A scientifically naïve bill

Oddly enough in the Civil Liability for Nuclear Damage Bill-2009 the operator’s liability has been capped at Rs 300 crore (it is reported that this figure has become Rs 500 crore) instead of SDRs and it is just horrifying to think that if an accident occurs a few decades hence, whether with the proposed compensation the victims will receive enough compensation to feed themselves for even a few months. The provision that the government may increase or decrease the cap amount on the operator’s liability would most likely benefit the operator in due course of time. Such departures from the international conventions cannot but be viewed as against the welfare of the Indian victims. If at all it was essential that the operator’s maximum liability be fixed in local currency whether at Rs 300 crore or 100 crore, this ought to have been linked to the Cost of Consumer Index or the Cost of Inflation Index (CII) as annually announced by the Indian authorities.Further the bill describes that subject to others provisions, every application shall be made within a period of three years from the date of knowledge of nuclear damage by the person suffering from such damage while another provision states: ‘The right to claim compensation for any nuclear damage caused by a nuclear incident shall extinguish if such claim is not made within a period of 10 years from the date of incident notified ...’. The nuclear damage as discussed above does not mean immediate loss of life or personal injury or loss of, or damage to property it may manifest several decades later in form of cancers of genetic abnormalities. For such well-documented nuclear damages the bill does not provide any succour as is available under the protocols to Vienna and Paris conventions where the limitation period is fixed at 30 years. The bill appears to have been drafted without proper application of mind and without considering the data available from Hiroshima and Nagasaki survivors. The scientific naivety of the bill cannot be denied.

Is the capping of compensation necessary?

This is most crucial point. Historically the concept of capping the maximum liability of the operator was evolved in Fifties and early Sixties of the last century considering that the nuclear industry was then an unexplored area but had a great potential for human welfare and if it had to grow, it needed private industry participation. At the same time, this industry was fraught with catastrophic accidents causing such huge damage to life and environment that if the industry had to compensate fully as per the common law of torts, it would go bankrupt. Hence the industry was reluctant to participate and demanded protection in some form of subsidy from public funds. All the international conventions and national laws of nuclear power countries framed in those days maintained this philosophy. Whether almost six decades later in the year 2010, the fully matured Indian nuclear industry can still demand this kind of subsidy from the state is highly debatable. Undoubtedly research and development activities in any industry are continuing processes and are not unique to the nuclear industry alone but none of the other industries are being provided such preferential protection by the state.

Is the capping of compensation rational?

The dynamic maturity of nuclear industry in the United States is well reflected in the Price-Anderson Act 1957 wherein initially the operator’s maximum liability was limited to $60 million and the government was to take-up a further liability of $500 million. In its 1982 amendment the operator’s liability was increased to $160 million and that of the government was decreased to $400 million still making the total maximum liability to $560 million. In the 2005 amendment, the government’s share became zero and the total liability of the operator increased to $10,761 million and all of it has to be assured and indemnified. In the bill presented in India, allegedly mooted on pressure from the US nuclear industry, the maximum amount of compensation is totally out of tune with the US Act itself and also with current amendments proposed under the Vienna ($493 million) and Paris ($2,383 million) Conventions and Convention on Supplementary Compensation ($986 million). The Bhopal gas case should have also served as another guideline for setting a maximum liability limit on the nuclear operator although a nuclear accident would be far more catastrophic. In the Bhopal gas tragedy the compensation was settled at $470 million on March 3, 1991. Taking the recent (2009) Cost Inflation Index of 632 with that of 1991 as 199, it would have been understandable if the maximum liability had been capped at $1,500 million in 2009 instead of $468 million as proposed in the bill.

Is the capping of compensation beneficial?

This issue may be discussed in two parts. Firstly, the operator’s liability being limited to a meagre sum of just Rs 300 crore (reportedly Rs 500 crore now), it does not provide sufficient incentives to the operator to prevent nuclear accidents. It is true that operation of nuclear installations is strictly regulated by rules and guidelines laid down and regularly reviewed and updated from time to time by international and Indian regulatory authorities, there still remains ample scope for the operator to innovate further safety and preventive measures as it is the operator who has more on-hand information on its installation than the regulatory authorities. In the absence of such incentives the operator is more likely to follow routinely the obligatory regulations and would shy away from innovating newer strategies for preventing accidents. The end result is, the operator turns complacent.Secondly, the state’s liability for the balance of the compensation is an indirect subsidy towards the nuclear industry. It results in an artificial competition in favour of the nuclear operator who ought to have absorbed the full cost of risk in the value of the product at the consumer end. Thus the cost of electricity from nuclear reactors becomes artificially more competitive leading to its unrealistic public appreciation and an undue state favour as against other alternative sources of energy like solar which are less hazardous and less polluting and ought to be encouraged from public funds.

Is the capping of compensation adequate? .

It is almost impossible to predict the cost of damage in a nuclear accident without being fraught with severe criticism and uncertainties. Before the Price-Anderson Act came into being, the US Atomic Energy Commission Wash-740 report estimated that in a worst nuclear accident the cost of damage to property alone would reach $7billion in the Fifties of the last century. This estimate has been revised to $17billion in 1964-’65. Yet in a later study WS-1400 during 1975 the estimated personal injuries were 3,300 early fatalities and 45,000 early illnesses that had to be added to the above property loss. In November 1982 the US Nuclear Regulatory Agency had sponsored yet another programme CRAC2 (Calculation of Reactor Accident Consequences) that estimated cost of US reactor accident to be as high as $314 billion. In July 1986, the United States General Accounting Office (GAO) report stated that a $6.5billion limit on liability would cover 95 per cent of the reactor accidents in the country but a serious accident could be up to 10 times greater. The maximum liability limited to 300 million SDRs as provided in the Civil Liability for Nuclear Damage Bill-2009 is not only ridiculously low but it is totally absurd.

Is the capping of compensation ethical and constitutional?

As said earlier the damage in nuclear accidents should be partitioned into personal damage to life and property and the damage to the environment and ecology. In case of damage to life and property of persons the basic principle of Tort Law is that the injurer be obliged to fully compensate the victim. The compensation for damage to environment is regulated by the international principle of ‘Polluter Pays’ as has been repeatedly held by the Supreme Court of India. A legislative enactment putting a cap on the liability of the injurer would be highly unethical and a blatant violation of Environmental Laws and Constitution of India.At the first instance we should remember that the population living around Indian nuclear installations would be, by and large, uneducated and economically very weak and shall depend solely on the compensation. Unlike in the developed world, they are not covered under any insurance scheme either for life, or property or for medical treatment. Any limit on the compensation to the affected persons fixed by legislation greatly favours the commercial establishments and the elected representatives ought to remember that their basic duties are to protect the interests and welfare of their electorates. Can they go to the people and say that we can give you only limited compensation but please vote for me?Secondly, it is pertinent to point out that the injury to the environment and ecology and sustainable development of the country has frequently been a subject matter before the Supreme Court of India. India has formulated its Constitution and enacted multitude of legislation that are commensurate with India’s cultural ethos, economy and policy of sustainable development. Hence, in the matter of Vellore Citizens Welfare Forum v/s Union of India decided on August 28 1996 the Hon’ble Supreme Court stated: “It is no doubt correct that the leather industry in India has become a major foreign exchange earner and at present Tamil Nadu is the leading exporter of finished leather accounting for 80 per cent of country’s export. Though the leather industry is of vital importance to the country as it generates foreign exchange and provides employment avenues it has no right to destroy the ecology, degrade the environment and pose a health hazard.” Their Lordships further stated quoting from an earlier judgment that “Once the activity carried on is hazardous or inherently dangerous, the person carrying on such activity is liable to make good the loss caused to any other person by his activity irrespective of the fact whether he took reasonable care while carrying on his activity. The rule is premised upon the very nature of the activity carried on” and “Consequently the polluting industries are absolutely liable to compensate for the harm caused by them to the villagers in the affected area, to soil and to the underground water. The Polluter Pays principle as interpreted by this court means that the absolute liability for harm to the environment extends not only to compensate the victims of pollution but also the cost of restoring the environmental degradation…. and as such the polluter is liable to pay the cost to the individual sufferers as well as the cost of reversing the damaged ecology”. As recently as on May 12, 2006, in the matter Karnataka Industrial Development Board Supreme Court reiterated the rule earlier laid down in Indian Council for Enviro-Legal Action & Ors v/s Union of India as “The Polluter Pays principle demands that the financial cost of preventing or remedying damage caused by the pollution should lie with the undertaking which caused the pollution, or produce the good which cause pollution. Under the principle it is not the role of government to meet the costs involved in either prevention of such damage, or in carrying out the remedial action, because the effect of this would be to shift the financial burden of the pollution incident to the tax payer.”The Indian nuclear industry has reached full maturity despite its 35 years of isolation due to sanctions imposed by the world community and is now a willing partner in the process of globalisation without compromising its interests and principles. It is not a signatory to NPT or CTBT or any of the abovementioned conventions of civil nuclear third party liabilities. Hence India ought to have drafted the legislation more suitable to its own ethos and needs.