[Senate Report 109-346]
[From the U.S. Government Publishing Office]
Calendar No. 636
109th Congress Report
SENATE
2d Session 109-346
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CONVENTION ON SUPPLEMENTARY COMPENSATION FOR NUCLEAR DAMAGE CONTINGENT
COST ALLOCATION ACT
_______
September 25, 2006.--Ordered to be printed
_______
Mr. Inhofe, from the Committee on Environment and Public Works,
submitted the following
R E P O R T
[To accompany S. 3879, as amended]
The Committee on Environment and Public Works, to which was
referred a bill (S. 3879) to implement the Convention on
Supplementary Compensation for Nuclear Damage, and for other
purposes, reports favorably thereon with an amendment, and
recommends that the bill, as amended, do pass.
GENERAL STATEMENT AND BACKGROUND
This bill modifies Section 170 of the Atomic Energy Act of
1954, known as the Price-Anderson Act (42 U.S.C. 2210 et seq.).
The bill modifies the Price-Anderson Act to implement the
Convention on Supplementary Compensation for Nuclear Damage
States (hereafter, CSC or the Convention) in the United States
(U.S.).
The Senate Committee on Environment and Public Works has
jurisdiction over the nonmilitary environmental regulation and
control of atomic energy. This includes both legislative and
oversight authority pertaining to the operations of the Nuclear
Regulatory Commission (NRC) and compensation for environmental
releases of radionuclides under the Price-Anderson Act.
The CSC creates a legal framework for defining,
adjudicating and compensating civil liability resulting from
covered nuclear incidents that is consistent with the existing
U.S. nuclear civil liability system. In addition, it
establishes an international supplementary compensation fund in
the event that such an incident exhausts the funds made
available, in accordance with the Convention, by the party in
which the incident takes place.
The CSC was adopted on September 12, 1997, in Vienna at the
41st General Conference of the International Atomic Energy
Agency (IAEA), and signed by the United States on September 29,
1997, the day it was opened for signature. On November 15,
2002, the President transmitted the CSC to the Senate for
advice and consent to ratification. The Senate Foreign
Relations Committee reported the Convention to the full Senate
on July 29, 2006, and the Senate gave its advice and consent to
the Convention on August 3, 2006.
The CSC will enter into force 90 days after at least five
States with a minimum of 400,000 units of installed nuclear
capacity have deposited an instrument of ratification,
acceptance or approval with the IAEA. To date, 13 countries
have signed the CSC, and Argentina, Romania, and Morocco have
ratified it.
Congress passed the Price-Anderson Act in 1957 to ensure
that adequate funds would be available to compensate victims of
a nuclear accident. It also recognized that the risk of
extraordinary liability that companies would incur if a nuclear
accident were to happen would render insurance costs
prohibitively high, and thwart the development of nuclear
energy.
The original Price-Anderson Act authorized government
indemnification for only 10 years, until August 1, 1967.
Congress extended the Act, in 1965 and 1975 for additional 10-
year periods, in 1988, for an additional 15 years, in 2003 for
the remainder of fiscal year 2003, and in 2005, until 2025. In
addition, in 2005, as part of the Energy Policy Act of 2005
(Public Law 109-58), Congress increased the annual premium
payments from $10,000,000 to $15,000,000 per reactor and
addressed modular reactors with a total generating capacity of
1,300 megawatts as a single reactor.
S. 3879 would establish a funding mechanism under the
Price-Anderson Act for the U.S. contribution (``contingent
costs'') to the international nuclear liability compensation
system that would be established by the CSC, which has not
entered into force.
With respect to incidents covered by the Price-Anderson
Act,\1\ S. 3879 would cover the contingent costs by using the
existing funding mechanism established by the Price-Anderson
Act in a manner that would neither increase the amount that a
nuclear power plant operator would otherwise contribute nor
decrease the amount otherwise available to compensate victims.
The bill modifies the way the Price-Anderson funding system
would operate, as described in Sections 4 and 5.
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\1\Principally Sec. 170 of the Atomic Energy Act of 1954 (42 U.S.C.
2210 et seq.), which establishes a liability cap and compensation
system for U.S. nuclear incidents.
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With respect to incidents outside the United States not
covered by the Price-Anderson Act, S. 3879 would allocate the
contingent costs among nuclear suppliers that the CSC relieves
from the risk of potential liability resulting from incidents
outside the United States that are not covered by the Price-
Anderson Act.
SECTION-BY-SECTION ANALYSIS
Section 1. Short title
This section identifies the short title of the Act as the
``Convention on Supplementary Compensation for Nuclear Damage
Contingent Cost Allocation Act of 2006''
Section 2. Findings and purpose
Under this section, Congress finds that the Price-Anderson
Act establishes a liability system for a nuclear incident
involving a commercial power plant or a Department of Energy
(DOE) nuclear contractor, which provides a prompt and equitable
process for recovering compensation for damage caused by the
nuclear incident, provides an assured source of funds for the
payment of this compensation, and channels liability for
covered claims to this assured source of funds. The CSC
establishes an international system comparable to and
compatible with the Price-Anderson system. The CSC benefits
potential victims by assuring that substantial funds will be
available to compensate damage caused by nuclear incidents by
establishing minimum requirements for the amount of
compensation available under the national laws of member
countries and by providing for an internationally financed
compensation fund to supplement the amounts available under
national law. The CSC benefits U.S. nuclear suppliers who face
potentially unlimited liability for nuclear incidents outside
the coverage of the Price-Anderson Act by replacing potentially
open-ended liability with a predictable regime. Congress finds
the CSC also benefits U.S. nuclear facility operators that may
be liable for public liability under the Price-Anderson Act by
providing an additional source of compensation for nuclear
incidents covered by the Price-Anderson Act. The United States
should fund any contributions that it may be required to make
to the Convention's supplementary compensation fund in a manner
that neither upsets settled expectations based on the liability
regime established in the Price-Anderson Act nor shifts to
Federal taxpayers liability risks for nuclear incidents at
foreign installations.
The purpose of the bill is to allocate the U.S.
contribution to the international compensation system
established by the Convention.
Section 3. Definitions
This section defines terms used in the Act:
``Commission'' refers to the Nuclear
Regulatory Commission.
``Contingent costs'' refers to the amount
that the United States could contribute to the
international fund established by the Convention. These
costs are contingent on the occurrence of a nuclear
incident that triggers the obligation to contribute.
The amount is dependent on the amount of nuclear damage
resulting from the nuclear incident and the identities
of the other countries that belong to the Convention.
``Convention'' refers to the Convention on
Supplementary Compensation for Nuclear Damage.
``Covered incident'' refers to a nuclear
incident that comes within the scope of the Convention.
In general, a covered incident is a nuclear incident in
a country that belongs to the Convention or during
transportation to or from such a country.
``Covered installation'' refers to a nuclear
installation that comes within the scope of the
Convention and at which the occurrence of a nuclear
incident could trigger the obligation to contribute to
the international fund.
``Covered person'' refers to a person that
may be a nuclear supplier for purposes of this Act. A
covered person may be either (1) a United States
person, or (2) any other person to the extent such
other person conducts activities in the United States.
A covered person may not be the United States or any
agency or instrumentality of the United States.
``Nuclear supplier'' refers to a covered
person or successor that either (1) provides goods or
services to a covered installation, or (2) engages in a
shipment of nuclear materials that could result in a
covered incident.
``Price-Anderson incident'' means a covered
incident that comes within the scope of the Price-
Anderson Act.
``Secretary'' refers to the Secretary of
Energy.
``United States'' refers to the same
geographic area as the definition of ``United States''
in the Atomic Energy Act, which includes the 50 states,
the District of Columbia, Puerto Rico, the Canal Zone,
the Territorial Sea as defined in Presidential
Proclamation 5928 (December 27, 1988), and the
territories and possessions of the United States.
``United States person'' refers to (1) any
individual who is a United States resident, national or
citizen, or (2) any entity that is organized under the
laws of the United States or any state, territory,
possession, or commonwealth of the United States, or
any political subdivision thereof.
Section 4. Use of Price-Anderson funds
This section provides that if a nuclear incident is covered
by the Price-Anderson Act, then a portion of the funds made
available for public liability under the Price-Anderson Act
will be used to cover the contribution by the United States to
the international fund established by the CSC. The use of
Price-Anderson funds to cover the contribution by the United
States to the international fund shall not decrease the
limitation for liability for nuclear damage.
Section 5. Effect on amount of public liability
This section provides that, with respect to an incident
covered by the Price-Anderson Act, funds made available to the
United States from the international fund established by the
CSC will be used to pay persons indemnified under the Price-
Anderson Act. In addition, this section provides that the
limitation on the amount of public liability under the Price-
Anderson Act will be increased by the net amount of funds that
the United States receives from the international fund (that
is, the actual amount of funds received less the amount of the
contribution by the United States to the international fund).
Section 6. Retrospective risk pooling program
This section requires a nuclear supplier to participate in
the retrospective payment program established by the bill to
cover the costs resulting from an incident outside the United
States that is covered by the Convention but not covered by the
Price-Anderson Act. The amount of the retrospective payment by
a nuclear supplier will be determined after a nuclear incident
occurs by allocating the amount of the contribution by the
United States to the international fund among nuclear suppliers
according to a risk-informed assessment formula developed by
the Secretary of Energy. In developing this formula, the
Secretary need not limit the examination to ``covered
installations'' in countries that have ratified the Convention,
but also may consider covered installations in countries that
have signed the Convention and in other countries that the
Secretary concludes are likely to join the Convention within a
reasonable period of time.
In developing the formula, the Secretary must take into
account certain risk factors that focus on the extent of the
potential liability of a nuclear supplier that could result
from its goods and services relative to the goods and services
of other nuclear suppliers. The formula is expected to exclude
nuclear suppliers that do not provide goods or services
specifically for nuclear facilities outside the United States
or whose goods or services are not likely to result in
significant potential liability outside the United States.
The Committee believes the Secretary should also ensure
that the burden imposed by the risk-informed formula among
nuclear suppliers is shared in a fair and equitable manner, and
that the contingent cost is not allocated disproportionately to
one supplier. Accordingly, the formula may provide for a
minimum and maximum share to be borne by nuclear suppliers not
otherwise excluded from the formula. Further, the Secretary
should endeavor to ensure that nuclear suppliers do not
undervalue their goods and services in order to shift greater
liability onto other nuclear suppliers, and that the
implementation of Section 6 of the Act does not create an
incentive for nuclear suppliers to shift their business
activities off-shore in order to avoid or minimize their
obligations under the Act or the formula. Given the variability
of prices of nuclear goods and services in the market and the
lack of any necessary connection between the price of a good or
service and the risk or hazard it poses, the share of the
contribution assessed on a nuclear supplier should be
determined principally by the risks and hazards associated with
such nuclear supplier's goods and services, as indicated by the
factors listed in the Act.
The Secretary is to determine the formula not later than
three years after enactment and every five years thereafter,
and to issue a report to Congress assessing the effects of the
implementation of the Convention on the U.S. nuclear industry
and suppliers within five years of enactment of this Act. Once
the initial report is completed, the Committee believes
periodic reporting to assess the effects of the implementation
of the Convention on the U.S. nuclear industry and nuclear
suppliers is warranted, and should be conducted in regular
increments of at least every five years. In each report, the
Secretary should assess whether there appears to be a
significant risk that the requirements of this Act could have a
material adverse effect on the competitiveness or availability
of U.S. nuclear suppliers and shall suggest mitigating actions
where appropriate.
Generally, in implementing this Act and, in particular, in
arriving at the risk-informed assessment formula under Section
6(b)(3), the Committee believe the Secretary should seek to (i)
minimize any adverse competitive impact of this Act on nuclear
suppliers in the United States or foreign markets and (ii)
avoid discouraging nuclear suppliers from engaging in
manufacturing, research and development or other activities in
the United States or from participating in U.S. Government-
sponsored projects or activities either in the United States or
abroad.
Section 7. Reporting
This section authorizes the Secretary of Energy to collect
information needed to develop and implement the assessment
formula. The section also requires the Secretary to make
information available to nuclear suppliers and insurers to
facilitate the creation of a voluntary private insurance system
to cover potential payments by nuclear suppliers under the
retrospective risk pooling program established by the Act. The
section also requires entities to make information available to
the Secretary to help develop and implement the assessment
formula.
Section 8. Effect on liability
This section provides that liability for a covered incident
may not be limited to less than 300 million Special Drawing
Rights (the amount prescribed in paragraph 1(a) of Article IV
of the Convention), unless an explicit law is enacted. 300
million Special Drawing Rights currently equal approximately
$420 million.
Section 9. Payments to and by the United States
This section sets forth the procedure for the Secretary of
Energy and nuclear suppliers to follow in the event of a call
for funds under the Convention so that the deferred payments
are made to the Treasury of the United States and conveyed from
the Treasury to the appropriate entity in fulfillment of the
obligation of the United States tocontribute to the
international fund established by the Convention. In the event a
nuclear supplier defaults on its obligation to make a deferred payment,
this section authorizes the Secretary of Energy to seek recovery from
the supplier of the payment, appropriate interest, and civil penalties
up to twice the amount of the payment.
Section 10. Limitation on judicial review; Cause of action
This section provides a right to sue the person legally
responsible for a nuclear incident under the Convention for
damage resulting from a nuclear incident for which a court of
the United States has jurisdiction under the Convention, but to
which the Price-Anderson Act does not apply. This section
ensures a cause of action will be available in all situations
where United States courts have jurisdiction over a nuclear
incident, including a nuclear incident during transportation,
for which federal or state law may not currently provide a
cause of action against the person responsible for the nuclear
incident as defined by the Convention.
This section also assigns jurisdiction to the United States
Court of Appeals for the District of Columbia Circuit for
appeals and reviews of claims resulting from a nuclear incident
for which a court of the United States has jurisdiction under
the Convention, but to which the Price-Anderson Act does not
apply. This assignment does not affect the jurisdiction of the
Supreme Court under chapter 81 of title 28 of the United States
Code.
Section 11. Right of recourse
This section clarifies that this Act does not provide the
operator of a covered installation a right of recourse against
a nuclear supplier or any other person.
Section 12. Protection of sensitive United States information
This section provides that neither this Act nor the
Convention should be construed to require the disclosure of
Restricted Data, Formerly Restricted Data, information relating
to intelligence sources or methods, or national security
information.
Section 13. Regulations
This section authorizes the Secretary of Energy and the
Nuclear Regulatory Commission to issue rules to implement this
Act, including rules on how the Price-Anderson Act and this Act
interact. The Secretary and the Commission will exercise this
authority over areas for which they are responsible. The
section provides that any implementing rules must be consistent
and equitable and ensure that the financial and operational
burden on a Commission licensee not increase as a result of the
enactment of this Act. This section should not be construed to
eliminate, limit, or otherwise affect any other regulatory
authority that the Secretary or the Commission already
possesses.
Section 14. Effective date
This section provides that the Act becomes effective on the
date on which the Convention on Supplementary Compensation for
Nuclear Damage enters into force for the United States.
LEGISLATIVE HISTORY
On September 8, 2006, Senator Jim M. Inhofe introduced S.
3879. The bill was referred to the Senate Committee on
Environment and Public Works. On September 13, 2006, S. 3879,
as amended, was favorably reported by the committee to the full
Senate.
HEARINGS
No committee hearings were held on S. 3879.
ROLLCALL VOTES
The Committee on Environment and Public Works met to
consider S. 3879 on September 13, 2006. Senators Inhofe and
Jeffords proposed an amendment, which was agreed to by voice
vote. The bill, as amended, was voted favorably by voice vote.
REGULATORY IMPACT STATEMENT
In compliance of section 11(b) of rule XXVI of the Standing
Rules of the Senate, the committee finds that S. 3879 does not
create any additional regulatory burdens, nor will it cause any
adverse impact on the personal privacy of individuals.
MANDATES ASSESSMENT
In compliance with the Unfunded Mandates Reform Act of 1995
(Public Law 104-4), the committee finds that this bill would
impose no Federal intergovernmental unfunded mandates on State,
local, or tribal governments.
COST OF LEGISLATION
Due to time constraints the Congressional Budget Office
estimate was not included in the report when received by the
committee, it will appear in the Congressional Record at a
later time.
CHANGES IN EXISTING LAW
Section 12 of rule XXVI of the Standing Rules of the Senate
requires the committee to publish changes in existing law made
by the bill as reported. Passage of this bill will make no
changes to existing law.