requirements or limitations imposed by the regime more burdensome than those of this Bill. The measure further provides that the United States would bear any payment of whatever kind that is required of the licensee under any international regime. Upon reading portions of previous testimony which has been presented during your hearings and further upon listening to various questions asked about Section 10 of the bill, it appears the majority of the witnesses interpreted sub-section B of this section as a casualty insurance coverage for industry. This is not the case. Industry will carry casualty coverage on items that are insurable with a private carrier. The subject of sub-section B of Section 10 is to provide insurance coverage as a protection of the peaceful enjoyment of the exclusive rights granted when a license is issued. The provisions of this bill are only enforceable as against all persons subject to the jurisdiction of the U.S.or any reciprocating state as that term is defined in the bill. The insurance protection covers interference by third parties who are not under the jurisdiction of the U.S. or a reciprocating state. The insurance premium should be an amount that is commensurate with the risk assumed. The insurance program should be self-liquidating. There is no international law, at the present, that speaks directly to the recovery of manganese nodules from the deep ocean. Therefore, industry desires protection from third parties,as described above, from interference with their exclusive rights even though international law has not been violated. The drafters of the bill were of the unanimous opinion that the lack of international law in this area should be highlighted by the inserting of the parenthetical phrase into sub-paragraph B. We are not requesting a subsidy -- a subsidy that is enjoyed by other industries in ocean activities. There are prior precedents relative to insurance of this type such as the Export-Import Bank and OPIC type insurance coverage. The subject of insurance in the deep ocean mining will not go away even under the international regime or the provisional regime as suggested by our State Department Seabeds Committee. Under the draft treaty which has been tabled by the United States in Geneva, Article 73 provides for political risk insurance of the same type that we are discussing under Section 10. The value of the minerals recovered and placed into the channels of world commerce will far exceed and over-weigh the worry about this insurance matter. Certainly there is sufficient expertise in this Government, both at the executive and legislative levels, to establish an insurance program that will be fair and equitable which respect to this matter. Again, I would like to emphasize that we are not asking for a subsidy and we are willing to pay the premiums, which in our opinion, will be commensurate with the risk involved. The United States population is now plus 200 million, approximately six percent (6%) of the world's population. However, we consume over one-third (1/3) of the world's mineral output. The Secretary of the Interior, in his Annual Report under the Mining and Minerals Policy Act of 1970, stated, "Among the world's developing nations, pressures for higher standards of living are increasing, the industrialization process is accelerating, and the search for mineral deposits is being intensified. It is contended that the land area available for prospecting and exploration is being reduced at the same time that the need for minerals is increasing. Withdrawals of public lands for the establishment of wilderness areas and parks, without adequate knowledge as to their mineralization, are subject to criticism as limiting the possible discovery of new mineral deposits within the United States.... "United States primary demand for minerals in the year 2000 is projected to rise $117 billion (at 1970 prices). At the same time, if the trend of the past twenty-year period, 1950-1970, continues, United States primary production of minerals in 2000 would be $53 billion, a deficit of $64 billion. Other witnesses have spoken to the $600 million deficit of the balance of payments involved specifically with the importation of the metals contained in manganese nodules. If S.1134 becomes law, U.S. industry will start immediate efforts to convert to manganese nodule, which is now only a mineral curiosity, into material which will flow through the channels of world commerce and aid the United States in reducing its deficit balance of payments. "Industry and government at all levels must work together to assure a continued and expanding flow of mineral raw materials at reasonable cost from dependable sources. "It is mandatory, therefore, as a matter of urgency, that policies be established and programs formulated and undertaken, to create the social and economic environment necessary to foster optimum development of our mineral resources within prudent environmental constraints - to meet projected future mineral and energy requirements." This states the Secretary of the Interior. Mr. Chairman, in our opinion S. 1134 satisfies the majority of the requests of the Secretary to help meet the projected future mineral requirements and could be one of the "forward-looking" pieces of legislation called for by the Secretary of the Interior to be enacted by the Congress. The American Mining Congress strongly supports this legislation and urges its prompt enactment. Thank you. This will reply to your letter of March 8, 1972, to the American Mining Congress seeking written replies to four questions relating to your consideration of S. 2801, the bill which the American Mining Congress is supporting to promote and assist the initiation of deep seabed mining by American companies. (An identical bill has been introduced in the House as H.R. 13904.) We surmise from the nature of these questions that your concerns are more with the timeliness of S. 2801 than they are with the merits of the bill itself or with the desirableness of the development of new sources of important raw materials for the American economy and of the application of American technology to the problems of exploiting the resources of the ocean. We note your concern "of the possible implications which legislation of the type proposed could have for the international negotiations at the 1973 Law of the Sea Conference and the broad spectrum of rights and freedoms which the United States presently enjoys with respect to the high seas." On our part, we believe that these implications are more likely to be positive than negative--that is to facilitate eventual international agreement rather than to retard it. We do not see that S. 2801 in any way threatens the broad spectrum of rights and freedoms which the United States presently enjoys with respect to the high seas. There are those who counsel that S. 2801 will lead to actions by other countries (particularly the "Less Developed Countries") toward seeking moratoriums and other measures which are inimical to U. S. interests. I cannot point out too strongly that the LDC's supported moratoriums, international operating agencies, control of markets, "creeping jurisdiction," ad infinitum long before W. A. MARTING 1. J. RANDALL J. ALLEN OVERTON, JR. HENRY 1. DWORSHAK DIRECTORS HERBERT C. JACKSON, Cleveland RAYMOND & SALVATI, Ft. Lauderdale, Pla. CLYDE E. WEED, Phoeniz CRIS DOBBINS, Denver KENNETH C. KELLAR, Lood, S.D. CLAUDE O. STEPHENS, New York ROBERT H. ALLEN, Houston Mr. Robert M. White April 12, 1972 Page 2 S. 2801 was introduced. One need only look at the record of the U. N. meetings in 1970 and in 1971 to substantiate this. In fact, S. 2801 utilizes and affirms these rights. Furthermore, S. 2801 embodies the principles enunciated by President Nixon on May 23, 1970-particularly the implementation of the policy where he stated, "I do not, however, 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." He goes on and says, "Accordingly, I call on other nations to join the United States in an interim policy." It is a temptation to discuss these questions of the President's Policy and of the proposed 1973 Law of The Sea Conference in further detail, but we merely wished to make the point that S. 2801 is not out of tune with the basic policy enunciated by President Nixon and does not appear to us to have adverse implications for international agreement. On the other hand, our fundamental concern is with the strengthening of American industry, the maintenance of the American technological lead whence in large part stems our basic economic strength, and the development of new sources of raw materials. We know that you share this concern with us and that the Department of Commerce plays a primary and historic role within the Government in the creation of a climate conducive to achieving such ends. We assume that you will play a similar role with respect to exploiting the resources of the ocean. We solicit your help and hope that our answers to your questions will be useful. 1. What is the best estimate of when actual commercial Your first question is conditioned by the parenthetical clause "(assuming Government support for U. S. industry)." We are not entirely certain what this condition means since we always assume that there is, at least in broad terms, Government support for U. S. industry. We have assumed that it means the passage into law of S. 2801, which would provide necessary rights and security of investment and regulations which would not impose economic penalties on ocean mining. It is assumed that foreign companies would benefit by a similar climate established by their own governments. We have assumed that in the case of the United States there is no Government financial support or subsidy; in the case of foreign companies, we know that such support already exists. We have also assumed that commercial exploitation means the production and sale of refined metals and other materials (see definition in S. 2801). On this basis the time of exploitation would depend on successful completion of technological developments and on normal business conditions such as supply of capital and needs of the market place. If the pacing element were technology |