Comments on Civil Nuclear Liability Bill

 

The UPA Government has introduced the Civil Liability for Nuclear Damages Bill in Parliament, which seeks to cap the liability of nuclear plant operators and the equipment suppliers in case there is an accident involving a nuclear installation.

 

This legislation is being pushed by the Government because of pressure from the US equipment suppliers and investors put through the US administration at the highest levels. The US has made a precondition that India must put a cap on liability of the nuclear operators and virtually remove all liabilities of the equipment suppliers before it delivers on its promises in the India US Nuclear Deal. This is the genesis of the current Bill and not the interest of the victims of a nuclear incident.

 

We give below the major concerns that we have with the Bill in its current form.

 

The Government has made it clear that it is interested in joining the Convention on Supplementary Compensation (CSC) and the proposed Civil Liability for Nuclear Damage Bill, 2010 has been drafted to make it compatible with CSC. It is important to note that making it compatible with CSC follows directly from the   commitment made by the UPA government when it entered into the Indo-US nuclear deal. This commitment was made in writing by the then foreign secretary, Shiv Sankar Menon in a letter to the US under secretary, William Burns, (September 10, 2008), which stated,

 

It is the intention of the Government of India and its entities to commence discussions with nuclear energy firms and conclude agreements after entry into force of the Agreement for cooperation in the construction of nuclear power units at two sites approved by the Government of India which would be capable of generating a minimum of 10,000 MWe…India also recognises the importance of establishing an adequate nuclear liability regime and it is the intention of the Indian Government to take all steps to adhere to the Convention on Supplementary Compensation (CSC) for nuclear damage…

 

US nuclear industry and the US Administration want all countries which receive US manufactured nuclear equipment to sign the CSC and indemnify the US suppliers. The key difference between the CSC and other similar international conventions is the degree of protection offered to the suppliers – CSC provides the maximum protection to the US suppliers. The reason that the US Government is pressing India to draw up a Nuclear Liability Bill that is consistent with CSC is simply because it protects the suppliers completely from litigation from damages from the victims and the operator.

 

Omer F Brown, the key spokesperson for the US nuclear industry articulated the US position on the need for nuclear liability law in India while speaking at a business summit in Mumbai in December 2006:

 

Currently, India does not have a nuclear liability law covering its facilities. Therefore, concerns over nuclear liability would be a major impediment to any nuclear trade with India…Most US nuclear suppliers would not be willing to work in India without nuclear liability protection.

 

US Assistant Secretary of State for South and Central Asian Affairs Robert Blake informed House Foreign Affairs Committee last year, “We are hoping to see action on nuclear liability legislation that would reduce liability for American companies and allow them to invest in India…”. Recently, he said in an interview (10^th March 2010):

 

We also are very much hoping that the Indian government will proceed with very important legislation on nuclear liability, that will be very important protection for American companies who are seeking to do more business in the civil nuclear area, in India. And, we were very gratified to learn that the President of India has announced India’s intention to introduce this bill in the current session of the Indian Parliament.

 

The Statement of Aims and Objects of the Bill makes it clear that the Bill has been drawn up to be consistent with CSC. It further goes on to state that a Nuclear Liability Bill is required as there is no provision currently to handle compensation and damage in the event of a nuclear accident. This is incorrect as the current law as clarified by the Supreme Court in its judgement on the Oleum leak case from Sri Ram Food and Fertilisers in 1987 had made clear that the industry operating hazardous plants had absolute liability including that for environmental damage. The only issue is how this liability is to be translated into practice – the modalities of handling liability claims. Under the guise of drawing up the modalities of handling claims, the Bill seeks to change the fundamental character of the liability regime itself in the case of a nuclear accident.

 

The government has argued that by joining the CSC, it can access international funds to compensate victims of nuclear accidents including trans-boundary victims. Only 13 countries have joined the CSC out of which only four have ratified it, the only major country being the US, which was the country steering this Convention. In the case of a nuclear accident, the amount from this Convention would be a small amount (computed by some experts to only about $ 50 million). Therefore indemnifying supplier from all liability in order to get a mere $ 50 million from CSC does not appear credible.

 

In line with the CSC, Nuclear Liability Bill exempts the suppliers from virtually any liability to pay compensation for the damages caused. What Westinghouse and General Electric want is that even the limited liability which accrued to Union Carbide in the case of Bhopal gas leak ($470 million as per the settlement approved by the Supreme Court) should not fall on them.

 

The government has argued that as per clause 17 (a), a foreign supplier can be liable if such a clause is included in the contract between the operator and the supplier. What it does not say is that neither the public sector Nuclear Power Corporation of India, which is the Indian operator, nor the American company, which will be the supplier, will include such a liability clause in the contract. If this law is passed and if there is a faulty design or a manufacturing defect in a reactor supplied by a US company, the operator or the victim of an accident has no right to claim damages from the supplier. The other clause, 17 (b), cited by the government is the one by which the operator has the right to recourse against the supplier only if the nuclear accident has resulted due to a “wilful act or gross negligence” on the part of the supplier. This makes it extremely difficult to hold the supplier liable as proving that faulty design or other defects are due to wilful action or gross negligence will be well nigh impossible.

 

The Government has also provided a cap for liability of Rs. 500 crore for the operator. Since the right to recourse belongs only to the operator in this Bill, this automatically caps whatever residual liability remains with the supplier to a sum of Rs. 500 crore. The clauses 35 and the clause 46 as currently drafted do not allow any role of the courts in any liability claims against the suppliers.

 

The cap put on the liability of the operator is Rs 500 crore while the overall financial liability for a nuclear accident is capped at around Rs 2140 crore. The reason why the liability of the operator is limited to Rs 500 crore is because the government wants to bring in private operators in the nuclear sector. The law will, therefore, limit the liability of Indian or foreign private companies who operate reactors to Rs 500 crore. Any amount to be paid above this cap will be footed by the government. In this manner, the government will subsidise private operators, including foreign companies, in the future. 

 

Thus, the people will have to pay with their lives or health in the case of a nuclear accident, but the profits of US companies and the corporate sector in India will be protected by limiting their liability. In the case of Bhopal, the compensation paid by the Union Carbide amounted to Rs 713 crore ($470 million) at the exchange rate prevailing in 1989. A nuclear accident may involve casualties on a much larger scale than Bhopal. Given that a serious nuclear accident can cause damage in billions, the small cap of 300 million SDRs (Rs 2140 crore) proposed shows the scant regard the Central Government holds for the Indian people.  

 

Any damage beyond this will not be compensated either by the Government or by the nuclear operator,which in the present case is a state operator. Given that accidents like Chernobyl and Three Mile Island, the two most well known nuclear accidents in history, have caused billions of worth of damages; this effectively means abandoning the victims in case of a nuclear accident. Such low caps on the operator will provide a perverse incentive on the operator to cut costs and play with plant safety. Many more Bhopals and Warren Andersons could recur if such a liability regime is put in place.

 

 

If there are lessons to be learnt from the tragic episode of Bhopal, it is that there should be strict laws which will assign civil liability and ensure that criminal liability is also pinned down. There can be no compromise with the lives and safety of the Indian people.

 

The Civil Nuclear Liability Bill bears the handiwork of the US nuclear industry lobby. This is not the path India should tread. The Bill in its current form should be scrapped as it has been drawn up keeping the interests of the nuclear suppliers and operators. A new Bill which starts with the interests of the victims of such an accident as its core concern needs to be drafted instead.