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;

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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.

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The exception of claims cognizable under the Federal Tort Claims Act serves to preserve that act intact in its application to the Panama Canal and to restrict the scope of proposed section 17 to property-damage claims not cognizable under that act.

The Federal Tort Claims Act covers all 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. Added section 17 will thus serve to cover tort claims arising in the Republic of Panama and the section is essential for that purpose, among others. 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 constitute the bulk of the claims arising in the Republic of Panama. It is thought essential that 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 those for damages to crops or improvements of owners or occupants of the lands occasioned by construction or survey or similar operations of the Canal, such as damages to crops in the Republic of Panama as a result of test-boring operations connected with investigation of the means of increasing the capacity and security of the Canal (Public Law 280, 79th Con.), and damage to crops or improvements of agricultural licensees in the Canal Zone as a 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 an employee's tools, while the employee is acting in the scope of his employment, upon the sinking or capsizing of floating equipment.

Claims of the classes above enumerated were neither numerous nor large even before the advent of the Tort Claims Act, and that act will now cover the greater portion of the claims heretofore settled under the appropriate language here sought to be supported by substantive legislation. In 1944 fewer than 20 claims were settled under the said appropriation language, with an aggregate amount of around $2,000, and a range in amount from $15 to $755.06. In 1945 some 50 claims were settled, with an aggregate amount of less than $1,000, and a range in amount of from $2 to $126.86. In 1946, some 32 claims were settled, amounting in the aggregate to $4,008.95 and ranging in amount from $4 to $2,409.67. Also in 1946, the Tort Claims Act having been enacted on August 2, some 10 claims were settled under the act, amounting in the aggregate to $312.39, and ranging in amount from $8.75 to $94.21.

If proposed section 17 is not enacted and if existing authority is excluded from the appropriation language, the claims above discussed, where not covered by the Tort Claims Act, will have to be submitted to the Congress. The amount of such claims would not ordinarily warrant such a 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.

SECTION 1 OF BILL, ADDING SECTION 18 OF TITLE 2, CANAL ZONE CODE

Section 1 of the bill would further add to the Canal Zone Code a section 18 of title 2, authorizing the Governor in the event of emergency because of disaster or calamity, occurring in the Canal Zone or occurring in the Republic of Panama in such circumstances as to constitute a hazard to health, safety, security, or property in the Canal Zone, to expend available funds and to utilize or furnish materials, supplies, equipment, and services for relief and protection. The section would provide support for the item in Canal appropriations, reading, "For expenses incident to any emergency arising because of calamity by flood, fire, pestilence, or like character not foreseen or otherwise provided for herein; * * *" which item first appeared in Canal appropriation language in 1916 (Sundry Civil Appropriations). The proposed section would enable the Governor to act immediately in the event of any disaster endangering life or disrupting Canal operation.

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SECTION 2 OF BILL, AMENDING CHAPTER 4 OF TITLE 2, CANAL ZONE CODE

Section 2 of the bill would amend chapter 4 of title 2, Canal Zone Code, now entitled "Business Operations" and consisting of two sections Nos. 51 and 52, respectively, in such manner as to expand the designation of the chapter to "Business Operations; Sales and Services" and to include proposed sections Nos. 51 to 54, respectively.

Present sections 51 and 52 of title 2, which are limited in scope to the provision of materials, supplies, and services for vessels, are here quoted for convenient reference:

"CHAPTER 4.-BUSINESS OPERATIONS

"SECTION 51. PROVIDING MATERIALS, SUPPLIES, AND SERVICES FOR VESSELS.-The President is authorized to establish, maintain, and operate, through the Panama Railroad Company or otherwise, drydocks, repair shops, yards, docks, wharves, warehouses, storehouses, and other necessary facilities and appurtenances for the purpose of providing coal and other materials, labor, repairs, and supplies for vessels of the Government of the United States and, incidentally, for supplying such at reasonable prices to passing vessels, in accordance with appropriations hereby authorized to be made from time to time by Congress as a part of the maintenance and operation of the Panama Canal. (Aug. 24, 1912, ch. 390, sec. 6, 37 Stat. 563 (U. S. Code, title 48, sec. 1323).)

RECEIPTS FROM SUCH BUSINESS; APPROPRIATION FOR EXPENDITURE AND

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REINVESTMENT

"52. Moneys received from the conduct of the business referred to in the next preceding section, may be expended and reinvested for such purposes without being covered into the Treasury of the United States; and such moneys are hereby appropriated for such purposes, but all deposits of such funds shall be subject to the provisions of existing law relating to the deposit of other public funds of the United States, and any net profits accruing from such business shall annually be covered into the Treasury of the United States. Monthly reports of such receipts and expenditures shall be made to the President by the persons in charge, and annual reports shall be made to the Congress. (Aug. 24, 1912, ch. 390, sec. 6, 37 Stat. 563 (U. S. Code, title 48, sec. 1323).)”

The provisions in the appropriation language as contained in the budget for fiscal year 1948 bearing upon the subject matter of the proposed new chapter are as follows:

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"For every expenditure requisite for and incident to the maintenance and operation, sanitation, and civil government of the Panama Canal and Canal Zone, and construction of additional facilities, including: * * ; printing and binding; *, purchase (not to exceed thirty-five in the fiscal year 1948), and hire of passenger motor vehicles; ; expenses incurred in assembling, assorting, storing, repairing, and selling material, machinery, and equipment heretofore or hereafter purchased or acquired for the construction of the Panama Canal which are unserviceable or. no longer needed, to be reimbursed from the proceeds of such sale;

"Maintenance and operation of the Panama Canal: * * * ; purchase, inspection, delivery, handling, and storing of materials, supplies, and equipment for issue to all departments of the Panama Canal, the Panama Railroad, other branches of the United States Government, and for authorized sales; *; in all, $16,850,000, together with all moneys arising from the conduct of business operations authorized by the Panama Canal Act.

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"Total Panama Canal, $24,226,000, to be available until expended.

"In addition to the foregoing sums there is hereby made available for the fiscal year 1948 for expenditures and reinvestment under the several heads of appropriation aforesaid, without being covered into the Treasury of the United States, and to remain available until expended, all moneys received by the Panama Canal during the fiscal year 1948 from services rendered or materials and supplies furnished to the United States, the Panama Railroad Company, the Canal Zone government, or to their employees, respectively, or to the Panama Government, from hotel and hospital supplies and services; from rentals, wharfage, and like serv

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ices; from labor, materials, and supplies and other services furnished to vessels other than those passing through the Canal, and to others unable to obtain the same elsewhere; from the sale of scrap and other byproducts of manufacturing and shop operations; from the sale of obsolete and unserviceable materials, supplies, and equipment purchased or acquired for the operation, maintenance, protection, sanitation, and government of the Canal and Canal Zone; and any net profits accruing from such business to the Panama Canal shall annually be covered into the Treasury of the United States.

"There is also made available for the fiscal year 1948 for the operation, maintenance, and extension of waterworks, sewers, and pavements in the cities of Panama and Colon, to remain available until expended, the necessary portions of such sums as shall be paid during that fiscal year as water rentals or directly by the Government of Panama for such expenses."

Proposed sections 51 to 54 combine, restate, and clarify the provisions contained in present sections 51 and 52 and those appearing from year to year in Panama Canal appropriation language relating to facilities maintained and auxiliary business activities established and conducted on the Isthmus in connection with, and essential to, the maintenance and operation, sanitation and civil government of the Panama Canal and Canal Zone, and relating to the use and disposition of moneys received from such operations. The Panama Canal as a whole is a large and important business organization of the Government. Since the beginning of operations the basic laws relating to its fiscal and administrative operations have consisted of the original Panama Canal Act of August 24, 1912 (now incorporated in the Canal Zone Code) and the various legislative provisions included from year to year in the annual appropriations acts. The intent of these provisions has been well understood and for many years now the operations have been carried on under interpretations which the Panama Canal believes pursue that intent and which have been understood by the various succeeding appropriations committees.

The time has now arrived, however, for a clear and comprehensive restatement of these provisions in general law. It is felt that the fundamental operating law of this organization should be so clear and explicit that no question can arise as to its intent and meaning. The proposed sections are intended to bring about that result. The sections do not change the methods which have actually been followed for years and which stood the test of time and experience in the administrative control of this large enterprise, the operation of which has been uniformly efficient and successful. Located as this organization is, far from the United States, and doing a large business subject to sudden changes and emergencies at any time in any of its many complex operations, the Congress has wisely given the organization the latitude that is needed and then held it responsible for results. Experience has confirmed the wisdom of the course followed and it is felt that no change should be made without the most careful thought on the part of the Congress. There follows a brief discussion of the proposed sections, individually.

PROPOSED SECTION 51 OF TITLE 2, CANAL ZONE CODE

Paragraph (a) of proposed section 51 of title 2, Canal Zone Code, may be said to consist of three parts, as follows:

First, an enumeration of the facilities and appurtenances authorized to be established, maintained, and operated; such enumeration being specific as to principal facilities and general as to others of lesser importance;

Second, an enumeration of the purposes for which the facilities and appurtenances may be maintained and operated, in terms of the character of materials, supplies, and services which they may provide;

And third, a general enumeration of the agencies, entities, and persons to whom such sales, services, supplies and materials may be made or furnished.

The general purpose of paragraph (a) of proposed section 51 is to provide adequate support in substantive legislation for the continued maintenance and operation of the facilities and appurtenances which are necessary in connection with the Canal enterprise including the government of the Canal Zone.

The third part of paragraph (a), after authorizing the making or furnishing of sales, services, and supplies, to vessels and to Government agencies and employees, concludes with an authorization for the making or furnishing of sales, services, and supplies, generally, to any other entities or persons eligible to make or receive the same "under the laws prevailing at the time and the policies heretofore or hereafter adopted consistently with such laws." The

present restrictions upon these operations are to be found in the general treaty of friendship and cooperation concluded with the Republic of Panama on March 2. 1936, and in the accessory notes exchanged between the two Governments on that date. (Treaty Series No. 945; 53 Stat. 1807.) These restrictions include restrictions (a) as to the classes of persons to whom goods may be sold; (b) as to persons entitled to reside or occupy dwellings in the Canal Zone; (c) as to the conduct of private business enterprises in the Canal Zone; (d) as to hotel operations; (e) as to sales to vessels; and (f) as to the use and services of Canal Zone facilities such as hospitals, dispensaries, restaurants, lunchrooms, messes, laundries, and cleaning and pressing establishments.

In section 51 as proposed in H. R. 5587, Seventy-ninth Congress, the power in reference to establishment, maintenance, and operation of these facilities was placed in "the Governor of the Panama Canal under the general supervision of the President"; however, in section 51 as now proposed these powers are vested in the President as in present section 51, hereinbefore quoted, because these powers are believed more appropriate for placing in the President. In section 51 in H. R. 5587 the placing of these powers in the Governor was accomplished without any marked feeling of necessity therefor, and principally because there was had in view the then-current project of the President to divest his office of detailed powers and duties.

Paragraph (b) of proposed section 51 did not appear in H. R. 5587, but instead is an outgrowth of the current project for reincorporation of the Panama Railroad Company by act of Congress pursuant to the provisions of section 304 (b) of the Government Corporation Control Act. In the event the President elects to operate through the Panama Railroad Company any of the facilities and appurtenances referred to in sections 51 and 52 of title 2, theretofore maintained and operated by the Panama Canal, paragraph (a) authorizes the President to transfer to the Panama Railroad the personnel, property, records, funds, et cetera, of or appertaining to the said facility and its appurtenances. The proposed legislation to incorporate the Panama Railroad Company parallels, and coordinates with, section 51 in this bill by vesting in the corporation the necessary power to operate the facilities and appurtenances in the event of transfer, and by providing for the receipt of the transferred facilities and appurtenances, and for an appropriate increase in the amount of the capital stock of the corporation upon any such transfer.

PROPOSED SECTION 52 OF TITLE 2, CANAL ZONE CODE

Proposed section 52 of title 2, Canal Zone Code, would authorize, and ratify, the setting up as "business operations" of any of the facilities and appurtenances referred to in proposed section 51, in which case any net profits accruing therefrom would be required to be covered annually into the Treasury. This procedure has been and would continue to be followed in the case of facilities and appurtenances susceptible of being operated on a self-sustaining basis. Since inclusion in H. R. 5587, this section, like proposed section 51, has been revised so as to vest its powers in the President rather than in the Governor under the general supervision of the President.

PROPOSED SECTION 53 OF TITLE 2, CANAL ZONE CODE

Proposed section 53 of title 2, Canal Zone Code, restates and clarifies present section 52 and present appropriation language, in authorizing the expenditure or reinvestment under the several heads of appropriation for the Panama Canal, without coverage into the Treasury (except in the case of net profits of business operations), of the receipts of the operations authorized by proposed sections 51 and 52, and, in fact, of all receipts from sales made and services rendered with the exception of tolls, taxes, court fees, or fines. This section would support an appropriation of receipts for expenditure and reinvestment such as that contained in the current appropriation language and quoted in paragraph 21 hereof. Proposed section 53 would require, as in present section 52, monthly reports of such receipts and expenditures to the President, and annual reports to the Congress.

PROPOSED SECTION 54 OF TITLE 2, CANAL ZONE CODE

Proposed section 54 of title 2, Canal Zone Code, would render sections 51 to 53 inapplicable to operations of the Canal Zone postal service or to the operation of Panama Canal clubhouses. The operations of the Canal Zone postal service