The American Mining Congress is a trade association composed of U.S. companies that produce most of the nation's metals, coal and industrial and agricultural minerals. It also represents more than 220 companies that manufacture mining and mineral processing equipment and supplies, and commercial banks and other institutions serving the mining industry and the financial community.

We appreciate the opportunity afforded to us to submit our comments on the subject of U. S. policy concerning the recovery of mineral resources from the Continental Margin and the Deep Seabed.

We would like to emphasize that in our comments we are addressing ourselves only to the "hard minerals" area of the mining industry.

After considerable discussion this Committee agreed to accept the basic concept of the statement of President Nixon on the U. S. oceans policy. We would like to emphasize that portion relating to an "interim policy." We feel it is most important that early attention be given to the problem of interim arrangements. This problem was anticipated in the President's May 23, 1970 statement. He said, "I do not believe it is either necessary or desirable to try to halt exploration and exploitation of the seabeds beyond the depth of 200 meters during the negotiation process..." which is necessary to establish an international treaty. The President called on other nations to "join the United States in an interim policy." He suggested "that all permits for exploration and exploitation of the seabed 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."

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Existing legal arrangements do not satisfy the policy proposed in the President's statement, nor do they meet industry's needs in the face of a rapidly developing technology that is making possible the practical exploitation of the ocean's depths beyond 200 meters in the near future. The most serious needs are to establish the secure investment climate for the commitment of substantial funds to ocean mining and to provide for security of tenure beyond the limitation of national jurisdiction.

The necessary legal arrangements to operate in the area extending to the seaward limit of the Continental Shelf as defined in the 1958 Geneva Convention are basically provided for by existing legislation in the form of the Submerged Lands Act and the Outer Continental Shelf Lands Act. The 1958 Geneva Convention provided:

ARTICLE 1

For the purpose of these articles, the term "continental shelf" is used as referring (a) to the seabed and subsoil of the submarine areas adjacent to the coast, but outside the area of the territorial sea, 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 area; (b) to the seabed and subsoil of similar submarine areas adjacent to the coasts of islands. (Emphasis by writer)

ARTICLE 2

1. The coastal State exercises over the continental shelf sovereign rights for the purpose of exploring it and exploiting its natural resources.

2.

The rights referred to in paragraph 1 of this article
are exclusive in the sense that if the coastal State
does not explore the continental shelf or exploit its
natural resources, no one may undertake these activities,
or make a claim to the continental shelf, without the
express consent of the coastal State.

3. The rights of the coastal State over the continental shelf do not depend on occupation, effective or national, or on any express proclamation.

4. The natural resources referred to in these articles
consist of the mineral and other non-living resources
of the seabed and subsoil together with living
organisms belonging to sedentary species, that is
to say, organisms which, at the harvestable stage,
either are immobile on or under the seabed or are
unable to move except in constant physical contact
with the seabed or the subsoil.

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ARTICLE 3

The rights of the coastal State over the continental
shelf do not affect the legal status of the superjacent
waters as high seas, or that of the air space above those
waters.

However, this present legislation has not encouraged "hard rock minerals" exploration and exploitation on the Continental Shelf.

In order to provide the necessary encouragement, domestic legislation in the form of an amendment to the Outer Continental Shelf Lands Act is required to permit free, non-exclusive prospecti ng without prior authorization and subsequent disclosures of information obtained from such prospecting. An amendment of this nature would encourage pioneering efforts to develop "hard minerals" on the Continental Shelf.

The amendment to the Act should further provide the right to obtain exclusive authorizations to explore and exploit a specific area on a "first-in-time, first-in-right" basis. Further, the amendment should provide that the terms and conditions of all authorizations granted prior to the ratification of the proposed draft treaty continue in full force and effect so long as said authorizations exist and not subject to the imposition of ex post facto regulations which could be imposed by some future international treaty.

The American Mining Congress Declaration of Policy on undersea mineral resources have stated in part:

"More precise international arrangements and new legal concepts
are needed at the earliest possible time in order to provide
the secure investment climate necessary for the development
of deep ocean mining. Until such international arrangements
are achieved, we recommend that the United States cooperate
with other nations in establishing a pattern of rules and
practices to be observed by common accord, to form the basis
for a formal agreement to assure freedom of development in
the deep ocean and security of tenure to those engaged in
mining on and under the ocean floor.

"The mining industry endorses continued direct consultation
between its representatives and the Congress and the Executive
Branch, and urges that these recommendations be taken into
full account in the development and implementation of U.S.
policy in this area which was the subject of a statement
by the President of the United States in May 1970."

Thus, in the area beyond national jurisdiction we believe it is essentiel to establish interim arrangements whereby operators may actively prospect, explore and exploit for marine minerals. In order to provide the necessary incentive for this activity prior to the establishment of an international agreement, Congress should enact legislation to assure security of investment

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and the control of the ocean activities of U.S. citizens. This suggested
legislation would protect the ocean miner against the largest financial
risk he would face during the interim pericd namely, interference
from others and lack of security of tenure.

The control of the ocean activities of U.S. citizens would provide tangible benefits in providing at least internal control in the deep ocean area. More importantly, it might establish a customary pattern of rules and practices that could be the basis for agreement with likeminded nations.

The draft treaty represents a tangible step in the direction of providing "the more precise international arrangements" mentioned in the American Mining Congress Declaration of Policy. We applaud this attempt to progress in the establishment of more precise international arrangements in the seabed area beyond national jurisdiction. The United States Government is, I think, to be commended for taking this initiative. Many worthwhile concepts have been included in this draft treaty and some needs of industry have been considered. However, we also believe that modifications must be made in the draft treaty as presently constituted to achieve the requisite incentive for industry to step up its efforts in the recovery of seabed resources. Apart from our specific suggestions for various provisions of the draft, we believe that Article 73 of the draft poses sericus uncertainties for those in the mining industry who may wish to carry on operations in Continental Shelf areas beyond the 200-meter depth. These Continental Shelf areas may now be subject to national jurisdiction and, in the case of the U. S. Shelf, may be the subject of rights granted under the Outer Continental Shelf Lands Act and possible future domestic legislation.

Under Article 73 all exploration and exploitation permits authorized by a Contracting Party in the area beyond 200 meters after July 1, 1970, must be converted into new licenses under the authority of the International Seabeds Authority established by the draft treaty within five years after the treaty is enforced. At the moment, no one knows what license provisions will ultimately be included in the final text of this treaty. Clearly, therefore, the approach taken by Article 73 creates serious uncertainties in the interim period and inevitably inhibits the incentive to search for and develop minerals. Moreover, this defect of Article 73 impairs the secure investment climate which is a prerequisite of the obtaining of investment-risk capital in the interim period.

We also object to the implication in Article 73 that nations may now be entitled to grant exclusive or other rights with respect to seabed areas which are beyond presently recognized limits of national jurisdiction, which will be recognized by the treaty as an exclusive right under the treaty. Accordingly, any such implication is clearly undesirable in principle and to the extent that it may give other nations a prior position in seeking licenses under the treaty with respect to areas of the seabed now beyond national jurisdiction. We would encourage the U.S.Government to grant these rights to its nationals and the rights would be exclusive with respect to only other U. S. nationals or non-nationals operating under the U. S. laws.

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Provisions must be made with respect to operations undertaken in the area beyond national jurisdiction to recognize them under this treaty without imposing on an operator ex post facto requirements.

Consideration has been given to the principal provisions which should be incorporated in domestic legislation in order to encourage the orderly exploration and exploitation of the seabed resources in accordance with the above principals. The principals are discussed in the preliminary statement of such principal provisions and are attached as "Exhibit A."

You have requested us to comment on the draft treaty "Article by Article." We do not feel that we have the experience or expertise to present a meaningful discussion on all subjects covered by the draft treaty. We will not comment on each specific item in the draft treaty, but we would like to highlight the following:

The draft treaty proposes the establishment of an International Seabed Authority that appears to be unnecessarily elaborate. It is feared that this type of organization will encumber the exploration and exploitation of marine mineral resources through administrative red tape and the imposition of financial burdens. Simplicity and efficiency without unnecessary expense should be the prime goal of any seabed authority that is established.

In prior conferences with the Departments of State, Interior, Commerce and at hearings before Congress, we have indicated our position with respect to large unwieldy international agencies. Many of the functions of the proposed Seabed Authority could be handled by existing authorities and agencies.

CHAPTER I BASIC PRINCIPLES

ARTICLE 10

Consideration should be given to restricting eligible licenses to natural or juridical persons, and to restricting the application of sovereign immunity in the resolution of disputes between operators, one of which is a sovereign government.

It is not realistic to assume that Contracting Parties will accept responsibilities for damages caused by "activities it authorizes or sponsors to any other Contracting Party or its nationals."