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(The prepared statement of Mr. Massie follows:)

STATEMENT OF WELFORD J. MASSIE, ASSISTANT GENERAL COUNSEL, GENERAL ACCOUNTING OFFICE, ON H. R. 2759 (80TH CONG.), BEFORE COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, UNITED STATES SENATE, MARCH 30, 1948

1. Limitations on suits against railroads not applicable to the United States

In a prior report to the House of Representatives from the General Accounting Office on this bill the view was expressed that under the usual rule (United States v. Nashville, Chattanooga & St. Louis Ry. Co., 118 U. S. 120; DuPont de Nemours v. Davis, Director General of Railroads, 264 U. S. 456) the United States would not be bound by a statute of limitations in the absence of specific provision or clear legislative intent to the contrary.

2. IOC has ruled otherwise as to its jurisdiction

However, in view of the possibility that the United States might have occasion to institute reparation proceedings before the Interstate Commerce Commission under the provisions of this bill, if enacted into law, attention was called to the case of United States v. Director General, as Agent, Baltimore & Ohio Railroad Company, et al., 80 I. C. C. 143, in which the limitation imposed in section 16 of the Interstate Commerce Act, as amended, was given effect by the Interstate Commerce Commission as precluding consideration by the Commission of petitions for reparation presented against rail carriers by the War Department and Navy Department where the petitions were not filed within the time limit specified. It was recommended, therefore, that the legislation here proposed be made specifically inapplicable to actions at law or other proceedings instituted by the United States.

3. Specific legislative clarification of H. R. 2759 is essential

In the course of debate in the House of Representatives on this bill the view was expressed, in urging its enactment, that the limitations which the bill provides should and would apply to the United States as shipper as effectively as to the ordinary shipper, and a communication from the Interstate Commerce Commission was quoted to the effect that said Commission could see no reason for allowing the Government a longer period than other shippers. These references in debate are of special significance because they were stated by the committee chairman in charge of the bill. In view of this circumstance it is believed the bill should provide specifically that it does or does not apply to actions at law or other proceedings instituted by the United States. As to the problem of construction or interpretation that otherwise would be presented, particularly in view of the different effect that has been given other comparable provisions of the act relating to rail carriers, see United Mine Workers v. United States, 330 U. S. 258. 4. To apply the 2-year limit to Government shipments would be unfair and unjust In view of the General Accounting Office a limitation of 2 years, dating from delivery of the shipment, for recovery of excessive charges paid carriers would result in an unfair advantage to the carriers and a considerable financial detriment to the Government for reasons as follows:

A. The time necessarily consumed between date of payment and completion of audit would render recovery of overpayments within 2 years by and large impossible as a practical matter.

(1) Approximately 12 months are consumed before payments are reached for audit. (2) Government difficulties of audit not experienced in commercial audits. (a) The Government ships on credit, not for cash, and Congress has sanctioned a procedure under which the Government pays whatever is billed by the carriers, with no audit or check on it until long afterward (sec. 322 of Transportation Act of 1940, 49 U. S. C. 66, providing for payment of carriers' charges on presentation of bills prior to audit and settlement by General Accounting Office; see also 31 U. S. C. 82g). (b) Necessity for obtaining additional information as to facts involved before proper audit can be made.

1. Indefinite descriptions on bills of lading.

2. Service, and payment made thereon, inconsistent with bill of lading or voucher record.

3. Error in weights, special services, pick-up and delivery.

(c) Special reduced rates applicable to United States only (sec. 22, Transportation Act).

B. Literal application of bill, as worded, in a considerable number of instances would leave little or no time for recovery of overpayments.

C. Distinctions, in the requirements of the Interstate Commerce Act, between commercial shippers and the Government with respect to the time within which transportation charges shall be paid (sec. 3 of act). In many instances Government would have considerably less time for audit, following payment, than commercial shippers customarily have.

D. To make this bill applicable to actions at law by the United States for recovery of overcharges paid to carriers by motor vehicle, carriers by water, and freight forwarders would result necessarily in either

(1) A disparity between the limitations applied to such carriers and the limitations applied to the rail carriers under the comparable provisions of section 16 (3) of the Interstate Commerce Act; or

(2) Necessity for a change in the effect given said section 16 (3) hereafter as compared with that given it judicially heretofore. Southern Pacific Company v. United States, 62 Ct. Cls. 391, holding that the limitations imposed by section 16 (3) have application only to commercial, as distinguished from Government transportation, and that accounting for payments for Government transportation must of necessity be subject to rules and regulations, in some respects sui generis.

5. Conclusions

If any limitation is to be imposed upon recovery of overcharges by the United States, it would seem that

A. Consistency with the fact that, under the general law as to claims against the Government, the carriers have 10 years in which to file claims with GAO for undercharges (act of October 9, 1940, 54 Stat. 1061) would justify fixing a like period for filing suits by the United States to recover overcharges, and the Comptroller General so recommends.

B. If any shorter period is fixed, it should not be less than 6 years, that being the limitation that has been applied in the Court of Claims with respect to suits by carriers against the Government.

C. If a period of 2 years is fixed, it will be impossible, as a practical matter, with respect to much traffic, to take the necessary action of audit and development preliminary to filing a suit by the Government in that period.

(The General Accounting Office subsequently submitted the following memorandum :)

MEMORANDUM SUPPLEMENTING GENERAL ACCOUNTING OFFICE TESTIMONY ON H. R. 2759 FOR USE OF COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, UNITED STATES SENATE

I. Citation to statutes which affect the presentation and audit of bills of common carriers against the Government and which contribute to delay in the recovery of overcharges collected from the Government, as compared with the time involved in the recovery of overcharges collected from commercial shippers. (1) Title 49 United States Code, section 3, paragraph (2):

"No carrier by railroad subject to the provisions of this chapter shall deliver or relinquish possession at destination of any freight transported by it until all tariff rates and charges thereon have been paid, except under such rules and regulations as the Commission may from time to time prescribe to govern the settlement of all such rates and charges and to prevent unjust discrimination: Provided, That the provisions of this paragraph shall not be construed to prohibit any carrier from extending credit in connection with rates and charges on freight transported for the United States, for any department, bureau, or agency thereof, or for any State or Territory or political subdivision thereof, or for the District of Columbia."

Comparable provisions relating to the prompt collection of charges by common carriers by motor vehicle, by common carriers by water, and by freight forwarders, appear respectively in sections 323, 918, and 1014 of the same title, being sections 223, 318, and 414, respectively, of the Interstate Commerce Act, as amended. Under these provisions common carriers are not required to collect charges promptly for transportation services furnished the United States and in the past it has been found that an average of probably 3 months has elapsed

with respect to transportation accounts generally between the date of completion of the transportation service and the date of presentation of the bill therefor by the carrier to the administrative office for payment. In some instances, as hereinafter more specifically shown, the period exceeds that now proposed to be prescribed for recovery of overcharges collected.

(2) Section 322 of the Transportation Act of 1940 (54 Stat. 898, 955) carried in the United States Code as section 66 of title 49:

"Payment for transportation of the United States mail and of persons or property for or on behalf of the United States by any common carrier subject to the Interstate Commerce Act, as amended, or the Civil Aeronautics Act of 1938, shall be made upon presentation of bills therefor, prior to audit or settlement by the General Accounting Office, but the right is hereby reserved to the United States Government to deduct the amount of any overpayment to any such carrier from any amount subsequently found to be due such carrier."

Under the provisions of the section, the departments of the Government are expected to make payment of the charges claimed, without varifying from the pertinent tariffs, classifications, or agreements the rates on the basis of which the charges are claimed. Relief from administrative liability for overpayments resulting from carriers' errors in these matters was afforded certifying officers and disbursing officers of the several departments by the act of June 1, 1942, (56 Stat. 306, 31 U. S. C. 82 (g)), amending the Certifying Officers Act of 1941 and providing:

"No disbursing or certifying officer of the United States shall be held liable for overpayments made for transportation furnished on Government bills of lading or transportation requests when said overpayments are due to the use of improper transportation rates, classifications, or the failure to deduct the proper amount under land-grant laws or equalization and other agreements."

That this system-shifting to the General Accounting Office the function of auditing the rates paid on Government shipments and eliminating in that way the enormous duplication of work otherwise required-is very definitely the mandate of the Congress is amply demonstrated by the following quotations from the Committee reports on that act:

(a) Senate Report No. 1169, Seventy-seventh Congress:

"The bill is designed to relieve disbursing and certifying officers of responsibility for overpayments made for transportation furnished on Government bills of lading or transportation requests when said overpayments are due to the use of improper transportation rates, classifications, or the failure to deduct the proper amount under land-grant or equalization or other agreements.

"The necessity for the proposed legislation grows out of section 322 of title III, part II, of the Transportation Act of 1940, which reads as follows:

"SEC. 322. Payment for transportation of the United States mail and of persons or property for or on behalf of the United States by any common carrier subject to the Interstate Commerce Act, as amended, or the Civil Aeronautics Act of 1938, shall be made upon presentation of bills therefor, prior to audit or settlement by the General Accounting Office, but the right is hereby reserved to the United States Government to deduct the amount of any overpayment to any such carrier from any amount subsequently found to be due such carrier.'

"The mandate of this statute requiring the payment of transportation accounts of carriers covered by section 322 upon presentation of the bills therefor places solely upon the General Accounting Office in the post audit of such accounts the verification of rates and classifications, and renders unnecessary a prior administrative verification of such rates, classifications, and deductions under land-grant laws or equalization and other agreements with respect to such accounts. The discontinuance of the administrative examination in these respects thus deprives disbursing and certifying officers of the opportunity to fully verify the accuracy of such payments, yet section 322 does not clearly protect said disbursing and certifying officers against liability for such overpayments on these accounts which may subsequently be found to exist and which cannot be collected from the carriers involved."

(b) House report No. 2142. Seventy-seventh Congress :

"The passage of this legislation will make it possible to expedite the payment of transportation bills as contemplated by section 322 of the Transportation Act of 1940 without placing upon disbursing officers accountability for overpayments which they might not be able to collect by means of the procedure provided in the Transportation Act. The Transportation Act provides that payment of trans

portation shall be made upon presentation of bills therefor, prior to audit or settlement by the General Accounting Office, and any overpayments made shall be deducted from subsequent bills. This section places responsibility for the verification of transportation rates and classifications upon the General Accounting Office, and thus allows the other agencies of the Government to simplify the administrative examination of transportation bills."

Thus there is usually no check of the charges claimed and paid, so far as the rates are concerned, until the disbursing officers' accounts are audited in the General Accounting Office. The only remaining administrative examination of transportation bills prior to payment is the relatively elementary function of determining that the carrier claiming is the carrier entitled to be paid, that the service involved was properly authorized and duly performed, and that appropriated funds are aavilable for purposes of making payment of the charges claimed. Some delay, therefore, ensues between presentation and payment of the bills.

(3) Following payment of the accounts varying periods are allowed the administrative officers for examination of the accounts before transmitting them to General Accounting Office, as indicated by the references immediately following: Title 31, United States Code, section 78, provides:

"Except as otherwise provided by law, all monthly accounts shall be mailed or otherwise sent to the proper officer at Washington within ten days after the end of the month to which they relate, and quarterly and other accounts within twenty days after the period to which they relate, and shall be transmitted to and received by the General Accounting Office within twenty days of their actual receipt at the proper office in Washington in the case of monthly, and sixty days in the case of quarterly and other accounts. * * ** The Secretary of the Treasury shall prescribe suitable rules and regulations, and may make orders in particular cases, relaxing the requirement of mailing or otherwise sending accounts as aforesaid, within ten or twenty days, or waiving delinquency, in such cases only in which there is, or is likely to be, a manifest physical difficulty in complying with the same, it being the purpose of this provision to require the prompt rendition of accounts without regard to the mere convenience of the officers, and to forbid the advance of money to those delinquent in rendering them.

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However, section 80 of title 31, relating to expenditures from appropriations for the Army, extends to 60 days the time for examination of monthly accounts "by the bureaus and offices of the War Department" before transmitting them to the General Accounting Office, and section 80a provides :

"The time for examination of monthly accounts covering expenditures by disbursing officers of the Army after the date of actual receipt by bureaus and offices of the War Department and before transmitting the same to the General Accounting Office, as limited by section 267 of title 5 and sections 44, 45, 78, 80, and 496 of this title, and notwithstanding the provisions of section 80 of this title, is extended, in time of war or during any emergency declared by Congress or determined by the President and for a period of eighteen months after such war or emergency shall have ceased to exist, from sixty to ninety days."

Likewise, with respect to monthly accounts covering expenditures by disbursing officers and special disbursing agents of the United States Navy, United States Marine Corps, and United States Coast Guard, similar periods of 60 and 90 days are afforded, in section 80b of title 31, for the administrative examination of such accounts after actual receipt in the office or offices designated to make the administrative examination and before transmitting the accounts to the General Accounting Office. An extension to 90 days "in time of war or during any emergency declared by Congress and for a period of eighteen months after such war or emergency shall have ceased ot exist" is afforded, also, in section 80c of title 31, for the examination of quarterly accounts covering expenditures by disbursing officers of the United States Navy after the date of actual receipt in the Bureau of Supplies and Accounts, Department of the Navy, and before transmitting the accounts to the General Accounting Office.

With respect to the above provisions extending the time for examination to 90 days "in time of war or during any emergency declared by Congress and for a period of eighteen months after such war or emergency shall have ceased to exist," it is provided in section 3 of the Joint Resolution of July 25, 1947 (61 Stat. 449, 451-452), that in the interpretation of the statutory provisions above indicated the date when said joint resolution should become effective should

be deemed to be the date of the termination of any state of war theretofore declared by the Congress and of the national emergencies proclaimed by the President on September 8, 1939, and on May 27, 1941. Accordingly, the period of 90 days for the administrative examination of the accounts mentioned will continue to be afforded through the remainder of 1948. Likewise the Secretary of the Treasury has extended from time to time for varying periods the time permitted the Chief Disbursing Officer for the rendition of his accounts current from offices within the continental limits of the United States. In June 1947 a period of 40 days was afforded for the rendition of such accounts for the fiscal year 1948.

Thus it will be seen that with respect to the accounts of the military services, comprising in the aggregate a relatively large proportion of the payments for Government transportation, a period of 3 months following payment is allowed before the accounts are received in the General Accounting Office. This does not include the time consumed in preparation and presentation of carriers' bills and the examination made of such bills prior to payment. If these latter periods be included it is indicated that an average period of probably 6 to 7 months elapses between the delivery of such shipments and the receipt of the paid accounts in the General Accounting Office. To this should be added a period of 4 to 6 months required for handling, shipping, or transferring, recording filing, and checking the disbursing officers' accounts before the transportation vouchers are segregated and distributed to rate clerks for audit. Experience has shown that approximately a year thus elapses following delivery of shipments before the pertinent vouchers are reached for audit.

(4) Section 22 of the Interstate Commerce Act, 49 U. S. C. 22, provides: "That nothing in this chapter shall prevent the carriage, storage, or handling of property free or at reduced rates for the United States,

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Comparable provisions relating to common carriers by motor vehicle, common carriers by water, and freight forwarders appear in sections 217 (b), 306 (c), and 405 (c) of the Interstate Commerce Act, as amended, being sections 317 (b), 906 (c), and 1005 (c) of Title 49 of the United States Code. Special rates are tendered in vast numbers by virtue of these provisions and made applicable to Government traffic, and they require an incalculably extensive additional search or consideration in connection with the audit over and above that required for the audit of charges for commercial traffic. Particularly is this true, when, as often happens, the special rates tendered to the administrative offices in Washington are for widespread application territorially and neither the local shipping and receiving officers nor the administrative officers examining the accounts have, or physically can be expected to have, for purposes of checking the bills presented, any familiarity with the terms of such rate tenders. Thus departures from the rates tendered remain to be detected in the audit made in the General Accounting Office. Obviously the audit of charges for commercial traffic does not encounter this accounting feature.

(5) Title 31, U. S. C. section 71 (a): Paragraph (1) of this section provides: "Every claim or demand (except a claim or demand by any State, Territory, possession, or the District of Columbia) against the United States cognizable by the General Accounting Office under sections 71 and 236 of this title shall be forever barred unless such claim, bearing the signature and address of the claimant or of an authorized agent or attorney, shall be received in said office within ten full years after the date such claim first accrued: Provided, That when a claim of any person serving in the military or naval forces of the United States accrues in time of war, or when war intervenes within five years after its accrual, such claim may be presented within five years after peace is established." The scope of this provision is apparent when consideration is given the claims cognizable by the General Accounting Office under sections 71 and 236 of this title, providing:

"8 71. Public accounts to be settled in General Accounting Office: All claims and demands whatever by the Government of the United States or against it, and all accounts whatever in which the Government of the United States is concerned, either as debtor or creditor, shall be settled and adjusted in the General Accounting Office."

" 236. Meritorious claims against United States not subject to lawful adjustment; submission to Congress by Comptroller General: When there is filed in the General Accounting Office a claim or demand against the United States that may not lawfully be adjusted by the use of an appropriation theretofore made,

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