10
Public Law 96-70 has removed from the Commission the authori-
ty, which resided in the canal for over 25 years, to adjust and pay
these claims and requires instead that they be submitted to the
Congress of the United States. Confusion has arisen since the law
is not explicit as to congressional intent on who is to bear the ulti-
mate financial responsibility for these claims. While the law is am-
biguous on the point, we have taken the position that the Commis-
sion, in the final analysis, will be required to pay these claims.
Therefore, we are accruing reserves to fund these liabilities on the
assumption that Congress will assign the Commission responsibility
for their payment. This action, I might say, is in full accord with
the clear intent that the canal be operated on a self-sufficient basis,
without cost to the U.S. taxpayer.
The fact that we are charging shipping for the costs of these acci-
dents-through inclusion of a factor in the toll bases-makes it im-
perative that the situation be clarified, one way or the other. If the
law is amended to reflect no liability on the part of the United
States for these accidents, then the Commission can cease the as-
sessment of this cost which, in effect, constitutes an insurance pre-
mium. Also, moneys collected to date for this purpose could be re-
turned to shipping prospectively through the tolls process. If, on
the other hand, the Congress wishes to have the Commission bear
this cost, there will be no added cost to shipping since, as I have
just stated, the toll base presently contemplates that situation.
Mr. Chairman, in closing, I would like to reiterate my apprecia-
tion to you and the subcommittee for the opportunity to appear
before you today. I have asked Mr. McAuliffe to follow me and
present to this committee a more detailed analysis of the claims
situation. We will be available to respond to any questions which
the subcommittee might have with regard to our testimony. Thank
you for your attention.
Mr. HUBBARD. Naturally, we look forward to your answers to our
questions.
Now, we ask for Mr. McAuliffe to please address the subcommit-
tee.
STATEMENT OF DENNIS P. McAULIFFE, ADMINISTRATOR-
PANAMA CANAL COMMISSION
Mr. McAULIFFE. Thank you, Mr. Chairman, members of the sub-
committee. I am Dennis P. McAuliffe, the Adminstrator of the
Panama Canal. I am pleased to appear before you today regarding
claims procedures for vessel damage as they currently exist in the
Panama Canal.
Mr. Gianelli has asked me to expand on his testimony. I propose
to summarize my full statement which I request be made part of
the record of this hearing.
Before turning to the points which I have been asked to address,
I would like to say a few words about vessel accidents at the canal
in general. The Panama Canal poses perhaps the most difficult
challenge of its kind to safe navigation anywhere in the world. For
that reason, the safety of vessels passing through the waterway
must always be foremost in the minds of our pilots, tugmasters,
locks operators, and the other hundreds of persons involved in the