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Regardless of bare legal obligation, it does not appear that the town of Bridgeport can be forced to furnish free services comparable to those required under the contract. The alternative is for the Government to provide such services at a greatly increased cost.

The town of Bridgeport entered into the agreement in good faith and performed in the same manner. To require repayment of the sums already paid by the Government and to leave it with the obligation of amortizing the cost of equipment purchased in reliance upon the agreement would work an injustice upon the taxpaying citizens of the town.

The passage of this bill will result in the annual payment by the United States of the sum of $2,280 for the life of the contract, which covers the construction period.

The Bureau of the Budget advised with respect to a companion bill, S. 581, that while there would be no objection to this Department presenting to the committee such report as it considers appropriate, that Office does not favor the enactment of this legislation. The Bureau of the Budget also requested that we make available to the committee the attached copy of the views of the Comptroller General respecting this proposal.

Sincerely yours,

WILBER M. BRUCKER,
Secretary of the Army.

COMPTROLLER GENERAL OF THE UNITED STATES,

Washington, June 30, 1958.

Hon. MAURICE H. STANS,

Director, Bureau of the Budget.

DEAR MR. STANS: In letter dated June 20, 1958, the Assistant Director for Legislative Reference requested our views on S. 3795, entitled "For the relief of the town of Bridgeport, Wash."

The bill, if enacted, would operate to validate contract No. DA-45108-ENG-565, dated June 15, 1950, between the town of Bridgeport and the Corps of Engineers together with payments heretofore or hereafter made notwithstanding our decision of March 13, 1958, B-131932. A copy of that decision is enclosed.

The contract provides that the town of Bridgeport, in consideration of annual payments of $2,280 by the United States, will furnish police and fire protection, and other municipal services, to Government facilities located within the corporate limits of the town to an extent and standard satisfactory to the Government "but in no event to a less extent and standard than such services are furnished any other residential area of the town."

The record indicates that the annual payment as stipulated in the contract was calculated by an approximation of the tax rates so that the payments would be comparable to those which private citizens would pay for services for corresponding property. It was concluded in the cited decision that the arrangement provided for under the contract is tantamount to general taxation to cover the overall pro rata cost of the involved services, which services presumably have been made available to other residents of the town without special service or other charges other than the payment of general taxes. As such, we concluded that since the annual contract payment is equivalent to

a payment in lieu of taxes without express statutory authority therefor and since the contract would have the effect of nullifying the taxexempt status of the Government the contract is invalid and void ab initio.

Our decisions in similar situations have held that contracts entered into with municipalities for furnishing fire and police protection and other governmental services to facilities of the Federal Government located within their boundaries do not give rise to valid enforcible obligations. This is in accordance with the principles, recognized by the overwhelming weight of authority that the furnishing of fire protection and similar services is a governmental function the exercise of which carries with it no power to interpose conditions not provided by law.

While in the present instance there may be some equities warranting favorable consideration of the bill, it would accord preferential treatment to the town not accorded to other towns and cities involved in contracts and similar arrangements held invalid by our decisions. In view of the foregoing we are not in a position to recommend favorable consideration to the bill.

The proposed report on the bill by the Secretary of the Army is returned.

Sincerely yours,

JOSEPH CAMPBELL,

Comptroller General of the United States.

86TH CONGRESS HOUSE OF REPRESENTATIVES 1st Session

{

REPORT No. 577

SUSPENSION OF DUTIES ON METAL SCRAP

JUNE 23, 1959.-Committed to the Committee of the Whole House on the State of the Union and ordered to be printed

Mr. MILLS, from the Committee on Ways and Means, submitted the

following

REPORT

[To accompany H.R. 6054]

The Committee on Ways and Means, to whom was referred the bill (H.R. 6054) to continue until the close of June 30, 1960, the suspension of duties on metal scrap, and for other purposes, having considered the same, report favorably thereon with an amendment and recommend that the bill as amended do pass.

The amendment is as follows:

Page 2, strike out lines 3 and 4, and insert:

SEC. 2. This Act shall not apply to any article provided for in section 4541 of the Internal Revenue Code of 1954.

PURPOSE

The purpose of H.R. 6054, as amended by your committee, is to amend section 2 of Public Law 869, 81st Congress, as amended, to continue for 1 year (from the close of June 30, 1959, to the close of June 30, 1960) the suspension of duties on metal scrap. The bill contains the existing proviso that the suspension shall not apply to lead scrap, lead alloy scrap, antimonial lead scrap, scrap battery lead or plates, zinc scrap, or zinc alloy scrap, or to any form of tungsten scrap, tungsten carbide scrap, or tungsten alloy scrap, or to articles of lead, lead alloy, antimonial lead, zinc, or zinc alloy, or to articles of tungsten, tungsten carbide or tungsten alloy, imported for remanufacture by melting. The bill also continues the existing provision that the suspension shall not apply to any article provided for in section 4541 of the Internal Revenue Code of 1954.

GENERAL STATEMENT

The temporary suspension of the duties on imports of metal scrap provided under present law to June 30, 1959, makes free of duty imports of metal scrap including such principal types of scrap as iron and steel, aluminum, magnesium, nickel, and nickel alloys. Your committee's bill would continue this suspension through June 30, 1960. The suspension of duties as provided under present law and its proposed extension under your committee's bill are of no significance with respect to the tariff treatment of imports of tin and tinplate scrap, because imports of such scrap, along with imports of tin in other unmanufactured forms, would not be subject to duty or import taxes in any case.

Section 2 of the bill, as reported, provides that this suspension shall not apply to any article provided for in section 4541 of the Internal Revenue Code of 1954. In general, section 4541 of the Internal Revenue Code of 1954 imposes an import tax on certain copper-bearing ores and concentrates, other articles of which copper is the component material of chief value, and other articles containing 4 percent or more of copper by weight.

Scrap of the various nonferrous metals, whether imported or of domestic origin, may be considered for most purposes simply as relatively small components in the total U.S. supplies of the respective metals, although some manufacturers depend wholly on metal scrap as a source of raw material. The relation of iron and steel scrap to the total supplies of iron and steel is somewhat different from that existing with respect to nonferrous metals. This is because the economical production of steel by the open-hearth process requires. that part of the iron-bearing materials used consist of heavy melting scrap. Thus, much iron and steel scrap constitutes a material important to the domestic production of steel. Despite the fact that imports of scrap metals have not in the past few years constituted important components of the total supplies of the various metals, the imports in some cases have represented important sources of the metals for limited numbers of consumers of such metals in some sections of the country.

The rates of duty on the principal types of ferrous and nonferrous metal scrap, the suspension of which would be continued by the bill, are shown in the following table:

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Relaying and rerolling rails would, in the absence of this legislation, be dutiable at the rate of one-twentieth of 1 cent per pound plus additional duties on alloy content under paragraphs 305 and 322 of the Tariff Act of 1930, as modified. Other metal articles not considered scrap within the meaning of the tariff classifications but imported to be used in remanufacture by melting are also exempt from

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