Pub.L. 107-107 ...

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retrospective risk pooling program that will be used to 
reimburse the United States for its contribution to the 
international supplementary fund (plus any interest and costs 
awarded). The obligation of suppliers to pay into the pool 
would be deferred until the United States is called upon to 
contribute to the international supplementary fund with respect 
to an actual covered incident.
    A third tier of compensation would be available in some 
states, such as the United States, that make available national 
funds of more than 300 million SDRs under domestic legislation. 
States that make available third tier funds are free to raise 
and distribute them in accordance with domestic law, with the 
single condition (already met by the United States) that the 
availability of these funds not be conditioned on the existence 
of reciprocal obligations with other nations that do not have 
nuclear installations on their territory.
    The CSC incorporates three well-accepted principles that 
form the basis for the Price-Anderson system as well as the 
Paris and Vienna conventions. It (1) requires that all claims 
resulting from a covered nuclear incident be adjudicated in a 
single forum (in most cases the courts of the Party within 
which the nuclear incident occurs), (2) channels liability for 
all claims to the nuclear installation operator, and (3) 
provides for the strict liability of the operator (i.e., 
without the need to prove negligence).
    The CSC establishes two legal criteria to be met by a state 
wishing to become a Party. First, each CSC Party must also be a 
Party to the 1994 Convention on Nuclear Safety. The United 
States met this condition on July 10, 1999. The second is that 
each Party to the CSC must also either be party to the Vienna 
Convention, the Paris Convention, or must have domestic nuclear 
liability statutes that conform to the requirements set forth 
in the CSC's Annex. The Annex, in turn, contains a grandfather 
clause specifically designed to permit the United States to 
join the new Convention without substantive change to the 
Price-Anderson system.
    The CSC assures that in most cases significantly greater 
resources will be available from both domestic and 
international sources to compensate potential victims and 
provide for restoration of the environment in the territory of 
Parties in the event of a nuclear incident. It also lays the 
foundation for a global legal regime governing nuclear 
liability. This regime would link, through legally binding 
treaty relations, states that are party to the Vienna 
Convention (32 states, including a number of Central and 
Eastern European states), the Paris Convention (17 states in 
Western Europe) and those states that are currently not party 
to either the Vienna Convention or the Paris Convention, 
including the United States, Canada, China, Japan, Russia, and 
South Korea, as well as many states that do not produce 
nuclear-generated power. Previous efforts (in particular those 
using the Vienna convention as a basis) failed to create such a 
global regime because the United States, the world's largest 
nuclear power-generating state, was not prepared to alter its 
fundamental tort-law system to conform to the Vienna Convention 
and because non-nuclear power generating states had no 
incentive to join that regime.
    The CSC addresses the first of these problems by providing 
the grandfather clause in Article 2 of the Annex that allows 
the United States to become a Party without significantly 
altering Price-Anderson as it currently exists.\4\
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    \4\ Becoming a Party, would, however, affect the U.S. Comprehensive 
Environmental Response, Compensation and Liability Act of 1980, as 
amended (42 U.S.C. Sec. 9601, et seq.) (CERCLA), insofar as it applies 
to a narrow category of nuclear incidents, namely those occurring in 
international waters that affect the environment or natural resources 
of the U.S. Exclusive Economic Zone (EEZ) and over which U.S. courts 
would have jurisdiction under the CSC. This change would limit the 
scope of parties liable for damage but would result in the guarantee of 
more funds available to compensate nuclear damage from this category of 
nuclear incidents than is available under CERCLA.
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    The second problem is addressed by the international 
supplementary fund, which has no analog in the Vienna 
Convention. Fifty percent of the fund is to be used to 
compensate damage occurring outside the ``installation state'' 
(transboundary damage), including transboundary damage 
occurring in a non-nuclear power generating Party. The 
availability of this fund, especially as half of it must be 
applied toward transboundary damage, creates a strong incentive 
for such non-nuclear states to join the regime, creating for 
the first time the potential for a nuclear liability convention 
that will apply globally.
    Increasing potential compensation for victims and for 
environmental damage and eventually creating a uniform global 
legal regime are important goals in themselves, but U.S. 
ratification of the CSC may also have two additional benefits. 
First, the CSC can strengthen U.S. efforts to improve nuclear 
safety, because, once widely accepted, the CSC will eliminate 
ongoing concerns on the part of U.S. suppliers of nuclear 
safety equipment and technology that they would be exposed to 
damage claims by victims of a possible future accident at a 
facility where they have provided assistance. This exposure to 
liability exists not only in the country where safety work has 
been performed and in other countries where damage might occur, 
but also in the United States because the suppliers are based 
here and are therefore subject to suit in U.S. courts. The CSC 
provides a mechanism for removing these liability concerns for 
suppliers, thus creating a legal environment that facilitates 
the provision of safety assistance.
    Second, U.S. participation in a global liability regime 
will allow U.S. exporters of nuclear technology and equipment 
to compete more effectively in foreign markets generally. 
Today, as noted above, these firms are exposed to potentially 
unlimited liability in their foreign businesses and to suit in 
U.S. courts. Even if the suits are baseless, expenses to defend 
such cases can be substantial. When the United States and the 
state whose nationals are involved are both Parties to the CSC, 
however, liability exposure will be channeled to the operator 
in the ``installation state,'' thus substantially limiting the 
nuclear liability risk of U.S. suppliers. Once the CSC is 
widely adopted, the entire nuclear supplier industry will be 
able to operate abroad under a single set of rules similar to 
those that have applied in the United States under the Price-
Anderson Act since the beginning of the commercial nuclear 
power industry in the 1950s, and that have contributed to the 
development of safe and effective nuclear technology in this 
country.
    The following is an article-by-article analysis of the CSC:
    The Preamble refers to the existing international 
instruments and national legislation that form the legal 
context within which the CSC is designed to operate, states the 
goals of creating a worldwide liability regime and increasing 
the amount of compensation for nuclear damage, and recognizes 
that the existence of such a worldwide regime would encourage 
regional and global cooperation to increase the level of 
nuclear safety.
    Article I contains definitions of 12 terms used in the CSC. 
They include definitions of the Vienna and Paris Conventions, 
``Special Drawing Right,'' ``nuclear reactor,'' ``installation 
state,'' ``nuclear damage,'' ``measures of reinstatement,'' 
``preventive measures,'' ``nuclear incident,'' ``installed 
nuclear capacity,'' ``law of the competent court'' and 
``reasonable measures.'' The definition of ``nuclear damage'' 
is substantially longer and more involved than the others, 
reflecting a need to accommodate different concepts of tort 
liability found in a wide variety of domestic legal systems 
while at the same time ensuring uniformity with respect to 
certain core elements. The types of damage covered by CSC are 
thus divided into two categories: those that must be 
compensated (loss of life, personnel injury, and property loss 
or damage), and those that are to be compensated ``to the 
extent determined by the laws of the competent court.'' This 
second category provides the national court adjudicating claims 
under the CSC with flexibility to determine under that state's 
legal system how and to what extent to compensate the following 
types of losses: those economic losses not falling in the 
categories of loss of life, personnel injury, and property loss 
or damage; the costs of measures of reinstatement of impaired 
environment; loss of income deriving from an economic interest 
in any use or enjoyment of the environment; the costs of 
preventive measures taken to mitigate damage from an imminent 
or actual nuclear incident; and any other economic loss 
recognized by the general law on civil liability of that court. 
The types of loss or damage enumerated in Article I are (with 
the exception of the costs of preventive measures) only covered 
by the CSC to the extent that the loss or damage arises out of 
or results from ionizing radiation emitted inside a nuclear 
installation or emitted from nuclear fuel or radioactive 
products or waste in, or of nuclear material coming from, 
originating in, or sent to, a nuclear installation.
    Article II lays out the overarching scope of the CSC and 
the extent of its application and establishes the relationship 
of the Annex to the CSC. Paragraph 1 states that the CSC's 
purpose is to supplement the system of compensation provided 
pursuant to national law that implements the Vienna Convention 
or the Paris Convention or that complies with the CSC's Annex. 
Paragraph 2 states that the CSC applies ``to nuclear damage for 
which an operator of a nuclear installation used for peaceful 
purposes situated in the territory of a Contracting Party is 
liable'' under the Vienna or Paris Convention or under national 
law that complies with the Annex. The limitation to 
installations used for peaceful purposes excludes military 
facilities from the coverage of the CSC.\5\ Paragraph 3 
incorporates the Annex as an integral part of the CSC.
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    \5\ Each Party will decide which of its installations are used for 
peaceful purposes under the CSC. In the United States, installations 
used for peaceful purposes would not include nuclear submarines and 
other installations used for military operations, i.e., all operations 
of the Department of Defense. Some of the installations operated by the 
Department of Energy may also be excluded from coverage of the CSC.
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    Article III contains the central undertaking of the CSC. 
Paragraph 1(a) obligates the ``installation state'' to ensure 
the availability of 300 million SDRs, or a greater amount it 
may have specified to the Depository (the Director General of 
the IAEA) before the incident, or an amount not less than 150 
million SDRs during the transitional period ending September 
29, 2007. The funds made available under this subparagraph 
constitute the first tier of compensation available in the 
event of a nuclear incident in a Party to the CSC. Paragraph 
1(b) establishes the obligation on all Parties to the CSC to 
make available public funds according to the formula specified 
in Article IV. These contributions make up the international 
supplementary fund that constitutes the second tier of 
compensation.
    Paragraph 2(a) requires that first tier funds be 
distributed equitably without discrimination on the basis of 
nationality, domicile or residence. The courts of the 
``installation state'' are thus required to treat domestic and 
transboundary victims without regard to their nationality when 
allocating the first tier of compensation. Subject to 
obligations it may have under other conventions on nuclear 
liability, the ``installation state'' is, however, free to 
include or exclude damage suffered in an non-Party state from 
the first tier. Paragraph 2(b) subjects the international 
supplementary fund to the same non-discrimination requirement, 
subject to Article V (which determines the geographical scope 
within which damage must occur in order to be eligible for 
compensation from the fund) and Article XI(1)(b) (which 
reserves 50 percent of the fund in favor of compensating 
transboundary damage).
    Paragraph 3 of Article III reduces contributions to the 
fund proportionately among the contributing Parties if the 
damage compensated does not use up the entire fund. Paragraph 4 
creates a separate category of interest and costs that may be 
assessed by a competent court and allocates any such interest 
and costs among the various possible contributors to the first 
two tiers proportionately. Contributions by the various 
possible contributors of their proportionate share of any 
interest and costs awarded will be required in addition to 
their actual contributions made pursuant to paragraph 1(a) and 
paragraph 1(b) of Article III and may cause their total 
contributions to exceed the contribution caps or minimums 
otherwise specified in the CSC. Interest and costs are allowed 
by the Price-Anderson Act and CERCLA and will be provided for 
in the implementing legislation that will be submitted with 
respect to the financing of U.S. contributions to the 
international supplementary fund.
    Article IV establishes the formula under which 
contributions to the fund are to be calculated.
    Paragraph 1(a)(i) assesses 300 SDRs per unit of installed 
capacity, which is defined in paragraph 2 as one megawatt of 
thermal power. Paragraph 1(a)(ii) assesses an additional amount 
equal to 10 percent of the amount assessed in (i), to be 
contributed by all Parties on the basis of the ratio between 
their United Nations rate of assessment for the year preceding 
the year in which the nuclear incident occurs and the total of 
such rates for all CSC Parties.
    Subpargraph (b) states that each Party's contribution shall 
constitute the sum of the amounts attributable to it under 
subparagraph (a), provided that states assessed the minimum 
rate by the United States and having no nuclear reactors shall 
be exempt from the requirement to contribute. The proviso was 
added in order to facilitate adherence to the CSC by very small 
developing states (e.g., Pacific Island nations).
    Subparagraph (c) contains a contribution cap. It provides 
that the maximum contribution that may be charged to a Party, 
other than the ``installation state,'' must not exceed a 
specified percentage, equal to its UN rate of assessment plus 
eight percentage points, of the fund as a whole. For the United 
States this percentage would be 33 percent (assuming a United 
Nations rate of assessment of 24 percent plus 8 percent); i.e., 
the U.S. share of the fund would be capped at one-third, based 
on a U.S. assessment of 25 percent.\6\ Absent the cap, if the 
United States and only a few other states were Parties (e.g., 
soon after the CSC enters into force), the proportion 
represented by the U.S. contribution would otherwise be much 
higher. For example, if the supplementary fund were to be 
activated when the United States, South Korea, Canada and Japan 
were the only nuclear power-generating states party to the CSC, 
the U.S. contribution to the fund without the 33 percent cap 
would be about 93 million SDRs out of a total fun of about 150 
million SDRs (i.e., the United States would contribute 62 
percent). Under the cap, however, the U.S. contribution would 
be limited to about 50 million SDRs (33 percent of 150) and the 
fund would actually total 107 million SDRs.
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    \6\ The recent reduction in the U.S. assessment to 22 percent 
lowers the U.S. contribution under Article IV(1)(b) and the U.S. cap 
under Article IV(1)(c) with respect to covered nuclear incidents 
occurring after the year 2001.
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    When the cap applies, the fund created would be smaller 
than it would otherwise have been, but this possible reduction 
of funds available for victims was judged to be acceptable when 
weighed against the likelihood that major nuclear power 
generating countries would not ratify the CSC if they faced a 
potentially disproportionate financial burden in the early 
states of building a global regime. To emphasize the 
transitional nature of the cap, the subparagraph further 
provides that it begins to phase out when a substantial 
fraction of the world's nuclear generating capacity, 625,000 
MW, is represented by Parties to the CSC, at which point each 
Party's cap is increased by one percentage point. For each 
75,000 MW in excess of 625,000 MW represented by CSC Parties, 
the level of the cap further increases one percentage point.
    Paragarph 2, which defines a unit of installed capacity as 
1 MW of thermal power, states that the formula shall be 
calculated on the basis of the installed capacity of the 
reactors shown at the date of the incident on a list 
established and updated pursuant to Article VIII.
    Paragraph 3 provides that for the purpose of calculating 
contributions, a reactor shall be taken into account from the 
date when nuclear fuel elements are first loaded into the 
reactor and shall be excluded when all fuel elements have been 
removed permanently from the reactor core and have been safely 
stored in accordance with approved procedures. For the United 

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