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96TH CONGRESS HOUSE OF REPRESENTATIVES REPORT
1st Session No. 96-473
PANAMA CANAL ACT OF 1979
SEPTEMBER 24, 1979.-Ordered to be printed
Mr. MURPHY of New York, from the committee of conference,
submitted the following
CONFERENCE REPORT
[To accompany H.R. 111]
The committee of conference on the disagreeing votes of the two
Houses on the amendment of the Senate to the bill (H.R. 111) to
enable the United States to maintain American security and interests
respecting the Panama Canal, for the duration of the Panama Canal
Treaty of 1977, having met, after full and free conference, have agreed
to recommend and do recommend to their respective Houses as follows:
That the House recede from its disagreement to the amendment of
I he Senate to the text of the bill and agree to the same with an amend-
ment as follows:
In lieu of the matter proposed to be inserted by the Senate amend-
ment insert the following:
SHORT TITLE
SECTION 1. This Act may be cited as the "Panama Canal Act of 1979".
TABLE OF CONTENTS
Sec.
1. Short title.
2. Statement of purpose.
3. Definitions and recommendation for legislation.
TITLE I-ADMINISTRATION AND REGULATIONS
CHAPTER 1-PANAMA CANAL COMMISSION
1101. Establishment of Commission.
1102. Supervisory Board.
1103. Administrator.
1104. Deputy Administrator and Chief Engineer.
1105. Consultative Committee.
1106. Joint Commission on the Environment.
1107. Travel expenses.
1108. Defense of the Panama Canal,
39-006 0




2
Sec.
1109. Joint Sea Level Canal Study Committee.
1110. Authority of the Ambassador.
1111. Security legislation.
1112. Code of Conduct for Commission personnel.
1113. Office of Ombudsman.
CHAPTER 2-EMPLOYEES
Subchapter I-Panama Canal Commission Personnel
1201. Definitions.
1202. Appointment and compensation; duties.
1203. Transfer of Federal employees.
1204. Compensation of individuals in the uniformed services.
1205. Deduction from basic pay of amounts due for supplies or services.
1206. Cost of living allowance.
1207. Educational travel benefits.
1208. Privileges and immunities of certain employees.
1209. Inapplicability of certain benefits to certain noncitizens.
Subchapter II-Wage and Employment Practices
1211. Definitions.
1212. Panama Canal Employment System; merit and other employment require-
ments.
1213. Employment standards.
1211. Interim application of Canal Zone Merit System.
1215. Basic pay.
1216. Uniform application of standards and rates.
1217. Recruitment and retention remuneration.
1218. Benefits based on basic pay.
1219. Salary protection upon conversion of pay base.
1220. Review and adjustment of classifications, grades, and pay level.
1221. Panama Canal Board of Appeals; duties.
1222. Appeals to Board; procedure; finality of decisions.
1223. Administration by the President.
1224. Applicability of certain laws.
1225. Minimum level of pay; minimum annual increases.
Subchapter III-Conditions of Employment and Placement
1231. Transferred or reemployed employees.
1232. Placement.
Subchapter IV-Retirement
1241. Early retirement eligibility.
1242. Early retirement computation.
1243. Retirement under special treaty provisions.
1244. Obligation of Commission for unfunded liability.
1245. Cash relief to certain former employees.
1216. Appliances for employees injured before September 7, 1916.
Subchapter V-Leave
1251. Leave for jury or witness service.
Subchapter VI-Application to Related Personnel
1261. Law enforcement; Canal Zone Civilian Personnel Policy Coordinating
Board; related employees.
Subchapter VII-Labor-Management Relations
1271. Labor-management relations.




3
CHAPTER 3-FUNDS AND ACCOUNTS
Sec. Subchapter I-Funds
1301. Canal Zone Government funds.
1302. Panama Canal Company funds; Commission funds.
1303. Emergency fund.
Subchapter II-Accounting Policies and Audits
1311. Accounting policies.
1312. Reports.
1313. Audit by the Comptroller General of the United States.
Subchapter III-Interagency Accounts
1321. Interagency services; reimbursements.
Subchapter IV-Postal Matters
1331. Postal service.
Subchapter V-Accounts With the Republic of Panama
1341. Payments to the Republic of Panama.
1342. Transactions with the Republic of Panama.
1343. Disaster relief.
1344. Congressional restraints on property transfers and tax expenditures.
CHAPTER 4-CLAIMS FOR INJURIES TO PERSONS OR PROPERTY
Subchapter I-General Provisions
1401. Settlement of claims generally.
Subchapter II-Vessel Damage
1411. Injuries in locks of Canal.
1412. Injuries outside locks.
1413. Measure of damages generally.
1414. Delays for which no responsibility is assumed.
1415. Settlement of claims.
1416. Actions on claims.
1417. Investigation of accident or injury giving rise to claim.
1418. Board of Local Inspectors.
CHAPTER 5-PUBLIc PROPERTY
1501. Assets and liabilities of Panama Canal Company.
1502. Transfers and cross-servicing between agencies.
1503. Disposition of property of the United States.
1504. Transfer of property to Panama.
CHAPTER 6-TOLLS FOR USE OF THE PANAMA CANAL
1601. Prescription of measurement rules and rates of tolls.
1602. Bases of tolls.
1603. Calculation of interest.
1604. Procedures.
1605. Interim toll adjustment.
CHAPTER 7-GENERAL REGULATIONS
1701. Authority of President.
1702. Authority of Commission.




4
CHAPTER 8-SHIPPING AND NAVIGATION
Subchapter I-Operation of Canal
1801. Operating regulations.
Subehapter II-Inspection of Vessels
.1811. Vessels subject to inspection.
1812. Foreign vessels.
1813. Regulations governing inspection.
TITLE 11-TREATY TRANSITION PERIOD
CHAPTER 1-LAWS CONTINUED IN FORCE
2101. Laws, regulations and administrative authority.
CHAPTER 2-COURTS
2201. Jurisdiction.
2202. Divisions and terms of District Court.
2203. Term of certain offices.
2204. Residence requirements.
2205. Special District Judge.
2206. Magistrates' courts.
CHAPTER 3-ATTORNEYS
2301. Oath of attorneys.
CHAPTER 4-TRANSITION AUTHORITY
2401. Transition authority of President.
2402. Prisons; parole; pardons.
TITLE III-GENERAL PROVISIONS
CHAPTER 1-CEMETERIES
3101. Disinterment, transportation, and reinterment of remains.
CHAPTER 2-IMMIGRATION
3201. Special immigrants.
CHAPTER 3-REPORT; AMENDMENTS; REPEALS AND REDESIGNATION;
EFFECTIVE DATE
3301. Report.
3302. Amendments.
3303. Repeals and redesignation.
3504. Effective date.
STATEMENT OF PURPOSE
SEc. 2. It is the purpose of this Act to provide legislation necessary
or desirable for the implementation of the Panama Canal Treaty of
1977 between the United States of America and the Republic of Pana-
ma and of the related agreements accompanying that Treaty.
DEFINITIONS AND RECOMMENDATION FOR LEGISLATION
Swe. 3. (a) For purposes of this Act-
(1) references to the Panama Canal Treaty of 1977 refer to the
Panama Canal Treaty between the United States of America and
the Republic of Panama, signed September 7, 1977; and




5
(2) references to the Panama Canal Treaty of 1977 and related
agreements refer to the Panama Canal Treaty of 1977, the agree-
ments relating to and implementing that Treaty, signed Septem-
ber 7, 1977, and the Agreement Between the United States of
America and the Republic of Panama Concerning Air Trafic Con-
trol and Related Services, concluded January 8, 1979.
(b) Subject to the provisions of subsection (c) of this section, for
purposes of applying the Canal Zone Code or other laws of the United
States and regulations issued pursuant to such Code or other laws
with respect to transactions, occurrences, or status on or after the
effective date of this Act-
(1) "Canal Zone" shall be deemed to refer to the areas and in-
stallations in the Republic of Panama made available to the United
States pursuant to the Panama Canal Treaty of 1977 and related
agreements;
(2) "Canal Zone waters" and "waters of the Canal Zone" shall
be deemed to refer to "Panama Canal waters" and ",waters of the
Panama Canal", respectively;
(3) "Government of the Canal Zone" or "Canal Zone Govern-
ment" shall be deemed to refer to the United States of America;
(4) "Governor of the Canal Zone" or "Governor", wherever
the reference is to the Governor of the Canal Zone, shall be deemed
to refer to the Panama Canl Commission;
(5) "Panama Canal Company" or "Company", wherever the
reference is to the Panama Canal -Company, shall be deemed to
refer to the Panama Canal Commission;
(6) in chapter 57 of title 5 of the Canal Zone Code, "hospi-
tals" and "Health Bureau" shall be deemed to refer, respectively,
to the hospitals operated by the United States in the Republic
of Panama, and to the organizational unit operating such hospi-
tals, and
(7) in chapter 57 of title 5 of the Canal Zone Code, in section
4784 of title 6 of such Code, and in section 2 of title 7 of such
Code, "health director" shall be deemed to refer to the senior
official in charge of the hospitals operated by the United States
in the Republic of Panama.
(c) Any reference set forth in subsection (b) of this section shall
apply except as otherwise provided in this Act or unless (1) such
reference is inconsistent with the provisions of this Act, () in the
context in which a term is used such reference is clearly not intended,
or (3) a term refers to a time before the effective date of this Act.
(d) The President shall, within two years after the Panama Canal
Treaty of 1977 enters into, force, submit to the Congress a request for
legislation which would-
(1) amend or repeal provisions of law which in their present
form are applicable only during the transition period prescribed
in Article XI of that Treaty,
(2) repeal the Canal Zone Code, and
(3) contain provisions considered necessary and appropriate
in light of the experience as of that time under that Treaty.




6
TITLE I-ADMINISTRATION AND REGULATIONS
CHAPTER 1-PANAMA CANAL COMMISSION
ESTABLISHMENT OF COMMISSION
SEC. 1101. There is established in the executive branch of the United
States Government an agency to be known as the Panama Canal
Commission (hereinafter in this Act referred to as the "Commission").
The Commission shall, under the general supervision of the Board
established by section 1102 of this Act, be responsible for the main-
tenance and operation of the Panama Canal and the facilities and
appurtenances related thereto. The authority of the President with
respect to the Commission shall be exercised through the Secretary of
Defense.
SUPERVISORY BOARD
SEC. 1102. (a) The Commission shall be supervised by a Board
composed of nine members, one of whom shall be the Secretary of
Defense or an officer of the Department of Defense designated by the
Secretary. Not less than five members of the Board shall be nationals
of the United States and the remaining members shall be nationals
of the Repubic of Panama. At least one of the members of the Board
who are nationals of the United States shall be experienced and knowl-
edgeable in the management or operation of an American-flag steam-
ship line which has or had ships regularly transiting the Panama
Canal, at least one other such member shall be experienced and knowl-
edgeable in United States port operations or in the business of export-
ing or importing one of the regular commodities dependent on the
Panama Canal as a transportation route, and at least one other such
member shall be experienced and knowledgeable in labor matters in
the United States. Three members of the Board shall hold no other
offloe in or be employed by the Government of the United States.
Members of the Board who are nationals of the United States shall
cast their votes as directed by the Secretary of Defense or his designee.
(b) The President shall appoint the members of the Board. The
members of the Board who are United States nationals shall be ap-
pointed by and with the advice and consent of the Senate. Each member
of the Board shall hold office at the pleasure of the President and, be-
fore assuming the duties of such office, shall take an oath to discharge
faithfully the duties of his office. Members of the Board shall serve
without compensation but shall be allowed travel or transportation
expenses, including per diem in lieu of subsistence, in accordance with
section 1107 of this Act.
(c) The Board shall hold meetings as provided in regulations
adopted by the Commission and approved by the Secretary of Defense.
A quorum for the transaction of business shall consist of a majority
of the Board members of which a majority of those present are na-
tionals of the United States.
ADMINISTRATOR
SEC. 1103. There shall be an Administrator of the Commission, who
shall be appointed by the President, by and with the advice and consent
of the Senate, and shall hold office at the pleasure of the President.




7
DEPUTY ADMINISTRATOR AND CHIEF ENGINEER
SEC. 1104. (a) There shall be a Deputy Administrator and a Chief
Engineer of the Commission, both of whom shall be appointed by, the
President. The Deputy Administrator and the Chief Engineer shall
perform such duties as may be prescribed by the President.
(b) The Deputy Administrator and the Chief Engineer shall each
be paid compensation at a rate of pay established by the President
,which does not exceed the rate of basic pay in effect for grade GS-18
of the General Schedule under section 5332 of title 5, United States
Code.
CONSULTATIVE COMMITTEE
SEC. 1105. (a) The President shall designate, and the Secretary of
State shall coordinate the participation of, representatives of the
United States to the Consultative Committee to be established under
paragraph 7 of Article III of the; Panama Canal Treaty of 1977.
(b) The Consultative Committee shall function as a diplomatic
forum for the exchange of views between the United States and the
Republic of Panama. The Committee shall advise the United States
Government and the Government of the Republic of Panama on mat-
ters of policy affecting the operation of the Panama Canal. The Com-
mittee shall have no authority to direct the Commission or any other
department or agency of the United States to initiate or withhold
action.
JOINT COMMISSION ON THE ENVIRONMENT
SEC. 1106. (a) The United States and the Republic of Panama, in
accordance with the Panama Canal Treaty of 1977, shall establish a
Joint Commission on the Environment (hereinafter in this section
referred to as the "Joint Commission") to be composed of not more than
three representatives of the United States and three representatives
of the Republic of Panama, or such other equivalent numbers of repre-
sentatives as may be agreed upon by the Governments of the two coun-
tries. The United States members of the Joint Commission shall
periodically review the implementation of the Panama Canal Treaty
of 1977 with respect to its impact on the environment and shall, jointly
with the representatives of the Government of Panama, make recom-
mendations to the United States Government and the Government of
the Republic of Panama with respect to ways to avoid or mitigate ad-
verse environmental impacts resulting from actions taken pursuant
to such Treaty.
(b) Representatives of the United States on the Joint Commission
shall be appointed by the President and shall serve at the pleasure of
the President. Such representatives shall serve without compensation
but shall be allowed travel or transportation expenses, including per
diem in lieu of subsistence, in accordance with section 1107 of this Act.
(c) Any Federal employee subject to the civil service laws and reg-
ulations who is detailed to serve with, or appointed by, the United
States representatives on the Joint Commission shall not lose any pay,
seniority, or other rights or benefits by reason of such detail or
appointment.




8
(d) The United States representatives on the Joint Commission
may, to such extent or in such amounts as are provided in advance in
appropriation Acts, appoint and fix the compensation of such per-
sonnel as the representatives of the United States on the Joint Com-
mission may consider necessary for the participation of the United
States on the Joint Commission.
(e) The United States representatives on the Joint Commission
may, in cooperation with the representatives of the Republic of Pan-
ama on the Joint Commission, establish rules of procedure to be wsed
by the Joint Commission in conducting its affairs, subject to the ap-
proval of such rules by the Governments of the United States and the
Republic of Panama.
TRAVEL EXPENSES
SEC. 1107. While away from their homes, regular places of business,
or official stations in performance of services under this chapter, mem-
bers of the Board of the Commission and the representatives of the
United States on the Consultative Committee referred to in section
1105 of this Act and on the Joint Commission on the Environment re-
ferred to in section 1106 of this Act shall be allowed travel or trans-
portation expenses, including per diem in lieu of subsistence, in the
same manner as persons employed intermittently in Government serv-
ice are allowed expenses under section 5703 of title 5, United States
Code.
DEFENSE OF THE PANAMA CANAL
SEC. 1108. In the event of an armed attack against the Panama
Canal, or when, in the opinion of the President, conditions exist which
threaten the security of the Canal, the Administrator of the Com-
mission shall, upon the order of the President, comply with such di-
rectives as the United States military officer charged with the
protection and defense of the Panama Canal may consider necessary
in the exercise of his duties.
JOINT SEA LEVEL CANAL STUDY COMMITTEE
SEC. 1109. (a) The President shall appoint the representatives of
the United States to any joint committee or body with the Republic
of Panama to study the possibility of a sea level canal in the Republic
of Panama pursuant to Article XII of the Panama Canal Treaty of
1977.
(b) Upon the completion of any joint study between the United
States and the Republic of Panama concerning the feasibility of a
sea level canal in the Republic of Panama pursuant to paragraph 1
of Article XII of the Panama Canal Treaty of 1977, the text of the
study shall be transmitted by the President to the President of the
Senate and to the Speaker of the House of Re representatives.
(c) No construction of a sea level canal by the United States in the
Republic of Panama shall be undertaken except with express con-
gressional authorization after submission of the study by the Presi-
dent as provided in subsection (b) of this section.




9
AUTHORITY OF THE AMBASSADOR
SEC. 1110. (a) The United States Ambassador to the Republic of
Panama shall have full responsibility for the coordination of the
transfer to the Republic of Panama of those functions that are to be
assumed by the Republic of Panama pursuant to the Panama Canal
Treaty of 1977 and related agreements.
(b) (1) The Commission shall not be subject to the direction or
supervision of the United States Chief of Mission in the Republic of
Panama with respect to the responsibilities of the Commission for the
operation, management, or maintenance of the Panama Canal, as es-
tablished in this or any other Act or in the Panama Canal Treaty of
1977 and related agreements, except that the Commission shall keep
the Ambassador fully and currently informed with respect to all ac-
tivities and operations of the Commission.
(2) Except as provided in paragraph (1) of this subsection, section
16 of the Act of August 1, 1956 (2 U.S.C. 2680a), shall apply with
respect to the activities of the Commission.
SECURITY LEGISLATION
SEC. 1111. It is the sense of the Congress that the best interests of
the United States require that the President enter into negotiations
with the Republic of Panama for the purpose of arranging for the
stationing of United States military forces, after the termination of
the Panama Canal Treaty of 1977, in the area comprising the Canal
Zone before the effective date of this Act, and for the maintenance of
installations and facilities, after the termination of such Treaty, for
the use of United States military forces stationed in such area. The
President shall report to the Congress in a timely manner the status
of negotiations conducted pursuant to this section.
CODE OF CONDUCT FOR COMMISSION PERSONNEL
SEC. 1112. (a) Before assuming the duties of his office or employ-
ment, each member of the Board of the Commission and each officer
and employee of the Commission shall take an oath to discharge faith-
fully the duties of his office or employment. All employees of the
Commission shall be subject to the laws of the United States regard-
ing duties and responsibilities of Federal employees.
(b) Not later than 60 days after all the members of the Board of
the Commission have been appointed, the Board shall adopt a code of
conduct applicable to the persons referred to in subsection (a) of this
section. The code of conduct shall contain provisions substantially
equivalent to those contained in part 735 of title 5 of the Code of Fed-
eral Regulations on the effective date of this Act. The code of conduct
shall, at a minimum, contain provisions substantially equivalent to
the following provisions of law:
(1) the provisions of chapter 11 of title 18, United States Code,
as amended, relating to bribery, graft, or conflicts of interest, as
appropriate to the employees concerned;
(9) section 7359 of title 5, United States Code, as amended;
H.Rept. 96-473 --- 2




10
(3) sections 207, 208, 285, 508, 641, 645, 1001, 1917, and 2071 of
title 18, United States Code, as amended;
(4) section 5 of the Act of July 16, 1914 (31 U.S.C. 638a), as
amended;
(5) the Ethics in Government Act of 1978 (92 Stat. 1824), as
.amended; and
(6) those provisions of the laws and regulations of the Republic
of Panama which are substantially equivalent to those of the
United States set forth in this subsection.
(c) The Commission shall investigate any allegations regarding the
violation of the code of conduct adopted pursuant to subsection (b) of
this section. The Commission may recommend that the President sus-
pend from the performance of his duties any member of the Board of
the Commission or any officer or employee of the Commission, pend-
ing judicial proceedings by appropriate authorities concerning such
allegations.
(d) The President shall negotiate suitable arrangements with the
Republic of Panama whereby each nation shall agree to take all meas-
ures within its legal authority to assure that members of the Board
of the Commission comply with the code of conduct established pur-
suant to subsection (b) of this section. Without prejudice to such juris-
diction as the United States may have with respect to members of the
Board, the provisions of law enumerated in subsection (b) of this sec-
tion shall be enforced with respect to members of the Board only in
accordance with such arrangements.
OFFICE OF OMBUDSMAN
SEC. 1113. (a) There is established within the Commission an Office
of Ombudsman, to be directed by an Ombudsman, who shall be ap-
pointed by the Commission. It shall be the function of the Office of
Ombudsman to receive individual complaints, grievances, requests,
and suggestions of employees (and their dependents) of the Com-
mission and other departments and agencies of the United States,
including the Smithsonian Institution, conducting operations before
the effective date of this Act in the area then comprising the Canal
Zone concerning administrative problems, inefficiencies, and conflicts
caused within departments and agencies of the United States, includ-
ing the Smithsonian Institution, as a result of the implementation of
the Panama Canal Treaty of 1977 and related agreements.
(b) The Ombudsman shall make findings and render assistance with
respect to the complaints, grievances, requests, and suggestions sub-
mitted to the Office of Ombudsman, and shall make appropriate ree-
ommendations to the Commission or any other department or agency
of the United States, including the Smithsonian Institution.
(c) The establishment of the Office of Ombudsman shall not affect
any procedures for grievances, appeals, or administrative matters in
any other provision of this Act, any other provision of law, or any
Federal regulation.
(d) The Ombudsman shall be a citizen of the United States.
(e) The Office of Ombudsman shall terminate upon the termination
of the Panama Canal Treaty of 1977.




11
CHAPTER 2-EMPLOYEES
Subchapter I-Panama Canal Commission Personnel
DEFINITIONS
SEC. 1201. As used in this chapter-
(1) "Executive agency" has the meaning given that term in
section 105 of title 5, United States Code;
(2) "uniformed services" has the meaning given that term in
section 2101(3) of title 5, United States Code;
(3) "competitive service" has the meaning given that term in
section 2102 of title 5, United States Code; and
(4) "United States", when used in a geographic sense, means
each of the several States and the District of Columbia.
APPOINTMENT AND COMPENSATION; DUTIES
SEC. 1202. (a) In accordance with this chapter, the Panama Canal
Commission may appoint without regard to the provisions of title 5,
United States Code, relating to appointments in the competitive serv-
ice, fix the compensation of, and define the authority and duties of,
officers, agents, attorneys, and employees (other than the Administra-
tor, Deputy Administrator, and Chief Engineer) necessary for the
management, operation, and maintenance of the Panama Canal and
its complementary works, installations, and equipment.
(b) Individuals serving in any Executive agency (other than the
Commission) or the Smithsonian Institution, including individuals
serving in the uniformed services, may, if appointed under this section
or section 1103 or 1104 of this Act, serve as officers or employees of the
Commission.
TRANSFER OF FEDERAL EMPLOYEES
SEC. 1203. (a) The head of any agency may enter into agreements
for the transfer or detail to the Commission of any employee of that
agency serving under a permanent appointment. Any employee who so
transfers or is so detailed shall, upon completion of the employee's
tour of duty with the Commission, be entitled to reemployment with
the agency from which the employee was transferred or detailed with-
out loss of pay, seniority, or other rights or benefits to which the em-
ployee would have been entitled had the employee not been so trans-
f erred or been so detailed.
(b) For purposes of this section, the term "agency" means an Execu-
tive agency, the United States Postal Service, and the Smithsonian
Institution.
(c) The Office of Personnel Management shall prescribe regulations
to carry out the purposes of this section.
COMPENSATION OF INDIVIDUALS IN THE UNIFORMED SERVICES
SEC. 1204. (a) Except as provided in subsection (b) of this section,
any individual who is serving in a position in the Commission and who
is a member of a uniformed service shall continue to be paid basic pay
by such uniformed service and shall not be paid by the Commission
for the period of the service in the uniformed service involved.




12
(b) If the individual appointed as Administrator, Deputy Admin-
istrator, or Chief Engineer of the Commission is a member of a uni-
formed service, the amount of basic pay otherwise payable to the
individual for service in that position shall be reduced, up to the
amount of that basic pay, by the amount of the basic pay payable to
the individual as a member of a uniformed service.
(c) The Commission shall annually pay to each uniformed service
amounts sufficient to reimburse that uniformed service for any basic
pay paid by that uniformed service to any member of that service
during any period of service in the Commission by the member.
DEDUCTION FROM BASIC PAY OF AMOUNTS DUE FOR SUPPLIES OR SERVICES
SEC. 1205. The Commission may deduct from the basic pay other-
wise payable by the Commission to any officer or employee of the
Commission any amount due from the officer or employee to the
Commission or to any contractor of the Commission for transporta-
tion, board, supplies, or any other service. Any amount so de-
ducted may be paid by the Commission to any contractor to whom it
is due or may be credited by the Commission to any appropriation
from which the Commission has expended such amount.
COST OF LIVING ALLOWANCE
SEC. 1206. Effective beginning October 1, 1984, each officer and em-
ployee of the Commission who is a citizen of the United States and
was employed by the Panama Canal Company or the Canal Zone
Government on September 30, 1979, or who is an individual of
any nationality recruited outside the Republic of Panama after Sep-
tember 30, 1979, may be paid an allowance to offset any increased cost
of living which may result from the termination of the eligibility of
the officer or employee and his dependents to use military postal serv-
ices, sales stores, and exchanges. The amount of the allowance may
be determined by the Commission.
EDUCATIONAL TRAVEL BENEFITS
SEC. 1207. (a) The Commission shall provide by regulation for
round-trip transportation between the Republic of Panama and the
United States or, in the case of an employee described in paragraph
(2) of this subsection, between the Republic of Panama and the
country in which such employee is recruited, for undergraduate
college education for dependents of employees of the Commission
who-
(1) are United States citizens who were employed by the Pan-
ama Canal Company or the Canal Zone Government on Septem-
ber 30, 1979, or
(2) are recruited outside the Republic of Panama after that
date.
(b) The regulations prescribed by the Commission under this see-
tion shall-
(1) provide eligibility requirements which must be met by such
dependents to qualify for transportation under this section, in-
cluding a requirement that all eligible dependents must be under
23 years of age; and




13
(2) limit the transportation provided to one round trip during
any one-year period.
PRIVILEGES AND IMMUNITIES OF CERTAIN EMPLOYEES
SEC. 1208. The Secretary of Defense shall designate those officers
and employees of the Commission and other individuals entitled to
the privileges and immunities accorded under paragraph 3 of
Article VIII of the Panama Canal Treaty of 1977. The Department
of State shall furnish to the Republic of Panama a list of the names
of such officers, employees, and other individuals and shall notify the
Republic of Panama of any subsequent additions to or deletions from
the list.
INAPPLICABILITY OF CERTAIN BENEFITS TO CERTAIN NONCITIZENS
Sec. 1209. (a) Chapter 81 of title 5, United States Code, relating to
compensation for work injuries, chapter 83 of such title 5, relating to
civil service retirement, chapter 87 of such title 5, relating to life
insurance, and chapter 89 of such title 5, relating to health insurance,
are inapplicable to any individual-
(1) who is not a citizen of the United States;
(2) whose initial appointment by the Commission occurs after
October 1, 1979; and
(3) who is covered by the Social Security System of the Repub-
lic of Panama pursuant to any provision of the Panama Canal
Treaty of 1977 and related agreements.
(b) Subparagraph (B) of section 8701 (a) of title 5, United States
Code, defining the term employee for purposes of life insurance, is
amended to read as follows:
" (B) an individual who is not a citizen or national of the
United States and whose permanent duty station is outside the
United States, unless the individual was an employee for the pur-
pose of this chapter on September 30, 1979, by reason of service
in an Executive agency, the United States Postal Service, or the
Smithsonian Institution in the area which was then known as
the Canal Zone; or".
(c) Clause (ii) of section 8901 (1) of title 5, United States Code,
defining the term employee for purposes of health insurance, is
amended to read as follows:
" (ii) an individual who is not a citizen or national of the
United States and whose permanent duty station is outside
the United States, unless the individual was an employee for
the purpose of this chapter on September 30, 1979, by reason
of service in an Executive agency, the United States Postal
Service, or the Smithsonian Institution in the area which
was then known as the Canal Zone;".
Subchapter Il-Wage and Employment Practices
DEFINITIONS
SEC. 1211. As used in this subchapter-
(1) agency" means-
(A) the Commission, and




14
(B) an Executive agency or the Smithsonian Institution,
to the extent of any election in effect under section 1212
(b) (2) of this Act;
(2) "position" means a civilian position in the Commission,
or in any other agency if a substantial portion of the duties and
responsibilities are performed in the Republic of Panama; and
(3) "employee" means an individual serving in a position.
PANAMA CANAL EMPLOYMENT SYSTEM; MERIT AND OTHER EMPLOYMENT
REQUIREMENTS
SEC. 1212. (a) After considering any recommendations of the Com-
mission, the President shall establish a Panama Canal Employment
System. The Panama Cana Employment System shall-
(1) be established in accordance with and be subject to the
provisions of the Panama Canal Treaty of 1977 and related agree-
ments, the provisions of this chapter, and any other applicable
provision of law;
(2) be based on the consideration of the merit of each employee
or candidate for employment and the qualifications and fitness of
the employee to hold the position concerned;
(3) conform, to the extent practicable and consistent with the
provisions of this Act, to the policies, principles, and standards
applicable to the competitive service; and
(4) in the case of employees who are citizens of the United
States, provide for the appropriate interchange of those employ-
ees between positions under the Panama Canal Employment Sys-
tem and positions in the competitive service.
(b) (1) The Commission, and any Executive agency and the
Smithsonian Institution to the extent of any election under para-
graph (2) of this subsection, shall conduct their employment and
pay practices relating to employees in accordance with the Panama
Canal Employment System and regulations prescribed by, or under
the authority of, the President in accordance with this subehapter.
(2) The head of any Executive agency and the Smithsonian Insti-
tution may elect to have the Panama Canal Employment System made
applicable in whole or in part to personnel of that agency in the Re-
public of Panama.
(c) Subject to the provisions of this chapter, the President may,
from time to time and after considering any recommendation of the
Commission, amend or modify any provision of the Panama Canal
Employment System, including any provision relating to selection
for appointment, reappointment, reinstatement, reemployment, and
retention, with respect to positions, employees, and candidates for
employment.
(d) The President may, to the extent the President determines
appropriate-
(1) exclude any employee or position from coverage under any
provision of this subchapter; and
(2) notwithstanding section 1202 of this Act, extend to any
employee, whether or not the employee is a citizen of the United
States, the rights and privileges which are provided by applicable
laws and regulations for citizens of the United States employed
in the competitive service,




15
EMPLOYMENT STANDARDS
SEC. 1213. The head of each agency shall establish written standards
for-
(1) determining the qualifications and fitness of employees and
of candidates for employment in positions; and
(2) selecting individuals for appointment, promotion, or trans-
fer to positions.
The standards shall conform to the provisions of this subchapter, any
regulations prescribed thereunder, and the Panama Canal Employ-
ment System.
INTERIM APPLICATION OF CANAL ZONE MERIT SYSTEM
SEC. 1214. Notwithstanding any repeal made by this Act or any
provision of this chapter, the provisions of subchapter III of chapter 7
of title 2 of the Canal Zone Code establishing the Canal Zone Merit
System, together with the regulations prescribed thereunder, as in
effect on September 30, 1979, shall continue in effect and shall apply
,with respect to employees until the Panama Canal Employment Sys-
tem is established and in effect pursuant to section 1212 of this Act.
BASIC PAY
SEC. 1215. (a) The head of each agency, in accordance with the pro-
visions of this subchapter, shall establish, and from time to time may
revise, the rates of basic pay for positions and employees in the agency.
(b) The rates of basic pay may be established and revised in relation
to the rates of basic pay for the same or similar work performed in the
United States or in such areas outside the United States as may be des-
ignated in the regulations prescribed under section 1223 of this Act.
(c) The head of each agency may make adjustments in rates of basic
pay established under subsection (b) of this section in amounts not
to exceed the amounts of the adjustments made from time to time
by or under statute in the corresponding rates of basic pay for the
same or similar work referred to in such subsection (b). The head of
the agency may designate the effective date of any such adjustment,
except that that date may not be earlier than the effective date of the
adjustment in the corresponding rate of basic pay.
UNIFORM APPLICATION OF STANDARDS AND RATES
SEC. 1216. The standards established pursuant to section 1213 of this
Act and the rates of basic pay established pursuant to section 1215 of
this Act shall be applied without regard to whether the employee or
individual concerned is a citizen of the United States or a citizen of the
Republic of Panama.
RECRUITMENT AND RETENTION REMUNERATION
SEC. 1217. (a) In addition to basic pay, additional compensation may
be paid, in such amounts as the head of the agency concerned deter-
mines, as an overseas recruitment or retention differential to any in-
dividual who-




16
(1) before October 1, 1979, was employed by the Panama Canal
Company, by the Canal Zone Government, or by any other agency
in the area then known as the Canal Zone;
(2) is an employee who was recruited on or after October 1, 1979,
outside of the Republic of Panama for placement in the Republic
of Panama; or
(3) is a medical doctor employed by the Department of Defense
in the Republic of Panama or by the Commission;
if, in the judgment of the head of the agency concerned, the recruit-
ment or retention of the individual is essential.
(b) Any employee described in more than one paragraph of sub-
section (a) of this section may qualify for a recruitment or retention
differential under only one of those paragraph.
(c) Additional compensation provided under this section may not
exceed 25 percent of the rate of basic pay for the same or similar work
performed in the United States by individuals employed by the Gov-
ernment of the United States.
(d) Subchapter III of chapter 59 of title 5, United States Code,
relating to overseas differentials and allowances, shall not apply with
respect to any employee whose permanent duty station is in the Re-
public of Panama and who is employed by an agency.
BENEFITS BASED ON BASIC PAY
SEC. 1218. For the purpose of determining-
(1) amounts of compensation for disability or death under
chapter 81 of title 5, United States Code, relating to compensation
for work in juries;
(2) benefits under subchapter III of chapter 83 of title 5,
United States Code, relating to civil service retirement;
(3) amounts of insurance under chapter 87 of title 5, United
States Code, relating to life insurance;
(4) amounts of overtime pay or other premium pay;
(5) annual leave benefits; and
(6) any other benefits related to basic pay;
the basic pay of each employee shall include the rate of basic pay
established for his position under section 1215 of this Act plus the
amount of any additional compensation provided under section 1217
of this Act.
SALARY PROTECTION UPON CONVERSION OF PAY BASE
SEC. 1219. (a) In the case of any employee whose rate of basic pay
is determined in relation to rates of basic pay for the same or similar
work in the United States and which is converted to a rate of basic pay
pursuant to section 1215 (b) of this Act which is determined in relation
to rates in areas other than the United States pursuant to such section
1215(b), the employee shall continue to receive a rate of basic pay not
less than that to which the employee was entitled immediately before
the conversion.
(b) This section shall cease to apply with respect to any employee
if the employee is placed in a position-




17
(1) for which the rate of basic pay is determined in relation to
rates of basic pay in the United States pursuant to section 1915 (b)
of this Act; or
(9) which is of a lower grade.
REVIEW AND ADJUSTMENT OF CLASSIFICATIONS, GRADES, AND PAY LEVEL
SEC. 1220. An employee may request at any time that the employee's
agency-
(1) review the classifiation of the employee's position or the
grade or pay level for the employee's position, or both; and
(2) revise or adjust that classification, grade or pay level, or
both, as the case may be.
The request for review and revision or adjustment shall be submitted
and adjudicated in accordance with the regularly established appeals
procedures of the agency.
PANAMA CANAL BOARD OF APPEALS; DUTIES
SEC. 1991. (a) Subject to the provisions of this chapter, the Presi-
dent shall prescribe regulations establishing a Panama Canal Board
of Appeals. The regulations shall provide for the number of members
of the Board and their appointment, compensation, and terms of of1ce,
the selection of a Chairman of the Board, the appointment and com-
pensation of the Board's employees, and other appropriate matters re-
lating to the Board.
(b) The Board shall review and determine the appeals of employees
in accordance with section 1222 of this Act. The decisions of the Board
shall conform to the provisions of this subchapter.
APPEALS TO BOARD; PROCEDURE; FINALITY OF DECISIONS
SEC. 1929. (a) An employee may appeal to the Panama Canal Board
of Appeals from an adverse determination made by an agency under
section 1220 of this A ct. The appeal shall be made in writing within
a reasonable time (as specified in regulations prescribed by, or under
the authority of, the President) after the date of the transmittal by the
agency to the employee of written notice of the adverse determination.
(b) The Board may authorize, in connection with an appeal pur-
suant to subsection (a) of this section, a personal appearance before
the Board by the employee, or by a representative of the employee
designated for that purpose.
(c) After investigation and consideration of the evidence submitted,
the Board shall-
(1) prepare a written decision on the appeal;
(9) transmit its decision to the agency concerned ; and
(3) transmit copies of the decision to the employee concerned
or to the designated representative.
(d) The decision of the Board on any question or other matter re-
lating to an appeal is final and conclusive. The agency concerned shall
take action in accordance with the decision of the Board.
H.Rept. 96-473 --- 3
S.Rept. 96-330 --- 3




18
ADMINISTRATION BY THE PRESIDENT
SEC. 1223. (a) The President shall prescribe regulations necessary
and appropriate to carry out the provisions of this subchapter and
coordinate the policies and activities of agencies under this subchapter.
(b) The President may establish an office within the Commission
as the successor to the Canal Zone Central Examining Offiee. The pur-
pose of the office shall be to assist the President in-
(1) carrying out the President's coordination responsibility
under subsection (a) of this section; and
(2) implementing the provisions of the Panama Canal Treaty
of 1977 and related agreements with respect to recruitment, ex-
amination, determination of qualification standards, and similar
matters.
(c) The President may delegate any authority vested in the Presi-
dent by this subchapter and may provide for the redelegation of that
authority.
APPLICABILITY OF CERTAIN LAWS
SEC. 1224. This chapter does not affect the applicability of-
(1) the provisions of title 5, United States Code, which relate
to preference eligibles;
(2) the provisions of title 5, United States Code, which relate
to removal or suspension from the competitive service; and
(3) the provisions of section 5544 (a) of title 5, United States
Code, which relate to wage-board overtime and Sunday rates,
with respect to classes of employees who were covered by those
provisions on the date of the enactment of this Act.
MINIMUM LEVELS OF PAY; MINIMUM ANNUAL INCREASES
SEC. 1225. (a) Subsection (f) of section 13 of the Fair Labor Stand-
ards Act of 1938 (29 U.S.C. 213(f)), relating to applicability to em-
ployees in foreign countries and certain United States possessions, is
amended by striking out "Johnston Island; and the Canal Zone." and
inserting in lieu thereof "and Johnston Island.".
(b) (1) Effective October 1, 1979, each individual employed by an
Executive agency or the Smithsonian Institution, whose permanent
duty station is located within an area or installation in the Republic
of Panama made available to the United States pursuant to the Panama,
Canal Treaty of 1977 and related agreements, shall be paid basic pay
at a rate of not less than $2.90 an hour.
(2) Effective on October 1 of each succeeding calendar year, the
rate of basic pay for each individual referred to in paragraph (1) of
this subsection whose basic pay is not fixed in relation to rates of basic
pay for the same or similar work performed in the United States shall
be increased by an amount equal to not less than 2 percent of the rate of
basic pay for that individual in effect immediately before that date.
Subchapter III-Conditions of Employment and Placement
TRANSFERRED OR REEMPLOYED EMPLOYEES
SEC. 1231. (a) (1) With respect to any individual employed in the
Panama Canal Company or the Canal Zone Government-




19
(A) who is transferred-
(i) to a position in the Commission; or
(ii) to a position in an Executive; agency or in the Smith-
sonian Institution the permanent duty station of which is in
the Republic of Panama (including the area known before
October 1, 1979, as the Canal Zone); or
(B) who is separated by reason of a reduction in force on Sep-
tember 30, 1979, and is appointed to a position in the Commission
before April 1, 1980;
the terms and conditions of employment set forth in paragraph (2)
of this subsection shall be generally no less favorable, on or after the
date of the transfer referred to in subparagraph (A) of this para-
graph or the date of the appointment referred to in subparagraph
(B) of this paragraph, as the case may be, than the terms and condi-
tions of employment with the Panama Canal Company and Canal
Zone Government on September 30, 1979, or, in the case of a transfer
described in subparagraph (A) (ii) of this paragraph which takes
place before that date, on the date of the transfer.
(2) The terms and conditions of employment referred to in para-
graph (1) of this subsection are the following:
(A) rates of basic pay;
(B) tropical differential;
(C) premium pay and night differential;
(D) reinstatement and restoration rights;
(E) injury and death compensation benefits;
(F) leave and travel;
(0) transportation and repatriation benefits;
(H) group health and life insurance;
(I) reduction-in-force rights;
(J) an employee grievance system, and the right to appeal
adverse and disciplinary actions and position classification
actions;
(K) veterans' preference eligibility;
(L) holidays;
(M) saved pay provisions; and
(N) severance pay benefits.
(3) (A) The provisions of this subsection shall take effect on the
date of the enactment of this Act.
(B) No spending authority (as described in section 401 (c) (2) (C)
of the Congressional Budget Act of 1974) provided for under this
subsection shall take effect before October 1,1979.
(0) Efective October 1, 1979, any individual who, but for subpara-
graph (B) of this paragraph, would have been entitled to one or more
payments pursuant to this subsection for periods before October 1,
1979, shall be entitled, to the extent or in such.amounts as are provided
in advance in appropriation Acts, to a lump sum payment equal to the
total amount of all such payments.
(b) Any individual described in subsection (a) (1) (B) of this sec-
tion who would have met the service requirement for early retire-
ment benefits under section 8336 (i) or 8339 (d) (2) of title 5, United
States Code (as amended by sections 1241 (a) and 1242 of this Act,
respectively), but for a break in service of more than 3 days imme-
diately after September 30, 1979, shall be considered to meet that
requirement. Any break in service by any such individual for purposes




20
of section 8332 of such title 5 during the period beginning September
30, 1979, and ending on the date of the appointment referred to in
such subsection (a) (1) (B) shall be considered a period of creditable
service under such section 8332 for such individual, except that such
period shall not be taken into account for purposes of determining
ave rage pay (as defined in section 8331 (4) of such, title 5 and no
deduction, contribution, or deposit shall be required for that period
under section 8334 of such title 5.
(c) (1) Section 5(c) of the Defense Department Overseas Teachers
Pay and Personnel Practices Act (20 U.S.C. 903(c)) shall not apply
with respect to any teacher who was employed by the Canal Zone
Government school system on September 30, 1979, and who was trans-
ferred from such position to a teaching position which is under the
Department of Defense Overseas Dependent School System and the
permanent duty station of which is in the Republic of Panama, until
the rates of basic compensation established under section 5(c) of such
Act equal or exceed the rates of basic compensation then in effect for
teachers who were so transferred.
(2) Section 6(a) (2) of the Defense Department Overseas Teachers
Pay and Personnel Practices Act (20 U.S.C. 904 (a) (2) ) shall not ap-
ply with respect to any teacher who was employed by the Canal Zone
Government school system on September 30, 1979, and who was trans-
ferred from such position to a teaching position which is under the
Department of Defense Overseas Dependent School System and the
permanent duty station of which is in the Republic of Panama.
(3) (A) The head of a department or agency of the United States
may grant a sabbatical to any teacher to whom paragraph (1) of this
subsection applies for not to exceed 11 months in order to permit the
teacher to engage in study or uncompensated work experience which
is in the United States and which 'oill contribute to the teacher's de-
velopment and effectiveness. Basic compensation shall be paid to
teachers on sabbatical under this section in the sa manner and to the
same extent as basic compensation would have been paid to teachers on
sabbatical while employed in the Canal Zone Government school sys-
tem on the day before the effective date of this Act. A sabbatical shall
not result in a loss of, or reduction in, leave to which the teacher is
otherwise entitled, credit for time or service, or performance or effl-
ciency rating. The head of the department or agency may authorize in
accordance with chapter 57 of title 5, United States Code, such travel
expenses (including per diem allowance) as the head of the depart-
ment or agency may determine to be essential for the study or
experence.
(B) A sabbatical under this paragraph may not be granted to any
teacher-
(i) more than once in any 10-year period;
(ii) unless the teacher has completed 7 years of service as a
teacher; and
(iii) if the teacher is eligible for voluntary retirement with a
right to an immediate annuity.
(C) (i) Any teacher in a department or agency of the United States
may be granted a sabbatical under this paragraph only if the teacher
agrees, as a condition of accepting the sabbatical, to serve in the civil




21
service upon the completion of the sabbatical for a period of two con-
secutive years.
(ii) Each agreement required under clause (i) of this subparagraph
shall provide that in the event the teacher fails to carry out the agree-
ment (except for good and sufficient reason as determined by the head
of the department or agency that granted the sabbatical) the teacher
shall be liable to the United States for payment of all expenses (in-
cluding salary) of the sabbatical. The amount shall be treated as a
debt due the United States.
(d) Sections 5595(a) (2) (iii), 5724a(a) (3) and (4), and 8102(b)
of title 5, United States Code, are each amended by striking out "Canal
Zone" each place it appears and inserting in lieu thereof "areas and
installations in the Republic of Panama made available to the United
States pursuant to the Panama Canal Treaty of 1977 and related
agreements (as described in section 3 (a) of the Panama Canal Act of
1979)."
PLACEMENT
SEC. 1232. (a) Any citizen of the United States-
(1) who, on March 31, 1979, was an employee of the Panama
Canal Company or the Canal Zone Government;
(2) who separates or is scheduled to separate on or after such
date for any reason other than misconduct or delinquency; and
(3) who is not placed in another appropriate position in the
Government of the United States in the Republic of Panama;
shall, upon the employee's request, be accorded appropriate assistance
for placement in vacant positions in the Government of the United
States in the United States.
(b) Any citizen of the United States-
(1) who, on March 31, 1979, was employed in the Canal Zone
as an employee of an Executive agency (other than the Panama
Canal Company or the Canal Zone Government) or the Smith-
sonian Institution;
(2) whose position is eliminated as the result of the imple-
mentation of any provision of the Panama Canal Treaty of 1977
and related agreements, and
(3) who is not appointed to another appropriate position in the
Government of the United States in the Republic of Panama;
shall, upon the employee's request, be accorded appropriate assistance
for placement in vacant positions in the Government of the United
States in the United States.
(c) The Office of Personnel Management shall establish and admin-
ister a Government-wide placement program for all eligible employees
who request appointment to positions under this section.
(d) The provisions of this section shall take effect on the date of the
enactment of this Act.
Subchapter IV-Retirement
EARLY RETIREMENT ELIGIBILITY
SEC. 1241. (a) Section 8336 of title 5, United States Code, is
amended-




22
(1) in subsection (c), by inserting (1) after (c) and by
adding at the end thereof the following new paragraph:
"(2) An employee is entitled to an annuity if the employee-
"(A) was a law enforcement officer or firefighter employed by
the Panama Canal Company or the Canal Zone Government at
any time during the period beginning March 31, 1979, and ending
September 30,1979; and
"(B) is separated from the service before January 1, 2000,
after becoming 48 years of age and completing 18 years of service
as a law enforcement officer or firefighter, or any combination of
such service totaling at least 18 years."; and
(2) by redesignating subsection (i) as subsection (j) and by
inserting after subsection (h) the following new subsection:
"(i) (1) An employee of the Panama Canal Commission or of an
Executive agency conducting operations in the Canal Zone or Repub-
lie of Panama who is separated from the service before January 1,
2000, who was employed by the Canal Zone Government or the Pan-
ama Canal Company at any time during the period beginning March
31, 1979, and ending September 30, 1979, and who has had continuous
Panama Canal service, without a break in service of more than 3 days,
from that time until separation, is entitled to an annuity if the em-
ployee is separated-
"(A) involuntarily, after completing 20 years of service or
after becoming 48 years of age and completing 18 years of service,
if the separation is a result of the implementation of any provi-
sion of the Panama Canal Treaty of 1977 and related agreements;
or
" (B) voluntarily, after completing 23 years of service or after
becoming 48 years of age and completing 18 years of service.
"(2) An employee of the Panama Canal Commission or of an Exec-
utive agency conducting operations in the Canal Zone or Republic of
Panama who is separated from the service before January 1, 2000,
who was employed, at a permanent duty station in the Canal Zone, by
any Executive agency other than the Canal Zone Government or the
Panama Canal Company at any time during the period beginning
March 31, 1979, and ending September 30, 1979, and who has had
continuous Panama Canal service, without a break in service of more
than 3 days, from that time until separation, is entitled to an annuity
if-
" (A) the employee is separated involuntarily, after completing
20 years of service or after becoming 48 years of age and com-
pleting 18 years of service; and
" (B) the separation is the result of the implementation of any
provision of the Panama Canal Treaty of 1977 and related
agreements.
"(3) For the purpose of this subsection-
"(A) 'Panama Canal service' means-
" (i) service as an employee of the Canal Zone Government,
the Panama Canal Company, or the Panama Canal Com-
mission; or
" (ii) service at a permanent duty station in the Canal
Zone or Republic of Panama as an employee of an Execu-




23
tive agency conducting operations in the Canal Zone or the
Republic of Panama; and
"(B) 'Executive agency' includes the United States District
Court for the District of the Canal Zone and the Smithsonian
Institution.".
(b) (1) The amendments made by this section shall take effect on
the date of the enactment of this Act, but no amount of annuity under
chapter 83 of title 5, United States Code, accruing by reason of those
amendments shall be payable for any period before October 1, 1979.
(2) Effective October 1, 1979, any individual who, but for para-
graph (1) of this subsection, would have been entitled to one or more
annuity payments pursuant to the amendments made by this section
for periods before October 1, 1979, shall be entitled, to such extent
or in such amounts as are provided in advance in appropriation
Acts, to a lump sum payment equal to the total amount of all such
annuity payments.
EARLY RETIREMENT COMPUTATION
SEc. 1242. Section 8339 (d) of title 5, United States Code, is amended
by inserting (1) after (d) and by adding at the end thereof the
following new paragraphs:
" (2) The annuity of an employee retiring under this subchapter
,who was employed by the Panama Canal Company or Canal Zone
Government on September 30, 1979, is computed with respect to the
period of continuous Panama Canal service from that date, disregard-
ing any break in service of not more than 3 days, by adding-
"(A) 2 percent of the employee's average pay multiplied by
so much of that service as does not exceed 20 years; plus
" (B) 2 percent of the employee's average pay multiplied by so
much of that service as exceeds 20 years.
"(3) (A) In the case of an employee who has service as a law
enforcement offcer or firefighter to which paragraph (2) of this sub-
section applies, the annuity of that employee is increased by $8 for each
full month of that service which is performed in the Republic of
Panama.
" (B) In the case of an employee retiring under this subchapter
who-
" (i) was employed as a law enforcement officer or firefighter by
the Panama Canal Company or Canal Zone Government at any
time during the period beginning March 31, 1979, and ending
September 30, 1979; and
" (ii) does not meet the age and service requirements of section
8336(c) of this title;
the annuity of that employee is increased by $12 for each full month of
that service which occurred before October 1, 1979.
" (0) An annuity increase under this paragraph does not apply with
respect to service performed after completion of 20 years of service
(or any combination of service) as a law enforcement officer or fire-
fighter.
"(4) For the purpose of this subsection-
"(A) 'Panama Canal service' means-




24
(i) service as an employee of the Panama Canal Commis-
son; or
" (ii) service at a permanent duty station in the Canal Zone
or Republic of Panama as an employee of an Executive agen-
cy conducting operations in the Canal Zone or Republic of
Panama; and
"(B) 'Executive agency' includes the Smithsonian Institu-
tion.".
(b) (1) The amendments made by this section shall take effect on the
date of the enactment of this Act, but no amount of annuity under
chapter 83 of title 5, United States Code, accruing by reason of those
amendments shall be payable for any period before October 1, 1979.
(2) Effective October 1, 1979, any individual who, but for para-
graph (1) of this subsection, would have been entitled to one or more
annuity payments pursuant to the amendments made by this section
for periods before October 1, 1979, shall be entitled, to such extent or
in such amounts as are provided in advance in appropriation Acts, to
a lump sum payment equal to the total amount of all such annuity
payments.
RETIREMENT UNDER SPECIAL TREATY PROVISIONS
SEC. 1243. (a) (1) Subject to subsection (b) of this section, and un-
der ouch regulations as the President may prescribe, the Secretary of
the Treasury shall pay to the Social Security System of the Republic
of Panama, out of funds deposited in the Treasury of the United
States to the credit of the Civil Service Retirement and Disability
Fund under section 8334 (a) (2) of title 5, United States Code, such
sums of money as may be necessary to aid in the purchase of a retire-
ment equity in such System for each individual who-
(A) meets the requirements of paragraph (2) of this subsection;
(B) is separated from employment in the Panama Canal Com-
pany, the Canal Zone Government, or the Commission by reason
of the implementation of any provision of the Panama Canal
Treaty of 1977 and related agreements; and
(0) becomes employed in a position covered by the Social
Security System of the Republic of Panama through the transfer
of a function or activity to the Republic of Panama from the
United States or through a job placement assistance program.
(2) This subsection applies with respect to any individual only if
the individual-
(A) has been credited with at least 5 years of civilian service
under section 8332 of title 5, United States Code, relating to
creditable service for purposes of civil service retirement;
(B) is not eligible for an immediate retirement annuity under
chapter 83 of title 5, United States Code, relating to civil service
retirement, and elects not to receive a deferred annuity under that
chapter based on any portion of that service; and
(C) elects to withdraw from the Civil Service Retirement and
Disability Fund the individual's entire lump-sum credit (as de-
fined in section 8331(8) of title 5, United States Code) and to
transfer that amount to the Social Security System of the Republic




25
of Panama pursuant to the special regime referred to in para-
graph 3 of Article VIII of the Agreement in Implementation
of Article III of the Panama Canal Treaty of 1977.
(b) The amount paid to the Social Security System of the Republic
of Panama with respect to any individual under subsection (a) of this
section shall not exceed the individual's entire lump-sum credit (as so
defined).
(c) (1) Pursuant to paragraph 2(b) of Annex C to the Agreement
in Implementation of Article IV of the Panama Canal Treaty of 1977,
the President, or the President's designee, shall purchase from a source
-determined by the President to be appropriate, in accordance with
suin regulations as the President or the President's designee may
prescribe, and to such extent or in such amounts as may be provided
in advance in appropriations Acts, a nontransferable deferred annuity
for the benefit of each employee of an agency or instrumentality of
the Government of the United States in the Republic of Panama-
(A) who is not a citizen of the United States;
(B) who was employed on October 1, 1979, and during any
period before that date by an agency or instrumentality of the
Government of the United States at any permanent duty station
in the Republic of Panama (including, with respect to employ-
ment before that date, the area then known as the Canal Zone);
(C) who, for any period of service with such agency or instru-
mentality before October 1, 1979, at any such permanent duty
station was not covered, by reason of that service, by the United
States Civil Service Retirement System or any other Federal
retirement system providing benefits similar to those retirement
benefits provided by the Social Security System of the Republic
of Panama; and
(D) who, on October 1, 1979, is under a Federal retirement
system and, on or before that date, has accrued in one or more
agencies or instrumentalities of the United States a total of
5 years or more of service which-
(i) is creditable toward any Federal retirement system as
in effect on October 1, 1979;
(ii) would have been creditable toward any such retire-
ment system if the retirement system were in effect at the
time of the service accrued by the employee; or
(iii) consists of any combination of service described in
clauses (i) and (ii) of this subparagraph.
(2) The retirement annuity referred to in paragraph (1) of this
subsection with respect to any employee will cover retroactively,
from October 1, 1979, all periods of service, described in subpara-
graph (D) of that paragraph, by that employee at any permanent
duty station in the Republic of Panama (including the area known
before that date as the Canal Zone) in agencies and instrumentalities
of the Government of the United States during which that employee
was not covered by the United States Civil Service Retirement Sys-
tem or any other Federal retirement system providing benefits simi-
lay to those retirement benefits provided by the Social Security
System of the Republic of Panama.
H.Rept. 96-473 --- 4
S.Rept. 96-330 --- 4




26
OBLIGATION OF COMMISSION FOR UNFUNDED LIABILITY
SEC. 1244. Section 8348 of title 5, United States Code, is amended by
adding at the end thereof the following new subsection:
" (i) (1) Notwithstanding any other provision of law, the Panama
Canal Commission shall be liable for that portion of any estimated
increase in the unfunded liability of the Fund whick is attributable
to any benefits payable from the Fund to or on behalf of employees
and their survivors to the extent attributable to the amendments made
by sections 1241 and 1242, and the provisions of sections 1231 (b) and
1243 (a) (1) of the Panama Canal Act of 1979.
" (2) The estimated increase in the unfunded liability referred to in
paragraph (1) of this subsection shall be determined by the Office of
Personnel Management. The Secretary of the Treasury shall pay to
the Fund from appropriations for that purpose the amount so deter-
mined in annual installments with interest computed at the rate used
in the most recent valuation of the Civil Service Retirement System.".
CASH RELIEF TO CERTAIN FORMER EMPLOYEES
SEc. 1245. (a) The Commission, under the regulations prescribed
by the President pursuant to the Act entitled "An Act author-
izing cash relief for certain employees of the Panama Canal not
coming within the provisions of the Canal Zone Retirement Act",
approved July 8, 1937, as amended (50 Stat. 478; 68 Stat. 17), may
continue the payments of cash relief to those individual former em-
ployees of the Canal Zone Government or Panama Canal Company
or their predecessor agencies not coming within the scope of the former
Canal Zone Retirement Act whose services were terminated prior to
October 5, 1958, because of unfitness for further useful service by rea-
son of mental or physical disability resulting from age or disease.
Subject to subsection (b) of this section, that cash relief may not
exceed $1.50 per month for each year of service of the employees so
furnished relief, with a maximum of $45 per month, plus the amount
of any cost-of-living increases in such cash relief granted before Oc-
tober 1, 1979, pursuant to section 181 of title 2 of the Canal Zone Code
(as in effect on September 30, 1979), nor be paid to any employee who,
at the time of termination for disability prior to October 5, 1958, had
less than 10 years' service with the Canal Zone Government, the Pan-
ama Canal Company, or their predecessor agencies on the Isthmus of
Panama.
(b) An additional amount of $20 per month shall be paid to each
person who receives payment of cash relief under subsection (a) of
this section and shall be allowed without regard to the limitations
contained therein.
(c) Each cash relief payment made pursuant to this section shall be
increased on the same effective date and by the same percent, adjusted
to the nearest dollar, as civil service retirement annuities are increased
under the cost-of-living adjustment provisions of section 8340 (b) of
title 5, United States Code. Such increase shall apply only to cash
relief payments made after October 1, 1979, as increased by annuity
increases made after that date under such section 8340 (b) .




27
(d) The Commission may pay cash relief to the widow of any
former employee of the Canal Zone Government or the Panama
Cawal Conipany who, until the time of his death, receives or
has received cash relief under subsection (a) of this section, under
section 181 of title 2 of the Canal Zone Code (as in effect on Septem-
ber 30, 1979), or under the Act of July 8, 1937, referred to in such
subsection (a). The term widowo" as used in this subsection includes
only the following:
(1) a woman legally married to such employee at the time of
his termination for disability and at his death;
(2) a woman who, although not legally married to such former
employee at the time of his termination, had resided continuously
with him for at least five years immediately preceding the em-
ployee's termination under such circumstances as would at com-
mon law make the relationship a valid marriage and who
continued to reside with him until his death; and
(3) a woman who has not remarried or assumed a common-law
relationship with any other person.
Cash relief granted to such a widow shall not at any time exceed 50
percent of the rate at which cash relief, inclusive of any additional
payment under subsection (b) of this section, would be payable to the
former employee were he then alive.
(e) Subchapter III of chapter 83 of title 5, United States Code,
applies with respect to those individuals who were in the service of the
Canal Zone Government or the Panama Canal Company on October 5,
,1958, and who, except for the operation of section 13 (a) (1) of the
Act entitled "An Act to, implement item 1 of a Memorandum of Under-
standing attached to the treaty of January 25, 1955, entered into by
the Government of the United States of America and the Government
of the Republic of Panama with respect to wage and employment
practices of the Government of the United States of America in the
Canal Zone", approved July 25,1958 (72 Stat. 405), would have been
within the classes of individuals subject to the Act of July 8, 1937,
referred to in subsection (a) of this section.
APPLIANCES FOR EMPLOYEES INJURED BEFORE SEPTEMBER 71 1916
SEC. 1246 Artificial limbs or other appliances may be purchased by
the Commissioii, out of any funds appropriated to the Commission,
for persons who were injured in the service of the Isthmian Canal
Commission or of the Panama Canal before September 7, 1916.
Subehapter V--Leave
LEAVE FOR JURY OR WITNESS SERVICE
SEC. 1251. Section 6322(a) of title 5, United States Code, is
amended-
(1) by striking out "the Canal Zone, or"; and
(2) by striking out "Islands." and sserting in lieu thereof
"Islands, or the Republic of Panama.".




28
Subehapter VI-Application to Related Personnel
LAW ENFORCEMENT; CANAL ZONE CIVILIAN PERSONNEL POLICY
COORDINATING BOARD; RELATED EMPLOYEES
SEC. 1261. (a) For the purposes of sections 1206, 1231, 1232, 1241,
and 1242 of this Act, including any amendment made by those sections,
the United States Attorney for the District of the Canal Zone and the
Assistant United States Attorneys and their clerical assistants, and
the United States Marshal for the District of the Canal Zone and his
deputies and clerical assistants shall be considered employees of the
Commission.
(b) For the purposes of this Act, including any amendment made
by this Act, the Executive Director of the Canal Zone Civilian Per-
sonnel Policy Coordinating Board, the Manager, Central Examining
Office, and their staffs shall be considered to have been employees of
the Panama Canal Company with respect to service in those positions
before October 1, 1979, and as employees of the Commission with
respect to service in those positions on or after that date.
(c) The provisions of this section shall take effect on the date of the
enactment of this Act.
Subchapter VII-Labor-Management Relations
LABOR-MANAGEMENT RELATIONS
SEC. 1271. (a) Nothing in this Act shall be construed to affect the
applicability of chapter 71 of title 5, United States Code, relating to
labor-management and employee relations, with respect to the Com-
mission or the operations of any other Executive agency conducted in
that area of the Republic of Panama which, on September 30, 1979,
was the Canal Zone, except that in applying those provisions-
(1) the definition of "employee" shall be applied without re-
gard to clause (i) of section 7103(a) (2) of such title 5 -which
relates to nationality and citizenship; and
(2) a unit shall be considered to be appropriate notwithstand-
ing the fact that it includes any supervisor if that supervisor's
position (or type of position) was, before October 1, 1979, repre-
sented before the Panama Canal Company by a labor organiza-
tion that included employees who were not supervisors.
(b) Labor-management and employee relations of the Commission,
other Executive agencies, and the Smithsonian Institution, their em-
ployees, and organizations of those employees, in connection with
operations conducted in that area of the Republic of Panama which, on
September 30, 1979, was the Canal Zone, shall be governed and regu-
lated solely by the applicable laws, rules, and regulations of the United
States.
CHAPTER 3-FUNDS AND AccouNTs
Subchapter I-Funds
CANAL ZONE GOVERNMENT FUNDS
SEC. 1301. On the effective date of this Act, any unexpended balances
of the appropriation accounts appearing on the books of the United




29
States Government as "Operating Expenses, Canal Zone Government
(38-0116-0-1-806)" and "Capital Outlay, Canal Zone Government
(38-0118-0-14-806) "shall be covered into the general fund of the Treas-
ury, and any appropriations to which expenditures under such accounts
have been chargeable before such effective date are repealed. The Com,-
mission may, to such extent or in such amounts as are provided in
appropriation Acts to the Commission for such purpose, pay claims or
make payments chargeable to such accounts, upon proper audit of such
claims or payments. There are authorized to be appropriated to the
Commission such funds as may be necessary to pay claims and make
payments pursuant to this section.
PANAMA CANAL COMPANY FUNDS; COMMISSION FUNDS
SEC. 1302. (a) On the effective date of this Act, the account appear-
ing on the books of the United States Government as the "Panama
Canal Company Fund (38-4060-0-3-403) shall be terminated, and
any unexpended balances under such account as of that date shall be
covered into the Treasury in an account to be known as the "Panama
Canal Commission Fund".
(b) On or after the effective date of this Act, tolls for the use of
the Panama Canal and all other receipts of the Commission that, before
such effective date, would have been credited to the account appearing
on the books of the Government as the "Panama anal Company Fund
(38-4060-0-3-403)" shall be deposited in the Treasury in the Panama
Canal Commission Fund.
(c) (1) No funds may be appropriated to or for the use of the
Commission, nor may any funds be obligated or expended by the
Commission for any Pscal year, unless such appropriation, obligation,
or expenditure has been specifically authorized by law.
(2) No funds may be appropriated to or for the use of the Commis-
sion for any fiscal year in excess of (A) the amount of revenues
deposited in the Panama Canal Commission Fund during such fiscal
year, .as such amount is estimated by the Secretary of Defense and
certified by the Comptroller General of the United States at the time
the budget request for the Commission for such fiscal year is submitted
to the Congress, plus (B) the amount of revenues deposited in such
Fund prior to such fiscal year and remaining unexpended at the begin-
ning of such fiscal year. Not later than thirty days after the end of such
fiscal year, the Secretary of the Treasury shall report to the Congress
the actual amount of revenues deposited in the Panama Canal Commis-
sion Fund during such fiscal year.
(d) The Commission may, to such extent or in such amounts as are
provided in advance in appropriation Acts, enter into contracts in
order to carry out its functions.
(e) (1) It is the sense of the Congress that the additional costs re-
sulting from implementation of the Panama Canal Treaty of 1977
and related agreements should be kept to the absolute minimum level.
To this end, the Congress declares that the direct appropriated costs
of implementation to be borne by the taxpayers over the life of such
Treaty should be kept to a level no greater than the March 1979 esti-
mate of those costs ($870,700,000) presented to the Congress by the
executive branch during consideration of this Act by the Congress,




30
less personnel retirement costs of $205,000,000, which were subtracted
and charged to tolls, therefore resulting in the net taxpayer cost of
approximately $665,700,000, plus appropriate adjustment for inflation.
(2) It is further the sense of the Congress that the actual costs of
implementation be consistent with the obligations of the United States
to operate the Panama Canal safely and efficiently and keep it secure.
EMERGENCY FUND
SEC. 1303. (a) On the effective date of this Act, the Secretary of the
Treasury shall establish and thereafter shall maintain in the Treasury
a fund to be known as the "Panama Canal Emergency Fund". There
are authorized to be appropriated for deposit in such Fund (1) for
the fiscal year beginning on October 1, 1979, $40,000,000, and (2) for
any fiscal year beginning on or after October 1, 1980, such additional
sums as may be specifically authorized by law for such fiscal year.
(b) The Commission may make withdrawals from the Panama
Canal Emergency Fund by check in order to defray emergency ex-
penses and to insure the continuous, effloient, and safe operation of the
Panama Canal, if funds appropriated for the operation and mainte-
nance of the Canal are insufficient for such purposes. Any withdrawal
from such Fund to cover increased costs attributable to unprogrammed
increases in traffic may not be made in amounts greater than the
revenues from such increased traffic. Such Fund shall not be available
for payments to Panama under Article XIII of the Panama Canal
Treaty of 1977. Any withdrawal from such Fund or expenditure made
under this subsection shall be reported forthwith by the Commission
to the Congress and to the Office of Management and Budget.
Subchapter II-Accounting Policies and Audits
ACCOUNTING POLICIES
SEC. 1311. (a) The Co8ission shall establish and maintain its
accounts pursuant to the Accounting and Auditing Act of 1950 (31
U.S.C. 65 et seq.) and the provisions of this chapter. Such accounts
shall specify all revenues received by the Commission, including tolls
for the use of the Panama Canal, expenditures for capital replacement,
expansion, and improvement, and all costs of maintenance and opera-
tion of the Panama Canal and of its complementary works, installa-
tions, and equipment, including depreciation, payments to the Republic
of Panama under the Panama Canal Treaty of 1977, and interest on the
investment of the United States calculated in accordance with section
1603 of this Act.
(b) The Commission may issue regulations establishing the basis of
accounting for the assets which are made available for the use of the
Commission. Such regulations may provide for depreciation of the net
replacement value of the assets which will ultimately require replace-
ment to maintain the service capacity of the Panama Canal. Such regu-
lation may also provide that depreciation of such assets be recorded
ratably over their service lives.




31
REPORTS
SEC. 1312. The Commission shall, not later than January 31 of each
year, submit to the President and the Congress a financial statement
and a complete report with respect to the maintenance and operation
of the Panama Canal during the preceding fiscal year.
AUDIT BY THE COMPTROLLER GENERAL OF THE UNITED STATES
SEC. 1313. (a) Financial transactions of the Commission shall be
audited by the Comptroller General of the United States (hereinafter
in this Act referred to as the "Comptroller General") pursuant to
the Accounting and Auditing Act of 1950 (31 U.S.C. 65 et seq.). In
conducting any audit pursuant to such Act, the appropriate represent-
atives of the Comptroller General shall have access to all books, ac-
counts, financial records, reports, files, and other papers, items, or
property in use by the Commission and necessary to facilitate such
audit, and such representatives shall be afforded full facilities for veri-
fying transactions with the balances or securities held by depositories,
fiscal agents, and custodians. An audit pursuant to such Act shall first
be conducted with respect to the fiscal year in which this Act becomes
effective.
(b) The Comptroller General shall, not later than six months after
the end of each fiscal year, submit to the Congress a report of the
audit conducted pursuant to subsection (a) of this section with respect
to such fical year. Such report shall set forth the scope of the audit
and shall include-
(1) a statement of assets and liabilities, capital, and surplus or
deficit, based on the accounts of the Commission established pur-
suant to this chapter,
(2) a statement of income and expenses,
(3) a statement of sources and application of funds,
(4) a statement listing all direct and indirect costs incurred by
the United States in implementing the Panama Canal Treaty of
1977, including the cost of property transferred to the Republic of
Panama during each fiscal year, and
(5) such comments and information as the Comptroller General
considers necessary to keep the Congress informed of the opera-
tions and financial transactions of the Commission, together with
such recommendations with respect to such operations and trans-
actions as the Comptroller General considers advisable.
The report shall identify specifically any program, expenditure, or
other financial transaction or undertaking observed in the course of
the audit which, in the opinion -of the Comptroller General, has been
carried out or made and has not been authorized by law. The Comptrol-
ler General shall submit a copy of each such report to the President,
the Secretary of the Treasury, and the Commission.
(c) In conducting the audits and preparing the reports provided for
in this section and in carrying out his other responsibilities pursuant
to law, the Comptroller General shall, with respect to fiscal year 1980,
take into account the problems inherent in converting the existing




32
accounting system of the Panama Canal Company to conform to the
requirements established in section 1311 of this Act. Accordingly, the
Comptroller General shall take no adverse action with respect to the
Commission, nor shall any violation of section 3679 of the Revised
Statutes (31 U.S.C. 665) be considered to have taken place, so long as
the Commission is in substantial compliance with the requirements of
this Act. The Comptroller General shall make such recommendations
to the Commission and to the Congress as he may consider appropri-
ate to insure that full compliance with the financial controls provided
for in the Accounting and Auditing Act of 1950 (31 U.S.C. 65 et seq.)
is achieved promptly.
Subehapter III-Interagency Accounts
INTERAGENCY SERVICES; REIMBURSEMENTS
SEc. 1321. (a) The Commission shall reimburse the Employees'
Compensation Fund, Bureau of Employee's Compensation, Depart-
ment of Labor, for the benefit payments to the Commission's employees,
and shall also reimburse other Government departments and agencies
for payments of a similar nature made on its behalf.
(b) The Department of Defense shall reimburse the Commission
for amounts expended by the Commission in maintaining defense facil-
ities in standby condition for the Department of Defense.
(c) Notwithstanding any other provision of law, funds appropriated
(for any fiscal year beginning after September 30, 1979) to or for the
use of the Department of Defense, or to any other department or
agency of the United States as may be designated by the President
to carry out the purposes of this subsection, shall be available for-
(1) conducting the educational and health care activities, in-
cluding kindergartens and college, carried out by the Canal Zone
Government and the Panama Canal Company before the efective
date of this Act, and
(2) providing the services related thereto to the categories of
persons to which such services were provided before such effect
tive date.
Notwithstanding any other provision of law, the Department of De-
fense, or any department or agency designated by the President to
provide health care services to those categories of persons referred
to in this subsection, shall provide such services to such categories of
persons on a basis no less favorable than that applied to its own em-
ployees and their dependents.
(d) Amounts expended for furnishing services referred to in sub-
section (c) of this section to persons eligible to receive them, less
amounts payable by such persons, shall be fully reimbursable to the
department or agency furnishing the services, except to the extent that
such expenditures are the responsibility of that department or agency.
The appropriations or funds of the Commission shall be available for
such reimbursements on behalf of-
(1) employees of the Commission, and
(2) other persons authorized to receive such services who are
eligible to receive them pursuant to the Panama Canal Treaty of
1977 and related agreements.




33
The appropriations or funds of any other department or agency of
the United States conducting operations in the Republic of Panama,
including the Smithsonian Institution, shall be available for reim-
bursements on behalf of employees of such department or agency and
their dependents.
(e) The appropriations or funds of the Commission, or of any other
department or agency of the United States conducting operations in
the Republic of Panama, shall be available, in accordance with sub-
section (d) of this section, to defray the cost of-
(1) health care services to elderly or disabled persons who were
eligible to receive such services before the effective date of this
Act, less amounts payable by such persons, and
(2) educational services provided by schools in the Republic
of Panama, which are not operated by the United States, to per-
sons who were receiving such services at the expense of the Canal
Zone Government before the effective date of this Act.
(f) For purposes of the reimbursement of the United States by the
Republic of Panama for the salaries and other employment costs of
employees of the Commission who are assigned to assist the Repub-
lic of Panama in the operation of activities which are transferred
to that Government as a result of any provision of the Panama Canal
Treaty of 1977 and related agreements, which reimbursement is pro-
vided for in paragraph 8 of Article 10 of that Treaty, the Commission
shall be deemed to be the United States of America.
(g) Notwithstanding any other provision of law, the President,
through the appropriate department or agency of the United States,
shall, until January 1, 2000, operate the educational institution known
as the "Canal Zone College". Such institution shall continue to pro-
Vide, insofar as practicable, the level of services which it offered im-
mediately before the effective date of this Act.
Subchapter IV-Postal Matters
POSTAL SERVICE
Sec. 1331. (a) The postal service established and governed by chap-
ter 73 of title 2 of the Canal Zone Code shall be discontinued on Oc-
tober 1, 1979.
(b) The provisions of chapter 73 of such title 2 relating to postal-
savings deposits, postal-savings certificates, postal money orders, and
the accounting for funds shall continue to apply for the purpose of
meeting the obligations of the United States concerning outstanding
postal savings and money orders and disposition of funds.
(c) The Commission shall take possession of and administer the
funds of the postal service referred to in subsection (a) of this section
and shall assume its obligations. The Commission and the United
States Postal Service may enter into agreements for the transfer of
funds or property and the assumption of administrative, rights or re-
sponsibilities with respect to the outstanding obligations of the postal
service referred to in subsection (a) of this section. Any transfer or
assumption (including any agreement for such transfer or assumption)
pursuant to this subsection shall be effective only to such extent or in
such amounts as are provided in advance in appropriation Acts.




34
(d) Mail addressed to the Canal Zone from or through the con-
tinental United States may be routed by the United States Postal
Service to the military post offices of the United States Forces in the
Republic of Panama. Such military post offices shall provide the re-
quired directory services and shall accept such mail to the extent per-
mitted under the Panama Canal Treaty of 1977 and related agree-
ments. The Commission shall furnish personnel, records, and other
services to such military post offices to assure wherever appropriate
the distribution, rerouting, or return of such mail.
(e) (1) The second sentence of section 403 (a) of title 39, United
States Code, is amended by striking out "Except as provided in the
Canal Zone Code, the" and inserting in lieu thereof "The".
(2) Section 3401 (b) of such title is amended-
(A) by inserting "or" before "the Virgin Islands"; and
(B) by striking out "or the Canal Zone,".
(3) (A) Section 3492 of such title is repealed.
(B) The table of sections for chapter 34 of title 39, United States
Code, is amended by repealing the item relating to section 3402.
(4) Section 3682 (b) (5) of such title is amended by striking out "the
Canal Zone and".
SUBCHAPTER V-AccouNTS WiTH THE REPUBLIC OF PANAMA
PAYMENTS TO THE REPUBLIC OF PANAMA
SEC. 1341. (a) The Commission shall pay to the Republic of Panama
those payments required under paragraph 5 of Article III and para-
graph 4 of Article XIII of the Panama Canal Treaty of 1977. Pay-
ments made under paragraph 5 of Article III of such Treaty shall be
audited annually by the Comptroller General and any overpayment, as
determined in accordance with Understanding (1) incorporated in the
Resolution of Ratification of the Panama Canal Treaty (adopted by
the United States Senate on April 18,1978), for the services described
in that paragraph which are provided shall be refunded by the Repub-
lic of Panama or set off against amounts payable by the United States
to the Republic of Panama under paragraph 5 of Article III of the
Panama Canal Treaty of 1977.
(b) In determining whether operating revenues exceed expendi-
tures for the purpose of payments to the Republic of Panama under
paragraph 4 (c) of Article XIII of the Panama Canal Treaty of 1977,
such operating revenues in a fiscal period shall be reduced by (1) all
costs of such period as shown by the accounts established pursuant to
section 1311 of this Act, and (2) the cumulative sum from prior years
(beginning with the year in which the Panama Canal Treaty of 1977
enters into force) of any excess of costs of the Panama Canal Commis-
sion over operating revenues.
(c) The President shall not accede to any interpretation of para-
graph 1 of Article IX of the Panama Canal Treaty of 1977 which
would permit the Republic of Panama to tax retroactively organiza-
tions and businesses opera ting, and citizens of the United States living,
in the Canal Zone b-e fore the effective date of this Act.
(d) Any accumulated unpaid balance under paragraph 4(c) of
Article XIII of the Panama Canal Treaty of 1977 at the termination




35
of such Treaty shall be payable only to the extent of any operating sur-
plus in the last year of the Treaty's duration, and nothing in such para-
graph may be construed as obligating the United States to pay after
the date of the termination of the Treaty any such unpaid balance
which has accrued before such date.
(e) As provided in section 1602(b) of this Act, tolls shall not be
prescribed at rates calculated to cover payments to the Republic of
Panama pursuant to paragraph 4 (c) of Article XIII of the Panama
Canal Treaty of 1977. Moreover, no payments may be made to the
Republic of Panama under paragraph 4(c) of Article XIII of the
Panama Canal Treaty of 1977 unless unexpended funds are used to pay
all costs of operation and maintenance of the Canal, including but not
limited to (1) operating expenses determined in accordance 'with gen-
erally accepted accounting principles, (2) payments to the Republic
of Panama under paragraphs 4 (a) and 4 (b) of such Article XIII and
under paragraph (5) of Article III of such Treaty, (3) amounts in
exces' of depreciation and amortization which are programed for
plant replacement, expansion, and improvements, (4) payments to
the Treasury of the United States under section 1603 of this Act, (5)
reimbursement to the Treasury of the United States for costs incurred
by other departments and agencies of the United States in providing
educational, health, and other services to the Commission, its employ-
ees and their dependents, and other categories of persons in accordance
with section 1321 of this Act, and (6) any costs of treaty implementa-
tion associated with the maintenance and operation of the Panama
C anal.
(f) The prohibitions contained in this section and in sections 1302
(c) and 1503 of this Act shall apply notwithstanding any other pro-
vision of law authorizing transfers of funds between accounts, repro-
graming of funds, use of funds for contingency purposes, or waivers
of prohibitions.
TRANSACTIONS WITH THE REPUBLIC OF PANAMA
SEC. 1342. The Commission may, on a reimbursable basis, provide
to the Republic of Panama materials, supplies, equipment, work, or
services, including water and electric power, requested by the Republic
of Panama, at such rates as may be agreed upon by the Commission
and the Republic of Panama. Payment for such materials, supplies,
equipment, work, or services may be made by direct payment by the
Republic of Panama to the Commission or by offset against amounts
due the Republic of Panama by the United States.
DISASTER RELIEF
SEC. 1343. If an emergency arises because of disaster or calamity by
flood, hurricane, earthquake, fire, pestilence, or like cause, not foreseen
or otherwise provided for, and occurring in the Republic of Panama
in such circumstances as to constitute an actual or potential hazard to
health, safety, security, or property in the areas and installations made
available to the United States pursuant to the Panama Canal Treaty o]
1977 and related agreements, the Commission may expend available
funds appropriated to the Commission for such purpose, and utilize
or furnish materials, supplies, equipment, and services for relief, as-
sistance, and protection.




36
CONGRESSIONAL RESTRAINTS ON PROPERTY TRANSFERS AND TAX
EXPENDITURES
S.c. 1344. (a) The Congress enacts this3 section in the exercise of its
authority under Article IV, section 3, clause 2 of the Constitution of
the United States to dispose of and make necessary rules and reguda-
tions with respect to property of the United States.
(b) Prior to the transfer of property of the United States located in
the Republic of Panama to the Republic of Panama pursuant to sec-
tion 1504 of this Act the President shall formally advise the Govern-
ment of Panama that-
(1) in fulfilling its obligations under the Panama Canal Treaty
of 1977, the United States shall make no payments to the
Republic of Panama derived from tax revenues of the United
States;
(2) the United States retains full discretion and authority to
determine whether and the extent to which tax revenues of the
United States may be expended in exercising United States rights
and carrying out United States responsibilities under the Panama
Canal Treaty of 1977 and related agreements ;
(3) no tax revenues of the United States shall be made avail-
able for obligations and expenditure after the effective date of this
Act for purposes of implementing the Panama Canal Treaty of
1977 and related agreements, unless hereafter specifially approved
by the Congress through the authorization and appropriation
process;
(4) the total amount expended by the Commission from funds
appropriated to or for the use of the Commission shall not exceed
the total amount deposited in the Panama Canal Commission
Fund; and
(5) the foregoing paragraphs of this subsection do not apply
to expenditures made by the United States in fulflling United
States obligations to transfer the remains of our honored dead
from Mount Hope Cemetery in the former Canal Zone to an ap-
propriate and dignified resting place in accordance with Reserva-
tion 3 to the Treaty Concerning the Permanent Neutrality and
Operation of the Panama Canal.
CHAPTER 4--CLAIMS FOR INJURIES TO PERSONS OR PROPERTY
Subchapter I-General Provisions
SETTLEMENT OF CLAIMS GENERALLY
SEc. 1401. (a) Subject to the provisions of this chapter. the Com-
mission may adjust and pay claims for injury to, or loss of, property
or for personal injury or death, arising from the operation of the Pan-
ama Canal or related facilities and appurtenances.
(b) No claim for an amount exceeding $50,000 shall be adjusted and
paid by the Commission under the provisions of this subchapter.
(c) An award made to a claimant under this section shall be payable
out of anAy moneys appropriated for or made available to the Commis-
sion. The acceptance by the claimant of the award shall be final and
conclusive on the claimant, and shall constitute a complete release by




37
the claimant of his claim against the United States and against any
employee of the United States acting in the course of his employment
who is involved in the matter giving rise to the claim.
(d) Except as provided in section 1416 of this Act, no action for
damages on claims cognizable under this chapter shall lie against the
United States or the Commission, and no such action shall lie against
any ofcer or employee of the United States. Neither this section nor
section 1416 of this Act shall preclude actions against offcers or em-
ployees of the United States for injuries resulting from their acts out-
side the scope of their employment or not in the line of their duties, or
from their acts committed with the intent to injure the person or prop-
erty of another.
(e) The provisions of section 1346(b) of title 28, United States
Code, and the provisions of chapter 171 of such title shall not apply to
claims cognizable under this chapter.
Subchapter Il-Vessel Damage
INJURIES IN LOCKS OF CANAL
SEC. 1411. The Commission shall promptly adjust and pay damages
for injuries to vessels, or to the cargo, crew, or passengers of vessels,
which may arise by reason of their passage through the locks of the
Panama Canal under the control of officers or employees of the United
States. Damages may not be paid where the injury was proximately
caused by the negligence or fault of the vessel, master, crew, or pas-
sengers. If the negligence or fault of the vessel, master, crew, or pas-
sengers proximately contributed to the injury, the award of damages
shall be diminished in proportion to the negligence or fault attribut-
able to the vessel, master, crew, or passengers. Damages may not be
allowed and paid for injuries to, any protrusion beyond any portion of
the hull of a vessel, whether it is permanent or temporary in character.
A vessel is considered to be passing through the locks of the Canal,
under the control of ooers or employees of the United States, from
the time the first towing line is made fast on board before entrance into
the locks and until the towing lines are cast off upon, or immediately
prior to, departure from the lock chamber.
INJURIES OUTSIDE LOCKS
SEC. 1412. The Commission shall promptly adjust and pay damages
for injuries to vessels, or to the cargo, crew, or passengers of vessels
which may arise by reason of their presence in the Panama Canal, or
waters adjacent thereto, other than the locks, when the injury was
proximately caused by negligence or fault on the part of an officer or
employee of the United States acting within the scope of his employ-
ment and in the line of his duties in connection with the operation of
the Canal, and when the amount of the claim does not exceed $120,000.
If the negligence or fault of the vessel, master, crew, or passengers
proximately contributed to the injury, the award of damages shall be
diminished in proportion to the negligence or fault attributable to the
vessel, master, crew, or passengers. In the case of a vessel which is re-
quired by or pursuant to regulations prescribed pursuant to section
1801 of this Act to have a Panama Canal pilot on duty aboard, damages




38
may not be adjusted and paid for injuries to the vessel, or its cargo,
orew, or passengers, incurred while the vessel was underway and in
motion, unless at the time the injuries were incurred the navigation or
movement of the vessel was under the control of a Panama Canal pilot.
MEASURE OF DAMAGES GENERALLY
SEC. 1413. In determining the amount of the award of damages for
injuries to a vessel for which the Commission is determined to be liable,
there may be included-
(1) the actual or estimated cost of repairs;
(2) charter hire actually lost by the owners, or charter hire
actually paid, depending upon the terms of the charter party, for
the time the vessel is undergoing repairs;
(3) maintenance of the vessel and wages of the crew, if they
are found to be actual additional expenses or losses incurred out-
side of the charter hire; and
(4) other expenses which are definitely and accurately shown
to have been incurred necessarily and by reason of the accident
or injuries.
Agent's fees, or commissions, or other incidental expenses of similar
character, or any items which are indefinite, indeterminable, specu-
lative, or conjectural may not be allowed. The Commission shall be
furnished such vouchers, receipts, or other evidence as may be neces-
sary in support of any item of a claim. If a vessel is not operated
under charter but by the owner directly, evidence shall be secured if
available as to the sum for which vessels of the same size and class can
be chartered in the market. If the charter value cannot be determined,
the value of the vessel to its owners in the business in which it was
engaged at the time of the injuries shall be used as a basis for estimat-
ing the damages for the vessel's detention; and the books of the owners
showing the vessel's earnings about the time of the accident or injuries
shall be considered as evidence of probable earnings during the time of
detention. If the books are unavailable, such other evidence shall be
furnished as may be necessary.
DELAYS FOR WHICH NO RESPONSIBILITY IS ASSUMED
SEC. 1414. The Commission is not responsible, and may not consider
any claim, for demurrage or delays caused by-
(1) landslides or other natural causes;
(2) necessary construction or maintenance work on Canal locks,
terminals, or equipment;
(3) obstruction arising from accidents;
(4) time necessary for admeasurement;
(5) congestion of traffic;
(6) time necessary for investigation of marine accidents; or
(7) except as specially set forth in this subchapter, any other
cause.
SETTLEMENT OF CLAIMS
SEC. 1415. (a) Subject to subsection (b) of this section, the Com-
mission, by mutual agreement, compromise, or otherwise, may adjust
and determine the amounts of the respective awards of damages pur-




39
suant to this subchapter. Such amounts shall be payable promptly out
of any moneys appropriated or allotted for the maintenance and opera-
tion of the Panama Canal. Acceptance by a claimant of the amount
awarded to him shall be deemed to be in full settlement of such claim
against the Government of the United States.
(b) The Commission shall not adjust and pay any claim for damages
for injuries arising by reason of the presence of the vessel in the
Panama Cana or adjacent waters outside the locks where the amount
of the claim exceeds $120,000 but shall submit the claim to the Con-
gress in a special report containing the material facts and the recom-
mendation of the Commission thereon.
ACTIONS ON CLAIMS
SEC. 1416. A claimant for damages pursuant to section 1411 of this
Act who considers himself aggrieved by the findings, determination,
or award of the Commission in reference to his claim may bring an
action on the claim against the Commission in the United States Dis-
trict Court for the Eastern District of Louisiana. Subject to the pro-
visions of this chapter and of applicable regulations issued pursuant
to section 1801 of this Act relative to navigation of the Panama Canal
and adjacent waters, such actions shall proceed and be heard by the
court without a jury according to the principles of law and rules of
practice obtaining generally in like cases between a private party and
a department or agency of the United States. Any judgment obtained
against the Commission in an action under this subchapter shall be
paid out of any moneys appropriated or allotted for the maintenance
and operation of the Panama Canal. An action for damages cognizable
under this section shall not otherwise lie against the United States or
the Commission, nor in any other court, th as provided in this sec-
tion; nor may it lie against any officer or employee of the United States
or of the Commission.
INVESTIGATION OF ACCIDENT OR INJURY GIVEN RISE TO CLAIM
SEC. 1417. Notwithstanding any other provision of law, a claim may
not be considered under this subchapter, or an action for damages lie
thereon, unless, prior to the departure from the Panama Canal of the
vessel involved-
(1) an investigation by the competent authorities of the acci-
dent or injury giving rise to the claim has been completed; and
(2) the basis for the claim has been laid before the Commission.
BOARD OF LOCAL INSPECTORS
SEC. 1418. (a) The President shall provide for the establishment of
a Board of Local Inspectors of the Panama Canal Commission which
shall perform, in accordance with regulations prescribed by the
President-
(1) the investigations required by section 1417 of this Act; and
(2) such other duties with respect to marine matters as may be
assigned by the President.
(b) In conducting any investigation pursuant to subsection (a) of
this section, the Board of Local Inspectors established pursuant to




40
such subsection may summon witnesses, administer oaths, and require
the production of books and papers necessary for such investigation.
CHAPTER 5-PBLIC PROPERTY
ASSETS AND LIABILITIES OF PANAMA CANAL COMPANY
SEC. 1501. All property and other assets of the Panama Canal Com-
pany shall revert to the United States on the defective date of this Act,
and, except as otherwise provided by law, the United States shall as-
sume the liabilities, including contractual obligations, of the Panama
Canal Company then outstanding. The Commission may- use such prop-
erty, facilities, and records of the Panama Canal Company as are nec-
essary to carry out its functions.
TRANSFERS AND CROSS-SERVICING BETWEEN AGENCIES
SEC. 1502. (a) In the interest of economy and maximum efficiency
in the utilization of property and facilities of the United States, there
are authorized to be transferred between departments and agencies of
the United States, with or without reimbursement, such facilities,
buildings, structures, improvements, stock, and equipment located in
the Republic of Panama, and used for their activities therein, as may be
mutually agreed upon by the departments and agencies involved and
approved by the President of the United States or his designee.
(b) The Commission may enter into cross-servicing agreements with
any other department or agency of the United States for the use of
facilities, furnishing of services, or performance of functions.
(c) The Commission, any department or agency of the United States,
or any United States court in the Republic of Panama is authorized
to transfer to the Government of the Republic of Panama any record
of such Commission, department, agency, or court, or copy thereof,
including any record acquired from the Canal Zone Government or
Panama Canal Company (including any vital statistics record), to any
other department, agency, or court of the United States if such action
is determined by the Commission, the head of the department or agency
concerned, or the judge of the court concerned to be in the interest of
the United States. Transfer of any record or copy thereof under this
section to the Government of the Republic of Panama shall be made
under the coordination of and with the approval of the United States
Ambassador to the Republic of Panama.
(d) The provisions of this section shall apply to the Smithsonian
Institution.
DISPOSITION OF PROPERTY OF THE UNITED STATES
SEc. 1503. No property of the United States located in the Republic
of Panama may be disposed of except pursuant to law enacted by the
Congress.
TRANSFER OF PROPERTY TO PANAMA
SEC. 1504. (a) (1) On the date on which the Panama Canal Treaty of
1977 enters into force, the Secretary of State may convey to the Repub-
lic of Panama the Panama Railroad and such property located in the
area which, immediately before such date, comprised the Canal Zone
and which is not within the land and water areas the use of which is




41
made available to the United States pursuant to the Panama Canal
Treaty of 1977 and related agreements.
(2) Property transferred pursuant to paragraph (1) of this sub-
section may not include buildings and other facilities, except housing,
located outside such areas, the use of which is retained by the United
States pursuant to the Panama Canal Treaty of 1977 and related
agreements.
(b) With respect to the transfer of all other property (not described
in subsection (a) (1) of this section) to be transferred in accordance
with the terms of the Panama Canal Treaty of 1977 and related agree-
ments, the Secretary of State may convey such property from time to
time in accordance with the terms of such Treaty and related agree-
ments. At least 180 days before the transfer of any such property, the
President must submit a written report to the Congress-
(1) precisely identifying and describing the particular prop-
erty to be transferred;
(2) certifying the state of compliance by the Republic of Pan-
ama with such Treaty and related agreements; and
(3) setting forth the reasons for the conveyance being made at
the particular time.
(c) The Panama Canal, and such other property referred to in
paragraph 2 (d) of Article XIII of the Panama Canal Treaty of 1977
that has not been previously transferred in accordance with paragraphs
2 (a), 2 (b), and 9 (c) of such Article, shall not be transferred to the
Republic of Panama prior to December 11, 1999.
CHAPTER 6-TOLLS FOR USE OF THE PANAMA CANAL
PRESCRIPTION OF MEASUREMENT RULES AND RATES OF TOLLS
SEc. 1601. (a) The President is authorized, subject to the provi-
sions of this chapter, to prescribe and from time to time change-
(1) the rules for the measurement of Vessels for the Panama
Canal; and
(2) the tolls that shall be levied for the use of the Canal.
(b) Such rules of measurement and tolls prevailing on the effective
date of this Act shall continue in effect until changed as provided in
this chapter.
BASES OF TOLLS
SEC. 1602. (a) Tolls on merchant vessels, army and navy transports,
colliers, tankers, hospital ships, supply ships, and yachts shall be based
on net vessel tons of one hundred cubic feet each of actual earning
capacity determined in accordance with the rules for the measure-
ment of vessels for the Panama Canal, and tolls on other floating craft
shall be based on displacement tonnage. The tolls on vessels in ballast
without passengers or cargo may be less than the tolls for vessels with
passengers or cargo.
(b) Tolls shall be prescribed at rates calculated to produce reve-
nues to cover as nearly as practicable all costs of maintaining and
operating the Panama Canal, together with the facilities and appur-
tenances related thereto, including unrecovered costs incurred on or
after the effective date of this Act, interest, depreciation, payments to
the Republic of Panama pursuant to paragraph 5 of Article III and
paragraph 4 (a) and (b) of Article XIII of the Panama Canal




42
Treaty of 1977, and capital for plant replacement, expansion, and
improvements. Tolls shall not be prescribed at rates calculated to
produce revenues sufficient to cover payments to the Republic of
Panama pursuant to paragraph 4(c) of Article XIII of the Panama
Canal Treaty of 1977.
(c) Vessels operated by the United States, including vessels of war
and auxiliary vessels, and ocean-going training ships owned by the
United States and operated by State nautical schools, shall pay tolls.
(d) The levy of tolls is subject to the provisions of section 1 of
Article III of the treaty between the United States of America and
Great Britain signed November 18, 1901, of Article I of the treaty
between the United States of America and the Republic of Co-
lombia signed April 6, 1914, and of Articles II, III, and VI of the
Treaty Concerning Permanent Neutrality and Operation of the Pan-
ama Canal, between the United States of America and the Republic
of Panama, signed September 7, 1977.
CALCULATION OF INTEREST
SEC. 1603. (a) For purposes of sections 1311 and 1602 of this Act,
interest shall be computed, at a rate determined by the Secretary of
the Treasury, on the investment of the United States in the Panama
Canal as shown in the accounts of the Panama Canal Company at the
close of business on the day preceding the effective date of this Act,
and as adjusted in accordance with subsections (b) and (c) of this
section. 'Capital investment for interest purposes shall not include
any interest during construction.
(b) The investment of the United States described in subsection
(a) of this section-
(1) shall be increased by-
(A) the amount of expenditures from appropriations to
the Commission made on or after the effective date of this
Act, and
(B) the value of property transferred to the Commission
by any other department or agency of the United States, as
determined in accordance with subsection (c) of this sec-
tion; and
(2) shall be decreased by-
(A) the amount of the funds covered into the Treasury
pursuant to section 1302 of this Act,
(B) the value of property transferred to the Republic of
Panama pursuant to this or any other Act on or after the
date on which the Panama Canal Treaty of 1977 enters into
force, and
(C) the value of property transferred by the Commission
to any other department or agency of the United States.
(c) The value of property transferred to the Commission by
any other department or agency of the United States shall be
determined by the Director of the Office of Management and Budget.
In computing such value, such Director shall give due considera-
tion to the cost and probable earning power of the transferred
property, or the usable value to the Commission if clearly less than
cost, and shall make adequate provisions for depreciation, obso-




43
lescence, and other determinable decreases in value. Insofar as prac-
ticable, the value of such transferred property shall exclude any
portion of such value properly allocable to national defense.
PROCEDURES
Src. 1604. (a) The Commission shall publish in the Federal
Register notice of any proposed change in the rules of meas-
urement or rates of tolls referred to in section 1601 (a) of this Act. The
Commission shall give interested parties an opportunity to partici-
pate in the proceedings through submission of written data, views,
or arguments, and participation in a public hearing to be held not less
than 30 days after the date of publication of the notice. The notice
shall include the substance of the proposed change and a statement
of the time, place, and nature of the proceedings. At the time of pub-
lication of such notice, the Commission shall make available to the
public an analysis showing the basis and justification for the proposed
change, which, in the case of a change in rates of tolls, shall indicate
the conformity of the existing and proposed rates of tolls with the
requirements of section 1602 of this Act, and the Commission's ad-
herence to the requirement for full consideration of the following
factors set forth in Understanding (1) incorporated in the Resolution
of Ratification of the Treaty Concerning the Permanent Neutrality and
Operation of the Panama Canal (adopted by the United States Sen-
ate on March 16. 1978):
(1) the costs of operating and maintaining the Panama
Canal;
(2) the competitive position of the use of the Canal in rela-
tion to other means of transportation;
(3) the interests of the United States and the Republic of
Panama in maintaining their domestic fleets;
(4) the impact of such a change in rates of tolls on the various
geographical areas of each of the two countries; and
(5) the interests of both countries in maximizing their inter-
national commerce.
(b) After consideration of the relevant matter presented, the
Commission may revise the proposed rules of measurement or rates
of tolls, as the case may be, except that, in the case of rates of tolls,
if such revision proposes rates greater than those originally proposed,
a new analysis of the proposed rates shall be made available to the
public, and a new notice of the revised proposal shall be published
in the Federal Register apprising interested persons of the oppor-
tunity to participate further in the proceedings through submission
of written data, views, or arguments, and participation in a public
hearing to be held not less than 30 days after the date of publication
of the new notice. The procedure set forth in this subsection shall be
followed for any subsequent revision of the proposed rates of tolls by
the Commission which proposes rates higher than those in the preced-
ing proposal.
(c) After the proceedings have been conducted pursuant to sub-
sections (a) and (b) of this section, the Commission shall publish in
the Federal Register a notice of the changes in the rules of measure-
ment or rates of tolls, as the case may be, to be recommended to the
President.




44
(d) Upon publication of the notice pursuant to subsection (c) of
this section, the Commission shall forward a complete record of the
proceedings, with the recommendation of the Commission, to the Presi-
dent for his consideration. The President may approve, disapprove, or
modify any or all of the changes in the rdes of measurement or rates
of tolls recommended by the Commission.
(e) Rules of measurement or rates of tolls prescribed by the Presi-
dent pursuant to this chapter shall take effect on a date prescribed
by the President which is not less than 30 days after the President
publishes such rules or rates in the Federal Register.
(f) Action to change the rules of measurement for the Panama
Canal or the rates of tolls for the use of the Canal pursuant to this
chapter shall be subject to judicial review in accordance with chapter
7 of title 5, United States Code.
INTERIM TOLL ADJUSTMENT
SEC. 1605. (a) After the effective date of this section, the Panama
Canal Company or the Commission may, without regard to, the pro-
cedures set forth in section 1604 of this Act for making changes in
tolls by the Commission and the President, change the rates of tolls
calculated to cover the cost of maintaining and operating the Panama
Canal during the fiscal year beginning on October 1, 1979. Such rates
shall be calculated in accordance with the provisions of section 1602 (b)
of this Act. Any such change in rates of tolls shall be subject to the
approval of the President whose action in the matter shall be final.
Any change in rates of tolls approved by the President shall become
effective on a date prescribed by the President.
(b) This section shall take effect on the date of the enactment of
this Act.
CHAPTER 7-GENERAL REGULATIONS
AUTHORITY OF PRESIDENT
SEC. 1701. The President may prescribe, and from time to time
amend, regulations applicable within the areas and installations made
available to the United States for the operation and protection of the
Panama Canal pursuant to, the Panama Canal Treaty of 1977 and
related agreements concerning-
(1) the use of aircraft;
(2) the possession and use of alcoholic beverages;
(3) exclusion and removal of persons; and
(4) health and sanitation.
AUTHORITY OF COMMISSION
SEC. 1702. The Commission may prescribe, and from time to time
amend, regulations applicable within the areas and installations made
available to the United States for the operation and protection of the
Panama Canal pursuant to the Panama Canal Treaty of 1977 and
related agreements concerning-
(1) the keeping and impounding of domestic animals;
(2) fire prevention;
(3) the sale or use of fireworks;




45
(4) the use of roads and highways;
(5) photographing of areas, objects, installations, or structures;
(6) swimming in the Panama Canal and adjacent waters; and
(7) the protection of wildlife, hunting, and fishing.
CHAPTER 8-SHIPPING AND NAVIGATION
Subehapter I-Operation of Canal
OPERATING REGULATIONS
SEC. 1801. The President may prescribe, and from time to time
amend, regulations governing-
(1) the operation of the Panama Canal;
(2) the navigation of the harbors and other waters of the Pan-
ama Canal and areas adjacent thereto, including the ports of
Balboa and Cristobal;
(3) the passage and control of vessels through the Panama
Canal or any part thereof, including the locks and approaches
thereto;
(4) pilotage .in the Panama Canal or the approaches thereto
through the adjacent waters; and
(5) the licensing of officers or other operators of vessels navi-
gating the waters of the Panama Canal and areas adjacent thereto,
including the ports of Balboa and Cristobal.
Subchapter II-Inspection of Vessels
VESSELS SUBJECT TO INSPECTION
SEC. 1811. With the exception of private vessels merely transiting
the Panama Canal, and of public vessels of all nations, vessels navi-
gating the waters of the Panama Canal shall be subject to an annual
inspection of hulls, boilers, machinery, equipment, and passenger
accommodations.
FOREIGN VESSELS
SEC. 1812. With respect to, a foreign vessel of a country which has
inspection laws approximating those of the United States, any such
vessel having an unexpired certificate of inspection duly issued by the
authorities of such country shall not be subject to an inspection other
than that necessary to determine whether the vessel, its boilers, and
its lifesaving equipment are as stated in the certificate of inspection.
A certificate of inspection may not be accepted as evidence of lawful
inspection under this section unless similar privileges are granted to
vessels of the United States under the laws of the country to which the
vessel belongs.
REGULATIONS GOVERNING INSPECTION
SEC. 1813. The Commission shall prescribe, and from time to time
may amend, regulations concerning the inspection of vessels conform-
ing as nearly as practicable to the laws and regulations governing
marine inspection by the United States Coast Guard.




46
TITLE II-TRkATY TRANSITION PERIOD
CHAPTER 1-LAWS CONTINUED IN FORCE
LAWS, REGULATIONS, AND ADMINISTRATIVE AUTHORITY
SEC. 2101. To the extent not inconsistent with the Panama Canal
Treaty of 1977 and related agreements and the provisions of this Act,
the Canal Zone Code and other laws, regulations, and administrative
authority of the United States applicable in the Canal Zone immedi-
ately before the date on which the Panama Canal Treaty of 1977 en-
ters into force shall continue in force for the purpose of the exercise
by the United States of law enforcement and judicial jurisdiction dur-
ing the transition period provided for in Article XI of the Panama
Canal Treaty of 1977 (hereinafter in this Act referred to as the "transi-
tion period").
CHAPTER 2-COURTS
JURISDICTION
SEC. 2201. (a) During the transition period, the jurisdiction of the
United States District Court for the District of the Canal Zone and
the magistrates' courts under title 3 of the Canal Zone Code shall be
continued, subject to the limitations set forth in Article XI of the
Panama Canal Treaty of 1977.
(b) For purposes of the exercise of the jurisdiction provided in Ar-
ticle XI of the Panama Canal Treaty of 1977, the United States Dis-
trict Court and magistrates' courts referred to in subsection (a) of this
section shall construe the terms "United States citizen employees",
"members of the United States Forces", "civilian component", and
"dependents" as such terms are defined in the Panama Canal Treaty of
1977 and related agreements, and shall construe the term "areas and
installations made available for the use of the United States" to mean
(1) the Panama Canal operating areas and housing areas described in
Annex A to the Agreement in Implementation of Article III of the
Panama Canal Treaty, (2) the Ports of Balboa and Uristobal described
in Annex B to that Agreement, and (3) the defense sites and Militariy
Areas of Coordination described in Annex A to the Agreement in
Implementation of Article IV of the Panama Canal Treaty.
DIVISION AND TERMS OF DISTRICT COURT
SEC. 2202. The United States District Court for the District of
the Canal Zone may conduct its affairs at such places within the areas
made available for the use of the United States pursuant to the Pan-
ama Canal Treaty of 1977 and related agreements, and at such times,
as the district judge may designate by rule or order.
TERMS OF CERTAIN OFFICES
SEC. 2203. (a) Notwithstanding the provisions of sections 5, 41,
45, and 82 of title 3 of the Canal Zone Code, the term of office of a
district judge, magistrate, United States attorney, or United States




47
marshal shall extend for a period of 30 months beginning on the
date on which the Panama Canal Treaty of 1977 enters into force,
and any such term shall be subject to such extension of time as may
be provided for the disposition of pending cases by agreement be-
tween the United States and the Republic of Panama, pursuant to the
last sentence of paragraph 7 of Article XI of the Panama Canal
Treaty of 1977.
(b) The provisions of this section shall take effect on the date of
the enactment of this Act.
RESIDENCE REQUIREMENTS
SEc. 2204. Sections 5(d), 7(d), 41(d), and 45(d) of title 3 of the
Canal Zone Code, the second sentence of section 42 of such title, and
the second sentence of section 82 (c) of such title, which provisions
require that certain court officials reside in the Canal Zone, are
repealed.
SPECIAL DISTRICT JUDGE
SEC. 2205. (a) Section 6 of title 3 of the Canal Zone Code is amended
to read as follows:
" 6. Special district judge
"The chief judge of the judicial circuit of the United States in
which the district court lies may designate and assign a special dis-
trict judge to act when necessary-
" (1) during the absence of the district judge;
" (2) during the disability or disqualification of the district
judge because of sickness or otherwise to discharge his duties; or
" (3) when there is a vacancy in the office of district judge.".
(b) Each designation and assignment by the chief judge under see-
tion 6 of title 3 of the Canal Zone Code, as amended by subsection (a)
of this section, shall be made in accordance with chapter 13 of title 28,
United States Code, which shall be deemed to apply for such purposes.
MAGISTRATES COURTS
SEC. 2206. (a) The two magistrates' courts established pursuant
to section 81 of title 3 of the Canal Zone Code and existing immedi-
ately before the date on which the Panama Canal Treaty of 1977
enters into force shall continue in operation during the transition
period unless terminated during such period under subsection (b) of
this section.
(b) During the transition period, the President may terminate one
magistrate's court, together with the positions of magistrate and con-
stable corresponding thereto, if the President determines that the
workload is insufficient to warrant continuance of that coUrt. If one of
the magistrates' courts is so terminated, the remaining magistrate's
court shall exercise the jurisdiction that otherwise would have been
exercised by the terminated court and shall take custody of and ad-
minister all records of the terminated court.




48
CHAPTER 3-ATTORNEYS
OATH OF ATTORNEYS
SEc. 2301. (a) Section 543 of title 3 of the Canal Zone Code is
amended to read as follows:
" 543. Oath of attorneys admitted to bar
"Before receiving a certificate the applicant shall take and subscribe
in court an appropriate oath prescribed by the district judge.".
(b) The table of sections for chapter 17 of title 3 of the Canal Zone
Code is amended by amending the item relating to section 543 to read
as follows:
"543. Oath of attorneys admitted to bar.".
CHAPTER 4-TRANSITION AUTHORITY
TRANSITION AUTHORITY OF PRESIDENT
SEC. 2401. Except as expressly provided to the contrary in this or
any other Act, or in the Panama Canal Treaty of 1977 and related
agreements, any authority necessary for the exercise during the transi-
tion period of the rights and responsibilities of the United States spec-
ifed in Article XI of the Panama Canal Treaty of 1977 shall be vested
in the President.
PRISONS; PAROLE; PARDONS
SEC. 2402. (a) Subsection (c) of section 6503 of title 6 of the Canal
Zone Code is amended to read as follows:
" (c) Pursuant to the provisions of section 5003 of title 18, United
States Code, the Governor may contract with the Attorney General of
the United States for the transfer to the custody of the Attorney Gen-
eral of prisoners sentenced by the United States District Court for the
District of the Canal Zone to terms of imprisonment in excess of
one year.".
(b) After entry into force of the Panama Canal Treaty of 1977-
(1) all prisoners imprisoned in United States prisons pursuant
to contracts entered into pursuant to subsection (c) of section
6503 of title 6 of the Canal Zone Code, as amended by subsection
(a) of this section, shall be committed to the custody of the At-
torney General as if committed in accordance with part III of
title 18, United States Code;
(2) all persons convicted of offenses in the United States Dis-
trict Court for the District of the Canal Zone, and sentenced to
terms of imprisonment of one year or less, shall be committed to
the custody of the Commission; and
(3) the Commission shall prescribe, and from time to time may
amend, regulations providing for the management of prisoners in
the jails located in the areas and installations made available for
the use of the United States pursuant to the Panama Canal Treaty
of 1977 and related agreements, including provisions for treat-
ment, care, assignment for work, discipline, and welfare.




49
(c) After the entry into force of the Panama Canal Treaty of 1977,
all persons convicted of offenses in the United States District Court
for the District of the Canal Zone, and sentenced to terms of impris-
onment in excess of one year, shall be committed to the custody of the
Attorney General pursuant to parts III and IV of title 18, United
States Code.
(d) (1) Sections 6501 through 6505 of title 6 of the Canal Zone Code
are repealed.
(2) The table of sections for chapter 351 of title 6 of the Canal Zone
Code is amended by repealing the items relating to sections 6501
through 6505.
(e) Subsections (c) and (d) of this section shall take effect 90
days after entry into force of the prisoner transfer agreement re-
ferred to in paragraph 11 of Article IX of the Panama Canal Treaty
of 1977 but in no event later than 90 days prior to the end of the transi-
tion period.
(f) (1) Chapter 355 of title 6 of the Canal Zone Code is repealed.
(2) The table of chapters for part 3 of title 6 of the Canal Zone Code
is amended by repealing the item relating to chapter 355.
TITLE III-GENERAL PROVISIONS
CHAPTER 1-CEMETERIES
DISINTERMENT, TRANSPORTATION, AND REINTERMENT OF REMAINS
SEC. 3101. (a) There are authorized to be appropriated for the
fiscal year beginning October 1, 1979, and subsequent fiscal years,
such sums as may be necessary to carry out the purposes and provi-
sions of reservation (3) to the Resolution of Ratifloation of the Treaty
Concerning the Permanent Neutrality and Operation of the Paama
Canal, adopted by the United States Senate on March 16, 1978, such
sums to be made available to those agencies that are directed and em-
powered by the President to carry out such purposes and provisions.
(b) With regard to remains that are to be reinterred in the United
States, the United States shall not bear the cost of funeral home serv-
ices, vaults, plots, or crypts unless otherwise provided for by law.
CHAPTER 2-IMMiGRATION
SPECIAL IMMIGRANTS
SEC. 3201. (a) Section 101 (a) (27) of the Immigration and Nation-
ality Act (8 U.S.C. 1101 (a) (27) ), relating to the definition of special
immigrants, is amended-
(1) by striking out "or" at the end of subparagraph (C);
(2) by striking out the period at the end of subparagraph (D)
and inserting in lieu thereof a semicolon; and
(3) by adding after subparagraph (D) the following new sub-
paragraphs:
" (E) an immigrant, and his accompanying spouse and children,
who is or has been an employee of the Panama Canal Company




50
or Canal Zone Government before the date on which the Panama
Canal Treaty of 1977 (as described in section 3 (a) (1) of the Pan-
ama Canal Act of 1979) enters into force, who was resident in the
Canal Zone on the effective date of the exchange of instruments
of ratification of such Treaty, and who has performed faithful
service as such an employee for one year or more;
" (F) an immigrant, and his accompanying spouse and children,
who is a Panamanian national and (i) who, before the date on
which such Panama Canal Treaty of 1977 enters into force, has
been honorably retired from United States Government employ-
ment in the Canal Zone with a total of 15 years or more; of faithful
service, or (ii) who, on the date on which such Treaty enters 'ikto
force, has been employed by the United States Government in the
Canal Zone with a total of 15 years or more of faithful service
and who subsequently is honorably retired from such employ-
ment; or
" (G) an immigrant, and his accompanying spouse and children,
who was an employee of the Panama Canal Company or Canal
Zone Government on the effective date of the exchange of instru-
ments of ratification of such Panama Canal Treaty of 1977, who
has performed faithful service for five years or more as such an
employee, and whose personal safety, or the personal safety of
whose spouse or children, as a direct result of such Treaty, is
reasonably placed in danger because of the special nature of any
of that employment.".
(b) Section 212(d) of such Act (8 U.S.C. 1182(d)), relating to
waivers of conditions of inadmissibility to the United States, is
amended by adding after paragraph (8) the following new para-
graphs:
"(9) The provisions of paragraph (7) of subsection (a) shall not
be applicable to any alien who is seeking to enter the United States as
a special immigrant under subparagraph (E), (F), or (G) of section
101(a) (27).
" (10) The provisions of paragraph (15) of subsection (a) shall not
be applicable to any alien who is seeking to enter the United States as
a special immigrant under subparagraph (E), (F), or (G) of section
101 (a) (27) and wcho applies for admission as such a special immigrant
not later than March 31,1982.".
(c) Notwithstanding any other provision of law, not more than
15,000 individuals may be admitted to the United States as special
immigrants under sub paragraphs (E), (F), and (G) of section 101
(a) (27) of the Immigration and Nationality Act, as added by subsec-
tion (a) of this section, of which not more than 5,000 may be admitted
in any fiscal year.
(d) (1) The amendments made by this section shall take effect on
the date of the enactment of this Act.
(2) Paragraph (9) of section 212 (d) of the Immigration and
Nationality Act, as added by subsection (b) of this section, shall
cease to be effective at the end of the transition period.




51
CHAPTER 3-REPORTS/ AMENDMENTS; REPEALS AND REDESIGNATION;
EFFEcTivE DATE
REPORT
SEC. 3301. Until the termination of the Panama Canal Treaty of
1977, the President shall report annually on the status of the exercise
of the rights and responsibilities of the United States under that
Treaty. Such report shall include a discussion of the following.*
(1) The actions taken by the Government of the Republic of
lknama4 with respect to the living conditions of persons who
resided in the Canal Zone before the effective date of this Act and
wcho continue to reside in those areas made available to the United
States under the Agreement in Implementation of Article; III of
the Panama Canal Treaty.
(2) The terms, conditions, and charges for land-use licenses
within the canal operating areas specified in the Agreement in
Implementation of Article III of the Panama Canal Treaty.
(3) The condition of former employees (and their dependents)
of the Panama Canal Company and the Canal Zone Government
who reside in the Republic of Panama on or after the effective
date of this Act.
AMENDMENTS
SEC. 3362. (a) Section 1 of title II of the Act of June 15, 1917
(50 U.S.C. 191), is amended-
(1) by striking out the second paragraph; and
(2) in subsection (b) of the last paragraph, by striking out
", the Canal Zone,".
(b) Section 1 of title XIII of the Act of June 15, 1917 (50 U.S.C.
195), is amended by striking out "the Canal Zone and".
(c) The first section of the Act of August 9, 1954 (50 U.S.C. 196),
is amended by striking out ". including the Canal Zone.".
(d) The Department of State, Justice, and Commerce, the Judi-
ciary, and Related Agencies Appropriation Act, 1974 (87 Stat. 636
et seq.) is amended by striking out the heading "PAYMENT TO THE RE-
PUBLIC OF PANAMA'1 and all that follows that relates to the heading.
(e) Title 5, United States Code, is amended-
(1) in sections 305 (a) (7), 5102 (a) (1) (vii), 5342 (a) (1) (0),
5348 (b), and 5541 (2) (xii), by striking out "Panama Canal Com-
pany" and inserting in lieu thereof "Panama Canal Commission";
(2) in sections 5504 (a) (A) and 6301(2) (iv) by striking out
"Canal Zone Government or the Panama Canal Company" and
inserting in lieu thereof "Panama Canal Commission";
(3) in section 8335(e), by striking out "Panama Canal Com-
pany or the Canal Zone Government" and inserting in lieu there-
of "Panama Canal Commission";
(4) in section 5373(1), by striking out "section 121 of title 2,
Canal Zone Code (76A Stat. 15) and inserting in lieu thereof
"section 1202 of the Panama Canal Act of 1979";
(5) in section 6323 (c) (2) (B), by striking out "the Canal
Zone,";




52
(6) in section 5102 (c), by amending paragraph (12) to read as
follows:
" (12) any Executive agency to the extent of any election under
section 1212(b) (2) (relating to the Panama Canal Employment
System) of the Panama Canal Act of 1979;";
(7) in section 5583 (b) by-
(A) adding "and" at the end of paragraph (1);
(B) striking out paraigraph (2) ; and
(C) redesignating paragraph (3) as paragraph (2);
(8) in section 5533 (d) (7), by-
(A) striking out the semicolon at the end of subparagraph
(E) and inserting in lieu thereof "; or";
(B) striking out "; or" at the end of subparagraph (F)
and inserting in lieu thereof a period; and
(C) striking out subparagraph (G);
(9) in section 8146-
(A) by striking out "Canal Zone" in the catchline and in-
serting in lieu thereof "Panama Canal Commission";
(B) in subsection (a) (1), by striking out "Canal Zone
Government and of the Panama Canal Company are con-
cerned to the Governor of the Canal Zone" and inserting in
lieu thereof "Panama Canal Commission are concerned to
the Commission";
(C) in the first sentence of subsection (b), by striking out
"Canal Zone Government" and inserting "Panama Canal
Commission" in lieu thereof;
(D) in the first sentence of subsection (b), by striking out
"or from funds of the Panama Canal Company";
(E) in the second sentence of subsection (b), by striking
out "Governor of the Canal Zone" and inserting "Panama
Canal Commission" in lieu thereof and by striking out "Canal
Zone Government" and inserting "Panama Canal Commis-
sion" in lieu thereof;
(F) by amending subsection (c) to read as follows:
"(c) The President may authorize the Panama Canal Commission
to waive, at its discretion, the making of the claim required by section
8121 of this title in the case of compensation to an employee of the
Panama Canal Commission for temporary disability, either total or
partial."; and
(G) in subsection (e), by striking out "Canal Zone Gov-
ernment and of the Panama Canal Company" and inserting
in lieu thereof "Panama Canal Commission";
(10) in section 5343(a) (5), by striking out "Canal Zone" and
inserting in lieu thereof "areas and installations in the Republic
of Panama made available to the United States pursuant to the
Panama Canal Treaty of 1977 and related agreements (as de-
scribed in section 3(a) of the Panama Canal Act of 1979";
(11) in section 5316(87), by striking out "Governor of the
Canal Zone" and inserting in lieu thereof "Administrator of the
Panama Canal Commission"; and
(12) in the table of sections for chapter 81, by striking out
"Canal Zone" in the item relating to section 8146 and inserting in
lieu thereof "Panama Canal Commis8ion".




53
REPEALS AND REDESIGNATION
SEC. 3303. (a) The following provisions of lao are repealed:
(1) title 2 of the Canal Zone Code;
(2) sections 2 and 3 of title 3 of the Canal Zone Code, and the
items relating to such sections in the table of sections for chapter
1 of title 3 of the Canal Zone Code;
(3) subchapter III of chapter 237 of title 6 of the Canal Zone
Code and the items relating to such subchapter in the table of
sections for chapter 237 of such title;
(4) subsection (d) of section 38 of the Arms Export Control
Act (22 U.S.C. 2778(d) ); and
(5) section 4 of the Act of November 15,1941 (50 U.S.C. 191b).
(b) Those provisions of the Canal Zone Code not repealed by this
Act are redesignated as the "Panama Canal Code". Any reference to
the Canal Zone Code in those laws and regulations referred to in sec-
tion 3(b) of this Act shall, subject to the provisions of such section,
be deemed to refer to the Panama Canal Code.
EFFECTIVE DATE
SEC. 3304. Except as provided in sections 1231, 1232, 1241, 1242, 1261,
1605, 2203, 2402, 3101, and 3201 of this Act, the preceding provisions
of this Act, shall take effect on the date on which the Panama Canal
Treaty of 1977 enters into force.
And the Senate agree to the same.
That the House recede from its disagreement to the Senate amend-
ment to the title of the bill and agree to the same with an amendment
as follows:
In lieu of the matter proposed to be inserted by the Senate to the
title of the bill insert the following: "An Act to provide for the opera-
tion and maintenance of the Panama Canal under the Panama Canal
Treaty of 1977, and for other purposes.".
And the Senate agree to the same.
JOHN M. MURPHY.
DAVID R. BOWEN,
DAVID E. BONIOR,
CLEMENT J. ZABLOCKI,
DANTE B. FASCELL,
JIM HANLEY,
PAT SCHROEDER,
HERBERT E. HARRIS, TI,
PAUL MCCLOSKEY,
BOB BAUMAN,
WM. BROOMFIELD,
EDWARD J. DERWINsKI,
HAMILTON FISH, Jr.,
Managers on the Part of the House.
JOHN C. STENNIS,
HENRY M. JACKSON,
J. J. ExoN,
CARL LEVIN,
STROM THURMOND,
JOHN W. WARNER,
Managers on the Part of the Senate.







JOINT EXPLANATORY STATEMENT OF THE
COMMITTEE OF CONFERENCE
The managers on the part of the House and the Senate at the con-
ference on the disagreeing votes of the two Houses on the amendment
of the Senate to the bill (H.R. 111) to enable the United States to
maintain American security and interests respecting the Panama
Canal, for the duration of the Panama Canal Treaty of 1977, submit
the following statement to the House and Senate in explanation of
the effect of the action agreed upon by the managers and recom-
mended in the accompanying conference report:
The Senate amendment struck out all of the House bill after the
enacting clause and inserted a substitute text.
The House recedes from its disagreement to the amendment of the
Senate with an amendment which is a substitute for the House bill
and the Senate amendment. The differences between the House bill,
the Senate amendment and the substitute agreed to in conference are
noted below, except for clerical corrections, conforming changes
made necessary by agreements reached by the conferees, and minor
drafting and clarifying changes.
OVERALL ORGANIZATION OF THE BILL
The major differences in structure and organization of the House
bill and the Senate amendment were in the portions of the two bills
dealing with the organization and financial operation of the Panama
Canal Commission. The sections of the bills dealing with employ-
ment matters, courts, postal matters and related administrative pro-
visions were similar and in some cases identical.
In light of the Senate's decision to recede from its amendments on
the form of the Panama Canal Commission, the conferees agreed to
adopt the basic organization structure of the House bill.
DISPOSITION OF CONFEREN CE ISSUES
There follows a description of the action taken by the conferees
on the principal differences between the House bill and the Senate
amendment.
Form of the Panama Canal Commission- (Section 1101)
The House bill provided that the Panama Canal Commission would
be operated as an appropriated funds agency, with all revenues depos-
ited in the Treasury and all expenditures made pursuant to appropria-
tion acts approved by Congress. The Senate amendment provided
that the Commission would continue to operate as a government
corporation.
The Senate reluctantly recedes.
(55)




56
Direction of the Secretary of Defense- (Sections 1101 and 1102)
Sections 101 and 102 of the House bill provided that the Commis-
sion and its Board would act under the direction of the Secretary of
Defense. The Senate amendment contained no comparable language.
The conferees adopted compromise language making it clear that
the powers of the President would be exercised through the Secretary
of Defense in order to clarify the administrative placement of the
Panama Canal Commission as an agency within the executive branch.
This language does not effect a delegation of the President's powers
to the Secretary of Defense, nor does it preclude the President from
exercising his powers directly.
Board Membership- (Section 1102)
The House provision (Sec. 102) provided supervision of the Com-
mission by a Board under the direction of the Secretary of Defense,
appointed by the President and, in the case of the American members,
subject to Senate confirmation. Five of the new members were to be
nationals of the United States and four nationals of Panama. The
House provision also required that of the five U.S. members one should
be the Secretary of Defense, one should be experienced in operation of
ships using the Canal, one should be experienced in U.S. port opera-
tions, and one should be experienced in U.S. labor matters. The Sen-
ate amendment (Sec. 205) eliminated the requirements in reference to
the three members other than the Secretary of Defense, and the spe-
cific provision for direction by the Secretary of Defense.
The conferees adopted a provision containing the reuirement from
the House bill that three U.S. members of the Board have specialized
backgrounds in steamship and port operations, and in labor matters,
and requiring that three U.S. members (though not necessarily the
same three referred to above) be from the private sector. The reference
to direction of the Board by the Secretary of Defense was omitted as
unnecessary in view of the revised provision of section 1101 for exer-
cise of the President's authority in reference to the Commission as an
Executive Branch agency.
Chief Engineer- (Section 1104)
The House bill contained a provision for a Chief Engineer to be
appointed by the President (Sec. 104). The Senate amendment did not
provide for this position.
The Senate recedes.
Wartime Control- (Section 1108)
The House bill contained a provision (Sec. 108) which allows the
President, in time of war in which the United States or the Republic
of Panama is engaged, to put the operation of the Panama Canal
under the direct control of a military officer. The Senate amendment
contained no comparable provision.
The conferees agreed to adopt compromise language similar to that
recommended by the House Committee on Foreign Affairs in its re-
port on H.R. 111. However, the description of conditions under which
the President may order the Administrator of the Panama Canal
Commission to comply with the orders of a military officer with re-
gard to protection and defense of the Canal is adapted directly from
Article IV of the Panama Canal Treaty, which defines U.S. defense
rights. This section is intended to define for domestic legal purposes




57
the manner through which the President will carry out the responsi-
bilities of the United States in accordance with the Treaties.
It is the intention of the Conferees that the phrase contained in sec-
tion 1108 . conditions . which threaten the security of the
Canal . ." is deemed to include any circumstance in which foreign
combat troops or military forces (other than those of the United States
as provided in the Panama Canal Treaties of 1977) are located within
the Republic of Panama.
Code of Conduct- (Section 1112)
The House bill required the Panama Canal Commission to adopt a
Code of Conduct applicable to each member of the supervisory Board
and all employees of the Commission (Sec. 110). The Senate amend-
ment did not include this provision.
The Senate recedes.
Cost of Living Allowance- (Section 1206)
The House bill provided that effective October 1, 1984, each U.S.-
citizen officer or employee of the Panama 'Canal Commission could
be paid an allowance to offset any increased cost-of-living due to
termination of his right to use military postal services, sales stores
and exchanges (Sec. 125). The Senate amendment provided the allow-
ance for U.S. citizens employed prior to the entry into force of the
Panama Canal Treaty or persons recruited outside of Panama by the
Commission.
The House recedes, with a technical amendment specifying that
persons employed before the effective date of the Panama Canal
Treaty must have been employed by the Panama Canal Company or
Canal Zone Government on September 30, 1979.
Educational Travel Benefts- (Section 1207)
The House bill stated that the Panama Canal Commission shall
provide educational travel benefits for dependents of individuals who
are U.S.-citizen officers or employees of the Panama Canal Commis-
sion (Sec. 126). The Senate amendment stated that the Commission
shall provide such educational benefits to dependents of U.S. citizens
employed prior to the entry into force of the Panama Canal Treaty
and also to dependents of individuals recruited outside of Panama
for employment with the Panama Canal Commission (See. 307).
The House recedes, with a technical amendment indicating that in
the case of U.S. citizens who must have been employed prior to the
entry into force of the new treaty, such employment must have been
by the Panama Canal Company or Canal Zone Government on Sep-
tember 30, 1979.
Privileges and Immunities- (Section 1208)
The House bill provided that the Secretary of Defense shall des-
ignate those officers and employees of the Panama Canal Commission
who are to receive privileges and immunities accorded under Article
VIII of the Panama Canal Treaty, and that the Department of State
shall furnish the list to Panama and notify that country of any changes
in it (Sec. 127). The Senate amendment provided that the Secretary
of State shall designate persons, from a list supplied by the Panama
Canal Commission, who will receive privileges and immunities (Sec.
107).
The Senate recedes.




58
Minimm Levels of Pay- (Section 19225)
The House bill contained a provision (Sec. 154(b)) which applies
certain provisions of the Fair Labor Standards Act to United States
agencies operating in Panama. The Senate amendment contained no
comparable provision.
As to the applicability of Fair Labor Standards Act, the House
recedes. The conferees agreed to add language outlining the wage
policy to be followed by U.S. agencies operating in Panama. This
section provides for a $2.90 per hour minimum wage for employees
of Federal government agencies operating in the areas made available
to the United States pursuant to the Panama Canal Treaty and related
agreements. It further provides that employees, other than employees
whose pay is established in relation to rates of pay paid in the con-
tinental United States, will receive each year, at a minimum, a two
percent pay adjustment in the form of a step increase. This provision
would not preclude payment of a starting wage that is higher than
$2.90 per hour, if required, to assure that wages paid by Federal
agencies remain competitive.
The managers note that the Department of Defense has announced
its intention to grandfather current employees of the Panama Canal
Company, and current employees of the Department of Defense in
Panama, at their current wage system, so that those employees who
have been receiving U.S. Civil Service wage increases would continue
to do so.
Terms and Conditions of Employment- (Section 19231)
The House bill and Senate amendment differed in three respects in
their specification of those benefits which must remain generally no
less favorable for employees who were employed by the Panama Canal
Company and Canal Zone Government and who will continue to work
for U.S. agencies in Panama.
The House bill (Sec. 201 (a) (2)) provided that not only the rates
of basic pay but also the bases for establishing such rates would remain
generally no less favorable. The Senate amendment (Sec. 341 (a) (2))
includes only rates of basic pay.
The House recedes.
The House bill (Sec. 201 (a) (2)) included leave and travel benefits
in the list of those terms of employment which would remain gen-
erally no less favorable, while the Senate amendment (Sec. 341 (a)
(2)) provided that leave and travel benefits could be modified to pro-
vide equity with other employees in the agency to which the employee
is transferred.
The Senate recedes.
The House bill provided in Section 201 (c) (3) for the continuation
of the sabbatical leave program provided to teachers by the Canal
Zone Government, but increasing the level of sabbatical pay from
one-half to full pay. The Senate amendment contained no sabbatical
program, in conformity with the Department of Defense worldwide
educational system, which will operate the former Canal Zone schools.
The Senate recedes, with an amendment restricting sabbatical pay to
one-half of basic pay.
Balance of Revenues and Appropriations-Section 1302(c) (92))
The House bill contained a provision (Sec. 232(c) (2)) which man-
dated that no funds could be appropriated for the Panama Canal




59
Commission in excess of estimated revenues for that fiscal year, and
providing that amounts appropriated in excess of actual revenues
would be deducted from appropriations in the following year. The
Senate amendment contained no comparable provision, though the
corporate form on which the Senate bill is based contemplated the
balancing of revenues and expenses.
The conferees agreed to a compromise provision which retained the
substance of the House provision limiting appropriations to estimated
revenues, while recognizing that there may be occasions when excess
revenues deposited in the Panama Canal Commission Fund in a prior
fiscal year justify appropriations greater than estimated revenues to
the extent of such prior year excess revenues. Both Senate and House
conferees reiterate their strong intention that the Panama Canal Com-
mission be operated over the life of the Panama Canal Treaty of 1977
without the need for support by the American taxpayer.
Method of Depreciation- (Section 1311 (b) )
The Senate amendment contained a provision in Section 211 which
described the basis of accounting to be used by the Panama Canal
Commission, bascd on the net repalcement value of those transferred
assets which will ultimately require replacement to maintain the serv-
ice capacity of the canal. The House bill contained no similar provision.
The House recedes, with an amendment to make it clear that the
method of depreciation described in the provision is recommended but
not mandatory.
GAO Audit-(Section 1313)
The House bill (Sec. 236) contains a provision for audit of the
financial transactions of the Commission by the General Accounting
Office pursuant to the Accounting and Auditing Act of 1950, with
reports of the audits similar to those required by the Government
Corporation Control Act for corporate agencies. The Senate amend-
inent contained no comparable provision inasmuch as the Government
Corporation Control Act would have been generally applicable to the
agency.
The Senate recedes and concurs in the House provision as consistent
with the agreement to establish the Commission as a Government
agency in non-corporate form. The conferees added language in this
section which recognizes the special problems inherent in revision of
the Panama Canal Company's accounting systems created by enact-
ment of H.R. 111 only a short time before the beginning of fiscal year
1980.
Interagency Services and Reimbursements- (Section 1321)
Sections 240 of the House bill and 213 of the Senate amendment
contained similar provisions regarding reimbursements by agencies
operating in Panama to the agency designated to furnish educational,
health and other services, and related matters.
The conferees agreed on a compromise provision which contains the
substance of the House and Senate versions. The new provision makes
it clear that agencies operating in Panama may make available health
care and educational services to the same categories of persons as had
received such services prior to the effective date of this Act, and that
services must be provided on an equitable basis.




60
The conferees intend that physicians transferred from the Canal
Zone Government to the agency designated by the President to con-
duct health care activities shall, to the extent agreed upon between
the U.S. and the Republic of Panama, continue to be eligible for
health, educational, commissary, post exchange, and postal services for
which they were eligible prior to entry into force of the 'Treaty.
Canal Zone College- (Section 1321 (g) )
Both bills contained provisions (Secs. 240 (d) of the House bill and
603 of the Senate amendment) mandating the continuation of the
Canal Zone College at generally the same level of services provided
on the effective date of the Act. The Senate provision specified that the
requirement applied not just to the Department of Defense but to any
executive agency which may be charged with operating the College.
The House recedes. Section 603 of the Senate amendment is section
1321 (g) of the conference report.
The conferees intend that the requirement to continue the same level
of services of the College includes a continuation of present tuition
policies.
Transfer of Leave Funds
Section 308 of the Senate amendment required the Panama Canal
Commission to reimburse the U.S. Treasury for the leave and repatria-
tion liabilities of employees transferred from the Company and Gov-
ernment to the Department of Defense. The House bill contained no
such provision, since all funds of the Panama Canal Commission would
be covered into the Treasury in any event under the appropriated funds
agency concept.
The Senate recedes.
Timing of Payments
The House bill provided that all treaty payments to Panama, except
the contingency payment described in Article XIII 4 (c) of the treaty,
would be made monthly from appropriations for that purpose. Any
contingency payment to Panama was to be paid at the end of the second
fiscal quarter following the end of the fiscal year for which payment
would be due (Sec. 250 (a)). The Senate amendment contained no com-
parable provision and left the timing of payments open.
The House recedes.
Payment to Panama (Section 1341)
The House bill contained three sections (Secs. 250 (c), (f ) and (g))
which imposed conditions on the payments to Panama. The Senate
amendment contained no comparable provisions.
As to section 250 (c), relating to the levying of retroactive taxes by
Panama, the conferees agreed to delete the House language and the
language from both the bill and the amendment expressing the sense
of Congress that retroactive taxes are prohibited by the Treaty. The
conferees substituted a new-provision stating that the President should
not accept any interpretation of the Treaty which would permit
Panama to impose retroactive taxes.
As to Section 250 (e), which conditioned Panama's receipt of the con-
tingency payment under Article XIII(4) (c) of the Panama Canal




61
Treaty of 1977 on prior payment of all U.S. costs of implementing the
Treaty, the conferees agreed to compromise language which makes it
clear that such payment may be made only after payment of all nor-
mal costs of operation and maintenance of the Panama Canal, reim-
bursement for costs incurred by other agencies in providing educa-
tional, health, and other services to Commission employees, and any
costs of treaty implementation which are associated with the opera-
tion and maintenance of the Canal.
As to section 250(g), conditioning the contingency payment to the
Republic of Panama on the determination of that country's noninter-
ference in the internal affairs of other nations, the House recedes.
Claims- (Section 1401-18)
Chapter 7 of Title 1 of the House bill withdrew consent to suit
against the United States or the Commission on claims other than
claims for damage to vessels in the locks and placed a limitation of
$120,000 on the amount of each claim that could be administratively
settled by the Commission. The Senate amendment deleted this chapter
and continued in effect the present claims provisions applicable to the
corporate agency with some specific amendments on measure of dam-
ages and procedural matters. (Sec. 231).
The Senate recedes, with an amendment to Section 271 of the House
version (new Sec. 1401) reducing to 50,000 the amount of claims other
than vessel accident claims within the authority of the Commission to
effect administrative settlement.
Disposition of Property-(Sections 1341(f), 1503, and 1504)
The House bill contained provisions (Secs. 373 and 374) requiring
that all transfers of property to Panama be authorized by the Con-
gress and leaving certain of those transfers to be decided by subsequent
legislation. The Senate amendment contained no provision on prop-
erty transfers.
The conferees agreed on language which retains Section 373 of the
House bill (new Sec. 1503) and amends Section 374 (new Sec. 1504)
to authorize all transfers required by the Treaties, with provision for
a report by the President on each transfer after those occurring on
October 1, 1979.
The conferees agreed on a new subsection (c) which makes it clear
that the President is not authorized to accelerate the final transfer of
the Panama Canal in 1999, as provided by the Panama Canal Treaty
of 1977.
It is the intention of the managers that the conference proposal
relative to disposition of property not prejudice the positions that
have been taken by the House and Senate with respect to the necessary
procedure for the disposition of property of the United States. The
managers on the part of the House believe that legislation is the
exclusive vehicle for effecting the disposition of U.S. property, and
hence that the authorizations in this bill are necessary to transfer
property to Panama. The managers on the part of the Senate maintain
that the treaty power is concurrent with the legislative power for the
purpose of disposing of property, and thus believe that the authoriza-
tions for transferring property in this bill are redundant to and
reaffirm the transfer provisions in the treaty.




62
The House bill contained a related provision, Section 250 (f), which
restricted the powers of the Commission to transfer property to
Panama through reprogramming of funds or pursuant to other
statutes. The Senate bill contained no comparable provision.
The conferees agreed to amended language which is intended to
negate any inference that the Foreign Excess Property Act would be
inapplicable to the Executive agencies operating in Panama.
The language of Section 1344 was changed to conform to the sub-
stantive agreement of the conferees on this issue.
Transfer of Fire Stations
The House bill provided that, except for the Balboa and Coco
Solito fire stations in the Panama Canal operating area, other fire
stations operated by the United States in such area would not be trans-
ferred to Panama until the Administrator determined that voluntary
attrition of firefighting personnel had made it impossible to staff such
station and also that the station was excess to needs of the United
States (Sec. 374). The Senate amendment contained no comparable
provision.
The House recedes. With no language in the conference report on
transfer of fire stations, such stations would be transferred under
the general provisions for property transfer in H.R. 111 and in con-
nection with the provisions of paragraph 14 of the Agreed Minute
to the Agreement in Implementation of Article III of the Panama
Canal Treaty. Paragraph 14 states that the United States will periodi-
cally review fire protection resources and if appropriate will transfer
fire stations to Panama that are excess to U.S. needs.
Toll Surcharge
The House bill contained a provision (Sec. 412 (c) ) which permitted
the Commission to impose a toll surcharge on traffic not originating
from or destined for United State or Panamanian ports in order to
fund future capital costs of the Panama Canal Commission. The Sen-
ate amendment contained no comparable provision.
The House recedes.
Interest Rate- (Section 1603)
Section 202 of the Senate amendment provided that the rate of in-
terest to be paid by the Panama Canal Commission to the Treasury on
the net direct interest-bearing investment of the United States in the
canal enterprise should be determined by the Secretary of the Treas-
ury. Section 413 (d) of the House bill repeated the requirement that
interest be paid, but stipulated that it should be calculated at the
"average market yield" rate.
The conferees adopted the House provision on interest but with the
Senate language allowing the Secretary of the Treasury to determine
the rate. It is the intention of the conferees that the Commission
should continue to pay interest at the "coupon" rate, the rate paid by
the Panama Canal Company before October 1, 1979.
The conferees also modified the language of this section (new Sec.
1603(b) (2) (B) and (C)) to make it clear that those subsections cover
non-capital as well as capital assets.




63
Interim Toll Adjwtment- (Section 1605)
Both sections 415 of the House bill and 222 of the Senate amend-
ment provided expedited procedures for the initial toll increase under
the Treaty.
The conferees agreed on a compromise provision, which provides
the needed authority to raise tolls effective October 1, 1979, provided
that such toll adjustment may cover only the first year of operation
of the Panama Canal Commission.
Navigation Regulation- (Section 1801)
The House bill provided that the President may prescribe and
amend regulations on Panama Canal operation, navigation, control of
vessels, pilotage, and licensing of vessels operations (Sec. 1331). Under
the Senate amendment the Commission was vested with that authority
(Sec. 212).
The Senate recedes.
Prisons and Parole- (Section 2404)
Both the House bill (Sec. 1532) and the Senate amendment (Sec.
412) contained provisions for the transfer to the custody of the U.S.
Attorney General of prisoners sentenced by the U.S. District Court
for the Canal Zone, and for issuance of regulations by the Commis-
sion for management of prisoners in jails located in the areas made
available for the use of the United States under the Panama Canal
Treaty. Because paragraph 11 of Article IX of the Panama Canal
Treaty contemplates a future prisoner transfer agreement between
the United States and the Republic of Panama, which could obviate
the need for transfer to the United States of prisoners who are
Panamanian citizens, the Senate amendment included a provision
making the transfer requirement effective no earlier than 90 days
after the entry into force of any such prisoner transfer agreement,
but in no case later than 90 days before the end of the transition
period established by paragraph 1 of Article XI of the Treaty.
The House recedes.
Special [mmigrants-(Section 3201)
The HIouse provision (Sec. 1611) conferred special immigrant
status on three categories of persons who have resided in the Canal
Zone or have been employed by the Canal Zone agencies for specified
periods of time. This included a category of persons whose personal
safety may be endangered as a result of changes brought about by
the Panama Canal Treaty. A limit of 7,500 was placed on the total
number of immigrants admitted under the provision. The Senate
amendment (Sec. 501) eliminated the class of immigrants whose
safety might be endangered and increased the total number of pos-
sible immigrants to 25,000, with a limit of no more than 7,500 in any
one year.
The conferees adopted a compromise provision restoring the class
of immigrants whose safety would be endangered, and with clarify-
ing language, allowing up to 5,000 immigrants a year up to a total
of 15,000.
The conferees agree that regulations issued for the administration
of this section should establish appropriate priorities for allocation




UNIVERSITY OF FLORIDA
64 3 1262 09092 6691
of the number of annual admissions to assure to the maximum pos-
sible extent that the immigrants selected are those whose need for
resort to the benefits of the section are most pressing and meritorious.
Title of the Bill
The conferees agreed on a compromise amendment to the title of
the bill.
JOHN M. MURPHY,
DAVID R. BOWEN,
DAVID E. BONIOR,
CLEMENT J. ZABLOCKI,
DANTE B. FASCELL,
JIM HANLEY,
PAT SCHROEDER,
HERBERT E. HARRIS, II,
PAUL MCCLOSKEY,
BOB BAUMAN,
Wm. BROOMFIELD,
EDWARD J. DERWINSKI,
HAMILTON FISH, Jr.,
Managers on the Part of the House.
JOHN C. STENNIS,
HENRY AT. JACKSON,
J. J. ExoN,
CARL LEVIN,
STROM THURMOND,
JOHN W. WARNER,
Managers on the Part of the Senate.
0

PAGE 1

96TH CONGREss HOUSE OF REPRESENTATIVES REPORT 1st Session No. 96-473 PANAMA CANAL ACT OF 1979 SEPTEMBER 24, 1979.-Ordered to be printed Mr. MURPHY of New York, from the committee of conference, submitted the following CONFERENCE REPORT [To accompany H.R. 111] The committee of conference on the disagreeing votes of the two Houses on the amendment of the Senate to the bill (H.R. 111) to enable the United States to maintain American security and interests respecting the Panama Canal, for the duration of the Panama Canal Treaty of 1977, having met, after full and free conference, have agreed to recommend and do recommend to their respective Houses as follows: That the House recede from its disagreement to the amendment of I he Senate to the text of the bill and agree to the same with an amendment as follows: In lieu of the matter proposed to be inserted by the Senate amendment insert the following: SHORT TITLE SECTION 1. This Act may be cited as the "Panama Canal Act of 1979". TABLE OF CONTENTS Sec. 1. Short title. 2. Statement of purpose. 3. Definitions and recommendation for legislation. TITLE I-ADMINISTRATION AND REGULATIONS CHAPTER 1-PANAMA CANAL COMMISSION 1101. Establishment of Commission. 1102. Supervisory Board. 1103. Administrator. 1104. Deputy Administrator and Chief Engineer. 1105. Consultative Committee. 1106. Joint Commission on the Environment. 1107. Travel expenses. 1108. Defense of the Panama Canal, 39-006 0

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2 Sec. 1109. Joint Sea Level Canal Study Committee. 1110. Authority of the Ambassador. 1111. Security legislation. 1112. Code of Conduct for Commission personnel. 1113. Office of Ombudsman. CHAPTER 2-EMPLOYEES Subchapter I-Panama Canal Commission Personnel 1201. Definitions. 1202. Appointment and compensation; duties. 1203. Transfer of Federal employees. 1204. Compensation of individuals in the uniformed services. 1205. Deduction from basic pay of amounts due for supplies or services. 1206. Cost of living allowance. 1207. Educational travel benefits. 1208. Privileges and immunities of certain employees. 1209. Inapplicability of certain benefits to certain noncitizens. Subchapter II-Wage and Employment Practices 1211. Definitions. 1212. Panama Canal Employment System; merit and other employment requirements. 1213. Employment standards. 1214. Interim application of Canal Zone Merit System. 1215. Basic pay. 1216. Uniform application of standards and rates. 1217. Recruitment and retention remuneration. 1218. Benefits based on basic pay. 1219. Salary protection upon conversion of pay base. 1220. Review and adjustment of classifications, grades, and pay level. 1221. Panama Canal Board of Appeals; duties. 1222. Appeals to Board; procedure; finality of decisions. 1223. Administration by the President. 1224. Applicability of certain laws. 1225. Minimum level of pay; minimum annual increases. Subchapter III-Conditions of Employment and Placement 1231. Transferred or reemployed employees. 1232. Placement. Subchapter IV-Retirement 1241. Early retirement eligibility. 1242. Early retirement computation. 1243. Retirement under special treaty provisions. 1244. Obligation of Commission for unfunded liability. 1245. Cash relief to certain former employees. 1246. Appliances for employees injured before September 7, 1916. Subchapter V-Leave 1251. Leave for jury or witness service. Subchapter VI-Application to Related Personnel 1261. Law enforcement; Canal Zone Civilian Personnel Policy Coordinating Board; related employees. Subchapter VII-Labor-Management Relations 1271. Labor-management relations.

PAGE 3

3 CHAPTER 3-FUNDS AND ACCOUNTS Sec. Subchapter I-Fund s 1301. Canal Zone Government funds. 1302. Panama Canal Company funds; Commission funds. 1303. Emergency fund. Subchapter Il-Accounting Policies and Audits 1311. Accounting policies. 1312. Reports. 1313. Audit by the Comptroller General of the United States. Subchapter III-Interagency Accounts 1321. Interagency services; reimbursements. Subehapter IV-Postal Matters 1331. Postal service. Subchapter V-Accounts With the Republic of Panama 1341. Payments to the Republic of Panama. 1342. Transactions with the Republic of Panama. 1343. Disaster relief. 1344. Congressional restraints on property transfers and tax expenditures. CHAPTER 4-CLAIMS FOR INJURIES TO PERSONS OR PROPERTY Subehapter I-General Provisions 1401. Settlement of claims generally. Subchapter II-Vessel Damage 1411. Injuries in locks of Canal. 1412. Injuries outside locks. 1413. Measure of damages generally. 1414. Delays for which no responsibility is assumed. 1415. Settlement of claims. 1416. Actions on claims. 1417. Investigation of accident or injury giving rise to claim. 1418. Board of Local Inspectors. CHAPTER 5-PUBLIC PROPERTY 1501. Assets and liabilities of Panama Canal Company. 1502. Transfers and cross-servicing between agencies. 1503. Disposition of property of the United States. 1504. Transfer of property to Panama. CHAPTER 6-TOLLS FOR USE OF THE PANAMA CANAL 1601. Prescription of measurement rules and rates of tolls. 1602. Bases of tolls. 1603. Calculation of interest. 1604. Procedures. 1605. Interim toll adjustment. CHAPTER 7-GENERAL REGULATIONS 1701. Authority of President. 1702. Authority of Commission.

PAGE 4

4 CHAPTER 8-SHIPPING AND NAVIGATION Subchapter I-Operation of Canal 1801. Operating regulations. Subchapter II-Inspection of Vessels 1811. Vessels subject to inspection. 1812. Foreign vessels. 1813. Regulations governing inspection. TITLE 11-TREATY TRANSITION PERIOD CHAPTER 1-LAWS CONTINUED IN FORCE 2101. Laws, regulations and administrative authority. CHAPTER 2-COURTS 2201. Jurisdiction. 2202. Divisions and terms of District Court. 2203. Term of certain offices. 2204. Residence requirements. 2205. Special District Judge. 2206. Magistrates' courts. CHAPTER 3-ATTORNEYS 2301. Oath of attorneys. CHAPTER 4-TRANSITION AUTHORITY 2401. Transition authority of President. 2402. Prisons; parole; pardons. TITLE III-GENERAL PROVISIONS CHAPTER 1-CEMETERIES 3101. Disinterment, transportation, and reinternient of remains. CHAPTER 2-IMMIGRATION 3201. Special immigrants. CHAPTER 3-REPORT; AMENDMENTS; REPEALS AND REDESIGNATION; EFFECTIVE DATE 3301. Report. 3302. Amendments. 3303. Repeals and redesignation. 3504. Effective dat. STATEMENT OF PURPOSE SEC. 2. It is the purpose of this Act to provide legislation necessary or desirable for the implementation of the Panama Canal Treaty of 1977 between the United States of America and the Republic of Panama and of the related agreements accompanying that Treaty. DEFINITIONS AND RECOMMENDATION FOR LEGISLATION SEC. 3. (a) For purposes of this Act(1) references to the Panama Canal Treaty of 1977 refer to the Panama Canal Treaty between the United States of America and the Republic of Panama, signed September 7, 1977; and

PAGE 5

5 (2) references to the Panama Canal Treaty of 1977 and related agreements refer to the Panama Canal Treaty of 1977, the agreements relating to and implementing that Treaty, signed September 7, 1977, and the Agreement Between the United States of America and the Republic of Panama Concerning Air Traffic Control and Related Services, concluded January 8, 1979. (b) Subject to the provisions of subsection (c) of this section, for purposes of applying the Canal Zone Code or other laws of the United States and regulations issued pursuant to such Code or other laws with respect to transactions, occurrences, or status on or after the effective date of this Act(1) "Canal Zone" shall be deemed to refer to the areas and installations in the Republic of Panama made available to the United States pursuant to the Panama Canal Treaty of 1977 and related agreements; (2) "Canal Zone waters" and "waters of the Canal Zone" shall be deemed to refer to "Panama Canal waters" and "waters of the Panama Canal", respectively; (3) "Government of the Canal Zone" or "Canal Zone Government" shall be deemed to refer to the United States of America; (4) "Governor of the Canal Zone" or "Governor", wherever the reference is to the Governor of the Canal Zone, shall be deemed to refer to the Panama Canal Commission; (5) "Panama Canal Company" or "Company", wherever the reference is to the Panama Canal Company, shall be deemed to refer to the Panama Canal Commission; (6) in chapter 57 of title 5 of the Canal Zone Code, "hospitals" and "Health Bureau" shall be deemed to refer, respectively, to the hospitals operated by the United States in the Republic of Panama, and to the organizational unit operating such hospitals; and (7) in chapter 57 of title 5 of the Canal Zone Code, in section 4784 of title 6 of such Code, and in section, 2 of title 7 of such Code, "health director" shall be deemed to refer to the senior official in charge of the hospitals operated by the United States in the Re public of Panama. (c) Any reference set forth in subsection (b) of this section shall apply except as otherwise provided in this Act or unless (1) such reference is inconsistent with the provisions of this Act, (2) in the context in which a term is used such reference is clearly not intended, or (3) a term refers to a time before the effective date of this Act. (d) The President shall, within two years after the Panama Canal Treaty of 1977 enters into force, submit to the Congress a request for legislation which would(1) amend or repeal provisions of law which in their present form are applicable only during the transition period prescribed in Article XI of that Treaty, (2) repeal the Canal Zone Code, and (3) contain provisions considered necessary and appropriate in light of the experience as of that time under that Treaty.

PAGE 6

6 TITLE I-ADMINISTRATION AND REGULATIONS CHAPTER 1-PANAMA CANAL COMMISSION ESTABLISHMENT OF COMMISSION SEC. 1101. There is established in the executive branch of the United States Government an agency to be known as the Panama Canal Commission (hereinafter in this Act referred to as the "Commission"). The Commission shall, under the general supervision of the Board established by section 1102 of this Act, be responsible for the maintenance and operation of the Panama Canal and the facilities and appurtenances related thereto. The authority of the President with respect to the Commission shall be exercised through the Secretary of Defense. SUPERVISORY BOARD SE'C. 1102. (a) The Coommission shall be supervised by a Board composed of nine members, one of whom shall be the Secretary of Defense or an officer of the Department of Defense designated by the Secretary. Not less than five rnembeis of the Board shall be nationals of the United States and the remaining members shall be nationals of the Repubic of Panama. At least one of the members of the Board who are nationals of the United States shall be experienced and knowledgeable in the management or operation of an American-flag steamship line which has or had ships regularly transiting the Panama Canal, at least one other such member shall be expei' enced and knowledgeable in United States port operations or in the business of exporting or importing one of the regular commodities dependent on the Panama Canal as a transportation route, and at least one other such member shall be experienced and knowledgeable in labor matters in the United States. Three members of the Board shall hold no other office in or be employed by the Government of the United States. Members of the Board who are nationals of the United States shall cast their votes as directed by the Secretary of Defense or his designee. (b) The President shall appoint the members of the Board. The members of the Board who are United States nationals shall be appointed by and with the advice and consent of the Senate. Each member of the Board shall hold office at the pleasure of the President and, before assuming the duties of such office, shall take an oath to discharge faithfully the duties of his office. Members of the Board shall serve without compensation but shall be allowed travel or transportation expenses, including per diem in lieu of subsistence, in accordance with section 1107 of this Act. (c) The Board shall hold meetings as provided in regulations adopted by the Commission and approved by the Secretary of Defense. A quorum for the transaction of business shall consist of a majority of the Board members of which a majority of those present are nationals of the United States. ADMINISTRATOR SEC. 1103. There shall be an Administrator of the Commission, who shall be appointed by the President, by and with the advice and consent of the Senate, and shall hold office at the pleasure of the President.

PAGE 7

7 DEPUTY ADMINISTRATOR AND CHIEF ENGINEER SEC. 1104. (a) There shall be a Deputy Administrator and a Chief Engineer of the Commission, both of whom shall be appointed by the President. The Deputy Administrator and the Chief Engineer shall perform such duties as may be prescribed by the President. (b) The Deputy Administrator and the Chief Engineer shall each be paid compensation at a rate of pay established by the President which does not exceed the rate of basic pay in effect for grade GS-18 of the General Schedule under section 5332 of title 5, United States Code. CONSULTATIVE COMMITTEE SEC. 1105. (a) The President shall designate, and the Secretary of State shall coordinate the participation of, representatives of the United States to the Consultative Committee to be established under paragraph 7 of Article III of the; Panama Canal Treaty of 1977. (b) The Consultative Committee shall function as a diplomatic forum for the exchange of views between the United States and the Republic of Panana. The Committee shall advise the United States Government and the Government of the Republic of Panama on matters of policy affecting the operation of the Panama Canal. The Committee shall have no authority to direct the Commission or any other department or agency of the United States to initiate or withhold action. JOINT COMMISSION ON THE ENVIRONMENT SEC. 1106. (a) The United States and the Republic of Panama, in accordance with the Panama Canal Treaty of 1977, shall establish a Joint Commission on the Environment (hereinafter in this section referred to as the "Joint Commission" ) to be composed of not more than three representatives of the United States and three representatives of the Republic of Panama, or such other equivalent numbers of representatives as may be agreed upon by the Governments of the two countries. The United States members of the Joint Commission shall periodically review the implementation of the Panama Canal Treaty of 1977 with respect to its impact on the environment and shall, jointly with the representatives of the Government of Panama, make recommendatioqis to the United States Government and the Government of the Republic of Panama with respect to ways to avoid or mitigate adverse environmental impacts resulting from actions taken pursuant to such Treaty. (b) Representatives of the United States on the Joint Commission shall be appointed by the President and shall serve at the pleasure of the President. Such representatives shall serve without compensation but shall be allowed travel or transportation expenses, including per diem in lieu of subsistence, in accordance with section 1107 of this Act. (c) Any Federal employee subject to the civil service laws and regulations who is detailed to serve with, or appointed by, the United States representatives on the Joint Commission shall not lose any pay, seniority, or other rights or benefits by reason of such detail or appointment.

PAGE 8

8 (d) The United States representatives on the Joint Commission may, to such extent or in such amounts as are provided in advance in appropriation Acts, appoint and fix the compensation of such personnel as the representatives of the United States on the Joint Comnmission may consider necessary for the participation of the United States on the Joint Commission. (e) The United States representatives on the Joint Commission may, in cooperation with the representatives of the Republic of Panama on the Joint Commission, establish rules of procedure to be used by the Joint Commission in conducting its affairs, subject to the approval of such rules by the Governments of the United States and the Republic of Panama. TRA VEL EXPENSES SEC. 1107. While away from their homes, regular places of business, or official stations in performance of services under this chapter, members of the Board of the Commission and the representatives of the United States on the Consultative Committee referred to in section 1105 of this Act and on the Joint Commission on the Environment referred to in section 1106 of this Act shall be allowed travel or transportation expenses, including per diem in lieu of subsistence, in the same manner as persons employed intermittently in Government service are allowed expenses under section 5703 of title 5, United States Code. DEFENSE OF THE PANAMA CANAL SEC. 1108. In the event of an armed attack against the Panama Canal, or when, in the opinion of the President, conditions exist which threaten the security of the Canal, the Administrator of the Commission shall, upon the order of the President, comply with such directives as the United States military officer charged with the protection and defense of the Panama Canal may consider necessary in the exercise of his duties. JOINT SEA LEVEL CANAL STUDY COMMITTEE SEC. 1109. (a) The President shall appoint the representatives of the United States to any joint committee or body with the Republic of Panama to study the possibility of a sea level canal in the Republic of Panama pursuant to Article XII of the Panama Canal Treaty of 1977. (b) Upon the completion of any joint study between the United States and the Republic of Panama concerning the feasibility of a sea level canal in the Republic of Panama pursuant to paragraph 1 of Article XII of the Panama Canal Treaty of 1977, the text of the study shall be transmitted by the President to the President of the Senate and to the Speaker of the House of Representatives. (c) No construction of a sea level canal by the United States in the Republic of Panama shall be undertaken except with express congressional authorization after submission of the study by the President as provided in subsection (b) of this section.

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9 AUTHORITY OF THE AMBASSADOR SEC. 1110. (a) The United States Ambassador to the Republic of Panama shall have full responsibility for the coordination of the transfer to the Republic of Panama of those functions that are to be assumed by the Republic of Panama pursuant to the Panama Canal Treaty of 1977 and related agreements. (b) (1) The Commission shall not be subject to the direction or supervision of the United States Chief of Mission in the Republic of Panama with respect to the responsibilities of the Commission for the operation, management, or maintenance of the Panama Canal, as established in this or any other Act or in the Panama Canal Treaty of 1977 and related agreements, except that the Commission shall keep the Ambassador fully and currently informed with respect toall activities and operations of the Commission. (2) Except as provided in paragraph (1) of this subsection, section 16 of the Act of August 1, 1956 (22 U.S.C. 2680a), shall apply with respect to the activities of the Commission. SECURITY LEGISLATION SEC. 1111. It is the sense of the Congress that the best interests of the United States require that the President enter into negotiations with the Republic of Panama for the purpose of arranging for the stationing of United States military forces, after the termination of the Panama Canal Treaty of 1977, in the area comprising the Canal Zone before the effective date of this Act, and for the maintenance of installations and facilities, after the termination of such Treaty, for the iuse of United States military forces stationed in such area. The President shall report to the Congress in a timely manner the status of negotiations conducted pursuant to this section. CODE OF CONDUCT FOR COMMISSION PERSONNEL SEC. 11112. (a) Before assuming the duties of his office or employment, each member of the Board of the Commission and each offer and employee of the Commission shall take an oath to discharge faithfully the duties of his office or employment. All employees of the Commission shall be subject to the laws of the United States regarding duties and responsibilities of Federal employees. (b) Not later than 60 days after all the members of the Board of the Commission have been appointed, the Board shall adopt a code of conduct applicable to the persons Peferred to in subsection (a) of this section. The code of conduct shall contain provisions substantially equivalent to those contained in part 735 of title 5 of the Code of Federal Regulations on the effective date of this Act. The code of conduct shall, at a minimum, contain provisions substantially equivalent to the following provisions of law: (1) the provisions of chapter 11 of title 18, United States Code, as amended, relating to bribery, graft, or conflicts of interest, as approprite to the employees concerned; (2) section 7352 of title 5, United States Code, as amended; H.Rept. 96-473 --2

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10 (3) sections 207, 208,285,508, 641, 645,1001, 1917, and 2071 of title 18, United States Code, as amended; (4) section 5 of the Act of July 16, 1914 (31 U.S.C. 638a), as amended; (5) the Ethics in Government Act of 1978 (92 Stat. 1824), as .amended; and (6) those provisions of the laws and regulations of the Republic of Panama which are substantially equivalent to those of the United States set forth in this subsection. (c) The Commission shall investigate any allegations regarding the violation of the code of conduct adopted pursuant to subsection (b) of this section. The Commission may recommend that the President suspend from the performance of his duties any member of the Board of the Commission or any ocer or employee of the Commission, pending judicial proceedings by appropriate authorities concerning such allegations. (d) The President shall negotiate suitable arrangements with the Republic of Panama whereby each nation shall agree to take all measures within its legal authority to assure that members of the Board of the Commission comply with the code of conduct established pursuant to subsection (b) of this section. Without prejudice to such jurisdiction as the United States may have with respect to members of the Board, the provisions of law enumerated in subsection (b) of this section shall be enforced with respect to members of the Board only in accordance with such arrangements. OFFICE OF OMBUDSMAN SEC. 1113. (a) There is established within the Commission an Office of Ombudsman, to be directed by an Ombudsman, who shall be appointed by the Commission. It shall be the function of the Offiee of Ombudsman to receive individual complaints, grievances, requests, and suggestions of employees (and their dependents) of the Commission and other departments and agencies of the United States, including the Smithsonian Institution, conducting operations before the effective date of this Act in the area then comprising the Canal Zone concerning administrative problems, ineffciencies, and conflicts caused within departments and agencies of the United States, including the Smithsonian Institution, as a result of the implementation of the Panama Canal Treaty of 1977 and related agreements. (b) The Ombudsman shall make findings and render assistance with respect to the complaints, grievances, requests, and suggestions submitted to the Office of Ombudsman, -and shall make appropriate recommendations to the Commission or any other department or agency of the United States, including the Smithsonian Institution. (c) The establishment of the Offce of Ombudsman shall not affect any procedures for grievances, appeals, or administrative matters in any other provision of this Act, any other provision of law, or any Federal regulation. (d) The Ombudsman shall be a citizen of the United States. (e) The O ffce of Ombudsman shall terminate upon the termination of the Panama Canal Treaty of 1977.

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11 CHAPTER 2-EMPLOYEES Subchapter I-Panama Canal Commission Personnel DEFINITIONS SEc. 1201. As used in this chapter(1) "Executive agency" has the meaning given that term in section 105 of title 5, United States Code; (2) "uniformed services" has the meaning given that term in section 2101(3) of title 5, United States Code; (3) "competitive service" has the meaning given that term in section 2102 of title 5, United States Code; and (4) "United States", when used in a geographic sense, means each of the several States and the District of Columbia. APPOINTMENT AND COMPENSATION; DUTIES SEC. 1202. (a) In accordance with this chapter, the Panama Canal Commission may appoint without regard to the provisions of title 5, United States Code, relating to appointments in the competitive service, fix the compensation of, and define the authority and duties of, officers, agents, attorneys, and employees (other than the Administrator, Deputy Administrator, and Chief Engineer) necessary for the management, operation, and maintenance of the Panama Canal and its complementary works, installations, and equipment. (b) Individuals serving in any Executive agency (other than the Commission) or the Smithsonian Institution, including individuals serving in the uniformed services, may, if appointed under this section or section 1103 or 1104 of thi! Act, serve as officers or employees of the Commission. TRANSFER OF FEDERAL EMPLOYEES SEC. 1203. (a) The head of any agency may enter into agreements for the transfer or detail to the Commission of any employee of that agency serving under a permanent appointment. Any employee who so transfers or is so detailed shall, upon completion of the employee's tour of duty with the Commission, be entitled to reemployment with the agency from which the employee was transferred or detailed without loss of pay, seniority, or other rights or benefits to which the employee would have been entitled had the employee not been so transf erred or been so detailed. (b) For purposes of this section, the term "agency" means an Executive agency, the United States Postal Service, and the Smithsonian Institution. (c) The Office of Personnel Management shall prescribe regulations to carry out the purposes of this section. COMPENSATION OF INDIVIDUALS IN THE UNIFORMED SERVICES SEC. 1204. (a) Except as provided in subsection (b) of this section, any individual who is serving in a position in the Commission and who is a member of a uniformed service shall continue to be paid basic pay by such uniformed service and shall not be paid by the Commission for the period of the service in the uniformed service involved.

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12 (b) If the individual appointed as Administrator, Deputy Administrator, or Chief Engineer of the Commission is a member of a uniformed service, the amount of basic pay otherwise payable to the individual for service in that position shall be reduced, up to the amount of that basic pay, by the amount of the basic pay payable to the individual as a member of a uniformed service. (c) The Commission shall annually pay to each uniformed service amounts sufficient to reimburse that uniformed service for any basic pay paid by that uniformed service to any member of that service during any period of service in the Commission by the member. DEDUCTION FROM BASIC PAY OF AMOUNTS DUE FOR SUPPLIES OR SERVICES SEC. 1205. The Commission may deduct from the basic pay otherwise payable by the Commission to any officer or employee of the Commission any amount due from the officer or employee to the Commission or to any contractor of the Commission for transportation, board, supplies, or any other service. Any amount so deducted may be paid by the Commission to any contractor to whom it is due or may be credited by the Commission to any appropriation from which the Commission has expended such amount. COST OF LIVING ALLOWANCE SEC. 1206. Effective beginning October 1, 1984, each officer and employee of the Commission who is a citizen of the United States and was employed by the Panama Canal Company or the Canal Zone Government on September 30, 1979, or who is an individual of any nationality recruited outside the Republic of Panama after September 30, 1979, may be paid an allowance to offset any increased cost of living which may result from the termination of the eligibility of the officer or employee and his dependents to use military postal services, sales stores, and exchanges. The amount of the allowance may be determined by the Commission. EDUCATIONAL TRAVEL BENEFITS SEC. 1207. (a) The Commission shall provide by regulation for round-trip transportation between the Republic of Panama and the United States or, in the case of an employee described in paragraph (2) of this subsection, between the Republic of Panama and the country in which such employee is recruited, for undergraduate college education for dependents of employees of the Commission who(1) are United States citizens who were employed by the Panama Canal Company or the Canal Zone Government on September 30,1979, or (2) are recruited outside the Republic of Panama after that date. (b) The regulations prescribed by the Commission under this section shall(1) provide eligibility requirements which must be met by such dependents to qualify for transportation under this section, including a requirement that all eligible dependents must be under 23 years of age; and

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13 (2) limit the transportation provided to one round trip during any one-year period. PRIVILEGES AND IMMUNITIES OF CERTAIN EMPLOYEES SEc. 1208. The Secretary of Defense shall designate those officers and employees of the Commission and other individuals entitled to the privileges and immunities accorded unde. paragraph 3 of Article VIII of the Panama Canal Treaty of 1977. The Department of State shall furnish to the Republic of Panama a list of the names of such officers, employees, and other individuals and shall notify the Republic of Panama of any subsequent additions to or deletions from the list. INAPPLICABILITY OF CERTAIN BENEFITS TO CERTAIN NONCITIZENS SEc. 1209. (a) Chapter 81 of title 5, United States Code, relating to compensation for work injuries, chapter 83 of such title 5, relating to civil service retirement, chapter 87 of such title 5, relating to life insurance, and chapter 89 of such title 5, relating to health insurance, are inapplicable to any individual(1) who is not a citizen of the United States; (2) whose initial appointment by the Commission occurs after October 1, 1979; and (3) who is covered by the Social Security System of the Republic of Panama pursuant to any provision of the Panama Canal Treaty of 1977 and related agreements. (b) Subparagraph (B) of section 8701(a) of title 5, United States Code, defining the term employee for purposes of life insurance, is amended to read as follows: "(B) an individual who is not a citizen or national of the United States and whose permanent duty station is outside the United States, unless the individual was an employee for the purpose of this chapter on September 30, 1979, by reason of service in an Executive agency, the United States Postal Service, or the Smithsonian Institution in the area which was then known as the Canal Zone; or". (c) Clause (ii) of section 8901 (1) of title 5, United States Code, defining the term employee for purposes of health insurance, is amended to read as follows: (ii) an individual who is not a citizen or national of the United States and whose permanent duty station is outside the United States, unless the individual was an employee for the purpose of this chapter on September 30, 1979, by reason of service in an Executive agency, the United States Postal Service, or the Smithsonian Institution in the area which was then known as the Canal Zone;". Subchapter II-Wage and Employment Practices DEFINITIONS SEC. 1211. As used in this subchapter(1) "agency" means(A) the Commission, and

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14 (B) an Executive agency or the Smithsonian Institution, to the extent of any election in effect under section 1212 (b)(2) of this Act; (2) "position" means a civilian position in the Commission, or in any other agency if a substantial portion of the duties and responsibilities are performed in the Republic of Panama; and (3) "employee" means an individual serving in a position. PANAMA CANAL EMPLOYMENT SYSTEM; MERIT AND OTHER EMPLOYMENT REQUIREMENTS SEC. 1212. (a) After considering any recommendations of the Commission, the President shall establish a Panama Canal Employment System. The Panama Canal Employment System shall(1) be established in accordance with and be subject to the provisions of the Panama Canal Treaty of 1977 and related agreements, the provisions of this chapter, and any other applicable provision of law; (2) be based on the consideration of the merit of each employee or candidate for employment and the qualifications and fitness of the employee to hold the position concerned; (3) conform, to the extent practicable and consistent with the provisions of this Act, to the policies, principles, and standards applicable to the competitive service; and (4) in the case of employees who are citizens of the United States, provide for the appropriate interchange of those employees between positions under the Panama Canal Employment System and positions in the competitive service. (b) (1) The Commission, and any Exective agency and the Smithsonian Institution to the extent of any election under paragraph (2) of this subsection, shall conduct their employment and pay practices relating to employees in accordance with the Panama Canal Employment System and regulations prescribed by, or under the authority of, the President in accordance with this subchapter. (2) The head of any Executive agency and the Smithsonian Institution may elect to have the Panama Canal Employment System made applicable in whole or in part to personnel of that agency in the Republic of Panama. (c) Subject to the provisions of this chapter, the President may, from time to time and after considering any recommendation of the Commission, amend or modify any provision of the Panama Canal Employment System, including any provision relating to selection for appointment, reappointment, reinstatement, reemployment, and retention, with respect to positions, employees, and candidates for employment. (d) The President may, to the extent the President determines appropriate(1) exclude any employee or position from coverage under any provision of this subchapter; and (2) notwithstanding section 1202 of this Act, extend to any employee, whether or not the employee is a citizen of the United States, the rights and privileges which are provided by applicable laws and regulations for citizens of the United States employed in the competitive service.

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15 EMPLOYMENT STANDARDS SE&c. 1213. The head of each agency shall establish written standards for(1) determining the qualifications and fitness of employees and of candidates for employment in positions; and (2) selecting individuals for appointment, promotion, or transfer to positions. The standards shall conform to the provisions of this subchapter, any regulations prescribed thereunder, and the Panama Canal Employment System. INTERIM APPLICATION OF CANAL ZONE MERIT SYSTEM S'c. 1214. Notwithstanding any repeal made by this Act or any provision of this chapter, the provisions of subchapter III of chapter 7 of title 2 of the Canal Zone Code establishing the Canal Zone Merit System, together with the regulations prescribed thereunder, as in effect on September 30, 1979, shall continue in effect and shall apply with respect to employees until the Panama Canal Employment System is established and in effect pursuant to section 1212 of this Act. BASIC PAY SEC. 1215. (a) The head of each agency, in accordance with the provisions of this subchapter, shall establish, and from time to time may revise, the rates of basic pay for positions and employees in the agency. (b) The rates of basic pay may be established and revised in relation to the rates of basic pay for the same or similar work performed in the United States or in such areas outside the United States as may be designated in the regulations prescribed under section 1223 of this Act. (c) The head of each agency may make adjustments in rates of basic pay established under subsection (b) of this section in amounts not to exceed the amounts of the adjustments made from time to time by or under statute in the corresponding rates of basic pay for the same or similar work referred to in such subsection (b). The head of the agency may designate the effective date of any such adjustment, except that that date may not be earlier than the effective date of the adjustment in the corresponding rate of basic pay. UNIFORM APPLICATION OF STANDARDS AND RATES SEC. 1216. The standards established pursuant to section 1213 of this Act and the rates of basic pay established pursuant to section 1215 of this Act shall be applied without regard to whether the employee or individual concerned is a citizen of the United States or a citizen of the Republic of Panama. RECRUITMENT AND RETENTION REMUNERATION SEC. 1217. (a) In addition to basic pay, additional compensation may be, paid, in such amounts as the head of the agency concerned determines, as an overseas recruitment or retention differential to any individual who-

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16 (1) before October 1,1979, was employed by the Panama Canal Company, by the Canal Zone Government, or by any other agency in the area then known as the Canal Zone; (2) is an employee who was recruited on or after October 1,1979, outside of the Republic of Panama for placement in the Republic of Panama; or (3) is a medical doctor employed by the Department of Defense in the Republic of Panama or by the Commission; if, in the judgment of the head of the agency concerned, the recruitment or retention of the individual is essential. (b) Any employee described in more than one paragraph of subsection (a) of this section may qualify for a recruitment or retention differential under only one of those paragraphs. (c) Additional compensation provided under this section may not exceed 25 percent of the rate of basic pay for the same or similar work performed in the United States by individuals employed by the Government of the United States. (d) Subchapter III of chapter 59 of title 5, United States Code, relating to overseas differentials and allowances, shall not apply with respect to any employee whose permanent duty station is in the Republic of Panama and who is employed by an agency. BENEFITS BASED ON BASIC PAY SEC. 1218. For the purpose of determining(1) amounts of compensation for disability or death under chapter 81 of title 5, United States Code, relating to compensation for work injuries; (2) benefits under subchapter III of chapter 83 of title 5, United States Code, relating to civil service retirement; (3) amounts of insurance under chapter 87 of title 5, United States Code, relating to life insurance; (4) amounts of overtime pay or other premium pay; (5) annual leave benefits; and (6) any other benefits related to basic pay; the basic pay of each employee shall include the rate of basic pay established for his position under section 1215 of this Act plus the amount of any additional compensation provided under section 1217 of this Act. SALARY PROTECTION UPON CONVERSION OF PAY BASE SEC. 1219. (a) In the case of any employee whose rate of basic pay is determined in relation to rates of basic pay for the same or similar work in the United States and which is converted to a rate of basic pay pursuant to section 1215 (b) of this Act which is determined in relation to rates in areas other than the United States pursuant to such section 1215(b), the employee shall continue to receive a rate of basic pay not less than that to which the employee was entitled immediately before the conversion. I (b) This section shall cease to apply with respect to any employee if the employee is placed in a position-

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17 (1) for which the rate of basic pay is determined in relation to rates of basic pay in the United States pursuant to section 1215 (b) of this Act; or (2) which is of a lower grade. REVIEW AND ADJUSTMENT OF CLASSIFICATIONS, GRADES, AND PAY LEVEL SEC. 1220. An employee may request at any time that the employee's agency (1) review the classification of the employee's position or the grade or pay level for the employee's position, or both; and (2) revise or adjust that classification, grade or pay level, or both, as the case may be. The request for review and revision or adjustment shall be submitted and ad judicated in accordance with the regularly established appeals procedures of the agency. PANAMA CANAL BOARD OF APPEALS; DUTIES SEC. 1221. (a) Subject to the provisions of this chapter, the President shall prescribed regulations establishing a Panama Canal Board of Appeals. The regulations shall provide for the number of members of the Board and their appointment, compensation, and terms of oflce, the selection of a Chairman of the Board, the appointment and compensation of the Board's employees, and other appropriate matters relating to the Board. (b) The Board shadl review and determine the appeals of employees in accordance with section 1222 of this Act. The decisions of the Board shall conform to the provisions of this subchapter. APPEALS TO BOARD; PROCEDURE; FINALITY OF DECISIONS SEC. 1222. (a) An employee may appeal to the Panama Canal Board of Appeals from an adverse determination made by an agency under section 1220 of this Act. The appeal shall be made in writing within a reasonable time (as specified in regulations prescribed by, or under the authority of, the President) after the date of the transmittal by the agency to the employee of written notice of the adverse determination. (b) The Board may authorize, in connection with an appeal pursuant to subsection (a) of this section, a personal appearance before the Board by the employee, or by a representative of the employee designated for that purpose. (c) Af ter investigation and consideration of the evidence submitted, the Board shall(1) prepare a written decision on the appeal; (2) transmit its decision to the agency concerned ; and (3) transmit copies of the decision to the employee concerned or to the designated representative. (d) The decision of the Board on any question or other matter relating to an appeal is final and conclusive. The agency concerned shall take action in accordance with the decision of the Board. H.Rept. 96-473 --3 S.Rept. 96-330 --3

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18 ADMINISTRATION BY THE PRESIDENT SEC. 1223. (a) The President shall prescribe regulations necessary and appropriate to carry out the provisions of this subchapter and coordinate the policies and activities of agencies under this subchapter. (b) The President may establish an office within the Commission as the successor to the Canal Zone Central Examining Office. The purpose of the office shall be to assist the President in(1) carrying out the President's coordination responsibility under subsection (a) of this section; and (2) implementing the provisions of the Panama Canal Treaty of 1977 and related agreements with respect to recruitment, examination, determination of qualification standards, and similar matters. (c) The President may delegate any authority vested in the President by this subchapter and may provide for the redelegation of that authority. APPLICABILITY OF CERTAIN LAWS SEC. 1224. This chapter does not affect the applicability of(1) the provisions of title 5, United States Code, which relate to preference eligibles; (2) the provisions of title 5, United States Code, which relate to removal or suspension from the competitive service; and (3) the provisions of section 5544(a) of title 5, United States Code, which relate to wage-board overtime and Sunday rates, with respect to classes of employees who were covered by those provisions on the date of the enactment of this Act. MINIMUM LEVELS OF PAY; MINIMUM ANNUAL INCREASES SEC. 1225. (a) Subsection (f ) of section 13 of the Fair Labor Standards Act of 1938 (29 U.S.C. 213(f)), relating to applicability to employees in foreign countries and certain United States possessions, is amended by striking out "Johnston Island; and the Canal Zone." and inserting in lieu thereof "and Johnston Island.". (b) (1) Efective October 1, 1979, each individual employed by an Executive agency or the Smithsonian Institution, whose permanent duty station is located within an area or installation in the Republic of Panama made available to the United States pursuant to the Panama, Canal Treaty of 1977 and related agreements, shall be paid basic pay at a rate of not less than $2.90 an hour. (2) Effective on October 1 of each succeeding calendar year, the rate of basic pay for each individual referred to in paragraph (1) of this subsection whose basic pay is not fixed in relation to rates of basic pay for the same or similar work performed in the United States shall be increased by an amount equal to not less than 2 percent of the rate of basic pay for that individual in effect immediately before that date. Subchapter III-Conditions of Employment and Placement TRANSFERRED OR REEMPLOYED EMPLOYEES SEC. 1231. (a) (1) With respect to any individual employed in the Panama Canal Company or the Canal Zone Government-

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19 (A) who is trans f erred(i) to a position in the Commission; or (ii) to a position in an Executive; agency or in the Smithsonian Institution the permanent duty station of which is in the Republic of Panama (including the area known before October 1, 1979, as the Canal Zone); or (B) who is separated by reason of a reduction in force on September 30,19,79, and is appointed to a position in the Commission before April 1, 1980 ; the terms and conditions of employment set forth in paragraph (2) of this subsection shall be generally no less favorable, on or after the date of the transfer referred to in subparagraph (A) of this paragraph or the date of the appointment referred to in subparagraph (B) of this paragraph, as the case may be, than the terms and conditiovs of employment with the Panama Canal Company and Canal Zone Government on September 30, 1979, or, in the case of a transfer described in subparagraph (A) (ii) of this paragraph which takes place before that date, on the date of the transfer. (2) The terms and conditions of employment referred to in paragraph (1) of this subsection are the following: (A) rates of basic pay; (B) tropical differential; (C) premium pay and night differential; (D) reinstatement and restoration rights; (E) injury and death compensation benefits; (F) leave and travel; (G) transportation and repatriation benefits; (H) group health and life insurance; (I) reduction-in-force rights; (J) an employee grievance system, and the right to appeal adverse and disciplinary actions and position classification actions; (K) veterans' preference eligibility; (L) holidays; (M) saved pay provisions; and (N) severance pay benefits. (3) (A) The provisions of this subsection shall take effect on the date of the enactment of this Act. (B) No spending authority (as described ;n section 401 (c) (2) (C) of the Congressional Budget Act of 1974) provided for under this subsection shall take effect before October 1, 1979. (C) Effective October 1, 1979, any indi-idual who, but for subpara.graph (B) of this paragraph, would have been entitled to one or more payments pursuant to this subsection for periods before October 1, 1979, shall be entitled, to the extent or in such amounts as are provided in advance in appropriation Acts, to a lump sum payment equal to the total amount of all such payments. (b) Any individual described in subsection (a) (1) (B) of this section who would have met the service requirement for early retirement benefits under section 8336(i) or 8339(d) (2) of title 5, United States Code (as amended by sections 1241 (a) and 1242 of this Act, respectively), but for a break in service of more than 3 days immediately after September 30, 1979, shall be considered to meet that requirement. Any break in service by any such individual for purposes

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20 of section 8332 of such title 5 during the period beginning September 30, 1979, and ending on the date of the appointment referred to in such subsection (a) (1) (B) shall be considered a period of creditable service under such section 8332 for such individual, except that such period shall not be taken into accoullt for purposes of determining rtrerage pay (as defined in section 8331 (4) of such title 5 and no deduction, contribution, or deposit shall be required for that period under section 8334 of such title 5. (c) (1) Section 5(c) of the Defense Department Overseas Teachers Pay and Personnel Practices Act (20 U.S.C. 903(c)) shall not apply with respect to any teacher who was employed by the Canal Zone Government school system on September 30, 1979, and who was transferred from such position to a teaching position which is under the Department of Defense Overseas Dependent School System and the permanent duty station of which is in the Republic of Panama, until the rates of basic compensation established under section 5(c) of such Act equal or exceed the rates of basic compensation then in effect for teachers who were so transferred. (2) Section 6(a) (2) of the Defense Department Overseas Teachers Pay and Personnel Practices Act (20 U.S.C. 904(a) (2) ) shall not apo ply with respect to any teacher who was employed by the Canal Zone Government school system on September 30, 1979, and who was transferred from such position to a teaching position which is under the Department of Defense Overseas Dependent School System and the permanent duty station of which is in the Republic of Panama. (3) (A) The head of a department or agency of the United States may grant a sabbatical to any teacher to whom paragraph (1) of this subsection applies for not to exceed 11 months in order to permit the teacher to engage in study or uncompensated work experience which is in the United States and which will contribute to the teacher's developme n t and effect eness. Basic compensation shall be paid to teachers on sabbatical under this section in the same manner and to the same extent as basic compensation would have been paid to teachers on sabbatical while employed in the Canal Zone Government school system on the day before the effective date of this Act. A sabbatical shall not result in a loss of, or reduction in, leave to which the teacher is otherwise entitled, credit for time or service, or performance or efficiency rating. The head of the department or agency may authorize in accordance with chapter 47 of title 5, United States Code, such travel expenses (including per diem allowance) as the head of the department or agency may determine to be essential for the study or experience. (B) A sabbatical under this paragraph may not be granted to any teacher(i) more than once in any 10-year period; (ii) unless the teacher has completed 7 years of service as a teacher; and (iii) if the teacher is eligible for voluntary retirement with a right to an immediate annuity. (0) (i) Any teacher in a department or agency of the United States may be granted a sabbatical under this paragraph only if the teacher agrees, as a condition of accepting the sabbatical, to serve in the civil

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21 service upon the completion of the sabbatical for a period of two consecutive years. (ii) Each agreement required under clause (i) of this subparagraph shall provide that in the event the teacher fails to carry out the agreement (except for good and sufficient reason as determined by the head of the department or agency that granted the sabbatical) the teacher shall be liable to the United States for payment of all expenses (including saary ) of the sabbatical. The amount shall be treated as a debt due the Unfiited States. (d) Sections 5595(a) (2) (iii), 5724a(a) (3) and (4), and 8102(b) of title 5, United States Code, are each amended by striking out "Canal Zone" each place it appears and inserting in lieu thereof "areas and installations in the Republic of Panama made available to the United States pursuant to the Panama Canal Treaty of 1977 and related agreements ( as described in section 3(a) of the Panama Canal Act of 1979)." PLA CE MENT SEc. 1232. (a) Any citizen of the United States(1) who, on March 31, 1979, was an employee of the Panama Canal Company or the Canal Zone Government; (2) who separates or is scheduled to separate on or after such date for any reason other than misconduct or delinquency; and (3) who is not placed in another appropriate position in the Government of the United States in the Republic of Panama; shall, upon the employee's request, be accorded appropriate assistance for placement in vacant positions in the Government of the United States in the United States. (b) Any citizen of the United States(1) who, on March 31, 1979, was employed in the Canal Zone as an employee of an Executive agency (other than the Panama Canal Company or the Canal Zone Government) or the Smithsonian Institution; (2) whose position is eliminated as the result of the implementation of any provision of the Panama Canal Treaty of 1977 and related agreements; and (3) who is not appointed to another appropriate position in the Government of the United States in the Republic of Panama; shall, upon the employee's request, be accorded appropriate assistance for placement in vacant positions in the Government of the United States in the United States. (c) The OfIce of Personnel Management shall establish and administer a Government-wide placement program for all eligible employees who request appointment to positions under this section. (d) The provisions of this section shall take effect on the date of the enactment of this Act. Subchapter IV-Retirement EARLY RETIREMENT ELIGIBILITY SEc. 1241. (a) Section 8336 of title 5, United States Code, is amended-

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22 (1) in subsection (c), by inserting "(1)" after "(c)" and by adding at the end thereof the following new paragraph: "(2) An employee is entitled to an annuity if the employee"(A) was a law enforcement officer or firefighter employed by the Panama Canal Company or the Canal Zone Government at any time during the period beginning March 31, 1979, and ending September 30,1979; and "(B) is separated from the service before January 1, 2000, after becoming 48 years of age and completing 18 years of service as a law enforcement offer or firefighter, or any combination of such service totaling at least 18 years."; and (2) by redesignating subsection (i) as subsection (j) and by inserting after subsection (h) the following new subsection: "(i) (1) An employee of the Panama Canal Commission or of an Executive agency conducting operations in the Canal Zone or Re public of Panama who is separated from the service before Januaiy 1, 2000, who was employed by the Canal Zone Government o) the Panama Canal Company at any time during the period beginning March 31, 1979, and ending September 30, 1979, and who has had continuous Panama Canal service, without a break in service of more than 3 days, from that time until separation, is entitled to an annuity if the employee is separated"(A) involuntarily, after completing 20 years of service or after becoming 48 years of age and completing 18 years of service, if the separation is a result of the implementation of any provision of the Pan ama Canal Treaty of 1977 and related agreements; or "(B) voluntarily, after completing 23 years of service or after becoming 48 years of age and completing 18 years of service. "(2) An employee of the Panama Canal Commission or of an Executive agency conducting operations in the Canal Zone or Republic of Panama who is separated from the service before January 1, 2000, who was employed, at a permanent duty station in the Canal Zone, by any Executive agency other than the Canal Zone Government or the Panama Canal Company at any time during the period beginning March 31, 1979, and ending Septem ber 30, 1979, and who has had continuous Panama Canal service, without a break in service of more than 3 days, from that time until separation, is entitled to an annuity if" (A) the employee is separated involuntarily, after completing 20 years of service or after becoming 48 years of age and completing 18 years of service; and "(B) the separation is the result of the implementation of any provision of the Panama Canal Treaty of 1977 and related agreements. "(3) For the pur pose of this subsection"(A) 'Panama Canal service' means" (i) service as an employee of the Canal Zone Government, the Panama Canal Company, or the Panama Canal Commission; or "(ii) service at a permanent duty station in the Canal Zone or Republic of Panama as an employee of an Execu-

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23 tive agency conducting operations in the Canal Zone or the Republic of Panama; and "(B) 'Executive agency' includes the United States District Court for the District of the Canal Zone and the Smithsonian Institution.". (b) (1) The amendments made by this section shall take effect on the date of the enactment of this Act, but no amount of annuity under chapter 83 of title 5, United States Code, accruing by reason of those amendments shall be payable for any period before October 1, 1979. (2) Effective October 1, 1979, any individual who, but for paragraph (1) of this subsection, would have been entitled to one or more annuity payments pursuant to the amendments made by this section for periods before October 1, 1979, sh.atll be entitled, to such extent or in such amounts as are provided in advance in appropriation Acts, to a lunp sum payment equal to the total amount of all such annuity payments. EARLY RETIREMENT COMPUTATION S EC. 1242. Section 8339 (d) of title 5, United States Code, is amended by inserting "(1)" after "(d)" and by adding at the end thereof the following new paragraphs: "(2) The annuity of an employee retiring under this subchapter who was employed by the Panama Canal Company or Canal Zone Government on September 30, 1979, is cow-6puted with respect to the period of continuous Panama Canal service from that date, disregarding any break in service of not more than 3 days, by adding"(A) 212 percent of the employee's average pay multiplied by so much of that service as does not exceed 20 years; plus "(B) 2 percent of the employee's average pay multiplied by so much of that service as exceeds 20 years. "(3) (A) In the case of an employee who has service as a law enforcement officer or firefighter to which paragraph (2) of this subsection applies, the annuity of that employee is increased by $8 for each full month of that service which is performed in the Republic of Panama. (B) In the case of an employee retiring under this subchapter who" (i) was employed as a law enforcement officer or firefighter by the Panama Canal Company or Canal Zone Government at any time during the period beginning March 31, 1979, and ending September 30, 1979; and (ii) does not meet the age and service requirements of section 8336(c) of this title; the annuity of that employee is increased by $12 for each full month of that service which occurred before October 1, 1979. (C) An annuity increase under this paragraph does not apply with respect to service performed after completion of 20 years of service (or any combination of service) as a law enforcement officer or firefighter. "(4) For the purpose of this subsection"(A) 'Panama Canal service' means-

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24 (i) service as an employee of the Panama Canal Commissio; or (ii) service at a permanent duty station in the Canal Zone or Republic of Panama as an employee of an Executive agency conducting operations in the Canal Zone or Republic of Panama; and "(B) 'Executive agency' includes the Smithsonian Ins titution.". (b) (1) The amendments made by this section shall take effect on the date of the enactment of this Act, but no amount of annuity under chapter 83 of title 5, United States Code, accruing by reason of those amendments shall be payable for any period before October 1, 1979. (2) Effective October 1, 1979, any individual who, but for paragraph (1) of this subsection, would have been entitled to one or more annuity payments pursuant to the amendments made by this section for periods before October 1, 1979, shall be entitled, to such extent or in such amounts as are provided in advance in appropriation Acts, to a lump sum payment equal to the total amount of all such annuity payments. RETIREMENT UNDER SPECIAL TREATY PROVISIONS SEC. 1243. (a) (1) Subject to subsection (b) of this section, and under such regulations as the President may prescribe, the Secretary of the Treasury shall pay to the Social Security System of the Republic of Panama, out of funds deposited in the Treasury of the United States to the credit of the Civil Service Retirement and Disability Fund under section 8334(a) (2) of title 5, United States Code, such sums of money as may be necessary to aid in the purchase of a retirement equity in such System for each individual who(A) meets the requirements of paragraph (2) of this subsection; (B) is separated from employment in the Panama Canal Company, the Canal Zone Government, or the Commission by reason of the implementation of any provision of the Panama Canal Treaty of 1977 and related agreements; and (C) becomes employed in a position covered by the Social Security System of the Republic of Panama through the transfer of a function or activity to the Republic of Panama from the United States or through a job placement assistance program. (2) This subsection applies with respect to any individual only if the individual(A) has been credited with at least 5 years of civilian service under section 8332 of title 5, United States Code, relating to creditable service for purposes of civil service retirement; (B) is not eligible for an immediate retirement annuity under chapter 83 of title 5, United States Code, relating to civil service retirement, and elects not to receive a deferred annuity under that chapter based on anu portion of that service; and (C) elects to withdraw from the Civil Sei'ice Retirement and Disability Fund the individual's entire lump-sum credit (as defined in section 8331(8) of title 5, United States Code) and to transfer that amount to the Social Security System of the Republic

PAGE 25

25 of Panama pursuant to the special regime referred to in paragraph 3 of Article VIII of the Agreement in Implementation of Article III of the Panama Canal Treaty of 1977. (b) The amount paid to the Social Security System of the Republic of Panama with respect to any individual under subsection (a) of this section shall not exceed the individual's entire lump-sum credit (as so defined). (c) (1) Pursuant to paragraph 2(b) of Annex C to the Agreement in Implementation of Article IV of the Panama Canal Treaty of 1977, the President, or the President's designee, shall purchase from a source .determined by the President to be appropriate, in accordance with sinic/ regulations as the President or the President's designee may prescribe, and to such extent or in such amounts as may be provided in advance in appropriations Acts, a nontransferable deferred annuity for the benefit of each employee of an agency or instrumentality of the Government of the United States in the Republic of Panama(A) who is not a citizen of the United States; (B) who was employed on October 1, 1979, and during any period before that date by an agency or instrumentality of the Government of the United States at any permanent duty station in the Republic of Panama (including, with respect to employment before that date, the area then known as the Canal Zone); (C) who, for any period of service with such agency or instrumentality before October 1, 1979, at any such permanent duty station was not covered, by reason of that service, by the United States Civil Service Retirement System or any other Federal retirement system providing benefits similar to those retirement benefits provided by the Social Security System of the Republic of Panama; and (D) who, on October 1, 1979, is under a Federal retirement system and, on or before that date, has accrued in one or more agencies or instrumentalities of the United States a total of 5 years or more of service which(i) is creditable toward any Federal retirement system as in effect on October 1,1979; (ii) would have been creditable toward any such retirement system if the retirement system were in effect at the time of the service accrued by the employee; or (iii) consists of any combination of service described in clauses (i) and (ii) of this subparagraph. (2) The retirement annuity referred to in paragraph (1) of this subsection with respect to any employee will cover retroactively, from October 1, 1979, all periods of service, described in subparagraph (D) of that paragraph, by that employee at any permanent duty station in the Republic of Panama (including the area known before that date as the Canal Zone) in agencies and instrumentalities of the Government of the United States during which that employee was not covered by the United States Civil Service Retirement System or any other Federal retirement system providing benefits similar to those retirement benefits provided by the Social Security System of the Republic of Panama. H.Rept. 96-473 --4 S.Rept. 96-330 --4

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26 OBLIGATION OF COMMISSION FOR UNFUNDED LIABILITY SEC. 1244. Section 8348 of title 5, United States Code, is amended by adding at the end thereof the following new subsection: (i) (1) Notwithstanding any other provision of law, the Panama Canal Cornmission shall be liable for that portion of any estimated increase in the unfunded liability of the Fund which is attributable to any benefits payable from the Fund to or on behalf of employees and their surci'ors to the extent attributable to the amendments made by sections 1241 and 1242, and the provisions of sections 1231 (b) and 1243( a) (1), of the Panama Canal Act of 1979. (2) The estimated increase in the unfunded liability referred to in paragraph (1) of this subsection shall be determined by the Office of Personnel Management. The Secretary of the Treasury shall pay to the Fund from approp nations for that purpose the amount so determined in annual installments with interest computed at the rate used in the most recent valuation of the Civil Service Retirement System.". CASH RELIEF TO CERTAIN FORMER EMPLOYEES SEc. 1243. (a) The Cornmmission, under the regulations prescribed by the President pursuant to the Act entitled "Ani Act authorizing cash relief for certain employees of the Panama Canal not coming within the provisions of the Canal Zone Retirement Act", approved July 8, 1937, as amended (50 Stat. 478; 68 Stat. 17), may continue the payments of cash relief to those individual former employees of the Canal Zone Government or Panama Canal Company or their predecessor agencies not coming within the scope of the former Canal Zone Retirement Act whose services were terminated prior to October 5, 1958, because of unfitness for further useful service by reason of mental or physical disability resulting from age or disease. Subject to subsection (b) of this section, that cash relief may not exceed $1.50 per month for each year of service of the employees so furnished relief, with a maximum of $45 per month, plus the amount of any cost-of-living increases in such cash relief granted before October 1, 1979, pursuant to section 181 of title 2 of the Canal Zone Code (as in effect on September 30, 1979), nor be paid to any employee who, at the time of termination for disability prior to October 5, 1958, had less than 10 years' service with the Canal Zone Government, the Panama Canal Company, or their predecessor agencies on the Isthmus of Panama. (b) An additional amount of $20 per month shall be paid to each person who receives payment of cash relief under subsection (a) of this section and shall be allowed without regard to the limitations contained therein. (c) Each cash relief payment made pursuant to this section shall be increased on the same effective date and by the same percent, adjusted to the nearest dollar, as civil service retirement annuities are increased under the cost-of-living adjustment provisions of section 8340(b) of title 5, United States Code. Such increase shall apply only to cash relief payments made after October .1, 1979, as increased by annuity increases made after that date under such section 8340( b).

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27 (d) The Cor mission may pay cash relief to the widow of any former employee of the Canal Zone Government or the Panama Canal Coiompany who, until the time of his death, receives or has received cash relief under subsection (a) of this section, under section 181 of title 2 of the Canal Zone Code (as in effect on September 30, 1979), or under the Act of July 8, 1937, referred to in such subsection (a). The term "widor" as used in this subsection includes only the following : (1) a woman legally married to such employee at the time of his termination for disability and at his death; (2) a woman who, although not legally married to such former employee at the time of his termination, had resided continuously with him for at least five years immediately preceding the employee's termination under such circumstances as would at common law make the relationship a valid marriage and who continued to reside with him until his death; and (3) a woman who has not remarried or assumed a common-law relationship with any other person. Cash relief granted to such a widow shall not at any time exceed 50 percent of the rate at which cash relief, inclusive of any additional payment under subsection (b) of this section, would be payable to the former employee were he then alive. (e) Subchapter III of chapter 83 of title 5, United States Code, applies with respect to those individuals who were in the service of the Canal Zone Government or the Panama Canal Company on October 5, 1958, and who, except for the operation of section 13(a) (1) of the Act entitled "An Act to implement item I of a Memorandum of Understanding attached to the treaty of January 25, 955, entered into by the Government of the United States of America and the Government of the Republic of Panama with respect to wage and employment practices of the Government of the United States of America in the Canal Zone", approved July 25,1958 (72 Stat. 405), would have been within the classes of individuals subject to the Act of July 8, 1937, referred to in subsection (a) of this section. APPLIANCES FOR EMPLOYEES INJURED BEFORE SEPTEMBER 7, 1916 SEc. 1246 Artificial limbs or other appliances may be purchased by the Commission, out of any funds appropriated to the Commission, for persons who were injured in the service of the Isthmian Canal Commission or of the Panama Canal before September 7,1916. Subchapter V--Leave LEAVE FOR JURY OR WITNESS SERVICE SEC. 1251. Section 6322(a) of title 5, United States Code, is amended(1) by striking out "the Canal Zone, or"; and (2) by striking out "Islands." and inserting in lieu thereof "Islands, or the Republic of Panama.".

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28 Subchapter V-Application to Related Personnel LAW ENFORCEMENT; CANAL ZONE CIVILIAN PERSONNEL POLICY COORDINATING BOARD; RELATED EMPLOYEES SEC. 1261. (a) For the purposes of sections 1206, 1231, 1232, 1241, and 1242 of this Act, including any amendment made by those sections, the United States Attorney for the District of the Canal Zone and the Assistant United States Attorneys and their clerical assistants, and the United States Marshal for the District of the Canal Zone and his deputies and clerical assistants shall be considered employees of the Commission. (b) For the purposes of this Act, including any amendment made bg this Act, the Executive Director of the Canal Zone Civilian Personnel Policy Coordinating Board, the Manager, Central Examining Office, and their staffs shall be considered to have been employees of the Panama Canal Company with respect to service in those positions before October 1, 1979, and as employees of the Commission with respect to service in those positions on or after that date. (c) The provisions of this section shall take efect on the date of the enactment of this Act. Subchapter VII-Labor-Management Relations LABOR-MANAGEMENT RELATIONS SEC. 1271. (a) Nothing in this Act shall be construed to affect the applicability of chapter 71 of title 5, United States Code, relating to labor-management and employee relations, with respect to the Commission or the operations of any other Executive agency conducted in that area of the Republic of Panama which, on September 30, 1979, was the Canal Zone, except that in applying those provisions(1) the definition of "employee" shall be applied without regard to clause (i) of section 7103(a) (2) of such title 5 which relates to nationality and citizenship; and (2) a unit shall be considered to be appropriate notwithstanding the fact that it includes any supervisor if that supervisor's position (or type of position) was, before October 1, 1979, represented before the Panama Canal Company by a labor organization that included employees who were not supervisors. (b) Labor-management and employee relations of the Commission, other Executive agencies, and the Smithsonian Institution, their employees, and organizations of those employees, in connection with operations conducted in that area of the Republic of Panama which, on September 30, 1979, was the Canal Zone, shall be governed and regulated solely by the applicable laws, rules, and regulations of the United States. CHAPTER 3-FUNDS AND ACCOUNTS Subchapter I-Funds CANAL ZONE GOVERNMENT FUNDS SEC. 1301. On the effective date of this Act, any unexpended balances of the appropriation accounts appearing on the books of the United

PAGE 29

29 States Government as "Operating Expenses, Canal Zone Government (38-0116-0-1-06)" and "Capital Outlay, Canal Zone Government (384118-0-1-806)" shall be covered into the general fund of the Treasury, and any appropriations to 'which expenditures under such accounts have been chargeable before such effective date are repealed. The Commi'i'ussion may, to such extent or in such amounts as arc provided in appropriations Acts to the Commission for such purpose, pay claims or make payments chargeable to such accorimsts, upon proper audit of such claims or payments. There are authorized to be appropriated to the Commission such funds as may be necessary to pay claims and make payments pursuant to this section. PANAMA CANAL COMPANY FUNDS; COMMISSION FUNDS SEC. 1302. (a) On the effective date of this Act, the account appearing on the books of the United States Government as the "Panama Canal Company Fund (38-4060-0-3-403)" shall be terminated, and any unexpended balances under such account as of that date shall be covered inho the Treasury in an account to be known as the "Panama Canal Commission Fund". (b) On or after the effective date of this Act, tolls for the use of the Panama Canal and all other receipts of the Commission that, before such effective date, would have been credited to the account appearing on the books of the Government as the "Panama Canal Company Fund (38-4060-0-3-403)" shall be deposited in the Treasury in the Panama Canal Commission Fund. (c) (1) No funds may be appropriated to or for the use of the Commission, nor may any funds be obligated or expended by the Commission for any fiscal year, unless such appropriation, obligation, or expenditure has been specifically authorized by law. (2) No funds may be appropriated to or for the use of the Commission for any fiscal year in excess of (A) the amount of revenues deposited in the Panama Canal Commission Fund during such fscal year,.as such amount is estimated by the Secretary of Defense and certified by the Comptroller General of the United States at the time the budget request for the Commission for such fiscal year is submitted to the Congress, plus (B) the amount of revenues deposited in such Fund prior to such fiscal year and remaining unexpended at the beginning of such fiscal year. Not later than thirty days after the end of such fscal year, the Secretary of the Treasury shall report to the Congress the actual amount of revenues deposited in the Panama Canal Commission Fund during such fiscal year. (d) The Commission may, to such extent or in such amounts as are provided in advance in appropriation Acts, enter into contracts in order to carry out its functions. (e) (1) It is the sense of the Congress that the additional costs resulting from implementation of the Panama Canal Treaty of 1977 and related agreements should be kept to the absolute minimum level. To this end, the Congress declares that the direct appropriated costs of implementation to be borne by the taxpayers over the life of such Treaty should be kept to a level no greater than the March 1979 estimate of those costs ($870,700,000) presented to the Congress by the executive branch during consideration of this Act by the Congress,

PAGE 30

30 less personnel retirement costs of $205,000,000, which were subtracted and charged to tolls, therefore resulting in the net taxpayer cost of approximately $665,700,000, plus appropriate ad justment for inflation. (2) It is further the sense of the Congress that the actual costs of implementation be consis tent with the obligations of the United States to operate the Panama Canal safely and efficiently and keep it secure. EMERGENCY FUND SEe. 1303. (a) On the effective date of this Act, the Secretary of the Treasury shall establish and thereafter shall maintain in the Treasury a fund to be known as the "Panama Canal Emergency Fund". There are authorized to be appropriated for deposit in such Fund (1) for the fiscal year beginning on October 1, 1979, $40,000,000, and (2) for any fiscal year beginning on or after October 1, 1980, such additional sums as may be specifically authorized by law for such fiscal year. (b) The Commission may make withdrawals from the Panama Canal Emergency Fund by check in order to defray emergency expenses and to insure the continuous, efficient, and safe operation of the Panama Canal, if funds appropriated for the operation and maintenance of the Canal are insufficient for such purposes. Any withdrawal from such Fund to cover increased costs attributable to unprogrammed increases in traffic may not be made in amounts greater than the revenues from such increased traffic. Such Fund shall not be available for payments to Panama under Article XIII of the Panama Canal Treaty of 1977. Any withdrawal from such Fund or expenditure made under this subsection shall be reported forthwith by the Commission to the Congress and to the Office of Management and Budget. Subchapter II-Accounting Policies and Audits ACCOUNTING POLICIES SEC. 1311. (a) The Commission shall establish and maintain its accounts pursuant to the Accounting and Auditing Act of 1950 (31 U.S.C. 65 et seq.) and the provisions of this chapter. Such accounts shall specify all revenues received by the Commission, including tolls for the use of the Panama Canal, expenditures for capital replacement, expansion, and improvement, and all costs of maintenance and operation of the Panama Canal and of its complementary works, installations, and equipment, including depreciation, payments to the Republic of Panama under the Panama Canal Treaty of 1977, and interest on the investment of the United States calculated in accordance with section 1603 of this Act. (b) The Commission may issue regulations establishing the basis of accounting for the assets which are made available for the use of the Commission. Such regulations may provide for depreciation of the net replacement value of the assets which will ultimately require replacement to maintain the service capacity of the Panama Canal. Such regulations may also provide that depreciation of such assets be recorded ratably over their service lives,

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31 REPORTS SEc. 1312. The Commission shall, not later than January 31 of each year, submit to the President and the Congress a financial statement and a complete report with respect to the maintenance and operation of the Panama Canal during the preceding Pcal year. AUDIT BY THE COMPTROLLER GENERAL OF THE UNITED STATES SEc. 1313. (a) Financial transactions of the Commission shall be audited by the Comptroller General of the United States (hereinafter in this Act referred to as the "Comptroller General") pursuant to the Accounting and Auditing Act of 1950 (31 U.S.C. 65 et seq.). In conducting any audit pursuant to such Act, the appropriate representatives of the Comptroller General shall have access to all books, accounts, financial records, reports, files, and other papers, items, or property in use by the Commission and necessary to facilitate such audit, and such representatives shall be afforded full facilities for verifying transactions with the balances or securities held by depositories, fiscal agents, and custodians. An audit pursuant to' such Act shall first be conducted with respect to the fiscal year in which this Act becomes effective. (b) The Comptroller General shall, not later than six months after the end of each Pscal year, submit to the Congress a report of the audit conducted pursuant to subsection (a) of this sectionwith respect to such fiscal year. Such report shall set forth the scope of the audit and shall include(1) a statement of assets and liabilities, capital, and surplus or defieit, based on the accounts of the Cowmmission established pursuant to this chapter, (2) a statement of income and expenses, (3) a statement of sources and application of funds, (4) a statement listing all direct and indirect costs incurred by the United States in implementing the Panama Canal Treaty of 1977, including the cost of property transferred to the Republic of Panama during each fiscal year, and (5) such comments and information as the Comptroller General considers necessary to keep the Congress informed of the operations and financial transactions of the Commission, together with such recommendations with respect to such operations and transactions as the Comptroller General considers advisable. The report shall identify specifically any program, expenditure, or other financial transaction or undertaking observed in the course of the audit which, in the opinion of the Comptroller General, has been carried out or made and has not been authorized by law. The Comptroller General shall submit a copy of each such report to the President, the Secretary of the Treasury, and the Commission. (c) In conducting the audits and preparing the reports provided for in this section and in carrying out his other responsibilities pursuant to law, the Comptroller General shall, with respect to fiscal year 1980, take into account the problems inherent in converting the existing

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32 accounting system of the Panama Canal Company to, conform to the requirements established in section 1311 of this Act. Accordingly, the Comptroller General shall take no adverse action with respect to the Commission, nor shall any violation of section 3679 of the Revised Statutes (31 U.S.C. 665) be considered to have taken place, so long as the Commission is in substantial compliance with the requirements of this Act. The Comptroller General shall make such recommendations to the Commission and to the Congress as he may consider appropriate to insure that full compliance with the financial controls provided for in the Accounting and Auditing Act of 1950 (31 U.S.C. 65 et seq.) ?s achieved promptly. Subchapter III-Interagency Accounts INTERAGENCY SERVICES; REIMBURSEMENTS S EC. 1321. (a) The Commission shall reimburse the Employees' Compensation Fund, Bureau of Employee's Compensation, Department of Labor, for the benefit payments to the Commission's employees, and shall also reimburse other Government departments and agencies for payments of a similar nature made on its behalf. (b) The Department of Defense shall reimburse the Commission for amounts expended by the Commission in maintaining defense facilities in standby condition for the Department of Defense. (c) Notwithstanding any other provision of law, funds appropriated (for any fiscal year beginning after September 30, 1979) to or for the use of the Department of Defense, or to any other department or agency of the United States as may be designated by the President to carry out the purposes of this subsection, shall be available for(1) conducting the educational and health care activities, including kindergartens and college, carried out by the Canal Zone Government and the Panama Canal Company before the effective date of this Act, and (2) providing the services related thereto to' the categories of persons to which such services were provided before such effec. tive date. Notwithstanding any other provision of law, the Department of Defense, or any department or agency designated by the President to provide health care services to those categories of persons referred to in this subsection, shall provide such services to such categories of persons on a basis no less favorable than that applied to its own employees and their dependents. (d) Amounts expended for furnishing services referred to in subsection (c) of this section to persons eligible to receive them, less amounts pay-able by such persons, shall be fully reimbursable to the department or agency furnishing the services, except to the extent that such expenditures are the responsibility of that department or agency. The appropriations or funds of the Commission shall be available for such reimbursements on behalf of(1) employees of the Commission, and (2) other persons authorized to receive such services who are eligible to receive them pursuant to the Panama Canal Treaty of 1977 and related agreements.

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33 The appropriations or funds of any other department or agency of the United States conducting operations in the Republic of Panama, including the Smithsonian Institution, shall be available for reimbursements on behalf of employees of such department or agency and their dependents. (e) The appropriations or funds of the Commission, or of any other department or agency of the United States conducting operations in the Republic of Panama, shall be available, in accordance with subsection (d) of this section, to defray the cost of(1) health care services to elderly or disabled persons who were eligible to receive such services before the effective date of this Act, less amounts payable by such persons, and (2) educational services provided by schools in the Republic of Panama, which are not operated by the United States, to persons who were receiving such services at the expense of the Canal Zone Government before the effective date of this Act. (f) For purposes of the reimbursement of the United States by the Republic of Panama for the salaries and other employment costs of employees of the Commission who are assigned to assist the Republic of Panama in the operation of activities which are transferred to that Government as a result of any provision of the Panama Canal Treaty of 1977 and related agreements, which reimbursement is provided for in paragraph 8 of Article 10 of that Treaty, the Commission shall be deemed to be the United States of America. (g) Notwithstanding any other provision of law, the President, through the appropriate department or agency of the United States, shall, until January 1, 2000, operate the educational institution known as the "Canal Zone College". Such institution shall continue to proVide, insofar as practicable, the level of services which it offered immediately before the effective date of this Act. Subchapter IV-Postal Matters POSTAL SERVICE Sec. 1331. (a) The postal service established and governed by chapter 73 of title 2 of the Canal Zone Code shall be discontinued on October 1, 1979. (b) The provisions of chapter 73 of such title 2 relating to postalsavings deposits, postal-savings certificates, postal money orders, and the accounting for funds shall continue to apply for the purpose of meeting the obligations of the United States concerning outstanding postal savings and money orders and disposition of funds. (c) The Commission shall take possession of and administer the funds of the postal service referred to in subsection (a) of this section and shall assume its obligations. The Commission and the United States Postal Service may enter into agreements for the transfer of funds or property and the assumption of administrative rights or responsibilities with respect to the outstanding obligations of the postal service referred to in subsection (a) of this section. Any transfer or assumption (including any agreement for such transfer or assumption) pursuant to this subsection shall be effective only to such extent or in such amounts as are provided in advance in appropriation Acts.

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34 (d) Mail addressed to the Canal Zone from or through the continental United States may be routed by the United States Postal Service to the military post offices of the United States Forces in the Republic of Panama. Such military post offices shall provide the required directory services and shall accept such mail to the extent permitted under the Panama Canal Treaty of 1977 and related agreements. The Commission shall furnish personnel, records, and other services to such military post offices to assure wherever appropriate the distribution, rerouting, or return of such mail. (e) (1) The second sentence of section 403(a) of title 39, United States Code, is amended by striking out "Except as provided in the Canal Zone Code, the" and inserting in lieu thereof "The". (2) Section 3401 (b) of such title is amended(A) by inserting "or" before "the Virgin Islands"; and (B) by striking out "or the Canal Zone,". (3) (A) Section 34Q2 of such title is repealed. (B) The table of sections for chapter 34 of title 39, United States Code, is amended by repealing the item relating to section 3402. (4) Section 3682(b) (5) of such title is amended by striking out "the Canal Zone and". SUBCHAPTER V-ACCOUNTS WITH THE REPUBLIC OF PANAMA PAYMENTS TO THE REPUBLIC OF PANAMA SEC. 1341. (a) The Commission shall pay to the Republic of Panama those payments required under paragraph 5 of Article III and paragraph 4 of Article XIII of the Panama Canal Treaty of 1977. Payments made under paragraph 5 of Article III of such Treaty shall be audited annually by the Comptroller General and any overpayment, as determined in accordance with Understanding (1) incorporated in the Resolution of Ratification of the Panama Canal Treaty (adopted by the United States Senate on April 18,1978), for the services described in that paragraph which are provided shall be refunded by the Re public of Panama or set off against amounts payable by the United States to the Republic of Panama under paragraph 5 of Article III of the Panama Canal Treaty of 1977. (b) In determining whether operating revenues exceed expenditures for the purpose of payments to the Republic of Panama under paragraph 4(c) of Article XIII of the Panama Canal Treaty of 1977, such operating revenues in a fiscal period shall be reduced by (1) all costs of such period as shown by the accounts established pursuant to section 1311 of this Act, and (2) the cumulative sum from prior years (beginning with the year in which the Panama Canal Treaty of 1977 enters into force) of any excess of costs of the Panama Canal Commission over operating revenues. (c) The President shall not accede ta any interpretation of paragraph 1 of Article IX of the Panama Canal Treaty of 1,977 which would permit the Republic of Panama to tax retroactively organizations and businesses operating, and citizens of the United States living, in the Canal Zone b-efore the effective date of this Act. (d) Any accumulated unpaid balance under paragraph 4(c) of Article XIII of the Panama Canal Treaty of 1977 at the termination

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35 of such Treaty shall be payable only to the extent of any operating surplus in the last year of the Treaty's duration, and nothing in such paragraph may be construed as obligating the United States to pay after the date of the termination of the Treaty any such unpaid balance which has accrued before such date. (e) As provided in section 1602(b) of this Act, tolls shall not be prescribed at rates calculated to cover payments to the Republic of Panama pursuant to paragraph 4(c) of Article XIII of the Panama Canal Treaty of 1977. Moreover, no payments may be made to the Republic of Panama under paragraph 4(c) of Article XIII of the Panama Canal Treaty of 1977 unless unexpended funds are used to pay all costs of operation and maintenance of the Canal, including but not limited to (1) operating expenses determined in accordance with generally accepted accounting principles, (2) payments to the Republic of Panama under paragraphs 4(a) and 4(b) of such Article XIII and under paragraph (5) of Article III of such Treaty, (3) amounts in excess of depreciation and amo rtization which are programed for plant replacement, expansion, and improvements, (4) payments to the Treasury of the United States under section 1603 of this Act, (5) reimbursement to the Treasury of the United States for costs incurred by other departments and agencies of the United States in providing educational, health, and other services to the Commission, its employees and their dependents, and other categories of persons in accordance with section 1321 of this Act, and (6) any costs of treaty implementation associated with the maintenance and operation of the Panama Canal. (f) The prohibitions contained in this section and in sections 1302 (c) and 1503 of this Act shall apply notwithstanding any other provision of law authorizing transfers of funds between accounts, reprograming of funds, use of funds for contingency purposes, or waivers of prohibitions. TRANSACTIONS WITH THE REPUBLIC OF PANAMA SEC. 1342. The Commission may, on a reimbursable basis, provide to the Republic of Panama materials, supplies, equipment, work, or services, including water and electric power, requested by the Republic of Panama, at such rates as may be agreed upon by the Commission and the Republic of Panama. Payment for such materials, supplies, equipment, work, or services may be made by direct payment by the Republic of Panama to the Commission or by offset against amounts due the Republic of Panama by the United States. DISASTER RELIEF SEC. 1343. If an emergency arises because of disaster or calamity by flood, hurricane, earthquake, fire, pestilence, or like cause, not foreseen or otherwise provided for, and occurring in the Republic of Panama in such circumstances as to constitute an actual or potential hazard to health, safety, security, or property in the areas and installations mad available to the United States pursuant to the Panama Canal Treaty o] 1977 and related agreements, the Commission may expend availabM funds appropriated to the Commission for such purpose, and utiliz( or furnish materials, supplies, equipment, and services for relief, assistance, and protection.

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36 CONGRESSIONAL RESTRAINTS ON PROPERTY TRANSFERS AND TAX EXPENDITURES SEc. 1344. (a) The Congress enacts thhs section in the exercise of its authority under Article IV, section 3, clause 2 of the Constitution of the United States to dispose of and make necessary i-des and regulations with respect to property of the United States. (b) Priorr to the transfer of property of the United States located in the Republic of Panama to the Republic of Panama pursuant to section 1504 of this Act the President shall formally advise the Government of Panama that(1) in fulfilling its obligations under the Panama Canal Treaty of 1977, the United States shall make no payments to the Republic of Panama derived from tax revenues of the United States; (2) the United States retains full discretion and authority to determine whether and the extent to which tax revenues of the United States may be expended in exercising United States rights ,and carrying out United States responsibilities under the Panama Canal Treaty of 1977 and related agreements ; (3) no tax revenues of the United States shall be made available for obligations and expenditure after the effective date of this Act for purposes of implementing the Panama Canal Treaty of 1977 and related agreements, unless hereafter specifically approved by the Congress through the authorization and appropriation process; (4) the total amount expended by the Commission from funds appropriated to or for the use of the Commission shall not exceed the total amount deposited in the Panama Canal Commission Fund; and (5) the foregoing paragraphs of this subsection do not apply to expenditures made by the United States in fulfilling United States obligations to transfer the remains of our honored dead from Mount Hope Cemetery in the former Canal Zone to an appropiriate and dignified resting place in accordance with Reservation 3 to the Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal. CHAPTER 4-CLAIMS FOR INJURIES TO PERSOnS OR PROPERTY Subchapter I-General Provisions SETTLEMENT OF CLAIMS GENERALLY SLc. 1401. (a) Subject to the provisions of this chapter. the Commission may adjust and pay claims for injury to, or loss of, property or for personal injury or death, arising from the operation of the Panama Canal or related facilities and appurtenances. (b) No claim for an amount exceeding $50,000 shall be adjusted and paid by the Commission under the provisions of this subchapter. (c) An award made to a claimant under this section shall be payable out of any moneys appropriated for or made available to the Commission. The acceptance by the claimant of the award shall be final and conclusive on the claimant, and shall constitute a complete release by

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37 the claimant of his claim against the United States and against any employee of the United States acting in the course of his employment who is involved in the matter giving rise to the claim. (d) Except as provided in section 1416 of this Act, no action for damages on claims cognizable under this chapter shall lie against the United States or the Commission, and no such action shall lie against any officer or employee of the United States. Neither this section nor section 1416 of this Act shall preclude actions against officers or employees of the United States for injuries resulting from their acts outside the scope of their employment or not in the line of their duties, or from their acts committed with the intent to injure the person or property of another. (e) The provisions of section 1346( b) of title 28, United States Code, and the provisions of chapter 171 of such title shall not apply to claims cognizable under this chapter. Subchapter II-Vessel Damage INJURIES IN LOCKS OF CANAL SEC. 1411. The Comnuission shall promptly adjust and pay damages f6,r injuries to vessels, or to the cargo, crew, or passengers of vessels, which may arise by reason of their passage through the locks of the Panama Canal under the control of officers or employees of the United States. Damages may not be paid where the injury was proximately caused by the negligence or fault of the vessel, master, crew, or passengers. If the negligence or fault of the vessel, master, creaw, or passengers proximately contributed to the injury, the award of damages shall be diminished in proportion to the negligence or fault attributable to the vessel, master, crew, or passengers. Damages may not be allowed and paid for injuries to any protrusion beyond any portion of the hull of a vessel, whether it is permanent or temporary in character. A vessel is considered to be passing through the locks of the Canal, under the control of offcers or employees of the United States, from the time the first towing line is made fast on board before entrance into the locks and until the towing lines are cast off upon, or immediately prior to, departure from the lock chamber. INJURIES OUTSIDE LOCKS SEC. 1412. The Commission shall promptly adjust and pay damages for injuries to vessels, or to the cargo, crew, or passengers of vessels which may arise by reason of their presence in the Panama Canal, or waters adjacent thereto, other than the locks, when the injury was proximately caused by negligence or fault on the part of an offcer or employee of the United States acting within the scope of his employment and in the line of his duties in connection with the operation of the Canal, and when the amount of the claim does not exceed $120,000. If the negligence or fault of the vessel, master, crew, or passengers proximately contributed to the injury, the award of damages shall be diminished in proportion to the negligence or fault attributable to the vessel, master, crew, or passengers. In the case of a vessel which is required by or pursuant to regulations prescribed pursuant to section 1801 of this Act to have a Panama Canal pilot on duty aboard, damages

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38 may not be adjusted and paid for injuries to the vessel, or its cargo, orew, or passengers, incurred while the vessel was underway and in motion, unless at the time the injuries were incurred the navigation or movement of the vessel was under the control of a Panama Canal pilot. MEASURE OF DAMAGES GENERALLY SEC. 1413. In determining the amount of the award of damages for injuries to a vessel for which the Commission is determined to be liable, there may be included(1) the actual or estimated cost of repairs; (2) charter hire actually lost by the owners, or charter hire actually paid, depending upon the terms of the charter party, for the time the vessel is undergoing repairs; (3) maintenance of the vessel and wages of the crew, if they are found to be actual additional expenses or losses incurred outside of the charter hire; and (4) other expenses which are defnitely and accurately shown to have been incurred necessarily and by reason of the accident or injuries. Agent's fees, or commissions, or other incidental expenses of similar character, or any items which are indefinite, indeterminable, speculative, or conjectural may not be allowed. The Commission sall be furnished such vouchers, receipts, or other evidence as may be necessary in support of any item of a claim. If a vessel is not operated under charter but by the owner directly, evidence shall be secured if available as to the sum for which vessels of the same size and class can be chartered in the market. If the charter value cannot be determined, the value of the vessel to its owners in the business in which it was ( ngaged at the time of the injuries shall be used as a basis for estimating the damages for the vessel's detention; and the books of the owners showing the vessel's earnings about the time of the accident or injuries shall be considered as evidence of probable earnings during the time of detention. If the books are unavailable, such other evidence shall be furnished as may be necessary. DELAYS FOR WHICH NO RESPONSIBILITY IS ASSUMED SEC. 14141. The Commission is not responsible, and may not consider any claim, for demurrage or delays caused by(1) landslides or other natural causes; (2) necessary construction or maintenance work on Canal locks, terminals, or equipment; (3) obstruction arising from accidents; (4) time necessary for admeasurement; (5) congestion of traffic; (6) time necessary for investigation of marine accidents; or (7) except as specially set forth in this subchapter, any other cause. SETTLEMENT OF CLAIMS SEC. 1415. (a) Subject to subsection (b) of this section, the Commission, by mutual agreement, compromise, or otherwise, may adjust and determine the amounts of the respective awards of damages pur-

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39 suant to this subchapter. Such amounts shall be payable promptly out of any moneys appropriated or allotted for the maintenance and operation of the Panama Canal. Acceptance by a claimant of the amount awarded to him shall be deemed to be in full settlement of such claim against the Government of the United States. (b) The Commission shall not adjust and pay any claim for damages for injuries arising by reason of the presence of the vessel in the Panama Canal or adjacent waters outside the locks where the amount of the claim exceeds $120,000 but shall submit the claim to the Congress in a special report containing the material facts and the recommendation of the Commission thereon. ACTIONS ON CLAIMS SEC. 1416. A claimant for damages pursuant to section 1411 of this Act who considers himself aggrieved by the findings, determination, or award of the Commission in reference to his claim may bring an action on the claim against the Commission in the United States District Court for the Eastern District of Louisiana. Subject to the provisions of this chapter and of applicable regulations issued pursuant to section 1801 of this Act relative to navigation of the Panama Canal and adjacent waters, such actions shall proceed and be heard by the court without a jury according to the principles of law and rules of practice obtaining generally in like cases between a private party and a department or agency of the United States. Any judgment obtained against the Commission in an action under this subchapter shall be paid out of any moneys appropriated or allotted for the maintenance and operation of the Panama Canal. An action for damages cognizable under this section shall not otherwise lie against the United States or the Commission, nor in any other court, than as provided in this section; nor may it lie against any officer or employee of the United States or of the Commission. INVESTIGATION OF ACCIDENT OR INJURY GIVEN RISE TO CLAIM SEC. 1417. Notwithstanding any other provision of law, a claim may not be considered under this subchapter, or an action for damages lie thereon, unless, prior to the departure from the Panama Canal of the vessel involved(1) an investigation by the competent authorities of the accident or injury giving rise to the claim has been completed; and (2) the basis for the claim has been laid before the Commission. BOARD OF LOCAL INSPECTORS SEC. 1418. (a) The President shall provide for the establishment of a Board of Local Inspectors of the Panama Canal Commission which shall perform, in accordance with regulations prescribed by the President(1) the investigations required by section 1417 of this Act; and (2) such other duties with respect to marine matters as may be assigned by the President. (b) In conducting any investigation pursuant to subsection (a) of this section, the Board of Local Inspectors established pursuant to

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40 such subsection may summon witnesses, administer oaths, and require the production of books and papers necessary for such investigation. CHAPTER 5-PUBLIC PROPERTY ASSETS AND LIABILITIES OF PANAMA CANAL COMPANY SEC. 1501. All property and other assets of the Panama Canal Company shall revert to the United States on the effective date of this Act, and, except as otherwise provided by law, the United States shall assume the liabilities, including contractual obligations, of the Panama Canal Company then outstanding. The Commission may use such property, facilities, and records of the Panama Canal Company as are necessary to carry out its functions. TRANSFERS AND CROSS-SERVICING BETWEEN AGENCIES SEC. 1502. (a) In the interest of economy and maximum efficiency in the utilization of property and facilities of the United States, there are authorized to be transferred between departments and agencies of the United States, with or without reimbursement, such facilities, buildings, structures, improvements, stock, and equipment located in the Republic of Panama, and used for their activities therein, as may be mutually agreed upon by the departments and agencies involved and approved by the President of the United States or his designee. (b) The Commission may enter into cross-servicing agreements with any other department or agency of the United States for the use of facilities, furnishing of services, or performance of functions. (c) The Commission, any department or agency of the United States, or any United States court in the Republic of Panama is authorized to transfer to the Government of the Republic of Panama any record of such Commission. department, agency, or court, or copy thereof, including any record acquired from the Canal Zone Government or Panama Canal Company (including any vital statistics record), to any other department, agency, or court of the United States if such action is determined by the Commission, the head of the department or agency concerned, or the judge of the court concerned to be in the interest of the United States. Transfer of any record or copy thereof under this section to the Government of the Republic of Panama shall be made under the coordination of and with the approval of the United States Ambassador to the Republic of Panama. (d) The provisions of this section shall apply to the Smithsonian Institution. DISPOSITION OF PROPERTY OF THE UNITED STATES SEC. 1503. No property of the United States located in the Republic of Panama may be disposed of except pursuant to law enacted by the Congress. TRANSFER OF PROPERTY TO PANAMA SEC. 1504. (a) (1) On the date on which the Panama Canal Treaty of 1977 enters into force, the Secretary of State may convey to the Republic of Panama the Panama Railroad and such property located in the area which, immediately before such date, comprised the Canal Zone and which is not within the land and water areas the use of which is

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41 made available to the United States pursuant to the Panama Canal Treaty of 1977 and related agreements. (2) Property transferred pursuant to paragraph (1) of this subsection may not include buildings and other facilities, except housing, located outside such areas, the use of which is retained by the United States pursuant to the Panama Canal Treaty of 1977 and related agreements. (b) With respect to the transfer of all other property (not described in subsection (a) (1) of this section) to be transferred in accordance with the terms of the Panama Canal Treaty of 1977 and related agreements, the Secretary of State may convey such property from time to time in accordance with the terms of such Treaty and related agreements. At least 180 days before the transfer of any such property, the President must submit a written report to the Congress(1) precisely identifying and describing the particular property to be transferred; (2) certifying the state of compliance by the Republic of Panama with such Treaty and related agreements; and (3) setting forth the reasons for the conveyance being made at the particular time. (c) The Panama Canal, and such other property referred to in paragraph 2(d) of Article XIII of the Panama Canal Treaty of 1977 that has not been previously transferred in accordance with paragraphs 2(a), 2(b), and 2(c) of such Article, shall not be transferred to the Republic of Panama prior to December 11, 1999. CHAPTER 6-TOLLS FOR USE OF THE PANAMA CANAL PRESCRIPTION OF MEASUREMENT RULES AND RATES OF TOLLS SEC. 1601. (a) The President is authorized, subject to the provisions of this chapter, to prescribe and from time to time change(1) the rules for the measurement of vessels for the Panama Canal; and (2) the tolls that shall be levied for the use of the Canal. (b) Such rules of measurement and tolls prevailing on the effective date of this Act shall continue in effect until changed as provided in this chapter. BASES OF TOLLS SEC. 1602. (a) Toils on merchant vessels, army and navy transports, colliers, tankers, hospital ships, supply ships, and yachts shall be based on net vessel tons of one hundred cubic feet each of actual earning capacity determined in accordance with the rules for the measurement of vessels for the Panama Canal, and tolls on other floating craft shall be based on displacement tonnage. The tolls on vessels in ballast without passengers or cargo may be less than the tolls for vessels with passengers or cargo. (b) Tolls shall be prescribed at rates calculated to produce revenues to cover as nearly as practicable all costs of maintaining and operating the Panama Canal, together with the facilities and appurtenances related thereto, including unrecovered costs incurred on or after the effective date of this Act, interest, depreciation, payments to the Republic of Panama pursuant to paragraph 5 of Article III and paragraph 4 (a) and (b) of Article XIIJ of the Panama Canal

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42 Treaty of 1977, and capital for plant replacement, expansion, and improvements. Tolls shall not be prescribed at rates calculated to produce revenues sufficient to cover payments to the Republic of Panama pursuant to paragraph 4(c) of Article XIII of the Panama Canal Treaty of 1977. (c) Vessels operated by the United States, including vessels of war and auxiliary vessels, and ocean-going training ships owned by the United States and operated by State nautical schools, shall pay tolls. (d) The levy of tolls is subject to the provisions .of section 1 of Article III of the treaty between the United States of America and Great Britain signed November 18, 1901, of Article I of the treaty between the United States of America and the Republic of Colombia signed April 6, 1914, and of Articles II, III, and VI of the Treaty Concerning Permanent Neutrality and Operation of the Panama Canal, between the United States of America and the Republic of Panama, signed September 7,1977. CALCULATION OF INTEREST SEC. 1603. (a) For purposes of sections 1311 and 1602 of this Act, interest shall be computed, at a rate determined by the Secretary of the Treasury, on the investment of the United States in the Panama Canal as shown in the accounts of the Panama Canal Company at the close of business on the day preceding the effective date of this Act, and as adjusted in accordance with subsections (b) and (c) of this section. 'Capital investment for interest purposes shall not include any interest during construction. (b) The investment of the United States described in subsection (a) of this section(1) shall be increased by(A), the amount of expenditures from appropriations to the Commission made on or after the effective date of this Act, and (B) the value of property transferred to the Commission by any other department or agency of the United States, as determined in accordance with subsection (c) of this section; and (2) shall be decreased by(A) the amount of the funds covered into the Treasury pursuant to section 1302 of this Act, (B) the value of property transferred to the Republic of Panama pursuant to this or any other Act on or after the date on which the Panama Canal Treaty of 1977 enters into force, and (C) the value of property transferred by the Commission to any other department or agency of the United States. (c) The value of property transferred to the Commission by any other department or agency of the United States shall be determined by the Director of the Office of Management and Budget. In computing such value, such Director shall give due consideration to the cost and probable earning power of the transferred property, or the usable value to the Commission if clearly less than cost, and shall male adequate provisions for depreciation, obso-

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43 lescence, and other determinable decreases in value. Insofar as practicable, the value of such transferred property shall exclude any portion of such value properly allocable to national defense. PROCEDURES SEc. 1604. (a) The Commission shall publish in the Federal Register notice of any proposed change in the rules of measurement or rates of tolls referred to in section 1601 (a) of this Act. The Commission shall give interested parties an opportunity to participate in the proceedings through submission of written data, views, or arguments, and participation in a public hearing to be held not less than 30 days after the date of publication of the notice. The notice shall include the substance of the proposed change and a statement of the time, place, and nature of the proceedings. At the time of publication of such notice, the Commission shall make available to the public an analysis showing the basis and justification for the proposed change, which, in the case of a change in rates of tolls, shall indicate the conformity of the existing and proposed rates of tolls with the requirements of section 1602 of this Act, and the Commission's adherence to the requirement for full consideration of the following factors set forth in Understanding (1) incorporated in the Resolution of Ratification of the Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal (adopted by the United States Senate on March 16, 1978) : (1) the costs of operating and maintaining the Panama Canal; (2) the competitive position of the use of the Canal in relation to other means of transportation; (3) the interests of the United States and the Republic of Panama in maintaining their domestic fleets; (4) tzhe impact of such a change in rates of tolls on the various geographical areas of each of the two countries; and (5) the interests of both countries in maximizing their international commerce. (b) After consideration of the relevant matter presented, the Commission may revise the proposed rules of measurement or rates of tolls, as the case may be, except that, in the case of rates of tolls, if such revision proposes rates greater than those originally proposed, a new analysis of the proposed rates shall be made available to the public, and a new notice of the revised proposal shall be published in the Federal Register apprising interested persons of the opportunity to participate further in the proceedings through submission of written data, views, or arguments, and participation in a public hearing to be held not less than 30 days after the date of publication of the new notice. The procedure set forth in this subsection shall be followed for any subsequent revision of the proposed rates of tolls by the Commission which proposes rates higher than those in the preceding proposal. (c) After the proceedings have been conducted pursuant to subsections (a) and (b) of this section, the Commission shall publish in the Federal Register a notice of the changes in the rules of measurement or rates of tolls, as the case may be, to be recommended to the President.

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44 (d) Upon publication of the notice pursuant to subsection (c) of this section, the Commission shall forward a complete record of the proceedings, with the recommendation of the Commission, to the President for his consideration. The President may approve, disapprove, or modify any or all of the changes in the rules of measurement or rates of tolls recommended by the Commission. (e) Rules of measurement or rates of tolls prescribed by the President pursuant to this chapter shall take effect on a date prescribed by the President which is not less than 30 days after the President publishes such rules or rates in the Federal Register. (f) Action to change the rules of measurement for the Panama Canal or the rates of tolls for the use of the Canal pursuant to this chapter shall be subject to judicial review in accordance with chapter 7 of title 5, United States Code. INTERIM TOLL ADJUSTMENT SEC. 1605. (a) After the effective date of this section, the Panama Canal Company or the Commission may, without regard to the procedures set forth in section 1604 of this Act for making changes in tolls by the Commission and the President, change the rates of tolls calculated to cover the cost of maintaining and operating the Panama Canal during the fiscal year beginning on October 1, 1979. Such rates shall be calculated in accordance with the provisions of section 1602( b) of this Act. Any such change in rates of tolls shall be subject to the approval of the President whose action in the matter shall be final. Any change in rates of tolls approved by the President shall become effective on a date prescribed by the President. (b) This section shall take effect on the date of the enactment of this Act. CHAPTER 7-GENERAL REGULATIONS AUTHORITY OF PRESIDENT SEC. 1701. The President may prescribe, and from time to time amend, regulations applicable within the areas and installations made available to the United States for the operation and protection of the Panama Canal pursuant to the Panama Canal Treaty of 1977 and related agreements concerning(1) the use of aircraft; (2) the possession and use of alcoholic beverages; (3) exclusion and removal of persons; and (4) health and sanitation. AUTHORITY OF COMMISSION SEC. 1702. The Commission may prescribe, and from time to time amend, regulations applicable within the areas and installations made available to the United States for the operation and protection of the Panama Canal pursuant to the Panama Canal Treaty of 1977 and related agreements concerning(1) the keeping and impounding of domestic animals; (2) fire prevention; (3) the sale or use of fireworks;

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45 (4) the use of roads and highways; (5) photographing of areas, objects, installations, or structures; (6) swimming in the Panama Canal and adjacent waters; and (7) the protection of wildlife, hunting, and fishing. CHAPTER 8-SHIPPING AND NAVIGATION Subchapter I-Operation of Canal OPERATING REGULATIONS SEC. 1801. The President may prescribe, and from time to time amend, regulations governing(1) the operation of the Panama Canal; (2) the navigation of the harbors and other waters of the Panama Canal and areas adjacent thereto, including the ports of Balboa and Cristobal; (3) the passage and control of vessels through the Panama Canal or any part thereof, including the locks and approaches thereto; (4) pilotage in the Panama Canal or the approaches thereto through the adjacent waters; and (5) the licensing of officers or other operators of vessels navigating the waters of the Panama Canal and areas adjacent thereto, including the ports of Balboa and Cristobal. Subchapter II-Inspection of Vessels VESSELS SUBJECT TO INSPECTION SEC. 1811. With the exception of private vessels 'merely transiting the Panama Canal, and of public vessels of all nations, vessels navigating the waters of the Panama Canal shall be subject to an annual inspection of hulls, boilers, machinery, equipment, and passenger accommodations. FOREIGN VESSELS SEC. 1812. With respect to a foreign vessel of a country which has inspection laws approximating those of the United States, any such vessel having an unexpired certificate of inspection duly issued by the authorities of such country shall not be subject to an inspection other than that necessary to determine whether the vessel, its boilers, and its lifesaving equipment are as stated in the certificate of inspection. A certificate of inspection may not be accepted as evidence of lawful inspection under this section unless similar privileges are granted to vessels of the United States under the laws of the country to which the vessel belongs. REGULATIONS GOVERNING INSPECTION SEC. 1813. The Commission shall prescribe, and from time to time may amend, regulations concerning the inspection of vessels conforming as nearly as practicable to the laws and regulations governing marine inspection by the United States Coast Guard.

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46 TITLE II-TRkATY TRANSITION PERIOD CHAPTER 1-LAWS CONTINUED IN FORCE LAWS, REGULATIONS, AND ADMINISTRATIVE AUTHORITY SEC. 9,101. To the extent not inconsistent with the Panama Canal Treaty of 1977 and related agreements and the provisions of this Act, the Canal Zone Code and other laws, regulations, and administrative authority of the United States applicable in the Canal Zone immediately before the date on which the Panama Canal Treaty of 1977 enters into force shall continue in force for the purpose of the exercise by the United States of law enforcement and judicial jurisdiction during the transition period provided for in Article XI of the Panama Canal Treaty of 1977 (hereinafter in this Act referred to as the "transition period"). CHAPTER 2-COURTS JURISDICTION SEC. 2091. (a) During the transition period, the jurisdiction of the United States District Court for the District of the Canal Zone and the magistrates' courts under title 3 of the Canal Zone Code shall be continued, subject to the limitations set forth in Article XI of the Panama Canal Treaty of 1977. (b) For purposes of the exercise of the jurisdiction provided in Article XI of the Panama Canal Treaty of 1977, the United States District Court and magistrates' courts referred to in subsection (a) of this section shall construe the terms "United States citizen employees", "members of the United States Forces", "civilian component", and "dependents" as such terms are defined in the Panama Canal Treaty of 1977 and related agreements, and shall construe the term "areas and installations made available for the use of the United States" to mean (1) the Panama Canal operating areas and housing areas described in Annex A to the Agreement in Implementation of Article III of the Panama Canal Treaty, (2) the Ports of Balboa and Cristobal described in Annex B to that Agreement, and (3) the defense sites and Military Areas of Coordination described in Annex A to the Agreement in Implementation of Article IV of the Panama Canal Treaty. DIVISION AND TERMS OF DISTRICT COURT SEC. 2202. The United States District Court for the District of the Canal Zone may conduct its affairs at such places within the areas made available for the use of the United States pursuant to the Panama Canal Treaty of 1977 and related agreements, and at such times, as the district judge may designate by rule or order. TERMS OF CERTAIN OFFICES SEC. 2203. (a) Notwithstanding the provisions of sections 5, 41, 45, and 82 of title 3 of the Canal Zone Code, the term of ofRce of a district judge, magistrate, United States attorney, or United States

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47 marshal shall extend for a period of 30 months beginning ow the date on which the Panama Canal Treaty of 1977 enters into force, and any such term shall be subject to such extension of time as may be provided for the disposition of pending cases by agreement between the United States and the Republic of Panama, pursuant to the last sentence of paragraph 7 of Article XI of the Panama Canal Treaty of 1977. (b) The provisions of this section shall take effect on the date of the enactment of this Act. RESIDENCE REQUIREMENTS SEC. 2204. Sections 5(d), 7 (d), 41 (d), and 45 (d) of title 3 of the Canal Zone Code, the second sentence of section 42 of such title, and the second sentence of section 82(c) of such title, which provisions require that certain court officials reside in the Canal Zone, are repealed. SPECIAL DISTRICT JUDGE SEC. 2205. (a) Section 6 of title 3 of the Canal Zone Code is amended to read as follows: 6. Special district judge "The chief judge of the judicial circuit of the United States in which the district court lies may designate and assign a special district judge to act when necessary" (1) during the absence of the district judge; (2) during the disability or disqualification of the district judge because of sickness or otherwise to discharge hi& duties; or (3) when there is a vacancy in the office of district judge.". (b) Each designation and assignment by the chief judge under seclion 6 of title 3 of the Canal Zone Code, as amended by subsection (a) of this section, shall be made in accordance with chapter 13 of title 28, United States Code, which shall be deemed to apply for such purposes. MAGISTRATES' COURTS SEC. 2206. (a) The two magistrates' courts established pursuant to section 81 of title 3 of the Canal Zone Code and existing immediately before the date on which the Panama Canal Treaty of 1977 enters into force shall continue in operation during the transition period unless terminated during such period under subsection (b) of this section. (b) During the transition period, the President may terminate one magistrate's court, together with the positions of magistrate and constable corresponding thereto, if the President determines that the workload is insufficient to warrant continuance of that c&urt. If one of the magistrates' courts is so terminated, the remaining magistrate's court shall exercise the jurisdiction that otherwise would have been exercised by the terminated .court and shall take custody of and administer all records of the terminated court.

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48 CHAPTER 3 -ATTORNEYS OATH OF ATTORNEYS SEC. 2301. (a) Section 543 of title 3 of the Canal Zone Code is amended to read as follows: 543. Oath of attorneys admitted to bar "Before receiving a certificate the applicant shall take and subscribe in court an appropriate oath prescribed by the district judge.". (b) The table of sections for chapter 17 of title 3 of the Canal Zone Code is amended by amending the item relating to section 543 to read as follows: "543. Oath of attorneys admitted to bar.". CHAPTER 4-TRANSITION AUTHORITY TRANSITION AUTHORITY OF PRESIDENT SEC. 2401. Except as expressly provided to the contrary in this or any other Act, or in the Panama Canal Treaty of 1977 and related agreements, any authority necessary for the exercise during the transition period of the rights and responsibilities of the United States specified in Article XI of the Panama Canal Treaty of 1977 shall be vested in the President. PRISONS; PAROLE; PARDONS SEC. 2402. (a) Subsection (c) of section 6503 of title 6 of the Canal Zone Code is amended to read as follows: (c) Pursuant to the provisions of section 5003 of title 18, United States Code, the Governor may contract with the A ttorney General of the United States for the transfer to the custody of the Attorney General of prisoners sentenced by the United States District Court for the District of the Canal Zone to terms of imprisonment in excess of one year.". (b) After entry into fore of the Panama Canal Treaty of 1977(1) all prisoners imprisoned in United States prisons pursuant to contracts entered into pursuant to subsection (c) of section 6503 of title 6 of the Canal Zone Code, as amended by subsection (a) of this section, shall be committed to the custody of the Attorney General as if committed in accordance with part III of title 18, United States Code; (2) all persons convicted of offenses in the United States District Court for the District of the Canal Zone, and sentenced to terms of imprisonment of one year or less, shall be committed to the custody of the Commission; and (3) the Commission shall prescribe, and from time to time may amend, regulations providing for the management of prisoners in the ;ails located in the areas and installations made available for the use of the United States pursuant to the Panama Canal Treaty of 1977 and related agreements, including provisions for treatment, care, assignment for work, discipline, and welfare.

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49 (c) After the entry into force of the Panama Canal Treaty of 1977, all persons convicted of offenses in the United States District Court for the District of the Canal Zone, and sentenced to terms of imprisonment in excess of one year, shall be committed to the custody of the A ttorney General pursuant to parts III and IV of title 18, United States Code. (d) (1) Sections 6501 through 6505 of title 6 of the Canal Zone Code are repealed. (2) The table of sections for chapter 351 of title 6 of the Canal Zone Code is amended by repealing the items relating to sections 6501 through 6505. (e) Subsections (c) and (d) of this section shall take effect 90 days after entry into force of the prisoner transfer agreement referred to in paragraph 11 of Article IX of the Panama Canal Treaty of 1977 but in no event later than 90 days prior to the end of the transition period. (f) (1) Chapter 355 of title 6 of the Canal Zone Code is repealed. (2) The table of chapters for part 3 of title 6 of the Canal Zone Code is amended by repealing the item relating to chapter 355. TITLE III-GENERAL PROVISIONS CHAPTER 1-CEMETERIES DISINTERMENT, TRANSPORTATION, AND REINTERMENT OF REMAINS SE&c. 3101. (a) There are authorized to be appropriated for the fiscal year beginning October 1, 1979, and subsequent fscal years, such sums as may be necessary to carry out the purposes and provisions of reservation (3) to the Resolution of Ratification of the Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal, adopted by the United States Senate on March 16, 1978, such sums to be made available to those agencies that are directed and empowered by the President to carry out such purposes and provisions. (b) With regard to remains that are to be reinterred in the United States, the United States shall not bear the cost of funeral home services, vaults, plots, or crypts unless otherwise provided for by law. CHAPTER 2-IMMiGRATION SPECIAL IMMIGRANTS SEC. 3201. (a) Section 101 (a) (27) of the Immigration and Nationality Act (8 U.S.C. 1101 (a) (27) ), relating to the definition of special immigrants, is amended(1) by striking out "or" at the end of subparagraph (C),; (2) by striking out the period at the end of subparagraph (D) and inserting in lieu thereof a semicolon; and (3) by adding after subparagraph (D) the following new subparagraphs: (E) an immigrant, and his accompanying spouse and children, who is or has been an employee of the Panama Canal Company

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50 or Canal Zone Government before the date on which the Panama Canal Treaty of 1977 (as described in section 3(a) (1) of the Panama Canal Act of 1979) enters into force, who was resident in the Canal Zone on the effective date of the exchange of instruments of ratification of such Treaty, and who has performed faithful service as such an employee for one year or more; (F) an immigrant, and his accompanying spouse and children, who is a Panamanian national and (i) who, before the date on which such Panama Canal Treaty of 1977 enters into force, has been honorably retired from United States Government employment in the Canal Zone with a total of 15 years or more; of faithful service, or (ii) who, on the date on which such Treaty enters' into force, has been employed by the United States Government in the Canal Zone with a total of 15 years or more of faithful service and who subsequently is honorably retired from such employment; or (G) an immigrant, and his accompanying spouse and children, who was an employee of the Panama Canal Company or Canal Zone Government on the effective date of the exchange of instruments of ratification of such Panama Canal Treaty of 1977, who has performed faithful service for five years or more as such an employee, and whose personal safety, or the personal safety of whose spouse or children, as a direct result of such Treaty, is reasonably placed in danger because of the special nature of any of that employment.". (b) Section 212(d) of such Act (8 U.S.C. 1182(d)), relating to waivers of conditions of inadmissibility to the United States, is amended by adding after paragraph (8) the following new paragraphs: "(9) The provisions of paragraph (7) of subsection (a) shall not be applicable to any alien who is seeking to enter the United States as a special immigrant under subparagraph (E), (F), or (G) of section 101(a) (27). "(10) The provisions of paragraph (15) of subsection (a) shall not be applicable to any alien who is seeking to enter the United States as a special immigrant under subparagraph (E), (F), or (G) of section 101 (a) (27) and who applies for admission as such a special immigrant not later than March 31,1982.". (c) Notwithstanding any other provision of law, not more than 15,000 individuals may be admitted to the United States as special immigrants under subparagraphs (E), (F), and (G) of section 101 (a) (27) of the Immigration and Nationality Act, as added by subsection (a) of this section, of which not more than 5,000 may be admitted in any fiscal year. (d) (1) The amendments made by this section shall take effect on the date of the enactment of this Act. (2) Paragraph (9) of section 212(d) of the Immigration and Nationality Act, as added by subsection (b) of this section, shall cease to be effective at the end of the transition period.

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51 CHAPTER 3-REPORTs; AMENDMENTS; REPEALS AND REDESIGNATION; EFFECTIVE DATE REPORT SEC. 3301. Until the termination of the Panama Canal Treaty of 1977, the President shall report annually on the status of the exercise of the rights and responsibilities of the United States under that Treaty. Such report shall include a discussion of the following: (1) The actions taken by the Government of the Republic of /'anama with respect to the living conditions of persons who resided in the Canal Zone before the effective date of this Act and who continue to reside in those areas made available to the United States under the Agreement in Implementation of Article; III of the Panama Canal Treaty. (2) The terms, conditions, and charges for land-use licenses within the canal operating areas specified in the Agreement in Implementation of Article III of the Panama Canal Treaty. (3) The condition of former employees (and their dependents) of the Panama Canal Company and the Canal Zone Government who reside in the Republic of Panama on or after the effective date of this Act. AMENDMENTS SEC. 3302. (a) Section 1 of title II of the Act of June 15, 1917 (50 U.S.C. 191), is amended(1) by striking out the second paragraph; and (2) in subsection (b) of the last paragraph, by striking out the Canal Zone,". (b) Section 1 of title XIII of the Act of June 15, 1917 (50 U.S.C. 195), is amended by striking out "the Canal Zone and". (c) The first section of the Act of August 9, 1954 (50 U.S.C. 196), is amended by striking out ". including the Canal Zone,". (d) The Department of State, Justice, and Commerce, the Judiciary, and Related Agencies Appropriation Act, 1974 (87 Stat. 636 et seq.) is amended by striking out the heading "PAYMENT TO THE REPUBLIC OF PANAMA' and all that follows that relates to the heading. (e) Title 5, United States Code, is amended(1) in sections 305(a) (7), 5102(a) (1) (vii), 5342(a) (1) (G), 5348(b), and 5541(2) (xii), by striking out "Panama Canal Company" and inserting in lieu thereof "Panama Canal Commission"; (2) in sections 5504 (a) (A) and 6301(2) (iv), by striking out "Canal Zone Government or the Panama Canal Company" and inserting in lieu thereof "Panama Canal Commission"; (3) in section 8335(e) by striking out "Panama Canal Company or the Canal Zone Government" and inserting in lieu thereof "Panama Canal Commission" ; (4) in section 5373(1), by striking out "section 121 of title 2, Canal Zone Code (76A Stat. 15)" and inserting in lieu thereof "section 1202 of the Panama Canal Act of 1979"; (5) in section 6323(c) (2) (B), by striking out "the Canal Zone,";

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52 (6) in section 5102 (c), by amending paragraph (12) to read as follows: (12) any Executive agency to the extent of any election under section 1212( b) (2) (relating to the Panama Canal Employment System) of the Panama Canal Act of 1979;"; (7) in section 5583(b) by(A) adding "and" at the end of paragraph (1), (B) striking out paragraph (2) ; and (C) redesignating paragraph (3) as paragraph (2); (8) in section 5533(d) (7), by(A) striking out the semicolon at the end of subparagraph (E) and inserting in lieu thereof "; or"; (B) striking out "; or" at the end of subparagraph (F) and inserting in lieu thereof a period; and (C) striking out subparagraph (G); (9) in section 8146(A) by striking out "Canal Zone" in the catchline and inserting in lieu thereof "Panama Canal Commission"'; (B) in subsection (a) (1), by striking out "Canal Zone Government and of the Panama Canal Company are concerned to the Governor of the Canal Zone" and inserting in lieu thereof "Panama Canal Commission are concerned to the Commission",; (C) in the flrst sentence of subsection (b), by striking out "Canal Zone Government" and inserting "Panama Canal Commission" in lieu thereof; (D) in the first sentence of subsection (b), by striking out or from funds of the Panama Canal Company"; (E) in the second sentence of subsection (b), by striking out "Governor of the Canal Zone" and inserting "Panama Canal Commission" in lieu thereof and by striking out "Canal Zone Government" and inserting "Panama Canal Commission" in lieu thereof; (F) by amending subsection (c) to read as follows: "(c) The President may authorize the Panama Canal Commission to waive, at its discretion, the making of the claim required by section 8121 of this title in the case of compensation to an employee of the Panama Canal Commission for temporary disability, either total or partial."; and (G) in subsection (e), by striking out "Canal Zone Government and of the Panama Canal Company" and inserting in lieu thereof "Panama Canal Commission"; (10) in section 5343(a) (5), by striking out "Canal Zone" and inserting in lieu thereof "areas and installations in the Republic of Panama made available to the United States pursuant to the Panama Canal Treaty of 1977 and related agreements (as described in section 3(a) of the Panama Canal Act of 1979"; (11) in section 531-6(87), by striking out "Governor of the Canal Zone" and inserting in lieu thereof "Administrator of the Panama Canal Commission"; and (12) in the table of sections for chapter 81, by striking out "Canal Zone" in the item relating to section 8146 and inserting in lieu thereof "Panama Canal Commission".

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53 REPEALS AND REDESIGNATION SEC. 3303. (a) The following provisions of law are repealed: (1) title 2 of the Canal Zone Code,; (2) sections 2 and 3 of title 3 of the Canal Zone Code, and the items relating to such sections in the table of sections for chapter 1 of title 3 of the Canal Zone Code; (3) subchapter III of chapter 237 of title 6 of the Canal Zone Code and the items relating to such subchapter in the table of sections for chapter 237 of such title; (4) subsection (d) of section 38 of the Arms Export Control Act (22 U.S.C. 2778 (d) ) ; and (5) section 4 of the Act of November 15,1941 (50 U.S.C. 191b). (b) Those provisions of the Canal Zone Code not repealed by this Act are redesignated as the "Panama Canal Code". Any reference to the Canal Zone Code in those laws and regulations referred to in section 3(b) of this Act shall, subject to the provisions of such section, be deemed to refer to the Panama Canal Code. EFFECTIVE DATE S EC. 3304. Except as provided in sections 1231,1232,1241,1242,1261, 1605, 2203, 2402, 3101, and 3201 of this Act, the preceding provisions of this Act, shall take effect on the date on which the Panama Canal Treaty of 1977 enters into force. And the Senate agree to the same. That the House recede from its disagreement to the Senate amendment to the title of the bill and agree to the same with an amendment as follows: In lieu of the matter proposed to be inserted by the Senate to the title of the bill insert the following: "An Act to provide for the operation and maintenance of the Panama Canal under the Panama Canal Treaty of 1977, and for other purposes.". And the Senate agree to the same. JOHN M. MURPHY. DAVID R. BOWEN, DAVID E. BONIOR, CLEMENT J. ZABLOCKI, DANTE B. FASCELL, JIM HANLEY, PAT SCHROEDERI HERBERT E. HARRIS, II, PAUL MCCLOSKEY, BOB BAUMAN, WM. BROOMFIELD, EDWARD J. DERWINSKI, HAMILTON FISH, Jr., Managers on the Part of the House. JOHN C. STENNIS, HENRY M. JACKSON, J. J. EXON, CARL LEVIN, STROM THURMOND, JOHN W. WARNER, Managers on the Part of the Senate.

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JOINT EXPLANATORY STATEMENT OF THE COMMITTEE OF CONFERENCE The managers on the part of the House and the Senate at the conference on the disagreeing votes of the two Houses on the amendment of the Senate to the bill (H.R. 111) to enable the United States to maintain American security and interests respecting the Panama Canal, for the duration of the Panama Canal Treaty of 1977, submit the following statement to the House and Senate in explanation of the effect of the action agreed upon by the managers and recommended in the accompanying conference report: The Senate amendment struck out all of the House bill after the enacting clause and inserted a substitute text. The House recedes from its disagreement to the amendment of the Senate with an amendment which is a substitute for the House bill and the Senate amendment. The differences between the House bill, the Senate amendment and the substitute agreed to in conference are noted below, except for clerical corrections, conforming changes made necessary by agreements reached by the conferees, and minor drafting and clarifying changes. OVERALL ORGANIZATION OF THE BILL The major differences in structure and organization of the House bill and the Senate amendment were in the portions of the two bills dealing with the organization and financial operation of the Panama Canal Commission. The sections of the bills dealing with employment matters. courts, postal matters and related administrative provisions were similar and in some cases identical. In light of the Senate's decision to recede from its amendments on the form of the Panama Canal Commission, the conferees agreed to adopt the basic organization structure of the House bill. DISPOSITION OF CONFERENCE ISSUES There follows a description of the action taken by the conferees on the principal differences between the House bill and the Senate amendment. Form of the Panama Canal Commission(Section 1101) The House bill provided that the Panama Canal Commission would be operated as an appropriated funds agency, with all revenues deposited in the Treasury and all expenditures made pursuant to appropriation acts approved by Congress. The Senate amendment provided that the Commission would continue to operate as a government corporation. The Senate reluctantly recedes. (55)

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56 Direction of the Secretary of Defense-(Sections 1101 and 1102) Sections 101 and 102 of the House bill provided that the Commission and its Board would act under the direction of the Secretary of Defense. The Senate amendment contained no comparable language. The conferees adopted compromise language making it clear that the powers of the President would be exercised through the Secretary of Defense in order to clarify the administrative placement of the Panama Canal Commission as an agency within the executive branch. This language does not effect a delegation of the President's powers to the Secretary of Defense, nor does it preclude the President from exercising his powers directly. Board Membership(Section 1102) The House provision (Sec. 102) provided supervision of the Commission by a Board under the direction of the Secretary of Defense, appointed by the President and, in the case of the American members, subject to Senate confirmation. Five of the new members were to be nationals of the United States and four nationals of Panama. The House provision also required that of the five U.S. members one should be the Secretary of Defense, one should be experienced in operation of ships using the Canal, one should be experienced in U.S. port operations, and one should be experienced in U.S. labor matters. The Senate amendment (Sec. 205) eliminated the requirements in reference to the three members other than the Secretary of Defense, and the specific provision for direction by the Secretary of Defense. The conferees adopted a provision containing the reuirement from the House bill that three U.S. members of the Board have specialized backgrounds in steamship and port operations, and in labor matters, and requiring that three U.S. members (though not necessarily the same three referred to above) be from the private sector. The reference to direction of the Board by the Secretary of Defense was omitted as unnecessary in view of the revised provision of section 1101 for exercise of the President's authority in reference to the Commission as an Executive Branch agency. Chief Engineer-(Section 1104) The House bill contained a .provision for a Chief Engineer to be appointed by the President (Sec. 104). The Senate amendment did not provide for this position. The Senate recedes. Wartime Control (Section 1108) The House bill contained a provision (Sec. 108) which allows the President, in time of war in which the United States or the Republic of Panama is engaged, to put the operation of the Panama Canal under the direct control of a military officer. The Senate amendment contained no comparable provision. The conferees agreed to adopt compromise language similar to that recommended by the House Committee on Foreign Affairs in its report on H.R. 111. However, the description of conditions under which the President may order the Administrator of the Panama Canal Commission to comply with the orders of a military officer with regard to protection and defense of the Canal is adapted directly from Article IV of the Panama Canal Treaty, which defines U.S. defense rights. This section is intended to define for domestic legal purposes

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57 the manner through which the President will carry out the responsibilities of the United States in accordance with the Treaties. It is the intention of the Conferees that the phrase contained in section 1108 ...conditions ...which threaten the security of the Canal ..." is deemed to include any circumstance in which foreign combat troops or military forces (other than those of the United States as provided in the Panama Canal Treaties of 1977) are located within the Republic of Panama. Code of Conduct(Section 1112) The House bill required the Panama Canal Commission to adopt a Code of Conduct applicable to each member of the supervisory Board and all employees of the Commission (Sec. 110). The Senate amendment did not include this provision. The Senate recedes. Cost o1 Living Allowance(Section 1206) The House bill provided that effective October 1, 1984, each U.S.citizen officer or employee of the Panama 'Canal Commission could be paid an allowance to offset any increased cost-of-living due to termination of his right to use military postal services, sales stores and exchanges (Sec. 125). The Senate amendment provided the allowance for U.S. citizens employed prior to the entry into force of the Panama Canal Treaty or persons recruited outside of Panama by the Commission. The House recedes, with a technical amendment specifying that persons employed before the effective date of the Panama Canal Treaty must have been employed by the Panama Canal Company or Canal Zone Government on September 30, 1979. Educational Travel Benefts(Section 1207) The House bill stated that the Panama Canal Commission shall provide educational travel benefits for dependents of individuals who are U.S.-citizen officers or employees of the Panama Canal Commission (Sec. 126). The Senate amendment stated that the Commission shall provide such educational benefits to dependents of U.S. citizens employed prior to the entry into force of the Panama Canal Treaty and also to dependents of individuals recruited outside of Panama for employment with the Panama Canal Commission (Sec. 307). The House recedes, with a technical amendment indicating that in the case of U.S. citizens who must have been employed prior to the entry into force of the new treaty, such employment must have been by the Panama Canal Company or Canal Zone Government on September 30, 1979. Privileges and Immunities-(Section 1208) The House bill provided that the Secretary of Defense shall designate those officers and employees of the Panama Canal Commission who are to receive privileges and immunities accorded under Article VIII of the Panama Canal Treaty, and that the Department of State shall furnish the list to Panama and notify that country of any changes in it (Sec. 127). The Senate amendment provided that the Secretary of State shall designate persons, from a list supplied by the Panama Canal Commission, who will receive privileges and immunities (Sec. 107). The Senate recedes.

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58 Minimum Levels of Pay-(Section 1225) The House bill contained a provision (Sec. 154(b)) which applies certain provisions of the Fair Labor Standards Act to United States agencies operating in Panama. The Senate amendment contained no comparable provision. As to the applicability of Fair Labor Standards Act, the House recedes. The conferees agreed to add language outlining the wage policy to be followed by U.S. agencies operating in Panama. This section provides for a $2.90 per hour minimum wage for employees of Federal government agencies operating in the areas made available to the United States pursuant to the Panama Canal Treaty and related agreements. It further provides that employees, other than employees whose pay is established in relation to rates of pay paid in the continental United States, will receive each year, at a minimum, a two percent pay adjustment in the form of a step increase. This provision would not preclude payment of a starting wage that is higher than $2.90 per hour, if required, to assure that wages paid by Federal agencies remain competitive. The managers note that the Department of Defense has announced its intention to grandfather current employees of the Panama Canal Company, and current employees of the Department of Defense in Panama, at their current wage system, so that those employees who have been receiving U.S. Civil Service wage increases would continue to do so. Terms and Conditions of Employment(Section 1231) The House bill and Senate amendment differed in three respects in their specification of those benefits which must remain generally no less favorable for employees who were employed by the Panama Canal Company and Canal Zone Government and who will continue to work for U.S. agencies in Panama. The House bill (Sec. 201 (a) (2)) provided that not only the rates of basic pay but also the bases for establishing such rates would remain generally no less favorable. The Senate amendment (Sec. 341 (a) (2)) includes only rates of basic pay. The House recedes. The House bill (Sec. 201 (a) (2)) included leave and travel benefits in the list of those terms of employment which would remain generally no less favorable, while the Senate amendment (Sec. 341 (a) (2)) provided that leave and travel benefits could be modified to provide equity with other employees in the agency to which the employee is transferred. The Senate recedes. The House bill provided in Section 201 (c) (3) for the continuation of the sabbatical leave program provided to teachers by the Canal Zone Government, but increasing the level of sabbatical pay from one-half to full pay. The Senate amendment contained no sabbatical program, in conformity with the Department of Defense worldwide educational system, which will operate the former Canal Zone schools. The Senate recedes, with an amendment restricting sabbatical pay to one-half of basic pay. Balance of Revenues and A ppropriations-Section 1302(c) (2)) The House bill contained a provision (Sec. 232(c) (2)) which mandated that no funds could be appropriated for the Panama Canal

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59 Commission in excess of estimated revenues for that fiscal year, and providing that amounts appropriated in excess of actual revenues would be deducted from appropriations in the following year. The Senate amendment contained no comparable provision, though the corporate form on which the Senate bill is based contemplated the balancing of revenues and expenses. The conferees agreed to a compromise provision which retained the substance of the House provision limiting appropriations to estimated revenues, while recognizing that there may be occasions when excess revenues deposited in the Panama Canal Commission Fund in a prior fiscal year justify appropriations greater than estimated revenues to the extent of such prior year excess revenues. Both Senate and House conferees reiterate their strong intention that the Panama Canal Commission be operated over the life of the Panama Canal Treaty of 1977 without the need for support by the American taxpayer. Method of Depreciation(Section 1311 (b) ) The Senate amendment contained a provision in Section 211 which described the basis of accounting to be used by the Panama Canal Commission, based on the net repalcement value of those transferred assets which will ultimately require replacement to maintain the service capacity of the canal. The House bill contained no similar provision. The House recedes, with an amendment to make it clear that the method of depreciation described in the provision is recommended but not mandatory. GAO Audit-(Section 1313) The House bill (Sec. 236) contains a provision for audit of the financial transactions of the Commission by the General Accounting Office pursuant to the Accounting and Auditing Act of 1950, with reports of the audits similar to those required by the Government Corporation Control Act for corporate agencies. 'The Senate amendment contained no comparable provision inasmuch as the Government Corporation Control Act would have been generally applicable to the agency. The Senate recedes and concurs in the House provision as consistent with the agreement to establish the Commission as a Government agency in non-corporate form. The conferees added language in this section which recognizes the special problems inherent in revision of the Panama Canal Company's accounting systems created by enactment of H.R. 111 only a short time before the beginning of fiscal year 1980. Interagency Services and Reimbursements-(Section 1321) Sections 240 of the House bill and 213 of the Senate amendment contained similar provisions regarding reimbursements by agencies operating in Panama to the agency designated to furnish educational, health and other services, and related matters. The conferees agreed on a compromise provision which contains the substance of the House and Senate versions. The new provision makes it clear that agencies operating in Panama may make available health care and educational services to the same categories of persons as had received such services prior to the effective date of this Act, and that services must be provided on an equitable basis.

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60 The conferees intend that physicians transferred from the Canal Zone Government to the agency designated by the President to conduct health care activities shall, to the extent agreed upon between the U.S. and the Republic of Panama, continue to be eligible for health, educational, commissary, post exchange, and postal services for which they were eligible prior to entry into force of the 'Treaty. Canal Zone College-(Section 1321 (g) ) Both bills contained provisions (Secs. 240(d) of the House bill and 603 of the Senate amendment) mandating the continuation of the Canal Zone College at generally the same level of services provided on the effective date of the Act. The Senate provision specified that the requirement applied not just to the Department of Defense but to any executive agency which may be charged with operating the College. The House recedes. Section 603 of the Senate amendment is section 1321 (g) of the conference report. The conferees intend that the requirement to continue the same level of services of the College includes a continuation of present tuition policies. Transfer of Leave Funds Section 308 of the Senate amendment required the Panama Canal Commission to reimburse the U.S. Treasury for the leave and repatriation liabilities of employees transferred from the Company and Government to the Department of Defense. The House bill contained no such provision, since all funds of the Panama Canal Commission would be covered into the Treasury in any event under the appropriated funds agency concept. The Senate recedes. Timing of Payments The House bill provided that all treaty payments to Panama, except -the contingency payment described in Article XIII 4(c) of the treaty, would be made monthly from appropriations for that purpose. Any contingency payment to Panama was to be paid at the end of the second fiscal Quarter following the end of the fiscal year for which payment would be due (Sec. 250(a)). The Senate amendment contained no comparable provision and left the timing of payments open. The House recedes. Payment to Panama(Section 1341) The House bill contained three sections (Secs. 250 (c), (f) and (g)) which imposed conditions on the payments to Panama, The Senate amendment contained no comparable provisions. As to section 250(c), relating to the levying of retroactive taxes by Panama, the conferees agreed to delete the House language and the language from both the bill and the amendment expressing the sense of Congress that retroactive taxes are prohibited by the Treaty. The conferees substituted a new-provision stating that the President should not accept any interpretation of the Treaty which would permit Panama to impose retroactive taxes. As to Section 250(e), which conditioned Panama's receipt of the contingency payment under Article XIII(4) (c) of the Panama Canal

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61 Treaty of 1977 on prior payment of all U.S. costs of implementing the Treaty, the conferees agreed to compromise language which makes it clear that such payment may be made only after payment of all normal costs of operation and maintenance of the Panama Canal, reimbursement for costs incurred by other agencies in providing educational, health, and other services to Commission employees, and any costs of treaty implementation which are associated with the operation and maintenance of the Canal. As to section 250(g), conditioning the contingency payment to the Republic of Panama on the determination of that country's noninterference in the internal affairs of other nations, the House recedes. Claims-(Section 1401-18) Chapter 7 of Title 1 of the House bill withdrew consent to suit against the United States or the Commission on claims other than claims for damage to vessels in the locks and placed a limitation of $120,000 on the amount of each claim that could be administratively settled by the Commission. The Senate amendment deleted this chapter and continued in effect the present claims provisions applicable to the corporate agency with some specific amendments on measure of damages and procedural matters. (Sec. 231). The Senate recedes, with an amendment to Section 271 of the House version (new Sec. 1401) reducing to 50,000 the amount of claims other than vessel accident claims within the authority of the Commission to effect administrative settlement. Disposition of Property-(Sections 1341(f), 1503, and 1504) The House bill contained provisions (Sees. 373 and 374) requiring that all transfers of property to Panama be authorized by the Congress and leaving certain of those transfers to be decided by subsequent legislation. The Senate amendment contained no provision on property transfers. The conferees agreed on language which retains Section 373 of the House bill (new Sec. 1503) and amends Section 374 (new Sec. 1504) to authorize all transfers required by the Treaties, with provision for a report by the President on each transfer after those occurring on October 1, 1979. The conferees agreed on a new subsection (c) which makes it clear that the President is not authorized to accelerate the final transfer of the Panama Canal in 1999, as provided by the Panama Canal Treaty of 1977. It is the intention of the managers that the conference proposal relative to disposition of property not prejudice the positions that have been taken by the House and Senate with respect to the necessary procedure for the disposition of property of the United States. The managers on the part of the House believe that legislation is the exclusive vehicle for effecting the disposition of U.S. property, and hence that the authorizations in this bill are necessary to transfer property to Panama. The managers on the part of the Senate maintain that the treaty power is concurrent with the legislative power for the purpose of disposing of property, and thus believe that the authorizations for transferring property in this bill are redundant to and reaffirm the transfer provisions in the treaty.

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62 The House bill contained a related provision, Section 250 (f), which restricted the powers of the Commission to transfer property to Panama through reprogramming of funds or pursuant to other statutes. The Senate bill contained no comparable provision. The conferees agreed to amended language which is intended to negate any inference that the Foreign Excess Property Act would be inapplicable to the Executive agencies operating in Panama. The language of Section 1344 was changed to conform to the substantive agreement of the conferees on this issue. Transfer of Fire Stations The House bill provided that, except for the Balboa and Coco Solito fire stations in the Panama Canal operating area, other fire stations operated by the United States in such area would not be transferred to Panama until the Administrator determined that voluntary attrition of firefighting personnel had made it impossible to staff such station and also that the station was excess to needs of the United States (Sec. 374). The Senate amendment contained no comparable provision. The House recedes. With no language in the conference report on transfer of fire stations, such stations would be transferred under the general provisions for property transfer in H.R. 111 and in connection with the provisions of paragraph 14 of the Agreed Minute to the Agreement in Implementation of Article III of the Panama Canal Treaty. Paragraph 14 states that the United States will periodically review fire protection resources and if appropriate will transfer fire stations to Panama that are excess to U.S. needs. Toll Surcharge The House bill contained a provision (Sec. 412 (c)) which permitted the Commission to impose a toll surcharge on traffic not originating from or destined for United State or Panamanian ports in order to fund future capital costs of the Panama Canal Commission. The Senate amendment contained no comparable provision. The House recedes. Interest Rate(Section 1603) Section 202 of the Senate amendment provided that the rate of interest to be paid by the Panama Canal Commission to the Treasury on the net direct interest-bearing investment of the United States in the canal enterprise should be determined by the Secretary of the Trehsury. Section 413(d) of the House bill repeated the requirement that interest be paid, but stipulated that it should be calculated at the "average market yield" rate. The conferees adopted the House provision on interest but with the Senate language allowing the Secretary of the Treasury to determine the rate. It is the intention of the conferees that the Commission should continue to pay interest at the "coupon" rate, the rate paid by the Panama Canal Company before October 1, 1979. The conferees also modified the language of this section (new Sec. 1603(b) (2) (B) and (C)) to make it clear that those subsections cover non-capital as well as capital assets.

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63 Interim Toll Ad justment-(Section 1605) Both sections 415 of the House bill and 222 of the Senate amendment provided expedited procedures for the initial toll increase under the Treaty. The conferees agreed on a compromise provision, which provides the needed authority to raise tolls effective October 1, 1979, provided that such toll adjustment may cover only the first year of operation of the Panama Canal Commission. Navigation Regulation(Section 1801) The House bill provided that the President may prescribe and amend regulations on Panama Canal operation, navigation, control of vessels, pilotage, and licensing of vessels operations (Sec. 1331). Under the Senate amendment the Commission was vested with that authority (Sec. 212). The Senate recedes. Prisons and Parole-(Section 2404) Both the House bill (Sec. 1532) and the Senate amendment (See. 412) contained provisions for the transfer to the custody of the U.S. Attorney General of prisoners sentenced by the U.S. District Court for the Canal Zone, and for issuance of regulations by the Commission for management of prisoners in jails located in the areas made available for the use of the United States under the Panama Canal Treaty. Because paragraph 11 of Article IX of the Panama Canal Treaty contemplates a future prisoner transfer agreement between the United States and the Republic of Panama, which could obviate the need for transfer to the United States of prisoners who are Panamanian citizens. the Senate amendment included a provision making the transfer requirement effective no earlier than 90 days after the entry into force of any such prisoner transfer agreement, but in no case later than 90 days before the end of the transition period established by paragraph 1 of Article XI of the Treaty. The House recedes. Special immigrants(Sec tion 3201) The House provision (Sec. 1611) conferred special immigrant status on three categories of persons who have resided in the Canal Zone or have been employed by the Canal Zone agencies for specified periods of time. This included a category of persons whose personal safety may be endangered as a result of changes brought about by the Panama Canal Treaty. A limit of 7,500 was placed on the total number of immigrants admitted under the provision. The Senate amendment (Sec. 501) eliminated the class of immigrants whose safety might be endangered and increased the total number of possible immigrants to 25,000, with a limit of no more than 7,500 in any one year. The conferees adopted a compromise provision restoring the class of immigrants whose safety would be endangered, and with clarifying language, allowing up to 5,000 immigrants a year up to a total of 15,000. The conferees agree that regulations issued for the administration of this section should establish appropriate priorities for allocation

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UNIVERSITY OF FLORIDA 64 3 1262 09092 6691 of the number of annual admissions to assure to the maximum possible extent that the immigrants selected are those whose need for resort to the benefits of the section are most pressing and meritorious. Title of the Bill The conferees agreed on a compromise amendment to the title of the bill. JOHN M. MURPHY, DAVID R. BOWEN, DAVID E. BONIOR, CLEMENT J. ZABLOCKI, DANTE B. FASCELL, JiM HANLEY, PAT SCHROEDER, HERBERT E. HARRIS, II, PAUL MCCLOSKEY, BOB BAUMAN, WM. BROOMFIELD, EDWARD J. DERWINSKJ, HAMILTON FISH, Jr., Managers on the Part of the House. JOHN C. STENNIS, HENRY M. JACKSON, J. J. ExoN, CARL LEVIN, STROM THURMOND, JOHN W. WARNER, Managers on the Part of the Senate. 0


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