Pub.L. 107-107 ...

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meeting shall be adopted if no negative votes are cast. Under 
paragraph 3, amendments adopted at the meeting shall be 
notified to all Parties. If, within a period of 36 months 
following the notification, it is accepted by all states that 
were Parties at the time the amendment was adopted, the 
amendment will enter into force 12 months after the final 
acceptance is received. Under paragraph 4, if the amendment is 
not accepted by the states that were Parties at the time it was 
adopted within the 36-month period, it is to be considered 
rejected. Under paragraph 5 if a state becomes a Party to the 
CSC during the 36-month period, that state will be bound by the 
amendment if it enters into force. If a state becomes a Party 
after the 36-month period, it will be bound by the amendment 
when it enters into force. In both cases, the amendment enters 
into force for the state in question when the amendment enters 
into force or when the CSC enters into force for that state, 
whichever is later.
    Article XXVI specifies the functions of the Depositary, 
which is required to notify Parties and all other states and 
the Secretary-General of the OECD (the Depositary of the Paris 
Convention) of all significant developments concerning the CSC. 
Article XXVII establishes the authentic languages of the CSC 
and directs the IAEA's Director General to send certified 
copies of the CSC to all states.
    The Annex obligates a Party to the CSC that is not party to 
the Vienna or Paris Convention to ensure that its national 
legislation is consistent with the provisions of the Annex, 
insofar as those provisions are not directly applicable as 
national law in that Party. A Party having no nuclear 
legislation necessary to enable it to give effect to its 
obligations under the CSC. As noted above, in the few instances 
where implementing legislation is needed to meet the CSC's 
obligations, such legislation will be submitted to Congress 
separately. With respect to the CSC's other obligations, its 
provisions would operate directly.
    Article 1(1) sets out definitions of certain terms used in 
the Annex (the terms defined in Article I of the CSC also apply 
to their use in the Annex). Five terms are defined in Article 
1: ``nuclear fuel,'' ``nuclear installation,'' ``nuclear 
material,'' ``operator,'' and ``radioactive products or 
waste.'' Paragraph 2 permits an ``installation state'' to 
exclude a nuclear installation or small quantities of nuclear 
material from the application of the CSC if criteria and limits 
for such exclusions have been established by the IAEA's Board 
of Governors and the exclusions satisfy those criteria and do 
not exceed those limits.
    Article 2 is a grandfather clause that permits the United 
States to become a Party to the CSC with only minor changes to 
the Price-Anderson system (although as noted below, certain 
provisions of the Annex could supersede other U.S. laws which 
could govern any nuclear incident that were to occur in the 
EEZ, to the extent such U.S. laws are inconsistent with the 
Annex and such unclear incident is not covered by the Price-
Anderson system). In particular, the grandfather clause permits 
the United States to retain the concept of economic channeling, 
under which operators are required to indemnify those legally 
liable for nuclear damage. The Paris and Vienna Conventions, as 
well as the Annex provisions from which the United States is 
exempted under the grandfather clause, employ the concept of 
legal channeling, under which all legal liability for nuclear 
damage is imputed exclusively to the operator. In both systems, 
the end result is essentially the same in that no one but the 
operator is responsible for compensating nuclear damage caused 
by an incident in an installation of involving nuclear material 
for which the operator is responsible. Paragraph 1 deems the 
national legislation of a Party to be in conformity with the 
provisions of Annex Articles 3, 4, 5, and 7 if that legislation 
contained on January 1, 1995, and continues to provide for 
three elements: (1) strict liability in the event of a nuclear 
incident, (2) the indemnification of any person liable for 
nuclear damage other than the operator (i.e., economic 
channeling of liability to the operator), and (3) the 
availability of the equivalent of at least 1,000 million SDRs 
in the event of an accident in a civil nuclear power plant and 
at least 300 million SDRs in the event of an accident in other 
types of civil nuclear installations. The United States is the 
only state that meets these three criteria, through the Price-
Anderson Act. It is intended that, where the Price-Anderson Act 
does apply, it will apply to the exclusion of any other causes 
of actions or remedies (except for availability of funds from 
the international supplementary fund) that might be implied in 
or created by the CSC.
    Subparagraph 2(a) permits a Party that satisfies the 
criteria of paragraph 1 to apply a broader definition of 
nuclear damage than other Parties, thus allowing the damage 
concept under applicable U.S. law to be applied without any 
restrictions with respect to incidents where the United States 
is the ``installation state.'' Paragraph 2(b) permits a 
grandfathered Party to apply a more narrow definition of 
``nuclear installation.'' This definition is found in paragraph 
3 and is consistent with the types of installations currently 
covered by the Price-Anderson Act.
    Paragraph 4 of Article 2 applies the provisions of Annex 
Articles 3-11 to a nuclear incident occurring outside the 
territory of a grandfathered Party over which its courts have 
been granted jurisdiction under Article XIII, but to which the 
national law under which it qualified as a grandfathered Party 
(i.e., the Price-Anderson Act) does not apply. To the extent 
Annex Articles 3-11 are inconsistent with other laws of the 
grandfathered Party, the Annex provisions prevail. In the case 
of the United States, the Price-Anderson Act, under which the 
United States qualified for grandfathered status, does not 
apply to most potential incidents within the U.S. EEZ, but 
Article XIII grants U.S. courts jurisdiction over incidents 
occurring there.\7\ Annex Articles 3-11 would as a result apply 
directly to a non-Price-Anderson incident covered by the CSC 
occurring in the U.S. EEZ, and would prevail over other 
existing U.S. statutes to the extent they are inconsistent. For 
example, CERCLA currently imposes potential liability on 
several categories of parties connected to the nuclear material 
in the event of a nuclear incident in the U.S. EEZ (vessel 
owners, vessel operators, shippers, cask manufacturers, etc.). 
Annex Article 3 of the CSC, however, provides for channeling of 
all nuclear liability to the operator on the basis of strict 
liability, and would thus prevail over the provisions of the 
CERCLA to the extent such provisions would otherwise permit 
different defendants to be sued. In addition, to the extent 
CERCLA or any other existing law established lower limits on 
operator liability than does Annex Article 4, the provisions of 
the Annex would prevail.\8\
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    \7\ In the 1999 Price-Anderson Report, the Department of Energy 
suggested that Congress consider amending the Price-Anderson Act by 
revising the definition of the United States to include the EEZ. Such 
action would eliminate almost all situations where the United States 
would have jurisdiction under the CSC but Price-Anderson would not 
apply.
    \8\ To avoid any ambiguity concerning the application of Article 4, 
legislation, which is being submitted separately to Congress, should be 
adopted to make explicit that, notwithstanding any other provision of 
law, the legal liability of the operator may not be limited to less 
than 300 million SDRs, plus the amount to be made available under the 
international supplementary fund with respect to nuclear incidents 
outside the United States for which U.S. courts have jurisdiction 
pursuant to the CSC but as to which Price-Anderson is not applicable.
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    With respect to incidents occurring outside the U.S. EEZ 
(other than those involving DOE contractors and U.S. 
Government-owned material, to which the Price-Anderson Act 
applies) with regard to which the United States is the 
``installation state,'' but which cause damage only in the EEZ 
or territory of another CSC Party and not in the U.S. EEZ or 
territory, neither Price Anderson nor CERCLA currently apply. 
In such circumstances, Annex Articles 3-11 would create causes 
of action cognizable in U.S. courts for loss of life, personal 
injury, and property loss or damage. Consistent with the CSC 
definition of ``nuclear damage'' in Article 1(f), Annex 
Articles 3-11 would not, however, create any obligations with 
respect to any other economic loss (such as the cost of 
environmental restoration in international waters), unless 
there is a cause of action for such other economic loss 
recognized under U.S. law independent of Price-Anderson or 
CERCLA.
    Article 3 establishes and describes the liability of the 
operator in the event of a nuclear incident. As noted above, 
since the United States would benefit from the Article 2 
grandfather clause, for the United States Article 3 would only 
apply to an incident that is not covered by the Price-Anderson 
Act. Paragraph 1 establishes the operator's liability for 
nuclear damage when it is proved that the damage was caused by 
a nuclear incident in that operator's installation or involving 
nuclear material coming from or originating in that 
installation over which that operator has control, unless the 
incident involves nuclear material in transit stored in that 
installation, but for which another operator is responsible.
    Paragraphs 1(b)(iv) and 1(c)(iv) are intended to establish 
when an operator of a nuclear installation covered by the CSC 
is liable for nuclear damage with respect to nuclear material 
sent between such covered installation and a person within the 
territory of a non-Party.
    Paragraph 2 permits Parties under their national law to 
allow a carrier of nuclear material or a person handling 
nuclear waste to be designated as an operator at the carrier's 
request and with the approval of the actual operator concerned 
so that the carrier is treated under the CSC as the operator 
with respect to that nuclear material.
    Paragraph 3 states that the liability of the operator for 
nuclear damage shall be absolute (i.e., applying the doctrine 
of strict liability to nuclear incidents covered by the 
Article).
    Paragraph 4 deems non-nuclear damage that is not reasonably 
separable from nuclear damage to be nuclear damage. Paragraph 4 
also provides that, to the extent that damage is caused jointly 
by a nuclear incident covered by the CSC Annex and by an 
emission of ionizing radiation not covered by it, the Annex 
does not limit or otherwise affect the liability of any person 
who may be held liable in connection with the emission of 
ionizing radiation.
    Subparagraph 5(a) excuses an operator from liability if the 
nuclear incident was caused directly by an act of armed 
conflict, hostilities, civil war or insurrection. Subparagraph 
5(b) similarly excludes damage caused by a nuclear incident 
directly due to a grave natural disaster of an exceptional 
character unless the law of the ``installation state'' provides 
to the contrary.
    Paragraph 6 permits Parties through their national law to 
relieve an operator from the obligation to pay compensation to 
a person the operator proves was responsible for the incident 
due to gross negligence or an intentional act or omission.
    Subparagraphs 7(a) and (b) relieve the operator from 
liability for nuclear damage to the installation itself and 
associated property or to any other nuclear installation on the 
same site. Subparagraph 7(c) relieves the operator in the event 
of a transport incident from liability for nuclear damage to 
the means of transport upon which the nuclear material involved 
was at the time of the incident, unless otherwise provided by 
the national law of the ``installation state.'' In that case, 
damages paid to compensate nuclear damage to the means of 
transport may not reduce the operator's remaining liability 
below 150 million SDRs or any higher amount established under 
that national law.
    Paragraph 8 stipulates that the operator's liability 
outside the CSC for damage to means of transport for which the 
operator is not liable under subparagraph 7(c) remains 
unaffected.
    Paragraph 9 states that the right to compensation for 
nuclear damage may only be exercised against the operator 
liable, or, if national law permits, against any supplier of 
funds (e.g., an insurer or pooling arrangement among operators) 
made available under national law to ensure compensation. This 
paragraph incorporates the principle of legal channeling, which 
is central to the Vienna and Paris Conventions. As noted above, 
the Price-Anderson Act employs economic channeling to reach 
substantially the same objective.
    Paragraph 10 states that the operator shall not incur 
liability for damage that lies outside the provisions of 
national law that is in accordance with the CSC. This provision 
is intended to prevent Parties from defining damage covered by 
the CSC as non-nuclear in their domestic law, thus 
circumventing the CSC's channeling requirement.
    Article 4 elaborates upon the obligation created in Article 
III(1) (a) to make available a first tier of compensation funds 
of not less than 300 million SDRs (subject to a possible phase-
in) with respect to Parties that are subject to the Annex 
(i.e., non-Parties to the Vienna or Paris Convention), to the 
extent they are not exempted from Article 4 by the grandfather 
clause (as the United States is with respect to those nuclear 
incidents covered by the Price-Anderson Act). In situations to 
which Article 4 applies, paragraph 1 allows such Parties to 
limit the liability of its operators to an amount not less than 
150 million SDRs per incident if public funds are available to 
make up the difference between that amount and 300 million 
SDRs.\9\ Paragraph 2 creates an exception to paragraph 1, 
allowing such Parties to reduce maximum operator liability to 
not less than five million SDRs having regard to the nature of 
the nuclear installation or the nuclear substances involved and 
to the likely consequences of an incident arising from that 
installation or material, again so long as public funds are 
available to cover the gap between the operator's liability and 
the applicable first tier amount. Under paragraph 3, the 
amounts established under paragraphs 1 and 2 are to be applied 
wherever the nuclear incident occurs.
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    \9\ To the extent that there are currently not any limits in U.S. 
law on the liability of operators for damages arising from certain 
nuclear incidents (e.g., an accident on the high sea not covered by 
Price-Anderson or CERCLA), neither the ratification of the CSC by the 
United States nor the changes in U.S. domestic law contemplated in 
connection with ratification will establish upper limits on that 
liability.
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    Article 5 deals with financial security to be provided by 
operators. Under subparagraph 1(a) operators in ``installation 
states'' that are Parties subject to the Annex, to the extent 
such states are not exempted by the grandfather clause (as the 
United States is with respect to those incidents covered by the 
Price-Anderson Act), must be required to obtain financial 
security (e.g., insurance) to cover their liability for nuclear 
damage in such amount, of such type, and under such terms as 
the ``installation state'' may require. Claims that exceed the 
yield of financial security maintained by the operator must be 
met through the provision of public funds, up to the applicable 
limit, if any, established under Article 4. When an 
installation state has not limited the liability of an 
operator, the amount of financial security that operator is 
required to obtain may not be less than 300 million SDRs. 
Again, if the yield of financial security is insufficient to 
meet claims up to the amount of security required, the 
difference must be made up through public funds. A provision 
similar to that found in Article 4(2) is included in 
subparagraph 1(b) to permit ``installation states'' to impose a 
requirement that operators obtain financial security as low as 
five million SDRs with respect to installations and materials 
that pose a reduced risk of nuclear damage in the event of an 
incident, but in this case public funds must be made available 
to cover any claims not covered by this lower amount of 
security up to the limit specified in subparagraph 1(a). 
Paragraph 2 exempts Parties and their political subdivisions 
that are operators for the purposes of the CSC from the 
requirement found in subparagraph 1 to obtain insurance or 
other financial security. Paragraph 3 states that funds 
provided by insurance or other financial security or by the 
``installation state'' pursuant to paragraph 1 of Article 
4(1)(b) shall be used exclusively for compensation due under 
the Annex. Paragraph 4 states that no insurer or financial 
guarantor shall suspend or cancel the insurance or other 
financial security provided pursuant to paragraph 1 without 
giving at least 2 months' written notice to the competent 
public authority, or, in the case when insurance applies to 
nuclear material being transported, while the material is being 

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