A League of Their Own

In recent years China’s prominence on the world stage has grown rapidly. With consistently high GDP growth, a swelling middle class, and high-profile international events such as the 2008 Beijing Olympics or the Expo 2010 in Shanghai, many recognize China as an emerging superpower. But this growth has not been consistent across all fronts, and in some respects China lags far behind other world powers. Recent events have made one area in particular stand out in this regard: oil spills.

On July 16^th in the Chinese port city of Dalian, the explosion of two oil pipelines caused thousands of barrels of oil to begin gushing into the sea. The slick has since expanded to cover hundreds of square kilometres of water and spread upwards of 90km down the coast. The spill – and China’s cack-handed response – is clearly modelled after the U.S.’s ongoing gulf coast saga – but it’s a pale imitation. Unlike the American spill, there seems to be no threat of the oil being carried to other nations’ coasts. Yet even Australia has managed to pull off a massive spill affecting its neighbours. If China wants to get into the oil spill big leagues, they’ll have to find a way to go international.

But while the international oil spill scene is characterised by intense competition, there is a notable lack of corresponding cooperation. It’s all well and good to give neighbours’ coasts an old fashioned “slicking”. But as any eighth-grader who gets caught TP-ing someone’s house because my friend Alan can’t keep his mouth shut knows, there must be a time for cleaning up as well. Unfortunately, international law provides few answers about who is responsible for cleaning up international spills.

The Convention on the Prevention of Marine Pollution by Dumping of Wastes and Other Matter explicitly excludes any “wastes derived from the exploration and exploitation of sea-bed mineral resources”. As a result, it will likely not apply to oil spills. The UN Convention on the Law of the Sea is more promising. It specifies at article 194 that “states shall take […] all measures consistent with this Convention that are necessary to prevent, reduce and control pollution of the marine environment from any source”, and specifically, “pollution from installations and devices used in exploration or exploitation of the natural resources of the seabed and subsoil”. However, for the U.S. oil spill UNCLOS is of limited value because America has not ratified the treaty. Instead President Reagan in 1983 directed government agencies to treat most parts of the treaty as customary law.

Beyond the realm of international treaties, much of the regulation of the offshore oil industry is carried out by special national regulators. These include the U.S.’s Minerals Management Service (MMS), the Norwegian Petroleum Directorate, Britain’s Health and Safety Executive, and Australia’s Department of Minerals and Petroleum Resources. In Canada the Canada-Newfoundland Labrador Offshore Petroleum Board (CNLOPB) regulates the industry, since Newfoundland-Labrador is the only province where offshore drilling currently occurs.

National offshore oil regulators do little to coordinate standards with one another. They lack even uniform sex and drugs corruption standards. A prominent example is the absence of coordinated regulations requiring the presence of an “acoustic switch” on offshore rigs. This is a failsafe device which can be remotely (and reliably) used to close off a gushing well on the sea floor in the event of an accident – such as that on the Deepwater Horizon rig. Acoustic switches are required on rigs in Norway, Brazil, and Canada, and they are present in British operations in the North Sea. Yet in a 2003 report to the MMS, requiring acoustic switches was not recommended because “they tend to be very costly”. As a result, acoustic systems are not present on American rigs.

The lack of coordination between oil regulators stands in stark contrast to the kind of international cooperation seen in other industries. IOSCO, the International Organization of Securities Committees, allows national (and provincial) securities regulators to unify policy approaches, while central banks are currently negotiating their third set of global banking standards through the Switzerland-based Basel Committee.

With the ever-increasing global demand for oil, offshore spills affecting multiple countries will likely be inevitable. Some day China will catch up with the pros in this respect, leaving behind their current small-town spills. But if oil-producing countries and their national regulators don’t do more to agree on standards for preventing and cleaning up international spills, then the international dimension of spills will remain one-sided. In that respect, perhaps all of the offshore oil producers will remain amateurs.

BUSH LEAGUE

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