New South Walves v. Commonwealth: The Australian Tidelands Controversy

Loyola Marymount University and Loyola Law School Digital Commons at Loyola Marymount University and Loyola Law School Loyola of Los Angeles International and Comparative Law Review Law Reviews 11-1-1991 New South Walves v. Commonwealth: The Australian Tidelands Controversy Edward A. Fitzgerald Recommended Citation Edward A. Fitzgerald, New South Walves v. Commonwealth: The Australian Tidelands Controversy, 14 Loy. L.A. Int'l & Comp. L. Rev. 25 (1991). Available at: http://digitalcommons.lmu.edu/ilr/vol14/iss1/2 This Article is brought to you for free and open access by the Law Reviews at Digital Commons @ Loyola Marymount University and Loyola Law School. It has been accepted for inclusion in Loyola of Los Angeles International and Comparative Law Review by an authorized administrator of Digital Commons@Loyola Marymount University and Loyola Law School. For more information, please contact . New South Wales v. Commonwealth: The Australian Tidelands Controversy DR. EDWARD A. FITZGERALD* I. INTRODUCTION There has been a great deal of conflict between the central and peripheral governments of federal systems regarding jurisdiction over offshore submerged lands. This conflict, known as the tidelands controversy,' has occurred in the United States, Canada, and Australia.2 The focus of this conflict has been the control of valuable offshore energy resources. This Article analyzes the Australian tidelands controversy and compares it to the United States and Canadian disputes. Beginning in the 1950s, Australia sought to develop its offshore petroleum resources to meet its growing energy needs. In 1967, the Australian Commonwealth ("Commonwealth") and state governments negotiated a common mining agreement that was designed to preclude the lengthy litigation that had plagued offshore energy development in the United States and was threatening to erupt in Canada. 3 This political settlement did not, however, prevent litigation. In 1973, the Commonwealth asserted jurisdiction over the territorial sea and continental shelf by establishing the Seas and Submerged Lands Act. 4 * Associate Professor of Political Science, Wright State University, Dayton, Ohio. B.A. 1971, Holy Cross College; J.D. 1974, Boston College; M.A. 1976, Northeastern University; Ph.D. 1983, Boston University. 1. ERNEST BARTLEY, THE TIDELANDS OIL CONTROVERSY (1953); William K. Met- calfe, The Tidelands Controversy:A Study in Development of a Political-LegalProblem, 4 SYRACUSE L. REV. 39 (1953); HUBERT MARSHALL & BETTY ZISK, THE FEDERAL-STATE STRUGGLE FOR OFFSHORE OIL (1966). The tidelands controversy was misnamed. Ownership of the tidelands, which is the area between the high- and low-water marks, has never been in question. Rather, the conflict focuses on the submerged lands seaward of the low-water mark. 2. Edward A. Fitzgerald, The Tidelands Controversy Revisited, 19 ENVTL. L. 209 (1988) [hereinafter Fitzgerald, Tidelands Controversy]; Edward A. Fitzgerald, The Newfoundland Offshore Reference: Federal-ProvincialConflict Over Offshore Energy Resources, 23 CASE W. RES. J. INT'L L. 1 (1991) [hereinafter Fitzgerald, Newfoundland]. 3. This agreement was known as the Agreement Relating to the Exploration for, and the Exploitation of, the Petroleum Resources, and Certain Other Resources, of the Continental Shelf of Australia and of Certain Territories of the Commonwealth and of Certain Other Submerged Land. It was executed October 16, 1967. Michael Crommelin, Offshore Oil and Gas Rights: A Comparative Study, 14 NAT. RESOURCES J. 457, 478 n.148 (1974). 4. Seas and Submerged Lands Act 1973, No. 161, 1973 AUSTL. ACTS P. 763. Loy. LA. Int'l & Comp. L.J. [Vol. 14:25 The states challenged the Commonwealth's offshore jurisdictional claim. In 1975, the High Court of Australia, in New South Wales v. Commonwealth, 5 held that the states' jurisdiction terminated at the low-water mark. 6 As such, the Australian High Court found that the Commonwealth's external affairs authority under section 51(xxix) of the Australian Constitution established federal jurisdiction over the 7 territorial sea and continental shelf. This Article demonstrates that the Australian High Court's decision in New South Wales was erroneous. During the nineteenth century, the Crown held sovereign and proprietary rights over the territorial sea. When the Australian colonies became self-governing, they were granted jurisdiction over the territorial sea and the right to the continental shelf resources. The colonies maintained their offshore jurisdiction upon their 1901 federation. The recognition of continental shelf rights under international law did not bolster the states' jurisdictional claims, but simply legitimized these claims under international law. The Commonwealth's external affairs authority under section 51 (xxix) of the Australian Constitution did not establish federal jurisdiction over the territorial sea or the continental shelf. The Australian High Court erroneously relied on flawed decisions of the United States and Canadian Supreme Courts in arriving at its decision.8 In 1979, a political settlement partially rectified the Australian High Court's decision. II. BACKGROUND ON THE DEVELOPMENT OF AUSTRALIA'S OFFSHORE PETROLEUM RESOURCE LEGISLATION Australia's dependence on oil imports from Indonesia and the Middle East, prior to 1960, made it vulnerable to supply interruptions and resulted in balance of payment deficits.9 Australia attempted to develop a domestic petroleum industry through federal and state incentives.' 0 For example, the federal government subsidized exploration operations in 1957 under the Petroleum Search Subsidy Scheme, which extended to exploratory drilling and geophysical surveys be5. 6. 7. 8. note 2. 9. 135 C.L.R. 337 (1975) (Austl.). Id. at 368. Id. at 364. Fitzgerald, Tidelands Controversy, supra note 2; Fitzgerald, Newfoundland, supra Andrew R. Thompson, Australia's Off-Shore Petroleum Common Code, 3 U.B.C. L. REV. 1 (1968). 10. Crommelin, supra note 3, at 481; Thompson, supra note 9, at 1. 1991] Australian Tidelands Controversy yond existing production areas." In 1960, the question of federal-state jurisdiction over offshore energy development became a salient public policy concern. That year, Broken Hill Proprietary Company, through its subsidiary, Hematite Petroleum Proprietary Limited, acquired permits from the states of South Australia, Tasmania, and Victoria to develop over 66,000 square miles of offshore lands.12 In 1962, the Commonwealth and state ministers commenced negotiations to develop a regulatory scheme for offshore energy development.1 3 The negotiators sought to develop a stable statutory and regulatory framework that would encourage private industry to invest the large capital necessary for offshore energy development. The negotiators also sought to avoid the litigation that had characterized United States offshore energy devel4 opment and was then threatening to erupt in C (...truncated)