captions copyright national cable satellite corp. 2008 i would suggest that if the return is 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, thought u.s. practice, and so, we find they're teaming up with the russians and with the chinese and others or 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. >> my 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 the deep waters and produce these energy resources. wide open risk without any limitation is a clear detriment, and as you've heard those people making the decisions in the boardrooms, the risk is too high. >> how do we deal with this second proposition being offered

and that is, after all, we do have the largest fleet, the only fleet that's everywhere and the bold statement but the idea is if there's a problem, someone should just shoot them up and you plow right on through, that people recognize and so forth therefore all this quibbling over the royalties and therefore we're as a nation losing our sense of sovereignty, our sense of ability to manage thing and why doesn't that work in the real world? >> your turn. >> thank you. senator, we are party to many agreements around the world and there is a lot of opposition to them, a lot of people were upset we went in to the wto. what we have found a single important thing, and to way to adjudicate differences between countries and most of the time the united states has won. on a cases we've lost and even

then we have ignored some of those things to our own detriment. but i happen to think while i have great confidence in the military, i happen to think it would be better to 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's going to make on this deal. and clearly, it would be much, much better to find a way to better to find a way to explore these tremendous resources without having to do it under the protection of naval power. under that argument, we could sail across -- go anywhere in the world and pull up with our

navy and say, by the way, we are going to dig right here. it may be your -- your 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. >> senator, if i could just a couple of comments on both of your questions here. while we certainly do factor in risk and balance that with our investments, it is very prudent for us to look for opportunities to lower risks wherever we can and this looks 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 some of the disputes that i've 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 like 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 dispatch a destroyer to fight over a garden-hose size cable going in to another country seems to be a bit of 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 hurt the oil industry. the keystone pipeline that you talked about is a great example of this administration,

basically trying to keep something that's in the interest 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 could 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. >> i appreciate the question, senator, and the irony wasn't lost on me either when i was invited to testify. let me just say this. let me step back and let me take a broader world, u.s. view. what we're talking about is the

future of the country and where we'll stand in the global economy and our potential opportunities. and so in our mind, we separate, if you will, those current domestic challenges or in our view. or in our view, inadequacies in terms of allowing us to produce our own oil and natural gas, what you are alluding to, senator is 80% of the continental shelf is off limits today as a result of u.s. policy where we do have sovereign rights currently. we're frustrated on that. our views on that have not changed. 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. >> let me ask you this -- >> that's a big deal moving forward. >> and i understand. i appreciate you being here, and i appreciate you experiencing the irony, too. so you'd be better off -- >> i would appreciate his full answer, too. >> well, i had a feeling it might last a long time.

>> there's a lot to say. you got 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. to oversimplify it in some places in the arctic, the water is relatively shallow in some areas. off the pacific coast it goes lower quicker and 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 with what we see here is something very different. >> i understand. >> yeah. thank you so much. mr. mcadam, i -- i heard you talking about laying cable on

the seabed, and i know you have companies that operate in the uk. as a matter of 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. these are not companies that operate in tennessee. i don't understand why you can't adjudicate these claims through the u.k. 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. >> well, senator, i just feel that we would be much more effective 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 carry our water in talking to another country i think is difficult for them. they have to balance that with all of their priorities and 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, is 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 government to do so? >> certainly. we would use existing -- >> so to say -- so to say that -- 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'd 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 -- work with

malta directly ourselves, but also, to bring in the state department or other federal government rather than having to go a circuitous route through the uk. >> now the issue of -- the issue of malta is not one of those issues where there's 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 answer that. if you'd like i'll get that for the record, though. >> so look. i appreciate you all being here. i don't know whether you're being here as good soldiers or whether this is something 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. donahue, 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 the climate issue, we do not have a veto process in place for our own country. so if you could have your legal folks tell me differently as part of the official record or tell me that i'm right, i'll greatly appreciate it. i think you're very wrong on that.

>> well, senator, it wouldn't be the first time i'm wrong. >> yeah. >> but i'm very enthusiastic, and not here on behalf of anybody else as the senator indicated. i was the one that was pushing him to do this. i would be very happy to have our legal guys do that. i think they're probably very involved the next 24 hours or so on what just came out of the supreme court, but by early next week we'll be very happy to do it, and i'll come up. 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. >> no, i'll send it beforehand so you have a chance to look at it. >> and i 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 with especially with issues that relate to the climate issue and other issues that matter to us and some of the sovereignty issues matter to us. i respect all four of you. i know there's 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 organization 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.

and 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 in most of these companies that mr. timmons, mr. donohue and mr. gerard represent and 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 would send that to me, i would appreciate it.

again, i ask these questions with great respect. >> can i take a moment? i want to add, senator, if i could, just for 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 counsel add in which is important, and we can spend some time with you on it. you cannot -- 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 country 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 interests. that's number one. number two, with respect to the veto, there's 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 climate is not one of those. >> let me just finish. you're correct, climate is not one of those. you're correct, but, and here's the critical but for you, there is a section which specifically states that you cannot be held accountable to any international law regarding climate or anything 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've signed up to it, and nobody comes 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. i mean, 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 that. my lawyers will get it done a lot faster now. >> thank you. mr. gerard. >> until the question asked i didn't view it as being here in support of the administration. our view transcends political party and administrations. our view, regardless of who's 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's 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 shaheen? >> 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 accession will provide great energy security by securing the united states exclusive rights for oil and gas production. so could you elaborate on that and why -- talk about why it's important? >> surely. it gives us expanded 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. when we're focused on more specifically right now which is a talked about regularly as the arctic. it's estimated 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. coming back to 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 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 will be hesitant to take those investment risks, and which echoes 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. succession 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 crocker 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 certainty when the 161 other countries are involved in a process of basically divvying up in their own mind the natural resources in the sea. also, a lot of very important issues here on navigation, on supply chain management, on the ability to get at rare earth minerals. this -- to me, this is very important and it's an easy issue because you have all -- you have many protections from 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, you 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 to being in support of this. senator, you might imagine with more than 300,000 members and the ability to legally represent 3 million companies, i can never get anybody -- 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's in the process of sharply reducing those exports and that they may eventually consume all of them within the country. can you talk about what the impact might be on both 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 china, in fact, did consume what it's currently exporting all within country and

what impact that would have on consumers and on businesses and jobs in this country? >> yes. if i start with the latter question first. if we don't ratify the treaty and businesses don't make the investments necessary to take advantage of the rare earth modules that exist on the seabed floor and china does use all of its rare earth materials, it would be devastating to the american economy, to manufacturing and to jobs in this country. the bottom line, as has been stated many times on this panel, is that businesses require certainty before they make multi-billion dollar investments. mining on the seabed floor is not an inexpensive proposition. it requires years of studying, planning, mapping and significant investment to do so.

and companies simply aren't going to do that without the certainty that the treaty provides. one of the reasons that we have the strong military that we've all acknowledged and that we all admire is because we have economic might in this country. the rare earth debate is one that businesses have been quite aware of for a number of years but it's rather new in the public dialogue, but it is one that will determine our ability to compete and succeed in the international marketplace in this global economy. and it's one that we simply cannot take for granted moving forward. >> and you talked about the importance of certainty before companies are going to be willing to invest large amounts of money that are required. can you talk about the extent to which those investments are happening right now or are those sitting on the sidelines waiting to see what happens with this debate? >> they are sitting on the sidelines for the most part, senator. and i would say that it's not only in this realm.

i think it's very important to remember that it's 20% more expensive to manufacture in this country than among our major trading partners after you take out the cost of labor, and that's because of lots of different things. taxes, regulation, energy where for the first time in many, many years we actually have a slight cost advantage. but this is another significant amount of uncertainty that will not allow capital to flow to those investments. >> thank you. >> senator, just one comment and jack gerard may want to mention, while there aren't many companies down on the deep part of the shelf bringing up the rare earth materials, many companies are preparing to do it. you just don't go out there with a boat and throw something over the side. this is a huge, complicated, technical issue, and there's a lot of money being invested by