Panama Canal treaty

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Title:
Panama Canal treaty disposition of United States territory : hearing before the Subcommittee on Separation of Powers of the Committee on the Judiciary, United States Senate, Ninety-fifth Congress, first session ..
Physical Description:
v. : ; 24 cm.
Language:
English
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United States -- Congress. -- Senate. -- Committee on the Judiciary. -- Subcommittee on Separation of Powers
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U.S. Govt. Print. Off.
Place of Publication:
Washington
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Subjects

Subjects / Keywords:
Foreign relations -- Panama -- United States   ( lcsh )
Foreign relations -- United States -- Panama   ( lcsh )
Panama Canal (Panama)   ( lcsh )
Canal Zone   ( lcsh )
Genre:
federal government publication   ( marcgt )
non-fiction   ( marcgt )

Notes

Bibliography:
Includes bibliographical references.
Additional Physical Form:
Also available in electronic format.
General Note:
Hearings held July 22, July 29, 1977.
General Note:
Reuse of record except for individual research requires license from LexisNexis Academic & Library Solutions.
General Note:
CIS Microfiche Accession Numbers: CIS 77 S521-48 (pt.1), CIS 77 S521-49 (pt.2), CIS 78 S521-12 (pt.3), CIS 78 S521-19 (pt.4)
General Note:
Reuse of record except for individual research requires license from Congressional Information Service, Inc.
General Note:
"Second session"--V. 4.
General Note:
"First session"--V. 1-3.

Record Information

Source Institution:
University of Florida
Rights Management:
All applicable rights reserved by the source institution and holding location.
Resource Identifier:
aleph - 021387688
oclc - 03412990
lccn - 77603936
Classification:
lcc - KF26 .J874 1977
System ID:
AA00023987:00001

Full Text










PANAMA CANAL TREATY (DISPOSITION OF UNITED STATES TERRITORY)









HEARING
BEFORE THE

SUBCOMMITTEE ON SEPARATION OF POWERS
OF THE

COMMITTEE ON THE JUDICIARY

UNITED STATES SENATE

NINETY-FIFTH CONGRESS

FIRST SESSION


PART 1


JULY 22, 1977


Printed for the use of the Committee on the Judiciary
















U.S. GOVERNMENT PRINTING OFFICE 94-4680 WASHINGTON : 1977


For sale by the Superintendent of Documents, U.S. Government Printing Office Washington, D.C. 20402
Stock Number 052-070-04213-3






























COMMITTEE ON THE JUDICIARY JAMES 0. EASTLAND, Mississippi, Chairman
JOHN L. McCLELLAN, Arkansas STROM THURMOND, South Carolina
EDWARD M. KENNEDY, Massachusetts CHARLES McC. MATHIAS, Jr., Maryland
BIRCH BAYH, Indiana WILLIAM L. SCOTT, Virginia
ROBERT C. BYRD, West Virginia PAUL LAXALT, Nevada
JAMES ABOUREZK, South Dakota ORRIN G. HATCH, Utah
JAMES B. ALLEN, Alabama MALCOLM WALLOP, Wyoming
JOSEPH R. BIDEN, Jr., Delaware JOHN C. CULVER, Iowa HOWARD M. METZENBAUM, Ohio DENNIS DECONCINI, Arizona
FRANCIS C. ROSENBERGER, Chief Counsel and Staff Director


SUBCOMMITTEE ON SEPARATION OF POWERS JAMES B. ALLEN, Alabama, Chairman ROBERT C. BYRD, West Virginia ORRIN G. HATCH, Utah
JAMES 0. EASTLAND, Mississippi WILLIAM L. SCOTT, Virginia
QUENTIN CROMMELIN, Jr., Chief Counsel and Staff Director
JAMES MCCLELLAN, Prof essional Staff (minority) PAUL GULLER, Editorial Director MELINDA CAMPBELL, Chief Clerkc

(I)












PANAMA CANAL TREATY
(DISPOSITION OF UNITED STATES TERRITORY)


FRIDAY, JULY 22, 1977
U.S. SENATE,
SUBCOMMITTEE ON SEPARATION OF POWERS,
COMMITTEE ON THE JUDICIARY,
Wa8kington, D.C.
The subcommittee met, pursuant to notice, at 8:10 a.m., in room 6202, Dirksen Senate Office Building, Senator James B. Allen (chairman of the subcommittee) presiding.
Also present: Senators Scott and Hatch.
Staff present: Quentin Crommelin, Jr., chief counsel and staff director; James McClellan, professional staff (minority); Paul Guller, editorial director; and Melinda Campbell, chief clerk.

OPENING STATEMENT OF SENATOR ALLEN
Senator ALLEN. The subcommittee will please come to order.
The Subcommittee on Separation of Powers of the Senate Committee on the Judiciary is convened today to investigate certain constitutional issues bearing on the Panama Canal negotiations. The saoxIomittee has jurisdiction over matters relating to the separation of power between the three branches of -the Federal Government and the division of power between the Federal Government !and States.
In this instance, the subcommittee hopes to examine and will seek to determine the proper role of the Congress and of the executive branch in negotiating a treaty with the Republic of Panarna for the transfer of certain U.S. territory and property in the Isthmus of Panama.
Inasmuch as section 3, article IV of the Constitution provides that Congress, that is, both houses of Congress, shall have power "to dispose of and make all needful rules and regulations respecting t.he territory or other property belonging to the United States," the subcommittee is concerned that serious constitutional issues involving the doctrine of separation of powers are raised by the continued secret negotiations of the executive branch for the disposition of U.S. territory and property in the Canal Zone.
While obviously the Executive has the power to negotiate for the acquisition of territory and property by treaty ratified by the Senate, many serious scholars of -the Constitution are of the view that territory or property of the United States may be disposed of only by Congress itself and not simply by the Executive through the treaty ratification process. The subcommittee will, therefore, hear testimony from several
(1)






2

respected scholars of the Constitution and -from other interested parties in the hope that the subcommittee can reach consensus and report thereon to the fullcoinmittee.
Additionally, members of the subcommittee are concerned that certain other agreements with the Panamanians for direct financial assistance may be concluded outside the context of the treaty negotiations with the result that any such agreement would not be, subjected to the normal "treaty ratification process which would be necessary otherwise. The press has mentioned a possible total of $5 billion. Direct financial -assistance of that magnitude would, of coursebe, made subject to specific congressional action through the appropriations process, but -if such assistance were, in fact, an integral part of the treaty, then as such it would also be subject to ratification by the Senate.
The subcommittee will, therefore, require testimony on the intentions of the executive branch with respect to separately negotiated financiaJ arrangements with the, Panamanians so that the subcommittee can determine whether such negotiations should be addressed by the Senate as part of the proposed canal treaty.

ECONOMIC Ar-D PACKAGE
Press reports during the past week have indicated that officials of the Department of the Treasury, representatives of the Agency for International Development, and representatives of the Department of Commerce have all conferred with the Minister for Economic Planning of the Republic of Panama with respect to an economic aid package for Panama designed to assist the troubled Panamanian economy. Obviously, any such negotiations would tend to bear directly on the negotiations foru new Panama Canal Treaty and could be said tobe an integral part of the canal treaty talks.
Accordingly, the subcommittee will seek to establish the extent of those discussions so that the subcommittee may advise the Senate whether such discussions are within the ambit ol the treaty negotiations -and whether any direct financial aid agreement with the Panamanians ought to be encompassed within the terms of any proposed treaty rat-her than be reviewed as a separate matter through the appropriations process. In that connection, certainly the subcommittee would desire that the ratification process not be circumvented by denying the Senate an opportunity to -pass on the desirability of separately negotiated financial agreements which might be, in actuality, within the umbit of the treaty negotiations and properly within the scope of any proposed treaty submitted to the *Senate.

THIRD HEARING SCHWULED
We anticipate that these hearings will require the 2 days presently scheduledand possibly a third date soon after the Senate reconvenes following the August recess. The subcommittee. has already scheduled the testimony of a very distinguished group of witnesses.'
I am particularly pleased that the Governor of the Panama, Canal Zone, Hon. Harold Parfitt. will appear before us this morning, and that the Commander-in- Chief of the Southern Command, Lt. Gen. Dennis McAuliffe, will later in the morning give the benefit of his own






3

expertise and experience as military commander in the zone. I look forward also to hearing the views of my good friend and constituent, Adm. Thomas Moorer, former Chief of Naval Operations and former Chairman of the Joint Chiefs of Staff.
To outline the constitutional issue, posed by section 3, article IV of the Constitution -and to state his own opinion of the proper interpretation of that provision in light of other relevant provisions of the Constitution, we are fortunate to have as our first witness, Mr. George Leonard, who took to the Supreme Court of the United States the case of Helms v. Vance, a suit for injunction -which sought to establish the exclusive authority of Congress to dispose of the Canal Zone territory.
Senator Scott, do you have an opening statement or comments that you would like to make at this time?
Senator Scorrr. No, Mr. Chairman, I do not have an opening statement. I think it would be well initially to insert into the record a literal text of the 1903 Treaty under which the canal was constructed. I do ask that it be inserted.
Senator ALLEN. Without objection, a copy of the treaty will be, included in the record at this point.
[Material follows:]








229



APPENDIX


LAW OFFICES OF DENNIt4S' R-iNKE- & VERTESCH
707 SOUTH A STREET RicH MONo, IN DIANA 47374 WILLiAM4 C.DKNNIS (1070-10621 DAVIC W. DENNI TELEPHONE: 969-2567
ROBERT L. REINKE AREA COOE: 317
PAUL. F.V VRTC SCH

July 7, 1977



The Honorable James B. Allen
Senator from Alabama Senate Office Building
Washington, D.C. 20515

Dear Senator Allen:

1 noted in the Indianapolis Star this morning that you are about to hold
hearings as the Chairman of the Subcommittee on Separation of Powers
on the subject of whether the President has the authority under the
Constitution to negotiate for the surrender of territorial or property
rights in the Panama Canal Zone.

On December 6, 1971, while a member of the Congress from Indiana, I
testified on this general subject before a subcommittee on the Panama
Canal of the House Committee on Merchant Marine and Fisheries which
was chaired by Representative Murphy of New York. I thought that
possibly my testimony on that occasion might be of some interest tQ you in connection with your present inquiry, and I therefore take the liberty
of enclosing a copy thereof.

I Am

Sincerely yours,




David W. Dennis

DWD:fld

Enclosure







230



Stxteaenatrof
W;GRAALE DAVID W. DENIS
of Indiana
before the Subc-ittee on the Pana& Canal
of the Conittee on Herhaint Karine and Fisheries siday, Dcmbr 6, 1971
Mr. Chairman and Gentleman of the Committee:

I should like to discuss reasonably briefly this morning the very interesting legal question which I understand to be mder consideration by this distinguished committee, and which nay, I think, be stated somewhat in this way:

If, in any now treaty negotiated by the United States of America and the Republic of Panama, provision is aded for the transfer of real or personal property of the United States to Panana, or if provision is a& for tke payment of money by the United States to Panama, can this be accomplished by the making and ratification of the treaty by the Presideat of tbe United States and the United States Senate aloae, or would such treaty provisions re4dr implementation enacted by both houses of the Congress?

I make ne claim to be an expert on this subjct. but I rogar it as as interesting and important one, e wbich I should enjoy holding a brief an behalf of the claims of this House, and I believe it is a question well worth all the attention we can gIve it.

Article II, Sec. 2, Clause 2 of the Constitution of the United States provides as follows: "He (the President) shall have Power. by ad with the Advice and Consent of the Senate, to make Treaties, provided two thirds of the Senators present concur;"

Article YI, Clause 2 of the Constitution provides that: 'This Constitution, and the Lws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, umder the Authority of the United States, shall be the supreme Law of the+ Lmd;"








231


On the other hant Article 1, gee. 9. Clause 7 specifically says:

"Ne Money shall be drawn frea the Treasury, but in Consequence of Appropriations

made by law;'

And Artiole IV, See. 3. Clause 2 states that: PThe Congess shall

have 1%ser to dispose of and make all needful Rules and Regulations respecting

the Territory or other Property belonging to the United States;*

These would seen to be th previies ef the Constitution of the

United States which are primarily eperative on the question new under

consideration.

Ratery reca'ds that the dispute ca this m,.tter goes beak to the

early days of our Republic. It has been noted that President Washington

and the Bnse of Representatives took differing vieva en the matter at

the tine of the ratification of the Jay Treaty in 1796. Trheas Jefferson

at See. 594, pages 291-92 of Jeffersen's uma l, as printed with the Roles

of the 92nd Cgess discusses the problea in this fashiea:

the Constitution of the United States this dezkrtxmnt
of legislation is seftimed to two branches ualy of the ordinary lgailature the President ariginating and the Senate having a
negative. To what subjects this p r tends has not been defined in detail by the ostitutio; nor are wo entirely agreed among ourselves. 1. It is admitted that it sust concern the foreign nation
party to the cotract, or it would be a more nuity, res inter
alias acta. 2. pr the general power to make treaties, the
Coestitution must have intended to easyrehad only those subjects
which are usually regulated by treaty, and can net be otherwise
rgulated. 3. It must have meant te except eat of these the
rights reserved to the States; for surely the President and Senate
can not do by treaty s*.it the vbale Government is interdicted
fo doing in ay way. 4. And also to except these subjects of
legislation in which it gave a particip tion to the Bow e of
Representatives. This nst exception is denied by same an the
ground that it would leave very little matter for the treaty power
to work on. The less the better, say ethers. The Constitution







232



thought it vise to restrain the Executive and Senate from entangling
and embroiling our affairs with those of Eurpe. Besides, as the
negotiations are carried on by the Ehecutive alone, the subjecting
to the ratification of the Representatives such articles an are
within their participation is no more inconvenient than to the
Senate.'

Henry Clay introduced resolutions in the House of Representatives in 1820 in connection with the treaty with Spain respecting Florida in vhich he asserted that no treaty purporting to alienate any portion of the territory belonging to the United States was valid without the concurrence of the Congress. Mr. Clay's resolutions, althugh debated, apparently never came to a vote; and it can not be said with ocafidence that there has even today been a cccplete and definitive answer given to the questions tch were considered by Clay, Jefferson, and Washington.

Certain principles seen to be fairly well established,' Thus, a

treaty is stated by the Ccnstitution to be the law of the land, and eonsequently it is treated, generally, as a Statute enacted by the Cengress Is treated; for exale, in the case of conflict between the provisions of a treaty and those of a Statute, the latter intim prevails, and so, it would seem, a treaty, like a Statutes might be uncnstitutional and, like a Statute, could have no validity if it cantravened the Constitution.

In the case of The Cherokee Tobacco 78M (3 Wall.)W (1870)

vhich held that a later Statute prevailed eWer the teZM of a treaty, the court observed, relative to Article IT. Sees 2 of the Constitution that:

"it need hardly be said that a treaty cannot change the
Constitution or be held valid if in violation of that instrMent.
This results frea the nature and fundmntal principles of Our
government."







233



Thus in Reid v. Covert 35' U. 1 (1936) Mr. Justice mack,

speaking for the Court, held that the provisions of Article VI, Clause 2 do not permit any treaty to contravene the Constitution. "It would", he said, "be manifestly . .alien to our entire Constitutional tradition.

.to construe Article VI as permitting the United States to exercise

power under an international agreement without observing Constitutional prohibitions. . .The prohibitions of the Constitution were designed to apply to all branches of the National gvermsent, and they cannot be nullified by the executive, or by the executive and the Senate coobined."

The Restatement of the Foreign Relations Law of the United States (Second) Sec. 117, Page 370 puts the matter thus:

"(1) The United States has the power under the Constitution
to make an international agreemnt if

(a) the matter is of international concern, and (b) the agreeuet does not contravene any of the limitations of the Constitution applicable to all
powers of the United States."

Again, it sees to be fairly clear that some treaties are selfexecuting and sae are not. This proposition was laid down at an early date by Chef Justice Marsball in the case of FoPster V. Nielson 27 U.S. (2 Peters) 25.3 at 314 (1829) where, after pointing out that by general principles of International law a treaty is a contract between nations and not ordinarily self-executing, he then said:

"n the U. S. a different principle is established. Our Cbastitution
declares a treaty to be the law of the land. It is, consequently, to be regarded in courts of justice as equivalent to an act of the legislature, whenever it operates of itself without the aid of any
legislative provison. But when the terms of the stipulation imOrt







234


a contract, when either of the parties engages to perform a
paricula act, the treaty addresses itself to the political, not the Judicial departed n-t and the legislature in execute
the contract before it can became for the Court,

It is submitted that this language ought to be significant in

construing the meaning and effect of any treaty under which this country should undrtake to make transfers of money or property.

Professor Cooley, in his Goml Principles of Constitutional Law (2nd Ed. Littlea Brown and Co~pany 1891) at page 106 says:

.the treaty vill take effect at its enactment provided
it is capable of operatng of itself without new legislati"

one e*a*le, among may which could be cited, of a self-executing treaty is found in the case of Cook v. UJ... U.S. 102 at 11849 (193) where a later adopted and self-executing treaty operated, in and of itself to alter the distance fre our shores previously fixed by Statute within which American Coast Guard cutters could stop and search British ships for illicit liquor.

It is interesting to note that fessor Cooley, in the sie passage already quoted, also has this to say regarding the treaty aking pwer:

OThe Constitution Imposes no restriction pn this poer,
but it is subject to the i~lied restriction that nothing can be done under it which changes the Constitution of the Country, or
robs a depr~nt of the goverment. .of itS ConstittiOmal
authority."

Mr. Justice yield observed in OCfry v. Riggs 133 U. 258 at 267 (1890) that *it would not be contended that the (treaty power) extends so far as to authorize what the Constitution forbids

And at page. 163 of his treatese alra4y referred to Professor Cooley has this rather striking passage which bears directly on our present question:








235



"The full treaty making power is in the President and Senate; but
the House of Representatives has a restraining pover upon it in that it may in its discretion at any time refuse to give &aent to legislation necessary to give a treaty effect. Many treaties need no such
legislation; but when monies are to be paid by the Vnited States
they can be appropriated by Congress alone; and in som other cases lava are needful. An unconstitutional or uznifestly unwise treaty the House of Representatives may possibly refuse to aid; and this,
when legislation is needful, would be equivalent to a refusal of the
government, through one of Its branches to carry the treaty into
effect, This would be an extreme masure, but is conceivable
that a case might arise in which a resort to it would be justified."

Returning to The Restatent at Sec. l141 the rulesis stated as

follows:

"A treaty can not be self-executing . to the extent that
it involves gover=zentl action that under the Constitution can
be taken onl by the Congress."

and at pages 435-36 under See. 141 we find the following:'

"f. Constitutional limitation on self-executing treaties.
Even though a treaty is cast in the form of a self-executing
treaty, it does not becme effective as domestic law in the Wnited
States upon becciing binding between the Wited States and the
other party or parties, if it deals with a subject matter that by
the Constitution is reserved exclusive to Congress., For ale
only the Congress can, appropr itiiyjfrom the treasury of the
Waited States.

"8, The Waited States 'enters into a treaty with state A
under which A agrees to cede a portion of its territory to the Wizted States in return for payment of $7,200,000. Advice and
Consent to the ratification Of the treaty is given by the Senate
anid it is ratified by the President. The ratification does not
have the effect of appropriating the $7,200,000D. Further action
to this, effect mazst be taken by both Houses of Congress.

"The mere fact, however, that a Congressional power exists
does not mean that the povmr is exclusive so as to preclude the
making. of a self-execut treaty within the area of that power."

Within these rules and principles, and having regard to the

specific and exclusive type of language found in Article I, Sec. 9,

Clause 7 of the Constitution I an of the opinion that any treaty calling for

the payment of money out of the Treasury of the United States would definitely







236


require an act of appropriation by the Congress.

I believe, further# that the authorities cited up to this point would lay the foundation for a good argument that such pleenting legislation would, or might well be, required also for other types of property.

I note in this connection that Mr. Carl F. Slans, Deputy Legal Advisor of the Departumnt of State, at page 5 of his statement to this Camittee refers to "interests in real property, including substantial iaprovements" which were acquired front .. .private land holders" and which might be transferred to Pansa.

It seems to se that it might well be entirely reasonable to equate property interests of this nature with public funds, in considering whether legislation by the Congress is necessary to legally effectuate this transfer.

When, howyer, we c~se to consider the broader matter of the cession of national territory to another sovereign power the answer, in view of past practice and some court decisions, is less clear.

Mr. Saslans, at page h, of his statment, makes the point, in this connection, that, as he claim, we do not have sovereignty in the Canal Zeas, that all we have is "the use of an ares" and "the rigt to exercise Jurisdiction7 whi3e Pana retains a "titular soverelgaty%. And he says "these are treaty rights and say be moified or temiated by another treaty." I a aware of the provisions of the 1903 treaty oan which Mr. Sasas bases this position. I woulA suggst, however, that wherever "titular sovereignty" ay reside under that treaty, that by its express and specific terms we have "in perzetuity the use, occupations, and control" of the Canal Zone and "all the rights, power, and authority" within that Zone whichh the United States would possess and exercise if it were the sovereign of the territory." It







237


seems to me that these are valuable property rights, well as treaty rights
ad, emorver that, certainly for all practical purposes, and very possibly for all legal intents and purposes we have sovereigty; for we certaily have, at least, a1l the powers and attributes of which sovereignty customarily consists, and which, alone, sake it valuable. Therefore it would seem to me that we can reasonably proceed to consider this problem on the basis that United States sovereignty presently exists.

ven so considered, however, the rights of Congress and the need of legislation to izplment a land cession by treaty are not so clear as we might wish.
There is a line of decisions regarding treaties between the

United States and Indian tribes or nations which are frequently cited for the proposition that a treaty alone, and without Iaplmnting legislation can legally operate to cede United States territory to a foreign nation.

Among these are the following:

Worcester v. Georgia 6 Pet. 515 (18321
Bolde V. Jay 8 U. S. (17 all.) 211(1872)

Jones v. )aeban 17 U. B9 1 (1899)

It ms be sad, however, that the language relied pon for this
view in ldean v. Jay is strictly dicta and decisim of the point now under discussion was, as the court pointed out, not necessary, because the treaty in question had been fully carried out sad Congress had repeatedly recognized it by the passage of appropriation bills.

Worcester v. Georgia. so far as applicable here, involved more strictly the drawing of a international boundary line than a cession of unquestioned American territory (smethin which even Henry Clay conceded in his 1820








238



reslutions xight be done by a treaty); and Jones v.-'Xeehan involved rater the validity of' a reservation to two Indian Chiefseimt of a cession of Indian land to the United States, than a transfer or session of original Amrican territory.

More persuas ive t-han these Akcisioaa, it sews to m, are the

cessionis of territory by traty practice thich are relied upon by ifr. 'Selana at pages 8 and 9 of his state~~nt. To thin, I think, night be -Ad d the reent case of Sven Ialad,* oft of .Bonnia.

I havb&e not had an oppottunity to review these; bUtLI would obs erve that apparently they vent unchallenged, and that a nw~ber of then vold appear to'be boundary adjustmentst as to which Mfr. Cla said:

"In all these causes, thet treaty-~da pwe xzeyrde
to certainty that which vas before uaacertained. It announces the fact; It proclA~nis in a tangibl fozu the ecistance of the bdr;
it does not make a new boundary; it asserts only msber. the nw
Sourndary vas. but it cannot vndr *Wl oaf fixing a budr
previously testing,* though act in fact nzext, undertake to cede
aq,, witut the coanrrnce of Corss, *tole pse".6

Quoted in Czsndall, Treatiers "%eIr )kaad a-fmmet (2nd W.i)



It is worthi noting also that the, Treaty with Paxma of 19"~ la

Article V therof nade the coveance or cession to ama of erta k lads both within aMd withmut the Caal UrZne subject t. the ""n~ of legislation

by the CGcr'Ss .8

Mr. Omairins, if I were to present thip mate to a eawr I vtoud, of course,, wish to do a great deal ami research on the subject tha I have attemted at this pointer








239



As tentative conclusions, however, I would suggest the following:

1. A treaty provisan calling for paymnt of mnies to Panama

out of the Treasury of the United States, definitely calls for and requires implmentation by an Act of Congress.

2. By parity of reasoning the sme would sem to be true as to the transfer of other personal property of the United States, and quite possibly also as to ral property interests eCquired by the United States frm private lan dakrn*s.

3. The necessity of iplaenting legislation in regard to treaty provisions providing for the cession of national territory, or the release of treaty rights conferring substantial national sovereignty over a Zone or tract of territory, is certainly ore debatables I vould, however, be willing to debate it, and I *a clearly of the opinion that, in any event, any such treaty respecting the territory of the canal zome oeht, in the national interest, to be so drawn as to require ixPlementig legislative.

I thank this distinguished. Cttee for extending to me -the

opportunity to appear before it, sad I hope that I ry have been able to contribute something of same value to y consideration of this very iheatant matter.








240


NIILETY-FiPlTH CONGRESS CHEF OF STAFF
CARL L. PERIAN
JOHN M. MURPHY, N.Y.. CHAIRMAN
THOMAS L. ASHLEY, OHIO PHIILP E. MUPPF. MICH. CHIEF COUNSEL
JOHN 0. DINGELL. MICH. PAUL. N. MC CLOSKEY. JR., CALIF. gERNEST J. CORAD*
PAUL. LROGERS. FLA. Gwe SMYDER. KY. J' fl3 n e rt nt i,, WALTER I. JONES. N.C. EDWIN B. FORSYTHE, N.J. * o o CHIEF C.SItK
RomERT L. LEGGETT, CALIFu. DAVID C. TREND. LA. RACES
MARIO SIAGGI. N.Y. JOEL Pr A WS. committee o
GLEAN M. ANDERSON, CALIF. DON YOUN, ALASKA MOnRY COUNSEL
E (IKA) 0DE LA GARZA. TE. ROERT E. AUMAN, MD. utrctbat I anb 3 INtD ACORriSs
RALPH H. METCALFE. ILL. NODRMAN F. LENT, N.Y. W PATRICK MORRIS
JOHN I. G" EAU"" LA. DAVID F, EMERY. MAINE X enh er e s h.Mug FRED R. ROONEY, PA. ROMERT K. DORNAN. CALIF. -o W41a SO GINN. GA. THOAS I. EVANS. JR.. DL.
GERRY E. STUDDS. MASS. PAUL S. TRILE. JR.. VA. ialigt0, M.. 205t5 DAVID R. SOWEN. MISS.
JOSHUA ElLBEN.S PA.
IRON DE LIGO, V..
CARROLL AD. JR.. KY.
DON ONK,. WAS. July 22, 1977
LES AU COIN, ORE.
NORMAN E. D'AMOURS. N.H.
JERRY M. PATTERSON, CALIF.
LEOD C. EPERETTI N.Y.
JAMES L. OERSTAR. MINN.
WILLIAM J. IHUGHES, NJ.
SAMARA A. MIMULSKI. MD.
DAVID L SOMOR. MICH.
DANIsEL. K. AKAKA. HAWAII

Honorable James B. Allen, Chairman
Separation of Powers Subcommittee
Senate Judiciary Committee
United States Senate
Washington, D. C. 20510

Dear Senator Allen:

I wish to commend you for holding hearings on the Constitutional question involved in the proposed giveaway of the
United States territory known as the Canal Zone. The hearings are of particular interest to me as one of the six Members of Congress who are plaintiffs in Helms v. Vance which hasaimed
to achieve judicial settlement of the question.

I am confident that your hearings will prove to be of great
value in the current debate over the canal issue. Since the
State Department in recent years, for unexplained reasons,
has claimed the Canal Zone is not U.S. territory, I would like
to submit a statement for the record which will document United
States sovereignty over, title to, and ownership and control
of the Canal Zone.

It seems to me that this fact, our absolute and total possession
of the Canal Zone, must underlie any discussion as to who is
empowered under the Constitution to dispose of that territory
should such an eventuality come to pass.

Sincerely,



Gene Snyde
Ranking M ority Member Panama Canal Subcommittee GS/nnl







241


STATEMENT OF WILLIAM R. DRUNXOND, CHAIRMAN, CANAL ZONE
CENTRAL LABOR UNIONMETAL TRADES COUNCIL, LEGISLATIVE
COMMITTEE, PRESENTED TO THE SENATE SUBCOMMITTEE ON

SEPARATION OF POWERS
THE HONORABLE JA.ES B. ALLEN, CHAIRMAN
SENATE JUDICIARY COMMITTEE







M-r. Chairman

It is my understanding that the subject of this hearing is to resolve a constitutional contraversy between the President's right to negotiate treaties and the Congress' right, once a territory has been acquired, by treaty or otherwise, to administer and dictate the future disposition of that U.S. territory. It is my firm belief, not without substance, that the solution to this contraversy is to have the Executive Branch seek direction and approval from the Congress prior to embarking upon any new Canal treaty with the Republic of Panama.

The outcome of this contraversy will have a profound impact on the inhabitants of the Canal Zone as well as U.S. citizens
within the States.

"Personal and Civil Rights" applicable within the Canal Zone originated by Executive Order on May 9, 1904, pursuant to the authority given by Act of Congress dated April 28, 1904. These
rights were and are based on the "Bill of Rights" of the Constitution of the United States.


On June 19, 1934, also pursuant to an Act of Congress, the Canal Zone Code, consisting of seven titles was established.

On October 18, 1962 the revised Canal Zone Code was enacted by











94-468 0 77 17







242


Congress through Public Law 87-P45 Stat. 76A., effective January 2, 1963. This revised edition consisted of eight titles. Title 1, Chapter 3, section 31 is composed entirely of "Pwsonal and Civil Rights" applicable to the Canal Zone. It has its base in the "Bill of Rights" of the United States. Title 4, Chapter 9, protects "owners of Property"'. Specifically, section 152 states: "Any person, whether citizen or alien, may take, hold, and dispose of property within the Canal Zone." ( derived verbatim from Title 3, section 262, 1934 Canal Zone Code.)


At least since 1914 Canal Zone residents have owned, title and deed, leased and rented real property within the Canal Zone. Ownership of personal property, of course, is also of historic record. (The Cristobal Shrin club is one example)

As the above indicates, we have had the right to freedom of speech, assembly, petition, life and religion since the United States established itself as the sovereign within the Canal Zone. These rights cannot be taken without due process of law. As in the Bill of Rights, the Canal Zone Code dictates that laws abridging these rights are "void". I would also like to emphasize that it has been established by law, Husband v. U.S., 1921, that the "Canal Zone Bill of Rights" have the same force and effect as the original document from which it came.

,1r. Chairman, in my letter to you dated July 8, 1977, I have indicated that, with the possible exception of freedom of religion, all of the above rights have been negated or compromised by our Executive Branch in deference to the present treaty negotiations. In response to their actions, I have entered into a court suit, along with several of the members of this Congress.

The Courts have declared that my appeal based on the above rights are not yet "ripe" for adjudication. I can only deduce from this ruling that the court considers my claim to be abstract and that this present negotiation process has not yet subverted the rights of the Canal Zone inhabitant.











iiii







243


In all respect due the C1"ourt, I must assert that this ruling is not a true reflection of the facts as they apply to the Canal Zone. Not only are the Bill of Rights in the Canal Zone being substantially violated in direct deference to the present Canal treaty negotiations, but the rights of the citizen within the continental limits of the United States are also being violated out of deference to these treaty negotiations.


I had intended, at this time,to include a number of specific examples of the violations that I have spoken of, but after reflection; I realize that to do so would take aw.ay from the thrust of this hearing and the time alloted to me. I have. been supplying the House Panama Canal Subcommittee with these type examples for the last several years, and I am sure that they would be willing to supply this Subcommittee with copies of this correspondence. I include here some of the more recent incidents..


Ir.Chairman, I have all but exhausted my appeal rights to the two other branchs of our government. I am here today appealing to the Confgress of the Unhited States on a matter that is of direct interest to them and the U.S. citizens that they represent. The right to be protected under-the laws of the United States. I do not consider these rights to be abstract.


If I fail in my appeal here today If this Subcommittee elects not to act forcefully in this matter,- I, and the people I represent,' will not only be the losers, but our very system of government will have been tested and will have failed to meet that test. I can think of no circumstance that could justify the Congress of the United States ignoring their responsibility in asserting the seperation of powers clause in this matter when United States citizen's rights are being violated..


Respectfully submitte4William R. Drummond





low"

244



40 Campo Bello Court Menlo Park, CA 94025 July 13, 1977











Dear Senator:

I am a resident of Menlo Park, California, and practice law
in Redwood City, California. I am enclosing for your review
a legal brief which I have prepared relating to the
sovereignty of the United States over the Panama Canal Zone .
Since you, as a United States Senator, will undoubtedly be voting on any revisions to the Panama Canal treaty, I feel that it is most important for you to understand the rights
of the United States concerning the Panama Canal Zone.

Very truly yours,

It
A*-%

A4t44A V..
Michael J. Brady

14JB/rm

Encl.








245










2
3
4


6
7
8
9
10 UNITED STATES OF AMERICA
11 -vs121 REPUBLIC OF PANA14A
131
14 LEGAL BRIEF RE SOVEREIGNTY OF UNITED STATES
OVER PANAMA CANAL AND PANIAMA CANAL ZONE 16 1. INTRODUCTION:
17 Representatives of the President are currently negotiating with
18 representatives of the Republic of Panama regarding substantive 191 changes in the position of the United States concerning the Panama 20 Canal and the Panama Canal Zone. It is undoubtedly true that Congress 21 (though probably not the President alone) can sell or donate territory 22 of the United States to a foreign power. The United States, of 23 course, has rarely done so, and the prospect bf the United States 24 giving away part of its territory is highly controversial -25 especially territory as strategically important as the Panama Canal 26, Zone. Nevertheless, that is a political decision, and if Congress 271 chooses to do so, Congress does have the power to dispose of national 281 territory in such a fashion.
29 It is critically important, however, that the government (both
30. the Congress and the President) understand exactly what their rights 31 are in the Panama Canal Zone before giving away any of these rights. 32 We say this because there was much pre-November, 1976, political 33 1 oratory that tended to indicate that the United States did not have 341 sovereign rights over the Panama Canal Zone and much oratory to the 35 effect that the Panama Canal Zone was not actually territory belonging 36 to the United States. Such political statements could well be viewed








246








Ias clearing the way and making it much easier for ratification of a 2 new treaty changing the rights of the United States over the Panama
3 Canal Zone; stated another way, if we accept as a fact that the United 41 States does not have sovereign rights over the Panama Canal Zone, then
5 living with a new treaty becomes more palatable.

6 Legally, however, it does appear that the United States has
7 absolute rights of sovereignty over the Panama Canal Zone, the United 8 States owns the Panama Canal Zone, and the Panama Canal Zone is actual 91 territory belonging to the United States. If this legal interpreta10~ tion is accepted, then the prospect of giving away these rights in a 11 new treaty must be approached with great caution.
12
131 II. SOVEREIGNTY OVER THE PANAMA CANAL ZONE WAS CEDED
I ~BY PANAMA TO THE UNITED STATES; THE PANAM4A CANAL 14 ZONE BELONGS TO THE UNITED STATES AND .IS ACTUALLY
151 PART OF THE TERRITORY OF THE UNITED-STATES:
161' The leading case discussing the rights of the United States
over the Panama Canal and the Panama Canal Zone is the United States 18Supreme Court case of Wilson v. Shaw, 204.U.S. 24, 27 Supreme C ourt 191 Reporter 233 (1906)., Since this is a United States Supreme Court 20 decision and since the decision construed the Panama Canal Treaty inso 211, far as the rights of the United States are concerned, the decision is, 22 entitled to the highest weight. 23 The case arose on a'suit by a private citizen to prevent the"
241 Untied States from paying out money for the construction of the 25 Panama Canal and from borrowing money on the credit of the United 26 States or from issuing bonds in connection with the raising of money 2/~ for the constructi 'on of the Panama Canal. The position of the plain28, tiff citizen was that the United States had no power to engage in the 2911 construction of the canal. The U. S. Supreme Court upheld the
position of the United States, ruling against the plaintiff, and in 31 so doing, the court discussed at length the exact legal position and 32~ rights which ~the United States of America possessed over'the Panama
33Canal Zone and the Panama Canal. Pertinent portions of the'decision 34, in.Wilson v. Shaw are quoted as follows, with comments by the writer 35 of this brief:
3611//








247









11 "To tell the story of all that was done in
respect to the construction ofthis.canal, prior 2 to the active intervention of.the United States,,
3 would take volumes. It is enough to say that the
efforts of De Lesseps failed. Since then Panama
4 has seceded from the Republic of Columbia and
5 established a new republic, which has been
recognized by other nations. This new republic
6 has by treaty granted to the United States
7 rights, territorial and ot-erwise."
27 Supreme Court at 234 (emphasis supplied).

9 Comment: The Supreme Court, therefore, indicates that the
10 Republic of Panama granted territorial rights to the United States 11 pursuant to this treaty.
12 The court followed this up by stating as follows:
13 "The title to what may be called the
14 Isthmian or canal zone, which, at the date of the
act, was in the Republic of Columbia, passed by 15 an act of secession to the newly formed Republic
of Panama. The latter was recognized as a nation 16 by the President. A treaty with it, ceding the
17 canal zone, was duly ratified. 33 Stat. at L. 2234.
Congress has passed several acts based upon the 18 title of the United States, among-them one to
19 prZTvide a temporary government'.
27 Supreme Court at 234 (emphasis supplied).
20
21 Comment: This section-of the opinion stands for the proposition
22 that the treaty between the United States and Panama operated as a 23 cession of the Panamanian title to the United States. 24 The court went on to state that there could be no question as
25 to the right of the United States to obtain territory in this fashion: 26 "It is too late in the history of the United
27 States to question the right of acquiring territory
by treaty."
28 27 Supreme Court at 234 (emphasis supplied).
29 The most important part of the decision of Wilson v. Shaw deals
30 with the couct's answer to plaintiff's contention that the United 31 States had no power to construct the Panama Canal because the canal 32 zone was not part of the territory of the United States. The court 33 flatly rejected such an argument and-in doing so interpreted the 34 language of the treaty between the United States and Panama: 35 "Another contention, in support of which
36 plaintiff has presented a voluminous arLiument,
is that the United States has no power to








248









I "engage in the work of digging this canal. His
first proposition is that the canal zone is no
2 part of the territory of the United tates, and
3 that, therefore, the government is powerless t,3
do anything of the kind therein. Article 2 of the treaty, heretofore referred to, 'grants to
5 the United States in perpetuity the use, ocoupation, and control of a zone of land and lanS under
6 water for the construction, maintenance, ojera7 tion, sanitation, and protection of said Ganal.1
By article 3, Panama 'grants to the United States
8 all the rights,,power, and authority within the
9 zone mentioned and described in article 2 of this
agreement, . which the United States-would 10 possess and exercise if it were the sovereign
11 of the territory within which said lands and
waters are located, to the entire exclusion
121 of the exercise by the Republic of Panama of any
13 such sovereign rights, power, or authority.'
14 "Other provisions of the treaty add to the
grants named in these two articles further
guaranties of exclusive rights of the United
16 States in the construction and maintenance of this
17 canal. It is hXpercritical to contend that the
title of the United States is imperfect, and that 18 the territory described does not belong to this
191 nation, because of the omission of some of the
E-echnical terms used in ordinary conveyancesof 20 real estate.
21
"Further, it is said that the boundaries of 22 the zone are not described in the treaty; but the*
23 description is sufficient for identification, and
it has been practically identified by the con24 current action of the two nations alone interested
25 in the matter. The fact that there may possibly be
in the future some dispute as to the exact boundary 26 on either side is immaterial. Such disputes not
27 infrequently attend conveyances of real estate or
28 cessions of territory. Alaska was ceded to us
forty years ago, but the boundary between it and
29 the English possessions east was not settled until
30 within the last two or three years. Yet no one
ever doubted the title of this Republic to Alaska." 31 27 Supreme Court at 235 (emphasis supplied).
321 Comment: Firstly, the Supreme Court quotes directly from the
33 language of the treaty, which language indicates that the United
34 States has absolute sovereign power over the canal zone and that
35 United States sovereignty is "to the entire exclusion" of Panamanian
36 sovereignty. Secondly, the Supreme Court holds that it is fallacious








2AG









I to argue that there are imperfections in the title of the United 2 States to the canal zone. Lastly, it is extremely interesting to
3 note that the United States Supreme Court analogizes the United State!,
4 rights to the Panama Canal Zone to the United States1rights over the 51 Territory of Alaska (which are, of course, undisputed).


71 111* RECENT FEDERAL DECISIONS HAVE REAFFIRMED THAT THE
PANA14A CANAL ZONE IS UNITED STATES TERRITORY:

9 A 1971 United States Court of Appeal decision, United States v.
10 Husband R. (Roach), 453 Fed.2d 1054 (8th Circuit 1971), has re11 affirmed the proposition that the Panama Canal Zone is United States 12 territory13 "The Canal Zone is an unincorporated
14 territory of the United Sta-tes. Laws
applicable in the Canal Zone are enacted by
15 the Congress -- there is no local legislature."
16 453 Fed.2d at 1057 (emphasis supplied).
17
18 CONCLUSION
Before Congress acts, Congress should understand that this 20 country has sovereign rights over the Panama Canal and the Panama 2,911 Canal Zone, that the Panama Canal Zone is actual territory of the 22 United States and belongs to the United States just as much as
Alaska belongedto the United States upon our purchase of that 24 territory. Y
25 DATED: July 13, 1977.
26
77
28
291 MICHAEL J. BRADY
Attorney at Law
30 40 Campo Bello Court
31 Menlo Park, California 94025
32
33 l/ The most recent reflection of public opinion concerning the 34 Tanama Canal Zone occurred on June 18, 1976, when the House of
Representatives (concerning an amendment to HR 13179) voted 197-157 35 in favor of the proposition that any new Panama Canal treaty should 36 "perpetuate the sovereignty and control" of the United States over the
Canal Zone.







250


July 21, 1977



Hon. James B. Allen
United States Senate
Washington D.C. 20515

Dear Senator Allen:

In view of the planned hearings by your Subcommittee or Separation of Powers on the negotiations for a new Panama Canal Treaty, we of the Panama Audubon Society woud like to bring to your attention the threat posed by such a treaty to the Canal Zone's valuable biological resources.

During the current talks between the United States-and
Panama, there has been no indication that the U.S. negotiators have considered the ecological impact on the Canal Zone of the proposed new treaty. ,This fact has caused great concern on the part of many persons here, as well as in the States, who realize that the forests of the Canal Zone harbor one of the world's richest treasures of tropical bird, animal and plant life. Robert S. Ridgely, ornithologist and author of A Guide to the Birds of Panama, describes the Canal Zone as "a naturalist's paradise ........ (with)probably the most extensive, readily accessible lowland forests in Middle America."

It is our understanding that under United States law the State Depar-tment should have prepared an Environmental Impact Statement prior to entering into negotiations with Panama to change the political status of the Canal Zone. This, to our knowledge, was not done. Considering Panama's almost total disregard of environmental conservation within the area of the Republic, there can be little doubt that Panamanian control of Canal Zone lands would pose a grave threat to the survival of the Zone's forests and their wildlife populations. Their destruction would be a great loss to mankind. Equally important, removal of the forests would have a disastrous effect upon the operation of the Canal itself, reducing the precipitation so vital to the Canal's water supply and promoting rapid erosion of the floodplain and silting of Canal
channels.

We, therefore, urge you and your subcommittee to give serious consideration to the ecological implications of the proposed Canal Treaty. For whatever further information it may Drovide on the subject, I am enclosing a copy of the letter I sent to President Carteron June 21, 1977, plus a cony of the reply I received from Mr. Hodding Carter of the
State Department.







251


We wish you and your fellow senators success in the
task you are undertaking, and hope for your support in our efforts to preserve the Canal Zone's important environmental resources.

Sinzerely,



Carol L
Vice-President, Panama Audubon Society .... (chapter of Florida Audubon Society) P.O. Box 2026
Balboa, Canal Zone






252


Jue 21, 1977



President JiuW Cartmw
The White House
fashington .C, 2055

Dear President Csates
I A85 writing to you because I know that you are deeply concerned about conservation and the preservation of our natural environment for future generations on this earth. Everything you have said and done in this area since taking office has been very encouraging, from your wise energy conservation policies and your efforts to reduce spending on wasteful water projects to your recent strong environment message supporting many important conservation goals.
For these reasons, I feel sure that you will be receptive to this urgent plea for your help in dealing with an impending environmental disaster here in the Panama Canal Zone.
With the political tensions that have developed around
the current treaty negotiations, it is difficult to talk about Canal Zone matters in anything but a political context. However, my concern is not with political questions but with the need to save for posterity one of the world's few remaining and relatively unspoiled tropical forest ecosystems. The concern of many conservation-minded persons in the Canal Zone has grown steadily in recent months as the canal treaty talks have gained momentum for there has been no indication whatsoever that the nsgo*iators# on either side, have considered environmental questions.
It is my understanding that the National Environmental Policy Act of 1969 would require the preparation of an environmental impact statement evaluating the probable effects upon. the Canal Zone's environment of the proposed new treaty with Panama. Certainly such a statement should include a realistic assessment of the value and extent of tropical wildlife resources and how they will be affected by the treaty's provisions. Among the hundreds of bird and anima.l species found here are a number that are considered endangered species and should receive the same protection in the Canal Zone that is given endangered species, and their habitats, in the United States under the Endangered Species Act passed py
Congress. in 1973.







253


Mr. President, I feel very strongly that the United States, considering its historical involvement In. the Canal Zone has a responsibility to tholmorld that goes beyond the political issues occupying the daily. news aolm m| namely, a responsibility to ensure that mankind does not lose, in the name of political expediency, an area endowed with a blological wealth that should contribute to human knowledge and understanding for generations to eoe.
For variety of tropical bird, animal and plant species
concentrated in. a single area, the Canal Zone rain forest habitats are perhaps unique. (In December 1976 the annual Canal Zone Christmas bird count of the Panama Audubon Society recorded a total of 333 different species sighted during one 24-hour period. This was the highest count ever achieved anywhere in the world.) For easy accessibility to scientists, students and amateur naturalists from all parts of the world, these habitats are unsurpassed, and thus ideally suited to firsthand observation and research. I think it would be difficult to calculate their value as a living laboratory wherein scientists can probe for answers oto nature 's many perplexing questions. Attesting to this fact are the many scientists presently engaged in research projects here under the ausoaices of such organizations as the Smithsonian. Tropical Research Institute and the Gorgas Memorial Laboratory,

Prom the moment I arrived on the isthmus nearly three
years ago, I have been impressed with the overwhelming abundance with which nature has blessed this area. As a member of the Panama Audubon Society, I have become intimately acquainted with some of the most beautiful local forest habitats. It has been distressing to observe the limited damage already inflict& by the slash and burn, methods of encroaching squatters and illegal hunting by poachers, even in areas set aside by the Canal Zone government as forest and wildlife preserves. But it is much more distressing to contemplate the certain tragic fate that awaits these irreplaceable forests if definite measures are not taken soon to protect them.

The inevitability of such a fate is made shockingly clear merely by traveling in any direction from the Canal Zone Into the Republic of Panama and observing the almost total destruction of natural vegetation., lost areas are completely devoid of any significant forest coverg and much of the land lies neglected and unproductive. Unless the United States government assunes a responsibility for their protection, the same thing will happen to the forested areas of the Canal Zone







254


oncedirect control over these lands passes from the Uited States to Panama, country with one of the poorest conservation. records in the world. Then not only will the wildlife populations be deprivAA of their habitats, but the soils will be depleted of forest-supplied nutrients, the canal will lose much of its vital wrter supply-as the absence of fort cover brings a decreaseein the amount of rainfall and denuded foodplains will permit erosion to rapidly silt up camal channel Ecologically, the Canal Zone could become a disaster area in a relatively short time. And since an ecosystem is not an isolated entity, the consequences of environmental deteriora ton in the Canal Zone could extend far beyond its bound res, affecting much of middle America*
Surely, himan rights include man's right to pursue.& greater understanding of the ecological relationships whic will. determine the quality, perhaps the survival, of life on earth. Many answers will be found through the study of the intrcate structure and dynamics of tropical ecosystems. Few euch systems remain intact--one of the most important is contained within the wet lowland forest of the Panama Canal Zone.
1, therefore, urge you, Mr. President, as the first
dedicated conservationist to occupy the White.House in a. vex long time, to assure that any agreement which the United States may finally reach with Panama goes beyond merely meeting the political demands of the hour and responds to the critical environmental needs of this and future generations.
Sine2rely yours,


Carolyn owe
Vice-President,
Pana Audubon Society







255




DEPARTMENT OF STA:E
Washington. D.C. 20520





July 6, 1977


Ms. Carolyn Lowe Post Office Box 2026 Ft. Amador Panama Canal Zone

Dear Ms. Lowe:

Your message to the President has been referred to the Bureau of Inter-American Affairs in the Department of State for reply. You will be hearing from them in the near future. Should you have further questions, you may wish to be in touch with them directly. They may be reached at (202) 632-9227 in Room 5263, Department of State, Washington, D.C. 20520.

We very much appreciate your interest.
Sincerely,





Hodding artery III
Assista t Secretary for Public Affairs and Department Spokesman

0


















CONTENTS


CHRONOLOGICAL ORDER OF WITNESSES
Page
Leonard, George S., attorney, Washington, D.C------------------------ 13
Parfitt, Hon. Harold R., Governor, Panama Canal Zone ------------------ 44
McAuliffe, Lt. Gen. Dennis, P., commander-in-chief, U.S. Southern Command; accompanied by Col. James F. Thornton, legal advisor--------- 91
Gravel, Hon. Mike, a U.S. Senator from the State of Alaska ------------ 102
Murphy, Hon. John M., a U.S. Representative from the State of New York.. 124
AFTERNOON SEssioN
Crowe, Hon. Guthrie F., retired judge ------------------------------- 160
Moorer, Adm. Thomas H., U.S. Navy, retired (Former Chairman of the Joint Chiefs of Staff) ------------------------------------------- 173
Helms, Hon. Jesse, a U.S. Senator from the State of North Carolina -------188 Meeker, Leonard, Center for Law and Social Policy, Washington, D.C ---- 218

ALPHABETICAL LIST OF WITNESSES
Crowe, Hon. Guthrie F., retired judge------------------------------- 160
Gravel, Hon. Mike, a U.S. Senator from the State of Alaska ------------- 102
Helms, Hon. Jesse, a U.S. Senator from the State of North Carolina -------188 Leonard, George S., attorney, Washington, D.C------------------------ 13
McAuliffe, Lt. Gen. Dennis P., commander-in-chief, U.S. Southern Command; accompanied by Col. James F. Thornton, legal advisor ---------- 91
Meeker, Leonard, Center for Law and Social Policy, Washington, D.C --- 218 Moorer, Adm. Thomas H., U.S. Navy, retired (Former Chairman of the
Joint Chiefs of Staff)------------------------------------------- 173
Murphy, Hon. John M., a U.S. Representative from the State of New York- 124 Parfltt, Hon. Harold R., Governor, Panama Canal Zone ---------------- 44

PREPARED STATEMENTS OF WITNESSES
Leonard, George S., attorney, Washington, D.C------------------------- 33
Parfitt, Hon. Harold R., Governor, Panama Canal Zone ------------------ 69
Gravel, Hon. Mike, a U.S. Senator from the State of Alaska ------------ 117
Murphy, Hon. John M., a U.S. Representative from the State of New York-.. 133

MATERIAL SUBMITTED FOR THE RECORD
Text of 1903 treaty (Isthmian Canal Convention. November 18, 1903)-- 4 Total payments for the Canal Zone property as a result of the 1903 treaty-. 56 Comparison of lock plans ------------------------------------------ 64
Table---------------------- --------------------------------- 65
Assurances for present employees of the Panama Canal Company/Canal
Zone Government under a new Panama Canal Treaty----------------- 90
Congressional Research Service report on the role of the House of Representatives in the disposition of U.S. property in the Panama Canal Zone
to Panama ------------------------------------------------------ 143
Letter to the President signed by four Chiefs of Naval Operations ----------177 Joint statement by the Honorable Henery A. Kissinger, Secretary of State
of the United States, and His Excellency Juan Antonio Tack, Minister
of Foreign Affairs of the Republic of Panama-1974 ------------------ 193
Senator Helm's Senate floor statement excerpted from the Congressional
Record, December 4, 1975, entitled "The Panama Canal' Negotiations
and Alleged Acceptance by Panama of U.S. Control"------------------- 197






IV

C 0 N T E N T S-Continued

APPENDIX
Statement of David W. Dennis, while a Member of Congress from Indiana, before the Subcommittee on the Panama Canal of the House Committee Page on Merchant Marine and Fisheries in 1971 --------------------------- 229
Letter to Senator Allen from Congressman Gene Snyder, ranking minority member of the Panama Canal Subcommittee, dated July 22, 1977, commending Chairman Allen for holding hearings on the constitutional issues of the Panama Canal negotiations ---------------------------- 240
Statement of William R. Drummond, chairman, Canal Zone Central Labor Union Metal Trades Council'_' ----------------------------- I -------- 241
Legal brief prepared by Michael J. Brady, Redwood City, Calif., re sovereignty of United States over Panama Canal and Panama Canal Zone ------------------ ---------------------------------------------- 244
Letter to Senator Allen from Carolyn Lowe, vice president, Panama Audubon Society, dated July 21, 1971, considering the ecological implications of the proposed Canal Treaty -------------------------------- 250
Letter to President Carter ----------------------------------------- 252
Response -------------------------------------------------------- 255






4


ISTHM IAN CANAL CONVENTION. NoVEmBE 18, 1900.

Convention between the United States and the Republic qf Panamafor the construction of a sk9) canal to connect the waters of the Atlantic and Pac ifc oceans. Sqned at ladhington, November 18, 1903; rat. cation advised by the Senate, February 23, 1904 ; ratifed by Me President, February .5,1904; rati{ted by Panama, December 1903; rati4cations exchanged at lFashengton, February 26, 1004; proclaimed, February 26, 1904.

BY ThE PRESIDENT OF THE UNrTED STATES OF AMERICA.
A PROCLAMATION.
Whereas a Convention between the United States of America and the Republic of Panama to insure the construction of a ship canal across the Isthmus of Panama to connect theAtlantic and Pactiic Oceans was concluded and signed by their respective Pleni otentiaries at Washington, on the eighteenth day of November, one thousand nine hundred and three, the original of which Convention, being in the English language, is word for word as follows:
ISTHMIAN CANAL CONVENTION.
The United States of America and the Repullic of Panama being desirous to insure the construction of a ship canal across the Isthmus of Panama to connect the Atlantic and Pacific oceans, and the Congre~ of the United States of America having passed an act approved June 28, 1902, in furtherance of that object, by which the President of the United States is authorized to acquire within a reasonable time the control of the necessary territory of the Republic of Colombia, and the sovereignty of such territory being actually vested in the Republic of Panama, the high contracting arties have resolved for that purpose to conclude a convention and have accordingly appointed as their plenipotentiaries.The President of the United States of America, JOHN HAY, Secretary of State. and
'The Government of the Republic of Panama, PHILIPPE BUNAUVARILLA, Envoy Extraordinary and Minister Plenipotentiary of the Republic of Pananma, thereunto specially empowered by said government, who after communicating with each other their respective e full powers, found to be in good ano due form, have agreed upon and concluded the following articles:
ARTICLE L
The United States guarantees and will maintain the independence of the Republic of Panama.
ARTICLE II.
The Republic of Panama grants to the United States in perpetuity the use, occupation and control of a zone of land and land under water-







5


for the construction, maintenance, operation, sanitation and protection of said Canal of the width if ten miles exterdiI1t to tl,( ,ti-4:nqce of five miles on each side of the center lie of the route of the Canal to be constructed; the said zone twginning i n the Caribbean Sea three marine miles from mean low water -mark and extending to and across the Isthmus of Panama into the Pacific ocean to a distance of three marine miles from mean low water mark with the proviso that the cities of Panama and Colon and the harbors adjacent to said cities, which are included within the boundaries of the zone above described, shall not be included within this grant. The Repubic of Panama further grants to the United States in perpetuity the use, occupation and control of any other lands and waters outside of the zone above described which may be necessary and convenient for the construction, maintenance, operation, sanitation and protection of the said Canal or of any auxiliary canals or other works necessary and convenient for the construction, maintenance, operation, sanitation and protection of the said enterprise.
The Republic of Panama further grants in like manner to the United States in perpetuity all islands within the limits of the zone above described and in addition thereto the group of small islands in the Bay of Panama, named Perico, Naos, Culebra and Flamenco.

ARTICLE IM1.
The Republic of Panama grants to the United States all the rights, power and authority within the zone mentioned and described in Article II of this agreement and within the limits of all auxiliary lands and waters mentioned and described in said Article I which the. United States would possess and exercise if it were the sovereign of the territory within which said lands and waters are located to the entire exclusion of the exercise by the Republic of Panama of any such sovereign rights, power or authority.

ARTICLE IV.
As rights subsidiary to the above grants the Republic of Panama grants in perpetuity to the United States the right to use the rivers, streams, lakes and other bodies of water within its limits for navigation, the supply of water or water-power or other purposes, so far as the use of said rivers, streams, lakes and bodies of water and the waters thereof may be necessary and convenient for the construction, maintenance, operation, sanitation and protection of the said Canal.
ARTICLE V.
The Republic of Panima grants to the United States in perpetuity a monopoly for the construction, maintenance and operation of any system of communication by means of canal or railroad across its territory between the Caribbean Sea and the Pacific ocean.







6


ARTICLE VI.
The grants herein contained shall in no manner invalidate the titles or rights of private land holders or owners of private property in the said zone or in or to any of the lands or waters granted to the United States by the provision's of any Article of this treaty, nor shall they interfere with the rights of way over the public roads passing through the said zone or over any of th said lands or waters unless said rights of way or private rights shall conflict with rights herein ganteA to the United States in which case the rights of the United States shall

be superior. All damages caused to the owners of private lands or private property of any kind by reason of the grants contained in this treaty or by reason of the operations of the United States, its agents or employees, or by reason of the construction, maintenance, opera. tion, sanitation and protection of the said Canal or of the works of sanitation and protection herein provided for, shall be appraised and settled by a joint Commission appointed by the Governments of the United States and the Republic of Panama, whdse decisions as to such damages shall be final and whose awards as to such damages shall be paid solely by the United States. No part of the work on gaid Canal or the Panama railroad or on any auxiliary works relating thereto and authorized by the terms of this treaty shall be prevented, delayed or impeded by or pending such proceedings to ascertain such damages. The appraisal of said private lands and private property and the assessment of damages to them shall be based upon their value before the date of this convention.
ARTICLE VIM

The Republic of Panama grants to the United States within the limits of the cities of Panamua and Colon and their adjacent harbors and within the territory adjacent thereto the right to acquire by purchase or by the exercise of the right of eminent domain, any lands, buildings, water rights or other properties necessary and convenient fo'r the construction, maintenance, operation and protection of the Canal and of any works of sanitation, such as the collection and disposition of sewage and the distribution of water in the said" cities of Panama and Colon which, in the discretion of the United States may be necessary anJ convenient for the construction, maintenance, operation, sanitation and protection of the said Canal and railroad. All such works of sanitation, collection and disposition of sewage and distribution of water in the cities of Panama and Colon shall be made at the expense of the United States, and the Government of the United States, its agents or nominees shall be authorized to impose and collect water rates and sewerage rates which shall he sufficient to provide for the payment of interest and the amortization of the principal of the cost of said works within a period of fifty years and upon the expiration of said term of fifty years the system of sewers and water works shall revert to and become the properties of the cities of Panama and Colon respectively, and the use of the water shall be free to the inhabitants of Panama and Colon, except to the extent that water rates may be necessary for the operation and maintenance of said system of sewers and water.






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The Repnblic of Panama agree that the cities of Panama and Colon shall comply in perpetuity with the sanitary ordinances whether of a preventive or curative character prescribed by the United States and m case the Government of Panama is unable or fails in its duty tD enforce this compliance by the cities of Panama and Colon with the sanitary ordinances of the United States the Republic of Panama grants to the United States the right and authority to enforce the same.
The same right and authority are granted to the United States for the maintenance of public order in the cities of Panama and Colon and the territories and harbors adjacent thereto in case the Republic of Panama should not be, in the judgment of the United States, able' to maintain such order. M
ARTICLE VUL

The Republic of Panama grants to the United States all rights which it now has or hereafter may acquire to the property of the New Panama Canal Company and the Panama Railroad Company as a result of the transfer of sovereignty from the Republic of Colombia to the Republic of Panama over the Isthmus of Panama and authorizes the New Panama Canal Company to sell and transfer to the United States its rights, privileges, l)roperties and convesions as well as tlhe Panama Rtiiroad and all the shlnres or part of the harcs of that cml'aliy; but till ib lntllic lands situated outside of the zone described in Article II of this treaty now included in the concessions to both said enterprises and not required in the construction or operation of the Canal shall revert to the Republie of Panama except any property now owned by or in the possession of said companies within Panama or Colon or the ports or terminals thereof.
ARTICLE IX.
The United States agrees that the ports at either entrance of the Canal and the waters thereof, and the Republic of Panama agrees that the towns of Panama anl Colon shall he free for all tinie so that there shall not be imposed or collected custom house tolls, tonnage, anchorage, lighthouse, wharf, pilot, or quarantine dues or any other charges or taxes of any kind upon any vessel using or passing through the Canal or belonging to or employed by the United States, directly or indirectly, in connection with the construction, maintenance, operation, sanitation and protection of the* main Canal, or auxiliary works, or upon the cargo, officers, crew, or passengers of any such vessels, except such tolls and charges as may be Imposed by the United States for the use of the Canal and other works, and except tolls and charges imposed by the Republic of Panama upon merchandise destined to be introduced for the consumption of the rest of the Republic of Panama, and upon vessels touching at the ports of Colon and -Panama and which do not cross the Canal.






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The Government of the Republic of Panama shall have the right to establish in such ports and in the towns of Panama and Colon such houses and guards as it may deem necessary to collect duties on importations destined to other portions of Panama and to prevent contraband trade. The United States shall have the right to make use of the towns and harbors of Panama and Colon as places or anchorage, and for makingrepairs, for loading, unloading, depositing, or transshipping cargoes either in transit or destined for the service of the Canal and or r works pertaining to the Canal.
ARTICLE X..
e
The Republic of Panama agrees that there shall not be imposed any taxes, national, municipal. departmental, or of any other class, upon the Canal, the 'railways and auxiliary works, tugs and other vessels employed in the service of the Canal, store houses, work shops, offices, quarters for laborers, factories of all kinds, warehouses, wharves, machinery and other works, property, and effects appertaining to the Canal or railroad and auxiliary works, or their officers or employees, situated within the cities of Panama and Colon, and that there shall not be imposed contributions or charges of a personal character of any kind upon officers, employees, laborers, and other individuals in the service of the Canal and railroad and auxiliary works.
ARTICLE XI.
The United States agrees that the official dispatches of the Government of the Republic of Panama shall be transmitted over any telegraph and telephone lines established for canal purposes and used for public and private business at rates not higher than those required from officials in the service of the United States.

ARTICLE XII.
The Government of the Republic of Panama shall permit the immi. ration and free access to the lands and workshops of the Canal and its auxiliary works of all employ ees and workmen of whatever nation. ality under contract to work upon or seeking enployment upon or in any wise connected with the said Canal and its auxiliary works, with their respective families, and all such persons shall be free and exempt from the military service of the Republic of Panama.
ARTICLE XIII.
The United States may import at any time into the said zone and auxiliary lands, free of custom duties, imports, taxes, or other charge and without any restrictions, any and all vessels, dredges, engines, ears, machinery, tools, explosives, materials, supplies, and other articles necessary and convenient in the construction, maintenance, opera tion. sanitation and protection of the Canal and auxiliary works, and all provisions, medicines, clothing, supplies and other things necessary and convenient for the officers, employees, workmen and laborers in






9


the service and employ of the United States and for their families. If any such articles are disposed of for use outside of the zone and auxiliary lands granted to the United States and within the territory of the Republic, they shall be subject to the same import or other duties as like articles imported under the laws of the Republic of Panam
ARTICLE XIV.
As the price. or compensation for the rights, powers and privileges granted in this convention by the Republic of Panama to the Unifed States, the Government of the United States agrees to pay to the Republic of Panama the sum of ten million dollars (1.O, 0) in gold coin of the United States on the exchange of the ratification of this convention and also an annual payment during the life of this convention of two hundred and fifty thousand dollars ($250,00 in like gold coin, beginning nine years after the date aforeskii.
The provisions of this Article shall be in addition to all other benefits assured to the Republic of Panama under this convention.
But no delay or difference of opinion under this Article or any other provisions of tlis treaty shall affect or interrupt the full operation and effect of this convention in all other respects.
ARTICLE XV.
The joint commission referred to in Article VI shall be established as follows: "
The President of the United States shall nominate two persons and the President of the Republic of Panama shall nominate two persons and they shall proceed to a decision; but in case of disagreement of the Commission (by reason of their being equally divided in conclusion) an ump ire shall be appointed by the two Governments who shall render the decision. In the event of the death, absence, or incapacity of a Commissioner or Umpire, or of his omitting, declining or ceasing to act, his place shall be filled by the appointment of another person in the manner above indicated. All decisions by a majority of the Commission or by the umpire shall be final.
-ARTICLE XVL
The two Governments shall make adequate provision by future agreement for the pursuit, capture, imprisonment, detention and delivery within said zone and auxiliary lands to the authorities of the Republic of Panama of lersots chi'trged with the 'onimitiient of crimes, felonies or misdemeanors without said zone fund for the pursuit, capture, imprisonment, detention and delivery without said zone to thq authorities of the United States of persons charged with the commitment of crimes, felonies and misdemeanors within said zone and auxiliary lands.






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ARTICLE XVII.
The Republic of Panama grants to the United States the use of all the ports of the Republic open to commerce as places of refuge for any vessels employed in the Canal enterprise, and for all vessels passing or bound to pas through the Caial whuch ny he in distress and be driven to seek refuge in said ports. Such vessels shall be exempt from anchorage and tonnage dues on the part of the Republic of Panama.
ARTICLE XVIII.
The Canal, when constructed, and the entrances thereto shall be neutal iI perpetuity, and shall be opened upon the terms provided for by Section I of Article three of, and in conformity with all the stipulations of, the treaty entered into by the Governments of the United States and Great Britain On Novenber 18, 1901.
ARTICLE XIX.
The Government of the Republic of Panama shall have the right to transport over the Conal its vessels and its troops and munitions of war in such vessels at all times without -paying charges of any kind. The exemption is to be extended to the auxiliary railway !or the transportation of persons in the service of the Republic of Panama, or of the police force charged with the preservation of public order outside of said zone, as well as to their baggage, munitions of war and supplies.
ARTICLE XX.
If by virtue of any existing treaty in relation to the territory of the Isthmus of Panama, whereof the obligations shall. descend or be assumed by the Republic of Panama, there may be any privilege or concession in favor of the Government or the citizens andsubjects of a third power relative to an interoceanic means of communication which in any of its terms may be incompatible with the terms of the present convention, the Republic of Panama agrees to eancel or modify such treaty in due forni, for which purpose it shall give to the said third power the requisite notification within the term of four months from the date of the present convention, and in c-ase the existing treaty contains no clause permitting its modifications or annulment, the Republic of Panama agrees to procure its modificution or annulment in such form that there shall not exist any --nflict with the stipulations of the present convention:
ARTICLE XXI.
The rights and privileges granted by the Republic of Panama to the United States in the preceding Articles are understood to be free of all anterior debts, liens, trustsq or -liabilities, or concessions or privileges to other Governments, corporlttion! syndicates or individuals, and consequently, if there should arise y claims on account of the present concessions and privileges or c ierwise, the claimants shall resort to the Government of the Republic of Panama and not to the United States for any indemnity or compromise which may be required.






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ARTICLE XXIL
The Republic of Panama renounces and grants to the United States the participation to which it might be entitled in the future earnings of the Canal un -r Article XV of the concessionary contract with Lucien N. B. Wvsf ,ow owned by the New Panama Cinal Company and any and all otL-r rights or claims of a pecuniary nature arising under or relating to said concession, or arising under or relating to the concessions to the Panama Railroad Company or any extension or modi ication thereof; and it likewise renounces, confirms and grants to the United States, now and hereafter, all the rights and property reserved in the said concessions which otherwise would belong to Panama at or before the expiration of the terms of ninety-nine years of the concessions granted to. or held by the above mentioned party and companies, and all right, tit"* and interest which it now iAs or may hereafter have, in and to the lands, canal, works, property and rights held by the said. companies under said concessions or otherwise, and acquire or to be acquired by the United States from or through the New Panama Canal Company, including any property and rights which might or may in the future either by lapse of time, forfeiture or otherwise, revert to the Republic of Panama under any contracts or concessions, with said Wyse, the Universal Panama Canal Company, the Panama Railroad Company and the .New Panama Canal Company.
The aforesaid rights and property shall be and are free and released from any present or reversionary interest in or claims of Panama and the title of the United States thereto upon consummation of the contemplated purchase by the United States from the New Panama Canal Company, shall be absolute, so far as concerns the Republic of Panama, excepting always the rights of the Republic specifically secured under this treaty.
ARTICLE XXL
If it should become necessary at any time to employ armed forces for the safety or protection of the Canal, or of the ships that make use of the same or the railways and auxiliary works, the United States shall have the right, at all times and in its discretion, to use its police and its land and naval forces or to establish fortifications for these Purposes.
ARTICLE XXIV.

No change either in the Government or in the laws and treaties of the Republic of Panama shall, without the consent of the United States, affect any right of the United States under the present convention, or under any treaty stipulation between the two countries that now exists or may hereafter exist touching the subject matter of this convention.
If the Republic of Panama shall hereafter enter as a constituent into any other Government or into any union or confederation of states, soas to merge her sovereignty om" independence in such Government, union or confederation, the rights of the United States under this convention shall not be in any respect lessened or impaired. -






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ARTICLE XXV.
For the better performance of the .hgagements of this convention and to the end of the efficient protection of the Canal and the reser nation 4f its neutrality, the (uvernmwnt of the Republic of Panama will s~ell or lease to the United States lands adequate and necessary for naval or coaling stations on the Pacific coast and on the western Caribbean coast of the Republic at certain points to be agreed upon with the President of the United States.

ARTICLE XXVL
This convention when signed by the Plenipotentiaries of the Contracting Parties shall be ratified by the respective Governments and the ratifications shall be exchanged at Wasi hmhiton at the earliest date possible.
In faith whereof the respective Plenipotentiaries have signed the
present convention in duplicate and have heseunto affixed their respective seals.
Done at the City of Washington the 18th day of November in the year of our Lord nineteen hundred and three.
JOHN HAT 1sa
P. BoxAu-VARILLA SEAL]
And whereas the said Convention has been duly ratified on both parts, and the ratifications of the two governments were exchanged in the City of Washington, on the twenty-sixth day of February, one thousand nine hundred and four;
Now, therefore, be it known that I, Theodore Roosevelt, President Sof the United States of America, have caused the said Convention to be made public, to the end that the same and every article and clause thereof, may be observed and fulfilled with good faith by the United States and the citizens thereof.
In 'tsstitmony whereof, I have hereunto set my hand and caused the seal of the United States of America to be affixed.
Done at the City of Washington, this twenty-sixth day of February,
in the yeir of our Lord one thousand nine hundred and four,
[sEAL] and of the Independence of the United States the one hundred and twenty-eighth.
THEODOR ROOSEVELT
By the President:
Jorn HAY
8ecretary of State.






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Senator ALLE. Senator Hatch?
S en ator HATCH. I have nothing to add. I think you have covered the subject very well, Mr. Chairman. I have no statement at this time. I am going to be very interested in hearing the witnesses on all sides of this question, -and I intend to keep a very open mind regarding all of the issues that will be raised in these important hearings.
Senator ALLEN. Thank you very much.
Mr. Leonard, will you come forward?
We welcome you to the subcommittee hearings and we are delighted to have you as our first witness. You may proceed in such manner as you see fit.

TESTIMONY OF GEORGE S. LEONARD, ATTORNEY, WASHINGTON, D.C.

Mr. LEONVARD. Thank you, Mr. Chairman, and Senators.
If the subcommittee so desires, I would like at this time to read a statement which has been circulated and then make myself available for whatever questions the committee might have.
Mr. Chairman and members of the subcommittee, my name is George S. Leonard. My offices are located at 1019 Nineteenth Street NW., in Washington, D.C.
I am an attorney before the bar of the Supreme Court iand various other courts in the State of New York, the District of Columbia, and elsewhere. I am an attorney with considerable background and experience in constitutional matters and have been the attorney for certain Senitors -and Members of the House of Representatives who have, been plaintiffs in actions brought to test whether under the doctrine of constitutional separation of powers the executive branch may dispose of -a territory of the United States by the presentation of a treaty proposal to the Senate.
I am familiar with the current status of the proposals regarding the disposition of the C-anal Zone. I appear here today to question as a matter of constitutional law whether the executive branch may enter into negotiations for a treaty which would divest the United States of its possession of the zone without any necessity for prior authorization from the whole Congress.

CONSTITUTIONAL AUTHORITY
Our question, therefore--and the one to which I have given consideration-is : Does the executive branch have the constitutional authority to negotiate for a treaty which disposes of the Panama Canal Zone?
I believe that the answer to that is flatly and unquestionably "no." I do not believe that there is any doubt whatsoever in the law or under the Constitution that such power does not abide in the executive branch of the United States.
Liet me give you some background if I may. It is customarily said,~ and the State Department has always repeated-and I notice even from the remarks of the ,chairman at this meeting-that it is assumed that the Canal Zone originally started out and was acquired by treaty. That is. not so. 9



94-468 0- 77- 2




. ... .... ....... .................. ................................


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What did happen was that Congress passed an act, which, is known
as the Spooner Act. It directedthe executive to make an arrangement either with Panama, or-in default of Panama-with Nicaragua to acquire in perpetuity the properties wross which a transoceanic canal
would be built.
The "in perpetuity" requirement was a congressional requirement.
It had nothing whatever to do with the executive department.
The treaty was more under that authority and by reference to that
authority. Senator Scott has put into the record here the actual text of what is known as the Hay-Bunau-Varilla Treaty. It will be found that in the first paragraph, in the opening word of that, the reference
is made to the fact that it is authorized by an act of Congress.

SPOONER ACT
Its terms are the terms which Congress required. Had Panama not
agreed to it-and I say Panama, because at the time of -the Spooner Act there was not even a Panama-the United States would have built the canal in Nicaragua which was, as a matter of fact, within one.or two votes in the Senate, the desired place to have put the interocean
canal.
It was by virtue of Panama's willingness to accept the treaty in that
form that the Spooner Act could be carried out and that the canal was,
in fact, built in Panama instead of in Nicaragua.
Under the Spooner Act Congress authorized the President to acquire
perpetual control of the necessary lands for the construction and defense of an interocean canal across the Isthmus of Panama. It stated that if the Executive were unable to purchase such control, then it was
to approach Nicaragua for the same purpose. .
Acting pursuant to the authorization which was thus granted by
Congress a convention was negotiated and approved by the then President and Secretary of State between the United States and the, newly formed Republic of Panama on November 18, 1903. This is the convention, treaty, or agreement, as you will call it, generally known as the Hay-Bunau-Vai4lla Convention, a copy of which is now in the
record.
It is pursuant to that that the United States acquired in perpetuity
the rights of the newly founded Republic of Panama to the territory
which is now known as the Canal Zone.
Since that time the Canal Zone has remained a territory of the
United States administered at the direction of the President of the United States in accordance with enabling legislation which has been
enacted from time to time thereafter by the Congress.
I point out in this connection that all powers which the, President
has in terms of the administration and organization of the canal spring
from congressional enactment and congressional authorization.
Such legislation by the Congress has directed both the form and the
substance of the governance of the administration and jurisprudence of the Canal Zone. It has culminated in a comprehensive revision by the Congress in Public Law 87-845, which is known generally as the Canal Zone Code. It became effective on January 2, 1963. It not only includes provisions for all of the necessary courts, the establishment






15

of a judiciary, and an office of the U.S. attorney, a criminal code and a civil code, but it also has a congressional guarantee of civil rights under the laws of the United States.
I may say parenthetically in addition to my statement that, the bill of rights in the Canal Zone Code has been held by the Fifth Circuit Court of Appeals to be the equivalent to the Bill of Rights in the, U.S. Constitution. There are some 3,500 citizens of the United States who are residents in the zone who, if this treaty presently proposed is to be taken at face value, will be put under Panamanian law without any hearing and without -any chance of defending themselves or arguing their own case.
Senator Scorr. Mr. Chairman, if 'I might interrupt, is that the case of United States8 v. Husband R. (Rioach) which is 453 F.2d, 1054?
Mr. LEo-N-AR. That is correct.
Senator ScoTr. I just wanted that established for the record.
Mr. LEONARD. On considering the facts of the acquisition of the Canal Zone the courts have unanimously recognized that the Canal Zone hais become a territory of the United States and that the title of the United States to the zone is complete.
I would like to repeat at this point the words of the Supreme Court; of the United States in the case of Wilson v. Shawr. which can be found at 204 U.S. 24. It was rendered in 1907 shortly after the canal had been acquired.
The Supreme Court said:
"It is hypercritical to contend that the title of the United States is imperfect, and that the Canal Zone does not belong to this Nation, because of -the technical terms used in ordinary conveyances of real estate."
There were two other cases. One was in the Canal Zone. which was Lucas v. Lucas, and another in the eastern district U.S court in Huasteca Petroleum Company v. United States. They have affirmed that position. I do not believe that there has ever been a court at any time which 'has held that the Panama Canal Zone is other than a territory of the United States.
I know that there have been many statements made about sovereignty, bust otherwise to the best of my knowledge there has never been any doubt on the question that the Panama Canal Zone. insofar as our courts have interpreted this acquisition, is in fact a territory of the United States. I believe that this is today conceded by thie State Department.
In 1936 and '1955 additional agreements with Panama were made on little minor pieces of territory here and there. I believe that some of them were outside the zone itself. In each such case -the perpetuity principle was reaffirmed. In each such case. both in 1936 and 19.55, the treaties were made subject to the passage of appropriate legislation by the Congress. It did not require ratification of the treaty by the Senate, but congressional action.

JOINT STATEMENT
The whole position changed in 1974. Mfr. Kissinger went to Panama as Secretary of State. He discussed the situation ith Foreigni M-Nf igter Tack of the Republic -of Panama. Between them they issued a joint statement which was published by the State Department..






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Among other things, Mr. Kissinger stated that he had agreed in the, name of the United States to the following: "The United States and Panama agree that the Treaty of 1903 should be replaced by a modern treaty that rejects the concept of perpetuity."
In another paragraph of the same statement Mr. Kissinger said; "The United States h, s proposed that Panamanian law and jurisdiction would be applied in the Canal Zone."
This joint statement, which was made, in 1974, is now stated by the Department of State and has been conceded in various motions which it has made before the courts to constitute the framework of the lDresent negotiations-that is, the disposition of the property of the Canal Zone andthe turning over of the citizens down there to Panamanian law, placing the zone under Panamanian jurisdiction.
The original announcement by Secretary Vance and President Carter was that they hoped to complete this treaty by June of this year. Since that time the Department has revised its prediction and has reported that it was hoping to complete the new treaty by late summer.
I understand froin the first page of this morning's Post that a demand is now being made by Panama for a payment in addition to the Canal Zone that could possibly put it off even further.
Let us go at this time, if we may, directly to what the Constitution holds. As the chairman has noted for the record, the Constitution provides complete congressional power over the disposition and governance of territories by article TV, section 3, clause 2. 1 would like to read it again into the record, since it is of considerable importance in this regard.
The Congress shall have Power to dispose of and make all needful Rules and Regulations respecting the Territory or other Property belonging to the United States.
This clause has come before the courts in many cases. The Supreme Court, in 1872 in the case of Gibson v. Chouteau held that the power given to Congress by the Constitution included the authority to prescribe the times, the conditions and mode of any transfer and the right to designate the persons to whomany transfer would be made.
This repeated a prior decisioii of the same court to the same effect in Irvine v. Harsha1l, reported in 20 Howard 558 in' 1858. It was later followed by Emblen v. Lincobi. Lavd Company, reported at'184 U.S. 660 in 1902.
Quite recently in 1970 in Sierra Club v. Hickel, there was a decision which wasaffirmed by the Supreme Court at 405 U.S. 727. The original decision was written bv the ninth circuit in 1970.
In Sierra Club v. Hickel, the decision of the Ninth Circuit Court of Appeals, which was affirmed by the Supreme Court, stated:
Article IV, Section 3 of the United States Constitution commits the management and control of the lands of the United States to Congress. That Congressional power is unlimited.
This power of Congress under the Constitution to dispose of property which belongs to the United States is an exclusive power and has been so held by the courts. To the best of my knowledge, no court has ever said it is not. No court has ever said that any other branch of government has such power.




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In GrWn v. United States in the Eighth, Circuit Court of Appeals,
reported at 168 2d 457, the court specifically pointed to the fact that the constitutional power thus giyen to Congress was in fact exclusive to the le legislativee body.
The same holding was made by the Supreme Court in United States v. Fitzgerald, reported at 40 "U.S. 785 in 1841; in 08borne v. United States reported at 145 F. 2d 892; and again the Supreme Court in 1954, in Alabama v. Texas reported at 347 U.S. 272. Each has affirmed the principle that the power over the territories which the Consitution lodges in Congress is an exclusive power. Accordingly, any authority which the Executive may have to dispose of property of the United States must be first derived from authority given by an Act of Congress. This was stated again by the ninth circuit in 1959 in the case of Tugade v. Hoy which is -reported at 265 F. 2d 63. It concerned the action of the United States in giving the Philippines their independence.
Does the State Department deny the congressional right to dispose of territories of the United States? The answer is no-,' it does not. Originally, in the earliest portions of the actions which were brought by various Senators and Congressmen against the State Department and others in this matter, the State Department did in fact take the position that the power of the Congress had to be modified to some extent by the State Department's arrangements with foreign nations. As I understand from the proposed testimony of Mr. Meeker and others and the filings which have more recently been made in these cases, the State Department no longer contests the power of Congress to dispose of this territory.
However, it has brought up and put forward at this time a claim that under the Constitution's grant of treaty power to the President, the executive branch of government holds a concurrent authority to dispose of any United States property. The treaty power, of course, is in article 11, section 2 of the Constitution. It says nothing whatever about territory or property of the United States.
STATE DEPARTMENT CLAIMS CONCURRENT POWER
When a matter is a proper question of foreign affairs and when it concerns a domestic matter which is not a proper subject of foreign affairs is a matter which I leave to the State Department to explain to this body. As of the present time, however, it is the contention of the State Department that the President has truly concurrent power under the treaty power to dispose, of property of the United States. The point is one of considerable interest. My office has researched the point. I have done considerable work on it myself. As far as we can tell, there is not a single court and there is not a single. commentator in the law who has ever supported the existence of this concurrent power which the State Department now claims. Actually, wi-hat we did find was that there have, been in,in y rulings by the courts that such an authority does not exist and that the President's treaty power is limited whenever primary authority has been granted to another branch of Government by the Constitution.






18

If 11 may at this time, I would like -to put into the record the following cases which I believe support that documents In the, Supreme, CourtSenator HATCH.Mr. Leonard, may I interrupt you for a moment?
Because we have so many witnesses, I would suggest that we put your whole statement in the record, which lists these cases and the citations. It would allow the committee to give every witness as much time as possible, by saving time.
Is this acceptable to you?
Mr. LEONARD. It is quite acceptable to me.
Mr. Chairman, with your perm. mission, I offerthe statements as part of the record, and I will therefore pass over any citations of the cases.
Senator ALLEN. Without objection, the statement will be, inserted in the record.
Mr. LEONARD. I will merely state in this particular connection that the rule which I have just stated is one which has been supported strongly by the Supreme Court without, so far as I know, any exoeptions of any kind.
Senator HATCH. I notice you have cited about seven or eight cases for that proposition.
Mr. LEONARD. It is rather a clear proposition. That is why I stated at the beginning that I simply do not believe that this new theory that the State Department has come up with has ever had any validity. I have pointed out that as late as 1955 there has never been the slightest question before the State Department that the disposition of any territory of the United States had to be made with the prior fluthorization of Congress.
To go outside of my prepared statement for a moment, it is my understanding that Franklin Delano Roosevelt tried to give 50 destroyers or thereabouts to the kingdom of Great Britain and was told by the .2W,orney General that this required congressional authorization before lie could even give away the old destroyers.
SenatorHATCH. I want to add that I -am particularly pleased- that you have put forth such a considerable effort here to provide us with cases and citations in this thorough and well-researched legal brief. We are very happy to have this additional information.
Mr. LEONARD. Senator, I would like to take the credit for that, but I cannot do it. This largely is a result of the research which has been done at the request of certain Senators who have gone forward iin this matter and have tried to establish this principle in the courts. It was for them that I had done most of the work and most of the background research on this matter.
I take up a point now which is very interesting because we run into a question which I think the State Department has never really answered. If in fact-and let us assume arguendo at this moment-the State Department or the executive branch of Government has this concurrent power which they are talking about, may they exercise it when Congress has already acted, as in the enactment of the Canal Zone Code?
It is difficult to find authority on this point, because, as I say, no court ever seems to have held that there is such a power. The nearest analogy we have been able to find is the authority of Congress under the Commerce power to legislate in the field of foreign trade and the






19

authott1 y of the President under the treaty power to negotiate in the field of foreign trade.
This appears to be a true concurrent power. As far as the courts are concerned it so exists.
I would like to point out, however, that the courts have unanimously, as far as I know, held that the President at, no time may utilize his treaty power in opposition to an existing enactment by the Congress.
I would like, if I may, to read some of the words of the' district court here in the District of Columbia which go directly to this point:
All parties recognize that if in fact Congress has preempted the relevant field of foreign trade and commerce, then the President lacks authority to act in a manner inconsistent with the requirements of the preemption legislation. The President clearly has no authority to give binding assurances that a particular course of conduct, even if encouraged by his representatives, does not violate the Sherman Act or other related congressional enactments any more than he can grant immunity under such laws.
Moreover, coming to the court of appeals and a decision which was rendered only about 6 or 7 months ago, which I think disposes of the maj or cases which have been referred to f rom. time to time by the State Department as justifying that claim, the court of appeals here in the District said:
Support for judicial deference to executive actions in the area of foreign affairs is found in United States v. Curtiss-Wright Export Corp., and Chicago and Southern Air Lines v. Waterman Steamship Corp. Without depreciating the support given by dicta in these opinions to inherent presidential authority in foreign affairs, we note that the presidential authority was there exercised pursuant to statute, i.e., by the will of Congress. Justice Jackson, concurring in the Steel Seizure Case, pointed out: "When the President takes measures incompatible with the expressed or implied will of Congress, his power is at its lowest ebb, for then he can rely only on his own constitutional powers minus any constitutional powers of Congress over the matter. Courts can sustain exclusive presidential control in such a case only by disabling Congress from acting upon the subject."
I point out that such legislation not only exists with respect to the Canal Zone, but when the Canal Zone Code and all of the other legislation relating to the Canal Zone were passed by this Congress, they received the concurrence of this Senate and they received the approval of the President of the United Statesthat is, the executive branch.
Those laws exist today and govern the Canal Zone by virtue of the concurrence of the executive and legislative branches of this Government.
If the treaty actually follows the framework of the 1974 statements-and we understand that it does, and it has been -stated that it does-then the proposed treaty in effect constitutes a repeal of the entire Canal Zone Code. It constitutes a repeal of all the legislation which Congress has ever passed for the Canal Zone. It constitutes an Executive act overriding ConLrress in a field which the Constitution specifically not only gives t6 power to Congress, but in which Congress has already acted.
If in fact it could be shown that the President had concurrent power by treaty to dispose of properties or territories of the United States, and we assume this, as I said, as a matter of argument, then you come don't' the fact that such power is absolutely curtailed by the courts whenever Congress has already acted in a field in which it has such concurrent power. In this field, 1'k has acted.






20

I will refer only to the citation rather than give it here-to a treaty provision with the Republic of Panama. I believe this is the 1936 language of the proposed treaty, which the State Department is bringing forward as being an example of their right to dispose of property to Panama-.
This is the language of the treaty:
When the authority of the Congress of the United States shall have been obtained therefor, the Government of the Unifted States w-Aill transfer to the Republic of Panama* *
In 1955-by the way, I may say that Congress did authorize that transfer passing an act on May 3, 194:3. The citation is in the statemnent.
Again, one of these peripheral matters came up in 1955. In the words of the treaty as passed at that time: The United States of America agrees that, subject to the enactment of legislation by the Congress, there shall be conveyed to the Republic of Panama.**
I point out that in every case we know of, and in every case we have been able to find, the State Department has in fact requested the authorization of Congress to whatever proposal it had. I do not' mean treaty approval on a moral commitment basis by the Senate.
With regard to that 1955' treaty part of whose words I have just read, Congress did in fact pass legislation which authorized that disposition of property. That is an act which was placed into effect'on August 3, 1957.
In 1973 there were World War II airfields outside the Canal Zone proper, I believe, in Panama, which had been taken over for the defense of the Canal. The idea was to return these to Panama.
Originally, as I understand it, treaties were proposed with Panama for this purpose. In 1973 President Nixon made a public announcement that he would propose returning them lby way of a bill passed through Congress. This is reported in 70 Department of State Bulletin 456. Actually, President Nixon never presented that to the Congressnieither the bill nor the treaties. It was never done. The reason for it I (d0 not know.
I point out possibly an unpleasant matter, and that is that Congress itself is limited in this regard. The Constitution provides, of course, that Congress may dispose of territories.
There are times when Congress would just as soon avoid, in small matters the necessity for going through the entire legislative process. On two occasions whlich we have been able to find, the Congress has attempted to dispose of property by joint resolution. In both cases it has been held that they could not do so.
If I may, I should like to read to you at the present time from the hearings before the Committee on Foreign Affairs of the House of Representatives, the citation for which is in the statement in the record.
This is rather remarkable. The person who made the statement involved is Mr. Green LHaekworth, certainly one of the greatest. and most notedI legal advisors which the State Department hias had. He is the author of many texts on international Law. T believe hie is regarded as one of the greatest authorities in this field that the State Department has, had the good fortune to employ.






21

He said:
The fact that our property rights in Panama acquired by the treaty process does :not in the slightest degree derogate from the authority of Congress to dispose of them. Its authority is the same whether the property was acquired by treaty, gift, purchase, or otherwise.
'There are innumerable instances in which property acquired, by the United States by treaty or convention, or other international agreement, has been disposed of -by the Congress, or the Congress has authorized the Executive to dispose of it. I have in mind the disposition of public lands acquired lby -the United States by treaties, such as those acquired from France in 1803, commonly referred to as the Louisiana Purchase, the territory acquired from Spain under the treaty of 1819, the Floridas and the territory acquired from Mexico under the Treaty of Guadalupe- H idalgo, in 1848 andl the Gadsden Treaty of 1853.
Now, in addition to Mr. Hackworth I point to the fact that the then Attorney General, whom hie consulted in this matter, was later Mr. Justice Harlan F. Stone, certainly one of the most revered of our Supreme Court Justices.
Mr. Justice stated:
The Constitution (art. 4, section 3, clause 2) gives to Congress the power "to dispose of ** property belonging to the United States," and 'Mr. JTustice Thompson sitting in Circuit, in U.S. v. Nicoll-an early case concerned with the disposition of personal property said: "No public property, therefore, be disposed of without the authority of law, either by an express act of Congress for that purpose, or lby, giving the authority to some department of the Government or subordinate agent."
If follows, then, that property once acquired by the Government may not be sold, or title otherwise disposed of except under the authority of Congress, and in the manner provided by law, and this prohibition extends to any attempt to alienate a part of the property or in general in any manner to limit or restrict the full and exclusive ownership of the United States therein.
The matter came before the Supreme Court in 1947. It came to precisely the same conclusions, and I have cited the case in the statement-that is Un dted Staes~ v. California.
Have these principles about which I have been speaking been taken before the courts and. ruled on? The answer is yes. They have been taken before the courts, and no; they have not been ruled on.
Two actions have been brought to challenge the claimed authority of the Executive to dispose of the Canal Zone by treaty without first seeking prior authorizing legislation from the Congress. The plaintiffs in both cases were William R. Drummond, a citizen and resident of the Canal Zone, employed by the United States there, and I believe a union official of Canal Zone Federal employees. His position is essentially the same as some 35,000 citizens living and employed in that area. The other plaintiffs were Senators Jesse A. Helms, James A. M.NcClure, and Strom Thurmond and Representatives Daniel J. Flood, La-wrence P. McDonald, and M. Gene Snyder.
I would like to point out that in both cases there would have been many more plaintiffs from both the Senate and the House of Representatives in these cases had it~ not been simply impractical procedurally to have more than was necessary to make the point.
Senator SCOTT. Mr. Chairman, if I might~ impose, as I notice the schedu le we have another witness at 8 :30 and it is-now 9 :00. I wonder if we could-retaining the courtesy to our present 'witness-request that hie might summarize so that we do not get too far behind in our schedule.





00

Senator ALLEN. I think it would probably be well, Mr. Leonard, if we put your statement in the record and then allow us to ask a couple of questions. Your statement will be in the, record in full.
Mr. LEONARD. Since my statement is in the record I will forego further reading from it and offer myself to answer any questions the Senators may have.
Senator ALLEN. Mr. Leonard, it would be preferable, I. assume, for the Congress to authorize the executive department to enter into these negotiations. However, do you feel that the negotiations which have, taken place are illegal, or do you feel that if an agreement is reached subject to the approval of Congress that that would satisfy the deficiency of prior authorization?
Mr. LEONARD. I assume that when you say "the approval of Congress," you mean a subsequent ratification?
Senator ALLEN. Yes.
Mr. LEONARD. The answer, Mr. Chairman, in my opinion, is that it is totally illegal and no subsequent ratification could approve it. The reason I -say that is that we have to go back to the phrase "foreign affairs." Is the disposition of property of the'United States a proper subject of foreign affairs?
If it is, it is a proper subject of treaty negotiation. It would be improper for a treaty to be proposed subject to subsequent congressional ratification. There are, however, sufficient examples of this having happened in sinaller matters. I am sure it is an established, procedure.
The question is, very interestingly here, whether disposing of property of the United States is a proper subject of the treaty power. I say it is not.
Senator ALLE N. If the treaty is entered into and it has a stipulation, as the 1942 and 1955 treaty had that on approval of Congress this disposition would take place, would that satisfy the requirement?
Mr. LEONARD. As of the time of the approval of Congress, I think so without question.
Senator ALLEN. Anything prior to the approval, though, would be unauthorized?
Mr. LEONARD. Prior to flie approval it would not, in my opinion, be a treaty, whatever it was called.
Senator ALLEN. Action by Congress would ive life to an unauthorized procedure, is that correct? 91
Mr. LEONARD. That is quite true. It has many times in the past. As I say, there are a number of instances in which a small matter of a few acres here and here-for example, certain Indian lands an& others-the Executive has simply acted and later gone to Congress for aut-liorization-retrocative authorization, and has received it.
You will notice that in both the 1936 and 1955 proposals, theywere made subject to congressional enactment. Congress did in fact approve them.
Senator ATLEN. Supposing that a proposed treaty Iis entered into That would take. approval by a two-thirds vote of the, Senate. In addition to that it would take a statute enacted by the Congress and approved by the President to result Iin the transfer of property. Is that correct?
Mr. LEONARD. No; I believe not, Mr. Chairman.






23

Senator ALLEN. What is your judgment of what is correct?
Mr. LEONARD. The treaty proposal to the Senate, if this is not a proper subject for treaty, is in fact void and the action of the Senate on it would be equally void.
I hope I make myself clear here, because when this question-and presumably sooner or later the question will come before the courtsthe question is whether it is, in fact, a treaty. If it is not a treaty, regardless of what it may be called, it is void.
Senator ALLEN. In other words, you feel that the treaty could not purport to transfer property even though that purported transfer was dependent upon action by the Congress. Is that correct?
Mr. LEONARD. If the property were small enough that it made no practical difference, I do not believe the courts would interest themselves in it.
In -this particular case we are talking about an entirely different -type of matter. In this particular case I believe that no such power exists; that the courts would sup-port the concept that no such circumstance exists that takes it out of the treaty power. Therefore, a piece of paper called a treaty, whether or not approved by two-thirds of the Senate is just as void as if it were done by myself.
Senator ALLEN. What if it were approved by both Houses of Congress by statute?
Mr. LEONARD. I think that at that point it would be read as being retroactive legislation. I think that as a 'practical matter the courts would rule it valid simply on the ground that Congress does possess the power to enact a bill having these provisions, and -that in effect is what it has done.
Senator ALLEN. In other words, it would be a belated action taking place -at the wrong time.
Mr. LEONARD. There have been some occasions on which the courts refused to say that Congress was belated.
Senior ALLEN. Let's look at the other side of the coin.
Suppose the Congress initiated the transfer and passed a statute providing for ,the transfer of this property. That would take a majority vote in both Houses, I assume.
Mr. LEONARD. That is correct.
Senator ALLEN. That having been done, what phases would be covered by t collateral treaty?
Mr. LEONARD. Well, I presume that Congress would designate some agent, as it did in the Spooner Act-preferably the Executive--who can act by an agreement which he calls a treaty or convention, because it makes no difference what it is called, really. Congress can authorize someone, whether it is the Executive or someone else, to conclude an agreement with the Republic of Panama the provisions of which are thus.
Senator ALLEN. In Other words, spell out the disposition of property in the treaty provisions and then submit it back to Congress or to the Senate; ,is that correct?
Mr. LEONARD. Where you cross the line of improper delegation of legislative powers to the Executive has been a question which lawyers have discussed for many years without coming to a clear result.








The general terms would certainly have to be oughed out by Congress. How far it would have to go into detail, 'however, is uncertain. I believe there is a free area of delegation of aut.hority within general policies or principles.
Senator ALLEN. It is your content ion that the treaty should not make any provisions for the disposition of property inasmuch as the disposion of property is not within the treaty making power of the Executive.
Mr. LEONARD. I do not know what else the treaty contains except the delivery of the Zone and jurisdiction to the Republic of Panama. There may be many subjects in it which are properly treaty subjects. It may therefore be properly called a treaty. It may deal with the actual relationships between Panama and the United States. In those areas no one could possibly criticize them. This is the authority of the Executive.
Senator ALLEN. Even though these provisions are in a treaty, you would feel that if both Houses of Congress approved this disposition of property in the treaty that such subsequent ratification by Congress would ma-ke the treaty binding and in full force and effect insofar as it purported to effect a disposal of property.
Mr. LEONARD. Well, I still say that it would not be a treaty, but the practical difference would not be of any concern to the courts.
Senator ALLEN. It would be an instrument, though, that in your judgment would accomplish the aims set out by whatever name it was called.
Mr. LEONARD. Quite correct. I think that is the way it would be viewed.
Senator ALLEN. The Constitution, of course, requires a two-thirds vote in the Senate for approval of a treaty.
Mr. LEONARD. This is correct..
Senator ALLEN. Would we have, as you would visualize it, a vote in the Senate requiring a two-thirds vote for giving this advice and consent in the treaty, and then in addition to that a statute requiring a majority vote in the House and a majority vote in the Senate?
Mr. LEONAR). Well, there is a certain amount of duplication involved in that, Mr. Chairman. The power of the Congress is essentially here only over the disposition of the Canal Zone, the nature of the jurisdiction in the. Canal Zone, and the laws applicable to the citizens.
If you had a rather hybrid instrument which contained certain matters which are properly under the treaty power combined with matters which are properly in Congress' authorization, then I would say that a two-thirds Senate vote followed by legislation covering the same subject and approving this, both of which were passed, would in the assemblage be quite valid.
Senator ALLEN. Therefore, even though the Constitution gives the exclusive power, you feel, to the Congress to dispose of property of the United States, the Executive can make such an agreement, and on approval of Congress put those provisions into effect even though they have no place in a treaty. n
Mr. LEONARD. Mr. Chairman, that is exactly the point I am trying to make. Apparently I am making it very poorly.
If the Executive makes a treaty on a subject which is not within the treaty power, it is void from the beginning. What steps are taken thereafter is of no concern. It is a void document.




. ................2.


if, on the other hand, you have a vote. of the whole Congress on a subject which is not within the treaty power but is within the congression-al power, you raise no question because the, combination of Executive and congressional power at that point makes, the intended action valid.
In other words, it can be justified under either one or the other. The courts, basically, will pay no attention to it. However, if you came forward solely with that piece of paper, even-though you got Senate ratific-ation and it was not submitted to the Congress, it might well be that the entire transaction, however valid appearing on its face, would be void.
Senator ALLEN. Well, I still understand you to say that the action by the Congress would breathe life into this void documnent.
Mr. LEONARD. Mr. Chairman, as a purely practical matter it is true. Once Congress has agreed by bill to whatever is contained in this document for practical purposes, if it is either within executive or congressional power that is sufficient.
Senator ALLEN. I would feel that this treaty that you would regard as being void would be submitted to the Senate for its advice and consent, requiring a two-thirds vote. Then I would think that there would properly be a statute, a separate instrument, passed by both Houses of the Congress and approved by the President, in which the Congress agreed to the disposition of the property.
I think it would be entirely imlpiroper, actually, to submit a document to the Senate requiring a two-thirds vote, and then sending it over to the House and say that that just requires a majority vote. Actually, the procedure would be to proceed to ratify the treaty in the Senate and on that ratification, to proceed with a statute. That would probably be the way it would be handled, I would think.
Mr. LEONARD. Mr. Chairmn it is an excellent thing to think about. I think it would eliminate most of the 1)roblems. I am only concerned with the question of where the House of Representatives refuses to accede to this.
Senator ALLEN. Yes; that, would create quite an impasse if the Senate approves a treaty and the House fails to approve the statute or the bill providing for the disposit ion of property. Where would we be then?
PANAMANIAN POSSESSION OF CATNAL ZONE
Mr. LEONARD. YOU would have a void treaty on your hands, but you would have a Canal Zone which was full of Panamanian soldiers.
Senator ALLEN. Do you think that the Executive would put Panama in control of the canal and the Canal Zone?
Mr. LEONARD. At least as of the day the treaty is approved by the Senate.
Senator ALLEN. You (d0 not feel that they would wait for congressional approval of the disposition of the property?
Mr. LEONARD. You have representatives of the State Department coming before you, Mr. Chairman. I suggest that that question be asked of them.
Senator ALLEN. Well, that creates a considerable prospective problem. does it not?
Mr. LEO-NA.RD. On behalf of the Senators who have maintained the actions in the past we have requested the courts to ha,,ve the defendants maintain the status quo in the Panama Canal Until this question could be settled.






26

In every case the Department of Justice, acting for the executive branch of Government has come -forward and objected on the ground that unless they are free to let Panamanians into the Canal Zone without opposition it will considerably upset their so-called negotiations.
I had originally assumed that the defendants in this case, which would be the President, the Secretary of State, and the principal Ambassador-at-large involved in this, would be just as anxious as the Congress to get this question determined. After all, it is a matter' which will go forward for many years to come. It affects the balance of powers between the three branches of Government directly.
Once established by this particular precedent it will go on for many -years into the history of this country.
Senator ALLEN. What action can Congress take to file litigation to stay the negotiations? What action can Congress take from a, practical point of view to prevent the ongoing of the negotiations looking to a treaty?
Mr. LEo.ARI). There is no reason why any action should -be taken to prevent the Executive going forward with his negotiations.
As far as I can see at the present time, the Executive through the Department of State is convincing the Panamanians that the authority to give the Canal Zone to them exists in the executive depart.ment. As Of this morning's paper I understand that for being willing to accept it, Panama is now demanding $5 billion. That may, of course, be just hearsay rumor on the part of the newspaper; I don't know.
However, on the purely practical side, which your q question is directed to, Mr. Chairman, the moment of -truth comes when a proposal is in fact transmitted to the country.
Senator ALLEN. Yes, you fear that if the Senate approves.the treaty, which you feel would be void, they would put Panamanians into possession of the canal. That would seem to be a very present danger that there should be some method of circumventing in advance. Mr. Chairman I think we have to recognize
Mr. LEoNARD. Well, I
the fact that President Carter, to whom I have no knowledge of how this matter has been presented or whether he even knows about it, seriously, is obligated to enforce the laws. He is obligated to defend the Canal Zone until such time as a proper documents proper action--of this Government is taken to change that status.
I would not deny for a moment, I would not even question, that President Carter has every intention of retaining the Canal Zone in the possession of the United States until the day that either the Senate acts or the Congress passes a bill.
I believe that at this point at least his Secretary of State, iis of the opinion that a treaty is sufficient.

SELF-EXECUTING TREATY
Senator ALLEN. Does he feel that would be a self-executing treaty?
Mr. LEONARD.Well, to be perfectly frank, Mr. Chairman, this is a phrase which the State Department often uses. A self-executing treaty is one which does not require what is known as implementing legislation by the Congress. 9






CY7
IQ I

A treaty actually is a law. It stands on a parallel with any other form of law. If the treaty is on a proper subject, a matter of foreign affairs, it has status in this country and before the courts exactly as any legislation of the Congress.
To call a treaty self-executing or not self-executing, therefore, is like saying whether an act of Congress is self-executing or not selfexecuting. The answer is that it is the law. It does not have to be selfexecuting or not self-executing. It takes effect. It states what the principle of law is and it will be enforced.
Senator ALLEN. Thank you very much, Mr. Leonard.
Senator Scott? .
Senator SCOTT. Mr. Chairman, I appreciate the research and the work that has gone into the testimony that Mr..Leonard has given us. It has been very enlightening to me personally., and I am sure to the committee.
I just want to pose one question and then defer to my colleague from Utah, Mr. Hatch.
Would you see the need for both a treaty and/or an article IV law by oth Houses of Congress that if, in fact, the United States acquired various rights by virtue of the 1903 treaty and then purchased the feesimple title from private owners, thereby acquiring the rights under the treaty, and also acquiring proprietary rights entitled -tinder feesimple to land that was formerly private property?
Mr. LEONARD. No necessity for the treaty whatsoever. In fact, I do not believe it is a proper subject for a treaty, as I have already testified.
Senator SCOTT. Thank you.
Mr. Chairman, I defer to Senator Hatch.
Senator ALLEN. Senator Hatch?
Senator HATCH. Mr. Leonard, as you have indicated in your testimony the precedents are well established that with regard to the disposition of U.S. property and territories, that the. Congress customarily would have to authorize the President to enter into treaty negotiations with the foreign government before any transfers should be undertaken.
This is very clear cut and very well settled by the law. In this particular case the treaty negotiators have gone ahead without this authority. If it is clear cut and this is the law-and I have reviewed much of what you have said-then why, in your review, hasn't the President simply taken steps to have a bill introduced in Congress to give him the authority to enter into such negotiations? Mr. LEONARD. I can only state a personal opinion. Why the President does a particular thing is not within my competence, and I could not even offer an opinion on it. I can state what the actual effect is, and whether it is intended or not I have to leave to the committee.
The effect of the present procedure takes advantage of what amounts to a disagreement, to some extent, in position between the House of Representatives and the Senate of the United States.
It is possible-and I say possible, because nobody can foretell pre(1isely-that such a bill would not be passed by the House of Representatives.
Senator HATCH. That is very probable, as a matter of fact.
M r. LEONARD. Well, let me put it this way. Theprocedure which has been adopted in this particular case, which is being adopted and which is being justified for the first time, as I understand it, by the State







Department in its claim of concurrent power would bypass the House
of Representatives. It would be, in fact, well designed to do that. I do not say that it is intended for that purpose.
Senator HATCii. Do you believe that all that will be requested of the Congress will be ratification by the Senate on the theory that this is just a routine treaty to be ratified by the Senate?
Mr. LEONARD. That is correct.
Senator HATCH. Do you believe that that is going to be made by the executive branch?
Mr. LEONARD. I 'believe that is the expressed intent of the executive branch-I do not believe there will be any argument. I do believe that they will sooner or later submit to the Senate a proposal. They will simply state that it is a treaty. They assume that the United States has already made a moral commitment to do whatever it is that the treaty provides.
The Senate will send it to its Committee on Foreign Relations as opposed to sending it to the committees which have jurisdiction over Panama Canal matters. It will bypass, of course, the House of Representatives. It will bypass the conference committees.
Senator HATCH. Ignoring the constitutional provisions?
Mr. LEONARD. Well, not necessarily ignore. I am assuming for the purpose of this answer, as you did in your question, that t'he State Department does in fact have concurrent power to give away U.S. property.
Senator HATCH. You assume that for the purpose of answering, but you do not believe that is so.
Mr. LEONARD. No; I do not believe it is so.
The thing is, as a practical matter it does not make any difference. If a proposal comes up here by treaty on a subject which is not a proper matter of a treaty-let us say, to increase the income tax of all Americans and pay the excess to France-it might be voided at a later date. I am referring to this question of delivering the Canal Zone. The thing is, once it is delivered it does not matter whether the treaty is void or not void.
The practical fact is that the zone will have 'been delivered to a power which is no longer concerned with what our courts may say.
Senator HATCH. You are saying that even though it is clear cut that the Congress has to approve the disposal of U.S. territory that in this particular case the executive branch has chosen to ignore that provision for whatever reason, valid or invalid, and there is a possibility that the reason for this is because of a belief that perhaps the House of Representatives will not go along with this disposition. The State Department is going ahead with a treaty.that, in effect, if agreed to will ultimately result, as a practical matter, in the takeover of sovereign American territory that is presently governed by the United States, pursuant to a valid treaty or to a valid existing state of law? Mr. LEONARD. It is pursuant to a set of laws enacted by the Congress.
Senator HATCh. It is pursuant to congressional enactment and congressional authority?
Mr. LEONARD. Correct.
Senator HATCH. You are saying that if that is so, regardless of what the Constitution says, regardless of what the law says, and regardless of whether the Congress has the right, in practice, State Iepartment apparently intends to deliver the canal in contravention of the Con-








stitution and the laws of Congress that have been upheld by the Supreme Court of the United States of America and are still in effect?
Mr. LEON-ARD. That is not only correct, but it is, I think, the practical effect as of the present time and quite possibly-as I think I have mentioned before--the indicator of the future.
I believe that in this particular case the Senate becomes a useful tool of the Executive for the promotion of executive power.
Senator HATCH. The Senate ought to insist upon this right of Congress. I agree with Senator Allen, on this issue of the role of Congress regarding this treaty. I think that if the Senate -ratifies this treaty it would also be required to enact authorizing legislation to implement the treaty and send this legislation -to the House of Representatives for approval. Without this legislation, even if the Senate ratifies the treaty, the treaty would not be valid.
Mr. LEONARD. That is precisely what, I have tried to explain.
Senator HATCH. The fact of the matter is that many people have not thought about the question of the President's authority to dispose of American territory by treaty alone.
Mr. LEONARD. Senator, that is a question which I am sorry to say is political and not -legal.
Senator HATCH. I understand that. I am saying that that is what seems to concern most Americans, and you have brought to this comm-ittee's attention an important constitutional issue that many Americans are not aware of at this time, involving a, very important piece of American ,territory-which is presently constituted as American -territory.
Mr. LEONARD. Well, I can -only say this, Senator: I regard it as being an exceedingly clever move. If I were asked for a. way for the Executive to act in the field in which the Executive may or may -not have any authority, this would be precisely the way I would counsel the Executive to do it.
Senator HATCH. Well, I think you have done us all a great service. I believe that most people in America realize the true constitutional implications of this treaty as you, have enunciated here today.
The impact of those implications and the ultimate future effect of those implications-not only in this hemisphere, but with regard to any American property anywhere in the world, including property presently within the confines of the territorial limits of the United States o'f America-is a matter of -grave importance to the people of this country.
Mir. LEONARD. Senator Hatch, if you could bring that to the attention of the other Senators and get them to acknowledge that this is, in fact, a turning point in history I would be most grateful.
Senator HATCH. You have indicated by that -remark that you believe that even some Members of the Senate may not be aware of the basic constitutional issue involved in this treaty.

INCREASE OF EXECUTIVE POWER
Mir. LEONARD. I do not believe that the Senate realizes, that if it approves a treaty or a piece, of paper called a treaty which gives away part of the LUnited States, that they will realize'that they have increased the executive power in this country-the powers of the executive branch-to an enormous degree, as against themselves.

94-468 0 77 3






30

Senator HATCH. What you seem to be saying-permit me to at least elaborate what I believe you are saying, and you can -say whether I have gone to far or not-is that this treat-y is a usurpation by the executive branch of the powers of Congress, in violation of the separation of powers,.in the absence of authorizing legislation by both houses of Congress.
Mr. LEONARD. That is very correctly stated. May I add, it has already been exercised.
Senator HATCH. All the precedents of the past, to the best of your researchMr. LEONARD. I am talking about the legislation which the Congress has previously passed. Keep in mind that the ExecutiveSenator HATCH. Previous legislation regarding Panama?
Mr. LEONARD. Precisely. The Executive is sworn to uphold existing legislation. That is his principal function.
As I understand it, the proposal that is to be made to the Senate in this particular case will virtually repeal all existing legislation for the Canal Zone which Congress has passed.
Senator HATCH. Irrespective of emotional arguments here and whether or not we can objectively determine whether it would be better to give this territory back or retain itMr. LEONARD. It is not a case of giving it back. We paid Colombia $25 million.
Senator HATCH. Irrespective of those arguments, the more important argument you have been bringing out, in your opinion, is the fact that the President is cleverly usurping the powers of Congress in such a way as to undermine the balance created by the separation of power concept of the Constitution?
Mr. LEONARD. This is correct.,
Senator HATCH. In a way that will ultimately divest the United States practically, and maybe legally, of the governance of the recognized territories established by the Congress of the United States?
Mr. LEONARD. That is correct.
Senator HATCH. I think that is a pretty important point and I sure hope that our people in the press and media do something with that point, because if the President or the executive branch, an~d I am not sure the President understands this concept-if they really want to do what is right, what they should do is approach Congress to request the introduction of a bill authorizing them to go down and enter into a
treaty.
Mr. LEONARD. I agree, but then I think that the evaluation in the executive department is that they could not get such a bill through
Congress.
Senator HATCH. I agree with you. I think that the reason they have not done so is not because they do not understand our constitutional procedures in the State Department. They have been pointed out to them. Maybe the President does not understand, but the State Department does.
The rea-son why the State Department is bypassing Congress is because it realizes that it cannot get the votes to do it the constitutionally legal and proper way. Therefore,~ it is doing it in an unconstitutional, illegal,, and improper way to accomplish indirectly. in practicality, what it could -not accomplish directly, constitutionally, and legally.






31

Mr. LEONARD. That would be correct.
Senator HA TCH. That is a very strong indictment against the State Department and perhaps even the Executive of the United States of America.
Mr. LEO-NARD. I cannot impute intention to anyone.
Senator HATCH. The fact of the matter is, it is still a pretty strong indictment if these precedents and procedures are known and they nevertheless continue to pursue a treaty without congressional approval.
Mr. LEoNARD. I can never say that the people of the State Department do not believe in their own statement that there is concurrent power.
Senator HATCH. Even if they do they have to admit that the Congress, and not just the Senate, ultimately would have to approve the use of concurrent power. They cannot logically escape that.
Mr. LE-NARD. No; that is not true. Let us assume for the moment that we had a situation in which there was no legislation of any kind by Congress that there were true concurrent powers under the treaty power and under the disposition of territories power. Then one could exercise the treaty power properly. Under the concurrent power one may create a treaty which would be presented only to the Senate.
I cannot argue against that. If in fact the State Department believes it has concurrent power and if there were no legislation this might very well be a proper and valid method of proceeding.
However, the State Department must know-in fact, everyone knows-that there is legislation, that Congress has already acted in this field, and that Congress has placed courts in the zone and has created the office of Marshal of U.S. Attorney and any number of local government officials, and so on.
Senator HATCH. There have beenotxecutive acknowledgements of such legislation and prior precedents.
Mr. LEONARD. This is correct. The Executive concurred in them.
Senator HATCH. Therefore, then, they cannot really validly assert the argument of concurrent jurisdiction.
Mr. LEONAm. They can assert that they have it, but even if they did have concurrent jurisdiction it could not be exercised to repeal an existing enactment of Congress.
Senator HATCH. That is my point-without congressional, and that means both Houses, action.
Mr. LEONARD. Correct.
Senator HATCH. We appreciate your testimony today. I think it has been very lucid and very important.
Senator ALLE.N. Thank you very much, Mr. Leonard. I appreciate your very fine testimony.
I might call the committee's attention to the fact, that in article V of
the 1955 mutual understanding between the United States and Panama it is decided that the United States of America agrees that subject to the enactment of legislation by the Congress that it should be conveyed.
Therefore, certainly we would hope that any treaty that is entered into would have that clause in the treaty.
Senator HATCH. If it does not I think we must raise this vital issue very vigorously within the Congress so that the balance of power as set up by the Founding Fathers is not upset or whittled away by unilateral Executive action.






32

Senator ALLEN. That would certainly be one ground for delaying action or actually defeating the treaty-if it does not -have that provision in it. To pre-vent a turning of the property over to -the Panamanians on approval by the Senate of the treaty, it might be well to hold it in the Senate until such time as this legislation is passed.
In other words, we could make that a conditional precedent to the approval by the Senate of the treaty.
Senator HATCH. Mr. Chairman, what disturbs me after hearing the testimony of Mr. Leonard is the practical effect of the treaty if the administration goes ahead and executes, a treaty that puts Panamanian troops into the zone before both Houses have acted. Our congressional powers will have been eroded in practice if not theory.
[Prepared statement of Mr. Leonard follows:]








33



Before the

Subcommittee on Separation of Powers of the

Senate Committee on the Judiciary




Statement
of
GEORGE S. LEONARD, Esq.



Mr. Chairman and members of the Subcommittee, my name is

4George S. Leonard. My offices are located at 1019 Nineteenth St., N.W. Washington, D.C. I am an attorney before the bar of the Supreme and various other Courts and I am the attorney for certain Senators and members of the House of Representatives who are plaintiffs in actions which have been brought to test whether under the doctrine of the Constitutional separation of powers, the Executive branch may dispose of a territory of the United States by presentation of a treaty proposal to the Senate.

I am familiar with the current status of the proposals

regarding the disposition of the Canal Zone. I appear today to question asa matter of constitutional law whether the Executive branch may enter into negotiations for a treaty which would divest the United States.of its possession of the Zone, without any necessity for prior authorization from the whole-Congress.







34



Question


Does the Executive branch have ConstitutLcnal authority to negotiate for a treaty disposing of the Panama Canal.


Answer


No.




Backgrouind


The Canal Zone was acquired in accordance wi th the tr-s of a 1902 enactment by Congress known as the Spooner Act (P.L. 183, 57th Cong., 1st Sass.).

Under that public law, Congress authorized the President to acquire perpetual control of the necessary lands for the construction and defense of an inter-ocean canal across the Isthmus of Panama or if such control could not be purchased, then to approach Nicaragua for the same purpose. Acting pursuant to the authorization so granted, a convention was negotiated and approved by the then President and Secretary of State between the United States and the Republic of Panama on November 18, 1903 (the Hay-Bunau-Varilla Convention) pursuant to which the'nited States acquired in perpetuity the rights of the newly founded Republic of Panama to the territory now known as the Canal Zone. Since then, the Canal Zone has remained a territory of the United States administered at the direction of the President of the United States in accordance with enabling legislation enacted from time to time thereafter by the Congress.








35



Such legislation by the Congress has directed the form and

substance of the governance of the administration and jurisprudence of the Canal Zone, culminating in a comprehensive revision thereof in Public Law 87-845, 76 A. Stat. 1, 48 U.S.C. If 1301 et se. the Canal Zone Code, which became effective January 2, 1963, and includes in part a Congressional guarantee of civil rights under the law of the United States to all residents of the Canal Zone (I C.Z.C. 31) and the establishmnent, of the necessary courts and a Judiciary f or their enforcement

(3*C.Z.C. 141).

On considering the facts of this acquisition the courts have

unanimously recognized that the Canal Zone has become a territory of the United States and that the title of the United States to the Zone is complete,

"It is hypercritical to contend that the title of the United States is imperfect,
and that the [Canal Zone] does not belong
to this nation, because of the technical
terms used in ordinary conveyances of real
estate."

Wilson v. Shaw
204 U.S. 24, 33, 27 S.Ct. 233, 235 (1907) Accord: Lucas v. Lucas, 232 F. Supp. 466, (D.C.C.Z., 1964); Huasteca Petroleum Co. v. United States, 14 F.2d 495 (E.D.N.Y. 1926).

The first change in this picture came in 1974 when former

Secretary Kissinger issued a joint proclamation with Foreign Minister Tack of Panama which provided in part:

*"The United States and Panama agreed that the Treaty of 1903 should be replaced by a modern
treaty that rejects the concept of perpetuity ."








36



"2. The United States has proposed that Panamanian law and jurisdiction would be
applied in the Canal Zone...

This joint statement of 1974 is conceded by the Department of State to provide-the framework for its present negotiations. Secretary of State Vance has publicized his intention to conclude a, new treaty as soon as practicable. Originally this was to be done by June-of this year. Since, the State Department has revised its prediction, and is reportedly now hoping to complete the new treaty by late summaer.





The Constitutional Power Over
Disposition of Territories


1. The Constitution provides complete Congressional power over the disposition and governance of territories under Art. IV, section 3, clause 2 which reads,

"The Congress shall have Power to dispose of and make all needful Rules and Regulations respecting the Territory or other
Property belonging to the United States."

This power gives Congress the authority to prescribe the times, conditions and mode of any transfer, and the right to designate the persons to whom any transfer will be made, Gibson v. Chouteau, 13'Wall. 92, 99 (1812), Irvine v.,Marshall, 20 How. 558 (1858), Emblen v. Lincoln Land Co., 184 U.S. 660, 664, 22 S.Ct. 523, 525 (1902). Reaffirming this principle the Supreme Court in Sierra Club v. Hickel, 433 F.2d 24, 28 (9 Cir. 1970) aff'd, 405 U.S. 727, 92 S.Ct. 1361 (1972) stated that,"Article IV, Section 3 of the United States
Constitution commits the management and control
of the lands of the United States to Congress.
That Congressional power is unlimited."







37



This power of Congress to dispose of property belonging to the

United States is "exclusive", Griffin v. U.S., 168 F.2d 457 (8 Cir. 1948), United States v. Fitzgerald, 40 U.S. 785, 15 Pet. 407, 421 (1841); Osborne v. United States, 145 F.2d 892 (9 Cir. 1944); Alabama v. Texas, 347 U.S. 272, 74 S.Ct. 481 (1954).

Therefore, any authority of the Executive to dispose of property of the United States must be first derived from authority given by an Act of Congress, Tugade v. Hoy, 265 F.2d 63 (9 Cir. 1959)(the Philippines).


2. The State Department does not deny the Congressional right in this matter but has asserted that under the Constitutional treaty power (Art. II, sec. 2), the President holds concurrent authority to dispose of United States property.

So far as my research shows, no court or even commentator has ever supported this concurrent power theory. Actually there have been many rulings by the Courts that such an authority does not exist, and that the President's treaty power is limited wherever primary authority has been granted to other branches of government by the Constitution. DeGeofroy v. Riggs, 133 U.S. 258,.267, 10 S.Ct. 295,. 297 (1890) Wisconsin R. Co. v. Price County, 133 U.S. 496, 507 (1890); Peirce v. State of New Hampshire, 13 N.H. 536, aff'd 46 U.S. 504, 5 How. 504, 12 L.Ed. 256 (1847), Zweibon v. Mitchell, 516 F.2d 594 (1975), Consumers Union of U.S. v. Rogers, 352 F. Supp. 1319 (D.D.C. 1973); Schactman v. Dulles, 255 F.2d 938, 945 (U.S. App. D.C. 1955, cone. op. of Edgerton, J); Farmer v. Rountree, 149 F. Supp. 327 (M.D. Tenn. 1956) aff'd 252 F.2d 490 cert. den. 337 U.S. 906.







00



3. And even if this new claim of concurrent presidential

treaty power to dispose of territory were valid, it could not be

used to contravene existing legislation which the President ha's

sworn to uphold and enforce. An example of true concurrent powers

exists in the field of foreign commerce. But the exercise of-such

power by the President through a treaty has been held to be circumscribed

by prior legislation dealing with the subject.

"All parties recognize that if in fact Congress has preempted the relevant field
of foreign trade and commerce, then the
President lacks authority to act In a
manner inconsistent with the requirements
of the preemption legislation.



The President clearly has no authority to give binding assurances that a particular
course of conduct, even if encouraged by
his representatives, does not violate the
Sherman Act or other related congressional
enactments any more than he can grant
immunity under such laws."

Consumers Union of U.S., Inc. v. Rogers 352 F. Supp. 1319 (D.D.C. 1973) at pp. 1322-1323

"Support for judicial deference to executive actions in the area of foreign
affairs is found in United States v. CurtissWright Export Corp., 299 U.S. 304 (1936) and
Chicago & Southern Air Lines v. Waterman
Steamship Corp., 333 U.S. 103 (1 8). Without
deprecating, the support given by dicta in these opinions to inherent presidential authority in foreign affairs, wo note that the presidential
authority was there exercised pursuant to statute
i.e., by the will of Congress. Justice Jackson,
concurring in the Steel Seizure Case, pointed out:








39



!When the President takes measures incompatible with the expressed or implied will of Congress, his power is at its lowest ebb, for then he can rely only upon his own constitutional powers minus any constituitonal powers of Congress over the matter. Courts can sustain exclusive presidential control in such a case only by disabling Congress from acting upon the subject."' United States v. American Telephone and Telegraph Company, et al. and John E. Moss, Member, United States House of RepresentatIves, 551 F.2d 384 ,(U.S. App. D.C. Dec. 1976) Such legislation not only exists with respect to the Canal Zone,

It was passed with the concurrence of the Senate and the President. Reference has been made for example to the Canal Zone Code. As a result, every prior executive proposal to turn over portions of the Canal Zone to the Republic of Panama have been made only in accordance with Congressional direction, e.g. Stat. (pt. 2) 1289, EAS No. 452.

"When the authority of the Congress of the
United States shall have been-obtained
therefor, the Government of the United States will transfer to the Republic of Panama," etc.

Congress did so authorize the transfer, Act of May 3, 1943, ch. 92, 57 Stat. 74.

Again in a 1955 treaty, it was provided

"The United States of America agrees that, subject to the enactment of legislation by
the Congress, there shall be conveyed to the
Republic of Panama ..." etc.

Congress did in fact pass such legislation, Act of Aug. 3, 1957, Pub. L.. No. 85-223, 71 Stat. 509.

-In 1973 President Nixon announced that he would propose a bill to Congress in order to dispose of two Zone airfields to Panama, 70 Dep't State Bull. 456 (1974) but never did so, nor were treaties even submitted for the purpose.







40



4. The method of disposition cannot be altered. Even Congress

itself has been stopped-when it sought to'disposei of property of the

United States without prior enactment of a bill. For example, Mr. Green

Hackworth, then the State Department Legal Advisor, in 1943 denied that

Congress itself had any right to dispose of Zone property by Joint

Resolution. In doing so he testified as to the state of the law on the

point.

"The fact that our property rights in Panama were acquired by the treaty process does not
in the slightest degree derogate from the
authority of Congress to dispose of them. Its authority is the same whether the property was
acquired by treaty, gift, purchase, or otherwise..

There are innumerable instances in which property acquired by the United States by treaty or convention, or other-international agreement,
has been disposed of by the Congress, or the Congress
has authorized the Executive to dispose of it. I
have in mind the disposition of public lands
acquired by the United States by treaties,such as
those acquired from France in 1803, commonly
referred to as the Louisiana Purchase, the territory
acquired from Spain under the treaty of 1819,'the
Floridas and the territory acquired from Mexico'
under the Treaty of Guadalupe Hidalgo in.1848 and
the Gadsden Treaty of 1853."

For his authority, Mr. Hackworth cited the opinion of the then

Attorney General, later Mr. Justice Harlan F. Stone,

"The Constitution (art. 4, sec. 3, cl.2) gives to Congress the power 'to dispose of ... property
belonging to the United States,' and Mr. Justice
Thompson sitting in Circuit, in U.S. v. Nicoll (27
Fed. Cas. 15879 pp. 149-150) -- an early case'
concerned with the disposition of personal
property -- said

'No public property can, therefore, be disposed of without the authority of law, either by an express act of Congress for that purpose, or by giving the authority to some department of the Government or subordinate agent. See also Wisconsin R. Co. v. Price County (133 U.S. 496, 507)'








41



It follows, then, that property once acquired by the Government may not be sold, or title
otherwise disposed of except under the authority
of Congress, and in the manner provided by law, and this prohibition extends to any attempt to
alienate a part of the property or in general
in any manner to limit or restrict the full and
exclusive ownership of the United States therein.
<34 Op. Att. Gen. 320, 322)."

Hearing Before The Committee on Foreign Affairs, House of Representatives on H.J. Res. 14 at pages 9 11 (March 16, 1943) To the same effect, four years later, see U.S. v. State of California, 332 U.S. 190 67 S.Ct. 1658 (1947).



III

Litigation


Two actions have been brought to challenge the claimed

authority of the Executive to dispose of the Canal Zone by treaty without first seeking prior authorizing legislation from the Congress. The plaintiffs in both cases were William R. Drummond, a citizen and resident of the Canal Zone, Senators Jesse A. Helms, James A. McClure, and Strom Thurmond, and Representatives Daniel J. Flood, Lawrence P. McDonald, and M. Gene Snyder. Named as defendants in both cases were the Secretary of State, the chief U.S. negotiator in the Canal Zone, and the President.

.-One action was filed inthe United States District Court for the Canal Zone and was dismissed on the ground that the Court could not 'Secure personal jurisdiction over the defendants. This question is now pending








42



on review before the United States Court of Appeals for the Fifth Circuit. The second action was brought in the United States District Court in the District of Columbia. Both that Court and the Court of Appeals in the District refused to consider the merits on the ground that the issue was premature, that the lack of any specific treaty proposal left the issue too indefinite to be decided at that time. The Supreme Court declined to review the case last month. The result of this efforthassimply been that the underlying question has been presented to five courts without any consideration of the merits on the underlying problem of the separation of Constitutional powers.

The problem of course is the danger of a fait accompli, that

the President through his control powers over the Canal Zone could permit it to be occupied by Panamanian forces without resistance before the constitutionality of any treaty can be tested. In fact Ambassador Bunker was once quoted by the State Department as suggesting that this be done even without waiting for a treaty.



V

Summary and Conclusion


The political stability of the Untied States has since the inception of the nation been based upon the Constitutional principle of the separation of powers between the three great branches of government. Both Houses of the Congress should be jealous to protect the powers granted to them by the Constitution from being usurped by a coordinate branch of government.








43



Here, the Executive, with the hoped-for assistance of the

Senate, is proposing to usurp the authority of the House of Representatives on the disposition of property of the United States. If this can be done in the case of the Canal Zone, it can be done in the cases of Guantanamo, Guam, 9.r Samoa. If the treaty power may override the legislation of Congress, then by a treaty with Mexico the Executive could presumably give back Texas, or grant Florida back to Spain.

If the Canal Zone is permitted to be occupied by Panamanian forces before the legal questions on the separation of powers can be determined by our Courts, there is no possibility short of war of ousting those forces if the proposed treaty should thereafter be declared void.






44

Senator ALLEN. Governor Parfitt is our next witness.
Governor Parfitt, we certainly thank you for the fine effort you have made in corning to appear before the subcommittee.
I have read your very excellent statement. It gives more background information about the Canal Zone and the Panama Canal and the Governor of Panama than we have obtained from any other source.
The questioning of the first witness has brought up so many facets of the problem that we have fallen far behind in our time f rame. I am hopeful, inasmuch as your statement in the main touches upon f acts and background rather- than expressions of opinion and views and policies, that you night be wligto touch on some of the highlights of your statement and then give us an opportunity to ask you some questions, with the understanding of course that your full statement will appear i n the record.
Would you oblige the committee to that extent, please?
Mr. PARFITT. Yes, sir. I have abbreviated my 'statement for this purpose. If 15 minutes would be appropriate, I will try to condense it to that time frame.
Senator ALLEN. Without objection, your statement will be included in the record in full.

TESTIMONY OF HON. HAROLD R. PARFITT, GOVERNOR OF THE PANAMA CANAL ZONE
Mr. PARFITT. Mr. Chairman and members of the subcommittee, I am Harold R. Parfitt, Governor of the Canal Zone and the President of the Panama Canal Company.
My statement addresses the questions in your letter of invitation to attend these hearings. With your permission, as just stated, I would like to cover the highlights now and commit the full text for the record.
Senator ALLE N. Very fine. We applreciate that.
Senator HATCHi. Before you begin, may I make one comment, Mr. Chairman? I have made a brief study of the constitutional issues involved here, and now have the benefit of Mr. Leonard's expertise. Mr. Leonard was previously with the Justice Department. I would like to see a refutation to his brief, because I think he is basically correct. We should encourage the testimony of witnesses or experts who might be inclined to refute what he had to say. In fact, I would delight in the prospect of doing that.
Senator ALLEN. I thank the Senator. There are several witnesses scheduled to testify who do have opposing views to those expressed by Mr. Leonard.
Senator HATCH. I thank the Chairman.
Senator ALLEN. The subcommittee wants, obviously, to hear all sides if there are more than two sides to this issue.
Governor Parfitt, please proceed.
Governor PARFITT. Mr. Chairman, as a preface I should note that matters relating to the defense of the Panama Canal or the conduct, status, or substance of negotiations for a new treaty relationship with the Republic of Panama. a)re outside my area of responsibility.
I would like to give you very briefly some background information about the Canal Zone and the operation of the Panama Canal.






45

BACKGROUND INFORMATION
The Panama Canal is approxmately 50 miles long and 10 miles wide and has a population of 37,900. The Panama Canal Company operates the canal and its supporting services, which include vessel repairs, harbor terminal operations, a railroad, an electric power system, communications system, a water system, rental housing, retail stores, and service and recreational activities.
The Canal Zone Government administers the civil government in the Canal Zone. Functions provided include education, health, sanitation, fire and police protection, customs services, -and postal services.
Although the canal has been in operation since 1914, the two canal agencies came into being in fiscal year 1952 following a reorganization of the canal enterprise by Congress, and the present financial history of the agencies dates back to July 1, 1951. The company operates under a Board of Directors appointed by the Secretary of the Army. The government operates under the supervision of the Secretary of the Army as the direct representative of the President.
In addressing the five major areas for which information was requested, I will cover the background material on investment, finances, and personnel before addressing the questions of transfer of property and functions to Panama.
First, the investment in the canal enterprise through 1976 is about $1.886 billion. Recoveries have amounted to about $1.134 billion, leaving an unrecovered investment of approximately $752 million.
The net book value of property, plant, and equipment for the Panama Canal is $501.8 million, and for the Canal Zone Government $59.6 million, for'a combined enterprise total of $561.5 million.
Replacement value has never been computed. However, the $855 million dollar acquisition cost of all in-service property, plant, and equipment' on the enterprise books adjusted to June 30, 1974, using the Department of Commerce's Gross National Product Implicit Price Deflators, is $3,573 million.
Finally, within the general background of investment you have asked for information about our routine capital investment and modern zation program. Since 1952, the total amount of investment in'capital replacements and improvements for the combined enterprise was $370 million. The Panama Canal Company has been able to finance its projects internally.
However, the Canal Zone Government needs are financed initially through 'appropriations, but the appropriation is paid back over the usef ul life of the asset.
Over the near future we do not expect company capital to exceed our in-house funding capability, which should average about $20 million a year. Over the long term there may be a need for appropriations because of the heavy impact of inflation on replacement costs. For the Canal Zone Government, we expect annual capital needs to be in the $4 to $7 million range.
Looking into the future of capital operations, our latest forecast is that oceangoing transits will rise from 33.4 per day in fiscal year 1977" to 46.7 per day in the vear 2000. Tolls revenue at current rates will increase from $166.6 million to $300 million in the same period.
I should note that forecasting tolls and transits that far into the


94-468 0 77 4






46

future is a hazardous undertaking and while we have presented our best estimate of the underlying trend of Canal traffic, events such as wars or new discoveries-for example, North Slope oil-could change those estimates.
Although no toll rate proposals are under consideration at this time, the company is required by law to set tolls to recover all costs of operating and maintaining the canal. If our forecast of growth in tolls revenue is reasonably correct, and if historic inflationary cost patterns continue, it will be necessary to adjust tolls periodically to break even.
Since inflation should impact concurrently on the costs of alternatives to the canal, I do not envision that these periodic adjustments would erode the comparative advantage provided by the canal.
Future toll increases other than the periodic adjustments which we may have to make if revenues do not match costs are ultimately limited by the cost of alternatives to the canal.
The most comprehensive study we have in thi's regard estimated the theoretical maximum amount that toll rates could be raised based on a 1974 traffic forecast to be about 75 percent.
The Panama Canal has increased its toll rates twice since the 1974 forecast, once in fiscal 1975 and again in fiscal 1977. In addition, we have modified our measurement rules which has had the effect of another, smaller toll rate increase. The two 'increases and the measurement rule changes add up to a 50-pereent increase in the last 3 years.
In view of the imprecise nature of estimating, it appears T)rudent to approach future increases on a conservative and g --' raduat basis. Any theoretical maximum toll increase cannot be considered valid until tested, and since the effects of toll increases are most felt over the long term, it may be too late to readjust if the, real maximum is lower than the theoretical maximum.
Now for some background material on personnel. Since the end of World War IT, improvements in efficiency and productivity have enabled the canal organization to reduce its ovemllp-ersonnel level, in spite of increased transits. We feel that we are now at the minimum staffing level and will have to add personnel to handle the North Slope oil traffic.
Exclusive of temporary employees there are, 3,395 U.S. citizen employees, and 9,230 non-VA citizen employees in the two canal agencies.
We have, recently experienced an increased rate of resignations. When compared to the period of 1973 to 1975. the resignation rate among our U.S. citizen employees during 1976 was up 60 percent. The rate go far during 1977 is 49 percent oNrer the comparable 1973 base period.
The total number of resignations from January 1, 1974, to May 31, 1.977, among U.S. citizens in permanent positions was 748. Although the number is not of such maomitude as to cause great concern, we are concerned about the. trend-which if unchecked could ultimately seriously affect our ability to perform the canal's mission.
To dispel some of the uncertainties about the treaty negotiations, the Secretary of the Army, with the concurrence of the TT'S. treaty negotiators, authorized in March of this Year the release. to our empl ovees of a 15-point list of assurances concerning employee rights that






47

constituted the benefits 6n'd protect-ions being sought for employees of the canal enterprise. A copy of the 15-point paper is submitted for the record.
Employee response to the announcement has been cautious and reserved to date.' They are generallyappreciative for having been authoritatively informed; however, there is a general feeling that the assurances are inadequate and leave, many questions unanswered.
Because of the status and classified nature of treaty negotiations, the company 1-yas had no valid basis on which it could poll or project how many workers would be willing to remain -with the canal -operation under changed conditions resulting from the new treaty. The only known effort in this direction was an informal poll conducted in April 1977 by the Canal Zone Civic Council, which is an organization of community representatives.
Of the limited sampling of 285 U.S. citizens contacted, 62.8 percent said they would not consider remaining in the canal area and working for the canal organization if there were complete Panamanian jurisdiction.
Although this survey may not be a true measure of employee intentions, it is certainly -a measure, of their apprehensions. As such, it confirms the need for an extremely high degree of attention in the treaty negotiation process to the problem of retention of necessary U.S. citizen personnel.
Periodic demonstrations, acts of violence, and illegal intrusions into the Canal Zone have been a factor contributing to employee apprehension. During the past 2 years there have been many such incidents, of which the most significant are outlined in my statement. I will not repeat them here.
In spite of this there exists between the Panama, National Guard and the, Canal Zone Police, a working relationship which at times is excellent. On balance, it could be called amicable. The degree of cooperation, however, varies. That depends, in the final analy sis, on the larger aspects of the U.S.-Panama political relationship.
If it were not for the pressures resulting from the larger political scene the working relationship with the National Guar d- would obviously be quite satisfactory.
Your specific questions concerning the classification and disposition of property and supportive services bear directly on proposals being considered in the ongoing treaty negotiations.
As I indicated earlier,'I have -no direct responsibility regarding the negotiations themselves. The Company/Government has been afforded the opportunity to submit position statements and to provide technical data to the U.S. negotiators. We have, also been called upon to answer specific questions regarding the canal and its supporting services. Our responses and recommendations have been made from the viewpoint of the operator of the waterway responsible for the continued effective operation of the canal.
We understand that these views are being balanced and weighed along with many other factors by our negotiators. Recognizing that formal agreement has not yet been readied and many issues still remain unresolved, premature public revelation of agency positions could have a negative impact on the conduct of effective negotiations. For these reasons, I am necessarily constrained from delvin(Y into specifies in addressing some of the matters covered in your letter to me.






48

With respect to the relative importance of facilities, we view each of the activities conducted by the Company/Government and its related facilities as being interrelated and interdependent and as contributory to the effectiveness of overall operation of the canal. We would hope that all agree that the Panama Canal has traditionally maintained a very high level of effectiveness. The absence of any one of the act ivities has the potential to diminish that effectiveness to some degree, with cumulative losses eventually reaching a point of ineffectiveness.
Some facilities are so basic as to be considered vital to the operation of the canal. The anchorages, breakwaters, channels and harbors, the three sets of locks, dams, navigational aids, power stations, tugs and dredges are examples of vital areas and facilities. The canaJ, of course, cannot operate without personnel and in order to retain a skilled and professional work force, appropriate facilities must be available to house them in a secure' and quality environment and to provide them with sufficient supporting services.
I believe we must not onlv consider facilities and activities each of which contribute in its own way on a selective, individual basis, but note that the cumulative effect of these facilities on canal operations needs also to be weighed.
With respect to geographical land requirements, and I am speaking only to operations and not to defense, the relinquishment to Panama of certain portions of the. existing Canal Zone now would have little or no impact on effectiveness of operations, in fact I see practical advantage in relinquishment of jurisdictional responsibility over certain areas, examples being Gavilan Point, Shaler Triangle, and Fourth of July Avenue on the Pacific side. In others, I see practical advantages to Panama without commensurate disadvantages to canal operations: for example, the France Field parcel on the Atlantic side.
Therefore, under a new treaty relationship the present canal operating area could -be reduced in size provided we were to retain sufficient lands and waters to accommodate canal operations and supporting activities.
In dealing with any transfer of facilities it is TY view that they should be considered on a case-by-case basis against the following criteria: First' that as a minimum this aLrency's standards of quality, reliability and cost be met; second, in a'--ppropriate cases, that services to be provided this agency be made available on a priority basis; third, that the transfer not compromise our capability to respond to emergency situations involving the canal or its supporting facilities and personnel; and fourth, th at any such transfers not seriously impair our ability to retain a stable and yet skilled and professional workforce.
With respect to environmental controls, the Canal Zone today is a very healthy place to live, but this is true only because of the extraordinary efforts of the United States starting with our highly success ul disease eradication program just prior to actual canal construction and continuing through the present time.
I consider it indispensable to continue to maintain this high environmental standard in the operation of potable water and sewerage






49

systems, refuse disposal, control of food and beverage quality, control of mosquitos, pest insects, bats and rodents, air and water quallity monitoring, and pesticide control.
In my judgment it is also essential that controls be maintained over the Chargers River watershed and the area in the vicinity of Gaillard Cut. Programs such as the Gaillard Cut bank stability program are necessary environmental measures which must be continued in order to assure that the waterway remains, open and safe for shipping.
-Speaking to the question concerning transfer of employee services, any diminution of employee services would incur opposition! from our employees. As I mentioned earlier, the retention of a skilled and professional workforce is an essential ingredient of an effective canal operation.
It follows, therefore, that the absence of any one of the existing employee service activities would in some way adversely affect our employees and the cumulative losses could be serious enough to erode the workforce.
In my judgment, then, p roposals related to the transfer of employee related services should be evaluated with the same -care as would be applied to the transfer of any operational activities. An additional very important factor, equally applicable to the transfer of any activity, would be the need for special provisions in -order to ameliorate any adverse impact on those employed in the transferred service.
In fiscal year 1977, gross costs estimated for all logistical services provided are $184 million. -A, comparable cost figure for similar s'v ices which might be obtained f rom. Panamanian sources cannot be determined with the possible exceptions of water, power, and telephone service.
I have, in the record here, provided comparative data which show that costs to users would be significantly higher if standard Panama rates were to be substituted for existing Canal -Zone rates on water, power, and telephone service.
Each of our three public utility systems are interconnected with Panama's in some fashion. In a purely technical sense, therefore, it may well be feasible to integrate the respective systems. IRecognizing, however, that utilities impact directly on our ability to sustain operations and as such are facilities vital to the canal, consideration of further integration of these systems should be subject to the criteria emphasized throughout my testimony; that is, quality, reliability and cost, priority for canal requirements, impact on employees, and emergency preparedness.
Mr. Chairman, I have tried to forthrightly address the questions set f orth in your letter and I very sincerely hope the information I have provided will be helpful toward the purpose of these hearings.
Should the committee desire additional data concerning my testimony I would be pleased to furnish it.
This concludes my statement.
Senator ALLEN. Thank you very much, Governor Parfitt, for a very fine statement.
Senator Scott, the senior minority member of the subcommittee, was recently in Panama onia factfinding mission, where he was able to talk with Governor Parfitt.
I am going to ask you to start the questioning if you will, Senator Scott.








Senator Scorr. Thank you, Mr. Chairman.
Let me first welcome the Governor to our committee. Certainly you extended every courtesy to me and, to those with me on our visit to the Canal Zone. We are grateful to you for this. We appreciated the, candor that you and your associates showed in sharing your views in an informal manner regarding the matters relating to the canal and to its future.
You know, as our Chairman has indicated, that the Judiciary Committee as well as the Armed Services Committee has an interest in this matter. In factY I believe that all of the Members of the Senate and perhaps the American people haven interest in the future of the, canal.
I would ask you, if you will, in responding to these questions to give your personal opinion on the matters that I am going to present to you. I know that you are the executive head of the entire Canal Zone and Governor of the Canal Zone and that you are in overall charge of the operation of the canal. You also are President of the Panama Railroad, but you are a Major General in the U.S. Army. I would, think that that would play a part in the views that you would express to this committee.
I just hope that you will share your personal thoughts as candidly as you did in an informal way a few weeks p go.
I understand from a conversation during our recent visit that the United States not only acquired rights in the canal by virtueof the 1903 Treaty with Panama, but our Government also purchased title to the property that was held in private ownership and paid the private citizens the market value for this property. Is this your understanding?
Governor PARnTT. That is correct, sir. Approximately $4- million was spent in that fashion.
Senator ScoTT. Four mill-ion dollars to private owners?
Governor PARFITT. Yes, sir.
Senator ScoTT. In 1903.
Has the State Department, Governor, solicited your views on the question of whether or not we should transfer title or control of the canal to Panama? I heard your previous remarks, but on the basic question as to whether we should transfer title or control of the canal to Panama, have your views been solicited?
Governor PARFITT. I liave to qualify my answer to that question, sir. My responses to inquiries and questions concerning the treaty stem from the starting point of the Principles of Agreement, the socalled "Tack-Kissinger" agreement. Since that was consummated and agreed upon before my assignment. as Governor, and since that is an executive agreement, that is a premise upon which I submit my advice concerning the treaty negotiations.
Within that framewo'ik I have responded, from the point of view of the operator, to the negotiator, as to what I deem to be the, essential needs in terms of control to insure continued effective operation of the Panama Canal.
Senator ScoTT. Let me go back to the, basic question, General. Has the State Department asked you whether or not in your judgment we should transfer title or control of the Panama Canal to the country of Panama?






51

Governor PARFiTT. They have asked me in general terms about my view of the impact on the operation of some of the initiatives that they are proposing, which involve transfer of title and in some cases ownership and control.
I have responded, in a classified mode, with my point of view on this issue. It varies with different facilities and different parcels of land and so forth.
Senator ScoTr. On the wisdom-the judgment factor of whether or not we should transfer the title or control of the Canal to the country of Panama, have your views been solicited on that general question?
Governor PARFITT. That is correct, sir.
Senator Scorr. They have been solicited on whether or not we should transfer title to the Canal Zone-to the country of Panama?
Governor Puu3Rrr. I really have a hangup on the word "title," sir. They have queried me on the degree of control that is essential for the operator in operating the Panama Canal.
Senator Sco'rr. General, what I am trying to get at is the overall treaty. As I understand what you are saying to us, on various portions and various matters-and I do not know what the questions have been, maybe personnel matters or something like this-on the basic matter that I believe we are concerned with, which is whether or not this should be clone--the overall transfer of the Canal f rom the United States Government to the Government of Panama--have they solicited your opinion on this overall? Have they said, "Should we do this or not do it?" I am talking about the overall question.
Governor PARIFITT. I must go back again, sir, to the fact that the Principles of Agreement, which were signed in 1974, established the concept that the Executive would undertake to consummate an agreement with Panama which canceled the 1903 Treaty, which transferred sovereignty to Panama, which ended perpetuity, and which transferred jurisdiction promptly to Panama. All of these things were matters consummated before my: entry on the scene. Therefore, no questions have been asked me in this regard.
Th~e questions posed to me have been, using as a premise the TackKissinger Agreement, how should we consummate and flesh out a treaty and what would the impact be on the operator or on the operational capability?
Senator Sco'rr. If I interpret your answer correctly, on the overall question as to whether or not this would be a wise thing to do, you are saying no, it is not.
Governor PAwRFIT. That is correct.
Senator Scorr. Thank you.
We would like to have your personal opinion, your opinion as an individual, as someone who' is f amiliar with Pana ina and thle surrounding areas, as someone who has worked there, and as someone who has been a military officer for a number of years on a number of questions.
In your opinion, General. would the Panamaniians miainitain the canal at the level that it has been maintained by the United States? Would their standards be as high in the maintenance of the canal as the United States?
Governor PARFiTT. I foresee serious problems there. Certainly it would take a considerable amount of training between now and the turnover of the canal to Panama to bring them up to the state of effectiveness that we now have.






52

Certainly that is envisioned in the treaty that is underway. There would be a transition period. during which we would train and upgrade technicians, particularly.
Senator SCOTT. You are saying that the present employees would train the Panamanians, some of the present employees being Panamanians and some being American citizens?
Governor PARFITT. The concept wofdld be that the numbers of Americans who are in highly skilled positions would, over a period of time, be replaced by Panamanians who were selected and trained to perform those skills.
It is conceived that over time this could be accomplished.
Senator SCOTT. You are saying that the management employees would have greater difficulty. The Panamanians would have greater difficulty as far as management employees are concerned?
Governor PARFITT. No, I think that their biggest difficulty would be in the area of technical skills, such as, pilots and highly skilled electricians and mechanical experts-those sorts of people. Additionally, in the management area the problems arise from the fact that a small country such as Panama would have competing needs. Therefore, moneys that are generated -through- a canal operation would not necessarily be made available to the operator. At least there would be tendencies to make them available for other competing needs.
We -do not have that problem today, since the canal enterprise is self-sustaining and permitted to use the money generated for replacements and addition and for maintenance. There would be a very real problem for Panama to face up to the hard question of how funds generated. would be utilized.

POPULATION OF CANAL ZONE
Senator SCOTT. As I understood you a few mintues, ago you said that the Canal Zone had a population of 37,000 people. How many of these are permanent residents of the Canal Zone'?
Governor PARFT. All are permanent residents, sir.
Senator SCOTT. Do they all work for the Canal?
Governor PARFi1T. No, approximately 10,000 of those are Canal Zone Enterprise employees and their families; U.S. citizens. Approximately 4,000 are non-U.S. citizen employees and their families. The remainder are primarily military and -their families and dependents.
Senator 'SCOTTr. I was told that an employee of the canal-an American employee-when he retired, he could no'longer live in the Canal Zone. Is this an accurate statement?, Governor PARFiTT. That is correct, sir. Nobody can live in the Canal Zone unless he is employed or a dependent of one who is employed.
Senator Scorr. That is really what I was getting at, and I appreciate it.
You mentioned resignations in recent years. Would that, in your judgment, be tied to the proposed treaty?
Governor PARFITr. Yes. I believe it is definitely tied to the treaty and corollary actions related to the treaty. The apprehensions that the treaty raised has motivated a movement of individuals to seek employment elsewhere.






53

Senator Scorw. Is there any difficulty in getting pilots for the ships that guide the vessels through the canal, or the tugs?
Governor PARFr. There has been an increased turnover, but to date we have been able to get the necessary replacements.
Senator Sco'rr. The pilots that are aboard the ship is what I should have said.,
Governor PAmprrr. Yes, sir. There has been an increased turnover, but we have been able to get replacements to date.
Senator Sco'rr. In your personal opinion, Governor, would the toll charges by the Panamanians cover only the cost of the operation of the canal, as has been done by our Government in the past., or would the Panamanians attempt to operate the canal at a profit?
I know I am asking you to speculate, but I look on you as an expert witness. As you know, an expert can express an opinion. Therefore, I am asking you as a judgment factor: In your opinion would the toll rates be increased in the event that the canal was operated by the Panamanians?
Governor PARFITT. Panama has over the years indicated that the United States has been overly generous and protective of shipping and shipping interests, and have kept tolls inordinately low. They have indicated, on occasion, that if they were running the operation they would run it in order to maximize profits.
Senator 'Sco'rr. One employee, I bel ieve, of the canal indicated to me that it might be increased thirteenfold. That sounds like a terribly large increase. Would you say whether it is thirteen, or would you be of the opinion that there would be a substantial increase in the cost?
Governor PARiFiTT. There would be a tendency on the part of Panama, were they running the canal to, as I say, maximize profits. There have been some studies which would indicate that tolls could be raised many multiples of the existing rate.
Our current studies reflect that that is an unreal estimate, and that the practical situation would inhibit inordinate raises of the type that you have indicated. Panama would not be able to do that.
Senator Scorr. Returns would enter into this.
Governor PARFITT. Diminishing returns, because you would drive away traffic to other competing avenues of arteries of commerce.
Senator ScoTr. General, during our stay in Panama we also went to Argentina and Chile. We were told from time to time that the Government-of Panama was waging a propaganda effort to influence world opinion in favor of obtaining control of the canal, and that our own Government was not reminding the world community as to how we had overcome hardship in constructing the canal, and how we had operated it for all the nations of the world without making any profit f rom its operation.
Again, requesting your personal opinion, General, has our Government presented its case as effectively as the Government of Panama?
Governor PARFiTT. I feel that we have made an attempt to present our case, but I certainly do not feel that our case has been effectively made.
Senator Scorr. General, would youi consider thielUnited States' control and its maintenance of the canal to be a, military asset to this Nation?
Governor01 PAuirrrr. Yes, sir, I do.








Senator Scomr In the event that the United States did not have the use of the canal, in your judgment, would we have to increase the size of our naval fleet in order to maintain its present effectiveness?
Governor PAsiU'rr. I do not really believe that I am competent to respond to that, sir, but it would be my impression that lacking a canal, or the utilization of the canal, we would have to-augment our forces.
Senator Sco'rr. If I said to you that Admiral Reasoner, the Pacific, Commander, said that we would have to, would you agree with that?
Governor PARnT. My offhand feeling would be that we would have to augment our naval fleet lacking a canal.
Senator Scorr. It has been said that it would cost $4 billion to build a substitute canal. Does this appear to you to be a reasonable estimate of the cost of a substitute canal? Would you have a judgment? I am not asking for a precise figure, but do you think- it would be somewhere in the ballpark of $4 billion at present day costs? Would that be unreasonable as an estimate?
Governor PARFI'Fr. The studies in 1970 of a potential for a sea level canal or a third locks canal concluded that a sea level canal in its most optimum location would cost about $2.9 billion, and a. third locks-a larger locks structure-would cost in the order of magnitude of $1.4 billion.
If we were to take those figures and escalate them to today's prices it would come to about $5.3 billion for a sea level canal and roughly $2.6 billion for a third locks plan.
Senator Scofrr. Governor, do you personally, as an individual, have any concern that a third party might become involved if a treaty is signed and ratified by the Senate-a third nation?
Governor PARFITT. Certainly there is always concern lest influences which are not in the best interests of the United States become involved. That is a possibility which we have to concern ourselves with.
Senator Scorr. General, of course we are again requesting your personal views-not your official views as the Governor or the views of the Government of the United States. As an individual and as an army general, do you have any concern that the canal might fall into Communist hands if the United States turns complete control over to the Panamanian Government, if our military. stepped out entirely? Would you have any concern about-and I know this is a difficult question, but I am asking for your personal opinion on this-the canal falling into Communist hands?
Governor PARFITT. Yes; I have some very real concern in that regard. I would hope that the treaty would in some way provide assurance against that.
Senator Scorr. I heard during my trip that in the event that it was, regardless of what was put in the treaty and regardless of the number of years that were specified for the gradual turnover or the completion of the turnover, the Panamanians might well nationalize the canal after they obtained possession of the canal.
Would you have any concern about this-about them not following the precise words that are in the treaty? I am asking. for your personal views again.
Governor PARriT. One must, again, concern himself with that because the history of our relationship with Panama has been replete with






55

amendments and adjustments -to treaty documents. Therefore the answer would be yes; I would be concerned about the potential for that.
Senator SCOTT. During our trip on behalf of the Armed Services Committee we were told by numerous individuals that some of the top advisers to the Panamanian Government were Communists, and that this was common knowledge in Panama.
As one who has been in Panama-and I am not going to ask for any names or identify anybody at all. I personally intend to do that in executive session before our Armed Services Committee.

COMMUNIST ADVISERS FOR PANAMANIAN GOVERNMENT
As one who has been in Panama for a number of years, what is your personal opinion as to Communists within the structure of the Government of Panama. Do you feel there are or that there are not Communists there?
Governor PARFITr. I believe the general consensus is that the Panamanian Government itself is not, Communist-leaning, but advisers in various places within the Government are in fact Communists.
Senator SCOTr. This would be advisers to General Torrijos? Some of his -advisers are believed to be Communists?
Governor PARFITT. That is correct.
Senator SCOTT. As I understand it, General Torrijos became the Chief of State taking over from a lawful government. I would assume that you are familiar with the history of the country of Panama. Does it have a history of being an unstable government?
Some figures were given to me that it was volatile, and that there have been 59 different governments in the past 70 years. Do you know if that is a fairly accurate statement? I would not hold you to the exact figures, but over the years has it been a volatile government?
Governor PARFIrr. Well, over the years it has been a volatile situation, but I do not think that the number you have indicated is completely representative of the actual facts. Many of those changes in government were not in the context of an upset or an overthrow or a change, really, but included in the changes in Presidents because of the absence from the country of a, President, and so forth.
In summation, yes, it is a volatile situation. It is not nearly as extreme as those figures would indicate.
Senator SCOTr. Well now, in your personal opinion, General, do you believe that the Panamanian officials are of the opinion that demonstrations and disturbances of various kinds tend to influence our Government to accede to their desire that the Canal be turned over to them, and that they can more readily obtain a treaty by demonstrating and by resorting to various kinds of violent action?.
Governor PARFILT. I am concerned that there may be this impression amongst some. There are indications to that effect.
Senator SCOTT~. General, I am very grateful to you for your candid comments here. If time would permit I would like to have further questions, but certainly it would be unfair for me to take any, more tim e. We are running behind schedule. I would like an opportunity, if you are free, after while to just visit with you privately 'for a bit on a personal basis.
Thank you very much for being with us.
Governor P~AR~ir. Thank you, sir.







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Senator ALLEN. Thank you, Senator Scott.
Senator Hatch?
Senator HATCH. Governor, would you review for our benefit the total payments, if you can, for the Canal Zone property, including the annual annuity payments to Panama? I do not think they are in your statement. You list the total cost.
Governor PAlRrr'r. I will provide the precise figures for the record.
[The aforementioned information was subsequently supplied for the record.]
TOTAL PAYMENTS AS A RESULT OF THE 1903 TREATY
1. Reflected on company books as title and treaty lights
a. Payment to Republic of Panama ---------------------- $10, 000V,004)
b. Payment to individual property owners (depopulation
of C.z.) ---------------------------------------- 31965, 254
c. Payment to French (land rights)----------------------- -326, 016
d. Madden Dam Area land rights, 1924-1932_ --------------437, 619
Total-------------------------------------------- 4,728,9889

2. Further payments to French
a. Inventories, salvage credits, other -------------1,282,64
b. Panama Railroad Capital Stock----------------------- 7,000,-000
c. Channel costs---------- ----------------------------- 31,391,319
Total-------------------------------------------- 39,*673,984
(Combined with le., payments to French total $40,000,000).
3. Payment to Colombia (not reflected onCompany books)
Indemnity to Colombia for loss of Panama ---------------25,000000
4. Payment to Panama for annuity
a. 1913-1920 (Capitalized'as construction costs) ------------2,000,000
b. 1921-1951 (Dollar value in gold changed, 1933) ----------10, 990, 000
c. 1952-1976 (Dollar value in gold changed, 1973 and 1974:
includes payment by State Department, 1956-76)-- 43,610,992
Total-------------------------------------------- 569 600, 992
Total payments to Panama, France and Colombia ------ $136, 003, 865

Note: The above figures report actual dollars paid at the time of payment and have not been adjusted to reflect the value of payments in terms of 1977 dollars.
Senator HATCH. I do not wish to put you on the spot, but I would just like to have the American people know a little about this.
Governor PAmrr. Titles and treaty rights were bou ght. We paid $10 million to Panama as part of the treaty and roughly $4 million for the acquisition of property from ownerships that existed-buying out the ownerships.
We paid $40 million to the French company for the interest that they had. In 1922, we paid $25 million to the Colombian Government under a separate treaty.
We also paid at the outset, in the treaty arrangement of 1903,$250,000 a year in gold in an annuity. That was escalated over time.
Senator HATCH. That is to Panama?






57

Governor PARFrIT. That is to Panama directly. That was increased to about $430,000 in 1934 and to approximately $1.9 -million in 1956. Then there have been some adjustments for the devaluation of the dollar to the current level of payments of $2.3 million per year, which is the annuity paid to Panama% now.
Senator HATCH. If we were. to take the extra payments for the canal to the French Company, to Panama, to Colombia, et cetera, and weight them in terms of present dollars, can you tell me what that would have been worth?
Governor PARFITT. Not in present dollars, sir. The actual unrecovered investment. as I indicated, is $752 million. That is in historic dollars.
Senator HATCH. To categorize this as a. matter of a few million dollars cost to the LUnited States to operate the canal would be somewhat misleading and probably unenlightening. It has cost us many hundreds of millions of dollars to have the canal. If you count the present value of what that money was-the present value of the moneys that were spent then would be several hundred millions of dollars.
Governor PARFITT. Yes in fact as indicated in my testimony, if you took the actual acquisition cost of all of our in-use property plant and equipment, which is about $855 million, and inflate it as you suggested, it would come to about $3.5 billion.
Senator HATCH. That is a lot of money.
Governor PARFJTT. Yes, sir.
Senator HATCH. What percentage-we are paying a little over $2 million a year now in annuity payments to the Government of Panama. What percentage of the total income for the Government of Panama is that payment; do you know?
Governor PARFiTT. That in itself is very small. I think you may be alluding to the fact that quite apart from the direct annuity payment there is an inflow to the Panamanian Government annually, or to the economy of Panama. not to the government, of somewhere between $240 million and $250 million annually.
Senator HATCH. In other words. if this canal was not there, what major industries in Panama would keep that country alive and well economically?
Governor PARFLTT. Well, certainly it can be said that the presence of the Panam-a Canal has infused much money into the Panamanian economy, and is responsible for the high standard of living in that part of Central America.
Senator HATCH. Some people have said that the canal is almost obsolete anyway, and by the year 2000 it would have to be either totally rebuilt or revamped. Do you agree with that opinion?
Governor PARFILT. NO; I do not believe so. At the current~ moment our estimates would indicate that. up through the turn of the century there will be adequate capacity in the canal-at least until the end of the century-to take care of all of the tonnage that is projected for passage across the Isthmus.
Senator HATCHa. If wNe have the sea-level canal or the proposed system of the new locks, we could keep the canal pretty well modernized well into the 21st century?
Governor PARFITT. Yes, sir.






58

SenatorllhATCH. Let me ask you this: If circumstances were to prevent the Panamanians from coming into the zone, could the canal be operated, on an emergency basis by U.S. civilian and military personnel?
Governor PARFLTT. In our contingency planning, sir, we envision the possibility of periodic disruptions because of disorders of one type or another-possibly in Panama. In those cases, given the size of the U.S. contingent, given the presence of the Panamanian citizens who live in the Canal Zone, given the fact that certain numbers of Panamanians would be present, we feel that an operation could be continued at a reduced level of efficiency for a short period of time-say, about 10 days. Beyond that we would probably need augmentation from external sources.
.Senator HATCH. In other words, it has been stated by others that if we do not give up the canal, that we shall be faced with guerrilla warfare, all types of insurgency; the destruction of various locks, or in general would have a chronic problem of maintaining order in the Canal Zone. Do you agree with that?
Governor PARFITT. That has been postulated, and certainly it is a possibility. There is a very high probability of disorders and disruptions and so forth. I would certainly hope that the mutual interests of the United States and Panama in an efficient operation of the canal would be overriding and that would not entail.
Senator HATCH. The fact of the matter is that the Panamanians would find it in their best interests to help preserve the integrity of the canal, because that is where they get most of the money they need to run their country.
Governor PARFITT. A high proportion of their economy is based on that. One would presume that logic would prevail and that they would not be interested in destruction of that source of income.
Senator HATCH. If any governmental leader in Panama is advancing that as a reason for the ultimate transfer of the canal to Panama by the United States, he should be unsuccessful. As a practical matter he really cannot advance that, because he has got to maintain the integrity of that canal and cooperate with the United States in maintaining it in order to have any kind of economy in Panama of any substance.
Governor PARFITT. It certainly would be in their interest to do so. However, one cannot rule out the acts of individuals that do not make sense.
Senator HATCH. In other words, there may be terrorists who might try to do that. Isn't that true even if the United States gets out of the operation of the Panama Canal?
iGovernor PARFITT. That is true, but probably to a lesser degree. It true, though.
Senator HATCH. Is it really true to a lesser degree? Would not the Panamanian Government and the canal be more vulnerable to terrorism without the awesome might of the United States? Keep in mind that I understand that any treaty has to contain a provision that the United States can maintain the territorial integrity 'and use of the canal on a nondiscriminatory basis, at least this has been represented to me both by Mr. Bunker anda Mr. Linowitz personally.
The point I am trying to make is that it may be just as reasonable to expect that terrorists could sabotage the canal if the United States divests itself of this property or if it keeps it. Isn't that true?






all

Governor PARFITT. The distinction I am trying to make, sir, is that given the full support of Panama and the Government of Panama, there is probably a better possibility of containing that. If the Panamanian Government were to stand aside, as has been suggested on occasion, then the likelihood of those types of activities is greater.
Senator HATCH. As a practical matter, the Government of Panama cannot stand aside or it would be overthrown because of the importance of the canal to the Panamanian economy.
Governor PARFITT. It certainly would not be in their ultimate interests to stand aside.
SenatorlHATCH. It seems to me that no leader could advocate standing aside and believe that his leadership would be continued.
Governor PARFITT. I am not sure of that, Sir, because the Panamanian Government has done a rather good job of mobilizing support for their concept of taking over the Canal Zone and the Panama Canal. It is a great emotional issue. The overriding sentiment that you hear amongst the militant group-which is not representative of everybody-is support for whatever action is necessary to, in effect, get what they feel is rightfully theirs.
Senator HATCH. Asa, practical matter, unless they can bring about that change very effectively, assuming the LUnited States does not divest itself of the canal, there would be supremely powerful economic f orces against the -continuation of that particular leadership.
Governor PARFiTT. That is correct, sir.
Senator HATCH. Therefore, both sides can be very well argued. The fact that we would divest ourselves of the canal does not necessarily guarantee that terrorism or acts of terrorism will not occur.
Governor PARFITr. That is correct.
Senator HATCH. What percentage of vessels in the world can actually go through the Panama Canal?
Governor PARFirr. Approximately 92 percent, sir.
Senator HATCH. Ninety-two percent can go through?
Governor PAR1TT. Yes, sir.

AMERICAN LIFE STYLE IN CANAL ZONE
Senator HATCH. Let me just ask you this question: What is the average value of a single family dwelling which is rented to the U.S. Canal Zone employees-U.S. citizen Canal Zone employees.
Governor PARFiTT. The average value, sir?
Senator HATCH. The point I am getting to is that some of the supporters of a new treaty have said that the American presence is a source of trouble because Americans are living a life of luxury down there in Panama. I would like you to give us your viewpoint and perspective concerning that. Are we oir are we not?
Governor PARFITT. I would say that definitely we are not. We have aiiite a wide range of quality of housin I would say that it is modest and represents kind of a middle America, except for the Governor's hoilse in which I live. Except for the Governor's house there is no really resplendent set of quarters.
Senator HATCH. Well, that is only rioht
Senator Scowr. If the Senator wifyield very brieflySenator HATCH'. Yes.








Senator Sco'rr. If you put that into context with the'living of the Panamanians, might that make a difference in your response? That would be contrasted with the average American in this country. Governor PARFiTT. In the -same fashion, within Panama there is quite a wide range in quality of housing. There is housing in Panama which is much more resplendent and valuable than that which is in the Canal Zone.
On the other hand, there are the- heights of poverty as well, which we do not have in the Canal Zone.
Senator HATCH.: My good friend and colleague, Sam Hayakawa, during his campaign said, tongue in cheek-and it was reported as though he meant it, but nevertheless it was tongue in cheek-"It is ours. We stole it fair and square."
Do you consider the United States to have stolen the Panama Canal or do you- think we paid a fair price for it in those days based upon constant dollars?
Governor PAMTT'~. My own personal opinion is that the quid pro quos of the 1903 treaty were not so heavily weighted in f avor of the United States as is now suggested in hindsight. At that point in history it was quite a high risk and quite an investment of assets and manpower.
Senator HATCH. Imagine if the French company had failed.
Governor PAXIuTr. In a major undertaking which was very difficult. I do not think the imbalance then was anywhere near as suggested today.
.Senator HATCH. I think from your testimony here you are saying that we paid a fair and reasonable price and took almost inordinate risks in order to produce and develop and maintain and operate the Panama Canal.
Governor PARFI1T. Yes, sir, I feel that way.
Senator HATCH. Can I also ask you if you feel that the United States has basically been fair to Panama under the circumstances? You are the Governor. You are intimately connected with the details. I appreciate the very effective and pervasive statement that you have given here today.
Do you think that we have 'basically been fair to the Republic of Panama in our approach to the canal up to, saty,' 1974, when the Kissinger-Tack Agreement was entered into?
Governor PARFITT. I believe that basically the U.S. Government has made a very extensive effort to be fair and eqluita'ble under the terms of the original agreement. Looking in hindsight, one can perhaps now say that under today's circumstances we ought to be more generous.
Senator HATCH. I am talking about 1974. 1 think our obligation to be. fair may 'be a continuing' obligation, but you are saying that basically we have been fair.
Governor PARFITT. I think we have been basically fair. Certainly I feel that in today's circumstances-we perhaps could find ways to do more to -assist Panama than we are doing right now under the terms of the current agreement.
Senator HATCH. Have you seen any indication on the part of anybody in this country of an unwillingness to do more or to do what is right or to be fair to the Repuiblic of Panama and its citizens?
Governor PARFIMr No; I do not really believe so.






61

Senator HATCH. Is there anybody down there in your administration or in your jurisdiction or working for you or for the Government of the United States who has indicated any willingness not to be fair, or any desire not to be fair to the Republic of Panamna or the Panamanians?
Governor PAJUxrrr. No; I think we have extended ourselves to cooperate and to work with Panama and the Panamanians.
I should say here that there is a good people-to-people relationship between the citizens of the Canal Zone and the U.S. citizens in genera, with Panamanians. Recently this relationship has become rather more delicate. It has been played up as being something of a hate campaign, but it really is not a feeling from person to person.
Certainly', there are certain segments of society who have had aroused in them emotions and antagonisms that cause frictions on the local scene. However, I do not think that typifies the general basic people-to-people relationship.
Senator HATCH. It has been said by some of the critics of our present ownership of the canal that we need to give up the canal because all of Latin America is against our continued ownership of the canal.
Living in Panama and negotiating and working with other Latin American neighbors-at least the nearby countries-do you agree with that statement?
Governor PARFiTTr. I believe that the official position of most if not all of the countries in that part of the world would be in support of a Panama~nian effort to have the canal revert to them.
fHaving said that, I also believe that there is a body of opinion amongst 'the population that -is not quite so sure that it would be in their interest or that it should be done.
Nevertheless, the official position is that in support of Panama.
Senator HATCH. I can see that. However, you have indicated that maybe it is not quite so strong that we would have to give -it up or else lose the respect and friendship of other Latin Americ'a:n countries and perhaps incur -the enmity of those countries, as has been advocated by those who would like to give up the canal. Is that true?
Governor PARFITr. Well, that is hard to judge, as I have indicated. In the world scene onu'n official basis, they will support Panama fully. Behind that there is a certain economic fact of life that tells them that it is in their interest to have an efficient operating canal. They would like to have a low-cost canal. They are quite happy with the way in which the United States has exercised its stewardship.
Therefore, this is a competing thought in their mind. How they really fall out, in the final analysis I could not project.
Senator HATCH. I think it would be fair to say that they might not be overly concerned if the U.S. continues to operate the low-cost operation of the Panama Canal and decides to forego the treaty.
Governor PARFITT. I believe that that would be their innermost thought, but I still believe that they would vocalize supportSenator HATCH. For the Latin American Community they wouldGovernor PARFnrr. Yes; they will vocalize support.
Senator HATCH. Are you talking about the immediate countries around Panama, or all Latin American countries.
.Governor PARFITr. Pretty generally all Latin American countries, sir.

94-468 0 77 5






62

Senator HATCH. Would you expect there to be a major disruption in American -Latin American relationships if we do not have a treaty giving the canal back to the Panamanians?
Governor PAmp'rrr. I really would not be competent to express an opinion on that matter. I really would not know how to judge that. It would appear to me that the State Department would have a better view.
Senator HATCH. Well, let us bring it down to Colombia and Venezuela, which are oftentimes mentioned. Do you think we would have a major disruption in our relationships with Colombia and Venezuela to the point of being irreparable should we not divest ourselves of the canal with a treaty?
Governor PAR.FiTT. Again, I am not competent to say, but, I do note that those two countries have been most vocal and most active in their support of the Panamanian cause.
Senator HATCH. I have particularly appreciated your testimony, and I think that it is very important to have somebody who is right there, who is familiar with the issues and the area, to come here and tell us the true facts.
You have been very helpful to the committee today and as straightforward and as fair, I believe, as you can be.
You have indicated that you believe, in response to Senator Scott's questions, that the tolls, if we do divest ourselves of the Canal, will go up considerably because the Panamanians will want to maximize profits.
Governor PARFrrr. I think that would be. their general tendency, but they will be constrained by the facts of life, which will not permit them to go up inordinately because if they do it would be counterproductive.
Senator HATCH. However, there is no doubt that they will go up considerably-to the maximum that they can and still be economically realistic.
Governor PARFITr. It would 'be their aim, I believe, to make a profit to permit them to use those profits to build their country.
Senator HATCH. Both Mr. Linowitz and Mr. Bunker have personally assured me that one of the requisites of any treaty concerning the Panama Canal will be that it will not permit the Panamanians to discriminate in toll rates or other related matters among any nations..
Do you 'believe that that would be so if we divest ourselves of the canal and Panama takes it over?
Governor PARIITT. Well, it is my understanding that there would be a continuing commitment in that regard, to have nondiscriminatory tolls.
Senator HATCH. The question that I am getting to is this: Once the canal is divested and Panama takes over the zone, do you think we, as a practical matter, will be able to enforce that understanding wit hout armed intervention?
Governor PARFriT. Well, I believeSenator HATCH. That is, assuming that they change it and start showing preferences to certain nations.
Governor PAR.FITT. I believe that it is reasonable to expect that they would live with a commitment of equitable treatment for all.








Senator HATCH. Do you believe that that is a reasonable expectation even for the Torrijos regime?
Governor PARFrr. Yes, becauseoI do not see any real advantage to being discriminatory. In fact, I would suggest that since the treaty would be supported by so many other people, to deviate from a nondiscriminatory attitude would be very, very suspect and would be very adverse to Panama's own interests.
Senator HATCH. If they did, our own recourse would be armed intervention?
Governor PARYrI. That is correct. Whatever provision that the treaty might have-whether it be arbitration or whatever might be involved in the treaty document-would be our resource. Our rights would be whatever is contained in that document.
Senator HATCH. Within the framework of your understanding of the treaty 'negotiations, would there by any neutral body to which we could turn to handle the problem of arbitration, other than world opinion?
Governor PARF=~. I was not suggesting that there is arbitration. I was merely Saying that there are many mechanisms that could be embodied in the treaty document.
Senator HATCH. Economic pressure could be brought about by other nations.
Governor PARFrrr. As a practical matter, it would involve intervention if we wanted to change some decisions that had been arrived at which are inimical to our own interests.
Senator HATCH. I am very appreciative of your testimony, and I appreciate your informative statement. I think it has been very helpful to me personally, and to the committee as a whole.
Thank you, Mr. Chairman.
Senator ALLEN. Senator Helms?
Senator HELMS. Mr. Chairman, I thank you for your courtesy in letting me sit in on the hearing of this subcommittee. I commend the subcommittee and the distinguished chairman for looking into this highly important subject.
Governor, on page 4 of your prepared text you give updated costs for the terminal lake-third locks plan. Your basis for updating is the 1970 Interoceanic, Canal Studies Commission report, is it not?
Governor PARFITT. That is correct, sir. We only made a mathemnatical extension using inflation factors.
Senator HELMS. Is it not a fact that the terminal lake plan studied in the 1970 report was based on rather vastly inflated dimensions and specifications? It has never been proposed in Congress. I understand that in 1971 the Canal Company itself made a study of the cost of the more practical plan which has been introduced in Congress. I believe it has currently been introduced as H.R. 1587.
Mr. Chairman, I would personally appreciate the Governor's supplying for the record updated figures based on the Canal Company's own 1971 study. I believe that the difference in these figures compared with the Commission's report would be rather interesting.
Governor PARFITT. As you suggested, Sir, there are quite a few differing plans-so-called "third lock" plans. In fact, I believe there are about six different schemes. Each one has its own cost. They range from, in 1970 dollars, $.8 billion to $1.5 billion.









We would be glad to provide for the record the figures you have asked for. W
Senator Hmms. I would be most interested in seeing that.
Senator ALLEN. We hope you will provide that additional information, Without objection, it will be inserted in the record.
[The following material was subsequently supplied for the record:]
1. There have been many third lock plans and a number of variations under each plan. I would like to insert for the record the attached table in order to clarify some of the concerns about costs and some of the basic differences in the plans.
2. We have searched our records and to the best of my knowledge the Panama Canal Company did not make an estimate of the Thlid Locks Terminal Lake Plan in 1971 which Congressional Bills showed at a cost of $850 million. The 1970 IOCS Report included an estimate of $1.4 billion for this project based on an a assumption of 35,000 transits.per year capacity. Their interpretation was that three lanes of new three lift locks 140 feet wide by 1,200 feet long by 45 feet deep would be constructed near the Gatun and Miraffores Locks at the Atlantic and Pacific ends of the Canal, respectively, with maximum lake level of 92.
3. Since we do not have our own estimate we have escalated both estimates to 1977 values based on Engineering News Record (ENR) Construction Cost Index. Using the 1970 annual index of 1385 and the July 1977 index of 2583 this would raise the $850 million to $1.6 billion and the IOCS estimate of $1.4 billion to $2.6 billion. Obviously this technique is very rough and if a new estimate were made today it could be either higher or lower.
4. The current Third Locks Bills H.R. 1043 introduced by Mr. Murphy and H.R. 1587 introduced by Mr. Flood appear to be identical to each other but they show costs of $1.15 billion and $1.25 billion respectively. I do not know the basis of these estimates. The Company has not forwarded its comments on these bills as of this date.












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66

COMPARISON OF LOCKS PLANS-DESCRIPTION OF CONSTRUCTION
EXi8ting locks.-1969 Kearny study modifications to increase ultimate capacity to 26,800 (1969 estimate) consisted of miscellaneous improvements such as tugs, locomotives and deepening/sea water pumping (to provide sufficient water).
Original third locks.-Addition of one lane of locks (140' x 1200' x 45') at Gatun, Pedro Migruel and Mirafiores. Existing locks would remain as is.
Modified third locks.-Same as original 3rd locks except size of chamber increased to 200' x 1500' x 50'.
Terminal Lake 3 lift-Initial phase.-Add triple lift one lane of locks (200' x 1500' x 50') at Gatun. Existing Gatun locks to remain as is. Remove Pedro Miguel locks. Add triple lift one lane of locks (200' x 1500' x 50') at Miraflores and add upper lock chambers to existing Miraflores Locks raising Mirafiores Lake to present lake elevation.
Terminal Lake 2 lift-Initial pha8e.-Same as above except new locks are two lifts.
Flood Thurmond Rarick (Terminal Lake plan).-Add one triple lift lock lane not less than 140' x 1200' x 45' and modify existing locks for 92' Lake elevation at Gatun. Remove Pedro Miguel Locks. Provide 3 new lanes of triple lift Locks at Miraflores with one lane not less than 140' x 1200' x 45' and two lanes the same size as existing Locks.
IOCS deep draft.-xistinglocks would not be modified. Add one triple lift lock lane (160' x 1450' x 65') at Gatun and Miraflores. New Miraflores Lock would raise ships directly to present lake level with a bypass of existing Pedro Miguel Locks.
BEST KEPT SECRET ON CAPITOL HILL

Senator HELMS. Mr. Chairman, I would like to make one more point, and I appreciate your indulgence.
I was very interested in your comments, sir, and I want to join my colleagues in commending you on your candor. I expect that these hearings may be the best kept secret on Capitol Hill in terms of the news media.
There has been such a bias in favor of what I call "the giveaway of the Panama Canal" with hardly any reference at all to the case on the other side.
Senator ScoTT. Mr. Chairman, would the Senator yield very briefly in that connection?
What business were you in before you entered the Senate?
Senator HELMS. As the Senator knows, I was in the news business. I possibly may have some expertise in watching my former colleagues.
You said in your testimony, in response to Senator Scott, I believe, that our case-meaning the case of the United States and the operation of the Panama Canal-has not been "effectively made." I believe that those were your exact words.
Why do you think that is? Is it because our spokesmen have not really tried?
Governor PARFITT. Well, one reason is that the situation is a very, very complex one. I often say that people come to the Canal Zone for a short period of time to determine the situation and really leave with the conclusions that they had before they came, because the time it takes to really understand and anpreciate the complex nature of the history of the organization and the operation is not available to those people.
Therefore. reports emanating from them, whether they be business groups or TV reporters or newspaper reporters, are sometimes dis-