE.

THE LETTER OF NOVEMBER 25, 1955, ADVISES THAT ALL TIMBER CUTTING OBLIGATIONS UNDER THE CONTRACT ARE EXPECTED TO BE FULFILLED AT AN EARLY DATE, AT WHICH TIME THE COMPANY WILL REQUEST TERMINATION OF THE CONTRACT AND RELEASE OF ITS PERFORMANCE BOND IN THE AMOUNT OF $50,000. HOWEVER, WITH RESPECT TO ANY OBLIGATION ON THE PART OF THE COMPANY UNDER THAT PORTION OF THE CONTRACT MODIFICATION WHICH INCORPORATE THE STIPULATION QUOTED ABOVE FROM SECTION 4 OF THE ACT OF JUNE 6, 1934, IT IS STATED THAT THE COMPANY'S RAILROAD HAS NEVER BEEN EXTENDED TO THE HOH RIVER. A LETTER DATED OCTOBER 10, 1955, FROM THE OZETTE RAILWAY COMPANY TO YOUR DEPARTMENT, INDICATES THAT VARIOUS FACTORS AND OCCURRENCES SINCE 1934 HAVE CONTRIBUTED TO MAKE AN EXTENSION OF THE COMPANY'S RAILROAD TO THE HOH RIVER UNNECESSARY AND IMPRACTICAL. AMONG THESE FACTORS ARE THE FORMATION OF THE OLYMPIC NATIONAL PARK AND RESULTING UNAVAILABILITY OF LARGE PORTIONS OF THE MERCHANTABLE TIMBER IN THE AREA THROUGH WHICH THE RAILROAD WOULD HAVE PASSED, TOGETHER WITH THE CONSTRUCTION OF ROADS AND HIGHWAYS THROUGHOUT THE AREA AND RADICAL CHANGES IN LOGGING TECHNIQUES THROUGH USE OF TRUCKS AND TRAILERS. AS A RESULT, NO DEMAND FOR COMMON CARRIER SERVICE TO THE HOH RIVER HAS EVER BEEN MADE ON THE COMPANY, NOR WOULD THERE BE ANY DEMAND FOR SUCH SERVICE AT THE RATES IT WOULD BE NECESSARY TO CHARGE IF THE RAILROAD WERE TO BE BUILT AND OPERATED AT A PROFIT.

THE LETTER OF THE ADMINISTRATIVE ASSISTANT SECRETARY EXPRESSES A BELIEF THAT THE STIPULATION REQUIRED TO BE MADE A PART OF THE CONTRACT DOES NOT CONSTITUTE AN OBLIGATION TO CONSTRUCT A RAILROAD, AND THAT THE SOLE PURPOSE OF SUCH STIPULATION IS TO REQUIRE THAT IN THE EVENT A RAILROAD IS BUILT TO COMPLETE LOGGING OPERATIONS UNDER THE CONTRACT SUCH RAILROAD WILL BECOME A COMMON CARRIER AND THAT IT WILL BE EXTENDED TO THE HOH RIVER; THEREFORE, THE COMPLETION OF LOGGING OPERATIONS WITHOUT BUILDING A RAILROAD MAKES THE STIPULATION INAPPLICABLE.

IN VIEW OF THE SITUATION AS OUTLINED ABOVE, TWO QUESTIONS ARE PRESENTED FOR OUR CONSIDERATION:

"1. IS IT WITHIN THE ADMINISTRATIVE AUTHORITY OF THE SECRETARY OF THE INTERIOR TO DETERMINE THAT THE EXTENSION OR OPERATION OF THE RAILROAD AS STIPULATED IN THE CONTRACT MODIFICATION OF AUGUST 20, 1936, NEED NOT BE PERFORMED AND THAT THE CONTRACT CAN BE TERMINATED AND THE BOND RELEASED WHEN ALL OTHER REQUIREMENTS HAVE BEEN MET?

"2. IF SUCH DETERMINATION IS NOT WITHIN THE AUTHORITY OF THE SECRETARY OF THE INTERIOR, WHAT LEGAL ACTION SHOULD BE TAKEN AT THIS TIME TO PREPARE THIS CONTRACT FOR TERMINATION WHEN LOGGING OPERATIONS ARE COMPLETED?

IN VIEW OF THE PLAIN LANGUAGE OF THE STATUTE AND THE CONTRACT PROVISION INVOLVED, WE ARE UNABLE TO AGREE WITH THE SUGGESTED CONCLUSION THAT THE CONTRACT IMPOSED AN OBLIGATION ON THE PART OF THE COMPANY ONLY TO OPERATE AS A COMMON CARRIER IN THE EVENT A RAILROAD WAS BUILT AS A RESULT OF ITS LOGGING OPERATIONS. BE THAT AS IT MAY, THE STATUTORY DIRECTIVE OF CONGRESS, AS EXPRESSED IN SECTION 4 OF THE ACT OF JUNE 6, 1934, WAS EXECUTED BY INCLUSION OF THE REQUIRED STIPULATION IN THE CONTRACT MODIFICATION DATED AUGUST 20, 1936, AND ANY RIGHT IN THE UNITED STATES TO PERFORMANCE, OR ANY PRESENT OBLIGATION ON THE PART OF THE CONTRACTOR TO PERFORM, NOW ARISES OUT OF THE CONTRACT ONLY.

IT IS WELL SETTLED THAT WHEN THE PUBLIC INTEREST REQUIRES SUCH ACTION A CONTRACTING OFFICER MAY TERMINATE A CONTRACT WHICH HE WAS AUTHORIZED TO MAKE AND, SO LONG AS/THE CONTRACTOR IS NOT IN DEFAULT, HE MAY ENTER INTO AN AGREEMENT WITH THE CONTRACTOR RESPECTING THE TERMS ON WHICH THE CONTRACT SHALL BE CANCELLED AND ITS PERFORMANCE TERMINATED. UNITED STATES V. CORLISS STEAM-ENGINE COMPANY, 91 U.S. 321; SAVAGE ARMS CORPORATION V. UNITED STATES, 266 U.S. 217; OHIO SAVINGS BANK AND TRUST COMPANY V. WILLYS CORPORATION, 16 F.2D 859. THIS PRINCIPLE HAS BEEN CONSTRUED BY THIS OFFICE TO APPLY EQUALLY TO DETERMINATIONS BY THE CONTRACTING OFFICER THAT THE PUBLIC INTEREST NO LONGER REQUIRES CONTINUED ENFORCEMENT OF A CONTRACT WHICH WAS ENTERED INTO BY THE UNITED STATES FOR THE PUBLIC BENEFIT. COMP. GEN. 811; B 25701, MAY 22, 1942; B-40226, MARCH 19, 1945. HOWEVER, THE DETERMINATION AS TO WHETHER THE PUBLIC INTEREST WOULD REQUIRE OR SUPPORT SUCH DETERMINATION IS A MATTER FOR ADMINISTRATIVE DECISION AND DOES NOT REST WITH THIS OFFICE. 18 COMP. GEN. 828.

ACCORDINGLY, IT IS OUR OPINION IN THE INSTANT CASE THAT THE SECRETARY OF THE INTERIOR HAS THE AUTHORITY TO DETERMINE THAT CONSTRUCTION OF THE RAILROAD IS NO LONGER NECESSARY TO THE PUBLIC INTEREST AND, IN THE EVENT OF SUCH DETERMINATION, TO TERMINATE THE CONTRACT UPON COMPLETION OF ALL OTHER CONTRACT REQUIREMENTS AND RELEASE THE PERFORMANCE BOND.

IN VIEW OF THE FOREGOING, YOUR SECOND QUESTION DOES NOT REQUIRE OUR CONSIDERATION.