Senator METCALF. Our next witness is Northcutt Ely.

We are pleased to have you before us again. You have been given about 15 seconds from Mr. Hawkins.

STATEMENT OF NORTHCUTT ELY, SPECIAL COUNSEL FOR DEEPSEA VENTURES, INC.

Mr. ELY. Thank you, Mr. Chairman. I am honored by the opportunity to appear again before your committee as I have over many years in the past. At the outset, Mr. Chairman, for the benefit of those not familiar with your leadership in this flight for legislation and fight against the frustrations involved in this treaty, I should say that 7 years ago in 1970, the senior members of this committee led by Senator Metcalf, signed a letter to the Secretary of State objecting in the strongest terms to the submission by the United States to the Seabed Conference in Geneva, the proposed draft treaty.

You pointed out, inherent in this treaty, the evils you are confronted with today, namely the creation of a giant supergovernment composed of a council and assembly of 155 nations, a Secretariat, three commissions, a tribunal, all of the elements of Government; and the concession to this supergovernment of control over the seabeds, as if it owned them, supplanting freedom of the seas which historically makes the seas available to all nations, all people.

The Nixon administration paid no attention to the recommendations of the senior members of this committee and went right ahead and released the draft treaty in 1970, and that is the root of the troubles with which we are now confronted.

It was seized upon avidly by the less-developed countries to gain political control of the seabeds, and they have diligently pursued that objective. A series of drafts have emerged in successive conferences, each worse than its predecessor from the point of the consumer. As one of my friends says in classic terms: It is the same cheese; it just gets riper every year.

The text with which we are currently confronted is the informal consolidated negotiating text. It recognizes full control of the seabed in the organization set up by the treaty: the Authority. The Authority's assembly of 155 nations is to be the supreme organ. It shall have full control over every phase of activity. This includes mining, transportation, the refining in the United States if indeed we were permitted to refine in the United States. The draft treaty provides that discrimination in favor of the less developed countries is not discrimination at all, and preference shall be given to the competing offer of an applicant for a contract who agrees to enter into a joint venture with the Authority's enterprise and to locate its processing plant in less developed countries.

The interests of the consumers of the United States in having adequate access to the reserves of the deep seabed are forgotten. As Mr. Hawkins and Mr. L'Esperance have told you, the steel consumers of the world would be dependent on seabed manganese in about the same time as has elapsed since the inauguration of President Eisenhower.

My prepared paper outlines, in the space available, the horrors of the present draft treaty. They are not believable until you read

the text of the treaty. Ambassador Richardson has told this committee it is so bad-those were his words, "so bad"-that the administration is reconsidering whether it should go forward with the conferences and if so, what the U.S. position should be.

I may say in furtherance of Mr. Hawkins statement, the American position, candidly is not retrievable in the Law of the Sea negotiations. The store was given away in 1970 over the objections of this committee; in 1976, 20 Senators joined in a letter to the President urging the specific points that appeared in the text that were unacceptable to the Senate. No attention was paid to it. Instead, Secretary Kissinger in 1970 went ahead and agreed to U.S. participation in the funding of the Enterprise; to the concept that an American company or any company that wanted a contract to mine the deep seabed should discover and explore two mine sites and tender them both through the Authority that would keep one and let us have the other, involving millions upon millions of dollars of useless expense and years upon years of delay.

Secretary Kissinger said we were prepared to accept the principle of production controls. After you have made the investment of half a billion dollars in deep-seabed mining, the political forces in the Authority would determine how much you could, in fact, produce.

The list goes on. It could go on for pages. Now let me turn, by contrast, to the objectives of your bill which in my opinion are sound. They don't purport to grant the seabed real estate to any company. The United States is not grabbing anything. It is imposing restrictions upon its citizens who are engaged in the exercise of a freedom of the sea, namely deep-seabed mining. These are restrictions designed to protect the environment, avoid monopoly, to make sure the metals recovered are brought home for processing in the United States. Your bill has a number of other protections for American national interests.

Your bill is in the national interest. The restrictions that it imposes upon the deep-seabed miner, in many cases, I agree with Mr. Dubs, should be modified, but the principle is right. Deepseabed mining should go ahead as a freedom of the seas, American companies should be subjected to American controls, not foreign domination, in the public interest, the type you are striving for. In my prepared statement, I enumerate perhaps 20 respects which I feel your bill is an improvement upon the House bill, H.R. 3350. In other respects, I think it is weakened, if I may say so, by some of the changes made and there are various respects in which it should be strengthened.

I spell these out in a rather detailed analysis attached to my statement. If I may dwell on one or two points here, the problems in both bills is that it is absolutely essential for any investor in a mine, whether onshore or now at sea, to have security of tenure and know precisely the area to which his rights relate and duration of the rights.

The difficulty with these two bills, in an effort I suppose to come to terms with the administration, too much is left to the discretion of the Secretary. For example, he is not controlled by the bill as to the area of the license. It is quite true section 401(c) requires uniformity insofar as possible in the terms and conditions of li

censes and permits but he may allow one company an area 10 times as great as another's. You don't discover from the face of the bill what the size of the area should be.

We think your earlier bill, S. 713, 94th Congress, was superior in this respect. It restricted the maximum area to one company, in blocks. This kind of problem can be solved, and will be solved, I am sure. Attention has been called to another problem as to the effective date of the act. To my mind the bill should be immediately effective upon signature of the President. But I would say no licenses for exploration should be effective for perhaps a year and permits for commercial production not become effective for an additional year.

But if you put off the effective date of the act for 3 years, as this bill provides, you are holding in limbo all activities of the mining companies. In the meantime, they don't know if they will ever get a license, what the area will be, what the terms of the license will be.

Finally, your bill names the Secretary of the Interior as the administrative entity. The House bill names the Secretary of Commerce. Personally, I don't care. Correcting errors of the Secretary of the Interior has been a small but steady source of income for my law firm for 30 or 40 years. But my friends who practice in the Department of Commerce say not to worry about it; he is just as prolific with errors as the Secretary of the Interior.

I just don't want to get squashed between these two dinosaurs. Senator SCHMITT. Mr. Chairman, the record should be corrected. It is "she."

Mr. ELY. Pardon me, I would not exclude any lady Secretaries. Maybe there will be a lady Secretary at Interior. At any rate, this problem should be resolved by the Congress.

As to the investment guarantee business, Mr. Clements is quite right. It is an insurance against political risk. We don't ask any guarantees of investment. We take our risks as investors, but we can't be protected in the insurance market against what this Government might do to us if it should indeed sign or ratify a treaty of the character that has become progressively worse.

We have great confidence, Senator Metcalf, that these committees will reach an equitable solution, and we hope you can do it quickly. Thank you.

[The prepared statement of Mr. Ely follows:]

STATEMENT OF NORTHCUTT ELY, SPECIAL COUNSEL, DEEPSEA VENTURES, INC.

I was honored by the Committee's invitation to discuss S. 2053, by Senator Metcalf, "a bill to promote the orderly and environmentally sound exploration for and commercial recovery of hard mineral resources of the deep seabed, pending adoption of an international regime relating thereto."

Senator Metcalf, the author of S. 2053, has led the fight for legislation to accomplish these objectives for many years, and the companion effort to prevent their frustration by this country's acquiescence in the unfortunate series of treaty drafts in the perpetual Law of the Sea conference. He is entitled to the gratitude of American consumers in this as in many other matters.

The views that I will express are my own, developed in the course of the years in which I have served as a member or chairman of various professional committees which have written reports on the law of the sea, and in the preparation of opinions for clients. I am currently counsel, in international law matters, to Deepsea Ven