Found it! From http://search.ancestry.com/search/db.aspx?dbid=1664
Contained in this database are birth reports from U.S. Consulates abroad between the years of 1910 and 1949. The report form is called A Consular Report of Birth Abroad and is primary proof of the individual's American citizenship. To qualify, the child must have either two U.S. citizen parents with one of the parents having resided in the U.S. prior to the child's birth, or one of the child's parents must be a U.S. citizen who has resided in the U.S. for a specified number of years previous to the child's birth.
So this procedure for acquiring "Citizenship at birth" for the children of a US parent living abroad has been in place for over 100 years.
Ted father has a naturalized Canadian citizen. Was Ted mom in the process of being naturalized too?
NO!!!! THE MOTHER WAS BORN IN THE USA ..!!!!!!!!
SHE WAS WORKING IN CANADA .. BUT SHE WAS NOT BORN THERE.
HOW MANY TIMES DOES THIS HAVE TO BE SAID ..???????