Nuclear Liability Bill : Government Protects Foreign Suppliers

The amendments to the Civil Liability for Nuclear Damage Bill, 2010 proposed by the Government not only goes against the grain of the crucial recommendations of the Standing Committee, but also seeks to further dilute the provisions of the original bill to protect the interests of the foreign suppliers of nuclear equipment and domestic private players.

The new formulation of Clause 17 (b) suggested by the Government reads as follows:

"(b) 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 or material with patent or latent defects or sub-standard services;"

This makes any liability on the part of the suppliers, for supplying defective or sub-standard equipment or material, contingent upon proof that it was "consequence of an act.done with the intent to cause nuclear damage.". With this amendment, it will become impossible  to ascribe liability to the supplier.

This goes against the Standing Committee formulation of 17 (b), which does not require any such proof:

"(b) the nuclear incident has resulted as a consequence of latent or patent defect, supply of sub-standard material, defective equipment or services or from the gross negligence on the part of the supplier of the material, equipment or services."

Thus, in the name of removing the "and" in 17 (a), as suggested by the Standing Committee, the Government has rewritten 17 (b), effectively throwing the baby out with the bathwater. The formulation of 17 (b) proposed in the amendment is in fact worse than the provision contained in the original bill.

The dubious intent of the Government is further exposed by the addition of Clause 7 (1) proposed as an amendment, through which it seeks to "assume full liability for a nuclear installation not operated by it" (i.e. private nuclear installations) even as the Standing Committee had categorically recommended "that there will be no private operator of nuclear installation". This paves the way for a massive subsidization of the private players in nuclear power by the Government, as and when they are allowed to operate.

All this is clearly being done under pressure from the foreign nuclear suppliers and domestic corporate lobbies.

Siddharth Vardarajan of The Hindu gives the background to the Manmohan Singh Government's shenanigans: 

Despite assuring the Left and the BJP that their concerns on the government’s proposed nuclear liability law had been fully addressed, the final version of the bill – as cleared by the Union Cabinet on Friday – protects foreign companies in the event of a nuclear accident caused by gross negligence or defective supplies on their part.

It does this by raising a legal barrier against damage claims that is so high it will be impossible to scale. The amended version of the bill says the suppliers of any defective equipment involved in an accident can be sued by the Indian operator of a nuclear facility only if the supply in question was made “with the intent to cause nuclear damage”.

In other words, the operator, who is wholly liable in the first instance for any damages resulting from an accident caused by that faulty equipment, can recover his money only if it is proved that the supplier intentionally caused the accident.

Clause 17(b) of the original draft allowed a right of recourse for the operator in the event of an accident resulting from “a wilful act” or “gross negligence” on the part of the supplier. As reported by The Hindu on March 8 and April 1, U.S. nuclear suppliers want this clause deleted as they feel it would expose them to litigation.

Critics in India, on the other hand, saw these conditions as too weak. The Standing Committee on Science & Technology, whose report on the bill was released earlier this week, felt the “vague” language of 17(b) offered suppliers an “escape route” and needed strengthening. “In case an incident takes place, it would be difficult to prove and establish the fact that it was a wilful act or gross negligence on the part of the supplier”, the report said.

“Hence there should be clear cut liability on the supplier of nuclear equipments/material in case they are found to be defective”. The committee also quoted the testimony of the Secretary (Legislative Department) to argue the use of the doctrine of mens rea, or criminal intent, though common in criminal and tax law, “is grossly inadequate and misplaced” in compensation cases.

Accordingly, the Standing Committee expanded the scope of the right of recourse in 17(b) to include nuclear incidents resulting “as a consequence of latent or patent defect, supply of sub-standard material, defective equipment or services” in addition to gross negligence.

The government’s first attempt by stealth to indemnify suppliers from legal action came in June, when it circulated amendments to the Standing Committee deleting 17(b) altogether. When the Opposition cried foul, it backed off, seeking instead to negate the clause by making it contingent on 17(a), which grants operators a right of recourse against suppliers only if expressly provided for in a contract.

Forced to backtrack there too, the government now appears to have hit upon the inclusion of intent as the best way of ensuring foreign suppliers never face legal action in the event of a nuclear accident.

Thus, the amended 17(b) gives the operator a right of recourse where “the nuclear incident has resulted as a consequence of an act of supplier or his employees, done with intent to cause nuclear damage, and such act includes supply of equipment or material with patent or latent defects or sub-standard services”.

Since accidents resulting from the intentional acts of a “person” (including corporate entities like a supplier) are already covered by 17(c) of the original draft, the government is now proposing to replace the word “person” in 17(c) with “individual” to avoid the charge of redundancy.

If the earlier subterfuge was to merge 17(b) with 17(a), the attempt now is merge it with 17(c). Either way, the Manmohan Singh government’s aim is the same: to produce legal language that would shield foreign suppliers from civil suits.

Oppose The Nuclear Liability Bill

The recent radioactive poisoning death in Delhi has once again highlighted the fact that the Civil Nuclear Liability Act being foisted on the nation will only help American companies get away with murder just as Union Carbide did after killing and maiming thousands in Bhopal. In the Mayapuri case one person died after coming into contact with a radioactive pencil that was disposed of by Delhi University as scrap, the vice chancellor appeared on TV to offer only an apology. No talk of compensation. This is going to be repeated on a horrific scale in case of an accident at nuclear power plants proposed to be built across the country. Sitaram Yechury argues why this the Civil Nuclear Liability Bill must be opposed 

On the last day of the budget session of Parliament, the government hurriedly introduced the Civil Nuclear Liability Bill amid largescale protests by the Opposition.

The Left had opposed the introduction of the Bill itself on the grounds of violation of Article 21 of the Constitution, which guarantees protection of life and personal liberty.

Former Attorney General Soli Sorabjee says, “In view of Supreme Court judgements which are part of Indian jurisprudence and whose thrust is for the protection of victims of accidents as part of their fundamental rights under Article 21 of the Constitution there is no warrant or justification for capping nuclear liability.”

However, it is precisely such a cap that the Civil Nuclear Liability Bill introduces.
The proposed Bill has sought to limit all liability arising out of a nuclear accident to only 300 million Special Drawing Rights (about $450 million) and the liability of the operator only to Rs 300 crore.

The difference between $450 million and Rs 300 crore (about $67 million) is the government’s liability. Given that a serious accident can cause damage in billions, the small cap of $450 million that’s been proposed shows the scant regard the the UPA has for the people.

The Bhopal Settlement of $470 million reached between the government of India and Union Carbide and accepted by the Supreme Court, has been shown to be a gross underestimation. Even today, gas victims are suffering and have received only meagre compensation.

It is unconscionable of the UPA government to suggest that all nuclear accidents, which have the potential of being much larger than Bhopal, be capped at a figure that has already been shown to be a gross underestimate. Since the government wants to allow private operators in the nuclear power sector, this low level for compensation is meant to serve their interests too.

Apart from this, the minuscule liability of Rs 300 crore for the actual operator is tantamount to encouraging the operator to play with plant safety.

The Indian legal regime is quite clear: for hazardous industries, the plant owners have strict liability. Neither does the law accept any limits to liability — the party concerned must not only pay full compensation but also the cost of any environmental damage that any accident may cause. The Oleum leak from Sriram Food and Fertility settled the liability regime in India and any legislation seeking to cap liability will be completely retrogressive.

Contrary to the claims being made, the Vienna Convention — the basis of the proposed Nuclear Liability Bill — does not cap nuclear liability but only puts a minimum floor. It also allows countries to operate their liability regimes. For example, Germany, Japan and Finland all have unlimited liability, the same as current Indian law.

The US has a liability cap of $10.2 billion. Not only is the Indian government proposing to cap liability of nuclear plants, but it is also proposing a cap of only $450 million, way below the consequences of any serious nuclear accident. It appears that in order to promote private nuclear power and foreign suppliers, the UPA government is willing to sacrifice its own people.

The suppliers’ liability is also being considerably weakened by the proposed Bill. Instead of the normal contract law, where recourse of the operator to claim damages is inherent, the Bill limits this recourse only if it is explicitly mentioned in the contract. Otherwise, the nuclear operator cannot claim compensation from the supplier of equipment even if it is shown to be faulty.

It is evident that contracts for buying US nuclear reactors will explicitly exclude any liability on the part of the suppliers and, therefore, by the law to be adopted, they will go scot-free even if an accident occurs due to a defect in the equipment supplied by a US company. 

In fact the UPA-II government wanted such a legislation, which the prime minister could carry with him to the Nuclear Security Summit that President Obama convened in Washington in April. However, following the controversial passage of the Women’s Reservation Bill in the Rajya Sabha with the help of marshals, the crucial support of 47 Lok Sabha MPs belonging to the BSP, SP and RJD was not forthcoming.

This obstacle, however, appears to have been overcome now through possibly some ‘bargain’ similar to what happened at the time of the passage of the Indo-US nuclear deal.

The US is insisting that this law be enacted to protect US suppliers of nuclear equipment from liability to pay compensation in the case of a nuclear accident. Currently, only the State-run Nuclear Power Corporation of India Ltd. under the existing Atomic Energy Act can operate nuclear power plants. But with the opening up of international nuclear commerce, US companies have sought a civil nuclear liability framework to be put in place before they enter.

The US government has linked the completion of the Indo-US nuclear agreement to India’s capping of nuclear liability. The UPA-I government, prior to the ratification of the 123 Agreement, had given a written commitment that India will buy nuclear reactors from the US totalling 10,000 megawatt of capacity.

This Bill has now been referred to the parliamentary standing committee for its consideration. It will now be tabled in the monsoon session. It is imperative for all political parties to ensure that the government is not allowed to disregard the life and safety of the Indian people through such a legislation. Article 21 of the Constitution and the various judgements of the Supreme Court cannot be allowed to be violated.

Indo-US Nuclear Deal: Kowtowing Again!

In the newest 123 agreement, the US has retained the legal right to unilaterally terminate cooperation but provided political assurances to India that such a right will be exercised only in extraordinary circumstances. A similar approach is mirrored in the reprocessing accord, warns Brahma Chellaney


One more accord has been concluded under the much-trumpeted Indo-US nuclear deal. But like the previous two — the 123 bilateral agreement with the US and the safeguards accord with the International Atomic Energy Agency (IAEA) — the latest agreement, too, will escape scrutiny by the Indian Parliament. The newest agreement involves US consent to India to reprocess spent fuel of American origin.

Is it a good advertisement for the world's most-populous democracy that while the American president will submit the reprocessing agreement to the US Congress for scrutiny, the Indian Parliament will again be shut out from playing any role on this latest accord? How can there be effective checks and balances in a democracy if the executive branch insists that the national legislature has no role to play in any international agreement?

It is only on the nuclear-accident liability issue that the government is coming to Parliament because that involves passing a new law. In fact, it wants Parliament to pass a law that limits liability to a pittance, overturning the doctrine of absolute liability that the Supreme Court has set in response to the Bhopal gas disaster.

The result of blocking Parliament from scrutinising the nuclear deal is that India is now saddled with a deal that does not adequately protect its interests. India has got no legally binding fuel-supply guarantee to avert a Tarapur-style fuel cutoff, and no right to withdraw from its obligations under any circumstance, although the US has reserved the right for itself to suspend or terminate the arrangements.

The terms of the latest reprocessing agreement are in continuation of what the US was able to extract in the 123 bilateral agreement. The US has retained the right to unilaterally suspend its grant of reprocessing consent to India. This is an extension of its right, incorporated in the 123 agreement, to unilaterally suspend or terminate fuel supply to India. That is exactly what the US did in the mid-70s under its previous 123 agreement with India dating back to 1963. As a result, the twin-reactor, US-built Tarapur nuclear power plant near Mumbai, was left high and dry.

In the newest 123 agreement, the US has retained the legal right to unilaterally terminate cooperation but provided political assurances to India that such a right will be exercised only in extraordinary circumstances. A similar approach is mirrored in the reprocessing accord.

Under Article 7 of the reprocessing accord, the reprocessing consent can be suspended on grounds of "national security" or a "serious threat to the physical protection of the facility or of the nuclear material at the facility," and if the party determines "that suspension is an unavoidable measure." So the US right to suspend reprocessing consent is unfettered.

Still, the agreement's article 7 and the accompanying "agreed minute" record political assurances to India that such a right shall be exercised only in special circumstances and after careful thought. But such assurances hold little value when the legal right to suspend reprocessing consent is explicitly recorded in the text.

The actual implementation of the reprocessing agreement is years away, even though US-origin spent fuel has been accumulating in India for nearly 40 years at Tarapur.
India will not be able to reprocess that spent fuel until it has built at least one new dedicated reprocessing facility — a process that will take a number of years. Article 1(3) specifies that the US consent relates to "two new national reprocessing facilities established by the government of India."

Only in those new facilities, approved by the IAEA, can India reprocess the discharged fuel under international inspection. Any additional reprocessing facility can be added only with prior US agreement.

Another feature of the agreement is that it amplifies India's reprocessing obligations with the IAEA, including to provide facility-design information in advance and to allow unhindered international monitoring and verification (article 2). But in addition, the accompanying "agreed minute" obligates India to permit US "consultations visits" to each dedicated reprocessing facility. Every "visiting team of not more than 10 persons" will be permitted onsite access "at a time and duration mutually agreed by the parties."

It is thus apparent that the US has got what it wanted. For example, the state department had earlier notified the US Congress in writing that "the proposed arrangements and procedures with India will provide for withdrawal of reprocessing consent" by the US. That is exactly what the text of the accord provides. Also by providing for US "consultations visits," it effectively permits IAEA-plus inspections.

Had the Parliament been allowed to play a role, the government would have been able to leverage that to fight back one-sided provisions.

Cortesy: DNA

More Secrets Of Manmohan Sellout To US Revealed

By Roger Alexander

The entire Indo-US Nuclear Deal has been shrouded in secrecy. A number of these have already been unravelled with the Presidential Determination submitted to the US Congress making public the US interpretation of the 123 Agreement. 

A series of reports have appeared suggesting that the assurances made by the prime minister to Parliament and the country on the India-US nuclear deal have been violated. Worse, there are reports that suggest that crucial information was concealed regarding details of the deal.

It appears that there is much more about this deal that the UPA government is hiding from Parliament. Large purchases from US based nuclear power companies have already been committed in a clandestine manner.

Indeed, the UPA Government seems to have already decided to place orders with the American nuclear power companies for supplying a large number of nuclear reactors without any debate in the country regarding the cost of such imported reactors, or the safety of their designs.

So now we know why the monsoon session of Parliament has been shifted to the beginning of winter despite the fact that Prime Minister Manmohan Singh had given and assurance that he would come back to Parliament after getting the clearance from the IAEA and the Nuclear Suppliers Group.

Parliament has been convened only on October 17, well after the nuclear deal will be sealed in Washington.

Despite making noises that India do nuclear commerce with France and Russia if the US Congress failed to pass the 123 agreement by September 25, it is clear the government wants to favour US companies.

In fact, the Indian government has already provided the US with a “strong letter of intent” to buy from US firms reactors with at least 10,000 MW worth of power generation capacity and committed two sites to US firms. 

These disclosures were made by under secretary of state for political affairs William Burns to the Senate Foreign Relations Committee during the special hearing on the 123 agreement on Friday.

“The administration has taken a number of steps to ensure the US nuclear industry will not suffer any competitive disadvantages during the 123 Agreement review process,” he revealed. 

Each 1000/1,100 MW reactor from US companies like Westinghouse or GE, by latest estimates, will cost at least $7 billion each. This translates to approximately Rs 28 crore per MW, which is 7 to 8 times the capital cost of coal fired thermal power plants of equivalent capacity.

The 10,000 MW figure stated by Burns implies India putting in around Rs. 280,000 crore of Indian money to bail out the US nuclear industry that has failed to secure any domestic order for the last 30 years.

More importantly, India also has committed to adhere to the Convention on Supplementary Compensation for Nuclear Damage. “Adherence to this international liability regime by the Indian government is an important step in ensuring US nuclear firms are competing on a level-playing field with other international competitors,” explained Burns. 

The US government, unlike other countries, does not provide liability coverage for nuclear companies which expose US firms to unlimited liability in US courts. With India signing the convention, US firms would be protected as the convention provides supplementary international funds to pay victims and keeps liability in the country where the accident takes place. 

This means that in the case of any Bhopal type disaster, the Indian Government will take over all liabilities from the suppliers and the operators. The suppliers of nuclear reactors have demanded a no-liability regime for supplying equipment, which the UPA Government seems to have accepted without any public debate.

ends