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MONDAY, JUNE 7, 1948
UNITED STATES SENATE,
SUBCOMMITTEE OF THE COMMITTEE ON ARMED SERVICES,
Washington, D. C.
The subcommittee met, pursuant to notice, at 9:30 a. m. in room 212, Senate Office Building, Senator Wayne Morse (chairman of the subcommittee) presiding.
Present: Senator Morse.
Senator MORSE. The committee will come to order.
The subcommittee, composed of Senator Baldwin, of Connecticut; Senator Kilgore, of West Virginia; and Senator Morse, of Oregon, has called this meeting for the consideration of S. 2003.
(S. 2003 is as follows:)
[S. 2003, 80th Cong., 2d sess.]
A BILL To amend the Canal Zone Code, and for other purposes
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That title 2 of the Canal Zone Code is amended by adding in chapter 1 thereof three new sections numbered 16 to 18, respectively, and reading as follows:
"16. ACQUISITION OR CONSTRUCTION OF STRUCTURES, EQUIPMENT, AND IMPROVEMENTS. The Governor of the Panama Canal is authorized, 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 Canal Zone.
"17. CLAIMS FOR LOSSES OF OR DAMAGES TO PROPERTY.-Authority is hereby conferred upon the Governor of the Panama Canal, or his designee for the purpose, to consider, adjust, determine, and settle 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: 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.
"Any award made to any claimant pursuant to this section shall be payable out of any moneys appropriated or made available for the maintenance and operation, sanitation, and civil government of the Panama Canal and Canal Zone; and the acceptance by the claimant of any such award shall be final and conclusive on the claimant, and shall constitute a complete release by the claimant of such claim against the United States.
"18. DISASTER RELIEF.-In the event of emergency arising because of disaster or calamity by flood, hurricane, earthquake, fire, pestilence, or like cause, not foreseen or otherwise provided for, and occurring in the Canal Zone, or occurring in the Republic of Panama in such circumstances as to constitute an actual or potential hazard to health, safety, security or property in the Canal Zone, the Governor of the Panama Canal is authorized to expend available funds and to utilize or furnish materials, supplies, equipment, and services for relief, assistance, and protection."
SEC. 2. Chapter 4 of title 2, Canal Zone Code, which chapter is now entitled "Business Operations" and consists of sections 51 and 52 of said title 2, is amended to read as follows:
"CHAPTER 4-BUSINESS OPERATIONS; SALES AND SERVICES
53. Receipts from such operations, sales, and
"51. Authorization for establishment and
"SEC. 51. AUTHORIZATION FOR ESTABLISHMENT AND OPERATION OF VARIOUS FACILITIES.-(a) In connection with the opertaion, maintenance, sanitation, and civil government of the Panama Canal and Canal Zone, the President is authorized to establish, maintain, and operate, through the Panama Railroad Company or otherwise, docks, wharves, piers, drydocks, shops, yards, marine railways, salvage and towing facilities, dredging facilities, construction facilities, fuel-handling facilities, motor-transportation facilities, civil air terminals, power systems, water and sewer systems, warehouses, storehouses, hotel, a printing plant, living quarters and other buildings, and any other necessary facilities and appurtenances, for the purpose of providing, at reasonable prices, fuel, electric power, water, equipment, supplies and materials generally, repairs, labor, transportation, quarters, space in buildings, wharf and like services, hotel services, and services generally, and for the purpose of assembling, assorting, storing, repairing, and selling scrap and other byproducts of manufacturing and shop operations, and materials, supplies, and equipment purchased or acquired for the construction, improvement, operation, maintenance, sanitation, or civil government of the Panama Canal or Canal Zone and which are obsolete, unserviceable, or no longer needed. The sales, services, equipment, supplies, and materials hereinbefore referred to may be made or furnished to vessels, to agencies of the Government of the United States, to the Panama Railroad Company, to employees of the Government of the United States or of the Panama Railroad Company, and to any other governments, agencies, persons, corporations, companies, or associations eligible to make or receive such purchases, services, supplies, or materials under the laws prevailing at the time and the policies heretofore or hereafter adopted consistently with such laws.
"(b) In the event the President has heretofore elected, or shall at any time hereafter elect, to maintain and operate through the Panama Railroad Company any of the facilities and appurtenances referred to in this section or section 52 of this title, theretofore maintained and operated by the Panama Canal, the President is authorized to transfer to the Panama Railroad Company all of the personnel, property, records, funds, assets, contracts, obligations, and liabilities of or appertaining to the said facility and its appurtenances, and such transfer shall be deemed to have been accepted and assumed by the Panama Railroad Company without the necessity of any act or acts on the part of the said corporation except as otherwise stipulated in provisions of law applicable to the said corporation.
"52. ORGANIZATION AND CONDUCT OF ANY SUCH FACILITIES BY PANAMA CANAL AS 'BUSINESS OPERATIONS'.-The President may cause any of the facilities and appurtenances referred to in paragraph (a) of section 51 of this title to be organized and conducted by the Panama Canal as 'business operations', and in such case any net profit accruing from the conduct of such business operations shall annually be covered into the Treasury of the United States.
"53. RECEIPTS FROM SUCH OPERATIONS, SALES, AND SERVICES; EXPENDITURE AND REINVESTMENT; REPORTS.-The moneys received by the Panama Canal from the operations authorized by sections 51 and 52 of this title, and from pilotage, quarantine, immigration, and like services, from rentals, from damage claims, and from any and all other sales made and services rendered, but not including tolls, taxes, court fees, or fines, may be expended or reinvested under the several heads of appropriation for the Panama Canal, without being covered into the Treasury of the United States except as provided in section 52 of this title; but, except as otherwise provided in this section, such funds shall be subject to the provisions of law relating to public funds of the United States. Monthly re
ports of such receipts and expenditures shall be made to the President and annual reports shall be made to the Congress.
"54. EXCEPTION OF CANAL ZONE POSTAL SERVICE AND PANAMA CANAL CLUBHOUSE OPERATIONS; AUTHORIZATION FOR CONDUCTING CLUBHOUSE OPERATIONS THROUGH PANAMA RAILROAD COMPANY.-The provisions of sections 51 to 53 of this title shall have no application to operations of the Canal Zone Postal Service or to the operation of Panama Canal clubhouse: Provided, however, That the President may at any time elect to maintain and operate through the Panama Railroad Company any or all of the facilities and appurtenances now maintained and operated through Panama Canal clubhouses; and in the event of such election the President is authorized to transfer to the Panama Railroad Company all of the personnel, property, records, funds, assets, contracts, obligations, and liabilities of or appertaining to the affected facility and its appurtenances, and such transfer shall be deemed to have been accepted and assumed by the Panama Railroad Company without the necessity of any act or acts on the part of the said corporation except as otherwise stipulated in provisions of law applicable to the said corporation."
SEC. 3. Title 2 of the Canal Zone Code is amended by adding in article 1 of chapter 6 thereof a new section numbered 85 and reading as follows:
"85. SPECIAL TRAINING OF EMPLOYEES.-The Governor of the Panama Canal is authorized, within the limits of appropriations made therefor, to provide for the special training in the United States or elsewhere of any employee of the Panama Canal when in the judgment of the Governor such special training will be of benefit to the work of the Panama Canal. During the period of such special training the employee may be paid his regular compensation and his travel expenses in accordance with the Standardized Government Travel Regulations and the Subsistence Expense Act of 1926, as amended."
SEC. 4. Title 2 of the Canal Zone Code is amended by adding in article 3 of chapter 6 thereof a new section numbered 124 and reading as follows:
"124. EMPLOYEES INJURED PRIOR TO SEPTEMBER 7, 1916; APPLIANCES; LUMPSUM PAYMENTS.-The Governor of the Panama Canal is authorized to purchase artificial limbs or other appliances for persons who were injured in the service of the Isthmian Canal Commission or of the Panama Canal prior to September 7, 1916, and to make payments in lump sums not exceeding the amounts authorized by the Act of September 7, 1916, as amended (U. S. C., title 5, ch. 15), to alien cripples who are now a charge upon the Panama Canal by reason of injuries sustained while employed in the construction of the Panama Canal."
SEC. 5. Title 6 of the Canal Zone Code is amended by adding in chapter 27 thereof a new section numbered 906 and reading as follows:
"906. CLOTHING AND MONEY FOR DISCHARGED PRISONERS.-On the discharge of a prisoner from any penal institution in the Canal Zone such prisoner may, in the discretion of the Governor of the Panama Canal, be furnished with such suitable clothing as may be authorized by the Governor, and an amount of money not exceeding $20."
Senator MORSE. The chairman will mark for purposes of identification, and receive in the record as exhibit 1 in this hearing, a letter dated January 14, 1948, addressed to Hon. Chan Gurney, chairman of the Senate Armed Services Committee of the United States Senate, and signed by Kenneth C. Royall, Secretary of the Army. The letter will speak for itself.
(Exhibit 1 is as follows:)
Hon. CHAN GURNEY,
Committee on Armed Services,
DEPARTMENT OF THE ARMY, Washington, D. C., January 14, 1948.
United States Senate, Washington, D. C.
DEAR SENATOR GURNEY: I submit herewith draft of bill to amend the Canal Zone Code, and for other purposes, designed to supply authority in substantive legislation to support Panama Canal appropriations and prepared pursuant to Bureau of the Budget Bulletin No. 1946-47:26, dated February 24, 1947.
The following explanatory statement has been made by the Governor of the Panama Canal under whose supervision the draft of bill was prepared.
ORIGIN AND GENERAL PURPOSES OF BILL
By Budget Bulletin No. 1944-45:10 of March 28, 1945, it was required that steps be taken immediately by the heads of executive departments and establishments to review their appropriation language and submit to the Bureau of the Budget the proposed legislation necessary to support appropriation provisions required on a permanent basis for the operation of such establishments. A draft of proposed legislation designed to supply necessary substantive authority for l'anama Canal activities and appropriations was, accordingly, submitted to the Bureau on November 8, 1945. There followed certain correspondence and conferences between representatives of the Bureau of the Budget and of the Panama Canal, which resulted in some modification of the provisions of the proposed legislation. By letter to this office dated December 27, 1945, the Director of the Bureau of the Budget stated that the proposed legislation in the form then submitted was considered sufficient to meet the purposes of Budget Bulletin No. 1944-45:10, and suggested that this office submit the same to the Congress. By letter to the Speaker of the House of Representatives, dated February 18, 1946 (subsequently printed as No. 93-Report of War Department on N. R. 5587 (Mr. Bland), the Secretary of War submitted the proposed legislation in the form of a draft of bill to amend the Canal Zone Code, and for other purposes, including in said letter the explanatory statement made by this office, and expressing concurrence in the views and recommendations contained in that statement. The bill was introduced by Mr. Bland on February 26, 1946, as H. R. 5587, Seventy-ninth Congress, second session, and was referred to the Committee on the Merchant Marine and Fisheries. On March 8, 1946, hearings on this bill were held by a subcommittee of the Committee on the Merchant Marine and Fisheries at Balboa Heights, C. Z., but the bill was not reported by that committee.
In preparing this proposed bill for resubmission certain relatively minor changes have been made in the light of events which have transpired since the introduction of H. R. 5587, and in the light of further study of the proposed legislation. These changes are hereinafter identified.
The general purpose of the proposed bill is, as hereinbefore indicated, to establish appropriate and adequate authority in substantive legislation to support operations now conducted by the Panama Canal, and procedures now followed, and the appropriation of funds for such operations and procedures, which are not now wholly covered by authorization in such legislation.
The sections of the bill are hereinafter severally discussed at some length with a view to making readily available the data relative to the existing legislative status of these several matters. The five sections of the bill either amend sections of, or add sections to, the Canal Zone Code approved June 19, 1934, and the sections are arranged in chronological order by title and section of that code.
SECTION 1 OF BILL, ADDING SECTION 16 OF TITLE 2, CANAL ZONE CODE
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 Canal Zone. This section, as well as sections 17 and 18 hereinafter discussed, would fall within chapter 1, General Provisions, of title 2, Operation and Maintenance of the Canal and Government of the Canal Zone Generally, to which chapter there have been previous additions of which the latest is a section numbered 15 as added by act December 12 1941 (48 U. S. Code, sec. 1337).
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; The quoted item first appeared in the War Department Civil Appropriation Act, 1940, and the following explanatory statement was offered by former Governor Ridley in support thereof (hearings, p. 44):
* ** *""
"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 facilities 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 it 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 revive suspended projects and to envisage more clearly the future long-term needs of the Canal.
SECTION 1 OF BILL, ADDING SECTION 17 OF TITLE 2, CANAL ZONE CODE
Section 1 of the bill would also add to the Canal Zone Code a section 17 or 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 appeared in Canal 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 June 13, 1940, chapter 358, section 1 (48 U. S. C., sec. 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.
A comparison of this proposed section with its predecessor in H. R. 5587 will disclose that the form of the section has been altered and, it is thought, improved, and that the section has also been altered in substance by excepting from its scope such claims as are cognizable under the Federal Tort Claims Act. The Tort Claims Act was approved on August 2, 1946, whereas H. R. 5587 was introduced on February 26, 1943; and there now appears in Panama Canal appropriation language as contained in the budget for 1948 an additional clause authorizing expenditures for claims under part 2 of the Tort Claims Act.