Hopes, Pressure Rise for End to U.S.-Russian Stalemate on Liability in Nuclear Security Projects

By Joe Fiorill
Global Security Newswire

WASHINGTON — A looming deadline and policy pressures are fueling new hopes that the United States and Russia might find a way out of a legal stalemate that for years has hampered the countries’ cooperation on work to secure and eliminate nuclear materials in Russia (see GSN, June 20).

Foreign-policy and domestic-security discussions here have been marked in recent months by a new focus on the threat of nuclear terrorism, with Russia mentioned frequently as a possible source of stolen or diverted material for a potential terrorist attack.

Meanwhile, a key U.S.-Russian agreement on locking down and destroying various materials in Russia is fast nearing expiration. Unless a new extension is agreed upon, the 1992 Cooperative Threat Reduction “umbrella agreement” will run out in the middle of next year.

The threat and deadline pressures could lead at last to a resolution to the dispute, officials and experts have indicated in recent interviews and public statements.

“They would like to get it done” within the next few months, a U.S. official close to the talks said in an interview this week. “We should have sorted this out a while ago.”

The disagreement centers on the extent to which U.S. officials and contractors should be shielded from lawsuits arising from their work in Russia to secure nuclear materials. Washington has until recently sought to impose, as a standard to be observed in all U.S.-Russian nuclear security agreements, broad liability protections such as those in the current umbrella agreement.

Related accords on U.S.-Russian nuclear security work have shielded U.S. officials and contractors from liability when engaging in activities under the agreements but, in a notable exception, left them exposed to liability in cases where damages or injury result from individuals’ intentional acts. The Cooperative Threat Reduction agreement, however, contains no such exception, providing more complete immunity for U.S. personnel.

Two U.S-Russian accords from 1998 — the Nuclear Cities Initiative and the Plutonium Science and Technology agreements — were allowed to expire in 2003 because they contained the exception for premeditated acts.

Later in 2003, Russia ratified the Framework Agreement on a Multilateral Nuclear Program in Russia, which governs European- and U.S.-aided programs to clean up nuclear sites in northwestern Russia. The liability provisions of the treaty contained the exception for intentional acts and, as a result, were laid out not in the main text but in a side agreement with European countries that the United States did not sign (see GSN, Dec. 15, 2003).

“I think that there probably need to be some compromises on the U.S. side,” Institute for Science and International Security Director David Albright said at a congressional hearing this week. “There has been a sense that some of the resistance on the U.S. side has been unnecessary.”

In early 2004, U.S. National Nuclear Security Administration head Linton Brooks defended the tough U.S. line on liability, saying Washington’s position was based on fears of “manipulation” of the Russian legal system, potentially leading to malicious lawsuits against U.S. contractors (see GSN, Jan. 14, 2004).

“We don’t want to subject our companies to that,” Brooks told reporters at the time.

Among those pushing for a quick resolution to the dispute, though, are many of the companies to which Brooks referred.   While they could be at the center of any lawsuits resulting from damages that occur during the nonproliferation projects, the contractors have questioned the U.S. insistence that liability protections include no exception for individuals’ premeditated acts.

The Contractors International Group on Nuclear Liability, which counts such members as Battelle Memorial Institute and General Electric, late last month wrote U.S. Secretary of State Condoleezza Rice to express support for speeding ratification of the International Atomic Energy Agency’s Convention on Supplementary Compensation for Nuclear Damage “as a long-term and comprehensive solution to the liability issue impasse.”

Voicing support for the conclusions of a recent U.S.-Russian expert report on the subject, the group said Russia and the United States should place more emphasis on the international treaty process and on Russian liability law rather than on “more than decade-old” efforts to reach a bilateral arrangement.

The contractors’ counsel, Omer Brown of the law firm Harmon, Wilmot & Brown, wrote in the letter to Rice that the group considers no current bilateral or multilateral agreement to provide adequate nuclear liability protection but that the solution is in the international treaty, not in insisting on liability protections for premeditated acts.

“Ad hoc” bilateral agreements with the United States, Brown wrote, could even diminish Russia’s motivation to adopt more comprehensive measures such as the U.N. treaty — a text contractors support, he added in an interview today, in part because it would require Russia to substantially increase the maximum amount it agrees to pay out in compensation after a nuclear incident. He said the treaty would raise Russia’s limit for such payments from about $60 million, the figure it is contemplating under the 1963 Vienna Convention on Civil Liability for Nuclear Damage, to about $450 million.

“Too much emphasis has been placed by the U.S. government on resisting Russia’s insistence that any agreement exclude coverage for premeditated acts of individuals,” Brown wrote in the letter. “Such a provision has been a feature of the 1963 Vienna and 1960 Paris conventions [addressing nuclear liability], under which contractors have done work for four decades. The exclusion does not appear unreasonable.”

While the United States focuses on the question of intentional acts, the contractors said, it fails to address a more important deficiency in the liability provisions.

“We’re not hung up on this acts-of-individuals, because that is something we’ve lived with under the conventions for 40 years, intentional acts of individuals. That’s something that the State Department has been insisting on, and it’s kind of held things up,” Brown said today. “What they haven’t been concentrating on is the most important part, which is the waiver of sovereign immunity.”

Brown wrote in his letter to Rice that the “critical deficiency of all prior nuclear indemnity agreements with Russia” was the lack of such a provision, in which Russia would waive its immunity as a sovereign country from lawsuits. Since a government cannot be sued without such a waiver, he said today, contractors would have no recourse if Russia simply refused to honor provisions in liability agreements that nominally require Moscow to provide compensation or come to the legal defense of contractors.

The chairwoman of the expert report group, Carnegie Endowment for International Peace Senior Associate Rose Gottemoeller, said contractors believe none of the existing U.S.-Russian agreements to provide adequate liability protection but are not eager to see work stopped either.

“They’re kind of holding their nose and proceeding with work,” the former U.S. Energy Department nonproliferation specialist said in an interview this week.

The Cooperative Threat Reduction umbrella agreement’s language on liability remains the United States’ “first position” in negotiations, the U.S. official close to the talks said, but “I’m not sure we’re going to get it.”

In the absence of that language, the parties could find solutions in the Multilateral Nuclear Program in Russia liability protocol or in the IAEA compensation treaty.

The multilateral accord, as signed by European countries and Russia, protects the European governments and their contractors from all legal proceedings brought by Moscow, “with the exception of claims for injury or damage against individuals arising from omissions or acts of such individuals done with intent to cause injury or damage.” It also requires Russia to “provide for the adequate legal defense of and indemnify” foreign contributors “in connection with third-party claims,” again stipulating the exception for intentional acts.

“That’s pretty good,” the U.S. official said of the agreement, “and that in itself might be one to use.”

The IAEA convention would create a “worldwide liability regime” in which each country would be responsible for maintaining reserves from which parties injured during activities at its facilities would be compensated. After a country’s reserve was paid out, the other treaty countries would contribute any additional compensation to injured parties, with the various countries’ payouts determined by a formula laid out in the treaty.

The convention assigns “absolute” liability to the country in which the nuclear site is located but adds an exception for damage resulting from “armed conflict, hostilities, civil war or insurrection” or from a “grave natural disaster of exceptional character — “pretty standard” language that contractors can live with, Brown said.

Neither the United States nor Russia has ratified the pact so far. Both countries are unlikely to do so before the umbrella agreement expires next year, but observers say its principles could still influence the countries’ liability talks.

In the United States, the treaty is pending before the Senate Foreign Relations Committee; the contractors’ group said the panel is expected to hold a hearing on the pact this year. The committee refused to confirm such a hearing was planned.

In recent months and weeks, there have been signs that the push for progress on securing nuclear sites could supersede U.S. worries about the liability language.

The U.S. Senate and House of Representatives this year have both used authorization and appropriations legislation as a forum for expressing dissatisfaction about the dispute (see GSN, June 2).

The Washington Post reported June 20 that, according to negotiators, the United States and Russia had made progress on the liability concerns and that an accord would be announced at next week’s Group of Eight summit in Perthshire, Scotland. An Associated Press interview with U.S. Senate Energy and Natural Resources Committee Chairman Pete Domenici (R-N.M.), published the same day, echoed that report.

The U.S. official familiar with the talks said there was a push to “get something done” at the Scotland meeting but indicated agreement could also be weeks or months, rather than days, away. “We’re negotiating with the Russians right now,” the official said.

The official identified next year’s expiration of the umbrella agreement as the main force driving recent progress in the talks. In the absence of an agreement on liability, the approaching expiration could begin to affect programs long before the deadline actually arrives, the source said, as offices involved in the effort begin to curtail new hiring or purchasing.

“I think people are realizing we have to come to some kind of way” to resolve the dispute, the official said. “If we’re going to continue this, we’re going to have to do something.”

The official questioned the Post’s report that the departure from the U.S. State Department of former Undersecretary John Bolton, who has been nominated as ambassador to the United Nations, was instrumental in breaking the liability stalemate.

“One could come to that conclusion,” the source said, “but on the other hand, I think, partly, the deadline, too, is focusing people’s minds — and the criticism.”

If Bolton was still in the State Department, the official said, “He might have gotten browbeaten so badly, it might have started moving anyway.”

Brown expressed skepticism about the prospects for an agreement but said he had no way of knowing whether rumors of an imminent solution were more accurate now than in the past.

“We’ve been told for two years that the agreement was imminent,” he said.

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