2004 when this committee passioned out the ratification, i believe 16-0, unanimous, and we looked at it. at that time and still today, i'm a member of the, senior member of both the armed services committee and the environment and -- so we had hearings and in these hearings we had witnesses that totally changed this around. so i really believe that's important and i appreciate the fact that you are going to be doing that. now, in the limited time that we have i'm going to quickly go over two items then i'll have a question for secretary panetta and for general dempsey. first of all, the -- i know you've talked about this in my absence before i came in, because i was watching part of it. if the u.s. approves the lauf the sea treaty and forced to transfer billions of dollars in royalties, generated from oil and gas production on the u.s. extended continental shelf to the u.n. international sea bed

authority for redistribution to the developing world, now i grant you that in terms of the eez, the exclusive economic zone, this treaty doesn't affect that, and that would be, that would be something we could continue to do, but outside the 200 nautical miling april lewes the ecs over which the u.s. currently enjoys total sovereignty and has for as long as i remember and thus has the right to exploit all of its natural resources. now, ard coulding -- so the problem isn't there. the problem is outside of the 200 nautical mile radius. we have appointed and i've read the work of the u.s. interagency extended continental shelf task force, and the, that the reef sources there may be -- talking about how to quantity fip the amount of money we would be losing, whether we say it's an arrangement or tax, i think it's a tax if it costs money, and they have said it would be

somewhere between billions and trillions of dollars that we would not have the in the united states and would be transferred to, in accordance with the u.n. international sea base authority. now, the way we arrive at this and the way to put this in context i would say between 12 and 18 % of royalties is about as much as they are going to allow and still continue to develop those resources. 7 so the united states would receive in that area, according to this task force, somewhere between 12.5 and 18.75% in royalties. now, the problem with this is, that under article 82, the law of the sea treaty, would require the u.s. to give up after a period of time between seven and 12 years about 7% of this. so if we take the conservative side of what the task force has said and say just $1 trillion,

$1 trillion would equate to $70 billion that would be royalties that would be paid to the isa as "pos opposed to the united states and of course go to the organization in kingston, jamaica for redistribution to the developing world. and this is the first time in history that an international organization, the u.n. in this case, would possess taxing authority over this country. now, i've heard the veto argument. discussed by one of the other members here. i think the secretary ritsch. it's really not too important to discuss that, because there are two entities that would make that determination. you have the council, the 36th-member council, the assembly, to make these decisions, but the point is, under article 160, it's going to cost us. well, let's see. yeah. under article 82, payments and contributions shall be made annually rp to all production at

a site after this period's time. what we're saying, it's going to be paid regardless of where you think it should go or where you think it is going to go. the second thing i want to kov herb is the environmental and, we in this, for the ten years now have rejected in both the house and the senate, but primarily the senate, because it started with the kyoto treaty, rejecting the cap and trade, the amount of a tax on the american people somewhere between $300 billion and $400 billion. we've rejected this over and over and over again. there may be at most 25 senators hoots would vote for a cap and trade bill now. so what they're attempting to do is to do what they couldn't do through legislation, under this treaty. under this treaty, any country could sue the united states in the international tribunal law of the sea, not in the united states courts, i might add. or take the u.s. before binding arbitration. i only say this, because this is already people are out there

planning their lawsuits and i would also quote from article 212, adoption "adopt laws and regulation to prevent, reduce and control pollution of the maritime environmental forum through the atmosphere applicable." what we're talking about there is what they would use as a basis for the lawsuit. under the treaty it says, "states are responsible for the fulfillment of the international obligations." well, we know what would happen. in fact, we have statements by lawyers, trial lawyers, around the country saying that they, one of them here is from william c.g. burns citing that the lawsuits would come forth. he named the united states as "the most logical state to bring access against given to us." now, with that, it's understandable by groups such as greenpeace and the natural resource defense counsel, environmental defense fund, all

have this as their top -- their priority. so let's get back to the $70 billion. the question i would have would be for secretary panetta, and for general dempsey. if we're talking about $70 billion, would it be better to have the $70 billion go to kingston, jamaica, to bail out some of the developing nations, or the following list. the ohio class ballistic missile submarines which they've been wanting. that's $3 billion. to maintain the navy's ship and aircraft and ground modernization program, $12 billion. eliminate the navy's gap by providing 240 f-35 fighters, that's $3 billion. eliminate the gap in the ford class carrier. $11 billion, and -- and, i say all five of these, meet the navy's request for six more e h

aegis ships. general dempsey, do you think it serves our national defense better to give that $70 billion to the isa in the kingston, jamaica or to benefit these programs? >> senator, i'm not to comment on the hypothetical use of are money we don't have. the budget supports the strategy we've developed. >> no. what i'm saying is, this is money i've documented pretty well, general dempsey, that would be there and would be lost to, through this process. now, i would just like to -- on these five issues. you're very familiar with all of them and know they've been kwechted. you know there is a gap. and my question, again, is, is that fulfilling those five gaps, in the best interests of our national defense, or sending the money to kingston, jamaica. >> senator, i will only comment that i support this convention on the law of the sea, because it enhances my ability to provide security in the maritime

domain. >> secretary panetta? >> i share, obviously, the chairman's viewpoint with regards why we consider this important, but i guess what i would ask you, senator, i know you've come up with the $70 million. >> it's billion. >> or billion. >> uh-huh. >> but what about the -- literally, the billions of dollars in economic benefit that would flow from these companies providing energy and being able to go at our sea -- and provide that part of the economic benefit? i mean, that's what you've got to focus on is that, yes, sure, there may be $70 billion paid in royalties, but what about the economic benefit that these companies would -- >> economic -- answer your question, mr. secretary, would be coming from companies that are already in this area, is the controversial area that i described. i think in a very exact way. so if been doing it before with

bilateral treaties with china. bilateral treaties with russia, we can continue do it and no loss there. the loss would be $70 billion affecting our national security and i'm looking forward, mr. chairman, to the hearing where we have those in opposition. >> well, we'll have it, i promised you that, and we'll have plenty of people here to do that, but let me 1yu69 say to you, senator, with all due respect, there is no way to contemplate what you've just contemplated in terms of a nush. first of all, there is no drilling in the extended shelf. the royalties only come from extended shelf. they only come after a certain period of time and they are in a range of 1% up to the high end, depending on how much you extract, and there's no way to tell today how much is going to be extracted. >> the task force has come up with a fig around i'm using. >> i understand that. we'll examine the premise of it and the nature of the task force and the interests of the task forces and all of those kinds of things. we'll look at all of that, but

the fundamental premise here still remains this -- ronald reagan renegotiated this with the oil companies and gas companies at the table. and they signed on to these royalties. which are far less than the royalties that they pay today to us. in the gulf of mexico or elsewhere. and they pay them into an international entity that we will have a veto over as to where our how it may be spent. >> and ronald reagan opposed this in this last effort, as you well know. >> senator, i think what's important here is, well we'll hear from george shultz and some of these people, but what's important is to recognize, i mean, you're here on protecting companies from paying a royalty that they want to pay. you're here protecting companies from being able to drill where they can't drill without this. so they'd rather have 93% of something than 0% of nothing. >> but they currently are producing and currently able to

dollful through bilateral treaties. this is going to be a subject -- >> we're going to go through this. they can't do it, because there is no bilateral treaty that can apply to the extended shelf. it is only up through the international rules that come through the law of the sea that you can do that. so unless you have this in place, no company is going to drill. and you will sit here and say, why are we importing it from other places? why are we buying it from other countries and not drilling it ourself? we're going to have this thoroughly vetted. of course, the next two months this will be coming out of everybody's ears, people will are tired of it and they'll understand it. we'll look at every aspect of it, i promise you. those companies will come in here and themselves tell you why they're not prepared to invest millions of dollars and put it at risk would you put the certainty of the claims that comes through this treaty's so we look forward to that debate. senator shaheen? >> thank you, mr. chairman.

and thank you for holding this hearing. you and ranking member lugar. and thank you all for being here. general dempsey, and in an atlantic council forum earlier kniss month you said the consequence "gives us at framework to counter excessive claims by states seeking to illegally restrict movement of vessels and aircraft." i wonder if you can elabor ate a little on that and tell me before we've seen these excessive claims and how do they affect our ability to move around in our seas? >> if i could, senator, if we were here 20 years ago we would be involved in predicting that growing world population, the rise of regional powers like china and india, would place extraordinarily challenging demands foe roar sourcefor reso.

here we are 20 years later, and it's playing out. so the reason i'm supportive of the convention on law of the sea, sb that it provides clarity on the definition of maritime zones. it provides clarity on navigational rights, and from that clampty comes stability, and as we now begin to rebalance our security interests into the pacific, this becomes very important. >> so do -- i appreciate that it's a sensitive topic to speak to some of those excessive claims, and senator boxer had a, an interesting map to show what china's looking at versus other countries in the region, but are we seeing, in fact, those kinds of claims from china and other countries in the pacific that are affecting our freedom of movement in those areas? or that we are concerned might in the future? >> let me go to might in the

future. as i said, the demand on resources, the competition for resources is becoming far more pronounced, and could potentially become far more dangerous. that's true not just in the south china sapp but true in the arctic and being part of a convention that would help manage that as another instrument for our use, recognizing we always had sovereign interests in a military and navy in particular that will protect those. i do think that's wise at this point. >> you know, i know we've heard some objections from some of our colleagues, and i'm sure we're all getting letters reflecting different perspectives on the treaty, but i want to repeat to you something from a letter that i got from a constituent. and ask you, if you could respond to it. it says, and i'm quoting from the letter -- even the freedom of navigation provisions add nothing to the existing customary natural law of the sea that sea faring

nations including the united states have observed for centuries. given that we haven't to date had any major disruptions at sea, can you respond to that and talk about why it's -- why the sense now is that it's imperative to ratify the treaty? >> i can. the customary international law evolves, and i can give you an example of something on the land domain in a moment, but it evolve, and it is subject to individual interpretations. so threading this back to my earlier answer, the rise of -- of new nations competing for resources. brazil, russia, india, china, the list goes on and on. their rise puts us in a position where unless we have this convention with which to form a basis to have the conversation about resources of the sort you're talking about, does cause us to be increasingly at risk to instability. now, that's my job.

instability. the secretary can speak eloquently about the economic issue, but i'm security issue u. that's what has changed. an example of the land domain i am tauking about. we are party to the geneva convention from we wee derive our lauer and there are plenty of international laws related to the use of force, but we kogsly and deliberately signed on to the geneva convention as a mechanism by which to have this conversation among a community of nations, and that's what's different today than was different 20 years ago. this competition for resources, which is migrating increasingly into the maritime domain. >> and thank you, general dempsey, as you poircnted out, secretary clinton, were you very eloquent in talking about the economic urgency of ratifying

the treaty, and one of the areas you mentioned was the arctic that we're the only arctic nation that hasn't ratchet phied the treaty. ip would point out, there are a lot of people when we acquired alaska, which gives us access to the arctic, there were a lot of people in this country who thought that was folly, as we remember. and history has shown very differently. but can you talk about where we are with respect to the other countries who have ratified the treaty, who border the arctic and where they are in terms of the their exploration and any other activities they may be doing in the arctic and how we compare to that and how much, to what extent we might be left behind if we don't ratify the treaty? >> well, thank you for that, senator, because i actually think that the arctic is one of these areas where potential instability as well as economic

competition are going to be played out. the largest single portion of the u.s. extended continental shelf is in the arctic, and the other arctic coastal nations, russia, canada, norway, denmark/greenland, are all in the process of establishing the outer limits of their continental shelves in the arctic, using the provisions of the convention. i think we all remember, russia going down and planting a flag under the water, claiming the arctic. you know, we don't think that has any force of law certainly, but it demonstrates the intense interest of staking a claim in the arctic. ft. further, at the arctic warms and frees up shipping routes it is more important that we put our navigational rights on a treaty footing and have a larger voice in the interpretation and development of the rules, because it won't just be the five arctic nations. you will see china, india,

brazil, you name it, all vying for navigational rights and routes through the arctic, and the framework that we should establish and support is the one based in the convention that will help us deal with expanding human activity in the arctic, which is why i think that the time is so pressing for us to make this decision. >> thank you. secretary panetta, did you want to add to that at all? >> no. she did it. >> okay. thank you, mr. chairman. >> thank you, senator sheehan. it's an appropriate moment to place in the record since we're putting a record together here, a letter from the commander of the united states northern command, general jakeby. to -- the letter myself, and the commander states, national security is dependent on cooperative partnerships and

peaceful opens of arctic waters is in the interests of the community nations. the united states is the only arctic nation that is not seated at the convention. consequent lip the nation risks being ex-clulded from strategic discussions for advancing the convention with our maritime partner, and resolving sovereignty, sea boundary and natural resource issues. future defense and sieve many support scenarios in maritime domain require closely coordinated, multi-national military operations to include the formation of coalition task forces. our nations ascension, goes on to other thing, but i would flas in the record. senator demint? >> thank you, mr. chairman and thank you for beginning a process of hearings. i appreciate that the panelists and their testimony today. the fact is that most of the testimony today dealt with navigation issues. and things that affect the navy

and the waters around the world. that's about ten pages of the treaty, and certainly we need to deal with this. there are a lot of theoretical advantages, i think, that have been discussed, as has been mentioned, i think, by the general. the united states plays by the rules, and the idea that we get into a rules-based system with other nations that establish some international rules of engagement theoretically i think we vo have hon echt debate how we come out on that. it doesn't always come out all right. we brought chine nan into the wto, thought we could get them in a rules-based system, we could have a fairer system. it hasn't worked out that way. a few months ago a lot on the panel squealing about china manipulating currency and nos playing by the rules. when dealing with iran, not all members play by the rules. they're not always that effective and, of course, a history of arms treaty when we go back and find the other

players are not playing by the rooms. so we could have a reasonable debate that there is a possibility that when we enter into agreements as a nation with other nations that don't play bip the rules, we could put ourselves at a disadvantage, but we could talk about that later. the concern i have is almost 300 other pages of the treaty that is really not been dealt with much today. and just for a few clarifications, we don't have a veto in assembly of this convention. we can have a veto in the council, just as sudan has. one of the world's leading sponsors of terror, but we cannot have a veto in what the assembly decides as a whole. and, also, the oil companies don't pei tay the royalties. the united states members pay that and the taxpayer will ultimately pay it. i just want to make a few points, and ask a short question.

of course, 160 other nations want us in this thing. we need to think that through. because as has been said, maybe we have a lot to gain, but we will pay more than any other nation that is participate of this agreement, because of the royalties that have been discussed. of course, they want us in this. they also get to help define the rules of engagement whip the u.s. navy all over the world. and that may be a theoretically, they are rettic lay good idea, but there's been a lot of testimony that the international rules of engagement on the ground for our troops in afghanistan have put our folks in harm's way. so we do need top debate that. and we do know from the treat they it very clearly subjects our states, our electric utilities, our businesses to environmental lawsuits that will be arbitrated by panels that could be slant ted guess us. if we have a dispurity with dploer nation, we appoint two

arbitrators, they appoint the two arbitrators and the secretary of state of the united states appoints the fifth. those aren't odds i want to deal with when it comes to doing business in america. and i would just ask, and we've talked about this already, and maybe i'll direct to the jer general. i certainly respect his advocacy for what he feels like is important to the navy, but this treaty is much bigger than that and involves a lot of other things, and given the fact, american oil companies already lease a lot of land 200 miles out of the gulf to begin development of that, and we've done that without the law of the treaty. and we can keep the straits open and wep have committed to do that whether we're in this treaty or not. but, general, how is it in the interests of the united states to turn the royalties over to an unaccountable international b e bureaucracy i know senator inhofe asked this, given the fact we're facing billions in dollars of shortfalls and cuts in our military and this is

something that is real money, that is going to be paid to an international body at a time our country is almost hopelessly in debt, and it will be distributed to countries that may be our enemy, like sudan. i just -- again, i respect your advocations for the naval aspect of this, the navigation aspect, but what we're trying to deal with is the whole treaty, and what it might do as far as cost to the american taxpayer, cost to american business, and just our ability to operate freely around the world, and i know that's a loaded question, but maybe you have an opinion you'd like to swing back at. >> what i would like to say, sir, is that the economics of it, i will leave to the economic experts, but from the security perspective, i would want to have a further conversation about where in the treaty you see our rules of engagement or our activity is limited, because they're not limited in any way. by the way, sir, we never see the rules of engagement on the

ground to include an afghanistan to any other nation on the face of the earth or any other organization. >> i appreciate that answer, because on one hand i think we're argues we need this for our military to appropriate freely around the world on a rules-based system and then i hear the treaty allows us on a military or defense front to completely opt out of this thing any time we want. so why do we need to get into all of this in order to be able to operate our navy as we have for years around the world? >> well, let me -- i'll take a shot at it and maybe pass it off either to either of the secretaries, but right now our freedoms of navigation, right now the description of maritime zones and the freedoms of navigation, or the rights of navigation, are codified in international customary law. i'm not comfortable with that any longer because of the reasons i gave to senator

shaheen, on the wait that the security in the maritime domain is being challenged by some of the rising powers, by the opens of the arctic and other area around the world where that customary international law is now subjected to individuals interpretations. so i think it is in our benefit to the become part of that conversation. >> general, as a follow-up, some of those countries that are interpreting the law are already parties to -- to the law of the sea trade. they're not following the rules. or at least arbitrarily interpreting them. what's different if we're in it? will they now abide by the rules as we see it? my concern is we will abide but they're already violating the rules they subscribe to. how does this create rules we can count on? >> go ahead, sir. >> senator, you know, i think -- i think the question you have to ask yourself is, is whether or

not a seats at this convention gives us the best of the both world. protect ourselves, conduct what we have to do in terms of our ability to operate in the seas. gives us the ability to avoid any kind of dispute resolution with regards to military activities. so it does give us the ability to opt out. that which we don't want to participate in but at the same time gives us the ability to engage when we have to engage. better to have a seat at the table than not at the table when deal wig issues that affect our claims, that affect our economy, that affect our rights. that's -- that's the key. >> mr. secretary, is there any table in the world that we're not sitting at right now? >> well, yes. we're not sitting in the seat that's reserved for us in the sea bed mining table, and to be clear, senator, any assembly decision, you referenced that, has to go through the council.

we have a permanent seat on the council. other members rotate. but i really want to do everything i can and i know my colleagues feel the same way, to try to explain over the next months in the process that chairman kerp kerry has starte we do think, as secretary panetta said, this is in our interests, and it is for us the best of all worlds. because otherwise we will put our economic interests and our economic players in a disadvantageous, uncompetitive position, and i think what you're hearing from both general dempsey and secretary panetta is that when we are now facing new threats that largely arise out of the incredible race for natural resources that will be primarily based in