more jobs. >> my time is up. let me come back in another round. senator lugar? >> thank you, mr. chairman. i want to pursue some more of the certainty argument. this was made by others in earlier hearings in the committee. and yet we pursued this during the last hearing when former secretary of defense don rumsfeld who testified against the treaty. so i raise the question senator rumsfeld, how he would deal with this situation in which american companies were testifying, as you have today, that without certainty they would not be prepared to invest the billions of dollars that are required, thus there would not be the creation of the jobs nor the degree of energy independence or the other attributes. now his response, and i hope do

justice to it, he observed that while businesses always prefer greater certainty, they enter into uncertain investments all the time when they believe the potential benefits justify the risks. on that basis, he suggested the united states companies saw potential benefits from deep sea bed activities but go right ahead and make those investments, even if the united states did not ratify the convention because as a practical matter there is no impediment to their doing so outside the convention rules. and secondly, he observed u.s. companies might consider entering into joint ventures with companies from countries that are parties to the law of the sea convention. they could therefore secure rights under the convention that way without the united states needing to join the convention ourselves. these were supporting comments in terms of not ratifying, and

the basic thoughts of the opponents were that we are forfeiting sovereignty. we're forfeiting money through the royalties and those aspects. and finally, that there simply is no reason why we should not proceed anyway. we have the greatest fleet on earth. and if we're challenged, do we have the ability to rebut whoever is challenging us. so it is repetitious, but nevertheless these arguments have been strongly made. this is the reason we're going through these hearings for the third time about having had ratification starting from 2003 onward. how do you respond to secretary rumsfeld's suggesting that after all is said and done, you like certainty, but you take risks all the time and you have to sort of consider what the profit may be and proceed, given our fleets and given our general stature in the world. mr. gerard, do you have a thought about that?

>> i do. there is risk, and then there is risks, senator lugar. in this case, there is risks, everyday business risks associated with doing business and making risk assessments and judgments. very fundamental to that risk assessment is property right, who has right, who doesn't have right. this is a very fundamental issue. when you go out in the open waters beyond our 200 mile nautical mile border today, the risk goes up very significantly. i would suggest that the return is that great, then there would be people there today, and there aren't. to the second point that he has raised is probably correct. what will eventually happen is u.s. companies will be forced to partner with other nations who have acceded to the treaty, the 161 i believe that were mentioned earlier to find opportunities around the globe because they cannot find certainty or protect their own

interests through u.s. law, through u.s. practice. and so we find them teaming up with the russians, the chinese and others where their preference would be to take the lead and to go alone, or to find others as their junior partners in assessing and managing this risk. >> by definition of these partnerships, we already divide up the profits, leaving aside the royalties in the sixth year. >> well, that's right. and plus you're at the behest of others in looking for those partners. we have i might say the best companies in the world, the most technologically advanced. we are on the cutting edge of the abilities to go out in these deep waters and produce these energy resources. wide open risk without any limitation is a clear detriment. and as you have heard the people making those decisions in the boardrooms, the risk is too high. >> how do we deal with this second proposition being offered, and that is that after all we do have the largest

fleet, the only fleet that is everywhere. this is too bald a statement. but the idea is if there is a problem with somebody, you just shoot them up. you just plow right on through, that people recognize might and so forth. therefore all this quibbling over the royalties and so forth were just simply as a nation losing our sense of sovereignty, our sense of our ability to manage things. why doesn't that work really in the real world? >> thank you. you know, senator, we're a party to many agreements around the world, and there was a lot of opposition to them. a lot of people were upset we went into the wto. what we have found, a single important thing we have found is a way to adjudicate differences between countries. and in most of the time, the united states has won. on occasions we have lost.

and even then we have ignored some of those things to our own detriment. but i happen to think -- well, i have great confidence in the military, i happen to think it could be better if we could avoid most of the need to confront militarily by joining an organization that 161 countries are already in, couldn't all be wrong, and having a way to participate vigorously in the process. clearly, the amount of money that you're going to pay in some sort of royalties or fees is a fraction of what the government is going to make on this deal, and clearly, it would be much, much better to find -- find a way to explore these tremendous resources without having to do it under the protection of naval power. i mean under that argument, we could sail across any -- go anywhere in the world and pull up with our navy and say by the

way, we're going to dig right here. it may be your -- and those people may be claimants to that property because of their participation in the treaty, i wouldn't know. but i just think the argument that we're the toughest guys on the block so it's simple, we'll just go in there and do what we want is probably not the best argument for us to make. >> and senator, if i could just a couple of comments on both of your questions here. while we certainly do accept risk, and we balance that in all of our investments, it is very prudent for us to look for opportunities to lower risk wherever we can. and this seems like a very reasonable way to do that. we do partner with many different companies to do these large undersea cable networks that i talked about. and in some of the disputes that i have mentioned, we have had to go to countries like the uk and france and ask them, frankly, to carry our water for us.

and it seems almost an assault on our sovereignty that we have to go do that, because we don't have a seat at the table. for me to try to convince the navy to go dispatch a destroyer to fight over a garden hose-sized cable going into another country seems to be a bit of an overkill. >> thank you very much. senator corker? >> thank you, mr. chairman. thanks for having this hearing and your diligence in having many of these. and thank you as witnesses for being here. i know most of you well, and i appreciate you being here. and i will say that it's a little bit of an out of body experience to have especially you, mr. gerard, in here talking about something administration is doing to help the oil industry. i think it's not a pejorative statement to say that they've done everything they can to -- to hurt the oil industry. the keystone pipeline that you talked about is a great example

of this administration. basically, trying to keep something that is in the interests of americans and american jobs from happening very -- you know, looks like for political reasons. and yet, you know, we've had members up here, people up here many times talking about this being good for the oil industry. so secretary clinton was up here talking about the same thing. so as you can imagine, i'm sitting up here. it's a little bit of an extraordinary experience. and i wonder if you would explain to me why you think the administration is working so hard to help the whole industry with this treaty and yet domestically doing everything they can to damage it and keep it from being productive. >> well, i appreciate the question, senator. and the irony wasn't lost on me either when i was invited to testify. but let me just say this. let me step back and take a broader world u.s. view. what we're talking about here is

the future of the country and where we'll stand in that global economy and our potential opportunities. and so in our mind, we separate if you will the current domestic challenges or in our view inadequacies in terms of allowing us to produce our own domestic oil and natural gas which alerting to senators 85% of our domestic outer continental shelf is off limits today as a result of u.s. policy where we do have sovereign rights currently. we're frustrated by that. our views on that have not changed. but we look to the future, particularly in the arctic. and under the expanded continental shelf, we have the potential to move that 200 mile radius or limit out to 600 miles. it's a big deal moving forward. >> right. and i understand. i appreciate you being here. and i appreciate you experiencing the irony too. so you would be better off -- >> i would appreciate his full answer, though, too.

>> well, i had a feeling it might last a long time. >> it's because there is a lot to say. you have to own up to these things. >> the 200 mile piece, though, is probably easier gotten to by u.s. companies, is it not? and the extended piece is deeper and more difficult to explore, is it not? >> yes and no. oversimplified in some places in the arctic the water is relatively shallow in some areas. off the pacific coast it goes deeper quicker. so it varies in the area around the world. >> you can understand the perplexing nature of having secretary clinton and others up here advocating for the petroleum industry when what we see here domestically is something very difficult. but i know that -- >> i understand. >> thank you so much. mr. mcadam, i heard you talking

about the under -- the laying cable on the sea bed. and i know you have companies that operate in the uk. in fact, you have a major base of operations there. and i know that the uk is signatory to this treaty. so i guess i'm confused if you had issues, and i know you operate on a global basis. and most of the companies that the chamber represents that care about this treaty operate all around the world. i mean these are not companies that operate inside in tennessee. i don't understand why you can't adjudicate these claims through the uk if we're not signatory. it doesn't make any sense to me that all of this is riding upon u.s. -- the u.s. us being signatory to this treaty. >> senator, i just feel that we would be much more effective at having a seat at the table and having that discussion. to go to the folks in the uk who

are good partners certainly and try to convince them to carrying our water is difficult for them. they have to balance that with all their priorities. i think one step removed makes us less effective. >> let me make sure i understand correctly. a company doesn't have the ability to try to make claims itself. it has to have a country representing them in the process. that the way it works? >> well, we would certainly be active with our legal folks and with our operations on the ground. but our opportunity to be back stopped by the federal government is important to us. and i believe will make us more effective. >> but to answer the question clearly, you have the ability to make claims directly, do you not? you don't have to come and ask permission of the united states to come and do so. >> certainly. we would just existing -- >> so to say that our country has to be signatory to these treaties, to this treaty, when

basically every one of these companies operates on a global basis and has other outlets through which to make claims is not a true statement, is it not? >> well, obviously, we've operated for years without the treaty. but our point is today merely we would be more effective if we had it. >> and tell me how you would be more effective? because i would assume that the many people that work for you in the uk believe that they have a very effective government that they work with. and i'm sure when you're there before their governing bodies, you're telling them how effective they are. so tell me why that would make you more effective. i'm having a hard time understanding that. >> well, i think the issue is that you have many countries around the world, like the example of malta that i used that can take this sort of unilateral action. and there isn't a framework for redress. so this gives us the ability to not only work with malta

directly ourselves, but also to bring in the state department or other federal government rather than having to go a circumstance caught us to route through the uk. >> the issue of malta is not one of those issues where there is even a veto process, is there? i mean we can weigh in, but just to cite your malta issue, that's not something where the u.s. government would have a veto process. that's one where we would have a voice among many other nations in trying to cause that to be successfully agreed to. is that correct? >> i would have to look at the specific terms of the agreement and get our legal experts to weigh in on that. i'm frankly not competent to offer the answer to that. if you would like, i'll get that for the record, though. >> so look, i appreciate all of you being here. and i don't know whether you being here is good soldiers or whether this is something that you're passionate about. but you certainly are people that i respect. and i'm very neutral on this. i'm here to learn.

i've been to every one of these hearings, and certainly there are people in the audience, senator warner and others that i respect greatly in addition to all of you. i do want to say to you, mr. donohue, who i know well and certainly have worked closely with, your comment regarding the veto on the climate issue is categorically incorrect. and i would like for the record for your legal person to give us an opinion to that correct -- to that statement. because i don't think that's correct. and i know that you're here and you don't know every word of the treaty, as i don't. but i think you're mixing apples with oranges. and on the issue of climate issue, we do not have a veto process in place for our own country. if you could have your legal folks tell me differently as part of official record, or tell me that i'm right, i would greatly appreciate it.

but i think you're very wrong on that. >> well, senator, it wouldn't be the first time i'm wrong, but i'm very enthusiastic. and not here on behalf of anybody else, as the senator indicated. i was the one who was pushing him to do this. i will be very happy to have our legal guys do that. i think they're probably very involved for the next 24 hours or so on what just came out of the supreme court. but by early next week, we'd be very happy to do it. and i'll come up. and now that i understand that you are neutral on this and trying very hard to -- as we all did for a long time to get a good grasp on it, i'll make it my business to come and talk to you about it. >> might bring that legal opinion with you. >> i'll send it beforehand so you have a chance to look at it. >> and i'll say to all of you, look, i hope that what we'll do, i do want to make the right decision on this treaty. and as in every issue, i really want to understand the details. but i hope that the responses

will be deep and not rhetorical. i think there are a lot of details that many of us are concerned about, especially as it relates to the climate issue. but other issues that really matter to us, and some of the sovereignty issues really matter to us. and again, i respect all four of you. i know that there is no way that you could possibly know the details of this. you're here because you're the leaders of your organizations. and you have people in the bowels of your organizations that do know the details. but i do look forward to future conversations and very much thank you for being here. and i will see you i'm sure very, very soon. >> senator, just one point for the record. you know that the chamber is perhaps the most aggressive organization in the city on climate issues that affect adversely this country and our economy. and talk about something i'm really worried about is the climate decisions that were made

just two days ago by the district court. that's a real problem. so we have our -- we have very good people on this. i'll be very happy to get you an answer to your question. and i just want you to know i looked at this as a worrisome issue until i believe i have been carefully advised that we're okay here. but i will get that and come and see you. >> and if you could, since -- and i thank the chairman for giving me an extra minute or two. mr. mcadam, i would -- i would love it if somebody from your government relations office would share with me truly since you operate around the world and most of these companies that mr. timmons and mr. donohue and mr. gerard represent do, i really would like to know for a fact why it enhances a company's ability to make claims when they can easily make it through any other country that they operate in. i would really like to know

that. if you could send that to me, i would appreciate it. and again, i ask these questions with great respect. >> can i take a moment? i want to add, senator corker, if i could for just a minute. first of all, you know how much i appreciate the due diligence you do on this stuff. and i really am grateful to you for taking the time and looking at this without all the external influences and kind of working through it. but let me just say to you. with respect to the dispute resolution, and we'll get this for the record. you've asked it of mr. mcadam, but we'll also have our own council, which is important, and we can spend some time with you on it. you cannot only -- only a country has access to dispute resolution, not an individual company. so it's irrelevant that they may have a company working here or there. they have to get the company to represent them. and that's where we are disadvantaged is that the united states can't bring that on

behalf of our own company. you'd have to persuade another country, not the company within the country. so they don't have some sort of ability because they have affiliates around the world to just use the affiliate to advantage their interest. that's number one. number two, with respect to the veto, there is sort of a split decision here. it is correct that the isa, which is the larger group of the representative countries doesn't have a veto. the council has a veto. mr. donohue is absolutely correct with respect to the council and the issues within the council. and there are specific issues limited to the council. >> but, but -- climate is not e. climate is not one of those. >> okay. >> but, and here is the critical but for you there is a section which specifically states that you cannot be held accountable to any international lawgaing c else unless you as a nation have signed up to it.

and the united states senate has never ratified anything. so under this treaty, in fact we are completely protected as to any environmental effort because, one, it can't come through the council where we have the veto, and two, it is specifically stated within the confines of the treaty that you only are subject to something if you have signed up to it. and nobody come through the back door to make you sign up to it. so i think when you see that, i think you're going to feel completely comfortable. final question, let me just ask you. i want to get this on the record. is any one of you here because you're a good soldier, or are you here because you're representing your industries and you're expressing the views of the people you represent? mr. timmons? >> the latter, mr. chairman. >> mr. donohue? >> i asked you first to please get busy on the deal, and you did, and i thank you very much. we've -- we'll talk some more, senator. this is a very serious issue in so many ways.

and i think this is a vigorous discussion. and mr. chairman, thank you for resolving all that issue. my lawyers will get it done a lot faster. now. >> thank you. mr. gerard? >> until the question was asked, i didn't view it here being in support of the administration. our view transcends political party and administrations. our view, regardless of who is in the white house, we look at the substance of the treaty. and that's our focus. >> and i want to emphasize again, the administration did not ask us to bring this treaty out now. we went to the administration and said what do you think about it. again, it's clear on the record here. and mr. donohue has made it clear that he made the request for us to be here at this time initially, and that's what got us going. senator sheehan? >> thank you, mr. chairman, and thank you all for being here. i apologize for missing your testimony. i was in an energy hearing. so i'm actually going to start

with that, mr. gerard, energy. and i wonder if you could talk about why this treaty is important to the energy security of the united states. in your letter to the committee, you stated that access by securing the exclusive rights for oil and gas exploration. could you elaborate on that and why it's important? >> surely. it gives us extended opportunity with the extended outer continental shelf, the extended resource to develop those resources under the guise and direction of the united states and u.s. law. the one we're focused on more specifically right now, which is a talked about regularly is the arctic. it's estimated that the arctic has one-quarter of the world's oil and gas reserves that is a big number. and right now as we look at it, we will be limited in our ability to go beyond our

200-mile exclusive economic zone unless we become parties to the treaty and thus can claim the extended continental shelf. it's estimated our claim up there could go as far as 600 miles. it would give us a very significant footprint. and coming back do the fundamental issues i talked about earlier before you got here, senator, certainty is the key. if we have knowledge, understanding, and confidence into who has the rights, who controls what law controls, it's much more likely the investment will flow. if the risk is too high, the investment will occur, but it will go elsewhere in the world. the world continues to shrink as to our ability to continue to produce these resources. with modern technologies today, we can do things we couldn't think of 30 years ago when the treaty was first written and talked about. so it's a very significant time for us on a global basis to look at the potential for oil and gas development. >> thank you.

mr. donohue, in your opening remarks, you stated that companies -- companies will be hesitant to take those investment risks. and which echos what mr. gerard just said. i wonder if you could talk specifically about any sector of the u.s. business community that opposes u.s. accession to this treaty. have you heard from anybody who opposes it? >> there are a number of think tanks and others who are represent some elements of the business community. there are as senator corker indicated people who are concerned about environmental issues. but across the board, the people that we represent are concerned about the following issues. a, energy, which is the

financial base on which we're going to fix this economy and give us more energy security. second issue is some legal certain certainty. when 161 other countries are involved in a legal process of basically divvying up in their own mind the natural resources in the sea, also, a lot of very important issues are here on navigation, on supply chain management, on the ability to get at rare earth minerals. this to me, this is very important. an it's an easy issue because you have all -- you have many protections from any -- any difficulties that might come from being a part of the treaty,

you have many exclusions because you're not a part of the treaty. and as everybody on the panel indicated, obviously had the protection of our armed forces. but we can't sort of run around the world doing our business like that every day. although i would say that the chamber is a vigorous supporter of our armed forces because you can't participate in a global economy without security. and, you know, i think there is a very clear process in the chamber that brings the great preponderance of our members being in support of this. senator, you might imagine with more than 300,000 members and the ability to legally represent three million companies, i can never get everybody to agree on anything, including what day it is. >> but just to be clear, you haven't heard from the businesses that you represent any significant downsides to

this country ratifying this treaty? >> exactly, that's correct. and i am more comfortable myself after i have spent a good deal of time exploring that question with our own associates and with people around the city and with members of the congress. and i thank you for that question. >> thank you. mr. timmons, mr. donohue talked about the rare earth minerals from china just now. and you pointed out in your testimony that china is in the process of sharply reducing those exports, and that they may ev eventually consume all of them within that country. can you talk about what the impact might be both on what the advantages of our ratification of the treaty gives us as we're competing for those rare earth minerals, and then what would happen if