acceptable risk, costs and effort. i have to question your assertion that 20 years later there's no evidence that suggest a change in circumstances such that u.s. succession has become convention to the navy's global mission. the actual number of countries which the united states has challenged under this freedom of navigation program has tripled. it can't be without risk, without costs and without effort. do you see any change that might cause you to re-consider. >> thank you for the question, senator. our navy has had challenges throughout its history. we managed a couple of world wars. we made it through the cold war.

the bulk of which or a great deal happened after the convention on the law of the sea was signed. we've had bufferining incidents with the soviets. these challenges will either go away or we have additional tools to address them. in my view, due to the other costs that are involved with the treaty, what i believe to be a marginal affect of joining the convention for the treaty is greatly outweighed. that said, the navy will continue to project force and will continue to engage in freedom of navigation operations. as you heard from general dempsey, our ability to project force isn't based on a treaty. thank god.

it's based on continuing to have a strong navy. it's just our view or my view that when you do the cost benefit analysis, whatever marginal benefit the navy may experience by joining the convention is outweighed by the other provisions that have those very real costs and risks. >> if i hear you right, not to put words in your mouth. >> you can put words in my mouth. that's fine. >> you would agree, as we heard uniformly from the generals, the admirals who testified this morning and general dempsey and others who consistently testified, that there would be a benefit to the freedom of navigation operations? it would be a benefit to our armed forces in having another tool in binding arbitration with allies? you just view the overall cost as exceeding that real benefit as being greater than that benefit? >> i want to agree with our men

and women in uniform that there would be an actual benefit. what i've studied, what's come clear to me is nothing changes operationally. we still do diplomatic protests in the exact same way. i've read them. what would change operationally. give me a reason to believe there's a tangible and real benefit for the navy here. i haven't been satisfied on that front, and so when you weigh that against the other costs, i can down on the side of skepticism. >> i'd like to thank the whole panel for your testimony today. part of what got me interested in this, as i mentioned is a personal meeting with the former

chief of naval operations who onlizing that same fact pattern came out in the opposite place in saying there would be operations that would not need to be conducted. it would be resolved through the mechanisms and it would allow us to focus those valuable resources on areas where we needed to continue on these navigation operations. thank you. >> thank you very much, senator. i do think, mr. groves, i call your attention to this fact. in the six, four stars who testified today, i rae waeally d to see what they were saying and pin down. i came up with 16 advantages that they defined in their

testimony. 16 positive differentials that could by virtue of signing onto this. one of them was very clearly articulated in detail who talked about the advantage in termsint narcotics. there are whole series of very specific rules of road that relief pressure cooker. you need to have the full statement. we're not going to lose our force because hopefully the united states congress or whoever is president is always going to be remain committed to have the strongest force possible. we will be able to protect our interest. that's not the issue here though. the issue is what general

dempsey said in the rest of his statement. he said, the failure to ratify put ourselves at risk of confrontation with other who is are interpreting customary international law to their benefit and the risk of confrontation goes up. what all of the commanders said today, and i think this is a very important sub text to their testimony was that the world is changing very rapidly. other countries are pressing for resources in ways that have not before. given that pressure for resources and that we're going to become a planet of going from seven billion to nine billion in the next 30, 40 years, that's only going to increase. what they're saying, all of them is that this provides an orderly prosays for how to manage your

way through that increased pressure intention. that's part of what increases the urgency. the second thing they sited. i think it's important for every member to realize this, our intel community will make it very clear that there are actors right now who are behaving in ways that challenge us where the law of the sea will have the ability to address those concerns. i do want to make sure the record is clear about both what general dempsey said and what the four star said today and sort of where we are. you'll have a chance to address this if you want. >> thank you. i found the testimony important.

i would mention testimony indicated the bush administration made law ovt sea a primary treaty objective beginning in 2002. i remember that period because i had the privilege of serving as chairman of the foreign relations committee as republicans got a majority and we took seriously that list of treaties and were able to ratify a good number. came off the shelf. we had good debate. law of the sea was among those as we took that up in 2003 and 2004 with a vote and a committee that was unanimous at that point if favor of the treaty. unfortunately, the republican majority leader decided there are other priorities. as a result we did not have floor debate. that opportunity passed.

senator biden became chairman of committee. he took it up again in 2007. once again the bush administration testified very strongly about the same way. the treaty went to the floor. the meanwhile, the question that was raised by secretary rumsf d rumsfeld, it's an interesting philosophical one. this is not president reagan's viewpoint.

if question is is there internationalization of the sea. it suggested maybe somebody might stretch this one bay to feel the atmosphere. on the other hand, they question we have to resolve is brought up and people mentioned lockheed martin. i received a letter that maybe other members of the committee have the i quote this part. it says the multibillion dollar investments needed to establish an ocean based resource development business must be predicated on clear legal rights established and protected under the treaty base frame work of law of the sea convention including international seabed authority. on the one hand you can take the position that the ocean out there, whether it's close to our shorelines or 200 me 0 miles or is nobody's business.

there is no idea of internationalization. nobody owns it. just a question of whether you want to go out and drill or not. take your chances. what mr. stephens is saying as a practical matter in terms of american businesses, very few of such drillings are going to occur that involve hundreds of millions of dollars, if not more without some legal basis, some assurance, some treaty that protects those rights. we can talk about all of those resources being out there till we're blue in the face. the facts are there is very little drilling for them without people feeling very precarious about it and american businesses among them are saying if we're serious about energy resources then we need this frame work. it's a legitimate argument as to whether anybody owns anything.

the treaty provides a practical means by which we might proceed in this world and particularly in this country given the resources and investment we have. i come back to this with questions that those of you have been testifying about this. it's a central issue in this. secretary rumsfeld, you've been fairly even handed in discussing fi philosophically the question, but how do you come down on the letter. why would lockheed martin proceed? >> i don't know fp nigh would proceed. a businessman makes a risk analysis. they bant as much certainty they can get. there's no question but it's perfectly logical for businesses

in this instance to prefer certain. p businesses enter into uncertain investments and at some point where they decide that the risk is realistic for the investmeinvestment, they wi right ahead because there's nothing preventing them from doing that. seems to me the easiest thing in the world if somebody wanted to do it, american companies have the technologies. they have the resources. you do a joint venture. i don't know why they couldn't. maybe they wouldn't get a license. i don't know the answer to that question. there's nothing that i've seen that legally in any way prevents them other than their assessment of what the risk is, and that's

fair. >> that is a good statement, but the companies are not taking the risk. we keep asking american investors to find more energy and at least deliver us from the reliance we've had on middle eastern oil, for example, or other situations. businesses could take that risk. this really does legitimize the law of the sea. you've using the law of the sea to make possible american business. already objection has come that the sharing of royalties in the sense of all of the world and so forth is not in our interest.

how did the bush administration come in '82 or rather 2002 to the thought this should be the prime treaty. why was there that change of view at that point? >> i guess that may go to me. once of my responsibilities although after 9/11 we were mostly focused on other things like terrorism, was to look at the treaties we inherited from the clinton administration that were for here and decide which one was our pry yours. we took a really good scrub at it. they are not confident and we knocked a number of things off the list. law of the sea treaty we were particularly skeptical of. there were lots of people in our administration and we had a lot of internal differences about whether this was the right thing. it took us close to a year to move it to the top of the list.

i wouldn't say it was the administration's top treaty priority. we didn't rank them 1 to 100, but we said this was a treaty that was a priority and the senate should act on. just to summarize, there were the military advantages particularly after 9/11 when we were asking our military to do more with less. i think secretary rumsfeld acknowledges that part. the economic and business advantages were things that could not be gotten in other ways. if there was another way to do it, i think that would not have been a good argument. we couldn't see another way for american companies, particularly as the arctic opened up and enormous advantages were there for us and we were watching canada, russia, denmark, norway all making billions of dollars.

norway has a petroleum found of $700 billion that it has gotten for its people from oil and company up in the arctic. we see what they have been doing up there and said for our companies to be able to do this, we need to become party to the treaty. that was an additional benefit. then there were environmental benefits for the health of world's oceans. >> thank you very much. >> thank you, senator luger. >> thank you. i won't go into what i did this morning but when we had the generals there, i say to you, secretary rumsfeld, i commented from my experience in the military that we have chain of command. it's kind of interesting all these people and this morning we had 24 stars before us. i submitted a letter of 33 stars who are retired. seems like once they retire things kind of change. i always suspected that had to

do with the chain of command. president obama and before him -- >> can i say to you, senator. >> i'll give you your time. i'm not going to invade your time. you are impugning the integrity of their testimony. each said they were there personally. it was their personal belief. no one twisted their arm and no one suggested it. >> not suggesting otherwise. i know the chain of command. that's all. i'd ask you secretary rumsfeld, how does it serve our national security interest to send not appropriated, entitlement spending to an international organization from payments that would go to countries, but would come from us. is there any way you can see that answers our national security? >> no, senator. i think what the admirals and generals testified to was a

narrowly their interests that relate to the department of defense. they clearly did not get into anything that is broader. >> in fact, i wasn't surprised they wouldn't want to get into that. i would like to ask you, mr. groves, i presented the case on two of these hearings now. i'm still waiting to see if anyone disagrees with it. that is under our royalties the royalty percentage ranges from 12 and a half to 18 3/4%. that varies because the point at which a company is not willing to go in and risk its capital. that's the reason we have range instead of a specific amount. the 7%, granted, it wouldn't have for 12 years, but at that point it would. while you said in your testimony there is no way to try to predict exactly what that would

be, the u.s. interagency continental shelf task force said it would be billions, if not billions, if not trillions, so i thought $1 trillion as an example would be -- >> we may have royalties. >> i'm talking about the extended continental shelf. >> yes. >> i understand that the other hasn't even been set, has it? >> the reason i'm asking the question is many are saying here, and they have said it at both of these hearings that without this we can't get in and develop the extended continental shelf. that's the question i would like to have you address. >> the major takeaway you should have here is that we don't know how much money is really at stake. >> that's right. >> i mean, there's been no study about the value of the hydrocarbon resources that are on the u.s. ecs which is vast,

twice the size of california. starts in the east coast, goes to the west, up to alaska and down to the south pacific, and yet we can sit here today and have no idea how much oil and natural gas is out there, and yet pledge to sign on to a treaty that would commit us to paying between a 1% and a 7% royalty on those hydrocarbons forever more. so that doesn't sound to me like a very fiscally responsible thing to do when we don't even have the first clue about how much is out there. now, the ecs task force has put the only number out there that i've ever found which is they said could be trillions of dollars, trillions with a "t" and plural, so we know at least from a gross estimation that we're talking about a significant amount of money, but until that study is done, until we have even the slightest idea 6 how much money we could be giving up for this treaty, i don't think it's very responsible or prudent to accede

to it. >> i would agree with that. a lot of discussions have been talking about a place at the table. i contended this morning that i'm not sure that -- where the table is. i mean, we have the imo, and apparently it's performed well. what i'd like to have you do, mr. groves, is talk a little bit about the differences between the council and the assembly and how veto works in this respect. >> sure. the international sea bed authority or it's called the authority is made up of a secretariat, made up of a council of 36 countries, and it's made up of the as bailiff 162 countries, and that's called a supreme organ of the authority. now, there are a couple of narrow questions, narrow but important questions that the council can make recommendations on that the assembly must consider. one of those is the distribution of these article 82 royalties.

but what has been -- what is basically the ability to block consensus has been kind of transmogrified by the participants in the convention of this blanket veto power when in fact it's a very narrow ability, and if we have the ability to block consensus on the council, so do the other 35 members, including my favorite member, sudan. but between the two bodies, when you've got a council that's making recommendations about the distribution of article 82 royalty and you've got an assembly which is the supreme organ at making the final decisions about the distribution of those royalties, we know in the end who is going to win that discussion regardless of whether there's some balance of authority between the two bodies. we know that because we've studied other international organizations in a multitudes of contexts. >> well, it would seem to me that it's kind of not all that significant to be talking about that anyway.

the big issue is they have the power to extract that money that otherwise would be royalties to the united states. >> yeah, sure. before we're talking about this supposed veto, we've already committed to make all of those article 82 royalty payments to the authority for redistribution, so for me i think the horse is already out of the pen. >> i noticed during the previous -- yes. >> a comment. the word veto i think is a little confusing in the sense that it leaves the impression like our constitution, where a president can veto something, or it leaves the impression that like the united nations, where we and other countries have a veto in the security council. in this instance it's much more like our role in nato, where you served as ambassador i guess 40 years ago, where it's -- it's operated by consensus, and watching how that works is really quite different from our constitution or even different from the u.n. security council. a second point on the military

issue that you raise. again, i'm no expert, but i -- i read this about the military activity exemption, and my impression is there's no definition of that and that the various structure, the executive, legislative and judicial structure that mr. groves described would be where that definition would eventually evolve, and if you think about it, a military activity can simultaneously be an economic activity and an environmental activity. i can remember we were -- we had lawsuits against us when i was serving as secretary the second time because sonar was adversely affecting whales, and -- and you can end up with a series of problems where people contest this. because of the lack of that definition, it would seem to me, and frankly i don't think i'm smart enough to know what that

definition could be without leaving enormous areas of ambiguity. >> yeah. i do remember that discussion, and mr. groves, i noticed you were making some notes and had some comments on responses from some of the witnesses. is there anything that you would like to add right now in this time that might be helpful to us? >> oh, such a great open-ended question. well, i think i'd just like to debunk the idea that there are oil companies that are -- that are waiting for us to join this treaty in order to engage in exploration of our extended continental shelf. there's a chart in my testimony, i've got it, you know, the one that looks like this, that indicates all of the areas of the extended continental shelf in the gulf of mexico that the united states has already leased out to american and foreign oil exploration companies. so the idea that this is going

to be some great prohibition on this development is -- is something that i don't agree with. these companies have made the business decision to buy multi-million dollar leases from the united states government to go out on the extended continental shelf. regardless that we're not a party to this treaty and whatever international certainty that comes with it, so if there's one thing i would add, i'd add that. >> i appreciate, that and mr. chairman, i appreciate the time. one last thing. are there any frail tis that you can think of in the imo, something that hasn't worked in the past that would be corrected by that? >> the imo is the forum where all of the things that the proponents allege are being discussed at the law of the sea meetings, are actually being discussed. >> that's the real table, when you say a place at the table. >> that's correct. that's where they are drawing the traffic separation seems and arc magic schemes through indonesia and discussing

treaties and other environmental obligations. that's where actual multi-lateral decisions are made in that forum. >> thank you, mr. chairman. >> before i recognize senator isakson, i think it would be helpful for the record. mr. bellinger, do you have any comment with respect to the argument on the intercontinental shelf? >> this is the point on mexico. >> the argument that mr. groves just made with respect to the ability to exploit and the royalties issue. >> well, i think the general point is that it's -- and i think this is perhaps the most important question for the senate really is the suggestion is that if we don't join the convention, then we still get all the benefits and so it's a choice between joining a flawed convention and not joining the convention and then all these u.s. companies get to do the same thing and don't have to pay anything. that's a false choice, at least based upon what companies are saying to us.

it's not do the royalties flow to the isa or to the treasury. of course, if i had that choice, would i much prefer to have all of the royalties paid to the treasury but the choice seems to be companies will either mine in the deep seabed and in the extended continental shelf and are willing to pay a small amount of royalties after five years or allow the u.s. government to do it, or they won't do it at all. so the choice is either lots of royalties for the treasury and lots and lots of money for u.s. companies and some small amount that goes to the isa or nothing at all. that seems to be the choice that's confronting us. >> i see were you taking a deep breath. did you want to add to that, sir? >> i was -- i would say that this argument is particularly pertinent with respect to the arctic, and i represented secretary rice at one of the arctic circle conferences with the russians, the dans, the norwegians and the