Article 82

KEYWORDS — ARTICLE 82

Article 82
Payments and contributions with respect to the exploitation of the continental shelf beyond 200 nautical miles

  1. The coastal State shall make payments or contributions in kind in respect of the exploitation of the non-living resources of the continental shelf beyond 200 nautical miles from the baselines from which the breadth of the territorial sea is measured.
  2. The payments and contributions shall be made annually with respect to all production at a site after the first five years of production at that site. For the sixth year, the rate of payment or contribution shall be 1 per cent of the value or volume of production at the site. The rate shall increase by 1 per cent for each subsequent year until the twelfth year and shall remain at 7 per cent thereafter. Production does not include resources used in connection with exploitation.
  3. A developing State which is a net importer of a mineral resource produced from its continental shelf is exempt from making such payments or contributions in respect of that mineral resource.
  4. The payments or contributions shall be made through the Authority, which shall distribute them to States Parties to this Convention, on the basis of equitable sharing criteria, taking into account the interests and needs of developing States, particularly the least developed and the land-locked among them.

Quicktabs: Keywords

UNCLOS would create new international authority for a massive and unprecedented transfer of wealth
The Treaty proposes to create a new global governance institution that would regulate American citizens and businesses, but which would not be accountable politically to the American people. Some of the Law of the Sea Treaty's proponents pay little attention to constitutional concerns about democratic legislative processes and principles of self-government, but I believe the American people take seriously threats to these foundations of our nation. The Treaty creates a United Nations-style body called the "International Seabed Authority." "The Authority," as UN bureaucrats call it in Orwellian shorthand, would be involved in all commercial activity such as mining and oil and gas production in international waters. It is to this entity that the United States, pursuant to the Treaty's Article 82, would be required to transfer a significant share of all royalties generated by American companies royalties that would otherwise go to the U.S. Treasury for the benefit of the American people. Over time, hundreds of billions of dollars could flow through the "Authority" with little oversight. The United States could not control how those revenues are spent. Under the Treaty, the Authority is empowered to redistribute these so-called "international royalties" to developing and landlocked nations with no role in exploring or extracting those resources. It would constitute a massive form of global welfare, courtesy of the American taxpayer. It would be as if fishermen who exerted themselves to catch fish on the high seas were required, on the principle that those fish belonged to all people everywhere, to give a share of their take to countries that had nothing to do with their costly, dangerous and arduous efforts.
Rumsfeld, Donald. "Testimony of Former Secretary of Defense Donald Rumsfeld ." Testimony before the Senate Foreign Relations Committee, June 14, 2012. [ More (3 quotes) ]
US accession to UNCLOS would obligate to transfer hundreds of billions of dollars of royalties to ISA
One area where the U.S. can expect to experience significant costs—with no appreciable benefit—is in its compliance with Article 82 of the Convention: “Payments and contributions with respect to the exploitation of the continental shelf beyond 200 nautical miles.” If the U.S. accedes to UNCLOS, it will be required pursuant to Article 82 to transfer royalties generated on the U.S. continental shelf beyond 200 nautical miles (nm)—an area known as the “extended continental shelf” (ECS)—to the International Seabed Authority. These royalties will likely total tens or even hundreds of billions of dollars over time. Instead of benefiting the American people, the royalties will be distributed by the Authority to developing and landlocked nations, including some that are corrupt, undemocratic, or even state sponsors of terrorism such as Cuba and Sudan.
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Groves, Steven. "The Law of the Sea: Costs of U.S. Accession to UNCLOS ." Testimony before the United States Senate Committee on Foreign Relations, June 14, 2012. [ More (11 quotes) ]
Under UNCLOS billions of dollars in royalties for offshore oil development would shift to ISA instead of to US revenue

The United States will likely soon begin to exploit the oil and natural gas resources on its ECS. The BOEMRE has already issued exploration leases for areas located, at least in part, on the U.S. ECS. Indeed, during the bidding process, the BOEMRE has given notice to companies bidding on offshore leases about UNCLOS Article 82. Since at least 2001 and as recently as 2008, BOEMRE has advised companies that the Article 82 royalty payment provisions would apply if the United States joins the convention.

The BOEMRE is not alone in its opinion that activities on the ECS will commence sooner rather than later. The report commissioned by the Authority predicts that, while Article 82 “has been dormant since the adoption of the Convention,” it “will soon awaken,” and royalties from that provision may come due to the Authority as early as 2015.

In sum, under current U.S. law and policy, all royalties and other revenue generated from exploitation of the U.S. ECS and owed to the United States would be deposited in the U.S. Treasury to be dispensed in the best interest of the United States and the American people. However, if the United States accedes to UNCLOS, potentially billions of dollars in royalties would instead be transferred to the Authority pursuant to Article 82. How the Authority would dispense those “internationalized” royalties is less clear.

[ Page 11 ]
Groves, Steven. U.N. Convention on the Law of the Sea Erodes U.S. Sovereignty over U.S. Extended Continental Shelf . Heritage Foundation: Washington, D.C., June 7, 2011 (1-13p). [ More (5 quotes) ]
U.S. seat on ISA board won't necessarily prevent article 82 revenue from going to our adversaries and dictatorships

Some UNCLOS proponents maintain that the United States, if it joined the convention, would have a “veto” over such decisions because the U.S. would hold a permanent seat on the 36-member Council, which is the executive organ of the Authority.54 In fact, UNCLOS empowers the Council only to make recommendations to the Assembly on the disposition of Article 82 revenue, which the Assembly may approve or disapprove.55 Any Council recommendation that is disapproved by the Assembly is returned to the Council “for reconsideration in the light of the views expressed by the Assembly.”56 Therefore, in function and form, the Assembly makes final determinations regarding the disposition of Article 82 revenue.

Thus, it is unlikely that the United States would be able to prevent the Authority from distributing Article 82 revenue to Cuba and Sudan, UNCLOS members that the U.S. State Department has designated as state sponsors of terrorism.57 It would also be difficult for the United States to block the Authority from sending funds to the undemocratic, despotic, and/or brutal regimes in Belarus, Burma, China, Somalia, and Zimbabwe.58 Finally, the United States would have limited ability to stop the transfer of Article 82 revenue to corrupt regimes, especially given that 13 of the 20 most corrupt nations in the world are UNCLOS members.59

By virtue of its seat on the Council, the United States might be able to hinder decisions to distribute Article 82 revenue for purposes to which it objects. Whether the United States would be steadfast in its objections to such distributions and whether the Assembly would make any such distributions without the consent of the Council are open questions.

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Groves, Steven. U.N. Convention on the Law of the Sea Erodes U.S. Sovereignty over U.S. Extended Continental Shelf . Heritage Foundation: Washington, D.C., June 7, 2011 (1-13p). [ More (5 quotes) ]
UNCLOS has no restrictions on how recipient nations under article 82 have to spend the money
UNCLOS is silent on how UNCLOS nations that receive Article 82 royalty revenue should spend it. UNCLOS does not require recipient nations to spend the revenue on anything related to the oceans or the maritime environment. Nor does it require them to spend the revenue on humanitarian or development projects, even though most, if not all, of the eligible recipients are supposed to be poor, developing countries. Recipients are apparently free to spend the funds on military expenditures or simply deposit them into the personal bank accounts of national leaders. Finally, UNCLOS does not require that Article 82 revenue be spent in a transparent or accountable manner. Apparently, the Authority simply hands over substantial amounts of money to the recipient nation to be spent however that nation sees fit, no matter how corrupt or inept that nation’s leadership is.
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Groves, Steven. U.N. Convention on the Law of the Sea Erodes U.S. Sovereignty over U.S. Extended Continental Shelf . Heritage Foundation: Washington, D.C., June 7, 2011 (1-13p). [ More (5 quotes) ]
U.S. foreign aid could be used to offset any required transfers to states, eliminating any tax burden

Payments are to be distributed by the ISBA to States Parties of UNCLOS in accordance with Article 82(4) on the basis of equitable criteria that take into account economic development factors. Of note, this distribution is distinct from the distribution of revenues generated from deep seabed mining operations under Part XI of the Convention. As a State Party to UNCLOS, the United States would have a permanent seat in the ISBA to ensure both kinds of distributions are made in ways acceptable to the United States—Section 3(15) of the Annex to the IA guarantees the United States a seat on the ISBA Council in perpetuity.28 Any ISBA decision regarding revenue sharing must be approved by the Council.29 Additionally, if distributions are made to a country that is already receiving U.S. foreign aid, the United States could offset aid to that country by the amount of distributions paid by the ISBA, in essence eliminating any increase financial burden to the American taxpayers.

[ Page 765 ]
Pedrozo, Raul. "Arctic Climate Change and U.S. Accession to the United Nations Convention on the Law of the Sea ." International Law Studies. Vol. 89. (2013): 757-775. [ More (10 quotes) ]
Bilateral offshore oil exploration agreement with Mexico already obligates US to participate in Article 82 revenue sharing agreement

The settlement we made with Mexico now makes it possible for leases in the Gulf of Mexico issued by the Department of the Interior’s Minerals Management Service (MMS) to be subject to the Article 82 “Revenue Sharing Provision” calling for the payment of royalties on production from oil and natural gas leases beyond the EEZ. According to MMS, seven leases have been awarded to companies in the far offshore Gulf of Mexico which include stipulations that any discoveries made on those leases could be subject to the royalty provisions of Article 82 of the Convention. MMS also reports that one successful well has been drilled about 2.5 miles inside the U.S. EEZ. Details on how the revenue sharing scheme will work remain unclear, and without ratification the U.S. Government’s ability to influence decisions on implementation of this provision is limited or non-existent. This creates uncertainty for U.S. industry.

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Kelly, Paul L. "Evaluating the Impact of the Law of the Sea Treaty on Future Offshore Drilling ." Global Offshore Drilling 2005 Conference. (April 19, 2005) [ More ]
Mining companies have incentive to over develop resource in inefficient manner to avoid paying higher royalty share

While Moore’s view is also that Article 82 is a “small quid pro quo”,11 the Article may nonetheless have undesirable consequences. For example, Rainer Lagoni observed in New Delhi in 2002 that in providing for five years where the revenue share is nil per cent before slowly climbing by one per cent a year there is an incentive of the mining industry to extract resource at a far faster rate than they might otherwise do.12 This may lead to an inefficient, even wasteful use of resource, particularly when taking into account the gearing of refinery resources to the raw resource available.

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Mingay, George. "Article 82 of the LOS Convention—Revenue Sharing—The Mining Industry’s Perspective." The International Journal of Marine and Coastal Law. Vol. 21, No. 3 (2006): 335-346. [ More (2 quotes) ]
Article 82 redistribution payments could be used to prop up corrupt governments

There are also the costs from the redistribution of payments from the Authority to governments of developing countries. Many of these governments are less than savory, and traditional aid funds or revenues from existing natural resources are already being channeled into the pockets of the governing class and used to keep them in power. An additional revenue stream from the Authority would further cement their positions and worsen the condition of their peoples, further suppressing global growth. Add to this the aforementioned risk of allocating funds to separatist or terrorist organizations, which could turn the Authority into a backdoor source of funding for the arms trade. Thus, if the Authority works in the way it is constituted, it would represent a perverse cost to the poorest people in the world.

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Murray, Iain. LOST at Sea: Why America Should Reject the Law of the Sea Treaty . National Center for Policy Analysis: Washington, D.C., March 2013 (20p). [ More (9 quotes) ]
Under UNCLOS, U.S. revenues from offshore resource extraction would be redistributed to non-desirable state actors

UNCLOS is silent on how UNCLOS nations that receive Article 82 royalty revenue should spend it. Recipients are apparently free to spend the funds on military expenditures or simply deposit them into the personal bank accounts of national leaders.

Keywords: 
Article 82
Related Quotes: 
Parent Arguments: 
Counter Argument: 
UNCLOS participation would require U.S. to transfer significant royalties to International Seabed Authority

If the U.S. accedes to UNCLOS, it will be required pursuant to Article 82 to transfer royalties generated on the U.S. continental shelf beyond 200 nautical miles (nm)—an area known as the “extended continental shelf” (ECS)—to the International Seabed Authority.

Keywords: 
Revenue Sharing, Article 82
Related Quotes: 
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