coast but outside the area of the territorial sea, to a depth of 200 metres, or, beyond that limit, to where the depth of the superjacent waters admits of the exploitation of the natural resources of the said areas; (b) to the seabed and subsoil of similar submarine areas adjacent to the coasts of islands. 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 notional, 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. 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. REMARKS BY T. S. ARY, MARINE TECHNICAL MEETING, WASHINGTON, D.C. We appreciate very much the opportunity to be here. The statements I make are not my own; they represent the efforts of the American Mining Congress Marine Mineral Committee. We have handed our report to the Interior Department. It would probably be available by contacting Charlie Burns at American mining Congress at the Ring Building. We would like to emphasize that in our comments we are addressing ourselves only to the hard minerals industry. From time to time I'm sure I'll overlap into the oil and gas, but if I do I'm sorry. Our committee spent a considerable amount of time, before we started writing our report for the Interior Department, trying to decide whether to accept the statement by the President as policy, and to decide how can we operate within the framework of that statement or should we take the President on and tell him his policy is wrong. We decided that in order to try to make some sense out of the draft treaty and out of the problem that we're in, we would accept his statement as policy and go from there. The American Mining Congress declaration of policy on undersea minerals in part states, "More precise international arrangements and new legal concepts are needed at the earliest possible time in order to provide the secure investment climate which is necessary for the development of the 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 which would form the basis of a formal agreement to insure freedom of development in the deep ocean and the security of tenure to those engaged in mining from under the deep ocean. "The mining industry endorses continued direct consultation between its representatives in Congress and the Executive Branch and urges that these recommendations be taken into full account in the development and implementation of the US policy in this area." The draft treaty represents a tangible step in the direction of providing "the more precise international arrangements" mentioned in our declaration of policy. We applaud this attempt to progress in the establishment of more precise international arrangements in the sea bed area beyond national jurisdiction. We feel that the United States Government is to be commended for taking the initiative and many worthwhile concepts have been included in this draft treaty and only some of the 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 requisites and incentives for industry to step up its efforts in the recovery of sea bed resources. Apart from our specific suggestions for various provisions of the draft, we believe that Article 73 of the draft poses serious uncertainties for those in the mining industry who may wish to carry operations in the continental shelf area beyond the 200 meter limit. The continental shelf areas may now be subject to national jurisdiction and the case of the US shelf may be subject to the rights granted under the Outer Continental Shelf Lands Act and possible future domestic legislation. Under Article 73 all exploration and exploitation 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 sea bed authority, which will be established by the draft treaty within 5 years after the treaty is in force. At the moment no one knows what license provisions will ultimately be included in the final text of the treaty. Clearly therefore the approach taken by Article 73 creates serious uncertainties in the interim period, and invariably 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 the investment risk capital in the interim period. We also object to the implication in Article 73 that nations may not be entitled to grant exclusive or other rights with respect to sea bed areas which are beyond presently recognized limits of national jurisdiction, which might be recognized by the treaty as an exclusive right under the treaty. Accordingly any such implication is clearly undesirable in principle to the extent that it may give other nations a prior position in seeking licenses under the treaty with respect of the areas of the sea bed now beyond national jurisdiction. We would like to emphasize that portion of the President's statement regarding the interim policy and interim period. We feel it's most important that early attention be given to the problem of the interim arrangements. This problem was anticipated by the President. The President called on other nations to join the US in an interim policy. He suggested that all permits for exploration 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. Existing legal arrangements, however, are not satisfactory for the policy proposed in the President's statement, nor do they meet the industry's needs in the face of a rapidly developing technology that is making possible the practical exploitation of the ocean depths beyond 200 meters. The most serious needs are to establish the secure investment climate for the commitment of substantial sums to ocean mining and to provide for security of tenure beyond the limits of national jurisdiction. 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 prospecting without prior authorization and subsequent disclosure of information obtained from such prospecting. An amendment of this nature would encourage pioneering efforts to develop "hard rock" minerals on the continental shelf. The amendment to the Act should further provide the right to obtain exclusive authorization 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 are not subject to the imposition of ex post facto regulations which could be imposed by some future international treaty. Thus in the area beyond national jurisdiction we believe it is essential 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 agree-ment, Congress should enact legislation to assure the security of investment and the control of the ocean activities of US citizens. I'll take the liberty of breaking into this and giving you our thinking behind this matter. We felt that at this time in order to secure the investment and control of the ocean, the US could pass interim legislation which would control US nationals with respect to other US nationals. The mineral industry is ready to go out in the ocean if we can have some type of protection against our own people. We are not asking the US to go out into the world now and establish something immediately with other nations. The suggested legislation would protect the ocean miner against the largest financial risk he would face during the interim period, namely, interferences from others and lack of security of tenure. The control of the oceans activities of US citizens would provide tangible benefits in providing at least internal control in the deep ocean areas. More importantly it might establish a customary pattern of rules and practices that could be the basis of agreement with like-minded nations. In referring directly to the draft treaty, we feel that it proposes the establishment of an international sea bed authority that appears to be unnecessarily elaborate. It is feared that this type of organization will encumber the exploration and exploitation of 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 sea bed authority that is established. In prior conferences with the Department of State, Interior, Commerce and at hearings before Congress we have indicated our position with respect to the large unwieldy international agency. Contrary to the implications of Mr. Oxman this morning in his statement regarding the strong administration position that is required and the nature of administration and requirement of a mining code, many of the functions that are contained in the draft treaty are not necessary and can be handled by existing authorities and agencies. We feel that there should be no over-lapping if possible. The sea bed authority as proposed is unnecessarily elaborate. It will through its size alone restrict and encumber the development of marine mineral resources. It does not have to take the position of being all things to all people. There is, for example, no need for the sea bed authority to be a marine parks administrator and educator for the world in marine studies. It should, however, wherever possible utilize existing facilities. Simplicity and efficiency without unnecessary expense should be the prime goal. Most of the information that is required under Article 75 relative to divulging information we feel is really unnecessary. We feel that the only items that should be necessary to submit to the authority are those items that will help determine what payments are to be made to the contracting authority and the requirements under the environmental control provision. We feel that if you have to supply the authority with information relative to your processes, your technique and materials that you place yourself in a disadvantageous position. The provisions of Appendix A of the draft treaty impose excessive economic burdens upon the prospective operator. We recognize the two tier system for satisfying the economic obligations of the operator with his respective contracting party. Each contracting party in turn will be individually responsible directly to the sea bed authority for satisfaction of the sea bed authority requirements. Under this two tier system each nation may tailor its ocean policies according to its own national interests and needs. If it is contemplated that the Outer Continental Shelf Lands Act is to be extended to cover the trusteeship zone, we recommend an amendment providing for the acquisition of hard mineral authorization on the continental shelf on a royalty-free, first-intime, first-in-right basis. Further, all activities under the direction of the above legislation or amendments thereto should be considered for all tax, tariff, import and export depletion and depreciation purposes as domestic production. Careful consideration should be given to prevent the acquisition of large contiguous blocks of the sea bed which may be controlled or operated by one nation or a group of nations acting together. A limitation on acquisition of large blocks of the sea bed would aid in the assurance to all contracting parties that there will not be a great land rush to acquire rights within the deep ocean floor. The treaty should not lend encouragement to those who may be mainly interested in control of mineral reserves or speculative or for international political reasons. The intent of the draft treaty is to provide a regime which will encourage the development of the marine mineral resources. The regime should discourage speculation or speculators from acquiring authorization for resale or assignment. In order to achieve this purpose, we recommend that the front-end payments be abolished but that the work requirements be substantially increased. The maximum work requirement should be in the range of a half million to one million dollars per year for each block or portion of a block during the pre-production period. The time limit for relinquishment of the block in the 5-1B and 5-1C minerals (hard minerals and manganese nodules) should be substantially shortened to, say, 4 years instead of the 15 years now permitted under the draft treaty. In this manner industry will be able to put the money in the ground and more rapidly develop their resources. We find that provisions No. 10 and 11 of the Appendix pertaining to the payments on production and a graduation of payments according to environment and other factors unworkable as applied to operators sponsored or authorized by governments with very different economic systems, taxing and accounting concepts. We recommend that these paragraphs be rewritten based upon a system under which the sponsoring or authorizing party makes payments to the authority based upon units of an area under license or units of production or other basis, uniform for and agreeable to all sponsoring parties. Sponsoring parties may desire to make sure that the operators they sponsor or authorize do not have to pay more than they would if they operated on the land. Owing to the novelty and uncertainties to encourage venture capital, the US might well wish to legislate a tax holiday for all American operators on the deep ocean bed in the first five years of all production. The tax payable by the operator should in any case be measured by the economic success of the venture. In view of the extra hazards and the interest in encouraging venture capital, the rate might well be less than on profits from proven land based ventures. Yet the US and other developed countries in view of the total international benefits which might be derived from such a treaty might be prepared to contribute to the authority amounts in excess of its collection to be made available to aid developing countries; with the prospect of receiving assured amounts the developing countries might become enthusiastic supporters of a satisfactory international deep sea regime. They might also see the advantages to them of a simple organizational structure with low administrative expenditures. We should suggest that the draft treaty paragraphs under discussion be revamped to provide for payments by the sponsoring or authorizing parties and in turn the sponsoring and authorizing parties would determine those payments or taxes to be assessed against the operator. In closing I would like to say the mineral industry does not understand why all of a sudden the US Government would like to use them as a lever in order to negotiate items which they have been unable to negotiate for themselves. We feel that we're putting up the risk capital, we're going to put new materials into the world market and we should be able to negotiate our own deals. We are not against taking a hard line, going out and getting together with other developed nations, making parallel declarations among ourselves if the Justice Department will allow us to. So we feel the US should take a hard line. They should go out and, if necessary, make parallel declarations with other developed nations so that we will be able to start working in the deep ocean arena. By obtaining parallel declarations we may be able to expedite any conference on the law of the sea and get some real workable rules and regulations enacted. [From the New York Times] SEVERE SHORTAGE OF ORES IS FEARED REPORT BY GEOLOGICAL SURVEY WARNS AGAINST WASTE AND By Harold M. Schmeck, Jr. [Special to The New York Times] Washington, May 8-The ravenous American appetite for minerals will lead to severe shortages in the next few decades unless the nation stops wasting resources and starts employing better ways of finding and exploiting low-grade ores, according to a report from the United States Geological Survey. The 722-page document, released today, is the first overall assessment of United States mineral use and resources in 21 years. The report covers everything from abrasives to zirconium, including coal, oil, natural gas and all the industrially important metals. The survey noted that these were the things on which civilization lived, not only in the United States, but throughout the world. "The real extent of our dependence on mineral resources places in jeopardy not merely affluence, but world civilization," said the editors of the volume. AMERICAN MINING CONGRESS, Hon. LEE METCALF, DEAR MR. CHAIRMAN: The enclosed are the answers to the written questions you provided to the American Mining Congress witnesses at the May 17 hearing on S. 1134. As you know, there was more than one list of questions, and we have attempted to combine those questions which were identical or very similar, and also to combine our replies. On behalf of the American Mining Congress, I wish to express our appreciation for the opportunity to appear and present testimony on this important legislation. If, during the course of hearings on S. 1134, other questions arise, we would be only too happy to respond to those questions to the best of our ability. Again, thank you, and best regards. T. S. ABY, Chairman, AMC Committee on Undersea Mineral Resources. Question 1. What is the state of the art of mining these manganese nodules on the deep seabed? What methods of recovery have proved superior? Can you give us a rundown on the companies pursuing deep seabed mining? How many are there, what size, how advanced is their technology? Mining of the manganese nodules on the deep seabed is within the state of the art today. Basic science and engineering knowledge is adequate to the task and no new fundamental discoveries are required to be made. The task to be accomplished is the development of specific equipment items required for mining. It is this task in which the companies pursuing deep seabed mining are now engaged. These companies are, of course, also carrying out exploration to locate and characterize specific manganese nodule deposits and are engaged in the development of metallurgical processes for winning specific metals from specific kinds of nodules. Examination of the state of the art of mining nodules can be best done from the vantage point of examining the basic elements of any mining system for nodules. These elements consist functionally of a bottom mining unit which gathers the nodules at the seabed and accomplishes their basic separation from the mud of the bottom, a lift system which transports the nodules from the seabed to the ocean surface, a surface platform which supports and controls the mining system and provides power, and a transport system to carry the nodules to an on-shore processing plant. It should be noted that the bulk of the costs are associated with the latter two items; namely, the transport system and the surface platform. Ocean transport systems are completely developed and are entirely adequate to the transport of nodules. Thus, this part of the problem is solved and the only thing required is to design and order the specific ships. There is a problem of transfer of nodules at sea from mining vessel to transport vessel. However, the most promising mining sites are in an ocean area with good weather and the basic techniques for these operations are in hand. Surface platforms, which can be ships or semi-submersibles, have been highly developed for and tested in petroleum operations. The technology is thus very well proven out and available for us. It is noted that a large scientific ship, the Glomar Challenger, has been drilling holes in the bottom of the ocean in all the world's oceans in water depths up to 20,000 feet. This ship has operated |