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«LEGAL ASPECTS OF OFFSHORE OIL AND GAS OPERATIONS OLIVER L. STONE* The states' own title to the lands, minerals and other things underlying the ...»

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The Proclamation did not attempt to define the term "continental shelf," but a contemporaneous White House press release indicated that the term referred to submerged lands contiguous to the coast which are covered by no more than 100 fathoms (600 feet) of water.

On the same date as the issuance of his continental shelf proclamation, President Truman issued Executive Order 9633,26 in which he ordered that "the natural resources of the subsoil and seabed of the Continental Shelf beneath the high seas but contiguous to the coasts of the United States... be placed under the jurisdiction and control of the Secretary of the Interior for administrative purposes, pending the enactment of legislation in regard thereto."

On January 16, 1953, the president issued Executive Order 10426,27 which revoked the foregoing Executive Order 9633, and

ordered that:

[T]he lands of the continental shelf of the United States and Alaska... extending to the furthermost limits of the paramount rights, full dominion and power of the United States over lands of

24. Preceding the Proclamation, memoranda dealing with U.S. policy relating to the continental shelf were prepared in the Department of State. One of these appears

at 4 M. Whiteman, Digest of International Law 755 and states:

In the exercise of its rights of self-protection and as a matter of national defense, the United States could not view without serious concern any attempt by a foreign power or the nationals thereof to exploit the resources of the continental shelf off the coast of the United States, at points sufficiently near the coast to impair or endanger its security, unless such activities were undertaken with its approval.

25. Press Release dated September 28, 1945, Dept. of State Bull. 484; also reproduced in S. Rep. No. 411, supra note 22, at 53. The press release stated: "[The policy proclaimed by the President] will... make possible the orderly development of an underwater area 750,000 square miles in extent. Generally, submerged land which is contiguous to the continent and which is covered by no more than 100 fathoms (600 feet) of water is considered as the continental shelf."

26. S. Rep. No. 411, supra note 22, at 56.

27. Id. at 63. On Feb. 13, 1953, the Attorney General advised the Secretary of Defense that Executive Order 10426 did not create a naval petroleum reserve to be administered pursuant to laws relating to such reserves, but merely transferred to the Secretary of Navy the administrative authority over these areas which had previously been conferred upon the Secretary of Interior by Executive Order No. 9633 issued September 28, 1945.4 M. Whiteman, Digest of International Law 759 (1965). Executive Order 10426 was, however, revoked by § 13 of the Outer Continental Shelf Lands Act, 43 U.S.C.A. § 1342 (1958). This Act will be discussed later.

NATURAL RESOURCES JOURNAL [VOL.,

the continental shelf are hereby set aside as a naval petroleum reserve and shall be administered by the Secretary of the Navy.

President Truman's 1945 Proclamation on the Continental Shelf was promptly followed by similar proclamations issued by other nations. Some were not nearly as restrained as that of President Truman in that they asserted sovereignty in the overlying waters off their coasts, as well as in the subsoil and seabed thereof; some even extended this assertion to waters and submarine areas as far as 200 miles from their coasts. 28 These various assertions prompted the General Assembly of the United Nations to refer the continental shelf question to the International Law Commission, whose work largely produced the Geneva Convention on the Continental Shelf in 1958. This Convention will be discussed later, while we proceed to examine developments in the United States.

III

ASSERTIONS OF JURISDICTION

A. The Submerged Lands Act of 1953 Congress first gave legislative sanction to Proclamation No.

2667 in the Submerged Lands Act, discussed above. Section 9 of that Act provides that the natural resources of the continental shelf seaward of the areas granted by the law to the states "appertain to the United States, and the jurisdiction and control of which by the United States is confirmed.1 29 The senate committee referred to this provision as giving "the weight of statutory law to the jurisdiction asserted by the proclamation of the President of the United States in 1945." ' 3 Until adoption of the Submerged Lands Act in 1953, there was no authorization for oil and gas leasing in the submerged lands of the United States continental shelf, outside of inland waters. This is so because the United States Supreme Court had held, as heretofore discussed, that the coastal states did not have such authority;

and, moreover, President Truman's proclamation of 1945 merely asserted jurisdiction and control in the United States of the natural resources of the subsoil and seabed of the continental shelf, but did

28. For discussions dealing with such assertions, see 4 M. Whiteman, Digest of International Law 763-64 (1965).

29. 43 U.S.C.A. § 1302 (1958).

30. S. Rep. No. 133, 83rd Cong., 1st Sess. 2 (1953).

OFFSHORE OIL AND GAS OPERATIONS

JULY 1968] not provide for their utilization or leasing-a power vested in Congress, not the president."' The Submerged Lands Act of 1953 partly filled the gap in this respect. In August of 1953, the United States Congress closed the gap by enacting the law which will now be discussed.





The Outer ContinentalShelf Lands Act of 195332 B.

The enactment of this law was foreshadowed by President Truman's Continental Shelf Proclamation of 1945. It deals only with the subsoil and seabed. It picks up exclusive jurisdiction and control for the federal government at the offshore boundaries of the coastal states, and carries that jurisdiction and control out to the farthest extent that the subsoil and seabed appertain to the United States and are subject to its jurisdiction and control. It makes clear that the character as high seas of the overlying waters of that area and the right to navigation and fishing therein are not affected."

The Act defines the term "outer continental shelf" as all submerged lands lying seaward and outside the lands granted to the states by and described in the Submerged Lands Act, "and of which the subsoil and seabed appertain to the United States and are subject to its jurisdiction and control. ' 34 Thus the outer geographic limit of the Act's applicability is not definitely specified. It appears to reach out to whatever extent the United States is legally capable of reaching.

The rights asserted are that "the subsoil and seabed of the outer Continental Shelf appertain to the United States and are subject to its jurisdiction, control, and power of disposition as provided in this [Act]." 3 The rights asserted relate to the entirety of the "subsoil and seabed," and not merely to the "natural resources" thereof, as

31. The Mineral Leasing Act of 1920 (30 U.S.C.A. §§ 181, et seq.) authorizes the Secretary of Interior to lease lands owned by the United States for development and production of oil, gas and certain other minerals. Attempts were made to acquire leases of offshore minerals under that Act, but it was held that offshore submerged lands are not covered by this law. Justheim v. McKay, 229 F.2d 29 (D.C. Cir. 1956), cert. denied 351 U.S. 933 (1956).

32. 43 U.S.C.A. §§1331-43 (1958), hereafter sometimes referred to as the Outer Shelf Act or the Act.

33. The Convention on the Continental Shelf also vests in the United States exclusive "sovereign rights" to explore and exploit its continental shelf for, inter alia, living organisms belonging to the sedentary species, for example, clams, oysters, and abalone.

34. 43 U.S.C.A. § 1331 (1958).

35. Id. § 1332 (1958).

NATURAL RESOURCES JOURNAL [VOL. 8

did the Truman Proclamation. 6 By adopting the Outer Shelf Act, Congress made a policy choice that the oil, gas and other minerals in the outer continental shelf were to be developed by private enterprise, in accordance with the leasing procedures contained in the Act.

The Act empowers the Secretary of Interior to administer the leasing provisions and to prescribe rules and regulations in that regard,8" but, as noted, it does not specify the exact offshore limit of the geographical area which is subject to the Secretary's leasing power. The only enlightenment from the Act itself is that the Secretary's leasing power is coextensive with the "outer continental shelf." That, in turn, is defined as the submerged area beyond state ownership and of which the "subsoil and seabed appertain to the 8 8s United States and are subject to its jurisdiction and control.

The legislative history of the Act indicates that there was an awareness of the geological concept of the continental shelf held by some experts. According to that notion, the continental shelf ends where the continental slope leading to the true ocean bottom begins.

This is generally regarded as being that place where the overlying water reaches a depth of approximately 600 feet. Congress, however, although made aware of the geological concept of the shelf, did not specifically adopt that concept when it defined the term "continental shelf" in the Act. Rather, it saw fit merely to specify that the Act's coverage extended to all submerged lands outside state ownership that "appertain to the United States and are subject to its jurisdiction and control." 40

36. The Senate Report and the Conference Report make clear that this extension of coverage was deliberate. The Senate Report, after observing that the Proclamation applied only to "the natural resources of the subsoil and seabed" states: "The provisions of S.1901 as reported carry this limited control a necessary step forward and extend the jurisdiction and control of the United States to the seabed and subsoil themselves." S. Rep. No. 411, supra note 22, at 7; see also House Conference Report No. 1031, 83rd Cong., 1st Sess. 12 (1953).

37. 43 U.S.C.A. § 1334 (1958).

38. Supra note 34.

39. Relevant portions of the legislative history in this regard are S. Rep. No. 411, supra note 22, at 2, 4-5, 7, 211-244; H. R. No. 215, 83rd Cong., 1st Sess. 6-7. See also Outer Continental Shelf, 6 Stan. L. Rev. 26 (1953).

40. The press release which accompanied the Truman Proclamation indicated that the continental shelf is considered to extend out to the point where the water depth is 600 feet. However, Executive Order No. 10426 which set aside the submerged lands of the continental shelf as a naval petroleum reserve provides in § 1(a) "... the lands of the continental shelf... extending to the furthermost limits of the paramount rights, full dominion, and power of the United States over lands of the continental shelf are hereby set aside as a naval petroleum reserve...." Both the press release and the executive order were before the Senate Committee and are reproduced in its Report on the Outer Shelf Act. S. Rep. No. 411, supra note 22, at 53, 63.

OFFSHORE OIL AND GAS OPERATIONS

JULY 1968] In seeking to ascertain the Act's outer reach, an analogy might be drawn from the following: When the Submerged Lands Act was enacted, Congress rejected a proposal that the term "inland waters" be defined with specificity. 41 The meaning of that term, however, was crucial to a determination of the rights acquired thereunder by the states, and it was of cardinal significance in the second California case.42 Being of the view that Congress intended to leave to the courts the responsibility for particularizing the meaning of the term "inland waters," the United States Supreme Court did so in light of what it considered to be the "settled international rule defining inland waters, '43 as embodied in the Convention on the Territorial Sea and the Contiguous Zone, even though that Convention was not in being when the Act was passed in 1953. It was ratified by the United States on March 24, 1961, and became effective on September 10, 1964, when the requisite number of nations ratified it. The same rationale would appear to be applicable to the openended seaward limit of the Outer Shelf Act, in light of the Convention on the Continental Shelf 44 which the United States has likeAt the hearings on the bill which became the Submerged Lands Act, the Attorney General of the United States suggested that, to avoid uncertainty, a line delineating the outer limits of "inland waters" be drawn on a map to be made part of the bill. Hearings, Sen. Comm. on Interior and Insular Affairs on S.J. 13, 83rd Cong., 1st Sess., 926 (1953). Congress rejected this suggestion.

42. United States v. California, 381 U.S. 139 (1965). The Court observed: "The focal point of this case is the interpretation to be placed on 'inland waters' as used in the Act." Id. at 149.

43. 381 U.S. 139, 163 (1965). The Court felt that it could best fulfill its responsibility by "giving content to the words which Congress employed by adopting the best and most workable definitions available. The Convention on the Territorial Sea and the Contiguous Zone... provides such definitions. We adopt them for purposes of the Submerged Lands Act." 381 U.S. 139, 165 (1965). The Court held that while the Convention permits nations to adopt the straight base line method to define inland waters, the permissive alternative to do so rests with the federal government, not the individual states, and California could not use the base line method to extend its boundary against the opposition of the United States. The Court held that, absent the adoption of the base line method by the federal government, California's claim would be resolved by the Convention-approved method which permits a 24-mile maximum closing line for bays, and a "semicircle" test for measuring the sufficiency of the water area enclosed to determine whether it qualifies as a bay. The Court said [381 U.S. 139, 164 (1965)]:



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