which were subject to a point of order unless covered by special rule by the Rules Committee. At his request the heads of executive departments and establishments were requested by the Bureau of the Budget to review the appropriation language and to submit proposed legislation necessary to support appropriation provisions required on a permanent basis for the operation of such establishments. Subsequent to the introduction of bill S. 2003, the General Accounting Office suggested some changes in the proposed legislation. The Governor and other representatives of the Panama Canal have discussed these suggestions with representatives of the General Accounting Office, and the agencies are now in agreement in all of the provisions of the bill except the one relating to the settlement of certain types of claims. A redraft of the bill embodying all the changes agreed upon has been furnished to your committee, and is exhibit 2. The views regarding the section on which the agencies are not yet in agreement will be presented to the committee in the section-by-section discussion of the bill. In this discussion I shall attempt to show the existing legislative status of the several matters involved. Section 1 of the bill would add to the Canal Zone Code a section 16 of title 2, authorizing the Governor, within the limits of available funds, to purchase, or otherwise acquire, construct, repair, replace, alter, or enlarge any building, structure, equipment, or other improvement, when in his judgment such action is necessary for the operation, maintenance, sanitation or civil government of the Panama Canal or the Canal Zone. The purpose of proposed section 16 is to provide the necessary support for the item in present Panama Canal appropriations, reading: For * * * purchase, construction, repair, replacement, alteration, or enlargement of buildings, structures, equipment, and other improvements; * Senator MORSE. That would dovetail very well with the bill which this subcommittee approved the other day in regard to which you testified for the corporation set-up of the Panama Railroad Company. Mr. BURDICK. Yes, sir. This bill also provides authority for transfer of certain of the business operations to the Railroad Company. The two agencies operate to make a complete organization; in other words, the railroad is an adjunct of the Canal. Senator MORSE. And there would be no conflict between this bill and the bill that this committee approved the other day. Mr. BURDICK. No, sir; that is right. Senator MORSE. So long as I have mentioned the other bill, you checked the final draft of the other bill and found it at least workable, if not necessarily satisfactory in every respect. Mr. BURDICK. Yes, sir. Senator MORSE. I think we followed your recommendations almost entirely, save and except for the civil-service matter, and it was my understanding that even as to that matter, we left it in a workable condition. Mr. BURDICK. Yes, sir; it was in excellent shape. The other two suggestions that the committee adopted, that is, made by the committee and adopted were also satisfactory. Senator MORSE. Satisfactory to you. 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 until 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 legsislation. Senator MORSE. That is what you propose to do by this bill. 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. Mr. BURDICK. Yes. 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 |