Pub.L. 107-107 ...

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transported.
    Article 5 does not apply to the United States with respect 
to incidents covered by the Price-Anderson Act. It would apply 
to the United States with respect to any nuclear incidents 
outside the United States not covered by the Price-Anderson Act 
where the United States is the ``installation state.'' Such 
situations would be rare because U.S. shippers normally 
transfer title to nuclear materials to their foreign consignees 
(which then become the operator for purposes of the CSC) when 
the shipment first enters international waters. To cover the 
unlikely possibility that title is not transferred, 
administrative authority exists under the Atomic Energy Act 
that could be used to require that insurance be taken out by 
U.S. operators to the extent it was determined that the nature 
of the transportation and the nuclear material involved and the 
likely consequences of a nuclear incident during transportation 
required mandatory insurance.\10\ As noted above, if the 
proceeds of such insurance and the contribution of the liable 
operator were to fail to cover claims up the applicable limit 
of liability, or if there were no insurance, the U.S. 
Government would be obligated to make up the differences or pay 
any otherwise unpaid portion of the required United States 
share.
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    \10\ This administrative authority also could be used to specify 
requirements as to when title transferred and could establish certain 
necessary terms of any insurance required to be obtained by shippers.
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    Article 6 (from which the United States is not exempted 
under the grandfather clause) pertains to incidents occurring 
during the transportation of nuclear materials. Paragraph 1 
states the general rule that during carriage the maximum amount 
of liability is determined by the national law of the 
``installation state.'' \11\ Paragraph 2 creates an exception 
to the general rule, permitting a Party through whose territory 
nuclear material is passing to require that the liability of 
the operator be increased to an amount not to exceed the limit 
of liability of an operator of a ``nuclear installation'' 
situated in that state. Paragraph 3 stipulates that the option 
created under paragraph 2 may not be exercised with respect to 
shipments of nuclear material by sea when there is a right of 
entry in cases of urgent distress into the ports of a Party or 
a right of innocent passage through its territorial sea, or to 
shipments by air where, by agreement or under international 
law, there is a right to fly over or land on the territory of a 
Party.
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    \11\ See footnote, page 39.
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    Article 7 covers the theoretically conceivable case where 
more than one operator may be liable for a single nuclear 
incident. (The Article does not apply to the United States 
under the grandfather clause with respect to those incidents 
covered by the Price-Anderson Act.) Under paragraph 1, the 
operators liable shall be held jointly and severally liable 
unless the damage attributable to the respective operators is 
reasonably separably. The ``installation state'' is authorized 
to limit the amount of public funds made available in this case 
to the difference between the amount made available by the 
liable operators directly or through their insurers and the 
first tier compensation amount established pursuant to Annex 
Article 4(1) and Article III(1)(b).
    Paragraph 2 deals with an incident occurring during 
transportation (e.g., when nuclear material belonging to more 
than one operator is being shipped together). In this case, the 
total amount of liability shall not exceed the highest amount 
applicable to any one of the operators involved pursuant to 
Article 4(1). Under paragraph 3, the liability of any one 
operator involved shall not exceed the amount applicable to 
that operator under Article 4(1). Paragraph 4 covers the 
possibility of an operator having more than one installation 
involved in the same incident. In this case, the liability 
limit applicable to that operator is multiplied by the number 
of installations involved. The ``installation state,'' however, 
is authorized to limit public funds made available to the 
difference between the total amount made available by the 
operator and the amount it has established pursuant to Article 
4(1).
    Article 8 deals with compensation under national law. (The 
United States is not exempt from Article 8 or subsequent Annex 
Articles.) Under paragraph 1, the amount of compensation 
provided pursuant to the CSC shall be determined without regard 
to any interest or costs awarded. Paragraph 2 requires that 
compensation for nuclear damage outside the ``installation 
state'' be provided in freely convertible form. Paragraph 3 
allows the national law of the Party where damage has been 
compensated to be applied to the question of whether and to 
what extent public health insurance, social insurance, and 
other national or applicable intergovernmental programs that 
may have compensated victims of a nuclear incident have rights 
of recourse.
    Article 9 establishes periods of extinction for rights of 
compensation for claims brought under the CSC. Paragraph 1 
establishes the period of extinction at 10 years, but allows 
this period to be extended if, under the law of the 
``installation state,'' the liability of the operator is 
covered by insurance or other financial security or by state 
funds for a longer period, which then becomes the limit under 
the CSC. Under paragraph 2, the period of extinction for an 
incident involving stolen, lost, jettisoned, or abandoned 
nuclear material is calculated from the date of the incident, 
but in no case, unless the national law of the ``installation 
state'' permits and operator and state funds remain available, 
shall the period exceed 20 years from the date of the theft, 
loss, jettison, or abandonment. Paragraph 3 permits the law of 
the competent court to establish a period of prescription or 
extinction of not less than 3 years from the date a person 
suffering nuclear damage had actual or constructive knowledge 
of the damage and of the operator liable for that damage, but 
this period may not exceed the periods established under 
paragraphs 1 and 2. Under paragraph 4 the law of a Party that 
provides for a period of extinction or prescription longer than 
10 years must contain provisions for the equitable and timely 
satisfaction of claims for loss of life or personal injury 
filed within 10 years from the date of the nuclear incident. 
The provisions of the Price-Anderson Act already satisfy these 
requirements. With respect to nuclear incidents not covered by 
Price-Anderson (i.e., certain incidents outside U.S. 
territorial waters), the provisions of Article 9 govern and, in 
the absence of U.S. statutory provisions for a period of 
extinction longer than 10 years, rights of compensation will be 
extinguished in the United States if an action is not brought 
within 10 years from the date of the nuclear incident.
    Article 10 addresses rights of recourse. It permits the 
national law of a Party to allow an operator to have rights of 
recourse against others only if these rights are provided for 
by a written contract or, if the nuclear incident for which the 
operator is liable under the CSC results from an act or 
omission done with intent to cause damage, against the 
individual who has acted or omitted to act with such intent.
    Article 11 states that, subject to the provisions of the 
CSC, the nature, form, extent and equitable distribution of 
compensation for nuclear damage caused by a nuclear incident 
shall be governed by the law of the competent court.
    The Department of Energy, the Nuclear Regulatory Commission 
and other interested U.S. Government agencies join the 
Department of State in recommending that the Convention on 
Supplementary Compensation for Nuclear Damage be transmitted to 
the Senate at an early date with a view to receiving its advice 
and consent to ratification, subject to the declaration 
permitted under Article XVI, paragraph 2, as described above.
    Respectfully submitted.
                                                   Colin L. Powell.
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