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.

Mr. BURDICK. Well, it is a little more than that, in one respect, and considerably less in the other. It does not remove the application of the Tort Claims Act to those that occur in the Canal Zone, but the Tort Claims Act does not cover these cases that arise in the Republic of Panama.

Senator MORSE. But the proposal says that the acceptance by the claimant of any such award shall be final and conclusive on the claimant, and shall constitute a complete release of such claimant against the United States.

Mr. BURDICK. Yes.

Senator MORSE. If you proceed under this act, he really waives the Tort Claims Act, does he not?

Mr. BURDICK. This section, let me say you will notice that in section 17, it has this proviso:

Provided, however, That this section shall not apply to claims cognizable either under section 10 of this title, as amended, or under the Federal Tort Claims Act.

It would supplement the Federal Tort Claims Act in one respect that it would give jurisdiction to settle these claims that arise outside of the Canal Zone in the Republic of Panama.

Senator MORSE. Let me have that statement of the Comptroller General's representative. We will make it an exhibit. It will be marked for purposes of identification as exhibit 3 and received into the record, a memorandum headed, "Explanation of Suggested Amendment to H. R. 5103," which is a statement submitted at the House hearings by a representative of the Comptroller General's Office, setting forth the objections of that office to the proposed section 17 of the proposed revised version of S. 2003.

(Exhibit 3 is as follows:)

EXPLANATION OF SUGGESTED AMENDMENT TO H. R. 5103

Section 17: 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.

Section 51 (a): The purpose of the suggested amendments to this section is to authorize the providing of services of the nature now furnished by the Panama Canal Clubhouse Services and to provide that the income from such activities be accounted for either under section 52 as business operations or section 53 as other authorized operations. Under the bill as amended, the Governor would have three choices with respect to the clubhouse operations-he could operate them as recreational services under section 51 (a), transfer them to the Panama Railroad Company under section 51 (b), or operate them as business operations under section 52.

Section 21 (b): The purpose of the suggested amendments to this section is to limit the transfer of personnel, etc., where facilities are transferred to the Panama Railroad Company, to those necessary and to eliminate the word "funds" as these facilities do not have funds as such.

Section 52: The suggested amendments to this section are for the purpose of recognizing the possibility of losses in some of the business activities and to provide for the accurate recording of such losses and the covering into the Treasury of the United States of the aggregate net profit. It is felt that the authority conferred on the General Accounting Office by 48 U. S. C. 1329 to "make such other examination into the accounts of the Panama Canal as may be directed by the Comptroller General" is sufficient to permit an audit of these business activities of sufficient thoroughness to detect any possible unjustifiable losses which may be absorbed by other activities under the section.

Section 54: Since the Panama Canal Clubhouse operations are covered by sections 51, 52, and 53 as amended, no exception is now required and it is proposed to delete such exception.

Section 85: The suggested amendments to this section are for the purpose of defining and placing reasonable limits on the authority granted therein, and to safeguard the investment made in the training of employees.

Senator MORSE. Let me be sure that the record is clear on this. I take a visit to the Canal Zone, and take my car down, and one of the trucks of the Canal Zone government negligently runs into me and demolishes my car. The driver was drunk. My remedy at the present time then, is under the Federal Tort Claims Act, because it happened in the Canal Zone.

Mr. BURDICK. Correct, sir.

Senator MORSE. This bill, this proposed section 17 in no way modifies my rights under the Federal Tort Claims Act nor does it give to the Panama Canal officials any right to enter into any settlement with me outside of the Federal Tort Claims Act for that particular accident; right?

Mr. BURDICK. That is correct, sir.

Senator MORSE. Now, instead of having my accident within the Canal Zone, I drive into the Republic of Panama, and this same driver and this same truck had been sent outside of the Canal Zone to bring back a truckload of supplies, for the Canal Zone government. He got drunk and he ran into my car 15 miles in the interior of the Republic of Panama and demolished it. I cannot bring action under the Federal Tort Claims Act, because the accident occurred not within the Canal Zone, is that it?

Mr. BURDICK. That is my understanding.

Mr. RAMSEY. I believe that probably you could bring action in the district court where you reside. However, if you were a national of the Republic of Panama, this Tort Claims Act would confer no jurisdiction on the court of the United States to hear that case.

Senator MORSE. Because I am an American citizen I would still be protected under the Federal Tort Claims Act, but taking the third hypothetical, and make the person who is injured a national of Panama, and an American truck runs into him in the Republic of Panama, he has no recourse against the United States Government.

Mr. BURDICK. That is it. That applies whether it is the Panama Government or Panama citizen or a resident of Panama.

Senator MORSE. Unless you get a private claims bill through the Congress.

Mr. BURDICK. Yes, sir.

Senator MORSE. Taking that third hypothetical, and assuming for a moment that section 17 is passed, you gentlemen take the position that the Panama Canal officials ought to be empowered to make a settlement with this national of Panama for the damage done to his automobile or personal injury to himself without any limitation of a thousand dollars?

Mr. BURDICK. Yes, sir. We think that the thousand dollars limitation should not be placed on there, that we ought to be able to settle the claim a little larger than that without forcing the citizen of Panama or the Government of Panama to come to the Congress of the United States and get relief. We are operating in the Republic of Panama, I suppose daily, and we think that proper relations with Panama,

maintenance of them and its citizens would require the prompt and just settlement of these claims, none of which are very large, but might very well be above $1,000.

Senator MORSE. There might be a death claim and be considerably above $1,000.

Mr. BURDICK. Yes. We believe that there is another reason for keeping the limitation off here in that it will enable us to settle other kinds of claims, as we have throughout the years, arising out of business operations. One, it would not necessarily be settled as a tort. In other words, if we place a limitation on these claims, we would have to make clear that it does not apply to these claims arising out of contracts, and that is my understanding, that it is not intended. here to deprive claimants of the rights to settlement either by the administrative officer, the General Accounting Office, or the courts, if the claim arises out of contract.

Senator MORSE. That is perfectly clear.

Mr. BURDICK. The reason that this language is in here is because we had to get authority to use our appropriations to pay the other classes of claims, and if the record is clear that it is not intended to remove the remedies that the claimants would have under the contract claims-for example, we decide in the maintenance of the Canal that we have to take a certain piece of property, and it is under license agreement, the licensee has some improvements on there, we have an agreement that if we take that property we will arrive at a just compensation. We would not want to deprive that person of the right that he now has to have settled under his contract.

Senator MORSE. Go ahead.

Mr. BURDICK. There might be some other cases where we would not actually have a contract. Time maybe did not permit the negotiations leading to that, but it is not a negligent tort. It is a delivery action of the Government taking their property for public use, in effect.

Senator MORSE. I was trying to make the record complete here so that we will cover what we can think of as any possible objection that anyone might raise on the floor. I have to take leadership of this on the floor if the bill reaches the floor. Suppose some Senator gets up and says, "Well, why give the Governor or his designee, as this seeks to provide, authority to settle these claims?" That is giving a lot of power to one individual. Why not give them to a court in the Panama Canal Zone, jurisdiction to render decisions in cases brought within the Canal Zone by nationals of Panama for accidents and tort liabilities created or incurred outside of the zone.

What would I say to him in answer to that question? Why would that not be sufficient?

Mr. BURDICK. That would give some help to permit him to sue there. We do not think it is an adequate remedy by any means that the claim may be small, comparatively small. He has to employ attorneys, go through the courts, in handling those cases, whereas an organization which conducts business activities ought to be able to settle some of these things in a businesslike way without putting the claimant to unnecessary expense and employing counsel and presenting all of the details.

Senator MORSE. What would we say to an objection that might be raised on the floor that the Governor or his designee in a specific case might grant an excessive allowance, maybe fraud, dishonesty, collusion, with no check on the Governor. Where is a check on him?

Mr. BURDICK. All accounts of the Panama Canal are audited by the Comptroller General, and anything of that nature would be brought to light in these audits, and reported to the Congress. We do not think that there is anything, any law that you could pass that would actually prevent an officer from paying out money improperly. You can only punish him for doing so. If you say that he cannot pay out money in his own discretion there, under the established procedures, why, you are simply saying he cannot make a payment without coming in each individual case for somebody else to approve. But we think that there is adequate protection there. Actually now, I would like to show we are not asking for any authority that we have not been exercising since I think 1916 without any limitation whatever.

Senator MORSE. You have been settling cases for over $1,000.

Mr. BURDICK. Yes, sir. These cases, I think the largest case that I know about was about $4,500 in all of that period of years, just a few thousand dollars a year at the most. I would say probably less than an average of $2,000 per year. But we do not know, tomorrow we may get another claim for $4,500 or even more than that.

Senator MORSE. I am surprised that you do not get more of them for more than that.

Mr. BURDICK. Weil, I think that the record shows that it has been pretty carefully administered over these years.

Senator MORSE. That leads me to my next question which I was about to put. Looking at it now from the standpoint of the plaintiff, the injured party, and the provision here that says that any award made to any claimant shall be payable out of any moneys appropriated or made available, that is a practical check; is it not?

Mr. BURDICK. Yes, sir.

Senator MORSE. It has a tendency to cause the officials of the zone who are settling these cases for the Governor to hold the allowances down to a bare minimum, because of the fact that whatever they allow reduces their appropriation just that much.

Mr. BURDICK. That is correct, sir, unless, of course, it were a large claim, and we have to come to Congress and ask for a special appropriation for it.

Senator MORSE. Does that have the effect, however, of working a detriment against the claimant in that if he follows this procedure, then he releases the Federal Government of any further claim on his part? Is it working justice to our claimants or is the result of it that we are creating the impression down there that Uncle Sam is pretty much of a Shylock in these cases?

Mr. BURDICK. I think probably the answer to that is that this does not restrict any rights that he would have had before, and that is the point I wanted to make clear a moment ago, that it did not eliminate any rights or remedies that he had under the contract, that this is merely an authorization for the Governor to try to arrive at a settlement that is satisfactory to both parties without the thousand dollars limitation.