Implementation of the Panama Canal Treaty of 1977


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Implementation of the Panama Canal Treaty of 1977
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United States -- Congress. -- House. -- Committee on Post Office and Civil Service
U.S. G. P. O. ( Washington, D.C )
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Table of Contents
    Front Cover
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    Table of Contents
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    Witnesses for February 16 and 17, 1979, in Canal Zone
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    Witnesses for March 12, 1979
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    Witnesses for March 15, 1979
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    Back Cover
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Full Text


OF 1977



H.R. 1716 and H.R. 111

FEBRUARY 16, 17, MARCH 12 AND 15, 1979

Serial No. 96-1

Printed for the use of the ""
Committee on Post Office and Civil Ser,. -

IMAY 31 1979

41-698 0 WASHINGTON : 1979


JAMES NIM HAN.EY. New Yirk. C(huirnmun
M()RRIS K. Ul)AI.L.. Ari/ona. Vice 'Chuirmun,

i A I. LES H W II.S()N. California
WI.IIAM 1). H')R(l). Michii.,tn
W II.1.1AM B11.I. (CI.AY, M,,,.i,,u r
1'.\ T'R I ( A SC I R( ) E ) E R. Colorado
(;ILA1)YS N(X)N SIEI..LMAN. .M;ir\la ind

(ENE TAYLO)R. Misouri
TOM ('()ORCORAN. Illinoi-

DAVID MINTON, Exet ut e Director and General (,unsel
THEOCHN)RE J. KAZ', M. nurift Stuff Director
ROBERT E. LI<(KHART, Depuil ('enu'rul Counsel
J. PIERCE' M :m. As.sistunt General Cuns(.I



Statement of- I'.
A n d erson L u is ......................................................................................................... 118
B aglien D a vid ........................................................................................................... 104
B ou ch e, G eorge ......................................................................................................... 169
Cheville, Dr. Richard A., president, Pacific Civil Council, accompanied by
Patricia Munchbach, president, Gamboa Civic Council, and George
Bouche and James Wheeler, Pacific Civil Council ....................................... 163
C orson, B arbara .............. .................................................................................. 103
Drummond, William, president, Canal Zone Police Union, local 1798,
American Federation of Government Employees.......................................... 105
F aulkner, C apt. S V ............................................................................................... 20
G rah am A lfred J .................................................................................................... 47
H am ilton F ran k ...................................................................................................... 2 1
H an nah K enneth .................................................................................................... 140
Haynes, Seabert, president, Pedro Miguel Civic Council, accompanied by
Clarence G. Gordon, president, Santa Cruz Civic Council; Samuel Blen-
man, president, Paraiso Civic Council; Phillip A. Henry, president,
Rainbow City Civic Council and Congress of Latin American Civic
C o u n cils ................................................................................................................. 149
Hudson, Gary, president, Coco Solo-France Field Civic Council, accompa-
nied by Kenneth Hannah, Cristobal-Margarita-Brazos Heights Civic
Council, and Victoria McCauley, president, Gatun Civic Council ............. 138
Innes, Douglas, Chief, Administrative and Management Office, Depart-
m ent of D defense ................................................................................................... 178
Kolodny, Jules, vice president, American Federation of Teachers, accompa-
nied by Ralph Sheppard, President, American Federation of Teachers,
L o ca l 2 9 .................................................................................................................. 12 6
Lindley, Patricia J., president, Canal Zone Bar Association ........................... 179
Lynch, Jim, international vice president, American Federation of Govern-
ment Employees, accompanied by James O'Donnell, president, AFGE
Local 14; David Baglien, first vice president, AFGE Local 14, and Barbara
Corson, president, Nurses Organization, Canal Zone, and Women's Coor-
dinator, A FG E ................................................................................................ 72
M cC au ley, V ictoria .................................................................................................. 142
M unchbach P atricia ............................................................................................... 166
O 'D on nell, J am es ..................................................................................................... 81
Parfitt, Hon. Harold R., Governor of the Canal Zone, accompanied by John
H aines, legal staff ................................................................................................ 3
Sinclair, William, area director, American Federation of State, County and
Municipal Employees, accompanied by Luis Anderson, secretary general,
AFSCME Local 907, and Saturnin Mauge, president, AFSCME Local
9 0 0 ........................................................................................................................... 1 13
T a rta r, M a rk ............................................................................................................ 48
Wall, Shannon, president, National Maritime Union, accompanied by Capt.
Norman Werner, president, IOMM&P, Pilot Membership Group, Pana-
ma Canal Branch; Capt. S. V. Faulkner, branch agent, IOMM&P, Atlan-
tic and Gulf Membership Group, Panama Canal and Caribbean Branch;
Alfred Graham, president of the Central Labor Union and Metal Trades
Council; Frank Hamilton, labor attorney; Rene Lioeanjie, vice president,
AFL-CIO Maritime Committee, and Talmage Simpkins, executive direc-
tor, M aritim e Com m ittee, AFL-CIO ................................................................. 15
W erner, C apt. N orm an ........................................................................................ 19


Nv\o I' 1,.k Bill. 12 t ill I,

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".11, hi ". \' \W A ln..1 ,i A ict'Sin ), tpl ,y G,' , (',i]n-,i.l U S P'u,-ltal .S 'rvict" .
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( >i"tlm +.. \ (,I\il .1A ft ir': D, ( ir';il Z<,tuw C]i\ecrrim t ....................... ;2t!
1 1 1n r c., ,u 1 + I .......................................................... .................... ...... ........... .... J 'L
Nil.wi P.itrick J.. nr tlin,,l It.i-Litive dirn ct',r, A.M riLiC.i li),tail W orkters
U n Hio n ............... . . . . . . . . . . . . . . . . . . . . . . . ....... 2 t 1
%+,i-m-r. A_ lr.mch ;went. O:,.imli, iin 'df M.acil-r.'. Mates ;and

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P.arfitt, tt. R .. (,,ivvrim r, R.1ininli (Cal\izl Zone................................................... 24" 1
A F 'I-C ( ) .M rintinim C( nm i lttet. ........................................................................... .. m7
(Caniial Z, it ( *.ntral l.atb)r Unioin aind Metal Trade, C'ouncil. AFI.-'IO) ...... *>l
An. wriC.1r Fedtriiion oi Stlit,. County., & M uniCipal Enilii>o vtv, .................. :'li"J
I I'rican Fedtvrzktio)n of T vach er s, A. -('L () .................................................. :',i,;
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Balboa, Panama Canal Zone.
The committee met, pursuant to notice, at 10 a.m., Balboa Train-
ing Center, Balboa, Panama Canal Zone, Hon. James M. Hanley
(chairman of the committee) presiding.
Members present: Representatives Hanley, Wilson, Schroeder,
Spellman, Derwinski, Taylor, and Corcoran.
The CHAIRMAN. We are pleased to be here in Panama this morn-
ing to hear firsthand your concerns about the implementation of the
Panama Canal Treaty of 1977.
At this point, I would like to introduce the other members pres-
ent: Mr. Derwinski of Illinois, Mr. Wilson of California, Mr. Taylor
of Missouri, Mrs. Schroeder of Colorado, Mr. Corcoran of Illinois,
and Mrs. Spellman of Maryland.
The committee is considering two bills to implement the treaty-
H.R. 1716, that is the proposal submitted to the Congress by the
Carter administration, and H.R. 111, which was introduced by Mr.
Murphy as an alternative to the administration's proposal.
The provisions which are of particular concern to this committee,
those relating to the treatment of employees, are found in title III
of both H.R. 111 and H.R. 1716. Generally speaking, the two bills
contain only minor differences with respect to those matters of
particular concern to this committee.
We are concerned about and look forward to comments on a
number of issues such as the employment system, placement assist-
ance to be provided, special retirement benefits and options, and
the labor-management relations framework which will be estab-
lished pursuant to any implementing legislation.
We are particularly concerned that employees here be treated
justly and fairly during the transition period which will occur
under the treaty. With respect to these matters, we welcome your
comments and your advice.
In the course of these hearings, in recognition of the number of
witnesses we will entertain, in all probability committee members
will not have the opportunity to pose many questions. By virtue of
their not doing that, do not think that there is a lack of interest.
Our purpose here is to hopefully entertain every witness who asked
to be heard.

We really put ourselves in the role of listeners today and tomor-
row and Monday, if need be. Our purpose here is to develop a
background upon which we will make sound judgment in the
House of Representatives when it comes time to deliberate and
consider and make decisions with respect to this implementing
Before hearing from our first witness, I would like to defer to the
ranking member of the committee, Mr. Derwinski.
Mr. DERWINSKI. Thank you, Mr. Chairman.
I would like to emphasize the point that you made that we are
here to listen. We have a major responsibility in this legislation
and our committee is concerned. I think we will come away from
this visit as well equipped as we possibly can be to meet our part of
the legislation in a responsible fashion.
The CHAIRMAN. Thank you, Mr. Derwinski.
Mrs. Schroeder?
Mrs. SCHROEDER. Mr. Chairman, I just wanted to ask a question.
Some of us have quite a few questions and I know we have an
awful lot of witnesses. If we get into a bind and have a package of
questions, would it be possible to submit them for the record and
have them answered that way so we can get as thorough a record
as possible?
The CHAIRMAN. The gentlelady makes a good point. In the event
the member doesn't have the opportunity to pose that question, the
question will be submitted in writing and we will anticipate a
response to that question in writing for the purpose of its being
recorded in the minutes of this hearing.
Does any other member at this point wish to be heard?
Mr. Wilson?
Mr. WILsoN. Just a question, Mr. Chairman.
I notice some of these statements are fortunately very brief and
some others are quite long. Is it going to be the policy of the Chair
to allow the witnesses to make their complete statement or are you
going to suggest that they try to keep it within 5 or 10 minutes at
the most and perhaps summarize it?
I hate to get into summaries because sometimes they wind up
longer than a prepared statement.
The CHAIRMAN. Mr. Wilson, it is the intent of the Chair to
request of each witness to accommodate our time problem and to
briefly summarize that text, making orally the most significant
points contained in your written testimony. Your full text will
become a part of the minutes of this hearing.
But for the sake of brevity, and again so that we will have the
opportunity to accommodate each of the scheduled witnesses, we
urge that you restrict your presentation at the table to a summary,
making only the most important points that you feel should be
orally called to the attention of this committee.
Are there any further comments?
Mrs. Spellman?
Mrs. SPELLMAN. Yes, Mr. Chairman.
I did want to make the point that on the 8th of March and on
the 13th of March there will be additional hearings in Washington
on those matters referring to compensation and retirement. Also,

Mrs. Schroeder will be holding hearings on the labor-management
section, although I don't know yet what the dates will be.
In any event, I wanted folks to know that there will be an
additional opportunity to consider this legislation.
The CHAIRMAN. I thank you, Mrs. Spellman. Again, that is im-
portant information. What we are doing here this morning initiates
the hearing process. As Mrs. Spellman has advised us, further
hearings will be conducted in Washington.
Are there further comments from members? If not, the first
witness this morning is Gov. Harold R. Parfitt.
Governor, we welcome you. We are very pleased that you see fit
to take time from your extremely busy schedule to join with us this
morning. We are confident that what you have to say will serve a
very meaningful purpose from the standpoint of our deliberations.
For the purpose of the record, you may introduce your associates.
Governor PARFIrrTT. Mr. Chairman and members of the committee,
with me today is Mr. John Haines, a member of our legal staff.
I am very appreciative of the opportunity to appear before you
today to testify concerning the legislation which has been drafted
to implement the Panama Canal Treaties of 1977 and related
As you know, the treaty will enter into force in October 1 of this
year. When it does, the Canal Zone which has existed under U.S.
jurisdiction since its creation in 1904 will be disestablished and the
Republic of Panama will assume plenary jurisdiction over that
area in accordance with the terms of the treaty.
That document requires that, upon entry into force, the present
Canal agencies-The Panama Canal Company and the Canal Zone
Government-cease operations in what is now the Canal Zone. It
also states that the United States will carry out its responsibilities
to manage, operate, and maintain the waterway until the end of
the century by means of a new U.S. Government agency called the
Panama Canal Commission.
To date, two bills designed to establish this new agency and
implement other non-self-executing provisions of the treaty docu-
ments have been presented to the Congress. The first of these, H.R.
111, sponsored by the chairman of the Merchant Marine and Fish-
eries Committee, was introduced on January 15. The administra-
tion, on January 31, submitted a draft bill introduced as H.R. 1716.
They differ in many substantive respects, especially concerning the
financial framework to be established for the Panama Canal Com-
There do not appear to be any significant differences between
the two bills concerning employee rights and benefits. While I will
defer to the Office of Personnel Management on the details of these
provisions, I would like to discuss their broad outlines in view of
the committee's interest in this area. I welcome the opportunity to
do so because of the importance of this portion of the bills to our
employees and, hence, to the continued efficient functioning of the
Panama Canal.

As you may appreciate, the last 18 months have been particular-
lv trying for our work force. Faced with considerable uncertainty
concerning their futures throughout the period of negotiations and,
later, during the Senate debates of the new treaties, employees of
the Canal agencies nevertheless continued to perform their jobs at
their usual high level of efficiency. They are still doing so, even
though they do not know what the statue implementing the treaty
will ultimately hold in store for them after the legislative process
has been completed. You may be assured, however, that the work-
ers in the Canal Zone are intimately familiar with the contents of
the two bills dealing with employee rights and benefits, and that
they will follow their progress closely.
To begin the review of the employee provisions, I would like to
call your attention to article X of the treaty. Under its provisions,
the Commission is authorized to pay, over and above basic compen-
sation, additional remuneration to certain categories of employees.
Accordingly, the bills would authorize the head of U.S. Govern-
ment agencies operating in Panama to pay overseas recruitment
and retention differentials to (a) persons employed by the Compa-
ny/Government or other U.S. Government agencies in the Canal
Zone before October 1, 1979; (b) to those recruited after that date
from outside of Panama; and (c) to medical doctors employed by the
Department of Defense or the Commission.
Both bills fix the ceiling on this differential at 25 percent of the
rate of basic compensation paid for the same or similar work
performed by U.S. Government employees in the United States.
A differential, currently 15 percent, has been paid by the canal
for many years and has provided one of the most effective incen-
tives for recruitment and retention of a skilled work force. Since
the need for highly skilled employees not readily available in
Panama will continue for the foreseeable future, we consider this
provision to be an important one.
With the inevitably significant change which the loss of U.S.
jurisdiction will bring, the bills recognize the importance of pre-
serving, to the maximum extent possible, the present quality of life
for canal employees by placing in the law the treaty guarantee
that the terms and conditions of employment with the Panama
Canal Commission will in general be no less favorable to persons
already employed by the Company/Government than those in
effect prior to October 1, 1979.
These provisions would extend that guarantee to those Compa-
ny/Government employees who are transferred to other U.S. Gov-
ernment agencies in Panama as a result of the treaty.
The 22 specific conditions of employment which would be protect-
ed are listed in the bills and include such things as wage rates,
reinstatement and restoration rights, injury and death compensa-
tion benefits, transportation and repatriation benefits, and leave
and travel except as modified to provide equity with other employ-
ees in the agency to which the employee is transferred.

The leave and travel provision has been construed by the Depart-
ment of Defense to allow employees who are transferred to that
agency to be converted to the leave and travel system applicable
generally in the Federal Service over a period of 3 years.
For those U.S. citizen employees of the Company/Government
who are either displaced as a result of the treaty or who decide
that they do not want to continue their employment in Panama,
the bills would require the Office of Personnel Management to
develop and administer a Government-wide program of placement
This provision we view as an equitable one since the great major-
ity of our U.S. citizens signed on with the canal on the assumption
that they could spend their careers living and working under U.S.
In addition to the recruitment and retention remuneration I
referred to earlier, the bills would require that U.S. citizen employ-
ees of the Commission be paid an allowance to offset the cost-of-
living increases they will experience as a result of losing military
postal, commissary, and exchange privileges. As you know, this will
occur in October 1984, 5 years after the treaty enters into force.
Probably the most publicized parts of the proposed bills-and to
many of our employees the most important-deal with early retire-
ment benefits. These provisions would allow employees who are
involuntarily separated or scheduled to be separated as a result of
implementation of the treaty to retire under more liberalized eligi-
bility criteria than are normally available under a major reduction-
in-force situation.
For example, instead of requiring 25 years of service at any age
or 20 years at age 50, with reduced annuity, the bills would require
20 years of service at any age or 18 years at age 48. In addition, the
bills would not impose a reduction in annuity because of the age at
which the employee retires.
More important to the agency and its employees, however, are
those provisions which would recognize the impact of the treaty on
living and working conditions by granting a continuing option,
throughout the life of the treaty, that is, through 1999, for employ-
ees, U.S. and non-U.S. citizens alike, to retire voluntarily under
similar liberalized eligibility criteria.
To illustrate, an employee could retire voluntarily any time after
he attains 23 years of service regardless of age, or after reaching
age 48 and 18 years of service. Again, there would be no reduction
in annuity because of the age at which the employee retires. Final-
ly, those electing to stay on with the Commission would have their
annuities computed at a higher rate than normal.
While the Office of Personnel Management has authorized early
optional retirement for canal workers under existing major RIF
provisions, our employees must exercise that option, if at all, be-
tween April 1 and September 30, 1979. Because the option is availa-
ble for a limited period of time prior to treaty effective date, it will
not contribute to the retention of our work force beyond October 1.

As I said, many of our employees consider the early retirement
provision of the treaty legislation to be the most important one and
a good percentage are deferring decision as to their futures until
thtev know what the law will provide on that subject.
If enacted in its present form, some will undoubtedly take advan-
tage of its provisions and retire at once. I have high hopes, how-
ever, that the continuing option feature-that is, the fact that the
option to retire under the liberalized eligibility and calculation
criteria I have outlined will remain open throughout the life of the
treaty-will cause the great majority to stay and give it a try with
the Commission.
If I am correct in that assessment, this should afford an opportu-
nity for officials of the Commission and the Government of
Panama to provide that transfer of jurisdiction can be effected
without the kind of adverse consequences which have worried our
Assuming this can be done, and we are optimistic in this regard,
then I believe that this early retirement option will do more than
any other single feature of the legislation toward maintaining a
skilled work force at the canal.
If, on the other hand, the legislation were to be enacted with a
significantly less liberal version of the early retirement option in
it, I also believe that our ability to retain needed skills would be
very seriously curtailed.
In the area of labor-management relations, both bills would place
in the law the treaty's recognition of the right of Commission
employees to negotiate collective contracts. The collective bargain-
ing system to be established would be developed along the lines of
that contained in title VII of the Civil Service Reform Act.
There is one other provision of the bill which is of special inter-
est to non-U.S. citizen employees in that it would confer special
immigrant status on certain persons:
First: Non-U.S. citizen employees of the Company or Government
who, on the effective date of exchange of instruments of ratifica-
tion, are residing in the Canal Zone and who have performed
faithful service for at least 1 year;
Second: Panamanians who, prior to the entry into force of the
treaty, have honorably retired from Government service in the
Canal Zone with 15 or more years of faithful service; and
Third: Panamanians who, on the date of entry into force, have
been faithfully employed by the U.S. Government in the Canal
Zone for at least 15 years and who later honorably retire from that
This special immigrant status would also be extended to the
spouse and children of employees in those three categories.
The administration's bill would waive the public charge provision
with respect to these people for the 30-month transition period.
This would, I believe, be an adequate period for those dedicated
employees, whom I have just identified, to immigrate, under the
waiver of the public charge provision, to the United States. H.R.

111, on the other hand, would place no time limit on the waiver
and thus could establish a dangerous precedent.
The special immigration provision is intended to afford longtime
non-U.S. citizen employees who have spent their careers working
with the U.S. Government on the isthmus, as well as those residing
under U.S. jurisdiction in the Canal Zone, the opportunity to come
to this country if they so desire.
This provision would appear to constitute an appropriate expres-
sion of appreciation by the U.S. Government for the contribution
made by these loyal employees, many of whose ancestors partici-
pated in the construction of the waterway.
I would like to take advantage of the committee's invitation to
testify here today to stress the need for timely enactment of the
treaty implementation legislation. In our view, delay in its passage
beyond early summer will impact adversely on our personnel ad-
ministration, labor relations, financial management, and relocation
of activities. If I may take a few minutes to do so, I would like to
review for you some of the more important problem areas which
we have been able to identify.
In the field of personnel, for example, the Department of Defense
and canal agencies, as well as many Panama Canal employees, will
be adversely affected if the early optional retirement provisions are
not in force by July 1. Lack of the early-out retirement option will
leave employees not otherwise eligible to retire little choice but to
accept transfers to DOD agencies and placement offers within the
Panama Canal Commission. However, many of these same individ-
uals will retire as soon as the treaty legislation is passed. If this
occurs after July 1, it may be too late for DOD to rework the
reduction-in-force action it will have underway at that time and too
late to recruit needed replacements for the employees who decline
transfers in favor of early retirement.
It will also be too late for the Panama Canal Organization to
rework its complex reduction-in-force actions to retain employees
scheduled for termination by placing them in the positions vacated
at the last minute by the retiring employees. Additionally, in rare
instances, employees in hard-to-fill positions for which U.S. recruit-
ment is essential and who had received a notification of separation,
may have already accepted an offer in the United States, leaving
no qualified applicants available locally to fill last-minute vacan-
cies created by retiring employees. This will cause disruptions in
fulfilling our mission due to understaffing and to the time required
to recruit replacements from the United States. Moreover, this
situation would have an inequitable effect on those former employ-
ees who might not have been otherwise terminated and who are
subsequently rehired by the Commission, in that it would appear
they would not be eligible for grandfathered pay or early retire-
ment benefits.
If there were to be no implementing legislation by October 1,
when the treaty goes into effect, the transfer of approximately
3,000 employees to DOD agencies will be effectively prevented be-
cause those agencies will not be authorized to conduct the trans-

ferred functions or to pay the transferred employees out of appro-
priated funds. This will result in the transferred employees being
left on the rolls of the organization, although the agency would be
precluded by the treaty from performing these functions. The ques-
tions would then arise as to whether there is authority to pay such
individuals. Further, these employees could not be separated with-
out appropriate advance notice under reduction-in-force procedures.
This would take an additional 60 to 90 days. It would also result in
many reduction-in-force actions taken against other employees ef-
fective October 1 being incorrect because the bumping patterns
would have improperly excluded the employees who were trans-
ferred. This would probably result in an inability to effect separa-
tion on October 1 as scheduled until the entire reduction-in-force is
reworked to include the excluded employees in order to effect
proper displacements. Moreover, new employees could not be hired
under Panama social security in accordance with the terms of the
agreements in implementation of the treaty because present law,
which would continue in effect, provides that all permanent em-
ployees must be covered under the U.S. civil service retirement
At this point I would like to give the committee some back-
ground. The formal planning sessions between Panama Canal agen-
cies and the Government of Panama began in early 1978. In the
summer of that year, specific guidelines were developed for the
formalization of the binational working group which is generally
considered to be the predecessor to the coordinating committee
called for by the treaty documents.
Joint working subcommittees, whose membership is made up of
representatives from our two countries, were also established. Sub-
jects being addressed by the subcommittees range from operational
transfers such as the ports and railroad to areas of employee and
community interest, including personnel, housing, social security,
utilities, the environment, and police and fire protection.
Our initial subcommittee goals were to familiarize the members
with the provisions of the treaty and related documents and to
formulate specific objectives, the accomplishment of which would
be responsive to treaty requirements. Individual subcommittee ob-
jectives were approved by the binational working group during
meetings held in September and October of last year.
In the early weeks of subcommittee work, Panamanian Govern-
ment officials, Panamanian subcommittee members, and their sup-
porting advisers were afforded orientation briefings and filed in-
spections to acquaint them with Panama Canal facilities and areas
in the Canal Zone.
Detailed listings of equipment and personnel presently employed
in certain canal operations have also been provided to Panamanian
subcommittee members for their use in determining internal Gov-
ernment of Panama resource requirements.
At the present time, the joint subcommittees are completing
their first planning phase, which includes the finalization of a
schedule for the accomplishment of actions necessary for treaty
implementation. Upon completion of staff review of the planning
documents by the canal organization, the U.S. Southern Command

and the U.S. Embassy in Panama, the plans will be submitted to
the binational working group for final approval.
Discussions in the joint working subcommittees and the bina-
tional working group are being conducted in a spirit of cooperation
with representatives of both Governments working in common to
achieve the objectives set forth in the treaty. The planning effort
we are currently involved in is an extremely complex and demand-
ing endeavor. I can assure you, however, that the desire for suc-
cessful accomplishment of this task is equally strong on both sides.
Probably the most complicated area in our planning involves the
railroad and the Ports of Balboa and Cristobal which are scheduled
for transfer to Panama upon entry into force.
While Panama has stated repeatedly that it will assume oper-
ational responsibility for the ports and railroad on October 1, it has
also indicated in recent weeks that it would like the Panama Canal
Commission to assign certain of its employees on a temporary basis
to work for that government and to have the Commission continue
to perform certain supportive functions on a reimbursable basis.
As to whether the Commission will be able to assist Panama in
running those operations that are turned over to that country
pursuant to the treaty, the answer appears to be a qualified yes.
The Panama Canal Commission's fiscal year 1980 budget is based
on the proposition that, effective October 1, Panama will perform
those functions transferred to it by the treaty documents.
There are, however, provisions in the treaty which would permit
the Commission either to assign its employees to assist Panama in
the operation of those activities or to continue to perform them
itself until such time as Panama can take them over.
Availing itself of those provisions, Panama has now stated that it
desires assistance and accordingly appropriate revisions will have
to be made to the budget to reflect the additional resources that
will be required.
As I have indicated, Panama will reimburse the Commission for
any assistance provided by that agency. We have informed the
Government of Panama that any further requirements it may have
must be made known to us in the very near future if the Commis-
sion is to have the resources to provide such support on October 1,
In conclusion, I would like to reiterate the pressing need for
timely enactment of the treaty legislation, especially those portions
which deal with canal employees. As I have said, these provisions
are foremost in the minds of members of our work force. Because
they are so important to our employees upon whom the continued,
efficient operation of the waterway depends, they are also impor-
tant to the agency.
My own personal view is that the employee provisions of the
implementing legislation-to a greater extent than the financial,
organizational, and other parts of the law-will determine whether
or not the canal will continue to function in the same exceptional
manner that has characterized its operation since 1914.
Mr. Chairman, that concludes my opening statement. I will now
attempt to answer any questions which you or other members of
the committee may have.

The CHAIRMAN. Governor, thank you very much for your very
comprehensive, excellent testimony. I have no questions. I recog-
nize you as an authority on the treaty, one who has spent a great
deal of time in this effort, and one who has, in my judgment,
dedicated himself to fairness and equality.
I want very much that the lines of communication between your
office and this committee remain open throughout the proceedings
and the months ahead. We want very much to benefit from your
observations as we go through the legislative process. You are
onsite and in many instances in a far better position to advise than
others might be.
So the committee will appreciate benefiting from your views. I
would hope that you would not ever be reluctant to pick up the
phone, and make us aware of your observations when there is
something that you think we are doing wrong or there is some
shortcoming that you observe. Please make us aware of that.
Beyond that, I again commend you for your excellent presenta-
tion and your obvious dedication to fairness and certainly your
task is a herculean one. I believe it is incumbent upon Congress to
assist you in fulfilling that responsibility.
Mr. Derwinski?
Mr. DERWINSKI. One question, Governor: The special immigration
section, do you have any idea, any ball park guess, as to how many
people might avail themselves of that provision?
Governor PARFITT. We have no indication whatsoever as to how
many might avail themselves of that provision. We have made
some very rough estimate as to the potential exposure. I think the
largest number computed has been to the extent of about 47,000
people, including employees and dependents, if all were to exercise
such an option, which is very unlikely, I might add.
Mr. DERWINSKI. Thank you.
Thank you, Mr. Chairman.
The CHAIRMAN. Mr. Wilson?
Mr. WILsoN. I have no questions, Mr. Chairman.
The CHAIRMAN. Mr. Taylor?
Mr. TAYLOR. I have no questions.
The CHAIRMAN. Mrs. Schroeder?
Mrs. SCHROEDER. On the immigration issue, are there provisions
included to give the workers preferential rights to civil service jobs
in the United States?
Governor PARFITT. There are none.
Mrs. SCHROEDER. So it would be a matter of sheer immigration?
Governor PARFITTr. That is correct.
Mrs. SCHROEDER. Could you tell me in the RIF how many people
that are female would be affected by the RIF, their percentage in
the work force and the percentage in the RIF?.
Governor PARFIrTT. I do not have such figures available to me, but
I will be glad to provide them for the record.
Mrs. SCHROEDER. Are there any women above GS-13 in the Canal
Governor PARFITT. Again, we have several 13's, but I am trying
to seek in my mind as to whether there are any 14's. We have in
the past some who were 14's or equivalent, particularly in the

schooling profession, but again I would like to provide you specifics
for the record.
Mrs. SCHROEDER. Are there any women in the Board of Directors
of the Panama Canal Company?
Governor PARFITT. Yes, there are.
Mrs. SCHROEDER. How many?
Governor PARFITT. There are two.
Mrs. SCHROEDER. I have some other questions that I would like to
submit to the Governor for the record that are a little more
lengthy. Basically they concern the difference between this legisla-
tion and title VII of the Civil Service Reform Act. We really need
some guidance as to why there were changes made in this legisla-
tion from title VII in particular with regard to dues checkoff and
different issues such as that.
But I will submit the rest, if that is OK, to help us with our
hearings when we do them in Washington.
Governor PARFITT. I will be happy to respond.
The CHAIRMAN. Thank you.
Mr. Corcoran?
Mr. CORCORAN. Governor, if we were to take a referendum of the
employees, both U.S. citizens and non-U.S. citizens who work for
the Canal Company, what do you think would be their judgment of
the Panama Canal Treaty itself?
Governor PARFITT. I hate to revert to that speculation, but to be
responsive to your question, I feel that they would be opposed to
the treaty if that were an option, which is not an option today.
Mr. CORCORAN. In your judgment, is that one of the reasons that
the package before us is pretty generous concerning early retire-
ment and in other respects?
Governor PARFITT. No, I don't think so. I think the package was
developed based on what was considered to be fair, reasonable,
under the circumstances, and in the best interest of continued
management of the waterway.
Mr. CORCORAN. Another question relates to item 9 in your testi-
mony. You talk about a future cost-of-living adjustment that will
have to go into effect.
Could you elaborate on how much money might be involved in
offsetting the loss of commissary and other privileges?
Governor PARFITT. It would be speculative at this point to try to
put a fixed sum of money on that question, in answer to that
question. We have taken some very tentative samples in the
market-basket technique to determine the difference in cost be-
tween buying in a military commissary as opposed to buying in the
Panamanian economy.
Tentative conclusions would indicate that it would have to be an
increase in the order of magnitude of about 15 percent today in the
payroll in order to offset that. That is quite speculative. That is a
general estimate and we would have to project ourselves forward 5
years from now.
Mr. CORCORAN. What is the payroll cost now?
Governor PARFITT. The payroll and total employee costs are
around $248 million. But that is not all base wage. That is contri-
butions to insurance and that sort of thing. But the payroll is in


the order of magnitude of $2s4, million, closer to $200 million base
Mr. COORORAN. Thank you.
The (,'IAIRMAN. Thank you.
Mrs. Spellman?
Mrs. SPELLMAN. Just a couple of questions now and then I have a
great many that I would like to submit to you. Let me just check
on something you just said.
There would be a 40 percent differential?
Governor PARFITT. No. If we were to take today's situation, and
this is a very rough calculation, we would have to increase the base
wages of individual employees by 15 percent to offset the difference
between buying at the price they pay for goods in the commissaries
of the military, the PX's, and using postal facilities, as opposed to
using such facilities in Panama.
I might add that the number I gave to Mr. Corcoran does not
relate to the 15 percent. We are only talking about the U.S. citi-
zens who have this benefit and would lose the benefit in 5 years. So
it is a portion of that figure and less than half.
Mrs. SPELLMAN. But there would be 25 percent on top of that 15
percent: is that what I understand or am I misunderstanding that?
Governor PARFITT. No. If we were to apply it today and tell our
employees that they were to buy in Panama, the individual em-
ployee, U.S. citizen, would be afforded a base salary, what he gets
now, plus a 15 percent tropical differential, plus an equivalent 15
percent which would go to the cost-of-living differential.
So there would be two 15 percent increments added to the base
salary under today's conditions.
Mrs. SPELLMAN. To follow up on Mrs. Schroeder's question on the
immigration, what would be the status of those employees? Would
they have civil service status with bumping rights?
Governor PARFITTr. These people would be off the rolls of the
Federal Government if they were to accept immigration into the
U.S. Government. There would be no obligation for employment.
They may be retirees. In most cases they would be retirees, but
they could also be just employees who severed relations with the
Federal Government and decided to immigrate to the United
States, but they would no longer be connected with Federal service.
Mrs. SPELLMAN. Then just one more, and as I said, the others
will be coming to you: I just somehow have a feeling we are being
somewhat schizophrenic here. We are providing a 2"'' percent mul-
tiplication factor on retirement in order to keep people in their
jobs, asking them to continue. That I can understand.
On the other hand, we are providing an extremely liberal, far
more liberal than anything we have had in the States, retirement
program which says it would be very nice for you to go.
Now I can understand that in some areas we might want to
encourage people to retire so that there will be no unemployment
and that maybe in other areas it is much more difficult to find
employees who can meet the criteria and we want them to stay.
But isn't there a way of handling that so that we are not saying
both things to all people at the same time?
Governor PARFITT. Well, I think what we are saying is that the
situation that has evolved here requires us to afford the employees

the right of retirement. That right is there, in my judgment, re-
gardless of the implementing legislation. So he has the right.
We are saying that because of the treaty mandate to seek earlier
or more liberal calculation of and entitlement to, that we should
afford that right to individuals who have not quite reached the
normal retirement criteria.
So to me there is no inconsistency there. Instead of 50 and 20, it
is 48 and 18, slightly liberalized criteria. The portion of the bill
that has to do with retaining people is to try to convince the
employee not to exercise the right on day 1 because if that were to
happen in the technical skills, we would not have the people to
operate the canal.
So we are trying to tell them that that right need not be exer-
cised on day 1 and you can stay here and during the course of the
treaty exercise it. To me that is consistent with fairness to the
employee, reasonableness under the circumstances, and the best
interests of the organization in maintaining a work force through-
out the life of the treaty, throughout a period when we must
reduce the numbers of U.S. citizens in those skill areas as mandat-
ed by the treaty.
Mrs. SPELLMAN. I must say, Governor, I am not fully convinced
yet, although you are most convincing. If indeed we should go in
this direction-then I think I should tell you where I am coming
from. I am very concerned that the Federal employees' retirement
funds be solvent. I am very concerned that we not get into the
position that we are in with social security.
As we have more and more early outs, we are dipping into those
funds and we have a greater unfunded liability. I am afraid that
not too long down the road somebody is going to take a look at
what appears to be an increasing unfunded liability and say, well,
this retirement fund is going to the dogs and let's just merge it
with social security. I am opposed to that.
So as we are talking now about liberalizing the benefits or the
early-out provisions in a way that, to my knowledge, hasn't been
done before, and when we say that this comes about because of the
treaty, in your opinion where should the money for that come
from? Should it come from the Federal employee retirement fund
which they have been contributing into at a pretty high rate or
should this come from general funds which would be considered
funding for implementing the treaty?
Governor PARFITT. In my judgment the latter seems to be consist-
ent with the administration views on this type of cost burden.
Mrs. SPELLMAN. Thank you, sir.
The CHAIRMAN. Thank you, Mrs. Spellman.
Governor, I would not ask for the answer to this question at this
point, but may I ask if you have the in-house capacity to provide
this committee with an estimate of the cost associated with imple-
mentation of title III? I would not expect that you do that right
now but, would appreciate it, if you could provide the committee
with that information, within 2 weeks.
The other part of the question is do you have the in-house
capacity as opposed to perhaps shifting that question to 0MB?
Governor PARFITT. It seems to me, sir, that the biggest cost drive
in this area is the early retirement. The Office of Personnel Man-

agement probably should provide that figure. We have asked them
to develop it. We have seen some tentative figures that they have
given to individuals who testified before the Senate hearings.
The order of magnitude figures being used at that time, referring
now to the cost of early retirement, were somewhere between $8
and A9 million per year for 30 years. So we have asked for an
update of those figures. It is my understanding that the Office of
Personnel Management will be providing such.
The CHAIRMAN. Mr. Taylor?
Mr. TAYLOR. I would like to ask one question.
Governor, I wonder if you could give the committee any idea as
to about how many employees at the present time would qualify
under the 48-18 criteria?
Governor PARFITrT. I will give you the answer, and I would like to
check it for the record, but it seems to me it is about 1,500.
Mr. TAYLOR. That is a substantial number are already eligible.
That would pose a threat if they did decide that they were going to
exercise that prerogative.
Governor PARFITr. The point I would make is that there is not a
great difference in numbers between those eligible under the 48-18
and those eligible under the 50-20. That is the point I make. There
is an enrichment, but in terms of impact on the organization, it is
not greatly different. That brings into force and into play the
requirement to provide incentive to stay under either system. That
is important from a management standpoint.
The CHAIRMAN. Mr. Wilson?
Mr. WILSON. Mr. Chairman, just one question.
In response to Mrs. Spellman's question about where the money
would come from to keep a balance in the retirement funds, and
without having to use up the funds that the employees have in
their own retirement program, you indicated that you felt that any
necessary funding should come from the general Treasury rather
than to take it from the retirement funds themselves.
Doesn't that fly in opposition to what the President told us that
there would be no cost to the taxpayers as a result of the treaty or
the implementing legislation?
Governor PARFirT. I think there has been some misunderstand-
ing on the administration's position with regard to cost of the
treaty. The statements made, to my understanding, always have
been that they referred to the cost of payments to Panama which
were to be borne by tolls received through the Commission. There
are indeed many costs of the treaty which will be borne by the U.S.
Mr. WILSON. Well, I am sure there are going to be, but I don't
know that that was honestly presented to the American public at
the time that the treaty was presented to them.
I think the impression that the taxpayer was given was that
there would not be any unusual costs or any additional costs to the
taxpayer. But obviously there are going to be many.
Governor PARFITT. Certainly there is a prevalent impression
among the American population that that is the case, but in fact
there are costs of the treaty. The point I am making is that my
understanding of the comments with regard to no cost has been
related to the payments to Panama which are required by the

treaty. Those would come from revenues earned by the Commission
through tolls and receipts.
The CHAIRMAN. Are there any further questions? If not, on
behalf of the committee, Governor, our deep appreciation for your
appearance and for your input.
Thank you very much.
Governor PARFITT. Thank you, Mr. Chairman.
Mrs. SPELLMAN. Mr. Chairman, may I point out that it is most
unusual that all of your employees are applauding you. I think
that speaks very well for you.
The CHAIRMAN. In line with what the gentlelady has said, I
think that provides a catalyst for the committee to applaud the
Our next witness is Mr. Shannon Wall as president of the Na-
tional Maritime Union.
President Wall, we are delighted to welcome you here this morn-
ing. We look forward to your testimony. If, for the purpose of the
record, you will be good enough to introduce your associates.
Mr. WALL. Yes. Thank you, Mr. Chairman.
Joining me this morning, or jointly appearing with me, are Capt.
Norman Werner, president of the Panama Canal Pilots Branch;
Capt. Sidney Faulkner, president of the Canal and Caribbean
Branch of the International Organization of Masters, Mates and
Pilots; Alfred Graham, president, Central Labor Union and Metal
Trades Council, and Frank Hamilton, a labor attorney.
Also appearing with me are Rene Lioeanjie, vice president, and
Tal Simpkins, executive director, of the AFL-CIO Maritime Com-
The CHAIRMAN. To each of you we issue a warm welcome. We are
delighted to have you participate in these proceedings this morn-
Mr. WALL. We appreciate this opportunity to appear and testify
on behalf of your members who are employed in all phases of the
activities in the Panama Canal Zone. More specifically, the unions
in this group represent the employees that are directly involved in
the movement of the ships through the canal.
We will be asking the other congressional committees that have
jurisdiction over other parts of this implementing legislation to
stipulate that there be a representative from the labor movement
and the maritime industry on all boards and commissions that are
established to run the canal.

We shall also make certain recommendations relating to the tolls
so that they will not adversely affect our foreign commerce and our
American-flag merchant marine.
We will, however, limit our presentation today to what we under-
stand to be the subject of these hearings-title III, employee and
postal matters.
I will make an introductory background statement. Captain
Werner will speak to the early retirement section of the bill. Cap-
tain Faulkner will present a paper, and then Frank Hamilton will
present the details of our labor-management relations paper. The
CLULJ-MTC will speak to the Railroad Retirement Act.
We have, since the treaty negotiations began some 13 years ago,
avoided taking a position on the treaty. Our position has continual-
ly been to do what we can as labor unions to look out for our
members and to leave the treaty negotiations to those experts in
that field.
Therefore, the following comments are not intended to reflect on
the treaty but to the labor guarantees for the protection of all
Canal Zone employees.
Basically, the material aspects of the treaty have been settled.
We ask that you urge the Congress to give the same consideration
to the human aspects.
We have been involved for a number of years and have testified
many times before Congress on behalf of the workers in the
Panama Canal Zone. I say this because much of what we will be
saying here we have said before.
In this presentation I shall concentrate on the one section of the
bill that we consider the most important and which as it is current-
ly written gives us the most concern. In addition to our comments
here, we will with your permission, submit additional comments on
other sections of the bill.
The CHAIRMAN. Without objection it is so ordered.
Mr. WALL. Section 303 of H.R. 1716 gives the Panama Canal
Commission the authority to establish a wage and employment
system and to establish a form of collective bargaining.
In 1976, as a part of a memorandum of understanding between
the Canal Zone Government and the employees, the following was
agreed to:
To initiate action immediately to formulate a labor-management committee to
commence a study with full participation of unions of all ramifications of applica-
tion of E.O. 11-1!1, as amended, or other mutually acceptable form of collective
bargaining with employees of the Panama Canal Company and Canal Zone Govern-
It was this general agreement that initiated many meetings be-
tween the labor unions in the zone that led to a general consensus
of what we believe is necessary to protect the interest of the
workers in the Panama Canal Area. We have also had continuing
meetings with the Government authorities on this subject. Frank
Hamilton will explain this in detail later in our testimony.
We believe that there are forces at work that would reestablish a
dual pay system for future employees that will be hired after the
new mechanism is set up to run the canal. The DOD people that
we have met with, before and after the treaty, have continually
emphasized to us that the employees who work for the Canal Zone

Company/Government at the time of the transfer to the Commis-
sion will not make less wages. This implies to us that the new hires
will make something less. This will surely happen if the discrimi-
natory language of section 7103 of title VII of the Civil Service
Reform Act of 1978 is allowed to apply.
If this happens, as we believe it will, we will be back to a
situation of where two workers working side by side doing the
same job will receive different wages.
We further believe that this Panama Canal employment system
will effectively deny the application of the U.S. Federal minimum
wage that the unions and the Congress worked so hard to have
applied here.
We have continuously worked for an employment system that
would apply equally to all workers in all Federal agencies in the
Panama Canal area. This means to us equality of treatment re-
gardless of the citizenship of those presently employed and those to
be employed.
There are many justifications for this. When the U.S. Govern-
ment entered the scene in this part of the world in 1903, there
existed a completely different set of conditions than those that
exist today.
In order to provide incentives for workers to brave the then-
known health hazards of this area, U.S. officials from the very
outset had to plan to provide for the total needs of its army of
imported workers-U.S. and tropical labor alike.
Armed with a treaty giving it wide powers, it is not surprising
that the Canal Commission set up a miniature U.S. city govern-
ment almost overnight in the zone with its own health department
and hospitals, post offices, police force, schools, bakeries, store-
houses, commissaries, clubhouses, et cetera. Food was imported
from the United States to maintain the essential needs of this work
Thus, from the very outset there was established on the Canal
Zone a basically North American and U.S. cost-of-living economy
throughout the zone and the terminal cities of the republic.
It is to be noted that all employees, both United States and non-
United States, were granted the right to purchase on the zone,
regardless of residence, at identical prices. This privilege was taken
away in 1955 for those non-U.S. citizens living off the zone.
As a consequence of this action, we would like to point out the
cost differentials that have and do exist. In 1976, a can of corned
beef which sold for $1.65 in a Canal Zone commissary, 99 cents in
Detroit, and $1.16 in Brooklyn, N.Y., sold in Panama City for $1.90.
These relative differences exist also today. Premium gasoline sells
throughout the Republic of Panama for more than $1.10 per gallon.
This same premium gas sells for 70 cents in the zone.
It has been well known for the past 50 years at least that the
American dollar and the Panamanian balboa are used interchange-
ably on the entire isthmian economic scene. The purchasing power
or value of both is identical. Anyone familiar with the facts will
agree that this interchange of currencies is not true of Costa Rica,
Haiti, Colombia, San Salvador, Barbados, Jamaica, Trinidad, and
many others of the surrounding countries.

It is vitally important to point out here that even though some
non-U.S. citizens who work on the zone were drawn originally from
neighboring Central American countries and the West Indies, the
vast majority of non-U.S. citizen employees on the zone are Pana-
manian nationals.
It is important to add here also that none of these employees live
or fulfill their day-to-day needs in these so-called surrounding coun-
tries, where the cost of living is substantially lower than that
prevailing on the Isthmus of Panama.
By the way, the cost of living in the Republic of Panama is the
24th highest in the world. They, therefore, must reside on the zone
or in the nearby cities of the Republic of Panama and must pur-
chase all their basic commodities and household and personal goods
in a predominantly North American economy at North American
Canal Zone labor unions have long been of the opinion that the
coverage of Canal Zone workers under the U.S. minimum wage law
in 1966 effectively underscored the inadequacy and indefensibility
of any continued adherence to a dual wage philosophy in the zone.
At the present time the Governor of the canal has the basic
authority to set the wages for the Canal Company/Government
employees and he does. Through the Civilian Personnel Policy
Coordinating Board, these wages are applied to all Federal and
nonappropriated fund employees in the zone.
As a result, the wages at best can be described as a hodge-podge
with very little rhyme or reason and we will not attempt to explain
them in detail.
The nonmanual grades 6 and above are based on the general
service schedule from the States. There are, however, exceptions to
this. The grades 1 through 5 wages are set on a Canal Zone NM
wage base. The manual grades MG-10 and above are set in accord-
ance with the Wage Board rates in the United States. There are
also exceptions to this. The grades below 10 are set on the Canal
Zone MG wage base.
This Canal Zone wage base is a carryover from the time when
the gold and silver pay systems were in effect. It was modified by
the Treaty of Mutual Understanding and Cooperation and the ap-
plication of the U.S. Federal minimum wage in 1966. Other than
these two inputs, we do not have the slightest idea of how these
local NM and MG wages are set.
The implementing legislation should establish by law and not by
administrative fiat a coherent unified pay system providing equal
pay for equal work in all areas for both present and future employ-
ees, citizen and noncitizen.
We ask that section 325, Early Retirement Eligibility, and sec-
tion 326, Early Retirement Computation, be amended so that they
will cover those Canal Zone DOD employees who are involuntarily
separated or scheduled to be separated as a direct or indirect result
of implementation of the treaty.
Several thousand Panama Canal Company/Government employ-
ees have already received notice of transfer of their units to DOD
control. Subsequently, RIF actions will be initiated by DOD, after
combined Company/Government and armed services retention
rosters are compiled for use in said RIF actions.

It is our understanding from conversations with the Governor
yesterday that this possibly has been taken care of, but our draft
preceded our conversations with the Governor so we have left it in
to make our point clear.
It is our contention that RIF actions resulting therefrom are a
direct result of the treaty and should entitle those affected to the
early retirement provisions of these subsections. Former Panama
Canal/Canal Zone Government employees transferred to DOD
should also be entitled to continuing eligibility for subsequent re-
tirement inasmuch as their transfer was necessitated by treaty
We will submit at a later date recommendations for your consid-
eration that will extend to the Army and Air Force exchange
personnel the same retirement options extended to the appropri-
ated fund employees.
I will conclude my portion of our remarks by stating our pleas-
ure with the inclusion of another group of nonappropriated fund
employees-those employed in the messes and the officers and
noncommissioned officers clubs-under the retirement benefits of
section 329 of this bill.
While this concludes my remarks, we ask that you withhold any
questions you may have until Captain Werner, Captain Faulkner,
the CLU-MTC and Mr. Hamilton have finished with their re-
marks. We suggest this in the interest of saving time, as their
remarks may clear up certain of your questions.
Thank you.
The CHAIRMAN. Thank you, President Wall.
Our next witness is Capt. Norman Werner, president of the
International Organization of Masters, Mates & Pilots. Captain
Captain WERNER. Good morning, Mr. Chairman and ladies and
gentlemen on the Post Office and Civil Service Committee. We
welcome you to the Panama Canal. We hope you find our isthmus
as pleasing as our tropical climate.
It is appropriate that I address the subject of the liberalized
early retirement feature included in the proposed implementing
legislation of the Panama Canal Treaty.
As you may be aware, the inclusion of an open-ended liberalized
retirement benefit as a retention incentive for midcareer employ-
ees is the product of an agreement made in good faith between the
President of the United States and a past president of our pilots
association in August 1977.
Our part of the bargain was that the canal pilots, who function
in autonomous control of the navigation of all vessels that transit
the Panama Canal, would not oppose President Carter's treaty. We
kept our end of that bargain.
Although the precision skill demanded to pilot large vessels
through the Panama Canal is unequaled anywhere else in the
maritime world, our maximum earnings as senior pilots are as
much as 50-percent lower than professional port pilots elsewhere.
Additionally, 91/2 years' experience as a pilot on the canal is the
minimum requirement to qualify as a control pilot of the largest


vessels that use the canal. The same length of time is necessary to
reach the senior pilot pay level.
It should be clear that the major retention incentive for the
three-fourths of the pilot force that would not be eligible to retire
under the reduction in force presently offered is the liberalized
early retirement opportunity available for the life of the treaty.
Many of the midcareer pilots who would continue providing their
service to the Panama Canal Agency if the early retirement benefit
is included in the implementing legislation are senior pilots such as
myself. The loss of experienced pilots who choose to leave under
the RIF and resignations of midcareer pilots, if the liberalized
retirement benefit were not included in the legislation, would
create an impossible situation. It should be obvious that these
people could not be replaced by new hires.
In conclusion, I reiterate that the major retention incentive for
midcareer pilots presently employed by the Panama Canal Compa-
ny is the early retirement option. We urge all those interested in a
smooth canal operation during the transition period to support the
early retirement legislation.
The CHAIRMAN. Thank you, Captain Werner.
Captain Faulkner?
Captain FAULKNER. Mr. Chairman and ladies and gentlemen,
like the gentlemen who have just spoken to you, we are involved in
the operation of the canal. The information and positions they
have presented to you have our complete concurrence and support.
I represent the Panama Canal and Caribbean Branch of the
International Organization of Masters, Mates and Pilots. We are:
the boarding officers who clear arriving transit vessels, the admea-
surers who determine the transit tolls, the tugboat captains who
assist transiting vessels, the maritime traffic controllers who co-
ordinate all transit operations, and the apprentices who are train-
ing to become tugboat masters and later to possibly become canal
We are professionals, not professional labor leaders but profes-
sional craftsmen of the Panama Canal, and we take pride in our
Aside from the performance of our daily jobs, we are also tasked
with training the men and women who will relieve us by the end of
the century. In some instances, this transition training has been
going on for over 10 years.
We endorse the spirit of the treaties. However, in all common-
sense and fairness, we cannot support conditions where our eventu-
al peers will work under different wages and work rules. This is
decisive and certainly not conducive to harmonious labor relations.
It destroys belonging and is disruptive to any community of inter-
est. Without this, good faith, morale and pride in performance are
Responsible Panama Canal labor or labor anywhere must
demand of itself strict professional standards, not only in perform-
ance itself and instruction of the craft but in the solidarity of
representation. Federal legislation and regulation have charged

organized labor with the responsibility of representing, supporting
and defending our peers, whether they are union members or not.
Whatever direction the regulation of Panama Canal labor rela-
tions takes, we feel all employees in designated bargaining units
must be required to contribute to the cost of representing the
employee in those units by paying the respective organizations an
amount equal to the dues, fees and assessments which the regular
members of such organizations pay.
The CHAIRMAN. Thank you, Captain Faulkner.
Mr. Hamilton?
Mr. HAMILTON. Mr. Chairman and ladies and gentlemen: May it
please the committee, you have a written presentation from me
which I would like to correct in the fourth line on page 3, the
public law referenced S. 95-454 instead of 114.
Instead of taking time to read that, I would like to talk with you
a little bit about the other document which you have been fur-
nished. This is entitled, "A Revised Joint Panama Canal Commis-
sion-Department of Defense Labor Relations Policy."
In the presentation you will note this is referred to as option 6.
The explanation of that terminology is in the written presentation.
First of all, I am a labor lawyer. I have and profess no expertise
in the area of the treaty. However, as I have been working with
the labor organizations which represent the employees here in the
canal, I have become impressed with a number of things.
First of all, that is the diversity of the problems of representation
which exist here.
Second of all, with the complexity of the means in which fair and
adequate compensation systems may be set.
Third, with the inadequacy of proceeding through a strictly ad-
ministrative process to accomplish the desired results and means.
As an illustration of this last point, I think you will see that for
more than a year we have been attempting to work out something
in the way of a policy. While we draw closer together, we are still
poles apart.
So that the primary thing which I would urge the committee is
that it consider that whatever the procedure for labor relations
policy for the employees here, that it be set by statute rather than
by rule and regulation.
Now in the formulation of the statute I would suggest that the
option 6 be carefully considered, not as in legislative form but as
the bedrock from which legislation can be drafted.
The genesis of option 6 was to take the proposals from the
Department, the various Executive orders relating to bargaining in
the Federal Government, the various public employee relations
acts of the States, and to examine them in the context of the
problems which exist here.
I sincerely state, and bear in mind I represent public employee
unions in the States, I sincerely believe that in the situation here,
the political and operational situation, the closer you can get to
full-scale bargaining for the employees here, the better the inter-
ests of the canal, the better the interests of the United States, the
better the interests of all concerned will be served.

Now, in the option 6 you will find there are procedures to resolve
questions of representation. There are procedures to require stand-
ards for the organizations to represent employees. There is the
duty of nondiscriminatory representation. You will find there are
unfair labor practice provisions and procedures for the resolution
of those.
Now in the Federal sector this has been to a limited extent
recognized by the amendments to the Civil Service Act. However,
of course, this bill, H.R. 1716, says that the amended, the revised
Civil Service Reform Act, will not apply to the Canal Zone, except
for certain sections.
Now the point that I was making there is that the revised Civil
Service Act now has established an agency or procedure for the
handling, not by the affected agency but by somebody else, of the
problems of enforcement of the employee rights to bargain and of
the labor organization duty to fairly represent. This is what is
We urge sincerely that every consideration possible be given
toward the establishment by Congress of the guides and the rules
under which employees and their families here in the canal will be
Now one final comment. I think Mr. Wall made reference to it
but I want to specifically direct your attention to the provisions of
section 7103 of the Civil Service Reform Act which provides in the
definitional section that an employee means an individual, and
then it describes various things, but does not include an alien or
noncitizen of the United States who occupies a position outside the
United States. That cannot apply to the canal.
Here we are committed as a Government to the employment and
to the increasing employment of aliens. If we are going to as a
nation be fair, if we are going to live up to our treaty obligations,
if we are going to have harmonious employee relations and effec-
tive operation of the canal, then we will eliminate any unrest
which arises by treating differently those employees who are not
citizens of the United States.
Thank you.
[The prepared statement follows:]
Ladies and gentlemen, may it please the Committee, my name is Frank E.
Hamilton. Jr. I am an attorney with offices at Tampa. Fla., and I specialize in the
field of labor relations, representing labor organizations. For the past several
months I have been assisting the various labor organizations which represent em-
ployvees in the Canal Zone in their efforts in the light of the mandates of the Treaty
to come up with a unified labor relations policy providing procedures for the
negotiatiooi of collective bargaining agreements and for their enforcement.
In order that the committee may fully appreciate the problem, I would like first
to take you back in time and trace in a most sketchy fashion the history of labor
relations in the Canal Zone and the events which bring us to where we are today.
As you know, in 1962 the late President John Kennedy issued Executive Order
No. 1090X which permitted a very limited type of recognition and negotiation
between Federal agencies and organizations representing Federal employees. Execu-
tive Order No 109,s provided for formal recognition without exclusive recognition
and permitted consultation as distinguished from collective bargaining. Executive
Order No. 1409H has been applied to groupings of employees in the Canal Zone, and
it the system under which some 22, or thereabouts, labor organizations attempt to
provide some measure of representation for their membership.

In 1969 Executive Order No. 11491 was issued and it provided for exclusive
recognition and a substantial measure of collective bargaining It contained provi-
sions permitting an agency or department to opt out from under its coverage on the
basis of national security; and this option was exercised by the Panama Canal
Government. Executive Order No. 11491 has not been applied to Canal Zone em-
This disparity in treatment as compared with other employees of the Federal
Government, coupled with the geographic separation and a variety of other factors,
led to employee unrest which threatened to close the Canal. As a result, there was a
memorandum of understanding issued by the Governor on March 20, 1976, which
provided: "To initiate action immediately to formulate a labor-management commit-
tee to commence a study, with full participation of unions of all ramifications of
application of E.O. 11491, as amended, or other mutually acceptable form of collec-
tive bargaining with employees of the Panama Canal Company and Canal Zone
Following this, the employees organizations attempted to meet to formulate a
mutually acceptable form of collective bargaining with employees of the Panama
Canal Company and the Canal Zone Government. Then came the Treaty.
As you know, article X, section 9, of the Treaty provides:
"(a) The right of employees to negotiate collective contracts with the Panama
Canal Commission is recognized. Labor relations with employees of the Panama
Canal Commission shall be conducted in accordance with forms of collective bar-
gaining established by the United States of America after consultation with em-
ployee unions."
(b) Employee unions shall have the right to affiliate with international labor
Following this impetus, there were further meetings between the various labor
organizations and representatives of the various departments, agencies, etc. From
these meetings there was presented to the Canal Zone labor organizations on May
10, 1978, a document from the Civilian Personnel Policy Coordinating Board of the
Canal Zone on "Proposed Consultation on Labor Options." The May 10, 197S,
document contained five basic options. I will not bore you with the details of these
five options. I will tell you that each of them was carefully and exhaustively
considered by the various labor organizations representing employees of the Canal
Zone; and the majority came up with a proposal which they labeled as "Option 6".
Such was reviewed and refined, and through the auspicies of the AFL-CIO, was
presented as a consensus of proposals acceptable to the organizations representing
Canal Zone employees.
Throughout the Federal Service a problem with Executive Order No. 11491 had
been the absence of an independent agency to monitor and enforce the spirit of the
Executive Order. In October of 1978, Public Law 95-454 was enacted (92 Stat. 1191)
and title VII provided for Federal Service Labor-Management relations, among
other things, creating "The Federal Labor Relations Authority." H.R. 1716 in title
III, section 303, provides that the provisions of chapter 71 of title V of the United
States Code (this is the part of the Civil Service Reform Bill dealing with labor-
management and employee relations), will not apply to employees of the Commis-
sion but mandating: "In lieu thereof, the President shall establish a form of collec-
tive bargaining, applicable to the Commission's employees; into which is incorporat-
ed the substance of sections 7102, 7106, 7116, 7120, and 7131. The form of collective
bargaining so established shall contain such other necessary provisions, and shall be
administered, so as to provide the Commission's employees with the right to bargain
collectively under the same conditions and with respect to the same subject matter
that obtains where the right is exercised generally in the Federal service within the
continental United States."
As related, "Option 6" has been furnished. After its receipt, there were further
meetings between representatives of the affiliated unions and of the agencies to
explain and discuss proposals which had been made. During the first week of
January of 1979, there was then furnished a new document entitled "Joint Panama
Canal Commission/Department of Defense Labor Relations Policy" which incorpo-
rated some provisions of the proposals in "Option 6", ignored others and proceeded
in exactly the opposite direction with still others. The latest proposal was reviewed
by the affected labor organizations in a meeting at the AFL-CIO offices in Washing-
ton on January 25; and I was asked to prepare for distribution a revised "Option 6"
incorporating as much of "Joint Policy" as possible without doing violence to the
concepts of "Option 6." The revised "Option 6" was hurriedly prepared and copies
are available for distribution with this presentation.

The pressures of time are such that it has been impossible to get to you in written
form the comments and explanations which I would like to furnish you as to the
concepts of organization and content of what we have called "Option 6 Additional-
ly. the pressures of time have prevented our redrafting "Option 6i" in legislative
form for inclusion in the legislation you are considering. But we strongly urge that
such consideration be given The reasons for this are varied. The history which I
have detailed for you shows that for seventeen years employees of the Canal Zone
have bet-en limited to "formal recognition" and "consultation". They have been
denied the expanded rights of other Federal employees under Executive Order No.
114.91, and it is proposed that they be given less than the rest of the Federal Service
is given, even under the Civil Service Reform Act The problems of the employees
are unique and are not paralleled elsewhere in the Federal Service. The political
climate in which they will work is full of uncertainty. The history which I have
outlined demonstrates that the best interests of the United States and of the
employees charged with the successful operation of the Canal will best be served by
clarifying and setting out in legislation the rights of employees to exercise their
collective bargaining rights with full-scale collective bargaining.


FR VI-! )


1O DI FLFNi[ 'uk 1L AI 1( : I 0 IC"Y

[PE: At. [ ,

'' t A AS tlie public interest uequire, hih starts ds of r pie r -

formance and the continual development r and implementation (F 'de '! rr s-

ive work practices to facilitate improved employee per0ormaire arnd ef ec j ad,

iHl.REAS the well being of employees and efFic icent ad','ini ra* on of

government operations are benefited by providing employees an opport nity t" p.'irti-

cipate in the formulation arid implementation of personnel policies and prac t; s

affecting the conditions of their employment; and,

WHEREAS, subject to applicable law and tice par amount r-e (qirements o

public service, effective labor-management relations requir-es a clear statement of

the respective rights and obligations of employees, their labor organic nations

and their employer; and,

i,'I- REAS traditions of collective bargaining in the area and the pro, s s

of applicable treaties, pacts, and status of force agreements make ex ist-ing Executive

Orders relating to collective bargaining inequitable arid/or imnpracticable in tie

performance of work in the geographic area of Panama containing the Panarra Canal

so that special considerations to protect, preserve and co form to suc(- tradition's,

treaties, pacts, and agreements are necessary and in the public interest as v,ll as

the interest of all concerned;

NOW, T1I-B EFORE, by virtue of the author-ity vested in me by the Predent

of the United States, I the Secretary of the Army, hereby direct that the following

policies shall govern officers of all Panama Canal Commission and DC ) Agencies in

all dealings with Panama Area federal employees and organizations representing

such employees.


"Board" Panama Area Labor '- relations Board

"PCAA" Panama Canal Area agencies which consist of vdhit is prest


I!* *- m ( f0't
O -" t' o! fy ". .' s b of Iot i 'o s t-

t m I,'> -r a n-Itvi lline t . ..A ,

e*ass 1s dtait pr omp i pri eiu '* sroiy, i r$ .

as - redil I i 0n 1r o se rity, ( i~rItr a 1 n9j out use f military

person nel, ti o n aW appeals, -- ; e, pa or .- .. relA o

ship' moth oris of ad9ustn9 qr es nr i al tru ane arb* at. r1

a .-'" V of leave, u on securiIt, trave (i) *er" .'-, ar I su. other rn tters as

may beo r e r t? by p prX r ecit rego taJd rit uart io t ris .'..:'ce.ment

i. '.tye(s (I f... An .; ,,' n assis ts *I a ts ina

dential capacity to persons hu formulate ar ,-I .... '- ,. .; pol ciers in

the f el of labor relao (s.

o Suti or . nsultatn" TIe mutual obi hu ti of im A and lab,-mr

orsgansztions repre ser I o ees io the AA o (opractce Corhlly xr ,

wrat n9 for the purpose of present;' or bty cntn9 v~rars or adus ox f interta


,i A calendar ic f

-, ... A civilan employee Of an ag~ency or r, n- appropridte'd fund

mnstrum'ental ty rea ve _r, ui sc r tre purpose o x l' re, .uc on, a suters

vay be spt J antby as providedt n ia e or to this 'icen

c pioyee to ,'rons o hrlati onhip hitoe II AA arI its in-

oyees unid f lar orran.zatI0 or, hen u Ad n th' q ner al s, tie reta sh'p

boneeen mar.pre',; employees or thel I AAe or c raomni

rployee r. ; r a n' A c .-e of an a eny ortel o ropria fme;

vis rceprit unit a r as provided thin i Pof h.

"Lxclusive Peprcs(,ntai! ive" -I he l.bor orq-ini/<-t ion w ich ti ,

certified herein by the Pan-im Area I ahor r elati 'I ons I d the rn jU ty

representative of thle employ rs in an appropriate, unit

"fact Finding" -d I ri fi.,'t io o(f tU( major iss sin ao parti lhIr d i"-

pultc, review of the position of th' par ties, ld thf vesti gtion ard repo tin

of the facts by one or more irnpa rti I flc t-fid rs ard the ndki of r(I I-d -

tions for settlement.

r ",r ar1ce'' Merris a- y co plint )y, an mIloy or fy i I Iibor- or' ii-

zation concerning any aspect of the e ployrent relti hi vith tth PCAA nIlu-

ding any matters which are subject to fral adm rist rativ ir'ev t f-e (f td

PCAA, as well as any cobplaint y ran ;p o (l; rfqi ;.io r, ar thr. f('A\

concerning the effect, interpretation v' nation m sir trpr tatio or- clair' of

breach of a collective bargaining agreement an d any c laimed viola to, misinter-

pretation, or misapplication of any law, rule, or regcl atio governor oditio s

of employment.

"Labor Organization" A lawful origan ztion in which employees partici-

pate and which exists for the purpose, in vhole or in part, of de#lr i with aqpcir's

concerning grievances, personnel policies and Ipractices, or oth-r rma tters affectirg

the working cnrdtions of their employees; but does not include an or.r i/atin

which consists of managerrmnt officials or supervisors, cxc 'pt as proi d-d in c-

tion 17 of this Policy.

'"ar.'qgr,', rt Official" An empoyee having auth ority to mrAke, or to infltu-

ence effectively the making of, policy necessary to the agency or activity with res-

pect to procedures or programs.

"Neg-tiations" Performance by duly authorized represrna t rs of manage-

ment and duly authorized representatives of an exclusive representative of ti1ir

mutual obligation to meet at reasonable times and to conlfer in good faith ,ith respect

to the terms and conditions of employment xrith a vie.w to, -ds reachi cc Vle t ie

bargaining agreement, including the continuing duty to so meet ad confer and sek

agreement as to the application of any such agreement to chAged circ stances.

"Professional Employee" a. Any employe- engaged in the perforradr o of

work (I) requiring knowledge of an advanced type in a field of since or i.rC.

customarily acquired by a prolonged co rse of specialized intellectual ir -,tr"( liif

and study in an institution of higher learning or a hospital, as disti uH lhoed fro'

knowledge acquired by a general academic ed auction, or from an pprrtices ip, or

f r

fnr ~ ~ rfj't <;f t Vt l *i*

11 p A

V ,~ ~

I ~V

V r

~ V

~ I ~ V

fl A P V V r q~ dl

V'~ I I V.~ V V V ,.



I ~


V ~, V ~



r V

( ~. ~I


* A~ ~ or p n z,~

b i'~ a of ~t V r~ A ~ r ~ r V ~ V

1*' 4.


V {~-I ~ve

V ~ ~Ld

V p a ~ > V t

V I~ ~uA end,

F) V rrp r<~~r~ Ar1 ur~ I ,r~ V d',4r A~ r VI

~-V re~ or r~iri ~ ~a1~

effectively recommend such abioo, if the exercise of the aulhcVrit is not merely

r jtVn e or clerical in nature, hut requires the cons stent exercit o f renert

1 "'I,"', except that, ith respect to any unit as proved( d in on or which

;CTI' 2. 2 E WRI S

a [ Ea
a. Each emp oyee th e *" ', freelIy,a ith falr frIr o raty rre-

prisal, to form, jo, a assist a aororg( n Hation o to (eri frm suh

activ, each employeeshiIl rf Oil I .' V (

as otherwise expressly provided in this policy, the riuh! to assist a labor orpni ,a-

tion externs to participa.ionr it rhe a ra jement of th t- orga!?at ion d aVin (or

the ation in the capacity of an itror r ~epresenta ive irri prese -

tation o ts views to officials of Ihe , ies, thr Cci *res or oth r rtppr

r P ~ r



cr~, or V


authority. Fhe hea(d of each agecy sill t. e th action require d to. llur tl -

ployees in the agency are a pprised of thkir rijg u er t i ;, tiit it i,)

interference, restraint, coercion, or d) ,ri i t i iort1 n I' t I 1.t I rI.

to ei courage or dior our agn i,. ber h ip.

b. Paragraph a of thi ,. ertionr dols not authorij/e parti( inp tiori it (e

management of a labororrgnin,,ation or acitnr as a a i.prcf rint;itivt of si h i n ihi/ -

tion by a snitpervisor, except as pr-on id. id %<:cti)ri 17 of '. Pohi y, I), by at fnmp-

loye ,vthenr the -particip( itiorn or activity w, ldI r;lt i nn ;co flirt iv cf ; :fr> t (fvlflict

of interest or, otherwise be incompatihiff ,.it i law or vith tIe o I dl is of th(



It is the right of the PCAA to d ter inf the rnisr of <(h ;- do.irt-

merits, to set standards of services to be of[ed, ad to ex rcise control over it

organization and operations. It is also the. right of the PrCAA to dir ct its eri ,

to take disciplinary action for proper cause(; [ ,'_ I o everr, tIat if tht- exercise

of such rights causes a discontinuance or- curtail e t f j it shIId e the1 oh -

tion of the PCAA to ensure that aIll emplo es affected thereby re nr tctd Ijit

all loss resulting therefrom; andL providLed, trit the exercise oF s i ts sall not

preclude employees or their representatives from baraIininr ofJCr rai'-in pS

about the practical impact that decisions oi the aboe malters have on t. rms af ( Ion-

ditions of employment.

The PCAA shall not make or apply rules or regulations v.hic !re in conflict

with any agreement negotiated under this Policy.


a. Each labor organization desiring qualification to represent PCAA emplo-

yees shall file with the Board provided in Section 5, a statement co1t inin the fo lowing

(1) the name and address of the organization

(2) charter or constitution and by-laws

(3) the names and titles of its officers

(4) the names of any other persons authorized to represent the


(5) a statement that membership in such orga:iration is ot c' ed

because of race, creed, color, sex, age, national origin, policitcal affiliationr, rari-

tal status, or ,n,.J apping condition.

b. Any labor organization riot subject to the regl!aition of thc Lat)or

Management Reporting and Disclosure Act of 1 as' amended ( U Section '

41-698 0 79 3


(1) (o 4l[mO f*tQ y .1 ''.i.

,r prey sin S *S *O . electo s to he ;,-, t to *' ',.* ;

,' ''' ,, i' c *r ,',.' ,.- ** r securing t i ; # of *...i .t,, i r

(. tor the emclusio o "ice 1n 1org zaturan of

odb prevented rom g office fay ph rovision+s of .' 'ion if

!he organization were suabject to the reciulation of sucLh statute.
( for A. 'ion of of fia ioal interests n

part of or ganiz alien officers a r- *.. ; ,,- which conflict with their duisto h
prganiratton A its members; -

(4) fOr the maintenance of fiscal irntecirity arJthe conducKt o the

0" rs of the organiatio, inc' '." provisions nor accounting financial co-troi s

andt regular financial reports or summaries to e made .1.,.1'..q' to meufers.

c. The official designated by the r',,, d shall register e bo r,-;. ;.'.-

tion which complies wfth the requirements of this section and shall maintat n a lst of
l qualified o, K. A! nations.

d. ,-ililied labor organi/ations shall promptly notify the i" ,'-d of r, ,
at id~t -y ar M I th~ memere ar

changes in the information required in . sion a or b of this section which octrur

subsequent to the time of original filing. by .-; t e its that a previous sly qualified .br.i -

an(zation no rloger copties may re irled weth the on ,rd which shati invest a.l',-t o

determine whether or not the involved organiation shal continue to be d o ,.

ION 5. PANAMA CANA .**'.* A LA IF' -MA;.:, i "W "T ,. AT ;I'...

a. There is hereby estabNished the ,. , Canal Area Labor-ManaQrement
S'ions d which shall be autonomous and whch shall consist of three members,
whose terms shall be three years, to f -"' the functions hereinafter set fo rth. fa h
member shall hold '*. untdi his successor is appointed. If a vacancy o curs during a
term, the appointee to said vacancy shall hold office for the remain der of the term ar
unti his successor is appointed.
,A P '. days after this policy bem o s effective, onee m mber shall be
atppoirt d In the rrcommennat ion of te AA and one shit bl ippomnted (> thli nomuin -
tion of the labor .* .: r nations representing employees of the "AA. 1i h membtiri thus
selected shall 'r select ith in seven days an imnpartial third member whI i be
apd rnted and designated as , rman. In the event the two members cannot agree, a
listin of persons equal l.. and wilting to serve shall be obtained frnom the American
Arbitration Association and the ,irman shall be obtained from such lists. The *...
man in tially appointed shall serve for a I 1' three year term. '. of the Iwr initial
members shall serve for a one year term and one shall serve for a ltw year term. These
terms shall be determined by lot. Vacancis on the *. inc ', thosi for new term
shall be filed in he same manner as the or ighal acooin tents.
'. _' ,'ifications of Members: The members of the '' ,i'" shall have experience
in the failed of employee relations and srall possess tIe impartiality necessary to protect
the interests of the i AA and its employees.

c. Members of the Board may be removed by the Secretary of the

Army only upon notice and hearing, and only for nornfcasdrnce, neglect of

duty, or malfeasance in office.

d. All members shall be eligible' for ro-[ppointmrnrt for e 0 ,o i r a

term, but no person shall serve more than two t rms.

e. Organization a d rrmeetings of thu Board. The .. d shall avj te

following duties and powers:

(1) to determine and approve appropriate, employee represntat on


(2) to arrange for and supervise the deter minatio of excsiv

representatives for appropriate units by means of el('ctiron s. I he results or suc

elections shall be certified by the Board,

(3) to decide matters involving certification or decertification of

labor organizations,

(4) to investigate, consider, and resolve charges of tunfar labor

practices and violations of standards of conduct and to take such action as the Board

deems necessary to effectuate this Policy, including but not limited to, the is uanrce

of orders to reinstate, make whole, or other affirmative action and/or to cease ard


(5) to establish and maintain an adequate list of impr rtia mr, ators

and fact-finders and to appoint same as provided for in Section 9 of this Policy,

(6) to act upon requests for mediation, fact-finding, or arbitration

of disputes as provided in Section 9 of this Policy,

(7) to conduct investigations, hear testimony, and take evidne

under oath at hearings on any matter subject to its jurisdiction,

(8) to consider and decide issues relating to righ-t;, ncri iesms

and duties of a labor c '.r i'r,ization in the event of a merger, amalgam ation, or transfer

of jurisdiction between two or more labor organization or agencies,

(9) to delegate to one or more : oard members, e ployees o agns

the powers or duties it deems proper,

(10) to make recommendations, co r'niq any tneces r or dri r *r le

revisions in this Policy to the Secretary of the Army,

(11) to take such other actions as the Pird deems ree-'sary to ef-

fectuate this Policy.

f. The Board is authorized, following notice and hearin to adot a--n-

able rules and procedures no! inconsistent oith the pro isions, of thi ,i ', or P

other applicable statutory provisions and federal reg nations in sJc ot er f A

regulations as hb vr- not hbten Pcoj"*r hv Y .tI4 't i

nece ,s s in %e ,tor .w4i' 1I dr i I' Iy i I I I h,t :r

of~~; If thisC f5 41oo kf seNe
h* I "'a;i r<'. .. c **... iS auh rz d o lwn.o ie h a i 9 oa tr a o

tbe roarda proe$r 1r nor e wh e prtfi ?clCnf h iyr y
other rpprtcaboe sttor cronps oms arlrria| edr rerr ,tir y of hooks pa oter r*-

me es "i r in th J .... te of it du ies r er .r ithi P~lt r it .d shal! rr-

oI nij; t he, ( '.i . ro iCe ell.1 i.- li(t I v pportie '. as it do -r

of ruh se pro of rv

1',, i h s aul horWie, f4 iollina iotce t r ai.l tI t r e n o" p reor -

bable rules a -d procedure not incosistet ft the F ,pro' n s of ,b a i h anyr
other appoitable st atutory prsovshons proI fede realr n9 ns tran sci pitser for

regular ,os a, a oendot bedn supersede the aCopies oa f this Plc aaad whlic are

neparties in the 'C'ost of repr of ti t dn.r i P i sl p
point from the rl z'"'.ie el;*i'1 '" lis ts, such supportive as il deems neceV5-

sa ry .

i. TIh r AA shall prov ide apropr anle osfaice fa iiie, r ,fer nce prhiod-

icals b oand equipment, aid suptalens f The f', o and luco 'o'g as the i

oi appoint. e1 er AA also ..., shall provide reaordin and trarnm rip in services for

all public F* ', ;'.* conduct ted by the r *d. Copies s all b Ie made cva la~hie to the

shall be paid in equal bi-weekly ins'tallmnents. The I'1 AA adltabor or pani/atior

nomninated mermbers of the ,.* r-d shall receive an hororarium of $ '* '.* I1 for each

,, i, ..... ed in the work of the Board. All members of the Boar d shall be reimbursed

for expenses inc-, 1I; I those reasonable incurred in travelin 9 to an I from and attend-

',.. me.", r arid functions of the Board.

k. IThe *'d shall make such I',Ies inci .I experditures for per-

sonal services, rental, law books, oks of reference, r. ils, furniture, equip-

nment, and supplies as , be r-cessary ir exercising its authority adoI powers in

carr, out its duties nd repon iitte. All such ' rs of th .-d shall

be allowed and paid by AA upon the preserntation of itemized vo uchr r therefore

Approved< by the I rman.


I. The Board shall ainta r id k p open durJii rI ( o l bI 'II

hours an office for- the trant-iction of its lJJ',in:,s t I t, i iat i f a ,

papers shall be ket. T-he B rold mry hid sc ssions and tco 1'.t lItr irC, i j! ' a y

place within the area.

m. The Bo;rd sa have a seal for aut-cticotn of its orders jnr pr-o-

cecdings and it s!all bI a y ntcd .

n. Any hearing held or" orJl aro'Jmnent a by t ,' rd sa bc op-n

to the publc, buJt the del 'ato s of the 'ird in u r reedr( 1 o t ,

be closed. All draft orders developed i prpnratio for or pel r" ry to !

issuance of a final v.rittcn order shd b arxe pt fro' ulic d re d r t

freedom of information n act.


a. The determination of an aporpiate uit i% 1 eade 1y tIe oard on

a case to case basis. The Board shal apply the foli o', in f tos dte -in

the appropriateness of representational units:

(I) The community of interest of mpl yees

(2) The lawful unit grouping th-at the errpoyees and the mpc;r

have followed in past bargain ing over a substantial period.

(3) The desires of the employees.

(4) The history of cployee representaton in the ut rong

other employees of the : AA and in similar eipoymet.

(5) The operational requjirements of the PCAA.

b. A unit shall not be established solely on the b sis of tie extent to v.hci

employees in the proposed unit have organized, nor shal a nit be established if it


(I) any management official or supervisor except ars provided i-

Section 17 of this Policy;

(2) an employee engaged in persnne work in ot`er tnan a purely

clerical capacity;

(3) both professional and nonprofssiora e mp' oyee

majority of the professional employees vote for i clusio i te urt;

(4) an employee n in ad r ister te prov i


(5) a confidential employee;

(6) any employee primarily engaged in i ?!t ie or a.

functions relating to the work of individ al employed by an a-nry ,,oe


1 Pl "'er~ I>* t :e* f| *! b ll r.* ,if 114 1 44 *<

)4 .v4~ All lt. tthn s a d i 4 t' 1) 4 r e id *i i
to ioe"h ll IN j pro d< (h b I pP r tI rlwi 'r jhI I nbor 4rt.c /a it*i he or C O

w 1he ( o reiprf(r t huim or her (fraom 1 4C (i fP tW1 baIfw or "' ".

I le(tio4 ri ay h'e h tod lo ce Prrrie t 4IHeticlir-

rc emP rntativ e enptoyees in aO unit;

a labor ; 'zaition s(wuld replace a:>4t. r l'-r r'ir

as th+e exc sit ve representative;

(3) a labor organati should cease to be the ex uive represen-
tative .

d. Petitions and elections. A petition ,. ,, be filed:

(I) ,, a qua(,1 .: labor organization that can demrIonstrate that

thirty pe rcent (m0 ) of the rK -: ', *r-:. in an .', ;, rate unit has .k;r authoriza-

tion cards, or are dues I '`i r'i members of that labor organization; or

(I by an agency cert) 'nq that one or more qualified labor or-

anizations meeting the requirements of (I) above, has presented to it a claim to be

re r''zed as the exclusive r r I rr, l ive in an appropriate unit; or

*'- by0 'I ri percent (30%) of the Pr.I ,,A-,n in an exclusive

unit C", g the exclusive representative is no I-,r, r the representative of the

mai .'' of employees in their unit.

'1 a petition has been filed as set forth above, .il qu I lifted labo r I* i.-

tations known to have members or known to be seekr.'] r. i.,,irij; n in the unit shall

be notified d by the 1', ,r ,*, in writ in q, of the proposal the description of the unit, 1t,

name of each labor organizations having or seeking exclusive r ., _ill ..rn ,, and ad-

vised that \'-, have ten calendar rdi,, after the date of the notice in which to r rPIN-

ter with the Board any views as to the proposed unit. EIach such 0 ization shall

be further advised that, if it wishes to represent the employees in the same unit, it

must demonstrate tha t it has he support of at least ten percent (1"1 of the total

number of employees evidenced by signed authorization cards, or as dues i. ir;* '

members in said unit, or thirty percent 'i of the total number of * ., has

* .;,, authorized cards, or are dues (* '. 9 rrbers in a,, smaller unit included

in said unit. ', th samew date of the notices require d by the paragra ph above,0

notice of the petition shill be posted on apro rit hf bulletin board, i! t0 -it ,

together ,with a statement of the time lim it (ten calredar d y after te l ate f

posting) within which views, or other s cific f nit rropos by labtr r ri / i

must be submitted to the head of the oar d.

The Board shall coidu( t su(_h inq iri(s arnd id .'ti o r bol s 11

hearings as it shall deem n cessary in order to decide the qiestio, rai id by the

petition or petitions. The Board's determn atior ay he d upon- tae evidem

adduced in such inquiries, investtigatqoi s, or hearings <. i t' q.t.

make or hold, or upon the results of a secr t ballot election as it Id direct aind


e. List of Names. Upon the direction of an election by the Brard, th

agency shall furnish each labor organ ization approved for in clusion on the balot,

a list of the names and departments of employees in the repre senatio nit. Te

list shall be furnished a reasonable time in advance of the election arid in no e

later than seven days after the direction of an election.

f. Elections. In any election for ex(clusive recognition the labor orgar-

zation receiving a majority of the valid votes cast shall be certified as the ) exclsive

representative of all employees in the voting unit. '. no choice on the ballot

including that of "no union" receives a majority, there shall be a run-off between

the two high choices. The Board shall certify the results of the election.

g. Duration of Certification. ' a labor organization has been certified

as the majority representative of an appropriate unit, certification shall remain in

effect for one year from the date thereof, and thereafter until the organization is

decertified pursuant to subsection d(3) of this section.

h. Effect of Certification. When a labor organization has been certified as

the exclusive repr e sentative of employees in an appropriate unit, it shall be entit ed

to represent and bargain collectively '. all employees in the unit and it shall be

responsible for representing the interests of all such employees without sc riin-j-

tion and without regard to labor organization membership. Such labor or izat on

shall have the right to participate in the formulation implementation, l rnd o .ia-

tion of personnel policies and practices and all other matters afectin; th coi tion

of employment of employees in the unit. The agency and such labor orgnitio,

through appropriate officials and representatives, shall meet at !reahonal times and

places for purposes of negotiating a written collective-bargaining agreement. 1 he

*.Ifrx .ur the l['t{ftf o rt1,i$i i /*(cii**h l
Ar i ? K I a I A Ir I q) I I

* IS, I ty I

t V a ~ IA I 11 I ti

~ It,

A 't ~ I I

d ty Ii d a ~t

I 1111) fl C VI I at

I'M UJiii

I I hA** re -

'N i11 pt

*t rc.' a aio

TN T Tit

lu if of thita IA I~n a (:* t If i (*T>.l (y e (

l'.. l inc h ''< lh< rrnii l (,i t 11.i A'i


I K~ a ~ I


sentatives prepared t

lecti,.e ba gain iny;

o b represented at he negotiate ons

> a' wo iate cm mailers it'

a at ri/' ;ed O eo e-

'' to me0t at rt asonabe times a connient places as frequently

as .. be necessary, l Io avoid unnecessary delays;

(4) to fr ish to the other party, upon request, a normally

maintained in the i course of business, reasonably available necessary

for full and proper ',scusson, under' ,' ; and ,...'iatbor of subI e ts wi thin

te scope of oliectv1e d i n'. ing; ad,

: to ate a grievance procedure to be uI' for the settle-

ment of '"s between employer and. i *., .. and groups of emploiy es involving

the interpretation or application of a collective bargaining agreement whih shall

'ave as its terminal step a final and bin g '. tiOn by, an impartial neutral

utuaally selected the part es.

(6) If an agreement s reached to execute, upon request, a written

document embodying the agreed terms and to take such steps as neces' ry to implement

the agreement; provided, however, recognition of any labor organi/atio In a whatever

form accorded and any grievance procedure provided ptursuant to above shall not

preclude any employee I u.r ''.. of his membership or non-merbersh p in ,p ,

habor organization from bringing ', q ... ares to the attention of appropriate ,.., ,

Officials ori 'ion that the -* ... *'rnt of such ,' es is not inconsistent with

a collective bar ; ,;' ing ... .,'"..',' then in effect andl that the a i ', :.. representa-

tive shall he given the opportunity to be present and to present its view ad provided

T 1. '? 7.


further employees r, -,, be required to elect between contractui qrie 'vir: r

dure and Civil Service or oth--t i.ncy procd s.

(7) Upon re luest of either party, the for u tio ,f B**<*! *

ground rules and any stc h u J o rst-rir, r,. I led h the p;rti m; he n

orated in a separate vnrirtn q. reen t; and,

(8) to fur- is' to the ol r party, upon re e t,. t .r'

maintained in the regular cor of bus ,, ren ,l)ly aa iabe ,1 ne

for full'and proper discussion undo rsti n'dii'q ana anjd tr.rt o ( ts7

grievances in the administration or applic nation of a collective bo'rnir" ar

ment; provided however this shalil not requ rfc csclo surc of mntcr-, [.-oi

from disclosure by "right to privacy" laws of the United Slatcs, a ,d the '/

regulation may provide procedures for the acceptance (f ,aivers or lim ited

from employees authorizing furnish of any such information.

NA by

V a i ve r


a. Negotiations:

(1) The scope of good faith negotiations b etveen rrana-enrt

representatives and representatives of labor organizations includIed the execution

of the budget; formulation and application of personnel regulations and irnitition of

revision of existing personnr el regulations and condition s of cmpoy r n' -nt.

(2) Negotiation shall not be required on any matter pre-emptd

or specifically provided for by federal law nor shall negotiation be required on the

exercise of Employee Rights as defined in Section 2 of this Policy.

(3) Requests for negotiations by exclusive representative n

matters requiring major budgetary financing shall be submitted to tohe management

representative in time for ade quate discussion, consideration a, action in con c-

tion with the budget.

(4) The PCAA will make available to labor org'nizat on such

information pertaining to employment relation-s as is contained in the p blic records

of the PCAA subject to the limitations and conditions set forth elserw ere in a;ic-

able law of the United States.

A) Such information shall be made avail b curi'

regular working hours in accordance with the PCAA rules a p rocdurs.

B) Information which shall be made iv ilale to

labor organizations includes regularly published data covering ,subjects under di-

cussio n.

b. Consultation :

(I) The scope of consultation between management repreet> t tiv e


tt I rIre t ai sf a ih li I y c iite t 'j O tati 1 in- r t t.oy .

1. t s-v r i Jti.j< 4"1 '* V sh il IN'~ I~l Ir. )Hiv c *r u ti i<'

Cro Ao e ec >(br Ct t Ii' ri ue ob prx", hr A* -iw a *!' r t
i ',.... |s for onsur latio sh ill t '. I. to the r1 .. I!. ., ,

St esentative of the aCAA h, vin( jur1 I rion ov It ( I ta" r to be ,' i.

Advwi Notice ot f ; ... 1 1 r . i .1 i

t1 ,. A .A shall ,: .. rvasoaitie artvoe writt n nott e to each

Qu l'i1talxor ,. i .r **ion .0'. n 1c of any rute rp
"' tly elatii9 to matters within the cope of 1 vprfsertitit prct os0J d to yr P'I-

ccpted, amer led or repealed and shall 9ive such ..* ..!','I ,. organ i/ation the opp'or-

unty to meet -ith the AA or his representat ive to iif, '. s' u h r fle or re-pjlation.

SCTI 1r. 9. .' A '

a. At least r i , p ior to the expiration date of any collective

9I' i 1' 9 .*iiirr-*I'it" or i0r i, i ,l days after coimmencre ent of nIe ot iaion of an

iiia I agreeme nt, the parties shall not ify the I ir he statuof f .. t of ','i, ,s.

The ir d shall dII .';qn a mediator kpon request of either I, I, or upon its own

mot ion.

b. If upon expiration of an existing negotiated agree ment, or thirty I'

days following cer; i'ic action or r* .,' 'rllionof an exclusive representative, an im-

pase exists b between the employer and the exclusive representative, the parties may

jointly pettiion the Board to initiate fact-i,' i'5'*i; however, the parties must ha ve

riade a ,'j ir .ini effort to resolve the differences themselves. The *: ird has the

authority to return the issue to the parties.

(I) i'',, ... three (3) ,', of receipt of rurh petition or the i

independent initiation, the Board shall submit to the parties a list cf severe qualified,

disinterested persons obtain ed from the I i a' i ion and Con i iat ion .

from which list each party shall alternate in .', '..i three names, and the rema in-

in person shaiti be ,. ; I'tetd "fact findr." This process shill be completed within,

Iive (5) days of receipt of the list. 1 he par ties shall notify the i'd o0 f the desi qnat

t ed fae I finder.

c 1 he fac fr finder shall .r, ,1 ,ely .1 ,Id. i, dati jr pl ieI of 1 al I; .

l ie fact finder may administer oaths and sh~ill .0l..r', all parti:t s ., '1 opportunity to


examine anid cross-ex.jmine all witness,

the issue in dis putc. Upon compl(ti

days from the appointmert the fic t finrh

recommencndiations for ros i-tion of th, di

1 ii'l to pr ae+ent any

t tli<> h<:ri ii j ., ut j ,
0 Io l ,1 v, :Ii M in
'01m ol ^'w -i Vill .erv-
I til" I, Jt all tr ,

evi(+lqrcnf p +r t i'"i>n; (<,
+V lal rc t l < t+ t (r r of (,fv a,leji

S x err'i fir irj' r tl')f

PCAA, the exclusive representative, arI t ft I

report public if the di,[putt is >it rei oleJ f,,<,

is submitted to the parties, If the -put i n

days after the repurt is subl)'i itd( to th:e itr

tion it considers necessary to resolve h irnm

Board or adoption of the fact fin f r's reo t.

binding on the parties.

d. The concerned agency and thp ex

only parties to fact-finding pro ..

e. The cost of mediation and fact--f

'The H(oard may i kr ti

Ofir ,~,t if tJt) dlttt

I tiit I' t

P 1 1 ill I I- t

t Jr1 I u'

P tt r U, II

elusive refpr e tati e +,r ll be thi

the Board.

f. Nothing in this section shall be construed to prohibit the fact fi Ydr

from endeavoring to mediate the dispute.

g. Nothing in this section shall be construed to prohibit t te parties from

voluntarily agreeing to submit any or all of the issues in dispute to fi al and bind-

ing arbitration, and if such agreement is reached said arbitration shall I srprsede

the fact-find;r;, procedures set forth in this section. An agreemnr t t- arbi trat,

and the award issued in accordance with such agreement shall be enforc'br in the

same manner as is a contract. The cost of such interest arbitration shall beo shared

by the parties.

h. Except upon written agreement to the contrary, Vhen the parties reach

an impasse, one party may not change a personnel! policy, practice or wo,'kin' con-

dition without first providing the other party vnith sufficient notice of its intent so

that the other party may *invoke these impasse procedures. If these pr -ocdres are

not invoked, however, the parties must r .- to established tpoli -ies, practice s

and working conditions to the masxirnmum extent possible. In the absc of an over-

riding exigency, the status quo will be matintained nrtil such tine a, t ipase

procedures are completed.


a. An agreement betweer n a gency and a li bor rociiniattion s1 ll rr i ", i

a procedure, applicable only to the unit, for the co srieratio cr o ie- s, ;"

culminating in final and binding arbitration, except as provided cis rI i tr o ;

Ow f
Sth i- cp^

-i + d +;+++S-


Sv. o* i l owr vi tP, A 't-v I Ia i t

bfri. t .'f1 t, *c, e'. (it ;*, >'* I hr< a n !- e o '**"> on o! havin mailer a (or wbi< theftr aPD
W, I t* t IV I *u*.ie a r A0 1aj

Oy to I. r*th l or 'r' > lr

O^ ,"t. t ref *otia;tedp< cedur s' h !f pf ovif f'j oti- arlnBip.tra, O ." .. orS

qr;.ntp ;c'* f:'is' be''" ir eked Or" y [.)2 ti te '1 agency or fahe eirc (t* siv rhep e'iqi ticy h.|i
d.'- >I -.t to a 4 t *r e i' ,orr f. r tI o.* *a r arvjec' o h

oad redrf sa e rievanoee is secinconsisternt withi Wn
t'rI t- of *or Iii f: a thf *'n I tj* ri rf| f '"*! tdt VC (">'T lw ft

t' T I 1t. .'-.t ,* t ,A "r A ... ',T.
b. II rrl~i r tI' *l rf I *. rt'1S *t"'pl i is tn' ap e l r

ior., :h t .j co 'e lith ah labgor. i icvainc as h exclusive rer esentalu ive o''
e'hployres a t(Tr '.haul ret toi te approval oth heaadt r, a laeny or ap op ral

proessg~ed byx' ihm Anagreemete pshaedure oalpesait.proveceduhre.ily' his eleto
date oe itide prior t s o* orms to aprirtrati .

c. A rear d prct< edue l oxalt proi r K arb itratio o f An ...c ...

A' htras tot been aiproed onl, b ted anc or thite ex clsive rprl ent dative.

d. -. Astionb as to hetthr #ornth ra apr*oic' onir a re ag jy etod ae

rievae prn o r e in (ar t esuing agrremnt, or o isn sje lo a e ir itr y, unrv1l

nI agreeme t a mAoy b s b itt So arbtritin an a j qes i n.

An .o : r r ath a labor e iitlon as te e exclusive repreentativ o

e p lo es in a r nt "' s to t ". ap v of [he ed' of ".e aecy or an offi

al of its ~e(ec uto if it conforms to apptical laws t the '" ,er ;i pub shedl

dg-n poice and * *ions (unles the ~ hi: **( ar (s q Ie aexpion lr> a pol-

ic or reg~ultit;n) an d reguaion o f other appropr *ate authorities. An.ii r *

w ichs not bee aprovedorr' '***oved~ ihn thirty fro 'rthe date of

~ its rNcto shl go int efec without Jt Ithe requred*n approval of e ag(nyid' 4
C Tr? ** a I I Ia

sfid beI bidn on ther pale sujet teprvsin of law he' icy, rth
regulationson of aprpit uhrte ulsd tea- ~ c

*h ; IO 12. !7 I i r C i. I L -\ l -A ; .

p* o 'hit it ha I he 1 r u Ire free(.lom when it is vujc to I r re uiretmen ts

.. ; .'l;* *h *; m * .r .,* ** .t ; i o *i I or 'n-rn t *' i N' ri i. *l i*i ^ r


fednralionr of labor org rni/atnri,' witll %luki 41 it lIt tottij kl V or 6A %0 0 i t j (*i iiI

pates, containing exprlicit "Ai( dA'tailc'd proviion' r to %,Jii(0i it IbJ), i b' ( ol Int (o -

(I) the r(naint'n1r)( C: of d(r r.t K, In oc dl lr'(s dw [1 ti( ., ir

eluding provisions for periodic election t b o
guards and provisions (d finirn ) arnd sc( urinr tIhe riqht o(if i ivi(d l ri nir.n r' to i'-

ticipation in the affairs of the or(jnr i/at ion, to fair and uqoi l tr tin(r u dt(en t0'ie

governing rules of tie orgiiiii/
'> (2) the excln s'iut fri 'n offi([ in tCI 01 i n i3 / i oi oIr ,'1ff [it'(!

with any organization wh ici a dvocat(s tio ov'orthrov of Iw ( on( t itut iii il force () f

r_,i., r nment in the United Stat ., and persons identified titl corrupt in flut n c-.;

(3) thQ pr'ou i i t ion of business orT fin ,i it iitr onn tl ('it

of organization officers arid agents whih conflict with their duty to the organization

and its members; and,

(4) the maintcinance of fiscal integrity in the condJ t of the a01 "s

of the organization, including provision for accounting onid finurmcii! ( tntrol, anr

regular financial reports or summaries to b, made tv ila e t .- membr,.

b. Notwithstanding the fact that a labor or qanization has adopted or sFt( -

sc ri 1 to standards of conduct as provided in paragraph of this sector, the

organization is required to furnish evidence of its freedom from corrupt inf tiornces

or influences opposed to basic democratic principles ,'hen there is reasonable cau

to believe that--

(I) the organization has been suspended or (xpelIed froim or i s-

ject to other sanction by a parent labor organization or federation of organ izationsi

with which it had been affiliated because it has demonstrated ar, unvil in gne or in-

ability to comply with governing requirements comparable in purpo-se to those req uired

by paragraph a of this section; or

(2) the organization is in fact subject to influences, that v oulc cpre-

clude recognition under this policy.

c. A labor organization which has, or seeks recog'nition as a rcprmee's t'ive,

of employees under this Policy shall file financial and other reports, provide for

bonding of officials and employees of the orqani nation, and i. mpr t iitl trustee iip

and election standards.

d. The Board shall prescribe the regulations needed to effeit mtte tlis

section. These regulations shall conform i rally to the principles, appli td t ko url-

ions in the Federal sector. Complaints of violations of this section shall be filed

with the Board.


C 1 I I )1 I I

in th - or !d '. I fr

7 r wi l altu e
a. O( AA shil, on t. 1t ol hye t ty ai (< iriato n a m 1Q|oee

-cJJit as f id jrn e &t or cost tof t d r oraft 14 or e uy-e

to I sf ll rem t sap d e t- I f- ar '1 ,,d tb> s id ;itt-tn ., o a ) I.

itih a ne
and retited s r ach pro i c -i that if an e lusive r- p esentat ose rs bee desi -

sTh aisignmel I o r r(a e rocable For a period of at reast of yar or the terSFsirIT-.

on dn e o i ie app Viable collective i, m ; I, hi 'hever occurs 'ooner.

b. ,' on_ i nthis 'icy shall preclude a laonr r Inatn that is theI

e a lusie .: ,representative and which does not hfve a Union sho .:, -.,'t

from cnt, : .,e into an agreement aith ite cosAA ohereby employees who arc- not mem-

bers of a labor f res d's iqation shall be required to contribute to the cost of the epre-

sentingof all ,.,c ... in the unit by *. I r ni sUchoIg t,',':atin aqual t ,d.:',e percent

'"-' of the dues fees and assessments that a member of such o' .j i iiatbon is rc irrrd

to pJy,

*CTI,. 15. "-'- '' FACILITIES

r iI for a t exclusive recognition hase not been ,id ,', activity facilities shall

bs cade assigable for" the use of labor ,, iat ions o here p yraticablea tepon reqt rest

on an io patie ap an quotable ocasivs for the postIni .j not es membership r'....

outside *r wor"'iin hours, and the like. peludr a labor orgn ', ization holds the o-

berse o, a ltaon, th cont rol of that use r iFaci it ics shall be I itheted to that ,rer-



a. Agency nrrinaijr nent H~ill not----

(1) in ler-for ( wvith r -" .1 r.oin or c > r c 0ii ritipto(y' f- ill tO'k ''

cise of the rights assured by thiW Policy;

(2) (CICOUrTjt o r' r (JisO I' r c 1 i ip ii l I

by prohibited discrimirnatiorr in rer'd to hirir)i tIrmr o, (le e ion, or othtr I

tions of ernployemrent;

(3) sponsor corntr ol, or ot er i'.*-f ,f'. st I li L O)r or''|.;,n/at r ,

except that an ag ncry rmay furnJh cui tornary irld roultine crvki( r's
der Section 15 of this Policy vhc onsite t ,it thc h .t irtrrett' of t'e aqc .,

its employees, arid the organization, and henr the services ard fcilitis ar t urn-

ished, if requested, on an impartial basis to or ;'rnizations having .q ivalent st tus

(4) discipline or otherwise discr ifmi te ag inst an nploy e l -e

cause the employee has filed a complaint, affidavit, or petition, or has given ainy

information or testimony under this Policy;

(5) refuse to consult or negoti te in good faith with
organization as required by this Policy;

(6) fail or refuse to cooerate in impasse procedures and imnp. e

decisions as required by this Policy;

(7) enforce any rule or regulation which is in confli t witl any

applicable collective bargaining agreement if the agreement was in ffect before

the date the rule or regulation was prescribed; or,

(8) otherwise fail or refuse to comply with any provision of this


b. A labor organization shall not--

(1) restrain or coerce any employee in the exercise by the er 'p-

Ioyee of any right under this Policy;

(2) cause or attempt to cause an agency to d'scritiinidte against

any employee in the exercise by the employee of any right under this Policy;

(3) discriminate against an employee with regards, to the term rs or

conditions of membership in the labor organization on the basis of race, color ,

creed, national origin, sex, age, policitcal affiliation, mriarital status, or handicap-

ping condition;

(4) refuse to consult or negotiate in good faith with an aogenry o',

required by this Policy;


A fad r rrfur1e tj ;r j II 17;l,,l' 4

isii~P r* rcur~ bi ihi f'othe
I 10 1<

C. or th pur p se tf ti cy it l l14 ar irfir r i r l t,: f ir

an eclu ive rcpre wnl tJt tr> deny membtrsh p to employee m hei r;r~ t

ni I y 1 A I l. c r r if(r any rt oo 1 i by

g) 1 I for I

{|) to fet r ef ionabt (H.Cup tirn dl sttiaird unJoi rmy r required

for a dm is'*ion ; or

po eet tie ntr ,' ,' inatory rqui ito orits ok the I If-

tioin's constitution, as a ',iion of ob la riiin g member ship in the r! '1atio' or

S' o teRer dues or other v," r required as a '.'ion1 of

acquiring ad retaining membership or the olle cti-e agreement

Tis subsecti ron does not prec lude .'" lab or organ nation from enforcing

,ipline in accordane ofith procedures under its corostitution or by-laws to the

extent consistent with the provisions of this t'' i, c.

d. The expression of any personal view, argument, opinion, or the making

of any statement which--

(I) pub!lic/es the fact of a representational election and encoJr i.[

employees to exercise their right to vote in such election;

(2) corrects the record with respect to any falsA or ,.1 n:,

statement made by v,', person; or,

(..i informs employees of the Government's policy re ating to

labor-manalrFm ent relation s and representation, shaHl not if the expression cotalins

no threat of reprisal or force or promise of benefit or was not made undIr coercive

conditions, (a) constitute an unfair labor practice under .1.m. prMo ision of this Pol;I .

or, ", constitute i,,, ir. for the setting aside of any election conducted i und er ,

pro visions of this !',..licy.

e. r ., ," .. of unfair labor practices under this section .', be made 1.. an

employee representative, an i,,!, II "'[,1. or a i, ,,,,r of employees, or by a

r" ,, ,;.''. *' repress ntatiwe. i ., h claims Ihall be processed by the i..,d in arcordd

ance with its rules.

f. If, upon a preliminary invest igjition, it is determined by th I mIrd or

its ,,,. that there is not substtanmtiaa evidence .' l. ,ting a prima lfa i, viola tion of

the aptpliable unfair labor practice provi ion/, the d' e',icin


shall di;rnis s the charge, sijbjc(t to the rilit of tOfe lchar gintg party to ) ppeal to tl


g. If the [oa( rd or it, .agetf! l,|r rin I here is ustantial evi hI'ii inr -

catitig a prima face violation, the Boar l or siOf h ag,.nt h ill Iissue and cause to be

served upon the person r h;argoed with tht violations a comrplainrt and noti' of hr:ar ing

before the Board or a member th!'reof, or before a dei Jnatijd agent at a plIace theirein

fixed to be held nrot leias than fourteen (14) clay's after service of a copy of the corp-

aint by the Board. Any cha rgt- riy he ,ahemendedl by the charging party it
prior to the issuance of a complain t based the eton provided the charged party is

not unfairly prejudiced thereby. 'I h,' )ers on upon whom the complairnt is served

shall file an answer to the complaint, the chabrgingJ party and the respondent shall

have the right to appear in person or otherwise and give testimony at the time aind

place fixed in the notice of hearing in the discretion of the member or conducting

the hearing, or the Board, any other person may be allowed to intervene in the

proceeding and to present testimony at any hear ing. The Board shall not Lte bound

by the judicial rules of evidence.

h. The testimony taken by the Board or its member or agent shall be re-

duced to writing and filed with the Board. Thereafter, the Board, upon notice,

may take further testimony or hear argument.

i. No complaint shall be issued based upon any unfair labor practice occur-

ring more than six (6) months prior to the filing of the charge with the Board unleo-s

the person a.iqgrlee.J thereby was prevented from filing the charge by reason of

service in the Armied Forces in which event the six (6) month per iod haill b e compu-

ted from the day of his discharge.

j. If the Board's decision is that the PCAA has engaged irn an unfiar lat'i

practice or has otherwise violated this Policy or 3ny 'ule or implementing regulA tiori

issued thereunder, the Board shall direct the PCAA to take appropriate corrctiv

action. If compliance with the Board's decision is not obtained within the tim'-

fied by the Board, it shall so notify the other party which may then resort to its

legal remedies.

k. If the decision is that a labor org ani/ation or its r! prenit.iti'e hve,

'en.ja.lrd in an unfair labor practice, or have otherwise violated this Polif y or ary

rule or implementing regulation issued hereunder, the Board shh,-ll direct t Ithe offend-

ing party to take appropriate corrective action. If -ompliance with tli .. '.

decision is not obtained within the time specified by the Board, it sh II'.o notify

the parties and shall take appropriate action to enforce it', decisi n.

41-698 0- 79 4

4 Ih.' F o

11" 1- 1 l1 1 1 t*t < ,

* t 14;ti 1 .l! i

i 1ii< 41j st v 01",

n nf ft4r 1~rts

4 4 444

'44. 4 ~4 1

I 14 4 4

44 W4 4 1 I

4< li 4r. .i .tn-t I~~ 4..t, 1 i 4.i(44 c~t 44

F r" f ,il I> (>4li t~- 4441 4 1i< 1

<4lf ii 424 14. 141

b. AfSto t (or t4 *fr" of o to labor 14i 44irn.'.i i f1, I

,*'. r ni 1 1 4 4 F ru o 1o 14 f .l-<1 1lii Po, c full ro>rnr n1 *) I 4 4 i4 14

s 44, 44on, tran1 sfer betlwee1n 44 ip4, , .* ot lI*', 'oil "' );

th e cmplo yee becunit's a member of an extluhsivf' uoil reyri

4' 4r { l)y a *'. b
(4) I .' *"* *' 4 is suspenJded (ir 4xpellf4 from (tite ilb.Jr 4,*

::, as pr ovid

: r y f urge t i o

TV. Y shall 5,

ci *anda rd<

11 sec.r 4ty

I ~ It11'~

4 ~ ~ 14 4<11

44 In,.~I 4 44 IF 4

o i ti I 'nam i ( 'an l

' lic of a1 1 i, r

,s4 t .o ,
of nliotnal ity,

(1) a4y office, b 4ea4 or entity within an ,. v, hich has as

n i4tel'ligenc4, in vo.l gative, or" security work, when the h'eald of

440 certify to II, ;4 a the ,'d after investigation -Al p[ r-

<. 1ado1ted under t4 p ovis 4 'ons of tIeFr Admn isp 4 l i. '4 t 'dtres

ha~tl lae Policy (.ro! be applied in a marnneer consi'nt with

4 4quirements(4 a41 J cor4 id4 ralions;

1 I any 4ff4e', b rea4, or enrvtity wi4thi an a4eney whi4h has as a

4r i !4s4 t 'at i41 e

4r a4 41 t of the c44ond4ct or work cf offc 4 ils or4 empl-

1ees of 4he 44iency for the purpose of en 444s4rin4 hone, sty ar
of t4 r 1 of" ; 1 du4ties wh4n the head of the agency s hall er4 if4y to he I .'*d and the

' ,4d 4f11 4 i44 4 t .1 1ion and 1 I tyi r[4 s4t+i d l 141do, .I4 1 1 4e44 Iis, t i to i 4 11 01 144liie1

of the A 44in44 t It 1 tiv4 .c e1 4 1cl4 Acl, 414t4444r 44 4 1tlI lhe Po1 li y 4. i444t tr 1'- 4pli4

i4 a m4ari4er (ons t w 4 .itlh the 4 1ter44il security of the ', ', 4 1

b. Eit pl oyces enrla<;(d in adniiri ntr i n hh I 'ol i( y sh by a labor orgi inizat ion ,hi;(h al si rcpr( ,rit (h,, (, I r qf p r
Policy, or which is affiIijl(- e d ir .ctly or ill (lidi He< tl \ 'h n r< o .t h i % pI-
regrrt such a 9t op f emplo .

Nothing| in this Policy s all b,' u. st (u d to deny ;cly pe or or crqnloyl,
rights granted by law or to confli t v.ith >vi.o s of aty la ai l' to ( A
arid its remployc( .

If any provision n of thi Policy, or t(e ;it ,rl of I r I:: n pO person or circurmstaic c, is for any rcaonr h(!I to be i v 'i ,y t( i of <'ty
court having plenary jurisdiction over the PCAA a, ts o es, such 11 ( "i -. '
shall not affect the validity off he rcna-ndcr of t s liy or th ct :.u
provision to persons or circumstances other than toe as to v.- t d in. d.

a. This Policy shiall become effective upon adoption by th e S cr'tary of tie
b. Revisions, of this PF ,licy sh' be made and bIc re.- e ( i after
compliance Nvith the rule making r equ irements of the A strative P foc(d I' Act
of the United States have beer mrt and time for appeal th rrefro- has- cx 'red I t0ot
an appeal or after final ruling on an appe which,-ver is lator.

The CHAIRMAN. Thank you very much, Mr. Hamilton.
President Wall and each of you gentlemen, we extend our deep
Now, Mr. Graham. I didn't have you on the list.

Mr. GRAHAM. The affiliated local unions of the Affiliated Local
Metal Trades Council wish to express our appreciation to the com-
mittee for the opportunity to speak to you about the related legisla-
The CLMTC is composed of a large cross section of Federal
employees in the Canal Zone such as local craft unions, the nurses,
guards and customs agents, maritime engineers, firefighters and
schoolteachers. Our Council testimony is included in the joint pack-
age presented to you by President Shannon Wall of the National
Maritime Union of America.
At tomorrow's hearing, or today, if time permits, our American
Federation of Teachers will present you with a position paper and
statement concerning problems unique to Canal Zone schools.
Today our only scheduled oral presentation will be given by our
first vice president, Mr. Mark Tartar, member of the Association of
Machinists and Aerospace Workers Local 811.
The CHAIRMAN. Mr. Tartar, you may proceed.

Mr. TARTAR. I am first vice president of the Central Labor Union
and Metal Trades Council. The purpose of my appearance before
this committee is to seek your help and support in obtaining legis-
lation to combine civil service and railroad retirement benefits for
30 employees of the Panal Canal Company.
Combining railroad retirement benefits with civil service benefits
is not a new concept. In 1948, the Senate passed a bill, S. 2326,
pertaining to the Alaska Railroad Retirement Act of June 29, 1936.
It authorized and directed the transfer of employee retirement
credits to the civil service retirement and disability fund. Those
transferred credits applied to the disparity between service pertain-
ing to the Alaska railroad and tenure pertaining to civil service
after those employees became civil service employees.
In effect, there are 30 employees of the Panama Canal Company
serving the railroad and other company units who formerly had
specific tenure of employment with class A railroads in the United
States under the provisions of the Railroad Retirement Act, as
amended. The list of employees involved indicates that the ages of the
respective American citizens range from 42 to 63 years. As a practi-
cal matter, with rare exceptions, not one of these employees can
regain any class A railroad status in the continental United States
where seniority rights on the class A railroads eliminate any possi-
bility of being rehired.
Furthermore, the passage of time while each of the employees
has served the United States and the Panama Canal Company
precludes any hope of achieving remediable compensable benefits
through railroad retirement. Consequently, unless the Congress
acts to correct the disparities which exist, these particular former
railroad employees will lose retirement income under both systems.
We are seeking a transfer of funds and credits from one Federal
system to another Federal system. The passage of specific legisla-
tion correcting the disparity by consolidating the two forms of
tenure will create no cost to the taxpayers of the United States or
add burdens to the fiscal requirements of subsidies by the Con-
gress. During the past 5 years, we, the 30 employees, have had
legislation introduced, H.R. 14939 and H.R. 4201, to combine the two
retirement credits, but we were not successful. On October 1, 1979,
the Panama Canal Company will relinquish control over the Pana-
ma Railroad. At that time, a number of the 3() employees will either
have to or wish to retire.
Therefore, it is respectfully requested that the Post Office and
Civil Service Committee propose remedial legislation at the earliest
possible date to merge our railroad retirement tenures with our
civil service tenures into continuous tenure for civil service retire-
ment benefits.
[The following statement from the Canal Zone Central Labor
Union and Metal Trades Council, AFL-CIO, was received for the


Can~l Zone Centr.4 Labor Ur. 'i

and Metal Trades Council, AFL-CIO

Box 471, Bai oa Heights, C. Z.

In the following commentary and recommended improvements
to the proposed Bill to Implement the Panama Canal Treaty of 1977,
we shall very likely address matters which are hot the direct
concern of this Committee. However, we believe that it is impor!- t
for the Committee to be aware of the total environment in which t-.
employees of the Panama Canal Company and Canal Zone Government
function. We live in a Copany town. On the surface, the visitor
sees an idyllic community. Yet, even with the present status of
the Canal Zone, those who have chosen to serve here have had to make
sacrifices. Simple examples are the loss of the pleasure of financial
advantages of home ownership, missed career opportunities, and the
severe disruption to extended family relationships.

With the loss of U. S. Constitutional protections, a poll,'
force that operates within the Bill of Rights, the Postal Service,
pure food and drug laws and many of the amenities of Canal Zone lif,.
cach employee must make a fresh decision regarding his job, future
and lifestyle. It is a fact of life that if the rewards offered are
great enough, people will go anywhere. Through the Congress's action
on our recommended -ncentives, the thousands of individual decisions
will develop into trends of immediate exodus or willingness to stay
and assist the Panama Canal through the entire transition period.
There is great pride among the workforce in the waterway and we would
like to see it remain a model of efficiency, but without sufficient
inducements, the many critical skills so necessary to its operation
may be lost. For the 20 years remaining, let the Congress not be
accused of being "penny wise and pound foolish."
In Section 105, we would like to request that 25% of the
designees to enjoy the privileges and immwunities accorded under
Article VIII of the Treaty will be rep-esentatives of United States
organized labor grov>s in the Republic of Panama. Unfortunately, in
the past, some of o'. labor leaders were detained because of their
activities and views.

In Section 106, which deals with the transfer of records,
we ask, for obvious reasons, that the individual records of U. S.
citizens be transferred only in consonance with the U. S. Privacy

In Section 205, in which the Board of Directors of the
Commission is defined, we ask that a qualifying statement be added
providing that no more than 50 percent of the individual country
representatives may be officers of military forces. The reasoning


for our reuut3t Is that the Cu.wiMisslon will be a civilian nqrncy ard
the Board rf :)'rectors ,hculd be attuned to civilian dejirce far la
of r-qg mentation.

We would also like it noted that we recommend approval rf
Section 206 as written which Ljbicifie. quorum reuirements for the
Board of Directors.

Tn Section 208, which duals 'th the liabf'lity of the
Coai~sion, we would like to se added Lr. "(C) it is -it frori any
lwbility for prej',qrment Interest" the additional -l'Bse, "except
in ca-rs i.ivolvrlnj -'ployev compensation in any form." It .r, .'d
to report that 'rqployees have often had to sue for ttiat whici wa-
cvL-d them and it is hoped that this addition would have the effect
of keeping cases from reaching the courts and p' Ing delays or
appeals which are designed solely to discourage a-.3 bankrupt etrploncc

In Section 212b, we would like added to Section 232 of
title 2 of the Panama Canal Code a paragraph "e" providing that
Military facilities are authorized to provide health care services
to elderly or disabled persLs w:io were eligible for such health
care prior to the effective date. It is felt very strongly that
the moral obligation which the U1. S. Cov'errnment. has to these
people, many of whom worked during the construction era, will not
be fulfilled by merely providing the funds for their core in
Panama. Hospitals in the Republic of Panama in the canal area
are already overcro%;'.d and will in 'liree years have to serve
the Panamanian employees' families who are presently treated in
the Canal Zone hospitals. There is a very real fear that the
elderly and disabled will be lost in the shuffle.

In Section 213b, which provides for crcss servicing
agreements between agencies, we would like added to Section 372b
of title 2 of the Panama Canal Code the provision that no cross
Qervicing agree:.-Tnt shall r'i,!Q't in the loss of ary employee bene-
fit ref -rpd to in Section 202 of title 2 Panama Canal Code, which
is Section 321 of this bill. As we shall extliin late, despite
assur-irces thnc there would be no loss of benefits to omnloyees
due to the Treaty, such as been planned for employp-2s transfer'-ed
to other agencies f-om the present C-mpany-Governmunt. It Is 'ur
IntLer.nLion through this addition to discourage at.t..pts .i Sawi., .le
employees and save money. At least one union was told that
according to the Treaty, their function could be transferred to
another agency which would in turn contract back to thch Cumnission.

In Section 301, wc ask that Section 14 of title of the Canal Code nc., be repealed sin.e if precludes -syrimiration
in training program:. While the Treaty provides for I r-ferentlal
hiring of Panamanianis, once "on-board" they would have to be trained.
However, to deny any employee, whether U. S. or tin, the


opportunity to be trained for advancement on the basis of citizen-
ship makes a mockery of the promise made repeatedly to z,< thdt
there would not be preferentIal promotional po)icJie. Thinking of
the canal's future, it should seem obvious that th. ei-ployee who
perceives himself as being discriminated against will prefer to
leave for better opportunities.
In Section 3C"-, in wt.2ch the Pone il iipi ,n,-.rt
System is defined, we would like tc add ro ti-fI 2, Panama Canal
Code, Section 142 a2 following the words "tukifj into acco .t a;y
recommendation of the Panama Cinal Comrnission" thb. ',,Hitional
clause, "after appropriate coordination with labor or-anization
under collective bargaining procedures established by tne treatyy."
Simply, we want to negotiate the regulations under which we shall
be working.

Section 305 of the bill meets our approval. However,
we would like it made clear that the limitation of not more than
25% overseas recruitment and retention differentials does not
apply to the adjustment of compensation referred to in Section
324 of this bill.

Section 306a dealing with the transfer of 1.rceral
employees to the Panama Canal Commission ha- -ur ap1'.,al, but
we feel that present employees, who have no St ts e r.-eM].oy-
menrit rights in other agencies need the followij.c protection added:
"Personnel who are transferred/detailed from c->fr federal agencies
and who retain re-employmnent rights in that agw*cy wll not, in
case of reduction in force actions in the Panara C :ial Commission,
Department of Defense Dependent Schools or other Executive agencYe
in the Republic of Panama be granted displacement rights over
personnel who were employed by the Panama Canal Company/Canjl ;
Government prior to the effective date of the Treaty.

In Section 307, dealing with Merit and Other -miployment
Requirements we, would like to again insect, following the words
"recommendation of the Panama Canal Commnission", the phrase,
"after appropriate coordination with '-i or organization .:rndtr
collective bargainir' procedures established by the Treaty." The
entire point of collective bargaining is to have some say in one's
job destiny and we feel that to exclude us from the establishment
of the ground-rules diminishes everything else we do.

Section 321 of the bill is necessary to meet the Treaty
Requirement of Article X, paragraph 2b which is designed to
"grandfather" benefits enjoyeC by present emp1. :es. In the enu-
meration of benefits there are some changes wh ';. ao.'. t-) be made
if there is to be true meaning behind the assur-'nces which were
given to the employees and organized labor that we would be tc
care of. Certainly nothing is more fundamental than th2 method
by which a worker is compensated. Yet, in listing "waie rates",


the Administration has made it clear that only present salaries
are guaranteed.. Future raises will depend on administrative
action. This would seem to be a rather high-handed attitude in
the face of the Co-.;,rabillty Act .-iud practice. "Terms and
conditions of emo]cyment" we do not bargain for our raises nor
do we hea for therr: we get them automatically *`ei cur counter-
pFarts in the States get them. Many of us are on wage bares that
are related to various areas. In the case of cnk oC tL :m, the
Washington, D. C. pay base, Corgress said qvit. clearly, as cmn
be seen in Attachment #1, thit although statiitcry aut'rrity had
to be repealed n inmlei'tlt.:c; the 1955 treat,.-, "It is the intent
of the Ccnqre-s that the Diecedent estabhlist- 41. -e Zone
in relating Canal Zonie '.uge increas'c to compoa: "I wage increases
in the United States will continue to be fellc" --'. Obviously,
in an inflationary world, frozen wages will tecime reduc-d wu.'es.
If payments to the Republic of Panama are to be adjusted for
inflation, why should not the szlarlcs of those who &r: resporsi-
ble for the toll revenues be similarly adjusted? We dre being
asked to remain with the Parinema Canal to see it through the transi-
tion, but unless this interpretation of "terms and conditions of
employment" is cha.,ged by the Congress, it would appear that the
employees who remain the longest c,' look forward to having their
pay frozen as soon as the Administ,---ion feels that there are few
enough of them in their particular craft that their loss could be
absorbed. Every worker can see tris b-ing applied to his job; Jt
is just a question of when. We, therefore, ask that you change
"wage rates" to read "wage bases and formulas."

We also request that following "leave and travel," the
phrase "except as modifiec. t,, t. ovfde e-uity with other employees
within the agency to which thi employee is tra. ;-erred" be
deleted. When the employees viho are scl-aou3- d to be transferred
were employed by the Panama Canal CcaT.inn--Canal Zone -overnment,
they received a to* benefit packa-.:. rhey have eve', reason
to expect that theoi ..enefits should remain intact si,,ce they will
be doing the same woik at the same location with the same U. -.
Government as employer. These employees certainly lid not ask
for this transfer; they are only pawns in a b,.dgetary reshuffling.
The requested deletion wLll also remove the incentive to arbitrari-
ly transfer other employees as we noted in Section 213.

In addition to the itemized benefits, we would like to
add, "sabatlcal leave for teachers, provision housing or
additional housIng allovwence, education' travel ber-fits and
naxi-"1 h-ours '-r rr for all firotight#:rs a establishedd by
the rai7 Labor Standard Act." The latter is necessary d',:? t) the
inapplicability of the Act 'ollo:,ing entry intc force. We also
request a final sentEnce, ";'Ml other present benefits not p,.:if-
icativ li-t,,' ;,bove are not excluder by this er.numeration" be


added at the end of Sectict 202, title 2 of the .-arama Cinal Co.

In Section 322, dealing with the placement program, we
ask that paragraph "d" be added to 5ect-cn 203 of the Panama
Canal Code title 2 as follows: "A 1'' 22" States citizen who
immediately precedlnc- the date of exchange of instru mnts of rat-
ificatton of the 1aaamra Canal Treaty of 1977 was an employee of an
agency of the Unitad States Governmrent in the Canal Zone, Canal
Zone Government-Panama Canral Co7-Cny or other F utiv Agency
exempt from present 5 xyetr rotation plan who wishes co tcave
voluntarily will be permitted to register for pd)'cement pnsistan-
at any time he desires th-ircu.i-cut the life of the Trfety." This
addition is necessary in order that emplo-e-t-_s have the confidence
that there is an escape hatch if needed in case conditions deteri-
orate following the five years presently provided in the Office
of Personnel Management's program. In five years, employees lose
access to APO mail facilities, sale torts an, :1hiqges. By
making the termination of the voluntary acmer, roG.-am at the
same time, employees are being encouraged to lec./. father than
continuing with the Commission.

In Section 323, establishing a new Section 204 to title
2 of the Panama Canal Code dealing with educational travel benefits,
it is again necessary to "grandfather" the transferees by insert-
ing after "Dependents of United States citizen employees of the
Panama Canal Commission" the phrase, "and dependents of U. S.
citizen employees of other Executive agencies who were employees
of the Canal Zone Government/Panama Canal Company on the day prior
to the effective date of the Treaty."

At the end of Section 324, Adjustment of Compensation,
we would like add-d following, "shall be determined by the Panama
Canal Commission" the phrase, "af+er appropriate
with labor organizations under collective procedures
established by the Treaty.' Also, a sentence v-e2ding. "The allow-
ance will be subject to regula-r review by a jon-_ Panama Canal
Cor-nisaior-Labor Committee."

Section 325 and 326 are the provisions for early retire-
ment which, from the employees1 standpoint, is thu centerpiece of
the implementing legislation. It is unfortunate that the Adminis-
tration's provisions seemed to meet just one objective the
prevention of an exodus by employees with long periods of service.
While this is an important factor within the first two or three
years of the treaty, it does not take into consideration effective
management through the next 20 years. The objective of inducing
young employees to remain with the Canal was not met. Our propos-
al realistically defiines a retirement rtstem which meets the five
parameters that exist:


1) Provide for employees whn trp t-n bA 44s:-lace. throua:. no
fault of their own bearing in m1nA t)ht Panama has an
astronomical unemployment rate and no unemployment or
welfare benefits system.

2) Induce key emp]',yjes to remain at the .< i ,i] aVd
maintain ctlcient --reration.

3 rrPven'-r an e>:odus tf nmiloye'-s with ici.r p, riods of

4) Prevent an e'xurius of employees with shr.rt periods of
service who see an insecure future arid do not want to
become captives of the retirement system, but who would
be willing to remain and see what will be happening.

5) Encourage those persons excess to the Canal's needs to

SPction 325, early retirement eligibility, begins with
the Hazardous Duty employees. At present, the noli-e a-e sche-
duled to be separated in three years. The firefighters have a
particular problem re,.arding their future because unli". .tiler
employees who know thpt their jobs are t- be phased out either
October first, three y-'-rs from now cr s-' until the :'ycr 20"',
the firefighters are j:1 limbo. Two stations go to '.- ..P a ar- .Ti
Sphassd out as of October first. Beyond then, thI t .*.y ..YE,
"..the United States...and the Republic of Panama ..will ,''irv
periodically the most effective allocation of boe'. :' :-er fire
protection resources, and, if ;propriate, the U-'. .-*.. SL.-es will
tranFef-'- to the Republic of Panama such other fire 0..ataJns ds are
excess to its needs." As Pana'-:.. is to be paid to rpwfte there
stations ard the pa-.'..-nt are to be increased as mre ar-e turned
over, wli't we ba;ve is contracting out of Fcdcr.:l jobb at the
stroke of a pen. It should be understood that it is virtually
impossible to enter a municipal fire department after the aqe 35,
aside from residency requirements, and that the placement rroGrani
is of minimal benefit for continuation of a career as a Fe.loral
firefighter. The Administration has been asked to either provide
., f'-etable of station turnovers or at least negotiate an agree-
ment with tho Re V1*14- o' Par ta .ialt nuch additional transfers
will only be accompli,.hud by attrito,. rn r-rmanent firefiQht:nc'
personnel. But so far, only vague as:ran-.cus, rather
guarantees, have been received. With their job secure .y vi'tu-
ally non-existent, why should the firefighters rc', ir.? Indi.-_-
ments muEt be offered because aside from the obvious, ie'- 1 ,F
serving the Commission did ? litary properties, vorld shiuping
and insurance interests -m.and adequate protection for the water-
way. One in.ucnement that we request is the deletion of the words
"age and" which follow the clause "upon separation, meets the"
in F:-'7ip. c2 of Section 8336 of Title 5 of the United States


Code. Actually, this would bring the eligibility requirements
into line with those of most municipalities and to the level that
we expect Hazardous Duty retirements are headed generally. Al-
though it has long been known that a firefighter's life expectanc:
is ten years below the norm despite better physical condition at
the time of entry into the field, only recently has it LeO'n fond
that heart attacks account for 44.5% of line of duty firefighter
deaths and that they peak by the age of 45 and by 20 years service.
These findings are graphically illus-rat& and attached. Obvious-
ly, the debilitating -rfects are cumui t e. It is therefore
also requested that because fire officer who were rocr'nited T -m
non-Federal positions in the United States were reqw'i' d to hoj+
prior experience, they be provided the o-yortunit t t*y cvsr c
in the Civil Service Hazardous Duty Retirement C .- cuce
years of service to a maximum of ten years provide- ".vu *" v do
not have a vested interest in a pension plan for ouch s.rvice.
We are not seeking that a person would be able o buv m double
coverage nor that this be continued for those err oyed ty the
Canal Zone Government after the effective date of the cxchanqe
of instruments of ratification. It would be an al-ro-iiate way of
recognizing the loyalty of Stateside recruits who, unlike z
greater number of fire officers who have the ba-,.-,riting on the
wall regarding their job security.
Teachers buy-in and ri.P. Retirement

We would also like to request that af-'- tl worwo
"employed by" in subsection h3B and i2B the word& "or rki'ed

at the convenience of" be inserted to accormodate those prcsQns
who may have been temporarily displaced from employtoe.t during
the entry into force and establishment of the Commission. In
order to give younger employees more incentive to -ry out the
Commission and the new lifestyle, we also recommend that provi-
sions be adopted that would permit employees who are involuntari-
ly separated with fewer than 16 years service to receive a
deferred annuity at age 50 and those who are voluntarily sapa-
--Ate_ wi*h fr-'r thian 18 years service to receive a deferred
annuity at age 55. People in their twenties are needed to see
the transition through to a successful completion, but the
standard deferred annuity until age 62 for fewer than 20 years
service is a disincsnLive to the yop.q person who cannot conceive
of that time ever coinJg.

We are requ. jtng major to Section o'z of the
bill to provide incentives for employees to not on3y stav until
they meet the minimum requirements for retirement, but t; xey. n
beyond that time as well. We would like to intrc-.-_E w sub-
section (n)l: "The annuity of an employee retir'i r, -mmdiat-

or deferred, under this sub-chal ter who was *. ;,l'jydJ .,* faruna
Canal C,.cn.any or C--ral ?Jne Govcr-nment on t*,e d-'.' of ei Thanqu of
ratification docr"- rts of the Panama Canal reaty of 1977, is
computed with respect to the serv ce prior to the -:'tr.' into
force of the Panarj Canal Treaty of 19-7 by multiplyir.'-;:

A. 2 1/2 per cent uf t4ie eployee's highest annual Fpay by
the first 10 years of ruch service plus.

B. 2 per cent of the employee's highest annual pay for the
rcr.,aining yLars.

C. Firefightcrs and law enforcement officers will have all
such time computed at the rate of 2 1/2 per cent of the
highest annual salary."
W. would redesi-,ate subsection (n) a- (r.)2 a: ;-tt,..r
the-word "retirlr.' insert *1ie phrase ",ru-eei.te r _f-rr
and substitute fo- al that cones after "muUt'py Io the phrase,
'"3 1/4 per r-t of th. -.Fpoyee' s annual pay 1'-' ich service. *
Tn -z.jsectlon 0, we want to change frc-n the fixc, dollar amount
that does not reflect the inflationdar- world in winich we live.
We request that you substitute for the phrase, "S8 for each full
month" the phrase "1/2 per cent for each full year." Because
the Treaty also calls for bcth more liberal entitlement and
ccmnutatlon of annuities, it is essential that the word "not"
in the second sentence of Sub3cction 0 be deleted. Otherwise,
as the bill is presented by the Admilnistration, a firefighter
or law enforcement officer with 20 years service before the entry
into force will receive no greater ccmT-uri.tion of annuities. If
our suageations for Section 326 are ed, we would have no
objection to deleting subsection (p). However, otherwise, we
request that the "$12 for each full month" be deleted ci fa"(
of "3/4 per cent for each full year."

Section 127, whicr' extei.03 the prcvisic:*. of various
benefits provided in this bill tr other -rcu's wh-h hve been
historically treated the same as Compan;,-Goveznrn:cct .pce,
is also endorsed by us.

Section 320 appears to be the -pr'p t.. lace to
add the following: The Washington, D. C. : ,, yase tor the public
school system will be tie applicable base for ta-hhers who ;.-e
er.ployed by the Canal Zone Goverient School System -anediatuly
prior to the effective date of the Treaty and are transfe-rec
to the Department of Defense Ovprseas Dcjenocnt Scioul Systeni.

We would also like t1 -o on rcurd as aiDrrovirq of
Section 341, 410 and 501 cf the bill.


The CHAIRMAN. Thank you, Mr. Tartar.
Does that complete this panel?
Mr. WALL. Yes, it does.
The CHAIRMAN. President Wall and gentlemen, on behalf of the
committee, our deep appreciation for your very fine testimony. I
observe that you put a great deal of effort into it and you have
made a number of excellent points.
Very briefly, President Wall, on page 2 of your statement, you
said: "We ask that you urge the Congress to give the same consid-
eration to the human aspects."
Fundamentally, that is the reason we are here today, to assure
that the human aspect is considered in the process of this legisla-
tive effort. We want to assure that everybody is treated fairly, that
as a result of this treaty, hopefully no negative action occurs that
would be harmful to any employee. That is our mission.
Mr. WALL. We thank you very much for that.
The CHAIRMAN. Mr. Hamilton, you made a decent observation
with respect to the recently enacted civil service reform legislation.
I add to what you say that this committee will, very soon be
initiating a series of hearings, taking a look at the implementation
of the act. The bill was not an all perfect one. There are shortcom-
ings within it. Our mission in this Congress will be hopefully to the
move in the direction of correcting some of the shortcomings.
There will be further implementing legislation that in all prob-
ability this committee will be dealing with in this Congress. There
may well be justification for specific treatment to Panama Canal
Zone employees in that piece of legislation that may have been
overlooked in the course of our deliberation of the civil service
reform bill.
I would suggest to you, and obviously you have paid a great deal
of attention to it, that you might want to put together a letter
stating your observations and what changes might be effected in
that legislation to the amendatory process that might have a direct
and favorable effect on Panama Canal Zone employees.
Mr. HAMILTON. I will be happy to do so.
The CHAIRMAN. If you will do that and direct that letter to this
committee, I assure you that your observation and your suggestions
will be given every consideration.
Mr. HAMILTON. May I clarify for a moment?
The provision as in the statute is not officially bad. It was in
there primarily because of the circumstances of, for example, in
Europe where under status-of-forces agreements there are nonciti-
zens who are employed but not directly by the United States. The
same thing in Iran and other locations, and that is the reason.
This is a different ball game in Panama which is the reason I
stressed and urged it for this location.
The CHAIRMAN. If there is a shortcoming here, we could move in
the direction of correcting that shortcoming.
Mr. HAMILTON. Thank you, sir.
Mrs. SCHROEDER. Would the gentleman yield?
The CHAIRMAN. I will be delighted to.
Mrs. SCHROEDER. I was wondering if when he submits that, if we
could also know which of the unions would agree with what he

submits. Is that possible? There are so many unions involved it is a
little difficult for us to sort it out.
Would that be possible, Mr. Hamilton?
Mr. HAMILTON. I will endeavor to try to conduct a poll of them if
that is what you are suggesting, but I don't believe that there is
disagreement-if I am wrong, others can correct me on it-from
the standpoint that there should not be discrimination as far as the
canal is concerned on the basis of citizenship.
The CHAIRMAN. I would assume that in that the overture would
have favorable effect, that everybody would be in support of it. But
in any event, you have posed the question, Mrs. Schroeder. Mr.
Hamilton has it and I am sure that he will confer with the other
people seated about this table for agreement on whatever the lan-
guage is.
Mr. HAMILTON. With this group I think I can answer immediate-
ly. There are other organizations in the zone that are not specifi-
cally here at the table.
Mr. WALL. When we submit the poll, Congresswoman Schroeder,
we will not only give you the organizations but we will give you the
percentage of participation they have in the overall canal labor
Mrs. SCHROEDER. I think that would be helpful.
Thank you, Mr. Chairman.
The CHAIRMAN. Thank you.
Mr. Derwinski?
Mr. DERWINSKI. I have one request for Mr. Tartar. You referred
to the list of your 30 employees, sir. If you could get it for us, what
I would like is the specific list with their individual ages, the
length of time they have worked for the Canal Railroad, and the
length of time and the railroad company that they were employed
in in the United States before they came down to the Panama
Would you be able to get that?
Mr. TARTAR. I would. I will forward it to you.
Mr. DERWINSKI. I appreciate that.
Then I have a question for Captain Werner. I want to apologize
in advance that this sounds provocative, but it is not. It is intended
to answer a question that your statement has brought to mind.
You made a reference to the fact that failure to enact proper
retirement benefits would create an impossible situation in that
there would be an exodus of your pilots. I gather what you are
saying is that the canal operation would be very seriously affected.
My question is this: The very same position was taken in 1956 by
the pilots in the Suez Canal, the French and British pilots, who
then left and assumed when they left the canal would stop dead.
Now my question is: How could you justify or explain to me as a
nontechnician why you are so certain that the situation here is
Captain WERNER. I could answer that by saying that the Panama
Canal operation is unique in all the world. This parallel between
the Suez Canal and Panama Canal is totally erroneous. The first
individual to find that out was de Lesseps when he was successful
in digging the Suez and was a failure in applying the same tech-
nique in the rocks of Panama.

Essentially the canal is a big ditch in the sand. The pilots take it
in. If they have an error, they take it over again. In the Panama
Canal it is a matter of locks and rocks. If the ship goes into ".he
rocks, it sinks. We had one ship sink in this decade. It was in the
canal for 2 years before we were able to get it out. At that time we
had to route traffic around that particular ship.
I would say on a scale of 1 to 10 a- far as maritime piloting goes,
Suez would be 7 or 8 and Panama No. 1.
So the degree of difficulty in taking a ship through the Suez as
compared to the Panama Canal are miles apart.
Mr. DERWINSKI. I presume, then, that the training time involved
in an apprenticeship, everything else involved, the same factors
would apply. It takes longer to train the pilot here?
Captain WERNER. Very true. As I pointed out, it takes a mini-
mum of 91/2 years before we get to the biggest ships because of the
unique characteristics of this particular waterway.
Mr. DERWINSKI. Thank you.
Thank you, Mr. Chairman.
The CHAIRMAN. Thank you.
Mr. Wilson?
Mr. WILSON. Captain Werner, I have a question to ask you also.
You said that:
As you may be aware, the inclusion of an open-ended liberalized retirement
benefit as a retention incentive for midcareer employees is a product of an agree-
ment made in good faith between the President of the United States and a past
president of our Pilots Associaton in August 1977.
Is there a copy of that agreement?
Captain WERNER. We have reference to it on our files. We can
supply you with that, yes.
Mr. WILSON. It just appears to me that this is an illegal activity.
I am just wondering, if there is a written agreement such as you
indicate, it may have been in violation of the treaty itself.
Captain WERNER. May I say that the agreement was in very
broad terms.
Mr. WILSON. Well, I suspect the President made all kinds of
agreements as he went along the road. We are still trying to find
out what he did at Camp David.
Mr. Hamilton, I wonder if you could expand a little bit on why
Panama should be treated differently than any other country in
the world insofar as including foreign nationals on the same basis
as Americans.
Now foreign nationals working for DOD and other agencies of
the Government in all other countries, as far as I am aware of, are
in separate bargaining units and they bargain for wages that are
based on local economy. Here the Panamanians receive the U.S.
minimum wage of $2.90 an hour while in Panama City the average
is about $1. And you say this has to be done here because this is a
unique situation.
I wonder if you could just educate me a little.
Mr. HAMILTON. All right, sir.
As I understand the treaty, we start with a predominantly
American work force which is to be phased out to become a pre-
dominantly Panamanian work force through attrition, replace-
ment, and so forth.


So we are going to have the situation which is different from
these other locations that you describe in which individuals who
are American nationals and who are foreign nationals will be
working side by side in the same job classification doing the same
job. and therefore it is necessary if there is to be any harmony in
the workplace, any stability in the employment relationship, any
elimination of perhaps reasons for overturning the situation, that
the workmen be treated the same, that they receive the same, that
the principle of equal pay for equal work, et cetera, be followed.
Now that is the principal and primary reason that I was getting
Additionally, of course, we have a situation that under the Com-
mission there is a unique status. It is not predominantly American
control. It is not predominantly Panamanian control. But it is in
the state of flux. Our security demands that everything possible
that can be done be done to insure that the canal operate.
Certainly, then, those areas of employee relations which can be
used to avoid problems, incidents, et cetera, should be strengthened
and reinforced. That is the reason we urge as we do.
Mr. WILSON. Well, of course, perhaps there is something unique
here. But it seems to me that there are many areas where foreign
nationals work side by side with Americans in other countries and
have to bargain on a different basis.
Mr. WALL. Congressman Wilson, I think I would like to take a
crack at that one with you.
Obviously, we are living in an entirely different situation here
through the history of the American building of this Panama
Canal which is an awful lot different than the Navy base in Subic
Bay in the Philippines where we pay the natives at the standard
status of forces rates in the Philippines.
It is quite a bit different than the Guantanamo Bay in Cuba
where we employ the Cubans to work on our base.
It is quite a bit different than the situation in Germany where
the German citizen is making more wages than the GI or the
American dependents that are working for the U.S. Government in
Germany. We are not paying the soldier and sailor in Germany
based upon the German economy.
During World War I we had Philippine nationals sailing in the
U.S. Navy and they received the same pay as all the other sailors
in the U.S. Navy. When the status of the Philippines changed to
one of an independent nation instead of a territory, we offered all
of those Philippine sailors U.S. citizenship, the same thing that we
are asking here for our nationals that work in the Panama Canal.
You want to remember that some of these men and some of
these women, their grandfathers helped build this canal and their
fathers worked here and retired here and these people came to
work for Uncle Sam and they came to work here and they expected
that they would retire and that perhaps their children would go to
work in the canal and they might retire.
But the treaty has changed that. We are asking under those
circumstances that this country-and we have made a lot of mis-
takes in Latin America. We have made a lot of mistakes here in
Panama in the past and some of the people that are in the Govern-
ment of Panama today grew up under the repression forces of the

United States. When we leave here in the next century, let's make
sure that the mistakes of the past are not brought into the future.
I think that the entire U.S. position in this hemisphere is a good
deal based upon what we do here as a government in our dealing
with the Panamanian nationals and the Panamanian Government.
We think there is a very unique situation and we would urge that
the Congress recognize that uniqueness.
Mr. WILSON. I wonder if you could explain what you meant about
the repressive treatment of people who have been brought up here
under the U.S. Government. Do you have any comments on that?
Mr. WALL. The Panama Canal Zone and Government has been
run as a colony of the United States. It started out that way. There
were many things that were wrong until the trade union move-
ments under Kennedy's Executive Order 10988 when the unions
came down here and we were able to exert certain pressures on the
relationships of the Canal Zone Government.
I can tell you one of the instances. We had our seamen down at
the locks on the Col6n side. There was a shapeup place for them.
There was a canteen facility there. Those canteen facilities were
only available to the U.S. citizens. Our canal lockmen had to go
around and get it handed out to them, outside the canteen. If it
was raining, if it was storming, they had to eat their food on the
outside. It was the NMU, with the help of the pilots and the other
unions here, that changed that. Our people can come inside the
Now if you don't think that that was a black eye on the United
States in the treatment of people working for them, then I think
that we don't see eye to eye on the issue. I think that our people
here who have been here much longer in the Canal Zone could
point out other instances.
Mr. WILSON. Well, thank you very much. I think the panel has
contributed greatly to the hearings. This is going to be very diffi-
cult legislation, as you can probably imagine, for us to adopt just as
everyone wants it. There are some 17 bargaining unions I believe
that are involved in the canal. So, obviously, we will hear from the
other groups that perhaps they will have a different approach to
the problems.
Mr. WALL. They may very well, but let me just point out that
those 22 organizations were created by the Panama Canal Compa-
ny and Government itself. Executive Order 10988 signed by Presi-
dent Kennedy gave the right to bargain to Federal employees and
included exclusive recognition. There is one little clause on the end
of it, and I can't quote it directly, but it excluded installations vital
to the defense of the United States and the Panama Canal Compa-
ny can evoke that clause.
We almost had exclusive recognition from the Department of
Defense down here and Panama Canal used their influence and
told the Department of Defense they could not grant the exclusive
Mr. Douland who was then labor relations representative went to
the administration and wanted the exclusive recognition eliminat-
ed. That means you can only have formal recognition and any
organization that can get 10 percent of the members, and there can

41-698 0 79 5

be dual membership, and that is why we have 20-some organiza-
tions in the canal today.
Mr. WILSON. I don't want you to misunderstand my position, Mr.
Wall. As a supporter of labor, I have carried the ball for the right
to strike and for everything else for Government employees, postal
employees. Then I found out that every time I put one of those bills
in, the Right-to-Work Committee would put out a fundraising letter
and raise a couple of million dollars for their war chest against us.
I am waiting now until I get more assurance of support before I
put my feet in the water again on that issue.
But there were these questions that raised doubts in my mind,
questions that I had, and I appreciate your response to them.
Mr. WALL. We fully realize the confusion. You ladies and gentle-
men are extremely busy. The task facing you is immense. It is
remarkable to us that you can keep up with the very myriad of
problems that you are confronted with in your day-to-day delibera-
tions in Washington.
We thank you very much.
The CHAIRMAN. Thank you, Mr. Wilson.
Mr. Taylor?
Mr. TAYLOR. Thank you, Mr. Chairman.
Captain Werner, in your testimony you indicated that it takes
9 ,,2 years for a person to develop into a control pilot. Are there any
nationals now who are control pilots?
Captain WERNER. I assume you are referring to Panamanian
Mr. TAYLOR. Yes.
Captain WERNER. This process does not eliminate a pilot from
being a control pilot. I said this is the minimum time requirement
for being a control pilot on the largest ships. There are a lot of
smaller ships that go through and we do have Panamanian nation-
als as control pilots and they have been here since 1973 and they
are performing admirably.
Mr. TAYLOR. You are in the process now of training more?
Captain WERNER. Yes. It is quite a problem because although
Panama has a position that makes it a maritime country, tradition-
ally they have not gone to sea so we are having a great deal of
difficulty in finding individuals to work in the canal as pilot.
Mr. TAYLOR. Mr. Wall, looking to the future, and with the imple-
mentation of the treaties, and moving toward the year 2000, what
do you see in the future as far as-and I am very appreciative of
the attachment and the dedication that the technical people have
here for the canal, and I might say that the Governor has for you
people as he expressed to us in an informal briefing this morning,
but as we move to the future, looking at the operation of the
Panama Canal in the year 2000, will the Panamanian Government
in your judgment be able to retain and maintain the quality of
technical people that will be necessary under the wage structure
that they might have to keep the canal open?
I know that is problematical. I know it is something that is
subjective, but I would like your opinion on how you see the future.
Mr. WALL. Well, of course, a lot will depend upon the delibera-
tion of the Congress enacting the things that we are concerned

Mr. TAYLOR. What we enact is only for 20 years, isn't it?
Mr. WALL. Yes.
Mr. TAYLOR. At the end of that time we are out. What happens
Mr. WALL. Well, we are having a great deal of difficulty getting
through the last 2 or 3 years and getting the implementation of the
treaty. Our job as we have said is not to negotiate the treaty. We
left that to the experts. Our job is to represent our members,
regardless of who their employer may be, to the best of our ability.
We have had problems with Uncle Sam, with the U.S. Govern-
ment. We had them when we came here. We still have some of
them here. We have resolved many of them. There are some that
are still unresolved and they will be going on. We expect that when
the Panamanians take over, we will just have a different employer,
we will have the same problems. They will be resolved. There are
some that will not be resolved.
Our job is to represent our members to the best of our ability.
That is what we are looking forward to at the present time.
Mr. TAYLOR. In other words, you are taking it a day at a time. I
can understand that.
Mr. WALL. At least a step at a time.
Mr. TAYLOR. A step at a time, right.
The CHAIRMAN. Thank you, Mr. Taylor.
Mrs. Schroeder?
Mrs. SCHROEDER. Mr. Chairman, thank you.
Also, I would like to ask your permission to submit a list of
questions to each of the unions just to help us in the future.
The CHAIRMAN. Without objection, it is so ordered.
Mrs. SCHROEDER. I wanted to ask if there were other unions
involved with your union, Captain Werner, in this broad agree-
ment that they had with the administration regarding the treaty?
Captain WERNER. This was a broad agreement between our Presi-
dent and Mr. Carter in 1977 concerning our support for his efforts
to get a treaty.
Mrs. SCHROEDER. Were there other unions involved that you are
aware of?
Captain WERNER. No, I am not aware of any other unions that
were involved.
Mrs. SCHROEDER. Do any of the rest of you at the table know of
any other unions involved in that?
Mr. WALL. No.
Mrs. SCHROEDER. Did any of the other unions at the table support
the treaty or was yours the only union down here that supported
the treaty?
Captain WERNER. Let me clarify that. I think I said, "would not
oppose the treaty."
Mrs. SCHROEDER. I see.
Were there any other unions that opposed it? Your union op-
posed it, Mr. Graham?
Mr. GRAHAM. That is correct.
Mr. WALL. Our position was from the very beginning that we
were concerned with the rights of our employees, not with the
technical aspects of the treaty. That we left to the governments.
The governments signed the treaties. The governments negotiated

the treaties. We made it very clear to everyone that we could talk
to that our concern was for the rights of the workers in that treaty.
We have a section in there that referred to the protection of the
rights of workers and the next step is the implementing legislation
which is the most important part of the treaty aspect for you.
Mrs. SCHROEDER. Were you involved in that negotiation in that
part in the treaty?
Mr. WA.LL. No, we simply made our positions known to whoever
would ask.
Mrs. SCHROEDER. But there was no active negotiation?
Mr. WALL. That is right.
Mrs. SCHROEDER. Mr. Hamilton, I have several additional general
questions and I have many more specific ones.
I agree with what you are saying about how important it is to
keep the canal open, and yet in your draft l:,ibor policy you come
out with a right to strike. How do vou t'l ose two things togeth-
Mr. HAMILTON. While I personally fa.or the right to strike, I do
not believe that I said that.
Mrs. SCHROEDER. I think the implication is there. My question is:
How do we deal with the labor-management section, deal with the
issue of right to strike, if our goal is to keep the Canal moving?
Mr. HAMILTON. The right to strike is the means of insuring that
there is honest collective bargaining, otherwise it is just consulta-
tion, a meeting, or whatever else phraseology you want to apply.
Experience has demonstrated that it is not the strike but it is the
threat of a strike which is effective, which is the means of bringing
parties together.
Now, if we run into the situation where there should be a strike
situation, I have every confidence that the President would be able
to invoke something along the 60-day emergency injunctive proce-
dures of Taft-Hartley so as to put the parties back to the bargain-
ing table.
Experience has demonstrated that where that procedure has
been followed, that only a very negligible percentage of situations
then result in a strike beyond the deadline.
Mrs. SCHROEDER. I think the fear is that with so many different
unions and their all having a very important part of keeping the
Canal going, and our treaty depending upon the tolls that go
through, it could be a very, very intensive pressure point.
I think that is one of our major concerns as we look at it.
Mr. HAMILTON. That is the very point that I am making with
reference to the citizenship question. That is, that if we are going
to have the employees who are not given the rights and responsibil-
ities and the obligations of American citizens, then we are going to
have the provocateur situation. The ground is ripe for that to bring
about the very thing you are talking about.
Mrs. SCHROEDER. Let me ask another question with respect to
You did not mention in your proposed labor policy certain things
that are in title VII. I am not quite sure I understand. In title VII
it says we don't recognize 1'bihor unions that are sponsored by an
agency. My question: People were saying the Panama Canal Com-

pany had created some of the unions or helped some of the unions
get formed. Therefore, they might not qualify under title VII.
Have you looked at that as a lawyer and determined whether the
prohibition of agency-sponsored unions might apply to any of the
Panama unions?
Mr. HAMILTON. I don't believe that it truly applies and I don't
believe that Mr. Wall intended to state that the agency created it.
Rather, the agency created the circumstance. We made it possible
for this proliferation of organizations.
Mr. WALL. Congresswoman, could I disassociate the NMU just a
little bit from the labor theory of my very good friend, Mr. Hamil-
The National Maritime Union and all of the unions represented
in the Canal Zone, in order to get recognition, have to pledge to the
U.S. Government that they will not engage in a strike.
The National Maritime Union represents the seamen on the
military sealift vessels, the military sealift command. We also rep-
resent seamen on commercial vessels that carry military cargo.
We have never once struck a cargo ship with military cargo on it
under our pledge to the United States. We have honored our pledge
in all of the Government facilities which NMU has contracts with,
and they are quite considerable. We have never once entertained
the idea of striking the Federal Government.
I wanted to disassociate myself from any theoretical right of
striking the Government.
Mrs. SCHROEDER. Let me ask one more question and then I will
submit the rest of them because they are fairly technical.
Would all of you at the table be happy with title VII of the Civil
Service Reform Act if non-U.S. citizens were included in the
Panama area?
Mr. HAMILTON. I believe the question is one which the others will
have to answer. I think any answers would have to be taken in the
light of everybody wants the best they can get. They would not be
Mrs. SCHROEDER. Including the taxpayer?
Mr. WALL. We are also taxpayers.
Mr. HAMILTON. They would not be convinced that it was the best
possible. They would not be convinced that it was the best, most
desirable. But if it was the best that they could get--
Mrs. SCHROEDER. Doesn't it basically seem the fairest when ev-
eryone in the United States is under that?
Mr. GRAHAM. We could answer that by saying it was never fair
for us to be under it before. Why are we being pointed out and
compared with Federal employees in the States now? We have not
been allowed to be under Executive Order 10988 on an exclusive
level. We have been refused 1191 now for practically 3 years. And
now we should compare ourselves with Federal employees in the
United States.
We do not agree to that. We feel that as a unique organization
we cannot. Also, there have been times when our employees have
been victimized by the company when they start to run into finan-
cial difficulties. The question that you asked in the sense of the
Central Labor Union and Metal Trades Council would be "no".
Title VII with the removal of the alien clause would not be enough.

We would also wish to bargain for wage areas, not wages but
wage areas, because we have found in the past that if the company
gets themselves in a financial bind, the wage areas suddenly
change, downward of course.
Right now we are faced with a very serious problem with the
schoolteachers going to DOD. They are on the Washington, D.C.
pay base and I am willing to bet 6 months' pay that they are going
to take them off the Washington, D.C. pay base and put them on
the DOD pay base which is $8,000 a year less and they will wait
until the year 2000 to get a raise.
Mrs. SCHROEDER. Did I hear you say that because you were not
allowed the full rights of American Federal employees that were
on the State side now, you should not be put under it? Is it kind of
Mr. GRAHAM. No. There is a feeling of resentment about it. This
comparison comes up all the time. You are a Federal employee,
why shouldn't you be happy with what the other Federal employ-
ees have gotten. We never got the benefits in the past so why
should we be compared with them now?
Mrs. SCHROEDER. I see.
Thank you.
The CHAIRMAN. Mr. Corcoran?
Mr. CORCORAN. Thank you, Mr. Chairman.
I would like to question both Mr. Wall and Mr. Hamilton about
two aspects of the issues before us.
First of all, as I understand your testimony, you have pointed out
that under the current situation the Governor of the Canal Compa-
ny, pretty much by fiat, makes the decisions regarding wages and
benefits. Yet I think the thrust of your overall testimony here this
morning is that you would like the Congress to put into statute
some guidelines and some principles governing the future labor-
management relations.
As I understand the overall context of the Panama Canal Treaty,
the people of Panama and the Panamanian Government asked for
the canal.
What you are asking us to do seems a little bit unfair. You want
us to impose upon the new arrangement some conditions which
would be far better and far more expensive than is currently the
How can you justify that, especially when you consider that
Panamanian labor law, as I understand it, is a good deal different
from American labor law?
Mr. HAMILTON. I am not quite sure I follow completely the thrust
of the question, or the statement, whichever it may be. But if I
understand what you are asking, it is that why do we propose that
there be legislation spelling it out when perhaps it may differ from
Panamanian law and when perhaps it may result in some cost
Mr. CORCORAN. And when it might be a good deal different from
the present guidelines and requirements governing labor-manage-
ment relations.
Mr. HAMILTON. All right, sir.
First of all, we have a different creature and that is, as I pointed
out earlier, you have neither the United States nor Panama in

complete control. You have instead the Commission operating
under the treaty and the implementing legislation in the geograph-
ic area of the Republic of Panama. Politically, this means that the
climate is not like anything else anywhere in the Federal system.
Second of all, you have an instrumentality which is vital to our
country which must be preserved. We have a nation which will
after the year 2000 be operating it. We need to establish and
provide and work with them in the establishment of the base so
that for so long as the United States needs the canal, it will be
Third, we have the situation of Americans who are down here,
other nationals who are here, and Panamanian nationals, all work-
ing in this one melting pot. We need, if they are going to be so
integrated in their operation as to be side by side, that there be
uniformity in the provision applicable to them.
Thirty years of experience in the field of labor law has shown me
that the greatest cause of problems is for there to be differences in
the treatment of people doing the same job.
For that reason, then, there must be a uniform system. Whose
system is it to be? The Federal Government's system, the Panama-
nian system, or one which is tailored to meet the problems which
exist, the realities, the economics and the political situation as we
are in. This is what we are urging. This is why we ask that
Congress address itself. This is why it is not to be left to the
administrative process which has already taken a tremendous
amount of time without reaching agreement.
Mr. CORCORAN. I can understand why, from the standpoint of the
employee, a unified, cohesive, statutory system would be better, but
the question and the concern I have is that we are going through a
transition period in which the responsibility will be turned over to
a new entity, the Panamanian Government, and you want us, in
that process, to impose upon them obligations which they may or
may not want and may or may not be able to handle.
Mr. WALL. Let me see if I can try that one also.
On pages 5 and 6, I think, is what you have directed the question
at. We have described how the authority of the Governor to set the
wage patterns works. We have termed it a hodgepodge. We then
say that this has come about in our estimation by a carryover from
the gold and silver days and that we tried to straighten that out
and did have some success in applying the minimum wage.
At this point, why turn over this hodgepodge to the new entity
that is coming in? We have a chance to make a break and set up a
pay scale that has some rhyme or reason to it. In comparison to
what a mate or a captain with their ability can make on a mer-
chant vessel with a U.S. flag, there is no comparison to the wages
that are paid here.
So why turn over a mess? Why not at this point legislate it, and
not through a fiat of some type. Let's set the record straight and
turn over a clean document rather than this mess that we think
that we have?
Mr. CORCORAN. The other aspect of the subject matter before us
that I would like to ask you about again concerns the question of
who is going to pay the bill for this package of legislation which is
pending before our committee.

As Governor Parfitt has testified, he believes that the general
revenues in the U.S. Treasury should be used to pay this bill. My
colleague. Congresswoman Spellman, along with others, feels that
the retirement system should not be ripped off in the process of
trying to pay this bill.
I just wonder if there might not be another approach which we
could consider and that is to look at the possibility of the Canal
Company itself, no matter what its new name might be, paying for
these benefits and recognizing that the Congress need not appropri-
ate funds for the budget or the employees and the operations of the
('anal Company. I am suggesting that, out of revenues or through
some bonding procedure, the assets and the entity which is going to
control these assets during the transition period and subsequently
be empowered with the responsibility to develop the funds to pay
the bill for the legislation that is before us.
That way we could honor the commitment that President Carter
made to the American people that there would be no taxpayer
funds involved in this new treaty.
What would your reaction to that be?
Mr. WALL. We realize that we have an administration approach
and we have Congressman Jack Murphy's bill. I don't think on our
part either the NMU or AFL-CIO Maritime Committee, that we
have made the analysis that would allow us at this point-I did not
come prepared from New York to Panama on that phase of the
You know we can all be for God and motherhood and the flag
and nobody wants to touch the retirement fund. The Governor is
perfectly expert in the field and if he feels that general revenues
should provide some of the costs-we in the maritime industry
have been very concerned over the past number of years with the
increases in tolls. We are also concerned over the limiting size of
the canal. The size vessel that can get through this canal is not an
economical vessel for a shipowner to build.
We have wondered in the past whether the shippers who use the
canal should have an obligation to pay for the hospitals, to pay for
the clubs, to pay for the police, the fire department, and all the
other things that we have said are part of it.
If I want to use a canal or a waterway or a dock, I expect to pay
for that facility, the cost of it, interest on the payments, and the
rest of it. But I don't know that I would want to pay for other parts
of the operation.
It has been our contention in the past, and it has never been
successful, that perhaps some part of this Canal Zone Government
operation should have been paid for out of the general Treasury of
the United States. Perhaps had that been, some people might not
have been so concerned about the giving away of the zone.
But there are other costs here, the cost of the bridge across the
canal. I don't know whether a ship going through the canal is
concerned about the upkeep of a bridge that gets people from one
side to the other.
I don't know what the Panamanian Government is going to do
with that problem. If they put a toll on, they are in trouble. If they
don't put a toll on, where is the cost going to come from-the
Treasury of Panama? Certainly, if they put a toll on, which might

be a logical thing, they are going to say as long as Uncle Sam ran
the operation there was no toll. As soon as we take it over, we put
a toll on it. That is their dilemma.
a Mr. CORCORAN. I just raised the question and I don't expect a
of definitive reply at this point, but I think that your organization

Shas the capacity to look into this, given some time to do so. I serve
al with Mrs. Spellman on the subcommittee which will be dealing
S later on next month with this subject. I think it is a line of inquiry
S and a line of possibility that we should pursue.
We are going to look at it. We would welcome your reaction to it
Sat a later date.
SMr. WALL. Tal Simpkins will develop the answer to the question.
SAll the questions will be answered to our fullest capabilities that
y the committee has.
The CHAIRMAN. Thank you, Mr. Corcoran.
Mrs. Spellman?
Mrs. SPELLMAN. Thank you, Mr. Chairman.
I just wanted to pursue a little bit of what was said here a bit
ago about why should we be treated differently here or why should
h we not be treated differently here?
ir I really expected it was going to be the other way around: How
Come we are different, why can't we be like everybody else.
SLet me point out that you are talking about Executive orders. All
ie the legislation pertains to you just as it does to any other Federal
employees, does it not?
Mr. GRAHAM. The legislation provides for title VII to be set aside.
i Mrs. SPELLMAN. To be set aside in this case. Don't you get the
s same pay, the same leave, the same rides home, and so forth that
Small other U.S. citizens working in foreign countries get?
ie Mr. GRAHAM. No.
f Mrs. SPELLMAN. You do not?
Mrs. SPELLMAN. That is different.
le Would you submit for the record which provisions of title V you
S don't fall under?
le Mr. GRAHAM. We have the Canal Zone wage base here. Any of
my craftsmen that are below the MG-10 cutoff are on a completely
y different Federal wage base. That is one example. Our leave is
ie different and that is another.
S Mrs. SPELLMAN. That comes about through Executive order?
Mr. GRAHAM. I don't know how it came about, but the Ramon-
n Eisenhower Treaty provided for the wage basis, how the leave
it system was devised. That was long before my time.
)f Mrs. SPELLMAN. If you would, gather for us the information on
)t where you fare less well than others.
Mr. GRAHAM. Well, the issue at hand, Mrs. Spellman, was collec-
Le tive bargaining. That is what we were zeroing in on there, not so
is much the overall Federal benefit. Certainly we enjoy benefits other
Le employees get. There is no question about that. But the collective
bargaining issue has been giving us heartburn for many, many
S years.
y Mrs. SPELLMAN. You feel you would be ill served if you got the
same collective bargaining rights as all other Federal employees?


Mr. GRAHAM. Well, that is a very good question. I think I would
like to answer it this way: If we had to fall back to an entrenched
position, I think we would be glad to accept title VII with the alien
clause removed because it is better than nothing and nothing is
what we have.
But naturally we will attempt to get something a little bit better
because of the uniqueness of the Panama Canal operation.
Mrs. SPELLMAN. I understand exactly what was meant by Mr.
Hamilton when he says everybody wants to get the best that can
be gotten. I hope that you recognize our position, too. We would
hope to get the best we can get but we may have a very, very
difficult time in getting anything passed in the House.
So that the more embroidery we put on this, the less likelihood j
of being able to get something through. We have been very, very
careful of just how much we do put on this.
I might point out, also, that when we are acting on the imple-
mentation of this particular treaty we are setting some precedents
that may face us in Taiwan. We are setting precedents that may
face us in implementing the Bureau of Indian Affairs legislation.
So we are not acting in a vacuum, you know. This is not the only
situation that we will be facing and we are going to have to be
pretty careful.
I wanted to ask Mr. Wall, if I might, how long is it that nationals
have been receiving equal pay for equal work?
Mr. WALL. 1955-56.
Mrs. SPELLMAN. Mrs. Schroeder says longer than women have.
Mrs. SCHROEDER. We still haven't made it.
Mrs. SPELLMAN. I was puzzled. On pages 4 and 5 you go into the
salaries here. When I recognize that there is a 75 cents minimum
wage for most people in the Canal Zone, then I say with the prices
that you are quoting, how do other people make out? How do other
Panamanians do, and are we creating the haves and have-nots
Mr. WAu.. The 75 cents an hour minimum wage?
Mrs. SPELLMAN. Yes. Or is it 80? I was told it was 75 cents.
Mr. WALL. That is in the Republic of Panama. You drive through
the back streets of Panama, you see the housing that they are
living in. That is the way they are living under their standard of
Mrs. SPELLMAN. It really makes quite a difference, then, doesn't
Mr. WALL. It certainly does.
Mrs. SPELLMAN. Mr. Werner, I am back to one of the things, one
of the basic problems that I have with all of this. We need the
pilots, you have convinced me of that, and we need you desperate-
ly. Then why are we offering early-outs? Why are we making it
possible for you to leave us? We need you. We should instead, I
think, be making it as attractive as we can for you to stay and
making it as hard as we can for you to leave.
Captain WERNER. Speaking from a personal standpoint, the at-
traction for staying here rather than working at the United States
at 50 percent more pay is the early option to retire at a reasonable
Mrs. SPELLMAN. Somewhere down the road maybe?

Captain WERNER. Perhaps if I am not too old by the time I retire
here. As you are aware, there is a RIF that has been extended to
people in the Canal Zone. People I represent are standing by to see
what retention incentives are going to be provided and make their
decision whether or not to take it. There is quite a few factors that
come into play in each individual situation.
So I talked mostly to the point of the mid-career pilot such as
myself. If the early option retirement is provided, I will stay here
another 7 years and continue providing my services as a senior
pilot to the Panama Canal Agency. If it is withheld, I am going to
resign and go elsewhere and work at a higher rate of pay.
Mrs. SPELLMAN. When you say the early option, you are referring
to down the road; am I right about that?
Captain WERNER. In my particular circumstances, yes. There are
people now that may be eligible for it, but there, again, the individ-
ual circumstances dictate whether or not they will accept it.
I heard on the news this morning that 7,000 people in Iran are
having an evacuation and yet a lot of people will remain there. I
think the stimulus to leave Iran is a heck of a lot stronger than to
stay here with an increased annuity in the legislation.
So it all depends on the individual circumstances. Hopefully, we
will be able to retain enough experienced people to have a minimal
impact on shipping going through the canal.
Mrs. SPELLMAN. If I had been with 0MB, I would not at this
point say you can have early out. I would have said no, we need
you, and when we need you we don't grant early out to give you
the incentive to leave. But we will add to your retirement with
each year that you stay, we will give you benefits if you stay on
with us. And then down the road after we have had an opportunity
to train additional people, et cetera, if you want to avail yourself of
those benefits, then you would have been far better off because you
stayed with us.
I think that is the way I would look at it instead of making it
easy for you to leave and at the same time try to keep you to stay.
Captain WERNER. I agree with your theory, although I don't
agree with the part about further down the road. I think there are
two paths here. You can withdraw the early retirement legislation
and we are going to have a lot of negatively motivated individuals
continuing on until they can retire.
Mrs. SPELLMAN. Are they going to wreck the ships?
Captain WERNER. Hopefully not. Midcareer pilots will be resign-
ing and going elsewhere. The difference between those that can go
under the present RIF which was already offered and the addition-
al number that could go under the implementing legislation early
retirement is minimal. It amounts to just slightly more than actu-
ally the pilots that resigned last year.
So we feel that your theory of providing additional incentives is
wonderful, but we also want to know that we have this end in sight
when we can leave and those people who do want to leave can
leave now.
Then I would say if it does create a problem, then we can talk
about additional retention incentives.
Mrs. SPELLMAN. I would like to pursue that with you.
The CHAIRMAN. Thank you, Mrs. Spellman.


Arte there any further questions? If not, gentlemen, our apprecia-
tion for your appearance and your participation here this morning.
Mr. W..I. Thank you for your attention
The CHAIRMAN. Our next witness, representing the American
Federation of Governmenrit Employees, Mr. Jim Lynch. He is interna-
tionalll vice president. Accompanying Mr. Lynch is Mr. James O'Don-
nell as president of AF(E Local 14.
Also testifying we have Mr. David Baglien, first vice president of
.AF(iE Local No. 1.1.
Mr. LYNCH. We are fortunate to have with us this morning Mrs.
Barbara Corson who is president of our nurses organization in the
Canal Zone. She holds another title for the 15th district. She is the
women 's coordinator for AFGE which covers all of our overseas
u r ions.
The CHAIRMAN. Welcome. We look forward to your testimony.
Mr. Lynch.
Mr. LYNCH. Thank you, Mr. Chairman and members of the com-
mittee. It is an honor and privilege to be here today. When I
walked in this building, I thought I was back in Washington at the
Cannon Office Building.
The 15th district is responsible for representing at the national
level the interest of the Federal employees in those overseas instal-
lations where we have been selected as exclusive collective bargain-
ing agents.
Among those overseas installations are the facilities in the
Panama Canal Zone which have become the subject of the treaties
of 19777 between the United States and Panama. At those installa-
tions we have the privilege to speak for approximately half the
Federal employees who are U.S. citizens and for many who are
Panamanian nationals.
I would like to thank you, Mr. Chairman, for the promptness in
having these hearings here and bringing it to the people in the
('anal Zone and afford them the opportunity to speak to you and
the members.
I would also like to thank Mrs. Spellman for her committee
action and having the hearings March 8.
I also understand Congresswoman Schroeder is going to have
meetings, too. I submitted requests to appear before your commit-
tee and we are looking forward to appearing before the subcommit-
tee in Washington. D.C.
A.s in the past, with the House Post Office and Civil Service
Committee. and the wisdom of you ladies and gentlemen, we are
looking forward in Washington to meeting with you and your staff
people and resolving any problems, if there be some, and I imagine
there may he one or two, but we look forward to working in these
problem areas with you and your staff people.

The CHAIRMAN. If the gentleman will yield, we appreciate the
continuing communications we have with you, Jim Lynch. in
Washington. As you say, we see a great deal of each oth-r. I
personally appreciate your input on a continuing basis. I have a
very decent handle on your attitude toward this particular i,-ue as
I believe do all of the members sitting at this table.
We will look forward to a continuation of that activity in Wash-
ington and certainly look forward to the hearings there that you
have already alluded to.
Mr. LYNCH. I am pleased to have this opportunity to appear on
behalf of our national president, Kenneth T. Blaylock, and to
present his testimony to your committee.
President Blaylock's testimony is of particular significance, in
my opinion, because it incorporates the views of our national con-
vention and of our 18-member national executive committee, speak-
ing for all AFGE members. Further, it is based on the understand-
ing reached by President Blaylock with the White House and with
the representatives of the Carter administration of their undertak-
ings regarding the passage of Public Law 95-454, the Civil Service
Reform Act of 1978. It also reflects the understandings our union
has gained from the readings of the texts of the 1977 treaties with
Panama, and the separate commitments made to U.S. nationals
and to Panamanian nationals in the transfer of sovereignty from
the United States to Panama over the territories where these
employees are located.
For my part, I concur fully with President Blaylock's testimony
and feel it a special privilege to be able to represent him in the
expression of these views.
I ask that the full text of President Blaylock's statement be made
a part of the record. With that, I shall commence with its presenta-
I appreciate the opportunity to have my statement entered
before your committee in connection with two bills: H.R. 111 and
H.R. 1716, both of which are concerned with implementing the
treaties of the United States, 1977, with the Republic of Panama.
Because that is the purpose of both these bills, I should like to
review with you the terms of the treaties, insofar as they affect
employee rights and labor-management relations, and, concurrent-
ly, the provisions of Public Law 95-454, enacted October 13, 1978,
which altered some of the rights and duties of all Federal employ-
ees and instituted a statutory basis for labor-management relations
in the Federal service. Both the treaties and Public Law 95-454 are
pertinent to those provisions of these two bills which concern em-
ployment and labor-management relations.
In bill H.R. 111, all of chapter 3, including all subchapters I
through VII are affected. In bill H.R. 1716, all of title III, including
chapter 1 and chapter 2, are directly implicated in the provisions of
both the treaties and Public Law 95-454.
For the sake of simplicity, I should like to begin with the discus-
sion of Public Law 95-454 and, having examined its relevance to

employment practices and labor-management relations, proceed to
the treaties themselves.
The enactment of Public Law 95-454 on October 13, 1978, when
President Carter signed this legislation, fundamentally altered the
status, rights, and duties of Federal employees, established new
institutions to safeguard and implement these and, finally, pro-
vided a statutory basis for labor-management relations.
In establishing these new purposes, the Congress provided two
definitions of "agency" in Public Law 95-454, the first appearing in
section 2302(aU2)NC) and the second appearing in section 7103(aX3).
It is the latter definition which concerns us in the area of labor-
management affairs. I attach as annex I, a reproduction of the
passages which I shall discuss hereunder.
Under that latter definition, it appears to us clear that all pres-
ent employees of the Canal Company and Government as well as
all employees of all Federal departments or agencies in the Canal
Zone now and later, under the treaties in the area of Panama
"made available to the United States," are entitled to the benefit of
the provisions of title VII of Public Law 95-454, unless specifically
excluded by that law.
The governing provision affecting these employees specifically is
that all the Federal employees are entitled to title VII excepting,
and I quote, the following: "7103(2XBXi) an alien or noncitizen of
the United States who occupies a position outside the United
Other exclusions, not at issue here in either bill H.R. 11l or H.R.
1716, are members of the uniformed services, supervisors and man-
agers, and Foreign Service personnel of the Department of State,
the Agency for International Development, and the International
Communication Agency.
Under these definitions, it is clear that all U.S. citizen employees
of the Company, Government, and of all other Federal agencies in
the Canal Zone are now already under title VII which governs
labor-management affairs. Consequently, the order issued by the
Secretary of the Army regulating labor-management relations no
longer had legal validity, from the effective date of Public Law
95-454, which was January 11, 1979, since it had been superseded
by title VII.
It could be contended, though we ourselves are not here pressing
the point, that all alien employees-that is, persons not U.S. citi-
zens-also come under title VII, for the interim period while the
treaties are not yet in force, on the claim that the Canal Zone is
U.S. territory until sovereignty passes to the Republic of Panama.
Whatever the status of employees who are not U.S. citizens,
however, it is manifest and uncontestable that all U.S. citizen
employees are now under title VII and, unless Public Law 95-454 is
set aside, shall remain under title VII following the date when the
territory comes under Panamanian sovereignty by action of the
treaties of 1977.
SNct re-printed

For these reasons, basing our views on Public Law 95-454, we are
opposed to the provisions of subchapter VII of bill H.R. 111, and
section 142(c) of bill H.R. 1716, both of which are designed solely to
deprive U.S. citizens of employee rights enjoyed by all other U.S.
citizen employees of similar classification located anywhere else in
the world, including every other foreign country.
Certainly, the undertakings made by the administration when
seeking senatorial advice and consent did not suggest that there
would be such outright discrimination practices against American
citizens, solely, for working in this area when all other American
citizens, who are not uniformed personnel or who are not in the
Foreign Service, are entitled to the protections of title VII, no
matter where they work.
The American Federation of Government Employees, AFL-CIO,
has discussed the provisions of title VII in hundreds of hours of
meetings with executive branch and legislative branch officers and
employees. At no time was there any reservation or stipulation
expressed in any of these meetings regarding the nonapplicabilityv
of title VII to U.S. citizens located in the Canal Zone or in Panama.
We would consider any effort to deprive these U.S. citizen em-
ployees of the rights for which they have waited so long and which
they now enjoy as a breach of faith by this administration.
There are other arguments, equally weighty, which I should like
to adduce under the provisions of the 1977 treaties.
The treaties of 1977 make a clear distinction between the rights
of U.S. citizen employees and those of Panamanian nationals work-
ing for the Canal Company/Commission. The latter are to displace
the former in the course of time, thus setting up a legal discrimina-
tion in favor of one group and against another.
This circumstance confronts both management and labor with
fundamental dilemmas in the area of labor-management relations.
Over and above the obvious conflict of interest which resides in
management and in labor in the classic management-labor rela-
tionship, resulting in the exclusion of supervisory and management
employees from union representation, the treaties inject further
conflicts of interest into the unionized labor force itself, distin-
guishing between, and discriminating among, them on the basis of
This conflict of interest takes two forms-legal and factual.
Legally, the treaties require that the U.S. citizen employees are
to be replaced by Panamanian employees over a course of time.
Moreover, the remedies which U.S. citizen employees are to obtain
for any losses they incur during this displacement are to be satis-
fied exclusively by U.S. authorities. On the other hand, the reme-
dies which Panamanian national employees, who might be dis-
placed incidental to the treaties' operations, are to be satisfied, in
some cases, by the U.S. authorities and, in other cases, by the
Panamanian authorities. However, these remedies are not com-
mensurate in procedural or factual terms, creating differences in
community of interest among the United States and Panamanian

Procedurally, the U.S. citizen employees will have available all
the U.S. constitutional and statutory processes, both administrative
and judicial. The Panamanian citizen employees will have availa-
ble only the treaties and the support of the Panamanian Govern-
Factually, the Panamanian employees expect to improve their
position primarily, if not exclusively, by displacing U.S. citizen
employees in those positions which will remain available, both in
matters of job retention and promotion to higher grades.
Given human strivings to advance competitively, the one set of
employees perforce will be seeking to hasten this process of transi-
tion to its advantage and the other set will be seeking to retard it.
This is not a community of interest. It resembles, if an analogy
may be drawn from marital life, the conflict of a prospective di-
vorce of husband and wife rather than the community of interest
of the parties.
As in any situation involving conflict of interest, the safest and
most rational posture is to face the facts openly. We hold that both
the U.S. employees and the Panamanian employees should have
the same rights vis-a-vis management. We regret the treaties do
not permit them the same rights vis-a-vis each other as employees.
For this reason, though most reluctantly, we bow to the situation
that the treaties do in fact purposely and radically discriminate
against U.S. citizen employees and in favor of Panamanian nation-
al employees. To avoid misconceptions and misunderstandings in
the future, we believe that it is in the best interests of all the
parties at the outset to reconcile themselves to this fundamental
fact and to seek to mitigate its impact insofar as the treaties do not
provide insurmountable obstacles.
We do not find rational the presumption of a situation where a
minority of Panamanian employees in the same bargaining unit as
a majority of U.S. employees can feel secure that the self-interest
of the U.S. employees will not be prejudicial to them. Similarly, we
do not find rational the presumption of the reverse situation,
where a minority of U.S. citizen employees will feel secure that the
motivations of the majority of Panamanian employees to accelerate
their displacement will not exist.
Our concerns do not arise out of prejudices due to national
origin. We have had no such problem in the past in the Canal Zone
and we have no such problem in the United States itself in situa-
tions where the laws clearly forbid discrimination on the basis of
national origin. However, the treaties positively require this dis-
crimination in favor of one class of nationals and against another
class and we are only being realistic to draw the objective, practical
consequences of such a legal requirement to discriminate.
Because of the importance of this issue, I should like to review
with you the provisions of the treaties which are the real core of
the dilemmas which I have been describing. I believe that, on the
basis of this review, it will become clear that the most prudent
system is to apply at the outset, two separate but equivalent and
parallel systems of collective bargaining, one for all U.S. employ-
ees, whether they work for the Company/Commission or for other
US agencies, and one for all employees who are not U.S. citizens

and who work either for the Company/Commission or other U.S.
The rights of U.S. employees of the Commission and of the
Armed Forces are separately set out under article III-Commis-
sion-and article IV-Armed Forces-of the treaty and the imple-
menting international agreements drawn up in consequence of
those two articles. (Article IV is sometimes described as the "Status
of Forces Article" because of the supplemental implementing inter-
national agreement which is based on it.)
These two articles superficially appear to make a distinction in
the rights between U.S. employees of the Commission and of the
armed services. In fact, no significant distinction applies. The main
difference relates to the commissary rights of U.S. citizen employ-
ees of the Armed Forces and, because of these commissary rights,
the eventual restriction of U.S. citizen employees of the Armed
Forces to residence in locations defined as "defense sites and such
other areas."
Procedurally, but not substantially, a distinction is made be-
tween these two categories of U.S. citizen employees because two
separate U.S./Panamanian liaison bodies will be established for
resolving personnel matters, one for the Panama Canal Commis-
sion and a separate body for the Armed Forces. All Commission
personnel matters will fall within the jurisdiction of the coordinat-
ing committee established under article III of the treaty and article
II of the relevant implementing international agreement. All
Armed Forces personnel matters will fall under the separate juris-
diction of a separate joint committee, established under the imple-
menting international agreement pursuant to article IV of the
treaty. Neither of these should be allowed to impinge on the rights
of labor organizations in dealing with management since these
coordinating functions will relate specifically to issues of quasi-
diplomatic agreements regarding management policies and not to
specific labor-management agreements pursuant to policies in the
area of employment incorporated in the treaties.
The employment rights of all U.S. citizens are defined and limit-
ed by several other articles of the treaty and by several implement-
ing agreements. Particularly important is article V, "Principle of
Non-Intervention," which requires that the U.S. nationals "refrain
from any intervention in the internal affairs of the Republic of
Panama." These internal affairs can relate, of course, also to the
conditions of employment of Panamanian nationals, to the nature
and status of the Panamanian labor unions, and to Panamanian
social security systems and taxation. Thus this article places U.S.
citizen employees in potential jeopardy if they are represented by
unions whose members are subject to Panamanian law.
Particularly relevant is paragraph 5 of title X, requiring the
periodic rotation, "at a maximum of 5 years, of U.S. citizen employ-
ees and other non-Panamanian employees, hired after the entry
into force of this treaty." The purpose of this is to assure that
seniority and career ladders are not established for U.S. citizen

41-698 0- 79 6


employees to the detriment of Panamanian nationals who need not
be rotated. Thus it clearly establishes a conflict-of-interest category
based on citizenship.
Articles in the implementing agreements clearly show that the
Status of Commission Employee Agreement-SOCEA-and the
Status of Forces Agreement-SOFA-are identical in placing ex-
press limitations on the employment rights, status, and tenure of
U.S. citizen employees. They are also identical for placing these
employees under criminal jurisdiction of the Panamanian State in
certain areas, including custody in Panamanian jails of those
charged with murder, rape, robbery with violence, trafficking in
drugs, or crimes against the security of the Panamanian State.
The implementation agreement to article IV of the treaty-
status of forces agreement-repeats as article II of that agreement
the text of article V of the treaty regarding the principles of
nonintervention. Thus, the similarity of legal status of U.S. citizen
employees of the Armed Forces to U.S. citizen employees of the
Commission is expressly emphasized. Article VII of the implement-
ing agreement to article IV of the treaty stipulates that the same
ratio of Panamanians to total employees will apply as defined in
the Panamanian law regarding foreign company operations.
I could cite additional passages in the treaties and implementing
agreements but I believe they would be redundant since the weight
of these texts clearly establishes that the U.S. citizen employees
have narrowly circumscribed and limited rights.
I want to make it absolutely clear that we are asking for the
same rights to be given to the employees of Panamanian or other
nationalities in labor-management relations as we are asking for
employees who are U.S. citizens. At the minimum, insofar as the
treaties themselves do not preclude these rights, they should be
equivalent to title VII of Public Law 95-454.
We would prefer more, of course. Title VII does not give any
Federal employees the same rights as private enterprise employees
in the United States have. But it is a great advance over the old
system of Executive orders. At least we now have a statutory
platform from which we can apply a lever to acquire rights and
conditions of work through collective bargaining for Federal em-
ployees which gradually will make their status somewhat like that
of private enterprise employees.
We will support totally all the unions in the AFL-CIO and, with
them, will insist that Panamanian nationals who are employees
either of the Commission or of the U.S. agencies have the same
rights as U.S. citizen employees. We do this while at the same time
noting that it is the treaties themselves which make it impractica-
ble in most cases for all employees, regardless of citizenship, to be
in the same units in order to effectively exercise these same rights
without the interjection of conflicts of interest among them.


SAlthough certain Panamanian national employees are entitled to
i special consideration for immigration into the United States, the
treaties do not give them any rights to guaranteed employment in
)f the United States. At best, former employees of the Company/
Commission will be placed with other U.S. agencies located in
Panama, so far as employment rights are concerned.
U.S. citizen employees, on the other hand, are entitled to certain
employment rights in the United States. Our concern is to assure
that they will be able to enjoy these rights in a timely fashion.
Therefore, I should like to solicit your committee's support for
it express legislative language they can cite when seeking to avail
)f themselves expeditiously of these rights, especially in a potential
n situation where there may be cutbacks in Federal employment in
e the United States itself.
t. The rights of which I speak are not disputed by the administra-
e tion. In fact, FPM letter 380-12, dated December 29, 1978, address-
Ses them directly. Entitled "Placement Assistance for Panama
Canal Zone Employees," the letter sets up certain high priorities
g for their assistance. I attach a reproduction of that letter as annex
it II 1 as evidence that there is no disagreement between us and the
executive branch regarding these placement commitments.
Our concern is that the envisioned program does not go far
enough in providing a statutory basis for these rights, and that it
does not provide the resources or the personnel to enforce it expedi-
tiously. Therefore, we should like to solicit your support for an
amendment to bill H.R. 111 and/or H.R. 1716 to establish an office
e of the Special Counsel of the Merit Systems Protection Board locat-
r ed in the offices of the Company/Commission where Federal em-
ployees can have direct access to officials cognizant of their rights
Sand able to require their enforcement.
I should like to ask your indulgence to permit me to enter as an
d attachment to my statement a draft of a proposed bill, which would
Establish such a procedure and office. I have had it drafted as a
d separate bill but it could easily be made a part of H.R. 111 or H.R.
I Basically, what the draft bill states is that for 5 years any U.S.
national who was employed by the Canal Company or Government
before the entry into force of the treaties" shall be entitled preferen-
tially to obtain employment at the same grade, career ladder, and
S pay in the United States. The remainder of the bill establishes and
e funds the machinery for carrying out this provision, locating it
formally in the office of the Special Counsel of the Merit Systems
SProtection Board established under Public Law 95-454, portions of
which I have already cited on previous occasions in this testimony.

Not reprinted.

You will be receiving proposals for specific other amendments
which will be presented by AFGE local union representatives
speaking for employee units which we represent. I endorse their
proposals completely and commend them to your special considera-
tion because they are all designed to improve the efficiency and
morale of the employees who will be recruited to remain in the
employment of the Commission or other Federal agencies after the
treaties come into force. I shall not repeat these petitions at this
point of the hearings, except to say that they have the complete
support of our union.


I am most grateful to your committee for accepting my state-
ment and for your kind reception of National Vice President James
Lynch and of the presidents of the locals who are appearing before
I look forward to presenting my own further testimony to you
personally in Washington when you hold hearings there.
In the meantime, I wish to assure you of the fullest cooperation
of myself and my staff in your addressing the complex problems
and resolving the dilemmas which now attend this implementing
Please accept my best wishes for a productive session and for a
safe journey back to Washington.
[The draft bill follows:]
I)RAFFT BILL To provide that United States nationals employed by the Panama Canal company
or ('anal Zone Government shall be entitled to be placed in civil service positions, and for
other purposes
Be it enacted by the Senate and House of Representatives of the United States of
Armeritu in Congress assembled. That (a) any U.S. national employed by the Panama
('anal Company or Canal Zone Government before the entry into force of the
Panama C('anal Treaty shall, during the 5-year period beginning on the date of the
enactment of this Ac.t, be entitled, upon request or upon termination of employment
with the Panama Canal Company, the Canal Zone Government, or the Panama
('anal Commission to be placed in a position in the competitive service or a position
in the Senior Executive Service held by a career appointee in any Executive
agency (within the meaning of section 105 of title 5. United States Code).
ibt any individual entitled to be placed in a position under subsection (a) shall be
placed in a position-
(1) having the same grade and pay, and
1'1 having the same duties and responsibilities and. to the maximum extent
feasible, the same qualification requirements.
as the position held by such individual before being placed under this section.
(c) Notwithstanding any other porvision of law, an individual entitled to be placed
in a position under subsection fa) shall be granted perference in placement in any
position over any other individual granted any other preference or advantage under
any other provision of law.
.K, 2 ial) The Special Counsel of the Merit Systems Protection Board shall
establish a separate office to receive and investigate complaints from any individual
with respect to placement in a position to which he is entitled under subsection (a)
of the first section of this Act.
'2' The office eFstablished under paragraph (1) shall-
'A'i be located in an area which is made available to the United States by the
Republic of Panama under the Panama Canal Treaty or any agreement with
respect thereto and which is accessible to individuals affected by this Act, and
i Nh- compxised of-
(i) 2 attorneys who shall be paid at a rate of pay not in excess of the
maximum rate of pay for (CS-15 of the General Schedule,

(ii) an administrative assistant, and
(iii) 3 clerical personnel.
(bX1) If, after any investigation under subsection (a), the itlice di-ttrri-nes "fies
(A) an individual entitled to be placed in a position under the fir-t -*.tin ,, 0hi-
Act was not so placed, or
(B) an individual was placed in a position which does not meet the- requirn-ii.:!'-
of subsection (b) of such first section,
the office shall report its determinations to the Special Counsel.
(2) If the Special Counsel concurs in the determination made by the ,f,. the
Special Counsel shall refer the matter to the Merit Systems Prtt_.-ctin B,,.ird jrid
shall notify the Congress of such referral
(3) If the Board concurs in the determination, it shall order the Office of P.r-,'n-
nel Management to place the individual in an appropriate position
(c)(l) The office shall report each quarter to the Comptr'ller General uf the
United States, and arrange for an audit of the office before the clse of th- first
year in which it is in operation
(2) The Comptroller General shall, after the audit conducted under paragraph (1),
report to the Congress with its recommendations with respect to the -t.Liff 1-nd other
needs of the office.
SEC. 3. There is authorized to be appropriated, without fiscal year limitation. the
sum of two million dollars to carry out the purposes of this A-ct, except that not
more than 650,000 dollars may be expended in the first fiscal year in .-hih such
money is made available.
The CHAIRMAN. Mr. O'Donnell.

Mr. O'DONNELL. My name is James J. O'Donnell, president of
local No. 14, American Federation of Government Employees. Be-
cause local No. 14 is the largest of the several unions representing
principally U.S. citizen employees, my comments today will reflect
principally the viewpoint of United States employees.
Although there are points of disagreement among the various
unions representing both U.S. and non-U.S. citizen employees, es-
sentially regarding collective bargaining, there are distinct broad
areas of agreement on most issues relating to the treaty.
Even though I will confine my testimony to the effect of the
proposed legislation on my own members, I assure you that AFGE
local 14 fully supports the aspirations of the other unions for the
legislation required to carry out those treaty provisions that insure
that "conditions of employment will be no less favorable than at
With the ratification of the treaty, an established fact, we must
now face the question of how to keep the canal running at top
efficiency under new and very different conditions. The key to that
question, as Governor Parfitt and many of his predecessors have
recognized, is the work force. Governor Parfitt has demonstrated
his concern for the work force by going to bat for us during the
treaty negotiation process and during the drafting of the imple-
menting legislation. He has also tried hard to keep us informed.
Unfortunately, however, he has to speak through layers of com-
mand, and the administration's bill comes to you following a long
process of filtration. The result is that you in Congress receive a
distorted view of the needs, concerns, and temper of today's canal
work force.
In the past, the American Federation of Government Employees
has had the opportunity of testifying to this committee on improv-
ing protections for Federal employees. Today, the committee.
through the sponsorship of H.R. 1716 and H.R. 111 is in the driv-

her's seat, but I would like to present to you what needs to be
amended in that legislation in order to assure that the canal's key
U.S. citizen employees will stay on the job and willingly train their
Panamanian replacements, and that tomorrow's vacancies in hard-
to-fill positions will continue to be filled by topflight personnel. In
general, the legislation takes care of most of the guarantees on
conditions of employment called for by the treaty, but certain
essential changes need to be made.
As might be expected certain fears and apprehensions remain in
the minds of the employees concerning the eventual turnover of
the Panama Canal and the Canal Zone to the Republic of Panama.
I am constantly besieged by employees asking, if U.S. employees
are expected to remain on the isthmus over the next 21 years, will
they and their families be able to lead their lives without fear or
the constant threat of harassment? What kind of job security will
be afforded, what kind of incentives will be provided for me to stay
and train my Panamanian replacement?
These are just some of the questions that workers are asking.
Unfortunately, I cannot provide the answers to these questions.
I am relying on this committee and your colleagues in the House
of Representatives who will soon be voting on the implementing
legislation to provide the necessary safeguards, benefits, and incen-
tives to retain the dedicated employees currently working for the
Federal Government on the isthmus, and for those who will be
needed to be hired in the future years.
AFGE believes the following considerations are absolutely neces-
sary to improve employee morale and insure the continued effec-
tive operation and success of the Panama Canal.
My first point: The employees, without question, need a collective
bargaining system. Too often in the past, management has with-
drawn benefits won by employees. I offer as an example the action
of the former Assistant Secretary of the Army (Civil Works), Victor
V. Veysey, in his capacity as Chairman, Canal Zone Civilian Per-
sonnel Policy Coordinating Board, deprived many employees of
their eligibility for a pay differential and for housing assignment
within the Canal Zone.
The end result of this arbitrary management action was a costly
job action that resulted in the loss to both shippers and the canal
organization of many hundreds of thousands of dollars.
Why did that action even take place? Simply because labor
groups were not consulted in good faith on the decisions affecting
the terms of their working conditions.
Local No. 14 firmly believes that only through the collective
bargaining process and the application of title VII of the Civil
Service Reform Act can the rights and benefits earned by employ-
ees be protected. We in the labor movement ask that.
On October 13, 1978, President Carter signed the Civil Service
Reform Act, designed to improve Government efficiency and to
balance management authority with employee protections. Among
the major features of the act are an independent and equitable
appeals process; protections against abuse of the merit system; and
incentives and rewards for good work and skillful management.
Some of the provisions of the Civil Service Reform Act took effect
here in the Canal Zone in January of this year. The application of

this act to the Canal Zone does not mean that labor has any
intentions of reducing management's right to manage. On the con-
trary, that right is recognized and respected.
All we in the labor movement ask is that true representation for
employees be afforded through the acknowledged and long-accepted
process of collective bargaining as recognized in title VII of the
Civil Service Reform Act of 1978. Local No. 14, AFGE, is requesting
that section C on page 30 of H.R. 1716 be deleted, as well as section
225 under subchapter VII, Labor Management Relations in H.R.
Second, the restoring of the tropical differential to the former
rate of 25 percent to be effective on October 1, 1979, would be a
step in the right direction for those employees who elect to stay
and make the treaty work for the good of the United States and
world commerce.
Point 3, employees are extremely concerned about the fact that
PX, commissary, and postal privileges will be denied them after 5
years. This is correctly perceived as a definite decline in their
quality of life.
In Panama, items such as electricity, telephone, et cetera, are
triple the cost for like items offered in the Canal Zone. Frequently,
the Panamanian economy suffers shortages in necessary staple
foodstuffs. Employees ask me, "How will I provide for my family
during these periods?" I believe that all U.S. employees should be
administratively extended PX, commissary, and U.S. postal privi-
leges until the year 2000.
Ironically, gentlemen, when I brought up this proposal to Gener-
al Dolvin and Assistant Secretary of State David Popper, they
brushed it aside with the comment that this item was locked into
the treaty. Strangely enough, however, whenever Panama asks for
reconsiderations on treaty matters, we suddenly find the terms of
the treaty are again negotiated. I respectfully suggest that what is
good for the goose is good for the gander.
Point 4, I would like to quote the specific language from the
treaty, article X. It states:
The United States of America shall with respect to the Treaties: (b) * seek
special legislation to provide more liberal entitlement to, and calculation of, retire-
ment annuities than is currently provided for by law.
It is perfectly clear from the language used in article X that
liberalized benefits and liberal calculation of those benefits envi-
sions two separate, specific actions, that is, (1) to provide more
generous and liberal benefits lhan the regulations currently pro-
vide in a large scale RIF action, and (2) after the liberalization of
benefits has occurred, then a liberal calculation of the more gener-
ous benefits must then be accomplished.
One does not have to be an expert in semantics to see this. But,
is this in fact, being done? I think not!
I would like to address the questions of the kind of annuity that
would meet the requirements of article X. The administration pro-
poses that employees earn an annuity at the rate of 21/2 percent of
their average 3 years pay for such service as does not exceed 20
years. This is one-half percent more than regulations currently

We propose, on the other hand, that the rate of annuity be
computed at 3 percent of the employee's highest I year's pay for
such service as does not exceed 20 years. With all due respect to
the administration's proposal, I do not believe that an additional
one-half percent will attract and keep the type of career-minded
employees we need.
Quite frankly, we are talking about a new agency that will be
out of existence in some 21 years. A 3-percent annuity rate is a
desperately needed incentive to improve employee morale, to keep
key employees, and to continue the efficiency of the organization
during the difficult and uncertain days that lie ahead of us.
For the past 70 years, the health care system in the Canal Zone
has provided outstanding services to employees, seamen of the
world, and others. Many contributions to medical knowledge have
emerged from the Canal Zone medical facilities. Local 14 has been
proud of our system of health care and we would like to see it
continue on after the treaty.
We are concerned about maintaining the current high standards
for physicians and dentists. At the present time the Canal Zone
Government has a licensing board in addition to a hospital creden-
tial committee. We are interested in keeping the credentials com-
mittee active after October 1979.
Local 14 believes that foreign medical graduates should demon-
strate a working knowledge in English. They should be required to
pass a standard medical exam such as U.S. specialty boards, flex,
national boards, or ECFMG. For dentists, ADA National Board
and/or U.S. State licenses should be a minimum standard.
Living conditions and the quality of life for all U.S. citizen em-
ployees now working in the Canal Zone are in considerable meas-
ure related to the availability and quality of medical care. The
quality of medical care depends on many things, one of which will
be the standards used to evaluate physicians and dentists.
Whether physicians and dentists now employed will remain
working under the new organization after October 1979 will depend
on the credentials and skills of their newly hired colleagues in the
health field. Local 14 believes that the current criteria must be
maintained to assure quality care for patients and to retain those
physicians and dentists now employed.
Consideration should be given to teachers and railroad employ-
ees. Local 14 would like to request that title V, United States Code,
be amended to include as creditable service for purposes of civil
service retirement system certain periods of service by individuals
before the date they were employed by the Panama Canal Compa-
ny or the Panama Railroad Company.
Title V should be amended to include as creditable service for
purposes of civil service retirement system certain periods of public
school service outside of the Canal Zone by individuals who become
subject to such provisions for public school service within the Canal
Zone. We are requesting that teachers and educational administra-
tors be allowed to purchase credit up to 10 years for public school
service in the United States.
Local 14 is asking for equity with the District of Columbia teach-
ers who by Federal legislation serve as a standard for Canal Zone

teachers pay and who have had the buy-in option for the past 50
Local 14 is requesting that the Secretary of the Treasury be
allowed to transfer to the civil service retirement and disability
fund from the Railroad Retirement Account or the Railroad Retire-
ment Supplemental Account an amount equal to the amounts col-
lected from present employees who were employed with a railroad
before the date they were employed by the Panama Canal Compa-
ny or the Panama Railroad Company.
Again, this is no precedent-setting request. Employees of the
Alaskan Railroad currently are permitted to do this.
We are asking that the implementing legislation concerning em-
ployee benefits and protections should be extended to the employ-
ees of all U.S. agencies conducting operations on the isthmus. It is
an accepted fact that the Panama Canal Treaties of 1977 will cause
serious disruption in the everyday lives and welfare of workers
employed by all Federal agencies in this area.
We ask that the same benefits, protections and rights afforded to
members of the Panama Canal Company organization and the new
Panama Canal Commission be extended to the employees of all
U.S. Federal agencies on the isthmus of Panama.
Specifically, a very important group of employees, namely Canal
Zone DOD Agency workers, are not equally protected under the
terms of this treaty, nor are they equally provided for during the
life of the treaty. The lack of equality of protection for these DOD
employees would be highly discriminatory. The importance of this
group of employees cannot be overemphasized. During the next 21
years they will be required to insure that vital functions are main-
tained. Any DOD Agency realignment, consolidation, transfer, or
elimination of function which affect the employees living and work-
ing conditions as a direct result of the treaty, such as the loss of
the U.S. court system and the loss of U.S. jurisdiction and sover-
eignty must be considered as adversely affecting them as it does
their colleagues in the Panama Canal Organization. Therefore,
these employees must receive equal consideration and future em-
ployment protections as proposed for Panama Canal Company em-
ployees in the implementing legislative package.
Historically, the 1955 Eisenhower/Remon Treaty established the
Government Canal Zone Merit System which placed all U.S. em-
ployees at parity with respect to compensation, retirement entitle-
ment, job protection rights, home leave entitlement, and tropical
differential. This resulted in a uniform nondiscriminatory civil
service for the Canal Zone employees both Panama Canal Compa-
ny/Government and DOD Agency workers.
The merit system was accepted by management and all U.S.
employees as appropriate and equitable since all were exposed to
the same living and working conditions within the same geographic
It now appears that the new treaty, if implemented by legisla-
tion, according to the strict wording of the treaty, will create a
dual civil service system for U.S. employees-discriminating
against DOD employees-and essentially turning the clock back to
pre-1955 conditions. For example the treaty does not provide U.S.
employees of other Government agencies the 21/2 percent per year

toward retirement, nor the voluntary retirement option or the
annual government paid round trip for dependents education, as is
proposed for employees of the new Panama Canal Commission.
Since all U.S. citizen employees of the new Panama Canal Com-
mission and DOD agencies during the next 21 years will be living
and working within a foreign country, subject to the identical
political-economic conditions, anything less than an equal civil
service system for both groups of U.S. employees would be intoler-
able, discriminatory in the extreme, and certainly not in the best
interests of the U.S. Government.
The great majority of employees of the various Federal agencies
came to the isthmus fully expecting a lifetime career on the isth-
mus. In many instances, they left home, family, and friends in
order to work overseas for the U.S. Government in their chosen
career fields. I know that they have always had the best interest of
the U.S. Government at heart. The administration cannot now
simply pull the rug out from under them without caring or making
some positive adjustment for their future well being. I firmly be-
lieve that the comments provided you and the proposed changes to
the implementing legislation that I am presenting represent the
best means of insuring the continued dedicated efforts of all the
employees concerned. Along these same lines, the continued effi-
cient operation of the Panama Canal will be guaranteed, so that
when we conclude our presence on the isthmus in the year 2000 a
safe and efficiently operating canal will be the inheritance of the
Panamanian people and world commerce.
It is estimated that $3.6 billion will be the cost of implementing
the treaties over the next 20 years. Surely some little consideration
must also be given to the employees who will be required to per-
form the work necessary to make the treaties a successful reality.
Then, finally, although not directly related to the proposed legis-
lation. I believe that the treaty is either being misinterpreted or
interpreted in bad faith. I refer to article IX of the treaty, Applica-
ble Laws and Law Enforcement.
I would like to ask this committee to investigate article IX to see
if it is being fully complied with. This article refers to nonprofit
organizations in the Canal Zone that wish to continue operation
after October 1, 1979.
It is clear from the reading of the treaty that those organizations
are to enjoy during the transition period that ends April 1, 1982
the same terms and conditions of operations as at present. Let's
face it, ladies and gentlemen, the treaty was and is a destroyer of
morale and a destroyer of incentives for work.
I have submitted as an attachment to this statement the specific
language that may be used to amend H.R. 1716 and H.R. 111, or
both, to provide for those labor guarantees and incentives. I have
discussed these amendments with both the State Department and
the Office of the Secretary of the Army and have been informed
that neither office would object to the inclusion of such amend-
ments in the final bill.
As October 1, 1979, the effective date, draws nearer and the
confusion regarding treaty implementation dies down, both these
parties realize that the present skilled work force is absolutely

Therefore, it is most advisable to implement more liberal provi-
sions to retain the skills and expertise of the employees that now
keep the canal operating and to provide real incentives to those
key personnel we will be required to hire in the future years.
Local 14, AFGE, is requesting that pages 31, 32, 33, 37, 39, 41 and
44 of H.R. 1716 be replaced with the enclosed attachments.
Your committee has asked for my comments on the bills and I
have given them to you. However, I would also like to offer some
advice. If you want to keep the canal operating as a marvel of
American know-how, as an international showcase of Americans
working side by side with Panamanians, then make the necessary
provisions to keep the employees on the isthmus so that they can
willingly pass on their knowledge to the people of Panama.
In terms of the cost involved, these suggestions are nominal. In
terms of worth to the canal organization, U.S. prestige and world
commerce, then they are invaluable.
Thank you, gentlemen.
[The substitute amendments to pages 31, 32, 33, 37, 39, 41, and 44
of H.R. 1716 follow:]


1 Sectton '... 1.. lon 1- f title 2 mf the Panama

2 aral C.,'e is amnded b'. deleting siubsection (d) thereof.

3 Section 14h is amended to read as follows

4 "S-c. r i-LrJ tmernt and retenttI 'n rermuneration.

5 (a) In addition to basic cmpensat ion and tropical differential,

6 .ad additional remianeration in such a-munts as the head

7 f the department concerned determines, mav be

8 paid as overseas recruitment and retention differentials

9 to the following categories of individuals

10 if, in the judgment of the head of the dep.irtCment

11 concerned, the recruitment and retention of such

12 employees is essential --

13 (1) persons emplu -yed by the Panama Canal

14 Company, Canal Zone Government or a department

15 in the Canal Zone prior to the effective date;

16 (2) persons thereafter recruited outside of

17 Panama for a position in the Republic of Panama;

18 and

19 (3) Medical doctors and dentist emplov'd by the Department

20 of Defense or Panama Canal Commission.

21 (b) Employees who fall into more thpn one

22 of the three categories described tn subsection

23 ja) of this section may qualify for additional

24 remuneration under only one of those cate'irles.



1 (c) Additional remuneration prescribed under

2 this section may exceed 25 percent of the

3 rate of basic compensation for the same or similar

4 work performed in the continental United

5 States by employees of the Government of the

6 United States."

7 Section 306. (a) Title 2 of the Panama Canal Code

8 is amended by adding a new section 14J.7 to read as follows:

9 "Sec. 147. Transfer of Federal Employees to

10 Panama Canal Commission. The head of any Federal

11 agency, including the United States Postal Service,

12 is authorized to enter into agreements for the

13 transfer or detail of that agency's employees,

14 serving under permanent appointment, to the Panama

15 Canal Commission. ''nder regulations prescribed by

16 the Office of Personnel Management, any employee

17 so transferred or detailed shall, upon completion

18 of his tour of duty with the Commission, be entitled

19 to reemployment with the agency from which he was

20 transferred or detailed without loss of pay,

21 seniority or other rights or benefits to which

22 he would have been entitled had he remained on

23 the rolls of that agency."

24 (b) Section 148 of title 2 of the Panama Canal

25 Code is amended by--


1 (1) changing the parenthetical citation

2 "(5 U.S.C., sec. 2091 et seq.)" In paragraph

3 (1) to read "(5 U.S.C. Ils 8701 et sMq.)";

4 (2) changing the parenthetical citation

5 "(5'.S.C., sec. 751 et seq.)" tn paragraph

6 (2) to read "( 5 U.S.C. II 8101 et seq.)";

7 (3) changing the parenthetical citation

8 "(5 U.S.C., sec. 2251 et seq.)" in paragraph

9 (4) to read "(5 U.S.C. II 8331 et &eq.)"; and

10 (4) revising the unindented portion of the

11 section following paragraph (6) to read as follows:

12 "...the basic compensation ef each employee

13 shall include the rate of basic

14 compensation established for his position,

15 and, where appropriate, the amount of overseas

16 recruitment and retention differentials,

17 determined in the manner respectively provided

18 by sections 144 and 146 of this title."

19 Section 307. Section 149 of title 2 of the Panpma

20 Canal Code is amended to read as follows:

21 "Sec. 149. Merit and Other Employment Requirements.

22 (a) Subject to this subchapter, the President may,

23 from time to time and taking into account any

24 recommendation of the Panama Canal Commission, and

25 after appropriate coordination with labor organization

26 under collective bargaining procedures established by the

27 Panama Canal treaty of 1977,


1 Wage rates; wage bases and wage formulas; tropical differential;

2 premium pay and night differential; reinstatement and restoration rights;

3 injury and death compensation benefits; leave and travel; except as

4 modified to provide equity with other employees within the agency to

5 which the employee is transferred; transportation and repatriation

6 benefits; group health and life insurance; reduction-ln-force rights;

7 an employee grievance system; and the right to appeal adverse and

8 disciplinary actions as well as position classification actions;

9 veteran's preference eligibility; holidays;4saved pay provisions; and

10 severence pay benefits; and sabatical leave. Educators employed by the
11 Canal Zone will be allowed the option to purchase retirement credit in

12 their current U.S. Civil Service Retirement plan for up to ten years of

13 previous service in public schools other than Canal Zone. Railroad employees

14 will be allowed to include as creditable service for purposes of the Civil
15 Service retirement system certain periods of service by individuals before the

16 date they were employed by the Panama Canal Company or the Panama Railroad

17 Company. Eligible employees will continue to have access to health care

18 services from Department of Defence facilities where credential requirements

19 shall conform to United States standards of certification for health care

20 practices.

21 Section 322. Title 2 of the Panama Canal Code is amended by adding a new

22 section 203 to read as follows:

23 "Sec. 203. Placement. (a) A United States citizen who, immediately

24 preceding the effective date of exchange of instruments of ratification of

25 the Panama Canal Treaty of 1977, was an employee of the Panama Canal Company

26 or Canal Zone Government, who separates or is scheduled to separate on that date

27 or thereafter in accordance with the program established upder subsection

28 (c) of this section
1 -37-

1 w .o !.3t plenty sistance Lsr, .'r this

2 sectionn"

3 n I,.. .' Ti tle 2 'f the Panaa Canal LIode is

n Ind b 1, addi'- a new section 2,-4 to read as follows:

5 FSI '. ..,vt .,nal travel benefits.

6 .n'n.Jt- s of United States citizen e.plowee% of

7 the Panama ,iatil '.L-. i ton or a department in the Canal Zone

8 who are eligible for educational travel b.-nefits shall

9 be entitled to one round trip per '.ar for undergraduate

10 studies in the citede d States until tOev reach their 23rd

II birtn .i, 1 "

12 Section 32.. Adlt i tment ,f c onpensati on. 11nited

13 States citizen .-ces of the Panama Canal Commnission

14 shall be r-ild an aII wance in addition to the tropical

15 differential to off'.et the increased cost of living

16 that -a result after the date of entry into force

17 of the Panp'-- Canal Treaty of 1977. The amount of the

18 additional compensation shall be determined by the

19 Panama Canal Commission.

20 Section 325. Early Retirement Eligibility.

21 Section 83,. of title 5 of the United States Code

22 is amended:



1 completing 20 years of service;

2 (2) voluntarily, after completing 25 years

3 of service or after becoming age 50 and completing

4 20 years of service; or

5 (3) involuntarily, as a result of the imple-

6 mentation of the Panama Canal Treaty of 1977 or

7 related agreements, except by removal for cause

8 on charges of misconduct or delinquency, or

9 voluntarily within 2 years prior to meeting the

10 age and/or service requirements in paragraph (2)

11 is entitled to an annuity if he--

12 (A) was employed by the Canal Zone Government,

13 Panama Canal Company or an Executive Department immediately

14 prior to the effective date of exchange of instruments

15 of ratification or entry into force of the

16 Panama Canal Treaty of 1977; and

17 (B) has been continuously employed by

18 the Panama Canal Commission or by an Executive

19 agency conducting operations in the Canal Zone

20 or the Republic of Panama since

21 the effective date of exchange of instruments

22 of ratification of the Panama Canal Treaty

23 of 1977 or its entry into force."


41-698 0- 79 7


1 "(n) The annuity of an erwloyee retiring under

2 this s'.ibchapter wh, was emplovedr by the Panama

3 Canal C',I-w.npanv or Canal Zr',ne Covernment Immedlately

4 prior to the entry into force of the Panama Canal

5 Treaty 'f 1,77, who continues in employment with

6 the Pana-a Canal Commlssion, or with another Executive

7 agency or the SmItihsntan Institution, in

8 the Republic of Panama is computed with respect

9 to the period of that service performed on a

10 continuous basis after the entry into force of

11 the Panama Canal Treaty of 1977 by multiplying--

12 (A) 3 percent of the employee's

13 highest annual pay by so much of such service as

14 does not exceed 20 years; plus

15 (B) 2 percent of the employee's highest annual

16 pay multiplied by so much of such service as

17 exceeds 20 years."

18 "(o) The annuity computed under subsection

19 (n) of this section for an employee who was employed

20 as a law enforcement officer or firefighter

21 shall be increased by $8 for each full month of

22 such service in the Republic of Panama after the

23 entry into force of the Panama Canal Treaty of

24 1977. This increase in annuity shall not be paid

25 with respect to service performed after completion



[The following additional statement was received for the record:]

Perhaps the message of widespread employee frustration at the continuing lack of
a firm framework of reference on living and working conditions on which to plan
their futures has been an underlying theme in the testimony thus far. This frustra-
tion and insecurity is pervasive and runs through all layers of management and
workers with the same uncertainties nagging at the highest level managers and
professionals to the lowest graded laborer.
Gentlemen, the threat to our security which we face has created a climate thick
with concern and demotivating in the most classic sense of behavioral psychology.
The hygienic motivating hierarchies or factors mentioned by Maslow and others are
now at the lowest level and I fear we have now a crisis in behavior that can best be
described as explosive; where the same elements of strength and loyalty that have
clearly established the Canal workforce as a proud model of dedication and efficien-
cy may be spontaneously precipitated in the opposite direction in a final attempt to
secure self preservation.
The scenario unfolding before us is clearly one of traumatic change without any
accompanying guarantees of security. By the beginning of May nearly 7 out of every
10 employees will have received notification of a transfer or a reduction in force.
The vast majority of the workforce will have tangible evidence of the effect on their
livelihoods without anything but empty promises that they will be protected. At the
same time, we also face major changes in life style and conditions such as legal
jurisdiction, schooling, medical care and logistical support to name but a few. The
future looms as one large elusive series of threatening actions which are vast and
Now you might be thinking, we've heard this before, and isn't this overstating the
case? I think not and I have tried to analyze some data which may quantifiably
indicate this underlying rapid deterioration of this model work force. Specifically, I
will present data on employee safety, ship accidents and disciplinary actions as
evidence of the deep-seated breakdown in employee motivation and morale, and
dispel the mistaken interpretation of employee silence and continued efforts on the
job as acquiescence, acceptance or resignation to their fates as fodder to feed the
treaties. Admittedly, each of ths indicators is composed of multiple factors; however,
a definite and identifiable trend exists which will allow you to draw your own
conclusions as to the quantifiable severity of extant problem and the need for
genuine equitable solutions as a matter of high priority.
The Accident Frequency Rate involving disabling injuries throughout the Panama
Canal Company/Canal Zone Government has shown a dramatic increase of 57
percent form fiscal year 1977 to fiscal year 1978. Individual bureaus have experi-
enced increases in disabling injuries of as much as 100 percent for this period. With
all factors being the same, one might justifiably conclude that the drastic increase
in accidents is a direct reflection of the pressures of insecurity on all employees.
When one looks at individual divisions, one finds that of the ten divisions exceeding
the Company/Government average Accident Frequency Rate; that the five highest
accident rates are being experienced by units which either will cease to exist on
October 1, 1979 or 30 months thereafter. For instance, the Marine Bunkering
Division, which leads the list in disabling injuries, is experiencing an Accident
Frequency Rate over 3.5 times that of the increased Company/Government average
and 6 times that of the Company/Government average in fiscal year 1977.
The frequency of accidents involving transiting ships shows the same alarming
trend. In fiscal year 1975 there was one accident for every 540 oceangoing transits.
In fiscal year 1978 the frequency has increased over 95 percent to one accident for
every 278 oceangoing transits. Approximately two-thirds of the accidents involve
employee-related fault. For the same period the average damage cost per accident
has climbed 36 percent, from $70K to $95.4K, and total damage amounted to nearly
$5.5 million in fiscal year 1978.
Employees receiving suspensions or reprimands is another factor which is indica-
tive of overall employee motivation and which we see clear signs of deterioration. In
fiscal year 1977, 548 disciplinary actions were taken within the workforce. In fiscal

year 197S this number increases to 700-an increase of nearly 2$ percent-with the
increase in suspensions increasing nearly 40 percent this same period
Gentlemen. I stipulate that from these indicators of employee frame of mind we
have clear aind quantifiable evidence of serious deterioration which unless checked
by providing an immediate and concrete assurance of living and working conditions
will reach epidemic and catastrophic proportions
Other le-ss quantifiable, but nonetheless observable indicators, such as pilferage,
absenteeism, alcoholism and psychotic behavior further confirms the critical break-
down in the traditional tough fiber of this workforce. I believe we are rapidly
approaching, if indeed we have not already reached, a point where any precipitant
could cause a spontaneous collapse of the workforce. The implications are quite dire
whether the collapse manifests itself as a work slowdown or stoppage or even willful
damage to the operating machinery, but the fact remains the population shows
clearly demonstrable signs of overstress, behavioral instability which has been
engendered and nourished by change and insecurity without any concrete stablizing
conditions to mitigate the trauma of change which to date has stricken at the very
heart of the motivation, morale and security of the population. Unrelenting and
unchecked frustration is unpredictable and often irrationally destructive.
The case. I believe, is clear that you gentlemen can take the action to rectify this
obviously dangerous situation. By passing the legislation which will fix the condi-
tions of employment you can allay, to a large extent, the very real fears now
ingrained into the Zone worker. The nature of the legislation required has been
amply stated by other testimony.
My only purpose today was to present to you evidence to clearly establish the
critical nature of our current situation.
I would like to conclude my remarks by briefly addressing the potential conse-
quences of a disruption to the Canal operations which is likely when all reasonable
avenues of relief have been exhausted.
On the basis of fiscal year 1978 data, one could expect a daily loss of 35.2 transits,
2.5 of them being North Slope crude oil Daily cargo loss would approximate 400,000
long tons and loss in tolls revenues would approximate $541,000 daily.
Focusing on one commodity, with the shortage of crude oil in the Eastern States
due to the Iran crisis one would conclude that the disruption of North Slope crude
supplies to the East Coast, which rely solely on the Panama Canal, might be crucial
and politically explosive.
Seventy percent of the Atlantic to Pacific commercial cargo transiting the water-
way originates on the West Coast and terminates on the East Coast, while 33
percent Pacific to Atlantic cargo can be attributed to reverse flow. Obviously the
impact on regional or local economies could be significant within the United States
whereas, for those countries in South and Central America where the bulk of both
its imports and exports depend on the Canal, the impact might well be disastrous
even on the short term
Data exists which could fully develop detailed potential impacts of a canal closure
but. suffice it to say that, from a broad overview such a closure would generate
major political and economic ripples and considerable grass roots interest on the
part of those affected
Clearly, then, the avoidance of such an eventuality is paramount if it can be done
within the bounds of reason, justice and equity.
I hope that this information will aid you to assess the situation as it exists, the
potential consequences of both favorable and unfavorable action on the part in
Congress and in the end contribute to resolving the end problems facing us as
employees and the two nations who have undertaken the new relationships con-
tained within the Panama Canal Treaties.


Calendar year P, r t
._., ^^ Permeni
Bureau 17 1976 1917 1978' increase

Engineering and construction . .. 3.28 252 487 6.19 270
M arine .................. .................................. 4 94 5.56 6 35 8.96 41.0
Transportation and terminals............................ 11.35 14 61 7 86 14 04 78.6
Supply and community services 1.95 185 1.79 3 50 95.5
Civil affairs . 2 31 4.17 6.57 10 73 630
Company/Government average........................ 4 82 5 35 5.37 8.41 56.6

'3 q r3 t