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B-125045-O.M. 1 (1959-09-21)

handle is hein.gao/gaobadaie0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE rh WASH INGTON 25. D.C. OFFICE OF GENERAL COUNSEL B-1250h5-o.A. September 21, 1959 FiLE COPY - COMP, GENE Director, Civil Accounting and Auditing Division Your memorandon of June 25, 1959, requests that we recheck the vieus expressed in our memorandum of April 28, 1959, B-120h5-0..,, to you, regarding the payment of just compensation by the Bureau of Reclamation for relocation of facilities of public utilities companies. The memorandum of April 28, 1959, considered the case of State of Tennessee v. United States, 256 F. 2d 244, therein the court sflaT page 2b5 that the correct measure of damages uould be the cost of ranoval and permanent relocation of the line less the depreciation that existod in the old line. In construing the court's holding we stated as follous: The court's determination of damages uns measured on the basis of the coat of renoval and relocation of the telephone line less the pecentage of depreciation that existed in the old line. That is to say, if the old line was 2/5 depreciated the cost to the Government for removal and relocation of a new line of equal utility could be 3/5 of the cost of the new line. This illustra. tion demonstrates that the depreciation credit due the Government on account of payment of just compensation for utility relocations is the percentage of depreciation taken on the old asset and applied to the current replacement cost of such asset. Our interpretiation and application of the court's holding was confirmed in a discussion with the Government attorneys on the brief of the case. nAccordingly, you are advised that the position taken by your Division in the report relative to the determination of just compensation for utility relocations appears to be in accord nith the holding in the cited case and is, in our opinion, legally proper. It apcpars that the Bureau of Reclamation disagrees ith our inter- pretation of the court's holding, it being their contention that the amount of juzt compensation provided for therein is for determination on the basis of reproduction cost less depreciation accrued on the old facility. In addition, the Bureau contends that a depreciation allownance incident to utility relocations should not be given mandatory effect in all cases as, the Bureau must retain the flexibility required in negotiations the end

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