living secretary of state and the joint chiefs. senate approval is imperative to expand u.s. territory beneath the oceans to develop new com i interests and create jobs. i thank you for allowing me to share these obvious comments. the bottom line is simple. the benefits are all to accrue to this country and to our economy and we ought to move forward on it. thank you much, mr. chairman. >> thank you very much. for very clear testimony, we approa appreciate it. mr. gerard? >> thank you mr. chairman, and senator lugar, it is a please your to be here today. mr. chairman, we need to thank tom for this cop opportunity as

well. is that right. on be hafhalf of 0 the companied the millions of men and women who work in the natural oil and gas industry, we appreciate the opportunity to testify on the treaty. we agree with secretary of state hillary clinton and former secretary of state conoleeza rice. that joining the law of the sea convention is truly in the best interest of the united states. today the u.s. relies on oil and natural gas for over 60% of all of the energy that we consume. recent projections of our own department of energy in the obama administration shows that 60% of the energy we consume

will continue to be oil and natural gas. other projections show the demand for world global energy will increase by over 50% in the next 20 to 30 years enjergy is very serious issue particularly to our global economy. the company spent years looking for and producing natural gas from around the world. from 2008 to 2011, the industry spent over $700 billion in the united states drilling and exploring for additional opportunities. just last week, the u.s. oil and gas industry paid $1.7 billion in bonus fits to the federal government to secure rights to develop the resources in the gulf of mexico.

preliminary studies estimate that the u.s. extended continental shelf as a result of the law of the sea treaty likely totals one million square kilometers and could contain resources billions if not trillions of collars to the u.s. economy. t reducing the potential for jurisdictional conflicts between nations. it provides planning so that companies can reduction risk. we are not looking quarter by quarter year by year, we look ten, 20, 30, at 40 year horizons when we are talking about

multiple billion dollar inve investme investments. this will result in more u.s. jobs, more u.s. revenue to our federal and state governments and many other benefits. the convention also broadens the shelf in a way that would favor the united states. as tom touched on earlier, it would secure 4.1 million square miles of ocean and provides a mechanism for laying claim to resources in tarctic and other areas and other countries. we understand there are legitimate concerns about certain aspects of the convention. we appreciate the attention to

assure that this convention is in the best interest of the united states. i'm here today to express to you the benefits the convention for the oil and natural gas industry. our expectation is that the congress will continue to work as the u.s. interests are protected. ip short, the law of the sea convention will mean a level playing field and new opportunity for marine sources development around the world. thank you again and i look forward to your question. >> thank you very much. >> and before you do start, let me say in response to your express eed hope that the congrs is going to protect and address those concerns, i want to say,

that we will have a set of specific declarations and understandings that clarify some of the concerns that have been raised by people as we have gonna long here. there will be crystal clarity and that will be taken care of in this. >> thank you very much. mr. chairman, senator lugar and members of the committee for the opportunity to speak about the law of the sea treat yixt the national association of nev manufacturers is the nation's largest manufacturing trade association and represent 12,000 manufacturers of all sizes acrosscountry.

und 95% of the world's consumers live outside of the united states, reaching them is absolutely necessary. it is 20% more expensive to manufacture in the united states than it is among our major trading part yerz aners and tha after you remove the kofcost of trading. it is provide the cost of trading for energy exploration, secure and reliable sources of energy consume 1/3 of our nation's energy output and secondly it will open up access for manufacturing applications.

if you use a cell phone or computer or hybrid car. chances are components of that product contain rare earth minerals. in the production process for many items such as renewable energy products consumer electronics and others. today, china produces upwards of 95% of the world's supply of rare earth minerals. brazil, malasia, canada are others. there is no doubt that it will likely use all of that, that it produces eventually. if that happens, that is going to jeopardize access to these materials. costs will rise as they have been. the economy will suffer, and

more jobs will be in jeopardy. the united states has an opportunity to tap a new source of rare earth and avoid the nair yo but first we need to ratify the law of the sea treaty. the development of resources is expensive and companies in the united states are unlikely to invest heavily in deep, sea bed mining because of the risk of legal challengeths to their ac tif actists. today they will only do so if there is a structure in place that contains agreements. foreign mining companies whose governments have joined the convention have granted access claims to operate in the deep sea bed area.

manufacturers cannot afford for the united states to sit on the sidelines when it comes to the law of the sea treaty. we are in a global economy and countries are working feverishly to take away our man tell of economic leadership. we need to adopt policies that promote long-term growth. manufacturering in the united states promotes long-paying jobs. no doubt, everyone in this hearing room would like to see those numbers grow. a strong and prosperous country need needs a better system. >> thank you very much. mr. mcadam? >> thank you cmr. chairman,

ranking remembrank ing member rugar and members of the committee i would ask that my remarks be entered into the record. >> without objection they will be. >> i would like to discuss ways that the convention will operate for a global sea operator. my views are based on 20 years during which time i have helped build and fix global networks domestically and internationally. to provide voice, video, internet and data services over a network for over 80 submarine cables, verizon supports the

treaty. they are the life blood of the business and the digital trade route of the 21st century. aside from our land based connections, more than 95% of internation as communications traffic travels over 38 submarine cables each roughly the diameter of a garden hose. without these dacables current satellite capacity could carry only 7% of the traffic. any disruption to the global submarine network could have a significant effect or impact on the world economy. as one official from the federal reserve noted in refersing to submarine cable networks when

communication networks go down, the financial sector does not grind to a halt, it snaps to a halt. there must be an appropriate legal framework in the rule of law to protect submarine cables. these provisions go beyond existing international law to provide a comprehensive international legal regime for submarine cables wherever they are deployed. several incidents recently underscore the ourgent need for protecting this infrastructure. first, some have attempted to deploy, maintain and repair

unders underseacables. with a seat at the table, the united states can enforce the convention's freedoms to lay, maintain and repair undersea cables. second, ratification of the convention will help better contend with disruptions. for example, in march of 2007, disruptions of two large systems in southeast asian were damaged from vessels from vietnam were damaged and taken out of service, more than 106 miles of cable were removed from the sea bed and repaired at a significant cost. it would have been very helpful if the united states as well as u.s. companies, including verizon had been able to use the convention deter future

violations. finally, the convention will help the united states government and affected companies respond when countries attempt unlawfully to acquire licenses or permits before submarine cables can be laid or repaired. for example, verizon is a co-owner of the cable system which passes over the continental shelf co-owned by malta. even though the current agreement allows for transit, malta's resources threaten legal action if a license is not paid and the fees add additional costs and raise the spector of coastal nations imposing similar requirements for the soul

purpose of raising revenue at the expense of the operators and owners. by signing onto the convention, they will be able to enforce the treaty's freedom to lay and maintain submarine cables without fees lev vieed by coast states. companies can work with the appropriate u.s. agencies to enforce the freedoms to lay and repair cables saving millions of dollars over the life of a cable system. this will improve and put u.s. companies on a level playing field for operating level playing systems. in conclusion, the convention

will provide sconfidence that under sea investments are prote protected. it will provide tangible benefits for critical submarine cable infrastructure. verizon urges the senate to ratify the convention. >> thank you mr. chairman. >> thank you very much. i apologize for having had to step out for just a minute. um, i think you will be able to tell your grandchildren that while you were speaking history was being made. it just wasn't exactly your speech. >> it wouldn't be the first time. >> but, it is my understanding, i don't have the full story h e here, i think tom got a message if i'm correct. but i think the entire aca was upheld with the exception of the

federal government's power to terminate medicaid funds is that what you understood? >> yes, it is very complicated. the individual mandate was found to be a tax. it appears, and i have very little information. we had talked about this. that the chief justice moved to the other side so that he could write the opinion and i think that the opinion is going to be very interesting to read. so probably none of us want to say thig fanything for the next hour. >> that is probably very appropriate. let me come back to the importance of what is being said here. i think your statement here today is a very, very important one.

i don't think a lot of people have focused on the extent to which the entire society, defense industry, finance, banking, all of this, is wrapped up in the movement of information and the degree to which the ability to protect that is obviously very, very significant. um and to have rights, with respect to it that are clear, is obviously critical with respect to any kind of disbute and or intervention by someone, by a terrorist group of by a nation. and anyone could envision such taking place in the world we live in today. i appreciate that and it raises the larger question that i want to ask all four of you. some of the folks who have raised questions about the

treaty and we don't challenge anybody's right to do that. this are different opinions here about these things. but they have argued that there is nothing to bar you from just going out and do what you want to do. they argue that you can drill and mine the deep shelf, that you can mine the deep sea bed, that you can fix your cables, just go do it. and if there are any problems, we'll just use the u.s. navy and u.s. military power to protect those operations. now, you know, i'm not going to go into any of the questions raised about war powers resolution, the politics of war, any of that. just give us the practicalities. what does that approach do for your ability to go out and do it? could each of you respond to it? maybe you want to start, mr. gerard? >> surely. i think in simple terms, senator, the thing to remember is certainty. and as you quoted earlier, marvin otum, chairman of shell

in the united states made a simple comment. he said without certainty, the risk is too high. and fundamentally from an oil and gas perspective, that's what we looked at. we go through political calculation, risk calculation on every project. and if there is question who owns that right or who owns that land or who has that access, we might be able to have a theoretical conversation about what the u.s. navy can or cannot do, but we're talking billions of dollars of investment. one quick anecdote, senator, that you might appreciate. shell oil is moving hopefully to the arctic even as we speak. a few days ago they just released two of their vessels from the seattle region headed up to the arctic. they're in the fifth year of a permit. they have invested $4 billion. that's a b, $4 billion, and hopefully this summer they'll get their first permit for their first drill hole.

when we're talking about investments, we're talking about multibillion efforts here. unless we're talking certainty, unless we know who has the right claim, who goes there, we will not go there. i think he made that clear in his statement. >> let me say for one minute, mr. chairman, on the issue of capital that it takes, whether it's to dig up rare earth minerals or whether it's to go for oil and gas, or whether it is to make other advances, capital doesn't come if it isn't safe. money goes where it is safe, where it can be profitable, and where it's protected. so when we're talking about certainty, we're talking about a form of protection that we know we can get the permits. we can do our business. and by the way, of course we can always say we have a great navy, even though we're shrinking the size of the navy and we haven't

done sequestration yet and all of that sort of thing. i think it's a lot cheaper. i think it's a lot smarter. i think it's a lot more credible in the courts of the world to be a party to this treaty. and i think we must keep sight of the fact that when you're on the inside, you can do something about it. when you're on the outside, you're just going to tell them we have great massive navy power, and we're going to go do what we want to do. if we ever came to that, of course we can. but i think it's important. we're going to have competition for these areas. if we don't lay a claim to these extended areas, there are lots of other people. as you mentioned, i think it was you, in the arctic, we've got the russians. we've got the chinese will be there. everybody is up there. everybody wants to get in on the deal. well, why don't we just put our footprint there. all we have to do is put this treaty in place with the adjustments that should be made, put our people there, and lay

claim to what is rightly the resources of this country. >> anybody else want to -- you don't need to. yes, mr. timmons. >> well, 161 other countries would likely not recognize our claims if we're not a part of the treaty and they are. the world is a very different place today than it was 40 years ago. we are a global economy. we compete internationally. we are competing for those 95% of con whosumersive outside of the borders of the united states. many of the companies that would be able to invest and take advantage of the resources of the deep sea bed are international in nature, and they have operations in other countries. and through -- through commitments and treaties, they rely on other countries to follow the rules, whether it be in areas like dumping or ip protection or financing. these other countries or these companies will want to follow the rules as well, or they simply will not invest.

>> now let me ask you one other question with respect to this, that we're hearing from some people, we're hearing from some people that this may be a back doorway of enforcing the climate change treaty, something like the kyoto protocol. now i know we've had many discussions, mr. donohue, about that. we have worked together on some energy stuff. i know the chamber is in other people's concerns about costs being dumped on you that you can't handle and make you noncompetitive. and that's been a major issue as we wrestle with how to deal with these things. so i'll ask each of you the very same question. do you have any concern that joining the law of the sea is going to require the united states to somehow be mandated into the kyoto or any other climate change agreement? mr. donohue? >> well, if you read what seems to be the treaties and

environmental interest, we have met all of them. all of them. period. and if we were a party to the treaty and inordinate or particularly inappropriate climate demands were made on us, we would have the ability to veto it, veto it. it takes one veto. >> may i ask you -- yes, mr. timmons? >> you'll tell me how you think that is wrong, and i'll be happy to discuss it with you. >> i think that's a very important point that mr. donohue has just made. we would have the only permanent seat on the sea bed authority, and we would have the right to object to any provisions that are put forward. that said, there is nothing in the treaty that i've read that indicates that we would have to join kyoto or any other -- any other treaty of that type.

and that's coming from an organization that does not support kyoto and has serious reservations about a cap and trade regime. >> some critics have additionally argued that if the u.s. joins the convention, we're going to lose jobs. this chamber of commerce agree with that? >> no. if you expand the economy, if you -- and many of our jobs in the future are going to come from mining, from energy, from trade, and this clearly is a treaty that will enhance that, not detract from it. and i believe as we have said publicly not only about this treaty, but about the whole energy mining and other issues, these are where a lot of the jobs of the future are, these will create jobs. >> anybody else want to comment

on that? >> clearly it will be a job creator. let me raise one other anecdote. i know i'm raising a touchy issue here. ski stone xl pipeline. a lot of people don't realize keystone pipeline has 2400 u.s. companies involved in its development from 49 different states. we've only not found someone in the state of hawaii that is involved in the keystone xl pipeline development. so when you look at energy infrastructure, energy investments, they're huge job creators, and they occur places that you least expect. the multiplier effects in energy, particularly in oil and natural gas are very significant. and so we see nothing but upside through ratification, through the extension process to secure those rights hopefully so we can secure the opportunities to develop that resource. and it will flow clear across this country in a variety of different ways. >> thank you. yes, mr. mcconnell? >> yes, mr. chairman, i would

point out in our telecommunications administrations, the buzzword, number one word is reliability. and we invest as a company 16 to $17 billion a year into our networks. and we in the undersea cable area particularly invest in mesh networks so that we can avoid issues with large storms or earthquakes off the coast of japan. so we invest to get a level of certainty for our customers. when a nation takes a unilateral action like i have referred to in my testimony, you can't counter that with another investment. so this treaty allows us to have certainty around those sorts of unilateral actions, and the belief that we can resolve any conflict amicably and quickly. so my belief is it will help us with our certainty around investments. well will make more investments, and thattu