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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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