REGULATORY: Mining and Natural Resources Regulatory; Maritime Deep Seabed Mining: The Next Wave -- U.S. Seabed Mining Regulatory Regime

by King & Spalding
Contact

Part I of this article appeared in the December 2012 Energy Newsletter and provided an introduction to the three principal types of seabed ore deposits, a history of exploration efforts, and an overview of the 1982 United Nations Convention on the Law of the Sea provisions governing the commercial exploitation of deep seabed mineral resources, including those of the International Seabed Authority (ISA). [1]

Part II covers the United States regulatory regimes governing activities in U.S. waters and those on the deep seabed outside of U.S. waters.

II. Mining in U.S. Waters: The Outer Continental Shelf Lands Act

Similar to the manner in which it guides the conduct of oil and gas operations, the Outer Continental Shelf Lands Act (OCSLA) governs seabed mining efforts on the U.S. continental shelf (i.e., all shelf submerged lands lying seaward of state coastal waters (3 nautical miles offshore) that are under U.S. jurisdiction). 43 U.S.C. §1331 et seq. This includes a 200-nm exclusive economic zone that is granted under customary international law and was proclaimed by President Reagan in 1983. Proclamation No. 5030, 48 Fed. Reg. 10605 (March 14, 1983).

Figure 3. United States Exclusive Economic Zone Boundaries [2]

U.S. waters and the seabed regulated under OCSLA also include areas beyond the 200-nm exclusive economic zone of the shelf. Pursuant to long-standing law and policy, the U.S. enjoys and exercises full jurisdiction over this area of its extended continental shelf. [3] This jurisdiction includes oil, gas, and hard mineral resources. The U.S. is in the process of delimiting the boundaries of its extended continental shelf through an interagency body, U.S. Extended Continental Shelf Task Force. See, e.g., continentalshelf.gov/about.html.

Figure 4. U.S. Extended Continental Shelf, Areas of Interest [4]

Operations involving seabed mining for hard minerals (any subsea minerals other than oil, gas, or sulphur) on the U.S. continental shelf are regulated under the OCSLA in three distinct parts: 1) Prospecting (30 C.F.R. 580 et seq.); 2) Leasing (30 C.F.R. 581 et seq.); and 3) Operations, including royalties (30 C.F.R. 582 et seq.).

An initial hard mineral lease lasts at least 20 years and a lease may remain in effect as long as mineral production continues. 30 C.F.R. § 581.19. A typical lease for minerals includes rights to all minerals within the leased area (except oil, gas, and sulphur). See id. § 581.8. Leases for oil and gas and other minerals are possible in the same area. See id. § 581.8(c). However, a mineral leasee may not unreasonably interfere with or endanger operations under an existing oil and gas lease. Id.

The identification of areas offered for mineral lease and the sizes of the lease tracts are to be determined by the Department of the Interior. 30 C.F.R. §§ 581.14, 581.15. The sizes of the tracts offered for lease are intended to be large enough to include potentially minable orebodies, meaning that lease tracts may be relatively large in some circumstances. See id. § 581.15.

The royalty due on minerals produced from a hard minerals lease on the U.S. continental shelf may vary and will be specified in the government’s leasing notice. 30 C.F.R. § 281.28. The royalty may be based on a percentage of the value or amount of the mineral(s) produced, a sum assessed per unit of product, or different method if included in the leasing notice. Id. Royalties may be waived, suspended, or reduced in situations where such action promotes the national interest, development, or the mine cannot successfully be operated under existing conditions. See id.

The provisions of the royalty management regulations regarding methods of valuation do not apply to all potential commodities produced by hard mineral mining operations on the outer continental shelf. In the event that the regulations to not address the specific minerals to be produced, the method of royalty calculation will be specified in the leasing notice and subsequently issued lease. See 30 C.F.R. § 581.29.

III. The High Seas: Deep Seabed Hard Minerals Resources Act

The U.S. has long held that its citizens and corporations have rights to explore and exploit the resources of the deep seabed beyond the shelf and may do so whether or not the United States accedes to the LOS Convention, provided that such activities are conducted without claiming sovereignty over any part of the deep seabed and as long as the activities are conducted with due regard to the rights of other nations. Restatement of the Law, Third, of the Foreign Relations Law of the United States, Vol. 2, § 523. These rights extend to mining activities for hard minerals of the deep seabed. Id.

In the absence of U.S. accession to the LOS Convention, the Deep Seabed Hard Minerals Resources Act (the “Resources Act”) governs conduct by U.S. nationals (citizens, vessels, and others subject to U.S. jurisdiction) that engage in exploration for, and commercial recovery of, hard mineral resources on the deep seabed outside of U.S. waters (i.e., the High Seas). See 30 U.S.C. § 1401 et seq.

This Act, implemented by the National Oceanic and Atmospheric Administration (NOAA), establishes the licensing regime applicable to U.S. deep seabed mining ventures. The application of NOAA regulations interpreting the provisions of the Resources Act is largely uncharted. The regulations outline a comprehensive regime governing the issuance of exploration and production licenses and the conduct of commercial recovery operations. See 15 C.F.R. Parts 170, 171. This regime includes:

  1. application requirements, including submission of statements of financial strength, technical experience, and commercial capabilities of applicants;
  2. licensing terms, including provisions covering freedoms of the high seas, international obligations, and safety at sea;
  3. operating terms, covering environmental protection, resource conservation, best available technology, and monitoring requirements; and
  4. enforcement provisions, including the use of observers and hearing and appeal procedures.

See id.

Future Prospects

Commentators deem it unlikely that the Senate will act to ratify the LOS Convention in the 113th Congress. The United States already exercises full jurisdiction and control over its entire continental shelf. Groves Statement, supra note 3, at 15. The U.S. claims clear title to all mineral resources lying under the extended continental shelf and currently enjoys the rights to any and all royalty revenue generated from the exploitation of such resources. Id. Without affixing a value of the mineral resources of the U.S. extended continental shelf, it would be difficult for the Senate to assess the costs, in terms of potential royalties lost, that would be associated with U.S. accession to the LOS Convention.

In the meantime, important moves are being made by private industry to advance technology necessary for deep seabed mining. Lockheed Martin, for example, recently obtained a license from the ISA, through a subsidiary of its British arm, UK Seabed Resources, to prospect for polymetallic nodules in the Clarion-Clipperton Zone. “Lockheed to Use Soviet Submarine Hunt Data in Sea Mine Plan,” BloombergBusinessweek, March 14, 2013 available at www.businessweek.com/news/2013-03-14/lockheed-to-use-soviet-submarine-hunt-data-in-seabed-mining-plan. It remains to be seen whether offshore oil and gas majors and contractors will capitalize on their knowledge and experience involving deepsea operations and move to form similar joint ventures with adventurous partners.

Whether or not the U.S. accedes to the LOS Convention, it would be wise, in the face of increased international competition, for companies to assess the applicability of the knowledge they have accumulated over decades of government-sponsored exploration activities to hard mineral development. Sinking a proverbial shovel into lucrative deposits on the U.S. continental shelf would be a good place to start.

[1] “Deep Seabed Mining Emerges from the Depths,” King & Spalding Energy Newsletter, December 2012 available at www.kslaw.com/library/newsletters/EnergyNewsletter/2012/December/article6.html.

2] Original graphic available at www.gc.noaa.gov/documents/2011/012711_gcil_maritime_eez_map.pdf.

[3] The Law of the Sea Convention: Hearing on Treaty Doc. 103-39 Before the S. Comm. on Foreign Relations, 112th Cong. 8 (2012) (statement of Steven Groves, Bernard and Barbara Lomas Fellow, Margaret Thatcher Center for Freedom, The Heritage Foundation).

See id.

Future Prospects

Commentators deem it unlikely that the Senate will act to ratify the LOS Convention in the 113th Congress. The United States already exercises full jurisdiction and control over its entire continental shelf. Groves Statement, supra note 3, at 15. The U.S. claims clear title to all mineral resources lying under the extended continental shelf and currently enjoys the rights to any and all royalty revenue generated from the exploitation of such resources. Id. Without affixing a value of the mineral resources of the U.S. extended continental shelf, it would be difficult for the Senate to assess the costs, in terms of potential royalties lost, that would be associated with U.S. accession to the LOS Convention.

In the meantime, important moves are being made by private industry to advance technology necessary for deep seabed mining. Lockheed Martin, for example, recently obtained a license from the ISA, through a subsidiary of its British arm, UK Seabed Resources, to prospect for polymetallic nodules in the Clarion-Clipperton Zone. “Lockheed to Use Soviet Submarine Hunt Data in Sea Mine Plan,” BloombergBusinessweek, March 14, 2013 available at www.businessweek.com/news/2013-03-14/lockheed-to-use-soviet-submarine-hunt-data-in-seabed-mining-plan. It remains to be seen whether offshore oil and gas majors and contractors will capitalize on their knowledge and experience involving deepsea operations and move to form similar joint ventures with adventurous partners.

Whether or not the U.S. accedes to the LOS Convention, it would be wise, in the face of increased international competition, for companies to assess the applicability of the knowledge they have accumulated over decades of government-sponsored exploration activities to hard mineral development. Sinking a proverbial shovel into lucrative deposits on the U.S. continental shelf would be a good place to start.
____________________
[1] “Deep Seabed Mining Emerges from the Depths,” King & Spalding Energy Newsletter, December 2012 available at www.kslaw.com/library/newsletters/EnergyNewsletter/2012/December/article6.html.
[2] Original graphic available at www.gc.noaa.gov/documents/2011/012711_gcil_maritime_eez_map.pdf.
[3] The Law of the Sea Convention: Hearing on Treaty Doc. 103-39 Before the S. Comm. on Foreign Relations, 112th Cong. 8 (2012) (statement of Steven Groves, Bernard and Barbara Lomas Fellow, Margaret Thatcher Center for Freedom, The Heritage Foundation).
[4] Original graphic available at continentalshelf.gov/media/ECSposterDec2010.pdf.

Jeffrey H. Perry
Washington, D.C.
+1 202 626 5521
jperry@kslaw.com

View Profile

Written by:

King & Spalding
Contact
more
less

King & Spalding on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
Feedback? Tell us what you think of the new jdsupra.com!