U.S. ratification of UNCLOS key to a number of maritime industries
Without the universally recognized legal regime governing the exploitation of the mineral resources of the deep-sea beyond the zones of national jurisdictions that UNCLOS provides, US companies will not assume the investment rights associated with such projects until it was clear who had “clear legal title” to the resources extracted.
Ratification of the Law of the Sea Convention also has an important bearing on a longer-term potential energy source that has been the subject of much research and investigation at the U.S. Department of Energy for several years: gas hydrates.
Gas hydrates are ice-like crystalline structures of water that form “cages” that trap low molecular weight gas molecules, especially methane, and have recently attracted international attention from government and scientific communities. World hydrate deposits are estimated to total more than twice the world reserves of all oil, natural gas and coal deposits combined.
Methane hydrates have been located in vast quantities around the world in continental slope deposits and permafrost. They are believed to exist beyond the EEZ. If the hydrates could be economically recovered, they represent an enormous potential energy resource. In the U.S. offshore, hydrates have been identified in Alaska, all along the West Coast, in the Gulf of Mexico, and in some areas along the East Coast. The technology does not now exist to extract methane hydrates on a commercial scale. Joint industry/government groups of scientists have been at work in the Gulf of Mexico examining the hydrate potential in several deepwater canyons. This work is intended to help companies find and analyze hydrates seismically and to complete an area-wide profile of hydrate deposits.
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From an economic perspective, the United States emerges a clear winner under the convention’s provisions on the exclusive economic zone (EEZ) and the continental shelf, due to its lengthy coastline and island possessions that border on several particularly productive ocean areas such as the Bering Sea. The United States has the largest and richest EEZ in the world. Also, our extended continental shelf has enormous potential due to oil and gas reserves, particularly in the Bering, Chukchi, and Beaufort Seas west and north of Alaska.
Discoveries by the crew aboard the USCG icebreaker Healy reveal that the U.S. continental shelf in the Arctic Ocean is much more extensive than originally thought. Nevertheless, only by becoming party to the convention and participating in its processes can the United States obtain secure title to these vast resources, adding an area twice the size of the Louisiana Purchase (some 290,000 square miles) for U.S. sovereign resource exploitation.
Despite claims from critics of the convention that the United States could and should develop its continental shelf resources beyond 200 miles without becoming a party to UNCLOS, it stands to reason that any oil, gas, or mining company would want the legal certainty of the convention before investing billions of dollars to develop an offshore feld, no matter how rich it might be. In addition, the convention’s deep seabed mining provisions, as amended in 1994, would permit and encourage American businesses to pursue free-market-oriented approaches to deep ocean mining, including in the Arctic Ocean.
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At issue, in light of China’s emergence as an economic power, technology leader and a nation with a defined oceans strategy, and the activity of Russia and others in the Arctic region, are serious concerns that the United States is falling behind by not securing its sovereign rights to the vast resources of its continental shelf beyond 200 miles from shore — and to explore for more around the world — matters that encompass economic losses as well as national security threats.
Proponents, largely within industry, are anxious to see the United States accede to the Convention. In doing so, the country gains the legal authority to sponsor U.S. companies eager to secure rights to oil and gas reserves, and to leverage investments upwards of $2 billion for mining deep seabeds for valuable metals and rare earth elements. More than 40 countries have begun the process of securing their own continental shelf rights, according to State Depart- ment data.
“Chinese, Indian and Russian companies are exploring deep seabeds for rare earth elements and valuable metals, but the United States cannot sponsor our companies to do the same,” Secretary of State Hillary Clinton said in a videotaped statement last December to the Pew Business Roundtable. “Joining the Convention will level the playing field for American companies so they have the same rights and opportunities as their competitors.”
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Third, U.S. companies have been unwilling to begin costly exploration and extraction activities in reliance on theoretical and untested legal arguments that have not been accepted by other countries and that are flatly contrary to the terms of Law of the Sea Convention. Companies instead want the clear legal certainty provided by the Convention before making investments that could run into the billions of dollars. Critics of the Convention who are concerned about the possibility of international litigation should be much more concerned about the possibility of lawsuits against the United States or U.S. companies if the United States were to engage in resource extraction on the U.S. extended continental shelf or on the deep seabed contrary to the terms of the Convention, than about possible environmental claims against the United States if the U.S. were to join the Convention. Moreover, a U.S. company that initiates deep seabed mining outside the Convention risks having a foreign company sponsored by a country that is party to the Convention jump on its claim after it has proven to be profitable. No U.S. company would want to take that legal risk.
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Contrary to the belief that UNCLOS “discourage[s] U.S. companies from participating in such [mining] activities,” there has been a call by U.S. companies and business leaders to ratify the treaty as soon as possible.201 At the 2012 Forum on the Law of the Sea held in Washington, Jennifer Warren, Vice President of Lockheed Martin, expressed the company’s high interest in deep seabed exploration and continued support of UNCLOS.202 Warren declared, “[r]ecent developments in deep seabed resources have really sharpened our interest in seeing the law of the Sea ratified as soon as possible.”203
Lockheed Martin currently benefits from UNCLOS and the ISA by acting through its British subsidiary.204 Despite this workaround, the company’s actions are symbolic of how important accession to the treaty is to the economic interests of the U.S.205 First, Lockheed’s workaround shows a lack of confidence in the current deep seabed mining regime provided by DSHMRA and the U.S.’s multilateral and bilateral agreements with a select group of nations.206 Second, it demonstrates the value U.S. companies place in security and predictability, both of which are provided by the ISA and UNCLOS.207 Lastly, it validates the significance of deep seabed resources.208 Warren’s statement summarized it best:
The importance of these resources is well understood internationally. Other countries are moving forward quickly and aggressively to access them. As the only U.S.-based claimant, our view is pretty straightforward. Business initiatives to exploit deep seabed mineral resources will only be able to secure the necessary financial investments if done pursuant to the existing international framework.209
In addition, John Ryan, Chief Legal Officer of Level 3 Communications,210 stated, “that any uncertainty inhibits economic growth and investment” when the protection of infrastructure in international waters is not guaranteed.211 While the rest of the world enjoys the benefits of UNCLOS and the ISA, the U.S. idly stands by, watching other nations like China and Russia claim prime locations for deep seabed mining activities.212
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Opponents of UNCLOS claim that accession will also harm U.S. commercial interests in the world‘s oceans. The provisions on seabed mining, in particular, are seen as an attempt at international wealth redistribution.65 Additionally, there is a fear that the ISA would have the power to enforce an international tax on resources extracted from the seabed.66
Although these commercial concerns resonate with many economic conservatives, they are among the easiest to debunk, primarily by examining the economic consequences the United States will face if it does not accede. Claims to mineral rights in the Arctic are governed by UNCLOS provisions on an extended continental shelf, and the United States may lose these claims without representation on the ISA or State Party status.67 Additionally, many economic concerns ring hollow in the face of favorable opinions of the treaty by U.S. industries affected by such regulations.68 For example, the oil and gas industries have agreed to pay any tax levied on deep seabed extractions.69
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The vastness of ocean space and the limits of our knowledge concerning the oceans’ future economic potential also make it critically important that the United States plays a central role in the future implementation of the convention. The convention facilitates the conduct of marine scientific research to expand understanding of the marine realm. As knowledge increases and as technology advances, the oceans may hold enormous, and as yet only dimly perceived, potential. When coupled with America’s unrivaled capacity for technological innovation, new ocean uses may become essential to helping drive economic prosperity for future generations. In the midst of a historic economic crisis, the United States needs to position itself by joining the treaty in order to secure its share of ocean industries of the future and the high- paying jobs they will create.
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American energy and deep-seabed companies are at a disad- vantage in making investments in the OCS due to the legal uncertainty over the outer limit of the U.S. continental shelf, nor can they obtain international recognition (and, as a result, financing) for mine sites or title to recovered minerals on the deep seabed beyond national jurisdiction. Even if U.S. firms were to unilaterally set out on their own, because the United States has negligible mineral-processing technology, they would have difficulty finding international partners to buy unprocessed minerals because they would have been obtained outside of the agreed regime.
And ratifying the treaty saves the United States boatloads of cash. Approving it would allow us to reduce our military expenditures yet maintain naval strength at a time when our nation’s debt keeps climbing. One example is over piracy. The total economic costs of Somali piracy in 2011 were approximately $7 billion by some estimates. Signing the treaty would allow the U.S. to better coordinate anti-piracy and anti-terrorism efforts alongside the international community. Instead of policing the world’s waters by ourselves, we could share the burden. Signing the treaty, then, reduces costs and danger for our already overextended navy. What’s more, approving the treaty is similar to the best kind of business decision: it reduces expenses and puts money in our pocket. It provides for Exclusive Economic Zones, or exclusive privileges to manage the natural resources near our coast. No country stands to benefit more from these zones than the United States. As Citizens for Global Solutions points out: “The American zone is larger than that of any country in the world. The size of [America’s] zone is…bigger than the lower 48 states combined.” With increased access to the ocean’s resources – including mineral-rich waters near our shores – we can boost the economy, increase domestic energy production and bring back more jobs.
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Recent discoveries by the U.S. Coast Guard (USCG) icebreaker Healy reveal that the U.S. continental shelf in the Arctic Ocean is much more extensive than originally thought. Only by becoming party to UNCLOS and participating in its processes, however, can the United States obtain secure title to these vast resources, adding some 290,000 square miles for sovereign resource exploitation.29 Moreover, no American business enterprise is likely to invest the many billions of dollars necessary to develop a distant, deep-water off-shore oil or gas field, no matter how rich it might be, unless it has an undisputed right to do so under both domestic and international law. In addition, the Convention's deep seabed mining provisions, as amended in 1994, would permit and encourage American businesses to pursue free-market- oriented approaches to deep ocean mining. The 1994 "Part XI Implementing Agreement" was crafted in such a way so as to protect the interests of investors and the United States. "31 As a result, the off-shore oil and gas and mining industries all strongly support accession to UNCLOS. Economic self- sufficiency and development of off-shore ocean resources contribute directly to our national security.
American businesses are urging the United States to ratify the UN Law of the Sea Treaty, saying it is needed to boost crucial domestic energy production and end China’s near-monopoly on rare earths.
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