U.S. citizens undertaken in accordance with the bill would be a reasonable use of the high seas as recognized in the 1958 Convention on the High Seas. Furthermore, the bill is drafted to ensure that activities under it will not be deemed to affect the legal status of the high seas, the superjacent airspace or the seabed and subsoil, including the continental shelf. In general, we feel the approach taken in this bill recognizes the vitality of international law and is designed to ensure that the development and operation of offshore facilities is undertaken in a manner consistent with accepted maritime practices and general principles of international law. In addition, we feel the bill establishes a rational, effective system for the licensing and regulation of deepwater ports. The Department has been informed by the Office of Management and Budget that there is no objection to the submission of this report. Sincerely, Hon. WARREN G. MAGNUSON, Chairman, Committee on Commerce, Washington, D.C. MARSHALL WRIGHT, Assistant Secretary, for Congressional Relations. DEPARTMENT OF JUSTICE, Washington, D.C., September 20, 1973. DEAR SENATOR: This is in response to your request for the views of the Department of Justice on S. 1751, a bill "To amend the Outer Continental Shelf Lands Act and to authorize the Secretary of the Interior to regulate the construction and operation of deepwater port facilities." This bill would establish for ports constructed beyond our present territorial sea a comprehensive legal system providing the full gamut of civil and criminal laws for activities on those structures. The bill authorizes the Department of the Interior to license the construction and operation of ports beyond the 3-mile limit and, generally, extends the laws of the United States to those ports, specifically enumerating a number of laws which are deemed to be particularly applicable to such facilities. The bill also extends to the superports as federal law the civil and criminal laws of the adjacent state, where such laws are applicable and not inconsistent with the Act or with other existing or future federal laws and regulations. Except for the personal jurisdiction which they exercise over their citizens, the states have no authority outside of their territorial limits. At present few federal laws would extend to the construction or operation of a port beyond the 3-mile territorial sea of the United States. The United States has asserted only limited authority beyond such limits primarily with respect to structures related to exploitation of the natural resources of the subsoil and seabed of the outer continental shelf (43 U.S.C. 1332, et seq.), with respect to fisheries (16 U.S.C. 1091), and marine pollution (P.L. 92–532, 86 Stat. 1052, P.L. 92-500, 33 U.S.C. 1161). There are, of course, many statutes of the United States, civil and criminal, which apply to individuals as to whom the Federal Government has personal jurisdiction wherever they may be located. Income Tax laws provide an example of both. However, in order to ensure the safe and orderly construction and operation of offshore ports, it is necessary to ensure that there exists a comprehensive legal system to govern that activity. Failure to provide such a legal system for these structures would inevitably result in future piecemeal attempts to stretch and apply state and federal laws which were not intended to apply to this novel situation. We believe S. 1751, with the following minor modifications, establishes such a system. Section 108 of the bill provides that any licensee who violates any condition of his license or any rule or regulation of the Secretary issued under the Act may be assessed a civil penalty by the Secretary. Section 109 provides that any person who willfully and knowingly violates any provision of the Act or any rule, regulation or condition made or imposed under the Act shall be punished by a fine. The "Criminal Penalties" authorized under section 109 are limited to monetary penalties. Where the penalties imposed are strictly monetary, we believe that civil penalties such as those imposed under section 108 are preferable to criminal penalties. Civil penalties which are collectable administratively by the agency itself avoid time-consuming prosecutions and decrease congestion in the criminal courts while still providing a deterrent to potential violators. However, if criminal penalties are desirable under the Act, we recommend that they provide for both fines and imprisonment. It is customary in establishing criminal sanctions to provide for both fines and imprisonment. Thus, section 5 of the Outer Continental Shelf Lands Act, 43 U.S.C. 1334, relating to rules and regulations issued by the Secretary of the Interior under that Act, provides for a fine or imprisonment. Moreover, under section 109 of the criminal penalties are made applicable to "any person" willfully and knowingly violating the Act, whereas under the civil penalty provision in section 108, the term used is “any licensee." The bill does not provide any definition of the word "person." Consequently, there is some difficulty in determining precisely to whom the criminal penalty provisions would apply. Finally, while section 108 provides a specific grant of jurisdiction to specific district courts, such a grant of jurisdiction is omitted in section 109. Section 110 authorizes the Secretary, upon non-compliance by a licensee with any provision of the Act or any rule, regulation, restriction or condition made thereunder, or failure by a licensee to pay any civil penalty assessed under section 108, to file an appropriate action in a federal district court either to suspend operations under the license or, if such a failure is knowing and continues for a period of 30 days after notice to the licensee by the Secretary, to revoke such a license. Although it is understood that the Department of Justice would institute in the federal courts the appropriate action under that provision, it is customary to provide in the relevant legislation a provision that the Secretary request the Attorney General to file the appropriate action. Section 111 of the bill generally extends the laws of the United States to offshore ports, specifiaclly enumerating nine laws which are deemed to be particularly applicable to such facilities. That section also extends to such ports, as federal law, state civil and criminal laws to the extent such laws are applicable and not inconsistent with the Act or other federal laws. However, section 111, like section 109, fails to provide a specific grant of jurisdiction to the federal courts to entertain actions based upon such laws, whether federal or assimilated state laws. Notably, such a specific grant was provided in similar legislation involving activities on structures erected on the seabed under the Outer Continental Shelf Lands Act, 43 U.S.C. 1333. We believe that such a grant of jurisdiction is necessary. However, we suggest as an alternative to providing individual grants of jurisdiction to the federal courts in three different sections of the bill, i.e., sections 108, 109 and 111, that a single general grant of jurisdiction such as that found in the Outer Continental Shelf Lands Act be incorporated in the bill. This could be accomplished by inserting such a new provision as a separate subsection "(b)" to section 111, redesignating present subsections (b) and (c) as new subsections (c) and (d), and deleting present subsection 108 (b). The new subsection 111(b) would read: The United States district courts shall have original jurisdiction of cases and controversies arising out of or in connection with the construction, operation or use of such facilities; proceedings with respect to any such case or controversy may be instituted in the judicial district in which any defendant may be found or the judicial district nearest the place where the cause of action arose. We also recomend that the Longshoremen's and Harbor Workers' Compensation Act should be included in the list of federal laws under section 111 applicable to offshore ports. Compensation or death or injury arising out of construction, operation or use of such facilities should not be left to implication from the provision in section 111 that the applicable law is to be the same as if such facilities "were located in the navigable waters of the United States." In this respect, we note that under the Outer Continental Shelf Lands Act the Longshoremen's Act is specifically made applicable to similar structures erected on our adjacent seabed for the purposes of exploring and exploiting the natural resources of our continental shelf. 43 U.S.C. 1333. Finally, we recommend that the word "construction" be inserted in section 111(a) at page 15, line 13 before "operation and use" to insure that the legal system established by that section applies during the construction of offshore ports as well as during their operation and use. Section 112 of the bill provides that the pipelines that would otherwise come within the jurisdiction of the states, as under the Submerged Lands Act, 43 U.S.C. 1301, "will be subject to all applicable laws or regulations of such a state or possession." To ensure that this section is not misconstrued as an attempt to expand the jurisdiction which the states otherwise exercise in the adjacent seas and seabed, we suggest that the following sentence be added to section 112 between present lines 11 and 12 on page 18: Provided that nothing in this section is intended to enlarge or diminish the jurisdiction which the states presently exercise in the adjacent seas and seabed. Finally, we note that there are three typographical errors in the bill. On page 7, line 7, the last complete word should read "and" while in line 12 "interest" should apparently be "interested." On page 13, line 7, the first "to" should be "or". The Department of Justice recommends enactment of this legislation amended as suggested above. The Office of Management and Budget has advised that there is no objection to the submission of this report from the standpoint of the Administration's program. Cordially, MIKE MCKEVITT. Hon. WARREN G. MAGNUSON, THE GENERAL COUNSEL OF THE TREASURY, Chairman, Committee on Commerce, Washington, D.C. DEAR MR. CHAIRMAN: Reference is made to your request for the views of this Department on S. 1751, "To amend the Outer Continental Shelf Lands Act and to authorize the Secretary of the Interior to regulate the construction and operation of deepwater port facilities." The bill would authorize the Secretary of the Interior to issue to citizens of the United States licenses to construct or operate deepwater port facilities if he determines that an applicant is financially responsible, the proposed facility will not unreasonably interfere with international navigation and is consistent with the international obligations of the United States, and that adverse environmenal effects will be prevented or minimized. He would be authorized to issue regulations prescribing procedures for issuing licenses. Customs and navigation laws administered by the Bureau of Customs, with certain exceptions, would not apply to facilities; however, customs officials would be granted reasonable access to deepwater port facilities to enforce laws under their jurisdiction. The bill was included in President Nixon's April 18, 1973, Message to the Congress on Energy Policy and the Department strongly recommends its enactment as a necessary step in meeting the nation's energy challenge. The Department would recommend minor technical changes to clarify section 113 of the bill with regard to the customs and navigation laws. A Comparative Print showing the suggested changes is enclosed for your convenient reference. The Department has been advised by the Office of Management and Budget that there is no objection from the standpoint of the Administration's program to the submission of this report to your Committee and that enactment of S. 1751 would be in accord with the program of the President. Sincerely yours, Enclosure. EDWARD C. SCHMULTS, COMPARATIVE PRINT Changes in section 113 are shown as follows (language proposed to be omitted is enclosed in brackets; new matter is underscored): SEC. 113. The customs and navigation laws administered by the [Bureau of Customs] Secretary of the Treasury, except those navigation laws specified in section 111(b) (7) [herein] of this Act, shall not apply to any deepwater port facility licensed under this Act; but all [materials] foreign articles to be used in the construction of any such deepwater port facility and connected facilities such as pipelines and cables shall first be made subject to a consumption entry in the United States and [duties deposited thereon] all applicable duties and taxes which would be imposed upon or by reason of their importation if they were imported for consumption in the United States shall be paid thereon in accordance with the laws applicable to merchandise imported into the customs territory of the United States [However, a] All United States officials, including [customs officials] officers of the customs as defined in section 401(i), Tariff Act of 1930, as amended, 19 U.S.C. 1401 (i), shall at all times be accorded reasonable access to deepwater facilities licensed under this Act for the purpose of enforcing laws under their jurisdiction or carrying out their responsibilities. GENERAL COUNSEL OF THE DEPARTMENT OF COMMERCE, Hon. WARREN G. MAGNUSON, Chairman, Committee on Commerce, U.S. Senate, Washington, D.C. Washington, D.C., October 29, 1973. DEAR MR. CHAIRMAN: This is in reply to your request for the views of this Department with respect to S. 1751, a bill-"To amend the Outer Continental Shelf Lands Act and to authorize the Secretary of the Interior to regulate the construction and operation of deepwater port facilities.” S. 1751 would establish authority in the Department of the Interior for licensing the construction and operation of deepwater port facilities. Under the provisions of S. 1751, licenses would be issued to any U.S. citizen, domestic corporation or State or local government after the Secretary of the Interior determines that the applicant is financially responsible and has demonstrated an ability and willingness to comply with all applicable laws, regulations and conditions; the construction and operation of proposed deepwater port facilities will not unreasonably interfere with international navigation or other reasonable uses of the high seas; and the facility will minimize or prevent any adverse significant environmental effects. Prior to issuing any license, the Secretary is required to consult with the governors of adjacent coastal States to ensure that the facility and its directly related land based activities would be consistent with the States' land use planning programs. The license required by S. 1751 would be in addition to permits or licenses which may be required under existing legislation from other Federal agencies. However, the proposed bill provides a mechanism whereby all Federal permits or licenses necessary for the construction and operation of the deepwater port facility will be handled through a single application filed with the Interior Department. That Department will ascertain the other Federal agencies which have the responsibility and jurisdiction under existing law for aspects of the construction and operation of such terminals. Interior will not issue a license under the Act until it has been notified by such agencies that the application meets the requirements of the laws which they administer. The Department of Commerce supports the enactment of S. 1751. Our support stems not only from the long-standing interest of the Maritime Administration in the promotion and development of our ports, but also from the interest of the National Oceanic and Atmospheric Administration in the promotion of a safe marine environment. We believe that the bill would encourage the construction of greatly needed deepwater port facilities in a manner that would ensure adequate regard for and balancing of both onshore and offshore environmental effects. Under section 8 of the Merchant Marine Act, 1920, the Maritime Administration is responsible for the promotion of efficiency and lower costs in the transportation of commodities in U.S. foreign commerce, including the im portation of petroleum. The issue of deepwater port facilities has therefore received serious examination in the agency, and it continues to be a subject of primary concern. We have determined that significant economies may be derived from the utilization of Very Large Crude Carries (VLCC's) that would require deepwater port facilities. For example, at world scale rates prevailing in mid-June of this year, it would have cost approximately $22.53 per ton to bring crude oil from the Persian Gulf to the United States East Coast in a 54,000 DWT tanker, while the transportation cost per ton for carrying crude oil in a 241,000 DWT tanker would have been only $14.11. Based upon the current price of Persian Gulf crude of $15.90 at the source, the $8.42 transportation cost reduction for VLCC's represents a 21.9 percent savings in the landed cost of Persian Gulf crude. Because of these and similar transportation economies, the Maritime Administration has been interested in encouraging the construction of VLCC's since the beginning of this decade. In December 1969, the Maritime Administration granted Title XI mortgage insurance for the first VLCC to be built in the United States and destined to fly the American flag, a 225,000 DWT tanker under construction at the Seatrain yard in Brooklyn, which was launched on June 30 of this year. On June 30, 1972, construction-differential subsidy was awarded for six VLCC's, including these tankers of 265,000 DWT, the largest ships ever to be built in this country. In June 1973, the Maritime Administration awarded construction-differential subsidy for three additional VLCC's, including two 265,000 DWT vessels which will be owned by Gulf Oil Corporation, the first American-built VLCC's to be purchased by a major United States oil company. The nine VLCC's will cost a total of more than $615 million and the Government's share of their cost paid as construction-differential subsidy is more than $260 million. These VLCC's cannot enter any of the Gulf Coast or East Coast harbors. If the United States is to be served by these vessels, deepwater port facilities must be developed. Levels of domestic energy production and usage fix the measure of required imports. To the extent that substantial imports will be required, given the transportation economies which exist, the issue is simply whether large tankers will unload their oil in the Caribbean or Canada for transshipment of petroleum or refined products to the United States in smaller vessels, or whether they will bring their cargoes directly to this country using deepwater port facilities. If transshipment of petroleum or refined products from deepwater ports in the Caribbean is elected, then many more visits by smaller tankers to United States ports will be required in order to transport our petroleum imports. This transshipment will result in higher costs for imports of crude oil and refined products. It will also result in a substantial increase in the risk of environmental damage to our ports and waterways from oil spills due to the increase in the number of visits by small vessels to our ports and the increase in port congestion which may result in collisions. The location of deepwater port facilities in the Caribbean and Canada may also result in the establishment of new refineries and petro-chemical complexes in those countries rather than in the United States. Such a development would result in the export of jobs from the United States and have an adverse effect on our balance-of-payments. The National Oceanic and Atmospheric Administration of the Department of Commerce would assist the Department of Interior in performing its duties to minimize the environmental hazards that could result from the construction of deepwater port facilities. NOAA can provide scientific information on the ocean environment, fisheries and marine biology. In addition, NOAA components such as the National Ocean Survey and the Environmental Research Laboratories haxe extensive programs dealing with tides, current, and atmospheric effects on the ocean. Thus, NOAA is able to determine if a site being considered for a deepwater port facility is one where discharge would be carried shoreward. Similarly, the expertise of NOAA in ocean dynamics could aid in siting artificial structures so as to minimize interference with bottom sediment transport, nutrient flow, and the ability of a body or area of water to assimilate pollutants. Another important role for NOAA in relation to the deepwater port legislation stems from its responsibilities for administering the Coastal Zone |