refers to administrative, budgetary or financial matters. so the u.s. would have a veto over any decision relating to administrative budgetary financial matter, which would include the distribution of fees. so that's why we believe the bush administration, which looked at this, believes the united states would have the critical role in deciding where any of the fees went. i believe mr. groves conceded that point. >> i'm a lawyer and i don't recover anything john. >> when consensus can't be reached and i would concede that if the u.s. was a part of the treaty and on the council that it could muddy that up and block consensus on some important

issues. the important part is what the treaty is silent about, which is what happens when no consensus can be reached on the counsel at all. let's say hypothetically because the sus putting the assembly could act by passing a resolution without the recommendations of the council. the counsel only makes recommendations to the assembly and it the assembly that makes the final decision. the reason why we know this to be true is that further on in the article in the 1994 agreement it says that the council's decisions on financial matters shall be based on the recommendations of the finance committee. so if the council has to be basing their recommendations on the recommendations of the finance committee, then it goes all the way down the line.

at one point or another someone is going from my view, especially with the license of the it's going to be the 162 member assembly that makes that decision. >> mr. chairman, you were commenting about the '94 agreement and i think that you're talking about the title or part 11, which was the subsequent amendment the united states proposed is that? >> that but also i think in '94 on page 272 section 3, decision making, it actually gave us protection. i'll read it to you. decisions of the assembly -- and this goes to mr. grove's decertains" about the -- what we

achieved in '94 through the the implementing agreement, which is very important, made clear the assembly is not permitted to take action on any matter within the competence of the council, unless the council has first recommended that the simably do so. so the council controls the agenda. now, let me read right out of it. decisions of the assembly on any matter for which the would you know and that is the des contributi -- any decision on any administrative or budgetary matter shall be based on the recommendation of the council. if the assembly does not accept the recommendation of the council on any matter, it shall return the matter to the council for further consideration. the council shall reconsider the matter in the light of the views expressed by the assembly.

in other words, it round robin. counsel has the final say, counsel has the orj nat say, has to go back to the council. there are serious limitations on it and the assembly effectively does not have this fearful power to come in and do something that you night be concerned about. i might also add if you don't like what it's doing -- we can come back to this. say you goat gelt your businesses out there and royalties are being produced and all of a sudden eight booit's n and you get $1 trillion. we'll come back to that.

in a minute, article 317, page 208. a state party may by written notification address to the secretary-general of the united nations, denounce this convention and may indicate its reasons. the denunciation shall take effect one day after receipt of the notification. in other words, you just get out of it. you're not bound to trillions of dollars. you're not locked in for a lifetime, just leave. if you don't like what it's doing and it's acting against our interests, you get out of it, so, i mean, this is really not as complicated as it's being made, but we can -- you know, we ought to continue to go at it. >> if i may just comment briefly, mr. chairman. >> yeah. >> first on the council issue, yes, the language says that any of these administrative budgetary financial matters shall be based on the recommendations of the council. but just three paragraphs later, it says decisions by the

assembly of the council, having financial or budgetary implications, shall be based on the recommendations of the finance committee. >> that's correct. we are a member of the finance committee. >> but we don't have -- we can't block consensus on the finance committee. >> i believe we can. you want to speak to that? >> we're also a permanent member of the finance commit and we can block -- we can block or control the finance committee. these were really the great changes that the united states made -- let me just add one thing, if i could, senator. two things really for senator isakson. it's really quite useful, a paper was done by one of our negotiators, which i would encourage your staff to look at, bernie oxman back in 1994, that described how all of president reagan's concerns were fixed by u.s. negotiators and how they ended up giving the u.s. enormous influence over every one of these issues, including the permanent seat on the council and the effective veto, and i'll ask that that could be put into the record. one of the most interesting things about that for both of you is that russia was so concerned that the united states was given so much influence in the council that they refused to sign on and actually abstained from the vote over the 1994 amendments because they felt that they discriminated in favor of the united states.

>> mr. chairman, could i make a comment on this? >> absolutely, yes, sir, mr. secretary. >> as a law school dropout i'm glad i wasn't asked to comment, but i -- i have a question about the 1994 amendments. they have been mentioned repeatedly, and i don't have any idea what their standing is given the fact that a number of countries have not signed on to them which just came up. second, one of the big issues for president reagan was technology transfer, and that was addressed in the amendments, and as i recall it went from mandatory technology transfer to a recommendation that technology transfer occur from the developed countries to the developing countries, i forget the precise language, but something like that. it seems to me that it is entirely possible, and i'd be happy to hear the experts on the subject, that in applying for licenses, the decisions with respect to licenses could be

dependant on the degree of accommodation a company is willing to make with respect to technology transfer, so when we say that the reagan concerns were fixed, they were addressed, for sure, and in some instances fixed, and i think in some instances we punted. >> i would let the experts speak to that, the people who were there during that time. i think that that's important. >> i'll take a stab at that again. these issues are addressed at length in professor oxman's article which describes all of the 1994 changes. the tech transfer requirements, of course, were dropped. the production limitations were dropped. the barriers to access to deep seabed mine were dropped, and the idea that the authority

could actually decide who could get mining rights and who couldn't, which was really one of our concerns, that we've have this group of countries that could look at u.s. mining companies and say, well, we really don't like you, was also dropped, and, one, u.s. companies were actually grandfathered in so that they would not have to make some of the same shows that other companies around the world would have to show. that was one of the reasons for the soviet protest. >> that's another reason why lockheed has no little objection to the treaty. >> and in addition there would not be an evaluation of the technical qualifications of applicants. it would be based on a first come, first serve basis as long as people met a basic financial qualifications. >> mr. chairman. >> yes, sir. >> i stirred up far too much of a hornet's nest. >> on the contrary. >> i think actually helped

clarify some very significant important areas. if i could just take 30 seconds to add, so it's in the record. i really want it to be in this record in this part. page 279, section 9, subsection 8, says, decisions in the finance committee on questions or procedures shall be taken by a majority of members present voting. decisions on questions of substance shall be taken by consensus. so both -- in every -- i can't think of an agreement -- i can't think of an international treaty on which the united states of america has the only permanent seat and the ability to block anything and protect our interests, and if we don't like it, can get out of it. so i think it's important to have that in its proper context. >> well, i'll just take one minute. this is a very critical question which is why i asked it, and i appreciate my uva law student doing such a good job that he got everybody engaged, but everybody has to remember they are communicating with a university of georgia business school graduate when they are talking to me and would i like to ask mr. groves and mr. bellinger if you wouldn't

mind to try to get me a one-pager that addresses this issue of consensus and veto and majority of the members present voting to override or two-thirds to override. if you could do that and how it applies, understanding the '94 amendments that may have taken place. and one other question, mr. chairman, and don't respond to this because i know it will drag it out, but i was reading paragraph 4 as were you reading it and paragraph 5 still in this book and i need to know if the '94 treaty extracted paragraph 5 which refers to majority of those voting, present investigate and refers to the two-thirds majority. we won't get into that debate now, but i'd like to know that. >> fair enough. >> i apologize. >> i think that's a terrific request, senator isakson. it's very important and we'll look for that full explanation. i think it would be very helpful to the committee, indeed. >> to the extent that anything in law can be distilled to one page, we'll do our best. >> thank you. senator lee, thanks for your

patience. >> thank you, mr. chairman, and thanks to all of you for your service to date for this committee and for your service to our country. mr. bellinger, i wanted to start just by asking a basic fundamental question about something this treaty does. by creating a royalty obligation as to the exploitation of minerals from the seabed outside of the 200 nautical mile range, aren't we creating a construct that recognizes ownership or at left a degree of sovereignty in an international organization? is that what the word royalty implies? if somebody can charge a royalty for the exploitation of minerals on any property, doesn't that imply that they own that land or at least that they possess the incidence of sovereignty with respect to that land? >> i wouldn't say so. i think -- i just see that as a fee that the united states has agreed to -- to -- to mine in that area. >> so if you own land and exxon mobil wants to develop oil on that land, and i say i'm going

to charge you a royalty for exploiting this resource -- this resource on mr. bellinger's land, wouldn't i be implying that i have some sort of ownership or sovereign right with respect to that land? >> well, again, not necessarily. i think that something that was agreed to in the treaty without a broad philosophical construct of the significance of what it meant for a royalty provision, i mean, as you know, because i know you have a long legal pedigree that property rights and bundles of sticks can get to be very complicated as far as what is actually a property right, and it can be used in different contexts and different things, and it's the same with respect to treaties, so simply that we agree to pay something here does not mean that we're conceding that the international community owns the extended continental shelf. >> okay. but we're creating an interest, a financial interest of one sort or another, one that could be

construed as a property interest. i appreciated your acknowledgement with regard to senator risch's comments on article 222, as i believe you acknowledged that at least there was ambiguity there as to the meaning of the word applicable, the phrase international applicable rules. if there's an ambiguity there, wouldn't that suggest that an international arbitration panel, perhaps one convened pursuant to annex8 under the treaty could, also conclude that there is an ambiguity there, and they could decide that issue one way or the other? >> i guess i say on that, senator, i would think not. i mean, i think it's a good question for someone who is reading that provision, but i can tell you as someone who has spent a lot of time reading treaties, particularly ones that were allegedly applicable -- i mean, honestly. this was my job for four years as legal advisers to defend against other countries that claimed that certain things were applicable to the united states,

and -- and applicable means that we are legally bound by it. >> if we get a good arbitration panel, if we get at least three who are well-trained, who are doing it right, doing it the way we'd like it to be done, your position is that they are going to reach the right conclusion? >> i think it's certainly pretty clear that applicable international obligation is something that we are legally bound by. >> okay. >> okay, thank you. secretary rumsfeld, i recently had a retired navy commander in my office. he made the following statement regarding this treaty. he said we should not in any way restrict the ability of the united states navy to serve its primary purpose, protecting the constitution of the united states of america against all enemies, foreign and domestic. ratifying the u.n. convention on the law of the sea will expose the united states navy to unnecessary counterproductive and extra constitutional bureaucratic and regulatory oversight. do you tend to sympathize with that statement?

>> well, i have to confess i can't look around all those corners, but we have seen an explosion of litigation in the world. i don't know how many lawsuits have been filed, but every time anyone in the united states government turns around, they get lawyered up. there's something like 10,000 lawyers in the department of defense today, and i don't doubt for a minute that -- that that could happen. it seems to me that the -- i watched some of the military panel this morning, and they were -- they are wonderful people and they are talented, and as they said things i did not hear a lot of instances as to why we believe that with this the chinese or the iranians, for example, will alter their

behavior notably. >> all right. >> the law of the sea has been around. they haven't solved some of the problems in the south china sea. china and the neighboring countries are members, and -- and in terms of dispute resolution, i -- i haven't seen it. in direct answer to your question. it seems to me that anything they said that they think that treaty could or should do that would benefit us, and there's no doubt in my mind but there's certainly some things that it would with respect to the military, the question is what's their weight against some other aspects of it, the disadvantages. it seems to me that the united states of america ought to pursue those on a bilateral or multi-lateral basis, if they are as important as they seem, and i don't doubt for a minute that the very credible military officers were making points that were valid that could be pursued bilaterally or multi-laterally. >> at the end of the day, mr. secretary, any legal rights, legal protections that we have, to the extent that they have to be enforced, would have to be enforced through our own military might, would they not? >> regardless of whether you're in the treaty or not. >> in the treaty or not. >> mr. groves, would you agree with that assertion, in the

treaty or not, legal rights, legal protections that we have, whether we draw them exclusively from customary international law as we would were we not to ratify this treaty, or if we were also to draw additional rights or perhaps the same set of rights from the treaty? don't those have to be enforced, to the extent they have to be enforced, by our military? >> i would agree with that, and i think that the members of this morning's panel would agree with that. they have said in no uncertain terms, you know, when push comes to shove, we're going to assert our rights. we're going to assert our power. we're going to project our power, and we hope that they will do so, whether or not they are in any treaty or not to protect american national security interests. their only argument is that somehow being inside the treaty will enhance their abilities to do so. i just haven't seen where that enhancement lies. their diplomatic protests would be the same, the same language.

their operational assertions would be the same. none of those things would change, but somehow they are making a claim that i just haven't found the substantiation for yet, that it enhances their ability to perform their mission. >> thank you. let me follow up with an additional question that i wanted to ask of you, mr. groves. let's suppose that we get into an international arbitration pursuant to say annex 8. our opponents choose two arbitrators and can't agree on the fifth arbitrator so the fifth is chosen but the u.n. secretary-general. at the end of the day three. five arbitrators rule against us. they rule against us on a theory that we think is legally deficient, that it's wrong, it's against us, we don't like it. is that judgment, notwithstanding our objections to it, notwithstanding the errors that we see it, is it enforcible in u.s. courts?

>> it's enforcible on u.s. territory because that's what the treaty says it is, and we've got at least one supreme court judge -- justice who says so in territory. >> referring to justice stevens' opinion. is there anything about our recission from the treaty, from the convention, which couldn't become effective until a year after we provided notice anyway, but is there anything about our withdrawal from the treaty, from the convention, that would affect the validity and the impact of such a judgment after the fact? >> under international law, no. we're actually dealing with that issue right now in the ivina case regarding the mexican death penalty cases that was litigated through our system as medain versus texas. the bush administration withdrew from the optional protocol to the convention after they got a really bad judgment from them but the judgment of the international court of justice

in that case is still pending. it still has legal force and effect because we were under its jurisdiction when they made the judgment regardless of our subsequent withdrawal. >> almost 30 years ago. >> the ivina case was during the bush administration. you might be thinking of the nicaragua case during the reagan administration. >> indeed. thank you very much. i see my time has expired. >> thanks, senator. i appreciate it. do you have any second round of questions? senator lee, you might be interested to know that the united states senate has already approved a treaty that has the exact same procedure in it and that's the -- we gave our advice and consent to it in 1996 and not only does it subject the united states to arbitration but in fact, it subjects us to arbitration under the law of the

sea convention. it seems to be working pretty well without problems. that incidentally was passed down under chairman jesse helms so yes. >> i just had one point that i wanted to make with respect to how adhering to the treaty might be helpful in some circumstances with respect to our naval activities and operations and coast guard. clearly, when you boil it down to a poll or choice between the use of force and the application of law, well, the application of american military force is likely to win every time. i don't question that. but let's take the proliferation security initiative, for example. there are instances where countries, friendly countries, have either had reservations

maand may seen in some instances have declined to cooperate with us on a particular mission because we are not party to the law of the sea. so that's an example of where i think the cooperative atmosphere on an issue of real security importance to the united states could improve if we accede to the treaty. the case of china, their exaggerated claims to the south china sea, they're out of sync and out of line with the law of the sea because of the way they draw their baselines and their historical interpretation of their jurisdiction over those seas and the best arguments are that they're not applying the principles that are embodied in the law of the sea. we're at a disadvantage in making that argument to them and along with other countries in southeast asia, because we're

not parties to the convention. so i can think of a number of instances where the application, and then the last one i guess i would cite is the passage, free passage through straits. i think -- i mean, that was a really major accomplishment in the law of the sea treaty and i think that, think of the complications we might have if we developed an antagonistic relationship with a particular country that decided it wanted to make it difficult for the free navigation through straits for either surface or other kinds of vessels. those are three examples i can think of where the treaty, and i don't think it's wrong for mr. gross to use the word enhance. you know, diplomacy has its limitations but it can still be positive, enhance is a positive word. >> thank you. >> let me wrap this up a little bit, if i can, because we're under a certain time constraint here. first of all, you all have been

terrific. i mean everybody. it's been very, very helpful to have this kind of back and forth. i would just say to senator lee and some of the others, mr. groves, that you are operating on the principle that the united states has already established full jurisdiction and control over the extended continental shelf, and i see you nodding to say that, and you point to the 1945 proclamation by harry truman regarding the outer continental shelf lands act. the problem is that nowhere in that proclamation or anywhere else has president truman or anyone else set out the longitude and latitude markers of the outer edge of our continental shelf. and the only way we can achieve certainty with respect to those

demarcations is through an international agreement of some kind. now, we're not going to go into length about it. i do want to pursue this and we may well have some of you back or all of you back at some point in time here when we get this paper and we get people's answers and we get the answers on the record. i'm concerned, secretary rumsfeld, about a recommendation for united states businesses to have to joint venture with another country to exploit our resources. or what might be our resources. that really concerns me. if you want to talk about american sovereignty and american interests, i don't want to share it with another country, and under this treaty, if you import what you exploit, you don't have to pay any royalty. royalty free if you're importing it to your country. so that's an extraordinary offering and it comes to the

real nub of this choice we face, which i think mr. bollenger put his finger on, which is this is not a choice between sort of a flawed treaty and what the impact might be and do you take some benefits in exchange for that or if you don't do it, you go out and get the same benefits. i think one of you suggested we ought to be doing these programs of distribution to these countries through our aid program. i don't know if you've been following the budget lately but we ain't growing our aid programs. we're shrinking them. our influence in the middle east, significantly reduced by our inability to be able to affect things, our ability to do counterterrorism, our ability to bring 60% of the populations of some arab countries out of destitute poverty because of the absence of anything remotely resembling a marshall plan or anything like it in modern

context is palpable. 60% of these populations under the age of, you know, 25, 50% under the age of 21, 40% under the age of 18, some countries 4%, 5% of their population at 4 years old, and the question is what are we all going to do about that. the idea that there may be some resources coming from something like this that goes to some of these countries may be a saving grace. senator luger has raised this question about sort of do you maybe get a trillion dollars or something, whatever you might get out of it. if you are seeing an untoward distribution of that, you do have this ability to get out of it. as i've said. but the bottom line is this. if we don't do it, there are no royalties. and there's no guarantee that anybody's going to drill. and the only reason i can say

that to you is that the ceos and legal departments of these companies are telling us that. now, you can choose not to believe fortune 500 ceos and their stock value interests and all the rest of it. it would be the first time i've known the republican party not to put some credibility in what they're saying. but you know, that's the choice here. it's not -- it seems to me we have to keep this framed properly. we will have additional hearings and we will continue to explore this. you all have been enormously helpful in fleshing out a number of these considerations. the record is getting stronger as a result in terms of people's ability to make judgments and that's what we want to do. so i'm very grateful to all of you for coming and to both the secretaries, we're really pleased to see you continuing to dig in and to contribute and we're delighted to have you here today. thank you all very, very much. we stand adjourned.