a. The annual budget of the Panama Canal Company is developed in accordance with policies and procedures prescribed by the Office of Management and Budget (OMB) in Circular A-11. With regard to budgeting for personnel compensation and allowances, it is the policy of OMB that estimates must be based on compensation scales provided by laws already enacted. Because they anticipate the enactment of legislation or issuance of Presidential Executive Orders, the amounts reflected in Exhibit XX could not be included in the Company's fiscal year 1975 budget. Although the Company must conform to OMB policies for budgeting purposes, sound business practice requires the inclusion of anticipated costs in its rate structure. b. To provide for a 5% increase in pay of classified and related employees beginning in October 1974. The 5% rate corresponds to recent increases in the cost of living and approximates the rates of previous pay increases. c. To provide for 6% pay increases for police, firemen, and teachers in the Canal Zone based on pay scales for counterpart employees in the District of Columbia. The average amount of these increases has been about 6% a year. d. Provision has been made for an expected increase in U. S. Government agencies' contributions to Federal Employees Health Benefits from the present 40% of the insurance premium to 50% in January 1974 and to 55% in January 1975. This is in line with H.R. 9256 (93d Congress, 1st Session) as approved by the Senate. ADJUSTMENTS TO THE FISCAL YEAR 1975 BUDGET FOR NON-BUDGETABLE WAGES AND RELATED COSTS(a)—Concluded Notes: (Cont'd) e. Adjustments net of costs transferred to other activities as shown below: TREATIES, LAWS, AND ADMINISTRATIVE REGULATIONS TREATIES The 1901 Hay-Pauncefote Treaty with Great Britain.. The 1903 Treaty with the Republic of Panama.. LEGISLATIVE HISTORY. Panama Canal Company. Canal Zone Government.. TOLL PROVISIONS CANAL ZONE CODE.. Section 411-Prescription of measurement rules and tolls GENERAL LAWS OF THE UNITED STATES.. ADMINISTRATIVE REGULATIONS.. CONSTRUCTION AND APPLICATION OF TOLLS FORMULA. Legislative Construction... 1. The United States constructed and now operates the Panama Canal under the provisions of treaties with Great Britain and the Republic of Panama and pursuant to the provisions of laws enacted by Congress, principally those incorporated in the Canal Zone Code. This appendix discusses the relevant provisions of the treaties and laws, provides a summary of the background of the applicable provisions of the Canal Zone Code, and summarizes administrative regulations adopted pursuant to the relevant statutory provisions. TREATIES The 1901 Hay-Pauncefote Treaty with Great Britain 2. The Hay-Pauncefote "Treaty to Facilitate the Construction of a Ship Canal" concluded by the United States and Great Britain on November 18, 1901, superseded the Clayton-Bulwer Treaty of April 19, 1850, between the two countries, provided for construction of a transisthmian canal by the United States, and gave the United States the exclusive right of providing for the regulation and management of the canal. Article III of the 1901 treaty, which remains in full force and effect, provides in pertinent part as follows: Article III "The United States adopts, as the basis of the neutralization of such ship canal, the following Rules, substantially as embodied in the Convention of Constantinople, signed the 28th October, 1888, for the free navigation of the Suez Canal, that is to say: 1. The canal shall be free and open to the vessels of commerce and of war of all nations observing these Rules, on terms of entire equality, so that there shall be no discrimination against any such nation, or its citizens or subjects, in respect of the conditions or charges of traffic, or otherwise. Such conditions and charges of traffic shall be just and equitable. 3. The effect of the commitment that the canal would be free and open to the vessels of all nations on terms of equality without discrimination in respect to conditions or charges of traffic was tested soon after the treaty went into effect as the result of enactment of legislation by the Congress providing for preferential treatment of certain vessels of United States registry. Invoking the provisions of the HayPauncefote Treaty, the Government of Great Britain immediately lodged a protest with the United States Government on the ground that exemption from tolls of vessels of the United States engaged in the coastwise trade constituted a denial of the right of equality of treatment to British vessels using the canal guaranteed by the treaty. In a message to Congress on March 5, 1914, President Wilson urged that Congress repeal the exemption of U.S. vessels as being in contravention of the treaty. Following the President's recommendation, Congress enacted legislation to repeal the exemption.' 1903 Treaty with the Republic of Panama 4. In 1902 an act of Congress, popularly known as the Spooner Act, authorized the President to acquire control of the land and other rights necessary for the construction and operation of a transisthmian canal and to proceed with the construction of such a canal when such rights were obtained. After an abortive effort to obtain the necessary rights in a treaty with Colombia, and following the secession of Panama from the Republic of Colombia, the United States on November 18, 1903, entered into a treaty with the Republic of Panama providing for the acquisition by the United States of the rights specified in the Spooner Act and for the construction and operation by the United States of a transisthmian canal at Panama. 5. Provisions of the treaty of particular relevance to the prescription of toll rates include the following: Article XVIII provides that "The Canal, when constructed, and the entrances thereto shall be neutral in perpetuity, and shall be opened upon the terms provided for by Section I of Article three of, and in conformity with all the stipulations of, the treaty entered into by the Governments of the United States and Great Britain on November 18, 1901." Article XIX provides that "The Government of the Republic of Panama shall have the right to transport over the Canal its vessels and its troops and munitions of war in such vessels at all times without paying charges of any kind." Article XIV provides that "As the price or compensation for the rights, powers, and privileges granted in this convention by the Republic of Panama to the United States, the Government of the United States agrees to pay to the Republic of Panama the sum of ten million dollars ($10,000,000) in gold coin of the United States on the exchange of the ratification of this convention and also an annual payment during the life of this convention of two hundred and fifty thousand dollars ($250,000) in like gold coin, beginning nine years after the date aforesaid...." 1936 Treaty with the Republic of Panama 6. A treaty between the United States and the Republic of Panama signed March 2, 1936 among other provisions, abrogated certain provisions of the 1903 treaty, and placed restrictions on residence, importations and commercial activities in the Canal Zone. Article VII of the 1936 treaty increased the amount of the annuity payable to the Republic of Panama under Article XIV of the 1903 treaty to four hundred thirty thousand Balboas (B/430,000) as defined in a separate monetary agreement, effected by 'Act of August 24, 1912, 37 Stat. 560. $38 Stat. 385. $32 Stat. 481. 453 Stat. 1807. "Article III; see C.Z. Code, Appendix IX, §34. an exchange of notes on the same date as the treaty, March 2, 1936. The treaty authorized payment of the annuity in any coin or currency provided the amount so paid was the equivalent of B/430,000 as defined in the 1936 monetary agreement. That agreement modified an earlier agreement establishing parity between the currencies of the United States and the Republic of Panama. After referring to action by the President of the United States in 1934 reducing the weight of the gold dollar, the agreement provided for reduction of the weight of the gold Balboa, "so that the legal standard units of value of the Republic of Panama and of the United States of America shall be equal. Accordingly, for the purposes of Article VII of the General Treaty signed today, the Balboa shall be regarded as defined to consist of 98711⁄2 milligrams of gold of 0.900 fineness." 1955 Treaty with the Republic of Panama 7. A third treaty between the United States and the Republic of Panama, signed January 25, 1955,7 contained among other provisions, an article that increased the annuity to one million nine hundred thirty thousand Balboas (B/1,930,000) as defined by the agreement embodied in the exchange of notes of March 2, 1936, but authorized the United States to discharge its obligation with respect to payment of the annuity in any coin or currency provided the amount so paid is the equivalent of one million nine hundred thirty thousand Balboas (B/1,930,000) as so defined. In a Memorandum of Understandings Reached accompanying the 1955 treaty, the United States undertook, among other things, to take certain actions in reference to employment of citizens of the Republic of Panama in the Canal Zone, and to seek legislative authority and appropriations to construct a bridge over the Canal at the Pacific entrance, in accordance with an earlier executive agreement.10 1914 Treaty with the Republic of Colombia 8. A treaty with the Republic of Colombia concluded April 6, 1914, providing for the settlement of differences arising out of events which took place on the Isthmus of Panama in November 1903, provided, among other things, for free transits through the Canal of Colombian naval vessels.11 General Background LEGISLATIVE HISTORY 9. Construction of the Panama Canal was accomplished by the Isthmian Canal Commission under the provisions of the Spooner Act, supra. As construction approached completion, Congress passed the Panama Canal Act of August 24, 1912,1 providing for the opening, maintenance, protection, and operation of the Panama Canal and the sanitation and government of the Canal Zone. The Act authorized the President to discontinue the Isthmian Canal Commission and to complete, govern and operate the Panama Canal, through a Governor of the Panama Canal. Pursuant to the authority conferred by the Panama Canal Act, the President issued Executive Order 1885 of January 27, 1914, providing a permanent organization for the completion, maintenance, operation, government and sanitation of the Panama Canal and its adjuncts principally consolidated in the operations of the Panama Railroad Company. The effect of the Panama Canal Act and the Executive Order was to establish the Panama Canal as an independent agency for operation and maintenance of the waterway and civil government of the Canal Zone. The pertinent provisions of the Panama Canal Act were later incorporated in the Canal Zone Code, enacted in 1934.1 "Exchange of Notes dated June 20, 1904, S. Doc. 401, 59th Cong., as modified by exchanges of notes dated March 26 and April 2, 1930, and May 28 and June 6, 1931. "TIAS 3297. "Article I. Item 1; see C.Z. Code, Appendix IX, §138. 10Item 5; see C.Z. Code, Appendix IX, §142. 1142 Stat. 2122. 1237 Stat. 560. 1348 Stat. 1122. |