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50. Department of State Bureau of Oceans and International Environmental and Scientific Affairs, letter concerning deepwater port in the Gulf of Mexico


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Margaret D. Blum

Associate Administrator for

Port, Intermodal, and Environmental Activities
U.S. Maritime Administration

400 7th Street, SW
Washington, D.C. 20590

Dear Ms. Blum:

This letter serves as the State Department’s response to the Coast Guard’s letter of August 16, 2004 regarding the application of Freeport-McMoRan Energy, LLC (FME), for a license to own, construct and operate a new offshore liquefied natural gas (LNG) deepwater port (DWP) in the Gulf of Mexico. This DWP, also known as the Main Pass Energy Hub, would be located approximately 16 miles off the coast of Louisiana on the Outer Continental Shelf. This letter also serves to fulfill the State Department’s requirements under Section 106(e)(1) of the Maritime Transportation Security Act of 2002 (PL 107-295), which requires the Department of State to transmit to the Department of Transportation written comments as to the expertise or jurisdiction of the Department of State concerning the construction or operation of DWPs for natural gas pursuant to the Deepwater Port Act of 1974 (33 U.S.C. 1501 et seq.)(DWPA). As you know, the Coast Guard and Maritime Administration (MARAD) are the lead agencies acting on behalf of the Department of Homeland Security and Department of Transportation, respectively. A substantively identical response is being sent to Coast Guard.

FME proposes to establish a DWP approximately 16 miles off the coast of Louisiana (Main Pass lease block number 299) in 210 feet of water, in the U.S. Exclusive Economic Zone (EEZ). The proposed location of the DWP is a former sulfur mining facility. The project would utilize four existing platforms, associated bridges and support structures, and two new platforms to support six LNG storage tanks. FME proposes to install five LNG transmission pipelines (a total of 192 miles) that will connect the DWP to several existing gas distribution pipelines that currently fall under the jurisdiction of the Federal Energy Regulatory Commission. The DWP facility will have an on-site total gas storage capacity of 28 billion cubic feet and will be able to receive LNG carriers with a total cargo capacity of up to 160,000 cubic meters.

After reviewing FME’s application, and subject to the comments below, the Department of State concludes that the application is adequate, and that the issuance of a license pursuant to 33 U.S.C. 1503 will have no adverse effect on programs within the jurisdiction of the Department of State. Our specific comments follow.

The DWPA at 33 U.S.C. 1505(a) requires the Department of Transportation to consult with the Department of State regarding the environmental review criteria established at Appendix A to 33 CFR Part 148 for aspects over which the Department of State has jurisdiction. The Department of State serves as the primary Executive Branch coordinator for, and determines U.S. foreign policy regarding several of the criteria listed in the DWPA, including but not limited to effects on the marine environment, effects on alternate uses of the oceans, such as scientific study, fishing and exploitation of other living and non-living resources, effects of land-based developments related to DWP development and effects on human health and welfare.

After reviewing the FME license application and considering the environmental review criteria for DWPs in Appendix A of 33 CFR 148, the Department of State is of the view that granting the license will not have significant adverse effects regarding United States foreign policy with regard to the criteria described above, to include global and regional fisheries agreements, international agreements for the prevention of marine pollution and international agreements regarding oceanographic research and study.

The DWPA at 33 U.S.C. 1509(d)(1) requires the Secretary of Transportation to designate, after consultation with the Secretary of State, among others, a zone of appropriate size around any DWP for navigation safety, and in accordance with recognized principles of international law. Accordingly, such zones are governed by three principal sources: the United Nations Convention on the Law of the Sea, 1982 (UNCLOS), specifically Articles 22, 60 and 211; the International Convention on the Safety of Life at Sea, 1974 (SOLAS), Annex, Chapter 5, primarily Regulation V/10; and the General Provisions on Ship’s Routeing, adopted by the International Maritime Organization (IMO) pursuant to Assembly Resolution A.572(14), as amended. The Department of State, as the lead agency for policy matters involving UNCLOS, and as the coordinator for matters involving the IMO, has specific expertise and jurisdiction in these matters. Any ship’s routeing measure established outside the U.S. territorial sea requires approval and adoption by the IMO, through its Safety of Navigation Subcommittee and its Maritime Safety Committee.

The DWPA at 33 U.S.C. 1518(a)(3) requires the Secretary of State to notify the government of each foreign state having vessels under its authority or flying its flag that may call at a DWP, that the United States intends to exercise jurisdiction over such vessels. The notification must indicate that, absent the foreign State’s objection, its vessels will be subject to U.S. jurisdiction whenever calling at the DWP or within an established safety zone (not greater than 500 meters) and using or interfering with the use of the DWP. Further, Section 1518(c)(2) states that entry by a vessel into the DWP is prohibited unless the flag State does not object to the exercise of U.S. jurisdiction or a bilateral agreement between the flag State of the vessel and the United States permitting the exercise of jurisdiction is in force.

However, Title 33 U.S.C. Section 1518 precedes the entry into force of UNCLOS Article 60, which grants coastal States the exclusive right to construct, authorize and regulate installations and structures in its EEZ, including DWPs. It also precedes the designation of the EEZ of the United States, which grants certain rights and jurisdiction under customary international law, as stated in UNCLOS Part V. While Article 60(7) indicates that a DWP does not have the status of an island, has no territorial sea of its own, and its presence does not affect the delimitation of the territorial sea, the EEZ or the continental shelf, the Government of the United States interprets UNCLOS Article 12 to mean that any roadstead located outside the territorial sea and used for the loading or unloading of ships is included in the territorial sea.

Thus, any ship calling at a DWP in our EEZ would be subject to U.S. jurisdiction as if it were in the territorial sea. As the proposed Main Pass Energy Hub DWP would be in the EEZ of the United States, this principle would apply. Any ship flying the flag of a party to UNCLOS would be subject to Articles 12 and 60 and would be bound to the same jurisdictional principles of 33 U.S.C. Section 1518, thus obviating the need for further bilateral agreements. If a ship flying the flag of a non-party to UNCLOS were to call at the DWP, the State Department would only object to such calls if the non-party flag State had filed an objection to our assertion of jurisdiction.

Pursuant to the DWPA at 33 U.S.C. 1521, upon approval of the license to construct this DWP, the State Department will notify the government of Mexico of such action, and will invite discussion with them on the subject of LNG DWPs.

In conclusion, the State Department has no objection to granting a license for the ownership, construction and operation of the Main Pass Energy Hub DWP. If you have questions or need further information, my point of contact is Clay Diamond in the Office of Oceans Affairs. He can be reached at (202) 647-3946 or e-mail at diamondcl@state.gov.

Sincerely,

David A. Balton

Deputy Assistant Secretary

For Oceans and Fisheries



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