Rajeev Dhavan wrote an op-ed yesterday in Mail Today citing over a dozen objections to the Civil Nuclear Liability Bill. I address each of these points.

Dhavan: What happens, if a nuclear incident is not declared by the Board, which classifies it as not grave or serious. Is that the end of story?

Response: Neither laws can be framed nor governments run on the basis that every authority will inevitably subvert the law at every step. Here too, as in every case, public vigilance must guard against abuse. It is sufficient to point out that other countries have a similar system. For eg., in the US, the Nuclear Regulatory Commission (NRC) is tasked with a similar responsibility of notifying whether there has been an ‘extraordinary nuclear occurrence’.

Dhavan: Second, the operator (on whom the liability falls) is someone who is designated by the Central government and, presumably following factories legislation, would be an individual. Enter designated Manager for the facility, exit Union Carbide or Warren Anderson!

Response: At present, the government owned NPCIL manages all plants; the analogy to Union Carbide/Warren Anderson is invalid. The Center assumes liability for a nuclear installation owned by it (cl.7(b)). If an offense has been committed by a private party, nothing in this law precludes them from being punished (cl.40, 46).

Dhavan: Third the liability clause is interesting. The upper limit of Rs. 500 crores per incident is illusory. The Union government may increase it or decrease it to Rs.100 crores.

Response: The Center wants this flexibility to tailor it in accordance with capacity of the nuclear insurance market. This point has been addressed in my earlier post.

Dhavan: Fourth, under the Nuclear Bill, damage is essentially awarded for damage outside the installation. This is important. In the Oleum Gas Case (1986), the Supreme Court made it clear that any ‘escape’ from an inherently hazardous activity would give rise to an absolute liability as soon as escape is shown. This was affirmed in the Bichhri (Indian Enviro) case (1995). This is not reflected in the Bill. Nor really taken into account.

Response: The primary purpose of the bill is to create a regime for third parties (i.e. disaster victims), not for those who work in the plant itself. Those who work on site and may be harmed are protected by existing labor laws. This legislation is in addition to, not in derogation of such other laws (cl.46) nor does the operator’s liability diminish for liabilities under them (cl.5(2)). There is also nothing in the bill to prevent a contractual arrangement with the builder to insure for on-site property damage during construction or to obtain insurance separately to cover for such damage.

The reason for doing this is to prioritize third party compensation over property damage suffered by the plant itself – suffering people ought to get paid first before damage to the building may be fixed. Not surprisingly, it is also provided for in international conventions.

Dhavan: In fact the Bill actually reverses the principle by saying that the operator can hide behind the fact that his employees did something willfully wrong.

Response: I suppose he is talking of cl.5(3). I quote the full provision:”Where any nuclear damage is suffered by a person on account of his own negligence or from his own acts of commission or omission, the operator shall not be liable to such person.” The meaning is plain. A high standard of personal responsibility is set here again because protecting workers dealing with hazardous material is not the primary purpose of this bill. That does not mean that they are precluded from filing a claim under a labor law.

Dhavan: Why should the Central government be liable for any liability over the limit? Or for damage due to natural disaster,insurrection, terrorism and the like? Why should the ‘operator’ not take out insurance for all damage as well?

Response: I have answered this question in the first post. It is also worth reflecting on a rhetorical question: By the same line of reasoning, Why should any government help anyone affected by any disaster? Why should everyone not insure their lives and property against natural calamities?

Dhavan: Fifth, the present insurance requirement is only to a certain sum for external damage under ‘normal circumstances’. Let it be more comprehensive. This will make the premium higher. But inviting the worst of possible hazards is an expensive business which cannot be dealt with by a blind eye to justice.

Response: The suggestion requires no more than a cautionary note. As the prime minister is said to be fond of saying, money does not grow on trees.

Dhavan: Sixth,according to Minister Jairam Ramesh, Indian nuclear power generation is to reach 6000 MW by 2011. Russia wants to build 12 nuclear reactors in India. There will be 60,000 MW by 2032 as against 4,120 MW now (an increase of 1456 per cent).

Response: As capacity grows, the case becomes stronger to raise shift a greater proportion of the liability burden to operators. This is what successive amendments to the Price-Anderson Act have successfully achieved in the US. Caps have been gradually raised in many other countries as well. However, it is too premature to recommend such a move.

Seventh, the normal adjudicatory system is through a Claims Commissioner. This is an ambitious plan locked up in procedure. The remedy is reposed in a Claims Commissioner who could be a person with 10 years practice or a Joint Secretary with 5 years special knowledge of nuclear liability. I assume such a person exists and is right for the job! Eighth, the limitation period is 3 years from discovery of knowledge of harm. Or a maximum of ten years — presumably, even if cases of latent damage are discovered years later.

Response: I assume Points #7 and #8 are about insufficient experience and extinction period respectively. I find them reasonable but still, these are numbers and can be changed. The extinction period of 10 years can be raised but any increase translates into higher liability risk which in turn means greater burden for the tax payer or higher cost of electricity.

Dhavan: Ninth, there is little scope for relief to alleviate and rectify the damage immediately. Relief and rehabilitation are given the go by.

Response: Nothing in this law prevents relief and rehabilitation measures in any way. The bill does not deal with specific measures to mitigate the effects of such a disaster but that is not the point of this bill anyway.

Dhavan: Tenth, a Claims Commission headed by a person qualified to be High Court judge or an Additional Secretary (both over 55 years) is to hear difficult cases and those where damage is greater than Rs 500 crores even though that is a mandatory cap. When the Central government feels the Commission has too little work it will be dissolved. Recourse to civil courts is ousted. This ensemble of authorities which is to determine issues of such grave portents will not necessarily have the ability or experience to do so.

Response: The idea here is that if the disaster is of a large magnitude, the commission will be constituted to adjudicate claims. Otherwise, a commissioner will do so. If the commission is dissolved, it is expected to happen only after most major claims have been settled and only minor ones are left behind. So it is not unreasonable to let the commissioner deal with them. I will concede that it is not unreasonable to argue in favor of appointing more experienced individuals than what is suggested in the bill (eg. a Supreme Court judge instead of a High Court judge, etc.)

Dhavan: There are no provisions for legal aid.

Response: There is nothing in the bill to prevent the government from offering it either. Dhavan mistakes this bill to be a ‘Nuclear Disaster Relief and Rehabilitation Bill’ which it is not.

Dhavan: Eleventh, there is the usual hateful provision that the Act shall come into effect on such dates the Central government decides — with possibly different dates for different parts of the Act. Acts should come into effect at once. This political largesse to the government is arbitrary.

Response: Agreed though such a provision is hardly unusual. This does confer a great deal of discretionary power on the government which is not desirable.

Dhavan: An argument has been made that India’s cap on liability is Rs. 500 crores as opposed to China (205 crores) and Canada (335 crores); and is similar to France (575 crores). But the Nuclear Bill leaves it to the government to reduce the amount to Rs. 100 crores in each case. Why? To say that America’s private operators have pooled together a fund of $10 billion is a fact. This is just the corpus. Why should the Indian taxpayer bear the burden of the excess?

Response: I have addressed the main point in the first post. One additional aspect is that the US created this corpus fund through an amendment to the Price-Anderson Act after its nuclear industry had grown substantially, not to begin with. This important distinction must be kept in mind when looking at these numbers. India could and probably should shift the burden away from tax payers as the number of nuclear plants grows but the sector has some way to go before that.

Dhavan: The operator in India is liable, the foreign investor goes scot-free. India is not party to the related Vienna Convention 1963, the Paris Convention of 1960, the 1997 Vienna Protocol or the Supplementary Convention for Compensation of 1997. To cite the China example ignores that there is no upper limit in the Vienna Convention and the Paris Convention’s limit is €700 million (Euros).

Response: Dhavan seems not to have noticed that all these conventions he cites also protect suppliers from liability. I am not sure why the absence of an upper limit in the Vienna convention is considered germane because a cap is not a requirement of any contracting state in the CSC either. The €700 million figure he cites is the operator liability from the Protocol to the Paris convention as amended in 2004. Barring Switzerland, no other country has ratified it. Nuclear insurers in several countries have indicated that the high amount will be impossible to insure. States too are naturally disinclined to make up for the shortfall not to mention their disinclination to pay for any liability with tax payers money (which is a very important reason for the slow ratification of these conventions). This is hardly an example for India to emulate.

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