STATEMENT OF LUKE W. FINLAY, ON BEHALF OF AMERICAN PETROLEUM INSTITUTE Mr. Chairman, members of the committee, my name is Luke W. Finlay. I am an international lawyer specializing in matters of interest to the petroleum industry. Prior to my retirement in December of 1969, I was for many years a lawyer and executive of the Standard Oil Company (New Jersey). My appearance today is in my capacity as Chairman of the Ad Hoc Committee on Mineral Resources Beneath the Seas of the American Petroleum Institute and I am pleased to have this opportunity to appear before this Committee to express the views of the American Petroleum Institute on H.R. 13904, the Deep Seabed Hard Mineral Resources bill. Our position on this bill is predicated on the fact that the Outer Continental Shelf Lands Act already makes provision for the exploration and development of seabed and subsoil resources off our shores to the full seaward extent under international law of U.S. national jurisdiction and control over such resources (see Section 2(a) of P. L. 212, 83rd Congress). As the United States is a party to the 1958 Geneva Convention on the Continental Shelf, this means that the seaward extent of its jurisdiction, and hence the seaward extent of the application of the Outer Continental Shelf Lands Act, is determined by the terms of that convention. I am sure that this Committee is fully familiar with the many studies that have been made on this subject and I shall therefore content myself with standing on the conclusion reached by the Special Subcommittee on Outer Continental Shelf of the Senate Committee on Interior and Insular Affairs, after extensive hearings in 1969 and 1970, that coastal nation rights under the 1958 Geneva Convention on the Continental Shelf extend to the limit of exploitability at any given time with an ultimate limit of adjacency which would encompass the entire continental margin (see pages 15-17 of the Report by the Special Subcommittee on Outer Continental Shelf to the Committee on Interior and Insular Affairs, United States Senate, dated December 21, 1970 and entitled, "Outer Continental Shelf," printed as a Committee Print of the 91st Congress, 2nd Session). This is the same conclusion that was reached by both the American Petroleum Institute and the National Petroleum Council after their own intensive studies and we would hope that this Committee will find itself in agreement after its own consideration of the matter. I would be glad to provide the Committee with copies of the 1969 Report and 1971 Supplemental Report of the National Petroleum Council on "Petroleum Resources Under Ocean Floor," if they would be of help to the Committee. The petroleum industry and the hard mineral mining industry are in quite. different positions in that the most promising prospects for oil and gas for some years to come appear to be on the continental margins, whereas the most promising deposits of manganese nodules appear to be on the abyssal ocean floor well beyond the continental margins. Accordingly, the petroleum. industry has no near term need for legislation comparable to H.R. 13904, subject, of course, to the proviso that the seaward application of the Outer Continental Shelf Lands Act is interpreted in the manner that I have postulated. We are, none the less, in full accord with that portion of the President's Statement on U.S. Oceans Policy of May 23, 1970 in which he expressed the belief that it is neither necessary nor desirable to try to halt exploration and exploitation of the seabeds beyond a depth of 200 meters during the negotiation of an international seabed treaty and called on other nations to join the United States in an interim policy to govern permits issued beyond this depth during the negotiating period. We therefore give our full support to the basic purpose of H.R. 13904 of providing such legislative assistance as is presently feasible to a branch of the American minerals industry that we understand is on the threshold of commercial operations beyond the limits of national jurisdiction. At the same time, as the definition of "hard mineral" in Section 2(d) of the bill appropriately precludes the application of the provisions of the bill to oil and natural gas, we feel that we should confine our remarks on the specific language of the bill to those provisions that could have a possible future impact on petroleum operations. As we see it, there are three such provisions, which I shall discuss in sequence. In the first place, we feel that it would be both appropriate and desirable for Congress to express a legislative view as to the correct interpretation of an international convention when that interpretation is critical to the interpretation of a legislative enactment, as would be the case in the present instance. It is therefore our first recommendation that the semicolon at the end of Section 2(b) of H.R. 13904 be changed to a period and that the following language be added: "In the absence of binding international determination of a contrary application of the foregoing Convention, this Act shall not be construed to apply to any part of the continental margin of the United States or any foreign state;". As I have previously mentioned, the primary focus of the hard mineral mining industry is on the manganese nodules of the abyssal ocean floor, with the result that this amendment should create no complications whatever from the standpoint of that industry. At the same time, it would be of distinct advantage to the petroleum industry in precluding the possibility of application of H.R. 13904, after its enactment into law, to areas that we believe should be governed by the Outer Continental Shelf Lands Act. Our second recommendation relates to Section 8(a) of the bill, which provides that a licensee must relinquish 75% of any block licensed under the Act within 10 years of the date of the license and not later than the start of commercial recovery. I understand that this is acceptable to the hard mineral mining industry for the reason that after operators in that industry have made a mineral discovery they must engage in extensive testing to outline the extent of the mineral deposit and develop a mining method for that particular deposit before the commencement of commercial recovery can be justified from an economic standpoint. Contrariwise, a single oil well can be of such magnitude as to justify the initiation of commercial production of oil before there has been any possibility of development drilling to evaluate the balance of the block on which the discovery is made. The Outer Continental Shelf Lands Act imposes no requirements whatever for surrender of leased acreage as long as commercial production is continued. As for foreign leases and concessions, which are generally for far larger areas than those prescribed under the Outer Continental Shelf Lands Act, the 1971 Supplemental Report of the National Petroleum Council on "Petroleum Resources Under the Ocean Floor," in speaking of a 75% relinquishment requirement for deep seabed operatons that was proposed by the Administration in an August 3, 1970 working paper submitted to the United Nations Committee on the Peaceful Uses of the Seabed, points out (at p. 28) that: "This is foreign to the usual relinquishment obligations calling for giving up, e.g., 25 percent after 5 years; a second 25 percent after 10 years; and a third 25 percent at a later date with an ultimate retention of 25 percent of the original area for the balance of a 20- or 30-year term. A related problem of this requirement is that oil may be found in one part of the block before exploration of the remainder is complete. Arbitrarily to force relinquishment as soon as a relatively modest quantity has been produced is inconsistent with customary practice and would deter interest in areas subject to such a provision." We anticipate that it will only be a matter of time before there will be an active petroleum industry interest in exploration and development of petroleum resources beyond the limits of national jurisdiction and we therefore think it would be most unfortunate if the 75% relinquishment requirement of Section 8(a) were to become a precedent for other branches of the mineral industry not now covered by the provisions of H.R. 13904. To avoid this possibility, we request that the Committee make it clear from the outset that it is not the intent of Congress that this should become the case. An appropriate way to accomplish this would be to redesignate Section 3 of the bill as Section 3(a) and to add a new Section 3(b) as follows: "(b) The provisions of this Act have been designed with a specific view to the needs for hard mineral development in the deep seabed and have been so limited because of the absence of evidence of a present need for legislation governing the development of other deep seabed minerals. Accordingly, the provisions of this Act shall not be construed as a precedent either for or against future legislation applicable to the development of other deep seabed minerals. Instead, the needs for such development shall be considered on their own legislative merits when the occasion arises." We request that H.R. 13904 be amended in this manner. Our third and final recommendation is also based on the view that the time will come when the petroleum industry is engaged in active operations beyond the limits of national jurisdiction. We therefore wish to be assured of the benefit of the Secretary of the Interior's authority under Section 4 (c) to prescribe as conditions for every license issued pursuant to the Act requirements to prevent unreasonable interference with "other ocean uses." To eliminate any possible doubt as to whether petroleum activities on the seabed would come within the ambit of "other ocean uses," we request that this phrase be expanded to read "other ocean and seabed uses" by the insertion of the words "and seabed" after the words "other ocean" at the end of line 18 of page 5 of the Committee Print of H.R. 13904. Mr. Chairman, may I express my gratitude for the opportunity to make this presentation on behalf of the American Petroleum Institute. CENTER OF CONCERN-Focus: TOWARD A WORLD THAT IS HUMAN, Hon. THOMAS N. DOWNING, Washington, D.C., April 11, 1973. Chairman, Subcommittee on Oceanography, Committee on Merchant Marine and Fisheries, Longworth House Office Building, Washington, D.C. DEAR CONGRESSMAN DOWNING: Thank you for your letter of April 9 inviting the Center of Concern to submit testimony for the record on H.R. 9, the "Deep Seabed Hard Mineral Resources Act," now pending before the Subcommittee on Oceanography. The first paragraphs of the testimony contain, as you suggest, a description of the Center of Concern and the authorization of the individual submitting the statement to do so on behalf of the staff of the Center. Sincerely, Enclosure. WILLIAM F. RYAN, S.J., Program Director. TESTIMONY ON BEHALF OF THE STAFF OF THE CENTER OF CONCERN The Center of Concern is an educational, non-profit, tax-exempt group established in 1971 to sensitize North Americans to issues of global justice and move them to effective action. It seeks to educate decision-makers, policy-formulators, and the general public in North America to an awareness of and respect for the rights and perspectives of people in other countries, particularly those of the developing world. Conferences, workshops, educational materials, and publications serve as vehicles in which Center staff examine the ethical dimensions of contemporary problems on a global scale. Because the uses of the deep seabeds involve many questions concerning the relationships between this country and other countries, both rich and poor, we are happy to accept the invitation of the Subcommittee on Oceanography to submit testimony for the record on the "Deep Seabed Hard Mineral Resources Act." This testimony was prepared by Ms. Mary Anne Mason, staff assistant for the Center of Concern, who is involved with research on the social justice dimensions of the uses of the seabeds. It is offered by Ms. Mason on behalf of the staff of the Center of Concern. OCEAN SPACE AND SOCIAL JUSTICE We consider that the issues surrounding the uses of the oceans and deep seabeds present the United States with an unprecedented opportunity to strengthen initiatives of the past few years that move us closer to genuine international understanding and global justice. More than any other issue facing the world community today, the law of the seas has the potential either to draw our world together or to widen the chasm between the rich nations and the poor nations. House Resolution 9 represents a unilateral action by the United States that will affect the mineral resources lying on the ocean floor in acknowledged international waters. With international negotiations proceeding at the present moment on the uses of the seas, the passage of House Resolution 9 will amount to a symbolic blow to hopes for international cooperation. By acting independently of international accords, the United States will slight the world community in general and the developing nations in particular. There are two basic principles of international understanding that are central to the concerns of the developing nations. These principles-major issues of social justice-involve the exploitation and usage of ocean resources. They are: (1) international ownership and; (2) equitable distribution of resources. We will discuss the effects of House Resolution 9 on the implementation of each of these principles. COMMON HERITAGE OR POWER PLAYGROUND? In 1967, Arvid Pardo, Ambassador of Malto to the United Nations, proposed that the seas and the deep seabeds be designated a unified, indivisible oceanspace constituting the "common heritage of mankind." This principle was accepted by the United Nations and was endorsed by the United States in its own draft United Nations Convention on the International Seabed Area, submitted in August of 1970. One important consequence of the principle of "common heritage" is that all nations should be party to any decisions affecting the future of that heritage. Policies of the United States government affecting the seas should therefore reflect responsibly our commitment to our common heritage. Should House Resolution 9 become law, however, the United States would be committed to a policy concerning ocean resources that disregards the rights of the world community in favor of short-term necessities of the American economy. It would mean a shocking repudiation of the position the United States has urged in its 1970 Draft Treaty. The developing nations in particular look to the sea as earth's last haven that is still substantially unscarred by the power politics of narrow national interest. Denis Goulet, author of the perceptive study of development The Cruel Choice (1971) has explained that open participation in the decision-making which affects the process of development is more important than any short-term change in economic growth or social institutions. Social justice requires that the debate concerning the exploitation of mineral resources of the seabeds be sensitive to the global range of economic and cultural needs, and that the decision-making be open to the influence of the developing nations. House Resolution 9 would undercut this goal. More specifically, House Resolution 9 would set the United States on a course that could have disastrous effects on the economies of many developing nations which rely heavily on the export of minerals. Chile is the world's largest exporter of copper; Angola, Gabon, Ghana, Ivory Coast, Morocco, South Africa, Zaire, Zambia, Brazil, and India account for more than half of the world's manganese production. Several of these nations are among the poorest nations in the world. But copper and manganese are two minerals which are found in abundance in the deep seabeds. If U.S. mining companies introduce new supplies of these minerals onto the world market without international controls, the economies of many of these developing countries would be seriously threatened, damaged, and/or destroyed. In fact, House Resolution 9 encourages U.S. mining interests to disregard the demands of international justice by providing that any future international regime must recognize and protect the rights of companies licensed by the United States. The thrust of House Resolution 9 thus implies that a national company's right to exploit its block of the seabed supercedes the right of the international community to protect the livelihood of its individual members. Surely this is a dangerous precedent for the United States to follow if we hope to act with justice in future negotiations concerning the seabeds. Rejection of House Resolution 9 would clarify the U.S. commitment to international protection of the "common heritage" of the sea. TECHNOLOGY AND RESOURCE SHARING The 1970 "common heritage" declaration by the United Nations contained a second very important principle: "equitable sharing by the states in the benefits derived [from the oceans], taking into particular consideration the interests and needs of the developing countries, whether land-locked or coastal." This principle emerges clearly as a social justice issue when we note the often-quoted statistic that the United States, representing 6% of the world's population, uses 40% of the world's annual resource production. We certainly cannot hope to foster a healthy world community with increasing interdependence as long as this situation continues. But it is not easy to narrow the gap between the rich and poor in the world community. One major difficulty to be faced is the impact of technology. Technological advances create their own pressure for industrial advancement and commercial enterprise. Clearly, this is the case with the bill now before this subcommittee. Mining companies in the United States and in several other industrialized nations are now capable of beginning the recovery of minerals from the deep seabeds. At first glance, there appears no reason why these companies should not be encouraged to go ahead and use the fruits of their knowledge. But we must take a second look. Technology creates difficult and subtle social justice issues that have never been fully faced by the industrialized nations. Viewed as property, technological knowledge operates effectively to exploit the resources and to control the markets of the world. The implications of this are painfully evident in the developing nations. In cases where advanced technology is utilized in a developing nation, it is generally controlled by a "multinational corporation"-headquartered in the industrialized world and responsible to foreign stockholders. But we must seriously ask ourselves whether individuals or corporations really "own" technological knowledge. Such knowledge is an outgrowth of the cultural, scientific, social and economic advances of the age. In fact, it is a "common heritage" itself. As such, it should by no means be used in a monopolistic, narrowly nationalistic fashion that perpetuates a grossly unjust distribution of resources. By rejecting House Resolution 9, this subcommittee can curb the irresponsible trend by which private industry utilizes its technological capability regardless of the cost to the future of humanity. SOME ALTERNATE RECOMMENDATIONS The Subcommittee on Oceanography of the Committee on Merchant Marine and Fisheries has a significant opportunity to use creatively the rejection of House Resolution 9. This rejection can serve as an opening for some new thinking and positive steps on the part of the United States vis-a-vis the developing nations. First, the Subcommittee should recommend that the United States decline any unilateral action that would encroach on the common heritage of the seas. Second, the Subcommittee should urge the United States government to work seriously within the structure of the United Nations Conference on the Seabeds to reach agreements suitable to the entire international community. Third, the Subcommittee should recommend that the United States take steps to discourage the prevailing "technological might makes right" approach to the world's resources. Instead, the United States and corporations under its jurisdiction should begin the process of genuine sharing of technological knowledge with the developing nations. Fourth, in order for this sharing to be accomplished in a just fashion, the Subcommittee should urge that exploitation of the oceans be carried on through a joint international commission that will utilize the technological advancements of our age for the advantage of all peoples, rich and poor. We return to our opening remarks. Passage of House Resolution 9 would offer a symbolic and also very real blow to the hopes for international cooperation over the seabeds. But rejection of this bill, and encouragement of more equitable approaches to the issues of international ownership and distribution of resources, will enable the United States effectively to promote international understanding and global justice. |