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TRANSIT OF OIL
Senator THURMOND. Is there any reason to believe the oil shipments will not continue to provide needed revenues over the next few years?
Mr. MCAULIFFE. No significant changes in the flow of Alaska North Slope Oil through the Canal are anticipated for at least the next two years. Shipments are projected to remain steady at a level of nearly 500 thousand barrels daily during this period.
RESERVES
Senator THURMOND. Should you be building a reserve to protect the canal if these oil shipments drop in the next few years?
Mr. MCAULIFFE. Without a change in legislation, there is no way to build a reserve to protect against the future loss of oil shipment revenues. The tolls formula set forth in the Panama Canal Act of 1979 provides only for the recovery of costs in setting rates for tolls. There is no authority for increasing toll rates to cover prospective losses of revenues. When and if revenues become insufficient to cover costs, the law requires that a toll rate increase be implemented.
HOUSE ACTION ON PROJECT COST INCREASES
Senator THURMOND. What was the rationale of the House action on captial project cost increases?
Mr. MCAULIFFE. I assume you are referring to the provision allowing any of the Committees or Subcommittees to which changes in the cost of individual capital projects are reported to disapprove such changes. We are not certain of the rationale for this requirement, but it appears that the purpose was to impose additional and more strict controls over capital expenditures. We believe this provision is unnecessarily restrictive, provides for a redundant approval of project change, and thus would impede the conduct of the capital program.
Senator THURMOND. What type of improvements are involved in the housing requests?
Mr. MCAULIFFE. The capital improvements involved in the housing request are for minor improvements, reroofing and insulation. A description of each category follows:
1. Minor improvements to quarters-This program contributes to improving management/employee relations by funding improvements to quarters that enhance their desirability. Its popularity is attested to by the heavy backlog of requests and the continued interest of communities in it, and is essential because of its effect on employees' morale.
Improvements generally provide for the conversion of open areas into living space and include such items as patio and carport slab, roofs and enclosures, security protection systems, basement enclosures and sidewalks.
Under this program the agency pays a portion of the cost of each improvement with the employee paying the balance. Rental rates are then increased to offset the agency's cost and provide for future maintenance. Improvements to approximately 80 apartment units are planned for fiscal year 1981.
2. Reroof employee quarters-This program provides for the replacement of deteriorating roofs of employees' quarters that have exceeded their normal life expectancy and have become uneconomical to repair. Failure to replace roofs on a timely basis results in higher maintenance costs when extensive repairs are required and frequently include water-soaked insulation, dry rot damaged framing members and warped and deteriorated interior ceilings.
3. Insulate employees quarters-This provides for insulating frame quarters by installing insulation in attics and installing vinyl siding on those quarters with ship-lap siding.
The primary purpose of the insulation program is to reduce electrical energy consumption. A secondary purpose is to lower maintenance and painting costs and retard deterioration of building exteriors.
PANAMA CANAL ACT OF 1979
Senator THURMOND. What portion of the 1979 Act have you found a hindrance to efficient operations?
Mr. MCAULIFFE. To be frank, we have had insufficient time to evaluate the effect of the new legislation on the operation of the canal. During the last eight