(1) The structure of the Authority. Its organization must reflect the realities of ocean capabilities, and must be insulated from caprices of the moment in the General Assembly.

(2) The power of the Authority to veto claims and to fix their size and duration. In order to avoid the abuses which can arise from monopoly power, the rights of claimants in all essential respects should be established in the treaty creating the regime.

(3) The denial of any re-registration preference to a state which had developed the area concerned. Such a policy could seriously impair incentive to exploit.

(4) The provision that claims must be registered by a state or states. This presents problems in situations where private enterprise has invested in preliminary exploration and seeks to perfect its rights in an area before claim-jumpers can take advantage of its work. It should be made certain that the principle of "first-come, first-registered" would apply as of the date the applicant gave proper notice to the Authority that it had filed with a member state an application that it register on the applicant's behalf.

(5) The concept of "paper claims," i.e., speculative registrations. A specurealistic concept to apply to the extractive industries, where risks are high and many unsuccessful attempts have to be paid for out of the small percentage of successful ventures.

(6) Scientific research. Care must be exercised to prevent the registration system from being used to impede genuine scientific research.

(7) The concept of "paper claims," i.e., speculative registrations. A speculative race to the registry office, a "race to grab," is inevitable if the reward for being first in line, without any prior exploratory effort, is to receive a power to exclude all others from a large area for a period of several years. Experience with mineral laws on land has proven this.

2. International Fund (p. 149)

This proposal is intended to compensate the world community as common owner of the resources by using the "economic rent" for purposes that the world community agrees will promote the common welfare. The Commission wisely declares that these purposes must be other than general purposes of the U.N. The International Registry Authority would fix a rate of payment (not so high as to kill incentive) of a portion of the value of production which it would turn over to the International Fund. The Authority should have no voice in the Fund's management. The membership of the Fund should be determined by the U.N. General Assembly.

Comment. We endorse the principle here recognized, that the agency concerned with production should be separated from the agency distributing the proceeds. It is probably the best way to give practical recognition to the proposition that the resources are the legacy of mankind and to the fact that all states should be entitled to participate in the benefits. However, the question arises whether it is justifiable discrimination to require royalty-type payments from the mineral extractive industries when other users of ocean space (e.g., fishing and merchant marine) are not so burdened.

Our other comments are:

(1) If there are to be royalty-type payments, the Commission is to be commended for the formula "a portion of the value of production" rather than "net return on investment." Cf. Comment (5) on the Registry, above.

(2) It is questionable whether the Authority should have unrestricted power to fix the rate of payment to the Fund. We believe that this should be settled in the basic agreement creating the regime, or at least that the agreement should set limits to the Authority's discretion. Clearly the Fund should not have power to set the rate.

(3) Determination of the membership of the Fund should be made by the parties to the proposed convention and should not in any event be delegated to the U.N. General Assembly.

3. Powers and Duties of Registering States (p. 150)

Each state registering a claim must enact domestic legislation to assure compliance with the terms and conditions of the international regime, payments and protection of exploration and exploitation activities. Failure to do this should be a ground of registry revocation by the Authority. The registering state would be free to apply its domestic law not inconsistent with the international regime, e.g., concerning working conditions, marketing of production and taxation.

Comment.-We agree in principle.

4. Policing Functions of the Registry Authority (p. 150)

The Report does not recommend that the Authority have any general policing functions. However, since the Authority would have the power to cancel registered claims for cause, it should have the power, according to the Report, to inspect and hold hearings.

Comment. We agree, subject to provisions for review of possible arbitrary action by the Authority, as provided for in the next proposal.

5. Despute Settlement (p. 150)

The Report recommends that the International Registry Authority should initially settle disputes arising under the international regime. However, at the request of any party to a dispute, the Authority's initial decision, including its revocation of claim registration, should be subject to review by an independent arbitral agency.

Comment. We agree. We would note that the possibility of recourse to the International Court of Justice should not be ruled out.

6. Intermediate Zone (p. 151)

In the Commission's view, mineral resources of the deep sea do not in fairness or law belong to the coastal states to the exclusion of other states from their benefits.

However, the Commission recognizes that some coastal states may regard themselves as having preferential rights to resources of a reasonable subsea area beyond the treaty shelf and also have a national security interest in adjacent offshore areas. For these reasons, some coastal states might be reluctant to agree to a narrow treaty shelf without recognition of their particular interests in the area immediately beyond.

As a compromise of the foregoing opposing views, the Report recommends the creation of an intermediate zone of seabed, seaward of the treaty shelf as defined by the Commission, to the 2,500 meter isobath or 100 nautical miles from the baseline of the territorial sea, whichever gives the greater area. The boundary would be permanently fixed as in the case of the shelf. The Commission assumes that the 2,500 meter isobath is the average depth at the foot of the geological continental terrace or slope and 100 miles is the average width of the shelf and slope or terrace. (Geologists do not all agree that these assumptions are true or relevant).

Only the coastal state or its licensees would be authorized to explore and exploit resources therein. It need not do so, but if it does so, its claims must be registered with the Authority and would come under the other terms and conditions of the international regime.

Comment. This proposal is essentially an effort by the Commission to propitiate the proponents of a "broad" treaty shelf. Many of the arguments summarized earlier with regard to the proper limit of the shelf are also applicable, pro and con, to this intermediate zone concept. If the Commission's "intermediate zone" proposal were adopted, in conjunction with a "narrow" shelf, foreign coastal nations would have exactly the same power to exclude American companies, or to demand burdensome concession terms, as they would have if their jurisdiction were commensurate with a "broad" shelf extending to the 2,500 ineter isobath or other outer limit of the proposed intermediate zone. Such a zone has, however, other drawbacks, of which the most weighty is perhaps its sheer awkwardness. Areas subject to divided responsibility are rarely viable, as the history of condominia and internationalized zones in international law indicates. On balance, we are opposed to this proposal.

An alternative proposal which has been put forward would call for complete coastal state authority over the zone but would provide for some kind of payments to the International Fund. Such an arrangement would be less objectionable, but it might lessen the incentives to the coastal state and its licensees to push on with development. It is also possible to foresee administrative difficulties under this system as well.

7. Conclusion With Respect to Areas Beyond National Jurisdiction.

Under the 1968 Resolution of the House of Delegates, the American Bar Association is committed to support the development as soon as practicable of international arrangements to govern the exploitation of deep-sea resources beyond the limits of national jurisdiction. Such arrangements, the Resolution affirms, must assure, inter alia,

"... freedom of exploration by all nations on a nondiscriminatory basis, security of tenure to those engaged in producing the resources in compliance with such rules, encouragement to discover and develop these resources, and optimum use to the benefit of all peoples.

Except for the intermediate zone proposal, and subject to the various caveats expressed in the foregoing comments, we believe that the Commission's recommendations for a deep-sea regime are broadly in harmony with the principles of the Resolution.

We would reiterate our belief, however, that the details of the Commission's proposed registry plan need careful attention before being submitted as a basis for international discussions. There are, in our opinion, too many loose ends and loopholes which might permit abuse in connection with the requirements for the registration, maintenance and vacating of claims. We are all against a "race to grab." It is difficult at present for anyone to "grab" the deep seabed physically but the concept of registration of paper claims would for the first time create the mechanism to make such a “grab” possible. Obviously safeguards against such a possibility must be drawn with the utmost care, but the factual data necessary for meaningful draftsmanship are not yet available.

Many of our members strongly believe that the first step, in setting up a deep sea regime, should not be the establishment of a system which recognizes paper claims or purely speculative registrations, but should be, instead, agreement on norms of conduct to be observed by the nations capable of carrying out deep-sea mineral exploration."

14

Such norms would be designed to minimize interference between expeditions or operators, and to preclude "jumping" of areas which are under actual exploration or development, plus reasonable protective margins. This, they believe, may well evolve into a more formal system of registry of claims, but only after enough information has been acquired to make possible an agreement on criteria with respect to areas, duration, diligence requirements, and other factors historically associated with mining rights. Such consensus on norms of conduct should be without prejudice to any agreement to dedicate some portion of the value of production from deep-sea mineral resources to agreed international purposes.

E. RELATIONS BETWEEN GOVERNMENT AND PRIVATE ENTERPRISE, AND THE INTERNATIONAL REGISTRATION SYSTEM (P. 153)

The Commission points out that the relations of the United States, as a registering nation under the international regime, with the business entities on whose behalf it will register claims are a matter of purely domestic concern. The recommendations which it makes for U.S. domestic procedures to deal with these relations are summarized below.

1. Policies Applicable to All Registered Claims

The Report recommends that the Department of the Interior be the U.S. agency which would register U.S. claims with the International Authority. Companies would apply to the Department of the Interior, paying to it the fees specified by the international regime to be forwarded to the Authority. The companies' royalty-type payments for exploitation should take the place of both the annual rent and the royalty now paid for mineral leases on the Outer Continental Shelf. We agree in general, but would recall our comment in regard to the Authority about the danger of delay in domestic registration channels which could lose an applicant his "first-come" position before the Authority.

2. Additional Intermediate Zone Policies

The Report recommends (p. 154) that the Secretary of the Interior should have power to award mineral rights without requiring competitive bidding, on the same basis as it recommended such procedure for the Outer Continental Shelf. This problem only arises if the intermediate zone proposal is adopted. 3. Additional Policies Beyond the Intermediate Zone

If the U.S. uses competitive bidding to select the companies to explore and exploit claims registered by it with the International Authority, U.S. companies would have an incentive to request states which charge less to register claims on their behalf. This would create a "flag of convenience" problem unless the U.S. prevented its nationals from applying to other states. The latter would be undesirable. Therefore, the Report recommends (p. 155) that the U.S. follow

14 This concept was referred to in our 1968 Joint Report.

the "first-come, first-registered" policy in selecting the companies on whose behalf it registers claims with the Authority.

We agree with this recommendation.

F. A COURSE OF INTERIM ACTION

The Report observes (p. 155) that it will take years to arrive at a new framework. In the meantime, it is important to seek early agreement on principles to guide states in interim exploration and exploitation of deep-sea resources. The Commission therefore announces its support for the principles proposed by the United States in the United Nations in June 1968,15 which it summarizes as follows:

(1) A "redefinition of the outer limits of the continental shelf." 18

(2) Exclusion of any claims to national sovereignty or sovereign rights over the deep-sea floor beyond the shelf limit.

(3) Dedication to international purposes of a portion of the value of the resources recovered.

(4) Call for a new international regime to be established as soon as practicable.

(5) Exploitation prior to the establishment of a shelf limit to be without prejudice to the eventual location of that limit.

To implement this last principle, the Commission recommends a U.S. proposal that in the interim, no nation should claim sovereign rights beyond the 200-meter line. Exploration and exploitation should, however, be permitted to continue beyond that line, provided that the authorization therefor "explicitly states that such exploration or exploitation shall be subject to the new international framework agreed upon" (p. 156).

Recognizing the uncertainties which such a rule would create for the private entrepreneur who would not know when his landlord and the terms of his lease might be switched, the Commission recommends (p. 156):

"... that Congress enact legislation to compensate private enterprise for loss of investment or expenses occasioned by any ned international framework that redefines the continental shelf so as to put the area in which is it engaged in mineral resources development beyond the shelf's outer limits."

A final recommendation from the Commission (p. 156) is that the Outer Continental Shelf Lands Act be amended to require permission from the Secretary of the Interior:

"... to engage in mineral resource exploration or exploitation in any subsea area beyond the 200-meter isobath upon such terms and conditions as the Secretary deems appropriate. The amendment should make clear that this requirement is not intended to constitute a U.S. claim to exercise sovereignty or sovereign rights over any subsea area beyond the 200-meter isobath."

In exercising this authority, the Secretary of the Interior should be guided by the Secretary of State's judgment as to foreign policy implications (p. 157). It is our understanding that the scope of this proposal would not be confined to areas off the U.S. coast; it would apply to activities by U.S. nationals off any coast, in order to assure Government control of the evolving worldwide situation pending adoption of the new international framework.

On these interim measures proposed by the Commission, we agree in part and disagree in part.

Of the five principles put forward in the United Nations, we find the first four acceptable (on the understanding, with respect to the first, that redefinition of the shelf limit be taken as equivalent to arriving at an agreed interpretation of the Convention definition rather than a new convention). These principles are also in harmony with the 1968 ABA Resolution.

We disagree with the fifth principle and with the recommendations for implementing it (except insofar as these recognize the importance of not suspending deep-sea exploration and exploitation activity)." These proposals, calling in effect for a moratorium on claims beyond the 200-meter line, are in our opinion retrogressive, impractical, and not in the best interests of the United States. The principal reasons for our conclusions may be summed up as follows:

15 UN Doc. A/AC.135/25; also in 59 Dept. of State Bulletin 152 (August 5. 1968). 16 We do not read the U.S. proposal this way. It did not, in our view, propose a "redefinition" of the outer limits of the continental shelf, but merely proposed that the limit be fixed in accordance with the existing Convention on the Continental Shelf.

17 The Standing Committee on World Order Under Law takes no position with respect to the fifth principle here discussed, for want of sufficient qualification to do so.

(1) The 200-meter line is out of date. Activities now exist beyond that line, undertaken in justified reliance on the exploitability concept of the Shelf Convention. These are now clearly within the national jurisdiction, and their status should not now be cast in jeopardy.

(2) Under our view of the Shelf Convention and its interpretation by parallel declarations, there is no need for a moratorium on claims. National rights simply extend or will extend to the limit of adjacency and stop.

(3) The possibility of shifting regimes and responsibilities will assuredly discourage the large investment needed to develop resources in deeper and deeper waters. The adverse effect on U.S. interests is obvious.

(4) The proposal for compensation is unrealistic. Even if Congress were prepared to enact such legislation, the suggested measure of compensation is wholly inadequate for the risks involved. The device thus fails to supply the inducement needed to overcome the uncertainties noted in point 3.

RESOLUTION (AMERICAN BAR ASSOCIATION)

RECOMMENDATION

The Sections of Natural Resources Law, International and Comparative Law, and the Standing Committee on Peace and Law Through United Nations, recommend that the following resolution be adopted by the House of Delegates:

Whereas the natural resources of the seabed and subsoil under the high seas are becoming, through technological progress, increasingly available to mankind in ways until recently unforeseen; and

Whereas a Committee of the United Nations General Assembly is presently considering "practical means to promote international co-operation in the exploration, conservation and use of the seabed and the ocean floor, and the subsoil thereof, and of their resources"; and

Whereas the United States, as a member of that United Nations Committee, has proposed that the exploration and use of the deep ocean floor be open to all states and their nationals without discrimination and in accordance with international law, and as a corollary of this that the exercise of sovereign rights over any part of the deep ocean floor be ruled out; and

Whereas the treaty known as the 1958 Convention on the Continental Shelf in force between 37 nations, including the United States, recognizes that each coastal state has "exclusive sovereign rights for the purpose of" exploring and exploiting the natural resources of "the sea-bed and subsoil of the submarine areas adjacent to the coast... to a depth of 200 meters or, beyond that limit, to where the depth of the superjacent waters admits of the exploitation of the natural resources of the said areas"; and

Whereas it is generally recognized that the definition in the 1958 Convention on the Continental Shelf of the boundary between the area of exclusive sovereign rights and the deep ocean floor needs to be clarified by an agreed interpretation; and

Whereas the House of Delegates, by its Resolution of August 9, 1966, stated that "prior to framing a policy. . . the United States Government . . . review thoroughly the issues at stake in consultation with representatives of the American Bar Association and others competent in the field of international law, with scientific and technical experts and with leaders of American industry in oceanic development": Now, therefore, be it

Resolved, That the American Bar Association

Supports the efforts being made in and out of the governments of interested states to protect the seabed and subsoil of the deep ocean floor beyond the limits of national jurisdiction from claims of sovereignty or rights of discretionary control by any nation or group or organization of nations;

Supports the call by the United States Government for internationally agreed arrangements governing the exploitation of natural resources of the deep ocean floor beyond the limits of national jurisdiction to be established as soon as practicable;

Recommends:

(1) That the United States consult with other parties to the 1958 Continental Shelf Convention with a view to establishing, through the issuance of parallel declarations or by other means, an agreed interpretation of the definition of the boundary between the areas of exclusive sovereign rights with respect to natural resources of the seabed and subsoil and the deep ocean floor beyond the limits of national jurisdiction.