DIGEST OF CERTAIN SUPREME COURT DECISIONS PERTINENT TO THE PROPOSED WESTERN WATER RIGHTS SETTLEMENT ACT (S. 863) AND STATEFEDERAL WATER PROBLEMS

These briefs are prepared in response to a request by Senator Anderson. They attempt to state succinctly the factual situation and quote the text of the Supreme Court decisions pertinent to the issues raised.

The decisions selected are largely those which Elmer F. Bennett cited, or had reference to, in his discussion of legal principles before the Subcommittee on Irrigation and Reclamation of the Senate Committee on Interior and Insular Affairs in connection with S. 863, 84th Congress.

The selection covers an expanse of historical development as well as constitutional law. The cases are grouped in order to emphasize basic constitutional powers and principles.

(S. 863 is printed on p. 33 of the appendix.)

A. COMMERCE IN GENERAL

1. In re Rahrer (140 U. S. 545 (1890)) presents a constitutional law problem of harmonizing the exercise by a State of its general police powers for the protection of the health, morals, and safety of its people, and the power of Congress to regulate commerce under the commerce clause (Constitution, art. I, sec. 8, cl. 3).

In the exercise of its police power, Kansas had prohibited in its constitution the manufacture and sale of intoxicating liquor except for medical, scientific, and mechanical purposes. This prohibition was enforced by State statutory law carrying penalties.

On August 8, 1890, the Wilson Act, which had been passed by Congress, was approved by the President. It provided that intoxicating liquors, upon arrival in a State should be subject to the operation of its laws to the same extent as liquors produced in that State, whether those liquors were in the original package or otherwise.

On August 9, 1890, Charles Rahrer, an agent for a Kansas City, Mo., liquor firm made some sales in Topeka, Kans., of interstate liquor contrary to this law. He was arrested but a writ of habeas corpus was obtained from the circuit court of the United States and the case went to the Supreme Court on appeal.

On State police power, Mr. Chief Justice Fuller said:

** [I]t is not to be doubted that the power to make the ordinary regulations of police remains with the individual States, and cannot be assumed by the National Government *** (p. 555).

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But there was the power of Congress to regulate commerce also to be considered and harmonized if possible. That Federal power, said the Supreme Court

when the subjects of that power are national in their nature, is also exclusive. The Constitution does not provide that interstate commerce shall be free, but, by the grant of this exclusive power to regulate it, it was left free except as Congress might impose restraint. Therefore, it has been determined that the failure of Congress to exercise this exclusive power in any case is an expression of its will that the subject shall be free from restrictions or impositions upon it by the several States*** and if a law passed by a State in the exercise of its acknowledged powers comes into conflict with that will, the Congress and the State cannot occupy the position of equal opposing sovereignties, because the Constitution declares its supremacy and that of the laws passed in pursuance thereof ***

That which is not supreme must yield to that which is supreme * * (pp.

555-556).

Turning back to the State police powers, the Court said:

If *** [the State had power to declare what should be an article of lawful commerce in the particular State; and, having declared that ardent spirits and wines were deleterious to morals and health, they had ceased to be commercial commodities there, and that then the police power attached, and consequently the powers of Congress could not interfere] then the paramount power of Congress to regulate commerce is subiect to a very material limitation; for it takes from Congress, and leaves to the States, the power to determine the commodities, or articles of property, which are the subjects of lawful commerce. Congress may regulate, but the States determine what shall or shall not be regulated. Upon this theory the power to regulate commerce, instead of being paramount over the subject, would become subordinate to the State police power * * * (p. 558).

Thus far the Court had talked of powers, State and Federal, noting that if Congress did not pass a law to regulate commerce specifically, or in such a way as to allow the laws of the State to operate upon it, Congress had thereby indicated its will that such commerce should be free and untrammelled. This being so:

It followed as a corollary, that when Congress acted at all, the result of its action must be to operate as a restraint upon that perfect freedom which its silence insured.

Congress has now spoken [in enacting the Wilson Act, 26 Stat. 313], and declared that imported liquors or liquids shall, upon arrival in a State, fall within the category of domestic articles of a similar nature. Is the law open to constitutional objection? (pp. 559-560).

The Supreme Court held that it was not.

The principle upon which local option laws, so called, have been sustained is, that while the legislature cannot delegate its power to make a law, it can make a law which leaves it to municipalities or the people to determine some fact or state of things, upon which the action of the law may depend

No reason is perceived why, if Congress chooses to provide that certain designated subjects of interstate commerce shall be governed by a rule which divests them of that character at an earlier period of time than would otherwise be the case, it is not within its competency to do so.

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The framers of the Constitution never intended that the legislative power of the Nation should find itself incapable of disposing of a subject matter specifically committed to its charge. The manner of that disposition brought into determination upon this record involves no ground for adjudging the act of Congress inoperative and void (p. 562).

Accordingly, Congress may by law remove a constitutional impediment to the exercise by a State of its police powers. Later on you will note in U. S. v. Rio Grande Irrigation Co. that States ordinarily have the power to determine what shall be their water policy except,

as here, insofar as that State policy may conflict with the exercise of constitutional powers by Congress.

2. Butte City Water Co. v. Baker (196 U. S. 119 (1905)), inserted here for comparative purposes, involved a dispute between two locations on the same mining ground. Baker's location was adjuged invalid by the trial court, and its decision was affirmed by the Montana Supreme Court, on the ground of a failure to comply with certain Montana statutes. Those statutes contained regulations concerning the location of mining claims which were in addition to those prescribed by acts of Congress. Those acts of Congress, among other things, had declared all valuable mineral deposits in lands belonging to the United States to be open to exploration

according to the local customs or rules of miners in the several mining districts so far as the same are applicable and not inconsistent with the laws of the United States (Rev. Stat. sec. 2319).

Section 2322 gave the locators the exclusive right of possession and enjoyment of the surface

so long as they comply with the laws of the United States, and with State. Territorial, and local regulations not in conflict with the laws of the United States governing their possessory title.

It was argued that the States could have no authority in the matter, because the Constitution vested in the Congress the power to dispose of the public lands. The following excerpts not only show the disposition of this argument by the Court, they show its reasoning:

Acting upon the belief that they were fully authorized, nearly all, if not all, the States in the mining regions have passed statutes prescribing additional regulations * *

This court has in many cases recognized the validity of such State legislation *** (p. 124).

The validity of such State legislation has been affirmed by the supreme court of several States * * *

What [then] is the ground upon which the validity of these supplementary regulations prescribed by a State is [now] challenged? It is insisted that the disposal of the public lands is an act of legislative power, and that it is not within the competency of a legislature to delegate to another body the exercise of its power; that Congress alone has the right to dispose of the public lands, and cannot transfer its authority to any State legislature or other body *** (p. 125).

*** In other words, Congress is the body to which is given the power to determine the conditions upon which public lands shall be disposed of ***. While the disposition of these lands is provided for by congressional legislation, such legislation savors somewhat of mere rules prescribed by an owner of property for its disposal. It is not a legislative character in the highest sense of the term, and as an owner may delegate to his principal agent the right to employ subordinates, giving them a limited discretion, so it would seem that Congress might rightfully entrust to the local legislature the determination of minor matters respecting the disposal of these lands.

Further, section 2324 distinctly grants to the miners of each mining district the power to make regulations, and the validity of this grant has been expressly affirmed by this court *** (p. 126).

Now, if Congress has power to delegate to a body of miners the making of additional regulations respecting location, it cannot be doubted that it has equal power to delegate similar authority to a State legislature.

Finally, it must be observed that this legislation was enacted by Congress more than 30 years ago. It has been acted upon as valid through all the mining regions of the country. Property rights have been built on the faith of it. To strike it down would unsettle countless titles and work manifold injury to the great mining interests of the Far West. While, of course, consequences may not determine a decision, yet in a doubtful case the court may well pause before thereby it unsettles interests so many and so vast-interests which have been built up on the faith not merely of congressional action but also of judicial decisions of many

State courts sustaining it, and of a frequent recognition of its validity by this court. Whatever doubts might exist if this matter was wholly res integra, we have no hesitation in holding that the question must be considered as settled by prior adjudications and cannot now be reopened (p. 127).

3. Clark Distilling Co. v. Western Maryland R. Co. (242 U. S. 311 (1917)) involves the Webb-Kenyon Act (37 Stat. 699) which went further than the Wilson Act and in effect made interstate shipments of liquor subject to State control by specifically prohibiting shipments in violation of those laws. Congress had the power, according to the Supreme Court, to enact legislation making existing and future State prohibitions applicable. Said the Court:

*** The mistaken assumption that the accidental considerations which cause a subject on the one hand to come under State control in the absence of congressional regulation, and other subjects on the contrary to be free from State control until Congress has acted, are the essential criteria by which to test the question of the power of Congress to regulate the mode in which the exertion of that power may be manifested. The two things are widely different, since the right to regulate and its scope and mode of exertion must depend upon the power possessed by Congress over the subject regulated. Following the unerring path pointed out by that great principle we can see no reason for saying that although Congress in view of the nature and character of intoxicants had a power to forbid their movement in interstate commerce, it had not the authority to so deal with the subject as to establish a regulation (which is what was done by the Webb-Kenyon law) making it impossible for one State to violate the prohibitions of the laws of another through the channels of interstate commerce. Indeed, we can see no escape from the conclusion that if we accepted the proposition urged, we would be obliged to announce the contradiction in terms that because Congress had exerted a regulation lesser in power than it was authorized to exert, therefore its action was void for excess of power. Or, in other words, stating the necessary result of the argument from a concrete consideration of the particular subject here involved, that because Congress in adopting a regulation had considered the nature and character of our dual system of government, State and Nation, and instead of absolutely prohibiting, had so conformed its regulation as to produce cooperation between the local and national forces of government to the end of preserving the rights of all, it had thereby transcended the complete and perfect power of regulation conferred by the Constitution. And it is well again to point out that this abnormal result to which the argument leads concerns a subject as to which both State and Nation in their respective spheres of authority possessed the supremest authority before the action of Congress which is complained of, and hence the argument virtually comes to the assertion that in some undisclosed way by the exertion of congressional authority, power possessed has evaporated.

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Before concluding, we come to consider what we deem to be arguments of inconvenience which are relied upon, that is, the dread expressed that the power by regulation to allow State prohibitions to attach to the movement of intoxicants lays the basis for subjecting interstate commerce in all articles to State control and therefore destroys the Constitution *** (pp. 330-332).

4. Kentucky Whip and Collar Co. v. Illinois Central Railroad Co. (299 U. S. 334) (1937) was an application of the Ashurst-Summers Act which sought to assist States, in protecting their industry and labor, by prohibiting the shipment of convict-made goods through channels of interstate commerce into such States contrary to their laws. In line with the Webb-Kenyon [liquor] Act cases, the Supreme Court held that Congress could shape its policy in the light of the fact that this transportation in interstate commerce, if permitted, would aid in the frustration of valid State laws for the protection of persons and property.

To aid the States in securing the full protection they desired, Congress brought into play its power to regulate interstate commerce (p. 349).

**The pertinent point is that where the subject of commerce is one as to which the power of the States may constitutionally be exerted by restriction or prohibition in order to prevent harmful consequences, the Congress may, if it sees fit, put forth its power to regulate interstate commerce so as to prevent that commerce from being used to impede the carrying out of the State policy (p. 351). The Congress in exercising the power confided to it by the Constitution is as free as the States to recognize the fundamental interests of free labor. Nor has the Congress attempted to delegate its authority to the States. The Congress has not sought to exercise a power not granted or to usurp the police powers of the States *** (p. 352).

5. Prudential Insurance Co. v. Benjamin (328 U. S. 408 (1946)) could be said to have roots in Paul v. Virginia (8 Wall. 168 (1869)). For the purposes of this brief it can be said that the Supreme Court held that the business of insurance was not interstate commerce. Whatever its character in 1869, the Supreme Court held in U. S. v. Southeastern Underwriters Assoc. (322 U. S. 533 (1944)) that as then organized and carried on, the insurance business was interstate in character.

To prevent chaos, Congress passed a temporary law preserving the status quo under State regulation pending further study. After due deliberation, Congress passed the McCarran Act (59 Stat. 33) authorizing State regulation and taxation of the insurance business.

South Carolina thereafter imposed on out-of-State insurance companies, as a condition of doing business in South Carolina, an annual tax of 3 percent of the premiums from business done in that State. No similar tax was imposed on South Carolina companies.

Prudential insisted not only that the tax was invalid because it was discriminatory, but also that Congress could not by law validate the State regulation of commerce or the imposition of this form of taxation. Said the Court:

The commerce clause is in no sense a limitation upon the power of Congress over interstate and foreign commerce. On the contrary, it is, as Marshall declared in Gibbons v. Ogden, a grant to Congress of plenary and supreme authority over those subjects. The only limitation it places upon Congress power is in respect to what constitutes commerce, including whatever rightly may be found to affect it sufficiently to make congressional regulation necessary or appropriate. This limitation, of course, is entirely distinct from the implied prohibition of the commerce clause. The one is concerned with defining commerce, with fixing the outer boundary of the field over which the authority granted shall govern. The other relates only to matters within the field of commerce, once this is defined, including whatever may fall within the "affectation" doctrine. The one limitation bounds the power of Congress. The other confines only the powers of the States. And the two areas are not coextensive. The distinction is not always clearly observed, for both questions may and indeed at times do arise in the same case and in close relationship. But to blur them and thereby equate the implied prohibition with the affirmative endowment is altogether fallacious. There is no such equivalence (p. 423).

It is not necessary to spend much time with interpreting the McCarran Act. *** Obviously Congress purpose was broadly to give support to the existing and future State systems for regulating and taxing the business of insurance. This was done in two ways. One was by removing obstructions which might be thought to flow from its own power, whether dormant or exercised, except as otherwise expressly provided in the act itself or in future legislation. The other was by declaring expressly and affirmatively that continued State regulation and taxation of this business is in the public interest and that the business and all who engage in it "shall be subject to" the laws of the several States in these respects.

Moreover, in taking this action Congress must have had full knowledge of the nationwide existence of State systems of regulation and taxation; of the fact that they differ greatly in the scope and character of the regulations imposed and of the taxes exacted; and of the further fact that many, if not all, include features which, to some extent, have not been applied generally to other interstate business.