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settlement. For the first time two claims exceeding the $120,000
limit were submitted to Congress on November 10 of this year.
A briefing memo was made available to subcommittee members
earlier this week and is in the members' folders. The memo details
the information about the current law and prior law for adjusting
and paying these claims.
This subcommittee has been contacted about this issue by several
interested parties, some of whom are testifying before us today.
We appreciate your taking the time from your schedules to
appear before us this morning, and we look forward to receiving
your remarks.
We do have a statement for the record on behalf of the full com-
mittee chairman, the Honorable Walter B. Jones. Without objec-
tion, the full statement of Chairman Jones will be entered into the
record.
[The statement of Walter B. Jones follows:]
STATEMENT OF HON. WALTER B. JONES, CHAIRMAN, MERCHANT MARINE AND
FISHERIES COMMITTEE
By way of introduction to the issues we will consider today, let me mention briefly
some of the background of this hearing. During the Panama Canal Commission au-
thorization process last year, the committee became aware-after meetings with
commission financial staff-that approximately $12 million per year in toll revenue
is earmarked for the payment of vessel damage claims. Of that amount, the Com-
mission allocates $6 million for the payment of claims for damage that occurs out-
side the canal locks where the claim exceeds $120,000. The committee questioned
whether this $6 million annual set-aside was appropriate in view of the fact that
section 1415(b) of the Panama Canal Act of 1979, 22 U.S.C. 3775, specifically prohib-
its the Commission from adjusting or paying any such claims. Under that section,
claims for outside-the-locks damage exceeding $120,000 must be referred to Con-
gress.
The Commission argued that while the law precluded their paying any of these
claims, it did not bar collecting tolls for that purpose. Doing so, they asserted, was
simply a prudent business practice since the claims forwarded to Congress would, in
all probability, eventually be paid out of Commission funds. The Commission felt
that Congress would not, and under the 1979 Panama Canal Act arguably could not,
pay such claims from the General Fund of the Treasury.
One reason for this hearing, therefore, is to inquire into whose interpretation of
the Panama Canal Act of 1979 is more accurate, and having examined that ques-
tion, to determine whether any changes in the law are needed. The Commission
may not disobey the law simply because it disagrees. On the other hand, Congress
should not unnecessariy mandate adherence to rules of operation that are illogical
or will be detrimental to the efficient and economical operation of the canal.
The other primary motivation for this hearing is the complaint by some canal
users that the Panama Canal Act of 1979 unfairly restricts the rights of vessel
damage claimants. Under sections 1412 and 1416 of the act, 22 U.S.C. 3772 and 3776,
the Panama Canal Commission has no power to settle claims for outside-the-locks
damage exceeding $120,000, and in no case may a claimant sue on any non-locks
claim. Thus, the Commission may pay non-locks claims under $120,000 but the
award cannot be appealed to court. Similar claims over $120,000 must be settled by
Congress, and again, cannot be taken to court. We meet today to consider various
options relating to this claims situation.
Mr. Chairman, at this point I would ask unanimous consent that the staff back-
ground memorandum on these matters be included in the hearing record immedi-
ately following my statement. The memorandum elaborates on the issues we will
discuss here today and puts them in historical perspective. I think it will helpful to
those interested in these proceedings.