Safety last

The nuclear liability Bill is no iron-clad legislation to prevent another Bhopal: it was necessary for foreign suppliers to start doing business.

THE amendments to the Civil Liability for Nuclear Damage Bill, 2010, were finally passed in both Houses of Parliament in late August, after the ruling parties and the main opposition party, the Bharatiya Janata Party (BJP), joined hands. The Left, and some smaller parties such as the Telugu Desam Party, opposed several provisions in the Bill. It was because of the strong stand taken by the Left parties that the original version of the Bill, which catered solely to the interests of the suppliers, was amended. It was clear that the government was in a hurry to pass the Bill before United States President Barack Obama's visit in November.

The U.S. business lobby is keen to get the biggest slice of the pie when lucrative contracts are awarded for the setting up of nuclear power projects all over India. The Americans believe that New Delhi owes them a debt of gratitude for allowing India into the nuclear club through the back door. Many of the high-profile nuclear energy-related contracts will be signed when Obama visits India. The passage of the Bill was necessary as American as well as other foreign suppliers, such as those in France and Russia, require this legislation before they can start doing business. After the Bill was passed in the Lok Sabha, Prime Minister Manmohan Singh said that the occasion signalled the completion of a journey to end the apartheid against India in the field of atomic power.

Prithviraj Chavan, Minister of State for Science and Technology, speaking in the Rajya Sabha, praised the BJP for its cooperation in passing the Bill. He said that the Bill had taken shape owing to the good work done by the National Democratic Alliance (NDA) government: the foundation for the close U.S.-India strategic and nuclear ties that have evolved in the past decade was laid by the NDA regime.

However, BJP leader Yashwant Sinha, speaking after the Bill was passed in the Rajya Sabha, told the media that the India-U.S. nuclear deal had made the country subservient to the U.S. in areas such as foreign policy and atomic policy. He said that the civilian nuclear Bill would further circumscribe India's independence in the matter of foreign policy.

The Communist Party of India (Marxist) objected to the new formulation of the controversial Clause 17(b) of the Bill, which puts accident liability on the supplier only when the nuclear incident has resulted as a consequence of an act of supplier or his employees, done with the intent to cause nuclear damage, and such act includes supply of equipment and material with patent or latent defects or substandard services. This makes any liability on the part of the suppliers, for supplying defective or substandard material, contingent upon proof that the incident was the consequence of an act done with the intent to cause nuclear damage. This provision, according to the CPI(M) and many commentators with expertise in the nuclear field, makes it impossible to ascribe liability to the supplier.

The new formulation also goes against the recommendation of the parliamentary Standing Committee, which wanted the suppliers to be held responsible in case of gross negligence of material, equipment, design or services.

The Left wanted iron-clad legislation to prevent another Bhopal-like tragedy. India had to settle for a paltry $470 million from Union Carbide in the Bhopal gas leak case against its earlier demand for $3.2 billion. Thousands of victims have not yet received any compensation.

The CPI(M) pointed out that the government, in the guise of removing the and in Clause 17(a) as suggested by the Standing Committee, had rewritten 17(b), effectively throwing the baby out with the bathwater. The dubious intent of the government, the CPI(M) said, was further exposed by the addition to Clause 7(l) through which it seeks to assume full liability for a nuclear installation not operated by it. This clause, the CPI(M) warned, would lead the way for the subsidisation of private players in nuclear power by the government, as and when they are allowed to operate. The only operator that would be running the nuclear plants in India is the NPCIL, a government-run agency. In effect, if an accident happens, the Indian taxpayer will be paying money out of his own pocket as compensation.

It was evident that the government has been liaising closely with Washington and foreign as well as domestic corporate houses while drafting the Bill. To expedite the U.S.-India nuclear agreement, the Indian government had conveyed to the Bush administration that there was $150 billion worth of business for American companies in the construction of nuclear reactors along with the supply of equipment. Last year itself, American and Indian companies had inked many memoranda of understanding (MoUs) for the construction of nuclear reactors. In June 2009, U.S. Assistant Secretary of State for South and Central Asian Affairs Robert Blake told the U.S. House Foreign Affairs Committee that the Obama administration was hoping to see action on nuclear liability legislation that would reduce liability for American companies and allow them to invest in India.

Under the new legislation passed by Parliament, the $110-million operator liability limit applies to isolated incidents. The Indian government will pick up the tab over the $110 million limit. The maximum liability amount for a nuclear accident has been capped at $460 million.

Nuclear companies based in the U.S. had conveyed their objections about Clause 17(b) to the United Progressive Alliance (UPA) government. They feared that the clause would expose them to criminal and tort proceedings. American nuclear companies have traditionally been reluctant to invest in countries that have laws that could make them criminally liable for accidents and disasters. Basil James, an American commentator on nuclear issues, had warned that if Clause 17(b) was drastically amended, the whole procedure of bringing the wrongdoer to justice will be thrown out of the window. Clause 17(b), as drafted by the Standing Committee, would have ensured speedy and fair compensation to the victims of a nuclear disaster and assured a fair remuneration for the operator from the supplier.

James points out that the major nuclear accidents around the world, like Chernobyl, Three Mile Island and Crystal River, were mainly caused by design flaws in the nuclear plants. If Article 17(b) is amended in favour of the supplier, then they will have almost no incentive to provide effective and foolproof safety mechanisms and to construct designs that are not prone to accidents of any kind, he observed in an article published just before the controversial nuclear liability Bill was passed by Parliament. The U.S. Constitution guarantees, under legislation passed way back in 1957, a compensation of $10.5 billion in case of a nuclear accident, which is 23 times higher than the limit set by the Indian government. Many nuclear scientists and commentators have said that the Indian government should have at least conveyed to the international community that the lives of its citizens are as precious as American ones.

India is now all set to join the Convention of Supplementary Compensation (CSC), an international fund set up by the International Atomic Energy Agency (IAEA) in 1997. Thirteen countries, which hold the same views on the issue of nuclear liability, are members of this forum. But the CSC has not yet been ratified and therefore cannot be brought into operation. For the CSC to be brought into operation, five of the signatories with a combined capacity of 400,000 megawatts need to ratify the protocol. Currently only four states Argentina, Morocco, Romania and the U.S. have done so. These states together have a combined capacity of 350,000 megawatts. If a state like India, together with any of the other nuclear countries like France or Russia, ratifies the convention, then the CSC will come into operation.

There has been speculation that the Obama administration is unhappy with the government's decision to drop the controversial clause seeking to indemnify companies from culpability and liability in the event of a nuclear accident. But so far there have been very few murmurs of protests from Washington, though American officials claim that their companies will not have a level-playing field vis-a-vis the competition from French and Russian companies, which enjoy state subsidies. Indications are that the American companies are not too unhappy with the form the nuclear liability Bill has ultimately taken.

A statement by the American-Indian Business Council said that a nuclear liability regime consistent with the CSC will safeguard the Indian public by delivering swift, certain and adequate compensation in the event of an unlikely nuclear accident. It will also attract to India the most responsible international suppliers and integrate Indian industry with the global commercial nuclear supply chain.

The American media, which represent corporate interests, has welcomed the passage of the Bill. Reports and editorials have said that the passage of the Bill will make it easier for American business to invest in India's lucrative energy sector. Those complaining the loudest about the Bill are domestic nuclear hawks and groups representing Indian big business. They fear that American companies will hesitate to invest in India. The pro-American think tanks and media commentators fear that the special relationship with Washington will be adversely impacted and India's quest for de jure nuclear power status will be slowed down.