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107th Congress Treaty Doc. SENATE 2d Session 107-21 _______________________________________________________________________ CONVENTION ON SUPPLEMENTARY COMPENSATION FOR NUCLEAR DAMAGE __________ MESSAGE from THE PRESIDENT OF THE UNITED STATES transmitting CONVENTION ON SUPPLEMENTARY COMPENSATION FOR NUCLEAR DAMAGE, DONE AT VIENNA ON SEPTEMBER 12, 1997. CONVENTION ADOPTED BY A DIPLOMATIC CONFERENCE CONVENED BY INTERNATIONAL ATOMIC ENERGY AGENCY (IAEA) AND OPENED FOR SIGNATURE AT VIENNA, SEPTEMBER 29, 1997 DURING IAEA GENERAL CONFERENCE <GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT> November 15, 2002.--Convention was read the first time, and together with the accompanying papers, referred to the Committee on Foreign Relations and ordered to be printed for the use of the Senate LETTER OF TRANSMITTAL ---------- The White House, November 15, 2002. To the Senate of the United States: I transmit herewith, for Senate advice and consent to ratification, with a declaration, the Convention on Supplementary Compensation for Nuclear Damage done at Vienna on September 12, 1997. This Convention was adopted by a Diplomatic Conference convened by the International Atomic Energy Agency (IAEA) and was opened for signature at Vienna on September 29, 1997, during the IAEA General Conference. Then-Secretary of Energy Federico Pena signed the Convention for the United States on that date, subject to ratification. Also transmitted for the information of the Senate is the report of the Department of State concerning the Convention. The Convention establishes a legal framework for defining, adjudicating, and compensating civil liability for nuclear damage that results from an incident in the territory of a Party, or in certain circumstances in international waters, and creates a contingent international supplementary compensation fund. This fund would be activated in the event of an incident with damage so extensive that it exhausts the compensation funds that the Party where the incident occurs is obligated under the Convention to make available. The international supplementary fund would be made up largely of contributions from Parties that operate nuclear power plants. The improved legal certainty and uniformity provided under the Convention combined with the availability of additional resources provided by the international supplementary fund create a balanced package appealing both to countries that operate nuclear power plants and those that do not. The Convention thus creates for the first time the potential for a nuclear civil liability convention with global application. Prompt U.S. ratification of the Convention is important for two reasons. First, U.S. suppliers of nuclear technology now face potentially unlimited third-party civil liability arising from their activities in foreign markets because the United States is not currently party to any international nuclear civil liability convention. In addition to limiting commercial opportunities, lack of liability protection afforded by treaty obligations has limited the scope of participation by major U.S. companies in the provision of safety assistance to Soviet- designed nuclear power plants, increasing the risk of future accidents in these plants. Once widely applied, the Convention will create for suppliers of U.S. nuclear equipment and technology substantially the same legal environment in foreign markets that they now experience domestically under the Price- Anderson Act. It will level the playing field on which they meet foreign competitors and eliminate the liability concerns that have inhibited them from providing the fullest range of safety assistance. Second, under existing nuclear liability conventions many potential victims outside the United States generally have no assurance that they will be adequately or promptly compensated in the event they are harmed by a civil nuclear incident, especially if that incident occurs outside their borders or damages their environment. The Convention, once widely accepted, will provide that assurance. United States leadership is essential in order to bring the Convention into force soon. With the United States as an initial Party, other countries will find the Convention attractive and the number of Parties is likely to grow quickly. Without U.S. leadership, the Convention could take many years to enter into force. The creation of a global civil liability regime will play a critical role in allowing nuclear power to achieve its full potential in the diverse and environmentally responsible world energy structure we need to build in the coming decades. The Convention is consistent with the primary existing U.S. statute governing nuclear civil liability, the Price-Anderson Act of 1957. Adoption of the Convention would require virtually no substantive changes in that Act. Moreover, under legislation that is being submitted separately to implement the Convention, the U.S. contingent liability to contribute to the international supplementary fund would be completely covered, either by funds generated under the Price-Anderson Act in the event of an accident covered by both that Act and the Convention, or by funds contributed to a retrospective pool by U.S. suppliers of nuclear equipment and technology in the event of an accident covered by the Convention but falling outside the Price-Anderson system. In either case, U.S. taxpayers would not have to bear the burden of the U.S. contribution to the international supplementary fund. The Convention allows nations that are party to existing nuclear liability conventions to join the new global regime easily, without giving up their participation in those conventions. It also permits nations that do not belong to an existing convention to join the new regime easily and rapidly. The United States in particular benefits from a grandfather clause that allows it to join the Convention without being required to change certain aspects of the Price-Anderson system that would otherwise be inconsistent with its requirements. The Convention, without relying on taxpayer funds, will increase the compensation available to potential victims of a civil nuclear incident, strengthen the position of U.S. exporters of nuclear equipment and technology, and permit us to provide safety assistance to the world's least-safe reactors more effectively. I urge the Senate to act expeditiously in giving its advice and consent to ratification of the Convention on Supplementary Compensation for Nuclear Damage, with a declaration as set forth in the accompanying report of the Department of State. George W. Bush. LETTER OF SUBMITTAL ---------- The Secretary of State, Washington, DC, August 7, 2001. The President, The White House. The President: I have the honor to submit to you the Convention on Supplementary Compensation for Nuclear Damage, done at Vienna on September 12, 1997. I recommend that this Convention be transmitted to the Senate for advice and consent to ratification, with a declaration. This Convention was adopted by a Diplomatic Conference convened by the International Atomic Energy Agency (IAEA), and was opened for signature at Vienna on September 29, 1997, during the IAEA General Conference. Then-Secretary of Energy Pena signed the Convention for the United States on that date, subject to ratification. Acting in the light of the 1986 Chernobyl accident, the General Conference of the IAEA decided in 1989, with U.S. support, to establish within the IAEA a Standing Committee on Nuclear Liability (SCNL). The SCNL's mandate was to examine ways to strengthen the existing international legal regime governing third party liability in the event of another nuclear accident. The SCNL met formally 17 times in Vienna over the intervening 7 years. It focused on two projects: (1) modernizing and strengthening the Vienna Convention on Civil Liability for Nuclear Damage of May 21, 1963 (the Vienna Convention), to provide a greater level of protection to third party victims of a nuclear accident to which that convention applied; and (2) drafting a new convention on supplementary funding that would mobilize funds on the international plane to supplement national funds made available by the ``installation state'' under its national law and its obligations under other nuclear liability conventions to which it might also be party. In May 1997, the SCNL adopted and forwarded to the IAEA Board of Governors the texts of a Protocol to Amend the Vienna Convention and of a ``Supplementary Funding Convention'' (as the Convention on Supplementary Compensation for Nuclear Damage was then known). The texts were considered by the Board of Governors at its June 1997 meeting. It decided to convene a Diplomatic Conference for the week of September 8-12, 1997, to adopt the two texts and open them for signature. The Diplomatic Conference adopted the two texts on September 12 and opened them for signature on September 29, the first day of the 1997 IAEA General Conference. Along with the United States, six other states (Australia, Lebanon, Lithuania, Morocco, Romania, and Ukraine) signed the Convention on Supplementary Compensation for Nuclear Damage (the ``CSC'') during the General Conference. Six other states (Argentina, the Czech Republic, Indonesia, Italy, Peru, and the Philippines) have since signed the CSC, and three states (Argentina, Morocco, and Romania) have ratified it. (The United States did not sign the Protocol to Amend the Vienna Convention; it is not party to the underlying Vienna Convention or to the Organization for Economic Cooperation and Development's (OECD) Paris Convention on Third Party Liability in the Field of Nuclear Energy of July 29, 1960 (the Paris Convention), because those conventions do not take into account the U.S. system of tort liability based on the laws of the States of the United States.) The CSC is divided into two parts, a main body and an annex. The main body creates mechanisms for compensating nuclear damage caused within the territory of Parties to the CSC (and in certain cases outside their territory) by a nuclear incident in a covered installation for which an operator within a state that is a Party to the CSC is liable under the CSC. Under the regime created by the CSC, the first tier of compensation is provided by funds made available under the laws of the ``installation state.'' The CSC defines an ``installation state'' in relation to a covered nuclear installation as the Party within whose territory that installation is situated, or if it is not situated within the territory of any state, the Party by which or under the authority of which the nuclear installation is operated. The minimum first tier compensation level for CSC Parties is set at a convertible currency equivalent to 300 million special drawing rights (SDRs) \1\ (about $400 million at current rates of exchange). There is, however, provision for a phrase-in period ending in 2007, until which time states may join the CSC with a first tier amount equivalent to not less than 150 million SDRs (about $200 million). After 2007, the 300 million SDRs requirement applies to all Parties.\2\ With respect to accidents within the territory of the United States (including its territory of the United States (including its territorial sea), and certain accidents occurring outside U.S. territory, the requirement for the United States to ensure the availability of the equivalent of 300 million SDRs in first tier compensation is already met (with two narrow exceptions) \3\ by funds that would be provided under the Price-Anderson Act (42 U.S.C. Sec. 2210). --------------------------------------------------------------------------- \1\ A special drawing right is the unit of account defined by the International Monetary Fund and used by it for its own operations and transactions. \2\ By contrast, the current version of the Vienna Convention allows parties to limit liability to as little as the equivalent of 5 million 1963 gold dollars (about $50 million at recent gold prices). Under the Paris Convention (to which most Western European countries belong) the operator's liability maybe limited to as little as 15 million SDRs per incident. The January 31, 1963, Brussels Convention Supplementary to the Paris Convention (the Brussels Convention), to which most Paris Convention Parties also belong, provides for the Paris/Brussel system to make available no less than 300 million SDRs to compensation damage in those Paris states that also being to the Brussels Convention. By comparison, once broadly adopted the CSCs will assure that no less than 600 million SDRs (about $800 million) will be available to victims. \3\ With respect to any nuclear incident occurring outside the United States involving contractors of the Department of Energy (DOE) transporting U.S. Government nuclear material, the Price-Anderson Act limits aggregate legal liability to $100 million. DOE has already recommended to Congress in its 1999 Report to Congress on the Price- Anderson Act, submitted to Congress in March 1999 (the 1999 Price- Anderson Act, submitted to Congress in March 1999 (the 1999 Price- Anderson Report), that this amount be increased to about $500 million, which would exceed the CSC requirement of 300 million SDRs. See the analysis of Annex Article 5 below for a discussion of a narrow set of potential accidents occurring outside the United States not covered by the Price-Anderson Act, but for which the United States would be the ``installation state.'' --------------------------------------------------------------------------- The second tier of compensation is provided by the international supplementary compensation fund that gives the CSC its name. The obligation to contribute to the fund would be triggered if the ``installation state'' notifies the Parties that the amount of all eligible claims may exceed the minimum first tier amount that applies to that state. Approximately 90 percent of the international supplementary fund would be made up of contributions assessed on the basis of the nuclear power generating capacity (if any) of each Party to the CSC at the time the incident occurs; the remainder would be made up of contributions assessed on the basis of each Party's United Nations assessment. Were it needed in its entirety today and were all major nuclear power generating states party to the CSC, the international supplementary fund would provide in excess of 300 million SDRs to compensate victims. Of this amount, the United States, as it possesses about one-third of the world's nuclear generating capacity, would be obligated to contribute the U.S. dollar equivalent of approximately 100 million SDRs (about $131 million). When only a few states are party, the U.S. contribution would be far less (see discussion below of Article IV(1)). Legislation to implement this requirement in the United States in a manner that does not impose a cost on U.S. taxpayers is being submitted separately to Congress. It provides that, if an accident covered by the CSC is also covered by the Price-Anderson Act, funds drawn from contributions made pursuant to that Act by U.S. nuclear utilities will cover the U.S. contribution to the international supplementary fund. In the event of an accident covered by the CSC, but not covered by the Price-Anderson system, the legislation would provide that U.S. firms that supply nuclear equipment and technology will be required to contribute to a
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