Panama Canal Commission authorization and oversight, 1980

MISSING IMAGE

Material Information

Title:
Panama Canal Commission authorization and oversight, 1980 hearing before the Subcommittee on the Panama Canal of the Committee on Merchant Marine and Fisheries, House of Representatives, Ninety-sixth Congress, first session ...
Series Title:
Serial - House, Committee on Merchant Marine and Fisheries ; no. 96-7
Physical Description:
iii, 199 p. : ; 24 cm.
Language:
English
Creator:
United States -- Congress. -- House. -- Committee on Merchant Marine and Fisheries. -- Subcommittee on Panama Canal
Publisher:
U.S. Govt. Print. Off.
Place of Publication:
Washington
Publication Date:

Subjects

Genre:
federal government publication   ( marcgt )
non-fiction   ( marcgt )

Notes

General Note:
Reuse of record except for individual research requires license from Congressional Information Service, Inc.
General Note:
Reuse of record except for individual research requires license from LexisNexis Academic & Library Solutions.
General Note:
CIS Microfiche Accession Numbers: CIS 79 H561-18

Record Information

Source Institution:
University of Florida
Rights Management:
All applicable rights reserved by the source institution and holding location.
Resource Identifier:
aleph - 022599507
oclc - 05842545X
Classification:
lcc - KF49
System ID:
AA00024738:00001

Full Text


PANAMA CANAL. COMMISSION AUTHORIZATION

AND OVERSIT-1 980



..........iiiiiiiiii iiiiii ii iiii i

HEARING

S 800MMI'E ON THE PANAMA CANAL
OF TE
COMMITEE ON
RCH-NTMARINE AND FIRITER.TER

AHUS OF REPRESENTATIVES
NINETY-SIXT CONGRESS
FIRST SESSION
ON
AUTHORIZATION OF FUNDS AND OVERSIGHT OF THE PANA.MA CANAL COMMISSION FOR FISCAL YEAR 1980

Serial No. 96-7

Printed for the use of thie Conmittee on IMerchant H Fisheries



...SEP 1 197gy






U.S. GOVERNMENT PRINTING OFFICE 49Ms 0 WASHINGTON :1970




















COMMIT'rEE ON MERCHANT MARINE AND FISHERIES
JOHN M. MURPHY, New York, Chairman THOMAS L. ASHLEY, Ohio PAUL N. McCLOSKEY, JjL, Calffornia
JOHN D. DINGELL, Michigan GENE SNYDER, Kentucky
WALTER B. JONES, North Carolina EDWIN B.-FORSYTEK New Jersey
MARIO BIAGGL New York DAVID C. TREEN, LouWana
GLENN M. ANDERSON, California JOEL PRITCHARD, Washingtm
E (KIKA) Ds LA GARZA, Texas DON YOUNG, Alaska
JOHN B. BREAUX, Louisiana ROBERT E. BAUMAN, Maryland
GERRY E. STUDS, Massachusetts NORMAN F. LENT, New York
DAVID R. BOWEN, Mississippi DAVID F. EMERY, Maine
CARROLL HUBBARD, JR., Kentucky ROBERT K. DORNAN, California
DON BONKER, Washington THOMAS B. EVANS, JR., Delaws"
LES AuCOIN, Oregon PAUL S. TRIBLE, JR., Virginia
NORMAN E. D'AMOURS, New Hampshire ROBERT W. DAVIS, Michigan
JAMES L. OBERSTAR, Minnesota WILLIAM CARNEY, New York
WILLIAM J. HUGHES, New Jersey MELVIN H. EVANS, Virgin Islazids
BARBARA A- MIKULSKI, Maryland DAVID E. BONIOR, Michigan DANIEL K. AKAKA, Hawaii MICHAEL OZZIE MYERS, Pennsylvania JOE WYATT, Texas
MIKE LOWRY, Washington EARL HUTTO, Florida EDWARD J. STACK, Florida BRIAN DONNELLY, Massachusetts CARL L. ftw", Chief of Staff LAwRzNcz J. O'BRiEN, JR., Chief Counsel ftANC9S &u4 Chief Clerk JACK E. SANDS, Minority Counsel


SUBCOMMIrrM ON PANAMA CANAL
CARROLL HUBBARD, JR., Kentucky, Chairman
DAVID R. BOWEN, Mississippi ROBERT E. BAUMAN, Maryland
DAVID E. BONIOR, Michigan DAVID C. TREEN, Louisiana
JOHN D. DINGELL, Michigan ROBERT K. DORNAN, California
WALTER B. JONES, North Carolina WILLIAM CARNEY, New York
MARIO BIAGGI, New York GLENN M. ANDERSON, California PAUL N. McCLOSKEY, JR., California
MIKE LOWRY, Washington (Ex Officio)

JOHN M. MURPHY, New York (Ex Officio)
TERwmE W. MoDGLw, Staff Director B=NARD TAmmmwm, Special Counsel W. MERRUX WEnMUN, Consultant KENNFM C. FENDLry, Professional Staff











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














CONTENTS


pa"
uly 16, 1979 ......................................................................................... 1
Stu
Constant, Thomas M., Secretary, Panama Canal Company ............................ 3
Afurj)hy, Hon. John M., chairman, Committee on Merchant Marine and
Fisheries ................................................................................................................ 10
Parfitt, H. R., Governor of the Canal Zone ........................................................ 3
Adftional material suppliedPar4tt, Gov. H. R.:
Board of Directors costs .................................................................................. 20
Breakdown of b "'dihng maintenance ........................................................... 40
Calculation of toll rate increase, required on October 1, 1979 ................ 14
-General c" e.xpense .................. 0 ................... ej, ............................................ 17
General corporal expense ............................... ........
te ....................................... 16
in budget ............................................................................................ 21
Increase in financial management costs ................................................. 64
Name and pay level of persons engaged in performance of the contracts ..................................................................................... .......... 66
Net impact on Treasury appropriations versus Commission revenue
deposits ........................................................................................................... 35
Questions of Mr. Hubbard and responses .................................................... 43
Ratio of personnel costs to total .................................................................... 65
View on section 104 provisions ...................................................................... 36
V olum e of traffic .............................................................................................. 18
UnIca submittednt letter of July 18, 1979, from Hon. John M. Murphy, Hon. Carroll
Hubbard, and Hon. Robert E. Bauman to James T. McIntyre, Jr ............. 29
AA-Esti=tes subrnitted by the Panama Canal Organization to the
in M ay 1979 .................................................................................................. 68
AppejRix BFwtimates derived and submitted by the Panama Canal OrganizaU oo on July 16 ............................................................................................................. 143




Pop"



























































































































































































. ........ ........... .... . ..... . ................ . .. -












PANAMACANAL COMISBION AUTHORIZATION
AND OVERSIGIIT-1980

MONDAY, JULY IS, 1979
House or RammAneeva
SUBCOMMIfTR ON PANAMA CANAL OF THE
ggfg~rig ON MAklNq AND FRHRTR,
Whshington, D
.1h on ahmitiee met, pusatt otice, at 10:12 am., in room
k3!4 Iang~rth ous oficeHon. Carroll Hubbard, Jr.,
Re esetatives hHubbard, Bonior, Lowry,
Staf pesnt: Terry Modglin, staff director, Panama anal Subso~t Merrill Whitman, consultant, Merchant Marine and Flld 6mtnittee; Bernard Tannenbaum, consultant, Merchant AG~keand Flsheries Committee; Ken Merin, minority conael, aCanal Subeammittee; Moll Dominick, secretary, Panama
'Subommitee Taddy-McAllister, clerk, Panama Caal 8ub606mitte; Michael Smth research assistant, Panama Canal Sub e; and Ken Fendly, staff asitnPanama Canal Sb
1*1,ma.n--. The Panama Canal Subcommittee will now please
o dmto orier.
Wkvm, Governor Parfitt, Mr. Constant, fellow members., ladies
atdgntlemen.
Eair this year the Panama Canal Subcommittee devoted 9
1 Whnldg on legislation which would establish the fr-anefrthe operation of the Panama Canal to the year 2000. As a r" of those IaigH.R. 111 was reported from the subcomnlhan the fulfl -committee, and then approved by the House an June 21. Last month the subcommittees held 2 more days of hear1Er as the aceevities or the Governmeant ot Panama that raised salaf questions atout that gdornments reliability& as future partsa in the operation of the canal. Today this subcommittee has an op portunity to give its full attention to the budget and activities of the: prospective Panama- Canal Commission in its crucial first year of operation.
In order to provide an objective basis for the exmntion of the Pana na Canal Commission budget the subcommittee has asked our 4tnused witness to assume that the terms of H.R. 111 as pased the House would be enacted into law. I want to emphasize that this assumption does not presume any action in the other body as to the terms of H.R. 111. The terms of the legislation may chane, but we must take as our guide the document approved by our owe body.






2
Why must we have authorizing hearings at this time? The answer is straightforward: without pr examine the Commission budget at this time, the subcommittee might not have adequate time to examine that budget after H.R. 111 or another bill was enacted, and consequently we would be giving inferior treatment to'tbW crucial This, then, is a1XLM&ttqr:Of
legislative res0onsibility. AP an Opponent. of the Panama Canal Treaties and as One who vot6d against H.A. 111, 1 could take the obstructionist path and attempt to delay any further legislation on the Panama Canal. But the House has indicated its intention to enact a law giving form to the. param eters' of the new treaty. The will of the House must be taken as a guideline.
No authorization bill for the fiscal year 1980 operations of the Commission now lies before the subcommittee. We. lp wutive has not submitted an authorization request Further.: I 144e not intro. duced an authorization bill because I believe that it would be best to obtain a consensus of the subcommittee members subseqw* to these hearings as to the precise form which an *initial am,.&... ought to take. Considering the many documents available to do not believe a thorough examination of the prospective Panama Canal Commission budget would be precluded in any wa* bY.the absence of a bill at this time.
If the terms of H.R. 111 rendering the Panama Canal Co.
sion an appropriated fund agency subject to authorization J enacted into law, it is my hope that a bill can be presented to the subcommittee, full committee and the House, and then enacted on a very expedited basis. In fact, subcommittee and full committee markup deserve consideration in the near future. The mammoth number of changes required to be made in the canal o niza n cannot be completed until all the legislation to provide the basis for operation has been enacted. In my judgment, even if H.R. 111 is greatly changed in conference, some sort of authorization could be necessary to provide the basis for the initial appropriations for the Panama Canal Commission.
Governor Parflitt, in behalf of the subcommi I welcome YOU and those with you. I look forward to discussing the personal problems, the capital program questions, the diplomatic pressures, and other burdens which face your successor and the Panama Canal Commission.
At this time I would like to yield to the ranking subcommittee minority member, Mr. Bauman, for any statement that he winhes to make.
Mr. BAUMAN. Thank you, Mr. Chairman.
I want to welcome both the Governor and the Secretary here today, and I look forward to the information that they will provide us. Before we proceed with testimony, I would like to state that in the last few weeks we have heard repeated statements by officials of the Panamanian Government, and particularly Mr. Royo, re, garding the implementing legislation which the House passed, and which the Senate is now addressing. Many of these comments have had to deal with financial terms of that legislation, and how it will be administered, and the attitude displayed has been less than. friendly to the United States, and certainly in opposition to the legislation.









ma. idnot, need: any laislation.
atOd ~ml statements denouncing the implentglgia
Smde in Panama for domestle political puroe A
staemo'tby the: 121 I Party indicates that no dsbsewiU. ea n Po nm other than those to the treaties,
e included in the treaty.
oesatement that concerned me a great deal, and I am
44M rques- -a the Govern will shed, some hight on it, is one
Ifoa eda, i ago, by a member of Panamna's Canal
e Claim hat he andd at least by impliation, the
Authoity which mnaes the transaction, have no
-whothenonas is eagaing from, or under what system it will

t~oeberm eareineetn to th ulc of the
go~ ~ wewl o nyo here.
Mr. Thankyeu, Congresmman Rauman.
G. arney. do yeu have any initial remarks?
.Mr*. Chraas usual, Lam at a loss for words.
IuW". That leaves me without d reply. He is not usually It wr s n am g o r here, though, Congressman
Ma pleased to present Governor Parfitt, Governor of the
Zonead Presidgnt of the Panama Canal Company. Thank
bigwith us.
4TO T r aFRNx. IEL -R. HarrrrT, GOVERNO R OF THE
'r"A ZON: ACCOMPANIED BY THOMAS M. CONSTANT, SECPANAMA- CANAL COMPANY

yur prisoI would ike to abbreviate my opening
-1:2tmom; ndprvd fullA test for the record.
Mr fuxmYe sVa thank youn
r~efolowing was received for the record]
arAmnnr as Gov. H. IL PARrrr

M: LMrChiinia and members of the committee, I am Major General Hiald R. Pfit Governor of the Canal Zone and President of the Panama Canal Company. I Jm b asked to appear today to present a rqetfor authoriztion of the
g I fiana year 1980 buget program for the Paam Canal Commission under Y the ill passed by the House on June 21 to implement the Panama Canal
T at 197. I am pleased to present this request as I realize these
eW4 ag hed in the interest of insuring that fuds will be available to
C don when it amnues responsibility for operation of the Panama Canal on C 1. 1979, an interest which I full share.
re oall aware that the Preident has not yet submitted to the Congress a L prograor fiscal year. 1980 that reflects operation of the Panama Canal C sis uderH.IL 111Ause of th netit vrwhat the final legislaf I eaklik and the administration's clear preernc for a coroate= form a than an. appropriate fund agency. Nevethelessfor the proeof these a -att proceedings we have finished the Committee with bugeschedules r agreentthis agencys best estimate of the aprpitosthat will be
d n Caal n iii yer190pusan o h
WOW RA UL Theme budget _--have not been suin itted to the Office











H HH~ ii~ iiiiiiiiiiiiii~ ii iiiiiiiiii ..
of ageen an Bwv! fo reie an, ta-for, nmbrs n te ebeud
shudntbiau sasg fdiiaiuareetwt nfDW.o

3 ........................ ............... ................................
Hous Suci tteoirnpramadBltd-M0p
p iiiiiiiiiiiiiiiiiyearilliiiii8iiiiiiiiiim a e ~ n e iiiiiiiiiiiiiiiRiiiiiKi~iiiiiiiiiii 1iiiiiii5iiii= iiiiiitim==== for the Panam Canal. Comm== = @ iion ehv ret
reflct ur mot urrnt ulokwihtoCmmsimPqPMd
.................................................... t o............................... .............................. t h e M xw ,
AWI U W .... RZ.......................
4 ......... ... .................. ..... .. .................. ........ ........... ...... ............ .. .... .
PaaaCnlini ea er18, oaln Ijd .i.~e]a
#prpito f$0mlo o elpstdi h aa







5

4*dWft. for'retum of unobligated funds rather than unexpended funds, this problem could be avoided.
11. "de from these prior obligations, we.Mjec $350.8 million will be required
cover operating expenses of the Commission itself in fiscal year 1980. This
t Jn6ludes the estimated cost to the Commission of such expense items as F. services and benefits, materials and supplies, tranportation, communica.
claims. In a "tion, it provides funds to cover certain other coda hinposed
on by the Panama Canal Treaty and H.R. 111, which I would like
few Woen to discuss at this time.
in the budget t 9 treaty ents to Panama estimated at
,.=ues ar,
n. This is cc of a $10.0 million fixed annu payment, a $10
payment for specified public services that Panama is to pe orm, and a $58.2 ,milum payment calculated at the rate of 30 cents per n vessel fon tr the Anow k fuical year 1980. Altho?#h the First two payments are fixed for fiscal
the tonnage kyment could vary depending upon the extent actual c in 0%at year deviates m projections on which the PaYment was estimated.
IL Umer H.R. 111 the Panama Canal Commimionis required to reimburse the UYU Service Retirement Fund for the unfunded liability associated with the early ietirement provisions contained in the bill. Reimbursements are to be made fi-om "VV"priations of the Commission in annual amounts as determined by the Office of These payments to the fund will be considered as operating posts and, acca 'y, will be included in the tolls base for recovery from stupping.
It The Office of Personnel Management has estimated the total cost of the- Awfy lothement program at $219 million, to be amortized over a period of 20 years Akwough payments of $16.7 million annually. We have included this amount in the
irne Panama Canal Treaty provides for the establishment of a sygem whereby 46 Commission employees may be temporarily assigned to assist Panama in the "WAtion, of certain functions for which it assumes responsibility on October 1. The Akandmion. would be reimbursed fbir any of its employees who are so assigned. In wuh areas as the ports and railroad, where the Commision will make use of services
* be, provided by Panama, it is to our advantage to render assistance to the extent cowdVe to insure continuity of services at acceptable standards. In addition to the
entof personnel, this assistance would include maintenance and other sup16. Despite earlier efforts on our part to ascertain from the Government of .'Panama its needs in- this regard, it is only very recently that specific indications
16" been given us regarding the extent of supporting services Panama will regip-re. llhisy thay have underestimated the problems inherent in assuming responmbility Abk -apefttional activities of such magnitude and complexity as the ports and railxli fktause of this concern, I have advised Panamanian officials that by no later than July 20 we must have their final requests for supporting services. Although we 4ack specific information at this time on what Panama may request in the way of WW assistance, I believe it is prudent to include a contingency amount in the budget, t6: cover the potential need to furnish substantial support to the Government of Panam after October 1.
17. For the foregoing reasons, I have included $6 million in the fical year 1980 operating budget as contingency funds for assistance to Panama. Additionally, $0.7 zEflfion has been included1br payment of 19 current employees whose services have 'been sPecifically requested. As I stated earlier, no assistance will be provided to
oti...other than a fully-reimbursable basis.
18. Mr. Cbairman, I would like to bring to your attention at this tune that we have budgeted for continuation. by the Commission of sponsoring education and Uodical care for former employees of the Panama Canal Company and the Canal
166e Government, and their dependents, as well as fbr active Commi-mion employees and -their dependents. R is our construction of the pertinent section of H.R. 111 that the bill authorized the Commission to cover these costs. In our view, however, MR-111 as passed does not provide for continued sponsorship by the Commission of such other categories of persons as ministers, employees of non-profit orgranizations and others. Accordingly, no funds have been requested for providing educational and health care services to these persons.
19. As a final point in this area, I would like to call your attention to the fact that the Canal's pperating activities currently provide extensive support for capital program projects, and they will continue to do so under the Commission. ConseOin-fly, theie is a requu'vment for inclusion in the authorkation of a provision for reimbuning the operating expense appropriation from the capital appropriation. 2D. The total amount requested for the operating expense appropriation is the Sam do that contained in the May budget submission to the House Subcommittee







6

IA Pri 'o Although the amounts am the same, substantial reprogramming
t ren p1=7
C"ITAL APPROPRIATION
21. An appropriation of $40.4 million is requested to provide for capital equipment replacements and additions, as well as construction or acquisition of other, lant assets and fixtures, to remain available until expended. Of that amount, 113.2
cts i
million is required to discharge obligations of the predecessor a encies estimated to be outstanding as of September 30, 1979. Mi *or progie u e $5
d million for
channel improvements, $4.3 million for acquisition of additional towing locomotives for the locks, $3.9 million for the replacement of dump scows used in the dredging operation, and $3.5 million for a new tugboat.
22. The $40.4 million capital appropriation being requested is $5.1 million lea than that which was forseen when we Submitted the earlier estimates to the House Appropriations Subcommittee. This reduction is due pruinarily to a refinement of our capital projects program to delete funding for projiicts which are not expected to be initiated prior to the end of fiscal year 1980.
presentation on the nation requirements for the
23. This completes m appro
Commission in Fiscal Year 1980. The picture woyd not be complete, however, without at least a brief discussion of the revenue picture.
REVENUES
24. H.R. 111 requires that all revenues of the Commission, including tolls, be covered into the Treasury which serves as a means to reimburse the U.S. Government for the appropriations provided the Canal agency. It is worthy of noting that among the items to be included in the tolls base and, hense, in the revenue stream, is interest on the U.S. investment. In fiscal vear 1980 interest expense to the Commission is projected at $20.9 million, based on an average yield rate of 10.25 percent as estimated by the U.S. Treasury.
25. We are currently estimating toll revenues of $221 million in fiscal year 1980 at existiny rates. Revenues from other sources are estimated at $89.2 million for a total 0 $310.2 million. As compared to projected accrued costs, which is. the accounting necessary for the determination of adequate toll rates, we project a commission deficit of,$79.3 million, including $5 million resulting from a capital surcharge. This translates into a requirement for a toll rate increase of 35.9 percent, without considering sensitivity of Canal traffic to toll increases.
26. 1 should alert the Commi to the fact that ff implementing legislation is not enacted in the-aear future, the Panama Canal Company will be unable, under tbe procedures for c anges in tolls as set forth in H.R. 111, to place adequate new. toll rates in effect b r 1 This will result in an underrecovery of cost for ea&
day's delay in p cing adequate rates in effect Accordingly, to recover full cost of operations for the year, the rates established under H.R. 111 must provide foran offsetting overrecovery during the months they will be in effect. This could result in the need for a toll increase in excess of the 35.9 percent previously mentioned.
27. In closing, in response to your request, herewith is some general informadon concerning the outlook for fiscal year 1981. 1 would caution, however, that wi are now in the process of formulating the budget for fiscal year 1981 and we do not yet have finalized data.
28. Transit are expected to increase from 13,310 in fiscal year 1980 to'-13,515 in fiscal year 198 1, generating. tolls at current rates in the amount of $221 million and $231.6 million respectively. Such traffic levels will generate annuity payments,..:t'0 Panama of $53.2 million in fiscal year 1980 and $55.8 million in fiscal year 11981. Adding the $10 million fixed annuity payments and the $10 million public serviM payments results in total payments to Panama in those years of $73.2 million and $79.8 million respectively. Current projections indicate that the tolls increase of 8&9 percent required in fiscal year 1980 should be adequate to sustain a breaiteves budget in fiscal year 1981.
29. Mr. Chairman and members of the Committee, this concludes n!y opaumg statement. I will now attempt to answer any questions you may have. Thank you for your attention,
[The following was submittedl
SUGGFMZD LANGUAGE iroR AuTHoRmATioN
GENFMAL PROVISIONS
Funds appropriated for the Panama Canal Commission mav be notwithstanding section 3679 of the Revised Statutes, as nd-4 (31 U. C. 65), to







7

tba extent necessary to permit payment of such pay increases for officers or employows a may be authorized by administrative action pursuant to law which are not in s w; of statutory increases anted for the same period in corresponding rates of apensation for other emploryees of the Government in comparable positions.
PANAMA CANAL EMERGENCY FUND
For expenses necessary to defray emergency expenditures and to insure continuow efficient and safe operation of the Panama Canal, where funds appropriated for the operation and maintenance of the Canal prove insufficient for such purposes,
*",000, toremain available until expended.
OPERATING EXPENSES
mor operi tting expenses necessary for the Panama Canal Commission, including hire of passenger motor vehicles and aircrafts; uniforms or allowances therefore, as Authorizod by law (5 U.S.C. 5901-5902); official reception and representation expeum operation of guide services; residence for the administrator, contingencies of the administrator, and to employ services as authorized by law (5 U.S.C. 3109); maintaini altering facilities of other United States Government agencies in
; lie, of Panama and facilities of the Government of the Republic of Panama
*ar Panama Canal Commission use; and for payment of liabilities of the Panama Canal Company and Canal Zone Government that were pending on September 30, 1979 or-that may accrue thereafter, including accounts payable for capital projects, $W 262,00-0. There may be credited to this appropriation, funds received from the Panama Canal Commission's capital outlay account for expenses incurred for suppism and Services provided for capital projects and for payment to other United States Gwrerriment agencies funds received from officers and employees of the Commisision, and/or commercial insurors of Commission employees, for expenditures made for services provided to Commission employees and their dependents by such other agencies.
CAPITAL PROGRAM
Rw acquisition, construction, and replacement of improvements, facilities, structures, and equipment r ired by the Panama Canal Commission, including the
purchase of not to exceed orty-eight passenger motor vehicles of which twenty-eight
*F0 1br replacement only; to employ services authorized by law (5 U.S.C. 3109) for
of liabilities of the Panama Canal Company and Canal Zone Government
were pending on September 30, 1979 or that may accrue thereafter; to improve
of other United States Government agencies in the Republic of Panama
fitcilities of the Government of the Republic of Panama for Panama Canal
use, $40,419,000 to remain available until expended. IN
F)scAL YEAR 1980 BUDGET ESTIMATE
OPERATING EXPENSES
Progmm and financing
[In thousands of dollars]
1.980
Program by activities--Operating costs: estirnate
Transit operations ........................................................................................ 243,529
upporting services ...................................................................................... 49,278
General corporate expense .......................................................................... 97,840
Total operating costs ................................................................................ 390,647
Unfunded a4justment to total operating costs I ......................................... -28,790
Total program costs, funded ................................................................... 361,857
Change in selected resources .......................................................................... -4,091
Total operating obligations ..................................................................... 357,766

WNINNG OF OBLIGATIONS CARRIED FORWARD MOM PREVIOUS AGENCIES
Accounts payable and accrued liabilities:
-Panam a Canal Com pany ............................................................................. 60,035
Canal Zone Governm ent .............................................................................. 5,064




WW-


8

Operations undelivered orders:
Panama Canal Company ............................................................................. H, Ja
Canal Zone Government ....................................... 11 ...... .....................
Total obligations carried forward from previous agencies ................ 76,496
10.00 Total obligations ...................................................................................... 434,262
Financing:
11.00 Offsetting collections, Federal funds, services and supplies
provided Panama Canal Commission, capital outlay account ................. ifood
21.40 Unobligated balance available start of year ................................................... ...........
23.40 Unobligated balance transferred to- other accounts ..........................................
24.40 Unobligated balance available end of year ..................................................
25.00 Unobligated balance lapsing ..................................................................
40.00 A ppropriation ....................................................................................
Relation of obligations to outlays:
71.00 Obligations incurred, net ............................................. .......
72.40 Obligated balance start of year ...................................... I ........ ...................
73.40 Obligated balance transferred, net ............. "o .......................................... 1"." ..
71.00 Obligated balance, end of year, appropriated funds .........................
90.00 O utlays ........................................................................................................ 3$4,J52
Includes $20,854 interest costs recovered in toll rates and paid to the US: Trea=7 tatht deposit of tolls.

CASUAL PROGRAM
Progmm and financing
[In thousands of dollars]

Program by activity:
Transit operation projects ...........................................................................
Supporting activities projects .....................................................................
General corporate projects .......................................................................... ..948
Acquisition of other assets .................. 50
Adjustment for slippage and recoveries ................................................... -2,000
Total obligations, current program ....................................................... 25,244
Funding of undelivered orders from predecessor agencies:
Panama Canal Company .............................................................................. 145&
Canal Zone Government .............................................................................. 613
Total obligations ........................................................................................ 38,419
Financing
24.40 Unobligated balance, end of year ............................................................ '20 0
40.00 A ppropriation .............................................................................................. 40,419
Relation of obligations to outlays
71.00 O bligations ................................................................................................... 38,419
72.40 Obligated balance, start of year ......................................................................................
73.40 Obligated balance, transferred, net ..............................................................
74.40 Obligated balance, end of year ................................................................
99.00 O utlays ......................................................................................................... 28,052
1 Includes $425,000 in undelivered orders from Canal Zone Government capital funds that may
be transferred to the Department of Defense in order to complete various projects.







9
...,DAW of Panama Oxnal Commission-Capital Pmgram Obligations, ft8cal year 1980
(In thousands of dollars]
ft*t wk Amount
Tmwit projects..
Install chamber lighting- all locks ........................................................... 56
Improve wingwall knuckle fendering system-all locks ....................... 265
Replace and add tugboats ............................................................................ 3,500
Replaw dum p scows ..................................................................................... 3,860
Channel im proved ents ................................................................................ 5,000
Replace and add equipm ent ........................................................................ 655
Replace launches and launch engines ...................................................... 600
Replace m ajors buoys ................................................................................... 10
im proved ents to facilities ........................................................................... 366
Relomflon costs, canal support operations .................... ................ I ... 2,404
Add towing locom motives ............................................................................... 4,320
Construct launch repair facility ................................................................. 2,000
Construpt locom otive cranes repair pits ................................................... 130
Prior years projects ...................................................................................... 432
Tbtal transit projects ................................................................................ 23,543
Supporting services projects:
Improvements to electrical power and communication system ........... 65
W ater SyStem S im proved ents .................................................................... 328
Replace m otor vehicles ............. .................... i ............................................... 450
Replace and add equipment ........................................................................ 243
Improve ents to facilities ........... ........................................................ 42
M inor im proved ents to quartem ............................................................... 370
Reroof em ployee quarters ....................................................................... 4'.. .336
Itisulate em ployee quarters ........................................................................ 217
Improverhents to communication facilities-Phase II ........................... 435
K 6derftize em ployee quarters ........................................................ ........... 75
Prior ye am, projects _... ................................................................................ 142
CToW supporting services ......................................................................... 2,703

Peneral corporate:
Im provenwnts to Com m mission buildings ............ i ................................... 212
AReplace and add equipm ent ..................................................... i .................. 21
Advanced engineering planning and design ............................... ;., ........... 250
M inor cao tal additions and replaced ents ................................... I .......... 182
Retired ent and rem oval costs .................................................................... 30
i yew jects ........... .............................................................. ........... 253
Total general corporate ..................... I ....................................................... 948
Aoqmisition-bf other assets:
Replace dredge pipe and appurtenances ............. 50
ToW acquisition of other assets ............................................................ 50
Total Panam a Canal Com m mission .............. ............ ....... _.,_ ............... 27,244
FunP* of undelivered orders from predecessor agencies. ...................... 18,175
T6tal appropriation required .................................................................. 40,419

Summary of revenue and expense
[In thousands of dollars]
IWnsit operation-Revenue:
Tolls at exist' toll rates ................... ........ .............................. ..............
...... ....






10

Added tolls from 35.9 percent rate revenue ............................................ T900
Revenue other than from tolls ................................................................... 43,740
Total revenues ........................................................................................... 344,050
E expense I ................................................................................................................
Net operating income, transit operation ...............................................
Sup rting activites:
T venue ........................................................ .................................................
Expense .................................................................................................. ....... -4 0 n
Supporting activities expense, net ......................................................... -4,356
General corporate expense:
R revenue .......................................................................................................... U 8
E xpense 2 ........................................................................................................ 08,650
General corporate expense, net ..............................................................
Net of revenues over expense, reflecting capital surcharge collected in
tolls ...................................................................................................................... 4,983
11 Reimbursements of $7,000,000 from the capital fund have been netted against transit oper, nation expense.
2 Includes $16,700,000 for annual cost of early retirement program, and $20,854,000 for interest on the U.S. investment in the Commission.

OPENING STATEMENT OF HoN. JOHN M. MURPHY, CHAHMIAN, COMMrfrZE ON MERCHANT MARINE AND ftHERM
This is an especially important hearing because it marks the first tune in recent memory that the legislative committee with jurisdiction over the Panama Canal has considered legislation to authorize approtriations for operation of the cAnal. Authorizing legislation' is specifically req y H.R. 111, and it appears that under the revisions of the Budget and Impoundment Act of 1974, and other provisions Of title 1 of the United State Code, such legislation would be ne atever form of
agency is established to operate the canal, and more especially i no such legislation were enacted.
I sincerely hope that after the significant action of the House in passing H.1;L 111, the latter eventuality, that is the failure of the Congress as a whole to act on the legislation, will not transpire. As the members of the subcommittee will clearly recall, H.R. 111 is tailored to provide the closest possible congressional control Vir canal operation through stringent application of the appropriations process that applies generally to. all government agencies that are not excluded from the process, usually because they are dealing with funds. that are not truly funds of the Vnited States. In this caw the treaty explicitly provides that tolls and other canal reoenues are to be retained by the United States and under the constitution those fundii can be expended only in accordance with appropriation laws enacted by Congres .
Under the Budget and Impoundment Act and the Rules of the House, appropriations may not exceed the authorizations recommended by the legislative columittee and enacted by the Congress before the appropriation laws are considered.
In this case, the fast approaching date for entry into force of the 1977 treatV October 1, 1979-creates a situation that approaches emergency propo on& r rti Without the basic legislation establishing the agency to operate the canal (HA. 111), legislation to authorize appropriations for that operation, and appropriations enacted for that purpose, on October 1 the United States will lose its legal cppability to carry on the operation of the canal. For that reason, I urge careful consideratim by the subcommittee of the requirements for authorization and the prompt'and expeditious consideration of the measure in the prescribed legislative process.
Governor PARFirr. Our authorization request covers three appropriations for the Panama Canal Commission in fiscal year 1980 totaling $507.7 million. One is an appropriation of $40 million to be deposited in the Panama Canal Emergency Fund established by H.R. 111. A second appropriation of $427.3 million is required f6r operating expenses of the Commission, and for expenses incident to the liquidation Of Claims against its predecessor agencies, the








-M a ealComanyand the Canal. Zone Government. The
-priation required is $40.4, million to provide for capital eqdalpm eplet and additions, and, construction, or acquiet&tldTiFOe t assets: and fixtures.
milkt 'emergency fund will be available to the CommissmM a* eatinuing bass to defray emergency expenses, and to
m eegka uig, ~lena d sae operation of the Panama
M .&ftand apropratefor operation and maintnceoth diam p hfieri for such purposes. .ngge11 imposes*,two specific, limitations on the use of these
.M.Sta, teycan beoued to cover increased costs attributable to unprogramed increases in traffic only to the extent that such
gpggee aditinalcompensating revenues.
:0pe fuds cannotbe used to make any of the payments
requred y article. XIII. of the Panama Canal Treaty of

C W. en xpense Ap 0ration of $427.3 million is also I., f thi amo6 o i 0 million is needed to discharge of thePnm Cana Cmaynd Canal Zone Governto bouStAnding- as of September. 30, 1979, and
&WvILnto cover regular oprtn expenses fte hms
year 1980...
111 requires that, in fierms of funds, the Commission make start, so.to..speak, in'thbat all unexpenxded cash balances in
of the Pan'ama Can~al Company and: Canal Zone Govern.yw tea-end 1979. Must: be covered into the U.S. Treasury. The
to' be deposited in thie U.S. Treasury is estimated at $88.1
siefrom these prior obligations, we project $350.8 million will
aed to cover operating expenses of teCommission itself in
Id in the budget request are "treaty payments to Panama
ated at $73.2 million, $6.7. million for assistance to Panama to abused as required and to be fully, reimbursable, and $16.7 million associated with the early retirement provisions contained
ieull.'The total' amount4requested for the operating expense
*is the same as that contained in the May budget
to the House Subcommittee on Appropriations.
An appropriation of $40.4 million is requested to provide for espital equipment replacements and' additions, as well as constructies or acquisition of other plant assets and fixtures, to remain
Athlble until expended. Of that amount, $13.2 million is required (wdigeharge obligations of thle predecessor agencies, estimated to be
hthtaningas: of Septembeir 30, 1979. The remainder would be uagd, to, fund capital projects in 1980.,.,. IfMajr projects icue$5 million for channel improvements, $4.3 million for acquisition of additional towintg locomotives for the tests $3.91 million for the replacement of dump, scows used in the dsdIn operation, and $3.5 million for a new tugboat. -f- H.R 111 requires that, all revenues of the Commision, including ta& be covered into the Tesrwhich serves as a means to






12

In fiscal year 1980, interest expense to the Commission is prqjo* ed at $20.9 million, based on an average yield rate of 10.25 peavo* as estimated by the U.S. Treasury.
We are currently estimating toll revenues of $221 milh-on....
fiscal year 1980 at existing rates. Revenues from other sourcei. are estimated at $89.2 million, for a total of $310.2 million. As catkpared to projected accrued costs, which is the accounting necesewy for the determination of adequate toll rates, we project a Commigision deficit of $79.3 million, including $5 million resulting from :, a capital surcharge. This translates into a requirement for a toll rate increase of 35.9 percent without considering sensitivity of Coial traffic to toll increases.
I should alert the committee to the fact that if hinplementing legislation is not enacted in the near future, the Panama:Canal will be unable, under the procedures for changes in tolls ag get forth in H.R. 111, to place adequate new toll rates in effeiA by October 1. This will result in an underrecovery of cost for each day's delay in placing adequate rates in effect.
Accordingly, to recover full cost of operations for theyear, the rates established under H.R. 111 must provide for an crffsetftog overrecovery during the months they will be in effect. :This could result in the need for a toll increase in excess of the 35.9 pordefit previously mentioned. Current projections indicate that th& tolls' increase of 35.9 percent required in fiscal year 1980 should be adequate to sustain a break even budget in fiscal year 1981.
Mr. Chairman, members of the Committee, this concludes my opening statement. I will now attempt to answer any questions you may have.
Mr. HUBBARD. Thank you, Governor Parfitt.
In reference to paragraphs 16 and 17 on page 7 of your staiement, what is the basis for inclusio2 of $6 million in the operating budget for maintenance of the ports and railroad that are turned over to Panama on October 1, 1979?
Governor PARFM. The treaty contemplates that Panama may ask for assistance from the Commission on a fully reimbursable basis. Original discussions with Panama have determined a limited requirement to date. However, recent discussions with Panama representatives indicate that they are having some secopd thoughts.
It is our judgment that there will be substantial assistance.requested by Panama and we have placed in the budget $6 milliowas a contingency for that purpose. In the budget there is also $700,000 to pay for reimbursement of 19 individuals requested by Panama. That figure has now grown to 73 as of several days ago,, and I project that the personnel support and the support in other arew will increase over time, and that is the reason for the contingency amounts in the appropriation request.
Mr. HUBBARD. Where is the $6 million included in the budget?
Governor PARFm. The $6 million is included in the budget for contingency purposes. We have identified this amount for appropriation to be returned on a reimbursable basis by Panama if drawn down for that purpose.
Mr. BAUMAN. Just one follow-up question.





13
a t .iiiiiiiiiii is t -o f t h e G o v e r n m e n t o f P a n a m a a s f a r a s
he oblgatio
-upidetst teCaa- oeI i otaou 8 ilin
GoerorPAnr.Bewen 85 ilio ad$9milin
.,..A r~j BvmAN.If youexten theicredisi:,sitoiseakiorith
an,:ots oe otH..11 eqie ha,8 ilintob
paid niv|
a jutseem to e thee isa cotradctioninialowig ith
v redkw. to countthe moeyibefre the liquiate it
b-,VvsorPAR~. hee redicusinsuneraywhchwol







..b~~~~~~~rsM#~~~.. th US.Gvenen ortes eries css oldb
lre~upd~b te US. ovrnmnt y ofsttig aaist aymnt
-dd6Panaa uner te traty
Mr.B~uAN.Do heyundrstnd hat

PAM M. essir

Mr. BumAN Is hat ccepable
PAR y unersandig i tha it s aceptble

Thank you.i
W. Hun~ARD. Pease lok -at aragrahi18ionpagei7ofiyou
stittement.iiiiii
V6 at theformr emloyee" reerre to here
Govrnr PR~~r.Thy ae etredanuitnt, smerei
who a disbled Thee ar als som whowillbe doppe fro iiie~~~~~~~~ ~ ~ ~ ~ ~ .............. rdcto i fre cioneesiaedb
the treaty.ii
.~~~~........... Mr Hx BR .W a stelg lbssfrcniun opo ieiiiiii
education and medical care to such former employees and theiriiiii~iiiiiiiiii
d e p e n d e n ts?......... iii iiiiiii iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii
Governor PAR m. It is our understanding and interpretation of
HW 11 tat ine w ae prmtte t prvie spprt oriniviiiiii uaswh repidb teComsso, ht teqalyfllw ta












piiiiii iii"iiiiiiii-i-iiii






11
GoenrPR= hti nitrpeaino iB sr: A wol epcflyrqetta he eakdt rvdlemio
ale ifirtiaiiittemiit






1 5i iiii~ iiiiiii ii~ iiiii iiiiiii ii iiiiiiiiiiiiiiiiiii
erntbmti -bti ntaalbl:t aeupaydfcista r
b kc rre iiioriiiiiiiiiiiiiiiiliiiiiiiiiii expecteiiiiiiiiiiiiiiiiiiiiiiiii 1980
B u t..t.o....e..x.e.n..t...t..i..is..t.r..e..in..o...he.....asiiiiiiiiiido ii
rwul i*a reucton f th ne diect nvetmet oftheU.S
Akm~rmentandothereorea reuctio in heiaountifiineres
that wuld berequirditoibipaid
511t. titm = Watis ean by he efeenc tothe$5 iini

incudd i te dfiit s esltig roma apialsurhage
taf~venorPA~w. he ota rquiemet fr nw pogrmsiiii fiscal yer 1980 fo capitalleplacemens and addtions isiiiliiiit
ed t be 234nllin. Te~derecatio cos basd a theassesio
-Comissonis 18milion Thre s pprximtel a 5 iiiiiiiii In orde to prvide fuding fricapitlirepacementi'ai$5millio
dtorhas een dde

*4 1HUBBRD.:Do yu no incude he etirecapialirquirmen
for 980 s request inthe pprpriaion n th coss tobeiiiov
frotdltols, particular inivieiofitheiroiisiosiof setioni23





i'iiifiiilliii
A qas ow f $18millon pls the$5 milionfacto.iAlliiii
W6iiiiiiiiiiiiiiii
W''Mr HUB ARD. he tbulaton o opertingexpenes...page16 ..
Yor taeen ecuds ntrstan erai ohr onud oss
ut ap ar nt y in lu es de r ci ti n om 188 ilio nh coss wichareuse asthebais or he pertin apropiaioniiiii
requested-seipagii14ireariingithat
explan whydepreiatin is ot exludeialonlwithothe
noiiiiiiiiiiiii
OovmorPA~ir. amno sue unertan yur uetio, i.iiii~i
Mr. HUBBARD.iOK.
The tbulaton o operting xpenes onpagei6iofyouritate

ment xclues iteret an cerain thernonfnd cstsbutippar
ently include eprecition, smei$188,iiniteicostiwhichireiuse
as~th basi for he oeratig appopriaions
.Can yu explin wh depreiationisiniiexcluedialogiwit
other non-undicosts
,* Gvernr PA~iTT Wel, beausedeprciaton iithesoureio 'tal fndingand w have requremenifori$3imilionio capta fnd, ad e ntciptetht o b mdeupby hed~reiiiiiiiiiii 'Ati $18millon pus he $ milion dditona caiiiiiiiii. W Wye o hae te reourcs tlcovr a 23 illin caita proram IfE HUBARD.Goveror, te quetionswhichIiam owigong.it
"k-Wil b bsedupn he atgoresof xpns inictedinth






16

We say this on behalf of all of us. If you have all the facts in front of you-and if you do not have the information, then you
supply it as soon as possible.
Please describe the functions that are included under this heading and the amount requested for each, talking about general Canal expense, page J784.
Governor PARFirr. I do not have the reference document in front of me, sir.
Mr. HUBBARD. General Canal expense on page J784. You do not have that?
Governor PARFITT. I do not have a copy of the hearing.
Mr. HUBBARD. This would again be page J784.
Governor PARFrrr. I can give you the general components that are made up in the general expense.
Mr. HUBBARD. Describe the functions that are included under this heading, "General Canal Expense," and the amount requested for each.
Governor PARFirr. Generally, the components that are in that are the Executive and operations direction of the Canal organization. That includes the cost of the financial Vice President's office, personnel, the Marine Director's office, and all other Executive direction elements. In addition, there is included in that category the cost of early retirement. There are the alien cash relief payments. There is a contribution to Federal health insurance and the cost of a judicial system. There is also the contribution to Federal health insurance programs. These are the main elements that are included in this item.
I will be g) ad to provide you a detailed breakout that make up the numbers in the total.
[The following was received for the record:]
The question was understood to refer to the General Corporate category of expenses, which are as follows:
General corporate expense
[In thousands of dollars]
1.980
atimate
Executive direction ............................................................................................... 5,245
O perations direction ............................................................................................ 3,562
Financial m anagem ent ........................................................................................ 10 753
Personnel adm inistration ................................................................................... 3:879
G eneral services .................................................................................................... 6,100
Recruitm ent and repatriation ............................................................................ 4,443
Em ployee states travel ........................................................................................ 1,522
Transportation of employee vehicles ................................................................ 859
Apprentice training program ............................................................................. 1,495
Employer contributions to FEGLI, FICA and Incentive awards ................. 750
Early retirem ent ................................................................................................... 16,700
Interest .................................................................. ... .... ** .... 20,854
Death and disability compensation ................................................................... 1,568
Employers contribution to Federal Health Insurance plans ....................... 5,147
Alien cost relief paym ents ................................................................................... 1,579
Alien cost relief annuitant welfare program .................................................. 309
Reimbursements to DOD for education and health costs ............................. 12,388
Probation, parole and judicial system .............................................................. 626
M ail and directory unit ....................................................................................... 454
Community and professional library ................................................................ 581
Joint personnel program ..................................................................................... 476






1ii

R11% tobuildbpand excss fkci....exense.............................. .......... 90
I wkwtin o~hred redts romPanma ccontsrecivale ...... (17 ii
Pana a S cia Seuriv p ymen s ................................................... 71
Alloher xpe ses nd redtsnet ................................................... 5 l0
T*W p n re cotpm e ~ ss ........................................9865


A of eww& Canl exense for isca yeai198iiiw

Creneal cnal epens
[in tmsane ofiiii"
......
c r Iiiiiiiiiiiir t iiiiii~
Nimmft~o Paa~w esimate
Annuty pymen basd o tonage ranstin ....... ....................i5,22
Vixe ann ity paym nt ..............................................................i1i00
Publc se vic pay ent.............................. ............................i1i00

Techicalassitanc proidedPanaa a reibursble.basi ..........ii67
of families du to lanttrandr ... ....................1,06
ketalsioe an nw' e ernwual cloe ou .....................i59
P rin ing of f rmo..... ....... ............... ........................................i8
Reprducion f dawin offiwiitis trnsfrredto ahma...........ii
Ilea4servces rovidd toformrempoyeesby DD ................... 366
AccrW fr m rineaccden s ..................................................... '00
:... ocru l fo oth r ca ualt loses .................................................i20
of p bli are s .......................................................i,17
Voen ral aun h ac iviy... ............. ....... '..6 ..............................i11
depo ............... ....... V .... ...................................i25
= can l s udi s ............ .............................................i5
Boar oflocl inpecors marne ccient nvetigtion ...............ii0

cust m s laiso un t .......... .... *......... *...........* ...............................i41



i=odf r of Fery ridg ..............................
A ll thercos s ...................................................i9 i
Dq~rt m ........... 65
j t i . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tpta~ge eralCan l ex ens s ....... .............................................i9,57
.Mr. AUM" Thethins tht cocern e, a leatiaferiasta i




P O W im ii ii~~~~iiiiiiiiiiiiiiiiiiiiiiiiii~iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiNNNm NN
1 8
M r B A U M A N J u st to fo llo w u p h a v e y o u h a d s im ila r d .. ii
from yer to yar in'ecent ears, icrease of th samooa'i.0i
iiiiiiiiiiiiiiituiid eiiiii
ii ~ ~ o e r o .... ... ....... .......... .......... .......... ... ... .... ... ...
iiiiii~iiiiii~iiiiiiiiiiiiii~iiiiiiiiii~~iiiiii i n fla tio n a ry 'in c r e a s e s.iiiiiiiiiiiiiiiiiiii
In ote wodtecs ficeae fwgs rm
iiiiiiiiii~ibeen a great enrichment in the actual elementwof costiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii
iiiiiiiiiii~ Mr. HUBBARD. What is the significance of the heading ,,"NaA!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!I
iiii~ii~~~~~~~iii iii~~~~~~ !!iiii~ ~ ~ ~~~~P oliii~~~~~~~iiiiii i cy C osts~iiiiiii~~ii
iiiiiiii~iiiii ~Governor PARY=. Which particular item, siriiiiiiiiiiiiiiiiiiiii~~ii~~iiiiiiiiiiiiiiiiiii
iiiiiii~i!!!iMr. HUBBARD. Under "General Canal Expenses." It would be~~i~~ii~~ii~ii~iiii~i~~iiiiiiiii~~iiiiiiiiii i
iiiii~i~iiiiiiiipage 784 again right at the top there.iiiiiiii~ii~iiiiiiii~~iiiiiii~iiii~~ii~~iiiiiiiii
iiii~ii~iii ~Governor Piiiiiiii~iwnw. Well, these cover the payments to Pantnia.iiiiiiiii~iiiiiiiiiiiiiiiiiiiiiiii~iiiiii
Fo xmlte$0mlinta hsbe gedt yVM17i
!!!!!!!!!!!as a fixed payment. The $10 million for services, and the!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!iii
pe toaan codn otetray hsIswaw,,i
reeec oi eisofntoa raycss
iiiiiiiiiiiiiiiiM r. H UBBARD. W h at is the eff ect on the e Ofi~iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii~iii~iiii
iiiiiiiiiiiithe provisions of H.R. 111 6, rawing onseritiiiiiiiiiiii of thbliiiiiiiiiii i~iiiiiii~ii~iiiiiiiiiiii
Sttst!uto lisecp lisfrdmg ovses h
loks an iiigteatoiyofteCmiso d!~p
i iiiiiiiiiiiiiii~~iiiiiiii~i~iiiiiiiiiiiiic la~~iiiiiiii im siiiiiiiiiiiiiiiiiiiiiii

iii~~i iGovernor PAR~i~~i~~m. The change really is, the limitationiiiiiiiiiiiiiiiii
iiiiiiiiiiiion the Commission in terms of paying for claims, or notiiiiiiiiiiiii~~ii~iiiiiiiiiiiiiiiiiiiiiiiiiiiiii
iiiii~ii~~iiclaims in excess of $120,000 outside the locks. That has.. th. eiiiii-i~ii~i~~iii~~iiiiiiiii~~iiiiiiiiiiii
iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii~iliiiii i m iting th e liability of th e C o m m ission.iiiiiiiiiiiiiiiii
,i "We estmat that the actual annualized cost for A, for'i'ii'i~iiiiiii
iiiiiiiiiaccidents w-puld go from $8 million to $6 million, and vwiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii

ii~iiiiiii~ii~iiirefl ected th a t in ou r b u d g et.iiiiiiii~~iii~iiiiiiiiiiiiiiiiiiii~~iii~~~iiiiiii
iiiiiiii~iiMr. HtMBARD. What is your current estimate of 1986iiiiiiiiiiii'fiiiiii~iiiiii~~i~~iiiiiiiiiiiffiiii
iiiiiiiiithrough the canaL expressed in Panama Canal tons? ,, ,riiiiii~iiiiiiiiiiiii~iii~iiiiiiiiiiii~~iii
iii~iiii~iiGovernor PAiiiiiiiiiiniir. I do not have that figure before me sir.iii~~ii~iiiiiiiiii~iiiiiiiiiiiii
iiiiiiihave to provide it for the record. f illiiiiiiiiiii~~~iiiiiiiiiiiiiiii~~iiiiiiiiiiiiiiiiiiii
ii~~ii~iiiiiii[The following was received for the record:]iiiiiiiiii~i!~ii~~ii~iiiiiiiiiiiiiii
ii!iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii~~~iiiiiiiiiV o~iiiiiiu m i& oiiiiiiiiiFTiiiiiiiiu mciiiii
Ou curetesimt o hevoue ftrffctht il oe hruh i
liiii~iiifiiscal year 190, in termsof Panama Caal net tonnge, is 177.
iiiii~iiGovernor PARiiiiim. We estimate 13,310 transits, and we-iiiiiiiiiiiiiiii0ii b
fiuei em ftnbt onthv htwt e
M r H U B R ........ u......t....r...d.....a............






19i
Mr. Rvnm. -Mbat woubt be the effect on payments to Panama
a~auremenabe icrease in traflc?
Twvaor ages. Well, it would be a favorable effect. Any
af weuld have the effort, of course, of increasing
neamabut the net effect would. be a reduction in
for tells rate increases, overall,
q.! r t no,'hat procedures do you anticipate using to monitor ~ ~ ~ th ult f-ulcsrie rovided by Pnama under paraGmmorPAR'F. We have, several months ago, provided to 1eaat pao awih outlines our views on this subject, and we
Arw~wi~k wihahm now to get ageement on procedures we wiRestblM foaveifying quality, adalso for verifying performDo you anticipate any problems of transition to
Panaa~s erosion of these services?
_Oewtor awrr. We will have some problems, obviously. You canot ranferfunctions of the scope that we are transferring TIMAMPXL I not have problems. We hope that the extensive plaal hathas gone on will miniimia those problems, and we
W O~at tohe the case.
HuBBAR. In the budget program for the Panama Canal V% fo fscal year 1980;, submitted on the assumption that
wobld enact legislation contining that agency in .corpovarious casts of executive direction, operations manageE~et, esnnel administration, general services, and employment
410W re hon-under the heading "General and administrative
7 nsesunder limitation."
f~siton Page J759 and 77O through 772. Where are these costs
ahon r.the budget estimate for an appropriated fund agency that
woud b etablished by H.R. 1117
as 1kwrilor PAnsww. We have not identified them as such, because
HR..111A all costs would be under control. Right now under
th mbrae form only this particular portion of the costs are unde tiht control. That is the G. & A., which includes primarily
general overhead items.
Btunder H.R. 111, all costs are under control, under limitation.
Mr. HUBBARD. What is the reason for the increase of directors
epnees from $11,000 in 1978 to $79,000 in 1980?
..&kernor PARrrr. The 1978 figure seems in question to me, sir. I vouldhave to verify that figure. It seems unusually low. In any 10"tthis figure is the best estimate we have for customer's participation, and board meetings, and so forth.
-We would anticipate thie poteitilfori-"much more travel under the new arrangement than there has been in the past.. Mr.:RUBBARD. Why?
Governor PARFmr. Well, there will be a mixed Board. Either the Pnmainwilb cmnga tothe United States, or the American idinbrs will be going to Pnama, so there will be considerably n00M travel Performed, and that cost is included in this element of expense.
Mr. HUBBARD. Increasing it $68,000 in 1 year?






20

On the other hand, in 1978, we had a Board made up of mieinbers of the Government, their travel was limited, most of the meetingit.. were right here in Washington, and very little costs were incurred.
I think if we look at the figures for other boards and other yeara, when travel was from all parts of the United States to W or to Panama, you will find that the costs are much higher::.than:. that, and I believe our costs, as we indicated for 1979 and 1980, hke about the order of magnitude that we will experience.
Mr. BAUMAN. If the Chairman will yield for a question on that. point.
Governor, have you been given any understanding from t1w. State Department about the prospective functions of the BoarcV., This is a question left untouched in our legislation that was discussed privately by a couple of witnesses who discussed the likelihood of frequent Board meetings to address the questions that arose.
Quite often the administrations made statements that referred to the fact that we have a 5-to-4 majority.
Do you have any personal knowledge about what the projected, activities of the Board will be?
GovernorPARFrrr. Not in specific terms, but I think all of us expect there to be a requirement for many more meetings during the initial stages of the establishment of the Commission. There will be new procedures to be established by the Commission, bylaws, authorities that will be exercised by the Board within the limitations imposed by Congress, and so forth.
I would expect the Board to be more active in the first year than they have been in the past.
Mr. HUBBARD. How much of that estimate is for entertainment and expenses over and above the per them authorized for members. of the Board?
Governor PARFm. I would have to provide that for the record, sir. We will certainly do that for 1979, which has a total estimated cost of $63,000. We will break that out in terms of travel expensest per them expenses, and representational expenses.
[The following was received for the record:]
Bomm oF Dumams Com
Costs for the Board of Directors since 1973 were as follows:
Fiscal year: Amowa
1973 .................................................................................................................. $63,000
1974 .................................................................................................................. K OOO
1975 .................................................................................................................. 67,0-00
1976 ......................... o ........................................................................................ 63,000
1977 ................................................................................ o ................................. 37.000
1978
11SPOOO,
The reduction in expense in 1977 from previous levels was due to the absenoe of an appointed Board from January through August 1977. The further decline in 1978 reflects the appointment of a Board made up of members of the Government. As compared to former board members who resided in cities throughout the United States, the present members reside mostly in Washington, D.C. area. As a result, travel and per them costs relating to Board meetings were substantially less than before, particularly as they relate to meetings held in Washington, D.C. Under IF X 111, the Board will be comprised at the maximum of only two members of the U.S. Government, with four members being Panamanian nationals and the remainder,, U.S. nationals from the private sector. This dispersion of membership, coupled with the forseeable need for more frequent and extensive meetings of the Board during











per~~~~~~~~~~~~~~~~~~~~ diman.oaltaspraio................................. $1,4
and ~ ent ......................................................................,6 .


A W 6t er..................................... I..................................... 3

............................................................................i1,81
HuuBRD.TheexpnsesfortheAdmnistato in198 in
-Axo~e~to $2.,22N fro $2,44,00 fourth resientifithiCom iP&RY~dt buresiiiii78,ii0 What i the easonfor tisiinrease

Go~kno: PAR~. Agan, sir I woudihavitoiprvide tat fo therecrdbutI tinkthee ae -ertin lemntsof he rga iiiii
.-Umthatprio to his erio of ime er crrieiothrielment
goviiiiiii
Forexmpl, ntheCaalZon Gvermet.The nwiiiiiiiiiiiiii
conmIkti. recarie unerth Adinstrto'sOffcean
vU4,AndI wll b, gld t idetif thoe chnge foryou

Mr. uwmw Butexpeses f $2922,00

GOI~orTART. ell th $.5 illon n 179.stiat isiiii :Iaed~f theexising ituaion.To tat yu mut adiinfatioian
son*elehens o cot wichaf-6nowbeig brneby the aci
** sufh'hthe~naI one Gvernent.So tereiaeicitaincost

thatflowinto thi pariculr elment wheeas nithipasithe
charged aganstisomeioteriactivity
Mr. u~am. Ths isan icreae of$678000 yeaiforexpeses P.Awrr. o, sr, Isee he bidgig heeiifabou
HUBBRD.Well fo 198 th expnse fortheAdmiistato I~e 2,92,00, ad fr th Prsidet o th Comanynow ii
whic wold e aninceas of 678000
Do yu hod ths toinfltion






22
Activities transferred in from Canal Zone Government 9 full-time rmanent positions ($334,000) and other costs ($10) ................. ....................
Transfers to other activities of labor relations staff ($102,000) And,
safety office ($147,000) ..................................................................................... 00
Reduction of 4 full-time permanent and 1 other employee due to reorganization ...........................................................................................................
A ll other variations ..............................................................................................
I 177 7
T otal ............................................................................................................ 81000
The current estimate for this office is somewhat higher than the PresMenes budget due principally to the requirements for a coordinating committee tcv.4*p& sent the United States interests in the Commission's negotiations with Panama =d an ombudsmen as required by H.R. 111.
Mr. HUBBARD. Does anyone else on the committee want to ask'a question about that tremendous increase of expenses?
Assuming enactment of legislation establishing the Commisffion as an appropriated fund agency, there will no longer be a re i ment for a Secretary of the Corporation.
What plans do you have for continuation of the functions-of that office insofar as they may relate to operation by an appropriaW fund agency?
Governor PARFirr. The Secretary has many functions,, on 0 Of which is liaison with the Congress here in Washington. One is as Secretary of the Board to develop programs, and take care of minutes, and so forth. We anticipate there will be a requiremei t for continued operation of the office of the Secretary.
Mr. HUBBARD. Do the estimates shown in the 1980 justifications for the Office of the Secretary include an entertainment allowance?
Governor PARFITT. There was $2,000 included in that account, but the Appropriations Committee has deleted that. All representational funds that were included in the proposal before the Appr priations Committee were deleted, except for a total of $3,000: &r the whole Commission.
Mr. HUBBARD. It is my understanding that the Public. Inform ation Office also is responsible for the tour guide, launch and receotion services. Will you describe the function of these operati6iris.
Governor PARFrrr. Well, as you have indicated, the Public Information Office has a guide service which provides guides 'at the locks to give explanations of the operation of the locks to visitors. They also periodically give tours, some are on a pay basis through the Panama Canal. It is a public information effort in order-,to accommodate the general public, as is most usual in similar activities. N
Mr. HUBBARD. The combined estimates for these public inform-ation services increases from $752,000 in 1978 to $990,000 in:J9N. What is the reason for this increase? Maybe over and above Ifinflation"?
Governor PARIFITT. I believe, sir, this is a return-I Will haie to verify this for the record, to the custom of participation In, affairs and activities throughout Panama, as we used to in the past when o
relations with Panama were better.
Mr. HUBBARD. What about the representation allowance"9 Is
that two words for entertainment?
Governor PARFirr. That is correct, sir. Basically for entertainment. Payment of costs. Is it under the Administrator, or under Public information? If you are talking about the Administrator, it






23
basicall y an account under which the Administrator, in the past, iHe Paama. Canal Zone Governor, has been able to entertain Ammmrk gSeatrs Congressmen, foreign dignitaries, and all others who appear on the scene.
Mr. BAuxAN. Maybe the chairman would like to ask what it was .in tilast few years.
.Mr. Russann. Yes, maybe the members who have gone to IPAtmffulled to see these two new words "representation allowane2' How much was spent before that, in the last 2 years?
... nemePAarrr. I believe the amount, sir-certainly, since my arrival in 1975-the amount in that account was $25,000. We have nboest that total amount, certainly did not in 1976 and 1977. 1971 andl97-9 probably come very close to that figure.
Mr. HUBaRD. Under the Panama Canal Treaty the Panama Cana Comission is to have an Administrator, which position "Astop fadb a U.S. national to the year 1990, and a Deputy
Adinistrator, which position must be filled by a Panamanian
to the year 1990,.
. 'paly, sectin 104 of H.R. 111 prescribes a Chief Engineer to. onted.by the President, and section 111 prescribes an
.......appointed. by the Supervisory Board of the Panama
,@:Executive undrae tfid qualified appointees for
a tion? Do YOU know?
P~errrr. To my knowledge there has been no formal
fave ai name ta would recommend for one position, but
*ntsubmitted that at this point i time.
numAR. Which position?
rarPArrr. Ombudsman.
daian.What would he or she do?
r PAnrr. He would perform the functions required by js a requirement of the bill, that an individual be appointio would be the individual who interfaces with the people MMarea, and the DOD, the Commission, and so forth. This is a
,that has been born in H.R. 111. It is not a position which tempended by the administration.
16.h"ftfAxo. All right. Are enough of the key officials within tPnadi Canal Organization remaining with the Commission to faster continuity of operations?
GbhwanorT"AFrrr We certainly hope so. The final outcome will not be known until the legislation is passed, and people make their final determinations. We anticipate at this point in time that we
*il hard sufficient skills to continue to function.
Mr What about the positions of the Deputy Ad~ministrator and Chief REgineed: Have any of- these positions, to yorknowledge, been Stokcyet? There are less than 90 days beforeuthey have to take
MGoviraor PARrrr. We have been informed that Mr. Manfreedo will be the nominee of the Pnmiasfor the Deputy,-and we
weat aniciatevery shortly to perhaps accelerate our coordina-






24

for the time being, the individual that we have now,,: he aw -11 charge of the Engineering function. That man is *h"
certainly would recommend that he be, designated the Chief neer, and time be afforded to find a replacemen
Mr. BAUMAN. Who is that?
Governor PARnn. Colonel Plunkett, who is a colonel, oU ft Corps of Engineers.
Mr. BAUMAN. But you have heard nothing about the A n msimpti* tor for Personnel? ... ..AJ
Governor PARmT. I have heard nothing about the Admninio"MW tor s position. M
Mr. HuBBmw. I have other questions, but at this timej 11.4eekok I am going to yield to the other members. I have other repeat, but I think it is fair to give them a chance.
Mr.
Mr. BAUM". I Will not take very much time,, because'. "re, Aim other members who wish to speak.
But one question arose out.of testimony that you gavio.s. Ij,
House Appropriations Committee in May. In response to.: a qudttion by Mr. Conte, you made reference to the GovernmentOWJ DfttV Control Act, saying that a new Commission would exist. ing somewhat in the last two paragraphs the answer I Zatve me, you say, "on the basis of the law, we interpret that sectim 2 mean the Commission could continue to operate if it had mea4$,by financing such operations, and that Congress could not. redrict programs and expenditures to the point that the Commission *oW be destroyed or incapable of carrying out its authoriied prim=y mission of transition ships through the Panama Canal."
In response to your question, therefore,, the act would n6t rovi& the Commission with a loophole to permit the Commission to ftake expenditures against the will of the Congress, unless it evident that in carrying out the congressional restri., ons OW
mission would be destroyed or incapable of meeting its aut InISSIOn.
That seems to be indeed a loophole, in the sense thatit give a wide latitude to the Commission as to what wwld WDoes that reflect the Commissionys position, the answer. gave back then? Y1RU
Governor PARFm. I am not sure. You read it soqxdclqy. ie, and I am not sure that I got the thrust of the answiRnX appears to be one constructed by our legal staff.
I think what you are saying, if I understood you co jo
there would be some mechanism found to provi the iftaiqr
authority, to provide for performance of the fimctions of the GovernmentMr. BAUM". What it seems to assume is. there is. irthereat'laftassaw under the Corporation Control Act to allow you to functionOd"4*
1 11 I
er the new Commission has placed a function or not. 0,0
MY question to you -is, precisely what would that,: entaffiZ jaw could you possibly continue without appropriations? Governor PAwmm. There will have to be some provide appropriations. The Congress wil.1 have toad in WM6 fashion, precise fashion unknown to me, to: ide1undingi: i,






25
otdor to to operate. As a matter of fact, there will not
even be a Commission at that time if there i no legislation.
Mr. BAum". Well, according to what we have, according to the interpretations placed on us by Ambassador Lopez-Guevara, and others that I have quoted to you this morning in my opening
t; they do not see any necessity for implementing legislatiba, and :could care less whether it is in place. They expect to walk iMbthe 6ftlces on October 1 and start functioning.
Governor PARnrr. I think the presumption is, there are several odf-"ecufing portions of the treaty document, such as those requi payments and turn over of certain facilities to Panama,
and, they:expect that they will be complied with.
7he residual problems for the canal organizations are that, althd*04he Panama Canal Company, and the Canal Zone Government do not go out of existence, they are precluded from operating in. the Oinal Zone. So there will be no Commission or predecessor
ciii authorized to operate in the Canal Zone.
him always been my opinion that some mechanism will have to beAbdad: for authority for the U. S. Government to continue with the fWwdons that remain the responsibility of the United States uAdw the treaty. I do not know precisely what that mechanism will be.
. I _tMr.:.'BAu3mx. Well, of course, until we finally act on legislation, we will not know, either. But it may be a simplistic view of their au*erity that members of the Commission have taken. They seem to, think that under the treaty they have the inherent right, once tbW..:-gamsovereignty, to come in and begin functioning, and I have
*.question. to you about that.
p is the mechanism suggested, less than 3 months
a8k,.::for %UY operation? All of the money that the Commisdowlas available to it today will be returned to the U.S. Tiiwsury, I assume, even if legislation does not pass. Governor PARFm. No, I do not think that would be correct, sir. It- i's the: legislation that requires the funds to be returned into the Treasury. So if the legislation did not pass, the funds will remain the fands of the Panama Canal Company, and the Canal Zone Government.
Mr. BAumAN. By whom will they be dispensed, by what auGovernor PARYrrr- That is the problem. We will have to deter0 .111, the means by which they will be disbursed, and how the
functions which remain the responsibility of the United States will be carried out, and I do not know the precise mechanism for doing thia
Mr. BAumAx- And so far there has been no system established? KGovernor PARY=. There has been some discussion, I understand, but the main thrust of our effort has been to have implementing
ation in place, and to have appro nati consistent with the kgislation, prior to October 1. This 9== very, very difficult because
of the timing comMdnt that you alre4dy pointed out. As an operator, it is extremely difficult to establish the budget vithout the framework of legislation, to defend the budget without knowing what the terms of the legislation will be, and also, to establish the tolls based on that legislation, whatever it may be.






26

Mr. BAUMAN. Well, let us assume then that the legislation.....ip passed in the form of H.R. 111. 1 will ask you about the Pananw, nian side of operation as far as finances are concerned, sir.
In this statement that I read to you from Mr. de la Resa,.ihe question was put to him as to precisely what arrangements am being made for the budget of the Panamanian Government,.As, pertains to financing their arrangements under the treaty.. public services and that kind of thing. His answer was less than encouraging. This was on July 12.
He says that what we really have left is the traditional funcUm that governments have already considered, and that every effort-jo going forward to make such services effective. But at this timewe lack assigned funds for such services, and that is the truth.
What is the Panamanian Government doing to make sure. that these services will not be interrupted?
Governor PARFM. I received a call from the Lieutenant Governor on Friday, which indicated, in a sketchy way, that the Panama Canal Authority was very encouraged because they had received some budget authority. I do not know the details of that, whether that represents the money they need to do the planning and the training that must go on in 1979, or whether it encompasses.the budgetary authority for expenses to be carried out in 1980.
I am not sure of the details, but they did indicate that they do have a budget approved.
Mr. BAUMAN. One last question. One of the problems you foresaw in past testimony was a personnel problem, the question of what overall rights they will have, and of course, the House has addressed it ir, reasonable fashion. But you foresee the bumping and sideways movement of various people who work for things like the Port Administration and the railroad, because they would rather be under American jurisdiction. This might produce personnel shortages.
A moment ago you said you thought there were enough key personnel. But what about this dislocation of the visiting personnel? Has that happened?
Governor PARFM. Yes, this is very serious. We have initiated reduction in force procedures, and the point that I have been making for some time has materialized, and that point is that there will be many shortages of personnel in the functions that are transferred to Panama.
Some weeks ago I received a very strong letter from the Panama Canal Authority, expressing great concern that this was about to happen.
I subsequently had a meeting with the officials of the Panama Canal Authority, which I think got us back on track. I pointed out that the very circumstances that they were concerned about were those that we had forecast, and were quite certain would occurt and that what we needed to do was to get about solving that problem.
One of the ways of solving that problem is to have individual& from the Comm* SSion provide Support to Panama, and based on our meeting Panama has now increased their request for personnel from 19 to 73. So there is a growing awareness that they need more support, not perhaps only from the standpoint of personnel but also






dA I
A.o.....e int f things like maintenance.support-perhaps even accounting assistance-and that is the. very reason why I tooluded in our budget request $6.7 million for authority to expend W~ppywhichwill be reimbursed -by Panama.
utI have been unable to define, in specific terms, that they do AM& lyM $6. mi-nedate the requirement is substantially than that.
Mr, IIUMAN. Would that likely be a Minimum figure? Would it go bov that?
Governr PARFFr. It i8 poasible, but the requests received to date Ao m =m indicate that it would be less than that. I believe thMoueser time Panama will find additional requirements for sup>pe4Akdam the Commission, and at this point in time the $6.7 m~l probably is a reasonable Agure. It could hardly be precise. Mro8Aum. Thank you.
MadEUBBRD.Chairman Murphy?
Mr mPy. Thak you, Mr. Chairman, and a belated welcome to Governor Parfitt and Tom Constant. :I am sorry I was not here at the very outset. I had a few other thtupk that are of overriding importance on the Energy Committee
aswllR n we are trying to get ready this afternoon to meet tea0ne V1w timlement some of-the administration's recommendaMevernor, I take it from your statement that the Panama Canal Aittihity that is supposed to be integrating the responsibilities that Panama is to assume under the treaty is not ready to do it?
Governor Parrrr. Well, I would say they are not as ready as they shoidd be. I tliMk they have done an awful lot in preparation, 844 I beieve that they will require more assistance from the U.S.
Agneesthan they orw an ticipated.
Xr. Mmars. Is the UntdStates ready to give them that assistr:PArrr. We are trying, but our ability to do so is being
411deer:time. We, too, are stuffering a probleni, because of
'iht force,, and we have not, to date, planned on keeping in-excess of that which we require for our functions. The*fore, itAs going to be ver diffeicut for us to respond as fully and effectively as we would lieto. But we certainly will do our Utyos. We think we can, together with Panama, provide for an ,aftotale transfer.
*. -Mearnt. It seems to sne that there are many people that are got to be required, after October 1, that originally we did not
on, and other in-depth planners had not anticipated would be r~et to trigger support services to Panama by October 1. Governor PARFrrr. That is an accurate comment. The point you ICIvhas been of concern to us, and is a continuing concern.
now, belatedly, in my judgment, is accelerating their eC to recruit; they are attempting to have us train more
ei and now they are asking: us to provide more direct emoe support. All. of these things Will be necessary in order to provde reasonable services come October 1.
r.MS wy DTo tX YO W~hleaurn toer 1?
iiiiii iii=iiiiiiiii'iiiiiiiiiiiiiiiiiii iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii Y e siiiiiii






Iliiiiiiiiiiihc iaiil...U PHY..ll,.o.hae.ad...eryf....rX
iii e com iteethi.mrnng
Nowois t mlmetwa yusi.
Goenr iiiTh niida h i:dsgnt&i
detsth diisrtr
Mr UPH.Adyoixecii o ar teK!
isirsnato!fe Otbr1
Governoriii iii htiscrecjsr
Mr. URPY. Te wy yo hae pu it
Goenr ~a.Year
Mr.= MUPYinpaeiini4a fyurwer V oi ntiiioeatnixpneiii90in!ppo re40
iii o eert oretiaeta 76. ilo il~emeq iiiiiishreth biatoso tecnl gnis b4 W ousanigasoiepebri0i17,anio sy havei benavsdtatOBtik hs s w e o
beasioiehnclwoknirolmiitiFL -Il. i WhioldO Badieyoaiiioviuixpr ha;A
siiiiieiliiayibeiilowli0.....


GoenrPRmiIistercocuinta IR l N. oftefcttailiinsmsib eune oteTrax*N whteioioipporaioshvebeiaseiytb XI
A2
iortiOtbeiieureiinrctioiecncld n rnp iiiiiius hecntatigagnyiiliologrietiia~ m
CaaiopnyoihiaalZnioermni.wil bra
PaaaCnl omsin
MriURH.HoiiiiBarieaita atoa
GoenoiiiiiIcnotsysr.Tiswsaiii ht~r
uingteierneo m ttmn otiscm ite, 0i
comleel unesadtertoae o h oi:peet#


OMadhaes nore hm
MriURH.iriharaniibeyuietr e O Bt iyi t.Iwudlkioneiocoiet nti atclr thtO B eive h oliaitiianlgllieh





29 i
. ... .... .
LUVihimhee wewl hv ra polmbcus ewilb
oveoblgatdoveoblgat or redcesoragecie, ad itha

in~fityto bligte und fo anyhin, eployesor nytig
elsecomeOctoer 1 Tha is yicicern
My concerns hvi ractin whch leds t appopritionlwhe
the -mpleentig legslaton bcomeseffetive

Mr. TlwzN~um.Thatis precise th reaon wyiChirma Hubbrd clledthishearng tdaynotwthstndin thefacttha
his bpfdon of he treaiesiis atheringative
-GaernrFAmT An cetailyas he anaer I pplud ha
We need~vry muh tohave pproriatinsipomptliwhe
legsltin s ssd.Aswelofcors, e il nedtohae ol hweaes mm y t genrat th fud fow ito he reaury
U reay he pproriaion tht ar drwn own

Mi. HB~mw To nterupt hairan MrphyiIiwlliak ith staf o reprea ettr orme orevn ettr orCh irmaniiiiiil Mtlrhyi ongrssma Bauan, nd e, t,..0B, akingfor.hei
atin o ths. nd f t i inuffciet n or oinin, eaiiiii
coul behel onthi isse wth MB ske to endwitesss t

explain tisito us
Me leter t whic refrenceis mae folows:
A Ju ~iii8iii9i9

Nam Jmw T.McbmiiiJr.
AMctr, Or oS~aagemetiiiiiiet
11 tve, we ildig, W shigton D.
,%Wiiii
bit~ MR McN~mE Inthecoure o tetimnybeorethePanaa CnalSub

onJuy 6,GoerorHrod arit sbmteda reard taemn
w~ch radainpartonipaesi4ind 4A
The stfat~damont equied y te Comisionto lquiatethes obiga
Uonf ofthepreecesorageniesis 76. milio, a indcatd erlir. oweerI






30

Mr. HUBBARD. Chairman Murphy, would you proceed? Any. otbar, questions?
Mr. MURPHY. Well, be sure that the request comes up in a ODWY fashion.
On page 2, Governor, you say "One is an appropriation of 440 million to be deposited in the Panama Canal Emergency Amd established by H.R. ill."
As of October 1, the funds that have been collected by the Trawl ury from the operations of the Panama Canal, from information that I think is pretty general knowledge within the financial community of the Canal Com any, there is quite a surplus that wiH have been generated, is that true?
Governor PARFrrr. Well, surplus may not be the precise word, sir. There will be a substantial cash balance which is about $88 million.
Mr. MURPHY. I meant to say cash balance.
Governor PARFITT. Against that, however, we will have outstand. ing obligations which will be slightly more than that, about equating to it.
Mr. MURPHY. So and I think that this committee is going to act so that the toll triggering formula will be in place and in effect as of October 1 so that there will be a wash on those dates when the additional cost responsibilities for the payment to Panama are it place. I frankly do not have any problem or any fear that the Congress will not have acted in a timely fashion to insure that that takes place.
Governor PARYM. Mr. Chairman, may I make a comment in regard to that?
I am very concerned about the ability of the canal organization to have a full increase in effect by October 1, using the terms of H.R. ill.
It would appear to me, even under the emergency procedures; that you require at least 60 days as a very minimum. That pointmi. time is almost upon us.
Frankly, I do not see today the ability to have a tolls increase.Iff position by October 1 and, therefore, to the extent that ther61x' A delay you will have to increase tolls beyond the figures that 1,..bgv16 presented.
Mr. MURPHY. Even with that cash surplus?
Governor PARFm. Yes, sir. The cash surplus has nothing to
with the tolls requirement. It only has something to do with the". cash position of the Treasury.
The tolls requirement is based on the accrued cost that we incur and to make the United States whole for all the activities in now: year 1980. Certainly the Treasury will enjoy a favorable position because the drawdown from the Treasury will be far less in total by virtue of the cash going into it.
But the costs, nevertheless, to be recovered from the shipper are those accrued in 1980 and do not relate to the cash flow in 1980.
Mr. MURPHY. I understand that the Senate is going into a markup, incidently a closed markup session here Tuesday. They do not have a side-by-side comparison of 111 with, I think, 1024, and we expect to go to conference; at least this committee is ready to 90 to conference. I have discussed it with the other committees of






31
jurisdiction. They are ready to go, and with any reasonable ak
at that time, I would say that we could probably meet Au" I as a deadline. That gives 60 days. ...Governor PARrm. We could just barely do it under that time fiv."e,.yeo, Mi.
Mr. MuRPHY. I would not want anybody to break their normal working pattern down there, and perhaps take a little of their sisota time in order to trigger some of these things.
G...ow.znor PARym. No, the time that I am talking about, sir, is tJ*.,0m required to put data into the Federal Register, the time tb4 *I Mait for a tolls hearing, the fact that you have to then aaWyw -information receive and present it to the Board of Direcuws an4 then to the President, and he has to announce his decision in the Federal Register. This 60 days I am talking about is time outside of the control, really, of the agencies that are developing the tolls requirement.
I W. Muxmy. What are the purposes of the tolls hearing that you h4ve had. earlier this year?
Governor PAmnTr. The purpose of the tolls hearing?.
Mr. XvapHy. You came into the 17th Congressional District for one of. those hearings.
Govexuar PARYM. The purpose of those tolls hearings primarily was, in the event legislation was not passed by October 1, to permit us to fulM the requirements of current law. We would have the ability to increase tolls, to pay off the requirements of current law which:nwans payment of the interest on the investment of the U.S. Government, and payments required by the treaty documents. It is oWrely possible that we could implement the proposal although I undep.tand that there is some question on that in the minds of this committee. We could implement that tolls increase and then make u ........Aifference by, a supplemental, depending on the full extent oFitrequirement 6f H.R. 111 or whateier bill is passed.
Mr., MuRpuy. No sense in replowing the same ground at another "t -(if hearings
dovernor NR Except by virtue of the fact, as I understand
111, that we wffl have to go through another set of hearings.
documents contemplate that if you are going to increase toUs bey.ond that which the original announcement indicated, that you mustO through the procedure again and place an announcement in flkib Pederal Register and give at least 30 days notice, at which time there will be a public hearing and all parties will be afforded the opportunity to comment on that increase, and tolls are certainly going to be increased beyond the amounts *in our toll proposal because, of the 'increased costs imposed by the bill.
Mr. MuRPHY. I have no further questions at this time.
Mr. HUBBMW. Congressman Carney?
Mr. CARmu. Governor, you indicate in your presentation today that you will have estimated toll revenues of $221 million. That is somewhat less than ou indicated when you applied for increased tolls in March of 1W
Could You give me an idea as to why You feel there will be a
decrease?.
tovernor PARFm. One big reason, sir, is the tolls from the North Slope is not living up to original expectations. There are







Diii~ii ii32
m a n re son fori ....... b u t the.............. .. p ri a ryii~ =., rea son......... ......... th at'i the N o rth............" i
SlpiiormAak i en bobdad sdo h etoa
much more tha oigiiiiiii nally nticiated.Soiraheritan $iiiiiJ
lio n. ini= .................... y e a r 1 9 7 9................................l l'........
have.......o..........7 million which is our best projection f................
source.
Sothtalnetiesasbtnildfeecinheiuryw
metond
Mr ANE.TePrsdn ls igtidcae ht ew!

no alo aytig o tad nth wy f nyncesay ipi




--, o ,,, ,,,,3,
M...................................................n....................e
wil meas ad tatsees o b o soe oncrnon y ar
becase w hav to ontiue t inreas thetoll and as uchtha
would ffect he Ameican cnsumer
I Gvernr PAY=. he satisics idicae tht weare n a rowt
siuaio. h vritin tatyo retakigabutrelctthtih
,4grow.....i.............e.a.....o.e...e..ct.d..But.the.e.is ...g.owt
Ikattwn~~~~~~~tbis~~ yerfomls.ya.Weas..tcpaesmemr
grwh i 180adsoemr i 91.Orcurn otoki iithat
the-grvwth~~~~ ~ ~ wil.......a....ignll pedctd
........................................................................e r t h e P r e s id e n t 's s p e e c h la s t ................................................ n ig h tiiiiiiiiiiiiiiiiiiiiii"'
think ~~~~ ~ ~ ~i tht.ha.wu...vea...ngratr.mpcto
the leseningioigrowth
Cwveror Punw. hav constant preenteiiicoceriitha
..dee on mgh b arivd t hih oud dvet orh loe iiii.......
And nw, ifthat appen, the ther woulibeiasubstntialiiiic fficn:*~~~~~~ ~ ~ ~~ ou.tas.......urreeue.nd.teefr,..lswol
han.to e inreasd toaccomodae tht cicumsance
W. CMEY No, d wegetint tha ciclewhee yu dal i
theelatiityoftolswhee t n lnge bcoms conmial eai-iiiiii bletous th cna? Wul yu hin yu re t ha pitiiiiiiii
: G o v e n o r P ~ r m Y o g et c o s e riadicl o s r .iIiwuldinoiiiic u
latlai tispoit n tmetha tatfacorwoud rin yu ter a
%W& poi tiiinitime






34
mines. But, in the end, normally there will be anme, increase MWthe consumer.. -idit
Mr. hanav.: I think we hame determined that8- the. c0mar
would pay at least one-third of those toll increased. is thbbeeOW
Governor PAnarmr. I believe. the ene-third. figam is.. derive*AWOm the fact that about one-third of the business efthe Pantamadedal is oriented to the.. United States. So. one-thid at the:,4ats;* increased costs, are 'passed on to the United -States in senterfahm As I say, they could be passed on. to the, impaeter-ar the the transporter, so yeu cannot come up with: any fihite.d-enih
For example, if a shipper determine that he must ahearththe cost then there is no effect on the importer or exporter. .
Mr. Cmnnar. Well, I think we can agree and say thattconsmeor is going to pay any increase that the importer or exporter: at trasporter is going to have to assume. i
Governor Pznne. What I am saying is that if 'the-Unite&SAtes is shipping a commodity, it may well be that the, increase in coo, 6f shipping it is placed ,on the importer which may be, say, Jh an
iprting grain. So they may pay part of it.
Mr. CAamav. I understand. Our exports. I understand..1:
Thank you very much.
Mr. HUBBARD. I am going to call on Mr. Merrill'hian, :counJsel for our committee, to ask a few questions, and. then . Bombd Tannenbaum will ask questions.
Mr. WarrMAN. One question relates to the colloquy that YOU had with the chairman about the fund balances on, September 8SaW the availability of those funds for the paymentof the oli obligations d the Panama Canal Company.
My reading of the hill is that the cash balances are paid ittigp Panama Canal Commission fund and that fund, is available Ga appropriation for payment of whatever expenses the Congressaa choose to make appropriations for so that,. obviously, the ame the bills left over, the unliquidated obligation, would be at and pulled out of the appropriations from 'the, fund. vi
As I understood your answer to Mr. Murphy, you were in.di.
that there might be some question as to whether this, is
Governor PAnrr=. I said that the payments of the cash into (M fund serves to reduce the investment of the U.S. oea~t Therefore, the interest payments are reduced as a consqee:o that action. The moneys estimated to go into the acut'ril than the outstanding obligations of the Panama- Canal, and QM Zone Government.
Mr. WarrxAN. If I may iternet, n the. figures that .you
us, the statement shows the payment in the Treasury of 'son*" million-Governor PARFIT. $88 million.
Mr. WarrMA. And the carried over obligation.-is sme
i~i.


















the range of $75 million or $79 million.
Governor PAR~rr. You have to add to that the obligationMs) @ capital so we have $13.2 million to add to that Amount, So, the
ousadn biain r bu 8. nih ~s.foiWi

abu 8 ilin jIi






35
Now, the draw-down of obligations, I want to be clear on that,
-down of obligations will be substantially less in the first yw than the cash inflow.
v ,4f that is your point, I agree with that completely. TV' Mr. WwTmAN. That is exactly my t We are concerned with
MJOrning with what to put in tgeo'b *ill for authorizations for 40
ions for 1980. We are not concerned with 1981 or 1982 or
TV talking about how much money the Congress has to
Powriate to. the Commission in that irst year.
Governor PAwnw. Even though the drawdown will be substanless, you have to have funding availability to carrying out
r *6Agoing obligations for next year. Based on a quick- calcula*e anticipate that there will be about $64 million more cash Into the Treasury than appropriations withdrawn, but neverthe appropriations have to be provided because of the re ents to fund outstanding obligations that carry over beyond
year 1980, but are incurred in 1980.
WHnwAN. Yes, but that would be, m
M 'y judgment, a prob
1 im the 1981 authorization appropriation. in other words, I do thiTilk 'you would have to establish a fund in the Treasury in
I Lh y u kee n deposit enough mong in that particular actopay of in th future obligations incurred in the course of 11%t year.
In M estimation, that is not the way to fund the appropriGovernor PAmir You seem to be suggesting that you do not
iiwd to got appropriations for commitments. If you order a $3.5 8tiffllion Wg *in 1980, but you are not going to have any or small .0 ditures against that, that you only get appropriations for the
*Tti6n of the expenditures and I do not think that is correct.
You have to have funding to fulfill the U.S. Government commit wont to pay the vendor the $3.5 million.
Mr. WHrrMAN. You have the obligation, there is no question about that. But you do not have to have the money appropriated in 1980, you do not have to have $64 million, you do not have to have lkppropri ta s for $64 million. You have to have authorization to ie inth a contract, and you have to have an appropriation of $10 "inDli" or whatever you are doing.
Governor PAR= I agree that, as I indicated, based on the
s requested, it would appear to me that we will have
ow into the Treasury something like $64 million more than
io drawdown.
Mr. VhnTxAN. Could you furnish the calculations to us?
Governor'PAnFm. Sure. I will be glad to.
rMe following was received for the record:]
XxT h&Acr oN TRxAsuRy APPRop=ATioNs vs. CommiwoN Rzvwmz DxPosm
Revenues compared to overall Commission appropriatiow
Amouw
16talappropriation requested .................................................................... $W .7
140 : Emergency Fund ........................................................... o ................. o ........... -40.0
Appropriations undrawn at year-end 80 but needed to cover obligations ..................... o ....................................................................................... 54.9
Total appropriatedfimdff used .................... .............................................. 412.8








T u -n o r d c s o g i es'iiiiiiiiiiii~iiiiiiiiiiiiiiiiiiiiiiiiii~~ii ............................................................................................................................................................................................................................................

Revenues~ ~ ~ ~ ~~i" covre into'' Trauy................................................... -3*.4




N et in fl owiiiiitoiTreasu ryi ........................ iiiiiH~i.... .................................. . .. ... ......V




The substantialiexcessiofiiiiiiiiepoiiteditoiTreasury ioveriappopi atioiiiliiiili= ii
to the first year of operations.iThisiisibecause iiiesF= iiiiiiies funds ambin di efett oe pirya biaionrte hnaprpitosaiil etee nsbe
quen years.iiii iiiiiiiiiiiii
Mr. WiiirrmiN ine.i Thatii i tha qusin I ~ ~ iii~ watdtocerupoeote..ngi. herltngt h
colqywt r amn

Th qesio.tat. Cot se i h prorainn
di o eaet l iutos t eae otestainudrti
Adminitratio b iiiiiiiliiiiiiiiiiiiiiil ii iiiii 1716 is questl~ii i oni iwas,=i If that *ere= iiN~iiiiiii i passed, ii~iiiiii whatL woul be iitheiefiect of scti o 10ifth oermn Ap r p ia in Controii iiiili Act andii the iiiiiiiiieil iippiirs toi say iiiiiii ithe





ai quston I utwatt lea itup
Governor PAR im I iiiiii m iiiiiirto th cm en ha wsmae
Mr W ~ AN Ta teprmieofte uetonws ottatw
have o leislaion bt tht wehave he Aminitratin leisla t i o n .i.......... ... ,, .............. ................. .. ,






Governo ....Ise Iddntudesadt...

Mr.~ ~ ~~ ~ ~~~ i Wi~iniiiiiN.i I mih d saqetoItk tta o r






37
Y. ke Of the turnover rate. You said you did not anticipate
9hy problems, that there would not be any problems.
:Kat is the current turnover rate?
Governor PARP I do not have it as a percentage, but we do have a very high retirement figure this year. It is about twice what it has been in the past. We anticipate for calendar year 1979, based on whatwe know today, at least 1,100 retirees. That is about twice what we, normally average. Resignations are down, however. In the U.S.! employee category, I believe we have a figure of about 100.
Vat I was trying to say before is that we are going from an orgalitzation of 15,500 to something like 8,500, but in the process there will be enough stay and particularly in the critical skills to continue to function efficiently; however there are a few critical skills. that we are watching because it is not total numbers that c6unts but where the losses occur.
Our feeling is that we will have adequate skills within the Comutitsion to continue to perform the functions that are the responsibility of the U.S. Government. Perhaps Panama will have a problem.more significant than ours because many of the individuals in :the ports, and the railroad, are exercising their discretion to bump iloo:,#* residual U.S. agency. That leaves considerable voids for Panama to fill-a problem which we have predicted and a problem 4hich-.we have presented many times to Panama, and I think they We.just beginning to really understand the extent of that problem.
TANNEwBAum. I notice you have been doing a lot of advertisi4 M. the United States. The New York Times carries major ads oRgertain skills.
Governor PAmrr. We are repeatedly short of marine engineers, pilot hWdy technical mechanical and electrical skills and there wiU be... a continuation of shortages in some of those skills because they do not exist in large numbers in the Panamanian economy.
Mr. MuRPHY. Would you yield at that point?
Governor, I understand that the Panama Canal Company hires Pilots directly.
Governor PAR"rr. That is correct, sir.
Mr. MuRPHY. I understand that the Pilots want to write a contract with the Commission so that they are the entit. to control pilots, and then, either as a corporation or a union, Teal directly with. the Commission, is that correct?
Governor Pmui That is generally correct. The pilots have entefed into discussions with the Marine Director of the Panama Canal with this thought in mind. We are just now fleshing out or having-them flesh out their concept.
But basically they would like to operate like a pilot organization ih:'.the United States, a private organization that deals directly with the shippers.
Mr. MuRPHY. What effect would that have on the operations of the canal, the management of it?
Governor PAR=. I would have to look at that very carefully. It would solve one of our problems which is a continuous problem of adversary employee-management relations. The pilots and management, have never been, through the years, close. There have always been problems of wages and working conditions and so forth so those problems presumably would be solved.








On the other hand, the flexibility that the caal.in asgmnts and so forth would be d.iM -V
at that very closely, weigh the balance of favor-beapO, unfavorable aspects before I would want to ma a are just merely undertaking consideration of t'a:ppf l
Mr. MURY. Could you advance an opinion
Governor PARrrr. My opinion, very frankly,.:WU4 e that it would be better to have the pilot force rte ment of the organiation. But some means will.hetob to solve the problems of wages. The wae of the fe&O of the United States, at least, are substanti they are for piloting in the canal orgarnzation. ~w~ are adversely affected by the 47,500 limit. That o would be exacerbated in the future by high level -m
Mr. MURHY. You are in the position that sm fte are in around here.
Governor PAnrrrr. Although some do make -irlan l
because of overtime, the limit is restrictiveJ Unls hti n we will continue to have serionar-problems with ak,Xlwet the work force.
Mr. TANNENBAUM. I am just curious to see wha- -id: -f -N you have been getting from some of theele ads.
Governor PARrrrT. We have had rather fvabr t 0%fdeb
cently from Pilots. The others are corning rather 81 %46y little concern about what the situation will be afe Ocoervt there msa little reluctance tor people to underto cct Canal Zone right now, until they get a clear deinato af* the future will hold.
Mr. TANNENBAUM. IH the environmental E- a
notice that petroleum aind grain comprise aIPP.nrm 5 cent of the total revenue, per tonnage throuh the CanI
Governor PARrrr. That is correct. Grain an
been two of the high commodity movements. .Petmei a d leum Products are the largest, as I recall, with grai ls
Mr. TANNENBAux. With the North Slope oil polm
pending recession, current recession, do you think htmy figures are too optimistic?
Governor PAnrrr. We do not think so. We have
recently, those figures, and we now anticipate rvnue $210 million. for 1979, and $221 for 1980. If,, of I't
couseum1.%

















sinfiatadditional reductions from North Sloe4 l, have to reduce that downward. We are now coate=an mately $20 million worth of business from North O~ do not see anything on the horizon which woudeae lower in the short term, unless there were a P..litia trade with Japan, or something like thatY
But Pipelines, and those kinds of solutions hav -- m~d
Mr. MURPHY. Would the gentlma yild There is not much ledieto the Soio: lineI 1ll
recommendation goes in, and you have an authortytha icas esciti that S l
thog n te eteNOO IP: 11aeW
around.ii





89
1r Etrr tOur information, sir, is that it would sr
5 mnth toput that line into condition to operate. Wa
as bis in fiscal 1980, and that as what our tolls are gaed*

King
k.;e-oaut see that solution as having an affect. Certainly, a iauL or it could have an affect
to~pEmva. Since you are retiig I thought maybe you CM-l- gie pg thes opportunity to indica your cnonrns for the p tthe future -viability of the canal, as a, viahle iaca
yoeare to comment on that?
Anaar.Well, I certainly would not want to see any
hicraseat this particular period of time, that goes beyond 40
daany time you go beyond that right now, you could be:440W ate dangerous territory. It is really speculative to look intq Aheftre, but basically we can anticipate the eanal will keep oter -com---i-ive modes or alternatiwas, which are iminflatin, as the canal is, and so. there should be a
abhance of the canal remaining viable fihencially. Ahmeare factors that would impact on that,. such as, cangn
*J~detens and inflationary costs and rages. Fors example I nat: i H 111 there is a mandate to pa the minimum wage, wnwl-wideipose a high cost in the fttre, probably very, ery simifat So all I can say is, in the short lerm, itlooks like the salall is viable, long term it becomes much'siore specuJfte iportant to me, however, is the fthat the Congress to d~ve ;,Murpty secifically,. has provided thettlnd ofa fradme1985tfe to 'the employee, which is citical to the cotn lt~ dfkdet peration of the Panama Canal. r ha been accommodated in H.R. 111, and it is an am~nu~aleleent. Next to that particular provision, there is a ned 1 ,Ogood strqpg cooperative relationship with Panamae, Zl accom plished in the transition periol. If it is hd4-*1 Ad epardise the efficient operation of the Panama
I wul, ope that the mutual interest of Panama and the United Siateit o drive us together, to find an accommodation that WouWinsre that relationship that mtst be there if we are going td ~ "f tiue 't berate the anat efficiently. This is essential biecaue te employees, and the critical skilled employees, will not
i onditions deteriorate.
'77dnt anticipate that they will, bnt if they should, it could Jv~prumethe efficient operation of the ctal.
T~tEBAUYM. The question I was getting at, though, was ACWftre liability of the canal, with the tolls sensitivity, and the
"dependence upon two products, petroleum and grains, and the eforos payment being made to Panama, would you in fact have
-sushitained canal in the future? rAb w that in the past you have expressed some concern. about
avtnor PARFTT. I would stil have to express concern, but you 4raly speculatingr ot in the future. t still Inks in me like it is
1! a s .n a a s w c a ,t l .............................................................................o ~






toiufil i the nex 20yers
I t er is) an erosion ............ trfi c ......f a ............r ft F a
thsmnytmsanthinltoaysiaexedthtrfc
grwh rtafcdmiihsthnyucudbpt naPWiio
wherethe.nite...ats.w....hve.t.s.b.....the.ana.
...... TNN BUa thr neoin n17 n 9
Goero PA( We dontatcpt hsa h rsn lf

Ouri~~))~~iiiiii)ii~iiiiiiiiiiiiiiiiiiii best estimate, whiii~ii)iii~ iiiiii~ii i c iii i nc u e ai reduction in N orth S oiim 6Hi
andit in lu e the im pac of..............ld pe...t.u.t......e
mettetetadudrHR 1,wt ne 0pret:i
caeintls
Mycneni htteemb infcn ea.I u a
wewudhv oices h ol usata mut niai
co l get above 40 percent very quickly.iiii~~i i~~iiiiiiii)iiiiiiiiiiiii iiiiii Mr TANNAM eyuhv xlie.Acrigt)h


sbisostthAprpitosCmite$290is pre





... i............................i ..........................1iI
O n it i n a 's th o u g h w e w e r e g o in g t o c o n t in u e t o o p e r a t e it W e
have~~ .............in!f aitl odswhchhvelog
tem~e, bt~wehav maintain tose aciltie in s god o bettr cnditon s wewoud hae i we ereto cntiue t oprat
Wr.TANENBUM.Youhav a aunh rpai family, oul yo
plainthat
'GovrnorPAR=. I isnow n te Pot ofBaloa. t i an pen
air ac~lty. t isa vey infficent peraion ecaue oftheieath
er: Ou popsa i t mvetht acliy o heinusril ivsin on he-Alaticsie f he stmu, her w d or gnealvese
repaimand to rovidean all-eatherfacilit. We jst didiotihav
the~~~I fudstod...bfoe
Yft~. TNNENAUM Wha ar th chanelimprvemnts

Governor~~~~~ ~ .. PAr.Tecanlipoeet nldideigiiiii
:andeasng bndsof he cnal onecaled he MmeiCurv. W ar
invev~e inthisproramfor afey ad securty ecaue o th

largr shps, nd w ar als tryng t do omeinital wrkitwar

1t ~ ~ ~ ~ ~ ~ ~~ iiiiiiii ............ s ta wtr o gnrain fpoe, n
redue *fuelcoss. o wethik tht te depenng s a oodpro

imdo corsethewidning staigtenig o beds, s esen
because~ ~~~ ofth.........zs f his
Mn: ENB~u. How doe that comare with heichanne

expem in 179 an 1978








I might say further, that is the internal proOess. W
then I present that program, which includes thie operatinaivl quirements as well as the capital requirements, to the- BudetAg Finance Committee of the Board. The Budget and Finanbedieag@o tee then makes its recommendations to the full Board.. ThatiMa Board then analyzes and provide theit approval, after ewmichmhe program is defended before OMB, and finally before theAyMn W ations Committee of Congress. I..
Mr. TANNENBAUM. Would you say that the budget yA tightening or ample room? 0H
Governor PAmrw. I would say that. it is fairly tight, MP,,jj i capital goods and expenditures are concerned. I -woud -ay:,i* prudent, but not tight on the operational side. a*d
Very frankly, in structuring the organisation for. the. new'gdj I was a little more liberal than I would have been for an organization because of the trauma and the change that is. occur, and the fact that you have got to have a little bit' you want to call it that, during this very difficult period af trqpOtion. --:0me
So I would expect, over time, that some of the overhead, eak&
ments could be reduced. I do not think it would be .prdestAb reduce them any further than we have done at this point-ia&! for 1980, for the first year of operation under our new sl.Ita..
Mr. TANNENBAUM. What area do you feel the most-- ewt h4s
Governor PARawr. We have a composite division, called the, Aneral Services Bureau. This picks up the pieces of what is let #g Transportation, Civil Affairs and the Supply and, Commmu4~rnices Bureaus and pulls together these activities -under a
When you do that, you bringing certain key- people who k stand, and know the system very well, and you try to-b41, organization. You find that theoretically you could redwae t) agAbers, but practically if you did, you would diluted the sil,-ufx at the outset. So in that particular area, very frankly,,- 01, may have a structure which is a little fuller than we wAoulin the final analysis. .i.
That is probably the main example. I have also permitta flexibility in our personnel division, because I know they through a terribly difficult time right now, and, they *dW some transitional Problems of significant import.
The-equal opportunity office is going to have an increaset~ste geoning workload because of all the complaints: and: appealed 46 are going to come because, of the major reorganization. Thkranw, areas like that which over time I think we can shrink as we get through the transition.: Pat
But I have made a very deliberate, very conscientiousi Many detailed analysis of all the elements of the organization, Auddhalk the best that, in, my judgment, can, be done under the olionasstances-that should be done -under- the circumstances.,.. 2
Mr. TANNENBAUM. Have all the capital projects *that Oaiis underway in 1980, that you anticipate, have they. all" bee~n~shchimo the pesentati&o?,a
Governor PAFTT. Yes, sir. .. ead
Mr. TANNENBAUM. How, do those compare. with,:-Say,, U74W* @
1978?=




B 43
G ov e rn o riiii iiiiiiiiiiiii A c u a l th e p rog ra m i ii iiiiii iiii iiiii iiiiiiiiii ii iiiiii iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii iiiiii th e sa m e as
1 9 7 8 M r T A N N E N B ] ]]]] ]] um T h e p r o g r a m s c o n t a in s o m e p r t o d ] ]] ]]] ] ]]] ] ]]
A roemnt ha ae ure oertoPaaa n 971T s tat'io
Govrno P~nmr. Y u wll aveto denifytheite ir. Iiiimii
ftt~~~~~~ .................u rerefrrngto
Mr, TANNEiBu...W..wil.pull.that.ot..In.the mantime, .le
i n th e r q u e s t i o n .
Do~~H"""' B yomnwo n terpoet htaeunewyit
.......................................................... t o p r o p e r t y -........................
PARP No wehavenoMr. A~i =Au Jut te nrmalrepirs
GwrnrPAFM us henoml episad heear
minimum of mino capita program siforiativitieithatiaeibein
m u e e over.................................... to P n a a

Yi oga in 1979...
TANNAMi aenofrhrqetos
Ili HunBARD. Governor, it is now 12:13 p:m. We still have sever 4. qi~estions tht we will not hve time to ask oday. I will as iwm u cosn. ha....m iigqusin.ta o o s
h! netfwmnts esbmte o h eod

Goeror wul aktht proritem mbrso





iii~i ...
I m es................c.........t i ng.........r.....u.t...................................................................... t s.......... A t*....
Anesn&C.udrcnrcspovdnfrpoesoa dieo
tosmte oniudt e hre oth oslatsadAvsr
isclya 90 etmtsrfettedrcinrcie rmOAai
tocsioslatievciitr t nsse eelpett D 0
ani rjctiotatulsriesfoi-ArhrAdrsn&C-ofir no
ifrainsse eeomn n 1100frpoesoa dieJ&:cbW,,O
matters.
uesi on2iiiistettlimutoionutnscotatii' --#AIa !i
Anwr hettlaoutoil Cmaycnslat onrcso
Jun 30....as$0167.5
Qusini o uhhsbe pn n uhcnrcs nldn tosli
19i(9
Anwr.Trugihifrtniemntsoifsalyai17,thrias.eiijw
$30545 nsuhcnrcs
Qusin4 o uhi ncue nte18 ugtfo oslig0umt n
aoi ateiepenes
Anwrihiicaier18 ude rvds$5700fral osl 04if fori heiCmmision
B.IOONE
Qusin1 Pnm'ieqetfrpesne-heCnlCmpn aihdgtdi

and at.w at.os.?......







overtime.. an oia ai 19 ilo.-.. .. F
Qusin1b() o ilw eev Pnm! rmtribreetfr4i

seviesofthseemloee.







45

the charging to this account of 27 ongoing administrative positions of the Canal Zone Goieriment to be assumed by the Commission, and 34 other positions relating u:increased training requirements which are not administrative positions in the .,:..trw sense. If these positions were not shown in the count, the Commission's admin_0 staff would show a decrease of 11 from the 1979 level.
The positions transferred in from the Canal Zone Government are to perform 34imer governzaental functions now to be carried out by the Commission, such as the executive secretary, fire, police, and certain health functions. The transfer also provides for the positions of Administrator and Deputy Administrator and staff. The 34 positions related to increased training requirements are for apprentice/ towboat/pilot trainees and sup A personnel for the program. The expanded train,,Wg 'Program is required to ME treaty commitments to train Panamanians so that the Qua]* for positions at all levels.
=re viW be 20 new positions established to accommodate treaty requirements. However, these positions, which include the Coordinating Committee Staff, Office of the Ombudsman and labor relation specialists for collective bargaining, will be more t.Wm offset by the abolishment of 31 pre-treaty administrative positions. k Question (b). Would you compare the ratio of administrative positions to nonrative positions for the Panama Canal Company in Fiscal Year 1979 and &r the Panama Canal Commission in Fiscal Year 1980? Answer. The ratio of administrative positions to non-administrative positions in .49c4,year 1979 was 1:10.9, as compared to 1:8.2 for fiscal year 1980, excluding the A4,apprentice training program positions.
C. EMPLOYMENT COSTS
Question 1. How much of the estimated costs under employment costs win be 1"u tired by actions taken pursuant to the 1977 Treaty?
Ansoer. In 1979, the employment costs include recruitment and repatriation expenses which are expected to be increased due to reductions in force and terminati6ns of employees at year-end 1979 Additional costs for the purpose were included in the 1979 supplemental requests f $1,837,000 for the Company and $1,301,000 for the Government. A continuation of higher turnover rates will contribute to hy1h recruitment and repatriation costs in 1980, but it is difficult to attribute a. specific porhon of this cost to the Treaty. The apprentice program does include provision for the addition of 25 training positions in 1980 at an incremental cost of $74 thousand io #1at year.
D. TOLLS
Quafion 1. Are tolls on Government vessels included in the revenues in the budget estimte submitted for the Panama Canal Commission? Aiewer. Yes. The budget estimates for fiscal year 1980 project toll revenues of $925 thousand related to the transit of U.S. Government vessels for that year. Question.2. If Government vessels do not pav tolls, would the amounts computed for icredit be considered for the purposes of- appropriation accounting revenues deposited in the Panama Canal Commission fund? ,:.:Anmw. My initial view was the H.R. 111 would permit a continuation of the ,present practice of offsetting tolls credit on government vessels -- t interest due theTreasury on the U.S. investment. In my judgment this woul be the preferred treatomt since it would eliminate the need for U.S. agencies to seek appropriations that are to be paid directly back into the Treasury. .. Ekased on acloser review of H.R. 111 however, it appears that subsection 412(d) could preclude amounts calculated for tolls credit on Government vessels from being co4sidered as revenue deposited in the Panama Canal Commission fund. The basis (Aw 'We conclusion is that subsection 412(d) provides that tolls credits are to be 'Okulated for the specific purpose only of prescribing rates of tolls and calculatinK Qw payment to Panama under paragraph 4(a) of Article XIII of the Panama Canal Treaty.
E. SUPPORTING ACTMTIES
ZINN.S.upply
1. What are the supply services that will be continued under the Com
Answer. The supply service is the centralized procurement and warehouse operation. This activity is responsible for the procurement of all major supplies and equipment. It also operates a centralized warehouse for materials used by Panama activities and an excess property disposal activity. These functions will con.
under the Commission.




49-653 0 79 4







46

Question 2. What accounts for the increase in cost of these services in L980 compared to 1978 and 1979?
Answer. The operating cost of this activity increases from $3,428,000 in 1979 to $4,448,000 in 1980. About 50 percent or $0.5 million of this charge is due to lo&::vf gross margin on sales of materials to employees and organizations. The remblAder of the charge is accounted for by cost escalation, $0.3 million, and $0.1 million each for additional excess property cusposal and added maintenance work to structdmft.
11 Water transportation
Question 1. What is the basis for continued operation of the SS Cristobal?
Answer. The SS Cristobal is a primary link in a well organized and efficient procurement and resupply system of the 'Panama Canal Compariy/Canal Zone Government. It will serve the same mission for the Panama Canal Commission.-ft is and will continue to be a major carrier for military cargoes coming to and Iftwing the Canal Zone and carries cargo for other Government agencies and contractors as space permits.
The Panama Canal rocurement and resupply system procures all logistics supV rt from the United 99tes that cannot be obtained reasonably in the RePAMC of
anaM]. The procurement office is in New Orleans, which serves as the neck of a inant national funnel that collects supplies from all over the nation to New Orleans &- ovement to the Zone via the SS Cristobal. Retrofit, household goods and military-civilian personal automobiles move northbound from the Zone to New Orleans. The system has proven to be economical, reliable, successful and timely. As a U.S. Government vessel, the SS Cristobal is not subject to interruption of cargo loading/unloading activities through labor unrest at Gulf Outport. Over the years, this has proven to be a significant advantage and should remain so. Much of the response y or retail sales to United States employees has been transferred to U.S. Military sales outlets in the Canal Zone. A large portion of these supplies will move via the SS Cristobal, partially offsetting the loss of retail sales cargo that was sold in Panama Canal Company outlets which cease operation September 30, M9. If the Commission were not to continue the use of the Cristobal, which operates on a fixed schedule of 25 sailings per year, it would have to maintain larger operating supply inventories with the attendant higher costs.
Various studies over the years have reconfirmed that use of this vessel for ocam transport is more economical and reliable than either commercialor MSC/charter modes. Should the costs of the SS Cristobal, under the Treaty appear to be out of line with the benefits realized by the United States Government, a study will be made to determine the desirability of continuing the vessel's operation.
Question 2. Is it not true that in the past net costs of operation of the Cristobal were largely absorbed in charges against the retail sales operation for ocean trems. portation which in turn was charged off fo employment costs of the Company as a whole?
Answer. Costs of operation of the SS Cristobal have historically been WVly recovered through ocean freight and handling charges billed to the users.. Thenet cost of operation, which represents total costs less revenues from the militAry and other government agencies, is distributed to the operational and retail sWrw inventories. Most of the freight cost charged to the retail store inventari4s ww not recovered since the selling prices of the retail goods are based on U.S. pricm This. is in accordance with the accepted policy that the Canal employee should not be required to pay more for these items than his U.S. counterpart.
Question Y. How will the costs of operation of the Cristobal be accounted for by the Commission which will no longer operate retail stores?
Answer. The cost of operation of the Cristobal will continue to be accounted for by distributing the cost to users, whether they be the military or the Commiaim,& mentioned earlier, the military will assume responsibility for retail sales to U A. Commission employees starting October 1. Accordingly, a large portion of 88 Cristo.
19 costs previously allocated to the Canal organization retail operation, will now be borne b th military since their usage of the vessel will increase.
Question 4. hol;nwe does the increased cost of bunker fuel affect the operating margin of the Cristobal?
Answer- An increase in the cost of bunker fuel results in increased operating Cqft for the SS Cristobal, as it does for all other ocean carriers. when this occurs, we must do what all other carriers, do in this situation, increase the tariff rates forour services.
Lff. Marine terminals
Question 1. What is the current estimate of the 1979 revenue of the bunkming service?







47

Azower. The most recent operating estimate for marine bunkering in fiscal year :IM, in luding all divisional costs but no allocation of general and administrative enwwls. Amount
Apprued costs ......................................................................................................... $4,551,(W
thterdivisional. transfer ............................................................................. 228,000
N et expense ................................................................................................ 4,323,000
.............. 39698*000
N etloperating loss ..................................................................................... 625,000
.,..B*mW an results through the month of June, it is anticipated that the lose for &=Iyear 1979 will be about $400,000 to $500,000.
The principal function of bunkering operation is to provide a pumphig service for ALi movement of oil sold by commercial oil companies to transition vessels. The loss operation this year is due to a depressed level of oil sales by these companies. 1, Quwtion What is the current estimate of the 1979 revenue of the other marine Aftiminal operations'?
Axamr. The other marine terminal geration provi'des cargo handling and stevedoring acrow the piers in the Canal Zone. Most of the cargo movements are in behalf of enterprises operating in the Republic of Panama. The operating cost .estimeto for this activity, including all divisional costs but no allocation of general "And ministrative expense, is: Amount
A accrued costs ......................................................................................................... $23,154,000
Interdivisional. transfer ............................................................................. 1,557,000
expense ................................................................................................ 21,597,000
.................................................................................................................. 25,456,000
Net operating m argin .............................................................................. 3,859,000

Q&iafian L How is the Power System affected by the Treat
Answer. The Power System is affected b the Treaty as fbEws:
The Powor System will be t ferreYfrom the Company to the Commission. A oiugh msiny areas of what is now the Canal Zone will trinsfer to Panama, the PQ er tam will continue to serve these areas until such time as the Government 1. rTarLa"Asa's. power utility can provide this service directly. Panama Power Utility
J e OW on a cost recovery basis for this energy.
. I ny costs for expanding our system to meet Panama's expansion in these areas
.Will have to be financed by the Panama Power System. Qt4ation 2. What is the relationship of the Company's Power System to Panama's
Ajimer. Our power system and the Government of Panama's power system have W an exceptionally good working relationship for the past several years. Since '1964, the systems have been physically inter-connected in order to aid each other in Wneq'rencies as well as to optimize the generation of power using the cheapest geodrators in both sptems.
In, addition, the Company, in 1969, entered into an agreement with the Panama Power lUtWity to' purchase 30-megawatts of capacity. The agreement will expire in M is .,
1"9 but su ect to renegotiation.
Quation J. row will the Treaty affect the sale of water to Panama.
'Anarer. Panama currentiX consumes approximately 74 percent of the potable w ater produced by the two Panama Canal Co water filtration plants. After
into water now suppli Myy the Company to. commercial
,, commercial enterprises, churc es and other non-profit tions, and
the Latin American townsites turned over to Panama, be supplied to
these consumers on behalf of Panama and at Panama's expense. This will increase the volume of water su pproxima
pplied to Panama to a tel 81 percent of production,
with a eorxnponding decrease in the percentage of potatle water delivered to the Vemwni4g FM customers (i.e., military, Commission facilities, employees in ComBUHR= 'h iusing, etc.). The total quantity 4 potable water produced at our two filtration plants is not expected to increase significantly due to the fact that we are now operating very near our practical capacities (63 m2lion gallons per day).
QimfiomL 4. It is the Committee's understanding dhat, + Government of Pamarnia
ovree over $9 million to the Canal organization. A GAO report, dated June 4. 19,79, states that the debt was $9,243,799.55 as of February 28, 1979. We understand that an agreement with the water agency in Panama has been concluded and







48

that some of the past water bills have been paid. (Reference-GAO repmr%:.,Bidtground Information on Implementing Legislation, pages 23-27).
(a) Do you believe the L)ast debts of the Government of Panama win be, poW Would they be paid to the Panama Canal Commission?
Answer. The Government of Panama has exp agreement %. "
exchange of notes between the two governments o =venng the terms of their past debts as well as for services to be provided them in the futum b the Commission. Under the proposed note agreement, Panama's back debt WO paid over a three-year period through quarterly installments, with en tg& after October 1, 1979 being offset against amounts due them under III and XM of the Panama Canal Treaty. To be excluded from this agreement, is the $744,156 of delinquent water accounts which are currently being paid on. a basis in accordance with a separate agreement entered into earlier with water agency. Barring an un:NV change in Panama's j)osition with resped to these obligations, the notes v be formally exchanged and payment of them, debts will be made throu h the offset process.
oW,:n
Direct payments or to will be considered as receipts by the Commis" .
Receipts applicable to Canal Zone Government accounts would be deposited by tht Commission into the general fund of the Treasury, whereas receipts applicable to Panama Canal Company accounts would be covered into the 1reasury to the:01J. count of the Panama Canal Commission fund.
Question 4(b). In the budget estimates submitted to the Appropriations ConuWbtee, was there included in the projected revenues any sums for the repayumtof these past debts?
Answer. Revenues associated with these past debts of Panama were recor4ed n the books of account of the Panama Canal Company and Canal Zone Government in the accounting period in which the services were rendered. Accordingly, the fiscal year 1980 budget estimates for the Commission do not project revenues as opch fpr repayment of these outstanding accounts. However, the amount expected to be paM by Panama in 1980 t Panama Canal Company receivables is included in our
ection of cash deposits to the Panama Canal Commission fund d i the year.
tiring 4
&Tej budget does not reflect deposit of payments of Canal Zone Government remyables, however, since these payments will be covered into the generaffund of the
such, and in accordance with H.R. Ill, these deposits will not apply
=r dting the U.S. investment in the Commission.
Question 40 -In terms of the business accounting for tolls ciacuLAion, h should the reffikyment of the past debts due from the government ofP'='ama, or signature of Panama on an agreement to repay those debts affect the allowances doubtful accounts now carried as a liability on the balance sheet of the Comwi4.. Would the amount for doubtful accounts be reduced to zero when an a greement wl
signed, or would it be reduced as amounts were paid?
Answer. The past debts of the Governmont of Panama will be considered collo& ible upon the exchange of notes between the two governments. At thaf tim allowance for doubtful accounts established against the debt will be cleared amount being transferred to a deferred credit account. This deferred 6vdit will amortized over a five-year period, which will have the effect of reducing future rate requirements. This treatment was approved by the Board of Directorp'O Company with the objective of returning to shipping moneys assessed them through the toll rates when the Panama accounts were considered uncoll=1 Although the Panama debt is to be paid over a three-year Peri-od, the credit will b amortized over five years on the basis that shipping was cfiarged initially for' costs over a similar time frame.
Question 4(d). How would the repayment of debts by Panama affect #*,,tplls estimates and or the Panama Canal commission for fiscal yea r 1980 .
Answer. A five-year amortization of the allowance for doubtful accounts
lished against this debt will reduce by about $1.733 million the costs to be recove through tolls in fiscal year 1980. Based on projected toll revenues of $221 this would amount to a reduction in.the toll rate requirement for 1980 of percent.
F. GENERAL CORPoRATz mmEwsE ENTEREsT
Question 1. The 1980 estimate for the Panama Canal Commission
as an, apo"
ated-fimd V:cy shows a category of expense referred to as "General Co- Expense.y$ Ir
t is the basis for use Of that terminology in a non-corporate agencf4 Answer. The title "General Corporate" was carried over from previougb;udgili and will be changed in future submissions for a non-corporate agency. Question 2. Under Section 412 of H.R. 111, the toll formula for use of the 10*i Canal is designed to recover interest on the investment of the United States in't'" Panama Canal. Under Section 413 of H.R. 111, the base for interest is reduced LT







49

trandm of assets from the Panama Canal Commission and increased by assets brought into the Commission.
At the present time, what do you project to be the amount of the base for pe yment of interest?
AnAwer. Section 413 of H.R. 111 also provides that the interest base shall be reduced by the amount of Panama Canal company fxmda covered into the Treasury pursuant, to. Section 232 of H.R. Ill and be increased by appropriation and docreaW by deposits of revenue. Such deposits of revenue will include interest and thus the investment base is reduced each year by the amount of interest.
The interest base is estimated as follows:
Anwunf
M diriot investment balance, estimate September 30, 1979 ..................... $318.9
Transfer of property:
Transfers in.- Canal Zone Government assets .......................................... 12.8
Transfers out:
Company assets to Panama .............................. ...... 1-77.1
Company assets to other Government agencies .............................. -0.2
Inventory to other Government agencies and Panama ................. -1.6

T otal ..................................................................................................... 66.1
Cbnoolidation of equity of U.S. Government in Thatcher Ferry Bridge .................................................................................... 18.1
it pEX-oppany cash in U.S. Treasury pursuant to section 232 of
......... ................................................................................................ 82.0
Tuterestibearing investment at beginning of 1980 ......................................... 188.9

TRANSAMONS 1980
A
ftr obligations from previous agencies .................................................... 76.5
W inergency Fund ................................................ .......................................... 40.0
FY .1980 operations ....................................................................................... 350.8
Lew
.. 7 Undrawn amounts at yearerid held to meet obligations ............... -42.9
Em eq;ency ftind .................................................................................... 40.0
Capita
obligations from previous agencies .................................................... 13.2
Fiscal year 1980 capital ............................................................................... 27.2
Transfers to -DOD during 1980 ......................................................... -0.7
Less: Undrawn amounts at year-end ........................................................ 11.3
Nk appropriations withdrawn from U.S6 Treasury ........ ................. 412A
Zi4 deposits:
Operating revenue including $20.9 in interest ........................................ -384.5
Capital surcharge .......................................................................................... 5.0
Ymeeds from sale of inventory and collection of receivables ............. -6.8
Total revenue deposits in U.S. Treasury .............................................. -396.3
investment at and of fiscal year 1980 ................................. 205.4
liMudem Thatcher Ferry Bridge.
Question 2(b). What amount would be recovered in fiscal year 1980 for the payrgent of interest?
Answer. The interest cost to be recovered in tolls in fiscal year 1980 is estimated tit $20,&54,000.
Quaawn 2(c). Would this amount be placed in the Panama Canal Commmon f1md, or would it go to the General Treasury fund? Anmww. Tolls will include a factor for interest according to section 412(b) of H.R. 111. Section 232(b) further provides that tolls shall be deposited in the Treasury in the Ponama Canal Commission Fund. Thus, interest payments will be deposited in tb6fthama, Canal Commission Fund.







50

G. C"rrAL
Tra ns i t project ts
Question 1. How does the procurement of additional towing locomotives million fit into your projections of traffic for the coming years? Answer. The fit is a good one since towing locomotive requirements relate
to the number and size of vessels to be serviced and these requirements have been increasing steadily. The table below shows actual transit in fiscal ye4ir 1977-18,an.dthe latest forecast through 1981.

Daily pewt POW
averap 80 forit 100 fQ*
oDeanprig beam
Fiscal year transit and over and V* : ..:1977 (k tual) .......................................................... 32.9 35.5 8.
1978 (k tual) .......................................................... 35.0 35.5 8.4
1979 (Estimate).... ................................................... 35.8 42.2 14.2
1980 (Estimate) ....................................................... 36.4 44.0 14.6
1981 (Estimate) ....................................................... 37.0 45.1 15.1

Through fiscal year 1978 we had a total of 57 towing locomotives. JA fismi YJ*r 1979, 8 towing locomotives were added, giving a new total of 65 towing lo6iobiofios, Based on the above projections and on increasing maintenance requirements 1o, keep up with the age of the original 57 towing locomotives, an additional 5 towing locomotives should be procured in fiscal year 1980.
Supporting service projects
Question 1. Are the Water System Improvements scheduled for 1980 at $885,000 for the purpose of serving the Canal areas or the Republic of Panama outOW: the, Canal areas?
Answer. The recommended fiscal year 1980 program contains a total of- $328,0()o for water system improvements-$278,000 to complete projects comm6need:'in fiscal year 1979 and $50,000 to add a coagulation feed system at Mt. Hope Filter Plant, All scheduled Water System Improvements are required for the Canal -areas, and they have been programmed primarily to improve service to our customers m"our areas and our DOD customers. Since the Commission's water system will. dso serve sections of Panama City, Colon, and the communities of Rainbow City, Paraisa ,;,and Pedro Miguel, residents of these communities will benefit from the w;ikem improvements.
Question 2. What is the project for impfovements to communicatiow faciKfidis -at $500,000 in 1980? 1
Answer. The project is for a new Private Automatic Branch Exchange (PABXYto replace the 1930 vintage switching equipment at the CA)co Solo townsite.- The. townsite stays with the Canal enterprise after Treaty entry into force. The:,rcupv* estimate cost included in the fiscal year 1980 budget is $435,000.
Capital program procedures
Question 1(a). Since this is the first budget review of this kind conducted by, this committee will you tell us about the Process of constructing the budget, particularly in reference to the capital program?
Answer. For capital the Bureaus and independent units of the Canal enterprise submit recommended projects. These projects are then analyzed and rank0k.-A management review is held and each manager has an opportunity to support.. his projects.. Rankings are then revised and a recommended capital program for: the Agency is prepared for submission to the Board of Directors.
The operations budget is similar except that most operating activities are:ongob whereas the capital Program consists of many one-of-a-kind-projects. The opefttfiij officials submit their operating budgets based on the requirement to co -61 obligations, operating margi Ln (or cost), and numbers of employees. Each submissiM peceives a comprehensive review often requiring managers to address their tow. resources and staff requirements in addition to the incremental changes over the prior year.
An in-house management review is conducted by officials of the Company,
which each manager justifies his programs. A great deal of consideration is gi to. the priority of needs at this time especially in attaining the Company's objectives.




HHHHH iiiiiii. iiiii~ii -iiii51~i
Siiiiiiiiiiiiiiiiiiiiitheiiaioiiiiiiii the Bu g t aniiine C mm te@o h
!ii ..... ipw iiiiiiiiiiiiBoardiiiiiiiiiiiiiiof D director revie w s the reco m m ended capital and operating
...................................................i i
budget.............te...l....a d's...ns.d ra...n...fer.theiBoa diapprove
ti 0 arqet h ugti umttdt M n ogesfrapoa
nQeto () sIudrtn t h ugti ie ls okb h 6r
........................................... iiliiliiiliiiiiiiiiiiiiiiiiliiii?
AAiiir The nrmalisquenceofievetsiforbudgetapprovl isifriaicopriien ...... intr yteaec aaeet n hnteBadsBde n
tee wit tat omitte akng tsrecmmndtios o teul

Bo TebdeasapoebyteBadithnsbitdtteOficeo
a *qeah n ugt hspoesws olwdfrte18 rsdn' ugt
it0WWL.VMgadcrusacsofsbeun 90sbisosudrHR il *k htti eiwpoescudntb olwd h 90bde
simtssbitdiMatoteCnrsinlAporainComteswe
to: the Board and OMB after that subm ]iion Ourostcurent198
P d n; ie WOO reviewed and approved by the Budget and Finance Committee on July
10~~~~~~~~ ~ ~ si .........e ul ordo Jl 2,199
Qiswstian 2. Dosth..ptl..gamfr.90....v.isuse.er ho l

the caialpojcs ht il eunewain 90 Anwr h aia rgamdsusdfrfsa er 90icue l aia
dmial xece ob ndra nfsclya 90
S.o dosteBad h M n h ugtgtacmrhniei
viewof te toal aountof oligaion andexpeditues i a gven ear
C~mew4*.' Primay.emphasis.in.Bard.p.esentatios.for.capital.pograms.is on a







52

2. Construction of a small automobile ramp at the Cristobal Piers at a Cost of $49,000 to serve roll-on/roll-off operations. This was started in 1978 and completed in 1979 and was required to allow for an efficient operation.
3. Small cell addition to the jail at the Balboa Police Station at a cost of..$3,000. This work is already completed.
4. Complete renovation work of toilets at the Piers and RR yard in Balboa at a cost of $22,000.
A project to Improve Oil Handling Facilities was included in fiscal year 1979 but, was cancelled in June 1978.
In addition, in 1979 we have the following projects to maintain facilities operati : efficiently:
1. Replacement of Marine Bunkering valves, pumps, and pipelines at a costof $263,000.
2. Replacement of Terminals Equipment at a cost of $100,000.
3. Replacement of RR Rail at a cost of $125,000.
4. Freight charges of $53,000 for the delivery of replacement RR Rolling stocL
H. MISCELLANEOUS
Question 1. Several years ago, at the request of the Subcommittee, you provided data giving the percentage breakdown of operating expenses of the Panama Carml Company and Canal Zone Government.
(a) Does the percentage breakdown of expense of the Panama Canal Commission differ markedly from the percentage breakdown for the Company9
Answer. For comparision purposes, the attached Schedule A combines the average operating expenses of the Panama Canal Company and Canal Zone Government for the 10-year period 1966-75 by major object classification.
Schedule B compares the combined agency expenses for the 10-year period 196675 with the fiscal year 1980 projected expenses for the Panama Canal Commission.
Question (b). In previous testimony before the Subcommittee, you have indicated that the percentage of the Canal operation's fixed and marginal costs-65% to 35%-would remain the same for the Panama Canal Commission. Do you retain that view?
Answer. Baed on a cursory review of the latest projections of costs and using the 1970 Arthur Andersen & Co. study as a guide, the percentage of fixed to narginal cost was determined to be virtually the same (61 to 39 percent). It should be emphasized, however, that the review was made without a comprehensive update of the AA study. Nevertheless, the review- had reasonable and practical assumptions on which to base the estimates.
SCHEDULE A-TO ACCOMPANY ANSWER TO QUESTION H. 1 (a)
[In millions of dollars]
Panama
supplies cost of Canal Nd cost
and Company of Gavew Dwec An
Person(W materials sow intereg serVim mem abon ohm TOW
Panama Canal Company .................... 90.9 12.5 21.1 12.5 ............. 27.8 9.8 1.7 176.3
Canal Zone Government .................... 33.8 3.2 ........................ 7.6 ............. 2.3 1.9 48.8
Elimination of Panama Canal Company services on a combined basis ......................................................... 7.6 ........................... 7.6 .... i .........

Total .................................... 124.7 15.7 21.1 12.5 ............. 27.8 12.1 11.2 225.1

Percentage breakdown ...................... 55.4 7.0 9.4 5.5 ............. 12.4 5.3 5.0 IOU













.. ................................................$24 7.5.$76..4

itd __il .............................. 5 771 7 51






D~ id a ion ..............................................................12.1..18.




....................... ........ ............................ Ii.. . . . . . . .1 .
Tdat omratin expeses ....................................225.1100i38 .5i10

*10t doiplyth W cot f etolumprduts MW Wbo'ot ertirt dcolmdbytemsof197 retywih anma

019*6~ 6iliiiiliiiford=
k p toPnh mebs an()3cetpePaaaCnlnttno ipn rnb thCaa,()fxdan ityo 1
nawt and(3) pui*service iw of $1,000,00o
.*o f o wo*apino hei oto aa oeGenet
wh &cri W p mah od= tanierdtoteCimis iePlce ie m fwh emint tth n f h 0
tz~ft parlei
M ........ 2,Waisteisiae mon ftefnd ftePnaaCnlta
wal on andon Spteber30,1979andtha wil becovredintotheTresur
un~r Secton 232 ofH.R. 111
.Amwr. I isestiate tha Copanycas on andat Spteber 0, 979ioib
coverd ino th Panma Cnal ommisionfundwillbei$2imilion
Qua~& Wht isthe stimted moun ofunexende funs ofthe analZon
Govenmen tht wil b covredintotheTreauryunde Setion231
1 Anfwei It s. etimaed tat $ milion f unxpened Cnalione overmen fud wl i oeedit teTeauy
"Qain4 Wa r helaiiie fteCopn n CnlZn Gvrmn
f or...... ....... . . .....l.. . . .q.i.e d

Answr. liailiies f te Cmpan an Govrnmnt nclue pinciall th sjuoiftdueforsalriesof mplyee, anua leae crretlydueter inatedi emplyee, suplis prchaed ut nt yt pid, npad cotratorservces an
eot~ate.. mouts de fr pst hip ccient. I addtio toliailites or uppi






54

L TRANSIT OPERATIONS
A. Maintenance of channel and harbors
Question 1. Please describe the nature of this activity.
Answer. Maintenance of channel and harbors consists of a variety of activities.
(a) The primary nature of this function is to maintain proper navigable depth in the channels and anchorages. In addition, meteorological and hydrographic conditions are observed and studied. This function also includes the operation a a.-Wide range of facilities such as lights, beacons, buoys, and other navigational aids, dams and spillways, and other earth structures adjacent to the waterway. Under the maintenance of the channel and anchorages we operate a drill boat which is used for subaqueous drilling and blasting, and dredges (one 15 cubic-yard and dae,13 cubic-yard clipper dredge, a 7Y2 yard clamshell/derrick dredge, and a 3,500, cubic, yard-per-hour suction dredge), and a variety of support craft.
(b) This function also accomplishes aquatic weed control, clean-up of floating debris materials, and maintains the breakwater which protects the anchoragep. at Cristobal and controls and cleans up oil spillages in Canal waters.
(c) Furthermore, under this function, we monitor the weather and control 'the levels of Madden and Gatun Lakes and maintain the dams and spillways associated with the structural integrity of the waterway.
Question 2. To what extent is the dredging work in the program essential to operation of the Canal?
Answer. The dredging work and the maintenance program is essential to keep the canal and channels open to canal traffic. That is: (1) removal of some 2D5 million cubic yards of siltation that accrues in the canal proper each year, (2) it removes critical shoals that crop up at random in the canal channels, and (3) the removal of slides at they occur.
Question What is the general level of dredging provided for in the budget, or put in a different way, what is the object of the dredging program?
Answer. The object of the dredging program is to maintain the canal to the approved navigable depths and to perform various approved channel and aneharage improvement programs for fiscal year 1980. The program includes about 133 days of maintenance dredging with our suction dredge, about 227 days of channel improvement dredging (split 50/50 between the suction dredge and the dipper dredge), and about 200 days of subaqueous drilling.
Question 4. What obligation does the PC Commission have to maintain the harbors at either end of the Canal? .1
Answer. The Commission will have no obligation to maintain the harboA at either end of the canal. This is in accordance with the provisions of the Treaty. However, it is possible that the Government of Panama may request our assistjtn e in its harbors; this assistance would be rendered only if our resources w6re not otherwise committed to canal activities, and only at the Government of Panama's expense. Funds are not included in the fiscal year 1980 budget for performing harbor maintenance.
Question 5. Does the capital program include any projects to improve the harbors?
Answer. Capital improvement of the harbors will, under the Treaty, be rnolongor the responsibility of the Canal Agency. Again, it is a possibility that the Govireft. ment of Panama may request our assistance in this matter. And again, we-would render this assistance only after all of the essential needs of the canal were met and, then, only at the Government of Panama's expense. The fiscal year 1980 budget does not include funds for harbor improvements.
Question 6. Does the ca.pital program include any projects to improve the Canal, such as, widening, deepening, providing more water?
Answer. Yes, the capital program includes the projected following projects:
(a) Widening Mamei Curve: This project is currently underway and the majority of the blasting has been done and dredging also has begun.
(b) Deepening: This consists of deepening Gaillard Cut three feet and to deepen Gatun Lake channel. This project would provide more water for canal usage. , '
(c) Bohio Curve: This project consists of removing Orchid/DeLesseps Islands. Tbds particular curve is the worst in the canal.
The total Canal Improvements Projects are estimated at a cost of $5 .-million annually through fiscal year 1985.










i~i ili iii~55~i
r, Qutn iiiiii@h rekonofte$386000 ot sonfr rni
operations I..Ase. h auato eo ietfe b ucins h ot ildiniiiii







Mkintenance ~ ~ ~ ~ ~ ~ ~ = ochnesadhros.............................................. 38,394

N*Y ~~ services and coto ................................. 58


M ub ic se v ce pa me t t P na a ..................... ............... ............. 10,000==' ]i
.. ...a ty p y e tioP a a a ....................................6 3
G e n e r a l c a n a l e x p e n s e ................................................................................. iiiiiiiiiiiliiii iii~ iiii~iiiiiiiii 1 8 ,7 16iiiiiiiiiiii iii ii
T o t a l o p e r a t in g c o s ts .... 2 6 9 ,3 79
1*s in r -g n y r c v r e ....................................3 3
Ne p~ a in o ts,,,, ...................................... ...... ,4







56

another line item of the Canal Protection Force. and the Thatchw Ferry BrW-sp to T
Panama.
Question .9. What are the "Supporting Serviees referred to in the edkmdm on: an appropriation basis?
Answer. The supporting Servicee" category includes essential ufifitiks 111*11017 and other incidental supporting functions that are required to awbotily adcankplish the Commission's mission.
Included in the utilities area are electdc power, water, aM
central air conditioning services. The supply and logistical fiinctions providm fw Me and warehousing of supplies and materials and transportation riogrements o the Commission. The major activity of the incidental su 11 functions
is the operation and maintenance of the housing program for employees of the

Question 10. Please summarize the changes in the operating costs of thow activities in comparison to the actual results for fiscal year 1978 and the estim results for 1979.
Answer. The increase in operating cost in 1979 over 1978 is due to cost
escalation for wages, supplies and material% fuel and contractual sevvwm In addition, there were some minor program increases for overhaul of equipawnt and maintenance for employee housing, retail units and water systemThe decrease in operating cost in 1980 over 1979 is due to the transfer or elimination of certain Company functions as required by the terms of the 1977 Treaty with Panama The harbor terminals, marine bunkering, and rai-trood operations are being transferred to the Republic of Panama on October 1, M9. The retail units, food units, theaters, and bowling alleys will cease operation so required by the Treaty. In addition, there will be a reduction in the mope of operation for the housing program due to certain quarters 1 to ffie Repub6c of ftnamna
Question 11. The 1980 estimate for the Panama Canal Commission as an. appropllated-fiind agency shows a category of expense referred to as "Genend C& P Expense." What is the basis for use of that terminology in a agency?
Answer. The title "General Corporate" was carried ov fimm prevww bu4pets and will be changed in future submissions fbr a non-corporate agency.
Question 12 Please give us a summary of what expenses am -induded in. U16 category of 'reneral Corporate Expense".
Answer. The latest estimates of general and administrative expenses ip UNAM presented in the following table. The cost estimates dilTer from the Prewidenes budget to conform to the requirements of H.R. 111 and our latest estimatm,

[La dwumuds of ddlanj

owing*
Executive direction ....................................................................... ............ ......... SIM
operations direction .......................................................................................... 3AM ,
Financial m anagem ent .............................................. ............................ ...........
Personnel adminsitration ...................................................................... ........ .
General services ....................................................................................................
Recruitment and repatriation ................................................ ....................... 4AU
Employee states travel .................................................................................... 1=
Transportation of employee vehicles ................................................................ 8W
Apprentice training program ................................................. .........
Employer contributions to FEGLL FICA and Incentive 750
Early retired ent ................................................................................................... 14,700
Interest ................................................................................................................... 2OX 4
Death and disability 6ompensation ......................... .............................. IM
Employers contribution to Federal Health Insurance plans ....... .............. k147
Alien cost relief payments .............................................................................. lim
Alien cost relief annuitant welfare program ..................... ..................... -.- 309
Reimbursements to DoD for education and health costs ................. .......... Ift=
Probation, parole and judicial system .............................................................. 626
M ail and directory unit ...................................... I ................................................ 454
Community and professional library ................................................................ 581
Joint personnel program ..................................................................................... 476
Repairs to buildings and excess facility expense ............................................ 908
Amortization of deferred credits from Panama accounts receivable ......... (1,733)







P~~~a~ Wa SocialH II H SecuritiiyHiiii pa m ns............................ ......... 715......




A l lii oiiiiiiiiw riiiii i e x p e n s e si a n d............................................................................................................................................................................................................. (5 0





T o t a l........ g e e a ............. m i n ................. ...........s e...... ........iii.............................................ii ii.. ..... ......... ... .......9 8 ,6 5 0 ...

Qiiio 1iN Ho otecssi htctgr GnrlCroaeEpne

...........e wih mmila costs in 1979 and the estimated costs in 1980? iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii iii








SCHEDULE--Coalloud




AN Ole, induft alfnal pene for astoins laism (8),
mail alrfing (4), geMBs (9),.M aid offli, liet (1) Wi
sa gs fron 55' paid s pay cap ..............- ...............L
C a isil f ach da g ..................... ...................-- ... ----...
i eoa yof accounts eceiae from Pnama .........................-...
ay I gibsion to Coopess ................................................. .......------ 383.8
lital ti projecloa (-$6.6 tolls, -$1.7 tonnag payneals
toPAN -30.5 olte eVenu) .-............... -1.7
geamt feed peat cluge to slat cost basis ................ -127
Fed atl pric escatalons, furler chage...-................... .. 6.0
garagat assismm for Panan, aptingenc.................. ....1.
Malatenanc o( loks, navigation, seric equipment.................1.
Facfy rel~oou, reduled back to 1979...................-.- 77Almost cost chang to 10.25 pseet intaes fate......... ......... 9
Regse eshole t arin accient, acesa fu $8.0 to $6.0.... -2.0O2
An ager cost vaioou indens mkainea mw w aeened work an =ftin anpigaent, net ....... ........ ... 1.2
Plusis o f # 1g serae for lasto ............. -............. : .......a............ ..Asp tria an abiloca pvisio ................................ .............. 1.2
Wdren Estuate, fiscal year 1980................_.. ............... ........... 384.

J. NAVIGATION 811RVIC AND CONTROL
sutw 1. Please describe briefy the Annations included in thisacity 4 1
Ase. Navigation Service and Control is comprised of two DIlimsit Opagatingp and the Canal Support Divisions. Functional -epofitaa



Suerison and enforcement of rules and regulationsCnlwith respot to transiting vessels esAo the Pacific i
Sea Buoy. The scheduling and control of vessels for Canal meant. training and supetision of pilots.
Canal support division
Supervision and enforcement of rules and regulations governing fuin w itg, lanch, and deckhand services; addleasurement of vessels fortol ment; inspection of vessels; responding to vessel emergencies; and the opato
maint an of tugs, launches and related shore facilities.
Qusin 2. For what level of traffic is this flnotion. budgeted . .t...
Ase. The fiscal year 1980 budget estimate provides for a foreast of transmit as fonlows:
Toa 0oceangoDing gtrans 8its ....................................................................
Daily average (percent) .................................................. ........ .................... K 4.
80 foot beam and over (percent) ................................................................. 4 .
100 foot beam and over (percent) ............................................................... 1
Question 3. le this your current proectio of traffic for fiscal yer19 7
Answer. Yes, this is the current projection of traffic for fisa year lto
Question *. How many pilots are now employed? T:
Answer. Out of a force ceiling of 230 pilots, there are 219 on boad &rM 1979. The fiscal year 1980 ceiling provides for 233 pilots. T
Question 5. Is this number of pilots adequate to handle the trri levels?
Answer. Our 219. pilots are barely adequate to handle traffic at p-cretl*
Th okodrqiesf-qetOetm. ltrcutie r'Re kWk mr

retyfIoal aebe neti n a e eUulsi:i~eA w




5 9
'T eY o r i ing cceis lengthy, so that we must h iren w o Sen ior pilot
in 1........................ a n diiiiiii iiii19 8 7 .iiiiiiiiiiiiii
? o htisteesalsedwrwekfr ios

Wehv w ascfr fplo mlyet
Regular: Pilots work a basic 6-day week and get overtime for all work over the 40 h urs A orm l wrklad i 3 ssinmets er eek,43ieekipeiyer i(
i ......................................................................................... y e r
.. ... ............ .. .. ............................... ..................................................................... ................ .. ............. ............. ......... ............................................ .ii ii i i ii i ii i i ii i ii i i ii i ii i ii i i ii i ii i i ii i iiin
@ iiiiiiiiiiiiiiiiiiiiiiiiiiiiiipiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiirini
thi dt eropn reaaial frasin et een (Ydaspr ek
w~~u t a .Wht sth veag mo n o oeti ewoke y ilt
A n s w e r .iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiyiiii
iAto &i How doesiiii ovri eafetteiospy
'Answer. Piosaepiiieadoe; o l okoe 0hus hyer
etapeimcmestofowoknhoias ihsSudyanva i
.... : 4 1 ^iiiiiiiiiiiii iiiiii4-ft a iii i i iiis cliHji ~ i i~~i iiiiii ~ :~~~~ii~ii~~iiiiiii ...... ............. .......................... J ....................................................................................
..... ......................................i e d l l o a c. ..................iiii iiii i
Ove imeadd aproxmatey $,40 ; 1h aveagepilt apay
.,.Q~w~oq 9.iInitheconsideraton ofiH.Ri111ioniteifloorioftheiHousea question
!Wrje~butedsrblt fcnrcigfrplt evc.Pes omn
o1 ..................................................................... P r o p o s a l .iiiiiiiiiiiiiiiiiiiii~ i
.Asir h pltsascitonhsha xpoaor eeig wt Mrn Bra
...............................................................................................ki ii ii iii ii ii iii ii iii ii ii iii ii iii ii ii iii ii ii
mi The plot associtioniandimnagementiaeiactivelypursuingitisimatter
p eriiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii
r= 10 il o esrb teogaiaina tucuecotmlae o
e oftenvgto evc n oto uc ion udrteCm isson
.i....................................................................................................................................................................................................................
sa m a..................... itliiiidayiiiiiiioviiiiiiiiiiiiiigriliiiliiiliir P ort C
W boa, and Cristobal..........org.a.n..ation.s......d theiiiDirectoriiiiiofiiiiiiiiiiiiiiiiiiiiiiuniti
e=vso -h an lS potDvson h rniiprain iiin i
continuediiiiiiasiiIniiiitsiiipresentiiiiform.ii
ulsii~ LW a ol eteef c nti cion of an... inraei rf i f iiiiiiiiiiiiii
P ilots......................................................... ......................... ............... 9

crw (8em lym ns ............................................ 7ii i







60

Total oceangoing transit ....................................................................................
D aily average ........................................................................................................ .36.4
80 foot beam and over (percent) ................................................................. 44.0
100 foot beam and over (percent) ............................................................... .14.6
Question What level of service will be Provided by the funds included in the budget estimate? (Note: Answer should be in the number of locks, crews, and hours of service.)
Answer. Beginning October 1, 1979 through January 31, 1980, the configairatiow of, Locks crewm*g will be as follows:
Gatun (3 lifts)--7 crews each day, 24-hour service two lanes with 8 hours
relay in one lane.
Pedro Miguel (1 lift)-5 crews each day, 24-hour service one lane, 16-bour
service one lane.
Miraflores (2 lifts)-6 crews each day, 24-hour service two lanes.
Call-out overtime (ten times per month) is provided as required through January 31,1980.
Beginning February 1, 1980, the configuration of Locks crewing will be as fonovw
Gatun (3 lifts)-8 crews each day, 24-hour service two lanes with 16-hour
relays in one lane.
Pedro Miguel (1 lift)-6 crews each day, 24-hour service two lanes.
Miraflores (2 lifts)-7 crews each day, 24-hour service two lanes with 8-hour
relays in one lane.
Locks crewing provides capability to handle traffic levels for fiscal year 1980 with projected ship mix.
Question 4. What level would the traffic have to reach before the funding provided by the estimate would become so insufficient as to affect the service provided by the Locks?
Answer. Sustained daily traffic levels beyond 38 would require additional. resources.
Question 5. What would be the cost of providing necessary additional service to meet the situation described *in your answer to the last question?
Answer. A sustained daily average beyond 38 transit would require the following locks crewing.
Gatun, 0 lifts -9 crews each day-24-hours service with 24-hour relays in o3ie
lane.
Pedro Miguel (1 lift)-6 crews each day-24-hours service two lanes.
Miraflores (2 lifts -9 crews each day-24-hours service with 24-hour relays in
one lane.
If the above crewing were provided on a, permanent basis they would cost approximately $1,500,000 annually in fiscal year 1980 dollars.
It would also be desirous to promptly advance the locks locomotive procurement and Gatun Locks chamber lighting project. Specifically the 5 towing locomot4Mm in the fiscal year 1980 program should be increased to 10 and the lighting project advanced from fiscal year 1981 to fiscal year 1980 at a total estimated cost of $5.i6 million ($4.3 million for additional locomotives and $1.3 million for lockslighting).

L. GENERAL REPAIR, ENGINEERING AND MAINTENANCE SERVICES
Question 1. Please describe the services included under this heading in the budget.
Answer. This activity provides a wide range of maintenance and repair work on structures, loading equipment, and shop and construction equipment necessary to the safe and efficient operation of the entire Canal Enterprise. Included here are: engineering designs and services, construction contract administration, routine building maintenance and electrical repair services, the operation of a general laboratory, and topographic and hydrographic surveys.
Question 2. What is the organizational structure contemplated for the performance of these functions?
Answer. These functions are now performed by elements of the Engineering and Construction Bureau. There is no change contemplated in this organization in fiscal year 1980.
Question To what extent would increases in traffic through the Canal affeo ithe level of activity of these services?
Answer. Traffic increases would tend to increase general repairs, engineering and maintenance services to a degree; however, the increase would not be a straight line' and would have minimal immediate impact. For instance, the floating equipment must be overhauled at intervals to prevent corrosion regardless of whether the equipment is used. However, as additional floating equipment such as tugs*are






61

to:. the fleet to meet increased traffic, the workload of certain of these
wtivitim would correspondingly increase.
M. SECURITY AND PROMMON SZRVICZB
Quation 1. Please describe the security and protection services included under
this head in the buTdfet*Canal Commission
I Answer. Police: e Police, for a 30 month transition period
will have concurrent criminal jurisdiction and investigative responsibilities with Penamnlan law enforcement authorities in Canal Operating Areas, Canal Housing
A
'Arwa, Arem, and facilities granted to the United States outside of Operating Areas, of Coordination, Defense Sites, and Ports and Piers Areas. This o responsibility will be accomplished b joint Canal Commission/Panama National
Zuard patro
Is in the aforementione7 areas. Additionally, the Canal Commission
Police to the penitentiary which will have a projected population of 137
= or r 1, 1979.
Fire.
The Canal Commission Fire Division is responsible for fire protection and
Am fighting aboard ships and floating equipment in Canal waters, locks areas, and
jointly *ble with the Government of Panama's Fire Department for fire
nr7om
rotectio land base areas such as Defense Sites, Commiss n and Military
Axeas, Ammunition Areas, and Chemical Storage Areas. Further, the
Cmilmi-*on Fire Division is responsible for resuce and emergency ambulance servim for Commission townsites.
Canal protecting: The Canal Protection Division is division in the Secutt.ind Protection Services of the General Services aMor
B u, Panama Canal Comn of the Canal Protection Division is to protect the security of The missio
selected installations of the Panama Canal Commission, which are vital to the
mwemmmtoperation and maintenance of the Panama Canal and to ensure that
these installations remain inviolable.
Internal security. This provides for loyalty investigations and intelligence and
sennity services for the Government and the Company. For 1980, these services Will le.: A& XAMD"i by the Commission as a part of its Security and Protection Services
nn.
Quwtiax 9. How many employees are involved?
Aawwor. Police: During the transition penod the Commission Police will gradually
phase out of existen e-.bn- October 1, 1979 the Canal Commission Police will have 0
an ai*horised strength of 314 full time permanent employees. By the end of fiscal year 1980 the number of full time permanent employees will reduce to 287. On
April 1, 1982 the number of full time permanent employees will be 34.
FW. 140 employees.
Canal protection. 195 full time permanent employees.
ttermal security: 12 employees.
Queetioft I What is the nationality of these employees?
Anraw. Police: The fiscal year 19813 employee composition of the Police Division
is expected to be 228 U.S. citizens and 86 non-U.S. citizens.
Fire:. 20 US. citizens and 120 non-U.S. citizens.
Canal. protection: Based upon information presently available, including impact of 1K
RIF action, at Entry into Force the Canal Protection Division will consist of 100
U.S. citizen and 95 non-U.S. citizen employees.
h1terpal security: 12 U.S. citizen employees.
4&wtian 4. Would an increase in the level of traffic affect this function? If so, to
what extent?
Answer. Police: An increase in the level of Canal traffic would not directly affect
this fitaction.
-es
Fire. An increase in the level of traffic would increase the number of calls to fit
and other emergencies. H
Capd protection: Fluctuations in the level of traffic will not affect the operational
reoponsio-VUSAWMIQof the Canal Protection Division.
internal security: An increase in the level of Canal traffic would not affwt this
fm-cti M
Question 5. H.R. ill provides for transfer to the custad of the Attorne General A.
pr"'Woers serving sentences of more than one year. ;Ut effect will = provi.
own have on the cost of this function?
Answer. It will not have a significant 1mDact on the cost of this function in fiscal
1980. We estimate that there will iiM be about 38 penitentiary inmates who
tffhave to be cared for after transfer of prisoners sentences of more than
mr. Since penitentiary costs are relatively fix"edo Y minor cost reductions
IC ossible until the f6cility can be completely closed.
Quesfian 8. What will be done with prisoners who are serving less than one year?


49-653 0 79 5







62

Answer. They will continue to be cared for in the penitentiary until the numbm are reduced sufficiently to be transferred to the Balboa Jail. It is probable that transfer to the Balboa Jail could take place when the population of the penitentiary drops below 20 inmates.
N. INDUSTRUL HEALTH AND SANffATION
A.
Question 1. Please describe the Industrial Health and Sanitation Services included under this head in the budget.
Answer. (a) Industrial health services will include the prevention of oompadonill diseases and injuries through survey or industrial operations as well as. the p session and technical aspects of the Panama Canal Commission's ce
to the requirements of the Occupational Safety and Health Act (OSHA). In ad&tion, the industrial health function will include: liaison with and monitoring the results of, Commission participants in the alcoholism rehabilitation program; protection program; radiation protection program; air sampling program; tation of exposure to hazardous substances; coordination, review and follow-upr on line of duty *injuries and medical examining board requirements and coordination and review of all physical examinati for Comnumnaumdon em operation of five first-aid stations located in industrial areas; and p : i quarantine and disease control/immunization capability required by the Pan&= Canal Commission to ensure continued sanitation of the Canal 0 area.
As an outgrowth of treaty related discussions with Government of counterparts, the Panama Canal Commission will exchange communicable disease and industrial health information. There will also be a continuing and hinportant reouirement to maintain close liaison with the Department of Defense (MEDDAQ and & Government of Panama on industrial health and sanitation matters.
(b) Zoonotic disease control capability will be retained to accomplish certain quarantine functions directly related to operations of the waterway. Among the quarantine fimctions to be performed are (1) The examination of animal aboard arriving vessels when such animals originated from countries infected with foot and mouth disease or other quarantinable diseases, (2) the inspection of ships' stores at the request of the master or agent where spoilage is suspected, (3) the safbigu of chilled, fresh or frozen meats that arrive on vessels from countries wit] bot and mouth disease to preclude unloading of such products in areas of Commission responsibility, and (4) supervision of the disposition of ships' qarbage in instances where infected meat is involved. In addition, the Commissions veterinarians will provide liaison with their DOD and GOP counterparts as well as with other national and international organizations/agencies.
(c) Sanitation of Canal Operating Areas remains as a major function of the Panama Canal Commission. In carrying out this responsibility in various areas: and installations in and around the Commission operating and housing areas, theSanitation Division will maintain field crews to misure proper drainage and larviciding and vector control activities in all areas likely to breed mosquitoes. It is further expected that the proper exercise of this control will cause Commission. sanitation workers to operate beyond the surveyed limits of Commission areas so as tD eradicate all mosquito breeding habitats within flight range of townsites and work ari as. Other services provided by Sanitation personnel are as follows:
1. Rat inspections to vessels at piers made available to U.S.
2. Maintain food sanitation controls 'at restaurants in Canal Operating Areas.
3. Control minor disease vectors, such as bats, ticks, flys, etc.
4. Monitor the quality of drinking water.
5. Monitor refuse collection and disposal.
6. Follow-up on communicable disease occurrences (Epidemiology),
7. Respond to public complaints.
8. Monitor the sanitation of public areas.
(d) The Safety Program will continue to Promote the Provisions of the Occupational Safety and Health Act as it applies to the Commission, will effect and monitor cpmpliance with the agency's safety directives, and will exercise techni sup6rvision over the safety officers employed in the Commission's bureaus. Fundin fbr this function is provided for under Operations Direction.
Question 2. To what extent would increases in traffic through the Canal affect:the level of activity of these services?
Answer. The nature of the services r 'ded is such that increases in C4uW traffic will not significantly affect the level oy a0evtlivity of these services.
Question 3. How are these services performed now?
Answer. With the exception of four of the five first aid stations and the safety function, all services described in N-1 are currently provided by the Division of Sanitation, Division of Public Health and the Division of Veterinary Medicine, all







63

wtdch am a part of the Health Bureau. Other activities of the current Health k Buvwu relate to the providing of medical care to individuals and are being trans.
brred to DOD because the treaty precludes the Commission from providing health WW medical services to individuals. However, the treaty does not assign any role to
DW in the management, operation and maintenance of the Canal.
The four, first aid stations referred to above are currently operated by three
On*aux ofthe agency but their op ration is under the technical supervision of the H Health Bureau. After October 1, in the interest of improved and more efficient M ement, all five of the first aid stations will be consolidated under and operat1111i od by the Office of Health and Safety. The fifth first aid station is currently Ili PWA by the Health Bureau. The safety function currently exists as a separate
loiid indepe uni reporting directly to the agency head. Because of its close
I tnterrelationship with industrial health, the safety function will be organized under
the Health and Safe- Office after October 1.
Question + Wouly it be feasible to consolidate this function with the Health
&&d6mbeilng transferred to DOD?
Answer. Though possible it would not be desirable to consolidate the Industrial
Hsaltk ,and Sanitation functions with those functions being transferred to DOD. The Panatft Cahal Commission is, by treaty, charged with the responsibility for the efficbmt amuiagement, operation and maintenance of the Canal. The Industrial Health and Sanitation functions constitute a vital part of the agency mission, while dw H*th portion of DOD's mission will be primarily one of providing medical
Mom to individuals.
diftrent agency missions (and thus placing different pr ori on resources) it is unlikel that the Panama Canal Commission would receive the same level..of support in important areas if the responsibility were transferred to

9 FlImMy it was never contemplated that these services would be transferred to
o6hers and DOD has not budgeted for these functions.
Questim 5. Please describe the organizational structure contemplated for performan of them functions.
K Answer. The health and safety responsibilities of the Panama Canal Commission
will be consolidated into an Office of Health and Safety.
1hpargnization. of Health and Safety Office will consist of an Office of the
Directai and four operating units: Industrial Health, Sanitation, Zoonotic Disease
Control and Safety.
'Ie Office of the Director will exercise executive direction and have overall
responsibility for the administration and supervision of all health and safety related activities remainin with the Panama Canal Commission as well as performing
essenW liaison with DOD, other U.S. Government agencies and other providers of 1-A
health care to the Commission and employees and dependents. ...
The Industrial Health element will include responsibilities for the prevention of
diseases and injuries through survey of industrial operations as well as
monitoring the professional and technical aspects of the Panama Canal Commis Sion's adherence to the requirements of the Occupational Safety and Health Act (OSELA). In addition, the industrial health function will include: liaison with, and
the results of, Commission participants in the alcoholism rehabilitation
1)= earing conservation program; respiratory protection program; radiation
protection program; air sampling program; documentation of e p sure to hazardous substances coordination, review and follow-up on line of duty injuries and medical
board requirements and findings; coordination and review of aR physical
examinations for Commission employees, operation of five first aid stations located in industrial areas; and provision of quarantine and disease control/immunization mpability required by the Panama Canal Commission to ensure continued sanitation of the Canal operating areas. 9 .
The Sanitation element will include responsibility for conducting ditching, larviand vector control activities in all Canal operating areas, areas made availathe U.S. for housing Commission employees. In addition, by joint GOP/CZG
agr ment, the Commission's sanitation forces will jointly sanitate, with their GOP counterparts, a one mile wide zone outside of townsite boundaries to insure insect free. housing areas. The Sanitation element will also rovide vessel derat services at piers made available to the U.S. Government; f0ox establishment inspections in Canal operating areas and, together with GOP counterparts, simila no in
ins
housing areas, monitor the purity and quality of drinking water in Commission
areas as well as monitor refuse collection.
The Zoonotic Disease Control activity will include responsibility for accomplishing
certain quarantin functions directly related to operations of the waterway. Am
the quarantine functions to be performed are (1) the examination of animal






64
arriving vessels when such animals originsted from countries infected mouth disease or other qantinabl diseases, (2) the inspection o4f the request of the master or agent where spoilage is-suspected,(8th of chilled, fresh or framen meats that arrive on vessels from Countries w"'ftr a mouth disease to preclude unloading of such products in area :of responsibility, and (4) supervise the disposition of ships' garbage in infected meat is involved. In addition, the Commission's veterinarise liaison with their DOD and GOP counterparts as well as with other international organizations/agencies.
The Safety element will include responsibility for insuring aec
with OSHA requirements and the agency's safety program as well t technical supervision over safty personnel assigned to the various filed units of the Commisn
Question How many people are involved?
Answer. The functions described above will require a total of 147 fufily*

Mr. IHUBBARD. This pertains to the fiancial
page 77. Please give us the description of the propos4 .o tion ad staffing of this function under the Commission. 4
governor PAmrrrf. I will be glad to provide details for thb but basically the fnciloperation would be ogt" staffed essentially as it is today, with very minor changes.
Mt*. HeUBA. Earlier I was askring for some of the eleents your budget in more detail. They were asked because of thq tainties which surround the authorization for the Pananma

How many people will be employed in this function shIe! Comrnmisin? I P"I
Governor PARaffr. The current estimate is 8,246 full-time pm hanents, and a, total staffiog of 8,595. That is the total staftway

Mn. HUBBAR. What about the fn cilpeople?
Governor PARFrrr. Financial Vice President.
Mr. HUBBARD. Under Fiaca aa eet how many
employed?
Governor PARrrr. Full-time Permanent staff of 346:eokrof total of 372 in the Financial Vice President's office. )4 1980.
Mr. HUBBARD. OK. what is the basis for the increase mean" between 1978 and 1980, as to Financial Management?
Governor PARFMf. I will have to Provide that for the recor I will be glad to do so.
[The following was received for the record:-]
INCREARE IN FbtANCLHI. 1ANAGEMT COBT
1Me fncrease in Finanicial Management costs of $1,335,000 from 1978 to 9*is accnedtfor as follows: 4res
W a g e a n d o t h e r c o s t e a la t io n .............................. --.... -- . . ............ $ 1 ,1 0 11
iiiiiiiiiiiii........




















Employment of 4 additional auditors to strengthen internal cnrl and other employments for workload.............................. 12,0
Additional requirements for computer rentals, .. mai ntena*n ce, and isay ^ plies ($101,000 in 1979, $67,000 in 1980) .......... ........ ..-.............................18 0
========W==%I=Ing






65
pjanftd.: in reduction in 1980 due to reduced workloads (15 full-time q-. Pwx and 6 others) ................................................................................. 131,000
1( requirements for employment in continuing positions
'71 W +*134,000 and -$84,000 in 1980) ........................................................ 50,000
.......................... ................................................................................ 11,000
Total .................... ........................................................................... ........... 1,335,000
The camnt estimate for 1980 is somewhat higher than the President's budget priampal1y due to the possible need to continue hospital billings for Commission ampldyeei expected increased claims activity and accounting systems development ,woikAV. "UBBAJW. Under "Personnel, page 771, just one question. f_ IU oubco mittee was told, sometime ago, that about one-half of
Panama Canal Commission costs, and 64 percent of all nontreaV payments of the Commission would be personnel related. Are tUw numbers, percentages of operating expense, or do they include operating and capital expense?
Governor PARFm. I believe they are basically related to the oper ation expense, but again I will confirm that for the record.
[The following was received for the record:]

RATio OF PERSONNEL Cbm To TOTAL
The ratios of personnel costs to total costs were developed by using only the werating vost of the Panama Canal Commission.
Mr. HUBBARD. And also, please confirm if these figures are correct. This is under employment costs on page 771. How do the items under this head of the estimates relate to the heading, "Personnel. Administration"9
..'Governor PARnrr Personnel Administration is essentially the staff that handles all the personnel activities of the organization, and employment costs are costs relating to all the employees of the entire Commission.
Mr. HUBBARD. Under tolls. Under section 412(d) of H.R. 111, the President may require U.S. Government vessels to pay tolls to the Panama Canal Commission, or the tolls that would have been levied on those vessels would be computed, and those amounts treated as revenues of the Panama Canal for the purpose of prescribing the rates of tolls, and computing payments to Panama.
Has any decision been made as to whether the President will require Government vessels to pay tolls?
Governor PARnrr. No decision has been made. I believe we
continue to function as we do now; that is, provide an offset against interest payments.
Mr. HUBBARD. What is your present estimate of tolls revenue in fiseal year 1979 and fiscal year 1980? ,4A
, Governor PARFM. 1979 is $210.8 million, and 1980 is $221 million.
. Mr. HUBBARD. Can you estimate for us how much of the estimated toll revenue is derived from movement of North Slope petroleum?
Governor PAm=. $20 million.
Mr. HUBBARD. What is your present assessment of the extent of future use of the canal for North Slope oil?






66

Governor PAm=. Through 1981, as I said, we still an
about the same level of business, perhaps some slight pickup. We are, at this point in time projecting about $21.6 million of re*enues from North Slope oil in 1981. Themidrange would depend ou. Pwny of the factors mentioned before concerning alternatives.
Mr. HUBBARD. We are almost through, Governor.
During hearings on H.R. 111, a partner in Arthur- Anderoon recommended a program of revaluation of Panama Canal aawts with a view to establishing new depreciation rates.
Was this program developed under a contract with the company, y?.
Governor PARFm. I do not believe this was developed under the contract with us. During the course of discussions they developed that concept, and presented it to our staff, but no i t
amount of time or analysis was made, and certainly not at our request. But the same individuals under contract to us developed that concept and presented it to our financial officials.
Mr. HUBBARD. How long a period would be required for such a valuation program, and development of a program for use of the results?
Governor PARFm. I cannot give an authoritative answer. There is some feeling that it could be done within a year. It has been my own view that although the concept is an appealing one, that with all of the other changes and the difficulties that we have now, that it should be deferred for subsequent decision.
Mr. HUBBARD. Is Arthur Anderson still under contract to perform consulting services for the company.?
Governor PAR=. They are, sir.
Mr. HUBRARD. Last, if you have a contract with Arthur Anderson at the present time, please furnish the names of the person engaged in the performance of the control, and the rates of compensation paid to Arthur Anderson for the services of each.
Would you do that for us?
Governor PARFm. I will be glad to, sir.
[The following was received for the record:]
ARTHuR ANDERsEN & Co.
[Cmbnact No& PG-Ip-1287 and PG-Ip-12931
Name and pay level of persons engaged in performance of the contracts
Amawa
Leonard J. Ku awa, partner ........................................................................
Edward F. Lukes, partner ................................................................................... 822
Dan M Cone, m manager V ................................................................................... 607
Patrick J. Condon, m an r IV ......................................................................... 577
Donald A. Legel, m manager 11 .............................................................................. 487
Robert N Talbert, staff II ................................................................................... 346
Daily rate of compensation (when worked.)
Mr. HUBBARD. Do you have anything else that you Would like to add, Governor Parfi'tt?
Governor PAwnw. No, sir, I think the testimony today has develoPed most of my concerns,, and Points that I would like to present.
Mr. HUBBARD. Governor, this might be the last time you testify before a congressional commi or subconuaittee. I want to commend you for the candor and honesty with which you have ad-






67
dressed this subcommittee, and other congressional bodies in the Past.
I want you to know that we appreciate the splendid job you have done in operating the canal, and from this chairman-members of the committee, and all others interested in the Panama Canal, we express our appreciation to you, and congratulate you. Governor PARF=. Thank you, Mr. Chairman. Mr. HUBBARD. Thank you again, Mr. Tom Constant, for being with us. You were very helpful to Governor Parfitt, and to each of us, even though your remarks for the record were somewhat limited. Thank you both.
The subcommittee is now in adjournment.
[The following was submitted:]













198


APENJUA-STIFIATESSBIONE OFTH PANACALORNITONo H
COGES NMY 99 TEESTIMATES FORE H AI O H USIN


PRESENTED OF THOU ANAMA SNATE SUCOMMITE ONJUY1,97








69



CANAL ZONE GOVERNMENT PANAMA CANAL COMPANY, 1978-1979 PANAMA CANAL COMMISSION, 1980
Justification of Programs and Estimates for the Fiscal Year Ending September 30, 1980

Tab. No. Table of Contents Page No.

1. Summary Statement ...................................... 1

2. Canal Zone Government Operating Expenses
Introduction ......................................... 4
Program and Financing ................................ 5
Detail of Accrued Costs by Activity .................. 6

3. Canal Zone Government Capital Outlay
Introduction ......................................... 14
Schedule of Capital Projects ......................... 15

4. Panama Canal Company (1978-1979)
Panama Canal Commission (1980)
General and Administrative Expenses Under Statutory
Limitation
Introduction ........................................ 16
Program by Activities ............................... 17
Exhibit I Summary of Variations, 1979-1980 ....... 18
Exhibit II- Summary of Accrued Expenses and
Variations by Activity, 1979-1980 ................. 21
Exhibit III- Detail of Variations, 1979-1980 ........ 21
Program Descriptions ................................ 27
Operations Not Under Limitation
Program and Performance ............................. 30
Revenue and Expense ................................. 32
Statement of Financial Condition .................... 33
Statement of Equity of the U. S. Government,
September 30, 1978 ................................ 35
Tolls Statistics ..................................... 36
Tolls ........ 37
Transit Operations
Maintenance of Channels and Harbors ............... 38
Navigation Service and Control .................... 38
Locks Operations .................................. 39
General Repair, Engineering, and Maintenance Services ... ** ... **:-*'***--"*-'** 39
Security and Protection Services .................. 40
Industrial Health ................................. 40
General Canal Expense ............................. 41
Supporting Services Operations
Supply and Logistical Services .................... 42
Utilities ........... ................ 45
Other Supporting Services ......................... 48
General Corporate Expense
Net Cost of Canal Zone Government ................. 52
Interest Payments to U. S. Treasury ............... 53
Other General Corporate Expense ................... 53
5. Capital Outlay
Summary of Capital Projects .......................... 55
Capital Project Justification, Index ................. 59
Justifications ....................................... 60









70



CANAL ZCKE GOVERMENT PANAMA CANAL COWANY, 1978-19-79 PANAMA CANAL camissiow, ig8o

SUMMARY STATEMENT

Introduction

The Panama Canal Treaty of 1977 defines a new agency, the Panama Canal C- mission, as the successor agency to the existing Panama Canal CompanyCanal Zone Goverment organization. The Panama Canal Cxmmmission is to take the form of a corporate agency of the United States Government, vith a nine-member Board of Directors and an Administrator and Deputy Administrator, all appointed by the President of the United States. The Board of Directors will be comprised of five U. S. and four Panamanian nationals. The Administrator and Deputy Administrator will be U. S. and Panamanian, respectively, until 1990, at which time the citizenship of the incumbents will be reversed.

The Panama Canal Commission will operate and maintain the interoceanic
waterway. Many functions now performed by the present organization will either be discontinued or transferred to private or governmental. agencies in the Republic of Panama, or to other U. S. Government agencies. Legislation is being proposed to implement the new treaty on the anticipated effective date of October 1, 1979. Accordingly, no appropriations are requested for the Canal Zone Government for 1980. However, outlays for obligated balances in the operating expense appropriation account will be made by the administration
of the Pan;mA Canal Commission. For the Canal Zone Goverment capital outlay appropriation, certain governmental program will be assumed by the Commission and others by the Department of Defense. Related fund bal7ances at year-end 1979, if any, will be transferred to the receiving agency.

Transfer of Functions and Facilities

There will be a transfer of major functions and related facilities to the Government of Panama and the Department of Defense upon entry into force of the treaty. Among those functions to be transferred to the Government of Panama are the following-ownership, management and operation of the ports at Balboa and Cristobal, and provision of all commercial services to vessels utilizing these port facilities.

-Ownership, management and operation of the Panama Railroad and its freight houses.

-Criminal jurisdiction, subject to certain conditions, in all parts of what is today the Canal Zone, with the exception of Canal operating and housing areas, and the port areas, for 30 months after entry into force, after
which time the police, courts and prison systems of the U. S. Goverment will cease to exist on the Isthms.

-Performance of customs, immigration and quarantine controls.

-Operation of commercial activities not directly related to the management and operation of the waterway.

-operation of a postal service, and after 30 months from entry into force, health services for non-U. S. citizen employees.

Major functions to be transferred to the Department of Defense are the health services, including operation of hospitals and clinics, and education services, including primary and secondary school operations and operation of a two-year community college.









71



SUHKARY STATEMMIT
(Continued)

Canal Zone Government

The programs and activities described for the Canal Zone Government conatitut. operating expenses and capital outlay for the fiscal years 1978 and 1979. All regular operating expenses of the Canal Zone Government incurred through Septembax 30, 1979, including depreciation and other non-fund expenses, are recovered from individuals and agencies served and from the Panama Canal Company.
The agency known an the Canal Zone Government will cease to exist after September 30, 1979.

Panama Canal Company/Panama Canal Commission

The Panama Canal Commission is the successor agency to the Panama Canal Comply, and, will operate generally as the Company has operated since its Inception in 1950. The primary purpose of the Commission is to operate and maintain the waterway. The Commission is expected to be financially selfsufficient in its operations and to make payments to Panama as specified in .the Treaty of 1977. The budget programs and activities represent, in 1978 and 1979, the operations of the existing organization, the Panama Canal Company. yor 1980, the estimates reflect operations under the reorganized entity, the Panama Canal Commission.

Major assumptions used in determining costs and recoveries for the Panama Canal Commission in 1980 were:

1. The Treaty will enter into force on October 1, 1979, the beginning of fiscal year 1980.

2. The Commission will not be required to pay interest to the
U.S. Treasury on the net direct investment of the United States in the Canal.

3. There is no longer a requirement to reimburse the U. S. Treasury for the net cost of Canal Zone Gover ent.

4. The $10 million contingent payment is not considered a cost for inclusion in toll base, with payment dependent upon the generation of revenues in excess of requirements.

5. The toll base can include a provision for funding capital
requirements over and above those which are funded through normal depreci ti charges.

6. Panama will be charged full cost recovery rates for all services rendered by the Commission.

7. The C mission will continue to provide electric power, water, and telephone services to the former Canal Zone area.

8. Panama will charge the commission for railroad and pier services at rate levels similar to what the Company charges its c' racial customers.

9. Department of Defense rates for education and medical care will be in line with what the Canal Zone Government would have charged in fiscal year 1980 for these services.

10. The Commission will continue to sponsor the education of individual students, who at Treaty date, were being sponsored by the Panama Canal Comps Y or Canal Zone Government, and such sponsorship is not assumed by another U. S. Government agency. 2









72



SUMMARY STATH ENT
(Continued)

Panama Canal Company/Panama Canal Commission

11. The Cam mission will continue to sponsor the medical care for
certain elderly and disabled individuals who are presently the responsibilities of the Panama Canal Company or Canal Zone Government in DOD hospitals.

12. The Treaty of 1977 specifies the following payments to the
Republic of Panama. These payments will be made from Canal operating revenues.

-Thirty cents per Panama Canal net tons transiting the Canal.
This amount is to be adjusted biennially after the initial five years of the treaty, to reflect changes in the United States wholesale price index for manufactured goods.

-A fixed annuity of ten million dollars.

-Ten million dollars for certain specified public services provided in Canal operating areas and in housing areas.

-An additional amount up to-ten million dollars per year to the extent that revenues exceed expenditures. In the event revenues in any one year do not produce a surplus sufficient to cover this payment, the unpaid balance is to be paid from operating surpluses of future years.

Based on the preceding assumptions and the Treaty-related
reorganization, the net operating result for fiscal year 1980 is estimated at $4.0 million. The margin of $4.0 million contemplates a toll rate increase yielding an estimated $46.7 million in tolls revenue in 1980. General and administrative expenses of the Commission under statutory limitation are estimated at $31,334,000 in 1980.

The capital obligational program for the Commission in 1980 totals $23.0 million. Major projects scheduled for obligation are (in millions of dollars):

1980
Obligations

Chann el improvements ........................... $ 5.0
Additional towing locomotives and spare
components ................................... 4.0
Replace and add equipment, transit operations .. 2.5
Construct launch repair facility ............... 2.0
Relocation of certain activities due to the
Treaty of 1977 ............................... 1.3
Replace launches and launch engines ............ 1.1
Replace and add motor vehicles ................. 0.7
Replace and add equipment, supporting operations 0.6
Improvements to water system ................... 0.5
Improvements to communications systems ......... 0.5
Reroof employee quarters ....................... 0.5
Minor improvements to quarters ................. 0.5











3








73



CANAL ZOM GOVNMGUM
OPERATING KXMSIS

The'Canal Zone Gover. ent administers the civil government and health snd sanitation functions within the present Canal Zone. The programs described on the following pages for the Canal Zone Government portray operatifts through September 30, 1979, at which time the agency will cease to exist. All regular operating expenses of the Canal Zone Goverment, including depreciation and other non-fund expenses, will be recovered from individuals and agencies served, with the remaining unrecovered cost paid by the Panama Canal Company. Obligated balances in the Canal Zone Goverment operating-expense appropriation, if any, will be transferred to the PanMMLa Canal Comission at fiscal 1979 year-end, to cover any carryover liabilities of the Canal Zone Government.










































4






























(g)~~~~Poga andli arasannfciitesing..


(Acua Entemaal secritimat440 Prora)b Octeivifeiss:, ., ,

2. Civil aundtiosantt:n

(a) Cuostasand iics..on............. 17,257 30,16

(b) Potea l ica services ....... ...... 4,375 3,1069


(a) olice protection r........... 28571016

(d) Firinterotentiond re.nte..e.t........ 3,1 4,703

(e) Otheria gen e ............... e382se 43 5.

(f dctoaLirrieos ............, 24,276 24329

(nfnde Pdubli es od toalite rogram. 5,055,13 (epre It n a lde aoet ............,... 36.74 40
Tota ptrog costsl afuaire................ 5 8
Ch.g Hnealctd satation: ., ~ 84
(aTosptal s abiai n d~ clinics. ..,.......... 27,257 30,8




(ffsetti coleoroera ..nds... 1285t ~36 Mppopitinteimnt anua Acnet .......... 7106 1703


Civli a rse......................... 84189,2294
Unune ajutent ea o antomal prepatramotis:33


Zong nesele teresres ,...,......... ,... -84 3,703
Totaobligatioalnce lapsin..................-30.11 -376

Toalfnacngancing:*.SS,* 0.1

AproT:iclude in Annue Audct of....... the06 74,000 SttsGvrn.18
Spma19Supina prprainPooas









75



Canal Zone Go ernment
Detail of Accrued Costs by Activity
1978-1979

1978 1979 1980
CIVIL FUNCTIONS Actual Estimate Estimate
(Dollars in thousands)
Customs and immigration This provides for the activities usually incident to such functions
(except that no collection of customs duties
is ITLvolved) and in addition includes special activities relating to vessels in transit and
the execution of certain treaty obligations to the Republic of Panama. For 1980, this
function will be the responsibility of Panama.
A minor administrative function will be
continued in the Commission and costed in the
General Canal expense category:

Office of the Chief, customs and
immigration ............................. 128 123
Balboa customs office ..................... 787 927
Cristobal customs office .................. 542 572
Immigration and detention ................. 1 5

Total funded costs ...................... 1,458 1,627
Depreciation ..............................

Total accrued costs ......... I ........... 1,458 1,627
Recoveries ................................ 3 2

Net cost, customs and immigration ....... _1,,455 1,625

Postal service: The postal system serves the entire Canal Zone and operates under policies and regulations generally similar to those of
the United States Postal Service. The
service will cease in 1980, with the
military Postal Service providing postal
service for the Commission and its employees
and dependents. A directory service unit
will continue with the Commission to assist
in the transition period. The costs for this service are in the General Corporate
Expenses of the Commission:

.. .. ..... ... ... Operation and maintenance, postal service 2,567 2,847
Transportation of mail .................... 224 240
Interest expense on postal savings ........ 2 3

Total funded costs ...................... 2,793 3,090
Depreciation .............................. 15 16

Total accrued costs ..................... 2,808 3,106
Recoveries ................................ 1,847 1,913

Net cost, postal service ................ 961 1.193









6









76



Canal Zone Government Detail of Accrued Costs by Activity 1978-1979

1978 1979 1980
CIVIL FUNCTIONS Actual Estimate Estimate
(Dollars in thousands) Police protection: This includes the usual
police functions of preservation of the peace and enforcement of the law in the Canal Zone, including operation of jails
and a penitentiary. The police protection function will continue in 1980, with
some reduction in scope, in the Security
and Protection Services of the Commission. Many police functions will be performed jointly with Panamanian police personnel.

Supervision and general operations ........ 561 729
General police protection ................. 6,855 7,522
Penitentiary operation and maintenance 1,325 1,545
Maintenance and rental of equipment ....... 206 248

Total funded costs ...................... 8,947 10,044
Depreciation .............................. 90 123

Total accrued costs ..................... 9,037 10,167
Recoveries ................................ 41 51

Net cost, police protection ............. 8,,996 10_.116

Fire protection: All firefighting facilities in the Canal Zone, except for
certain aircraft crash fires, are consolidated under the Canal Zone Government. In 1980, some fire protection responsibility will transfer to Panama. The Commission will perform fire protection service in those areas remaining with the Commission and
for the military ;

Fire station operations ................... 3,454 3,970
Fire hydrant maintenance .................. 23 22
Fire chief's office ....................... 160 125

Total funded costs ...................... 3,637 4,117
Depreciation .............................. 76 84

Total accrued costs ..................... 3,713 4,201
Recoveries ................................ 4,639 5,359

Net cost or income (-) fire protection -926 il- 158

Judicial system: This includes the operation
of two magistrate courts and the expense
of the district court (excluding salaries) which serves as both a State and Federal Court. A public defender service is
provided. A reduced workload in 1980
is costed in the Commission in the General
Corporate Expense category:
Magistrates' courts ....................... 201 256
Public defender ........................... 47 47
Logistical support of District court ...... 134 134

Total accrued costs (funded) ............ 382 438
Recoveries ................................ 200 200

Net cost, judicial system ............... 182 238
7








77



Canal Zone Government Detail of Accrued Costs by.Activity
1978-1979

1978 1979 1980
CIVIL FUNCTIONS Actual Estimate Estimate
(Dollars in thousands) Education: This provides for the operation
of schools, kindergarten through college,
and in certain areas payment for educational benefits for the dependents of
Canal Zone residents, the dependents of U. S. citizen Government employees
residing in the Republic of Panama,
and, on a space-available basis certain
other residents of the Republic of Panama.
There also are specialized programs for
the handicapped. Also included is the
operation of public libraries. Pursuant to the Treaty, the Department of Defense
will operate the schools. Only those
swimming pools in Commission areas, and
a community library will remain with
the Commission. The operation of these
pools is costed in supporting services activity and the library is costed in
general corporate expense. Reimbursements
to the Department of Defeuse for educational services is costed in General
Corporate Expense:

Higher education .......................... 1,574 1,573
Secondary education ....................... 9,211 9,037
Elementary education ...................... 8,583 9,489
-Community libraries ....................... 510 592
Swimming pools ............................ 837 869
Administrative & general expense .......... 1,895 2,167

Total funded costs ...................... 22,610 23,727
Depreciation .............................. 666 635

Total accrued costs ..................... 23,276 24,362
Recoveries ................................ 26,642 26,812

Net cost or income (-), education ....... _13 366

Public areas and facilities: This includes
the cleaning, lighting, and maintenance of streets and highways; maintenance of sewers; and care of public areas within the Canal Zone, not including military
reservations. Also included are the Operation and maintenance of recreational facilities. Pursuant to the Treaty, Panama will assume responsibility for the maintenance, lighting and cleaning of streets not in
C mission operating areas as well as traffic management. The residual functions retained by the Commission
are costed in the General Canal Expense category:

















49-653 o 79 6


















Maintenanceccouedtroets andActivit


Care~~~~~Dllr of grunsousands),,,,,.. <~


Recreational facilities program ............. 25>25
Street lighting ,........................ 31 2 A
Street cleaning .............,.,........ 136 11
Traffic Maaeet...,.*........ ............ 56

Total funded costs *..................., 4,4 ,9 A
Depreciation ................... 1 2

Total accrued and net costs, public ares
and facilities ,...................... 5.055_5,_21

Internal Security: This provide-s for loyalty investigations and intelligence and security services for the Government and the Company. For 1980, these services will be performed by the Coimission as a part of its Security and Protection Services function.

Total accrued and net costs, Internal
Security ................................ 364 401__eitherr (ivil Affairs: This includes licensing, civil defense activities, and supervso of the civii functions proram Themao
portion of the licensing function will transfer to Paaain 1980. The rean g
functions will be absorbed by the Coaission:

Civil Affairs Director's office .,.... I. 49649
License functions .............................287 327
Civil defense ......,.................. 67 6
Youth activities program .......................98< 94__Total funded costs ,.................,9897,
Depreciation .............................. 11 1

Total accrued costs ............................879<
Recoveries .............................. 1491

Net cost, other Civil Affairs ..................2













Detail o cre ot yAtvt


1978 1979 1980



icalandsurica hopitals, with outnel A euopschatric an dmiciliary opertedandmaitaied. The hosp itals andclnic wllbe roperae by DepartwenofDefnsein198 and the leprosariun wil bcoe responsibility of Paaa A reidul reponibility for certain publc halthserices, presently a part of teOter ulc Health Services function, willbe ccoplihedby the Comission in its Indstral eath and Sanitation function.





Patint srvi e er ...ea...... ......... 1,58 1,24

Dieteticst~ .. . . ... .. .. .. ..... 1, 2 1,5 504 8
Loisicl upor ..............2.3,275 42559
Edcto n riig .......... 2695 1,076 3 Spri io an u- geexenea hospitals. 1,80 2,061Recoverie e...pense..... ............ 27108 29,443



Patient sevie ............ .... 2,459 2,58

Diottts ...... ...................... 39 3159




T~gqlclsupport ............. 1714 4126
si and g-eneral expenses ........... 271 25

Toa uddcosts ............ 345 320
Dp e iation ......... ....... 410 4 596

Ttlaccrued costa ..................... 5,9236



PaoSc opalo:c hnia1, ,,,1 Pain service ..............-0 2
Diet tic ... ... .... ... ... .... ... ... 13 310









80



Canal Zone Goverrtment
Detail of Accrued Costs by Activity 1978-1979

1978 1979 1980
HEALTH AND SANITATION Actual Estimate Estimate
(Dollars in thmsands)
Hospitals and clinics summary:
Funded costs ............................. 26,624 29,480
Depreciation ............................. 633 708

Total accrued costs .................... 27,257 30,188
Recoveries ............................... 30,497 34,076

Net cost or income (-), hospitals and
clinics .............................. -3,240 m

Other public health services: This provides
for community wide public health services,
a social welfare program, sanitation and quarantine work in the Canal Zone and for ships calling at its ports and transiting
the Canal, inspection of food processing establishments, and facilities for animal care and quarantine. For 1980, this program, reduced in scope, will be accomplished by the Commission in its Industrial Health and Sanitation function:

Health director's office .................. 416 469
Sanitation ................................ 1,151 1,275
Preventive medicine and community health
service (incl. Dental & Mort.) .......... 1,624 1,822
Veterinary services ....................... 596 694
Garbage collection ........................ 333 372
Cemeteries ................................ 235 259

Total funded costs ...................... 4,356 4,891
Depreciation .............................. 19 18

Total accrued costs ..................... 4,375 4,909
Recoveries ................................ 803 863

Net cost, other public health services... 3,572 _4,,046








































A









81



Canal Zone Government
Detail of Accrued Costs by'Activity 1978-1979

1978 1979 1980
GMRAL GOVERNMENT EXPENSES Actual Estimate Estimate
(Dollars in thousands)
Office of the Governor: This provides for
the executive direction of all Canal Zone Goverranent activities and includes the expenses of the office of the Governor
and his residence, the office of the
Executive Secretary, and provision for
certain contingencies. All costs of the
office of the Governor which pertain in 1980 are included in the Executive Direction function of the Commission:

Governor's office ......................... 235 296
Contingencies of the Governor ............. 5 30
Official residence operations and maint ... 45 58
Costs of conducting hearings an the Isthmus 2

Total accrued and net cost, office of
the Governor ............ .............. 285 386

Disinterment and Reinterment: Provides for the
exhumation and reinterment of U. S. citizen
remains buried in cemeteries coming under
the jurisdiction of Panama under the Treaty.

Funded and accrued costs ................

Other general government expenses: This includes
the costs of recruitment and repatriation and
employees' home leave travel, aid to indigents, payments to certain former employees and other general charges. Those costs which will continue with the Commission in 1980 are shown in the corresponding accounts in the General
Corporate expense category.

Employment costs:
Employees' states travel .................. 640 884
Recruitment and repatriation .............. 756 874
Transportation of employees' vehicles ..... 104 325
Health benefits contribution .............. 1,268 1,488
Employer's contribution to FEGLI .......... 221 195
Death and disability compensation ......... 252 296
FICA tax .................................. 123 151

other general government costs:
Buildings and sites ....................... 830 962
Alien cash relief payments to former
employees ............................... 80 75
Alien cash-relief payments to widows of
former employees ........................ 37 36
Miscellaneous expenses and credit net 497 28

Total funded costs ........................ 4,808 5,314
Depreciation .............................. 331 227

Total accrued costs ....................... 5,139 5,541
Recoveries ................................ (4,783 (4,847)

Net cost other general government expenses. 10 388
12









82

4
Canal Zone Government Detail of Accrued Costs by Activity 1978-1979

1978 1979 1980
CANAL ZONE GOVERNMENT SUMMARY Actual Estimate Estimate
(Dollars in thousands) Funded costs .................................. 81,354 90,486
Depreciation .................................. 2,754 2,743

Total accrued costs ......................... 841108 93,229
Recoveries from services ...................... 60,768 65,344

Anticipated recovery from appropriation for
disinterments and interments ................ 1,703

Total recoveries ............................ 60,768 67,047

Net cost Canal Zone Government ................ 23 340 26 182






















R
















4
j






13








wAA M OEON

CPTLOUTA













No aproriaionis equetedfor198, sncethe ana Zoe Gvermen



vilo~Eea fSpeme 0 99








84



CANAL ZONE GOVERNMENT CAPITAL O[JTIAY SCHEDULE OF CAPITAL PROJECTS (In thousands of dollars)


Obligations
Actual SubseProject thru 1978 1979 1980 quent
Total 1977 Actual Estimate Estimate years

CIVIL FUNCTIONS

Replace and add equipment.. 2,206 1,543 256 407
Education:
Improvements and replacements to educational
facilities ............ 1,537 1,044 287 206
Public Areas and Facilities: Additions and replacements to municipal
systems ............... 972 497 317 158
Road and street replacements .... *"'*"*''*** 1,308 896 210 202
Community Recreational
facilities ............ 185 138 40 7
Other Civil Functions:
Improvements and replacements to other civil
functions ............. 1,G48 697 55 296
Total Civil Functions.. 7,256 4,815 1,276

HEALTH AND SANITATION

Replace and add equipment.. 3,548 2,430 561 557
Hospitals and clinics:
Improvemer.1-s and rehabilitation to health
facilities ............ 6,067 4,980 219 868

Total Health and
Sanitation .......... 92615 7,41P 780 1,425

G1 N1-'KAL GOVERNMENT

other general government:
Replacements and improvements to government
buildings ............. 226 101 59 66
Advance engineering,
planning and design 442 416 44 -18
Minor capital additions
and replacements ...... 318 243 1 74
Retirement and removal
costs ..... 55 15 5 35
Total General Government 1,041 75 109 157
Total Capital Program
Outlay ................ 17,912 13,000 2,05 2,858
Financing:
Funds to complete projects
underway at start of year ... ... 1,747 -1,823
Funds committed to complete
projects underway, end of
year ................... ... ... 1,823

BUDGET AUTHORITY
(Appropriation) ........ 2,13 0 3 5
15









85



PANAMA CANAL COMPANY, 1978-1979
PANAMA CANAL COMMISSION, 1980

General and Administrative Expenses Under Statutory Limitation

The summary statements and detail schedules which follow present the

general and administrative expenses under statutory limitation for the Panama Canal Company in 1978 and 1979, and for the newly constituted Panama Canal Commission in 1980. Variations between amounts estimated for 1979 and 1980 are detailed and explanations for such variations are provided.

The major variations between 1979 and 1980 are due to the changed organizational Btructure of the agency, and the movement of certain nondiacretionary employment costs in 1980 to the general corporate expense category not under limitation. The Commission will continue to pay the FICA costs for covered U. S. Citizen employees in 1980.












































16









86



THE PANAMA CANAL
PANAMA CANAL COMPANY, 1978-1979 PANAMA CANAL COMMISSION, 1980 LIMITATION ON GENERAL AND ADMINISTRATIVE EXPENSES

1978 1979 1980
Actual Estimate Estimate
(In thousands of dollars) Program by activities:

1. Executive direction ..................... 3,391 3,963 4,664

2. Operations direction .................... 2,392 2,501 3,445

3. Financial management .................... 8,462 9,555 9,797

4. Personnel administration ................ 3,312 3,495 3,674

5. General services ........................ 3,256 3,867 5,781

6. Employment costs ........................ 4,432 6,831 3,973

Total program costs, funded ......... 25,245 30,212 31,334

Change in selected resources ............ -31

Total General and Administrative
obligations ........................ 25,214 30.,,212 31_,.334






































17








87



EXHIBIT I
PANAMA CANAL COMPANY, 1978-1979 PANAMA CANAL COMMISSION, 1980 GENERAL AND ADMINISTRATIVE EXPENSES UNDER LIMITATION

,Summary of Agency Vari tions FY 1979 to 1980
(Dollars in thousands)
Limitation

1979 authorization in annual act for the Panama Canal
Company ............................................... $27,580
Proposed supplemental authorization for classified
pay increase .......................................... 795
Proposed supplemental for abnormal repatriation expenses. 1,837
1979 accrued expense estimate, Panama Canal Company $3OL212

Cross Reference to
Exhibit III

1. Wage increases and other cost escalations:

a. Difference between full-year and part year 1979
cost of 5.5% classified pay raise effective
10/7/78 ..................................... $ 18

b. Cost of wageboard type pay increases .......... 141

c. Cost of FLSA minimum wage increases ........... 53

d. Net additional cost of within-grade and other
promotions .................................. 403

e. Increased cost of supplies and materials due
to price increases .......................... 69

f. Increased cost of services performed by other
Panama Canal organizations .................. 521

g. Increased cost of commercial services due to
price escalation ............................ 172

h. increased cost of statutory employee benefits
(Employees' States Travel) .................. 77

Total wage increases and other cost escalations ............. 1,454

2. Treaty related changes:

a. Transfer of functions from former Canal Zone
Government activities, including:

(1) 9 FTP positions and related cost (1
Administrator, 8 Executive Secretarys'
Staff) ................................. 334

(2) 14 FTP positions and related costs (8
from former Health Bureau office, $265;
6 from former Civil Affairs Bureau
office, $195) .......................... 460

(3) 4 FTP positions and related costs (4
employee's Identification Unit) ........ 94

(4) official residence operation and maintenance (formerly Governor's residence) ... 62

18
















2. Treaty related chne(Con')

(5) General ad apca nieeigsrie
requirements from formerC.Z
Government ............... 3

(6) Building and sites mainteac for fre
C. Z. Government (transferred to
Coumslsion)............... 81



(8) Cost of FUGLI and FICA for former C. Z.
Government employees transferred to


(9) Mscellaneous expenses~ ........... 10_Total transfers from Canal Zone Goenet...... ,5

b. Provision for expanded training programs including:

(1) Additional MT training staffing incldn
1 industrial training instructor, 2
employee development specialists,2
language instructors, I clerk-typst,
and 1 tools and partsiattendant ......... 71

(2) Addition of 10 FTP pilot/towboat trainees
(part-year costs) ..... ...... !......... 2

(3)~ 2 FTP audio-visual specialists in Graphics
Branch to support expanded training 34,

(4) Net additional input of 15 FTP apprentices
(90 input less 71 transerred to
divisions and 4 resignatka) .......... 4

(5) Additional supporting costs (travel,
equipment, and other services) due to
higher numbers of apprentices, trainees,
and staff . . . . . . . . 8

(6) Full-year 1980 versus part-year 1979 cost
of new and continuing positions occuie id
only part of 1979............ 15

Total provisions for expanded training rgas ... 7

c. Provisions for 12 additional FJTP and 1 'other' positin
and for reduced delays in the filling of new and continuing positions occupied onl patof 1979:

(1) 4 Professional level positions ($162)
reduced delays in filling other poion
($122) in the Executive Planning Staff.... >306








on
00



-EXHIBIT

Limitation

2. Treaty related chanites(Cont'd):

C. provisions for 12 additional FTP and 1 'other' positions
and for reduc7d delays in the filli7ng of new and
continuing positions occupied only part of 1979(Cont'd)(2) 3 additional labor relations positions
for Labor Relations Office ............... 45

(3) 5 full-time permanent and 1 temporary
positions to handle increased administrative
workloads due to additional functions and
for additional microfilming .............. 94

(4) Reduced delays in filling positions vacant
p art of 1979 in Administrative Services 64

Total provisions for additional positions
(other than for training programs) ................. 509

d. Force reductions:

(1) Reduction of 20 FTP accounting and personnel
specialists due to closing of retail stores
and transfer of schools and health functions
to the Department of Defense ............ (163)

(2) Reductions in force of (.L5)FTP and Q)
lother' positions due to changes in
functions and workloads resulting from
reorganizations and other treaty
implementations ......................... (551)

Total force reductions ............................... (714)

e. Other treaty related changes, net, including internal
transfers of function ...................................... 104



3. Transfer of costs for recruitments and repatriations and transportation of employee's vehicles to Commission general
corporate expenses not under limitation ........................ (3,375)

4. All other changes (including provision for conversion of I
part-time clerk-typist to FTP in Marine Director's
Office, reinstatement of a Management Analyst position
for office of the General Services Director) ................... 313

Total increase in accrued expense, 1979 to 1980 .............. 1.122

1980 authorization request, Panama Canal Commission ..........











20









90



MMIBIT

PANAMA CANAL COMPANY, 1978-1979 iANAMA CANAL COMMISSION, 1980 tENERAL AND A124INISTRATIVE EXPENSES UNDER LIMITATION Summary of Accrued Knenses and Variations by Activity

1979 1960 Increase Cross
Estimate Estimate or (Decrease) Reference Accrued Accrued Accrued to M&Lbit
Expenses Expenses Expenses III
(In thousands of dollWr-s) Executive direction ........ 3,963 4,664 701 (1)

Operations direction ....... 2,501 3,445 9" (2)

Financial management ....... 9,555 9,797 242 (3)

Personnel administration ... 3,495 3,674 179 (4)

General services ........... 3,867 5,781 1,914 (5)

Employment costs ........... 6,831 3,973 Q L858) (6)

Total program costs, funded 30.21 31_.334 1..122



EXHIBIT III

Detail of Variations by Activity 1979 1980
(in thousands of dollars) Reference Reference Accrued
ExhibitII Description Exhibit I Expenses

(1) The increase of $701 thous n4 in Executive
Direction includes:

Wage and other cost escalations ........... 1. $209

Transfer from former Canal Zone Government. 2. 406

a. 9 full-time permanent positions
including I Administre-tor and 8
Executive Secretary's Staff......$334

b. Operation and maintenance of
Administrator's Official
residence ...................... 62

c. Miscellaneous expenses ........... 10

other treaty related changes .............. 2. 15

a. Provision for 4 professional level fulltime permanent positions in the
Executive Planning Staff ....... $162

b. Reduced delays in the filling of
new and continuing positions .. 122

C. Reduction of 4 full-time permanent
and 1 temporary position due to
reorganization under treaty -48
ZI









91





Detail of Variations kX Activity 1979 1980
(In thousands of dollars)

Reterence Reference Accrued
Exhibit 11 Description Exhibit I Expenses

d. Transfer of labor relations
function to Personnel Administration subprogram ............ 102

e. Transfer of safety office function to operations direction
subprogram ........ o ........... 147

f. All other changes, including
termination of 2 WAE EEO
specialists, $-10; increased frequency of travel by Board
members, $16; and other
miscellaneous costs, $22 ...... 28

Provision for overhaul of launch IAS CRUCES 4. 71

Increase in accrued expense ....... o ..................... 701


(2) The increase of $944 thousand in Operations
Direction includes:

Wage and other cost escalations ........ 1. $118

Transfers from former Canal Zone Government 2. 697

a. 8 full-time permanent positions and
related costs from former Health
Director's office ............. o$265

b. 6 full-time permanent positions
from fo r Civil Affairs
Director's office .............. 195

c. General and special engineering
services requirements .......... 237

other treaty related changes ................ 2. 92

a. Transfers in of Safety office.
Function from Executive Direction
subprogram including 5 FTP
positions ...................... 147

b. Deletion of office of Supply and
Community Services Director
including 8 full-time permanent
positions ................... *. -296

c. Deletion of office of Transportation and Terminals Director including 10 full-time permanent positions ................. 400





22









92



EXHIBIT iT

Detail of Variations by Activity 1979 1980
(in thousands of dollars)

Reference Reference Accrued
Exhibit II Description Exhibit T Expenses

d. Establishment of office of
General Services Director
including transfer in of 18
full-time permanent positions
from the deleted offices of
the former Supply and Community Services and Transportation and
Terminals Directors, reduced
delays in filling vacated positions and provisions for additional
supplies and other services ... 865

e. Reduction of 6 full-time permanent
positions a, d reduction of overtime and temporary employments
during the year due to reorganizations under the treaty..-224

other changes ............................... 4. 37

a. Provision for reinstatement of I
full-time permanent Management
Analyst positions ............... 24

b. Conversion of 1 part-time ClerkTypist position in Marine
Director's Office to full-time
permanent ...................... 13

Increase in accrued expense .......................... L944

(3) The increase of $242 thousand in Financial
management includes:

Wage and other cost escalations ........... 1. 390

Treaty related changes .................... 2. -148

a. Reduction of 15 full-time permanent
and 6 part-time payroll and
accounting positions due to closing
of retail stores and transfer of
schools and hospitals to Department
of Defense ..................... -131

other changes .............................. 4. -17

a. Increased delays in filling of
vacated continuing positions.... -84

b. Provision for increased maintenance
of computer and related equipment during 1980 ................ 67

Increase in accrued expenses ........................ 242

(4) The increase of $179 thousand in Personnel
Administration includes-.

Wage and other cost escalations ........... 1. 192
23








93





Detail of Variations Activity 1979 1980
(In thousands of dollars)

Reference Reference Accrued
MMUS.1 Description Exhibit I Imenses
Treaty related changes ........... 0 ........ 2. -13

a. Transfer in of labor relations office
from Executive Direction subprogram
including 6 full-time permanent
positions .................... $102

b. Provision for 3 additional fulltime permanent positions for
labor relations office ........ 45

c. Provision for 7 additional fulltime permanent positions for
expanded training programs
(I industrial training instructor,
2 employee development specialists,
2 language instructors, 1 clerktypist, and 1 tools and parts
attendant) .................... 71

d. Provision for additional travel,
rent, communications, equipment,
and other services due to
expanded training and labor relations
programs including use of imported
instructors and appeal examiners 77
e. Termination of 10 temporary clerktypist positi-Ons due to
completion of treaty implementation personnel work ................ 147
f. Reduction in force of 15 fulltime permanent personnel specialist and clerical positions due to lower
overall workloads under the
treaty ..................... 161

Increase in accrued expenses ......................... 179

(5) The increase of $1,914 thousand in
General Services includes:

Wage and other cost escalations ............ 1. $253

Transfer from former Canal Zone Government.. 2. 905

a. Buildings and sites maintenance
provision ................... $811

b. 4 full-time permanent positions and related costs for employees identification unit (from former License Section) 94

other treaty related changes ............... 2. 534

a. 2 full-time permanent audio-visual
specialists (Graphics Branch) to

support expanded training programs ................... 34 24








49-653 0 79 7


















andI IIt


Referenhcnde increc Aet~.

b.5additional ful-im pemaen

redvIsi terr ostost andl oninuingd ok uet

a.Rddctiona ofucin suha
peotairetoysrie






emloe IDdditiol satsacs
min-flinto puliaton
revision hn e t................ 9

C. Ryinge elausint filio e
and ninuing poits


d. Reducedo re5 uiremetm formnt
ondf other osaitsions uto
Nblgaizaffirns ,..,.*,,,,.. -2

e.nPreasion acrue eonrpenrservice.# ..


Wage anthaser cot records

Trnser fdiinrequifomenal foe
a ravmployeestt cormuicatiors,

menuiforntansfoterevce


g. Additioal requircosts for

Adminisrat r .......... 60




Othe tretye related untsfo









95



EXHIBIT III

Detail of Variations by Activity 1979 1980
(In thousands of dollars)

Reference Reference Accrued
Exhibit II Description Exhibit.1 Elmenses

a. Provision for expanded training
programs including net additional input of 15
apprentices, $48; 10 pilot/
towboat trainees, $26;
reduced delays in filling
vacated positions, $115; and
additional supporting costs for travel, equipment and other services, $4 $193

b. Reduced requirements for employee's States travel costs, -$213, and for FICA, FEGLI, and incentive award
payments, -$203, due to lower overall
numbers of employees in
the Commission ............. 416

Transfer of costs for recruitments and
repatriations and for transportation of employees vehicles to Commission
general corporate expenses
not under limitation ......... 3. -3,375

Decrease in accrued expenses .........................



































26









96



Executive Direction

1978 1979 1980
Actual Eitimate Estimate
(Dollars i thousands)

Director's expenses ........................... 11 63 79
President's/Administrator's office and staff .. 2,244 2,508 2,122
Secretary's office, Washington, D. C ........... 168 192 199
Panama Canal Information office ............... 662 699 804
Tour guide, launch, and reception service ..... 90 91 186
Consultants and advisors ...................... 216 410 412
official Residence of President/Administrator.. 62

Total executive direction .................. _3_.391 3,963 4.664

This function is comprised of: The Board of Directors, whose members are paid per them and travel expenses for meetings and time spent on special services of the Company; the office of the President, with an executive planning staff, a legal office, and a safety branch; the Secretary's office in Washington, responsible for liaison with the Congress, the Stockholder, and Federal Government departments and agencies; the Panama Canal Information Office, responsible for public relations activities, press and news releases and the publication of the Panama Canal review and a weekly newspaper in English and Spanish; the guide and reception service which provides tours for visitors to the Canal Zone; and a provision for consultants for special studies, Canal improvements, and organizational studies. Included in 1980 are the costs for operation and maintenance of the Commission Administrator's residence.

Operations Direction

1978 1979 1980
Actual Estimate Estimate
(Dollars in thousands)

Marine Director's office ...................... 310 371 390
Engineering and Construction Director's office. 758 858 852
11,alth and Safety Chief's Office .............. 412
Central Service Director's office ............. 889
Supply and Community Service Director's office. 275 296
Transportation and Terminals Director's office. 332 400
General and special engineering service ....... 717 576 902

Total, operations direction ................. 2,392 2,,501 3 445

This function comprises the offices of bureau heads responsible for directing the non-administrative operations of the Company. Also included are varying needs for general and special engineering services, such as preliminary designs and estimates for development of capital programs and studies relating to use and alterations of existing facilities when functional changes are proposed. For 1980, this function includes the offices of the Health director and the Director, General Services Bureau. Excluded are the offices of the Transportation and Terminals director and Supply and Community services director.

Financial Management
1978 1979 1980
Actual Estimate Estimate

Total financial management .................... 8,462 9,555 9,797

The Financial Management activity covers the Financial Vice President's Office and staff, and the cost of the annual audit of the Company and Government by the General Accounting Office.

Estimates for the Financial Vice President's office and staff cover the cost of development of accounting, financial, and rate-making policies; the issuance of 27















L