text:
    UNITED STATES of America, Plaintiff-Appellee, v. Fred MOSLEY, Defendant-Appellant.
    No. 73-3336.
    United States Court of Appeals, Fifth Circuit.
    Dec. 30, 1974.
    J. D. Quinlivan, Jr. (Court-appointed), Ian Frederick Gaston, Mobile, Ala., for defendant-appellant.
    Charles White-Spunner, U. S. Atty., Irwin W. Coleman, Jr., Asst. U. S. Atty., Mobile, Ala., for plaintiff-appellee.
    Before BELL, SIMPSON and IN-GRAHAM, Circuit Judges.
    On Petition for Rehearing and Petition for Rehearing En Bane
    (Opinion July 5, 1974, 5 Cir., 1974, 496 F.2d 1012.)
   PER CURIAM:

We reaffirm our holding that the district court erred in denying the request of defendant to give an instruction on a Bueno-type issue in a defense of entrapment. United States v. Bueno, 5 Cir., 1971, 447 F.2d 903. The evidence, although disputed, was that the government, through an informer, supplied the heroin which defendant was charged with distributing. See United States v. Soto, 5 Cir., 1974, 504 F.2d 557; and cf. United States v. Arias-Diaz, 5 Cir., 1974, 497 F.2d 165, 169, Fn. 4.

The petition for rehearing en banc is denied and no member of this panel nor Judge in regular active service on the Court having requested that the Court be polled on rehearing en banc (Rule 35, Federal Rules of Appellate Procedure; Local Fifth Circuit Rule 12), the petition for rehearing en banc is denied.


source: Caselaw Access Project

author: DAVIS, Judge:

license: Public Domain

text:
    SOUTHERN PACIFIC TRANSPORTATION COMPANY v. The UNITED STATES.
    No. 155-69.
    United States Court of Claims.
    Oct. 23, 1974.

      Martin Sterenbuch, Washington, D. C., attorney of record, for plaintiff. Cake & Sterenbuch, Washington, D. C., of counsel.
    John Charles Ranney, Washington, D. C., with whom was Asst. Atty. Gen. Carla A. Hills, for defendant.
    Before LARAMORE and DURFEE, Senior Judges, and DAVIS, Judge.
   ON PLAINTIFF’S MOTION TO REVIEW AND SET ASIDE THE DECISION AND ORDERS OF THE INTERSTATE COMMERCE COMMISSION

DAVIS, Judge:

In 1965 and 1966 plaintiff carried over its railroad a number of shipments of generators, internal combustion engines, tractors, graders, cranes, earth hauling vehicles and other similar articles, from various points in the United States to Port Hueneme, California. These shipments moved on commercial bills of lading from apparently private consignors to apparently private consignees; there was no endorsement indicating that the transportation was for the United States or that the freight charges were to be paid or reimbursed by the Government; nor did the documents otherwise show, on their face, that the transportation was for, or the charges would be borne by, the United States; but at least some of the documents did bear an overseas destination of Viet Nam or Thailand or were marked for export. In fact, the goods shipped were acquired under cost-reimbursable government agreements which required the United States to bear the transportation costs, and the United States actually compensated the entity which paid the charges.

After the completion of the transportation and initial payment to the plaintiff on the basis that the Government was not involved, the General Accounting Office, implementing 49 U.S.C. § 66, notified the carrier that the consignee of the shipments was acting under Government cost-reimbursable contracts which obliged the United States to reimburse the charges. Because of these circumstances the GAO claimed that the proper tariff rates were those listed in a “section 22 quotation” to which plaintiff had adhered. When the carrier disagreed that the section 22 quotation was applicable to these shipments, the GAO recovered the claimed refund by deduction from other funds due Southern Pacific. There is no dispute that the section 22 quotation rates are less than those billed by plaintiff.

The company then brought this action, and both parties moved for summary judgment on the issue of whether the section 22 quotation comes into play. After oral argument, the court issued an order (Feb. 26, 1971, amended, March 5, 1971) in effect finding the above facts, suspending action on the cross-motions for judgment, and referring to the Interstate Commerce Commission (see United States v. Western Pacific R.R., 352 U.S. 59, 62-70, 77 S.Ct. 161, 1 L.Ed.2d 126 (1956)) “the question of whether the Section 22 quotation involved in the case properly applies, in the circumstances stated above, to the shipments on which plaintiff sues.”

Pursuant to this order, plaintiff filed with the Commission a petition for a declaratory order, to which the Department of Justice responded. The Commission's administrative law judge (then called “hearing examiner”) issued a report and order finding that the section 22 quotation governed. On exceptions by the carrier, the Commission’s Review Board No. 4 affirmed this report and order. Plaintiff filed a petition for reconsideration which was taken up and denied by the Commission’s Division 2. With this step, plaintiff exhausted its Commission remedy.

Subsection “b” of Section 1336 of Title 28 (enacted in 1964) provides that when “the Court of Claims refers a question or issue to the Interstate Commerce Commission for determination,” this court alone “shall have exclusive jurisdiction of a civil action to enforce, enjoin, set aside, annul, or suspend, in whole or in part, any order of the Interstate Commerce Commission arising out of such referral.” In McLean Trucking Co. v. United States, 387 F.2d 657, 660, 181 Ct.Cl. 170, 176-177 (1967), we ruled that this legislation does not call for the institution of a formal new “civil action” by the party seeking review, but only that he file “a pleading setting forth the action he requests of this court and stating specifically the grounds therefor.” See also, Seaboard Airline R.R. v. United States, 387 F.2d 651, 655, 181 Ct.Cl. 719, 727 (1967). Plaintiff has complied with this requirement by filing a motion to review and set aside the Commission’s decision and orders (with a supporting brief). There is no procedural obstacle to our considering the administrative ruling on its merits.

Before the present suit was begun in 1969, the Commission had had before it a proceeding to determine a particular method by which section 22 quotations could apply to shipments moving on commercial bills of lading. In Interpretation of Government Rate Tariff for Eastern Motor Carriers Association, 323 I.C.C. 347 (1964), a group of motor carriers asked whether section 22 coverage could be extended to shipments moving on commercial bills bearing an endorsement stating that the costs paid to the carrier by the shipper or receiver are to be reimbursed by the Government. The Commission’s answer was affirmative, if the Government totally, actually, and directly received the benefit of the reduced section 22 rate. Id. at 352. On appeal by carrier interests, the District Court remanded to the Commission to consider practical problems urged by the complainants as following from the adoption of the Commission’s rule. Middle Atlantic Conf. National Motor Freight Traffic Ass’n v. United States, 265 F.Supp. 448 (D.Md.1967). On remand, the Commission reaffirmed and supplemented its previous decision by setting forth very precise endorsement language for section 22 quotation ship~-ments moving on commercial bills. 332 I.C.C. 161 (1968).

Southern Pacific’s position is that the shipments at issue in this case do not qualify for section 22 treatment under either the Commission’s 1964 or its 1968 ruling since the commercial bills of lading contained no endorsement, in any form, that the transportation was for, or the charges would be paid by, the United States. In the referral proceeding the Commission ruled, however, that the 1968 requirements were guidelines implementing the basic congressional purpose and, as such, were not to be applied retroactively.

In this court, the carrier does not urge error in this refusal to apply the specific 1968 requirements, with their precise wording, to the shipments transported in 1965-1966. Rather, plaintiff’s complaint is that at no level did the Commission treat Southern Pacific’s underlying contention that in 1965 and 1966 (the years involved here) goods moving under commercial bills of lading were disentitled to section 22 rates unless (unlike the shipments involved here) they showed, in some way, on the face of the documents that the transportation was for the United States or that the charges would be paid by the Government. Plaintiff also considers it clear that this was minimal section 22 law until the 1964 and 1968 I.C.C. orders tightened up the requirements by calling for a particular type of endorsement.

The carrier’s misconceptions, as we see them, are two — first, that the Commission failed in plaintiff’s proceeding to address itself to this point, and, second, that prior to 1968 section 22 law was as plaintiff now asserts it to have been. On the first issue we do not agree that the I.C.C. failed to consider the pre-1968 law. The report of the administrative law judge does not stop with a rejection of retroactive application for the specific 1968 requirements. He added expressly that “there is no question that but for an endorsement of governmental responsibility, the transportation in question qualified for section 22 rate handling.” This strongly implies (especially when taken with the report’s prior discussion of retroactivity) that, before the precise endorsement requirement became effective in 1968, section 22 coverage could be extended to certain types of shipments which bore no such endorsement. It seems clear that the Commission’s basic postulate in the referral proceeding was that the core qualification for the section 22 privilege is that the Government directly bear the transportation cost and obtain the benefit of the reduced rate, and that the endorsement requirements were simply administrative guidelines — implementing the central statutory purpose “as a practical means of insuring that section 22 rate quotations would be properly applied and that potential abuses and possible violations of law would not occur” — which had to be observed once promulgated, but only after their adoption. In other words, the Commission’s view, as expressed in plaintiff’s case, was that, prior to 1968, a section 22 quotation could properly apply to a shipment which was actually and directly for the Government’s account even though the Government’s participation was not shown or indicated in the documentation.

Is this a tenable reading of section 22 law prior to 1968? Plaintiff insists not, citing the following statement in Rocky Mountain Carrier-Agreement, 314 I.C.C. 279, 280 (1961):

Section 22 quotations are voluntary tenders by carriers for application only on shipments for the United States Government, moving under Government bills of lading. They are not applicable on shipments moving under commercial bills of lading on which the Government may have arranged to bear the transportation costs.

However, this was not a generalization applicable to cdl section 22 quotations, but merely a description of the particular class of quotations involved in that case, i. e. in which the tariff expressly required the shipment to move on a government bill of lading. Here, in contrast, the specific section 22 quotation (unlike its predecessor) embodied no requirement of any kind that, in order to obtain the benefit of the quotation, the bill of lading contain an endorsement, or show on its face, that transportation would be for the United States or that the transportation charges would be paid by the United States.

Nor is the 1964 Eastern Motor Carriers Association case, 323 I.C.C. 347, supra, necessarily to be viewed as a holding contrary to the Commission’s later position on the referral in the present case. The 1964 report is not wholly clear — that is a main reason why we referred the matter to the I.C.C.— but it is quite permissible to read it as deciding that the requirement of an endorsement would be proper if the carrier wanted to use one for its own protection, but that, in the absence of such a requirement, a section 22 quotation could cover any shipment in which the Government was shown to be in fact the direct and entire beneficiary of the special rate.

There is much in the 1964 report to support that reading. The Commission, for instance, concluded “that section 22 quotations are applicable on transportation services which are performed for the government [footnote omitted], so long as the direct and entire benefit of the special rates accrues solely to the government. Whether it does so accrue is a question of fact.” 323 I.C.C. at 350. Then the Commission added: “The circumstances of the particular transportation determine whether the requirements of section 22 have been met”. Ibid. In that connection, the report stresses the carrier’s power to require “whatever it considers adequate to show that the transportation service sought qualifies for the special rates which it is permitted, but not required, to establish.” 323 I.C.C. at 352. And the opinion ends by pointing to the advantages of the carrier’s insisting on a government bill of lading, but saying that “neither the wording of the statute nor the apparent legislative intent to maintain the preferred position of governments in their transportation dealings [footnote omitted] allows us to limit the scope of the section by reading in such a restriction.” Ibid. All this, and more, is consistent with the view that, although the carrier can take steps, if it wishes, to limit section 22 coverage to particular forms of shipments, it need not do so, and where it fails to insist on such measures the privilege applies to all shipments “for the United States,” i. e. in which the Government is shown to be the direct beneficiary of the reduction. This is a rational and acceptable appraisal by the Commission of section 22 law prior to the effectiveness of the specific new 1968 requirements. As such, we can and do confirm it as an appropriate interpretation which conforms to the broad language of the statute. See note 1, supra.

We do not, therefore, concur with plaintiff either that the Commission failed to address itself to the precise issue or to dispose of that question adequately and understandably, or that it incorrectly interpreted the pre-1968 law of section 22. On the coñtrary, we are satisfied the orders and decision under review (1) had a rational basis in the record, the statute, and the Commission’s prior decisions, (2) were neither arbitrary nor capricious, and (3) were not contrary to law. See McLean Trucking Co. v. United States, 387 F.2d 657, 661, 181 Ct.Cl. 170, 178 (1967); Seaboard Airline R.R. v. United States, 387 F.2d 651, 656, 181 Ct.Cl. 719, 727 (1967).

Plaintiff’s motion to review and set aside the decision and orders of the Interstate Commerce Commission is denied; instead, the decision and orders are accepted and confirmed. Defendant has not asked for the entry of judgment by us, but that the case be sent back to the trial judge. Accordingly, the case is remanded to the trial division for further proceedings consistent with this opinion.

      . Section 22 quotations are special reduced rates which carriers may, often do, but are not required to, offer under section 22 of the Interstate Commerce Act, 49 U.S.C. § 22 (1970), on traffic moving for the account of the United States (among others). The pertinent part of section 22 is: “Nothing in this chapter shall prevent the carriage, storage, or handling of property free or at reduced rates for the United States, State, or municipal governments * * * .”

      . Our recital of the facts also takes account of other undisputed parts of the record previously before the court on the motions for summary judgment, as well as the record now before us.

      . Plaintiff’s request for oral argument was rejected.

      . In McLean Trucking Co., supra, 387 F.2d at 660, 181 Ct.Cl. at 177, we also held that the Commission is a necessary party “whenever its decision on a referred case is attacked,” and said that we “will not entertain a motion or other action to set aside an order of the Commission unless it is made a party to the suit, duly served, and thus given an opportunity to defend its decision.” This was done in the present case, but the Commission has chosen not to file anything in support of its decicion.

      . This statement was adopted by the Review Board when it held that “the statement of facts, conclusions, and findings in the report, being proper and correct in all material respects, should be, and they are hereby, affirmed and adopted as our own.” Nothing in the summary order of Division 2 denying reconsideration suggests that it had any other view.

      . In Interpretation of Government Rate Tariff for Eastern Central Motor Carriers Association, 323 I.C.C. 347, 350 (1964), the Commission said that in the Rocky Mountain Oati-riers — Agreement ease “a carriers’ agreement defined and somewhat narrowed the application of section 22 quotations.”

      . This was one of our findings in the order of February 26, 1971, referring this case to the I.C.C.


author: PER CURIAM: GAMER, Senior Trial Judge:

text:
    WILLIAM F. KLINGENSMITH, INC. v. The UNITED STATES.
    No. 80-73.
    United States Court of Claims.
    Nov. 20, 1974.

      Michael A. Steuer, Washington, D. C., for plaintiff, Branko Stupar, Washington, D. C., attorney of record.
    Michael J. Rubin, Washington, D. C., with whom was Asst. Atty. Gen. Carla A. Hills, for defendant.
    Before LARAMORE, Senior Judge, SKELTON and BENNETT, Judges.
   PER CURIAM:

This case comes before the court on plaintiff’s request, filed May 16, 1974, for review by the court of the recommended decision filed on March 18, 1974, by Senior Trial Judge Saul Richard Gamer (then Chief of the trial division and since retired), pursuant to Rule 166(c), on plaintiff’s motion and defendant’s cross-motion for summary judgment, and on defendant’s motion, filed June 17, 1974, to adopt the said recommended decision. The case has been submitted to the court on the briefs of the parties and oral argument of counsel. Upon consideration thereof, since the court agrees with the said recommended decision, as hereinafter set forth, it hereby affirms and adopts the same as the basis for its judgment in this case. It is therefore concluded that plaintiff is not entitled to recover and plaintiff’s motion for summary judgment is denied and defendant’s like cross-motion is granted. Defendant’s motion to adopt is granted and plaintiff’s petition is dismissed.

Opinion of Trial Judge

GAMER, Senior Trial Judge:

The dispute in this case grows out of the performance by plaintiff of a contract it entered into on March 6, 1969, with defendant, acting through the Public Buildings Service, General Services Administration, for the construction of Phase I of the United States Secret Service Training Center in Beltsville, Maryland. Included in the contract was site work, demolition, clearing, excavation, grading and the erection of masonry units. The site work requirements were spelled out in Division 2 of the Specifications. Included therein was a section — Section 0261 — headed “Bituminous Pavement,” under which plaintiff was to construct roadways and other paved areas. In connection with such construction, the section set forth the requirements for each of two base courses or layers which were to be constructed beneath the surface course. The dispute between the parties involves the material required to be used for one of these base courses. The material plaintiff was directed to use was more expensive than that which plaintiff proposed and contends it was entitled to use. Plaintiff claims the difference between such costs.

As the time approached for the performance of the paving work, plaintiff, in July 1969, sought approval from a Public Buildings Service employee of the material it felt it was authorized to use for such base course. The material was termed “bank run gravel,” which, in the project area, is known as gravel in the form in which it comes out of a bank of natural gravel deposits. However, the employee concluded that, under the pertinent contract provisions, the layer in question was required to be a macadam one. Thereupon plaintiff, by a letter of July 29, 1969 to the contracting officer, formally sought approval of the use of bank run gravel, relying on (a) the aforementioned Section 0261, (b) two details on a certain contract drawing (showing “Pavement Detail Sections” and “Typical Roadway & Shoulder Details”), which did not, with respect to the layer in question, indicate or even mention macadam, but did instead depict gravel, with one of the details specifically designating the course as a gravel one and (c) “ * * * the applicable sections of the Maryland State Roads Commission Specification, 1962 edition.” Section 0261 incorporated into the contract, “with modifications as specified herein,” these Maryland specifications (entitled “State of Maryland, State Roads Commission, Specifications for Materials, Highways, Bridges and Incidental Structures”).

By letter of August 13, 1969, the contracting officer advised plaintiff that under Section 0261 “the macadam base is clearly specified” and that the “bank run material is not acceptable for use as a macadam base.” He relied on the provision of par. 4.3 of the Section which stated that “[mjacadam base layer shall be in accordance with Article 32.06” of the Maryland Roads Specifications (1962 edition). This article, headed “MACADAM BASE COURSE,” set forth the requirements for such a layer. He acknowledged a conflict between the drawing upon which plaintiff relied and Section 0261, but pointed out that Article 2, entitled “Specifications and Drawings,” of the contract’s General Provisions, expressly provided that “[i]n case of difference between drawings and specifications, the specifications shall govern.”

By letter of August 19, 1969, plaintiff requested the contracting officer to reconsider, and specifically asked for a final decisión under the Disputes clause of the contract’s General Provisions. By letter dated October 1, 1969, the contracting officer rendered his final decision, in which he reaffirmed his previous determination.

Upon plaintiff’s appeal to the General Services Board of Contract Appeals, in which plaintiff claimed $40,000 as costs incurred over those which would have been incurred had he been permitted to use bank run gravel, the Board, after holding a hearing, denied plaintiff’s appeal by its decision of August 30, 1971. 71-2 BCA |[9051. Plaintiff’s motion for reconsideration was denied November 12, 1971 by a second Board opinion (GSBCA No. 3147). By its petition herein, filed under the Wunderlich Act (68 Stat. 81 (1954), 41 U.S.C. §§ 321, 322 (1970)), plaintiff attacks the Board’s decisions and findings as being “erroneous as a matter of law” and as “arbitrary and not supported by substantial evidence.”

Plaintiff places principal reliance upon the contention that there was an ambiguity as to what materials were required for the disputed layer which, in accordance with familiar principles, should be resolved against the drafter, i. e., the Government. While this question of interpretation raises a legal issue which the court itself is free to resolve, it is nevertheless plain that, in concluding that the contract “can in no way be interpreted as permitting the use of bank run gravel,” the Board was correct.

There is no dispute that the paved areas were to have two base courses — one of which is the disputed layer in question — beneath the surface course of bituminous concrete. The above-mentioned “Bituminous Pavement” Section 0261 of the contract specifications so provided, par. 4, headed “Base Course,” setting forth, in 3 sub-paragraphs, the requirements for the two base courses, and par. 5, headed “Surface Course,” setting forth the provisions for the bituminous concrete surface layer. The three subparagraphs of Base Course paragraph 4, which directly relate to the problem at hand, are as follows :

4.1 Base course shall consist of 6 inches compacted thickness of stabilized soil base and 8 inches for Type HD, and 6 inches for Type LD compacted thickness of macadam base course.
4.2 Stabilized soil base layer shall consist of scarified sub-grade to a depth of 6-7 inches for a resultant 6 inches of compacted stabilized soil base course. Stabilized soil base course shall be in accordance with requirements of Article 32.02, including cross-referenced requirements, of State of Maryland referenced specifications.
4.3 Macadam base course layer shall consist of compacted 8 inches for Type HD and 6 inches for Type LD thickness placed over stabilized soil base layer. Macadam base layer shall be in accordance with Article 32.06, including cross-referenced requirements, of State of Maryland referenced specifications.

The course which plaintiff claims the right to construct as a bank run gravel one is the course described in subpara-graphs 4.1 and 4.3 as the “macadam base course.” As hereinabove set forth, plaintiff’s claim that it has the right to disregard these explicit requirements of the specifications that the course be a macadam one is based principally upon the fact that the above-mentioned details on the contract drawing (No. 2-5, “Site Details”) depicted the layer as a gravel one, with one of the details specifically referring to it as a “Compacted Gravel Sub-Base Course.” As shown, however, both the contracting officer and the Board concluded that, in view of the above-mentioned contract provision that the specifications governed over the plans, this conflict between the plans and the specifications was an insufficient basis for reading out of the specifications the provisions requiring that the course was to be a macadam one. The Board was clearly correct in holding that “the specification requiring a ‘macadam’ base layer was unambiguous,” as was that part of Article 2 of the contract’s General Provisions, hereinabove quoted, which “spelled out plainly that specifications govern over plans * * Cf. Merando v. United States, 475 F.2d 598, 600, 201 Ct.Cl. 19, 23 (1973). Under these circumstances, there was no such ambiguity as would call into play the rule that an ambiguity be resolved against the drafter, since such rule is subject to the condition that the alternative interpretation tendered by the other party be a reasonable one. Astro-Space Labs., Inc. v. United States, 470 F.2d 1003, 1010, 200 Ct.Cl. 282, 295 (1972). It is here plain that plaintiff’s bank run gravel interpretation does not fall into such a category.

Plaintiff further argues that, although Article 2 of the General Provisions of its contract does, as set forth above, provide that, where the drawings and specifications differ, “the specifications shall govern,” nevertheless the incorporated Maryland Roads Specifications mandated the exact opposite, Seetion 10.05-4 thereof stating that “[i]n the case of any discrepancy between the Plans and the Specifications, the Plans are to govern.” This conflict, says plaintiff, is an additional reason why the contract specifications should be considered to be ambiguous, and plaintiff’s interpretation, therefore, adopted. The Board rejected this contention, holding that the language of Article 2 of the contract’s General Provisions, “superseded contrary language in [Section 10.05-4 of] the incorporated Maryland Road Department Specifications.” Here too the Board’s conclusion is correct. The section of the Maryland Roads Specifications upon which plaintiff relies reads as follows:

Section 10.05-4 Coordination of Plans, Specifications, Supplemental Specifications and Special Provisions.
These Specifications, the Supplemental Specifications, the Plans, Special Provisions, and all supplementary documents are essential parts of the Contract, and a requirement occurring in one is as binding as though occurring in all. They are intended to be complementary and to describe and provide for a complete work. In the event of any discrepancy between the drawing and figures written thereon, the figures, unless obviously incorrect, are to govern over- sealed dimensions. In the case of any discrepancy between the Plans and the Specifications, the Plans are to govern. If there is a discrepancy between these standard Specifications and Supplemental Specifications, the Supplemental Specifications are to govern. Special provisions shall govern over Specifications, Supplemental Specifications, and Plans. [Emphasis supplied.]

Plaintiff’s contract with defendant, which established their basic relationship and which, including the integral General Provisions, fixed the fundamental terms and conditions of such relationship, certainly constitutes the type of overriding “special provisions” contemplated by the last sentence of such section. In order to achieve its “ambiguity” plaintiff would reád entirely out of its contract not only the two “macadam base course” paragraphs of Section 0261 of its contract specifications (paragraphs 4.1 and 4.3), but also Article 2 of its contract’s General Provisions. To establish an “ambiguity,” an interpretation which would require complete disregard of entire paragraphs in a contract will not normally be considered reasonable. Merando v. United States, 475 F.2d 603, 605, 201 Ct.Cl. 28, 30 (1973). Furthermore, Article 2 of the contract’s General Provisions is a part of mandatory Standard Form 23-A, whereas the Maryland Roads Specification provision relied on by plaintiff is, by incorporation, made a part of the project specifications. In such a situation, “the court will construe the agreement, to the extent it is fairly possible to do so, so as not to eliminate the standard article or deprive it of most of its ordinary coverage,” and, therefore, “is justified in reading the specifications, if reasonably possible, to harmonize and not conflict with [the mandatory] standard clause.” Morrison-Knudsen Co. v. United States, 397 F.2d 826, 829, 184 Ct.Cl. 661, 666 (1968). In any event, in view of the aforementioned last sentence of Section 10.05-4 of the incorporated Maryland Roads Specifications, there was no reasonable basis for any confusion as to Article 2 of the General Provisions being controlling.

In further support of its ambiguity contention, plaintiff relies on (1) certain errors in addition to the macadam-gravel conflict between the specifications and the drawing; (2) the fact that, by the time the Invitation for Bids was issued on January 10, 1969, a new edition of the Maryland Roads Specifications had been issued in March 1968, although in the contract specifications issued with the Invitation defendant was, without so stating, still referring to the sections of the previous 1962 edition; (3) the fact that macadam had not been used in recent years in the Washington, D. C. area as a base course so that, plaintiff argues, it was therefore appropriately considered to be obsolete for such purpose, while bank run gravel had been so used; and (4) the Government’s own estimator, in his prebid estimate, had calculated the paving cost on the basis of utilizing bank run gravel.

These factors are of little significance :

(1) The other errors which plaintiff claims added to its confusion were entirely unrelated to the macadam-gravel base course question. Accordingly, there was no reason why they should have caused plaintiff (or its paving subcontractor, who first raised the question involved in this case), any concern at all about that problem. As the Board correctly concluded: “Despite the deficiencies [in Section 0261], Paragraph 4 of Specification 0261 can in no way be interpreted as permitting the use of bank run gravel. There was no ambiguity as to what material was intended for the 8-inch base layer in that specification.”

(2) The contract specifications were indeed faulty in not explicitly stating that the Maryland Roads Specifications being incorporated into the contract were those of the 1962 edition and not of the recently issued 1968 edition. However, it was obvious that it was the 1962 edition that was being referred to. As shown, it is paragraph 4.3 of Section 0261 that concerns the base course involved in the dispute, such Section stating that “[m]acadam base layer shall be in accordance with Article 32.06, including cross-referenced requirements, of State of Maryland referenced specifications.” Article 32.06 of the 1962 edition of the Maryland Roads Specifications is, conformably, headed “MACADAM BASE COURSE.” Article 32.06 of the 1968 edition of the Maryland Roads Specifications is, however, nonconforma-bly headed “FOUNDATION LAYER,” and makes no mention of a “macadam base course” or layer.

That plaintiff (or its subcontractor) was in no manner confused by the lack of specific reference to the 1962 edition is shown by its contemporaneous interpretation. Plaintiff’s first letter with respect to this dispute — the aforementioned letter dated July 29, 1969 to the contracting officer- — made reference to “specification section 0261 ‘Bituminous Pavement’ and * * * also to the applicable sections of the Maryland State Roads Commission Specifications, 1962 edition.” The contracting officer’s reply similarly referred to various articles which were in the 1962 edition, as did the parties’ subsequent communications, none of which even mentioned the 1968 specifications or indicated any confusion with respect thereto. On this basis the Board correctly concluded that “[apparently both parties interpreted the contract as incorporating the 1962 edition of the Maryland specifications during the course of the contract work.”

3. The fact that macadam had not in recent years been used as a base course in the Washington, D. C. area is of no materiality. The decision to revert to such use on this particular project was one for defendant to make and not plaintiff. As was stated in Jefferson Constr. Co. v. United States, 151 Ct.Cl. 75, 86 (1960):

* * * whether or not someone else would have effected the rehabilitation of the structure in a different, or even in a better, manner is essentially irrelevant. Any owner is entitled to have a construction project consummated in such manner as he may desire and to have the contract fulfilled in accordance with its terms. Farwell Company, Inc. v. United States, 137 Ct.Cl. 832.

4. With respect to the interpretation problem with which the court is here faced, the prebid cost estimate made by the Government’s estimator, which was based on gravel and not macadam, is of no consequence in view of the estimator’s admission that in making his estimate, he relied only on the drawing (which contained the necessary dimensions). At the time he made his estimate, he was not familiar with the pertinent specifications and did not consider them.

Plaintiff places heavy reliance upon a telephone conversation its representative had with a Government official (the Acting Chief of the Design Branch of the Public Buildings Service) just prior to the bid opening. The facts as found by the Board (or as are otherwise undisputed) with respect to this aspect of the case are as follows:

While preparing the bid for the contract, plaintiff’s estimator received inquiries from proposed paving subcontractors concerning the conflict between the drawing and the specifications (as well as a conflict on the drawing itself). The estimator decided to seek information from the defendant and, on the morning of the date on which the bids were to be opened, called the office of the architect-engineers who had been employed by defendant and whose name appeared on the drawing in question. The architect-engineers’ office advised, however, that the matter was no longer in their hands and suggested that the estimator attempt to obtain clarification by calling the office of the Chief of the Design Branch. Upon so calling, however, the Chief (Acting) of such Branch informed the estimator that he could not respond to such inquiries on the telephone since such clarifications were required to be made through a formal addendum issued to all prospective bidders, an obviously impossible procedure to be put into effect at that time, which was only 3 hours before the bid opening. Plaintiff’s estimator then replied that his “only solution” was “to interpret to my advantage which is to use bank run gravel base course.”

Plaintiff relies on the general rule that if a party “enters into a contract with knowledge of the other party’s interpretation of it, [it] is bound by such interpretation * * *” and is deemed to have “acquiesced in” such meaning. Perry & Wallis, Inc. v. United States, 427 F.2d 722, 725, 192 Ct.Cl. 310, 314-315 (1970). Clearly, however, this principle is inapplicable to the facts of this case. The Board correctly held that plaintiff could gain no advantage by this telephone conversation made so shortly before the bid opening. It pointed out that the title page of the Invitation for Bids, dated January 10, 1969, specifically stated:

8. Explanation to Bidders:
Requests for clarification or interpretations of bid documents (except amendments) must be submitted in “Sufficient Time" (which, for the purpose of this Invitation, shall mean not less than 10 calendar days prior to date for receipt of bids) and in accordance with requirements of Standard Form 22, Instructions to Bidders, and modifications thereto. Questions regarding amendments may be submitted at any time prior to the date for receipt of bids.

The referred to Standard Form 22, Instructions to Bidders (Construction Contract),” which was included in the Invitation, provided:

1. Explanations to Bidders. Any explanation desired by a bidder regarding the meaning or interpretation of the invitation for bids, drawings, specifications, etc., must be requested in writing and with sufficient time allowed for a reply to reach bidders before the submission of their bids. Any interpretation made will be in the form of an amendment of the invitation for bids, drawings, specifications, etc., and will be furnished to all prospective bidders. Its receipt by the bidder must be acknowledged in the space provided on the Bid Form (Standard Form 21) or by letter or telegram received before the time set for opening of bids. Oral explanations or instructions given before the award of the contract will not be binding.

Under these explicit provisions there can be no faulting the Board’s conclusions that “[t]he estimator’s telephone call, three hours before bid opening, did not meet the applicable contract requirements,” that plaintiff’s “ * * * bidding stage inquiry was untimely and wholly deficient * * and that:

The contract clarification and interpretation requirements, which the Appellant failed to follow, are designed to give the Government sufficient opportunity to consider such discrepancies, and, if necessary, modify requirements by publishing an addendum in sufficient time to be considered by all bidders. Thus, the integrity of the bidding process would be violated if, in this case, we required the Government to issue a change order permitting the Appellant to use the less expensive bank run gravel rather than the material required by the specification.

Even in “ambiguity” situations, the rule that the ambiguity is to be resolved against the drafter would not be applied where there is a failure to comply with contract provisions obligating the contractor to seek clarifications if there are conflicts and discrepancies in the drawings and specifications. Chris Berg, Inc. v. United States, 455 F.2d 1037, 1044-1045, 197 Ct.Cl. 503, 514-515 (1972). Where a contractor fails to bring a conflict or discrepancy to defendant’s attention in a timely manner, as required by the contract terms, he cannot thereafter “bridge the crevasse in his own favor.” Beacon Constr. Co. v. United States, 314 F.2d 501, 504, 161 Ct.Cl. 1, 7 (1963).

. Plaintiff contends that it should not be disadvantaged by its failure to comply with the contractual provisions concerning requests for clarification because such failure was allegedly directly attributable to defendant’s own failure to abide by the provisions of 41 U.S.C. § 253 (1970), which provides that:

§ 253. Advertising requirements.
Whenever advertising is required— (a) The advertisement for bids shall be made a sufficient time previous to the purchase or contract -X- -X- *

Plaintiff says the bidding time allowed was insufficient, as is further indicated, it contends, by a provision of the Bidding Time section of the Federal Procurement Regulations, 41 C.F.R. § 1-2.-202-1, which provides:

(c) Minimum bidding time. As a general rule, bidding time shall be not less than * * * 30 calendar days when procuring other than standard commercial articles or services.

In this case, the invitation was issued January 10, 1969, and the bids were opened January 30, 1969. Thus only 20 days were allowed, not the 30 days specified by the Regulation “as a general rule.”

This particular issue is a new one presented for the first time to this court. It was not advanced to the Board which, naturally, did not consider or rule upon it. Accordingly, plaintiff has in this respect failed to exhaust its administrative remedy and is, consequently, precluded from raising the issue here. Ace Constr. Co. v. United States, 401 F.2d 816, 823, 185 Ct.Cl. 487, 500 (1968), and cases there cited. The Regulation 'relied on does not rigidly compel a bidding time of 30 days. Subsection (a) provides that the time limitations specified be “ [c] onsistent with the needs of the Government for obtaining the supplies or services.” Subsection (b) specifies various “[f] actors to be considered” in establishing the bidding time, such as “[t]he urgency of the Government’s need for the items or services.” And subsection (c), after setting forth the 30-day provision upon which plaintiff relies, goes on to provide that: “This rule need not be observed in special circumstances or where the urgency for the supplies or services does not permit such delay.” Had the issue been timely raised administratively, the record before the Board concerning it could have been developed, by testimony or otherwise, and the question as to whether the agency was justified in allowing only 20 days could then have been explored and ruled upon by the Board. Similarly, plaintiff could have been called upon to demonstrate why the request for clarification or interpretation could not have reasonably been made, as the Invitation for Bids specifically required, at least 10 days before the bid opening time even though the bidding period was only 20 days. None of this was investigated at the hearing. Plaintiff cannot expect this court to resolve all these issues in its favor on the basis of presumptions that the agency violated the statute and the regulations by fixing a 20-day bidding time, and that plaintiff could not reasonably have made appropriate inquiry at least 10 days before the bid opening.

For all of the reasons hereinabove set forth, plaintiff is not entitled to recover and the petition is dismissed.

       The necessary facts are stated in tlie opinion.

      . By letter of October 13, 1969, plaintiff, preserving its right to appeal the contracting officer’s decision, requested that it be permitted to substitute a “Dense Grading Aggregate Base Course” (as described in Article 32.07 of the Maryland Roads Specifications) for the macadam base course which the contracting officer had ruled plaintiff was obliged to install. Plaintiff’s request was granted and effected by a change order dated October 28, 1969. The order was without change in price. This permitted change has not been treated by the parties as affecting plaintiff’s right to claim that it was entitled to use bank run gravel for the base course in question.

      . As described in par. 5, such surface course layer for heavy duty paved areas was required to consist of a 3" base layer, and a 1" surface layer, of bituminous concrete. For light duty areas, only one 2" surface layer of such concrete was required.

      . It is conceded that if plaintiff is correct in its contention that the contract, properly interpreted, called for the course in question to be a gravel one, “bank run gravel” would be acceptable for the purpose.

      . This provision of the Maryland Roads ’ Specifications is incorporated into the contract pursuant to par. 17.1 of the General Conditions of the contract which state:
      “All documents and publications * * * which are cited in this contract for the purpose of establishing requirements * * * under this contract, shall be deemed to be incorporated herein as fully as if printed and bound with the specifications of this contract * *

      . Article 17.1.2 of the contract’s Section 0010, “General Conditions,” provided that wherever reference was made to incorporated publications “the Contractor shall comply with the requirements set out in the edition specified in this contract, or if not specified, the latest edition or revision thereof * * * in effect on the date of the Invitation for Bids on this project * * * >>

      . For instance, as the Board found, “the mix used for the binder layer had to be changed from that specified in Paragraph 5.2 [of Section 0261] because the specified material was incompatible with the material to be used for the surface layer.” The Board acknowledged that “[specification 0261 did contain errors,” and concluded that “[i]t is apparent that the Government was negligent in preparing Specification 0261.”
      In this connection it seems clear that, at least in one respect, the Board went too far. It cited as an “error” the fact that, in “Paragraph 2 [of Section 0261], entitled MATERIALS, Maryland specifications relat; ing to Portland cement and water for concrete were cited; they had nothing to do with bituminous pavement.” However, paragraph 5.2 of Section 0261 did refer to a layer of “bituminous concrete” for the surface course, to be “in accordance with Article 33.08 or Article 33.11” of the Maryland Roads Specifications. Such articles headed “BITUMINOUS ROAD MIX SURFACE COURSE” and “PENETRATION MACADAM” respectively, in turn referred, with respect to the materials requirements, to Article 20.05, one of the Maryland Roads Specifications articles specifically referred to in the criticized Paragraph 2, and that Article did (in Section 20.05-2) in fact make numerous references to Portland cement and bituminous concrete.

      . The Board concluded that “an inference can be drawn that the specification requiring use of macadam was outdated.”

      . The Board’s reason for disregarding the estimate was that “[t]he fact that a Government estimator also mistakenly figured in the cost of gravel instead of the prescribed substance is not binding on the Government and does not make the plain meaning of Section 4.3 any less clear to the Board.”

      . Detail 3 on the drawing, showing a pavement cross section, referred to the course in question as an “8-inch compacted gravel sub-base course” whereas Detail 4, showing a typical roadway cross section, referred to the course as an “8-inch compacted soil base” (although' it depicted gravel).

      . The opening was to be held at 2 p. m. on January 30,1969.

      . Defendant contends that the Chief of the Design and Construction Division was the official authorized to handle requests for clarification and not the Chief of the Design Branch. This contention has no validity. The Invitation for Bids stated:
      “Requests for clarification or interpretation of bid documents prior to date of bid opening should be addressed to: Chief of Design and Construction Division, General Services Administration, Public Buildings Service, Region 3, 7th and D Streets, S.W., Room 2652, Washington, D.C. 20407, Attention : Chief of Design Branch.”

      . The estimator further stated that if plaintiff was the low bidder and obtained the contract and if a dispute subsequently arose concerning the matter, he would call upon the Government official to testify to the conversation.


author: NICHOLS, Judge:

text:
    The DENVER AND RIO GRANDE WESTERN RAILROAD CO. v. The UNITED STATES.
    No. 145-70.
    United States Court of Claims.
    Nov. 20, 1974.
    As Corrected Dec. 6, 1974.

      Michael C. Durney, Washington, D. C., for plaintiff; Stanley Worth, Washington, D. C., attorney of record for plaintiff; Hamel, Park, McCabe & Saunders, Washington, D. C., of counsel.
    Richard D. Silvester, Washington, D. C., with whom was Acting Asst. Atty. Gen. Richard M. Roberts, Washington, D. C., for defendant; Gilbert E. Andrews Jr. and Theodore D. Yeyser Jr., Washington, D. C., of counsel.
    Before LARAMORE, Senior Judge, and NICHOLS and KUNZIG, Judges.
   On Defendant’s Motion For Partial Summary Judgment

NICHOLS, Judge:

Plaintiff, Denver and Rio Grande Western Railroad Company, brings this action to recover federal income taxes paid by it for the taxable years 1964 and 1965. We have jurisdiction pursuant to 28 U.S.C. §§ 1346(a)(1) and 1491.

Our decision is limited to the issues raised by the defendant’s motion for partial summary judgment and the plaintiff’s opposition thereto — namely, whether the amount of investment credit and depreciation deductions taken by the Railroad for the Cane Creek Branch for the taxable years in question was excessive. Both parties agree that the answer to this question depends upon whether the Railroad is entitled to a cost basis under Internal Revenue Code of 1954, § 1012 for the contingent liabilities it incurred to finance the construction of the Cane Creek Branch.

On March 2, 1961, the taxpayer-Railroad entered into a Trackage Agreement with Texas Gulf Sulfur Company (hereinafter TGS), whereby it agreed to arrange for the construction of a 39-mile spur line necessary to provide rail service for a TGS Potash Mine and Plant near Moab, Utah. The agreement provided that the taxpayer was to hold title to all but 3 miles of the line. However TGS was required to pay into an escrow account for the taxpayer the entire estimated cost of the project, with the exception of amounts expended by the taxpayer for rails and rail fastenings. The amounts advanced by TGS were to be refunded by taxpayer as follows:

After movement of 100,000 net tons in each year of the refund period the Railroad Company will refund on the basis of 32% of the revenue accruing to the Railroad Company on all carload freight traffic originating or finding destination on trackage covered by this agreement, or any extension to said trackage that may be made thereto until Industry’s disbursements for construction are refunded, but not to exceed a period of 10 years next ensuing after the date of completion of the Track, said repayment to be made in semi-annual installments.

In accordance with the above agreement TGS advanced the Railroad $7,784,-350.59 of the $8,360,143.74 total cost of construction. TGS encountered unanticipated processing difficulties which temporarily made it impossible for it to ship sufficient quantities to merit any refunds. The parties therefore amended the agreement on July 22, 1964, to extend the payment period until 10 years after the date of the movement of the first 100,000 tons of potash. The 10-year period apparently begin in 1966, the year in which the Railroad made the first refund to TGS. To date the Railroad has reimbursed TGS as follows:

Amount Balance
Total Advance by TGS........................................#7,78i, S6,0.69 $7,784,350.59
Refund Jan.-Jun. 1066...................................... (24,658.93) 7,769,791.66
Refund Jul.-Dec. 1966...................................... (129,320.15) 7,630,471.51
Refund Jan.-Jun. 1967...................................... (22,880.36) 7,607,691.16
Refund Jul.-Dec. 1967...................................... (258,222.94) 7,349,368.21
Refund Jan.-Jun. 1968...................................... (246,403.69) 7,102,964.62
Refund Jul.-Dec. 1968...................................... (314,986.84) 6,787,977.68
Refund Jan.-Jun. 1969...................................... (300,154.14) 6,487,823.64
Refund Jul.-Dec. 1969...................................... (360,396.86) 6,127,426.69
Refund Jan.-Jun. 1970...................................... (269,636.29) 6,857,890.40
Refund Jul.-Dee. 1970...................................... (54,266.34) 5,803,624.06
Refund Jul.-Dec. 1970 to adjust error....................... (228,364.24) 5,675,259.82
Refund Jan.-Jun. 1971...................................... None 6,576; 269.82
Rofund Jul.-Dec. 1971...................................... Nono 5,575,259.82
Total amount refunded at December 31,1971.............$2,209,090.77
Remainder of advance still to be repaid...................................$5,576,259.82

Plaintiff included the entire $7,784,-350.59 advanced it by TGS in its cost basis of the spur line for purposes of computing its depreciation deductions and investment credit. The IRS sanctioned the use of this cost basis in its audit of the railroad’s 1964 and 1965 tax returns. However, the IRS disallowed the investment credit with respect to certain items which it felt did not qualify for reasons irrelevant to this motion. The Railroad claimed a refund with respect to the disallowed items, and on May 5, 1970, brought this refund suit. In its answer the defendant prays for an offset premised upon the Railroad’s using an incorrect cost basis for computing its depreciation deductions and investment credit for the years in dispute. The amounts presently involved are as follows:

Correct Correct
Investment Investment
Investment Credit Credit
Credit Allowed According Accordin
On Audit To Plaintiff To Defendant
1964. $179, 734. 34 $585,210.04 $38, 850. 48
1965. Zero Zero Zero
Correct Correct
Depreciation Depreciation Depreciation
Allowed According According
On Audit To Plaintiff To Defendant
1964. $18, 815. 80 $18, 815. SO Zero
1965. 37, 631. 64 37, 631. 64 Zero

On March 1, 1974, after this litigation started, the parties amended the Track-age Agreement so as to require the Railroad to continue to make refunds until all of the funds advanced by TGS are repaid. According to the plaintiff this amendment was made because of unanticipated production difficulties encountered by TGS at the mine.

We cannot give retroactive effect to an amendment made long after the tax years involved. As the agreement then stood, payments would stop after 10 years whether the advances of TGS were then fully refunded or not. It was perfectly foreseeable that the 32 percent rate would never give the Railroad enough revenue to complete its repayment. Plaintiff has obtained and includes in its opposition to the motion an affidavit by a TGS official saying that TGS at all times since the original agreement date expected to recover the full sum advanced, and that TGS has never claimed investment credit for itself on account of the spur. We take this as true, but such unilateral expectations cannot alter the agreement terms themselves. As a common carrier, plaintiff could have earned revenue on the line other than from TGS ore, but the isolation of the region made this unlikely.

The amount of investment credit and depreciation deduction allowable to a taxpayer with respect to an asset is dependent upon the basis of such asset.

Section 38(a) allows an investment credit for investment in certain depreciable property. Section 46(a) provides that the amount of the credit is equal to 7 percent of the “qualified investment.” “Qualified investment” is defined by § 46(c) as the applicable percentage (100 percent in the case of property having a useful life of 8 years or more) on the basis of new “section 38 property” placed in service by the taxpayer during the taxable year. “Section 38 property” is defined by § 48(a) as generally being tangible, depreciable property. The basis for computing the investment credit is the same as that used for computing depreciation. See Treas. Reg. § 1.46-3(c) (1).

Section 167(a) provides that a depreciation deduction shall be allowed for the exhaution of property used in trade or business, or property held for the production of income. The basis for computing depreciation is pursuant to § 167(g) “the adjusted basis provided in § 1011 for the purpose of determining the gain on the sale or other disposition of such property.” Section 1011 provides that the adjusted basis is its “basis (determined under § 1012 or other applicable sections * * *), adjusted as provided in § 1016.”

As a general rule the Code provides in § 1012 that the basis of property to a taxpayer is its cost. The basis of property includes not just the taxpayer’s equity, but also liabilities assumed or encumbering the property acquired. Crane v. Commissioner, 331 U.S. 1, 67 S.Ct. 1047, 91 L.Ed. 1301 (1947); Parker v. Delaney, 186 F.2d 455 (1st Cir. 1950); Manuel D. Mayerson, 47 T.C. 340 (1966). Since § 167(g) makes the amount of a taxpayer’s depreciation deductions dependent upon its basis in the property subject to depreciation, the inclusion of liabilities in basis enables it to generate current tax savings far in excess of its equity investment. See, H. Calkins and K. Updegraft, Jr., Tax Shelters, 26 Tax Lawyer 493, 506-08 (1973), and Manuel D. Mayerson, supra, where the Tax Court permitted a purchase money mortgage to be included as 97 percent of the taxpayer’s § 1012 cost basis despite the fact that the mortgage was without personal liability and no principal payments were due for 99 years.

In the present case the Railroad is attempting to increase its investment credit and depreciation deductions by including as part of its cost basis TGS’ advances for the spur line which it might never have to repay. The defendant argues that plaintiff cannot include such liability in its basis for the spur line because of its highly contingent nature. Cited as authority are Columbus & Greenville Ry. Co. v. Commissioner, 42 T.C. 834 (1964), aff’d per curiam, 358 F.2d 294 (5th Cir. 1966); Albany Car Wheel Co. v. Commissioner, 40 T.C. 831 (1963), aff’d per curiam, 333 F.2d 653 (2d Cir. 1964); Reisinger v. Commissioner, 144 F.2d 475 (2d Cir. 1944); Elizabethtown Water Co. Consolidated v. Commissioner, 7 T.C. 406 (1946). Defendant is willing to build up the basis only year-by-year as plaintiff paid for the spur.

The taxpayer contends that the above cases are inapposite since in light of the underlying facts and circumstances it could be predicted with “reasonable certainty” that the advances made by TGS would be repaid in full. We conclude that such a distinction cannot be made on these facts.

The underlying facts and circumstances relied on by the Railroad are as follows:

1. There is no uncertainty as to the amount to be refunded or the expectation of the parties that it would be refunded.
2. TGS fully expected to recover all of its advance to the Railroad based on the terms of the original Trackage Agreement entered into in 1961.
3. Despite the 10-year payback limitation in the 1961 agreement the parties always intended that the taxpayer continue to make refunds until all sums advanced were repaid. This is evidenced by the amendments extending the payback period made in 1964 and 1974.

It does not matter what the parties’ subjective intentions were. Absent a binding obligation on the Railroad’s part to repay all of TGS’ advances' at the time the investment credit and depreciation deductions were taken we deem it impossible to value the obligation assumed. The Railroad’s obligation to repay was contingent upon TGS’ (1) shipping a sufficient volume from its Moab, Utah, mine, and (2) within ten years of the time. Innumerable happenings could prevent that which was intended by the parties from becoming a reality, e. g., strikes or labor shortage, a reduction in the demand for potash, or an advance in mining technology which would make the Moab, Utah, mine no longer economically feasible to operate. The assertion that the parties to the Trackage Agreement always intended that TGS be paid in full, no matter how long it took, does not reduce the uncertainty. It is mere conjecture that a publicly owned and regulated corporation, such as the plaintiff, will expend sums with which it is not legally obligated to part.

Reference to Denver & Rio Grande Western R.R. v. Commissioner, 32 T.C. 43 (1959), aff’d on other issues, 279 F.2d 368 (10th Cir. 1960), is absent from the parties’ briefs. It concerned the determination of the same taxpayer’s basis for railway sidings financed under a substantially similar agreement with a shipper. The determination of the basis was necessary to compute the loss after the sidings were retired from service.

The arrangement between the Railroad and the shipper in the earlier Denver & Rio Grande Western R.R. case is described by the Tax Court at page 44:

The petitioner, at the request of a shipper, would build a spur track or a related facility. * * * The portion of the total cost which related to the trackage on the petitioner’s right-of-way and to which the petitioner acquired exclusive title and exclusive right of use was included in the petitioner’s road property account * * *. The shipper was required to make a deposit with the petitioner at the time of construction of an amount equal to that portion of the total cost. The deposit was credited by the petitioner to an account entitled “Other Deferred Liabilities” and was to be refunded to the shipper, either in whole or in part, depending upon the number of cars moved over the spur track during the next 5 years. Any portion of the deposit which had not been refunded by the end of the 5-year period was credited to an account entitled “Donations and Grants” and the shipper lost all rights to refund of that portion.
if * -»

Relying on the Supreme Court’s opinion in Detroit Edison v. Commissioner, 319 U.S. 98, 63 S.Ct. 902, 87 L.Ed. 1286 (1943), the Tax Court held that the amounts not reimbursed to the shippers were not includable in the Railroad’s basis because such amounts did not represent a gift by the shipper and did not cost the taxpayer anything. The fact that basis is being used in this instance to compute investment credit and depreciation is immaterial since the same rules apply for determining basis. The reliance upon Detroit Edison appears justified. That decision upholds the IRS in eliminating from the utilities’ basis deposits exacted from customers for extension of facilities to them and not refunded. The Court says “cost” means “cost to the taxpayer.” [P. 102, 63 S.Ct. 902.] In United States v. Chicago, Burlington & Quincy RR., 412 U.S. 401, 409, 93 S.Ct. 2169, 37 L.Ed.2d 30 (1973), the rule of Detroit Edison is reaffirmed and the apparently contrary result of Brown Shoe Co. v. Commissioner, 339 U.S. 583, 70 S.Ct. 820, 94 L.Ed. 1081 (1950), is restricted to instances where the customer intended to contribute to the taxpayer’s capital.

Defendant’s motion for partial summary judgment is granted and the petition is dismissed with respect to the claims dealt with in the motion.

      . Hereinafter all section references are to the Internal Revenue Code of 1954.


author: SKELTON, Judge:

text:
    John C. GROSS v. The UNITED STATES.
    No. 443-73.
    United States Court of Claims.
    Nov. 20, 1974.

      Dennis C. McFarland, Sioux Falls, S. D., attorney of record, for plaintiff; John N. Gridley, III, Soux Falls, S. D., of counsel.
    Lawrence S. Smith, Washington, D. C., with whom was Asst. Atty. Gen. Carla A. Hills, for defendant.
    Before DAVIS, SKELTON and KUN-ZIG, Judges.
   ON DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

SKELTON, Judge:

The plaintiff is a farmer in South Dakota who was denied participation in the Feed Grain Programs administered by the Department of Agriculture for the years 1968, 1969, 1970, and 1971, because he was found guilty of violating the regulations issued by the Secretary of Agriculture governing the programs. The programs authorized payments to farmers for diverting some of their land from the production of specified grains, such as corn and barley, known as feed grain, to approved conservation uses. The statutes authorizing these programs are as follows:

The 1968-1970 Feed Grain Programs were authorized by section 16(i) of the Soil Conservation and Domestic Allotment Act, as amended by the Food and Agriculture Act of 1965, enacted November 3, 1965, 79 Stat. 1190, 82 Stat. 996; and by section 105(e) of the Agriculture Act of 1949, as amended, 79 Stat. 1188, 82 Stat. 996.

The 1971 Feed Grain Program was authorized by section 105 of the Agriculture Act of 1949, as amended by the Agricultural Act of 1970, enacted November 30, 1970, 84 Stat. 1368.

This motion specifically involves a basic, statutory provision for the finality of the administratively determined facts involved in determination of lack of eligibility to participate in the instant Feed Grain Programs, 7 U.S.C. § 1385. It was originally enacted as section 385 of the Agricultural Adjustment Act of 1938, 52 Stat. 68, and, although the section has been amended from time to time, it has been in effect ever since, with the finality language of the statute fundamentally unchanged.

Immediately prior to enactment of the Agricultural Act of 1970, on November 30, 1970, 84 Stat. 1358 et seq., section 1385 provided, in pertinent part, as follows:

The facts constituting the basis for any payment under the Soil Conservation and Domestic Allotment Act, as amended, parity payment, payment under section 1339 of this title, [i. e., diverted acreage payments] loan, or price support operation, or the amount thereof, when officially determined in conformity with the applicable regulations prescribed by the Secretary or by the Commodity Credit Corporation, shall be final and conclusive and shall not be reviewable by any other officer or agency of the Government. * * * [7 U.S.C. § 1385 (1964)]

The Agricultural Act of 1970, supra,, continued the Feed Grain Program, for the crop years 1971, 1972, and 1973, by amendment to section 105 of the Agricultural Act of 1949, as amended. 84 Stat. 1368. As part of the same enactment, it made the aforesaid finality provision of the Agricultural Adjustment Act of 1938, as amended (section 385; 7 U.S.C. § 1385) applicable in express terms to payments under the feed grain set-aside program (and also to payments made under the cotton and wheat programs, also provided for in the same Act), as the Feed Grain Program was now authorized under the said Agricultural Act of 1970, independent of the Soil Conservation and Domestic Allotment Act, 84 Stat. 1366 (§ 404(5)); id., 1378 (§ 605(3)). The amendment did not change the fundamental thrust of section 1385, which after the 1970 amendment, read, in pertinent part, as follows:

The facts constituting the basis for any payment under the Soil Conservation and Domestic Allotment Act, as amended, parity payment, payments under the cotton set-aside program, payments (including certificates) under the wheat and feed grain set-aside programs, payment under section 1339 of this title, [i. e., diverted acreage payments] loan, or price support operation, or the amount thereof, when officially determined in conformity with the applicable regulations prescribed by the Secretary or by the Commodity Credit Corporation, shall be final and conclusive and shall not be reviewable by any other officer or agency of the Government. * * * [7 U.S.C. § 1385 (1970)]

The regulations issued by the Secretary provided generally for tenants and sharecroppers to receive a proportionate part of the program payments, based on their rental or sharing agreement with the owner or operator of the farm; precluded payments if the owner or operator reduced the number of tenants and sharecroppers on the farm in anticipation of or because of participating in the programs; and required refund by producers of payments to which they were not entitled, including payments in which the county Agricultural Stabilization and Conservation Committee (ASC Committee) determined that the share received by the tenants and sharecroppers was not fair and equitable, based on the guidelines contained in the regulations for the division of payments. The Secretary was specifically authorized by statute to issue regulations providing for a fair and equitable division of payments to participating producers on farms. The Act of November 3, 1965, supra, added subsection (i) to section 16 of the Soil Conservation and Domestic Allotment Act, as amended. 79 Stat. 1190. Subsection 16(i)(4) stated as follows:

(4) The Secretary shall provide by regulations for the sharing of payments under this subsection among producers on the farm on a fair and equitable basis and in keeping with existing contracts. [79 Stat. 1192]

In like manner, the November 30, 1970 Act, supra, amended section 105 of the Agriculture Act of 1949, as amended. 84 Stat. 1368. As amended, sections 105(d) and 105(h) stated as follows:

(d) The Secretary shall provide for the sharing of payments under this section among producers on the farm on a fair and equitable basis.
* * *• * * *
(h) The Secretary is authorized to issue such regulations as he determines necessary to carry out the provisions of this section. [84 Stat. 1370, 1371]

The regulations issued by the Secretary applicable to this ease are contained in Title 7 — Agriculture, Code of Federal Regulations. They are listed as follows:

Part 775 — Feed Grains, Subpart-1966-69 Feed Grain Regulations (1970 ed.)
Part 775 — Feed Grains, Subpart-1970 Feed Grain Program (1971 ed.)
Part 775 — Feed Grains, Subpart-Feed Grain Set-Aside Program for Crop Years 1971-73 (1972 ed.)
Part 780 — Appeal Regulations'(1970 ed.)
Part 780 — Appeal Regulations (1971 ed.)
Part 780 — Appeal Regulations (1972 ed.)
Part 794 — Division of Payments and Certificates (1970 ed.)
Part 794 — Division of Payments and Certificates (1971 ed.)
Part 794 — Division of Payments and Certificates (1972 ed.)

The 1969 Feed Grain Program

On April 16, 1969, the Lake County, South Dakota ASC Committee notified plaintiff that his Feed Grain Contract for the 1969 Feed Grain Program had been disapproved by the Committee because he had violated the following sections of the regulations: § 775.-419(a)(2), § 775.419(a)(3); § 794.-3(a)(2) and § 794.3(a)(3). The notification letter set forth the provisions of the regulations that the Committee had determined that plaintiff had violated. The Committee found as facts that the plaintiff had violated the regulations by having reduced the number of tenants on his farms in anticipation of or because of the'programs; having exacted agreements from the tenants which caused them to pay over to him payments earned by them under the program ; having sought an agreement with a tenant which would have changed the tenant’s status so as to deprive him of payments he otherwise would have received under the program; and having sought an agreement with a tenant which would have reduced the size of the production unit.

The Committee denied the plaintiff the right to participate in the program for 1969 because of these violations, causing plaintiff a loss in payments of $7,670.74.

The plaintiff appealed to the State ASC Committee, which sustained the decision of the County Committee. Plaintiff then appealed to the Deputy Administrator, State County Operations, ASCS, Department of Agriculture, Washington, D. C., who conducted a hearing which was attended by the plaintiff. The Deputy Administrator sustained the State and County Committees’ decisions declaring plaintiff ineligible to participate in the program, and denied his appeal. The plaintiff requested the Deputy Administrator to reconsider the decision. The request was denied. The plaintiff then appealed from the denial of reconsideration' and requested a hearing and the Deputy Administrator accepted the appeal and held a hearing which was attended by the plaintiff. (In the meantime, the matter had been reopened at the county and state levels to permit those committees to determine whether plaintiff had any new information they had not previously considered.) Following the hearing on the reconsideration appeal, the Deputy Administrator notified the plaintiff that his prior decision holding plaintiff ineligible to participate in, and to receive payments under, the 1969 Feed Grain Program was affirmed.

The 1968, 1970 and 1971 Feed Grain Programs

The plaintiff participated in the 1968, 1970, and 1971 Feed Grain Programs and was paid $7,904.70 by the Government for such participation. However, on November 23, 1971, the Executive Director of the Lake County ASC Committee notified him in writing that an investigation had revealed that plaintiff had violated the landlord-tenant provisions of the regulations in each of those years, and, consequently, was ineligible to participate. The violations were set forth in detail in the Executive Director’s written notice, which consisted, in the main, of findings that there existed between the plaintiff and his tenants, in each of these years, a lease, contract, agreement, or understanding, unfairly exacted or required by him, which required the tenants to pay over to him the payments earned by and paid to the tenants under the programs. The notice from the Director requested refund of the amounts paid to the plaintiff and also the amounts paid to the tenants which he had forced them to pay to him, all in the total sum of $7,904.70.

The plaintiff appealed to the County ASC Committee, which held a hearing that was attended by plaintiff and his attorney. The County Committee sustained the prior determination of the Executive Director regarding plaintiff’s ineligibility.

The plaintiff appealed to the State Committee, which also held a hearing. The plaintiff and his attorney were present. The State Committee affirmed the decision denying plaintiff’s participation during the years involved.

The decision of the State Committee was appealed by the plaintiff to the Deputy Administrator State and County Operations, ASCS, Washington, D. C., who scheduled a hearing to which plaintiff was invited to attend in person or by representative. The plaintiff declined to attend by notifying the Director, Program Division, ASCS, Washington, D. C., in writing. Thereafter, on June 7, 1972, the Deputy Administrator sustained the decisions of the County and State Committees that plaintiff was ineligible to participate in the 1968, 1970, and 1971 Feed Grain Programs. The plaintiff filed this suit on November 23, 1973, in which he says he has been damaged in the sum of $7,904.70 in connection with the 1968, 1970, and 1971 Feed Grain Programs. He asks for judgment against the United States for the amount already set off by the Department of Agriculture and that the United States be enjoined from setting off further monies due plaintiff. He also seeks judgment for $7,670.74 denied him under the 1969 Feed Grain Program. The defendant has moved for summary judgment.

The plaintiff alleged in his petition that the defendant violated Department of Agriculture Regulations sections 775.418, 775.419(a)(2), 775.-419(b) or 775.418, 775.403, 775.416, and 775.425. However, this is a general allegation, and a conclusion that is not supported by any facts pleaded by plaintiff nor specifically pointed out in his brief. In other words, the plaintiff has not specified nor shown how any regulation was violated by the defendant. The plaintiff clearly has this burden in his attack on the administrative decisions in this case. See Sundstrand Turbo v. United States, 389 F.2d 406, 182 Ct.Cl. 31 (1968); Williamsburg Drapery Co. v. United States, 369 F.2d 729, 177 Ct.Cl. 776 (1966), and Jefferson Construction Co. v. United States, 368 F.2d 247, 177 Ct.Cl. 581 (1966). The plaintiff has failed to meet this burden. His general allegation of noncompliance cannot overcome the strong presumption that Government officials acted properly and faithfully discharged their duties and that the regulations and procedures involved were properly observed and carried out. Cooper v. United States, 203 Ct.Cl. 300 (1973); Bethlehem Steel Corp. v. United States, 423 F.2d 300, 191 Ct.Cl. 141 (1970), and Biddle v. United States, 186 Ct.Cl. 87, 104 (1968). Furthermore, it appears from the record in this case that the regulations and procedures were properly followed and complied with.

The plaintiff says that a summary judgment should not be granted in this case because there are unresolved questions of fact, but he does not specify what they are nor point to them in the administrative record. He attempts to sustain this contention by denying that he violated any of the regulations and that the findings of the agency to the contrary were wrong. Such general conclusions do not constitute unresolved questions of fact. The record in this case shows that the handling of this case by the Department of Agriculture is a model of fairness to the plaintiff. Seldom does one see a case where an administrative agency gives a claimant as many opportunities to present his side of the case as was done by the Department of Agriculture in the instant proceeding. He was granted every appeal and every hearing that he asked for, and was allowed to appear in person and furnish evidence in his behalf at every step in the administrative process. All facts were received and repeatedly considered and reconsidered by the officials of the agency. The plaintiff was invited to present evidence not only at the hearings, but also by correspondence. All facts were thoroughly and complete considered many times. There are no unresolved questions of fact.

The plaintiff argues that the $7,904.70 paid to him under the 1968, 1970, and 1971 Programs are final as to the Department of Agriculture under the finality provisions of 7 U.S.C. § 1385, supra, and cannot be reviewed by any other officer or agency of the Government. Yet the plaintiff contradicts this statement by asking this court, which is another agency of the Government, to review the facts relating to such payments and to give him a judgment for the amount involved. Obviously, the plaintiff cannot have it both ways. The plaintiff loses sight of the fact that 7 U.S.C. § 1385 does not prohibit the Department of Agriculture from reviewing its own decisions. The prohibition is against a review by any other officer or agency of the Government. The agency clearly had the right to review its decision regarding these payments after a proper investigation and to require a refund if the facts warranted it. In fact, the regulations that authorized the payments in the first place provide for such a refund. See sections 775.418(d) and 794.2(e) of the Department of Agriculture Regulations which provide as follows:

§ 775.418 Division of diversion and price support payments.
(d) Refund of payments not properly divided. Payments which producers receive to which they are not entitled, including diversion payments which the county committee determines are not fair and equitable based on the factors provided in this section, shall be refunded to the county committee. In the event of fraud, the producer shall be subject to the provisions of § 775.421.
§ 794.2 Division of diversion payments, price support payments, and wheat marketing certificates.
(e) Refund of payments and wheat marketing certificates not properly divided. Payments and wheat marketing certificates which producers receive, to which they are not entitled, including diversion payments which the county committee determines are not fair and equitable based on the factors provided in this section, shall, in the case of payment, be refunded to the county committee and, in the case of certificates, be returned to the county committee or the value thereof paid to the Commodity Credit Corporation. In the event of fraud, the producer shall be subject to the provisions pertaining to fraudulent representation in the applicable program regulations. (Sec. 339, 76 Stat. 622; 7 U.S.C. 1339) [32 F.R. 19155, Dec. 20, 1967, as amended by Amdt. 1, 34 F.R. 1227, Jan. 25, 1969]

The above regulations clearly authorized the agency to demand and collect the refund under the circumstances of this case.

The defendant urges that its motion for summary judgment be granted because the factual determinations made by the agency are final under 7 U.S.C. § 1385 and are not subject to judicial review. While this appears to be a question of first impression in this court, the decisions of other courts support this proposition. Aycock-Lindsey Corp. v. United States, 171 F.2d 518, 522 (5th Cir. 1948), 187 F.2d 117 (5 Cir. 1951); Gregory v. Freeman, 261 F.Supp. 362, 365 (N.D.N.Y.1966); United States v. Kopf, 379 F.2d 8, 12 (8th Cir. 1967); United States v. Moore, 298 F.Supp. 199, 200 (S.D.Ohio 1969); United States v. Gomes, 323 F.Supp. 1319 (E.D.Cal. 1971); and cases cited in the foregoing cases.

In United States v. Gomes, supra, the court discussed the decisions in most of these cases and analyzed the finality provisions of 7 U.S.C. § 1385 as follows:

Now the government has moved for summary judgment on Count III of the complaint. The basis for this motion is the government’s theory that administrative determinations made under the Feed Grain Programs are final and conclusive and not subject to review. This theory is based on the fact that the Soil Conservation and Domestic Allotment Act, which authorized the Program, contains no provisions for judicial review. It is also based on the provisions of Section 385 of the Agricultural Adjustment Act (hereinafter, the AAA), which in pertinent part provides as follows:
The facts constituting the basis for any payment under the Soil Conservation Act, * * * when officially determined in conformity with the applicable regulations prescribed by the Secretary or by the Commodity Credit Corporation, shall be final and conclusive and shall not be reviewable by any other officer or agency of the Government. 7 U.S.C. Sec. 1385.
This statute and similar statutes have been interpreted on several occasions as a bar to judicial review of administrative determinations of fact.
Section 385 was analyzed as follows in Aycock-Lindsey Corp. v. United States, 171 F.2d 518, 522 (5th Cir. 1948):
We do not interpret the Act as preventing, or undertaking to prevent, a review by the courts of the legal questions involved, but only to preclude a review of the facts constituting the basis for payment.
Gregory v. Freeman, 261 F.Supp. 362 (N.D.N.Y.1966) was a case directly concerned with AAA Sec. 385 (7 U.S.C. Sec. 1385). This case was an action in which plaintiff sought an order annulling a determination of the county committee under the 1963 Feed Grain Program. The determination withheld payment of the final installment alleged to be due under the program and directed that a payment already made be returned with interest. The court concluded that it lacked jurisdiction over the matter. It declared :
7 U.S.C. § 1385 and 7 C.F.R. Sec. 775.216 attach finality to the findings of the state committee on questions of fact. Congress, if it so chooses, may make the administrative rejection of a claim final and conclusive * * * If an agency determination is made final and conclusive by Congress, as it was here, the district court is without jurisdiction to review such action.
United States v. Moore, 298 F.Supp. 199 (S.D.Ohio 1969), was a case very similar to the instant case. It was an action by the United States to recover payments made to the defendant, under the Feed Grain Program. Defendant was accused of exceeding her allotted acreage. The district court granted the motion by the United States for summary judgment on the grounds that the determination of the state agricultural stabilization committee was final and conclusive under AAA Sec. 385 (7 U.S.C. § 1385), and ordered the defendant to return all moneys paid to her.
The case of Mario Mercado E. Hijos v. Benson, 97 U.S.App.D.C. 298, 231 F.2d 251 (1956) was concerned with Section 306 of the Sugar Act. This section provided that “[t]he facts constituting the basis for any payment, or the amount thereof authorized to be made under this title, officially determined in conformity with rules and regulations prescribed by the Secretary, and his determinations with respect thereto shall be final and conclusive.” The court said of this statute: “We think this makes it clear that Congress intended to preclude judicial review, not only of the Secretary’s finding but of the hearing which led to it.”
In Elliott v. United States, 179 F.Supp. 758 (D.Neb.1959), the court was concerned with a provision of the Soil Bank Act found at 7 U.S.C. See. 1831(d), which stated that “the determination of the State committee made in accordance with regulations of the Secretary shall be final and conclusive.” The court declared that “In the absence of a complete disregard or unjustifiable interpretation of the facts and the procedural and substantive regulations of the Secretary, which is not present here, this Court will follow the statutory mandate of Congress and refuse to review either the fact constituting the basis for payment or the amount thereof authorized under the Soil Bank Act.” Accord, Holden v. United States, 297 F.2d 831 (8 Cir., 1962).
It is the court’s conclusion that the weight of authority requires the view that the official determinations of program administrators are final and conclusive, and not reviewable by the court. Defendant has not cited any authorities to compel me to the opposite view. [Id. at 1320-21]

The defendant cites other Acts dealing with agriculture that have language similar to 7 U.S.C. § 1385 which various courts have construed and applied as having finality provisions that are binding on the courts as follows:

The Soil Bank Act (7 U.S.C. §§ 1801, 1836 (1964)) contains a comparable provision, set forth in substantially identical language (at § 1809). It has been construed and applied in the same manner. Elliott v. United States, 179 F.Supp. 758, 761, 764 (D.Neb.1959); Dickson v. Edwards, 293 F.2d 211, 213-214 (5th Cir. 1961); Caulfield v. United States Department of Agriculture, 293 F.2d 217, 219-221 (5th Cir. 1961); United States v. Yarbrough, 290 F.Supp. 4, 6 (N.D.Miss.1968); and cases cited in the foregoing cases.

Likewise, the National Wool Act, as amended, 7 U.S.C. §§ 1781, 1785 (1970), contains such a finality provision, also in substantially identical language (at § 1785) and it too has been construed and applied in this manner. United States v. Blackwell, 467 F.2d 1377 (5th Cir. 1972).

The same situation prevails under the Sugar Act of 1948, 61 Stat. 922, 7 U.S. C. § 1100 (1970). It contains a substantially identical finality provision, 61 Stat. 932, 7 U.S.C. § 1136 (1970), and it has been similarly interpreted and applied. Mario Mercado E Hijos v. Benson, 97 U.S.App.D.C. 298, 231 F.2d 251, 252 (1956).

It is concluded that the factual determinations made by the agency in this case are entitled to finality under 7 U.S.C. § 1385 and are not subject to review by this court; and the decisions of the agency based on such factual determinations are also entitled to finality and are not subject to judicial review, except as to questions of law, or allegations and proof by the plaintiff that such decisions were arbitrary or capricious. The burden of proof is on the plaintiff to allege and prove that the decisions were arbitrary or capricious. Crain v. United States, 84 F.Supp. 876, 114 Ct.Cl. 94 (1949), cert. denied, 339 U.S. 911, 70 S.Ct. 566, 94 L.Ed. 1337 (1950); Aycock-Lindsey Corp. v. United States, supra. The plaintiff has not discharged this burden in this case. Neither has the plaintiff raised any question of law that requires judicial review.

Accordingly, defendant’s motion for summary judgment is granted, and plaintiff’s petition is dismissed.

        . Apparently the Government has set off the $7,904.70 against payments due plaintiff in later years, as it has not filed a counterclaim for its recovery.


author: PER CURIAM:

text:
    PORTEC, INC. v. The UNITED STATES.
    Nos. 868-71 and 127-72.
    United States Court of Claims.
    Nov. 20, 1974.
    William T. Hart, Chicago, 111., attorney of record, for plaintiff; James M. Van Vliet, Jr., and Schiff Hardin & Waite, Chicago, 111., of counsel.
    Ray Goddard, Washington, D. C., with whom was Asst. Atty. Gen. Carla A. Hills, for defendant.
    Before DAVIS, SKELTON and KUN-ZIG, Judges.
   ON PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT AND DEFENDANT’S CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT

PER CURIAM:

Plaintiff brought these suits for a re-determination of excessive profits found by the Renegotiation Board to have been received in 1966 and 1967, primarily on contracts for the sale of large rock crushers to the Army and Air Force. The jurisdiction of this court is founded on 50 App.U.S.C. § 1218 (Supp. II, 1972), providing for a de novo determination of the amount, if any, of excessive profits received by the claimant. While plaintiff states several bases on which it asks the court to find that it had no excessive profits, the only issue now before us on the parties’ cross-motions for partial summary judgment, see Rule 101(a), is whether plaintiff is entitled to the partial mandatory exemption for “durable productive equipment,” 50 App.U.S.C. § 1216(e) (1970), with respect to receipts from the rock crusher sales.

The disagreement centers on whether the term “durable productive equipment,” defined in the statute as “machinery, tools or other productive equipment which has an average useful life of more than five years,” 50 App.U. S.C. § 1216(c) (2) (1970), includes only manufacturing equipment or also covers other large capital equipment used in processing materials. While the Renegotiation Board in Renegotiation Bulletin No. 12, 32 C.F.R. § 1499.2-12 (1974), has since 1967 limited the exemption to strictly manufacturing items, we believe that the legislative history and the Congressional purpose require a broader interpretation.

The “durable productive equipment” exemption as first included in the 1951 Renegotiation Act covered only equipment sold by subcontractors to government contractors who neither included the equipment in the end-product sold to the United States nor acted as its purchasing agent. Renegotiation Act of 1951, ch. 15, § 106(c), 65 Stat. 18 (1951). The rationale for the exemption, as stated in the House and Senate hearings, the Senate report and the floor debates, was that, without a partial exemption, profits from the sale of large machinery purchased bj contractors would be completely renegotiable even though the machines would be used on defense or government work only a small part of their useful lives. See Hearings on H.R. 9246 Before the House Comm, on Ways and Means, 81st Cong., 2d Sess. 201 (1950); Hearings on H.R. 1724 Before the Senate Finance Comm., 82d Cong., 1st Sess. 105-06 (1951); S.Rep. No. 92, 82d Cong., 1st Sess. 6-7 (1951); 97 Cong.Rec. 1326, 2254, 2275 (1951). This rationale is equally applicable to all large capital equipment used for processing, a point emphasized during the floor discussion when the Chairman of the Senate Finance Committee,- Senator George, stated that the exemption “concerns long-lived machinery, tools and so forth * * *.” 97 Cong.Rec. 1326 (1951). This legislative history, plus the broad wording of the Act itself (i. e. “durable productive equipment”), makes it clear to us that the exemption was, as passed in 1951, applicable to processing equipment of the kind now before us. And after the adoption of the exemption in 1951, the Renegotiation Board appears to have read it in this way for about a decade and one-half.

The Government argues, however, that the 1954 amendments, Act of Sept. 1, 1954, ch. 1209, 68 Stat. 1116, making the exemption applicable to prime contractors like plaintiff, also narrowed the class of machinery to which the exemption is applicable. The purpose of the 1954 amendment, as expressed in the reports and debates, was to protect manufacturers whose equipment was stockpiled and resold by the Government, thereby reducing the market for future non-renegotiable commercial sales. S. Rep. No. 643, 83d Cong., 1st Sess. 3 (1953) , 1954 U.S.Code Cong. & Admin. News, p. 3878; 100 Cong.Rec. 14774 (1954) . While the major stockpiling problem at the time was in machine tools, the debate and reports covered “machine tools and other productive equipment.” Ibid. The purpose of the 1954 amendment, like that of the original exemption, is broad enough to cover more than manufacturing machine tools. And in amending the provision, Congress did not change the definition section of the exemption to make it narrower. We can discern no other change in legislative focus which would constrict the Congressional concern from all durable processing or productive equipment to purely manufacturing machinery.

We need not .ponder whether the Board’s 1967 Bulletin No. 12 — limiting for the first time the “productive equipment” exemption to strictly manufacturing items — is entitled to the status of a full-fledged regulation. Even if it is, it cannot stand against the adverse weight of (a) the broad wording of the exemption plus (b) the clear Congressional purpose. In addition, the Bulletin plainly fails to have the cachet either of a contemporaneous construction (it was not adopted until 1967) or of a long-continued consistent interpretation by the administering agency (in the now relevant aspect, the Bulletin reversed a 15 or 16 year policy looking the other way).

For these reasons, we hold that plaintiff is entitled to the partial exemption and its motion to that effect is granted. The Government’s countervailing motion is denied. The case is remanded to the trial division for further proceedings consistent with this opinion.

      . Section 1216(c) (1) declares that the provisions of the Renegotiation Act “shall not apply to receipts or accruals (other than rents) from contracts or subcontracts for new durable productive equipment, except (A) to that - part of such receipts or accruals which bears the same ratio to the total of such receipts or accruals as five years bears to the average useful life of such equipment as set forth in Bulletin F of the Bureau of Internal Revenue (1942 edition) or, if an average useful life is not so set forth, then as estimated by the Board and (B) to receipts and accruals from contracts for new durable productive equipment in eases in which the Board finds that the new productive equipment covered by such contracts cannot be adapted, converted or retooled for commercial use.”
      As indicated above, the exemption is limited to an amount which “bears the same ratio to the total * * * receipts or accruals as five years bears to the average useful life of such equipment * * * ” 50 App. Ü.S.C. § 1216(c) (1) (1970).

      . The parties have stipulated that the useful life of the items in this case is 15 years. Defendant does not urge, and the Board did not find, that this equipment cannot be adapted, converted or retooled for commercial use.

      . This equipment is expressly listed in Bulletin F, referred to in the statute, see note 1, supra.

      . The Board first adopted a regulation which provided that “machinery, equipment or materials will be deemed to be used in the processing of an end product or an article incorporated in an end product in all cases where such machinery, equipment, or materials are used — (a) to produce or otherwise operate, directly on an end product or an article incorporated in an end product by chemical, physical or mechanical methods; such, for example, as shaping, cutting, constructing, combining, refining, assembling, testing, inspecting or (in the case of end products) packaging; * *
      For later, consistent, Board pronouncements in 1955 and 1960, see note 7, infra.

      . In this case for example, the defendant has already resold parts of four of plaintiff’s machines. Defendant’s Answers to Interrogatories, Feb. 3, 1973.

      . The 1954 and 1955 amendments altered the definition section, but in a way not relevant here. See Act of Sept. 1, 1954, ch. 1209 § 4(c), 68 Stat. 1117; Act of Aug. 3, 1955, ch. 499 § 5, 69 Stat. 448. The 1955 modification deleted a reference to “end product” which had been inadvertently allowed to remain in the provision when the 1954 amendment was adopted.

      . In fact the Renegotiation Board, in Bulletins issued in 1955 and 1960, disagreed with defendant’s and the Board’s present position, stating that the exemption covered items used “to produce or otherwise operate directly on other materials by chemical, physical or mechanical methods” (1955 version) or “to manufacture or process tangible materials” (1960 version). Renegotiation Bulletin No. 23 (Mar. 29, 1955) ; Renegotiation Bulletin No. 23 (Revised, Aug. 25, 1960).