We definitely need Nuclear Liability Bill, but not in haste

Saturday, March 27, 2010

Ever since the Chernobyl disaster which killed thousands and affected millions, there have been number of efforts to create common international standards on liability and compensation; so that the responsibility of such a disaster can be fixed and the victims of the disaster are given a fair compensation. There are four international conventions on nuclear liability issue. The 1960 Paris Convention, The 1963 Vienna Convention, 1997 Protocol to Amend Vienna Convention  and 1997 Convention on Supplementary Compensation for Nuclear Damage. India is not a party to any of these conventions and hence has no legal obligation to adhere to these conventiosn.

There are about 30 countries that operate civil nuclear power. Most of these countries have "some sort of nuclear liability act in force in their territory either as a result of adherence to these international conventions or through enacting national liability law." In India, "there is no provision in the Indian Atomic Energy Act, 1962 about either nuclear liability or compensation for nuclear damage due to nuclear accident or incident. Nor are there any other laws that deal with nuclear liability. It was in this context that the new law (The Civil Liability for Nuclear Damage Bill) has been proposed and also on the necessity of joining an appropriate international liability regime [Indian Express]."

The Civil Liability for Nuclear Damage Bill says, "The liability due to any damage caused by these plants are borne by the central government. ... It caps the liability of any incident at SDR 300 million (approximately Rs 2100 crore at current conversion rates); the maximum liability of any single operator is capped at Rs 500 crore.  The liability of any damage beyond this level will lie with the central government [PRS]."

What does it mean?
The liability of the operator of (civil) nuclear facility is capped at Rs 500 Crore. This means,  "Central Government shall be liable for nuclear damage in respect of a nuclear incident when such liability exceeds the Rs.500-crore liability limit of the operator or where the accident occurs in a nuclear installation owned by it [i.e. the Indian government]."

Currently, Nuclear Power Corporation of India Ltd (NPCIL) is responsible for the generation of nuclear power for electricity. NPCIL is the only power utility company in India which uses nuclear fuel sources and hence it becomes the sole operator responsible for nuclear power generation. Since it is owned by government of India, NPCIL's liability becomes the liability of the government and hence the burden falls on tax payers. Thus, in case of nuclear emergency, the suppliers will have no responsibility whatsoever to compensate the victims and all the compensation has to be borne by government and hence tax payers.

On the other hand, "the foreign reactor builder (supplier) — however culpable it is for a nuclear accident — will be completely immune from any victim-initiated civil suit or criminal proceedings in an Indian court or in a court in its home country. So, even if the accident were triggered by wilful negligence on the part of the foreign supplier and the consequences were catastrophic, all claims would have to be filed against the Indian state."

How does this "liability" work in US?
In the united states, Price-Anderson Act deals with the issue of nuclear liability. This act makes the suppliers legally liable for damages caused by the nuclear emergency. But, this liability is "channeled" to the facility operator. What this means is, "in US, the supplier is insured under the nuclear liability facility form policy written by the American Nuclear Insurers (ANI) and purchased by the facility operator." i.e. the supplier is insured under (or with?) ANI and that insurance is purchased by the facility operator. Thus, the supplier is virtually free from legal responsibilities. [More on this here]

Why US wants India to have a liability bill?
"India is on record wanting to buy 10,000 MW of nuclear reactors from the US suppliers. The US nuclear industry wants the billions of dollars in profits from Indian sales, but does not want any risks: good old risk-free capitalism, US style. This is the genesis of the nuclear liability bill – a hefty subsidy from Indian tax payers for the US to be able to market its reactors. [Read More]"
What do critics say about the bill?
  1. The Price Anderson Act in the United States capped liability at an amount 23 times higher than the sum the Indian Bill seeks to fix.
  2. Russians and the French were doing nuclear business with India without demanding this kind of legislation.
  3. There cannot be a situation where the foreign supplier has zero liability, and the public sector and the Indian government have all the responsibility and the liability.
  4. However, no liability will be fixed on the foreign supplier companies even if there is a mishap because of a manufacturing defect. This provision has been strongly opposed by the Left, the BJP and environment groups.
  5. "Government was bringing the law in the PSU regime and may perhaps allow private companies to run nuclear power plants in the country who would be liable under the same rule of law". Though government doesn't intend to bring in private players, "Who knows what the government will do after the law is passed?" Read More.
The way forward
In the united states, American Nuclear Insurers (ANI) plays a significant role. ANI's purpose is to pool the financial assets pledged by it's member companies to provide the significant amount of property and liability insurance required for nuclear power plants and related facilities throughout the world. But in India, there is no institution like ANI and government becomes the insurer of last resort. Government cannot be lenient towards the suppliers and the responsibility of damages should be shared by suppliers at least to a reasonable extent. There cannot be a situation where the foreign supplier has zero liability, and the public sector and the Indian government have all the responsibility and the liability.

In the recent years, though the nuclear industry has achieved an impressive safety record, we cannot say we can obviate an unpredictable emergency situation. Under such context, The Civil Liability for Nuclear Damage Bill has crucial role to play and Government of India and the people of India cannot afford a hasty decision on this issue. Government definitely needs to take a second look at the framework of the bill.

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This work by Manjunath Singe is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 2.5 India License. The views and opinions expressed in this work are strictly those of the author and do not represent his employer's views in anyway.