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tered into force and the Panama Canal Act of 1979 became effective, these present-
ed no problem since section 42 of Title 5 of the Canal Zone Code, 76A Stat. 281,
provided a 3-year statute-of-limitations on actions against the agency based on such
claims. Claims received after that period were denied. Since it has been in existence
only since October 1979, it is still to early to tell whether the Commission, like its
predecessor, will also receive some unreasonably late claims, but we have no reason
to believe that it will not. Our suggestions concerning a statute-of-limitations de-
signed to deal with stale claims are set out in response to question No. 3, below.
Question 2. Prior to the enactment of P.L. 96-70, what was the average time lapse
for claims over $120,000 from the date of the accident until the settlement of the
claim?
Answer. It is understood that this question has now been revised to request cer-
tain data on vessel accidents occurring in fiscal years 1977 through 1979. Those data
are being compiled and will be provided separately.
Question 3. On page 8 of your remarks you state that there have been 21 out-of-
lock vessel accidents in which the Commission estimates that its liability may
exceed $120,000 although no claims have yet been filed. How many of these claims
would not be barred if a two-year statute of limitations on the filing of claims had
been in effect since 1979? What is you opinion about the possible imposition of such
a statute of limitations? What would you recommend as the time limits?
Answer. Of the potential claims arising out of the 21 marine accidents to which I
referred in my testimony, four would have been time barred by December 1, 1982 if
there were a two-year statute of limitations on the filing of such claims now in
effect.
The Commission favors the establishment of a limitation on vessel damage claims
and upon lawsuits in those cases in which judicial review is permitted. We envision
a provision, patterned after the one contained in the Federal Tort Claims Act,
which would forever bar a vessel accident claim against the Commission (1) unless it
is presented in writing to the agency within two years after it accrues and, (2), in
those cases where recourse to the courts is permitted, unless an action is begun
within one year after the Commission makes its final decision with respect to the
claim. Such a statute would have a dual benefit of preventing stale claims while, at
the same time, allowing the parties as much time as they require for negotiation.
That latter feature should result in the compromise and settlement of the vast ma-
jority of these claims, and should avoid time-consuming and expensive litigation in
New Orleans, in those cases where the agency is subject to suit.
Question 4. What problems do you foresee with the possibility of requesting a sup-
plemental appropriation to pay for the claims in excess of $120,000 should there not
be the $6 million in the "reserve fund"?
Answer. The first problem that exists for the Commission in submitting a supple-
mental appropriation is authority. Public Law 96-70 specifically precludes the Com-
mission from making payment of these outside-the-locks accidents in excess of
$120,000. Prior to requesting a supplemental appropriation, Congress would have to
first grant the Commission, through appropriate legislative action, authority to pay
these claims. Our accounting treatment of these claims, to date, has been predicated
on the assumption that this authority was forthcoming from Congress.
The Commission's second problem is ensuring that sufficient funds are on deposit
in the Panama Canal Commission Fund. Without the reserve fund, the costs of
these claims would not be reflected in the Commission's accounting records until
after the supplemental appropriation was requested. This could result in the Com-
mission not being able to demonstrate it had adequate resources in the Panama
Canal Commission Fund to finance such claims. The Commission would also be
placed in a "catch-up" situation to recover the costs of such claims from Canal users
in the future instead of during the time they are incurred. The Commission is man-
dated by law to recover all costs of maintaining and operating the Panama Canal.
By utilizing the reserve method, the Commission is better able to match (normalize)
operating expenses with revenues and thus establish the appropriate tolls rates for
the users of the Canal.
Question 5. You stated in the hearing that from 1912 to 1951, when the Panama
Canal was operated by an appropriated U.S. Agency, that there was no reserve fund
to handle the claims. What method of accounting was used and how did you pay for
the claims?