jurisdiction and offshore petroleum in australia: creating symmetry between the commonwealth and...

E L S E V I E R

Ocean & Coastal Management, Vol. 34, No. 3, pp. 173--204, 1997 O 1997 Elsevier Science Limited.

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J~dsdiction and offshore petroleum in Australia: creating symmetry between the Commonwealth and

states by sharing benefits and avoiding costs

Nathan Evans* & John Bailey Division of Environment Science, Murdoch University, Murdoch, Western Australia 6150,

Australia

(Received 25 June 1996; accepted 27 January 1997)

ABSTRACT

This article examines the federal legislative regime for governing offshore oil development in Australia. Adopting an evolutionary perspective, the article considers how the Australian petroleum regime has been able to avoid the "asymmetry o f costs and benefits" which have shut down the offshore oil leasing program on the US west coast. To this end, it is shown that the Petroleum (Submerged Lands) Act has overcome jurisdictional issues by creating a parmership between the federal and state governments, enabling both to share in the benefits of policy making. This joint decision-making structure is narrowly focused uptm exploitation, though, and does not deal with environmental issues outside of its original scope. The absence o f a complementary regime to fill this policy gap permits environmental costs to go unaccounted in petroleum development. This shortcoming notwithstanding, the Petro- leum (Submerged Lands) Act provides a useful model by which federal~state jurisdictional limitations can be overcome. Ocean and coa,stal issues are currently receiving political attention in Australia, and it i~: timely for the cooperative governance model to be revisited and also extended to other marine policy sectors. Moreover, joint authority approaches could be considered by other federations struggling with offshore jurisdiction issuex @~ 1997 Elsevier Science Ltd.

1. I N T R O D U C T I O N T O O F F S H O R E J U R I S D I C T I O N A N D P E T R O L E U M P O L I C Y

There i.,; increasing recognit ion within the academic li terature of the need for federal and state governments to col laborate in devising new

* Present address: Bureau of Resource Sciences, PO Box Ell, Kingston, ACT 2604, Australia,

173

174 iV. Evans, J. Bailey

governance systems for marine policy. 1 Unfortunately, there is little sign of cooperation if the US marine policy framework is any indicator of support for the concept. Far from being cooperative, the US framework is based around the traditional 3-mile separation offshore of state from federal authority, with the consequence that differing and often conflicting objectives are pursued by governments within their respective coastal zones. The situation with respect to offshore oil development is especially illustrative. As documented amply in the recent literature, 2 many coastal states are strongly opposed to offshore oil leasing proposals in adjacent federal waters, and relations between the two spheres of government have deteriorated to acrimony in this policy area. To describe the problem as exclusively one of federalism tends to oversimplify the character of offshore development. It is more appropriate to conceive the tension existing offshore as a product of decision making within the federal structure, rather than simply as an unavoidable byproduct of federalism. 3 Several insightful analyses frame the widespread opposition to federal offshore leasing as an 'asymmetrical distribution of costs and benefits'. That is, the beneficial aspects of offshore development accrue mainly to the federal government as oil-derived revenue, whereas the costs of onshore infrastructure, environmental damage, and disruption to lifestyle are incurred by local and state communities and authoritie~ 4

Expressing decision making as a function of costs and benefits explains why symmetry cannot be achieved in the manner originally conceived by legislators. In the USA, a number of federal laws govern offshore oil decision making, the main ones being the National Environmental Policy Act, Coastal Zone Management Act, and the amended Outer Continental Shelf Lands Act. Although these statutes provide for outside input to federal decision making, participation by non-federal actors only occurs once proposals are well advanced instead of at earlier pre-decision stages of leasing. In other words, states are restricted to reminding the federal government of the costs of offshore development through federal environmental statutes while receiving few tangible benefits. Out of frustration at this situation, state representatives have resorted annually to Congressional budgetary moratoria to thwart federal processes and halt offshore developments. The repeated use of this backdoor tactic suggests that there is a real need to repair the regulatory system, if not replace it altogether. In Wilder's terms '... the regime has simply broken down'. 5

A number of scholars recognize this situation as being inherently problematic. 6 Advocates are now calling for a reconsideration of statutory approaches with greater involvement by coastal states in federal offshore decision making. There is almost a sea change in opinion favouring forms of

Jurisdiction and offshore petroleum in Australia 175

cooperative governance, and extending further offshore the decision- making capabilities of the states. 7 It has been suggested that amendments to provide for revenue sharing are a first step towards a cooperative goverance model, s though this seems to be a rather lacklustre approach which has contribmed little to the restructuring of ocean management regimes. To help visualize better this 'second generation' approach to offshore governance, 9 practitioners in the USA could perhaps review Australia's history of federal and state government relations offshore.

Marine policy in Australia has been played out around the central issue of offshore jurisdiction, much as has occurred in the USA. Australia has existed as a federation of six internal states and two territories 1° since the beginning of this century. Colonial origins date back to 1788, a historical factor that has influenced the approach taken to offshore jurisdictional settlements, in terms of both policy approaches and legal questions. The legislative responsibilities of the two levels of government in Australia correspond closely with the distribution of power in the US legal system. Under the Australian Constitution, state parliaments may legislate with respect to all matters not reserved exclusively to the Commonwealth (the federal l~vel of government). These exclusive Commonwealth powers are limited to matters with a clear federal character, such as responsibilities for defence ~ d airport lands, and the federal public service. 1~ In most areas of policy, therefore, the power to legislate is conferred concurrently upon both levels of government.

The concurrent nature of legislative power in Australia means that section 109 is very important when interpreting the validity of state and federal laws. As with the federal supremacy clause in the USA, section 109 of the Australian Constitution ensures that in the event of conflict between state legislation and Commonwealth law enacted pursuant to its enumerated heads of power, the latter will prevail and the state law will be invalid to the extent of the inconsistency. Not surprisingly, the relationship between Commonwealth and state legislation has been the subject of considerable dispute, especially in the areas of offshore jurisdiction and environmental law. The nation's supreme juridicial body, the High Court of Australia, has on a number of occasions adjudicated regarding the authority of federal and state offshore claims. ~2 In fact, it was only as recently as 1980 that jurisdiction was resolved satisfactorily, since which time the Commonwealth has been able to concentrate upon petroleum policy instead of engaging in debate over the distribution of offshore responsibilities.

Australia and the USA differ greatly in the approach taken to petroleum policy in spite of sharing a federal structure and a broadly similar jurisdictional history. In Australia, offshore petroleum development is

176 N. Evans, Z Bailey

regulated under a cooperative governance model that finds its source in complementary Commonwealth/state legislation. This policy framework is often given the term 'mirror' because the enabling statutes on both sides of the 3-mile jurisdictional boundary are identical in structure and form. Discussions of the regime emphasise this legal complementarity as being the important feature of Australia's petroleum legislation. 13 These inter- pretations maintain that because complementary resource titles are granted pursuant to identical Commonwealth and state legislation, continuity and consistency in decision making is achieved irrespective of the 3-mile division of jurisdiction. These analyses, however, tend to focus upon strictly legal questions pertaining to the enforceability of rights, and fail to appreciate the cooperative regime created by the Petroleum (Submerged Lands) Act 1967 (hereafter P(SL)A). TM Consequently, the rather more intriguing governance aspects of this legislation have been given little serious treatment in the literature.

The greater contribution made by the P(SL)A towards realising cooperative governance is that it vests in state ministers executive powers of the Commonwealth in relation to the federal offshore area. Under the provisions of the Commonwealth's P(SL)A the states make offshore leasing and development decisions jointly with the Commonwealth in respect of the outer continental shelf, as well as exercising a range of other decision- making powers on the Commonwealth's behalf. Given that the offshore area seaward of 3 miles is now well established to be beyond the ordinary decision-making competence of the states, such an arrangement represents an extraordinary commitment to federalism on the part of the federal parliament, especially when considering the value of the resources at stake. This article argues that it is the joint exercise of decision-making i~nctions by both levels of governmentmrather more than simply having in place mirror legislation to create identical resource titles--that explains why the Australian petroleum regime is able to negate the tensions commonly associated with divided offshore jurisdiction.

Statutorily, the empowerment of state ministers is achieved through the joint and designated authorities established under the Commonwealth Act. It is through these creative mechanisms that the Australian federal and state governments are able to set common policies for the development of offshore petroleum resources. When reflecting upon the extant petroleum regime in the USA, it is not difficult to appreciate the efficacy of the P(SL)A in creating a federal/state partnership in relation to Australian offshore waters. As suggested earlier, it is the lack of meaningful participation by states in federal decision making that underlies the asymmetry existing between the two governmental spheres in the USA. It is argued that the Australian joint/designated authority model is a proven means by which


asymmetry can be overcome, at least in so far as distributing benefits is concerned.

Some qualifications should be made when considering how well the costs of offshore development are included in joint policy setting. Much less political attention has been devoted to devising environmental regimes than has gone into resolving claims over the ownership of resources, or into fashionm~g legislation for the exploitation thereof- As will be discussed later, wider public concerns of an environmental nature are poorly contemplated and represented at law. Indeed, the public record indicates that the Commonwealth has avoided legislating to establish accountable marine environmental policies. For the moment, it is worth observing three main defects in the statutory framework. Ftrsfly, joint decision-making mechanisms are absent from environmental statutes, suggesting that the environment is accorded lower priority by the Commonwealth relative to the petroleum sector. Moreover, the principal statute in this regard--the Enviromnent Protection (Impact of Proposals) Act 1974 provides the Commonwealth with considerable latitude as to the preparation of federal enviroxmaental impact statements. Thirdly, parties disaffected by Com- monwealth coastal policy decisions have few means of statutory redress at their disposal. The effect of this inconsistent treatment by the legislature of the two policy areas is that offshore oil deposits continue to be exploited largely unfettered by the federal environmental inconveniences so obvious in the USA. In terms of the present analysis, few costs are perceived while all the benefits deriving from offshore oil flow to the two spheres of government.

Marine issues are currently on the agenda in Australia as they are around the world, is It is timely therefore to review the history of offshore petroleum policy and reflect upon the lessons learned, both to identify deficiencies in the Australian regime and to consider those features that are worth exporting to other coastal nations. Because the model has evolved over time to reach its current form--rather than being the product of an ideally conceived offshore regime--to ignore the historical path leading to the creation of the joint authority model would be to misrepresent the regime's development. Therefore, adopting the evolutionary perspective of Juda, TM this article firstly discusses the history of jurisdictional settlements and considers how these have shaped contemporary offshore regimes. Within ~Lhis context of offshore federalism, the petroleum and then the enviromnental regimes are reviewed to demonstrate how Australia has avoided decision-making asymmetry in terms of the distribution of benefits and coslls associated with petroleum policy. After the Australian offshore situation has been discussed at length, the circumstances of the USA are revisited to clarify the significant points of departure between the


experiences of the two countries. In conclusion, the argument is made that the offshore petroleum regimes of both nations need to be updated and made more relevant to the broader marine policy requirements of today.

2. JURISDICTIONAL SETFLEMENTS AND OFFSHORE PETROLEUM IN AUSTRALIA

Jurisdictional accords feature obviously in a n y historical review of Australian marine policy. Despite a 30-year history of settlements and a constant renegotiating of offshore positions, it is apparent upon closer review that participation by both state and federal governments in offshore petroleum policy has never been seriously doubted. Rather, the offshore saga has been argued around the proper role of each governmental sphere with respect to policy making. Over time federalism has certainly been perceived as a problem with respect to offshore development, 17 but the very fact that the federal structure affords tremendous opportunities for joint decision making makes short shrift of the argument that the division of powers is inherently problematic.

To appreciate how the Petroleum (Submerged Lands) Act regime has evolved it is necessary to recount the history of Commonwealth/state relations offshore. As suggested earlier, the present form of the P(SL)A is the most recent of several that have emerged over time as the system has struggled to find internal symmetry. Three distinct periods in federal/state offshore relations can be identified. The first period reflects developments up until about 1972, a period that is best thought of as one of policy avoidance with respect to jurisdictional issues in Australia. A shorter, more turbulent period followed as the Commonwealth sought to assert federal supremacy offshore through legislative action. The third periodBbeginning in 1980--represents the maturation of offshore federalism in Australia. The Offshore Constitutional Settlement reached during this time finally settled most outstanding jurisdictional questions, a status that has continued relatively unchanged since.

Each period of the offshore jurisdictional history is treated in turn here before the nature of costs and benefits in decision making is considered in part 3. Although the historic situation leading to the current settlement is peculiar to Australia, it will be commented later that this fact of history does not preclude the features of the regime being adopted by other federations.

2.1. 1952-1972: policy avoidance

Prior to the mid-1960s, the Commonwealth displayed few desires to manage marine resources, is The states were reluctant to accept federal management


of offshore resources, 19 therefore initial plunges by the Commonwealth into the area of marine policy were very deferential to states. 2° The first hint of conflict over the role of the Commonwealth and the states in offshore policy corresponded to increasing interest in the exploitation of marine resources. The absence of jurisdictional rivalries offshore, however, meant that when oil development began in earnest during the 1960S, the regulation thereof lacked any certainty as to the roles of Commonwealth and state. 21

The 1~67 Australian Petroleum Settlement was the first attempt to reduce jurisdictional uncertainty about the offshore. The Settlement itself consisted of two parts, a political Agreement and complementary legislation. 22 The former of these detailed the broad principles of a common mining code agreed to by the state and federal governments, while the supporting statutes--the Petroleum (Submerged Lands) Acts---were needed to create the essential statutory titles to explore and produce offshore. This legislation was identical in title and provision except that the federal P(SL)A applied to waters right around the country, whereas the state Acts applied to those offshore waters adjacent to each state. This mechanism was designed to avoid answering the question of jurisdiction by providing two separate authoritative sources for offshore titles. Granting to each operator two identical titles---one issued under each of the Commonwealth and state laws---in respect of each licence area assured operators of the validity of at least one of these licences in the event of jurisdiction being clarified. The legislation was thus able to satisfy the key requirement of securing the validity of petroleum titles irrespective of any eventual resolution of outstanding jurisdictional questions.

Although intergovemmental conflict over the offshore was avoided, the extent of the concessions made by the Commonwealth to the states in 1967 is remarkable. By accepting the terms of the Settlement--in particular, the overlapping state legislation--the Commonwealth effectively quitclaimed to states its previous sole jurisdiction over the continental shelf. This was an excessiw~ gesture because it was felt that in the event of a court-case states might have been able to mount a credible possessory claim over the 3-mile territorial waters. 23 With respect to continental shelf areas, however, there was little doubt that the Commonwealth would be held to exercise sovereign rights over seabed resources. 24 Even within this restricted context the Commonwealth largely abdicated to the states its functional capabilities with respect to policy development. Pursuant to the federal P(SL)A, state ministers were nominated as designated authorities, upon whom were bestowed all the powers and functions available under Commonwealth law in areas adjacent to each state. 2s The states therefore exercised Commonwealth decision-making capabilities in addition to administering their own legislation.

180 N. Evans, J. Bailey

Several points help to explain the extraordinary concessions made by the Commonwealth to the states under the 1967 Settlement. Firstly, it is worth noting that legislators at the time subscribed to the view that the litigious experience of the USA should be avoided in Australia. 2e An elaborate political solution under which no litigation could occur was therefore adopted by all governments as an alternative strategy. 27 However, because the Settlement was essentially a political solution which failed to provide a legal answer to a problem of Constitutional law, it could only reduce uncertainty rather than achieve the complete removal thereof. A second and perhaps more important point is that the Settlement clearly did not address which level of government should participate in offshore decision making. Rather, it settled how their participation could best be achieved within the policy context of avoiding any juridicial resolution.

Notwithstanding that this approach was preferred primarily because of legal uncertainties and the Commonwealth's own policy inadequacies, the Settlement was born of mutualism and worked to the advantage of all participants. 2s Two particular consequences flowed from the Settlement. The dominance of the states as policy makers firstly negated the requirement of the Commonwealth to develop its own marine policy expertise. Instead, the Commonwealth for some time relied upon the state governments to administer the fledgling petroleum regime. Following from this early reliance, the role of state governments as fisheries and petroleum regulators assured them of continued participation in marine policy formation. So entrenched within the policy system were the states that the very suggestion of their exclusion was untenable, and a brief move in this direction failed to survive during the 1970s (see below).

To be sure, successive Commonwealth policies have reduced the role of states offshore, and if the regime were to be devised anew, a different-- perhaps asymmetrical--approach might well be adopted. None the less, neither sphere of government solely occupied the policy field in 1967, nor refused to accept the legitimacy of the other jurisdiction's offshore claims. If anything, the nature of decision making within the regime meant that asymmetry was skewed in favour of the states. The Commonwealth's contentment with this arrangement meant that the distribution of benefits, as measured by participatory decision making as well as royalty returns, did not even emerge as an issue.

2.2. 1973-1975: commonwealth assertiveness

Despite its low policy-making profile offshore, the Commonwealth did retain a slight measure of input into key policy decisions under the 1967


Settlement. State ministers, when acting in their capacity as designated authorities, were required to consult with the Commonwealth before granting instruments relating to exploration and production. 29 This requirement was written into the Agreement only and lacked enforceability, reflecting the desire of the federal and state governments to avoid litigation pursuant to the Settlement. The Australian Petroleum Settlement operated largely on the basis of consensus and good faith between the Commonwealth and the state governments. 3°

The election of the Whitlam federal government in 1972 brought the offshore jurisdiction question back into currency. Consistent with its centralist philosophy of government, the Commonwealth sought to exert a greater role in offshore decision making. This it did initially by insisting upon observing the consultative mechanisms of the designated authority. Up until this time, the states had largely ignored the requirement to consult with the Commonwealth, an attitude that displayed a general indifference on their part towards the Agreement, and suggestive also of a desire to exclude the federal government from participating further in petroleum development. Offshore oil policy was therefore very much the province of the states, historically and as perpetuated through the Australian Petroleum Settlement. With an ideologically different federal government in power, though, the instability of this political partnership was soon exposed.

The incoming Commonwealth considered state governments inconven- ient to its pursuit of a national energy policy. 31 As a priority after assuming office the Commonwealth government rapidly passed into law the Seas and Submerged Lands Act 1973 (Cth) (SSLA) to redefine offshore jurisdiction, effectively denying the states any marine policy-making role and advancing its view of offshore intergovernmental relations. The SSLA declared sovereign rights over continental shelf resources vested in the Crown ~a right of the Commonwealth, 32 and similarly vested in the Commonwealth exclusive sovereignty over the 3-mile territorial sea. 33 With respect to petroleum development, the effect of this was to render invalid the states' overlapping petroleum legislation. The statute also relegated to state governments the continued administration of navigation and shoreline infrastructure, 34 a situation clearly asymmetrical with respect to the distribution of costs and benefits from petroleum development. Under older circumstances such asymmetry would have been disquieting. Put in the context of the historical state dominance offshore, such a profound and sudden redistribution of responsibilities compelled the states in 1975 to enjoin in action in the High Court of Australia challenging the SSLA. 35

The response of Australian states to the Commonwealth's SSLA is well


documented, at least with respect to legal issues) 6 In terms of explaining state reactions to the legislation, however, few scholars of the offshore disputes have recognized that every Australian state possesses a long coastline, a geopolitical factor that has fundamentally predetermined the history of offshore jurisdiction in Australia) 7 Upon the enactment of the SSLA every state was immediately dispossesed of a lengthy coastal margin. It is also important to note that at the time of the High Court challenge hydrocarbon activity was restricted to areas off the state of Victoria, suggesting that being deprived of their coastlines per se--rather than any loss of oil-derived revenuemaccounts for the Australia-wide reaction of state governments. 3a In the event, the High Court action provided the states with no relief from the effect of the SSLA, regardless of state unanimity and the history of state decision making offshore. The ensuing casemNew South Wales v. the Commonweal th~was in fact a regressive step in state efforts to re-exert power offshore. Without belabouring here the particularities of the case, suffice it to say that the Seas and Submerged Lands Act was upheld in entirety based upon section 51 head powers. Indeed, the judgement went so far as to confirm that the Commonwealth possessed legislative capabilities it had not even contemplated when enacting the statute in 1973. 39 By upholding the SSLA the High Court ruled that state territory not only ended at the low water mark of the beach, but that all colonial ties beyond this boundary were ceded to the Commonwealth upon federation. 4° In other words, the Seas and Submerged Lands Act did not represent a new accrual of rights to the Commonwealth, but merely codified in law those offshore rights held federally but hitherto unexercised. This aspect of the judgement is suggested to have most offended the states, far exceeding expectations based upon prevailing opinion and custom. 41 For the states the issue was therefore not the immediacy of offshore development, but was instead the recognition of personality within the federal structure. 42

The outcome of New South Wales v. the Commonwealth, although compelling, was not longiived. Regardless of the legal principles established by the judgement, denying the states an offshore role was doomed to fail politically and administratively. In an extraordinary series of political events taking place at the same time as the High Court ruling was delivered, the Whitlam government lost office in rather spectacular fashion. The Fraser Commonwealth government that came to power in 1975 advocated a platform of reduced federal government. Part of its New Federalism policy sought to undo the Seas and Submerged Lands framework and readmit the states to an offshore partnership. 43 Consequently, as had occurred in 1967, the two spheres of government narrowed upon another cooperative settlement in response to jurisdic-


tional difficulties, this time to circumvent the unpalatable High Court judgement. 44

2.3. 1980: the offshore constitutional settlement

The cooperative settlement reached in 1980---the Offshore Constitutional Settlement (OCS)--was both straightforward and ambitious. Minimally, the OCS sought to reassign the territorial sea to the states within the context of the Australian federal structure. This it did by creating for the first time a Commonwealth/state jurisdictional divide 3 miles offshore. The states w~;re to be returned jurisdiction over the territorial sea pursuant to the OCS while title to the continental shelf beyond would revert to the Commonwealth. The especial feature of the OCS is that, within the framework it created, a number of sectoral policy models were proposed to enabl~ the states to participate in federal decision making beyond the limits of their own waters. 4s By proposing agreed arrangements for individual marine policy sectors, the Commonwealth was able to offset the huge loss of state territory effectuated by the Seas and Submerged Lands Act.

As stated, the new federal government embraced a more federalist outlook and accepted the legitimate place of the states as participants in offshore policy. Federalism theories provide only a partial explanation of the form of the OCS petroleum regime, though, overlooking an important parallel influence. By the time the OCS was concluded the Commonwealth was cognizant of the logistics of offshore activity, and of the need to involve the states in regulating and controlling outer continental shelf activity. :Highly prospective areas were being discovered off the northwest coast of Australia, but unlike the Victorian offshore situation, where oillields were easily accessible to the Commonwealth, the geographical remoten,ess of north Western Australia presented administrative problems for the federal government. 46 The influences shaping the OCS approach to the petroleum sector were therefore twofold. In addition to the persistent demands; of the states to recoup offshore identity, it was apparent also that state cooperation was needed in managing expansive federal submerged lands. 47 ]in other words, the approach of the Commonwealth and the states to offshore petroleum in 1980 was determined both by the federalism currents flowing at that time and by the operational requirements of offshore development.

The legal response to these combined influences was to create a regime that was common to Commonwealth and state waters right around the country. To give effect to this strategy, identical legislation was enacted by all Australian Parliaments applicable to the waters under their respective jurisdiction. The Commonwealth's P(SL)A was amended to apply seaward


of the territorial sea out to the edge of the continental shelf, while new state legislation of the same name was enacted to apply between the coastline and the limit of the territorial sea. 4a A mirror regime was thus emplaced--as mentioned in the introduction---creating a decision-making structure that continued unbroken across state and Commonwealth waters in place of the overlapping regimes that existed previously.

Several commentators have remarked that it is this continuity in federal and state decision making that explains the smooth administration of the Australian petroleum regime. 49 A number of administrative conveniences arise from the existence of common rights and duties offshore, especially with respect to investment and expenditure decisions made by the holders and operators of statutory approvals. 5° In so far as intergovernmental relations are concerned, though, it is the significant involvement by the states in decision making that accounts for the absence of federal/state conflict over offshore resources. In this regard, the states are involved in making petroleum decisions through three roles assigned to the state minister under the complementary legislation. Each of these three roles-- one created under the state legislation and two under the Commonwealth ActEare introduced and described in turn here. In the following sections, the involvement of states in federal decision making is argued to be the factor underpinning the success of the petroleum regime in handling normally troublesome jurisdictional problems.

Of the three decision-making roles given to the state minister, the most easily understood is that fulfilled within state waters. Title over the first 3 miles of coastal waters is vested in the states under the terms of the OCS, as is plenary legislative power. This combination of title and power provides the basis upon which the state P(SL)As are enacted and operate. Under their respective statutes, state ministers perform a wide range of functions pertaining to development approval, from preleasing decisions through to directing the rate of petroleum recovery. Within the first 3 miles of coastal waters, jurisdiction in relation to all aspects of petroleum activity is essentially exclusive to the states.

Further offshore in Commonwealth watersEwhere the vast petroleum deposits are located~the state minister assumes two additional roles under an intriguing legal regime. Firstly, the state minister serves as a member of the two-person joint authority, a statutory body comprising the Commonwealth and the relevant state minister established in respect of each federal adjacent area (the outer continental shelf adjoining the coastal waters of each state). 51 Under the Commonwealth's P(SL)A, the joint authority is empowered to make decisions pertaining to petroleum activity on the continental shelf at all stages of development. 52 The more significant of these decision-making powers include: opening areas for


exploration; awarding leases to explore prospective areas; issuing and renewing productive mining ficences; and determining the approval conditions of petroleum titles, s3 These decisions are of a clear policy nature, which taken collectively set the pace and scale of continental shelf activity. Acting as a member of the joint authority, the state minister is therefore involved in determining federal petroleum policy jointly with the Commonwealth, from leasing through to production.

Within the joint authority structure there still exists the possibility for disagreement between the Commonwealth and state ministers regarding development approvals. The Commonwealth's decision prevails in this event, a provision that rests upon the Commonwealth paramountcy clause, section 109 of the Constitution. s4 Such disagreements over development policy have been rare, being limited to an early period of dispute between the Victorian and Commonwealth governments. This disputation, moreow;r, pertained to the determination of royalties flowing from productJion activity rather than being concerned with questions of area develop:ment. 55 With this exception, joint authority approvals have continued apace since the model was adopted in 1980, as documented further below in part 3.

The third role filled by state ministers is that of designated authority, continued under the Commonwealth Act but modified from its antecedent form begun in 1967. In the previous regime, the designated authority was the only decision-maker offshore, administering both the state and Commonwealth statutes in respect of each adjacent area. The designated authority was continued by the OCS-amended P(SL)A although with reduced powers and functions, the residue of these having been transferred to the joint authority. 56 The role of the designated authority was reviised in 1980 to be concerned with supportive aspects of petroleum recover.¢ rather than with policy decisions pertaining to the award of tenements. To this end, the Commonwealth Act assigned to the designated authority a range of powers relating to the advertisement and receival of title applications, and miscellaneous work-related responsibilities. 57

The OCS has not been challenged since its settlement in 1980, and the allocation of jurisdiction achieved thereunder has not altered. Within this jurisdictional framework, though, the P(SL)A has twice been amended to redefine: the extent of state participation in the Commonwealth regime subsequent to its renegotiation in 1980. 58 The first of these amendments related to power over petroleum recovery. As originally amended pursuant to the OCS in 1980, the federal statute gave to the designated authority the power to direct production licence holders to increase the rate at which petroleum was being recovered. Because this power belonged to the designalLed authority, even after 1980, it continued to be exercised solely at


the discretion of state mini.~ters. In 1984, the Commonwealth amended its P(SL)A to replace the designated authority by the joint authority as the relevant decision maker responsible for setting production rates. The same amendment also enabled Commonwealth revenue to be taken into account by the joint authority when issuing directions to vary production rates. 59 The combined effect of these changes was to enable the joint authority to tailor individual licence decisions to meet national policy goals, which hitherto were a state prerogative without the benefit of a national perspective. The same tactic was employed several years later by the Commonwealth to further redistribute some of those generous powers that the OCS had preserved largely intact from 1967. 60 In 1987, amendment legislation replaced the designated authority with the joint authority as the relevant decision maker with respect to a number of the secondary functions mentioned earlier.

To put the post-1980 regime in perspective, before the 1984 and 1987 amendments to the P(SL)A, state ministers acting alone made federal decisions---under Commonwealth legislation--in relation to the outer continental shell The effect of the amending legislation in 1984 and 1987 was to convert these decisions to the combined province of the Commonwealth and state ministers as the joint authority. This redistribution of powers means that the federal and state governments now jointly determine all continental shelf policy decisions made under the Commonwealth's P(SL)A.

In summary, it can be seen that the role of state ministers has been eroded from the hegemonic position they previously occupied. Despite this erosion, the extent of state participation in Commonwealth petroleum policy making is none the less quite remarkable. It can be seen that the conspicuous features of the petroleum regime are the formulae wherein decision-making power is shared by both spheres of government. State ministers are empowered to make decisions in respect of a Commonwealth areauthe outer continental shelf--despite this being exclusive to the Commonwealth under section 52 of the Constitution. Some unanswered questions as to the constitutionality of this arrangement do persist, but positive commentary by Australian superior courts has legitimated the OCS, and the federal empowerment of state ministers upon which it is predicated. 61 It is unsurprising, given this effective devolvement of powers from the Commonwealth to the states pursuant to the P(SL)A, that the Australian regime operates unencumbered by intergovernmental tensions. To show the success of the cooperative governance model, the article now turns to reviewing the joint authority approach to decision making since 1982, before considering how well environmental and social costs are factored into these decisions.


3. F E D E R A L I S M A N D T H E D I S T R I B U T I O N O F COSTS A N D BENEFITS

3.1. Johtt authority decision making and cooperative governance

The offshore pe t ro leum regime has been criticized as being complex, comprising as it does separate regimes for each adjacent Commonwea l th and state area. 62 Al though 18 adjacent areas do exist a round Australia, complexity in decision making is more attributable to the prot racted jurisdictional history offshore than it is to actual management . Activity occurs largely free of tension in four zones a round the mainland (federal and state areas adjacent to Western Australia and Victoria), comprising some 1:i 000 km, or half the length of the Australian coastline. 63 In the event of prospective deposits being located elsewhere on the continental shelf, the success of the current operat ive regimes suggests that the identical legislation applicable to o ther states and territories would similarly succeed in obviating in tergovernmental difficulties.

To illlustrate the decision-making efficacy of the P(SL)A structure, Table 1 shows the nature of joint authori ty decision making since the OCS

TABLE 1 Joint authority decisions 1982-1995 (total and sample decisions by type)

Year Total Exploration Areas Changes decisions permits ° (re)leased to title

1982-1983 52 2 - - 38 1983-19&~ 176 2 12 86 1984-198:5 174 5 9 110 1985-19&5 181 7 6 130 1986-198'7 174 13 13 112 1987-1988 b 127 25 11 70 1988-1989 253 17 18 145 1989-1993 288 10 26 205 1990--1991 N/A N/A 34 N/A 1991-1992 206 19 22 101 1992-19913 206 20 26 73 1993-1994 430 10 24 313 1994-1995 412 12 29 290

Sources: Department of National Development and Energy, Annual Reports 1980-1981/1981-1982; Department of Resources and Energy, Annual Reports 1982-1983 to 1986-1987; Department of Primary Industries and Energy, Annual Reports 1987-1988 through 1994-1995. Australian Government Publishing Service, Canberra. ° Includes exploration permits issued and changes to initial approval conditions, b The downturn in joint authority activity in the financial year 1987-1988 is attributable to depressed oil prices and the commensurate lack of interest in developing new areas.


legislation came into effect in 1982. ~ From this data several patterns are identified which confirm that the petroleum legislation has been successful in overcoming jurisdictional difficulties. Most obviously, it can be seen that joint authority decision making has increased eighffold since 1982, including a 100% increase in decisions over the past 5 years. That is, intergovernmental decisions pertaining to the issue of offshore resource titles are being made, and in increasing number over time.

Curiously, it can also be seen from the table that the annual release of prospective areas for exploration (and the approval therefor) has remained constant since 1989, in spite of the increase in the number of joint authority decisions being made. In other words, the two ministers are making fewer policy decisions pertaining to resources development as a proportion of the total decision-making effort. The joint authority is instead becoming preoccupied with registering changes in the ownership of resource titles rather than with releasing new areas for exploration, or entitling prospectors to explore therein. In response to this emerging pattern, the P(SL)A was again substantively amended by Parliament. In 1991, amendment legislation was enacted to enable the joint authority ministers to delegate to agency executives all the joint authority powers, including those pertaining to leasing and development decisions. 65

The most immediate effect of this delegation was to relieve the two ministers of having to approve the exchange of mining titles amongst oil companies, a function better managed by agencies without the need to await ministerial approval, with all its associated delays. Because of this delegation of power, many of the joint authority decisions post-1991 were made by agency chief executives rather than by the Commonwealth and state ministers. Following from this fact is a second, more important observation. The act of legislatively endorsing the delegation of ministerial decision-making powers to senior agency staff underscores the success of the cooperative governance model. Only in a climate of confidence and decision-making harmony would the federal legislature provide the ministers--as the joint authority--with the capacity to divest ministerial executive powers to the exercise of agencies. In this respect, Parliamentary debates confirm that by 1991 joint ministerial decisions were becoming almost routine under the enabling legislation. ~ Statutory delegation of responsibilities---without weakening ministerial controlmtherefore represented a logical maturation of the P(SL)A.

In terms of intergovernmental relations, the most visible benefit of the Australian petroleum regime is its ability to reconcile federal with state policy through the joint authority mechanism, and importantly, the joint ownership of decisions implied thereby. A rather more subtle effect of cooperative governance is to be found when considering the costs of


offshore development, alluded to earlier. The means by which costs are included in policy decisions----or not in the case of Australia--is achieved through two pathways. Firstly, by involving state governments in federal decision making, the former participants are obliged to accept the costs associated with the resultant joint decisions. 67 In the case of offshore petrolemn development, this analysis maintains that because the decision to exploit resources is made by the Commonwealth in collaboration with the states, any costs deriving from offshore activities are more acceptable to the latter sphere of government than if these were made by the Commonwealth acting alone. That much said, the willingness of local communities and state governments to pay for the costs of development would be severely tested in the event of development becoming environmentally costly, a scenario that nearly came to pass as a consequence of a major shipping incident several years ago off the Western Australian coast. 6s During the contingency and salvage phases of that misadventure----occurring 25 miles offshore--federal and state relations were sorely strained. 69 The extent to which this pathway therefore accommodates the costs of offshore activity needs to be explored more closely before firmer conclusions can be drawn.

The second pathway by which the costs of development are kept affordable is simply to restrict the cost-accounting mechanisms available to participants. The instruments through which social and environmental costs are commonly included in offshore decision making in the USA are enviro~aental impact assessment (EIA) and coastal zone management. Neither of these tools are readily available to disaffected third parties in Australia, where federal legislation is notably short on provisions for accommodating public input in Commonwealth decision making. Indeed, the form of environmental legislation is such that third parties are not even alerted at law to the potential costs arising from petroleum development. In terms of the present analysis, the lack of a participative cost-accounting regime permits development-related costs to go unrecog- nized, mad allows the Commonwealth and the states to pursue relatively unfettered the objective of expeditious offshore development. To complete the analysis, it is necessary to consider the framework within which the calculation and distribution of costs arising from offshore development Occurs.

3.2. Em~ronmental impact assessment

With respect to EIA, the relevant Commonwealth statute is the Environment Protection (Impact of Proposals) Act 1974 (Cth) (Impact of Proposals Act). The Act applies to federal decision making, namely


projects undertaken by a Commonwealth instrumentality which require federal approval or which occur on Commonwealth property. 7° Admin- istrative Procedures established under the parent Act provide the detail for determining both the need for and the requirements of an environmental impact s t a t emen t (EIS) . 71 The preparation of an EIS under the Act is very discretionary, being triggered solely by the 'action minister'. 72 Under the Administrative Procedures, the minister whose department either is the proponent or is responsible for project approval determines whether a proposal will generate significant environmental impacts, and may therefore warrant formal assessment. 73 Procedurally, this determination of significance is achieved by the action minister nominating a proponent with respect to a proposed action, after which the proposal in question is referred to the Environment Protection Group within the federal environment portfolio for its opinion as to the need for an EIS. 74 The environment agency's function is to determine only that assessment of proposals is not required; the question of the need to prepare an EIS is referred by the agency to the minister for the environment. 7s Only when a proposal reaches the third decision point of the environment minister can an EIS actually be ordered. Upon completion of any assessment, the action minister will then ensure that the recommendations arising from the EIA are 'taken into account' and 'given effect to' when implementing the proposal. 7°

The Impact of Proposals Act represents a cautious legislative approach towards environmental policy. At the time the legislation was enacted in the early 1970s the Commonwealth was desirous of avoiding the delays caused by NEPA in the USA, and, much as it had done in 1967 with respect to the original petroleum legislation, looked to the American experience. 77 One lesson the Commonwealth learnt was to avoid enacting EIS legislation that exposed its decisions to judicial review, hence the emphasis upon ministerial and administrative discretion for specifying EIS requirements, rather than this being prescribed in enforceable terms within the statute. Subsequent to its enactment, though, the Impact of Proposals Act has not been updated and strengthened. Whilst the Administrative Procedures were amended in 1987 to clarify the scope and content of EISs prepared thereunder, there is a growing recognition of the need to amend if not replace the original statute. 7s

In 1994, efforts to this end were belatedly initiated by the Commonwealth when it conducted a comprehensive review of the legislation. 79 From this review emerged a number of recommendations, two in particular being worthy of mention because of their relevance to the present discussion. One recommendation proposed to give the power for triggering federal EIA to the environment agency or minister, while it


was also recommended that third parties be provided with a more defined, partidpative role in Commonwealth assessments, including better access to the courts. In the event, a Federal Court decisionS°---the Gunns case--that was unfavourable to the Commonwealth, and a change of government, derailed the review process.

With ~respect to offshore petroleum and federal EIA, it is opportune to comment upon a development proposal located in Commonwealth waters adjacent to Western Australia. sl The significance of this proposal, the Wandoo Full Field development, is that it represents the first time in relation to federal waters that a proponent has been required to prepare an EIS under the administrative procedures of the Impact of Proposals Actfl 2 Several Commonwealth/state combined assessments have been conducted where proposals overlap state waters elswhere around Australia. In fact, one of the few previous applications of the Commonwealth Act to offshore oil activity occurred as a combined EIA during the negotiation phase of the OCS, to demonstrate, it seems, the regime's cooperative governance philosophy, a3 However, the current development is the only EIS prepared in respect of an offshore oil proposal located wholly within Commonwealth waters during the 20-year life of the Impact of Proposals Act. In this regard, it is also worth observing that Wandoo is a full developmental field rather than an exploration proposal. In other words, preproduction stages of petroleum activity are yet to be subjected to the full force of Commonwealth EIS legislation.

The Wandoo proposal also appears to have been motivated at least in part by the administrative adjustments flowing from the Gunns decision mentioned above. ~ The Gunns case of early 1995 complicated the Commonwealth EIA review process by examining aspects of the legislation previously unreviewed by the courts. ~ In essence, the judgement widened the application of the Impact of Proposals Act to bring within tlhe purview of Commonwealth EIA decisions that previously had been subjected to assessment, s6 In response to the difficulties presented by Gunns, the Commonwealth acted to exempt a number of environmental decisions from the Impact of Proposals Act rather than risk exposing its decision making to greater judicial review, quite plainly defying the spirit of the 1994 review recommendations, a7 It is unsurprising, therefore, that the review has not been implemented by the Commonwealth. Several minor changes to the Administrative Procedures established under the parent .~;tatute have been initiated, ~ instead of the hoped for legislative overhaul.

Scholars have increasingly come to recognize that the discretion built into the Impact of Proposals Act has seriously compromised the statute's


intent of publicly accountable environmental policy, s9 In the words of one commentator, 'As a r e s u l t . . , the Australian system is characterised by an extraordinary amount of ministerial discretion, sporadic public involvement, and frequent calls for reform'. 9° In terms of outer continental shelf development activity, Commonwealth EIA offers little support for the better accounting and distribution of environmental costs arising from federal decisions, especially with respect to participation by non-state actors who oppose aspects of the joint authority offshore leasing programme. 91 In so far as environmental protection is concerned, conditions are attached by the designated and joint authorities to mining titles granted under the Commonwealth P(SL)A. ~z However, this occurs as a routine administrative decision without exposing proposals to the rigours of external review and public scrutiny. 93

3.3. Coastal zone management

The other means by which state and local interests in the USA have endeavoured to achieve symmetry in federally sanctioned development is statutory coastal zone management. Similar legislation is absent in Australia, as the Commonwealth has resisted opportunities to move in this direction on several occasions. The firstmand possibly most convenient-- moment to consider national coastal management occurred in parallel with the OCS. At that time, a House Standing Committee conducted a review of Australian coastal zone management, wherein the Commonwealth was urged to formulate a national coastal policy. 94 Legislative action was not contemplated by the Committee, which was cautious not to encroach upon states' responsibilities, 95 a mood sympathetic to the complex OCS negotiations that were proceeding at the time. Notwithstanding the possibility at least to usefully link the two developments, the report commented upon the OCS only in passing. 96 Coastal land-use issues were clearly not a priority in 1980, in spite of the attention being focused further offshore. 97

Eleven years later another House of Representatives Committee delivered a second, slightly more insistent review of national coastal policy. 9s The report, The Injured Coastline, considered that the Commonwealth had three roles in coastal environmental protection: broad policy making; the provision and distribution of research and information; and the supportive resourcing of programmes. 99 To a large extent, the evocative name of the report belied the nature of the recommendations that emerged. While the Committee 'strongly believed' the Com- monwealth should initiate a national coastal strategy, it stressed that this must be developed with the cooperation of state and local governments. 1°° The US Coastal Zone Management Act was discussed by the


Committee~including particular reference to the federal consistency clause and its contribution to the policy gridlock offshore California--but the Committee stopped short of recommending that a similar model be adopted in Australia. 1°1 Instead, the Committee recommended that the Commonwealth enact legislation specifying federal interests in the coastal zone and agreed national environmental guidelines. 1~

Two other findings of The Injured Coastline are worth commenting upon. The report quite clearly identified the frustration felt by a number of participants at their inability to participate in federal decision making. Despite noting that participation was limited to the EIA process ' . . . which did not always satisfy the demands of the community', 1°3 the Committee still cotmselled against adopting more participative models. Quite clear from the review, moreover, was that the federal/state interface per se did not pre:sent problems for coastal environmental protection. ~°4 The extent to which problems did exist was attributable to decision-making fragmentation; namely, multiple public agencies, arbitrary administrative boundaries, and the failure to consider cumulative effects. 1°5 In other words, the vertical division of jurisdiction was not identified as a factor limiting the development of environmental policy in the coastal zone. None the less, the desire of the Commonwealth to avoid committing to a participative environmental policy, through the highly public approach of legislating, was again apparent in 1991.

An even more recent independent review of Australian coastal policy has been conducted. The report of the statutory Resource Assessment Commi,ssion (RAC) largely repeated the findings of the 1991 House Committee report in its Coastal Zone Inquiry review, completed in November 1993. l°6 The RAC recommended that the Commonwealth take the lead in initiating a National Coastal Action Program as befitted its role as national government. However, the review commented that '[T]he Commonwealth, however, should not attempt to impose a uniform national coastal regulatory scheme. Rather, it should enact legislation to guide funding allocations by the Commonwealth to coastal zone management'. 1°7 In response to the exhaustive review completed by the RAC over 2 years, the federal government in 1995 contented itself with preparing a detailed but hortatory policy statement steeped in consultation and cooperation, l°s Not to advocate the development of non-participatory approaches~indeed, the tenor of this article is that such participation is essential--the opportunity to imprint upon the coastline a nationally binding environmental policy was lost, an especial misfortune in light of the indifferent administration of environmental impact assessment law by the Colnmonwealth. In choosing not to enact legislation modelled on the CZMA, the Commonwealth has likely looked to the USA--as it did in


1967--and been influenced by the near breakdown there of the federal offshore oil leasing programme.

Given the extensive reviews of the administration of coastal policy over recent times, and the nature of the outcomes arising therefrom, the Commonwealth's coastal policy is firmly established for at least the next 3 years. :°9 Unfortnnately, the 'Living on the Coast' policy is expressed so as to preclude future legislative action that might better account for environmental costs arising from offshore activity. Without the existence of consistency requirements binding the Commonwealth to local coastal zone policies, third-party participants are unable to influence joint authority leasing decisions and later project appraisal. In terms of the present analysis, the absence of cost-accounting mechanisms such as coastal zone management and EIA means that costs are not imputed in Com- monwealth petroleum policy. Consequently, although environmental and social impacts are felt at the state and local level, the costs thereof simply go unaccounted in decision making because of the failure of the governance system to properly record and distribute these amongst participants, including governments.

4. PROSPECTS FOR COOPERATIVE MARINE POLICY

From this review it is apparent that the Commonwealth has since 1980 taken a more active interest in marine affairs. Unfortunately, its keenness to release frontier areas for development is not matched by a commitment to environmental policy. From an environmental perspective the P(SL)A regime is notoriously deficient. One commentator notes that: 'While the legislation is long on management regimes for petroleum exploration and development, it tends to be short on environmental safeguards. '11° The lack of any meaningful environmental mandate is traceable at least to the OCS, which did not contemplate extending to other policy areas the innovative joint authority approach used in the resource extraction sectors, m Instead, the OCS committed the Commonwealth and the states to pursue the development of sectoral policies within their respective jurisdictions for these non-peak policy areas, n2 As shown both by the absence of a cooperative environmental regime and by the indifferent administration of those few requirements that do exist, the Com- monwealth has made little progress towards improving its marine environmental performance, l~a Under these conditions, the marine and coastal environment is bearing the uncosted burden of administrative harmony.

The Commonwealth's desire to avoid social and environmental costs while maximizing offshore resource benefits is apparent in its approach to


the Law of the Sea Convention entering into force. As discussed elsewhere by several authors, 114 the federal government has implemented only those Parts of the Convention pertaining to the continental shelf and exclusive economic zone while neglecting to enact into law provisions with a non- exploitative purpose, such as those found in Parts XII and XIII. 115 To complement its LOSC-implementing legislation in late 1994, the Commonwealth also enacted a statute for the exploitation of submerged minerals. 116 The Offshore Minerals Act 1994 (Cth) adopts a joint authority model for minerals development on the outer continental shelt~ following the approach of the petroleum regime. Commonwealth and state adjacent areas are established in respect of each state, u7 with management achieved by the same joint and designated authority structure, xls The enactment of an identical regime for the exploitation of hard minerals confirms the broad success and applicability of the cooperative governance approach as a model for marine policy making? !9

So successfully has the P(SL)A negated offshore jurisdictional problems that the Australian OCS has been suggested as a model framework for resolving federal/state conflicts in the USA. x2° The fact of Australia and the USA, being federations steeped with similar legal structures suggests that the Australian policy regimes may be suitable--if not attractive--for achieving symmetry in federal US decision making. 121 To restate, though, the Australian petroleum regime has evolved to reach its present form. The USA is not characterized by a predominance of state policy setting, and federal administrators or political leaders may oppose any propositions to extend to state agencies the privileges of exercising federal powers, suggested earlier as being valuable to any cooperative governance model, l~r~ this regard, Wilder's caution that reform will most likely come incremer, ttally is sagacious. 122

On the other hand, Fischer acknowledges ' . . . that a federal-state partnership has not evolved . . . ' offshore the USA, and that the only way to effect greater state input is through explicit legislative commitment. 1~ In this respect, proposals of the kind envisaged here are far from unthinkable, and in fact are eminently palatable to Congress~ Shared decision making is now sufficiently progressed as a concept for the key participants in the policy subsystem to be softened up and receptive to the idea. n4 A history of shared offshore responsibilites is a preferable scenario upon whiLch to build, but it is certainly not essential for a joint approach to decision making to have observed the same evolutionary path. Replacing the present model will require the support of key offshore stakeholders, and the resolve of legislators to create a new re ,me. Indeed, given the paralysed state of offshore petroleum activity any proposal to break this gridlock must offer appeal to practitioners in the state and federal


bureaucracies. The condition is so bad that governments actually have little to lose by adopting a reformed governance model.

As described at length, offshore development in Australia occurs without the familiar asymmetrical distribution of costs and benefits existing with respect to policy development in the USA. t25 The legislative strategy of the P(SL)A is based upon involving both the Commonwealth and the states in decision making, and amendments thereto have endeavoured to find the best formula to this end. To be sure, the Commonwealth over time has developed its own administrative capabilities and come to rely less upon the states for assistance. 1~ None the less, it is the fundamental cooperative approach to decision making, which explains why decision-making asymmetry has been largely unknown in Australia. The success of the regime is due to the Commonwealth's capacity to involve the states in policy development while still preserving to itself the ultimate right to prevail in resource exploitation decisions.

For all its strengths, though, the Australian P(SL)A, is not without fault. As shown, the regime fails to recognize the environmental and social costs customarily associated with offshore oil development. Moreover, the same degree of healthy complexity and public scrutiny that occurs through environmental statutes and common resort to the courts in the USA is unknown in Australia. It seems that legislative models of both countries are therefore worthy of emulation and exchange, from which it should be possible to craft cooperative governance approaches demonstrably more advanced than any in operation. The two models discussed here--the joint/designated authority structure and US federal consistency laws---have succeeded in overcoming the artificial 3-mile barrier offshore, and other similar statutory devices can also be conceived. Elements of an ideal offshore regime are evident in the offshore experiences of both federations, from which emerge two fundamental tenets of marine policy. All policy areas---not just resources developmentDneed to be given serious political and legislative attention and mechanisms established to reconcile federal with state marine policies. Secondly, the role of both federal and state governments in offshore policy must be assured beyond the life of a particular federal government, to ensure longevity in policy formulation and implementation. The fulfilment of these two requirements will be a considerable step towards realising a true second generation approach to marine governance.

REFERENCES

1. Cicin-Sain, B. and Knecht, R., The problem of governance of US ocean resources and the new exclusive economic zone. Ocean Development and


International Law, 1985, 15, 289--320; Wilder, R. J., Cooperative governance, environmental policy, and management of offshore oil and gas in the United States. Ocean Development and International Law, 1993, 24, 41-62; Cicin-Sain, B., A national ocean governance strategy for the United States is needed now. Coastal Management, 1994, 22, 171-176.

2. Fitzgerald, E., Outer continental shelf oil and gas revenues: coastal states should be entitled to a share. Coastal Management, 1988, 16, 319-339; Lester, C., Contemporary federalism and new re~mes of ocean governance: lessons from the case of outer continental shelf oil development. Ocean and Coastal Management, 1994, 23, 7-47; Smith, E. and Garcia, S., Evolving California opinion on offshore oil development. Ocean and Coastal Management, 1995, 26, 41-56; Walls, M., Federalism and offshore oil leasing resources for the future. Natural Resources Journal, 1993, 33, 776-795.

3. Lester, C., Contemporary federalism and new regimes of ocean governance: lessons from the case of outer continental shelf oil development. Ocean and Coa.s'tal Management, 1994, 23, 7-47.

4. Cicin-Sain, B., Ocean resources and intergovernmental relations: an analysis of the patterns. In Ocean Resources and US Intergovernmental Relations in the 1980s, ed. M. Silva. Westview Press, Boulder, 1986, pp. 241-262; Knecht, R., The exclusive economic zone: a new opportunity in federal-state ocean relations. In Ocean Resources and US Intergovernmental Relations in the 1980s, ed. M. Silva, Westview Press, Boulder, CO, 1986, pp. 263-273.

5. Wilder, R. J., Cooperative governance, environmental policy, and management of offshore oil and gas in the United States. Ocean Development and Inter, national Law, 1993, 24, 41-62.

6. Fitzgerald, E., Outer continental shelf revenue sharing: a proposal to end the seaweed rebellion. UCLA Journal o f Environmental Law and Policy, 1985, 5, 1-47; Hershman, M., Building a federal-state partnership for US ocean resource management. In Ocean Resources and US Intergovernmental Relations in the 1980s, ed. M. Silva. Westview Press, Boulder, 1986, pp. 221-240.

7. Cicin-Sain, B. and Knecht, R., Implications of the Earth Summit for ocean and coastal governance. Ocean Development and International Law, 1993, 24, 323-!;53; Koester, G. T., State-federal jurisdictional conflicts in the US 12-mile territorial sea: an opportunity to end the seaweed rebellion. Coastal Management, 1990, 18, 195-211; Wilder, R. J., Sea-change from Bush to Clinton: setting a new course for offshore oil development and US energy poliq},. UCLA Journal of Environmental Law and Policy, 1993, 11, 131-173.

8. Fitzgerald, E., Outer continental shelf revenue sharing: a proposal to end the seaweed rebellion. UCLA Journal of Environmental Law and Policy, 1985, 5, 1-47; Hildreth, R. G., Federal-state revenue sharing and resource manatgement under Outer Continental Shelf Lands Act section 8(g). Coastal Management, 1989, 17, 171-191.

9. Cicin-Sain, B. and Knecht, R., The problem of governance of US ocean resouxces and the new exclusive economic zone. Ocean Development and International Law, 1985, 15, 289-320; Shapiro, M. E. and Shapiro, R. W., Opportunities for a state-federal partnership in an expanded territorial sea. CoasJ'.al Zone Management Journal, 1984, 11, 335-351; Wilder, R. J., The three- mile territorial sea: its origins and implications for contemporary offshore


federalism. Virginia Journal oflnternational Law, 1992, 32, 681-746. 10. The distinction between the two subnational levels of government is of little

practical relevance. Within the discussion, therefore, all references to the states should be read to include the Northern Territory.

11. Australian Constitution, section 52. 12. Bates, G., Environmental Law in Australia. Butterworths, Sydney, 1995, pp

76--94. 13. Crommelin, M., Federal-regional cooperation: a comparative perspective.

Managing Natural Resources in a Federal State, ed. J. O. Sannders, Carswell, Calgary, 1986, pp. 295-321; Cullen, R., Bass Strait revenue raising: a case of one government too many? Journal of Energy and Natural Resources Law, 1988, 6, 213-247; Harders, C., Commonwealth and state jurisdiction over offshore areas. Australian Mining and Petroleum Law Association Journal, 1977, 1, 7-16.

14. To clarify for readers unfamiliar with Australian legislation, it is worth commenting that the term 'Petroleum (Submerged Lands) Act' is simply the enacted title of the statute. A convention often employed by the Commonwealth when enacting legislation is to parenthesise part of the official title to distinguish between statutes enacted for different purposes within the same portfolio area. The common citation of Australian legislation is the statute title followed by the year of enactment, with the jurisdiction abbreviated in parenthesis, e.g. Petroleum (Submerged Lands) Act 1967 (Cth).

15. Ocean and coastal matters have been the subject of considerable public and government attention over the past 3 years, as evidenced by a flurry of review reports and legislative amendments. Amongst these include: the Resource Assessment Commission's Coastal Zone Inquiry conducted over the 2-year period up to December 1993; numerous sectoral reports dealing with marine technology, pollution, and fisheries, to identify a few; and federal and state parliamentary action on coastal planning, fisheries, submerged minerals, shipborne pollution, and the territorial sea. This activity coincides with developments underway around the world occurring in sympathy with the entry into force of the Law of the Sea Convention and efforts to give effect to the UNCED agenda (see Cicin-Sain, B., Sustainable development and integrated coastal management. Ocean and Coastal Management, 1993, 21, 11-43; ODIL special issue, Vol. 27, 1996).

16. Juda, L. Ocean policy, multi-use management, and the cumulative impact of piecemeal change: the case of the United States outer continental shelf- Ocean Development and International Law, 1993, 24, 355-376.

17. Lumb, R., The continental shelf. Melbourne University Law Review, 1968, 6, 357-369; Cullen, R., Federalism in Action: The Australian and Canadian Offshore Disputes. The Federation Press, Sydney, 199~, Cullen, R., The encounter between natural resources and federalism in Canada and Australia. UBC Law Review, 1990, 24, 275-305.

18. The management of ocean fisheries had traditionally been left to the states despite the Commonwealth having the clear constitutional authority to legislate in this regard. For instance, with respect to the Fisheries Act 1952 (Cth)--the first federal marine resources legislation--rather than challenging state control over fisheries, this Act created a framework for interstate fisheries management by vesting in states the federal authority to manage

Yurisdic~on and offshore petroleum in Australia 199

fisheries beyond 3 miles. See Harrison, A., Marine living resources policy in Tasmania. In Issues in Australia's Marine and Antarctic Policies, ed. R. Herr, R. Hall and B. Davies. University of Tasmania, Tasmania, 1982, pp. 69-88.

19. Herr, R. and Davis, B., ~ae impact of UNCLOS 3 on Australian federalism. International Journal, 1986, 41, 674--693.

20. Taylor, J., The settlement of disputes between federal and state governments concerning offshore petroleum resources: accommodation or adjudication? Harvard International Law Journal, 1970, 11, 358-399.

21. Opeskin, B. R. and Rothwell, D. R., Australia's territorial sea: international and federal implications of its extension to 12 miles. Ocean Development and International Law, 1991, 22, 395-431.

22. Agreement relating to the Exploration for, and the Exploitation o£ 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 ('the Agreement').

23. Lumb, R., The Law of the Sea and Australian Off-shore Areas. University of Queensland Press, Brisbane, 1966.

24. Lumb, R., The continental shelf- Melbourne University Law Review, 1968, 6, 357-369.

25. Clau~e 9 of the Agreement stated the Common Mining Code would be administered by the Designated Authority in respect of each State, a role definod by the Commonwealth Petroleum (Submerged Lands) Act to be the responsible state minister. This arrangement raised a question of constitutional law that is yet to be answered--whether the Constitution permits the power to administer a Commonwealth statute to be conferred upon a state minisler. The Designated Authority device was created to avoid the judicial review that such a fundamental legal issue would invite. The Commonwealth's Petroleum (Submerged Lands) Act refers to the Designated Authority instead of to the state minister directly, in order to avoid provoking concern over the constitutional legitimacy of the Designated Authority creation.

26. Parliamentary Hansard, House of Representatives, 18 October 1967, pp. 1102-1103.

27. Clause 26 of the Agreement illustrates the Settlement's legal unenforceability, stating in part ' . . . (this Agreement) is not intended to create legal relationships justiciable in a Court of L a w . . . ' In other words, legally binding provisions were eschewed by the Commonwealth and the states in their effort.,; to avoid confronting the issue of offshore jurisdiction.

28. In addition to the historic role of states as marine resource managers, the Commonwealth was not a significant land holder. There was not in place a parallel and easily adaptable federal system for the disposition of resources. It was perhaps natural that regulatory control should fall to the state governments.

29. Clause 11 of the Agreement specified that state governments would consult the Commonwealth before granting, renewing or varying any permits, licences or authorities in relation to adjacent areas.

30. Taylor, J., The settlement of disputes between federal and state governments concerning offshore petroleum resources: accommodation or adjudication? Harvard International Law Journal, 1970, 11, 358-399.

31. Galligan, B. and Fletcher, C., New Federalism, Intergovernmental Relations


and Environment Policy. Federalism Research Centre, Australian National University, Canberra, 1993.

32. Seas and Submerged Lands Act 1973 (Cth) section 11. 33. Seas and Submerged Lands Act 1973 (Cth) section 6. 34. Seas and Submerged Lands Act 1973 (Cth) section 15. 35. New South Wales v. the Commonwealth, 1975, 135 CLR 337. 36. CuUen, R., Federalism in Action: The Australian and Canadian Offshore

Disputes. The Federation Press, Sydney, 1990. 37. One particular notable exception is to be found in Opeskin, B. R. and

Rothwell, D. R., Australia's territorial sea: international and federal implications of its extension to 12 miles. Ocean Development and International Law, 1991, 22, 395-431.

38. Haward, M., The Australian offshore constitutional settlement. Marine Policy 1989, 13, 334-348.

39. Cullen, R., Federalism in Action: The Australian and Canadian Offshore Disputes. The Federation Press, Sydney, 1990. p 107.

40. Cullen, R., Federalism in Action: The Australian and Canadian Offshore Disputes. The Federation Press, Sydney, 1990. p 107.

41. Cullen, R., Canada and Australia: a federal parting of the ways. Federal Law Review, 1989, 18, 68-83.

42. Cullen, R., Bass Strait revenue raising: a case of one government too many?. Journal of Energy and Natural Resources Law, 1988, 6, 213-247.

43. Cullen, R., Federalism in Action: The Australian and Canadian Offshore Disputes. The Federation Press, Sydney, 1990; Haward, M., The Australian Offshore Constitutional Settlement. Marine Policy, 1989, 13, 334-348.

44. Cullen, R., Bass Strait revenue raising: a case of one government too many? Journal of Energy and Natural Resources Law, 1988, 6, 213-247. It was not enough for the Commonwealth to desire to readjust the offshore jurisdictional situation; the judgement with respect to the Seas and Submerged Lands Act 1973 (Cth) represented a legal obstacle that had to be overcome before the desired political position could be reached.

45. Haward, M., The Australian offshore constitutional settlement. Marine Policy, 1989, 13, 334-348.

46. The northwest region of Western Australia is approximately 4000 km from Canberra, the seat of the federal government. This expansive distance, the sparse population of the region, and a non-existant federal presence made the Commonwealth ineffectual as an administrator, and the region amenable to state administration.

47. Opeskin, B. R. and Rothwell, D. R., Australia's territorial sea: international and federal implications of its extension to 12 miles Ocean Development and International Law, 1991, 22, 395-431.

48. In the case of Western Australia, the statute was the Petroleum (Submerged Lands) Act 1982 (WA).

49. See note 13. 50. Hunt, C. D., The offshore petroleum regimes of Canada and Australia: some

comparative observations. Australian Mining and Petroleum Law Association Bulletin, 1990, 9, 103-111.

51. Petroleum (Submerged Lands) Act 1967 (Cth) section 8. 52. Forbes, J. and Lang, A., Australian Mining and Petroleum Laws. Butterworths,


Sydney, 1987. The joint authority powers are equivalent to those available to the state minister under the mirror Petroleum (Submerged Lands) Acts within state waters.

53. Petroleum (Submerged Lands) Act 1967 (Cth) sections 20(1 and 3), 30, 32, 33, 38(A--K), 39(A), 40, 44, 51, 54, 55, 56, 58, 65, 70, 78, 81, 103.

54. Petroleum (Submerged Lands) Act 1967 (Cth) section 8(D)(3). 55. Cullen, R., Bass Strait revenue raising: a case of one government too many?

Journal of Energy and Natural Resources Law, 1988, 6, 213-247; Hunt, C. D., The offshore petroleum regimes of Canada and Australia: some comparative observations. Australian Mining and Petroleum Law Association Bulletin, 1990, 9, 103-111.

56. Petroileum (Submerged Lands) Act 1967 (Cth) section 14. 57. Petrolteum (Submerged Lands) Act 1967 (Cth) sections 20(2), 31(5),

39A(.~;)(b) and 40(4)(b), 57(4), respectively. 58. Haward, M., The offshore. In Intergovernmental Relations and Public Policy,

ed. B. Galligan, O. Hughes and C. Walsh. Allen and Unwin, Sydney, 1991, pp. 109-1128.

59. Petroleum (Submerged Lands) Amendment Act 1984 (Cth). 60. Petroleum (Submerged Lands) Amendment Act 1987 (Cth). 61. Gardner, A., Federal intergovernmental co-operation on environmental

management: a comparison of developments in Australia and Canada. Environmental and Planning Law Journal, 1994, II, 104--136.

62. Hildreth, R. G., Managing ocean resources: New Zealand and Australia. International Journal of Estuarine and Coastal Law, 1991, 6, 89--126.

63. ResouLrce Assessment Commission, Resources and Uses of the Coastal Zone. Information Paper No. 3, Coastal Zone Inquiry, Anstralian Government Publishing Service, Canberra, 1993.

64. The rmmber and content of joint authority decisions are employed as a surrogate indicator for effectiveness of the offshore oil regime within the context of Commonwealth/state relations. Other indicators, such as exploratory drilling activity and expenditure, are more a function of oil company marketing strategies and investment priorities than closely reflecting intergovernmental policy, and their use would misrepresent the extent of joint authority decision making.

65. Petroleum (Submerged Lands) Amendment Act 1991 (Cth) section 3. 66. Hansard, House of Representatives, 8 May 1991 p. 3262 67. Bradley, D. and Ingram, H., How federalism matters in natural resources

policy. In Ocean Resources and US Intergovernmental Relations in the 1980s, ed. M. Silva. Westview Press, Boulder, 1986, pp. 37-73.

68. Exmouth fears oil spill threat to local industry. The West Australian, 27 April 1993.

69. Feder,'d/state relations in the area of maritime jurisdiction were strained in July 1991 when the Greek-registerd ship Kirki struck a reef proximate to a length of unspoilt coastline, placing oil spill readiness plans under great stress. White, M., The Kirki oil spill: pollution in Western Australia. UWA Law Review, 1992, 22, 168-177.

70. Enviroument Protection (Impact of ProposaLs) Act 1974 (Cth) section 5. 71. Admirdstrative Procedures under section 6 of the Environment Protection

(Impact of Proposals) Act 1974 (Cth).


72. Crommelin, M., Commonwealth involvement in environment policy: past, present and future. Environmental and Planning Law Journal, 1987, 4, 101-112.

73. Administrative Procedures, Paragraph 1.2.1. 74. Administrative Procedures, Paragraph 3.1.1(a). 75. Administrative Procedures, Paragraph 3.1.1(b). 76. Respectively, Administrative Procedures, Paragraph 9.5; Environment Protec-

tion (Impact of Proposals) Act 1974 (Cth) section 8. 77. Blumm, M., Theorigin, evolution and direction of the United States National

Environmental Policy Act. Environmental and Planning Law Journal, 1988, 5, 179-193.

78. Gibb, S., Some proposals for reform of the Environment Protection (Impact of Proposals) Act. Australian Law Journal, 1996, 70, 553-570.

79. Environment Protection Agency, Public Review of the Commonwealth Environment Impact Assessment Process. Discussion Paper, Australian Government Publishing Service, Canberra, 1994.

80. Tasmanian Conservation Trust v. Minister for Resources and Gunns Limited. Unreported, Federal Court of Australia, NG 536 of 1994, 10 January 1995.

81. Commonwealth of Australia Gazette No GN 46, 22 November 1995. 82. Evans, N., Offshore oil updates. Australian Mining and Petroleum Law

Association Bulletin, 1996, 15, 116-117. 83. Nunn, R. M., Comment on environmental assessment. Australian Mining and

Petroleum Law Journal, 1978, 1, 581-597. 84. Department of Primary Industries and Energy Annual Report 1994-95,

AGPS, Canberra. 85. Tasmanian Conservation Trust v. Minister for Resources and Gunns Limited.

Unreported, Federal Court of Australia, NG 536 of 1994, 10 January 1995. 86. Munchenberg, S., Amendments to Commonwealth EIA procedures. Environ-

mental and Planning Law Journal, 1995, 12, 235-237. 87. Commonwealth of Australia Gazette No GN 25, 28 June 1995. 88. Commonwealth of Australia Gazette No 5165, 5 May 1995. 89. Court, J., Wright, C. and Guthrie, A., Environmental assessment and

sustainabflity: are we ready for the challenge. Australian Journal of Environmental Management, 1996, 3, 42-57; Fowler, R., Environmental impact assessment: what role for the Commonwealth?man overview. Environmental and Planning Law Journal, 1996, 13, 246-259.

90. Blumm, M., The origin, evolution and direction of the United States National Environmental Policy Act. Environmental and Planning Law Journal, 1988, 5, 179-193.

91. Greenpeace, Oil company under fire over $80m platform. The Australian, 20 March 1996.

92. For the sake of completeness, it is worth commenting that within the 3 miles of Western Australian state waters offshore oil activity occurring under the mirror Petroleum (Submerged Lands) Act 1982 (WA) is subject to statutory environmental impact assessment pursuant to the state Environmental Protection Act 1986 (WA). The regime created under this statute differs greatly from that applicable to federal waters under the Commonwealth's Impact of Proposals Act. All stages of development activity in state waters--from exploratory leasing through to production and pipeline


constructionmare exposed to full public comment and independent evaluation by the Western Australian Environmental Protection Authority. See Wood, C. and Bailey, J., Predominance and independence in environmental impact assessment: the Western Australia model. Environ- mental Impact Assessment Review, 1994, 14, 37-59.

93. For example, conditions are set under the Petroleum (Submerged Lands) Act 1967 (Oh) with respect to exploration permits (section 33), retention leases (section 38A), and production licences (section 56).

94. House of Representatives Standing Committee on Environment and Conservation, Australian Coastal Zone Management. Australian Government Publishing Service, Canberra, 1980.

95. Paragraph 198. 96. Paragraph 174. 97. Hildreth, R. G., Managing ocean resources: New Zealand and Australia.

International Journal of Estuarine and Coastal Law, 1991, 6, 89-126. 98. House of Representatives Standing Committee on Environment, Recreation

and the Arts, The Injured Coastline. Australian Government Publishing Service, Canberra, 1991.

99. The Injured Coastline, Paragraph 6.10. 100. The Injured Coastline, Paragraphs 6.21-6.22. 101. Hildreth, R., Australian coastal management: a North American perspective.

Environmental and Planning Law Journal, 1992, 9, 165-174. 102. The Injured Coastline, Recommendation 12. 103. The Injured Coastline, Paragraph 3.38. 104. Crawford, D. 'The Injured Coastiine'mA Parliamentary report on coastal

protection in Australia. Coastal Management, 1992, 20, 189-198. 105. The Injured Coastline, Paragraphs 3.35-3.37. 106. The Resource Assessment Commission was part of an effort to implement an

accordist environmental policy in Australia. The findings of the RAC did not comport with the preferred policies of the Commonwealth, and it was disbanded after the Coastal Zone Inquiry. See Economou, N., Accordism and the environment: the Resource Assessment Commission and national env:ironmental policy-making. Australian Journal o f Political Science, 1993, 28, 399-412.

107. Resource Assessment Commission, Coastal Zone Inquiry. Final report, Australian Government Publishing Service, Canberra, 1993, Paragraph 19.37.

108. Department of the Environment, Sport and Territories, Living on the Cor~st--Commonwealth Coastal Policy. Australian Government Publishing Sercice, Canberra, 1995.

109. The: Commonwealth Coastal Policy is projected over a budgetary horizon of 4 years, and provides for an evaluation of progress after 3 years.

110. Bradbrook, A., Energy law: the neglected aspect of environmental law. Me;bourne University Law Review 1993, 19, 1-19.

111. Haward, M., The Australian Offshore Constitutional Settlement. Marine Policy, 1989, 13, 334-348.

112. Attorney-General's Department, Offshore Constitutional Settlement~A Milestone in Cooperative Federalism. Australian Government Publishing Service, Canberra, 1980.


113. To be fair, the Commonwealth recognized the need for marine environmental law during the 1970x Before the proposed Marine Environment Protection Bill was enacted, the initiative was regrettably lost with the derni~ of the Whitlam government in 1975 (mentioned earlier). A similar attempt was made in 1990 to create a marine environmental policy with the Coastal Waters (Environment Protection) Bill, which, like the earlier attempt, did not survive on the political agenda as it was the initiative of a minor party and lacked the support of the government.

114. Evans, N., LOSC, Offshore resources and Australian marine policy. Marine Policy, 1996, 20, 223--227; Rothweli, D., Australia and the United Nations Convention on the Law of the Sea. International Law News, 1994, 30-35.

115. Parts XII and XIII are entitled, respectively, 'protection and preservation of the marine environment' and 'Marine scientific research', wherein are detailed regimes for the regulation of these areas of marine policy.

116. Brazil, P., UNCLOS comes into force--implications for mining, Australian Mining and Petroleum Law Association Bulletin, 1995, 14(1) 1-3.

117. Offshore Minerals Act 1994 (Cth) section 13. 118. Offshore Minerals Act 1994 (Cth) sections 29-34. 119. Rothwell, D. and Haward, M., Federal and international perspectives on

Australia's maritime claims. Marine Policy, 1996, 20, 29--46. 120. Opeskin, B. R. and Rothwell, D. R., Australia's territorial sea: international

and federal implications of its extension to 12 miles. Ocean Development and International Law, 1991, 22, 395-431.

121. Hildreth, R., Australian coastal management: some North American perspectives on recent Queensland and other initiatives. Coastal Management 1992, 20, 255-268.

122. Wilder, R. J., Cooperative governance, environmental policy, and management of offshore oil and gas in the United States. Ocean Development and International Law, 1993, 24, 41-62.

123. Fischer, D., Hard mineral resource development policy in the US exclusive economic zone: a review of the role of the coastal states. Ocean Development and International Law, 1988, 19, 101-111.

124. This comment borrows from the scheme of policy making described in Kingdon, J., Agendag Alternatives, and Public Policies. HarperCollins, Boston, 1984.

125. Cicin-Sain, B., Ocean resources and intergovernmental relations: an analysis of the patterns. In Ocean Resources and US Intergovernmental Relations in the 1980s, ed. M. Silva. Westview Press, Boulder, 1986, pp 241-262.

126. Hunt, C. D., The offshore petroleum regimes of Canada and Australia: some comparative observations. Australian Mining and Petroleum Law Association Bulletin, 1990, 9, 103-111,

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