in section 201's provision that the act and regulations continue in effect to the extent that they are not inconsistent with the treaty. In S. 2053, section 201 contains an identical provision.

4-Emergency authority.-The request that the secretary have emergency authority to suspend operations to protect the marine environment is satisified in section 104c (106c in S. 2053), which permits notice and hearing procedures to be waived if violations of the act, regulations or terms, pose an unreasonable environmental threat. Other changes made to our bill and contained in the bill which you have introduced concern the timing and standards for enviromental guidelines, prototype or pilot project testing, investment insurance, and in publication of environmental impact statements. All of the major provisions which were suggested by the environmental community have been taken into account and the amended bill in the House and your bill in the Senate reflect all of these suggestions.

In addition the bills now contain additional environmental features which are even more protective than those advocated by the environmental groups. The point I feel deserves to be made here is that we have all been extremely careful to draft and adopt a piece of legislation which is extremely protective of the marine environment, even when we are not sure what harm may be posed to such environment. Most data which has been received from environmental organizations and scientists engaged in testing and evaluating the effects of deep ocean mining have concluded that no significant harm is being caused by deep ocean mining activities. I believe that we should be very careful about amending any bill further until we have more information which indicates a potential for harm to the marine environment. It is too early to further inhibit an infant industry with a number of bureaucratic layers and regulations before we have more specific data and information concerning harmful effects of ocean mining. I believe that the present bills are adequately protective of the environment and should not be tampered with.

In closing, I would like to point out that our subcommittee spent seven days in hearings and four days in markup on the bill which was reported to the House this past August. The legislation was redrafted to take into account recommendations from the administration, industry, environmental groups, and the international community. Your bill reflects most of these changes as well and I beleive that we should be very careful about placing a number of further restrictions in this legislation without fully considering the harm it may cause to this new and exciting ocean mining industry. There seems to be a trend in parts of the Congress these days to restrict the private sector as much as possible without fully considering the benefits which this Nation has and will continue to derive from private industry. I believe that this is a clear case where we should proceed cautiously and wisely in adopting legislation which will adequately protect and encourage at the same time. Thank you Mr. Chairman. I would be pleased to attempt to answer any questions which you and the other members of the committee may have.

Senator METCALF. Gentlemen, with the permission of my colleagues, I wonder if I could ask you to summarize your statements. I have some of them. I am glad some of them are voluminous. They will go in the record as if read but we are short of time for this hearing and for all of our hearings from now until our target date for adjournment.

Gentlemen, would you take 5 minutes apiece and then we will open for interrogation. If each of you starts off that way we will hold the rest of the panel to it.

Senator SCHMITT. Mr. Chairman, I assume we will go through the whole panel and question them generally. I am sure a lot of the points will come out in their statements.

Senator METCALF. Mr. Dubs, please.

STATEMENT OF MARNE DUBS ON BEHALF OF THE AMERICAN MINING CONGRESS

Mr. DUBS. Senator, before summarizing my testimony, I would also like to ask your permission to introduce into the record the resolution of the American Mining Congress which was just adopted last week on undersea mineral resources. It is not included in

my testimony, I think it represents the overall position of the Congress.

Senator METCALF. That will appear after the testimony of the various members of the panel, unless there is objection.

Mr. DUBS. Let me make these points. The major obstacle to passage of the bill in the past has been the hope and expectation the Law of the Sea Conference would end happily with an acceptable treaty. It has become clear that has not happened and won't happen.

The need for legislation we have discussed in the past and we have made several points.

First: There has been more than $100 million spent to develop that technology.

Second: There are no technological impairments to ocean mining. Third: Ocean mining can provide large quantities of minerals including cobalt, nickel, copper, and manganese for the U.S. economy.

Fourth: That banks are not willing to loan nor could corporate management justify to the stockholders the expenditures of the very large sums required, perhaps $500, $700, $100 million, as long as there is a significant risk, the Law of the Sea Treaty will come into effect and cause a diminution of that investment. There has ben no meeting of the minds on the law of the sea at all and the compromise proposals presently under discussion, either the Evensen text or the ICNT are simply not a basis for investment. We could continue our development, expend the sums I refer to and commence mining under the freedom of the high seas. That freedom has been reaffirmed, but nevertheless the problems of a treaty hanging over our head remains the same as we have described in the past.

If we cease activity until a treaty is negotiated, of course, then it is apparent we would disband and disseminate our resources to do

So.

Now with respect to the Law of the Sea Treaty and the progress that was not made in the past spring, I think there has been ample discussion of that already before the committee. My written testimony covers that in some detail.

The major point I want to reemphasize is neither the Evensen text nor the ICNT, also called the Engo test, would result in conditions that would permit investment.

Finally, I would make the point the law of the sea negotiation has gone very much in the direction of creating an enterprise which, in fact, would be the main exploiter of the deep seabed. I think that is the direction of the deep-seabed negotiations. I think today enactment of appropriate legislation is more urgent than

ever.

We need a stable, legal order for deep-sea mining that will enjoy some measure of international recognition. We are optimistic about the progress that has been made in Congress starting with the passage of H.R. 3350 through committee and now your taking up of this issue again.

I might note H.R. 3350 has many deficiencies from the industry's perspective. We are uncomfortable with the large latitude granted the Secretary of Commerce in licensing activities including the

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power to withhold licensing to begin the commercial recovery stage. We are disappointed that the investment protection offered by that bill is so limited. Nevertheless, we hope H.R. 3350 might be a focal point for accommodating the various interests involved. With respect to your bill, S. 2053, we see it containing a number of new, and we believe, serious difficulties in the view of the American Mining Congress. The first difficulty is S. 2053 would not go into effect until January 1, 1980, unless the President, by executive order, used the authority of the bill to grant an earlier effective date. This means, in effect, in the development work we face in the immediate future, and you will recall the sums of money involved in that are extremely large, we have no real assurance of what the terms and conditions will be for the future so this long time in the future effective date is a significant problem for us. The second feature is the draft rules and regulations. We appreciate the bill includes provisions for getting started on them right away, but nevertheless they would not really come into effect as fully operative rules and regulations until the issuance of commercial permits, until the issuance of license in 1980, which again leaves this whole area in uncertainty.

We believe the deferred effective date would be harmful to international negotiations. It is simple to tell the rest of the world they don't have to negotiate until 1980, and we know how effective it has been in the past in spurring that legislation.

The second point is S. 2053 fails to accord ocean miners fundamental protection procedures. The Secretary can unilaterally impose on individual licensing permittees differing and potentially discriminatory conditions and restrictions. The applicant does not seem to have a mechanism to challenge the substance of the terms and furthermore, and perhaps more importantly, it authorizes the unilateral modification of the Secretary's permit terms for environmental protection and for national security reasons to avoid conflict with international obligations.

We find that very disturbing. We believe, that, in effect, permits the license terms to be modified almost without restraint. That includes the suspension of activities to maintain the objective of national security.

So taken together, these provisions, to us, constitute a major serious risk.

The next point is all vessels used in deep-sea mining projects under S. 2053 would be documented under U.S. law. In contrast, H.R. 3350 limits the requirement to recovery and processing vessels.

Fourth: The procedures set forth in the bill for the issuance of licenses and permits appear to us to be unduly cumbersome and unworkable. An example of that is the requirement of full consultation with all interested Federal agencies and departments. Another feature is the rather complex review of antitrust.

There are also a number of problems with the environmental protection procedures in the bill. Congressman Breaux summarized this: The procedures that are present in H.R. 3350, we believe, are very good. We are concerned in S. 2053 there is an open-ended time involved that may, in fact, delay development because of delay in instituting environmental procedures.

We are concerned the bill failed to clarify which laws, tax, customs, and similar laws, will apply to operations. I read the Deputy Assistant Secretary of the Treasury statement yesterday, and I am concerned perhaps there is some ambiguity there that has crept into S. 2053 with respect to the application of domestic laws and I wonder if perhaps the kind of wording that is in H.R. 3350 might be a route to make it clear that seabed mining is domestic but not only will it not be discriminated against but it is domestic.

Finally, we note that S. 2053 would designate the Secretary of the Interior as the responsible cabinet officer to implement the act. This is not a jurisdictional dispute we want to get into, but simply to urge that settling of those issues be done to avoid delay in the legislative processes.

The mining industry has identified a variety of other important difficulties with S. 2053 and, with your permission, the affected companies will submit more comprehensive comments on the bill for the record of the committee.

I am afraid I have used up my 5 minutes.

Senator METCALF. I know you have made a very helpful statement. We are very glad to have your opinion on the legislation. [The prepared statement of Mr. Dubs follows:]

STATEMENT OF MARNE A. DUBS ON BEHALF OF THE AMERICAN MINING CONGRESS

Mr. Chairman, my name is Marne A. Dubs. I appear here on behalf of the American Mining Congress. The American Mining Congress is a trade association whose members produce most of the Nation's metal, coal and industrial and agricultural minerals as well as the more than 220 companies who manufacture mining, milling and processing equipment and supplies, and commercial banks and other institutions serving the mining industry and the financial community. I am Chairman of the Committee on Undersea Mineral Resources of the American Mining Congress and am also Director of the Ocean Resources Department of the Kennecott Copper Corporation.

Committees of Congress, including your own, Mr. Chairman, have developed over the past half-dozen years, thousands of pages of records concerning ocean mining. Witnesses have been heard from the industry, the environmental community, the government, the banks, the ship builders, the academic community and others too numerous to mention. The record is replete with statistics, opinions, predictions and frustration. I do not intend today to try to repeat what has been put before the Congress many times before. You, Mr. Chairman, the members of your Committee and your colleagues on the Senate Commerce Committee have been generous with your time, your patience and your understanding. We in the industry have for our part stated our case during these past seven years as plainly as possible. Now, however, we have run out of time. Major investment decisions are before us all in 1977, and it seems that the prospects of continued growth for ocean mining company plans are dim, unless satisfactory legislation is well on its way to enactment. We think it is.

The major obstacle to passage of a suitable bill in the past has been the hope and expectation of the Administration that the Law of the Sea Conference would end happily with a treaty acceptable to the United States "at the next session." This has not happened and now appears most unlikely to occur in 1978 and probably not in 1979 either. Mr. Chairman, I would like to return to the Law of the Sea in a few moments, but I want to place before you at the outset what we consider now to be the essential elements of the argument for legislation from what I believe to be a national interest perspective-but in any event from an industrialist's perspective. First, several American companies together with their partners, both foreign and domestic, have already spent well in excess of $100 million to develop ocean mining technology.

Second, there is no known technological impediment to ocean mining, and on the basis of current technology and economic predictions and a favorable business climate, ocean mining companies must be prepared to acquire and spend more than $2,500,000,000 between now and the commencement of commercial recovery on the

first few mines in the deep ocean which will be located in the north Pacific Ocean between Hawaii and the West Coast.

Third, U.S. based ocean mining (producing annually in 1990 as much as 16 million tons of manganese nodules) could reduce, if all the production were consumed in the U.S., our nickel imports from 73 percent in 1974 to about one-third (based on a projected U.S. consumption of about 360,000 tons and seabed nickel production of about 220,000 tons); our cobalt imports from 98 percent to zero; our manganese imports from 98 percent to zero; and could supplement our copper production to substantially reduce the need for any imports.

Fourth, banks are not willing to loan any substantial part of the $2,500,000,000 needed, nor could corporate management justify to stockholders its approval of the expenditure of such sums, so long as there is a significant risk that a treaty on the law of the sea will subsequently come into force for the United States containing terms that will vitiate that investment.

Fifth, the Third World and the United States, together with its industrialized country allies, have reached no meeting of the minds on any critical issue in the law of the sea negotiations relating to deep sea mining, and all of the so-called compromise proposals which are presently under consideration raise doubts as to whether ocean mining could occur at all.

Sixth, ocean miners are free to continue their development work, spend the sums I have referred to, and commence mining under the freedoms of the high seas. The Department of State has repeatedly assured us that the United States regards such activities as lawful. But, Mr. Chairman, the United States Government is now negotiating a treaty, and has been for ten years, which when completed might very well terminate our rights under existing international law, or prohibit our mining activities, or limit the amount of our production, or fix prices, or raise our costs prohibitively, or force us to move from the minesite we have developed to another one, or all of these in combination.

Seventh, we could cease our activities until this treaty is negotiated and we learn what our rights are, indeed, whether we have any. But, if we disband and dissipate this effort, it will likely be exported to other industrialized countries with a better and more realistic awareness of their mineral needs, and the development of a vast new source of secure raw materials supply for this country may be indefinitely delayed. We will then forego the opportunity to become the leading producers of these minerals. We would then import seabed minerals instead of produce them. In short, Mr. Chairman, the American ocean mining industry has reached a critical stage in its investment decisions, with the magnitude and timing differing slightly for each company. The common feature among us is the inability to make a serious, final commitment to enter this new field when we are faced with uncertainty as to what the ultimate regime will require of us and when these political decisions will actually be taken. To mitigate this unstable investment climate we need first, an assurance that the right to mine ore bodies we have identified will not subsequently be taken away by treaty, and second, a licensing system that provides an orderly administrative framework for the issuance of rights to mine these specific sites. The chance for a treaty which offers this is poor. Even if one could be more optimistic on substance, however, no one could say that even a good treaty will be available in time to meet our needs-indeed virtually all agree that a fully operational treaty is ten years away at the minimum.

The results of the 1977 session of the Law of the Sea Conference were, to say the least, very disappointing. The United States delegation made substantial efforts to break the log-jam in the deep seabed negotiation by showing a willingness to seriously consider compromise proposals that, in the view of the American Mining Congress, went much too far towards disregarding basic United States objectives in assured access to deep seabed minerals under secure and reasonable terms and conditions, administered by an international body whose political structure would be stable and in which the U.S. would exercise influence commensurate with its economic interests. The developing countries responded to the overly conciliatory overtures of the United States by demanding more and more concessions. The end result was a set of draft treaty articles formulated by Minister Evensen of Norway reflecting the trend of the debate in Committee I's informal working group. It is these so-called compromise formulations that Ambassador Elliot Richardson has suggested offered prospects for resolving the impasse. In contrast to the deep seabed provisions of the subsequently issued Informal Composite Negotiating Text-now the official working document of the Conference-the Evensen articles may have been marginally more favorable to the United States, but it is critical to understand that neither text would establish a system under which American private capital would flow into deep sea mining.