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ating expenses with a uniform amount each month. This normalizes the operating
expense. When accidents occur, the resultant losses are charged to the reserve
rather than to operations. It should be emphasized that the accrual is for "normal"
marine accident costs. It does not provide for accidents of a catastrophic nature.
Question 4. Section 1414(6) of P.L. 96-70 specifically states that the Commission is
not responsible and may not consider any claim for demurrage or delays caused by
time necessary for investigation of marine accidents. I understand that witnesses to
follow you later today will express concern with the present procedures for award-
ing the Board of Local Inspection (BLI) damages. Please tell us what procedures are
followed by the Board of Local Inspectors in conducting accident investigations?
Answer. The Board of Local Inspectors is now established under authority of the
President pursuant to section 1418(a) of The Panama Canal Act of 1979, Pub. L. 96-
70. Originally it was an administrative body, first created in 1909 at the direction of
President Taft. Its accident-investigation procedures have been subject to very little
change through the years since the Canal was opened in 1914. The Board always
has performed this function with the objective of conducting a formal inquiry into
each marine casualty as soon as practicable after the incident occurs. Such a policy
is advantageous for serveral reasons, including that of enabling the vessel promptly
to continue its voyage. It is obvious that in some cases a damaged ship will be de-
layed (irrespective of the investigation) in order to make temporary or permanent
repairs that are necessary prior to sailing.
The basic procedures that are followed by the Board and the parties giving evi-
dence or testimony before it are published at Part 117 of Title 35, Code of Federal
Regulations. It will be noted that provision is made in section 117.1a for scheduling
the investigation at least 10 hours after the accident. The regulation describes the
purpose of this rule as that of affording pilots and other parties-in-interest a period
for rest and consultation before the proceeding begins. This waiting period may be
waived or shortened in urgent cases.
It is the Commission's understanding that shipowners and operators are not pri-
marily concerned with, or critical of, the manner in which the Board of Local In-
spectors conducts these inquiries or the time that they require. Rather, the affected
parties are protesting the fact that, when the Commission is liable for damages that
accrue as a result of an accident, they are precluded from recovery of the expense of
detention time attributable to the hours spent in Canal waters awaiting and attend-
ing the investigation by the Board. As the Subcommittee has noted, however, sec-
tion 1414(6) of the Panama Canal Act prohibits the Commission from considering
any claim for that element of an injured party's damages. The Panama Canal Com-
mission is neutral on the question of whether the provisions of this subsection
should be removed from the law.
Mr. LENT. Another subject: I understand since October 1, 1980,
all harbor movements in the ports of Balboa and Cristobal are per-
formed by tugs operating under contract with the National Board
of Panama.
My question would be, is it true that after this date, October 1,
1980 the Japanese NYK Co., took over Balboa and Cristobal
Harbor tug operations?
Mr. McAULIFFE. Yes. As I recall, that was about the date that
the National Port Authority of Panama contracted with the Japa-
nese firm to provide tug service in the harbors.
Mr. LENT. Are those vessels involved in harbor movements as
distinct from canal movements required to have Panama Canal
Commission pilots aboard?
Mr. McAULIFFE. No, sir, not on the tugs. Our pilots, however, do
man the vessels themselves that are being maneuvered into the
two port areas and out of them.
Mr. LENT. Even though they are not going to transit the canal?
Mr. McAULIFFE. Well, the fact is that they must have a pilot
aboard in order to traverse even the smaller portions of the canal
between the ports and the open seas.
Mr. LENT. So that the Panama Canal Commission, as opposed to
the Port Authority of Panama, continues to have liability for any