9 3 PANAMA CANAL OVERSIGHT

EARINGS

BEFORE THE

SUBCOMMITTEE ON THE PANAMA CANAL

OF THE

COMMITTEE ON

MERCHANT MARINE AND FISHERIES

HOUSE OF REPRESENTATIVES

NINETY-SIXTH CONGRESS

SECOND SESSION

ON

PANAMA CANAL ADMINISTRATION OVERSIGHT

JULY 28, 1980

PANAMA CANAL ENVIRONMENTAL ISSUES,

OVERSIGHT

MARCH 17, 1980

Serial No. 96-38

Printed for the use of the Committee on Merchant Marine and Fisheries

U.S. GOVERNMENT PRINTING OFFICE

66-810 0 WASHINGTON: 1980
COMMITTEE ON MERCHANT MARINE AND FISHERIES

JOHN M. MURPHY, New York, Chairman

THOMAS L. ASHLEY, Ohio PAUL N. McCLOSKEY, JR., California

JOHN D. DINGELL, Michigan GENE SNYDER, Kentucky

WALTER B. JONES, North Carolina EDWIN B. FOjSYTHE, New Jersey

MARIO BIAGGI, New York JOEL PRITCHARD, Washington

GLENN M. ANDERSON, California DON YOUNG, Alaska

E (KIKA) DE LA GARZA, Texas ROBERT E. BAUMAN, Maryland

JOHN B. BREAUX, Louisiana NORMAN F. LENT, New York

GERRY E. STUDDS, Massachusetts DAVID F. EMERY, Maine

DAVID R. BOWEN, Mississippi ROBERT K. DORNAN, California

CARROLL HUBBARD, JR., Kentucky THOMAS B. EVANS, JR., Delaware

DON BONKER, Washington PAUL S. TRIBLE, JR., Virginia

LES AuCOIN, Oregon ROBERT W. DAVIS, Michigan

NORMAN E. D'AMOURS, New Hampshire WILLIAM CARNEY, New York

JAMES L. OBERSTAR, Minnesota MELVIN H. EVANS, Virgin Islands

WILLIAM J. HUGHES, New Jersey BOB LIVINGSTON, Louisiana

BARBARA A. MIKULSKI, Maryland

DAVID E. BONIOR, Michigan

DANIEL K. AKAKA, Hawaii

MICHAEL OZZIE MYERS, Pennsylvania

JOE WYATT, Texas

MIKE LOWRY, Washington

EARL HUTTO, Florida

EDWARD J. STACK, Florida

BRIAN DONNELLY, Massachusetts

CARL L. PERIAN, Chief of Staff

LAWRENCE J. O'BRIEN, Jr., Chief Counsel

JULIA P. PERIAN, Chief Clerk/Administrator

JACK E. SANDS, Minority Counsel

SUBCOMMITTEE ON PANAMA CANAL

CARROLL HUBBARD, JR., Kentucky, Chairman

DAVID R. BOWEN, Mississippi ROBERT E. BAUMAN, Maryland

DAVID E. BONIOR, Michigan ROBERT K. DORNAN, California

JOHN D. DINGELL, Michigan WILLIAM CARNEY, New York

WALTER B. JONES, North Carolina BOB LIVINGSTON, Louisiana

MARIO BIAGGI, New York PAUL N. McCLOSKEY, JR., California

GLENN M. ANDERSON, California (Ex Officio)

MIKE LOWRY, Washington

JOHN M. MURPHY, New York

(Ex Officio)

TERRENCE W. MODGLIN, Staff Director

BERNARD TANNENBAUM, Special Counsel

W. MERRILL WHITMAN, Consultant

(II)
CONTENTS

PANAMA CANAL ADMINISTRATION OVERSIGHT

Page

H earing held July 28, 1980 . . 1

Statement of:

Blumenfeld, Hon. Michael, Assistant Secretary of the Army, Civil Works. 6

Prepared statem ent. 6

McAuliffe, Dennis P., Administrator, Panama Canal Commission. 6

Rhode, M ichael, Jr., Secretary. 6

Additional material supplied:

Whitman, W. Merrill: Comparative Analysis Regulations of the Board of

the Panama Canal Commission adopted June 4, 1980. 44

Communications submitted:

Claytor, W. Graham, Jr.: Memorandum of July 18, 1980, to Secretaries of

the Military Departments, Chairman, Joint chiefs of Staff, Under Secretaries of Defense, Assistant Secretaries of Defense, General Counsel,

Assistants to the Secretary of Defense, Director, Defense Intelligence

Agency, Department of Defense Representative for Panama Canal

T reaty A ffairs. 10

Rhode, Michael, Jr.: Letter of July 28, 1980, to Hon. Carroll Hubbard

w ith attachm ents. 19

PANAMA CANAL ENVIRONMENTAL ISSUES OVERSIGHT

H earing held M arch 17, 1980. 109

Statement of:

Constant, Thomas, Secretary, Panama Canal Commission. 122

Hayne, William Alston, Deputy Assistant Secretary for Environmental,

Health and Natural Resources, Department of State . 149

Ortman, David E., research associate, Friends of the Earth . 156

Rubinoff, Dr. Ira, Director, Smithsonian Tropical Research Institute . 112

Ruiz, Aldelmo, Director of the Agency for International Development

M ission in Panam a. 142

Additional material supplied:

Article from Miami Herald of January 17, 1980: "New Panama Canal

Possible in 12 years". 158

Article from Seattle Times, March 22, 1980: "Japan, Panama To Study

Plan for Second Canal" . 156

Constant, Thomas:

Environmental laws, regulations, and policies affecting the Panama

C anal Com m ission . 126

Report on environmental quality of surface water and ambient air in

Panam a Canal Com m ission areas . 133

Katz, Dean: Article of January 27, 1980, from Seattle Times: "Alaskan,

Japanese Pushing Sea-Level Panama Canal". 157

Rubinoff, Dr. Ira: Economic viability of forests.:. 116

Communication submitted:

Ozores T., Carlos: Letter of October 1, 1980, to U.S. Ambassador in

P an am a . 150

(III)
b

'!t
PANAMA CANAL ADMINISTRATION OVERSIGHT

MONDAY, JULY 28, 1980

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON THE PANAMA CANAL,

COMMITTEE ON MERCHANT MARINE AND FISHERIES,

Washington, D.C.

The subcommittee met, pursuant to notice, at 10:10 a.m., in room

1334, Longworth House Office Building, the Hon. Carroll Hubbard

(chairman of the subcommittee) presiding. 

Present: Representatives Hubbard, Bauman, and Carney.

Also present: Mary Pat Barrett, Luis Luna, Merrill Whitman,

and Guy Land.

Mr. HUBBARD. The Chair will call to order the Subcommittee on

the Panama Canal.

Two of our members are present and that is sufficient in that we

have one from each of the parties. It could be said one from each

side of the aisle.

This is the second in a series of hearings by this subcommittee

inquiring into the actions taken to carry into effect the provisions

of Public Law 96-70, approved September 27, 1979. That act provides for operation of the Panama Canal under rights granted to

the United States under the 1977 treaty with Panama.

Under rule X of the House of Representatives, each standing

committee is required to review and study on a continuing basis

the administration and execution of all laws within its legislative

jurisdiction. Under rule XI committee reports are required to include oversight findings separately set out and clearly identified.

Specifically the purpose of the hearing this morning is to examine the manner in which the provisions of Public Law 96-70 have

been carried into effect in the organization and operation of the

Panama Canal Commission established by title I of that act.

As background, paragraph 1 of article III of the 1977 treaty

grants to the United States the rights to manage, operate, and

maintain the Panama Canal. Paragraph 3 of that article provides

that the United States will in accordance with the terms of this

treaty and the provisions of U.S. law, carry out its responsibilities

by means of a U.S. governmental agency called the Panama Canal

Commission, which shall be constituted by and in conformity with

the laws of the United States of America.

Paragraph 3 of article II of the treaty goes on to provide that the

Commission shall be supervised by a nine-member Board, five of

whom shall be nationals of the United States and four of whom

shall be Panamanian nationals proposed by the Republic of

Panama for appointment to such positions by the United States of

America.

(1)
2

Title I of Public Law 96-70 established the Panama Canal Commission as an agency in the executive branch of the U.S. Government. Under the Constitution, the President is the head of the

entire executive branch and section 1101 of Public Law 96-70 provides that the authority of the President with respect to the Commission shall be exercised through the Secretary of Defense.

Consistent with that provision, the President has delegated substantially all of his supervisory authority over the Commission as a

Government agency in the executive branch to the Secretary of

Defense. This was accomplished by Executive Order No. 12215

issued May 27, 1980.

It should also be kept in mind that prior to the effective date of

Public Law 96-70, the Panama Canal was operated by a Government agency in corporate form called the Panama Canal Company.

The law governing the operations of that agency specifically

provided that management of the corporation was vested in a

Board of directors and the law vested broad and extensive powers

in the company.

All these former provisions were repealed by Public Law 96-70

and an entirely different form of Government agency was substituted under the direct control of the President through the Secretary of Defense.

At the time the bill, which was eventually enacted as Public Law

96-70, was under consideration by the Congress, both the Government of Panama and the corporate agency then operating the

canal objected strenuously to the provisions of the law that gave

direct control to the President through the Secretary of Defense

and substituted a supervisory Board for the former Board of directors which had full management powers over the discontinued

corporate agency.

The members of the supervisory Board established by the act

were appointed by the President after the nomination so the members who were U.S. nationals were confirmed by the Senate.

The committee has not been advised as to the dates when the

appointments were made or when the members qualified by taking

the oath of office. We hope to obtain that information in the course

of the testimony this morning.

The supervisory Board held its first meeting early in June of this

year and a press release issued after the meeting announced that

the Board of directors of the Panama Canal Commission had met

and assumed responsibility for policy making and supervision of

the affairs of the Panama Canal Commission.

The press release further stated that actions taken by the Board

included approval of the regulations which govern the functions of

the Board as specified in the Panama Canal Treaty of 1977.

The description of the action of the Board in the press release

raised a number of questions in regard to the authority of the

Board and the relationship of the regulations to the controlling

provisions of Public Law 96-70.

Inasmuch as under the provisions of Public Law 96-70, the President, through the Secretary of Defense, has ultimate authority and

responsibility for operation of the canal, the subcommittee invited

the Secretary to appear today and inform the committee in regard

to what steps have been taken to carry the provisions of the law
3

into effect, with particular reference to whether the members of

the Board had been duly appointed and had taken the oath, and

the relationship of the Board to the Commission under the terms of

the law.

Shortly after the hearing was scheduled, a copy of the regulations adopted by the Board at the June meeting was furnished to

the subcommittee, but the text of the regulations is somewhat less

than reassuring.

The regulations appear to adopt in toto the theory pressed by the

proponents of the 1977 treaty during the debate on H.R. 111, which

was ultimately passed as Public Law 96-70.

The law in its present form was enacted after a series of votes

rejecting the organizational structure which these regulations

appear to incorporate.

At my request, a comparative analysis of the provisions of the

regulations has been prepared for the subcommittee by Mr. Merrill

Whitman. Without objection, that analysis will be included in the

record at an appropriate place.

Mr. HUBBARD. Appearing for the Secretary of Defense this morning is Hon. Michael Blumenfeld, Assistant Secretary of the Army

for Civil Works. We welcome you to the subcommittee and appreciate your being present.

In addition to his distinguished service as a prominent official of

the Department of Defense, Mr. Blumenfeld was formerly Chairman of the Board of Directors of the Panama Canal Company, and

I understand that he has been elected Chairman of the Board of

the Panama Canal Commission.

He is uniquely qualified to provide the authoritative information

the subcommittee so acutely needs to discharge its oversight responsibilities and we are delighted to have him with us today.

Again I say we are delighted to have Michael Blumenfeld with

us today.

Before proceeding with his testimony, the Chair will inquire

whether or not other members of the subcommittee wish to make

opening statements this morning.

Our distinguished ranking minority member, Mr. Robert

Bauman, Congressman from Maryland, is here.

While he gathers his thoughts and notes, we would ask the

distinguished Congressman from Long Island, N.Y., Mr. William

Carney, if he has an opening statement he would like to make?

Mr. CARNEY. Mr. Chairman, I would take this opportunity-I do

not have an opening statement.

I would yield to the ranking minority member, Mr. Bauman,

from Maryland.

Mr. BAUMAN. Thank you very much.

I have had occasion over the weekend to read the minutes of the

first meeting of the board of supervisors, now apparently called the

board of directors, and also to look at the prepared remarks of

today's witness.

I would like to add a few remarks which might set this issue into

some perspective, at least from my viewpoint.

I would like to associate myself with your remarks, Mr. Chairman, and also your reservations about the way in which Public

Law 96-70, the Panama Canal Act which implemented the treaties
4

of 1977, has been interpreted by the Panama Canal Commission's

supervisory board.

I am particularly concerned about the implications of the board's

newly promulgated regulations. I would not want to see an attempt

made to subvert the intent of the implementing legislation or grant

the operation of the Panama Canal an organizational structure

which was rejected by the Congress.

As we all know, especially those of us who went through the

canal debate on a daily basis for more than a year, the implementing legislation was approved after lengthy debate, much negotiation, two conference reports, and bitter disagreement over the

impact of the controversial treaties themselves.

Together with the extensive debate about the issue, there were

several close votes, very close votes, on the implementing legislation, both in this committee and on the floor. Even though those

votes were close, there shouldn't be any mistake about what the

Congress intended.

We specified that the Commission be an appropriated fund

agency, whose authority flows from the President through the

Secretary of Defense. We also specified that the Commission be

supervised by a nine-member, binational board consistent with the

treaties, notwithstanding the desire of the Carter administration to

turn control of the canal over to the State Department or the

desire of the Panamanians to have operational control over the

canal.

I might say that this was my view of what the Panamanian

members attempted at the board meeting, as reflected by the minutes.

I certainly do not want to see the issue about the extent to which

the House, or the Congress, can work its will on the Panama Canal

matter reopened, but by the looks of these regulations it seems to

me that the board has ignored the will of the House to a large

degree, has ignored the implementing legislation, and has even

ignored the Panama Canal treaties themselves.

I would suggest that we need at these hearings to look at the

regulations and how consistent they are with existing law.

For instance, reading the new regulations, before we even get to

the text, the Board has christened itself a Board of Directors. We

rejected the corporate form from the beginning of this legislation

and we still reject it.

If you look at the Panama Canal treaties, under article III, which

describes the management of the canal, there is a mention of this

Board as a supervisory Board.

Under chapter I, section 1102 of the Panama Canal Act, there is

a further detailing of the functions of this Board of Supervisors.

This is not a semantics game. The difference between directors

and supervisors was made clear by the House and the Senate. We

stipulated that there would be a change in the way the canal is

managed, that the corporate agency form was to be abolished and

in its place we would have a new appropriated fund agency.

I would not like to see an attempt on the part of those who

opposed the House and Senate's decision to try to circumvent the

intent of our legislation.
5

Let me give you another example. Section 1102(c) of Public Law

96-70 specifies that a quorum for the transaction of business shall

consist of a majority of the Board members, of which a majority of

those present are nationals of the United States. Yet the newly

adopted Board regulations, after repeating this requirement in one

section, then goes on to set up an executive committee which,

incidentally, I noticed even the Panamanians were opposed to,

empowered to "exercise all the powers of the Board of Directors."

This executive committee consists of only four members, two

Panamanian nations and two U.S. nationals. Nowhere in the implementing legislation is the Board authorized to lend its powers to

anyone else, or to any smaller body.

I must point out that the regulations do not even reference, at

any point, Public Law 96-70. Nowhere do I see it mentioned in the

opening statement by Secretary Blumenfeld, by the Panamanians,

by the administrator, by anyone, save for one brief reference by

Ambassador Moss to Public Law 96-70.

Nowhere in the meeting is there any defense against the attacks

on Public Law 96-70, which the Panamanians in their statement

specifically declare to be null and void as far as they are concerned.

Ambassador Moss' only reference to Public Law 96-70 is a glancing one to the President's statement that the law will be enforced

strictly and consistent with the terms of the treaty.

So I am quite disturbed by the provisions in the regulations,

which suggest that these regulations shall apparently be a new

interpretation of law.

One other point that concerns me is the fact that the Board

meetings shall not be open to the public. It seems to me that, while

a closed meeting may lend itself to a display of unity, it also closes

out a full understanding of what the Board's deliberations are.

Mr. Chairman, we spent too much time and too many ballots in

both Houses of the Congress over the treaties and the implementing legislation to let the operation of this highly controversial

matter be governed by the Board's unilateral interpretation of the

treaty and the implementing legislation.

I am very pleased we will have this chance today to ask of our

witnesses precisely what direction they see this issue taking. I

would also like to inform the chairman that in light of the Board's

regulations, their content, and the actions of the Board, I no longer

favor having the authorizing legislation for the Panama Canal for

fiscal year 1981 brought up before the House under suspension of

the rules.

I may wish to offer amendments to resolve the difficulties that I

will be addressing today, and under the House rules, suspension

would not permit that. I think we need to thoroughly air this

matter in this subcommittee, in the full committee, and on the

floor of the House; and I do not rule out the possibility-although I

hope it doesn't have to go that way-that we will have a complete

replay of the issue of last year of the implementing legislation on

the floor of the House before we adjourn.

Thank you, Mr. Chairman.

Mr. HUBBARD. Thank you, Congressman Bauman.
6

Congressman Carney, who yielded to Mr. Bauman-the only

reason I skipped over Mr. Bauman was because he might not have

been ready. Congressman Carney.

Mr. CARNEY. Mr. Chairman, I would just like to say that I would

like to associate myself with the remarks of the chairman and the

ranking minority member of this committee.

I too share that same concern you, as chairman, and Mr.

Bauman, as the ranking minority member, have to the carrying

out of the intent in this Congress and hope that we will not have to

rehash our intentions when it comes to the appropriate time on the

floor of the House.

Hopefully, the actions of this committee can solve the questions

that we as a Congress might have pertaining to the carrying out of

our implementation of the legislation and would alleviate the necessity to rehash this in both Houses of Congress.

Thank you, Mr. Chairman.

Mr. HUBBARD. Thank you, Congressman Carney.

We will call upon you, Mr. Blumenfeld, for your testimony.

Thank you for being with us.

STATEMENT OF HON. MICHAEL BLUMENFELD, ASSISTANT SECRETARY OF THE ARMY, CIVIL WORKS, ACCOMPANIED BY

DENNIS P. McAULIFFE, ADMINISTRATOR, PANAMA CANAL

COMMISSION, AND MICHAEL RHODE, JR., SECRETARY

Mr. BLUMENFELD. Thank you, Mr. Chairman. It is a great pleasure to be here before this committee.

If I may, I would like to enter the full text of my testimony into

the record.

Mr. HUBBARD. Without objection, so ordered.

[The information follows:]

STATEMENT BY HON. MICHAEL BLUMENFELD, ASSISTANT SECRETARY OF THE ARMY

(CIVIL WORKS) AND CHAIRMAN OF THE BOARD OF DIRECTORS, PANAMA CANAL

COMMISSION

Mr. Chairman, I am honored to appear before the committee today as the representative of the Secretary of Defense. I am responding to your inquiry regarding the

manner in which Public Law 96-70, the Panama Canal Act of 1979, has been

implemented in the organization and operation of the Panama Canal Commission.

My testimony this morning will focus on appointment of the members of the Board

of Directors; the role of the Secretary of Defense with regard to the operation of the

Commission; the implementation of the Panama Canal Act and Executive Order

12215 of May 27, 1980; the specific authority of the Board of Directors and the

Administrator, Panama Canal Commission; and operation of the Board to date.

ROLE OF THE SECRETARY OF DEFENSE

I act on behalf of the Secretary of the Army as the representative of the Secretary

of Defense to assure that the Panama Canal Commission functions effectively and

efficiently under the Treaty. In this role, my staff and I review legislative and

executive proposals of the Commission; testify at authorization hearings; coordinate

within DoD and with other Executive agencies as required on actions involving the

Commission; and serve as the primary point of contact within the Department of

Defense regarding management, operation and maintenance of the- Canal. Defense

of the Canal remains a DoD functional responsibility, and is exercised by the Joint

Chiefs of Staff and U.S. Southern Command on a mission basis.

DELEGATIONS OF AUTHORITY

As you are aware, Mr. Chairman, in Executive Order 12215 of May 27, 1980, the

President vested certain authority in the Secretary of Defense. That order also

directed the Secretary to insure by redelegation or otherwise, that certain Canal
7

operation and management functions, as opposed to items of an oversight or coordinating nature, be carried out by the Commission. By memorandum of July 18, 1980,

the Secretary of Defense redelegated certain authority to the Secretary of the Army

and to the Commission. I have submitted a copy of that memorandum for the

record. You will see from that document that those functions requiring a coordinated role between Defense and the Commission were vested in the Secretary of the

Army.

APPOINTMENT OF THE BOARD

In accordance with Section 1102 of the Panama Canal Act of 1979, the Board of

the Commission has been appointed by the President. The U.S. members have been

confirmed by the Senate. As you are aware, I am the designee of the Secretary of

Defense. The other U.S. members appointed and confirmed are:

Mr. John Bushnell, Deputy Assistant Secretary for Inter-American Affairs, Department of State. Mr. Bushnell brings to the Board important experience in the

areas of foreign affairs and inernational law.

Mr. Jay W. Clark. Jay Clark rose through the ranks of Delta Lines to be President of the Company and to later serve as Chairman of the Board. He tendered his

resignation effective January 1, 1980, to assume active management of Clark Maritime Associates, Inc. The appointment of Mr. Clark to the Board satisfies the

statutory requirement that one member be knowledgeable and experienced in the

management and operation of an American-flag steamship line which had ships

regularly transiting the Canal.

Mr. Clifford B. O'Hara is the Board member experienced and knowledgeable in

United States port operations. Mr. O'Hara is the Director of Port Commerce for the

Port Authority of New York and New Jersey. Mr. O'Hara is in charge of the

Authority's program to develop the commerce and transportation of the Port District.

Mr. William Sidell, past General President of the United Brotherhood of Carpenters and Joiners of America, is the member experienced and knowledgeable in labor

matters in the United States and has held offices at local, state, and national levels.

The Panamanian members of the Board are: Mr. Edwin Fabrega, General Manager of the Institute of Hydraulic Resources and Electrification; Mr. Roberto Heurtematte, a prominent businessman and former Ambassador to the United States;

Mr. Ricardo Rodriguez, the Minister of Government and Justice; and Mr. Tomas

Paredes, Director of the Executive Bureau for Panama Canal Treaty Affairs.

OATH

The U.S. and Panamanian members executed written affidavits prior to formally

assuming office, to faithfully discharge their duties as Board members. In May, the

Panamanian members were sworn in by the Deputy Administrator-a U.S. official

designated in writing to do so-and the U.S. members were sworn in on June 1.

Thus, on June 1, 1980, the Board was duly constituted.

ACTIONS BY THE BOARD OF DIRECTORS

As the Secretary of Defense's designee on the Board of the Commission, I can,

pursuant to P.L. 96-70, direct the vote of the U.S. majority on the Board. The Board

convened for the first time in Panama on June 2. At the first session, I was elected

Chairman of the Board. Primary items on the agenda of the first meeting included

overview briefings on personnel and financial matters; a review of actions taken by

the Commission through May; adoption of the Board regulations, copies of which

have been provided to your Committee; establishment of Board Committees to

facilitate doing Board business; and preliminary discussion of a Code of Conduct.

The meeting, I believe, established a sound framework for future operations.

The regulations adopted by the Board provide, in part, that regular meetings will

be held at least quarterly, and that at least two of these will be conducted in

Panama each year. They also provide for special meetings which may be called by

the Chairman upon five days telephonic notice. The provisions of the regulations

dealing with the composition of the Board and the quorum requirements embody

those specified by P.L. 96-70.

Other salient provisions of the regulations are the sections providing for main and

branch offices of the Commission in Panama and Washington, respectively; establishment of standing and special committees of the Board; and continuation of the

concept followed by the Panama Canal Company that the Secretary of the agency

serves both as an officer of the Board and the Commission official responsible for

the operation of the Washington office.
8

In my role as the individual responsible for oversight of the Commission on behalf

of the Secretary of Defense, I have approved the regulations adopted by the Board.

A second Board meeting, also in Panama, was held on July 21 and 22. At this

meeting, the Board approved the minutes of the first meeting and adopted a Code of

Conduct as required by section 1112 of the Panama Canal Act of 1979. This Code of

Conduct includes provisions substantially equivalent to the laws cited in the Act,

and the action was accomplished within sixty days of the Board being properly

constituted. The Administrator was authorized to issue supplemental regulations to

augment the provisions of the Code. Copies of the Code of Conduct will be provided

to the Committee shortly. Copies of the minutes of the first meeting have already

been provided, and I will routinely provide copies of Board-approved minutes to both

this Committee and the Senate Armed Services Committee.

The Board also reviewed and approved for submission to OMB the budget proposal for fiscal year 1982, thus marking the first opportunity for the Binational Board

to participate in the authorization and appropriation process. Since this budget

proposal is still subject to review and approval by the President, I will limit my

comments with regard to it to advising the Committee that it anticipates no toll

increase from fiscal year 1981. As you know, the fiscal year 1981 budget, in turn,

proposes no toll increase from fiscal year 1980.

I would like to take this opportunity to advise the Committee that, to date, this

Binational Board has approached its task with a serious intent and resolve to

improve Canal operations both now and in the future, and to do so in a spirit of

cooperation. As is reflected in the minutes of its first meeting, the Board recognizes

that it is responsible for policy making and supervision of the Panama Canal

Commission and I can assure you that this unique body will carry out those

responsibilities in a fashion fully consistent with both the Treaty and P.L. 96-70.

AUTHORITY OF THE COMMISSION

The question of whether the Board or the Administrator should exercise the

authority vested in the Commission by the Panama Canal Act and the Executive

Order was a major discussion item at the second Board meeting held this past week,

and will be on the agenda for the third meeting of the Board scheduled for October.

Generally, the Board would retain the prerogative to review all decisions of the

.Administrator, but would exercise only that authority necessary for executive-level

management of the Canal enterprise. Other authority vested in the Commission

would be exercised by the Administrator.

EMPLOYMENT SYSTEM

The authority to establish and regulate the Panama Canal Employment System

has been delegated through the Secretary of Defense to the Panama Canal Commission. In the interim period, as you know, the Canal Zone Merit System remains the

primary employment system in effect for United States Government agencies in the

Panama Canal Area. The Commission staff is in the final stages of coordinating the

draft Panama Canal Employment System and it is scheduled to be presented to the

Board Personnel Committee in October. The target date of implementation is January 1981.

I also serve as Chairman of the Panama Area Personnel Board which is responsible for coordinating the personnel and wage practices of all participating agencies.

This Board currently reviews any proposed change to the Canal Zone Merit System.

Once the Panama Canal Employment System is established, the Personnel Board

will continue to serve as the coordinating mechanism in order to assure that

compatible wage and employment practices prevail among all agencies on the

Isthmus. The other two members of the Personnel Board are the Commander in

Chief of the U.S. Southern Command and the Administrator of the Commission.

SUMMARY

I am confident that the actions of the Executive Branch to date have been fully

consistent with the letter and spirit of the requirements mandated by the Congress in P.L. 96-70. The task of reorganizing the Panama Canal enterprise, while simultaneously adjusting to an appropriated fund form for the agency has been, and

continues to be, a challenging task. However, I believe we have accomplished the

required actions in an effective manner.

Mr. Chairman, I am accompanied today by the Administrator of the Panama

Canal Commission, Mr. D. P. McAuliffe, and the Agency's Secretary, Mr. Michael

Rhode, Jr. I request that they join me at the witness table as I respond to any

questions the Committee might have.

Thank you.
9

Mr. BLUMENFELD. Thank you, Mr. Chairman.

I would summarize that statement in some of its more important

aspects. If I may, let me preface this summary by some reactions to

the statements made by you and by Congressman Bauman and

Congressman Carney.

I am delighted to be here this morning to discuss with the

committee, and hopefully persuade the committee, how indeed all

of the actions taken thus far by the Panama Canal Commission are

in full compliance with the requirements of Public Law 96-70.

Though I will not discuss I do not plan to cover the details of

regulations or of the contents of the minutes of the first Board

meeting, whatever the committee would like to look into, I will

discuss.

Let me suggest, in addition, we step back for a moment and see

what the performance thus far has been of the Panama Canal

Commission.

There has been continuous operation of the canal. There has

been no exodus of U.S. employees, which some had feared as a

result of the treaty implementation.

There has been no toll increase in 1981, nor, as I point out later

in my testimony, is a toll increase planned for 1982.

This is a good track record, I believe, and I would urge the

committee to attend to that track record as well as to the details of

Board regulations and the like.

With respect to those regulations and to the structure of delegations of authority that have taken place, let me say a couple of

words.

We are acutely aware that we cannot turn an appropriated fund

agency into the corporation that used to be the Panama Canal

Company. The Administrator is aware of that daily. I am aware of

that daily as we deal with the requirements of an appropriated

fund agency. There is not an attempt to convert it into something

which Congress rejected, and if the intent were there, there isn't

the ability.

No. 2, as you read the minutes of the Board meetings-and we

will be, as a matter of routine, making copies of these minutes

available to the committee, as well as to the Senate Armed Services Committee, as soon as they are produced-I would urge the

committee not to fix upon what the Panamanian Board members

say, but to watch what the Commission does. I guarantee this

committee that what the Commission does has been and will be in

full compliance with Public Law 96-70.

With respect to the terminology "Board of Directors" versus

"Supervisory Board," we have had some discussions on this heretofore. We believe that the term "Board of Directors" is merely a

semantic difference vis-a-vis "Supervisory Board." To reassure

myself on that point, this weekend I took a look at the Random

House Dictionary of the English Language in its unabridged edition. That dictionary refers to "supervisory" as "having supervision." In turn, it refers to "supervision" as the act of supervising;

and in turn it defines the act of supervising, as "to oversee during

execution or performance, to superintend, to have the oversight

and direction of."
10

I believe that the terminology is only a semantic difference, but I

would add that the term "board of directors" is one that is fully

justified both by the common English definition of "supervisory,'

as I have just pointed out, as well as by the equal authenticity of

the term "junta directiva" in article III of the treaty in its Spanish

version as it refers to the supervisory board which we have been

talking about here.

With that preface, let me sketch the highlights of my testimony,

if I may. I will try to be reasonably quick so that the committee

can go to what I know are many questions.

I am responding today to your inquiry regarding the manner in

which Public Law 96-70 has been implemented in the organization

and operation of the Panama Canal Commission.

I act on behalf of the Secretary of the Army as the representative of the Secretary of Defense to assure that the Panama Canal

Commission functions effectively and efficiently under the treaty.

I serve as the primary point of contact within the Department of

Defense regarding the management, operation, and maintenance of

the canal.

The defense of the canal remains a DOD functional responsibility

and is exercised by the Joint Chiefs of Staff and the U.S. Southern

Command on a mission basis.

As you are aware, Mr. Chairman, and you referred to it in your

opening statement, Executive Order 12215 was issued on May 27,

1980. The President vested thereby certain authority in the Secretary of Defense.

That order also directed the Secretary to insure by redelegation

or otherwise that certain canal operation and management functions, as opposed to the items of an oversight or coordinating

nature, be carried out by the Commission.

By memorandum of July 18, 1980, the Secretary of Defense redelegated certain authority to the Secretary of the Army and to the

Commission. I have submitted a copy of that memorandum for the

record.

[The information follows:]

THE DEPUTY SECRETARY OF DEFENSE,

Washington, D.C., July 18, 1980.

Memorandum for Secretaries of the Military Departments, Chairman, Joint Chiefs

of Staff, Under Secretaries of Defense, Assistant Secretaries of Defense, General

Counsel, Assistants to the Secretary of Defense, Director, Defense Intelligence

Agency, Department of Defense Representative for Panama Canal Treaty Affairs.

Subject: Implementation of Executive Order 12215, "Delegation of Panama Canal

Functions".

On May 27, 1980, the President signed Executive Order 12215, which delegates to

the Secretary of Defense certain functions vested in the President by the Panama

Canal Code (76A Stat. 1) and the Panama Canal Cat of 1979 (93 Stat. 452; 22 U.S.C.

3601). By this memorandum, I am reaffirming the responsibilities of the Secretary

of the Army and the DoD Representative for Panama Canal Treaty Affairs and I

am delegating the following functions relating to the Panama Canal.

With respect to the authorities herein delegated, matters of interest to the Office

of the Secretary of Defense shall be coordinated with the DoD Representative for

Panama Canal Treaty Affairs. The Representative for Panama Canal Treaty Affairs

shall clear matters of treaty implementation policy with the Assistant Secretary of

Defense, International Security Affairs (ISA).

The following authorities are delegated to the Secretary of the Army as the senior

Defense official involved in the management and operation of the Canal:

The function vested in the Secretary of Defense by Section 1102(c) of the Panama

Canal Act of 1979 (93 Stat. 457; 22 U.S.C. 3612) with respect to approval of regula-
11

tions adopted by the Board of the Panama Canal Commission to govern the Board's

activities.

The function vested in the President by Section 1212(d)(1) of the Panama Canal

Act of 1979 (93 Stat. 464; 22 U.S.C. 3652(d)(1)), and delegated to the Secretary of

Defense by Section 1-102 of Executive Order 12215, to exclude employees of, or

positions within, the Department of Defense from coverage under any provision of

subchapter II of Chapter 2 of Title I of the Panama Canal Act of 1979.

The function vested in the Secretary of Defense by Section 1-202 of Executive

Order 12215 to approve schedules of basic pay adopted by the head of each agency

pursuant to Section 1215 of the Panama Canal Act of 1979 (93 Stat. 465; 22 U.S.C.

3655) and regulations governing other matters relating to pay and employment

practices.

The functions vested in the Secretary of Defense by Section 1-201 of the Executive Order 12215, with respect to consultations with other agencies with respect to

the development of compatible or unified systems for basic pay and employment

practices under subchapter II of Chapter 2 of Title I of the Panama Canal Act of

1979 (93 Stat. 463; 22 U.S.C. 3651).

The function vested in the Secretary of Defense by Section 1208 of the Panama

Canal Act of 1979 (93 Stat. 463; 22 U.S.C. 3648) to designate, pursuant to paragraph

3 of Article VIII of the Panama Canal Treaty of 1977, the individuals who shall

enjoy the privileges and immunities accorded to diplomatic agents and their dependents.

The authority vested in the President by Section 1223(a) of the Panama Canal Act

of 1979 (93 Stat. 467; 22 U.S.C. 3663(a)), and delegated to the Secretary of Defense by

Section 1-203 of Executive Order 12215, to coordinate the policies and activities of

agencies.

The function vested in the Secretary of Defense by Section 1302(c)(2) of the

Panama Canal Act of 1979 (93 Stat. 478; 22 U.S.C. 3712(c)) to estimate the amount of

revenues deposited in the Panama Canal Commission Fund at the time of the

budget request for the Panama Canal Commission.

The functions vested in the President by Section 1502(a) of the Panama Canal Act

of 1979 (93 Stat. 488; 22 U.S.C. 3782(a)), and delegated to the Secretary of Defense by

Section 1-106 of Executive Order 12215, relating to transfers between agencies.

The functions vested in the President by Sections 82 (with respect to appointment

and assignment of magistrates, constables, and other employees) and 86 (with respect to regulations for magistrates courts) of Title 3 of the Panama Canal Code

(76A Stat. 54 and 55, respectively; 3 P.C.C. 82 and 86, respectively), and delegated to

the Secretary of Defense by Section 1-306 of Executive Order 12215.

The function vested in the Secretary of Defense by Section 1102(a) of the Panama

Canal Act of 1979 (93 Stat. 457; 22 U.S.C. 3612) to direct the votes of Members of the

Board of the Panama Canal Commission who are nationals of the United States.

The following function is delegated to the Commander-in-Chief of the United

States Southern Command:

The function vested in the President by Section 1701 of the Panama Canal Act of

1979 (93 Stat. 492; 22 U.S.C. 3801), and delegated to the Secretary of Defense by

Section 1-104 of Executive Order 12215, with respect to regulations applicable

within the areas and installations in Panama that are made available to the United

States pursuant to the Agreement in Implementation of Article IV (Protection and

Defense) of the Panama Canal Treaty of 1977.

The following functions are delegated to the Panama Canal Commission (PCC)

and, except as I may subsequently determine otherwise, these functions are delegated without limitation and do not require any prior approval outside the PCC:

The authority of the President under Section 1104 of the Panama Canal Act of

1979 (93 Stat. 457; 22 U.S.C. 1114), and delegated to the Secretary of Defense by

Section 1-302 of Executive Order 12215, to fix the compensation and to define the

authorities and duties of the Deputy Administrator and the Chief Engineer.

The functions vested in the President by Sections 1418 (with respect to the

establishment of a Board of Local Inspectors of the Panama Canal Commission),

1801 (with respect to Canal regulations), and 2206(b)( (with respect to termination of

a magistrate's court) of the Panama Canal Act of 1979 (93 Stat. 487, 492, and 495,

respectively; 22 U.S.C. 3778, 3811, and 3844(b), respectively) which are delegated to

the Secretary of Defense by Section 1-303 of Executive Order 12215.

The authority of the President under Section 1701 of the Panama Canal Act of

1979 (93 Stat. 492; 22 U.S.C. 3801), delegated to the Secretary of Defense by Section

1-304 of Executive Order 12215, with respect to regulations applicable within the

areas and installations made available to the United States pursuant to the Agreement in Implementation of Article III (Canal Operation and Management) of the

Panama Canal Treaty of 1977.
12

Except to the extent heretofore delegated, or for which the Secretary of the Army

has approval authority, the functions vested in the President pursuant to subchapter II of Chapter 2 of Title I of the Panama Canal Act of 1979 (93 Stat. 463; 22

U.S.C. 3651), and delegated to the Secretary of Defense by Section 1-308 of Executive Order 12215, dealing with wage and employment practices, are hereby delegated to the Panama Canal Commission.

In exercise of the authority vested in me by Section 1-307 of Executive Order

12215, the administration of subchapter 1 of Chapter 81 of Title 5 of the United

States Code is transferred to the Panama Canal Commission so far as employees of

the Panama Canal Commission are concerned. The Panama Canal Commission is

authorized to pay the compensation provided by subchapter 1 from appropriations

for the Panama Canal Commission. The Panama Canal Commission is authorized to

waive, at its discretion, the making of the claim required by Section 8121 of Title 5

in the case of compensation to an employee of the Panama Canal Commission for

temporary disability, either total or partial.

The following functions vested in the Secretary of Defense will not be redelegated:

The function vested in the Secretary of Defense by Section 1-101 of Executive

Order 12215 to develop for the President's consideration, pursuant to Section 3(d) of

the Panama Canal Act of 1979 (93 Stat. 456; 22 U.S.C. 3602(d)), an appropriate

request for legislation to amend, repeal or add provisions of law as appropriate in

light of experience under the Panama Canal Treaty of 1977. The Secretary of the

Army, however, is requested to develop and recommend such a legislative request

by June 1, 1981.

The function vested in the President by Section 1243(c)(1) of the Panama Canal

Act of 1979 (93 Stat. 474; 22 U.S.C. 3681(c)(1)), and delegated to the Secretary of

Defense by Section 1-105 of Executive Order 12215, with respect to purchase of

annuities for the benefit of certain U.S. government employees in Panama.

The function vested in the President by Section 2401 of the Panama Canal Act of

1979 (93 Stat. 495; 22 U.S.C. 3851), and delegated to the Secretary of Defense by

Section 1-105 of Executive Order 12215, to exercise during the thirty-month transition period any authority necessary for the exercise of rights and responsibilities of

the United States specified in Article XI of the Panama Canal Treaty of 1977.

The function vested in the President by Section 1281(b) of Title 6 of the Panama

Canal Code (76A Stat. 455), and delegated to the Secretary of Defense by Section 1-

305 of Executive Order 12215, to prescribe and amend regulations made available to

the United States pursuant to the Panama Canal Treaty of 1977 and implementing

agreements.

This memorandum cancels all prior delegations of functions by the Secretary or

Deputy Secretary of Defense with respect to Executive Orders on the Panama Canal

and with respect to the Panama Canal Act of 1979.

W. GRAHAM CLAYTOR, Jr.

Mr. BLUMENFELD. You will see that those coordinating and oversight functions were vested in the Secretary of the Army who has

redelegated them to me.

With respect to appointment of the Board, in accordance with

section 1102 of Public Law 96-70, the Board of the Commission has

been appointed by the President and the U.S. members have been

confirmed by the Senate. As you are aware, I am the designee of

the Secretary of Defense. The other U.S. members appointed and

confirmed are named, and a brief biographical description of them

is given, in my written statement. These members meet the requirements of Public Law 96-70 in terms of those Board positions

where specific backgrounds were required.

With respect to the oath of office, the United States and Panamanian members executed written affidavits, prior to formally assuming office, to faithfully discharge their duties as Board members.

In May, the Panamanian members were sworn in by the Deputy

Administator, a U.S. official designated in writing to do so. The

U.S. members were sworn in on June 1. Thus, on June 1, 1980, the

Board was duly constituted.
13

With respect to actions by the Board of Directors thus far, you

are aware that as the Secretary of Defense designee on the Board

of the Commission, I can, pursuant to Public Law 96-70, direct the

vote of the U.S. majority on the Board.

The Board convened for the first time in Panama on June 2. At

the first session I was elected Chairman of the Board.

Principal items on the agenda of the first meeting included overview briefings on personnel and financial matters, a review of the

actions taken by the Commission through May, adoption of the

Board regulations-copies of which have been provided to your

committee-establishment of Board committees to facilitate doing

business and preliminary discussion of a code of conduct.

That first meeting, I believe, established a sound framework for

future operations.

In my role as the individual responsible for oversight of the

Commission on behalf of the Secretary of Defense, I have approved

the regulations adopted by the Board at its first meeting.

A second Board meeting, also held in Panama, was held on July

21 and 22. At this meeting, the Board approved the minutes of the

first meeting and adopted a code of conduct as required by section

1112 of the Panama Canal Act of 1979.

Copies of this code of conduct are available to the committee.

Copies of the minutes of the first meeting have already been provided and, as I mentioned, I will routinely provide copies of Boardapproved minutes to both this committee and to the Senate Armed

Services Committee.

At its second meeting, the Board also reviewed and approved for

submission to OMB the budget proposal for fiscal year 1982.

Since this proposal is still subject to review and approval by the

President, I will limit my comments with regard to it to advising

the committee that it anticipates no toll increase from fiscal year

1981. As you know, the fiscal year 1981 budget, in turn, proposes

no toll increase from fiscal year 1980.

I would like to take this opportunity to advise the committee

that to date the binational Board has approached its task with a

serious intent and resolve to improve canal operations, both now

and in the future, and to do so in a spirit of cooperation.

The Board recognizes it is responsible for policymaking and supervision of the Panama Canal Commission. I can assure you this

unique body will carry out those responsibilities in a fashion fully

consistent with the treaty and Public Law 96-70.

The question of whether the Board or the Administrator should

exercise the authority vested in the Commission by the Panama

Canal Act and by the President's Executive order was a major

discussion item at the second Board meeting held last week. It will

be on the agenda for the third meeting scheduled for October.

The authority to establish and regulate the Panama Canal Employment System has been delegated through the Secretary of Defense to the Panama Canal Commission. The Commission staff is in

the final stages of coordinating the draft Panama Canal Employment System and The document is scheduled to be presented to the

Board Personnel Committee in October.

In this connection, I believe the committee is aware that I also

serve as Chairman of the Panama Area Personnel Board which is

66-810 0 - 80 - 2
14

responsible for coordinating the personnel and wage practices of all

participating agencies. The other members of this Board are the

commander-in-chief of the U.S. Southern Command and the Administrator of the Commission.

In summary, Mr. Chairman, I am confident that the actions of

the executive branch to date have been fully consistent with the

letter and spirit of the treaty and with the requirements mandated

by the Congress in Public Law 96-70.

The task of reorganizing the Panama Canal enterprise, while

simultaneously adjusting to an appropriated fund form for the

agency, has been and continues to be a challenging task. However,

I believe we have accomplished the required actions in an effective

way.

Mr. Chairman, I am accompanied today by the Administrator of

the Panama Canal Commission, Mr. Dennis P. McAuliffe, and the

Secretary, Mr. Michael Rhode, Jr. I ask they join me at the witness

table as I respond to any questions the committee might have.

Mr. HUBBARD. Thank you very much, Hon. Michael Blumenfeld.

We would ask that these two distinguished gentlemen join you,

please, at the table' for possibly helping in answering our questions.

Formerly Colonel Rhode was assistant to Secretary Blumenfeld.

The first question:

What is the basis for the Board's adoption of the name Board of

Directors?

Mr. BLUMENFELD. As I tried to spell out in my preface, the basis

is in the treaty, and in the lack of any requirement in Public Law

96-70 that any other name be adopted, the Board members preferred that term. I believe it is a matter of indifference from a

substantive standpoint as to which name was adopted; and we

adopted the term "Board of Directors."

It implies no wish or intent to return to a corporate form of

organization.

Mr. BAUMAN. May I ask a question on that point? I am not so

sure your answer gives me much pause, when compared with the

deliberations of the Board in the June meeting and the regulations

which you issued to carry out the intent of the law and the treaties.

If you read "Board of Directors" together with the Panamanians'

statement as to what their attitude toward Public Law 96-70 is, it

seems to me it is quite clear the Panamanian members, as expressed in President Royo's letters to President Carter, particularly

the January 9 letter, which was quoted at length in the statement,

simply reject the terms of the public law. It is as though Panama

thinks the treaty did not leave to Congress the right to set up the

Commission and to pass a statute that would govern it consistent

with the treaty.

Taken together with the words "board of directors" and the

understanding from Panama's side that the Board is the policymaking body, it seems to simply say that Congress has little or no

role in this other than to provide the money, and that the Board

will make the policy decisions and that you are the Board of

Directors, in the strongest possible interpretation of that term.

Mr. BLUMENFELD. Mr. Bauman, I would urge once again that you

pay more attention to what the Commission does than to what the
15

Panamanian Board members say. They have, as does the Panamanian Foreign Minister, certain internal political needs which require certain statements to be made.

What the Commission does, how the Board operates under my

Chairmanship as the Secretary of Defense designee, who controls

the vote of the Board, and therefore the actions of the Board on

any issues that come before it, will show that we are in full

compliance with Public Law 96-70. That compliance does not require that each document advert to Public Law 96-70.

Mr. BAUMAN. Well, I would accede that that is the case, that you

don't have to make reference to the provisions of the law.

The treaty and the law both govern the operations.

My concern is that if the attitude of one side, not just rhetoric

for internal consumption in Panama, but the attitude of the Panamanians is that. the law can be disregarded and the American

feeling is to let them talk, and not resolve the matter because it

would be diplomatically improvident to do so, then I can't think of

a worse situation.

It seems to me the United States should make plain from the

beginning what our position is not just with bland assurances and

neither in any sort of way to invite confrontation, but simply to

make the statement.

I see nowhere in the exchanges between President Carter and

President Royo or in the deliberations of your Board so far language upholding Public Law 96-70.

You have come here today and told us flatly what your intention

is. It seems to me if you can tell a committee of Congress some

understanding or statement that will be reported in the Panamanian press anyway, you might as well lay down the U.S. position in

the Board meetings, too, so there is no misunderstanding of what

the Board's role is.

I don't want false expectations raised about the Boards role when

neither the treaty nor the law permits such interpretations.

Thank you, Mr. Chairman.

Mr. HUBBARD. President Royo's letter of January 9 to President

Carter attaches substantial significance to the fact that Public Law

96-70 does not describe the Board as a Board of Directors.

Is the action of the Board a recognition of the validity of President Royo's criticism of the law on that point?

Mr. BLUMENFELD. No, sir. There has not been a recognition of

any aspect of President Royo's critique of Public Law 96-70.

As I tried to say, the choice of the term is one which was open to

us under the treaty and under the legislation, and a choice which

we made. This does not in any way represent a confirmation of

President Royo's attack upon the legislation.

Mr. HUBBARD. Mr. Blumenfeld, what is the basis for the statement in section 1.1 of the regulations that responsibility for policymaking and supervision of the Commission is vested in the Board,

article III(a) of the Panama Canal Treaty of 1977?

Mr. BLUMENFELD. The basis with the treaty is article III. This is

also consistent with Public Law 96-70, in terms of the President's

authority with respect to the Commission being exercised not by

but through the Secretary of Defense. Those aspects of authority
16

which have been delegated to the Commission are in full compliance with Public Law 96-70.

Mr. HUBBARD. Mr. Blumenfeld, why do the regulations fail to

refer at any point to Public Law 96-70 which establishes the Board

and defines its function as an agency in the executive branch of

the U.S. Government?

Again, why do the regulations fail to refer at any point to Public

Law 96-70?

Mr. BLUMENFELD. Mr. Chairman, this is related to the question

asked by Mr. Bauman a moment ago. There have been in the

Board discussions numerous occasions on which the certainty that

the Panama Canal Commission is a U.S. Government agency has

been reaffirmed to the Panamanians.

The absence of reference to the law is not an indicator that these

regulations are in any way inconsistent with the law. As I said to

Mr. Bauman, there is no requirement in the law that the law be

adverted to in documents so long as the results of the documentsthe policies and the decisions-are in compliance with Public Law

96-70. They have been so far, and they will continue to be so.

Mr. HUBBARD. Congressman Bauman?

Mr. BAUMAN. If I may follow up on that point, again I have great

concern about a specific provision in your regulations, article I,

section 1.3, subparagraph (b), in which the board seems to be

creating its own powers; and you say that the Board of Directors

may appoint others who shall have such authority, and perform

such duty's as the Board of Directors may prescribe from time to

time.

I am not aware that the Board of Directors are granted-either

under the treaty or Public Law 96-70-any powers to define their

duties within the confines of the treaty and section 1102 and other

sections of Public Law 96-70, because these are is your charters for

authority and power.

It seems to me you are attempting by regulations to draw a

future source of authority out of the thin air, and it seems to me

that that will also give rise to all kinds of problems, not only with

the Congress, but conceivably with the Panamanian Government,

depending upon how this authority is used.

It just seems to me that this is made out of whole cloth. I don't

know who the attorneys were who drew up your regulations. They

might not have known that this one phrase would have had attached to it a rather large flag and a rather loud bell.

What is the authority for this section? Where do you get out of

the treaty or the law that the Board can describe its own authority

and powers?

Mr. BLUMENFELD. Out of the treaty; I think article III is fairly

straightforward. Out of the law; I think that delegations to the

Secretary of Defense, through him to the Secretary of the Army,

and to the Commission have occurred in order to insure adequate

supervision and coordination of the tasks involved in running the

canal.

As is always the case in any delegation, it is the authority that is

delegated, not the responsibility.

I must stress this: I can, and its is my role as the representative

of the Secretary of Defense, and as the Chairman of the Board who
17

has the power to direct the vote of the U.S. majority, to assure that

those actions taken by the Board are in full consonance with the

policy of the U.S. Government.

I intend to do that.

Public Law 96-70 specifically vests in the Commission certain

authorities; the vesting in the Commission of more general authorities through the President's delegation, through the President's

Executive order, and the subsequent delegation of the Secretary of

Defense are from a legal standpoint, consistent with the terms of

Public Law 96-70. 1 don't believe the Attorney General would have

signed off on that delegation were it not consistent.

As a matter of practical policy, the hats that I wear as the

Secretary of Defense's designee on the Board and as his agent for

overseeing the operation make it quite clear that the Commission

is not going to be adopting policies that are in any way in conflict

with U.S. policy.

Mr. BAUMAN. Mr. Chairman, if I may pursue that, do I understand your interpretation of that section of your rules that that

grant of authority and power to the board to perform their duties

is circumscribed by both the treaty and the laws and that it will be

your intention to oppose, through the power of the Secretary of

Defense to instruct all five U.S. Board members, any extensions

beyond what your interpretation of the treaty and the law allows?

Mr. BLUMENFELD. I am not sure I follow the question exactly, but

let me say that I intend that our actions will be consistent with the

treaty and they will be consistent with Public Law 96-70.

The power of the Secretary of Defense to approve regulations

adopted by the Board was delegated by him 'to me. I have approved

those regulations on his behalf.

Mr. BAUMAN. Let me give you an example of what would concern me. I am not sure what action you took in your July meeting.

It may be my concern has been addressed. In your first meeting

though, there was a disinclination on the part of the Panamanians

to appoint a chief engineer. Was that taken care of at the subsequent meeting?

Mr. BLUMENFELD. No, sir. We have not appointed a chief engineer. The sense of the discussion at the first meeting was that as

the Long Range Canal Improvements Committee-which we established at that first meeting-became more familiar with the longterm planning process for capital improvement, as well as for

maintenance, that the role, the duties, the qualification requirements of this chief engineer position would become clearer and

that the Board would act upon it at a later date.

Mr. BAUMAN. I noticed in the minutes the reluctance on the part

of the Panamanians to name such an engineer for whatever

reason. The matter was deferred to the July meeting; now it is

deferred further.

There is a case where the Congress debated whether we should

have a chief engineer or not; decided that we should, and outlined

his role to some degree in the law and the report.

If a year were to pass and no engineer were to be named, it

seems to me the board is, in fact, in that case exceeding its authority and it raises the question of whether the U.S. majority is going
18

to honor the terms of the law or take unto itself, under new article

I powers, what it decides the law will be.

I just cite that as an example of the kind of problem that is going

to arise if the Board's attitude is that it is its own authority, it will

describe its own powers as it goes along, and ignore the law because the treaty obviously is very flexible in its interpretation.

The law is far more specific, however unsettling that is to the

Panamanians.

Mr. BLUMENFELD. I understand your point. Let me say with

respect to the chief engineer that there is no requirement for a

time certain by which the chief engineer must be appointed.

Mr. HUBBARD. Mr. Blumenfeld, section 1202 authorizes the

Panama Canal Commission to appoint, fix the compensation of,

and define the authority and duties of officers, employees, agents,

and attorneys.

What is the basis for the assumption of that authority by the

Board in section 1.3?

Mr. BLUMENFELD. If you will give me a moment, Mr. Chairman.

Mr. HUBBARD. Sure.

Mr. BLUMENFELD. Thank you, Mr. Chairman.

Section 1202, as with other sections of the law, requires a duty of

the Panama Canal Commission. There is a question as to which of

those powers will be undertaken by the Administrator and which

will be reserved to the board.

The law is not specific in that aspect. The discussions that were

begun at our second meeting of the Board and will continue at the

third meeting attempt to delegate to the Administrator those authorities which belong with the Administrator and to reserve to the

Board those which the Board believes should be held by the Board

and not delegated to the administrator.

We believe that the language of the act, when it refers to the

Commission, leaves it open for certain authorities to be delegated

from the Board to the Administrator and certain others to be

reserved to the Board.

Mr. HUBBARD. That last sentence, would you repeat that?

Mr. BLUMENFELD. That the act, in its reference to the Panama

Canal Commission, is silent with respect to whether that power

was to be exercised by the Administrator or by the Board. Both

obviously compose the Commission, and the decision as to which

powers the Board will keep to itself and which it will delegate to

the Administrator remains to be made; but the act refers to the

Commission which, of course, could be either the Administrator or

the Board.

Mr. HUBBARD. Mr. Blumenfeld, what is the basis for substitution

of the term "appointment affidavit" in section 1.4 of the regulations for the "oath" required by section 1102(b) of Public Law 96-

70?

Repeating: What is the basis for the substitution of the term

"appointment affidavit" in section 1.4 of the regulations for the

term "oath" required by section 1102(b) of Public Law 96-70?

Mr. BLUMENFELD. I would refer, Mr. Chairman, to the document

which indeed each of the U.S. members, including myself, signed

when taking that oath of office, which is headed "Appointment

Affidavits."
19

We believe-and we have counsel's advice-that the use of the

term "affidavit" is by no means exceptionable, and indeed, there is

a note at the bottom of the form which says that among other

things the words "so help me God" in the oath and the word

"'swear" should be stricken out when the appointee elects to affirm

rather than to swear to the affidavit.

So we think there is clear basis for the terminology of "affidavit."

Mr. HUBBARD. Would you please provide the subcommittee with

a copy of the affidavit?

Mr. BLUMENFELD. Yes, indeed.

Mr. HUBBARD. And also a copy of the oaths taken by the Panamanian members?

Mr. BLUMENFELD. Yes, indeed. I will give the affidavits, done

both for the U.S. members and for the Panamanian members.

The Panamanian members' affidavits were administered by the

Deputy Administrator, a U.S. Agency official who had been designated in writing to do so by the Administrator, and therefore in

conformity with U.S. law.

Mr. HUBBARD. Thank you.

Later you will provide a copy of the affidavits and oaths referred

to?

Mr. BLUMENFELD. Certainly.

[The following was received for the record:]

PANAMA CANAL COMMISSION,

Washington, D.C., July 28, 1980.

Hon. CARROLL HUBBARD,

Chairman, Panama Canal Subcommittee,

House of Representatives, Washington, D.C.

DEAR MR. CHAIRMAN: In the course of the hearing this morning conducted by the

Panama Canal Subcommittee, several requests were made of Mr. Blumenfeld to

provide certain documents to the committee. These were: Copies of the Appointment

Affidavits signed by members of the Board of the Commission; and delegation of

authority concerning duties of the Deputy Administrator.

Both documents are attached.

Please note that the President delegated to the Secretary of Defense in section 1-

302, Executive Order 12215, the authority to "fix the compensation of and to define

the authorities and duties of the Deputy Administrator". The Secretary of Defense

redelegated this authority to the Commission as indicated in his letter of July 18,

1980.

I enjoyed our short chat after the hearing and look forward to a continuing

exchange of views concerning the Panama Canal Commission.

Sincerely,

MICHAEL RHODE, Jr., Secretary.

Attachments.
20

SIANDAR FORM 61 OMB APPROVAL NO. 50-R0318 REVISED SEPTEMBER 1970 U.S. CIVIL SERVICE COMMISSION F.P.M. CHAPTER 295 61-107

APPOINTMENT AFFIDAVITL I

A Member of the Board of the Panama Canal Commission.

(Position to which appointed) (Date of appointment)

(Department or agency) (Bureau or division) (Place of employment)

I, Michael_ Blumenfeld ______, do solemnly swear (or affirm) thatA. OATH OF OFFICE

I will support and defend the Constitution of the United States against, all enemies, foreign and

domestic; that I will bear true faith and allegiance to the samie; that I take this obligation freely,

without any mental reservation or purpose of evasion; and that I will well and faithfully discharge

the duties of the office on which I am about to enter. So help me God.

B. AFFIDAVIT AS TO STRIKING AGAINST THE FEDERAL GOVERNMENT

I am not participating in any strike against the Government of the United States or any agency

thereof, and I will not so participate while an employee of the Government. of the United States or

any agency thereof.

C. AFFIDAVIT AS TO PURCHASE AND SALE OF OFFICE

I have not, nor has anyone acting in my behalf, given, transferred, promised or paid any consideration for or in expectation or hope of receiving assistance in securing this appointment.

(Signature of appointee)

Subscribed and sworn (or affirmed) before me this day of A.D. 19

at A &A Ln~ &u7

(City) (State)

[SEAL] sEAL(Signature of offcer)

Commission expires. C M U

(If by a Notary Public, the date of expiration Tifle

of his Commission should be shown) 444

NOTE.-The oath of office must be administered by a person specified in 5 U.S.C. 2903. The words "So help nle God"

in the oath and the word "sirear" wherever it appears abovC should be stricken out when the appointee elects

to aftrmn rather than siccar to the affidavits; only these words may be stricken and only when the appointee

elects to affIrm the affidavits.

U.S.GPO:1979-0-281-18714238
21

STANDARD FORM 61 OMB APPROVAL NO. 50-RO118 REVISED SEPTEMBER 1970 U.S. CIVIL SERVICE COMMISSION F.P.M. CHAPTER 295 61-107

APPOINTMENT AFFIDAVITS

A Member of the Board of the

Panama C anaL xuommis ikn. __

(Position to which appointed) (Date of appointment)

(Departmncnt or agency) ' (Bureau or division) (Place of cumplayment)

i, John Alden Bushnell , do solemnly swear (or affirm) thatA. OATH OF OFFICE

I will support and defend the Constitution of the United States against all enemies, foreign and

domestic; that I will bear true faith and allegiance to the same; that I take this obligation freely,

without any mental reservation or purpose of evasion; and that I will well and faithfully discharge

the duties of the office on which I am about. to enter. So help me God.

B. AFFIDAVIT AS TO STRIKING AGAINST THE FEDERAL GOVERNMENT

I am not participating in any strike against the Government of the United States or any agency

thereof, and I will not so participate while an employee of the Government of the United States or

any agency thereof.

C. AFFIDAVIT AS TO PURCHASE AND SALE OF OFFICE

I have not, nor has anyone acting in my behalf, given, transferred, promised or paid any consideration for or in expectation or hope of receiving assist ance in securing this appointment.

(Signaturc of appointee)

Subscribed and sworn (or affirmed) before me this day of A.D. 19

at i~~ ~ 4 ~ ~ (J~~54.4 $tne 4-

(City) (State)

[BSAL] (Signature of officer)

s__ __ Commission expires. - 0 A 

(If by a Notary Public, the date of expiration

of his Conmiission should be shown)

NOTE.-The oath of once must be administered by a person specified in 5 U.S.C. 2903. The words "So help me God"

in the oath and the word "siccar" wherecr it appears above should lc stricken out when the appointee elects

to affirm rather than siccar to the affidavits; only these words may be stricken und only when the appointee

elects to affirm thc afidavits.

* U.S.G PO:1979--281-18714238
22

STANDARD FORM 61 OMB APPROVAL NO. 50-R0118 REVISED SEPTEMBER 1970 U.S. CIVIL SERVICE COMMISSION F.P.M. CHAPTER 295 61-107

APPOINTMENT AFFIDAVITS

A Member of the Board of the

Panama Canal Commission.

(Position to which appointed) (Date of appointment)

(Department or agency) (Burcau or divisionn) (Place of employment)

John W. Clark do solemnly swear (or affirm) thatA. OATH OF OFFICE

I will support and defend the Constitution of the United States against all enemies, foreign and

domestic; that I will bear true faith and allegiance to the same; that I take this obligation freely,

without any mental reservation or purpose of evasion; and that I will well and faithfully discharge

the duties of the office on which I am about to enter. So help me God.

B. AFFIDAVIT AS TO STRIkING AGAINST THE FEDERAL GOVERNMENT

I am not participating in any strike against the Government of the United States or any agency

thereof, and I will not so participate while an employee of the Government of the United States or

any agency thereof.

C. AFFIDAVIT AS TO PURCHASE AND SALE OF OFFICE

I have not, nor has anyone acting in my behalf, given, transferred, promised or paid any consideration for or in expectation or hope of receiving assistance in securing this appointment.

(Signature of appointee)

Subscribed and sworn (or affirmed) before me this day of _ _A.D._19_2_0_A D.1

(City) - (Statc)

[SEAL] (Signature of officer)

Commission expires. &4PK1 

(If by a Notary Public, the date of expiration Jie) (?/tAw.

of hi Commission should be shown) e rtn1/4

NOTE.-The oath of ofce must be administered by a person specified in 5 U.S.C. 2903. The words "So help me God"

in the oath and the word silverr" wherever it appears above should be stricken ont when thc appointee elects

to affirm rather than swear to thc afidavits; only these words may be stricken and only vhcn the appointee elects to affirm thc affidavits.

*U.S.GPO:19794281-18714238
23

SlANDARD FORM 61 OMB APPROVAL NO. 50-R0118 REVISED SEPTEMBER 1970 U.S. CIVIL SERVICE COMMISSION F.P.M. CHAPTER 295 61-107

APPOINTMENT AFFIDAVITS

A Member of the Board of the.

Panama Canal Commission.

(Position to which appointed) (Date of appointment)

(Department or agency) (Bureau or division) (Place of employment)

Clifford Bradley O' Hara , (1 solemnly swear (or affirm) thatA. OATH OF OFFICE

I will support and defend the Constitution of the United States against all enemies, foreign and

domestic; that I will bear true faith and allegiance to the same; that I take this obligation freely,

without any mental reservation or purpose of evasion; and that I will well and faithfully discharge

the duties of the office on which I am about to enter. So help me God.

B. AFFIDAVIT AS TO STRIKING AGAINST THE FEDERAL GOVERNMENT

I am not participating in any strike against the Government of the United Stat es or any agency

thereof, and I will not so participate while an employee of the Government of the United States or

any agency thereof.

C. AFFIDAVIT AS TO PURCHASE AND SALE OF OFFICE

I have not, nor has anyone acting in my behalf, given, transferred, promised or paid any consideration for or in expectation or hope of receiving assistance in securing this appointment.

(Signaturc of appointee)

Subscribed and sworn (or affirmed) before me this day of A.D. 19

at Atv k tlv W '' fA(A 4t p4 xA9J ~ (City) (Statc)

sEAL (Signature of officer)

Commission expires._ _ _ _ __

(If by a Notary Public, the date of expiration (Ttle of his Commission should be shown) L.w- (2,."

NOTE-The oath of opcc must be administered by a person specified in 5 U.S.C. 2903. The aeords "So help rme God"

in the oath and the word "sccar" wherever it appears abotrc 8hnuld be stricken 0nt 11hn thC appointee clcs to affirm rather than scar to the affidavits; only these words may bc strickcn and only wchen the appointee

elects to affirm the afdavits.

SU.S.GPO:1979-0-281-18714238
24

StANDARD FORM 61 OMB APPROVAL NO. 50-ROIIB REVISED SEPTEMBER 1970 U.S. CIVIL SERVICE COMMISSION F.P.M. CHAPTER 295 61-107

APPOINTMENT AFFIDAVITS

A Member of the Board of the

.Panama-Canl Crommission,

(Position to which appointed) (Date of appointment)

(Department or agency) (Bureau or division) (Place of enployment)

William Side11 , do solemnly swear (or affirm) thatA. OATH OF OFFICE

I will support and defend the Constitution of the United States against all enemies, foreign and

domestic; that I will bear true faith and allegiance to the same; that. I take this obligation freely,

without any mental reservation or purpose of evasion; and that I will well and faithfully discharge

the duties of the office on which I am about to enter. So help me God.

B. AFFIDAVIT AS TO STRIKING AGAINST THE FEDERAL GOVERNMENT

I am not participating in any strike against the Government of the United States or any agency

thereof, and I will not so participate while an employee of the Government of the United States or

any agency thereof.

C. AFFIDAVIT AS TO PURCHASE AND SALE OF OFFICE

I have not, nor has anyone acting in my behalf, given, transferred, promised or paid any consideration for or in expectation or hope of receiving assistance in securing this appointment.

(Signature of appointee)

Subscribed and sworn (or affirmed) before me this day of ___A.D.

'at < 4 1kJEAJ / 4 rVt (4 4 t 43 4 6( 1v~ W-&I-US II -4Ac .(

(City) (State)

[SEAL]

(Signature of officer)

Commission expires. CQj(x / f

(If by a Notary Public, the date of expiration T'tle)

of his Commission should be shown)

NOTE-The oath of office must be administered by a person specified in 5 U.S.C. 2903. The words "So help me God"

in the oath and the word "swvear" wherever it appears above should be stricken out when the appointee elects

to afirm rather than swear to the affidavits; only these words may be stricken and only when the appointee

elects to affirm the afidavits.

* U.S.GPO:1979-0-21-1874238
25

APPOINTMENT AFFIDAVIT

Member of the Board of the

Panama Canal Commission

I, Ricardo A. Rodriguez, do solemnly affirm that I will well

and faithfully discharge the duties of the office on which I am

about to enter.

Ricardo A. Rodriguez

Affirmed before me this / day of jLA4 1980, at

Panama, Republic of Panama.

Fernando Manfredo, Jr.

Deputy Administrator
26

APPOINTMENT AFFIDAVIT

Member of the Board of the

Panama Canal Commission

I, Roberto M. Heurtematte E.,do solemnly affirm that I will

well and faithfully discharge the duties of-the office on which

I am about to enter.

Roberto M. Heurtemtte E.

Affirmed before me this . day of , 1980, at

Panama, Republic of Panama.

Fernando Manfredo, Jr.

Deputy Administrator
27

APPOINTMENT AFFIDAVIT

Member of the Board of the

Panama Canal Commission

I, Edwin Fabrega V., do solemnly affirm that I will well and

faithfully discharge the duties of the office on which I am about

to enter.

Edwin Fabrega V.

Affirmed before me this '2A day of , 1980, at

Panama, Republic of Panama.

Fernando Manfredo, Jr.

Deputy Administrator
28

APPOINTMENT AFFIDAVIT

Member of the Board of the

Panama Canal Commission

I, Tomss Paredes R., do solemnly affirm that I will well and

faithfully discharge the duties of the office on which I am about

to enter.

Tomss Paredes R.

Affirmed before me this 4d day of 7 , 1980, at

Panama, Republic of Panama.

Fernando Manfredo, Jr.

Deputy Administrator
29

Mr. HUBBARD. Congressman Bauman.

Mr. BAUMAN. Following up on the business of an affidavit or

oath, that was one contention made repeatedly by those opposed to

the treaty and implementing legislation, that it was impossible for

a Panamanian citizen to be an official of a U.S. Government

agency, and that the question of oath-taking would be one that

would be addressed in the courts, which might deny the legal basis

for such an arrangement.

I notice, too, in your deliberations that the Panamanian members objected to the imposition of a code of conduct, at least in the

first meeting. You now mentioned you addressed that in the second

meeting.

What is the legal attitude that the U.S. Directors have taken

toward the obligations of the Panamanian members of this Board?

Are they in fact subject to U.S. law as Public Law 96-70 indicates they should be? Or are you treating them in a special status,

and is the affidavit a reflection of that attitude?

Mr. BLUMENFELD. With respect to the code of conduct, the enforcement of any of the standards of behavior that the code of

conduct laid out are a matter for subsequent negotiation, government to government.

The Board adopted a code of conduct which spells out standards

of behavior both for employees and for Board members. The adoption of that code by the Board does not one way or the other affect

the applicability of U.S. law to Board members or to employees.

There is a statement, as you have seen, by the Panamanian

Foreign Minister and certain Board members that U.S. law does

not apply. The Board, however, adopted that code. By its adoption,

it does not affect the difference that may exist in interpretation

between the U.S. Board members and the Panamanian Board

members to what extent there is reach of U.S. law into the Republic of Panama.

Mr. BAUMAN. So there was no dissension at the time regarding

the code of conduct by the Panamanian members? Did they abstain? Did they support the position?

Mr. BLUMENFELD. There was a five to four vote on both portions

of the code, portion one dealing with employees and portion two

dealing with the Board.

Mr. BAUMAN. There was no significant indication that they refused to accept it?

Mr. BLUMENFELD. The Panamanians indicated that with respect

to themselves as Board members, they did not believe that the

Commission could adopt a code which would require standards of

behavior of them.

It was the U.S. position that the code would and should set up

standards for behavior of the Board members. It was our recognition that the enforcement of those standards could not follow from

adoption of the code, but would have to be, as spelled out in Public

Law 96-70, the subject of future negotiation between the two countries.

Mr. BAUMAN. As an aside on the code matter, it is true we left

its enforcement an open-ended question because we knew we had

no real enforcement authority over Panamanian nationals.

66-810 0 - 80 - 3
30

I think the congressional consensus was we did have authority to

set a code by which they could be judged. The question was whether they would be acted against if they transgressed that code. You

say your attitude is in the 5-to-4 vote that the Panamanian directors are not bound by the code?

Mr. BLUMENFELD. That is correct. Which is not to say that they

are not bound by similar ethical precepts of Panamanian law,

which I do believe they find themselves bound by.

Mr. BAUMAN. Except the treaty clearly says in article III that

the Panama Canal Commission and its Board-"grants and rights

of the United States shall be in accordance with the treaty and

provisions of United States law in carrying out the responsibilities."

So at least the authority in the treaty exists and they should be

bound by that. Whether we can enforce it is something else.

Let me pass back to the question of affidavit or oath. What was

it the Panamanian and American members swore to uphold in this

affidavit or oath? The Constitution of the United States? The treaties? The Public Law 96-70? Or just general, good conduct standards?

Mr. BLUMENFELD. The U.S. members said:

I will support and defend the Constitution of the United States against all

enemies, foreign and domestic. I will bear true faith and allegiance to the same. I

take this obligation freely without mental reservation. I will faithfully discharge the

duties of the office upon which I am about to enter.

The Panamanian affidavit read that "I do solemnly affirm I will

well and faithfully discharge the duties of the office upon which I

am about to enter."

Mr. BAUMAN. I don't think I have any further questions after

that.

Mr. HUBBARD. Thank you, Congressman Bauman.

Mr. Blumenfeld, what was the specific authority of the Deputy

Administrator to administer this oath?

Mr. BLUMENFELD. As an official of a U.S. Government agency

designated in writing to do so by the Administrator.

Mr. HUBBARD. What authority do you refer to for this Deputy

Administrator to administer the oath?

Mr. BLUMENFELD. Section 2903(b) of title 5 of the United States

Code.

Mr. HUBBARD. Thank you.

The next question, Mr. Blumenfeld-Mr. Carney?

Mr. CARNEY. Mr. Blumenfeld, you mentioned something about

eliminating the word "God" and "swear."

Who made that determination and why?

Mr. BLUMENFELD. That determination is at the bottom of a form

called Standard Form 61, Revised September 1970, U.S. Civil Service Commission, F.P.M. Chapter 295 61-107.

It appears as a note at the bottom of the form.

Mr. CARNEY. Could you read that note again?

Mr. BLUMENFELD [reading]:

The oath of office must be administered by a person specified in 5 U.S.C. 2903.

The words "So help me God" in the oath and the word "swear" wherever it appears

above should be stricken out when the appointee elects to affirm rather than swear

to the affidavits. Only these words may be stricken and only when the appointee elects to affirm the affidavits.
31

Mr. CARNEY. We are getting copies of that, is that correct?

Mr. BLUMENFELD. Yes.

Mr. CARNEY. Is that common practice?

Mr. BLUMENFELD. It is standard.

Mr. CARNEY. Standard practice now?

Thank you.

Mr. HUBBARD. Mr. Blumenfeld, what is the authority for the

provision of section 1.5(b) of the regulations that Board meetings

shall not be open to the public?

Again what is the authority of the provision of section 1.5(b) of

the regulations that Board meetings shall not be open to the public

in view of the provisions of 5 U.S.C. 552(b) requiring open meetings

by Government agencies?

Mr. BLUMENFELD. I believe you are referring to the Government

in the Sunshine Act, and I believe that the Sunshine Act requires

that where a Government agency is headed by a collegial body, the

majority of whose members are appointed by the President and

confirmed by the Senate, those meetings shall be open and it has

various other responsibilities for public disclosure.

It is our position that by virtue of the fact that two of the five

U.S. Board members hold their positions in effect ex officio, and

since the Justice Department has repeatedly taken the position

that where there are ex officio members, they do not count toward

the total that one adds up to get the majority of the agency, that

there is not a majority of the members who would make the

Commission subject to the Government in the Sunshine Act.

Therefore, we are not subject to it, and it was, therefore, within

our ability to exclude the public from the meetings.

Mr. HUBBARD. You believe that is wise in this day and time when

the general public is so anxious to be aware and become informed

as to the happenings of the agencies, especially with so much

skepticism about the wisdom of the Panama Canal treaties?

Mr. BLUMENFELD. I would sympathize with your question were it

not for the fact that we are reporting regularly to the committees

of Congress, including your committee, on what transpires at the

Board meetings, giving you copies of the minutes.

My personal view is, I believe that the more these Board meetings can address issues that concern the operation and maintenance of the canal, and the less that they are forums for public

posturing, the better run the canal is going to be. I think the

exclusion of the public helps minimize those occasions upon which

people will be either, (a) saying things in order to win some political points or (b) refrain from saying things because they are worried that the public or the press may find them to be silly or

unjustified. I think it helps make a better Board meeting for it not

to be open to the public.

Mr. HUBBARD. Mr. Blumenfeld, how can a member of the Board

supervising an agency in the executive branch of the U.S. Government act legally in accordance with instructions from a foreign

government as provided, in effect, by section 1.8 of the regulations?

If you will hold your answer on that, we will go back to the

meetings question prior to this.
32

Congressman Bauman had another point to make or a question

to ask regarding that subject of the meetings of the Board not

being open to the public, the meetings of the Board.

Mr. BAUMAN. The rationale you just advanced for secret meetings is one we are not unfamiliar with in the Congress. Several

years ago we grappled with the same problem and decided that

unless the majority of the committees for the most part specifically

voted to close the meetings for certain categories of secret information, reputations of other people, and so on, that we would remain

open, which was a reversal of policy.

Sure it is much easier for Government officials to deliberate in

private and then announce what they have decided in public without the benefit of the deliberations, and I was struck by this

provision that you have included in here of the closed meeting, and

my reading of the minutes, which I found to be highly inaccurate.

I served' as secretaries of boards myself over the years. I know

how minutes are written. They are written to reflect a viewpoint,

and they are written very carefully not to reflect any dissention or

any other things except where it is absolutely required in the form

of votes and motions.

I can only say that as a member of this subcommittee, I would

very much like to have someone attending your meetings, giving us

an independent report, independent of the U.S. Embassy and independent of your operation, just to know what is going on.

Maybe that is not appropriate.

The wider question: The legal basis you cite that ex officio, two

of the members-at least yourself-are ex officio,. I don't understand where you can draw on that interpretation despite other

cases.

Quite clearly the law requires the President nominate five people

and have them confirmed. They were in fact nominated and confirmed. Senate hearings indicate that that is the case.

Even though you are required by statute, the President, to nominate certain categories of people, it doesn't make you an ex officio

member of the Board. You are a full member appointed by the

.President and approved by the U.S. Senate.

How do you get around the existing law the chairman has

quoted? It seems to me you strain the interpretation for a purpose

less than acceptable to a lot of people.

Mr. BLUMENFELD. Let me say a couple of things, if I may.

I think there is another basis, although it is not one that I would

necessarily choose to advance for exclusion under the Sunshine

Act. Arguably the collegial board heading an agency which would

invoke Government in the Sunshine is not a case which would

exist here. It is arguable that the Commission Board does not head

the Commission in the sense intended in the Government in the

Sunshine Act.

As we have been discussing before, the Commission is supervised

by the Board, but the Secretary of Defense, or his designee, directs

the vote and the outcome of issues before the Board. I think that

that circumstance may, in fact-although I am not, nor do I pretend to be a constitutional lawyer-may be another basis upon

which the Government in the Sunshine Act could be found not to

apply.
33

Let me say, though, that with respect to the minutes disguising

any dissension, I think what you will find in the minutes of the

second meeting and subsequent meetings is that there will not be

any attempt to do that. Indeed, the Panamanian Board members

will, on many occasions, ask that their specific documents reflecting their dissension with given points be appended to the minutes

of the meeting and they will be there available to look at.

We are not trying to hide nor will we hide dissension. I think the

decision to close the meetings was only taken in the interests of an

efficient-running Board which can cover the business before it in as

reasonably short a period of time as is necessary.

Given that we have three private sector members who have

commitments that don't make them infinitely available for Board

meetings or Board committee meetings, and the opportunity for

time-consuming posturing before the public is one which I would

like to minimize in the operation of the Board, it seemed to me the

closing to the public accomplishes that. There are ample means to

report through your committee and others the doings of the Board.

Mr. BAUMAN. Well, I for one, Mr. Chairman, would like to register my own protest at this regulation. It seems to me there are

inherent difficulties in any public body with the reaction of the

public to what they do. The risk that the members of that body

may use it as a forum exists, but I think that had to be foreseen in

this arrangement of the treaty and the law.

Quite obviously the people on both sides are responsible individuals, chosen because of their ability, one assumes, to carry out the

duties of the Board.

I just don't think the expedient of time is a sufficient excuse to

close the public out of the deliberations of this group.

You do have the consultative committee for broader discussion of

broader policy questions; that if they want to beat each other over

the head, that is the place to do it, obviously.

The substance of the actions that control the canal as an enterprise is in your Board, along with the Congress directions and the

treaties' directions. To say the public be damned is a mistake.

Thank you, Mr. Chairman.

Mr. HUBBARD. Congressman Carney?

Mr. CARNEY. Who are the two ex officio members?

Mr. BLUMENFELD. John Bushnell and myself.

Mr. CARNEY. How was it determined that you are ex officio

members?

Mr. BLUMENFELD. As to myself as the designee of the Secretary

of Defense, we construe that as an ex officio membership. I think

the case is less strong with respect to John Bushnell. But at least

one is very clearly an ex officio member. As such, there is no

longer a majority of members, defined in the sense that the Government in the Sunshine Act defines it, so that the act is not

invoked.

Mr. CARNEY. That is an awful loose interpretation in my opinion.

Let me ask about these closed meetings.

Would they be closed to Members of Congress?

Mr. BLUMENFELD. Members of Congress, as any other members of

the public, could be invited by the Chairman to attend. I certainly

would entertain--
34

Mr. CARNEY. What you are saying is, I would need an invitation

to attend one of those meetings?

Mr. BLUMENFELD. Yes, sir.

Mr. CARNEY. Is it the intention of the Commission or whatever

you decide to call yourself to continue to aggravate the Congress?

This is just a small point, but you seem to care very little about

the Congress. You are going to run it the way you want. I am just

wondering, is that the intention that you are going to continue to

do, or are we going to have to, every year when it comes to

appropriations, fight this thing out continually?

I don't know. I certainly can't support a lot of things that are

going on. I would hope-as I said before-that we wouldn't have to

continue to rehash all of this, but I think it is absurd that a

Member of Congress cannot attend one of those meetings without

an invitation when that Member of Congress has to spend or has to

appropriate money for the carrying out of the operations of the

canal.

I think too the interpretation that you are an ex officio member

of the committee is not what the intention of the Congress was. I

am just wondering how much further this Commission-what the

intentions are to continue to aggravate Members of Congress like

you are doing to me right now?

I mean, you know, hopefully all of that was behind us. Evidently

it is not. Evidently we are back to war again.

It is just the attitude that seems to be that Congress be damned;

the American public be damned. You are not going to be able to

come to our meetings. I am an ex officio member. The Congress

had no intentions of making any member of the five-member delegation an ex officio member.

We wanted to have five members on that board. It is there in the

public law. It is there in the treaty. Apparently you don't care

what the intent of the Congress is.

I would think that the Congress can get aggravated over those

situations. We are going to be continually rehashing this if it

continues like that.

Mr. BLUMENFELD. I would hope not. I certainly do not intend to

aggravate you, Congressman Carney.

Mr. CARNEY. Knowing I need an invitation to attend a meeting

aggravates me very much. I am sure it will aggravate one-third of

my colleagues when it comes up on suspension. Let's put it that

way.

Mr. HUBBARD. Continuing, Mr. Blumenfeld, how can a member

of a board supervising an agency in the executive branch of the

U.S. Government act legally in accordance with instructions from a

foreign government as provided in effect by section 1.8 of the

regulations?

How can a member of a board supervising an agency in the

executive branch of our Government act legally in accordance with

instructions from a foreign government as provided, in effect, by

section 1.8 of the regulations?

Mr. BLUMENFELD. That section may not have been as artfully

written as it could have been, but what it is intended to do-and I

think will do-is to assure that in the Commission regulations the

requirement which Congress wrote into the law that the U.S.
35

Board members will vote at the direction of the Chairman, the

Secretary of Defense designee, that that requirement is reflected in

the regulations as well as being in the law.

With respect to the Panamanian members, it reflects the fact

that the Panamanian members develop a position which represents the position adopted by the Government of the Republic of Panama

on any particular issue. They are representatives of the Government of Panama. But section 1.8 does not by any means imply that

U.S. Board members will so vote-I believe the word "respective" there is fairly clear. What it tries to do is assure in the regulations that U.S. Board members vote at the direction of the Secretary of

Defense's designee.

Mr. HUBBARD. Mr. Blumenfeld, section 1102(c) of the Public Law

96-70 provides a quorum of the Board for transactions of business

shall consist of a majority of Board members of which those present are U.S. nationals.

Section 1.7 of the regulations repeats this requirement. Since a

majority of the Board is five, what is the legal basis for the provi- sions of section 3.1 of the regulations that between Board meetings, the executive committee may exercise all of the powers of the

Board with a quorum of three of the five members?

Mr. BLUMENFELD. With one of the members being the Chairman.

Three constitute a quorum if made up of the Chairman and another U.S. member. So there was a U.S. majority. I believe the

establishment of committees and the prescription of procedures for

them to follow are within the inherent authority of the Board.

For example, there are emergencies, time-sensitive actions which

the Board will have to take and will be unable to set up a meeting

to consider the issue. The regulation that you refer to, which we

adopted, indicates clearly that the full Board can affirm or alter or

revoke any action that is taken by the executive committee.

We needed to provide a mechanism for actions to be taken between Board meetings. I don't believe that-the Public Law 96-70 in

any way precludes the establishment of such a committee to help the Board do its business.

Mr. HUBBARD. I want to ask Mr. Whitman to ask a question at

this point based upon your answers, please, Mr. Blumenfeld.

Mr. WHITMAN. I think possibly you may have misconstrued the

question. I don't believe it was the intention of the chairman to

question the setting up of an executive committee, but the question is, having set up the executive committee, how can that committee

exercise all the powers of the Board with fewer members than that

prescribed by Public Law 96-70?

Mr. BLUMENFELD. If I may, let me get you, for the record, a legal analysis of that ability.

I think practically, pragmatically, it is clear, and I believe Congress would have intended that the Board be able to deal with an

issue in a timely fashion.

It is not always possible to convene a Board meeting with a U.S.

majority in attendance as quickly as one might wish because of

conflicting schedules. I think the Commission has to be in a posi- tion to deal with matters which might occur; say, if there were a

landslide or some emergency to be handled. It would not be the

intention of the chairman to utilize this executive committee
36

except in instances where the urgency of the action precluded the

ability to have a timely Board response to the issue.

[The following was received for the record:]

Public Law 96-70 contemplates the adoption of regulations by the Board for the

conduct of meetings. Section 1102(c) of Public Law 96-70 states that a quorum shall

consist of a majority of the Board members (5) of which a majority of those present

(3) are nationals of the United States. The terms of the law do not address an

Executive Committee.

Section 3.2 of the Board Regulations creates an Executive Committee consisting of

five members. A quorum of the Committee under Section 1.7 of the Regulations

would consist of three members, a majority of whom (2) are nationals of the United

States and one of those must be the Chairman of the Board. The Regulations state

that the Executive Committee may exercise all powers of the Board arising in the

ordinary course of business during the intervals between meetings of the Board.

The creation of the Committee is a logical and practical extension of the intent of

the law in that it provides for continuing supervision of the Commission even when

the Board is not meeting. It is contemplated that the Committee will only be called

upon to act in emergency situations when time or other similar constraints do not

permit the calling of a material of the full Board. As a practical matter, it is

significant that no meeting may occur without the Chairman of the Board, who may

direct the votes of U.S. members. Accordingly the outcome of a meeting of the

Executive Committee should be consistent with the result to be anticipated had the

full Board considered the issue. It is noted, moreover, that all decisions or actions

taken by the Committee are subject to review and approval by the full Board. Thus,

the actions of the Committee may be characterized as only interim and of an

emergency nature.

We therefore believe that the provisions of the Regulations pertaining to the

Executive Committee are in conformance with the intent of the Act.

Mr. WHITMAN. I think that legal opinion would be very helpful.

What concerns me is not whether or not it would be desirable or a

good thing or would expedite the business of the Commission, but

rather whether it is authorized by the terms of the law.

Mr. HUBBARD. Mr. Blumenfeld-excuse me.

Mr. BAUMAN. Could I have some comment, in view of your last

question, as to what the role of the Administrator is, if this executive committee is needed in terms of an emergency? My concept

was that the Administrator had authority to act in an emergency.

The emergency fund, for instance, was created for his availability.

Are you saying this executive committee has to be convened if a

slide occurs or an oil spill or something that requires extraordinary

expenditures occurs?

Mr. BLUMENFELD. I would expect yes, the Administrator would

want to get the Board's blessing of an action undertaken pursuant

to a landslide or some such emergency, if that tapping the emergency fund were involved, if and when that fund is created.

There may be other issues besides the emergency fund where

quick action is required. Where it is of such magnitude that,

indeed, it is appropriate that the Board decide, with its U.S. majority and U.S. votes directed by the designee of the Secretary of

Defense, that the action should be taken in the clear. Certainly it

is U.S. policy to take that action, reference to the Board by the

Administrator in such cases would be indicated.

Mr. BAUMAN. It just seems to me as I conceived it-as only one

member's interpretation, since the issue has never been addressed

as closely as this morning-that the Administrator's role was to act

between Board meetings, that the Board set down general guidelines and that in emergency cases, in particular, the Administrator

would be able to act.
37

Obviously the Board itself can take certain actions when they

convene subsequently, but again it seems to underscore your view

or the view of whoever drafted these regulations that the Board,

with an executive committee, is in fact the controlling body that

will set policy and make all decisions as in a corporation.

It troubles me that the Administrator may be downgraded because I think on a day-to-day basis he has to have these powers to

act, regardless of your executive committee's availability.

Mr. BLUMENFELD. I appreciate your comment. I think perhaps

the Administrator may want to say a few words on this issue. But

let me remind you that in 1990, the Administrator becomes Panamanian.

Mr. BAUMAN. That doesn't give me any particular pause. I am

sure by 1990 all of this will have been resolved and we will no

longer be on these subcommittees or have these problems. Perhaps

you won't even be there, either, Mr. Secretary.

Mr. BLUMENFELD. Perhaps not.

Mr. HUBBARD. Mr. Blumenfeld, what is the legal basis for provisions of section 4.1 prescribing the duties of the Administrator who

is appointed. and serves at the pleasure of the President?

Mr. BLUMENFELD. The section specifically spells out the appointment of the Administrator. The section and the act itself is silent

with respect to the duties of the Administrator.

We believe it is consistent with the Public Law 96-70 that the

authority to define those duties be delegated as the President sees

fit. I would add that in the appointment of Mr. McAuliffe as the

first Administrator the President was provided with a job description for that position, a description which, if the committee does

not have, I would be glad to put before it.

Mr. HUBBARD. I am aware that Congressman Bauman likes to be

on the House floor when the House convenes, especially nowadays.

I have three more questions.

I am going to wait on those and let Congressman Bauman proceed with his questioning in view of the fact he may want to get

over to the House floor.

Mr. BAUMAN. I appreciate that, Mr. Chairman.

There are a couple of questions that arose in my reading of the

June meeting minutes. One has to do with some comments apparently from Phil McAuliffe, regarding the future income of the

Canal on page 8 of your minutes. There seems to be in the Board's

discussion an inherent acceptance that there will be an increase in

tolls. Then there is a mention of a potential loss of $30 to $40

million that may be identified. What is that all about?

I thought our financial condition was relatively stable?

Mr. BLUMENFELD. At the time of the June meeting, the budget

requests that were in hand from the various operating bureaus and

the revenue projections indicated very preliminarily that there

might be such a deficit.

The refined figures developed between then and the time of our

July meeting indicated, as I testified, that no toll increase will be

required in fiscal year 1982.

Mr. BAUMAN. That projection had to do with income, not costs,

but income from the tolls, and the possibilities of a shortfall?
38

Mr. BLUMENFELD. That was a projection for 1982 that we were

talking about. At the June meeting the projections, for 1982 indicated there might be a shortfall; but the refined figures developed

between then and the July meeting indicated there would not be in

1982, and there is not now.

We do not have a problem in fiscal year 1980 and don't anticipate one for 1981, as reflected in our budget submission. Now we

conclude we don't anticipate one for fiscal year 1982 either.

Mr. BAUMAN. Mr. Chairman, I think I have touched on most of

the other concerns I had. Of course, I haven't read the July board

meeting minutes. I might have some other concerns to express

then, but I would just express my hope again that we don't have to

replay the issue of the treaties and the law on the floor of the

House again.

We have the Department of Transportation appropriations bill

coming up shortly, maybe even this week. We also have the authorizing legislation pending.

It really makes a mockery of the process if we don't have an

authorizing bill and yet if the Board of Directors or Supervisors

continues to move in the direction that it has, obviously this gives

rise to complaints by many of us.

You have said, Mr. Secretary, in a very familiar phrase, "watch

what we do; not what we say.'

I have heard that said in the White House last week and other

White Houses in past times.

It gives me pause and concern when I hear that phrase used. I

will watch what you do. I have before me what you say, which is

going to cause a great deal of concern to many of us. We are

willing to work with you in any way we can and take into account

the need to bring our Panamanian brothers into the process fully,

as the treaty envisions, but there are terms in the treaty and the

law that cannot be bent and should not be.

That I think, Mr. Chairman, is all I have to say.

Mr. BLUMENFELD. I agree, Mr. Bauman. Let me say watch not

only what we do prospectively, but what we have done retrospectively. No toll increases, continuous operation of the canal.

Mr. BAUMAN. If I may make one comment, I don't know why the

administration delayed the appointment of the Board of Supervisors or Directors.

The Panamanian members were ready to go many, many months

before. In a private conversation with some Americans and Panamanians who are close to the situation, the representation was

made to me that if the Board never met it might be far better

because the two administrators seem to have handled the situation

very well working on a totally extra legal basis, since no one

envisioned that hiatus.

The problems arose only after -the Board was appointed. That

may be true of all boards, having served on so many of them

myself.

Mr. HUBBARD. Thank you, Congressman Bauman. These three

last questions, and then Congressman Carney may have some questions, Mr. Whitman may have some questions, and Mr. Guy Land,

legislative assistant to Mr. David Bowen, who could not be here

today and who has his legislative assistant present.
39

Mr. Blumenfeld, what is the legal basis or section 4.2 of the

regulations assigning duties to the Deputy Administrator when

section 1104(a) of Public Law 96-70 provides specifically that the

Deputy Administrator "shall perform duties, such duties as may be

prescribed by the President"?

Mr. BLUMENFELD. It has been delegated by the President through

his Executive order.

Mr. HUBBARD. To the Secretary of Defense?

Mr. BLUMENFELD. And through the Secretary of Defense to the

Commission.

Mr. HUBBARD. Could we please have a copy later of that delegation to the commission?

Mr. BLUMENFELD. Yes, indeed.

Mr. HUBBARD. Two more questions.

Is the intention of section 3.4 of the regulations to authorize the

Board to provide for payment of travel expenses and per diem for

committee members at rates different from those provided for

Board members by section 1107 of Public Law 96-70?

Mr. BLUMENFELD. No, it is not. I suppose it is conceivable that

they might be reimbursed at less than what is authorized by U.S.

law on certain occasions, but certainly not more.

Mr. HUBBARD. Lastly, if the board does not follow the provisions

of the Government in the Sunshine Act, it appears that under

present procedures there are long delays in bringing to the attention of the subcommittee significant developments in the management of the commission, including actions taken at board meetings.

Do you have any suggestions for improving the procedures employed by the commission to keep our subcommittee fully advised

on a current basis?

Mr. BLUMENFELD. What I would suggest, Mr. Chairman, is that if

you are questioning the timeliness with which you get the minutes

that reflect what went on at the Board meetings, I would offer to

brief your subcommittee orally on what has transpired at a Board

meeting.

The minutes of a meeting don't become official minutes of the

Commission until ratified by the Board at a subsequent meeting, so

that I would not provide copies of what are draft minutes. But I

would certainly be willing to brief the committee on what transpired at a Board meeting as soon after that meeting as we could

set up a convenient time.

Mr. HUBBARD. Congressman Carney?

Mr. CARNEY. I have no further questions.

I would like to just express my concern that perhaps we are not

working as close together in the Congress as we could to have an

efficient operation of the canal.

I would hope some of the things we brought up today, what

specifically lends great concern to me is the fact of the closed

meetings.

I think there is no necessity for it.

I think as the chairman stated before, in today's times, with such

a great feeling for open government in America, where there is an

awful lot of mistrust in government in America, that if you continue that policy, we could indeed be on a collision course.
40

I would hate to see that. I would hope, as you said, that we cai

look at the record of how you have performed. It is kind of tough to

look at a record of how you performed when we can't even attend a

meeting to find out how you are performing.

I would just hope that some of the things that were brought out

today would not be put in the circular or the round file.

The feeling that I have is that you really don't care about the

Congress. If that is the feeling that will prevail, it is going to be a

rough several years down the road.

As Mr. Bauman said, perhaps we are not going to be on this

committee or you are not going to be in your position. I don't know.

But the Congress is a sensitive body, a responsible body. If they

feel-like I believe-that they are being left out, they have to react

that way. We have a responsibility to that canal. We will have a

responsibility to that canal until the year 2000.

As a committee member now-whether I will be in the future, I

don't know-I have that responsibility. I am a little bit skeptical,

perhaps, as to whether we are going to work as well together as we

should or not.

That is of great concern to me. I would hope that we do have

better communications in the future. I would hope that the chairman of this committee, that we have an opportunity to have oversight or-meetings on the operation of the canal on a more frequent basis so we can keep track of our responsibility.

It is no secret that the implementation was long and drawn out.

There was an awful lot of opinion. There were very close votes on

many of the key issues. I think those sentiments of many of the

members still prevail.

We want to watch this very, very carefully. I think you are

making it somewhat difficult for us to do that, to carry out our

responsibility as a Congress.

I would hope that you would look very, very carefully at that one

particular issue. That is the closed meetings. I hope in your position you bring that feeling back to the Commission that indeed, I

believe, the Congress is not satisfied with that type of meeting.

You are an agency of the United States. I think you should be

subject to the same rules as any other agency of the United States.

Your interpretation of having two ex officio members on it to me

is bunk.

I can't think of a better term.

I would hope that we can have smoother relationships or we can

run the canal and take care of our remaining responsibilities for

the next 19 years. I think we have to get together a little bit more

often, have better dialog, have a better understanding of what is

going on.

As I said, right now I know as a member of this subcommittee I

am somewhat irritated. I think the cooperation of the Congress is

necessary.

We would appreciate a little bit more cooperation, at least I

would. I am speaking as a person.

I think many of the Members of Congress in 1980 will not tolerate closed meetings. It is almost un-American. It might sound

funny. I can understand having closed meetings. There are circum-
41

stances when you have to, but to have it a condition for every

meeting is ridiculous.

I would hope that that would be corrected by the time we meet

again.

Thank you very much.

Mr. HUBBARD. Thank you, Congressman Carney. You have

indeed my high regards and the affection I have for my colleague

and friend from New York are known to him and to others perhaps

in this room.

I would respectfully disagree regarding Mr. Blumenfeld's attitude about the Congress. I have found him to be a very helpful,

cooperative individual in past times, dealing with our subcommittee and the full committee. I would have to respectfully--

Mr. CARNEY. If I might add, I wasn't meaning that personally to

Mr. Blumenfeld. I hope that was not the way it was interpreted. I

am saying as a commission, as a commission if they continue to

disregard some of the intent of Congress-and it is well known

what the intent was. We sat in this room day in and day out

ironing out the implementation legislation. I have seen several

areas where it is not. I don't mean that as a personal attack on Mr.

Blumenfeld.

My God, if that is the way it came out, please make sure it is

loud and clear in the minutes that is not my intention.

I can understand the problems that all the members of the board

have dealing with a situation that is somewhat unique to say the

least. I would hope that that is not the way it is coming out.

I do feel in my heart that we could be on a collision course with

the Congress, that you will not receive the cooperation that will be

necessary to run the canal if you continue to keep us in the dark.

That is all I am saying.

I don't mean that in a personal vein. I am glad you brought that

out so there would be no misunderstanding, Mr. Chairman.

Mr. HUBBARD. I would say again regarding my high regard for

the Congressman from New York, whose attitude about the

Panama Canal treaties was originally the same as mine-I would

indicate that these are delicate issues that the Commission and the

Board deals with and these same type delicate issues regarding the

Panama Canal treaties and its implementation did cause even the

Congress or the House of Representatives to have a closed session

on two occasions, if my memory is correct.

There may be reasons not known to Congressman Carney and

me that caused the Board to have that desire to meet in closed

meetings, and yet I believe he has said repeatedly today that they

are anxious to report the happenings of these meetings.

Mr. BLUMENFELD. Yes, indeed, Mr. Chairman.

Mr. HUBBARD. Not only to our subcommittee, but to the news

media, to the public, whenever requested, or even beyond that, on

their own.

Does my good friend, the agitated, irritated Congressman from

New York, have any other comments?

Mr. CARNEY. Mr. Chairman, I don't really want to get into a

dialog with the chairman.

I would say the norm is to have open committees. When there is

a situation that would require secrecy, you would vote to go into a
42

secret session. I would have no objection to that. However, the

norm here is to have secret meetings.

I think-or closed meetings, I should say. I think that is not in

the American spirit right now, today, in 1980. That is my objection.

As I say, I would hope that that would not continue to be the

case. The Congress wants to cooperate as much as possible with the

Commission. Certainly it is our desire to see that the implementation legislation is carried out.

It is our desire to see that our responsibilities are carried out. It

makes it somewhat awkward for us to do that when one of the

elements of the carrying out of the legislation in the running of the

canal is being done in secrecy where we as members of Congress

cannot even participate without an invitation.

It makes it awkward for me to see how I can carry out my

responsibility as a member of this committee or as a Member of

Congress when I am being excluded from the happenings. That is

not to say that I want to run down and attend every meeting, but I

think it is absurd that we would need permission to attend such a

meeting.

Mr. HUBBARD. Does the Congressman agree that the President

and the State Deprtment should not have revealed to each Member

of Congress the plans of the Iranian rescue mission which were

carried out in secrecy?

Mr. CARNEY. Once again, I don't want to get into a dialog. I agree

with you, I think, 100 percent.

Does the chairman agree that the President should reveal to us

all the happenings in the Billygate situation? We can go on and on

and on. We are not going to get into a dialog here.

Mr. HUBBARD. Thank you, Congressman Carney.

Mr. Guy Land, the legislative assistant to Congressman David

Bowen, do you have comments or questions?

Mr. LAND. Just one brief question, Mr. Chairman.

I thank you.

Mr. Secretary, would you describe very generally the effort of the

Board in drafting the regulations to take into account the congressional intent behind Public Law 96-70, as expressed in the legislative debates?

Mr. BLUMENFELD. Well, I am not sure exactly how to answer

that, except to say that it was clearly our intent that the regulations reflect the requirements of Public Law 96-70.

As I tried to say in response to specific questions about the

specific sections of the regulations, I believe we have been successful. We bore in mind the requirements of Public Law 96-70 in

determining how the Board should operate.

Mr. LAND. Thank you very much, Mr. Secretary. Thank you, Mr.

Chairman.

Mr. HUBBARD. Mr. Blumenfeld, let me say as chairman of our

subcommittee, to back up some of the comments made by my

colleague, Mr. Carney of New York, that indeed this subcommittee

is anxious to know the happenings and the decisions of this Board.

I want my views known on that in case it was interpreted that Ithough I have not criticized your regulations that Board meetings

shall not be open to the public, I am anxious that we know what

does happen.
43

We are anxious to monitor the Panama Canal treaties, the implementation thereof, and our subcommittee will continue to have

oversight hearings as to the implementation of the Panama Canal

treaties.

You probably remember that the chairman and Congressman

Bauman and Congressman Carney were not in favor of the

Panama Canal treaties as Members of Congress, but that decision

was not ours; that was the President's and the Senators'.

We do have the Panama Canal Subcommittee, and its main goal

at this time is to implement the treaties and see that the rights of

the United States are protected. I realize full well that that is the

same goal, of course, of Mr. Michael Blumenfeld and Mr. Dennis P.

Phil McAuliffe, and also Col. Michael Rhode.

Do you, Phil McAuliffe, or you, Mike Rhode, have any comments

to add to that which has already been said?

Mr. McAULIFFE. If I may, Mr. Chairman, I would like to offer a

very brief 2 or 3 minutes, perhaps, summary of our situation in

Panama, but with respect to relationships with the Board or clarification of the role of the Board, I believe that has been adequately

covered in the questions and answers this morning, sir.

Mr. HUBBARD. Colonel Rhode?

Mr. RHODE. I have nothing to say, Mr. Chairman. Thank you.

Mr. HUBBARD. Mr. Blumenfeld, anything else from you?

Mr. BLUMENFELD. No, sir.

Let me simply say I welcome such opportunities as this, when

the committee does hold oversight hearings, to share information

and perspectives. It is vital. We do need the cooperation of this

committee. There is no doubt about that.

If it were my intent to ignore the will of this committee, it is not

an intent that I could execute. Moreover, I do not intend to ignore

it. I welcome the questions and the comments that are made, and I

hope that we will continue to have good communications in the

future.

We obviously are subject to Public Law 96-70. As I tried to

testify, we are operating in accordance with the requirements of

Public Law 96-70. The will of this committee is not something that

can be ignored as we operate, and I don't plan to ignore it.

Mr. HUBBARD. Please understand Congressman Carney and this

chairman's attitude. We are anxious to work with you. We are

anxious to find out what the Board is doing. We are anxious that

the interests of the U.S. Government be protected, and though

Congressman Carney and I do like to be informed and to know

what is going on to be sure the Congress is kept in mind, and that

the decisions of the Board be known to us. I know I speak for

Congressman Carney in saying that we hope that in the future the

President, the State Department do make decisions such as the

Iranian rescue mission without notifying each Member of Congress,

some of whom cannot keep a secret.

Anything else?

Mr. Merrill Whitman I realize was mentioned a few moments

ago. He has already asked the questions he had in mind.

[Mr. Whitman's analysis follows:]
44

COMPARATIVE ANALYSIS

REGULATIONS OF THE BOARD

OF THE PANAMA CANAL COMMISSION

ADOPTED JUNE 4, 1980

PREPARED BY W. MERRILL WHITMAN

JULY 21, 1980
45

TABLE OF CONTENTS

PAGE

Part I Background and Summary. . . . . . . . . . . . . . . . 1

Part II Text of regulations adopted at June 4, 1980

meeting of the supervisory Board of the Panama

Canal Commission . . . . . . . . . . . . . . . . 4

Part III Section by Section Comparison with applicable

law and related materials. . . . . . . . . . . . ..8a

Article I The Board of Directors

Sec. 1.1. Functions . . . . . . . . . 9

Sec. 1.2. Composition of the Board . 18

Sec. 1.3. Appointment and Term. . . . 19

Sec. 1.4. Appointment Affidavit. . . . 20

Sec. 1.5. Regular Meetings. . . . . . .21

Sec. 1.6. Availability of Records.,. 22

Sec. 1.7. Quorum. . . . . . . . . . . .23

Sec. 1.8. Voting. . . . . . . . . . . .24

Sec. 1.9. Special Meetings. . .25

Sec. 1.10. Per Diem Allowance

and Travel. . . . . . . . . .26

Article II Offices

Sec. 2.1. Offices. . . . . . . . . . 27

Article III Committees

Sec. 3.1. Executive Committee. . . . .28

Sec. 3.2. Standing and Special

Committees. . . . . . . . . 29

Sec. 3.3. Committee Procedure. . .30

Sec. 3.4. . Per Diem and Travel Expenses of Committees. . . . 3-1

66-810 0 - 80 - 4
46

PAGE

Article IV Administration

Sec. 4.1. Administrator. . . . . . . . 32

Sec. 4.2. Deputy Administrator. . .33

Sec. 4.3. Secretary. . . . . . . . . . 34

Article V General Provisions

Sec. 5.1. Language. . . . . . . . . . .35

Sec. 5.2. Amendment. . . . . . . . . . 35

Part IV Related materials.

1. Executive Order No. 12215 of May 27, 1980. . . . .36

2. Text, Government in the Sunshine Act,

5 U.S.C. 552(b). . . . . . . . . . . . . . . . .39

3. Letter from President Royo to President

Carter dated January 9, 1980. . . . . . . . . . . 41

4. Letter from Honorable John M. Murphy to

Secretary of State Vance dated January

9, 1980. . . . . . . . . . . . . . . . . . . . . .44

5. Press Release - Panama Canal Commission,

re: June 1980 Board meeting. . . . . . . . . . . 45

- 6. Press report El Matutino June 12, 1980,

quoting letter of Minister of Government

and Justice of Panama. . . . . . . . . . . . . . .48

7. Letter dated June 30, 1980, from Honorable

Carroll Hubbard to Secretary of Defense. . . . . .50

8. Chapter 1 of Title I of Public Law 96-70. . . . . 52

9. Statements of three Panamanian Members of the

Panama Canal Commission Board, reported at the

Panamanian presidency. . . . . *-. . . . . . . . . .57

10. El Matutino, August 1, 1980, article by Luis

Restrepo Rosa, "Interpretations.". . . . . . . . .61
47

PART I

BACKGROUND AND SUMMARY

The purpose of-this memorandum is to examine the statutory

authority for the regulations adopted by the Board of the

Panama Canal Commission at a meeting of the Board on June 4,

1980.

Paragraph 1 of Article III of the 1977 treaty grants to

the United States the rights to manage, operate and maintain

the Panama Canal." Paragraph 3 of the Article provides that

the United States will "in accordance with the terms of this

Treaty and the provisions of United States law carry out its

responsibilities by means of a United States Government

agency called the Panama Canal Commission, which shall be

constituted by and in conformity with the laws of the United

States of America.

Paragraph 3 of Article III goes on to provide that the

Commission "shall be supervised" by a nine member Board of

whom five shall be nationals of the United States and four

of whom shall be Panamanian nationals "proposed by the

Republic of Panama for appointment to such positions by the

United States of America."

Title 1 of Public Law 96-70 established the Panama

Canal Commission as an agency in the Executive Branch of the

United States Government. Under the Constitution the

President is the head of the entire Executive Branch and Section

1101 of Public Law 96-70 provides that the authority of the

President with respect to the Commission shall be exercised

through the Secretary of Defense. Consistently with that

provision the President has delegated substantially all of

his supervisory authority over the Commission as a Government

Agency in the Executive Branch to the Secretary of Defense.

This was accomplished by Executive Order No. 12215 issued

May 27, 1980.

Prior to the effective date of Public Law 96-70 the

Panama Canal was operated by a government agency in corporate

form called the Panama Canal Company. The law governing the

operations of that agency specifically provided that "management of the corporation was vested in a Board of Directors

and the law granted broad and extensive powers to the Company.

All these former provisions were repealed by Public Law 96-

70 and an entirely different form of government agency was

substituted under the direct control of the President through

the Secretary of Defense.

At the time the bill which was eventually enacted as

Public Law 96-70 was under consideration by the Congress,

both the Government of Panama and the corporate agency then

operating the canal objected strenuously to the provisions

of the law that gave direct control to the President and
48

2

Secretary of Defense, substituting a supervisory board for a

Board of Directors with full management powers. This controversy is reflected in the legislative history of Public Law

96-70 and in letters from President Royo to President Carter.

See the annotations and materials in Parts III and IV.

The Members of the supervisory Board called for by the

Act were appointed by the President after the nominations of

the members who were U.S. nationals were confirmed by the

Senate.

The supervisory Board held its first meeting early in

June of this year and a press release issued after the

meeting announced that the "Board of Directors" of the,

Panama Canal Commission "assumed responsibility for polidymaking and supervision of the affairs of the Panama Canal

Commission." The press release further stated that actions

taken by the Board included "approval of the regulations

which govern the functions of the Board as specified in the

Panama Canal Treaty of 1977.

Close examination of the Regulations adopted by the

Board on June 4 suggest a number of fundamental problems in

respect to the conformity of the regulations to the provisions

of Public Law 96-70 and other provisions of statutory law in

respect to the organization of the Panama Canal Commission, and

the authority and functions of the Board.

Specific problems suggested by the adoption by the

Board of the June 4 regulations include the following:

1. The adoption of the name "Board of Directors," a

term not used in the English text of the treaty or in

the law; (Sec. 1.1).

2. The exclusive reference to the 1977 treaty as the

source of the authority of the Board and the various

provisions of the regulations without any reference

to the applicable governing provisions of Public Law

96-70; (Sec. 1.1, 4.1, and 4.2).

3. The assumption of authority to appoint officers

and agents and to prescribe their duties - a power the

Act vests in the Commission; (Sec. 1.2(b)).

4. The substitution of an "appointment affidavit" for

the oath of office required by law; (Sec. 1.4).

5. The provision that Board meetings shall not be open

to the public in the face of the contrary provisions

of the Government in the Sunshine Act which requires

open meetings; (Sec. 1.5(b)).

6. The provision that Board members shall vote ?in

accordance with the instructions of their respective

Governments" thereby recognizing a dilution of the

complete authority of the United States Government

over one of its agencies; (Sec. 1.8).
49

3

7. The delegation of the powers of the Board to an

Executive Committee which is authorized to act without

the presence of a majority of the members of the Board

of whom a majority are nationals of the United States,

as required by the law; (Sec. 3.1).

8. The assignment of specific powers to the Administrator, an officer of the United States appointed by and

serving at the pleasure of the President, and necessarily

performing duties assigned by the President; (Sec.

4.1.).

9. The assignment of duties to the Deputy Administrator,

a power specifically reserved to the President by the

law; (Sec. 4.2).

10. The provision for payment of travel expenses of

members of Committees "in accordance with regulations

pertaining to the establishment of the Committee - a

matter expressly regulated by the provisions of the

law governing payment of travel expenses to Board

members. (Sec. 3.4).

11. The adequacy of the procedures established to keep

the Congress currently and fully informed concerning

the activities of the Panama Canal Commission and its

component elements, including the Board.
50

4

PART II

REGULATIONS OF. THE BOARD OF DIRECTORS

PANAMA CANAL COMMISSION

ARTICLE-I

The Board of Directors

. Sec. 1.1. Functions. Responsibility for policy making and supervision

of the affairs of the Panama Canal Commission is vested in a Bqard by

Article III 3(a), Panama Canal Treaty of 1977. The Board shall be called

the Board of Directors, Panama Canal Commission. The Board shall review

and approve for submission to the Congress the annual budget of the Commission

to include the capital program for Canal improvements.

Sec. 1.2. Composition of the Board. (a) The Board of Directors is

composed of nine members, five of whom are nationals of the United States,

and four of whom are nationals of the Republic of Panama.

(b) There shall be a Chairman of the Board of Directors, elected

by. members, who shall preside at all meetings.

Sec. 1.3. Appointment and Term. (a) The members of the Board of

Directors are appointed by the President of the United States for an

indefinite term in accordance with Article III.of the Panama Canal Treaty

of 1977,

(b) The Board of Directors may elect or appoint such other

officers and agents as it shall deem necessary or as business of the

Commission may require, in carrying out the provisions -of the Panama

.Canal Treaty of 1977, each of whom shall hold office for such period,

have such authority and-perform such duties as the Board of Directors

may prescribe from time to time.

Sec. 1.4 Appointment Affidavit. Prior to assuming his position,

each member of the Board of Directors shall complete an appointment

affidavit administered by a Commission official signifying his commitment

to faithfully discharge the duties of his position. His affidavit

signifies the formal assumption of the office and shall be filed as

official records of the Board of Directors.

. Sec. 1.5 Regular Meetings. (a) Regular meetings of the Board of

Directors shall be held at least quarterly at a place and on such dates

as may be agreed by the Board of Directors or as-designated by the

Chairman of the Board. Members shall be notified of meeting by telephone,

with written notic dispatched immediately thereafter, a minimum of

15 calendar days prior to a scheduled meeting. At least two regular

meetings per year shall be held in Panama.
51

5,

(b) Board meetings shall not be open to the public. Officials

and staff of the Commission, and others, may attend such portions of

meetings as they are invited to by the Chairman, except that, the

Administrator and Deputy Administrator shall be invited to attend all

Board meetings. In addition, Panamanian and U.S. Board members, as

groups, may bring expert advisors to Board meetings. Such advisors may

only address the Board with the consent of the Board.

Sec. 1.6. Availability of Records. The Board of Directors shall

have access at all times to financial and operational records maintained

by the Commission.

Sec. 1.7. Quorum. A quorum for the transaction of business shall

consist of a minimum of five Board members of which a majority of those

present are.nationals of the United States. It is the intention of

the Board that a maximum number of United States and Republic of Panama

Board members be present at each Board meeting.

Sec. 1.8. Voting. Action shall be by a majority vote of the members

present. Members shall vote in accordance with the instructions of their

respective governments.

Sec. 1.9. Special Meetings. Special meetings of the Board of

Directors may be called by the Chairman of the Board at the request of

any member. Members shall be notified of the meeting by telephone, with.

written notice.dispatched immediately thereafter, a minimum of 5 calendar

days prior to a scheduled meeting, of the time, place and purpose of

meeting.

Sec. 1.10. Per Diem Allowance and'Travel. While away from home

or regular place of business, each member of the Board of Directors shall

be paid per diem and travel expenses in connection with attendance at

meetings, time spent on special service of the Commission, or while

traveling on Commission business.

ARTICLE II

Offices

Sec. 2.1. Offices. The principal office of the Panama Canal

Commission shall be located in the Republic of Panama in one of the

areas made available for the use of the United States pursuant to the

Panama Canal Treaty of 1977 and related agreements. Branch offices will

be maintained at Washington, D.C., and such other places as the Board of

Directors may direct.
52

6

ARTICLE III

Committees

Sec. 3.1. Executive Committee. (a) The Board shall elect annually

from among its members an Executive Committee consisting of four members

in addition to the Chairman of the Board. Two of the members shall be

Panamanian nationals and two shall be U.S. nationals. Notice shall be

sent to all members in Writing or by other means of communication when

an issue is to be considered by. the Committee. Three or more members

shall constitute a quorum when they include the Chairman and one U.S.

national.

(b) During the intervals between meetings of the Board of

Directors, the Executive Committee may exercise all the powers of the

board of Directors in acting on matters upon recommendation of the

Administrator that disposition of the matter cannot, because of its

urgency, await the next Board meeting.

(c) Meetings of the Committee may be called by the Chairman

upon his own initiative or at the request of any member. Such meetings

may be conducted and issues before the Executive Committee decided, by

telephone or other such means in lieu of physical attendance by Executive

Committee members, if the Chairman determines that the issue before the

Committee is of such an emergency nature that time is of the essence.

(d) The Board may affirm, alter or revoke any action of the

Committee.

Sec. 3.2. Standin and Special Committees. (a) For the proper

performance of its functions, the Board of Directors may establish such

other committees as necessary. Any such committee shall be composed of

four members of the Board of Directors, of whom two shall be nationals

of the United States, and two shall be Panamanian nationals.

(b) The function of such Committees shall be to provide

support to the Board of Directors and recommend to the Board of

Directors necessary or appropriate action.

(c) The Board of Directors shall establish rules on all

matters relative-to the Committees referred to in this article.

(d)' The Board of Directors may reach a decision without

waiting for the competent Committee's report or proposal.

(e) Committees may conduct their business by means other

than a meeting if all members of the committee consent.

(f) A committee quorum shall consist of a majority of the

members and action shall be by a majority of the members present.
53

7

Sec. 3.3. Committee Procedure. Each committee shall keep minutes

of its proceedings and report the same to the- Board at its next meeting.

Any member of the BDard shall have access to the information-and.records

of any committee at any time. The Board may affirm, alter or revoke

any action of any committee.

Sec. 3.4. Per Diem and Travel Expenses of Committees. While away

from home or regular place of business, each member of a committee shall

be paid per diem and travel expenses in connection with attendance at

meetings of a committee or while traveling on committee business in

accordance with regulations pertaining to the establishment bf the

Committee.

ARTICLE IV

Administration

Sec. 4.1. Administrator. (a) The Administrator, appointed by'the

President in accordance with the provisions of Article III' 3(c) of the

Panama Canal Treaty of 1977 shall,'under the supervision and direction

of the Board of Directors, be the chief executive officer of. the Commission,

and have general and active control of its affairs and business and

general supervision over its officials, agents, attorneys, and employees.

(b) The Administrator shall have the power, subject to the

regulations promulgated by the Board of Directors and to the laws that

the Panama Canal Treaty of 1977 and. related agreement's permit to be

applied, to appoint, remove, fix the compensation and prescribe the

conditions of employment of officials and employees of the Panama Canal

Commission,-other than those appointed by the Board of Directors; provided,

however, that matters of general policy involved shall be~ subject to the

authority of the Board of Directors.

Sec. 4.2. Deputy Administrator. 'The Deputy Administrator, appointed

by the President in accordance with the provisions of Article III 3(c)

of the Panama Canal Treaty of 1977, shall be the principal assistant to

the Administrator. During the Administrator's temporary absence from

'duty with the Commission, or during his disability, or upon his express

delegation, the Deputy Administrator shall perform all the duties of the

Administrator, and, when so acting, shall have all the powers of, and be

subject to all restrictions upon, the Administrator. The Deputy Administrator shall have such other power and shall perform such duties as may

be assigned to him by the Board of Directors or the Administrator.

Sec. 4.3. Secretary. .(a) There shall be a Secretary appointed by

the Board of Directors who shall assist the Board in the conduct of 

its affairs. The Secretary shall, oi behalf of the Chairman, issue the

notices of meetings to members of the Board, and shall attend all meetings
f54

8

of the Board and its committees and record all proceedings thereat in a

book to be kept for that purpose. He shall perform such other duties as

may be assigned to him by the Chairman of the Board or the Administrator.

(b) The Secretary shall direct the Branch Office in Washington,.

D.C., established pursuant to Section 2.1.

ARTICLE V

General Provisions

Sec. 5.1. Language. Board members may speak at Board meetings in

either English or Spanish.

Sec. 5.2. Amendment. These regulations may be amended at any

meeting of the Board of Directors upon written notice to each Board

member containing a statement of the proposed amendment at least five

days prior to such meeting.
55

8a

SECTIONT BY SECTION

Part III Section by Section Comparison with applicable

law and related materials. . . . . . . . . . . . ..8a

Article I The Board of Directors

Sec. 1.1. Functions . . . . . . . . . 9

Sec. 1.2. Composition of the Board. 18

Sec. 1.3. Appointment and Term. . . . 19

Sec. 1.4. Appointment Affidavit. .20

Sec. 1.5. Regular Meetings. . . .. . .21

Sec. 1.6. Availability of Records. . 22

Sec. 1.7. Quorum. . . . . . . . . . . .23

Sec. 1.8. Voting. . . . . . . . . . .. 24

Sec. 1.9. Special Meetings. . . . . . .25

Sec. 1.10. Per Diem Allowance

and Travel. . . . . . . . . .26

Article 11 Offices

Sec. 2.1. Offices . . . . . . . . . . 27

Article III Committees

Sec. 3.1. Executive Committee. . .28

Sec. 3-.2. Standing and Special

Committees. . . . . . . . . 29

Sec. 3.3. Committee Procedure. . . . .30

Sec. 3.4. .Per Diem and Travel Expenses of Committees. . . . 31

Article IV Administration

Sec. 4.1. Administrator. . . . . . . . 32

Sec. 4.2. Deputy Administrator. . . . .33

Sec. 4.3. Secretary. . . . . . . . . . 34

Article V General Provisions

Sec. 5.1. Language. . . . . . . . . . .35

Sec. 5.2. Amendment. . . . . . . . . . 35
56

9 

- WUN 4 1980 REGULATIONS OF- THE BOARD OF DIRECTORS .

J PANAMA CANAL COMMISSION

ARTICLE-I

The Board of Directors

Sec. 1.1. Functions. Responsibility for policy makipgand supervision

of the affairs of the Panama Canal Commission is vested in a Board by

Article III 3(a), Panama Canal Treaty of 1977. The Board shallhbe-caled

the Board of Directors, Panama Canal Commisssion- The Board shall review

and approve for submission to the pj s t n b of th Comissjnn

to-caita roqram for Canal improvement.

93 STAT. 456 PUBLIC LAW 96-70-SEPT. 27, 1979

PANAMA CANAL TREATY TITLE I-ADMINISTRATION AND REGULATIONS

CHAPTER 1-PANAMA CANAL COMIMISsIoN

ESTABLISHMENT OF COMMISSION

ARTICLE II SEC. 1101. There is established in the executive branch of the

CANAL OPERATION AND MANAGEMENT United States Government an agency to be known as the Panama

Canal Commission (hereinafter in this Act referred to as the "Com1. The Republic of Panama, as territorial sovereign, mission"). The Commission shall, under the general supervision of

grants to the United States of America the rights to the Board established by section 1102 of this Act, be responsible for

manage. operate, and maintain the Panama Canal. its the maintenance and operation of the Panama Canal and the

complementary works, installations and equipment and facilities and appurtenances related thereto. The authority of the to provide for the orderly transit of vessels through the President with respect to the Commission shall be exercised through Panama Canal. The United States of America accepts the Secretary of Defense.

the grant of such rights and undertakes to exercise SUPERVISORY BOARD them in accordance with this Treaty and related agree- SEC. 1CAs ments. SEC. 1102. (a) The Commission shall be supervised by a Board * * *composed of nine members, one of whom shall be the Secretary of

3. Pursuant to the foregoing 

Defense or an officer of the Department of Defense designated by the

United States of America 

grant of rights, the Secretary. Not less than five members of the Board shall be nationals terms of this Treaty and the 

shall, 

provisions 

in accordance with the of the United States and the remaining members shall be nationals of

law, carry out its responsibilities by means 

of United 

of a United 

States the 

who Republic of Panama. At least one of the members of the Board

States 

are nationals of the United States shall be experienced and Government agency called the Panama Canal knowledgeable in the management or operation of an American-flag format which shalltbe he constituted United States by of and America. in con- steamship line which has or had ships regularly transiting the Panama Canal, at least one other such member shall be experienced (a) The Panama Canal Commission shall be super- and knowledgeable in United States port operations or in the busi- vised ba a Board composed of nine members, ive of ness of exporting or importing one of the regular commodities

whom shall be nationals of the United States of dependent on the Panama Canal as a transportation route, and at America. and four of whom shall be Panamanian nation- least one other such member shall be experienced and knowledgeable als proposed by the Republic of Panama for appoint- in labor matters in the United States. Three members of the Board ment to such positions by the United States of America " " '""" " *^.-"f" b in a timely manner.

- United States.
57

HOUSE COMMITTEE REPORT

NO. 96-98, PART II

10' IL EFFECT OF H.R. 111 Experience with the operate ions of the Panam Canal Company with

IIR. Il would repeal Title 2 of the Canal Zone Code and return to Boards of Directors selected predominantly from the private sector

the noucorporate structure under which the canal was operated prior and other Boards composed predoniinantly of Government officials

to 1951. In format, the bill follows the organization of Title 2 of the suggests that orientation of the members of the Board to private busiCanal Zone Code in its present form, preserving existing section num- ness and professional experience is preferable to a parochial approach

hers as far as possible. resulting from identification with the particular interests of one or

The principal features of H.R. 111 are: another department of the Government. Coordination of matters of

1. The provision for operation of the canal by a noncorporate Government policy with other departments and agencies is reqmred

agency instead of continuing the Panama Canal Company under in the management of all Government agencies, and the means for efanother name; fecting that coordination will be available to the Panama Canal Con2. The return to the requirement that revenues of the canal be- mission through established channels including the oversight funcpaid into the Treasury and that expenditures be made pursuant to tions of the Secretary of Defense.

annual appropriations; Paragraph (b) ot section 102 provides for appointment of tie sit3. The centralization of administrative authority and responsi- pervisory board by the President with Senate confirmation of the

bility in the Secretary of Defense; and members who are nationals of the United States. Provision that the

4. Provision for Presidential appointment and Senate confirra- members serve at the plhasume of the President, without fixed terms,

tion of the key officials of the agency and members of the various reinforces other provisions of the bill intended to insure that the oppolicymaking bodies provided for by the treaty, such as the U.S. eration of the Canal will be fully responsive to U.S. Government

nat ionals on the supervisory board, and the Administrator of the policy.

Panaima Canal Communission.

SENATE COMMITTEE REPORT

No.' 96-255 TrTz I.-Aarxsra.xriox AxD REOuLr1ioNN

PART I.-ADMINIsTTION Commission powers and organization

Chapter .- Panama Canal Coma ssion . The Panama Canal Treaty provides that the canal shall be operated

This chapter restores the concept under which the canal operateJ by a U.S. agency called the Panama Canal Commission. The Commisuntil 1951, that the agency operating the canal is sihject to the sum sion shall be governed by a nine-member Board of Directors, of which

fiscal and administrative' controls as are applicable to Government five shall be American and four Panamanian for the life of the treaty. agencies generally. The. most conspicuous effect of this arrangement Day-to-day administration will be provided by an American Adminis that all revenues derived from the operation of the canal are to b istrator and a Panamanian Deputy Administrator until 1990, after

paid into the Treasury and expenditures are to be made pursuant ti which the nationalities will be reversed.

Congressional authorizations and appropriations. The Administration bill provides that the members of the Board

Section !1.-Poname Canal Commissis.-The treaty (Article ITT. will be appointed by the President, without specification as to their

paragraph 3) provides that the United States will carry out its respon - qualifications, but Administration spokesmen have indicated that the

sibilities for operation of time Canal by means of a United States Gov- President intends to appoint to the Board representatives of the Deernment agency called the "Panama Canal Commission" constituted partments of Treasury, Defense, State, Commerce and Transportation. by and in conformity with the laws of the United States (Article II, .R. 111, on the other hand specifies that one of the members be the

Secretary of Defense or Iis Iesignee, one a person experienced in ship- ping, one a person experienced in port or importing operations, and one paragraph 3), and that upon entry iito force 6f the treaty, the Gov- a person experienced in labor matters. The committee concludes that ernmient agencies known as the laanama Canal Company and Canal the President should have flexibility in the naming of members of the

Zone Governinict will ease to operate (Article III, paragraph 10). Board, and generally adopted the relevant provisions of S. 1024 on this

Section lt of the bill replaces the Panamua Canal Company by a point. It was concerned that members drawn from particular interest new agency called the Panama Canal Conunission.The new agency will groups might tend to be more concerned with representing their inbe subject to the laws of the United States applicable generallyto other terest group and not with the overall best interests of the enterprise. Government departments and agencies other than those established While giving the President flexibility in the matter of appointing as Government corporations under the Government Corporation Con- members, however, the committee is concerned that a Board composed trol Act. Apart front that general provision of section 101 that the entirely of government officials might well be unable to devote full

agency is established for the maintenance and operation of the Canal attentions to the business of the Commission, and could even bring a and the facilities and alpiirtetnances related thereto, the authority and departmental parochialisi similar to that which the committee was responsibilities of the agency are .pelled out by the further provisions concerned with avoiding in the House bill. The President should take of the bill and by the general laws of the United States referred to

Under the provisions of thepresent law that the interests of the steps to ensure that the Board members he appoints are prepared I

United States its owner of the corporate agency operating the canal be active, contributing members.

shall be. represented by the President of the United States or such ofli- The committee adopted the action of the House in providing ti.

ccr as lie niny designate, etilledl the "stocklioltler" (2 Canal Zone Cotle the U.S. members of the Board and the Administrator should be at

c), the resident has is the tast designated the Secretary of the Army pointed with advice and consent of the Senate.

its -orkhobler (5 C R :.2) bitt as a practical mpdatter the Secretary o f The House bill contained several provisions concerning the conti

a the h1 ( Gy -r3.2)d th t aseg t d Irauthic atsubject to the direc- over the Commission by the Secretary of Defense it both pet, the A rniv has exercised that delegated a thority lnties thire- time and wartime, and giving the President the right to place opec: tiot of tple -aciet-v of eofense.Section 1O continues this arrange- tion of the canal directly under a military officer in time of w:t

aeratlIy plin the responsibility for Exectiie oversight of canal In its action on the bill, the House Foreign Affairs Committee cot ,:,eatiots in tih Spetetai of defense wrho may-,if lie so desires, tdee eluded that thesei provisions were inconsistent with the treaties. SO. g"ate tile iresponsibility in whole or inl part to the Secretary of the tion 101 of H.R. 111, for example, provides that the Commission shil

Although it is not contemplated that the provisions of this section operate the Canal "subject to the direction of the Secretary of Dwill make the i inata cnma Commission a part of the Department of feitse. t And section 102 states that the Board "shall act under Ithe <d

Dtuse, it is consaml that consolidation of oversight responsibility rection of the Secretary of Defense." Realizing that the Coimiussio, e ty will be supervised generally by the Secretary of Defense, as the Cot in the Secretary of Defense is particularly appropriate in view of tle pany is now by the Secretary of the Army, the committee is concerns relationship of that responsibility to the related cities of the Secre- that specific language regarding "direction" of the Commission all- tar- of Defense in respect to the protection and defense of the Canal its Board are inconsistent with the treaty provisions that state th- uilr the provisions of the 1977 treaties. Commission shall operate the Canal. For example, Article III, para. Section /0". Superrisory loard.-Paragraph 3(a) of Article III provides that the United States "shall . . . carry out its responsibili of the treaty provides that the. Panama Canal Commission "shall be ties by means of a United States Government agency called the Panaou supervised 1by a Board- consisting of nine members, tve of whom shall Canal Commission," and that the Commission "saill be supervistd Is nationils of the United States and four of whom shah he nationals by a bi-national Board with Panamanian representation. Thus ti' of Sanamii. . committee declined to adopt these provisions, particularly since the: Sect ion 10-2 of the bill establishes surh a hoard. Consistent with the are unnecessary to ensure full United States control over the watei

provisions of section 101 establishiig the Comission as such, section way until the year 2000. The United States maintains its five-to-fot

]i02 provide - that rite loard shall supervise the Commission under the majority on the Board during this period and those members serve t diition of the Secretary of Defense. the pleasure of the President.

The section further provides that of the five members of the Board

who are U.S. nationals, at least one member shall have experience in

U.S. inaritime matters, one in putt operations or in the business of

itiporting or exportinif commodities that move through the canal and

one in labor matters. These three members are prohibited from holding

any other oftite in or to be employed hr the U.S. Government. The mem- .beis of the Boarl who are U.S. niationals are required to cast their votes as directed b the Secretary of Defense. but no requirement exists for

tht, Pana mao ian nationals who are members of the Board to cast their

.vt-s in accordance with the wishes of the Secretary of Defense or his

designee.
58

11,

T CoS Eiass HOUSE OF REPRESENTATIVES J REPorr

18t &5e20io fi No. 96-473

PANAMA CANAL ACT OF 1979

SEPr-EMBEB 24, 1979.-Ordered to be printed

Mr. Muneits of New York, from the committee of conference,

submitted the following

CONFERENCE REPORT

[To accompany H.R. 1111

DISPOSrION OF CONFERENCE ISSUER

There follows a description of the action taken by the conferees

on the principal differences between the House bill and the Senate

nmendmrent.

Form of the Panama Canal Cosmis8siof-(Section 1101)

The House bill provided that the Panama Canal Commission would

be operated as an aippropriated funds agency. with all revenues deposited in the Treasury and all expenditures made pursuant to appropriation acts approved by Congress. The Senate amendment provided

that the Commission would continue to operate as a government

corporation.

The Senate reluctantly recedes.

(55)

Direction of the Secretary of Defensc-(Sectiona 1101 and 1102)

Sections 101 and 102 of the House bill provided that the Commnission and its Board would act under the direction of the Secretary of

Defense. The Senate anendlniit coitainmed no comparable language.

The conferees adopted compromiise language making it clear that

the power, of the President would be exercised th rough the Secretary of Defense in order to clarify the administrative placement of the

Panaia Canal Coiiiission as an agency within the executive branch.

This language does not effect a delegation of the President's powers to the Secietary of Defeiise, nor does it preclude the President from

exercising his powers directly.

Boaud Membeship-(S ection1102)

Tle house provision (See. 102) provided supervision of the Colnmission by a Board under the direction of the Secretary of Defense,

appointed by the President and, in the case of the American ineibers,

subject to Senate confirmation. Five of the new ienbers were to he

nationals of the United States and four nationals of Panana. The

House provision also reqiiired that of the five IT.S. neibers one should

be the Secretary of Defense, one should be experienced in operation of

ships using the Canal, one should be experienced ill U.S. port operations, and one should be experienced in U.S. labor matters. The Sen- ate amuendment (See. 205) eliminated the requirements in reference to the three imeinbers other than the Secretary of Defense, and the specific provision for direction by the Secretary of Defense.

The conferees adopted a provision containing the reuireunent from

the House bill that three U.S. members of the Board have specialized

backgrounds in steamship and port operations, and in labor matters,

and requiring that three U.S. members (though not necessarily the same three referred to above) be froni the private sector. 'lie reference

to direction of the Board by the Secretary of Defense was omitted as unnecessary in view of the revised provision of section 1101 for exer- cise of the President's authority in reference to the Commission as an

Executive Branch agency.
59

TREATY_ COMPARISON OF

SPANISH AND ENGLISH * 12 Prepared by Sylvia Costellanos

Reprinted in

PANAMA CANAL TREATIES III. Panama Canal Coanission and Board United States Senate Debate Article III of the Panama Canal Treaty establishes a Panam Canal

Ccrumission through which the United States will carry out its Canal Pepar b Subo mmitt e Separation of Powers of the

c-anagement functions. In connection with this Corission, a Boa-rd is also

tablished. 6 Comittee-on 'tho Judiciary

The Cormission is described as a "United States Covernmint agency United States Senate

which shall be constituted by and in conformity with1 7 the laws of the Page 861

United States of America." In connection with its duties, the-U.S.

may, asng other things, "issue and enforce regulations for the effective

exercise of lta7 rights and responsibilities."

These points are significant in light of the role of the Board cited

earlier. The English text describes the role of the Board and its relation

to the Crn.ission in this manner: "The Panama Canal C-aission shall be

supervised by a Board." This seems to -mly the panel is one with oversight

responsibility; that it shall serve as a watchdog ensuring the Cormission

is properly carrying out its established responsibilities.

The Spanish version does not present a literal translation of the

sentence, stating, "The Panama Canal Caeission shall be directed by a

Board of Directors." Under the Panamanian text a rather different panel

seems to be created. "To direct" is not synonymous with "to supervise,"

the forer implying the existence of policy-making authority. The canbination of "to direct" and "Board of Directors" (in contrast to a simple

"Board") sens to indicate that Panama expects the bcdy being created to

have far core authority than the U.S. presumably intends it to have.

The policy king 'powr of the Board implied in the Panamanian text

raises at least two problem. One is the degree to which a foreign country

would have control over an agency of the U.S. government.

The make-up of the Board is significant in this context. The treaty

19

stipulates it shall consist of five Americans and four Panamanians. With

Panamanian participation casing one vote short of control of the Board,

this panel would almost certainly earge as a vehicle for strong Panamanian

influence on matters relating to the Canal's operation.

The 5 - 4 make-up, moreover, is no guarantee the U.S. will always

have a majority. With full attendance, one American voting with the

Panamanian bloc would be sufficient for the latter's position to prevail.

Unavoidable absences frem meetings and temporary vacancies in the Fmerican

positions could similarly give Panama a temporary majority on the Board.

The ccrposition of the Board, in short,dilutes-and in sane instances

may vitiate-the rights granted to .the United States in connection with

the Canal.

The second problem relates to the question of responsibility. What

entity is liable for possible improper Canal operation, or accidents?

The U.S. is charged with managing the Canal, and the Panama Canal Conission

is officially a U.S. governsrnt agency. On this basis, reposnsibility

should fall on the United States. Yet if the Board is to have a policymaking role, the U.S. has less than full control over the actions of the

Cc-mission. Would the U.S. nevertheless be made liable for problems

relating to the Canal? -

U.S. Department of State, Treati-es, p. 2.

S7jn the Spanish text the words "by and" are oitted. The resulting sentence

,nakes no reference to the Commission being constituted by the United states.

18U.S. Department of State. Treaties, p. 2.

19

U.S. Departet of State, TreatieS, p. 2.
60

PRIOR LAW 13

CANAL ZONE CODE TITLE 2

(Repealed by P.L. 96-70)

63. Board of Directors; allowances; quorum; meetings

(a) A board of directors shall manage the affairs of the Panama

Canal Company. The board shall consist of not less than nine nor

more than thirteen members, including:

(1) the Governor, who shall serve as a director, ex officio;

and

(2) the stockholder, if he elects to serve as a director.

The stockholder shall appoint all other members of the board, and

neither this chapter nor any other law prevents the appointment

and service, as a director, of an officer or employee of the United

States. Each director so appointed shall hold office at the pleasure

of the stockholder, and, before entering upon his duties, shall take

an oath faithfully to discharge the duties of his office.

65. General powers of Company

(a) The Panama Canal Company may:

(1) adopt, alter, and use a corporate seal, which shall be

judicially noticed;

(2) adopt, amend, and repeal bylaws governing the conduct

of its general business and the performance of the powers and

duties granted to or imposed upon it by .law;

(3) sue and be sued in its corporate name, but an attachment, garnishment, or similar process may not be issued

against salaries or other moneys owed by the Company to

its employees;

(4) enter into contracts, leases, agreements, or other transactions;

(5) determine the character of, and necessity for, its obligations and expenditures and the manner in which they shall

be incurred, allowed, and paid, and incur, allow, and pay them,

subject to pertinent provisions of law generally applicable

to Government corporations; and

(6) purchase, lease, or otherwise acquire, and hold, own,

maintain, work, develop, sell, lease, exchange, convey, mortgage, or otherwise dispose of, and deal in, lands, leaseholds,

and any interest, estate, or rights in real, personal, or mixed

property, and any franchises, concessions, rights, licenses, or

privileges necessary or appropriate for any of the purposes

expressed in this chapter.

(b) The Panama Canal Company has the priority of the United

States in the payment of .debts out of bankrupt estates.
61

14

66. Specific powers of Company

(a) Subject to the Government Corporation Control Act (31

U.S.C., see. 841 et seq.), the Panama Canal Company may:

(1) maintain and operate the Panama Canal;

(2) construct, maintain, and operate a railroad across the

Isthmus of Panama;

(3) construct or acquire, and operate, vessels for the transportation of passengers or freight, and for other purposes;

(4) construct or acquire, establish, maintain, and operate

docks, wharves, piers, harbor terminal facilities, shops, yards,

marine railways, salvage and towing facilities, fuel-handling

facilities, motor-transportation facilities, power systems,-water

systems, a telephone system, construction facilities, living quarters and other buildings, guest houses, warehouses, storehouses, a printing plant, commissaries, and manufacturing,

processing or service facilities in connection therewith, laundries, dairy facilities, restaurants, amusement and recreational

facilities, and other business enterprises, facilities, and appurtenances necesssary and appropriate for the accomplishment

of the purposes of this chapter;

(5) make or furnish sales, services, equipment, supplies, and

materials, as contemplated by this chapter, to:

(A) vessels;

(B) agencies of the Government of the United States;

(C) employees of the Government of the United States;

and

(D) any other governments, agencies, persons, corpora-

. tions, or associations eligible to make or receive such purchases, services, sup-plies, or materials under the laws prevailing at the time and the policies heretofore or hereafter

. adopted consistently with those laws;

(6) use the United States mails in the same manner and

under the same conditions as the executive departments of

the Federal Government; and

(7) take such actions as are necessary or appropriate to

carry out the powers specifically conferred upon it.

(b) Subject to subsection (c) of this section, the Company may

not undertake any new types of activities not included in the annual

budget program prescribed by section 102 of the Government Corporation Control Act (31 U.S.C., sec. 847), except those which may

be transferred to it pursuant to section 62(c) (2) of this title.

(c) If, during a period when the Congress is not in session, the

board of directors, or the president of the Company, with the concurrence of as many of the directors as may be consulted without

loss of time unreasonable in the circumstances, declares *an emergercy to exist, the Company may undertake recommended appropriate action within the scope of this chapter, without regard to

the restriction imposed by subsection (b) of this section. A report

on the emergency activity shall be presented promptly to the Congress, when it reconvenes, for its approval and such action as it

may deem necessary or desirable with respect to reimbursement

through supplemental appropriation of funds to cover costs or

losses arising from the emergency.
15

Excerpt from January 9, 1980, letter from

President Royo of Panama to President Carter

94982

LM/BP

Span i sh

11 FICE G1 THE PRESIDENT

:iEPl5I.C (F PANAMA

Jairuarv 9, !980

A:. Presiah-at

In mn ', Iter cf .t:Av 11, f9yi , I infurnu-d yon of the objections of the

P:n:,m, ai i.iverni--nt to - exeral art icle. of Bill H.R. III , then under discussion

if Ohe U.S. Congre- s, t :L:. wore contrary ti the spirit and letter of the Panama

Cata;.l Trea! y, or that were unsuitable because they could create difficulties in

i.plenuiat ion of the 'Irtaty. Although amendments were made later to the text

lich, on( it was approved, way rcgiste Led as.Publlic Law 96-70 of Septnber 27,

1979. rost OF tW p1ruvisions to which I objected in my letter were not amended,

t'r at least :1.)t in a way aid manner suitable for faithful implementation of the

obligation, rontracted by the Treaity signatories.

Three tnnth-: have posvd sinte the Ta *'sty 'entered into force. During this

time I havc tollowed the '. rk of adiristering the Canal, principally with the

help of dat., received fra:: our officialss of the Canal authority. In studying

and analyzing these data I have not iced that the facts confirm my Government's

presempt~ia concerning the un var.able consequences for my country's rights

:41d !egitii oue e.<pectai io.5 aji-i ti dift icultie:; for administration of the Canal

iis Excelleiiy

Jimmy Carter,

President of that

United States of America,

The Ulhite Ibuase.
63

16

i zter of July 11, 1979, is valid in this respect. However, I must deal

.;ith scn. 4pects that cannot be ignored.

in r rating the Caaal Co.anission, Section 1101 of the Act ends with the

f, llewing )rovision: "The authority of tho President with respCct to the

C.ipi ssi: fiall be exercised tlbrough the Secretar of Pefense." This provision,

s.L.-.:e in;.e .t appears tu be a mere formality, has in reality a special purpose,

that of rr. d;ig the Commi~ssion totally dependent.on the Department of Defense as

a '.1e f :',dige to it. This hral po: )ose is evident in Section 1102(a), which

stimulate . Itat. one of the members of the Si'pervisory Board shall be the Secretzry

oil It:f'ens' a.d that the U-iited States members of the Boa.jd shall cast their votes

,:. director! 1;y that SrcreLary, as well as in Section 1102(c) which stipulates 

that "Tli !.')ard shall hol-l meet ings as provided in regulations adopted by the

Ccm-issicn . !d upj'Viv d b th_ Seretary of Defense." And in the name, or title,

for Sect it,, 1102, the Law departs fronr the terminology used in the Spanish text of

ti.@. Tre;.N . -.hich ir alf.o authentic, and expressly calls the Board a "Supervisory

Jk.ard," th: final cuuclu: on of t.he conversion into a supervisory board of what

can ht notl it g le:-s th.i a board of directors. Thus the Secretary of Defense is

everything . lie is the channel for the President to exercise authority over the

Co-uuission, a regular member of the Board, the source of instructions on how the

mo.sjority of the Jhard should vete, and the authority who approves the Commission's

rerjulatiur's for the Board. For tliese reasons, the Law places the Canal Commission

in the sub:,rdinat.e position of an agency of the Department of Defense. To a

certain depi'ee, the Law places it exactly where the Panama Canal Company was until

Otober 1, 1979, i.e. unJer the control of the same Department, by mandate of the

Canal Zone Code.

If the Ireaty conceived of the Commission as a newly created legal agency

that would -xercise the rights and re:,ponsibilities of the United States, then the
64

17

that. would anevitalD, resuit. iromi certain provisions of Bill H.R. 111, now Law

9'-70.

Thercf'1re, I amn sendia ycn this letter--the bsic purpose of which is to

explain th, vie.p.: int of .;y Covc niment and of the Panamanian people regarding

the aO!nvef 'liL ioniest si that iojl:--as an effort. on-our part !oward good relations

and :i:ut'!al iiritrstanding bettwovi our count i c's in all mat' ers related to the

1'anama Can j).

The I ,.;t relevat, zaid most general, observation is that Law 96-70 is not,

because of its contents, the appropriate legal instrument for implementation

of the bas .4 principles and objectives of the Treaty of'1977. The treaty providJ.d that (ie rights and responsibilities of the United States established in

it" text w*i, to be exerci;t!eJ through a specialized government agency, the Panama

CeiaiJ cXr:. ::;ion, in wh: struticture slnd operation the basic principle of increasing pa -ticipat kfn ly the Rx-ptublic of Panama in Lhe management, protection,

an defen!u of th;. C.i)j, as established in ArtihIe 1(3) of the Treaty, would be

ful ly resp( ;t Ud. LJ:w 96-10 is a radical depart nre from the Treaty concept of the

Cauial CUMN;m! sion and orgZiinizes it as an eecutive agency ("appropriated-fund

agerc.y"), r.t ing it admnii;strative]y, economically, and financially rigid and

infi exiic. 

This chkilge by Law 9(>-70 is contrary to the Treaty and results in a series

of provisit;.:- that. so distort the nature o-F the Panama Canal Commission as it.was

agreed upor lay the tw4 parties that my Go crutnent can Only consider this Act, in

its general content, to be illegal, contrary to the legitimate interests of both

parties, unsuitable because of the modus oprandi that it establishes, and unacceptable to the Republic of lPa.iam.a foit all of these reasons.

* * * * * * * * * * * * * * 
65

18

Sec. 1.2. Composition of the Board. (a) The Board of Directors is

composed of nine members, five of whom are nationals of the United States,

and four of whom are nationals of the Republic of Panama.

(b) There shall be a Chairman of the Board of Directors, elected

by. members, who shall preside atall meetings.

(Cross Reference: For provisions of Treaty,

Panama Canal Act, Legislative history, etc.,

see annotations following section 1.1 of the

Regulations)
66

19

Sec. 1.3. Appointment and Term. (a) The members of the Board of

Directors are appointed by the President of the United States for an

indefinite term in accordance with Article III of the Panama Canal Treaty

of 1977.

P.L. 96-70 93 Stat.457 Sec. 1102(b)

(b) The President shall appoint the members of the Board. The

PANAMA CANAL TREATY members of the Board who are United States nationals shall be

appointed by and with the advice and consent of the Senate. Each

member of the Board shall hold office at the pleasure of the President

and, before assuming the duties of such office, shall take an oath to

ARTICLE discharge faithfully the duties of his office. Members of the Board

3. *shall serve without- compensation bit shall be allowed travel or

(a) The Panama Canal Commission shall be super- transportation expenses, including per diem in lieu of subsistence, in

vised by a Board composed of nine members, five of accordance with section 1107 of this Act.

whom shall be nationals of the -United States oAmerica. and four of whom shall be Panamanian nationals proposed by the Republic of Panama for appointment to such positions by the United States of America HOUSE REPORT 96-98 Part I Page 43

in a timely manner. Paragniaph (b) 'of section ]141 proviils for appointmient of the spervisorv board by the Ir'e-uient with Senate coni rinwimn of the

iiembliers who are nationals of the United States. Provision that tihe

members serve at the phasurie of t le ]'Praidlvit, without fixed terms,

reinforces other provisions of the bill intended to insure that the operation of the Canal will be fully rmeponsive to U.S. Government

(b) The Board of Directors may elect or appoint such other - officers and agents as it shall deem necessary or as business of the

Commission may require, in carrying out the provisions of the Panama -Cana Treaty of 1977, each of whom shall hold office for such period, have such authority and-perform such duties as the Board of Directors

may prescribe from time to time.

PANAMA CANAL TREATY PUBLIC LAW 96-70-SEPT. 27, 1979 93 STAT. 461

APPOINTMENT AND COMPENSATION; DUTIES

ARTICLE I

A EATICE AD SEC. 1202. (a) In accordance with this chapter, the Panama Canal

CANAL OPERATION AND MANAGEMENT .Commission may appoint without regard to the provisions of title 5,

1. The Republic of Panama. as territorial sovereign, United States Code, relating to appointments in the competitive

grants to the United States of America the rights to service, fix the compensation of, and define the authority and duties

manage. operate. and maintain the Panama Canal. its of, officers, agents, attorneys, and employees (other than the Admincomplementary works, installations and equipment and istrator, Deputy Administrator, and Chief Engineer) necessary for

to provide for the orderly transit of vessels through the the management, operation, and maintenance of the Panama Canal

Panama Canal. The United States of America accepts and its complementary works, installations, and equipment.

the grant of such rights and undertakes to exercise (b) Individuals serving in any Executive agency (other than the

them in accordance with this Treaty and related agree- Commission) or the Smithsonian Institution, including individuals

mnthe. serving in the uniformed services, may, if appointed under this

ments. section or section 1103 or 1104 of this Act, serve as officers or

2. In carrying out the foregoing responsibilities, the employees of the Commission.

United States of America may:

..

(e) Regulate relations with employees of the United

States Government;
67

20

Sec. 1.4 Appointment Affidavit. Prior to assuming his position,

each member of the Board of Directors shall complete an appointment

affidavit administered by a Commission official signifying his commitment

to faithfully discharge the duties of his position. His affidavit

signifies the formal assumption of the office and shall be filed as

official records of the Board of Directors.

93 STAT. 460 PUBLIC LAW 96-70-SEPT. 27, 1979

(b) The President shall appoint the members of the Board. The

members of the Board who are United States nationals shall be

appointed by and with the advice and consent of the Senate. Cb

member of the Board shall hold office at the pleasure of the President

and, before assuming the duties of such offie, s Ltakj .aoathj discharge faithfully the duties of his office. Members of the Board

shall serve. without compensation butsHall be allowed travel or I

transportation expenses, including per diem in lieu of subsistence, in

accordance with section 1107 of this Act.

House Report 96-98 Part I

Page 43

Section 102(b) continues the requirement of 2 C.Z. Code M3, applicable to the Board of Directors of the Panama Canal Company that

the members of the Board take an oath faithfully to discharge the

duties of their office. This requirement requires an oath substantially less comprehensive than that established for officers of the UnitedI

States by 51U.S.C. 4 3331.
68

21

Sec. 1.5 Regular Meetings. (a) Regular meetings of the Board of

Directors shall be held at least quarterly at a p3 ace and on such dates

as may be agreed by the Board of Directors or as-designated by the

Chairman of the Board. Members shall be notified of meeting by telephone,

with written notice dispatched immediately thereafter, a minimum of

15 calendar days .prior to a scheduled meeting. At least two regular

meetings per year shall be held in Panama.

P.L. 96-70

Section 1102(c)

(c) The Board shall hoid meetings as provided in regulation

adopted by the Commission and approved by the Secretary (r,

Defense. A quorum for the transaction of business shall consist of a

majority of the Board members of which a majority of those present

are nationals of the United States.

PRIOR LAW

CANAL ZONE CODE

TITLE 2 5 63(c)

Repealed by P.L. 96-70

(c) The directors, of whom a majority constitute a quorum for

the transaction of business, shall hold meetings as provided by the

bylaws of the Panama Canal Company.

(b) Board meetings shall not be open to the public. Officials and staff of the Commission, and others, may attend such portions of

meetings as they are invited to by the Chairman, except that the

Administrator and Deputy Administrator shall be invited to attend all

Board meetings. In addition, Panamanian and U.S. Board members, as

groups, may bring expert advisors to Board meetings. Such advisors may only address the Board with the consent of. the Board.

GOVERNMENT IN THE SUNSHINE ACT

5 U.S.C. 552b

552b. Open meetings

(a) For purposes of this section-

(1) the term "agency" means any agency, as defined in section 552(e) of this title, headed by a collegial body composed of two or more individual members, a majority of whom are ap- pointed to such position by the President with the advice and

consent of the Senate, and any subdivision thereof authorized

to act on behalf of the agency;

(2) the term "meeting" means the deliberations of at least the number of individual agency members required to take action on behalf of the agency where such deliberations determine

or result in the joint conduct or disposition of official agency

business, but does not include deliberations required or permitted by subsection (d) or (e); and .t

(3) the term "member" means an individual who belongs to a

collegial body heading an agency.

(b) Members shall not jointly conduct or disa of agency busi- ness other than in accordance with this section. except as provided

in subsection (c), every portion of every kneetin a n agency 5a

th en i~itii~b11bratioii - -
69

22

Sec. 1.6. Availability of Records. The Board of Directors shall

have access at all times to financial and operational records maintained

by the Commission.

23

Sec. 1.7. Quorum. A quorum for the transaction of business shall

consist of a minimum of five Board members of which a majority of those

present are nationals of the United States. It is the intention of

the Board that a maximum number of United States and Republic of Panama

Board members be present at each Board meeting.

P.L:. 9b-70

Sec. 1102(c)

(c) The Board shall hold meetings .as provided in regulations.

adopted by the Commission and approved by the Secretary of

Defense. A quorum for the transaction of business shall consist of a

majority of the Board members of which a majority of those present

are nationals of the United States.
70

24

Sec. 1.8. Voting. Action shall be by a majority vote of the members

present. 'Iembers shall vote in accordance with the instructions of their

respective governments.

1977 TREATY 

P.L. 96-70

Sec. 1102(a)

See Annotations under Sc 12a

see nation s undot er Members of the Board who are nationals of tle

se tion 1. 1 of the United States shall cast their votes as directed by the Secretary of

Regulations Defense or his designee.

25

Sec. 1.9. Special Meetings. Special meetings of the Board of

Directors may be called by the Chairman of the Board at the request of

any member. Members shall be notified of the meeting by telephone, with

written notice dispatched immediately thereafter, a minimum of 5 calendar

days prior to a scheduled meeting, of the time, place and purpose of

meeting.
71

26

- Sec. 1.10. Per Diem Allowance and'Travel. While away from home or regular place of business, each member of the Board of Directors shall be'paid per diem and travel expenses in connection with attendance at meetings, time spenf on special service of the Commission, or while traveling on Commission business.

(Cross References See sec. 3.4 of the Regulations

for provisions relating to travel allowances

for members of Committees established by the Board.)

P.L. 96-70 93 Stat. 457

Sec. 1102(b)

Members of the Board

shall serve without compensation but shall be allowed travel or

transportation expenses, including per diem in lieu of subsistence, in

accordance with section 1107 of this Act.

93 Stat. 458

TRAVEL EXPENSES

SEC. 1107. While away from their homes, regular places of business,

or official stations in performance of services under this chapter,

members of the Board of the Commission and the representatives of

the United States on the Consultative Committee referred to in

section 1105 of this Act and on the Joint Commission on the

Environment referred to in section 1106 of this Act shall be allowed

travel or transportation expenses, including per diem in lieu of

subsistence, in the same manner as persons employed intermittently

in Government service are allowed expenses under section 5703 of

title 5, United States Code.

- U.S. CODE 5703

5703. Per diem, travel, and transportation expenses; experts and consultants; individuals serving without pay An employee serving intermittently in the Government service as an expert or consultant and paid on a daily when-actually-employed basis, or serving without pay or at $1 a year, may be allowed travel or trans- portation expenses, under this subchapter, while away from his homc or regul,'r place of business and at the place of employment or service. As amended Pub. L. 91-144, 2, Nov. 10, 1969, 83 Stat. 190; Pub. L. 94-22, 4, May 19, 1975, 89 Stat. 85.

1975 Amendment. Pub. L. 94-22 struck out separate provisions for per diem allowances of employees serving as experts, consultants, or serving without pay or at $1 a year. 1969 Amendment. Subsec. (c) (1). Pub. L. 91-114 increased the per diem 

not to 

allowance 

exceed 

for travel inside the continental United States from the rate of $16 to not to exceed the rate of $25. Subsec. (d). Pub. L. 91-114 in el. (1) increased the amount author- ized to be named in the travel authorization for each day in a travel status inside the continental United States from not to exceed $30 to not to exceed $40, and in cl. (2) increased the amount authorized to be named in the travel authorization for each day in a travel status

per 

outside the continental United States from not to exceed the maximum

allowance 

diem allowance 

plus plus $10 to not to exceed the maximum per diem $18.

Legislative History. For legislative history and purpose of Pub. L. 91-114, see 1969 V.S. Code Conir. and Adm. News. p. 1249. See, also, Pub. L. 94-22, 1975 U.S. Code Cong. and Adm. News, p. 152.
72

27

ARTICLE II

Offices

Commission 

Sec. 2.1. Offices. The principal office of the Panama Canal

areas made available 

shall be located in the Republic of Panama in one.of the

Panama Canal Treaty 

for the use of the United States pursuant to the

be ma inta fined at Washinoton, 

of 1977 and related agreements. Branch offices will

Directors may direct. D.C., and such other places as the- Board of

PRIOR LAW

2 Canal Zone Code 61

(Repealed by P. L. 96-70)

61. Continuation, purposes, offices and residence of the Company

** * * 

(c) The principal offices of the Company shall be in the Canal

Zone, but the Company may establish agencies or branch offices in

such other places as it deems necessary or appropriate in the conduct of its business. Within the meaning of the laws of the United

States relating to venue in civil actions, the Company is an inhabitant and resident of the Canal Zone and of the District of Columbia.
73

28

ARTICLE :11

Committees

Sec. 3.1. Executive Committee. (a) The Board shall elect annually from among its members an Executive Committee consisting of four members in addition to the Chairman of-the Board. Two of the members shall be Panamanian nationals and -two shall be U.S. nationals. Notice shall be sent to all members in writing or by other means of communication when

an issue is to be considered by the Committee.' Three or more members shall constitute a quorum when they include the Chairman and one U.S. national.

(b) During the intervals between meetings of the Board of Directors, the Executive Committee may exercise all the powers of the Board of Directors in acting on matters upon recommendation of the Administrator that disposition of the matter cannot, because of its

urgency, await the next Board meeting.

(c) Meetings of the Committee may be called by the Chairman

upon his own initiative or at the request of any member. Such meetings may be conducted and issues before the Executive Committee decided, by telephone or other such means in lieu of physical attendance by Executive Committee members, if the Chairman determines that the issue before the Committee- is of such an emergency nature that time is of the essence.

(d) The Board may affirm, alter or revoke any action of the Committee.

P.L. 96-70 93 Stat 457

Sec. 1102. Supervisory Board

* * 

(c) The Bard shall hold meetings .as provided in regulations adopted by the Commission and approved by the Secretary of Defense. A quorum for the transaction of business shall consist of a majority of the Board members of which a majority of those present are nationals of the United States;

Cross Reference:

See Sec. 1.7. Quorum
74

29

Sec. 3.2. Standing and Special Committees. (a) For the proper

performance of its functions, the Board of Directors may establish such

other committees as necessary. Any such committee shall be composed of

four members of the Board of Directors, of whom two shall be nationals

of the United States, and two shall be Panamanian nationals.

(b) The function of such Committees shall be to provide

support to the Board of Directors and recommend to the Board of

Directors necessary or appropriate action.

(c) The Board of Directors shall establish rules on all

matters relative-to the Committees referred to in this article.

(d) The Board of Directors may reach a decision without

waiting for the competent Committee's report or proposal.

(e) Committees may conduct their business by means other

than a meeting if all members of the committee consent.

(f) A committee quorum shall consist of a majority of the

members and action shall be by a majority of the members present.

30

Sec. 3.3. Committee Procedure. Each committee shall keep minutes of its proceedings and report the same to the- Board at its next meeting. Any member of the Board shall have access to the information- and- records

of any committee at any time. The Board may affirm, alter or .revoke

any action of any committee.
75

31

Sec. 3.4. Per Diem and Travel Expenses of Committees. While away from home or regular place of business, each member of a committee shall, be paid per diem and travel expenses in connection with attendance at

meetings of a committee or while traveling on committee business in

accordance with regulations pertaining to the establishment of the Committee.

P.L. 96-70 93 St;,. 45,9

TRAVEL EXPENSES

SEc. 1107. While away from their homes, regular places of business,

or official stations in performance of services under this chapter,

members of the Board of the Commission and the representatives of

the United States on the Consultative Committee referred to in

section 1105 of this Act and on the Joint Commission on the

Environment referred to in section 1106 of this Act shall be allowed

travel or transportation expenses, including per diem in lieu of

subsistence, in the same manner as persons employed intermittently

in Government service are allowed expenses under section- 5703 of

title 5, United States Code.

Cross Reference: See Sec. 1.10 of

the Regulations for provisions

governing travel allowances for

members of the Board.
76

.32

ARTICLE IV

Administration

Sec. 4.1. Admin-istrator. (a) The Administrator, appointed by the

President in accordance with the provisions of Article III. 3(c) of the

Panama Canal Treaty of 1977 shall,-under the supervision and direction

of the Board of Directors, be the chief executive officer of. the Commission,

and have general and active control of its affairs and business and

general supervision over its officials, agents, attorneys, and employees.

(b) The' Administrator shall have the power, subject to the

regulations promulgated by the Board of Directors~'and to the Taws that

the Panama Canal Treaty of 1977 and. related agreements permit to be.

applied, to appoint, remove, fix the compensation and prescribe the.

conditions of employment of officials and employees of the Panama Canal

Commission, other than those appointed by the Board of Directors; provided,

however, that matters of general policy involved shall be subject to the

authority of the Board of Directors.

P.L, ( 96-70 93 Stat 457

* TEXT-PANAMA CANAL TREATY TITLE I-ADMINISTRATION AND REGULATIONS

~' CHAPTER 1-PANAMA CANAL COMMISSION ARCLE III

CANAL OrE.&ION AND ,NAGPMET ESTABLISHMENT OF COMMISSION

SEC. 1101. There is established in the executive branch of the

United States Government an agency to be known as the Panama'

(c) The United States of America shal' employ a national of Canal Commission (hereinafter in this Act referred to as the "Comthe United States of America as Administrator of the Panama mission"). The Commission shall, under the general supervision of Canal Commission, and a Panamanian national as Deputy Ad- the Board established by section 1102 of this Act, be responsible for

1990, a Panamanian national shall be employed as the Admims- the maintenance and operation of the Panama Canal and the

trator and a national of the United States of America shall facilities and appurtenances related thereto. The authority of the

occupy 

nationals 

the 

shall 

position of Deputy Administrator. Such Panamanian President with respect to the Commission shall be exercised through be proposed to the United States of America by the Secretary of Defense. the Republic of Panama for appointment to such positions by the United States of America.

(d) Should the United States of America remove the Panamanian national from his position as Deputy Administrator, or ADMINISTRATOR Administrator, the Republic of Panama shall propose another 

Panamanian national for appointment to such position by the United States of America SEC. 1103. There shall be an Administrator of the Commission, who shall be appointed by the President, by and with the advice and consent of the Senate, and shall hold office at the pleasure of the President.

Commission 

SEC. 1202. (a) In accordance with this chapter, the Panama Canal

United may appoint without regard to the provisions of title 5, States dode, relating to appointments in the competitive service, fix the compensation of; and define the authority and duties of, officers, agents, attorneys, and employees (other than the Admin. istrator, Deputy Administrator, and Chief Engineer) necessary for the 

and management, operation, and maintenance of the Panama Canal its complementary works, installations, and equipment.

Commission) 

(b) Individuals serving in any Executive agency (other than the or the Smithsonian Institution, including individuals serving in the uniformed services, may, if appointed under this section or section 1103 or 1104 of this Act, serve as officers or emplcyees of the Commission.
77

33

Sec. 4.2. Deputy Administrator. The Deputy Administrator, appointed

by the President in accordance with the provisions of Article III 3(c)

of the Panama Canal Treaty of 1977, shall be the principal assistant to

the Administrator. During the Administrator's temporary absence from

duty with the Commission, or during his disability, or upon his express

delegation, the Deputy Administrator shall perform all the duties of the

Administrator, and, when so acting, shall have all the powers of, and be

subject to all restrictions upon, the Administrator. The Deputy Administrator shall have such. other power and shall perform such duties as may

be assigned to him by the Board of Directors or the Administrator.

TEXT-PANAMA CANAL TREATY PUBLIC LAW 96-7-SET 27, 1979 93 STAT. 456

Article III

Canal Operation and Mamagement TITLE I-ADMINISTRATION AND REGULATIONS

CHAPTER 1-PANAMA CANAL CoMMISSION

(c) The United States of America shall employ a national of

the United States of America as Administrator of the Panam ESTABLISHMENT OF COMMISSION

Canal Commission, and a Panamanian national as Deputy Administrator, through December ;11, 13S9. eginning Janary 1, SEC. 1101. There is established in the executive branch of the

190, a ananian national shal he employee as the, Adminis- United States Government an agency to be known as the Panama tractor and a national of the United States of America shall Canal Commission (hereinafter in this Act referred to as the "Comoccu1py the, position of Deputly Adin nist rator. Stich PanamanianComsin(eiafrintsAcrfredoashe"oat*ionals shall be propose to the United States of Ancrica b mission"). The Commission shall, under the general supervision of

the Republic of Panama for appointment to such positions by the Board established by section 1102 of this Act, be responsible for

the United States of America. the maintenance and operation of the Panama Canal and the

(d) Should the United States of America remove the Pana- facilities and appurtenances related thereto. The authority of the

mrniatn national from is position as Deputy Administrator, or President with respect to the Commission shall be exercised through Administrator, the TRepibl ic of Panama shall propose another thSerayofDen.

Panamanian national for appointment to such position by the the Secretary of Defense.

Taind States of America,

DEPUTY ADMINISTRATOR AND CHIEF ENGINEER

SEC. 1104. (a) There shall be a Deputy Administrator and a Chief

Engineer of the Commission, both of whom shall be appointed by the

President. The Deputy Administrator and the Chief Engineer shall

perform such duties as may be prescribed by the President.

(b) The Deputy Administrator and the Chief Engineer shall each be

paid compensation at a rate of pay established by the President which

does not exceed the rate of basic pay in effect for grade GS-18 of the

General Schedule under section 5332 of title 5, United States Code.

(Note; The authority of the President

under this section is delegated to the

Secretar of Defense b Section 1-302

of Executive Order 12215 of May 27, 1980

SEC. 1202. (a) In accordance with this chapter, the Panama Canal

Commission may appoint without regard to the provisions of title 5,.

United States Code, relating to appointments in the competitive

service, fix the compensation of, and define the authority and duties

of, officers, agents, attorneys, and employees (other than the Administrator, Deputy Administrator, and Chief Engineer) necessary for

the management, operation, and maintenance of the Panama Canal

and its complementary works, installations, and equipment.

(b) Individuals serving in any Executive agency (other than the

Commission) or the Smithsonian Institution, including individuals

serving in the uniformed services, may, if appointed under this

sectio-I or section 1103 or 1104 of this Act, serve as officers or

empicyces of the Ccmmission.
78

34

Sec. 4.3. Secretary. (a) There shall be a Secretary appointed by

the Board of Directors who shall assist the Board in the conduct of

its affairs. The Secretary shall, on' behalf of the Chairman, issue the

notices of meetings to members of the Board, and shall attend all meetings

of the Board and its committees and record all proceedings thereat in a

book to be kept for that purpose. He shall perform such other duties as

may be assigned to him by the Chairman of the Board or the Administrator.

(b) The Secretary shall direct the Branch Office in Washington,

D.C., established pursuant to Section 2.1.
79

35

ARTICLE VGeneral Provisions

Sec. 5.1. Lanquace. Board members may speak at Board meetings in

either English or Spanish.

Sec. 5.2. Amendment. These regulatJons may be amended at any

meeting of the Board of Directors upon written notice to each Board

member containing a statement of the proposed amendment at least five

days prior to such meeting.
80

PART IV 36 - - 36043

Federal Reister Presidential Documents

Vol. 45. No. 105 

Thursday. May 29. 1980

Title 3- Executive Order 12215 of May 27, 1980

The President Delegation of Panama Canal Functions

By the authority vested in me as President of the United States of America by

the Panama Canal Code (76A Stat. 1), as amended, by the Panama Canal Act

of 1979 (93 Stat. 452; 22 U.S.C. 3601 et seq.), and by Section 301 of Title 3 of the

United States Code, it is hereby ordered-as follows:

1-1. The Secretary of Defense.

1-101. The Secretary of Defense shall develop for the President's consideration an appropriate legislative proposal as required by .Section 3(d) of the

Panama Canal Act of 1979 (93 Stat. 456; 22 U.S.C. 3602(d)). The Secretary of

Defense shall coordinate development of this proposal with the Secretary of

State and the heads of other interested Executive 'gnis

1-102. The function vested in the President by Section 1212(d)(1) of the

Panama Canal Act of 1979 (93 Stat. 464; 22 U.S.C. 3652(d)(1)) to exclude

employees of, or positions within,-the Department of Defense from coverage

under any provision of subchapter II, Chapter 2 of Title I of the Panama Canal

- *Act of 1979, is delegated to the Secretary of Defense.

1-103. The function vested in the President by Section 1281(b) of Title 6 of the

Panama Canal Code (76A Stat. 455; 6 P.C.C. 1281(b)), as amended, with respect

to areas and installations made available to the United States pursuant to the

Agreement in Implementation of Article IV of the Panama Can l Treaty of

1977 is delegated to the Secretary of Defense.

1-104. The function vested in the President by Section 1701 of the Panama

Canal Act of 1979 (93 Stat. 492; 22 U.S.C. 3801), with respect to regulations

applicable within the areas and installations made available to the United

States pursuant to the Agreement in. Implementation of Article IV of the

Panama Canal Treaty of 1977, is delegated to the Secretary of Defense.

1-105. The functions vested in the President by Sections 1243(c)(1) and 2401 of

the Panama Canal Act of 1979 (93 Stat. 474 and 495; 22 U.S.C. 3681(c)(1) and

3851) are delegated to the Secretary of Defense.

- 1-106. The functions vested in the President by Section 1502(a) of the Panama

Canal Act of 1979 (93 Stat. 488; 22 U.S.C. 3782(a)) are delegated to the

Secretary of Defense.

1-2. Coordination of Pay and Employment Practices.

1-201. In order to coordinate the policies and activities of agencies under

subchapter ii of Chapter 2 of Title I of the Panama Canal Act of 1979 (93 Stat.

463; 22 U.S.C. 3651 et seq.), each agency shall periodically consult with the

Secretary of Defense with respect to the establishment of rates of pay, in order

- to develop compatible or unified systems for basic pay. In addition, each

agency shall consult with the Secretary of Defense on such other matters as the Secretary may deem appropriate in order to develop compatible or unified

employment practices.

1-202. The head of each agency shall, upon approval by the Secretary of

Defense, adopt a schedule of basic pay pursuant to Section 1215 of the

Panama Canal Act of 1979 (93 Stat. 465; 22 U.S.C. 3655) and adopt regulations

governing other matters relating to pay and employment practices.
81

37

36044 Federal Register / Vol. 45, No. 105 / Thursday, May 29, 1980 / Presidential Documents

1-203. The authority vested in the President by Section 1223(a) of the Panama

Canal Act of 1979 to coordinate the policies and activities of agencies (93 Stat.

467; 22 U.S.C. 3663(a)) is delegated to the Secretary of Defense. The Secretary

shall exercise such functions in a manner which is in accord with the

provisions of Sections 1-201 and 1-202 of this Order.

.1-3. Panama Canal Commission.

1-301. The functions vestedin the President and delegated to the Secretary of

Defense in this Section 1-3 of this Order shall be carried out by the Secretary

of Defense, who shall, in carrying out the said functions, provide, by redelegation or otherwise, for their performance, in a manner consistent with paragraph 3 of Article III of the Panama Canal Treaty of 1977, by the Panama

Canal Commission. 

1-302. The authority of the President under Section 1104 of the Panama Canal

Act of 1979 (93 Stat. 457; 22 U.S.C. 3614) to fix the compensation of and to

define the authorities and duties of the Deputy Administrator and the Chief

Engineer is delegated to the Secretary of Defense.

1-303. The functions vested in the President by Sections 1418, 1801, and 2206

of the Panama Canal Act of 1979 (93 Stat. 487, 492, and 494; 22 U.S.C. 3778,

3811, and 3844) are delegated to the Secretary of Defense.

1-304. The authority of the President under Section 1701 of the Panama Canal

Act of 1979 (93 Stat. 492; 22 U.S.C. 3801) with respect to regulations applicable

within the areas and installations made available to the United States pursuant to-the Agreement in. Implementation of Article III of the Panama Canal

Treaty of 1977 is delegated to the Secretary of Defense.

-1-305. The function vested in the President by Section 1281(b) of Title 6 of the

Panama Canal Code (76A Stat. 455; 6 P.C.C. 1281(b)), as amended, with respect

to areas and installations in the Republic of Panama niade available to the

United States pursuant to the Agreement in Implementation of Article III of

the Panama Canal Treaty of 1977 is delegated to the Secretary of Defense.

1-06. The functions vested in the President by Sections 82 and 86 of Title 3 of

the Panama Canal Code (76A Stat. 54 and 55; 3 P.C.C. 82 and 86), as amended,

are delegated to the Secretary of Defense.

1-307. The functions vested in the President by subsections (a), (b) and (c) of

Section 8146 of Title 5 of the United States Code, as they apply to the

employees of the Panama Canal Commission, are delegated to the Secretary of

Defense.

1-308. Except to the extent heretofore delegated, the functions vested in the

President pursuant to subchapter II of Chapter 2 of Title I of the Panama Canal

Act of 1979 (93'Stat. 463) are hereby delegated to the Secretary of Defense.

1-4. Other Agencies.

1-401. The functions vested in the President .by Sections 1111 and 3301 of the

Panama Canal Act of 1979 (93 Stat. 459 and 497; 22 U.S.C. 3621 and 3871), are

delegated to the Secretary of-State. The Secretary shall perform these functions in coordination with the Secretary of Defense.

1-402. The functions vested in the President by Sections 1112(d), 1344(b), and

1504(b) of the Panama Canal Act of 1979 (93 Stat. 460, 484, and 488; 22 U.S.C.

3622(d), 3754(b), and 3784(b)) are delegated to the.Secretary of State.
82

38

Federal Register / Vol. 45, No. 105 / Thursday, May 29. 1980 / Presidential Documents 36045

- 1-403. The functions vested in the President by Section 1243(a)(1) of the

Panama Canal Act of 1979 (93 Stat. 473; 22 U.S.C. 3681(a)(1)) are delegated to

the Director of the Office. of Personnel Management. 

1-404. Paragraphs (22) and (23) of Section 1 of Executive Order No. 11609, as

amended, and Executive Order No. 11713 are revoked.

THE WHITE HOUSE,

May 27, 1986. '7 [FR Doc. 0-16422 

Filed 5-27-80, 3:44 pm]

Billing code 3195-01-Ml
83

"GOVERNMENT IN THE SUNSHINE ACT" 39

5 552b THE AGENCIES GE:NEIlALLY Ch. 5 5 552b THE AGENCIES GENEtALLY Ch. 5

the agency members nbalI be taken with respect to each agency 552b. open imetiligs meeting a portion or portions of which are proposed to be closed to

(a) For purposes of this seettoi- the public pursuant to subsection (c), or with respect to any infor-

(1) the term "agency" means any agency, as defined in set- mation which is proposed to be withheld under subsection (c). A

tion 5521) of this title. headed by a collegial body composed of single vote may be taken with respect to a series of meeting, a portwo or more individual members, a majority at whom are ap. tion or portions of which are pIroosed to be closed to the public, or

pointed to such position by the President with the advice aiu with respect to any information concerning such series of meetings,

consent of the Senate, and any subdivision thereof authorized so long as each meeting in such series involves the same particular

to act on behalf of the agency; mutters and is scheduled to be held no more than thirty days after

(2) the term "meting" means the deliberntiosa of at least the initial meeting in sich series. The vote of each agency member

the number of individual agency members required to take ac- participating in such vote shall be recorded and no proxies shall be

tion on behalf of the agency where such deliberations determine allowed.

or result in the joint conduct or disposition of official agency

businec-, but does not include deliberations required or permit- ()by a portion of a meeting requests that the agency close such ted by subsection (d) or (e) ; and portion to the public for any of the reasons referred to in paragraph

(3) the term "member" neoans an individual who belongs to a (5), (G), or (7) of subsection (c), the agency, upon request of any

collegial body heading an agency. one of its members, shall vote by recorded vote whether to close

(b) Alembers shall not jointly conduct or dispoie of agency bust. such meeting 

iess other than in accordance with this section. Except as pinsidud (3) Withiti one day of any vote taken pursuant to paragraph (1)

in subsection (c), every portion of every meeting of an agency shall or (2), the agency hall make publicly available a written copy of. 1be ope to Public observation \ such vote reflecting the vote of each member on the question. If a b ) Eten pincae b e . vt reletii the tote of pulh m r h sI portion of a meeting is to be closed to the public, the agency shall,

(c) Exceit in a case where the agency finds that the pubi titer. within one day of the vote takeut Pursuant to paragraph (1) or (2) est requires otherwise, the seicottd senitetice of subiseclion (hi shall of this subsection, make publicly available a full written explanation

not apply to any portion of an agency meeting, arid the requirements of its action closing the portion together eith a list of all persons

5f subsections (d) and (c) shall not apply to any information per. -f t atnd the m otin todther ithais

training to such meeting otherwise required by this section to be dis- expected to attend the neetitg atd their affiliation.

closed to the public, where the agency properly determines that such (4) Any agency, a majority of whose meetings may properly be

portion or portions of its meeting or the disclosure of such informal closed to the public pursuant to paragraph (4), (8), (9)(A), or (10)

tion is likely to- of subsection (c), or any combination thereof. may provide by regu-

(1) disclose matters that are (A) specifically authorized un- lotion for the closing of such meetings or portions thereof in the

der criteria established by an Executive order to be kept secret event that a majority of the members of the agency votes by recordin the interests of national defense or foreign policy and (B) in ed vote at the beginning of such meeting, or portion thereof, to close

fact properly classified pursuant to such Executive order; the exempt portion or portions of the meeting, and a copy of such

vote, reflecting the vote of each member on the question, is made

(2) relate solely to the internal personnel rules and practices available to the public. The provisions of paragraphs (1), (2), and

(3f disceny; mt(3) of this subsection and subsection (e) shall not apply to any por-

(3) disclose matters specifically exempted from disclosure hy tin of a meeting to which such regulations apply: Provided, That

statute (other than section 552 of this title), provided that such the agency shall, except to the extent that such information is exstatute (A) requires that the matters be withheld from the pub- empty from disclosure tnder the provisions of subsection (c), provide

lie in such a mantier as to leave no discretion on the issue, or the public with public announcement of the time, place, and subject

(B) establishes particular criteria for withholding or refers to matter of the meeting and of each portion thereof at the earliest

particular types of matters to be withheld; practicable time.

(4) disclose trade secrets and commercial or financial infor. (e)(1) In the case of each meeting, the agency shall make public

nation obtained from a person and privileged or confidential: announcement, at least one week before the meeting, of the time,

(5) involve accusing any person of a crime, or formally ci- -place, and subject matter of the meeting, whether it is to be open or

closed to the public, and the name and phone number of the official

W) disclose information of a personal nature where dis - designated by the agency to respond to requests for information

sure would constitute a clearly unwarranted invasion o person- about the meeting. Such announcement shall be made unlss a manurwuco t majority of the members of the agency determines by a recorded vote at privacy; .that agency business requires that such meeting be called at an ear-

(7) disclose investigatory records compiled for law enforce- lier date, in which case the agency shall make public announcement

ment Purposes, or information which if written would be con- of the time, place, and subject matter of such meeting, and whether

taintd in such records, but only to the extent that the produc- open or closed to the public, at the earliest practicable time.

tion of stch records or information would (A) interfere with (2) The time or Place of a meeting may be changed following the enforcement proceedings. (B) deprive a person of a right to a public announcement required by paragraph (1) only if the agency fair trial or an imtiartial adjudication, (C) constitute an unwar- publicly announces such change at the earliest Practicable time. ranted invasion of personal privacy, (D) diselost the identity The subject matter of a meeting, or the determination of the agency of a confidential source and, in the case of a record compiled by a to open or close a meetug, or portion of a meeting, to the ptbiic,

criminal law enforcement authority in the course of a criminal may be changed follosiig the i unl antioucement required by this

invesligation, or by an agency conducting a lawful national ae- subsection only if (A) a majority of the tire membership of the

urity inteligesce investigation, confidential informal ion fur- agency determines by a recorded vote that agency business so renished otly by the confidential source (E) disclose investia- quires and that no earlier announcement of the change was possible, tive techniques and procedures, or (F) endanger the life or and (B) the agency publicly announces such change and the vote of

physical safety of law enforcement personnel; each member upon such change at the earliest practicable time.

(8) disclose information contained in or related to examina- (3) Immediately following each public announcement required by tion, operating, or condition reports prepared by, on behalf of. this subsection, notice of the time, place, and subject matter of a or for the use of an agency responsible for the regulation or a- meeting, whether the meeting is open or closed, any change in one pervision of financial institutions; of the preeding, and the name and phone number of the official

(9) disclose information the premature disclosure of which designated by the agency to respond to requests for information

would- about the meeting, shall also be submitted for publication in the

(A) in the case of an agency which regulates currencies, Federal Register,

securities, commodities, or financial institutions, be likely (f)(1) For every meeting closed pursuant to paragraphs (1)

to (ii lead to significant financial speculation in curren. through (10) of subsection (c), the General Counsel or chief legal

cies, securities, or commodities, or (ii) significantly endan- officer of the agency shall publicly certify that, in his or her opinger the stability of any financial institution; or ion, the meeting may be closed to the public and shall state each rel-

(B) in the cast of any agency, be likely to significantly evant exemptive provision. A copy of such certification, together

frustrate implementation of a Proposed agency action, with a statement from the presiding officer of the meeting setting forth the time and place of the meeting, and the persons present,

except that subparagraph (B) shall not apply in any instance shall be retained by the agency. The agency shall maintain a com. where the agency has already disclosed to the public the con- plete transcript or electronic recording adequate to record fully the tent or nature of its proposed action, or where the agency is re- proceedings of each meeting, or portion of a meeting, closed to the quired by law to make such disclosure on its own initiative prior public, except that in the case of a meeting, or portion of a meeting, to taking final agency action on such proposal; or closed to the public pursuant to paragraph (8), (9)(A), or (10) of

(10) specifically concern the agency's issuance of a subpena, subsection (c), the agency shall maintain either such a transcript or

or the agency's participation in a civil action or proceeding. an recording, or a set of minutes. Such minutes shall fully and clearly

action in a foreign court or international tribunal, or an arbi- describe all matters discussed and shall provide a full and accurate tration. or the initiation. conduct, or disposition by the agency summary of any actions taken, and the reasons therefor, including a

of a particular case of formal agency adjudication Pursuant to description of each of the views expressed on any item and the record

the procedures in section 554 of this title or otherwise involving of any rolicall vote (reflecting the vote of each menrber on the quest determination on the record after opportunity for a hearing. tion). All documents considered in connection with any action shall

(d)(1) Action under subsection (c) shall be taken only when a be identified in such minutes.

majority of the entire membership of the agency las defined in (2) The agency shall make promptly available to the public, in

sabection (a)(1)) votes to take such action. A separate vote of a place easily accessible to .he public, the transcript, electronic re-
84

5 552b TIIF AGENCIES GENERALLY Ch. 5 40

cording, or minutes (as required by paragraph (1)) of the discus- 5 552b, THE AGENCIES GENERALLY Ch. 

5 sion of any item on the agenda, or of any item of the testimony of

any witness received at the meeting, except for such item or items agency meeting or portion thereof required by any other provision of such discussion or testimony us the agency determines to contain of law to be open. information which may be withheld under subsection (c). Copies of

such transcript, or minutes, or a transcription of such recording di- (m) Nothio in this section asthorices any agency to withhold

closing the identity of each speaker, shall be furnished to any per- from any individual any record, including transcripts, recordings, or

son at the actual cost of duplication or transcription. The agency minutes required by this sections, which is otherwise accessible to

shall maintain a complete verbatim copy of the transcript, a com- such individual under section 652a of this title.

plete copy of the minutes, or a complete electronic recording of each Added Pub.L. 94-409, 3(a), Sept. 13, 1976, 90 Stat. 1241.

meeting, or portion of a meeting. closed to the -public, for a period

of at least two years after such meeting, or until one year after the Hhstvr.1 Not.

conclusion of any agency proceeding with respect to which the "m'"e"'" I" T. 0 'I,,s ei the se4I., fmedise ves 751, .27. .,

d ,.e o s inse si ,t m: 17.s1in. e-. d 5r ' Id thki i1111. 10 ii n , oft Ape.

meeting or portion was held, whichever occurs later. revved lo in sois,. oven, 1.150 days 1ie i f thi t, i,. on, setio 410 of Ti. elir the dii.te n e-imeni .f l',,i.i, iie235.edvenvcinge prsaiiaons stooI 

s (g) Each agency subject to the requirements of this section shall, 0>. ,4. eIcf wv s ole vea fof i. 13 157ff. D,s ,.de 5h,1 se-vini~ say i.e -ed as

within 180 days after the date of enactment of this section, follow- Cai,tr n of title 44, united stt,, the overnmns in th sash"iAe Act'."

ing consultation with the Office of the Chairman of the Administra- 

. Code. e .ed t in abse. (ki, i. sii,- .,iof Ievisrlisn nh e r and sia-en-et 

o

tive Conference of the United States and published notice in the fee 33 ot This 44. rfliv Peisins end --- ,.vse.5,ve5o s o l. 0 -00 Pro.

Federal Register of at least thirty days and opportunity for written Do, fs Tis4.ided b-"1 

. h41eei OIsed o N C.,_i, _ie Sis,_ at . 1~a,. the pol,,y at It, , 'ii,.d Stief, h in.lb

comment by any person, promulgate regulations to implement the re- l 4I0s prvidrnled th5t Pfff'-

5

5 1, es to the, tallest -rasiesquirements of subsections (b) through (f) of this section. Any per- -- W epessipr,.de is ss s,.vso. ifol,.l - rr. l fesi adinne h 

son may bring a proceeding in the United States District Court for (11,) a the .as sin, lif iPvoavs iie ttl prvfsisi thde Gr d.is s1s Acses

the District of Columbia to require an agency to promulgate such At (- ISn short Tit ,t evinder t l i ite vise oft ctd Isee 1115Sf7 Ias7o h.11 take W,,ts 1-, da- 8P,, Till, role see -1f and,.r (him sregulations if such agency has not promulgated such regulations rt,, the de sr iof en1.i , Serf 13 heal is Proi l the pubic sith soh io

within the time period specified herein. Subject to any limitations 107. 0 aiti,ish i ii, sfiily ,rt felassesof time provided by law, any person may bring a proceeding in the l v a de sdde ify "h.t f e eau is lneih aes iftie.

United States Court of Appeals for the District of Columbia to set ectin 3(a) of thi Act lauese. Ini of Laiislivs litney. For tegiesladi

aside agency regulations issued pursuant to this subsection that are th l svflfcsf -)-eil lake effect .11. ensel- story ssd .rpse. of 1Pab.L. 0, see

not in accord with the requirements of subsections (b) through (f) .et (Fd. 13.1976)1 1070 U.OCods Cos. and Ad.Nsee. p. iica, Till.Seaili I aofla 0"Its 10 h of this section and to require the promulgation of regulations that provided: "That hl, Act (eoinfeg Ihin

are in accord with such subsections.

(h)(1) The district courts of the United States shall have juris- Library tefersses

diction to enforce the requirements of subsections (b) through (f) Adm ardtrtil. L- and Proe~dan C.j 

. rubric Admitiltrtive Bodle, and of this section by declaratory judgment, injunctive relief, or other e 07sednes i11i.

relief as may be appropriate. Such actions may be brought by any Went's Fedoral Formo person against an agency prior to, or within sixty days after, the

meeting out of which the violation of this section arises, except that Declrato.ry Jvslsmetvv,,attrm perta1.g to, 

. 1 410 etsea if public announcement of such meeting is not initially provided by JIeidtion -- ane sad In distrvt .rs, sedrees, totining Ia en

the agency in accordance with the requirements of this section, such rrInn in d,

action may be instituted pursuant to this section at any time prior Taxation s mets, 46 a to 4032.

to sixty days after any public announcement of such meeting. Such

actions may be brought in the district court of the United States for Cod of Federal Regolaelone

the district in which the agency meeting is held or in which the Civsve Ca,,,,Iiso mf Ire 25o ur et a1.

agency in question has its headquarters, or in the District Court for Cm * o C e ev sc. r Co ,~dfty o_,,e vsln ,,1s1,i1,1,Taosc 17 CPRI 1417.1 t am,.

the District of Columbia. In such actions a defendant shall serve Coamev 1ralav safely C,,maleIn see 10 CFI 1012.1 t se.

his answer within thirty days after the service of the complaint. C fnvi o laivreevi, Qfality, mee 40 CFn 1-7.l e most.

The burden is on the defendant to sustain his action. In deciding "il,-,lof ar Av,*,iie Csa,,,-fY Credit CorpslIao., so 7 CPR 1400.1 at seq. - Dvs v,o,v, ,,t1at,'5e -,32 CF Mr., t -le, - DrvfsI lei,.ro- I7i~~.sd Welto.

such cases the court may examine in camera any portion of the Scial Na Ossatily ad cdsil.iaol lddaeo 

C -o 0 CFu 401.1 t seq.

transcript, electronic recording, or minutes of a meeting closed to

the public, and may take ouch additional evidence as it deems necessary. The court, having due regard for orderly administration and

the public interest, as well as the interests of the parties, may grant

such equitable relief as it deems appropriate, including granting an

injunction against future violations of this section or ordering the

agency to make available to the public such portion of the transcript, recording, or minutes of a meeting as is not authorized to be

withheld under subsection (c) of this section.

(2) Any Federal court otherwise authorized by law to review

agency action may, at the application of any person properly iarticipatiig in the proceeding pursuant to other applicable law, inquire

into violations by the agency of the requirements of this section and

afford such relief as it deems appropriate. Nothing in this section

authorizes any Federal court having jurisdiction solely on the basis

of paragraph (1) to set aside, enjoin, or invalidate any agency action (other than an action to close a meeting or to withhold information under this section) taken or discussed at any agency meeting

out of which the violation of this section arose.

(i) The court may assess against any party reasonable attorney

fees and other litigation costs reasonably incurred by any other tarty who substantially prevails in any action brought in accord ice

with the provisions of subsection (g) or (h) of this section, except

that costs may be assessed against the plaintiff only where the

court fiids that the suit was initiated by the plaintiff primarily for

frivolous or dilatory purposes. In the case of assessment of costs

against an agency, the costs may be assessed by the court against the United State.,

(j) Each agency subject to the requirements of this section shall

annually report to Congress regarding its compliance with such requirements, including a tabulation of the total number of agency

meetings open to the public, the total number of meetings closed to

the public, the reasons for closing such meetings, and a description

of any litigation brought against the agency under this section, including any costs assessed against the agency in such litigation

(whether or not paid oy the agency).

(k) Nothing herein expands or limits the present rights of any

person under section 552 of this title. except that the exemptions set

forth in subsection (c) of this section shall govern in the case of

any request made pursuant to section 552 to copy or inspect the

transcripts, recordings, or minutes described in subsection (f) of

this section. The requirements of chapter 33 of title 44, United

States Code, shall not apply to the transcripts, recordings, and minutes described in subsection (f) of this section.

(1) This section does not constitute authority to withhold any in- formation from Congress, and does not authorize the closing of any
85

41

Letter, President Royo to

President Certer, January 10, 1980.

(Cong. Record March 11, 1980, 32399)

PANAMA,

January 10, 1980. Your Excellency JIMMY CARTER,

President of the United States of America, White House. 

DEAR PRESIDENT: In my letter of 11 July 1979, I presented to you the objections of the

Panamanian Governritent to several articles

of the bill HR-111, under discussion at the

time by the U.S. Congress, which violated

the spirit and letter of the Panama Canal

treaty or were not acceptable because they could create difficulties in the implementation of the treaty. Although amendments were made later to the bill which after it was approved was registered as Public Law

96-70 of 27 September 1979, most of the

resolutions to which I objected in my letter were not amended, at least not in the sense and way established for the accurate imple- mentation of the obligations, contracted by

the signees of the treaty. . .- .

Three months have gone by since the implementation of the treaty and during this

time I have followed the course of the works

of the canal operation, mostly aided by information provided by bur officials from the

Canal Authority. In studying and analyzing

this information, I have become aware that

facts corroborate my government's presumptions regarding the unfavorable conse- quences to the rights and just aspirations

of my country and of the difficulties in the

administration of the canal which Inevitably

would result from some dispositions of bill

HR-111, which now is Law 96-70.

For this reason I am writing .you this

letter, with the main purpose of submitting to you the viewpoint of my government

and the Panamanian people regarding the

aforementioned situations. We do this in an effort on our part to see that good relations

and mutual understanding prevail between our countries, in everything related to the

Panama Canal. -

The first and most general observation is

that the contents of Law 96-70 are not the

legal instruments for the implementation

according to the norms and basic ob4

ectIves

of the 1977 treaty. The treaty established

that U.S. rights and responsibilities were to

be carried out by a specialized government

agency, the Panama Canal Commission, and

that the Republic of Panama would as a basic principle be granted a growing par- ticipation in its structure, functioning, administration, protection and defense of the

canal, as established in Article 1, Paragraph

3, of the treaty. Law 96-70 radically dIffers

from the concept of the treaty regarding the

Canal Commission by making It into

an executive agency ("aporopriated-fund

agency"), which rigidly binds it and takes

away its administrative, economic and financial flexibility. 

A series of dispositions which distorted the

nature of the Panama Canal Commission

have been derived from the interpretation of

Law 98-70 which is contrary to the treaty,

as was agreed by both parties. This has happened in such a way that my government
86

42'

S 2400 CONGRESSIONAL RECORD -SENATE March 11, 1980 cannot but consider that the law, in its gen. ernment over the limitation of funds with than covered by the taxes that the U.S. canal eral content, is illegal, contrary to the legiti- which Law 96-70 jeopardizes the efficient workers contribute to the U.S. Treasury. mate interests of both parties, not accept- handling of canal operations by the com- Among the economic compensations to able because of the modus operand! it estab- mission. Because it was created as an execu- Panama is also an annual payment of up to lishes and unacceptable in every way for the tive agency, its budget appropriations require $10 million-payable from the surplus in- Republic of Panama. approval by the U.S. Congress (Section 1302, come from the canal operation-and the It would be inadequate to present in this c, 1). In addition, commission's expenses, with the stipulation letter full details of the direct objections Section 1302(C) (2) provides that no funds that the amount not paid in any given year which could be made against many articles will be accredited for us by the Canal Com- would be paid with the surplus from future of Law 96-70. In its full extension, my letter mission during any fiscal year execeeding the years. It cannot be denied that in the treaty of 11 July 1979 serves the purpose. However, commission's income during said period plus this last provision refers only to any pay- I must refer to some aspects which I cannot any available balance of the funds appropri- ment balance pending in favor of Panama. overlook. ated to it for the preceding fiscal year. Obvi- and that no interpretation of Subparagraph On creating the Canal Commission, Sec.- ously, the objective of this restriction is to C, Paragraph 4, Article XII could be carried tion 1101 of the law closes with the disposi- keep the U.S. Treasury from contributing, to to the extreme [of construing) that it au- tion that "the authority of the president of the payment of canal operating expenses. thorizes the accumulation of losses to charge the commission will be exercised through the To further tighten this financial squeeze, them against the surplus of future years. Secretary of Defense." This disposition, the House of Representatives Budget Appro- Nonetheless, this provision has been trans- which apparently is a simple formality, car- priations Committee rejected the inclusion formed by Law 96-70 into something totally rides with it a special objective, which con- of two appropriations, of $2 million and of contrary for, in accordance with Section 1341 sists of placing the commission under the $5.9 million, in the Panama Canal Commis- (B), previous losses will be counted against total dependency of that department, as a sion's 1980 budget. any year's surplus. There can be no more sort 

This 

of appendix to it, To be charged to the Federal Treasury, open and flagrant violation of the treaty, double purpose as published can be these funds were to be used to pay off the .since -it only mentions "surplus balances," seen in Section 102(A), which establishes debts of the defunct Panama Canal Company while the legal text mentions "accumulated that one of the members of the supervisory that were outstanding at the.close of busi- losses." board is the Secretary of Defense, and that ness on 30 September 1979. The committee Regarding this same economic right by the U.S. members of. the board will Nrote ac- ignored the fact that the $5.9 million would Panama, it turns out that the treaty takes cording to the instructions of the Secretary be recovered by the collection of moneys owed into consideration the commission's "ex- of 

determines 

Defense, 

that 

and 

"the 

in Section 

board will 

1102(C) which to the Panama Canal Company. senses," while In Its Sections 1341(B), 1311

ings according to the 

hold meet- Section 1303 (A) of Law 96-70 provides for (A) and 1341(E), Law 6-70 orders that no

commission and 

bylaws adopted by the the establishment, effective 1 October 1979, less than the "costs" listed in those sections

of Defense." Already 

approved by the Secretary of a Panama Canal contingency fund of $40 be accounted against the revenues and for in the title correspond- million to cover unexpected expenses' and to the purpose of making the Payment to Pan. ing 

scribes to the 

Section 

board 

1102, 

as a 

the 

supervisory 

law explicitly board 

dedeback 

ous, up 

efficient appropriations and to insure the continu- -ama. Expenses are generally ex penditures In secure operation of the cs Execss ar geonl expetey viating from the terminology employed in canal. The same committee also opposed the s o beyond that, since they the Spanish text of the treaty, which is also approval of an appropriation to finance the Include special amounts, such as deprecia- authentic. - - fund, maintaining that financing should to.reserves, and so forth.

This is going to the extreme of converting come from the canal tolls. . This listing of costs, as a function of the it into a supervisory board when it should The committee also ignored the fact that commission's expenses, is illegitimate, par- not be less than a board of directors. Thus moneys drawn from the fund would be re. ticularly because its final result might repre- we see that the secretary of state represents placed by the commission from its income. . .sent an antijuridical dissipation of an eco- everything: The means for the president to - The decisions mentioned above render the nomic right that emanates from the treaty. exercise his authority over the commission Panama Canal Commission helpless on those. Those costs, of course, do not represent a by being a member of the board; the source fortuitous occasions in which it will require small amount. According to a report sub- of instructions telling the majority of the funds to cover unexpected expenses or when Itted by the administrator to the House of board how to vote: and being the one that the actual expenses exceed budgeted Representatives' Panama Canal Subcommit- approves the regulations of the comniission amounts. - - . -. - tee, the 1980 budget allocations increase above the board. -some of those costs to the following figures: For this reason the law leaves the Canal the dredging of the canal and the correction (A) $14.8 million in terest for the nonre- .Commission in a subordinate position as a of dangerous curves on the canal route are o covered U.S. Investment in the construction dependency of the Defense Department, just necessary to keep the canal's passageways of the canal; (B) $16.7 mullon to amortize as the Panama Canal Company was to a cer- neay een the rans seys the cost of the 'employees' anticipated op- tain 

control extent of that 

until same 1 October 

department, 1979 under 

accordingOnca the permanently efficient for the transit of hps. tionat retirement. In accordance with the otdmisthIpracefte to the law of the Canald Z en, n fact that the interoceanic waterway already special retirement law-a total of $31.5

And if the treaty conceived the commis- has been in continuous use for more than m sion ercise as a newly created legal agency to ex- 6 decades and that its installations have de- If the treaty recognized Panama's 'right' ercie the the U.S. U.S. rIghts rightdnan 'and responsibilities reommibitis. teriorated, requiring constant, intensive and to an annual payment chargeable to the the the open subordination of the comis- "increasing maintenance. .; srlso surplus or surplus upu balances between reve- sion to the Defense Department effected un- Because of the dispositions of Law 96-70 nues and expenses as part of a "just and der this law violates, through an unusual which negatively affect the possibilities of equitable retribution for the national re- disavowal, the special and independent legal financing, the commission might find itself sources it has dedicated to the efficient func- status granted to the commission by the in the position of adopting highly inconven- tioning, running, maintenance, protection treaty. lent measures such as decreasing regtfiar and defense of the canal" (Article XIII), It was enough, and not juridically objec. maintenance activities, deferring the com- Panama cannot agree to the solution uni- tionable, for Section 1102(A) to designate pletion of improvement projects that are be- laterally provided by Law 96-70, which vlsi- the defense secretary as member of the board ing studied or are underway, or by trying to bly violates the treaty. of directors. However% the turning of the reduce taxpayers by cutting back its labor : What this law has done regarding the sal- Canal Commission into an appendix of that force. - ary system is worth noting with similar em- department is what invalidates in practice Contrasting with the limitation of funds Phasis. It has removed the commission's em- the concept in regard to the commission described above, the United States has the ployees from the "Fair Labor Standard Act," contained in the treaty. signed obligation to maintain the waterway which recognized the salary increases agreed This merits a most categorical opposition in an appropriate condition for its efficient, on for 1980 and 1981-these indreases were on the part of the Republic of Panama be- continuous and secure operation and to higher than the ones now established-with- cause Panama did not agree in the treaty transfer the canal to the Republic of Panama out consulting the workers and without their that the agency which will manage the canal the last day of the present century in good consent. On the basis of this regulation, the operations-4n 

manian 

which there are four Pana- working condition. . . Canal Commission has put into effect the directors and an assistant adminis- Noncompliance or negligence in fulfilling labor remuneration system that the Policies trator-would be-through an illegal man- these obligations would constitute a clear Coorinating Board approved for civilian per- date included in the law-inexplicably sub- violation of the treaty. On the subject of pay- sonnel in September 1979. This system ordinated to the U.S. Defense Department, ments to the Republic of Panama as stipu, creates two plans and two different pay with the aggravating circumstance that- lated in the treaty, Law 96-70 also does not scales based on the distinction between old through an exorbitant demand-the law conform because it specifies that the Canal and new employees. provides 

at all board 

that a quorum will be constituted Commission muat pay from its funds the $10 ' Furthermore, Law 96-70 Section 1225 (B) sessions when an internal ma- million in public services that the Republic (1) (2), establishes that as of 1 October 1979, jority of U.S members is present (Section of Panama is going to provide in the town- the salary for new canal employees must 1102, C). sites where U.S. employees reside. . 'not be lower than $2.90 per hour, with an The U.S. Government should be as sern- This disposition is unjust, to say the least, nnual 2-percent increase. This provision ousily concerned as is the Panamanian Gov- if one considers that this expense is more does not agree with the treaty's stipulations
87

43

March 11, 1980 CONGRESSIONAL RECORD-SENATE S 2401

aimed at preventing the Impairment of labor We are pleased that the respective U.S. choose a Panamanian citizen for this posiconditions and terms in the canal area. Fur- members of the board of directors have tion, because Law 96-70, after creating the

thermore, the limitation of increases to 2 finally been appointed. However, the exces- office of ombudsman, has restricted the appercent per year is unjustified. sive delay in designating the U.S. members pointment to that office to a US. citizen.

It is thus necessary to adjust the labor has delayed their action. I believe some final considerations are in

retribution system to the treaty's stipula- And since the Canal Commission was sup- order and In them I must frankly convey my

tions. The commitment of maintaining the posed to begin functioning without interrup- reflections on this matter. My participation same conditions and terms of employment tion last 1 October, and in the absence of in the decisive phase of the negotiations

that existed in the canal area before the Im- the board of directors, we have proceeded to and, from a different level, in the arduous

plementation of the treaty must be ful- make decisions, to define policies, to acquire process of ratifying the canal treaty in the

filled by reestablishing the pay scale in effect obligations and to effect transactions which Senate and adopting the implementing

before 1980 and 1981 and by implementing the Republic of Panama should have been legislation by the House of Representatives,

a unified and just salary policy, with uniform advised of and which their representatives leads me to make the clear and precise propay scales. . on the board of directors should have con- posal that follows.

Since at the end of the present century sidered. The known objective of opponents to the

the canal is to be transferred to the Repub- To bring things to their proper course, It Is treaties In the Senate was none other than

lic of Panama and the latter must assume necessary that upon integrating this organi- to undermine the stipulations which recogthe responsibility for running It, Panama's zation, the most important decisions, on nized the rights of the Panamanian people

increasing participation in the administra- those elements adopted as of 1 October be to the interoceanic waterway and the canal

tion. protection and defense of the canal, reviewed to agree on what is pertinent. - area. The congressmen, in turn, for identical

which the treaty establishes, Is of. relevant In addition to this, given that the powers objectives intr~dduced in Law 96-70 articles

significance because of its purpose. Its ob- and functions of the board of directors and which seek to hinder the application of the

jective is not only the training of Pana- of the administrator and deputy adminis- treaty, with the aim of preventing or Immanian personnel in all aspects of the trator were not specified in the treaty, the peding the Republic of Panama from obadministration and functioning of the canal problem arises over what must be accom- tamning its legitimate benefits as sovereign

so that this transference is carried out "in plished by the two parties, to conform with of the canal territory. But their attempt was

an orderly and efficient manner," as the the method of execution - in the joint or' so unwise that it has created serious obtreaty itself expresses. . bilateral statutes adopted in the treaty. It stacles to the Canal Commission's ability to

This participation is also aimed at having is inadvisable that the respective functions administer efficiently and properly the inPanama play an Important role in every- of the administrator and deputy adminis- termarine waterway. I consider that such an

thing connected with the canal. The joint . trator be regulated by informal understand- attitude on the part of the U.S. legislators

organizations that the treaty establishes Ings that would have a permanent effect, or harms the best interests of the United States

with their special functions materialize that they be unilaterally regulated. ' and the Republic of Panama, and the canal

Panama's right to participate in the making It is obvious to me that the adminis- which belongs to it. .- . .- 

of decisions connected with the canal. ,trator and deputy administrator, the two In view of the significance of Law 96-70,

Thus, the appointment of four Pana- most prominent posts in the canal adminis- on which I have had to dwell in the precedingmanian members to the commission's direct : tration, in addition to the board of direc- pages, and in the face of the specific Issues

tive board and of a Panamanian assistant . tors, function In the Canal Commission as which this law has created in the execution

administrator In this commission consti- the president and vice president of the of the canal treaty, which I have also mentutes Panamanian Representation at the defunct Panama Canal Company. This being toned, I consider that the Government of

commission's top directive levels, which the so, the position and functions of the latter the United States must undertake specific

treaty specifically terms "the participation ~ were transferred to the deputy adminis- efforts to produce a decisive halt to the unof Panamanians at the top levels of the com- trator. Furthermore, the deputy adminis- wise practices which violate the treaty and:.

mission's directorate." The Panamanian di- trator is the Republic of Panama's repre- which affect their implementation and the

vectors and assistant administrator are pro- sentative in the highest executive branch of friendly relations to which we am bound be-

)osed by Panama: the latter even has the the canal administration. It is he who safe- cause of our close connection with the canal.

.right to request the removal of any of the guards the interests of the Panamanian It Is not possible that a few months after

Panamanian directors; and this legally con- Government and peoples, of the United the Implementation of the treaty, forces adfirms their role as representatives of Pana- States and canal users, because by working verse to the community of interests that we

manian interests within the commission. In concert with these three groups he guar- share, are causing disruptions and offensive

Since the board of directors and the posi- antees that the canal will serve its function injustices to prevail-something we believed

- tions of administrator and deputy adminis- as an international transit waterway. -' was a thing of the past.

trator are part of the Panama Canal Com- Consequently, the deputy administrator I call upon your authority as President

mission, a U.S. Government agency, it is must have Immediate, expeditious and con- of the United States and your well-known

within U.S. authority to appoint them. But stant access to all components of the canal attitude of understanding toward Panama,

the Panamanian directors and deputy ad- administration and participate in all the so that a halt to this wrongful policy of disministrator do not lose, by reason of such a decisions, both for the exercise of his powers regarding Panamanian rights will become the

technicality, their role as representatives of and responsibilities, as well as to keep. the rule of behavior to the evecution of the

the interests of the Republic of Panama, Panamanian Government abreast of all that treaty for the purpose of achieving a general

Nevertheless, Law 96-70 treats those offi- it is entitled to know as a partner in the reform of -Law 96-70 and drafting of new

clals In a way which is not In keeping with canal enterprise. Therefore, the deputy ad- bilateral agreements in those areas warthe situation drafted by the treaty. Section ministrator must be free of any obstacles or ranted. - - .1 - --. 

1102(B) Indiscriminately states that the hindrances, particularly regarding docu- To be frank, Mr. President, I must state

board members will maintain their posts at ments dealing with the handling, operation that our nation has not waged from 1901 to

the discretion of the U.S. President. How- and maintenance of the canal. - 1977 a tenacious struggle, leading to the

ever, this cannot be true of the Panamanian The most important matter Is the adoption sacrifice of blood-a date which precisely tomembers, because the treaty contains a of a series of essential regulations to replace day we commemorate with devtion-so that

special procedure for their removal. provisions of the code of federation regula- the Important achievements of the recent

- Section 1112(B) of the law establishes that tions which do not conform to the new treaty will be denied it by Law 96-70; and

the board will approve a "code of conduct" jurisdictional status of the interoceanic if such a denial Is maintained, the present

applicable to its members and officials and waterway. These regulations deal with vir- and future generations. no doubt, will also

employees of the commission and that this tually all or at least the most important struggle, as has occurred in the 80 years of

code will contain provisions substantially aspects of the canal administration. Such this century, to raise the banner of justice

the same as certain comparable U.S. laws and a task must always consider, from drafting to achieve the genuine sovereignty which,

Panamanian legal provisions. initial proposals and their discussion until notwithstanding the provisions of the TorThe application of the code of conduct to their final adoption, the Republic of Panama- rijosCarter treaties. certain US. sectors,

the Panamanian directors and deputy ad- Tetet rae dqaebntoa which have still not understood the signifi- thePanmanandirctos nd epuy d- The treaty created adequate binational cance of respect of the dignity of the Pane- ministrator violates their jurisdictional organizations with this aim and allows the ian people still seek to disregard. With status which the treaty grants them as repre- creation of others of a special nature if the certainty that you will make the neces- sentatives of the interests of the Republic deemed advisable for the purpose set forth of Panama. I I ee ems rvetteeegneo sary efforts to adequately solve the situations .oiPanma. . 'here. We must prevent the emergence of which prompted this note. I cordially greet This violation Is not lessened by the fact differences and controversies once the new yiu, your friend, Aistldes Royo, President of that the same Section 1112(B) has estab- regulations are implemented, because It the Republic of Panama. *- :et lished that agreement will be reached with would be more difficult to resolve them then.

the Republic of Panama in which each na- The opportunity has arrived for desig- i

"on will agree on adopting measures to In- natiu, the chief engineer, a post created by re that the board members will comply Law 96-70, alongside that of the deputy adA ,th the "code of conduct." - ministrator of the commission. Since the

This is so. because Section (B) literally in- treaty provides for the increasing participa- sures. independent of such agreements, "the tion of the Republic of Panama In all levels

jurisdiction which the United States may of employment of- the commission, It would

have with respect to the board members." be advisable, by virtue of this principle, to
88

NINCTY.-IXM" CONGRZS4

JOIN M. MNPY* N.Y. CHAIRMAN

THOMAS L ASmLEY oHIO PU N. C , CHIEF MC STAFF 0. l"llR M. D N .FOR E. N.J. DINOEWLL. N M DWIN M C. KRI

MARIO IA00I. N.Y. JOE!. 

ro~.KF 30ouwe of t ~PretntatibetCALL ERA P-rc"ARD. WASH. 

LE ". ANDERSON. CAUF. Dl Y N. AA AE JC . 0 IK J. K (.nA) D l GRZA. ItX. ROBERT E. DAUMAII, MO.oA Y OMA r. LENT. N.Y. lABevbant e R GERRY M. 51"005 MW.S DAVI.- CHIEF CLERR/ADINTRATOR

DAVID P. EEY AN . - W aMs. ROBER K. oO we Ca. JLI . ER CARROLL HUB A .' ,. KY. O S N R. E L .oom 1334. l'.oUbvwrM *cn Offict 3BU9 bing M EL

DONNONER WASH. PAUL S. TRI8l.Z J. VA. -A M COIN DE. R. W. DS MN. I S NOMAN ;.C. 20515'-afington, -K S OAIIR . . WILAM CARNEYV. N.Y. ~i~ o ,C AD

JAMES -OERSTAR, MINN. MELVN N. EVANS. V.1. TOhe ono. r b LIVIeSIlA January C6y .980 ArArA A. MIate M

"DAr r. ONKR. MICr. DANIL K. AAKA HAWAU

ICHA . O .I MV.ENS. PA.

JO WYATT. TTX.

MIKE LOWRY. WASH.

EARL N I. fl.

EDPWARb J. STACK.FA

ORIAN DONlIELLY.MA.

The Honorable Cyrus R. Vance

Secretary of State

Dear M-1r. Secretary:

The Spanish language press in the city of Panama has published the text of a letter dated January 8, 1980 to President

Carter from President Royo objecting to certain provisions of

the Panama Canal Act of 1979. An unofficial translation of

the published text refers to President Royo's earlier letter

of July 11, 1979 on the same subject and either elaborates on the points presented in the July letter or raises additional

objections to the law or the manner of its application.

Some of the contentions made in the letter as published

raise questions of constitutional law in respect to the opbration of the Panama Canal Commission as an agency of the United

States Government while others lead to even more difficult

questions concerning the effect of discrepencies between the

English and Spanish texts of the treaty.

The questions raised by the letter are sufficiently serious

to warrant close examination by the Committee on Mer-chant Marine

and Fisheries and the Congress as a whole. As a preliminary step

in that process the first step is to obtain an authentic text

of the letter, an authoritative translation into English and

the views of the Department of State in regard to the various

points discussed in the letter. Your courtesy in providing

the text of the letter and its translation, along with your

comments and any recommendations you may have in the premises,

will be greatly appreciated.

Sincerely,

JOHN M. MURPHY

Chairman
89

45

PANAMA CANAL COMMISSION

APO MIAMI 3401 1

OFFICE OF THE ADMINISTRATOR

The nine-member Board of Directors of the Panama Ca'nal

Commission Wednesday concluded a productive three-day meeting in

wh'ich,-for the first time, U.S. and Panamanian members together

assumed responsibility for policy-making and supervision of the

affairs of the Panama Canal Commission. The Board focused

harmonic usly on its responsibilities for the smooth and efficient

operation of the Canal while implementing the provisions of the

Treaty between the two nations. The Board consists of five'U.S.

members and four Panamanian members.

, Among actions taken by the Board were:

Approval of the regulations which govern the functions

and responsibilities of the Board as specified in the Panama Canal

Treaty of 1977.

Election of Michael Blumenfeld, Assistant Secretary of

the Army (Civil Works), as Chairman of the Board.

Designation of Executive, Budget and Finance, and

Personnel Committees as well as a Committee on Long Range Canal

improvements.

During the three-day meeting, members were thoroughly

briefed on major aspects of Canal operations.

CommissiOn Administrator D. P. McAuliffe briefed the Board

on major actions and decisions taken since the Panama Canal

Commission was established on October 1, 1979. The Board commended

McAuliffe and approved the actions with the understanding that
90

46

measures pertaining to Canal improvements and major maintenance

projects, wage systems, and employee quality of life matters will

be reviewed in depth-by the proper committees of the Board at a

future date to determine whether a revision or modification of

such actions is indicated.

Deputy Administrator Fernando Manfredo, Jr., briefed members

on the Nrganization and functions of the Canal Commission.

Financial and accounting systems were explained by Walter D.

Bjorseth, the Commission's top financial executive, and personnel

programs were outlined by Personnel Director Ronald L. Seeley.

A special briefing on training and development of Panamanian

personnel in preparation for the year 2000, when Panama assumes

full responsibility for operation of the waterway, was given by

Ricardo R. Varela, newly appointed Associate Director for Human

Resources Development.

Chairman of the Board Blumenfeld is also Chairman of the

Executive Committee. Other members of the Committee are John A.

Bushnell, Deputy Assistant Secretary. of State for inter-American

Affairs; Clifford B. O'Hara, Director of Port Commerce, New York

and New Jersey Port Authority; Ricardo A. Rodriguez, Panama's

Minister of Government and Justice; and Tomas Paredes, Executive

Director of Panama's Treaty Affairs Office. (DEPAT). Members of

the Executive Committee, with the exception of the Chairman, are

elected each year by the Board.

Edwin Fabrega V., Director General of Panama's Institute

of Hydraulic Resources and. Electrification, is Chairman of the

Budget and Finance Committee. Members are J. W. Clark, President
,91

47

of Clark Maritime Associates, Inc., New Orleans; O'Hara and

Parades.

-- The same four Directors will constitute the Committee of

Long-Range Canal Improvements. This Committee will suggest its

own Chairman.

The Personnel Committee is chaired by Clark. Members are

Paha:A businessman Roberto M. Heurtematte E.; William Sidell,

former General President of the Carpenters and Joiners Union; and

Paredes.

At Wednesday morning's session the Board also had preliminary discussions on a proposed Code of Conduct for Commission

employees and Board members. The Board decided to defer further

consideration until such time as there has been additional discussion between U.S. and Panamanian representatives to clarify

the standards of conduct that will conform to the laws of each

country and'are acceptable to all members of the Board.

The Board appointed Michael Rhode, Jr. as the Secretary of

the Panama Canal Commission.

The next meeting of the full Board was set for July 21 and

22 in Panama, with Committee meetings scheduled for July 17-19,

also in Panama.
92

El Matutino, June 12, 1980

48

Report on June meeting of Board of Panama Canal Commission by

Ricardo Alonso Rodriquez, Minister of Government and Justice

Republic of Panama.

In my column of Monday this week, I asked the Panamanian

members of the binational board of the Panama Canal Commission,

several questions which I consider disturbing as the lack of

adequate information on the subject creates a justified uneasiness in public opinion.

In this respect, I have received a letter which I,

reproduce below with an excerpt of the talk given by the

Minister of Government and Justice to the Association of

Chinese-Pamananian Professionals. I am referring to the

questions I asked. I repeat that in spite of the information that the Minister of Government and Justice is giving

me, I will continue asking, and analyzing, because I believe

I interpret the feeling of all the Panamanians interested in

knowing about the very sensitive area of relations between

Panama and the United States.

Herewith, the documents sent by the Minister of Government

and Justice:

Panama, June 10, 1980

Mr. Luis Restrepo

El Matutino

Dear Mr. Restrepo:

I am pleased to send you a copy of the talk I gave to

the Association of Chinese-Panamanian Professionals.

At that time I spoke- on relations between Panama and

the United States and, in particular, I gave a brief -report

on the participation of the Panamanian members of the Board

of Directors of the Panama Canal Commission and listed what

in our-judgment constitute the most important actions taken

during those meetings.

This letter is to provide you with information that you

could take into consideration in the development of your

judgment regarding the problem of the relations between the

two countries and at the same time you will be able to judge

the performance of the Panamanian members of the organization.

Sincerely yours,

Ricardo Alonso Rodriguez

Minister of Government and Justice

After this introduction it is worthwhile to publish a

synthesis of what happened during the meetings.of the Board

of Directors of the Panama Canal Commission. I believe that

the most important actions that I should give to the public

at this moment, are the following:
93

49

1. The approval of Article 1 of the Board's by-laws,

because it reflects the judgment of our country that such

organization is not the supervisor but the director of the

Panama Canal Commission. The Article reads as follows: Sec.

1.1. Functions. Responsibility for policy making and

supervision of the affairs of the Panama Canal Commission is

vested in a Board by Article III 3 (s), Panama Canal Treaty

of 1977. The Board shall be called the Board of Directors,

Panama Canal Commission. The Board shall review and approve

for submission to the Congress the annual budget of the

Commission to include the capital program for Canal improvements.

2. The election of Arq. Edwin Fabrega- as President of

the Budget and Finance Commission.

3. The creation of a Committee for the review of the

improvement and maintenance of the Panama Canal program.

4. The approval of the statutory regulation that all

members of the Board of Directors have the right to have

access to all the information available in the Panama Canal

Commission, regarding its finance and operations.

5. The unanimous approval of a resolution ratifying

the performance of Administrator McAuliffe, with the provision

that measures related to salaries, maintenance programs,

capital investments, quality of life and budget will be

reviewed in depth by the Board itself.

6. All complaints regarding violations of the TorrijosCarter Treaties by the Panama Canal Commission, were raised.

7. Finally the appointments of the Chief of Finance

and the Chief Engineer were deferred and it was decided to

Wait until the Governments of the United States and Panama

reach an agreement on the-Code of Conduct for Board members

and so that members of the Board can on their own reach an

understanding in the near future on the Code of Conduct.

There are more important details and facts, but today I

had to give prominence to the above because:

a) That indeed the Board of Directors began its operations

with functions that guarantee to the Republic and to the

Panamanians an effective participation in the Administration

of the Canal.

b) That in spite of the differences of opinion, there

is the recognition among the members of the Board of Directors

that they should try, as far as it is possible, to reach

decisions on the basis of consensus and not on a simple

Majority.
94

NINIZY-CIXTH CONGRESS 50

JOHN M. MURPHY, N.Y. CHAIRMAN CHIEF OP STAFF THOMAS L. ASHL-Y. OHIO PAUL N. MC CLOSKEY. JR., CALIF. CARL I. PERIAN

ALTER. O EDWIN III SYTH NJ. ZIA % A o CHIEF COUNSEL MARIO BIAGIN. N.Y. DAVID C. TEEN. LA. ANDERSON. CALIF. JOEL PRITCHARD. WASH. L EJommiEEee JJ

E (K1KA) DE LA .ARZA. TEX. DON YOUNG, ALASKA

J. a. VREA. LA ROIIERT E. SIIAUMAYJ MD. fATerciant fllarine anb .ff i%jerir; CHUIE F . L ERIMNITAO GERRY r- SDDS. MASI. NORMAN F. LENT. N.Y. P E IA VIDO . 2WEN4 MISS. DAVID. rY. MAINE IT .L CT.,1,ihR

CARROLL HUtSARD, JRK Y. POERY K. DONAN. CUF. 3Rcam 1334, 3LongWrlb .f not offict MINORITY COUNSEL

DOH. BONKES. WASH. THOMAS B. EVAN. J. DEL. L" AU COI. ORE. PAUL JACK E. SANDS . TRIE 1. VA11an~l~~l 4'- NMAN C'.D RS. N.H. ROBERT . DISJ. Maington, D.C. 20515

JAMES L. OERSTAR. MINN. WILLIAM CARNEY, N.Y. HNE. M. N. MELVIN H. EVANS. VI. June 30, 1980 BARBRA A. MIKULAKI. MD.

DAVID E. ONIOR, MICH.

DANIEL K. AKAK. HAWAII

MICAEL OZ.E YER. PA.

JOE WYATT. TEX.

MIKE LOWRY, WASH.

EARL HUTTO, F1.A.

EDWARD J. STACK. TLA.

BRIAN DONNLLY. MASS.

Honorable Harold Brown

Secretary of Defense

The Pentagon

Washington, D.C. 20301

Dear Mr. Secretary:

On July 28, 1980, under the authority of Rules X and XI

of the U.S. House of Representatives, the Subcommittee on

the Panama Canal of the Committee on Merchant Marine and

Fisheries will commence an investigation into the manner in

which the provisions of Public Law 96-70, approved September

27, 1979, have been carried into effect in the organization

and operation of the Panama Canal Commission established by

Title I of that Act.

At the hearing the Subcammittee will examine generally

the extent of the authority conferred by the Act of July 27,

1980,on the Administrator and supervisory Board; the appointment, qualification and powers of the Board under the Act of

September 27, 1979, and the role of the Secretary of Defense

in the operations of the Commission.

The Subcommittee's. inquiry is based primarily on the

provisions of the Act of July 27, 1979, particularly section

1101 of the Act establishing the Panama Canal Commission as

an agency in the executive branch .of the United States

Government with respect to which the authority of the President

is to be exercised through the Secretary of Defense. The

Subcommittee has noted the issuance of Executive Order 12215

of May 27, 1980, delegating certain specific authorities

under the Act, July 27, 1979, to the Secretary of Defense,

the Secretary of State, and the Director of Office of Personnel Management. No further delegations of authority have

been brought to the attention of the Subcommittee.

The Subcommittee is particularly interested in a press

report released by the Panama Canal Commission in June of

this year stating that "The nine member Board of Directors

of the Panama Canal Commission Wednesday concluded a productive three day meeting in which, for the first time, U.S.
95

Honorable Harold Brown

June 30, 1980 51

Page 2

and Panamanian members assumed responsibility for policy-

'making and supervision of the affairs of the Panama Canal

Commission" and that "Among actions taken by the Board were:

approval of the Regulations which govern the functions and

responsibilities of the Board as specified in the Panama

Canal Treaty of 1977."

The Subcommittee has been unable to obtain a copy of

these regulations from the Commission.

In your written testimony please comment on the conformity to the provisions of the Act of September 27, 1979,,

in the appointment and qualification of the members of the

supervisory Board; the basis for the description of the

Board as a "Board of Directors", and the relationship of the

Board to the officers of the Commission, the Secretary of

Defense (as the representative of the President), and the

Executive Branch of the United States Government.

After consideration of your testimony, the testimony of

other witnesses, and other relevant data, the Subcommittee

will consider the necessity and desirability of enactment of

further legislation on the subject in addition to the pending

authorization and appropriation bills for the agency.

Fifty copies of your prepared testimony should be

received by the Subcommittee not later than July 24, 1980.

Please bring an additional 25 copies to the hearing.

With best wishes for you, I am

-Sincerely yours,

CARROLL HUBBARD

Chairman

Panama Canal Subcommittee

CH:WMW:mpb
96

52

Public Law 96-70,

September 27, 1980,

93 Stat. 456. 

TITLE I-ADMINISTRATION AND REGULATIONS

CHAPTER 1-PANAMA CANAL COMMISSION

ESTABLISHMENT OF COMMISSION

22 USC 3611. SEC. 1101. There is established in the executive branch of the

United States Government an agency to be known as the Panama

Canal Commission (hereinafter in this Act referred to as the "Commission"). The Commission shall, under the general supervision of

the Board established by section 1102 of this Act, be responsible for

the maintenance and operation of the Panama Canal and the

facilities and appurtenances related thereto. The authority of the

President with respect to the Commission shall be exercised through

the Secretary of Defense.

SUPERVISORY BOARD

Membership. SEC. 1102. (a) The Commission shall be supervised by a Board

22 USC 3612. composed of nine members, one of whom shall be the Secretary of

Defense or an officer of the Department of Defense designated by the

Secretary. Not less than five members of the Board shall be nationals

of the United States and the remaining members shall be nationals of

the Republic of Panama. At least one of the members of the Board

who are nationals of the United States shall be experienced and

knowledgeable in the management or operation of an American-flag

steamship line which has or had ships regularly transiting the

Panama Canal, at least one other such member shall be experienced

and knowledgeable in United States port operations or in the business of exporting or importing one of the regular commodities

dependent on the Panama Canal as a transportation route, and at

least one other suoh member shall be experienced and knowledgeable

in labor matters in the United States. Three members of the Board

shall hold no other office in or be employed by the Government of the
97

53

93 STAT. 460 PUBLIC LAW 96-70-SEPT. 27, 1979

section. The code of conduct shall contain provisions substantially

equivalent to those contained in part 735 of title 5 of the Code of

Federal Regulations on the effective date of this Act. The code of

conduct shall, at a minimum, contain provisions substantially equivalent to the following provisions of law:

18 USC 201 et (1) the provisions of chapter 11 of title 18, United States Code,

seq. as amended, relating to bribery, graft, or conflicts of interest, as

appropriate to the employees concerned;

(2) section 7352 of title 5, United States Code, as amerided;

(3) sections 207, 208, 235, 508, 641, 645, 1001, 1917, and 2071 of

title 18, United States Code, as amended;

(4) section 5 of the Act of July 16, 1914 (31 U.S.C. 638a), as

amended;

2 Usc 701. (5) the Ethics in Government Act of 1978 (92 Stat. 1824), as

amended; and

(6) those provisions of the laws and regulations of the Republic

of Panama which are substantially equivalent to those of the

United States set forth in this subsection.

Investigation. (c) The Commission shall investigate any allegations regarding the

violation of the code of conduct adopted pursuant to subsection (b) of

this section. The Commission may recommend that the President

suspend from the performance of his duties any member of the Board

of the Commission or any officer or employee of the Commission,

pending judicial proceedings by appropriate authorities concerning

such allegations.

Negotiations. (d) The President shall negotiate suitable arrangements with the

Republic of Panama whereby each nation shall agree to take all

measures within its legal authority to assure that members of the

Board of the Commission comply with the code of conduct established

pursuant to subsection (b) of this section. Without prejudice to such

jurisdiction as the United States may have with respect to members

of the Board, the provisions of law enumerated in subsection (b) of

this section shall be enforced with respect to members of the Board

only in accordance with such arrangements.

OFFICE OF OMBUDSMAN

Establishment. SEC. 1113. (a) There is established within the Commission an Office

22 USC 3623. of Ombudsman, to be directed by an Ombudsman, who shall be

appointed by the Commission. It shall be the function of the Office of

Ombudsman to receive individual complaints, grievances, requests,

and suggestions of employees (and their dependents) of the Commission and other departments and agencies of the United States,

including the Smithsonian Institution, conducting operations before

the effective date of this Act in the area then comprising the Canal

Zone concerning administrative problems, inefficiencies, and conflicts caused within departments and agencies of the United States,

including the Smithsonian Institution, as a result of the implementation of the Panama Canal Treaty of 1977 and related agreements.

Functions. (b) The Ombudsman shall make findings-and render assistance

with respect to the complaints, grievances, requests, and suggestions

submitted to the Office of Ombudsman, and shall make appropriate

recommendations to the Commission or any other department or

agency of the United States, including the Smithsonian Institution.

(c) The establishment of the Office of Ombudsman shall not affect

any procedures for grievances, appeals, or administrative matters in

any other provision of this Act, any other provision of law, or any

Federal regulation.

(d) The Ombudsman shall be a citizen of the United States.

(e) The Office of Ombudsman shall terminate upon the termination Terminat of the Panama Canal Treaty of 1977.
98

54

PUBLIC LAW 96-70-SEPT. 27, 1979 93 STAT. 459

JOINT SEA LEVEL CANAL STUDY COMMITTEE

SEC. 1109. (a) The President shall appoint the representatives of the 22 USC 3619.

United States to any joint committee or body with the Republic of

Panama to study the possibility of a sea level canal in the Republic of

Panama pursuant to Article XII of the Panama Canal Treaty of 1977.

(b) Upon the completion of any joint study between the United Transmittal to

States and the Republic of Panama concerning the feasibility of a sea President of the

level canal in the Republic of Panama pursuant to paragraph 1 of Senate and House of Article XII of the Panama Canal Treaty of 1977, the text of the study Representatives.

shall be transmitted by the President to the President of th6eSenate

and to the Speaker of the House of Representatives.

(c) No construction of a sea level canal by the United States in the

Republic of Panama shall be undertaken except with express congressional authorization after submission of the study by the President as

provided in subsection (b) of this section.

AUTHORITY OF THE AMBASSADOR

SEC. 1110. (a) The United States Ambassador to the Republic of Coordination of

Panama shall have full responsibility for the coordination of the transfer of

transfer to the Republic of Panama of those functions that are to be functions.

assumed by the Republic of Panama pursuant to the Panama Canal

Treaty of 1977 and related agreements.

(bXl) The Commission shall not be subject to the direction or

supervision of the United States Chief of Mission in the Republic of

Panama with respect to the responsibilities of the Commission for the

operation, management, or maintenance of the Panama Canal, as

established in this or any other Act or in the Panama Canal Treaty of

1977 and related agreements, except that the Commission shall keep

the Ambassador fully and currently informed with respect to all'

activities and operations of the Commission.

(2) Except as provided in paragraph (1) of this subsection, section 16

of the Act of August 1, 1956 (22 U.S.C. 2680a), shall apply with respect

to the activities of the Commission.

SECURITY LEGISLATION

SEC. 1111. It is the sense of the Congress that the best interests of 22 USC 3621.

the United States require that the President enter into negotiations with the Republic of Panama for the purpose of arranging for the

stationing of United States military forces, after the termination of

the Panama Canal Treaty of 1977, in the area comprising the Canal

Zone before the effective date of this Act, and for the maintenance of

installations and facilities, after the termination of such Treaty, for

the use of United States military forces stationed in such area. The Report to

President shall report to the Congress in a timely manner the status Congress.

of negotiations conducted pursuant to this section.

CODE OF CONDUCT FOR COMMISSION PERSONNEL

SEC. 1112. (a) Before assuming the duties of his office Jr employ- Oath of office.

ment, each member of the Board of the Commission and each officer 22 USC 3622.

and employee of the Commission shall take an oath to discharge

faithfully the duties of his office or employment. All employees of the

Commission shall be subject to the laws of the United States regard- ing duties and responsibilities of Federal employees. (b) Not later than 60 days after all the members of the Board of the

Commission have been appointed, the Board shall adopt a code of

conduct applicable to the persons referred to in subsection (a) of this

59-139 0 - 79 - 2 (74)
99

.5 5

PUBLIC LAW 96-70-SEPT. 27, 1979 93 STAT. 457

United States. Members of the Board who are nationals of the

United States shall cast their votes as directed by the Secretary of

Defense or his designee.

(b) The President shall appoint the members of the Board. The

members of the Board who are United States nationals shall be

appointed by and with the advice and consent of the Senate. Each

member of the Board shall hold office at the pleasure of the President

and, before assuming the duties of such office, shall take an oath to

discharge faithfully the duties of his office. Members of the Board

shall serve without compensation but shall be allowed travel or Compensation,

transportation expenses, including per diem in lieu of subsistence, in travel expenses.

accordance with section 1107 of this Act.

(c) The Board shall hold meetings as provided in regulations

adopted by the Commission and approved by the Secretary of

Defense. A quorum for the transaction of business shall consist of a Quorum.

majority of the Board members of which a majority of those present

are nationals of the United States.

ADMINISTRATOR

SEC. 1103. There shall be an Administrator of the Commission, who 22 USC 1113.

shall be appointed by the President, by and with the advice and

consent of the Senate, and shall hold office at the pleasure of the

President.

DEPUTY ADMINISTRATOR AND CHIEF ENGINEER

SEC. 1104. (a) There shall be a Deputy Administrator and a Chief 22 USC 1114.

Engineer of the Commission, both of whom shall be appointed by the

President. The Deputy Administrator and the Chief Engineer shall

perform such duties as may be prescribed by the President.

(b) The Deputy Administrator and the Chief Engineer shall each be

paid compensation at a rate of pay established by the President which

does not exceed the rate of basic pay in effect for grade GS-18 of the

General Schedule under section 5332 of title 5, United States Code. 3 CFR 1978

Comp., p. 236.

CONSULTATIVE COMMITTEE

SEC. 1105. (a) The President shall designate, and the Secretary of 22 USC 3615.

State shall coordinate the participation of, representatives of the

United States to the Consultative Committee to be established under

paragraph 7 of Article III of the Panama Canal Treaty of 1977.

(b) The Consultative Committee shall function as a diplomatic

forum for the exchange of views between the United States and the

Republic of Panama. The Committee shall advise the United States

Government and the Government of the Republic of Panama on

matters of policy affecting the operation of the Panama Canal. The

Committee shall have no authority to direct the Commission or any

other department or agency of the United States to initiate or

withhold action.

JOINT COMMISSION ON THE ENVIRONMENT

SEC. 1106. (a) The United States and the Republic of Panama, in Membership.

accordance with the Panama Canal Treaty of 1977, shall establish a 22 USC 3616.

Joint Commission on the Environment (hereinafter in this section

referred to as the "Joint Commission") to be composed of not more

than three representatives of the United States and three representatives of the Republic of Panama, or such other equivalent numbers of
100

56

93 STAT. 458 PUBLIC.LAW 96-70-SEPT. 27, 1979

representatives as may be agreed upon by the Governments of the

two countries. The United States members of the Joint Commission

shall periodically review the implementation of the Panama Canal

Treaty of 1977 with respect to its impact on the environment and

shall, jointly with the representatives of the Government of Panama,

make recommendations to the United States Government and the

Government of the Republic of Panama with respect to ways to avoid

or mitigate adverse environmental impacts resulting from actions

taken pursuant to such Treaty. Compensation, (b) Representatives of the United States on the Joint Commission

travel expenses. shall be appointed by the President and shall serve at the pleasure of

the President. Such representatives shall serve without compensation but shall be allowed travel or transportation expenses, including

per diem in lieu of subsistence, in accordance with section 1107 of this

Act.

(c) Any Federal employee subject to the civil service laws and

regulations who is detailed to serve with, or appointed by, the United

States representatives on the Joint Commission shall not lose any

pay, seniority, or other rights or benefits by reason of such detail or

appointment. Compensation. (d) The United States representatives on the Joint Commission

may, to such extent or in such amounts as are provided in advance in

appropriation Acts, appoint and fix the compensation of such personnel as the representatives of the United States on the Joint Commission may consider necessary for the participation of the United States

on the Joint Commission.

Rules of (e) The United States representatives on the Joint Commission

pocedure. may, in cooperation with the representatives of the Republic of

Panama on the Joint Commission, establish rules of procedure to be

used by the Joint Commission in conducting its affairs, subject to the

approval of such rules by the Governments of the United States and

the Republic of Panama.

TRAVEL EXPENSES

22 USC 3617. SEC. 1107. While away from their homes, regular places of business,

or official stations in performance of services under this chapter,

members of the Board of the Commission and the representatives of

the United States on the Consultative Committee referred to in

section 1105 of this Act and on the Joint Commission on the

Environment referred to in section 1106 of this Act shall be allowed

travel or transportation expenses, including per diem in lieu of

subsistence, in the same manner as persons employed intermittently

in Government service are allowed expenses under section 5703 of

title 5, United States Code.

DEFENSE OF THE PANAMA CANAL

22 USC 3618. SEC. 1108. In the event of an armed attack against the Panama

Canal, or when, in the opinion of the President, conditions exist

which threaten the security of the Canal, the Administrator of the

Commission shall, upon the order of the President, comply with such

directives as the United States military officer charged with the

protection and defense of the Panama Canal may consider necessary

in the exercise of his duties.
101

57

VI. 31 Jul 80 N 6 PANAMA

CANAL COMMISSION MEMBERS COMMENT ON ISSUES

PA241801 Panama City Circuito RPC Television in Spanish 2300 GMT 23 -Jul 80

[Statements by Ricardo Rodriguez, Edwin Fabrega and Tomas Paredes, Panamanian members

of the Panama Canal Commission, reported by news director Fernando Eleta Casanova at

Panamanian presidency; date not. specified--passages in quotation marks recorded]

[Text] [Eleta Casanova] Many important points were discussed during the ordinary

session of the Panama Canal Commission Board of Directors. One of these was the code

of ethics to be applied to all the Panamanian and U.S. personnel involved in the operation of the canal. Government and Justice Minister Ricardo Rodriguez, a member of

the Board of Directors, has explained the Panamanian position in this regard.

[Rodriguez] ".During the first session, we, as Panamanian Government representatives,

opposed the adoption of the code of ethics and we emphatically stated that as representatives of Panama on the Board of Directors, we could not be subject to norms issued

by an organ that belongs to the structure of another government. We said that as

government representatives we could not be subject to the common disciplinary rules

governing employees of an ordinary institution. That is the position we adopted in

the first session of the Board of Directors of the Panama Canal Commission. As a

result of that debate, the issue was postponed.

"On this occasion, the U.S. delegation once again presented a draft code of conduct

but different from the initial draft. In the first draft, all the employees and members of the Board of Directors, regardless of their nationality, were subject to the

code of conduct and to U.S. legislation. In the new draft, even though norms of the

code of ethics are adopted, this is done in two parts: one for the U.S. employees and

- - members of the Board of Directors and another for the Panamanian members of the Board

of Directors. So the code is divided into two parts:*- one for all the employees and

another for the members of the Board of Directors. Regarding the members of the Board

of Directors, it explicitly states that the Panamanian members of the board are not

subject to U.S. legislation but to Panamanian legislation dealing.with ethics. In

. - other words, they expressly state that we are not subject to any U.S. legislation.

"Our opposition to the code of ethics is due to certain very delicate norms which

permit very accommodating [acomodadas]. interpretations. It is also a result of

formal aspects; namely, as-government representatives we cannot-be subject to such

norms. This is not necessarily due to the ethical content of the famous code of ethics

because if we look at its content, in general I would say that 99 percent of its norms

are correct and respond to the desire to achieve correct moral behavior from all the

members of the Board of Directors and the employees of the Canal Zone. However, as

representatives of a government and the fact that, in the end, the code is the product

of an organ that is an agency of a foreign government does not permit us to be subject

to those rules. We categorically stated this. We said that despite the fact that the

code of ethics was approved by five to four, the Republic of Panama did not accept that.

code of ethics and did not feel it was subject to those norms. However, we said that

through the other channels established by the treaties such as the consultative committee and at the embassy level, we would continue to debate the problem so that the

U.S. Government will issue the necessary measures so that this part of the code referring to the Panamanian members of the Board of Directors will be abolished or abrogated."

(Eleta Casanova] Minister Rodriguez also spoke on the draft of the delimitation of

functions between the canal 'administrator and the Board of Directors which was presented

by the North Americans.
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58

VI. 31 Jul 80 N 7 PANAMA

[Rodriguez] "In general the draft expresses the Panamanian position that the Board of

Directors is the body that really directs the entity called the Canal Commission. This

is the objective of the draft of the resolution since it gives maximum authority to the

Board of Directors and points out the important functions of the Board of Directors such

as approving the budget, assigning functions to the administrator, deputy administrator

chief of engineers and other important officials of the Canal Commission, and approving

the labor policy and the employment and wage systems. In sum, all the ,most important

functions remain in the hands of the Board of Directors.

"However, we opposed it because we believed that the draft could be improved. In other 

words, the authority granted to the administrator must be consistent with the new circumstances which are the result of the Torrijos-Carter treaties. The draft of 'he resolution

specifically lists six or seven functions that the Board of Directors reserves for itself.

Another paragraph then states that all those functions which have not been assigned to

the Board of Directors are left in the hand~ of the administrator, for example, the

conclusion and approval of contracts, the establishment of regulations for the functioning

of the boards of inspectors which deal with the claims over canal transit accidents which

is a very important function, and the settlement of claims. All these functions would

be left in the hands of the administrator who would use his own discretionary power even

though the same resolution establishes that the Board of Directors maintains the power

to review the administration's actions.

"We believe that, given the new circumstances, it is logical and normal that the specific

functions of the Board of Directors be expressed, that the resolution state that those

functions not assigned to the administrator are in the hands of the Board of Directors

and that the functions of the administrator be also defined. Regarding the power to

sign contracts and undertake transactions and so forth, limits and categories should be

established to reflect a new way of administering the canal in accordance with the

Torrijos-Carter treaties. That is, the resolution should indicate what contracts must

be previously approved-or authorized by the Board of Directors, what contracts can be

approved afterward by the Board of Directors and what contracts can be concluded by the

Canal Zone administrator in accordance with his own Judgment.

"We also pointed out that all the regulating functions, those of issuing general regulations

for the functioning of the Canal Commission, must exclusively be in the hands of the

Board of Directors.

"These observations, which are not all of the ones we made, reflect our concern that

this new resolution, which leans in the direction that the republic and its spokesman,

the president of the republic, have pointed out, to the effect that the Board of Directors

should be a real Board of Directors because this is established in the text of the treaties,

is generally positive. However, these deficiencies must be corrected. These observations,

I repeat, were favorably received by the U.S. delegates and discussion of the subject was

postponed until the next Board of Directors meeting whiTch will be held in New Orleans in

October. 

"I believe our observation about establishing certain limitations on the power of the

administrator has been viewed positively by the U.S. delegation and I think that in the

next session we will have a draft which will be more consistent with the viewpoints of

the two delegations. I think there is a consensus or at least a substantial improvement

in the draft."

(Eleta Casanova] Thank you, minister, Edwin Fabrega, a member of the board, will explain

his new duties. He is not chief of maintenance of the canal. Instead he has been elected

chairman of the Canal Planning and Improvement Commission.
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59

VI. 31 Jul 80 N 8 PANAMA

(Fabrega) "In truth, our function is to follow closely the work of the Canal Commission.

Planning Group, to encourage their studies and then to advise them so studies will be

made which will guarantee that in the year 2000 Panama will receive a canal in better

conditions than those which exist now and in perfect condition to handle the traffic

foreseen for that time."

[Eleta Casanova] We asked Fabrega about the plans to achieve those objectives.

[Fabrega) "There are very specific plans. For example, the increase in the number

of mules means that less time is lost in getting the ships in the locks and that the

transit will be faster. The deepening of the canal means there will always be a proper

depth for the ships and that we will not have to impose the cargo reductions that sometimes are established because of lack of depth. This will also permit an.'increase in

the number of transits that ships can make in a year. Those studies also include ones

on special illumination and on internal navigation controls to permit big ships to transit

at night. That area is frequently foggy, which makes night navigation impossible.

"All those projects, which are very costly, would guarantee more efficiency in the

canal. We are talking of investments of no less than $40-$50 million a year. In the

budget that has just been approved for 1982 we have noted that only $27 million has been

allocated for this. We-feel it is not enough, even though the $27 million is well

allocated, directed at solving the main problems, which are the traffic bottlenecks.

We think policy in this area must be more aggressive.

"They [not further identified] also recognize that there are limits imposed by the

implementation law which governs them. It establishes that the canal expenditures must

- come strictly from its revenues. This imposes limitations because the enterprise is

limited in asking for loans and in making investments now when it is cheaper, rather

than when it will have money available after years of collecting tolls."

. [Eleta Casanova) Fabrega explained the budget approved by the Board of Directors for

the next fiscal year for the operation of the canal.

[Fabrega) "The budget that was approved amounts to approximately $430 million, 75

percent of which comes from toll revenues. The other 25 percent is frdm revenues from

other Canal Commission services such as payments for the electric energy supplied to

the armed forces, the tow services for the ships which dock in 'the pots or additional

tugboat service for ships which cannot transist the canal by themselves. These amountto $430 million a year of that budget. There is an estimated amount of payments to

Panama based on the tonnage that transits the canal, the set $10 million paid to Panama

and the $10 million paid to Panama for the services it provides to the canal area. It is

estimated that $75 million of that budget will go to Panama.

"That budget includes $27-$28 million for investments. This includes the purchase of

new tugboats and mules. These are part of the improvement programs which, as I indicated before, are the ones we are interested in as members- of that commission, to make

sure that the canal will have adequate capacity to handle traffic on the day we receive

it in the year 2000.

[Eleta Casanova) Fabrega also said that although Panama approved the budget, its representatives made the observation that they did not agree with the payment of $17

million for interest on the cost of construction of the canal since our country considers

that this has been fully paid. Fabrega also said it was established that the budget

would be -flexible so changes will be considered when the wages between the old and new

workers are leveled.
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60

VI. 31 Jul 80 N '9 PANAMA

Tomas Paredes will speak about the labor aspects.

[Paredes) "Panama had the opportunity to present at the Board of Directors its position regarding various labor aspects. In the first place, Panama presented its position regarding payment of the second part of the 13th month bonus by the Panama Canal

Commission. It indicated that this is the obligation of the employer and at no time

can it be transferred to the worker. Second, Panama presented its position on the

immediate elimination of the pay scales that went into effect on 1 October for the new

workers of the Panama Canal Commission since these introduce discriminatory aspects.

It has led to cases in which two people who do the same work receive different wages.

"In the third place, Panama presented a proposal for wage adjustment for thePanamanians who are Panama Canal Commission employees and who live in the canal area,

due to the decrease in their purchasing power as a result of.the increase in the cost

of living since they do not have access to housing, food, gasoline and public services

which are subsidized, as was the case with the Panama Canal Company.

"In other labor aspects, Panama vigorously protested the application of some temporary

measures that the Canal Commission has adopted through its administrator with regard

to the preferential hiring of Panamanians by the Canal Commission, the rotation of

North Americans in that agency and the hiring of citizens of third countries outside

Panama.

"Panama maintained a firm position regarding fulfillment of the provisions of the 1977

Panama Canal Treaty. .Special stress was made in these discussions on labor aspects

regarding the application of title 7 which regulates the labor-management relations in

the canal area. Title 7 is essentially based on U.S. law and therefore its application

flagrantly violates the Panama Canal Treaty.

"The last subject to be discussed in labor affairs was that of the ombudsman. Panama

has said that this position in the commission is discriminatory because it is

established that it must be filled by a U.S. citizen. We also said that in the

application or implementation of that ombudsman position much care has to be taken so

that the person in that post will not apply or interpret the provisions established in

the Panama Canal Treaty."

(Eleta Casanova] What were the results of these complaints? Was agreement reached or

did the United States obtain approval by five to our votes?

[Paredes] "No vote has taken place. On the contrary, most of the Panamanian complaints

arc the object of serious studies and analyses by the U.S. members of the Board of

Directors. P~on kts part Panama has been drafting and improving all these proposals and

their economic, social and political effects& I think that in a third meeting of the

Board of Directors which will be held in October, final decisions on these subjects

will be made." 

[Eleta Casanova) Even though there are differences between Panamanian and U.S.

representatives, the sole agreement to postpone decisions until consensus is reached

seems to indicate that the implementation of the treaties is functioning.

From the presidency of the republic, this is Fernando Eleta Casanova.
105

61

VI. 4 Aug 80 P A N A M A N 1

MATUTINO CRITICIZES U.-S. INTERPRETATION OF CANAL TREATY

PA021342 Panama City MATUTINO in Spanish 1 Aug 80 pp 4-a, 8-a

[Article by Luis Restrepo Rosas: "Interpretations"]

[Text] Worried about what is occurring as a result of the U.S. colonialist interpretation

of the Torrijos-Carter treaties on the Panama Canal, ,and also About the passive attitude of

the Panamanian Government toward that interpretation, I approached a Panamanian patriot who

has studied this issue. Because he knows many- sides of the problem well, I asked him to make

a legal interpretation of the conflicts that I have been commenting on in this column, always serving first and foremost the interests of the country and of urban and rural workers.

We talked for a long time and I received some very objective guidance which will come in

handy in the future in the struggle for a fair U.S. interpretation of the treaty which

will apparently eliminate the points of conflict between the two nations. My friend told

me that that is a capricious interpretation based primarily on Law 96-70, which was approved by the U.S. Congress. That law has totally twisted the bases of the canal:treaty.

Here is the legal interpretation he made:
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62

VI. 4 Aug 80 N2 PANAMA

The conflicts around the behavior code, the authority of the President of the United States

and the U.S. secretaries of defense and army to guide the Panama Canal Commission, the

requirement for Panamanians onthe board of directors and the Panamanian deputy administrator to take an oath, the application of Title 35 of the Code on Federal Regulations,

sections of the Canal Zone Code and the Civil Service Law, and all the other jurisdictional problems that we have been facing since 1 October 1979 are the result of the enforcement

of Law 96-70 which was enacted by the U.S. Congress and which totally distorts the

Torrijos-Carter treaty.

Panama and the United States agreed in the treaty that during the transition period,

before completely relinquishing the administration of the Panama Canal, a binational body

led by a board of directors would manage, operate and maintain the canal.

That binational body (international because it includes two countries and was created

through a treaty) would follow the provisions of the treaty, as well as Panamanian laws,

except those that might be contrary to it.

Article 9 of the treaty is very clear when it says that "in keeping with the provisions

of the treaty and its annexes, the laws of the Republic of Panama will be applied in the

areas placed at the disposal of the United States pursuant to the treaty."

For greater protection, U.S. negotiators made item eight in that same Article 9 read:

"The Republic of Panama will not enact, pass or implement any -law, decree, regulation or

international agreement or take any action intended to regulate or in some way interfere

with the exercise of the rights of the United States of America conferred by this treaty

or its annexes."

The sole legislative act that the United States could pass was the law creating the

Panama Canal Commission.

However, Congress took advantage of this to try to distort the treaty.

Law 96-70 goes far beyond the creation of a body and openly violates the treaty by turning the body into an agency subordinate to the President of the United States. It takes

away the powers of the board of directors and gives them to the President of the United

States, who in turn can delegate them to the secretary of defense; it restrains the use

of funds for administrative purposes; it creates executive positions; it pinpoints guidelines on labor, employment, wages, accounting and auditing, tolls, ship accidents, sales,

navigation rules, ship inspections, police and legal procedures.

As long as that law remains in effect we will continue to live in day-to-day confrontation,

because Panama has a completely different idea about the legal status of the Panama Canal.

Commission, the role of the Panamanians on the board of directors, the deputy administrator and the Panamanians on the canal administration later, on the applicable legislation,

and autonomy from the U.S. President and the Congress.

The U.S. officials on the board of directors and in the administration, as well as the

secretary of the army, have apologized saying that they simply bave to comply with Law

96-70.

Therefore, the Panamanian Governrient should formally denounce the United States in international organizations for violating the Torrijos-Carter treaty. That law completely

thwarts the objectives of the treaty as well as the elimination of the causes of conflict.

On the contrary, it intensifies them.

Panamanian Foreign Minister Dr Carlos Ozores owes us an explanation because President

Carter's recommendation to discuss this matter in the consultative committee is unacceptable. It is a trap and a waste of time.
107

Mr. HUBBARD. Thanks to Mr. Blumenfeld, those with him, and to

the members of the subcommittee who were here today.

The record will be kept open until the close of business on

August 28, 1980, for submission of further material by Members of

Congress or the witness, Mr. Michael Blumenfeld.

If there is no further business, the hearing is recessed subject to

the call of the Chair.

[Additional material submitted follows:]
108

DEPARTMENT OF THE ARMY

OFFICE OF THE ASSISTANT SECRETARY

WASHINGTON, D.C. 20310

-REPLY TOAU1918 ATTENTION OF AUG 191980

Honorable Carroll Hubbard, Jr.

Chairman, Panama Canal Subcommittee

Committee on Merchant Marine and Fisheries

House of Representatives

Washington, D.C. 20515

Dear Mr. Hubbard:

During the oversight hearing of the Panama Canal Subcommittee on July 28,

Representative Carney inquired about methods of obtaining additional information on the management of the Panama Canal. Specifically, he mentioned that

attendance at meetings of the Board of Directors might prove beneficial to

members of the Subcommittee. As you will probably recall, I responded that

members of the Subcommittee could attend when invited. I assure you that this

response was not an attempt on my part to block attendance at any meeting of

the Board by a member of the Subcommittee; rather, it was in keeping with our

regulations, which authorize special guests at meetings only upon invitation

by the Chairman. I would certainly be responsive to a request by any member

of the Subcommittee to be a guest at any of our meetings. I would, however,

like to suggest some other methods whereby Subcommittee members can be kept

fully informed of Board activities and Canal operations.

Regarding information on Board activities I, or the Secretary of the Commission, would be available to present a briefing to members of the Subcommittee on the topics discussed at each meeting. Subsequently, after the minutes

of the Board meetings are approved, copies of the minutes would be provided to

the Subcommittee as was the case with the first meeting.

With respect to Canal operations, the Secretary of the Panama Canal Commission could send to the Subcommittee a copy of the monthly report prepared

for members of the Board. Further, he is always available to discuss the

activities of the Commission. In addition, the Administrator and the Deputy

Administrator could call upon you whenever either one is in the Washington

area. Naturally, copies of the Panama Canal Commission Annual Report will be

provided routinely to the Subcommittee.

I believe these initiatives, which will keep the Subcommittee informed

of the activities of the Board and the status of Canal operations, will be

beneficial to Subcommittee members, and I will be pleased to implement them.

Sincerely,

Michael Blumenfeld

Assistant Secretary of the Army 

(Civil Works)

[Whereupon, at 12 m., the subcommittee was adjourned, subject

to the call of the Chair.]
PANAMA CANAL ENVIRONMENTAL ISSUES

OVERSIGHT

MONDAY, MARCH 17, 1980

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON THE PANAMA CANAL,

COMMITTEE ON MERCHANT MARINE AND FISHERIES,

Washington, D.C.

The subcommittee met at 10:18 a.m., in room 1334, Longworth

House Office Building, Hon. Carroll Hubbard, chairman, presiding.

Present: Representatives Hubbard, Bauman, and Livingston.

Staff present: Merrill Whitman, Terrence Modglin, Luis Luna,

Michael Smith, and Mary Pat Barrett.

Mr. HUBBARD. To each of you who visits with us today, I extend

my greetings as the chairman of the Panama Canal Subcommittee.

Since we are holding a hearing on the Monday morning, many

Members are still out of town, especially on a Monday when it is

announced, that we will not, in fact, have any rollcall votes. But

the Speaker of the House, Tip O'Neill; the majority leader of the

House, Jim Wright; and the minority leader of the House, John

Rhodes, have all encouraged committee members to hold hearings

on Monday, and to try to complete hearings, if possible, on

Monday, so that we can have these out of the way and behind us,

and so that they do not interrupt and conflict with meetings of the

House of Representatives when the House is indeed in session.

Oftentimes, committees do meet on Wednesday, with the House not

going into session until 3 p.m., or, as last week, 1 p.m.

Therefore, I have seen on my own schedule, I have three subcommittee meetings and a full committee meeting, all in markup at

the same time. It is impossible for me to attend but one of them, of

course, and I have to leave proxies with the others.

So having heard the request of the Speaker and the majority

leader and the minority leader, and others, as to having hearings,

when possible, on an open day, to encourage the Members not to be

out of town on both Monday and Friday, we are holding this

hearing today. Friday we did not meet. However, I went ahead and

scheduled this subcommittee hearing for today, and I can begin the

meeting, as we are doing now, and I will read my opening statement.

Today marks the first opportunity, now that the Panama Canal

Treaty has entered into force, for this subcommittee to examine in

full the environmental factors affecting the viable operation of the

Panama Canal and the quality of life of those who live in the canal

area.

The purpose of this hearing is to bring the subcommittee members up to date on the status of the environment of the Panama

(109)
110

Canal and to point out some of the consequences of the failure to

properly maintain environmental balance in the canal area.

Environmental protection of the Panama Canal area has been a

concern of this subcommittee in the past, and will remain a longterm concern because it is inextricably related to the smooth and

continual canal operation in future years.

We are aware that in the long run environmental protection of

the canal watershed will depend on the will of the Government and

Republic of Panama. But the United States is also responsible,

along with the Republic of Panama, until the year 2000, to implement the Panama Canal Treaty in a manner which would avoid

any adverse environmental impacts in the canal area.

The Panama Canal Treaty and the Panama Canal Act provide

the framework of institutions, and a list of tasks, for the canal's

environmental protection in the next 20 years.

The Joint Commission on the Environment is the primary institutional vehicle envisioned in the Panama Canal Treaty of 1977 to

provide for close overview of any environmental problem that could

arise as a result of the implementation of the treaty. This Commission is composed of three representatives of the United States, one

of whom will be testifying today, and three representatives of the

Republic of Panama. For the substantive participation of the

United States in the work of the Joint Commission, section 1106 of

the Panama Canal Act provides for appointment of U.S. Commissioners, the appointment and compensation of staff, and the establishment of rules of procedure.

While the Joint Commission on the Environment is the primary

institution for environmental protection referenced in the treaty, it

is clear that relevant U.S. agencies must also have full commitment to environmental concerns if there is to be a successful

implementation of the treaty without environmental damage.

The Panama Canal Commission, for example, is most directly

concerned with the water supply of the canal, coordination with

Panama of public services provided in the canal area, and maintenance of existing equipment and facilities for the direct operation

of the canal and for the support of employees, all of which have

considerable interrelation with the environment.

Moreover, the Agency for International Development has undertaken to work with the Government of Panama in a major effort to

reforest the canal's watershed.

Finally, the Smithsonian Tropical Research Institute provides a

formidable source of scientific and environmentalist expertise to

deal with environmental problems that do arise in the canal area.

Because of the role of these agencies, then, we have asked for their

testimony today. We have asked the agencies to comment upon

present and prospective environmental problems, and their proposed solutions.

In addition to addressing the topic in general, our witnesses have

also been invited to make any comments they might desire concerning the Office of Technology Assessment working paper dated

December 15, 1978. That paper was a landmark piece of work

because of the experts whose opinion were included in it. We hope

to build on the study in the future.
111

Environmental concerns need to be represented at all stages of

the implementation of the treaty to prevent any adverse action

which could endanger the canal operation. A determination to deal

with these concerns needs to be reflected from the very beginning

of the application of the Panama Canal Act, and that is why this

subcommittee is holding today's hearings.

In the context of our hopes for the future successful operation of

the canal, and in the light of a forward-looking policy for development of all resources to attain that objective, we now anticipate

the statements of Dr. Ira Rubinoff, Director of the Smithsonian

Tropical Research Institute in Panama; Mr. Thomas Constant, Secretary of the Panama Canal Commission; Mr. Aldelmo Ruiz, Director of the Agency for International Development Mission in

Panama; and Hon. William Austin Hayne, Deputy Assistant Secretary of State for Environmental Health and Natural Resources,

and also a U.S. representative on the Joint Commission on the

Environment.

At this, time I would like to note that our newest member of the

subcommittee Congressman Robert Livingston, is with us. We welcome you to the subcommittee, Congressman Livingston.

Mr. LIVINGSTON. Thank you, Mr. Chairman.

It is a pleasure to be here.

This is my first opportunity to serve on the subcommittee and I

look forward to the hearings.

Mr. HUBBARD. It is true that former Congressman Treen, now in

his second week as Governor, he did resign as a Member of Congress.

Mr. LIVINGSTON. He did resign and I am taking his position.

Mr. HUBBARD. At this time, the Chair asks unanimous consent to

enter into the record documents relating to the hearing today.

These documents consist of the St. Louis Globe-Democrat article

entitled "Is the Panama Canal Doomed?", and selected portions of

the Agency for International Development paper on the watershed

management project; the Office of Technology Assessment paper on

environmental factors related to the canal, to which there will be

many references this morning, was included in our previous printed hearings on Canal Operations Under the 1977 Treaty, Parts 1

and 2.

Mr. HUBBARD. Our first witness today before our subcommittee is

Dr. Ira Rubinoff, Director of the Smithsonian Tropical Research

Institute.

Dr. Rubinoff has appeared before our subcommittee many times

in the past to testify on the operations of the Institute and its

subordinate entity, the Canal Zone Biological Area. Members will

recall that earlier in this Congress, pursuant to its authorizing

role, the subcommittee promoted legislation to raise the limit on

authorized funds for this biological area to $750,000 per year. The

legislation was signed into law as Public Law 96-89 on October 19,

1979.

Our witness has been Director of the Tropical Research Institute,

known as STRI, for many years, and he has had considerable

contact with his Panamanian scientific counterparts.
112

His role and background should enable him and the organization

he heads to contribute significantly to present and future environmental problems.

Dr. Rubinoff, your testimony today gives us an opportunity to

brief the subcommittee on the latest activities in the biological

area. But we hope you will give special emphasis to what, and

should, arise respecting the canal in the years ahead.

Again, Dr. Rubinoff, the Director of the Smithsonian Tropical

Research Institute of the Smithsonian Institution. We welcome you

and your remarks.

STATEMENT OF DR. IRA RUBINOFF, DIRECTOR, SMITHSONIAN

TROPICAL RESEARCH INSTITUTE

Dr. RUBINOFF. Thank you, Mr. Chairman.

I appreciate the opportunity, on behalf of the Smithsonian Tropical Research Institute, a Bureau of the Smithsonian Institution, to

appear before you today to discuss environmental issues related to

the Panama Canal.

The lakes of the Panama Canal provide water for ship transits

and for the cities of Colon and Panama. Thus, protection of the

canal watershed against deforestation is of primary concern to

Panama and to other countries that contemplate using the canal.

The 326,300 hectare watershed is already 80 percent deforested,

chiefly in areas that do not directly abut the canal. It has been

calculated that soil erosion will increase between 50 cubic meters

per hectare per year and 260 cubic meters per hectare per year on

deforested areas. Soil passing into the canal waters can present

major problems. At the moment it costs $1.31 to remove 1 cubic

meter of soil from the canal, and increased erosion could directly

raise canal operating costs. Erosion would also reduce the capacity

of existing water storage areas by siltation. The forest remaining in

the Canal watershed is partly adjacent to the canal and partly in

the far eastern portion of the watershed. The human population in

the watershed area, according to the U.S. Agency for International

Development, is growing at 5 percent per year and pressure to

clear the remaining areas of forest for temporary agricultural use

is great and increasing.

Until the implementation of the new Panama Canal Treaty, the

Smithsonian Tropical Research Institute administered the 1,650

hectare island of Barro Colorado-the largest island in Gatun Lake

which is the principal water storage basin of the canal watershed.

In accordance with the new treaty and with the 1940 Western

Hemisphere Convention for the Protection of Fauna, Flora, and

Natural Areas, Barro Colorado Island and adjacent peninsulas with

an additional total area of nearly 4,000 hectares, were designated

the Barro Colorado Nature Monument under the administration of

the Smithsonian Tropical Research Institute. It is of interest to

note that the administration of the monument by STRI is not

limited by the life of the Panama Canal Treaty.

The Smithsonian Tropical Research Institute is, quite naturally,

very active in the field of environmental protection in the canal

watershed. The Institute has a force of eight wardens and one

supervisor who conduct a 24-hour a day patrol of the areas under

its jurisdiction. The Smithsonian's fiscal year 1981 budget request
113

includes an appeal for seven additional game wardens and a resident naturalist to augment the protection of this valuable park. In

addition, a total of more than 11 kilometers of fencing has been

erected to protect critical mainland areas, and a management plan

for the entire area is now being prepared in conjunction with the

Wildlands Management Unit of the Agricultural Research UnitCATIE-in Costa Rica and with the U.S. National Park Service.

On March 29, 1979, President Royo declared the intention of his

government to make a large area-22,000 hectares-of the watershed lying adjacent to the Barro Colorado Nature Monument into a

national park when the area reverted to the administration of

Panama on October 1, 1979. The declaration instituting the park

has not yet been enacted, but the area has been declared a special

forest by the agency of the Ministry for Agricultural Development

that is charged with national conservation of natural resources

(RENARE). The area is presently intermittently patrolled by two

guards from RENARE who are accompanied by one armed soldier.

A loan of $10 million has been made to the Government of

Panama by the U.S. Agency for International Development for

protection and improvement of the canal watershed and two watersheds in other parts of the country over the next 5 years. The

stated purposes of the loan are: (1) Strengthening of the agency

RENARE; (2) reforestation in deforested areas; (3) agrosilviculture;

and (4) silviculture.

Some reforestation has started and several plantations of cashew

trees in company with castor beans have been initiated as agrosilvicultural projects.

The Joint Commission on the Environment, as called for in the

new treaty, has not yet had its first meeting. This is regrettable

since projects that should have been subjected to their review and

approval. have already begun-for example, a 6,000 unit housing

development in the Colon area. It appears that the Commission

will have an uphill struggle to effectively influence matters affecting the environment.

A related problem lies in the fact that the general level of

concern for environmental matters is relatively low, even at administrative levels. The practical importance of sound environmental policies is not broadly appreciated.

I might add an aside: Since this was written we have had very

positive reaction from the Government of Panama. We arrested

two poachers in the Barro Colorado Nature Monument, and they

were sentenced to 60 days in jail, a much stiffer sentence than the

U.S. courts administered when they had responsibility for that

area.

It is unpredictable, for example, how a laxity toward the enforcement of existing laws will affect the spread of hoof-and-mouth

disease into, and through, Central America. The Inter-American

Highway is steadily progressing toward the Colombian border. A

large park on the frontier with Colombia is planned, which, theoretically, will act as a buffer to prevent the transmission of the

disease northward. Although it is against the law to "colonize" the

sides of the highway, adventitious agriculturalists have already cut

the forest in a strip more than 100 meters wide for the entire

existing length of the road. They are cutting the forest almost
114

before the extension of the engineering pilot road reaches into a

new area, and one must seriously wonder whether or not the

barrier park can succeed in its objectives.

The proposed construction of a sea-level canal is now very much

a preoccupation of the Republic of Panama, with many people in

favor of it, some against, and a few wanting to examine the possible economic and ecological effects before committing themselves.

In 1977, at the last National Research Council Review, scientists

from the Smithsonian Tropical Research Institute stated their

belief that a major program of investigation into the possible ecological effects of the construction of this canal should be made as a

primary step in its planning. Dr. David Challinor, Assistant Secretary for Science at the Smithsonian Institution, testified before this

subcommittee in June 1978, about the issues such a plan should

address and a means of undertaking the broad scale study which

we believe is essential. No plans for a study have been made, yet

the Japanese have already sent a delegation to Panama to explore

the possibilities of canal construction. An indication of the seriousness of the interest of the Panamanians in this possibility is that

President Royo will go to Japan to continue the discussions in the

very near future.

I would like to add that the problem of tropical deforesiation in

the former canal zone is merely a tip of the iceberg. Tropical

deforestation is one of the major unperceived, or poorly perceived

problems of this country with manifestations much further reaching than the Panama Canal watershed.

Throughout the tropical regions of the world an area the size of

Delaware is being deforested every week; an area the size of England every year.

These forests temper the climate of the world and provide fuel

for much of the world. These forests are important in protecting

the genetic reservoirs of the highest diversity of life on this planet,

a diversity which has provided many of the food crops and medicines that we use. It is in our future national interest to support

the establishment and maintenance of preserves and parks in the

forest regions throughout the world.

These are reservoirs that we will need in the future, reservoirs of

genetic diversity for which technology cannot provide substitutes in

the future.

These are living resources, and once extinct, they are gone forever.

Thank you, Mr. Chairman.

I will be glad to respond to any questions.

Mr. HUBBARD. Thank you for your statement, Dr. Rubinoff.

My first question regards environmental consciousness. In your

statement you seem to paint a rather somber picture of the consciousness of environmental protection in the canal area. You state

that the "Commission will have an uphill struggle to effectively

influence matters affecting the environment." You further state

that "The general level of concern for environmental matters is

very low." It would seem that some strong measures are needed to

impart this consciousness. What do you recommend to the United

States to achieve this objective?
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Dr. RUBINOFF. Well, I think that there are a variety of things

that can be done.

One is the support of conservation organizations throughout

Latin America, and we at the Smithsonian are attempting to do

this in a small way, in the Republic of Panama.

We have had teacher training seminars on conservation matters,

and a number of the teachers who attended these courses have

gone back and started conservation clubs in their schools. There is

a conservation ethic that has to be developed and this takes some

time. It will probably take another generation which has to grow

up with these ideas in mind.

In the interim, I think a very strong action has to be taken and

that is that the United States should pay for the conservation of

natural areas. There is a model that I think would work in the

Republic of Panama as well as elsewhere in the Tropics. It is in our

national interest. These are resources that we are going to need in

the future. Just as we pay the Arabs for their social security when

their oil runs out-we pay more than the cost of exploration,

refining, and transportation of oil.

We are going to need these tropical genetic resources in the

future, and every year we should be paying for these reserves

throughout the tropical world; we could set up an inspection program whereby the amount that is paid is dependent upon the

number of squatters being kept in check and the number of acres

that are kept forested.

These are the types of programs that I think we need. A longterm program of education and an immediate program of protection through payments.

Mr. HUBBARD. Dr. Rubinoff, do you envision a potential problem

with the two governments being receptive to the Joint Commission

of the Environment's recommendations?

Dr. RUBINOFF. I would think not. It seems to me that the atmosphere between the two nations has improved considerably since the

treaty. I would imagine that there would be no problems.

Mr. HUBBARD. Regarding dredging costs, based on the figures

that you present on page 1 of your statement, it would appear that

due to deforestation the Canal Commission is likely to be spending

significantly greater amounts in future years for dredging of the

canal. At the same time continued soil erosion would cause draft

limitations for vessels transiting the canal and thus reduce tolls

receipts. So, we would be losing money in two ways, not to mention

the human and wildlife aspects of the problem.

Has the Smithsonian done any studies calculating the economic

effects of deforestation, or have such studies been done by other

agencies?

Dr. RUBINOFF. We have attempted to do some studies. I am

afraid I do not have the data with me.

Perhaps I could provide it for the record.

What are the alternative uses of leaving the forests in its natural

state, how is this economically possible? I think we have data on

that.

Mr. HUBBARD. Repeat that last sentence, if you would?

I did not hear you.
116

Dr. RUBINOFF. We have some studies on how leaving the forest

can be economically viable. We are attempting to develop data on

rearing certain organisms for food while leaving the forest intact.

But I do not have the data with me. I will have to provide it.

Mr. HUBBARD. Will you please provide that for the record?

Dr. RUBINOFF. I will do it.

[The following was received for the record:]

ECONOMIC VIABILITY OF FORESTS

In the lowland humid tropics the choice of removing the trees from an area or

attempting to exploit the standing forests must be made while keeping both the

short and long term consequences in mind. The consequences of removing the trees

are complicated by various factors, not all of which are well understood, but basically one or more of the following results are likely:

1. Profitable crops of maize or starchy roots can be grown from one to three years.

2. Pasture of various qualities (depending on what kinds of grass are introduced)

can be grown for several more years and a small number of cattle per unit area can

be raised, or the area is invaded by fire resistant pest grasses in which case the area

is lost to human use.

3. Without further intensive input of fertilizers the pasture gradually deteriorates,

the soil pulverizes or laterizes and the process of desertification begins.

We believe that with the development of special management techniques, forests

consisting of native species can be exploited to give a sustained yield of protein and

wood. We have not yet put the idea into practice, but recent studies on the population dynamics and ecology of native mammals (5 genera would be susceptible to

wildlife management techniques: Dasyprocta, Agouti, Dasypus, Tayassu and Odocoileus-all five are readily acceptable in human diets) in combination with Iguanas,

strongly suggest that a minimum yield of 50 kg./ha./yr. (dressed carcass weight)

could be attained. In some cases the productivity of raising cattle could produce a

greater yield over the short-run than raising these mixed species, but the latter is

more likely to produce a long-run sustained yield.

In addition to the raising of native animals for a protein yield, the forest composition could be artificially altered so that a greater proportion of a) those species that

are important as food for the managed animals, and b) those species that yield high

quality wood, would be grown.

Mr. HUBBARD. Are there any particular studies on this subject

that you would recommend for inclusion in our hearing record?

Dr. RUBINOFF. Not offhand, no.

I might add that there is a wide margin on this estimate of

sedimentation rates and I think that some basic monitoring of the

sedimentation rates in the lake should be initiated.

Mr. HUBBARD. Regarding Panamanian Government efforts with

respect to the environment, you tell us on page 2 of your statement

that President Royo declared his intention to set up a national

park in 22,000 hectares of the canal watershed. Has there been any

particular reason why the park has not yet been dedicated?

Dr. RUBINOFF. Not that I know of.

I think it is a question of getting the decree written and the

margins defined accurately. I expect it will be announced relatively

soon.

Mr. HUBBARD. What positive signs for environmental protection

have you seen emanating from either the United States or the

Panamanian Government as a result of the entry into force of the

new treaty?

Dr. RUBINOFF. Well, from the part of the Panamanian Government, they appointed their commissioners to the joint commission

immediately. The United States has now done the same.

They are planning a meeting. I think that is a positive sign. I

think it probably should have' happened a little more quickly.
117

On the part of the United States, there is a working committee

that the Embassy in Panama has organized to provide the commissioners with basic information. That group has met a number of

times.

There seems to be a greater awareness, in newspaper articles of

environmental issues and it seems to be something that more and

more people are becoming concerned about in the Republic of

Panama, although it is going from a base that is much different

than the levels, say, of the awareness that exists in the United

States.

Mr. HUBBARD. Regarding the sea-level canal study you mentioned, your statement contained several points concerning the

advisability of environmental studies in connection with any feasibility study for a sea-level canal. The problem of a shortage of

water supply due to soil erosion would not be present if there were

a sea-level canal. I suspect that you see other problems, however.

What are some of the subjects to which environmental studies of a

sea-level canal should be directed?

Dr. RUBINOFF. Well, our studies through the last 15 years in the

Republic of Panama have indicated that there are a great variety

of organisms living on one coast or another which do not exist in

the other ocean and which might become serious problems if they

were allowed access to the other ocean. Some of the more conspicuous ones which have been mentioned in the press are the Crown of

Thorns starfish which occurs only in the Pacific Ocean and the

Pacific sea snake. Less well known are at least 18 other species of

coral reef predators that exist in the Pacific and that do not exist

in the Atlantic Ocean. These would present a real threat to Caribbean coral reefs.

I have some photographs of some of these organisms which I can

pass around if the chairman would like.

Mr. HUBBARD. All right, please let us look at them.

Dr. RUBINOFF. The issue that is most important to keep in mind,

I think, in terms of ecological surveys, is that the biological studies

necessary to evaluate the impact of the sea-level canal are longterm studies, studies that cannot be done in 6 months or a year.

There are many fluctuations in populations of both coasts, and

many of these are natural fluctuations, some of periods of 3 or 4

years, or more.

There is no way that you can map and plot those fluctuations

without studying them through two and a half cycles.

Consequently, if a canal is built tomorrow, every fluctuation of

an organism that has an economic value would be blamed on the

canal regardless of whether or not the actual construction had

anything to do with a sudden reduction in the species.

So I think, in terms of protection from criticism, by fishermen

and other groups, it is important that these studies be undertaken

for at least a 5- or 10-year period.

Mr. HUBBARD. Thank you.

Regarding educational programs-and I am observing these

beautiful pictures that you have presented to us in connection with

the response you just provided-is the Smithsonian Institution continuing to conduct education programs concerning conservation of

tropical forests for the local people in Panama?

66-810 0 - 80 - 8
118

Dr. RUBINOFF. Yes; we are.

We have a variety of programs.

We are attempting to develop an interpretive program for the

new national park. We have obtained several grants from private

organizations which will help finance these. programs and we also

have applied for funds in our Federal budget for this. Our idea is

that in the new national park, which is accessible to the major

population centers of Colon and Panama City, if effective, will have

a multiplier effect and create a demand for similar parks and

natural areas.

We are continuing with our lecture program throughout the

school system; we have prepared articles for the newspapers and

television; and we have a film library on conservation films which

we lend out to schools and social groups.

Mr. HUBBARD. Have these educational programs been successful?

Dr. RUBINOFF. As far as I can measure; yes. Judging by the

number of new conservation groups which are formed in schools,

and by private organizations. After the first course was given, five

small groups organized themselves into various kinds of conservation organizations in the private sector.

Mr. HUBBARD. In what other programs is the Tropical Research

Institute working directly with Panama to foster conservation?

Dr. RUBINOFF. For example, there is a World Bank loan to

Panama to create nine dams in the Changuinola area of Panama.

That is an area just south of the Costa Rican border on the Atlantic side. We have been invited to participate in the environmental

assessment of those hydroelectric projects.

We have also worked with various groups in Panama concerning

possibilities of establishing sea bird sanctuaries in the Pearl Islands; we have worked with the master planning group on the new

national park; we have advised on the barrier national parks that

are planned; and we have been involved in other sorts of activities

such as those.

Mr. HUBBARD. I am nearing a conclusion of my questions, Dr.

Rubinoff.

Regarding the continuation of reforestation projects, after the 5-

year AID reforestation project is completed, do you feel that

Panama has the resources and the desire to be able to maintain

these reforestation projects at a level suitable to insure a viable

canal operation?

Dr. RUBINOFF. That is a little difficult to say. I think they definitely have the desire to do it. Whether they will have the economic ability after 5 years to do so, I would not want to venture a

guess.

I would hope that the United States, in its responsibility for the

maintenance of the canal until the year 2000, would consider additional programs to aid in the reforestation and the maintenance of

the reforested areas until that time.

Mr. HUBBARD. Last, regarding wildlife, do you feel that the rich

wildlife in the canal is protected by Panamanian law?

Dr. RUBINOFF. Just about 2 weeks ago, in the newspaper, they

announced new game laws and protection of wildlife measures by

protecting endangered species and restricting private ownership of

wild animals.
119

I think that the laws are adequate.

It is a question of enforcement at this point and it is a little early

to tell.

I think from the recent signs I have indicated, for example, the

courts dealing very serverely with the poachers that we arrested,

that administratively and legally, these laws probably will be enforced. It is easier to enforce the wildlife laws than to prevent

deforestation.

In deforestation, we are dealing with people's subsistence and

very often the wildlife destruction is more recreational and easier

to stop.

Mr. HUBBARD. Congressman Bauman, the ranking minority

member of the subcommittee.

We appreciate your being here.

Mr. BAUMAN. No questions.

Mr. HUBBARD. He has no questions.

Congressman Livingston?

Mr. LIVINGSTON. Just one.

Dr. Rubinoff, I have seen some reports from the CIA that the

world is going to be facing increasing food shortages due to lack of

farmland throughout the world.

How does that relate to the need for reforestation, and what are

your projections for the future regarding conflicts between the

need to increase farmland versus ecologically needed new forests?

Dr. RUBINOFF. It is a very difficult situation.

At least some people understand the need for preservation of

these resources which we are going to need ultimately.

On the other hand, there are immediate problems in the country

for food, as you pointed out. I think it is a question of distribution

somewhat. There is a potential for losing our food. It is a question

of changing economic orders. That is a long-term goal, an ultimate

goal.

I do not think that there is going to be an opportunity-there

would not be any forest left by the time we change the world order.

What I think we need is a proximate solution as well, one that will

protect areas now, by paying for their protection and thus insuring

that some of this tropical genetic reservoir is available in the

future.

For example, if we have a shift in our climate, as has happened

before, and we go back to those reservoirs for food, since many of

our crops used in temperate areas are derived from tropical plants,

we would not find any. There would not be any left.

We are going to be stuck. These tropical forests are resources

that do not survive in museums and in many cases the organisms

therein are undescribed; the tropical area is less known scientifically than anywhere else in the world.

I think that the only way to protect them is by paying for the

use of those lands as parks. The nations that do not have those

resources which are largely the temperate, wealthier nations, need

to pay the tropical nations for the protection of their forests.

That is the only solution I can see in the short term.

Mr. LIVINGSTON. You do view this as a continuing conflict?

Dr. RUBINOFF. Absolutely.
120

Mr. HUBBARD. Just as a matter of interest, what kind of overhaul

of the economic order do you envision?

Dr. RUBINOFF. I would recommend looking at Dr. Norman Myers'

book, "The Sinking Ark." I do not think his solution is going to

work. His solution is a long-term goal, I cannot justly summarize

here.

Mr. LIVINGSTON. Thank you.

Thank you, Mr. Chairman.

Mr. HUBBARD. Thank you Congressman Livingston.

We will call on Mr. Terry Modglin, the head of our Panama

Canal Subcommittee staff, for questions.

Mr. MODGLIN. Thank you, Mr. Chairman.

Dr. Rubinoff, I want to follow up on one of the chairman's

questions concerning the cost of dredging the Panama Canal as a

result of water runoff resulting from deforestation of the watersheds. You imply in your statement, although you do not state

directly, that the deforestation of the watershed could be a financial hazard to the canal, and that it would cut short the water

supply for the existing canal.

There are apparently two schools of thought on this particular

subject as to whether or not the deforestation of the canal watershed will result in less of a water supply for the canal.

The Office of Technology assessment work paper states: "no reliable body of data exists on the quantitative effects of deforestation

on weather, soil erosion, water storage and water table." Further,

the OTA study pointed out that the Panama Canal Company had

done a review of the water supply problem and that particular

study, according to the Company, did not show a measurable effect

on the water supply as a result of the deforestation of the watershed.

At the same time as the thesis exists that deforestation will not

cut the canal's water supply, the OTA study pointed to a number of

expert and Panamanian sources which indicated that the water

supply of the canal was indeed in danger in the future as a result

of the watershed deforestation.

For the purposes of the record, could you make clear on which

particular side of this argument your position falls and how you

respond to the statement that there is no reliable data to indicate

that the water supply of the canal is in danger?

Dr. RUBINOFF. While it is true there is not a great amount of

data, I think there are two issues. One is water runoff which will

continue and probably not be accelerated by deforestation.

I think, however, there is no question that sedimentation does

increase when forests are removed and the topsoil will come off. I

think one of the pictures shows on the slope of a canal peninsula

what will happen when the rains come and that soil is going to

wash right into the canal.

So I think there is no question about the sedimentation part of

it.

There are more technical problems about what happens to the

water where there is no forest to hold it.

Certainly, these are areas which are not all scientifically resolved.
121

When the forest is removed, the rapid evaporation and evaporation is changed, too. In fact, the weather pattern can change also.

More data is needed.

Mr. MODGLIN. Another question that I have concerns the national park in Panama. You spoke of President Royo's plans to dedicate

a national park; that park would consist of a large number of

hectares in the canal watershed. In previous testimony before this

subcommittee, Dr. Challinor of the Smithsonian Institution talked

about the Nature Monument that was going to be preserved in

connection with Panama on Barro Colorado Island. Could you differentiate between those two projects, and indicate what land

would be included within the territory of the park and the Nature

Monument?

Dr. RUBINOFF. There are two separate areas. May I use the map?

The negotiators of the Panama Canal Treaty recognize the value

of the work that has been going on since 1923, on Barro Colorado

Island, and included in it the Convention on Nature Protection and

Wildlife Preservation in the Western Hemisphere signed by President Roosevelt in 1940.

In addition, they recognized the need to have stepping stones

across the canal area and to provide a buffer zone from the agricultural developments which we see going on in this area.

So they included-they authorized the Republic of Panama to

lease to the Smithsonian, until 1999, an area on the west bank

which has subsequently been determined to be this peninsula and

this area here, and they authorized the Panama Canal Commission

to continue to lease to the Smithsonian, until 1999, peninsulas on

the west bank, from the railroad to this section here, this peninsula, and this one.

In 1999, when the treaty terminates, these areas become part of

the Nature Monument which is founded under the Hemispheric

Convention. It will be registered with the OAS. This area is to be

used-to be administered by the Smithsonian for research purposes. The national park which President Royo has declared, goes

from Summit Garden, which is here, all the way through the

pipeline area, along the margin of the old Canal Zone border,

which was somewhere around here.

So, except for this red area near Gamboa all of this area will

become a National Park. It has one of the highest bird species and

plant species diversity in Central America, and it is extremely

accessible by virtue of this 14-mile road which was built in World

War II to service a Navy pipeline that passes through this area.

There was a declaration that this area will be a national park with

all the appurtenances of a national park: public access, public

education, recreation, and preservation of wildlife.

On other hand, this area-the Barro Colorado Nature Monument-will be restricted to research purposes.

Mr. MODGLIN. Thank you, sir.

Mr. HUBBARD. Thank you, Terry Modglin, our staff director for

the Panama Canal Subcommittee.

Any further questions from any Member of Congress?

Mr. Luis Luna, our staff member for the minority side, do you

have any questions?

Mr. LUNA. No, sir.
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Mr. HUBBARD. Dr. Rubinoff, I believe that is all, unless there are

other questions later. Dr. Ira Rubinoff, Director, Smithsonian

Tropical Research Institute, a witness before our subcommittee

many, many times, we appreciate your helpful information and the

informative answers to the questions presented to you.

The past witness has been the director of the institute known as

STRI for many years, and has had contact with his Panamanian

scientific counterparts.

Our next witness is Mr. Thomas Constant, another welcome

witness familiar to us. He will represent the views of the Panama

Canal Commission before our subcommittee today.

In its daily operations, the Panama Canal Commission must

adhere to a significant number of environmental laws and regulations. How these are being implemented, how the new treaty arrangement affects their application, and whether prescriptions of

legal and regulatory authority are needed constitute some of the

concerns of our subcommittee. Moreover, in terms of our bilateral

relations with Panama, I think the members of this subcommittee

are also interested in knowing the mechanisms by which the

Panama Canal Commission, the operating agency for the canal,

will relate to the Joint Commission on the Environment, an advisory binational body envisioned in the Panama Canal Treaty.

Tom Constant, as always, we look forward to hearing your testimony and welcome you here this morning.

STATEMENT OF THOMAS CONSTANT, SECRETARY, PANAMA

CANAL COMMISSION

Mr. CONSTANT. Thank you, Mr. Chairman, and members of the

subcommittee.

I am Thomas M. Constant, Secretary of the Panama Canal Commission. I am pleased to appear before you today to describe the

Commission's role in decisionmaking affecting the environment in

the canal area, to comment on environmental matters contained in

the working paper prepared by the Office of Technology Assessment (OTA), and to brief you on actions taken by the Commission

which address current and potential sources of environmental concern.

If you have no objection, Mr. Chairman, I will abbreviate where

appropriate, and then provide my entire statement for the record.

Mr. HUBBARD. That will be fine. It is so ordered.

[The following was received for the record:]

STATEMENT OF THOMAS CONSTANT, SECRETARY, PANAMA CANAL COMMISSION

Mr. Chairman and members of the subcommittee, I am Thomas M. Constant,

Secretary of the Panama Canal Commission. I am pleased to appear before you

today to describe the commission's role in decision-making affecting the environment in the canal area, to comment on environmental matters contained in the

working paper prepared by the office of technology assessment (OTA), and to brief

you on actions taken by the commission which address current and potential

sources of environmental concern.

DESCRIPTION OF AGENCY'S ENVIRONMENTAL MANAGEMENT OBJECTIVES AND

RESPONSIBILITIES

I would like to begin by giving you some background information on the agency's

environmental management program and federal and canal zone regulations that

continue to be applicable to our operations.
123

When I refer to actions taken by this agency prior to October 1, 1979, I am, of

course, referring to the Panama Canal Company/Canal Zone Government, and after

that date, the Panama Canal Commission. The environmental management objectives for the Panama Canal Commission focus on compliance with Federal environmental laws, regulations, policies, and Presidential executive orders which apply to

the canal area, the operations of the Panama Canal, and which impact on the

quality of the natural and human environment. As a general proposition, under

section 3 of Public Law 96-70, the environmental legislation which was applicable

specifically to the former Canal Zone (citations attached for the record) continues to

be applicable to the areas and installations in the Republic of Panama made

available to the United States pursuant to the Panama Canal Treaty of 1977 and

related agreements. Other laws which apply to Federal agencies generally, without

geographical limitation, also are applicable to the Commission.

Our formulation of environmental conservation goals according to provisions of

Federal statutes and Canal Zone laws, has resulted in an increased awareness of the

quality of the environment in the canal operating area in recent years. A summary

of actions taken by the agency to protect and enhance the local environment for

each major area of concern follows:

1. Oil and hazardous substance disposal

Since 1971 the agency has been complying with section 311 of the Federal Water

Pollution Control Act, as amended, which prohibits the discharge of oil and other

hazardous substances into navigable waters of the United States. An oil and debris

control section was established by the agency to deal with spillage of oil and

hazardous chemicals in rivers, lakes, and harbors.

2. Marine sanitation disposal

In compliance with section 312 of the Federal Water Pollution Control Act, the

agency has scheduled the installation of sanitary control systems aboard towboats

and has developed the capacity to receive onshore and treat marine sewage.

3. Water and air quality

The policy of the agency is to meet all legal requirements as to water quality and

to meet the intent of Federal regulations to the extent possible under our unique

environmental circumstances. A water quality control laboratory was established by

the agency in fiscal year 1972. This laboratory measures and characterizes the

existing water quality parameters of the marine and fresh waters of the canal area

and has the responsibility for determining the effects of waste water effluents on

the water quality. The laboratory is also charged with the sampling and measurement of air quality according to Federal standards, even though they do not apply

to the canal area.

4. Aquatic weed control

Control of aquatic weeds has been the subject of an intensive study by the agency.

Approximately seventeen species of aquatic plants are common to canal fresh

waters. Some of the species such as hydrilla and water hyacinth are the sources of

navigational and mosquito breeding problems. An integrated biological, chemical

and mechanical control program is currently underway to control these and other

problem plants.

5. Pest control

As a direct result of the National Environmental Policy Act (NEPA), the agency

filed a pesticide program with the Federal working group on pest management. Our

pest control program maximizes drainage and breeding source reduction to minimize the utilization of pesticides in the canal operating area.

6. Solid waste and hazardous and toxic substances disposal

All non-hazardous solid waste is disposed of in Commission landfills located on the

Pacific and Atlantic sides of the Isthmus. Refuse is disposed of daily according to

sanitation specifications.

The limited quantities of toxic chemicals used by the agency are now handled and

stored in accordance with Federal regulations. Planning for their safe disposal is

underway and the creation of special dump sites is currently under study.

7. Dredged material disposal

The Commission is subject to the restrictions of the ocean dumping act, which

prohibit discharge of material into ocean waters. All dumping of dredged material is

within the inland waters of the canal operating area and at controlled dredge spoil

sites on land.
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8. Implementation of National Environmental Policy Act (NEPA)

The policies to be followed by Federal agencies are set forth in NEPA and ensure

that effects on the environment are given appropriate consideration in Federal

decision-making, along with the economic, technical and other considerations. Since

1977, the agency has prepared twenty-eight environmental impact analyses, and

several others have been prepared with the assistance of outside consultants or by

other U.S. agencies for projects within the canal area.

To assist in its administration of NEPA, the agency established an environmental

quality committee (EQC) with the following responsibilities:

(1) the maintenance of an environmental control policy;

(2) the review of proposed policies, regulations and procedures to determine their

effect on the local environment; and

(3) to coordinate environmental impact assessments and statements.

I would now like to address the specific areas oulined in the Chairman's letter

announcing the hearing.

ROLE OF COMMISSION IN DECISIONMAKING AFFECTING THE ENVIRONMENT IN THE

CANAL AREA

Following the signing of the Panama Canal Treaty of 1977, a binational working

group was established in 1978, composed of representatives of agencies of the Government of the Republic of Panama and the Panama Canal Company/Canal Zone

Government. This joint working group was to coordinate treaty implementation

planning by both countries, while serving as a forum for discussion. The group

discussed a number of issues in preparation for the implementation of the new

treaty.

The. binational working group called upon the expertise of 23 joint working

subcommittees. One, an environmental subcommittee consisting of representatives

from both Governments, was formed to coordinate plans on environmental issues of

mutual concern. The environmental subcommittee also served as the point of contact between the agency and the Republic of Panama.

As its first task, the environmental subcommittee developed and implemented a

plan to deal with the illegal cutting, burning and farming that were becoming acute

problems in the former Canal Zone. Binational working group endorsement of a

project to "continue anti-deforestation efforts in the Canal Zone" reflected the

concerns of both Governments regarding the need to protect and enhance the canal

watershed. The actions associated with this project fell into five broad categories:

Planning; information/education; aerial and ground surveillance; relocation of limited numbers of squatters residing throughout the canal area; and selective reforestation. The anti-deforestation project was implemented as a cooperative activity with

Panama over the period April 1978 through September 30, 1979. The project has

since continued in the canal watershed under the responsibility of the Government

of Panama's Ministry of Agricultural Development, as an integral component of

Panama's watershed management program under Agency for International Development (AID) auspices. The Government of Panama has developed the necessary plans

and programs to reverse deforestation and soil depletion, and to conserve the canal

watershed.

The Panama Canal Commission continues its active role in the environmental

decisionmaking process as it relates to the canal area. The environmental/energy

coordinator for the agency is a member of an interim ad hoc technical secretariat,

organized to provide technical support for the Joint Commission on the Environment.

Article VI of the canal treaty called for the establishment of the JCE for the

purpose of recommending, as appropriate, to the two Governments, ways to avoid or

mitigate the adverse environmental impacts which might result from their respective actions pursuant to the treaty. The JCE will be assisted and supported by a

permanent technical secretariat for its operations. During the interim, before the

appointment of the permanent secretariat, the ad hoc technical secretariat has been

established to work in close collaboration with the U.S. Embassy in gathering,

reviewing and evaluating existing environmental documents from the various local

U.S. agencies. This interim group has also assisted in the development of work plans

for the functions of the JCE as well as laying groundwork for the primary responsibilities the technical secretariat will have in assisting the JCE.

At present, the Panama Canal Commission representatives and the other members of the interim group are planning for the first meeting of the JCE in April in

Panama.
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COMMENTS ON ENVIRONMENTAL MATTERS CONTAINED IN THE WORKING PAPER OF

THE OFFICE OF TECHNOLOGY ASSESSMENT

With respect to the functions performed by the Commission for the continuing

management, operation, and maintenance of the canal, we do not expect any significant change in existing environmental policy. As a Federal agency, we are required

under NEPA to review new and on-going agency actions for possible adverse environmental impact and to prepare environmental assessments or statements as

appropriate. Following is a summary updating specific environmental issues addressed in the OTA report:

Oil pollution

The Panama Canal Commission is responsible for oil pollution control in canal

waters, including the north and south approaches to the canal. As in the past, the

Commission maintains an oil pollution control officer on both the Atlantic and

Pacific sides whose primary responsibility is to clear ships after bunkering operations for passage through the canal. The control officers also maintain liaison with

Panama's pollution control officers and will lend assistance when necessary on a

cost recovery basis.

Panama's newly formed oil pollution department has a limited oil recovery

system for pier area use. This capability is being expanded.

Weed and debris control

The Commission continues to be responsible for aquatic weed control, debris, etc.,

within the canal operating area, and has the authority to exercise aquatic weed

control measures in outlying areas.

Dredging operations

Dredging operations by the Commission continue as an essential function to the

canal.

Disposal of dredge spoil has been carefully controlled. Suction dredge spoil areas

have been expanded and to date, no new areas have been developed. Spoil disposal

in Gatun Lake is carefully monitored and controlled.

Environmental sanitation

The level of environmental health and sanitation of the canal area five months

after the implementation of the treaty remains high. A sanitation unit was retained

by the agency to carry out a community-Commission sanitation program. Presently,

the unit enforces such measures as the control of pests and disease vectors, and

plumbing, water and waste standards. The unit also monitors food hygiene, pesticide

use, refuse collection and disposal, swimming pools, and recreation sites within the

canal operating and housing areas.

Panama sanitation laws and regulations apply to areas released to Panama and

agreements have been reached with Panama health officials for specific cooperative

activities. Joint activities such as combined vector control teams to control mosquitoes are working well. No increase in illness or disease outbreaks has occurred.

The Commission retained a vessel quarantine activity for rat inspections aboard

ships at anchorage and moored to piers made available to the Commission. These

measures prevent the introduction of rodent borne disease on each side of the

isthmus. This activity is closely coordinated with Panama quarantine officials and

has been working well to date.

Wildlife preservation

On the status of wildlife preservation, the Panamanian Bureau of Renewable

Natural Resources (RENARE) has recently issued two resolutions impacting on the

conservation of native animals. The first deals with an expansion of their list of

endangered species; a number of the species now included were previously protected

by U.S. public law. The second calls for the registration of all wild animals in

captivity and Panama has now prohibited the removal of any wild animal pets

without a permit. The protective measures, together with the conversion of critical

habitats to national parks (Madden Forest Reserve, pipeline road area), national

monuments (Barro Colorado Island), and ongoing anti-deforestation actions, are

contributing to the prevention of wildlife depletion and forest habitat destruction.

PRESENT AND POTENTIAL ENVIRONMENTAL PROBLEMS IN THE CANAL AREA

Panama has instituted environmental controls and evidences increasing interest

in protecting the environment. However, if controls were not maintained, deforestation activities in the watershed could accelerate the rate of storm flood runoff and

impact unfavorably on flood controls.
126

The canal area, in its present state, preserves the habitats of native vegetation

and animal species. With the recommendations of the JCE, Panama can continue

the development of the canal area through carefully planned actions to avoid or

mitigate potential adverse environmental impacts.

CONCLUDING REMARKS

We have not observed any adverse environmental impacts as a result of implementation of the Panama Canal Treaty. We will continue tp work closely with

Panama on environmental control measures and their enforceriYent. Studies such as

the Republic of Panama watershed management program, which was mentioned

previously, are illustrative of Panama's concern for the future of the canal area.

The environmental controls, monitored by the JCE, should insure the preservation

of the waterway in the years ahead.

Should the committee desire additional information on the subject, we shall be

pleased to furnish it. This concludes my statement. Thank you.

ATTACHMENT I

ENVIRONMENTAL LAWS, REGULATIONS, AND POLICIES AFFECTING THE PANAMA CANAL

COMMISSION

1. Federal statutes

A. National Environmental Policy Act of 1969 (P.L. 91-190); 1970.

B. Occupational Safety and Health Act of 1970 (P.L. 91-595) (where it regulates

the environment).

C. Clean Air Act of 1970 (P.L. 91-604), as amended. (Subchapter II, Emission

Standards for Moving Sources).

D. Federal Water Pollution Control Act Amendments of 1972 (P.L. 92-500) (Section 311, Discharge of Oil and Hazardous Substances; Section 312, Marine Sanitation Devices).

E. Marine Mammal Protection Act of 1972 (P.L. 92-522).

F. Marine Protection, Research and Sanctuaries Act of 1972 (P.L. 92-532) (Ocean

Dumping Act).

G. Noise Control Act of 1972 (P.L. 92-574) (Section 4).

H. Endangered Species Act of 1973 (P.L. 93-205).

I. Safe Drinking Water Act of 1974 (P.L. 93-523).

J. Toxic Substances Control Act of 1976 (P.L. 94-469).

K. Solid Waste Disposal Act, as amended by Resource Conservation and Recovery

Act of 1976 (P.L. 96-580).

2. Executive orders

A. E.O. 11514, "Protection & Enhancement of Environmental Quality" March 7,

1970 (35 FR 46, 4247).

B. E.O. 12088, "Federal Compliance with Pollution Control Standards" (FR, October 17, 1978).

C. E.O. 12114, "Environmental Effects Abroad of Major Federal Actions" (FR,

January 9, 1979).

3. Former Canal Zone regulations that continue to apply to the commission

A. Establishment of Procedures to comply with the National Environmental

Policy Act, 41 FR 86, May 3, 1976.

B. Code of Federal Regulations, Title 35, Chap. 1, Canal Zone Regulations: Part

61-Health, Sanitation, and Quarantine (includes control on use of pesticides, herbicides, insecticides & rodenticides). Part 103, Sec. 21, Precautions against emission of

sparks, smoke or noxious gases, etc., from vessels; Sec. 22, Vessels at fuel berths.

Part 113, Hazardous Cargoes; Subpart B, Handling, Loading and Unloading of

Explosives; Subpart C, Harzardous Liquid Cargoes; Subpart D, Other Hazardous

Materials.

4. Canal Zone administration and regulations

A. Chapter 5, Part 169, Subpart B, Protection of Wildlife.

Mr. CONSTANT. I would like to begin by giving you some background information on the agency's environmental management

program and Federal and canal zone regulations that continue to

be applicable to our operations.
127

Our formulation of environmental conservation goals according

to provisions of Federal Statues and canal zone laws, has resulted

in an increased awareness of the quality of the environment in the

canal operating area in recent years. A summary of actions taken

by the agency to protect and enhance the local environment for

each major area of concern follows:

Since 1971 the agency has been complying with section 311 of the

Federal Water Pollution Control Act, as amended, which prohibits

the discharge of oil and other hazardous substances into navigable

waters of the United States. An oil and debris control section was

established by the agency to deal with spillage of oil and hazardous

chemicals in rivers, lakes, and harbors.

In compliance with section 312 of the Federal Water Pollution

Control Act, the agency has scheduled the installation of sanitary

control systems aboard towboats and has developed the capacity to

receive onshore and treat marine sewage.

The policy of the agency is to meet all legal requirements as to

water quality and to meet the intent of Federal regulations to the

extent possible under our unique environmental circumstances. A

water quality control laboratory was established by the agency in

1972. This laboratory measures and characterizes the existing

water quality parameters of the marine and fresh waters of the

canal area and has the responsibility for determining the effects of

waste water effluents on the water quality. The laboratory is also

charged with the sampling and measurement of air quality according to Federal standards, even though they do not apply to the

canal area.

Control of aquatic weeds has been the subject of an intensive

study by the agency. Approximately 17 species of aquatic plants

are common to canal fresh waters. Some of the species such as

hydrilla and water hyacinth are the sources of navigational and

mosquito breeding problems. An integrated biological, chemical

and mechanical control program is currently underway to control

these and other problem plants.

As a direct result of the National Environmental Policy Act

(NEPA) the agency filed a pesticide program with the Federal

working group on pest management. Our pest control program

maximizes drainage and breeding source reduction to minimize the

utilization of pesticides in the canal operating area.

All nonhazardous solid waste is disposed of in Commission landfills located on the Pacific and Atlantic sides of the isthmus. Refuse

is disposed of daily according to sanitation specifications.

The limited quantities of toxic chemicals used by the agency are

now handled and stored in accordance with Federal regulations.

Planning for their safe disposal is underway and the creation of

special dump sites is currently under study.

The Commission is subject to the restrictions of the Ocean Dumping Act, which prohibit discharge of material into ocean waters. All

dumping of dredged material is within the inland waters of the

canal operating area and at controlled dredge spoil sites on land.

Since 1977, the agency has prepared 28 environmental impact

analyses, and several others have been prepared with the assistance of outside consultants or by other U.S. agencies for projects

within the canal area.
128

To assist in its administration of NEPA, the agency established

an Environmental Quality Committee (EQC) with the following

responsibilities:

One, the maintenace of an environmental control policy.

Two, the review of proposed policies, regulations and procedures

to determine their effect on the local environment.

Three, to coordinate environmental impact assessments and

statements.

I would now like to address the specific areas outlined in the

chairman's letter announcing the hearing.

Following the signing of the Panama Canal Treaty of 1977, a

binational working group was established in 1978, composed of

representatives of agencies of the Government of the Republic of

Panama and the Panama Canal Company/Canal Zone Government. This joint working group was to coordinate treaty implementation planning by both countries.

The binational working group called upon the expertise of 23

joint working subcommittees. One, an Environmental Subcommittee consisting of representatives from both governments, was

formed to coordinate plans on environmental issues of mutual concern. The Environmental Subcommittee also served as the point of

contact between the agency and the Republic of Panama.

As its first task, the Environmental Subcommittee developed and

implemented a plan to deal with the illegal cutting, burning and

farming that were becoming acute problems in the former canal

zone. Binational working group endorsement of a project to "continue antideforestation efforts in the canal zone" reflected the concerns of both governments regarding the need to protect and enhance the canal watershed. The actions associated with this project

fell into five broad categories: Planning; information/education;

aerial and ground surveillance; relocation of limited numbers of

squatters residing throughout the canal area; and selective reforestation. The antideforestation project was implemented as a cooperative activity with Panama over the period April 1978 through

September 30, 1979. The project has since continued in the canal

watershed under the responsibility of the Government of Panama's

Ministry of Agricultural Development, as an integral component of

Panama's watershed management program under Agency for International Development-AID-auspices. The Government of

Panama has developed the necessary plans and programs to reverse deforestation and soil depletion, and to conserve the canal

watershed.

The Panama Canal Commission continues its active role in the

environmental decisionmaking process as it relates to the canal

area. The environmental/energy coordinator for the agency is a

member of an interim ad hoc technical secretariat, organized to

provide technical support for the Joint Commission on the Environment.

Article VI of the canal treaty called for the establishment of the

JCE for the purpose of recommending, as appropriate, to the two

governments, ways to avoid or mitigate the adverse environmental

impacts which might result from their respective actions pursuant

to the treaty. The JCE will be assisted and supported by a permanent technical secretariat for its operations. During the interim,
129

before the appointment of the permanent secretariat, the ad hoc

technical secretariat has been established to work in close collaboration with the U.S. Embassy in gathering, reviewing and evaluating existing environmental documents from the various local U.S.

agencies.

At present, the Panama Canal Commission representatives and

the other members of the interim group are planning for the first

meeting of the JCE in April in Panama.

With respect to the functions performed by the Commission for

the continuing management, operation, and maintenance of the

canal, we do not expect any significant change in existing environmental policy. As a Federal agency, we are required under NEPA

to review new and ongoing agency actions for possible adverse

environmental impact and to prepare environmental assessments

or statements as appropriate. Following is a summary updating

specific environmental issues addressed in the OTA report.

The Panama Canal Commission is responsible for oil pollution

control in canal waters, including the north and south approaches

to the canal. As in the past, the Commission maintains an oil

pollution control officer on both the Atlantic and Pacific sides

whose primary responsibility is to clear ships after bunkering operations for passage through the canal. The control officers also

maintain liaison with Panama pollution control officers and will

lend assistance when necessary on a cost recovery basis.

Panama's newly formed oil pollution department has a limited

oil recovery system for pier area use. This capability is being

expanded.

The Commission continues to be responsible for aquatic weed

control, debris, et cetera, within the canal operating area, and has

the authority to exercise aquatic weed control measures in outlying

areas.

Dredging operations by the Commission continue as an essential

function to the canal.

Disposal of dredge spoil has been carefully controlled. Suction

dredge spoil areas have been expanded and to date, no new areas

have been developed. Spoil disposal in Gatun Lake is carefully

monitored and controlled.

The level of environmental health and sanitation of the canal

area 5 months after the implementation of the treaty remains

high. A sanitation unit was retained by the agency to carry out a

community-Commission sanitation program. Presently, the unit enforces such measures as the control of pests and disease vectors,

and plumbing, water, and waste standards

That is within the canal area.

The unit also monitors food hygiene, pesticide use, refuse collection and disposal, swimming pools, and recreation sites within the

canal operating and housing areas.

Panama sanitation laws and regulations apply to areas released

to Panama and agreements have been reached with Panana health

officers for specific cooperative activities. Joint activites such as

combined vector control teams to control mosquitoes are working

well. No increase in illness or disease outbreaks has occurred.

The Commission retained a vessel quarantine activity for rat

inspections aboard ships at anchorage and moored to piers made
130

available to the Commission. These measures prevent the introduction of rodent-borne disease on each side of the isthmus. This

activity is closely coordinated with Panama quarantine officials

and has been working well to date.

On the status of wildlife preservation, the Panamanian Bureau

of Renewable Natural Resources (RENARE) has recently issued

two resolutions impacting on the conservation of native animals.

The first deals with an expansion of their list of endangered species; a number of the species now included were previously protected by U.S. public law. The second calls for the registration of all

wild animals in captivity and Panama has now prohibited the

removal of any wild animal pets without a permit. The protective

measures, together with conversion of critical habitats to national

parks-madden Forest Reserve, pipeline road area-national

monuments-Barro Colorado Island-and ongoing antideforestation

actions, are contributing to the prevention of wildlife depletion and

forest habitat destruction.

Panama has instituted environmental controls and evidences increasing interest in protecting the environment. However, if controls were not maintained, deforestation activities in the watershed

could accelerate the rate of storm flood runoff and impact unfavorably on flood controls.

The canal area, in its present state, preserves the habitats of

native vegetation and animal species. With the recommendations

of the JCE, Panama can continue the development of the canal

area through carefully planned actions to avoid or mitigate potential adverse environmental impacts.

We have not observed any adverse environmental impacts as a

result of implementation of the Panama Canal Treaty. We will

continue to work closely with Panama on environmental control

measures and their enforcement. Studies such as the Republic of

Panama watershed management program, which was mentioned

previously, are illustrative of Panama's concern for the future of

the canal area. The environmental controls, monitored by the JCF,

should insure the preservation of the waterway in the years ahead.

Should the committee desire additional information on the subject, we shall be pleased to furnish it.

This concludes my statement, Mr. Chairman, and I will be happy

to answer any questions.

Mr. HUBBARD. Thank you very much, Mr. Thomas Constant.

Regarding squatters in the Panama Canal area, before the termination of the canal zone on October 1, there had been a problem

with squatters in the zone, near the banks of certain stretches of

the Panama Canal. These squatters were practicing slash-and-burn

agriculture near the waterway, giving rise to a dangerous situation

which ultimately threatened the water supply of the canal.

Tom, since October 1, what measures have been taken to deal

with the problem of squatters in the canal zone?

Mr. CONSTANT. We do have joint patrols working with the Panamanians where we go through the canal areas, attempting to locate

any squatters.

Last year, several actions were taken, as we mentioned. Squatters were removed in a joint effort by the agency protection forces

and Panama National Guard.
131

Plans for removing squatters located in the Pacific and Atlantic

military areas of coordination and defense sites have been worked

out and at last report, Panama has begun working on the relocation plans for a number of squatter families.

We have not personally removed any ourselves.

Mr. BAUMAN. Mr. Chairman?

Mr. HUBBARD. Congressman Bauman.

Mr. BAUMAN. To follow up on a question on that, Tom, since the

area under U.S. jurisdiction has shrunken, have you seen a movement of squatters into the areas where they were formerly excluded by reason of U.S. jurisdiction? Has there been a mass movement?

Mr. CONSTANT. No, sir, we do not see a mass movement.

We do not have the people out there anymore checking to see, so

we do not have any measure of the number if there have been any

increases. To our knowledge, there has not been any major movement into the former canal areas.

Mr. BAUMAN. It would seem to me that this would be a good test

of the Panamanian Government's will to control the problem:

whether they allow squattors to move into the restricted areas.

In the past we had a difficult time of getting them evicted from

the area.

Thank you, Mr. Chairman.

Mr. HUBBARD. Thank you, Congressman Bauman.

Mr. Constant, are there squatters remaining in the canal operating area, who practice slash-and-burn agriculture?

Mr. CONSTANT. Not in the canal area, no, sir. In the canal operating area, that is.

Mr. HUBBARD. Exactly how does the Canal Commission coordinate with Panama to deal with squatters?

Mr. CONSTANT. We work with the Guardia Nacional by pointing

out if we locate any of these squatters, and leave it up to Panamanian control measures in order to move any people.

Mr. HUBBARD. What tangible signs are there of improvement or

deterioration of the situation?

Mr. CONSTANT. Sir, we have no tangible measure of any deterioration. Of improvement, I think we can say there is a status quo. It

is continuing at approximately the same level that it was when the

treaty went into effect in October.

Mr. HUBBARD. All right.

Regarding statutes relating to hazardous cargoes, marine accidents, inspection and registration of vessels and sanitary requirements, in your statement you cite many of the U.S. statutes on

environmental protection that apply to the canal area. Most of

these are implemented by regulations published in title 35 of the

Code of Federal Regulations.

On December 19, the Panama Canal Commission published new

regulations pursuant to the Panama Canal Treaty and the Panama

Canal Act. Those regulations continued the substance of previous

regulations relating to hazardous cargoes, marine accidents, and

their investigations, control, and responsibility; licensing of officers;

inspection and registration of vessels; and sanitary requirements,

vessel waters, garbage, and ballast. However, with respect to each
132

of these subject areas, the penalty provisions of the regulations

were eliminated.

How is the authority of the Commission in these areas to be

enforced? If Panama is to hold the enforcement authority, what

agreements have been made to insure that our regulations and

enforcement of them is coordinated?

To repeat, first back to that earlier question. How is the authority of the Commission in these areas to be enforced?

Mr. CONSTANT. With respect to the levying of any charges

against individuals, for instance, illegal dumping of oil in the canal

areas, the only means of enforcement that we have in the canal is

to report to the U.S. Coast Guard who are responsible for the

enforcement of the Federal Water Pollution Control Act in the U.S.

waters and in the canal area.

If there should be any dumping or any oil pollution, and we in

the canal area use our equipment to clean it up and there is a cost

involved, we would transfer that cost to the agent of the vessel

involved in that spillage.

We would bill him for that cost.

As far as enforcement, it would be up to the Coast Guard to

bring action if the vessel did not comply with the law or agree to

pay the bill. We have not had that problem because the vessel will

want to go through the canal and if there have been any spills of

that nature, any charges have been paid by them.

Mr. HUBBARD. Let me ask you this then:

Have you touched on this? I did not hear you comment on this in

its entirety. Is Panama to hold the enforcement authority in these

areas? Is that correct, since you mentioned the Coast Guard would

have the enforcement authority?

Mr. CONSTANT. The Commission is immune from the jurisdiction

of Panama within its waters, within the waters of the canal operation. Panama is prohibited from issuing, adopting, or enforcing

any law, decree, or international agreement or taking other action

which purports to regulate or would otherwise interfere with the

U.S. rights under the treaty.

What I am saying is that there are no enforceable laws other

than the U.S. laws, in the canal area.

Panama does not have any authority to issue these laws controlling the waters and the pollution of waters in the canal area.

Mr. HUBBARD. All right.

Thank you.

Regarding Panama Canal Commission's budget for environmental matters, would you tell the subcommittee of the amounts budgeted in the fiscal year 1981 budget for each of the major environmental areas of interest outlined in your statement?

Mr. CONSTANT. Yes, sir.

For the control of aquatic weeds, for instance, the white amur

fish, we have budgeted for $57,000 in fiscal year 1981. Other biological control, $45,000. Chemical and mechanical control of aquatic

weeds, $70,000. Oil pollution, we have budgeted for $505,000 during

fiscal year 1981. Environmental santitation-pest and disease, food,

hygiene-$1.443 million, and marine sanitation control $220,000.

Now that is for the provision of holding tanks on our floating

equipment.
133

Mr. HUBBARD. Again, under aquatic weed control, how much is

the program to stock Gatun Lake? I believe you mentioned $57,000,

did you not?

Mr. CONSTANT. Yes, sir, for aquatic weeds.

Well, it is the total of $57,000, $45,000, and $70,000, or $172,000,

because there are several programs included.

Mr. HUBBARD. How much for stocking white amur fish?

Mr. CONSTANT. $57,000, sir.

Mr. HUBBARD. And these white amur fish are to eat aquatic

weeds?

Mr. CONSTANT. Yes, they have proven very successful in that

effort.

Mr. HUBBARD. How much has the treatment of aquatic weeds by

chemicals been costing each year?

Mr. CONSTANT. We combined that, sir, into chemical and mechanical, mechanical being where we rake out the aquatic weeds.

The total is $70,000 for fiscal year 1981. For fiscal year 1980 it was

$64,000.

Mr. HUBBARD. Why the increase?

One of my constituents may want to ask me that.

Mr. CONSTANT. It is just the inflation in cost of salaries, sir, more

than anything else. The weeds themselves are not getting anymore

expensive to take out. It is merely the matter of paying the people

to do it. The weeds are a hazard to navigation since they can foul

the propellers.

Mr. HUBBARD. Regarding water and air quality in the Panama

Canal, the third category of major environmental concern outlined

in your statement.

According to the measurements and samplings of the Commissions, has the air quality in the canal area and particularly the

water quality of canal areas, been either improving or deteriorating in recent years?

Mr. CONSTANT. Sir, I believe that our-I would have to provide

specifics on that for the record.

But since October 1, there has been no degradation of either the

water or the air quality in the canal areas.

I am not sure as to the actual progress of water control over the

past years and I would have to provide that for the record, sir.

Mr. HUBBARD. OK, please do.

[The following was received for the record:]

REPORT ON ENVIRONMENTAL QUALITY OF SURFACE WATER AND AMBIENT AIR IN

PANAMA CANAL COMMISSION AREAS

SUMMARY

The lake waters in Panama Canal Commission (PCC) areas are generally of

excellent quality and have not suffered any significant deterioration in the past

seven years. River waters reaching the lake are of generally inferior quality, dependent on the amount and type of surface run-off in the watershed. The drinking

water produced at the PCC Water Treatment Plants is of excellent quality. PCC

Atlantic Marine waters in Limon Bay are of good quality with the exception of

eastward areas influenced by sanitary contamination in Manzanillo Bay. PCC Pacific Marine waters are contaminated by sanitary pollution from Miraflores Locks to a

point of 1.5 miles south of the Thatcher Ferry Bridge. Ambient air quality in the

PCC areas is well within the recommended EPA Standards.
134

A. Water quality

The Environmental and Testing Laboratory of the Water and Laboratories

Branch, has been monitoring water quality of the lake and marine waters within

the Panama Canal Areas since calendar year 1972.

Originally, the water quality monitoring program extended to all lake and marine

areas in the then existing Canal Zone, but has now been reduced to the Canal

operating area. This report covers the water areas presently assigned to Panama

Canal Commission activities under the new Treaty.

1. Gatun Lake waters.-Table 1 lists the average concentration levels found for

specific parameters with environmental significance, throughout the Gatun Lake

areas during calendar years 1972, 1975, and 1979, to outline trends during our

monitoring program. As can be seen from this data, the water in this section of the

lake is of good quality and there have been no significant changes in the water

quality during this seven year period.

Gatun Lake waters in this section of the lake are generally of excellent quality

with high transparency, low fecal coliform bacterial counts, almost neutral pH, and

dissolved oxygen levels near saturation with less than 0.5 ppm difference between

the surface and bottom strata. There are no thermoclines, and the temperature

difference between surface and bottom levels are usually less than 0.40 C, with

overall values ranging from 27.5 to 29.50 C throughout the year. The waters are soft

(less than 50 ppm hardness), of low alkalinity (less than 40 ppm), and free of heavy

contaminant metals and pesticide/herbicide residues.

The nutrient content of the water is low, but the constant influx from the lake

watershed is enough to support a considerable biomass of submerged and floating

vegetation. The solids content of the water varies seasonally with influx of rain and

surface runoff, but turbidity in most open lake areas remains below 3.5 NTU's. The

lake is in a mesotrophic state of eutrophication from a phosphorus standpoint, with

an apparent high productivity, and forming a well-balanced ecosystem. The overall

water quality is excellent for recreational purposes, and adequate to support a

variety of aquatic life.

2. Gamboa Reach, Chagres River, and Gaillard Cut waters.-This water region

begins in the Chagres River near the intersection with the Canal channel and

Gamboa extending to the west through the Gamboa Reach to Gatun Lake and to

the southeast through Gaillard Cut to Pedro Miguel Locks.

This section of the Panama Canal Commission channel receives most of its waters

from Madden Lake and the watershed above the Lake in the Republic of Panama.

This water originates in the upper Chagres and Pequeni Rivers, and consists mostly

of run-off water traveling across Madden Lake as a density current, at a depth

dependent on the temperature, silt load, and chemical content of the influx from

the watershed. This current causes Madden Lake to be stratified, suffer from

dissolved oxygen deficiencies in the middle strata and to have varying BOD and

turbidity loads. Therefore, the waters received downstream in the lower section of

the Chagres River have seasonal variations in bacteria, turbidity, BOD, nutrient,

and oxygen content. The Chagres River also receives poor quality water (low dissolved oxygen and high bacteria and BOD levels) from the Chilibre River since its

watershed extends to many urban developments in the Republic of Panama.

The Panama Canal Commission has one sewage outfall, servicing approximately

2,500 people, discharging into the Gamboa Reach area. This causes a localized

increase in bacteria, BOD, and nutrients in the immediate vicinity of the outfall.

The waters in the Gamboa Reach area of the Canal are of varying quality,

depending on the quantity and type of surface run-off in the watershed.

Table 2 gives the water quality found in samples representative of the lower

Chagres River. While water from this station contains higher levels of bacteria,

nutrients, turbidity, and lower oxygen content than open Gatun Lake waters, the

quality of these waters in terms of metallic ions, and organics is still very acceptable.

3. Atlantic marine area.-The Panama Canal Commission waters in the Atlantic

Marine Area extend from Gatun Locks to the breakwater. There are 11 sewage

outfalls discharging into Atlantic Marine waters. The three main outfalls are Colon,

6.9 MGD (Panama); Rainbow City, 1.2 MGD (Panama); and Fort Gulick, .56 MGD

(U.S. Army). Two outfalls discharge into Panama Canal Commission waters at

Gatun (PCC) and Fort Davis (U.S. Army).

The waters in the Atlantic Marine Area under the control of the PCC generally

contain less than 200 fecal coliform bacteria/100 ml., deriving mostly from the

waste discharge in the adjacent Manzanillo Bay. Limon Bay waters have limited

mixing with Caribbean Sea waters because of the breakwater and small tidal

differences along the Atlantic Coast. The Canal provides daily influx of 125 x 106 cu.

ft. of fresh water into Limon Bay through ship transits.
135

Table 3 shows the quality of the waters on the east side of the Canal channel as

compared to the west side during calendar years 1972, 1975, and 1979. The data does

not show any significant change in the water quality of the Limon Bay surface

waters during this period. The poor quality of these waters as indicated by the high

bacteriological, nutrient, and BOD levels derives from the sewage outfalls in the

area. Levels of metals and other contaminants are generally low.

4. Pacific marine area.-The Panama Canal Commission Pacific Marine Area

extends from Miraflores Locks to the Canal channel in Panama Bay. There are 11

sewage outfalls discharging into the Canal channel and Panama Bay. The three

main outfalls are Albrook-Diablo (PCC) 1.7 MGD; Fort Clayton, (U.S. Army) 1.3

MGD; and Ancon-Curundu (PCC) 1.2 MGD. The Curundu River which empties into

the Balboa Harbor also carriers a high sewage load from several communities in

Panama City.

The waters in the Pacific Commission Marine Areas have sanitary contamination

from the surrounding outfalls with fecal coliform bacteria levels ranging from 200

to 2000 counts/100 ml. Balboa Harbor and Panama Bay waters are open to the sea

and subject to tidal differences, and the Canal provides daily influx of 118 x 106 cu.

ft. of fresh water into this area through ship transits and the Miraflores Spillway.

Table 4' shows the quality of the waters in the Canal channel north of the

Thatcher Ferry Bridge as compared to Canal channel waters south of the Bridge

during calendar years 1972, 1975, and 1979. The data does not show any significant

change in water quality of Pacific Marine waters during this period. Sewage outfalls

are the major contributing factors which cause poor sanitary quality of the Canal

channel waters, from Miraflores Locks, to a point 1.5 miles south of the Thatcher

Ferry Bridge (Puente de las Americas).

B. Drinking water quality

The Panama Canal Commission operates two water treatment plants, one in the

Atlantic area at Mount Hope and one on the Pacific area, at Miraflores.

The Mount Hope plant raw water inlet is located in the Monte Lirio area of

Gatun Lake in the Republic of Panama. This section of the lake is partially isolated

from the rest of the lake by the railroad causeway, and its water originates from the

Rio Gatun watershed. The surface waters in this area are generally of good quality,

with adequate oxygen content and are usually low in turbidity. Table 2 shows the

quality of the water entering the Mount Hope Water Treatment Plant.

The Miraflores Plant has two inlets, one in Gamboa on the lower Chagres River,

and one in Paraiso. The water feeding these intakes usually comes from Madden'

Lake and its watershed in the Republic of Panama, and has therefore, seasonal

variations in turbidity, coliform count, and oxygen content. Table 2 shows the

quality of the water entering Miraflores Water Treatment Plant intakes.

Daily checks are made on the quality of raw, settled, and filtered water at each

water treatment plant. Table 5 shows the quality of the drinking waters produced

as compared to EPA Drinking Water Standards. The quality of the drinking waters

produced in both plants is well within the requirements of these standards.

C. Ambient air quality

In 1977, the Environmental and Testing Laboratory began studying the quality of

ambient air in the Canal Area. Four suburban and one regional (background) air

sampling stations were established and the ambient air tested following EPA methodologies for these parameters: particulate matter (hi-volume sampler), sulfur dioxide (bubbler-pararosaniline method), and nitrogen dioxide (bubbler-Arsenite

method).

The suburban stations were located in the Pacific area of the Canal and the

regional (background) station near Madden Dam, in an area mostly surrounded by

vegetation. The stations were sampled on a time available basis for a period of

approximately one month, three to four times during the year to gather a data

bank. All measurements taken represented 24-hour averages. No continuous monitoring stations were established.

Table 6 lists the yearly averages obtained for each parameter at the suburban

stations vs. the regional (background) station. The data shows particulate, sulfur

dioxide, and nitrogen dioxide levels to be well within the EPA Primary Ambient Air

Quality Standards. Occasional measurments were also made for carbon monoxide

and ozone content and these contaminants were also found at levels below the EPA

permissible limits.
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TABLE 1.-WATER QUALITY DATA FOR GATUN LAKE PANAMA CANAL COMMISSION AREA

Parameters 1972 1 1975 1 1979'

Tem perature . . 28 .0 28 .1 28.1

p H , un its . 7 .3 7 .2 7 .1

Fecal coli-bacteria, counts/100 ml. 31 12 19

D O , m g/I . 6 .0 6.2 5 .8

BOD (5 day) mg/I. .64 .67 .69

Turbidity NTU . 2.66 3.80 3 .12

Alkalinity (as mg/I CaCO,) . . 36 36 35

Fluoride, m g/I. 0 51 .053 .049

A m m onia, m g/l. .0 2 .02 .02

Kjeldahl nitrogen, m g/I. .1 .13 .10

N itrate-N , m g/I. .037 .039 .034

Total phosphorous, mg/I. .024 .026 .015

Arsenic, m g/I. < .010 < .010 < .010

Barium, mg/I. < .050 < .050 < .050

Cadmium, mg/l. < .010 < .010 < .010

Chromium, mg/l. < .020 < .020 < .020

Copper, m g/l . < .020 < .020 < .020

Iron, m g/I. 124 .6 131 138

Lead, m g/I. < .040 < .040 < .040

Lithium , m g/I . < .100 < .020 < .020

Manganese, mg/I. < .010 < .010 < .010

Mercury, mg/I. <.0004 <.0004 <.0004

Nickel, m g/l. < .020 < .020 < .020

Potassium , m g/I. < 2 < 2 < 2

Selenium, mg/I. < .010 < .010 < .010

Silver, m g/l . < .020 < .020 < .020

Sodium , m g/I. 6.2 6.1 6.2

Zinc, m g/I . < .020 < .020 < .020

Data given as yearly averages of 5 representative stations in the Gatun Lake Area.

Note.-Whenever a < (less than) figure is shown, it means that levels were below the detection limit of the method used.

TABLE 2.-WATER QUALITY DATA 1 FOR PANAMA CANAL COMMISSION DRINKING WATER INTAKE

AREAS

Atlantic intake Gamboa intake Paraiso intake

Parameters

1971 1975 1979 1972 1975 1979 1972 1975 1979

Temperature, *C. 29.0 28.9 27.8 27.8 27.9 27.0 28.2 28.2 27.2

pit, units. 7.1 7.05 6.97 6.9 7.2 7.0 7.0 7.0 7.2

Fecal coli-bacteria, counts/100 ml. 18 34 9 42 38 14 112 170 93

Dissolved oxygen, mg/I. 6.1 6.05 6.0 4.3 4.6 5.3 5.1 5.8 5.9

BOD (5 day) mg/I. .49 .61 .41 .61 .39 .63 .55 .55 .58

Turbidity, NTU. .62 .68 .71 3.6 6.7 2.2 18.3 20.2 9.5

Alkalinity (as mg/I CaCO,. 38 37 44 49 49 55 49 47 50

Fluoride, mg/I. .05 .05 .05 .05 .05 .05 .05 .06 .06

Ammonia, mg/l. .050 .050 .024 .030 .030 .030 .012 .025 .030

Kjeldahl nitrogen, mg/I. .13 .11 .15 .12 .14 .11 .20 .24 .21

Nitrate-N, mg/l. .010 .012 <.010 .126 .126 .054 .212 .223 .085

Total phosphorus, mg/l. .018 .021 .018 .025 .024 .025 .019 .023 .026

Arsenic, mg/I. < .010 < .010 <.010 <.010 <.010 <.010 <.010 <.010 <.010

Barium, mg/I. < .050 <.050 <.050 <.050 <.050 <.050 <.050 <.050 <.050

Cadmium, mg/l. < .030 <.010 <.010 <.010 <.010 <.010 <.010 <.010 <.010

Chromium, mg/l. < .020 <.020 <.020 <.020 <.020 <.020 <.020 <.020 <.020

Copper, mg/I. < .020 <.020 <.020 <.020 <.020 <.020 <.020 <.020 <.020

Iron, mg/I. 51 40 45 214 211 266 341 431 450

Lead, mg/I. < .040 <.040 < .020 <.020 <.040 <.040 <.040 <.040 <.005

Lithium, mg/l. <.10 <.10 <.10 <.10 <.10 <.10 <.10 <.10 <.10

Manganese, mg/I. < .010 <.010 <.010 <.010 < .010 <.010 < .010 <.010 <.010

Mercury, mg/I. < .020 < .020 < .020 <.020 <.020 <.020 <.020 <.020 <.020

Nickel, mg/I. < .020 < .020 <.020 <.020 <.020 <.020 <.020 <.020 <.020

Potassium, mg/l. <.020 <.020 <.020 <.020 <.020 <.020 <.020 <.020 <.020
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TABLE 2.-WATER QUALITY DATA I FOR PANAMA CANAL COMMISSION DRINKING WATER INTAKE

AREAS-Continued

Atlantic intake Gamboa intake Paraiso intake

Parameters

1971 1975 1979 1972 1975 1979 1972 1975 1979

Selinium, mg/I. <.010 <.010 <.010 <.010 <.010 <.010 <.010 <.010 <.010

Silver, mg/I. <.020 <.020 <.020 <.020 <.020 <.020 <.020 <.020 <.020

Sodium, mg/I. 5.08 5.6 5.7 7.5 7.1 7.3 7.4 7.1 7.4

Zinc, mg/I. <.020 <.020 <.020 <.020 <.020 <.020 <.020 <.020 <.020

1Data given as yearly averages of representative stations in each area.

TABLE 3.-WATER QUALITY DATA FOR LIMON BAY

Limon Bay; west side Limon Bay: east side Parameter

1972 1975 1979 1972 1975 1979

pH, units. 8.5 8.4 8.5 8.2 8.4 8.5

DO, m g/I. 6.4 6.2 6.0 6.4 6.5 5.9

BOD (95 day) mg/I. .56 .53 .56 .70 .87 1.04

Fecal coliform-bacteria (counts/100 ml) . . 24 5 4 249 94 120

Kjeldahl nitrogen, mg/I. .18 .10 <.10 .18 .11 <.10

Ammonia, mg/I. .034 .025 .025 .041 .029 .031

Total phosphorous, mg/I. .033 .019 .008 .036 .023 .011

Turbidity, NTU . . 1.44 1.26 .66 .52 .75 .49

TABLE 4.-WATER QUALITY DATA FOR BALBOA HARBOR AND PANAMA BAY

Marine waters north of Thatcher Ferry Marine waters south of Thatcher Ferry

Parameter Bridge Bridge

1972 1975 1979 1972 1975 1979

pH, units. 7.4 7.3 7.4 7.7 7.7 7.7

DO, mg/1. 5.15 4.7 5.8 6.3 6.3 6.2

BLD (5-day) mg/I. .83 .81 .76 .79 .83 .68

Fecal coliform-bacteria (counts/100 ml) . 700 393 578 41 74 53

Kjeldahl nitrogen, mg/I. .34 .18 .14 .16 .17 .13

Ammonia, mg/I. . . .060 .080 .060 .027 .023 .035

Total phosphorus, mg/I. .062 .052 .027 .039 .039 .039

Tubidity, NTU . 2.60 2.57 5.45 2.18 1.95 1.90

TABLE 5.-QUALITY OF DRINKING WATER PRODUCED BY PANAMA CANAL COMMISSION'S WATER

TREATMENT PLANTS

EPA maximum Mount Hope Miraflores drinking standard (mg/I) drinking water water (mg/I) (mg/I)

A. Inorganic contaminants:

A rsenic . 0.05 < 0.0 1 < 0.0 1

B arium . . 1 < .0 5 < .0 5

Cadm ium . .010 < .0005 < .0005

Chrom ium . .05 < .00 5 < .005

Lead . .0 5 < .00 5 < .00 5

M ercury. .00 2 < .00 1 < .00 1

N itrate (as N ) . 10 < .005 < .005

Selenium . .0 1 < .005 < .00 5

Silver. . .05 < .0005 < .000 5

B. Fluoride temperature range:26.3 to 32.5 . 1.4 .68 .66
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TABLE 5.-QUALITY OF DRINKING WATER PRODUCED BY PANAMA CANAL COMMISSION'S WATER

TREATMENT PLANTS-Continued

EPA maximum Mount Hope Miraflores drinking standard (mg/f) drinking water water (mg/I) (mg/I)

C. Organic contaminants:

Chlorinated hydrocarbons:

Endrin . .0002 < .00004 < .00004

Lindane . .004 < .00001 < .00001

M ethoxychlor. .1 < .00005 < .00005

Toxaphene . .005 < .00005 < .00005

Chlorophenoxys:

2,4-D . .1 < .0006 < .0006

2,4,5-TP Silvex . .01 < .0006 < .0006

D. TURBIDITY

Maximum contaminant level permissible is 1 turbidity unit as determine by a

monthly average:

Mount Hope drinking water averages <.15 TU.

Miraflores drinking water averages <.35 TU.

E. MICROBIOLOGICAL CONTAMINANT

EPA drinking water regulations allow not more than 10 percent (in any month) of

the 10 ml fermentation tube portions to contain coliform bacteria present:

Mount Hope drinking water averages <1 percent.

Miraflores drinking water averages <1 percent.

F. RADIOACTIVITY AND RADIONUCLIDE CONTAMINANTS

There are no present facilities avilable to conduct these tests. Occasional samples

sent to stateside laboratories shows the levels to be well within the drinking water

regulation requirements.

TABLE 6.-AIR QUALITY DATA1 FOR PANAMA CANAL COMMISSION AREAS

Suspended particulates 2 Sulfur dioxide 3 Nitrogen dioxide 4

Sampling Stations

1977 1978 1979 1977 1978 1979 1977 1978 1979

Miraflores. 38.98 33.60 37.50 12.67 11.49 10.21 21.33 23.08 20.16

Pedro Miguel. 44.99 35.87 40.72 7.57 13.69 11.80 27.30 29.11 30.55

Balboa. 56.08 48.40 51.24 12.69 19.53 14.21 49.11 45.87 46.32

Madden. 55.81 49.31 50.82 5.80 11.42 8.0 16.14 17.75 15.71

90 percent of the data has been screened and processed. 2 EPA, primary air quality standard for suspended particulates: 75 jig/m 3 annual geometric mean.

3 EPA, primary air quality standard for sulfur dioxide: 80 ptg/m 3 annual arithmetic mean.

4 EPA, primary air quality standard for nitrogen dioxide: 100 stg/m3 annual arithmetic mean.

Note: All data given in micrograms per cubic meter ( g/m3 ).

Mr. HUBBARD. Regarding pest and mosquito control, the sixth

category of major concern which you mentioned.

Under the new treaty and Panama Canal Act, what responsibilities for the important mosquito control program does Panama

have, and what responsibility does the United States have?

Mr. CONSTANT. Sir, the responsibilities are delineated based upon

the areas over which we have control. We operate within the canal

operating area and the housing areas. We work jointly with

Panama Commission's mosquito control teams, and we work with

them just outside the limits of housing areas for Commission personnel. We work with them jointly in those areas, but inside the
139

areas, we work ourselves. Outside of the area, with the exception of

those joint teams, it is Panama's responsibility.

Mr. HUBBARD. Has the Commission experienced any recent problems with respect to the effectiveness of the mosquito control program?

Mr. CONSTANT. No, sir; not to my knowledge. We have not had

any problems recently.

Mr. HUBBARD. Regarding disposal of dredge material, where are

the sites for disposal of dredge material in the canal operating

areas?

Mr. CONSTANT. We have a number of them in the channel areas

before going up the locks and into the lake. We have an area on

the Pacific side which is near Rodman Naval Station-and on the

Atlantic side, the disposal area is on Telfer's Island. In the lake

istelf, much of the dredged material is dumped into the former

valleys that were in that area prior to the creation of the lake.

You realize there were hills and valleys in that entire area and

much of the dredged material is dumped into those valley areas,

and we have had no problem with that.

Mr. HUBBARD. What are the Commission's guidelines for the

fixing of the location of such sites?

Mr. CONSTANT. Well, we have been expanding these areas for

some time in order to create as much spoil area as we possibly

could, and we do not intend to expand them any further other than

increasing the height of the dike area that protects this material

from flowing back into the canal. We feel that that is sufficient

area at the present time and for the foreseeable future to take care

of our dredged materials.

Mr. HUBBARD. Tom, have the dredge disposal sites been of any

environmental concern to either Panamanian or U.S. citizens who

live within the vicinity of these sites?

Mr. CONSTANT. No, sir; there have been no problems there at all.

They are monitored very closely by our teams and we have found

no concern over the environmental problems affected by the

dredged material.

Mr. HUBBARD. Regarding the Joint Commission on the Environment, on page 4 of your statement you indicate that: "The environmental/energy coordinator for the Commission is a member of an

interim ad hoc technical secretariat, organized to provide technical

support for the Joint Commission on the Environment."

Would you please elaborate on what type of coordination you

expect the Commission to have with the Joint Commission on the

Environment when that body is organized?

Mr. CONSTANT. The individual we are referring to there is Dr.

Frank Morris, who has been our environmental officer for several

years. He will act as the Commission's representative to provide

source material to the Joint Commission on the Environment. We

will not have a member on the Commission, but we will be providing the secretariat and the Commission with material upon which

they can base their recommendations to the respective governments.

It will be a continuing process. When we find that there may be

a problem, we would bring it to the attention of the Joint Commission.
140

Mr. HUBBARD. Regarding oil pollution-and I am nearing the

conclusion of my questions-on page 5 of your statement, you

indicate that: "Panama's newly formed Oil Pollution Department

has a limited oil recovery system for pier area use."

Do you feel that Panama's Oil Department is adequate to recover

from any oil accidents arising in the port areas now under Panama's jurisdiction?

Mr. CONSTANT. No, sir; we do not. The Government of Panama

realizes that they do not have the capability at the present time.

Panama borrows equipment from a private concern when there

is ever any oilspill in the port area, or they have been asking for

our assistance and we have been very happy to provide it.

Mr. HUBBARD. Regarding draft limitations, the OTA study indicated that in the past, draft limitations due to water shortages

have occasionally been imposed on ships transiting the canal. The

most severe limitation occurred in May 1977, when the maximum

permissible draft was 35.6 feet. The maximum transit draft at that

time could have been 39.6 feet.

Recently, we were informed by Administrator McAuliffe during

the authorization hearings, of a significant increase in ships transiting the canal.

Now that the ships are larger, do you anticipate draft limitations

due to' water shortages which will now have an even greater

impact on canal finances?

Mr. CONSTANT. Not necessarily, sir.

The draft limitations are placed, based upon the adequacy of

rainfall and the amount of water contained in both Madden Lake

and Gatun Lakes. It is not dependent upon siltation in the channel.

So what we are talking about is adequacy of rainfall and the

limitation, the severe limitation, that was placed at that particular

time, as you mentioned, was based upon a very dry season.

We do not foresee any major limitations. We will continue with

our maintenance dredging in the channels and we do not see any

limitation on drafts, other than those caused by rain shortages.

Mr. HUBBARD. The last subject on which I have questions regards

sanitation measures.

On page 5 of.your statement, you indicate that a sanitation unit

is retained by the Commission to carry out a community-Commission sanitation program enforcing such measures as refuse collection and disposal.

Where is the Commission enforcing these measures?

Mr. CONSTANT. Sir, we are not actually enforcing them other

than in our own canal areas. We are monitoring the collection of

garbage by Panamanian agencies. Where we feel that there might

be a sanitation problem, we bring it to the attention of the Panamanian authorities. This has happened in a couple of minor instances and it has been corrected immediately.

We, our teams, do monitor also within the housing areas, the

family housing areas that we mentioned previously.

Mr. HUBBARD. How does this program relate to Panama's responsibilities of garbage collection in the canal area?

Mr. CONSTANT. Well, as I mentioned, sir, the relationship is that

our teams will monitor the work being performed by the Panamanian agencies responsible for the collection of garbage and where
141

there are possible health difficulties we report it to the Panamanian authorities.

Mr. HUBBARD. Congressman Bauman?

Mr. BAUMAN. Tom, the Joint Commission has not met yet, and I

think that is regrettable. I think the whole pace of the administration's implementation of our side of the Panama Canal Treaties is

highly regrettable. It has already given rise to a number of problems outside of the issue of the environment. One question I have

for you is, has there been any discussion with Panamanian officials

about the impact of a second canal? Certainly, environmentally,

this would have a major impact, particularly with its proposed

location.

I notice that the Japanese have visited Panama to study this

matter, and President Royo is slated to go to Japan to discuss a

new canal, if he has not already done so.

The money is obviously a major barrier in building a second

canal, but it seems that the environmental aspects and related

issues ought to be talked about with the Commission and its staff.

Do you know of any discussion that is going on?

Mr. CONSTANT. No, Congressman Bauman. We have had no official discussions with the Panamanian Government on their plans

for a sea-level canal. That, of course, is covered in the terms of the

treaty.

At a certain point, they will have discussions, I am sure, but

none to my knowledge have taken place, and certainly the Commission has not been involved in any.

Mr. BAUMAN. I would hope that when the Joint Commission does

finally organize that that would be one of the first issues that is

raised with our Panamanian counterparts so that the environmental impact alone of such a suggestion could be considered, because

all the testimony that I have ever heard in the last 2 years that I

have served on this subcommittee indicates that the impact on the

environment would be the major roadblock, second only to financial hurdles, if such a thing was ever to come about.

Mr. CONSTANT. I am sure that that is the case; yes, sir.

Mr. BAUMAN. Thank you.

Mr. HUBBARD. Mr. Modglin, any questions?

Mr. MODGLIN. No questions.

Mr. HUBBARD. I believe that is all, Tom.

We appreciate so much your helpful testimony and also we appreciate your answers to our several questions.

The key project designed to curb the reforestation of the Panama

Canal watershed has been initiated under the auspices of the U.S.

Agency for International Development in connection with the appropriate agencies of the Panama Canal Government.

Since the reforestation efforts may be vital to the canal in the

years ahead, we have asked AID to brief us this morning on the

project status for the future.

Here to present testimony is Mr. Aldelmo Ruiz, AID Mission

Director in Panama.

Prior to assuming his post in mid-1979, Mr. Ruiz was a Mission

Director in El Salvadore, and before that Yemen. He joined AID in

1962. His background is in engineering and he was born on the

island of Puerto Rico.
142

Mr. Ruiz, we do welcome your testimony and appreciate your

being here this morning and recognize you as an authority on your

presentation.

STATEMENT OF ALDELMO RUIZ, DIRECTOR OF THE AGENCY

FOR INTERNATIONAL DEVELOPMENT MISSION IN PANAMA

Mr. Ruiz. Thank you, Mr. Chairman.

Mr. Chairman and members of the Panama Canal Subcommittee, I am pleased to be here today to testify on the subject of

environmental protection measures in Panama.

In Panama, as in other countries of Central America and the

developing world, the disastrous effects of widespread and uncontrolled deforestation were only recently recognized. At the turn of

the century, most of the deforestation in Panama was caused by

systematic and large-scale commercial lumbering operations. More

recently, it has been caused by the ever-increasing number of

human incursions into formerly inaccessible virgin forest areas.

Most of the' damage is being caused by migratory subsistence

farmers who clear forest land and plant one or two crops before

moving to another location where the same process is repeated.

While overall statistics for Panama are not available, it is estimated that between 1952 and 1978, the amount of land in the

Panama Canal watershed containing forest cover declined from 83

percent to 32 percent as a result of slash and burn practices. At

current rates of destruction, the remaining primary forest in the

watershed will all but disappear by the year 2000. It is generally

acknowledged that the rate of deforestation in other areas of

Panama is substantially more severe. In fact, many of the inhabited areas of Panama's Pacific slope are almost completely denuded.

We are hopeful that as a result of current and proposed government action, this vital resource will not be permanently lost to

future generations.

As we so graphically learned from the massive human suffering

in the African Sahel region not too long ago, the problems of

deforestation, when combined with other natural disasters such as

drought, can rapidly escalate into a major catastrophe for large

numbers of people.

On a worldwide basis, the loss of tropical forests has become

alarming. In Latin America, one-third of the tropical forests have

been lost, and in Africa and Asia, the percentage has reached 50 to

70 percent respectively.

Over the past decade, the Panamanian Government has become

acutely aware of the critical and unique role that forest cover and

watersheds play in maintaining the equilibrium of the environment and in insuring economic and human progress.

The recently concluded Panama Canal Treaties did much to alert

the Government and the general public of the vital link, that exists

between the maintenance and restoration of forests and watersheds

and such factors as flood and erosion control, freshwater storage

for human consumption, irrigation and hydroelectricity, providing

sanctuaries for numerous endangered species of plant and animal

life, and the operation of the Panama Canal.

The magnitude of the problem becomes abundantly clear when

one realizes that the transit of but a single oceangoing ship
143

through the canal requires more than 52 million gallons of freshwater. This is roughly equivalent to the daily requirements of a

medium-sized city. When one considers that there are 38 such

transits during the average 24-hour period, one can begin to realize

how important proper watershed management practices are to the

economic well being of Panama.

Draft reduction of vessels transiting the canal toward the end of

the dry season are usually required in years of below-normal rainfall. Two years of low rainfall in 1976 and 1977 caused the lowest

level of record in Lake Gatun.

In May 1977, it reached 80.5 feet, causing a draft reduction of 3.1

feet. A more serious longrun problem, however, is the progressive

loss of storage by sedimentation of the reservoirs, especially Lake

Alajuela, due to excessive erosion within the watershed.

It is estimated that, if present land-use trends continue, Lake

Alajuela, a primary water control and water facility serving the

canal, will have lost 22 percent of its storage capacity by the year

2000, and that it will become useless for water storage sometime

before the year 2050.

From an ecological and environmental point of view, the Panama

Canal watershed represents what many consider to be one of the

most extensive and economically critical humid tropical forests in

all of Central America. According to the most recent Smithsonian

Tropical Research Institute publication, the region harbors over

1,300 species of vascular plants and is the home of 562 of the 642

species of birds which are known to inhabit North America.

In addition to being the habitat of numerous other species of

mammals, the area also serves as a sanctuary for 63 percent of the

animal species protected by the Panamanian game laws and 20

percent of the mammals listed in the U.S. Endangered Species Act.

The continued preservation of the canal's watershed is indispensible if this rich and varied collection of plant and wildlife are to be

protected.

In terms of economic and human development implications, the

major Panamanian watersheds including that on the Panama

Canal provide potable water for over 900,000 Panamanian citizens

and are the major source of the freshwater utilized for irrigation

by sugar and banana plantations which account for a major share

of the country's export crops, as well as significant employment

opportunities.

The watersheds also prevent the silting and sedimentation of

rivers, streams, and the canal, which is the country's single largest

source of revenue. Unless current rates of silting and sedimentation can be reduced, this vital waterway may no longer be fully

serviceable when it is finally transferred to Panama at the end of

1999.

The situation is equally critical for Panama's hydroelectric

power-generating capacity. With the skyrocketing price of fossil

fuels, any reduction in generating capacity due to silting or water

shortages would create major problems for the economy.

In a major expression of concern and an awareness of the limited

institutional and financial resources available for dealing with this

problem, the Government of Panama requested assistance from

AID in early 1978. During the ensuing year, some rather detailed
144

studies and analyses were conducted in preparation for the signature of a $10 million AID loan agreement early in 1979. The loan is

designed to: (1) Strengthen the technical, managerial, and administrative capabilities of the Panamanian institution responsible for

the management of renewable natural resources; (2) increase

awareness among all segments of the Government and the general

population of the importance of natural resource conservation; and

(3) establish watershed management programs in the Panama

Canal and two other priority watersheds in western and southern

Panama and involve the local population in the resource management and conservation progress. These activities are designed to

establish a rational and sustainable natural resource use and protection program.

These goals are admittedly formidable, given the historical, cultural, and attitudinal constraints which will have to be overcome.

While the obstacles are great, so are the potential rewards.

If the process of degradation can be slowed and, perhaps, even

reversed, we will not only have assisted Panama with this pressing

problem, but may also have developed a replicable methodology

applicable to other parts of the world as well.

Although implementation of the project began only 8 months

ago, some measurable achievements have been obtained. The Panamanian Directorate of Natural and Renewable Resources now has

in place a group of trained professionals capable of managing the

varied activities to be carried out under this program.

Startup activities included establishing a complete tree and pasture nursery system capable of producing an estimated 2 million

trees per year when in full production, which should be within 1

year.

During the first planting season, 700 hectares of permanent tree

crops was established. In the field of resource protection, the project employed, trained, and placed in the field 50 forest and park

rangers. Also, during the first portion of the project, a series of

radio and TV informational activities were conducted. The net

effect of these activities is an increased awareness on the part of

the local population of the importance of natural resource restoration and protection. Almost every community in the Panama Canal

watershed is involved in some way in a watershed management

activity.

Conducting this project will produce an experienced Panamanian

natural resource agency capable of conducting an effective ongoing

resource use and protection program.

During the life of the project, a series of interrelated field activities will be carried out. We anticipate establishing within the canal

watershed 10,000 hectares of forested land, a series of soil erosion

control systems, improved pasture on a major portion of the 85,000

hectares of unimproved, rapidly degrading pastureland, and a

system of protection for the 93,000 hectares of remaining primary

forest.

We also expect to have a local population acutely aware of the

problems of soil erosion and the consequences of destructive land

and water management, and aware of their role in protecting the

critical natural resource base.
145

During the first year of project implementation, we have been

encouraged by the degree of Government and community commitment to this significant development effort and are looking forward

to measurable progress over coming years.

This, Mr. Chairman, completes my prepared statement.

I will be pleased to respond to any questions that you or other

members of the committee may have.

Mr. HUBBARD. Thank you very much, Mr. Aldelmo Ruiz, the

Panama AID Mission Director, AID standing for Agency for International Development. We appreciate your testimony.

Regarding the threat to canal operations presented by deforestation, Mr. Ruiz, the earlier part of your statement concerning the

deforestation of the Panama Canal watershed includes some statements that are somewhat surprising, particularly the statement on

the top of page 4 where you say that: "This vital waterway may no

longer be fully serviceable when it is finally transferred to Panama

in 1999."

Do you see where you said that?

Mr. Ruiz. Yes, Mr. Chairman.

Mr. HUBBARD [reading]. "This vital waterway may no longer be

serviceable when it is finally transferred to Panama in 1999."

Mr. Ruiz. Yes, sir.

Mr. HUBBARD. I am glad that you have warned us of this danger,

because it is certainly in the U.S. interest that the canal be capable

of handling U.S. trade and world trade both before and after the

year 2000.

In light of your statement, would you care to elaborate upon

your own reaction upon learning of the situation in Panama concerning the deforestation of the watershed, or is your conclusion

one at which you arrived over a period of time?

Mr. Ruiz. According to the most recent estimates, by 1978 the

sedimentation rate of the canal watershed had reached approximately 9 million cubic meters (M3 ) per year. This rate is expected

to increase to 11.5 million m3 by 1983 and 16 million m3 by the

year 2000, unless effective remedial measures are adopted.

The joint AID/Government of Panama (GOP) watershed management project is -designed to stabilize the sedimentation rate at

approximately 7.9 million m3 per year. If this goal is achieved, the

overall rate of sedimentation will be reduced by approximately 8.1

million m3 in the year 2000. This would contribute measurably to

the expected life of the canal. To illustrate the severity of the

deforestation problem, I would like to draw your attention to a

number of charts which I have brought with me.

The first illustration depicts the canal watershed in 1952 when it

was completely forested.

The second illustration depicts the canal watershed as it appeared in 1978. Please note that it was almost completely deforested except for the former Canal Zone which was still relatively

intact.

My own reaction to the situation was to support and encourage a

concerted effort by the Government of Panama and other international donors to cope with this serious problem. Since AID staff

have been concerned with the human and economic implications of

deforestation for some years, we took the initiative to develop a
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pilot project which we hope can be replicated in other parts of the

developing world.

Mr. HUBBARD. Does that complete your answer?

Mr. Ruiz. Yes; Mr. Chairman.

Mr. HUBBARD. Let me ask you regarding the terms of the loan.

Would you elaborate upon the terms of the $10 million loan

under which the canal watershed project is being carried out?

Has the loan been fully funded through appropriations?

Mr. Ruiz. The loan was a total of $10 million, and it fully funded.

In addition, the GOP will have a counterpart financing funding by

the amount of $6.8 million. So the total amount available for the

project will be $16.8 million.

As for the terms of the loan it is a 20-year loan with a 10-year

grace period payable as follows: 2 percent for the first 10 years, 3

percent for the succeeding 10 years.

Mr. HUBBARD. What amount of the loan has been disbursed thus

far?

Mr. Ruiz. As of to date about $900,000 have been spent, of which

$300,000 have been disbursed.

Mr. HUBBARD. How long will the terms of this loan be in effect?

Mr. Ruiz. Well, sir, do you mean the project?

The loan is for a 20-year period with a 10-year grace period.

Mr. HUBBARD. For how many years will the project be ongoing?

Mr. RUiz. Five-year project.

Mr. HUBBARD. Five years?

Mr. RUIz. Five years. It will go on until 1983.

Mr. HUBBARD. Well, then, over how many years will the loan be

repaid?

Mr. Ruiz. It will be repaid in 20 years, with a 10-year grace

period. This total 30 years.

Mr. HUBBARD. All right.

Are there any particular problems at present with the execution

of the loan?

Mr. Ruiz. No, sir, at the present, we have not encountered any

difficulties with the execution of the loan.

Mr. HUBBARD. I have a question regarding stopping the return of

slash-and-burn farmers, as you indicate on page 5 of your statement. In the early part of the watershed project, there is an emphasis on production and planting of trees in order to forest as

many hectares of land in the watershed as possible. You also

indicate the project will provide improved pasture on 85,000 hectares of unimproved pastureland. Once the planting of trees is done,

and the pasture improved, how do you stop the slash-and-burn

Panamanian farmer from coming in and destroying the trees and

the pasture and making the project a waste of money?

Mr. RUiz. The present approach being employed by the GOP

through the implementing agency-the Panamanian Directorate of

Natural and Renewable Resources RENARE is by providing employment to the farmers that are living in the watershed area.

Those farmers as of now are working in the reforestation program

and have discontinued their slash-and-burn practices. Regarding

new farmers moving into the area, I have been told by the technicians actively engaged in this project, that so far the Government

has been sucessful in preventing additional farmers from moving
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into the area. I understand that the control is very strict-this

being carried out by the forest rangers.

Further, I must point out that in the long run reforestation is a

permanent undertaking and it is planned by RENARE to permanently employ farmers in the watershed area in the reforestation

program.

Mr. HUBBARD. How many forest and park rangers do you estimate will have to be hired by Panama to watch over the watershed

area?

Mr. Ruiz. How many?

Mr. HUBBARD. How many forest and park rangers do you estimate will have to be hired by Panama to watch over the watershed

area?

Mr. Ruiz. As of to-date RENARE has employed about 800 people

of which approximately 700 are daily laborers-farmers- engaged

in manual work; 50 are engaged in administrative and clerical

work the remaining 50 are forest rangers. To the best of my knowledge the total forest rangers within the project will remain around

50.

Mr. HUBBARD. I apologize. I did not catch that.

Mr. Ruiz. The organization for the project-RENARE-now employs approximately 800 people under the watershed management

project. Of the 800 people, 700 people are workmen, employed in

planting trees and nurseries in addition to the cleaning and other

menial work. Approximately 50 people are administrative and

clerical staff and the other 50 are forest rangers.

Mr. HUBBARD. Regarding the Joint Commission on the Environment, once the Joint Commission on the Environment becomes an

active body overseeing the implementation of the Panama Canal

Treaty, what type of role does your agency plan to have with that

body?

Mr. Ruiz. Well, our role with that Agency will be minor, maybe

a coordinating role. This is because our main role is to work in

collaboration with the Panamanians in strengthening the institution that eventually will be carrying out the important work of

watershed management.

Mr. HUBBARD. Regarding the continuation of the reforestation

programs, after the 5-year AID reforestation project in Panama is

completed, do you feel the Panamanian Government will be able to

continue the reforestation projects at the necessary level in order

to protect the viable operation of the canal?

Mr. Ruiz. I feel that they will do so. At present Panamanian

officials becoming increasingly aware of this mammoth problem,

which if it is not coped with will be highly detrimental to their

overall economic development. I must point out that other international organizations are providing technical assistance in this area

of watershed management. For example, FAO now has, I have been

informed, four technicians working with RENARE in this area.

As I have stated I think that the Panamanians will be able to

carry on the task of watershed management. However, I believe,

we need to observe closely their performance during the period

that the project is developing to see how their performance is going

to be.
148

Mr. HUBBARD. Last, my last question is one regarding squatters

in the Panama Canal area.

Can you elaborate on what specific action is being taken by

Panama right now with respect to these migratory subsistence

farmers who appear to be causing most of the damage to the

existing forests in Panama?

Mr. Ruiz. As I stated previously, the organization responsible for

watershed management-RENARE-have employed farmers living

in the watershed area to work in the project. So far this appears to

be successful. This is mainly because such employment provide the

farmer with adequate living which prevents them from continuing

to damage the forest.

As far as we know there are no new migratory subsistence

farmers moving into the area. I understand that the Government

of Panama has been very successful in keeping them away. AID

will keep observing the Government success in this area.

Mr. HUBBARD. Congressman Livingston?

Mr. LIVINGSTON. No questions.

Mr. HUBBARD. Any questions from Terry Modglin or Merrill

Whitman or Mr. Luna? I believe we have no questions, Mr. Ruiz.

Do you have any additional comments that you wish to make?

Mr. Ruiz. Yes, Mr. Chairman.

I would like to make a few comments about the serious situation

that exists at present in Panama concerning the deforestation of

the tropical forests. As an example, as the construction of the

Inter-American Highway progresses toward the Columbian border

the subsistance farmers keep destroying the forests on both sides of

the highway. This is occurring at a rapid rate. The need for measures, such as rules and regulations need to emanate from the

Panamanian central government to protect their virgin forests.

AID will continue collaborating and working with the Panamanian

Government in reaching this important goal.

Mr. HUBBARD. Thank you very much, Dr. Ruiz.

Before you go, on March 6 of this year, Ambler Moss,' Jr., the

American Ambassador, our Ambassador to Panama, located at the

Embassy of the United States in Panama, wrote me a letter. It is

addressed to me and I read:

Dear Mr. Chairman:

I am writing you this note to introduce Dr. Aldelmo Ruiz, Director of the AID

Mission in Panama, who will be testifying before your Subcommittee on the subject

of environmental protection measures in Panama. Dr. Ruiz is a seasoned veteran of

development programs in Latin America and a person with a creative mind and

plenty of initiative. I know that you will enjoy meeting him.

We are so glad to have you, and you are very highly recommended by Ambler Moss, Mr. Ruiz.

In 1967, Dr. Ruiz, when I was running for the State Senate, my

first attempt at elected office, I referred to my 67-year-old opponent

as a seasoned politician. I believe Ambassador Moss, when he

refers to you as a seasoned veteran of programs in Latin America,

is giving you a high compliment and he refers to you as a person

with a creative mind and plenty of initiative. Coming from Ambler

Moss, for whom I have much admiration, that is a compliment to

you of which you can be very proud. Certainly I hope to know you

better and we appreciate very much your coming here today to

testify before us.
149

Your testimony is very helpful and your answers to our questions are very helpful and we express our appreciation to you.

Mr. Ruiz. Thank you, Mr. Chairman.

Mr. HUBBARD. Good.

Our final witness is William Alston Hayne, Deputy Assistant

Secretary for Environmental, Health and Natural Resources, Department of State.

Mr. Hayne is one of three U.S. citizens who was appointed by the

President on January 7 to membership on the Joint Commission on

the Environment.

Mr. Hayne is appearing here today to brief us on the role that

the Joint Commission will play in attempting to resolve the environmental problems that now exist and are likely to exist in the

canal area.

Mr. Hayne, we are lucky to have someone with your background

representing the United States. We understand you headed the

U.S. delegation to numerous conferences on environmental matters; and we also recognize that you have served in economic

positions with the Foreign Service of the State Department, and

that you have also served on detail to the Council of Environmental Quality.

The subcommittee welcomes you today and, speaking for the

subcommittee, I hope that, beginning today, we will have an active

dialog with you and other Joint Commission members.

Now, we await your comments, Mr. Hayne.

STATEMENT OF HON. WILLIAM ALSTON HAYNE, DEPUTY ASSISTANT SECRETARY FOR ENVIRONMENTAL, HEALTH AND

NATURAL RESOURCES, DEPARTMENT OF STATE

Mr. HAYNE. Thank you, Mr. Chairman.

I am glad you got me confused with somebody of importance in

your State. It has happened before.

In addition to myself, as you know, President Carter has designated Charles R. Ford and Robert 0. Blake to serve as Commissioners. Mr. Ford is Executive Assistant and Staff Director to the

Administrator of the Environmental Protection Agency. He previously served as Deputy, then Acting, Assistant Secretary of the

Army for Civil Works, the office whose responsibilities include

environmental matters and the operation of the Panama Canal.

Ambassador Blake is a retired Foreign Service officer who is

active in environmental activities. During the Senate debate on the

Panama Canal treaties and congressional enactment of implementing legislation, he chaired the Panama Canal Environmental Task

Force, a coalition of environmental groups which supported the

Treaties.

The U.S. Commissioners have met in Washington, and we are

preparing now to meet with our Panamanian counterparts in

Panama next month. The Department of State officer, Mr. William

Mansfield, who is with me today, and who will provide staff support in the Commission, visited Panama last week.

I would like to add to my statement that when we were appointed in January, the Joint Commission was prepared to meet immediately but we were asked not to get too far ahead of the principal
150

Panama Commission. Even now there are problems for Panama

with respect to meeting promptly with us.

We hope to go to Panama next month, accompanied by Mr.

Mansfield, where we will expect to inform ourselves about relevant

environmental conditions, as well as making contact with our Panamanian counterparts and Panamanian officials as we initiate

work on the programs and procedures.

We recognize that the Joint Commission on Environment is a

unique institution. There are few comparable organizations from

which we can draw experience.

Our basic mandate of course comes from article VI of the

Panama Canal Treaty itself. Further details are provided by the

exchange of notes on October 1, 1979, between our Ambassador in

Panama and the Panamanian Minister of Foreign Relations. The

texts of these notes are attached as an annex to my statement.

[The following was received for the record:]

PANAMA, October 1, 1980.

His EXCELLENCY, CARLOS OZORES T.,

Minister of Foreign Relations,

Panama.

EXCELLENCY: "I have the honor to refer to your Note of today's date concerning

the Joint Commission on the Environment, which reads:

"MR. AMBASSADOR: I have the honor to address Your Excellency in reference to

paragraph 2 of Article VI of the Panama Canal Treaty signed September 7, 1977

and to recent discussions between representatives of our two Governments relating

to the establishment and functions of the Joint Commission on the Environment.

"In particular, I am pleased to propose the following:

"The Joint Commission on the Environment is established as of October 1, 1979.

"The Joint Commission is composed of three representatives.of each Government

who shall serve for periods of three years each.

"Management of the work of the Commission will be the concern of a combined

Presidency, one of whom will serve as Chairman for a term of two years. By Laws of

the Commission will determine the way in which the Chairmanship will rotate and

also the exercise of the functions of the combined Presidency and the Chairmanship.

"As provided in Paragraph 2 of Article VI of the Treaty, the principal objective of

the Joint Commission on the Environment is to recommend to the Governments of

the Republic of Panama and the United States of America ways to avoid, or should

this not be possible, to mitigate the adverse environmnental impacts which might

result from their respective actions pursuant to the implementation of the Treaty.

The functions of the Joint Commission on the Environment are as follows:

"1. To receive from the Governments of the Republic of Panama and of the

United States of America complete information on any action taken in accordance

with the Treaty which, in the judgment of both Governments, might have a significant effect on the environment.

"2. To recommend means to avoid or mitigate the adverse effects on the environment of the Republic of Panama resulting from implementation of the Treaty.

"3. To review periodically anti-pollution actions recommended by the Commission

and the ecological protection and preservation activities carried out by the two

Governments in relation to implementation of the Treaty.

"4. To advise both Governments regarding the strategy and policy of environmental protection related to implementation of the Treaty.

"5. To work closely with official organizations of the Republic of Panama and of

the United States of America carrying out duties related to the protection of the

environment in the area of the Canal and to obtain continuous and timely information about activities of international and private organizations working to the same

purpose.

"6. To consult regularly with other bi-national mechanisms of coordination established for the implementation of the Treaty, especially with the Coordinating Committee, the Joint Committee, and the Consultative Committee, with the purpose of

obtaining information from both Governments about the activities provided for in

the Treaty which could have a significant effect on the environment.

"7. To study methods to obtain effective environmental protection and the prevention of pollution which could be caused by implementation of the Treaty, especially
151

in regard to land and water areas, air, flora, fauna, and to the social and economic

repercussions thereof.

"8. To recommend the adoption and application of measures to protect and control

the contamination of land and water areas, flora, fauna, and air from physical,

chemical and biological contaminants which could result from implementation of

the Treaty.

"9. To recommend the kinds of environmental studies that may be necessary

pursuant to Article XII of the Treaty.

"Recommendations of the Commission will be made by consensus and will be

submitted to the Minister of Foreign Relations of the Republic of Panama and to

the Secretary of State of the United States of America. The Commission's recommendations will be based on the best professional and objective judgments and

sound ecological practices as well as such factors as costs, resource requirements

and other policies relating to canal operations.

"The Commission shall be assisted in its work by a Secretariat which will have

the following responsibilities:

"1. To monitor action taken respecting the recommendations made by the Commission.

"2. To prepare all necessary documentation for the work of the Commission.

"3. To prepare on instruction of the Commission necessary terms of reference for

studies and surveys on the environmental consequences of any action carried out by

virtue of the Treaty which might have significance effects on the environment.

"4. To formulate recommendations and evaluations for technical proposals for the

contracting of professional services relating to the environment.

"5. To advise and make suggestions to the Commission about actions for the

protection of the environment of Panama relating to implementation of the Treaty.

"6. To maintain liaison and necessary coordination with relevant United States

Government agencies, Government of Panama agencies and binational entities created by the Treaty.

"The Governments of the Republic of Panama and of the United States of America will provide subject to the availability of funds for the necessary facilities and

resources to establish the Commission and for operation of the Secretariat. The

Republic of Panama will discharge its responsibilities through the Panama Canal

Authority and other relevant Panamanian Government agencies and the United

States will discharge its responsibilities through the Department of State, and other

relevant United States Government agencies.

"I propose to Your Excellency, that this Note and your response hereto indicating

acceptance shall constitute an agreement between both countries.

"I take this occasion to renew to Your Excellency the assurances of my highest

consideration."

CARLOS OZORES T.,

Minister of Foreign Relations.

I have the honor to confirm the foregoing arrangements on behalf of my Government, and to confirm that Your Excellency's Note and this Note shall constitute an

agreement between our two Governments concerning this matter, which will enter

into force on October 1, 1979.

Mr. HAYNE. While I do not wish to repeat in detail the content of

either the treaty article or the diplomatic notes, some mention of

the way our work is being directed is probably in order.

Our principal objective is to recommend to the governments of

the Republic of Panama and of the United States of America ways

to avoid, or should this not be possible, to mitigate the adverse

environmental impacts which might result from their respective

actions pursuant to the implementation of the treaty.

General functions of the Joint Commission are spelled out in

some nine points in the exchange of notes as well as some general

guidance on how the Joint Commission should operate. While this

is helpful, much yet remains to be decided concerning the specific

ways by which we must accomplish our task.

In preparing for our visit, we are assisted by considerable material and expertise available in Washington. The Department of

State's environmental impact statement identified some key environmental concerns related to the treaty implementation. These
152

considerations are also discussed in the valuable working paper of

December 15, 1978, entitled "Environmental Issues Affecting the

Panama Canal," prepared by the Office of Technology Assessment

for this subcommittee. I have read those documents with great

interest. We have also been in touch with AID, the Smithsonian

and with nongovernmental organizations knowledgeable about environmental conditions in Panama. We have scheduled further

visits with their representatives in Panama.

While I do not wish to anticipate the nature of the problems, it is

clear that strong priority must be given to the protection of the

tropical forests and wildlife which could be destroyed by agricultural practices unless conservation and protection measures are taken.

The Panama forest watershed is a great sponge which holds the

rainwaters that are essential to the canal's operation. The animal

and plantlife of this forest is an important natural resource. Likewise, adequate sanitation in the area is important to prevent the

spread of tropical disease; oil spills, water and air pollution must

be guarded against.

The question of a third lane of locks as well as the possibility of

constructing a sea-level canal have environmental implications.

In conclusion, I wish to emphasize the importance that I and my

fellow Commissioners give to accomplishing our task. We welcome

the interest of Congress in our work and look forward to a long and

close relationship with this subcommittee as we move forward.

Before concluding my statement, Mr. Chairman, I would like to

add that with respect to the deforestation, the Environmental

Office in the Department of State looks on tropical deforestation

worldwide as one of our priority items. While the situation which

is presented to us today appears very serious and very difficult to

cope with, in few parts of the world do we see cause and effect so

clearly related, and this gives me some encouragement.

In the tropical forest, in Indonesia and parts of Central and

South America, the cause and effect is not so readily apparent. So I

hope with the cooperation of Panama and ourselves that we can

make some real progress in this area.

Thank you, Mr. Chairman.

Mr. HUBBARD. Thank you, Mr. Hayne.

First, regarding the impact of Panamanian industrialization, in

discussing a possible agenda for the Joint Commission on the Environment, you referenced the 1977 treaty environmental impact

statement of the Department of State as a source for the statement

of environmental problems relating to the canal. That impact statement did outline a number of the environmental problems of the

canal area but was criticized because it failed to treat the potential

consequences or Panamanian industrialization in areas near the

canal.

Do you believe that industrialization should be considered as an

issue for treatment by the Joint Commission?

Mr. HAYNE. Our mandate says we must deal with everything

that has to do with implementation of the treaty. I, myself, would

like to construe it, at least initially, narrowly we can so that we

can give priority to the major problems.

Obviously, if the industrialization is a result of the treaty, we

must give some attention to it; but I think I would give our first
153

priority to some of the issues you have heard about today, particularly the watershed.

Mr. HUBBARD. Regarding the budget, Mr. Hayne, in the President's fiscal year 1981 budget, what amounts are included for

operation of the Joint Commission?

Mr. HAYNE. As I understand it, the total figure is about $439,000,

under which Panama puts up about 20-25 percent. This leaves us

about $370,000 for this year for the operation of a Joint Commission.

I think this figure is a little larger the first year because it is

supposed to go to help set up an office and procure supplies that we

need.

Mr. HUBBARD. Do you foresee any decrease in the amount requested of Congress?

Mr. HAYNE. Well, to the extent that this figure is set up initially

to include purchases, I would think that requests for subsequent

years, at least for the next couple of years, would be somewhat less.

Mr. HUBBARD. Regarding staff, do you expect to have the U.S.

staff of the Secretariat paid out of appropriations for the Joint

Commission on the Environment, or will these employees be loaned

from other U.S. agencies?

Mr. HAYNE. The U.S. participants all have their salaries paid for

by U.S. agencies. The small Secretariat which we hope to establish

in Panama will come out of our budget.

Mr. HUBBARD. Do you know what portion of the expenses of the

Joint Commission the Panamanian Government will bear?

Mr. HAYNE. Yes, sir. I think it is 20-25 percent.

Mr. HUBBARD. Twenty to twenty-five percent?

Mr. HAYNE. Yes, sir.

Mr. HUBBARD. Regarding public access, how will the Joint Commission interface with the public?

Mr. HAYNE. That remains to be seen, sir. I see many advantages

of doing this in as public a fashion as possible.

Mr. HUBBARD. Do you expect that its interface will be solely with

the two governments and their agencies, or will there be direct

contact with the public?

Mr. HAYNE. I would anticipate some direct contact, some public

hearings. But we have, of course, to consult with our Panamanian

colleagues and see what they think about it and see what is the

most effective way to proceed.

We have not really decided that yet.

Mr. HUBBARD. I have three more subjects to address. One, with

respect to jurisdiction of the Joint Commission, article VI of the

Panama Canal Treaty says that the Joint Commission is to periodically review the implementation of the treaty in order to avoid or

mitigate adverse environmental consequences in Panama. On page

3 of your statement, you indicate the Joint Commission should give

priority to protection of tropical forests and wildlife.

Do I understand that your vision for the Joint Commission extends to the entire canal watershed area, the problems of which we

have heard so much about today?

Mr. HAYNE. Yes, sir. This obviously is the area outside of the

former zone, the watershed extends a long way outside of what
154

used to be the canal zone, and I think that we have to give

attention to that area.

The deforestation which has occurred has been, to the best of my

knowledge, perfectly legal. The people who established farms and

ranches in that area, did so in a legal fashion. But I read somewhere that if you try and use it for agriculture and the slope is

greater than 45 degrees, the land is eroded. So the answer is, yes, I

do anticipate covering the full area of the watershed.

Mr. HUBBARD. Second, I have a question regarding activities of

the Joint Commission.

What do you envision as the primary tasks which the Joint

Commission should tackle in its first years of existence?

Mr. HAYNE. Well, I think the first thing we have to do is to find

out how we can set up a structure which is most effective in

working with the Commission, with Panama, and with the U.S.

agencies involved. So the first year may be one of setting up our

structure.

At the same time, we have to acquire a data base on the environment and see where we are and where we need to be. I would hope

that by the end of the year we would be in full operation.

Mr. HUBBARD. And, lastly, regarding the subject of Panamanian

environmental law, do you believe the present laws of Panama

relating to environmental protection, standing by themselves, adequately protect U.S. interests in the Panama Canal?

Mr. HAYNE. I have read a number of complementary statements

about them but I do not have any firsthand knowledge, sir.

Mr. HUBBARD. Is the Joint Commission on the Environment

going to monitor to ascertain whether all the appropriate environmental laws of the United States and Panama are abided by and

enforced when necessary?

Mr. HAYNE. Well, I think these are tools to help the Joint Commission operate. I do not really think that it is the Joint Commission's responsibility to monitor the enforcement of United States

and Panamanian laws.

Mr. HUBBARD. Any questions from Congressman Livingston?

Mr. LIVINGSTON. No questions.

Mr. HUBBARD. Mr. Terry Modglin or Merrill Whitman?

Mr. MODGLIN. I have one brief question, Mr. Chairman.

Mr. Hayne, do you envision that the Joint Commission on the

Environment will be using advisory panels as it tackles the various

issues that come before it?

Mr. HAYNE. We certainly have to get advice in some form. The

three of us obviously are not scientists and are not all engineers, so

I anticipate either consultants or advisory panels in some form;

yes.

Mr. MODGLIN. The reason why I raise that issue is because the

Office of Technology Assessment's working paper in 1978 did suggest that as one alternative.

Mr. HAYNE. I think it is an excellent idea and we will have to get

help from whatever source we can.

Mr. MODGLIN. Thank you.

Mr. HUBBARD. Mr. Hayne, let me ask you, in light of an article

that I read yesterday in the Washington Post by George Will, he

was indicating that the health of the former Shah of Iran is in
155

danger and perhaps he was not receiving the best treatment possible in Panama.

The reports today are, however, that he is not to be admitted

back into the United States for surgery but that Dr. Michael DeBakey, of Houston, Tex., could not do the operation because he was

not licensed in Panama.

We noticed also in the news today that the former Shah of Iran

has been sent back for 3 more weeks of rest because he was not

strong enough to undergo the operation for the removal of the

spleen.

You are Deputy Assistant Secretary for Environmental, Health

and Natural Resources. I guess that is what prompts me, having

read what I learned yesterday and what I heard this morning, to

ask whether you have any firsthand facts about the condition of

the Shah of Iran?

Mr. HAYNE. No, sir; I have nothing other than what is available

to us all in the newspapers.

Mr. HUBBARD. Is the State Department working with the Panamanian Government regarding the health and safety of the former

Shah of Iran?

Mr. HAYNE. I would presume so, sir, but this is handled on the

other side of the building and I occupy myself primarily with

environmental matters. There may be others here from the Department of State who can answer that question. I cannot.

Mr. HUBBARD. Is there anyone from the State Department here

who knows the answer to those questions?

Mr. HAYNE. I believe the man who was here, sir, had to leave.

Mr. HUBBARD. I realize that was not part of your presentation

and it was completely foreign to your testimony, but--

Mr. HAYNE. I would help you if I could, but I cannot.

Mr. HUBBARD. As chairman of the Panama Canal Subcommittee,

I was tempted, rather I was prompted to ask you those questions in

case you knew.

We appreciate your being here and we are fortunate to have

someone with your background representing our country in the

State Department with regard to environmental, health, and natural resource matters.

You were-I believe I am correct-one of the three U.S. citizens

appointed by President Carter on January 7 to membership on the

Joint Commission on the Environment?

Mr. HAYNE. That is correct, sir.

Mr. HUBBARD. We appreciate your appearing today to brief us on

the role that the Joint Commission will play in attempting to

resolve the environmental problems that now exist in the canal

area.

We may have hearings on this subject in the future and, hopefully, you will be able to present testimony again, an update on the

environmental aspects relating to the canal area.

Do you have anything else that you want to add?

Mr. HAYNE. No, sir. We will welcome the opportunity to appear

again when the opportunity comes in the future.

Mr. HUBBARD. Thank you again for being with us.

That concludes our presentations. We have no more scheduled

witnesses and, I trust, no more questions of those who have testi-
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fied, so we can declare our meeting adjourned; and therefore, the

chairman does declare the subcommittee adjourned subject to call

of the Chair.

Thank you.

[The following was received for the record:]

TESTIMONY OF FRIENDS OF THE EARTH ON OVERSIGHT HEARING ON ENVIRONMENTAL

ISSUES RELATED TO THE PANAMA CANAL BY DAVID E. ORTMAN, RESEARCH ASSOCIATE

My name is David E. Ortman, Research Associate with Friends of the Earth.

Friends of the Earth is a national environmental organization with approximately

20,000 members. In addition, we have sister organizations in twenty foreign countries.

Environmental and conservation organizations have long been concerned about

the preservation of the Canal Zone in Panama. We have also continued to voice

opposition to a Sea-level Canal across the Isthmus.

Friends of the Earth concurs with and supports the testimony of Ira Rubinoff,

Director of the Smithsonian Tropical Research Institute given before your committee 17 March 1980. Dr. Rubinoff mentions several areas of environmental concern

and many opportunities for preservation and protection including the AID watershed project which FOE supports.

One area which was not discussed concerns the impacts of dredging and chemical

and biological control of weed populations in the canal. 2,4-D Amine Salts are now

under EPA's R-PAR process and may be taken off the market while Diquat is

largely ineffective in turbid waters.

We view with alarm the fact that as of the 17 March Panama Canal Subcommittee hearing, the Joint Commission on the Environment had not had its first meeting. All efforts should be made to bring the Joint Commission on the Environment

into a functioning body as soon as possible.

Enclosed for the record are several news articles concerning the progress of the

proposed sea-level canal project. As Dr. Rubinoff reported, the Japanese have sent a

delegation to Panama to explore the possibilities of canal construction. We would

encourage the Subcommittee to investigate what environmental laws Japan has

passed which would apply to such a project.

We wish to remind the Subcommittee that such a project is of international

concern. The Norwegian Association for Ecology in a letter of 16th February 1978

stated that "the proposed sea-level canal across the American Isthmus may give

local as well as distal impacts on marine ecosystems. This makes the project an

international matter and a common practical and scientific concern."

It should also be noted that the 1978 report by the Office of Technology Assessment, cited by both Deputy Asst. Sec. of State William A. Hayne and Subcommittee

Chairman Carroll Hubbard in their remarks, did not include a critique of either a

sea-level canal or third land of locks.

Friends of the Earth urges this Subcommittee to take the lead in pointing out the

grave environmental and ecological issues involved in such a project as the sea-level

canal as well as insure that the Joint Commission of the Environment is given the

financial resources to carry out its mission. Thank you for including these comments in the record.

[From the Seattle Times, Mar. 22, 1980]

JAPAN, PANAMA To STUDY PLAN FOR SECOND CANAL

TOKYO.-Japan will cooperate with Panama in studying the feasibility of building

a second canal linking the Atlantic and Pacific Oceans, Japanese newspapers reported yesterday.

The reports, quoting Japanese Foreign Ministry sources, said possible Japanese

participation in the canal project will be the major topic when Panama's President

Aristides Royo arrives in Tokyo tomorrow for a six-day state visit.

The sources quoted Japanese Prime Minister Masayoshi Ohira as saying that

Japan "will give full consideration to participating in the project."

The papers said Japan has drafted an outline for a 61-mile sea-level canal that

would be about 9 miles west of the existing waterway. Projected construction costs

would total $8.3 billion over a 10-year period, with Japan, the United States and

Panama financing the project.
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The concept calls for the new canal to handle vessels up to 300,000 tons and be

navigable in five or six hours, compared to the 66-year-old canal which is limited to

ships under 40,000 tons and takes longer to transit because of its intricate lock

system.

The United States would benefit by being able to move its warships more quickly

from ocean to ocean, the papers said. The new canal also would ease the transfer of

Alaskan oil to East and Gulf Coast refineries, they noted.

[From the Seattle Times, Jan. 27, 1980]

ALASKAN, JAPANESE PUSHING SEA-LEVEL PANAMA CANAL

(By Dean Katz)

WASHINGTON.-Senator Mike Gravel, Alaska Democrat, and a group of leading

Japanese businessmen will travel this week to Panama in an attempt to arouse

interest in a new sea-level Panama Canal.

A new Panama Canal could negatively affect Seattle's flourishing port operation

as a major import-export center for Japanese trade.

And it could be presented as a supplement or alternative to the Northern Tier

Pipeline Co.'s proposed west-to-east oil pipeline, beginning at Port Angeles.

Gravel said United States officials were cautiously studying the idea of constructing a new canal, which he estimated would cost from $10 billion to $15 billion. He

said six federal agencies would issue a joint report "two or three months from now."

Meanwhile, Japanese business leaders seemed anything but cautious at a news

conference Gravel called yesterday.

Among those traveling with Gravel to Panama will be Shigeo Nagano, president

of the Japan Chamber of Commerce and Industry, and the heads of Japan's leading

banks and largest shipbuilding company and executives of the huge Mitsubishi

Corp. and other Japanese companies.

Gravel said a study completed by the federal government in 1970 had concluded

that a new canal was feasible. Congress twice has refused to apporove Gravel's $8

million proposal to update that study. He and his Japanese friends are pushing the

Japanese government to fund $25 million tripartite commission to study the idea.

Gravel discussed the idea with Prime Minister Masayoshi Ohira of Japan in

November. Japan has yet decided whether to fund the study.

Panamanian officials have been "very enthusiastic about the possibility of building a canal," though they are approaching the idea "very cautiously," Gravel said.

President Carter said in 1977 that a sea-level canal eventually would be necessary.

Gravel said he envisioned the United States' role in any canal construction

project as that of a guarantor of loans to build the waterway.

A State Department official familiar with Gravel's efforts said that "obviously we

want to be able to respond to Senator Gravel's interest in the project. So we have

begun within the executive branch an interagency reivew of whether and under

what conditions we would even recommend that the 1970 study be updated.

"We certainly don't want to throw any cold water on this," said the official, who.

asked not to be identified. "On the other hand, the position of the administration is

that we don't have a position with respect to the carrying out of a feasibility study

at this time."

The major advantage of a new waterway would be its ability to accommodate the

increasing number of large sea-going vessels that cannot squeeze through the existing canal.

For Alaska, Gravel said, the new canal would be a plus because it would cut the

costs of shipping Alaskan oil.

For Japan, the benefits are obvious. A new canal would enable Japan to import

finished products, grain and cotton from the East, Midwest and South, and oil from

Eastern Mexico and Venzuela at a lower cost than it now does.

Bill Hoffman, legislative director for Gravel, acknowledged that a new canal could

adversely affect Seattle's standing as a focal point for United States trade with

Japan.

Gravel said he did not necessarily see a new Panama Canal serving as a replacement for a west-to-east pipeline, but rather as a supplement to it.

But a report prepared by Gravel's office said a preliminary analysis showed "a

sea-level canal is a highly competitive alternative" to such a pipeline.

The country's existing oil-pipeline system runs south to north, from the Gulf

Coast states to the Midwest and Northeast, Gravel said. A new Panama Canal

would serve the present pipeline system and Gulf Coast refineries, while a new
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west-to-east pipeline, like Northern Tier's, would mean that the existing pipeline

system "would have to be replaced" at a very high cost.

Though the oil companies have not evidenced much interest in the canal idea,

neither have they shown any public support for the Northern Tier pipeline.

[From the Miami Herald, Jan. 17, 1980]

NEW PANAMA CANAL POSSIBLE IN 12 YEARS

PANAMA.-A new larger canal across Panama could be opened in 12 years if

Japanese officials already interested in the project agree to participate in the

construction. Panamanian authorities said.

Forty-five Japanese government and business leaders are to arrive in Panama

Jan. 28 to discuss building the new, sea-level canal, which would run alongside the

65-year-old Colon-Balboa waterway, which uses a series of locks to pass ships between the Pacific and Atlantic oceans.

The new canal would be owned and operated by Panama but construction would

be financed largely by Japanese banks, Panamanian officials said.

The canal would be built 10 miles west of the existing waterway and would cost

about $8.5 billion at present prices. If construction began by 1984, the canal could be

finished by 1992.

Initially, Panama planned to construct a shallow canal for ships of 150,000 tons or

less. However, initial studies provided by Japanese companies recommended a canal

that could accommodate 500,000-ton ships. The Japanese recommended a waterway

60 miles long and about 100 feet deep.

Negotiations with Japan on construction of the canal were started by Panamanian leader Gen. Omar Torrijos, who visited Tokyo in February. Later, President

Aristides Royo invited the Japanese officials to visit Panama City.

Torrijos has been the main promoter of constructing a new canal to replace the

existing route, which is expected to be less attractive to shipping in coming years

because it cannot handle the supertankers.

Many ships already must circle South America because they re too large to fit

through the canal.

[Whereupon, at 12:37, p.m., the subcommittee adjourned.]
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