The President proposed that a treaty be adopted as soon as possible, and stated that the United States would introduce specific proposals at the August 1970 session of the United Nations Seabeds Committee. The proposed treaty would provide for the renunciation of all national claims beyond the 200-meter isobath and the establishment of an international regime to administer seabed resources exploitation beyond this limit. As stated by the President:

The regime should include the collection of substantial mineral royalties to be used for international community purposes, particularly economic assistance to developing countries. The regime should also establish general rules to prevent unreasonable interference with other uses of the ocean, to protect the ocean from pollution, to assure the integrity of the investment necessary for such exploitation and to provide for peaceful and compulsory settlement of disputes.

The proposed international regime would include two types of machinery.

First, there would be an international trusteeship zone including the continental margins beyond the 200-meter depth, in which the coastal nations would act as trustees. The coastal nation would share the international revenues for its zone and would have discretion to impose additional taxes. It would apply and administer its own laws and regulations, within the broader rules of the international regime. Changes in U.S. domestic import and tax laws and regulations may be necessary to avoid discrimination against U.S. nationals operating in the trusteeship zone.

Second, international machinery would govern the use of seabed resources beyond the continental margins.

With regard to an interim policy, the President suggested that all permits for exploration and exploitation be issued subject to the international regime to be agreed upon, with a portion of the revenues from interim exploitation to be paid to an appropriate international development agency.

An additional treaty was proposed to deal with problems related to other law of the sea problem areas. It would establish a 12-mile territorial sea limit, provide for free transit through international straits, and accommodate coastal State fishing interests.

Because many controversial questions were brought to light during the hearing, the members of the subcommittee were invited to submit written questions to the State Department. The questions submitted and the responses received have been reproduced in the hearing record.

VII. THE SUBCOMMITTEE'S RESPONSE TO THE PRESIDENT'S PROPOSAL AND TO THE DRAFT WORKING PAPER

11

Subsequent to the Administration's policy statement and at the request of Chairman Metcalf, the Subcommittee received a copy of the draft treaty " prepared by the Administration to be proposed at the United Nations Seabed Committee meeting in Geneva in August 1970.12

11 We include as appendices to this report six excellent, equally cogent approaches, each related to the development of a policy pertaining to the limits of natura! jurisdiction and the establishment of a deep seabed regime. These were prepared respectively by the American, British, and Australian Branch Deepsea Mining Committees of the International Law Association and the ILA's international committee. Also included are suggestions from the British and French Governments introduced as working papers by them at the U.N. Seabeds Committee meeting this August in Geneva. The draft U.S. working paper is also included as an appendix.

12 The State Department Legal Adviser requested that the Subcommittee insert his remarks concerning the Draft Treaty, and they are included as Appendix K.

After reviewing the draft, the Subcommittee was unanimous in expressing serious doubts about many of its provisions. Secretary of State William P. Rogers received a letter dated July 21, signed by Senator Henry M. Jackson, chairman of the Senate Interior and Insular Affairs Committee; Senator Gordon Allott, the Committee's ranking minority member; Senator Lee Metcalf, chairman of the Committee's Special Subcommittee on the Outer Continental Shelf; and Senator Henry L. Bellmon, ranking minority member of the Special Subcommittee.

The letter urged that the proposed treaty not be presented at the Geneva conference and instead that it be substantially revised. The subcommittee members succeeded to their satisfaction in modifying several provisions of the treaty, and reducing its status to that of a "working paper for discussion purposes" as is indicated in the disclaimer appearing on the front page of the paper. That disclaimer

states:

The draft Convention and its Appendices raise a number of questions with respect to which further detailed study is clearly necessary and do not necessarily represent the definitive views of the United States Government. The Appendices in particular are included solely by way of example.

On September 22 and 23 additional testimony was presented consisting primarily of commentary related to the President's proposed oceans policy, the draft working paper, and to the matter of an interim policy which would apply to the period extending from the present to the date a deep seabeds treaty would enter into force. The comments, on the whole, were rather critical of the draft working paper. Mr. Northcutt Ely, representing the American Bar Association stated:

. . . it is manifest that in this proposed treaty we are characterizing as the "common heritage of mankind" resources, that under existing international law, are a major component of the American mineral estate, in which the United States has exclusive sovereign rights exercised by Congress.

What is the quid pro quo? What does the United States receive, by this treaty, in return for what it gives up? The consideration, if there is one, must be sought in some other document. The advantages to the United States visible within the four corners of this treaty are minimal.

Mr. Ely further commented that, the search for the quid pro quo for the "renunciation" and "trusteeship" proposed "* ** is a very baffling search indeed. If freedom of use of the seabed for military but nonoffensive purposes is the objective, it seems that it ought to be reached in a treaty dealing with military uses of the seabed, not in a treaty dealing with mineral resources of the seabed."

Regarding the international organization called for in the draft working paper, "supersovereignty" and "a sort of floating Chinese pagoda" were the terms Mr. Ely used to describe it. With respect to the interim policy as it affected our continental margin, he concluded that the United States would benefit more from standing on its rights under the present shelf doctrine than issuing leases subject to the international regime as proposed in Article 73 of the draft working

paper.

Mr. John Laylin, representing the Committee on Oceanography of the Section on International and Comparative Law of the American Bar Association, opened his remarks with the comment that the draft working paper was "a good beginning". The remainder of his testimony, however, was largely critical of the draft.

After affirming the worth of a licensing system for deep seabed mineral exploitation, he stated that the draft working paper requires prospecting as well as actual exploitation to be subject to a license issued by an international authority. Requiring a license for prospecting, Mr. Laylin termed, "unworkable" as it would serve only to "handicap the conscientious".

Mr. Laylin also had objections to the international organization called for in the draft. It was too elaborate, he said, and its "administrative expenses would very possibly exceed for many years to come all payments made ***" to it.

Mr. Laylin additionally suggested that the amount and method of payments called for in the draft working paper should be revamped.

With respect to the interim period, mining of the deep seabed should be carried out under a procedure in which the United States would license its own nationals to mine an area of the deep seabed beyond national jurisdiction. Such licenses would afford U.S. nationals protection from one another only, as the U.S. lacks the authority to issue licenses beyond the continental margin good against foreign nationals. Other nations through similar procedures should establish licensing systems for their nationals. The U.S. should engage in various bilateral diplomatic negotiations to achieve this objective, Mr. Laylin concluded. A future seabed treaty should include due protection for the integrity of investments made under such a licensing system prior to entry into force of the treaty.

* *

The third witness to testify was Mr. T. S. Ary, Vice President of the Union Carbide Exploration Corp., on behalf of the American Mining Congress. Referring specifically to draft Article 73 of the working paper, he stated that it "* creates serious uncertainties in the interim period and inevitably inhibits the incentive to search for and develop minerals * * *" and that it "** * impairs the secure investment climate which is a prerequisite of the obtaining of investment risk capital in the interim period."

Mr. Ary joined the other witnesses in criticizing the elaborateness of the international organization called for in the draft working paper. He agreed with the procedures which called for the operator being responsible to his own national government which would in turn be responsible to an international organization.

He agreed with Mr. Laylin by suggesting that prospecting should be excluded from international licensing. He also felt that proprietary information resulting from prospecting operations should not be turned over to the international organization as called for in the draft working paper. Disclosures should be limited to those necessary to certify correctness of amounts payable or which bear directly upon compliance with minimum work requirements and environmental standards, Mr. Ary declared. He also stated that the working paper called for "*** far too many fees, rentals and bonuses." He suggested, in effect, that a "registration" rather than a "licensing" system would be more desirable.

Mr. Ary additionally presented several other thoughtful suggestions concerning technical improvements which could be made in the draft working paper.

The final witness to testify was Mr. Luke W. Finlay, on behalf of the American Petroleum Institute. His major two points were (1) that the draft working paper is critically defective in its failure to give adequate and lasting protection to the vital interests in the United States in the mineral resources of the U.S. continental margins beyond the 200-meter depth contour, and (2) conversely, it would have a stifling effect on the future development of the U.S. Outer Continental Shelf beyond the 200-meter depth contour.

In support of these contentions, Mr. Finlay argued that the draft working paper refers to the U.S. continental margin beyond the 200meter depth contour as part of the "common heritage of all mankind” even though also termed a "trusteeship". Further, that contrary to Under Secretary of State Richardson's testimony that the "* trusteeship would not be subject to revocation by the international regime***" the draft working paper would afford no protection to coastal nations should they withdraw from the treaty as presently drafted. In other words, if a coastal nation withdrew from the treaty, its trusteeship zone, encompassing the continental margin beyond the 200-meter depth contour, would be forfeited to the international community as part of the "common heritage of all mankind." As Mr. Finlay put it, "This is the disastrous, but nonetheless inevitable, result that would flow from the withdrawing party's previous commitment that its rights to the Continental Shelf beyond the 200meter isobath were irrevocably renounced." His proposed alternative was stated as follows:

What is needed is an abandonment of the proposed renunciation by the coastal nations of all national rights beyond the 200-meter isobath. For it, there should be substituted a proposal that all nations join in a treaty which would firmly establish the outer limit of coastal nation jurisdiction over seabed resources at the outer edge of the continental margin.

Mr. Finlay, however, supported the President's Ocean Policy Statement of May 23. The one major exception was the provision calling for issuance of OCS leases beyond the 200-meter depth contour subject to a future international seabed regime. This provision was also incorporated in Article 73 of the draft working paper. Mr. Finlay's comment was, "The critical point is that it is fundamentally wrong to subject OCS leases to the unknown terms of a convention yet to be negotiated." The offer to repay OCS lessees for losses suffered as a result of future convention would not be "an adequate measure of compensation", he declared. As he saw it, investors would not invest in OCS leases under the present terms contained in the draft working paper. Mr. Finlay suggested that a more appropriate measure would be to provide for retention of OCS lessee's rights as fixed and that any changes brought about by a new treaty would be the obligations of the lessor coastal nation. Thus, relying on the existing Outer Continental Shelf Lands Act of 1953, as the source of legal authority for leasing of our continental margin beyond the 200-meter depth contour during the iterim period, prior to the entry into force of a seabeds treaty, would be a more appropriate interim policy, Mr. Finlay seemed to indicate.

54-162 O 713

In short, the witnesses were considerably more supportive of the President's proposed ocean policy (with the exception of the trusteeship concept and the interim leasing suggestions) than they were of the draft working paper. That latter document, they thought, deviated substantially from the more general policy recommendations contained in the President's May 23d statement.

The Subcommittee views the draft working paper merely as an example of one of a number of possible approaches 13 to the development of a U.S. seabed policy within the general framework intended by President Nixon on May 23, 1970.

VIII. THE SUBCOMMITTEE'S CONCLUSIONS CONCERNING THE PRESIDENT'S PROPOSED OCEAN POLICY STATEMENT AND THE DRAFT WORKING PAPER

The President's proposed framework for an ocean policy contained the offer of bold and daring financial concessions on the part of the United States in the interest of international good will. Nevertheless, the proposal was not unmindful of the national interest, as the President declared:

I do not *** believe it is either necessary or desirable to try to halt exploration and exploitation of the seabeds beyond a depth of 200 meters *** during the negotiating process. Accordingly, I call on other nations to join the United States in an interim policy. I suggest that all permits for exploration and exploitation of the seabeds beyond 200 meters be issued subject to the international regime to be agreed upon. The regime should accordingly include due protection for the integrity of investments made in the interim period.

With respect to "due protection for the integrity of investments made in the interim period," as proposed by the President, we feel the only acceptable means of providing such protection is to continue the operation of the present leasing system as defined by the Outer Continental Shelf Lands Act of 1953 and the 1958 Geneva Convention on the Continental Shelf. Any future seabeds treaty should contain additional protection in the form of grandfather clauses. Such grandfather clauses should provide that any rights or obligations contained within any leases entered into between coastal nation lessors and any leasees will remain fixed insofar as the leasees are concerned, after ratification of the seabeds treaty. Accordingly, any future seabeds treaty should provide for the adoption of existing leases and all of their terms regarding areas of the continental margin beyond the 200-meter depth limit, and should place no new obligations or burdens on the leasee.

We construe the President's policy proposal to mean that while pressing for international acceptance of the type of legal framework outlined in it, the United States should take no action which will in any way forfeit the present sovereign rights the United States enjoys in its continental margin.

Further, at such time as the United States might renounce its present "sovereign rights" to the natural resources of the seabed beyond the 200-meter depth limit through ratification of a future treaty, the United States would retain the exclusive right to determine whether and by whom the seabed resources to the outer edge of the U.S. continental margin would be exploited and the exclusive jurisdiction and control over such exploitation.

13 See footnote 11, supra.