Power Authority v. Federal Power Commission

Mr. John R. Davison, Albany, N. Y., a member of the bar of the Court of Appeals of New York, pro hac vice, by special leave of Court, for intervenor, People of the State of New York. Mr. Henry H. Fowler, Washington, D. C., also entered an appearance for intervenor, People of the State of New York.

Mr. Lawrence Potamkin, Washington, D. C., was on the brief for intervenor, Oneida Madison Electric Cooperative, Inc., and certain other intervenors.

Mr. T. Carl Nixon, Rochester, N. Y., was on the brief for intervenor, Rochester Gas and Electric Corporation.

Messrs. Northcutt Ely, Robert L. McCarty, C. Emerson Duncan II, and Charles F. Wheatley, Jr., Washington, D. C., were on the brief for intervenors, American Public Power Association, and the City of Jamestown, New York.

Before EDGERTON, Chief Judge, and BAZELON and BASTIAN, Circuit Judges.

BAZELON, Circuit Judge.

Petitioner, an agency of the State of New York, applied to the Federal Power Commission for a license to construct a power project to utilize all of the Niagara River water which, under the 1950 treaty between the United States and Canada,1 is available for American exploitation.

In consenting to the treaty, the Senate had attached the following "reservation":

The United States on its part expressly reserves the right to provide by Act of Congress for redevelopment, for the public use and benefit, of the United States share of the waters of the Niagara River made available by the provisions of the treaty, and no project for redevelopment of the United States share of such waters shall be undertaken until it be specifically authorized by Act of Congress. [1 U.S.T. 694, 699.]

The Commission dismissed petitioner's application on November 30, 1956, in an opinion and order declaring:

"In the absence of the treaty reservation we would act on the Power Authority's application in accordance with the provisions of the Federal Power Act [16 U.S.C.A. § 791a et seq.] But if we are to accept the injunction of the reservation as it stands, we would have no authority to consider the application of the Power Authority on its merits. * * *

"Since the reservation here was intended by the Senate as part of the treaty and was intended to prevent our jurisdiction attaching to the water made available by the treaty, it is entirely authoritative with us as the Supreme Law of the Land under Article VI of the Constitution. * * *

"We are without authority to issue a license for the redevelopment (Project No. 2216) proposed by the Power Authority of the State of New York."

An application for rehearing was denied on January 2, 1957, and petitioner brought this review proceeding.

The parties agree that, if the reservation to the 1950 treaty is not "Law of the Land," the order should be set aside. Since the reservation did not have the concurrence of the House of Representatives, it is not "Law of the Land" by way of legislation.2 The question is whether it became "Law of the Land" as part of the treaty.

The Commission argues that the reservation is an effective part of the treaty because: (1) it was a condition of the Senate's consent to the ratification of the treaty; (2) the condition was sanctioned by the President, was "accepted" by Canada, and was included in the exchange of ratifications; and (3) it "thus became a part of the Treaty." Simple as this argument seems, we cannot agree with it.

The treaty was signed on behalf of the United States and Canada on February 27, 1950. It defined the quantity of Niagara River water which was to be available for power purposes and provided that it "shall be divided equally between the United States of America and Canada." How each party was to exploit its share of the water was left for that party to decide.

In transmitting the treaty to the Senate on May 2, 1950, the President pointed out that the treaty did not determine how the United States was to exploit its share of the water. He said:

"* * * It is a question which we in the United States must settle under our own procedures and laws. It would not be appropriate either for this country or for Canada to require that an international agreement between them contain the solution of what is entirely a domestic problem."3

The Foreign Relations Committee of the Senate agreed that the question was "domestic in nature" and "concerns the United States constitutional process alone." It recommended the reservation because, without it, "the redevelopment for power purposes would be governed by the Federal Power Act. The Committee intends by the reservation to retain that power in the hands of Congress."4 The Senate accepted the Committee's recommendation and consented to the ratification of the treaty with the reservation on August 9, 1950.5

Meanwhile, the Canadian Parliament had approved the treaty as signed, without the reservation. In a note on August 17, 1950, the Legal Advisor of the Department of State called the attention of the Canadian Government to the Senate action, saying:

"It appears that, while recognizing the subject matter of the reservation as domestic in nature and concerning the United States constitutional process alone, the Senate considered the reservation necessary in order to make certain that implementation of the treaty on the part of the United States would be made only by specifically authorized acts of Congress and would not be governed by the Federal Power Act."

A week later, without waiting for Canadian reaction to the reservation, the President ratified the treaty subject to the reservation. On September 21, 1950, the Canadian Ambassador, replying to the State Department's note, advised that his government accepted the reservation and would indicate its acceptance "by a statement to be included in the Protocol of exchange of ratifications." Two weeks later, without resubmitting the treaty to Parliament for approval of the reservation, the Canadian Government ratified the treaty. In the Protocol, on October 10, 1950, Canada inserted the following statement:

"Canada accepts the above-mentioned reservation because its provisions relate only to the internal application of the Treaty within the United States and do not affect Canada's rights or obligations under the Treaty."

The Canadian view that the reservation was of purely domestic concern to the United States and of no concern to Canada was shared, as we have shown, by the President, the Department of State and the Senate.

Unquestionably the Senate may condition its consent to a treaty upon a variation of its terms. The effect of such a "consent," by analogy to contract law, is to reject the offered treaty and to propose the variation as a counter-offer which will become a binding agreement only if accepted by the other party.6 But, if what the Senate seeks to add was implicit in the original offer, the purported "conditional acceptance" is an acceptance and the contract arises without a further acceptance by the other party being required. Restatement, Contracts § 60, comment a (1932). The disposition of the United States share of the water covered by this treaty was, even apart from the reservation, something "which we in the United States must settle under our own procedures and laws." The reservation, therefore, made no change in the treaty. It was merely an expression of domestic policy which the Senate attached to its consent. It was not a counter-offer requiring Canadian acceptance before the treaty could become effective. That Canada did "accept" the reservation does not change its character. The Canadian acceptance, moreover, was not so much an acceptance as a disclaimer of interest. It is of some significance in this regard that the Canadian Government, although it had submitted the original treaty to the Parliament for its approval, found it unnecessary to resubmit the treaty to Parliament after the reservation was inserted. Also significant is the fact that the President ratified the treaty with the reservation without even waiting for Canada to "accept."

A true reservation which becomes a part of a treaty is one which alters "the effect of the treaty in so far as it may apply in the relations of [the] State with the other State or States which may be parties to the treaty." Report of the Harvard Research in International Law, 29 Am.J. Int'l L. Supp. 843, 857 (1935). It creates "a different relationship between" the parties and varies "the obligations of the party proposing it * * *" 2 Hyde, International Law, Chiefly As Interpreted and Applied by the United States (2d revised ed. 1945) 1435; International Law Commission, 2d Sess., Report on the Law of Treaties by J. N. Brierly, U.N. Doc. A/CN. 4/23, 14 April 1950, pp. 41, 42-43. The purported reservation to the 1950 treaty makes no change in the relationship between the United States and Canada under the treaty and has nothing at all to do with the rights or obligations of either party. To the extent here relevant, the treaty was wholly executed on its effective date. Each party became entitled to divert its half of the agreed quantum of water. Neither party had any interest in how the share of the other would be exploited, nor any obligation to the other as to how it would exploit its own share. The Senate could, of course, have attached to its consent a reservation to the effect that the rights and obligations of the signatory parties should not arise until the passage of an act of Congress. Such a reservation, if accepted by Canada, would have made the treaty executory. But the Senate did not seek to make the treaty executory. By the terms of its consent, the rights and obligations of both countries arose at once on the effective date of the treaty. All that the Senate sought to make executory was the purely municipal matter of how the American share of the water was to be exploited.

A party to a treaty may presumably attach to it a matter of purely municipal application, neither affecting nor intended to affect the other party. But such matter does not become part of the treaty. The Republic of New Granada, in 1857, attached such purely municipal matter to its ratification of a treaty with the United States. The President of the United States treated the added articles as being no part of the treaty. He ratified the treaty without resubmitting it to the Senate, stating in the Protocol of Exchange of Ratifications:

"* * * considering the said articles as in no way affecting the provisions of the said Treaty, but as being acts simply of domestic legislation7 on the part of the Granadian Confederacy, and as implying no reciprocal obligation on the part of the United States, the said exchange has this day been effected in due form. [Miller, Reservations To Treaties (1919) 27.]"

The constitutionality of the reservation as a treaty provision was extensively argued by the parties. The respondent merely suggests that "there is no apparent limit" to what may be done under the treaty power, citing State of Missouri v. Holland, 1920, 252 U.S. 416, 40 S.Ct. 382, 64 L.Ed. 641. Intervenor Rochester Gas and Electric Corporation puts the proposition more baldly. It defends this reservation as an "exercise of the treaty-making power to legislate in the domestic field * * * ," calling our attention to the fact that the Supreme Court has never held a treaty provision unconstitutional.8 But it has been pointed out that the Court has never had occasion to consider a treaty provision which "lacked an obvious connection with a matter of international concern." 2 Hyde, International Law, Chiefly As Interpreted and Applied By The United States (2d revised ed. 1945) 1401. The instant reservation is sui generis. There is complete agreement by all concerned that it relates to a matter of purely domestic concern.

In State of Missouri v. Holland, 252 U.S. at page 433, 40 S.Ct. at page 383, Mr. Justice Holmes questioned, but did not decide, whether there was any constitutional limitation on the treaty-making power other than the formal requirements prescribed for the making of treaties.9 The treaty he sustained related to a "national interest of very nearly the first magnitude" which "can be protected only by national action in concert with that of another power." Id., 252 U.S. at page 435, 40 S.Ct. at page 384. And it conferred rights and imposed obligations upon both signatories. Id., 252 U.S. at page 431, 40 S.Ct. at page 383. The treaty power's relative freedom from constitutional restraint, so far as it attaches to "any matter which is properly the subject of negotiation with a foreign country," Ware v. Hylton, 1796, 3 Dall. 199, 1 L.Ed. 568, is a long-established fact. Geofroy v. Riggs, 1890, 133 U.S. 258, 10 S.Ct. 295, 33 L.Ed. 642. No court has ever said, however, that the treaty power can be exercised without limit to affect matters which are of purely domestic concern and do not pertain to our relations with other nations.

Our present Secretary of State has said that the treaty power may be exercised with respect to a matter which "reasonably and directly affects other nations in such a way that it is properly a subject for treaties which become contracts between nations as to how they should act"; and not with respect to matters "which do not essentially affect the actions of nations in relation to international affairs, but are purely internal."10 He had earlier said:

"* * * I do not believe that treaties should, or lawfully can, be used as a device to circumvent the constitutional procedures established in relation to what are essentially matters of domestic concern.11"

Charles Evans Hughes, just before he became Chief Justice and after he had been Secretary of State, addressing himself to the question whether there is any constitutional limitation of the treaty power, said:

"* * * The Supreme Court has expressed a doubt whether there could be any such * * *. But if there is a limitation to be implied, I should say it might be found in the nature of the treaty-making power.

"* * * The power is to deal with foreign nations with regard to matters of international concern. It is not a power intended to be exercised, it may be assumed, with respect to matters that have no relation to international concerns. * * the nation has the power to make any agreement whatever in a constitutional manner that relates to the conduct of our international relations, unless there can be found some express prohibition in the Constitution, and I am not aware of any which would in any way detract from the power as I have defined it in connection with our relations with other governments. But if we attempted to use the treaty-making power to deal with matters which did not pertain to our external relations but to control matters which normally and appropriately were within the local jurisdiction of the States, then I again say there might be ground for implying a limitation upon the treaty-making power that it is intended for the purpose of having treaties made relating to foreign affairs and not to make laws for the people of the United States in their internal concerns through the exercise of the asserted treaty-making power.12

In the Dulles view this reservation, if part of the treaty, would be an invalid exercise of the treaty power. In the Hughes view, its constitutionality would be a matter of grave doubt. "The path of constitutional concern in this situation is clear." United States v. Witkovich, 1957, 353 U.S. 194, 77 S.Ct. 779, 783, 1 L.Ed.2d 765. We construe the reservation as an expression of the Senate's desires and not a part of the treaty. We do not decide the constitutional question.

It is argued that, since the reservation was a condition to the Senate's consent to the treaty, to deny effect to the condition vitiates the consent and thus invalidates the whole treaty. That argument, we think, was disposed of by the Supreme Court in New York Indians v. United States, 1898, 170 U.S. 1, 18 S.Ct. 531, 42 L.Ed. 927. That case involved a treaty with certain Indian tribes. The Senate in its resolution of consent to the treaty, had attached certain amendments and declared that "the treaty shall have no force or effect whatever, * * * nor shall it be understood that the senate have assented to any of the contracts connected with it until the same, with the amendments herein proposed, is submitted and fully and fairly explained by a commissioner of the United States to each of said tribes or bands, separately assembled in council, and they have given their free and voluntary assent thereto * * *." Id., 170 U.S. at pages 21-22, 18 S.Ct. at page 536. The amendments which the Senate attached to its resolution consenting to the treaty, as the Supreme Court recognized, were not communicated to the Indian tribes. The Court concluded that the amendments were not part of the treaty. It nevertheless treated the Senate's consent as effective to make the treaty valid and operative. Id., 170 U.S. at pages 22-24, 18 S.Ct. at page 536.

The order under review is set aside and the case remanded to the Federal Power Commission.

It is so ordered.

BASTIAN, Circuit Judge (dissenting).

Petitioner, Power Authority of the State of New York, petitions under § 313 (b) (16 U.S.C.A. § 825l) of the Federal Power Act to set aside the whole of an order of the respondent, Federal Power Commission. That order dismissed petitioner's application for license under § 4 (e) (16 U.S.C.A. § 797(e) of the Federal Power Act for a power project. The application was for a license for a proposed hydro-electric development, including facilities for the diversion from the Niagara River of all of the water available under the 1950 Treaty between the United States and Canada.

Being doubtful of its power to act on the application for license because of a reservation made in the treaty as a condition to the advice and consent of the United States thereto, the Commission heard oral argument on the application of the 1950 Treaty and the reservation. Thereafter, finding itself without authority to issue a license for the project, the Commission ordered the application dismissed.

Petitioner filed application for rehearing, which was denied by the Commission's order of January 2, 1957; whereupon, the present petition for review was filed.

The facts are largely undisputed and appear in the opinion and order of the Commission dismissing the application for license, as follows:

"The application proposes a project which, briefly, would consist of an intake structure located about three miles above the falls on the Niagara River, two covered conduits extending about 4.5 miles from the intake around the falls to a proposed pumping-generating plant and reservoir at Lewiston, New York, an open canal by which the water will be carried about one mile from the pumping-generating plant and reservoir to the main power-house, which is also located at Lewiston at the edge of the river and consists of intake structures on the top of the cliff, and a generating station at the bottom of the cliff containing thirteen 150,000 kw units.

"Up to now power development on the American side at Niagara Falls has been under the authority of a license issued on March 2, 1921, for Project 16 and now held by Niagara Mohawk Power Corporation. Niagara Mohawk's Schoellkopf generating station at the Falls was rendered inoperative by a rock slide on June 7, 1956, but the company has filed an application requesting authority to restore the station in part. The application of Power Authority proposes that if Niagara Mohawk will consent to the surrender of its license for Project 16 it will sell it an amount of power equivalent to that which it has hitherto produced by this project.

"Power Authority's proposal is designed to make use of all the water available under the 1950 treaty, the purpose of which was to preserve the beauty of Niagara Falls and to bring about the full use of the water resources of the Niagara River. The American share up to the time of the treaty had been only 32,500 cfs, made available under the treaty of 1909 and through subsequent exchanges of notes between the United States and Canada, and has been utilized, up to the time of the rock slide, by Niagara Mohawk's Project 16. The 1950 treaty increased this amount by providing that the United States and Canada should divide equally the water flowing in the Niagara River (with certain adjustments) less 50,000 cfs at certain times and 100,000 cfs at other times, to preserve the beauty of the Falls.

"When the Senate of the United States on August 9, 1950, advised and consented to the ratification of the 1950 treaty, it included the following reservation:

"The United States on its part expressly reserves the right to provide by Act of Congress for redevelopment, for the public use and benefit, of the United States' shares of the waters of the Niagara River made available by the provisions of the Treaty, and no project for redevelopment of the United States share of such waters shall be undertaken until it be specifically authorized by Act of Congress (1 UST 694, 699).

"Thereafter Canada accepted the reservation and on August 24, 1950, the treaty, including the reservation, was ratified by the President of the United States. It was ratified by Canada on October 5, 1950. Ratifications were exchanged at Ottawa on October 10, 1950. The treaty was proclaimed by the President on October 30, 1950, and entered into force October 10, 1950."

On these facts the Commission very properly concluded that it had no power to determine the constitutionality of an act of Congress, and ruled:

"Where, as here, there is action by the Senate, which was ratified by the President purportedly under the treaty-making power of the Constitution, we likewise cannot determine its validity and this is especially true since the action is that of the legislative branch of the government, of which we are an arm and of whose intention we can have no doubt."

There is no doubt that a treaty is not only a contract between sovereign nations but may contain provisions which affect local law within the nation. State of Missouri v. Holland, 1920, 252 U.S. 416, 40 S.Ct. 382, 64 L.Ed. 641. The Senate, in connection with its treaty-making powers,1 is not a mere rubber stamp for the executive. It is true that ordinarily it is the President who originates treaties and negotiates with a foreign nation but he is unable to conclude such treaties without the advice and consent of the Senate. The Senate has the duty of both "advice" and "consent". Both of these terms are important and were so deemed by our founding fathers. Consequently, the Senate has the right to advise reservations and amendments to a proposed treaty and has done so on many occasions. Thus, in the original United States-Canadian Boundary Waters Treaty of 1909 the Senate proposed, and there was adopted, an amendment of understanding. In fact, the Jay Treaty of 1794,2 the first made by this country after the adoption of the Constitution, was not consented to by the Senate as originally proposed. Instead, the Senate advised and consented to ratification only after an amendment of the proposed terms of the treaty.

The treaty involved here was, as usual, originally sent by the President to the Senate. The Senate advised and consented to ratification upon conditions set out in the reservation. Canada accepted the reservation and, thereafter, on August 24, 1950, the President ratified the treaty as conditioned by the Senate. Canada ratified on October 5, 1950, and the reservation was included in the protocol evidencing the exchange of ratification by the United States and Canada.

* Petitioner argues, and the majority holds, that what was called a reservation by the Senate, the President, State Department officials, and the Canadian Government, was not truly a reservation, but merely a declaration of Senatorial policy which has no binding effect. The basis of this argument is that standing alone, without considering other factors, the reservation was a matter of domestic concern having no effect on the rights and duties of the sovereign parties to the treaty, whereas a valid reservation must alter the rights and duties of the parties under the treaty as originally proposed. No need exists for an esoteric discussion of whether the language in question conforms to the scholar's definition of a treaty reservation. If the Senate conditioned its advice and consent to the treaty upon inclusion of the language in question and upon its being given an operative effect — if the Senate did so condition its consent — if the condition was a sine qua non to its consent and to ratification — if but for its condition being given effect the Senate would not have consented to the treaty — then regardless of what the language in question is called it must be given effect. Believing this to be the only proper approach to petitioner's contention, I would dispose of that contention by determining the intent of the Senate when it insisted upon inclusion of the language in question in the treaty.

As will be shown in more detail later, the Senate was aware, at the time the treaty was submitted, of pending legislation relative to the development of water-power resources of the Niagara River.3 It was likewise aware that if the treaty was ratified as written the additional water power available for exploitation by this country would be developed pursuant to the Federal Power Act, supra.4 Whether it should be developed pursuant to that Act or according to the terms of later legislation was a matter of considerable concern to the Senate. If the language of the reservation does not make this clear, and I think it does, then the report of the Senate Foreign Relations Committee does.5 There is no reasonable construction of the plain language of the reservation or of its legislative history other than this: The Senate desired to consent to the proposed treaty, but not at the expense of foreclosing from the consideration and decision of the Congress at large the question of how the water power would be developed. We should not assume that this reservation, arising from due deliberation, was an idle gesture. Its language is straightforward and to the point. Its meaning is clear. I do not see how we can avoid giving effect to it according to its terms. Of course, if the reservation was beyond the constitutional power of the Senate, it cannot be given effect. If it is beyond the power of the Senate, then not just the reservation falls, but the entire treaty. How can it be otherwise when the Senate has made it abundantly clear that without the reservation it would not have consented to the treaty?6

No authority can be found for holding a treaty valid while rendering a Senatorial reservation to it nugatory. New York Indians v. United States, 1898, 170 U.S. 1, 18 S.Ct. 531, 42 L.Ed. 927, referred to by petitioner, certainly does not do so and has no application to the case before us. In New York Indians, the Senate proviso was never incorporated in the text of the treaty; it was not contained in the original or published copy of the treaty; nor was it contained in the Presidential proclamation of the treaty. The Supreme Court indicated that it believed the Senate resolution in question was "mainly directory" and stated "* * * it is difficult to see how it can be regarded as part of the treaty, or as limiting at all the terms of the grant."7 The Court also pointed out that there was no evidence that the Senate amendment of the proposed treaty had ever had the sanction or approval of the President.

Even if the proviso in the Indian treaty were intended as a reservation, that case is clearly distinguishable in important particulars. There the United States sought to invoke the reservation to the detriment of the other parties to the treaty. Also, the United States was doing so despite the fact that the other parties had acted on the basis of the treaty as proclaimed and had no knowledge of the proviso. The Court said that to permit the United States to invoke the proviso "shocks the conscience."8 This is the language of an estoppel. Upholding a treaty while declaring void a reservation such as this one, and upholding a treaty while estopping the government from asserting an uncommunicated reservation are entirely different situations. Certainly the latter is not authority for the propriety of the former.

Enough has been said already to indicate my disagreement with a holding that the reservation is not a part of the treaty and that the treaty is effective without it.

Before turning to petitioner's argument that the reservation in question is beyond the Senate's constitutional power it is important to carefully delineate what is not before the court in this case. Doing so should be an aid to a proper understanding of what is. First, the Senate has not by its reservation sought to extort as its price for ratifying the treaty that it be allowed, independently of the Congress at large, to determine the nature and status of domestic legislation or policy. It has not provided that its conditional ratification is to be regarded as withdrawn if the Federal Power Act is ever applied to the water in question. It has merely left the question as to whether that Act or some other should be applied open to determination of both houses of Congress and the President. It has not demanded its way. Its reservation is not self-serving, but purports to extend to the Congress and the President a voice in determining how the increased water supply will be developed. This then is a case where the Senate has not sought to limit the participation of the Congress at large and the President in decisions regarding domestic policy. It is a case in which the Senate has sought to enlarge their participation.

Secondly, this is not a case in which the Senate has exacted as a price for its ratification of a treaty that some new, nonexisting legislation become law. Nor is it a situation where ratification is conditioned on nonapplication of some general statute not germane to the subject matter of the treaty.9

This is simply a case where the Senate has conditioned ratification upon the nonapplication of the Federal Power Act to the additional water supply made available by the treaty, and provided that decision as to how and by whom that resource is to be developed shall be held in abeyance.10 These are matters directly germane to the subject matter of the treaty. This is the only case before this court. Those other situations can well await decision in cases where they are presented. The grave constitutional issues they present should n