Introduction As the political battle for restructuring of Nigeria continues to rage, one aspect of it that has recently commanded attention has been the issue of resource control in general, and in particular the dichotomy made by the Federal government about onshore/offshore oil resources. It came to a head recently when the Federal government filed a suit dragging all 36 states to the Supreme Court for its constitutional interpretation of Section 162.
It is a legal battle that the Federal government is destined to win, but if the states eventually ask for the right things now or afterwards, it is a political battle that they can win.
But first things first.
The situation in the United States I am of the opinion that since Nigeria runs a federal system similar to the United States, we should look to the US legislation and courts for guidance during constitutional contentions. One such issue is this offshore control business.
For starters, the US is comprised of 50 states, a population of about 280 million people, and an area of 9,629,091 sq. km. Of these 50 states, 22 (44%) are littoral having borders with the oceans or a gulf. These littoral states comprise 60% of the people of the United States and 48% of the land mass (see Table 1 for further details.) On the other hand, Nigeria is comprised of 36 states, 8 ( or 22% ) of which are littoral, with a population of about 27% of the total Nigeria (about 123 million) and 13% of the land mass.
Thus if states were to be able to push their way in terms of offshore resource control, it will be in the US.
In 1947, the state of California tried exactly that, and was immediately sued by the United States government. In 1950, Texas and Louisiana, now arguing that they had control of offshore resources BEFORE they joined the US union, also came under the US's legal hammer. In each case, the Supreme court ruling was in favor of the Federal government, with the US Supreme Court arguing in the case of Texas and Louisiana that they had given up some of their state rights for the sake of equality of all states in the new union (See appendix I). These three cases are part of the maybe half-a-dozen suits EVER brought by the US against any state.
The conclusion therefore is that the legal issue of who owns offshore resources in the US is settled: it is the Federal government. I am certain that when arguments are made before the Supreme Court in Nigeria, lawyers for and against the government will be combing through the
American arguments. The weight of those arguments would be in favor of the federal government.
The general principle here is that there must be certain resources SHARED by all people of a nation if indeed they are one nation. The oceans and the air above the nation are such resources. I am in firm agreement with that principle.
Company Registration and Taxation by States So what is to be done?
Now everyone knows that California, Texas, Louisiana, etc. are fairly rich states in the US because of their oil, both offshore and onshore, and the question is; "how manage?" The answer lies in the incorporation and taxing system in the US.
Well, for one, even if you go off to the sea to mine your oil and get gas, you still have to come home at night to sleep somewhere. You need to have your offices on land, and your ship has to dock somewhere. Your company has to register in the state to do business, it has to pay state taxes and its workers have to pay state taxes. Hence all the business activities related to the oil or anything else, whether onshore or offshore, eventually rub off on California, Texas, etc. because of the states' ability to TAX any and all economic activities within their borders.
Of course, the Federal government of the United States also taxes the profits of such companies - with the profit being calculated AFTER the companies have paid their money to the states. After all, individuals in the US pay three taxes: to the county, to the state and to the Federal government, at different set rates of taxation.
But what is the current situation in Nigeria? All companies are registered in Abuja, incorporation of bodies being on the Exclusive Legislative list of the Constitution. (See Section 32 of Constitution; see Appendix II below, excerpting some relevant sections from the 1999 Nigerian Constitution). They pay federal taxes to Abuja. [I am not even sure that federal workers, companies or their workers pay any taxes to the state in which they reside.] If Section 163 of the Constitution is to be believed, the federal government is then supposed to remit some
proportional amount (based on derivation) to the state governments.
We know what that means - that state governments will continue to depend on the kind-heartedness or otherwise of the federal government, depending on whether the party in control of the center is in agreement with those of the state; whether the governor of the state is in the good books of the federal executive. In short, state craft becomes hinged on capriciousness.
Amending the Constitution So suppose Section 32 (incorporation of bodies) as an exclusive federal exercise is scrapped and Section 59 (taxation of incomes, profits, etc.) of the 1999 Constitution were moved into the concurrent list, thereby leaving the states to be able to register companies and to tax all
economic activities. Then it would not matter whether the activity was onshore or offshore - the relevant states would still benefit via taxation from the economic activity within their borders.
That would go a long way towards solving this resource control business, and do away once and for all with this onshore/offshore dichotomy, notwithstanding the Land Use Decree or Section 39 (exclusive rights on "Mines and minerals, including oil fields.") of the constitution.
I would rest my case, except to ask whether, under the current political arrangement of Nigeria, this amendment can be achieved under the two-thirds majority provisions of Section 9, Chapter 1, Part 2 of the 1999 Constitution. (see Appendix 2). Hardly likely. Will the federal suit resolve issues? Hardly likely, unless the issue is "dialogued" at a Sovereign National Conference.
Table 1
COMPARISON OF STATISTICS OF LITTORAL STATES
Nigeria
United States
All States
Number of States
36
50
Population
123,337,822 (Est. 2000)
281,421,906 (census 2000)
Area (sq. km)
923,768
9,629,091
Border (km)
4,047
32,172
Littoral States
Number of States (%)
8 (22.2%)
22 (44%)
Population (%)
32,767,153 (26.6%)
164,324,880 (58.4%)
Area (sq. km) (%)
115,804 (12.5%)
4,583,447 (47.6%)
Coastline (km) (%)
853 (17.4%)
19,924 (61.9%)
Littoral States
Lagos (roughly 180 km of coastline)
Ogun (20 km),
Ondo (75 km),
Delta (100 km),
Bayelsa (180 km),
Rivers (180 km),
Akwa-Ibom (85 km),
Cross-River (30 km)
Washington
Oregon
California
Hawaii
Alaska
Texas
Louisiana
Mississippi
Alabama
Florida
Georgia
South Carolina
North Carolina
Virginia
Maryland
Delaware
New York
New Jersey
Rhode Island
Massachusetts
New Hampshire
Maine
Appendix I
US Suits Against California (1947), Louisiana (1950) and Texas (1950) Over Maritime Property Claims
Constitution, Analysis and Interpretation (1992 Edition); Constitution, Analysis and Interpretation (1998 Supplement)
STATE ACTS HELD UNCONSTITUTIONAL
United States v. California, 332 U.S. 19 (1947). California claimed that it owned the resources of the soil under the three-mile marginal belt as an incident to those elements of sovereignty which it exercised in that area, and therefore might grant permits to California residents to prospect far out and on the ocean floor within said limits. Held: California is not the owner of the three-mile marginal belt along its coast; the Federal Government rather than the State has paramount rights in and power over that belt, and full dominion over the resources of the soil under that water area. The United States is therefore, entitled to a decree enjoining California and all persons claiming under it from continuing to trespass upon the area in violation of the rights of the United States.
United States v. Louisiana, 339 U.S. 699 (1950). The Louisiana constitution provides that the Louisiana boundary includes all islands within three leagues of the coast; and Louisiana statutes provide that the State's southern boundary is 27 marine miles from the shore line. Since
the three-mile belt off the shore is in the domain of the Nation rather than that of the States, it follows that the area claimed by Louisiana extending 24 miles seaward beyond the three-mile belt is also in the domain of the Nation rather than Louisiana. The marginal sea is a
national, not a state, concern and national rights are paramount in that area. The United States, therefore, is entitled to a decree upholding such paramount rights and enjoining Louisiana and all persons claiming under it from trespassing upon the area in violation of the rights of the United States, and requiring Louisiana to account for the money derived by it from the area after June 23, 1947. Justices Concurring: Vinson, C.J., Black, Frankfurter, Douglas, Burton. Justices Dissenting: Reed, Minton.
United States v. Texas, 339 U.S. 707 (1950). Notwithstanding provisions in Texas laws whereby that State extended its boundary to a line in the Gulf of Mexico 24 marine miles beyond the three-mile limit and asserted ownership of the bed within that area and to the outer edge of
the continental shelf, the United States is entitled to a decree sustaining its paramount rights to dominion of natural resources in said area, beyond the low-water mark on the coast of Texas and outside inland waters. Any claim which Texas may have asserted over the marginal belt
when she existed as an independent Republic was relinquished upon her admission into the Union on an equal footing with the existing States.
Justices Concurring: Vinson, C.J., Black, Frankfurter, Douglas, Burton.
Justices Dissenting: Reed, Minton.
Appendix II
The 1999 Constitution (excerpts)
Exclusive Legislative List
Incorporation, regulation and winding up of bodies corporate, other than co-operative societies, local government councils and bodies corporate established directly by any Law enacted by a House of Assembly of a State.....
Mines and minerals, including oil fields, oil mining, geological surveys and natural gas....
Taxation of incomes, profits and capital gains, except as otherwise prescribed by this Constitution.
Concurrent List
In the exercise of its powers to impose any tax or duty on
capital gains, incomes or profits of persons other than companies; and
documents or transactions by way of stamp duties,
the National Assembly may, subject to such conditions as it may prescribe, provide that the collection of any such tax or duty or the administration of the law imposing it shall be carried out by the Government of a state or other authority of a state.
Where an Act of the National Assembly provides for the collection of tax or duty on capital gains, incomes or profit or administration of any law by an authority of a state in accordance with paragraph 7 hereof, it shall regulate the liability of persons to such tax or duty in such manner as to ensure that such tax or duty is not levied on the same person by
more than one state.
A House of Assembly may, subject to such conditions as it may prescribe, make provisions for the collection of any tax, fee or rate or for the administration of the Law providing for such collection by a local government council.
Where a Law of a House of Assembly provides for the collection of tax, fee or rate or for the administration of such Law by a local government council in accordance with the provisions hereof it shall regulate the liability of persons to the tax, fee or rate in such manner as to ensure that such tax, fee or rate is not levied on the same person in respect of the same liability by more than one local government council.
Chapter 6, Part I On Taxation
Where under an Act of the National Assembly, tax or duty is imposed in respect of any of the matters specified in item D of Part II of the Second Schedule to this Constitution, the net proceeds of such tax or duty shall be distributed among the States on the basis of derivation and
accordingly -
where such tax or duty is collected by the Government of a State or other authority of the State, the net proceeds shall be treated as part of the Consolidated Revenue Fund of that State;
where such tax or duty is collected by the Government of the Federation or other authority of the Federation, there shall be paid to each State at such times as the National Assembly may prescribe a sum equal to the proportion of the net proceeds of such tax or duty that are
derived from that State.
Chapter I Part II
(On Amending the Constitution)
The National Assembly may, subject to the provision of this section, alter any of the provisions of this Constitution.
An Act of the National Assembly for the altertion of this Constitution, not being an Act to which section 8 of this Constitution applies, shall not be passed in either House of the National Assembly unless the proposal is supported by the votes of not less than two-thirds
majority of all the members of that House and approved by resolution of the Houses of Assembly of not less than two-thirds of all the States.
An Act of the National Assembly for the purpose of altering the provisions of this section, section 8 or Chapter IV of this Constitution shall not be passed by either House of the National Assembly unless the proposal is approved by the votes of not less than four-fifths majority of all the members of each House, and also approved by resolution of the House of Assembly of not less than two-third of all States.
For the purposes of section 8 of this Constitution and of subsections (2) and (3) of this section, the number of members of each House of the National Assembly shall, notwithstanding any vacancy, be deemed to be the number of members specified in sections 48 and 49 of this Constitution.
Guides
SATURDAY ESSAY