82
is no less dedicated to that purpose; but the irony of this situation
is that this very issue we are discussing here today undermines the
efforts to keep these U.S. flag merchant fleet afloat. Everybody
knows that with the worldwide recession that with worldwide
shipping, and U.S. shipping in particular, is in very dire straits. We
are losing vessels every day, laid up or being scrapped. The margin of
profit on any company, be it liner or bulk, is only a few percent.
Here we have damage claims of our operators in the millions of
dollars and there is no redress for this; and the way it is going,
there is no telling when there will be.
In addition, we also support the statement of the Transporta-
tion Institute with respect to detention, although we didn't put it
in our statement. I won't take anymore time, Mr. Chairman.
Thank you very much for having us here today.
[The statement of Ernest Corrado follows:]
PREPARED STATEMENT OF ERNEST J. CORRADO, VICE PRESIDENT, AMERICAN INSTITUTE
OF MERCHANT SHIPPING
Thank you, Mr. Chairman, my name is Ernest J. Corrado, and I am vice president
of the American Institute of Merchant Shipping (AIMS), which is a national trade
association consisting of 30 member companies which own or operate almost 12 mil-
lion deadweight tons of United States flag bulk shipping operating mostly in U.S.
domestic commerce.
Many of our members use the Panama Canal frequently in their trades so we are
happy to have been invited here today to comment on this matter of extreme impor-
tance to our membership. Also, we are encouraged that the subcommittee is holding
these hearings and we regard it as a sign that the subcommittee and full Merchant
Marine and Fisheries Committee intend moving expeditiously to solve this vexing
problem involving damage to vessels occurring outside the locks during transits of
the canal.
As has been set out in correspondence between AIMS and this subcommittee (and
full committee) over the past year, we are opposed to two provisions of the Panama
Canal Act of 1979 (22 USC 3601, et seq.): (1) the requirement that any decision of the
Commission awarding $120,000 or more to claimants be forwarded to congress for
approval; and, (2) the requirement that claims for damage arising outside of the
locks be submitted to the Panama Canal Commission with no right of judicial
review of the Commission's decision.
The users of the canal are adamantly opposed to this limitation amount system
and would like to return to the system which existed prior to the 1979 Panama
Canal Act which implemented the treaties, whereby the present commission's prede-
cessor corporation, the Panama Canal Company, had unlimited authority to settle
outside the locks claims, and judicial review of such claims was available under the
canal zone code and in the Federal district court in the canal zone.
Mr. Chairman, in the interests of saving time and not burdening the record un-
necessarily, I will not go into the myraid of laws, regulations, executive orders, ap-
propriations act provisions, decisions of the Comptroller of the Treasury, and gov-
erning claims, beginning with the Panama Canal Act of August 24, 1912 (37 stat.
562) and extending to the act of September 26, 1950 (64 stat. 1038). You have this
record and also individuals available to you who are well versed in these develop-
ments.
The 1950 act, of course, transferred the operation of the Panal Canal, effective
July 1, 1951, to the Panama Railroad Company which was renamed the Panama
Canal Company. Section 3 of the 1950 act amended section 10 of title 2 of the canal
zone code governing claims for vessel damage. The Panama Railroad Company was
generally subject to suit on tort claims, so the transfer just mentioned and the
amendment of section 10 of title 2 would:
(1) Continue the previous rule imposing absolute liability for damage in the locks;
(2) For the first time extend the liability of the company on claims for vessel
damage outside the locks caused by the negligence of Panama Canal employees;
(3) Continue the consent to suit against the agency operating the canal for
damage in the locks, and extend this consent to suit for vessel damage outside the
locks;