There should not be any embargo on or prohibition of exploration of deep sea mineral resources pending the negotiation of an international agreement, relating thereto. To the contrary, all possible exploration, research, and exchange of knowledge should be encouraged. There is no need to prohibit this desirable progress because of uncertainties as to who shall control production, if minerals are discovered.

2. With respect to the area within the exclusive jurisdiction of the coastal nations over submarine mineral resources

Since exploration and exploitation of undersea minerals is likely to occur earlier in the shallower waters of the oceans adjacent to the continents than in the abyssal depths, it follows that if jurisdictional uncertainties arise to impede such operations during the next several decades, such problems will be primarily related to the scope of the mineral jurisdiction which is already vested exclusively in the coastal states by the "exploitability" and "adjacency" criteria of jurisdiction which now appear in the Continental Shelf Convention. This uncertainty, if necessity for its resolution occurs, might be removed by consultation among the major coastal nations which are capable of conducting deep sea mineral development, looking toward the issuance by those states of parallel ex parte declarations. These declarations might appropriately restrict claims of exclusive seabed mineral jurisdiction, pursuant to the exploitability and adjacency factors of the Continental Shelf Convention, to (i) the submerged portions of the continental land mass, or (ii) to a stated distance from the base line, whichever limitation encompasses the larger area. These declarations might appropriately recognize special cases. Two such classifications suggest themselves: (i) in the case of states whose coasts plunge precipitously to the ocean floor (e.g., on the west coast of South America), the limit on seabed mineral jurisdiction would automatically operate on the deep ocean floor; (ii) in the case of narrow or enclosed seas, the principle of adjacency might appropriately carry coastal mineral jurisdiction to the median lines, even though these are beyond the continental blocks.

This proposal should not necessitate any amendment of the text of the Continental Shelf Convention. That Convention's differentiation between the coastal state's exclusive rights in seabed minerals, on the one hand, and, on the other hand, the non-exclusive status of the seabed with respect to research and other uses not related to mineral exploitation, would be retained. So also with the Convention's preservation of the high-seas status of the overlying waters.

It would, however, be both appropriate and desirable to reiterate these understandings in the recommended declarations. In the instance of scientific research, which is being increasingly impeded by the requirement of coastal consent for research undertaken on the continental shelf, these parallel declarations might be employed to secure greater protection for this vital activity.

3. With respect to the regime which should be applicable to the minerals in and under the seabed, seaward of the limit of the coastal state's exclusive jurisdiction

(1) On the basis of the information now available, we do not think jurisdiction should be vested in the United Nations or in any other international organization to administer an international licensing system with power to grant or deny exploration and production concessions with respect to these resources.

(2) We think there should be created an international commission (including adequate representation of the maritime powers now engaged in oceanic research and mineral exploration), or vesting responsibility in an existing commission so constituted, with instructions to draft a convention (subject, of course, to ratification) which shall have as its objectives:

a. Creation of an international agency with the limited functions of (i) receiving, recording, and publishing notices by sovereign nations of their intent to occupy and explore stated areas of the seabed exclusively for mineral production, notices of actual occupation thereof, notices of discovery, and periodic notices of continuing activity, together with (ii) resolution of conflicts between notices recorded by two or more nations encompassing the same area.

b. Establishment of norms of conduct by sovereign nations with respect to the recording of the notices proposed in the preceding paragraph, and in the occupation of the seabed and exploration and production of minerals therefrom. The drafting commission could appropriately recommend for inclusion in the resulting

convention, among other things, standards (or a mechanism to establish standards) relating to permissible areas for inclusion in exploration and production phases, periods of exclusive rights of occupancy, requirements of diligence as related to tenure, conservation, avoidance of pollution, accommodation with cmpeting uses of the marine environment, etc. The instructions to the negotiating commission should stipulate that the resulting convention shall contemplate that the actual production and marketing of minerals discovered shall be controlled by the laws of the recording nation, and that that nation shall be held accountable for the conduct of those operating under its flag in the exploration and exploitation of minerals.

c. Establishment of (i) reasonable payments to be made, preferably to the World Bank, by the nation which undertakes mineral development, in areas seaward of coastal mineral jurisdiction, in the nature of registration fees, and development fees or royalties, and (ii) the purposes to which such revenues, when received, shall be applied. These purposes should be restricted to international activities on which wide agreement can be reached, such as oceanic research, programs aimed at improved use of the sea's food resources to alleviate protein malnutrition, and the development of the natural resources of the less developed countries.

JESSE P. LUTON, Jr.,

Chairman, Section of Natural Resources Law.

JOE C. BARRETT,

Chairman, Section of International and Comparative Law.

EBERHARD P. DEUTSCH.

Chairman, Standing Committee on Peace, and Law Through United Nations.

APPENDIX B

NON-LIVING RESOURCES OF THE SEA

A Summary and Critique of Chapter 4, Part II of the Report of the Marine Science Commission

JOINT REPORT OF THE SECTION OF INTERNATIONAL AND COMPARATIVE LAW, THE SECTION OF NATURAL RESOURCES LAW, AND THE STANDING COMMITTEE ON WORLD ORDER UNDER LAW OF THE AMERICAN BAR ASSOCIATION, AUGUST 1969

Note This Report was approved by the Section of International and Comparative Law, by the Section of Natural Resources Law, and (with the qualifications noted on pp. 6 and 56) by the Standing Committee on World Order Under Law at their meetings in Dallas on August 10-11, 1969. It is not to be construed as representing the opinions or views of the American Bar Association.

INTRODUCTION

On January 9, 1969, the Commisison on Marine Science, Engineering and Resources, created pursuant to Public Law 89-454 enacted June 17, 1966, submitted its Report to the President and Congress. This Report, entitled Our Nation and the Sea, is a document of major significance in the formulation of United States policy with regard to all aspects of the sea, its resources, and its uses. The Commission Report, together with the supporting papers from the Commission's various panels and consultants, is not only a comprehensive study but a positive program for future action. Many of its proposals are controversial, but all represent serious efforts to solve difficult and often novel problems. They merit careful attention from all concerned about national ocean policy.

The present Joint Report is confined to those legal and institutional aspects of the Commission's Report which are of common concern to the Sections and Committees joining herein. It deals with that part of the Commission's Report (Chapter 4, Part III) which relates to non-living marine resources beneath the sea. In particular, it examines the Commission's proposals regarding an international legal-political framework for the development of such resources in the light of the Resolution on this subject adopted by the House of Delegates of the American Bar Association at its meeting in Philadelphia in August 1968 and the Joint Report submitted to the House of Delegates.1

Other parts of the Commission's Report contain proposals of significant legal interest which are not discussed here. In particular, the Commission's elaborate proposals for the administrative reorganization of oceanographic activities within the Federal Government have not been dealt with. The omission of any of these matters from the present Joint Report should not be taken as indicating either approval, disapproval, or lack of concern with respect thereto on the part of any of the sections or committees participating herein.

I. THE DEVELOPMENT OF NON-LIVING MARINE RESOURCES

(p. 121)2

The Report of the Marine Science Commission divides non-living marine resources into four categories: oil, gas, hard minerals and fresh water. Recovery of each of these has its unique problems. All have common problems, such as a need for reconnaissance surveys, the role of Federal agencies, and a national and international legal framework.

A. PETROLEUM (p. 122)

The Report notes that investments of the U.S. offshore oil industry now run more than $1 billion annually and will grow about 18% per year for the next ten years. Offshore sources on a world-wide basis will probably produce at least a third of world production in ten years. It is unlikely that oil exists in comparable quantities in the deeper ocean basins beyond the foot of the continental terrace or slope.

1. Technical Considerations (p. 123)

Regarding technical considerations applicable to petroleum, the Report contains this recommendation (p. 124) :

"*** that appropriate mechanisms be established to assure timely exchange of scientific and technological information among the Federal Government, the petroleum industry and the scientific community consistent with security and proprietary considerations."

We agree generally with this recommendation, but feel that it should be broadened to include other mineral industries as well as the petroleum industry. Moreover, special attention should be given to the phrase "consistent with security and proprietary considerations.” Private industry should not be required to make public highly confidential information which it has assembled at high cost, such as interpretations of, and certain classes of, geological and geophysical information. To do so would retard research, development and exploration. 2. U.S. Legal and Regulatory Considerations (p. 124)

In discussing legal and regulatory considerations applicable to petroleum, the Report contains this recommendation (p. 127):

"The Commission recommends that leasing and regulatory policies for offshore oil be geared to a rate of development reflecting all aspects of national interest. Strong support should be given to accomplishing the analysis necessary to provide a basis for decisions on development rates. In scheduling its Federal lease sales the Government should give adequate consideration to industry's need to plan its exploration and development programs in an orderly and effective fashion. For example, it is recommended that longer periods of advance notice be provided for Federal lease sales."

We agree generally with this recommendation. However, as to rate of development, private industry, which will undertake uns development, should have a significant voice in the decision-making process. With respect to the scheduling of Federal lease sales, we agree that longer periods of advance notice should be provided, but flexibility shoold be retained so that when companies have expended huge sums of money in conducting geological and geophysical surveys in the offshore areas, they should be afforded the opportunity of bidding on the acreage for the purpose of acquiring leases.

We believe, moreover, that the Federal leasing for oil and gas should have as its principal objective not the short-run maximizing of Federal income, but rather the long term objective of finding and developing adequate petroleum reserves within this nation's control. Experience under the Outer Continental Shelf Lands Act does not indicate that development of oil and gas on the U.S. continental shelf has been too rapid. Because of the declining reserves to production ratio for both oil and gas on the land areas of the United States, a continuing and accelerated effort to discover petroleum reserves in the offshore areas under the jurisdiction and control of the United States is needed in our national interest and security.

B. NATURAL GAS (p. 127)3

The Report points out that offshore gas is chiefly explored for and produced by oil companies. Transportation (in pipelines) is regulated by the Federal Power Commission, and distribution to consumers is regulated by State or local governments. Sales are predicted to increase about 4% per year for the

1 The text of the resolution appears in the appendix to the present joint report. 2 Page numbers in parentheses refer to the printed commission report.

next ten years, and with declining reserves on land it is important to encourage a greater rate of exploration and development. To this end FPC policies should be modified in two respects.

First, with respect to new natural gas pipeline construction, the Report states that the Federal Power Commission should reexamine its policies to determine the extent to which efforts to establish proven reserves result in disclosures adverse to a company, and the FPC should devise methods by which such impact, if any, might be legitimately minimized (p. 128).

We agree with this suggestion.

Second, with respect to wellhead price regulation, the Report recommends (p. 128):

"... that the Federal Power Commission reexamine its differential price policies for natural gas and make such adjustments as it deems advisable to reflect adequately the increased cost of offshore production."

We agree with this recommendation.

With respect to the regulation of interstate natural gas pipelines, the Report also recommends (p. 129):

66

.. that in order to encourage innovative research and development activities, the Federal Power Commission review its accounting regulations relating to research and development to determine whether such regulations are consistent with the legitimate need of the gas transmission industry for clear and realistic guidelines."

We agree with this recommendation.

C. HARD MINERALS (130)

World demand projections for many key minerals are such that the U.S. must ensure itself an adequate and dependable supply by increasing the rate of discovery. The Commission finds that the present supply outlook does not raise an urgent necessity to develop seabed minerals at maximum speed regardless of cost. However, an early start in offshore exploration and technology development is warranted, and in the Commission's view it is proper for government to play a large role because of the lead time required, the very great costs involved and the diverse nature of the benefits.

1. The Seabed as a Potential Source of Hard Minerals (p. 130)

The Report affirms that for the foreseeable future the economics of extracting metals--other than salt, bromine and magnesium-from sea water are such that there is little likelihood of commercial production.

A more promising source is placer deposits, which are confined mainly to the inner edge of the continental shelf. It is unlikely that significant placer deposits exist on the continental slope or beyond. The Commission states that serious reconaissance is warranted of the placer prospects off U.S. coasts.

Very little is known about the mineral potential of buried consolidated rock deposits in the substrata of the continental shelf and slope. Unless accessible by tunneling from shore or artificial islands, exploration of these deposits lies well in the future.

As to the abyssal ocean floor, the only deposits which now seem to the Commission to have potential economic importance are nodules, crusts and oozes on the ocean floor. The rocks beneath the abyssal ocean floor are far beyond present technical capacity to explore.

We agree with this general estimate of potentialities.

2. The State of Ocean Mining (p. 132)

The Report notes that the marine mining industry is in its infancy. Worldwide there were in 1967 about 300 marine mining operations of all types. All were near shore; almost all were outside the U.S. However, U.S. Government agencies and private firms are engaged increasingly in exploration and technological development. But further progress toward commercial exploitation involves overcoming certain economic, technological, and institutional (legal and regulatory) obstacles.

3 The Standing Committee on World Order Under Law is of the opinion that this section should be deleted on the ground that it largely involves matters beyond the appropriate scope of this Report.

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