    [Senate Hearing 112-654]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 112-654

               THE LAW OF THE SEA CONVENTION (TREATY DOC. 103-39)

    =======================================================================

                                    HEARINGS

                                   BEFORE THE

                         COMMITTEE ON FOREIGN RELATIONS
                              UNITED STATES SENATE

                          ONE HUNDRED TWELFTH CONGRESS

                                 SECOND SESSION

                                   ----------

                       MAY 23, JUNE 14, AND JUNE 28, 2012

                                   ----------

           Printed for the use of the Committee on Foreign Relations

          Available via the World Wide Web: http://www.gpo.gov/fdsys/
               THE LAW OF THE SEA CONVENTION (TREATY DOC. 103-39)

                                                            S. Hrg. 112-654

               THE LAW OF THE SEA CONVENTION (TREATY DOC. 103-39)

    =======================================================================

                                    HEARINGS

                                   BEFORE THE

                         COMMITTEE ON FOREIGN RELATIONS
                              UNITED STATES SENATE

                          ONE HUNDRED TWELFTH CONGRESS

                                 SECOND SESSION

                                   __________

                       MAY 23, JUNE 14, AND JUNE 28, 2012

                                   __________

           Printed for the use of the Committee on Foreign Relations

          Available via the World Wide Web: http://www.gpo.gov/fdsys/
    ?

                      U.S. GOVERNMENT PRINTING OFFICE
    77-375                    WASHINGTON : 2013
    -----------------------------------------------------------------------
    For sale by the Superintendent of Documents, U.S. Government Printing Office,
    http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Printing Office. Phone 202�09512�091800, or 866�09512�091800 (toll-free). E-mail, gpo@custhelp.com.

                    COMMITTEE ON FOREIGN RELATIONS

                 JOHN F. KERRY, Massachusetts, Chairman
    BARBARA BOXER, California            RICHARD G. LUGAR, Indiana
    ROBERT MENENDEZ, New Jersey          BOB CORKER, Tennessee
    BENJAMIN L. CARDIN, Maryland         JAMES E. RISCH, Idaho
    ROBERT P. CASEY, Jr., Pennsylvania   MARCO RUBIO, Florida
    JIM WEBB, Virginia                   JAMES M. INHOFE, Oklahoma
    JEANNE SHAHEEN, New Hampshire        JIM DeMINT, South Carolina
    CHRISTOPHER A. COONS, Delaware       JOHNNY ISAKSON, Georgia
    RICHARD J. DURBIN, Illinois          JOHN BARRASSO, Wyoming
    TOM UDALL, New Mexico                MIKE LEE, Utah
                   William C. Danvers, Staff Director
            Kenneth A. Myers, Jr., Republican Staff Director

                                  (ii)

                                C O N T E N T S

                                  ----------

                            Wednesday, May 23, 2012
              THE LAW OF THE SEA CONVENTION (TREATY DOC. 103-39):
                    THE U.S. NATIONAL SECURITY AND STRATEGIC
                          IMPERATIVES FOR RATIFICATION

                                                                       Page

    Clinton, Hon. Hillary Rodham, Secretary of State, U.S. Department
      of State, Washington, DC.......................................     7
        Prepared statement...........................................    12
        Responses to questions for the record submitted by Senator
          John F. Kerry..............................................    62
    Dempsey, GEN Martin E., Chairman, Joint Chiefs of Staff,
      Washington, DC.................................................    22
        Prepared statement...........................................    23
        Responses to questions for the record submitted by Senator
          John F. Kerry..............................................    72
    Kerry, Hon. John F., U.S. Senator from Massachusetts, opening
      statement......................................................     1
    Lugar, Hon. Richard G., U.S. Senator from Indiana, opening
      statement......................................................     5
    Panetta, Hon. Leon E., Secretary of Defense, U.S. Department of
      Defense, Washington, DC........................................    16
        Prepared statement...........................................    19
        Responses to questions for the record submitted by Senator
          John F. Kerry..............................................    70

                  Additional Material Submitted for the Record

    Letters submitted by Senator John F. Kerry received from:
        Lockheed Martin Corporation, Robert J. Stevens, Chairman and
          CEO........................................................    74
        AT&T, Bill Smith, president, AT&T Network Operations.........    76
        Director of National Intelligence, James R. Clapper, director    78
        United States Northern Command, Gen. Charles H. Jacoby, Jr.,
          U.S. Army..................................................    80
        Chamber of Commerce of the United States, R. Bruce Josten,
          executive vice president, Government Affairs...............    81
    Letters submitted by Secretary of State Hillary Rodham Clinton
      received from:
        Maritime Trades Department, Michael Sacco, president.........    83
        Seafarers International Union of North America, AFL-CIO,
          David Heindel, executive vice president/secretary-treasurer    84
        American Federation of Labor and Congress of Industrial
          Organizations, Richard L. Trumka, president................    85
        Defenders of Wildlife; Environmental Defense Fund;
          International Union for Conservation of Nature; Marine
          Conservation Institute; Natural Resource Defense Council;
          The Nature Conservancy; Oceana; Ocean Conservancy; and
          World Wildlife Fund US.....................................    87
        American Petroleum Institute, Jack N. Gerard, president and
          CEO........................................................    89

                         Thursday, June 14, 2012 (a.m.)
     THE LAW OF THE SEA CONVENTION (TREATY DOC. 103-39): PERSPECTIVES FROM
                               THE U.S. MILITARY

    Fraser, GEN William M., III, Commander, U.S. Transportation
      Command, Scott Air Force Base, IL..............................   106
        Prepared statement...........................................   107
        Responses to questions submitted for the record by Senator
          John F. Kerry..............................................   150
        Response of General Fraser, General Jacoby, and Admiral
          Locklear to question submitted for the record by Senator
          John F. Kerry..............................................   152
    Greenert, ADM Jonathan W., Chief of Naval Operations, U.S. Navy,
      Washington, DC.................................................    99
        Prepared statement...........................................   100
        Responses to questions submitted for the record by Senator
          John F. Kerry..............................................   148
        Response to question submitted for the record by Senator
          Robert P. Casey, Jr........................................   154
    Jacoby, GEN Charles H., Jr., Commander, U.S. Northern Command,
      Peterson Air Force Base, CO....................................   108
        Prepared statement...........................................   109
        Response to question submitted for the record by Senator John
          F. Kerry...................................................   152
    Kerry, Hon. John F., U.S. Senator from Massachusetts, opening
      statement......................................................    91
    Locklear, ADM Samuel J., Commander, U.S. Pacific Command, Camp
      H.M. Smith, HI.................................................   110
        Prepared statement...........................................   111
        Responses to questions submitted for the record by Senator
          John F. Kerry..............................................   152
        Response to question submitted for the record by Senator
          Robert P. Casey, Jr........................................   154
    Lugar, Hon. Richard G., U.S. Senator from Indiana, opening
      statement......................................................    94
    Papp, ADM Robert J., Jr., Commandant, U.S. Coast Guard, U.S.
      Department of Homeland Security, Washington, DC................   101
        Prepared statement...........................................   103
        Responses to questions submitted for the record by Senator
          John F. Kerry..............................................   149
    Winnefeld, ADM James A., Jr., Vice Chairman, Joint Chiefs of
      Staff, Washington, DC..........................................    96
        Prepared statement...........................................    98
        Responses to questions submitted for the record by Senator
          John F. Kerry..............................................   149
        Response to question submitted for the record by Senator
          Robert P. Casey, Jr........................................   153

                  Additional Material Submitted for the Record

    Letters submitted for the record by Senator John F. Kerry:
        James N. Mattis, General, U.S. Marines.......................   155
        Douglas M. Fraser, General, U.S. Air Force, Commander........   156
        J. Stavridis, Admiral, U.S. Navy.............................   157
        William H. McRaven, Admiral, U.S. Navy, Commander............   158
        C. Robert Kehler, General, USAF, Commander...................   159
    Letters submitted for the record by Senator James M. Inhofe:
        Coalition to Preserve American Sovereignty...................   160
        Reserve Officers Association.................................   164

                         Thursday, June 14, 2012 (p.m.)
               THE LAW OF THE SEA CONVENTION (TREATY DOC. 103-39)

    Bellinger, Hon. John B., III, former Legal Adviser, U.S.
      Department of State, Partner, Arnold & Porter, LLP, Washington,
      DC.............................................................   181
        Prepared statement...........................................   183
    Groves, Steven, Bernard and Barbara Lomas Fellow, The Heritage
      Foundation, Washington, DC.....................................   189
        Prepared statement...........................................   191
    Kerry, Hon. John F., U.S. Senator from Massachusetts, opening
      statement......................................................   169
    Lugar, Hon. Richard G., U.S. Senator from Indiana, opening
      statement......................................................   171
    Negroponte, Hon. John, former U.S. Deputy Secretary of State,
      Washington, DC.................................................   176
        Prepared statement...........................................   179
    Rumsfeld, Hon. Donald, former U.S. Secretary of Defense, the
      Rumsfeld Foundation, Washington, DC............................   173
        Prepared statement...........................................   175

                  Additional Material Submitted for the Record

    Letters submitted by Senator John F. Kerry received from:
        Lockheed Martin..............................................   232
        AT&T.........................................................   234
        Chamber of Commerce of the United States.....................   236
        American Petroleum Institute.................................   238
        ExxonMobile..................................................   240
        Chamber of Shipping..........................................   242
    Letter from Heritage submitted by Senator James E. Risch.........   244
    Paper by Bernie Oxman submitted by Hon. John B. Bellinger III....   247

                            Thursday, June 28, 2012
     THE LAW OF THE SEA CONVENTION (TREATY DOC. 103-39): PERSPECTIVES FROM
                             BUSINESS AND INDUSTRY

    Donohue, Thomas J., president and CEO, U.S. Chamber of Commerce,
      Washington, DC.................................................   263
        Prepared statement...........................................   266
        Responses to questions submitted for the record by Senator
          James E. Risch.............................................   306
    Gerard, Jack N., president and CEO, American Petroleum Institute,
      Washington, DC.................................................   270
        Prepared statement...........................................   272
    Kerry, Hon. John F., U.S. Senator from Massachusetts, opening
      statement......................................................   257
    Lugar, Richard G., U.S. Senator from Indiana, opening statement..   262
    McAdam, Lowell C., chairman and CEO, Verizon Communications,
      Inc., New York, NY.............................................   279
        Prepared statement...........................................   281
        Responses to questions submitted for the record by Senator
          Jim DeMint.................................................   309
    Timmons, Jay, president and CEO, National Association of
      Manufacturers, Washington, DC..................................   275
        Prepared statement...........................................   277

                  Additional Material Submitted for the Record

    Marvin E. Odum, president, Shell Oil Company, prepared statement.   259

     THE LAW OF THE SEA CONVENTION (TREATY DOC. 103-39): THE U.S. NATIONAL
              SECURITY AND STRATEGIC IMPERATIVES FOR RATIFICATION

                                  ----------

                            WEDNESDAY, MAY 23, 2012

                                           U.S. Senate,
                                Committee on Foreign Relations,
                                                        Washington, DC.
        The committee met, pursuant to notice, at 10:04 a.m., in
    room SH-216, Hart Senate Office Building, Hon. John F. Kerry
    (chairman of the committee) presiding.
        Present: Senators Kerry, Boxer, Menendez, Cardin, Webb,
    Shaheen, Coons, Durbin, Udall, Lugar, Corker, Risch, Inhofe,
    DeMint, Isakson, Barrasso, and Lee.

                OPENING STATEMENT OF HON. JOHN F. KERRY,
                    U.S. SENATOR FROM MASSACHUSETTS

        The Chairman. The hearing will come to order.
        Thank you all very much for being here with us today.
        Secretary Clinton, Secretary Panetta, and General Dempsey,
    welcome. We are particularly privileged to have you here today,
    and we thank you for joining us.
        It is really a rare occasion, I think, in any committee,
    but it is a rare occasion in this committee when we have
    simultaneously a panel of witnesses that brings together
    America's top diplomat, our country's top defense official, and
    our Nation's top military officer. Your presence here all
    together powerfully underscores the importance that you put on
    this issue.
        Our committee shares this sense of importance, which is
    why, I hope without respect to party or ideology, we will begin
    an open, honest, and comprehensive discussion about whether the
    United States of America should join the Law of the Sea
    Convention.
        I want to underscore the word ``comprehensive.'' I have
    heard from countless military and business leaders for some
    period of time who believe it is urgent that we ratify this
    treaty. And I have also spoken with Senators and some groups
    who oppose the treaty.
        I intend to make certain that the committee does its job
    properly and thoroughly. We will hear from all sides, and we
    will ask all the questions as we begin the process of
    educational hearings on this issue, the first since 2007.
        The Senate has seen a fair number of new members elected
    since then from both sides of the aisle, and our committee also
    has new members. So I think a thorough examination of the
    treaty is especially timely and relevant.
        Some of us have had the opportunity in the past to evaluate
    this treaty and even to vote on it in this committee. I am
    personally deeply supportive of it, and I believe it is now
    more urgent than ever that we ratify it because to remain
    outside of it is fundamentally directly counter to the best
    interests of our country.
        I am convinced beyond any doubt that joining the other 160
    nations that are party to the treaty will protect America's
    economic interests and our strategic security interests. And I
    believe the evaluation we make over these next weeks will
    document that beyond any doubt.
        I promise the committee and the Senate that,
    notwithstanding my support, we will conduct exhaustive and fair
    hearings to examine all of the arguments, pro and con.
        Now some may ask why now? Why consider a treaty that has
    been untouched by the Senate for the last 5 years and been
    hanging around for more than 25?
        Well, I think the real question is why we wouldn't have
    this discussion now when, today, we have the worst of all
    worlds? We have effectively lived by the terms of the treaty
    for 30 years, but as a nonparty, we are on the outside looking
    in. We live by the rules, but we don't shape the rules.
        It couldn't be more clear. Without joining the Law of the
    Sea, we are deprived of critical benefits and protections under
    the treaty. A few quick examples.
        Ratifying the treaty will lock in the favorable
    navigational rights that our military and shipping interests
    depend on every single day. It will strengthen our hand against
    China and others who stake out claims in the Pacific, the
    Arctic, or elsewhere. It will give our oil and gas companies
    the certainty that they need to make crucial investments to
    secure our energy future. It will put our telecommunications
    companies on an equal footing with their foreign competitors,
    and it will help secure access to rare earth minerals, which we
    need for weapon systems, computers, cell phones, and the like.
        It will also address issues of military effectiveness. As
    our national security focus shifts toward the Asia-Pacific
    region, it is more important than ever that we are part of this
    treaty. China and other countries are staking out illegal
    claims in the South China Sea and elsewhere. Becoming a party
    to the treaty would give an immediate boost to U.S. credibility
    as we push back against excessive maritime claims and illegal
    restrictions on our warships or commercial vessels.
        There is no doubt in my mind it would help resolve maritime
    issues to the benefit of the United States and our regional
    allies and partners, and we will hear from every single former
    Chief of Naval Operations and Commandant of the Coast Guard to
    that effect.
        The treaty is also about energy security. While we sit on
    the sidelines, Russia and other countries are carving up the
    Arctic and laying claims to the oil and gas riches in that
    region. We, on the other hand, can't even access the treaty
    body that provides international legitimacy for these types of
    Arctic claims.
        Instead of taking every possible step to ensure our stake
    in this resource-rich area, we are watching others assert their
    claims and doing nothing about it because we have no legal
    recourse.
        This treaty is also about rare earth minerals. China
    currently controls the production of rare earth minerals.
    Ninety percent of the world's supply, we are dependent on from
    China. There is no way that enhances American security. We need
    this for cell phones, computers, weapon systems. U.S. industry
    is poised to secure these minerals from the deep seabed, but
    they cannot do so through the United States as it is because we
    are not a party to the treaty.
        Don't take my word for it. Listen to our top companies.
    Just last week, Bob Stevens, the CEO of Lockheed Martin, wrote
    to me urging that the Senate pass the Law of the Sea Treaty. I
    want to just take a minute to read from his letter.
        He said, ``The multibillion dollar investments needed to
    establish an ocean-based resource development business must be
    predicated upon clear legal rights established and protected
    under the treaty-based framework of the Law of the Sea
    Convention, including the International Seabed Authority. Other
    international players recognize this same reality and are
    acting upon it. Countries, including China and Russia, are
    moving forward aggressively within the treaty framework, and
    several of these countries currently hold exploration licenses
    from the International Seabed Authority.
        ``Unfortunately, without ratifying the Convention, the
    United States cannot sponsor claims with or shape the deep
    seabed rules of the ISA. Yet that is the critical path forward
    if the United States intends to expand and ensure access for
    both U.S. commercial and Government interests to new sources of
    strategic mineral resources.''
        And without objection, I will place the full letter into
    the record.
        I also would just point out quickly that today there is a
    full-page ad in the Wall Street Journal, placed by the U.S.
    Chamber of Commerce. The U.S. Chamber of Commerce states three
    reasons, the first of which is pure economics--jobs. The United
    States economy depends on the passage of this.
        So whether it is rare earth minerals, the Arctic, or
    illegal maritime claims, China is moving the ball over the goal
    line while we are sitting on the sidelines. To oppose this
    treaty is actually to enable China and Russia to continue to
    utilize the treaty to their benefit and to our disadvantage.
    How does that make sense for American economic or strategic
    security?
        And the treaty is also about telecommunications. The treaty
    provides a legal framework to lay and protect submarine cables.
    I don't need to tell most people about how critical the
    Internet is to our economy and national security.
        We need to put ourselves on the best footing possible to
    protect those cables through which the Internet flows, and the
    treaty does that. And that is why AT&T, Verizon, Level 3, and
    others support this treaty.
        Again, don't take my word for it. In a recent letter, AT&T
    explained, ``Submarine cables provide the backbone of
    international transmission facilities for the global Internet,
    electronic commerce, and other international voice and data
    communication services that are major drivers of the 21st
    century global information-based economy. It has never been
    more important to our U.S. economic infrastructure and our
    participation in the global economy to strengthen the
    protection and reliability of international submarine cables.
    ``The Law of the Sea Convention, particularly as assisted by
    the enforcement mechanisms available to parties under article
    297, is a critical element of this protection.''
        I would like to enter this letter into the record as well.
        Now let me say a last thing about the process and timing
    for consideration of this treaty, and I think that it is
    important what I am going to say. Obviously, this is a
    Presidential election year, and it is one that has already
    proven difficult, if not, at times, toxic.
        I do not want this treaty to become a victim to that race
    or to the politics of the moment. A number of colleagues on and
    off the committee have been very candid and suggested that they
    would be more comfortable if we can avoid pushing this
    deliberative process into the middle of an election. I would
    like to see this treaty stay out of the hurly-burly
    Presidential politics.
        So heeding that advice and preferring that we encourage the
    kind of evaluative and educational process which does justice
    to this committee and justice to the United States Senate
    ratification process, I announce today that I do not currently
    intend to bring the treaty to a vote before the November
    elections. We will have extensive hearings. We will do our due
    diligence. We will prepare for a vote.
        But unless somehow the dynamic were to shift or change, we
    will wait until the passions of the election have subsided
    before we vote. My hope and expectation is that everyone will
    exhaust all avenues of inquiry and carefully consider the
    arguments on both sides.
        The contentious political season will now give us a chance
    to do what this committee has historically done best, which is
    not to politicize, but to spend serious, thoughtful time
    deliberating and debating all of the questions of substance.
        I am pleased to see that the Internet is already beginning
    to buzz with some discussion of this. But I will say up front
    there
    is a lot of misinformation, and there is a certain amount of
    mythology.
        So I look forward to the process of clearing up that
    misinformation and the mythology. As my friend Senator Moynihan
    used to say, ``Everyone is entitled to his own opinion, but not
    to his own facts.''
        There are facts with respect to this treaty, and I look
    forward to this committee establishing what they are.
    Ultimately, this issue needs to be decided by the members of
    the committee asking tough questions of the witnesses and not
    by the outside groups.
        So I am pleased that we are going to have an opportunity
    over the next several weeks, the next couple of months, to hear
    from multiple witnesses, and we begin today with our top
    national security leaders. They will be followed by military
    commanders, including those who are in charge of our
    operations; by top business leaders, the Chamber of Commerce,
    others; by treaty experts; and by opponents.
        Once again, I simply ask that everybody work hard to find
    out what is factual and what the realities are with respect to
    how this works.
        And so, with that, I would like to welcome today's
    distinguished witnesses. As Secretary of State, Hillary Clinton
    has worked tirelessly to advance our security and economic
    interests abroad and, I think everyone agrees, has done a
    tremendous job of doing so.
        Secretary of Defense Leon Panetta has served with great
    distinction across four decades in government. He has earned
    broad respect from Democrats and Republicans for his pragmatic
    and thoughtful approach to national security.
        And General Martin Dempsey, the Chairman of the Joint
    Chiefs of Staff, has done a tremendous job in his stewardship
    of our military during a time of extraordinary challenge and
    transition.
        Senator Lugar.

              OPENING STATEMENT OF HON. RICHARD G. LUGAR,
                       U.S. SENATOR FROM INDIANA

        Senator Lugar. Mr. Chairman, I join you in welcoming
    Secretary Clinton, Secretary Panetta, and General Dempsey. We
    are very pleased and honored that you have joined us today.
        Nine years ago, the Foreign Relations Committee began
    consideration of the Law of the Sea Convention after it was
    designated by President George W. Bush as one of five
    ``urgent'' treaties deserving of ratification. The Foreign
    Relations Committee took up all five of those treaties during
    the 108th Congress, and all but the Law of the Sea eventually
    gained the advice and consent of the Senate.
        Our committee held two public hearings and four briefings
    to examine the Law of the Sea Convention. Six Bush
    administration Cabinet departments participated in the
    interagency group that helped write the resolution of advice
    and consent accompanying the treaty.
        In the private sector, every major ocean industry,
    including shipping, fishing, oil and natural gas, drilling
    contractors, shipbuilders, and telecommunications companies
    that use underwater cables, supported U.S. accession to the Law
    of the Sea and lobbied in favor of it.
        During the more than 4 months of consideration of this
    treaty, the committee received only one negative communication
    related to the treaty, and that was from a private individual.
    None of the 19 members of the committee requested additional
    witnesses or hearings, and the resolution of ratification
    passed on February 25, 2004, without a dissenting vote.
        Despite the unanimous vote in the Foreign Relations
    Committee, Senator Bill Frist, then the majority leader,
    declined to bring the Convention up in the Senate. In 2007 the
    committee undertook an even lengthier process resulting in a
    17-4 vote to refer the Convention to the full Senate. By that
    time, Senator Harry Reid had become majority leader, and he,
    too, declined to bring Law of the Sea before the full Senate.
        In 2009 and 2010, though discussions occurred on Law of the
    Sea within the Obama administration, passing the Convention was
    not accorded a high priority. There was no concerted effort on
    the part of the administration to move Law of the Sea as there
    had been under the Bush administration.
        The Obama administration's 2009 treaty priority list
    indicated no special emphasis on passing Law of the Sea,
    listing it among a general group of 17 treaties on which action
    was supported. To my knowledge, the only official mention of
    Law of the Sea by the President during his first 2 years was
    one line in his Executive order covering ocean policy, which
    was not issued until July 19, 2010.
        Clearly, the enthusiasm for Law of the Sea has increased
    within the administration during this Congress. The presence of
    the distinguished panel before us today surely underscores
    this. The substantive case for Law of the Sea is even stronger
    today than it was in 2004 when I brought it up as chairman of
    this committee.
        Every year that goes by without the United States joining
    the Convention results in deepening our country's submission to
    ocean laws and practices determined by foreign governments
    without U.S. input. Our Navy and our ocean industries operate
    every day in a maritime environment that is increasingly
    dominated by foreign decisionmaking. In almost any other
    context, the Senate would be outraged at subjecting Americans
    to foreign controls without U.S. input.
        What many observers fail to understand about Law of the Sea
    is that the Convention already forms the basis of maritime law
    regardless of whether the United States is a party.
    International decisions related to resource exploitation,
    navigation rights, and other matters will be made in the
    context of the Convention whether we join or not. Because of
    this, there is virtual unanimity in favor of this treaty among
    people who actually deal with oceans on a daily basis and
    invest their money in job-creating activities on the oceans.
        By not joining the treaty, we are abetting Russian
    ambitions in the Arctic. We are making the job of our Navy more
    difficult, despite the longstanding and nearly unanimous pleas
    of Navy leaders that U.S. participation in Law of the Sea will
    help them maintain navigational rights more effectively and
    with less risk to the men and women they command.
        We are turning our backs on the requests of important
    American industries that use the oceans and must abide by rules
    established under this Convention. We are diminishing our
    chances for energy independence by making U.S. oil and gas
    exploration in international waters less likely.
        And we will not even be able to participate in the
    amendment process to this treaty, which is far more likely to
    impose new requirements on our Navy and ocean industries if the
    United States is absent. We will feel these costs most keenly
    in the Arctic, which is why successive Alaskan Governors and
    Senators of both parties have supported this treaty.
        In 2007, Mr. Paul Kelly, testifying on behalf of the oil
    and gas industry, underscored how much we have to lose in the
    Arctic by remaining outside the treaty. He noted that under the
    Law of the Sea, the United States would have the opportunity to
    expand its economic sovereignty over more than 291,000 square
    miles of Extended Continental Shelf. Much of this is in the
    Arctic, which holds one quarter of the world's undiscovered oil
    and natural gas, according to the U.S. Geological Survey.
        Mr. Kelly said, ``By some estimates, in the years ahead we
    could see a historic dividing up of many millions of square
    kilometers of offshore territory with management rights to all
    its living and nonliving marine resources . . . How much longer
    can the United States afford to be a laggard in joining this
    process?''
        Suggestions that somehow our maritime interests can be
    asserted solely through robust naval power are not relevant to
    the real world. The overwhelming majority of ocean disputes do
    not involve enemies or issues that warrant military action.
        As ADM Patrick Walsh testified at our first hearing in
    2007, ``Many of the partners that we have in the Global War on
    Terror who have put life, limb, and national treasure on the
    line are some of the same ones where we have disagreements on
    what they view as their economic zone or their environmental
    laws.
        ``It does not seem to me to be wise to now conduct Freedom
    of Navigation operations against those very partners that . . .
    are in our headquarters trying to pursue a more difficult
    challenge ahead of us . . . a Global War on Terror.''
        Even a mythical 1,000-ship U.S. Navy could not patrol every
    strait, protect every economic interest, or assert every
    navigational right. Attempting to do so would be prohibitively
    expensive and destructively confrontational.
        The decision before this committee is whether the Senate
    should continue to consign the United States to a position of
    self-imposed weakness in our ability to influence ocean
    affairs, despite the fact that no other nation has a greater
    interest in navigational freedoms, a larger Exclusive Economic
    Zone, or a more advanced technological capacity to exploit
    ocean resources.
        The Senate should enthusiastically affirm the leadership of
    the United States in this vital area of international relations
    by giving advice and consent to the Law of the Sea Convention.
        I thank you, Mr. Chairman.
        The Chairman. Thank you very much, Senator Lugar. I
    appreciate that very much.
        Madam Secretary, if you would lead off? Secretary Panetta
    second, and General Dempsey, if you would bat cleanup? Thank
    you.

     STATEMENT OF HON. HILLARY RODHAM CLINTON, SECRETARY OF STATE,
                U.S. DEPARTMENT OF STATE, WASHINGTON, DC

        Secretary Clinton. Thank you very much, Mr. Chairman,
    Senator Lugar.
        After both of your opening comments, I think you have made
    the case, both eloquently and persuasively, for anyone who is
    willing to look at the facts. I am well aware that this treaty
    does have determined opposition: Limited, but nevertheless
    quite vociferous. And it is unfortunate because it is
    opposition based in ideology and mythology, not in facts,
    evidence, or the consequences of our continuing failure to
    accede to the treaty.
        So I think you will hear from both Secretary Panetta and
    General Dempsey, as well as myself, further statements and
    information that really reinforces the very strong points that
    both of you have made.
        We believe that it is imperative to act now. No country is
    better served by this Convention than the United States. As the
    world's foremost maritime power, we benefit from the
    Convention's favorable freedom of navigation provisions.
        As the country with the world's second-longest coastline,
    we benefit from its provisions on offshore natural resources.
    As a country with an exceptionally large area of sea floor, we
    benefit from the ability to extend our Continental Shelf and
    the oil and gas rights on that shelf.
        As a global trading power, we benefit from the mobility
    that the Convention accords to all commercial ships. And as the
    only country under this treaty that was given a permanent seat
    on the group that will make decisions about deep seabed mining,
    we will be in a unique position to promote our interests.
        Now the many benefits of this Convention have attracted a
    wide-ranging coalition of supporters. Obviously, as we heard
    from both Senator Kerry and Senator Lugar, Republican and
    Democratic Presidents have supported U.S. accession. Military
    leaders see the benefits for our national security. American
    businesses, including strongly the U.S. Chamber of Commerce,
    see the economic benefits.
        It has the support of every affected industry, including
    shipping, fisheries, telecommunications, energy, and
    environmental groups as well. We have a coalition of
    environmental, conservation, business, industry, and security
    groups all in support of this Convention.
        And I would ask that my longer written statement, along
    with the letters that I have received in support of the treaty
    be entered into the record.
        The Chairman. Without objection.
        Secretary Clinton. Now, one could argue that 20 years ago,
    10 years ago, maybe even 5 years ago, joining the Convention
    was important, but not urgent. That is no longer the case
    today. Four new developments make our participation a matter of
    utmost security and economic urgency.
        First, for years, American oil and gas companies were not
    technologically ready to take advantage of the Convention's
    provisions regarding the Extended U.S. Continental Shelf. Now
    they are.
        The Convention allows countries to claim sovereignty over
    their Continental Shelf far out into the ocean beyond 200
    nautical miles from shore. The relevant area for the United
    States is probably more than 1.5 times the size of Texas. In
    fact, we believe it could be considerably larger.
        U.S. oil and gas companies are now ready, willing, and able
    to explore this area. But they have made it clear to us that
    they need the maximum level of international legal certainty
    before they will or could make the substantial investments--
    and, we believe, create many jobs in doing so--needed to
    extract these far-offshore resources.
        If we were a party to the Convention, we would gain
    international recognition of our sovereign rights, including by
    using the Convention's procedures, and therefore be able to
    give our oil and gas companies this legal certainty. Staying
    outside the Convention, we simply cannot.
        The second development concerns deep seabed mining, which
    takes place in that part of the ocean floor that is beyond any
    country's jurisdiction. Now for years, technological challenges
    meant that deep seabed mining was only theoretical. Today's
    advances make it very real.
        But it is also very expensive. And before any company will
    explore a mine site, it will naturally insist on having a
    secure title to the site and the minerals that it will recover.
    The Convention offers the only effective mechanism for gaining
    this title, but only a party to the Convention can use this
    mechanism on behalf of its companies.
        So as long as the United States is outside the Convention,
    our companies are left with two bad choices--either take their
    deep sea mining business to another country or give up on the
    idea. Meanwhile, as you heard from Senator Kerry and Senator
    Lugar, China, Russia, and many other countries are already
    securing their licenses under the Convention to begin mining
    for valuable metals and rare earth elements.
        As you know, rare earth elements are essential for
    manufacturing high-tech products like cell phones and flat-
    screen televisions. They are currently in tight supply and
    produced almost exclusively by China.
        So while we are challenging China's export restrictions on
    these critical materials, we also need American companies to
    develop other sources for these materials. But as it stands
    today, they will only do that if they have the secure rights
    that can only be provided under this Convention. If we expect
    to be able to manage our own energy future and our need for
    rare earth minerals, we must be a party to the Law of the Sea
    Convention.
        The third development that is now urgent is the emerging
    opportunities in the Arctic. As the area gets warmer, it is
    opening up to new activities, such as fishing, oil and gas
    exploration, shipping, and tourism. This Convention provides
    the international framework to deal with these new
    opportunities. We are the only Arctic nation outside the
    Convention.
        Russia and the other Arctic States are advancing their
    Continental Shelf claims in the Arctic while we are on the
    outside looking in. As a party to the Convention, we would have
    a much stronger basis to assert our interests throughout the
    entire Arctic region.
        The fourth development is that the Convention's bodies are
    now up and running. The body that makes recommendations
    regarding countries' Continental Shelves beyond 200 nautical
    miles is actively considering submissions from over 40
    countries without the participation of a U.S. commissioner.
        The body addressing deep seabed mining is now drawing up
    the rules to govern the extraction of minerals of great
    interest to the United States and American industry. It simply
    should not be acceptable to us that the United States will be
    absent from either of those discussions.
        Our negotiators obtained a permanent U.S. seat on the key
    decisionmaking body for deep seabed mining. I know of no other
    international body that accords one country and one country
    alone, us, a permanent seat on its decisionmaking body. But
    until we join, that reserved seat remains empty.
        So those are the stakes for our economy, and you will hear
    from Secretary Panetta and General Dempsey that our security
    interests are intrinsically linked to freedom of navigation. We
    have much more to gain from legal certainty and public order in
    the world's oceans than any other country.
        U.S. Armed Forces rely on the navigational rights and
    freedoms reflected in the Convention for worldwide access to
    get to combat areas, sustain our forces during conflict, and
    return home safely, all without permission from other
    countries.
        Now as a nonparty to the Convention, we have to rely on
    what is called customary international law as a legal basis for
    invoking and enforcing these norms. But in no other situation
    in which our security interests are so much at stake do we
    consider customary international law good enough to protect
    rights that are vital to the operation of the United States
    military.
        So far, we have been fortunate. But our navigational rights
    and our ability to challenge other countries' behavior should
    stand on the firmest and most persuasive legal footing
    available, including in critical areas such as the South China
    Sea.
        I am sure you have followed the claims countries are making
    in the South China Sea. Although we do not have territory
    there, we have vital interests--particularly freedom of
    navigation. And I can report from the diplomatic trenches that,
    as a party to the Convention, we would have greater credibility
    in invoking the Convention's rules and a greater ability to
    enforce them.
        Now I know a number of you have heard arguments opposing
    the Convention, and let me just address those head on. Critics
    claim we would surrender U.S. sovereignty under this treaty,
    but in fact, it is exactly the opposite. We would secure
    sovereign rights over vast new areas and resources, including
    our 200-mile Exclusive Economic Zone and vast Continental Shelf
    areas extending off our coasts and at least 600 miles off
    Alaska.
        I know some are concerned that the treaty's provisions for
    binding dispute settlement would impinge on our sovereignty. We
    are no stranger to similar provisions, including in the World
    Trade Organization, which have allowed us to bring trade cases,
    many of them currently pending, against abusers around the
    world. As with the WTO, the United States has much more to gain
    than lose by being able to hold others accountable under clear
    and transparent rules.
        Some critics invoke the concern we would be submitting to
    mandatory technology transfer and cite this and President
    Reagan's other initial objections to the treaty. You know,
    those concerns might have been relevant decades ago, but today,
    they are not.
        In 1994, negotiators made modifications specifically to
    address each of President Reagan's objections, including
    mandatory technology transfer, which is why President Reagan's
    own Secretary of State, George Shultz, has since written that
    we should join the Convention in light of those modifications
    having been made.
        Now some continue to assert we do not need to join the
    Convention for U.S. companies to drill beyond 200 miles or to
    engage in deep seabed mining. That is not what the companies
    say. So I find it quite ironic--in fact, somewhat bewildering--
    that a group, an organization, an individual would make a claim
    that is refuted by every major company in every major sector of
    the economy that stands to benefit from this treaty.
        Under current circumstances, the companies are very clear.
    They will not take on the costs and risk these activities under
    uncertain legal frameworks. They need the indisputable,
    internationally recognized rights available under the treaty.
    So, please, listen to these companies, not to those who have
    other reasons or claims that are not based on the facts.
        These companies are refuting the critics who say, ``Go
    ahead. You will be fine.'' But they are not the ones, the
    critics, being asked to invest tens of millions of dollars
    without the legal certainty that comes with joining the
    Convention.
        Now some mischaracterize the payments for benefit of
    resource rights beyond 200 miles as ``a U.N. tax''--and this is
    my personal favorite of the arguments against the treaty--that
    will be used to support state sponsors of terrorism. Honestly,
    I don't know where these people make these things up. But
    anyway, the Convention does not contain or authorize any such
    taxes.
        Any royalty fee does not go to the United Nations. It goes
    into a fund for distribution to parties of the Convention, and
    we, were we actually to join the Convention, would have a
    permanent veto power over how the funds are distributed. And we
    could prevent them from going anywhere we did not want them to
    go.
        I just want to underscore this is simple arithmetic. If we
    don't join the Convention, our companies will miss out on
    opportunities to explore vast areas of Continental Shelf and
    deep seabed. If we do join the Convention, we unlock economic
    opportunities worth potentially hundreds of billions of dollars
    for a small-percentage royalty a few years down the line.
        I have also heard we should not join this Convention
    because ``it is a U.N. treaty,'' and of course, that means the
    black helicopters are on their way. Well, the fact that a
    treaty was negotiated under the auspices of the United Nations,
    which is, after all, a convenient gathering place for the
    countries of the world, has not stopped us from joining
    agreements that are in our interests.
        We are party to dozens of agreements negotiated under the
    U.N. auspices on everything from counterterrorism and law
    enforcement to health, commerce, and aviation. And we often pay
    fees under those treaties, recognizing the benefits we get
    dwarf those minimal fees.
        And on the national security front, some argue we would be
    handing power over the U.S. Navy to an international body. This
    is patently untrue and, obviously, absolutely contrary to any
    history or law governing our Navy. None of us would be sitting
    here if there were even a chance that you could make the most
    absurd argument that could possibly lead to that conclusion.
        Disputes concerning U.S. military activities are clearly
    excluded from dispute settlement under the Convention. And
    neither is it true that the Convention would prohibit
    intelligence activities. The intelligence community has once
    again in 2012, as it did in 2007, as it did in 2003, confirmed
    that is absolutely not true.
        So whatever arguments may have existed for delaying U.S.
    accession no longer exist and truly cannot be even taken with a
    straight face. The benefits of joining have always been
    significant. But today, the costs of not joining are
    increasing.
        So much is at stake, and I, therefore, urge the committee
    to listen to the experts, listen to our businesses, listen to
    the Chamber of Commerce, listen to our military, and please
    give advice and consent to this treaty before the end of this
    year.
        Thank you, Mr. Chairman.
        [The prepared statement of Secretary Clinton follows:]

        Prepared Statement of Secretary of State Hillary Rodham Clinton

        Mr. Chairman and members of the committee, it is a great pleasure
    for me to testify today on the Law of the Sea Convention, which I
    regard as critical to the leadership and security of the United States.
    Joining the Convention and the 1994 Agreement that modifies its deep
    seabed mining provisions is a priority for the Department of State and
    for me personally.
        U.S. interests are deeply tied to the oceans. No country is in a
    position to gain more from the Law of the Sea Convention than the
    United States:

       As the world's foremost maritime power, the United States
            benefits from the Convention's favorable freedom of navigation
            provisions. These are the provisions that enable our vessels to
            transit the maritime domain--including the high seas,
            international straits, and the exclusive economic zones and
            territorial seas of other countries.
       Our economy depends on international trade, and the United
            States benefits from the global mobility that those
            navigational provisions accord to commercial ships of all
            nations.
       We have the world's second-longest coastline, so the United
            States benefits greatly from the Convention's favorable
            provisions on offshore natural resources. The treaty accords
            sovereign rights over natural resources within a 200-mile
            Exclusive Economic Zone. The United States is further
            advantaged by provisions in the treaty that allow the
            Continental Shelf--and oil and gas rights--to extend beyond 200
            miles in certain areas. Off the north shore of Alaska, our
            Continental Shelf could extend 600 miles into the Arctic.
       American companies are equipped and ready to engage in deep
            seabed mining. But the United States can only take advantage of
            the Convention's provisions that accord security of tenure to
            mine sites in areas beyond national jurisdiction as a party to
            this treaty. The Convention, which was modified to meet U.S.
            demands, accords the United States a guaranteed seat on the key
            decisionmaking body.

        It is no wonder then that there is such a strong and wide-ranging
    coalition supporting U.S. accession. The U.S. military has consistently
    and unequivocally supported the Convention for its national security
    benefits. Affected U.S. industries, including shipping, fisheries,
    telecommunications, and energy, have consistently supported U.S.
    accession for its economic benefits. Nongovernmental organizations
    concerned with the protection of natural resources have consistently
    supported U.S. accession. And both Republican and Democratic Presidents
    have supported U.S. accession. I have never seen another treaty with
    such intensive and broad support.
        Furthermore, no treaty has been as thoroughly scrutinized by the
    Senate as the Law of the Sea Convention. This committee has twice
    examined it and sent it to the full Senate. Four other committees held
    hearings in 2004, including the Senate Armed Services Committee, of
    which I was a member. In 2007, the Foreign Relations Committee held two
    additional hearings and another favorable vote. Every conceivable
    question has been asked and answered.
        As President George W. Bush said in 2007, joining the Convention
    will serve the national security interests of the United States, secure
    U.S. sovereign rights over extensive marine areas, promote U.S.
    interests in the health of the oceans, and give the United States a
    seat at the table where rights essential to our interests are debated
    and interpreted. We need to get off the sidelines and start taking
    advantage of the great deal that the Convention offers the United
    States and our business community.

                                    HISTORY

        By looking at the history that led to the adoption of the
    Convention and the 1994 Agreement on deep seabed mining, we can see how
    beneficial the Convention is to American interests. The United States
    became party to a group of earlier law of the sea treaties in 1958. We
    are still bound by them today. A number of the provisions in the 1982
    Convention are the same as the provisions in these 1958 treaties. But
    the 1958 treaties left some important issues unresolved, and some of
    their provisions are outdated and have been supplanted by more
    favorable provisions for the United States in the 1982 Convention.
        For example, the 1982 Convention established for the first time a
    maximum breadth of the territorial sea, an issue of critical importance
    to U.S. freedom of navigation. The 1982 Convention provides for
    exclusive jurisdiction of coastal States over economic activities out
    to 200 miles from shore. It also sets forth a procedure for providing
    legal certainty regarding the Continental Shelf. Both of these
    additions are critically important to U.S. economic interests in the
    oceans.
        These and other benefits of the 1982 Convention came about because
    the United States played a prominent role in negotiating this treaty,
    beginning in the Nixon administration. The Law of the Sea Convention,
    as adopted in 1982, represented a victory for U.S. navigational,
    economic, and other interests. Only one important issue area was
    flawed--deep seabed mining--and that one area is why President Reagan
    decided not to sign the 1982 Convention. I will discuss these flaws in
    greater depth below.
        All the other aspects of the treaty were so favorable that
    President Reagan announced in 1983 that the United States accepted, and
    would act in accordance with, the Convention's balance of interests
    relating to traditional uses of the oceans--everything but deep seabed
    mining. He instructed the entire United States Government to abide by
    the commitments, to exercise the rights set forth in the Convention and
    to encourage other countries to do likewise.
        President Reagan believed that the deep seabed mining chapter of
    the 1982 Convention would deter future development of deep seabed
    mining; establish a decisionmaking process that would not reflect or
    protect American interests; allow amendments to enter into force
    without U.S. approval; require mandatory transfers of technology; allow
    national liberation movements to share in the benefits of deep seabed
    mining and not assure access of future qualified miners.
        President Reagan's concerns were well placed and shared by many of
    our allies. Like the United States, many industrialized countries
    declined to become party to the Convention as originally adopted.
    President Reagan did not oppose all international regulation of mining
    in the portion of the seabed beyond national jurisdiction. Indeed, U.S.
    policy extending back to President Nixon has taken the view that such
    mining should be subject to international administration, primarily to
    enable companies to obtain secure title to mine sites in the deep
    ocean. U.S. law, specifically the Deep Seabed Hard Mineral Resources
    Act of 1980 (Public Law 96-283), also reflects that approach.
        With the end of the cold war, international support grew for a more
    efficient and market-oriented system. This spurred an initiative by the
    administration of President George H.W. Bush in the early 1990s to
    undertake a new round of negotiations with the aim of fundamentally
    overhauling the deep seabed mining provisions of the 1982 Convention.
        President Bush's efforts succeeded. The Part XI Agreement, adopted
    in 1994, modifies the Convention so as to satisfy each of President
    Reagan's objections. As a result, the present, modified Convention:

       Ensures that market-oriented approaches are taken to the
            management of deep seabed minerals (e.g., by eliminating
            production controls);
       Scales back the structure of the organization that
            administers deep seabed mining;
       Provides the United States, once it becomes a party, with a
            guaranteed, permanent seat on the Seabed Council--which would
            ensure that U.S. approval would be necessary for any decision
            that would result in a substantive obligation on the United
            States, or that would have financial or budgetary implications;
       Ensures that the United States, once it becomes a party,
            could veto and block the adoption of any amendment to the deep
            seabed mining provisions that it opposes;
       Deletes the objectionable provisions on mandatory technology
            transfer;
       Ensures that the United States, once it becomes a party,
            would be able to veto any decision relating to the sharing of
            benefits; and
       Provides assured access for any future qualified U.S. mining
            companies.

        The United States signed the Agreement on the deep seabed mining
    provisions in 1994. As George P. Shultz, Secretary of State to
    President Reagan, said in a letter to Senator Lugar in 2007: ``The
    treaty has been changed in such a way with respect to the deep sea-beds
    that it is now acceptable, in my judgment. Under these circumstances,
    and given the many desirable aspects of the treaty on other grounds, I
    believe it is time to proceed with ratification.'' Indeed, every former
    Secretary of State since Secretary Shultz, Democrat and Republican
    alike, has called for the United States to secure and advance our
    national interests by joining the Convention.
        The Convention, as modified by the 1994 Agreement, came into force
    in 1994, and since has been joined by the industrialized countries that
    shared U.S. objections to the initial deep seabed mining chapter. There
    are now 162 parties to the Convention, including almost all of our
    traditional allies.
        The administration of George W. Bush strongly supported the
    modified Convention in testimony before this committee in 2003 and
    2007. Bush administration officials worked closely with the committee
    to develop a proposed Resolution of Advice and Consent, which this
    administration continues to support.

                                    BENEFITS

        What are the benefits to joining the Law of the Sea Convention? To
    put it plainly, joining this Convention will bolster U.S. national
    security and provide economic benefits, including the creation of
    American jobs. U.S. companies, business groups, labor unions, the U.S.
    Navy, the U.S. Coast Guard, the Joint Chiefs of Staff, and a host of
    others support joining the Convention now.
        I'd like to take a few minutes to talk about the national security
    benefits. As the world's foremost maritime power, our security
    interests are intrinsically linked to freedom of navigation. We have
    more to gain from legal certainty and public order in the world's
    oceans than any other country. Our forces are deployed throughout the
    world and need guaranteed mobility on, over, and under the world's
    oceans. U.S. Armed Forces rely on the navigational rights and freedoms
    reflected in the Convention for worldwide access to get to combat
    areas, sustain our forces during conflict, and return home safely,
    without permission from other countries.
        In this regard, the Convention secures the rights we need for U.S.
    military ships, and the commercial ships that support our forces, to
    meet national security requirements in four major ways:

       By limiting coastal States' territorial seas to 12 nautical
            miles;
       By affording our military and commercial vessels and
            aircraft necessary passage rights, not requiring permission,
            through other countries' territorial seas and archipelagoes, as
            well as through straits used for international navigation (such
            as the critical right of submarines to transit submerged
            through such straits);
       By setting forth maximum navigational rights and freedoms
            for our vessels and aircraft in the Exclusive Economic Zones of
            other countries and in the high seas; and
       By affirming the authority of U.S. warships and government
            ships to board stateless vessels on the high seas, which is
            vital to our maritime security, counternarcotic, and
            counterproliferation efforts and operations, including the
            Proliferation Security Initiative.

        As a nonparty to the Convention, the United States must rely on
    customary international law as a legal basis for invoking and enforcing
    these norms. But it is risky to assume that customary law will preserve
    these norms forever. There are increasing pressures from some coastal
    States to augment their control over the activities of other nations'
    vessels off their coasts in a manner that would alter the balance of
    interests struck in the Convention.
        Joining the Convention would secure our navigational rights and our
    ability to challenge other countries' behavior on the firmest and most
    persuasive legal footing, including in critical areas such as the South
    China Sea and the Arctic. Only as a party to the Convention can the
    United States best protect the navigational freedoms enshrined in the
    Convention and exert the level of influence that reflects our status as
    the world's foremost maritime power.
        The highest levels of our Nation's military have expressed their
    solid and unwavering support for joining this Convention over and over
    again.
        Now I'd like to focus on economic benefits. Joining the Convention
    would advance U.S. economic and resource interests in ocean waters and
    seabed. For example,

       The Convention is the foundation on which rules for
            sustainable international fisheries are based. For that reason,
            the U.S. fishing industry supports U.S. accession.
       The Convention secures the rights for commercial ships to
            export U.S. commodities and protects the tanker routes through
            which half of the world's oil moves. For that reason, the U.S.
            shipping industry supports accession.
       The Convention's provisions protect the laying and
            maintaining of fiber optic cables through which the modern
            world communicates, for both commercial and military purposes.
            For that reason, the U.S. telecommunications industry supports
            accession.

        There are two additional areas of economic benefits that deserve
    special mention: the provisions related to mineral resources in the
    seabed of our Continental Shelf and resources in the seabed beyond any
    country's Continental Shelf.
        The Convention provides for an Extended Continental Shelf, beyond
    200 nautical miles from shore, if certain criteria are met. A coastal
    State can exercise sovereign rights over its Extended Continental
    Shelf, including exploration, exploitation, conservation, and
    management of nonliving resources, such as oil, gas, and other energy
    and mineral resources, and of living, ``sedentary'' species, such as
    clams, crabs, and sponges. The size of the U.S. Continental Shelf--just
    the portion beyond 200 miles from shore--is probably more than one and
    one-half times the size of Texas, and could be considerably larger than
    that. For this reason, the U.S. oil and gas industry, including the
    American Petroleum Institute, are in favor of joining the Convention.
        Much is at stake in the vast areas of Continental Shelf beyond 200
    nautical miles from shore, and the Convention's procedures enable
    Parties--and only Parties--to fully secure their sovereign rights
    therein.
        Unlike the 1958 law of the sea treaty on the Continental Shelf,
    this Convention contains a detailed definition of the Continental Shelf
    and well-defined procedures for a country to establish the outer limits
    of its Continental Shelf. Specifically, Parties to the Convention enjoy
    access to the expert body whose technical recommendations provide the
    needed international recognition and legal certainty regarding
    Continental Shelf areas beyond 200 nautical miles.
        The ability to gain international recognition of a coastal State's
    sovereignty over the Continental Shelf resources beyond 200 miles from
    shore was a major achievement in the 1982 Convention for the United
    States and for other coastal States with an Extended Continental Shelf.
    International recognition is necessary for the legal certainty that
    will allow oil and gas companies to attract the substantial investments
    needed--and create the many jobs--to extract these far-offshore
    resources.
        More than 40 countries have made submissions regarding their
    Continental Shelves beyond 200 nautical miles to the expert Commission.
    Sixteen States, including Russia, Brazil, Australia, France, Indonesia,
    and Mexico, have received recommendations from the Commission and are
    proceeding to establish the outer limits of their Continental Shelves.
    As a nonparty, the United States is sitting on the sidelines while this
    happens.
        The second economic benefit I would like to highlight relates to
    mining in the deep seabed areas beyond any country's jurisdiction. Only
    as a party to the Convention could the United States sponsor U.S.
    companies like Lockheed Martin to mine the deep seabed for valuable
    metals and rare earth elements.
        These rare earth elements--essential for cell phones, flat-screen
    televisions, electric car batteries, and other high-tech products--are
    currently in tight supply and produced almost exclusively by China.
    While we challenge China's export restrictions, we must also make it
    possible for U.S. companies to develop other sources of these critical
    materials. They can only do this if they can obtain secure rights to
    deep seabed mine sites and indisputable title to minerals recovered.
    While we sit on the sidelines, companies in China, India, Russia, and
    elsewhere are securing their rights, moving ahead with deep seabed
    resource exploration, and taking the lead in this emerging market.
        I want to make two additional points about deep seabed mining.
    First, we cannot rely on customary international law here. For
    companies to obtain security of tenure to deep seabed mining sites,
    they must be sponsored by a party to the Convention. And without such
    security of tenure, industry has told us that it will not risk the
    significant investment needed to extract these valuable resources. I
    want to be clear that there is no means for the United States to
    support its domestic deep seabed mining industry as a nonparty.
        Second, once the United States becomes a party, we would have an
    unprecedented ability to influence deep seabed mining activities
    worldwide. In revising the Convention's deep seabed provisions in the
    1994 Agreement, our negotiators obtained a permanent U.S. seat on the
    seabed Council. This is the key decisionmaking body established by the
    Convention on deep seabed matters. I know of no other international
    body that accords one country, and one country only--the United
    States--a permanent seat on its decisionmaking body. In this way, the
    Convention's institutions provide the United States with a level of
    influence commensurate with our interests and global standing.
        Until we join, however, our reserved seat remains empty. As a
    result, we have limited ability to shape the rules and no ability to
    help U.S. companies pursue their job-creating initiatives to exploit
    deep seabed resources.
    Other Benefits
        We should also join the Convention now to steer its implementation.
    The Convention's institutions are up and running, and we--the country
    with the most to gain or lose on law of the sea issues--are sitting on
    the sidelines. As I mentioned, the Commission on the Limits of the
    Continental Shelf has received submissions from over 40 countries
    without the participation of a U.S. commissioner. Recommendations made
    in that body could create precedents, positive and negative, on the
    future outer limit of the U.S. shelf. We need to be on the inside to
    protect and advance our interests. Moreover, in fora outside the
    Convention, the provisions of the Convention are also being actively
    applied. Only as a party can we exert the level of influence that
    reflects our status as the world's foremost maritime power.
        Are there any serious drawbacks to joining this Convention?
    Opponents of the treaty believe there are, but they are mistaken.

       Some critics assert that joining the Convention would
            impinge upon U.S. sovereignty. On the contrary, joining the
            Convention will increase and strengthen our sovereignty. The
            Convention secures the United States an expansive Exclusive
            Economic Zone and Extended Continental Shelf, with vast
            resources in each. U.S. accession would lock-in our rights to
            all of this maritime space.
       Some say that the Convention's dispute resolution provisions
            are not in the U.S. interest. On the contrary, these
            procedures--which the United States sought--help protect rather
            than harm U.S. interests. As in many other treaties, including
            free trade agreements, such procedures provide the United
            States with
            an important tool to help ensure that other countries live up
            to their obligations. And U.S. military activities will never
            be subject to any form of dispute resolution.
       Other critics have suggested that the Convention gives the
            United Nations the authority to levy some kind of global tax.
            This is also untrue. There are no taxes on any individuals,
            corporations, or anyone else under the Convention.

                                   CONCLUSION

        As Senator Lugar has said, to oppose this Convention on economic
    grounds requires one to believe that U.S. industries as diverse as oil
    and gas, fishing, shipping, seabed mining, and telecommunications do
    not understand how best to grow their businesses, create jobs, and
    protect their bottom lines.
        And to oppose this Convention on national security grounds requires
    one to believe that the Departments of Defense and Homeland Security do
    not understand how best to protect U.S. national security.
        The United States is long past due in joining this Convention. Our
    global leadership on maritime issues is at stake. I therefore urge the
    committee to give its swift approval for U.S. accession to the Law of
    the Sea Convention and ratification of the 1994 Agreement, and urge the
    Senate to give its advice and consent before the end of this year.

        The Chairman. Well, Madam Secretary, thank you for very
    important testimony. And I particularly appreciate the detail
    that you went into. I think it was very helpful.
        Mr. Secretary.

     STATEMENT OF HON. LEON E. PANETTA, SECRETARY OF DEFENSE, U.S.
                 DEPARTMENT OF DEFENSE, WASHINGTON, DC

        Secretary Panetta. Chairman Kerry, Senator Lugar,
    distinguished members, I want to thank you for the opportunity
    to appear here as the first Secretary of Defense to testify in
    support of the United States accession to the Law of the Sea
    Convention.
        I have been involved with ocean issues most of my career,
    and I strongly believe that accession to this treaty is
    absolutely essential not only to our economic interests, our
    diplomatic interests, but I am here to say that it is extremely
    important to our national security interests as well.
        I join a lot of the military voices of the past and present
    that have spoken so strongly in support of this treaty. The
    fundamental point is clear. If the United States is to assert
    its historical role as a global maritime power--and we have
    without question the strongest navy in the world. But if we are
    going to continue to assert our role as a maritime power, it is
    essential that we accede to this important Convention.
        Being here with Secretary Clinton, Chairman Dempsey, their
    presence alone is a testament to the conviction of our
    diplomatic and military leadership that this Convention is
    absolutely essential to strengthening our position in the
    world. Let me outline some of the critical arguments with
    regards to U.S. national security and why it is time to move
    forward with this issue.
        First of all, as has been pointed out, as the world's
    strongest preeminent maritime power, we are a country that has
    one of the longest coastlines and one of the largest Extended
    Continental Shelves in the world. We have more to gain by
    approving this Convention than almost any other country.
        There are 161 countries that have approved. We are the only
    industrial power that has failed to do that, and as a result,
    we don't have a seat at the table.
        If we are sitting at this international table of nations,
    we can defend our interests. We can defend our claims. We can
    lead the discussion in trying to influence treaty bodies that
    develop and interpret the Law of the Sea. We are not there. And
    as a result, they are the ones that are developing the
    interpretation of this very important treaty.
        In that way, we would ensure that our rights are not
    whittled away by the excessive claims and erroneous
    interpretations of others who would give us the power and
    authority to support and promote the peaceful resolution of
    disputes within a rules-based order.
        Second, we would secure our navigational freedoms and
    global access for military and commercial ships, aircraft, and
    undersea fiber optic cables. Treaty law remains the firmest
    legal foundation upon which to base our global presence, as the
    Secretary has pointed out. And it is true on, above, and below
    the seas. By joining the Convention, we would help lock in
    rules that are favorable to our freedom of navigation in our
    global mobility.
        Third, accession would help secure a truly massive increase
    in our country's resource and economic jurisdiction. Not only
    to 200 nautical miles off our coast, but to a broad, Extended
    Continental Shelf beyond that zone, adding almost another third
    to our Nation in terms of jurisdiction.
        Fourth, accession would ensure our ability to reap the
    benefits, again as the Secretary has pointed out, of the
    opening of the Arctic. Joining the Convention would maximize
    international recognition and acceptance of our substantial
    Extended Continental Shelf claims in the Arctic. And, as again
    pointed out, we are the only Arctic nation that is not a party
    to this Convention.
        More importantly, from our navigation and military point of
    view, accession would secure our freedom of navigation, our
    freedom of overflight rights throughout the Arctic. And it
    would strengthen the freedom of navigation arguments with
    respect to the northern sea route in the Northwest Passage.
        And finally, let me say that we at the Defense Department
    have gone through an effort to develop a defense strategy for
    the future. A defense strategy not only for now, but into the
    future as well. And it emphasizes the strategically vital arc
    that extends from the Western Pacific and Eastern Asia into the
    Indian Ocean region and South Asia on to the Middle East.
        By not acceding, we undercut our credibility in a number of
    focused multilateral venues that involve that arc I just
    defined. We are pushing, for example, for a rules-based order
    in the region and the peaceful resolution of maritime and
    territorial disputes in the South China Sea, in the Strait of
    Hormuz and elsewhere. How can we argue--how can we argue that
    other nations must abide by international rules when we haven't
    joined the very treaty that codifies those rules?
        We would also help strengthen worldwide transit passage
    rights under international law, and we would further isolate
    Iran as one of the few remaining nonparties to the Convention.
    These are the key reasons from a national security point of
    view for accession, reasons that are critical to our
    sovereignty, critical to our national security.
        Again, as the Secretary pointed out, I understand the
    arguments that have been made on the other side. But at the
    same time, I don't understand the logic of those arguments. The
    myth that somehow this would surrender U.S. sovereignty,
    nothing could be further from the truth.
        Not since we acquired the lands of the American West and
    Alaska have we had such an opportunity to expand U.S.
    sovereignty. The estimated Extended Continental Shelf is said
    to encompass at least 385,000 square miles, 385,000 square
    miles of seabed. As the Secretary pointed out, it is 1.5 times
    the size of Texas that would be added to our sovereignty, that
    would be added to our jurisdiction.
        Some claim that joining the Convention would restrict our
    military operations and activities or limit our ability to
    collect intelligence in territorial seas. Nothing could be
    further from the truth.
        The Convention in no way harms our intelligence collection
    activities. In no way does it constrain our military
    operations. On the contrary, U.S. accession to the Convention
    secures our freedom of navigation and overflight rights as
    bedrock treaty law.
        Some allege that the Convention would subject us to the
    jurisdiction of international courts and that this represents a
    surrendering of our sovereignty. Once again, this is not the
    case. The Convention provides that a party may declare it does
    not accept any dispute resolution procedures for disputes
    concerning military activities, and we would do the same, as so
    many other nations have chosen likewise to do. Moreover, it
    would be up to the United States to decide precisely what
    constitutes a military activity, not others.
        Others argue that our maritime interdiction operations
    would be constrained, and again, this is simply not the case.
    The United States and our partners routinely conduct a range of
    interdiction operations based on U.N. Security Council
    resolutions.
        On treaties, on port state control measures, and on the
    inherent right of self-defense, the United States would be able
    to continue conducting the full range of maritime interdiction
    operations. In short, the Law of the Sea Convention provides a
    stable, recognized legal regime that we need in order to
    conduct our global operations today and in the future. Frankly,
    I don't think this is a close call.
        The Law of the Sea Convention is supported, as pointed out,
    by major U.S. industries, by the Chamber of Commerce, by our
    energy, oil, shipbuilding, shipping, and communications
    companies, by our fishing interests, and by environmental
    organizations, along with past and present Republican and
    Democratic administrations, strong bipartisan majorities of
    this committee, and the entire national security leadership.
        By finally acceding to the Convention, we help make our
    Nation more secure and more prosperous for generations to come.
        America is the strongest power in the world. We have the
    strongest navy. And make no mistake, we have the ability to
    defend our interests anytime, anywhere. But we are strong
    precisely because we play by the rules--because we play by the
    rules.
        For too long, the United States has failed to act on this
    treaty. For too long, we have undermined our moral and
    diplomatic authority to fight for our rights and our maritime
    interests. And for too long, we have allowed our inability to
    act to impair our national security.
        For that reason the time is now for the Senate to do what
    others have failed to do, join the Law of the Sea Convention
    and help us remain the strongest maritime power in the world.
        Thank you.
        [The prepared statement of Secretary Panetta follows:]

           Prepared Statement of Secretary of Defense Leon E. Panetta

        Chairman Kerry, Senator Lugar, distinguished members. I want to
    thank you for the opportunity to testify in support of United States
    accession to the Law of the Sea Convention.
        I'm pleased to be here with Secretary Clinton and Chairman
    Dempsey--their presence here is a testament to the conviction of our
    diplomatic and military leadership that accession to this Convention
    will greatly strengthen America's position around the world.
        As many of you know, I've long been passionate about oceans policy,
    and the need to develop and protect our maritime resources for this
    country, for ourselves, for our children and for future generations.
    One of my proudest accomplishments as a Member of Congress was
    establishing the Monterey Bay National Marine Sanctuary. Recently,
    before I took the jobs in this administration, I had the honor to chair
    the Pew Oceans Commission, and later cochaired a Joint Oceans
    Commission Initiative with Adm. Jim Watkins--both commissions confirmed
    the importance of our oceans--but more importantly both strongly
    supported accession to the Law of the Sea Convention.
        For nearly two decades, the Department of Defense's civilian and
    military leadership has shown sustained, consistent, unequivocal
    support for the Law of the Sea Convention. And I am pleased to be the
    first Secretary of Defense to convey such support in hearing testimony.
    Today, I join the Department's many voices past and present that have
    spoken so strongly in support. The fundamental point is clear: if the
    United States is to fully assert its historic role as a global leader,
    it must accede to this important Convention.
        The Law of the Sea Convention is the bedrock legal instrument
    underpinning public order across the maritime domain. We are the only
    permanent member of the U.N. Security Council that is not a party to
    it. This puts us at a distinct disadvantage when it comes to disputes
    over maritime rights and responsibilities with the 162 parties to the
    Convention, several of which are rising powers.
        The basic idea of the Convention is to establish some basic rules
    of the road--to define what can be done, where, in the world's oceans.
    More precisely, it provides for:

       The legal divisions of maritime space and accompanying
            rights of innocent passage through territorial waters;
       Transit passage through vital international straits;
       High seas freedoms of navigation, and overflight, and other
            internationally lawful uses of the sea related to those
            freedoms in the Exclusive Economic Zone, and beyond; and
       Sovereign immunity to warships, naval auxiliaries and other
            government vessels and aircraft.

        In other words, it reflects what has been the longstanding practice
    of our military and gives the United States the international
    foundation to promote, project and protect its global role as the
    world's leading maritime power.
        Let me further outline why I believe this Convention is critical to
    U.S. national security in today's strategic context, why it is time to
    move forward, and why the longer we delay, the more we undermine our
    national security interests.
        The United States is at a strategic turning point after a decade of
    war. Yet, even as these wars recede, we face a challenging and complex
    global security environment. We confront multiple transnational threats
    including violent extremism, the destabilizing behavior of nations like
    Iran and North Korea, military modernization across the Asia-Pacific,
    and turmoil in the Middle East and North Africa. At the same time, we
    are dealing with the changing nature of warfare, the proliferation of
    nuclear, biological, and chemical weapons and technology, and the
    growing threat of cyber intrusion.
        The fact is that these real and growing challenges are beyond the
    ability of any single nation to resolve alone. That is why a key part
    of our new defense strategy is to meet these challenges by modernizing
    our network of defense and security partnerships across the globe, and
    supporting a rules-based international order that promotes stability.
    And that is also why the United States should be exerting a leadership
    role in the development and interpretation of the rules that determine
    legal certainty on the world's oceans.
        Let me give you five important reasons as to why joining this
    Convention would provide enhanced national security.
        First, as the world's preeminent maritime power, and the country
    with one of the longest coastlines and largest Extended Continental
    Shelf, we have more to gain from accession to the Convention than any
    other country.
        If we are not at the table, then who will defend our interests? Who
    will lead the discussion to influence the further development and
    interpretation of the Law of the Sea? It is only by being there to
    protect our rights that we would ensure that our sovereignty is not
    whittled away by the excessive claims and erroneous interpretations of
    others. It would give us the power and credibility to support and
    promote the peaceful resolution of disputes within a rules-based order.
        Second, by joining the Convention, we can secure our navigational
    freedoms and global access for military and commercial ships, aircraft,
    and undersea fiber optic cables. As it currently stands, we are forced
    to assert our rights to freedom of navigation through customary
    international law, which can change to our detriment. Treaty law
    remains the firmest legal foundation upon which to base our global
    presence, on, above, and below the seas. By joining the Convention, we
    would help lock in rules favorable to freedom of navigation and our
    global mobility.
        Third, accession would bring legal certainty to a truly massive
    increase in our country's resource and economic jurisdiction, not only
    to 200 nautical miles off our coasts, but to a broad Extended
    Continental Shelf beyond that zone.
        Fourth, accession would ensure our ability to reap the benefits of
    the opening of the Arctic--a region of increasingly important maritime
    security and economic interest. We already see countries testing new
    shipping routes and exploring for natural resources as Arctic ice cover
    recedes. Joining the Convention would maximize international
    recognition and acceptance of our substantial Extended Continental
    Shelf claims in the Arctic. As we are the only Arctic nation that is
    not a party to the Convention, we are at a serious disadvantage in this
    respect. Accession would also secure our navigation and overflight
    rights throughout the Arctic, and strengthen our arguments for freedom
    of navigation through the Northwest Passage and Northern Sea Route.
        Fifth, and finally, our new defense strategy emphasizes the
    strategically vital arc extending from the Western Pacific and East
    Asia into the Indian Ocean region and South Asia. Becoming a party to
    the Convention would strengthen our position in this key area. For
    example, numerous countries sit astride critical trade and supply
    routes and propose restrictions on access for military vessels in the
    Indian Ocean, Persian Gulf, and the South China Sea. The United States
    has long declared our interests and respect for international law,
    freedom of navigation, and peaceful resolution of disputes. We have
    demonstrated our commitment to those interests through our consistent
    presence and engagement in these critical maritime regions.
        By not acceding to the Convention, we give up the strongest legal
    footing for our actions. We undercut our credibility in a number of
    Asia-focused multilateral venues--just as we're pushing for a rules-
    based order in the region and the peaceful resolution of maritime and
    territorial disputes in the South China Sea and elsewhere. How can we
    argue that other nations must abide by international rules when we
    haven't joined the treaty that codifies those rules?
        At the other end of this arc sits the Strait of Hormuz, a vital sea
    lane of communication to us and our partners. We are determined to
    preserve freedom of transit there despite Iranian threats to impose a
    blockade. U.S. accession to the Convention would help strengthen
    worldwide transit passage rights under international law and help to
    further isolate Iran as one of the few remaining nonparties to the
    Convention.
        These are the key reasons for accession, which is critical to our
    sovereignty and our national security. That is why I fail to understand
    the arguments opposed to the treaty.
        First, some have put forward the myth that the Law of the Sea
    Convention would force us to surrender U.S. sovereignty. Nothing could
    be further from the truth. Not since we acquired the lands of the
    American West and Alaska have we had such an opportunity to expand U.S.
    sovereignty.
        Second, there are some who claim that accession to the Convention
    will restrict our military's operations and activities, or limit our
    ability to collect intelligence in territorial seas. Quite simply, they
    are wrong. The Convention in no way harms our intelligence collection
    activities or constrains our military operations. On the contrary, U.S.
    accession to the Convention secures our freedom of navigation and over-
    flight rights as bedrock treaty law.
        Third, some allege that in joining, our military would be subject
    to the jurisdiction of international courts--and that this represents a
    surrendering of U.S. sovereignty. But once again, this is not the case.
    The Convention provides that a party may declare it does not accept any
    dispute resolution procedures for disputes concerning military
    activities. This election has been made by 20 other nations that have
    joined the Convention, and the United States would do the same. The
    bottom line is that neither U.S. military activities nor a U.S.
    decision as to what constitutes a U.S. military activity would be
    subject to review by any international court or tribunal.
        Fourth, some argue that certain military activities--specifically,
    our ability to conduct maritime interdiction operations--will be
    constrained because the Convention only recognizes the right of
    warships to board ships suspected of engaging in piracy, the slave
    trade or being stateless. Again, this is simply not the case. The
    United States and our partners routinely conduct a range of
    interdiction operations at sea based on U.N. Security Council
    Resolutions, treaties, port state control measures and the inherent
    right of self-defense. Further, the Convention expands the range of
    interdiction authorities found in the 1958 Law of the Sea Conventions
    we've already joined. In short, the United States would be able to
    continue conducting the full range of maritime interdiction operations.
        In closing, our new defense strategy recognizes our return to our
    maritime roots, and the importance to our military of freedom of
    navigation and global mobility.
        Freedom of navigation is essential for any global power, but
    equally applies to all maritime states--everywhere. This Convention
    helps ensure that this freedom is preserved and secured through
    reasoned, deliberate, international rules which are fully in accord
    with the freedom of navigation asserted by the United States around the
    world for decades. It provides the stable, recognized legal regime we
    need to conduct our global operations today, and in the future.
        This Convention is supported by major U.S. industries, the Chamber
    of Commerce, our energy, shipbuilding, shipping, and communications
    companies, fishing, and environmental organizations--along with past
    and present Republican and Democratic administrations, and the entire
    national security leadership.
        By finally acceding to the Convention, we help make our Nation more
    secure and more prosperous for generations to come. America is the
    strongest power in the world. We are strong precisely because we play
    by the rules. For too long, the United States has failed to act on this
    treaty. For too long, we have undermined our moral and diplomatic
    authority to fight for our rights and our maritime interests. For too
    long, we have allowed our inability to act to impair our national
    security. The time is now, for this Senate to do what others have
    failed to do: ratify the Law of the Sea Convention.

        The Chairman. Mr. Secretary, thank you. Again, also very
    important testimony, and we appreciate it very much and respect
    the fact you are the first Secretary of Defense to testify in
    favor of this treaty.
        General Dempsey.

     STATEMENT OF GEN MARTIN E. DEMPSEY, CHAIRMAN, JOINT CHIEFS OF
                         STAFF, WASHINGTON, DC

        General Dempsey. Thank you, Mr. Chairman, Senator Lugar,
    and other distinguished members of the committee.
        I join Secretary Clinton and Secretary Panetta in offering
    my support for the Law of the Sea Convention. My voice joins
    past and present senior defense leaders to include our Joint
    Chiefs of Staff. It echoes every Chairman of the Joint Chiefs
    of Staff since the Convention was sent to the Senate in 1994.
        This support has been so consistent because of what the
    Convention does for our Armed Forces and for our national
    security. Joining the Convention would strengthen our ability
    to apply sea power. It codifies the navigational rights and
    freedoms necessary to project and sustain our military force.
        These include the right of transit through international
    straits, the right to exercise high seas freedoms in foreign
    Exclusive Economic Zones, and the right of innocent passage
    through foreign territorial seas. And it reinforces the
    sovereign immunity of our warships as they conduct operations.
        By contrast, we currently rely on customary international
    law and assert it through our physical presence. This plays
    into the hands of foreign states that seek to bend the
    customary international law to restrict movement on the oceans,
    and it puts our warships and aircraft on point to constantly
    challenge claims.
        We can defend our interests, and we will do that with
    military force, if necessary. But the force of arms does not
    have to be and should not be our only national security
    instrument. Joining the Convention would provide us another way
    to stave off conflict with less risk of escalation.
        The Convention also offers us an opportunity to exercise
    global leadership. Over 160 nations are party to it, as you
    have heard, including every permanent member of the U.N.
    Security Council and every Arctic nation. Our absence separates
    us from our partners and allies. It limits our ability to build
    coalitions and work cooperatively to solve these pressing
    security problems that face us.
        Although the terms of the Convention are favorable to the
    United States interests, we are not positioned to further guide
    its interpretation nor its implementation. We need to join it
    in order to strengthen our leadership role in global maritime
    affairs.
        To close, America is a maritime nation, both militarily and
    economically. Our prosperity and security depend on the bounty
    of and access to the world's oceans. By joining the Convention,
    our forces would enjoy a firmer legal standing for operations
    on, over, and under the world's waters, and it would provide us
    an additional tool for navigating an increasingly complex and
    competitive security environment.
        I look forward to your questions. Thank you.
        [The prepared statement of General Dempsey follows:]

                  Prepared Statement of GEN Martin E. Dempsey

        Mr. Chairman, Senator Lugar, and distinguished members of the
    committee, I appreciate this opportunity to discuss the military and
    security implications of the Law of the Sea Convention.
        The United States is a maritime nation--militarily and
    economically. We have the world's largest Exclusive Economic Zone and
    the world's largest and most capable navy. We stand to benefit from the
    additional legal certainty and public order this treaty would provide.
    Moreover, this certainty will become increasingly important as the
    global security environment becomes more competitive and more complex.
        It is with this in mind that I join Secretary Clinton, Secretary
    Panetta, the Joint Chiefs, and every Chairman of the Joint Chiefs of
    Staff and every Chief of Naval Operations since the Convention was
    submitted to the Senate in 1994 in offering my unqualified support for
    this treaty.
        There are many reasons for this support. I would like to highlight
    three.
        First, joining the Convention would give our day-to-day maritime
    operations a firmer, codified legal foundation. It would enable and
    strengthen our military efforts, not limit them.
        We currently rely on customary international law and physical
    presence to secure global freedom of access. But there is risk in this
    approach. Tradition is a shaky basis upon which to rest our national
    security and the protection of our forces. Customs can be disputed, and
    they can change.
        Joining the Convention would provide legal certainty to our
    navigational freedoms and legitimacy to our maritime operations that
    customary law simply cannot. It would affirm critical navigational
    freedoms and reinforce the sovereign immunity of our warships as they
    conduct these operations. These include the right of transit through
    international straits, the right to exercise high seas freedoms in
    foreign Exclusive Economic Zones, and the right of innocent passage
    through foreign territorial seas. The Convention would also provide a
    stronger legal basis for some important activities such as stopping and
    boarding stateless vessels--ships often used by pirates, traffickers,
    and terrorists.
        Second, joining the Convention would provide a consistent and
    effective legal framework for opposing challenges to the rules-based
    international order in the maritime domain. Around the globe we are
    witnessing nations expanding their naval capabilities. We are also
    seeing countries expand their maritime claims--in the direction of
    restricting movement on the oceans. Illegitimate expansionism could
    become particularly problematic in the Pacific and the Arctic, two
    regions whose importance to our security and our economic prosperity
    will only increase over the next several decades. The Convention would
    provide us an important tool to help stave off jurisdictional creep in
    these areas and to resolve future conflicts peacefully and with less
    risk of escalation.
        Last, being a member of the Convention would better allow the
    United States to exercise global security leadership--a critical
    component of our global strategy. Our absence from the Convention
    separates us from our Partners and allies. It places us in the company
    of those who disdain the rule of international law. We are the only
    permanent member of the U.N. Security Council and the only Arctic
    nation that is not a party to the Convention. As a result, there are
    limits to our ability to build coalitions for important international
    security efforts.
        From the beginning, U.S. negotiators have been involved in the
    development of the Convention and have ensured it would both serve and
    protect our interests. Not joining the Convention limits our ability to
    shape its implementation and interpretation. We will need that
    influence if we intend to continue to lead in global maritime affairs.
        Now is the time for the United States to join the Convention. We
    should not wait. The global security environment is changing. The
    Pacific and the Arctic are becoming increasingly important. And some
    nations appear increasingly willing to assert themselves and to push
    the boundaries of custom and tradition in a negative direction.
        This treaty has been thoroughly debated and vetted, and it has
    consistently received support from senior defense leaders. We should
    become party to the Law of the Sea Convention now and demonstrate our
    global maritime leadership.

        The Chairman. Thank you very much, General.
        As I mentioned earlier, we will be having Chief of Naval
    Operations, the Commandant of the Coast Guard, and the
    Commanders of the various forces, all of whom are affected by
    this, come in and be able to answer questions for Senators.
        But General Dempsey, if I could ask you, opponents of the
    Convention have argued that U.S. accession is somehow going to
    lead to an unacceptable restriction on the U.S. military--
    Secretary Panetta addressed this a little bit--suggesting it
    would harm our national security. This has been a refrain
    repeated in a number of editorials and elsewhere.
        I want to ask you some questions about that, if I may?
    First of all, do they know something that you don't know?
    [Laughter.]
        General Dempsey. Well, I can't speak for them, but I know
    what I know. And I know that it will not do any of the things
    you just suggested.
        The Chairman. None?
        General Dempsey. None.
        The Chairman. And you are certain of that?
        General Dempsey. I am certain of that.
        The Chairman. And that is shared by every commander of the
    various combatant forces?
        General Dempsey. It is, sir. You have probably noticed that
    I am not exactly dressed exactly as someone who would speak
    with authority on the issue of maritime operations. But I am a
    student and, in fact, prior to my testimony and even before, I
    have made it a point to consult with those who are experts on
    this and have become, to the best of my ability, an expert as
    well.
        The Chairman. President Reagan decided in 1983 that the
    Convention's provisions relating to the traditional uses of the
    oceans generally confirmed existing maritime law in practice
    and fairly balanced the interests of all states. He, therefore,
    announced that the United States, including the U.S. military,
    will act in accordance with those provisions, notwithstanding
    we hadn't ratified it.
        Has that policy ever changed since President Reagan first
    made the announcement in 1983?
        General Dempsey. It has not changed for the United States
    military. No, sir.
        The Chairman. So in light of the fact, and I ask this of
    both the Secretary of Defense and you, as Chairman of the Joint
    Chiefs, that we are already following the Convention, would
    joining it require the military to make any change in existing
    policy or procedure with respect to use of the oceans?
        General Dempsey. It would not.
        The Chairman. Would it place any restraint whatsoever on
    any of our strategic goals?
        General Dempsey. It would not.
        The Chairman. As Chairman of the Joint Chiefs of Staff, do
    you believe that joining the Convention would harm the U.S.
    military in any way?
        General Dempsey. I believe it would not harm us in any way.
        The Chairman. And haven't you expressed, and I think, Mr.
    Secretary, you have said that rather than harm us, it would, in
    fact, enhance our strategic goals and our interests.
        Secretary Panetta. It would. It would give us--it would
    give us the opportunity to be able to engage when it comes to
    navigational freedoms and navigational rights. We can argue for
    those now. We can do what we do. But very frankly, we have
    undermined our moral authority by not having a seat at the
    table with these nations to make the arguments for these
    rights.
        The Chairman. I have a letter here from Director of
    National
    Intelligence Clapper, dated May 16, 2012, in which he confirms
    that the Convention would not prohibit intelligence activities
    in any way. This is another one of those myths that get thrown
    out there.
        I want to enter that letter into the record.
        But the intelligence community made the same confirmation
    to this committee during the Bush administration, did it not,
    in 2003 and 2007?
        Secretary Panetta. That is correct.
        The Chairman. So, General Dempsey and Secretary Panetta, I
    ask you each the same question. Do you have any concern or any
    belief whatsoever that joining this Convention would harm the
    U.S. military's ability to collect intelligence?
        Secretary Panetta. Having served in a key intelligence
    position and now as Secretary of Defense, this would in no way
    inhibit our ability to conduct intelligence operations.
        The Chairman. General Dempsey.
        General Dempsey. It would not affect our intelligence
    operations.
        The Chairman. And is it not accurate that the Russians are
    about to send their fifth mission up to the Arctic this summer,
    and the Chinese are currently laying claims that may, in fact,
    impinge on U.S. interests and claims?
        Mr. Secretary.
        Secretary Panetta. That is correct.
        The Chairman. General Dempsey.
        General Dempsey. Yes, sir.
        The Chairman. And our ability to affect that is, in fact,
    enhanced by joining the treaty, is it not?
        General Dempsey. As I said, sir, acceding to the Convention
    would allow us to have another instrument with which to engage
    any nation that would potentially threaten our interests.
        The Chairman. Now, Secretary Panetta, we have heard
    arguments also that the military doesn't need the treaty
    because customary international law gives us the rights we will
    need. You addressed this to some degree, the whole issue of
    codifying a preference for gunboat diplomacy by not embracing
    this treaty.
        Can you speak, General Dempsey and Mr. Secretary, since you
    are the direct line commanders for sending people into
    conflict, how you react to the notion that we should just leave
    aside a legal regimen and rely on the fact that we have the
    strongest navy and our military force?
        Secretary Panetta. Well, look, first and foremost, there is
    no question that we have the strongest navy in the world. But
    if we are going to engage in gunboat diplomacy everywhere we go
    in order to assert our rights, then the end result of that is
    going to be conflict, and it could very well jeopardize our
    national security if we resort to that as our primary means of
    asserting our rights, you know, sending the destroyers in,
    sending the carriers in, in order to do that.
        The better approach is to have those carriers, have those
    destroyers, make very clear the power we have. But then sit
    down and engage these other countries in a rules-based format
    that allows us to make the kinds of arguments that we have to
    make when we engage with 160 other nations as to navigational
    rights.
        I mean, that is the way we do it. We are strong because we
    play by the rules, not because we go against those rules.
        The Chairman. And Madam Secretary, I have certainly run
    into this in discussions with people, and I think you and I
    have discussed. That the lack of our presence in the treaty is,
    in fact, thrown at us by various countries today. And they
    almost needle us about our inability to assert our rights.
        I partly put that in this context. Some opponents of the
    Convention say we don't need it in order to get the legal
    certainty on the Extended Continental Shelf. We can just get it
    by a series of bilateral agreements like Mexico and Russia and
    so forth. Could you speak to that?
        Secretary Clinton. Well, first, we have not been able to
    realize all the potential benefits, because we are not a party
    to the treaty. We cannot fully secure our sovereign rights to
    the vast resources of our Continental Shelf beyond 200 nautical
    miles. We cannot sponsor U.S. companies to mine the deep seabed
    for valuable metals and rare earth elements.
        We cannot count on what is called customary international
    law, that it won't change or it won't be subject to either
    being ignored or undermined over time that we cannot control
    because we are not taking our seat at the table. We only get
    future stability in what the legal framework is if we are a
    party to the Convention, and you know, many of the provisions
    enshrined in the Convention are very favorable to us.
        And finally, to your point directly, Chairman Kerry, we do
    find, and I certainly personally find, that when I am, for
    example, working on claims in the South China Sea that affect
    our treaty allies like the Philippines or Japan or others, the
    fact that we are not a party really undermines our position.
        And I would bet that there are many in the world who hope
    we never are a party, and they can go on and plot the way
    forward, set the rules, enforce them as they choose, putting us
    further and further at a disadvantage.
        The Chairman. Thank you very much.
        Senator Lugar.
        Senator Lugar. Thank you, Mr. Chairman.
        Each of you has been covering the ground that I am about to
    cover again. But let me just say that again and again during
    testimony in 2004, 2007, we had the thought that the opposition
    was not being heard, not being understood. So let me introduce
    some of the opposition today so that we have the benefit.
        For instance, on the editorial page or B4 of the Washington
    Times of Tuesday, May 22, 2012, Frank Gaffney writes about the
    situation. He says, ``If, on the other hand, the members of the
    U.S. Senate trouble themselves to study, or at least read, the
    text of the Law of the Sea Treaty, they would immediately see
    it for what it really is: a diplomatic dinosaur, a throwback to
    a bygone era when U.N. negotiations were dominated by
    Communists of the Soviet Union and their fellow travelers in
    the Third World.
        ``These adversaries' agenda was transparent and wholly
    inimical to American equities. They sought to: establish
    control over 70 percent of the world's surface; create an
    international governing institution that would serve as a model
    for bringing national states like ours to heel; and
    redistribute the planet's wealth and technology from the
    developed world to themselves. LOST codifies such
    arrangements--and would subject us to mandatory dispute
    resolution to enforce them via stacked-deck adjudication
    panels.
        ``And I would suggest even then Senators will not read the
    treaty, nor perhaps other national leaders. So I suggest that
    Dick Morris and his wife, Eileen, have just published an
    important book that addresses, among other outrages, LOST as a
    prime example of the title: `Screwed! How Foreign Countries Are
    Ripping Off America and Plundering Our Economy and How Our
    Leaders Help Them Do it,' '' and so forth.
        Now over on the next page, Ed Feulner writes, ``Without
    LOST, we are told, we will not be able to develop the
    hydrocarbon resources beneath the Extended Continental Shelf.
    Sounds pretty dire at a time of fluctuating prices for gasoline
    and other forms of fuel. Fortunately, it is not true. Under
    international law and longstanding U.S. policy, we already have
    access to these areas.
        ``Presidents dating back to Harry Truman have issued
    proclamations--and Congress has passed laws--establishing
    America's maritime laws and boundaries, and no one has
    challenged them.''
        Now, as you pointed out, we do have a navy, and perhaps
    opponents of the treaty would say why get involved in all of
    this nonsense? Send the fleet out. Shoot it up. If, in fact,
    you have got a problem, what is this navy for?
        Now I tried to mention this briefly in my comments, that
    even at a 1,000-ship level, the United States cannot cover all
    the disputes of the world.
        What we ought to have then maybe is an additional hearing
    on how many more ships, how much more military spending, and
    how much more infrastructure we will need to do it our way and
    to say let the rest fly by themselves.
        I take your time to listen to all of this because,
    essentially, you have presented a very strong case, and people
    from industry are going to present a strong case. And they will
    be pilloried as capitalists who are looking after their own
    stockholders, looking after their own interests once again
    without regard to our sovereignty and our ability to address
    disputes militarily if pressed to do so.
        And I don't know who else will come in. Perhaps we will
    have some who will say that peace in the world is important and
    that this treaty is an important means to strengthen
    international cooperation. But I am afraid they are going to
    get short shrift.
        How, Secretary Panetta, would you begin to describe the
    military problem here? In other words, we do have the Navy, we
    are not going to stand by, and we are worried about the South
    China Sea. And all of our Asian allies are coming, and we are
    placing Marines in Australia, and we are pivoting, as you
    described the policy.
        But what are the limitations, if there are any, to our
    ability to shoot it out?
        Secretary Panetta. Well, Senator Lugar, again, I think it
    is a question of looking at the facts that we are dealing with.
    The fact is that we are dealing with a world in which there are
    myriad threats that we confront now. This is--you know, we are
    not just dealing with the Soviet Union. We are dealing with
    myriad threats.
        In the South China Sea with rising powers, in the Pacific
    with North Korea, with Iran, with transit in the Strait of
    Hormuz, with turmoil in the Middle East, with a whole series of
    challenges, not to mention war, not to mention terrorism. All
    of those are the threats that we confront.
        And the reality is that we are now in a world in which,
    frankly, in order to be able to deal with that myriad
    challenges, it isn't enough for the United States Navy to go
    wandering around the world asserting its strength as a way to
    solve that myriad problems and threats I just defined.
        The only way we are going to do this in today's world is to
    engage in alliances and partnerships, work with other countries
    to develop some kind of rules-based approach to dealing with
    those threats so that other countries as well understand the
    threats they confront and can react to those threats. That is
    the kind of world we are part of. That is the kind of world we
    live in.
        And it is for that reason that the Law of the Seas becomes
    important because it is one of those vehicles in which to
    engage the world. One hundred sixty nations have acceded to it,
    and we say the hell with them, we are not going to participate
    in that. Then 160 nations are going to determine what happens
    in terms of the Law of the Sea, and we won't be there.
        So that is the reason from a national security point of
    view, from a very practical point of view, from the point of
    view of what is in the best interests of the United States,
    that we have to accede to this Convention so that we are part
    of a rules-based international order.
        We say that every time we go--we argue with Iran. Every
    time we argue with North Korea, we argue on the basis that they
    are not abiding by international rules. They are not abiding by
    the international standards that we have established.
        And here we are, trying to make the same argument with
    regards to navigation, and we aren't even a member of the
    Convention. That is the reason we need to accede to this
    Convention.
        Senator Lugar. Thank you.
        The Chairman. Let me just say, since there are a few
    seconds left, Senator Lugar, that neither President Truman's
    proclamation nor any act of Congress has ever delineated the
    outer edge of the Extended Continental Shelf of the United
    States. And currently, other countries can prohibit the United
    States from coming into an ECS. We can't because we are not a
    party to the treaty.
        So the only way to protect that outside of this is to
    accede to the treaty. And finally, no company is going to put
    millions of dollars into the effort to go out and do the mining
    or do the drilling if they don't have the legal certainty
    protection of the treaty.
        So there are further reasons in answer to Mr. Feulner. But
    we will have Mr. Feulner in here, and we will have others who
    oppose it and have a chance to explore this.
        Senator Menendez.
        Senator Menendez. Thank you, Mr. Chairman, for beginning
    this series of hearings, which I think are incredibly
    important.
        A couple of years ago, I chaired the beginning of one of
    these on your behalf, and I think it is even more important
    today than it was then. And I appreciate all of our
    distinguished witnesses and their service to our country.
        General Dempsey, when you took an oath as the Chairman of
    the Joint Chiefs of Staff and when you took an oath to the
    service that you originally joined from which you come, you
    took an oath to protect the United States of America. Is that
    not correct?
        General Dempsey. I did, sir.
        Senator Menendez. And is there anything in this treaty that
    you believe undermines the oath that you took both in your
    service, as well as the Chairman of the Joint Chiefs of Staff?
        General Dempsey. There is not.
        Senator Menendez. So you believe that the treaty clearly
    continues to allow for you, on behalf of all of those of the
    different services who serve this country, to protect and
    defend the United States of America and doesn't undermine any
    of those abilities?
        General Dempsey. It protects our ability to do what we need
    to do for this country.
        Senator Menendez. Thank you very much.
        Secretary Panetta, do you have any concerns that this
    treaty would impinge on either the rights or ability of you, as
    the Secretary of Defense, to protect the air, sea, or land
    territory of the United States? Or conversely, would the treaty
    impact the ability of the Department of Defense or the service
    branches to navigate or engage in freedom of navigation
    operations?
        Secretary Panetta. No, it would not. It would enhance our
    ability to be able to navigate because we would be able to be
    at the table to protect our interests and protect our claims.
        Senator Menendez. In fact, doesn't this treaty, if we were
    to ratify it, give us the wherewithal to extend our reach to a
    third more than the territory that we have beyond the 200 miles
    Exclusive Economic Zone? Is that a correct statement?
        Secretary Panetta. That is absolutely correct.
        Senator Menendez. In recent months, as I am sure many of
    you know, I have been following Iran with a laser-like focus.
    In these past few months, we have heard Iran threaten to close
    the Strait of Hormuz in response to United States and European
    Union sanctions.
        Beyond our own ability to respond in the national interest
    and security of the United States, which the administration
    made very clear at the time when that threat took place, my
    understanding of the treaty is that such an action by Iran
    would have violated the treaty because of the treaty's
    guarantee of the right of innocent passage even in a nation's
    territorial waters and even for United States military
    vehicles--vessels, I should say. Is that a correct statement?
        Secretary Panetta. That is a correct statement.
        Senator Menendez. The other thing that I focus a great deal
    on in our subcommittee role is proliferation of narcotics
    trafficking, as well as the proliferation of weapons of mass
    destruction. What benefits would the United States derive from
    joining the treaty with respect to countering and interdicting
    narcotics and the proliferation of weapons of mass destruction
    to and from state and nonstate actors of proliferation concern,
    such as Iran and Syria?
        For example, would joining the treaty advance interdiction
    efforts under the Proliferation Security Initiative, such as
    providing a basis for taking action against vessels suspected
    of engaging in proliferation activities?
        General Dempsey. Right now, sir, as you know, we use
    customary international law to assert our right to visit. This
    would be documented in the Convention of the Law of the Sea and
    preserve the right of visit, which would enhance our use of the
    Proliferation Security Initiative.
        Senator Menendez. Do we believe that joining the treaty
    would help our efforts to bring countries into the
    Proliferation Security Initiative and further undertake our
    efforts in needed interdiction efforts?
        Secretary Clinton. I believe it would, Senator. I think
    joining the Convention would likely strengthen the PSI by
    attracting new cooperative partners.
        Senator Menendez. Now, finally, this treaty has allowed for
    us, on a provisional basis, to participate and influence the
    work of various entities, such as the Commission on the Limits
    on the Continental Shelf and the International Seabed
    Authority, the body that regulates the exploration,
    development, exploration of international areas beyond national
    jurisdiction, such as oil, gas, and nonliving resources under
    the seabed and subsoil.
        However, because we have not ratified the treaty, we have
    been relegated to observer status on the Commission. What
    impact has the failure to ratify had on our ability to
    influence the actions on the Continental Shelf Commission and
    the international seabed activity?
        Secretary Clinton. Well, Senator, first of all, there are a
    number of observers who actually view this Convention as a huge
    win for the United States. In fact, it is called by some ``the
    U.S. land grab'' because of what it would mean for our ability
    to extend jurisdiction far beyond our shores.
        But unfortunately, our failure to accede to it limits our
    capacity to do so. We believe the seabed mining body's action
    on rules for mining, coming up in 2013, is something that we
    would heavily influence and would certainly influence in favor
    of our interests and our companies, if we were to accede by
    then.
        So the Convention bodies that are determining the rules are
    proceeding without us, and we are on the sidelines and do not
    have the authority needed to do much more than try to wave our
    arms and get attention to make points. But we would have direct
    influence and we would have, as I said in my testimony, what
    amounts to a veto because of the consensus rules if we were
    actually present.
        Senator Menendez. So, clearly, because a gift of God allows
    us access to the Atlantic, Pacific, Arctic, and gulf
    territorial waters, it is in our security interests, our energy
    interests and private sector interests to ratify this treaty.
    Is that a fair statement?
        Secretary Clinton. That is an absolutely fair statement.
        Senator Menendez. Thank you very much.
        The Chairman. And if I could just augment that by saying,
    Senator, that because of Guam, because of the Hawaiian Islands,
    because of the Aleutians, we have an extraordinary reach, which
    is why there is such a breadth here to what is available to us,
    which is unique.
        No other country in the world has as significant an
    extended zone as we do, and we are not taking advantage of
    that.
        Senator Corker.
        Senator Corker. Thank you, Mr. Chairman.
        And thank each of you for your testimony and service to our
    country.
        And Secretary Clinton, I noticed you enjoyed your testimony
    more than most. I don't know if it is because January is just
    around the corner or not, but you seem very happy today, and I
    am glad to have you here.
        You know, I have been around here a while now, and this is
    sort of a Lazarus moment. This thing has been around for 30
    years. We are in the middle of a pretty contentious
    Presidential race, and we have a treaty that is coming up that
    both majority leaders on the Democratic side and Republican
    side have not wanted to bring to the floor.
        So I have my antenna up slightly. I do want everybody to
    know that I begin in a neutral place. I, too, want to make my
    decision on this treaty based on facts and not myths and
    certainly plan to go about learning as much as I can about the
    facts of where this treaty places our Nation.
        So I listened to the testimony, and again, I enjoyed all
    three of you. I am listening to cases being made about oil. And
    at the depths of exploration we are talking about, we are
    talking about really big oil. And I just find it interesting. I
    don't think this is a pejorative comment. The administration
    has not particularly been a great fan of big oil.
        As a matter of fact, we have restricted our own lands to
    their access in many ways. So I just find it an interesting
    point that is being made by an administration that has been
    anything but ``friendly'' to big oil, why all of a sudden on
    this particular treaty, such a big deal is being made out of
    that? And if you could just answer me briefly, Secretary
    Clinton, I would appreciate it.
        Secretary Clinton. Well, Senator Corker, I am always happy
    when I am appearing before this committee and back in the
    Senate. So thank you for the warm welcome.
        You know, I really believe that the United States has an
    opportunity in developing our natural resources, which we are
    currently doing, particularly with unconventional gas and the
    steps and progress that we are making in that arena, which are
    extremely important to our future.
        Yes, there are discussions and debates over where to do it,
    in whose backyard and the like. But we are making progress, and
    for the first time in many years, we actually are a net
    exporter. And as someone who spends a lot of my time promoting
    American jobs around the world and finding how interested
    people are in perhaps being able to import from us, I think
    that is all to the good.
        It is also important that we take advantage--that we have
    the opportunity to take advantage of what may be possible in
    the future. I don't want to close the door on anything. And
    that is what I fear we are doing. It is the opportunity cost of
    not acceding to the Convention now.
        I am not an expert in oil and gas exploration and drilling.
    But what the oil and gas industry tells us is that they are now
    in a position to take advantage of this; actually, our majors
    are among the very limited number of such companies anywhere in
    the world.
        And to shut the door on their ability to do that I just
    don't think is economically smart. So I think if you look at
    the whole picture, we are positioned well, and I want us to
    continue to be so in the future.
        Senator Corker. So second point, I know the administration
    has tried to push legislation relating to carbon, and I know
    cap and trade was discussed for a while. And that obviously
    didn't pass muster here in the Senate, and so the EPA has taken
    steps to, in many ways, make pieces of that happen through
    regulation.
        One of the things that the treaty does do is regulate
    pollution in the ocean from land-based sources, and one of the
    things you didn't mention in the comments about some of the
    negativity toward the treaty is a lot of people believe--and
    again, I am asking the question after reading, and I am not
    saying I am one of those. But a lot of people believe that the
    administration--my antenna is up--that the administration wants
    to use this treaty as a way to get America into a regime
    relating to carbon since it has been unsuccessful doing so
    domestically. And I wonder if you might respond to that?
        And if the treaty, in your opinion, does put us in a
    situation either to respond to international regimes or to be
    subject to lawsuits from people because of carbon that is
    emitted from the United States affecting the ocean bed?
        Secretary Clinton. Senator, I know some have been
    concerned, and I appreciate your raising it that somehow the
    Convention is a backdoor Kyoto protocol. It is our legal
    assessment that there is nothing in the Convention that commits
    the United States to implement any commitments on greenhouse
    gases under any regime.
        And it contains no obligations to implement any particular
    climate change policies. It doesn't require adherence to any
    specific emission policies, and we would be glad to present for
    the record a legal analysis to that effect.
        Senator Corker. How do we exit this treaty? Is there a way
    to--you know, typically treaties have ways of exiting. And
    again, briefly, I want to ask one other question. How would one
    exit this treaty if we became a party to it?
        Secretary Clinton. Again, I will submit it to the record,
    but it is my understanding that just as we accede to certain
    treaties, we can end our accession or our membership. There is
    no continuing obligation to be a member of a treaty that you
    freely joined.
        [The written response from the State Department follows:]

        During Secretary Clinton's May 23, 2012 testimony before the Senate
    Committee on Foreign Relations, you asked for more information on the
    Law of the Sea Convention's provisions that permit a party to withdraw
    from the Convention. You also asked about the relationship between the
    Convention and U.S. climate change policy. Please find our analysis
    below on both of these issues.
                 withdrawal from the law of the sea convention
        Withdrawal by a State party from the Law of the Sea Convention is
    governed by Article 317, entitled ``Denunciation.''
        Article 317 provides that a State party may withdraw from the
    Convention at any time. It is not necessary to indicate a reason for
    denunciation. Denunciation takes effect 1 year after providing written
    notification.
        Article 317 is similar to withdrawal provisions found in other
    treaties to which the United States is a party.

                                 CLIMATE CHANGE

        The Law of the Sea Convention is an oceans treaty, not a climate
    treaty. Joining the Convention would not require the United States to
    implement the Kyoto Protocol or any other particular climate change
    laws or policies, and the Convention's provisions could not
    legitimately be argued to create such a requirement.
        Part XII of the Convention addresses the marine environment.
    ``Pollution of the marine environment'' is defined in Article 1,
    paragraph 4. Even if one assumed, for the sake of argument, that (1)
    Part XII applied to the issue of climate change; (2) ``pollution of the
    marine environment'' existed within the meaning of Article 1(4); (3)
    there was a causal link between a Party's GHG emissions and such
    pollution; and (4) other requirements were satisfied, Part XII would
    still not require a Party to adopt particular climate laws or policies.
        Part XII's arguably relevant provisions are either extremely
    general (e.g., Article 194) or expressly do not require a Party to
    implement any particular standards.

       Articles 207 and 212 call on Parties merely to ``tak[e] into
            account internationally agreed rules, standards and recommended
            practices and procedures.''
       Articles 213 and 222, which are the ``enforcement''
            analogues to Articles 207 and 212, would likewise not require
            the United States to adopt or enforce particular standards
            related to climate change. The ``enforcement'' section of Part
            XII allocates responsibilities among flag States, coastal
            States, and port States, depending upon the source/type of
            marine pollution in question. Adoption and enforcement of laws
            in relation to Articles 207 and 212 fall within the domain of
            the State concerned. However, even if these articles applied to
            climate change, they would not require adoption/enforcement of
            Kyoto or other climate rules or standards. There are simply no
            such international rules and standards relating to climate
            change applicable to the United States.

        The Convention would also not provide a forum for challenging U.S.
    climate change policies.

       Domestically, the Convention could not be invoked in court;
            it does not create rights of action or other enforceable
            individual legal rights in U.S. courts. (See declaration 24 of
            the draft resolution of advice and consent and the Committee
            Report of December 19, 2007, at page 18.)
       Internationally, dispute resolution is not open to
            individuals or groups, only States Parties. Were a State Party
            to seek to challenge U.S. climate policies under the guise of a
            ``marine environment'' dispute, the Convention's dispute
            settlement procedures would not be available.

            Because of the sensitivities of coastal States concerning
                their land-based (and certain other) activities, the
                Convention sets forth limitations on the obligations
                related to marine pollution that could be subject to
                dispute resolution.
            Specifically, Article 297(1)(c) sets out the exclusive
                bases upon which a coastal State would be subject to
                dispute resolution for pollution of the marine environment.
            Among other things, there would need to be a ``specified''
                international rule or standard ``applicable'' to the
                coastal State. As noted, no provision of the Convention
                ``applies'' international rules or standards to the United
                States in this area, much less a ``specified'' one. As
                such, it would not be possible to invoke the dispute
                resolution procedures to challenge the United States in
                relation to climate change.
            Were a State Party to seek to invoke the Framework
                Convention on Climate Change (to which the United States is
                a Party) as the basis for a challenge under the LOS
                Convention, Articles 280 and 281 of the Convention would
                further preclude recourse to the Law of the Sea
                Convention's dispute resolution procedures. (These Articles
                provide that Parties can choose to resolve disputes by
                means of their own choosing, including through other
                agreements. The Framework Convention on Climate Change
                already contains provisions for dispute settlement, and
                those provisions do not entail any legally binding
                procedures between Parties unless the Parties agree on such
                procedures.)

        Thus, the Convention would not obligate the United States to have
    in place any particular climate laws or policies, and it would not
    subject U.S. climate change approaches to dispute resolution.
        U.S. agencies, including the Coast Guard, EPA, and the Justice
    Department, have been acting in accordance with Part XII of the
    Convention since President Reagan directed the U.S. Government to abide
    by the bulk of the Convention's provisions. Were the United States to
    become a Party to the Convention, U.S. agencies would implement Part
    XII under existing laws, regulations, and practices. This was confirmed
    in a March 1, 2004, letter to Chairman Lugar from William H. Taft IV,
    the State Department's Legal Adviser during the Bush administration.
    The letter provided, in pertinent part: ``The United States, as a
    Party, would be able to implement the Convention through existing laws,
    regulations, and practices (including enforcement practices), which are
    consistent with the Convention and which would not need to change in
    order for the United States to meet its Convention obligations.''
        We stand by the Taft letter.

        Senator Corker. And then, last, is this treaty subject to
    the typical resolution of ratification that happens in the
    Senate when treaties are--that is correct?
        Secretary Clinton. Yes, that is correct.
        Senator Corker. There is some language that stipulates no
    changes. But you are saying the Senate has the ability to put
    stipulations upon our entrance?
        Secretary Clinton. We always have a resolution for
    ratification that is prepared. I think there was one prepared
    in past times when it didn't get to the floor, but it was
    certainly part of the preparation work leading up to a
    potential vote.
        Senator Corker. OK. And on that note, and this is not
    directed at you in any way. We did have a resolution of
    ratification under the START Treaty, and I know we have had
    some conversations about this in the past. And I know that
    there are pieces of this that are outside the jurisdiction of
    the State Department.
        But I will say that I think the gentlemen on either side of
    you, I know the gentleman to your left, mentioned many times
    that the modernization of our nuclear armaments is very
    important to our Nation, especially if we are going to be
    reducing the numbers of those. And I want to say one more time
    in every public setting that I can, and I know this is not the
    State Department, but that resolution has not been honored.
        And for what it is worth, it is not a really good way to
    build trust with folks on future treaty resolution. So, again,
    none of this is directed at you, but the types of
    modernizations at Sandia and Los Alamos and Pantex and other
    places have been waiting for, and military leaders and civilian
    military leaders have said is very important, has not occurred,
    per the resolution of ratification.
        Not directed at you, but just to say that it is not the
    kind of thing that builds a lot of faith in those resolutions.
        Secretary Clinton. If I could respond, Senator, because I
    know this is a continuing concern of yours. And for the record,
    I just want to state that in FY12, the administration did live
    up to the obligations that we agreed on by requesting $7.629
    billion for NNSA weapons activities.
        Congress did not appropriate that full amount, instead
    appropriating only $7.214 billion. That did create a shortfall.
    So, in FY 2013, we continued to honor our commitments by
    requesting $7.6 billion. That is $363 million, or 5 percent,
    above the amount appropriated by Congress for FY12.
        It is one of the very few accounts in the entire Government
    to receive an increase of this size. And we would like to work
    with Congress to be able to have everybody on the same page
    concerning this.
        Senator Corker. Well, I will close with that if it is OK. I
    appreciate that. And yet, this year, that request was not made.
    And I want to say that the resolution states that if those
    funding requirements are not met, it is incumbent upon the
    administration to come forth with a report showing how that
    affects the overall process.
        That has not happened. And again, none of that is directed
    at you. It is directed overall at the administration. But it
    does creation problems as it relates to overall trust issues.
        I thank you all for your testimony and look forward to the
    future hearings.
        Secretary Clinton. And Senator, I take very seriously this
    concern of yours. We will be submitting the 9(b) report
    shortly.
        The Chairman. Thank you, Senator Corker.
        Senator Cardin.
        Senator Cardin. Well, Mr. Chairman, let me thank all of our
    witnesses. I found your presentations to be as comprehensive a
    presentation that I have ever received on the treaty, and I
    thank you for that. I thank you for particularly addressing the
    criticisms that have been made about this treaty, but of
    course, it is typical of any treaty that we hear some of these
    complaints.
        I want to go into an issue that I think, Secretary Clinton,
    you alluded to. And that is that this is not a static
    situation. It is changing, changing all the time. And there are
    now groups that are meeting that will affect U.S. interests
    that we are not a party to. We don't have our representative
    there.
        The Law of the Sea is changing because of the treaty. And
    there is now discussion as to what should be the appropriate
    use of sea-lanes, and where should the mineral rights in the
    future go, what should be the international regime for dealing
    with some of these issues? And the United States, of course, is
    perhaps the most significant player in these issues, and yet
    our interests are not being represented as these types of
    changes are being debated.
        Can you just elaborate a little bit more as to what type of
    discussions are currently taking place that we truly are not
    part of, we are not involved, as far as having our
    representative at the table during these discussions, that
    could very much affect U.S. companies, could affect the
    commercial operations, could affect all the interests that you
    have mentioned?
        Secretary Clinton. Well, Senator, you are absolutely right
    with respect to demarcating, claiming, and asserting sovereign
    jurisdiction over the Continental Shelf, that is ongoing.
    Countries are doing that. As has been already said, we stand to
    gain more than any country in the world, and we have not done
    so.
        Going beyond the Extended Continental Shelf, which is of
    great importance to us, are the rules on deep seabed mining
    that will influence whether a number of the supporters of the
    treaty--Senator Kerry mentioned one, Lockheed Martin--who are
    interested in the rare earth minerals, can participate. Because
    in the absence of setting the right rules and then being a
    party to the treaty, it may or may not be as advantageous to us
    as it should be.
        We have a seat on that body, and we are not filling it.
        So we will really only have ourselves to hold responsible
    if the bodies that are now gearing up and working under this
    Convention begin to make decisions that are not in our
    interest.
        And I think Secretary Panetta made a great comment. You
    know, we like to use our military power to promote our national
    security. We have a lot of economic interests at stake here
    that will be very hard for us to exercise, even with the
    largest, most professional military in the world, if we don't
    get in under the Convention's rules. And we have a chance still
    to shape those rules.
        Senator Cardin. Normally, on these international treaties
    and organizations, the U.S. participation is looked upon
    internationally with great importance, because it adds to the
    comprehensive nature of the organization. You mentioned the
    Arctic area. Without having the United States, you're missing
    one of the key players in the Arctic. So I know that there are
    strong international interests for us to become a party to the
    treaty.
        But I would expect that there is some interest in other
    countries that are saying, we hope you don't ratify this
    treaty. After all, it gives our companies a better edge on some
    of these issues and puts us in a stronger position on some of
    the economic and legal issues, as it affects U.S. operations.
        Am I correct? I assume that there is strong international
    support for U.S. interests, but in some respects, they may be
    saying, if you don't want to take advantage of it, we will fill
    the void.
        Secretary Clinton. Well, the United States was certainly
    among the relatively small group of nations that drove the
    treaty in the first place, and then led the modifications in
    1994 to make sure that nothing in the treaty would be adverse
    to our interests.
        And so we have a lot at stake. We have already invested a
    lot in it. I think most of the world wants to see us accede,
    because they know that with the United States as the principal
    driver of a rules-based international system, our being inside,
    helping to devise and execute those rules, is in their
    interests as well.
        But I have to agree with you, Senator, that there are
    nations who would be perfectly happy to be in the driver's seat
    instead of us, and we're letting them be in the driver's seat,
    by our failure to be party to the Convention.
        Senator Cardin. We just had the NATO summit in Chicago, and
    one of the issues that was raised pretty vocally by this
    committee is that we want our NATO partners to carry out their
    responsibility. The responsibility for international security
    should rest with all of our partners, not just principally with
    one country, the United States.
        And, Secretary Panetta, it seems to me that our allies have
    to have some concern about the U.S. participation in this
    treaty, as it relates to the coordination of our security
    issues, as it relates to the sea.
        Secretary Panetta. That's absolutely correct. We sit down
    with these countries. We develop strategies. We develop plans.
    We develop military operations. We develop naval operations,
    working with them as well.
        And if we are not operating based on the same rules, it
    puts us at a disadvantage.
        I am sure this is true for Secretary Clinton, but I can't
    tell you--I've been in meetings with both those that are
    considered our allies as well as those that are considered our
    competitors, and make the argument with regards to navigational
    rights, make the argument with regards to our ability to
    exercise rights in the open seas.
        And they have said in these meetings, how can you even
    assert that when you are not even--have acceded to the Law of
    the Seas Convention? That has been thrown right in our face.
        And I am sure they would love to continue to have that
    argument. That is the concern.
        Senator Cardin. It does make our arguments for parity that
    much more difficult, particularly when there really is, as you
    have all pointed out, it is hard to defend an argument as to
    why we have taken so long and why we have not, in fact,
    ratified the treaty.
        Thank you, Mr. Chairman.
        The Chairman. Thank you very much, Senator.
        Senator Risch.
        Senator Risch. Thank you, Mr. Chairman.
        Secretary Clinton, in your opening statement, you addressed
    the people who oppose the ratification of the treaty, and
    particularly spoke to the ideology and the philosophical
    opposition that some people have to this. And I hope you
    weren't scoffing at us. I am one of those who fall into that
    category, because I have some deep-seated reservations on that
    basis.
        Indeed, most wars we have fought have been fought over
    ideology and philosophy. Indeed, our country was founded on
    that, because we had a difference with Great Britain over that.
        So I consider that an important point. And to get this down
    even narrower, my problem is with sovereignty. There are 288
    pages here. And as you read it, there is some good stuff in
    here. But if we give up one scintilla of sovereignty that this
    country has fought, has bled for, have given up our treasure,
    and the best that America has, I can't vote for it.
        So I want to talk about a couple of those, and focus on
    those, if we can.
        First of all, with all due respect, you defended the
    opposition, or you challenged the opposition. You said that
    there is nothing in here that requires that we do certain
    things regarding the Kyoto protocols and environmental-type
    things. If you look at article 222, and I am going to quote
    from that article, which says that signatories to this treaty,
    ``shall adopt laws and regulations, and take other measures
    necessary, to implement applicable international rules and
    standards established to competent international organizations
    or diplomatic conference to prevent, reduce, and control
    pollution of the marine environment from or through the
    atmosphere.''
        That has got Kyoto written all over it.
        And what it's got written all over it is any time the U.N.
    calls a conference or what have you, they all get together,
    they all sign onto it, and even though we disagree, by adopting
    this treaty, we have said that we will adopt it, even though we
    don't agree with that particular treaty.
        So with all due respect to the legal interpretations you
    say you have, and I have read thousands of pieces of
    legislation, this is written in plain English. And I don't know
    how you can argue that, after this is adopted by Congress or by
    the Senate, if it is, how we're going to get around the fact
    that we have agreed that we will adopt these laws and
    regulations.
        Secretary Clinton. Well, Senator, I join you in being
    absolutely, 100 percent, supportive and protective of American
    sovereignty. I've spent much of my adult life, in whatever role
    I have found myself in, defending and arguing on behalf of our
    country and our rights, and I will continue to do so.
        But I would strongly argue that, No. 1, our sovereignty
    will be considerably enhanced by joining this treaty. And No.
    2, with the specific to the question you asked, our reading of
    that, and the information about the meaning of it goes back to
    the very beginning of the treaty, because we have had American
    negotiators at the table from the very beginning, is that there
    is nothing in what you read that requires any particular
    standards. There is nothing that requires this subject to be
    put to dispute settlement. It calls on parties to participate
    in discussions, conferences, and the like, concerning
    environmental issues that might come to impact the oceans.
        And for the record, I will give you a longer written
    response, because I really do want to put your mind at ease, as
    much as I am able to, because I believe so vehemently that
    acceding to this treaty is in America's sovereign interests, or
    I would not be sitting here.
        [The written response from the State Department follows:]

        During Secretary Clinton's May 23, 2012, testimony before the
    Senate Committee on Foreign Relations, you discussed the relationship
    between the Law of the Sea Convention and climate change. Please find
    our analysis below on this issue.

                                 CLIMATE CHANGE

        The Law of the Sea Convention is an oceans treaty, not a climate
    treaty. Joining the Convention would not require the United States to
    implement the Kyoto Protocol or any other particular climate change
    laws or policies, and the Convention's provisions could not
    legitimately be argued to create such a requirement.
        Part XII of the Convention addresses the marine environment.
    ``Pollution of the marine environment'' is defined in Article 1,
    paragraph 4. Even if one assumed, for the sake of argument, that (1)
    Part XII applied to the issue of climate change; (2) ``pollution of the
    marine environment'' existed within the meaning of Article 1(4); (3)
    there was a causal link between a Party's GHG emissions and such
    pollution; and (4) other requirements were satisfied, Part XII would
    still not require a Party to adopt particular climate laws or policies.
        Part XII's arguably relevant provisions are either extremely
    general (e.g., Article 194) or expressly do not require a Party to
    implement any particular standards.

       Articles 207 and 212 call on Parties merely to ``tak[e] into
            account internationally agreed rules, standards and recommended
            practices and procedures.''
       Articles 213 and 222, which are the ``enforcement''
            analogues to Articles 207 and 212, would likewise not require
            the United States to adopt or enforce particular standards
            related to climate change. The ``enforcement'' section of Part
            XII allocates responsibilities among flag States, coastal
            States, and port States, depending upon the source/type of
            marine pollution in question. Adoption and enforcement of laws
            in relation to Articles 207 and 212 fall within the domain of
            the State concerned. However, even if these articles applied to
            climate change, they would not require adoption/enforcement of
            Kyoto or other climate rules or standards. There are simply no
            such international rules and standards relating to climate
            change applicable to the United States.

        The Convention would also not provide a forum for challenging U.S.
    climate change policies.

       Domestically, the Convention could not be invoked in court;
            it does not create rights of action or other enforceable
            individual legal rights in U.S. courts. (See declaration 24 of
            the draft resolution of advice and consent and the Committee
            Report of December 19, 2007, at page 18.)
       Internationally, dispute resolution is not open to
            individuals or groups, only States Parties. Were a State Party
            to seek to challenge U.S. climate policies under the guise of a
            ``marine environment'' dispute, the Convention's dispute
            settlement procedures would not be available.

            Because of the sensitivities of coastal States concerning
                their land-based (and certain other) activities, the
                Convention sets forth limitations on the obligations
                related to marine pollution that could be subject to
                dispute resolution.
            Specifically, Article 297(l)(c) sets out the exclusive
                bases upon which a coastal State would be subject to
                dispute resolution for pollution of the marine environment.
            Among other things, there would need to be a ``specified''
                international rule or standard ``applicable'' to the
                coastal State. As noted, no provision of the Convention
                ``applies'' international rules or standards to the United
                States in this area, much less a ``specified'' one. As
                such, it would not be possible to invoke the dispute
                resolution procedures to challenge the United States in
                relation to climate change.
            Were a State Party to seek to invoke the Framework
                Convention on Climate Change (to which the United States is
                a Party) as the basis for a challenge under the LOS
                Convention, Articles 280 and 281 of the Convention would
                further preclude recourse to the Law of the Sea
                Convention's dispute resolution procedures. (These Articles
                provide that Parties can choose to resolve disputes by
                means of their own choosing, including through other
                agreements. The Framework Convention on Climate Change
                already contains provisions for dispute settlement, and
                those provisions do not entail any legally binding
                procedures between Parties unless the Parties agree on such
                procedures.)

        Thus, the Convention would not obligate the United States to have
    in place any particular climate laws or policies, and it would not
    subject U.S. climate change approaches to dispute resolution.
        U.S. agencies, including the Coast Guard, EPA, and the Justice
    Department, have been acting in accordance with Part XII of the
    Convention since President Reagan directed the U.S. Government to abide
    by the bulk of the Convention's provisions. Were the United States to
    become a Party to the Convention, U.S. agencies would implement Part
    XII under existing laws, regulations, and practices. This was confirmed
    in a March I, 2004, letter to Chairman Lugar from William H. Taft IV,
    the State Department's Legal Adviser during the Bush Administration.
    The letter provided, in pertinent part: ``The United States, as a
    Party, would be able to implement the Convention through existing laws,
    regulations, and practices (including enforcement practices), which are
    consistent with the Convention and which would not need to change in
    order for the United States to meet its Convention obligations.''
        We stand by the Taft letter.

        Senator Risch. Thank you, and I want to see the additional
    explanation. I am open-minded on it.
        But I tell you, this language is just so black and white
    and so straightforward that says America shall adopt laws and
    regulations that are in conformance with anything adopted by a
    competent international organization.
        Well, let's turn to another provision that I have real
    difficulty with. As I understand it, since 1776, we have never
    ceded our authority, as far as taxing American people or
    American companies are concerned. If you read article 82,
    subsection 4, it talks about--well, start with article 82. It
    talks about us taxing or us requiring a tax of these companies
    that operate out in the waters, mining or pumping or what have
    you.
        Section 4 says 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
    landlocked among them.
        Why oh why oh why, as we as Americans, give up our taxing
    authority, handing money over to the United Nations to develop
    some kind of a formula that we have no idea what it is going to
    say, and allowing them to distribute our tax money according to
    some formula that is very vaguely set out here? Why would we do
    that?
        Secretary Clinton. Well, Senator, we're not doing it. And I
    can tell you that without fear of contradiction. The Convention
    does not provide for or authorize taxation of individuals,
    corporations, or otherwise.
        There is a royalty arrangement that kicks in after 5 years
    of drilling and extraction from the ocean. Payments that would
    be related to the Continental Shelf beyond 200 nautical miles
    go through, not to, one of the Convention bodies, the Seabed
    Authority. They are held there until agreement is reached on
    disbursement of the funds, if agreement is ever reached.
        The distribution formula has to be agreed to. The United
    States, with its permanent seat, would have to agree to it. And
    the payments would mean that we were actually extracting
    valuable resources from the Extended Continental Shelf. This is
    supported by the American oil and gas industry, because it only
    applies to such areas beyond 200 nautical miles.
        And I would note, too, Senator, there is nothing
    unprecedented about payment being made under treaties for
    various benefits, because here the benefit is being absolutely,
    legally assured of sovereign rights over a vast area of common
    ocean, and the legal certainty that comes with that.
        And we already make payments to the International
    Telecommunications Union, for example, because it helps to
    regulate the use of spectrum and associated orbital slots to
    protect U.S. radio communications from harmful interference.
        So there are precedents that demonstrate why this is in our
    interest. Nothing is agreed to, unless everybody in the
    Convention agrees to it.
        Now standing on the outside, there may be something agreed
    to which will later be something we don't like, but we will not
    have been able to veto it, which we could if we were on the
    inside.
        Senator Risch. My time is up. Thank you, Mr. Chairman.
        I would just say that I find very little comfort in taking
    this seat, as Secretary Panetta talks about, in a group of 160
    countries, most of whom don't like us, many of whom hate us.
    And us having one vote amongst 160, I think we're going have a
    really tough time.
        Secretary Clinton. But, Senator, it is a consensus, which
    means it has to be unanimous, so our 1 vote counts as much as
    159 other votes. And not every country will be represented on
    this body, but the United States will be.
        Senator Risch. On this particular provision, but there are
    others in here that there is not--we don't have a veto
    throughout everything that the conference does.
        The Chairman. But the point, Senator, is that there is a
    veto with respect to the distribution of any money whatsoever.
    And I think, as we go forward in this, we will have the legal
    experts in who will define precisely how that works. But I
    think you will come to see----
        Senator Risch. I look forward to that.
        The Chairman. We have protected that.
        But the other thing I was going to say is the application
    of the section that you raised with respect to the ``shall
    apply'' is only with respect to if you have already signed up
    to an international law that applies with respect to that.
        So, in fact, it's not an ad hoc provision that says you
    have to go out and adopt this. It is if you have already signed
    an international agreement, and we haven't.
        Senator Risch. That's not what it says, Mr. Chairman.
        The Chairman. Again, I will have a panel of experts who
    will come in and clearly define that, because it's very
    important.
        Senator Risch. No question about that.
        The Chairman. And we obviously want you to understand that.
    And we want you to be satisfied with respect to that, and I
    believe you will be.
        But I think it's important to have that done that way.
        Senator Boxer is back.
        Thank you.
        Senator Boxer. Thank you. Forgive me, please, I had to go
    deal with the transportation bill, and that's moving ahead very
    well, I will tell my colleagues on both sides.
        Well, Mr. Chairman and Senator Lugar, thank you so much for
    this important hearing.
        And I want to say to the panel what an honor it is to be in
    the same room with you all. You give every day to your country,

    24/7, and we all appreciate it so much.
        This is a very important issue, and I thanked the chairman
    privately, because we're just late in the game with this, so we
    need to make up for lost time.
        And Senator Lugar went through the history. I well remember
    in 2007, when we voted 17-to-4 to report the Convention to the
    full Senate. And as rightly pointed out, it wasn't taken up
    because there were threats of filibusters and everything else.
    And when you are the majority leader, you want to go to
    something you can get done.
        So I am hopeful this time we are going to get it done,
    because of everything that was said.
        The Convention has the unequivocal support of our national
    security community, the business community, the tech community,
    the oil and gas companies, and environmental groups.
        Now, I tell you, it's tough to find that kind of coalition,
    but we've got it here.
        And here's the puzzling part to me, I say to my colleagues,
    that this Convention should bring us together, not tear us
    apart.
        My chairman has said it's his best opinion that we go for
    this after the election. So be it. But I find that kind of
    shocking, since, again, I'm confounded that with so much
    support, Senators consider this so controversial.
        U.S. accession would help give the U.S. Navy maximum
    navigational rights in a dangerous world, help protect U.S.
    rights in the Arctic, afford greater flexibility to U.S. tech
    companies to lay their fiber optic cables under the sea. The
    Convention provides mechanisms for peaceful resolution of
    disputes.
        So the Law of the Sea protects U.S. national interests, and
    joining is the right thing to do.
        And it brings me to my question for you, Madam Secretary,
    and it has to do with China. And we have a little map here, if
    people will bear with me. It tells the story.
        China has made aggressive claims to a massive portion of
    the South China Sea, one of the world's busiest shipping lanes.
        The blue lines show a 200-nautical-mile maritime area that
    each respective country, such as Vietnam or the Philippines, is
    entitled to under the Law of the Sea Convention. It is called,
    as was referred to, the Exclusive Economic Zone.
        The red line shows what China is claiming for itself. As
    you see, it goes far beyond China's own 200-mile Exclusive
    Economic Zone. It reaches far into other nation's zones, a
    significant territorial grab that comes very close to the land
    borders of countries in the region.
        Now this dispute has already led to confrontation on more
    than one occasion. In fact, just last month, the Chinese Navy
    sent surveillance ships to block the efforts of a Philippine
    Coast Guard cutter that was trying to stop activities of
    Chinese fishermen who were within 200 miles of the Philippine
    coastline.
        Now, Secretary Clinton, I understand that you have been
    personally involved in trying to help resolve territorial
    disputes within the South China Sea. And I would ask you this
    question: Has the United States failure to join the Convention
    had an impact on your efforts to resolve disputes in the South
    China Sea? And if you could explain to us why and how.
        And I thank you. You did a great job up there.
        Secretary Clinton. Well, thank you very much, Senator
    Boxer, for raising this issue, because you are right. I am
    personally engaged in many bilateral and multilateral
    discussions on South China Sea issues.
        And the claims that China has made, and I'm not saying
    anything other than what I have said repeatedly to the Chinese
    themselves, are, in our view, beyond what is permitted under
    the Law of the Sea. We are working to try to help to resolve
    these disputes peacefully, and particularly to give support to
    the countries that are being threatened by these claims.
        Yet, as a nonparty to the Convention, we are forced to
    advance our interests from a position of weakness, not
    strength. As a nonparty, we cede the legal high ground to
    China. We put ourselves on the defensive. We're not as strong
    an advocate for our friends and allies in the region as I would
    like us to be. And I don't think that's anyplace for the
    world's preeminent maritime power to find ourselves.
        So the common thread, and this is something that Secretary
    Panetta stressed, is when I make an argument to the Chinese
    about resolving these disputes, I premise it on a rules-based
    order in the region, that they cannot have a Chinese rule, they
    have to be bound by the treaty obligations and the legal
    framework set forth in the Convention. And our credibility and
    our strategic position would be strengthened were we a member.
        Senator Boxer. Thank you.
        My last question I would give to Secretary Panetta. And I
    know you spoke about Iranian threats to close the Strait of
    Hormuz. You alluded to that. But I have a specific question.
        According to the U.S. Energy Information Administration,
    they said, ``Hormuz is by far the world's most important
    chokepoint due to its daily oil flow with approximately 20
    percent of the world's oil traveling through the strait.''
    Furthermore, energy analysts say that, ``even a partial
    blockage of the strait could raise the world price of oil by
    $50 a barrel within days.''
        So would you elaborate more on how U.S. accession to the
    Law of the Sea Convention could help us address such threats
    from Iran?
        Secretary Panetta. Senator, for those that have not had a
    chance to look at the Strait of Hormuz, it is a very tight area
    that is located there. And it is under the Law of the Sea,
    there is an international passageway that is allowed, so that
    ships can carry oil through the strait.
        And it gives us the argument that we absolutely have to
    have, which is that we need, in order to protect the world's
    oil supply, which goes through the Strait of Hormuz, we have to
    do it based on the international rules provided through the Law
    of the Sea that allows for transit in that area.
        And if Iran were to engage in efforts to block the Strait
    of Hormuz, that is the very reason we have made clear that that
    is a redline that we would not tolerate. We have to keep that
    strait open.
        Senator Boxer. Thank you.
        Thank you, Mr. Chairman.
        The Chairman. Thank you very much, Senator Boxer.
        As I recognize Senator Inhofe, let me just say, Senator
    Risch, we are already working on and will work, and we want to
    work closely with Senators, Senator Inhofe and others, who may
    have questions about this, or reservations about it, to
    specifically adopt in the resolution of ratification
    appropriate reservations and/or understandings and
    declarations, and we're working on some of them now.
        And I think as this hearing process goes on, and things are
    fleshed out where there may be those issues, we are ready to
    work with you to do that.
        Senator Inhofe.
        Senator Inhofe. Thank you, Mr. Chairman.
        And also, thank you for our conversation we had on the
    floor a couple days ago, where you did agree to hold a hearing
    with those who are in opposition to the ratification of the Law
    of the Sea Treaty, which I am. So I appreciate that very much.
        And I remember so well back in 2004, when this committee
    passed out the ratification. I believe it was 16 to nothing. It
    was unanimous. We looked at it, and at that time, and still
    today, I'm a senior member of both the Armed Service Committee
    and the Environment and Public Works Committee, and so we had
    hearings. And in these hearings, we had witnesses that totally
    changed this around, so I really believe that's important. And
    I appreciate the fact that you're going to be doing that.
        Now in the limited time that we have, I'm going to really
    quickly go over two items, then I have a question for Secretary
    Panetta and General Dempsey.
        First of all, I know you talked about this in my absence
    before I came in, because I was watching part of it. If the
    United States approves the Law of the Sea Treaty, it would be
    forced to transfer billions of dollars in royalties generated
    from oil and gas production on the U.S. Extended Continental
    Shelf to the U.N. International Seabed Authority for
    redistribution to the developing world.
        Now, I grant you, in terms of the EEZ, the Exclusive
    Economic Zone, this treaty doesn't affect that. And that would
    be something we could continue to do.
        But outside the 200 nautical miles, allows the ECS--over
    which the United States currently enjoys total sovereignty and
    has been for as long as I can remember, and, thus, has the
    right to exploit all of its natural resources. So the problem
    isn't there.
        The problem is outside of the 200-nautical-mile radius. We
    have appointed, and I have read the work of the U.S.
    Interagency Extended Continental Shelf Task Force, that the
    resources there may be--talking about how to quantify the
    amount of money that we would be losing, whether we say it is
    an arrangement or a tax. I think it's a tax if it costs money.
        And they have said it would be somewhere between billions
    and trillions of dollars that we would not have in the United
    States and would be transferred in accordance with the U.N.
    International Seabed Authority.
        Now the way we arrive at this, and to put this in context,
    I would say that between 12 and 18 percent of royalties is
    about as much as they are going to allow and still continue to
    develop those resources. So the United States would receive in
    that area, according to this task force, somewhere between 12.5
    percent and 18.75 percent in royalties.
        Now the problem with this is, under article 82, the Law of
    the Sea Treaty would require the United State to give up, after
    a period of time, between 7 and 12 years, about 7 percent of
    this. And so if we take the conservative side of what the task
    force has said and say just $1 trillion, $1 trillion would
    equate to $70 billion that would be royalties that would be
    paid to the ISA as opposed to the United States. And of course,
    they would go to the organization in Kingston, Jamaica, for
    redistribution to the developing world.
        And this is the first time in history that an international
    organization, the U.N. in this case, would possess taxing
    authority over this country.
        Now, I've heard the veto argument. And I think that was
    discussed by one of the other members here. I think it Senator
    Risch.
        It is really not too important to discuss that, because
    there are two entities that would make that determination. You
    have the Council, the 36-member Council. You have the Assembly
    that would ultimately make these decisions.
        But the point is, under article 160, it is going to cost
    us--well, let's see--yes, under article 82, the payments and
    contributions shall be made annually with respect to all
    production at a site after this period of time. So what we're
    saying is, it is going to be paid regardless of where you think
    it should go or where you think it is going to go.
        The second thing that I want to cover is the environmental
    end. You know, we, for 10 years now, have rejected in both the
    House and the Senate, but primarily in the Senate, because it
    started with the Kyoto treaty, rejecting the cap and trade that
    would amount to a tax on the American people of somewhere
    between $300 billion and $400 billion. We have rejected this
    over and over and over again. There may be, at most, 25
    Senators who would vote for a cap-and-trade bill now.
        So what they are attempting to do is to do what they
    couldn't do through legislation under this treaty. Under this
    treaty, any country could sue the United States in the
    international tribunal Law of the Sea, not in the United States
    courts, I might add, or take the United State before binding
    arbitration.
        I only say this because already people are out there
    planning their lawsuits, and I would also quote from article
    212, ``adopt laws and regulations to prevent, reduce, and
    control pollution of the maritime environment from or through
    the atmosphere,'' if applicable.
        Now, what we're talking about there is what they would use
    as the basis for the lawsuit. Under the treaty, it says,
    ``States are responsible for the fulfillment of their
    international obligations.''
        Well, we know what would happen. In fact, we have
    statements by lawyers, trial lawyers around the country, saying
    that one of them here is from William C.G. Burns, citing that
    the lawsuits would come forth. He named the United States as
    the, ``the most logical state to bring action against,''
    given--to us.
        Now with that, it's understandable why groups such as
    Greenpeace and the Natural Resources Defense Council,
    Environmental Defense Fund, all have this as their top
    priority.
        So let's get back to the $70 billion. And the question I
    would have would be for Secretary Panetta and for General
    Dempsey.
        If we are talking about $70 billion, would it be better to
    have the $70 billion go to Kingston, Jamaica, to bail out some
    of the developing nations, or the following list: The Ohio-
    class ballistic missile submarine, which they have been
    wanting, that's $3 billion; to maintain the Navy's ship and
    aircraft and ground modernization program is $12 billion;
    eliminate the Navy's gap by providing 240 F-35 fighters, that's
    $3 billion; eliminate the gap in the Ford-class carrier, $11
    billion. And again, I say all five of these meet the Navy's
    request for six more Aegis ships, that's $12 billion. It adds
    up to $70 billion.
        General Dempsey, do you think it serves our national
    defense better to give that $70 billion to the ISA in Kingston,
    Jamaica, or to accomplish these programs?
        General Dempsey. Senator, I'm not going to comment on the
    hypothetical use of money we don't have. I will tell you that
    the budget we submitted supports the strategy we have
    developed.
        Senator Inhofe. No, what I'm saying is, this is money that
    I've documented pretty well, General Dempsey, that would be
    there and would be lost through this process.
        Now, on these five issues, you are very familiar with all
    of them. You know that they have been requested. You know that
    there is a gap.
        And my question again, is fulfilling those five gaps in the
    best interest of our national defense, or sending the money to
    Kingston, Jamaica?
        General Dempsey. Senator, I will only comment that I
    support this Convention on the Law of the Sea because it
    enhances my ability to provide security of the maritime domain.
        Senator Inhofe. Secretary Panetta.
        Secretary Panetta. You know, I share, obviously, the
    chairman's viewpoint with regard to why we consider this
    important.
        But I guess what I would ask, Senator, I know you've come
    up with the $70 million.
        Senator Inhofe. It's billion.
        Secretary Panetta. Or billion. But what about the literally
    billions of dollars in economic benefit that would flow from
    these companies providing energy and being able to go at our
    seabed and provide that part of the economic benefit.
        I mean, that's what you have to focus on, is that, yes,
    there may be $70 billion that may be paid in royalties, but
    what about the economic benefit that these companies would
    render to the United States?
        Senator Inhofe. The economic benefit, in answer to your
    question, Mr. Secretary, would be coming from companies that
    are already in this area, the controversial area that I
    described, I think in a very exact way.
        So if we've been doing it before, but with bilateral
    treaties with China, bilateral treaties with Russia, we can
    continue to do it, and there would be no loss there. The loss
    would be $7 billion, and that would affect our national
    security.
        And I'm looking forward, Mr. Chairman, to the hearing where
    we have those in opposition.
        The Chairman. Well, I promised you that, and we'll have
    plenty of people here to do that.
        But let me just say to you, Senator, with all due respect,
    there is no way to contemplate what you just contemplated in
    terms of the number, because, first of all, there is no
    drilling in the extended shelf.
        The royalties only come from extended shelf. They only come
    after a certain period of time, and they are in a range of 1
    percent up to the high-end, depending on how much you extract.
    And there's no way to tell today how much has been extracted.
        Senator Inhofe. But the task force has come up with a
    figure, and I'm using their figure.
        The Chairman. I understand, and we will examine the premise
    of it and the nature of the task force and the interests of the
    task force and all of those kinds of things. We will look at
    all of that.
        But the fundamental premise here still remains this: Ronald
    Reagan renegotiated this with the oil companies and gas
    companies at the table, and they signed on to these royalties,
    which are far less than the royalties that they pay today to us
    in the Gulf of Mexico or elsewhere. And they pay them into an
    international entity that we will have a veto over as to where
    or how it may be spent.
        Senator Inhofe. And Ronald Reagan opposed this in this last
    effort, as you well know.
        The Chairman. Well, we'll hear from George Schultz, we'll
    hear from some of these people. But I think what is important
    here is to recognize you're here protecting companies from
    paying a royalty that they want to pay. You're here protecting
    companies from being able to drill where they can't drill
    without this. So they'd rather have 93 percent of something
    than 0 percent of nothing.
        Senator Inhofe. But they currently are producing and
    they're currently able to do that through bilateral treaties.
        Anyway, this will be a subject at the next hearing.
        The Chairman. We're going to go through this. They can't do
    it, because there is no bilateral treaty that can apply to the
    extended shelf. It is only through the international rules that
    come through the Law of the Sea that you can do that.
        So unless you have this in place, no company is going to
    drill. And you will sit here and say why are we importing it
    from other places, why are we buying it from other countries
    and not drilling it ourselves?
        So we are going to have this thoroughly vetted in the
    course of the next 2 months. This will be coming out of
    everybody's ears and people will be tired of it, and they will
    understand it. But we will look at every aspect of that, I
    promise you.
        And those companies will come in here and themselves tell
    you why they are not prepared to invest millions of dollars and
    put it at risk without the certainty of the claims that come
    through this treaty.
        So we'll look forward to that debate.
        Senator Shaheen.
        Senator Shaheen. Thank you, Mr. Chairman.
        And thank you for holding this hearing, you and Ranking
    Member Lugar.
        And thank you all for being here.
        General Dempsey, at an Atlantic Council forum earlier this
    month, you said that the Convention, ``gives us the framework
    to counter excessive claims by states seeking to illegally
    restrict movement of vessels and aircraft.''
        I wonder if you could elaborate a little bit on that and
    tell us specifically where we've seen these excessive claims
    and how they affect our ability to freely move around in our
    seas?
        General Dempsey. If I could, Senator, if we were here 20
    years ago, we would have all been predicting that growing world
    population, the rise of regional powers like China and India,
    would place extraordinarily challenging demands for resources,
    and that that could become destabilizing. And here we are, 20
    years later, and it's playing out.
        So the reason I'm supportive of the Convention on Law of
    the Sea is that it provides clarity on the definition of
    maritime zones, it provides clarity on navigational rights. And
    from that clarity comes stability.
        And as we now begin to rebalance our security interest into
    the Pacific, this becomes very important.
        Senator Shaheen. So I appreciate that it's a sensitive
    topic to speak to some of those excessive claims, and Senator
    Boxer had an interesting map to show what China is looking at
    versus other countries in the region, but are we seeing, in
    fact, those kinds of claims from China and other countries in
    the Pacific that are affecting our freedom of movement in those
    areas or that we are concerned might in the future?
        General Dempsey. Let me go to ``might in the future,'' as I
    said, the demand on resources or the competition for resources
    is becoming far more pronounced and could potentially become
    far more dangerous. And that is true not just in the South
    China Sea, but it's also true in the Arctic.
        And I think that being part of a Convention that would help
    manage that as another instrument for our use, recognizing we
    always have sovereign interests and a military, and a Navy in
    particular, that will protect those, I do think that is wise at
    this point.
        Senator Shaheen. You know, I know we have heard some
    objections from some of our colleagues, and I'm sure we are all
    getting letters reflecting different perspectives on the
    treaty. But I want to read to you something from a letter that
    I got from a constituent, and ask you if you could respond to
    it.
        It says, and I'm quoting from the letter, ``Even the
    freedom of navigation provisions add nothing to the existing
    customary international law of the sea that seafaring nations,
    including United States, have observed for centuries.''
        Given that we haven't to date had any major disruptions at
    sea, can you respond to that and talk about why the sense now
    is that it's imperative to ratify the treaty?
        General Dempsey. I can. The customary international law
    evolves, and I can give you an example of something on the land
    domain in a moment, but it evolves, and it is subject to
    individual interpretations.
        So threading this back to my earlier answer, the rise of
    new nations competing for resources, Brazil, Russia, India,
    China, and the list goes on and on, puts us in a position
    where, unless we have this Convention with which to form a
    basis to have the conversation about resources of the sort you
    are talking about, does cause us to be increasingly at risk to
    instability.
        Now that's my job, instability. The Secretary can speak
    eloquently about the economic issues, but I'm speaking about
    the security issues.
        And so that is what has changed. And I'll give you the
    example of the land domain made that I mentioned. We are party
    to the Geneva Convention from which we derive our law of armed
    conflict. There were plenty of customary international laws
    related to the use of force, but we consciously and
    deliberately signed on to the Geneva Convention as a mechanism
    by which to have this conversation among a community of
    nations.
        And that is what's different today than was different 20
    years ago, this competition for resources, which is migrating
    increasingly into the maritime domain.
        Senator Shaheen. And thank you, General Dempsey.
        As you pointed out, Secretary Clinton, you were very
    eloquent in talking about the economic urgency of ratifying the
    treaty. And one of the areas you mentioned was the Arctic,
    we're the only Arctic nation that hasn't ratified the treaty.
        I would point out that there were a lot of people when we
    acquired Alaska, which gives us access to the Arctic, there
    were a lot of people in this country who thought that was
    folly, Seward's Folly, as we remember. And history has shown
    very differently.
        But can you talk about where we are with respect to the
    other countries who have ratified the treaty, who border the
    Arctic, and where they are in terms of exploration and any
    other activities they may be doing in the Arctic? And how we
    compare to that and how much, to what extent we might be left
    behind if we don't ratify the treaty?
        Secretary Clinton. Well, thank you for that, Senator,
    because I actually think that the Arctic is one of these areas
    where potential instability as well as economic competition are
    going to be played out. The largest single portion of the U.S.
    Extended Continental Shelf is in the Arctic, and other Arctic
    coastal nations--Russia, Canada, Norway, Denmark/Greenland--are
    all in the process of establishing the outer limits of their
    Continental Shelves in the Arctic, using the provisions of the
    Convention.
        I think we all remember Russia going down and planting a
    flag under the water, claiming the Arctic. You know, we don't
    think that has any force of law, certainly, but it demonstrates
    the intense interests in staking a claim in the Arctic.
        Further, as the Arctic warms and frees up shipping routes,
    it is more important that we put our navigational rights on a
    treaty footing and have a larger voice in the interpretation
    and development of the rules, because it won't just be the five
    Arctic nations.
        You'll see China, India, Brazil, you name it, all vying for
    navigational rights and routes through the Arctic. And the
    framework that we should establish and support is the one based
    in the Convention that will help us deal with expanding human
    activity in the Arctic, which is why I think that the time is
    so pressing for us to make this decision.
        Senator Shaheen. Thank you.
        Secretary Panetta, did you want to add to that at all?
        Secretary Panetta. No, she did it.
        Senator Shaheen. OK, thank you, Mr. Chairman.
        The Chairman. Thank you, Senator Shaheen.
        I think it's an appropriate moment to place in the record,
    since we're putting a record together here, a letter from the
    commander of the United States Northern Command, General
    Jacoby, to Senator Lugar and myself.
        And the commander states: ``National security is dependent
    on cooperative partnerships, and peaceful opening of Arctic
    waters is in the interests of the community of Arctic nations.
    The United States is the only Arctic nation that has not
    acceded to the Convention. Consequently, the Nation risks being
    excluded from strategic discussions for advancing the
    Convention with our maritime partners and for resolving
    sovereignty, sea boundary, and natural resource issues. Future
    defense and civil support scenarios in the maritime domain will
    require closely coordinated, multinational military operations
    to include the formation of coalition task forces. Our Nation's
    accession to the Convention will set the conditions for
    partnership and cooperation.''
        It goes on and says further things, but I place that in the
    record.
        Senator DeMint.
        Senator DeMint. Thank you, Mr. Chairman.
        And thank you for beginning a process of hearings. I
    appreciate the panelists and their testimony today.
        The fact is that most of the testimony today dealt with
    navigation issues and things that affect the Navy on the waters
    around the world. That is about 10 pages of the treaty.
        And certainly, we need to deal with this. There are a lot
    of theoretical advantages that I think that have been
    discussed. As has been mentioned, I think by the General, the
    United States plays by the rules, and the idea that we get into
    a rules-based system with other nations that establish some
    international rules of engagement, theoretically, I think we
    could have some honest debate on how we come out on that. It
    doesn't always come out OK.
        I know we brought China into the WTO, because we thought if
    we could get them in a rules-based system, then we would have a
    fairer system. It hasn't worked out that way.
        Only a few months ago, a lot of us here on the panel were
    squealing about China manipulating their currency and not
    playing by the rules. We know when we try to deal with the U.N.
    on sanctions against Iran, not all of the members play by the
    rules. They're not always that effective.
        And of course, we have a history of arms treaties, when we
    go back and find that the other players are not playing by the
    rules.
        So we could have a reasonable debate that there is a
    possibility that when we enter into an agreement with other
    nations that don't play by the rules, we could put ourselves at
    a disadvantage. We could talk about that later.
        The concern I have is almost 300 other pages of the treaty
    that has really not been dealt with much today. And just for a
    few clarifications, we don't have a veto in the Assembly of
    this Convention. We can have a veto in the Council, just a
    Sudan has, one of the world's leading sponsors of terror, but
    we cannot have a veto in what the Assembly decides as a whole.
        And also, the oil companies don't pay the royalties. The
    United States does. The treaty specifically says that the State
    Members pay that, and the taxpayer will ultimately pay it.
        I just want to make a few points, ask a short question.
        Of course, 160 other nations want us in this thing. We need
    to think that through, because as has been said, maybe we have
    a lot to gain, but we will pay more than any other nation that
    is part of this agreement, because of the royalties that have
    been discussed.
        Of course, they want us in this. They also get to help
    define the rules of engagement for the U.S. Navy all over the
    world. And that may be, theoretically, a good idea, but there's
    been a lot of testimony that the international rules of
    engagement on the ground for our troops in Afghanistan have put
    our folks in harm's way. So we do need to debate that.
        And we do know from the treaty that it very clearly
    subjects our states, our electric utilities, our businesses, to
    environmental lawsuits that will be arbitrated by panels that
    could be slanted against us. Because it's very clear from the
    treaty, if we have a dispute with another nation, we appoint
    two arbitrators, they appoint two arbitrators, and the
    Secretary General of the United Nations appoints the fifth.
    Those aren't odds I want to deal with when it comes to doing
    business in America.
        And I would just ask, and we talked about this already, and
    it may be directed to the General, because I certainly respect
    his advocacy for what he feels like is important to the Navy,
    but this treaty is much bigger than that, involves a lot of
    other things. And given the fact American oil companies already
    leased a lot of land 200 miles out in the gulf to begin
    development of that, and we've done that without the Law of the
    Sea Treaty.
        And we can keep the strait open, and we have committed to
    do that whether we are in this treaty or not.
        But, General, how is it in the interests of the United
    States to turn the royalties over to an unaccountable
    international bureaucracy?
        And I know Senator Inhofe asked this, but given the fact
    that we are facing billions of dollars in shortfalls and cuts
    in our military, and this is something that is real money, that
    is going to be paid to an international body at a time our
    country is almost hopelessly in debt, and it will be
    distributed to countries that may be our enemies, like Sudan,
    again, I respect your advocacy for the naval aspect of this,
    the navigation aspect, but what we're trying to deal with is
    the whole treaty, and what it might do as far as cost to the
    American taxpayer, cost to American business, and just our
    ability to operate freely around the world.
        And I know that's a loaded question, but maybe you have an
    opinion you would like to swing back at me.
        General Dempsey. Well, what I would like to say, sir, is
    that the economics of it, I will leave to the economic experts.
        But from the security perspective, I would want to have a
    further conversation about where in the treaty you see our
    rules of engagement or our activities limited, because they're
    not limited in any way.
        And by the way, sir, we never cede the rules of engagement
    on the ground, to include in Afghanistan, to any other nation
    on the face of the Earth or any other international
    organization.
        Senator DeMint. Well, I appreciate that answer, because, on
    one hand, I think we're arguing that, hey, we need this for our
    military to operate freely around the world in a rules-based
    system, and then I hear the treaty allows us, on a military or
    defense front, to completely opt out of this thing anytime we
    want.
        So why do we need to get into all of this in order to be
    able to operate our Navy as we have for years around the world?
        General Dempsey. Well, I will take a shot at it and maybe
    pass it off to either of the Secretaries.
        But right now our freedoms of navigation, right now the
    description of maritime zones and the freedoms of navigation,
    or the rights of navigation, are codified in international
    customary law. I'm not comfortable with that any longer,
    because of the reasons that I gave to Senator Shaheen, on the
    way that the security in the maritime domain is being
    challenged by some of the rising powers, by the opening of the
    Arctic and other areas around the world, where that customary
    international law is now being subjected to individual's
    interpretation. So I think it is in our benefit to become part
    of that conversation.
        Senator DeMint. General, just as a followup, some of those
    countries that are interpreting the law are already parties to
    the Law of the Sea Treaty. They're not following the rules, or
    at least they are arbitrarily interpreting them.
        What is going to be different that we are in it? Are they
    going to now abide by the rules the way we see them?
        My concern is we will abide, but they're already violating
    the rules that they have ascribed to. I don't know how this
    creates a system of rules that we can count on.
        General Dempsey. Go ahead, sir.
        Secretary Panetta. Senator, I think the question you have
    to ask yourself is whether or not acceding to this Convention
    gives us the best of both worlds. It gives us the ability to
    protect or military activities. It gives us the ability to
    conduct what we have to do in terms of our ability to operate
    in the seas. It gives us the ability to avoid any kind of
    dispute resolution with regards to military activities.
        So it does give us the ability to opt out of that with
    which we don't want to participate in.
        But at the same time, it gives us the ability to engage
    when we have to engage. I mean, better to have a seat at the
    table than not at the table, when they're dealing with issues
    that affect our claims, that affect our economy, that affect
    our rights. That is the key here.
        Senator DeMint. Mr. Secretary, is there any table in the
    world that we're not sitting at right now?
        Secretary Clinton. Well, yes, we're not sitting in the seat
    that's reserved for us at the deep seabed mining table.
        And to be clear, Senator, any Assembly decision, because
    you referenced that, has to go through the Council. We have a
    permanent seat on the Council; other members rotate.
        But I really want to do everything I can, and I know my
    colleagues feel the same way, to try to explain over the next
    months, in the process that Chairman Kerry has started, why we
    do think, as Secretary Panetta said, this is in our interests,
    and it is, for us, the best of all worlds. Because otherwise,
    we will put our economic interests and our economic players in
    a disadvantageous, uncompetitive position.
        And I think what you're hearing from both General Dempsey
    and Secretary Panetta is that when we are now facing new
    threats that largely arise out of the incredible race for
    natural resources that will be primarily based in the oceans,
    we need to be able to play any card at our disposal. And we
    think we will have more cards if we are member than if we are
    not a member.
        Senator DeMint. Thank you. Thanks to you all.
        Thank you, Mr. Chairman.
        The Chairman. Thank you, Senator.
        And I'd just point out to the Senator, we'll go into this
    further, but the veto, you are correct, is not within the
    Assembly. But there is a restriction specifically defined
    within the treaty as to what can go to the Assembly. And the
    royalties are specifically reserved to the Council to send, and
    that has to be by consensus.
        Consensus is specifically defined as requiring, any form of
    objection.
        Senator DeMint. I'd like to get into that, because it begs
    two questions. First of all, Sudan is on the Council. If we
    have a veto, they have a veto. Their interest is very different
    than ours.
        Is there a question about whether they are on the Council
    or not?
        Secretary Clinton. They are a member. They have acceded to
    the Convention.
        Senator DeMint. And they are on the Council of
    International Seabed.
        Secretary Clinton. Well, you know, a lot of Member States,
    over 160 of them, are technically within an all-member body,
    but all the important decisions are made by the Council, and
    there's absolutely nothing in this Convention which says that--
    --
        Senator DeMint. I'm speaking of the Council. I'm looking at
    the list of members right now, and Sudan is on it.
        And so if we have a veto, they have a veto. And so it's
    just something we need to look into.
        Again, the devil is in the details. We talked about some
    theoretical advantages that might address some navigation
    issues, but that only assumes if other countries are playing by
    the rules. There's very little indication within the Treaty
    Convention of the members already that that is happening or
    that we can count on it in the international community as we go
    forward.
        But again, I want to thank all of the----
        The Chairman. Let me just say to the Senator, for the
    period of time that Sudan is on the Council, it is possible,
    hypothetically, that they could veto something, and therefore,
    you could wind up with gridlock and they would look like the
    United States Senate or Congress. [Laughter.]
        But the fact is, they're not a permanent member of the
    Council. We are.
        In fact, I think we are the only permanent member. So we
    stand in a very special status that we are not currently able
    to exercise.
        And I think with respect to the Senator's fears, and other
    fears, what you're trying to protect is something that would go
    against the interests of our country. That's what we need to be
    able to protect. If Sudan votes to do something or blocks us
    from doing something that we're interested in doing, then there
    are plenty of other avenues of recourse for that, too.
        But if you're dealing with the oceans and dealing with this
    question of royalties and other things, the fact that we would
    preserve the right to protect our interests, I think what the
    Senator and others have raised as an issue is they don't want
    money going to dictators, they don't want money going to bad-
    actor countries. We can block that. We can block that until the
    cows come home.
        And so I think we can be protected.
        So again, we will go into that. And while the veto word is
    not used, it's also not used, incidentally, in the Constitution
    of the United States, but no one doubts the President has it.
        So we have the ability to be able to do it through the
    language that is there. That will become, I think, more clear
    as we go forward.
        Senator Coons.
        Senator Coons. Thank you, Chairman Kerry. I'm very glad
    that we're having this hearing today, and I appreciate all of
    you for being here.
        Senator Webb and I sent Chairman Kerry and Ranking Member
    Lugar a letter back in April, urging that we move forward to
    consideration of the Law of the Sea Treaty, and I'm grateful to
    your broad and searching and supportive testimony here today.
        When I was brand new to the Senate, one of the earlier
    meetings I took was with the then-outgoing Chief of Naval
    Operations, Adm. Gary Roughead. And when I asked him, what is
    the single most important thing we can do to help the Navy over
    the next decade, he said, without hesitation, ratify the Law of
    the Sea Treaty. I was taken aback by that, given very urgent
    shipbuilding needs, other budgetary priorities, other staffing
    issues, operational issues.
        As it turned out, Admiral Roughead's estimation, his
    assessment of the importance of this treaty, is shared, as I
    understand,
    by every living Chief of Naval Operations, not to mention every
    living Secretary of State and Secretary of Defense, and, of
    course, strongly supported by both and by Chairman Dempsey here
    today.
        I note that Senator Warner, former Senator Warner, a former
    chairman of the Armed Services Committee, former Secretary of
    the Navy, is with us here today. And I have a copy of a letter
    that he submitted to then-Chairman Biden and Ranking Member
    Lugar, commenting on incoming Chief of Naval Operations Admiral
    Roughead and how he had given very strong testimony in support
    of this treaty in 2007.
        My concern, Mr. Chairman, members of the panel, is that
    this is the treaty that time forgot, that we are locked in a
    debate that is literally decades out of date.
        And I understand some of the concerns raised by members of
    this committee. There were some flaws and some issues in this
    treaty when first negotiated in 1982. Many of them hammered
    out, resolved by 1994, by amendments, certainly by the time
    this was previously considered several times by this committee
    during your service here, Senator, now Secretary.
        I believe it is well past the time when the questions and
    concerns raised here today were compelling. And if I have to
    face questions about whether this is a critical firefight in
    the defense of American sovereignty, or a self-inflicted wound
    in a rapidly emerging global theater where our competitors are
    taking advantage of our absence, that empty seat at the table,
    then I would rather take my naval strategic advice from the
    Chief of Naval Operations, and the Chairman of the Joint Chiefs
    of Staff, and the Secretary of the Navy, than from the
    editorial pages of the Washington Times.
        So frankly, if I could, I have a few questions I would like
    to ask you. But I think what you've laid out here today is an
    overwhelming response to the question, Is the ratification of
    this treaty in the best interests of the United States?
        Senator Menendez before me asked, in sort of rapid-fire
    succession, a series of questions. Does this in any way put the
    security of the United States at threat? Does this in any way
    compromise the sovereignty of the United States? Does this in
    any way compromise our intelligence-gathering ability? And my
    recollection was, you all said no.
        Let me put it in the opposite: Does failure to ratify this
    treaty, General Dempsey, in any way compromise the ability of
    the United States to project force around the world, to support
    and sustain our allies, and to meet the threats within the
    constraints that we have, in a balanced and responsible way?
    Are we at risk as a result of failure to ratify this treaty?
        General Dempsey. Based on our current application of
    customary international law, we will, of course, assert our
    sovereignty and our ability to navigate.
        However, what it does do--and, therefore, it won't
    deteriorate, our ability to project force will not deteriorate.
        What it could cause, if we do not ratify over time, what
    could happen is that we put ourselves at risk of confrontation
    with others who are interpreting customary international law to
    their benefit. So the risk of confrontation goes up. Our
    ability to project power is unaffected.
        Senator Coons. So failure to ratify puts us at some greater
    risk of conflict. You are confident we continue to have the
    resources to meet that, but we are, as it were, unilaterally
    choosing not to use one potential tool for our national
    defense.
        General Dempsey. I would agree with that phraseology.
        The Chairman. Secretary Panetta, do you want to----
        Senator Coons. If I might, Secretary Panetta, I have the
    same question for you.
        Secretary Panetta. Senator, let me just make the point, it
    does put us at risk, and the risk is this, that if we face a
    situation that involves navigational rights, if we are not a
    party to this treaty and can't deal with it at the table, then
    we have to deal with it at sea with our naval power. And once
    that happens, we clearly increase the risk of confrontation.
        Senator Coons. And if I might, Secretary Panetta, given the

    Pacific pivot, given the aggressive, expansive actions that
    others have referred to in the South China Sea by China and
    others, in your view, does this put our allies at any risk, in
    terms of their confidence about our willingness and ability to
    fight for their territorial issues, to fight for their freedom
    of navigation of the seas?
        Secretary Panetta. Well, the majority of our allies are
    signatories. They have acceded to this Convention. They are
    part of it. And they have a difficult time understanding why we
    aren't there at the table alongside of them, making the
    arguments we need to make.
        Sure, they know we are a strong naval power. They know that
    we can exert ourselves militarily wherever we want to. But they
    also know that, in today's world, they are dealing at the table
    trying to negotiate resolutions to conflicts in a rules-based
    manner. That is the way to deal with issues like that.
        And somehow, they are concerned, and I think rightly so,
    that a great power like the United States is not there
    alongside of them.
        Senator Coons. Secretary Clinton, if I might, in 2007,
    during a previous consideration or debate over this treaty,
    Senator Murkowski voted for the Convention. Then-Governor Sarah
    Palin endorsed the Convention. You referenced earlier that this
    would extend our reach from 200 miles to 600 miles, and provide
    some predictability for investment for oil and gas extraction,
    for transoceanic cables, for seabed mining, a whole variety of
    things that are newly emergent opportunities.
        And in the Arctic, if we remain the only Arctic nation not
    to accede to the treaty, not ratify the treaty, puts us at some
    risk, both in terms defending shipping lanes and commercial
    opportunities for our own country.
        What challenges is the State Department facing in
    protecting U.S. interests in the Northwest Passage in the
    Arctic? And in your view, are we at some risk if we fail to
    ratify this treaty?
        Secretary Clinton. Well, I think one of the reasons there
    has been such strong bipartisan support coming from Alaska over
    the last decades is because they are truly on the front lines.
    We know there are natural resources there that are likely to be
    exploitable if we have the opportunity to do so.
        And so, I think, Senator, the fact that we are an Arctic
    nation, we are the only Arctic nation that has not taken the
    step of acceding to the Convention and, thereby, being able to
    demarcate our Continental Shelf and our Extended Continental
    Shelf, is seen in Alaska as a missed opportunity and a
    strategic disadvantage that is increasingly going to make us
    vulnerable as the waters and the weather warms. And there are
    going to be ships from all over the world exploring,
    exploiting, fishing--taking advantage of what rightly should be
    American sovereign territory. And nobody wants to see that
    happen.
        Senator Coons. Well, Madam Secretary, Mr. Secretary, Mr.
    Chairman of the Joint Chiefs, I am grateful for your testimony
    today.
        I'm struck, Mr. Chairman, in listening to this testimony,
    in reading the background materials and reflecting on it, how a
    fight over some of the details of this treaty that was largely
    resolved in our favor in 1994, remains frozen in time. And I
    conclude, from what I've heard so far today, that the real risk
    we face is that we are letting others draw boundaries, we are
    letting others set rules, we are leaving our economic interests
    out of the fight, and we are putting our national security
    interests at risk by failing to ratify this treaty.
        Thank you, Mr. Chairman.
        The Chairman. Thank you very much, Senator. I appreciate
    it.
        Senator Lee.
        Senator Lee. Thank you, Mr. Chairman. I thank each of the
    witnesses for joining us today.
        I am one of the people who have some concerns with this
    treaty, and I assure you that my concerns are rooted in
    something more than mythology. They're rooted in something more
    than an editorial page. They are rooted, first and foremost, in
    America's national sovereignty. And I think that is not
    something that is to be discounted here.
        One of the exchanges that I have appreciated during the
    course of our discussion this morning has surrounded what has
    been described at times as a veto on the Council. I want to
    drill down on that issue a little bit and make sure I
    understand it correctly.
        My reading of article 158 of the treaty is that it creates
    three basic bodies. It creates the Assembly, it creates the
    Council, and it creates the Secretariat, as outlined in section
    1 of article 158.
        Now in article 160, we have a basic definition of the
    purpose of the Assembly, and it describes that purpose as
    follows, it says that the Assembly shall be considered the
    supreme organ of the authority, meaning the International
    Seabed Authority based in Kingston, Jamaica.
        Then we move to article 162, which describes the purpose of
    the Council. This is the 36-member body, not to be confused
    with the 160-plus-member body that is the Assembly.
        The Council, as I understand it, is empowered to do a
    number of things, including to exercise the power outlined in
    section 2 of article 162, subsection o(i), which is to
    recommend to the Assembly rules, regulations, and procedures on
    the equitable sharing of financial and other economic benefits
    derived from activities in the area, and the payments and
    contributions made pursuant to article 82.
        So these are the royalties we are talking about, the
    escalating royalties that begin at 1 percent 5 years into the
    operation of the treaty, escalate gradually up until they get
    to 7 percent, where they remain thereafter, once they achieve
    that level.
        It appears to me, based on my reading of article 162, that
    the power of the Council, this body on which the United States
    has a seat and has what you described as veto power, is a
    recommending body.
        And it appears also to me, as I look back at 160, section
    160, subsection 2(g), that it is up to the Assembly and not to
    the Council to decide upon the equitable sharing of financial
    and other economic benefits from activities in the area.
        So, Secretary Clinton, I was wondering if you could help me
    understand, is my reading correct or am I missing something?
        Secretary Clinton. Senator, the Assembly cannot take up an
    issue unless recommended by the Council. Any decision that
    would impose any obligations on the United States or otherwise
    deal with substance must go through the Council. The
    Secretariat has no decisionmaking authority.
        So in effect, the practical consequences of this is that
    the United States would have the right to reject or, in our
    parlance, veto any decision that would result in a substantive
    obligation on the United States or that would have financial
    and budgetary implications. And that is due to the fact that
    the United States is unique in having a permanent seat on the
    Council of the International Seabed Authority, which is its
    main decisionmaking body, and that important decisions must be
    made by consensus.
        So it is our very strong conviction that, as a party, the
    United States would have an unprecedented ability to influence
    deep seabed mining activities worldwide.
        There is no other international organization that gives one
    country, and one country only, a permanent membership on a key
    decisionmaking body.
        So as examples of decisions subject to U.S. approval would
    be any rules, regulations, or procedures implementing the
    seabed mining regime or amendments thereto; any decisions
    relating to the distribution of payments for oil and gas
    production on the Continental Shelf beyond 200 nautical miles;
    adoption of any amendments to the seabed mining regime.
        And just, finally, I think it is worth saying, and this
    really echoes something that the chairman said: royalties under
    this Convention are not a net loss to the United States, but a
    net gain, because companies will not drill that far out, so
    there is no money that would be coming to the Treasury or to
    the profit of the companies. And if we are a party, we gain
    from both domestic royalties and oil production.
        So I know that there is, with any written document, and I
    am a recovering lawyer, so I have been in this position in my
    past life, there is a way to, you know, raise questions about
    where the comma is placed or where the parenthesis occurs, but
    this debate over this Convention has now gone on for 20 years.
    And when you look at the people from Jim Baker to Condi Rice to
    George Schultz to Michael Chertoff to Stephen Hadley, who have
    supported this in both administrations, Republican and
    Democratic, I just don't think we are all missing something,
    Senator.
        I think that we are trying our best to make a case that the
    United States will be advantaged and that, in fact, our
    sovereignty will be advanced.
        Senator Lee. Thank you, Secretary Clinton. And I appreciate
    your analysis on that. I appreciate the fact that that is your
    position, that it is the position of the administration.
        As I read, as I, too, am a recovering lawyer, we have to
    call ourselves recovering rather than cured or ex-lawyer.
        As I read this, I see the fact that the Assembly shall be
    considered the supreme organ, and I also see that the Assembly
    and not the Council has ultimate power to decide upon the
    equitable sharing of financial and other benefits.
        And so, that causes me to ask the question, what if those
    who serve on the Assembly disagree with your interpretation? I
    understand it is your interpretation and that of the
    administration. I also understand that it is your
    interpretation of that of the administration, that of the
    United States of America, I suppose you could say, that the
    treaty does not, as you point out, adopt any framework to tie
    the United States into a climate change control regime or any
    kind of system that could limit the emission of greenhouse
    gases.
        But in that context, the climate change context, and in
    this context, what happens if the Assembly takes a different
    position? And in the climate change context, could not the
    Assembly reach a different conclusion and read several
    provisions of the treaty, including articles 207 and 212,
    coupled with the dispute resolution provisions of annex VI,
    could it not take that interpretation and conclude differently
    from the conclusions that you have reached today?
        Secretary Clinton. We do not believe that that they could,
    on
    either the plain reading or the intent of the Convention. But
    we also believe, Senator, that concerns such as these are not
    only going to be properly vetted in this series of hearings,
    but certainly can be taken into account with the resolution of
    ratification.
        You know, there is no obligation that the United States, in
    the area of climate change, would be forced to accept or adopt
    anything done by the Assembly under the Convention of the Law
    of the Sea.
        But, as an abundance of caution, that could certainly be
    clarified and insisted upon in ratification resolution
    language.
        Senator Lee. I see my time has expired, Mr. Chairman.
        As I close, I would just like to point out that there is
    not just the Assembly. We could get hauled into a tribunal
    called for under the annex. And at that point, if this is a
    ratified treaty, arguably, our courts would be bound to enforce
    the judgments of an international tribunal convened under the
    authority.
        Thank you.
        The Chairman. Senator Lee, I'm just checking in on that,
    and it's my understanding that we would not be subject to that,
    because we would be able to choose arbitration, and arbitration
    is actually limited.
        But I see you're ready to leap.
        Senator Lee. Yes, so arbitration, so we get to choose two
    arbitrators, and the other side gets to choose two. And if we
    can't come to an agreement as to the fifth, then that person is
    chosen, I believe, by the Secretary General.
        The Chairman. But it's limited as to what it is.
        We will go through this. We're going to go through this. We
    will clarify it.
        And as the Secretary just said, this exercise is not to
    diminish our sovereignty. It's to grow our sovereignty. And we
    believe this treaty, in its whole, will grow the sovereignty.
    And we hope we can persuade you of that in the end.
        And so we have the ability, through the ratification
    process, to be able to clarify some of that.
        But second, I believe it will be clarified. If you look at,
    I think it's 160(g) that you referred to, about the rules and
    regulations, they are only able to make that decision in the
    Assembly, ``consistent with the Convention and the rules and
    regulations and procedures of the authority.'' The rules and
    regulations and procedures of authority are specifically set by
    the Council. And that is how it has worked, and that is how it
    does work.
        So in the end, the Assembly is simply implementing what has
    been put forward. And we have a veto over what that rule or
    regulation will be that they are implementing.
        So again, this will be clarified appropriately, and we will
    have the experts here who can make that clear.
        In fact, I would like to ask, I think it would be helpful,
    Madam Secretary and Mr. Secretary, if your legal teams would
    put their heads together, and I'm going to leave the record
    open for a week, if you could submit your formal legal
    understanding of that, to answer the Senator's question, I
    think that would be particularly helpful to the record.
        Secretary Panetta. We would be happy to, Senator.
        [The written response from the State Department follows:]

        During Secretary Clinton's May 23, 2012, testimony before the
    Senate Committee on Foreign Relations, you discussed whether the United
    States, as a party to the Law of the Sea Convention, would be able to
    veto decisions on distribution of royalty payments. You also discussed
    the relationship between the Convention and climate change. Please find
    herein further information on both of these issues.
    legal basis for u.s.veto over international seabed authority decisions

                      ON DISTRIBUTION OF ROYALTY PAYMENTS

        As a party to the Law the Sea Convention, as modified by the 1994
    Agreement, the United States would have the ability to veto any
    decision related to the distribution of payments resulting from
    production on the Continental Shelf beyond 200 nautical miles (Article
    82).
        Summary:

       Decisions on the distribution of any payments resulting from
            production on the Continental Shelf beyond 200 nautical miles
            are made by the Assembly of the Seabed Authority.
       However, the Assembly can only make such decisions ``upon
            the recommendation of the Council'' of the Seabed Authority.
       Any Council recommendation on this matter would need to be
            by consensus, which is defined as the absence of any formal
            objection.
       As a Party, the United States--and no other country--is
            guaranteed a permanent seat on the Council.
       Thus, as a Party and member of the Council, the United
            States could formally object to (and thereby block consensus)
            any Council recommendation on this matter.
       There would then be no Council recommendation, which would
            preclude any decision by the Assembly.

        Detailed explanation:

       Royalty payments are made ``through''--not ``to''--the
            International Seabed Authority. They are held there for
            distribution to States Parties to the Convention. Article
            82(4).
       The rules and procedures for distributing royalty payments
            are to be decided by the International Seabed Authority's
            Assembly (comprising all States Parties) only upon the
            recommendation of the Seabed Authority's Council (comprising 36
            States Parties).

            Article 162(2)(o)(i) provides that the Council ``shall . .
                . recommend to the Assembly rules, regulations and
                procedures on the equitable sharing of . . . the payments
                and contributions made pursuant to article 82 . . . .''
            Article 160(2)(f)(i) provides that the Assembly ``shall .
                . . consider and approve, upon the recommendation of the
                Council, the rules, regulations and procedures on the
                equitable sharing of payments and contributions made
                pursuant to article 82.''
            Thus, the Council is not a merely a ``recommending body''
                in the sense that its recommendations are merely advisory.
                Assembly decisions must be ``upon the recommendation'' of
                the Council.
            Article 160(2)(f)(i) provides further that ``If the
                Assembly does not approve the recommendations of the
                Council, the Assembly shall return them to
                the Council for reconsideration in light of the views
                expressed by the Assembly.''

       Any Council recommendation to the Assembly on this matter
            must be taken by consensus.

            Article 161(8)(d) provides that decisions arising under
                Article 162(2)(o) ``shall be taken by consensus.'' As noted
                above, Article 162(2)(o) pertains to Council
                recommendations on benefit sharing.
            Article 161(8)(e) provides that `` `consensus' means the
                absence of any formal objection.''

       The 1994 Agreement guarantees the United States, and only
            the United States, a permanent seat on the Council.

            Section 3, paragraph 15 of the Annex to the 1994 Agreement
                provides that ``The Council shall consist of 36 members
                [including]: (a) Four members from among those States
                Parties which, during the last five years for which
                statistics are available, have either [met certain
                consumption/imports criteria for seabed minerals], provided
                that the four members shall include . . . the State, on the
                date of entry into force of the Convention, having the
                largest economy in terms of gross domestic product, if such
                States wish to be represented in this group'' (emphasis
                added);
            The United States had the largest economy in terms of GDP
                at the time of entry into force in 1994.

        Thus, as a Party and member of the Council, any formal objection by
    the United States would preclude consensus and therefore block any
    Council recommendation to the Assembly on this matter. Without a
    recommendation, the Assembly has no authority to take a decision on the
    matter.
        Furthermore, if the United States were to agree to a Council
    recommendation but the Assembly did not support it, the matter would
    have to be returned to the Council for reconsideration. Therefore, the
    Assembly could not change a recommendation of the Council without the
    Council's approval.
        Finally, as a Party, the United States would have a veto over far
    more deep seabed mining matters than just those on the distribution of
    royalty payments. The Convention, as modified by the 1994 Agreement, is
    structured to ensure consensus decisionmaking not just for distributing
    royalty payments but for any decision that would result in a
    substantive obligation on the United States or that would have
    financial and budgetary implications. For instance, the United States
    could block a decision on any rules, regulations and procedures
    implementing the seabed mining regime or amendments thereto.

                                 CLIMATE CHANGE

        The Law of the Sea Convention is an oceans treaty, not a climate
    treaty. Joining the Convention would not require the United States to
    implement the Kyoto Protocol or any other particular climate change
    laws or policies, and the Convention's provisions could not
    legitimately be argued to create such a requirement.
        Part XII of the Convention addresses the marine environment.
    ``Pollution of the marine environment'' is defined in Article 1,
    paragraph 4. Even if one assumed, for the sake of argument, that (1)
    Part XII applied to the issue of climate change; (2) ``pollution of the
    marine environment'' existed within the meaning of Article 1(4); (3)
    there was a causal link between a Party's GHG emissions and such
    pollution; and (4) other requirements were satisfied, Part XII would
    still not require a Party to adopt particular climate laws or policies.
        Part XII's arguably relevant provisions are either extremely
    general (e.g., Article 194) or expressly do not require a Party to
    implement any particular standards.

       Articles 207 and 212 call on Parties merely to ``tak[e] into
            account internationally agreed rules, standards and recommended
            practices and procedures.''
       Articles 213 and 222, which are the ``enforcement''
            analogues to Articles 207 and 212, would likewise not require
            the United States to adopt or enforce particular standards
            related to climate change. The ``enforcement'' section of Part
            XII allocates responsibilities among flag States, coastal
            States, and port States, depending upon the source/type of
            marine pollution in question. Adoption and enforcement of laws
            in relation to Articles 207 and 212 fall within the domain of
            the State concerned. However, even if these articles applied to
            climate change, they would not require adoption/enforcement of
            Kyoto or other climate rules or standards. There are simply no
            such international rules and standards relating to climate
            change applicable to the United States.

        The Convention would also not provide a forum for challenging U.S.
    climate change policies.

       Domestically, the Convention could not be invoked in court;
            it does not create rights of action or other enforceable
            individual legal rights in U.S. courts. (See declaration 24 of
            the draft resolution of advice and consent and the Committee
            Report of December 19, 2007, at page 18.)
       Internationally, dispute resolution is not open to
            individuals or groups, only States Parties. Were a State Party
            to seek to challenge U.S. climate policies under the guise of a
            ``marine environment'' dispute, the Convention's dispute
            settlement procedures would not be available.

            Because of the sensitivities of coastal States concerning
                their land-based (and certain other) activities, the
                Convention sets forth limitations on the obligations
                related to marine pollution that could be subject to
                dispute resolution.
            Specifically, Article 297(1)(c) sets out the exclusive
                bases upon which a coastal State would be subject to
                dispute resolution for pollution of the marine environment.
            Among other things, there would need to be a ``specified''
                international rule or standard ``applicable'' to the
                coastal State. As noted, no provision of the Convention
                ``applies'' international rules or standards to the United
                States in this area, much less a ``specified'' one. As
                such, it would not be possible to invoke the dispute
                resolution procedures to challenge the United States in
                relation to climate change.
            Were a State Party to seek to invoke the Framework
                Convention on Climate Change (to which the United States is
                a Party) as the basis for a challenge under the LOS
                Convention, Articles 280 and 281 of the Convention would
                further preclude recourse to the Law of the Sea
                Convention's dispute resolution procedures. (These Articles
                provide that Parties can choose to resolve disputes by
                means of their own choosing, including through other
                agreements. The Framework Convention on Climate Change
                already contains provisions for dispute settlement, and
                those provisions do not entail any legally binding
                procedures between Parties unless the Parties agree on such
                procedures.)

        Thus, the Convention would not obligate the United States to have
    in place any particular climate laws or policies, and it would not
    subject U.S. climate change approaches to dispute resolution.
        U.S. agencies, including the Coast Guard, EPA, and the Justice
    Department, have been acting in accordance with Part XII of the
    Convention since President Reagan directed the U.S. Government to abide
    by the bulk of the Convention's provisions. Were the United States to
    become a Party to the Convention, U.S. agencies would implement Part
    XII under existing laws, regulations, and practices. This was confirmed
    in a March 1, 2004, letter to Chairman Lugar from William H. Taft IV,
    the State Department's Legal Adviser during the Bush administration.
    The letter provided, in pertinent part: ``The United States, as a
    Party, would be able to implement the Convention through existing laws,
    regulations, and practices (including enforcement practices), which are
    consistent with the Convention and which would not need to change in
    order for the United States to meet its Convention obligations.''
        We stand by the Taft letter.

        The Chairman. Senator Lugar, do you have additional
    questions?
        On that basis, let me just thank all of you. I think this
    has been a terrific opening engagement. I appreciate,
    obviously, the focus of everybody on it.
        I'm confident that these questions are going to be answered
    as we go forward. There is going to be plenty of opportunity.
        We will have more of the active commanders of each of the
    areas of concern, who will speak to their experience in the
    field. We will have the businesses themselves come forward. We
    will have some other groups and entities who are concerned. And
    we'll have plenty of opportunity to be able to vet this as we
    go forward.
        I think your testimony today was excellent and a terrific
    beginning to this process. We're going to build the most
    extensive, exhaustive record that has yet been on this, and I
    think provide our colleagues in the Senate with ample
    opportunity to be able to make a sound decision.
        So with that, we thank you very, very much for joining us
    today. And we thank you for the jobs you are doing, all of you.
    Appreciate it very much.
        We stand adjourned.
        [Whereupon, at 12:55 p.m., the hearing was adjourned.]
                                  ----------

            Letters and Additional Material Submitted for the Record

      Responses of Secretary of State Hillary Rodham Clinton to Questions
                       Submitted by Senator John F. Kerry

        Questions 1a-1g. Some have expressed concerns that the Law of the
    Sea Convention would require the United States to accede to, or
    otherwise comply, with international climate change agreements, such as
    the Kyoto protocol. Among other things, they point to article 212 of
    the Convention, which provides, inter alia, that states parties shall
    ``adopt laws and regulations to prevent, reduce, and control pollution
    of the marine environment from or through the atmosphere, applicable to
    the air space under their sovereignty and to vessels flying their flag
    or vessels or aircraft of their registry, taking into account
    internationally agreed rules, standards and recommended practices and
    procedures and the safety of air navigation.'' They also point to
    article 222 of the Convention, which provides, inter alia, that states
    parties to the Convention ``shall adopt laws and regulations and take
    measures necessary to implement applicable international rules and
    standards established through competent international organizations or
    diplomatic conferences to prevent, reduce, and control pollution of the
    marine environment from or through the atmosphere, in conformity with
    all relevant international rules and standards concerning the safety of
    air navigation.''

       (1a). Would United States accession to the Law of the Sea
            Convention require the United States to sign or accede to the
            Kyoto protocol or to sign, ratify, or accede to any other
            international agreement, legally binding or otherwise,
            concerning climate change?

        Answer. No. The Law of the Sea Convention is an oceans treaty, not
    a climate treaty. Joining the Convention would not require the United
    States to implement the Kyoto Protocol or any other particular climate
    change laws or policies, and the Convention's provisions could not
    legitimately be argued to create such a requirement.

       (1b). Would United States accession to the Law of the Sea
            Convention require the United States to adopt any new laws or
            regulations to implement rules or standards related to climate
            change established by international organizations or at
            diplomatic conferences?

        Answer. No. The Convention would not obligate the United States to
    adopt any such laws or regulations.

       (1c). If your response to questions 1(a) and/or 1(b) is
            ``no,'' please explain in detail why the Convention, including
            Articles 207, 212 or 222, would not require such action by the
            United States.

        Answer. These articles appear in Part XII of the Convention, which
    addresses the marine environment. ``Pollution of the marine
    environment'' is defined in Article 1, paragraph 4. Even if one
    assumed, for the sake of argument, that (1) Part XII applied to the
    issue of climate change; (2) ``pollution of the marine environment''
    existed within the meaning of Article 1(4); (3) there was a causal link
    between a Party's GHG emissions and such pollution; and (4) other
    requirements were satisfied, Part XII would still not require a Party
    to adopt particular climate laws or policies.
        Part XII's arguably relevant provisions are either extremely
    general (e.g., Article 194) or expressly do not require a Party to
    implement any particular standards.

        Articles 207 and 212 call on Parties merely to ``tak[e] into
                account internationally agreed rules, standards and
                recommended practices and procedures.''
        Articles 213 and 222, which are the ``enforcement'' analogues
                to Articles 207 and 212, would likewise not require the
                United States to adopt or enforce particular standards
                related to climate change. The ``enforcement'' section of
                Part XII allocates responsibilities among flag States,
                coastal States, and port States, depending upon the source/
                type of marine pollution in question. Adoption and
                enforcement of laws in relation to Articles 207 and 212
                fall within the domain of the State concerned. However,
                even if these articles applied to climate change, they
                would not require adoption or enforcement of Kyoto or other
                climate rules or standards. There are simply no such
                international rules and standards relating to climate
                change applicable to the United States.

       (1d). Has any dispute resolution proceeding been instituted
            under the Convention against a country alleging failure to
            adopt or implement the Kyoto protocol or another international
            climate change agreement or climate change rules and standards
            established by international organizations or at diplomatic
            conferences?

        Answer. No. In the 18 years since the Convention has been in force,
    climate change has not been the subject of any dispute settlement
    proceedings.

       (1e). Would United States accession to the Law of the Sea
            Convention require the United States to adopt ``cap and trade''
            legislation or regulations?

        Answer. No. The Convention would not require the United States to
    adopt ``cap and trade'' legislation or regulations or any other
    particular climate laws or policies.

       (1f). If your response to question 1(f) is ``no,'' please
            describe in detail why the Convention, including Articles 207,
            212 or 222, would not require the United States to adopt ``cap
            and trade'' legislation or regulations.

        Answer. See Answer (1c) above.

       (1g). Has any dispute resolution proceeding been instituted
            under the Convention against a country alleging failure to
            adopt or enforce ``cap and trade'' legislation or regulations?

        Answer. No. Climate change has not been the subject of any dispute
    settlement proceedings.

        Questions 2a-2c. Some have expressed concerns that United States
    accession to the Law of the Sea Convention will expose the United
    States to baseless environmental lawsuits, including lawsuits relating
    to land-based sources of pollution of the marine environment.

       (2a). Are there any environmental provisions of the Law of
            the Sea Convention that the United States does not already
            follow as a matter of domestic law and regulation?

        Answer. No. U.S. agencies, including the Coast Guard, EPA, and the
    Justice Department, have been acting in accordance with the Convention
    since President Reagan directed the U.S. Government to abide by the
    bulk of the Convention's provisions in 1983. Were the United States to
    become a Party to the Convention, U.S. agencies would implement its
    ``marine environment'' provisions under existing laws, regulations, and
    practices. This was confirmed in a March 1, 2004, letter to Chairman
    Lugar from William H. Taft IV, the State Department's Legal Adviser
    during the Bush administration. The letter provided, in pertinent part:
    ``The United States, as a Party, would be able to implement the
    Convention through existing laws, regulations, and practices (including
    enforcement practices), which are consistent with the Convention and
    which would not need to change in order for the United States to meet
    its Convention obligations.'' We stand by the Taft letter.

       (2b). Would United States accession to the Convention
            require the United States to adopt new or different
            environmental laws or regulations?

        Answer. No. As discussed in Answer (2a), the United States would be
    able to implement the Convention through existing laws and regulations,
    including those related to the marine environment.

       (2c). Has any dispute resolution proceeding been instituted
            under the Convention against a country for failing to adopt or
            enforce environmental standards or rules contained in
            international agreements to which that country was not a Party,
            or that were adopted by international organizations or
            diplomatic conferences over that country's objection?

        Answer. No. In the 18 years since the Convention has been in force,
    no such proceeding has been instituted.

        Question 3. Article 309 of the Convention states that no
    reservations or exceptions are permitted unless they are expressly
    permitted by other articles of the Convention. Article 310 of the
    Convention states that a State acceding to the Convention may make
    declarations or statements concerning the Convention ``provided that
    such declarations or statements do not purport to exclude or to modify
    the legal effect of the provisions of this Convention in their
    application to that State.'' In 2007 the Senate Foreign Relations
    Committee recommended that the following declaration be included in a
    resolution of advice and consent for the Convention: ``The United
    States further declares that its consent to accession to the Convention
    is conditioned upon the understanding that, under article 298(1)(b),
    each State Party has the exclusive right to determine whether its
    activities are or were `military activities' and that such
    determinations are not subject to review.''

       Has any court or arbitration tribunal established under the
            Convention contradicted a State Party's exclusive right to
            determine whether its activities are or were ``military
            activities''?

        Answer. No State Party has challenged and no court or arbitration
    established under the Convention has contradicted a State Party's
    exclusive right to determine whether its activities are or were
    ``military activities.''
        The exemption of U.S. ``military activities'' from dispute
    settlement procedures is consistent with the terms of the Convention.
    If a tribunal were nevertheless to second-guess a U.S. judgment as to
    what constitutes a U.S. ``military activity,'' the United States would
    view that judgment as lacking a legal basis and invalid, and it would
    therefore have no legal effect on the United States.

        Questions 4a-4e. The Law of the Sea Convention contains several
    provisions relating to the Extended Continental Shelf--the area of a
    coastal State's Continental Shelf that extends beyond 200 nautical
    miles from the coast--including that a coastal State's establishment of
    the outer limits of its Continental Shelf on the basis of
    recommendations from the Commission on the Limits of the Continental
    Shelf ``shall be final and binding'' on all State Parties to the
    Convention.

       (4a). Has the United States of America issued any oil or gas
            leases relating to the U.S. Extended Continental Shelf?

        Answer. Yes, the Department of Interior has issued leases in the
    ``western gap,'' a small high seas area in the Gulf of Mexico, beneath
    which is Extended Continental Shelf of the United States and Mexico.

       (4b). If the answer to question 7(a) is ``yes,'' are any of
            these lease areas currently in the production stage--i.e., are
            resources actually being extracted at this time?

        Answer. According to the Department of Interior, it has not
    received any exploration plans for these areas and no exploratory
    drilling has taken place in the leased areas.

       (4c). If the answer to question 7(a) is ``yes,'' please
            explain why accession to the Law of the Sea Convention remains
            necessary.

        Answer. The best way to achieve international recognition of our
    Continental Shelf is as a Party to the Convention. The U.S. Chamber of
    Commerce, the American Petroleum Institute, and the companies that
    would potentially be involved in resource development on the
    Continental Shelf all support accession to the Convention because they
    desire such international legal recognition and certainty.
        A key element of achieving this legal certainty and international
    recognition is access to the Commission of technical experts set up
    under the Convention. If the United States remains a nonparty, and
    attempts to establish its Continental Shelf limits without a review by
    the expert Commission, it is unlikely the international community would
    give those limits the same sort of recognition and acceptance that
    Parties to the Convention will enjoy.

       (4d). Rather than acceding to the Law of the Sea Convention,
            could the United States achieve the same level of legal
            certainty for drilling activities on the U.S. Extended
            Continental Shelf by negotiating bilateral agreements with
            neighboring countries? To fully replicate the Extended
            Continental Shelf protections of the Convention, how many
            agreements would the United States need to conclude?

        Answer. No. Two countries can agree on how to divide their own
    maritime claims, but they cannot decide what is, and what is not,
    Continental Shelf that extends beyond their Exclusive Economic Zone
    limits. That is a matter that concerns all countries. As such, a series
    of bilateral agreements, assuming other countries were even willing to
    negotiate such agreements and agree to U.S. terms, would not be the
    equivalent of joining the Convention and using its mechanisms to get
    binding international recognition of our shelf beyond 200 nautical
    miles from the over 160 States Parties to the Convention.
        In short, we cannot gain the certainty and security over our
    Continental Shelf that our industry needs to be prepared to make the
    substantial investments necessary to exploit it by negotiating
    bilateral agreements with individual nations. The way to secure our
    Continental Shelf rights is to become a Party to the Convention.

       (4e). How are foreign governments likely to react if the
            United States were to approach them and ask that they sign a
            separate deal that replicates the protection for Extended
            Continental Shelf activity that is contained in the Convention?

        Answer. It is not clear how other countries would react and
    whether, if they agreed to such negotiations, they would be prepared to
    conclude agreements on terms favorable to the United States. At
    present, the United States has 17 unresolved maritime boundaries with
    various neighbors. The process of addressing those disputes and
    concluding them pursuant to a mutually acceptable agreement is
    challenging and time-consuming, and it is important that the United
    States not conclude such agreements unless they are on terms favorable
    to the United States. Even neighboring countries that may be interested
    in negotiating boundary agreements with us understand that such
    agreements cannot ``replicate'' the Convention in regards to the
    Continental Shelf.

        Questions 5a-5b. In your testimony you noted that the International
    Seabed Authority may begin as early as 2013 the process of developing
    rules governing mining in the deep seabed.

       (5a). As a nonparty to the Convention, what ability will the
            United States have to shape those rules in ways favorable to
            U.S. interests or to block attempts by other states to shape
            the rules in ways contrary to U.S. interests?

        Answer. As a nonparty, the United States participates as an
    observer to the International Seabed Authority. As an observer, without
    a vote or formal voice, the United States has very limited ability to
    shape deep seabed mining rules in its interests. For instance, the
    United States has no ability as an observer to block
     proposals by members of the Seabed Authority's Council, including
    proposals by members related to deep seabed mining rules and proposals
    for the distribution of payments made for oil and gas production on the
    Continental Shelf beyond 200 nautical miles.

       (5b). How would this change if the United States were to
            become a Party to the Convention this year? What provisions of
            the Convention support your conclusions in this regard?

        Answer. As a Party, the United States would have an unprecedented
    and unparalleled ability to influence deep seabed mining activities
    worldwide. No other international organization gives one country, and
    one country only--the United States--permanent membership on its key
    decisionmaking body. If the United States acceded to the Convention
    this year, it would be able to fill this seat at the Seabed Authority's
    meeting in 2013.
        The 1994 Agreement guarantees the United States, and only the
    United States, a permanent seat on the 36-member Council. Specifically,
    Section 3(15) of the Annex to the Agreement provides that Council
    membership shall include the State having the largest gross domestic
    product at the time of entry into force of the Convention, which was
    1994. That country was the United States.
        Furthermore, the Convention, as modified by the 1994 Agreement, is
    structured to require consensus decisionmaking for any decision that
    would result in a substantive obligation on the United States or that
    would have financial and budgetary implications. For instance, the
    United States could use its permanent seat to block a decision on any
    rules, regulations, and procedures implementing the seabed mining
    regime or amendments thereto.

        Questions 6a-6b. In your testimony you made repeated references to
    the fact that the United States would, upon its accession to the
    Convention, have an effective veto over the way that the International
    Seabed Authority distributes any royalties or fees that it receives
    with respect to exploitation in the Extended Continental Shelf or the
    deep seabed.

       (6a). Please describe in detail the provisions of the
            Convention that support this conclusion.

        Answer. As a Party to the Law the Sea Convention, as modified by
    the 1994 Agreement, the United States would have the ability to veto
    any decision related to the distribution of payments resulting from
    production on the Continental Shelf beyond 200 nautical miles (Article
    82).
        Summary of Convention provisions supporting this conclusion:

        Decisions on the distribution of any payments resulting from
                production on the Continental Shelf beyond 200 nautical
                miles are made by the Assembly of the Seabed Authority.
        However, the Assembly can only make such decisions ``upon the
                recommendation of the Council'' of the Seabed Authority.
        Any Council recommendation on this matter would need to be by
                consensus, which is defined as the absence of any formal
                objection.
        As a Party, the United States--and no other country--is
                guaranteed a permanent seat on the Council.
        Thus, as a Party and member of the Council, the United States
                could formally object to (and thereby block consensus on)
                any Council recommendation on this matter.
        There would then be no Council recommendation, which would
                preclude any decision by the Assembly.

        Detailed explanation of Convention provisions supporting this
    conclusion:

        Royalty payments are made ``through''--not ``to''--the
                International Seabed Authority. They are held there for
                distribution to States Parties to the Convention. Article
                82(4).
        The rules and procedures for distributing royalty payments are
                to be decided by the International Seabed Authority's
                Assembly (comprising all States Parties) only upon the
                recommendation of the Seabed Authority's Council.

          Article 162, paragraph (2)(o)(i) provides that the Council
                ``shall . . . recommend to the Assembly rules, regulations
                and procedures on the equitable sharing of . . . the
                payments and contributions made pursuant to article 82 . .
                . .''
          Article 160, paragraph (2)(f)(i) provides that the Assembly
                ``shall . . . consider and approve, upon the recommendation
                of the Council, the rules, regulations and procedures on
                the equitable sharing of payments and contributions made
                pursuant to article 82.''
          Thus, the Council is not a merely a ``recommending body'' in
                the sense that its recommendations are merely advisory.
                Assembly decisions must be ``upon the recommendation'' of
                the Council.
          Article 160, paragraph (2)(f)(i) provides further that
                ``[i]f the Assembly does not approve the recommendations of
                the Council, the Assembly shall return them to the Council
                for reconsideration in light of the views express by the
                Assembly.''

        Any Council recommendation to the Assembly on this matter must
                be taken by consensus.

          Article 161, paragraph (8)(d) provides that decisions
                arising under Article 162, paragraph (2)(o) ``shall be
                taken by consensus.'' As noted above, Article, paragraph
                162(2)(o) pertains to Council recommendations on benefit
                sharing.
          Article 161, paragraph (8)(e) provides that `` `consensus'
                means the absence of any formal objection.''

        The 1994 Agreement guarantees the United States, and only the
                United States, a permanent seat on the Council.

          Section 3, paragraph 15 of the Annex to the 1994 Agreement
                provides that ``The Council shall consist of 36 members
                [including]: (a) Four members from among those States
                Parties which, during the last five years for which
                statistics are available, have either [met certain
                consumption/imports criteria for seabed minerals], provided
                that the four members shall include . . . the State, on the
                date of entry into force of the Convention, having the
                largest economy in terms of gross domestic product, if such
                States wish to be represented in this group;''
          The United States had the largest economy in terms of GDP at
                the time of entry into force in 1994.

        Thus, as a Party and member of the Council, any formal objection by
    the United States would preclude consensus and therefore block any
    Council recommendation to the Assembly on this matter. Without a
    recommendation, the Assembly has no authority to take a decision on the
    matter.
        Furthermore, if the United States were to agree to a Council
    recommendation but the Assembly did not support it, the matter would
    have to be returned to the Council for reconsideration. Therefore, the
    Assembly could not change a recommendation of the Council without the
    Council's approval.
        Finally, as a Party, the United States would have a veto over far
    more deep seabed mining matters than just the distribution of royalty
    payments. For instance, the United States could block a decision on any
    rules, regulations, and procedures implementing the seabed mining
    regime or amendments thereto. As explained in the answer to question 7,
    this includes rules, regulations, and procedures relating to any
    royalties relating to deep seabed mining.

       (6b). How many other countries are guaranteed a permanent
            seat on the Council of the International Seabed Authority?

        Answer. None. No countries other than the United States have a
    permanent seat on the Council of the International Seabed Authority.

        Questions 7a-7c. What payments, if any, must Parties to the
    Convention or companies that they sponsor pay to the International
    Seabed Authority in connection with exploitation of the deep seabed? To
    the extent that the rules or regulations concerning such payments are
    not yet in place, please describe:

       (7a). The process by which the amount of such payments will
            be determined.

        Answer. With the exception of an application fee, described below,
    there are presently no payments that Parties or companies must make for
    exploitation of the deep seabed.
        Prior to the 1994 Agreement, the Convention contained extensive
    provisions on payments related to deep seabed mining. These problematic
    provisions were eliminated by the 1994 Agreement, which takes a ``cost-
    effective'' and ``evolutionary approach.'' (Agreement, Annex, Sections
    1 and 8) Specifically, in lieu of the Convention's original provisions,
    the Agreement provides a set of principles that provide the basis for
    establishing future rules, regulations, and procedures for financial
    payments related to deep seabed mining. (Agreement, Section 8) For
    instance, the Agreement provides that the system of payments:

        ``Shall be fair to both the contractor and to the Authority'';
        ``Shall . . . avoid giving deep seabed miners an artificial
                competitive advantage or imposing on them a competitive
                disadvantage'' relative to land-based mineral producers;
                and
        ``should not be complicated and should not impose major
                administrative costs on the Authority or on a contractor.''
                (Agreement, Section 8(1))

        These provisions reflect market principles and are a fundamental
    change from the original Convention. They also reflect the cost-
    effective and evolutionary approach adopted in the Agreement; rather
    than decide on financial matters in advance, the Agreement provides
    that rulemaking within the Seabed Authority be undertaken ``at various
    stages of the development of activities in the area.'' (Agreement,
    Annex, Section 1) Since activities in the Area presently remain at the
    exploration (rather than exploitation) phase, the Seabed Authority has
    not yet developed any rules for payments related to exploitation.
        The Agreement provides for a fee of US$250,000 ``for processing
    applications'' of either exploration or exploitation. (Agreement,
    Section 8(3)) The amount of that fee is to be ``reviewed from time to
    time by the Council in order to ensure that it covers the
    administrative cost incurred. If such administrative cost incurred by
    the Authority in processing the application is less than the fixed
    amount, the Authority shall refund the difference to the applicant.''
    (Convention, Annex III, Article 13(2))
        Finally, it is important to note that the purpose of payments to
    the Seabed Authority is to cover its expenses and enable it to be a
    financially self-sufficient entity. When the Seabed Authority is able
    to meet its administrative expenses from funds received in connection
    with mining activities, it will no longer request assessed
    contributions from Parties.

       (7b). [To the extent that the rules or regulations
            concerning such payments are not yet in place, please
            describe:] the extent to which the United States, as a nonparty
            to the Convention, would have the ability to influence the
            rules and regulations relating to such payments; and

        Answer. As a nonparty, the United States participates as an
    observer to the International Seabed Authority. As an observer, without
    a vote or formal voice, the United States has very limited ability to
    influence rules and regulations relating to payments from deep seabed
    mining, and no ability to block objectionable proposals on payments
    related to deep seabed mining. Thus, it is particularly important that
    the United States accede to the Convention prior to key decisions by
    the Seabed Authority on this and other deep seabed mining issues.

       (7c). [To the extent that the rules or regulations
            concerning such payments are not yet in place, please
            describe:] the extent to which the United States, as a Party to
            the Convention, would have the ability to influence the rules
            and regulations relating to such payments.

        Please explain the provisions of the Convention that support your
    conclusions in this regard.

        Answer. As a Party to the Convention, the United States would have
    an unprecedented and unparalleled ability to influence deep seabed
    mining activities worldwide, including with respect to rules and
    regulations relating to such payments. As a Party, decisions on the
    rules, regulations, and procedures implementing the seabed mining
    regime could not be adopted without approval of the United States. This
    is provided for in the following provisions:

        Article 160, paragraph (2)(f)(ii), on Assembly approval,
        Article 162, paragraph (2)(o)(ii), on powers of the Council,
                and
        Article 161, paragraph (8)(d), on consensus decisionmaking in
                the Council.
        1994 Agreement, Annex, Section 3(15)(a), providing the United
                States with a permanent seat on the Council.

        Questions 8a-8e. Article 160, Subsection 2(g) of the Convention
    states that a duty of the Assembly of the International Seabed
    Authority is to ``decide upon the equitable sharing of financial and
    other economic benefits derived from activities in the [Deep Seabed]
    Area, consistent with this Convention and the rules, regulations and
    procedures of the Authority.''

       (8a). What are the ``rules, regulations and procedures''
            referenced in this provision?

        Answer. The reference to ``rules, regulations and procedures'' in
    Article 160, paragraph 2(g) refers to all rules, regulations, and
    procedures of the Seabed Authority.
        Of particular relevance would be any ``rules, regulations and
    procedures'' adopted relating to the ``sharing of financial and other
    economic benefits'' derived from activities in the deep seabed area.
    (Article 160, paragraph (2)(f)(i)) to date, however, no such rules,
    regulations, and procedures have been adopted.

       (8b). Which body or bodies of the International Seabed
            Authority promulgates them?

        Answer. Decisions on ``rules, regulations and procedures'' that
    relate to ``sharing of financial and other economic benefits'' derived
    from activities in the deep seabed area are made by the Assembly of the
    Seabed Authority. However, the Assembly can only make such decisions
    ``upon the recommendation of the Council'' of the Seabed Authority, and
    such decisions must be taken by consensus. Along the same lines as
    detailed in the response to Question 6a, this is provided for in
    Articles:

        160, paragraph (2)(f)(i), on Assembly approval,
        162, paragraph (2)(o)(i), on powers of the Council, and
        161, paragraph (8)(d), on consensus decisionmaking in the
                Council.

        As a Party, the United States would have a permanent seat on the
    Council (1994 Agreement, Annex, Section 3(15)(a)) and, therefore, the
    United States would have the ability to veto any proposed decision on
    this matter at any time.

       (8c). Can the Assembly take a decision under Article 160,
            Subsection 2(g) of the Convention that contravenes these rules,
            regulations and procedures?

        Answer. No. Article 160, paragraph 2(g) itself states that such
    decisions must be ``consistent with this Convention and the rules,
    regulations, and procedures of the Authority.''
        Furthermore, the Assembly may not take a decision on those ``rules,
    regulations, and procedures'' unless it is ``upon the recommendation of
    the Council.'' Specifically, Article 160, paragraph (2)(f)(i) states
    that ``[i]f the Assembly does not approve the recommendations of the
    Council, the Assembly shall return them to the Council for
    reconsideration . . . .'' Thus, if the United States were to agree to a
    Council recommendation, but the Assembly did not support it, the matter
    would have to be returned to the Council for reconsideration. The
    Assembly could not change a recommendation of the Council without the
    Council's approval.
        Thus, the Council is not a merely a ``recommending body'' in the
    sense that its recommendations are merely advisory. Assembly decisions
    must be ``upon the recommendation'' of the Council.

       (8d). Can the Assembly take such a decision without first
            receiving a recommendation from the Council?

        Answer. As discussed above, decision on any rules, regulations, and
    procedures related to ``sharing of financial and other economic
    benefits'' must be upon the recommendation of the Council, and no such
    decision or recommendation has been made.
        Whether the Assembly can ultimately take decision under Article
    160, paragraph 2(g) without first receiving a recommendation from the
    Council will depend upon the rules, regulations, and procedures decided
    upon by the Council itself. To date, no such rules, regulations, and
    procedures have been adopted. As a Party, the United States could
    ensure--through the development of the rules, regulations, and
    procedures--that any Assembly decision under Article 160, paragraph
    2(g) is made only on the basis of a prior Council decision.
        In addition, the Convention as modified by the 1994 Agreement
    already provides that any actions taken by the Assembly under Article
    160, paragraph 2(g) need to first go through the Finance Committee.
    Specifically, the Agreement provides that decisions by the Assembly
    (and the Council) on ``[r]ules, regulations and procedures on the
    equitable sharing of financial and other economic benefits derived from
    activities in the Area and the decisions to be made thereon'' shall
    take into account recommendations of the Finance Committee. (Agreement,
    Annex, Section 9(7)) Thus, the Assembly could not act in the absence of
    a prior recommendation of the Finance Committee. The Agreement further
    provides that the United States is guaranteed a seat on the Finance
    Committee (until such time as the Seabed Authority is financially self-
    sufficient) and that decisions by the Finance Committee on any question
    of substance shall be taken by consensus. (Agreement, Annex, Section 9)

       (8e). Can the Assembly take such a decision contrary to the
            Council's recommendation?

        Answer. As discussed above, the Assembly may not take a decision on
    rules, regulations, and procedures that relate to ``sharing of
    financial and other economic benefits'' unless it is ``upon the
    recommendation of the Council.'' Article 160, paragraph (2)(f)(i)
    states that ``[i]f the Assembly does not approve the recommendations of
    the Council, the Assembly shall return them to the Council for
    reconsideration . . . .''
        As discussed above, whether the Assembly can ultimately take an
    action under Article 160, paragraph 2(g) without first receiving a
    recommendation from the Council will depend upon the rules,
    regulations, and procedures adopted by the Council itself and
    subsequently approved by the Assembly. As a Party, the United States
    could ensure--through the development of the rules, regulations, and
    procedures--that the Assembly can take no such a decision contrary to a
    prior decision of the Council.
                                     ______

         Responses of Secretary Leon E. Panetta to Questions Submitted
                            by Senator John F. Kerry

        Question.Freedom of Navigation Operations.--It is absolutely
    imperative that we retain the capability to protect our access to the
    skies, the high seas, the straits, and even the territorial waters of
    other nations with respect to innocent passage. The U.S. Navy has run,
    and will continue to run, multiple Freedom of Navigation operations
    every year in areas--including the South China Sea--where countries try
    to place unlawful restrictions on the freedom of navigation, to ensure
    that we and the international community do not accept as a precedent
    these unlawful claims.

       Is it correct to say that these operations are going to
            continue apace whether we're a party to the treaty or not?

        Answer. Yes, regardless of whether the United States is a party to
    the Law of the Sea Convention, U.S. Military assets will continue to
    conduct operational assertions under the U.S. Freedom of Navigation
    Program. It remains our primary operational means to challenge
    excessive maritime claims and excessive assertions of jurisdiction by
    coastal States.

       Would being a party to the Convention help our forces when
            they're out there trying to get countries to drop their
            spurious restrictions on freedom of navigation? If so, how?

        Answer. Yes. I believe strongly that joining the Convention would
    assist U.S. efforts to get countries with excessive maritime claims to
    drop their spurious restrictions on freedom of navigation. Joining the
    Convention would reinforce our position as a global maritime leader in
    shaping the discussion interpreting the Law of the Sea; and being a
    party would certainly afford us increased authority in the conduct of
    our operational assertions.

       Would being a party to the Convention help you enlist
            support from other countries to get the offending countries to
            drop their spurious claims? If so, how?

        Answer. Yes. I believe that being a party to the Convention would
    help enlist support from other countries to get offending countries to
    drop their spurious claims. Much of our defense strategy is based upon
    modernizing our network of defense and security partnerships and
    supporting a rules-based order that promotes stability. In joining the
    Convention, we would be demonstrating, actively, our commitment to such
    an order and to working with others in support of the rule of law.

       Does the fact that the United States is not now a party to
            the Convention hamper our ability to push back against these
            spurious claims?

        Answer. Yes. The fact that the United States is not a party to
    Convention complicates our ability now to challenge spurious claims. At
    present, the United States is unable to participate fully in some of
    the Convention's key institutions and meetings where these very issues
    are being discussed and shaped. Without a full seat at the table, we're
    unable to participate in these important discussions, defend our
    interests, and shape the outcome.

        Question. Dispute Resolution Mechanism.--Based on the treaty text
    and on how it is already being implemented, do you have any concern
    whatsoever over whether the United States will be able to exclude
    disputes concerning military activities from the Convention's dispute
    resolution mechanism, and that the United States will be able to decide
    for itself whether an activity is a ``military'' one for the purposes
    of the Convention?

        Answer. No, I have no concerns about U.S. ability to exclude
    military related disputes from the Convention's dispute resolution
    mechanism, should we accede to the Convention. Article 298 of the
    Convention expressly allows States to exclude ``disputes concerning
    military activities'' from dispute resolution mechanisms and
    procedures; if the United States accedes to the Convention, we would
    invoke that exception. This exception has been invoked by numerous
    States that are already parties to the Convention, including Russia,
    China, the United Kingdom, and France. Moreover, the United States
    would retain the right to determine what activities constitute
    ``military activities''--and would not be subject to review by an
    international tribunal or court.

        Question. Mandatory Technology Transfer.--Some have asserted that
    the Convention provides for mandatory technology transfer and would
    require the United States to equip adversaries with sensitive
    technology, such as antisubmarine warfare technology. Do you agree with
    this assertion?

        Answer. No, I do not agree with this assertion. There is absolutely
    no provision in the Convention that would require the United States to
    equip adversaries with sensitive technology. When the Convention was
    originally negotiated, there was a provision providing for mandatory
    technology transfer relating to deep seabed mining technology, but this
    provision was superseded by the 1994 Agreement relating to the
    Implementation of Part XI, which has no mandate for technology
    transfer.

        Question. Use or Threat of Military Force.--Some have asserted that
    because certain articles of the Convention such as Articles 88, 141,
    and 301 state that the high seas and the deep seabed should be reserved
    for ``peaceful purposes'' that U.S. accession to the Convention will
    impose new restrictions on the United States with respect to the use or
    threat of military force. Do you agree with this assertion?

        Answer. No. I do not agree with this assertion; the Convention's
    ``peaceful purposes'' provisions would not impose any new restrictions
    with regard to the United States use or threat of military force and
    would not impair the inherent right of individual or collective self-
    defense or rights during armed conflict. In fact, U.S. military
    operations and activities would not be inhibited or constrained in any
    manner if the United States became a party to the Convention. The
    ``peaceful purposes'' provisions merely repeat the same obligations
    under the United Nations Charter to which the United States has been
    obligated since 1945. This has not kept the United States from
    responding to an attack or protecting our national interests.

        Question. Size of the U.S. Navy.--Some have characterized the Law
    of the Sea Convention as a way to shrink the U.S. military--and in
    particular the U.S. Navy--by allowing the United States to rely on a
    treaty instead of military force. They argue that instead of joining
    the Convention, the United States should increase the size of the U.S.
    Navy.

       Is your support for United States accession to the Law of
            the Sea Convention motivated by a desire to shrink the size of
            the U.S. Navy and its fleet?

        Answer. No. My strong and unwavering support for U.S. accession to
    the Law of the Sea Convention is not at all motivated by a desire to
    shrink the size of the U.S. Navy and its fleet; my support is not
    linked in any way whatsoever to the size of the U.S. Navy or the size
    of DOD forces. Instead, my support is based on a fundamental belief
    that joining promotes U.S. national security interests, for several
    reasons. Joining the Convention preserves and protects our navigational
    freedoms and global access for military and commercial ships, aircraft,
    and undersea fiber optic cables. We depend on the navigational
    provisions for global access to train our forces, get them to the
    fights, sustain them and then return them home--all without a
    ``permission slip'' from other countries. Although we have succeeded to
    date in preserving and protecting our navigational freedoms through
    reliance on customary international law, joining the Convention places
    our national security on firmer footing. Customary international law
    changes over time, subject to state practice. Treaty law remains the
    firmest legal foundation upon which to base our global presence--that
    is precisely why I support U.S. accession.

       If the United States Naval fleet were doubled or tripled in
            size, would you still support immediate U.S. accession to the
            Convention?

        Answer. Yes. If the U.S. Navy fleet were doubled or tripled in
    size, I would continue to support unequivocally U.S. accession to the
    Convention. As noted earlier, I support U.S. accession regardless of
    the size of our fleet.

        Question. U.S. Maritime Interdiction Efforts.--Some have asserted
    that U.S. accession to the Convention would hurt U.S. maritime
    interdiction efforts under the Proliferation Security Initiative (PSI).
    Do you agree?

        Answer. No. U.S. accession to the Convention would not hurt U.S.
    maritime interdiction efforts under the Proliferation Security
    Initiative (PSI). It is important to note that the United States
    ability to conduct the full range of maritime interdiction operations
    would not be hampered at all by joining the Convention. In the Defense
    Strategic Guidance issued earlier this year, countering weapons of mass
    destruction remains a primary mission set for U.S. forces. PSI is a key
    tool in our arsenal for executing this mission across the maritime
    domain. To this end, joining the Convention would not interfere with
    U.S. participation in PSI; to the contrary, it would reinforce our
    long-held position that PSI is entirely consistent and compatible with
    the Convention. In fact, PSI's Statement of Interdiction Principles
    states that interdiction activities under PSI will be conducted
    ``consistent with national legal authorities and relevant international
    law frameworks.'' Rather, U.S. accession could encourage other States
    to join PSI as it would convey our commitment to the rule of law for
    the oceans to the same degree they are already committed.
                                     ______

           Responses of Gen. Martin E. Dempsey to Questions Submitted
                            by Senator John F. Kerry

        Question. Freedom of Navigation Operations.--It is absolutely
    imperative that we retain the capability to protect our access to the
    skies, the high seas, the straits, and even the territorial waters of
    other nations with respect to innocent passage. The U.S. Navy has run,
    and will continue to run, multiple Freedom of Navigation operations
    every year in areas--including the South China Sea--where countries try
    to place unlawful restrictions on the freedom of navigation, to ensure
    that we and the international community do not accept as a precedent
    these unlawful claims.

       Is it correct to say that these operations are going to
            continue apace whether we're a party to the treaty or not?

        Answer. Yes. U.S. forces will continue to conduct operational
    assertions against excessive maritime claims as part of the Freedom of
    Navigation Program.

       Would being a party to the Convention help our forces when
            they're out there trying to get countries to drop their
            spurious restrictions on freedom of navigation? If so, how?

        Answer. Yes. The rules of the Convention that guarantee the freedom
    of navigation are favorable to our interests. Being a party to
    Convention would enhance the credibility of our operational assertions
    and diplomatic challenges against excessive maritime claims throughout
    the world.

       Would being a party to the Convention help you enlist
            support from other countries to get the offending countries to
            drop their spurious claims? If so, how?

        Answer. Yes. Being a party to the Convention would demonstrate U.S.
    commitment to the rules based international order and strengthen the
    foundation for partnerships with countries that share our national
    interest in preserving the navigational rights that are codified in the
    Convention.

       Does the fact that the United States is not now a party to
            the Convention hamper our ability to push back against these
            spurious claims?

        Answer. Yes, our status as a nonparty does hamper our ability to
    push back against spurious claims. Joining the Convention would allow
    us to bring the full force of our influence as the world's foremost
    maritime power to bear against countries with excessive maritime
    claims.

        Question. Dispute Resolution Mechanism.--Based on the treaty text
    and on how it is already being implemented, do you have any concern
    whatsoever over whether the United States will be able to exclude
    disputes concerning military activities from the Convention's dispute
    resolution mechanism, and that the United States will be able to decide
    for itself whether an activity is a ``military'' one for the purposes
    of the Convention?

        Answer. No, I do not have the concerns you mentioned. The United
    States has the right to forgo participation in any of the Convention's
    dispute resolution mechanisms for disputes concerning military
    activities. Other nations, including China, France, Russia, and the
    United Kingdom have exempted their military activities. This right is
    not subject to review.

        Question. Mandatory Technology Transfer.--Some have asserted that
    the Convention provides for mandatory technology transfer and would
    require the United States to equip adversaries with sensitive
    technology, such as antisubmarine warfare technology. Do you agree with
    this assertion?

        Answer. I do not agree with this assertion. Although mandatory
    technology transfer was one of the objectionable provisions related to
    deep seabed mining in the original 1982 Convention, the 1994 Agreement
    eliminated that provision. In addition, the Convention expressly
    provides that nothing in it shall be deemed to require a party to
    disclose information contrary to the essential interests of its
    security.

        Question. Use or Threat of Military Force.--Some have asserted that
    because certain articles of the Convention such as Articles 88, 141,
    and 301 state that the high seas and the deep seabed should be reserved
    for ``peaceful purposes'' that U.S. accession to the Convention will
    impose new restrictions on the United States with respect to the use or
    threat of military force. Do you agree with this assertion?

        Answer. I do not agree with this assertion. Those provisions simply
    incorporate into the Convention the same obligations that the United
    States already has under the U.N. Charter.

        Question. Size of the U.S. Navy.--Some have characterized the Law
    of the Sea Convention as a way to shrink the U.S. military--and in
    particular the U.S. Navy--by allowing the United States to rely on a
    treaty instead of military force. They argue that instead of joining
    the Convention, the United States should increase the size of the U.S.
    Navy.

       Is your support for United States accession to the Law of
            the Sea Convention motivated by a desire to shrink the size of
            the U.S. Navy and its fleet?

        Answer. No. My support for the Convention is not motivated by a
    desire to shrink the U.S. Navy. The Convention codifies rules that are
    very favorable to U.S. national security interests. Joining the
    Convention would give the men and women of our Armed Forces another
    tool to accomplish the mission.

       If the United States naval fleet were doubled or tripled in
            size, would you still support immediate U.S. accession to the
            Convention?

        Answer. Yes. Joining the Convention would strengthen our military
    operations by preserving essential navigation and overflight rights and
    providing legal certainty to the world's largest maneuver space.

        Question. U.S. Maritime Interdiction Efforts.--Some have asserted
    that U.S. accession to the Convention would hurt U.S. maritime
    interdiction efforts under the Proliferation Security Initiative (PSI).
    Do you agree?

        Answer. No, U.S. accession to the Convention would not hurt U.S.
    maritime interdiction efforts. The PSI specifically requires
    participating countries to act consistently with international law,
    which includes the law reflected in the Convention. Most PSI partners
    are parties to the Convention. Further, joining the Convention is
    likely to strengthen PSI by attracting new cooperative partners.

        Question. Customary International Law.--In your testimony you
    stated that you were not now comfortable relying solely upon customary
    international law with regard to rights of navigation because of, among
    other things, the fact that customary international law evolves and may
    be subject to individual interpretation by countries attempting to
    interpret customary law to their benefit. Some of those countries--like
    China, for example--are parties to the Convention. If these parties to
    the Convention already interpret both customary international law and
    the Convention in ways that are inimical to U.S. interests, why would
    United States accession to the Convention matter?

        Answer. U.S. accession would increase our credibility and influence
    in defending the Convention's existing norms that enable the access,
    mobility, and sustainment of our military forces and commercial fleet.
    Our nonparty status detracts from our ability to lead developments in
    the maritime domain, and enables emerging powers to advance their
    contrary interpretations of the Convention. As the global security
    environment changes, it will become increasingly important for the
    United States to use all elements of national power.
                                     ______

                   Letters Submitted by Senator John F. Kerry

         Letters Submitted by Secretary of State Hillary Rodham Clinton

     THE LAW OF THE SEA CONVENTION (TREATY DOC. 103-39): PERSPECTIVES FROM
                               THE U.S. MILITARY

                                  ----------

                         THURSDAY, JUNE 14, 2012 (a.m.)

                                           U.S. Senate,
                                Committee on Foreign Relations,
                                                        Washington, DC.
        The committee met, pursuant to notice, at 10:06 a.m., in
    room SH-216, Hart Senate Office Building, Hon. John Kerry
    (chairman of the committee) presiding.
        Present: Senators Kerry, Cardin, Webb, Coons, Udall, Lugar,
    Corker, Risch, Inhofe, DeMint, Isakson, Barrasso, and Lee.

               OPENING STATEMENT OF HON. JOHN F. KERRY,
                    U.S. SENATOR FROM MASSACHUSETTS

        The Chairman. The hearing will come to order.
        Thank you all very much for being here with us today. This
    is the second hearing on the Law of the Sea Convention and we
    are very pleased to welcome six individuals with long and
    remarkably distinguished careers in defense of America's
    security. ADM James A. Winnefeld, Jr., is the Vice Chairman of
    the Joint Chiefs of Staff. ADM Jonathan Greenert is Chief of
    Naval Operations. ADM Robert J. Papp, Jr., is Commandant of the
    U.S. Coast Guard. Gen. William M. Fraser III is Commander of
    U.S. Transportation Command. GEN Charles H. Jacoby, Jr., is the
    Commander of U.S. Northern Command, and ADM Samuel J. Locklear
    III is Commander of the U.S. Pacific Command.
        I cannot think of any time, certainly not since I have been
    here and I doubt even before that, that we have had so many top
    military leaders come before the Senate Foreign Relations
    Committee at one time, and I thank you all for being here.
        I want to make clear why the committee is so interested in
    this testimony and why it is so important.
        There are many people--there are some people who raise
    questions about the treaty inevitably as they have about any
    treaty that we have ever passed. But this treaty particularly
    has two components that those of us who support it believe are
    important for the country.
        One is, above all, the economic component. And we will have
    a hearing shortly with major leaders from American industry,
    the mining industry, oil and gas, communications, others,
    transportation, who are deeply concerned about the legality of
    their claims, should they capitalize and spend millions of
    dollars exploiting resources from the ocean seabed, and that is
    worth enormous competitive advantage to the United States of
    America and it is worth enormous numbers of jobs.
        But second, there is a very significant national security
    component to this. And we have asked as many of the different
    commanders to come here because each of them in their own way
    will have an ability to be able to share with America their
    individual reasons. And there are individual reasons. They
    differ in some cases of what is most important to them about
    the passage of this treaty. And in its sum total, it is a
    compelling rationale for why this is in America's interest. And
    the committee this afternoon will have another hearing. We will
    have some opponents to the treaty there and we will have others
    who want to come in and oppose it because we think it is very,
    very important. Senator Lugar and I are committed to hear from
    everybody so that the Senate can build the strongest record
    possible and then act in its, hopeful, wisdom based on facts
    and based on that record that is compiled here.
        We have heard from Secretary of State Hillary Clinton. We
    have heard from Secretary of Defense Leon Panetta, and we have
    heard from the Chairman of the Joint Chiefs of Staff, GEN
    Martin Dempsey.
        In addition to support from the witnesses here today, we
    have letters that have urged ratification of the treaty from
    General Mattis, the Commander of the U.S. Central Command;
    General Fraser, Commander of the U.S. Southern Command; Admiral
    Stavridis, Commander of the U.S. European Command; Admiral
    McRaven, Commander of U.S. Special Operations Command; and
    General Kehler, Commander of the U.S. Strategic Command. And I
    will place each of those letters in the record so that people
    can read them in full.
        The Chairman. We do want to have an open and honest
    discussion regarding this. I think that is the important thing
    in building a record regarding this treaty. But today we are
    going to focus on the national security component, and at the
    appropriate time, probably after the election, we will have a
    full Senate classified briefing because there is classified
    material that needs to be digested by Members of the Senate,
    but I think the appropriate time would be sometime after the
    election.
        As the world's foremost maritime power, our national
    security interests are intrinsically linked to freedom of
    navigation. There is a reason that every living Chief of Naval
    Operations has supported the U.S. accession to the Law of the
    Sea during the time that they were serving as Chief of Naval
    Operations. They know that the United States needs the treaty's
    navigational bill of rights for worldwide access to get our
    troops to the fight, to sustain them during the fight, to get
    back home without the permission of other countries or without
    the diversion of having to force one's way into those passages
    and have a secondary struggle apart from the primary conflict
    that one might be engaged in.
        Now, critics say that these navigational provisions are
    nothing new because they are already protected under customary
    international law. But most legal experts and most practical
    analysts of our security will tell you that relying on
    customary international law puts the legal basis for our
    actions outside of our ultimate control. By joining, we would
    maximize U.S. influence on the treaty bodies that play a role
    in interpreting, applying, and developing the Law of the Sea.
        Former Secretaries of State, Henry Kissinger, George
    Shultz, James Baker, Colin Powell, and Condoleezza Rice
    recently wrote an op-ed driving this point home, and I just
    want to quote it. ``Some say it's good enough to protect our
    navigational interests through customary international law, and
    if that approach fails, then we can use force or threaten to do
    so. But customary law is vague and doesn't provide a strong
    foundation for critical national security rights. What's more,
    the use of force can be risky and costly. Joining the
    Convention would put our vital rights on a firmer legal basis,
    gaining legal certainty and legitimacy as we operate in the
    world's largest international zone.''
        I would call everybody's attention to a full-page
    advertisement in today's Wall Street Journal featuring the five
    Secretaries, all of whom cite these reasons for why they
    believe we should ratify this treaty.
        The bottom line is this. Do we really want to entrust our
    national security to an unwritten set of rules where our
    security would be enhanced by having clarity ahead of time? Is
    there any other area in which we choose to leave important
    matters of national security simply to customary law where we
    have an option not to? And the answer to both questions is
    ``No.'' Just look at the numbers of treaties we have engaged in
    with respect to nuclear weapons, chemical weapons, and other
    issues.
        We need to join the treaty to ensure critical navigational
    rights and high seas freedoms are protected. Nowhere is the
    nexus between our national security and this treaty more clear
    than in the South China Sea. Becoming a party would give an
    immediate boost to U.S. credibility as we push back against
    excessive maritime claims and illegal restrictions on our
    warships and commercial vessels and those of our allies. There
    is no doubt in my mind that it would help resolve maritime
    issues to the benefit of the United States and our regional
    allies and partners, and I believe if our colleagues have the
    opportunity to hear the classified briefing, which they will,
    and also the testimony here, I think they will come to that
    conclusion.
        It is true that the United States has used diplomatic and
    military assets to refute excessive maritime claims, and I am
    sure we will continue in the future. These freedoms of
    navigation of operations efforts on our behalf will continue
    for sure. But they entail a degree of risk and our Navy cannot
    be everywhere at once no matter what the size of our fleet.
        As leaders and citizens, we owe it to our men and women in
    uniform to provide them with every available means at our
    disposal to perform their dangerous mission. Let me be clear. I
    am not advocating that our military take a step backward, and I
    am not advocating that we replace a strong military with a
    piece of paper. I would never do that, nor would anybody who
    advocates this. What I am advocating is common sense and giving
    the military all of the tools that it needs.
        General Dempsey said it best. This treaty would ``provide
    us an additional tool for navigating an increasingly complex
    and competitive security environment.''
        Ratification would also give the United States greater
    credibility and legitimacy as we seek to hold others to the
    treaty's terms. It would demonstrate by deed, not just by
    words, America's commitment to the rule of law and strengthen
    the foundation for the alliances and partnerships that are
    critical to U.S. national security and global stability.
        So you do not have to take my word for that, but let me
    quote our current Secretary of Defense. Secretary Panetta said:
    ``We are pushing for a rules-based order in the region and the
    peaceful resolution of maritime and territorial disputes in the
    South China Sea, in the Strait of Hormuz, and elsewhere. How
    can we argue that other nations must abide by international
    rules when we haven't joined the very treaty that codifies
    those rules?'' I think that is exactly right. The Law of the
    Sea ensures and secures the rights that we need for our
    military and commercial ships to meet our core national
    security requirements.
        Now, some will say that perhaps we should not bother
    joining the treaty because China and some other countries that
    are parties do not always follow the rules. Well, it is true
    that they do not always, but it does not make sense not to join
    the treaty to have a tool to be able to try to force them to or
    hold them accountable. And I will tell you--and we will hear
    the testimony--that there are occasions when our Secretaries
    have raised this issue with the Chinese at various meetings
    from ASEAN to elsewhere, and the Chinese look at us and say you
    are not even a party to the treaty. Who are you to tell us?
        The United States is the greatest maritime power in the
    world, the greatest maritime power the world has ever seen. We
    have the strongest navy, and our economy relies heavily on our
    imports and exports that move by sea. As a result, we have an
    enormous stake in ensuring a stable and predictable set of
    rules for the oceans. Joining the treaty helps us do this.
        So with that, I welcome our distinguished witnesses again.
    Thank you for bringing your expertise to this committee at this
    important moment. We look forward to hearing your insights.
        Senator Lugar.

              OPENING STATEMENT OF HON. RICHARD G. LUGAR,
                       U.S. SENATOR FROM INDIANA

        Senator Lugar. Thank you, Mr. Chairman. I join you in
    welcoming our distinguished military panel to the Foreign
    Relations Committee.
        I want to underscore for my colleagues a fundamental
    starting point for this hearing. The Commander in Chief, the
    Joint Chiefs of Staff, the United States Navy, the United
    States Coast Guard, and individual combatant commanders are
    asking the Senate to give its advice and consent to the Law of
    the Sea Convention. Our uniformed commanders are telling us,
    unanimously, that U.S. accession to this treaty would help them
    do their job in a time of considerable international threat.
        We have charged the United States Navy with maintaining
    sea-lanes and defending our Nation's interests on the high
    seas. They do this every day, and even in peacetime these
    operations carry considerable risk. The Navy is telling us that
    U.S. membership in the Law of the Sea Convention is a tool that
    they need to maximize their ability to protect United States
    national security with the least risk to the men and women
    charged with this task.
        This request is not the result of a recent reassessment by
    Navy authorities or the enthusiasm of a few leaders. The
    support of the military and the Navy for this treaty has been
    consistent, sustained, and unequivocal. All the members of the
    Joint Chiefs support advice and consent. Their predecessors
    likewise supported the Convention. As seven CNOs wrote in a
    joint letter back in 1998, ``there are no downsides to this
    treaty--it contains expansive terms, which we use to maintain
    forward presence and preserve U.S. maritime superiority. It
    also has vitally important provisions which guard against the
    dilution of our navigational freedoms and prevent the growth of
    new forms of excessive maritime claims.''
        The military is not always right. But the overwhelming
    presumption in the United States Senate has been that if
    military leaders ask us for something to help them do their job
    we do our best to provide them with that tool within the
    constraints of law and responsible budgeting. Articles and
    statements opposing the Convention often avoid mentioning the
    military's longstanding support for Law of the Sea. This is
    because to oppose the Convention on national security grounds
    requires one to say that military leaders who have commanded
    fleets in times of war and peace and who have devoted their
    lives to naval and military studies have illegitimate opinions.
        Those critics who do mention the military's support
    sometimes spin theories as to why the military would back this
    treaty. One explanation that was offered in 2007 was that
    somehow military commanders had been misled by their service
    lawyers. As a former Navy officer who served as an intelligence
    briefer to CNO ADM Arleigh Burke, I can attest that CNOs are
    not easy to deceive. These are some of the most talented and
    politically adept individuals to serve our Nation. The
    suggestion that CNOs, service chiefs, and other military
    leaders are blithely allowing themselves to be led astray by
    Defense Department lawyers is nonsense.
        Other critics have suggested that military support for the
    Convention is simply a function of top uniformed officers
    taking orders from Presidents and Secretaries of Defense. But
    this theory relies on a simplistic understanding of how
    military decisions are made, and it fails to explain why Navy
    leaders have continued to support the Law of the Sea Convention
    long after they have left active service.
        Still other critics suggest that the Navy's expression that
    it will be able to maintain freedom of navigation with or
    without U.S. ratification of Law of the Sea means that
    accession is unnecessary or even undesirable. But the Navy's
    assertion that it will protect sea-lanes under any circumstance
    does not relieve us of the responsibility to give them tools to
    make their job less arduous, less expensive, and less complex.
    The Navy will always have a ``can do'' attitude regarding its
    freedom of navigation mission, but that should not make us
    cavalier about the seriousness of their request for Law of the
    Sea. Navy leaders are not looking for a substitute for naval
    power, they are hoping for a tool that will help resolve
    navigation disputes with all types of nations, including
    allies. They are hoping for a tool that will allow them to
    reduce the share
    of naval assets that must be devoted to freedom of navigation
    missions.
        The ongoing delay in ratifying the Convention would be just
    an interesting political science case study if the United
    States were not facing serious consequences because of our
    nonparticipation. As a nonparty we have little say in
    amendments that could roll back navigational rights that we
    fought hard to achieve. In addition, as a nonparty, our ability
    to influence the decisions of the Commission on the limits of
    the Continental Shelf is severely constrained. Every year that
    goes by without the United States joining the Convention
    deepens our country's submission to ocean laws and practices
    determined by foreign governments without U.S. input.
        I thank once again our distinguished panel for joining us
    today. We certainly look forward to their testimony.
        And I thank you, Mr. Chairman.
        The Chairman. Thank you very much, Senator Lugar. I
    appreciate it.
        Senator Corker and, I think, Senator Risch, I do not think
    you were here when I mentioned it. You may have been, Senator
    Risch, but we will have a classified briefing at the
    appropriate time down the road, and I think Senators will be
    interested in that and I am asking just to withhold judgment in
    a sense till then.
        I want to recognize that our former colleague and former
    Secretary of the Navy, John Warner, is here, and we are
    delighted to have him as part of the proceedings, and I think
    he has a number of friendly admirals, retired, who are here
    with him, and we appreciate their interest in this.
        I neglected to mention I think today is the Army's
    birthday. Is that correct? Happy Birthday to all of the members
    of the United States Army. And I think it is your birthday,
    General Jacoby, tomorrow. So I wish you many happy returns,
    sir.
        We will begin in this order, if we will: Vice Chairman
    Winnefeld and then Chief of Naval Operations Greenert, Coast
    Guard Commandant Papp, General Fraser, General Jacoby, and
    Admiral Locklear. Admiral thank you for being with us.
    Appreciate it.

    STATEMENT OF ADM JAMES A. WINNEFELD, JR., VICE CHAIRMAN, JOINT
                    CHIEFS OF STAFF, WASHINGTON, DC

        Admiral Winnefeld. Mr. Chairman, Senator Lugar,
    distinguished members of the Foreign Relations Committee, good
    morning and thank you for the opportunity to appear before you
    on this topic.
        I appear today as a career sailor, a former combatant
    commander, and in my current position, all assignments that
    have informed my perspectives on the Law of the Sea Convention.
        It is also a privilege to appear alongside another
    generation of military leaders as we join in sharing the view
    that now is the time for the United States to join the Law of
    the Sea Convention.
        I have come to my own judgment on this, not informed by
    lawyers--or actually informed, but not influenced by lawyers--
    that joining this treaty will have positive implications for
    our operations across the maritime domain. The Convention
    improves on previous agreements, including the 1958 Geneva
    Convention. It will further protect our access to the maritime
    domain. It will fortify our credibility as the world's leading
    naval power and allow us to bring to bear the full force of our
    influence on maritime disputes. In short, it preserves what we
    have and it gives us yet another tool to engage any nation that
    would threaten our maritime interests.
        We have listened very closely over the many years to the
    rationale for why we should not accede to the Convention,
    including a number of items in public debate, and we take these
    concerns very seriously. We read this and we study it and we
    want to understand it.
        But I would say that some say that joining the Convention
    would result in the loss of sovereignty for the United States.
    I believe just the opposite to be true. Some of these op-eds
    and the like would say that joining the Convention will open
    U.S. Navy operations to the jurisdiction of international
    courts. We know this is not true. The 2007 proposed Senate
    declarations and understandings specifically express our right
    to exempt military activities from the Convention. Many other
    nations that have acceded have already exempted their military
    activities from the treaty without dispute.
        Some say that joining the Convention will require us to
    surrender our sovereignty over our warships and other military
    vessels. I can assure you that we will not let this happen and
    the Convention does not require it. If anything, it further
    protects our sovereignty in this regard well before we would
    have to resort to any use of force.
        Others say that it will cause us to have to alter our rules
    of engagement. This is also false. I can tell you that joining
    the Convention would not require any change whatsoever in the
    rules of engagement that we employ today, including and
    especially our right to self-defense.
        Still others say that it means our naval activities will be
    restricted in or beyond areas in which we now operate. Rather,
    if we do not join the Convention, we are at more risk than ever
    of nations attempting to impose such limitations under evolving
    interpretations of customary international law. That body of
    law is not static. Joining the Convention will protect us from
    ongoing and persistent efforts on the part of a number of
    nations, including those with growing economic and military
    power to advance their national laws and set precedents that
    could restrict our maritime activities particularly within the
    bounds of their Exclusive Economic Zones.
        We attach the term ``lawfare'' to these efforts to erode
    the protections of customary international law. It is a trend
    that is real and pressing and that could place your Navy at
    legal disadvantage unless we join the Convention. And the
    nations that would challenge us in this and other ways are,
    frankly, delighted that we are not a party to the Convention.
        Joining will also give us a stronger moral standing to
    support partners who are being intimidated over questions of
    sovereignty that should be resolved peacefully and voluntarily
    under the Convention. Candidly, I join my boss, Secretary
    Panetta, and Marty Dempsey in finding it awkward to suggest
    that other nations should follow rules that we have not yet
    agreed to ourselves.
        And joining will give us the ability to influence key
    decisions that could affect our sovereign rights and those of
    our partners and friends in the Arctic and elsewhere, and this
    grows more important each day.
        The real question to me is whether our country will choose
    to lead in the maritime environment from the inside or will
    follow from the outside.
        Senator, you know, I tell my sons that there are three
    kinds of people in this world: those who make things happen,
    those who watch what happens, and those who wonder what
    happened. I do not want to see the United States or our Navy or
    Coast Guard wondering what happened when key decisions,
    potentially detrimental to our sovereignty, are made in our
    absence by the 161 members of the treaty.
        Our recommendations to join reflect nearly 2 decades of
    military leaders who have studied this problem closely and
    arrived at the same conclusion that ratification is in our best
    interests. Today I join these officers, including every
    chairman of the Joint Chiefs since 1994, in giving my support
    to the Law of the Sea Convention and in asking for your advice
    and consent.
        I thank you for the opportunity appear this morning, and I
    look forward to your questions. I thank you, sir.
        [The prepared statement of Admiral Winnefeld follows:]

               Prepared Statement of ADM James A. Winnefeld , Jr.

        Mr. Chairman, Senator Lugar, distinguished members of the Foreign
    Relations Committee, thank you for the opportunity to appear before you
    this morning.
        I appear here today as a career Sailor, as a former Commander of
    United States Northern Command, and in my current position--all
    assignments that have informed my perspectives on the Law of the Sea
    Convention.
        It is a privilege to appear alongside so many uniquely qualified
    leaders, each with their own unique perspectives, to join in sharing
    our view that it is time for the United States to join the Law of the
    Sea Convention.
        Joining this treaty will strengthen our posture and operations
    across the maritime domain, including in the Arctic, the Asia-Pacific
    region, the Strait of Hormuz, and the global shipping lanes at the
    heart of our military sealift capabilities.
        Joining will solidify our global maritime leadership, enhance our
    credibility, and, as the world's foremost naval power, allow us to
    bring to bear the full force of our influence on maritime disputes.
        We've listened closely over many years to the rationale for why we
    should not join, and take these concerns very seriously.
        Some say that joining will result in a loss of sovereignty for the
    United States. I believe the opposite to be true.
        Some say joining the Convention will open U.S. Navy operations to
    the jurisdiction of international courts. This is not true, as was
    specifically declared in the 2007 proposed Senate declarations and
    understandings. Many other nations who have joined have exempted their
    military activities from the treaty.
        Some say it will require us to surrender our sovereignty over our
    warships. This is erroneous. We will not let this happen, and the
    Convention does not require it.
        Others say it will cause us to have to alter our rules of
    engagement. This is also false--joining the Convention would not
    require any change whatsoever to our rules of engagement
        Still others say it means our naval activities will be restricted
    in or beyond areas in which we now operate. This is false as well. In
    fact, if we do not join the Convention, we are more at risk than ever
    of nations attempting to impose such limitations under evolving
    interpretations of customary international law.
        Customary international law is not static and joining the
    Convention will protect us from persistent attempts to erode the
    protection of customary international law, as a number of states,
    including those with growing economic and military power, advance
    national laws that attempt to restrict our maritime activities,
    particularly within the bounds of their Exclusive Economic Zones. This
    is contrary to the Convention, but is a trend that is real and pressing
    and that could place your Navy at an enormous legal disadvantage.
    Joining will allow us to go on the offensive against such self-serving
    ``lawfare'' activity that runs counter to our vital interests. Nations
    that would challenge us in the maritime domain are delighted that we
    have not joined. Meanwhile, there are other nations--such as North
    Korea, Iran, Syria, and Venezuela--in whose company I believe it is not
    in our interest to remain as nonparties to the Convention.
        Joining will also give us stronger standing to advance treaty
    arguments in support of partners who are being intimidated over
    disputes that should be resolved peacefully and voluntarily under the
    Convention. Candidly, I find it awkward to suggest that other nations
    should follow rules that we haven't even formally agreed to ourselves.
        And joining will give us a seat at the table when key decisions are
    being made that could affect our sovereign rights and those of our
    partners and friends in the Arctic--this is more timely than it has
    ever been in the history of the Convention.
        Our recommendation to join reflects nearly two decades of military
    leaders who have studied this problem and who have continued to come to
    the clear conclusion that ratification is in our best interests.
        Today, I join those officers, including every Chairman of the Joint
    Chiefs since 1994 when this was first submitted, in giving my
    unwavering support to the Law of the Sea Convention and in asking for
    your advice and consent.

        The Chairman. Thank you very much. Appreciate it.
        Admiral Greenert, proceed.

         STATEMENT OF ADM JONATHAN W. GREENERT, CHIEF OF NAVAL
                 OPERATIONS, U.S. NAVY, WASHINGTON, DC

        Admiral Greenert. Thank you, Chairman Kerry, Ranking Member
    Lugar, distinguished members of the committee. I am honored to
    appear before you to discuss the Law of the Sea Convention. You
    will have to excuse me. I have a little bit of laryngitis, but
    I will get through this.
        This morning I would like to make three points, if I may.
        No. 1, the Law of the Sea Convention will help ensure the
    access that the Navy needs to operate forward, and Senator,
    operating forward is what we are about. That is where we are at
    our best.
    That is where we serve the Nation best. That is the key to our
    effectiveness.
        No. 2, the Convention will provide a formal and consistent
    framework with legal certainty to peacefully settle maritime
    disputes.
        And No. 3, the Convention will help ensure we remain
    consistent with our principles and will enhance our
    multilateral cooperation. That I have found in spades as I have
    interfaced with heads of navy around the world.
        As the world's preeminent maritime power, the U.S. Navy
    will benefit from the support the Convention provides our
    operations, especially the broad navigational rights that are
    guaranteed on the high seas and inside Exclusive Economic Zones
    of the other nations. For example, in the past several years,
    some nations in the Middle East and the Asia-Pacific region
    have complained about U.S. Navy survey ships operating within
    their Exclusive Economic Zones. Commanders have consistently
    responded by asserting our rights under the Convention and
    customary international law. However, our argument would carry
    much more weight if the United States were a party to the
    Convention. Joining the Convention would give our day-to-day
    maritime operations a firmer, codified legal foundation. It
    would enable and strengthen our military efforts. It will not
    limit them.
        The Convention provides a formal and consistent framework
    for peaceful resolution of maritime disputes. The Convention
    defines the extent of control that nations can legally assert
    at sea and prescribes procedures to peacefully resolve
    differences. It is an important element in preventing
    disagreements from escalating into a confrontation or
    potentially conflict.
        Recent interference with our operations in the western
    Pacific and some rhetoric by Iran about closing the Strait of
    Hormuz underscore the need to be able to use the Convention to
    clearly identify and respond to violations of international law
    that might attempt to constrain our access. As a member of the
    Convention, our ability to press the rule of law and to
    peacefully deter conflict will certainly be enhanced.
        Remaining outside the Convention is just inconsistent with
    our principles, our national security strategy, and our leading
    position in maritime affairs. For example, our forces in the
    U.S. Fifth Fleet in the Arabian Gulf lead a coalition maritime
    force that enforces maritime security in the greater Middle
    East. Out of the 26 nations that serve in this coalition, only
    3, including the United States, are not a party to the
    Convention. This coalition asserts rights on a daily basis
    under the Convention to visit vessels, counter piracy, and
    render assistance to vessels in danger. However, America's
    status as a nonparty to the Convention is sometimes questioned
    by our coalition partners. Acceding to the Convention will
    enhance our position as a leader of that coalition and a leader
    in the world of maritime nations in the Middle East and
    elsewhere.
        In closing, aided by the framework provided by the
    Convention, your Navy will continue to be critical to our
    Nation's security and prosperity.
        I appreciate the committee's longstanding support of the
    men and women of the Navy, and I look forward to continuing to
    work with you as we address these challenges. Thank you,
    Senator.
        [The prepared statement of Admiral Greenert follows:]

                 Prepared Statement of ADM Jonathan W. Greenert

        Chairman Kerry, Senator Lugar, and members of the committee, thank
    you for the opportunity to testify in support of the United States
    joining the Law of the Sea Convention (LOSC). I join my predecessors in
    supporting the Convention and I believe it is important to our ability
    to reduce our reliance on customary international law, provide a
    mechanism to resolve disputes, assure our access across the maritime
    domain, and protect our Nation's security and prosperity. I appreciate
    your continued support of our 625,000 Sailors and civilians and look
    forward to working together in pursuing our national security
    objectives.
        As the world's preeminent maritime power, the United States will
    benefit from the support LOSC provides to our operations. Our ability
    to deter aggression, contain conflict, and fight and win our Nation's
    wars depends upon our ability to freely navigate the world's oceans.
    The rules inherent in LOSC support worldwide access for military and
    commercial ships and aircraft without requiring permission of other
    countries, such as in the archipelagic waters of countries like
    Indonesia, or in the Arctic where receding ice is opening new routes
    for transit. The Convention affords our submarines the right to transit
    submerged and aviation-capable ships to transit while conducting flight
    operations through international straits; establishes broad
    navigational rights and freedoms for our ships and aircraft in the
    exclusive economic zones of other nations and on the high seas; and
    reinforces the sovereign status of our vessels. The Convention affords
    navigational rights for ships without regard to cargo or means of
    propulsion, an extremely important right given our extensive use of
    nuclear power.
        LOSC provides a formal and consistent framework for the peaceful
    resolution of maritime disputes. It defines the extent of control
    nations can legally assert at sea and prescribes procedures to counter
    excessive maritime claims. Acceding to LOSC will increase our
    credibility in invoking and enforcing the treaty's provisions and
    maximize our influence in the interpretation and application of the law
    of the sea. Recent interference with our operations in the Western
    Pacific and rhetoric by Iran to close the Strait of Hormuz underscore
    the need to use the Convention to clearly identify and respond to
    violations of international law that seek to constrain access to
    international waters. As a party to the Convention, we will bolster our
    position to press the rule of law and maintain the freedom to conduct
    military activities in these areas.
        Remaining outside LOSC is inconsistent with our principles, our
    national security strategy and our leadership in commerce and trade.
    Virtually every major ally of the United States is a party to LOSC, as
    are all other permanent members of the U.N. Security Council and all
    other Arctic nations. Our absence could provide an excuse for nations
    to selectively choose among Convention provisions or abandon it
    altogether, thereby eroding the navigational freedoms we enjoy today.
    Accession would enhance multilateral operations with our partners and
    demonstrate a clear commitment to the rule of law for the oceans. For
    example, under the Convention, warships are authorized to stop and
    board vessels if they are suspected to be without nationality or
    engaged in piracy. By joining LOSC, we would ``lock in'' these
    authorities as a matter of treaty law and thus strengthen our ability
    to conduct counterpiracy operations across the globe and provides an
    important tool to support counterproliferation efforts, and maritime
    interdiction of terrorists and illegal traffickers tied to terrorism.
        LOSC supports the operations of our military forces. Under the
    Convention we retain the right to define what constitutes our own
    military activities, which are excluded from dispute resolution
    procedures. Moreover, the Convention does not limit our ability to use
    force in self-defense. I would not support LOSC if I thought it limited
    our Nation's military options.
        The Navy's ability to retain access across the maritime domain and
    adjacent airspace, especially the strategic maritime crossroads, would
    be enhanced by accession to LOSC. As the world's preeminent maritime
    power, the United States has much to gain from the legal certainty and
    global order brought by LOSC. As a party to LOSC, we will be in a
    better position to counter the efforts of nations to restrict freedom
    of the seas. The United States should not rely on customs and
    traditions for the legal basis of our military and commercial activity
    when we can instead use this Convention. It is an important element of
    protecting our Nation's security and prosperity.

        The Chairman. Thank you very much, sir. We appreciate it.
        Commandant.

     STATEMENT OF ADM ROBERT J. PAPP, JR., COMMANDANT, U.S. COAST
      GUARD, U.S. DEPARTMENT OF HOMELAND SECURITY, WASHINGTON, DC

        Admiral Papp. Good morning, Chairman Kerry, Senator Lugar,
    and the distinguished members of the committee.
        It is my privilege to testify before you here today on how
    the United States should accede to the Law of the Sea
    Convention because it will enhance the Coast Guard's operations
    and maritime leadership. Like six previous commandants, I urge
    you to accede to the Convention without further delay.
        Having served on six Coast Guard cutters, commanding four
    of them, I view things through a sailor's eye. My fictional
    hero, Captain Jack Aubrey of Patrick O'Brian's ``Master and
    Commander'' book series always positioned his ship in battle so
    that he could hold the weather gauge. The ship with the weather
    gauge is upwind and has greater ability to maneuver relative to
    other ships and it maintains its position of advantage and is
    able to dictate the terms of engagement. I can think of no
    better analogy to describe the Law of the Sea Convention than
    providing the Coast Guard with the weather gauge to protect
    Americans on the sea, protect America from threats from the
    sea, and to protect the sea itself.
        Since the founding of our Nation, American prosperity has
    depended upon having safe, reliable, and secure maritime trade.
    Today the Convention's provisions set forth the global maritime
    framework, among other things. The Convention's provisions
    contain internationally recognized sovereign maritime
    boundaries. It is this framework that we rely upon every day to
    aid mariners in distress, to protect our fish stocks, to
    intercept illicit traffickers attempting to deliver drugs,
    persons, and other illegal cargos to our shores, and to
    preserve our maritime sovereignty, navigational rights, and
    freedoms. Indeed, our many bilateral and multilateral law
    enforcement agreements that we rely upon to stop drug
    smugglers, interdict human traffickers, and protect our oceans
    are predicated upon the Convention. These agreements, which
    have been described as the fabric of the Law of the Sea, are
    concluded, interpreted, and enforced under the Convention's
    framework.
        The Convention also provides us with the largest Exclusive
    Economic Zone, or EEZ, of any coastal State. Our EEZ contains
    vast fisheries, energy, and other resources. Beyond the EEZ
    lies the Extended Continental Shelf, or ECS. Its seabed,
    particularly off Alaska, is a new frontier that contains 20 to
    30 percent of the world's untapped fossil fuel resources. And
    it is the Convention that contains the mechanisms to seek and
    ensure international recognition of our sovereign ECS rights.
    Joining the Convention will not only put these sovereign rights
    on the strongest legal footing, it will also bolster our
    ability to ensure stewardship of our ECS resources.
        There is no better example of this than the emerging
    Arctic. Our ability to effectively plan and allocate Arctic
    resources depends in part upon the delineation of maritime
    boundaries, sovereign rights, privileges, and navigational
    freedoms. Yet, as we work alongside our partner Arctic nations
    on issues of governance such as cooperative search and rescue
    agreements, oil spill prevention, and response protocols and
    delineation of maritime claims, we remain the only Arctic
    nation that is not a party to the Convention.
        Being a nonparty detracts from our ability to best provide
    for the safety, security, and stewardship of our vast resource-
    rich maritime and emerging Arctic domains. The Convention
    contains an established legal framework for the oceans. Unlike
    customary international law which can change, the Convention
    codifies this framework and we follow this framework. We demand
    others do so. Yet, we remain outside of it.
        In sailors' terms, this puts us downwind and it forces us
    to tack up into the wind when we should be leading on maritime
    issues. That is why I am urging you today to seize the weather
    gauge and to accede to the Convention.
        Thank you for this opportunity to testify and I look
    forward to answering your questions.
        [The prepared statement of Admiral Papp follows:]

                 Prepared Statement of ADM Robert J. Papp, Jr.

        Good morning, Chairman Kerry, Ranking Member Lugar, distinguished
    members of the committee, I am pleased to have the opportunity to
    discuss how United States accession to the Law of the Sea Convention
    would enhance Coast Guard operations and advance our global leadership.
    Like the six commandants before me, I am firmly convinced that the
    legal certainty and stability accorded by the Convention will
    strengthen Coast Guard efforts in: (1) sustaining mission excellence as
    America's maritime first responder; (2) protecting American prosperity;
    and (3) ensuring America's Arctic future.
        The United States is a maritime and Arctic nation. We have one of
    the world's longest coastlines, measuring more than 95,000 miles, and
    the world's largest Exclusive Economic Zone (EEZ), responsible for over
    $122 billion in revenue annually. The U.S. maritime transportation
    system is comprised of 361 ports and thousands of miles of maritime
    thoroughfares that support 95 percent of U.S. foreign trade. Most of
    that trade is transported on over 7,500 vessels that make more than
    60,000 visits to U.S. ports annually. The need to secure our maritime
    rights and interests, including ocean resources, is paramount. To this
    end, the Coast Guard maintains a persistent maritime presence to
    protect Americans on the sea, to protect America from threats delivered
    by sea, and to protect the sea itself.

      SUSTAINING MISSION EXCELLENCE AS AMERICA'S MARITIME FIRST RESPONDER

        As one of the five armed services of the United States, the Coast
    Guard provides support to the geographic combatant commanders and U.S.
    naval presence around the world to ensure the Nation's national
    security. The ability to navigate freely in international waters,
    engage in innocent and transit passage, and enjoy high seas freedoms
    are critical rights under international law, which the Convention
    codifies. These rights allow our cutters and aircraft to move without
    the permission of or need to provide advance notice to other coastal
    nations. I add my voice to the other armed services in urging that we
    ``lock in'' these crucial rights through the Convention to protect them
    from erosion.
        We currently assert navigational rights and freedoms based on
    customary international law, and we will continue to do so if necessary
    to fulfill the responsibilities the Nation entrusts to us. But
    customary international law can evolve over time and is subject to
    change and erosion. By becoming a party to the Convention we will
    secure these favorable rules on the strongest legal footing and better
    position the Coast Guard to exercise these rights to sustain
    operations. For the Coast Guard, one of the Convention's most important
    provisions is the stabilization of territorial sea claims to 12
    nautical miles. Joining the Convention strengthens our position to
    contest and curtail foreign excessive territorial sea claims.
        Although we do not recognize excessive territorial sea claims made
    by some other nations, they nevertheless impact our mobility and can
    interfere with our drug interdiction and other law enforcement
    activities. By limiting territorial sea claims to 12 nautical miles,
    the Convention secures vital boarding rights for the Coast Guard
    outside this zone. Similarly, the Convention secures the important
    rights of approach and visit to determine vessel nationality. Where
    vessel nationality is not properly established, the Convention provides
    the process for concluding that a vessel is stateless and allowing the
    enforcement of U.S. laws. These provisions are particularly important
    to our efforts to interdict and prosecute smugglers using stateless
    vessels for illicit activity, including semi- and fully submersible
    vessels. Last year, the Coast Guard interdicted 40 vessels and six
    semisubmersibles engaged in drug trafficking, assimilating many of
    those vessels to stateless vessels.
        For many of the laws the Coast Guard enforces, especially those
    involving drug trafficking, illegal immigration, and counterterrorism,
    we leverage international partnerships to monitor, interdict, and
    prosecute those who threaten our Nation's security. Our international
    partners are overwhelmingly parties to the Law of the Sea Convention.
    Our status as a nonparty presents an unnecessary obstacle to gaining
    their cooperation. Accession to the Convention would most effectively
    cement a common cooperative framework, language, and operating
    procedures used in securing expeditious boarding, search, enforcement,
    and disposition decisions, thereby enabling on-scene personnel,
    cutters, and maritime patrol aircraft to pursue further mission
    tasking.
        We also must cooperate and engage with our international partners
    to advance global and regional security priorities. Strengthening these
    relationships is crucial for sustaining our international leadership.
    Acceding to the Convention is an important step to achieving these
    goals. Frequently, the Coast Guard works internationally to train other
    nations' navies. These navies more closely resemble the Coast Guard in
    authority and activity, uniquely positioning us to expand important
    maritime partnerships. The Convention serves as our guiding framework
    in helping these navies develop domestic law, protocols, and
    strategies. The Coast Guard needs the Convention to better promote
    United States security interests through capacity-building. Building
    this capacity is an important force multiplier for the Coast Guard that
    further secures stability of the oceans, promotes efficient maritime
    commerce, and aids us in achieving strategic objectives regarding
    safety, security, and environmental protection.

                         PROTECTING AMERICAN PROSPERITY

        Joining the Convention will enhance the Coast Guard's ability to
    protect America's prosperity by facilitating commerce and preserving
    ocean resources. Commercial ships, which are the engines that drive the
    international supply chain, rely on the same navigational rights as our
    cutters to traverse the oceans. Joining the Convention guarantees that
    commercial ships will continue to enjoy these same rights and
    navigation freedoms, assuring that maritime shipping remains the most
    cost-efficient mode of transportation. America needs the Convention to
    secure stability in maritime trade, boost economic confidence, and open
    the door to exploitation of deep seabed resources by U.S. industry.
        Vibrant and safe U.S. ports are also vital to a healthy and
    thriving economy. The safety of U.S. ports, and the vessels that call
    on them, is a function of U.S. port state control. The Coast Guard
    maintains a comprehensive port state control program, including vessel
    inspections, assuring the proficiency of mariners, and monitoring port
    activity to ensure compliance with the highest standards of maritime
    safety, security, and environmental protection. Uniform international
    standards, negotiated and adopted through the International Maritime
    Organization (IMO), are the foundations of this program. These
    standards, accepted by the international community, are the linchpin of
    a transportation system that depends on speed--inconsistent and
    misunderstood standards only lead to expensive delay and mishaps.
        In international maritime shipping, where a ship may be flagged by
    one jurisdiction, owned by a party in another jurisdiction, chartered
    by a party in yet another jurisdiction, sail through the coastal zones
    of several jurisdictions, and call in the ports of many other
    jurisdictions, uniformity of standards is key. The concept of port
    state control recognizes responsibility through the hierarchy of a
    ship's affiliations (including owner, ship classification society, and
    flag state) to comply with these internationally agreed standards,
    which should result in compliance wherever a ship is located, including
    when it sails through waters of the United States but is not calling on
    a U.S. port (and thus not subject to our port state jurisdiction).
        The shipping standards negotiated at the IMO are the fabric of the
    port state control regime that is underpinned by the Convention. It is
    the Convention that sets forth the responsibilities of flag states,
    port states, and coastal states for shipping, and the Convention is the
    agreement that holds nations accountable for adhering to those
    responsibilities. Because of the currently anomalous situation where
    the United States is a party to the substantive IMO standards, but not
    the underlying legal framework of the Convention, our ability to ensure
    comprehensive global accountability demanded by the port state control
    framework is weakened. Acceding to the Convention would strengthen
    Coast Guard negotiation efforts at the IMO, where we lead in the
    continued development of these important international standards.
    Although other countries look to us for leadership, there is growing
    skepticism for certain U.S. negotiating positions because the United
    States is not a party to the Convention. Becoming party to the
    Convention would increase the Coast Guard's credibility as a leader at
    IMO and result in greater effectiveness in ensuring that U.S. interests
    are reflected in the standards that are ultimately adopted. The Coast
    Guard needs the Convention to better promote United States safety,
    security, and environmental interests at the IMO.
        The Convention also maximizes legal certainty for United States
    sovereign rights over ocean resources in the largest EEZ in the world,
    as well as energy and mineral and other resources on our Extended
    Continental Shelf. The Convention provides the mechanism to assure
    international recognition of additional United States sovereign rights
    on an Extended Continental Shelf. Moreover, due to overfished and
    depleted fish populations, effective management of migratory fish
    stocks and fisheries will continue to be a contentious issue for the
    foreseeable future. The Convention is widely accepted as the legal
    framework under which all international fisheries are regulated and
    enforced. The Convention imposes responsibilities on the coastal states
    to manage their fishery resources responsibly and provides a process
    for resolving conflicts between competing users. The Coast Guard
    defends United States sovereign rights by protecting our precious ocean
    resources from poaching, unlawful incursion, and illegal exploitation.
    Joining the Convention places these sovereign rights on a firmer legal
    foundation, bolstering the Coast Guard's continued ability to ensure
    our Nation's sovereign rights are respected.
        In particular, becoming a party to the Convention will give the
    Coast Guard greater leverage in our efforts to eliminate illegal,
    unreported, and unregulated fishing. American fishermen are currently
    abiding by standards contemplated by the Convention and further
    detailed in the related U.N. Fish Stocks Agreement. They are adversely
    affected by foreign fishermen who illegally harvest highly migratory
    fish stocks. In another anomalous situation, the United States is a
    party to the U.N. Fish Stocks Agreement, which is directly related to
    the legal regime of the Law of the Sea Convention, even though we have
    not joined the underlying Convention. As a party to the Convention, we
    would be in a stronger position to persuade other nations to abide by
    the U.N. Fish Stocks Agreement and other modern international standards
    of fisheries management and thus advance our Nation's interests in this
    field.
        The Convention also provides a framework for the United States, as
    a coastal state, to address marine pollution from foreign sources at
    the international level. The Convention's environmental provisions
    support the Coast Guard's strategic goal and statutory mission to
    enforce existing U.S. environmental laws relating to the oceans. Even
    spills far offshore can have devastating impacts to the economic well-
    being of Americans whose livelihoods depend on the oceans. The Coast
    Guard is the Nation's first responder for any oil spill on the ocean.
    We need the strongest legal footing possible to confront any crisis on
    the ocean, particularly in the case of transboundary pollution. As
    other nations increase their offshore energy production and exploration
    efforts in areas close to our shores, it is imperative that the Coast
    Guard work cooperatively with those nations to prevent and respond to
    incidents. The Convention provides a primary basis of cooperation, but
    unlike all our neighboring nations, the United States is not a party.
    Joining the Convention will give the Coast Guard a much-needed
    additional tool to reduce the risk of marine pollution from foreign
    nations and vessels from reaching our waters and shores.

                        ENSURING AMERICA'S ARCTIC FUTURE

        As the ice pack in the Arctic recedes, more use will be made of
    those waters, greatly increasing American economic interests in the
    region. Melting ice in the Arctic also raises the significance of
    issues such as rights of navigation and offshore resource exploration
    and extraction and environmental preservation and protection. The Coast
    Guard has robust statutory authority to protect U.S. interests in the
    Arctic. The Coast Guard has been operating in the Arctic since Alaska
    was a territory, and our responsibilities will continue to expand with
    America's interests. As an example, the United States is in the midst
    of implementing a comprehensive maritime search and rescue agreement
    with other Arctic nations, yet the United States is the only Arctic
    nation not a party to the Convention. Additionally, we are negotiating
    a new agreement with our Arctic neighbors on oil pollution preparedness
    and response in the region. The Convention is also the ``umbrella'' for
    those discussions. Our negotiation position would be much stronger if
    the United States were a party to the Convention.
        Arctic nations are using the Convention's provisions in article 76
    to file Extended Continental Shelf submissions with the Commission on
    the Limits of the Continental Shelf to perfect their claims to areas
    over which they have exclusive rights to resources on and beneath the
    Arctic seabed. A United States submission to the Continental Shelf
    Commission could help perfect U.S. claims to major additional seabed
    resources out to 600 miles from the Alaska coast, far beyond the 200
    mile EEZ. This area implicates many of the Coast Guard's missions,
    including protection of the marine environment.
        We must continue to seek out opportunities with our Arctic
    neighbors and the global community to address the critical issues of
    governance, sovereign rights, environmental protection, and security in
    the Arctic. While there are many challenges, the increasingly wet
    Arctic Ocean presents unique opportunities. The Convention provides the
    key legal framework we need to take advantage of these opportunities.
    The Coast Guard needs the Convention to ensure America's Arctic future.

                                WHY ACCEDE NOW?

        The Convention and the subsequent 1994 Agreement on implementing
    Part XI were diplomatic triumphs for the United States. These documents
    preserve and protect our interests by codifying international law that
    is highly favorable to the United States as both a coastal state and
    preeminent maritime power. In order for the Coast Guard to most
    effectively use the Convention's provisions, the United States must
    become party.
        For decades, we have largely acted in accordance with a treaty that
    we have no ability to shape and without the additional benefits that
    come from being a party. We need to lock in the favorable navigational
    rights that our military and shipping interests depend on. We need to
    be a party as the best way to secure international recognition of our
    sovereign rights over our Extended Continental Shelf. We need to be a
    party to influence and lead the further development of the
    international rules governing the oceans. Too much is at stake to rely
    on the inherently changeable nature of customary international law to
    protect our Nation's economic and security interests. Joining the
    Convention will best position us to protect the rights accorded by the
    Convention and to defend against any attempt to erode those rights.

                                   CONCLUSION

        The Coast Guard needs a comprehensive legal framework that
    addresses activities on, over, and under the world's oceans to further
    its statutory missions. We also need a solid legal framework that
    customary international law cannot provide as it remains subject to
    change based on state practice--whether at the local, regional, or
    global level. The Convention is this certain framework. The Convention
    was, and still is, a resounding success for U.S. diplomacy. Acceding to
    the Convention will strengthen the Coast Guard's ability to protect
    U.S. maritime interests. The Convention is widely accepted; there are
    currently 162 parties. Of the eight Arctic nations, only the United
    States is not a party to the Convention.
        I can see no downside to the Coast Guard in the United States
    acceding to the Law of the Sea Convention. To the contrary, joining the
    Law of the Sea Convention will immensely enhance the Coast Guard's
    ability to address emerging threats that challenge our Nation and
    safeguard the American people, our environment, and ocean resources
    that benefit all Americans.

        The Chairman. Thank you very much, sir. We appreciate it.
        General Fraser.

       STATEMENT OF GEN. WILLIAM M. FRASER III, COMMANDER, U.S.
            TRANSPORTATION COMMAND, SCOTT AIR FORCE BASE, IL

        General Fraser. Chairman Kerry, Ranking Member Lugar, and
    distinguished members of this committee, it is indeed my
    distinct privilege to be here with you today representing the
    United States Transportation Command. I appreciate this
    opportunity to testify concerning the Law of the Sea
    Convention, and I join an array of other senior military
    officers, both past and present, which support the Law of the
    Sea Convention.
        The United States Transportation Command is the Department
    of Defense's distribution process owner and global distribution
    synchronizer responsible for planning global deployment and
    distribution operations. USTRANSCOM relies on unfettered global
    mobility, unimpeded flow of cargo by air and sea through
    strategic chokepoints and unchallenged access to the world's
    navigation lanes by our military assets and our commercial
    industry partners to support our forces around the globe. On
    any given day, USTRANSCOM has approximately 30 ships loading,
    unloading, or underway, and we have a mobility aircraft taking
    off and landing every 90 seconds. These assets are operated by
    our military components and our commercial partners. It is
    vital that we maintain freedom of the high seas and
    international overflight routes for our military and our
    commercial operations as these freedoms are essential to our
    Nation's strategic mobility.
        Our military conducts activities and operations across air,
    ocean, and sea-lanes. Unobstructed passage through these lanes
    is paramount for the United States Transportation Command as we
    provide support and sustainment to our warfighters around the
    world. For example, our civilian air carriers and transporters
    transport almost all of our military passengers and much of our
    air cargo over the ocean and sea-lanes. Unhindered overflight
    of these transports is crucial to our mission's success.
    Moreover, the vast majority of our military equipment and
    supplies are transported around the world through ocean and
    sea-lanes by our commercial partners. They conduct these
    movements typically without escort or onboard security teams.
        In today's environment, we assess our navigation and
    overflight rights through customary international law. To
    better secure our global access, joining the Law of the Sea
    Convention would provide a solid legal foundation to our
    military and commercial partners that transport the lifeline of
    supplies and equipment to our warfighters around the globe.
    Specifically, accession to the Law of the Sea Convention
    secures navigation and overflight rights for the vessels and
    aircraft operated by both our military and our commercial
    partners.
        The Law of the Sea Convention protects our military
    mobility by legally binding, favorable transit rights that
    support our ability to operate around the globe anytime and
    anywhere. Our sealift industry partners will be internationally
    protected as they transit the strategic chokepoints from the
    Strait of Gibraltar to the Straits of Malacca and Hormuz. As we
    move forward and look to the future challenges, support of the
    Law of the Sea Convention is essential to our national strategy
    and security.
        Chairman Kerry, Ranking Member Lugar, and all the members
    of this committee, I want to thank you for your continued
    support of United States Transportation Command, and to all of
    our men and women in uniform and especially to their families.
    I am grateful for this opportunity to be here today with my
    distinguished colleagues at this table, and I ask that my
    written statement be submitted for the record. I look forward
    to your questions. Thank you.
        [The prepared statement of General Fraser follows:]

                Prepared Statement of Gen. William M. Fraser III

         Chairman Kerry, Senator Lugar, and distinguished members of the
    committee, it is my privilege as the Commander of the United States
    Transportation Command (USTRANSCOM) to testify today on the Law of the
    Sea Convention. As the Department of Defense's Distribution Process
    Owner and Global Distribution Synchronizer, USTRANSCOM relies on
    unfettered global mobility, unimpeded flow of cargo by air and sea
    through strategic chokepoints, and unchallenged access to the world's
    navigational lanes by our military assets and our commercial industry
    partners to support our forces around the globe. I believe that a
    comprehensive, globally accepted, and stable legal basis for navigating
    and overflying the world's oceans is essential to support our forces
    worldwide and to ensure our national security.
        Joining this Convention would codify several important recognized
    rights of navigation into a binding legal foundation. It supports our
    national security interests by defining the rights of U.S. military and
    civilian vessels as they meet our mission requirements, reaffirms the
    sovereign immunity of our warships and other vessels owned by the
    United States and used for government noncommercial service, and
    preserves our right to conduct military activities and operations in
    exclusive economic zones. As the defense strategy places greater
    demands on our ability to mobilize forces, guaranteed access to
    shipping and overflight lanes becomes increasingly important to support
    our forces overseas.
        Currently, the United States relies upon customary international
    law as the primary legal basis to secure global freedom of access.
    However, as emerging powers around the world grow and modernize, states
    may seek to redefine or reinterpret customary international law in ways
    that directly conflict with our interests, including freedom of
    navigation and overflight, potentially challenging our global mobility
    needs. This Convention represents the best guarantee against erosion of
    essential navigation and overflight freedoms that we take for granted
    through reliance on customary international law. Accession will give
    the United States leverage to counter efforts by other nations seeking
    to reshape current internationally accepted rules we depend on for
    transporting cargo and passengers.
        USTRANSCOM's military and commercial partners operate across every
    portion of the globe in defense of our national interests. Before we
    send them into harm's way, it is important for our sailors and airmen
    to know they have the backing and authority of U.S. accession to the
    Convention on the Law of the Sea rather than depending on customary
    international law which some nations attempt to ignore or challenge.
    This is especially true for strategic chokepoints such as the Bab Al
    Mandeb, the Gulf of Aden, and the Strait of Hormuz. Iran's recent
    challenge to freedom of navigation through the Strait of Hormuz for a
    military exercise is an example of threats to international law and our
    ability to move critical supplies through that region. Acceding to the
    Convention would provide U.S. forces and commercial partners the
    strongest legal footing for countering an Iranian antiaccess attempt to
    close the strait to international shipping.
        Being a member of the Convention will help to simplify this complex
    maritime environment both for our military forces as well as our
    commercial partners who have played a critical role in developing new
    routes for transporting DOD cargo and in enabling access to a vast
    global infrastructure for transport of DOD cargo. More than 90 percent
    of all military supplies and equipment are transported around the world
    by sea, much of it by commercial vessels. This Convention provides
    important legal support for our commercial partners who transport our
    cargo, unescorted by U.S. warships, under the legal regimes of the Law
    of The Sea Convention. Without codification of those rights, our
    commercial partners are at greater risk.
        Likewise, the Convention will provide important legal support to
    our civil air carrier partners who transport nearly all military
    passengers and a significant amount of DOD air cargo over the sea. As
    we continue to improve efficiency in air transportation, unimpeded
    overflight access to the world's oceans and sea-lanes will remain a
    necessary component to conducting our mission.
        The Convention would also support freedom of navigation and
    overflight in emerging areas of strategic importance including the
    South China Sea and the Arctic. The defense strategy requires continued
    and future access to navigational routes throughout Asia, particularly
    in the South China Sea, in order to sustain our forces in that region.
    As the Arctic becomes increasingly important for mobility, the
    interpretation of the navigational provisions will become even more
    critical. We need U.S. leadership as a party to the Convention to
    influence and lead this discussion. In both regions, the Convention
    will help defend our rights to transport cargo and personnel against
    nations attempting to assert extended territorial claims.
        The United States has a rich history as a maritime and aviation
    leader in the international community. We must continue to lead in
    ensuring access rights to shipping lanes and overflight routes.
    Accession to the Law of the Sea Convention allows the United States to
    continue to have a leadership role in developing and influencing the
    Law of the Sea as a leader among sovereign nations. I strongly support
    U.S. accession to the Convention.

        The Chairman. Thank you very much, General.
        Let me just say that all written testimonies will be placed
    in the record in full as if delivered in full, and we look
    forward to having them part of the record.
        General Jacoby.

       STATEMENT OF GEN CHARLES H. JACOBY, JR., COMMANDER, U.S.
             NORTHERN COMMAND, PETERSON AIR FORCE BASE, CO

        General Jacoby. Chairman Kerry, Senator Lugar,
    distinguished members of the committee, thank you for the
    opportunity to appear today.
        As Commander of U.S. Northern Command, I am assigned
    responsibility for military defense of our continental United
    States homeland and nearby waters. As Commander of North
    American Aerospace Defense Command, I am assigned
    responsibility for maritime and aerospace warning and for
    aerospace control to the Governments of the United States and
    Canada.
        Based on my command responsibilities, principally in the
    Arctic, my experience, and our changing operating environment,
    I believe there is a compelling reason for the United States to
    accede to the Law of the Sea Convention for the safety and
    security of our homeland. In the maritime environment, our
    military defensive operations are best served by a clear,
    stable, rules-based, cooperative international framework that
    helps our friends and allies work with us, helping us be the
    security partner of choice.
        Now, Arctic cooperative security is one of the five lines
    of operation delineated in U.S. Northern Command's theater
    campaign plan. U.S. accession to the Convention, joining all
    the other seven Arctic nations, would be helpful in supporting
    peaceful opening of the Arctic, which is my mission, and in
    dealing with non-Arctic States that have shown an interest in
    engaging in the Arctic and in resolving sovereignty, natural
    resource, infrastructure, communication, navigation, military
    presence, and public safety issues in the Arctic as human
    activity increases.
        For our maritime warning mission, accession to the
    Convention will help us establish the global operational
    relationships that are critical to information-sharing,
    recognition of patterns of activity, and quick identification
    of safety, security, and defense issues.
        We are grateful for everything the members of the committee
    have done to ensure our ability to defend our citizens here at
    home. I am honored to be here, and I look forward to your
    questions.
        [The prepared statement of General Jacoby follows:]

                Prepared Statement of GEN Charles H. Jacoby, Jr.

        Chairman Kerry, Senator Lugar, distinguished members of the
    committee, I appreciate this opportunity to provide my position on the
    Law of the Sea Convention. As a combatant commander with mission
    responsibilities for homeland defense and civil support in the maritime
    approaches to the homeland with an increasingly accessible Arctic
    Ocean, I fully support our Nation's accession to the Convention. From
    an Arctic perspective, our accession to the Convention is important to
    encouraging cooperative relationships among Arctic states and securing
    Continental Shelf limits and natural resources in the Arctic as human
    activity increases. From a global perspective, with the overwhelming
    majority of countries being party to the Convention, it is the
    internationally recognized legal framework that will formalize our
    Nation's standing and leadership where our vital interests are at
    stake, secure U.S. rights over extensive marine resources, promote
    freedom of navigation and overflight, and support our national security
    interests in the maritime domain.
        Acceding to the Convention will reinforce our leadership role in
    shaping international maritime policy and overseeing peaceful economic
    activity on and under our world's seas and oceans. Greater access to
    the Arctic Ocean highlighted by Shell's exploratory drilling this
    summer and the increasing trend in commercial shipping through the
    Bering Strait are new circumstances that highlight the benefits the
    United States can access through the Convention for continued economic
    progress, freedom of maneuver, conservation of offshore resources, and
    protection of the sensitive maritime environment. Joining the
    Convention would help our Nation in each of these respects.
        Cooperative partnerships are essential for our national security.
    As human activity in the Arctic region increases, a cooperative and
    peaceful opening of Arctic waters is in the interest of the global
    community and in particular the Arctic nations. Accordingly, Arctic
    Cooperative Security is one of the five lines of operation delineated
    in U.S. Northern Command's Theater Campaign Plan. However, the United
    States is the only Arctic nation that has not acceded to the
    Convention, which could impede international cooperation and eventually
    limit the development of cooperative partnerships with the other
    members of the Arctic Council, Canada, Denmark, Finland, Iceland,
    Norway, Sweden, and Russia. Future defense and civil support scenarios
    in the Arctic maritime domain will require closely coordinated,
    multinational operations in this expansive and resource rich region.
    Therefore, U.S. accession to the Convention will set the conditions for
    partnership and cooperation, resulting in more efficient and effective
    multinational command and control and operations in the maritime
    domain.
        I support the current and past administrations' position, as well
    as that of my primary interagency partner in the maritime domain, the
    U.S. Coast Guard, to become a Party to the Convention. Joining the
    Convention will protect and advance a broad range of significant
    economic and national security interests, and ultimately contribute to
    the peaceful opening of the Arctic in a manner that strengthens the
    United States and international cooperation.
        We are grateful for everything the members of this committee have
    done to ensure our ability to defend the homeland. We appreciate your
    support of our Soldiers, Sailors, Airmen, Marines, Coast Guardsmen, and
    of their families for their efforts to defend our Nation at home and
    abroad. With your help, North America will be even safer tomorrow than
    it is today.

        The Chairman. Thank you, sir. Thank you, General.
        Admiral Locklear.

       STATEMENT OF ADM SAMUEL J. LOCKLEAR III, COMMANDER, U.S.
                  PACIFIC COMMAND, CAMP H.M. SMITH, HI

        Admiral Locklear. Chairman Kerry, Senator Lugar, and
    members of the committee, thank you for this opportunity to
    appear before you to discuss the subject of strategic
    importance and how it relates to the Asia-Pacific region.
        As the Commander of United States Pacific Command, I join
    my colleagues and my other combatant commanders in recommending
    that the United States accede to the Law of the Sea Convention.
    After careful reflection, I am fully confident that our
    accession to the Convention will advance U.S. national security
    interests in the Pacific Command area of responsibility.
        As you know, this region is predominantly maritime. It
    covers half the planet. It is home to three dozen nations, over
    3.6 billion people, the world's largest economies, a
    significant part of our national economy, the world's largest
    militaries, as well as some of the most important sea and air
    lines of communication. As the United States military executes
    our rebalance to the Pacific, acceding to the Convention is
    essential to locking in a stable, legal framework for the
    maritime domain that is favorable to our national interests and
    preserves our access to this critical region. And as a Pacific
    power, the United States must continue to lead the effort to
    maintain security in the region which has defended freedom,
    enabled prosperity, and protected peace there in that area for
    more than six decades.
        Joining the Convention will reinforce United States
    international leadership in the maritime domain. The Convention
    specifically codifies the rights, the freedoms, and the uses of
    the sea that are critical for our forces to transit through and
    operate in the waters of the Asia-Pacific region.
        As the populations and the economies of the Asia-Pacific
    region continue to grow, competing claims in the maritime
    domain by some coastal states are becoming more numerous and
    contentious. Some of these claims, if left unchallenged, will
    put us at risk for our operational rights and our freedoms in
    key areas of the Asia-Pacific. Nowhere is this more prevalent
    than in the South China Sea where claimants have asserted broad
    territorial and sovereignty rights over land features, sea
    space, and resources in the area. The Convention is an
    important component of a rules-based approach that encourages
    peaceful resolution of these maritime disputes. Moreover, the
    Convention codifies an effective balance of coastal state and
    maritime state rights, a stable legal framework that we help to
    negotiate that is favorable to our interests and that we should
    leverage as a check on states that attempt to assert excessive
    maritime claims.
        Currently the United States is forced to rely on customary
    international law as the basis for asserting our rights and
    freedoms in the maritime domain and because we are not a party
    of the Convention, our challenges are less credible than they
    might otherwise be. By joining the Convention, we place
    ourselves in a much stronger position to demand adherence to
    the rules contained in it; rules that we have been protecting
    from the outside since the 1980s and before.
        Thank you for the opportunity to testify on this important
    Convention as it relates to this critical region. I look
    forward to your questions. Thank you.
        [The prepared statement of Admiral Locklear follows:]

                Prepared Statement of ADM Samuel J. Locklear III

        Mr. Chairman and members of the committee, thank you for the
    opportunity to testify before the committee today on this subject of
    strategic importance.
        As the Commander of U.S. Pacific Command (PACOM), I join Secretary
    Clinton, Secretary Panetta, Chairman Dempsey, my fellow Combatant
    Commanders, and numerous other current and former leaders within the
    Department of Defense and United States Government in recommending that
    the United States accede to the Law of the Sea Convention. After
    careful reflection, I am fully confident that our accession to this
    Convention would advance U.S. national security interests in the PACOM
    area of responsibility (AOR). Specifically, the Convention sets forth
    and locks in a rules-based order that protects military activities
    which are vital to our operations in defense of the Nation, as well as
    our allies and partners.
        As you know, the United States is refocusing on the Pacific after
    more than 10 years of war. As noted by Secretary Panetta, ``We continue
    to face a challenging and complex global security environment, with
    multiple transnational threats including violent extremism, the
    destabilizing behavior of nations like Iran and North Korea, military
    modernization across the Asia-Pacific, and turmoil in the Middle East
    and North Africa.'' All of the foregoing challenges must be viewed
    against the backdrop of the world's increasing dependence on trade and
    commerce to and from the Asia-Pacific region.
        It is critical for the United States to maintain its leadership
    role in the Pacific in order to best protect our vital security
    interests. As the Secretary of Defense stated in his testimony, a key
    component of our strategy is to reenergize and strengthen our network
    of defense and security partnerships throughout the Asia Pacific
    region. An area of universal interest among our allies and partners is
    protection of the rights and freedoms that underpin all nations' access
    to and uses of the world's oceans. Joining the Convention will ensure
    seamless integration of international legal authorities between our
    forces and those of our partners and will place the United States in
    the best possible position to continue to lead international efforts in
    the maritime domain.
        Most important to me as the Commander of U.S. Pacific Command are
    the protections contained in the Convention for our navigational rights
    and freedoms, over-flight rights and freedoms, military activities, and
    our rights to transit international straits and choke points without
    impediment. With more than half the world's ocean area within my AOR,
    forces assigned to me rely on these basic rights, freedoms, and uses
    daily to accomplish their mission. All of the foregoing rights and
    freedoms are specifically protected by the Convention.
        As we look into the future, our status as a nonparty will
    increasingly disadvantage the United States. Presently, the United
    States is forced to rely on customary international law as the basis
    for asserting our rights and freedoms in the maritime domain. In
    situations where coastal states assert maritime claims that exceed the
    rights afforded to them by the Convention, USPACOM challenges such
    claims through a variety of means including the U.S. Freedom of
    Navigation program, military-to-military communications, and diplomatic
    protests issued through the State Department. When challenging such
    excessive claims through military-to-military or diplomatic exchanges,
    the United States typically cites customary international law and the
    relevant provisions of the Convention. Unfortunately, because we are
    not a party to the Convention, our challenges are less credible than
    they would otherwise be. Other States are less persuaded to accept our
    demand that they comply with the rules set forth in the Convention,
    given that we have not joined the Convention ourselves.
        In addition, as you know, customary international law depends in
    part on State practice and is subject to change over time. This is less
    so in the case of treaty or convention-based international law, which
    comes from written and agreed-upon terms and conditions that are
    contained in such treaties or conventions. Ironically, by not being a
    party to the Convention and relying on customary international law, our
    rights within the maritime domain are less well defined than the rights
    enjoyed by virtually all of the other nations within the PACOM AOR, and
    around the world with over 160 nations as parties. Moreover, by
    remaining outside the Convention, we leave ourselves potentially in a
    situation where other nations feel they can ignore the Convention's
    provisions when dealing with the United States, in favor of what they
    may view as less clear and more subjective obligations that may exist
    in customary international law.
        As the Asia Pacific region continues to rise, competing claims and
    counter claims in the maritime domain are becoming more prominent.
    Nowhere is this more prevalent than in the South China Sea. Numerous
    claimants have asserted broad territorial and sovereignty rights over
    land features, sea space, and resources in the area. The United States
    has consistently encouraged all parties to resolve their disputes
    peacefully through a rules-based approach. The Convention is an
    important component of this rules-based approach and encourages the
    peaceful resolution of maritime disputes. Here again though, the
    effectiveness of the U.S. message is somewhat less credible than it
    might otherwise be, due to the fact that we are not a party to the
    Convention.
        Some States in the USPACOM AOR have adopted deliberate strategies
    vis-a-vis the United States to try to manipulate international law to
    achieve desired ends. Such strategies are infinitely more achievable
    when working within the customary international law realm, versus the
    realm of treaty-based law. By joining the Convention, we greatly reduce
    this interpretive maneuver space of others and we place ourselves in a
    much stronger position to demand adherence by others to the rules
    contained in the Convention--rules that we have been following,
    protecting, and promoting from the outside for many decades.
        Additionally, while Convention or treaty-based international law is
    less subject to change and interpretation, it is not immune from
    change. Parties can collectively agree to change the rule-set in a
    treaty or adopt particular interpretations of its provisions, in
    accordance with the terms of the treaty. Given that over 160 nations
    are currently parties to the Convention, if the rule-set were to
    change, we might no longer be able to argue that the existing,
    favorable set of rules under the Convention reflects customary
    international law. We would be forced to either accept the new rule-set
    or act as a persistent objector, either of which would come with its
    own risks. Moreover, our continued status as a nonparty allows states
    an enhanced ability to co-opt the existing text of the Convention and
    attempt to re-interpret its rules contrary to the original intent that
    we and other maritime powers helped to negotiate. It would be much more
    beneficial for the United States to lead the international community in
    this crucial area of international law from within the Convention,
    rather than from the outside.
        In the past, questions have been raised about whether U.S.
    accession would harm or otherwise undermine our security interests. It
    is important to answer these questions directly and factually.
    Questions include the following:
        Will accession to the Convention force us to surrender U.S.
    jurisdiction over military vessels? The answer is ``No.'' The
    Convention specifically preserves the sovereign immunity of warships
    and exempts them from the exercise of foreign jurisdiction. Given that
    the Convention is clear on this point, exclusive U.S. jurisdiction over
    our warships would be better protected through accession than is
    currently the case.
        Will accession restrict U.S. military operations and activities?
    Here again, the answer is ``No.'' The Convention in no way restricts
    our ability or legal right to conduct military activities in the
    maritime domain. As stated by the Secretary of Defense, ``U.S.
    accession to the Convention preserves our freedom of navigation and
    over-flight rights as bedrock treaty law--the firmest possible legal
    foundation for these activities.''
        Will accession subject the U.S. military to the jurisdiction of
    international courts? Again, the answer is ``No.'' The Convention
    specifically permits nations to exempt from international dispute
    resolution, ``disputes concerning military activities, including
    military activities by government vessels and aircraft.'' State Parties
    individually determine what constitute ``military activities.'' Current
    and former leadership within the U.S. Government have given repeated
    assurances that the United States would take full advantage of this
    clause in its accession documents to exempt U.S. military activities
    and protect them from the jurisdiction of international courts and
    tribunals. In fact, this is specifically outlined in this Committee's
    Draft Resolution of Advice and Consent of 2007 and continues to be
    supported by the current administration.
        Will accession hamper our ability to conduct maritime interdiction
    operations, outside the piracy realm? The answer here is ``No,'' as
    well. The United States conducts a wide range of maritime interdiction
    and related operations with our allies and partners, virtually all of
    whom are parties to the Convention. We rely on a broad range of legal
    authorities to conduct such operations, including the Convention, U.N.
    Security Council Resolutions, other treaties, port state control
    measures, flag state authorities, and if necessary, the inherent right
    of self-defense. Accession would strengthen our ability to conduct such
    operations by eliminating any question of our right to avail ourselves
    of the legal authorities contained in the Convention and by ensuring
    that we share the same international legal authorities as our partners
    and allies.
        In conclusion, the United States is currently in a situation where
    we operate outside of a treaty that we were largely responsible for
    negotiating through which we obtained all our stated objectives, and
    that has been joined over 160 other nations, including virtually all of
    our allies and key partners. We conduct our actions consistent with
    many of its terms, which we regard as customary international law, but
    we do not obtain the benefits of the Convention available only to
    parties. Now more than ever, the United States must be a leader in
    preserving the rights, freedoms, and uses of the oceans that enable us
    to protect our vital security interests in the maritime domain around
    the globe. The diminishing group of countries outside the Convention
    includes land-locked nations such as Uzbekistan, Tajikistan,
    Afghanistan, and Bhutan, as well as rogue nations such as North Korea
    and Iran. To best protect our vital national security interests in the
    years to come, now is the time for the United States to lock in a
    stable legal framework for the maritime domain, and send a clear
    message to other nations in the PACOM AOR that the maritime freedoms
    codified in the Convention are worth preserving and the Convention's
    rule of law is worth upholding.

        The Chairman. Thank you very much, Admiral. Thank you to
    all of you for your testimony.
        Let me begin. I want to try to clear up something and pick
    up on a theme that Senator Lugar opened up in his opening
    comments.
        Some in our very diverse media platforms that we have
    today, whether it is an editorial or a blog or whatever, have
    tried to suggest, oh, you know, these guys from the military
    are just coming there because the administration has told them
    to come there and they are going to say what they have to say,
    but we can sort of discount it. So I want to get right at that
    right up front if I can.
        Are each of you--I believe when you are confirmed, you
    agree before the Senate that you will live up to sort of
    individual advice and do what is in your conscience and so
    forth. But are you appearing today--any of you--under any kind
    of sort of order or coercion, or are you here because you
    believe in this treaty and you are expressing your personal
    view to the Senate as the best advice that you can give to the
    Senate to perform our function?
        Do you want to begin, Admiral Winnefeld?
        Admiral Winnefeld. I would invite my colleagues to speak up
    as well, but nobody twisted my arm in any way to be here today.
    I am here because I believe we should ratify the treaty. Yes,
    sir.
        The Chairman. And the reasons you have given for the treaty
    are reasons you believe in?
        Admiral Winnefeld. Yes, sir.
        The Chairman. Can we just run through the list in the order
    that you testified or however you want to do it.
        Admiral Greenert. Yes, sir, Senator. I am here to give you
    my best professional and military advice on the treaty, and I
    support the treaty fully.
        Admiral Papp. Yes, sir. I fully believe in this. As I said
    in my opening comments, as a practitioner, as a person that has
    been out there operating on the seas for nearly four decades, I
    believe in this, and more than anything else, I believe in it
    because we have young lieutenants that are commanding patrol
    boats. We have boatswain mates who are making law enforcement
    boardings. And they need the clarity and the continuity and the
    predictability that this Convention provides in terms of making
    determinations on a daily basis on jurisdictional issues and
    other things.
        General Fraser. Chairman, I am here because I want to be. I
    want to be especially because of not only the extensive career
    that I have had and been on the receiving end of certainly the
    support that an operation like TRANSCOM has provided but also
    because of my study of this Convention and engaging our
    commercial partners in the need for us to be able to deploy,
    sustain, and then return home our warfighters whether they are
    supporting humanitarian operations or responding to another
    type of crisis. I will provide you my honest assessment.
        General Jacoby. Chairman Kerry, I am here to support the
    Law of the Sea based on my professional responsibilities, my
    experiences as a commander in every theater, and I am fully
    committed to this approach. Thank you.
        Admiral Locklear. Senator Kerry, the men and women of
    Pacific Command--they live this issue every day. They are
    confronted with the aspects of ambiguities of not being a part
    of this treaty. I am here because I support this treaty. I
    support the framework it gives the military commanders, and
    those that work under me, our ability to make decisions that
    will be in the best interest of this Nation, that will be in
    the best interest of ensuring that we can follow the rule of
    law and not have miscalculations that lead us in directions
    that we would not want to go as a nation. So I am here to
    support this treaty, and I both professionally and personally
    support it.
        The Chairman. Well, I thank each of you. I had no doubt,
    but I thought it was important to have those statements on the
    record and I appreciate your candid answers.
        Admiral Winnefeld, you made a statement in the beginning of
    your testimony in which you talked about the misplacing of this
    notion about giving up our sovereignty in any way. In fact, you
    said it is the opposite. We would be growing our sovereignty.
        Preliminary studies indicate that the Extended Continental
    Shelf--it is not fully defined yet, and part of the reason for
    joining this treaty, as I understand it, is to have that
    clarity about our Extended Continental Shelf. But right now,
    the estimates are that the Continental Shelf that we would have
    exclusive rights to could conceivably be as high as l million
    square kilometers, an area about twice the size of California,
    nearly half of the Louisiana Purchase. So what we are looking
    at here, are we not, is the opportunity for us to, in fact,
    gain exclusivity and gain clarity with respect to the
    exploitative rights over this vast area of additional land mass
    to the United States? Is that accurate?
        Admiral Winnefeld. Yes, sir.
        The Chairman. And can you sort of explain? Some people say,
    well, what the heck. You know, we got the strongest Navy in the
    world. We are paying a lot of money for it. Nobody is going to
    stand up to us. We will just go out and do what we want to do
    and need to do, and if somebody gets in our way, we will
    enforce it. What is wrong with that?
        Admiral Winnefeld. Well, there are a couple things.
    Specifically related to the Continental Shelf, notwithstanding
    the potential economic benefits, which I think would be covered
    in a different setting for the committee, we would have much
    more control over, as you point out, the Extended Continental
    Shelf. I think as of today, theoretically, absent a clear
    delineation of that shelf, somebody could come in and
    potentially prospect for resources at the 201 mile point away
    from our coastline which, if the Extended Continental Shelf is
    defined the way we think it ought to be defined under the
    Convention, they would not be able to do. And now there comes
    into question with Admiral Papp and how he would have to
    enforce that under existing customary law or whether he would
    have the full force of the Convention behind him.
        The Chairman. Well, what is wrong with the approach of
    people who say we will go just in and kick them out? What the
    heck?
        Admiral Winnefeld. Well, if the President tells us to do
    that, we certainly would be ready and willing and able to do
    it, but I think we would rather apply a legal approach and a
    stepped forum before we got to the potential use of force.
        The Chairman. Admiral Papp, can you speak to this question
    of sort of added sovereignty?
        Admiral Papp. Absolutely, sir. And while most of us and the
    theme of this is looking at national defense, I would suggest
    that national security--only part of that is defense. There is
    also economic security, environmental security, and energy
    security, and others that come into the whole equation of
    national security. And when we are talking about the Extended
    Continental Shelf and making determinations on where it might
    be, we need that clarity.
        And I have a slightly more nuanced view perhaps than my
    colleagues because the Coast Guard is the one of the five armed
    services that has the responsibility for law enforcement of
    U.S. laws on our waters and on the high seas. So we look at it
    from a law enforcement perspective. Use of force is one of our
    last resorts and abiding through the rule of law. And so we
    have to think on a daily basis how we conduct our law
    enforcement operations and we need the predictability and
    stability of what those determinations are based upon which the
    Convention gives us.
        The Chairman. Senator Lugar.
        Senator Lugar. Gentlemen, you have discussed two areas that
    I want to touch upon in these questions. One of them was the
    growing complexity of the Arctic situation. This may, in part,
    be because of the melting of ice flows or the ambitions of
    other countries to create sea-lanes to have commerce in the
    Arctic well beyond that which we have had before. It does raise
    the points which you have made that it is not really clear just
    in terms of law enforcement, in other words simply how and by
    whom indiscretions of various people are addressed or rescue
    missions for people who get caught in a situation are carried
    out.
        I am hopeful that one or more of you are doing some
    scholarly work that is going to be of help to each of us to
    explain what the circumstances are for a sea which either
    expands or constricts or so forth quite apart from what the
    claims may be in terms of sovereignty of all of the boundaries.
        But I want to dwell specifically on the Pacific because we
    had an interesting visit last week. Some of us visited with the
    President of the Philippines. It is a very good time in terms
    of our relations with the Philippines because of their growing
    economy. President Aquino is a straightforward, honest
    President of the Philippines. And furthermore, the Philippines,
    having rejected our fleet from Subic and various other places
    in recent years, now is very concerned about the definition of
    where the rights are for the Chinese. The Philippines would
    join Vietnam, Indonesia, and other countries in wondering
    precisely who is going to enforce what for a variety of
    reasons, in part because of these Law of the Sea questions,
    which have come into the orbit of our diplomacy in a way that
    we have not seen in the last decade.
        Let me just ask any one of you, How are we going to work to
    define who owns or governs or commands what in the South China
    Sea? In that large area between China and the Philippines in
    which there are extraordinary resources and certainly very
    little definition of who does what and for the moment, a great
    deal of reliance upon the United States fleet to bring some
    definition to this. If we do not have Law of the Sea the
    question is, How do we define it? What are we prepared to do
    and what are the American people prepared to do? It is one
    thing to talk about enforcing this and, in essence, going to
    war over it, but at least in the old days, a declaration of war
    was required and people really wanted to know if it was worth
    the sacrifice of individual human beings.
        Can anyone give me some idea of where we are headed in the
    Pacific and the South China Sea particularly?
        Admiral Locklear. Yes, sir, I can. In the South China Sea,
    you have, I think, a great example of how the Law of the Sea
    should play out if done correctly. Because of globalization,
    the things that move in the oceans that move through the South
    China Sea--half the energy supplies in the world move through
    there daily. A third of our economy moves through there daily,
    you know, all the things we talked about. So there are
    competing claims from the various coastal states in there. We
    have a tendency to want to talk about China, but there are a
    number of countries that have excessive claims, and they are in
    two areas. One is in territorial disputes and the other is in
    maritime disputes.
        So what the Law of the Sea would give us--it gives a
    framework on territorial disputes which the United States takes
    no position on territorial disputes between the Philippines and
    the Chinese or any other excessive territorial claim. But the
    Law of the Sea would give a framework for them to be able to
    have that dialogue in a peaceful way. Our perspective is that
    we do not want coercion. We want things done peacefully. We
    want them done in a framework that allows that to happen. And
    my understanding is that there are vehicles in the Law of the
    Sea, if applied properly that would allow them that vehicle and
    their desires of that in the ASEAN nations in particular.
        The other side is excessive maritime claims, which are
    clearly laid out in the Law of the Sea of what can be there.
    And these are critical to us so that we can maintain our
    unimpeded access to those areas for the future that allows us
    to provide, if you want to call it, a security deterrent, that
    allows us to--we have seven allies in the world; five of them
    are in this region. And ensuring that our allies' perspectives
    are looked at properly through a rule of law that allows us to
    continue to operate freely with them is important. So this is
    why the Law of the Sea Convention is important to me.
        Senator Lugar. Yes, sir.
        Admiral Papp. Senator, there is one other nuance. I have
    been watching this. Admiral Locklear has the responsibility out
    there, but the Coast Guard has responsibilities in the Pacific
    as well. And one of the things we have seen China doing as an
    indication that they are operating under the rule of law, they
    are, in fact, many times now keeping their maritime patrol
    vessels, more or less their coast guard vessels, which are less
    provocative rather than sending large navy ships out there,
    once again portraying themselves as following the rule of law
    and acting within the Convention. We have no means of disputing
    that unless we are parties to the Convention because I am
    involved with the Chinese in the North Pacific Coast Guard
    Forum and whenever we address issues like this, their first
    response is but you are not a party to the Convention, and it
    puts us in a difficult situation to deal with and it makes our
    work much harder.
        Admiral Greenert. Senator, if I may make a comment. This is
    one of the things I would like to pursue--and the South China
    Sea is just one part of the ocean. I organize, train, equip,
    and deliver the ships to Admiral Locklear and others. And we
    are looking forward to what I call a dependable, if you will,
    or predictive behavior by the elements in these maritime
    crossroads such as the South China Sea. If each interaction
    ends up a debate or a confrontation, it becomes unpredictable,
    and then you get unprepared, if you will, and then you get this
    in situ debate which is OK if everybody is agreed upon what the
    customary international law is. But it evolves and it becomes
    domestically derived in some locations. That is kind of what we
    have right now in the South China Sea.
        So we say to ourselves, how do we preclude this? Well, we
    should talk and not have belligerent behavior. So we pursue
    things like the Military Maritime Consultative Agreement talks
    with China for an example, and there are others. I host heads
    of navies every 2 years in the International Sea Power
    Symposium. Having something like the Law of the Sea Convention
    as a book that we all have agreed to and we sit down and say,
    OK, let us talk about the protocols that we are all kind of
    going to agree to or what is the basis of the disagreement
    would be very helpful.
        Senator Lugar. I appreciate that. Each of you knows that we
    got briefings here about the so-called pivot of our national
    defense toward the South China Sea, toward the Pacific. So that
    is why it is very crucial both in terms of what we are talking
    about today as well as our overall national defense and foreign
    policy.
        Thank you very much.
        The Chairman. Thank you, Senator Lugar.
        Senator Cardin.
        Senator Cardin. Thank you very much, Mr. Chairman.
        And let me thank all of you for your leadership and your
    service to our country.
        You have all indicated that you support the ratification of
    the Law of the Sea Treaty. We have been, at least, in
    discussions of this for almost 20 years. So this has been an
    issue that has been around the United States Senate for a long
    time.
        I would like to get from you an assessment as to whether
    this is just something that would be nice to get out of the way
    and done or whether this is an important issue as it relates to
    our national security.
        Admiral Winnefeld. I can start off, sir. I think it is an
    important issue related to our national security. Some have
    pointed out that there are no operations that we have been
    unable to conduct because we have not become a party to the
    Convention. And that, in fact, is true. But as we look to the
    future, which is what this is really about, and we see some of
    the erosions of customary international law that have been
    referred to by Admiral Locklear and Admiral Greenert and
    Admiral Papp, that is what we are really concerned about. And
    we would rather not wait until that becomes a crisis for us. We
    would rather get the treaty ratified now so we have got that
    fundamental basis in international treaty law for us to do what
    we need to do and to counter those who might be taking us on in
    a maritime environment. So we believe it is an issue for
    national security mostly in the future.
        Senator Cardin. Is there any disagreement on that or any
    further clarification?
        Admiral Greenert. If I may, Senator, the Arctic, as
    mentioned earlier by Senator Lugar, is a new area. I do not
    know what is customary up there, and we are going to be
    defining our behavior
    and our protocols up there. Therefore, I would say this is an
    opportunity.
        Senator Cardin. In regards to the Arctic--and that is an
    area that is emerging as to the issues. The issues that are
    currently being thought of were not 10 years ago. So it is an
    emerging area of great interest to the United States. As I
    understand it, we are the only country that borders the Arctic
    that is not a member of the--has not ratified the Law of the
    Sea. Explain a little bit more as to how that disadvantages us
    as these discussions are taking place?
        General Jacoby. Senator, I am the Commander of Northern
    Command. It is in my area of responsibility. The Arctic is a
    fast-changing environment. It is harsh. There are few assets
    available. Working together is really at a premium. It is the
    opening of a new frontier, danger and uncertainty and also
    opportunity. So the idea that the strongest, the fastest, the
    most aggressive party can define the customary international
    law is not the approach that any of the eight Arctic nations
    desire to take. It would empower me, as I provide leadership on
    behalf of the United States in the Arctic, to start with that
    rules-based framework, the firmness of treaty law, in order to
    start sorting through the uncertainty that we face up there.
    And as I said, there is a large premium on working together in
    the Arctic right now.
        Senator Cardin. Thank you for that.
        I want to get back to China for one moment because I think
    back a decade ago when we were looking at China and say, gee,
    we certainly should be able to manage our trade issues with
    China. It was not going to be a major problem for America. And
    now we see how this has developed. The maritime interest of
    China seems to be expanding. They seem to be more bold than
    they have been in the past, some of which we believe are not
    appropriate under international law.
        Can you tell us how ratification of the Law of the Sea
    would put us in a stronger position vis-a-vis China as it
    relates to its maritime ambitions?
        Admiral Winnefeld. I can start and then turn it over to
    Admiral Locklear.
        One of the things, as we have talked about, is the concern
    about erosion of law. And one of the areas where China has been
    assertive is in writing national laws that would restrict
    maritime activity in their Exclusive Economic Zone. And some of
    that maritime activity is very important to us from a military
    sense, and perhaps in a classified briefing later in the year
    we can go over that. But without being a party to the
    Convention, we really do not have a leg to stand on if we try
    to invoke the Convention's clear rights in terms of our ability
    to operate in that Exclusive Economic Zone. So that is again a
    potential future source of friction. It is already a source of
    friction but it could get worse, and we would like to see the
    fundamental underpinning of accession to the treaty to back up
    our rights in the EEZ to do what we need to do from a military
    basis.
        Over to Sam.
        Admiral Locklear. I fully agree. It provides a solid,
    fixed, and a favorable legal framework for us, first, to
    protect U.S. navigation and overflight rights, as well as the
    sovereignty of our ships and aircraft. So that is the first
    thing it does.
        You know, us being part of the Convention, it aligns our
    international legal authorities with those of our allies and
    our partners and our friends who are in that region, which is
    important. I think it would strengthen our standing to support
    our allies who are dealing with some of these issues
    particularly in the South China Sea. And they are trying to
    find a mechanism to align their maritime claims with
    international law, and so it would improve our overall support
    and our standing as we try to get them to resolve in an ever-
    increasingly complex environment. We have to look forward I
    think here, not in the rear view mirror.
        The complexity of the maritime environment, because of the
    demand for resources, because of the amount of goods--10 years
    ago, the amount of things that float on the ocean across the
    sea lines--in that 10 years, it quadrupled because of the
    globalization of the economy. So we need to make sure that we
    are able to work through these disputes from a solid, fixed,
    favorable legal framework rather than resulting to every one of
    these issues being a standoff that could potentially lead, I
    think, us down a path that we do not want to go.
        Senator Cardin. As I understand it, in the 1990s when this
    treaty was first brought to the Senate, there were concerns.
    Those concerns were shared by some of our allies. Modifications
    were made and our allies went ahead and ratified the treaty.
    The Senate has not followed suit.
        From your testimony here today, am I correct to say that
    you believe today it is more important to ratify the treaty
    than it was a decade ago, that circumstances on the sea
    continue to present additional challenges that the Law of the
    Sea would help America in promoting its national interests and
    its national security? Is that a fair assessment, that it is
    even more important today than 10 years ago because of the
    emerging issues?
        Admiral Winnefeld. Absolutely. A decade ago, there were not
    as many nations who were asserting their claims into the
    maritime environment in the way they are as there are today,
    and those excessive claims continue to grow. So I would say
    definitely compared to 10 years ago, it is more important today
    than it was.
        Senator Cardin. Thank you, Mr. Chairman.
        The Chairman. Thank you, Senator Cardin.
        Before I recognize Senator Corker, let me just quickly--on
    your question about the Arctic, I just wanted to comment.
        I believe the Russians are sending their fifth mission into
    the Arctic to do plotting this summer, and the Chinese have
    been up there in a very significant way. Is that not accurate?
        General Jacoby. Yes, Senator, that is.
        The Chairman. Again, this will be part of our classified
    briefing for all the Members, but it is quite significant what
    is happening there without recourse in any legal way. Is that
    correct?
        General Jacoby. That is correct, Senator.
        The Chairman. Senator Corker.
        Senator Corker. Thank you, Mr. Chairman.
        And thank each of you. And I do believe that each of you
    are here espousing your own views. I also know that sometimes
    we can have silos where one part of our Government wants
    something to happen and other parts may be jeopardized. And
    that is our role here is to balance all of those off. But we
    thank you very much for being here and certainly for your
    service.
        Admiral Locklear, my friend and colleague, Senator Lugar,
    asked you about China and the Philippines. It looks to me like
    that it is just the opposite of what we just said, that those
    two countries are signatory to the Law of the Sea Treaty. There
    is a dispute and there is no resolution. It looks to me like
    that the Law of the Sea Treaty is not working as it should be
    with two countries having a dispute and both being signatory. I
    would like for you to explain why the Law of the Sea Treaty has
    not already resolved the conflict there and what is it about it
    that is failing.
        Admiral Locklear. Yes, sir. I think your perspective is
    correct. It has failed them to some degree, but I think it has
    not been tried in some of these areas that are now emerging.
    And I believe that there is opportunity. And I get from all of
    our----
        Senator Corker. What do you mean it has not been tried? I
    mean, we have a conflict there. They are in dispute, and it
    looks to me like China has basically said we are sorry. We are
    not going to adhere to the treaty document. So how is it
    working?
        Admiral Locklear. Well, at this stage, my understanding is
    that the Chinese want to solve this in a bilateral relationship
    with the Philippines.
        Senator Corker. So the treaty is not working if they are
    doing it in a bilateral way. Is that correct? I mean, is there
    not a group----
        Admiral Locklear. The treaty provides mechanisms should the
    Partner States choose to use it or the signatory States choose
    to use it. So our perspective in our dialogue with our allies
    and our partners, as well as the Chinese, is that we want them
    to resolve this using standard rules and to use those
    mechanisms that are outlined in the Convention rather than a
    bilateral way where you may end up having a coercive
    perspective from one party or the other that drives a decision
    in a direction that we would not want it to go.
        Senator Corker. Yes, but it sounds like China is saying we
    do not care what you think. We do not care that we are members
    of the treaty. We want to resolve it in a bilateral way. So, I
    would just say, to me it points to failure. We have a real-live
    example of a failure of this treaty.
        Admiral Winnefeld, let me ask you this. You kept saying
    that this in no way affects our sovereignty. But then you kept
    saying that if we are not a member, key decisions are being
    made that affect our sovereign rights. How can both be true?
        Admiral Winnefeld. I would say, first of all, I want to add
    a little bit to what Sam Locklear said. One of the things that
    helps us in the South China Sea is that when we have the
    Association of Southeast Asian Nations--ASEAN--nations aligned
    together pushing against China, China tends to listen, and when
    they can cut out somebody from the herd and go bilateral, then
    they will tend to not go under treaty mechanisms.
        So if we are a party to the Law of the Sea and we can put
    our political power, our diplomatic power behind that, it would
    tend to buttress the ASEAN nations into potentially supporting
    the Philippines and what have you. So the Law of the Sea is not
    a magic formula to resolve a dispute between China and the
    Philippines. Nobody is claiming that, but I think it would
    allow us to have a little more credibility in entering into
    that environment.
        And then in terms of sovereignty piece, what we would like
    is we will be able, as a party to the Convention, to have
    direct influence over how the Convention is applied. We will be
    able to more fundamentally and with more credibility apply what
    is now customary international law that is embedded in the
    Convention.
        Senator Corker. But specific--I understand all those
    things. We are a member of the club and therefore we can
    influence the rules of the club.
        But if key decisions are being made right now because we
    are not a party to the treaty that affect our sovereignty, how
    can you say that the treaty does not affect our sovereignty? It
    sounds like----
        Admiral Winnefeld. Because, Senator, we would be in the
    mechanisms of the treaty and able to counter those decisions.
        Senator Corker. Well, wait a minute. You cannot say on one
    hand that the treaty in no way affects our sovereignty and then
    say that decisions are being made that affect our sovereignty.
    You cannot say that and it be true.
        Admiral Winnefeld. What I am saying is by not being a party
    to the Convention, we lose the opportunity to preserve our
    sovereignty. So if we lose the opportunity----
        Senator Corker. By virtue of you saying that, you are
    saying the treaty then has pieces of it that affect our
    sovereignty.
        Admiral Winnefeld. It positively affects our sovereignty
    and avoids negative impact on our sovereignty. So, for example,
    the Extended Continental Shelf piece--we will not be able to
    assert that right unless we accede to the treaty. Nobody will
    pay attention to it. So theoretically somebody could come in to
    201 miles off of our coast and explore for natural resources,
    and we do not have the power of the treaty behind us to say,
    sorry, you cannot do that.
        Senator Corker. You know, Admiral Papp, can you give me one
    example where us not being a party to this treaty has ever
    impacted your ability to board a ship or enforce U.S. law? One
    live example.
        Admiral Papp. Oh, absolutely, sir. We have countries within
    South and Central America that have excessive territorial sea
    claims, and oftentimes when you have these questions about
    jurisdiction, we may have intelligence or we may have a target
    which we believe is smuggling drugs or people and we cannot
    gain cooperation from these countries that are outside the
    Convention. We are outside the Convention. They have
    jurisdictional claims. We do not have the mechanism for
    disputing this. And on a routine basis, not only do we lose
    cases, but oftentimes we lose time--our cutters and crews--
    while we go through protracted negotiations on jurisdictional
    disputes between countries for, in particular, drug
    interdiction.
        But I would add. You know, we are focused on some of the
    countries that are challenging us around the world on a day-to-
    day basis, and I think to buttress what Admiral Winnefeld is
    saying, even with our closest friends, we have disputes that
    only can be resolved within the Convention. Our border between
    Canada and Alaska is under dispute and we cannot negotiate with
    all the tools in our tool bag with Canada unless we are members
    of the Convention. We have waters in northern New England
    between Maine and Alaska where we have jurisdictional disputes
    in terms of transit that has prevented an LNG port to be
    developed in Passamaquoddy, ME, because Canada will not allow
    us to have free and unimpeded passage because--and I think they
    are on very loose footing here--we cannot negotiate because we
    are not members of the Convention.
        So it is not just with countries that challenge us. It is
    also with our friends as well. And those can be played against
    us because we have not signed onto the Convention.
        Senator Corker. I find it hard to believe we could not
    reach a bilateral agreement with Canada. It sounds a little
    far-fetched, but I would love to talk to you more about it.
        One last question. I get the impression that we feel like
    that if we were a party to the Law of the Sea Treaty that it
    would cause us to have some savings as it relates to dealing
    with maritime issues throughout our Navy. Is that correct,
    Admiral?
        Admiral Winnefeld. I do not know that there is any
    influence on the----
        Senator Corker. Well, we are talking about the cost. We
    have a lot of cost because we are not part of the treaty. We
    have to do things in a very different way. I mean, it seems to
    me that I have heard that throughout the testimony here today.
        Admiral Winnefeld. I do not think any of us have expressed,
    Senator, that it would be more costly for us if we did not
    accede to the treaty in terms of financial terms. We are not
    going to have any different size of Navy if we do or do not
    accede to the treaty. It just gives us another tool in the
    toolbox to do business as a navy and as a nation.
        Senator Corker. Well, listen, I respect each of you. I will
    say that today's testimony--and I thank you very much for your
    public service. It to me has fogged things up more than it
    began. I very much appreciate it. I look forward to many one-
    on-one meetings as we hash this out. And I thank you very much
    for your service to our country.
        The Chairman. Senator Webb.
        Senator Webb. Thank you, Mr. Chairman.
        Let me begin by just offering an observation on the
    exchange that just took place. Without getting to the issue of
    sovereignty--and there are sovereignty issues involved clearly
    in what we are attempting to do in places like the South China
    Sea--I would just say, as an observation that treaties in and
    of their nature compel certain actions by our country. That is
    why we come together and undertake this process very carefully
    before we ratify a treaty. And they also cause an agreement
    among our governmental people to abide by certain standards
    that are in a treaty. That is what a treaty is about. That does
    mean that in a treaty, at least in my opinion, we are going to
    be giving up any of our sovereignty rights. Just let me start
    with that.
        Before I get into my question, I would like to join the
    chairman in recognizing Senator John Warner for his presence
    here today. He has been working on this issue for a very long
    time from the time that he was in the Department of the Navy
    and I was a 25-year-old marine on his staff. That was a long
    time ago and it was a pleasure to follow Senator Warner as
    Secretary of the Navy and also to be able to serve with him
    here in the Senate as my senior partner. I have tremendous
    regard for all of his service and the work that he has done on
    this area.
        I believe that the indisputable starting point in this
    discussion really is that the international rules of the road
    for security and also for commercial exploration have never
    been more complex. This affects the issues of freedom of
    navigation, as you have discussed several times this morning.
    Those are basically tactical questions. It also affects issues
    of sovereignty. Those are strategic questions. And following
    issues of sovereignty, in and of itself, it unavoidably
    involves commerce and how our Nation interacts in a lot of
    areas that right now are not clear in terms of who has those
    rights. That is apparent in the Arctic, as has been discussed.
    It is also clear in such areas as the Senkaku Islands where
    after a number of years of quiet dispute in 2010, Japan and
    China had a blowup over sovereignty that could have involved
    our security treaty with Japan if it had gone further.
        It is clearly apparent in the South China Sea. From our
    office, we initially offered a Senate resolution condemning the
    Chinese actions a couple of years ago involving the use of
    military force in the Philippines and off of the coast of
    Vietnam. We had a unanimous vote by the Senate that had two
    very important pieces in it, I think, in terms of the
    expression of the Senate. One was deploring the use of force by
    naval and maritime security vessels from China, and the other
    was calling on all parties to refrain from threatening the use
    of force and to continue efforts to facilitate multilateral
    peaceful processes as we address these issues.
        And that to me is the most important component of what we
    are talking about today. We need to find the right forum to
    address disputes where claims can be resolved with the
    agreement of multiple claimants. And this is a key point when
    we are discussing the activities of China particularly to this
    point. Not only China. You go to the Spratlys, there are five
    claimants. You go to the Paracels, you have two. There are a
    lot of these that are potentially going to affect sovereignty
    rights and eventually commercial competition.
        ASEAN has been mentioned. ASEAN is an evolving entity. It
    is a very important entity: 10 countries, 650 million people
    with widely varying governmental systems among them. They have
    been struggling for 10 years now to find rules of navigation in
    sovereignty to try to calm down the process in this part of the
    world. They have issued a proclamation in 2002 trying to lay
    down rules of the road. They issued another one recently.
        We have not been totally successful with China. We all know
    that. But we have been attempting to develop a number of
    different ways to encourage China to come into the solutions
    process on a multilateral basis.
        From our office, we have done the same thing with respect
    to the Mekong Delta where China does not recognize downstream
    water rights from the Mekong River with all the damming that it
    has done upstream. That makes it very difficult to bring China
    into a multilateral solutions process, and there is no place
    that it truer than when we look at the sovereignty rights and
    the future of the activities in commercial endeavors in the
    South China Sea.
        For that reason, I think this is a format that will greatly
    assist us in the future, and I know that there are questions on
    the other side. I am sure all of you have seen the editorial in
    the Wall Street Journal yesterday that was written by former
    Secretary of Defense Rumsfeld where he said the treaty remains
    a sweeping power grab that could prove to be the largest
    mechanism for worldwide redistribution of wealth in human
    history. I know that is not necessarily in any of your
    portfolios, but I would like to hear from you.
        What is the downside? What is the downside of this treaty?
    Is there, in your view, a downside, Admiral?
        Admiral Winnefeld. On the security side, I am not aware of
    any downsides that we can point to. In fact, the upsides are
    really why we are here today. As I mentioned, it very much
    improves the 1958 Geneva Conventions. It codifies in treaty
    law, not customary law, the things that we need to do day in
    and day out as a navy and as a force. So on the security side,
    I know of no downside. I have explored the commercial side, and
    it is complex. But it seems to me as though this treaty was
    negotiated and modified in 1994 to our advantage, but I would
    leave the economic experts to discuss. But I see no downside on
    the security side.
        Admiral Greenert. Senator, if I were to think of a
    downside, it would be misinterpreting the advantages of what
    this will do for us. It is not going to solve everybody's
    problems, and you laid out some very clear issues that we have
    been dealing with for years and years from Senkaku, et cetera.
    I think feeling that the Law of the Sea Convention will solve
    unto itself, because it establishes law, is wrong. Now we need
    to roll up our sleeves and go use it as the instrument to now
    sit down with nations because we have a consistent instrument
    that we can use.
        Senator Webb. Admiral Locklear.
        Admiral Locklear. Yes, sir. I see no downside from a
    security perspective. I see a downside on the status quo,
    though. One is it leaves us relying on customary international
    law, which I think is going to morph in a way that we cannot
    predict. It leaves us outside the full international legal
    framework that governs these rights and obligations and the
    actions of our allies, partners, and friends. It weakens our
    standing to object to inappropriate actions of other States
    that violate the Convention. I mean, 160 countries have signed
    up for this thing. They do not all follow it to the letter of
    the law, but we are not in there to be able to object to that.
    And I think it weakens our ability to shape potential changes
    to the Convention that we may want to see in the future.
        Admiral Papp. Senator, I find it interesting. You used the
    rules of the road in the beginning of your statement there. In
    fact, to me that is one of the greatest analogies here. The
    rules of the road for centuries were determined by customary
    international law. The challenge was, particularly as we went
    from sail to steam and vessels approached each other much more
    quickly, everybody had their own version of customary
    international law, and consequently collisions occurred. All
    countries agreed at a certain point to collision avoidance
    regs, or COLREGS, which standardized things across the entire
    world for mariners at sea. There is stability. There is
    continuity. There is predictability in those rules which
    sailors depend upon. And I think that is a perfect analogy for
    us. If we continue under customary international law, it
    changes and everybody has a different view of it. We have
    negotiated ourselves in a position where this is most favorable
    to us. It is almost like having a lottery ticket--a winning
    lottery ticket--that you do not cash in and you cannot use the
    proceeds.
        Senator Webb. Well, I would respectfully submit that the
    series of exchanges that we have had with China where they have
    insisted on only bilateral solutions is perhaps the strongest
    argument for us proceeding forward in this sort of way where we
    can continue to encourage multilateral solutions.
        Thank you, Mr. Chairman.
        The Chairman. Well, thank you, Senator Webb. That last
    point is a critical one. I am sorry Senator Corker is not still
    here to hear you say it, but I think we should probably chat
    with him about it.
        But everyone, I think, has agreed--I mean, one of the
    reasons we have our presence, where we do in the Pacific, is
    because we are viewed by most nations out there as being the
    indispensable nation. And clearly China would love to just use
    its power to bilaterally leverage some other country. But if
    the United States is at the table or if ASEAN is at the table
    and there is a unity, there is a whole different equation the
    Chinese have to take into account.
        So the virtue of it, in fact, advantages the Chinese for us
    to be out. And Secretary Clinton and others have told me
    personally that they have been ribbed and kind of--what is the
    word--you know, sort of made fun of in a jocular kind of way at
    various meetings when these subjects come up because we are not
    a member. And they sort of look at them and say, well, you are
    not a member. You do not have any standing to bring this up. So
    people need to weigh that as we go forward here.
        Senator Risch.
        Senator Risch. Thank you, Mr. Chairman.
        Admiral Papp, you know, we sit here every day and it is not
    very often our intelligence is insulted, but for you to come
    here and tell us that we cannot resolve a border dispute with
    Canada because we are not a member of this Law of the Sea
    Treaty really does that. And I am sorry that you chose to go
    down that route because I think those kinds of representations
    really undermine the statements and the logical arguments made
    by others who want to see this treaty authorized.
        I was surprised, as all of you testified, that the South
    China Sea was not mentioned until we got to Admiral Locklear. I
    was going to go down the same route that Senator Corker did in
    that regard, and I guess I will touch on it at least some.
        I would say that most people in America do not realize what
    a mess that the South China Sea is in, and the description that
    we have had here today has been very antiseptic. I have met
    with representatives of the governments, and it is not just the
    Philippines. It is other governments that are having the same
    kind of difficulties, and they are begging for help. Not one of
    them asked that we subscribe to the Law of the Sea Treaty. They
    wanted you guys to do something about it. They wanted me to
    urge the President to have you do something about it, which I
    am not inclined to do, by the way.
        But Senator Corker made the point that this treaty was
    negotiated 30 years ago this coming December 12. It was adopted
    by the United Nations a couple of decades ago, and every one of
    the players in the mess in the South China Sea is a subscriber
    to this treaty. Yet, this treaty is just a piece of paper and
    is just flowery speeches like we have had here today until the
    gate opens and the rodeo starts. And the gate has opened and
    the rodeo has started, and this thing has not helped one bit to
    resolve the tension, the disputes, and the defugalties that are
    going on in the South China Sea. They are shooting at each
    other there. There have been munitions expended, and this thing
    has not done one thing to help as Senator Corker has pointed
    out.
        Can any one of you point to me one thing that this treaty
    has done on a specific basis, people, places, and timing? Tell
    me one thing that this treaty has done to resolve the disputes
    and the tensions that have taken place in the South China Sea.
    And I do not want to talk about the future. I do not want to
    talk about what a wonderful document it is. I want to know what
    one country did to use the provisions of this treaty to help
    itself in the mess that they are in the South China Sea. Who
    wants to try that?
        Admiral Winnefeld. We pointed out, Senator, already that
    the treaty is not a magical document that is going to cure the
    ills of the South China Sea. It is yet another tool. And I
    think that the nations there will feel more empowered to use
    whatever mechanisms are in or to insist that the mechanisms in
    the Law of the Sea Convention be used if we are a party----
        Senator Risch. But, Admiral, they have not.
        Admiral Winnefeld [continuing]. If we apply our political
    backing and our political power and our influence to do that.
    And it might not work. And if that is the case, there are other
    mechanisms.
        Why should we leap right away to the use of force or
    something along that order when we have the opportunity to
    bring our influence to bear in the region? And the nations in
    that region will be a lot more comfortable if we are bringing
    our influence to bear with treaty law behind us than if we are
    on the outside looking in with no credibility to be able to--
    having not acceded to the treaty--to make statements about the
    treaty.
        Senator Risch. You know, I am not suggesting that you
    should jump in with force. I am not suggesting that at all.
    What I am suggesting is this has been an abject failure for the
    members who have signed this and who have been members for
    years and years and years. They are coming to us asking for
    help.
        Can anybody answer my question? Give me one example of a
    tension or a difficulty that was resolved as a result of this
    treaty by the members who operate in the South China Sea. Give
    me one example. Can anybody do that?
        [No response.]
        Senator Risch. I will take that as an answer.
        Thank you, Mr. Chairman. I am done.
        The Chairman. Well, let me give you an answer because it is
    important to know that the Philippines and Vietnam have both
    specifically asked us to join the Law of the Sea in order to be
    able to help them leverage a peaceful outcome to the disputes
    of the South China Sea because they cannot do it on their own
    because of China's power. And China, until we are in the Law of
    the Sea, does not listen to us either because we are not party
    to it.
        So I will make sure those documents and those facts are
    made available to the Senator.
        But you know, China wants a different outcome. China does
    not want to submit to the Law of the Sea right now, and it is
    going to take a different equation within the Law of the Sea
    for China to feel compelled to listen. But those nations are at
    a huge disadvantage. And if you look at the map at what China
    is claiming, it is clear why. So clearly, the Law of the Sea on
    its own is not going to resolve it.
        Senator Coons.
        Senator Risch. Well----
        The Chairman. Yes. Sorry. Go ahead.
        Senator Risch. Well, Mr. Chairman, you know, with all due
    respect, I do not understand that. You have these countries
    that have signed this agreement that is supposed to resolve
    these kinds of disputes. Whether we are in, or not in, should
    not make any difference whatsoever. There are 160-some
    countries that are in here. Supposedly this document is
    supposed to do something to create a mechanism by which they
    resolve this dispute, and it simply has not happened.
        The Chairman. Senator, it does. It provides a forum with a
    set of rules, but if a party to any dispute--this is true
    anywhere in any country anytime. Here in the United States, if
    you have got two parties, you know, whether it is a sports
    figure negotiating with the franchise owner and they go to
    arbitration ultimately because they cannot come to agreement
    because one party does not want to agree. Or how about the
    United States Senate where we had a super committee where we
    could get no agreement, so we are going to have a sequester?
    There is a great example. So, I mean, there are plenty of
    examples where people cannot agree, and you need a structure to
    be able to get it to agree.
        Senator Risch. And it has not worked.
        The Chairman. It has not worked with respect to the South
    China Sea. But the question is, Would the presence of the
    United States at the table, in conjunction with those other
    nations, be a precursor and lay the predicate to other options
    if you had to come to them? And the answer is according to, I
    think most experts, they would say absolutely. If you are going
    to go to war, you want to go to war with China over the South
    China Sea, you better lay the predicate, and the predicate
    better be that you have exhausted every opportunity peacefully
    before you ask the American people to do that.
        Senator Risch. I would certainly hope the United States
    does not give any consideration in going to war with China over
    the South China Sea. But this document was supposed to, long
    ago, have resolved this amongst the players in the South China
    Sea and not one person has been able to give me a specific
    example as to one of these tensions or one of these disputes
    that has been resolved.
        The Chairman. With respect to the South China Sea, and I
    think it is for very obvious reasons. But we will have plenty
    of testimony that will show you the ways in which on an
    everyday basis countless decisions are made which create rules
    of the road--Admiral Papp has testified to that--which lay out
    the rules of the road which have assisted and avoided conflict,
    and there are dozens of examples where conflict is avoided or
    various thorny issues have been resolved by virtue of people
    being at the table.
        You know, we have had arms control agreements between the
    United States and the former Soviet Union and we did not always
    have a resolution as a result of it. But ultimately we found a
    forum or a mechanism to try to move forward.
        I guess it is a fundamental belief about whether you think
    it is better to have some structure within which you can work
    these things through or you want to do it on an absolutely ad
    hoc basis. But I do not think anything should diminish the
    veracity and the impact of the evidence that says from our
    commanders who are dealing with young officers and sailors and
    forces in various ways on a daily basis who are put in harm's
    way trying to do a board and search or trying to stop a drug
    interdiction or whatever it is--they are advantaged, according
    to the testimony of these commanders, by the presence of this
    agreement. You may not agree, but these are the commanders who
    are telling us on a daily basis that those advantages are
    there.
        With respect to the South China Sea, I would rather have
    the United States be at that table, and I will bet you if we
    are at the table within the confines of this, we can help
    resolve some of those issues.
        Senator Coons.
        Senator Coons. Thank you, Chairman Kerry, for holding
    another hearing on the Law of the Sea. And I am grateful to the
    panel for their testimony to us today.
        As I expressed at our previous hearing, I am concerned that
    the debate over this treaty is locked in a framework that is
    decades out of date. All major questions about this treaty have
    been answered thoroughly, not once, but twice, by both
    Democratic and Republican administrations, and we are now in
    the process of thoroughly vetting them a third time.
        In our last hearing, after listening to and asking
    questions of General Dempsey, Secretary Panetta, and Secretary
    Clinton, it was apparent to me that the real risk we face is
    letting others draw boundaries, set rules, and advance their
    economic interests without the United States having a seat at
    the table, all the while putting our national security
    interests at some risk by failing to ratify this treaty.
        Based on what I have heard and read today and over the last
    few weeks, as well as the 30 years of commentary before that,
    there seem to be two schools of thought on this treaty's impact
    on our national security.
        First, there are those who argue--and I would put many of
    today's witnesses in this camp--that the Law of the Sea is a
    treaty that contains vital provisions about navigation that
    would help our Armed Forces carry out their global mission. It
    also, as we will hear, includes benefits for American business.
        There are others who believe that the Law of the Sea
    Convention is an agreement with only minimally important
    provisions on navigation which has little impact on our Armed
    Forces, and so we should focus our time on this International
    Seabed Authority, and picking apart the functioning of a group
    of international bookkeepers. I disagree. And in my view there
    are real benefits to the United States in terms of navigational
    rights I would like to focus on.
        As many distinguished witnesses have testified to the
    strategic value of this treaty, I would like to focus narrowly
    on the question of sort of exactly how in the real world
    freedom of navigation operations are carried out and what
    potential benefit there might be as a result of accession to
    this. And since 9 out of 15 of the nations with excessive
    maritime claims in 2011 were challenged by our Armed Forces
    through PACOM, in PACOM's area of responsibility, I am going to
    focus my questions today on Admirals Greenert and Locklear with
    my apologies to the other fine witnesses who have also joined
    us today.
        Now, Admiral Greenert, if I could start, just to reiterate
    what was covered in the last hearing for the sake of a starting
    point, is it correct that in navigational disputes, the United
    States currently asserts customary international law as defined
    by the Law of the Sea?
        Admiral Greenert. That is correct.
        Senator Coons. And so when another nation, whether ally or
    competitor, claims customary international law does allow their
    claim in excess to those allowed by the Law of the Sea, is it
    correct the United States then performs a so-called freedom of
    navigation operation to reassert the real customary
    international law?
        Admiral Greenert. Well, when accosted, our commanders are
    directed to say we are operating in international waters. So in
    effect, you could say, ``Yes.'' In situ, we do a freedom of
    navigation operation. But in addition, we do regularly
    scheduled freedom of navigation operations. Admiral Locklear
    manages those in the Pacific. They are well documented,
    transparent about the whole thing saying where we are going to
    go and why we are going to do it.
        Senator Coons. If the United States did not contest an
    excessive claim through either routine or special freedom of
    navigation operations, are we at some risk that that would set
    a new precedent and that our competitors, allies, or others
    would suggest somehow the United States agreed that customary
    international law might allow their excessive claims?
        Admiral Greenert. I believe that is so. We are looked at
    very much as the ones that sort of set the standard not only in
    the Pacific but in the Arabian Gulf, the north Arabian Sea. I
    have seen it again and again. If we say that inland seas start
    at 75 miles, in other words, if our behavior is that, then
    others are going to assume we believe that, and that it is as
    we attest to.
        Senator Coons. And Admiral Locklear, if I might. In a
    freedom of navigation operation, generally speaking--I am not
    asking about tactics, techniques, or procedures, but just
    generally speaking--is it correct that an aircraft or maritime
    vessel is placed into the contested area in order to prove
    customary international law is still in force and we are
    demonstrating real customary international law is in force
    because no one successfully intercepts, turns back, or fires on
    that aircraft or vessel?
        Admiral Locklear. That is correct.
        Senator Coons. So it sounds to me like this is a process
    that is not without cost and risk. Secretary Panetta said
    clearly at the last hearing we never give up our right to self-
    defense. And so when we insert men and women, aircraft, vessels
    into these situations, I presume there is some risk associated
    with that.
        Admiral Locklear. That is correct.
        Senator Coons. So when we have successfully reasserted
    customary international law and leave a contested area, do
    these other nations sometimes then reassert their excessive
    claim?
        Admiral Locklear. They do.
        Senator Coons. And we then have to conduct another freedom
    of navigation operation. This is a back and forth, routinely
    contested thing that is just part of your mission week in, week
    out, year in and year out.
        Admiral Locklear. That is correct. We actually have a plan
    that we recognize where the contested areas are, and then we
    plan and get approval for freedom of navigation operations that
    do the same thing, do what you just said. They show that we are
    not abiding by that claim.
        Senator Coons. And, Admiral Greenert, the annual report
    that the Pentagon provides to Congress on freedom of navigation
    shows the number of countries with excessive claims that the
    United States Armed Forces have actively engaged in challenging
    has actually tripled since 2006. The number of countries making
    these excessive claims and the number of incidents that have
    required a freedom of navigation operation have tripled since
    2006. Would accession to the Convention eliminate the need
    altogether for freedom of navigation exercises?
        Admiral Greenert. I do not think it would eliminate
    altogether the need for it. Periodically we would--in order to
    establish what is codified in the Law of the Sea Convention, we
    would continue that. It is right and proper. We believe in it.
    But it would certainly reduce the need to, the requirement to
    do that because we feel compelled to do that for reasons you
    said. Our behavior helps our coalition allies and potential
    allies to see what the standards are. We are the standard
    bearer.
        Senator Coons. So, Admiral, if I hear you right, would
    access to the Convention provide an alternative, nonlethal,
    less risky, less asset-consuming tool to assert navigation
    rights for the United States?
        Admiral Greenert. Yes, Senator, it would.
        Senator Coons. And so my conclusion is that freedom of
    navigation operations, which are provocative to nations, some
    of which are our allies, some of which are our opponents, have
    steadily increased in number, in seriousness, in cost and
    complexity over recent years. And based on that testimony, it
    seems to me, Mr. Chairman, in conclusion, that what you and
    Senator Lugar have said for a long time is correct, that to
    avoid setting new precedents in customary international law,
    the United States has to continue to carry out increasingly
    large numbers of freedom of navigation operations, each of
    which is inherently life-threatening for our service members
    and consumes our limited assets and is also provocative to the
    nations whose claims we are contesting, whether hostile,
    friendly, or allied. And the entire dangerous, risky, and
    provocative process could be avoided in some circumstances by
    ratifying this treaty and being able to contest excessive
    claims in the ways it allows us to do. So this treaty makes a
    real difference for the average men and women who serve us on
    the high seas, in the air around the world, and in my view,
    contributes meaningfully to the national security of the United
    States.
        Thank you for your testimony today.
        The Chairman. Thank you very much, Senator Coons.
    Appreciate it.
        Senator Inhofe.
        Senator Inhofe. Thank you, Mr. Chairman. I appreciate the
    opportunity to be here.
        Let me, first of all, say all six of you--I know all about
    you. You are great guys and you have served your country, and I
    have the greatest respect for you. I do not envy you a bit.
        You are put in a position--I know a little bit about chain
    of command because I was in a very lowly position, but I was in
    the United States Army. And my chain of command started with my
    master sergeant and on up to the lieutenants and the rest of
    them. Yours is the President of the United States. He is the
    Commander in Chief. So you are going to naturally reflect
    anything that comes from--you have to. You are military. And I
    understand that. I have been there.
        What I would like to do is suggest that maybe after your
    retirement, you might change your mind. I am looking right now
    at 24 stars--I just had a few stripes--24 stars, and that is
    very, very impressive. And I have a letter here that is signed
    by 33 stars, but these guys have already retired.
        On this letter--and I want to ask that this be made a part
    of the record--it says--I cannot read the whole letter. There
    is not time. ``But we wish respectfully to challenge the
    perception that military personnel uniformly support this
    accord by expressing our strongly held belief that Law of the
    Sea ratification would prove inimical both to the national
    security interests and sovereignty of the United States.'' It
    goes back and gives the history of this thing. And they have
    very, very strong language. It is signed by nine of the top-
    level people who are in retirement.
        Now, I asked that it be a part of the record.
        The Chairman. Without objection.
        Senator Inhofe. And I also want to make as a part of the
    record the Reserve Officers Association. This is a letter that
    we have here. It is actually a resolution. At the very end of
    the resolution, it says: ``In conclusion, the Reserve Officers
    Association does not endorse ratification of the Law of the Sea
    Treaty. It actively advocates against it. Historically the
    United States has claimed that its right to territory was
    manifest. To agree to the Law of the Sea Treaty acknowledges
    that the United Nations has authority over the United States
    maritime territorial claims. The Reserve Offices Association's
    concern is that the Law of the Sea Treaty will become''--and it
    goes on and on. So I ask also that this be made a part of the
    record. These are all retired people, and I think that is
    significant.
        Senator Inhofe. Now, I am going to have to quickly go
    through this. I assume that you all agree--and it can just be a
    yes-or-no answer because there is not time for more than a yes-
    or-no answer--that the not signing of this is not going to
    compromise in any way our ability to use force or to navigate.
    Is that true? Is that yes or no? Do you agree with that,
    starting with you, General Jacoby?
        General Jacoby. Yes, Senator, I agree with that.
        Senator Inhofe. All right. Do you agree?
        Admiral Papp. Yes, sir.
        Admiral Winnefeld. At the moment, it will not but in the
    future it could.
        Senator Inhofe. OK.
        Admiral Greenert. I agree.
        Senator Inhofe. OK, you all agree.
        At the last hearing, here is a guy who is your boss. He is
    Chairman of the Joint Chiefs of Staff, General Dempsey. At the
    last hearing, he was asked a question as to whether or not this
    would have an effect. He said--whether failure to ratify the
    Law of the Sea Treaty would compromise our ability to project
    force around the world and his answer that the United States
    would continue to assert our ability to navigate and our
    ability to project force and it would not be deteriorated if we
    do not ratify this treaty. So I will not ask you whether you
    agree or disagree with your boss, but I agree with him.
        When I talk to people in what I call the real world--that
    is outside of Washington--in Oklahoma and I say what do you
    think about a treaty that cedes our right and allows another
    entity to tax the United States for the first time or to sue in
    a court not in the United States, they find that this is a real
    sovereignty issue. We have talked about sovereignty up here,
    but we have not really gotten specific.
        I do not think anyone is going to question the fact that
    this does give the Seabed Authority the right, the privilege,
    the authority to tax us. And it comes through royalties. Right
    now, the royalties on the area of the Extended Continental
    Shelf range between 12\1/2\ percent and 18\3/4\ percent. And
    the reason that is a range is because the oil companies who
    would drill--they would say anything in excess of that range we
    would not be interested in doing. So we have to do it at that
    range.
        This authority, according to the U.S. Interagency Extended
    Continental Shelf Task Force, talks about the resources out
    there are worth billions, if not trillions. Now, if you just
    merely take a trillion dollars and you apply this to it, at the
    end of 12 years, it would get up to 7 percent of these
    royalties that would otherwise go to the United States. Now,
    that amount would be around $70 billion.
        I will not ask you the question I asked the last panel
    because I do not want to put you in that situation. But by
    doing this and having the authority to tax us in that amount--
    one of the questions I am going to ask at the end of this, does
    anyone know of any time in the history of this country that we
    have given, ceded our authority, taxing authority, to allow
    someone else to tax us.
        And the second thing would be on the--which I think Senator
    Lee is going to--he certainly is in a much better position to
    talk about the fact that they would be able to sue us.
        I would only want to read something to make sure it is in
    the record. When you talk about the people who are champing at
    the bit waiting for us to become a party of this treaty so they
    can sue the United States of America, one person that I would
    quote so it gets into the record would be the international
    tribunal--well, I do not have it right here.
        But Andrew L. Strauss who--the forum was the Global Warming
    Emissions. He said the article proposed various forums for
    initiating lawsuits against the United States, including the
    Law of the Sea Treaty's compulsory dispute resolution, which I
    am sure that Senator Lee will be talking about, mechanisms. And
    he said, as the United States has not adhered to the
    Convention, however, a suit could not be brought unless we
    adhered to the Convention.
        In the book that was written ``Climate Change Damage and
    International Law,'' law professor Roda Verheyen said--she
    posed a comprehensive hypothetical case that could be brought
    against the United States for its alleged responsibility in
    melting glaciers, causing glacier outburst and floods.
        The reason I am interested in this is we in the Senate and
    the House have refused to adhere to this and pass something
    that would put a limitation on anthropogenic gases and here we
    would be ceding that authority to someone else.
        And the last thing I want to mention, Mr. Chairman, if you
    would allow me to do this--they keep talking about a seat at
    the table. I think my good friend to my right, Senator DeMint,
    is going to ask what table you are talking about because we
    already have a table out there and it is called the
    International Maritime Organization. They have had this since
    World War II. It says accomplished by passing and adopting
    implementing standards, maritime safety and security,
    efficiency of navigation, and prevention or control of
    pollution from ships, IMO is the source of approximately 60
    legal instruments that guide the regulatory development of its
    Member States and improve the area of the sea.
        So those questions I would ask are you really do not think
    that our sovereignty is impaired by ceding these authorities to
    some international group for suing the United States or taxing
    the United States. And then also, can you tell me of incidents
    where the IMO has not answered these problems that we have been
    talking about to your satisfaction?
        Thank you, Mr. Chairman.
        The Chairman. Thank you very much, Senator Inhofe. You put
    a lot on the table. Do you want to respond, Admiral?
        Admiral Winnefeld. There is an awful lot. First of all, it
    is great to see you again, Senator. I always enjoy our
    conversations.
        There is an awful lot in that question.
        Senator Inhofe. Up till now. [Laughter.]
        Admiral Winnefeld. Even now, sir. Even now, with respect.
        There is an awful lot in your question, and I think that we
    would have to have, I think, a detailed one-on-one discussion
    because I am not sure that I would, for example, agree that it
    is a tax as opposed to a royalty.
        I would also suggest--and again, I am not the economic
    expert or the industry person who might testify to this. But I
    think a lot of these guys are not investing in these areas
    because they are worried that they do not have the underpinning
    of treaty law to protect them. And so it is money that is not
    there because they are not drawing the natural resources from
    the Extended Continental Shelf that perhaps we as a nation
    would like to see them draw.
        Senator Inhofe. If we did, of course, we would be able to
    get royalties in the range that I discussed, and of course, 7
    percent would represent more than 50 percent of the royalties
    we would otherwise be entitled to.
        Admiral Winnefeld. Depending on the range.
        Senator Inhofe. That is right.
        Admiral Winnefeld. If we took 18 and three-quarters and
    took 7 off of that, we would be down to certainly 11 and three-
    quarters, which at the moment that money does not exist. I
    mean, we could have a detailed discussion there.
        Another example would be the Reserve Officers Association
    letter, which I read for the first time this morning, which I
    found--after I read it, I felt like these guys ought to go get
    better advice because there are a number of statements in there
    that I think are incorrect or misleading. For example, they
    talk about territorial seas, that the 1958 Geneva Convention
    established territorial seas. That is just not true.
        It talks about, sort of cleverly, that that Convention
    defined international straits, but what it did not do, but what
    the Law of the Sea does, is to define what transit passage is
    through those areas. That is not in the Geneva Convention and
    it is in the Law of the Sea Convention.
        Very importantly to me--and I would want to go into a
    classified session to discuss this--is that the Law of the Sea
    Convention defines a stateless vessel. That is incredibly
    important to us in the counterterrorism world and the
    counterproliferation world.
        So there are some inaccuracies in that letter that I would
    love to sit down and walk through, even though they are a great
    bunch of guys who obviously mean the best for our country.
        So, again, as I said, I always enjoy our conversations and
    I look forward to the potential to have one on this very
    important subject, sir.
        The Chairman. Thank you very much, Admiral.
        Yes, Admiral Papp.
        Admiral Papp. And, Senator, I lead the U.S. delegation to
    the International Maritime Organization. I went to my first
    general Assembly this fall, and in every discussion, bilateral
    and multilateral, every conversation starts off with the other
    country questioning and wondering why the United States is not
    asserting leadership by joining the Convention because every
    negotiation that is done, whether it has to do with piracy,
    whether it has to do with marine casualty, overseas, everything
    is formed on the basis of the treaty, and with us being an
    outsider, oftentimes just because of who we are, because of the
    United States, we can influence it and we can still get things
    done, but it makes it more difficult for us to get these things
    done.
        We are looking at this and how are we are going to operate
    in the future, what tools are we going to have to use in the
    future. And customary international law, countries'
    influences--they ebb and flow. They rise, they fall. This is
    something that assures because it is the basic underpinning of
    all these treaties, all these agreements that we come to at
    IMO.
        Senator Inhofe. My question was where has this not worked
    in the past. It has been working since World War II.
        Admiral Papp. Well, I can give you one right now, sir, and
    it is dealing with the Arctic. I personally requested a meeting
    with all the other Arctic representatives there so that we can
    continue our negotiations in terms of coming up with the
    details of the search and rescue agreements for the Arctic, for
    pollution response in the Arctic----
        Senator Inhofe. They did not meet with you? Is this what
    you are asserting here?
        Admiral Papp. They did meet with me, sir, because we are
    the United States. We still have influence.
        Senator Inhofe. Exactly.
        Admiral Papp. But will that influence continue forever?
        The shifting politics, shifting strengths of countries.
        What I can tell you is that each and every one of those
    countries looks to the United States for leadership and setting
    an example under the rule of law and being in a leadership
    position. And we are not quite in that leadership position
    given the current stance that we have.
        Senator Inhofe. Do you think in the future if we do give
    this opportunity for them to take funds, royalties or
    otherwise, which I would have to say, Admiral, that is a tax
    because that is money, to be redistributed by some organization
    that we do not even have a voice in--do you think that is in
    our best national security interest?
        Admiral Papp. Well, sir, I think it is all speculative at
    this point because nobody is willing to drill on the Extended
    Continental Shelf because they do not have the legal assurances
    that are given by the Convention. And if we are a member of the
    Convention, we do have a seat at the table. Somebody asked what
    table do we have a seat at. The International Seabed Authority
    where we would have the one permanent seat and veto power.
        Senator Inhofe. The same veto power that other countries
    like Sudan might have. We have veto power. First of all, you
    are talking about two entities. One is an advisory and the
    other is making a decision. And you are saying that we have a
    different veto power than the other countries have?
        Admiral Winnefeld. If any country has the veto power, then
    that would nullify the ability to distribute any of those
    funds.
        Senator Inhofe. That is right.
        Admiral Winnefeld. So the deal would be that if the group
    does not come up with what seems to be a fair and equitable
    distribution of those funds, then we would veto it.
        Senator Inhofe. On distributing the funds, yes. But the
    funds would already be there. The tax, the royalty would
    already be in effect. They would have the control over those
    funds that came from our efforts that otherwise would be coming
    to the United States. So that does not affect that. They would
    have that authority. It is just that you are saying that we
    could direct which countries they go to, but they would not be
    coming to ours.
        Admiral Winnefeld. Some of them could be coming to ours,
    but you are correct. Whatever the----
        Senator Inhofe. For the record, I want you to send me a
    scenario by which any of that would come to the United States.
        The Chairman. Well, I am going to intervene here just for a
    second.
        Senator Inhofe. Yes. You are the chairman.
        The Chairman. Well, no, no, but I have given you well more
    than double the amount of time of any other Senator because I
    really want any opponent to be able to have an opportunity to
    grill people.
        Senator Inhofe. And I appreciate it.
        The Chairman. I think that is really important, and I want
    to get all these issues out on the table.
        But I do think it is important, as we do that, that we try
    to establish what is fact and what is not. There is no power
    and no right of taxation in this document. And we will have an
    understanding and a declaration that makes it clear in the
    resolution of ratification that the United States of America
    will never accede to any other country's tax, that there is no
    tax in here, and it will be properly defined.
        Senator Inhofe. Mr. Chairman, we are saying that they will
    have a percentage of the royalties that we would otherwise----
        The Chairman. A royalty. A royalty is not a tax.
        Senator Inhofe. Is not a tax?
        The Chairman. That is correct. A royalty is a bargain. It
    is an agreement. A royalty is not a tax. No government
    authority has issued a tax in any kind of way that constitutes
    taxation. It is a royalty where the companies who are at the
    table during the negotiation--Ronald Reagan set that in place.
    And in fact, we will have testimony from John Negroponte and
    others who have been part of these negotiations over a long
    period of time as to exactly what was agreed on and how. There
    is a royalty scheme.
        Why is there a royalty scheme? Because three-quarters of
    the planet Earth is ocean. Three-quarters of the planet. And a
    whole bunch of countries are landlocked. And if the ones with
    the border on the ocean have the right to extend their shelf
    way out into the ocean, you could have very few nations
    claiming all the resources of the Earth to the exclusion of
    everybody else. So what was agreed on is really quite minimal.
    It is far less than the oil companies pay to drill off the
    coast of Louisiana. Far less. And it is scaled according to how
    much mining and how much resources you take out of the ocean.
        Now, Lockheed Martin and a whole bunch of other companies
    decided, wow, you know what?--97 percent of something is a heck
    of a lot better than 0 percent of nothing. And they want 97
    percent. They want their 93 percent. And so they have agreed
    there will be a scale of some amount that will go to the
    landlocked nations in compensation for the rights of other
    countries to exploit the seabed of the Earth.
        We have over a million acres of land out there that we can
    claim for America, more than any other nation on the face of
    the planet because we have Guam, because of the Marianas,
    because of Hawaii, because of the Aleutians and so forth. We
    have the most extensive--and I will bring a map in of it one
    day. It is extraordinary. To sit here and think that we are not
    going to take advantage of that and stake our claim and have
    our claims legitimate so our companies can go out would be just
    astonishing. The companies want this. They are ready to pay the
    royalty because they want the profits that come from the other
    93 percent.
        Senator Inhofe. They establish the royalties. I just have
    to say--and I am afraid you will cut me off before I respond to
    your statement----
        The Chairman. No, I will not. I have never cut you off,
    Senator.
        Senator Inhofe [continuing]. About a tax. Money that would
    be coming to the United States, that by virtue of this treaty,
    would not come to the United States--I call that a tax. Most
    people outside of Washington would call that a tax.
        The Chairman. Well, Senator, you are entitled to--we will,
    as I said, make it crystal clear in the ratification document.
        And I think the companies will be quite upset that you are
    protecting them from earning the profit that they would like to
    earn. It is sort of remarkable to me, but so be it.
        I also think it is important here to deal with facts.
    General Dempsey, indeed, said we would not reduce our force.
        Senator Inhofe. Force power.
        The Chairman. Force power. Of course, the United States of
    America is not going to reduce its force power. But every one
    of these gentlemen at this table, who have the responsibility
    of sending people into combat conceivably at some point in
    time, have said they would rather have a tool at their disposal
    to try to resolve things peacefully first. And what General
    Dempsey said, if you quote him completely, which you did not
    do--he went on to say that the failure to ratify puts ourselves
    at risk of confrontation with others who are interpreting
    customary international law to their benefit. So the risk of
    confrontation goes up. So our force capacity will not go down,
    but the risk of having it used in a confrontation you do not
    want goes up. And that is what every one of these leaders have
    said is not advisable.
        Senator Inhofe. No, I understand and we talked about that.
    So you would agree then that not going into this treaty would
    not in any way compromise our ability to project force or to
    navigate. You would agree with that.
        The Chairman. Not necessarily navigate but project force I
    would agree. We will project force, but it is not necessarily
    going to affect those rights. If you want to have the
    confrontation without having a tool to resolve it properly,
    that is a choice every Senator will face when we get to it.
        But I have taken up Senators' time, but I just want to
    also--
    I think it is important--and Admiral, maybe you want to comment
    on this. The Reserve Officers' letter--and I respect them
    completely and they are entitled and we will welcome those
    kinds of comments here. But once again, we have to deal with
    facts.
        A lot of people are working off of the 1982 treaty, and for
    them and for some people, things have not moved since then. But
    the negotiation has and the status of the treaty has changed
    since then. And so we are dealing with a very different set of
    facts here. And, Admiral Winnefeld, I think you would agree
    that there is an assertion that has been made here that every
    provision of the Convention is already codified in previous
    treaties to which we are a party, and I think that is a
    misunderstanding. It reflects a confusion about what was in
    customary law as opposed to the older treaties.
        For example, the 1958 Convention, Senator, did not specify
    any limit on the territorial sea, and some countries were
    taking advantage of that loophole to extend their territorial
    seas. Article 3 of the 1982 Convention explicitly set a 12-mile
    limit according to U.S. policy. The 1958 Convention did not
    include a codification of the right of transit passage through
    straits used for international navigation that had developed in
    customary international law. And there are other examples of
    that.
        So I would just very quickly ask you, Admiral Winnefeld, is
    that correct.
        Senator DeMint. Mr. Chairman, I do not mean to be rude and
    do not want to interrupt, but we have a vote at 12:30.
        The Chairman. Fair enough.
        Senator DeMint. A number have been waiting a long time----
        The Chairman. Let us come back to this. We will come back
    to this at the appropriate time. We are certainly going to
    leave the record open, and we are going to building a longer
    record anyway. So we will draw this out so people understand
    the distinction between the 1982 and where we are now, what is
    in customary and what the relationship is to the treaty.
        Senator Udall, thanks so much for your patience.
        Senator Udall. Thank you, Senator Kerry. And let me just
    thank you again for approaching this treaty in a very, very
    thorough way and having these fine servicemembers before us
    that are giving us their personal opinions.
        I think there was some suggestion here that your opinions--
    I know Senator Kerry asked you at the beginning, are you here
    giving us the best of your experience and the best of your
    personal opinions, and I think everyone said yes. And so I
    think we should put to rest this issue of the idea that the
    Commander in Chief has ordered you to testify in a certain way.
    Is that the case, that these are your personal opinions here
    and based on your experience? Yes? I see everybody nodding.
        Admiral Greenert. That is correct.
        Admiral Winnefeld. That is correct, Senator.
        Senator Udall. Let the record reflect. OK. Thank you.
        There was also a suggestion that on the letter with the
    retired officers--and you all are active military--that somehow
    there is a split. Do you any of you all have a sense? I mean, I
    know Senator Warner was here earlier. He was a captain in the
    Marines. He is in support. Do you any of you have a sense of
    how it comes down in terms of retired military versus active
    military on this or the various associations or anything? And
    if you do not know it off the top of your head, you can get us
    the information. But please.
        Admiral Greenert. All of the colleagues that I have spoken
    to--Chiefs of Naval Operations--the conversation centered
    around maritime security. That is what I am conveyed to take
    care of. And there has not been a split. And those retired who
    were not Chiefs of Naval Operations--the issue has been
    consistent in that the elements in the Law of the Sea
    Convention that enhance maritime security, which the entire
    Convention that I see does, there has not been a split. There
    have been some who are retired that I have spoken to who said,
    well, I am not so sure, and it involved a lot of the details of
    the economics and the ability to control. That has been my
    experience, Senator.
        Senator Udall. Do any of you--would any of the others like
    to comment on that?
        Admiral Winnefeld. I am aware of a 2007 letter written by
    the Military Officers Association that is supportive of the
    treaty. So that is why I was sort of surprised to see this
    morning the other letter which again had some inaccuracies. But
    I give them credit for the courage and the strength of their
    convictions, but I think they just had some things inaccurately
    stated.
        Senator Udall. The Navy and the Coast Guard's ability to
    conduct maritime interdiction is an important tool to stop drug
    trafficking and conduct counterproliferation operations. And
    while some have asserted that the Law of the Sea Treaty puts
    shackles on our maritime forces, I agree with the assessment of
    the Navy JAG that article 110 pertaining to the right of visit
    actually strengthens our ability to conduct maritime
    interdictions.
        Can you go into details about how our Armed Forces will be
    enabled to conduct their mission by article 110 and why it is
    important that the Navy and the Coast Guard have the backing of
    an international treaty to conduct operations they can already
    conduct via force if needed?
        Admiral Papp. Well, sir, being in the service that is
    involved in maritime interdictions on almost a daily basis, I
    can tell you that prior to the Convention, we tried to work out
    bilateral or multilateral agreements with other countries that
    enable us to operate close to their waters, sometimes even in
    their territorial seas because we are able to come to these
    agreements, whether we use ship riders or other things. It
    helps us to interdict drugs, migrants, and perhaps other things
    far offshore in the transit zone, sometimes in the departure
    zone.
        Prior to the Convention and the 1994 revision, we had about
    a dozen countries that we were able to get into agreements
    with. After the 1994 Convention, which had language in there
    talking about cooperation between countries particularly as it
    relates to interdicting drugs and because we comply with the
    Convention, even though we have not acceded to it, we have
    built that up to about 45 countries that we have agreements
    with around the world.
        However, administrations change. Other people are elected
    in. These constructs that we have come to are on a foundation
    of shifting sand, and we cannot always rely upon each country
    to live up to its agreement because things will change. We have
    some countries that have excessive territorial sea claims that
    we have to respect.
        But having the assurance of the underpinning of a solid
    foundation of the Convention would help us in negotiating those
    things into the future and give us greater predictability.
        Senator Udall. Thank you very much.
        Admiral Greenert. The elements that describe freedom of
    navigation, for example, Exclusive Economic Zones, territorial
    seas, and all that, transit passage, archipelagic passage--that
    all enhances our ability to conduct maritime intercept
    operations because it clarifies where we can operate.
        But also what section 110 does is it provides clarity on
    unauthorized broadcasting, drug trafficking, piracy, and
    unflagged nations as the Vice Chairman mentioned earlier. But
    it also says that powers confirmed by other treaties, in other
    words, United Nations resolutions and all that, that is very
    clearly laid out and gives us those mandates that enhance our
    ability to, especially in a coalition operations, bring it all
    together to do maritime intercept.
        Senator Udall. Any of the other panelists have a comment on
    that?
        [No response.]
        Senator Udall. Thank you very much for your answers and
    thank you for your service.
        The Chairman. Thanks so much, Senator Udall.
        And, Senator DeMint, thanks for your patience. Appreciate
    it.
        Senator DeMint. Thank you, Mr. Chairman.
        And I want to thank all of the folks here today. You and
    the men and women who serve with you make us proud to be
    Americans.
        And I appreciate your being here to advocate for the
    treaty. I mean, there are 10 pages in this treaty dealing with
    navigation that would have a lot of theoretical benefits to our
    military, to particularly our Navy. I do not refute that at
    all, although some of the things I have heard today would make
    me even concerned about that part of it.
        As has been pointed out, where it has really been tested in
    the South China Sea with China violating the rules, with
    numerous countries affected, there has been no enforcement
    based on the treaty, and numerous countries that are part of
    this treaty.
        And the implication I have heard from some of you today
    maybe worries me more than anything else, is that by joining,
    we, in effect, become the enforcers of this around the world.
    And I know that is not what you said, but that we add our
    weight. But I am afraid that these other countries are part of
    this treaty. It is not being enforced, and if we become part of
    it--they want us to become part of it for numerous reasons, but
    one is to help enforce it. That worries me.
        But I would like to take just a second to explain why I
    oppose the treaty as a whole, not necessarily the pages you are
    talking about, and instead of ask a question, yield to Senator
    Lee because I know he has studied this a lot and I would like
    to give him a chance to ask questions before we run out of
    time.
        But you have explained that the up side of this treaty is
    that it might give you an additional tool to deal with issues
    out in the future. And I respect that. But the down-side risks
    for us seem much greater than that potential benefit that we
    might have that is clearly theoretical, not working now. The
    hope is if we get involved, our weight might make it work. But
    the 300 pages is primarily a document, I would say, at least in
    large part with environmental issues, and that may affect us
    much more than any navigation part of this.
        In fact, all the research I have done--there is not a table
    in Jamaica where the naval powers around the world, except for
    us, are meeting at a table making decisions about navigation.
    That is not happening. That is not what they are dealing with
    now. Perhaps our joining the Convention could change that, but
    that is not what the Convention is doing now.
        But the language in this treaty that worries us is
    particularly that that deals with environmental issues and the
    ability of this Convention to enforce that with signatories of
    the treaty. And it is clear that the United States is the
    largest economic power. We are the largest producer, the
    largest consumer. We also have the largest military in the
    world. And if you put all that together, we are by far the
    largest emitters of carbon, and that is an issue around the
    world.
        This is not a theoretical issue. Europe is already going to
    charge us taxes for our commercial planes to land there because
    of emissions. And it is clear from this that the United States
    is going to be subject to complaints and suits from all over
    the world dealing with climate change, issues like cap and
    trade. There will be suits for us to pay for pollution credits
    where we sail our ships and where we fly our military aircraft.
    And the arbitration or the dispute resolution part of this is
    out of our control. We appoint two. The complainant appoints
    two, and the United Nations Secretary General will be the
    deciding vote.
        And so while a lot of us who are against this treaty are
    mocked, in effect, for not having the good sense to understand
    what is in it, I am afraid that you are looking at a section of
    this that might benefit our military long-term, but the other
    issues that are in the other 300 pages are very serious and
    subject the United States to a high cost. We will pay more for
    being in this Convention, just like we do the United Nations,
    than any other nation. The royalties that come from it will
    largely come from us. That is why other countries want in it.
    We will probably be paying for pollution credits very quickly,
    and we will pay for countless lawsuits that are going come
    against us that are not theoretical but I think very real.
        So we have concerns not necessarily disagreements of what
    you are talking about. And again, I appreciate your advocacy of
    trying to bring us and the rest of the world into the rule of
    law. This treaty is not doing it now. I do not think it is
    going to do it when we join it.
        But I will yield to Senator Lee.
        Senator Lee. Am I recognized?
        The Chairman. Yes, absolutely.
        Senator Lee. Thank you.
        Thank you all for being with us today. It is an impressive
    site to have 24 stars here in front of us with only six
    officials, and I am honored by your service to our country.
        I too have some concerns with this proposed treaty,
    concerns that relate ultimately to sovereignty concerns. The
    discussion we had a few minutes ago regarding the difference
    between a tax and a royalty is, I think, a legitimate one.
    There is a legitimate point to be made there.
        My concerns would not, however, be resolved merely if we
    could conclude that what we are talking about under article 82
    is a royalty rather than a tax. The reason that developers will
    pay a royalty to the United States Government in the American
    submerged lands offshore has to do with the fact that there is
    a recognition there of a sovereign interest vested in the
    United States of America. That is why the royalty gets paid
    when it is on Federal lands, whether it is onshore or offshore.
    The idea of paying a royalty to any international body tends to
    imbue that international body with a degree of sovereignty.
    That by itself raises significant concerns in my mind.
        Now, of course, the primary reason why the six of you are
    before this committee today is to talk about our maritime
    interests, our navigational rights as a country. And I
    understand that. But I do have to ask the question. I am happy
    to ask it to any or all of you who are willing to answer this
    question. Why is it necessary? Let us assume for purposes of
    this discussion that you may be right, that it could be a good
    thing to protect our navigational, our maritime rights through
    some kind of a treaty. Why is it necessary to join that
    together with a separate part of the same treaty that also
    deals with exploitation of the seabed extending beyond our
    Outer Continental Shelf?
        General Jacoby, you are closest to me. Why do you not take
    a stab at that?
        General Jacoby. I would be happy to, Senator.
        In my area of operations, my concern about the Law of the
    Sea Treaty, my support is generated by the opening of the
    Arctic. It is one of those things where you have got to be in
    favor of what is going to happen. For whatever reason, human
    activity is increasing at a fast pace. Since 2008, double the
    number of vessels heading through the Bering Strait. This
    summer right now Shell Oil is bringing two platforms to work in
    the Beaufort Sea. And this is increasing. Economic activity
    inevitably is followed with security and perhaps later safety
    and defense concerns. And so we have to pace that and make sure
    that we stay ahead of that.
        Senator Lee. Would that necessarily include then--I mean,
    to the extent that there are some benefits of joining those two
    things, is there any reason why it would have to include a
    royalty paid to an international sovereign body, which I assume
    you would agree, by the way, this would be unprecedented? I
    mean, it is really the first time we would, as a country, be
    vesting an international body with real incidents of sovereign
    authority.
        General Jacoby. Senator, I am going to stick with the
    operational aspects of that, if I may. This increasing
    competitiveness that is generated by increased human activity
    and economic activity really opens up a whole new world of
    friction points. So for an operational commander, it is where
    are you going to pick your fights and what tools are in your
    tool bag. Harsh environment, few assets, little infrastructure,
    economic activity outpacing that ability.
        So having this framework, this starting point with all the
    other Arctic nations but not just the nations, in my case the
    chiefs of defense, the chiefs of security, the folks
    responsible for safety, that allows us to build shared
    situational awareness, common interests, common framework so
    that we are going to avoid--my job--avoid these frictions the
    best that I can as this pace of activity----
        Senator Lee. So is the common framework that you are
    referring to--would that be established by the International
    Seabed Authority? Is that the table, the metaphorical table
    that we keep talking about?
        General Jacoby. I am going to stick with just the
    operational aspects of it. I think the seabed questions and the
    Continental Shelf questions, of course, are the things that are
    the uncertainty that is accompanying increased economic
    activity. The Law of the Sea does allow us a starting point of
    certainty in our discussions and in our coordination and
    cooperation as we try to resolve what is really an opportunity
    to have a boon in an activity in the Arctic. And so for me it
    is just allowing us to get ahead of this. It is about the
    future, and it is about how can we contribute to the peaceful
    opening of the Arctic, reduce potential friction points, and
    this is a good, solid framework which all the Arctic countries
    and the chiefs of defense start with when we begin those
    discussions.
        Senator Lee. OK.
        Admiral Papp, I heard you mention a few minutes ago that we
    have had some difficulty negotiating with Canada on an issue
    that you described. You said that Canada was standing on what
    you regarded as, I think, weak footing or words to that effect.
    You also indicated that although it was on a weak footing, the
    objections that Canada was raising were based on the fact that
    the United States has not yet ratified this treaty. Do you want
    to explain to us why that is the case and why ratification of
    the treaty would necessarily resolve that?
        Admiral Papp. Yes, sir. And getting back to Senator Risch's
    comment, if I insulted anybody's intelligence, we will be happy
    to have staffs come up and brief specifics of the cases that I
    cited.
        The one that I will give you is because I have been
    personally involved as the Atlantic Area Commander, my previous
    job. Part of the Coast Guard's responsibility is the permitting
    process. We are a law enforcement and regulatory agency. So
    when people for commerce purposes seek to build oil facilities,
    gas facilities, et cetera, New England has a need for more LNG
    facilities--there was a proposal to put one up in northern
    Maine. Canada objected because of--and claiming that it was
    internal waters and that they would have control over the
    weather. There were transits through that area.
        There is also a dispute as to our border between western
    Canada and the eastern edge of Alaska.
        More importantly and more significantly, a large issue is
    the Northwest Passage, whether that is internal waters to
    Canada or whether it is archipelagic where there should be a
    transit----
        Senator Lee. Are these all issues that--and I apologize for
    interrupting, but we have got very little time here before we
    have got to go to vote. Are these all issues that are not
    adequately addressed by customary international law that would
    be resolved by the treaty, were it ratified?
        Admiral Papp. If we were operating only under customary
    international law, perhaps. But Canada is a signatory to the
    Convention. They fall back on the fact that they are a
    signatory to the Convention and we are not. So we are not a
    party and do not have any standing to dispute their claims.
        Senator Lee. And so they would regard that aspect of
    customary international law as nonbinding to them and they are
    excused now from that aspect of customary international law?
        Admiral Papp. Well, sir, as I said earlier, in regards to
    the collision regulations, collision avoidance regulations,
    when we operated under customary international law, customary
    international law is in the eyes of the beholder. Everybody has
    slightly different variations of customary international law.
        Senator Lee. And that was an example, was it not, of how
    countries were able to come together and establish
    international regulatory standards without vesting sovereign
    authority in an international body?
        Admiral Papp. I would say that is correct, yes, sir.
        Senator Lee. And also one in which we were able to
    establish those international standards, those international
    norms, which have helped facilitate maritime traffic without
    subjecting the United States to lawsuits to be decided by a
    tribunal that would be weighted in many instances by what would
    likely be the tie-breaking arbitrator being chosen by the
    Secretary General of the United States.
        Admiral Papp. I cannot really comment on that, sir, and I
    would be delighted to bring my lawyers up to discuss that. I am
    looking at it from an operational commander's point of view
    where I like to have all the tools possible in order to
    negotiate agreements on the broad range of things that Coast
    Guard does in terms of assuring safe, secure, and
    environmentally sound commerce into our country, out of our
    country, through our waters, and concluding agreements in the
    Arctic which we are constrained because we are not a party to
    the Convention.
        Senator Lee. OK. Thank you all very much for your
    testimony.
        Just in closing, to wrap up, I just want to comment that I
    respect your judgment greatly, and if there is a need to codify
    certain aspects of currently existing, extant, customary
    international law, either in a treaty or in the U.S. Code or in
    some combination of the two, I am more than open to discussing
    that idea. I have, nonetheless, grave concerns, concerns that
    have not been resolved in any hearing to this point or in any
    reading of the treaty that I have undertaken so far that what
    we are doing is not just that, but we are going far beyond that
    and creating an international body that would be imbued with
    many of the incidents of sovereignty and doing so in a way that
    is completely unprecedented in U.S. history.
        Thank you very much.
        The Chairman. Senator Lee, I appreciate your questions and
    those of Senator DeMint. Obviously, part of what we would love
    to try to do here is be able to address your concerns and your
    fears about this.
        There really are some significant mistaken interpretations,
    and I do mean mistaken. For instance, Senator DeMint and I will
    sit down and talk about this one on one, but there is no
    ability to have an environmental lawsuit that would have any
    standing--I mean, somebody can bring a suit that they want
    tried, but it is not going to go anywhere. It cannot go
    anywhere because the specific language of the treaty says that
    no one is accountable to any environmental standard that you
    have not signed up for internationally. The United States of
    America has not signed up to any international environmental
    agreement. So literally--and I know the Senator is a good
    lawyer and he understands standing--there would be zero
    standing under the direct, overt language of this treaty. There
    is no ability to bring an environmental suit against us. No. 1.
        No. 2, with respect to this concern about the Seabed
    Authority, the United States of America is the only country
    that has a permanent seat on it. Kudos to Ronald Reagan and the
    folks who negotiated this. And we will hear from some of the
    negotiators this afternoon. The others are rotating on a 4-year
    basis. So Sudan may be there today. Who knows where they will
    be in the future? But the bottom line is that Sudan is on a lot
    of bodies that we currently work with, and it has not impeded
    our ability to assert our values or our interests.
        Moreover, if we do not accede to this treaty, our major
    mining companies and other exploitative, undersea entities,
    gas, oil, et cetera, whatever, will not drill, will not
    exploit. In fact, it is very interesting. Lockheed Martin has
    asked the British Government and joined into a British
    consortium in order to be able to access someplace because the
    United States of America will not stand up for it and represent
    it through this process to legalize its claims. So here we are
    sending our companies to other countries to have them stand up
    for their interests. Lockheed Martin will not drill and put
    millions of dollars into an undersea exploitation unless they
    know they have legality to their claim.
        That is for the Extended Shelf. The Extended Shelf we have
    available to us here is bigger than any other country in the
    world. Now, are we going to sit here and say it is smart for
    the United States not to help our companies have legal
    assurance so they can go out there and exploit those resources?
        There is going to be a competition for resources. I mean,
    look at what China is doing now in Africa. Look at what they
    are doing in Afghanistan. We are fighting and putting people on
    the line, and they are there trying to exploit copper. I mean,
    we got to start thinking about our long-term economic strategic
    interests here, and if we do not sign up, we have a chance
    other countries can take us to the cleaners and you will see
    this in the classified briefing, the degree to which other
    countries are staking claims and we are just sitting here.
        Now, we have a permanent seat. We have a veto to boot.
    Nothing can happen through the Seabed Authority that we do not
    agree to. So no money is going to be sent to some--I have heard
    people say we are going to send money to dictators through
    this. No; we are not. It cannot happen because we, if we are on
    it, can prevent it. If you want it to happen, it can happen
    through all the exploitation that is going to take place
    without us on it, and then they may decide to go do those
    things. So, in fact, there is a reverse argument. There is a
    much greater interest for us to be here to protect against
    those kinds of distributions.
        The final thing I would just call to the attention of the
    Senator, article 82, which sets up this entity and the
    distribution. You know, for the first 5 years of production at
    a site, you do not pay any royalty at all. Nothing. And then
    for the 6th year, you pay about 1 percent of the value of
    production at the site. One percent of the total value of
    production at the site. That rate increases by 1 percent for
    each subsequent year until the 12th year. Only at the 12th year
    do you get to a 7-percent. If we are lucky enough to hit mining
    or oil, gas where that lasts for the 12 years, you may get 7
    percent, much less than we pay on any of those oil rigs down in
    the gulf.
        And finally, if you are a net importer of the minerals that
    you are producing out there, you do not pay anything at all.
    Zero royalty. If you are the importer because you are using it,
    this negotiation had the judgment to say that is your use that
    is your deal. It is if you are exporting it and selling it,
    then you have to pay the party.
        And finally, the payments are not made to the Seabed
    Authority. They are distinctly isolated and they go through the
    Seabed Authority. And that language is very specific, and it is
    only in an agreement by the parties at the table as to how they
    would be distributed to where. We are not at that table. So
    whatever is exploited in the world now is going to be
    distributed without the input of the United States. We are far
    better off sitting there and influencing that distribution and
    vetoing it if it is against our interests than we are watching
    it go by.
        So I think we ought to have this conversation.
        Senator Lee. If I could just respond very briefly to a
    couple of those points.
        The Chairman. Yes, please, absolutely.
        Senator Lee. First of all, I appreciate your insight, Mr.
    Chairman. This is an issue that you have lived with and worked
    with for many years, and I do appreciate your insights. I would
    observe, however, a couple of points.
        First, the International Seabed Authority is governed----
        The Chairman. Well, let me just ask how much time we have
    on the vote. I am not trying to cut you off. We have 5 minutes.
    We have time. We have time.
        Senator Lee. In that case, I will try to finish up in 1
    minute.
        The International Seabed Authority is governed ultimately
    by the Assembly. The Assembly is that 160-plus member entity
    which is the supreme organ, the supreme lawmaking body, of the
    Authority.
        The chairman is absolutely right to point out that the
    Council, this smaller body on which the United States does have
    a seat and has what can, I think, fairly be described in some
    limited context as veto authority because in some areas it
    requires consensus. The Council does have the authority to
    propose the rules and regulations governing the article 82
    distribution, but ultimately the distribution itself, the
    determination of how those rules are implemented and the
    allocation itself is made by the Assembly and not by the
    Council.
        As to the lawsuit, I understand your point about a lawsuit,
    but let us take into account the fact that let us suppose we,
    the United States, get hauled into an arbitration pursuant to
    Annex 8 and we find ourselves, having chosen two of our
    arbitrators, our opponent having chosen two, and the fifth
    having been chosen by the Secretary General of the United
    Nations. You could easily count to three among the arbitrators
    who might interpret the laws to which we have acceded, the
    environmental provisions to which we have agreed to be bound,
    differently that a U.S. court might, differently that you and I
    might, and that does present us with some risk.
        The Chairman. Actually it does not, Senator, for this
    reason. If we were to agree to an international agreement with
    respect to the environment and we agreed to a dispute
    resolution process within that treaty, that treaty would govern
    and you could specifically, in fact, preclude--and I am
    confident we would--in the negotiation any jurisdiction of Law
    of the Sea over that particular issue. So in fact, we would be
    well protected if we were to get there.
        I wish this really were a threat that the United States was
    about to enter into an agreement on international climate
    change, but I think it is a long way away given where we are.
    But I am willing, certainly, to provide for that. And we could
    do something in the resolution of ratification that addresses
    that concern, and I am perfectly happy to work with the Senator
    to do that.
        Senator Lee. Thank you.
        The Chairman. Thank you very much.
        Gentlemen, I think everybody here has said it. We are
    enormously grateful to you for not just being here today but
    for your service, for your careers, for what you represent, and
    really it is, I think, important to have had these 24 stars
    here. We are grateful for your testimony and most importantly
    for what you do every single day. We thank you on behalf of the
    country. Thanks for being here today.
        And again, Happy Birthday to the United States Army. Thank
    you.
        We stand adjourned.
        [Whereupon, at 12:45 p.m., the hearing was adjourned.]
                                  ----------

            Letters and additional Material Submitted for the Record

          Responses of ADM Jonathan W. Greenert to Questions Submitted
                            by Senator John F. Kerry

        Question. If we had a larger Navy would you still be a proponent of
    the Convention? Why?

        Answer. Yes. The Convention supports the legal basis for global
    access and mobility of U.S. military forces. However, this access is
    not a substitute for a capable fleet that can prevent wars and prevail
    in war when prevention fails. We need both a robust fleet and the
    benefits of the Convention to ensure our national economic and security
    interests are met in the maritime domain.

        Question. How would being a party to the Convention further U.S.
    national security?

        Answer. It is by joining the Convention that we can best secure our
    navigational freedoms and global access for military and commercial
    ships, aircraft, and undersea fiber optic cables. As it currently
    stands, we are forced to assert our rights to freedom of navigation
    through customary international law, which can change, to our
    detriment. Treaty law remains the firmest legal foundation upon which
    to base our global presence, on, above, and below the seas.
        Additionally, our new defense strategy emphasizes the strategically
    vital area extending from the Western Pacific and East Asia into the
    Indian Ocean region and South Asia. Several countries in the region
    border on and use critically important trade and supply routes.
    Further, some have proposed restrictions on access for military vessels
    in the Indian Ocean, Persian Gulf, and the South China Sea. The United
    States has continually expressed that it is in our vital interest to
    preserve the freedom of the seas and our respect for international law,
    freedom of navigation, and peaceful resolution of disputes. We continue
    to demonstrate our commitment to those interests by our continuing
    presence and engagement in these critical maritime regions. By not
    acceding to the Convention, we forgo the best and strongest legal
    footing for our actions.
        U.S. accession to the Convention would help strengthen worldwide
    transit passage rights under international law and help to further
    isolate Iran as one of the few remaining nonparties to the Convention.
    For our friends and adversaries alike, it is difficult to understand
    how we argue that other nations must abide by international rules when
    we have not joined the treaty that codifies those rules.

        Question. How would being a party to the Convention help U.S. naval
    forces in their efforts to resist attempts to impose illegitimate
    restrictions on freedom of navigation by other countries? Would you
    provide examples of such restrictions?

        Answer. The Convention provides a formal and consistent framework
    for peaceful resolution of maritime disputes. It defines the extent of
    control that countries can legally assert at sea and prescribes
    procedures to peacefully resolve differences. When we confront another
    country over their illegitimate restrictions it would be beneficial to
    be able to point to a legally binding document as our reference rather
    than the nebulous concept of customary international law. Joining the
    Convention is an important element in preventing disagreements from
    escalating into confrontations or conflicts.
        Recent interference with our operations in the western Pacific and
    Indian Ocean, as well as rhetoric by Iran about closing the Strait of
    Hormuz, underscore the need to be able to use the Convention to
    identify and respond to violations of international law that might
    attempt to constrain our access.

        Question. It has been suggested that by acceding to the treaty we
    are turning the keys of our Navy over to an international organization.
    Would joining the treaty cause us to turn over any authority to an
    international organization regarding our rules of engagement or give
    any international organization control or veto power over our military
    operations?

        Answer. No. Becoming a party to the treaty would not cause the
    United States to turn over any authority to an international
    organization regarding our rules of engagement nor would we be
    relinquishing any control or power over our military operations.
                                     ______

          Responses of ADM Robert J. Papp, Jr. to Questions Submitted
                            by Senator John F. Kerry

        Question. If you had more ships in the Coast Guard, would you still
    support ratification of the Convention?

        Answer. Yes. The crucial navigation rights and freedoms that would
    be ``locked-in'' by the United States becoming party to the Law of the
    Sea Convention are important for Coast Guard mission execution
    regardless of how many cutters the Coast Guard operates.

        Question. How would the Convention impact your efforts to work with
    your foreign counterparts, including during the conduct of interdiction
    operations?

        Answer. The Coast Guard's international partnerships are vital to
    Coast Guard mission execution. The Convention would greatly enhance
    these international partnerships, including strengthening our efforts
    to:

       Monitor, interdict, and prosecute those who threaten our
            Nation's security;
       Advance global and regional security priorities;
       Lead, develop, and negotiate global shipping standards at
            the International Maritime Organization for safe, secure, and
            clean ships;
       Combat illegal, unreported, and unregulated fishing; and,
       Prevent environmental damage and natural resource
            degradation associated with maritime activities.

        In particular, bilateral agreements are important for successful
    and efficient interdiction operations. The Convention provides the
    cooperative framework, language, and operating procedures to negotiate
    these bilateral agreements and thus would facilitate our negotiation
    process. Under the status quo, the negotiation process often slows down
    due to nonparty status.
                                     ______

         Responses of ADM James Winnefeld, Jr., to Questions Submitted
                            by Senator John F. Kerry

        Question. Some claim that the United States does not need to be a
    party to the Convention--that because most of the rest of the world has
    come to view the 1982 Convention as ``customary international law,''
    the vital international norms that provide access to the seas and the
    airways above them are indefinitely protected.

       (a) Are you comfortable with relying indefinitely on
            customary international law?

        Answer. Relying on customary international law is not in the United
    States best long-term interest. Treaty law remains the firmest legal
    foundation upon which to base our operational posture.

       (b) Does reliance on customary international law leave the
            United States vulnerable to the other countries that might push
            alternative interpretations of the treaty text? Could such
            interpretations leave the U.S. military in a more tenuous
            position?

        Answer. Unlike treaty law, customary international law can change
    subject to State practice at the local, regional or global level. As
    States seek to interpret treaty provisions in a manner that restricts
    freedom of navigation, U.S. reliance on customary international law
    becomes far more vulnerable and needlessly places our forces in a more
    tenuous position when conducting military activities.

       (c) Please provide some examples of provisions in the
            Convention that you'd like to see locked in?

        Answer. The provisions on transit passage and archipelagic sea-
    lanes passage--which were created pursuant to the Convention's
    negotiations--are vital to the global mobility of our forces.
    Additionally, provisions related to the limits of territorial seas and
    innocent passage, the right to exercise the full range of high-seas
    freedoms of navigation and overflight in the Exclusive Economic Zone,
    and the right of warships and other government vessels to visit
    suspected stateless vessels are key provisions that help ensure our
    global force posture.

        Question. Would acceding to the Convention provide you with another
    tool--a force multiplier--that would aid the U.S. military in its
    mission?

       (a) How will the Convention support our operations?
       (b) Will the U.S. military still conduct freedom of
            navigation exercises?

        Answer. Yes. U.S. accession would comprise another important tool
    in our operators' toolkit. Having every available instrument of
    national power at our disposal is essential to address a range of
    challenges in an increasingly complex and diverse global security
    environment.
        (a) Becoming a party to the Convention supports operations by
    protecting our navigational freedoms and global access for military and
    commercial ships, aircraft, and undersea fiber optic cables. It would
    also enhance our credibility and leadership in maritime affairs,
    reinforce our commitment to the rule of law, and provide an effective
    tool to counter interpretations of the Convention that seek to limit
    military operations.
        (b) Yes. U.S. military forces will continue to use operational
    assertions to challenge excessive maritime claims under the U.S.
    Freedom of Navigation Program. Becoming a party to the Convention would
    strengthen the legitimacy of our operational assertions.

        Question. If we accede to the Convention will our military
    operations be in any way restricted?

        Answer. No. For nearly 30 years, we have conducted all U.S.
    military operations and activities in strict conformity with the
    Convention's navigational provisions; U.S. accession will not change
    the manner in which we operate. It will have no effect on our rules of
    engagement or our exercise of self-defense.

        Question. Article 298 of the Convention expressly allows States to
    exclude ``disputes concerning military activities'' from dispute
    resolution. If we join this treaty, we will invoke that exception.

       Based on the treaty text and on how it is already being
            implemented, do you have any concern whatsoever over whether
            the United States will be able to exclude disputes concerning
            military activities from the Convention's dispute resolution
            mechanism, and that the United States will be able to decide
            for itself whether an activity is a ``military'' one for the
            purposes of the Convention?

        Answer. No. I am confident that if the United States accedes to the
    Convention, we would invoke this exception and exclude U.S. military
    activities from any form of dispute resolution mechanisms or
    procedures. I am equally confident that the United States will be able
    to decide for itself what constitutes a military activity for purposes
    of the Convention. Many other State Parties to the Convention,
    including the other four permanent members of the U.N. Security
    Council, have submitted declarations exempting their military
    activities from dispute resolution. Each State Party retains the right
    to determine what activities constitute ``military activities.''
                                     ______

         Responses of Gen. William Fraser III, to Questions Submitted
                            by Senator John F. Kerry

        Question. In your role as the Commander of U.S. Transportation
    Command, and also as an aviator, would you address how the treaty aids
    the unimpeded flow of sealift and airlift through strategic
    chokepoints?

        Answer. Unimpeded movement of our strategic sealift vessels and
    airlift aircraft through the world's strategic chokepoints remains
    essential to global mobility. Currently, the U.S. relies upon customary
    international law as the primary legal basis to secure global freedom
    of access. However, some countries may seek to redefine or reinterpret
    customary international law in ways that directly conflict with our
    interests. The Law of the Sea Convention provides legal support against
    erosion of essential navigation and overflight freedoms. Accession will
    give the U.S. leverage against countries seeking to reshape current
    internationally accepted rules we depend upon to transport our cargo
    and passengers.

        Question. Does the Convention support your efforts to maintain
    global mobility and partner with private industry to ensure the
    delivery of troops, equipment, and supplies to and from the fight?

        Answer. Yes, it does. The Law of the Sea Convention supports our
    national security interests by defining the rights of U.S. military and
    civilian vessels as they meet our mission requirements, reaffirms the
    sovereign immunity of our vessels owned by the U.S. as well as those
    used for government noncommercial service, and preserves our right to
    conduct military activities and operations in Exclusive Economic Zones.
    The Convention will help to simplify the complex maritime environment
    for our military forces and our commercial partners who play a critical
    role in developing new routes for transporting DOD cargo and in
    enabling access to a vast global infrastructure used for the transport
    of DOD cargo. This Convention provides important legal support for our
    commercial partners who transport our cargo, unescorted by U.S.
    warships, under the legal regimes of the Law of The Sea Convention. It
    also supports our civil air carrier partners who transport nearly all
    our military passengers and a significant amount of DOD air cargo.

        Question. What are the impacts to USTRANSCOM should the United
    States fail to ratify the Convention?

        Answer. There are no immediate impacts to U.S. military ships and
    commercial partners carrying DOD cargo. Over time, however, customary
    international law may be interpreted in different ways, particularly by
    emerging powers such as China, which may attempt to exert influence in
    areas traditionally accepted as international passageways. Ratifying
    the Convention will help to counter those interpretations and ensure
    our rights to navigate through coastal areas, international straits and
    Archipelagic Sea Lanes. The Law of the Sea Convention codifies, among
    other things, the Rights of Innocent Passage, Transit Passage and
    Archipelagic Sea Lanes Passage, reducing the risk of such challenges by
    Convention signatories. The Convention also supports the right of
    passage through and operations within foreign Exclusive Economic Zones,
    which some nations currently attempt to treat as areas of coastal state
    sovereignty.

        Question. Please explain how the Law of the Sea Convention enhances
    USTRANSCOM's ability to traverse through the Arctic region.

        Answer. Currently, little surface transit takes place through the
    Arctic, but we do exercise Arctic overflight while enroute to the
    CENTCOM AOR. As Arctic ice melts and the region increases in importance
    as a navigable area both on the sea and for overflight, it will become
    increasingly important for USTRANSCOM to traverse the region freely as
    more nations claim and secure extended Continental Shelf rights. As
    Arctic transit becomes practicable, the Law of the Sea Convention will
    define the regional international straits and determine the rights of
    vessels transiting those straits. Becoming a Party would guarantee that
    right by treaty law, vice reliance upon evolving interpretations of
    customary international law.

        Question. How does the Law of the Sea Convention support commercial
    partners who are carrying cargo for U.S. forces?

        Answer. More than 90 percent of all U.S. military supplies and
    equipment are transported by sea in DOD and U.S.-flagged charter and
    liner ships. The Law of the Sea Convention provides a legal basis for
    the sovereign immune status of DOD vessels and U.S.-flag long-term
    charters, and also provides important legal protection for U.S.-flag
    liner shipping used for the transport of DOD cargo. Liner shipping,
    U.S.-flagged vessels conducting commercial business while carrying DOD
    cargo, would be afforded the same protections as any flagged ship under
    the Convention even though they do not enjoy sovereign immune status.
                                     ______

           Response of GEN Charles Jacoby, Jr., to Question Submitted
                            by Senator John F. Kerry

        Question. Would a rule-based international framework such as Law of
    the Sea Convention aid you in your efforts to maintain stability and
    secure U.S. interests in the Arctic?

        Answer. Yes. Use of diplomacy and the framework provided by the Law
    of the Sea Convention would facilitate military cooperation in the
    Arctic and would enhance my leadership position for building military
    partnerships in the region as a combatant commander. A rule-based
    framework aligns with my responsibility to support the peaceful opening
    of the Arctic in a manner that strengthens international cooperation.
    The Convention provides a crucial roadmap for resolving friction that
    may arise as the Arctic opens, allowing conflict to be resolved
    diplomatically, without coercion.
                                     ______

     Response of GEN William Fraser III, GEN Charles Jacoby, Jr., and ADM
       Samuel Locklear III to Question Submitted by Senator John F. Kerry

        Question. As a combatant commander, if you had all of the material
    resources you could possibly ask for at your disposal, would you still
    support the Convention?

        Answer. Yes. The Law of the Sea Convention provides an
    internationally recognized legal framework to support our freedom of
    navigation and overflight rights. It gives the United States a stronger
    diplomatic and legal position to assert our rights where the
    alternative might be to rely on my capabilities as a combatant
    commander to ensure access and mobility in the maritime domain.
                                     ______

            Responses of ADM Samuel Locklear to Questions Submitted
                            by Senator John F. Kerry

        Question. As a combatant commander, if you had all of the material
    resources you could possible ask for at your disposal, would you still
    support the Convention?

        Answer. Yes. As a combatant commander, regardless of the level of
    available resources, I would still support the Convention.

        Question. How has the Convention helped to resolve disputes in the
    South China Sea? Please provide specific examples.

        Answer. The Convention provides a legal framework for nations to
    resolve maritime and boundary disputes, including many of the disputes
    in the South China Sea. Generally, Article 279 of the Convention states
    that Parties ``shall settle any dispute concerning the interpretation
    or application of this Convention by peaceful means. . . .'' The
    Convention recognizes several methods of dispute resolution, and does
    not mandate a particular method. Specifically, Article 280 states that
    Parties may ``agree at any time to settle a dispute between them
    concerning the interpretation or application of this Convention by any
    peaceful means of their own choice.'' These means include
    ``negotiation'' (Article 283), ``conciliation,'' (Article 284),
    ``arbitration'' (Article 287), or decision by the International
    Tribunal for the Law of the Sea (Article 287) or the International
    Court of Justice (Article 287).
        An example of how the Convention helped to resolve a dispute in the
    South China Sea is the maritime boundary between Vietnam and the
    People's Republic of China in the Gulf of Tonkin (Beibu Gulf in Chinese
    and Bac Bo Gulf in Vietnamese). Both Vietnam and China are parties to
    the Convention: Vietnam signed it in December 1982, and ratified it in
    July 1994; China signed it in December 1982, and ratified it in June
    1996. The process of dispute resolution in the Gulf of Tonkin between
    the two nations had three stages: (i) brief negotiations in 1974, (ii)
    negotiations between October 1977 and June 1978, (iii) and negotiations
    between 1992 and 2000. In 1993, the two nations reached a general
    agreement on the basic principles to be applied to settle the dispute,
    including ``applying the International Law of the Sea.'' On December
    25, 2000, the two nations signed an Agreement on the Delimitation of
    the Territorial Seas, Exclusive Economic Zones, and Continental
    Shelves. Article 1, Section 1 of the Agreement acknowledged, ``The
    Parties have determined the demarcation line for the territorial seas,
    exclusive economic zones and continental shelves of the two countries
    in the Beibu Gulf in accordance with the 1982 United Nations Convention
    on the Law of the Sea, generally accepted principles of international
    law and international practice, based on the full consideration of all
    relevant circumstances of the Beibu Gulf and on the equitable
    principle, and through friendly consultation.'' (Emphasis added.)
        An example of how the Convention has helped to resolve a dispute
    elsewhere in the Asia-Pacific region, similar to some of the disputes
    in the South China Sea, includes the March 2012 case between Bangladesh
    and Burma before the International Tribunal for the Law of the Sea
    concerning their maritime boundary. That case demonstrates that, if the
    Parties to a particular dispute have the political will to utilize the
    Convention's methods of dispute resolution, the Convention provides an
    effective legal framework for resolving maritime and boundary disputes.

        Question. In your dealings with military officials in the region,
    does our non-party status to this Convention have an impact on your
    mission?

        Answer. Yes. In the Asia-Pacific region, the United States has
    national interests in security and stability, freedom of navigation and
    open access to the maritime domain, respect for international law, and
    unimpeded commerce and economic development. We can best protect our
    national security and our leadership role in the Pacific by acceding to
    the Convention. As the Secretary of Defense stated in his May 23
    testimony, a key component of our strategy is to reenergize and
    strengthen our network of defense and security partnerships throughout
    the Asia-Pacific region. An area of universal interests among our
    allies and partners is protection of the rights, freedoms, and uses of
    the sea that underpin all nations' access to the world's oceans.
    Joining the Convention will enhance seamless integration of
    international legal authorities between our forces and those of our
    partners and will place the United States in the best position to lead
    international efforts in the maritime domain.
        As we look into the future, our status as a non-Party will
    increasingly disadvantage the United States. Presently, the United
    States is forced to rely on customary international law as the basis
    for asserting our rights and freedoms in the maritime domain. In
    situations when coastal States assert maritime claims that exceed the
    rights afforded to them by the Convention, U.S. Pacific Command
    challenges such claims through a variety of means including Freedom of
    Navigation operations, military-to-military communications, and
    diplomatic protests through the State Department. When challenging such
    excessive claims through military-to-military or diplomatic exchanges,
    the United States typically cites customary international law and the
    relevant provisions of the Convention. Unfortunately, because we are
    not a party to the Convention, our challenges are less credible than
    they would otherwise be. Other States are less persuaded to accept our
    demand that they comply with the rules set forth in the Convention,
    given that we have not joined the Convention.

        Question. How does not being a party to the Convention hamper you
    when you push back against spurious territorial claims and restrictions
    on U.S. military activity?

        Answer. The United States, as well as our allies and partners, face
    various attempts from particular coastal States to limit military
    activities in large areas of the ocean. The Convention provides a
    stable legal framework of rights, freedoms, and uses of the sea, as
    well as a robust negotiating history, upon which U.S. Pacific Command
    could rely to challenge such coastal States. As a non-party to the
    Convention, however, we are not able to effectively, credibly rely on
    the Convention as a source of law to protect our interests and
    challenge excessive maritime claims of coastal States.
                                     ______

          Response of ADM James Winnefeld, Jr., to Question Submitted
                        by Senator Robert P. Casey, Jr.

        Question. The United States has declined membership in the United
    Nations Convention on the Law of the Sea for three decades. Why should
    joining the Convention on the Law of the Sea be a priority for the
    United States at this time? From the perspective of the U.S. military,
    what are the expected advantages of membership in the Convention on the
    Law of the Sea? What are the possible drawbacks?

        Answer. Joining the Convention now is a priority because the global
    environment has changed since the Convention's negotiation and entry
    into force. From the perspective of the U.S. Armed Forces, joining the
    Convention is essential to protecting navigational freedoms and U.S.
    national security interests while positioning our forces for the future
    as we confront an increasingly complex security environment. Through
    internal legislation and their own efforts to interpret the Convention,
    rising powers seek to erode the favorable navigational provisions that
    are essential to the global mobility of U.S. forces. As a preeminent
    maritime power, we must operate inside of the Convention to influence
    and lead in manner that prevents this erosion and locks in vital
    navigational provisions. As we rebalance toward the Asia-Pacific
    region, our status as a Party to the Convention will position the U.S.
    Armed Forces to exercise more influence and leadership as tensions and
    disputes arise in the maritime domain. As the Arctic becomes available
    for increased navigation and use, the U.S. Armed Forces will be better
    postured to promote and protect U.S. national security interests and
    effectively interact with the other seven Arctic Council nations who
    are parties to the Convention. From my perspective, there are no
    drawbacks to joining the Convention.
                                     ______

           Response of ADM Jonathan W. Greenert to Question Submitted
                        by Senator Robert P. Casey, Jr.

        Question. Some observers have argued that U.S. membership in the
    United Nations Convention on the Law of the Sea will restrict the U.S.
    Navy's ability to navigate the seas and conduct maritime operations
    freely.

       What is the possible negative impact, if any, of U.S.
            accession to the Convention on the Law of the Sea on the
            freedom of U.S. Navy operations?
       Are there specific provisions within the Convention that
            protect U.S. freedom to conduct maritime military operations?

        Answer. U.S. Navy operations have been conducted consistent with
    the navigational provisions of the Convention for the past 30 years
    specifically because those provisions reinforce our sovereign and
    security interests. Accession to the Convention will have no negative
    impact on the freedom of U.S. Navy operations. The Convention's
    provisions protect U.S. freedom to conduct maritime military
    operations. Specifically, Articles 58 and 87 preserve the right to
    exercise high-seas freedoms in foreign exclusive economic zones,
    Article 17 provides the right to exercise innocent passage through
    foreign territorial seas without discrimination based on cargo or means
    of propulsion, Article 38 provides the right of navigation and
    overflight through international straits in the normal mode of
    operation, and Article 95 provides warships on the high seas with
    complete immunity from the jurisdiction of foreign nations. The
    Convention's navigational provisions were designed to ensure continued
    protection of sovereign rights and enable naval forces to engage in
    unimpeded free navigation of the high seas to defend Member States'
    security and economic interests in the maritime domain.
                                     ______

             Response of ADM Samuel Locklear to Question Submitted
                        by Senator Robert P. Casey, Jr.

        Question. The United States has significant national security and
    economic interests in the Asia-Pacific maritime region. The Department
    of Defense's announcement of plans to shift additional forces to the
    Pacific indicates that this region is an increasingly high priority for
    the U.S. military.

       Has the United States status as a nonmember of the United
            Nations Convention of the Law of the Sea hampered our ability
            to protect and promote our interests in this critical maritime
            region up to this point? If so, how?
       How will accession to the Convention improve our ability to
            pursue these interests?

        Answer. Not being a party to the U.N. Convention on the Law of the
    Sea (UNCLOS) is used against the U.S. when we challenge--diplomatically
    or operationally--excessive maritime claims of nations in the Asia-
    Pacific region. Most States in that area are parties to the Convention
    and cite its language as legal authority for their claims. Some of
    these countries state the U.S. invocation of the UNCLOS language is
    disingenuous as a non-party since the U.S.'s legal foundation is based
    in customary international law as opposed to treaty law. The United
    States asserts the Convention embodies customary international law,
    which is binding on all nations regardless of their status with respect
    to the Convention. However, customary international law is created by
    state practice over time. States' claims and actions create and alter
    customary international law. It is not necessarily static. However, the
    Convention binds the parties to the language of the Convention and that
    language only changes through a formal amendment process. By acceding
    to the Convention, the United States will be in a better position to
    interpret and control that language.

           Letters Submitted for the Record by Senator John F. Kerry

          Letters Submitted for the Record by Senator James M. Inhofe

                         THE LAW OF THE SEA CONVENTION
                              (TREATY DOC. 103-39)

                                  ----------

                         THURSDAY, JUNE 14, 2012 (p.m.)

                                           U.S. Senate,
                                Committee on Foreign Relations,
                                                        Washington, DC.
        The committee met, pursuant to notice, at 2:36 p.m., in
    room SD-419, Dirksen Senate Office Building, Hon. John F. Kerry
    (chairman of the committee) presiding.
        Present: Senators Kerry, Shaheen, Coons, Lugar, Corker,
    Risch, Inhofe, DeMint, Isakson, Barrasso, and Lee.

                OPENING STATEMENT OF HON. JOHN F. KERRY,
                    U.S. SENATOR FROM MASSACHUSETTS

        The Chairman. The hearing will come to order.
        Thank you all for being here. I am sorry we are late.
        Let me begin. At the outset, let me say to people that I
    apologize that we are back in the smaller hearing room here. We
    tried a month ago to reserve Hart 219 for this afternoon, and
    we simply were not able. Somebody else had it for this time.
        So we are here, and I know there are a bunch of people
    outside who would have liked to have come in. And I am sorry
    that we are not able to accommodate that, but it is not for any
    other reason. We are going to try and have our hearings there
    because we know there is interest, and it is just easier for
    everybody. But that is why we are back in here this afternoon.
        This is our third hearing on the Law of the Sea. We are
    going to have some more after this, no doubt. And I am
    particularly looking forward to this afternoon because what I
    like about it is that we have folks with different points of
    view on the same panel and an opportunity to really dig in,
    which I hope we will do. And I think that will be useful to
    everybody here.
        Senator Inhofe, along with a number of other colleagues,
    requested that I invite four witnesses to testify, and so we
    did. We invited all four. Two of them, Secretary Rumsfeld and
    Steven Groves, agreed to join us today, along with two other
    distinguished witnesses. And I am really happy that all of you
    could take the time to be here with us.
        Donald Rumsfeld, everybody knows, is currently president of
    the Rumsfeld Foundation; has held various very senior positions
    in previous administrations, most recently serving as Secretary
    of Defense under President George W. Bush.
        He is joined by John Negroponte, a veteran also of multiple
    administrations. Most recently, Mr. Negroponte served as our
    first Director of National Intelligence and then as Deputy
    Secretary of State in the George W. Bush administration. And he
    is currently vice chairman at McLarty Associates.
        We are also pleased to have John Bellinger. From 2001 to
    2005, he served in the White House as the associate counsel to
    President George W. Bush, and then as the Legal Adviser to the
    National Security Council. And from 2005 to 2009, he was the
    Legal Adviser to the State Department. He is now a partner at
    the law firm Arnold & Porter.
        And finally, rounding out the panel is Steven Groves, the
    Bernard and Barbara Lomas Fellow at the Heritage Foundation,
    and Mr. Groves was previously senior counsel to the Senate
    Permanent Subcommittee on Investigations.
        So welcome to all of you.
        Now this morning, we heard a panel from some of our most
    senior operational commanders, along with the Vice Chairman of
    the Joint Chiefs and the top officers in the Navy and the Coast
    Guard, and they added their voices to that of Chairman of the
    Joint Chiefs and the Secretary of Defense and the Secretary of
    State, calling for ratification of the treaty.
        We have also here heard and we have introduced into the
    record letters from other combatant commanders, all of whom
    strongly support joining the Law of the Sea Convention.
        I think it is my understanding, drawing on the two hearings
    we have had, that even the critics of the Law of the Sea are
    beginning to join the consensus that the navigational bill of
    rights provided for in the treaty and which our military and
    our shippers rely on every day are beneficial to the United
    States.
        As I see it--and just listening, I hope I am not
    mischaracterizing it--I think the bulk of the debate is really
    not focused on the navigational provisions, but rather on other
    aspects of the treaty. And I believe personally--I am not going
    to go into this at length because I don't think that would be
    fair in terms of my chairmanship. But I do think that there are
    a lot of criticisms that are inaccurate, and what I want to try
    to do is separate what is accurate, what is not, so that the
    committee can, hopefully, in the resolution of ratification
    deal with those things that we think we need to deal with.
        But let me give you an example of that. The International
    Seabed Authority has been accused of being, but is not, some
    bloated U.N. bureaucracy. It is totally separate from the
    United Nations and has a staff of less than 40. Nothing in its
    13-year history suggests that it is an organization that is out
    of control or is somehow going to act inconsistent with our
    interests. Or that in joining it, we would not be able to
    effectively use our veto in the ISA Council to advance U.S.
    interests.
        Other criticisms have focused on the royalty provisions,
    other things. But I think we need to dig into facts, and I am
    going to just sort of let that happen.
        The one thing I do want to put out here is it is clear that
    the original provisions of the 1982 Convention were not fully
    consistent with free market principles and would have
    disadvantaged our businesses. If I were looking strictly at the
    four corners in the 1982 Convention, I would have had problems,
    as Ronald Reagan did and others did.
        But those problems, I think in most people's judgment, have
    been addressed in full. Bob Stevens, the CEO of Lockheed
    Martin, recently wrote to me urging that we pass this
    Convention. And this is what he said.
        ``The multibillion dollar investments needed to establish
    an ocean-based resource development business must be predicated
    upon clear legal rights established and protected under the
    treaty-based framework of the Law of the Sea Convention,
    including the International Seabed Authority. Other
    international players recognize this same reality and are
    acting upon it. Countries, including China and Russia, are
    moving forward aggressively within the treaty framework, and
    several of these countries currently hold exploration licenses
    from the International Seabed Authority.
        ``Unfortunately, without ratifying the Convention, the
    United States cannot sponsor claims with or shape the deep
    seabed rules of the ISA. Yet that is the critical path forward
    if the United States intends to expand and ensure access for
    both U.S. commercial and Government interests to new sources of
    strategic mineral resources.''
        I might add that Lockheed is not alone. I recently received
    a letter from Rex Tillerson, the head of ExxonMobil. He
    expressed ExxonMobil's support for ratification and said this.
        ``As an American company engaged in the global market for
    energy development, ExxonMobil is interested in exploring for
    oil and gas resources that may exist under the vast new areas
    that are recognized for sovereignty purposes under the Law of
    the Sea. The exploration and development of offshore resources
    is complicated and costly, and operating in the extended areas
    addressed under the Law of the Sea will be even more so. Before
    undertaking such immense investments, legal certainty in the
    property rights being explored and developed is essential.''
        I think our businesses have overwhelmingly made that point,
    including the Chamber of Commerce, the American Petroleum
    Institute, the telecommunications industry, and the Chamber of
    Shipping of America, who just wrote to me in support of the
    treaty. And I would like to enter each of those letters in the
    record.
        So this is part of the area we will be going forward. In a
    few weeks, we will have many of these people here to testify,
    to talk about the economic realities.
        But today, we have experts who really understand the
    negotiation of the treaty and so forth and have examined it.
        And we look forward to a very healthy dialogue and,
    hopefully, very productive results for the committee.
        Senator Lugar.

              OPENING STATEMENT OF HON. RICHARD G. LUGAR,
                       U.S. SENATOR FROM INDIANA

        Senator Lugar. Thank you, Mr. Chairman.
        This morning the Foreign Relations Committee heard
    unequivocal testimony from our uniformed military leadership in
    support of the Law of the Sea Convention. At an upcoming
    hearing, the committee will hear from a broad spectrum of
    ocean-related businesses that strongly support this treaty.
        When the Convention was before this committee in 2003 and
    2007, military and business support for the Law of the Sea was
    similarly overwhelming. This underscores that Americans who are
    involved in the oceans professionally on a daily basis--those
    who defend our country's interests on the seas and those who
    invest their money and create jobs related to ocean
    enterprises--want this Convention ratified.
        Unlike some treaties, such as the Kyoto agreement or the
    Comprehensive Test Ban Treaty, where United States
    nonparticipation renders the treaty virtually irrelevant or
    inoperable, the Law of the Sea will continue to form the basis
    of maritime law regardless of whether the United States is a
    party. International decisions related to national claims on
    Continental Shelves beyond 200 miles from our shore, resource
    exploitation in the open ocean, navigation rights, and other
    matters will be made in the context of the treaty whether we
    join it or not.
        Consequently, the United States cannot insulate itself from
    the Convention merely by declining to ratify. It is the
    accepted standard in international maritime law and the
    dominant forum for the evolution of international ocean policy.
    Americans who use the ocean and interact with other nations on
    the ocean have to contend with the Law of the Sea on a daily
    basis.
        They want the United States to participate in the
    structures of Law of the Sea to defend their interests and to
    make sure that other nations respect our rights and our claims.
    Among the questions addressed by Law of the Sea is how should
    resources in the deep seabed or on a nation's Extended
    Continental Shelf beyond the 200-mile limit be exploited?
        The treaty makes it possible for a mining or drilling
    company to stake an unequivocal legal claim on the ocean floor
    and have it recognized under international law. Some have
    argued that the United States accession to the Law of the Sea
    Convention is unnecessary to secure the legal basis for
    companies to fully exploit oil, natural gas, and mineral wealth
    on the ocean floor. But that is not the opinion of the American
    companies that might invest their resources in this activity.
        They are in favor of the treaty, because without the
    certainty of title provided by the Law of the Sea Convention,
    they would not go forward with many projects requiring large
    investments. Their concern is that after doing the expensive
    exploration, research, testing, and construction necessary to
    exploit a site, they have to be certain that another entity
    won't be able to free-ride off their investment or challenge
    their claim in international courts.
        The oil drilling and mining companies prefer to pay a small
    royalty beginning in the 6th year of production in return for
    an international system that gives them undisputed claim to the
    resources produced. This royalty provision of the Convention
    was negotiated with the participation of extraction companies.
    They judged that it is reasonable given the legal certainty it
    secures and the value of what might be produced, especially
    since the first 5 years of production will not be subject to
    any royalty.
        This is why Law of the Sea is endorsed by the United States
    Chamber of Commerce, the American Petroleum Institute, and
    every industry that has a stake in the deep seabed mining and
    drilling. In other words, our resource extractors are telling
    us that if we want them to move forward with large-scale
    development of ocean floor resources that could contribute
    significantly to United States energy and national security and
    create jobs, we need to ratify Law of the Sea.
        I have been especially critical of President Obama and the
    State Department for failing to approve the Keystone XL
    pipeline because it provides clear long-term benefits to job
    creation and energy security. In that case, the President's
    delay is unnecessarily disadvantaging the United States economy
    over concerns that have largely been resolved.
        If the U.S. Senate declines to ratify Law of the Sea, I
    believe we will be doing the same thing. During this Congress
    few topics have been more central to Senate deliberations than
    job creation, energy security, and the needs of our military.
    The Law of the Sea Convention is the rare initiative that would
    contribute to all three objectives.
        I welcome, as you have, Mr. Chairman, our distinguished
    witnesses and look forward to their testimony.
        The Chairman. Senator Lugar, thank you very much.
        So we will proceed. Mr. Secretary Rumsfeld, if you would
    lead off, sir, I would appreciate it. And then Secretary
    Negroponte, Counselor Bellinger, and Mr. Groves.

      STATEMENT OF HON. DONALD RUMSFELD, FORMER U.S. SECRETARY OF
            DEFENSE, THE RUMSFELD FOUNDATION, WASHINGTON, DC

        Mr. Rumsfeld. Mr. Chairman and members of the committee,
    thank you for your invitation.
        I have submitted some brief prepared remarks, and I will
    try to adjust them down to 5 minutes.
        The Chairman. Without objection, all of the testimonies
    will be placed in the record in full as if read in full.
        Mr. Rumsfeld. It is a pleasure to appear with these experts
    on this subject. I am 30 years away from it, but I am pleased
    to be here.
        It was 30 years ago that President Reagan asked me to meet
    with world leaders to represent the United States in opposition
    to the Law of the Sea Treaty. Our efforts soon found a
    persuasive supporter in British Prime Minister Margaret
    Thatcher. Today, as the U.S. Senate again considers approving
    this agreement, the reasons for their opposition, I believe,
    remain as persuasive.
        When I met with Mrs. Thatcher in 1982, she promptly grasped
    the issues at stake. Her conclusion on the treaty was
    unforgettable. She said what this treaty proposes is nothing
    less than the international nationalization of roughly two-
    thirds of the Earth's surface. And then referring to her
    battles dismantling Britain's state-owned mining and utility
    companies, she added, ``And you know how I feel about
    nationalization.''
        The major idea underlying the Law of the Sea Treaty is that
    the riches of the oceans beyond national boundaries are the
    common heritage of mankind and, thus, supposedly owned by all
    people, which means they are unowned.
        This idea of ownership, which is encompassed in the treaty,
    requires that anyone who finds a way to make use of such riches
    by applying their labor or their technology or their risk-
    taking are required to pay royalties of unknown amounts,
    potentially billions--possibly even tens of billions--over an
    extended period, an ill-defined period of time, to the new
    International Seabed Authority for distribution to less
    developed countries.
        This, in my view, is a new idea of enormous consequence. It
    establishes a way of looking at industry investment, talent,
    risk, and good fortune that argues in favor of distributing a
    significant portion of the value of the minerals in the deep
    seabeds to developing countries. I suppose it is also
    conceivable that it could become a precedent for the resources
    of outer space.
        The principle that advanced countries, when they make use
    of resources that previously belonged to no one, owe royalties
    to less developed countries is a novel principle that has, in
    my view, no clear limits. I know of no other treaty that
    follows that pattern.
        The idea is fundamental and integral to the Law of the Sea
    Treaty. It is the major reason I believe that treaty should not
    be ratified.
        I don't argue against developed countries providing
    financial and other forms of aid to poor countries. There are
    moral and practical arguments in favor of such aid. But the
    decision to provide such aid is, has been, and probably should
    be a sovereign choice for each nation.
        In the case of our country, it is a choice of our citizens
    and you, their elected representatives. Very simply, I do not
    believe the United States should endorse a treaty that makes it
    a legal obligation for productive countries to pay royalties to
    less productive countries based on rhetoric about ``common
    heritage of mankind.''
        The wealth distribution idea incorporated in the Law of the
    Sea Treaty is especially objectionable because the mechanism
    for the redistribution is poorly designed. It uses a newly
    created multinational Seabed Authority, which is effectively a
    U.N. agency, instead of the U.S. Congress through our foreign
    aid programs, or through the World Bank of which we and others
    are members.
        If the treaty were to be ratified, the United States
    apparently would receive a permanent seat on the Council of the
    Authority. Even so, the Authority would not be effectively
    accountable to the American people any more than any other U.N.
    agency is accountable. And it must be acknowledged that the
    United Nations has a poor record in administering its programs.
    For example, the U.N. Oil for Food Programme was a multibillion
    dollar scandal.
        Some businesses, as the chairman and the ranking member
    have indicated, have expressed support for the treaty in that
    it would provide greater certainty, which I agree could be
    helpful. I was in business for 20 years, and there is no
    question but that they make that argument and it is a valid
    one. And it needs to be considered and weighed.
        The most persuasive argument for the Law of the Sea Treaty,
    in my view, is the U.S. Navy's desire to ``lock in'' some
    navigation rights. It is correct that the treaty would provide
    some benefits, clarifying some principles, and perhaps making
    it easier to resolve certain disputes. But the U.S. Navy has
    done quite well without this treaty for the past 200 years and
    certainly during the 20 or so years since the treaty has been
    in effect, relying often on customary international law to
    assert navigation rights.
        In my view, the Law of the Sea Treaty would not make a
    large enough additional contribution regarding navigation
    rights or business certainty to counterbalance the problems it
    would create. As Members of the Senate carefully read each of
    the 208 pages of this document, the 320 articles, and also the
    1994 Agreement, I think they will appreciate the basis for
    those concerns and uncertainties.
        I respect the concerns raised by the Navy, by the military,
    and by some in the business community. But the fundamental
    objections raised by Mrs. Thatcher in her 1982 objection to
    effectively nationalizing the world's oceans through a new,
    multinational bureaucracy I believe outweigh the advantages and
    make the
    treaty, on balance, a net loss for U.S. interests.
        Thank you, Mr. Chairman.
        [The prepared statement of Mr. Rumsfeld follows:]

                   Prepared Statement of Hon. Donald Rumsfeld

        Mr. Chairman and members of the committee, 30 years ago President
    Ronald Reagan asked me to meet with world leaders to represent the
    United States in opposition to the Law of the Sea Treaty. Our efforts
    soon found a persuasive supporter in British Prime Minister Margaret
    Thatcher. Today, as the U.S. Senate again considers approving this
    flawed agreement, the reasons for President Reagan and Mrs. Thatcher's
    opposition remain every bit as persuasive.
        When I met with Mrs. Thatcher in 1982, she promptly grasped the
    issues at stake. Her conclusion on the treaty was unforgettable: ``What
    this treaty proposes is nothing less than the international
    nationalization of roughly two-thirds of the Earth's surface.'' Then,
    referring to her battles dismantling Britain's state-owned mining and
    utility companies, she added, ``And you know how I feel about
    nationalization. Tell Ronnie I'm with him.''
        President Reagan, for his part, had just been elected to office.
    The treaty had been presented to him as a done deal requiring only his
    signature and U.S. Senate consent to its ratification. Then as now,
    most of the world's nations had already approved it. The Nixon, Ford,
    and Carter administrations had all gone along with it. American
    diplomats generally supported the treaty and were shocked when Reagan
    changed America's policy. Puzzled by their reaction, the President was
    said to have responded, ``But isn't that what the election was all
    about?''
        Yet, as the man known as the Gipper might say, here we go again. An
    impressive, if unlikely, coalition is now arrayed in support of U.S.
    ratification of the United Nations Law of the Sea Treaty. As during the
    Reagan years, dozens of diplomats and national security officials,
    including every living former Secretary of State have endorsed the
    Obama administration's goal of ratification. The U.S. Navy wants to
    ``lock in'' existing and widely accepted rules of high-seas navigation.
    Business groups say the treaty could help them by creating somewhat
    more certainty.
        Can so many people, organizations, and countries be mistaken? The
    answer, I believe, is ``Yes.'' Various proponents have their particular
    considerations, each valid, but none, in my view, has made a compelling
    case that the treaty would, on balance, benefit America as a whole.
        Though modest ``fixes'' were made in 1994 in a separate agreement
    signed by some, but not all, of the treaty's parties in the hope of
    addressing some of the flaws identified in the Reagan-era version of
    the treaty, its most serious defect is unaltered: the Law of the Sea
    Treaty remains a sweeping power grab that could prove to be the largest
    mechanism for the worldwide redistribution of wealth in human history.
        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 U.N.
    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.
        Worse still, these sizable ``royalties'' could go to corrupt
    dictatorships and state sponsors of terrorism. For example, as a treaty
    signatory and a member of the ``Authority's'' executive council, the
    Government of Sudan--which has harbored terrorists and conducted a mass
    extermination campaign against its own people--would have just as much
    say as the United States on issues to be decided by the ``Authority.''
    Disagreements among treaty signatories are to be decided through
    mandatory dispute resolution processes of uncertain integrity.
    Americans should
    be uncomfortable with unelected and unaccountable tribunals appointed
    by the Secretary General of the United Nations serving as the final
    arbiter of such disagreements.
        Even if one were to agree with the principle of global wealth
    redistribution from the United States to other nations, other U.N.
    bodies have proven notably unskilled at financial management. The U.N.
    Oil-for-Food Programme in Iraq, for instance, resulted in hundreds of
    millions of dollars in corruption and graft that directly benefited
    Saddam Hussein and those nations friendly to Iraq. The Law of the Sea
    Treaty is another grand opportunity for scandal on an even larger
    scale.
        The most persuasive argument for the Law of the Sea Treaty is the
    U.S. Navy's desire to shore up international navigation rights. It is
    true that the treaty might produce some benefits, clarifying some
    principles and perhaps making it easier to resolve certain disputes.
    But our Navy has done quite well without this treaty for the past 200
    years, relying often on centuries-old, well-established customary
    international law to assert navigational rights. Ultimately, it is our
    naval power that protects international freedom of navigation. The Law
    of the Sea Treaty would not make a large enough additional contribution
    to counterbalance the problems it would create.
        In his farewell address to the Nation in 1988, President Reagan,
    advised the country: ``Don't be afraid to see what you see.'' If the
    Members of the U.S. Senate fulfill their responsibilities, actually
    read the Law of the Sea Treaty and consider it carefully, I believe
    they will come to the conclusion, as I have, that the treaty's costs to
    our security and sovereignty would far exceed any benefits for the
    United States.

        The Chairman. Thank you, Mr. Secretary. Appreciate it.
        Secretary Negroponte.

    STATEMENT OF HON. JOHN NEGROPONTE, FORMER U.S. DEPUTY SECRETARY
                        OF STATE, WASHINGTON, DC

        Ambassador Negroponte. Thank you, Mr. Chairman and members
    of the committee, for this opportunity to appear before this
    committee to discuss the Law of the Sea Convention.
        Let me say at the outset and as unequivocally as possible
    that I believe the United States should accede to this treaty.
    As you have heard recently from the Secretaries of State and
    Defense, the Chairman of the JCS, and our maritime service
    chiefs, there are real costs to remaining outside the treaty.
    For the benefit of our country, I hope this is the year that we
    finally become party to the Law of the Sea.
        My involvement with this treaty dates back to 1970 when I
    was a member of the National Security Council staff. I was
    given the assignment of helping coordinate the preparation of
    President Nixon's first directive on the Law of the Sea, and I
    have worked on this issue on and off in the ensuing years,
    although I would not claim to be an expert.
        In the Reagan administration, I served as an Assistant
    Secretary of State for Oceans and International Environmental
    and Scientific Affairs at the State Department, and then as
    President Reagan's Deputy National Security Adviser. And then
    in the George W. Bush administration, as Director of National
    Intelligence and, finally, as Deputy Secretary of State.
        These experiences have only strengthened my support for the
    treaty. And as you will recall, Senator, I was the lead
    administration witness in the last administration when we
    appeared before the committee in 2007.
        The United States has consistently sought to balance the
    interests of countries in controlling activities off their
    coasts and the interests of all countries in protecting freedom
    of navigation. The United States joined a group of Law of the
    Sea treaties in 1958 by which it is still bound. But those
    treaties left open some important issues.
        For example, they did not set forth the maximum breadth of
    the territorial sea, an issue of critical importance to freedom
    of navigation. And they did not elaborate a procedure for
    providing legal certainty as regards the Continental Shelf.
        Under President Nixon, the United States proposed the
    concept of a treaty that would address these concerns, and it
    was President Nixon, by the way, who first introduced the
    notion of a U.S. policy supporting this concept of the common
    heritage of mankind. I think what we have been debating in the
    ensuing years is exactly how you define that in ways with which
    we can live.
        Formal negotiations were launched a little over 3 years
    later, and the Convention was finalized in 1982. The United
    States supported the 1982 Convention, with the exception of the
    deep seabed provisions. And in 1983, President Reagan issued a
    statement explaining that because of certain concerns with
    these provisions, the United States would not sign the
    Convention.
        He affirmed, however--and I think this is the very
    important--that the United States would voluntarily follow the
    bulk of the treaty. Negotiations began during the George
    Herbert Walker Bush administration to rewrite the deep seabed
    mining provisions. An implementing agreement was signed in
    1994, which dealt with each of the problems identified by
    President Reagan.
        The Clinton administration submitted the Convention and the
    1994 Agreement to the Senate in July 1994, and President George
    W. Bush urged approval of the Convention, both in 2004 and in
    2007, arguing that, ``Joining will serve the national security
    interests of the United States and secure U.S. sovereign rights
    over extensive marine areas including the valuable natural
    resources they contain.''
        Why is it important for the United States to join the
    Convention now? To begin, the United States would gain legal
    protection for its sovereignty, sovereign rights and
    jurisdiction in offshore zones, the freedom of maneuver and
    action for its military forces, and protection for economic and
    marine research interests at sea.
        U.S. firms would be able to obtain essential
    internationally recognized and exclusive rights to explore and
    exploit deposits of strategic minerals on the ocean floor
    beyond national jurisdiction and secure recognized title to the
    recovered resources. The Convention, as revised by the 1994
    Agreement on Implementation, provides the commercial regime
    needed for private industry, and it fully satisfies the
    criteria articulated in 1982 by President Reagan.
        Allow me to cite a few specific practical reasons of how
    remaining outside the Convention damages U.S. national
    interests. These are not academic or philosophical points, but
    real world examples of how we are undercutting our national
    interests by failing to join.
        First, the Convention is now open for amendment and could
    be changed in ways that adversely impact the navigational
    rights and high seas freedoms on which our military depends for
    global mobility. If we join now, our rights are protected in
    two ways.
        First, it will allow us to shape the interpretation,
    application, and development of specific amendments to the
    nonseabed parts of the Convention. If we delay joining until
    after an amendment is adopted, we could choose only to accept
    or reject another party's amended version.
        In addition, once the United States takes its permanent
    seat at the International Seabed Authority, it will have a veto
    over any amendments related to the seabed parts of the
    Convention.
        Second, as tensions flair in critical regions like the
    Persian Gulf and South China Sea, it is important that the
    United States provide its men and women in uniform with every
    means available to protect the navigational rights enshrined in
    the treaty. Right now, the United States has two ways to defend
    its maritime interests. We can initiate a diplomatic process to
    lodge a complaint with a state that denies us free passage, or
    we can assert our right to passage by putting our vessel in
    harm's way.
        The freedom of navigation program is an important tool in
    our military's arsenal, but it does carry a risk of escalation.
    Law of the Sea is an additional tool we can use, and it is one
    the Navy and the Coast Guard have asked us repeatedly to
    provide them.
        Third, by not joining the treaty the United States is
    limited in its leadership ability to resolve maritime disputes
    between its allies, such as Japan and Korea, and in
    strategically important
    regions, such as the Gulf of Aden or the South China Sea.
        Fourth, by remaining on the outside, we have created self-
    imposed obstacles to securing the most widespread possible
    cooperation in our counterproliferation and counternarcotics
    operations at sea. The United States refusal to join the
    Convention undermines the confidence of other countries, and
    they do bring this up, in our willingness to abide by the
    accepted rules of the road when conducting interdiction
    activities.
        Fifth, and critically important, our failure to join the
    Convention to date is negatively impacting our businesses. At
    least one U.S. company, Lockheed Martin, as has been mentioned,
    is prepared to harvest critical rare earth minerals on the deep
    seabed--and I personally spoke to representatives of Lockheed
    about this--minerals that are used in our weapon systems, cell
    phones, and automobiles.
        But as a nonparty to the treaty, the United States cannot
    sponsor Lockheed to go out and get these minerals from the
    seabed. While the United States watches, 17 countries have
    approved exploration claims for deep seabed mining.
        Five new applications will be considered this summer at the
    annual session of the International Seabed Authority. The
    United Kingdom and Belgium are joining China, India, Germany,
    France, Japan, South Korea, and seven other nations in
    commercial exploration of strategic minerals while the United
    States watches from ashore.
        Similarly, our energy companies are less likely to invest
    the billions of dollars necessary to exploit oil and gas
    reserves in the Arctic and elsewhere because of the legal
    uncertainty surrounding the outer limit of the United States
    Continental Shelf. The only way to give the companies the
    clear, internationally recognized title that they need before
    investing this type of money is to join the treaty and work
    through its Continental Shelf process.
        Last, Mr. Chairman, one other point I would like to make
    with respect to the diplomatic aspect of this question and one
    which I think is important as a person who was a diplomatic
    practitioner for more than 40 years. And that was the
    unprecedented nature, I felt, of the concession by the rest of
    the international community in its willingness to reopen this
    Convention because of the objections that the United States
    raised when President Reagan said he would not sign the treaty.
        And after learning of our objections, they came to us and
    invited us and said we are prepared to reopen this part 11 of
    the Law of the Sea Treaty to try and meet your objections so
    that you will feel more comfortable coming onboard. We did
    that. We held these talks.
        Twelve years later, we reached agreement on the revised
    part 11. And I think, as a matter of diplomatic practice and in
    terms of credibility in relationships with the countries with
    which we deal, the idea that they accommodated our concerns and
    reopened the treaty and modified that chapter and for us again
    to reject this Convention now that those concerns have been
    met, I would say would be tantamount to a diplomatic slap in
    the face, if not more.
        Mr. Chairman, I am confident that the committee will agree
    to--that United States accession to the treaty is the best way
    to secure essential navigational and economic rights related to
    the ocean.
        Thank you.
        [The prepared statement of Ambassador Negroponte follows:]

                Prepared Statement of Ambassador John Negroponte

        Mr. Chairman, thank you for the opportunity to appear before this
    committee to discuss the 1982 U.N. Convention on the Law of the Sea.
        Let me say at the beginning of my testimony and as unequivocally as
    possible that I believe the United States should accede to this treaty.
    As you have heard recently from the Secretaries of State and Defense,
    and the Chairman of the Joint Chiefs of Staff as well as our maritime
    service chiefs, there is strong consensus that it is in our national
    interests to do so, and, as I will elaborate in my remarks, there are
    real costs of remaining outside the Convention.
        For the benefit of our country, I hope this is the year we finally
    become party to the Law of the Sea.
        There is broad and bipartisan consensus from our Nation's military,
    political, and business leadership to join the treaty because, as the
    world's greatest maritime power with a host of maritime interests,
    merely treating the Convention as customary law is not good enough.
        As the committee has heard hours of previous testimony, I hope not
    to repeat general points here about why the United States should sign
    on to the treaty which I wholeheartedly support, but rather I will cite
    specific practical reasons of how remaining outside the Convention
    damages U.S. national interests. These are not academic or
    philosophical points, but real world examples of how we are undermining
    our national interests by not officially joining.
        First, the Convention is now open for amendment and could be
    changed in ways counter to our interests in navigational freedoms or
    access to seabed resources. If we join now, however, our rights are
    protected in two ways: first, by the Convention's requirement that
    amendments to the nonseabed parts of the Convention only apply to those
    countries that ratify them. Even countries that join the Convention
    after it is amended must deal with those that have not ratified an
    amendment according to the terms of the unamended Convention. If we
    delay until after an amendment is adopted, we could only choose the
    amended version. Regarding amendments to the seabed parts of the
    Convention, once the United States takes its permanent seat at the
    International Seabed Authority it will have a veto over any amendments
    related to that part.
        Second, the United States cannot currently participate in the
    Commission on the Limits of the Continental Shelf (CLCS) which oversees
    ocean delineation on the outer limits of the Extended Continental Shelf
    (Outer Continental Shelf). Even though it is collecting scientific
    evidence to support eventual claims off its Atlantic, Gulf, and Alaskan
    coasts, the United States, without becoming party to the Convention,
    has no standing in the CLCS.
        This not only precludes it from making a submission claiming the
    sovereign rights over the resources of potentially more than 1 million
    square kilometers of the OCS, it also denies the United States any
    right to review or contest other claims that appear to be overly
    expansive. This is becoming especially urgent with each passing year as
    the Commission is reviewing an influx of claims.
        Third, and especially acute as it relates to current tensions in
    the Persian Gulf or naval mobility in the Pacific, the United States
    today forfeits legal authority to other states, some of them less than
    friendly to U.S. interests, that seek to restrict rights enshrined in
    the Law of the Sea central to American national security strategy, such
    as the freedom of navigation.
        Relatedly, the United States also puts its sailors in unneeded
    jeopardy when carrying out the Freedom of Navigation (FON) program to
    contest Law of the Sea abuses.
        Fourth, the United States is limited in its leadership ability to
    act within the Convention to help mitigate maritime disputes between
    strategic allies, such as Japan and Korea, and in strategically
    important regions, such as the Gulf of Aden or the South China Sea.
        Fifth, the United States is frustrated in expanding the
    Proliferation Security Initiative (PSI) and gaining greater cooperation
    in counterpiracy, counternarcotics, and counterterrorism operations at
    sea. Although our allies are supportive of our efforts on these fronts,
    they understandably indicate that U.S. refusal to join the Convention
    has eroded their confidence that the United States will abide by
    international law when conducting interdiction activities.
        Sixth, U.S. firms and citizens cannot take advantage of the
    arbitration processes established within the Convention to defend their
    rights against foreign encroachment or abuse.
        Seventh, the United States is unable to nominate a candidate for
    election to the Law of the Sea Tribunal and thus is deprived of the
    opportunity to shape directly the interpretation and application of the
    Convention.
        Eighth, American energy and deep seabed companies are at a
    disadvantage in making investments in the OCS due to the legal
    uncertainty over the outer limit of the U.S. Continental Shelf, nor can
    they obtain international recognition, and, as a result, financing for
    mine sites or title to recovered minerals on the deep seabed beyond
    national jurisdiction. As a result, our once-lead in ocean technologies
    has atrophied and we have now fallen behind other countries in critical
    areas such as deep seabed mining.
        Potential U.S. developers of deep seabed minerals are falling
    farther and farther behind international competitors for deep seabed
    minerals. While lack of international recognition of U.S. claims to
    areas beyond national jurisdiction is keeping the sole U.S. claimant on
    shore, 17 countries have 12 approved mine site claims and five new
    applications will be considered this summer at the annual session of
    the International Seabed Authority. The U.K. and Belgium are joining
    Germany, France, Japan, South Korea, India, China, and seven other
    nations in commercial exploration of seabed critical and strategic
    minerals while the United States watches from shore.
        Ninth, and as referenced before, the United States is unable to
    fill its permanent seat on the International Seabed Authority and
    therefore is unable to influence this body's work overseeing minerals
    development in the deep seabed beyond national jurisdiction.
        Last, and really a point of clarification rather than a specific
    cost, let me be clear as the first Director of National Intelligence
    that joining the Convention in no way hinders our intelligence
    gathering to include not impairing in anyway our submarine activities.
        I would now like to focus specifically on the Arctic, a region of
    particular interest to me, and how not being a state party to the
    treaty is undermining our interests in this increasingly important
    region of the world.
        In 2008, I led a U.S. delegation to Ilulissat, Greenland, for an
    international conference of Arctic Foreign Ministers to discuss
    emerging regional issues. The United States is the only Arctic nation
    not to have joined the treaty and our nonparty status diminished our
    voice in this forum.
        Furthermore, the United States is in a weaker legal position in the
    opening of the Arctic to police new shipping along the Alaskan coast
    such as greater regulatory authority afforded under article 234 and to
    apply internationally developed rules and standards to foreign
    shipping, to contest disputed boundary claims and to press our own
    under article 76, and to challenge Canada's assertion that the
    Northwest Passage falls within its internal waters.
        Why is it imperative for the United States to join the Convention
    now?
        For starters, the United States would gain legal protection for its
    sovereignty, sovereign rights and jurisdiction in offshore zones, the
    freedom of maneuver and action for its military forces, protection for
    economic, environmental, and marine research interests at sea while
    seizing an extraordinary opportunity to restore the mantle of
    international leadership on, over and under nearly three-quarters of
    the earth.
        U.S. firms would be able to obtain essential internationally
    recognized exclusive rights to explore and exploit deposits of critical
    and strategic minerals on the ocean floor beyond national jurisdiction
    and secure recognized title to the recovered resources. The Convention,
    as revised by the 1994 Agreement on Implementation, provides the
    commercial regime needed for private industry in full compliance with
    the criteria articulated in 1982 by President Reagan when he laid out
    his conditions for a convention he would sign.
        More difficult to measure than the tangible benefits gained from
    U.S. accession is the diplomatic blight on America's reputation for
    rejecting a carefully negotiated accord that enjoys overwhelming
    international consensus and a treaty that was adjusted in unprecedented
    fashion to specifically meet the demands put forth by President Reagan.
    Remaining outside the Convention undermines U.S. credibility and limits
    our ability to achieve critical national security objectives.
        The treaty was negotiated over decades during which American
    delegations scored important victories. To the dismay of the rest of
    the world that negotiated the Convention with the United States in good
    faith, after many years the Senate has yet to have an up-or-down vote.
    In my opinion, this is a constitutional abdication of congressional
    leadership.
        Through inaction, the United States is forfeiting concrete
    interests while simultaneously undermining something more intangible,
    the legitimacy of U.S. leadership and its international reputation.
        The United States should join the Law of the Sea Convention because
    it remains committed to the rule of law and its historic role as an
    architect and defender of a world order that benefits all nations,
    including and especially the United States of America.
        Thank you, and I look forward to responding to your questions and
    expanding on any of the points in my testimony.

        The Chairman. Thank you, Mr. Secretary.
        Mr. Bellinger.

    STATEMENT OF HON. JOHN B. BELLINGER III, FORMER LEGAL ADVISER,
       U.S. DEPARTMENT OF STATE, PARTNER, ARNOLD & PORTER, LLP,
                             WASHINGTON, DC

        Mr. Bellinger. Thank you, Mr. Chairman and Ranking Member
    Lugar.
        I don't go back quite as far with the treaty as either
    Secretary Rumsfeld or Secretary Negroponte, although I have
    spent a lot of time with both of them inside the White House.
    As you mentioned, I served for all 8 years in the Bush
    administration, first as the Legal Adviser for the National
    Security Council in the White House for the first term and then
    as the Legal Adviser for the State Department in the second
    term.
        What I can do is explain why during those 8 years the Bush
    administration decided to support the Law of the Sea Convention
    because I started from the beginning there. And I do, let me
    say,
    appreciate very much the concerns that have been raised about
    the Convention, including by Senators on this committee,
    because the Bush administration carefully looked at almost all
    of these same issues before we ultimately decided to support
    the treaty.
        And let me say President Bush did not decide to support the
    treaty out of a blind commitment to multilateralism. I don't
    think anyone has ever accused the Bush administration of an
    overabundance of enthusiasm for international organizations or
    multilateral treaties.
        When we came into office in 2001, we decided not to support
    several of the treaties that had been supported by the Clinton
    administration, including the Comprehensive Test Ban Treaty and
    the Kyoto Protocol. Bush administration officials were
    similarly skeptical about the Law of the Sea Treaty. We
    remembered President Reagan's concerns.
        But after a year-long interagency review, we concluded that
    the Convention strongly advanced U.S. national security,
    economic, and environmental interests. And in the
    administration's first treaty priority list in February 2002,
    we told this committee that there was ``an urgent need for
    Senate approval of the Convention.''
        We reviewed the serious concerns that President Reagan had
    raised about the Convention in 1982. We concluded that these
    concerns had been satisfactorily addressed by the amendments to
    the Convention in 1994. The other Western countries that
    President Reagan and Secretary Rumsfeld had successfully
    persuaded not to sign the treaty, including Britain, Germany,
    and Japan, had all joined the treaty after the treaty was
    amended.
        So between 2003 and 2009, senior Bush administration
    political appointees from the Departments of Defense, State,
    Commerce, Interior, Homeland Security testified and sent
    letters to this committee and other committees strongly
    endorsing the Convention. Defense Department appointees twice
    testified in favor of the treaty. President Bush himself issued
    statements in 2007 and 2009, urging the Senate to approve the
    Convention.
        Let me end by addressing some of the concerns that have
    been raised because we did address some of those same concerns.
    First, reliance on customary international law alone does not
    give the United States important rights that are available only
    to parties of the Convention. Most important, U.S. companies
    would not have the legal certainty that they need before they
    are willing to invest billions in development in the Arctic or
    the deep seabed.
        By not joining the Convention, the U.S. Government is
    preventing U.S. oil, gas, and mining companies from making
    investments that could produce enormous wealth and jobs for the
    U.S. economy. Moreover, the United States would not be able to
    take its permanent seat on the Council of the International
    Seabed, which is currently making decisions that affect U.S.
    interests.
        Second, the United States would only be required to pay
    royalties to the Deep Seabed Authority if it were actually
    developing resources on the U.S. Extended Continental Shelf.
    Moreover, U.S. oil and gas companies and the U.S. Treasury
    would be able to keep 100 percent of the value of the
    production at any site for the first 5 years and then between
    99 and 93 percent of the value for the remaining years.
        This would be an enormous net benefit, not a loss, for the
    U.S. Treasury. If these fees would actually cause the economic
    problems that are claimed by critics, then certainly other
    major industrial countries would not have agreed to pay them.
        Third, the seabed authority only has limited authority to
    address mining activities on the deep seabed beyond the
    jurisdiction of any country. It has no authority to regulate
    activities in the world's oceans or on the U.S. Extended
    Continental Shelf.
        If critics are seriously concerned about the potential
    actions of the ISA, then the most effective way to restrict its
    activities would be for the United States to become party to
    the Convention and take its permanent seat and effective veto
    power on the ISA Council.
        Finally, joining the Convention does not, in my view,
    subject the United States to significant new environmental
    litigation risks. In fact, the litigation risk to the United
    States and U.S. companies would be much greater if U.S.
    companies were to try to exploit the resources on the U.S.
    Extended Continental Shelf or on the deep seabed contrary to
    the terms of the Convention.
        Mr. Chairman, through determined diplomacy, including by
    Secretary Rumsfeld, the United States has been able to achieve
    all of its important objectives in the original 1982 Law of the
    Sea Convention and the 1994 amendments. After careful review,
    the Bush administration concluded that the amended Convention
    strongly serves U.S. military, economic, and environmental
    interests. And we concluded that important U.S. objectives,
    especially our goals to exploit the valuable resources on our
    Extended Continental Shelf in the Arctic and on the deep seabed
    and to participate in the Convention's decisionmaking bodies
    could not be achieved through other means.
        For these reasons, President Bush decided to support the
    Law of the Sea Convention, and he urged the Senate to approve
    it rapidly.
        Mr. Chairman and members of the committee, thank you for
    this opportunity to appear today.
        [The prepared statement of Mr. Bellinger follows:]

                  Prepared Statement of John B. Bellinger III

        Mr. Chairman, Ranking Member Lugar, thank you for inviting me to
    appear before the committee today to discuss the Convention on the Law
    of the Sea. My last appearance before this committee was at this
    committee's last hearing on the Law of the Sea Convention in September
    2007, when I appeared together with then-Deputy Secretary of State John
    Negroponte and then-Deputy Secretary of Defense Gordon England to
    support the Convention on behalf of the Bush administration.
        I am now a partner in the international and national security law
    practices at Arnold & Porter LLP and an Adjunct Senior Fellow in
    International and National Security Law at the Council on Foreign
    Relations. Although I am advising several clients on legal issues
    relating to the Law of the Sea Convention, I am appearing today in my
    personal capacity and not on behalf of any client.
        I served for 8 years as a senior legal official in the
    administration of President George W. Bush, and I was actively involved
    in the administration's consideration of the Convention for all 8
    years. During the first term, I served in the White House as Senior
    Associate Counsel to the President and Legal Adviser to the National
    Security Council from 2001-2005. I was in the White House Situation
    Room on September 11. Although I spent the vast majority of my time in
    this position focused on military, intelligence, and counterterrorism
    issues, I was also responsible for coordinating the Bush
    administration's treaty priorities and for reviewing all treaties
    transmitted to the Senate by the President.
        In the second term, I served as the Legal Adviser for the
    Department of State from 2005-2009 under Secretary of State Condoleezza
    Rice, after a confirmation hearing before this committee in March 2005
    and confirmation by the full Senate in April 2005. As Legal Adviser, I
    was the most senior international lawyer in the administration and was
    responsible, among other duties, for the negotiation and legal
    interpretation of treaties and for securing Senate approval and
    Presidential ratification of treaties supported by the administration.
    I also represented the United States before international tribunals.
        Today, I would like to explain why the Bush administration decided,
    after a careful review, to support the Law of the Sea Convention. I
    will also address some of the concerns that have been raised by critics
    of the Convention.
        Let me emphasize at the outset that I very much appreciate many of
    the concerns that have been raised about the Convention, including by
    Senators on this committee. I watched this committee's hearing on May
    23 and listened to the concerns that were raised. During the Bush
    administration, we carefully examined many of these same issues before
    allowing administration witnesses to testify in favor of the treaty
    before this committee in 2003 and 2007. Although some of the criticisms
    of the Convention are inaccurate or based on outdated information,
    other criticisms raise legitimate concerns that the Bush administration
    reviewed before we decided to support the Convention.
        When the Bush administration came into office in January 2001, we
    began a careful review of all of the treaties that had been submitted
    to the Senate by the Clinton administration to determine which treaties
    the Bush administration would support and would not support. The Bush
    administration did not support all of the treaties that had been
    supported by the prior administration. For example, the Bush
    administration did not support the Comprehensive Nuclear Test Ban
    Treaty, which had been strongly supported by the Clinton
    administration. We did not support the Kyoto Protocol, which had been
    signed by the Clinton administration. Many Bush administration
    officials were similarly skeptical of the Law of the Sea Convention
    because it was a multilateral treaty, and President Reagan had refused
    to sign it. However, after a year-long interagency review, the Bush
    administration concluded that the Convention was in the U.S. national
    interest and decided strongly to endorse the treaty. In February 2002,
    the administration submitted its first Treaty Priority List to this
    committee and listed the Law of the Sea Convention as a treaty for
    which there was an ``urgent need for Senate approval.''
        Let me emphasize that the Bush administration did not decide to
    support the Law of the Sea Convention out of a blind commitment to
    multilateral treaties or international organizations. No one has ever
    accused the Bush administration of an overabundance of enthusiasm for
    the United Nations or multilateralism. Indeed, the Bush administration
    was especially skeptical of the United Nations and many U.N. bodies,
    such as the Human Rights Council. And the Bush administration was
    especially committed to defending U.S. sovereignty and international
    freedom of action, particularly after September 11.
        The Bush administration decided to support the Law of the Sea
    Convention and to provide senior administration officials to testify in
    favor of the Convention only after weighing the Convention's benefits
    against its risks. We ultimately concluded that, on balance, the treaty
    was clearly in the U.S. national security, economic, and environmental
    interests.
        First and foremost, the Bush administration concluded that the
    Convention was beneficial to the United States military, especially
    during a time of armed conflict, because it provided clear treaty-based
    navigational rights for our Navy, Coast Guard, and aircraft. This was
    especially important for the Bush administration as we asked our
    military to take on numerous new missions after the 9/11 attacks during
    the Global War on Terrorism; several countries had challenged U.S.
    military activities in their territorial waters, and the administration
    concluded that it was vital to have a treaty-based legal right to
    support our freedom of movement and activities. We also concluded that
    joining the Convention would support our Proliferation Security
    Initiative.
        Second, the administration concluded that the Convention was in the
    U.S. commercial and economic interests because it codified U.S. rights
    to exploit the vast and valuable resources in the U.S. Exclusive
    Economic Zone--the largest in the world--and on its substantial
    Extended Continental Shelf (ECS), to lay and service submarine
    telecommunications cables, and to engage in mining in the deep seabed
    outside the sovereign jurisdiction of the United States. Later, as the
    melting Arctic ice opened up new commercial opportunities on the U.S.
    Extended Continental Shelf off of Alaska, the administration concluded
    that codifying U.S. rights in the Arctic and participating on the
    Continental Shelf Commission created by the Convention was even more
    important than before.
        Third, the administration concluded that joining the Convention
    supported important U.S. environmental interests in the health of the
    world's oceans and the living resources in them.
        The Bush administration reviewed the specific concerns that
    President Reagan had raised about the Convention, which focused on Part
    XI of the Convention, regarding deep seabed mining. We concluded that
    all of these concerns had been satisfactorily addressed by the
    amendments made to the Convention in 1994. For example, the provisions
    in the original Part XI requiring transfer of technology to less
    developed countries or mandating limits on deep seabed mining based on
    nonmarket factors had been eliminated. Moreover, the United States had
    been given a permanent seat on the Council of the International Seabed
    Authority and the power to veto all decisions of the International
    Seabed Authority relating to budgetary or financial matters. During our
    review, we noted that, in his January 1982 statement on ``U.S. Policy
    and the Law of the Sea,'' President Reagan had stated that the ``The
    United States remains committed to the multilateral treaty process for
    reaching agreement on the law of the sea.'' President Reagan had said
    that if U.S. concerns were addressed, ``my administration will support
    ratification.''
        We also noted that after 1994, all of the major industrialized
    countries--including the United Kingdom, Japan, Italy and Germany--had
    decided to join the Convention. These were the countries that had
    followed President Reagan's lead and had refused to sign the 1982
    Convention because they shared U.S. concerns about the Convention's
    deep seabed mining provisions, but then concluded that the 1994
    amendments had fixed the original problems with the treaty. China and
    Russia--two members of the U.N. Security Council that also jealously
    protect their sovereignty and freedom of action--had also joined the
    Convention in 1996 and 1997, respectively.
        As a result of its reviews of the Convention, the Bush
    administration did identify several concerns. The administration
    concluded, however, that these concerns could be adequately addressed
    through declarations and understandings that could be included with the
    Senate's Resolution of Advice and Consent to Ratification.
        A broad array of senior Bush administration political appointees
    from a variety of agencies testified in favor of the Convention, and
    wrote letters supporting the Convention, between 2003 and 2009. In
    October 2003, Assistant Secretary of State John Turner, Legal Adviser
    William H. Taft IV, and Deputy Assistant Secretary of Defense Mark
    Esper testified before this committee in favor of the treaty. Dr.
    Esper, who had previously served as chief of staff at the Heritage
    Foundation, testified on behalf of the Department of Defense that the
    administration had ``undertaken a review of the Law of the Sea
    Convention to ensure that it continues to meet U.S. needs in the
    current national security environment.'' Dr. Esper testified that the
    review ``did not reveal particular problems affecting current U.S.
    operations.'' He stated that the administration ``supports accession to
    the Convention because the Convention supports navigational rights
    critical to military operations.''
        Ambassador Taft testified on behalf of the Bush administration in
    favor of the Convention on several additional occasions before other
    Senate committees. Ambassador Taft had broad experience in defense
    matters, having served previously as General Counsel of the Department
    of Defense and later as Deputy Secretary of Defense and Acting
    Secretary of Defense during the Reagan administration, and as
    Ambassador to NATO in the administration of President George H.W. Bush.
        In addition, in June 2004, the Senate Select Committee on
    Intelligence held a closed hearing on the intelligence implications of
    U.S. accession to the Convention. The Director of Naval Intelligence,
    the Assistant Director of Central Intelligence for Collection, and
    Ambassador Taft all expressed support for the Convention and stated
    that the Convention would not affect the conduct of U.S. intelligence
    activities.
        In March 2004, this committee unanimously reported the Convention
    with a recommendation that the full Senate vote on it promptly. The
    full Senate, however, did not vote on the treaty in 2004.
        In 2007, the Bush administration stepped up its efforts to urge the
    Senate to approve the Convention. On February 8, 2007, then-Assistant
    to the President for National Security Affairs, Stephen Hadley, wrote
    to this committee to urge the Senate to approve the Convention ``as
    early as possible in the 110th Congress.'' Mr. Hadley stated that ``As
    the President believes, and many members of this administration and
    others have stated, the Convention protects and advances the national
    security, economic, and environmental interests of the United States.''
    On May 15, 2007, President Bush himself issued a statement on
    ``Advancing U.S. Interests in the World's Oceans,'' in which he said
    ``I urge the Senate to act favorably on U.S. accession to the United
    Nations Convention on the Law of the Sea Convention during this session
    of Congress.''
        In September 2007, senior administration witnesses again testified
    before this committee in favor of the Convention. This time, Deputy
    Secretary of State John Negroponte and Deputy Secretary of Defense (and
    former Secretary of the Navy) Gordon England testified. Secretary
    Negroponte had previously served as the Deputy National Security
    Adviser during the Reagan administration. I joined Deputy Secretary
    Negroponte, and Deputy Secretary England was joined by Admiral Patrick
    Walsh, the Vice Chief of Naval Operations, and Admiral Bruce MacDonald,
    the Judge Advocate General of the Navy.
        Shortly before the hearing, on September 17, 2007, then-Governor of
    Alaska Sarah Palin wrote to the committee to ``put my administration on
    record in support of the Convention as the predicate for asserting
    sovereign rights that will be of benefit to Alaska and the Nation.''
    Governor Palin noted that Senate ``ratification has been thwarted by a
    small group of Senators who are concerned about the perceived loss of
    U.S. sovereignty. I believe that quite the contrary is true.''
        Also before this committee's 2007 hearing, the Chairman of the
    Senate Intelligence Committee, Jay Rockefeller, and Vice Chairman
    Christopher Bond wrote a letter to this committee stating that ``we
    concur in the assessment of the Intelligence Community, the Department
    of Defense, and the Department of State that the Law of the Sea
    Convention neither regulates intelligence activities nor subjects
    disputes over intelligence activities to settlement procedures under
    the Convention. It is therefore our judgment that accession to the
    Convention will not adversely affect U.S. intelligence collection or
    other intelligence activities.''
        After the September 2007 hearing, Secretary of Homeland Security
    Michael Chertoff, Secretary of the Interior Dirk Kempthorne, and
    Secretary of Commerce Carlos Gutierrez all submitted letters to the
    committee strongly endorsing the Convention.
        In December 2007, this committee again favorably reported the
    treaty to the full Senate, but the full Senate again did not act on the
    treaty before the end of the 110th Congress.
        The Bush administration, however, continued to support Senate
    approval of
    the treaty. On January 9, 2009, President Bush signed National Security
    Presidential Directive 66, relating to ``Arctic Region Policy.'' In
    this directive, President Bush again called on the Senate promptly to
    act favorably on the Law of the Sea Convention.
        I would now like to address some of the concerns that have been
    raised by critics of the Law of the Sea Convention.
        Reliance on Customary International Law. Some have suggested that
    it is not necessary for the United States to join the Convention in
    order to enjoy its benefits because the main provisions of the treaty
    are now accepted as ``customary international law.'' According to this
    argument, the United States can enjoy international freedom of
    navigation and exploit the resources on the U.S. Extended Continental
    Shelf and on the deep seabed, without having to assume any obligations
    ourselves under the treaty, because these provisions have become
    accepted as customary international law.
        Reliance on customary international law to protect U.S. interests
    is insufficient for many reasons:
        First, asserting customary international law does not give the
    United States important rights that are available only to parties to
    the Convention. For example, the U.S. may not take our permanent seat
    on the Council of the International Seabed Authority, or have a U.S.
    national elected to the Continental Shelf Commission, unless we are
    party to the Convention. These bodies are currently making important
    decisions that affect our interests without our participation. For
    example, the Continental Shelf Commission is reviewing the claims of
    Russia and other Arctic coastal states to their Continental Shelves in
    the Arctic, and we have no say in its decisions. Similarly, the Council
    of the ISA is adopting rules relating to deep seabed mining without
    U.S. input. And the U.S. may not sponsor U.S. companies, such as
    Lockheed, to engage in mining on the deep seabed.
        Second, it is not at all clear that all of the substantive
    provisions of the Convention are, in fact, recognized as customary
    international law. It could be extremely difficult for the U.S. to
    establish that there was general agreement by countries around the
    world that a country has a legal right to exploit the resources on its
    Extended Continental Shelf or on the deep seabed, without joining the
    Convention. Similarly, contrary to the claims of some, the U.S. does
    not have a clear right to its Extended Continental Shelf under the 1958
    Convention on the Continental Shelf; the lack of clarity in the 1958
    Convention is a principal reason why President Nixon endorsed the
    concept of a new Law of the Sea Convention.
        Third, U.S. companies have been unwilling to begin costly
    exploration and extraction activities in reliance on theoretical and
    untested legal arguments that have not been accepted by other countries
    and that are flatly contrary to the terms of Law of the Sea Convention.
    Companies instead want the clear legal certainty provided by the
    Convention before making investments that could run into the billions
    of dollars. Critics of the Convention who are concerned about the
    possibility of international litigation should be much more concerned
    about the possibility of lawsuits against the United States or U.S.
    companies if the United States were to engage in resource extraction on
    the U.S. Extended Continental Shelf or on the deep seabed contrary to
    the terms of the Convention, than about possible environmental claims
    against the United States if the U.S. were to join the Convention.
    Moreover, a U.S. company that initiates deep seabed mining outside the
    Convention risks having a foreign company sponsored by a country that
    is party to the Convention jump on its claim after it has proven to be
    profitable. No U.S. company would want to take that legal risk.
        Fourth, relying on customary international law does not guarantee
    that even the benefits we do currently enjoy are secure over the long
    term. Customary international law is not the most solid basis upon
    which to protect and assert U.S. navigational and economic rights. It
    is not universally accepted and may change over time based on State
    practice. We therefore cannot assume that customary law will always
    continue to mirror the Convention, and we need to lock in the
    Convention's rights as a matter of treaty law. Indeed, it is surprising
    that opponents of the Convention who are usually critical of the
    haziness and unpredictability of ``customary international law'' should
    urge the U.S. military and U.S. businesses to rely on it to protect
    their essential interests.
        U.N. ``Taxes''/Royalty Payments. Some have objected that the U.S.
    would be obligated to pay fees to the International Seabed Authority--
    which some have inaccurately called ``U.N. taxes''--if the U.S. were to
    join the Convention and allow resource development on its Extended
    Continental Shelf. Some have suggested that these fees could result in
    the loss of billions of dollars to the U.S. Treasury. The Bush
    administration carefully considered these concerns and concluded that
    the licensing and fee structure established by the Convention was
    acceptable.
        First, the fees are minimal in comparison to the enormous economic
    value that would be received, and the jobs that would be created, by
    the United States if its industry were to engage in oil, gas, and
    mineral development on the U.S. Extended Continental Shelf in the
    Arctic. The U.S. would be required to make no payments for the first 5
    years of production at any site, and then to pay a fee of 1 percent per
    year starting in year 6, up to a maximum of 7 percent in year 12.
    Assuming the U.S. Government imposed, for example, a royalty fee of
    approximately 18 percent on the value of production on the U.S.
    Extended Continental Shelf, that would be 18 percent more than the U.S.
    would gain if we stayed outside the Convention. In other words, joining
    the Convention would attract substantial investment, and produce
    substantial revenues for the Treasury, that would not otherwise be
    produced. So, even when the Convention payment is at its highest rate
    of 7 percent, the U.S. Treasury would still be 11 percent better off
    with respect to each production site than it would be if the U.S. does
    not join the Convention. This would be an enormous benefit--not a
    loss--to the U.S. budget.
        Second, these fees would only have to be paid by the United States
    if there is actually production on the U.S. Extended Continental Shelf.
        Third, these fees were negotiated by U.S. negotiators in
    consultation with experts from the U.S. oil and gas industry, who
    deemed them to be acceptable.
        Fourth, all of the Western industrialized countries, including our
    major allies, as well as Russia and China, have concluded that these
    fees are acceptable and have joined the treaty. If these fees would
    actually cause the economic woes claimed by critics, then certainly
    these other countries would not have been willing to agree to pay them.
    Instead, most of these countries are already busily surveying and
    staking claims to their Extended Continental Shelves so that their oil,
    gas, and mining companies can exploit these resources. For example,
    Norway--which already has a sovereign wealth fund worth $700 billion,
    all of which has been derived from Arctic oil and gas profits--is
    preparing to make a claim to the oil and gas on its Extended
    Continental Shelf in the Arctic. Russia, Canada, and Denmark are all
    preparing to make similar claims in the Arctic using the provisions of
    the Convention, and they have agreed to pay royalties if they exploit
    the resources on their Extended Continental Shelves.
        Finally, royalty fees would not be paid to the United Nations. They
    would be paid through the International Seabed Authority, and back to
    the Parties to the Convention under a distribution formula developed by
    the Seabed Authority's Council, where the U.S. would have a permanent
    seat and a decisive voice on how fees would be spent.
        International Seabed Authority. Some have objected to the creation
    of, or to having the U.S. join, the International Seabed Authority
    created by the Convention. Critics claim that the ISA is a large U.N.
    bureaucracy that is hostile to American interests, that includes
    undemocratic governments, that would regulate U.S. activities over or
    under the world's oceans, and that would distribute money to rogue
    regimes. These claims are inaccurate or exaggerated.
        First, the ISA is not part of the United Nations. It is an
    independent body that is not part of the U.N. Moreover, the ISA is very
    small. It has fewer than 50 employees.
        Second, the ISA has already been in operation for 18 years. The
    United States cannot prevent its coming into existence or its
    operations by not joining the Convention.
        Third, the U.S. is guaranteed a permanent seat on the Council of
    the ISA, with veto power over financial and substantive decisions of
    the ISA, but only if the U.S. joins the Convention. If critics are
    concerned about the potential actions of the ISA (including the
    potential distribution of fees to rogue states), the most effective way
    to restrict its activities would be for the U.S. to become party to the
    Convention and to exercise its veto rights over Council decisions.
    Indeed, if Russia, China, and other countries begin to pay fees to the
    ISA, the U.S. would be able to affect how these fees are distributed if
    it takes its guaranteed seat on the ISA Council.
        Fourth, the ISA has authority only to regulate mining activities on
    the deep seabed beyond the jurisdiction of any country. It has no
    authority to regulate activities on the deep seabed unrelated to
    mining, or with respect to resource development on the Continental
    Shelf of the U.S. or other countries. Nor does the ISA have authority
    over activities of the United States or other countries in the world's
    oceans.
        Finally, while the United States participates in numerous
    international organizations in which undemocratic countries are also
    members and even hold leadership positions, the International Seabed
    Authority is the only international organization where the U.S. alone
    is given a permanent seat and veto authority over its activities.
        Environmental Obligations/Environmental Disputes. Some have argued
    that the Convention might obligate the U.S. to comply with
    international environmental agreements (such as the Kyoto Protocol) to
    which the U.S. is not a party, or subject the U.S. to mandatory dispute
    resolution for marine pollution (such as atmospheric pollution or
    pollution from land-based sources). I share the concerns of some
    critics of the Convention about the goals of some groups to embroil the
    U.S. in international litigation. As the State Department Legal Adviser
    during the Bush administration, I witnessed first-hand the efforts of
    many groups hostile to U.S. counterterrorism actions to wage
    ``lawfare'' against the United States. In my view, however, joining the
    Law of the Sea Convention does not subject the United States to
    significant new legal risks, especially when compared to the benefits
    of joining the Convention.
        The terms of the Convention do not require Parties to comply with
    other international environmental treaties. With respect to land-based
    sources and pollution through the atmosphere, Part XII, Section 5 of
    the Convention requires Parties at most to adopt laws and regulations
    to prevent, reduce and control marine pollution, but in doing so,
    parties are required only to ``tak[e] into account internationally
    agreed rules, standards and recommended practices and procedures.''
    This does not impose an obligation to comply with Kyoto or any other
    environmental treaty or standard, including treaties to which the U.S.
    is not a party.
        In addition, the U.S. would not be subject to dispute resolution
    for allegedly violating the Kyoto protocol or any other environmental
    treaty, including agreements governing pollution from land-based
    sources. The Convention's dispute settlement system applies only to
    disputes ``concerning the interpretation or application'' of the
    Convention itself, not to the alleged violation of other treaties.
    Articles 297 and 298 of the Convention further exclude certain
    potentially sensitive disputes from dispute settlement.
        Finally, as I have noted previously, those who are rightly
    concerned about international litigation against the United States
    should be much more concerned about subjecting the United States and
    U.S. businesses to international claims if the United States were to
    try to claim the resources on its Extended Continental Shelf or on the
    deep seabed without becoming party to the Law of the Sea Convention. In
    my view, the risk of environmental litigation against the United States
    if it joins the Convention is low. The risk of international litigation
    against the United States if it were unilaterally to claim the
    resources on its Extended Continental Shelf or on the deep seabed,
    without becoming party to the Convention, is much higher.
        In closing, I want to focus on the bigger picture. In deciding
    whether to accede to the Law of the Sea Convention, as with any treaty,
    the question for the President and the Senate is whether the treaty, on
    balance, is in the national interest of the United States. Do the
    advantages of the treaty outweigh its disadvantages? Can the
    disadvantages or risks be mitigated? Can the United States achieve its
    objectives in other ways?
        No treaty the United States has ever joined has been 100 percent
    perfect from our point of view. And yet the U.S. Senate has approved
    and the United States has become party to thousands of treaties,
    including hundreds of multilateral treaties, over its history, which
    have benefited the United States greatly. Many of these treaties have
    required the United States to give up theoretical rights that we might
    otherwise have tried to assert, in order to persuade other countries to
    do the same. Many of these treaties have dispute resolution mechanisms
    in which the dispute bodies can rule, and even have ruled, against the
    United States, but they have also ruled in favor of the United States.
    This is all in the nature of treaties. Over the course of our history,
    numerous Presidents and Senators have concluded that entering into
    treaties with other countries is not a sign of weakness, but rather the
    most effective way for the United States to get other countries to do
    what we want them to do.
        Through dogged diplomacy and the insistence of President Reagan,
    the United States has been able to achieve all of its important
    objectives in the original 1982 Convention and the 1994 amendments. The
    Bush administration concluded that the Convention, as amended, strongly
    serves U.S. military, economic and commercial, and environmental
    interests. We concluded that the concerns we did identify with the
    Convention could be addressed in our instrument of ratification. And we
    concluded that important U.S. objectives--especially our goals to
    develop the valuable resources on our Extended Continental Shelf in the
    Arctic and on the deep seabed and to participate in the Convention's
    decisionmaking bodies--could not be achieved through other means, for
    example, through reliance on customary international law alone. For
    these reasons, President Bush decided to support the Law of the Sea
    Convention and urged the Senate to approve it rapidly.
        Mr. Chairman and members of the committee, thank you for this
    opportunity to appear before you today.

        The Chairman. Thank you very much, Secretary Bellinger.
        Mr. Groves.

     STATEMENT OF STEVEN GROVES, BERNARD AND BARBARA LOMAS FELLOW,
                THE HERITAGE FOUNDATION, WASHINGTON, DC

        Mr. Groves. Thank you, Mr. Chairman, for inviting me to
    testify this afternoon regarding U.S. accession to the United
    Nations Convention on the Law of the Sea.
        At a recent hearing, a prominent treaty proponent stated
    that opposition to UNCLOS is based on mythology and ideology.
    At the outset, allow me to ensure you that my concerns and the
    concerns of many others are not based in mythology or on strict
    adherence to ideology without regard for facts or evidence.
        To the extent that treaty skeptics base their opposition on
    ideology, it is an ideology that places the protection of
    American sovereignty over the advancement of narrow commercial
    interests and over a misplaced desire to please the
    international community. Joining UNCLOS would affect our
    sovereignty and national interests in several ways.
        It would expose the United States to adverse judgments from
    international tribunals from which there are no appeals. It
    would obligate the United States to make an open-ended
    commitment to transfer an incalculable amount of royalty
    revenue to an international organization for redistribution to
    the developing world. And it would require the United States to
    seek permission to mine the deep seabed from a council of
    foreign countries that includes Sudan.
        Ceding American sovereignty should not be done lightly
    since it was achieved and has been preserved through great
    sacrifice. When the Founding Fathers wrested sovereignty away
    from Great Britain and declared our independence, they stated
    their reasons for doing so. Among those reasons were the
    imposition of taxes from afar and for transporting us beyond
    the seas to be tried for pretended offenses.
        More than 230 years later, the Senate is considering a
    treaty that would siphon off royalty revenue that belongs to
    the American people, but instead will be remitted to Kingston,
    Jamaica, to be spent in other countries. The treaty would also
    transport the United States to tribunals in Germany and the
    Netherlands to answer for pretended offenses.
        The Founders had a deep respect for the law of nations and
    for the opinions of mankind, but I doubt that they could fathom
    that the United States would subject itself to such an
    arrangement.
        But opposition to UNCLOS is, of course, based on more than
    ideology. Our skepticism is based on the available evidence,
    longstanding U.S. law and policy, customary international law,
    U.S. experiences in other international organizations, U.S.
    experiences in international tribunals, the provisions of the
    Convention itself, and, of course, the facts.
        First, in regard to navigational rights and freedoms, we
    know the following facts. For more than 230 years, the U.S.
    Navy has successfully protected our maritime interests,
    regardless of the fact that the United States has not joined
    the Convention.
        The Navy has never been successfully denied access to any
    international strait, archipelagic water, or territorial sea.
    Indeed, at the hearing on May 23, General Dempsey, the Chairman
    of the Joint Chiefs of Staff, admitted that failure to join
    UNCLOS would not compromise our ability to project force around
    the world.
        In regard to developing the resources of the Extended
    Continental Shelf, we know the following facts. The United
    States currently exercises full jurisdiction and control over
    its Extended Continental Shelf and has successfully demarcated
    its limits in the Gulf of Mexico and the Arctic Ocean through
    treaties with Mexico and Russia.
        Since August 2001, the United States has leased blocks of
    the Extended Continental Shelf in the Gulf of Mexico for
    development to United States companies, such as Chevron, as
    well as companies from Brazil, Denmark, France, Italy, Norway,
    and the United Kingdom.
        Regarding the transfer of royalties to the International
    Seabed Authority under article 82, we know the following facts.
    This committee cannot know the amount of royalty revenue that
    the U.S. Treasury will forgo because no study has been
    conducted to determine the value of the hydrocarbon resources
    of the vast U.S. Extended Continental Shelf.
        As such, if the United States accedes to the Convention, it
    will be making an open-ended commitment to transfer an
    incalculable sum of royalty revenue to the authority for
    redistribution to developing and landlocked countries.
        Regarding the Convention's mandatory dispute resolution
    provisions, we know the following facts. That acceding to
    UNCLOS would expose the United States to baseless international
    lawsuits. That environmental activists, legal academics, and at
    least one member of the Convention have contemplated initiating
    climate change litigation against the United States. And that
    adverse judgments issued by UNCLOS tribunals are final, not
    subject to appeal, and are enforceable in the United States.
        Finally, in regard to U.S. rights to mine the deep seabed,
    we know the following facts. That pursuant to U.S. law,
    longstanding U.S. policy, and customary international law, U.S.
    persons and corporations have the right to explore and exploit
    the deep seabed, regardless of whether or not the United States
    is a party to UNCLOS.
        These are the facts. And collectively, they indicate that
    there are real costs and foreseeable risks that the United
    States will undertake if it joins the Convention.
        Now, proponents of accession claim that there are no costs
    whatsoever, that the United States will only enjoy benefits
    from membership, and that if only the United States would join
    the Convention, everything would work out just fine. In light
    of the facts, I believe that it is the proponents' claims that
    are based in mythology and on blind faith.
        Thank you again, Mr. Chairman, for inviting me to testify
    today, and I look forward to any questions that you have.
        [The prepared statement of Mr. Groves follows:]

                      Prepared statement of Steven Groves

        Mr. Chairman and members of the committee, thank you for inviting
    me to testify before you today regarding the United Nations Convention
    on the Law of the Sea (UNCLOS).
        UNCLOS, like any complex treaty or piece of legislation, should be
    thoroughly examined by the Committee to determine its costs as well as
    its benefits. At bottom, the disagreement between those who favor U.S.
    accession to the Convention and those who oppose boils down to a
    disagreement regarding whether the benefits of membership are
    outweighed by the costs.
        By its nature, no treaty comes without costs. As with comprehensive
    legislation, there are often provisions of a treaty that are
    uncontroversial and attractive in themselves. Likewise, there are other
    provisions that are controversial and divisive. This rule generally
    holds true for all treaties, including those involving arms control,
    human rights, the environment, international courts, and others. UNCLOS
    is no exception.
        However, unlike most other treaties, the terms of UNCLOS prevent
    the United States from exempting itself from its more controversial
    provisions. Specifically, pursuant to article 309, UNCLOS forbids
    states parties from submitting reservations or exceptions that would
    otherwise allow the United States to disregard provisions that do not
    comport with the U.S. Constitution or longstanding U.S. law and policy.
        My testimony today focuses on the costs associated with U.S.
    accession to UNCLOS and whether the benefits of accession are such that
    the costs are outweighed. The costs of accession are not imaginary. Nor
    is opposition to U.S. accession based on purist ideology, but rather on
    the available evidence, current U.S. law and policy, customary
    international law, U.S. experience in other international
    organizations, the U.S. record in international tribunals, and of
    course the provisions of the convention itself.
        In summary:

       If the U.S. accedes to UNCLOS, it will be required by
            article 82 to transfer royalties generated from hydrocarbon
            production of the U.S. ``Extended Continental Shelf'' (ECS) to
            the International Seabed Authority for redistribution to
            developing and landlocked countries. Since the value of the
            hydrocarbon resources lying beneath the U.S. ECS may be worth
            trillions of dollars, the amount of royalties that the U.S.
            Treasury would be required to transfer to the Authority would
            be substantial. In any event, U.S. accession would amount to an
            open-ended commitment to forgo an incalculable amount of
            royalty revenue for no appreciable benefit.
       U.S. accession to UNCLOS is not necessary to develop or
            secure title to the hydrocarbon resources of the ECS. Under
            international law and longstanding U.S. policy and practice,
            the U.S. has established full jurisdiction and control over its
            ECS and is in the process of delimiting its ECS boundaries on a
            worldwide basis. The successful delimitation of areas of U.S.
            ECS and subsequent leasing of those areas in the Gulf of Mexico
            to U.S. and foreign oil exploration companies demonstrate that
            the United States does not need to achieve universal
            international recognition of its ECS to provide ``certainty''
            to oil exploration companies.
       Proponents of U.S. accession to UNCLOS contend that by
            failing to join the Convention the United States is forbidden
            from mining the deep seabed--the ocean floor lying beyond the
            ECS and designated as ``the Area.'' However, no legal barriers
            prevent U.S. access, exploration, and exploitation of the
            resources of the deep seabed. The United States has long held
            that U.S. corporations and citizens have the right to develop
            the resources of the deep seabed and may do so whether or not
            the United States accedes to UNCLOS.
       U.S. accession to UNCLOS would expose the U.S. to lawsuits
            regarding virtually any maritime activity, such as alleged
            pollution of the marine environment from a land-based source or
            through the atmosphere. Regardless of the lack of merits of
            such a case, the U.S. would be forced to defend itself against
            every such lawsuit at great expense to U.S. taxpayers. Any
            adverse judgment rendered by an UNCLOS tribunal would be final,
            could not be appealed, and would be enforceable in U.S.
            territory.
       Finally, it is not essential or even necessary for the
            United States to accede to UNCLOS to protect and preserve its
            navigational rights and freedoms. The navigational and maritime
            boundary provisions of the Convention either codify customary
            international law that existed well before the Convention was
            adopted in 1982 or ``refine and elaborate'' navigational rights
            and regimes that are now widely accepted as binding
            international law.

                     ARTICLE 82 AND THE COSTS OF COMPLIANCE

        Proponents of U.S. accession to UNCLOS extol the supposed benefits
    of joining the Convention but are reluctant to discuss its very real
    costs.
        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.
        Article 82 of UNCLOS requires member states to ``share'' a portion
    of their royalty revenue for all oil, gas, or other mineral resources
    extracted from the ECS:

              The coastal State shall make payments or contributions in
            kind in respect of the exploitation of the nonliving resources
            of the Continental Shelf beyond 200 nautical miles from the
            baselines from which the breadth of the territorial sea is
            measured.

        These payments are to be made to the Authority on an annual basis
    by the states parties, and are based on the value of production at the
    particular site--in most cases, an offshore drilling platform
    extracting oil or natural gas from the ECS. According to a recent study
    conducted for the Authority, such payments are considered
    ``international royalties.''
        The potential size of the U.S. ECS worldwide is significant. The
    value of the hydrocarbon deposits lying beneath the U.S. ECS is
    difficult to estimate, but it is likely substantial. According to the
    U.S. Extended Continental Shelf Task Force, ``Given the size of the
    U.S. Continental Shelf, the resources we might find there may be worth
    many billions if not trillions of dollars.''
        Member states begin to pay these ``international royalties'' during
    the 6th year of production at the drilling site. Starting with the 6th
    year of production, UNCLOS members must pay 1 percent of the value of
    the total production at that site to the Authority. Thereafter, the
    royalty rate increases in increments of 1 percentage point per year
    until the 12th year of production, when it reaches 7 percent. The rate
    remains at 7 percent until production ceases at the site.
        As such, if the United States accedes to UNCLOS it would be
    obligated to transfer to the Authority a considerable portion of the
    royalties generated on the U.S. ECS that would otherwise be deposited
    in the U.S. Treasury for the benefit of the American people. For
    example, the royalty rate of the majority of blocks currently under an
    active lease on the U.S. ECS is 12.5 percent. Beginning in the 12th
    year of production on such an ECS block the U.S. would be required to
    transfer 7 percent--more than half--of its royalty revenue to the
    Authority and do so each year until production ends on that lease. The
    remaining 5.5 percent of the royalty would be retained by the Treasury.
        Given that resources of the U.S. ECS ``may be worth many billions
    if not trillions of dollars,'' this would amount to a substantial sum
    over time.

        But there is the rub. There has been no comprehensive study to
    determine the value of the oil and natural gas that lies beneath the
    U.S. ECS. The total area of the U.S. ECS is reportedly twice the size
    of California and stretches from the U.S. east coast to the South
    Pacific and up to the Arctic Ocean. How can this committee be expected
    to conduct a proper assessment of the financial impact of U.S.
    accession to UNCLOS if the value of the natural resources on the U.S.
    ECS is unknown? If the value of U.S. hydrocarbons on the ECS is unknown
    then so too is the amount of royalty revenue that the United States
    will ultimately forgo if it accedes to the Convention.
        As such, by acceding to UNCLOS the United States will be making an
    open-ended international commitment to transfer an indefinite sum of
    royalty revenue (indefinite, but likely in the tens if not hundreds of
    billions of dollars) to the Authority for redistribution to developing
    and landlocked nations.

         DETERMINING THE EXTENT OF THE U.S. EXTENDED CONTINENTAL SHELF

        Some proponents of U.S. accession to UNCLOS claim that U.S. oil
    companies cannot achieve the ``certainty'' they require to develop the
    hydrocarbon resources on the ECS unless the United States accedes to
    the Convention and receives the approval of the Commission on the
    Limits of the Continental Shelf--an international committee of
    geologists and hydrographers located at U.N. headquarters in New York
    City. For example, in 2007, former Deputy Secretary of State John
    Negroponte stated, ``In the absence of such international recognition
    and legal certainty, U.S. companies are unlikely to secure the
    necessary financing and insurance to exploit energy resources on the
    extended shelf.''
        However, pursuant to longstanding law and policy the United States
    already enjoys and exercises full jurisdiction and control over its
    ECS. In addition to the 1945 Truman Proclamation, in which President
    Harry S Truman declared that the United States ``regards the natural
    resources of the subsoil and seabed of the Continental Shelf beneath
    the high seas but contiguous to the coasts of the United States as
    appertaining to the United States, subject to its jurisdiction and
    control,'' in 1953 Congress passed the Outer Continental Shelf Lands
    Act, which defined the outer Continental Shelf as ``all submerged lands
    lying seaward and outside of the area of lands beneath navigable waters
    . . . and of which the subsoil and seabed appertain to the United
    States and are subject to its jurisdiction and control.''
        After the adoption of UNCLOS in 1982, the U.S. affirmed its
    jurisdiction over its entire Continental Shelf, including the ECS.
    Specifically, in November 1987 a U.S. Government interagency group
    issued a policy statement declaring its intent to delimit the U.S. ECS
    in conformity with article 76 of UNCLOS (which provides a formula for
    measuring the extent of a coastal state's ECS). That statement read, in
    pertinent part, ``The United States has exercised and shall continue to
    exercise jurisdiction over its Continental Shelf in accordance with and
    to the full extent permitted by international law as reflected in
    Article 76, paragraphs (1), (2) and (3).''
        Indeed, the United States has already demarcated areas of its ECS
    in the Gulf of Mexico, the Bering Sea, and the Arctic Ocean via
    bilateral treaties with Mexico and Russia. In the Gulf, for example,
    the U.S. and Mexico have negotiated a series of treaties to delimit
    their maritime and Continental Shelf boundaries, including areas of
    abutting ECS:

       In November 1970, the U.S. and Mexico signed a treaty to
            maintain the Rio Grande and Colorado River as the agreed
            international boundary between the two nations. As part of the
            treaty, the two nations demarcated their maritime boundaries in
            the Gulf of Mexico and the Pacific Ocean out to 12 nm.
       In May 1978, building on the 1970 treaty, the two nations
            signed a treaty delimiting their maritime boundaries in the
            Gulf and in the Pacific out to 200 nm. The treaty demarcated
            boundary lines in the Gulf where their respective 200 nm
            Exclusive Economic Zones (EEZ) abutted, leaving a ``doughnut
            hole'' of approximately 5,092 square nm (now known as the
            ``western gap'') where their 200 nm boundary lines did not
            meet. A second doughnut hole was created in the eastern Gulf
            where the EEZ of the U.S., Mexico, and Cuba fail to intersect
            (the ``eastern gap'').
       In June 2000, the U.S. and Mexico signed a treaty dividing
            the area of ECS within the western gap. Of the 5,092 square nm
            of ECS in the western gap, 1,913 (38 percent) went to the
            United States and 3,179 (62 percent) went to Mexico. The treaty
            established a drilling moratorium over a narrow strip along the
            boundary within the western gap due to the possibility that
            transboundary hydrocarbon reservoirs are located along the
            boundary.
       In February 2012, the U.S. and Mexico signed a treaty
            regarding the exploitation of transboundary reservoirs located
            along the Continental Shelf boundary shared by the two nations
            in the Gulf, including along the ECS boundary within the
            western gap. The treaty has not yet been transmitted to the
            U.S. Senate for its advice and consent.

        Collectively, these treaties between the United States and Mexico,
    particularly the June 2000 ECS delimitation treaty, demarcated an area
    of U.S. ECS--the 1,913 square nm of submerged Continental Shelf in the
    northern portion of the western gap. There is no evidence that the
    ``international community'' does not, or will not, recognize the ECS in
    the northern portion of the western gap and its resources as being
    subject to the jurisdiction and control of the United States.

        The United States exercises jurisdiction and control over its ECS
    as evidenced by the fact that the Department of the Interior has made
    the western gap in the Gulf of Mexico available for hydrocarbon
    development since August 2001. Specifically, the Bureau of Ocean Energy
    Management (BOEM) offered the northern portion of the western gap for
    lease almost immediately after the 2000 U.S.-Mexico ECS delimitation
    treaty was ratified. That treaty entered into force on January 17,
    2001. Seven months later, on August 22, BOEM offered the area of U.S.
    ECS in the western gap in Lease Sale 180. In that lease sale, three
    U.S. companies (Texaco, Hess, and Burlington Resources Offshore) and
    one foreign company (Petrobras) submitted bids totaling more than $2
    million for seven lease blocks in the western gap.
        BOEM has offered western gap ECS blocks in 19 lease sales between
    2001 and 2010. Seven U.S. companies (Burlington, Chevron, Devon Energy,
    Hess, Mariner Energy, NARCA Corporation, and Texaco) submitted bids to
    lease ECS blocks in the western gap. Five foreign companies--BP, Eni
    Petroleum (Italy), Maersk Oil (Denmark), Petrobras, and Total
    (France)--also bid on western gap ECS blocks during those sales. BOEM
    collected more than $47 million in bonus bids in connection with lease
    sales on those ECS blocks. Of the approximate 320 blocks located in
    whole or in part on the western gap ECS, 65 (approximately 20 percent)
    are currently held under active leases by nine U.S. and foreign oil
    exploration companies.

        The successful delimitation and subsequent leasing of ECS areas in
    the Gulf of Mexico demonstrate that the United States does not need to
    achieve universal international recognition of its ECS. The United
    States identified and demarcated areas of ECS in the western gap in
    cooperation with the only other relevant nation, Mexico, and that area
    was subsequently offered for development to U.S. and foreign oil and
    gas companies. All of this was achieved without U.S. accession to
    UNCLOS or the approval of the Commission on the Limits of the
    Continental Shelf.
        Even though approximately 20 percent of the only area of U.S. ECS
    that has been made available for lease by BOEM is currently under an
    active lease, the U.S. oil and gas industry has supported and will
    likely continue to support U.S. accession to UNCLOS in order to achieve
    even greater ``certainty.'' That is their prerogative, of course, and
    achieving a maximum amount of certainty is a legitimate and desirable
    goal for a capital-intensive commercial enterprise. However, the
    successful delimitation of the ECS in the western gap and the U.S.
    Government's continuing lease sales of ECS blocks would appear to have
    provided the certainty necessary for several major U.S. and foreign oil
    exploration companies to secure leases for the development of the U.S.
    ECS.

                      U.S. RIGHTS TO DEEP SEABED MINERALS

        Proponents of U.S. accession to UNCLOS contend that by failing to
    join the Convention the United States is forbidden from mining the deep
    seabed--the ocean floor lying beyond the ECS and designated as ``the
    Area.'' However, no legal barriers block U.S. access, exploration, and
    exploitation of the resources of the deep seabed. The United States has
    long held that U.S. corporations and citizens have the right to explore
    and exploit the resources of the deep seabed and may do so whether or
    not the United States accedes to UNCLOS.
        The United States made its position on its right to engage in deep
    seabed mining very clear in March 1983 during the final days of the
    Third U.N. Conference on the Law of the Sea. Specifically, in response
    to statements from other U.N. member states that UNCLOS nonparties
    would not have the right to engage in deep seabed mining, the U.S.
    stated the following:

              Some speakers asserted that existing principles of
            international law, or the Convention, prohibit any State,
            including a nonparty, from exploring for and exploiting the
            mineral resources of the deep sea-bed except in accordance with
            the Convention. The United States does not believe that such
            assertions have any merit. The deep sea-bed mining regime of
            the Convention adopted by the Conference is purely contractual
            in character. The United States and other nonparties do not
            incur the obligations provided for therein to which they
            object.
              Article 137 of the Convention [forbidding claims of
            sovereignty over the deep sea-bed or its resources] may not as
            a matter of law prohibit sea-bed mining activities by
            nonparties to the Convention; nor may it relieve a party from
            the duty to respect the exercise of high seas freedoms,
            including the exploration for and exploitation of deep sea-bed
            minerals, by nonparties. Mining of the sea-bed is a lawful use
            of the high seas open to all States . . . . The practice of the
            United States and the other States principally interested in
            sea-bed mining makes it clear that sea-bed mining continues to
            be a lawful use of the high seas within the traditional meaning
            of the freedom of the high seas.

        The U.S. legal position set forth in 1983 on deep seabed mining
    remains the same today. According to the ``Restatement of the Law,
    Third, of the Foreign Relations Law of the United States,'' the United
    States may engage in deep seabed mining activities even if it does not
    accede to UNCLOS, provided that such activities are conducted without
    claiming sovereignty over any part of the deep seabed and as long as
    the mining activities are conducted with due regard to the rights of
    other nations to engage in mining. As related by the Restatement,
    ``like the fish of the high seas the minerals of the deep sea-bed are
    open to anyone to take.''
        The U.S. position is also reflected in the Deep Seabed Hard Mineral
    Resources Act of 1980, which Congress enacted 2 years before the
    adoption of UNCLOS to provide a framework for U.S. corporations to
    conduct deep seabed mining until such time as the United States joins
    an acceptable convention on the law of the sea. The DSHMRA states the
    U.S. position on the legality of deep seabed mining as follows:

            [I]t is the legal opinion of the United States that exploration
            for and commercial recovery of hard mineral resources of the
            deep seabed are freedoms of the high seas subject to a duty of
            reasonable regard to the interests of other states in their
            exercise of those and other freedoms recognized by general
            principles of international law.

        In sum, the long-held position of the United States, both
    domestically and internationally, is that U.S. citizens and
    corporations have the right to explore and exploit the deep seabed
    regardless of whether or not the United States is a party to UNCLOS.
                  exposure to baseless international lawsuits
              ``The possibility that a small island state, or another
            injured party, would bring a liability claim against states
            responsible for climate change no longer is a topic for fiction
            or a theoretical prospect. There is a rise in plans for
            litigation worldwide for consequences of global warming.''--
            International law professors Michael Faure and Andre
            Nollkaemper

        Part XV of UNCLOS addresses the settlement of maritime disputes
    between parties to the Convention. Part XV contemplates that UNCLOS
    states parties, in accordance with the U.N. Charter, will attempt to
    resolve maritime disputes peacefully without resort to the Convention's
    compulsory procedures. When a dispute arises between two UNCLOS
    members, they are obligated to ``proceed expeditiously to an exchange
    of views regarding its settlement by negotiation or other peaceful
    means.'' States parties may also resort to a nonbinding ``conciliation
    procedure'' under Annex V of the Convention.
        But if a maritime dispute cannot be settled in a voluntary manner,
    any UNCLOS state party may compel another state party to defend itself
    in one of four forums: the International Tribunal for the Law of the
    Sea (ITLOS), the International Court of Justice (ICJ), an arbitral
    tribunal organized under Annex VII, or a ``special'' arbitral tribunal
    organized under Annex VIII. Within ITLOS, a special tribunal, the
    Seabed Disputes Chamber (SDC), was established to resolve disputes
    about activities on the seabed floor beyond the limits of national
    jurisdiction, known as ``the Area.''
        Acceding to UNCLOS would expose the U.S. to lawsuits on virtually
    any maritime activity, such as alleged pollution of the marine
    environment from a land-based source or through the atmosphere.
    Regardless of the merits, the U.S. would be forced to defend itself
    against every such lawsuit at great expense to U.S. taxpayers. Any
    judgment rendered by an UNCLOS tribunal would be final, could not be
    appealed, and would be enforceable in U.S. territory.
        Unlike a resolution passed by the U.N. General Assembly or a
    recommendation made by a human rights treaty committee, judgments
    issued by UNCLOS tribunals are legally enforceable upon members of the
    Convention. Article 296 of the Convention, titled ``Finality and
    binding force of decisions,'' states, ``Any decision rendered by a
    court or tribunal having jurisdiction under this section shall be final
    and shall be complied with by all the parties to the dispute.''
        Judgments made by UNCLOS tribunals are enforceable in the same
    manner that a judgment from a U.S. domestic court would be. For
    example, Article 39 of Annex VI states that ``The decisions of the
    [Seabed Disputes] Chamber shall be enforceable in the territories of
    the States Parties in the same manner as judgments or orders of the
    highest court of the State Party in whose territory the enforcement is
    sought.'' In other words, if the United States accedes to the
    Convention, the U.S. Government will be required to enforce and comply
    with SDC judgments in the same manner as it would enforce and comply
    with a judgment of the U.S. Supreme Court. In other words, the U.S.
    court system will serve not as an avenue for appeal from UNCLOS
    tribunals, but rather as an enforcement mechanism for their judgments.
        The domestic enforceability of UNCLOS tribunal judgments was
    confirmed by U.S. Supreme Court Justice John Paul Stevens in the
    landmark 2008 case, Medellin v. Texas. In Medellin, Justice Stevens,
    writing a concurring opinion, cited Article 39 of Annex VI for the
    proposition that UNCLOS members--presumably including the United States
    if it accedes to the Convention--are obligated to comply with the
    judgments of the Convention's tribunals.
        U.S. accession to the Convention would provide an opportunity and
    legal forum for other UNCLOS members to initiate lawsuits against the
    U.S. challenging the adequacy of its efforts to protect the marine
    environment. Although current U.S. law may satisfy many of the general
    environmental obligations set forth in the Convention, the U.S. might
    nevertheless be forced to defend itself in a costly and politically
    embarrassing lawsuit challenging the sufficiency and enforcement of
    U.S. domestic environmental laws and regulations. One such lawsuit--the
    MOX Plant Case (Ireland v. United Kingdom)--has already been litigated
    in UNCLOS tribunals.
        Acceding to UNCLOS would commit the U.S. to controlling its
    pollutants, including alleged ``harmful substances'' such as carbon
    emissions and other greenhouse gases (GHG), in such a way that they do
    not negatively impact the marine environment. The U.S. would also be
    obligated to adopt laws and regulations to prevent the pollution of the
    marine environment from the atmosphere and could be liable under
    international law for failing to enact legislation necessary to prevent
    atmospheric pollution. Moreover, such domestic laws and regulations
    ``shall'' take into account ``internationally agreed rules, standards
    and recommended practices and procedures.'' The ``internationally
    agreed rules, standards and recommended practices'' that could be
    invoked by UNCLOS litigants may include instruments such as the U.N.
    Framework Convention on Climate Change (UNFCCC) and its Kyoto Protocol.
        A consensus has emerged within the international environmental and
    legal community that the United States is the best target for an
    international climate change lawsuit. One law professor has
    characterized the United States as a likely target because it is a
    developed nation with high per capita and total GHG emissions, adding
    that the ``higher the overall historic and present contribution to
    global emissions by the defending party, arguably the better the chance
    of a successful outcome.''
        Over the past decade, there has been a steady drumbeat to initiate
    an international climate change lawsuit against the United States, and
    UNCLOS tribunals have featured prominently among the potential forums
    identified as a venue for such a case.

       In 2002, the Prime Minister of Tuvalu, a Pacific island
            nation consisting of a chain of nine coral atolls, stated his
            intention to initiate a climate change lawsuit against the
            United States because of its failure to adopt the Kyoto
            Protocol. That year, at the World Summit for Sustainable
            Development held in Johannesburg, Tuvalu's Government lobbied
            other small island nations to join them in such a suit at the
            International Court of Justice.
       In 2003, the Washington, DC-based Environmental Law
            Institute published ``The Legal Option: Suing the United States
            in International Forums for Global Warming Emissions'' by law
            professor Andrew L. Strauss. According to Strauss, the U.S.
            rejection of the Kyoto Protocol ``makes the United States the
            most logical first country target of a global warming lawsuit
            in an international forum.'' The article proposed various
            forums for initiating a lawsuit against the United States,
            including UNCLOS tribunals, but Strauss lamented, ``As the
            United States has not adhered to the Convention, however, a
            suit could not be brought directly against it under the
            Convention.''
       In her 2005 book ``Climate Change Damage and International
            Law,'' law professor Roda Verheyen posed a hypothetical case
            that could be brought against the United States for its alleged
            responsibility in melting glaciers and causing glacial outburst
            floods in the Himalayas. The claim would include compensation
            for flood damages as well as additional funds to monitor
            glacial lakes and prevent future floods. Verheyen based
            liability for such damages on the U.S.'s alleged violation of
            its commitments under the UNFCCC and failure to ratify the
            Kyoto Protocol.
       In December 2005, the Inuit Circumpolar Council, an
            international nongovernmental organization representing Inuit
            peoples in Alaska, Canada, Greenland, and Russia, filed a
            petition against the United States at the Inter-American
            Commission on Human Rights (IACHR), a human rights body
            operating within the Organization of American States. The
            petition requested that the IACHR direct the United States to
            adopt mandatory measures to limit its emissions and to provide
            assistance to help the Inuit adapt to the impacts of climate
            change.
       In 2006, the ``International Journal of Sustainable
            Development Law & Policy'' published ``Potential Causes of
            Action for Climate Change Damages in International Fora: The
            Law of the Sea Convention,'' in which law professor, William C.
            G. Burns, cited UNCLOS's marine pollution provisions as a basis
            for a cause of action for rising sea levels and changes in
            ocean acidity. Burns named the United States as ``the most
            logical State to bring an action against given its status as
            the leading producer of anthropogenic greenhouse gas emissions,
            as well as its failure to ratify Kyoto,'' but noted that the
            U.S. ``is not currently a Party to the Convention.''
       In a September 2011 speech to the U.N. General Assembly,
            Johnson Toribiong, President of the Pacific island nation of
            Palau, called upon the General Assembly to seek an advisory
            opinion from the International Court of Justice ``on the
            responsibilities of States under international law to ensure
            that activities carried out under their jurisdiction or control
            that emit greenhouse gases do not damage other States.''

        In sum, the United States would be at the top of the list of
    potential defendants in an UNCLOS climate change lawsuit, if the U.S.
    accedes to the Convention. Thus far, the United States has denied
    potential climate change claimants their day in international court by
    refusing to accede to UNCLOS. Clearly, accession to the Convention
    would open the door to these litigants as well as to their advocates in
    the international academic, environmental, and nongovernmental
    organization communities.

                        NAVIGATIONAL RIGHTS AND FREEDOMS

        In 1993, the Department of Defense issued an Ocean Policy Review
    Paper on ``the currency and adequacy of U.S. oceans policy, from the
    strategic standpoint, to support the national defense strategy.'' The
    paper concluded that U.S. national security interests in the oceans
    have been protected even though the U.S. is not party to UNCLOS:

              U.S. security interests in the oceans have been adequately
            protected to date by current U.S. ocean policy and implementing
            strategy. U.S. reliance on arguments that customary
            international law, as articulated in the nondeep seabed mining
            provisions of the 1982 Law of the Sea Convention, and as
            supplemented by diplomatic protests and assertion of rights
            under the Freedom of Navigation Program, have served so far to
            preserve fundamental freedoms of navigation and overflight with
            acceptable risk, cost and effort.

        Almost 20 years later, there is no evidence that suggests a change
    in circumstances such that U.S. accession to UNCLOS has become
    essential to the successful execution of the U.S. Navy's global
    mission.
        Throughout its history, the United States has successfully
    protected its maritime interests despite not being an UNCLOS member.
    The reason is simple; Enjoyment of the Convention's navigational
    provisions is not restricted to UNCLOS members. Those provisions
    represent widely accepted customary international law, some of which
    has been recognized as such for centuries. UNCLOS members and
    nonmembers alike are bound by the Convention's navigational provisions.
        The body of international law known as the ``law of the sea'' was
    not invented in 1982 when UNCLOS was adopted, but rather ``has its
    origins in the customary practice of nations spanning several
    centuries.'' It developed as customary international law, which is
    ``that body of rules that nations consider binding in their relations
    with one another. It derives from the practice of nations in the
    international arena and from their international agreements.'' Although
    not a party to UNCLOS, the United States is bound by and acts in
    accordance with the customary international law of the sea and
    considers the UNCLOS navigational provisions as reflecting
    international law.
        Most of the UNCLOS navigational provisions have long been
    recognized as customary international law. The Convention's articles on
    navigation on the high seas (Articles 86-115, generally) and passage
    through territorial waters (Articles 2-32, generally) were copied
    almost verbatim from the Convention on the High Seas and the Convention
    on the Territorial Sea and the Contiguous Zone, both of which were
    adopted in 1958. The United States is party to both Conventions, which
    are considered to be codifications of widely accepted customary
    international law.
        Similar to other multilateral conventions, such as the Vienna
    Convention on Diplomatic Relations, UNCLOS is said to ``have codified
    settled customary international law or to have `crystallized' emerging
    customary international law.'' UNCLOS codified customary law relating
    to navigation on the high seas and through territorial waters and
    ``crystallized'' emerging customary law, such as the concepts of
    ``transit passage'' through international straits and ``archipelagic
    sea-lanes passage.'' As summarized by Defense Department official John
    McNeill in 1994, UNCLOS ``contains a comprehensive codification of
    long-recognized tenets of customary international law which reflect a
    fair balance of traditional ocean uses.'' In short, the Convention's
    navigational provisions have attained such a status that all nations--
    UNCLOS members and nonmembers alike--are expected to adhere to them.
        One way to determine the extent to which UNCLOS's navigational
    provisions have achieved the status of binding international law is to
    study the behavior of nations. Behavior in conformity with the
    Convention--known as ``state practice''--is additional evidence that
    its navigational provisions reflect international law. Indications that
    a state is acting in conformity with international law may be found in
    states' ``legislation, the decisions of their courts, and the
    statements of their official government and diplomatic
    representatives.'' A nation's inaction regarding a particular
    navigational provision may also be viewed as state practice because it
    can be deemed to be acquiescence.
        The consistent practice of states--maritime states, coastal states,
    UNCLOS members, and nonmembers--indicates that the UNCLOS navigational
    provisions are almost universally accepted law. The ``Restatement of
    the Law, Third, of the Foreign Relations Law of the United States''
    notes:

            [B]y express or tacit agreement accompanied by consistent
            practice, the United States, and states generally, have
            accepted the substantive provisions of the Convention, other
            than those addressing deep sea-bed mining, as statements of
            customary law binding upon them apart from the Convention.

        This has long been the U.S. position. Since the Reagan
    administration, the official U.S. policy has been that the UNCLOS
    provisions on the traditional uses of the oceans, including the
    provisions on navigation and overflight, confirm international law and
    practice. Specifically, in March 1983, President Ronald Reagan
    announced the U.S. oceans policy in light of his decision not to sign
    UNCLOS. Reagan announced that ``the United States is prepared to accept
    and act in accordance with the balance of interests relating to
    traditional uses of the oceans--such as navigation and overflight'' and
    ``will recognize the rights of other states in the waters off their
    coasts, as reflected in the Convention, so long as the rights and
    freedoms of the United States and others under international law are
    recognized by such coastal states.''
        Reagan's 1983 oceans policy statement confirmed what was already
    widely recognized: that the navigational provisions of UNCLOS generally
    reflect customary international law and as such must be respected by
    all nations.
        Yet proponents of U.S. accession to UNCLOS maintain that the United
    States cannot fully benefit from these navigational rights unless it is
    a party to the Convention, which ``provides'' and ``preserves'' these
    rights. This is simply incorrect. The United States enjoys the same
    navigational rights as UNCLOS parties enjoy.
        At the December 1982 final plenary meeting of the Third United
    Nations Conference on the Law of the Sea, some nations took the
    opposite position, contending that any nation that chose not to join
    the Convention would forgo all of these rights. On March 8, 1983, the
    United States, exercising its right to reply, expressly rejected that
    position:

              Some speakers discussed the legal question of the rights and
            duties of States which do not become party to the Convention
            adopted by the Conference. Some of these speakers alleged that
            such States must either accept the provisions of the Convention
            as a ``package deal'' or forgo all of the rights referred to in
            the Convention. This supposed election is without foundation or
            precedent in international law. It is a basic principle of law
            that parties may not, by agreement among themselves, impair the
            rights of third parties or their obligations to third parties.
            Neither the Conference nor the States indicating an intention
            to become parties to the Convention have been granted global
            legislative power . . . .
              The United States will continue to exercise its rights and
            fulfill its duties in a manner consistent with international
            law, including those aspects of the Convention which either
            codify customary international law or refine and elaborate
            concepts which represent an accommodation of the interests of
            all States and form part of international law.

        In sum, it is not essential or even necessary for the United States
    to accede to UNCLOS to benefit from the certainty and stability
    provided by its navigational provisions. Those provisions either codify
    customary international law that existed well before the Convention was
    adopted in 1982 or ``refine and elaborate'' navigational rights that
    are now almost universally accepted as binding international law.
        One prominent proponent of U.S. accession to UNCLOS recently stated
    that opposition to the Convention was not based on ``facts'' or
    ``evidence'' but rather on ``ideology and mythology.'' The facts and
    evidence, however, are as follows:

       The U.S. already has full jurisdiction and control over its
            entire Continental Shelf--including its ``Extended''
            Continental Shelf. Through Presidential proclamations, acts of
            Congress, and bilateral treaties with neighboring countries,
            the United States has successfully demarcated the limits of its
            maritime boundaries and key areas of its ECS;
       The U.S. has clear title to all hydrocarbon resources lying
            under the ECS and currently enjoys the rights to any and all
            royalty revenue generated from the exploitation of such
            resources;
       The U.S. has demonstrably exercised jurisdiction and control
            over its ECS, as evidenced by the fact that it has been leasing
            blocks for development to U.S. and foreign oil exploration
            companies since August 2001;
       The ``western gap'' in the Gulf of Mexico is the only area
            of ECS that has been offered for development by the United
            States, and 20 percent of that area is currently under lease.
            U.S. companies such as Chevron and companies from Brazil,
            Denmark, France, Italy, Norway, and the United Kingdom hold
            active leases on the western gap ECS;
       No comprehensive study has been conducted to determine the
            value of the hydrocarbon resources that lie beneath the vast
            U.S. ECS that is likely twice the size of California;
       The U.S. Extended Continental Shelf Task Force estimates
            that the U.S. ECS resources ``may be worth many billions if not
            trillions of dollars'';
       If the U.S. accedes to UNCLOS it will be making an open-
            ended commitment to transfer an incalculable sum of royalty
            revenue from the U.S. Treasury to the International Seabed
            Authority for redistribution to developing and landlocked
            nations;
       The policy and law of the United States, both domestically
            (i.e., the Deep Seabed Hard Mineral Resources Act) and
            internationally, is that U.S. citizens and corporations have
            the right to explore and exploit the deep seabed regardless of
            whether or not the United States is a party to UNCLOS;
       Acceding to UNCLOS would expose the United States to
            international lawsuits, including baseless environmental cases
            and suits based on alleged U.S. contributions to global climate
            change;
       Certain UNCLOS states parties, environmental activists, and
            international legal academics are actively exploring the
            potential of using international litigation against the United
            States in an UNCLOS tribunal to advance their climate change
            agenda;
       An adverse judgment in a climate change lawsuit initiated
            under UNCLOS would be final, not subject to appeal, and
            enforceable in the United States. Such a judgment would impose
            massive regulatory burdens on U.S. companies, which would pass
            the costs on to American consumers;
       For more than 200 years before UNCLOS was adopted in 1982
            and for 30 years since then, the U.S. Navy has successfully
            protected U.S. maritime interests regardless of the fact that
            the U.S. has not joined the Convention;
       The U.S. Navy has never been successfully denied access to
            any international strait or archipelagic water and regularly
            exercises its freedom of navigation and overflight rights on
            the high seas and ``innocent passage'' through territorial
            waters;
       The U.S. Navy's ``Commander's Handbook on the Law of Naval
            Operations'' is the preeminent operational manual regarding
            navigational rights and is considered the gold standard by
            maritime nations worldwide, many of which have adopted it for
            use by their own navies; and,
       The United States is a member of the International Maritime
            Organization and a founding member of the Arctic Council--
            organizations in which it actually means something to have a
            ``seat at the table.''

        All of these facts collectively represent compelling evidence that
    the United States need not accede to UNCLOS in order to advance its
    maritime and national security interests. Indeed, the evidence suggests
    that there are real costs involved in accession that outweigh the
    supposed benefits, which are dubious and insubstantial.
        UNCLOS is a controversial and fatally flawed treaty. Accession to
    the Convention would result in a dangerous loss of American
    sovereignty. It would require the U.S. Treasury to transfer billions of
    dollars to an unaccountable international organization in Jamaica,
    which in turn is empowered to redistribute those American dollars to
    countries with interests that are inimical to the United States. The
    Convention's mandatory dispute mechanisms will result ultimately in
    troublesome and costly lawsuits and adverse judgments if the United
    States is deemed to have ``violated'' the Convention--most likely when
    the United States has acted in its own best interests.
        The U.S. Navy's support for the navigational rights enshrined in
    UNCLOS is far outweighed by the Convention's nonnavigational
    provisions. The practices of the Navy and the navies of other major
    maritime powers created the very customary international law upon which
    the navigational provisions of UNCLOS are based. The Navy enjoys those
    same navigational rights and freedoms despite nonaccession to the
    treaty. The Navy's insistence that a failure to join UNCLOS will hinder
    its ability to conduct its global mission successfully is belied by the
    facts and demonstrably disproved by history.

        The Chairman. Thank you very much, Mr. Groves.
        I really appreciate it, and that is a good, articulate
    summary of the position. I think it helps us really join the
    discussion here, which I am thrilled to be able to tell you I
    am very happy is between Republicans. [Laughter.]
        So I am going to look to you guys to thrash it through. It
    is sort of interesting to me that this treaty----
        Mr. Rumsfeld. Mr. Chairman, in defense of John Negroponte,
    he is a career diplomat.
        The Chairman. Career diplomat, with no party affiliation.
    [Laughter.]
        John, is that true?
        Mr. Rumsfeld. I wouldn't want him tarnished.
        The Chairman. Don't tarnish him. Fine. Mr. Secretary, thank
    you for saving him from perdition.
        Let me just say to all of you that it is sort of
    interesting to me that this Democratic chairman is working very
    hard to get something done which President Nixon conceived of,
    President Reagan fixed and supported and pushed, President
    George Herbert Walker Bush refined, and President George W.
    Bush, with whom I had many disagreements, obviously----
        [Laughter.]
        The Chairman [continuing]. Saw fit to send to the Senate.
    And I don't think that is inconsequential. I don't think it is
    inconsequential that today five former Republican Secretaries
    of State, beginning with Henry Kissinger, all said we have got
    to do this. So let us explore it.
        I want to explore it. And I am going to ask you guys to
    sort of engage in a lot of this dialogue, if I can.
        But Mr. Groves, let me just sort of follow through a little
    bit, if I can. You, in your testimony, your written testimony,
    say that there is no legal barrier. I think you repeated it
    just at the end of your testimony now. There is no legal
    barrier to prevent U.S. access, exploration, and exploitation
    of the resources of the deep seabed. So we can go out there and
    we can go ahead and dig.
        And the United States, as part of your position, has long
    held that U.S. corporations and citizens have the right to go
    out and develop the resources of the deep seabed, whether or
    not the United States accedes to UNCLOS. Is that a fair
    statement? You believe that?
        Mr. Groves. Yes, Mr. Chairman.
        The Chairman. OK. Now, if that is true, is it your general
    point that under international law, there is no legal right,
    except by a treaty, to exclude another nation from mining in
    the deep seabed because it is out on the high seas?
        Mr. Groves. Correct. Correct. Another country couldn't
    unreasonably interfere----
        The Chairman. They can't interfere with us?
        Mr. Groves. Correct.
        The Chairman. OK. But that works both ways, doesn't it?
        Mr. Groves. Yes, we can't unreasonably interfere with other
    countries' claims as well.
        The Chairman. So if the United States, without joining the
    treaty, decides to do some deep seabed mining, under
    international law, we couldn't prevent the Chinese or the
    Russians from piggybacking half a mile away from our mining
    claim or 200 yards away, could we?
        Mr. Groves. No. As long as it didn't unreasonably interfere
    with our own claim.
        The Chairman. Well, what would be the legal--where would be
    the legal recourse for that?
        Mr. Groves. You mean if they did----
        The Chairman. What is to back up our claim? We don't have a
    claim. We are out in the deep sea without any legal instrument
    because we are not a party to the treaty. Where would our claim
    be?
        Mr. Groves. The only claims that exist right now on the
    U.S. side are those held by Lockheed Martin. Those are actually
    legacy claims----
        The Chairman. No, no, no. I am talking broader here.
        What would be--by what mechanism would--particularly, let
    us say Russia and China, which are signatories to this treaty,
    get the legal claim 100 yards from where we are, and we are not
    party to it. If you can find a company that is dumb enough and
    go drill without being party to the treaty, but let us presume,
    for the purposes of your argument, you say go to it. Go dig.
        What is the mechanism by which they are going to assert any
    right?
        Mr. Groves. Well, if the Russian--in your hypothetical, Mr.
    Chairman----
        The Chairman. Well, it is not a hypothetical. It is real
    under your regimen. Under your regimen, it is real. You are
    saying don't join the treaty. Go out and dig. That is your
    theory, and you just agreed.
        Mr. Groves. No, but your hypothetical was that there is a
    Chinese or Russian claim within a couple of hundred yards of an
    existing United States claim.
        The Chairman. Or let us say it is right on the same spot.
    But the Law of the Sea folks have acceded to that because they
    are the members, and we are not. And they say, ``Screw you,
    U.S. These guys are part of it, and we are giving them the
    claim.''
        Mr. Groves. Well, two things would happen, Mr. Chairman. If
    Russia or China or any other country interferes with a claim
    that has been made under the auspices of U.S. law, particularly
    the Deep Seabed Hard Mineral Resources Act, then this would be
    a bilateral problem between the United States and whichever
    other country was doing that.
        They would be infringing on our claim. And so, the relief--
    --
        The Chairman. We don't have a claim. There is no claim.
    What are you doing? Claiming into the thin air? Claiming to
    God? Who are you claiming to?
        Mr. Groves. No, there is a U.S. statute and regulatory
    framework called the Deep Seabed Hard Mineral Resources Act
    that allows U.S. companies to apply for licenses from the
    Administrator of NOAA to make a claim in the deep seabed, and
    countries can move under those statutes and those regulations
    to make claims and engage in deep seabed mining.
        So there is a claim.
        The Chairman. Now, Mr. Bellinger and Secretary Negroponte,
    isn't that precisely what brought--the kind of thing that
    brought the Bush administration to say that the only way as a
    lawyer you could conceivably say to Lockheed Martin or another
    company go drill is to know that you have certainty with
    respect to the claim. And you wouldn't have certainty, would
    you not, under the structure that Mr. Groves has described?
        Mr. Bellinger. Thanks, Mr. Chairman.
        As you know, a cardinal feature of the Bush administration
    was, in fact, to preserve our freedom of action and our
    sovereignty. So we were not quick to sign up to obligations
    that would tie us down.
        But in looking at the best way for U.S. business,
    particularly as new technologies became available that would
    allow us to mine in the deep seabed or with the melting Arctic
    ice to exploit oil/gas resources in the Arctic, that the best
    way to allow companies to do that was to have the legal
    certainty that was provided under the Convention.
        We did look at customary international law, which, in fact,
    the Navy does rely on successfully for their naval activities.
    Although we thought again that the Convention would be better.
    But we saw that the only way that U.S. business could, in fact,
    engage in deep seabed mining or oil and gas exploitation in the
    Arctic was through the treaty.
        The Chairman. Well, I mean, isn't it accurate that if 161
    nations have signed up for the treaty and that is the agreed-
    upon international mechanism for legitimizing claims under the
    ocean, would the United States be advantaged or disadvantaged
    in just staking its claim outside of that regimen relative to
    somebody who had a legitimized claim under it?
        Mr. Bellinger. The companies told us and they continue to
    tell you that that would be very risky, and these are companies
    who would want to invest literally billions of dollars out in
    the deep seabed or the Extended Continental Shelf. They would
    not want to invest that kind of money based on a risky claim.
    They would prefer the certainty that the treaty provides.
        The Chairman. I would like to ask both of you, if you
    would, I thought that Mr. Groves did an excellent job of kind
    of laying out the case, so to speak. But I think we need to
    examine that now, and I want to try and do that.
        He suggested that there would be an invitation to adverse
    judgments. There are three big reasons. Adverse judgments.
    Second, the transfer of an unbelievable amount of royalty. And
    third, that we would have to request permission to mine from
    Sudan.
        Can you, both of you, speak to those, if you would, and
    give us a sense of what the committee ought to think about
    that? Just--go ahead.
        Ambassador Negroponte. I mean, maybe we can share these,
    John. On the question of royalties, I think one of the really
    important points that I am not sure we have mentioned this
    afternoon is that if you look at the original part 11 that was
    negotiated and concluded in 1982, the fees were very high and
    very costly. And that was one of the things, I think, that
    threw people off.
        In the amended version now of part 11 in the annex there,
    it says that those fees and that fee structure does not apply,
    and it leaves it to subsequent determination by a council of
    which if we acceded to the treaty, we would be a member and if
    we ratified this amendment to the treaty. We would be a member
    of that council, and the procedure for making decisions on that
    kind of issue would be by consensus.
        So we would be in a very advantageous position to protect
    our interests. So I think as far as distribution of fees,
    decisionmaking process, and these new arrangements, I think our
    interests would be very well protected.
        The other point was already made about how from year zero
    to year five, there would be no royalties in the case of oil
    and then up to 7 percent beyond that. But again, that is in the
    case of actually----
        The Chairman. Well, I think it is important to recognize
    that--I think this is important because the companies will tell
    you this. One of the reasons everybody got happy about this is
    that it is
    1 percent for the first 5 years. It is an additional percent
    for the next year, an additional percent each year up. So you
    are really looking at 6 percent, 7 percent, 8 percent, up until
    you get to 12 years.
        So the top amount is 7 percent. So you are going up very
    slowly. The top amount is 7 percent. But many of those
    companies believe that with modern technology, they have an
    ability to exploit well within that period, and they are not
    looking at these enormous amounts of royalties.
        I mean, that is----
        Ambassador Negroponte. Right.
        The Chairman. But would you come back for a moment to the
    adverse judgments? There is a fear here that----
        Ambassador Negroponte. I will defer to John on that.
        Mr. Bellinger. Sure. I think it is much more likely that
    there would be an adverse judgment or certainly litigation
    against a U.S. company that tried to engage in deep seabed
    mining or mining on the U.S. Extended Continental Shelf outside
    the treaty. I think anybody could see that.
        To rely on a speculative legal argument accepted by no
    country in the world, that is flatly contrary to the terms of a
    Convention that has existed for 30 years, for ExxonMobil or
    Lockheed to spend billions of dollars relying on an academic
    theory suggested by a think tank, I think that is something
    that would create great legal risk for it. It is not surprising
    to me that their CEOs have written to say their preference is
    to rely on the terms of the treaty.
        With respect to other litigation, environmental litigation,
    I think the risk is relatively low. We have not seen other
    countries, and as you point out, there are lots of major
    industrial countries, including Japan and the U.K. and others,
    who are potential targets for environmental litigation. They
    have not been sued for climate change.
        And so, let me--the last thing I will say is I suffered
    under lawfare, along with Secretary Rumsfeld, as the legal
    adviser for the Bush administration. There were lots of
    unfounded claims relating to terrorism against us. So I have
    seen these.
        But I think in respect to environmental litigation, I just
    don't see that joining the treaty is going to open us up to
    significant new claims.
        The Chairman. I resisted saying that, well, you should have
    suffered, but----
        [Laughter.]
        Mr. Bellinger. Mr. Chairman, if I could just----
        The Chairman. Only joking. Only joking.
        If I can come back for a minute, just one thing, and then I
    am going to turn to Senator Lugar. Isn't it a fact, though,
    that no environmental suit would be allowed unless we were a
    party to an international agreement?
        Mr. Bellinger. That is exactly the point, Mr. Chairman.
        The Chairman. OK. Senator Lugar.
        Senator Lugar. Mr. Chairman, I am prepared to come after
    Senator Risch.
        The Chairman. Oh, Senator Risch, he has a conflict. So I am
    happy to recognize him.
        Senator Risch. Thank you, Mr. Chairman.
        I will try to be brief. First of all, I would like to place
    in the record, without objection, a letter addressed to the
    chairman and ranking member and the committee, dated June 14,
    2012, and it is on Heritage Action stationery. It is by
    numerous former Government officials, including, obviously, Mr.
    Rumsfeld, John Bolton, Edwin Meese, many, many others, who
    reach a very, very different conclusion than two of the
    witnesses here today. I ask it be placed in the record.
        The Chairman. Absolutely. Without objection, that will be
    made part of the record.
        Senator Risch. I have got--there are so many parts to this.
    I am going to focus on just one, and it is going to pick up
    right where you left off, Mr. Bellinger. I have your testimony
    in front of me, and this caught my eye. So I am going to focus
    on it.
        And on the fourth paragraph on page 10, you state, ``Some
    have argued that the Convention might obligate the United
    States to comply with international environmental agreements,
    such as Kyoto Protocol, to which the United States is not a
    party.'' You stated that.
        I am one of those people, except you understated it. I
    don't believe that it might. I believe it will.
        The first sentence of the next paragraph, you state
    conclusory, ``The terms of the Convention do not require
    parties to comply with other international environmental
    treaties.'' That was your conclusion. Then you quote a real
    small portion of one sentence to reach that conclusion.
        I know you are familiar with this, but I wish you would
    take the treaty in front of you there and open with me to
    article 212, subsection 1. It is on page 175. Have you got that
    in front of you? Pardon?
        Mr. Bellinger. I have it here.
        Senator Risch. OK. Great. The very first part of the
    sentence says, ``States shall adopt laws and regulations to
    prevent, reduce, and control pollution.'' Nothing wrong with
    that. The United States has already done that. There is no
    sideboards on it. It doesn't say exactly what we have to do, as
    long as we enact some kind of laws. Don't have any difficulty
    with that.
        But then, when you turn to article 222 and if you will go
    down to the middle of the first paragraph, if you read what we
    just read. I am sorry. Article 222, page 180.
        Mr. Bellinger. Page what?
        Senator Risch. Page 180. It is about the middle of the
    page, and the treaty goes on to state that the signatories
    ``shall''--again, the word ``shall.'' ``Shall adopt laws and
    regulations and take other measures necessary to implement
    applicable international rules and standards established
    through competent international organizations or diplomatic
    conference to prevent, reduce, and control pollution.''
        That is going to be the law of the land if we accede to
    this treaty. How long do you think it is going to take a
    Federal judge to find Kyoto or any one of the other conventions
    that they have as being a competent international organization,
    which has set standards and rules which by this language we
    have acceded to?
        I mean, you are going to find a gaggle of judges tripping
    over each other to force the EPA and other organizations in the
    United States to say you shall, just as the Congress or the
    U.S. Senate has said, you shall adopt these rules and
    regulations. That doesn't trouble you at all?
        Mr. Bellinger. Well, Senator, I really do appreciate your
    concerns because these were exactly some of the issues that we
    looked at in the Bush administration. You will recall in our
    first year, one of the treaties that we rejected was, in fact,
    the Kyoto Protocol. So the Bush administration was very
    concerned about that.
        Senator Risch. And that is good, but we want to focus on
    this language, which is black and white----
        Mr. Bellinger. I just want to emphasize that we were
    approaching this from a perspective that I think is sympathetic
    to your position.
        With respect to 212, and then I will go on to 222, it says
    we shall adopt laws and regulations to prevent, reduce, and
    control pollution, but then only taking into account
    internationally agreed rules.
        Senator Risch. Sure.
        Mr. Bellinger. So we don't have to enact Kyoto.
        Senator Risch. Nothing wrong with that.
        Mr. Bellinger. 222 says that we shall enforce those laws
    that have been adopted in accordance with article 212,
    paragraph 1. So it says we have to enforce our own laws.
        Senator Risch. Nothing wrong with that. But after what you
    just read, the next word is ``and.'' ``And with other
    provisions of this Convention and shall adopt laws and
    regulations and take other measures necessary to implement,''
    et cetera.
        Mr. Bellinger. And the key word there, Senator, is
    ``applicable.'' Applicable international rules and standards.
        If we haven't signed it, it is not applicable to us.
        Senator Risch. Well, Mr. Bellinger, I would greatly
    disagree with that reading of it. It doesn't say that at all.
    If it did say that, you would say that in plain English.
        What they mean by ``applicable,'' by the word
    ``applicable,'' is applicable rules to the situation at hand.
        Mr. Bellinger. Well, I can--I understand your reading the
    plain text of it. It is very difficult to read, as all of us
    have pointed out, language like this. And I agree with you.
    That is why it took us in the Bush administration a
    considerable amount of time to work our way through these.
        All I can tell you, Senator, is you raise a legitimate
    concern. But the longstanding view of the Bush administration
    and of the, I understand, the new administration is to say
    applicable international rule means it has to apply to you.
    Treaties that have been negotiated by other people to which we
    are not party don't apply to us.
        And Secretary Rumsfeld I think would probably agree there
    were lots of international human rights rules that people said
    we ought to abide by that we were not party to, and we would
    say those are not applicable to us because we have not become
    party to them.
        Senator Risch. And you are willing to take the chance that
    that torture--that tortured interpretation will be accepted by
    a United States District Court in the United States?
        Mr. Bellinger. Again, sir, I am with you on this in that
    you raise concerns. I have seen lots of lawfare brought by
    groups, by other countries, by people who were upset with the
    United States. I think it is fair to raise that as a concern.
    That is the view of the U.S. Government about the meaning of
    those terms, and I think then, on balance, even if this is a
    fair concern, you have to take into account the cost versus the
    benefit.
        And with respect to U.S. companies, there is a false choice
    to suggest that U.S. companies, if we don't join the treaty,
    can still go ahead and mine. And so, we are basically denying
    them the opportunity, even if you have a fair point on
    environmental litigation, the benefits of the treaty to U.S.
    businesses and to the U.S. Treasury and to the U.S. Navy
    outweigh what may well be a fair concern to raise.
        Senator Risch. Appreciate your judgment in that regard, and
    thank you, Mr. Bellinger.
        And thank you, Mr. Chairman, for your----
        The Chairman. Senator, as you are taking off or going home,
    whatever it is, article 297. I would direct you to take a
    moment to read that in your travels.
        Senator Risch. I have read 297.
        The Chairman. Paragraph C, which is pretty clear that the
    only way in which anything regarding the environment would
    apply to us is where it is applicable to us because we have
    signed up to it or we are part of it, and I think that is
    exactly what Mr. Bellinger is saying.
        So, in fact, within the four corners of this agreement is a
    dispensation against any state, the United States or anybody
    else, who hasn't signed up to the international law. So there
    is no standing. There is no exposure.
        Senator Risch. I don't read it that way. But thank you, Mr.
    Chairman.
        The Chairman. Well that is the language. It is hard not to
    read the language that way because that is what it says.
        Senator Risch. I couldn't agree with you more that the
    language is black and white.
        The Chairman. If you only take one section, you can read it
    your way. But if you apply the entire law, it is different.
        Mr. Bellinger. And Senator Risch, and I know you need to
    leave, I want to simply say from--I don't want that to be an
    argument between us. I think it is a completely fair point
    reading that language and a fair question to ask. And there is
    an argument on the other side.
        I have given you what is the view, I think, of both the
    Bush administration, which looked at these things very
    seriously and was very concerned about environmental litigation
    and ultimately felt that that was the better interpretation of
    that provision. And even counterbalancing those risks, still
    overall the benefits of the treaty would still counterbalance
    against the risks that you have raised.
        So I understand and support those concerns.
        Senator Risch. Appreciate it.
        The Chairman. Thanks, Senator Risch.
        Senator Coons.
        Senator Coons. Thank you, Chairman Kerry.
        And thank you for an opportunity to join you again in our
    second hearing today on the Law of the Sea.
        This morning, as others have noted, we had six four-star
    officers testify that ratifying the Law of the Sea Convention
    would substantially improve the flexibility and capability of
    the United States and their ability to fulfill their respective
    missions. Now they are not alone in doing so. Since 1994, their
    predecessors have almost unanimously made the same claim.
        Now that means that those who oppose this treaty need to
    convincingly explain why the preponderance of admirals and
    generals who have claimed the treaty is of value are wrong.
    Opponents have made a strong effort to do so for almost 20
    years, but leaders of our military continue to maintain their
    claim that not ratifying makes the jobs of the men and women
    who serve under them harder and more dangerous.
        I want to be clear. I am grateful Secretary Rumsfeld, Mr.
    Groves have come to testify about something on which they feel
    strongly. The questions they raise about the treaty, especially
    questions on the impact of sovereignty, are well worth
    considering and answering, and I believe they have been
    answered.
        I hope we can answer them again today. And I hope we can do
    it in a way that makes it clear to everyone this treaty is not
    a threat to the American way of life, but at least in these
    areas around navigation we have discussed earlier today are a
    real benefit to the men and women who serve us in our Armed
    Forces.
        Ambassador Negroponte, if I might? This morning, I had an
    exchange with Admiral Greenert, the Chief of Naval Operations,
    in charge of giving his best advice to the President, and to
    Admiral Locklear, Commander of Pacific Command. And we
    discussed what freedom of navigation operations mean, how they
    work, and what opponents of the treaty would have us entirely
    rely on, and what that instead means for the men and women who
    serve.
        We have talked a lot about strategy. But I think it is
    important to remember that, at the end of the day, there are
    sons and daughters, mothers and fathers, who serve, and we put
    them at times, I think, needlessly in harm's way because of our
    refusal to ratify.
        You said in your testimony, and I quote, that the ``United
    States puts its sailors in unneeded jeopardy when carrying out
    freedom of navigation programs to contest Law of the Sea
    abuses.'' Could you elaborate on how men and women in uniform
    actually out there in contested areas in the seas or in the air
    are put in unneeded jeopardy?
        Ambassador Negroponte. Well, and I repeated that earlier
    this afternoon before you arrived, Senator, as well.
        I think that there is an element----
        Senator Coons. Well, forgive my late arrival.
        Ambassador Negroponte [continuing]. Of risk involved in
    this, and I am trying to think of specific examples. And I
    think I would go back quite a ways here because I recall a time
    at which I was working in the Bureau of Oceans, Environment,
    and Science, and we had this challenge program, where we
    identify maritime claims that we think are not supported by
    international law and where we feel our navigational interests
    are affected.
        And if I remember correctly--and John will correct me if I
    am wrong, or perhaps Secretary Rumsfeld--the Gulf of Libya was
    one of those because the Libyans had a rather restrictive
    interpretation of freedom of the seas in that gulf there. And
    so, we would deliberately sail into what they considered waters
    over which they had greater jurisdiction than we recognized.
    And that always, especially when you are dealing with a regime
    that was not exactly predictable, entailed a certain amount of
    risk for those forces that were undertaking those exercises.
        So I don't think that you can say that the Law of the Sea
    is a substitute for the exercise of our navigational rights. We
    are always going to exercise them. But I think it does reduce
    the level of risk.
        Senator Coons. Well, thank you, Ambassador.
        One of the things I would welcome your expounding on a
    little bit further, that some have seized upon comments made in
    a previous panel by General Dempsey and some of the folks
    testified today who suggested the Law of the Sea Treaty, this
    Convention, if ratified, would not, in any way, help with force
    projection, that a failure to ratify doesn't put our Nation at
    greater risk.
        But to be clearer, how would supporting this Law of the Sea
    Treaty provide additional tools that would help our military
    more safely conduct their missions?
        Ambassador Negroponte. Well, I think another area, and
    speaking as former Director of National Intelligence, I think
    the fact that you have an internationally recognized freedoms
    of navigation between the 12-mile outer limit of the
    territorial sea and the 200-mile resource zone, and the fact
    that this Convention now--not if it is modified someday by
    somebody--but now recognizes the right of freedom of
    navigation, that inherently protects certain intelligence
    equities that we have as well.
        Senator Coons. Mr. Groves, if I might, in your testimony,
    you reference a Department of Defense issued ocean policy
    review paper--I think it is from 1993--which states the freedom
    of navigation program has served to preserve fundamental
    freedoms of navigation and overflight with acceptable risk,
    cost, and effort.
        And I just have to question your assertion that 20 years
    later, there is no evidence that suggest a change in
    circumstances, such that U.S. accession to the Convention has
    become essential to the successful execution of the Navy's
    global mission. Over the past 5 years, as I mentioned in a
    previous panel this morning, the actual number of countries
    which the United States has challenged under this freedom of
    navigation program has tripled.
        It can't be without risk, without cost, and without effort.
    I suppose perhaps we might differ about whether it is
    acceptable. Do you see any change in the past 20 years that
    might cause you to reconsider whether the freedom of navigation
    program would have an additional valuable tool if we were to
    accede to the treaty?
        Mr. Groves. Thank you for the question, Senator.
        You know, our Navy has had challenges throughout its
    history. We managed a couple of world wars. We made it through
    the cold war, the bulk of which or a great deal of which
    happened after the Convention on the Law of the Sea was signed.
    We have had bumping incidents with the Soviets. We have had EP-
    3 incidents with China.
        The challenges are always going to be there. The question
    is whether joining the Convention is of such significance that
    these challenges will either somehow go away or that we have
    additional tools to address them. And my view is that due to
    the other costs that are involved with the treaty, what I
    believe to be a marginal effect of joining the Convention is
    greatly outweighed.
        That said, the Navy will continue to project force and will
    continue to engage in freedom of navigation operations.
        And as you heard from General Dempsey, our ability to
    project force isn't based on the treaty. Thank God. It is based
    on continuing to have a strong navy.
        And so, it is just our view or my view that when you do the
    cost-benefit analysis, whatever marginal benefit the Navy may
    experience by joining the Convention is outweighed by the other
    provisions that have those very real costs and risks.
        Senator Coons. So if I hear you right, not to put words in
    your mouth. But if I hear you right----
        Mr. Groves. You can put words in my mouth. That is fine.
        Senator Coons. You would agree, as we heard unanimously,
    uniformly, from the generals, the admirals who testified this
    morning--and General Dempsey and others who have consistently
    testified--that there would be a benefit to the freedom of
    navigation operations. There would be a benefit to our Armed
    Forces in having another tool and having the opportunity to
    pursue binding arbitration, for example, with allies, with whom
    we do sometimes have to engage in these costly, risky
    exercises.
        You just view the overall costs of the treaty as exceeding
    that real benefit, as being greater than that benefit?
        Mr. Groves. I want to agree with our men and women in
    uniform that there would be an actual benefit. But when I have
    studied it, what has come clear to me is that nothing changes
    operationally. We still do diplomatic protests and demarches in
    the exact same way. I have read them when we protest a country
    for an excessive maritime claim.
        If we are going to do a freedom of navigation operation, we
    would steam through in the same way, giving the same notice. So
    what I have searched for, and what I have met with people over
    at the Department of Defense for hours in an attempt to find
    out, is what would exactly change operationally? Give me a
    reason to believe that there is a tangible and real benefit for
    the Navy here.
        I haven't been satisfied on that front. And so, when you
    weigh that against the other costs, I come down on the side of
    skepticism.
        Senator Coons. Well, Mr. Groves, I appreciate your
    testimony. I would like to thank the whole panel for your
    testimony today.
        Part of what got me interested in this, as I mentioned at
    our previous hearing, was a personal meeting with the former
    Chief of Naval Operations, who, analyzing that same fact
    pattern, came out in exactly the opposite place and saying that
    there would be operations that would not need to be conducted,
    that could instead be resolved through the mechanisms of this
    treaty, and that that would reduce risk and cost and exposure
    on duty and allow us to focus those very valuable resources on
    areas where we genuinely needed to continue on these freedom of
    navigation operations.
        So thank you, Mr. Chairman. And thank you for the
    opportunity.
        The Chairman. Thank you very much, Senator.
        Before I recognize Senator Lugar--are you taking off?--let
    me just remind, I do think, Mr. Groves, I would just call your
    attention to this fact because I went through their testimony
    very carefully.
        In the six four-stars who testified today, I really wanted
    to see what they were specifically saying and see if I could
    pin it down the way you did, too. And I came up with 16
    advantages that they specifically define in their testimony,
    and I commend it to my colleagues, 16 positive differentials
    that come by virtue of signing onto this.
        One of them was very clearly articulated in detail by
    Commandant of the Coast Guard Papp, who talked about the
    advantage in terms of their interdictions of narcotics, their
    boarding and search in the Caribbean and elsewhere. There are a
    whole series of very specific rules of the road, in a sense,
    that relieve pressure cooker.
        And here is what--you need to have the full statement of
    General Dempsey. General Dempsey did say we wouldn't lose our
    force, but he didn't say that there aren't additional risks, et
    cetera. We are not going to lose our force because, hopefully,
    the U.S. Congress and whoever is President is always going to
    remain committed to have the strongest force possible, and we
    will be able to protect our interests.
        That is not the issue here, though. The issue is what
    General Dempsey said in the rest of his statement, and I just
    read it to you very quickly. He said, ``The failure to ratify
    puts ourselves at risk of confrontation with others who are
    interpreting customary international law to their benefit and
    the risk of confrontation goes up.''
        And what all of the commanders said today, and I think this
    is a very important subtext to their testimony, was that the
    world is changing very rapidly. Other nations are pressing for
    resources in ways they have not ever been before. China, all
    over the world, we know that. Resource-oriented policy beyond
    anybody else.
        And given that pressure for resources and that we are going
    to become a planet of going from 7 billion to 9 billion in the
    next 30, 40 years, that is only going to increase. What they
    are saying, all of them, is that this provides an orderly
    process for how to manage your way through that increased
    pressure and tension, and that is part of what increases the
    urgency.
        The second thing they cited, and I think it is very
    important for every member to realize this--and this is why I
    said we will have a classified briefing--our intel community
    will make it very clear that there are actors right now who are
    behaving in ways that challenge us, where the Law of the Sea
    would, in fact, have an ability to be able to address those
    concerns. And that will be raised in the course of our
    classified briefing.
        So I do want to make sure the record is clear about both
    what General Dempsey has said, what the four-stars said today,
    and sort of where we are. You will have a chance to address
    this if you want.
        But let me get to Senator Lugar, and then we will come back
    and finish up because I know there are a couple of colleagues
    under pressure.
        Senator Lugar. Well, thank you, Mr. Chairman.
        I found the testimony very important just in terms of the
    historical record of the evolution of this issue before
    previous administrations and the Congress. Specifically, I
    would mention testimony today that indicated that the Bush
    administration made Law of the Sea a primary treaty objective,
    beginning in 2002.
        Now I remember that period because I had the privilege of
    serving again as chairman of the Foreign Relations Committee as
    Republicans got a majority, and we took seriously that list of
    treaties and, as a matter of fact, were able to ratify a good
    number. They came off the shelf and we had good debate. Law of
    the Sea was among those, as we took that up in 2003 and,
    ultimately, in 2004 the committee voted unanimously in favor of
    the treaty.
        Unfortunately, Senator Bill Frist, who was the Republican
    majority leader, decided there were other priorities. And as a
    result, we did not have floor debate, and that opportunity
    passed.
        Republicans lost the majority. Senator Biden became
    chairman of the committee. He took it up again in 2007. Once
    again, the Bush administration testified very strongly in
    support of the treaty. On that occasion, as I recall, the
    treaty received four negative votes in committee, but it went
    to the floor with a pretty good majority. And Senator Harry
    Reid, now the Democratic majority leader, did not find it
    convenient to take up the treaty.
        The question that was raised by Secretary Rumsfeld and in a
    way by both you, Mr. Bellinger, and Ambassador Negroponte, is
    an interesting philosophical one that I made note of. On the
    one hand, and this really is not only President Reagan's
    viewpoint, the statute was quoted by Secretary Rumsfeld.
        Essentially, the question is, Is there such a thing as the
    internationalization of the seas? Is this something that
    belongs to all mankind? Suppose maybe someone might stretch
    this some day and argue that the atmosphere belongs to all
    mankind.
        On the other hand, I received a letter, which maybe other
    members of the committee have, from Mr. Bob Stevens over at
    Lockheed Martin. I quote this part. It says, ``The multibillion
    dollar investments needed to establish an ocean-based resource
    development business must be predicated on clear legal rights
    established and protected under the treaty-based framework of
    the Law of the Sea Convention, including the International
    Seabed Authority.''
        So, on the one hand, you could take a position that the
    ocean, whether it is close to our shorelines, 200 miles or not,
    is nobody's business. In essence, there is no idea of
    internationalization. Nobody owns it. It is just simply a
    question of whether you want to go out and drill or not and
    take your chances.
        But what Mr. Stevens is saying is that as a practical
    matter in terms of American businesses, very few such drillings
    are going to occur that involve hundreds of millions of
    dollars, if not more, without some legal basis, some assurance,
    some treaty, as a matter of fact, that protects their ability
    to do so. We can talk about all of those mineral resources
    being out there until we are blue in the face, but the facts
    are that there is very little drilling for them without people
    feeling very precarious about it. And American businesses among
    them are saying if we are serious about energy resources,
    energy independence, and our own security, then we need this
    framework.
        It is a legitimate argument as to whether anybody owns
    anything here. All I am saying is the treaty provides a
    practical means by which we might proceed in this world and
    particularly in this country, given the resources and the
    investments that we have.
        I come back to this with questions to those of you who have
    been testifying about this. I think it is a central issue in
    this. I would say, Secretary Rumsfeld, you have been I think
    fairly even-handed in discussing philosophically the question.
    But how do you come down on the question of Mr. Stevens'
    letter?
        Why would Lockheed Martin proceed without there being at
    least the assurances provided by Law of the Sea?
        Mr. Rumsfeld. Well, I don't know if they would proceed. But
    it seems to me that a businessman makes a cost and a benefit
    and risk analysis. They want as much certainty as they can get.
    And there is no question, but it is perfectly logical for
    businesses in this instance to prefer certainty.
        On the other hand, businesses all the time enter into
    uncertain investments. And, at some point, they decide that the
    risk is realistic for the investment and they go right ahead
    because there is nothing preventing them from doing that.
        Second, I haven't thought about this, but having been in
    business, seems to me the easiest thing in the world if
    somebody really wanted to do it, the American companies have
    the technology. They are skillful. They have resources. And
    they can always do a joint venture with another company that is
    a member of the Law of the Sea. I don't know why they couldn't.
    Maybe they can't.
        Maybe they wouldn't get a license if it was a joint
    venture. But I don't know the answer to that question. But
    there is nothing that I have seen that legally in any way
    prevents them, other than their assessment, as the chairman
    said, of what the risk is. And that is fair.
        Senator Lugar. Well, of course, that is a good statement.
    But the point is that companies are not taking the risk. We
    keep asking American investors to find more energy and to at
    least deliver us from the reliance we have had on Middle
    Eastern oil, for example, or other situations.
        And businesses could take that risk.
        It is an interesting equation that perhaps you tie up with
    somebody who is a Law of the Sea Treaty person. But this then
    really does legitimize in a way the Law of the Sea. You are
    using the Law of the Sea once again to make possible the lack
    of risk for an American business and sharing whatever profits
    there may be. Already objection has come that the sharing of
    royalties is not in our interest even though that has been
    downsized over the course of time.
        But how did the Bush administration come in 2002 to the
    thought that this should be the prime treaty? Why was there a
    change of view at that point?
        Mr. Bellinger. I guess that would go to me. My job, one of
    my responsibilities as NSC legal adviser--although after 9/11
    we were mostly focused on other things, like terrorism--was, in
    fact, to look at all of the treaties that we had inherited from
    the Clinton administration that were before the committee here
    and decide which ones were our priorities.
        And we took a really good scrub at it. Any administration
    does. They are not confident in the priorities of the last
    administration, and we knocked a number of things off the list.
        The Law of the Sea Treaty we were particularly skeptical
    of. There were lots of people in our administration, and we had
    a lot of internal differences about whether this really was the
    right thing. And it took us close to a year, until February
    2002, to move it to the top of the list.
        I wouldn't say it was the administration's top treaty
    priority. We didn't rank them 1 to 100. But we said that this
    was a treaty that was a priority that the Senate should act on.
        And just to summarize, there were the military advantages,
    particularly after 9/11, when we were asking our military to do
    more with less, and it was easier to rely on a legal right. And
    I think Secretary Rumsfeld acknowledges that part. But the
    economic and business advantages were things that just could
    not be gotten in other ways.
        If there was another way to do it, I think it would not
    have been--that would not have been a good argument. But we
    couldn't see another way for American companies, particularly
    as the Arctic opened up and enormous advantages were there for
    us, and we were watching Canada, Russia, Denmark, Norway, all
    making billions of dollars.
        Norway has a sovereign wealth petroleum fund of $700
    billion that it has gotten for its people from oil and gas up
    in the Arctic. And so, we see what they have been doing up
    there and said for our companies to be able to do this, we need
    to become party to the treaty.
        So that was an additional benefit. And then there were
    environmental benefits as well for the health of the world's
    oceans.
        Senator Lugar. Thank you very much.
        The Chairman. Thank you, Senator Lugar.
        Senator Inhofe.
        Senator Inhofe. Thank you, Mr. Chairman.
        I won't go into what I did this morning when we had the
    generals there. I say to you, Secretary Rumsfeld, I commented
    from my experience in the military that we have a chain of
    command, and it is kind of interesting all of these people, and
    this morning we had actually 24 stars before us. And yet I
    submitted a letter of 33 stars who are retired.
        It seems like once they retire, things kind of change. And
    I always suspected that was a little bit had to do with the
    chain of command. Of course, President Obama is the--and before
    him, of course, President Bush was commander in chief.
        The Chairman. Can I just say to you, Senator--no, I will
    give you your time. I am not going to invade your time. But you
    are impugning the integrity of their testimony this morning.
        Senator Inhofe. No. No, I am not.
        The Chairman. Each of them said they were there personally.
    It was their personal belief. No one twisted their arm, and no
    one requested them otherwise. And to suggest otherwise----
        Senator Inhofe. OK.
        The Chairman [continuing]. Is not to believe----
        Senator Inhofe. Not suggesting otherwise. I know the chain
    of command. That is all.
        I would ask you, Secretary Rumsfeld, how does it serve our
    national security interests to send nonappropriated,
    essentially entitlement spending to an international
    organization from payments that would go to countries but would
    come from us? Is there any way you can see somehow that
    enhances our national security?
        Mr. Rumsfeld. No, Senator. I think what the admirals and
    generals testified to was narrowly their interests that relate
    to the Department of Defense.
        Senator Inhofe. OK.
        Mr. Rumsfeld. And they clearly did not get into anything
    that is broader----
        Senator Inhofe. Yes. In fact, I wasn't surprised that they
    wouldn't want to get into that.
        Mr. Rumsfeld. Right.
        Senator Inhofe. But I would like to ask you, Mr. Groves, I
    presented the case on two of these hearings now that I am still
    waiting to see if anyone really disagrees with it, and that is
    under our royalties currently, the royalty percentage ranges
    between 12.5 and 18.75 percent. That varies because of the
    point at which a company is not willing to go in and risk its
    capital to go after. That is the main reason we have a range
    instead of a specific amount.
        The 7 percent, granted, it wouldn't happen for 12 years.
    But at that point, it would. And while you said in your
    testimony, Mr. Groves, that there is no way to try to predict
    exactly what that would be, the U.S. Interagency Extended
    Continental Shelf Task Force said it would be billions, if not
    trillions.
        So I felt that maybe a trillion dollars as an example would
    not be unrealistic. Would you like to comment in terms of that,
    the amount of money that we could be talking about here?
        Mr. Rumsfeld. It sounds to me like we may have mixed the
    royalties that relate to the 200-miles area, as opposed to the
    deep seas.
        Senator Inhofe. No, I am talking about the Extended
    Continental Shelf.
        Mr. Rumsfeld. Right.
        Senator Inhofe. Yes, because I----
        Mr. Rumsfeld. As I understand it, the other hasn't even
    been set, has it?
        Senator Inhofe. But the reason I am asking the question is
    many are saying here, and they have said at both of these
    hearings, that without this we can't get in and develop the
    Extended Continental Shelf. That is a question I would like to
    have you address.
        Mr. Groves. Right. The major take-away you should have here
    is that we don't know how much money is really at stake.
        Senator Inhofe. That is right.
        Mr. Groves. I mean, there has been no study about the value
    of the hydrocarbon resources that are on the U.S. ECS, which is
    vast. It is twice the size of California. Starts on the east
    coast, goes to the west, up to Alaska, and down in the South
    Pacific.
        And yet we can sit here today and have no idea how much oil
    and natural gas is out there, and yet pledge to sign on to a
    treaty that would commit us to paying between a 1-percent and a
    7-percent royalty on those hydrocarbons forevermore. So that
    doesn't sound to me like a very fiscally responsible thing to
    do when we don't even have the first clue about how much is out
    there.
        Now the ECS Task Force has put the only number out there
    that I have ever found, which, as they said, could be trillions
    of dollars. Trillions, with a ``T'' and plural. So we know, at
    least from a gross estimation, that we are talking about a
    significant amount of money.
        But until that study is done, until we have even the
    slightest idea of how much money we could be giving up for this
    treaty, I don't think it is very responsible or prudent to
    accede to it.
        Senator Inhofe. I would agree with that. A lot of
    discussion has been on the--talking about a place at the table.
    I contended this morning that I am not sure where the table is.
    I mean, we have the IMO, and apparently, it has performed well.
        What I would like to have you do, Mr. Groves, is talk a
    little bit about the differences between the Council and the
    Assembly and how veto works in this respect.
        Mr. Groves. Sure. The International Seabed Authority, or it
    is called ``The Authority,'' is made up of a Secretariat, it is
    made up of a Council of 36 countries, and it is made up of the
    Assembly of 162 countries, and that is called the ``supreme
    organ'' of the Authority.
        Now there are a couple of narrow questions. Narrow, but
    important questions that the Council can make recommendations
    on that the Assembly must consider. One of those is the
    distribution of these article 82 royalties. But what has been--
    what is basically the ability to block consensus has been kind
    of transmogrified by proponents of the Convention into this
    blanket veto power that the United States would have over the
    entire operations of the authority, when, in fact, it is a very
    narrow ability.
        And if we have the ability to block consensus on the
    Council, so do the other 35 members, including my favorite
    member, Sudan. But between the two bodies, when you have got a
    council that is making recommendations about the distribution
    of article 82 royalty and you have got an assembly, which is
    the supreme organ making the final decisions about the
    distribution of those royalties, we know in the end who is
    going to win that discussion, regardless of whether there is
    some balance of authority between the two bodies.
        We know that because we've studied other international
    organizations in a multitude of contexts.
        Senator Inhofe. Well, it would seem to me that it is kind
    of not all that significant to be talking about that anyway.
    The big issue is they have the power to extract that money that
    otherwise would be royalties to the United States.
        Mr. Groves. Yes, sure. Before we are talking about this
    supposed veto, we have already committed to make all of those
    article 82 royalty payments to the Authority for
    redistribution. So, for me, I think the horse is already out of
    the pen.
        Senator Inhofe. I noticed during the previous--yes?
        Mr. Rumsfeld. A comment. The word ``veto,'' I think, is a
    little confusing in the sense that it leaves the impression
    like our Constitution where a President can veto something, or
    it leaves the impression that like the United Nations, where we
    and other countries have a veto in the Security Council.
        In this instance, it is much more like our role in NATO,
    where I served as Ambassador I guess 40 years ago, where it is
    operated by consensus. And watching how that works is really
    quite different from our Constitution or even different from
    the U.N. Security Council.
        A second point on the military issue that you raise. Again,
    I am no expert, but I read this about the military activity
    exemption. My impression is there is no definition of the so-
    called ``military activity exemption'' and that the structure--
    the executive, legislative, and judicial structure that Mr.
    Groves described--would be where the definition of that phase
    would eventually be decided.
        And, if you think about it, a military activity can
    simultaneously be an economic activity and an environmental
    activity. I can remember we had lawsuits against us when I was
    serving as Secretary of Defense the second time because SONAR
    was adversely affecting whales.
        And you can end up with a series of problems where people
    contest this because of the lack of a definition, it would seem
    to me. And frankly, I don't think I am smart enough to know
    what that definition could be without leaving enormous areas of
    ambiguity.
        Senator Inhofe. Yes. I do remember that discussion. And Mr.
    Groves, I noticed you were making some notes and had some
    comments on responses from some of the witnesses. Is there
    anything that you would like to add right now in this time that
    might be helpful to us?
        Mr. Groves. Oh, boy. Such a great open-ended question.
    Well, I think I would just like to debunk the idea that there
    are oil companies that are waiting for us to join this treaty
    in order to engage in exploration of our Extended Continental
    Shelf.
        There is a chart in my testimony--I have got it, the one
    that looks like this--that indicates all of the areas of the
    Extended Continental Shelf in the Gulf of Mexico that the
    United States has already leased out to American and foreign
    oil exploration companies. So the idea that this is going to be
    some great prohibition on this development is something that I
    don't agree with.
        These companies have made the business decision to buy
    multimillion dollar leases from the U.S. Government to go out
    on the Extended Continental Shelf, regardless that we are not a
    party to this treaty and whatever international certainty that
    comes along with it.
        So if there was one thing I would add, I would just add
    that.
        Senator Inhofe. I appreciate that. And Mr. Chairman, I
    appreciate the time. But one last thing, Are there any
    frailties that you can think of in the IMO, something that
    hasn't worked in the past that would be corrected by this?
        Mr. Groves. The IMO is the forum where all of the things
    that the proponents allege are being discussed at the Law of
    the Sea meetings are actually being discussed.
        Senator Inhofe. That is the real table when you say a place
    at the table?
        Mr. Groves. That is correct. That is where they are drawing
    the traffic separation schemes and the archipelagic sea-lanes
    through Indonesia and discussing treaties and other
    environmental obligations. That is where actual multilateral
    decisions are made, in that forum.
        Senator Inhofe. Thank you, Mr. Chairman.
        The Chairman. Before I recognize Senator Isakson, I just
    think it would be helpful for the record. Mr. Bellinger, do you
    have any comment with respect to the argument on the Outer
    Continental Shelf?
        Mr. Bellinger. This is the point on Mexico?
        The Chairman. The argument that Mr. Groves just made with
    respect to the ability to exploit and the royalties issue.
        Mr. Bellinger. Yes, well, I think this is perhaps the most
    important question for the Senate really is the suggestion is
    that if we don't join the Convention, then we still get all the
    benefits. And so, it is a choice between joining a flawed
    Convention or not joining the Convention, and then U.S.
    companies still get to do all those things and they don't have
    to pay anything.
        But that seems to me a false choice, at least based on what
    companies have been saying to us. It is not, do the royalties
    flow to the ISA or to the Treasury? Of course, if I had that
    choice, I would much prefer to have all of the royalties paid
    to the Treasury.
        But the choice seems to be companies will either mine in
    the deep seabed and in the Extended Continental Shelf and are
    willing to pay a small amount of royalties after 5 years or
    allow the U.S. Government to do it, or they won't do it at all.
    So the choice is either lots of royalties for the Treasury and
    lots and lots of money for U.S. companies and some small amount
    that goes to the ISA, or nothing at all. That seems to be the
    choice that is confronting us.
        The Chairman. I see you were taking a deep breath. Were you
    about to--did you want to add to that, sir?
        Ambassador Negroponte. I would say that this argument is
    particularly pertinent with respect to the Arctic, and I
    represented Secretary Rice at one of the Arctic Circle
    conferences with the Russians, the Danes, the Norwegians, and
    the Canadians. And it was clear that this is one area where our
    companies do feel inhibited from exploring and exploiting
    beyond 200, where we may have Continental Shelf that extends as
    far out as 600 miles in the Arctic Ocean.
        So I think it is important that that issue be resolved, I
    believe, for our----
        The Chairman. We will come back to that. I want to come
    back to that when we get into the second round.
        I would just say to Mr. Groves, you are right. They are
    buying some leases, and they are very smart to do so. But there
    is a huge gulf between buying the lease and sitting on it.
    There are a whole bunch of leases down in the gulf that have
    been owned for years, but they don't exploit them. They are not
    buying them and drilling.
        And the differential is the capitalization that it requires
    to exploit, and that is really where the nub of this is. But we
    will come back to that. I want to come back to that if we can.
        Senator Isakson.
        Senator Isakson. Thank you, Mr. Chairman.
        And I apologize that I am late, and I apologize to the
    panel that I am late. I really have a compliment and then one
    question that is, I think, significant.
        But I want to thank Secretary Rumsfeld and Ambassador
    Negroponte for their service to the country. I remember
    Secretary Rumsfeld's transformation of our military and how
    well it prepared us for the unseen events of the last decade. I
    saw John Negroponte in Baghdad in the most difficult days of
    our conflict there, and both of you deserve tremendous credit
    for your service to the country.
        My question is to Mr. Bellinger and Mr. Groves. I am not an
    attorney. I love listening to attorneys going back and forth.
    But I have a University of Virginia law school student who is
    an intern for the summer. So I posed to him this question of
    the veto. I said, ``I want you to research this thing and read
    this thing, and I want to talk about the veto for a second
    because some people say we have got a veto, and some people
    says, well, now you see it and now you don't.''
        He did a beautiful paper for me, and I want to read two
    quotes from the treaty, and then I would like both of you to
    comment on it as it relates to this question of do we have a
    veto or do we not?
        One is that the veto is the absence of any--I mean, the
    consensus, as defined by the treaty, is the absence of any
    negative objection or formal objection from the members. Is
    that correct? Which means if there was a proposal before either
    the Council or the Assembly, as long as nobody objected, then
    they had consensus and they could move forward.
        But if one member of the 35-member Council objected, then
    what do you do? And I want to read this sentence. ``If all
    efforts to reach a decision by consensus,'' which is nobody
    objecting, ``have been exhausted, decisions on questions of
    procedure in the Assembly shall be taken by a majority of the
    members present and voting, and decisions on questions of
    substance shall be taken by two-thirds majority of members
    present and voting.''
        That says to me that we may have a veto to stop something
    from move because we can stop consensus, but the veto can be
    overridden by a two-thirds vote of the full Aassembly or by a
    majority vote of those voting in the Council. And I just would
    like both of you to comment on am I right or is my law student
    right, or am I wrong or is my law student wrong?
        The Chairman. Before--can I help your law student a little
    bit?
        Senator Isakson. I am not mentioning his name. I don't want
    to get him in trouble. [Laughter.]
        The Chairman. Well, I don't want to get him in trouble
    either. But he is actually taking that from the 1982 original
    agreement and not from the agreement as amended.
        Senator Isakson. Well, good. That is the kind of
    information I am looking for. So I would like to hear from both
    of you.
        Mr. Bellinger. Well, I have the greatest respect for the
    University of Virginia, where I have my own master's degree
    from. So, and I love University of Virginia law students. But I
    would say that the longstanding position of both
    administrations, in fact, multiple administrations, on this
    very point is that we fixed the problem in the Council voting
    to give the United States the predominant voice.
        One, we are a permanent member of the Council. So we are
    the only country that is a permanent member of the Council. And
    two, the Council has to be the one to make decisions on
    administrative, budget, or financial matters. And on the
    sentence that you just read where ultimately there is not
    agreement and it gets referred back, you did not mention the
    clause that says--and this is in section 3, paragraph 5,
    ``Except where the Convention provides for decisions by
    consensus in the Council.''
        And so, the United States is always in the Council. We are
    always the permanent member. Section 3, paragraph 2 says the
    decisionmakings and the organs of the Authority should be by
    consensus. The clause there says that except where the
    Convention provides for decisions by consensus in the Council,
    which refers to administrative, budgetary, or financial
    matters.
        So the United States would have a veto over any decision
    relating to administrative, budgetary, or financial matters,
    which would include the distribution of fees. So that is why we
    believe, the Bush administration, which looked at this,
    believes the United States would have the critical role in
    deciding where any of the fees went.
        And I believe that Mr. Groves conceded that point. But even
    if he didn't, that is our interpretation. And I can see this is
    why you love lawyers.
        Mr. Groves. I am a lawyer, and I don't concede anything,
    John. Actually, I am a recovering lawyer.
        Now there is no doubt what the treaty says in the black
    letter law of the treaty when consensus can't be reached, and I
    would concede that if the United States was a party of the
    treaty and on the Council that it could muddy that up and block
    consensus on some important issues.
        The important part is what the treaty is silent about,
    which is what happens where no consensus can be reached on the
    Council at all. Let us say, hypothetically, because the United
    States is putting its foot down on something regarding
    royalties.
        And from the silence of the treaty, the only rational
    explanation is that the Assembly could act by passing a
    resolution without the recommendations of the Council. You see,
    at the end of the day, article 82 royalty distributions, the
    Council only makes recommendations to the Assembly, and it is
    the Assembly that makes the final decision.
        And the reason why we know this to be true is that further
    on in the article in the 1994 Agreement, it says that the
    Council's decisions on financial matters shall be based on the
    recommendations of the Finance Committee. So if the Council has
    to be basing their recommendations on the recommendations of
    the Finance Committee, then it goes all the way down the line.
        At one point or another, someone is going to make a
    decision. We see this in international organizations all the
    time. And from my view, especially with the silence of the
    treaty, it is going to be the supreme organ of the Authority,
    the 162-member Assembly, that makes that decision.
        Senator Isakson. Mr. Chairman. Mr. Chairman, you were
    commenting about the 1994 Agreement, and I think that you are
    talking about the title or part 11, which was the subsequent
    amendments the United States proposed. Is that correct?
        The Chairman. That, but also I think in 1994--on page 272,
    section 3, decisionmaking, it actually gave us protection. I
    will read it to you. ``Decisions of the Assembly''--and this
    goes to Mr. Groves' deep concern about the Assembly and what
    the Assembly might do. The achievements, what we achieved in
    1994 through the implementing agreement, which is very
    important, made clear that the Assembly is not permitted to
    take action on any matter within the competence of the Council
    unless the Council has first recommended that the Assembly do
    so. So the Council controls the agenda.
        Now let me read right out of it. ``Decisions of the
    Assembly on any matter for which the Council also has
    competence,'' and that is laid out, and that is the
    distribution revenue and a whole bunch of other things. So the
    competence is in the Council. ``Any decision for which the
    Council has competence or on any administrative, budgetary, or
    financial matter shall be based on the recommendations of the
    Council. If the Assembly does not accept the recommendation of
    the Council on any matter, it shall return the matter to the
    Council for further consideration. The Council shall reconsider
    the matter in the light of the views expressed by the
    Assembly.''
        In other words, it is a round robin. Council has the final
    say. Council has the original say, has to go back to the
    Council. There are serious limitations on it. And the Assembly
    effectively does not have this fearful power to come in and do
    something that you might be concerned about.
        Now I might also add if you don't like what it is doing--I
    mean, we can come back to this. But let us say you get your
    businesses out there, and suddenly, the royalties are being
    produced. And all of a sudden, it is a bonanza, and you get a
    trillion dollars. And we can come back to that in a minute.
        Article 317, page 208, ``A state party may, by written
    notification addressed to the Secretary General of the United
    Nations denounce this Convention and may indicate its reasons.
    The denunciation shall take effect one year after the date of
    receipt of the notification.''
        In other words, you can just get out of it. You are not
    bound to trillions of dollars. You are not locked in for a
    lifetime. Just leave. If you don't like what it is doing and it
    is acting against our interests, you get out of it.
        So, I mean, this is really not as complicated as it is
    being made, but we ought to continue to go at it.
        Mr. Groves. If I may just comment briefly, Mr. Chairman?
        The Chairman. Yes.
        Mr. Groves. First, on the Council issue. Yes, the language
    says that any of these administrative, budgetary, and financial
    matters shall be based on the recommendations of the Council.
    But just three paragraphs later, it says decisions by the
    Assembly of the Council having financial or budgetary
    implications shall be based on the recommendations of the
    Finance Committee.
        So if it is----
        The Chairman. That is correct. We are a member of the
    Finance Committee.
        Mr. Groves. But we can't block consensus on the Finance
    Committee.
        The Chairman. I believe we can. You want to speak to that?
        Mr. Bellinger. We are also a permanent member of the
    Finance Committee, and we can block or control the Finance
    Committee. These were really the great changes that the United
    States made.
        The Chairman. It is also stated----
        Mr. Bellinger. Let me just add one thing, if I could,
    Senator? Two things, really, for Senator Isakson. It is really
    quite useful.
        A paper was done by one of our negotiators, which I would
    encourage your staff to look at--Bernie Oxman, back in 1994--
    that described how all of President Reagan's concerns were
    fixed by U.S. negotiators and how they ended up giving the U.S.
    enormous influence over every one of these issues, including
    the permanent seat on the Council and the effective veto. And I
    will ask that that could be put into the record.
        Mr. Bellinger. One of the most interesting things about
    that, for both of you, is that Russia was so concerned that the
    United States was given so much influence in the Council that
    they refused to sign on and actually abstained from the vote
    over the 1994 amendments because they felt that they
    discriminated in favor of the United States.
        Mr. Rumsfeld. Mr. Chairman, may I make a comment on this?
        The Chairman. Absolutely. Yes, sir, Mr. Secretary.
        Mr. Rumsfeld. As a law school dropout, I am glad I wasn't
    asked to comment. But I have a question about the 1994
    amendments. They have been mentioned repeatedly, and I don't
    have any idea what their standing is, given the fact that a
    number of countries have not signed onto them.
        Second, one of the big issues for President Reagan was
    technology transfer, and that was addressed in the amendment.
    And as I recall, it went from mandatory technology transfer to
    a recommendation that technology transfer occur from the
    developed countries to the developing countries. I forget the
    precise language, but it is something like that.
        It seems to be that it is entirely possible, and I would be
    happy to hear the experts on the subject, that in applying for
    licenses, the decisions with respect to licenses could be
    dependent on the degree of accommodation a company is willing
    to make with respect to technology transfer.
        So when we say that the Reagan concerns were fixed, they
    were addressed for sure and in some instances fixed. But I
    think in some instances, we punted.
        The Chairman. I would let the experts speak to that, the
    people who were there during that time. I think that is
    important.
        Mr. Bellinger. I will take a stab at that. Again, these
    issues are addressed at length in Professor Oxman's article,
    which describes all of the 1994 changes. The tech transfer
    requirements, of course, were dropped. The production
    limitations were dropped. The barriers to access to deep seabed
    mining were dropped.
        And the idea that the authority could actually decide who
    could get mining rights and who couldn't, which was really one
    of our concerns that we would have this group of countries that
    would look at U.S. mining companies and say, ``Well, we don't
    really like you'' was also dropped. And U.S. companies were
    actually grandfathered in so they would not have to make some
    of the same showings that other companies around the world
    would have to show. That was one of the reasons for the Soviet
    protest.
        Mr. Groves. It is another reason why Lockheed has little
    objection to the treaty.
        Mr. Bellinger. And in addition, there would not be an
    evaluation of the technical qualifications of applicants. It
    would be based on a first-come, first-served basis as long as
    people met basic financial qualifications.
        Senator Isakson. Mr. Chairman.
        The Chairman. Yes, sir.
        Senator Isakson. I stirred up far too much of a hornet's
    nest.
        The Chairman. On the contrary, I think, actually, you have
    helped clarify significantly some very important areas. And if
    I could just take 30 seconds to add so that it is in the
    record, I really want it to be in the record in this part.
        Page 279, section 9, subsection 8, says, ``Decisions in the
    Finance Committee on questions of procedure shall be taken by a
    majority of members present and voting. Decisions on questions
    of substance shall be taken by consensus.''
        I can't think of an agreement, I can't think of an
    international treaty in which the United States of America has
    the only permanent seat and the ability to block anything and
    protect our interests and, if we don't like it, can get out of
    it. So I think it is important to have that in its proper
    context.
        Senator Isakson. I will just take 1 minute. This is a very
    critical question, which is why I asked it, and I appreciate my
    UVA law student doing such a good job. He got everybody
    engaged.
        But everybody has to remember they are communicating with a
    University of Georgia Business School graduate when they are
    talking to me, and I would like to ask Mr. Groves and Mr.
    Bellinger, if you wouldn't mind, to try to give me a one-pager
    that addresses this issue of consensus and veto and majority of
    the members present voting to override or two-thirds to
    override. If you could do that and how it applies,
    understanding the 1994 amendments that may have taken place.
        And one other question, Mr. Chairman, and don't respond to
    this because I know it will drag it out. But I was reading
    paragraph 4 as you were reading it. But paragraph 5 is still in
    this book, and I need to know if the 1994 treaty extracted
    paragraph 5, which refers to the majority of those voting,
    present voting, and refers to the two-thirds majority.
        We won't get into that debate now, but I would like to know
    that.
        The Chairman. Fair enough.
        Senator Isakson. I apologize.
        The Chairman. No, I think it is a terrific request, Senator
    Isakson. I think it is very important, and we will look for
    that full explanation. I think it would be very helpful to the
    committee, indeed.
        Mr. Groves. To the extent that anything in Law of the Sea
    can be distilled to one page, we will do our best. [Laughter.]
        The Chairman. Thank you.
        Senator Lee. Thanks for your patience.
        Senator Lee. Thank you, Mr. Chairman.
        And thanks to all of you for your service today to this
    committee and for your service to our country.
        Mr. Bellinger, I wanted to start just by asking a basic,
    fundamental question about something this treaty does. By
    creating a royalty obligation as to the exploitation of
    minerals from the seabed outside of the 200 nautical mile
    range, aren't we creating a construct that recognizes ownership
    or at least a degree of sovereignty in an international
    organization? Isn't that what the word ``royalty'' implies?
        If somebody can charge a royalty for the exploitation of
    minerals on any property, doesn't that imply that they own that
    land or at least that they possess the sovereign, the incidence
    of sovereignty with respect to that land?
        Mr. Bellinger. I wouldn't say so. I think I would just see
    that as a fee that the United States has agreed to, to mine in
    that area.
        Senator Lee. So if you own land, and ExxonMobil wants to
    develop oil on that land, and I say I am going to charge you a
    royalty for exploiting this resource on Mr. Bellinger's land,
    wouldn't I be implying that I have some sort of ownership or
    sovereign right with respect to that land?
        Mr. Bellinger. Well, again, not necessarily. I think that
    it is something that was agreed to in the treaty without a
    broad philosophical construct of the significance of what it
    meant for a royalty provision. I mean, as you know--because I
    know you have a long legal pedigree--that property rights and
    bundles of sticks can get to be very complicated as far as what
    is actually a property right, and it can be used in different
    contexts and different things.
        And it is the same with respect to treaties. So simply that
    we agree to pay something here does not mean that we are
    conceding that the international community owns the Extended
    Continental Shelf.
        Senator Lee. OK. But we are creating an interest, a
    financial interest of one sort or another. One that could be
    construed as a property interest.
        I appreciated your acknowledgment with regard to Senator
    Risch's comments on article 222, that as I believe you
    acknowledged there was at least an ambiguity there as to the
    meaning of the word ``applicable'' and the phrase ``implement
    applicable international rules.''
        If there is at least an ambiguity there, wouldn't that
    suggest that an international arbitration panel, perhaps one
    convened pursuant to annex 8 under the treaty, could also
    conclude that there is an ambiguity there, and they could
    decide that issue one way or the other?
        Mr. Bellinger. I guess I would say on that, Senator, I
    would think not. I mean, I think it is a good question for
    someone who is reading that provision. But I can tell you as
    someone who spent a lot of time reading treaties, particularly
    ones that were allegedly--I mean, honestly, this was my job for
    4 years as legal adviser, to defend against other countries who
    claimed that certain things were applicable to the United
    States.
        And applicable means that we are legally bound by it, not--
    --
        Senator Lee. If we get a good arbitration panel, if we get
    at least three who are well trained, who are doing it right,
    doing it the way that we would like it to be done, your
    position would be that they are going to reach the right
    conclusion?
        Mr. Bellinger. I certainly think it is pretty clear that
    ``applicable'' international obligation means something that is
    we are legally bound by.
        Senator Lee. OK. Thank you.
        Secretary Rumsfeld, I recently had a retired Navy commander
    in my office. He made the following statement regarding this
    treaty. He said we should not in any way restrict the ability
    of the U.S. Navy to serve its primary purpose--protecting the
    Constitution of the United States of America against all
    enemies, foreign and domestic.
        Ratifying the U.N. Convention on the Law of the Sea will
    expose the U.S. Navy to unnecessary, counterproductive, and
    extraconstitutional bureaucratic and regulatory oversight. Do
    you tend to sympathize with that statement?
        Mr. Rumsfeld. Well, I have to confess I can't look around
    all those corners, but we have seen an explosion of litigation
    in the world. I don't know how many lawsuits have been filed.
        But every time anyone in the U.S. Government turns around,
    they get lawyered up. There is something like 10,000 lawyers in
    the Department of Defense today. And I don't doubt for a minute
    that that could happen.
        It seems to me that the--I watched some of the military
    panel this morning. And they are wonderful people, and they are
    talented. As they said things, I did not hear a lot of
    instances as to why we believe that with this, the Chinese or
    the Iranians, for example, will alter their behavior notably. I
    just didn't.
        The Law of the Sea has been around. They haven't solved
    some of the problems in the South China Sea. China and the
    neighboring countries are members. And in terms of dispute
    resolution, I haven't seen it.
        In direct answer to your question, it seems to me that
    anything that they said that they believe this treaty could or
    should do that would benefit us--and there is no doubt in my
    mind but there is certainly some things that it would with
    respect to the military--the question is what is their weight
    against some other aspects of it, the disadvantages?
        It seems to me then the United States of America ought to
    pursue those on a bilateral or a multilateral basis if they are
    as important as they say. And I don't doubt for a minute that
    the very credible military officers were making points that
    were valid that could be pursued bilaterally or multilaterally.
        Senator Lee. And at the end of the day, Mr. Secretary, any
    legal rights, legal protections that we have, to the extent
    they have to be enforced, would have to be enforced through our
    own military might, would they not?
        Mr. Rumsfeld. Regardless of whether you are in the treaty
    or not.
        Senator Lee. In the treaty or not. OK.
        Mr. Groves, would you agree with that assertion? In the
    treaty or not, legal rights, legal protections that we have,
    whether we draw them exclusively from customary international
    law, as we would were we not to ratify this treaty, or if we
    were also to draw additional rights or perhaps same set of
    rights from the treaty. Don't those have to be enforced, to the
    extent they have to be enforced, by our military?
        Mr. Groves. I would agree with that, and I think that the
    members of this morning's panel would agree with that. They
    have said, in no uncertain terms, that when push comes to
    shove, we are going to assert our rights. We are going to
    assert our power. We are going to project our power.
        And we hope that they will do so whether or not they are in
    any treaty or not to protect American national security
    interests. Their only argument is that somehow being inside the
    treaty will enhance their abilities to do so. I just haven't
    seen where that enhancement lies.
        Their diplomatic protests would be the same. The same
    language. Their operational assertions would be the same. None
    of those things would change. But somehow they are making a
    claim that I just haven't found the substantiation for yet that
    it enhances their ability to perform their mission.
        Senator Lee. Thank you. Let me follow up with an additional
    question I wanted to ask of you, Mr. Groves.
        Let us suppose that we get into an international
    arbitration, pursuant to, say, annex 8. We choose two
    arbitrators. Our opponents choose two arbitrators. We can't
    agree on the fifth arbitrator. So the fifth is chosen by the
    U.N. Secretary General.
        At the end of the day, three of the five arbitrators rule
    against us. They rule against us on a theory that we think is
    legally deficit. We think is wrong. It is against us. We don't
    like it.
        Is that judgment--notwithstanding our objections to it,
    notwithstanding the errors that we see in it--is it enforceable
    in U.S. courts?
        Mr. Groves. It is enforceable on U.S. territory because
    that is what the treaty says it is. And we have got at least
    one Supreme Court Justice who says so in dicta in the Medellin
    case. He discussed how decisions made by UNCLOS tribunals would
    be enforceable in U.S. territory.
        Senator Lee. Referring to Justice Stevens' opinion in
    Medellin. Is there anything about our rescission from the
    treaty, from the Convention, which couldn't become effective
    until a year after we have provided notice anyway? But is there
    anything about our withdrawal from the treaty, from the
    Convention, that would affect the validity and the impact of
    such a judgment after the fact?
        Mr. Groves. Under international law, no. And we are
    actually dealing with that issue right now in the Avena case,
    regarding the Mexican death penalty cases that was litigated
    through our system as Medellin v. Texas.
        We withdrew, the Bush administration withdrew from the
    optional protocol to the Vienna Convention on Consular
    Relations after they got a really bad judgment from them. But
    the judgment of the International Court of Justice in that case
    is still pending. It still has legal force and effect because
    we were under its jurisdiction when they made the judgment,
    regardless of our subsequent withdrawal.
        Senator Lee. Almost 30 years ago.
        Mr. Groves. The Avena case was during the Bush
    administration. You might be thinking of the Nicaragua case
    during the Reagan administration.
        Senator Lee. Indeed. Thank you very much. I see my time has
    expired.
        The Chairman. Thanks, Senator. I appreciate it.
        Senator Lee, you might be interested to know that the U.S.
    Senate has already approved a treaty that has the exact same
    procedure in it, and that is the--we gave our advice and
    consent to it in 1996. And not only does it subject the United
    States to arbitration, but in fact, it subjects us to
    arbitration under the Law of the Sea Convention.
        Senator Lee. May the Senate not err twice.
        The Chairman. Ratified. It seems to be working pretty well
    without problems. That, incidentally, was passed out under
    Chairman Jesse Helms. So----
        Yes, Mr. Negroponte.
        Ambassador Negroponte. Senator, I just had one point that I
    wanted to make with respect to how adhering to the treaty might
    be helpful in some circumstances with respect to our naval
    activities and operations and Coast Guard. And clearly, when
    you boil it down to a polar choice between the use of force and
    the application of law, well, the application of American
    military force is likely to win every time. I don't question
    that.
        But let us take the Proliferation Security Initiative, for
    example. There are instances where countries, friendly
    countries, have either had reservations and may even in some
    instances have declined to cooperate with us on a particular
    PSI mission because we are not party to the Law of the Sea. So
    that is an example of where I think the cooperative atmosphere
    on an issue of real security importance to the United States
    could improve if we accede to the treaty.
        The case of China and their exaggerated claims to the South
    China Sea, they are out of sync and out of line with the Law of
    the Sea because of the way they draw their baselines and their
    historical interpretation of their jurisdiction over those
    seas. And the best arguments are that they are not applying the
    principles that are embodied in the Law of the Sea.
        Well, we are disadvantaged in making that argument to them
    and along with other countries in Southeast Asia because we are
    not parties to the Convention. So, I mean, I can think of a
    number of instances where the application----
        And then the last one I guess I would cite is the passage,
    free passage through straits. I think we got--I mean, that was
    a really major accomplishment in the Law of the Sea Treaty.
    Think of the complications we might have if we developed an
    antagonistic relationship with a particular country that
    decided it wanted to make it difficult for the free navigation
    through straits for either surface or other kinds of vessels.
        So those are three examples I can think of where the
    treaty--and I don't think it is wrong for Mr. Groves to use the
    word ``enhance.'' But diplomacy has its limitations, but it can
    still be positive. ``Enhance'' is a positive word.
        Senator Lee. Thank you.
        The Chairman. Well, let me wrap this up a little bit, if I
    can, because we are under certain time constraint here.
        First of all, you all have been terrific, and I mean
    everybody. I think it has been very, very helpful to have this
    kind of back and forth.
        I would just say to Senator Lee and some of the others and
    Mr. Groves that you are operating on the principle that the
    United States has already established full jurisdiction and
    control over the Extended Continental Shelf. And I see you
    nodding to say that. And you point to the 1945 proclamation by
    Harry Truman regarding the Outer Continental Shelf Lands Act.
        The problem is that nowhere in that proclamation or
    anywhere else has President Truman or anyone else set out the
    longitude and latitude markers of the outer edge of our
    Continental Shelf. And the only way we can achieve certainty
    with respect to those demarcations is through an international
    agreement of some kind.
        Now we are not going to go on at length about that. I do
    want to pursue this, and we may well have some of you back or
    all of you back at some point in time here to--when we get this
    paper and we get people's answers and we get the answer on the
    record.
        I am concerned, Secretary Rumsfeld, about a recommendation
    for United States businesses to have to joint venture with
    another country to exploit our resources or what might be our
    resources. That really concerns me. I mean, if you want to talk
    about American sovereignty and American interests, I don't want
    to share it with another country.
        And under this treaty, if you import what you exploit, you
    don't have to pay any royalty. Royalty free if you are
    importing it to your country.
        So that is an extraordinary offering, and it comes to the
    real nub of this choice that we face, which I think Mr.
    Bellinger put his finger on, which is this is not a choice
    between sort of a flawed treaty and what the impact might be,
    and do you take some benefits in exchange for that? Or if you
    don't do it, you go out and get the same benefits.
        I think one of you suggested we ought to be doing these
    programs of distribution to these countries through our aid
    program. I don't know if you have been following the budget
    lately, but we ain't growing our aid programs. We are shrinking
    them.
        Our influence in the Middle East significantly reduced by
    our inability to be able to effect things, our ability to do
    counterterrorism, our ability to bring 60 percent of the
    populations of some Arab countries out of destitute poverty
    because of the absence of anything remotely resembling a
    Marshall Plan or anything like it in modern context is
    palpable.
        Sixty percent of these populations under the age of 25; 50
    percent under the age of 21; 40 percent under the age of 18.
    Some countries have 4 and 5 percent of their population at 4
    years old. And the question is, What are we all going to do
    about that?
        The idea that there may be some resources coming from
    something like this that goes to some of these countries may be
    a saving grace. And Senator Lugar has raised this question
    about sort of do you maybe get a trillion dollars or whatever
    you might get out of it. If you are seeing an untoward
    distribution of that, you do have this ability to get out of
    it, as I have said.
        But the bottom line is this, if we don't do it, there are
    no royalties, and there is no guarantee that anybody is going
    to drill. And the only reason I can say that to you is that the
    CEOs and legal departments of these companies are telling us
    that.
        Now you can choose not to believe Fortune 500 CEOs and
    their stock value interests and all the rest of it. It would be
    the first time I have known the Republican Party not to put
    some credibility in what they are saying.
        But you know, that is the choice here. It seems to me we
    have to keep this framed properly. So we will have additional
    hearings, and we will continue to explore this.
        You all have been enormously helpful in fleshing out a
    number of these considerations. The record is getting stronger
    as a result in terms of people's ability to make judgments, and
    that is what we want to do.
        So I am very grateful to all of you for coming. And to both
    the Secretaries, we are really pleased to see you continuing to
    dig in and to contribute, and we are delighted to have you here
    today. Thank you all very, very much.
        We stand adjourned.
        The record will stay open for a week, as it will from this
    morning's hearing, and we will be building the record in a
    written fashion also.
        Thank you.
        [Whereupon, at 4:55 p.m., the hearing was adjourned.]

            Letters and Additional Material Submitted for the Record

                   Letters Submitted by Senator John F. Kerry

    Letter From Heritage Submitted for the Record by Senator James E. Risch

                 Paper by Bernie Oxman Submitted for the Record
                         by Hon. John B. Bellinger III

     THE LAW OF THE SEA CONVENTION (TREATY DOC. 103-39): PERSPECTIVES FROM
                             BUSINESS AND INDUSTRY

                                  ----------

                            THURSDAY, JUNE 28, 2012

                                           U.S. Senate,
                                Committee on Foreign Relations,
                                                        Washington, DC.
        The committee met, pursuant to notice, at 9:33 a.m., in
    room SH-216, Hart Senate Office Building, Hon. John F. Kerry
    (chairman of the committee) presiding.
        Present: Senators Kerry, Casey, Webb, Shaheen, Coons,
    Lugar, Corker, and Isakson.

                OPENING STATEMENT OF HON. JOHN F. KERRY,
                    U.S. SENATOR FROM MASSACHUSETTS

        The Chairman. Hearing will come to order.
        Thank you very much for being here this morning. Needless
    to say, Capitol Hill is filled with a little bit of
    anticipation about the Supreme Court decision shortly, and we
    are going to prove that we can continue to do the Nation's
    business, notwithstanding that anticipation.
        I am delighted to have this very significant panel of
    business leaders here this morning to further help us evaluate
    and think about the Law of the Sea Treaty. And I want to just
    say a couple of words at the beginning to put in perspective
    sort of what really brought this about, why we are here.
        I have been accused of many different reasons. I just read
    something the other day in the papers about why this treaty is
    sort of here and what it represents, et cetera. And I think
    everybody has kind of got it wrong so far.
        I was actually out to dinner with Tom Donohue maybe a year
    and a half ago or so, and we were talking about a number of
    things on the agenda, but particularly energy policy. And at
    the very end of the dinner, Tom turned to me, and he said, ``By
    the way, when are you going to get this Law of the Sea Treaty
    done?''
        And I was completely taken aback. It was the last thing I
    expected to hear about at the dinner, and I said, ``Why are you
    bringing that up? Why is that a concern?'' He said, ``Are you
    kidding? I have got a bunch of members who are desperate to get
    this thing done so they can go out and explore and mine, do
    what is necessary to produce energy for America.''
        And so, that is what really flagged it for me, and I came
    back and talked to my staff. And I promised Tom that I would,
    in fact, look into it and give it a good faith effort. And that
    is what really brought us here because I met with various
    representatives of those industries and became convinced that
    American competitiveness and American jobs were at stake.
        We are not here because of any political agenda. We are not
    here because the administration decided this was the moment.
    This is really coming from America's business community, and I
    think people will hear that very powerfully here this morning.
    I think there is an urgency to it, and that is what we will
    examine today.
        We have heard already from our Nation's top military
    leaders. The Secretary of Defense, the first sitting Secretary
    of Defense testified in favor of it. We have heard from the
    Secretary of State and from every past Secretary of State,
    Republican and Democrat alike, who have together signed an op-
    ed that they wrote, which has been reproduced in national
    newspapers, regarding this treaty. We have heard from treaty
    experts and opponents, and we will hear from more still. We are
    not finished on that score.
        Our military leaders have consistently supported the
    accession to this treaty for more than two decades now, and
    some have argued that we should prefer to rely on customary
    international law to protect our navigational freedom. But most
    of the national security community completely disagrees with
    that and does not believe that we should leave our national
    security to an unwritten set of rules, subject to change by
    other countries and subject to change at any point in time.
        That capacity to have things subject to change also
    provides uncertainty to the business community. And as we hear
    again and again up here, nothing is more damaging to long-term
    business plans and investments, capital formation, job creation
    than a lack of certainty about what the rules of the road are.
        So, today, we shift away our focus from the military to our
    energy and economic security, and we are going to hear directly
    from top business and industry leaders who, combined, represent
    millions of businesses and jobs. Our companies want this treaty
    quite simply, bottom line, because it affects their bottom
    lines.
        Joining the Law of the Sea will provide benefits to U.S.
    business and industry that are not available through any other
    means. Just a quick few examples.
        Telecommunications industry. As we will hear shortly, we
    have vast undersea cable networks, and they provide a backbone
    for the world's voice and data networks. When there is a
    problem, if a country were to seek to block a company from
    laying a cable or impeding the repair of damaged cables, the
    Law of the Sea provides redress.
        A party to the treaty can bring suit on behalf of its
    companies within the context of the Law of the Sea agreement.
    But since the United States is on the outside of that agreement
    today, we cannot take advantage of this legal roadmap. Our
    companies have to piggyback on efforts by governments that are
    party to the Convention.
        So instead of standing up for our companies when they need
    our help, our failure to join the treaty actually forces them
    to look elsewhere--greater expense, greater uncertainty, lack
    of protection of American sovereignty. The status quo is simply
    not acceptable.
        Lowell McAdam of Verizon, CEO of Verizon, who I am very
    pleased is here today, will go into some of the detail
    regarding that. And all you have to do is listen to AT&T, the
    telecommunications industry, Verizon, others, all of whom urge
    accession to this treaty.
        On energy security, people come to the same conclusion. The
    United States is blessed with hundreds of thousands of square
    miles of Extended Continental Shelf. We can double the size of
    the United States, in effect, from what is undersea and
    available to us for exclusive jurisdiction, and that will be
    critical to our energy security for years to come.
        The only way to maximize the legal certainty and establish
    clear title over the extended shelf is through recognition by
    the Continental Shelf Commission. As a nonparty to the treaty,
    we are shut out from this process. We are shutting ourselves
    out.
        This makes a critical difference to our energy companies,
    as we will hear. They want and need certainty to invest the
    billions of dollars required to develop energy in the extended
    shelf, especially in the Arctic where the Chinese and the
    Russians are already laying claims. Instead of doing what we
    can do to encourage environmentally sound energy exploration in
    those areas, our failure to join the Law of the Sea is
    deterring it.
        We are pleased to have Jack Gerard here today to speak on
    behalf of the American Petroleum Institute and explain exactly
    why what I have just said is the case. Mr. Gerard is not alone.
    You can listen to Rex Tillerson, the respected head of
    ExxonMobil, who recently wrote to Senator Lugar and myself
    urging ratification of the treaty.
        Or listen to Marvin Odum, the head of Shell Oil Company,
    which employs over 22,000 people in this country and strongly
    supports joining the Law of the Sea. Marvin was, unfortunately,
    unable to join us today, but he has submitted testimony for the
    record. And his full testimony will be placed in the record as
    if read here in full.
        [The prepared statement of Mr. Odum follows:]

       Prepared Statement of Marvin E. Odum, President, Shell Oil Company

        As President of Shell Oil Company, I am pleased to have an
    opportunity to provide the Senate Foreign Relations Committee with
    Shell's views on United States accession to the Law of the Sea
    Convention and provide information, specific to the United States,
    about potential benefits of additional oil and gas production under the
    Convention.
        Shell Oil Company is the U.S.-based subsidiary of Royal Dutch
    Shell, headquartered in Houston, Texas. Shell employs approximately
    22,000 people in the United States.
        Shell's support for the Law of the Sea Convention is based on three
    points.
        First, enormous oil and gas resources are estimated to lie in the
    U.S. ``Extended Continental Shelf,'' an area that begins at 200 miles
    from shore and runs out to the outer edge of the continental margin of
    the United States. The U.S. Extended Continental Shelf off the coast of
    Alaska has been estimated by the U.S. Government to be at least 1
    million square kilometers, or twice the size of California. The U.S.
    Geological Survey estimates that the area north of the Arctic Circle
    contains nearly a hundred billion barrels of oil and trillions of cubic
    feet of natural gas, a vast untapped resource.
        Second, the Convention establishes a process through which Parties
    to the treaty can establish internationally-recognized claims over the
    resources in their extended continental shelf. Without this high degree
    of legal certainty, any future claims to oil and gas resources of the
    extended shelf would be vulnerable to legal challenge or subject to
    dispute. The resulting uncertainty would discourage the type of private
    sector investment needed to develop the resources.
        Third, the royalty rates set forth in the Convention are workable
    and acceptable to our company.

                 IMPORTANCE OF THE ENERGY RESOURCES GUARANTEED
                        BY THE LAW OF THE SEA CONVENTION

        Under the Law of the Sea Convention, all coastal states have rights
    to the resources, such as fish, oil, natural gas, and minerals, in or
    under the oceans within 200 miles of their coasts. This is the area
    known in the Convention as the Exclusive Economic Zone, or EEZ.
        The Convention also provides for exclusive rights to resources on
    the seabed and subsoil beyond the EEZ, if a coastal state is a party to
    the Convention and demonstrates to the Commission on the Limits of the
    Continental Shelf established by the Convention that the area meets the
    geological criteria of an extended continental shelf. The Extended
    Continental Shelf of the U.S. likely extends more than 600 miles into
    the Arctic Ocean off the coast of Alaska, encompassing a vast portion
    of the Arctic Circle.
        The U.S. Geological Survey (USGS) estimates that the area north of
    the Arctic Circle contains nearly a hundred billion barrels of oil and
    trillions of cubic feet of natural gas. The USGS estimates that this
    constitutes one-quarter of the world's undiscovered reserves, as well
    as extensive deposits of valuable minerals. Conservative estimates from
    the Bureau of Ocean and Energy Management place roughly 27 billion
    barrels of oil and over 120 trillion cubic feet of gas in Alaska's
    offshore without factoring in the massive U.S. Extended Continental
    Shelf.
        Shell has decades of experience in Arctic oil and gas development.
    This summer we plan to execute an exploration program on leases off the
    coast of Alaska. With an investment of more than $4 billion and a
    program that meets and exceeds regulatory requirements, we are
    confident that this is the first step to developing world-class
    resources there. To be clear, these existing leases are within the EEZ
    of the U.S., and production would come on line in the early to mid-
    2020s. But this work would tap a fraction of the resources within the
    geological formations off the coast of Alaska. Estimates from all
    experts say that the area beyond 200 miles into the U.S. Extended
    Continental Shelf is resource-rich.
        Although development in these extended shelf areas of the Arctic
    has not yet occurred, other countries bordering the Arctic Ocean--
    Russia, Canada, Norway, and Denmark--have ratified the Convention and
    are proceeding under its process at the Continental Shelf Commission to
    delineate their Extended Continental Shelves in the Arctic and secure
    their right to vast additional oil and gas resources. Although the
    United States is undertaking Continental Shelf mapping activities, any
    U.S. claims to oil and gas resources in the extended shelf would not
    have the international recognition that is afforded to Convention
    members. Moreover, until the United States ratifies the Convention, it
    has no opportunity to sit on the Commission and participate in
    decisions--including the review of other countries' claims--that affect
    its interests, including in the Arctic.
        The benefits of developing Alaska's offshore oil and gas resources
    are many. Offshore leasing and development--whether in the U.S. EEZ or
    the Extended Continental Shelf--encourages economic activity in the
    United States, leads to more domestic supply and an improved balance of
    trade, and increases government revenue.

                 THE NEED FOR LEGAL CERTAINTY FOR INVESTMENTS
                       IN THE EXTENDED CONTINENTAL SHELF

        More than 160 countries are currently Parties to the Convention,
    including all of the major maritime powers and all of the major
    industrial countries, and they can benefit from the legal certainty
    over resource development that the Convention provides. If the United
    States were to become a party to the Convention, it could participate
    in the internationally recognized process for claiming its Extended
    Continental Shelf and its rights over oil and gas, which would provide
    legal certainty for accessing and developing these energy resources.
    Without this clear claim, our company would not find investment
    conditions favorable.
        Legal certainty, as would be facilitated under the Convention, is
    essential. Companies make multibillion dollar investment decisions
    based in part on confidence that the investment will not be undermined
    by legal challenge. Considering that substantial investments will be
    required for safe and responsible exploration and development on the
    Extended Continental Shelf in the Arctic, we do not envision pursuing
    activities in these areas unless the claims of Arctic nations,
    including the United States, have been approved by the Continental
    Shelf Commission. Until this legal risk and uncertainty is minimized,
    the oil and gas resources of the Extended Continental Shelf in the
    Arctic may be considered to be stranded.

          THE ROYALTY RATES OF THE CONVENTION ARE ACCEPTABLE TO SHELL

        Under the Convention member nations can secure exclusive rights to
    extract resources in their Extended Continental Shelf--areas not
    previously subject to clear jurisdiction. The Convention also requires
    member nations extracting oil and gas resources from their Extended
    Continental Shelves to make payments to the International Seabed
    Authority based on the value of production. If the United States
    ratified the Convention, Shell expects that the U.S. Government would
    collect the fees it would be obligated to pay to the Authority from
    those companies that produce oil and gas in the extended shelf, along
    with royalties it collects for the U.S. Treasury.
        The royalty rates the United States would pay to the Authority were
    negotiated with input from industry. The royalties set in the
    Convention would begin at 1 percent of the value of production in the
    6th year of production at a production site, rising 1 percent per year
    to a maximum of 7 percent in the 12th year and following years. While
    the overall royalty rate (that going to the U.S. Treasury and that
    going to the Authority) would be part of the economic calculations we
    make in determining whether or not to proceed with investment, Shell
    finds the Convention's royalty rates to be reasonable and acceptable.
        Thank you for the opportunity to express our support for Senate
    approval of the Law of the Sea Convention. We welcome and encourage any
    actions the Senate may make to reduce investment risk, increase legal
    certainty, and facilitate oil and gas development.

        The Chairman. A short excerpt. This is Marvin Odum. ``If
    the United States were to become a party to the Convention, it
    could participate in the internationally recognized process for
    claiming its Extended Continental Shelf and its rights over oil
    and gas, which would provide legal certainty for accessing and
    developing those energy resources. Without this clear claim,
    our company would not find investment conditions favorable.''
        So, finally, we turn to manufacturing. As many of you know,
    rare earth minerals are critical to a large part of modern
    manufacturing. Rare earth minerals are an essential component
    of our communication systems, of our defense control systems,
    missile defense control technology, and other weapons systems.
        It includes--the breadth or sort of the scope of rare earth
    mineral use is in electronics. It is in computers, cell phones,
    and all of the advanced weapons systems, some of which I have
    named.
        Today, my friends, China controls about 97 percent of the
    production market for these minerals. Can anybody in their
    right mind suggest that the United States is safer and our
    companies are advantaged sitting in a situation where you can't
    invest because you can't be safe and you can't be legally
    protected, and we are sitting on the outside? We cannot secure
    international recognition for deep sea mining claims that our
    companies want in order to invest billions of dollars unless we
    are part of this treaty.
        So, on rare earth minerals, on oil and gas, on whatever
    unknown minerals and/or products may be findable under the
    ocean, we have a choice. We can either join the major
    industrial nations that have already joined up and are already
    using this to their advantage and secure the benefits of the
    sea for Law of the Sea, as well as the sea, for our businesses
    and industries, or we can remain on the outside, deprive our
    companies of the legal investment and operational security they
    seek, cede American competitive advantage, and watch while
    other countries take the spoils.
        I think the choice is clear. Today, we have people who can
    speak with much more authority than I can because it is their
    livelihood. It is their life endeavor, and I think we need to
    listen to them.
        Thomas Donohue, president and CEO of the U.S. Chamber of
    Commerce, representing broadly many of these industries. Jack
    Gerard, president and CEO of the American Petroleum Institute,
    of which all of our major producers are partners. Jay Timmons,
    president and CEO of the National Association of Manufacturers.
    And Lowell McAdam, chairman and CEO of Verizon.
        So, gentlemen, welcome today. Thank you for being with us.
        Senator Lugar.

              OPENING STATEMENT OF HON. RICHARD G. LUGAR,
                       U.S. SENATOR FROM INDIANA

        Senator Lugar. Thank you, Mr. Chairman.
        I join you in welcoming our distinguished panel of industry
    leaders. I appreciate especially their efforts on behalf of the
    Law of the Sea and their willingness to explain how the
    Convention will help them create private sector jobs and
    contribute to the growth of the U.S. economy.
        Every major ocean industry--including shipping, fishing,
    telecommunications, oil and natural gas, drilling contractors,
    shipbuilders--support United States accession to the Law of the
    Sea Treaty. This is not a recent development. Ocean industry
    support for the Convention has been virtually unanimous going
    back to 2003 when the Foreign Relations Committee first took it
    up and initiated a process that resulted in a unanimous
    committee vote to report Law of the Sea favorably to the whole
    Senate on that occasion.
        A few years later at a Foreign Relations Committee hearing
    on October 4, 2007, a business panel testified in favor of the
    Convention. Only Senator Menendez and I were present for that
    powerful, unequivocal testimony. But then, as now, every major
    ocean industry backed the Convention and appealed for
    ratification.
        With good reason, Americans are intensely interested in job
    creation and the pace of United States economic activity. In my
    State of Indiana, this is the paramount issue among voters.
    There are innumerable threats to the United States economy,
    including the phenomenon over which we have minimal control,
    such as the European debt situation.
        Moreover, because of our own national debt, we have few
    stimulus options to combat a future economic downturn. These
    factors increase the importance of a jobs creating impact, of
    technological innovation, and our own natural resources. As we
    will hear today, U.S. ratification of Law of the Sea would
    support job creating investment and open new resources to our
    industries at a critical time for our economy.
        The Law of the Sea already forms the basis of maritime law
    regardless of whether the United States is a party.
    International decisions related to resource exploitation,
    navigation rights, and other matters will be made in the
    context of the Convention whether we join or not. And we will
    not even be able to participate in the amendment process to
    this treaty, which is far more likely to impose new
    requirements on our Navy and ocean industries if the United
    States is absent.
        Because of these factors, the people who actually deal with
    oceans on a daily basis and invest their money in job creating
    activities on the oceans want this Convention ratified. They do
    not want to be at a competitive disadvantage to foreign
    industries.
        By not joining the Law of the Sea, we also are diminishing
    the potential scope of our domestic energy production. Some
    have argued that United States accession to the Law of the Sea
    Convention is unnecessary to secure the legal basis for
    companies to fully exploit oil, natural gas, and mineral wealth
    on the ocean floor, but that is not the opinion of American
    companies that might invest their resources in this activity.
        They tell us that without the certainty of title provided
    by Law of the Sea Convention, they would not go forward with
    many projects requiring large investments. Their concern is
    that after doing the expensive exploration, research, testing,
    and construction necessary to exploit a site, they have to be
    certain that another entity won't be able to free-ride on their
    investment or challenge their claim in international courts.
        The drilling and mining companies prefer to pay a small
    royalty beginning in the sixth year of production in return for
    an international system that gives them undisputed claim for
    the resources produced. This royalty provision of the
    Convention was negotiated with the participation of extraction
    companies.
        They judged that it is reasonable, given the legal
    certainty it secures and the value of what might be produced,
    especially since the first 5 years of production will not be
    subject to any royalty.
        Our resource extractors are telling us that if we want them
    to move forward with scale development of ocean floor resources
    that could contribute significantly to United States energy
    security and create jobs, we need to ratify the Law of the Sea.
        I thank the chairman for this hearing, and we look forward
    to our discussions.
        The Chairman. Thank you, Senator Lugar.
        I am reminded by your testimony, as I don't need to be
    reminded by it. But it flagged it that this is ground that this
    committee has been over before. And Senator Lugar has
    previously led that effort and has had a longtime association
    with and stake in this effort, and I just want to acknowledge
    that and thank him for his laying that groundwork and record
    that we have to date.
        Mr. Donohue, if you would lead off, and Mr. Gerard second,
    Mr. Timmons third, and Mr. McAdam, if you would bat cleanup?
    Thanks.

     STATEMENT OF THOMAS J. DONOHUE, PRESIDENT AND CHIEF EXECUTIVE
           OFFICER, U.S. CHAMBER OF COMMERCE, WASHINGTON, DC

        Mr. Donohue. Thank you, Mr. Chairman and Ranking Member
    Lugar and all the members of the committee who are here or will
    be here. We appreciate this opportunity to testify today.
        I am pleased to express the U.S. Chamber of Commerce's
    strong support for approval of the Law of the Sea Treaty. This
    morning, I will focus my remarks on why the treaty is in our
    economic interest, our national security interest, and why it
    is essential to America's global leadership.
        On the economic side, the treaty would be a boon to U.S.
    economic growth by providing American companies with the legal
    certainty and stability that they need to hire and invest. It
    would codify the U.S. legal rights to use international
    shipping lanes to lay and service underwater cables and to
    develop vast amounts of oil, natural gas, and minerals off the
    U.S. coast and in the deepwater seabed.
        The treaty would benefit several industries key to economic
    growth, job creation, and U.S. competitiveness. It would
    benefit the energy industry by providing sovereign rights to
    seabed resources 200 miles off our coast. If certain geological
    criteria are met, the zone of sovereignty could extend to 600
    miles, or the so-called Extended Continental Shelf.
        Proper delineation of the Extended Continental Shelf could
    bring an additional 4.1 million square miles of ocean floor
    under U.S. sovereign rights, an area larger than the lower 48
    States. The treaty would also allow the United States to have a
    U.S. expert elected to the international body that determines
    the claims in the Arctic, and there are going to be a lot of
    them.
        Securing international recognition for U.S. rights in these
    areas and defending against the unreasonable claims of other
    nations is vital to the economic prosperity of our Nation. The
    telecommunications industry needs the treaty to codify the
    right to lay and maintain underwater cables in the oceans of
    the world. It also needs them to provide stronger protections
    for cables against damages by other parties.
        A wide range of domestic industries, including aerospace,
    defense, and consumer electronics, need the treaty to enable
    access to new sources of mineral resources, including rare
    earth minerals, as the Senator indicated, which lie in massive
    deposits on or beneath the deep seabed floor.
        Companies need the legal certainty and the stability
    provided by the treaty in order to minimize the investment
    risks and cost to developing these resources in the U.S.
    Extended Continental Shelf and the area beyond that, the deep
    seabed. That is why the treaty's approval is so important to
    sustaining and creating American jobs and protecting American
    interests close to our mainland.
        Now let me say a word about national security. The treaty
    clearly is essential to America's national security.
        The U.S. Chamber has a long and proud history of supporting
    America's national security interests.
        For example, we played an instrumental role in mobilizing
    America's industrial might to fight and win World Wars I and
    II. I put that in there, if I might say, Mr. Chairman, because
    we just celebrated our 100th anniversary, and we took the time
    to read about why the Chamber was founded and what its basic
    principles were, which were to represent the American business
    community and to represent it at the highest level with the
    greatest service our country and its needs.
        We have long supported a robust national defense, and we
    have recently launched a major effort called Hiring Our Heroes
    to employ veterans by matching them with employers all around
    the country. It is in this tradition that we support approval
    of the Law of the Sea as it relates to national security.
        At any given time, hundreds of U.S. flagged ships and ships
    owned by U.S. companies rely on the freedom of navigation
    rights codified in the treaty while crossing the world's
    oceans. In fact, seafaring vessels transport more than 95
    percent of all goods imported to or exported from the United
    States, including essential commodities like oil.
        While we can always rely on the U.S. Navy to ensure lawful
    passage of U.S. flagged and owned ships, the Chamber strongly
    supports the Navy's desire to codify rights to freedom of
    navigation in the treaty rather than rely on the customary
    international law or a strong navy.
        Let me say a word about a seat at the table. The treaty is
    critical to America's global leadership. As the world's
    preeminent maritime power with one of the largest Continental
    Shelves, the United States has more than any other country to
    gain, or to lose, based on how the treaty's terms are
    interpreted, applied, or changed.
        The Law of the Sea Treaty will continue to form the basis
    of maritime law with or without our approval. Our Nation's
    interests are best protected by being an active participant.
        Another side comment. There is a lot of comment and
    suggestion that this organization set up in Jamaica is going to
    run our lives. It clearly is not. But what a mistake we make if
    we don't join the treaty and put our representative there, who
    would have the absolute power to veto any action suggested by
    the organization.
        Now let me say a word about our critics of the treaty, who
    I have a lot of respect for. But I would like to rebut two of
    the chief criticisms that we hear.
        The first is that it erodes American sovereignty. This
    couldn't be further from the truth. This treaty promotes our
    sovereignty by codifying our property rights in the Arctic and
    on our Extended Continental Shelf. It will be ours. People will
    know it is ours, and we have every right to defend it.
        The second is opposition to a small portion of royalties
    from development that would be going to the International
    Seabed Authority. My response to that is simple. The U.S.
    Treasury will lose billions of dollars in royalty revenue by
    not providing companies the legal certainty and stability to
    develop its Extended Continental Shelf.
        It is a simple balance. We get most of the money under that
    system. The treaty provides that certainty, which will
    encourage companies to explore and develop these areas and
    produce potentially billions and billions of dollars in
    royalties going to the Government.
        And finally, like any agreement, this treaty is not
    perfect, but we are better off sitting at the table. Today, the
    benefits far outweigh the costs, and we must protect those
    benefits.
        For all of these reasons, the U.S. Chamber urges the Senate
    to give its advice and consent to the Law of the Sea Treaty.
    The treaty has the enthusiastic backing of every industry it
    impacts, including energy, telecom, shipping, mining, fishing,
    biotech, et cetera. It enjoys the support of every living
    Secretary of State and the Joint Chiefs.
        Senate approval is imperative to expand U.S. territory
    beneath the oceans to protect vital national security
    interests, to develop new commercial interests, and to create
    jobs.
        So I thank you for allowing me to share these obvious
    comments. I am sure the discussion will get more specific, but
    the bottom line is very simple. The benefits are all to accrue
    to this country and to our economy, and we ought to move
    forward on it.
        Thank you very much, Mr. Chairman.
        [The prepared statement of Mr. Donohue follows:]

                    Prepared Statement of Thomas J. Donohue

        Good morning, Chairman Kerry, Ranking Member Lugar, and members of
    the Committee on Foreign Relations. My name is Thomas J. Donohue and I
    am President and Chief Executive Officer of the U.S. Chamber of
    Commerce. The U.S. Chamber of Commerce is the world's largest business
    federation, representing the interests of more than 3 million
    businesses of all sizes, sectors, and regions, as well as state and
    local chambers and industry associations. I am pleased to appear before
    you today to affirm the Chamber's strong support for U.S. accession to
    the Law of the Sea (LOS) Convention.

                                   KEY POINTS

        I want to stress a few critical points to this committee:

       We support joining the Convention because it is in our
            national interest--both in our national security and our
            economic interests. The Chamber has a long and proud history of
            supporting America's national security interests including
            playing an instrumental role in mobilizing America's industrial
            might to fight and win World Wars I and II. It is in this
            tradition that we support approving the Law of the Sea Treaty.
       Becoming a party to the Treaty benefits the U.S.
            economically by providing American companies the legal
            certainty and stability they need to hire and invest. Companies
            will be hesitant to take on the investment risk and cost to
            explore and develop the resources of the sea--particularly on
            the Extended Continental Shelf (ECS)--without the legal
            certainty and stability accession to LOS provides. The benefits
            of joining cut across many important industries including
            telecommunications, mining, shipping, and oil and natural gas.
       LOS will continue to form the basis of maritime law with or
            without our accession. Our national interests are best
            protected by being an active participant in this process.
            Joining the Convention will provide the United States a
            critical voice on maritime issues--from mineral claims in the
            Arctic to how International Seabed Authority (ISA) funds are
            distributed.
       Many opponents present a false option to LOS that does not
            exist: that the United States can enjoy the benefits of LOS
            without joining it. In reality, only by joining can the U.S.
            reap the full economic and national security benefits of the
            Convention. Like any agreement, LOS isn't perfect. But its
            benefits far outweigh the costs of continuing to stand on the
            sidelines. The Chamber and the business community do not fear
            adverse rulings under the Convention so much as we fear being
            left behind by our global competitors.
       Contrary to some opponents' claims, joining the treaty
            promotes American sovereignty. LOS strengthens our sovereignty
            by codifying our property claims in the Arctic and on our ECS.
            Remaining outside of the Convention undercuts our sovereignty
            by not allowing us to advance and protect our property claims
            through the process utilized by every other major global power.
            the chamber's support for the law of the sea convention
        The Chamber has a long history of supporting the Law of the Sea
    Convention before this committee. The Chamber remains steadfast in its
    belief that the Senate should expeditiously approve the Convention
    because of the tremendous benefits it will provide for American
    enterprise. The Convention has the enthusiastic backing of every
    industry it impacts, including energy, telecom, shipping, mining,
    fishing and biotech. Earlier this month, the Chamber and 11 diverse
    trade associations wrote to this committee, submitting a letter
    strongly urging accession to the Convention. This is because the
    Convention is overwhelmingly favorable for U.S. business interests: it
    would codify U.S. legal rights to use international shipping lanes, to
    lay and service submarine cables, and to develop vast amounts of oil,
    natural gas, and minerals off the U.S. coasts and on the deep seabed.
    Our letter emphasized that now that ``new technologies and changed
    conditions have made it cheaper and easier to access the potential
    wealth beneath the oceans, the business community simply cannot afford
    to have the U.S. remain on the sidelines.''
        In addition to a 12-mile territorial sea, the Convention provides
    for a 200-mile Exclusive Economic Zone, over which a coastal state has
    exclusive resource management rights. If certain geological criteria
    are met, the Convention also provides sovereign rights to seabed
    resources on the Continental Shelf beyond 200 nautical miles. The
    United States has the world's second-longest coastline and likely has
    an Extended Continental Shelf in at least six different locations,
    including off of the Eastern seaboard and up to 600 miles off the coast
    of Alaska. In total, the Convention would confer a resource
    jurisdiction larger than that of any other nation in the world--an
    additional 4.1 million square miles of ocean floor, greater than the
    area of the contiguous 48 States. Securing international recognition
    for U.S. rights in these areas--and defending against the outsized
    claims of other nations--is vital to the economic prosperity of our
    Nation.
        The Convention provides stability, predictability, and clear legal
    rights, which are essential for American investment in our oceans, and
    therefore to sustaining and creating American jobs. The oceans, which
    comprise 70 percent of the earth's surface, are integral to global
    commerce. Ships carry virtually all goods passing in international
    trade, and submarine cables--not satellites--relay virtually all modern
    communications. Oceans also promise enormous frontiers of untapped
    resources. Development of hydrocarbon resources on the U.S. ECS in the
    Arctic and elsewhere would create thousands of new jobs for Americans,
    generate billions of dollars in new economic activity, and increase our
    energy security. Similarly, mining on the U.S. ECS and the deep seabed
    presents vast new opportunities to tap into deposits of manganese,
    nickel, cobalt, copper, and vital rare earth minerals.
        Because of our status as a non-party, the United States is not
    represented on the Council of the International Seabed Authority, nor
    are we able to nominate an expert to sit on the Continental Shelf
    Commission, which determines whether seabed qualifies as Continental
    Shelf. Other industrial nations--all members of the G8 included--joined
    the Convention following the 1994 deep seabed mining reforms. Today,
    161 countries and the European Union are party. The U.S. is the only
    notable outlier. The Convention's institutions are now up and running,
    and it is open to amendment. As a party, we would be in a position to
    lead from within and advance and protect our interests. And in
    institutions outside the Convention, such as the International Maritime
    Organization, joining the Convention would increase our credibility and
    authority to cite and interpret Convention provisions in defense of our
    interests.
        Because the Convention's governing bodies are active, the Senate's
    continued inaction on the Law of the Sea has relegated the United
    States to an observer status. Since 1982, the U.S. has voluntarily
    complied with the Convention's rules. The U.S. must now become party to
    the Convention in order to lock in the treaty's favorable rights and
    reassert U.S. leadership in the maritime sphere. Focusing on four key
    U.S. industries--oil and natural gas, shipping, mining and telecom--I
    will elaborate on the reasons why the Senate should approve the Law of
    the Sea Convention in 2012.
        the business case for accession to the law of the sea convention
    A . Oil and Natural Gas
        Accession to the Law of the Sea Convention would provide oil and
    natural gas companies with legal certainty as they explore and develop
    the vast energy deposits off the coasts of the United States. As I have
    mentioned, the U.S. benefits from a broad continental margin,
    especially off of Alaska's coast, where the U.S. Continental Shelf
    likely extends more than 600 miles into the Arctic Ocean. The U.S.
    Geological Survey estimates that the Arctic contains one-quarter of the
    world's undiscovered oil and natural gas, including nearly 100 billion
    barrels of oil and trillions of cubic feet of gas. The U.S. ECS seaward
    of Alaska encompasses a large portion of this Arctic Circle area. And,
    while much is yet unknown regarding Alaska's offshore, a Department of
    Interior report estimates that just the area within 200 miles of shore
    holds 27 billion barrels of oil and 132 trillion cubic feet of natural
    gas. The U.S. offshore in the Gulf of Mexico has a similarly impressive
    total endowment which, including quantities already pumped to surface,
    is estimated to contain 45 billion barrels of oil and 232 trillion
    cubic feet of natural gas.
        Clearly, the hydrocarbon potential of these offshore areas is
    enormous. Offshore oil volumes already account for about 30 percent of
    all U.S. production. Successful development will grow the U.S. economy,
    create jobs, and significantly reduce American reliance on foreign oil.
    The U.S. Government should enable such development, not hinder it. But
    that is precisely what the Senate's failure to approve the Law of the
    Sea Convention has done, because the U.S. cannot secure international
    recognition of its Continental Shelf beyond 200 miles without joining
    the Convention.
        Offshore operations are capital-intensive, requiring significant
    financing and insurance. Oil and natural gas companies do not want to
    undertake these massive expenditures if their lease sites may be
    subject to territorial dispute. They operate transnationally, and need
    to know that the title to the petroleum resources will be respected
    worldwide and not just in the United States. Availability of clear
    legal title is crucial to realizing the potential of U.S. offshore
    areas both now and in the future, as drilling technology continues to
    advance and make new projects feasible. As ExxonMobil emphasized in its
    recent letter to this committee, before it undertakes the immense
    investments required to explore and develop resources beyond 200 miles,
    ``legal certainty in the property rights being explored and developed
    is essential.''
        Under the Convention, parties can secure international recognition
    of the limits of their Continental Shelves by demonstrating to a body
    of scientific experts, the Continental Shelf Commission, that its
    seabed meets certain geological criteria. Over 40 nations--including
    every other Arctic nation--are already taking actions to stake their
    claims before this Commission. As a non-party, the U.S. is not able to
    stake our own claims, nor have an expert sit on the Commission and
    participate in discussions affecting its interests.
        Opponents of the Convention often cite its imposition of royalties
    on ECS production as an important reason to reject the Convention.
    Under the Convention, parties must make payments to the ISA based on
    the value of resources extracted from sites on their Extended
    Continental Shelves. Production companies would be able to keep the
    entire value of production at each site for the first 5 years, subject
    to any licensing fees imposed by the U.S. Government. Payments to the
    Seabed Authority would begin at 1 percent of the value of production in
    the 6th year of exploitation at a site and rise 1 percent per year to a
    maximum of 7 percent in the 12th year and following years. These
    royalty rates were negotiated by the U.S. Government with extensive
    input from U.S. oil and natural gas interests. As oil and natural gas
    companies have recognized, the royalties are reasonable in view of the
    immense value of the resources that would be made subject to the United
    States exclusive sovereign jurisdiction. The oil and natural gas
    companies--and the U.S. Treasury--would be able to retain much more
    than the U.S. would be required to pay to the Seabed Authority.
    Notwithstanding the required payments to the Seabed Authority, joining
    the Convention would be overwhelmingly beneficial to U.S. economy and
    the U.S. Treasury.
    B. Mining
        Mining, like oil and natural gas, represents a field where the U.S.
    will damage its own interests and those of U.S. industry by remaining
    outside the Law of the Sea Convention. Only by joining the Convention
    will the U.S. secure its rights to vast mineral deposits on the U.S.
    ECS, and perhaps even more important, be able to sponsor companies to
    mine the deep seabed in the area beyond any national jurisdiction.
    Beneath the oceans are troves of valuable metals and rare earth
    elements richer than any found on land, including deposits of
    manganese, nickel, cobalt, copper, lead and other metals commonly used
    in modern manufacturing.
        Several recent developments make access to deep seabed mining sites
    an urgent matter. Due to technological progress, our ability to mine
    the deep seabed has improved dramatically, while at the same time
    prices for various metals have increased. Today, deep seabed mining
    presents an attractive business proposition. China, Russia, India, and
    other countries have responded, sponsoring mining ventureswhich have
    licensed their respective sites with the ISA. These countries have
    obviously concluded that the fees are worth paying to secure legal
    title to deep seabed mining sites.
        The importance and relative scarcity of rare earth minerals is
    another factor requiring urgent access to the deep seabed. Rare earth
    minerals have a wide range of critical technology and defense
    applications. China has a virtual monopoly on the land-based supply of
    these elements, a reality that is of great concern for U.S.governmental
    and commercial interests. The U.S. suffers from a competitive and
    strategic disadvantage because, as a non-party to the Convention, it
    cannot sponsor U.S. companies to engage in deep seabed mining.
        Lockheed Martin, the only U.S. company with active claims to deep
    seabed sites under a U.S. law predating the Law of the Sea Convention,
    recently wrote to this committee urging the Senate to approve the
    Convention. Lockheed has invested hundreds of millions of dollars on
    research and development related to deep seabed mining over the past 40
    years. The company's letter made clear that the multibillion dollar
    investments now required to launch an ocean-based resource development
    business will only occur if it can obtain the security of tenure and
    clear legal rights offered under the Convention. With Lockheed and
    potentially other U.S. companies poised to expand their operations and
    create new jobs, Senate accession to this treaty would allow investor
    dollars to stay here.
        Equally important to U.S. companies contemplating deep seabed
    mining activities is U.S. leadership in the ISA. The next several years
    will be formative for the nascent deep seabed mining industry. As I
    mentioned earlier, the Convention's deep seabed mining regime was
    overhauled in 1994, resulting in a system that is uniquely favorable to
    American interests. Those reforms included a permanent U.S. seat on the
    Council of the ISA. But the U.S. has not assumed that seat, and cannot
    guide the development of new rules pertinent to deep seabed mining
    activities while outside the Convention.
    C. Shipping
        The U.S. shipping industry depends heavily on the rights enshrined
    in the Law of the Sea Convention. At any given time, hundreds of U.S.
    flag ships and ships owned by U.S. companies rely on the freedom of
    navigation rights codified in the Convention while in transit through
    the world's oceans. Unsurprisingly, U.S. shipping companies have long
    been ardent supporters of accession to the Convention. The Chamber of
    Shipping of America has been a longtime supporter of the Convention and
    has testified and written letters to this committee urging the Senate
    to approve the treaty.
        The Convention guarantees rights of innocent passage through
    territorial seas, transit passage through straits and archipelagoes,
    and freedom of all vessels on the high seas. Seafaring vessels, such as
    container ships, crude oil tankers, and bulk carriers, carry over 95
    percent of all goods imported to, or exported from, the United States.
    Guaranteeing their free movement is both an economic and a national
    security concern, as these ships transport the majority of this
    country's oil and other crucial commodities and goods.
        The Convention's detractors argue that U.S. ships can rely on
    customary international law to ensure their mobility. But customary
    international law is not well-suited to the needs of business. By
    definition, it is hard to find and apply customary law because it does
    not exist in one place. Its rules can and will shift over time.
    Shipping companies benefit from a set of stable, written rules that
    they can easily reference during a dispute. The Law of the Sea
    Convention serves this function by codifying key navigational rights in
    a single, central Authority.
        Furthermore, robust U.S. leadership on maritime issues is just as
    important as a set of treaty-based rules. Without U.S. participation,
    there is a greater likelihood that countries will successfully assert
    divergent views on the application of the Convention's navigational
    rules. As a non-party, the U.S. lacks credibility to enforce the
    consistent application of norms embodied in the Convention. The
    shipping industry--and industry in general--will benefit from a strong,
    treaty-based rule of law guided by the United States.
    D. Telecommunications
        The rights codified in the Law of the Sea Convention are likewise
    of paramount importance to the daily operations of U.S.
    telecommunications companies. The Convention was negotiated with
    extensive input from the U.S. telecommunications industry and
    represents a quantum leap forward in law applicable to underwater
    cables. It provides rights to lay, maintain, and repair submarine
    cables outside territorial seas, certain protections to prevent damage
    to cables, and avenues for legal recourse when these various provisions
    are violated.
        Submarine cables represent critical communications infrastructure,
    as they form the backbone of the Internet and global e-commerce. Such
    cables, typically consisting of optical fibers laid along the ocean
    floor in a bundle no larger than a garden hose, carry over 95 percent
    of transoceanic voice and data communication. U.S. telecom companies
    have worked rapidly to meet exploding consumer appetite for data,
    increasing the total circuit capacity of transoceanic cables landing in
    the U.S. by more than 1,000 fold since 1995.
        There is no substitute for these underwater cables in case of
    damage. The earth's satellites can carry no more than 7 percent of U.S.
    international voice and data traffic. But worldwide, nearly 100 cable
    outages occur each year. The vast majority of cable outages are caused
    by bottom trawling fishing, dredging, and ship anchoring. Occasionally,
    cables are taken in an act of piracy, as occurred in 2007 when
    individuals in commercial vessels from Vietnam stole over 100 miles of
    cables on the high seas. Cable outages may disrupt governments,
    financial markets, and business operations and require costly repairs.
        Accession to the Law of the Sea Convention would better protect
    U.S. companies' existing cable systems and foster additional
    investments. Companies would benefit from the legal certainty provided
    by treaty-based rights to lay, maintain, and repair cables, and conduct
    surveys incident to laying cables. Like shipping companies, telecom
    interests emphasize that they cannot merely rely on customary
    international law because of the threat of encroachments by coastal
    states. Russia's attempt to delineate cable routes on its continental
    margin in the Arctic proves that fears of encroachment are not
    theoretical. As a non-party, the U.S. loses more than just credibility
    to lodge diplomatic protests to such actions because, with respect to
    its submarine cable provisions, the Convention permits parties to
    invoke its meaningful dispute resolution procedures. U.S. telecom
    companies have repeatedly emphasized that they are comfortable with,
    and want to rely on, the compulsory dispute resolution provisions in
    the Convention.
        Because the U.S. remains on the sidelines, it puts its telecom
    companies at a competitive disadvantage and fails to provide them
    important legal rights. They do not benefit from the legal certainty
    and dispute resolution options that companies based in other countries
    enjoy. In order to support its telecom companies and protect vital
    communications infrastructure, the U.S. should join the Law of the Sea
    Convention.

                                   CONCLUSION

        The U.S. Chamber urges the Senate to give its advice and consent to
    the Law of the Sea Convention. The Convention has the resounding
    support of every industry it impacts. It codifies legal rights on which
    U.S. businesses rely on a daily basis and provides access and clear
    legal title to new frontiers of hydrocarbon and mineral resources.
    Consequently, accession will lay the groundwork for investment that
    boosts the U.S. economy and creates new jobs. Now that new technologies
    and changed conditions have made it cheaper and easier to access the
    wealth beneath the oceans, the United States simply cannot afford not
    to join the Convention.

        The Chairman. Thank you very much, Mr. Donohue, for very
    clear testimony. We appreciate it.
        Mr. Gerard.

      STATEMENT OF JACK N. GERARD, PRESIDENT AND CHIEF EXECUTIVE
         OFFICER, AMERICAN PETROLEUM INSTITUTE, WASHINGTON, DC

        Mr. Gerard. Thank you, Mr. Chairman and Ranking Member
    Lugar, and Senators Webb and Corker and Isakson. It is a
    pleasure to be here with you today.
        And in light of your statement, Mr. Chairman, as you
    started, I guess we need to thank Tom for this opportunity as
    well. Is that right?
        The Chairman. That is right.
        Mr. Gerard. It is always good to be here with him at the
    table, and the others.
        On behalf of the 500 member companies, along with the 9.2
    million Americans, men and women who work in the U.S. oil and
    natural gas industry, we appreciate the opportunity to be here
    today to testify in support of accession to the Law of the Sea
    Treaty.
        We agree with Secretary of State Hillary Clinton, with
    former Secretary of State Condoleezza Rice, and with the other
    Secretaries of State before her, as well as Presidents of both
    political parties who have urged accession, that joining the
    Law of the Sea Convention is truly in the best interests of the
    United States.
        Today, the United States relies on oil and natural gas for
    over 60 percent of all the energy we consume. Recent economic
    projections by our own Department of Energy in the Obama
    administration show that 30 years from now, 57 percent of all
    the energy we consume in the United States will continue to be
    oil and natural gas.
        Other projections show the demand for world global energy
    led by oil and natural gas will increase by over 50 percent in
    the next 20 to 30 years. Energy is a very serious issue,
    particularly to our global economy. Companies spend billions of
    dollars annually looking for and producing oil and natural gas
    around the world.
        To give you some insight, from just 2009 to 2011, the
    industry spent over $700 billion just in the United States
    drilling and exploring for additional opportunities. Just last
    week at the lease sale conducted the central Gulf of Mexico,
    the U.S. oil and gas industry paid $1.7 billion in bonus bids
    to the Federal Government to secure rights to develop those
    resources in the Gulf of Mexico.
        Preliminary studies estimate that the U.S. Extended
    Continental Shelf as a result of accession to the Law of the
    Sea Treaty likely totals 1 million additional square kilometers
    and could contain resources worth billions, if not trillions,
    of dollars to our U.S. economy.
        The Convention provides a clear objective means of
    asserting U.S. authority and gaining international recognition
    of that authority, reducing the potential for jurisdictional
    conflicts between nations. This provides certainty for business
    planning so that companies can manage their financial risk over
    the lifetime of their investment.
        I might add that when we in the oil and gas business look
    for investment opportunities, we are not looking quarter by
    quarter, year by year. We look 10, 20, 30, at 40-year horizons
    when we are talking about multibillion dollar investments.
        This certainty will increase the likelihood of companies
    investing in the Extended Continental Shelf. This, in turn,
    will result in more U.S. jobs, more U.S. revenue to our Federal
    and State governments and many other benefits.
        The Convention also broadens the definition of the
    Continental Shelf in a way that would significantly favor the
    United States. As Tom touched on earlier, it would secure an
    additional 4.1 million square miles of ocean under U.S.
    jurisdiction and provides a mechanism for laying claim to
    vitally needed natural resources in the Arctic and other areas
    where other countries--Russia, for instance--have already laid
    claim, will protect our navigation rights and freedoms for our
    vessels.
        We understand that there are legitimate concerns about
    certain aspects of the Convention. We greatly appreciate the
    attention by members to ensure that this Convention is truly in
    the best interests of the United States.
        While I am here today to express to you the benefits of the
    Convention for the oil and natural gas industry, our
    expectation is that the administration and the Congress will
    continue to work to ensure that U.S. interests are protected as
    they represent the Nation in the implementation of the Law of
    the Sea Treaty.
        In short, the Law of the Sea Convention will advance and
    protect America's energy interests. It will mean a level
    playing field and new opportunity for marine sources
    development all around the world.
        Thank you again, Mr. Chairman and members of the committee.
    And I look forward to your questions.
        [The prepared statement of Mr. Gerard follows:]

                      Prepared Statement of Jack N. Gerard

        Thank you, Chairman Kerry, Ranking Member Lugar and members of the
    committee. My name is Jack N. Gerard and I am the president and CEO of
    the American Petroleum Institute.
        API is a national trade association representing more than 500
    member companies in the oil and natural gas industry. On behalf of our
    members and the more than 9.2 million American men and women whose jobs
    are supported by the U.S. oil and natural gas industry, I want to
    express my appreciation for the invitation to appear before you today
    to speak on this very important issue.
        It is an issue that is important to the our member companies, to
    the millions of employees whose jobs these companies support, directly
    or indirectly, and the thousands of communities in every state of the
    union where these companies--and the companies that provide them goods
    and services--have a presence.
        We agree with Secretary of State Hillary Clinton that no country is
    better served by this Convention than the United States. And we agree
    with former Secretary of State Condoleezza Rice and other Secretaries
    of State before her--as well as Presidents of both parties who have
    urged accession--that joining the Law of the Sea Convention will
    advance America's interests.
        Experts, both within the government and outside, agree that America
    will need more energy of all types in order to grow and to meet its
    growing energy demand. Today, the U.S. relies on oil and natural gas
    for over 60 percent of the energy it consumes.
        Since 2000, our industry has invested nearly $2.3 trillion in U.S.
    capital projects to meet ourcountry's growing demand for energy. The
    significant investments made here in the United States not only support
    the 9.2 million jobs mentioned above, but also support millions of
    America's retirees through pension funds, IRAs, 401ks and other
    investments. At a time when millions of Americans are unemployed, the
    oil and natural gas industry has been a key driver of job creation and
    economic activity.
        It also supports 7.7 percent of U.S. gross domestic product, and
    has provided $86 million a day in revenues to the Federal Government in
    taxes, royalties, rental payments, and other production fees. That's
    more than $30 billion per year. And with the right policies to access
    more domestic oil and natural gas, there will be more jobs, and more
    revenue for State and Federal treasuries: more than $800 billion by
    2030.
        According to the Energy Information Administration, projections for
    2035 show oil and natural gas will still provide nearly 57 percent of
    growing U.S. energy consumption--even with significant increases in
    renewable energy use.
        So the question isn't whether we will need more oil and natural
    gas, but where will we get it? Will we use our own vast energy
    resources or will we rely on others? Our Nation has the resources, and
    one of the key areas with great potential for energy production is our
    Continental Shelf.
        Just last week, the Department of Interior conducted a lease sale
    in the Central Gulf of Mexico where 56 oil and gas companies submitted
    bids on 454 lease tracts and paid a total of $1.7 billion to the U.S.
    Treasury to secure their rights to those lease tracts. This was in an
    area where there has already been plenty of production, and companies
    are committed in investing in this key U.S. offshore area.
        Preliminary studies estimate that the U.S. Extended Continental
    Shelf likely totals 1 million square kilometers and could contain
    resources worth billions--if not trillions--of dollars.
        The U.S. Geological Survey estimates that about one quarter of the
    world's undiscovered oil and natural gas lies beneath Arctic waters
    alone, and there is also the possibility of high yields of oil and gas
    in the Extended Continental Shelf off of our Atlantic and Pacific
    coasts. Modern technology makes it possible today to access these
    resources. With the right leadership and vision, we can take control of
    our energy future.
        The Law of the Sea Convention provides the certainty that companies
    need to invest the billions required and offers the potential of
    greatly and definitively broadening the offshore areas from which we
    can access new resources to meet our Nation's growing energy needs. It
    will lead us to a greater energy future, with more jobs, more economic
    growth, higher government revenues, and enhanced energy security.
        Companies spend billions annually looking for and producing oil and
    natural gas around the world. From 2009 to 2011, the industry spent
    over $600 billion in U.S. drilling and exploration activities. They
    make these substantial investment decisions by weighing carefully the
    level of risk against the potential for returns on investment.
        Because the industry must plan, invest and operate under long lead
    times, it is crucial that government policies including our tax
    framework encourage investment and provide certainty for business
    planning so that companies can manage their financial risk over the
    lifetime of the investment.
        The Convention provides a clear, objective means of asserting U.S.
    authority and gaining international recognition of that authority,
    reducing the potential for jurisdictional conflicts between nations.
        With greater certainty and the predictability provided by the Law
    of the Sea Convention, industry will have greater incentive to fully
    take advantage of the significant advances in technology that allow us
    to extend operations into areas once considered out of reach or
    uneconomical. Indeed, the Convention would provide a significant
    incentive for industry to continue to develop the technology to push
    into even deeper waters in frontier areas.
        Given the rapid economic and political changes sweeping the world,
    the U.S. can no longer afford to be left out of the process. U.S.
    accession would ensure that American companies that are engaged in
    offshore energy production remain competitive in the global market.
    And, as companies that take their responsibility to their shareholders
    seriously, they are more likely to invest in projects they believe have
    the greatest certainty in their operations and the highest returns
    possible.
        As advances in technology push us further from our shores and into
    areas of harsher climates, the potential for conflicts with other
    nations' territorial claims inevitably increases. As such, there is a
    more pressing need for certainty and stability in the delineation of
    boundaries. Accession to the Convention would fulfill this need.
        In addition, it will give the United States a seat at the table as
    the Commission on the Limits of the Continental Shelf continues the
    process of dividing up millions of square miles of offshore territory
    and assigning management rights to all of the world's marine
    resources--a process that has been described as ``probably the last big
    shift in ownership of territory in the history of the Earth.''
        Today there is no American official, no American geoscientist,
    sitting at the table while this important work progresses. We can't
    emphasize strongly enough that the United States cannot afford to be
    left out of this process.
        The Convention broadens the definition of the Continental Shelf in
    a way that significantly favors the United States with its broad
    continental margins, particularly in the North Atlantic, Gulf of
    Mexico, the Bering Sea, and the Arctic Ocean. In the case of the United
    States, this secures an additional 4.1 million square miles of ocean
    under U.S. jurisdiction. That's more than 3 billion acres--an area that
    is larger than the U.S. land area.
        It should come as no surprise that our companies are interested in
    taking advantage of the resources in those areas beyond 200 miles--
    again, on behalf of their shareholders and the millions of jobs they
    support--in ways that continue to demonstrate environmentally sound
    drilling development and production technologies. Offshore petroleum
    production is a major technological triumph.
        We now have development projects located in water depth in the Gulf
    of Mexico that not too long ago few thought possible.
        New technologies are allowing oil explorers to extend their search
    for new resources of oil and gas out to and beyond 200 miles for the
    first time, providing the potential for the largest discoveries in a
    generation to be made in field sizes not even imagined before.
        We need to get on with the mapping work and other analyses and
    measurements required to substantiate the extent of our shelf, and some
    of the best technology for accomplishing this resides in the United
    States. Establishing the continental margin beyond 200 miles is
    particularly important in the Arctic, where there are already a number
    of countries vying to expand their offshore jurisdictional claims.
        Such features as the Chukchi Plateau and component elevations,
    situated to the north of Alaska, could be claimed by the U.S. under the
    provisions stated in the Law of the Sea Convention. U.S. companies have
    a clear interest in setting international precedents by being the first
    to operate in these frontier areas--and to continue demonstrating
    environmentally sound drilling development and production technologies.
        The Convention will increase certainty in a significant manner and
    will in turn make it much easier to decide to invest billions of
    dollars in future operations.
        One other important consideration is our international oil trade.
    U.S. companies are leading participants in the global oil market, and,
    in 2010, about 44 percent of U.S. maritime commerce consists of
    petroleum and petroleum products. Trading routes are secured by
    provisions in the Convention combining customary rules of international
    law with new rights of passage through straits and archipelagoes.
        Accession to the Convention would put us in a much better position
    to invoke such rules and rights. Steady growth in the demand for
    petroleum throughout the world means increases in crude oil and product
    shipments in all directions throughout the globe. The Convention can
    provide protection of navigational rights and freedoms in all these
    areas through which tankers will be transporting larger volumes of oil
    and natural gas.
        From an energy perspective, we see potential future pressures
    building in terms of both marine boundary and Continental Shelf
    delineations and in marine transportation.
        The Law of the Sea Convention will provide the necessary certainty
    and predictability to ensure we have access to another significant
    potential energy resource.
        I know there is considerable concern about royalties and whether,
    as a result of accession to this treaty, our companies would be paying
    royalties to the United Nations or another international organization.
        While it is true that some royalties (7 percent at most) would
    ultimately be shared with the International Seabed Authority (ISA)--an
    independent intergovernmental body established by the Convention, and
    not part of the U.N.--the U.S. would still retain all bonus bids,
    annual rental fees, and most of the royalties from these leases. A
    company would make all payments to the U.S. Government and then it
    would be the responsibility of the U.S. Government to share this
    royalty with the ISA beginning in the sixth year of production.
        Over the last 10 years, oil and natural gas companies have paid to
    the U.S. Treasury more than $70 billion to conduct offshore exploration
    and production activities. They have paid $15 billion in bonus bids,
    $2.2 billion in rentals, and $54 billion in royalties. As I mentioned
    earlier, just last week, at the lease sale conducted in the Central
    Gulf of Mexico, the U.S. oil and gas industry paid $1.7 billion in
    bonus bids to the U.S. Government in order to secure rights to develop
    those resources.
        If that lease sale had been conducted on our Extended Continental
    Shelf after U.S. accession to the Convention, the U.S. would still
    receive all of those bonus bids in addition to all annual rental
    payments prior to production and all royalties from the first 5 years
    of production. It is only in the sixth year of production that the U.S.
    would begin to share a small portion of its royalties with the
    International Seabed Authority.
        We recognize that the royalty sharing provision is a tradeoff for
    the certainty that the Convention will provide and the vast economic
    returns that the U.S. will realize through development of its Extended
    Continental Shelf. But without the certainty provided through the
    Convention, the likelihood of companies investing will decrease, and
    the United States would likely collect little to no bonus bids,
    rentals, or royalties at all with regard to the Extended Continental
    Shelf.
        Our industry also understands that there are concerns with regard
    to the development of the implementation policies and procedures for
    the Convention, particularly with regard to how the International
    Seabed Authority might spend the royalties it receives. But we believe
    that is precisely why the Senate must approve this treaty.
        Accession to the Convention now would allow the United States to
    participate in the drafting of these procedures and provide a leading
    voice in how the royalty funds are used. We cannot influence the
    process and ensure that our concerns are addressed if we are not
    sitting at the table.
        Once the policies and procedures of the ISA have been established,
    the U.S. would have a permanent seat on the ISA Council with the power
    to block adoption or modification of all major rules, regulations and
    procedures. Specifically, this would include the distribution of funds,
    the development of economic adjustment programs, and amendments to the
    seabed mining provisions of the Convention. In short, no money could be
    spent without the complete and total agreement of the United States.
    The implementation details are being hashed out today, and the
    negotiations are being conducted without us.
        Without accession to the Convention, the United States cannot be a
    part of those discussions, and if we're not part of those discussions,
    we have no input on how the Convention will be implemented and we have
    no say on how the royalty funds are used, including royalties paid on
    production from other nations' Extended Continental Shelf.
        In short, with a seat at the table of the International Seabed
    Authority's Council, the United States would not only be able to
    exercise leadership in the expenditure of this money, it would also
    have veto power to block expenditures it disagrees with. We believe the
    Law of the Sea Convention offers the United States the chance to
    exercise needed leadership in addressing these pressures and protecting
    the many vital U.S. ocean interests.
        If the United States were not to become a party to the Convention,
    it could negatively affect opportunities to lay claim to vitally needed
    natural resources in the Arctic and areas where other countries--
    Russia, for instance--have already made submissions with respect to the
    outer limit of their Continental Shelf.
        Today, the United States does not participate--even as an
    observer--in the Commission on the Limits of the Continental Shelf. We
    are watching from the outside as the guidelines and protocols for
    conduct on the world's oceans are developed and as certain provisions
    of the Convention are implemented.
        Over the past few years, our industry has made great strides in
    providing more of the energy our Nation's consumers and our Nation's
    economy need. As our economy improves, we will need even more energy
    from all sources. We are a technology-driven industry that has been
    able to create jobs throughout the economic downturn. Greater access to
    dependable, domestic resources for exploration and production is the
    cornerstone of our energy future.
        Accessing the resources in the Extended Continental Shelf would be
    available to us under this Convention would also mean more money in the
    Federal Treasury through royalties, leases, bonus bids and tax revenue.
    With certainty of access to additional offshore areas, our government
    could see much more in revenue and our economy would see more jobs and
    more growth.
        Ultimately, these are components that collectively will lead to
    greater national security.
        The oil and natural gas industry has been a bright spot in our
    troubled economy, accounting for 3 percent of all jobs created since
    2009, while boosting America's manufacturing industries and
    revitalizing communities.
        As an industry, we have looked at the Convention from a business
    perspective and supported it through the past several administrations--
    under both Republicans and Democrats. Our position is one that we have
    held for over 15 years.
        The American oil and natural gas industry is ready to step up to
    the plate, but in order for it to succeed, it must be allowed to play
    on a level international playing field.
        The Law of the Sea Convention will go a great distance to provide
    us that level playing field.
        It is good for our Nation, and we urge this committee and the
    Senate to give its approval.

        The Chairman. Thanks very much, Mr. Gerard.
        And Mr. Timmons, just before you do start, let me just say
    in response to your expressed hope that the Congress is going
    to--
    that the Senate is going to make sure that we protect and
    address any of those concerns that exist, I want to again say
    to my colleagues that we will have a set of specific
    declarations and understandings that clarify some of the
    concerns that have been raised by people as we have gone along
    here.
        So there will be crystal clarity with respect to issues
    raised about tax or jurisdiction, et cetera, and that will be
    taken care of in this.
        Mr. Timmons.

        STATEMENT OF JAY TIMMONS, PRESIDENT AND CHIEF EXECUTIVE
     OFFICER, NATIONAL ASSOCIATION OF MANUFACTURERS, WASHINGTON, DC

        Mr. Timmons. Well, thank you very much, Mr. Chairman,
    Senator Lugar, and members of the committee, for the
    opportunity to speak about the Law of the Sea Treaty, which is
    vital for both our national security, as well as our economic
    security.
        The National Association of Manufacturers is the Nation's
    largest manufacturing trade association, and we represent
    12,000 manufacturers of all sizes across our country. I am
    pleased to add the voice of manufacturers in support of the
    adoption of the Law of the Sea Treaty because its approval is
    absolutely critical for manufacturers' ability to compete and
    succeed in the global marketplace.
        One key to manufacturing growth and competitiveness is
    exports. Ninety-five percent of the world's consumers live
    outside of the United States. So reaching these potential
    customers is absolutely necessary for manufacturing
    competitiveness.
        Most significantly, it is 20 percent--20 percent--more
    expensive to manufacture in the United States than it is among
    our major trading partners, and that is after you remove the
    cost of labor. This treaty will help reduce the cost of
    manufacturing in two very important ways.
        First, it will provide new opportunities, as you have heard
    from my colleagues here, for energy exploration. Secure and
    reliable sources of energy are a significant concern for
    manufacturers, which consume one-third of our Nation's energy
    output.
        And second, it will open up access to critical inputs for
    many manufacturing applications. If you use a cell phone or a
    computer or drive a hybrid car, chances are that components of
    that product contain what are known as rare earth minerals.
    Rare earths are the basic inputs in the production process for
    many items, such as renewable energy products, defense
    products, consumer electronics, and others.
        Today, as was noted by the chairman, China produces upward
    of 95 percent of the world's supply of rare earth minerals.
    Brazil, India, Malaysia, and Canada are the remaining sources.
    And while China uses 60 percent of the rare earths that it
    mines today, there is no doubt that it will likely use all of
    that that it produces eventually.
        Now, if that happens, that is going to jeopardize
    manufacturers' access to these materials. Costs will rise, as
    they have been, not only on manufacturers, but also on
    consumers. The economy will suffer, and more jobs will be in
    jeopardy.
        The United States has an opportunity to tap a new source of
    rare earths and avoid this scenario, but first we need to
    ratify the Law of the Sea Treaty. The development of resources
    in and on the deep seabed is incredibly expensive, as you might
    imagine. Companies in the United States are unlikely to invest
    heavily in deep seabed mining because of the risk of legal
    challenges to their activities.
        Today, many U.S. companies have the means to explore and
    develop these resources and minerals, but they will only do so
    if there is a structure in place that contains internationally
    recognized agreements. Ratification of the treaty will give
    companies the certainty that they need to begin to develop
    these resources.
        Foreign mining companies whose governments have joined the
    Convention have access to the international bodies that grant
    the legal claims to operate in the deep seabed area. U.S.
    companies are currently excluded from those bodies simply
    because we have not adopted the treaty.
        Manufacturers cannot afford for the United States to sit on
    the sidelines when it comes to the Law of the Sea Treaty. We
    are in a global economy, and countries are working feverishly
    to take away our mantle of economic leadership. To strengthen
    manufacturing in the United States and maintain our economic
    position, we need to adopt policies that promote long-term and
    sustained economic growth.
        Manufacturing in the United States employs over 12 million
    Americans with high-paying jobs, and the sector supports 5
    million more jobs in this country. No doubt everyone in this
    hearing room would like to see those numbers grow. A strong and
    prosperous country needs a strong manufacturing sector, and
    this treaty will strengthen manufacturing, and it will
    strengthen our Nation.
        Thank you again for the opportunity to speak with you
    today.
        [The prepared statement of Mr. Timmons follows:]

                       Prepared Statement of Jay Timmons

        Thank you, Chairman Kerry and Ranking Member Lugar, for holding
    this hearing and including the business community in your deliberations
    on an issue that is vital to our national security and our global
    economic competitiveness.
        I am pleased to appear before this committee to discuss the U.N.
    Convention on Law of the Sea and its importance for America's
    manufacturers. I am Jay Timmons, president and CEO of the National
    Association of Manufacturers (NAM). The NAM is the Nation's largest
    industrial trade association, representing small and large
    manufacturers in every industrial sector and in all 50 States. Our
    membership includes both large multinational corporations and small and
    medium-sized manufacturers.
        Our charge at the NAM is to promote policies that make the United
    States the best place in the world to manufacture.
        It's no surprise then that ratification of the Law of the Sea
    Treaty is a priority for many of the NAM's members. Its adoption is
    critical for manufacturing competitiveness in the United States.
        While my testimony will focus primarily on mineral development on
    the deep seabed, that is not the only reason for the urgency in
    adopting this treaty.
        In today's global economy, exports are more important than ever.
    Ninety-five percent of the world's consumers live outside the United
    States, so reaching these potential customers is critical for
    manufacturing competitiveness.
        This treaty will secure international lanes of commerce and ensure
    that manufacturers can export their products efficiently. It protects
    our sovereign interests and promotes international commerce.
        Secure shipping lanes are a priority for NAM members. Last year,
    cargo ships and other ocean liners carried $570 billion of U.S.
    exports. Discounting our exports to Mexico and Canada, which travel by
    rail and truck, this total accounts for more than 50 percent of our
    exports by value and more than 90 percent of our exports by weight.
        And, with global commerce comes the need for global communication.
    The telecommunications industry needs the Convention to expand the
    right to lay and maintain submarine cables in the oceans of the world
    and provide stronger protections for cables against damage by other
    parties.
        We can also strengthen manufacturing by ensuring that manufacturing
    in the United States is cost competitive. Currently, it is 20 percent
    more expensive to manufacture in the United States than it is among our
    major trading partners.
        This treaty will help reduce the cost of manufacturing in two
    important ways.
        First, it will provide new opportunities for energy exploration.
    Secure and reliable sources of energy are a significant concern for
    manufacturers, which consume one-third of the energy produced in the
    United States.
        Energy companies need the certainty the Convention provides in
    order to explore beyond 200 miles and to place experts on international
    bodies that will delineate claims in the Arctic.
        And next, it will help reduce manufacturing costs by opening up
    access to critical inputs used in many manufacturing applications.

                 RARE EARTH MINERALS ARE VITAL TO MANUFACTURING

        Manufacturers in the United States require access to basic inputs
    for the production process in order to become and remain competitive in
    the global economy. As manufacturing grows more high tech, ``rare
    earth'' minerals are becoming increasingly important to manufacturers
    and their supply chains. Rare earth minerals consist of 17 elements
    that are important for numerous manufacturing applications, including
    in the production of chemicals, defense products, consumer electronics,
    wind turbines, hybrid car batteries and other renewable energy
    products. They are also used as catalysts for petroleum refining.
        Until a decade ago, the United States was 100 percent self-reliant
    for rare earth production, with domestic companies producing enough to
    supply U.S. manufacturers. Over time, however, U.S. production was
    halted as it became economically and environmentally cost prohibitive.
        Companies in various countries--including the United States--are
    looking at reopening closed mines and developing new deposits, but
    these efforts could take a number of years to fully come on line.
        The deep seabed offers a new opportunity for the United States to
    gain steady access to these vital rare earth minerals. Polymetallic
    nodules are located on the deep ocean floor. These nodules typically
    contain manganese, nickel, copper, cobalt and rare earth minerals.
    However, U.S. companies cannot actively pursue claims in the areas
    where these nodules are dense unless the United States ratifies the Law
    of the Sea Treaty.

                            DEEP SEABED DEVELOPMENT

        There is no doubt the world is very different today. We are a
    global economy, and countries are working feverishly to take our mantle
    of economic leadership away from us.
        Deep seabed mining is an emerging global industry and, indeed, a
    key ingredient to economic growth and competitiveness. We have
    companies in the United States with the means to explore and develop
    the resources and minerals on and in the seabeds of international
    waters, but they will only do so if there is a structure that contains
    internationally recognized agreements in place. This treaty will
    institute that legal framework upon which companies--and countries--can
    rely.
        U.S. multinational companies expect other countries to abide by
    international standards and rules in other areas, such as intellectual
    property, counterfeiting, dumping, and international financing. So do
    we. It, therefore, is logical that we would expect the same when
    determining our ability to access the resources of the seabed.
        The Law of the Sea Convention provides the only internationally
    recognized legal regime for extracting mineral resources from the ocean
    floor in the deep seabed, an area over which no country has sovereign
    rights. The International Seabed Authority (ISA) develops the rules,
    regulations, and procedures relating to the deep seabed. The Convention
    guarantees the United States, and only the United States, a permanent
    seat on the decisionmaking Council of the ISA--with an effective veto
    over decisions impacting U.S. interests.
        The development of deep seabed claims is incredibly expensive.
    Companies in the United States are reluctant to invest heavily in deep
    seabed mining because of the risk that their activities would not
    withstand a legal challenge since the U.S. is not a party to the
    Convention. Conversely, foreign companies, because their governments
    have joined the Convention, have access to the international bodies
    that grant the legal claims to operate in the deep seabed area. The
    U.S. cannot represent the interests of its companies in those bodies.
        Lockheed Martin, for example, has two deep seabed claims that
    predate the Law of the Sea Convention. It has continued to extend its
    licenses through the National Oceanic and Atmospheric Administration
    (NOAA). These claims will be instantly recognized by the International
    Seabed Authority (ISA) if the U.S. joins the Convention. However,
    without the U.S. becoming a party to the Convention, Lockheed Martin is
    unable to secure U.S. sponsorship of these claims at the ISA.

                        CHINA'S DOMINANCE OF RARE EARTHS

        Our Nation's ability to access rare earth minerals may be the most
    pressing economic security issue we face.
        Today, a single country--China--holds a virtual monopoly on the
    mining and production of rare earth elements. China produces more than
    90 percent of the world's supply and also consumes roughly 60 percent
    of that supply. Brazil, India, Malaysia, and Canada are the other
    sources of the remaining paltry supply of rare earths.
        China recently imposed significant export restrictions on its rare
    earth production. In 2010, it announced it would cut exports of rare
    earth minerals by 40 percent by 2012. Just last week, Chinese officials
    released a white paper defending the country's export control
    restrictions on rare earths. Earlier this year, the United States
    joined with Japan and the European Union to file complaints with the
    World Trade Organization (WTO) over China's export policies on rare
    earths. Experts believe China may eventually consume 100 percent of the
    rare earth minerals that it produces, jeopardizing U.S. manufacturers'
    access to these materials and, at the very least, significantly driving
    up costs for companies that use these minerals. These increased costs
    would impose significant and detrimental costs on the many millions of
    consumers who use these products and could have a profound negative
    impact on U.S. national security.
        At the same time, the Chinese are accelerating their own deep
    seabed mining efforts. They have increased government funding for
    seabed mining, and the government announced a $75 million national deep
    sea technology base in 2010. China is also expanding its engagement
    with the ISA, where it secured one of the four ISA exploration licenses
    issued in 2011. The Chinese can boast more than 20 years of sustained
    technical and political efforts to develop the deep seabed, funded by
    the government.
        A close look at the map of claims in the Clarion Clipperton Zone
    (CCZ), a location in the Pacific Ocean that is rich with rare earths,
    shows active claims by China, Japan, and Russia ``planting their
    flags,'' so to speak. Recently published reports have indicated that
    the Chinese are actively surveying other claim areas in the CCZ,
    including those of the United States. Russia, Tonga, and Nauru were
    also granted deep seabed mining licenses by the ISA last year. At last
    count, the ISA has 17 pending or completed applications for
    exploration--up from just 8 in 2010.
        Only ratification of the Law of the Sea Convention and engagement
    with the ISA will provide a sufficient mechanism to secure
    international recognition of U.S.-based claims and rights.
    Manufacturers and consumers will benefit from a more diverse and
    competitive market for rare earths, and deep seabed mining is an
    opportunity for the U.S. to quickly diversify its rare earth sources.

                                   CONCLUSION

        Manufacturing in the United States employs 12 million Americans
    with good-paying jobs. The sector supports 5 million more jobs in this
    country. Everyone in this hearing room would like to see those numbers
    grow. A strong and prosperous country needs a strong manufacturing
    sector.
        To strengthen manufacturing in the United States, we need to adopt
    policies that make our country more competitive in the global
    marketplace by reducing the cost differential we face with our economic
    competitors. Other nations are actively seeking to knock us from our
    mantle of economic leadership, yet, too often, we remain on the
    sidelines. Manufacturers can't afford for the United States to sit on
    the sidelines when it comes to the Law of the Sea Convention.

        The Chairman. No, thank you very much, Mr. Timmons. We
    appreciate it.
        Mr. McAdam.

      STATEMENT OF LOWELL C. McADAM, CHAIRMAN AND CHIEF EXECUTIVE
          OFFICER, VERIZON COMMUNICATIONS, INC., NEW YORK, NY

        Mr. McAdam. Thank you, Mr. Chairman, Ranking Member Lugar,
    and members of the committee. Thank you for the invitation to
    speak before the committee today.
        I would ask that my full remarks be entered into the
    record.
        The Chairman. Without objection, they will be.
        Mr. McAdam. So far today, you have heard a broad
    perspective from my esteemed colleagues on the Law of the Sea.
    What I would like to do is discuss ways that the Convention
    will strengthen protection for a global undersea cable network
    operator. My views are based on more than 20 years in the
    telecommunications industry, during which time I have helped
    build both fixed and mobile networks domestically and
    internationally.
        As a major communications company utilizing the
    international seabed to provide voice, video, Internet, and
    data services over a network of more than 80 submarine cables,
    Verizon supports the U.S. ratification of the Law of the Sea
    Convention. Fiber optic submarine cables are the lifeblood of
    U.S. carriers' global business and the digital trade route of
    the 21st century.
        Aside from our land-based connections with Canada and
    Mexico, more than 95 percent of international communications
    traffic travels over 38 submarine cables, each roughly the
    diameter of a garden hose. Without these cables, current
    satellite capacity could carry only 7 percent of the total U.S.
    international traffic.
        Any disruption to the global submarine network can have a
    significant effect on the flow of digital information around
    the world, as well as an impact on the world economy. As one
    official from the Federal Reserve noted in referring to
    submarine cable networks, ``when communications networks go
    down, the financial sector does not grind to a halt. It snaps
    to a halt.''
        There must be an appropriate legal framework based upon
    global cooperation and the rule of law to protect submarine
    cables. The Convention provides this necessary framework in 10
    provisions applicable to submarine cables. These provisions go
    beyond existing international law to provide a comprehensive
    international legal regime for submarine cables wherever they
    are deployed.
        Several incidents recently underscore the urgent need for a
    clear and unambiguous framework protecting this vital
    communications infrastructure. First, some nations have
    attempted to encroach on the ability of U.S. operators to
    deploy, maintain, and repair undersea cables. This is in
    violation of the Convention. With a seat at the table, the
    United States can more effectively oppose these types of
    foreign encroachments on restrictions and enforce the
    Convention's freedoms to lay, maintain, and repair undersea
    cables.
        Second, ratification of the Convention will help U.S.
    companies better contend with disruptions to undersea cables.
    For example, in March 2007, large sections of two active
    international cable systems in Southeast Asia were heavily
    damaged by commercial vessels from Vietnam and taken out of
    service for about 3 months.
        More than 106 miles of cable were removed from the seabed
    and repaired at a significant cost. It would have been very
    helpful if the United States, as well as affected U.S.
    companies, including Verizon, had been able to use the
    Convention to compensate cable owners, arbitrate disputes over
    service disruptions, and deter future violations.
        Finally, the Convention will help the U.S. Government and
    affected companies respond when countries attempt unlawfully to
    require licenses or permits before submarine cables can be laid
    or repaired. As an example, Verizon is a co-owner of the
    Europe-India Gateway submarine cable system, which passes over
    the Continental Shelf claimed by Malta but never enters Malta's
    territorial seas.
        Even though the Convention allows for such transit without
    interference by coastal nations, Malta's resources authority
    has threatened legal action if the cable operators do not
    obtain a license and pay a significant fee. Not only do these
    fees add unforeseeable cost on existing undersea cable systems,
    they raise the specter of coastal nations imposing similar
    requirements for the sole purpose of raising revenue at the
    expense of the cable operators and owners.
        By signing on to the Convention, the United States will
    have an enhanced ability to effectively support American
    parties to such disputes and enforce the treaty's expressly
    stated freedom to lay and maintain submarine cables in
    international waters without tolls, taxation, or fees levied by
    coastal states.
        Once the United States is party to the Convention, Verizon
    and other U.S. telecommunications companies can work with the
    appropriate U.S. agencies to enforce the freedoms to lay and
    repair cables, saving millions of dollars over the life of a
    cable system. This Convention will improve the reliability of
    our critical infrastructure and put U.S. companies on a level
    playing field for operating international cable systems.
        In conclusion, Senate ratification of the Convention will
    provide confidence to U.S. companies that their undersea
    submarine cable investments are protected by more specific and
    reliable international law. The Convention will provide
    tangible benefits to the United States through specific new
    protections for critical submarine cable infrastructure.
    Verizon urges the Senate to ratify the Convention.
        Thank you, Mr. Chairman.
        [The prepared statement of Mr. McAdam follows:]

                     Prepared Statement of Lowell C. McAdam

        Mr. Chairman and members of the committee, it is an honor to appear
    before you today to discuss the United Nations Convention on the Law of
    the Sea. I will discuss the ways that the Convention will strengthen
    protection for the global undersea cable networks on which our economy
    and national security rely.
        My views are based on my more than 20 years in the
    telecommunications industry, during which I have helped build fixed and
    mobile networks in the United States and other regions of the world.
        As a major communications company utilizing the international
    seabed, Verizon supports the U.S. ratification of the Law of the Sea
    Convention.
        Verizon is a global leader in delivering broadband and other
    wireless and wireline communications services to consumer, business,
    government and wholesale customers in more than 150 countries and for
    all of the Fortune 500 Companies. We deliver these services over a
    network circling the globe and supported by more than 80 submarine
    cable systems.
        Fiber-optic submarine cables are the lifeblood of U.S. carriers'
    global business. Aside from our land-based connections with Canada and
    Mexico, more than 95 percent of U.S. international traffic--voice,
    video, Internet and data--travels over 38 submarine cables, each the
    diameter of a garden hose. Without these cables, current satellite
    capacity could carry only 7 percent of the total U.S. international
    traffic.
        Fiber-optic submarine cables are the international digital trade
    routes of the 21st century. And thus, any disruptions to the submarine
    cable global network can have significant impact on the flow of digital
    information around the world, with severe consequences for the world
    economy. As one official from the Federal Reserve noted in referring to
    submarine cable networks, ``When the communication networks go down,
    the financial sector does not grind to a halt, it snaps to a halt.''
    \1\
    ---------------------------------------------------------------------------
        \1\ Stephen Malphrus, ``Keynote Address,'' ROGUCCI Summit, Dubai,
    U.A.E., October 19, 2009.
    ---------------------------------------------------------------------------
        Given their importance to global networks and the world economy,
    there must be an appropriate legal framework based upon global
    cooperation and the rule of law to protect submarine cables. The
    Convention provides this necessary framework in 10 provisions
    applicable to submarine cables, going beyond existing international law
    to provide a comprehensive international legal regime for submarine
    cables wherever they are--whether in territorial seas, in Exclusive
    Economic Zones
    (or ``EEZ''), on Continental Shelves, or on the high seas. Once the
    Convention is ratified, the United States Government will be able to
    insist on compliance by other nations with these protections. Several
    recent events underscore the urgent need for a clear and unambiguous
    framework for protecting this vital communications infrastructure.
        First, some nations have attempted to encroach on the ability of
    U.S. operators to participate effectively in the deployment,
    maintenance, and repair of undersea cables. To oppose these types of
    foreign encroachments or restrictions effectively, the United States
    must have a seat at the table where it can enforce the Convention's
    freedoms to lay, maintain, and repair undersea cables.
        Second, ratification of the Convention will also help U.S.
    companies better contend with disruptions to undersea cable service.
    For example, in March 2007, large sections of two active international
    cable systems in Southeast Asia were heavily damaged by commercial
    vessels from Vietnam and taken out of service for about 3 months. More
    than 106 miles of cable were removed from the seabed and repaired, at a
    cost of more than $7 million. It would have been very helpful if the
    United States, Verizon, and other affected U.S. companies had been able
    to use the Convention to compensate cable owners, arbitrate disputes
    over service disruptions, and deter future violations.
        Third, the Convention will also help the United States Government
    and international companies respond when countries attempt to
    unlawfully require licenses or permits before submarine cables can be
    laid or repaired. As an example, Verizon is one of the co-owners of the
    Europe India Gateway submarine cable system, which passes over the
    Continental Shelf claimed by Malta but never enters Malta's territorial
    seas. Even though the Convention allows for such transit without
    interference by coastal nations, Malta's Resources Authority has
    threatened legal action if the submarine cable operators do not obtain
    a license and pay a fee. Not only do these fees add unforeseeable costs
    on existing undersea cable systems, they raise the specter of coastal
    nations imposing similar requirements for the sole purpose of raising
    revenue at the expense of the cable owners. By signing on to the
    Convention, the U.S. will have the discretion to add its diplomatic
    efforts in the ongoing dispute with Malta and enforce the treaty's
    expressly stated freedom to lay and maintain submarine cables in
    international waters without tolls, taxation or fees levied by coastal
    States.
        Finally, the Government of India imposes onerous requirements on
    cable ships outside its territorial seas, including submarine cable
    repair ships. India requires cable ships to enter one of its ports for
    a security inspection, which triggers a customs bond against the value
    of the ship and any cable being carried. Although the bond may be
    repaid at the end of the repair, other fees are not. Getting a permit
    can take more than 3 months. The net result: India has become one of
    the most expensive places to maintain and repair submarine cables, with
    unnecessary costs running to the millions of dollars.
        Once the United States is a party to the Convention, Verizon, and
    other U.S. telecommunications companies can work with the appropriate
    U.S. agencies to enforce, when necessary, the freedoms to lay and
    repair cables on the Continental Shelf and the EEZ--saving millions of
    dollars over the life of a cable system, improving the reliability of
    our critical infrastructure, and putting U.S. companies on a level
    playing field for operating international cable systems.
        If the Congress fails to act to ratify the Convention, U.S.
    companies will continue to operate at a disadvantage vis-a-vis our
    global counterparts, indeed having to work through our international
    providers and their respective governments to seek protection of their
    submarine cable infrastructure under the Convention.
        In conclusion, Senate ratification of the Convention will provide
    confidence to U.S. companies that their undersea submarine cable
    investments are protected by more specific and reliable international
    law. The Convention provides tangible benefits to the United States
    through specific new protections for critical submarine cable
    infrastructure. Verizon urges the Senate to ratify the Convention.

        The Chairman. Well, thank you very much, Mr. McAdam. I
    really appreciate that.
        I apologize for having had to step out just for a minute. I
    think you will be able to tell your grandchildren that while
    you were speaking, history was being made. It is just that it
    wasn't exactly your speech that made it. [Laughter.]
        Mr. McAdam. Wouldn't be the first time.
        The Chairman. But it is my understanding--I don't have the
    full story here. I think Tom also got a message, if I am
    correct. But I think the entire ACA was upheld, with the
    exception of the Federal Government's power to terminate
    Medicaid funds. That was very narrowly drawn.
        But otherwise, that is what I understood. Is that what you
    understood, Tom?
        Mr. Donohue. Yes. This is very complicated. First of all,
    the individual mandate was found to be a tax. And it appears,
    and I have very little information--we had talked about this--
    that the Chief Justice moved to the other side so that he could
    write the opinion, and I think the opinion is going to be very
    interesting to read. And so, we probably none of us want to say
    anything for the next half hour.
        The Chairman. I think that is pretty accurate. We will wait
    and get a readout at the appropriate time.
        But let me come back, if we can, to the importance of what
    is being said here. And I think your statement today, Mr.
    McAdam, actually is a very, very important one because I don't
    think a lot of people have focused on the extent to which an
    entire society--defense industry, finance, banking, all of
    this--is wrapped up in the movement of information and the
    degree to which the ability to protect that is obviously very,
    very significant.
        And to have rights with respect to it that are clear is
    obviously critical with respect to any kind of dispute and/or
    intervention by someone, by a terrorist group or by a nation
    state. And obviously, one could envision any such intervention
    taking place in the world we are living in today. So I
    appreciate what you have said.
        And it raises the larger question that I want to ask all
    four of you. Some of the folks who have raised questions about
    the treaty--and we don't challenge anybody's right to do that.
    Obviously, there are different opinions here about these
    things. But they have argued that companies, that there is
    nothing to bar you from just going out. Just to go out and do
    what you want to do.
        They argue that you can drill for oil and gas in the
    extended shelf, that you can mine the deep seabed, you can fix
    your cables. Just go do it, and if there are any problems, we
    will just use the U.S. Navy and U.S. military power to protect
    those operations.
        Now I am not going to go into any of the questions raised
    about war powers resolution, the politics of war, any of that.
    Just give us the practicalities. What does that approach do for
    your ability to, in fact, go out and do it, if anything? Could
    each of you respond to that?
        Maybe you want to start, Mr. Gerard?
        Mr. Gerard. Surely. I think in simple terms, Senator, the
    thing to remember is the word ``certainty.'' And as you quoted
    earlier, Marvin Odum, chairman of Shell in the United States,
    made a simple comment. And he said without certainty, the risk
    is too high.
        And fundamentally, from an oil and gas perspective, that is
    what we looked at. We go through political calculation, risk
    calculation on every project. And if there is question as to
    who has that right or who owns that land or who has access, we
    might be able to have a theoretical conversation about what the
    U.S. Navy can or cannot do, but we are talking billions of
    dollars of investment.
        One quick anecdote, Senator, that you might appreciate.
    Shell Oil is moving, hopefully, to the Arctic, even as we
    speak. A few days ago, they just released two of their vessels
    from the Seattle region, headed up to the Arctic.
        They are in the fifth year of a permit. They have invested
    $4 billion. That is a ``B,'' $4 billion. And hopefully, this
    summer, they will get their first permit for their first drill
    hole.
        So when we talk about investments, we are talking about
    multibillion dollar efforts here. So unless we have certainty
    and know who has got the right claim, who controls that area,
    our money will not go there, and I think Marv Odum made that
    quite clear in his statement.
        The Chairman. Yes. Mr. Donohu.
        Mr. Donohue. Let me state for 1 minute, Mr. Chairman, on
    the issue of capital that it takes--whether it is to dig up
    rare earth minerals or whether it is to go for oil and gas or
    whether it is to make other advances, capital doesn't come if
    it isn't safe. Money goes where it is safe, where it can be
    profitable, and where it is protected.
        And so, when we are talking about certainty, we are talking
    about a form of protection that we know we can get the permits,
    we can do our business. And by the way, of course, we can
    always say we have a great Navy, even though we are shrinking
    the size of the Navy and we haven't done sequestration yet and
    all of that sort of thing.
        I think it is a lot cheaper. I think it is a lot smarter. I
    think it is a lot more credible in the courts of the world to
    be a party to this treaty. And I think we must keep sight of
    the fact that when you are on the inside, you can do something
    about it. When you are on the outside, are you just going to
    tell them we have great massive Navy power, and we are going to
    go do what we want to do?
        If it ever came to that, of course we can. But I think it
    is important. We are going to have competition for these areas.
    If we don't lay a claim to these extended areas, there are lots
    of other people. As you mentioned, I think it was you, in the
    Arctic, we have got the Russians. We have got--the Chinese will
    be there. Everybody is up there. Everybody wants to get in on
    the deal.
        Well, why don't we just put our footprint there? All we
    have to do is put this treaty in place with the adjustments
    that should be made, put our people there, and lay claim to
    what is rightly the resources of this country.
        The Chairman. Anybody else want to? You don't need to. Yes,
    Mr. Timmons.
        Mr. Timmons. Well, 161 other countries would likely not
    recognize our claims if we are not a part of the treaty and
    they are. The world is a very different place today than it was
    40 years ago. We are a global economy. We compete
    internationally. We are competing for those 95 percent of
    consumers who live outside of the borders of the United States.
        Many of the companies that would be able to invest and take
    advantage of the resources of the deep seabed are international
    in nature, and they have operations in other countries. And
    through commitments and treaties, they rely on other countries
    to follow the rules. Whether it be in areas like dumping or IP
    protection or financing, these other countries--or these
    companies will want to follow the rules as well, or they simply
    will not invest.
        The Chairman. Now let me ask you one other question with
    respect to this. That we are hearing from some people--we are
    hearing from some people that this may be a back door way of
    enforcing the climate change treaty, something like the Kyoto
    Protocol.
        Now I know we have had many discussions, Mr. Donohue, about
    that. We have worked together on some energy stuff. I know the
    Chamber's and other people's concerns about costs being dumped
    on you that you can't handle and make you noncompetitive. And
    that has been a major issue as we wrestle with how to deal with
    these things.
        So I will ask each of you the very same question. Do you
    have any concern that joining the Law of the Sea is going to
    require the United States to somehow be mandated into the Kyoto
    or any other climate change agreement?
        Mr. Donohue.
        Mr. Donohue. Well, if you read what seems to be the
    treaty's environmental interests, we have met all of them. All
    of them, period. And if we were a party to the treaty and
    inordinate or particularly inappropriate climate demands were
    made on us, we would have the ability to veto it. Veto it. It
    takes one veto.
        The Chairman. Let me ask you--yes, Mr. Timmon.
        Mr. Donohue. You tell me how you think that is wrong, and I
    will be happy to discuss it with you.
        Mr. Timmons. I think that is a very important point that
    Mr. Donohue has just made. We would have the only permanent
    seat on the Seabed Authority, and we would have the right to
    object to any provisions that are put forward.
        That said, there is nothing in the treaty that I have read
    that indicates that we would have to join Kyoto or any other
    treaty of that type. And that is coming from an organization
    that does not support Kyoto and has serious reservations about
    a cap-and-trade regime.
        The Chairman. Some critics have additionally argued that if
    the U.S. joins the Convention, we are going to lose jobs. Does
    the Chamber of Commerce agree with that?
        Mr. Donohue. No. If you expand the economy, if you--and
    many of our jobs in the future are going to come from mining,
    from energy, from trade, and this clearly is a treaty that will
    enhance that, not detract from it. And I believe, as we have
    said publicly not only about this treaty, but about energy,
    mining, and other industries, these are where a lot of the jobs
    of the future are.
        I think it would create jobs.
        The Chairman. Anybody else want to comment on that?
        Mr. Gerard.
        Mr. Gerard. I would just say, Senator, clearly it will be a
    job creator.
        Let me just add one other anecdote, and I know I am raising
    a touchy issue here--Keystone XL pipeline. A lot of people
    don't realize the Keystone XL pipeline has 2,400 U.S. companies
    involved in its development from 49 different States. We have
    only not found someone in the State of Hawaii that is involved
    in the Keystone XL pipeline development.
        So when you look at energy infrastructure, energy
    investments, they are huge job creators, and they occur places
    that you least expect. The multiplier effects in energy,
    particularly in oil and natural gas, are very significant.
        And so, we see nothing but upside through ratification,
    through the accession process to secure those rights, hopefully
    so we can secure the opportunities to develop that resource,
    and it will flow clear across this country in a variety of
    different ways.
        The Chairman. Thank you.
        Yes, Mr. McAdam.
        Mr. McAdam. Yes, Mr. Chairman, I would just point out in
    our industry, telecommunications, the buzz word, No. 1 word is
    ``reliability.'' And we invest as a company $16 billion to $17
    billion a year into our networks.
        And we in the undersea cable area in particular invest in
    mesh networks so that we can avoid issues with large storms or
    earthquakes off the coast of Japan. So we invest to get a level
    of certainty for our customers.
        When a nation takes a unilateral action like I referred to
    in my testimony, you can't counter that with another
    investment. So this treaty allows us to have certainty around
    those sorts of unilateral actions and the belief that we can
    resolve any conflict amicably and quickly.
        And so, my view is it will help us with our certainty
    around investments. We will make more investments, and that, in
    turn, will create more jobs.
        The Chairman. My time is up. Let me come back another
    round.
        Senator Lugar.
        Senator Lugar. Thank you, Mr. Chairman.
        I want to pursue some more of the certainty argument. This
    was made by others in earlier hearings of the committee, and
    yet we pursued this during the last hearing with former
    Secretary of Defense Don Rumsfeld, who testified against the
    treaty.
        So I raised the question with Secretary Rumsfeld how he
    would deal with the situation in which American companies were
    testifying, as you have today, that without certainty they
    would not be prepared to invest the billions of dollars that
    are required. Thus, there would not be the creation of the jobs
    nor the degree of energy independence or the other attributes.
        Now his response, and I hope I do justice to it, he
    observed that while businesses always prefer greater certainty,
    they enter into uncertain investments all the time when they
    believe the potential benefits justify the risks. On that
    basis, he suggested United States companies that saw potential
    benefits from deep seabed activities would go right ahead and
    make those investments even if the United States did not ratify
    the Convention because as a practical matter, there is no
    impediment to their doing so outside the Convention rules.
        And second, he observed U.S. companies might consider
    entering into joint ventures with companies from countries that
    are parties to the Law of the Sea Convention. They could,
    therefore, secure rights under the Convention in that way
    without the United States needing to join the Convention
    ourselves.
        Now these were supporting comments in terms of not
    ratifying, and the basic thoughts of the opponents were that we
    are forfeiting sovereignty. We are forfeiting money through the
    royalties and those aspects.
        And finally, that there simply is no reason why we should
    not proceed anyway. We have the greatest fleet on earth. And if
    we are challenged, we have the ability to rebut whoever is
    challenging us.
        So this is repetitious. But nevertheless, these arguments
    have been strongly made. That is the reason we are going
    through these hearings for the third time, not having had
    ratification, starting from 2003 onward.
        How do you respond to Secretary Rumsfeld suggesting that
    after all is said and done, you like certainty, but you take
    risks all the time. And you have to sort of consider what the
    profit may be and proceed, given our fleet and given our
    general stature in the world.
        Mr. Gerard, do you have a thought about that?
        Mr. Gerard. I do. There is risk, and then there is risk,
    Senator Lugar. In this case, there is risk, everyday business
    risk associated with doing business and making risk assessments
    and judgments. Very fundamental to that risk assessment is
    property right--who has right, who doesn't have right. This is
    a very fundamental issue.
        When you go out in the open waters beyond our 200-mile
    nautical mile border today, the risk goes up very
    significantly. I would suggest if the return is that great,
    then there would be people there today, and there aren't.
        To the second point that he has raised is probably correct.
    What will eventually happen is U.S. companies will be forced to
    partner with other nations who have acceded to the treaty--the
    161, I believe, that were mentioned earlier--to find
    opportunities around the globe because they cannot find
    certainty or protect their own interests through U.S. law,
    through U.S. practice. And so, we would find them teaming up
    with the Russians, with the Chinese, and others where their
    preference would be to take the lead and to go alone or to find
    others as their junior partners in assessing and managing this
    risk.
        Senator Lugar. By definition of these partnerships, we
    already divide up the profits, leaving aside the royalties in
    the sixth year.
        Mr. Gerard. Well, that is right. And plus, you are at the
    behest of others in looking for those partners. We have, I
    might say, the best companies in the world, the most
    technologically advanced. We are on the cutting edge of the
    abilities to go out in these deep waters and produce these
    energy resources.
        Wide open risk without any limitation is a clear detriment,
    and as you have heard the people making those decisions in the
    boardrooms, the risk is too high.
        Senator Lugar. How do we deal with this second proposition
    that is being offered? And that is that after all we do have
    the largest fleet, the only fleet that is everywhere. This is
    too bald a statement, but the idea is if there is a problem
    with somebody, you just shoot them up. You just plow right on
    through.
        That people recognize might and so forth. Therefore, all
    this quibbling over the royalties and so forth, we are just
    simply as a nation losing our sense of sovereignty, our sense
    of our ability, really, to manage things. Why doesn't that work
    really in the real world?
        Mr. Donohue. You know, Senator, we are a party to many
    agreements around the world, and there was a lot of opposition
    to them. A lot of people were upset that we went into the WTO.
        What we have found, a single important thing we have found
    it was a way to adjudicate differences between countries. And
    most of the time, the United States has won. On occasions, we
    have lost, and even then, we have ignored some of those things
    to our own detriment.
        But I happen to think--while I have great confidence in the
    military, I happen to think it would be better if we could
    avoid most of the need to confront militarily by joining an
    organization that 161 countries are already in, couldn't all be
    wrong, and having a way to participate vigorously in the
    process.
        Clearly, the amount of money that you are going to pay in
    some sort of royalties or fees is a fraction of what the
    Government is going to make on this deal. And clearly, it would
    be much, much better to find a way to explore these tremendous
    resources without having to do it under the protection of naval
    power.
        I mean, under that argument, we could sail across any--go
    anywhere in the world and pull up with our Navy and say, by the
    way, we are going to dig right here, and maybe your--and those
    people may be claimants to that property because of their
    participation in the treaty. I wouldn't know. But I just think
    the argument that we are the toughest guys on the block is too
    simple. We will just go in there and do what we want is
    probably not the best argument for us to make.
        Mr. McAdam. Senator, if I could just, a couple comments on
    both of your questions here. While we certainly do accept risk
    and we balance that in all of our investments, it is very
    prudent for us to look for opportunities to lower risk wherever
    we can. And this seems like a very reasonable way to do that.
        We do partner with many different companies to do these
    large undersea cable networks that I talked about. And in some
    of the disputes that I have mentioned, we have had to go to
    countries like the U.K. and France and ask them, frankly, to
    carry our water for us. And it seems almost an assault on our
    sovereignty that we have to go do that because we don't have a
    seat at the table.
        For me to try to convince the Navy to go dispatch a
    destroyer to fight over a garden-hose-size cable going into
    another country seems to be a bit of overkill.
        Senator Lugar. Thank you very much.
        The Chairman. Senator Corker.
        Senator Corker. Thank you, Mr. Chairman. Thanks for having
    this hearing and your diligence in having many of these.
        And thank you, as witnesses, for being here. I know most of
    you well, and I appreciate you being here.
        And I will say that it is a little bit of an out-of-body
    experience to have especially you, Mr. Gerard, in here talking
    about something the administration is doing to help the oil
    industry. I think it is not a pejorative statement to say that
    they have done everything they can to hurt the oil industry.
        The Keystone pipeline that you talked about is a great
    example of this administration basically trying to keep
    something that is in the interest of Americans and American
    jobs from happening, very--it looks like for political reasons.
    And yet, you know, we have had members up here, people up here
    many times talking about this being good for the oil industry.
        So Secretary Clinton was up here talking about the same
    thing. So, as you can imagine, I am sitting up here, it is a
    little bit of an extraordinary experience. And I wonder if you
    could explain to me why you think the administration is working
    so hard to help the oil industry with this treaty, and yet
    domestically doing everything they can to damage it and keep it
    from being productive?
        Mr. Gerard. Well, I appreciate the question, Senator. And
    the irony wasn't lost on me either when I was invited to
    testify.
        But let me just say this. Let me step back, and let us take
    a broader world U.S. view. What we are talking about here is
    the future of the country and where we will stand in that
    global economy and our potential opportunities.
        And so, in our mind, we separate, if you will, those
    current domestic challenges or, in our view, inadequacies in
    terms of allowing us to produce our own domestic oil and
    natural gas. I think what you are alluding to, Senator, is 85
    percent of our domestic outer Continental Shelf is off limits
    today, as a result of U.S. policy where we do have sovereign
    rights currently.
        We are frustrated by that. Our views on that have not
    changed. But we look to the future, particularly in the Arctic.
    And under the Expanded Continental Shelf, we have the potential
    to move that 200-mile radius or limit out to 600 miles.
        Senator Corker. But let me ask you this question.
        Mr. Gerard. We think it is a big deal moving forward.
        Senator Corker. Right. And I understand. I appreciate you
    being here, and I appreciate you experiencing the irony, too.
    So you would be better off----
        The Chairman. We want you to appreciate his full answer,
    though, too.
        Senator Corker. Well, I had a feeling it might last a long
    time. [Laughter.]
        The Chairman. There is a lot to say. You have got to stand
    up to these things.
        Mr. Gerard. I will be brief. Go ahead, Senator.
        Senator Corker. The 200-mile piece, though, is probably
    easier gotten to by U.S. companies, is it not, and the extended
    piece is deeper and more difficult to explore, is it not?
        Mr. Gerard. Yes and no. To oversimplify it, in some places
    in the Arctic, the water is relatively shallow. In some areas
    off the Pacific coast, it goes deeper quicker. The Atlantic a
    little shallow. So it just varies in the area around the world.
        Senator Corker. You can understand the perplexing nature of
    having Secretary Clinton and others up here advocating for the
    petroleum industry when what we see here domestically is
    something very different. But I know that everybody----
        Mr. Gerard. I understand.
        Senator Corker. Yes, thank you so much.
        Mr. McAdam, I heard you talking about laying cable on the
    seabed, and I know you have companies that operate in the U.K.
    As matter of fact, you have a major base of operations there,
    and I know that the U.K. is signatory to this treaty. So I
    guess I am confused.
        If you had issues, and I know you operate on a global
    basis, and most of the companies that the Chamber represents
    that care about this treaty operate all around the world. I
    mean, these are not companies that operate in Soddy-Daisy,
    Tennessee. I don't understand why you can't adjudicate these
    claims through the U.K. if we are not signatory. It doesn't
    make any sense to me that all of this is riding upon the United
    States, us being signatory to this treaty.
        Mr. McAdam. Well, Senator, I just feel that we would be
    much more effective having a seat at the table and having that
    discussion. To go to the folks in the U.K., who are good
    partners certainly, and try to convince them to carry our water
    in talking to another country I think is difficult for them.
    They have to balance that with all their priorities, and I
    think that one step removed makes us less effective.
        Senator Corker. So, in each case, a company--let me make
    sure I understand correctly. A company doesn't have the ability
    to try to make claims itself. It has to have a country
    representing them in the process. Is that the way it works?
        Mr. McAdam. Well, we would certainly be active with our
    legal folks and with our operations on the ground. But our
    opportunity to be backstopped by the Federal Government is
    important to us and I believe will make us more effective.
        Senator Corker. But to answer the question, clearly, you
    have the ability to make claims directly, do you not? You don't
    have to come and ask permission of the U.S. Government to do
    so.
        Mr. McAdam. Certainly. We would use existing legal
    frameworks.
        Senator Corker. So to say--so to say that our country has
    to be signatory to these treaties--to this treaty when,
    basically, every one of these companies operates on a global
    basis and has other outlets through which to make claims is not
    a true statement, is it not?
        Mr. McAdam. Well, obviously, we have operated for years
    without the treaty. But our point is today merely we would be
    more effective if we had it.
        Senator Corker. And tell me how you would be more
    effective. Because I would assume that the many people that
    work for you in the U.K. believe that they have a very
    effective government that they work with, and I am sure when
    you are there before their governing bodies, you are telling
    them how effective they are.
        So tell me why that would make you more effective. I am
    having a hard time understanding that.
        Mr. McAdam. Well, I think the issue is that you have many
    countries around the world, like the example of Malta that I
    used, that can take this sort of unilateral action, and there
    isn't a framework for redress. So this gives us the ability to
    not only work with Malta directly ourselves, but also to bring
    in the State Department or other Federal Government rather than
    having to go a circuitous route through the U.K.
        Senator Corker. Yes. Now the issue of Malta is not one of
    those issues where there is even a veto process, is there? I
    mean, we can weigh in. But just to cite your Malta issue, that
    is not something where the U.S. Government would have a veto
    process. That is one where we would have a voice among many
    other nations in trying to cause that to be successfully agreed
    to. Is that correct?
        Mr. McAdam. I would have to look at the specific terms of
    the agreement and get our legal experts to weigh in on that. I
    am, frankly, not competent to offer the answer to that. If you
    would like, I will get that for the record, though.
        Senator Corker. So, look, I appreciate all of you being
    here, and I don't know whether you are being here as good
    soldiers or whether this is something that you are passionate
    about. But you certainly are people that I respect. And I am
    very neutral on this. I am here to learn. I have been to every
    one of these hearings, and certainly, there are people in the
    audience, Senator Warner and others, that I respect greatly in
    addition to all of you.
        I do want to say to you, Mr. Donohue, who I know well and
    certainly have worked closely with, your comment regarding the
    veto on the climate issue is categorically incorrect. And I
    would like for the record for your legal person to give us an
    opinion to that statement because I don't think that is
    correct.
        And I know that you are here, and you don't know every word
    of the treaty, as I don't. but I think you are mixing apples
    with oranges. And on the issue of the climate issue, we do not
    have a veto process in place for our own country.
        So if you could have your legal folks tell me differently
    as part of the official record or tell me that I am right, I
    would greatly appreciate it. But I think you are very wrong on
    that, and you can respond.
        Mr. Donohue. Well, Senator, it wouldn't be the first time I
    am wrong, but I am very enthusiastic. I am not here on behalf
    of anybody else. As the Senator indicated, I was the one that
    was pushing him to do this.
        I will be very happy to have our legal guys do that. I
    think they are probably very involved for the next 24 hours or
    so on what just came out of the Supreme Court. But by early
    next week, we would be very happy to do it. And I will come up,
    now that I understand that you are neutral on this and trying
    very hard to, as we all did for a long time, to get a good
    grasp on it, I will make it my business to come and talk to you
    about it.
        Senator Corker. You might bring that legal opinion with
    you.
        Mr. Donohue. No, I will send it beforehand so you have a
    chance to look at it.
        Senator Corker. And I say to all of you, look, I hope that
    what we will do--I do want to make the right decision on this
    treaty, and as in every issue, I really want to understand the
    details. But I hope that the responses will be deep and not
    rhetorical. I mean, I think there are a lot of details that
    many of us are concerned about, especially as it relates to the
    climate issue.
        But other issues that really matter to us, and some of the
    sovereignty issues really matter to us. And again, I respect
    all four of you. I know that there is no way that you could
    possibly know the details of this. You are here because you are
    the leaders of your organizations, and you have people in the
    bowels of your organizations that do know the details. But I do
    look forward to future conversations and very much thank you
    for being here, and I will see, I am sure, very, very soon.
        Mr. Donohue. Senator, just one point for the record. You
    know that the Chamber is perhaps the most aggressive
    organization in the city on climate issues that affect
    adversely this country and our economy. And talk about
    something I am really worried about is the climate decisions
    that were made just 2 days ago by the District Court. That is a
    real problem.
        So we have very good people on this. I will be very happy
    to get you an answer to your question. And I just want you to
    know I looked at this as a worrisome issue until I believe I
    have been carefully advised that we are OK here. But I will get
    that and come and see you.
        [A written response from Mr. Donohue to the question
    follows:]

        Two separate issues were under discussion at the hearing. One
    involved the United States veto over the important actions of the
    International Seabed Authority (ISA), and the second involved the
    concern that the United States approval of the Treaty would obligate
    the United States to comply with the Kyoto Protocol or other
    international environmental agreements that the United States has not
    approved.

                     UNITED STATES INFLUENCE WITHIN THE ISA

        LOS's 1994 Agreement provides the United States a guaranteed
    permanent seat on the ISA's 36-member Council. We are the only nation
    afforded this position. The 1994 agreement also requires that Council
    actions must be by consensus on issues such as rules, regulations, and
    procedures involving the ISA's deep seabed mining royalties. Because
    ``consensus'' is defined as the absence of any formal objection, the
    United States enjoys a veto on important matters--including royalty
    distribution--decided by the ISA. Furthermore, the ISA's structure
    makes the Council the key decisionmaking body of the ISA. The rules and
    procedures for distributing the ISA's royalty payments require the
    Council's recommendation in order for the ISA's Assembly to act. Thus
    the United States role in the ISA is properly recognized as a veto.

               UNITED STATES ENVIRONMENTAL OBLIGATIONS UNDER LOS

        As you know, no organization has been more adamantly opposed to the
    Kyoto Protocol than the Chamber. As a result, we are extremely
    concerned by efforts to impose Kyoto onto the United States and
    American businesses.
        The Chamber is not concerned that United States approval of LOS
    would impose any new environmental requirements on the United States
    and American business primarily for two reasons. First, LOS does not
    require parties to comply with other international environmental
    treaties. Thus, the Kyoto Protocol does not apply to the United States
    because we are not party to it.
        Second, the United States already is in compliance with any LOS
    environmental provisions. Therefore, the United States would not be
    required to adopt additional environmental laws, regulations, or
    policies that might affect American business. Specifically, Article 212
    of the LOS Treaty requires states to ``adopt laws and regulations to
    prevent, reduce and control pollution of the marine environment from
    the atmosphere.'' The United States has strong atmospheric pollution
    laws and is already in compliance with this provision.

        Senator Corker. And if you could, since--and I thank the
    chairman for giving me an extra minute or two.
        Mr. McAdam, I would love it if somebody from your
    government relations office would share with me truly, since
    you operate around the world in most of these companies that
    Mr. Timmons and Mr. Donohue and Mr. Gerard represent do, I
    really would like to know for a fact why it enhances a
    company's ability to make claims when they can easily make it
    through any other country that they operate in.
        I would really like to know that. If you would send that to
    me, I would appreciate it. And again, I ask these questions
    with great respect.
        [The written information requested from Mr. McAdam
    follows:]

        Under the treaty, it is the State Parties who can best protect
    their constituents from unlawful incursions against domestic companies'
    submarine cable interests. If the United States were a party to the
    treaty, it could act on behalf of United States companies to protect
    U.S. interests in undersea cables. Without this protection, United
    States companies are forced to seek out the protection of foreign
    governments to help safeguard U.S. investments.
        Although these nations may make claims on behalf of foreign
    companies in their discretion, in practice obtaining such assistance
    may not be straight forward or timely. While U.S. companies in some
    instances in the past have been able to join with foreign companies who
    can appeal to their governments, there is no guarantee that such
    collaboration will be available in the future.

        The Chairman. Can I take a moment? I want to add--Senator
    Corker, if I could, just for a minute? First of all, you know
    how much I appreciate the due diligence you do on this stuff,
    and I really am grateful to you for taking the time and looking
    at this without all the external influences and kind of working
    through it.
        But let me just say to you with respect to the dispute
    resolution--and we will get this for the record. You have asked
    it of Mr. McAdam, but we will also have our own counsel add in,
    which is important, and we can spend some time with you on it.
        You cannot--only a country has access to dispute
    resolution, not an individual company. So it is irrelevant that
    they may have a company working here or there. They have to get
    the country to represent them. And that is where we are
    disadvantaged is that the United States can't bring that on
    behalf of our own company. You would have to persuade another
    country, not the company within the country.
        So they don't have some sort of ability because they have
    affiliates around the world to just use the affiliate to
    advantage their interest. That is No. 1.
        No. 2, with respect to the veto, there is sort of a split
    decision here. It is correct that the ISA, which is the larger
    group of the representative countries, doesn't have a veto. The
    Council has a veto. Mr. Donohue is absolutely correct with
    respect to the Council and the issues within the Council. And
    there are specific issues limited to the council.
        Senator Corker. But climate is not one of those.
        The Chairman. Let me just finish. You are correct. Climate
    is not one of those. But--and here is the critical ``but'' for
    you.
        Senator Corker. OK.
        The Chairman. There is a section which specifically states
    that you cannot be held accountable to any international law
    regarding climate or anything else unless you, as a nation,
    have signed up to it, and the U.S. Senate has never ratified
    anything. So under this treaty, in fact, we are completely
    protected as to any environmental effort because, one, it can't
    come through the Council where we have the veto, and two, it is
    specifically stated within the confines of the treaty that you
    only are subject to something if you have signed up to it.
        And nobody can come through the back door to make you sign
    up to it. So I think when you see that, I think you are going
    to feel completely comfortable.
        Final question, let me just ask you. I want to just get
    this on the record. Is any one of you here because you are a
    good soldier, or are you here because you are representing your
    industries and you are expressing the views of the people you
    represent?
        Mr. Timmons.
        Mr. Timmons. The latter, Mr. Chairman.
        The Chairman. Mr. Donohue.
        Mr. Donohue. I asked you first to please get busy on the
    deal, and you did, and I thank you very much.
        We will talk some more, Senator. This is a very serious
    issue in so many ways. And I think this is a vigorous
    discussion. And Mr. Chairman, thank you for resolving all that
    issue. My lawyers will get it done a lot faster now.
        The Chairman. Thank you.
        Mr. Gerard.
        Mr. Gerard. Until the question was asked, I didn't view it
    as being here in support of the administration. Our view
    transcends political party and administrations. Our view,
    regardless of who is in the White House, we look at the
    substance of the treaty, and that is our focus.
        The Chairman. And I want to emphasize again that the
    administration did not ask us to bring this treaty out now. We
    went to the administration and said, ``What do you think about
    it?''
        Again, it is clear on the record here, and Mr. Donohue has
    made it clear that he made the request for us to be here at
    this time initially, and that is what got us going.
        Senator Shaheen.
        Senator Shaheen. Thank you, Mr. Chairman.
        And thank you all for being here. I apologize for missing
    your testimony. I was at an energy hearing. So I am actually
    going to start with that, Mr. Gerard--energy.
        And I wonder if you could talk about why this treaty is
    important to the energy security of the United States. In your
    letter to the committee, you stated that accession will provide
    greater energy security by securing the United States exclusive
    rights for oil and gas production. So could you elaborate on
    that and why; talk about why it is important?
        Mr. Gerard. Surely. It gives us expanded opportunity with
    the extended outer Continental Shelf, the extended resource to
    develop those resources under the guise and direction of the
    United States and U.S. law. What we are focused on more
    specifically right now, which is talked about regularly, is the
    Arctic. It is estimated that the Arctic has one-quarter of the
    world's oil and gas reserves.
        That is a big number.
        And right now, as we look at it, we will be limited in our
    ability to go beyond our 200-mile Exclusive Economic Zone
    unless we become parties to the treaty and, thus, can claim the
    Extended Continental Shelf. It is estimated our claim up there
    could go as far as 600 miles. It would give us a very
    significant footprint.
        And coming back to the fundamental issues I talked about
    earlier before you got here, Senator, certainty is the key. If
    we have knowledge, understanding, and confidence into who has
    the rights, who controls, what law controls, it is much more
    likely the investment will flow. If the risk is too high, the
    investment will occur, but it will go elsewhere in the world.
        The world continues to shrink as to our ability to produce
    these resources. With modern technologies today, we can do
    things we couldn't think of 30 years ago when the treaty was
    first written and talked about. So it is a very significant
    time for us on a global basis to look at the potential for oil
    and gas development.
        Senator Shaheen. Thank you.
        Mr. Donohue, in your opening remarks, you stated that
    companies will be hesitant to take those investment risks and
    which echoes what Mr. Gerard just said. I wonder if you could
    talk specifically about any sector of the U.S. business
    community that opposes U.S. accession to this treaty? Have you
    heard from anybody who opposes it?
        Mr. Donohue. There are a number of think tanks and others
    who are--represent some elements of the business community.
    There are, as Senator Corker indicated, people who are
    concerned about environmental issues.
        But across the board, the people that we represent are
    concerned about the following issues. First, energy, which is
    the financial base on which we are going to fix this economy
    and give us more energy security.
        Second issue is some legal certainty, when 161 other
    countries are involved in the process of basically divvying up
    the natural resources in the sea. Also a lot of very important
    issues here on navigation, on supply chain management, on the
    ability to get at rare earth minerals.
        This, to me, this is very important, and it is an easy
    issue because you have all--you have many protections from any
    difficulties that might come from being a part of the treaty.
    You have many exclusions because you are not a part of the
    treaty.
        And as everybody on the panel indicated, you obviously have
    the protection of our Armed Forces. But we can't sort of run
    around the world doing our business like that every day,
    although I would say that the Chamber is a vigorous supporter
    of our Armed Forces because you can't participate in a global
    economy without security.
        And I think there is a very clear process in the Chamber
    that brings the great preponderance of our members to being in
    support of this. Senator, you might imagine, with more than
    300,000 members and the ability to legally represent 3 million
    companies, I can never get everybody to agree on anything,
    including what day it is.
        Senator Shaheen. But just to be clear, you haven't heard
    from the businesses that you represent any significant
    downsides to this country ratifying this treaty?
        Mr. Donohue. Exactly. That is correct. And I am more
    comfortable myself after I have spent a good deal of time
    exploring that question with our own associates and with people
    around the city and with Members of the Congress. And I thank
    you for that question.
        Senator Shaheen. Thank you.
        Mr. Timmons, Mr. Donohue talked about the rare earth
    minerals from China just now, and you pointed out in your
    testimony that China is in the process of sharply reducing
    those exports and that they may eventually consume all of them
    within the country. Can you talk about what the impact might be
    on both what the advantages of our ratification of the treaty
    gives us as we are competing for those rare earth minerals, and
    then what would happen if China, in fact, did consume what it
    is currently exporting all within country and what impact that
    would have on consumers and on businesses and jobs in this
    country?
        Mr. Timmons. Yes. If I could start with the latter question
    first? If we don't ratify the treaty and businesses don't make
    the investments necessary to take advantage of the rare earth
    nodules that exist on the seabed floor, and China does use all
    of its rare earth materials, it would be devastating to the
    American economy, to manufacturing, and to jobs in this
    country.
        The bottom line, as has been stated many times on this
    panel, is that businesses require certainty before they make
    multibillion dollar investments. Mining on the seabed floor is
    not an inexpensive proposition. It requires years of studying,
    planning, mapping, and significant investment to do so. And
    companies simply aren't going to do that without the certainty
    that the treaty provides.
        One of the reasons that we have the strong military that we
    have all acknowledged and that we all admire is because we have
    economic might in this country. The rare earth debate is one
    that businesses have been quite aware of for a number of years,
    but it is rather new in the public dialogue. But it is one that
    will determine our ability to compete and succeed in the
    international marketplace and this global economy, and it is
    one that we simply cannot take for granted moving forward.
        Senator Shaheen. And you talked about the importance of
    certainty before companies are going to be willing to invest
    large amounts of money that are required. Can you talk about
    the extent to which those investments are happening right now,
    or are those sitting on the sidelines waiting to see what
    happens with this debate?
        Mr. Timmons. They are sitting on the sidelines for the most
    part, Senator. And I would say that it is not only in this
    realm. I think it is very important to remember that it is 20
    percent more expensive to manufacture in this country than
    among our major trading partners after you take out the cost of
    labor.
        And that is because of lots of different things--taxes,
    regulation, energy, where for the first time in many, many
    years we actually have a slight cost advantage. But this is
    another significant amount of uncertainty that will not allow
    capital to flow to those investments.
        Senator Shaheen. Thank you.
        Mr. Donohue. Senator, just one comment, and Jack Gerard may
    want to mention. While there aren't many companies down on the
    deep part of the shelf bringing up the rare earth materials,
    many companies are preparing to do it. You just don't go out
    there with a boat and throw something over the side. This is a
    huge, complicated technical issue, and there is a lot of money
    being invested by American companies and by consortiums of
    companies to figure out exactly where it is, exactly how to do
    it, and exactly how to do it in a safe and environmentally
    sensitive way.
        Senator Shaheen. Thank you.
        The Chairman. Thank you, Senator Shaheen.
        Senator Isakson, thanks for your patience.
        Senator Isakson. Thank you, Mr. Chairman.
        Thank you all for coming. It is good to have you here today
    on what is a historic day.
        I need to get a couple of clarifications. I wrote down some
    things. Mr. Gerard, you made a statement, I think it was with
    regard to Shell that invested $4 billion in the Arctic, and
    they had sent two ships recently out from Washington to go
    there to their first claim. Is that correct?
        Mr. Gerard. Yes, they acquired the lease 5 years ago
    through the process of permitting and getting the ability to go
    out and actually start to drill a well. They have been in that
    process 5 years. It has cost them $4 billion to this point, and
    we hope they are going to get final approval to drill those
    first wells this summer during this summer season. But that is
    how long this process takes.
        My simple point was these are long-term investments, and
    they are very significant. So we have got to know that we have
    got some rights intact before we commit to make those
    investments.
        Senator Isakson. Who is granting that permit?
        Mr. Gerard. The U.S. Government.
        Senator Isakson. The U.S. Government. So it is on our
    current territorial waters?
        Mr. Gerard. Yes, it is within the 200-mile Exclusive
    Economic Zone.
        Senator Isakson. The extended seabed.
        Mr. Gerard. Yes.
        Senator Isakson. Thank you very much.
        Mr. Timmons, you made a statement, and I wrote part of it
    down. I apologize again if this is wrong, but this is an
    important issue for me.
        I am talking about the deep seabed. You talked about
    international bodies who have current authority to issue
    permits or issue permission on deep seabed. Did I miss that?
    Did I misunderstand you?
        Mr. Timmons. I think so.
        Senator Isakson. So, currently, if somebody was going to
    the deep seabed to try and mine rare earth minerals there is no
    current authority other than what authority might be under the
    Convention?
        Mr. Timmons. ISA. That is right. Under the Convention.
        Senator Isakson. And Mr. Donohue, the last time I brought
    this up, the chairman and I got into a 15-minute discussion. I
    blew up the whole meeting. But this veto thing is an issue of
    which there is a lot of conversation.
        The chairman, in his response back to you, talked about the
    Council. In terms of the Council, I understand the definition
    of ``veto'' to be when a member objects creating an absence of
    consensus. But I also understand that a simple majority of
    those present and voting on the Council or a two-thirds vote of
    the Assembly can override that absence of consensus. Am I right
    or am I wrong?
        Mr. Donohue. Senator, having watched the discussion here,
    committed to get some more detail for your colleagues, and not
    wanting to start another 15-minute harangue, I look forward to
    answering that question in specific detail.
        Senator Isakson. I appreciate that, and so does the
    audience.
        Mr. Donohue. Thank you.
        Senator Isakson. Thank you very much.
        Mr. McAdam, in your testimony, you refer to some nations
    have attempted to encroach on the ability of U.S. operators to
    effectively manage, deploy, or prepare maintenance and repairs
    on their lines. In your testimony, you cite Malta's attempt to
    assess a fee or a license. You talked about a Vietnam carrier
    that had done 106 miles worth of damage to your cable.
        Are those the two examples you are referring to in ``some
    nations,'' or are there some other examples that come to mind?
        Mr. McAdam. Yes, there are other examples, excuse me, for
    sure, Senator. Just one is in India. Even though we don't cross
    into their territory, they require the cable laying and
    maintaining ships to put into port, and they assess a fee
    against them. It is against the Convention, but they do that.
    And so, we have to take legal action or we just have to pay the
    fees.
        So those are three examples.
        Senator Isakson. So the Convention exempts you from having
    to pay a licensing fee or some type of arbitrary fee to
    maintain your cable or to lay your cable?
        Mr. McAdam. Right. That is all laid out in a framework that
    we can rely on versus having these unilateral actions that have
    occurred in many places.
        Senator Isakson. Does the Seabed Authority, the Assembly,
    or the Council have to issue you a license to lay a cable?
        Mr. McAdam. I would have to look at the specific details of
    that, Senator. I don't know that off the top of my head.
        Senator Isakson. Because I am sure we are laying cable now,
    and we are not a party to the treaty.
        Mr. McAdam. Right.
        Senator Isakson. So my question would be if we are laying
    cable now and we are not a party to the treaty, would being a
    party to the treaty, from your testimony, only benefit us to
    the extent that it would exempt us from paying fees to the
    countries?
        Mr. McAdam. No, it is not the fees. We are in and out of
    these cables constantly, upgrading the technology, doing
    maintenance on the cables. And I think the concern that we have
    is the arbitrary nature of what happens today.
        And if we can have greater certainty, we can predict our
    costs better and we can make those investments. That is my main
    point, Senator.
        Senator Isakson. Thank you very much, Mr. Chairman. I have
    got to join a conference call so I will have to yield back the
    balance of my time.
        The Chairman. Well, I appreciate that. Before you run out,
    Senator Isakson, let me just say to you quickly because you
    have raised an important question. The voting structure in the
    Council was significantly rewritten as part of the 1994
    implementing agreement. And it was rewritten in a way that
    gives the United States a tremendous amount of influence, even
    in matters where the Council does not act by consensus.
        So we do, in fact, do have a veto over every item that
    would be critical to us. Let me just be very specific quickly.
        A Finance Committee was created. We insisted on this. It
    has to make recommendations on all financial and budgetary
    matters before the full Council can make its decisions. The
    Finance Committee operates by a consensus, and there are
    provisions making clear that the United States will be
    permanently on that committee. So we have an ability to prevent
    any counterbudgetary or fiscal matter from being contrary to
    our interests.
        Then the Council, second, is divided into several chambers.
    For any other issue not decided by consensus, there is a rule
    stating that any chamber by majority vote can veto a matter,
    and the United States would be in the chamber with four
    members. So there, we would have to get two other members to
    agree with us, but we, again, could have a veto by virtue of
    that.
        And third, and this is very important, section 3, paragraph
    4 of the annex states that the ISA Assembly cannot take a
    decision on ``any matter for which the Council also has
    competence or any administrative, budgetary, or financial
    matter unless it does so based upon a recommendation of the
    Council,'' where we have the veto.
        So it can't change the recommendation of the Council. All
    it can do is accept it or send the matter back. So, in effect,
    because of our negotiations in 1994, which came out of
    President Reagan's questions about this, we have, in fact,
    negotiated a rather remarkable position for ourselves, which we
    are not able to exercise.
        And so, we will get this fully properly articulated in the
    context of the record, but I wanted you to be aware of that.
        Senator Isakson. Thank you, Mr. Chairman. Would you mind
    providing me with that from which you are reading?
        The Chairman. We will give the entire thing to you. We will
    give you all the details.
        Senator Isakson. Thank you, Mr. Chairman.
        The Chairman. You got it.
        Senator Shaheen. Mr. Chairman, can I ask that you share it
    with all of the members of the committee?
        The Chairman. Everybody on the committee will get it.
        Senator? Thank you, Senator Casey, for your patience.
        Senator Casey. Mr. Chairman, thank you, and thank you for
    calling this hearing. This is a vitally important issue, and we
    are spending time on a subject matter that I think we sometimes
    don't do enough on in Washington. And I am grateful to be part
    of this, and I am sorry I am late.
        I'm running the risk of being redundant, but I would say
    that redundancy is important in Washington. Repeating important
    messages is important. So I might be plowing old ground.
        But part of what I think hasn't been touched on with great
    detail yet, Mr. McAdam, are some of the statements in your
    testimony.
        I am reading from the first page of your testimony labeled
    page 2. And you say in the second to last paragraph, and I am
    quoting, ``Aside from our land-based connections with Canada
    and Mexico, more than 95 percent of U.S. international
    traffic--voice, video, Internet, and data--travels over 38
    submarine cables, each the diameter of a garden hose. Without
    these cables, current satellite capacity could carry only 7
    percent of the total U.S. international traffic.''
        With that as a predicate, I would ask you, what can you
    tell us about the importance of this treaty as it relates to
    our 95 percent dependence on that transmission?
        Mr. McAdam. Well, we invest a great deal, Senator, in
    making these cables as redundant as we can. We use the term
    ``mesh networks.'' And if you think about it as a fence, you
    can cut certain pieces of it, but there are other pieces of the
    network that are redundant. And therefore, so we are the same
    as the Government in some ways, I guess, to make sure that our
    customers can rely on that service.
        That helps us when we have things like storms or
    earthquakes that sever the cables. But if a country takes some
    sort of a unilateral action, such as we have seen, and doesn't,
    frankly, support some of the repair operations that we had in
    Vietnam--and I referred to that in my testimony where it took
    many months to get those cables repaired--that really can
    impact global commerce.
        And so, the framework that we will have in place with the
    treaty allows us to have an ongoing dialogue with the country.
    We have a set of rules that we can rely on. If there are
    disputes, we have arbitration we can go to. We can enlist the
    help of the Federal Government where our local team can't make
    the proper headway.
        So it is a series of additional steps that give us greater
    certainty and allow us to make these sorts of investments.
        Senator Casey. Thank you.
        I am going to go back to a question I know that Senator
    Shaheen raised, and I am sure others did as well, on
    manufacturing.
        Mr. Timmons, I appreciate your testimony. I represent a
    State that has had a long and very substantial legacy and
    reputation for manufacturing. And we have had our challenges,
    as you and I have talked about. But we have had a bit of a
    resurgence, and I think we are, frankly, headed in the right
    direction in terms of being able to create and maintain
    manufacturing jobs.
        If I were traveling across Pennsylvania this August when we
    are going to be home, and someone grabbed me on the street and
    said tell me in a few words why this treaty is important for
    manufacturing, in terms of having a general strategy for
    manufacturing and especially for maintaining those jobs, what
    should I say to them in a few sentences? If you can help me
    with that.
        Mr. Timmons. Well, when you are looking at the issue of
    rare earth materials, it is a vital component of all
    manufacturing processes, particularly the chemical industry.
    You have a large preponderance of folks involved in the
    chemical industry. Without those rare earth materials,
    manufacturing simply will not be able to compete and succeed in
    the world marketplace.
        Ten years ago, this country was able to produce 100 percent
    of the rare earth materials that we used in manufacturing.
    Today, we onshore produce none. And that is because of many
    factors--regulatory matters, permitting, and other factors. The
    bottom line is if we can't access rare earth materials on the
    floor of the sea, we are going to be put at a significant
    competitive disadvantage.
        The manufacturing renaissance that you and I have spoken
    about will cease to exist, and it will harm our economy and
    cost jobs.
        Senator Casey. I hope I can be that articulate with the
    constituent.
        Mr. Timmons. Well, I don't think that is a couple of
    sentences, unfortunately. But I will work on that and get back
    to you.
        Mr. Donohue. But I would add one more sentence, and maybe
    you were going to say it. If we do this right, we will drive
    down the cost and increase the availability of fuels. And that
    is going to have a large, large effect on manufacturing and on
    your State's economy.
        Senator Casey. Thank you, Mr. Donohue.
        Mr. Gerard. Senator, I was just going to add something that
    you already know. The answer, the other answer that is very
    significant in your State is natural gas. As you know, the
    price is down to the $2 to $3 range today; 83,000 new jobs in
    your State as a result of that resurgence.
        And I think as Jay said earlier, that is primarily what is
    driving the manufacturing resurgence in the United States. We
    often forget that those chemical plants and others are
    primarily driven by the feedstock of natural gas, where they
    convert natural gas to all the products we consume every day
    and don't think about. So it is natural gas, low-cost,
    affordable, reliable energy that is driving those other
    benefits in our economy today.
        Senator Casey. I will submit some more questions for the
    record. I have got to run. But thank you so much for your
    testimony.
        Mr. Chairman, thank you.
        The Chairman. Thank you very much.
        Senator Shaheen, do you have any second round questions?
        Senator Shaheen. I do have a couple, Mr. Chairman.
        And I know that one of the issues that has been raised
    about the treaty and I heard some of that debate today has been
    what is the real authority of the International Seabed
    Authority, and how would our participation play in that?
        And I wonder if you all have looked at the Authority to the
    extent that it is operated today and whether you have any views
    about countries like Russia and China and what their actions
    have been on the Authority in our absence and whether they are,
    in fact, taking advantage of our inability to ratify the treaty
    and participate on the Authority? What impact has it had to
    have the United States not to be part of that body?
        Mr. Gerard. I will try, Senator. First is, to us, that is
    very significant. As Senator--Chairman Kerry mentioned earlier,
    the 1994 changes, the amendments were very significant in
    giving us additional power, a permanent seat on that Council in
    the Seabed Authority.
        The reason we say that is twofold. No. 1, any other
    decisions that come out of there, we essentially have that veto
    right. We interpret it as such, and so I am anxious to hear
    others' legal opinions. We have gone to outside counsel, and we
    view that we have that right and that authority within the
    seabed Council.
        But the other thing we shouldn't overlook, there has been
    talk about royalties and other things that come from oil and
    gas production beginning the 6th to the 12th year. Today, if
    those are produced any other place in the world, those dollars
    are going to go wherever that group that sits there are going
    to allow them to go. If we have the seat, the permanent seat in
    that Council, we have the ability to direct that to make sure
    those very significant resources aren't given to unfriendly
    nations around the world and aren't spent for purposes that are
    not in the best interests of the United States.
        So we think it is twofold. No. 1, we need to be there to
    secure our own rights. But No. 2, by being there, having a seat
    at the table, we can influence and have some direct leverage
    over the other decisions the Seabed Authority is making.
        Senator Shaheen. So, just to be clear, they are going to
    assess those rates from our companies whether we are a member
    of the treaty or not?
        Mr. Gerard. Well, they apply only beyond 200 miles. My
    point is that others who are participants who might be paying
    into that fund today, those dollars go elsewhere without us
    having any say until we accede and participate and become part
    of the treaty process. Does that clarify it?
        Senator Shaheen. Yes. Thank you.
        The other thing that I wonder, and again, this may have
    been covered to some extent. But I haven't heard much
    discussion since I arrived about how we benefit in the Arctic.
    I mean, you talked about that a little bit, Mr. Gerard, in
    terms of our ability to have much more of an opportunity to
    access the minerals that may and the resources that may exist
    under the Arctic.
        But can you also talk about how what is happening there
    with other countries, and are we lagging behind Russia and
    those other countries who may be also interested in the
    resources of the Arctic?
        Mr. Gerard. Well, if you look at the way the Authority is
    set up and the commission on the limitation of the Continental
    Shelf, which determines how far those boundaries may go based
    on the definition of the Continental Shelf, those nations that
    are active in the Arctic or seek to be active--Russia, Denmark,
    Norway, Canada, and others--are all participants. And many of
    them have already filed or laid claim to those lands or those
    potential lands in the outer Continental Shelf. We stand here
    watching that happen.
        We have a very, very significant interest in the Arctic.
    And as I mentioned earlier, Shell hopefully will start that
    again today. It is estimated that one-quarter of the world's
    oil and gas resources are under the Arctic. Why we would sit on
    the sidelines and watch the rest of the world develop that
    resource to us is somewhat mystifying, not to mention our own
    resources that we have within our own 200-mile Exclusive
    Economic Zone.
        We are the only industrialized nation in the world that
    does not take full advantage of our outer Continental Shelf. We
    think it would be a big miss, a missed opportunity to sit today
    and watch and 30 years from now wonder why we missed out when
    those decisions were made in the Arctic, which is so important
    to global advancement and economic development.
        Senator Shaheen. Thank you very much.
        Thank you, Mr. Chairman.
        The Chairman. Thank you very much, Senator Shaheen. Those
    were good questions and I think important part of the record. I
    appreciate it.
        Let me just close out. Senator Lugar does not have
    additional questions. I just have one or two quickly that I
    just want to get the record complete here.
        We will leave the record open, incidentally, for a week in
    case there are additional questions to submit in writing.
        Mr. Timmons, at a hearing before the committee a couple of
    weeks ago, we heard from one of the think tank folks out here
    from the Heritage Foundation, analyst who said that U.S.
    companies are free to exploit the deep seabed right now, and
    they have all the legal certainty necessary to support
    investments to drill in the deep seabed.
        And the analogy drawn by that witness was just like
    fishing. You know, you go out. Nobody owns the fish. It is
    every person for themselves.
        In light of the fact that you have got 161 nations and the
    European Union that are all parties to the Convention, it seems
    odd to sort of suggest an every person for themselves approach
    to this. And I wonder if you just--you have addressed it
    somewhat here, and you have talked about the certainty. I just
    want to be crystal clear whether that is an alternative. Is
    that viable?
        Mr. Timmons. Well, Senator, Mr. Chairman, I would say it is
    an alternative, but I don't think it is viable. We could
    proceed as a nation--I think it is very important to recognize
    that the world today is extraordinarily different than it was
    40 years ago. We are, again, a global economy. We have
    multinational companies that have the means to develop these
    resources, but they are simply unwilling to do so because of
    the risk that exists without ratification of this treaty.
        If that theory were, in fact, accurate, you would see the
    development of these resources today, and it is simply not
    happening.
        The Chairman. So I want to ask everybody this. Therefore,
    is it clear, are you saying here definitively today that the
    people you represent and the interests that you are here to
    advance will not be served by and that no one will invest, in
    fact, billions of dollars if you were to pursue that theory of
    every person for themselves?
        Mr. Timmons. I think our country would not be served if the
    treaty is not ratified because companies simply will not invest
    or take the risks if they don't have the certainty provided in
    this treaty. That means from a manufacturing perspective that
    manufacturing suffers, which means the economy suffers, which
    means jobs suffer.
        And so, it is in the long-term economic and national
    security interests of our country, in the view of
    manufacturers, that this treaty be ratified.
        The Chairman. Mr. Donohue.
        Mr. Donohue. Senator, if we don't join this treaty, we may
    find people doing that without the protection, but they may be
    the Russians, they may be the Chinese, and they may be on our
    extended outer Continental Shelf. Obviously, the Arctic is more
    available than it was before because of thinning of the ice
    while it is thickening on the South Pole, you know, all this
    stuff going on.
        But people are making plans and claims to establish
    themselves in the Arctic. And as Jack indicated, we are on the
    outside looking in, with all sorts of power. But as you know in
    your job, most of the most powerful things we can do, we can't
    do or we shouldn't do.
        And I think the benefits of making this fundamental
    adjustment, taking a seat at the table with a lot of strength
    to protect our interests at least gives us a raison d'etre for
    whatever steps we have to take to represent and to help this
    country. So the answer is, I don't think you are going to see a
    lot of American firms--you can get a permission from the
    Federal Government--this is another point--to access an area,
    but then they won't give you a permit to drill it.
        And we have all of those problems, but the bottom line, we
    have been arguing this thing for so long. And when the old
    arguments run out, then we have some new arguments. And I
    respect the people that have that view, and I suppose you could
    find some of my members that have that view, but not very many
    of them. And we have got tens and tens of thousands of them
    that think it is about time to get on with it.
        The Chairman. Final--yes?
        Mr. Gerard. Senator, I would just add there is a lot of
    different opinions about this, but I would suggest you look
    closely at those opinions where it really matters. You cited
    one earlier, the chairman of Shell, Marvin Odum. Rex Tillerson
    has sent you a letter.
        These are the individuals that are going to make those
    decisions, and they have been very clear and unequivocal saying
    they will not make those decisions. The risk is too high. There
    is too much at stake. They won't be able to convince boards and
    shareholders that that is the best use and the safest use of
    their money and their resource.
        So I would hope we would look at those that have experience
    that are on the front line making those decisions and perhaps
    in fairness give that opinion a little more weight than others.
        Mr. Donohue. And at the same time, to think about what the
    Joint Chiefs of Staff and our military leaders who are
    challenged to protect us in many ways, including in those
    areas, and you know they are not people easily convinced of
    joining committees.
        The Chairman. Well, final question, last question, I
    promise. It seems to me, listening to your testimony, that if
    companies aren't going to invest, that if we are looking at a
    reduction of the availability of rare earth minerals and we
    could be mining rare earth minerals, sounds to me like that
    takes a lot of people to produce the equipment to be out there
    doing it. That if we are looking at increased ability to find
    more energy sources for the United States, it takes people to
    go out and do that. And if you are talking about providing
    cheaper energy for the United States over the long term, that
    affects our economy. Bottom line to everything here, it seems
    to me, is jobs.
        This seems to me to be screaming at us that there is this
    availability of jobs for Americans out there if we were to do
    this, more than anything else. Would each of you comment? I
    mean, is that really what is fundamentally at stake here?
        Mr. Donohue.
        Mr. Donohue. The next great industry in this country is
    energy of every type, and that is going to create millions of
    jobs over time. We should not make this more difficult for us
    to access rare earth minerals, energy, and whatever else we
    might find while 161 other countries are out making their plans
    to do so. This is in the enlightened self-interest of this
    country and in the interest of our national security.
        And I respectfully say to those that disagree, and by the
    way, we have tried to learn something from them, that the
    positive part of this treaty so overwhelms and outweighs those
    objections, which I respect, that the plurality, as they would
    say up here, is highly significant.
        The Chairman. Mr. Gerard.
        Mr. Gerard. Senator, I was just going to add to that. Tom
    mentioned something that is very significant today. The energy
    opportunities of the United States today are of game-changing
    proportions. To put it in simple context, an economist just a
    few months ago said that within the next decade if the U.S.
    policy is done well, we will become the new Middle East for
    energy production.
        That is how serious this discussion is if we, as a nation,
    are serious about producing our own energy. So I think there
    are two dimensions to this answer. The first one is we need to
    think long term. We have to look at things like the Law of the
    Sea and say how do we secure our energy future, not only the
    next 10 to 20 years, but the next 50 to 100 years?
        Oil and natural gas will continue to be the foundation
    energy building block for many decades yet to come, even as we
    strive to move to alternative renewable forms and other less
    emitting forms of energy.
        But the second dimension we shouldn't overlook, and it goes
    back to Senator Corker's point earlier. We have got to get our
    act together as a country in our own permitting processes, in
    our own political will, and ability to produce our own energy.
    We can secure the border. We can secure the long-term future
    through the Law of the Sea, but we have got to have processes
    within the United States where we say energy is a priority.
        As Senator Casey pointed out earlier, in the last 18
    months, we have created 83,000 jobs in the State of
    Pennsylvania producing clean-burning natural gas that saved the
    consumers of Pennsylvania close to a quarter of a billion
    dollars in 1 year because that supply drove the price of
    natural gas down to where it is today.
        Now it can't stay there forever, but we have the same
    potential with oil. North Dakota, the No. 2 producer.
    Unemployment rate,
    3 percent. Median wage in North Dakota in oil production,
    $90,000 a year. Median wage for everybody else, $42,000 a year.
        We talk about jobs. We talk about energy security and
    revenue to the Government. We ought to think about energy
    particularly as we make this decision because it will be
    altering for this Nation for many years yet to come.
        The Chairman. Mr. McAdam, do you want to add? You don't
    have to, but if you want to add anything.
        Mr. McAdam. No, I think the only thing I would add is that
    while we aren't out mining the seabed for rare earth minerals,
    we are putting these cables across that provide the
    infrastructure so that these companies can make the investments
    and run their businesses effectively. And I think we should do
    everything we can to eliminate the risks associated with this
    vital network.
        The Chairman. Well, I want to thank all of you. I think
    your testimony has been extraordinarily significant, very, very
    thought out and thorough and, I think, important to this
    process. So we are very, very grateful to all of you for taking
    time here today.
        We will, as I said, leave the record open for a week, and
    we look forward to continuing the discussion with you over the
    course of the next months. Appreciate it.
        We stand adjourned. Thank you.
        [Whereupon, at 11:32 a.m., the hearing was adjourned.]
                                  ----------

                  Additional Material Submitted for the Record

             Responses of Thomas J. Donohue to Questions Submitted
                           by Senator James E. Risch

        Question. If the United States accedes to the United Nations
    Convention on the Law of the Sea (UNCLOS), U.S. companies seeking to
    engage in exploratory or development activity in the deep seabed will
    be required to obtain permission from the International Seabed
    Authority. The 1994 Agreement relating to the Implementation of Part XI
    of UNCLOS changed the obligations of States Parties and their
    contractors in regard to the transfer of technology relating to the
    deep seabed. The relevant section of the 1994Agreement reads:

          SECTION 5. TRANSFER OF TECHNOLOGY
              1. In addition to the provisions of article 144 of the
            Convention, transfer of technology for the purposes of Part XI
            shall be governed by the following principles:
              (a) The Enterprise, and developing States wishing to obtain
            deep seabed mining technology, shall seek to obtain such
            technology on fair and reasonable commercial terms and
            conditions on the open market, or through joint-venture
            arrangements;
              (b) If the Enterprise or developing States are unable to
            obtain deep seabed mining technology, the Authority may request
            all or any of the contractors and their respective sponsoring
            State or States to cooperate with it in facilitating the
            acquisition of deep seabed mining technology by the Enterprise
            or its joint venture, or by a developing State or States
            seeking to acquire such technology on fair and reasonable
            commercial terms and conditions, consistent with the effective
            protection of intellectual property rights. States Parties
            undertake to cooperate fully and effectively with the Authority
            for this purpose and to ensure that contractors sponsored by
            them also cooperate fully with the Authority;
              (c) As a general rule, States Parties shall promote
            international technical and scientific cooperation with regard
            to activities in the Area either between the parties concerned
            or by developing training, technical assistance and scientific
            cooperation programmes in marine science and technology and the
            protection and preservation of the marine environment.

       Does Section 5 of the Agreement give you and your members
            full confidence that, should they engage in exploratory or
            development activity in the deep seabed, they will not be
            compelled to share proprietary technology?
       How does the Chamber interpret the obligation to ``cooperate
            fully and effectively with the Authority'' for the purpose of
            sharing deep seabed mining technology with the Enterprise or
            developing States?
       What types of deep seabed technology is the Chamber and its
            members currently willing and able to transfer or otherwise
            share with the Enterprise or with developing States?

        Answer. In his Oceans Policy Statement dated January 29, 1982,
    President Reagan objected to the provision in the draft Law of the Sea
    Convention that required transfer of technology by seabed mining
    companies to the International Seabed Authority (ISA) and to developing
    countries. President Reagan's concern was addressed in the 1994
    Agreement. Section 5(2) of the Annex to the 1994 Agreement provides
    that the technology transfer provisions of the original 1982 Convention
    ``shall not apply.''
        Instead, Section 5 of the 1994 Agreement provides that the ISA may
    ``request'' that a deep seabed mining contractor and its sponsoring
    State to ``cooperate in facilitating the acquisition of deep seabed
    mining technology'' by the Enterprise or by a developing State. The
    U.S. Chamber is not aware of any requests that have been made to
    potential U.S. seabed mining contractors or to the United States to
    acquire seabed technology.
        Unlike the original 1982 Convention, Section 5 of the 1994
    Agreement does not require a U.S. contractor or the United States to
    transfer any proprietary technology. Moreover, contractors and their
    sponsoring states are required only to facilitate the acquisition of
    mining technology ``on fair and reasonable commercial terms and
    conditions'' and ``consistent with the effective protection of
    intellectual property rights.'' Thus, if the ISA or the developing
    State requesting the technology is unwilling to acquire the technology
    on fair and reasonable commercial terms, or the contractor and
    sponsoring State believe that the transfer of the technology would not
    protect the intellectual property rights of the contractor, then there
    is no obligation whatsoever to facilitate the acquisition. These
    caveats give U.S. seabed mining contractors and the United States broad
    discretion to decline to facilitate inappropriate requests for seabed
    mining equipment.
        Of course, in many cases U.S. companies may affirmatively want to
    sell deep seabed mining equipment or technology to other countries or
    their contractors, provided the terms are commercially reasonable and
    the U.S. companies' intellectual property rights are protected. U.S.
    equipment manufacturers will benefit economically by export sales of
    seabed mining equipment to other countries, just as U.S. companies
    already sell billions of dollars of on-land mining equipment,
    construction equipment, and other heavy machinery into other countries.

        Question. In your written testimony you stated that the United
    States must join UNCLOS to ensure that U.S. companies such as Lockheed
    Martin may engage in deep seabed mining. You further stated that
    ``other U.S. companies'' are ``poised to expand their operations and
    create new jobs'' in the deep seabed mining industry, should the United
    States accede to the Convention.

       Please identify any and all members of the Chamber or any
            other U.S. company that, to your knowledge or in your opinion,
            are ``poised'' to engage in deep seabed mining in the event
            that the United States accedes to UNCLOS.
       Please identify all members of the Chamber or any other U.S.
            company that comprise the ``nascent deep seabed mining
            industry'' mentioned in your written testimony.
       Should the United States accede to UNCLOS before the end of
            the year, how long will it be before any such member(s) or
            companies will take steps to explore the deep seabed and/or
            engage in any form of deep seabed development activity through
            the Authority?

        Besides the fact that the United States is not a party to UNCLOS,
    what legal, financial, commercial, or other factors, if any, are
    currently preventing U.S. companies from engaging in the development of
    the deep seabed?

        Answer. In my written testimony, I stated, with respect to deep
    seabed mining, that ``Lockheed and potentially other U.S. companies
    [are] poised to expand their operations and create new jobs.''
    (Emphasis added.) In other words, U.S. companies other than Lockheed
    may be interested in engaging directly in deep seabed mining, now that
    the necessary technology is more readily available and the market for
    deep seabed minerals and rare earths is more favorable, provided they
    would be able to receive a license to engage in seabed mining.
        Moreover, Lockheed or other potential mining contractors are not
    the only U.S. companies that would be able to create jobs and benefit
    economically from the startup of a U.S. deep seabed mining industry.
    Numerous other U.S. companies in potentially dozens of States--such as
    engineering companies, consulting firms, exploration companies,
    exploration and mining equipment manufacturers, and mineral processing
    companies--would be able to assist or participate in aspects of the
    emerging deep seabed mining industry, with the potential addition of
    hundreds or thousands of jobs and tax dollars to the U.S. economy. By
    refusing to approve the Convention, the Senate is blocking the ability
    not only of Lockheed but also of a diverse group of U.S. companies in
    many States that could become part of a lucrative U.S.-based deep
    seabed industry.
        The primary obstacle to the commencement of deep seabed mining by
    Lockheed and related U.S. companies is that the United States has not
    joined the Law of the Sea Convention. Lockheed has made clear that it
    is unwilling to invest the billions of dollars necessary to engage in
    deep seabed mining unless it has clear legal title to specific claim
    areas in international waters. If the United States joins the
    Convention this year, Lockheed or another U.S. mining contractor could
    apply for and receive a license at the next annual meeting of the ISA
    in July 2013.

        Question. U.S. persons and companies, including Lockheed Martin,
    are currently permitted to engage in deep seabed exploration and mining
    pursuant to the Deep Seabed Hard Mineral Resources Act (DSHMRA; 30
    U.S.C. Sec. Sec. 1441 et seq.), which states in part that ``it is the
    legal opinion of the United States that exploration for and commercial
    recovery of hard mineral resources of the deep seabed are freedoms of
    the high seas.''

       Please identify any and all legal barriers that would
            prevent U.S. persons and companies from seeking licenses for
            exploration and permits for commercial recovery of deep seabed
            minerals pursuant to DSHMRA.
       Please explain why U.S. persons and companies are unable to
            engage in deep seabed mining pursuant to DSHMRA and its
            regulatory regime and why U.S. accession to UNCLOS is legally
            necessary to do so.

        Regardless of U.S. accession to UNCLOS, do current U.S. laws,
    including DSHMRA, provide legitimate and sufficient legal authority and
    protections for U.S. companies to engage in exploratory or development
    activity in the deep seabed?

        Answer. The Deep Seabed Hard Mineral Resources Act (DSHMRA) was not
    intended to serve as a unilateral U.S. substitute for the international
    legal authority provided by the Law of the Sea Convention. Rather, the
    DSHMRA was enacted by Congress ``to establish, pending the ratification
    by, and entering into force with respect to, the United States of such
    a treaty, an interim program to regulate the exploration for and
    commercial recovery of hard mineral resources of the deep seabed by
    United States citizens.'' (Emphasis added.)
        Indeed, section 1402 of the DSHMRA specifically states that the
    United States ``does not thereby assert sovereignty or sovereign or
    exclusive rights or jurisdiction over, or the ownership of, any areas
    or resources in the deep seabed.''
        Accordingly, although the DSHMRA provides a U.S. domestic law
    framework for U.S. companies to seek licenses to engage in exploration
    and commercial recovery of deep seabed minerals, it does not provide
    the clear international legal title that U.S. companies--especially
    public companies that owe special obligations to public investors--
    require before investing billions of dollars in exploration and
    resource extraction.
        Lockheed Martin has applied under the DSHMRA to the National
    Oceanic and Atmospheric Administration and has received an extension of
    its licenses to engage in deep seabed exploration. Lockheed has
    informed NOAA that it is prepared to engage in preparatory activities
    on land, but that it would not make the ``substantial investment in at-
    sea exploration'' until it has the ``adequate assurance of security of
    tenure at the international level'' that would be provided by U.S.
    ratification of the Law of the Sea Convention. See 77 Fed. Reg. 12445,
    12446 (February 29, 2012).

        Question. It is a fact that companies in the United States,
    including Lockheed Martin, may enter a joint venture or other
    arrangement with countries that are already party to UNCLOS for the
    purpose of engaging in deep seabed mining under the Convention. Indeed,
    there is already precedent for such an arrangement between a Canadian
    company (Nautilus Minerals Inc.) and the Kingdom of Tonga, which were
    awarded a 15-year contract by the Authority in January of this year
    under the name Tonga Offshore Mining Limited.

       Should the United States not accede to UNCLOS, does anything
            prevent U.S. companies that desire to engage in development
            activity in the deep seabed from partnering with a States Party
            (or a company therefrom) that can sponsor the endeavor before
            the International Seabed Authority?
       In fact, with almost all contemporary oil, gas, and other
            natural resource extraction and development enterprises
            horizontally integrated, would not a partnership be expected
            and even desired?

        Answer. U.S. companies may not be sponsored for licenses to engage
    in deep seabed mining under the Law of the Sea Convention by countries
    other than the United States. Article 4 of Annex III to the Convention
    provides that ``Each applicant [for a license] shall be sponsored by
    the State Party of which it is a national . . .'' For applications by a
    partnership or consortium, each company must be sponsored by the
    country of its nationality.
        A U.S. company could, of course, establish a foreign subsidiary
    that could be sponsored by another country for a license for the sole
    purpose of engaging in seabed mining. But this forced approach would
    have numerous commercial and economic disadvantages both for the
    company involved and for the United States, which would lose license
    and tax revenue and the jobs benefits.
        Equally important, U.S. companies, while making substantial
    investments in deep seabed exploration or mining, would lose the
    benefit of U.S.-input into the development of the rules and regulations
    for the seabed mining industry. In contrast, if the United States joins
    the Convention, the United States will have a permanent seat on the
    Council of the ISA, which would give the United States a permanent and
    significant voice in the development of the rules and regulations for
    seabed mining and the institutional management of the ISA.
        The ISA has now approved 17 applications by Parties to the
    Convention for contractors to engage in exploration for deep seabed
    minerals. At its most recent annual meeting, the ISA approved five
    licenses for seabed exploration of sulphides and polymetallic nodules,
    including applications by Korea, France, the United Kingdom, Kiribati,
    and Belgium. Clearly, the entities involved in these applications have
    concluded that there is significant mineral wealth on the deep seabed.
    The United States, however, had no voice in reviewing these
    applications and will have no voice in the development of the rules and
    regulations that will regulate the international seabed mining
    industry, unless the United States becomes party to the Convention.
    U.S. companies are losing significant commercial opportunities, and the
    potential to create thousands of new jobs, because the United States is
    not party to the Convention.
                                     ______

              Responses of Lowell C. McAdam to Questions Submitted
                             by Senator Jim DeMint

        Question. Verizon is currently fighting the FCC in court regarding
    two recently imposed regulations--net neutrality (``open Internet
    order'') and data roaming mandates. The FCC is a 5-member tribunal of
    sorts that is a creature of the U.S. Congress and bounded in theory by
    the laws of this country. They often overstep these laws, however, and
    appeals to the U.S. judiciary are entered by affected private
    companies. One wonders why a company like Verizon, which has
    consistently been affected by and fought extra-legal FCC decisions,
    would work for the creation of a new tribunal--particularly one that
    operates under the far less transparent and consistent authority of
    international law.
        Looking at the first case involving data roaming, the rules, which
    the FCC approved on a party-line 3-2 vote in April 2011, will require
    mobile broadband providers to provide data roaming on ``commercially
    reasonable'' terms and conditions. In essence this mandate requires
    that a company which has built its own network must offer that network
    to another company that, for whatever reason, has chosen not to build a
    network in the same geographic area. Here is Verizon's statement at the
    time of the order: ``By forcing carriers that have invested in wireless
    infrastructure to make those networks available to competitors that
    avoid this investment, at a price ultimately determined by the FCC,
    today's order discourages network investment in less profitable
    areas,'' Tom Tauke, Verizon Communications' executive vice president of
    public affairs, policy and communications, said in a statement. ``That
    is directly contrary to the interests of rural America and the
    development of facilities-based competition and potential job creation.
    Therefore, it is a defeat for both consumers and the innovation
    fostered by true competition.''

       What do you believe will happen when dealing with an
            international body, with even less transparency or
            accountability to American companies and taxpayers?
       Do you believe that an international body with little to no
            accountability to the United States or industry will legislate
            in a more satisfactory way than the FCC?

        Answer. We believe that the Convention would be helpful in dealing
    with the threat of expansion by coastal States. If the United States
    were a party to the treaty, it could act on behalf of U.S. companies to
    protect U.S. interests in undersea cables. Without this protection,
    U.S. companies are forced to seek out the protection of foreign
    governments to help safeguard U.S. investments. Thus, ratification of
    the Convention will help U.S. companies better contend with disruptions
    or threats to undersea cable service by giving them an avenue to work
    with the U.S. Government in a way that currently is not available. Once
    the United States is a party to the Convention, Verizon and other U.S.
    telecommunications companies can work with the appropriate U.S.
    agencies to enforce, when necessary, the freedoms to lay and repair
    cables on the Continental Shelf and the EEZ--saving millions of dollars
    over the life of a cable system, improving the reliability of our
    critical infrastructure, and putting U.S. companies on a level playing
    field for operating international cable systems.

        Question. Second, regarding Net Neutrality, there was another 3-2
    decision by the FCC in December 2010. The ``open Internet'' rules
    require wireline providers to be transparent in how they manage and
    operate their networks; prohibit the blocking of traffic on the
    Internet; and, prohibit wireline broadband providers from unreasonably
    discriminating against traffic on their network. Verizon accuses the
    FCC of overstepping its authority. And the company has said that
    because the FCC is trying to impose regulations it doesn't have
    authority to impose, it's creating uncertainty in the market that will
    ultimately harm innovation. Verizon's quote upon filing their legal
    challenge: ``Verizon is fully committed to an open Internet,'' Michael
    E. Glover, Verizon senior vice president and deputy general counsel,
    said in a statement. ``We are deeply concerned by the FCC's assertion
    of broad authority to impose potentially sweeping and unneeded
    regulations on broadband networks and services and on the Internet
    itself.''

       How long do you think it will be before you will have to buy
            a lease or pay fees to the international body to lay cable?
       Are you prepared to pay for the additional fees, such as an
            environmental impact study when you lay cable on the ocean
            floor?

        Answer. The Convention gives cable owners the explicit legal
    protection for the freedom to lay and maintain cables in international
    waters. If the United States ratifies the treaty, it will have the
    ability to work with U.S. companies and our allies to help protect U.S.
    interests in underseas cables, including in connection with assessing,
    and if appropriate, challenging, any fees or levies assessed.