Panama Line: Statement of tonnage handled for fiscal year ended June 30, 1955 Total Total Total Total Total Total Total Total Govern- com- Govern- com- Govern- com- Govern- comment mercial ment mercial ment mercial ment mercial ton nage EXHIBIT II Panama Canal Company-Steamship Line operations: Comparative statement of income and expenses for the years 1953–56 1 Annual depreciation on steamships was reduced starting in 1954 because of increase in estimated service lives from 25 to 35 years' adjusted prospectively. 2 Reclassified to general corporate expense. The allocation of general and administrative expense has been discontinued. Mr. ROWLAND R. HUGHES, Director, Bureau of the Budget, Executive Office Building, Washington, D. C. MARCH 28, 1956. DEAR MR. HUGHES: In the report of the Bureau of the Budget study of Panama Canal operations, transmitted by the President to Congress on January 31, 1950, certain recommendations were made, among them, that responsibility for supervision of the Panama Canal and the Panama Railroad Company be transferred from the Secretary of the Army to the Secretary of Commerce. Have there been any further studies by the Bureau on the operations of the canal? Or has the Bureau at any time since this study was transmitted to the Congress revised or modified their recommendations regarding the transfer of these facilities to the Secretary of Commerce? Your prompt reply would be appreciated, so that we might have the benefit of the Bureau's present thinking on the matter in the preparation of our committee report on S. 2167, to transfer administration of the Panama Canal to the Secretary of Commerce. With kind regards, I am, WARREN G. MAGNUSON, Chairman. EXECUTIVE OFFICE OF THE PRESIDENT, Hon. WARREN G. MAGNUSON, BUREAU OF THE BUDGET, Washington, D. C., April 9, 1956. Chairman, Committee on Interstate and Foreign Commerce, United States Senate, Washington, D. C. MY DEAR MR. CHAIRMAN: This will reply to your letter of March 28, 1956, concerning the Bureau of the Budget study of Panama Canal operations, which was transmitted by the President to the Congress on January 31, 1950. As you have indicated, the Bureau recommended at that time that responsibility for supervision of the Panama Canal agencies be transferred from the Secretary of the Army to the Secretary of Commerce. President Truman specifically withheld approval of this recommendation and stated that he desired "to give further study to that recommendation, particularly in connection with plans to carry out the proposals of the Commission on Organization of the Executive Branch of the Government which are now under consideration." The Bureau has examined the organization and operations of the Panama Canal Company and Canal Zone Government from time to time since 1950 as a part of its normal functions under the Budget and Accounting Act. It has not conducted any special studies of the type undertaken in 1949 and 1950 at the request of the Congress. The Bureau's 1950 recommendation that supervision of the Panama Canal be transferred from the Secretary of the Army to the Secretary of Commerce represented an attempt to deal with certain specific organization problems existing at that time. In January 1950 the Panama Canal was still operating under direct military control pursuant to a wartime executive order. The respective missions of the commanding general, Caribbean Command, and the Governor of the Canal Zone with respect to "protection" of the canal were not well defined, and the relationship of the Panama Canal agencies to the Department of the Army was also a subject of dispute. These problems have been substantially eliminated by the following actions taken since the Bureau's study was transmitted to the Congress : 1. The Executive order placing the Panama Canal under military control was revoked in February 1950. 2. The President by letter dated May 30, 1952, clarified the position of the Secretary of the Army with reference to the Panama Canal Company and Canal Zone Government. It was made clear that the Secretary of the Army was to act as the President's representative, not as head of the Department of the Army, in supervising the Panama Canal agencies. 3. Executive Order 10398 September 26, 1952, clarified the respective roles of the commanding general, Caribbean Command, and the Governor of the Canal Zone with respect to protection of the canal. 4. The Secretary of the Army now has a source of independent staff advice on Panama Canal matters in the Office of the Assistant Secretary of the Army (CMA) which did not exist in January 1950. In view of the above actions, the Bureau no longer favors transfer of supervision of the Panama Canal to the Secretary of Commerce. Present arrangements are believed to be those best calculated to assure necessary coordination of the peacetime operations of the Panama Canal with those of the military forces in the Canal Zone and to facilitate planning for the defense of the canal in time of war. The primary concern of the Secretary of Commerce with the Panama Canal relates to the fixing of toll rates and the effect such rates may have on national transportation objectives. This Bureau is of the opinion that satisfactory arrangements can be developed which will provide essential coordination with respect to tolls policy without requiring any change in present supervisory responsibilities. Sincerely yours, PERCIVAL BRUNDAGE, Director. PACIFIC AMERICAN STEAMSHIP ASSOCIATION, Panama Canal: S. 2167, 84th Congress, letter of comment by Director, Administrative Office, United States Courts Hon. WARREN G. MAGNUSON, United States Senate, Washington, D. C. DEAR SENATOR: This refers to letter of comment by Mr. Harry P. Chandler, Director Admnistrative Office, United States Courts, which was read at the hearing before your committee on the above bill on March 20, 1956. I commented briefly on the points made in that letter, and at that time indicated that I would like to comment in more detail later. Mr. Chandlers' letter made these points: 1. Venue-Second district versus fifth district.-The letter stated that under 28 United States Code 41, the Canal Zone is a part of the fifth circuit, and not the second, and that for that reason any appellate matters growing out of section 411 of the Canal Zone Code should be handled in the fifth, not second circuit. Comment: Because of the many amendments to the Canal Zone Code, and lack of availability of all of the sections thereof in one document, it is certainly understandable that Mr. Chandler's office in preparing the letter, may possibly have overlooked the new section 245 of the Canal Zone Code, as amended by Public Law 808, 80th Congress, which reads in part: “*** Within the meaning of the laws of the United States relating to venue in civil actions, the corporation shall be deemed to be an inhabitant and resident both of the southern judicial district of New York and of the Canal Zone." Thus it would appear at least that there is room for legislative direction as to where venue might lie, since the corporation resides in both judicial districts. 2. Propriety of placing before a court.-The letter points out that courts are constituted to handle transactions for which there are definite standards either by law or regulations. He adds that no criteria are prescribed for the exercise by the court of appeals of the jurisdiction purportedly to be conferred upon it by the proviso, beyond what the letter described as "vague" terms, i. e., "unlawfully withheld" and "unreasonably delayed." He described these as too uncertain for court action. Comment: Actually, the terms cited by the letter are lifted bodily from the Administrative Procedure Act. The Administrative Procedure Act provides for a right of court review of Government agency action without such action necessarily having been judicial or quasi-judicial in character. Section 10 provides that "except so far as (1) statutes preclude judicial review or (2) agency action is by law committed to agency discretion— "(a) RIGHT OF REVIEW.-Any person suffering legal wrong because of any agency action or adversely affected or aggrieved by such action within the meaning of any relevant statute, shall be entitled to judicial review thereof. "(b) FORM AND VENUE OF ACTION.-The form of proceeding for judicial review shall be any special statutory review proceeding relevant to the subject matter in any court specified by statute or, in the absence or inadequacy thereof, any applicable form of legal action *** in any court of competent jurisdiction * * * "(c) REVIEW ABLE ACTS.-Every agency action made reviewable by statute and every final agency action for which there is no other adequate remedy in any court shall be subject to judicial review. * * * "(e) SCOPE OF REVIEW.-So far as necessary to decision and where presented the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of any agency action. It shall (A) compel agency action unlawfully withheld or unreasonably delayed, (B) hold unlawful and set aside agency action, findings, and conclusions found to be (1) arbitrary, capricious, ** 3. Lack of adequate record.-The letter states that the court of appeals acts only on a record either of a proceeding in a district court or an administrative agency. "The provision lacks any provision for an appropriate record for consideration of a court of appeals," the letter states. Comment: This objection does not appear to be valid. Two types of matters would come before the court under such a provision. The first might be an appeal from a decision of the corporation, establishing a particular tolls rate, after holding a hearing and making an adjudication. A court review of this kind of an agency act is clearly provided for in section 10 (c) of the Administrative Procedure Act. (See italicized portion of sec. 10 (c), above). The second might be an appeal from a refusal of the Panama Canal Company to even so much as hold a hearing. In such a case, the appeal would be from agency action "unlawfully withheld" as in section 10 (e), quoted above. In the case of this second type of appeal, it certainly may be said, as Mr. Chandler's letter alleges, that there would not be as complete a record nor the same kind of a record as one resulting from a tolls hearing. The record would presumably be constituted by a request of an interested party for a hearing and the failure of the Company to hold such a hearing. If this were taken to the appellate court in the first instance, as the bill proposes, certainly the time of the Government and the toll payers would be conserved, since an appeal to that court would probably result if it were handled in the first instance in the district rather than appellate court. We therefore believe that the language of the bill as it now stands is proper for either type of appeal. However, if after further discussion with Mr. Chandler's office, the committee feels that there would not be a sufficient record for an appellate court in the second type of appeal, then we would be agreeable to changing section 9 of the bill so as to make the last sentence thereof read as follows: "Provided, however, That the Court of Appeals of the Second Circuit shall have exclusive jurisdiction to review the acts of the corporation under this section and the District Court for the Southern Judicial District of New York shall have exclusive jurisdiction to compel corporate action unlawfully withheld or unreasonably delayed." This would have the effect of handling the first type of court review in the appellate court and the second in the district court. We do not believe such a change is necessary, but would be agreeable to it if the committee and Mr. Chandler's office felt it might facilitate administration of the section. We are grateful for Mr. Chandler's review of this portion of the bill. If, in attempting to answer his comments, we have overlooked anything, we do hope it can be brought to our attention, so that we may have a further opportunity to offer suggestions. Our desire is to submit workable legislation. If you desire to submit the information in this letter to Mr. Chandler's office for review and comment, it certainly would be most satisfactory with us, and to that end we are enclosing three extra copies of this letter. Very truly yours, Hon. WARREN G. MAGNUSON, R. E. MAYER, President. COMMITTEE ON PANAMA CANAL TOLLS, Chairman, Committee on Interstate and Foreign Commerce, United States Senate, Washington, D. C. SIR: In the recent hearings conducted by your committee with respect to S. 2167, a bill to transfer the Canal Zone Government and the Panama Canal Company to the Department of Commerce, a number of references were made to the tolls litigation now pending in the Federal Court at New York (Grace Line, et al. v. Panama Canal Company). This is a suit brought by 12 leading United States-flag shipping companies to enforce their rights to lower tolls under existing law. The Committee on Panama Canal Tolls is a committee of the plaintiffs to supervise the litigation and act as liaison between them and legal counsel. The committee, as such, and the plaintiffs, as such, have not participated in the hearings on S. 2167 except that Mr. James Sinclair, president and general manager of Luckenbach Steamship Co., made a statement supporting the bill on behalf of that company. If the Commerce Committee believes that the views of our committee as to existing law are relevant, reference should be made to the complaint and brief in the lawsuit. These were tendered to the Commerce Committee by Mr. Sinclair. In his testimony General Seybold, Governor of the Canal Zone and President of the Panama Canal Company, referred several times to his thesis that under existing law the Company was warranted in charging the losses of its so-called "business operations" against tolls, as it has done. For the reasons set forth in our brief, the existing law does not authorize this practice. Not only are we so advised by our own legal counsel, but the General Accounting Office has so ruled in its 1954 audit report, page 2. Moreover, the GAO audit report, at page 15, indicates that the General Counsel of the Panama Canal Company has given his opinion to General Seybold to the same effect. Plaintiffs have endeavored to obtain a copy of this opinion through the discovery processes of the court, but the Panama Canal Company has vigorously resisted these efforts and at present has procured a court order staying them pending the court's rulings on preliminary jurisdictional questions. If the plaintiffs' interpretation of the GAO report is correct-and that interpretation is confirmed by the Canal Company's resistance to efforts to obtain the opinion through legal procedures-the Canal Company's practice is in defiance of the law as construed by its own legal adviser. Because the interest of this committee, as such, is in the judicial enforcement of existing legal rights rather than in new legislation, we confine our comments to this brief statement of our position on the "business operations," which is the substantial issue in the lawsuit. The committee would be grateful if the Commerce Committee would accept this letter for its files and include it in any publication of its hearings on S. 2167. Very truly yours, G. C. CHARLTON, Secretary. |