circumstances surrounding the recent negotiations. So often our public officials lack the courage to question whether an endeavor, which is well underway, is worth the price we may have to pay.

Second, I want to make it clear that I am not opposed to the concept of a treaty on the Law of the Sea. I am for it.

But not at any price.

And certainly not at the cost of crippling rather than promoting the interest of American technology.

The notion that mineral resources located beyond the jurisdiction of any nation should be governed by international agreement is a reasonable one.

It is intolerable, however, to accept the proposition that nations which today enjoy the legal right to engage in ocean mining under the high seas doctrine be willing to give up that right to the exclusive control of an international seabed authority-an authority dedicated to the goal of restricting seabed development, phasing out private industries, and acquiring the means to become the sole monopoly operator in the deep seabed.

Yet, for years, this is precisely what the U.S. has been asked to accept in the deep seabed negotiations.

It is my sincere hope that the administration, in its reassessment of our position in the LOS Conference, will take a realistic view of what can be achieved-and what probably cannot be achieved-in a setting composed of some 156 divergent interests. At the same time, I have every reason to believe that the administration will no longer see these international negotiations and unilateral legislation as mutually exclusive and incompatible activities.

IV. CONCLUSION

Mr. Chairman, in closing, I would like to emphasize my conviction that all the participants in the national debate on ocean mining's future-the industry, the administration, environmental and citizen organizations, and the Congress-have the same basic national goals in view.

In the past, our strong differences on how best to proceed with this new endeavor may have confused and clouded these goals. However, today the events at the Law of the Sea Conference, and throughout the world on other resource questions, have considerably narrowed the range of effective steps the United States can take to promote its mineral's interest in the deep seabed. With this reality in mind, I believe a new political consensus is emerging in the administration and in the Congress—a consensus which will remove obstacles to industrial development of the

ocean.

I think we are all becoming aware of the realities of international economicsrealities which indicate that to discourage those with the technological and financial capability from developing a resource will ultimately result in the non-development of that resource. Neither the industrialized countries nor the Third World can afford the danger inherent in that reality.

As each nation moves to become exporters—rather than importers-of the world's essential resources, the international arena will take on a new and uncertain dimension. Until and unless this uncertainty is clarified, we must not allow our nation to be placed in a position of weakness with respect to the international community.

Mr. Chairman, I once again commend you and the members of these committees for your expeditious consideration of S. 2053 and I appreciate your attention to my remarks this morning.

Thank you.

HON. LEE METCALF,

U.S. HOUSE OF REPRESENTATIVES, COMMITTEE ON MERCHANT MARINE AND FISHERIES, Washington, D.C., October 27, 1977.

Senate Committee on Energy and Natural Resources, Subcommittee on Public Lands and Resources, Washington, D.C.

DEAR SENATOR METCALF: Following my testimony before your Subcommittee and the Senate Committee on Commerce, Science, and Transportation on September 19, 1977, I agreed to supply for the record answers to three questions which were asked at that time.

The following information is in response to those questions.

1. Compare the cost between imported minerals and minerals recovered from the deep seabed.

Because deep seabed mining is still a virgin industry, high-confidence predictive data are difficult to obtain. Clearly, in the absence of export controls, their prices would be substantially the same given a competitive world market (and relatively low bulk transport costs).

An equally important question in this regard is how much would deep seabed mining reduce mineral prices from what they would have been otherwise. While projections on this question are highly speculative, I think that the mining industry's confidence in the profitability of seabed mining indicates that the projections have validity.

A Department of the Interior estimate, which appears in the report of the Merchant Marine and Fisheries Committee, projects a price of cobalt 42 percent higher without ocean mining than with such mining in the year 1990. The price of nickel is projected to be 12 percent higher without ocean mining than with it in that same year. In view of the projected size of the nickel market, this percentage would represent considerable cost savings. According to the Interior Department, nickel sales will yield almost 70 percent of gross revenues for most contemplated operations.

Copper recovered from deep seabed nodules will represent a very small fraction of world copper production and, consequently have virtually no effect upon price. The copper market is, in terms of quantity, by far the largest of the four markets. The Department of the Interior made no projections on the future price of manganese. This market is the smallest of the four mineral markets and prices are highly responsive to changes in production quantity as a result. Of the consortia interested in ocean mining, Deepsea Ventures is the only one currently planning recovery of manganese. However, should the world price for manganese rise significantly, one could expect consortia mining the nodules to start processing this mineral and thus, stabilize the price.

2. What are the four consortia presently engaged in deep seabed mining?

A. Deepsea Ventures Group: (1) U.S. Steel (USA); (2) Union Miniere (Belgium); and (3) Sun Oil (USA).

B. Kennecott Group: (1) Kennecott Copper (USA); (2) Rio Tinto Zinc (United Kingdom); (3) Consolidated Gold Fields (United Kingdom); (4) Noranda Mines (Canada); (5) Mitsubishi (Japan); and (6) British Petroleum (United Kingdom).

C. Ocean Management (INCO Group): (1) International Nickel (Canada); (2) AMR (Germany); (3) Domco (Japan); and (4) Sedco (USA).

D. Lockheed Group: (1) Lockheed Missiles and Space (USA); (2) Standard Oil of Indiana (USA); (3) Royal Dutch Shell (United Kingdom/Holland); and (4) Not yet announced (USA).

3. Are there any precedents for the United States Government or World Court issuing a license for high seas activities similar to deep seabed mining licenses and permits?

United States flag vessels are licensed and subject to U.S. regulation and protection while in international waters. Additionally, there are multilateral agreements instituting quotas on quantities of certain species of fish that may be caught by fishermen of other nations. The United States is a party to one such agreement on tuna. A quota is, in a very real sense, a negative property right (i.e., you are entitled to no more than a certain quantity of fish, even though the resource is considered res nullius).

Finally, the right of the United States Government to exercise its jurisdiction by regulating the activities of its citizens in international waters is well established. The regulation of such activities does not thereby assert sovereignty or exclusive rights over any area of the deep seabed. With respect to such sovereignty or rights, H.R. 3350, in section 101, specifically disclaims any such ownership rights.

I appreciate the opportunity to testify before your Committee and to respond to the above questions for the record. I would be happy to provide any additional information which you or other Members of the Committee feel would be helpful in your deliberations on deep seabed mining legislation.

With warm personal regards,

Sincerely,

JOHN M. MURPHY,

Chairman.

Senator METCALF. We have representatives from three agencies here, all of whom have different ideas. I think we would do better to have them make a brief statement and come forward as a panel and then we can interrogate them.

Senator HOLLINGS. Sure.

Senator METCALF. If Mr. Frank from NOAA, Secretary Davenport from Interior, and Ms. Helen Junz from Treasury would all come forward-would it be satisfactory, if you summarize your statements in a few minutes?

Mr. FRANK. I would be happy to summarize my statement, Mr. Chairman.

Senator METCALF. Unless there is objection, we will give each witness 10 minutes to summarize his or her statement and then we will interrogate them as a panel.

Senator HOLLINGS. Good.

Senator METCALF. Mr. Frank, you are first on my list so you can start off.

STATEMENT OF HON. RICHARD A. FRANK, ADMINISTRATOR, NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION, DEPARTMENT OF COMMERCE

Mr. FRANK. Mr. Chairman, members of the committee, it is a pleasure to be before you and discuss S. 2053, the Deep Seabed Mineral Resources Act. If my statement can be submitted for the record, I will summarize the salient points and discuss some of the issues I feel most critical to deep seabed mining.

First, I think this committee has heard many times the importance of deep sea mining to the United States. I don't intend to articulate again in detail that importance. I think it is realized that the benefits to the United States are balance of payments benefits, profits benefits, and resource and security benefits. Some legitimate dispute exists as to when those benefits must be realized.

I think there may be a different question that the committee may wish to focus on. That is, not when the benefits will be realized, but whether they will ever be realized, not only with respect to deep seabed minerals, but also, with respect to other resources of the deep oceans.

I raise that question, because the present text of the Law of the Sea Conference, is so fraught with uncertainty and so burdened with controls, we may lose a great deal of the discovery, inventiveness and venture capital coming to the oceans.

If we have a regime which stifles progress, it will not only be countries like the United States which are harmed, but also developing countries. I will speak more in a minute about the Law of the Sea Conference.

One primary issue in connection with deep sea mining is the environment. Will this kind of treatment of the oceans present an unreasonable risk to the environment and will there be significant adverse environmental effects?

NOAA has done a great deal of work in this area through deepocean mining environmental studies. On the basis of our tentative results, it is my belief that there will be no significant adverse environmental effect to the oceans from deep-sea mining.

Put another way, I believe there is no reason from an environmental point of view why we should not go forward with deep sea mining. I do not mean to suggest that all of the issues are resolved.

Indeed, we do have some concern and there may be some problems with respect to the plume created by disposal of sediment in

the ocean. There may be some problems with respect to processing at sea or on shore. I believe those problems can be resolved and they deserve further study.

The fact that we do have problems simply means that we should continue to work with industry and environmental organizations to see that we go forward with deep-sea mining in a sensible fashion. NOAA is setting up an Office of Ocean Management. I am surprised that the Government did not do it before. We have had land use planning for years and we have not had ocean management. Congress has passed legislation in the past like the Coastal Zone Management Act which indicates the concern of Congress for management of coastal areas and ocean areas.

While deep-sea mining has not yet been assessed from an oceanmanagement point of view, I believe the criteria that the new NOAA office would use would be lead to the conclusion that deepsea mining is a prudent ocean use. By that I mean that if will not seriously conflict with othe: ocean uses and any minor conflicts could be resolved.

We have the problem of the Law of the Sea Treaty. I believe every statement before you will indicate that the Law of the Sea Treaty negotiation has been inadequate from the point of view of the United States.

The United States has taken a very reasonable position in agreeing to share the benefits of the deep seabed with developing countries. However, we have had difficulties. The present text is unacceptable, as Ambassador Richardson has said.

It represents those kinds of constraints which I mentioned earlier which I think will foreclose development in the deep sea. Its problem is that it in no way assures access and does not tell us what kind of access there will be by those companies which have the technological capability and which can benefit international society, not only developed countries, but also, developing countries.

I cannot project what will happen in the next Law of the Sea Conference session and, indeed, any projection I could give you would be like a broken record that you have heard before and probably would be worth very little.

I do not know whether we will have success in future conferences, I imagine Ambassador Richardson when he testifies before the committee will have a better judgment in that connection.

Let me shift briefly to the legislation. The adminstration has pointed out certain provisions of legislation drafted both in the House and in the Senate with which it does not agree.

I will not repeat in detail administration views on those provisions. I believe the committee is fully aware of them. However, in general terms, the administration believes that there should not be investment guarantees and that the legislation should not be site specific.

It also has views with respect to whether or not processing should take place in the United States. I believe the committee is fully attuned to the feelings of the administration on that and other issues and the reason for those feelings.

I do believe that the version of the legislation which is before us today is an improvement over earlier versions. Secretary Kreps did

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point out when she testified before Congress on this subject that she believed that certain provisions of prior bills should be changed and, indeed, I believe those provisions have been changed.

Excessive detail has been reduced, express reference to mine site blocks has been removed, and provision is made for the future legislation to share revenues with the international community through a future treaty. I might say that is important. Also in this legislation, there are waivers that may be granted with respect to the general requirement that processing plants be located in the United States.

We have all talked about legislation being temporary in nature. But I do believe we should have legislation which will survive a treaty to cover gaps in the international regime. We will want some form of national control over those within our jurisdiction with respect to those gaps.

Let me last mention what NOAA has done relating to ocean mining. Our activities have been oriented toward doing all of the preliminary work which would allow deep-sea mining to progress in a sensible and timely fashion once legislation is passed.

We have done, as I mentioned before, the deep-ocean mining environmental study (domes). I would like to submit to the committee for the record a progress report on deep-ocean mining environmental study, phase I. It is a 178-page document which usefully points out the environmental aspects of deep-sea mining. [Retained in the committee files.]

Second, in the July 1977 issue of NOAA magazine, we have a rather interesting article entitled, "What Price Manganese Nodules?" It talks about the deep-ocean mining environmental studies which our oceanographers have done.

In addition to those activities, NOAA has provided an overview on the planning and conduct of other environmental studies and is prepared to issue preliminary environmental guidelines, a statement to industry of what kind of environmental problems we may foresee in the future.

NOAA is developing an environmental assessment report on deep seabed mining. That report is relatively important. In the past, industry has been held up because environmental impact statements were not ready on time. We are simply moving forward so that an environmental impact study, and a good one, will be ready on time.

We are developing a preliminary cost engineering model deep ocean mining systems and that is being done by us in collaboration with MIT.

We are conducting research and analysis needed to support the enactment of interim domestic legislation. We are supporting efforts to obtain a Law of the Sea Treaty meeting U.S. deep-seabed objectives.

We are conducting a technology transfer pilot project which will allow information now available to the Federal Government, mainly information available to the Navy, to be declassified and made available to the deep-sea mining industry and other industries which will move forward in the ocean to produce benefits for mankind.