In re Transportation Claim of United States Against Standard Transmission
| Decision Date | 02 September 1976 |
| Docket Number | B-185503 |
| Citation | 55 Comp. Gen. 1423 |
| Parties | IN THE MATTER OF TRANSPORTATION CLAIM OF UNITED STATES AGAINST STANDARD TRANSMISSION, SEPTEMBER 2, 1976. |
| Court | Comptroller General of the United States |
Transportation - contracts - readjustment provisions - interpretation interpretation of readjustment provisions in contracts for transportation of fuel in pipelines is upheld where carrier's intention is plain on the face of its offer where carrier receives a reasonable return on investment, and where if offer were ambiguous it would have to be construed strongly against the carrier author.
This is an advance decision to the secretary of defense concerning the propriety of overcharges totaling nearly $200, 000 allegedly made on behalf of the defense fuel supply center (DFSC) to standard transmission (standard) for the transportation of jet fuel in pipelines to three air force bases during 1973 and 1974. The overcharges depend upon the government's interpretation of the readjustment provisions contained in three offers by standard to the government for pipeline transportation services from EL paso Texas, to holloman air force base, New Mexico (hereafter EL paso-holloman); macon, Georgia, to robbins air force base Georgia; and port everglades, Florida, to homestead air force base, Florida.
Standard disagrees with the government's interpretation of the readjustment provisions; since standard used substantially similar language in the three offers, we will use the EL paso-holloman offer to illustrate the dispute.
In February 1972, southern pacific pipe lines, Inc. (southern) and standard tendered to the united states under section 22 of the interstate commerce act, 49 U.S.C. 22 (1970), an offer to transport jet fuel owned by the government. The offer published as southern's and standard's section 22 (ICC) quotation 1, names in item 2, titled "rates to be applied, " a two -factor combination rate of 29 cents per barrel; the first factor, 20 cents per barrel, applied over the lines of southern and standard from southern's EL paso station to standard's terminal in alamogordo, New Mexico; the second factor, 9 cents per barrel, applied onward to standard's location at holloman air force base.
In a letter dated February 15, 1973, the military traffic management and terminal service (service), on behalf of DFSC, requested that standard consider establishing a scale of rates for the EL paso holloman transportation of jet fuel. The letter set forth this graduated scale: (table omitted)
The letter continued:
The proposed rates are based on estimated CY 1973 operating expenses PLUS a reasonable return on your investment. The rates will be assessed on individual shipments based on the scale which applies to the annual projected volume. For example, if at the beginning of the annual period the projected thruput falls between 700, 000 and 749, 999 barrels, the rate of $0.30 per barrel would apply on all shipments throughout the entire 12 month period. At the end of the 12 month period, if the actual volume failed to equal or exceeded the projection, and rate level would be adjusted for the applicable volume on the scale. The annual projection for calendar year 1973 and the succeeding 4 years are reflected in the inclosure. An annual update of these projections will be furnished by the shipper service.
In a letter dated March 8, 1973, the service stated:
Pursuant to telephone conversation with Mr. P. I. Voshell, the headquarters on 28 February 1973, our proposal has been modified to provide for assessment at a rate of 33 cents per barrel on all shipments occurring throughout the annual period. When the actual volume fails to equal 650, 000 barrels or exceeds 699, 999 barrels, the rate level will be adjusted for the applicable volume on the scale as indicated in the referenced letter.
Representatives of standard and of the service met in Washington to work out together the text of an amendment to quotation 1. The amendment which applied to all shipments moving under quotation 1 from origin stations on and after January 1, 1973, named in item 2 a combination rate of 33 cents per barrel. The first factor, 20 cents per barrel, applied over the lines of southern and standard from southern's EL paso station to standard's terminal in alamogordo, New Mexico; the second factor, a sliding scale of rates, applied onward to standard's location at Holloman. The second factor reads in pertinent part: (CHART omitted)
A combined rate of thirty-three cents (33[) per barrel from EL paso to holloman AFB will be initially assessed and collected on all shipments made under this quotation throughout the entire annual period. When the actual aggregate annual volume delivered at holloman air force base fails to equal 650, 000 barrels or exceeds 699, 999 barrels, the rate level for that portion of the movement from alamogordo to holloman air force base will be adjusted for the applicable volume on the scale in item 2 at the end of the annual period. Certification of quantities transported on annual volume rate basis is required. At the close of the annual period the carrier will prepare a statement showing the actual quantity delivered to holloman air force base, New Mexico, during the annual period. The statement will be certified by the base transportation officer verifying the actual quantity as being delivered. The certified statement will be attached to the supplemental billing or refund as appropriate and forwarded to the finance center, Indianapolis, Indiana.
The disputed words, italicized in the amendment, are "that portion, " and "applicable volume." DFSC and the service contend that the words "that portion" refer to geographical locations (alamogordo to holloman) whereas standard contends that they refer to the increments of 50, 000 barrels on the volume scale. Likewise, DFSC and the service contend that the words "applicable volume" refer to the total annual volume of barrels transported, whereas standard contends that this also refers to increments of 50, 000 barrels. Based on the government's interpretation, and assuming that 800,...
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