Verizon Joins Oil Industry to Support Obama on Sea Treaty

Verizon Joins Oil Industry to Support Obama on Sea Treaty
Underwater cable on the sea floor. Photographer: Francis Zera/Spaces Images/Corbis

Verizon Communications Inc., an investor in 80 underwater cable systems, and an industry group for U.S. energy companies have joined President Barack Obama’s administration in support of a global maritime accord.

Ratifying the 1982 United Nations Convention on the Law of the Sea will provide certainty for U.S. companies investing in sometimes contested international waters, trade organizations told the Senate Foreign Relations Committee in Washington today.

“Some nations have attempted to encroach on the ability of U.S. operators to deploy, maintain and repair undersea cables,” Lowell McAdam, chief executive officer of New York-based Verizon, said at the hearing. Embracing the treaty would give the U.S. a voice in resolving such disputes, he said.

The 30-year-old treaty is supported by more than 160 nations, and the U.S. is the only industrialized nation missing from the roster. President Ronald Reagan refused to back the accord unless changes were made to provisions covering mining for underwater minerals.

The treaty went into effect in 1994 and establishes economic and navigational rights in the world’s oceans. It also sets rules for claims to natural resources, including the rare earths that are used in high-tech equipment, under the sea floor in international waters.

“Our companies want this treaty -- quite simply, bottom line -- because it affects their bottom line,” said Senator John Kerry, a Massachusetts Democrat and committee chairman.

‘Energy Interests’

The Law of the Sea Convention “will advance and protect America’s energy interests,” Jack Gerard, chief executive officer of the American Petroleum Institute, a Washington-based industry group for companies including Exxon Mobil Corp. and Chevron Corp., said at the hearing.

The treaty broadens the definition of the Continental Shelf, placing under U.S. jurisdiction as much as 4.1 million additional square miles of sea in regions including the Arctic, Gerard said.

China controls more than 90 percent of the world’s production of rare earths, and ratification would let the U.S. secure claims to such minerals in regions including the Pacific Ocean, Jay Timmons, chief executive officer of the National Association of Manufacturers, a Washington-based industry group, said at the hearing.

Corker, Kerry

Senator Bob Corker, a Tennessee Republican, questioned how the treaty would improve a company’s claims, when multinational companies can file claims using operations in nations that have ratified it. Kerry said that without signing the accord, the U.S. wouldn’t have access to the dispute-resolution process.

Technology now makes it possible to extract minerals from deposits beyond the typical 200-mile limit of a nation’s control of offshore assets and the start of international waters, Deputy Secretary of State Tom Nides said yesterday in a phone interview.

“The technology is so much more sophisticated than it was in the Reagan era, when we last debated the treaty,” he said. “Other countries can do so much more, which frankly scares us.”

Opponents including former Defense Secretary Donald Rumsfeld have said the treaty creates a global body to oversee commercial activity, such as undersea mining, that wouldn’t be accountable to American citizens. U.S. companies would have to pay a share of their royalties, which may be distributed to “less productive countries,” Rumsfeld testified to the Senate panel on June 14.

At a hearing May 23, U.S. Secretary of State Hillary Clinton, Defense Secretary Leon Panetta and Joint Chiefs of Staff Chairman Martin Dempsey urged Senate ratification for economic and strategic reasons.

Thomas Donohue, CEO of the U.S. Chamber of Commerce, brought the treaty to Kerry’s attention during a dinner last year, Kerry said today. Donohue, who also testified, called for the Senate to support the Law of the Sea Convention.

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