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Senator MORSE. And it is the chairman's understanding that a favorable report on the pending bill would in no way conflict with the bill that we approved the other day as to the corporation.

Mr. BURDICK. No, sir. On the other hand, it would supplement it in certain respects.

Senator MORSE. While I have interrupted, Mr. Adams, is it a correct understanding of mine that this bill, S. 2003, has not been heard on the House side, or has it been heard on the House side?

Mr. ADAMS. There was an earlier hearing on both of these bills before the House Committee on Merchant Marine and Fisheries, and the committee disagreed with the language of the original bills, and it was as a result of that disagreement that the corrected bills in both cases were prepared by Mr. Burdick, and so the bill which we approved the other day was generally in conformance with the language which was preferred by the House committee, and for that reason the House chairman, Mr. Weichel, thinks they will handle it very quickly this week.

This bill in its corrected version conforms to the language which was suggested, as a revision, by the House committee when they heard it. Senator MORSE. If we should decide after hearing this morning to vote this bill, S. 2003, as corrected in line with exhibit 2 in this hearing, we have a good chance of getting the House action to take concurrent action on this bill, along with the Panama Railroad Company bill, do you think?

Mr. ADAMS. Yes, sir. I think so. The other bill has been on the House calendar, and this is not yet on the Senate calendar for action nntil next Monday.

Senator MORSE. Why?

Mr. ADAMS. It will get on at the next call, which will be next Monday, which is the last call of the calendar in the Senate.

Senator MORSE. When is the last call of the calendar in the House? Mr. ADAMS. Monday or Tuesday of next week. Therefore, it will be necessary for them to act on the bill in the hopes that they can cross. Senator MORSE. I think we ought to try that. Go ahead.

Mr. BURDICK. The following explanatory statement was made to the House Committee on Appropriations by former Governor Ridley in support of the quoted item when it was first included in the War Department Civil Appropriations Act for the fiscal year 1940:

The purpose of this amendment is to meet objections raised by the Comptroller General. He has questioned the use of Canal appropriations for constructing buildings and other improvements because specific authority cannot be cited in the Canal Appropriation Act authorizing such expenditures, notwithstanding the fact that the Panama Canal has for many years constructed such buildings and improvements with funds appropriated for the maintenance and operation of the Canal in conformity with estimates for such improvements specifically submitted to Congress each year and explained in detail to the Bureau of the Budget and the Appropriations Committee. The amendment will make no change whatever in the practice that has been followed for many years, and its only purpose is to meet the technical objections of the Comptroller General.

The purpose of this amendment has the approval of the Bureau of the Budget, as shown in House Document No. 206, Seventy-sixth Congress, first session, by which the President submitted a supplemental estimate for the fiscal year 1940. It is believed that the language should be continued from year to year and should properly be inserted in the place suggested above.

The continued efficient and economical operation of the Panama Canal and its appurtenances is dependent upon maintaining all facili

ties at a high standard. Many structures erected during the early years of Canal operation are reaching an advanced stage of deterioration, equipment must be replaced due to obsolescence or inability to meet increased loads, and existing facilities require improvements due to changes in procedure to incorporate modern methods in operations. To assist the Canal administration in exercising intelligent management with respect to scheduling replacements and improvements, an advance plan of future requirements is maintained. The plan is revised annually and careful attention is given to insure inclusion of all projects that can be foreseen will be needed for the future efficient operation of the Canal. The entire program is coordinated and priorities for the projects are assigned on the basis of providing the greatest improvement to the operation of the Canal as a whole. The major items submitted each year in the budget estimates are selected from the projects carried in the advance plan. During the war period just past the need to make all Canal facilities available for work pertaining to the war effort forced the cancellation of many projects listed for those years and the partial abandonment of the advance plan as such. With the end of the war and the return of operations to normal peacetime levels, it is possible to reconsider suspended projects and to envisage more clearly the future long-term needs of the Canal. I mention these things to show that this is the procedure that has been in operation for many years.

Senator MORSE. Your difficulty is that the Comptroller General now takes the position that unless you have legislation to this effect that you cannot take, for example, reserve funds that you collect from Panama Canal operations and use them for construction and repair and replacements and alterations or enlargements, as provided for here in section 16 without special approval of Congress. Is that the problem? Mr. BURDICK. He did take that position, Mr. Chairman, a few years ago, and to overcome that objection, that technical objection, we came to Congress and asked for language to be included in our annual appropriation act. That has been carried in the appropriation acts ever since, but the point we make now is that the chairman of the House Appropriations Committee has called attention to the fact that some of these are subject to points of order, and therefore should now be placed into substantive legislation.

Senator MORSE. That is what you propose to do by this bill.
Mr. BURDICK. That is what we propose.

Senator MORSE. So if you ever got into a situation on the House where somebody would raise a point of order that the request is for funds for construction and repair, for example, attached to an appropriation bill constitutes legislation and therefore is subject to a point. of order, that situation would not be possible, that point of order would not be possible if this bill were passed.

Mr. BURDICK. That is correct, sir.

Senator MORSE. One hypothetical question. Suppose now, just picking it out of the air, that the Panama Canal, for example, should end up with $50,000,000 some year. Let us assume that absurd figure. That is income over outgo. And you need a substantial improvement, we will say, in a warehouse, you need a new warehouse. And let us say it costs $20,000,000. If this bill were passed, would it authorize you to go ahead and use that $20,000,000 for the construction of that warehouse without any approval by Congress at all?

Mr. BURDICK. This would not change the present law or the present practice. Under this bill at the end of the fiscal year, the net profits of the business operations of the Panama Canal are to be deposited as in the past into the Treasury as miscellaneous assets. This does not purport to change that at all. It does not solve that particular problem, but it does authorize the Governor to use funds that Congress has appropriated for these buildings in all of the major cases actually justifications for each individual project have been made before the committee.

Senator MORSE. That is the point I wanted to make clear.

Going on with this hypothetical question, what this bill provides is that if Congress has authorized the construction of the $20,000,000 warehouse, then the Canal officials would be authorized by this bill to proceed to construct the warehouse, because of the fact that they ended up with $50,000,000 excess of income over outgo. Is that a correct statement?

Mr. BURDICK. Only, I believe, Mr. Chairman, if the use of those receipts was justified for that purpose.

Senator MORSE. That is right.

Mr. BURDICK. I mean justified to the congressional committee.
Senator MORSE. To the Appropriations Committee.


Senator MORSE. Would the bill in the light of my hypothetical question, in view of the fact of your testimony that that $50,000,000 would automatically go into the miscellaneous funds of the Treasury, require the Appropriations Committee not only to authorize the construction of the $20,000,000 warehouse, but specifically appropriate the money for the construction of the $20,000,000 warehouse?

Mr. BURDICK. It would require an authorization and it would require an appropriation since the net profits from these business operations are turned into the Treasury at the end of the year.

Senator MORSE. It would require both authorization and appropriation.

Mr. BURDICK. Yes, sir.

Senator MORSE. But the advantage of this bill, then, is that if they include the construction of this warehouse at the last minute in an appropriation bill with reference to the use of funds that the Panama Canal has collected, it would not be subject to a point of order on the ground that it is new legislation. Is that the only advantage?

Mr. BURDICK. That is the only thing that I know of because it is the same authority that we have had in the law in the substantive law, plus the legislative provisions for years.

Senator MORSE. Certainly not much of a change then, is it?
Mr. BURDICK. No, it is not intended to.

Senator MORSE. It is just a technical change to remove the chance of raising a point of order on the ground that an appropriation bill that specifically refers to $20,000,000 warehouse in my hypothetical question is not subject to a point of order on the ground that it is legislative in nature, simply because the plan is to use funds which have gone into the Treasury, but which after all were surplus over outgo collected by the Canal government.

Mr. BURDICK. There is no change in the entire bill, I believe, from what is now authorized in one form or another, and what is now being done; there is only one thing, that the authority for the transfer of

business operations from the Canal to the railroad may be slightly broader, because in restating, which we will find when we come to sections 51 to 54, in restating the authority there again we have combined the substantive law with the law that is contained in the apropriations act, in a restatement which might have the effect of permitting the President to transfer some activities that have not been specifically authorized before. I do not know that it really is beyond the power of the President to do so, but that is the only possible exception that I could think of here in the entire bill.

Senator MORSE. That is clear to me now.

Mr. BURDICK. Section 1 of the bill would also add to the Canal Zone Code a section 17 of title 2, authorizing the Governor, or his designee for the purpose, to adjust and pay claims for losses of or damages to property arising from the conduct by the Panama Canal of authorized business operations, or arising from the maintenance, operation, improvement, or enlargement of capacity of the Panama Canal or from the sanitation or civil government of the Canal Zone; subject to the proviso, however, that the added section shall not apply to claims cognizable either under section 10 of title 2, as amended, or under the Federal Tort Claims Act.

The purpose of the proposed section is to provide substantive support for items of appropriation for the Panama Canal which have been in the appropriation language in substantially their present form since 1916, and which read as follows:

For * * * claims for losses of or damages to property arising from the conduct of authorized business operations; claims for damages to property arising from the maintenance and operation, sanitation, and civil government of the Panama Canal, and construction of additional facilities; * * *

Section 10 of title 2, as amended by act of June 13, 1940, chapter 358, section 1-48 U. S. C. 1319-provides for the adjustment and payment of claims for injuries to vessels, cargo, crew, or passengers occasioned by operation of the Canal; and the exception of claims so arising is of course necessary to preserve intact section 10 as amended.

The Federal Tort Claims Act covers claims for property loss or damage, or personal injury or death, caused by the negligent or wrongful act or omission of any employee while in the scope of his employment under circumstances where the United States, if a private person, would be liable, except that it does not apply to claims arising in a foreign country.

Proposed section 17 will serve to cover tort claims arising in the Republic of Panama, and that is one of the essential reasons for the section. Various operations are conducted by the Panama Canal in the Republic of Panama, particularly in the cities of Panama and Colon. Motor vehicles of the transportation division operate freely and necessarily in the Republic of Panama, and such operation would involve the bulk of the claims arising in the Republic of Panama.

It is thought essential that the authority be had locally to settle such claims and to achieve that end proposed section 17 is deemed far more appropriate than an extension of the Tort Claims Act, with its provisions for resort to United States district courts.

Proposed section 17 will likewise serve to cover such claims as loss for damages to crops or improvements of owners or occupants of lands occasioned by construction or survey or similar operations

of the Canal, such as damages to crops in the Republic of Panama as the result of test boring operations connected with investigation of means of increasing the capacity and security of the Canal, and damage to crops or improvements in the Canal Zone as the result of highway or other construction work.

Proposed section 17 will further serve to cover occasional claims for damages to or loss of personal property and effects of employees in the special and limited circumstances where such claims have heretofore been allowed, such, for example, as the loss of employee's tools, while the employee is acting in the scope of his employment on the sinking or capsizing of floating equipment.

If proposed section 17 is not enacted and if existing authority should be excluded from the appropriation language, the claims heretofore discussed were not covered by the Tort Claims Act, and would have to be submitted to Congress. The amount of such claims would not. ordinarily warrant such course, and in any event such a course would not be appropriate from the standpoint of maintaining proper relations with the Republic of Panama and its nationals and residents.

It is that section, Mr. Chairman, that we are not in complete agreement with the General Accounting Office on yet. In fact, that is the only section that we are not in complete agreement on.

Senator MORSE. What are their suggestions?

Mr. BURDICK. Their suggestion in considering the original draft of the bill was that we place in section 17 a limitation of $1,000 on the claims that be settled by the Panama Canal. They made the statement with respect to that that it was their general view, I believe, that there should be some limitation, and that they had seleced the $1,000 limitation, because that was the limitation in the Federal Torts Claims Act. Senator MORSE. Is it contemplated to have anybody from the Comptroller General's Office present their point of view on this particular section of the bill?

Mr. ADAMS. I understood when I talked to Mr. Burdick Friday that he was going to bring somebody from the Comptroller General's Office. Senator MORSE. They do not want to testify?

Mr. BURDICK. I did not understand that we were to request them to come, Mr. Adams, but the gentleman who was over at the other hearing, and who was also at the House hearing on both of these bills, is out of the city at the present time.

Senator MORSE. Do you have a memorandum from them setting forth the reasons of their objections?

Mr. BURDICK. I have a brief statement here that they presented, I believe, to the House committee. There was some other comment on it along the same general line. Here was the written statement that they read at the House hearing on this section:

The purpose of the suggested amendments to this section is to place a ceiling on the claims authorized to be paid thereunder. This is in accordance with the usual practice in such instances. The ceiling of $1,000 was selected because it is the limit placed on administrative approval of claims in the Federal Tort Claims Act. The language used in connection with claims in excess of $1,000 net cognizable under section 10, or the Federal Tort Claims Act, is for the purpose of authorizing the introduction of private bills in such instances.

Senator MORSE. What this section really proposes to do is to give the officials of the Canal Zone authority to really compromise tort claims.

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