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 2007 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. this convention will improve the reliability of our infrastructure and put u.s. companies on a level playing field.

it will provide tangible events for critical cable submarine inf infrastructure. 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.

>> i think what you need remember is the word certainty. . he said without certainty the risk is too high. from an oil and gas perspective, that's what we looked at. we go through political cal c calculati calculation, risk calculation on every project. we might be able to have a conversation what about the u.s. navy can and cannot do. we're talking billions of dollars of investments. 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 investments we're talking about multibillion-dollar efforts here. so unless we have certainty and know who's got the right claim and who controls that area, our money will not go there, and i think marv odom made it quite clear in his statement. >> let me state for one minute, mr. chairman, on the issue of capital, what it takes, whether it's to dig up rare earth minerals or whether to go for oil and gas and whether it is to make other advances and the capital doesn't come if it isn't safe. money goes where it's safe and where it can be profitable and where it's protected and so when we're talking about certainty, we're talking about a form of protection that we know we can get the permits and 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, and 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. when you're on the inside you can do something about it. when you're own the outside you can tell them you're going to go do what you want to do. . we'll have competition for these areas. if we don't lay a claim to these extended area, there are lots of other people as you mentioned, i think it was you, in the arctic. we've got the russians and the chinese will be there, everybody's up there and everybody wants to get in on the deal.

why don't we just put our footprint there. all we have to do is put this treaty in place, with the adjustments that need to be made and put our people there and lay claim to what is rightly the resources with this country. >> yes, mr. timmons? >> 161 other countries would likely not recognize our claims if we're not a party of the treaty and they are, and the world is a very different place, and we're a global economy and we compete internationally and we are competing for the 95% of consumers in the united states. many of the companies that would take advantage of the resources are international in nature and they have operations in other countries through commitments and treaties and they rely in other countries and, and i.p. protection and these other

countries and these companies want to follow the rules, as well, or they simply will not invest. >> now, let me ask you one other request with respect to this, that we're hearing from some people. we're hearing from some people that this may be a back doorway than enforcing the treaty like the kyoto protocol. i know we've had many discussions about that. we've worked together on some energy stuff. i know the chambers and other people's concerns about costs being dumped on you and that's been a major issue as we learn how to wrestle with these things and we'll ask each of you the very same question. do you have any concern that joining the law of the sea will require the united states to somehow be mandated into the kyoto or any other climate change agreement.

if we read what seems to be the treaty's environmental interest, we've met all of them, period, and if we were a party to the treaty and inordinate or particularly inappropriate climate and demands were made on us and we would have the ability to veto it. veto it. it takes one veto. >> and he'll tell me how you think he does and i'll be happy to discuss it with you. >> it's a very important point that mr. don hugh has made and we would have the sea bed authority and we would have the right to object to any provisions that are put forward. that said, there's nothing in the treaty that i've read that indicates that we would have to join kyoto or any other treaty of that type and that's coming

from an organization that does not support kyoto or has serious reservations about a cap and trade regime. >> some treaties argue that if the u.s. joins the convention we'll lose jobs. does the chamber of commerce agree with that? >> no. if you expand the economy, and many of our jobs in the future come from mining, energy and trade and this clearly is a treaty that will enhance that, not detract from it, and i believe that 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 in the future are, and i think they'll create jobs. >> anyone else want to comment on that? >> senator, surely, it will be a job creator and let me add one other anecdote and the keystone excel pipeline. a lot of people don't realize that the keystone excel pipeline has 2400 companies from 49 different states. we've only not found someone in the state of hawaii that's involved in the keystone excel pipeline development. so when you look at energy infrastructure and energy investments they're huge job creators and they occur in places that you least expect. the multiplier effects particularly in oil and natural gas are very significant and so we see nothing, but upside through ratification and the extension process to secure those rights hopefully so we can secure the options to develop that resource and it will flow clear across this country in a variety of different ways.

>> thank you. >> mr. chairman, i would point out in our industry, the telecommunications, the buzz word, the 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 in particular 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 the level of certainty for our customers. when a nation takes a unilateral action like i 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. and that will help us with the

certainty around investments and we will make that and that in turn will create more jobs. >> my time is up. >> thank you, mr. chairman. i want to pursue more of the argument and this was made by others in the earlier hearings in the committee and during the last hearing and former secretary of defense donald rumsfeld who testified against the treaty. so i raise the question, and secretary rumsfeld, how we deal with the situation and how american companies are testifying as we have today that without certainty they would not be prepared to invest the billions of dollars that are required and thus that would not be the creation of the jobs nor

the degree of energy independence or the other attributes. his response, and i hope i have justice to it, he observed that while businesses always prefer certainty, we have uncertain investments all of the time when they believe the potential benefits justify the risks. on that basis he suggests to the united states companies that saw potential benefits from deep sea bed activities then go right ahead and make those investments even if the united states did not ratify that convention. there is no impediment and they're doing so outside the convention rules. secondly, observe u.s. companies might consider entering into joint ventures with companies from countries that are parties to the law of the sea convention. they can therefore secure rights under the convention and that way and now that the united states needing to join the convention ourselves and these

were supporting comments in terms of not ratifying and the basic thoughts of the opponents thought that we are forfeiting sovereignty or forfeiting money through the royalties and those aspects and finally that it's no reason why we should not proceed anyway. and if we're challenged and we have the ability to rebut whoever is challenging us. so as it's a repetitious, but nevertheless, these arguments have been strongly made. this is the reason that we're going through these hearings for the third time and not having had ratification and started from 2003 onward, how do you respond to secretary rumsfeld suggesting that after all is said and done, he likes certainty, but you take risks all of the time and you have to sort of consider what the profit may be and proceed given our fleet and given our general stats in the world. have you ever thought about

that? >> i do. there's risk and then there are risks, senator lugar. in this case, there are risks every day, everyday risk associated with business and making risk assessments and judgments. very fundamental to that risk assessment is property right and who has right and who doesn't have right and this is a fundamental issue and you go beyond the 200 nautical mile today, the risk goes up very significantly. 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 raise side probably correct. what will eventually happen is u.s. companies will be forced to partner with other nations who have acceded to the treaty because they cannot find certainty or protect their own

interests through u.s. law or 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 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 and the most technologically advanced and 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 heard those people making the decisions in the board rooms, the risk is too high. >> how do we deal with the second proposition being offered

and that is after all, we do have the largest fleet, the only fleet that's everywhere and 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 and it's simply as a nation, losing our sense of sovereignty and our sense of ability to manage thing and why doesn't that work in the real world. >> senator, we are a party to many agreements around the world, and there is a lot of opposition to them and a lot of people were upset and we went to the wto. and what we have found a single

important thing, and to adjudicate between countries and most of the time, and on occasions we'd, and when we have our own detriment, but i happen to think that we have great competence in the military. i happen to think that 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 and couldn't all be one, and having a way to participate in the process, and giving the money that pays some sort of royalties or fees is a fraction of what the government will make on this deal and clearly it would be much, much better to find a way to explore these tremendous resources without having to do it under the protection of enabled power. under that argument, we could sail across -- go anywhere in

the world and pull up with our navy and by the way, we will dig right here and maybe you're -- 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 and we'll just go in there and do what we want is probably not the best argument for us to make. >> senator, just a couple of comments on your questions here, and while we balance that in all of our investments, it is very prudent for us to look at 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've 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 do that because we don't have a seat at the table. for me to try to convince the navy to dispatch a destroyer with the garden hose-sized cable 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 and you're talking about something the administration is doing to help the oil industry. it's not 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. it 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. as you can imagine i'm sitting up here and 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. >> i appreciate the question, senator, and the irony wasn't lost on me either when i was

invited to testify. 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. so in our mind, we separate, if you will, those current and domestic challenges 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 and frustrated by 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 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 have to allow 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, oversimplify it in some places in the arctic and the water is relatively shallow in some areas, and off the pacific coast it goes lower quicker and it varies in the area around the world. you can understand the perplexing nature advocating for the petroleum industry with what we see here is something very different. >> i understand. >> yea. thank you so much. mr. mcadam, i -- i heard you