Left Parties’ Appeal to Members of Parliament

Do Not Support the Civil Nuclear Liability Bill

Dear Member of Parliament,

The UPA Government is about to introduce the Civil Liability for Nuclear Damages Bill in Parliament. This Bill seeks to cap the liability of nuclear plant operators and the equipment suppliers in case there is an accident involving a nuclear plant.

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. That is why the Fuel Reprocessing Consent, claimed to be a done deal by the proponents of the Nuclear Deal has yet to be agreed to by the US. Neither have the dual use technology restrictions been removed as the Prime Minister had claimed before the Parliament.

Salient Features

The salient points in the Civil Liability for Nuclear Damages Bill are:

* It allows the foreign reactor suppliers to rake in unlimited profits while transferring their liabilities to the Indian exchequer.

* Financial liability for a nuclear accident will be capped at only 300 million SDRs (Rs. 2142.85 crore). Beyond this cap, the affected people will not get any compensation for either loss of life, health damages or damages to property and environment.

* The liability of the Indian operator of nuclear plants will be limited to only to Rs. 500 crore. The Central Government can decrease the amount of liability to a minimum of Rs. 100 crore.

* The difference between the two – Rs. 2142.85 and Rs. 500 crore, i.e. of about Rs. 1642 crore – is the Government’s share of the liability.

* There is no legal liability of the foreign reactor supplier even if it supplies faulty and substandard equipment.

* Any liability for foreign reactor suppliers can at best be included in private contracts between the suppliers and the Indian operator.

Problematic Provisions

Given that a serious nuclear accident can cause damage in billions, the small cap of 300 million SDRs 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.The Bhopal Settlement of $470 million (Rs. 2152 crore) reached between the Central Government and Union Carbide and accepted by the Supreme Court, has proved to be totally inadequate. Even today, lakhs of gas victims are suffering and have received only meagre compensation. It is completely unconscionable of the UPA Government to suggest that all nuclear accidents, which have the potential of being much larger than the Bhopal tragedy, be capped at a figure that has already been shown to be a gross underestimate. Apart from this, the minuscule liability of Rs. 500 crore for the Indian operator – currently the state owned Nuclear Power Corporation of India Limited – is tantamount to encouraging the operator to play with plant safety.

The suppliers’ liability has also been made virtually non-existent in the proposed Bill. Normally, if any accident takes place in a nuclear plant, the victims and the Indian operator should be able to sue the supplier for damages if the cause of the accident is found to be poor or faulty equipment. The Bill takes away this legal right of the Indian operator as well as the victims. Instead of ensuring the operators’ and victims’ right to claim damages from the supplier, the current Bill limits this to only a private contract between the supplier and the operator. The US suppliers can make billions of dollars from the Indian market, but will not have to pay any damages for a nuclear accident. Even if they are completely at fault.

Favouring US Suppliers

It is important to note that neither the Russian nor the French nuclear equipment suppliers have raised the issue of capping or limiting nuclear liability. It is an entirely US concern and being driven by the interests of US suppliers and investors. If this is accepted, this will be yet another case of the Central Government capitulating to the US and putting the interest of US capital before the interests of its people.

The Central Government has already proposed to buy 10,000 MW of nuclear reactors from private US suppliers like GE, Westinghouse and others without going through open tendering and competitive bidding mandated under the present Electricity Act. This is being done as Government to Government contracts, precluding public scrutiny of the terms of these contracts. The Government is also unwilling to tell the people either the cost of those reactors or the cost of electricity which is to be produced from such imported reactors. The latest figures available from the US regulator makes clear that the cost of US made reactors will be 3 to 4 times that of indigenous reactors and so also the electricity produced from such plants.

Moreover, even such high price for their reactors and billions of dollars of profits is not enough for the US nuclear suppliers. They also seek to completely cover their risks at the cost of the Indian exchequer. Omer F Brown, the key spokesperson for the US nuclear industry and the lead counsel to two major nuclear industry groups – the Contractors International Group on Nuclear Liability and the Energy Contractors Price-Anderson Group – 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 (10th 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.

This is the background to the proposed legislation.

Against Indian Jurisprudence

The current liability regime in India is quite clear: for hazardous industries, the plant owners have strict liability for accidents and the law does not accept any limits to liability. The party concerned must not only pay full compensation to affected persons but also bear the cost of environmental damage that any accident may cause. The Oleum leak from Sriram Food and Fertilizers settled the liability regime in India. The Supreme Court judgement in this case – MC Mehta vs. Union of India (1987) – stated clearly:

…in case of accidents occurring in plants run by enterprises which are engaged in a hazardous or inherently dangerous activity that poses a potential threat to the health and safety of persons such enterprises applying the Polluter Pays Principle owe an absolute and non-delegable duty to ensure that no harm results to anyone. (emphasis added)Any legislation seeking to cap liability as is being proposed will therefore be completely retrogressive.

International Liability Regimes

The Statement of Objects and Reasons of the Bill states that the Bill is meant to facilitate India’s entry into an international nuclear liability regime. It explicitly states that India intends to join the Convention on Supplementary Compensation for Nuclear Damage, which was adopted in 1997. This it is argued would provide India access to an international fund to compensate victims of nuclear accidents, for which India too has to make its own contribution. What is not mentioned, however, is that only thirteen countries have signed this Convention on Supplementary Compensation (CSC): Argentina, Australia, Czech Republic, Indonesia, Italy, Lebanon, Lithuania, Morocco, Peru, Philippines, Romania, Ukraine and the US. Out of these thirteen countries, only four including the US, Argentina, Morocco and Romania have ratified it so far. Hence the Convention has not yet entered into force since it requires the ratification of at least five States with a minimum of 400,000 MW of installed nuclear capacity. In contrast to the existing Paris or Vienna Conventions, the CSC provides complete protection to the suppliers of nuclear equipment. This is the reason why important countries such as Russia have not signed the CSC; which has been a bone of contention between the US and Russia. Most other countries operating significant number of nuclear plants have also not joined the CSC. Therefore neither is there any reason why India should hurry to join this Convention, nor any basis to the claim that joining this Convention would immediately provide access to international funds, since the CSC is yet to enter into force.

The Vienna Convention on Civil Liability for Nuclear Damage under the auspices of the IAEA attempts to put together a common minimum liability regime for countries operating nuclear plants. India is so far not a party to this Convention. It is noteworthy that the Vienna Convention does not cap nuclear liability but only puts a minimum floor. It also allows countries to operate their independent liability regimes. For example, Germany, Japan and Finland all have unlimited liability, the same as current Indian law.

The US, which is not a part of the Vienna Convention or the Paris Convention (but a signatory to the CSC) has its own Price-Anderson Nuclear Industries Indemnity Act 1957 (last amended in 2005) governing its domestic nuclear damage liability. The Price-Anderson Act ensures the availability of private-sector funds of over $ 10 billion (over Rs. 45000 crore) to cover liability for nuclear damages. Thus the liability of the US nuclear operators for nuclear damages is 23 times more in the US than what is being proposed in the Indian legislation. Are Indian lives 23 times cheaper than American lives?

Not in the Interest of Indian People

The nuclear liability regime being proposed through the Civil Nuclear Liability Bill is nothing but a huge hidden subsidy to the US equipment suppliers. It appears that in order to promote private nuclear power plants and favour US equipment suppliers, the UPA Government is willing to sacrifice the interests of the Indian people. We appeal to you to consider all these aspects of the Bill carefully. We hope you will take a stand against this Bill which compromises the vital interests of the Indian people regarding their safety and security.

(Prakash Karat) General Secretary, CPI (M)
(A. B. Bardhan) General Secretary, CPI
(D. Biswas) General Secretary, AIFB
(T. J. Chandrachoodan) General Secretary, RSP