In conclusion, our major concern is that our Government, Congress, or the administration not lose sight of our long-term interests at a time when so much of the focus, both in Congress and at the Law of the Sea Conference, is upon the narrow, relatively less crucial but surely vexatious issue of deep-seabed exploitation.

Further, we are concerned that the frustrations of dealing with this issue does not make us too readily assume that a comprehensive treaty is expendable.

I detect a growing sentiment in this town that as we have reached satisfactory compromises on most issues at the Conference, we might hope to establish customary international law along these lines by unilateral action, as indeed we did with the Truman Proclamation on the Continental Shelf.

I am skeptical that we could expect the same result in the present international context. If this Government were to act too hastily on a misplaced assumption along these lines, it might destroy the tremendous achievements of our negotiators and much of the sophisticated work done in the area by our legislators and by the executive-most recently by one of the finest administrators this country has known. If all that were jeopardized, this Government would have much explaining to do to generations of Americans to come.

Thank you, Mr. Chairman. I apologize for the present shortage of copies of my testimony, however, I am afraid the printer was not quite as speedy as I thought he would be. I have arranged to have copies dropped off in room 3106 behind us, so if anyone in the audience wishes to pick them up, they may do so.

[The prepared statement of Mr. Lock and a policy statement of the Bar Association of San Francisco follows:]

STATEMENT OF REINIER LOCK, CHAIRMAN, SPECIAL COMMITTEE ON THE LAW OF THE SEA, BAR ASSOCIATION OF SAN FRANCISCO

Senators, it is an honor for me to appear before these Senate Committees in hearings organized by Senator Metcalf, who has done so much to make the issue of deep seabed mining part of the public debate.

The Bar Association of San Francisco, on whose behalf I appear today, long ago recognized the crucial importance of the Law of the Sea Conference to the interests of the United States, both short- and long-term. It established a Special Committee to keep abreast of developments at the Law of the Sea negotiations and to monitor the activities of our government in relation to these negotiations. Its contributions to the public interest were recognized by an Award of Merit for Overall Excellence at the last convention of the American Bar Association.

Of major concern to the Special Committee has been the disruptive potential on the negotiations of unilateral action in the oceans by our own, or any other, government by the private sector.

The Special Committee has consistently opposed any government encouragement of unilateral action by U.S. entities in international waters while the staus of ocean space is being negotiated at the Law of the Sea Conference. Particularly in the deepsea mining area, on which the Conference is deeply divided along ideologicallycharged lines that raise many of the so-called "North-South" issues, we feel that unilateral action presents unjustified risks.

Such actions might undermine our own negotiating positions and leverage. Worse, it might jeopardize the best prospects for rapid achievement of a satisfactory, comprehensive treaty on all the major issues at the Conference.

For this reason, we have opposed earlier deepsea mining bills, as far back as 1973, and we made our views known in writing to Congress. In July of this year, we reexamined this position and concluded that our earlier position remained valid-a view we expressed by letter to those Congressional committees we felt might be concerned with the issue. May I please ask that a copy of our letter to Senator

Sparkman, which is identical in form to the others, be included in the record as part of our tesimony.

We also supported, in a 22-page policy letter to Secretary Kissinger in 1975, the Administration's refusal to protect the "claim" of Deepsea Ventures, Inc. to mine a large portion of the Pacific floor. We questioned, however, the advisability of the State Department's view that such activities might proceed as a "reasonable use" of the high seas and urged positive discouragement of such activity.

The economic risks to the companies concerned of proceeding with operations in the face of negotiations that might produce a treaty limiting their operations has apparently provided that discouragement. Now we are asked, in S. 2053, to provide conditions which will remove that discouragement and, in 1980 (or earlier if the Administration so deems), to provide positive financial encouragement of such activities.

While we note the "interim" nature of the bill, its welcome environmental provisions, and the careful effort that has been put into trying to conform it to "common heritage" principle and to present realities at the Law of the Sea negotiations, we nevertheless feel it would amount to a present encouragement by this government of unilateral activity in the deep seabed area by our private sector. As such, it would almost certainly be interpreted by some nations as violative of the General Assembly resolution placing a moratorium upon such deep sea bed activities. Even if not binding upon us, this resolution does at least express the strong sentiment of the majority of the nations with whom we are sill striving to reach a settlement on this very issue at the Conference. This sentiment is at least one reasonable and logical application of the "common heritage" principle, to which our government has subscribed on many occasions.

Accordingly, we cannot see how this bill can have anything but a deleterious effect on the present Committee I negotiations, already seriously deadlocked, and so perhaps undermine the entire Conference. We are not convinced that this legislation might, as some have suggested, provide the "big stick" to pressure the Group of 77 into a more reasonable negotiating posture on Committee I. The risks that it will do just the reverse are simply too great to place reliance on this unsubstantiated theory.

Failure of the Conference could, we feel, provoke a rash of conflicting unilateral claims that might lead to anarchy in ocean space. That is a risk too high to accentuate in any way whatsoever.

The need for orderly international regulation of ocean space is overwhelming. Even a principle so revered as freedom of navigation on the high seas, woven by maritime nations over the centuries into a delicate fabric of customary international law, could otherwise be undermined. If unilaterally proclaimed 200-mile economic or pollution zones become a pretext for undue harassment of or economic burdens on international shipping, the consequences could be devastating. Precious few of our major shipping lanes would remain unaffected; and something like 95% of our own international trade, alone valued, I am told, at some $200 billion annually, could be seriously affected. If we allow the principle of freedom of the high seas to be jeopardized, the long-term consequences on the world economy could be disastrous. Only a treaty ensuring international standards, or a series of costly and probably counterproductive Mayaguez incidents would serve to keep our shipping lanes open.

This interest alone far outweighs even the alleged gains promised by proponents if we encourage deep sea mining of this point.

I need hardly add our other crucial interests that might also be jeopardized: Unimpeded passage through international straits; a satisi actory status for the proposed 200-mile economic zones, allowing an appropriate balance between coastal state rights and international concerns; protection of the marine environment; freedom of scientific research; and many others.

On almost every issue on which we have major interests, we have achieved basic agreement and draft treaty provisions that are at least by and large acceptable to our delegation, if not totally satisfactory to all interest groups in this country. True, our marine scientists are not happy with some provisions, but even there, advances were made at the last Conference session. Otherwise, outside the deep seabed exploitation area, compromises satisfactory to the United States have been struck. This is a remarkable achievement in the time frame of this Conference, given the large number of complex issues on which most of the 150-odd nations have different priorities.

Yet, we are asked to risk all this for an alleged immediate national interest in proceeding with deepsea mining-this in the midst of a negotiation that increasingly focuses upon a deadlock on that very issue.

That immediate national interest has simply not been demonstrated. While we are cognizant of recent studies suggesting severe mineral shortages in the longterm, we note that the majority of experts testifying as to the minerals contained in these manganese Nodules do not feel there is a serious danger of either substantial shortages, or of producer cartelization sufficient to cause damaging price increases in the foreseeable future. And how much longer are we to be fed the myth that we cannot ultimately survive unless we are substantially self-sufficient in all our basic primary products.

Even a clear showing of an immediate price increase that is so severe as to threaten our economic and security capabilities would have to be weighed against our other crucial interests, some of which I have listed. But such showing has simply not been made. Better we await the outcome of the Law of the Sea negotiations, which may not be too much longer, than take so massive a risk on such a flimsy pretext.

We should never make the mistake of confusing with our national interest the financial well-being of the companies concerned, or potentially concerned, with seabed mining. Their pioneering efforts in this area of technology are certainly admirable; their entrepreneurship certainly follows one of our finest traditions. But it has not been our tradition to insure our private sector against political risks that conflict with our national interest in the international arena. It clearly should not be our policy now. If the claim of some mining companies concerned that their technology may become blunted by the delay is substantiated, we might consider some means of preserving it; but that would be a far more modest proposition than this bill proposes.

In conclusion, our major concern is that our government, Congress, or Administration not lose sight of our long-term interests at a time when so much of the focus, both in Congress and at the Law of the Sea Conference, is upon the narrow, relatively less crucial but surely vexatious issue of deep seabed exploitation. Further, we are concerned that the frustrations of dealing with this issue not make us too readily asume that a comprehensive treaty is expendable. I detect a growing sentiment in this town that as we have reached satisfactory compromises on most issues at the Conference, we might hope to establish customary_international law along these lines by unilateral action, as indeed we did with the Truman Proclamation on the Continental Shelf. I am skeptical that we could expect the same result in the present international context. If this government were to act too hastily on a misplaced assumption along these lines, it might destroy the tremendous achievements of our negotiators and much of the sophisticated work done in the area by our legislators and by the executive-most recently by one of the finest administrators this country has known. If all that were jeopardized, this government would have much explaining to do to generations of Americans to come.

THE BAR ASSOCIATION OF SAN FRANCISCO,

San Francisco, Calif., July 29, 1977. Re Position of the Bar Association of San Francisco on Deep Seabed Mining Legislation.

Senator JOHN SPARKMAN,

Chairman, Senate Committee on Foreign Relations, Dirksen Office Building, Washington, D.C.

1

DEAR SENATOR SPARKMAN: It is the position of the The Bar Association of San Francisco, based on the recommendation of its Special Committee on the Law of the Seas, that domestic legislation designed to encourage deep seabed mineral exploration by U.S. nationals be deferred pending efforts of the Law of the Sea Conference to conclude a comprehensive treaty governing all uses of ocean space. Passage of domestic deep seabed mining legislation remains inadvisable and unnecessary at this time for the following reasons:

(1) Unilateral action concerning deep seabed mining, one of the more controversial aspects of the current Law of the Sea negotiations, will jeopardize the successful resolution of disagreements concerning other equally if not more important uses of ocean space such as transit through straits, the nature of and the rights of states vis-a-vis the exclusive economic zone, protection of the ocean environment, freedom of scientific research, and access to and the sharing of the benefits of the oceans' resources. Unilateral action on the part of the United States relative to the deep

'The Special Committee on the Law of the Seas was created in 1971 to "examine the law and proposals to alter that law in order to recommend in principle a body of law to: (1) Prevent conflict among the nations; (2) to assure maximization of use of the oceans' resources consistent with sound ecological principles; (3) to establish a system that will allow equitable distribution of the oceans' wealth."

seabed would in all likelihood lead to a hardening of positions on other unresolved matters by the developing nations. Moreover, the bona fides of the United States posture as a leading force negotiating at the Law of the Sea Conference in good faith and in a spirit of compromise would be seriously questioned.

(2) It has not been persuasively demonstrated that immediate access to deep seabed minerals is of strategic importance to the United States.

(3) The resources of the deep seabed have been recognized by the United States and most other countries as "the common heritage of mankind." Whatever that principle means, it certainly means that the resources of the deep seabed should not be exploited without regard to the interests of the world community. Accordingly, measures encouraging the unilateral exploitation of the resources of the deep seabed by the technologically advanced, completely outside of an internationally agreed framework, should not be looked upon with favor.

Yours sincerely,

JAMES J. BROSNAHAN,

President, Bar Association of San Francisco.
REINIER LOCK,

Chairman, Special Committee on the Law of the Seas.
DONALD L. HUMPHREYS,

Vice-Chairman, Special Committee on the Law of the Seas.

Senator MATSUNAGA. Thank you very much, Mr. Lock. As requested of the previous panel, we would appreciate it if and when we do submit written questions to you, you will supply the answers to us as soon as possible, preferably by Thursday of next week. It is 12:30 now. I am already overdue. Unless you have one sentence to add, each of you

Mr. STATHAM. Could I say, Mr. Chairman, briefly, one of the few occasions in my life I find myself more closely in agreement with someone on my right than on my left, I obviously disagree with many of the points Mr. Ary made, and for the record, would be pleased to respond to any questions or comments

Senator MATSUNAGA. Thank you very much. You were the only one who kept within the 10 minutes, you are deserving of extra treatment.

We will insert for the record at this point the testimony of Mr. James L. Johnston, senior economist with the Standard Oil Co. (Indiana), and Mr. C. Richard Tinsley, Minerals Economist, Continental Illinois National Bank in Chicago.

[The prepared statements of Mr. Johnston and Mr. Tinsley follow:]

'H. Res. 330 (93rd Cong. 1st Sess.), S. Res. 82 (93rd Cong., 1st Sess.) and U.N. General Assembly Resolutions 2467Ă (XXIV), 2574 (XXIV),. 2749 (XXV), and 2750A (XXV).

TESTIMONY OF JAMES L. JOHNSTON BEFORE
THE ENERGY COMMITTEE AND THE COMMERCE COMMITTEE

OF THE U.S. SENATE ON OCTOBER 4, 1977

My name is James L. Johnston and I am currently senior economist with Standard Oil Company (Indiana). Until two years ago, I was the Treasury representative on the U.S. delegation to the U.N. Conference on the Law of the Sea (UNCLOS). As you know, a subsidiary of Standard Oil, Amoco Minerals has announced its intention to join Lockheed's ocean mining consortium. However, with your permission, I would like to present my analysis of the tax and insurance provisions of the ocean mining legislation in my personal capacity as an economist with experience in the negotiations rather than as a representative of the industry.

My Continental Bank colleague Richard Tinsley has sketched out for you the potential contribution of ocean mining to the future supplies of nickel, copper, cobalt, and manganese. He has also provided estimates of the liability exposure for both the industry and the government, should the U.S. negotiators choose to make ocean mining a concession to obtain a treaty at the UNCLOS. There are three important points in his analysis.

1.

The mineral production from ocean mining has the potential of improving the raw material independence of the United States, but will nowhere near flood the market.

2. The liability of the government is significantly less than 100 per cent of the loss imposed on the industry by the U.S. negotiators if the treaty is made effective in the peak year.

3.

The fund of industry payments will be nearly $150 million by 1988, thereby providing a potential incentive for other countries to endorse our legislation in order to share in that fund.

While acceptable with some minor improvements, the domestic legislation is less than what the industry has said they would like to see enacted. As it now stands the legislation actually imposes a more adverse regime on ocean mining than that which prevails for land-based mineral recovery.

First, the land-based miners are not cursed with the UNCLOS. Make no mistake, the UNCLOS negotiations are very dangerous and that danger does not disappear if the UNCLOS collapses. Even now the negotiations are contributing to customary international law, with the whole process being aggravated largely because U.S. negotiators insist on making their concessions public. While this saves the U.S. negotiators the embarrassment of withdrawing concessions after they have proved ineffective, it erodes the existing rights we possess under international law. Indeed, one of the UNCLOS diplomats Alan Beasley of Canada, who is no friend of U.S. mineral interests, has argued that the negotiations have already put a legal cloud over the right to engage in ocean mining. He would