Case ID: us-ct-cl_184/html/0169-01.html
Source: Caselaw Access Project
Author: {"author": "Pee Curiam : \n      Nichols, Judge,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

394 F. 2d 990
    PACIFIC FAR EAST LINE, INC. v. THE UNITED STATES
    [No. 119-63.
    Decided May 10, 1968]
    
      
      Mark P. 8chief er, attorney of record for plaintiff. T. S. L. Perlman and Kominers, Fort, Sohlefer, Farmer & Boyer, of counsel.
    
      Allan J. Weiss, with whom was Assistant Attorney General Edwi/n L. Weisl, Jr., for defendant.
    Before CoweN, Ghief Judge, Labamore, Dtjreee, Davis, ColliNS, SeeltoN, and Nichols, Judges.
    
   Pee Curiam :

This case was referred to Trial Commissioner Paul H. McMurray, with directions to make findings of fact and recommendation for conclusions of law under the order of reference and Eule 57(a). The commissioner has done so in an opinion and report filed on June 5,1967. Exceptions to the commissioner’s opinion, findings and recommendation were filed by the parties and the case has been submitted to the court on oral argument of counsel and the briefs of the parties. Since the court agrees with the commissioner’s opinion, findings and recommended conclusion of law as hereinafter set forth, it hereby adopts the same as the basis for its judgment in this case. Therefore, the court concludes that plaintiff is entitled to recover and judgment is entered for plaintiff with the amount of recovery to be determined pursuant to Eule 47(c).

OPINION OP COMMISSIONER

McMurray, Commissioner: Pacific Far East Line, Inc., (PFEL) sues for damages under the Tucker Act, 28 U.S.C. § 1491 (1964), alleging that defendant breached its operating-differential subsidy (ODS) agreement with plaintiff by improperly withholding portions of subsidy funds due and payable to PFEL.

In my opinion plaintiff is entitled to recover.

In order to alleviate or diminish the complexities of this case, the parties requested and were permitted to present oral argument before the commissioner after they had filed their briefs under Eule 57. No transcript reflecting the oral argument was filed with the clerk of the court, but the transcript of testimony taken at the trial is very extensive. Complexities are involved in this case primarily because the events giving rise to the claim occurred over a 10-year period and involved voyages of many vessels which (voyages and vessels) are subject to a variety of classifications having many legal aspects.

PFEL, a Delaware corporation with its primary place of business in California, had engaged in the transoceanic foreign commerce of the United States since 1946. Anticipating keen competition from foreign shipping operators, PFEL sought an ODS to help replace its vessels with more efficient ships as a means of maintaining its favorable competitive position. Proceedings on the application were held pursuant to Title VI of the Merchant Marine Act of 1936 (hereinafter Act), 49 Stat. 2001, as amended, 46 U.S.C. §§ 1171-1183a (1964). Pacific Far East Line, Inc., 4 F.M.B. 7 (No. S-19, 1952). The defendant through the Federal Maritime Board, subsequently entered into a subsidy contract (FMB-22) on December 31, 1952. FMB-22 covered the period from January 1,1953 through 1962, which is the period of time (sometimes referred to as the recapture period) in which the activities giving rise to this case occurred. Later the parties substituted another contract (FMB-81) for FMB-22, effective January 1, 1959, but FMB-81 provided that the first recapture period should remain January 1, 1953 through 1962. The substitution does not change the issues in this case because the controversial contract provisions and the recapture period remain substantially the same. In this opinion both contracts may be referred to as one or as the agreement.

PFEL agreed to operate certain vessels on the service described by the contract (sometimes called the subsidized service) in accordance with the terms and conditions of the contract. In return, defendant promised to pay a subsidy toward various costs as determined by the contract. FMB-22 described the subsidized service as a berth service of a restricted number of outward sailings on essential Trade Route 29 — Service 2 as follows:

Between the California ports of Los Angeles and San Francisco and Yokohama, Kobe, Osaka, other Japanese ports (as traffic offers). Shanghai, other North China ports and ports in Manchuria and Korea (as traffic offers), Hong Kong, Manila, Philippine Islands out-ports, French Indo-China and Siam (as traffic offers); with privilege of calls at ports of U.S.S.K.. in Asia.

FMB-81 described the service as between “ports in California” and, basically, the same Far Eastern ports. The agreement imposed upon PFEL an obligation to replace its old subsidized ships with new vessels and the new vessels became “subsidized vessels,” i.e., the voyages of these vessels on the subsidized service were entitled to subsidy, as they were acquired.

Article 11-16 of FMB-81 provided in part:

(a) Without the express approval of the United States, * * * [PFEL] shall [not] operate or cause or permit to 'be operated any unsubsidized vessel, * * * in competition with any subsidized service of the Operator [PFEL] or in the foreign commerce of the United States in competition with any other essential United States flag service, route, or line, as defined in applicable rules and regulations of the United States.

Article 11-16 was included because defendant felt that it had a statutory duty to prevent the continuity of the service and the quality of operations from being adversely affected and because it had a contingent financial interest in the profits from subsidized operations by virtue of Article 11-28.

Section 606(5) of the Act, 49 Stat. 2004, as amended, 46 U.S.C. §1176(5) (1964), requires the inclusion in every ODS contract of language which constitutes the substance of Article 11-28 of the agreement. Thus, the contract provided the following recapture formula:

(a) At the expiration of each 10-year recapture period during which, without interval, an immediately preceding subsidy agreement, this agreement, or a consecutive agreement shall have been m effect * * *, and upon the final termination of subsidized operations, the United States shall determine the amount of the net profits of the Operator on its subsidized vessel (s) and services incident thereto (without regard to capital gains and capital losses) during each 10-year recapture period, or the period to the final termination of subsidized operations, after deduction of depreciation charges based upon a life expectancy of the subsidized vessel(s) determined as provided in Section 607 (b) of the Act. Forthwith upon such determination, if such net profit for any such period has averaged more than 10 per centum per annum upon the Operator’s capital investment necessarily employed in the operation of the subsidized vessel (s), service(s), route (s), and line(s), the Operator shall pay to the United States an amount equal to one-half of such profits in excess of 10 per centum per annum, less amounts already retained, as partial or complete reimbursement for operating-differential subsidy payments received by the Operator for such recapture period, but the amount of excess profits so recaptured shall not in any case exceed the amount of * * * subsidy payments theretofore made * * * under this agreement or consecutive agreement (s), and the payment of such reimbursement * * * shall be subject to * * * Section 607 of the Act and Articles 11-26 and 11-29 hereof.
Hi .1: * * *

In effect, plaintiff’s claim is for subsidy moneys withheld by defendant because the periodic payments of subsidy by defendant to PFEL were reduced by defendant’s corresponding estimates of its recapture interest. Plaintiff, therefore, hopes to bring about a recalculation of defendant’s recapture interest. Plaintiff cites the Article 11-28 phrase “and services incident thereto,” and contends that defendant’s improper failure to include the financial results of certain nonsubsidized voyages, and inclusion of the financial results of other nonsubsidized voyages, as “services incident thereto” constitutes a breach of the contract resulting in the calculation of greater excess profits (i.e., profits subject to recapture by the United States) than would have been determined had the voyages been otherwise treated for recapture purposes. Defendant’s basic defense is that Article 11-16, relating to competing nonsubsidized operations, gave it the discretion to determine which of the nonsubsidized voyages should be included in the recapture formula and that defendant properly exercised its discretion. Resolution of this dispute requires understanding of the nature of the nonsub-sidized voyages and analysis of the accounting involved.

In December 1952, before the ODS agreement was finally executed, PFEL informed the Maritime Administration (MARAD) by letter that it desired to operate certain non-subsidized services. The letter stated that PFEL did not believe these services required the approval of MARAD under Article 11-16 and that these services would not compete or conflict with the subsidized service, but it requested that MARAD treat the letter as an application for express approval if such approval was deemed necessary. The Maritime Administrator, treating the letter as an Article 11-16 request, acted on it on November 17, 1953, and his letter of November 25, 1953, informing PFEL of his action largely sets the stage for this case.

The Administrator approved the following nonsubsidized services subject to stated conditions: (1) transpacific reefer service (i.e., transportation of food products under refrigeration) between United States West Coast ports, Alaskan ports and certain Far Eastern ports, many of which were also on the subsidized service; (2) Pacific-Guam and transpacific bulk cargo services consisting of “usually two sailings monthly in the service ‘California ports direct to Guam with general cargo, then to Japan with bulk; cargo as well as one or two sailings monthly direct to Japan and Korea with bulk cargo * * *. Vessels are to return to California ports in ballast.’ * * *” The term “in ballast” means “empty” or without cargo.

The letter constituted prior approval for the reefer voyages; but it required PFEL to submit sailing schedules, and to acquire MARAD’s prior approval of those schedules, for voyages in the Pacific-Guam and bulk services. The letter also stipulated that the approval granted therein was subject to conditions pertaining to the financial treatment of these voyages. Thus, all nonsubsidized voyages made exclusively outside the subsidized service (off-route) were to be excluded from the recapture formula while all such voyages conducted entirely within that service (on-route) were to be included. Further

(e) In the event any of the voyages made by these vessels are partially within and partially without the subsidized service (characterized as “split voyages”), the financial results of such voyages shall be accounted for on the basis of each such voyage as determined by the Administration with respect to each six-month period of terminated voyages.

This case is concerned primarily with split voyages although there is controversy regarding certain on-route voyages which must also be determined.

Interpretation of “Services Incident Thereto”

We shall use plaintiff’s nonsubsidized reefer service as the vehicle by which we construe the phrase “services incident thereto.” Plaintiff’s nonsubsidized reefer service from 1953 through 1958 included over 200 on-route and split voyages. The acquisition of Mariner vessels and their introduction into the subsidized service pursuant to the contract caused this nonsubsidized service to be phased out. Apparently there were 21 nonsubsidized split reefer voyages which MABAD refused to include in the recapture accounting formula for the years 1955 through 1958. Plaintiff contends that one such voyage conducted in 1956 earned 50 percent or more of its revenue from cargo carried between ports on Trade Boute 29. The remainder appears to have earned less than 50 percent of its revenue from such carriage. There is evidence suggesting that the nonsubsidized reefer service met inadequacies in the subsidized service. In view of these facts plaintiff asks this court to hold that MABAD should have included all of these split reefer voyages in recapture accounting on the theory they augmented or complemented the subsidized service and, consequently, were incident thereto.

Plaintiff may not obtain relief on this theory. Placing its reliance on the word “incident” in Article 11-28, PFEL suggests that its meaning is “naturally * * * appertaining, esp. as a subordinate or subsidiary feature.” The adjective “incident” is not a precise term, and it admits of other shades of meaning also. For example, it may mean “occurring or likely to occur esp. as a minor consequence or accompaniment” or also “dependent on or relating to another thing.” Webster’s Seventh New Collegiate Dictionary (1963). To seize on one shade over another as a means of expressing the particular relationship between the incident services and the subsidized vessels might be proper if the ambiguous phrase had been reasonably construed by plaintiff. Kraus v. United States, 177 Ct. Cl. 108, 116, 366 F. 2d 975, 979-80 (1966), and cases therein cited. This contract, however, must be interpreted as a whole, or, in other words, the intention of the parties must be gathered from the whole instrument. Hol-Gar Mfg. Corp. v. United States, 169 Ct. Cl. 384, 351 F. 2d 972 (1965). The interpretation should give a reasonable meaning to all provisions without construing any as being in conflict with another “unless no other reasonable interpretation is possible.” Ibid. This is particularly true where the provision sought to be affected is a standard mandatory clause of broad application. See Thompson Ramo Wooldridge, Inc. v. United States, 175 Ct. Cl. 527, 536, 361 F. 2d 222, 228 (1966). Clearly we may not close our eyes to the fact that Federal law (49 Stat. 2004 (1936), as amended, 46 U.S.C. § 606(5) (1964)) requires the inclusion of the disputed language. A. H. Bull S.S. Co. v. United States, 123 Ct. Cl. 520, 528, 108 F. Supp. 95, 99 (1952); G. L. Christian & Associates v. United States, 160 Ct. Cl. 1, 12, 312 F. 2d 418, 424 (1963), cert. denied, 375 U.S. 954. A necessary corollary is that, if we go beyond the contract to ascertain its meaning, we should look to the history of the legislation to determine the meaning of the language which must be included in the instrument. Cf. Russell Motor Car Co. v. United States, 261 U.S. 514 (1923).

Article 11-28 is deficient in that it does not expressly state the nature of the relationship 'between the subsidized vessels and the incident services. Although nonsubsidized voyages are not mentioned, both parties argue that some should be included in the formula. Moreover, 'both parties sought to include certain nonsubsidized voyages in the formula during the operation of the agreement. Further, these services are in addition to the subsidized vessels; and the Maritime Administrator has defined “service” in Maritime Administration, U.S. Department of Commerce, Essential United States Foreign Trade Routes 76 (July 1960), as follows:

The means of providing transportation over a trade route, including the itinerary, sailing frequency, number and type of vessels to be employed. A service may be contained entirely within the limits of a designated trade route, * * * [or] a service may extend into other trade routes * * *.

The administrative cases hold that “service” contemplates “the entire scope of an operation.” Pacific Transport Lines, Inc.-Subsidy, Route 29, supra. See American Export Lines, Inc., 1 M.S.B. 236, 249 (Docket No. S-135, 1963); Lykes Bros. S.S. Co., 4 F.M.B. 153, 158 (Docket No. S-23, 1953); Grace Line, Inc., 6 F.M.B. 82, 86 (Docket No. S-113, 1960). In Grace Line tie Board said that “the words ‘service, route, or line’ should receive the same construction in section 606 (4) as they receive in section 601(a) and 603(a), and for the same reason.” Ibid. The same must be true for section 606(5). Thus, it is clear that at least some split and on-route non-subsidized voyages are contemplated by Article 11-28.

A hint concerning which voyages are to be included appears in Article 11-28 insofar as it speaks of “the operation of the subsidized vessel (s), service (s), route (s), and line(s).” [Emphasis supplied.] The obvious purpose of this article is to permit the defendant to share in the “excess” profits generated by subsidized operations to the extent that subsidy is paid. This was apparently all that Congress intended when it enacted and amended section 606(5) (49 Stat. 2004 (1936), as amended, 46 U.S.C. §1176(5) (1964)). S. Rept. No. 1618, 75th Cong., 3d Sess. 14-15 (1938); 79th Cong. Rec. 9901 (1936) (remarks by Senator Guffey) ; S. Rept. No. 898, 74th Cong., 1st Sess. 38-47 (1935) ; S. Rept. No. 1859, 84th Cong., 2d Sess. 1 (1956). None of those sources, nor any historical data related to the section, which we have found, speak in terms of nonsubsidized voyages or operations, but they focus entirely on subsidized operations wherever the recapture concept is discussed. It would be contrary to the obvious purpose of Article 11-28 to include in its scope the financial results of voyages which do not reflect subsidized operations.

Voyages which compete with the subsidized vessels reflect potential subsidized operations. Such voyages may draw cargo from the subsidized vessels. Where one party controls both the subsidized and nonsubsidized voyages, it may determine which ones will perform the best in terms of cargo carried. The defendant may have anticipated a diversion of the subsidy to nonsubsidized vessels by way of allocation, or manipulation, of cargoes; obviously Article 11-16 was written into the contract to guard against that possibility. That provision expressly gives the defendant the right to approve or disapprove prospective requests to conduct voyages competitive with the subsidized service. By this logic the defendant, acting pursuant to Article 11-16, lacked contractual authority to approve or disapprove noncompetitive, unsubsidized reefer voyages. The conditional approval of November 25, 1953, was made pursuant to Article 11-16, and therefore, necessarily contemplated competitive reefer voyages. Since MARAT) had the contractual right either to approve or to disapprove competitive voyages, it would be improper to hold that a qualified or conditional approval lacked a valid contractual basis. Cf. Jack Stone Co. v. United States, 170 Ct. Cl. 281, 287-88, 344 F. 2d 370, 374 (1965). To the extent that Article 11-16 was a basis for approvals, it must be read in conjunction with Article 11-28. The November 25, 1953 approval granted by MARAD was conditional in that it, inter alia, expressly reserved for the defendant the right to determine in the future the accounting basis for the financial results of split voyages. Behind this reservation was MARAD’s theory that the impact of nonsubsidized split voyages on revenue of subsidized voyages could not be determined until after the completion of the split voyage. MARAD, therefore, sought to effectuate the purpose of the contract. It cannot be held to have breached the contract by reasonably exercising its discretion. See Fox Valley Eng'r, Inc. v. United States, 151 Ct. Cl. 228, 236-37 (1960); Jack Stone Co. v. United States, supra, at 286, 344 F. 2d at 373.

The above comments regarding the nonsubsidized reefer voyages apply to the transpacific bulk and the Pacific-Guam services insofar as plaintiff contends they were complementary. The fact that they may have complemented, as plaintiff defines that word, the subsidized service has no bearing on whether MARAD could impose reasonable conditions pursuant to Article 11-16. To the extent that the voyages were competitive with the subsidized service, MARAD had the right under Article 11-16 to determine a reasonable basis on which split voyages in these nonsubsidized services would be included in recapture accounting. Since plaintiff also contends that the methods used to select nonsubsidized voyages for accounting purposes and the bases on which periodic accounting treatment rests were arbitrary and capricious, we turn our attention to specific voyages and periods of time during which the various accounting treatments were used.

Recapture Accounting for Split Voyages

Contracts for cooperation-differential subsidies are to be treated like any other commercial contract between the United States and a private party. Capital Necessarily Employed-General Order 71, 4 F.M.B. 646, 654 (Docket No. S-66, 1952); cf. S. Rept. No. 1618, 75th Cong., 3d Sess. 3 (1938). The defendant’s rights and responsibilities under this contract are similar to those of a private individual who is a party to a contract (G. L. Christian & Associates v. United States, supra at 11, 312 F. 2d at 423, and cases cited therein), and defendant normally is subject to “the same rules of law that govern private individuals.” Hughes Transp., Inc. v. United States, 128 Ct. Cl. 221, 245, 121 F. Supp. 212, 228 (1954). A party vested with contractual discretion must exercise his discretion reasonably and may not do so arbitrarily or capriciously. Jack Stone Co. v. United States, supra at 286, 344 F. 2d at 373; Fox Valley Eng'r, Inc. v. United States, supra; Ferguson & Edmondson Co. v. United States, 116 Ct. Cl. 246, 268, 89 F. Supp. 135, 138 (1950); Wm. Eisenberg & Sons v. United States, 110 Ct. Cl. 388, 422-24, 75 F. Supp. 1006, 1008-09 (1948) ; cf. First-Citizens Bank & Trust Co. v. United States, 110 Ct. Cl. 280, 76 F. Supp. 250 (1948). This court will grant relief where contractually exercised discretion is abused. Fox Valley Eng'r, Inc. v. United States, supra; Jack Stone Co. v. United States, supra. But there can be no relief from an erroneous judgment exercised in good faith pursuant to valid discretionary power. Cf. Ferguson & Edmondson Co. v. United States, supra. As decided herein, Article 11-16 gave MANAD the discretion of determining whether a nonsubsi-dized voyage was competing with the subsidized service and, when read with Article 11-28, to take steps to assure that recapture reflected the financial results of the competing non-subsidized service. We shall now decide whether MARAD’s actual treatment of nonsubsidized split voyages was a proper exercise of its discretion within the legal guidelines previously discussed.

The 10-year recapture period may be viewed in four aspects or parts, each representing a period of time for which a different method was used to determine which voyages should be included in recapture accounting. Therein lies the basis for plaintiff’s contention that MANAD acted inconsistently and, therefore, arbitrarily in exercising its discretion to determine which voyages fit the recapture formula. The first part of the recapture period includes the years 1953 and 1954. Except for three 1954 voyages discussed in a later part of this opinion, plaintiff agrees with the results obtained by MANAD’s treatment for 1953 and 1954. For the sake of continuity we shall discuss the means used to reach those results. MANAD had reserved the right to determine the accounting basis for split voyages in the letter of November 25, 1953. MANAD intended to make this determination based on a standard or guideline which it termed a test of the “competitive impact/substantial involvement” of non-subsidized voyages with the subsidized service. This test constituted MANAD’s interpretation of the phrase “services incident thereto” in Article 11-28. Mr. Callahan, an experienced MANAD examiner, analyzed each nonsubsidized voyage for 1953 and 1954 in 1954 and 1955, respectively, to determine which voyages were substantially involved with or had a competitive impact upon the subsidized service. He based his analysis upon the various factors: (1) his personal knowledge of PFEL’s operations and of traffic movements on the trade route; (2) ports served by each voyage; (3) cargoes carried; and (4) a comparison with subsidized voyages. Financial results of unsubsidized voyages were not in Callahan’s analyses. Acting on Callahan’s recommendations, MANAD included all split voyages (except the three to be discussed later) in the recapture formula for 1953 and 1954. {Ihid.']

The treatment afforded split voyages occurring between January 1,1955 and March 7,1957, involves a major portion of plaintiff’s claim. In 1958 and 1959 PFEL included all split voyages in its preliminary accountings for 1955 and 1956, respectively, because it was determined, with, apparent justification, that such a basis was consistent with the 1953 and 1954 method. On April 25, 1957, MABAD adopted General Order No. 80. 46 C.F.R. §§281.11-281.17 (1966). That regulation provides that the financial results of nonsub-sidized voyages by subsidized operators

shall be included in the subsidized operations for recapture and reserve fund purposes if * * * 50 percent or more of the total gross voyage revenue is derived from carrying cargo between ports within the subsidized service, and

that voyages deriving less than 50 percent of such revenue from such carriage shall be excluded. 46 C.F.R. § 281.16(d) (1966).

In 1959 it was the opinion of MARAD officials in San Francisco, contrary to PFEL’s belief, that no official allocation of unsubsidized split voyages had been made for 1955 and 1956. Also, they were not certain of the date from which General Order 80 should apply to unsubsidized voyages. Upon request for clarification, the Office of Government Aid, by letter dated June 24, 1959, informed the San Francisco officials that General Order 80 criteria should apply to the financial results of split voyages occurring in 1955, 1956 and 1957. MARAD likewise informed PFEL, and MARAD’s auditors-in-residence at PFEL (in San Francisco) proceeded on that basis with the 1955 and 1956 preliminary accountings. As a result, PFEL apparently became entitled to a net refund of approximately $750,000 of recaptured subsidy. PFEL requested use of that money in December 1959.

In January 1960 MARAD canceled the letter of June 24, 1959, and required that 1955 and 1956 be treated in the same manner as were 1953 and 1954. The only apparent reason for revoking the General Order 80 criteria was that the Office of Government Aid stated that “General Order No. 80 should not be applied retroactively to the years 1955 and 1956.” Subsequently, MARAD, by letter dated March 7, 1957, informed PFEL of the change and explained that General Order 80 criteria applied only to voyages commenced on or after March 8,1957. At the same time MARAD told PFEL which voyages were subject to recapture under the letter of November 25, 1953. Mr. Schulmeister, another MARAD examiner, analyzed tbe 1955 and 1956 split voyages using the substantial involvement and competitive impact standard in much the same manner as Callahan had done for 1953 and 1954. As a result, however, voyages excludable under General Order 80 criteria were included in the formula, thereby tending to increase recapture.

It is found that MANAD abused its discretion by repealing the General Order 80 criteria under the circumstances involved in this case. MANAD’s authority to determine the split voyage allocation for recapture during this period springs from the letter of November 25,1953, which, in turn, is based upon Article 11-16 and, therefore, the objective of the letter was the prevention of competitive influence adverse to the subsidy program set up by the contract. MANAD felt that General Order 80 criteria measured the competitive nature of the split voyages. It used that method for 1957-60 also, and defendant contends that the substantial involvement/competitive impact standard was maintained throughout the recapture period. Also clear is the fact that the method used by Schulmeister likewise measured competitiveness. No choice is made at this time with respect to the best method of the two used. It is found, however, that under the circumstances in this case MANAD could not first apply the General Order 80 method, and then revoke it in favor of another method without having a valid reason for the revocation.

MANAD reversed itself only after it found that the mathematical approach of General Order 80 resulted in less recapture than the rather subjective approach used by Schul-meister. One can only speculate about the merits of Schul-meister’s approach. While his analysis was based on the same factors considered by Callahan, his analysis was inherently different perhaps because of the differences in human judgment and knowledge of individuals. Possibly such differences stimulated the formulation of the objective, mathematical formula set forth in General Order 80. The merits of the methods, however, are immaterial because we need only to determine whether the substitution of one for the other was permissible under this agreement. Because MAEAD knew the effect of General Order 80 on recapture and the fact that it substituted an approach largely based on human judgment which caused results adverse to PFEL’s interest, we look with suspicion at the stated reason for substitution.

It is found that M A RAP’s only announced reason was the opinion that General Order 80 should not be applied retroactively. More is required than a mere statement that retro-activity is undesirable to make it so. MARAD should have a good reason for revoking an accounting procedure based upon a mathematical formula when the revocation takes place after the mathematical procedure had been applied in such a manner that the operator became entitled to a substantial sum of money and when the method substituted for the revoked procedure is based substantially on the personal judgment of a MARAD official. We see no material difference between the retroactive application of General Order 80 and the use of Schulmeister’s schedule of includable voyages except that they produce different results. Schulmeister joined MARAD in 1957 which was, of course, after the accounting years of 1955 and 1956; and, by the terms of the November 25, 1953 approval, he could not evaluate the voyages until they were completed. By the same token, General Order 80 was promulgated April 25, 1957, (46 O.F.R. §§ 281.11-281.17 (1966)) and, likewise, could not be applied to specific voyages until those voyages were completed, Thus, in terms of actual treatment of the financial results of each voyage the method was inherently retrospective. Such retrospective treatment was the expressed intent of the condition imposed by the letter of November 25,1953, and the reasonableness of that intent is not questioned. We simply notice the retrospective aspect in order to try to understand the reason for the change in methods, and from this point of view there is no difference between the use of either method. Further, from another point of view, the application of General Order 80 criteria to 1955 and 1956 would in effect be applying that criteria to periods which had elapsed before its promulgation as a regulation. MARAD, however, applied General Order 80 criteria to the period March 7, 1957 through April 25, 1957. This period is relatively short in comparison to the period January 1, 1955 to March 7,1957, but there is no difference in the principle of retroactivity in the application of General Order 80. The application of General Order 80 was retroactive when applied from March 7, 1957, in the same manner as it would have been had it been applied from January 1, 1955. MANAD indicated that the application of General Order 80 criteria to 1955 and 1956 was adequate to protect the subsidy program when MANAD originally applied it to those years. There has been no suggestion that the revocation of General Order 80 criteria was based upon its unsuitability for this purpose, and, indeed, such contention would be difficult to sustain since MANAD used General Order 80 for subsequent years. We are compelled to conclude that MANAD’s statement, to the effect that the retroactive application of General Order 80 was undesirable, was meaningless and not the real reason for changing the method of accounting. We are left with the bald circumstance that MANAD changed its method of accounting after it discovered that PFEL was entitled to a large sum under its original procedure. MANAD’s only concern must have been to secure for the defendant the maximum amount of money in the form of recapture. As such, this situation takes on the appearance of market place haggling and unreasonable retroactivity which offended this court in American President Lines, Ltd. v. United States, 154 Ct. Cl. 695, 705, 291 F. 2d 931, 936 (1961). In that case there was a strong element of unreasonable discrimination in the administration of a different provision of the same statutory section (§ 606(5), 49 Stat. 2004 (1936), as amended, 46 U.S.C. §1176(5) (1964)) which gives rise to this case. While there is no unreasonable discrimination present here, we think MANAD’s change in accounting method was unreasonable because the change was based on the desire to increase its recapture interest, and, therefore, was not consistent with MANAD’s discretion under Article 11-16. That article was intended to protect subsidized services from the effects of adverse competition. MANAD lost sight of that protective goal when it changed the accounting method in order to increase the dollar amount of recapture. It is commendable for Federal officials to minimize the costs of government, but MANAD could only do so in this case within the framework of its contract. Since the above case is deemed to clearly establish that one may recover for an unreasonable exercise of discretion, it will be necessary to determine the actual damages resulting from MAKAD’s change in the accounting procedure.

In denying effect to the change in accounting procedure, we are supported by the history behind the statute requiring the inclusion of the recapture formula. Just prior to the time section 606(5) (49 Stat. 2004 (1936), as amended, 46 U.S.C. § 1176(5) (1964)) was again amended to increase the recapture period from 5 to 10 years (52 Stat. 953 (1938)) the Senate Committee on Commerce reported:

A study of the financial history of the steamship business indicates that such incidents [extreme cyclical swings over long periods of time] are characteristic of the industry. Profits, while large in some instances and in others enormous, during prosperous periods, are usually counterbalanced by equally large or enormous losses in depression years. The proposed amendment recognizes this fact and adopts the recapture provisions to the cyclical nature of the industry. [S. Kept. No. 1618, 75th Cong., 3d Sess. 15 (1938).]

The report shows that Congress was concerned with attracting private capital through sound business practices {Id. at 3, 15) and, therefore, not with maximizing recapture by choosing some accounting method which would result in the greatest recapture as appears to be the case here.

From March 7, 1957 through 1960, General Order 80 criteria determined the inclusion of split voyages. There seems to be no doubt that General Order 80 tended to increase recapture for that period, as PFEL contends. There is some evidence to support a finding that General Order 80 should not have been applied to PFEL, and, indeed, it was abandoned after 1960. Despite the fact that MAJRAD used General Order 80 to measure competitiveness for several years, plaintiff insists that General Order 80 does not accomplish that result. Plaintiff’s view may well be correct, but it has adduced little or nothing to support its contention. At most it can be stated that General Order 80 does not appear to be a proper yardstick of measurement. As previously stated, the court is not particularly concerned with the relative merits of several suggested approaches which might be utilized, but only with the issue of whether MARAD abused its discretion in using General Order 80. MARAD considered General Order 80 to be a refinement of the substantial involvement standard. Whether it was a poor refinement or a matter for MARAD to consider, it is neither an issue nor a basis for relief in this case.

There is no dispute over the financial treatment of split voyages in 1961 and 1962. We need not discuss these years except to say that MARAD, at PFEL’s urging, instituted a new refinement of the substantial impact standard in order to replace General Order 80.

Plaintiff contends, however, that the various changes over the entire recapture period from one method to another constitute inconsistent and unreasonable treatment. There is nothing in Article 11-16 requiring the same precise measure of competition during the recapture period. Events occurring before and during that time suggest changing patterns of competition. A voyage considered competitive at one time might not be competitive at another time. The plaintiff has not been of much assistance in the consideration of competitive factors. MARAD, having the discretion to determine which voyages were competitive, was not limited by the contract to a formula with which it was reasonably dissatisfied. There is no inherent unreasonableness in MARAD’s use of several different methods during the recapture period. Plaintiff has not chosen to present an analytical attack relating to whether MARAD’s use of these methods was actually based upon the competitiveness of nonsubsidized voyages with the subsidized service, and, therefore, we need not accord detailed consideration to this aspect of the case as suggested by plaintiff’s contention.

Fourteen On-Route Iron Ore Voyages

Fourteen bulk voyages by nonsubsidized vessels, chartered by PFEL from the defendant, require separate discussion. PFEL, attempting to increase its bulk business, bad contracted to carry large quantities of iron ore from the United States to Japan. Economic conditions caused the ore to pile up at Stockton, California, to the extent that the port facilities there were severely damaged, creating an emergency situation. Unable to fulfill its commitment with its own vessels, PFEL applied for and, 'because of the emergency, was granted permission to charter Victory vessels from the defendant by the Federal Maritime Board pursuant to Public Law 81-591 (64 Stat. 308 (1950), as amended, 50 U.S.C. App. § 1738(e) (1964)). Pacific Far East Line, Inc., 4 F.M.B. 785, 794-97 (Docket No. M-64, 1956). Consequently, MAEAD and PFEL entered into a contract to this effect on March 23, 1956, which provided that the chartered vessels could only carry the ore on voyages outbound to Japan. The contract also provided that subsidized vessels calling at Japan would carry at least 3,500 long tons of ore per voyage.

MAEAD felt that these unsubsidized ore voyages were dissimilar to subsidized liner operations in that the charter contract contemplated a nonliner, single commodity, bulk operation serving only one subsidiary United States port. Further, MAEAD expected the voyages to result in net losses because profitability depended primarily upon the highly speculative possibility of obtaining an agreement by the sea-going unions to reduce manpower on the vessels; and even with such an agreement, losses were likely.

Thus, on March 29, 1956, after the contract was executed, MAEAD informed PFEL by letter that, contrary to the usual treatment of on-route voyages, because of the circumstances surrounding these unsubsidized ore voyages, the financial results would be excluded from recapture accounting. The exclusion occurred and plaintiff complains of that action by MAEAD. It appears that this court should determine whether MAEAD had the right to follow the condition set forth in the letter of March 29, 1956, namely, exclusion of recapture accounting. Based on the facts reflected herein, it is appropriate to estop MAEAD from giving effect to the provisions of the letter of March. 29, 1956. The charter contract imposed several obligations on PFEL, the foremost of which was an obligation to charter seven vessels from the defendant. The contract limited the vessels to the carriage of ore from Stockton, California, to Japan. At the time the contract was executed, MARAD’s letter approving nonsubsidized bulk service dated November 25, 1953, was in effect. Since these 14 voyages to Japan by chartered vessels were conducted over a 9-month period, they appear to come within the phrase “one or two sailings monthly direct to Japan and Korea with bulk cargo * * *” which is part of the approval of November 25, 1953. The approval also provided that the voyages would be included in the recapture formula. There is nothing in the record which indicates that plaintiff thought the approval of November 25, 1953, was not applicable to those ore voyages at the time the charter contract was executed. In addition, the charter contract tied the movement of this ore to the subsidized service by requiring subsidized vessels to carry at least 3,500 tons of the ore, but the charter contract said nothing about recapture. While we have made no finding that PFEL in fact believed the voyages conducted by these chartered vessels would be subject to the recapture formula, it would be unreasonable for us to conclude otherwise in view of the circumstances described herein. As pointed out above, MARAT) recognized that inclusion in the recapture formula was the normal practice. Further, the charter contract said nothing about recapture. At the very most, in defendant’s favor, is the ambiguity, if any, in the letter of November 25, 1953, from the phrase “to Japan and Korea,” [emphasis added] and we cannot say PFEL interpreted it unreasonably. Kraus v. United States, supra.

We do not deal with whether MARAD could have tried to insert the exclusionary condition in the contract or could have imposed it prior to March 23,1956. Its failure to do so before PFEL became Obligated under the charter agreement is the reason for our decision. Had PFEL known in advance that these voyages, which would probably be unprofitable, would not receive recapture treatment, it might not have entered into the contract. Of course, if PFEL took that action, it probably would not have been able to meet its commitments to deliver the ore. Pacific Far East Line, Inc., 4 F.M.B. 785 (Docket No. M-64,1956). However, that choice was for PFEL to make, and there is evidence to suggest that foreign flag operators could have done so. Clearly, from PFEL’s point of view the economic value of these voyages is lessened by exclusion. We take the modem approach and invoke the doctrine of equitable estoppel because defendant’s actions misled plaintiff to its detriment, and good conscience precludes defendant from repudiating its conduct on which PFEL reasonably relied. Mahoning Inv. Co. v. United States, 78 Ct. Cl. 231, 246-48, 3 F. Supp. 622, 629-30 (1933), cert. denied, 291 U.S. 675 (1934); Branch Banking & Trust Co. v. United States, 120 Ct. Cl. 72, 91-93, 98 F. Supp. 757, 768-69 (1951), cert. denied, 342 U.S. 893. These 14 on-route ore voyages must be included in the recapture formula because that is the treatment they would have received had MAKAD not followed the letter of March 29, 1956.

Certain Indwidmil Voyages

We shall now discuss certain specific voyages which were excluded. First, the Tosma, voyage 1,. conducted in 1955, should not be included in the recapture formula as an unsubsidized on-route voyage because the evidence fails to establish that it was an on-route voyage conducted under the authorization letter of November 25, 1953. The evidence not only poses an irreconcilable conflict as to whether the voyage was split or on-route, but there is no showing that the November 25, 1953 authorization governs the financial treatment of this voyage as plaintiff contends it does.

Voyage 1 of the Portland Trader carried cargo, which PFEL’s regular berth vessels were unable to handle, inbound from the Philippines to California in 1955. A letter of approval of this voyage, dated May 2, 1955, responds to a specific request by PFEL to conduct the voyage and the approval provided that the financial results of the voyage would be included in recapture unless inclusion would reduce recapture. Those results were excluded. The letter of November 25,1953, only deals with outbound voyages (from California), and, therefore, could not have contemplated the voyage of the Portland Trader. Since PFEL filed a specific request and MANAD granted conditional approval, the parties must have realized that the voyage was competitive although it is difficult to find the competitive aspect in view of the fact that other vessels could not accommodate the cargo. If it were competitive, it is established that MARAD had the right to provide for exclusion from recapture. If it were not competitive, we do not see why its financial results should be included in the recapture formula because plaintiff has not given us any reason for avoiding the 1955 approval.

Plaintiff contends that the financial results of three 1954 voyages should have been included in recapture. These are the voyages we excepted from our above discussion regarding split voyages. Voyage 1 of the NiJeobar loaded cotton in Mexico, called at Los Angeles for bunkers. Bunkers are compartments used for fuel storage. DeKerchove, International Maritime Dictionary 106 (2d ed. 1961). The Nikobar loaded no cargo at Los Angeles, and proceeded to a foreign port. MARAD treated it as a voyage between foreign ports only and excluded its financial results from recapture. Plaintiff contends it was a split voyage. The Canada Bear, voyage 23, and the Hawaii Bear, voyage 20, were time-chartered to the Military Sea Transport Service at Guam, and did not call at a foreign port on the subsidized service while operated by PFEL. Under the letter of November 25, 1953, off-route voyages were excludable from recapture. Assuming that the Nikobar, voyage 1, was a split voyage, we may treat all three of these voyages alike for the purposes of this claim. Paragraph (e) of the letter of November 25,1953, provides that the 'financial results of split voyages “shall be accounted for on the basis of each such voyage as determined by the Administration with respect to each six-month period of terminated voyages.” This language plainly reserves to MARAD the discretion to decide whether completed split voyages should be subject to recapture. But, as we demonstrated above, this discretion may not be exercised unreasonably. The only fact plaintiff cites, which might tend to show an unreasonable exclusion, is that each voyage touched a port on the subsidized service. We have already decided that the single fact that a voyage touches the subsidized service or route does not establish that it is necessarily incident to the subsidized service. Since the cargo carried by the Nikobar, voyage 1, originated outside the subsidized service, we do not see how it can be related to the subsidized service and plaintiff has not assisted us in this regard. Similarly, since the Canada Bear, voyage 23, and the Hawaii Bear, voyage 20, generated no revenues from cargo carried by PFEL on the subsidized service, there is no apparent unreasonableness in the exclusion of these two voyages. Again, plaintiff has not pointed out factors showing any unreasonable treatment in that regard. This claim was well-tried and well-briefed by both parties. There should be no speculation as to why the treatment of these three voyages might be improper, and we need not search the record to establish impropriety. Cf. H. R. Henderson & Co. v. United States, 169 Ct. Cl. 228, 249 (1965). Consequently, we cannot conclude that these voyages were improperly excluded from the recapture formula.

The financial results of three off-route voyages-Alaska Bear, voyage 47, Hawaii Bear, voyage 50, and India Bear, voyage 5-were included in PFEL’s 1961 earnings from subsidized operations. The parties have agreed that each inclusion was inadvertent and improper, and that the financial results must be excluded from subsidized earnings whatever the result of this litigation may be.

PFEEs Faikt/re to Exhamt Its Administrative Remedy

Defendant suggests that PFEL should have pursued its claims under General Order No. 78, effective since January 1956 (46 C.F.E. Part 205 (1965)), and that, having failed to do so relief should be denied. When this action was commenced, General Order No. 78, provided:

_§ 205.2 Policy. Any contractor * * * who disagrees with the findings, interpretations, or decisions reflected in an audit report of the Maritime Administration and who fails to settle said differences by negotation * * * may submit an appeal against such findings in accordance with the procedure set forth in this part. [Emphasis added.]
§ 205.3 Procedure, (a) Appeals, as described in § 205.2, shall be made * * * within six months following the date of the document notifying the contractor * * * of the final audit findings * * *. [Emphasis added.]

The regulation provided a permissive remedy after the final audit findings.

Until 1960, when MAEAD changed the accounting method for 1955 and 1956 from the previously utilized General Order 80 criteria, PFEL was satisfied with the procedure followed. The accountings for 1955 and 1956 became final in December 1960 and January 1961, respectively. Had PFEL appealed in 1960 or 1961, it would have been faced with the possibility that future losses would eliminate excess profits in view of the fact that Article 11-28 provides that excessiveness depends on whether profits during the recapture period have “averaged more than 10 per centum per annum.” See United States v. Moore-McCormack Lines, Inc., 308 F. 2d 866, 871 (4th Cir. 1962), cert. denied, 372 U.S. 944 (1963). To have appealed in 1961 would have been wasteful and premature.

After 1962 the parties probably knew whether PFEL was in a recapture position. However, the final accounting for 1962 had not been filed when this case came to trial. In fact, final accountings for 1959-61 had not been returned to PFEL by that time. To await the final accountings for those years in order to pursue its permissive remedy might have barred plaintiff’s suit in this court. Nager Elec. Co. v. United States, 177 Ct. Cl. 234, 243, n. 11, 368 F. 2d 847, 853, n. 11 (1966). There appears to be no sound reason to hold that under these circumstances, plaintiff should have pursued its administrative remedy. Cf. Adler v. United States, 134 Ct. Cl. 200, 202-203, 146 F. Supp. 956, 957-58 (1956), cert. denied sub nom., Baker v. United States, 352 U.S. 894; Mallow v. United States, 161 Ct. Cl. 207, 212 (1963); Pine v. United States, 178 Ct. Cl. 146, 149, n. 1, 371 F. 2d 466, 467, n. 1 (1967).

Plaintiff has presented its evidence relating to the issues of liability and damages. Defendant has been permitted to reserve the right to present its defense on the issue of damages. If defendant presents such defense, plaintiff will have an opportunity for rebuttal. This case should be remanded to the commissioner to determine the amount of plaintiff’s damages resulting from defendant’s liability pursuant to Rule 47 (c) under the four categories listed: (1) The General Order 80 criteria should be applied to the financial treatment of split voyages during the period January 1, 1955 through March 7, 1957. (2) The financial results of the 14 on-route iron ore voyages from Stockton, California, to Japan during 1956 should be included with the net earnings from subsidized operations for recapture purposes. (3) The financial results of the Alaska Bear, voyage 47, the Hawaii Bear, voyage 50, and the India Bear, voyage 5, should be excluded from PFEL’s 1961 net earnings from subsidized operations. (4) Plaintiff is not entitled to have the financial results of any other voyages included in its net earnings from subsidized operations.

Nichols, Judge,

dissenting:

I am compelled to dissent because I do not read the contract here involved as my brothers do.

They say, if I understand them, that Article 11-16 read with Article 11-28 gave MANAD the “discretion” to say that a nonsubsidized voyage was competing with a subsidized voyage and so finding to bring it within the recapture accounting (or refuse to do so), to assure that recapture would reflect the financial results of the “competing” non-subsidized service (or not do so, as seems desirable) and thus prevent erosion of the recapturable profits by destructive competition. MANAD apparently was of the opinion that any voyage over the area of the subsidized route was competitive because it might “infringe retroactively or prospectively on the subsidized service.” (Finding 12d.).

The Government, the commissioner, and the court all seem indeed to assume, further, that any other voyage by plaintiff’s vessels in the foreign commerce of the United States is competition with the subsidized vessels on Noute 29, no matter where they go or what they carry. If I misunderstand the position I would be glad to be told. But observe, for example, the Government brief, p. 14:

Accordingly, every subsidized operator contractually agrees to restrict all operations in the foreign commerce of the United States to [the subsidized voyages] * * * [Emphasis supplied.]

And how does the operator make such an agreement? He does it, according to the Government “In clear and unambiguous language” in Article 11-16, the agreement not to compete except with MANAD consent. Thus the Government clearly says that if plaintiff operated an unsubsidized route from New York to Greenland, it would be in “competition” with the subsidized ships on Noute 29 and would have to have MANAD consent or else cease and desist. Of course, I recognize that as a practical matter voyages by plaintiff’s ships in the Atlantic, the Mediterranean, or the Indian Ocean might be banned because in competition with other subsidized American flag lines. The point is that considerations of real economic competition are here put aside. The word is simply a name for all operations in foreign commerce. The actual competitive impact only comes to be considered to establish whether MARAD should exercise its discretion under 11-16, which is to allow a competitive voyage to be made regardless of its competitive effect. Thus no voyage anywhere is outside the reach of its power, should it in its wisdom decide that the voyage should not be made, or should be made subject to conditions only.

It seems obvious to me that an operation which is “incidental,” whatever that means, may or may not be competitive. If, e.g., it provides “reefer” (refrigeration) service when the subsidized ships have no “reefer” space, that is “incidental” but not competitive. Of course, you may say if there were no reefer service offered maybe shippers would export food on the subsidized ships preserved in other ways. More likely, however, they would resort to foreign “reefer” tonnage and the trade would be lost to American flag ships, both subsidized and unsubsidized. You may say all the lawyers in a town are in competition with all the doctors, because the more the people spend for doctors, the less they have for lawyers. I would hold an unsubsidized ship is in competition with one which is subsidized only if it offers to carry to the same port or a nearby one a class of cargo the subsidized ship is ready and able to carry, so the shipper has a choice which service to employ. As I understand it, subsidized “berth” liners are normally not suited to carry large quantities of bulk cargo although the Mariner class when procured had a limited bulk capacity. Therefore a supplemental service to accomplish a large bulk cargo movement is not competitive either. The undisputed power of MARAD to prevent the carrier from operating in direct competition with itself or another subsidized carrier would seem ample to control the diversion of profits from recapturable to nonrecapturable accounts by diversion of cargo, and no jockeying with the coverage of recapture accounting is needed. I do not think the possibility that an unsubsidized voyage will reduce recapture if subject to recapture accounting, suffices to make it “in competition.”

Whatever an “incidental” service is, to me it includes supplemental or complementary services such, as any carrier must offer to bold its customers and meet its competition. Such services are in support and not in competition and they may contribute to make the subsidized operation more profitable, whether or not profitable themselves.

There may be instances of services which truly are both “incidental” and “competitive”, but it appears to me they would be infrequent. It would include cases where the service was complementary to the owner’s subsidized service but competitive with the subsidized service of another carrier. No competition such as this was found here; it was merely hypothesized arguendo. At times there may be cases where the harm from the competition would be measurable but not enough to justify stopping it in light of the basic objective of the Act, which after all is to keep the American flag on the ocean.

What MAEAD appears to me to have done is to stretch the prohibition against unauthorized competition to cover, in its discretion, practically anything the carrier might do, so that by conditioning its consent on subjection to recapture accounting in the case of on-route voyages, and split voyages when it so chooses, and exclusion likewise when it so chooses, it can manipulate the recapture accounting to make it produce the results it desires. I find it difficult to connect with any other rational policy the yoking up of the horse of Article 11-16 with the ox of Article 11-28, and the fine, resounding, but to me vague, guideline: “competitive impact/substantial involvement.”

As I see it, MAEAD was burdened with the duty to determine what voyages were “in competition” and in doing so it could, within reasonable limits, define the word, but not stretch it beyond all reason. When and only when it had reasonably determined that a voyage was “in competition” it was clothed with discretion whether or not to allow it to take place, or to impose conditions on its taking place. As the “reefer” voyages here involved, e.y., were noncompetitive before there was reefer space in the subsidized ships, by any reasonable definition, it could not prohibit them and therefore could not limit their allowance to conditions not otherwise authorized.

As to what voyages were subject to recapture accounting, that was a separate issue to be resolved under different rules. In deciding what voyages were “incidental,” the agency had, not discretion to regulate, but something entirely different though often confused, the power to interpret a statutory provision stated in general terms, and intended for the agency to administer. Within limits, courts will accord such interpretations great weight. They must, however, be reasonable and be adhered to consistently. If an agency yaws and veers about, none of its interpretations have weight. No court, I suppose, would doubt that on-route voyages were incidental and off-route voyages not. The split voyages are where we are in trouble. Not only has MABAD shifted continually, but it has tried to find a basis for uncontrolled discretion on the alleged power to consent on conditions, which in the cases of noncompetitive voyages it did not have.

It appears to me that the real question at issue here is one that MABAD and our commissioner have not come to grips with, at least not in any overt manner. No doubt it is a latent consideration in their minds. It is whether a subsidized carrier, fortunate enough to be realizing enough profit to create a “recapture position,” may in its discretion divert otherwise recapturable profits to maintain supplemental noncompetitive (in a real sense) services to hold as much business as possible in its hands, or whether MABAD in its discretion may limit such economic activity in order to maintain the recap-turable fund at a high level. In this regard it may be noted that the policy of the basic legislation is that “It is necessary for the national defense and development of its foreign and domestic commerce that the United States shall have a merchant marine (a) sufficient to carry * * * a substantial portion of the water-borne export and import foreign commerce of the United States * * *”46 U.S.C. 1101. It is common knowledge that, today, the portion so carried is at best not more than substantial. It would appear that the carrier’s position in this litigation will, to the extent it prevails, cause more vessels to be operated under the United States flag, while MAEAD’s will add more of them to the mothball fleet. To that extent the policy of the Act favors the carrier. On the other hand, subsidy funds are already committed to the legislative purpose and recapture of them, though commendable, is an incidental benefit rather than an object of top priority. The answer, however, must be found in the text of the contract. It is assumed in this litigation that the carrier may operate on its route unsubsidized incidental services, except those barred as involving damaging competition. MAEAD, not satisfied with its undisputed power to bar, seeks to manipulate its recapture accounting so as further to prevent depletion of the recapturable fund. I do not see what statute or contract provision gives it this power. To find it, one must read into contract clauses words that are not there, i.e., “incidental” must be read as meaning “in competition” and “in competition” read as meaning “incidental” though naturally their import is entirely different. If the framers of this contract meant such different words to mean the same thing one wonders why it did not occur to them to use the same words in both the clauses involved.

It may be argued that to favor the carrier herein would leave MAEAD defenseless against loss through uneconomic and wasteful operation of unsubsidized ships when it could not find direct competition. Considering, however, the limited scope and contingent nature of recapture accounting, it seems reasonable to suppose that the ordinary laws of supply and demand would compel prudent operation by maintaining most of the adverse consequences that imprudence may entail. If the Government wants more it should write a clause making its intention clear.

Because of my views as stated above, I am unable to join the court in affirming the commissioner’s findings and adopting his opinion as its own.

FINDINGS of Fact

1. Pacific Far East Line, Inc. (PFEL), is a Delaware corporation having its principal place of business in Cali-fomia. Since August 1946 PFEL has been engaged in the United States flag steamship business as a common carrier of freight between ports on the United States Pacific coast, Guam, and other mid-Pacific ports and ports in the Far East. PFEL began as an unsubsidized operator, but in 1949, it applied to the defendant for an operating differential subsidy (hereinafter “ODS” or “subsidy”) to enable it to acquire new vessels in order to continue competing favorably with foreign flag operators. After proceedings on the application pursuant to Title VI of the Merchant Marine Act of 1936, 49 Stat. 2001, as amended, 46 U.S.C. §§ 1171-1183 (a) (1964), the Federal Maritime Board (hereinafter “the Board”) on November 21,1952, authorized an operating differential subsidy agreement with PFEL which was consummated December 31, 1952, identified as Contract No. FMB 22.

2. On June 27, 1958, PFEL applied for another subsidy agreement and requested, among other things, that the new agreement be effective from January 1, 1959, at which time FMB-22 would terrain ate by mutual consent. On October 24, 1958, PFEL and the Board entered into the substitute contract identified as FMB-81, effective January 1, 1959, covering a period of 20 years and terminating on December 31, 1978.

3. The subsidy agreement. Article 1-1 of both subsidy contracts provided that the defendant would pay the operator (PFEL) an operating differential subsidy based on certain costs of PFEL determined in accordance with provisions in the contracts. It also provided that PFEL would operate the designated vessels on the described service in accordance with the terms and conditions of the agreements.

4. The subsidized service. FMB-22 and FMB-81 were based in part upon the Administrator’s determination that tbe service (sometimes hereinafter the “subsidized service”), route and line described therein, including the number of sailing and type of vessels specified, were essential for the promotion, development, expansion and maintenance of the foreign commerce of the defendant within the meaning of the Merchant Marine Act of 1986. FMB-22, Article 1-2. described PFEL’s subsidized service as a berth service with a minimum of 36 and a maximum of 40 outward sailings each year with cargo vessels on Trade Route 29 — Service 2.

Between the California ports of Los Angeles and San Francisco and Yokohama, Kobe, Osaka, other Japanese ports (as traffic offers). Shanghai, other North China ports and ports in Manchuria and Korea (as traffic offers), Hong Kong, Manila, Philippine Islands out-ports, French Indo-China and Siam (as traffic offers); with privilege of calls at ports of U.S.S.R. in Asia.

FMB-22 was amended to permit a maximum of 41 sailings during 1955, and to require a minimum of 47 to a maximum of 53 sailings per annum subsequent to December 31, 1955.

Article 1-2 of FMB-81 described the required TransPacific Freight Service on Trade Route 29 as consisting of a minimum of 47 and a maximum of 53 outward sailings per year with the vessels assigned by Article 1-3. It required berth service between “ports in California” and ports in Japan, Hong Kong and Manila; it granted permissive berth service between United States ports on the required service and ports in China (including Manchuria), Formosa, Korea, Okinawa, the Philippine Islands other than Manila, Viet-Nam, Cambodia and Thailand; it provided for privileged berth service between United States ports and ports in Asian U.S.S.K. Effective May 1, 1959, FMB-81 was amended to permit a maximum of 57 yearly sailings. Effective March 20, 1961, Ensenada, Mexico, became a privilege port. Similarly on April 13,1961, amendment added the Marshall and Midway Islands to the list of privilege ports.

5. The subsidized vessels. Article 1-3 of FMB-22 named and described the eight vessels (hereinafter sometimes called the “subsidized vessels”) to be maintained and operated on the subsidized service. A ninth subsidized vessel was added in 1956. During the life of FMB-22 there were two amendments to the contract substituting replacement vessels in the list of subsidized vessels.

Article 1-3 of FMB-81 named and described the same subsidized vessels as did the amended FMB-22. Further, it expressly provided that vessels introduced into the subsidized service to replace subsidized vessels, pursuant to Article 1-9 of FMB-81, should be included in the contract as subsidized vessels, and the replaced vessels deleted from the agreement. At various times in 1962, two vessels were deleted from the list of subsidized vessels and two vessels were added to the list.

6. The replacement program. Article 1-9 of both contracts provided in detail for a subsidized vessel replacement program to be undertaken by PFEL. The need to acquire new vessels in order to maintain its favorable competitive position in 'foreign commerce was the primary motive behind PFEL’s original application for subsidy. PFEL hoped to finance the heavy capital outlay for new vessels from the subsidy. At least one primary reason for substituting FMB-81 for FMB-22 was to assure PFEL that the replacement vessels having a high investment cost would continue to be eligible for subsidy during their economic life. There was no contractual obligation on PFEL to replace or modernize nonsub-sidized vessels. At various times, pursuant to its contractual replacement obligation, PFEL replaced its subsidized war-built vessels with larger, faster, and more efficient Mariner vessels designed to meet the physical, commercial, and competitive requirements of Trade Koute29.

7. Recapture. Both FMB-22 and FMB-81 contained an Article 11-28, in all material respects identical. Article II-28 of FMB-81 set forth the recapture formula as follows:

(a) At the expiration of each 10-year recapture period * * * the United States shall determine the amount of the net profits of the Operator on its subsidized vessel(s) and services incident thereto * * * during each 10-year recapture period, or the period to the final termination of subsidized operations, * * *. Forthwith upon such determination, if such net profit for any such period has averaged more than 10 per centum per annum upon the Operator’s capital investment necessarily employed in the operation of the subsidized vessel'(s), service (s), route(s), and line(s), the Operator shall pay to the United States an amount equal to one-half of such profits in excess of 10 per centum per annum, less amounts already retained, as partial or complete reimbursement for operating-differential subsidy payments received by the Operator for such recapture period, but the amount of excess profits so recaptured shall not in any case exceed the amount of the operating-differential subsidy payments theretofore made to the Operator for such period under this agreement or consecutive agreement (s), and the payment of such reimbursement to the United States shall be subject to the provisions of Section 607 of the Act and "Articles 11-26 and 11-29 hereof.

Article 1-10 of FMB-81 defined the first recapture period as including the entire original contract period of FMB-22. Thus, the recapture period with which this case is concerned is January 1,1953 to December 31,1962.

8. Restrictions imposed by Articles 11-16 and 11-36 of the subsidy agreements. Article 11-16 of FMB-81 relating to “competition” provided in pertinent part as follows:

11-16. Competition, (a) Without the express approval of the United States, * * * [PFEL] shall [not] operate or cause or permit to be operated any unsubsidized vessel, * * * in competition with any subsidized service of the Operator [PFEL] or in the foreign commerce of ■the United 'States in competition with any other essential United States flag service, route, or line, as defined in applicable rules and regulations of the United States.
(b) * * * [PFEL shall not] operate or cause or permit to be operated any [of its] unsubsidized vessel [s] * * * in the foreign commerce of the United States in violation of applicable rules and regulations of the United ■States.

FMB-22 contained substantially the same provision. Witnesses for both parties interpreted this article as requiring PFEL to acquire the approval of MAE,AD for plaintiff’s unsubsidized voyages which would actually be competitive with any subsidized vessel or service. The reasons for MARAD’s inclusion of Article 11-16 in the contracts were (1) to protect the defendant’s contingent financial interest in the form of recapture of PFEL’s profits and (2) to carry out its statutory duty to prevent the continuity of the subsidized service and the quality of subsidized operations from being adversely affected. MARAD realized that a subsidized operator might divert subsidy to nonsubsidized vessels by allocation, or manipulation of cargoes where it controls both the subsidized and nonsubsidized voyages.

Article 11-36 provided that when the defendant granted any permissions, consents or approvals under the contract or under the Act, such permissions, etc., which imposed restrictions on the operator’s business should be in writing, limited as to time and subject matter, stating the conditions on which they were granted, and promptly transmitted to the operator.

9. Bequest for 'permission to continue unsubsidized services. PFEL had been awarded a lesser number of subsidized sailings than requested in its application. On December 12, 1952, just prior to the execution of its subsidy agreement, PFEL wrote to MAEAD describing its then existing non-subsidized operations including, among others, its transpacific reefer service, its Pacific Coast to Guam service with bulk service beyond Guam. Plaintiff explained that it was transmitting the letter in the light of Article 11-16 of its subsidy agreement to be consummated, which, article requires express approval of the defendant in connection with PFEL’s operation of any unsubsidized vessels in competition with any subsidized services or other essential United States flag service. PFEL stated that in its opinion the services described in its letter would not compete with its proposed subsidized service and that continued operation of such unsubsidized services did not require MANAD approval, but that if MANAD deemed such approval necessary, the letter should be treated as an application for approval under Article 11-16 of the subsidy agreement.

10. Response to PFEUs request for permission to continue unsubsidized services, a. Prior to January 1,1953, MANAD had given PFEL informal permission to continue its unsubsidized operations pending formal action under Article 11-16 of the subsidy agreement. When PFEL began operations under the agreement it was in the unusual position of conducting more unsubsidized than subsidized operations. On November 5, 1953, MANAD’s staff submitted its recommendations regarding plaintiff’s request for nonsubsidized operations to the Maritime Administrator. On November 17, 1953, the Administrator approved the staff recommendations, and on November 25,1953, PFEL was informed of the Administrator’s action on PFEL’s request under Article 11-16 of FMB-22. Subject to expressly stated conditions, the Administrator, inter cdia, approved plaintiff’s request to continue its nonsubsidized transpacific reefer service and its Pacific-Gruam and transpacific bulk cargo services as follows:

A. Trans-Pacific Reefer Service
1. Services generally within the area “between U.S. West Coast ports and ports in Alaska (primarily Adak), Japan, Korea, Okinawa and other Nyuku [sic] Islands, China (including Hong Kong) and the Marianas Islands”, but subject to deviations necessary to meet military requirements, for such period as the requirements of the military are in excess of the reefer capacity of available privately-owned vessels and subject of the annual review under Public Law 591 — 81st Congress, and the cancellation provision under the charter contract ; provided that: if all of the space is not required by the military on any voyage, small quantities of commercial reefer cargo may be carried to Guam on ships scheduled to call at Guam; provided further: that in no case shall any consignments of commercial.dry cargo be carried outbound or inbound without specific prior approval of the Administration.
$ # * # *
B. Paoifbo-Guam and Tmns-Paciftc Bulk Cargo Services
Usually two sailings monthly in the service “California ports direct to Guam with general cargo, then to Japan with bulk cargo as well as one or two sailings monthly direct to Japan and Korea with bulk cargo. * * * Vessels are to return to California ports in ballast [empty or without cargo].” All voyages in this service are subject to prior approval by the Maritime Administration of sailing schedules to be submitted monthly * * *. [Material in brackets supplied.]

b. In addition to approving the continuance of the above unsubsidized services, the Administrator advised plaintiff that the financial results of the approved nonsubsidized voyages would be included in or excluded from the net earnings from subsidized operations for recapture purposes as follows:

(c) If any of the voyages made by these vessels are made exclusively within PFEL’s subsidized service, that is, if a vessel loaded and discharged cargo exclusively at ports contained in the trade route description of subsidized service, [] irrespective of whether the cargo handled is commercial or for the account of MSTS [Military Sea Transport Service], the financial results of such voyages shall be included in the net earnings from subsidized operations and become subject to the reserve funds and recapture provisions of the subsidy contract.
(d) If the vessels are operated exclusively on any [] service other than the regularly subsidized service, the operating results are to be treated separately, that is, as non-subsidized operations.
(e) In tbe event any of the voyages made by these vessels are partially within and partially without the subsidized service (characterized as “split voyages”), the financial results of such voyages shall be accounted for on the basis of each such voyage as determined by the Administration with respect to each six-month period of terminated voyages.

The conditions outlined in this finding were effective Jan-uray 1,1953.

11, Unsubsidized transpacific reefer service. a. PFEL was operating seven chartered, unsubsidized, reefer vessels, owned by the defendant when the OES agreement became effective. A Februray 1953 communication between two MANAD divisions stated that the service “is meeting a serious inadequacy of reefer space and is imperative from a military standpoint.” PFEL completed well over 200 non-subsidized reefer voyages, commenced after January 1,1953, wholly or partly on Trade Noute 29. The number of such voyages tended to decrease each year during 1956-1958. In 1954 PFEL began acquiring the above-mentioned (finding No. 6) Mariner type vessels, which had larger refrigeration facilities, for introduction into the subsidized service. By 1959 the chartered reefer vessels had been redelivered to the defendant and completely phased out of Trade Noute 29 operations. Another MANAD memorandum in 1956 stated that the nonsubsidized reefer fleet had decreased because of a decline in military requirements for refrigerated cargo in the Pacific area.

b. Recapture treatment of split reefer voyages. The financial results of 21 split reefer voyages were apparently excluded from the recapture formula for the years 1955 through 1958. Twenty of these voyages earned less than 50 percent of their respective revenue from cargo carried between ports on Trade Noute 29. One 1956 voyage apparently earned 50 percent or more of its revenue from such cargo.

12. a. Fourteen on-route iron ore voyages. When it entered the subsidy contract PFEL regarded the agreement as flexible in that it could be amended. In this light PFEL tried to expand its subsidized operations by encouraging and developing bulk cargoes, i.e., cargoes of fungible commodities loaded directly into the ship against the skin of the vessel rather than loaded in containers or packages. Examples of bulk cargoes are coal, iron ore and grain. Bulk may be carried in full shiploads or in parcel lots (less than full cargo capacity of the vessel). General cargo is packaged in containers and usually carries a higher charge or rate than bulk. PFEL felt that parcel lots of bulk freight could be used to fill out the increased cargo capacity of its new Mariner vessels and it also envisioned an expansion in the description of the trade route as a result of cargo development.

b. Prior to 1955 PFEL had contractually obligated itself to carry iron ore to Japan. Unexpected adverse economic conditions caused a tremendous quantity of this ore to pile up at the Port of Stockton, California, to the extent that the port’s facilities were severely damaged from the weight of the iron. Because an emergency situation developed and since PFEL and other American flag operators were unable to carry the ore on their own vessels, the Federal Maritime Board, proceeding under Public Law 81-591 (64 Stat. 308 (1950), as amended, 50 U.S.C. App. § 1138 (e) (1964)), approved PFEL’s application to charter Victory ships from the United States in order to carry the ore. Pacific Far East Line, Inc., 4 F.M.B. 785, 794-97 (Docket No. M-64, 1956). The contract of charter, prepared by MAKAD’s Office of Ship Operations and executed on March 23, 1956, limited the chartered vessels solely to the outbound carriage of iron ore from Stockton, California, to Japan. The contract also required plaintiff’s subsidized ships to carry 3500 tons of bulk ore on each subsidized voyage during the term of the charter. The charter contract made no mention of recapture. There is evidence which indicates that foreign-owned vessels could have carried the ore bad PFEL not been allowed to charter Government vessels.

c. On March 29, 1956, 6 days after the execution of the charter of the Victory ships to plaintiff for shipment of the iron ore from Stockton to Japan, plaintiff received a letter from the Maritime Administrator advising plaintiff in part as follows:

* * * you are advised that because of the particular circumstances involved herein, the financial results of the voyages of the aforesaid Victory vessels are to be excluded from the financial results of your subsidized operations, notwithstanding the fact that this determination is the reverse of the Administration’s usual practice in the case of voyages made wholly within the area of the subsidized service.

d. The above-quoted letter was prepared for the Administrator in the Office of Government Aid which office also prepared a memorandum, addressed to the Administrator, recommending the exclusion of the financial results of the Victory ship voyages from the financial results of plaintiff’s subsidized operations. The reasons for the recommendation are summarized as follows: (1) The ore operation was dissimilar to plaintiff’s subsidized service in that the charter contract involved a non-liner, single commodity, bulk operation serving only one subsidiary port of the United States; (2) the financial results of the venture were highly speculative since they depended largely upon the improbable circumstances of procuring an agreement by the seagoing (maritime) unions to reduce manpower on the Victory vessels, and, without such an agreement, the probable losses which plaintiff would incur would have a substantially adverse effect on MABAD’s subsidy recapture; (3) even if plaintiff obtained the desired agreement with the maritime unions, it was unlikely that plaintiff would break even on the venture; and (4) that Article 11-38 of subsidy contract FMB-22 prohibited the operator from carrying a full bulk cargo on a regular subsidized vessel without the prior approval of the Administrator.

MARAD believed that the exclusion of the 'financial results of the on-route ore voyages by these chartered vessels was within the authority of MARAD under subsidy contract Article 11-16 relating to competition on the theory that any vessel traveling over the area of the subsidized service might impinge retroactively or prospectively on the subsidized service.

e. PFEL performed 14 of these nonsubsidized iron ore voyages in 1956. Pursuant to the letter of March 29,1956, the financial results of these wholly on-route nonsubsidized ore voyages were excluded from recapture accounting. Had these voyages been treated under the authorization of November 25, 1953, they would have been included in the recapture formula.

13. Grain carriage with chartered vessels. Proceedings before the Federal Maritime Board formed the basis for two subsequent charter contracts for bareboat bulk Victory carriers. Pacific Far East Line, Inc., 5 F.M.B. 136 (Docket No. M-69 (Sub. No. 1), 1956); Pacific Far East Line Inc., et al., 5 F.M.B. 177 (Docket No. M-69 (Sub. No. 2), 1956). These vessels carried grain from Pacific-Northwest ports (Washington and Oregon) discharging at ports in India, Japan, Korea or Pakistan. On some return voyages from India or Pakistan, the vessels carried iron ore from Goa to Japan presumably with MARAD’s permission since the charter contracts required such permission on inbound voyages.

Some of these charter vessels lifted grain from California ports and some discharged in Korea. It is not entirely clear, but there is support in the record for a finding that full cargoes of grain originated in the Pacific-Northwest whereas parcels of grain often originated in California. The parties appear to agree that these grain voyages, conducted under the charter contracts were completed in 1957 or, at the latest, before 1959 (when Trade Route 29 was redefined to include the Pacific-Northwest (see n. 4, supra)).

14. Unsubsidized on-route service. On January 14, 1953, pursuant to Article 11-16, PFEL requested MARAD’s approval of proposed nonsubsidized dry cargo voyages in the area of the subsidized service. MARAD responded by letter dated February 19, 1953, and, denying the request, provided that PFEL must make further prior requests for the specific voyages it desired to conduct in a subsequent month in order to reserve to MARAD the right and means to approve such voyages as they were needed to meet dry cargo requirements. The letter also stated that the financial results of approved voyages, regardless of cargo carried, should be included in the net earnings from subsidized voyages since the voyages would be conducted exclusively within the subsidized service. Later, in December 1957, MARAD concluded that the subsequent contractual increase in the maximum number of annual subsidized sailings to 53, effective January 1, 1956, would eliminate regular requests for nonsubsidized sailings.

15. Bases for approvals of voyages. In addition to the letters of approval discussed above, MARAD wrote several others granting permission for PFEL to operate specific non-subsidized voyages. Most of these voyages, if not all, appear to have been on-route. The permission granted in these and all other letters of approval discussed herein appear to have been based, at least in part, on a finding by MARAD that the particular nonsubsidized operation would not have an adverse effect or a seriously adverse effect on any United States flag operator. Sometimes suck finding was made because the proposed voyage did not compete with any subsidized United States flag operator; sometimes the basis was consent by other operators; usually MAEAD either found that the voyage was needed to meet traffic demands and would not draw cargo from subsidized vessels, or MAEAD provided against such a result in the letter of approval. A finding that the voyage probably would be to PFEL’s financial advantage was sometimes also a reason for the procedure adopted. It is not possible to delineate or assess from the record before the court, the particular reasons for approval of the voyages in issue here, and the parties have not tried to do so.

16. All letters of approval for nonsubsidized voyages issued during the recapture period met the requirements of Article 11-36 of the ODS agreement. PFEL performed the approved operations or services in accordance with the permissions granted by MAEAD.

17. Accownting procedures, a. Article 11-24 of FMB-81, substantially the same in both subsidy contracts, provides:

There shall be a final accounting hereunder between the Operator and the United'States as soon as practicable after the end of each calendar year and upon termination of this agreement * * *.
'(■a) If, at the time of such final accounting, there remains unpaid subsidy accrued hereunder with respect to operations during the then current recapture period in excess of any amount of the recapture accrual required by law to be withheld by the United States, the United States shall then pay the amount of such excess to the Operator.

b. Preparation of annual subsidy accountings included a determination of recapture to the date of the accounting in accordance with Article 11-28. The capital investment necessarily employed in the operation of the subsidized vessels, services, routes and lines for a certain year was developed from net worth as of the close of the immediately preceding year. Net worth was based upon certain inclusions and exclusions of balance sheet accounts, as required by regulations, and upon certain allocation of balance sheet accounts between subsidized and nonsubsidized operations. The item of profits accounting was based upon similar allocations. Accrued subsidy was calculated by applying tentative subsidy rates to subsidizable expenses. The operator then submitted a public voucher for accrued subsidy payable, less cumulative recapture. Identification of the services incident to the subsidized service was a matter of determining the enterprise involved and was not an accounting matter. Determining net profits was an accounting matter undertaken independently of segregating the voyages for which profits were to be calculated.

c. PFEL submitted preliminary accountings for each year. MASAD’s San Francisco office audited them, and, as deemed proper, made changes or requested that changes be made. Estimated recapture was determined. 'Supplemental account-ings for the year were subsequently filed. The last supplemental accounting became the final annual accounting, and it incorporated the changes and adjustments and the items previously estimated which had become known after a prior accounting. All communications regarding annual account-ings were between the San Francisco offices of MASAD and PFEL unless PFEL appealed an audit finding. MASAD offices in Washington, D.C., processed appeals from an audit finding.

d. Accountings were prepared on a terminated-voyage basis, items of revenue and expense being assigned to the voyage on which they were received or incurred. Article II-24(d) of the subsidy contracts provided: “accounting shall be based on voyages completed under this agreement within” the calendar year. Thus, for the purposes of this case it is necessary to identify the voyages involved in the accounting process.

e. The following chart indicates when preliminary (P), supplementary (S) and final (F) accountings passed from PFEL to MANAD and from MARAD to PFEL:

18. Accounting for subsidized voyages. The financial results of all voyages of subsidized vessels operating in the subsidized service were included in the accountings for purposes of subsidy and recapture during the terms of the ODS agreements.

19. Recapture treatment of nonsubsidized off-route voyages. During the recapture period, with three exceptions, MANAD excluded the financial results of all nonsubsidized voyages entirely outside the subsidized service from the annual accountings of net earnings from subsidized operations. These voyages are not subject to recapture procedure. Likewise, the financial results of all Guam-turnaround voyages were excluded since they were entirely outside the service.

20. Recapture treatment of nonsubsidised on-route voyages. With certain exceptions noted below, the financial results of unsubsidized on-route voyages were included by MARAD in the annual accountings of the 1953-1962 subsidized operations for the purpose of computing recapture. The financial results of on-route voyages were not included in annual accountings of plaintiff’s subsidized operations in the following cases: (1) the ore voyages between Stockton, California, and the Far East and (2) voyage 1 of the Portland Trader inbound in 1955 from the Philippines to California. The Portland Trader voyage was authorized by MARAD in a letter dated May 2,1955, which stipulated that the financial results of the voyage would be excluded if inclusion would have the effect of reducing recapture. When the voyage resulted in a loss the financial results were excluded from the recapture accounting. MARAD granted permission for this voyage, at least in part, because PFEL’s regular vessels were unable to carry the proposed cargo.

21. A letter dated February 3, 1955, from defendant to plaintiff authorized an unsubsidized on-route bulk voyage from Los Angeles to Korea by either of two vessels or a substitute, and a penciled notation on the letter indicated that the Tosina, voyage 1, was substituted for the named vessels. The letter stated that if the financial results of the voyage reduced recapture, they would be excluded in plaintiff’s annual accountings of the subsidized operations. Plaintiff’s Schedule of Nonsubsidized Voyages Terminating During 1955 indicated that the Tosina, voyage 1, resulted in a loss and the financial results thereof were excluded from the recapture computation. The same document, however, indicated that this was a split voyage earning less than 50 percent of gross revenue from cargo carried within Trade Route 29. The evidence is inconclusive as to whether the voyage was on-route or split, and also whether the authorization for the voyage was contained in defendant’s letter of November 25, 1953, or the letter of February 3, 1955, mentioned above.

22. Recapture treatment of split voyages. Generally, MAE,AD felt that split voyages, i.e., voyages partially within and partially without the subsidized service, had a variable impact on the traffic and revenue of the subsidized service and that such impact could not be determined until after the nonsubsidized split voyages were completed. For these reasons MAE,AD included in its November 25, 1953 letter permission for plaintiff to continue some of its unsubsidized operations, relating to the financial treatment to be accorded the unsubsidized split voyages. The inclusion or exclusion of the financial results of such split voyages was left to the discretion of the Administration and the determination in each case was to be made on a voyage-by-voyage basis in order that the defendant might protect itself against reductions in recapture resulting from possible diversion of traffic by nonsubsi-dized operations which traffic would otherwise have been available to subsidized voyages. In making the determination to include or exclude the financial results of such split voyages, MARAD employed a standard which it described as a test of the “competitive impact/substantial involvement” of the particular nonsubsidized split voyage. Similarly, in applying Article 11-28 (a) of the subsidy agreement covering computation of the amount of recapture to the extent that the article provided for the determination of the net profits of the operator on its subsidized vessels and “services incident thereto,” MARAD applied the same test of “competitive impact/substantial involvement” in determining whether or not the nonsubsidized split voyages constituted “services incident” to the subsidized operations.

23. Recapture of 1953 split voyages. In 1954, MARAD, acting under paragraph (e) of the November 25,1953 letter, decided that the financial results of all of plaintiff’s unsubsidized split voyages should be included in plaintiff’s recapture accounting for the calendar year 1953 because MARAD had concluded that these split voyages had been substantially operated on the subsidized trade route. MARAD based its treatment of the 1953 unsubsidized split voyages upon the 1954 recommendations of an experienced examiner, Mr. Callahan. He reached his conclusions regarding the substantial involvement or competitive impact of each split voyage by virtue of an analysis based on the following factors: (1) his personal knowledge of PFEL’s operations and of traffic moving on the route; (2) itineraries (ports served) by proposed and actual voyages; (3) cargoes carried; and (4) a comparison with subsidized voyages. Callahan did not know the individual financial results of each voyage and the record is not clear as to whether he knew the total financial results of all 1953 split voyages.

24. Recapture of 1954 split voyages. Utilizing the same standard and method of analysis as was used for 1953, MARAD, through Callahan, determined in 1955 that all 1954 split voyages should be included in PFEL’s recapture accounting. The financial results of three voyages conducted in 1954 were excluded on the ground that they were not split voyages and did not operate at all in the subsidized service: (1) the NiJcohar, voyage 1, claimed by plaintiff to have been a split voyage, loaded cotton in Mexico and called at Los Angeles for bunkers (fuel containers), did not load any cargo there, but went on to Japan. MARAD treated the voyage as one between the foreign ports of Mexico and Japan and excluded the financial resulte from recapture; (2) the Canada Bear, voyage 23; and (3) the Hawaii Bear, voyage 20, were time-chartered by plaintiff to the Military Sea Transportation Service at Guam. Neither vessel called at a foreign port in the subsidized service while controlled and operated by PFEL, and since cargo data on the portion of the voyage beyond Guam was not available to MARAD, the financial results of these voyages were excluded from plaintiff’s 1954 recapture computation.

25. General Order No. 80. On February 20,1957, MAR.AD published for public notice, in the Federal Register, General Order No. 80,22 Fed. Reg. 1040-42 (1957). On April 25,1957, General Order No. 80 became a regulation. 46 O.F'.R. §§ 281.11-281.17 (1966). General Order No. 80 provided that the financial results of all nonsubsidized voyages of subsidized operators should be included in the financial results of their subsidized operations for recapture purposes whenever 50 percent or more of the gross revenue of the voyages was derived from cargo carriage within the subsidized service.

26. On March 7, 1957, MARAD wrote plaintiff a letter granting plaintiff permission to carry commercial general, bulk and military cargo on certain approved nonsubsidized vessels during the remainder of 1957. The letter authorized calls at Guam, a domestic port, and other domestic ports outside the subsidized service. With respect to recapture accounting, the letter provided that the financial results of unsubsidized voyages should be included in the net earnings of the subsidized operations only when 50 percent or more of the total gross unsubsidized voyage revenue was derived from cargo carriage between ports within the subsidized service. This formula was the same as the formula provided for in General Order 80. It was MARAD’s view that the March 7, 1957 letter superseded the November 25, 1953 letter insofar as the earlier letter made provision for the inclusion or exclusion of plaintiff’s split voyage financial results in computing recapture.

27. Recapture concerning split voyages from January 1, 1955 to March 7,1957. In August 1958 plaintiff submitted to MARAD its preliminary accounting for 1955 and in June 1959 it submitted tire preliminary accounting for 1956. PFEL included all of its unsubsidized split voyages in these preliminary accountings on the basis of its belief, based on prior practice, that the financial results of such voyages (non-subsidized transpacific reefer and Pacific-Guam and transpacific bulk services) should be included in recapture accounting whenever a vessel involved called at a port on the subsidized service. There is nothing in the record to show that plaintiff was aware of the “substantial involvement/competitive impact” standard which MARAD had been applying in making its 1953 and 1954 determinations concerning inclusion or exclusion of financial results of plaintiff’s split voyages.

28. Wben PFEL submitted its 1955 preliminary accounting in August 1958 the District Comptroller of MAEAD in San Francisco was uncertain as to the applicability thereto of General Order No. 80 which became effective as a regulation on April 25, 1957. 46 C.F.E. §§281.11-281.17 (1966). The Comptroller was of the opinion that no official split voyage allocation had been made for 1955 or 1956, as was the case for 1953 and 1954, regarding treatment of the financial results for purposes of recapture accounting. Consequently, in March 1959 the Comptroller requested a MAEAD official in Washington, D.C., to clarify the matter for him. On June 24, 1959, the Office of Government Aid in Washington responded to the Comptroller’s request by memorandum stating that all unsubsidized split voyages undertaken in 1955, 1956 and 1957 should be treated in accordance with General Order No. 80. Included in Government Aid’s response to the San Francisco inquiry were lists indicating which nonsubsidized voyages conducted by PFEL during the accounting periods 1955, 1956 and from January 1 to March 7, 1957, were on-route, off-route, or split voyages. The 'San Francisco office of MAEAD informed PFEL of the change in recapture accounting, and the MAEAD auditors-in-residence at PFEL in San Francisco applied the 50 percent-'of-revenue formula in General Order No. 80 to PFEL’s 1955 and 1956 preliminary accountings.

29. The application of General Order No. 80 criteria to 1955 and 1956 resulted in the exclusion from recapture accounting the financial results of 46 1955 split voyages and 49 1956 split voyages which had been profitable. These exclusions had the apparent result of entitling PFEL to a net refund of approximately $750,000 and in December 1959 PFEL requested permission to use the money.

30. In January 1960 the Office of Government Aid in Washington, D.C., cancelled its memorandum of June 24, 1959, to tbe District Comptroller in San Francisco, in which it had stated that General Order 80 should be applied to plaintiff’s 1955,1956 and 1957 nonsubsidized voyages for recapture purposes. The Office of Government Aid directed that the 1955,1956 and January 1 to March 7,1957, voyages be treated in the same manner as had the 1954 nonsubsidized split voyages and that the General Order No. 80 50 percent-of-revenue formula should apply only with respect to authorizations granted after March 7, 1957. The parties treated March 7, 1957, as the effective date of General Order No. 80 for purposes of determining defendant’s recapture interest in PFEL’s nonsubsidized split voyages. The only reason given by MAE.AD for this change in treatment was that a review of the June 24,1959 memorandum persuaded the Office of Government Aid that “General Order No. 80 should not be applied retroactively to the years 1955 and 1956.”

31. Early in 1960 MABAD’s District Comptroller for San Francisco informed plaintiff of the latter change in recapture accounting, and explained that General Order No. 80 would apply only to voyages authorized after its effective date after March 7, 1957). The Comptroller submitted a schedule showing which voyages from January 1,1955 to March 7, 1957, were subject to recapture accounting under the provisions and conditions set forth in the letter of authorization dated November 25, 1953. This schedule was based on the recommendations of Sc'hulmeister, a MAKAD examiner, who, in 1960, applied the substantial involvement standard in a manner similar to that used by Callahan for the 1953 and 1954 nonsubsidized voyages. Application of this method resulted in the inclusion of some voyages which would have been excluded on the 50 percent-of-revenue basis and in the exclusion of many other split voyages. Schulmeister’s treatment had a greater tendency to increase recapture than the General Order No. 80 method during this period.

32. Recapture concerning split voyages from March 7, 1957 to December 81,1960. MANAD, on March 7, 1957, authorized .plaintiff to make nonsubsidized voyages during the balance of 1957 with the financial results thereof to be included in the recapture accounting where 50 percent or more of the total gross unsubsidized voyage revenue was derived from cargo carriage between ports within the subsidized service. Similar letters of authorization containing the same conditions were issued to PFEL for the years 1958, 1959, and 1960. PFEL submitted its final accountings for those years on the 50 percent-of-revenue basis contained in the letters and in General Order No. 80, with the result that the majority of PFEL’s nonsubsidized split voyages were excluded from recapture accounting. Some voyages excluded by the General Order No. 80 method during this period would probably have been included had the method used prior to March 7, 1957, been carried through 1960. MANAD felt that General Order No. 80 measured the substantiality of the involvement of the nonsubsidized voyages with the subsidized service and that General Order No. 80 was a refinement of the substantial involvement standard.

33. Recaptwre of 1961 and 1962 split voyages. On December 23, 1960, MANAD authorized plaintiff to make certain nonsubsidized voyages during 1961 with named vessels, with the financial results of such voyages to be included or excluded from recapture accounting under the 50 percent-of-revenue criterion of General Order No. 80.

34. For the years 1957 through 1960 the majority of PFEL’s nonsubsidized split voyages were excluded from recapture accounting under the 50 percent-of-revenue criterion. Most of these split voyages resulted in losses far exceeding profits made on other split voyages during this time. Both parties knew PFEL was in a recapture position. Thus, on June 23, 1961, PFEL requested relief from the application of the provisions of General Order No. 80. In fact, PFEL requested that MANAD rescind General Order No. 80 as the recapture accounting method for split voyages during 1957 through 1960, as well as after 1960. As a result of PFEL’s request the Chief, Office of Government Aid, sent the Maritime Administrator a memorandum dated August 2, 1961, which discussed PFEL’s request and made recommendations. The memorandum stated that it was the “opinion of the staff members who participated in the promulgation of General Order 80 that it was never intended to apply to cases of a continuing service but was intended to deal with individual nonsubsidized voyages made by a subsidized operator and requiring prior approval of each voyage based upon the facts and circumstances of such voyage.” The staff felt that General Order No. 80 was inapplicable to PFEL’s Guam service and should not have been applied to that service for any years subsequent to the inception of the order; but since the order had actually been applied to those prior years, the staff concluded that no change should be made in the authorizations for those years. The staff recommended a change for 1961 and subsequent authorizations, with PFEL required to furnish an adequate justification for the necessity of making those voyages which were to go beyond the Guam service to Trade Route No. 29 ports, and to show a reasonable expectation of profit for such portion of the voyage, and the defendant would reserve the right to disapprove any voyage or to exclude it from subsidized accounting if made without satisfactory justification. The memorandum also stated that such a provision “would remove criticism as to diversion of profitable cargo from subsidized ships and would assure that the profits derived therefrom were included in the subsidized operations.”

35. On August 7, 1961, MARAD wrote a letter to PFEL which stated that it superseded the December 23, 1960 letter of authorization and provided that the financial results of the authorized 1961 nonsubsidized on-route and split voyages should all be included in plaintiff’s recapture accounting. The letter of August 7, 1961, contained conditions requiring PFEL to supply MARAD with certain information (relating, inter alia, to itinerary, revenue, condition of vessels) prior to each voyage and to justify the need for each voyage and to demonstrate whether the subsidized service would be adversely affected and whether there was a reasonable expectation of profit on the voyage. In the absence of a satisfactory justification, the letter from MANAD reserved the right to disapprove the voyage and to exclude the earnings thereof from recapture accounting. In a letter dated December 26,1961, MANAD authorized nonsubsidized sailings for the year 1962 on the same basis and subject to the same recapture accounting treatment as set forth in the letter of August 7, 1961. By this means MANAD considered that it had maintained the substantial involvement standard for 1961 and 1962.

36. Protest and concurrence, a. (1) PFEL did not file any formal protest relating to the provisions of Article 11-16 approvals which treated the financial results of nonsubsidized voyages as being subject to or not subject to inclusion with net earnings from subsidized operations. Similarly, no appeals were taken in regard to PFEL’s accountings which were provided for, filed, and processed by MANAD. The parties agree that General Order No. 78, revised, (46 O.F.N. §§ 205.1-205.4 (1965)), established the policy and procedure to be followed after January 4, 1956, by subsidized ship operators who disagreed with the findings, interpretation or decisions reflected in an audit report made by MANAD.

(2) A MANAD official in the Division of Audits, Office of the Comptroller, which dealt with General Order No. 78 appeals, explained that General Order No. 78 gave the operator a right to appeal disputed accounting items to the Administrator. The Division of Audits would then contact the District Comptroller to get information concerning both sides of the dispute. When the dispute involved ODS, the Division of Audits prepared recommendations to the Administrator who rendered a decision.

(3) It was the opinion of PFEL that General Order No. 80 was MANAD’s determination, called for by the letter of November 25,1953, and PFEL did not object to the criterion provided by General Order No. 80. When General Order No. 80 was first applied, PFEL thought the order was intended to apply to tlie entire recapture period. PFEL made verbal objections when it discovered that MARAD would have applied it only to periods subsequent to March 7,1957.

b. All letters of approval dated before March 7, 1957, included near the end the following, or similar language: “Please indicate your concurrence in the aforegoing by signing and returning promptly the enclosed copy of this letter.” Only one such letter in evidence, which dealt solely with a voyage of the Old Oolony Mariner in March 1956, bears the express concurrence of PFEL. As for letters issued on or after March 7, 1957, a PFEL official testified that PFEL complied with them, but did not concur in them.

37. Other operators. Other primary American flag berth operators engaged in the foreign commerce of the defendant on Trade Route 29 include: American Mail Line, Ltd., American President Lines, Ltd., States Steamship Co., Isbrandtsen Co., Inc., Isthmian Lines, Inc., States Marine Lines, Inc., and Waterman Steamship Corp.

During plaintiff’s recapture period it appears from the record that American President Lines (APL) was the only other subsidized operator continually on Trade Route 29. Regarding unsubsidized voyages, MARAD applied the same standard to both APL and PFEL in connection with their respective recapture liability. In contrast to PFEL’s results, however, all of APL’s split voyages were excluded from the recapture formula for 1953 and 1954. There is no evidentiary basis for further comparisons of MARAD’s treatment of PFEL and other operators.

38. Net reoaptme. Accrued gross subsidy during PFEL’s recapture period was $44,140,511. MARAD determined the net subsidy to be $31,904,810, and determined recapture to be $12,235,701. PFEL claims the defendant improperly recaptured, by means of withheld subsidy, $1,602,155 of subsidy payable to PFEL under the most favorable (to PFEL) method of computation.

CONCLUSION OF Law

Upon the foregoing findings of fact and opinion, which are adopted by the court and made a part of the judgment herein, the court concludes as a matter of law that plaintiff is entitled to recover, and judgment is entered to that effect, with determination of the amount of recovery reserved for further proceedings under Rule 47(c) in accordance with this opinion and the stipulation of the parties. 
      
      The dissenting opinion of Nichols, Judge, follows the opinion of the Trial Commissioner which has been adopted by the court.
     
      
       The 1936 Act was first administered by the former united States Maritime Commission. By Reorganization Plan No. 21 of 1960, effective May 24, 1950 (64 Stat. 1274, 15 Fed. Reg. 3178 (1950)), the Federal Maritime Board and the Maritime Administration succeeded to the Commission’s powers and duties. By Reorganization Plan No. 7 of 1961, effective August 12, 1961 (75 Stat. 840, 26 Fed. Reg. 7315 (1961)), the Secretary of Commerce succeeded to the Board’s powers and duties under the Merchant Marine Act of 1936. Some of these powers and duties have been delegated to the Maritime Administrator by Department of Commerce Departmental Order No. 117. See 27 Fed. Reg. 3637 (1962) and references therein.
     
      
       All articles preceded by Roman numeral II are standard provisions in ODS contracts.
     
      
       Defendant’s entrance into the agreement was expressly based upon a determination that the subsidized service would be essential for the promotion, development, expansion and maintenance of foreign commerce of the united States. Section 601(a) of the Act, 49 Stat. 2001, as amended, 46 U.S.C. § 1171(a) (1964).
     
      
       Bulk cargoes are fungible commodities such as ore loaded directly Into the ship rather than loaded In containers or packages. Bulk cargo rests against the skin of the vessel. It may be carried in full shiploads or in parcel lots (less than full cargo capacity of the vessel).
     
      
       Since defendant will have a chance to present evidence relating to damages, these and other similar figures are not binding on the parties and the court in relation to the issue of damages.
     
      
       The word “incident” describes the “services * * * thereto.” Clearly, plaintiff thinks likewise because it goes to great lengths to demonstrate that “services” is a comprehensive term denoting “the entire scope of an operation.” Pacific Transport Lines, Inc.-Subsidy, Route 29, 4 F.M.B. 7, 11 (Docket No. S-18, 1952). The phrase would have no meaning if both “services” and “incident” were merely descriptive terms. That “incident” describes the relationship between “subsidized vessel (s) and services incident thereto” is also clear from the context. A contrary reading not only violates ordinary usage but also ignores settled rules of interpretation requiring unstrained and reasonable construction. Southern Constr. Co. v. United States, 176 Ct. Cl. 1339, 1362, 364 F. 2d 439, 453 (1966) ; Hol-Gar Mfg. Corp. v. United States, 169 Ct. Cl. 384, 390, 395, 351 F. 2d 972, 976, 979 (1965).
     
      
       That an ODS contract must be construed in the same manner as any commercial contract is the valid assumption underlying this statement and the interpretation of this agreement. Capital necessarily Employed-General Order 11, 4 F.M.B.-M.A. 646, 654-55 (Docket No. S-66, 1952), and citations therein; cf. S. Rept. No. 1618, 75 Cong., 3d Sess. 3 (1938).
     
      
       This point is particularly persuasive because the contemporaneous construction of the disputed language before it becomes the subject of judicial controversy is entitled to great weight when this court must interpret the language. Chase & Rice, Inc. v. United States, 173 Ct. Cl. 740, 746, 354 F. 2d 318, 321-322 (1965) ; Micrecord Corp. v. United States, 176 Ct. Cl. 46, 53, 361 F. 2d 1000, 1004 (1966) ; Blanchard V. United States, 171 Ct. Cl. 559, 566, 347 F. 2d 268, 273 (1965).
     
      
       The facts do not suggest that PFEL intended or engaged in such manipulation, and it should not be inferred that PFEL sought to avoid its contractual obligation by such means.
     
      
       “Liner” has been defined as a trading vessel used on a particular route with regular sailings. DeKerchove, International Maritime Diotionary 457 (2d ed. 1961).
     
      
       Since the theory of equitable estoppel is an adequate basis for our decision on this issue, we need not consider the possibilities that the letter of November 25, 1953, gave rise to a promissory estoppel (see Gay, Trustee v. United States, 174 Ct. Cl. 420, 434, 356 F. 2d 516, 524, cert. denied, 385 U.S. 898 (1966)) or to another contract (see Himfar v. United States 174 Ct. Cl. 209, 214-215, 355 F. 2d 606, 609-610 (1966)).
     
      
       On January 14, 1953, PEEL requested MARAD’s approval to operate non-subsidized dry cargo voyages In tbe area of the subsidized service. On February 19, 1953, MARAD wrote to PFEL and denied the request. However, MARAD provided that PFEL must make prior requests for voyages it desired to conduct in a subsequent month. By this means MARAD retained the right to approve nonsubsidized on-route voyages as they were needed to meet requirements for carriage of dry cargo. As to recapture, MARAD further provided that the financial results of approved voyages, regardless of cargo carried, should be included in the net earnings from subsidized voyages because the approved voyages would be conducted exclusively within the subsidized service. Plaintiff has not linked the letter of February 19, 1953, to the Portland Trader, voyage 1, and, therefore, we are not faced with any conflict between that letter and the letter dated May 2, 1955, approving voyage 1 of the Portland Trader.
      
     
      
       On September 11, 1965, General Order 78 was revised to exclude the word “final” from § 205.3(a), 46 C.E.R. § 205.3(a) (1966).
     
      
       Also, the first preliminary accounting for 1955 was returned to PEEL in 1958. Clearly PEEL’S action, filed in 1963, is not time-barred. Oceanic S.S. Co. v. United States, 165 Ct. Cl. 217 (1964).
     
      
       Pacific Far East Line, Inc., 4 F.M.B. 7 (Docket No. S-19, 1952).
     
      
       The 1936 Act was first administered by the former united States Maritime Commission. By Reorganization Plan No. 21 of 1950, effective May 24, 1950 (64 Stat. 1274, 15 Fed. Reg. 3178 (1950), the Federal Maritime Board and the Maritime Administration succeeded to the Commission’s powers and duties. By Reorganization Plan No. 7 of 1961, effective August 12, 1961 (75 Stat. 840, 26 Fed. Reg. 7315 (1961)), the Secretary of Commerce succeeded to the Board’s powers and duties under the Merchant Marine Act of 1936. He has delegated some of these powers and duties to the Maritime Administrator by Departmental Order No. 117. 'See 27 Fed. Reg. 3637 (1962) and references therein.
     
      
       Basically the subsidy contract is divided into two parts. Part I covers articles having specific application to the contract or operator. Part II contains standard provisions found in all such contracts. Reference to an article number prefaced by “I” refers to the first part of the contract. When the article number is prefaced by “II” it appears in Part II.
     
      
       Trade Route No. 29 consisted of two types of service: Service 1 — passenger and freight, and Service 2 — freight. The united States Maritime Commission had determined that T.R. 29 was essential, within the meaning of the Merchant Maritime Act of 1936, for the promotion, development, expansion and maintenance of the foreign commerce of the United States. It remained essential throughout the period involved in this case. Until February 1959, Trade Route 29 ran from California ports to ports in the Far Hast which embraced the areas of PFEL’s subsidized service. In February 1959, Trade Route 29 was enlarged to include ports in Alaska, Washington, and Oregon, which had previously been part of Trade Route 30. (24 Fed. Reg. 1164 (1959)).
     
      
      5 Service provided in connection with privilege calls was subordinate to service between required areas, and it could not be conducted in a manner detrimental to the required service.
     
      
       Permissive service was also subordinate to required service, and could not be conducted in a manner detrimental to the required service.
     
      
       Section 606(5) of the Merchant Marine Act of 1936, 49 Stat. 2004, as amended, 46 U.S.C. § 1176(5) (1964), requires that substantially the same language be included in every contract for an operating-differential subsidy.
     
      
       Hereinafter voyages falling within this description shall be termed “on-route” or “on-service” voyages.
     
      
       Hereinafter voyages falling within this description shall be termed “off-route” or “off-service” voyages.
     
      
       “Reefer” denotes tie transportation of food products under cold storage or refrigeration. DeKerchove, International Maritime Dictionary, 639 (2d ed. 1961).
     
      
       In fact Article 11-38 further provided that if such voyage was authorized, MARAD “* * * shall in each instance determine whether subsidy is to be paid thereon and whether the voyage is to be credited toward fulfillment of the sailing requirements of the Operator under this agreement or treated as a voyage in excess of the maximum authorized sailings in accordance with Article 11-21 (g) of this agreement.”
      Article 11-21 (g) provided: “No subsidy shall be payable hereunder for any voyages exceeding the maximum number of voyages then authorized by Part I hereof, but all other provisions of this agreement shall apply to such excess voyages, whether with owned or chartered vessels and whether or not such vessels are covered by this agreement * * *.”
     
      
       Plaintiff frequently by implication equates the lack of adverse effect, or serious adverse effect, -with an alleged lack of competition. The evidence does not support this equation ; and, indeed, plaintiff has not undertaken an analysis of these concepts. We need not do so. See H. R. Henderson & Co. v. United States, 169 Ct. Cl. 228, 249 (1965). We have not done so. As the above test suggests, the possibility of lack of competition was only one factor involved in the finding of no adverse or seriously adverse effect, and the exact relationship between the concepts cannot be accurately determined from the record before the court.
     
      
       Article 11-23 contemplated preliminary annual accountings. MARAD’s General Order No. 74 provided for preliminary annual accountings and revised accountings incorporating adjustments subsequently recorded. 46 C.F.R. § 292.3 (1965). General Order No. 31, revised, (46 C.F.R. § 286 (1966)) superseded General Order No. 74. 46 C.F.R. § 292.9 (1965). General Order No. 31 provides for preliminary, supplemental and final accountings. 46 C.F.R. § 286.5 (1966).
     
      
       Article 11 — 20 of FMB — 81 provided: “The Operator * * * shall keep its books, records, and accounts * * * in such form and under such rules and regulations as may be prescribed by the united States * * General Order No. 22 (46 C.F.R. Part 282 (1965)) prescribed a uniform system of accounts for operating-differential subsidy contractors.
     
      
       The three exceptions are the Alasita Bear (voyage 47), Hawaii Bear (voyage 50), India Bear (voyage 5) which were inadvertently improperly included in PEEL’s 1961 net earnings from subsidized operations, and, the parties agree, must be excluded whatever the result of this litigation.
     
      
      
         Testimony by MAEAD officials, Sehulmeister, Callahan, and Aptaker, indicates that “substantially operated” is equivalent to “substantially involved” and to “substantially competitive” in MAEAD’s vernacular.
     
      
       Voyages which sailed from united States ports on the subsidized service to Guam and/or other domestic ports and then returned to the united States during the recapture period (characterized by plaintiff as the “Guam-turnaround” service) are not in issue in this ease. The parties agree that such voyages were off-route and were properly excluded from the financial results of subsidized operations.
     
      
       PFEL requested permission to make a voluntary deposit of these funds in a reserve fund. Had the request been granted income taxes would have been deferred and certain financial difficulties might have been alleviated.
     
      
       PFEL contends, to the contrary, that a “random” method was used because there was no rationale governing the inclusion or exclusion of split voyages in the recapture accounting. The record established that Schulmeister considered the amount of time a vessel spent in its various ports of call and the amount of cargo discharged there in addition to his knowledge of PFEL, the industry, and the other factors considered by Callahan.
     
      
       As of March 7, 1957, PEEL’S unsubsidized operations in this area consisted of the Guam-turnaround and the Pacific-Guam services which might include bulk carriage.