Mr. HUBBARD. No objection. Thank you.
[The following was submitted for the record:] ·

STATEMENT OF H. MILES FOY, ATTORNEY-ADVISER, OFFICE OF LEGAL COUNSEL,
DEPARTMENT OF JUSTICE

Mr. Chairman: I want to thank the committee for inviting the Department of Justice to participate in these hearings. You have asked us to comment on ten specific questions involving legal aspects of the proposed implementing legislation and the Panama Canal Treaty itself. In these prepared remarks I will focus on five of these questions: (1) the constitutionality of Panamanian participation on the Panama Canal Commission, (2) the effect of the treaty on the federal income tax liability of U.S. citizens in the Canal Zone, (3) the extent of U.S. authority during the transition period, (4) the legal consequences of a failure to enact implementing legislation, and (5) the constitutionality of payments to Panama by the Panama Canal Commission in the absence of "appropriations" for such payments.

CONSTITUTIONAL QUESTIONS SURROUNDING PANAMANIAN PARTICIPATION ON THE PANAMA

CANAL COMMISSION

As you know, Panama will assume administrative and legislative jurisdiction over the Canal Zone on October 1, 1979, but Panama will not assume full responsibility for managing the canal itself until the end of the century. Until then, the United States will manage the canal through a new agency called Panama Canal Commission.

The treaty establishes a framework for an orderly transition to full Panamanian control by the year 2000. It provides that Panamanians will participate in the management and operation of the canal from the outset. The intent is that by the end of the century Panamanian policy-makers, managers, and employees will be in place and will be fully prepared to assume the responsibilities that will devolve upon Panama when the treaty terminates.

Panamanian participation will take a number of different forms. The treaty and the ancillary agreements provide that Panamanians will participate on bilateral committees, that the Panama Canal Commission will employ Panamanians “at all levels," that until 1990 the Deputy Administrator of the Commission will be a Panamanian proposed by Panama for appointment to that position by the United States, and that after 1990 the Administrator of the Commission will be a Panamanian proposed and appointed in the same way. Finally, and more significantly, the treaty provides that four of the nine members of the governing board of the Commission will be Panamanians proposed by Panama for appointment to the board by the United States and subject during their tenure to removal at the request of Panama.

The provisions regulating the selection, appointment and removal of the Panamanian board meners have given rise to several constitutional questions. The basic question is whether these provisions comport with the clauses of Article II of the Constitution that regulate the appointment and removal of “Officers of the United States." Does Article II allow us to establish an arrangement under which candidates for appointment to public office will be proposed by a foreign nation (Panama)? Can "Officers of the United States" be subject to removal at the request of a foreign nation? Can foreigners (Panamanians) be Officers of the United States? These questions are based on an assumption-the assumption that the Panamanian board members will indeed be "Officers of the United States" in the Article II sense. I want to examine that assumption. Unless the treaty itself, the Constitution, or some other law makes these Panamanians "Officers of the United States" or requires us to regard them as such, we need not test the manner of their selection or removal against the requirements of Article II.

The treaty provides that the Panama Canal Commission will exercise the powers that devolve upon the United States under the treaty. Whenever they concur with the American majority, the Panamanian minority on the board will participate in the exercise of those powers; but the manifest intention of the treaty is that they will represent, not the interests of the United States, but the interests of Panama. They will of course be bound by the treaty, which is a law of the United States, but their function will be to represent the views of a foreign nation, our partner in this joint enterprise.

Are these Panamanians "Officers of the United States" in the Article II sense? The Supreme Court has not given us a precise definition of that constitutional phrase. We know that "Officers of the United States" are persons engaged "in the administration and enforcement of public law," see Buckley v. Valeo, 42 U.S. 1, 141

F

(1975); but in the reported cases we find little guidance beyond that general pronouncement. The safest course is to examine Article II itself. It contains no actual definition, but it sheds light on the question by implication. For example, it provides that "civil Officers of the United States" will be subject to removal from office on impeachment for, and conviction of, "treason." Because a person cannot commit "treason" unless he "owes allegiance" to the sovereign against whom the treason is committed, see Young v. U.S., 97 U.S. 39 (1877), Article II appears to contemplate that Officers of the United States will be persons who "owe allegiance" to the United States under our law. I should add that one does not have to be a citizen of the United States in order to "owe allegiance" to the United States in this sense; but the basic point still holds. Article II appears to contemplate that Officers of the United States will be persons whose basic loyalty is to this country and whose basic objective in the performance of their duties is to advance the interests of this country.

I return to the question at hand. Does this treaty contemplate that the Panamanian board members will be "Officers of the United States" in the constitutional sense? We think it does not. Their primary allegiance will be to Panama, and their function under the treaty will be to represent Panamanian interests during the transition to full Panamanian control.

This brings us to the nub of the matter. The real question here is whether this treaty can give a voice in the control of the canal to persons who are not "Officers of the United States" in the constitutional sense. The answer to that question is yes. As implemented by the legislation establishing the Commission (enacted pursuant to Congress' undoubted power under Article IV), this treaty can transfer control over the Panama Canal to Panamanians. Indeed, the treaty itself is sufficient. That issue, or an issue very much like it, was resolved last Spring by the Court of Appeals for the District of Columbia Circuit in Edwards v. Carter (opinion filed April 17, 1978). There the Court of Appeals held that the disposition of our interests in the Canal Zone is a proper subject for negotiation between this Nation and Panama, that this subject is therefore within the treaty power, and that our interest may therefore be transferred to Panama by treaty. This decision was supported by the history of the treaty cause, by treaty practice, and by the weight of scholarly authority.

If the Constitution permits us to give control of the Panama Canal to Panamanians, we think there can be no substantial constitutional question that control can be transferred as contemplated by this treaty-that is, by first giving Panama a voice, but not a controlling voice, in the operation of the canal, by employing Panamanians in increasing numbers to do the actual work involved in the operation of the canal, and then by transferring full control to Panama at the end of the century.

I will conclude this discussion by emphasizing the point I have just made. If the United States entered into a treaty with, say, Canada, providing that the Secretary of Defense would be a Canadian proposed by Canada and subject to removal at the request of Canada, the constitutional problem with that arrangement would be fundamental. Control over the Department of Defense cannot be transferred to a foreign power by treaty or by any other law. That control must be exercised by an individual who owes allegiance to the United States and is subject to the full administrative power of the United States; and in constitutional terms this means that he must be an "Officer of the United States" in the sense contemplated by Article II. Control over the Panama Canal, however, can be constitutionally transferred to Panama. That is the critical point. Control over the Panama Canal can be placed in the hands of Panamanians who are not Officers of the United States in the constitutional sense, and this is what the Panama Canal Treaty is designed ultimately to do.

I have two final points. First, the preceding analysis should not be taken to suggest that the Administrator and Deputy Administrator of the Commission are on the same legal footing as the Panamanian Board members. They are fully subject to U.S. control and are responsible to us. Second, the approaches taken in the Administration's bill and in Chairman Murphy's bill differ on the question of the mode of appointment of the board members. The Administration's bill provides that they will be appointed by the President. Chairman Murphy's bill provides that they will be appointed by the President with the advice and consent of the Senate. For the reasons I have just given, neither of these modes of appointment presents a constitutional problem with respect to the Panamanian members; but I should add that to the extent that the advice and consent requirement seems to suggest that the Panamanian members must answer to us in their opinions and policies, this arrangement seems inconsistent with the theory upon which the treaty is based. Our remedy is to exercise control through the American majority. I note that on this point both the Administration's bill and Chairman Murphy's bill provide explicitly that the board can take no action in the absence of an American majority.

25-309 O 84 - 9

Dr. FRANCIS. Mr. Harman and Mr. Dodge, as I said a moment ago, why do you not commence making your summaries of your statements, if you would like? By that time, I hope that Senator East will have returned. So why do you not go ahead?

Thank you, Mr. Dalton, again.

STATEMENT OF HERBERT W. DODGE

Dr. DODGE. Thank you, Mr. Chairman, for giving me the opportunity to appear in support of Dr. Breecher with reference to the Panama Canal treaties. In the interest of time, I will summarize my written statement which I have given the committee. I appreciate that you want a short summary.

I am reminded by the State Department's summary of the fellow from Yale who wanted to summarize his years at Yale and he started with the letter "Y," and for half an hour he talked about that, and then "a" a half hour, "1" a half hour, and "e" a half hour. And one fellow said he was glad he did not go to the Massachusetts Institute of Technology.

The issues we are bringing today before this committee are very simple and you do not need a long lawyer's argumentation about them. First, the Panama Canal treaties are not valid because the parties have not agreed to the same treaty texts. In other words, there is no meeting of the minds.

Second, the implementation of the Panama Canal Act of 1979 is unconstitutional because Panamanian nonresident aliens have been appointed as members and as deputy administrators of the Panama Canal Commission, a U.S. Government agency.

It is unfortunate that we are not under oath here because this is not a complicated thing, and as just an ordinary, everyday citizen, I think that, you know, it is necessary to get to the bottom of it. And it would be good if we could clarify these issues that we are raising without going through a lot of rigmarole.

What are the facts of the situation? First, with bilateral treaties, the two countries must agree to the same text to ratify. The text of the U.S. instrument of the Neutrality Treaty gives the United States the right to independently, without Panama's consent and full cooperation, and without restriction, to use military force in Panama to keep the canal open, if necessary. There is nothing ambiguous about this.

The Panamanian instruments of ratification first accept this, and then add unilaterally a three-paragraph-long counterreservation which has been kept from the American people. This counterreservation says in unequivocal language that the United States can use military force in Panama only in self-defense, pursuant to article 18 of the OAS charter, and, further, only in the spirit of cooperation.

Now, if you are going in to keep the canal open against Panama, how can you do that in cooperation? This interpretation must be accepted verbatim by the United States or there is no agreed text. Now, the fundamental difference between the text as ratified by the United States and the text as ratified by Panama can easily be made apparent. Assume a strike for U.S. wage rates by Panamanian workers, supported by the Panamanian Government, closes

the canal. Picket lines cannot be crossed except by giving strikebreakers military protection.

Under the DeConcini reservation, the United States could independently, without agreement or cooperation of Panama, use military force so picket lines could be crossed and the canal operated. But under the Panamanian understanding, the cooperation of Panama would be necessary and then the United States would be helpless.

It would make all the difference in the world with the U.S. public and with our European allies whether the United States had the right, under the treaties, to go ahead with military force against Panama's will and resistance, or whether Panama could maintain that the treaty gives the United States no such right unless Panama agrees.

I think you would agree that this scenario is a most realistic one. Threatening action by Panamanians or Panamanians supported by their Government is a much more likely prospect than the possible seizure of the canal from some outside force.

I would challenge the representatives of the State Department to testify under oath that under such a scenario, United States and Panamanian versions of the treaty would not differ in their application.

Since the Panamanian counterreservation made their consent to the treaties contingent upon a continued adherence to the unamended article 18 of the OAS Charter and to the spirit of cooperation with Panama-the very thing the DeConcini reservation does not require the proper course for our State Department would have been to resubmit the treaty with the Panamanian understanding to the Senate for its approval.

Instead, the record will show that the State Department for a number of years, despite many specific documented written efforts to point out this situation, ignored and did not even acknowledge the existence of the second and third paragraphs in this correspondence.

I could cite one instance of my correspondence, Mr. Chairman, where, as a result, this issue was brought to the State Department's attention by a member of this Judiciary Committee. The State Department delayed for over 6 months and then gave a reply that was either untrue or misleading in every material respect, stating the argument were "familiar to the Department and have been answered in congressional testimony."

Up to this time, where has there been one line of executive branch testimony on this issue?

The fact that the U.S. State Department acted consciously to subvert the Constitution of the United States has been fully attested by the now well-known letter of David H. Popper to Phillip H. Harman of June 5, 1982. This fact was also clearly and explicitly described in an address by former Assistant Secretary William D. Rodgers at the annual dinner of the American Society of International Law on April 29, 1979.

How many Senators, Mr. Chairman, who voted for the treaties only after the inclusion of the DeConcini reservation would agree that the United States could only exercise DeConcini in self de

fense, per article 18 of the OAS Charter, and in the spirit of cooperation with Panama?

To determine whether the State Department is going to persist in covering these facts up that there is a difference in the treaties as ratified by Panama and the United States, I suggest that the representatives of the State Department be required to testify under oath, and that the seven questions listed on pages 3 and 4 of my written statement be put to them. These questions are very simple and can be answered yes or no.

Now, with reference to implementation of the treaties, the simple fact is that appointing nonresident Panamanians to the Panama Canal Commission is a violation of the Constitution. On March 26, 1981, Dr. Charles H. Breecher testified under oath before the Panama Canal Subcommittee of the House. He stated in a forthright manner that the Panama Canal Commission was a U.S. agency, an undisputed fact; that officers of the Commission, whether they were called administrators, deputy administrators, or members, were Federal law officers and, as such, under the U.S. Constitution could not be nonresident Panamanians, who obviously could not bind themselves by oath to support the Constitution or to be impeached for committing treason against the United States.

It should have been simple to deal with the basic set of facts that Dr. Breecher had thus set forth. It was significant that no one arose in the March 26 hearing to challenge Dr. Breecher's assertions.

On March 23, 1981, Chairman Hubbard of the Panama Canal Subcommittee had written me to state that the solution to problems of ratification and the eligibility of Panamanian nationals to hold offices on the Panama Canal Commission were primarily the responsibility of the executive branch and the Senate.

In response to Chairman Hubbard, who apparently accepted Dr. Breecher's assertions, I suggested in a letter dated March 28 that he write to the new President to explain to him these problems and request executive branch action toward some solution.

On April 7, 1981, in a letter to President Reagan, Chairman Hubbard raised the whole matter of constitutionality of appropriations for payments of officers of the Panama Canal Commission who are not U.S. citizens for executive branch action.

It took over 1 year for the executive branch to respond to Chairman Hubbard's request, to which it stated on September 30, 1981, it would give prompt and careful attention. However, no substantive reply came for over 1 year. When it did materialize on May 17, it was merely a transmittal of an unsupportable 1979 thesis of the Justice Department that the Panamanian members of the Commission were not officers of the United States. This position had already been rejected in 1979 by the subcommittee-an action fully endorsed by Congress in the Panama Canal Act of 1979.

Mr. Chairman, over the past several years I have written to a number of Senators and Congressmen to get some resolution on these rather simple and basic issues. One distinguished Senator replied:

It is certainly true that a case can be made that the treaties are null and void, since there is no agreed upon text and because Panama has repudiated the reservations appended by the Senate. But in international relations, legal cases are only as