In a post last November, we highlighted reports from Japan indicating that the government there intended to propose ratification of the Convention on Supplementary Compensation (CSC), in part to facilitate international assistance for cleanup at Fukushima. On the U.S. side, U.S. Energy Secretary Ernest Moniz indicated in November 2013 that the CSC would facilitate greater participation by U.S. national labs and companies in the Fukushima cleanup. Secretary Moniz also indicated some urgency on the part of Japan to ratify the agreement in 2014.
The CSC does not enter into force until at least five states with a minimum of 400,000 units of installed nuclear capacity have joined. Until now, the U.S. had been the only country with substantial nuclear capacity to have joined the CSC, which was first opened for signature in September 1997. In the November 2013 post, we noted that, if ratified by Japan, the CSC would meet the threshold for ratification and then enter into force.
Well, on November 19, 2014, the Japanese parliament approved that country’s accession to the CSC. Other members to the CSC include the United States, Argentina, Morocco, Romania, and the United Arab Emirates. With Japan’s membership, the requirement that at least five states with a minimum of 400,000 MW of installed capacity join the treaty finally has been satisfied. As a result, the CSC should come into force in 90 days.
One feature of the CSC is the creation of an “international supplementary fund,” which provides an additional tier of compensation not otherwise available under a State’s national law. In the U.S. this means creation of a new risk pooling program for nuclear suppliers to pay the U.S.’s contribution to the international supplementary fund. Although this scheme is still under development at the U.S. Department of Energy – see 75 Fed. Reg. 43945 (July 27, 2010) – the risk pooling program will likely involve a premium to be assessed retrospectively (i.e., a deferred payment) based on a risk-informed formula taking into account specified risk factors. A nuclear incident outside the United States therefore could require a nuclear supplier to pay a premium even if the supplier had no involvement with the facility where the incident occurred.
On balance, the CSC’s entry into force will likely be a net positive for nuclear development and the international nuclear industry, particularly in the context of providing compensation to the public. But, like many schemes designed to clarify liability, there will undoubtedly be those whose risk increases as a result.