[Senate Hearing 109-324]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 109-324
 
                                TREATIES

=======================================================================

                                HEARING


                               BEFORE THE


                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE



                       ONE HUNDRED NINTH CONGRESS



                             FIRST SESSION



                               __________

                           SEPTEMBER 29, 2005

                               __________



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                     COMMITTEE ON FOREIGN RELATIONS

                  RICHARD G. LUGAR, Indiana, Chairman

CHUCK HAGEL, Nebraska                JOSEPH R. BIDEN, Jr., Delaware
LINCOLN CHAFEE, Rhode Island         PAUL S. SARBANES, Maryland
GEORGE ALLEN, Virginia               CHRISTOPHER J. DODD, Connecticut
NORM COLEMAN, Minnesota              JOHN F. KERRY, Massachusetts
GEORGE V. VOINOVICH, Ohio            RUSSELL D. FEINGOLD, Wisconsin
LAMAR ALEXANDER, Tennessee           BARBARA BOXER, California
JOHN E. SUNUNU, New Hampshire        BILL NELSON, Florida
LISA MURKOWSKI, Alaska               BARACK OBAMA, Illinois
MEL MARTINEZ, Florida
                 Kenneth A. Myers, Jr., Staff Director
              Antony J. Blinken, Democratic Staff Director


                                  (ii)

  
?

                            C O N T E N T S

                              ----------                              
                                                                   Page
Balton, Hon. David A., Deputy Assistant Secretary for Oceans and 
  International Environmental and Scientific Affairs, Department 
  of State.......................................................     3

    Prepared statement...........................................     5

Lugar, Hon. Richard G., U.S. Senator from Indiana................     1

McRae, James Bennett, Assistant General Counsel, Civilian Nuclear 
  Programs, Department of Energy.................................    20

    Prepared statement...........................................    21

Stern, Warren M., Senior Coordinator for Nuclear Safety, 
  Department of State............................................    17

    Prepared statement...........................................    18


                                Appendix

Responses to Additional Questions Submitted for the Record by 
  Members of the Committee

    Responses to Additional Questions Relating to the Convention 
      on the Conservation and Management of the Highly Migratory 
      Fish Stocks in the Western and Central Pacific Ocean 
      (Treaty Doc. 109-1)........................................    33

    Responses to Additional Questions Relating to the Convention 
      for the Strengthening on the Inter-American Tropical Tuna 
      Commission (Treaty Doc. 109-2).............................    35

    Responses to Additional Questions Relating to MARPOL Annex VI 
      (Treaty Doc. 108-7)........................................    36

    Responses to Additional Questions Relating to the Convention 
      on Supplementary Compensation for Nuclear Damage (Treaty 
      Doc. 107-21)...............................................    42

                                 (iii)

  


                                TREATIES

                              ----------                              


                      Thursday, September 29, 2005

                                       U.S. Senate,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:33 a.m. in Room 
SD-419, Dirksen Senate Office Building, Hon. Richard G. Lugar 
[chairman] presiding.
    Present: Senators Lugar [presiding].

          OPENING STATEMENT OF HON. RICHARD G. LUGAR,
                   U.S. SENATOR FROM INDIANA

    The Chairman. This meeting of the Senate Foreign Relations 
Committee is called to order. The committee meets today to hear 
testimony on five treaties. Within the Congress, the Senate 
Foreign Relations Committee is charged with the unique 
responsibility of reviewing treaties negotiated by the 
administration. Our colleagues in the Senate depend on us to 
make timely and judicious recommendations on treaties.
    We are pleased that the Bush administration has negotiated 
these agreements. We look forward to hearing from these 
officials about why they believe the Senate should approve 
them.
    In advance of this hearing, committee staff members have 
reviewed these treaties carefully. We have held two formal 
committee briefings covering treaties, with administration 
representatives available to answer questions. I appreciate the 
support and cooperation of the distinguished ranking member, 
Senator Biden, throughout that process.
    On our first panel, we welcome Mr. David Balton, Deputy 
Assistant Secretary of State for Oceans and International 
Environmental and Scientific Affairs. He will testify on four 
treaties related to international fisheries and the ocean 
environment.
    The first of these treaties relates to marine pollution. 
The 1973 International Convention for the Prevention of 
Pollution from Ships, as modified by the Protocol of 1978, 
commonly referred to as ``MARPOL,'' is the global framework 
agreement to control discharges of pollution from ships. Today 
we will be considering the 1997 protocol amending MARPOL and 
adding Annex VI, which contains regulations for preventing air 
pollution.
    Among other measures, MARPOL Annex VI limits the discharge 
of nitrogen oxides from larger marine diesel engines, governs 
the sulphur content of marine diesel fuel, prohibits the 
emission of ozone-depleting substances, and set standards for 
shipboard incinerators and fuel oil quality, and establishes 
requirements for platforms and drilling rigs at sea.
    Mr. Balton will also address three treaties related to fish 
stocks in the Pacific Ocean. The United States-Canada Agreement 
on Pacific Hake-Whiting creates a formal process through which 
scientists and fishery managers from both nations will 
recommend annual total catches of Pacific whiting, also known 
as Pacific hake. This agreement would establish for the first 
time percentage shares of the trans-boundary stock of Pacific 
whiting for each nation. The treaty is designed to alleviate 
overfishing and to provide long-term stability for harvesters 
and processors.
    The third treaty, the Convention on Conservation and 
Management of Highly Migratory Fish Stocks in the Western and 
Central Pacific Ocean, provides for the long-term conservation 
and sustainable use of fish stocks, such as tuna, swordfish, 
and marlin. These important fish migrate across the high seas 
of the western and central Pacific Ocean, as well as through 
waters under fishery jurisdiction of several nations, including 
the United States. The Convention creates a new regional 
fishery management organization for this area.
    Similarly, the convention for the strengthening of the 
Inter-American Tropical Tuna Commission, known as the Antigua 
Convention, provides for the long-term conservation and 
sustainable use of highly migratory fish stocks, such as tuna 
and swordfish, which range across the eastern Pacific. The 
Antigua Convention would update a 1949 convention to reflect 
improved methods in managing international marine reserves.
    On our second panel, the committee will hear testimony from 
Warren Stern, Senior Coordinator for Nuclear Safety at the 
Department of State, and Mr. James Bennett McRae, Assistant 
General Counsel for Civilian Nuclear Programs at the Department 
of Energy. This will discuss the Convention on Supplementary 
Compensation for Nuclear Damage, known as the CSC. Adopted at a 
conference convened by the International Atomic Energy 
Commission, the CSC is an effort to create a global nuclear 
civil liability regime compatible with the existing U.S. 
nuclear civil liability law under the Price-Anderson Act.
    The Price-Anderson Act, which was recently reauthorized by 
Congress in the comprehensive energy bill, has set the standard 
for nuclear liability in the United States for many years. The 
CSC is designed to limit the liability now facing United States 
suppliers of nuclear technology with respect to their 
activities in foreign markets. This treaty would help U.S. 
companies export nuclear safety technology to foreign nations. 
At the same time, the CSC's creation of a supplementary 
international fund is expected to help ensure that potential 
victims of a civil nuclear incident overseas will be adequately 
compensated.
    The United States' ratification of the CSC could be a step 
toward establishing a common international nuclear liability 
standard. It would also encourage improvements in civilian 
nuclear plant safety overseas and provide liability standards 
that would level the playing field for American suppliers and 
bring more predictability to the market.
    I commend the American negotiators who have worked on these 
five agreements, some of which are the product of years of 
patient diplomacy. We look forward to the contributions of our 
witnesses to our understanding.
    I would like now to call upon the first panel. This is in 
fact the Honorable David Balton, Deputy Assistant Secretary of 
State. Secretary Balton, would you please proceed. I understand 
you will discuss the first four treaties that we are to hear 
this morning, and then we will have discussion of the fifth 
treaty with your colleagues at the table at that time.
    Please proceed.

 STATEMENT OF HON. DAVID A. BALTON, DEPUTY ASSISTANT SECRETARY 
   FOR OCEANS AND INTERNATIONAL ENVIRONMENTAL AND SCIENTIFIC 
                  AFFAIRS, DEPARTMENT OF STATE

    Mr. Balton.  Thank you very much, Mr. Chairman. I have a 
written statement and ask that it be included in full in the 
record, and that will be true of the statements of each of the 
witnesses today.
    Thank you. I appreciate the opportunity to testify on four 
treaties relating to the oceans, the ones you outlined: the 
U.S.-Canada Agreement on Pacific Hake-Whiting; the Convention 
for the Strengthening of the Inter-American Tropical Tuna 
Commission, also known as the Antigua Convention; the Western 
and Central Pacific Fisheries Convention, and Annex VI to the 
MARPOL Convention.
    Mr. Chairman, today's hearing takes place at a time of 
increased attention and concern about the oceans and their 
resources. The U.S. Commission on Ocean Policy presented its 
comprehensive report, ``An Ocean Blueprint for the 21st 
Century,'' one year ago, detailing the many challenges we face 
in this regard. The administration has issued and has begun to 
implement the U.S. Ocean Action Plan, building on the Ocean 
Commission report and other initiatives. Congress is also 
considering several pieces of legislation to strengthen our 
stewardship of the oceans.
    As these efforts move forward, we must recognize that no 
nation acting alone can address issues relating to the oceans 
fully or effectively. For fisheries and other resources that 
cross jurisdictional lines in the seas, we must secure the 
cooperation of other nations to conserve and manage those 
resources sustainably. Similarly, the control and reduction of 
pollution affecting the oceans, including air pollution from 
ships, require concerted international action.
    All four of the oceans treaties before you today represent 
successful efforts to secure such cooperation. In each case, 
U.S. negotiating teams representing the full range of U.S. 
interests on these matters labored hard to reach the 
agreements. Due in large part to this inclusive approach, I am 
pleased to report that affected stakeholders in the United 
States support ratification of all four of these treaties. 
Indeed, I am aware of no opposition to any of them.
    Of course, each treaty has its own unique purpose and 
particular features. Please allow me to summarize each in turn. 
I will begin with the U.S.-Canada agreement on Pacific whiting. 
This provides for the first time a stable and equitable basis 
on which our two nations can share a valuable stock of fish, 
known generally in the United States as Pacific whiting and in 
Canada as Pacific hake. This fish stock occurs off the West 
Coast of North America from California to British Columbia. The 
fishery in the United States alone has a value of more than $20 
million annually.
    U.S. and Canadian scientists fishery managers have 
cooperated informally for many years to develop an annual 
overall total allowable catch, or TAC, for the stock. But our 
two countries have not been able to agree until now on how to 
divide the TAC between U.S. and Canadian fisheries. The United 
States has generally claimed and taken roughly 80 percent of 
the allowable catch, while Canada has claimed and taken roughly 
30 percent. This situation, coupled with other factors, led to 
a decline in the stock. In 2002 the Department of Commerce 
declared the stock to be overfished.
    The Pacific whiting agreement reflects a commitment by both 
nations and their respective industries to resolve this issue 
for the sake of the stock and for the sake of the fishery. The 
agreement assigns almost 74 percent of the TAC to the United 
States and slightly more than 26 percent to Canada. The 
agreement also formalizes the means by which U.S. and Canadian 
scientists and fisheries managers will determine the total 
catch each year. Stakeholders from both countries will have 
significant input into this process.
    I will now turn to the Convention for Strengthening the 
Inter-American Tropical Tuna Commission. In 1949, as you said, 
Mr. Chairman, the United States and Costa Rica developed an 
initial treaty to create the Inter-American Tropical Tuna 
Commission, or the IATTC, as an international fisheries 
organization to conserve and manage the fisheries for tuna and 
related species in the eastern Pacific Ocean. The IATTC now has 
14 members as well as five other states and entities that 
participate in its work.
    The years since the inception of the IATTC have witnessed 
dramatic changes in international law and norms relating to 
ocean fisheries. In light of these changes, the states and 
entities participating in the IATTC agreed to renegotiate the 
original treaty, primarily to incorporate modern principles of 
fisheries management. Negotiations resulted in the Convention 
before you today, which the United States signed on November 
14, 2003.
    The Antigua Convention, named for the city in Guatemala 
where it was adopted, will significantly strengthen the legal 
and policy framework on which the valuable work of the IATTC 
rests. Early U.S. ratification would provide valuable momentum 
to bring the Convention into force and would demonstrate our 
continued commitment on and leadership in international 
fisheries issues.
    The Western and Central Pacific Fisheries Convention 
establishes a brand new international fisheries organization to 
conserve and manage tunas and related species in that portion 
of the Pacific Ocean not covered by the IATTC. These two 
organizations, the IATTC and the Western and Central Pacific 
Fisheries Commission, will together provide for sustainable 
management of fisheries throughout the Pacific Ocean.
    The tuna fisheries of the western and central Pacific are 
the largest and most valuable in the world. Implementation of 
this convention offers the opportunity to conserve and 
responsibly manage these resources while the threat of 
overfishing and overcapacity are still at a manageable stage.
    This Convention entered into force more than 1 year ago. 
Given the central role that the United States played in its 
negotiation and the significance of these fisheries to U.S. 
commercial and environmental interests, the administration 
believes that it is high time for the United States to take its 
seat at the table as a party to this treaty.
    Finally, the International Convention for the Prevention of 
Pollution from ships, also known as MARPOL, is the primary 
treaty to control the accidental and operational discharges of 
pollutants from ships. The convention, negotiated under the 
auspices of the International Maritime Organization, now 
consists of a framework agreement as well as six annexes, each 
of which addresses a particular source of ship-based pollution. 
The United States is already a party to MARPOL and four of its 
annexes.
    Annex VI, before you today, deals with air pollution from 
ships. It does so in part by establishing design standards for 
marine diesel engines installed after 1 January 2000 for the 
reduction of oxides of nitrogen. The Annex also sets a global 
cap of 4.5 percent on the sulphur content of marine fuels, as 
well as a mechanism for reducing the sulphur content to 1.5 
percent in particular areas, so-called SOX emission 
control areas. The administration contemplates seeking the 
establishment of such areas in waters adjacent to North America 
where ship emissions contribute to air quality problems in the 
United States, Canada, and Mexico.
    Annex VI also prohibits the deliberate emission from ships 
of ozone-depleting substances, including halons and CFCs, and 
prohibits the incineration onboard ship of certain products, 
such as contaminated packaging materials and PCBs. Annex VI 
entered into force on May 19 of this year. There are currently 
27 parties to it, representing almost two-thirds of the world's 
tonnage of merchant ships.
    U.S. ratification will enhance our ability to work through 
the IMO to establish even more stringent global emission 
reduction standards in the future.
    Thank you, Mr. Chairman, for the opportunity to discuss 
these issues. I would be happy to answer any questions you may 
have. I also have with me Mr. Brian Wood-Thomas of the 
Environmental Protection Agency to help me in responding to any 
technical questions relating to MARPOL Annex VI. Thank you.

    [Secretary Balton's prepared statement follows:]

               Prepared Statement of Hon. David A. Balton

    Mr. Chairman and members of the committee: I appreciate the 
opportunity to testify today on four treaties relating to the oceans:

   the Agreement between the Government of the United States of 
        America and the Government of Canada on Pacific Hake/Whiting 
        (Whiting Agreement);

   the Convention for the Strengthening of the Inter-American 
        Tropical Tuna Commission (Antigua Convention);

   the Convention on the Conservation and Management of the 
        Highly Migratory Fish Stocks in the Western and Central Pacific 
        Ocean, with Annexes (WCPF Convention); and

   the Protocol of 1997 to Amend the International Convention 
        for the Prevention of Pollution from Ships, 1973, as Modified 
        by the Protocol of 1978 thereto (MARPOL Annex VI)

    The first three of these treaties concern the conservation and 
management of vital fisheries resources shared between the United 
States and other nations. The fourth treaty regulates air pollution 
from ocean-going vessels. The administration urges the Senate to review 
all four of these agreements favorably, with a view to providing advice 
and consent to their ratification as soon as possible.
    Mr. Chairman, today's hearing takes place at a time of increased 
attention and concern about the oceans and their resources. The U.S. 
Commission on Ocean Policy presented its comprehensive report, ``An 
Ocean Blueprint for the 21st Century,'' one year ago, detailing the 
many challenges we face in this. regard. The administration has issued 
and has begun to implement the U.S. Ocean Action Plan, building on the 
Ocean Commission report and other initiatives. Congress is also 
considering a number of pieces of legislation to strengthen the ability 
of this Nation to act as a proper steward of the oceans.
    As these efforts move forward, we must recognize that no nation 
acting alone can address issues relating to the oceans fully or 
effectively. For fisheries and other resources that cross 
jurisdictional lines in the seas we must secure the cooperation of 
other nations to conserve and manage those resources sustainably. 
Similarly, the control and reduction of pollution affecting the 
oceans--including air pollution from ships--requires concerted 
international action.
    All four treaties before you today represent successful efforts to 
secure such international cooperation. In each case, U.S. negotiating 
teams, representing the full range of U.S. interests on these matters, 
labored hard to reach the agreements. Due in large part to this 
inclusive approach, I am pleased to report that affected stakeholders 
in the United States support ratification of all these treaties. 
Indeed, I am aware of no opposition to them.
    Of course, each treaty has its own unique purpose and particular 
features, as outlined below. Ratification of each treaty would also 
require the enactment of legislation to implement U.S. obligations.
    Mr. Chairman, I will now present a brief summary of each treaty.

             AGREEMENT WITH CANADA ON PACIFIC HAKE/WHITING

    This Agreement with Canada provides, for the first time, a stable 
and equitable basis on which our two nations can share a valuable stock 
of fish whose range includes Pacific waters off of our respective West 
Coasts. This fish, known generally in the United States as Pacific 
whiting and in Canada as Pacific hake, is used principally in the 
manufacture of surimi, which is the basis for such products as 
imitation crab legs and shrimp. The fishery, which takes place in 
waters off Northern California, Oregon, Washington, and British 
Columbia, was worth approximately $21.9 million to U.S. fishermen in 
2004. The fish is processed both at sea and by land-based firms. The 
fishery also has a substantial economic impact on several fishing 
ports, such as Crescent City and Eureka in California and Astoria and 
Newport in Oregon.
    Beginning in the 1970s, scientists and fisheries managers from the 
United States and Canada reached informal agreement on an annual 
overall total allowable catch (TAC) for the stock. The two countries 
conducted periodic joint stock assessments and agreed informally on 
certain management measures, but not the most important one--how to 
divide the TAC between U.S. and Canadian fisheries. The United States 
generally claimed 80% of the allowable catch, while Canada took 30%. 
This situation, coupled with other factors, led to a decline in the 
stock. In 2002, for the first time, the Department of Commerce declared 
the stock to be ``overfished.''
    Following resumed talks in 2002, both sides agreed in principle in 
April 2003 to the text of a new long-term management and sharing 
arrangement. The Agreement, signed at Seattle on November 21, 2003, 
establishes a default harvest policy and assigns 73.88% of the TAC to 
the United States and 26.12% to Canada for an initial period of nine 
years, and thereafter unless the Parties agree to change it. It also 
creates a formal process through which U.S. and Canadian scientists and 
fisheries managers will determine the total catch of hake each year, to 
be divided by the percentage formula. Stakeholders from both countries 
will have significant input into this process.
    The U.S. fishing industry strongly supports the Agreement. It not 
only allows the Parties to redress the overfishing that had led to the 
recent decline in stock levels, but also provides for long-term 
stability to U.S. fishers and processors and a structure for future 
scientific collaboration.
    Legislation will be necessary to implement this agreement. The 
administration anticipates that such legislation will be relatively 
short and straightforward. We have already been in contact with 
relevant committees in Congress to suggest possible wording for such 
legislation.

      CONVENTION STRENGTHENING THE INTER-AMERICAN TUNA COMMISSION
 
   The Inter-American Tropical Tuna Commission (IATTC) is an 
international fisheries organization with a mission to conserve and 
manage the fisheries for tuna and related species in the Eastern 
Pacific Ocean. The treaty establishing the IATTC was initially 
concluded in 1949 as a bilateral agreement between the United States 
and Costa Rica. Since then, the organization has grown to include 14 
members, as well as five other States and entities that enjoy the 
status of ``cooperating non-parties.''
    Several years ago, the States and entities participating in the 
IATTC agreed to re-negotiate the original treaty, primarily to 
incorporate modern principles of fisheries management. Negotiations 
toward this end resulted in the Convention for the Strengthening of the 
Inter-American Tropical Tuna Commission (IATTC), also known as the 
Antigua Convention, adopted on June 27, 2003, in Antigua, Guatemala. 
The United States signed the Convention on November 14, 2003.
    The United States Government, represented by the Departments of 
State and Commerce, as well as stakeholders from the U.S. fishing 
industry and conservation community, played a central role in the 
negotiation of the Antigua Convention. The administration, supported by 
these stakeholders, believes that this treaty will serve as a strong 
and comprehensive basis for the future work of the IATTC. The Antigua 
Convention faithfully incorporates valuable provisions of other recent 
fisheries treaties, particularly the 1995 United Nations Fish Stocks 
Agreement, to which the United States is already a party. The Antigua 
Convention will also provide a sound legal framework for protecting 
U.S. interests in this fishery, including by creating a mechanism in 
which both the European Union and Taiwan can participate fully in the 
work of the IATTC and be bound by the regulatory measures adopted by 
that organization.
    The Antigua Convention will enter into force fifteen months after 
the deposit of the seventh instrument of ratification, acceptance, 
approval, or accession by States that were Parties to the 1949 
Convention on November 14, 2003. To date, 12 States and the European 
Commission have signed the Convention. Two countries, Mexico and El 
Salvador, have so far deposited instruments of ratification. In 
addition, Taiwan has signed an instrument declaring its firm commitment 
to abide by the terms of the Antigua Convention, subject to 
confirmation.
    Early U.S. ratification would provide valuable momentum to bring 
the Antigua Convention into force and would demonstrate our continued 
commitment to and leadership on international fisheries issues. 
Although the United States could implement much of the Antigua 
Convention under existing statutory authority, the administration will 
propose legislation to effect certain changes in U.S. law, principally 
the Tuna Conventions Act of 1950, as amended, to provide the strongest 
basis for implementing the Antigua Convention.
convention on the conservation and management of highly migratory fish 

            STOCKS IN THE CENTRAL AND WESTERN PACIFIC OCEAN

    Unlike the Antigua Convention, which is designed to strengthen the 
underlying treaty of an international fisheries organization that has 
existed for more than half a century, the Convention on the 
Conservation and Management of the Highly Migratory Fish Stocks of the 
Western and Central Pacific Ocean, with Annexes, (``the WCPF 
Convention''), establishes a brand new international fisheries 
organization to conserve and manage tunas and related species in that 
portion of the Pacific Ocean not covered by the IATTC. The two 
organizations will have complementary mandates intended to provide for 
effective and sustainable management of these fisheries throughout the 
entire Pacific Ocean.
    The WCPF Convention was adopted on September 5, 2000, in Honolulu. 
The United States signed the Convention on that date. The Convention 
entered into force on June 19, 2004, and now boasts 20 parties. In 
addition, Taiwan has signed an instrument declaring its firm commitment 
to abide by the terms of the WCPF Convention, subject to confirmation. 
The United States is one of the few original signatories yet to ratify 
or accede.
    The United States played a lead role during the negotiations on a 
wide range of issues. One such issue was the effort to afford 
membership in the Commission to Taiwan under the terms of the separate 
instrument noted above. As a result, for the first time in any regional 
fisheries organization, vessels from Taiwan will be bound by the terms 
of the Convention, including the conservation and management measures 
adopted pursuant thereto. Similar arrangements were subsequently 
included in the Antigua Convention, discussed above, which was adopted 
after the adoption of the WCPF Convention.
    The highly migratory fish stocks of the Western and Central Pacific 
are of great significance to the United States and the other nations 
involved in those fisheries. Indeed, the tuna fisheries in that region 
are the largest and most valuable in the world. Implementation of the 
WCPF Convention offers the opportunity to conserve and responsibly 
manage these resources while the threat of overfishing and over-
capacity are still at a manageable stage, before conditions deteriorate 
as we have seen too often elsewhere in the world's oceans.
    The WCPF Convention builds upon the 1982 United Nations Convention 
on the Law of the Sea (the LOS Convention) and the 1995 United Nations 
Agreement on the Conservation and Management of Straddling Fish Stocks 
and Highly Migratory Fish Stocks (the Fish Stocks Agreement). The WCPF 
Convention gives effect to the provisions of the LOS Convention and 
Fish Stocks Agreement that recognize as essential, and require, 
cooperation to conserve highly migratory fish stocks through regional 
fishery management organizations, by those with direct interests in 
them--coastal States with authority to manage fishing in waters under 
their jurisdiction and those nations whose vessels fish for these 
stocks.
    The United States has direct and important interests in the 
effective implementation of the WCPF Convention. The United States is a 
major distant water fishing nation, with the fourth largest catch in 
the region. At the same time, the United States is the coastal State 
with the largest EEZ in the Convention Area (including the waters 
around Hawaii, American Samoa, Guam, the Northern Mariana Islands and 
other unincorporated islands under U.S. jurisdiction). Accordingly, 
U.S. fishing concerns, including the U.S. tuna industry, U.S. 
conservation organizations and U.S. consumers, as well as the residents 
of Hawaii and the U.S. Flag Pacific island areas of Guam, American 
Samoa and the Northern Mariana Islands, all have a crucial stake in the 
health of the oceans and their resources as promoted by the WCPF 
Convention.

    PROTOCOL OF 1997 TO AMEND THE INTERNATIONAL CONVENTION FOR THE 
 PREVENTION OF POLLUTION FROM SHIPS, 1973, AS MODIFIED BY THE PROTOCOL 
                   OF 1978 THERETO (MARPOL ANNEX VI)

    Negotiated under the auspices of the International Maritime 
Organization (IMO), the International Convention for the Prevention of 
Pollution from Ships (MARPOL Convention) is the primary international 
agreement to control the accidental and operational discharges of 
pollutants from ships. The Convention currently includes a framework 
agreement and six annexes that address particular sources of marine 
pollution from ships. The United States is already a party to MARPOL 
and four of its annexes.
    Annex VI establishes an international framework addressing air 
pollution from ships and will make an important contribution to the 
protection of the environment by addressing harmful air pollutants from 
ships. In short, the Annex establishes design standards for marine 
diesel engines installed after 1 January 2000 for the reduction of 
oxides of nitrogen (NOX) and establishes a global cap of 4.5 
percent on the sulfur content of marine fuels, as well as a mechanism 
for reducing the sulfur content to 1.5 percent in particular areas 
(called SOX Emission Control Areas) where SOX 
reduction is considered necessary. The administration contemplates 
seeking the establishment of such areas in waters adjacent to North 
America where ship emissions contribute to air quality problems in the 
United States, Canada and Mexico. Annex VI also prohibits the 
deliberate emission of ozone-depleting substances, including halons and 
chlorofluocarbons, from ships and prohibits the incineration onboard 
ship of certain products, such as contaminated packaging materials and 
polychlorinated biphenyls (PCBs).
    Annex VI entered into force on May 19, 2005. There are currently 27 
parties to it, representing almost two thirds of the world's tonnage of 
merchant ships. U.S. ratification will enhance our ability to work 
through the IMO to establish more stringent global emission reduction 
standards in the future. To this end, the President has proposed a 
declaration expressing support for an Annex VI amendment to establish 
Tier II emission standards that will further reduce the agreed 
NOX emission control limits. The President has proposed one 
other declaration regarding the application of Regulation 15 concerning 
volatile organic compound emissions (VOCs). Most importantly, the 
President has also proposed a formal understanding highlighting the 
point that Parties are permitted to impose more stringent 
NOX limits as a condition of entry into their ports. The 
United States is presently engaged in discussions at the IMO to explore 
more stringent standards for NOX and sulfur content of 
marine fuels. The discussions currently underway at IMO will also 
consider standards for particulate matter (PM), volatile organic 
compounds (VOCs), and expansion of the Annex to include non-diesel 
engines.
    Before closing, Mr. Chairman, I note that the administration 
continues to press forward on other international agreements pertaining 
to the oceans and looks forward to working with the committee once 
again.
    Thank you, Mr. Chairman, for the opportunity to discuss these 
issues. I would be happy to answer any questions from the members of 
the committee.

    The Chairman. Thank you very much, Secretary Balton, for 
your comprehensive opening statement that was made a part of 
the record and likewise your testimony this morning.
    I am going to raise questions initially about the first 
four treaties because they are different in character than the 
final treaty and we will take it up separately, after you have 
responded to these questions. The answers to some of these 
questions you have either testified upon or more 
comprehensively addressed in your lengthier statement. But for 
the sake of the record, so that it is clear to all Senators who 
are watching at least the work of the committee and considering 
their support of ratification, please respond if you can 
briefly to each of these questions.
    How would implementation of the Pacific hake-whiting 
agreement affect the Pacific whiting industry in the United 
States? Specifically, do you expect it to have an economic 
impact on United States ports and facilities used by this 
fishery and what effects do you foresee for the fish stock?
    Mr. Balton.  Thank you, Mr. Chairman. The whiting agreement 
has a very limited purpose, which is to set a total allowable 
catch of this stock annually and divide it between U.S. and 
Canadian fisheries. All other aspects of managing the fishery 
for this stock in the United States will remain unaffected by 
the agreement.
    But, that said, I do anticipate that the agreement will 
have a very positive effect on both the stock and on the 
industry in the United States that relies on it. The collective 
overfishing that the U.S. and Canada have engaged in in the 
absence of this agreement contributed to the decline of the 
stock. Now, with this agreement we have the ability to prevent 
such overfishing, which should increase the possibility for 
long-term sustainable harvests.
    The Chairman. How does the agreement relate to the work of 
the Pacific Fishery Management Council and the Department of 
Commerce, which are currently responsible for setting the total 
allowable catch and for any sub-allocation of the fish stock 
within the United States, and would the agreement impact 
existing United States procedures for sub-allocation of the 
U.S. catch for Pacific whiting?
    Mr. Balton.  Thank you, Mr. Chairman. Under the agreement, 
each year Canada and the United States will work together to 
produce a total allowable catch, which will then be divided 
under the percentage formula agreement between the U.S. fishery 
and the Canadian fishery.
    The responsibility of the Pacific Fishery Management 
Council of the United States for managing all aspects of the 
U.S. share will not change. Similarly, the responsibility of 
the Department of Commerce for overseeing the work of the 
council in this respect will not change.
    The Chairman. Thirdly, I understand that United States 
stakeholders, both industry and environmental groups, are 
supportive of the agreement, as you have testified. Please 
mention how and if they were consulted during negotiation of 
the agreement and, looking forward, will United States 
stakeholders have any input into the process envisioned by the 
agreement for setting the total allowable catch each year? In 
other words, does the administration foresee a formal role for 
them in any of the bodies to be set up under the agreement and, 
if so, how would the United States choose the individuals who 
would serve on these boards?
    Mr. Balton.  Mr. Chairman, U.S. stakeholders participated 
very actively in the negotiations that produced the whiting 
agreement. Among those who took direct part in the negotiations 
as members of the U.S. delegation were: the Pacific Fisheries 
Management Council itself, through its chair and executive 
director; representatives of the State governments of 
Washington and Oregon; representatives of four different U.S. 
industry user groups, including one Indian tribe, the Maccah 
Indian Tribe. Two U.S. environmental groups, also monitored the 
negotiations and provided input into U.S. positions.
    Indeed, I can say with certainty, Mr. Chairman, that the 
agreement would not exist but for the active involvement of all 
these stakeholders in creating it.
    Now, looking ahead, U.S. and Canadian stakeholders will 
have a very meaningful role in the implementation of this 
agreement. The joint technical committee and the scientific 
review group established by the agreement will each have 
independent members nominated by a stakeholder advisory group. 
U.S. members of the joint management committee under the treaty 
will, under legislation we have suggested, include stakeholder 
representatives as well.
    In addition, article 2, paragraph 4 of this agreement 
creates this advisory panel and gives it an ongoing right to 
provide input in the development of the overall TAC each year.
    The Chairman. Finally, with regard to this treaty, I 
understand that implementing legislation will be required for 
this agreement. What areas would be addressed in this 
legislation and will the administration be seeking any new 
authorities to implement the agreement?
    Mr. Balton.  Yes, Mr. Chairman, legislation for this 
agreement is necessary in order to implement U.S. obligations 
under it. We have provided informal suggestion for such 
legislation to your colleagues on the Senate Commerce Committee 
and the House Resources Committee as well. The legislation we 
suggest would allow for the United States to appoint 
individuals to the various bodies created under this agreement. 
The legislation would give the Secretary of Commerce authority 
to issue regulations relating to this treaty and would prohibit 
acts inconsistent with the treaty. This piece of legislation 
would most likely be a new free-standing law rather than an 
amendment to any existing statute.
    The Chairman. I thank you.
    Let me ask questions with regard to the Antigua Convention. 
What is the status of the highly migratory fish stocks under 
the jurisdiction of the Inter-American Tropical Tuna 
Commission? Are any of these considered to be overfished and 
how will the Antigua Convention, how will it improve the 
commission's ability to manage these stocks?
    Mr. Balton.  Generally speaking, Mr. Chairman, the highly 
migratory stocks of the Pacific Ocean, including those in the 
eastern Pacific which this treaty covers, are thought to be in 
reasonably good shape relative to most stocks in the world. But 
there are warning signs on the horizon. There is overcapacity, 
too many vessels in this fishery, we believe, and we are 
worried as well about issues of bycatch and other degradation 
of the marine environment that could threaten these stocks in 
the future.
    The Antigua Convention would give us a much stronger basis 
to deal with these problems. By incorporating the modern 
principles of fishery management, we will have the ability 
through this treaty to take firmer action to address potential 
overfishing, overcapacity, illegal fishing, effects of fishing 
on associated independent species.
    The Chairman. The Antigua Convention will replace the 1949 
convention that created the IATTC. Following entry into force 
of the Antigua Convention, what will be the status of the 
measures taken by the IATTC under the 1949 convention?
    Mr. Balton.  Mr. Chairman, I am confident that there will 
be a seamless transition between the regime of the 1949 treaty 
and the new agreement. Indeed, there are provisions in the 
Antigua Convention that would provide for such a seamless 
transition. There will be a period of time during which the 
Antigua Convention is in force, but not all of the parties to 
the original treaty have as yet ratified, but there are ways to 
bridge that gap such that the measures adopted by this 
organization, the IATTC, will continue to be effective, all the 
assets will be preserved, and we will be moving forward 
cooperatively with our colleagues in this organization.
    The Chairman. The Antigua Convention requires the IATTC to 
make decisions on the basis of consensus. How has this 
requirement for consensus affected the IATTC's actions in the 
past? Has it prevented the commission from taking measures that 
the United States believed were necessary to properly manage 
the fish stocks under its jurisdiction?
    Mr. Balton.  You are right, Mr. Chairman, that this 
organization has always operated on the principle of consensus, 
and at least to date I would say that that principle has served 
the U.S. and the other nations in this organization well. The 
organization has been marked by a strong spirit of cooperation. 
There are very few times, if ever, in its history that one 
nation has tried to block consensus.
    There are important issues facing this regime in the 
future, but we are confident that the consensus rule will not 
prevent movement forward on these issues.
    The Chairman. With how many parties must consensus be 
gained? How many are around the table?
    Mr. Balton.  There are currently 14 members of the IATTC 
and then there are five other states and entities that 
participate in its work. Under the new agreement, which can 
enter into force with seven of those original parties 
ratifying, it is the parties that come together to make up 
consensus. As a practical matter, Mr. Chairman, though, 
everybody around the table has a voice.
    The Chairman. What is the current budget for the commission 
and will this change under the Antigua Convention? What is the 
anticipated United States financial contribution and how are 
such contributions to be determined?
    Mr. Balton.  There are several different aspects of that 
question. The current U.S. contribution to the IATTC is roughly 
$2 million a year. That is actually considerably less than it 
has been at some points in the past. Our $2 million 
contribution represents roughly 40 percent of the budget of 
this organization. We are one of the relatively few developed 
countries in this organization.
    The treaty before you today does not set the contribution 
rules. Those will be set on the basis of agreement within the 
organization. My expectation is that U.S. contributions to this 
organization will not change appreciably under the new 
agreement. Indeed, the new agreement will allow the European 
Union and also Taiwan to become full members of this 
organization, and their contributions to the budget may help to 
reduce U.S. costs in the organization.
    The Chairman. You have mentioned that 14 countries were 
parties to the 1949 convention that established the IATTC. Will 
they in your judgment vote to ratify the new convention and are 
other eligible countries expected to join the 14?
    Mr. Balton.  Yes to both questions, Mr. Chairman. I do 
believe that all of the members of the original convention will 
move to ratify the Antigua Convention. That said, I think the 
U.S. ratification will be a great spur to those who have not 
yet completed their processes. A lot of the countries around 
the table are waiting to see what we will do. But once we move 
forward I am confident they will as well, and indeed some other 
countries whose vessels fish in the region may join the 
organization.
    The Chairman. In your testimony you have mentioned that the 
administration will propose implementing legislation for this 
convention. When do you expect that to happen and what types of 
changes will the administration seek?
    Mr. Balton.  Yes, we are going to propose formally 
legislation to implement this agreement. The legislation to 
implement the agreement would take the form of a series of 
proposed amendments to an existing statute that implements the 
existing treaty, the so-called Tuna Conventions Act of 1950. It 
is my anticipation that this legislation will come before 
Congress in the very near future. It is in the final stages of 
clearance within the administration.
    The Chairman. Let me raise some questions on the third 
treaty, the Western and Central Pacific Fishery Convention. 
What is the status of the highly migratory fish stocks to be 
governed by the WCPF convention and what impact will the 
convention have on these fish stocks? How is it expected to 
affect specifically the United States fishery industry?
    Mr. Balton.  Mr. Chairman, my answer to this question is 
very similar to my answer to that question as it related to the 
Antigua Convention. The status of the highly migratory fish 
stocks in the western and central Pacific Ocean is generally 
speaking considered to be good relative to the status of 
similar stocks in other parts of the world. That said, there 
are warning signs on the horizon, especially with respect to 
bigeye tuna. There are problems of overfishing and overcapacity 
in the region, illegal fishing, bycatch.
    Once again, the entry into force of this agreement has 
provided a new tool, in this case for the very first time, to 
deal with these problems on a cooperative multilateral basis.
    For the United States in particular, it is very important 
that we be at the table as a very large segment of our tuna 
industry fishes in this region of the world, the western and 
central Pacific.
    The Chairman. How will the commission created under the 
WCPF convention coordinate with other regional fishery 
management organizations, such as the IATTC that we have just 
been discussing, that are managing similar species in other 
areas?
    Mr. Balton.  As you say, Mr. Chairman, there must be 
coordination between the WCPFC, the commission, and the IATTC, 
that commission, because they do cover many of the same species 
that range throughout the entirety of the Pacific Ocean. There 
are provisions in each of these treaties that require 
cooperation and compatibility of measures adopted across the 
Pacific by these sister organizations.
    There will be as well interaction between the Western and 
Central Pacific Convention and the commission created by it and 
some other regional fishery organizations, including the 
Commission for the Conservation of Southern Bluefin Tuna, an 
organization to which the United States is not party, that does 
have overlapping jurisdiction on the other side, the area 
around Australia, New Zealand, and out into the Indian Ocean.
    The Chairman. Article 43 of the convention provides for 
participation in the work of the commission and its subordinate 
bodies short of voting rights by dependent territories located 
in the convention area, including American Samoa, Guam, and the 
Northern Mariana Islands, with appropriate authorization from 
the parties that have responsibility for their foreign affairs. 
Does the administration plan to authorize the participation of 
these United States territories and did the administration work 
with these territories during negotiation of the convention?
    Mr. Balton.  Yes and yes, Mr. Chairman. Pending the 
finalization of discussions with representatives of the 
territories themselves, the administration expects to authorize 
the participation of American Samoa, Guam, and the Commonwealth 
of the Northern Mariana Islands to participate in the work of 
this agreement. These territories as a result would be allowed 
to sit at the table in their own name and right and to speak on 
issues in which they have a direct interest.
    This is consistent with the approach taken in other 
organizations in the Pacific region, such as the Secretariat of 
the Pacific Community and the South Pacific Regional 
Environmental Program.
    The Chairman. What is the current budget of the commission 
and is it expected that that budget may increase as the work of 
the commission develops? Once again, what is the United States' 
contribution to the commission? How will the contributions of 
the parties be determined?
    Mr. Balton.  This commission, although it has already been 
established, is still in its infancy and its initial budget is 
not as robust as we expect it to become in the coming years as 
it takes on some of the important management functions it is 
charged with overseeing. We estimate that an initial U.S. 
contribution will probably be in the order of $150,000 or so.
    Because there are already 20 parties to this treaty, 
including some developed countries such as Japan, we will not 
have to share nearly as large a burden in the budget of this 
commission as for the IATTC.
    The Chairman. As you have just mentioned, the commission 
has just been in force since June 2004. In fact, has the 
commission met yet? What work has it undertaken and to what 
extent was the United States able to participate in that work?
    Mr. Balton.  Yes, Mr. Chairman, the commission has already 
met and will meet again in December. There are a number of 
subsidiary bodies and less formal meetings that take place 
under the general auspices of the convention. The United States 
has been able to participate fully and effectively in these 
organizations--in these bodies, I should say--despite the fact 
that we have not yet ratified, because everyone expects us to 
and because of the history of the United States in helping to 
craft the treaty.
    I do not know how long that goodwill would last if we did 
not ratify some time soon, though, and that is why we are here 
today to urge you to consider this favorably.
    The Chairman. As one further piece of housekeeping, is 
there any implementing legislation necessary for this treaty to 
comply with the WCPF convention, and if so what is the status 
of legislation and what might it address?
    Mr. Balton.  Thank you, Mr. Chairman. Yes, legislation 
would be necessary to implement this agreement as well. We are 
also in the final stages of clearance within the administration 
and hope to have such legislation to propose to Congress 
formally in the very near future. The legislation that we 
propose--this will sound familiar to you--will allow for the 
appointment of U.S. individuals to participate in the 
scientific and management activities that take place under this 
treaty. The legislation would authorize the Secretary of 
Commerce to issue regulations relating to the treaty. It would 
prohibit acts inconsistent with the treaty. It would authorize 
the appropriation of funds related to the treaty.
    This particular piece of legislation would, like the 
whiting legislation, almost certainly need to be a free-
standing piece rather than a set of amendments to an existing 
law.
    The Chairman. I thank you.
    Now let me ask questions on the fourth treaty, the MARPOL 
Annex VI. First of all, fundamentally why is the treaty needed? 
What is the scope of air pollution problems from ships, 
particularly as it relates to the United States?
    Mr. Balton.  Mr. Chairman, this annex represents the first 
time the international community has agreed on any standards 
relating to air pollution from ships. It is very much in the 
U.S. environmental and commercial interests that there be an 
agreed set of standards. As shipping is inherently 
international in nature, the U.S. alone cannot hope to regulate 
by itself air pollution from ships that visit U.S. ports that 
are flagged to foreign countries.
    Through MARPOL Annex VI, we have a mechanism to create a 
common set of standards that will both protect the air quality 
in U.S. ports and also set a common industry standard that U.S. 
vessels can adhere to as they sail around the world.
    The Chairman. Annex VI to MARPOL places a number of 
requirements on ships. To what extent are U.S.-flag ships 
equipped to comply with these requirements? What economic 
impact would compliance with these requirements have on United 
States ships? Similarly, to what extent are foreign flag ships 
able to meet the requirements, and what would be the impacts on 
those foreign flag ships traveling to U.S. ports and waters?
    Mr. Balton.  Mr. Chairman, with respect to U.S. flag 
vessels, I can say that most, if not all, are already in 
compliance with the standards set by Annex VI, and therefore 
the cost to the U.S. industry will be minimal. The current 
global cap of 4.5 percent concerning sulphur content in marine 
fuels will have little or no impact on the U.S. and marine fuel 
markets currently since the overwhelming majority, 
approximately 98 percent, of marine fuels fall under this 
figure.
    Now, there will be ongoing discussions within the IMO about 
the possibility of making more stringent standards and the 
economic impact of those standards, including on U.S. vessels, 
will of course be a factor in those discussions.
    The Chairman. That partially anticipates my next question, 
because Annex VI establishes international standards for 
controlling air pollution, but would Annex VI prohibit the 
United States from implementing standards more stringent than 
those in Annex VI?
    Mr. Balton.  No, Mr. Chairman. Indeed, the administration 
is proposing a declaration to accompany a ratification of Annex 
VI making clear that a port state, such as the United States, 
can establish more stringent standards with respect to vessels 
entering our ports.
    The Chairman. My understanding is that Annex VI allows for 
the establishment of sulphur oxide emission control areas, 
SECAs, in which ships are required to abide by more stringent 
regulations on sulphur oxide emissions. Annex VI establishes 
the Black Sea as one such area and the International Maritime 
Organization has approved the North Sea as a SECA.
    What is the process for approval declaring an area to be an 
SECA area and is the United States considering requesting the 
designation of any of U.S. waters as SECAs?
    Mr. Balton.  I can answer the second part of that question, 
Mr. Chairman. I may ask my colleague from the EPA to help 
answer the first part.
    With respect to the second part, yes, we are considering 
the possibility of submitting to IMO a proposal to establish 
one or more SECAs in the United States or waters off the United 
States, on all three of our ocean coasts, Pacific Ocean, 
Atlantic Ocean, and Gulf Coast.
    Let me ask Mr. Wood-Thomas from the EPA to help address 
your question about what the precise processes within IMO for 
establishing such a SECA.
    The Chairman. Mr. Thomas, would you come to the table, 
please.
    Mr. Wood-Thomas. Thank you, Mr. Chairman. With respect to 
the establishment of a SOX emission control area, 
the treaty outlines specific criteria that must be met. 
Procedurally, a party or a group of parties may come forward 
with a proposal. That in fact has to be approved by parties to 
the agreement. A formula specifies that approval must be made 
by at least two-thirds of the parties present and voting.
    The Chairman. How many parties are there likely to be? Two-
thirds of how many?
    Mr. Wood-Thomas. Presently there are 27 parties. We are 
aware that there will be a considerable addition to that figure 
since the EU is committed to ratification.
    The Chairman. Thank you very much.
    How does Annex VI apply to platforms and drilling rigs at 
sea and what requirements must they follow?
    Mr. Balton.  Consistent with the structure found in the 
other annexes of MARPOL, the requirements with respect to 
platforms apply to those emissions that operate from auxiliary 
equipment on platforms. Those emissions arising directly from 
exploration and production operations on the platforms are 
exempt.
    The Chairman. Annex VI limits the sulphur content of any 
fuel oil used on board to 4.5 percent by weight or 45,000 parts 
per million. But the present average in the global fleet is 2.7 
percent by weight or 27,000 parts per million, well below this 
requirement. If the United States becomes a party to Annex VI, 
will it be possible to amend the agreement to require further 
reductions in sulphur content or any of the other requirements?
    Mr. Balton.  Thank you, Senator. Indeed, the question of 
sulphur content will be a point of discussion in negotiations 
that are now under way at the International Maritime 
Organization. In addition to the global cap of 4.5 percent, I 
think most of the political will will focus on the question of 
whether we might lower the 1.5 percent figure for 
SOX emission control areas. Essentially, that is 
going to be a decision and a discussion very much influenced by 
what we believe the fuel markets can bear and the economics 
associated with that, and we are presently looking at that 
issue.
    The Chairman. I thank you.
    Annex VI requires United States ships and foreign ships 
entering our ports to be in compliance with this requirement. 
What regulatory regimes are in place to enforce these 
provisions?
    Mr. Wood-Thomas. The implementing legislation for Annex VI 
will come in the form of a set of amendments to the Act to 
Prevent Pollution from Ships. In addition, we currently have 
regulations applicable to oxides of nitrogen under the Clean 
Air Act that are applicable to different categories of marine 
diesel engines.
    The Chairman. Finally, is any implementing legislation 
required on this treaty necessary to bring United States law in 
accord with Annex VI, and if so what is the status of that 
legislation?
    Mr. Balton.  Yes, Mr. Chairman, we believe that legislation 
would be necessary to fully implement U.S. obligations under 
Annex VI. The legislation, as Mr. Wood-Thomas just said, would 
likely take the form of a series of amendments to an existing 
law, the Act to Prevent Pollution from Ships. Such legislation 
once again is in the very final stages of development and 
clearance within the administration and the administration 
hopes to have it before Congress very shortly.
    The Chairman. I thank you very much, Secretary Balton and 
Mr. Thomas, for your testimony on each of these four treaties. 
You have made an excellent record, I believe, and obviously 
demonstrated that the administration has been thoughtful about 
the parameters of the treaties and the implications for the 
other parties, as well as for United States parties, and we 
thank you for that consideration.
    I would like now to turn to the Convention on Supplementary 
Compensation for Nuclear Damage. We welcome our witnesses on 
this occasion: Mr. Warren M. Stern, Senior Coordinator for 
Nuclear Safety in the Department of State; and James Bennett 
McRae, Assistant General Counsel, Civilian Nuclear Programs, in 
the Department of Energy. Gentlemen, we are appreciative of 
your coming today and, as I have indicated, your full 
statements will be made a part of the record. But please 
proceed in any way that you think would be helpful for 
consideration of this treaty.

 STATEMENT OF WARREN M. STERN, SENIOR COORDINATOR FOR NUCLEAR 
                  SAFETY, DEPARTMENT OF STATE

    Mr. Stern.  Thank you, Mr. Chairman. I appreciate the 
opportunity to testify before you today on the Convention on 
Supplementary Compensation for Nuclear Damage. As you noted, I 
have submitted detailed testimony for the record and will 
provide a summary now so that we can quickly get to the 
questions that you have on this important treaty.
    I would note that, in addition to Mr. McRae, who was part 
of the negotiating team for the treaty, we also have with us 
today Marjorie Nordlinger from the Nuclear Regulatory 
Commission, who can help to answer questions.
    The Chairman. Would you please identify----
    [Ms. Nordlinger raises her hand.]
    Mr. Stern.  Marjorie was part of the negotiating team.
    The Chairman. Excellent.
    Mr. Stern.  As well as Ms. Julie Herr from State Department 
also.
    The Chairman. Great.
    Mr. Stern.  Mr. Chairman, the CSC lays the foundation for a 
global legal regime governing civil nuclear liability. This is 
a regime that does not currently exist. This regime will 
benefit victims of nuclear incidents, U.S. suppliers of nuclear 
equipment and technology, and the government of the United 
States. United States leadership is essential in developing 
participation in this global nuclear liability regime.
    At its core, the CSC provides predictable procedures to 
assure that in the event of a nuclear incident resources will 
be available from both domestic and international sources to 
compensate victims. The CSC incorporates three well-accepted 
principles for dealing with nuclear liability. The first 
principle requires that all claims resulting from a covered 
nuclear incident be adjudicated in a single forum. In nearly 
all cases that forum would be the courts of the party in whose 
territory the nuclear incident occurs.
    The second principle is that liability for all claims is 
channeled to the operator of the nuclear installation. The 
third principle is that the operator has strict liability, that 
is there is no need to prove fault, in the case of an incident.
    U.S. participation in this liability regime will allow its 
exporters of nuclear technology and equipment to compete more 
effectively in foreign markets. Today these firms are exposed 
to potentially unlimited liability claims and believe that they 
are disadvantaged in terms of--in relation to their foreign 
competitors.
    Mr. Chairman, in previous international efforts a global 
liability regime failed for two key reasons. The Vienna 
Convention on Civil Liability failed because it does not 
include the U.S., the world's largest nuclear generator, as 
well as non-nuclear states. The U.S. could not join the Vienna 
regime because it would require that the U.S. alter our 
fundamental tort law system, a step that we have been unwilling 
to take. The Vienna Convention also does not provide an 
incentive for non-nuclear states to join.
    The CSC addresses the first of these problems by providing 
a grandfather clause that allows the U.S. to join without 
altering our fundamental tort law system. The incentive 
problem, that is for non-nuclear generating states, is solved 
by the creation of a supplementary fund of roughly $450 million 
at its maximum to ensure that there is an international fund to 
compensate victims of these non-nuclear generating states in 
the case of a nuclear incident.
    Mr. Chairman, to date 13 countries have signed the CSC and 
3 have ratified it. U.S. leadership is essential. This is a 
small number. The CSC was created in essence for us and by us. 
It was created to deal with our fundamental problems with the 
international regime as it existed. Without U.S. leadership, 
the regime will go nowhere.
    We seek your advice and consent and appreciate your 
consideration.
    I will now turn to Mr. McRae from the Department of Energy.

    [Mr. Stern's prepared statement follows:]

                   Prepared Statement of Warren Stern

    Mr. Chairman and members of the committee: I appreciate this 
opportunity to discuss with you the Convention on Supplementary 
Compensation for Nuclear Damage (``CSC''). On November 15, 2002, the 
President transmitted the CSC to the Senate for advice and consent to 
ratification. We urge that the Senate give its advice and consent to 
ratification.
    The CSC lays the foundation for a global legal regime governing 
civil nuclear liability--a regime that does not currently exist. This 
regime will benefit victims of nuclear incidents, United States 
suppliers of nuclear equipment and technology, and the Government of 
the United States, as well as other countries around the world that 
become parties.
    United States leadership is essential in developing and encouraging 
participation in this global civil nuclear liability regime.
    At its core, the CSC provides predictable procedures to assure 
that, in the event of a nuclear incident, resources will be available, 
from both domestic and international sources, to compensate victims.
    The CSC incorporates three well-accepted principles for dealing 
with nuclear liability. The first principle requires that all claims 
resulting from a covered nuclear incident be adjudicated in a single 
forum. In nearly all cases, that forum would be the courts of the Party 
in whose territory the nuclear incident occurs. The second principle is 
that liability for all claims is channeled to the operator of the 
nuclear installation. The third principle is that the operator has 
strict liability without the need to prove fault).
    United States participation in this liability regime will also 
allow its exporters of nuclear technology and equipment to compete more 
effectively in foreign markets. Today, these firms are exposed to 
potentially unlimited liability claims through their foreign businesses 
and consider themselves to be at a disadvantage from their foreign 
competitors.
    Once the United States and the state whose nationals are involved 
are both Parties to the CSC, liability exposure will be channeled to 
the operator in the ``installation state,'' thus substantially limiting 
the nuclear liability risk of United States suppliers. Once the CSC is 
widely adopted, the United States nuclear supplier industry will be 
able to compete abroad under a single set of rules.
    The CSC will also support United States objectives of improving 
nuclear safety globally. Once widely adopted, the CSC will eliminate 
ongoing concerns on the part of United States nuclear suppliers about 
damage claims by victims of accidents at a facility where they have 
supplied safety-related equipment.
    The CSC is divided into two parts, a main body and an annex. The 
main body creates mechanisms for compensating nuclear damage caused by 
a nuclear incident in an installation operated within a state that is a 
CSC Party. The Annex contains a grandfather clause specifically 
designed to permit the United States to join the CSC without 
substantive change to the Price-Anderson system.
    Under the regime created by the CSC, the first tier of compensation 
is provided by funds made available under the laws of the Party within 
whose territory the installation at which the nuclear incident occurred 
is situated, or if the installation 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 $450 
million at current rates of exchange). There is, however, provision for 
a phase-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 $225 million).
---------------------------------------------------------------------------
    \1\ The SDR is an international reserve asset, created by the IMF 
in 1969, which serves as the unit of account of the IMF and other 
international organizations. Its value is based on a basket of key 
international currencies. As of 21 September 2005, its value was listed 
as 1 SDR = 1.46414 USD.
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    The second tier of compensation is provided by the international 
supplementary compensation fund that gives the CSC its name. 
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 all major nuclear power generating states party to the CSC 
today, 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 $150 million). 
Until a substantial number of nuclear power generating states are 
parties, the United States contribution would be less.
    The administration has proposed legislation to provide for 
financing the United States contribution to the supplementary fund in 
the event of an accident outside the United States in a manner that 
does not impose a cost on United States taxpayers. My DOE colleague 
will provide greater explanation of this proposed legislation.
    A third tier of compensation would be available in some states, 
such as the United States, that make available national funds of more 
than 300 million SDRs under domestic legislation. States that make 
available third tier funds are free to raise and distribute them in 
accordance with domestic law. With respect to accidents within the 
territory of the United States, the United States would use Price-
Anderson funds for the third tier of compensation, as necessary.
    In previous international efforts, a global liability regime failed 
for two key reasons. The Vienna Convention on Civil Liability for 
Nuclear Damage (``Vienna Convention'') does not include the United 
States--the world's largest nuclear power generator--because it would 
require that the United. States alter its fundamental tort-law system--
a step the U.S. is unwilling to take. The Vienna Convention also does 
not provide an incentive for non-nuclear power generating states to 
give up the jurisdiction of their own courts and laws in the event of a 
nuclear accident outside their territory, in order to join that regime.
    The CSC addresses the first of these problems by providing the 
grandfather clause in Article 2 of the Annex that allows the United 
States to become a Party without alteration of Price-Anderson as it 
currently exists.
    The ``incentive'' problem for non-nuclear generating states is 
addressed by the international supplementary fund. Fifty percent of the 
fund is reserved to compensate damage occurring outside the 
``installation state'' (transboundary damage), including transboundary 
damage occurring in a non-nuclear power generating Party. The 
availability of this fund, especially as half of it must be applied 
toward transboundary damage, creates a strong incentive for such non-
nuclear states to join the regime, creating for the first time the 
potential for a nuclear liability convention that will apply globally.
    To date, 13 countries have signed the CSC, and three have ratified 
it. This is a small number. We want to create a global regime. However, 
the CSC was created in large part by the United States, to deal with a 
situation unique to the United States. Other major nuclear power 
generating states, and non-nuclear power generating states will not 
join the regime unless the United States leads the way. The 
administration seeks the advice and consent of the Senate to 
ratification of the CSC so that the United States can credibly promote 
the benefits of bringing the CSC into force and achieving widespread 
adherence.
    Thank you. for the opportunity to discuss the CSC. Let me introduce 
my colleagues from the Department of Energy who are here with me to 
present additional testimony.

    The Chairman. Mr. McRae.

 STATEMENT OF JAMES BENNETT McRAE, ASSISTANT GENERAL COUNSEL, 
        CIVILIAN NUCLEAR PROGRAMS, DEPARTMENT OF ENERGY

    Mr. McRae.  Thank you, Mr. Chairman. I appreciate this 
opportunity to testify and I will try to keep my remarks short 
and not repeat too much of what is in my written testimony or 
repeat what Mr. Stern has already said.
    In the early 1990s there were increasing concerns over 
nuclear liability by U.S. suppliers. After considering various 
options, the United States Government decided that the best way 
to address these concerns was to become engaged in the ongoing 
negotiations over nuclear liability at the International Atomic 
Energy Agency and to seek a global nuclear liability regime.
    After more than 5 years, in 1997 there was a diplomatic 
conference that adopted the Convention on Supplementary 
Compensation. The U.S. had taken the lead in promoting that 
convention and I am happy to say that we were very successful 
in getting our objectives. Our objectives were to have a 
regime--our objective was to have a regime that would be 
attractive to nuclear and non-nuclear countries. To do that, we 
have provisions that require each member country to have 
national law that basically incorporates the principles of 
nuclear liability that were first developed here in the United 
States in the 1950s when we adopted the Price-Anderson Act.
    We also had provisions that provide for substantial 
compensation in the event of a nuclear accident without 
protracted litigation. The amounts that we achieved, while not 
as high as what is currently provided here in the U.S., for 
most other countries represent a substantial increase in the 
amount of compensation that would be available.
    We also were successful in having a definition of 
environmental damage adopted that was much closer to the broad 
definition that we have here in the United States. As Warren 
said, we were especially successful in gaining provisions that 
will not require the United States to change our basic nuclear 
law.
    Ratification of the CSC by the United States and other 
countries will establish a global regime and, as Warren said, 
because the United States was such a proponent of the CSC and 
because so many of the provisions are tailored to meet the 
needs of the United States, other countries, while they have 
expressed support or interest in the CSC, have made it clear 
that they expect the United States to take the lead in 
ratifying this convention.
    A global regime will have many benefits for the U.S. Among 
them is that it will facilitate efforts by the Department of 
Energy and other U.S. agencies to use U.S. nuclear suppliers in 
nuclear projects overseas to promote important national 
objectives. It also will allow nuclear suppliers to compete for 
the growing market in other countries, and this will have a 
number of beneficial effects. It certainly will increase jobs 
here in the United States, it will help the balance of 
payments, and it will help maintain our nuclear infrastructure. 
It will allow our nuclear suppliers to continue to be leaders 
in technology. It will provide incentives for students to 
pursue degrees in nuclear technology, things which are ongoing 
problems today.
    I think the other main point is, while there will be no 
need for any change in our basic nuclear law, there is a need 
for implementing legislation that will coordinate how the 
United States--as Warren said, the convention provides for an 
international fund to provide supplementary compensation in the 
event of a nuclear accident. That fund is made up of 
contributions from member countries. There is a need to provide 
for how the United States will make its contribution.
    In June of 2004, former Secretary Abraham submitted 
legislation for the administration that provides for how this 
contribution will be paid for. In the first instance, it is the 
obligation of the United States. The implementing legislation 
provides that where the Price-Anderson Act covers that 
situation that we will use that existing mechanism to fund the 
U.S. contribution in a manner that imposes no additional 
burdens on U.S. industry that contributes to Price-Anderson and 
in fact increases by a slight amount the amount of compensation 
that is available to cover damage from an accident.
    For situations outside the United States that are not 
covered by Price-Anderson, the proposed legislation basically 
provides that those U.S. nuclear suppliers who benefit from 
this regime will pay for it, will reimburse the U.S. for our 
contribution to the international fund. That mechanism would 
come into play only if the United States had to make a 
contribution and it would be--the legislation provides for the 
Department of Energy to adopt regulations on how that 
contribution would be allocated among U.S. nuclear suppliers on 
the basis of their potential risk.
    I will be happy to answer any questions. Thank you.

    [Mr. McRae's prepared statement follows:]

               Prepared Statement of James Bennett McRae

    Mr. Chairman and members of the committee: I appreciate this 
opportunity to testify before you to discuss the reasons for ratifying 
the Convention on Supplementary Compensation for Nuclear Damage (CSC).
    By way of background, in the early 1990's, concerns over nuclear 
liability were hindering many important United States initiatives to 
promote nuclear safety and nuclear non-proliferation. Specifically, in 
the aftermath of Chernobyl and Bophal, U.S. suppliers of goods and 
services to nuclear projects were becoming increasingly reluctant to 
provide goods and services to nuclear projects outside the United 
States. After considering various options to deal with concerns over 
nuclear liability, the United States concluded that a global nuclear 
liability regime was the best solution to these concerns. This 
conclusion continues to be valid. Over the years, much important work 
has been delayed or left undone. In many cases, the Department of 
Energy has been able to secure the assistance of U. S. firms only by 
extending an unlimited indemnification to them under Public Law 85-804. 
In some cases, it has been necessary to negotiate liability agreements 
with the country where work is being undertaken. Earlier this year, the 
U.S. and Russian Committees on Strengthening U.S.-Russian Cooperation 
on Nuclear Nonproliferation of the U.S. and Russian National Academies 
issued a joint report, entitled Strengthening US Russian Cooperation on 
Nuclear Nonproliferation, that stresses the need to attach very high 
priority to solving the nuclear liability problem and recommends that 
the governments of the United States and Russia adopt and ratify the 
CSC as the long-term and comprehensive solution.
    In 1997, after more than five years of negotiations in which the 
United States played the leading role, a Diplomatic Conference adopted 
the CSC. Ratification of the CSC by the United States and a number of 
other countries and its entry into force will create a global nuclear 
liability regime. However, both because the United States has been the 
primary proponent of the CSC and because the CSC contains a number of 
provisions specifically tailored for the United States, most countries 
expect the United States to take the lead in ratifying the CSC before 
they will act.
    The CSC has two primary elements. These elements will benefit both 
potential victims by assuring the availability of substantial 
compensation without protracted litigation and U. S. nuclear suppliers 
by defining their potential liability exposure.
    The CSC utilizes two mechanisms to assure the availability of 
substantial funds to compensate victims in the event of a nuclear 
incident Specifically, the national law of each member country must 
guarantee the availability of at least 300 million Special Drawing 
Rights (SDRs) (approximately $450 million) to compensate victims for 
nuclear damage resulting from a nuclear incident. In addition, the CSC 
creates an international fund to supplement the compensation available 
under national law. While the amount of the international fund will be 
dependent on the actual generating capacity of nuclear powerplants in 
the Contracting Parties, it is reasonable to expect the fund eventually 
to exceed 300 million SDR's. For comparison purposes, the recently 
enacted Energy Policy Act established a $500 million limit on liability 
for nuclear damage resulting from a nuclear incident outside the United 
States that is covered by the Price-Anderson Act.
    The CSC defines potential liability exposure by requiring the 
national laws of the Contracting Parties to incorporate certain basic 
principles of nuclear liability law that have been developed in the 
United States and other nuclear countries over the past half century. 
These principles include: (1) making operators of nuclear facilities 
exclusively liable for nuclear damage; (2) imposing strict liability 
and thereby eliminating protracted litigation over fault or negligence; 
(3) consolidating all claims in a single forum with the focus on 
expedited compensation of victims; and (4) prohibiting discrimination 
among victims on the basis of nationality, domicile, or residence. 
Unlike other international nuclear liability conventions, the CSC 
contains an explicit provision that permits the United States to become 
a CSC party while maintaining the manner in which our national law 
currently implements these principles with respect to nuclear incidents 
within the United States, as well as nuclear incidents outside the 
United States that are subject to the Price-Anderson Act.
    Ratification of the CSC by the United States and other countries 
and establishment of a global nuclear liability regime will yield a 
number of benefits.
    First, the CSC will address the liability concerns of U. S. firms 
in many cases where the United States seeks to utilize these firms in 
nuclear projects around the world to promote important national 
objectives.
    Second, the CSC also will address the liability concerns of U. S. 
firms with respect to commercial nuclear projects outside the United 
States. These concerns have placed United States firms at a competitive 
disadvantage. Eliminating this disadvantage will promote several 
important U.S. national interests. Where a U. S. firm is the exporter 
of nuclear goods or services, the requirements of U.S. law and 
agreements for cooperation between the United States and the recipient 
country give the United States some control over the recipient 
country's use of the source technology and equipment provided. Also, 
U.S. nuclear exports inevitably improve safety conditions in countries 
of concern when state-of-the-art U.S. safety assistance programs are 
deployed there.
    Increasing nuclear exports will help the U.S. balance of trade and 
create jobs in the United States. Around the world today, 30 nuclear 
power plants are currently under construction. Additionally, 14 
countries have announced plans to start construction of considerably 
more new nuclear power plants by the year 2025. U.S. nuclear suppliers 
most likely would provide goods and services to many of these new 
plants if they could compete on a level playing field.
    Nuclear exports also help to preserve the U.S. nuclear 
infrastructure. The potential for providing goods and services to 
nuclear projects outside the United States contributes significantly to 
the business case for continuing nuclear business activities, 
maintaining technological leadership, and for students pursuing nuclear 
degrees.
    While no change in how our national law deals with nuclear 
incidents within the United States is necessary, there is a need to 
clarify the interaction between the operation of the Price-Anderson Act 
and the international fund established by the CSC, including how the 
contribution by the United States to the fund will ultimately be paid. 
The administration has provided proposed legislation on this matter 
that can be summarized as follows.
    The proposed legislation 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 Convention. The use of Price-
Anderson funds to cover the contribution by the United States to the 
international fund will not decrease the funds available to compensate 
nuclear damage since the United States will receive a corresponding 
amount as part of the funds distributed from the international fund. 
The contribution by the United States to the international fund and the 
distribution from the international fund of a corresponding amount will 
offset each other. In addition, the remaining portion of the 
distribution from the international fund, which comes from 
contributions by countries other than the United States, will result in 
a net increase in the amount of compensation available to pay persons 
indemnified under the Price-Anderson Act. The proposed legislation 
takes this net increase into account by increasing the limit on public 
liability under the Price-Anderson Act by the amount received from the 
international fund which comes from countries other than the United 
States.
    The following example illustrates how the proposed legislation will 
operate. For this example, assume: (1) the limitation on public 
liability established pursuant the Price-Anderson Act is $10 billion; 
(2) there are 100 powerplants covered by the Price-Anderson system; (3) 
the operator of each powerplant must contribute $100 million to the 
Price-Anderson system if legal liability reaches $10 billion; (4) 1 SDR 
(special drawing right) equals $1.50; (5) the contribution by the 
United States to the international fund is $100 million; (6) the 
payment to the United States from the international fund is $300 
million; and (7) there is a nuclear incident at a domestic nuclear 
power plant resulting in damage that exceeds $10 billion. Under these 
assumptions, the Price-Anderson Act would use funds from operators to 
indemnify legal liability resulting from the nuclear incident until 
legal liability reached $450 million (300 special drawing rights X 
$1.50). At this point, the United States would use the next $100 
million of funds from operators to cover the United States contribution 
to the international fund. At the same time, the United States would 
receive a payment of $300 million from the international fund. This 
payment from the international fund would be. used to indemnify legal 
liability between $450 million and $750 million. In addition, the 
limitation on public liability would be increased by $200 million (that 
is, by the portion of the payment that comes from contributions from 
countries other than the United States). When legal liability reached 
$750 million, operators would resume making funds available through the 
Price-Anderson system to cover legal liability and would continue to do 
so until legal liability reached the limit $10.2 billion. Under this 
example, an additional $200 million would be available to indemnify 
legal liability resulting from a nuclear incident covered by the Price-
Anderson Act, at no additional costs to power plant operators. In fact, 
the retrospective premium imposed on an operator would be slightly 
lower with respect to nuclear incidents with aggregate damage between 
approximately $450 million and the increased limit on public liability.
    With respect to a nuclear incident outside the United States that 
is not covered by the Price-Anderson Act, the proposed legislation 
requires nuclear suppliers to participate in a retrospective program to 
cover the cost of the contribution by the United States to the 
international fund. This program is based on the retrospective pooling 
arrangement established by the Price-Anderson Act which provides a 
nuclear power plant operator with insurance for potential liability 
resulting from a nuclear incident at its power plant and which 
determines the premium for this insurance retrospective after a nuclear 
incident occurs by allocating the amount of the aggregate legal 
liability actually resulting from the nuclear incident among all 
nuclear power plant operators without regard to whether an operator has 
any liability for the nuclear incident. The retrospective program, in 
effect, provides for the collection of an insurance premium from 
nuclear suppliers for the protection that the CSC gives them against 
potential liability resulting from a nuclear incident outside the 
United States that is not covered by the Price-Anderson Act. The 
proposed legislation thus recognizes that nuclear suppliers are the 
primary beneficiaries of the CSC and makes them responsible for 
ultimately paying for the contingent cost to the United States 
associated with the international fund.
    The amount of the premium collected from a nuclear supplier will be 
determined retrospectively after a nuclear incident occurs by 
allocating the amount of the contribution by the United States to the 
international fund among nuclear suppliers without regard to whether 
the nuclear supplier has any liability for the nuclear incident. A 
nuclear supplier will not be required to pay its portion of the premium 
established by the retrospective program unless and until the United 
States must make a contribution to the international fund established 
by the CSC. The portion of the premium allocated to a nuclear supplier 
will reflect the risk from which the nuclear supplier is relieved 
relative to other nuclear suppliers by participation by the United 
States in the global nuclear liability regime established by the CSC. 
The proposed legislation requires the Secretary of Energy to determine 
by rulemaking the formula for allocating the amount of the contribution 
by the United States to the international fund among nuclear suppliers. 
The proposed legislation specifies certain risk factors the Secretary 
must take into account in determining the formula. These. risk factors 
focus on the extent of the potential liability of a nuclear supplier 
that could result from its activities relative to other nuclear 
suppliers. The proposed legislation also lists certain factors that can 
provide a basis to exclude certain nuclear suppliers that do not 
provide goods or services specifically for nuclear facilities or that 
do not engage in activities likely to result in significant potential 
liability or that engage in such activities to only a minor extent.
    The proposed legislation sets forth the procedure for the Secretary 
of Energy and nuclear suppliers to follow in the event of a call for 
funds under the CSC so that payments by the suppliers 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 to contribute to the international fund established by the CSC. 
In the event a nuclear supplier defaults on its obligation to make a 
payment, the proposed legislation 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.
    In conclusion, I thank you for this opportunity to speak in support 
of the CSC and I urge you to act expeditiously in giving your advice 
and consent to the ratification of the CSC.

    The Chairman. Well, thank you both very much.
    I will raise the question and one or either of you may want 
to respond. First of all, the primary aim, as you pointed out, 
and principal benefit of the CSC would be for U.S. civil 
nuclear technology exporters, and we would have the 
establishment of a common international liability to better 
assure that market. Could you explain how the current 
international liability picture limits now or hinders United 
States exporters?
    Mr. Stern.  I think probably the best way to work this is 
if I could give a brief introduction and then Mr. McRae could 
perhaps correct what I say incorrectly.
    The Chairman. Very well.
    Mr. Stern.  Right now nuclear exporters feel that they are 
greatly disadvantaged because of liability concerns. This is 
not true, for example, for European exporters. In essence, if 
we create a global liability regime we will all be competing on 
the same basis and that is in fact what the CSC would do.
    Mr. McRae.  The concerns about liability are varied. They 
relate--and I will go through them and I think the CSC 
addresses all of them. When a company is considering whether or 
not to undertake a nuclear project in another country, they 
assess their national laws. They like to see a national law 
that is similar to Price-Anderson and that which exists in 
Western Europe, where liability is channeled to the operator, 
where there is a predictable process that allows those who 
might be affected by an accident to know that there will be 
compensation available without protracted litigation. My 
understanding is that they usually insist on such a structure 
before they will consider pursuing projects there.
    They also have concerns about what courts will have 
jurisdiction. While there has only been one accident, 
Chernobyl, that actually had trans-boundary damage, there is 
that potential and the concern would be that there could be 
multiple forums for lawsuits and that again the normal rule 
would be that the court in the country where an accident 
occurred should have jurisdiction. That is usually the case, 
even with U.S. courts. Where it might come into question is if 
there is the perception or the reality that there is not an 
adequate remedy in the country where the accident occurred.
    The CSC addresses that by giving exclusive jurisdiction to 
the courts where a country--where an accident occurs, and also 
by providing that there will be an adequate remedy, that there 
will be substantial compensation, and that there will be rules 
that allow victims to get compensation quickly and without 
litigating questions like fault or negligence.
    The Chairman. Thank you.
    My second question really has to do with the potential 
export opportunities that might be available. I am not asking 
the two of you for a market analysis of all those, but from 
personal experience--yesterday I addressed a large group of 
people who are discussing the issues pertaining to Ukraine. 
These were both people from Ukraine as well as Americans. The 
Chernobyl situation which you mentioned in your testimony today 
arose, but likewise the tremendous dependence that Ukraine has 
on other countries for its energy resources now, even to the 
point of severe debilitation of the economy if things were to 
go poorly. So obviously an interest again, even despite the 
tragedy, in more successful and safer nuclear energy resources.
    So we were talking in practical terms about one potential 
market. However, even there conceivably American suppliers 
might feel constrained, as you say, if they do not see a law 
similar to Price-Anderson or other favorable aspects to this. 
Can you give us any idea how large of a market we are talking 
about, how important this might be to that segment of American 
business that is involved in this sort of nuclear technology 
production?
    Mr. McRae.  I can try, Mr. Chairman. I think there are 
probably I think around 20, 25 nuclear projects currently under 
way outside the United States. I have seen estimates that, oh, 
14, 15 countries may be considering initiating nuclear projects 
within the next 20 years, and that the numbers that they are 
talking about, it is a range, but I have seen estimates of 
between 25 and 75 additional nuclear power plants.
    So I think we could say somewhere between 50 and 100 new 
plants in the next 20 years. Given the fact that U.S. suppliers 
have some of the leading technology, we have three of the 
designs, I think, three lightwater reactors, that it is 
reasonable to expect that if they are allowed to compete they 
will be able to secure a fair amount of that market.
    Mr. Stern.  If I could just add, Mr. Chairman. It is not 
only a matter of new reactors, of course. There are a large 
number of reactors that currently exist that were built with 
U.S. technology, that will or have been relicensed for another 
20 or 30 years, that will need U.S. technology and equipment. 
So there is both a nuclear--there is an economic benefit to the 
exporters that work on these facilities as well as a nuclear 
safety benefit in terms of ensuring that those operators have 
access to the best technology available, American technology.
    The Chairman. The CSC could be a foundation for a new 
global legal regime governing civil nuclear liability since it 
would link states that are already parties to existing 
liability treaties and those states not party to any civil 
nuclear liability regime. The United States, Canada, Japan, 
Russia, and South Korea are currently not party to any 
international liability regime. Aside from the United States, 
none of these states has signed the CSC.
    What efforts is the administration undertaking to ensure 
that those countries sign and become parties to the CSC and do 
you have any information that those countries are waiting on 
United States ratification to act similarly?
    Mr. Stern.  I appreciate the question, Mr. Chairman. Yes, 
we have raised the CSC a number of times with the countries you 
have listed, in particular Korea and Japan and Canada. The 
message that comes back loud and strong is in fact the message 
I tried to bring to the table in my initial testimony, that: 
America, this is your treaty regime; it was created for you and 
by you; we are not going to move until you move. So we are of 
course trying to move, so we can press even harder on those 
countries and others to sign and ratify the CSC.
    The Chairman. How likely is it that nations that are now 
parties to other international instruments governing civil 
nuclear liability, such as the Paris Convention on Third Party 
Liability in the field of nuclear energy, or the Vienna 
Convention on Civil Liability for Nuclear Damage, will accede 
to the CSC? If the United States were to ratify the CSC, what 
steps would the administration take to encourage such countries 
to join?
    Mr. Stern.  It is difficult for me, Mr. Chairman, to talk 
in terms of probabilities, but I believe that once the 
countries who are party to the Vienna Convention and the Paris 
Convention see that the CSC gains momentum, in particular as we 
gain the participation of states that are now not party to any 
treaty regime, Canada and several Asian countries, the 
countries who are party to Vienna and Paris will see the 
benefit, the very large benefit, in creating what is a truly 
global regime, because the regime that exists now cannot by its 
terms be global.
    Mr. McRae.  Mr. Chairman, if I could add to that.
    The Chairman. Yes, Mr. McRae.
    Mr. McRae.  During the negotiation of the CSC, we were 
mindful of the need to include the Paris countries and the 
Vienna countries, and we were quite careful to make it clear 
that, just as the United States would be able to join the CSC 
without joining our national--without changing our national 
law, we set it up so that those countries which were already 
party to the Paris Convention or the Vienna Convention would be 
able to join the CSC without changing their national law or 
without any fundamental changes in their existing treaty 
relations.
    As far as outreach, we have been very active with 
encouraging and having the International Atomic Energy Agency 
set up a group called INLEX to promote the CSC. That group has 
produced a commentary that is being made available on how the 
CSC operates, that will be given to member countries. They have 
set up a series of workshops, I think the first of which is 
going to be in Australia this December, and then I think I may 
be attending that to describe the CSC. There should be one 
early next year in Latin America.
    We have also been active at the Nuclear Energy Agency and 
their liability group. We worked with them when the Paris 
countries were revising Paris and the companion Brussels 
Convention to make sure that they had provisions that would 
make them compatible with the Paris countries joining the CSC.
    Thank you.
    The Chairman. The letter of submittal states that there 
could be a positive benefit to United States commercial nuclear 
suppliers since the limitation on liability in the CSC would 
extend to suits filed in United States courts. Does this in 
effect limit the right of U.S. persons to bring suit against 
entities or companies in the United States courts or against 
U.S. companies for accidents overseas? Are there any other 
international agreements to which the United States is 
currently a party that similarly limit the rights of U.S. 
persons?
    Mr. Stern.  Mr. Chairman, the short answer is yes, the 
treaty could limit the rights of U.S. citizens to sue in U.S. 
courts. The general rule under the CSC is, vis a vis courts of 
other parties, only the courts of the parties within the 
incident, within the state in which the incident occurs, should 
have jurisdiction. As a practical matter, in today's legal 
framework, where there is no CSC, we would expect that if a 
nuclear incident occurs overseas U.S. courts would assert 
jurisdiction over a claim only if they concluded that no 
adequate remedy exists in the court of the country where the 
accident occurred.
    The CSC would create a regime where an adequate remedy 
exists. So the answer to your question, Mr. Senator, Mr. 
Chairman, is yes.
    In terms of other precedents, we did a brief search and 
were not able to find a good precedent for this.
    The Chairman. Do you have a comment, Mr. McRae?
    Mr. McRae.  If I could add, the simple answer is that it 
does limit jurisdiction. But there is one area where it 
actually will make clear that U.S. courts have exclusive 
jurisdiction where now there is a fair amount of confusion, and 
that would be with respect to accidents in our exclusive 
economic zone. There the convention gives exclusive 
jurisdiction to U.S. courts over maritime accidents, as well as 
maritime accidents where the United States would be responsible 
for the operator of the ship.
    So there are situations where in fact the jurisdiction of 
U.S. courts is made clear and exclusive under the CSC.
    The Chairman. The letter of submittal states that the 
United States may become a party to the CSC, quote, ``without 
substantive change to the Price-Anderson system,'' end of 
quote, the primary legislation that currently covers civil 
nuclear liability in the United States. Could you both 
summarize the changes that will be made to Price-Anderson under 
the administration's proposed implementing legislation?
    Mr. Stern.  Ben can correct me if I am wrong, but I believe 
that the only change that would have been required was in fact 
made when the Price-Anderson Act was extended a few months ago. 
The other legislation that is needed, which is not and does not 
affect the Price-Anderson legislation, is that which is 
necessary to create the funds for U.S. contribution to the 
supplementary fund. Ben I think provided a brief description of 
that before and can go into greater detail if that is your 
desire.
    Mr. McRae.  Mr. Chairman, Warren is right that the recent 
Energy Policy Act made the only change that was necessary to 
Price-Anderson, which was to increase the liability amount for 
nuclear accidents outside the United States from $100 million 
to $500 million.
    I would request that the section by section that the 
administration provided in connection with our proposed 
legislation be incorporated into the record. It gives a 
detailed discussion of the proposed legislation. I will again 
just summarize that the intent in the proposed legislation was 
to make sure that there was no--that in making the U.S. 
contribution to the international fund that we take advantage 
of Price-Anderson's collection of funds to pay for the U.S. 
contribution without increasing the burden on taxpayers or on 
U.S. nuclear operators and at the same time have a mechanism so 
that we ensure that the amount of compensation available for an 
accident would be no less and in fact slightly higher.
    The Chairman. Your request for submission of that 
additional information is granted. It will be made a part of 
the record at the appropriate point.
    Yes, Mr. Stern.
    Mr. Stern.  If I could add, Mr. Chairman, we will do an 
additional search to see if we can find relevant treaties that 
could provide a precedent for this and we will supply that 
information to you.
    The Chairman. That would be very helpful if you would 
supplement the record with that research.

    [The information referred to follows:]

    We have conducted research to find an example of a relevant treaty 
to which the Senate has given advice and consent to ratification, where 
citizens of the United States are limited in their ability to seek 
legal recourse in U.S. courts for damage or injury sustained abroad. 
One example of such a treaty is the Convention for the Unification of 
Certain Rules Related to International Transportation by Air, done at 
Warsaw, October 12, 1929 (the ``Warsaw Convention''), and to which the 
Senate gave advice and consent on June 15, 1934.
    Article 28, paragraph 1, of the Warsaw Convention states,

          (1) An action for damages must be brought, at the option of 
        the plaintiff, in the territory of one of the High Contracting 
        Parties, either before the court of the domicile of the carrier 
        or of his principal place of business, or where he has a place 
        of business through which the contract has been made, or before 
        the court at the place of destination.

    The Warsaw Convention has been superseded by the Convention for the 
Unification of Certain Rules for International Carriage by Air, done at 
Montreal May 28, 1999 (the ``Montreal Convention''), as among parties 
to the Warsaw Convention that are now parties to the Montreal 
Convention. The Senate gave its advice and consent to the Montreal 
Convention on July 31, 2003. Article 33 of the Montreal Convention, 
entitled ``Jurisdiction,'' states,

          (1) An action for damages must be brought, at the option of 
        the plaintiff, in the territory of one of the States Parties, 
        either before the court of the domicile of the carrier or of 
        its principal place of business, or where it has a place of 
        business through which the contract has been made or before the 
        court at the place of destination.

          (2) In respect of damage resulting from the death or injury 
        of a passenger, an action may be brought before one of the 
        courts mentioned in paragraph 1 of this Article, or in the 
        territory of a State Party in which at the time of the accident 
        the passenger has his or her principal and permanent residence 
        and to or from which the carrier operates services for the 
        carriage of passengers by air, either on its own aircraft, or 
        on another carrier's aircraft pursuant to a commercial 
        agreement, and in which that carrier conducts its business of 
        carriage of passengers by air from premises leased or owned by 
        the carrier itself or by another carrier with which it has a 
        commercial agreement.

    While other precedents may exist, we note that the example cited 
above relates to a significant, longstanding treaty that has been open 
to judicial scrutiny.

    Mr. Stern.  Thank you.
    The Chairman. Now, you have touched upon the answer to this 
question, but let me just raise it specifically, the 
administration's proposed implementing legislation requiring 
United States nuclear suppliers to pay the U.S. share of any 
supplementary compensation under the convention for nuclear 
incidents not covered by the Price-Anderson Act. Have you had 
any comment from industry regarding their views on this 
provision?
    Mr. Stern.  Our general impression, not surprisingly, is 
that they would rather not contribute in this way. Yes, we have 
discussed this with them.
    The Chairman. But nevertheless you intend to propose 
implementing legislation that would require that they pay these 
shares?
    Mr. Stern.  Yes. The primary beneficiaries of the CSC are 
in fact the suppliers. It is the administration's view that the 
costs, if any, should not fall on the general taxpayer, but 
rather those that benefit directly by the treaty.
    The Chairman. Do you have any further comment, Mr. McRae?
    Mr. McRae.  Only to add that we were sensitive to the U.S. 
industry on this issue and that following the diplomatic 
conference and signing the CSC the U.S., the State Department 
and Department of Energy, had numerous discussions with 
representatives of the industry about what might be an 
acceptable formula. I am not going to say that they want to 
pay, but we certainly listened to many of their concerns and in 
developing our proposal we took as much of that into account, 
in the sense of trying to make sure that payments would only 
occur in the unlikely event that we were to make a 
contribution, and that we tried to come up with a formula on 
allocating risk which is similar to that which I understand is 
already used in the insurance industry to allocate risk when 
there are multiple companies involved in a nuclear project.
    The Chairman. Under the CSC, nuclear operators would be 
held liable for damage caused by nuclear incidents at the 
nuclear installations they operate. Would an operator have any 
defense to liability? Would an operator have any right to 
recover from third parties who might be at fault? How does this 
compare to the existing United States regime under the Price-
Anderson Act?
    Mr. McRae.  Under the convention there are provisions that 
provide the operator with a right of recourse. They are both 
subject to national law. So in the case of the United States 
there would be no right of recourse because that is not allowed 
under Price-Anderson. In other countries, national law could 
permit two situations for right of recourse. One would be 
against a person who intentionally causes a nuclear accident. 
The other would be where an operator and a contractor agreed by 
contract for some type of right of recourse or some kind of 
mechanism in the event of an accident. Those are the same 
provisions that are in the existing international conventions 
on liability.
    The Chairman. Thank you.
    What are the implications for the United States share of 
the supplemental compensation fund and the overall amount of 
that fund if the convention enters into force with only a small 
number of countries with nuclear installations?
    Mr. Stern.  Mr. Chairman, if all major nuclear generators 
were in fact parties and the treaty were in force, the 
international fund would be roughly 300 SDRs, which translates 
into approximately 450 million U.S. dollars. Of that, the U.S. 
would be obligated to contribute approximately $150 million. 
There is a complicated formula as parties join, but in general 
if a smaller number of countries are in fact parties the fund 
would be smaller and the U.S. contribution would be smaller. 
There is a cap of I think, I believe, 30 percent for the U.S. 
contribution.
    The Chairman. Do you have a further comment, Mr. McRae?
    Mr. McRae.  It is a complicated formula, but we were very 
sensitive to the fact that the United States might be in a 
situation at the beginning of the process where we would be the 
major contributor and we were mindful that there needed to be 
limits and, as a practical matter, the United States will never 
pay more than around 30 percent. As it matures, the amount will 
be less than that. But at no point will it be more than about a 
third.
    The Chairman. Thank you.
    When transmitting the convention to the Senate, the 
administration recommended that the Senate include in its 
resolution of ratification a reservation to this convention 
relating to dispute resolution. Is this still the 
administration's position?
    Mr. Stern.  Yes, Mr. Chairman.
    The Chairman. You would agree?
    Mr. McRae.  Yes.
    The Chairman. Very well.
    Gentlemen, I appreciate your thoughtful answers to each of 
these questions, which will once again make the strong record 
of a hearing on this important treaty.
    Let me just ask any of the four of you if you have any 
final comments or words of wisdom that would further complete 
our record, because if not I am prepared to thank you and 
adjourn the hearing. Yes, Secretary Balton?
    Mr. Balton.  Thank you, Mr. Chairman. I should say two 
things: first, to express our appreciation to you and other 
members of the committee and the staff for their willingness to 
take up the four treaties related to the oceans. I am sure my 
colleagues would say the same with respect to the nuclear 
liability convention.
    I had thought in the course of questions and answers I 
would have a chance to say this. I did not, so I should say it 
now. All four of the oceans-related treaties are built on and 
add to the framework created by the 1982 United States 
Convention on the Law of the Sea and it still remains the 
administration's position that we seek U.S. accession to that 
treaty as well at the earliest possible time.
    Thank you.
    The Chairman. I thank you for that comment, and I cannot 
emphasize how important administration leadership and support 
will be in this issue. It is not a new issue before the 
committee, but, as you recall, we have taken action with 
enthusiasm, unanimously attempted to work with our colleagues 
to gain some floor time in a practical way, and have not yet 
been successful.
    But to the extent that the Departments that are here 
represented can weigh in with some of our colleagues as well as 
the general public, that will be helpful. I agree it is a very 
important part of the consideration of the oceans and the 
fisheries that we have discussed today.
    Well, I thank you very much for your testimony and we look 
forward in the committee to taking action on the treaties at an 
early time when we can get a quorum of our members for a 
business meeting.
    Let me just say, the committee has a number of further 
questions for you as witnesses. Members who were not able to 
attend the hearing today have requested some additional time to 
review what we have asked and your responses, and then they may 
be submitting questions for the record. We will ask you to 
answer the questions promptly, and following completion of the 
record we will have our business meeting consideration.
    Thank you all and the hearing is adjourned.
    [Whereupon, at 10:55 a.m., the committee was adjourned.]


                            A P P E N D I X

                              ----------                              


 Responses to Additional Questions Submitted for the Record by Members 
                            of the Committee

  Responses to Additional Questions Relating to the Convention on the 
Conservation and Management of the Highly Migratory Fish Stocks in the 
         Western and Central Pacific Ocean (Treaty Doc. 109-1)

RESPONSES TO ADDITIONAL QUESTIONS FOR THE RECORD SUBMITTED TO DAVID A. 
                   BALTON BY SENATOR RICHARD G. LUGAR

    Question. The next meeting of the WCPF Commission is to take place 
in December 2005. What issues is the Commission expected to address at 
this meeting? Will the United States Delegation to the meeting include 
representatives of interested U.S. territories?

    Answer. The Commission is expected to consider the following issues 
at the December 2005 meeting: conservation and management measures for 
bigeye and yellowfin tunas; a limit on further increases in fishing 
effort on northern albacore; a shark-finning prohibition similar to 
those adopted by management organizations in the Atlantic (by ICCAT) 
and in Eastern Pacific (by IATTC); measures to mitigate the bycatch and 
mortality of sea turtles in Pacific longline fisheries; cooperation 
with Inter-American Tropical Tuna Commission on shared fish stocks; and 
efforts to address the continuing increase in fishing capacity, among 
others. The meeting will also be held in conjunction with the first 
meeting of the Commission's Technical and Compliance Committee. That 
committee will consider a range of issues related to monitoring, 
control and surveillance such as observer programs, vessel monitoring 
systems, port state measures, and high sea boarding and inspection, 
among others.
    As has been the case at every negotiating session and every session 
of the Preparatory Conference and the Commission, all interested U.S. 
territories are invited to send a representative to participate on the 
U.S. delegation.

    Question. Article 25(11) of the Convention allows WCPF Commission 
members to take action ``in accordance with the Agreement and 
international law, including through procedures adopted by the 
Commission for this purpose'' against vessels that have engaged in 
activities that undermine or violate the measures adopted by the 
Commission to deter such vessels from fishing in the Convention Area 
until their flag State takes appropriate action. What type of action 
might the United States or another member pursue against a foreign-flag 
vessel under this provision?

    Answer. There are various tools consistent with the Agreement and 
international law that could be used to prevent and deter fishing that 
undermines or violate the Commission's rules. Vessels operating in the 
Convention Area in waters under the jurisdiction of a coastal State are 
subject to boarding and inspection by that state and subject to the 
rules, laws and regulations such State may put in place to enforce the 
Commission's management measures. Vessels found to have violated such 
measures could face seizure of the vessel or catch and the application 
of other appropriate sanctions and penalties.
    There are also measures that can be applied to vessels of Parties 
to the Convention fishing outside the jurisdiction on any country; 
i.e., on the high seas. Such vessels are subject to reporting 
requirements, use of vessels monitoring systems and even boarding and 
inspection on the high seas by other members of the Commission. When 
infractions are identified, the first line of defense is action by the 
flag state. If the flag state is unable or unwilling to take action, 
other measures that could be applied by the United States and other 
countries include denial of port access, and trade measures to prevent 
the fish caught by that vessel from entering into international 
commerce, as described below.
    Port States may also take a variety of steps with respect to 
foreign vessels that have come to their ports, e.g., to land or 
transship fish. For example, port States may require such a vessel to 
submit information about the vessel and its catch in advance of 
arrival. The port State may also inspect the vessel while in port. If 
evidence of a violation is found, the port State may take a number of 
additional steps, depending on the circumstances. At a minimum, the 
port State could refuse to allow the vessel to land or transship its 
catch and could forward evidence of the violation to the flag State.
    States that import fish from fisheries regulated by the Commission 
may also take certain steps. In 2001, the Food and Agriculture 
Organization adopted by consensus the International Plan of Action to 
Prevent, Deter and Eliminate Illegal, Unreported and Unregulated 
Fishing. This IPOA calls for States to use certain ``multilateral 
market measures,'' consistent with international law, to prevent 
illegally harvested fish from entering their markets. A number of other 
regional fisheries management organizations, including ICCAT, have 
already put in place such multilateral market measures. The WCPF 
Commission is likely to consider similar schemes in the near future.
                               __________

RESPONSES TO ADDITIONAL QUESTIONS FOR THE RECORD SUBMITTED TO DAVID A. 
                 BALTON BY SENATOR JOSEPH R. BIDEN, JR.

    Question. Please describe the anticipated regulatory framework 
under U.S. law for the implementation of the conservation and 
management measures required under the Convention. How will it relate 
to current regulation of any species found in U.S. jurisdiction (i.e., 
territorial waters or the EEZ) under the Magnuson-Stevens Act? Further, 
Article 8 requires compatibility between conservation and management 
measures established for the high seas and those adopted for areas 
under national jurisdiction. Please describe how this will be assured 
under U.S. law and regulation.

    Answer. The administration is currently preparing proposed 
legislation to implement the WCPF Convention. If such legislation, once 
passed, follows the precedents implementing other such Conventions, it 
would authorize the Secretary of Commerce to administer, implement and 
enforce all the provisions of such legislation and regulations issued 
pursuant thereto, in consultation with other appropriate agencies and 
Departments. Measures with respect to fisheries currently managed under 
the Magnuson-Stevens Act would also require coordination with the 
respective regional fishery management council or councils. Further, 
the administration's draft legislation would provide for the Secretary 
to ensure, to the extent practicable, consistency between fishery 
conservation and management programs administered under that 
legislation with the Magnuson-Stevens Act and other legislation, 
including the Tuna Conventions Act, the South Pacific Tuna Act, Pacific 
Albacore legislation and the Atlantic Tunas Convention Act.
    It should be noted that Article 8 applies to the Commission. Thus, 
Article 8 addresses the responsibility of the Commission, rather than 
individual States, regarding compatibility between measures adopted for 
the high seas and those adopted for areas under national jurisdiction. 
The premise of this international regime is to manage the affected fish 
stocks throughout their range, which includes areas under national 
jurisdiction and the high seas. The Convention specifies that the area 
of application of any measure shall be determined at the time the 
measure is adopted. For its part, we expect that the U.S. delegations 
to these meetings, working in concert with other like-minded 
delegations, will work to ensure that measures adopted by the 
Commission do not make artificial distinctions or create 
incompatibility between such areas. Such measures, once adopted, would 
then be implemented by the United States under the scheme described in 
the preceding paragraph.

    Question. Article 8(2)(b)(ii) requires the Commission to take into 
account ``previously agreed measures established and applied in respect 
of the same stocks for the high seas which form part of the Convention 
Area by relevant coastal States and States fishing on the high seas in 
accordance with the 1982 Convention and the Agreement.'' Please 
summarize any such ``previously agreed measures.''

    Answer. There are a number of such previously agreed measures. As 
far as the United States is concerned, such measures flow from the 
Multilateral Treaty on Fisheries between the Pacific Island States and 
the United States. Under that Treaty, U.S. vessels are subject to a 
range of reporting and operational requirements. These include 
requirements to: have a proper license issued annually by the Forum 
Fisheries Agency (FFA); report catches and position on a weekly basis; 
report when entering or exiting the waters under the jurisdiction of 
any Party to the Treaty; notify in advance when planning to enter a 
port for the purpose of unloading catch; carry an observer when 
requested by the FFA; and have on board and active a vessel monitoring 
system at all times in the Treaty licensing area. As far as other 
countries are concerned, their vessels are subject to similar 
requirements under bilateral agreements with various Pacific Island 
States. The provisions of Art. 8(2)(b)(ii) are intended to help ensure 
that requirements adopted under the WCPF Convention are not 
inconsistent with these requirements and do not impose either duplicate 
or conflicting obligations and requirements on fishing vessels in the 
region.

    Question. What is the anticipated U.S. share of the Commission 
budget?

    Answer. The notional scheme of contributions is based on a variety 
of factors, the most significant of which are level of development and 
level of fish catches in the region. Based on the current level of U.S. 
catches, the United States share is projected at approximately 12 
percent of the budget. The Commission's budget for the first year is 
approximately $970,000, of which the U.S. share would be approximately 
$116,000. As the Commission builds its staff and operational capacity, 
the budget and the U.S. contribution will grow, but the relative share 
paid by the United States will remain constant.
                               __________

 Responses to Additional Questions Relating to the Convention for the 
 Strengthening on the Inter-American Tropical Tuna Commission (Treaty 
                              Doc. 109-2)

RESPONSES TO ADDITIONAL QUESTIONS FOR THE RECORD SUBMITTED TO DAVID A. 
                   BALTON BY SENATOR RICHARD G. LUGAR

    Question. At the hearing, you indicated that the Executive Branch 
will soon propose implementing legislation for this convention in the 
form of amendments to the Tuna Conventions Act of 1950, which 
implements the 1949 Convention that established the Inter-American 
Tropical Tuna Commission. Please explain what type of amendments would 
be needed in order for the United States to fully comply with the new 
convention. Are any new authorities required for this purpose?

    Answer. No new authorities are required in order to implement the 
Antigua Convention. Nonetheless, the administration believes that some 
modification to the current implementing legislation (the Tuna 
Conventions Act of 1950) is warranted and is currently preparing draft 
legislation to this effect. In particular, we believe some changes are 
advisable to reflect the fact that, under the Antigua Convention, the 
IATTC will take decisions rather than make recommendations, as under 
the 1949 Convention. Other changes being considered are to remove 
references in the Tunas Convention Act to a second Convention, ``the 
International Commission for the Scientific Investigation of Tunas'' 
(the Commission, included in the 1949 Act, never came into existence) 
and to update the enforcement and penalties sections to reflect current 
standards and practice. The general regulatory framework within which 
the United States implements its obligation under the IATTC would 
remain in place.

    Question. Article VII(i) of the Convention authorizes the Inter-
American Tropical Tuna Commission (IATTC) to ``establish a 
comprehensive program for data collection and monitoring which shall 
include such elements as the Commission determines necessary.'' What 
type of data collection and monitoring measures were adopted by the 
Commission under the 1949 Convention? Are any changes expected in this 
area under the new Convention? The Convention on the Conservation and 
Management of the Highly Migratory Fish Stocks in the Western and 
Central Pacific Ocean, which the Senate is also considering, would 
authorize a regional observer program and require the use of near real-
time satellite position-fixing transmitters. Do you anticipate that the 
IATTC will adopt similar measures? Why or why not?

    Answer. The provisions of Article VII(i) are intended to provide 
the legal basis for, and thus strengthen, the Commission's program of 
data collection and analysis. The Commission utilizes the international 
observer program established under the Agreement on the International 
Dolphin Conservation Program. This program requires 100 percent 
observer coverage on all large-scale purse seine vessels operating in 
the convention area. The international observer program provides that 
national observers from AIDCP Parties may cover up to 50 percent of the 
fishing trips by vessels from that nation. Both international and 
national observer programs operate under the same requirements to 
collect data on the location, gear configuration and target species of 
all purse seine sets, and on bycatch and other biological data. IATTC 
scientific staff conducts random catch sampling and port sampling to 
collect additional data. In addition, IATTC Members are required to 
provide data on set location, gear configuration and target species for 
all of their vessels, not just purse seine vessels, fishing for species 
covered by the Convention.
    Regarding monitoring, the IATTC recently adopted a resolution 
requiring the development of a satellite-based vessel monitoring system 
for all large-scale fishing vessels in the convention area. Also, 
vessels carrying on-board observers are required to report collected 
data weekly to the IATTC Secretariat.
                               __________

RESPONSES TO ADDITIONAL QUESTIONS FOR THE RECORD SUBMITTED TO DAVID A. 
                 BALTON BY SENATOR JOSEPH R. BIDEN, JR.

    Question. Article V requires compatibility between conservation and 
management measures established for the high seas and those adopted for 
areas under national jurisdiction. Please describe how this will be 
assured under U.S. law and regulation.

    Answer. Measures adopted by the IATTC are implemented under U.S. 
law through regulations promulgated by the National Marine Fisheries 
Service through authorities derived from the Tuna Conventions Act of 
1950 and in part from the Magnuson-Stevens Fishery Conservation and 
Management Act. While this general legal and regulatory framework would 
not change in a significant way, the administration is working to 
prepare proposed amendments to that legislation to ensure consistency 
with the provisions of the Antigua Convention.
    Moreover, the provisions of Article V apply not only to members of 
the Commission individually, but also to the Commission collectively. 
As a result, it will also be incumbent upon delegations to the 
Commission meetings to ensure that the Commission itself does not adopt 
measures that might create inconsistencies between measures applied on 
the high seas and in areas under national jurisdiction.

    Question. What is the anticipated U.S. share of the Commission 
budget?

    Answer. The U.S. contribution for 2006 is $1.9 million. This level 
of funding is the result of a multiyear, negotiated effort to reduce 
the U.S. contribution from its previous level of more than $3.2 
million. Previously, the United States was paying $3.2 million of a 
total IATTC budget of approximately $3.6 million, or almost 90 percent 
of the total. This year, due both to reductions in the U.S. 
contribution and increases in contributions by other IATTC members, the 
U.S. contribution of $1.9 million represents 36 percent of the total 
IATTC budget of $5.2 million. We anticipate that the U.S. contribution 
will decrease further, in both real and relative terms, as more 
countries join the IATTC by ratifying or acceding to the Antigua 
Convention.
                               __________

     Responses to Additional Questions Relating to MARPOL Annex VI 
                          (Treaty Doc. 108-7)

RESPONSES TO ADDITIONAL QUESTIONS FOR THE RECORD SUBMITTED TO DAVID A. 
                   BALTON BY SENATOR RICHARD G. LUGAR

    Question. The United States has ratified Annexes I, II, III, and V 
of the MARPOL Convention and the administration is seeking to ratify 
Annex VI. In the letter of submittal, the administration indicated that 
it does not intend to seek ratification of Annex IV, which regulates 
ship-generated sewage. Please explain why. How does Annex IV differ 
from existing U.S. law?

    Answer. The U.S. administration conducted an extensive review of 
Annex IV between 1999 and 2000 since the IMO's Marine Environment 
Protection Committee was then considering changes to the Annex. As a 
result of that review, the United States proposed a series of 
amendments designed to improve Annex IV and to better align Annex IV 
with the approach taken under U.S. law. Unfortunately, the changes 
proposed by the United States were not supported by the committee. 
Annex IV entered into force on November 27, 2003 and the revised Annex 
IV subsequently entered into force on August 1, 2005 without any of the 
changes proposed by the United States.
    While existing U.S. law has at least the same effect as Annex IV, 
Annex IV differs from the approach outlined in U.S. law in three main 
areas. First, the definition of sewage contained in Annex IV is 
considerably broader than that found in U.S. law. The MARPOL definition 
includes drainage from shipboard medical premises, wash tubs, and 
scuppers located in such premises, as well as drainage from spaces 
containing live animals. U.S. regulations prohibit commingling of 
medical waste with sewage on all public and many privately owned 
vessels. The broader MARPOL definition also presents the significant 
challenge of processing gray water from shipboard animal spaces through 
sewage plants on U.S. flag vessels as well as other difficulties in 
mixing graywater and blackwater discharges.
    Second, Annex IV regulates discharges as a function of distance 
from land with no provisions afforded for the protection of sensitive 
resources or the establishment of ``no-discharge'' zones as afforded 
under U.S. law.
    Third, Regulation 12 of the revised Annex IV requires Parties to 
undertake the provision of adequate reception facilities at ports and 
terminals for the reception of sewage. While mandatory port reception 
facilities are a logical requirement under Annexes I, II, V, and VI of 
MARPOL, the administration believes a requirement for sewage port 
reception facilities is economically inefficient, since discharge at 
sea, when properly treated, is an environmentally appropriate solution.

    Question. Regulation 17 calls for Parties to Annex VI to provide 
facilities to receive ozone-depleting substances and solid wastes from 
exhaust cleaning systems and the implementing legislation the 
administration submitted to Congress contains provisions requiring such 
facilities at U.S. ports and terminals. Do any United States ports 
already have such pollution reception facilities? How many of these 
reception facilities would have to be constructed in order for the 
United States to comply with Annex VI? What is the estimated cost of 
the construction of these facilities?

    Answer. The United States currently has federal regulations for the 
control of ozone-depleting substances. Foreign ships are subject to 
these requirements when they service equipment or systems that use 
these substances while they are in the United States. It is not 
expected that additional reception facilities for ozone-depleting 
substances will be necessary in the U.S. to meet the requirements of 
Regulations 12 and 17.
    Annex VI permits the use of exhaust gas cleaning systems, for both 
NOX and SOX removal (Regulations 13(3)(b) and 
14(4)(b)). In the case of NOX removal, the Annex VI 
standards can be achieved through engine-based controls and do not 
require the use of after-treatment. Selective catalytic reduction units 
or various water-based (e.g., water emulsification) devices may be fit 
on a ship for additional NOX reductions, but these 
technologies do not result in residues and are therefore unlikely to 
present a disposal problem that would require reception facilities. In 
the case of SOX removal, it is difficult to say at this time 
what kinds of reception facilities will be required, how many would be 
needed, or how much they would cost. SOX exhaust gas 
cleaning systems for marine applications remain under development. 
Limited field testing is just beginning and there are currently no 
commercially manufactured devices available. Once we have a better 
understanding of what form these devices are likely to take, the nature 
of their residues, and how much of those residues will be required to 
be disposed of through port-supplied facilities, we will be in a 
position to estimate what types of reception facilities will be needed 
and how much those facilities would cost.

    Question. If the United States becomes a party to Annex VI, what 
are the next steps that the administration would seek in negotiations 
under the agreement? For instance, would the administration seek more 
stringent air pollution regulations? How soon would the administration 
seek to declare certain coastal areas as SOX Emission 
Control Areas?

    A decision was recently taken by IMO Member States to begin 
discussions to consider the development of broader and more stringent 
standards than those currently found in Annex VI. The administration is 
committed to pursuing at the IMO more stringent standards for 
NOX and is carefully considering the feasibility of more 
stringent sulfur limits applicable in SOX Emission Control 
Areas, as well as expanding the Annex to establish standards applicable 
to existing engines, particulate matter, volatile organic compounds, 
and non-diesel engines.
    EPA is currently conducting studies needed to evaluate the 
establishment of certain coastal waters as a SOX Emission 
Control Area. Should these studies lead to a decision to seek 
establishment of such an area(s), the administration would need to 
submit a proposal for consideration under Annex VI of MARPOL. Such a 
proposal may be submitted to the IMO as early as 2007. Recognizing the 
time necessary for review at the IMO and the time required for such an 
amendment to enter-into-force, any North American SOX 
Emission Control Area would not be effective until 2009 or later.

    Question. On July 11, 2005, several amendments to Annex VI were 
adopted, including changes to the NOX Technical Code and a 
provision establishing the North Sea as a SOX Emission 
Control Area (SECA). The administration has indicated that, if the U.S. 
instrument of ratification for Annex VI were deposited before May, 
2006, the United States would be in a position to either accept these 
amendments or condition its acceptance. What does the administration 
intend to do with respect to these amendments?

    Answer. The administration fully supported development and adoption 
of these amendments and wishes to see them enter into force for the 
United States.
                               __________

RESPONSES TO ADDITIONAL QUESTIONS FOR THE RECORD SUBMITTED TO DAVID A. 
                 BALTON BY SENATOR JOSEPH R. BIDEN, JR.

    Question. Does the Executive Branch have any data on the degree of 
pollution from ships and the degree to which such pollution affects on-
shore air, quality and achievement of Clean Air Act requirements (i.e., 
National Ambient Air Quality Standards)? Please provide a summary of 
the degree of this problem.

    Answer. Ships that use the marine diesel engines and fuels covered 
by Annex VI contribute significantly to air pollution in the United 
States. EPA's Office of Transportation and Air Quality estimates that 
in 1996 these engines contributed approximately 6%, 6%, and 27%, 
respectively, of the national mobile source NOX, PM 2.5, and 
SOX inventories. These contributions are expected to 
increase to 28%, 25%, and 84%, respectively, by 2030, due to increasing 
trade and the declining contribution of other mobile sources resulting 
from the use of cleaner fuels and the implementation of EPA's recently 
adopted emission control programs.
    The effects of ship emissions on on-shore air quality can be 
considerable, particularly because these emissions are concentrated in 
ports and coastal and river areas. Nearly all of the emissions from 
U.S. flag vessels, including tugs, ferries, fishing boats, supply 
boats, and push boats, occur on our rivers and lakes, within our ports, 
or in close proximity to the U.S. coast. Emissions from foreign-flagged 
ocean-going vessels also contribute significantly to air quality 
problems in numerous U.S. ports and coastal areas, many of which are 
high-density urban areas.
    The contributions of marine vessels to local NOX, PM 
2.5, and SOX emission inventories have an impact on states' 
ability to achieve National Ambient Air Quality Standards (NAAQS) for 
ozone and PM. As many as thirty commercial ports are located in areas 
that have been designated as non-attainment areas under EPA's new 8-
hour ozone and fine particulate (PM 2.5) NAAQS. States with non-
attainment areas will be required to take action to bring those areas 
into compliance in the future.

    Question. Please provide a summary of the current or contemplated 
regulatory framework implementing the following provisions of Annex VI: 
Regulations 12, 13, 14, and 16.

    Answer. EPA currently has regulatory programs that control the 
substances addressed in Regulations 12 (ozone-depleting substances), 13 
(NOX), 14 (SOX), and 16 (incinerators). Each of 
these programs was authorized by the Clean Air Act. EPA's program for 
ozone-depleting substances was promulgated under Title VI of the Clean 
Air Act, and regulations can be found in 40 CFR 82. The programs for 
NOX and SOX emissions from marine diesel engines 
and their fuels were promulgated under Title II of the Clean Air and 
regulations can be found in 40 CFR 94 and 80. The Coast Guard 
promulgated a notice and comment rule at 46 CFR 63.25-9 to regulate 
shipboard incinerators on inspected U.S. flagged vessels. This 
regulation was last amended on December 1, 1999. It incorporates some 
of the elements within the scope of Annex VI, Regulation 16. The Coast 
Guard grants type-approvals for incinerators in accordance with this 
standard. The balance of the elements within the scope of Regulation 16 
are addressed by a notice and comment rulemaking that is currently in 
progress to amend that same regulation. The NPRM for those amendments 
is the subject of the June 30, 2004 Federal Register entry at 67 FR 
39762.
    EPA's program for ozone depleting substances is very comprehensive 
and already applies to ships when systems using these substances are 
serviced or replaced while the vessel is in U.S. ports or territorial 
waters. We do not anticipate that major revisions of the national 
program will be necessary to implement Regulation 12.
    EPA's standards for marine diesel engines were adopted in rules 
finalized in 1999 and 2003. The Annex VI NOX limits (EPA's 
Tier 1 standards) were made mandatory for engines above 2.5 1/cyl 
beginning in 2004. The federal emission limits also include a second 
tier of standards that apply to engines up to 30 liters per cylinder 
displacement. In addition to more stringent NOX limits, 
these Tier 2 standards include PM, HC, and CO limits. The federal 
certification and compliance program is very similar to the Annex VI 
program, although there are some differences regarding liability for 
in-use compliance, emission system durability, test conditions, test 
parameters, and witness testing. These requirements are sufficiently 
consistent with Annex VI and the NOX Technical Code to allow 
manufacturers to use a single harmonized compliance strategy to certify 
under both systems.
    EPA's program for marine fuels covers only distillate fuel. 
Therefore, it will be necessary to develop regulations to implement the 
requirements of Regulations 14 and 18 with respect to certifying 
residual fuels and setting out compliance with the requirements by ship 
owners. Regulations will also be required to implement a SOX 
Emission Control Area should such an area be proposed and approved off 
the North American coast.

    Question. Regulation 13 applies to diesel engines which are 
installed or undergo a major conversion on or after January I, 2000. If 
the United States becomes a party to Annex VI, will this requirement 
apply retroactively to engines installed or which were subject to a 
major conversion between January 1, 2000 and the date of entry into 
force for the United States?

    Answer. The Annex stipulates that the effective date of the 
NOX requirements is January 1, 2000. Compliance with the 
applicable standards should not be a problem; the requirements have 
been widely known, given that they were adopted in 1997. In addition, 
marine engine manufacturers have provided IMO compliant engines since 
January 1, 2000, and most marine classification societies have insisted 
on compliance with the requirements since that time.

    Question. The Secretary's letter of submittal of the treaty notes 
that the United States ``intends to press'' the International Maritime 
Organization to set more stringent NO), emission standards ``on an 
expedited basis.'' What is the current status of the diplomatic effort 
to seek such standards?

    Answer. The United States is seeking to establish an additional 
tier of standards under the Annex that will set more stringent limits 
consistent with recent advances in emission control technology, 
including after-treatment technology. We will advocate aggressive 
reductions beyond the existing standards for new engines with per 
cylinder displacement below 30 liters in line with the controls EPA is 
considering for a new tier of federal standards for these engines. We 
will also advocate significant reductions for new engines used for 
propulsion on ocean-going vessels. Moreover, we will encourage adoption 
of new controls applicable to existing engines that reflect the 
appropriate use of emission control technologies that can be applied to 
these older engines.

    Question. The Secretary's letter of submittal states that the 
United States is ``considering whether the Annex VI sulfur oxide limits 
should be lowered under this Convention, particularly in SOX 
Emission Control Areas.'' What is the current U.S. policy in this 
regard, and what limits would such policy seek?

    Answer. The fuel sulfur content limits in Annex VI are of interest 
to the United States because the residual fuel used in ocean-going 
marine engines is an important source of SOX emissions, 
which in turn contribute to ambient levels of particulate matter. EPA 
estimates that, in light of mandated decreases in emissions from other 
sources, the relative contribution of such sources to overall mobile 
source SOX inventories will increase by three to four times 
by 2030. Many of these emissions affect our port communities and 
coastal areas and therefore have important public health impacts.
    Annex VI limits the sulfur content of marine diesel fuel to 45,000 
ppm; the cap in SOX Emission Control Areas (SECAs) is 15,000 
ppm. The current global average fuel sulfur content level is about 
27,000 ppm. In comparison, EPA recently finalized fuel sulfur limits of 
500 ppm (in 2007) and 15 ppm (in 2012) for marine distillate fuel sold 
in the United States.The IMO has recently decided to review the 
Regulation 14 fuel sulfur limits. Currently, U.S. policy is to work 
within this review group to bring about the adoption of more stringent 
international standards that will protect human health and the 
environment. These standards could be achieved either by reducing the 
sulfur content of fuel or by the use of after-treatment on board 
vessels. These devices are currently under development by a number of 
manufacturers, and it is hoped that they will offer a low-cost 
alternative to very low sulfur residual fuel. These devices may also 
allow achievement of standards that fuel sulfur controls alone would 
not permit, since extracting sulfur from residual fuel is complicated 
and very costly.

    Question. In addition to strengthening NOX, standards, 
does the United States believe other measures are necessary to 
strengthen the agreement? If so, why does the Executive Branch propose 
a declaration focused only on the NOX emission control 
limits, and not the need to strengthen other provisions of Annex VI?

    Answer. The United States does anticipate that other measures are 
necessary to strengthen the agreement, in terms of the engine emission 
standards (to cover more pollutants), the types of engines covered 
(existing engines and rebuilds), and the fuel standards. The 
administration proposed a declaration in May 2003 focused on the 
NOX limits because the administration had already concluded 
that the NOX emission limits should be lowered in the near 
future. While we do anticipate the need to strengthen other aspects of 
the Annex, the administration has not yet reached conclusions on the 
specific changes that may be appropriate. These negotiating positions 
will be based on analysis of studies currently underway and will also 
be influenced by forthcoming discussions yet to be held at the 
International Maritime Organization.

    Question. Similarly, the Executive Branch has proposed an 
understanding stating that, with respect to emissions of nitrogen 
oxides pursuant to Regulation 13, the Protocol does not ``prohibit 
parties from imposing more stringent measures than those identified in 
the Protocol as a condition of entry into their ports or internal 
waters.'' Does the same principle apply to other compounds regulated by 
Annex VI? That is, may parties impose more stringent measures as a 
condition of port entry or entry into internal waters for sulphur 
oxides, VOC emissions, shipboard incineration, or fuel oil quality 
standards? If so, why is the proposed understanding focused only on 
nitrogen oxides?

    Answer. The understanding is focused on NOX emissions 
not because that is the only pollutant with respect to which more 
stringent measures may be applied as a condition of port entry, and the 
principle does not apply exclusively to NOX emissions. 
NOX is highlighted because it has been the primary focus of 
U.S. regulatory action and to send a signal internationally of the 
importance of developing an appropriately stringent standard. Parties 
are free to impose more stringent measures as a condition of port entry 
for sulfur oxides, volatile organic compounds (noting the requirement 
in Regulation 15 of a six-month notice requirement, as explained on 
page VIII of the Letter of Submittal), shipboard incineration, fuel oil 
quality, ozone-depleting substances, and NOX.

    Question. Regulation 10 provides a ``clear grounds'' standard for 
Inspection of a ship in port or an offshore terminal. How does this 
standard compare to current Coast Guard authorities for such 
inspection?

    Answer. The Port State Control provisions of Regulation 10 are 
similar to the corresponding provisions in the other MARPOL Annexes to 
which the United States is a party. Thus, this ``clear grounds'' 
standard is familiar to the Coast Guard and provides a sufficient basis 
for carrying out an effective Port State Control program.

    Question. Will the United States enforce Annex VI against all 
ships, U.S. and foreign, that come into all of the waters over which 
the U.S. has jurisdiction--i.e., in ports, in the territorial sea, and 
in the exclusive economic zone?

    Answer. In the draft implementing legislation forwarded to Congress 
on October 6, 2005, the administration proposed that the United States 
enforce Annex VI against U.S. ships wherever located, consistent with 
the existing provisions of the Act to Prevent Pollution from Ships (see 
33 U.S.C. Sec.  1902(a)(1)), and against foreign ships to the extent 
set forth in the proposed implementing legislation.

    Question. Does the Executive Branch regard Annex VI as a 
``generally accepted international rule or standard'' as that term is 
used in Articles 21 and 211 of the UN Convention on the Law of the Sea?

    Answer. Whether a particular measure within a treaty is considered 
a ``generally accepted international rule or standard'' within the 
meaning of various provisions of the Law of the Sea Convention would 
depend upon a variety of factors, such as: whether the rule/standard 
has been formally adopted; whether it is in force; the number and type 
of States adopting the standard; the extent to which the group 
represents States whose vital interests are affected by the standard; 
and State practice. In this case, we do not need to reach the issue 
whether one or more of the measures reflected in Annex VI constitutes a 
generally accepted international rule of standard, as our proposed 
implementing legislation does not rely on the coastal State authorities 
set forth in the LOS Convention that depend upon the existence of such 
a rule/standard.

    Question. MARPOL does not apply to any warship, naval auxiliary or 
other ship owned or operated by a state and used on government service. 
But the Convention does require that such ships act ``in a manner 
consistent, so far as is reasonable and practicable, with the present 
Convention.'' How will Annex VI be applied to U.S. sovereign vessels? 
How does that compare to the application of other MARPOL annexes to 
sovereign vessels?

    Answer. The draft legislation submitted by the administration 
provides authority to the EPA. Administrator to apply some or all Annex 
VI standards to non-combat public vessels of the United States. Such 
application requires the concurrence of the Secretary of the affected 
Department or Departments. U.S. treatment of U.S. public vessels under 
the Act to Prevent Pollution from Ships (APPS) for Annexes I and II of 
MARPOL exempts all U.S. public vessels. MARPOL Annex III is implemented 
through statutes and regulations pertaining to the transportation of 
hazardous materials, which require the exclusion of U.S. public 
vessels. With respect to Annex V, APPS requires compliance by all U.S. 
public vessels, with certain exceptions during time of war and from 
Regulation 5 of Annex V under specified conditions.
    As noted in the transmittal package, Article 3 of MARPOL exempts 
warships, naval auxiliary and other ships owned or operated by a State 
and used in governmental non-commercial service, from the application 
of the provisions of the Convention. Such vessels are therefore 
excluded from the application of Amex VI. At the same time, each Party 
is required to take appropriate measures not impairing the operations 
or operational capabilities of such ships owned or operated by it, to 
ensure that such ships act in a manner consistent, so far as is 
reasonable and practicable, with Annex VI. The United States already 
meets this requirement with respect to its sovereign immune vessels; 
the proposed legislation's exclusions will help ensure the maximum 
degree of flexibility in avoiding circumstances that could impair the 
operations or operational capabilities of Navy ships. Most U.S. Navy 
fossil fuel-powered ships now use gas turbines, which are not regulated 
by Annex VI, for main propulsion. U.S. Navy ships that use diesel 
engines for main propulsion use low (less than 1%) sulfur distillate 
fuel that is much cleaner than the heavy fuel oils used by many 
commercial marine diesel engines. Procurement programs for future 
diesel-powered ships specify that diesel engines for main propulsion 
meet emissions standards in Annex VI. In addition, new classes of 
surface ships are no longer constructed to use CFCs in shipboard air 
conditioning and refrigeration equipment, or halons in shipboard fire-
fighting equipment.

    Question. The Secretary's letter of transmittal states that the 
United States may seek the establishment of sulphur oxides emission 
control areas off the North American coasts. What would be the process, 
and timetable, of reaching such a decision within the U.S. government? 
Has that process commenced?

    Answer. EPA, working with interested states, is conducting studies 
to investigate whether some portion of the waters adjacent to the North 
American coast would warrant designation as a SOX Emission 
Control Area (SECA) under Annex VI. Given the time necessary to conduct 
these studies, we do not foresee a decision by the administration on 
this question until early 2007 or later. We further anticipate that any 
decision in this regard would involve consultations with Canada and 
Mexico. Any decision to pursue designation of a SECA would also be 
subject to subsequent review and approval at the IMO by other Parties 
to Annex VI.

    Question. Amendments to MARPOL Annexes proceed through a simplified 
amendment procedure. U.S. acceptance of amendments to Annex VI would 
not, therefore, involve Senate consent. When Annex III was before this 
committee for consideration, then-Chairman Pell sought assurances that 
none of the amendments contemplated by this procedure would be of 
``such a nature as would require advice and consent of the Senate.'' 
The Executive Branch witness, Admiral Kime (Commandant of the Coast 
Guard), assured Senator Pell that the committee would ``be apprised of 
all pending amendments, to ensure that they are of a technical 
nature.'' (Hearing on Maritime Treaties before Senate Committee on 
Foreign Relations, Apr. 16, 1991, S. Hrg. 102-106, at 16).

          a. How many amendments to MARPOL Annexes have been accepted 
        since April 1991?

          b. Has this committee been consulted about those amendments?

          c. What is the procedure in the Executive Branch for ensuring 
        consultation with the Senate on such amendments?

          d. Will the Executive Branch commit to consultation on 
        amendments in the future?

    Answer. a. Twelve sets of amendments to MARPOL Annexes have entered 
into force for the United States through the simplified amendment 
procedure since 1991.

    b. We did not consult with the Senate Foreign Relations Committee 
with respect to the above-listed amendments. However, other Senate 
committees and subcommittees that have cognizance over the technical 
subject matter of these amendments were frequently consulted by 
stakeholder agencies. In addition, staff members of such Senate 
committees and subcommittees were specifically invited to participate 
on some IMO Delegations and were regularly briefed and consulted on 
potential amendments as they arose.

    c. Although there is no formal Executive Branch procedure for 
ensuring such consultations, the Department of State, in consultation 
with other stakeholder agencies, reviews all proposed amendments to 
MARPOL Annexes to determine whether consultation is required. On an 
informal basis, as mentioned above, Senate committee and/or 
subcommittee staffs are regularly briefed and consulted on potential 
amendments.

    d. We favor and will endeavor to facilitate regular consultations 
between the State Department and other agencies involved in the 
negotiation of amendments to IMO treaties, and interested congressional 
committees, including the Senate Foreign Relations Committee and its 
staff. In particular, we recognize the importance of consulting with 
this committee, should an amendment be potentially subject to the 
advice and consent of the Senate. As an aid to such consultation, it 
may interest you to know that draft amendments to IMO instruments can 
be accessed on an IMO password-protected website: 
(www.imodocs.imo.org). We can help you to obtain access to this 
website, should this be of interest.
                               __________

    Responses to Additional Questions Relating to the Convention on 
   Supplementary Compensation for Nuclear Damage (Treaty Doc. 107-21)

   RESPONSES TO ADDITIONAL QUESTIONS FOR THE RECORD SUBMITTED TO MR. 
              WARREN M. STERN BY SENATOR RICHARD G. LUGAR

    Question. Article II(2) of the Convention on Supplementary 
Compensation for Nuclear Damage (the ``CSC'') limits coverage of the 
Convention to ``nuclear damage for which an operator of a nuclear 
installation used for peaceful purposes situated in the territory of a 
Contracting Party is liable'' under the Vienna Convention on Civil 
Liability for Nuclear Damage, the Paris Convention on Third Party 
Liability in the Field of Nuclear Energy, or national law complying 
with the Annex to the Convention. The term ``peaceful purposes'' is not 
defined in the Convention, but the Secretary of State's Letter of 
Submittal for the Convention states:

          Each Party will decide which of its installations are used 
        for peaceful purposes under the CSC. In the United States, 
        installations used for peaceful purposes would not include 
        nuclear submarines and other installations used for military 
        operations, i.e., all operations of the Department of Defense. 
        Some of the installations operated by the Department of Energy 
        may also be excluded from coverage of the CSC.

    a. Is it the view of the administration that all nuclear 
installations operated by the U.S. Department of Defense are used for 
military operations and would therefore be excluded from coverage under 
this provision?

    b. Please provide a description of the types of nuclear 
installations operated by the Department of Energy, and whether they 
would be covered by or excluded from the Convention under this 
provision.

    c. What actions are available to a party if it were to disagree 
with the determination of a second party as to whether a particular 
nuclear installation in that second party's territory was operated for 
peaceful purposes?

    Answer. a. It is our view that all nuclear installations operated 
by the U.S. Department of Defense would be excluded from coverage under 
this provision.

    b. Department of Energy (DOE) has a number of nuclear facilities 
that come within the definition of ``nuclear installation'' set forth 
in paragraph 2.3 of the Annex. These facilities are either reactors or 
facilities for processing or storing spent fuel, high level radioactive 
waste, and certain other waste that poses a significant risk. Based on 
Article II of the CSC and the limitation to civil facilities in the 
definition of nuclear installation set forth in 2.3, DOE does not view 
the CSC as covering its facilities that prepare nuclear material or 
equipment to utilize nuclear material for use by the Department of 
Defense, or that receive such material or equipment from the Department 
of Defense, unless and until such material and equipment are 
transferred permanently to and managed within exclusively civilian 
programs. Although this standard does not appear in the CSC, it is the 
standard that the United States already applies in the context of the 
Joint Convention on The Safety of Spent Fuel Management and on The 
Safety of Radioactive Waste Management done September 5, 1997.

    c. Under Article VIII, each Contracting State provides its own list 
of nuclear installations, although other Contracting States may raise 
objections to that State concerning its list through the Depositary 
(that is, the IAEA). Article VIII provides that any unresolved 
questions be dealt with in accordance with the dispute settlement 
procedure of Article XVI. Article XVI provides that, in the event of a 
dispute concerning the interpretation or application of the CSC, the 
parties to the dispute should consult with a view toward settlement of 
the dispute by negotiation or other peaceful means acceptable to them. 
If such a dispute cannot be resolved within 6 months from the date of 
the request for consultation, it can be submitted to arbitration or 
referred to the International Court of Justice (ICJ) at the request of 
any of the parties to the dispute. However, Article XVI also permits 
any State to declare, at the time of ratifying, approving, accepting or 
acceding to the CSC, that it does not consider itself bound by either 
or both of the dispute settlement provisions. The administration has 
recommended that the United States declare that it does not consider 
itself bound by the dispute settlement provisions relating to 
arbitration or the ICJ.


    Question. What countries does the administration expect to build 
new nuclear facilities or to require U.S. technology to maintain 
existing facilities over the next 20 to 25 years? Are these countries 
expected to become parties to the CSC?

    Answer. The administration expects a global expansion in the use of 
nuclear energy in the next 20 to 25 years and that U.S. technology can 
and will play an important role in that expansion if U.S. firms are 
given a fair chance to compete. We believe the most likely countries to 
use U.S. technology to maintain existing facilities or build new ones 
are Argentina, Canada, China, India, Japan, Romania, South Africa, 
South Korea, and Ukraine. Argentina and Romania already have ratified 
the CSC. Several other countries listed have expressed significant 
interest in joining the CSC, but have indicated they are waiting to see 
whether the United States (as the principal proponent of the Convention 
at the IAEA) becomes a party.


    Question. a. Would this Convention apply in the event of nuclear 
damage caused by an act of sabotage or other terrorist attack at a 
nuclear facility covered by the Convention?

    b. Would the Convention affect who would be held legally liable for 
the damage caused by such an attack at a facility in the United States?

    c. How would it affect the compensation of victims of such an 
attack?


    Answer. a. Yes, this Convention would apply in the event of nuclear 
damage caused by an act of sabotage or other terrorist attack at a 
nuclear facility covered by the Convention.

    b. No, the Convention has been crafted so that it would not affect 
the operation of our domestic nuclear liability regime, including the 
determination of who has civil legal liability for the damage caused by 
an act of sabotage or a terrorist attack on a facility in the United 
States.

    c. The Convention would not deny or reduce compensation to victims 
of such an attack within the United States. The Convention would 
actually make available additional funds to compensate victims of an 
attack within the United States (up to approximately two-thirds of the 
total amount of the contributions to the supplementary fund required 
with respect to a particular nuclear incident).


    Question. Article I of the CSC contains a definition of the term 
``nuclear reactor,'' but no definition of the term ``nuclear 
installation,'' which is used throughout the CSC. How does the 
administration interpret this term? Note that a definition of ``nuclear 
installation'' is provided in Article 1 of the Annex to the CSC, for 
purposes of the Annex. Does the term have the same meaning in the main 
body of the Convention?

    Answer. The CSC is an umbrella convention that, except for the 
definitions and requirements explicitly specified in its main body, 
fits over a country's national law, which must be based on the Vienna 
Convention on Civil Liability for Nuclear Damage (the Vienna 
Convention), the Paris Convention on Third Party Liability in the Field 
of Nuclear Energy (the Paris Convention), or the Annex to the CSC. 
Thus, the relevant definition of ``nuclear installation'' for a 
particular country would depend on whether it adhered to the Vienna 
Convention or the Paris Convention or it based its national law on the 
provisions of the Annex. The definition of ``nuclear installation'' 
would be essentially the same in all of these cases. However, the Annex 
also permits the United States to use an alternative definition of 
``nuclear installation.'' This alternative definition is explicitly 
restricted to civil facilities that are reactors or facilities for 
processing or storing spent fuel, or certain products or waste that 
pose a significant risk (for example high-level radioactive waste).


    Question. Article III(1)(a)(i) of the CSC requires each 
installation state to ensure the availability of 300 million SDRs, or a 
greater amount that it may specify to the depositary, as a first tier 
of compensation for victims. Alternatively, Article III(1)(a)(ii) 
provides temporary authority for each party to establish a transitional 
first tier amount of at least 150 million SDRs for the first ten years 
the Convention is open for signature (expiring in 2007). What amount 
would the administration ensure is available as a first tier of 
compensation to victims of nuclear incidents covered by the CSC when 
the United States is the installation state?

    Answer. The amount that the administration would ensure is 
available as a first tier of compensation to victims of nuclear 
incidents covered by the CSC when the United States is an installation 
state is $300 million SDRs.


    Question. The administration has indicated that it plans to meet 
U.S. obligations for contributions to the international fund created 
under Article III(1)(b) of the CSC by instituting retroactive pooling 
of funds from U.S. nuclear suppliers.

    a. How long does the administration anticipate that it would take 
the U.S. Government to collect such funds from U.S. nuclear suppliers, 
assuming the maximum U.S. contribution of approximately $150 million is 
needed?

    b. How would the U.S. Government meet this obligation if the funds 
were needed before the U.S. Government was able to collect the full 
amount from the nuclear suppliers?

    c. What would happen if a U.S. nuclear supplier were unwilling or 
unable to provide the funds?

    Answer. a. The administration-proposed legislation implementing the 
CSC requires that nuclear suppliers make any required deferred payments 
no later than 60 days after a notification from the Secretary of 
Energy, but would permit nuclear suppliers to prorate a required 
deferred payment in five equal annual payments, plus interest.

    b. Under the administration-proposed legislation, deferred payments 
by nuclear suppliers rather than public funds would be the ultimate 
source of funds by which the United States would meet its obligation to 
contribute to the supplementary fund in the event of a covered nuclear 
incident necessitating such contributions. We recognize, however, the 
need for a mechanism permitting the U.S. Government, to meet its 
obligation to pay into the supplementary fund in a timely fashion, if 
necessary before the full amount due from suppliers is collected. The 
administration will work with the Congress when it considers the 
implementing legislation to devise an acceptable mechanism.

    c. The administration's proposed legislation would permit the 
Secretary of Energy to take appropriate action to recover the amount of 
payment due from a supplier, any applicable interest on the payment, 
and a penalty up to twice the amount of the deferred payment due from 
the supplier.


    Question. Article IV of the CSC specifies the formula for 
contributions by CSC parties to the international fund referred to in 
Article III(1)(b). This formula is based in part on the installed 
nuclear capacity of each party, counting one unit of installed capacity 
for each MW of thermal power for ``each nuclear reactor situated in the 
territory'' of the party. Article IV does not explicitly limit this 
formula to nuclear reactors that would be covered by the Convention 
(i.e., that are used for peaceful purposes). Does the administration 
interpret this formula to include all nuclear reactors situated in a 
party's territory, or only those that would be covered by the 
Convention? What is the basis for this interpretation?

    Answer. The formula includes only reactors used for peaceful 
purposes, all of which would be covered by the Convention. This 
interpretation is based on Article II, which deals with the purpose and 
application of the Convention.


    Question. Article V(2) of the CSC permits each party to assimilate 
persons having their habitual residence in its territory as its 
nationals for purposes of Article V(1)(b)(ii), regarding damage to a 
national of a party while on the high seas. What is the 
administration's intention in this regard?

    Answer. The administration does not intend to exercise this option.


    Question. Article IX of the CSC refers to the nuclear operator's 
right of recourse, to the extent provided in the Vienna Convention, the 
Paris Convention, or national legislation in accordance with the Annex 
to the CSC.

    a. If the United States were a party to the CSC, what right of 
recourse would be available to a nuclear operator in the event of a 
nuclear incident occurring in the United States? Does this differ from 
current U.S. law?

    b. What right of recourse is available to nuclear operators under 
the Paris and Vienna Conventions?

    Answer. a. As noted above, the CSC has been crafted so that it 
would not affect the operation of our domestic nuclear liability 
regime. Under our domestic regime, there is no right of recourse 
available to a nuclear operator unless explicitly provided in a private 
contract between the operator and the other party to the contract.

    b. There is no right of recourse except to the extent explicitly 
provided for in national law or in a private contract.


    Question. What is the administration's position with regard to 
Article IX(2), which permits each party to provide, through 
legislation, for the recovery from the operator of public funds made 
available under the CSC if damage results from fault on the part of the 
operator?

    Answer. Consistent with our domestic nuclear liability regime, the 
United States would not exercise this option.


    Question. Article XXV provides simplified amendment procedures that 
would apply with regard to amending the amount of funds made available 
under Article III(1)(a) or (b) or amending the formula under Article 
IV(3). What procedures would apply to the adoption and entry into force 
of other amendments to the Convention?

    Answer. Article XXIV provides for an international conference for 
the purpose of revising or amending the Convention as a whole. In 
accordance with generally accepted rules of international law 
(reflected in the Vienna Convention of the Law of Treaties), the 
adoption of amendments at such a conference takes place by the vote of 
two-thirds of the parties present and voting. A party to the Convention 
at the time the amendments are adopted would only become bound by those 
amendments (and the amended Convention would only enter into force for 
such a party) upon its consent to be bound by the amendments.

                                 
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