national security interests and why it's essential to the leadership. on the economic side the treaty would be a boom to the u.s. economic growth by providing american companies with the legal certainty and the stability that they need to hire and invest. it would codify the u.s. legal rights international shipping lanes and delay and service under water cables and to develop vast amounts of oil, natural gas and minerals off the u.s. coast and in the deep water sea bed. the treaty would benefit several industries keen to economic growth, job creation and u.s. competitiveness. it would benefit the energy industry by providing sovereign rights to seabed resources' 200 miles off our coast. if certain geological criteria

are met, the zone of the sovereignty could extend to 600 miles or the so-called extended continental shelf. proper delineation of the extended continental shelf could bring an additional 4.1 million square miles of ocean floor under u.s. sovereign rights, an area larger than the lowest -- than the lower 48 states. the treaty would also allow the u.s. to have a u.s. expert elected to the international body that determines the claims in the arctic and there are going to be a lot of them. securing international recognition for u.s. rights in these wears and defending against the unreasonable claims of other nations is vital to the economic prosperity of our nation. the telecommunications industry needs a treaty to codify the right delay and maintain

underwater cables in the oceans of the world. it also needs them to provide stronger protections for cables against damages by other parties. a wide range of domestic indz stress including aerospace, defense and consumer electronics need the treaty to enable access to new sources of mineral resources including rare earth minerals as the senator indicated which lie in massive deposits on or beneath the deep seaboard floor. companies need the legal certainty and the stability provided by the treaty in order to minimize the investment risks and cause to developing these resources in the u.s.'s extended continental shelf in an area beyond that, the deep sea bed. that's why the treaty's approval

is so important to sustaining american jobs and protecting american interests close to our mainland. now let me say a word about national security. the treaty clearly is essential to america's national security. the u.s. chamber has a long and proud history of supporting america's national security interests. for example, we played an instrumental role in mobilizing americans' industrial mite to fight in world wars 1 and ii. i put that in there, mr. chairman, because we just celebrated our 100th anniversary and we took the time to read why the chamber was founded and what its basic principles were which were to represent the american business community and represent at the highest level with the greatest service our country and its needs. we have long supported a robust national defense and we have

recently launched a major effort called hiring our heroes to employ veterans by matching them with employers all around the country. it is in this tradition that we support approval of the law of the sea as, at any given time, at any u.s. flagships and ships owned by u.s. companies and the freed ochl navigation rights codified in the treaty while crossing the world's oceans. in fact, sea-faring vessels transport more than 95% of all goods, imported to or exported and from the united states including essential, and while we can always rely on the u.s. navy to ensure lawful passage of u.s. flagged and owned shirngs the chamber strongly supports the navy's desire to codify

rights to freed ocom of navigat and the treaty rather than rely on the customary international law or strong navy. let me say a word about a seat at the table. the treaty is critical to america's global leadership. as the world's preeminent maritime power with one of the largest continental shelves, the u.s. has more than any other country to gain or to lose based on how the treaty's terms are enter pr interpreted applied or changed. it will form the basis of the maritime law with or without our approval, our nation's interests are being enacted by being an active participant. there's a lot of comment and suggestion that this organization is set up in jamaica is going to run our lives. it clearly is not, but what a

mistake we make if we don't join the treaty and put our representative there who would have the absolute power to veto any action suggested by the organization. now let me say a word about our critics of the treaty who i have a lot of respect for, but i'd like to -- but two of the chief criticisms that we hear. the first is that it erodes american sovereignty and this couldn't be further from the truth. this treaty promotes our sovereignty by codifying the property rights and on our extended continental shelf. it will be ours, people will know its ours and we have every right to defend it and the second is opposition to a small portion of royalties from the development that will be going to the international sea bed authority. my response is simple. the u.s. treasury will lose hundreds of hundreds of billions

of dollars in royalty revenue by not providing companies the legal certainty and stability to develop its extended continental shelf. it's a simple balance. we get most of the money under that system. the treaty provides which certainty will explore and develop these areas and produce billions and billions of dollars in royalties going to the government. and finally like any agreement, this treaty is not perfect. it will be changed like all treaties are and we better be sitting at the table. today the benefits far outweigh the costs and we must protect those benefits. for all of these reasons the u.s. chamber urges the senate to give its advice and consent to the law of the sea treaty. the treaty has the enthusiastic backing of every industry it impacts including energy, telecom, shipping, mining, fishing, biotech, et cetera.

it enjoys the support of every living secretary of state and the joint chiefs. senate approval is imperative to expand u.s. territory beneath the oceans to protect vital, national security interests, to develop new commercial interests and to create jobs. so i thank you for allowing me to share these obvious comments. i'm sure the discussion will get more specific, but the bottom line is very simple. the benefits are all to accrue to this country and to our economy and we ought to move forward on it, thank you very much, mr. chairman. >> thank you very much for your testimony. we appreciate it. mr. gerard? >> thank you, mr. chairman, and ranking member lugar and senators web and corker, and it's a pleasure to be with you today. in light of your statement, mr. chairman, as you started we need to thank tom for your opportunity as well, right?

>> that's right. >> it's always good to be with you here at the table with the others. on behalf of the member companies along with the 1.2 million americans along with the u.s. oil and natural gas industry and we appreciate the opportunity to be here today to testify in support for the law of the sea treaty. >> we agree with secretary of state hillary clinton and the former secretary of state condoleezza rice and with the other secretaries of state before her as well as presidents of both political parties who have urged succession. the law of the sea concession 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 we consume. the recent economic projections by our own department of energy in the obama administration show that 30 years from now, 57% of all the energy we consume in the

united states we continue to be oil and natural gas. other projections show the demand for world, global energy led by oil and natural gas will increase by over 50% in the next 20 to 30 years. energy is a very serious issue particularly to our global economy. companies spend billions of dollars annually looking for and producing oil and natural gas around the world to give you some insight from 2009 to 2011, the industry spent over $700 billion just in the united states drilling and exploring for additional opportunities. just last week at the lee sale conducted in the gulf of mexico, the u.s. oil and gas industry paid $1.7 billion in bonus bids to the federal government to secure rights to develop those 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 1 million additional square kilometers and could contain resources worth billions, if not trillions of dollars to our u.s. economy. the convention provides a clear objective means of asserting u.s. authority and gaining international recognition of that authority, reducing the potential for jurisdictional conflicts between nations. this provides certainty for business planning so that companies can manage their financial risk over the lifetime of their investment. i might add, that when we in the oil and gas business look for investment opportunities, we're not looking quarter by quarter, year by year. we look 10, 20, 30, at 40-year horizons when we're talking

about multibillion-dollar investments. this certainty will increase the likelihood of companies investing in the extended continental shelf. this, in turn, 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 definition of the continental shelf in a way that would significantly favor the united states. as tom touched on earlier, it would secure an additional $4.1 milli million -- and provide natural resources in the arctic and other areas where in other countries and russia, for instance has already laid claim will protect our navigational rights and freedoms for our vessels. we understand that there are legitimate concerns about certain aspects of the convention. we greatly appreciate the

attention by members to ensure that this convention is truly in the best interest of the united states. i'm here today to express to you the benefits for the oil and gas industry. our expectation is the administration and the congress will continue to work to ensure that the u.s. interests are protected as they represent the nation in the implementation in the treaty. in short, the law of the sea convention will advance and protect america's energy interests. it will mean a level playing field and new opportunity for marine sources development all around the world. thank you again, mr. chairman and members of the committee, and i look forward to your questions. >> thanks very much, mr. dryden and just before you do start, let me just say in response to your expressed hope that the congress -- that the senate is going to make sure that we

protect and address any of those concerns. i want to say to my colleagues that we will have a set of specific declarations and understandings that clarify some of the concerns that have been raised by people as they've govern along here. so there will be crystal clarity with respect to issues raised by tax and issues and that will be taken care of. >> thank you very much, mr. chairman, senator lugar and members of the committee for the opportunity to speak about the law of the sea treaty which is vital for both our national security as well as our economic security. the national association of manufacturers is the nation's largest manufacturing trade association and we represent 12,000 manufacturers of all sizes across our country. i am pleased to have the voice of manufacturers in support of the adoption of the law of the sea treaty because its approval is absolutely critical for the

manufacturer's ability to compete and succeed in the global marketplace. one key to manufacturing growth and competitiveness is exports. 95% of the world's consumers live outside of the united states so reaching these potential customers is absolutely necessary for manufacturing competitiveness. most significantly it is 20%. 20% more expensive to manufacture in the united states than it is among the major trading partners and that's after you remove the cost of labor. this treaty will help reduce the cost of manufacturing in two very important ways. first, it will provide new opportunities as you've heard from my colleagues here, for energy exploration, secure and reliable sources of energy are a significant concern for manufacturers which consume one-third of our nation's energy output. secondly, it will open up access to critical inputs from many manufacturing applications.

if you use a cell phone or a computer or drive a hybrid car, chances are that componentses of that product contain what are known as rare earth minerals. rare earths are the basic inputs in the production process for many items such as renewable energy, products, defense products, consumer electronics and others. today, as was noted by the chairman, china produces upwards of 95% of the world's supply of rare earth minerals. brazil, india, malaysia and canada are the remaining sources and while china uses 60% of the rare earths that it means today there's no doubt that it will likely use all of that, that it produces eventually. if that happens, that's going to jeopardize manufacturers' access to these materials. costs will rise as they have been. not only on manufacturers, but also on consumers. 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 scenario, but first, we need to ratify the law of the sea treaty. the development of resources on or near the deep sea bed, companies in the united states are unlikely to invest heavily in deep seabed mining because of the risk of legal challenges to their activities. today, many u.s. companies have means to explore and develop these resources and minerals, but they will only do so if there is a structure in place that contains internationally recognized agreements. ratification will give companies the certainty they need to begin to develop these resources. mining companies whose governments have joined the convention have access to the international bodies that grant the legal claims to operate in the deep sea bed area.

u.s. companies are excluded by those because we have not ado adopted the treaty. manufacturers cannot afford for the united states to sit on the sidelines when it comes to the law of the sea treaty. we're in a global economy, and countries are working, and to take away the mental, and the manufacturing in the united states maintain our economic position. we need to adopt policies that promote long-term and sustained economic growth. manufacturing in the united states employs over 12 million americans with high-paying jobs and the sector supports 5 million more jobs in this country. no doubt, everyone in this hearing room would like to see those numbers grow. a strong and prosperous country needs a strong manufacturing sector and this treaty will strengthen manufacturing and it will strengthen our nation. thank you again for the opportunity to speak with you today. >> thank you very much, we appreciate it. mr. mcadam. >> thank you, mr. chairman, ranking member lugar and members of the committee.

thank you for the invitation to speak before the committee today. i would ask that my full remarks be entered into the record. >> without objection they will be. >> so far today you've heard a broad perspective from my esteemed colleagues on the law of the sea. what i would like to do is discuss ways that the convention will strengthen protection for a global, undersea cable operator. in the telecommunications industry, during which time we've had both fixed and mobile networks domestically and internationally. as a major communications company utilizing the international sea bed to provide voice, video, internet and data services over a network of more than 80 submarine cables, verizon supports the u.s. ratification of the law of the sea convention.

fiber optic submarine cables are the lifeblood of u.s. carriers' global business and the digital trade route of the 21st century. aside from the land-based connections with canada and mexico, more than 95% of international communications traffic travels over 38 submarine cables, each roughly the diameter of a garden hose. without these cables, current satellite capacity could carry only 7% of the total u.s. international traffic. any disruption to the global submarine network could have a significant effect on the flow of digital information around the world as well as an impact on the world economy. as one official from the federal reserve noted in referring to submarine cable networks, when communications networks go down,

the financial sector does not grind to a halt. it snaps to a halt. there must be an appropriate legal framework based upon global cooperation and the rule of law that protects submarine cables. the convention provides this necessary framework in ten provisions applicable to 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 urgent need for a clear and unambiguous framework protecting this vital communications infrastructure. first, some nations have attempted to encroach on the ability of u.s. operators to deploy, maintain and repair undersea cables. this is in violation of the convention.

where the seat at the table, the u.s. can more effectively oppose these types of foreign encroachments and enforce the convention's freedoms to delay, maintain and repair undersea cables. second, ratification of the convention will help u.s. companies better contend with disruptions to undersea cables. for example, in march of twernt 07 large sections of two active, international cable systems in southeast asia were heavily damaged by commercial vessels from vietnam and taken out of service for three months. 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 affected u.s. companies including verizon has used the convention to arbitrate disputes over service disruptions and

deter future violations. finally, the convention will help the united states government and affected governments when they attempt unlawfully to require licenses or permits before submarine cables can be laid or repaired. as an example, verizon is a co-owner of the europe-india gateway submarine cable system which passes over the continental shelf claimed by malta, but never enters malta's territorial seas. even though the convention allows for such transit without interference by coastal nations, malta's resource authority has threatened legal action if the cable operators do not obtain a license and pay a significant fee. not only do these fees add unforeseeable costs, they raise the specter of coastal nations imposing similar requirements for the sole purpose of raising

revenue at the expense of the cable operators and owners. by signing on to the convention, the u.s. will have an enhanced ability to effectively support american parties to such disputes and enforce the treaties expressly-stated freedom to lay and maintain submarine cables without else to, taxation or fees levied by coastal states. once the u.s. is party to the convention, verizon and other use telecommunications companies can work with the appropriate u.s. agencies, and the life of a cable system. and the convention -- and the

more specific and reliable law and the convention will provide tangible benefits to specific new protections for critical submarine cable infrastructure. verizon urges the senate to ratify the convention. thank you, mr. chairman. >> thank you very much, i really appreciate that, and i apologize for having to step out just for a minute. i think you'll be able to tell your grandchildren that while you were speaking history was being made. it's just that it wasn't exactly your speech. >> it wouldn't be the first time. >> but it's my understanding, i don't have the full story here, i think tom, you also got a message, if i'm correct and i think the entire aca was upheld with the exception of the federal government's power to

terminate medicaid -- medicaid funds, that was narrowly drawn, but otherwise, that's what with i understood. is that what you understood? >> yes, it's very complicated, first of all is the individual mandate was found to be a tax and it appears that very little information we had talked about with the chief justice moved to the other side so that he can write the opinion, and i think the opinion will be very interesting and so we probable -- probably none of us want to say anything for the next half hour. >> that's accurate and we'll wait to get a readout at the appropriate time. let me come back, if we can, to the importance of what is being said here and i think your statement today, mr. mcadam, is a very, very important one because i don't think a lot of

people have focused on the extent to come the entire society defense industry, finance, and banking and 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. and to have rights with respect to it that are clear is obviously critical to any kind of dispute, and/or intervention by someone, by a terrorist group or by a nation state and obviously, one could envision any such intervention taking place in the world we're living in today, and i appreciate what you've said 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

any of those to do that. obviously, there are different opinions here about these things, but they have argued that companies -- that there's nothing to go out, just to go out and do what you want to do. they argue that you can drill for oil and gas in the extended shelf and you can mine the deep sea bed and fix the cables and just go do it and if there are problem, just use the u.s. navy and military power to protect those operations. now, i'm not going to go into any of the questions raised about war powers resolution and the politics of war and any of that. just give us the practicalities. what does that approach for you to go out and do if anything. and the word certainty, and as you quoted earlier, marvin odom & the chairman of shell and the

united states made a simple comment and he said without certainty the risk is too high. fundamentally from an oil and gas perspective and the political calculations on every project and the question is to who has that right and who has that land or who has access and they might 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 that you might appreciate, shell oil is moving hopefully to the arctic even as we speak, a few days ago they released two of the vessels from the seattle region and 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 the first permit for their first drill hole. so when we talk about investmes