B-148044, NOV 18, 1975

B-148044 Nov 18, 1975
Jump To:
Skip to Highlights
Highlights

TERM "COMMERCIAL ENTERPRISE" IS NOT LIMITED TO BUSINESSES ENGAGED IN EXCHANGE OR BUYING AND SELLING OF COMMODITIES. ELIGIBILITY OF DISPLACED BUSINESS FOR OPTIONAL BUSINESS RELOCATION PAYMENT IS CONTINGENT UPON DETERMINATION BY HEAD OF AGENCY THAT BUSINESS IS NOT PART OF LARGER COMMERCIAL ENTERPRISE. SECTION 202(C) OF THE ACT PROVIDES IN PART AS FOLLOWS: "ANY DISPLACED PERSON ELIGIBLE FOR PAYMENTS UNDER SUBSECTION (A) OF THIS SECTION WHO IS DISPLACED FROM HIS PLACE OF BUSINESS OR FROM HIS FARM OPERATION AND WHO ELECTS TO ACCEPT THE PAYMENT AUTHORIZED BY THIS SUBSECTION IN LIEU OF THE PAYMENT AUTHORIZED BY SUBSECTION (A) OF THIS SECTION. IN THE CASE OF A BUSINESS NO PAYMENT SHALL BE MADE UNDER THIS SUBSECTION UNLESS THE HEAD OF THE FEDERAL AGENCY IS SATISFIED THAT THE BUSINESS (1) CANNOT BE RELOCATED WITHOUT A SUBSTANTIAL LOSS OF ITS EXISTING PATRONAGE.

View Decision

B-148044, NOV 18, 1975

(1) FOR PURPOSE OF OPTIONAL BUSINESS RELOCATION PAYMENT UNDER SECTION 202(C) OF UNIFORM RELOCATION ASSISTANCE AND REAL PROPERTY ACQUISITION POLICIES ACT OF 1970, TERM "COMMERCIAL ENTERPRISE" IS NOT LIMITED TO BUSINESSES ENGAGED IN EXCHANGE OR BUYING AND SELLING OF COMMODITIES, BUT INCLUDES REAL PROPERTY RENTALS AND INVESTMENTS. (2) UNDER SECTION 202(C) OF UNIFORM RELOCATION ASSISTANCE AND REAL PROPERTY ACQUISITION POLICIES ACT OF 1970, ELIGIBILITY OF DISPLACED BUSINESS FOR OPTIONAL BUSINESS RELOCATION PAYMENT IS CONTINGENT UPON DETERMINATION BY HEAD OF AGENCY THAT BUSINESS IS NOT PART OF LARGER COMMERCIAL ENTERPRISE.

CLAIM OF SAGER AND HUHN TO OPTIONAL BUSINESS RELOCATION PAYMENT:

THE ARCHITECT OF THE CAPITOL HAS REQUESTED OUR DECISION AS TO WHETHER PAYMENT MAY BE MADE UNDER SECTION 202(C) OF THE UNIFORM RELOCATION ASSISTANCE AND REAL PROPERTY ACQUISITION POLICIES ACT OF 1970, PUB. L. NO. 91-646, 84 STAT. 1896, JANUARY 2, 1971, 42 U.S.C. SEC. 4622(C) (1970), TO FORMER OWNERS OF RENTAL REAL PROPERTY DISPLACED THROUGH ACQUISITION BY HIS OFFICE, SINCE THEY ALSO OWN RENTAL PROPERTY OTHER THAN THE PROPERTY ACQUIRED. SECTION 202(C) OF THE ACT PROVIDES IN PART AS FOLLOWS:

"ANY DISPLACED PERSON ELIGIBLE FOR PAYMENTS UNDER SUBSECTION (A) OF THIS SECTION WHO IS DISPLACED FROM HIS PLACE OF BUSINESS OR FROM HIS FARM OPERATION AND WHO ELECTS TO ACCEPT THE PAYMENT AUTHORIZED BY THIS SUBSECTION IN LIEU OF THE PAYMENT AUTHORIZED BY SUBSECTION (A) OF THIS SECTION, MAY RECEIVE A FIXED PAYMENT IN AN AMOUNT EQUAL TO THE AVERAGE ANNUAL NET EARNINGS OF THE BUSINESS OR FARM OPERATION, EXCEPT THAT SUCH PAYMENT SHALL BE NOT LESS THAN $2,500 NOR MORE THAN $10,000. IN THE CASE OF A BUSINESS NO PAYMENT SHALL BE MADE UNDER THIS SUBSECTION UNLESS THE HEAD OF THE FEDERAL AGENCY IS SATISFIED THAT THE BUSINESS (1) CANNOT BE RELOCATED WITHOUT A SUBSTANTIAL LOSS OF ITS EXISTING PATRONAGE, AND (2) IS NOT A PART OF A COMMERCIAL ENTERPRISE HAVING AT LEAST ONE OTHER ESTABLISHMENT NOT BEING ACQUIRED BY THE UNITED STATES, WHICH IS ENGAGED IN THE SAME OR SIMILAR BUSINES. ***."

THE ARCHITECT ACQUIRED THE REAL PROPERTY AND IMPROVEMENTS KNOWN AS 120 C STREET, N.E., WASHINGTON, D.C., AN APARTMENT BUILDING FORMERLY OWNED BY CHARLES DOUGLAS SAGER AND RICHARD HUHN, TRUSTEE UNDER THE WILL OF REBECCA N. SAGER, AS PART OF HIS ACQUISITION OF ALL PRIVATELY OWNED REAL PROPERTY IN SQUARE 724 IN THE DISTRICT OF COLUMBIA. THE ACQUISITION WAS MADE UNDER THE SUPPLEMENTAL APPROPRIATIONS ACT, 1973, PUB. L. NO. 92-607, 86 STAT. 1498, 1510, OCTOBER 31, 1972, AND PURSUANT TO THE DIRECTION OF THE SENATE OFFICE BUILDING COMMISSION. TITLE TO THE PROPERTY VESTED IN THE UNITED STATES AS OF NOVEMBER 6, 1974.

ON JANUARY 15, 1975, THE FORMER OWNERS SUBMITTED AN APPLICATION FOR REIMBURSEMENT FOR MOVING AND RELATED EXPENSES UNDER THE ACT, INCLUDING A CLAIM FOR $10,000 UNDER THE OPTION CLAUSE OF SECTION 202(C). INFORMATION ELICITED FROM THE FORMER OWNERS INDICATED THAT THEY ALSO OWNED RENTAL PROPERTY OTHER THAN THE PROPERTY ACQUIRED BY THE ARCHITECT'S OFFICE. THE RENTAL OF REAL PROPERTY IS EXPRESSLY INCLUDED IN THE DEFINITION OF "BUSINESS" UNDER SECTION 106(7) OF THE ACT, 42 U.S.C. SEC. 4601(7) (1970). HOWEVER, THE ARCHITECT HAS REFUSED PAYMENT OF THIS PORTION OF THE FORMER OWNERS' CLAIM BECAUSE HE BELIEVES THAT THE ACQUIRED PROPERTY IS A BUSINESS WHICH IS "PART OF A COMMERCIAL ENTERPRISE HAVING AT LEAST ONE OTHER ESTABLISHMENT NOT BEING ACQUIRED BY THE UNITED STATES, WHICH IS ENGAGED IN THE SAME OR SIMILAR BUSINESS."

THE FORMER OWNERS ADMIT THAT THEY OWN SEVERAL OTHER RENTAL PROPERTIES, BUT CLAIM THAT THEY ARE HELD AS INVESTMENTS ONLY. THEY POINT TO THE DEFINITION OF "COMMERCE" FOUND IN WEBSTER'S INTERNATIONAL DICTIONARY, I.E., "THE EXCHANGE OR BUYING AND SELLING OF COMMODITIES ON A LARGE SCALE BETWEEN DIFFERENT PLACES," AND ARGUE THAT THEY ARE NOT ENGAGED IN THE EXCHANGE OR BUYING AND SELLING OF COMMODITIES. ADDITIONALLY, THEY CONTEND THAT THEIR REAL PROPERTY INVESTMENTS ARE NOT RELATED TO EACH OTHER AND THUS DO NOT CONSTITUTE A COMMERCIAL ENTERPRISE.

IN CONSIDERING THIS QUESTION, WE REQUESTED THE VIEWS OF THE ADMINISTRATOR OF THE GENERAL SERVICES ADMINISTRATION (GSA). BY LETTER DATED JUNE 2, 1975, THE GENERAL COUNSEL OF GSA RESPONDED TO OUR REQUEST, CONTENDING THAT THE ARGUMENT OF THE FORMER OWNERS IS NOT WELL FOUNDED. GSA SUGGESTS THAT THE CONCEPTS OF "COMMERCE" AND "INVESTMENT" ARE NOT MUTUALLY EXCLUSIVE. MOREOVER GSA ARGUES THAT THE EFFECT OF THE FORMER OWNERS' CONSTRUCTION WOULD BE TO ESTABLISH MORE STRINGENT STANDARDS OF ELIGIBILITY FOR PAYMENT UNDER SECTION 202(C) FOR BUSINESSES ENGAGED IN MANUFACTURING, PROCESSING, OR MARKETING OF COMMODITIES THAN FOR BUSINESSES ENGAGED IN LEASING REAL PROPERTY, AND NOTHING IN THE ACT OR LEGISLATIVE HISTORY SUPPORTS SUCH A RESULT.

WE AGREE. THE COURTS HAVE CONSISTENTLY RECOGNIZED THAT THE TERM "COMMERCE" IS NOT LIMITED TO EXCHANGE OR BUYING AND SELLING OF COMMODITIES. SEE, E.G., JORDAN V. TOSHIRO, 278 U.S. 123, 127-128 (1928), WHEREIN THE COURT STATED:

"WHILE IN A NARROW AND RESTRICTED SENSE THE TERMS 'COMMERCE,' OR 'COMMERCIAL,' AND 'TRADE' MAY BE LIMITED TO THE PURCHASE AND SALE OR EXCHANGE OF GOODS AND COMMODITIES, THEY MAY CONNOTE, AS WELL, OTHER OCCUPATIONS AND OTHER RECOGNIZED FORMS OF BUSINESS ENTERPRISE WHICH DO NOT NECESSARILY INVOLVE TRADING IN MERCHANDISE. *** AND ALTHOUGH COMMERCE INCLUDES TRAFFIC IN THIS NARROWER SENSE, FOR MORE THAN A CENTURY IT HAS BEEN JUDICIALLY RECOGNIZED THAT IN A BROAD SENSE IT EMBRACES EVERY PHASE OF COMMERCIAL AND BUSINESS ACTIVITY AND INTERCOURSE. ***."

NEITHER THE ACT NOR ITS LEGISLATIVE HISTORY PROVIDES ANY INDICATION THAT THE DEFINITION SUGGESTED BY THE FORMER OWNERS WAS INTENDED. ON THE CONTRARY, READ IN CONJUNCTION WITH THE DEFINITION OF "BUSINESS" FOUND IN SECTION 101(7) OF THE ACT, SUPRA, THE TERM "COMMERCIAL ENTERPRISE" AS UTILIZED IN SECTION 202(C) APPEARS TO BE INTENDED MERELY TO DISTINGUISH THE COMPLETE BUSINESS ENTITY ("COMMERCIAL ENTERPRISE") FROM THE ACTIVITIES ENGAGED IN BY THE SINGLE ENTITY WHICH OPERATED ON THE ACQUIRED PROPERTY ("A BUSINESS").

FURTHERMORE, SECTION 201 OF THE ACT, 42 U.S.C. SEC. 4621 (1970), STATES THAT THE PURPOSE OF TITLE II, IN WHICH SECTION 202(C) IS FOUND, IS

"*** TO ESTABLISH A UNIFORM POLICY FOR THE FAIR AND EQUITABLE TREATMENT OF PERSONS DISPLACED AS A RESULT OF FEDERAL AND FEDERALLY ASSISTED PROGRAMS, SO THAT THEY WILL NOT SUFFER DISPROPORTIONATE INJURIES AS A RESULT OF PROGRAMS DESIGNED FOR THE BENEFIT OF THE PUBLIC AS A WHOLE."

A DISTINCTION BETWEEN TRADE IN GOODS AND OTHER TYPES OF BUSINESS ACTIVITY, AS URGED BY THE FORMER OWNERS, WOULD SEEM TO BE CONTRARY TO THE INTENT OF TITLE II AS EXPRESSED IN SECTION 201.

THE FORMER OWNERS ALSO CONTEND THAT THEIR MULTIPLE INVESTMENTS IN RENTAL REAL PROPERTIES ARE NOT RELATED TO EACH OTHER AND THUS DO NOT CONSTITUTE A COMMERCIAL ENTERPRISE. THE LANGUAGE OF SECTION 202(C), HOWEVER, IS UNAMBIGUOUS IN THIS REGARD, AND PROHIBITS PAYMENT UNLESS THE HEAD OF THE FEDERAL AGENCY INVOLVED IS SATISFIED THAT THE BUSINESS IS NOT PART OF A LARGER COMMERCIAL ENTERPRISE. THIS DETERMINATION IS WITHIN THE SOUND DISCRETION OF THE ARCHITECT IN THE INSTANT CASE. WE FIND NO BASIS TO DISAGREE WITH HIS DETERMINATION IN THIS CASE.

ACCORDINGLY, IT IS OUR OPINION THAT THE ARCHITECT MAY WITHHOLD THE OPTIONAL PAYMENT UNDER SECTION 202(C) OF THE ACT.

GAO Contacts