The Littoral States and Onshore/Offshore Resource Control in Nigeria
by
Burtonsville, MD, USA
Introduction
As the political battle for restructuring of Nigeria continues to rage, one aspect of it that has recently commanded attention has been the issue of resource control in general, and in particular the dichotomy made by
the Federal government about onshore/offshore oil resources. It came to a
head recently when the Federal government filed a suit dragging all 36
states to the Supreme Court for its constitutional interpretation of
Section 162.
It is a legal battle that the Federal government is destined to win, but
if the states eventually ask for the right things now or afterwards, it is
a political battle that they can win.
But first things first.
The situation in the United States
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I am of the opinion that since Nigeria runs a federal system similar to
the United States, we should look to the US legislation and courts for
guidance during constitutional contentions. One such issue is this
offshore control business.
For starters, the US is comprised of 50 states, a population of about 280
million people, and an area of 9,629,091 sq. km. Of these 50 states, 22
(44%) are littoral having borders with the oceans or a gulf. These
littoral states comprise 60% of the people of the United States and 48% of
the land mass (see Table 1 for further details.) On the other hand,
Nigeria is comprised of 36 states, 8 ( or 22% ) of which are littoral,
with a population of about 27% of the total Nigeria (about 123 million)
and 13% of the land mass.
Thus if states were to be able to push their way in terms of offshore
resource control, it will be in the US.
In 1947, the State of California tried exactly that, and was immediately
sued by the United States government. In 1950, Texas and Louisiana, now
arguing that they had control of offshore resources BEFORE they joined the
US union, also came under the US's legal hammer. In each case, the Supreme
Court ruling was in favor of the Federal government, with the US Supreme
Court arguing in the case of Texas and Louisiana that they had given up
some of their state rights for the sake of equality of all states in the
new union (See appendix I). These three cases are part of the maybe
half-a-dozen suits EVER brought by the US against any state.
The conclusion therefore is that the legal issue of who owns offshore resources in the US is settled: it is the Federal government. I am certain that when arguments are made before the Supreme Court in Nigeria, lawyers for and against the government will be combing through the American arguments. The weight of those arguments would be in favor of the federal government.
The general principle here is that there must be certain resources SHARED
by all people of a nation if indeed they are one nation. The oceans and
the air above the nation are such resources. I am in firm agreement with
that principle.
Company Registration and Taxation by States
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So what is to be done?
Now everyone knows that California, Texas, Louisiana, etc. are fairly rich
states in the US because of their oil, both offshore and onshore, and the
question is; "how manage?" The answer lies in the incorporation and
taxing system in the US.
Well, for one, even if you go off to the sea to mine your oil and get gas,
you still have to come home at night to sleep somewhere. You need to have
your offices on land, and your ship has to dock somewhere. Your company
has to register in the state to do business, it has to pay state taxes and
its workers have to pay state taxes. Hence all the business activities
related to the oil or anything else, whether onshore or offshore,
eventually rub off on California, Texas, etc. because of the states'
ability to TAX any and all economic activities within their borders.
Of course, the Federal government of the United States also taxes the
profits of such companies - with the profit being calculated AFTER the
companies have paid their money to the states. After all, individuals in
the US pay three taxes: to the county, to the state and to the Federal
government, at different set rates of taxation.
But what is the current situation in Nigeria? All companies are
registered in Abuja, incorporation of bodies being on the Exclusive
Legislative list of the Constitution. (See Section 32 of Constitution; see
Appendix II below, excerpting some relevant sections from the 1999
Nigerian Constitution). They pay federal taxes to Abuja. [I am not even
sure that federal workers, companies or their workers pay any taxes to the
state in which they reside.] If Section 163 of the Constitution is to be
believed, the federal government is then supposed to remit some
proportional amount (based on derivation) to the state governments.
We know what that means - that state governments will continue to depend
on the kind-heartedness or otherwise of the federal government, depending
on whether the party in control of the center is in agreement with those
of the state; whether the governor of the state is in the good books of
the federal executive. In short, state craft becomes hinged on
capriciousness.
Amending the Constitution
-------------------------
So suppose Section 32 (incorporation of bodies) as an exclusive federal
exercise is scrapped and Section 59 (taxation of incomes, profits, etc.)
of the 1999 Constitution were moved into the concurrent list, thereby
leaving the states to be able to register companies and to tax all
economic activities. Then it would not matter whether the activity was
onshore or offshore - the relevant states would still benefit via
taxation from the economic activity within their borders.
That would go a long way towards solving this resource control business,
and do away once and for all with this onshore/offshore dichotomy,
notwithstanding the Land Use Decree or Section 39 (exclusive rights on
"Mines and minerals, including oil fields.") of the constitution.
I would rest my case, except to ask whether, under the current political
arrangement of Nigeria, this amendment can be achieved under the
two-thirds majority provisions of Section 9, Chapter 1, Part 2 of the 1999
Constitution. (see Appendix 2). Hardly likely. Will the federal suit
resolve issues? Hardly likely, unless the issue is "dialogued" at a
Sovereign National Conference.
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Table 1
COMPARISON OF STATISTICS OF LITTORAL STATES
Nigeria United States
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All States
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# of States 36 50
Population 123,337,822 (Est. 2000) 281,421,906 (Census 2000)
Area, sq. km 923,768 9,629,091
Border, km 4,047 32,172
Littoral States
---------------
# of States (%) 8 (22.2%) 22 (44%)
Population (%) 32,767,153 (26.6%) 164,324,880 (58.4%)
Area, sq. km (%) 115,804 (12.5%) 4,583,447 (47.6%)
Coastline, km (%) 853 (17.4%) 19,924 (61.9%)
Littoral States - Nigeria: Lagos (roughly 180 km of coastline), Ogun (20
km), Ondo (75 km), Delta (100 km), Bayelsa
(180 km), Rivers (180 km), Akwa-Ibom (85 km),
Cross-River (30 km)
Littoral States - US: Washington, Oregon, California, Hawaii, Alaska,
Texas, Louisiana, Mississippi, Alabama, Florida,
Georgia, South Carolina, North Carolina, Virginia
Maryland, Delaware, New York, New Jersey,
Rhode Island, Massachussetts, New Hampshire, Maine
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Appendix I
US Suits Against California (1947), Louisiana (1950) and Texas (1950) Over
Maritime Property Claims
Constitution, Analysis and Interpretation (1992 Edition); Constitution,
Analysis and Interpretation (1998 Supplement)
http://frwebgate2.access.gpo.gov/cgi-bin/waisgate.cgi
STATE ACTS HELD UNCONSTITUTIONAL
541. United States v. California, 332 U.S. 19 (1947). California claimed
that it owned the resources of the soil under the three-mile marginal belt
as an incident to those elements of sovereignty which it exercised in that
area, and therefore might grant permits to California residents to
prospect far out and on the ocean floor within said limits. Held:
California is not the owner of the three-mile marginal belt along its
coast; the Federal Government rather than the State has paramount rights
in and power over that belt, and full dominion over the resources of the
soil under that water area. The United States is therefore, entitled to a
decree enjoining California and all persons claiming under it from
continuing to trespass upon the area in violation of the rights of the
United States.
560. United States v. Louisiana, 339 U.S. 699 (1950). The Louisiana
constitution provides that the Louisiana boundary includes all islands
within three leagues of the coast; and Louisiana statutes provide that the
State's southern boundary is 27 marine miles from the shore line. Since
the three-mile belt off the shore is in the domain of the Nation rather
than that of the States, it follows that the area claimed by Louisiana
extending 24 miles seaward beyond the three-mile belt is also in the
domain of the Nation rather than Louisiana. The marginal sea is a
national, not a state, concern and national rights are paramount in that
area. The United States, therefore, is entitled to a decree upholding such
paramount rights and enjoining Louisiana and all persons claiming under it
from trespassing upon the area in violation of the rights of the United
States, and requiring Louisiana to account for the money derived by it
from the area after June 23, 1947. Justices Concurring: Vinson, C.J.,
Black, Frankfurter, Douglas, Burton. Justices Dissenting: Reed, Minton.
561. United States v. Texas, 339 U.S. 707 (1950). Notwithstanding
provisions in Texas laws whereby that State extended its boundary to a
line in the Gulf of Mexico 24 marine miles beyond the three-mile limit and
asserted ownership of the bed within that area and to the outer edge of
the continental shelf, the United States is entitled to a decree
sustaining its paramount rights to dominion of natural resources in said
area, beyond the low-water mark on the coast of Texas and outside inland
waters. Any claim which Texas may have asserted over the marginal belt
when she existed as an independent Republic was relinquished upon her
admission into the Union on an equal footing with the existing States.
Justices Concurring: Vinson, C.J., Black, Frankfurter, Douglas, Burton.
Justices Dissenting: Reed, Minton.
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Appendix II
The 1999 Constitution (excerpts)
Exclusive Legislative List
--------------------------
32. Incorporation, regulation and winding up of bodies corporate, other
than co-operative societies, local government councils and bodies
corporate established directly by any Law enacted by a House of Assembly
of a State.....
39. Mines and minerals, including oil fields, oil mining, geological
surveys and natural gas....
59. Taxation of incomes, profits and capital gains, except as otherwise
prescribed by this Constitution.
Concurrent List
7. In the exercise of its powers to impose any tax or duty on
(a) capital gains, incomes or profits of persons other than companies; and
(b) documents or transactions by way of stamp duties,
the National Assembly may, subject to such conditions as it may prescribe,
provide that the collection of any such tax or duty or the administration
of the law imposing it shall be carried out by the Government of a state
or other authority of a state.
8. Where an Act of the National Assembly provides for the collection of
tax or duty on capital gains, incomes or profit or administration of any
law by an authority of a state in accordance with paragraph 7 hereof, it
shall regulate the liability of persons to such tax or duty in such manner
as to ensure that such tax or duty is not levied on the same person by
more than one state.
9. A House of Assembly may, subject to such conditions as it may
prescribe, make provisions for the collection of any tax, fee or rate or
for the administration of the Law providing for such collection by a local
government council.
10. Where a Law of a House of Assembly provides for the collection of tax,
fee or rate or for the administration of such Law by a local government
council in accordance with the provisions hereof it shall regulate the
liability of persons to the tax, fee or rate in such manner as to ensure
that such tax, fee or rate is not levied on the same person in respect of
the same liability by more than one local government council.
Chapter 6, Part I On Taxation
-----------------------------
163. Where under an Act of the National Assembly, tax or duty is imposed
in respect of any of the matters specified in item D of Part II of the
Second Schedule to this Constitution, the net proceeds of such tax or duty
shall be distributed among the States on the basis of derivation and
accordingly -
(a) where such tax or duty is collected by the Government of a State or
other authority of the State, the net proceeds shall be treated as part of
the Consolidated Revenue Fund of that State;
(b) where such tax or duty is collected by the Government of the
Federation or other authority of the Federation, there shall be paid to
each State at such times as the National Assembly may prescribe a sum
equal to the proportion of the net proceeds of such tax or duty that are
derived from that State.
Chapter I Part II
-----------------
9. (On Amending the Constitution)
(1) The National Assembly may, subject to the provision of this section, alter any of the provisions of this Constitution.
(2) An Act of the National Assembly for the alteration of this
Constitution, not being an Act to which section 8 of this Constitution applies, shall not be passed in either House of the National Assembly unless the proposal is supported by the votes of not less than two-thirds
majority of all the members of that House and approved by resolution of the Houses of Assembly of not less than two-thirds of all the States.
(3) An Act of the National Assembly for the purpose of altering the
provisions of this section, section 8 or Chapter IV of this Constitution
shall not be passed by either House of the National Assembly unless the
proposal is approved by the votes of not less than four-fifths majority of
all the members of each House, and also approved by resolution of the
House of Assembly of not less than two-third of all States.
(4) For the purposes of section 8 of this Constitution and of subsections
(2) and (3) of this section, the number of members of each House of the
National Assembly shall, notwithstanding any vacancy, be deemed to be the
number of members specified in sections 48 and 49 of this Constitution.
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Some related stories
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http://allafrica.com/stories/200102080319.html
Federal Government Sues Southern Governors Over Resource Control
Vanguard Daily (Lagos) February 8, 2001
http://allafrica.com/stories/200102080385.html
Federal Government Sues States Over Resource Control
Panafrican News Agency (Dakar) February 8, 2001
http://allafrica.com/stories/200103150418.html
Derivation Suit, Ploy To Intimidate South-South, Says Delta AG
Vanguard Daily (Lagos) March 15, 2001
http://allafrica.com/stories/200103130178.html
Rage Over Resource Control - Dayo Abatan
Vanguard Daily (Lagos) March 13, 2001
http://allafrica.com/stories/200103090285.html
Resource Control: Ibori Calls for Dialogue
Vanguard Daily (Lagos) March 9, 2001
http://allafrica.com/stories/200103070111.html
The Battle For Resource Control
Vanguard Daily (Lagos) March 7, 2001
Also see:
http://www.un.org/Depts/los/index.htm
OCEANS AND LAW OF THE SEA HOME PAGE of the United Nations
http://www.un.org/Depts/los/unclos/closindx.htm
UNITED NATIONS CONVENTION ON THE LAW OF THE SEA and the AGREEMENT RELATING TO THE IMPLEMENTATION OF PART XI OF THE CONVENTION
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See Excerpted article below:
http://www.iss.co.za/Pubs/MONOGRAPHS/NO%209/Hara.html
SOUTHERN AFRICAN MARINE EXCLUSIVE ZONES: BURDENS AND OPPORTUNITIES
Mafaniso Hara, Research Fellow, Centre for Southern African Studies, University of the Western Cape Published in Monograph No 9, Diplomats and Defenders, February 1997
BACKGROUND
The 'freedom of the sea' has been a historic principle of customary
international law from the time of Grotius's 'Mare liberum' in 1608.
Grotius proclaimed that "the sea was limitless and could not become the
possession of anyone but was, by nature, suitable to the use of all." This
notion persisted until the signing of [United Nations Convention on Law of
the Sea] UNCLOS III in 1982. Under this Convention, which came into force
in November 1994, coastal states can claim and establish jurisdiction in
the form of 'sovereign rights' in the area 200 nautical miles (nm) out
seaward from the baseline (the lowest line to which the water of the sea
recedes during periods of ordinary spring tide) as an Exclusive Economic
Zone [EEZ]. In this zone, the coastal state has 'sovereign rights' for the
purpose of exploring and exploiting, conserving and managing the natural
resources, whether living or non living, of the water above to the seabed
and of the seabed and its subsoil.
MARITIME ZONES
Under international law, four categories of maritime zones can be
distinguished: internal waters, territorial sea, contiguous zone and the
EEZ/continental shelf.
Internal waters
Internal waters are those which are landward of the baseline. These
include estuaries, river mouths, points and bays, where these have been
closed off. Internal waters are assimilated into national territory and
are subject to the control of the coastal state.
Territorial waters
Under UNCLOS I of 1958, it became accepted that coastal states could claim
a territorial zone of 12 nm. In this zone the coastal state can exercise
complete sovereignty just as on its land area. The laws of the state in
question are fully applicable in this zone. The only exception to the rule
is that foreign vessels have a right of 'innocent passage' through the
territorial sea.
Contiguous zone
International law provides for coastal countries to declare an additional
12 kilometres immediately seaward of the 12 nm territorial zone to a total
of 24 nm. This is the zone called the contiguous zone. While a coastal
state cannot make laws in this zone, it can enforce its customs, fiscal,
immigration and health laws in the zone. But the contiguous zone does not
constitute part of the coastal state's territory.
Exclusive Economic Zone and the continental shelf
Using the UNCLOS III Convention, coastal states can declare the area
covering 200 nm from its baseline out seaward, as an EEZ. In this zone the
coastal state exercises sovereign rights over all resources. It also has
jurisdiction over the construction of offshore structures and scientific
research, and has a right to protect and preserve the environment. Allied
to the concept of the EEZ is the doctrine of the 'continental shelf',
reaffirmed in UNCLOS I of 1958. The continental shelf is the shallow
platform adjacent to the land mass to the 200 m isobath (depth line). The
doctrine originated with the 1945 Truman declaration. Under this
declaration, the United States proclaimed its continental shelf, which in
the case of the eastern seaboard extended to as far as 250 nm, exclusive
for its exploration and exploitation and subject to its jurisdiction and
control. Apart from the depth line, the concept also includes the
criterion of exploitability, leaving the extent of the legal continental
shelf open-ended. The concept of the continental shelf grants coastal
states sovereignty over natural resources in the shelf or as far out as
they have the ability to exploit the resources. Because the physical shelf
does not always coincide in size with the 200 nm boundary, this doctrine
has resulted in an overlap in the two regimes. What is important to note
is that the UNCLOS III EEZ regime does not supersede the continental shelf
doctrine, but merely complements it. In practice, countries choose to
ratify the regime that would best serve their interests.......