    Application of the Federal Water Pollution Control Act to
                 the Former Panama Canal Zone


T h e Panam a C anal T reaty and its im plem enting legislation m ake U.S. law s based on
   territo rial jurisd ictio n , including the Federal W ater Pollution C ontrol A ct, inapplicable
   to the form er P anam a Canal Z o n e. B oth the T re a ty negotiators and C ongress expected
   environm ental problem s in th e form er C anal Z one to be dealt w ith jo intly by the
   U nited States and Panama th ro u g h th e Joint Com m ission on the E nvironm ent.

                                                                                 March 17, 1981

   M EM ORAN DUM O P IN IO N FO R T H E A SSISTA N T LEG A L
 A D V IS E R FO R IN TER -A M ER IC A N A FFA IRS, D E PA R T M E N T
                             O F STA TE

  This responds to your request for our opinion whether the Federal
W ater Pollution Control A ct (FW PCA), 33 U.S.C. §311 of §1321,
applies to the former Panama Canal Zone. T he several agencies that
have analyzed this question have reached contrary conclusions. We
have reviewed the memoranda prepared by these agencies and inde­
pendently reviewed the text of the Panama Canal Treaties 1 and related
documents and legislation. F or reasons set forth below, we conclude
that the FW PC A does not apply to any portion of the former Canal
Zone.
  In the FW PC A , Congress declares that there should be no discharge
of oil o r hazardous substances into or upon “the navigable waters of the
United States or adjoining shorelines o r the waters o f the contiguous
zone,” and imposes a civil penalty on any owner or operator of a
vessel, on-shore facility, o r off-shore facility from which oil or a haz­
ardous substance is discharged. 33 U.S.C. § 1321(b). The President is
authorized to remove discharged oil or hazardous substances and the
party responsible for the discharge is liable for removal costs. 33 U.S.C.
§ 1321(c), (f), (g). The Adm inistrator o f the Environmental Protection
Agency, the Secretary o f the Departm ent in which the Coast Guard is
operating, the Council on Environmental Quality, and other officials

   •T w o treaties between the Republic of Panama and the United States were signed on September 7,
1977: the Panama Canal Treaty 33 U.S.T. ____, T.I.A.S. No. 10030, and the Treaty Concerning the
Perm anent Neutrality and Operation of the Panama Canal. 33 U.S.T. ____, T.I.A.S. No. 10029.
Hereinafter, references to the “T reaty ” refer to the Panama Canal Treaty, unless otherwise specified.

                                                  80
are given responsibilities either directly by the A ct or by delegation
from the President. Id.; Executive Order No. 11,735 38 Fed. Reg. 21243
(1973). The A ct is applicable only to navigable waters of the United
States, adjoining shorelines, and waters of the contiguous zone.2 The
Act defines “United States” to include the Canal Zone; thus, prior to
the Canal Zone’s change in status, the A ct clearly was applicable. The
question here is whether the Panama Canal Treaty and implementing
legislation render the A ct inapplicable to the former Canal Zone.
   We first examine the Treaty itself. Under the original 1903 treaty
with Panama, the United States obtained the right to exercise plenary
administrative and legislative jurisdiction over the Canal Zone as if the
United States were sovereign over the Zone. 33 Stat. 2234, T.S. No.
431, (1903). The recent Treaty substantially alters this relationship.
Under the Treaty, the Canal Zone itself loses its legal identification and
Panama resumes administrative and legislative jurisdiction over the
territory lying within the former Zone. The Treaty provides in Article
XI, that “[t]he Republic of Panama shall reassume plenary jurisdiction
over the former Canal Zone upon entry into force o f this Treaty and in
accordance with its terms.” As territorial sovereign, Panama grants to
the United States for the duration of the Treaty 3 “the rights necessary
to regulate the transit of ships through the Panama Canal, and to
manage, operate, maintain, improve, protect and defend the Canal.”
Thus, Panama grants to the United States the right to use, for these
purposes, the various installations and areas including the Canal and its
waters.
   The Treaty deals less clearly with the question what law shall govern
these areas. Paragraph 1 of Article IX o f the Treaty specifies that the
laws of the Republic of Panama shall apply in the areas made available
for use of the United States, although paragraph 8 prohibits Panama
from adopting any law or taking any action that would interfere with
rights granted under the Treaty to the United States. Paragraph 7 of
Article XI provides that “[t]he laws, regulations, and administrative
authority of the United States . . . shall, to the extent not inconsistent
with this Treaty, and related agreements, continue in force for the
purpose of exercise by the United States of America of law enforce­
ment and judicial jurisdiction only during the transition period.”
   Treaties are to be construed “with the highest good faith” with an
eye to the “manifest meaning of the whole treaty.” Johnson v. Browne,
205 U.S. 309, 321-22 (1907). Construing these Treaty provisions consist­
ently and in keeping with the purpose of the Treaty, we conclude that

   2 The “contiguous zone” is defined as “the entire zone established or to be established by the United
States under article 24 o f the Convention on the Territorial Sea and the Contiguous Zone.” 33 U.S.C.
§ 1321(a)(9)
   3The Treaty terminates on December 31, 1999. Art II, U 2

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the laws o f the United States regarding water pollution are not applica­
ble in the form er zone.4
   In interpreting a treaty and other international agreements, the con­
struction placed upon it by the Departm ent charged with supervision of
our foreign relations should be given much weight. Kolovrat v. Oregon,
366 U.S. 187, 194 (1961); Factor v. Laubenheimer, 290 U.S. 276, 294—95
(1933); Sullivan v. Kidd, 254 U.S. 433, 442 (1921). Here, the State
D epartm ent consistently has taken the position that the FW PCA is
inconsistent with, and thus superseded by, the Panama Canal Treaty. In
connection with the hearings on ratification o f the Treaty, the Secre­
tary of State specifically listed the FW PCA, 33 U.S.C. § 1321(a)(5), as a
statute that would be superseded by the T reaty.5 In 1980, the State
D epartm ent Legal Adviser’s Office opined that “any laws of the United
States based on territorial jurisdiction (such as the FW PCA) have
become, by virtue of the Treaty, inapplicable in Panama.” 6
   This interpretation of the Treaty is consistent with the Panama Canal
A ct of 1979 (Canal Act), 22 U.S.C. § 3601, legislation passed to imple­
ment the T reaty.7 The Canal A ct provides:
          Subject to the provisions of subsection (c) of this section,
          for the purposes o f applying the . . . laws of the United
          States and regulations issued pursuant to such . . . laws
          with respect to transactions, occurrences, or status on or
          after October 1, 1979—
             (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 o f 1977 and related agree­
                 ments; . . .
22 U.S.C. § 3602(b)(1). Subsection (c), referred to above, provides:
          Any reference set forth in subsection (b) of this section
          shall apply except as otherwise provided in this chapter
          or unless (1) such reference is inconsistent with the provi­
          sions o f this chapter, (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 October 1, 1979.

   4 It is true that repeals by implication are not favored and that a treaty will not be regarded as
repealing an earlier statute by implication unless the tw o are absolutely incompatible and the statute
cannot be enforced without antagonizing the treaty. Johnson v. Browne, 20S U.S. 309, 321 (1907).
W here there is such a conflict, however, it is resolved in accordance with the same rule of priority
that governs the resolution of conflicts between statutes. The later in time prevails. Cook v United
States. 288 U.S. 102, 118-19(1933).
   5 Panama Canal Treaties: Hearings on Executive N Before the Committee on Foreign Relations, 95th
Cong., 1st Sess. 80-82 (1977).
   6 L etter from the A cting Assistant Legal Adviser for Inter-American Affairs to an attorney with the
Federal Maritime Commission (August IS, 1980).
   7T he A ct was intended by Congress to implement, and to be fully consistent with, the Panama
Canal treaties. H.R. Rep. No. 94, 96th Cong., 1st Sess. (pt. I) 7-9 (1979).

                                                  82
 22 U.S.C. § 3602(c). If subsection (b) were not qualified by subsection
 (c), one could interpret subsection (b) to require that the term “Canal
.Zone” in the FW PCA be read to refer to areas and installations in
 Panama made available to the United States pursuant to the Treaty and
 related agreements. These areas include the land and water areas
 encompassing a “continuous area generally following the course of the
 Panama Canal and generally contiguous to it . . . 8 and thus the
 FW PCA would apply to the navigable waters of the Canal. Subsection
 (c), however, precludes application of this definition of “Canal Zone” if
 such reference is inconsistent with the Canal Act or if such reference
 clearly is not intended. Just as enforcement of the FW PCA in the
 Canal area would be inconsistent with the Treaty, so would it be
 inconsistent with the Canal Act. In our opinion, such a reference was
 not intended and the subsection (c) exception must be invoked.
    As does the Treaty, the Act contains provisions which indicate it was
 not intended that the FW PCA would apply to the former Zone. The
 Panama Canal Commission, for example, was created as an agency of
 the Executive Branch to maintain and operate the Canal. Treaty, Art.
 Ill, 1J3; 22 U.S.C. §3611. The Commission comprises both United
 States nationals and Panamanian nationals, with the Panamanians as­
 suming increasing management responsibilities throughout the treaty
 period. The Annex to the Treaty specifically provides that “[i]t is
 understood that the Panama Canal Commission . . . may perform func­
 tions such as . . . protection of the environment by preventing and
 controlling the spillage of oil and substances harmful to human or
 animal life and of the ecological equilibrium in areas used in operation
 of the Canal and the anchorages.” Treaty Annex, U 3n. The authors
 thus contemplated that the Commission would be performing this func­
 tion, not the Administrator of the Environmental Protection Agency or
 other United States officials. To draw these United States officials into
 the decisionmaking process by applying United States law could under­
 cut the participation of Panamanian nationals and undermine the goal of
 having Panamanian policymakers, managers, and employees in place
 and fully prepared to assume the responsibilities that will devolve upon
 Panama when the Treaty terminates. See H.R. Rep. No. 94, 96th Cong.,
 1st Sess. (pt. IV) 13 (1979).
    Another indication that both the treaty negotiators and Congress
 expected environmental problems to be dealt with jointly by the United
 States and Panama is the creation of a Joint Commission on the Envi­
 ronment. Treaty, Art. VI, 1) 2; 22 U.S.C. § 3616. This Commission,
 established with equal representation from the United States and
 Panama, recommends to the two governments ways to avoid or to

  8Treaty, Art. Ill, 2(a); Treaty, Agreement in Implementation of Article III (Sept. 7, 1977), 33
U.S.T ____, T.I A.S. No. 10031, Art. Ill, I and annex A, fl l(a)(i).

                                               83
mitigate adverse environmental impacts. Article VI, H 1 of the Treaty
explains the underlying policy:
         T he United States . . . [and] Panama commit themselves
         to implement this Treaty in a manner consistent with the
         protection of the natural environment o f the Republic of
         Panama. T o this end, they shall consult and cooperate
         with each other in all appropriate ways to ensure that
         they shall give due regard to the protection and conserva­
         tion of the environment.
In authorizing the establishment of the Joint Commission on the Envi­
ronment, the House Committee on Foreign Affairs stated its intent that
“the [Commission] be broad enough to deal with the entire range of
environmental issues which might arise anywhere within the Panama
Canal W atershed region.” H.R. Rep. No. 94, 96th Cong., 1st Sess. (pt.
I) 12-13 (1979).
   Attem pting to apply the FW PCA to the Canal area after passage of
the Canal A ct also would raise jurisdictional problems. The FW PCA
provides that in cases under the A ct arising in the Canal Zone, actions
may be brought in the United States District Court for the District of
the Canal Zone. 33 U.S.C. § 1321(n). Yet under the Canal Act and the
Treaty, jurisdiction of the courts of the United States functioning in the
former Canal Zone is severely restricted and would not include juris­
diction over new suits arising out of the FW PCA. See Treaty, Art. XI,
n 5; 22 U.S.C. § 3841(a).9
   Throughout the legislative history o f the Canal Act, there are refer­
ences to the fact that United States territorial jurisdiction over the
Panama Canal area has ceased. With respect to the redefinition of the
Canal Zone quoted above,10 the House Committee on Foreign Affairs
wrote:
          Notwithstanding section 2(c)(1)(A) of the bill, as reported,
          which establishes the general rule that laws of the United
          States presently applicable in the Canal Zone will con­
          tinue to apply to areas and installations made available to
          the United States pursuant to the Panama Canal Treaty,
          laws which are presently applied to the Canal Zone on
          the basis of territorial jurisdiction of the United States

   9W e note also that the Treaty Concerning Permanant Neutrality and Operation of ihe Panama
Canal contains a provision (hat as a pre-condition o f transit, vessels may be required to establish the
financial responsibility and guarantees for payment o f damages resulting from acts or omissions of such
vessels when passing through the Canal, "consistent with international practices and standards/'
T reaty Concerning Permanent Neutrality, supra. Art. Ill,      1(d) If the FW PCA applied to the Canal
area during the period o f management by the United States, the Treaty provision referred to above
would conflict with 33 US.C § 1321(p), which requires large vessels carrying oil or hazardous
substances to establish and maintain, under applicable federal regulations, evidence of financial respon­
sibility in set amounts.
    1022 U S .C . §§ 3602(b), (c)

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         over the zone will continue to apply in these areas and
         installations only for the purpose of exercising authority
         vested in the United States by the Treaty and related
         agreements. This limited application of the U.S. law is
         necessitated by the termination of the U.S. territorial juris­
         diction effected by the Treaty.
H.R. Rep. 94, 96th Cong., 1st Sess. (pt. I) 12 (1979). The House
Committee on Merchant Marine and Fisheries also emphasized that the
laws of the United States, insofar as they are applicable by virtue of
territorial jurisdiction of the United States in the Canal Zone prior to
the Treaty, continue in force only for the purposes of exercising the
authority vested in the United States by the Treaty. H.R. Rep. No. 98,
96th Cong., 1st Sess. (pt. I) 41 (1979). The specific phrase that referred
to territorial jurisdiction was dropped from the final version of the bill,
but there is no indication that Congress intended by this deletion to
assert territorial jurisdiction over the canal areas. Certainly such an
attempt would have provoked much debate.11
   We note that at least one other agency, whose jurisdiction included
the Canal Zone pursuant to a statutory provision similar to the
FW PCA, has concluded that the law it administers no longer applies in
the former Zone. The Zone was eligible for assistance under the Disas­
ter Relief Act because § 102(4) of that Act, 42 U.S.C. § 5122(4), defines
“State” to include the Canal Zone. The Federal Emergency Manage­
ment Agency has determined, however, that the area formerly known
as the Canal Zone is no longer eligible for disaster assistance: “W ith the
ratification of the Panama Canal treaties this area became territory
within the Republic of Panama on October 1, 1979, and is, therefore,
excluded from assistance under the Disaster Relief Act of 1974.” 44
Fed. Reg. 66,062 (1979).12 The principle of harmony in statutory law
dictates that, wherever possible, statutes should be construed consist­
ently and harmoniously. Hyrup v. Kleppe, 406 F. Supp. 214, 217 (D.
Colo. 1976); Sutherland Statutory Construction § 53.01 (Sands ed., 1973
& Supp. 1980).

   " T h e General Counsel’s office of the Federal Maritime Commission has asserted that the FW PCA
is not based solely on territorial jurisdiction and may be applied in areas that are not strictly part of
the United States' territorial jurisdiction Cited in support of this assertion is § 311(b)(1), 33 U.S.C.
§ 1321(b)(1), in which Congress declares that it is the policy of the United States that there should be
no discharges.
           into or upon the navigable waters of the United States, adjoining shorelines, or into or
           upon the waters o f the contiguous zone, or in connection with activities under the Outer
           Continental Shelf Lands Act or the Deepwater Port Act or which may affect natural
           resources belonging to, appertaining to, or under the exclusive management authority of
           the United States      . .
(Emphasis added, citations omitted.) The former Canal Zone fits into none of these categories,
however. Given the unique nature of the responsibilities o f the United States in operating the Canal
under the treaty terms, and the participation of Panamanian nationals both on the Panama Canal
Commission and the Joint Commission on the Environment, the waters of the Canal cannot accurately
be said to be under the exclusive management authority of the United States
   12 The Panama Canal Act of 1979 authorizes the Panama Canal Commission to expend appropriated
funds to deal with emergencies. 22 U S.C. § 3753.


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  F or these reasons, we conclude that the FW PCA does not apply to
any part of the former Canal Zone.

                                        L   arry   L . S im m s
                                 Acting Assistant Attorney General
                                      Office o f Legal Counsel




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