[Congressional Record Volume 146, Number 47 (Thursday, April 13, 2000)]
[Extensions of Remarks]
[Pages E563-E564]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  INTRODUCTION OF H.R. 4266; PROHIBITION ON UNITED STATES GOVERNMENT 
       LIABILITY FOR NUCLEAR ACCIDENTS IN NORTH KOREA ACT OF 2000

                                 ______
                                 

                        HON. BENJAMIN A. GILMAN

                              of new york

                    in the house of representatives

                        Thursday, April 13, 2000

  Mr. GILMAN. Mr. Speaker, today I have introduced H.R. 4266, the 
``Prohibition on United States Government Liability for Nuclear 
Accidents in North Korea Act of 2000.'' I am pleased to be joined in 
offering this bipartisan legislation by a distinguished group of 
original cosponsors including, among others, the Ranking Democratic 
Member of the Subcommittee on Telecommunications, Trade, and Consumer 
Protection of the Committee on Commerce, Mr. Markey, the Chairman of 
our Subcommittee on Asia and the Pacific of the Committee on 
International Relations, Mr. Bereuter, the Chairman of the Committee on 
Armed Services, Mr. Spence, and the Chairman of the House Republican 
Policy Committee, Mr. Cox.
  This bill prohibits the United States Government from, in effect, 
issuing insurance--backed up by the full faith and credit of the 
American taxpayer--for whatever liability claims might be made if the 
nuclear reactors that the Administration is trying to give to North 
Korea are involved in a catastrophic nuclear accident. The fact that 
the Administration is considering issuing such insurance was reported 
for the first time in yesterday's Los Angeles Times in an article by 
Jim Mann. I submit the Los Angeles Times article for the Record.
  As explained in the article, the American taxpayer may ultimately be 
forced to pay tens of billions of dollars in damages if the North 
Koreans inadvertently create an Asian Chernoble with the advanced 
nuclear reactors that the Administration is seeking to give them. This 
is not an idle fear. The North Koreans have no experience whatsoever 
operating advanced light water nuclear reactors of the type the 
Administration plans to give them. The existing North Korean nuclear 
program involves graphite-moderated reactors operating on 1950s 
technology, with dials, levers, and vacuum tubes. The state of the art 
nuclear reactors that the Administration wants to give them are far 
more sophisticated than anything their technicians have ever seen.
  This might not be a big problem if their technicians could be 
properly trained to operate modern light water reactors. But North 
Korea already has indicated that North Korean technicians will not be 
allowed to leave the country to receive such training on light water 
reactors currently operating elsewhere. Apparently the North Koreans 
are afraid their technicians will defect. Others fear, however, the 
result could be a Chernoble on the Korean Peninsula.
  Among those who fear a possible nuclear catastrophe are the 
contractors who the Administration thought would be eager to 
participate in this $5 billion construction project in North Korea. The 
contractors are afraid that if there is such a catastrophe they might 
be sued, and the potential liability could bring down their companies. 
Ordinarily in such situations, companies buy insurance on the private 
market to protect themselves. In this case, however, the private 
insurers apparently have not been willing to provide sufficient 
coverage. This is in contrast to other countries like China, where U.S. 
and other private vendors have been willing to go forward on nuclear 
reactor projects because their concerns about liability have addressed 
by means short of an indemnity backed up by the United States 
Government.
  I was surprised and alarmed to learn that the Administration is 
considering offering such an indemnity to contractors participating in 
the North Korean nuclear project. It has been five and a half years 
since the Agreed Framework between the United States and North Korea 
was signed. Over that period of time, there have been innumerable 
consultations between Congress and the Administration about the Agreed 
Framework. It is probably no exaggeration to say that Administration 
officials have testified before Congress dozens of times on the 
subject. The Administration is intimately familiar with our concerns 
about the

[[Page E564]]

potential costs of the project, and also with our unwillingness to 
provide U.S. Government funding for the construction of nuclear 
reactors in North Korea. Since 1994, Congress has routinely agreed to 
U.S. funding for the delivery of heavy fuel oil to North Korea pursuant 
to the Agreed Framework, but we have consistently prohibited U.S. 
funding for the construction of nuclear reactors.
  Not once over the last five and a half years has the Administration 
come to us and told us they were considering imposing a contingent 
liability on the U.S. Government in connection with the construction of 
nuclear reactors in North Korea that could run into the tens of 
billions of dollars. Our staff had to ferret out this information 
through the conduct of congressional oversight, and most members of 
Congress first learned about it yesterday when they read about it in 
the press.
  According to yesterday's press report, the Administration is 
considering imposing this liability on the American taxpayer by 
reinterpreting an old law in such way as to ensure that congressional 
approval will not be required. It is totally unacceptable that the 
Administration would consider obligating the American taxpayer in this 
way without the approval of Congress. The bipartisan legislation we are 
introducing today will make sure that the Administration cannot get 
away with this.

              [From the Los Angeles Times, Apr. 12, 2000]

                       A Risky Policy On N. Korea

                             (By Jim Mann)

       Warning to American taxpayers. Without knowing it, you may 
     soon take on responsibility for what could be billions of 
     dollars in liability stemming from nuclear accidents in, of 
     all place, North Korea.
       At the behest of the General Electric Co., the Clinton 
     administration is quietly weighing a policy change that would 
     make the U.S. government the insurer of last resort for any 
     disasters at the civilian nuclear plants being built for the 
     North Korean regime.
       In case of a Chernobyl-type disaster in North Korea (a 
     country not known for advanced safety procedures), the U.S. 
     might wind up paying legal claims.
       The proposed U.S. government guarantee, now being 
     intensively studied by the State and Energy departments, 
     would be aimed at easing the way for construction of two 
     light-water nuclear reactors in North Korea. Those reactors 
     are a key element in the Clinton administration's 1994 deal 
     in which North Korea agreed to freeze its nuclear weapon 
     program.
       North Korea, which has defaulted on debts in the past, is 
     too poor and unreliable to be counted on to pay legal claims 
     arising from a nuclear accident. Private insurers are 
     unwilling to take on the potentially astronomical claims of a 
     North Korean Three Mile Island. So, American companies 
     supplying parts for the North Korean reactors worry that, if 
     there were a disaster, they would be sued.
       Both the Clinton administration and GE confirmed that the 
     company asked several months ago to be indemnified by the 
     U.S. government before participating in the North Korea deal.
       ``We would like indemnity before we sign'' any contract, 
     said a spokesman for GE, which makes the steam turbines that 
     would be used in the project.
       ``If there's an accident, they [GE officials] have to 
     understand on what basis they'd be covered,'' explained 
     Charles Kartman, the State Department's special envoy for 
     North Korea.
       Kartman acknowledged that GE's request was unusual, if not 
     unique: Other firms participating in the North Korea project 
     have been willing to go ahead without the indemnity GE is 
     seeking in hopes that the unsettled liability questions could 
     be worked out over the next few years.
       How will the Clinton administration go about granting new 
     legal protection to GE? It is reluctant to seek a new law 
     from the Republican Congress, which often has criticized the 
     administration's policy of engagement with North Korea.
       That roadblock has set administration lawyers scurrying 
     through the U.S. code, and they have found an obscure law 
     that might be used in a new way to cover GE.
       This law--Title 85, Section 804--was intended to indemnify 
     companies that took part in nuclear cleanup operations. But 
     the State and Energy departments are now thinking of applying 
     it to protect the firms participating in the North Korean 
     civilian reactor project.
       Presto! One little legal reinterpretation by the 
     administration and one huge new legal liability for American 
     taxpayers.
       Not to worry, insisted Kartman. The idea that the U.S. 
     government will ever have to pay these claims is ``very 
     hypothetical.''
       He noted that the parts for the North Korean reactors would 
     not be shipped
       But ask yourself this: If the proposed international accord 
     Kartman describes is such a sure thing and the prospects of 
     claims from a nuclear accident are so remote, why can't the 
     Clinton administration persuade GE to go ahead without the 
     indemnity it is seeking? Why does the U.S. Government, rather 
     than GE, have to take responsibility for this supposedly 
     hypothetical risk?
       Viewed strictly from GE's self-interest, its request has a 
     certain logic. GE is a relatively small player in the North 
     Korea project; most of the work is being done by South Korean 
     companies. The sale of GE's steam turbines will bring in 
     roughly $30 million, yet the company fears it could face 
     lawsuits ranging in the billions.
       Why don't the organizers of the North Korea project simply 
     do without GE and find another company more willing to take 
     the risk?
       They could. But doing that would require a redesign of the 
     North Korea project, would lead to delays of a year or more 
     and would increase the overall costs--most of which are being 
     paid by South Korea. So, on the whole, everyone involved is 
     eager to avoid losing the big American company.
       For GE, it seems, the Clinton administration brings good 
     things to life. The rest of us are left to pray that we don't 
     get stuck with massive bills from nuclear plants we won't run 
     in a country over which we have no control.

     

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