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Section 349.1 Tax: as applied to coal sold to governmental agencies. The Commission has received numerous inquiries from code members for interpretation of the Bituminous Coal Act of 1937, in so far as it relates to sales for the exclusive use of the United States or any State or Territory of the United States or the District of Columbia, or any political subdivision of any of them, for use in the performance of governmental functions.

Section 3 (e) of the Arct provides that the excise tax of 1 cent per ton of 2,000 pounds imposed by section 3(a) of the Act (50 Stat. 75; 15 U.S.C., Sup., 830 (a), (e)) shall not apply in the case of sales of coal to the above enumerated purchasers when such purchases are for use in the performance of governmental functions. Section 4, part II (e) (50 Stat. 80; 15 U.S.C., Sup., 833 (e)) provides that no coal subject to the provisions of this section shall be sold or delivered or offered for sale at a price below the minimum or above the maximum therefor established by the Commission, and the sale or delivery or offer for sale of coal at a price below such minimum or above such maximum shall constitute a violation of the code.

The Commission construes the above referred sections of the Act in light of the intent of Congress as permitting a reduction of 1 cent per ton of 2,000 pounds below the minimum price established for such coal when sold for the exclusive use of the United States or any State or Territory of the United States or the District of Columbia, or any political subdivision of any of them, for use in the performance of governmental functions.

The Bureau of Internal Revenue has provided in Regulations 98, Chapter IV, Article 31, the procedure by which exemption from tax on such sales may be obtained. (Sec. 3 (e), 50 Stat. 75; 15 U.S.C., Sup., 830 (e)) [Ruling, NBCC, Jan. 15, 1938, 3 F.R. 90]

CROSS REFERENCE: For Chapter IV, Article 31 of Regulations 98 of the Bureau of Internal Revenue relating to taxes on the sale or other disposal of Bituminous Coal imposed under The Bituminous Coal Act of 1937, see 26 CFR 311.31.

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349.11 Construction of section 4, part II (e); 30 day limitation. The Bituminous Coal Act of 1937 (section 4, part II, marketing, subsection (e)) provides :

No coal subject to the provisions of this section shall be sold or delivered or offered for sale at a price below the minimum or above the maximum therefor established by the Commission, and the sale or delivery or offer for sale of coal at a price below such minimum or above such maximum shall constitute a violation of the code: Provided, That the provisions of this paragraph shall not apply to a lawful and bona fide written contract entered into prior to June 16, 1933.

From and after the date of approval of this Act, until prices shall have been established pursuant to subsections (a) and (b) of part II of this section, no contract for the sale of coal shall be made providing for delivery for a period longer than thirty days from the date of the contract.

In order to give full force and effect to the minimum prices to be established by the Commission, the National Bituminous Coal Commission pursuant to Act of Congress entitled “An Act to regulate

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288 349.11–349.16 will probably become ineffective by October 1, 1938. Page 50

interstate commerce in bituminous coal, and for other purposes" (50 Stat. 72; 15 U.S.C., Sup., 828–851), known as the Bituminous Coal Act of 1937, hereby orders and directs:

From and after September 14, 1937, no contract shall be entered into and no order shall be accepted by any member of the Bituminous Coal Code providing for the delivery of coal for a period longer than 30 days from the date of the contract or order. * (Par. 1, Order 44, NBCC, Sept. 14, 1937, 2 F.R. 1849]

*$$ 349.11 to 349.16, inclusive, issued under the authority contained in sec. 2 (a), 50 Stat. 72; 15 U.S.C., Sup., 829 (a): apply sec. 4, part II (e), 50 Stat. 80; 15 U.S.C., Sup., 833.

349.12 Violation. The Commission construes the first paragraph of section 4, part II, subsection (e), as being applicable to the third paragraph of the same subsection, which limits contracts for the sale of coal from and after the date of the approval of the Act until prices have been established, to a period not longer than 30 days from the date of the contract. The Commission will construe as a violation of the Bituminous Coal Code the shipment or delivery upon any such contract, subsequent to the establishment of minimum prices, of any coal subject to section 4 of the Act at a price below the minimum price therefor established by the Commission.

The Commission construes the first paragraph of subsection (e) of section 4, part II, of the Act as not applicable to any lawful and bona fide written contract entered into prior to June 16, 1933, in the event such contract has been duly authenticated by the Commission in conformity with regulations hereafter to be prescribed.

Following the establishment of minimum prices, no code member may, upon the sale of coal to a distributor, grant any maximum discount or price allowance, or any part thereof, hereafter prescribed by the Commission pursuant to subsection (h) of section 4, part II, of the Act (50 Stat. 81; 15 U.S.C., Sup., 833 (h)), for delivery upon a contract for the sale of coal made by such distributor from and after the date of this order and prior to the establishment by the Commission of such distributors' discounts unless the contract price at which the coal has been sold by such distributor is not less than the established code minimum price for the size and grade of coal covered by such contract and in effect at the time of delivery.* [Par. 2, order 44, NBCC, Sept. 14, 1937, 2 F.R. 1849]

349.13 Contracts with government agencies excepted. (a) The Commission will not construe as a violation of the Act the making of a contract with an agency of the Federal or State Governments, or political subdivisions thereof, which contains a provision that in the event the National Bituminous Coal Commission shall establish during the period of the contract a minimum price for the class, grade or size of coal produced at the mine or mines named in the contract, which is more than the contract price for such coal, the contract price shall be increased to the minimum price so established by the Commission, for the coal shipped from the mine or mines and delivered after the effective date of the establishment of such minimum price; that the right is reserved to the purchaser to enter a new contract for successive 30 day periods until a minimum

*For statutory citation, see note to § 349.11.

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price for the coal shall have been established by the Commission; and that the right is reserved to the purchaser to enter a new contract for a period of 60 days after the date of the establishment of such a minimum price, the price to be paid during such periods to be the contract price or the minimum price, if any, established by the Commission effective on dates of shipment from the mine or mines named in the contract.

(b) It will not construe as a violation of the code the making of a contract by a code member in conformity with the provisions set forth in paragraph (a) of this section.* [Ruling, NBCC, Oct. 27, 1937, 2 F.R. 2396]

349.14 Regulations held still in effect. Inquiry having been made to the Commission as to whether or not a 30 day limitation on contracts for the sale of coal is in effect by virtue of the provisions of the third paragraph of section 4 (e) of the Act, or by virtue of Commission's Order No. 44 (88 349.11–349.12), and as to the power of the Commission to impose such 30 day limitation under the authority vesting in the Commission to prescribe reasonable rules and regulations to carry out the provisions of the Act, in response thereto and in conformity with what it deems to be the intent of Congress, and in order to carry out the provisions of the Act:

The Commission construes the third paragraph of section 4 (e) of the Act, which limits contracts for the sale of coal from and after the date of the approval of the Act, "until prices shall have been established,” to a period not longer than 30 days from the date of the contract, as meaning that the 30 day limitation on contracts shall be effective "while” or “as long as" prices are not established, the word "until” referring to the entire time of the duration of a condition, rather than the mere point of inception of such condition, and;

The Commission declares that until minimum prices of coals of code members have been re-established by the National Bituminous Coal Commission, pursuant to subsections (a) and (b) of part II, section 4 of the Act (50 Stat. 77, 78; 15 U.S.C., Sup., 833 (a), (b)), no code member shall sell or enter into any agreement to sell coal calling for delivery thereof for a period beyond 30 days from the date of such sale or agreement of sale.* [Ruling, NBCC, Mar. 30, 1938, 3 F.R. 689]

349.15 Contracts with governmental agencies excepted. The Commission declares that until minimum prices of coals of code members have been reestablished by the National Bituminous Coal Commission, pursuant to subsections (a) and (b) of part II, section 4 of the Act, no code member shall sell or enter into any agreement to sell coal calling for delivery thereof for a period beyond 30 days from the date of such sale or agreement of sale, provided however, that it will not be deemed a violation of the code:

(a) To enter into a contract for the sale of coal with agencies of the Federal Government containing a provision permitting the Federal Government to renew the contract after the effective date of

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*For statutory citation, see note to 8 349.11.

or:

minimum prices, either for the remainder of the fiscal year or for such part thereof as the Government may desire, but such contract must provide that no coal will be delivered thereunder below the minimum prices, when the same are established by the Commission,

(b) To enter into a contract for the sale of coal for periods not exceeding 1 year in any case where a State or political subdivision thereof or any other governmental agency is required by state statute or local ordinance to purchase coal for periods in excess of 30 days, but such contract must provide for a reasonable price to continue until minimum prices are made effective by the Commission and that thereafter no coal will be delivered thereunder below the minimum prices.

Section 349.14 is, in all other respects, unchanged, and this modification is made for the purpose of relieving any undue interference with governmental functions.* [Ruling, NBCC, Apr. 6, 1938, 3 F.R. 717]

349.16 Bunker coal. Bunker coal is expressly included within the domestic market and subject both to the provisions relating to minimum prices and the limitation expressed in the Act as to the term of contracts made prior to the date upon which minimum prices become effective by order of the Commission.

The Commission therefore states in reply to the inquiries submitted, that in its opinion the making of a contract for bunker coal for delivery over a period longer than 30 days from the date of the contract is in violation of the provisions of the Act cited above.* [Ruling, June 12, 1937]

*For statutory citation, see note to § 349.11.

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