September 29 marked the 10-year anniversary of the United States
signing the Convention on Supplementary Compensation for Nuclear
Damage (CSC). The House of Representatives has failed to
pass legislation to implement the treaty. As it stands, U.S. firms
are exposed to unlimited liability in U.S. courts, virtually
barring them from competing for nuclear energy projects abroad.
Participating in the CSC will better enable U.S. companies to
engage in peaceful international nuclear commerce. Congress should
quickly adopt implementing legislation that will increase American
competitiveness, demonstrate American leadership, and come at no
cost to taxpayers.
With the President's support, the Senate approved CSC by
unanimous consent on August 3, 2006, and has twice unanimously
passed implementing legislation (most recently as an amendment to
its version of H.R. 6, The Clean Energy Act of 2007). The
House of Representatives, however, has yet to act.
For the treaty to go into effect, the Department of State must
file the treaty's instruments of ratification with the
International Atomic Energy Agency. However, the State Department
will not do so until Congress passes implementing legislation that
identifies a funding source for America's treaty obligation.
The importance of the CSC will grow as the global nuclear market
evolves. Today, approximately 30 reactors are under
construction outside of the United States. Additional orders are
already being placed, and The American Council on Global Nuclear
Competitiveness estimates that more than 150 reactors are being
proposed. Without the CSC in place, U.S. suppliers
will be at a serious disadvantage in competing for that business-if
they can compete at all. Industry sources estimate that 60,000 to
120,000 jobs would be created if American companies built even half
of the reactors planned for the next 25 years.
The existing U.S. liability system for nuclear operations only
covers activities inside the United States and does not apply to
international commerce. As a result, competing for projects abroad
exposes U.S. companies to unlimited liability in U.S. courts. In
cases where U.S. firms do compete abroad, they do so with increased
risk or within the context of additional regulation, adding cost
and undermining competitiveness.
In contrast, many foreign countries provide liability coverage
for their nuclear firms or cap their liability exposure. This
enables foreign companies to operate freely in the United States
(or elsewhere), because they do not risk their entire business by
participating in a specific project. The protection offered by
other nations puts U.S. companies at a disadvantage in the global
The CSC would fix this problem. It establishes an international
liability regime that creates common, international standards for
handling nuclear facility accident claims. In addition to providing
supplemental international funds to pay victims, the treaty would
keep liability in the country where the accident occurs. This would
help protect U.S. companies from frivolous lawsuits. Under the
current system, when a U.S. company engages in international
commerce, it potentially risks the entire company.
Many nations are waiting to join the CSC until the United States
joins. Without U.S. participation, CSC would be meaningless, since
104 of the world's approximately 440 power reactors operate within
the United States.
Failure to engage in the commercial nuclear market risks
undermining U.S. leadership on related issues, such as
nonproliferation. Other nations will simply work amongst themselves
to achieve their nuclear objectives. Countries such as Russia,
France, and China will fill the policymaking void left by the
The United States once led the world in commercial nuclear
technology but has ceded that capability to countries such as
France, Japan, Great Britain, and Russia over the past three
decades. A more competitive American industry would provide
opportunities for the United States to re-emerge as a leader in the
global commercial nuclear market. Furthermore, CSC implementation
will signal that the U.S. government is committed to the expansion
of nuclear power. This commitment by the federal government is
essential to attracting the massive private investment required to
rebuild the domestic capabilities needed to support America's
growing commercial nuclear activities.
No Cost to Taxpayers
As a CSC party, the United States wouldbe responsible for
contributing to the CSC fund in the event of an accident.Initially,
the U.S. contribution would amount to $62 million. Thisamount is
determined by a formula based primarily on the level of a country's
installed nuclear capacityand the United Nations' scale of
assessment (the percentage of the U.N. budget that the organization
charges its member states). The implementing legislation, which is
supported by the nuclear industry, places all financial
responsibility associated with the treaty on those companies that
engage in export activities. In the event that a company would not
meet its obligations, the U.S. government would take appropriate
action, as directed by the implementing legislation, to recover
owed funds from the companies.
It has been a decade since the United States signed the CSC.
While the Administration and Congress have done much to promote
nuclear energy, few near-term actions would be as significant as
finally passing CSC implementing legislation. Congress has waited
long enough. The time to act is now.
Jack Spencer is Research
Fellow in the Thomas A. Roe Institute for Economic Policy Studies
at The Heritage Foundation.
President George W. Bush, "Message to the
Senate of the United States," November 14, 2002, (September 27,
a full analysis of global nuclear liability, please see Omer Brown,
"Nuclear Liability: A Continuing Impediment to Nuclear Commerce,"
Twenty-Fourth Annual International Symposium, The Uranium
Institute, 1999, at www.world-nuclear.org/sym/1999/brown.htm
(September 27, 2007).
Convention on Supplementary Compensation for
Nuclear Damage Contingent Cost Allocation Act, S. 1653, 110th
Congress, 1st Session.