UNCLOS and the Continental Shelf: A Response to Steven Groves

[John E. Noyes is the Roger J. Traynor Professor of Law at California Western School of Law.]

My thanks again to Julian Ku for organizing this series on U.S. accession to the Law of the Sea Convention.  I write to respond to Mr. Groves’s contention, based on U.S. experience in the Gulf of Mexico, that U.S. accession is not needed to further the stability and security of claims to offshore oil and gas resources.  In another post, I respond to Professor Rabkin’s concerns about the third-party dispute settlement system of the LOS Convention.

Mineral resources are found on the continental shelf of coastal states and in the Area, i.e., the seabed beyond the limits of national jurisdiction.  The 1982 Law of the Sea Convention, as modified by the 1994 Part XI Implementation Agreement (the “LOS Convention”) is essential to the stability of property rights that U.S. companies want to assert over deep seabed mining claims in the Area.  When the United States joins the Convention, it will be able to sponsor internationally recognized claims for U.S. companies, shape International Seabed Authority (ISA) regulations, and effectively veto ISA financial plans with which the United States disagrees.  U.S. acceptance of the LOS Convention would also help assure certainty and stability with respect to the extended continental shelf beyond 200 nautical miles from baselines.  In response to my earlier post Mr. Groves focused on continental shelf resources, and my comment today explores continental shelf issues.

When we consider oil and gas activities on the continental shelf, it is important to distinguish between, on the one hand, continental shelf boundary delimitations between neighboring states and, on the other, the setting of extended continental shelf outer limits lines that border on the Area.  U.S. refusal to accept the LOS Convention leads to instability especially in connection with the latter situation.  As Mr. Groves notes, the United States and Mexico have by bilateral treaty delimited a maritime boundary in the Western Gap in the Gulf of Mexico, which lies beyond 200 nautical miles from baselines.  Although Mexico, as a party to the LOS Convention, made its required submission to the Commission on the Limits of the Continental Shelf (CLCS) concerning the Western Gap, no one doubted that the bilateral treaty line would serve as the outer limits of Mexico’s continental shelf; bilateral negotiations could determine those limits in the Western Gap.  In the Arctic Ocean off the north coast of Alaska, the situation is different.  Where the continental shelf ends, the Area begins, and the dividing line between them depends on complex technical and scientific criteria.  U.S. acceptance of the LOS Convention and its participation in the CLCS process that reviews relevant scientific data would interject certainty and stability with respect to extended continental shelf resources and the setting of outer limits lines, particularly where the continental shelf borders the Area.

Let me be specific about why U.S. acceptance of the Convention will foster certainty with respect to an extended continental shelf beyond 200 nautical miles from baselines.  These reasons help explain why U.S. oil companies and both Republican and Democratic administrations have supported U.S. acceptance of the LOS Convention.  First, outer limits lines based on CLCS technical recommendations under the Convention will likely be more stable and certain than any lines the United States might assert unilaterally.  This is because outer limits lines that coastal states draw on the basis of CLCS recommendations are deemed “final and binding” in accordance with Article 76(8) of the Convention.  States did not, in the LOS Convention, grant the CLCS the authority to make binding decisions concerning continental shelf outer limits lines.  But oil companies and the banks that finance them will feel more security if the United States joins the Convention and, after submitting scientific data to the CLCS, sets outer limits in accordance with the ensuing CLCS recommendations.

There is a second reason – in addition to concern over the “final and binding” character of outer limits lines – why U.S. accession to the LOS Convention would further the security of U.S. extended continental shelf resources.  International lawyers debate whether the United States is entitled to any continental shelf beyond 200 nautical miles from baselines without accepting the Convention.  Some, including Mr. Groves, will assert that the United States is so entitled.  But other experts and likely other countries will assert that the United States is not entitled to an extended continental shelf under Article 76 without accepting the quid pro quo of Article 82; that Article requires the coastal state to pay a small percentage of the value of production of extended continental shelf resources for international development purposes, to be distributed by the ISA.  The United States can eliminate this uncertainty by joining the LOS Convention and assuring itself the benefits of Article 76 as a matter of treaty law.

Here’s why the issue matters:  Suppose that the United States were to remain a non-party to the Convention and a U.S. company actually produced oil from an extended, unilaterally asserted “U.S. continental shelf.”  States Parties to the LOS Convention that do not recognize the U.S. extended continental shelf would regard the oil as coming from the Area.  Since the oil – a “mineral” under Article 133 – has been recovered from the Area without approval under Convention procedures applicable to the Area, States Parties are obligated not to recognize the legality of claims or title to it (Article 137(3) and Annex III, Article 1).  The U.S. multinational that produced the oil – a company with operations, investments, and assets in other countries, and dealing with international commodities exchanges – could face legal restrictions abroad, penalties at least as large as Article 82 payments, and foreign litigation.  Those risks can harm U.S. consumers by increasing the price of hydrocarbons, the market for which is global.  Those risks exist – should the United States remain outside the LOS Convention – with respect to oil production both from an asserted extended continental shelf that borders the Area and from the Western Gap in the Gulf of Mexico; Western Gap lease sales that reserve blocks for possible future development are different from actual production.  Those risks have led oil companies, which favor stable investment conditions, to support U.S. accession to the Convention.  Yes, joining the Convention entails the quid pro quo of Article 82 payments, but those payments are ones that successive U.S. administrations and U.S. oil companies (both during the LOS Convention negotiations and today) have agreed are reasonable in light of gaining the security of internationally recognized rights to an extended continental shelf.  I dispute Mr. Groves’s assertion that “U.S. accession would amount to an open-ended commitment to forgo” the Article 82 fees “to corrupt, undemocratic, or despotic regimes”; as the LOS Convention makes clear, the United States can, when it joins the Convention, block any ISA payment plans concerning Article 82 funds with which the United States disagrees (see LOS Convention, arts. 160(2)(f)(ii), 161(8), and 162(o)(i); 1994 Agreement, Annex § 3(4)-(5), (7), (15)(a) and § 9).

Third, the CLCS and the LOS Convention contribute to interstate stability.  It is, for example, unsettling to imagine an Arctic Ocean without the CLCS process.  A few years ago Russia planted its flag on the floor of the Arctic Ocean, and some popular accounts suggested that the move signaled a Wild West land grab there.  As of now, however, the Russian flag planting remains just a publicity stunt.  Russia and other Arctic countries are all – except the United States – parties to the LOS Convention, and those States Parties have been proceeding deliberately through the CLCS.  But the odds of Russia bypassing the CLCS and making an excessive unilateral continental shelf claim increase significantly should the United States itself proceed unilaterally in the Arctic.  With respect to both U.S. and foreign claims to an extended continental shelf, U.S. accession to the LOS Convention furthers the goals of stability and security.