extraordinarily successful with no losses. That they have successfully negotiated satisfactory recoveries with any insured parties so requesting it. I would like to emphasize it is one thing to receive opinions at this point about whether or not there is market capacity because different brokers do disagree on that matter. But I think there might be agreement that this particular legislation can be the vehicle for maximizing the possibility of that participation and I think that is the most that can be asked. I think at the point where is can be demonstrated or maximized, there would be substantially greater comfort in the House guaranteeing investment which, without the effort to maximize, might look like a half-hearted effort. I would like to recommend further work on providing more security. Senator METCALF. Does anyone else have anything else to add? I think we have just started on this area. Perhaps each of you have just launched us into what is going to ultimately result in further discussion and perhaps different ways of trying to reach the result we are seeking and that is getting substantial investment in this new venture that will not only bring us scarce metals but new materials and jobs in various areas. Thank you very much, gentlemen. As I have said to others on the panels, we will call on you for help on other questions. We will be in recess until October 4, 1977, when Ambassador Richardson will come before us for the administration. [Whereupon, at 1:13 p.m., the hearing was recessed, to reconvene at 9 a.m., October 4, 1977.] MINING OF THE DEEP SEABED TUESDAY, OCTOBER 4, 1977 U.S. SENATE, SUBCOMMITTEE ON PUBLIC LANDS AND The subcommittee and committee met, pursuant to notice, at 9 a.m., in room 3110, Dirksen Office Building, Hon. Spark M. Matsunaga presiding. Present: Senators Matsunaga, Weicker, and Stevens. Also present: Steven P. Quarles, counsel, Norm Williams, professional staff member, Subcommittee on Public Lands and Resources; and James P. Walsh, general counsel, Deborah Stirling, and Christopher Koch, professional staff members; Gerald Kovach, minority staff counsel, Committee on Commerce, Science and Transportation. OPENING STATEMENT OF HON. SPARK M. MATSUNAGA, A U.S. SENATOR FROM THE STATE OF HAWAII Senator MATSUNAGA. The joint hearing of the Subcommittee on Public Lands and Resources of the Committee on Energy and Natural Resources and the Committee on Commerce, Science, and Transportation will come to order. This is the third and last of a series of hearings on S. 2053, the Deep Seabed Mineral Resources Act, held jointly by the Subcommittee on Public Lands and Resources of the Energy and Natural Resources Committee, and the Commerce, Science, and Transportation Committee. Previous hearings were held on September 19 and 20. Testimony was received from Congressman John Murphy, Congressman John Breaux, the Departments of Commerce, Interior, and Treasury, and representatives of the deep seabed mining, the banking, and insurance interests. I apologize for my tardiness. I was at the White House to attend a gift presentation ceremony which was supposed to have lasted but 5 minutes and lasted 20 minutes. So I beg your pardon, Congressman Pritchard. Senator Lee Metcalf, who chaired these hearings, has unfortunately been hospitalized. Although he is now out of danger, he is still indisposed and is unable to preside today. He asked me to chair the hearings. (361) This morning we are privileged to hear from another Congressman who has taken a leading part in formulating deep seabed legislation in the House Merchant Marine and Fisheries Committee. We also expect to have the first definitive explanation of the administration's position on this legislation from Ambassador Elliot Richardson." In addition, there will be two panels of academic and other experts offering varying viewpoints of S. 2053. I believe those witnesses have been invited to comment on certain aspects of Senator Lowell Weicker's bill, S. 2085. I should make note of the fact that a third deep seabed resources bill, S. 2168, was introduced last Friday by Senator Ted Stevens, too late for consideration at this hearing. Senator Stevens will make a statement. STATEMENT OF HON. TED STEVENS, A U.S. SENATOR FROM THE STATE OF ALASKA Senator STEVENS. Mr. Chairman, I would like to speak briefly today on the issue of ocean-mining legislation. As you know, I have long shared the committee's interest in encouraging the development of a national capability to undertake mining of the deep seabed and have recently introduced a bill-S. 2168-which is similar to S. 2053 but differs in several key respects. For the reasons I will explain later, I do not believe that S. 2053 will be effective in promoting the national deep seabed mineral interests and, accordingly, I oppose it. I am convinced that a consensus is emerging in the Congress to adopt interim ocean-mining legislation. It is stimulated by recognition that: One: Deep seabed mineral resources can offer significant benefits to American consumers; Two: There is nothing to be gained in deterring American industry's efforts to develop these resources while we await a predictably protracted and probably unsatisfactory conclusion to the U.N. Law of the Sea negotiations; and Three: Our ocean mining companies need the protection only legislation can give against the risk of an unfavorable future treaty, before they can continue with their technological development. The case for moving ahead with ocean-mining activities has become increasingly straightforward over the years I have followed this subject, Mr. Chairman, and can now be stated in a very few words. First: The United States has no domestic reserves of nickel, cobalt, and manganese, and our copper industry has been seriously impacted by the escalating costs of land-based mining. We, thus, import almost all of our requirements for three of these metals at a significant disadvantage to our balance of payments. This import dependence raises-at the minimum-the risk of short-term supply interruptions for critical minerals concentrated in a few major producing countries. Economists disagree on the susceptibility of these metal markets to the formation of mineral cartels similar to OPEC; but they all agree on the basic premise that greater diversification of sources will decrease the chances of cartel-like behavior and promote lower cost and more stable metals prices. Moreover, the long-term outlook for continued U.S. dependence on mineral imports is more disturbing. The bulk of free world reserves for these four minerals is located in the developing nations. Recent attitudes toward foreign minerals investment in the Third World demonstrates that U.S. industry's access to these resources may steadily decline or be obtained at increasingly high and arbitrary costs. The outcome will be artificially inflated metals prices for which American and other consumers will bear the burden. Second: Manganese nodule deposits in the deep seabed are abundant and can be exploited with technology developed by American ocean-mining companies. If the four multinational consortiums which are most advanced in their work, base operations in the United States, our reliance on foreign producers for these minerals will be substantially reduced by the mid-1980's. In later years, the United States could become a net exporter of these same metals. Moreover, these operations will bring to the United States other economic benefits associated with a total capital outlay in excess of $2.5 billion, including new employment in the maritime and construction industries and technological spinoffs and other areas of commercial oceans development. Third: While ocean miners have the legal right to commence operations today, the international community, which has been embroiled in contentious debate on the deep seabed for over a decade, may eventually arrive at an agreement that would nullify this right. This negotiation creates investor uncertainty and is retarding the continuous development of a deep sea mining capability. Fourth: The past concern that enactment of U.S. ocean-mining legislation would unfairly preempt the Law of the Sea Conference by prematurely going forward with these activities while other countries are negotiating in good faith is no longer warranted. During five lengthy working sessions, the demands of the developing countries for monopoly control over deep seabed resources have not diminished-and the industrialized countries have come closer and closer to accepting that result. The most recent draft law of the sea treaty would vest in a U.N.-type assembly, controlled by developing countries, plenary powers to deny access to U.S. oceanmining companies, to set the terms and conditions of mining at discriminatory and umprofitable levels and to control the rates of seabed production and the prices at which seabed metals are sold. More distressing is the fact that even this unpredictable chance of State- and private-party access would probably go out of existence after 25 years in favor of monopoly exploitation by an international mining company-the Enterprise. While the U.S. delegation has rejected the deep seabed provisions of this draft treaty, it nevertheless has hinted publicly that the administration would be prepared to accept a result only slightly less disastrous for the national minerals interest. Since it is inconceivable that the Senate of the United States will give its consent to the kind of international deep seabed regime now under consideration, we must conclude either that the treaty effort will end in failure or that the Conference will require several more years to successfully redirect the deep seabed negotiation. |