Don’t amend, just scrap the bill

Tags: Opinion
It is now plain the Civil Nuclear Liability Bill cannot be passed by Parliament in its present form. It is far too loaded in favour of the nuclear industry for it even to remotely compensate the public decently in the event of an accident. Its genesis is so blatantly linked to nagging pressure from the US government and nuclear industry that even the Bharatiya Janata Party, which is generally anxious not to be seen to be mildly critical of Washington, is embarrassed by its tilt.

The US evidently wants a share of India’s nuclear power pie for American corporations and is loath to see the French and the Russians cornering the bulk of the new atomic power projects that have been made possible by the US-India nuclear deal and its endorsement by the International Atomic Energy Agency and the 45-nation Nuclear Suppliers Group—secured by Washington. But so crude is the application of the US pressure, as usual, that it is somewhat counterproductive.

Under the circumstances, the United Progressive Alliance will find it difficult to muster a simple majority for the bill in either houses of Parliament. Its emissaries to the Opposition, especially the BJP, have dropped hints that it is willing to amend the present draft—if necessary in a parliamentary standing committee—to fix some of its problems. In particular, the government might be willing to raise, even double, the operator’s liability from the present laughable Rs 500 crore, and the total liability for a nuclear accident from the present equivalent of $450 million to $700-900 million. It is also considering an industry-wide insurance pool to finance future compensation.

Besides being messy, such a compromise would still leave the bill’s basic flaws unaddressed. Four of these are major: the very idea of capping liability for potentially large scale damage from a nuclear accident; the exclusive channelling of liability to the operators of nuclear installations and exemption of equipment suppliers; an obligation on the government—that is the public—to bear the difference between operator liability and total liability; and single-country jurisdiction regarding liability.

The Indian debate has so far focussed on whether the liability amounts in the bill are similar to those prevalent in some other countries. The bill’s supporters cite even lower amounts (the Rs 205 crore prevalent in China and Rs 335 crore in Canada), and $350-600 million in some other countries. Many opponents argue that the US has a pooled fund of about $11 billion under the Price-Anderson Act.

However, these arguments are beside the point. The existence or absence of a precedent elsewhere is not tantamount to a reason for or against the liability bill. The pertinent question is if it is at all legitimate to cap liability for a nuclear accident, which is potentially catastrophic, or to legislate for unlimited liability to be determined by the actual damage.

Any reasonable industry-specific liability law must provide compensation for the maximum possible damage and not the average or probable damage for an accident in that industry. In the nuclear industry, the maximum accident is a core meltdown: the overheating of the core of a nuclear reactor, the site of fission, due to a loss of coolant accident (LOCA) or some other malfunction. Chernobyl (1986) involved a meltdown. Three-Mile Island (1979) was a LOCA, which did not mercifully result in a meltdown—always a scary possibility. The global nuclear power industry recorded more than 60 serious accidents until 2007, many of them LOCAs.

Every single of the world’s 430-odd operating nuclear reactors, regardless of design /configuration, is vulnerable to a meltdown. The likely damage from a meltdown is hundreds of billions, even trillions of dollars. Chernobyl caused an estimated loss of $250 billion. A German study estimates the loss from a German Chernobyl at euro 2-5 trillion. It is totally unreasonable, indeed unacceptable, to cap liability in the first place. Doing so three-orders-of-mag­nitude below maximum damage levels is grotesque.

Second, there is no reason why the designers and suppliers of nuclear plant and equipment should be let off the liability hook. The notions of absolute and strict liability, and of product liability, which all derive from the cardinal Precautionary Principle and the Polluter Pays Principle, entail responsibility on the supplier’s part. This is a standard practice in civil aviation, military contracts and high-risk businesses like satellite launches.

It is not good enough to argue hat the operator is free to sue the supplier under the law of contracts. The whole rationale of a liability law is to fix liability on all potentially reprehensible actors, not to shield them. The idea that the public should pick up part of the tab for compensation blatantly violates the Polluter Pays Principle.The bill rightly concedes that damage from a nuclear accident can reach beyond national borders. So, it makes no sense to limit jurisdiction to one country. The bill does just that.

Together, these flaws are fatal. The bill must be scrap­ped. Nuclear power is a 60-year-old, exhausted, problematic technology, which dese­rves no subsidy—certainly not through an artificially low-liability cap.


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Chairman & CEO, Accenture