issue. We have done an analysis in the Department which indicates that there will be substantial economic benefits to the Nation if we found some other means of shipping crude oil to whatever market is concerned-but it is not clear that the administration has adopted that position.

Mr. CARNEY. When you did your analysis of the substantial economic benefit that the people of the United States would gain by using another method, did you compute into that how much money it would cost the United States to continue the canal operation because of the loss of revenue that they would receive from the amount of oil going through it now?

Mr. GASKINS. To my knowledge, we did not include any cost borne by continued maintenance of the canal which is not used for transshipping oil, but I will check that question for the record. Mr. CARNEY. It is entirely possible, then-go ahead. Mr. GASKINS. We did not include any such costs, no.

Mr. CARNEY. Then it is entirely possible that what the U.S. citizen would gain in one pocket would be lost in the other because we would have to subsidize the canal operations because of loss of tolls?

Mr. GASKINS. I would be glad to do that calculation for the committee. It's my guess that is fairly unlikely, Congressman. It is my understanding that one or two ships a day go through the canal, and I doubt very much that the shortfall associated with the demise of that number of ships would compensate the Nation for the benefits from using a more efficient crude oil delivery system. But I will be glad to do that analysis for you. [The following was received:]

LOSS IF ALASKA OIL NOT TRANSITING CANAL

The canal receives some $23-25 million annually in toils for moving Alaska crude oil.

If the Panama Canal Company's request for a 15 percent increase for fiscal year 1980 is approved, this would increase the revenues for moving Alaska crude to $2628 million annually.

Currently, about 38 to 40 ships transit the Panama Canal each day. Since only 12 ships per day carry Alaska crude, these shipments are not the Canal's principal support.

Mr. CARNEY. Well, the administration's claims as to this treaty not costing the U.S. taxpayers any money-I am just bringing this up for general information--is based on the fact that there will be tolls from the Alaska crude oil going through. Apparently one hand is not telling the other hand what is going on-and I am not directing that at you; I am just making that a comment for the record, if I might.

Do you know the exact status of the California approval of the pipeline from California to Texas as far as the――

Mr. GASKINS. I would be glad to provide a description of the exact status for the record. Briefly I can summarize my understanding of the status.

There are several obstacles: The local clean-air authority has raised objections with the air emissions tradeoff package; there is a case pending before the supreme court in California, which could jeopardize the PACTEX line; and there is a question of compensation to El Paso for a gas line which is going to be reversed, which

must be cleared up. So there are a whole series of obstacles to the development of the SOHIO/PACTEX line. However, the Department remains confident that these obstacles can be overcome. [The following was received:]

SOHIO PACTEX PIPELINE PROPOSAL

Four key issues exist at the state or local level and each requires a desision by a separate governmental body. First, a local permit must be obtained from the South Coast Air Quality Management District (SCAQMD) regarding the air emissions trade-off package proposed by SOHIO and accepted recently by the California Air Resources Board. SCAQMD has some concerns over the scrubber equipment to be installed in Southern California Edison's facility. Hearings are expected to be held this month on the trade-off package.

Second, SOHIO recently asked approval to put two petroleum storage tanks in Long Beach harbor. Approval for this must come from the California Coastal Zone Commission.

Third, a lawsuit is pending before the California Supreme Court challenging the efficiency of the State's Environmental Impact Report. It is not known when the Court will act on this. Fourth, approval is needed from the California Public Utilities Commission for abandonment of the gas pipeline in California that is expected to be converted to oil use.

Mr. CARNEY. You indicate that you think they could be overcome in your statement by 1982, is that correct?

Mr. GASKINS. Yes; if they are overcome and the SOHIO/PACTEX line is built, transshipment through the canal of substantial quantities of ANS crude would be eliminated by 1982.

Mr. CARNEY. If this went through, you feel that substantial quantities of Alaskan North Slope crude would cease going through the canal?

Mr. GASKINS. That's right.

Mr. CARNEY. By 1982?

Mr. GASKINS. By 1982.

Mr. CARNEY. Once again we have the conflict, because in Panama we have so much faith that this oil will continue to go through the canal, and it's very important for the economic wellbeing of the Panama Canal Commission, and that importance, of course, relates back to the idea that it is not going to cost the taxpayers any money.

You have statistics that you can give us as to the transit from the east to west coast through the canal of refined gasoline?

Mr. GASKINS. I can provide for the record statistics. It is a very small amount of gasoline that has been shipped to California, but I would be glad to provide that for the record.

[The following was submitted:]

TRANSIT, EAST TO WEST, OF REFINED GASOLINE

Based on data from the Panama Canal Company, an average of about 24,000 barrels per day of gasoline moved from the East to West Coast via the Canal during fiscal year 1978 (October 1977-September 1978).

Mr. CARNEY. One other question. Could you tell me what the loss is between crude and gasoline? Now, what I am saying is the amount of volume necessary-how many gallons of crude does it take to make a gallon of gasoline? There's a loss in there through the refining process.

Mr. GASKINS. I can provide for the record the details, but it is my understanding that the actual loss is quite small. What happens is

that a barrel of crude oil is cracked into multiple products, gasoline being a major one for domestic refineries. Much of the crude oil is turned into other products; For example, it is turned into residual fuel oil or asphalt or some other product. The actual losses themselves, if any, are quite small.

I would be glad to provide details for the record. [The following was received:]

LOSS BETWEEN CRUDE AND GASOLINE IN REFINING

To answer this, it is important to make some distinctions. First of all, the most important determinant of gasoline volumetric yield from crude relates to the specific gravity-the weight-of the crude. The lighter the crude the more gasoline can be produced and vice versa.

After considering specific gravity, the second important determinant of gasoline yield produced relates to the type of refinery process configuration. The more complicated the configuration the more gasoline that can be produced. In the simplest configuration (the topping refinery), for example, no gasoline is produced. In the most complicated configuration (the high conversion refinery), on the other hand, the gasoline volumetric yield can be as high as 75 percent.

The fact that gasoline yields vary according to the refinery process does not mean the residue is lost, however. Instead the residue is turned into other petroleum products such as residual fuel, kerosene, asphalt or some other product. Moreover, as in the case of gasoline, the respective yields of these other products depend on the type of refinery process configuration.

Finally, whether or not an actual volumetric loss occurs when the crude is converted into various petroleum products also depends on the refinery process configuration. For some processes, in fact, a volumetric gain will occur. This is the result in the complicated refinery processes that have the high gasoline yields. Conversely, a small loss occurs in the simpler refinery process configurations.

Mr. CARNEY. I would appreciate that, because of the impact of the raising of the tolls. We are trying to figure out what the impact would be on gasoline and the availability of gasoline when they raise the toll.

Thank you very much. No further questions, Mr. Chairman. Mr. HUBBARD. Thank you, Congressman Carney. Thank you, Mr. Gaskins.

Before you leave, would you agree to give us in writing more precise statistics about the amount of Alaskan oil going through the Panama Canal daily?

Mr. GASKINS. I would be glad to do that.

Mr. HUBBARD. You made a comment earlier and I wonder if it's correct. It could be. Would you provide that in writing when you research those statistics?

Mr. GASKINS. I would be glad to do that.

Mr. HUBBARD. We thank you for your excellent testimony as a substitute for Mr. Alm.

This concludes the hearings today, and we stand adjourned until the call of the Chair, which probably will be next Tuesday, March the 6th.

[The subcommittee adjourned at 12:59 p.m.]

CANAL OPERATION UNDER 1977 TREATY

WEDNESDAY, MARCH 7, 1979

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON THE PANAMA CANAL

OF THE COMMITTEE ON MERCHANT MARINE AND FISHERIES,

Washington, D.C.
in room

The subcommittee met, pursuant to notice, at 9:17 a.m., 3571, House Annex No. 2, Hon. Carroll Hubbard, chairman of the subcommittee, presiding.

Present: Representatives Hubbard, Bonior, Anderson, Evans, and Carney.

Staff present: Bernard Tannenbaum, special counsel; Terrence W. Modglin, staff director.

Mr. HUBBARD. The Panama Canal Subcommittee will now come to order. Our first witness this morning at the hearing is Dr. Charles H. Breecher. I would like to defer at this time to a distinguished member of our full committee, the Congressman from Delaware, Thomas B. Evans, who will present Dr. Breecher. Tom? Mr. EVANS. Mr. Chairman, thank you for giving me the opportunity and the privilege of presenting my friend, Dr. Charles Breecher. Dr. Breecher is one of the most knowledgeable people in our country today on issues relating to the Panama Canal Treaty; and specifically, to the question of implementing legislation for the Panama Canal Treaty.

I am very pleased and grateful to you, Mr. Chairman, for scheduling this hearing this morning so that Dr. Breecher could be with us. I have repeatedly brought to the attention of the Justice Department the legal problems raised by Dr. Breecher to the implementing legislation. Frankly, I hope the committee has more success than I have had in ferretting out answers from the administration on the many difficult issues surrounding this entire matter. After months of waiting for a response, the Justice Department finally told me that they would respond to Dr. Breecher's arguments at these hearings. But one really gets the impression that they have no answers.

So, Mr. Chairman, it is a great pleasure and privilege to introduce my friend, who is not only an expert on the Panama Canal, but is a very fine economist and journalist, and a very fine constituent of mine in Delaware, Dr. Charles Breecher.

Mr. HUBBARD. We are glad to have you, Dr. Breecher. We are glad to accommodate you in these hearings.

(1329)

STATEMENT OF CHARLES H. BREECHER, JURIST

Dr. BREECHER. Mr. Chairman, I greatly appreciate this opportunity and privilege to testify before this committee. My testimony concerns one point only, but a point of fundamental importance, and that is that the proposed legislation, H.R. 1716, which attempts to set up the Panama Canal Commission, a U.S. Government agency, in accordance with the Panama Canal Treaty of 1977, is in conflict with the provisions of the U.S. Constitution.

The legislation introduced by the executive branch is unconstitutional beyond any doubt. Mr. Chairman, showing that the setting up of the Panama Canal Commission, as ordained in the treaty, is unconstitutional, is a simple, straightforward issue, even though it has not been fully debated yet and the executive branch has given no answers, as Congressman Evans just outlined.

I have yet to hear, after a full year, one respectable legal argument in rebuttal from anybody, and I must have talked to hundreds of knowledgeable jurists, among others. I feel very much like the child who shouted that the emperor has no clothes on.

The Panama Canal Commission is a U.S. Government agency; the treaty says so and the implementing legislation says so. All its nine members exercise significant U.S. governmental authority. Accordingly, and pursuant to the Supreme Court's definition of who civil officers of the United States are in Buckley v. Valeo, a 1976 decision, all nine directors of the Panama Canal Commission are U.S. civil officers.

But the implementing legislation, pursuant to the wording of the Panama Canal Treaty of 1977, provides that there should be four Panamanian nationals, nonresident aliens-and I stress the word "nonresident"-on the Commission. Further, the President must, according to the legislation which follows the treaty, appoint the nominees of the Panamanian Government in a timely manner. He must remove them at Panamanian request, and he cannot remove them without Panamanian consent.

Although they are superior officers, they are exempted by the legislation from Senate advise and consent to their appointment. Now, these provisions violate the U.S. Constitution, as interpreted by various Supreme Court decisions which I shall cite, on five major counts. Every one of these counts is sufficient to deem the legislation unconstitutional beyond any reasonable doubt, as follows:

A President's right to appoint cannot be restricted by law to the point where he has no choice at all but to appoint somebody else's nominee in a timely manner.

Second, the President's power to remove executive officers cannot be restricted in any way, nor can it be usurped by someone else at whose request he must remove.

Third, the Senate's right to give advice and consent to appointments can be abridged only for inferior officers, not for superior officers.

Fourth, and here I come to the most important rights of individual U.S. citizens, nonresident aliens owing no loyalty to the United States cannot become U.S. civil officers.