Transboundary Agreement Hinges on the Core of International Environmental Law

–Meaghan Anderson, J.D./C.L. 2013, Paul M. Hebert Law Center, Louisiana State University. Meaghan was the Deepwater Land Intern for Chevron U.S.A. in 2012 and will be a Gulf of Mexico Land Representative for Chevron U.S.A. in August 2013.

A long awaited agreement between the United States and Mexico may have found a common ground between the mutual needs for energy and environmental protection. The Transboundary Agreement was formed between United States and Mexico on February 20, 2012, after decades of indecision on deepwater drilling along their international maritime boundaries in the Gulf of Mexico.[1] The Transboundary Agreement could open up millions of new acres to deepwater drilling for both countries.[2] However, the prospect of increasing deepwater drilling has been tainted since the 2010 BP oil spill.[3] The world watched as the oil came ashore along the Gulf Coast, affecting both state and federal maritime boundaries.[4] One factor became very clear: oil does not recognize borders of any kind due to its fugacious complexities.[5] It is a reality that must be dealt with as deepwater drilling now becomes more prevalent in the Gulf of Mexico. Therefore, countries must develop better safety and environmental protocols, while at the same time respecting sovereign borders.[6] Perhaps the best framework for understanding the ongoing threat of oil pollution in an international body of water such as the Gulf of Mexico is found in the Trail Smelter Arbitral Tribunal case.[7]

The Trail Smelter Arbitral Tribunal caseoccurred between the United States and Canada in 1941.[8] The United States alleged that fumes from a Canadian smelter in Trail, British Columbia, were carried downriver into Washington State, where it caused pollution.[9]A tribunal was established to try the case, and both countries agreed to provide one member of the tribunal and to choose jointly a chairman who was a national of neither country, here a Belgian.[10] The Tribunal was required to decide “the limits of the fundamental legal concept of the sovereign equality of states. Where Canada’s sovereignty implied the right to exploit its natural resources as it willed, that same sovereign norm protected the United States’ right to the inviolability of it national territory. The activities . . . in Trail, by virtue of climatic conditions that sent its emissions downstream and into the United States, implicated both sovereign rights at the same time.”[11]

Originally, the Tribunal looked to customary international law and international decisions on international environmental pollution, but no relevant precedent was found.[12] Therefore, the Tribunal relied heavily on the law of United States, which was authorized by the Convention between the United States and Canada.[13] The law of the United States was particularly fitting due to the number of analogous cases involving intrastate pollution in the United States.[14] The Tribunal found Canada liable for damages to the United States and obligated it to abate the pollution caused by the Trail smelter.[15] The Trail Smelter Arbitral Decision was a very seminal case because it established a basic principle of international law. The Tribunal articulated what have come to be known as the Trail Smelter principles:

(1) the state has a duty to prevent transboundary harm, which is commonly expressed in the Latin maxim sic utere tuo ut alilenum non laedas (“one should use one’s own property so as not to injure another”); and (2) the “polluter pays” principle, which holds that the polluting state should pay compensation for the transboundary harm it has caused.[16]

The Transboundary Agreement clearly implicates the principles laid down by the Trail Smelter Arbitral Tribunal in light of oil crossing boundaries freely like the Trail smelter pollution. The Agreement creates a set of mutual safety and regulatory protocols applicable to both Mexico and the United States’ deepwater drilling activities, while still maintaining each country’s sovereign regulatory and leasing systems.[17] The joint set of protocols is an active desire to fulfill the duty principle and more clearly delineate the liabilities of a polluting country laid down in Trail Smelter.[18] By implicating these international principles, the Transboundary Agreement, if ratified, will bring decades of uncertainty about deepwater drilling to a rest.

In 1970, the United Nations Law of the Sea Convention expanded the Exclusive Economic Zones (EEZs) of each country to 200 miles off their coast with Resolution 2749.[19] Within the EEZs, countries were given the right to develop natural resources.[20] The Resolution stipulated, however, that where EEZs intersected, separate treaties were to be formed between the countries.[21] Such a scenario is exactly what happened between the United States and Mexico.[22] Over the next decade, provisional recognition of each country’s sovereign EEZ was proposed until eventually, in 1978, Mexico ratified the Mexico-US Mexico Maritime Limits Treaty,[23] which was based on international law and practice. However, the United States Senate refused to ratify the 1978 Mexican treaty.[24] The main issue, which prevented Senate ratification, was two areas along the US-Mexico maritime EEZ boundary called the “Eastern and Western Doughnut holes.”[25]

The issue of the “doughnut holes” became more prominent around the turn of thetwenty-first century, as a result of improved drilling technology and encouragement to drill offshore from the United States government.[26] The United States Senate finally ratified the 1978 Mexico-US Mexico Maritime Limits Treaty in 1997, which delineated the territorial and maritime boundaries for the Western Polygon.[27] As of 2001, “[t]he final sharing of the Western Polygon was: 62% for Mexico… and 38% for the US.”[28]

Yet, the Treaty did not answer all issues regarding deepwater drilling along the maritime borders of the US and Mexico. The main issue was lack of execution on the seabed or subsoil of the Western Polygon due to the likelihood that reservoirs of resources could transcend international boundaries.[29] As a result, a moratorium prevented drilling and exploration within a 2.8 mile strip along the established maritime boundary.[30] The worry over such as issue was likely two-fold and goes back to the current debate over the need to balance environmental risks with economic needs.

First, an environmental risk existed in regards to transboundary oil and gas pollution, since no joint safety or investigative protocols were established.[31]The 1958 United Nations Convention on the High Seas Article 24 states that “Every State shall draw up regulations to prevent pollution of the seas by the discharge of oil from ships or pipelines or resulting from the exploitation and exploration of the seabed and its subsoil, taking account of existing treaty provisions on the subject.”[32] The 1970 Law of the Sea Convention Resolution incorporated this Article into the duty to create EEZs and maritime boundaries should those areas intersect.[33] Therefore, should an oil spill occur in the Western Polygon, it would violate a duty under international law (law of the sea) and the 1997 Treaty between the United States and Mexico.

On the other hand, an economic risk existed in regards to the rule of capture in deepwater drilling in the Western Doughnut Hole. The traditional rule of capture states that “a landowner may drill as many wells and produce as much oil and gas from his land as he pleases even though some of what he produces or ‘captures’ comes from under a neighboring tract. The neighbor’s only remedy is to drill a well on his own land, since under the rule he also has the right to ‘capture’ all he can from under his land.”[34] The 1997 Treaty stated that no international rule of capture existed for the Western Doughnut Hole “due to the possible existence of oil or natural gas fields that could extend through the established limits in the continental shelf.”[35]As a result, further negotiations were necessary to develop a doctrine of correlative rights since the United States’ deepwater drilling capability far exceeded that of Mexico. A doctrine of correlative rights recognizes that, while each country who owns lands within which a reservoir is found may freely produce from it, that country may not do anything that would prevent or unduly interfere with the exercise of the same rights by his neighbor.[36] Yet, the need for natural resources in the Gulf of Mexico and the international environmental duty of Trail Smelter were clearly still at odds even after the 1997 treaty ratification. As a result, a drilling moratorium in the Western Polygon was set to conclude on January 16, 2011.[37]However, the 2010 BP oil spill derailed the original Treaty plans.[38]

The BP oil spill was a major realization for the United States and Mexico on the necessity of clarifying the lingering issues of the 1997 Treaty to ensure the safe, efficient, and responsible exploration of the deepwater reservoirs in the Gulf of Mexico. United States Secretary of State Clinton remarked at the signing of the Transboundary Agreement in Los Cabos, Mexico, that the Agreement would not only address the economic issues of deepwater drilling between the United States and Mexico, but would also implement new safety regulations and investigative protocols in respecting the duties of international environmental law.[39] The availability of a firm set of rules and protocols applicable to both nations will help prevent disputes along the maritime boundary by clearly delineating the borders and responsibilities for Petróleos Mexicanos (Pemex) and American companies drilling along this boundary.[40] Also, new opportunities will be available for American companies to collaborate with Pemex, thus fostering economic growth for both countries,[41] and providing new information and technology to Pemex to better equip them for deepwater drilling and thus reducing the risk of future oil spills.[42]

United States Interior Secretary Salazar stated, “U.S. companies can now move forward with legal certainty which has been missing in this area.”[43]  The “legal certainty” Secretary Salazar speaks of is founded directly in international law. Thus far, the treaty has been ratified by Mexico in March 2012 and is now awaiting ratification by the United States Senate.[44] The signing of the Transboundary Agreement validates a long awaited merger of the Trail Smelter international environmental principles and the duty under the United Nations Law of the Sea and the Convention on the High Seas to formalize a marine boundary agreement between the United States and Mexico in order to produce oil and gas from the Gulf of Mexico’s deepwater reservoirs.

Preferred citation: Meaghan Anderson, Transboundary Agreement Hinges on the Core of International Environmental Law, LSU J. Energy L. & Res. Currents (October 25, 2012), http://sites.law.lsu.edu/jelrblog/?p=129.