Nuclear Liability Bill ignores Environment, Finance Ministry objections

The Ministries of Finance and Environemnt raised serious objections to the Nuclear Liability Bill but their concerns were finally brushed aside by the Cabinet...


5 March 2010
The Hindu

[NOTE" In the print edition of the Hindu, this story was split in two, with the second part, 'Limiting nuclear liability may affect safety standards, Finance Ministry said', carried on an inside page.]

EXCLUSIVE
Nuclear Bill ignores Ministries' objections

Siddharth Varadarajan

New Delhi: The Union Cabinet overrode strong objections from both the Finance and Environment Ministries in approving the controversial Civil Liability for Nuclear Damage Bill November last, The Hindu has learned. These objections related to the impact of the law on safety standards and on providing adequate compensation in the event of a nuclear accident.

The Bill, which the government is to introduce in Parliament this session, channels all liability stemming from a nuclear accident to the operator of the plant. The maximum liability for an incident has been fixed at 300 million SDRs (approximately Rs. 2,385 crore), but the liability of the operator, whether public or private, is capped at Rs. 500 crore. The draft law will enable the country to accede to the Convention on Supplementary Compensation for Nuclear Damage (CSC), without which the United States says its companies will not be able to sell nuclear equipment to India.

In its comments, the Ministry of Environment and Forests (MoEF) drew attention to the law's failure to specify the amount of compensation for death or damage due to an accident. It said nuclear damage to human and animal life and the environment were long-term and needed a thorough understanding of the subject, “especially as the Act is for final compensation and not for interim relief.”

The MoEF pointed out that the law did not specify which agency or entity was eligible to file a claim for compensation for damage to the environment. Finally, in the absence of the Health Ministry batting for its concerns, it said the 10-year limit for filing of claims was too low “since the nuclear damages involves changes in DNAs resulting in mutagenic and teratogenic changes, which take a long time to manifest.” It observed that more scientific guidelines were needed to ensure the competent claims authority was able to review these kinds of damage and award compensation “which is just.”

The Finance Ministry focussed its criticism on the central tenet of the law — the need to limit the liability of private companies involved in the nuclear business to Rs. 500 crore. Noting that the difference between that figure and the maximum liability of Rs. 2,385 crore would have to be made good by the government, the Ministry questioned the Department of Atomic Energy's rationale that the risk of accidents was low and that unlimited liability would hinder the growth of the nuclear industry in the country.

Limiting the liability in an arbitrary way could “expose the government to substantial liabilities for the failings of the private sector management in such installations,” it said in its submissions to the Cabinet.

In the end, however, the objections were rejected and the draft law approved as it stood.

May affect safety standards

Questioning the logic of limiting the liability of private companies in the nuclear field, the Finance Ministry suggested that a “formula-based limitation be considered which matches the liability regime for the operator to the types of accidents that may occur so as to incentivise adherence to the higher safety standards, limit negligence and encourage the practice of the highest international standards while providing reasonable and scientifically determined cover by the Central government.”

The Ministry requested the Department of Atomic Energy (DAE) to revise this aspect of the law so as to “limit the government's liability to a reasonable, justifiable, appropriate and methodically determined level and not to fix it to an arbitrary, predetermined figure.”

In its answers to the objections and suggestions of both the Ministry of Environment and Forests (MoEF) and the Ministry of Finance, the DAE cited the conformity of the draft nuclear liability law with the provisions of the Convention on Supplementary Compensation (CSC).

The DAE said it tried to strike a balance between promoting the nuclear industry, reducing the burden of the government and facilitating speedy compensation. It also pointed out that “presently, liability is, in effect, 100 per cent the responsibility of government. With this law, the burden will be shared by fixing responsibility on the operator to the extent of Rs. 500 crore.”

While the government is today fully liable for nuclear accidents since all atomic power plants are in the public sector, the DAE's explanation sidesteps the Finance Ministry's objection to subsiding private companies in the event of an accident.

The draft Bill was referred to the MoEF, the Ministry of External Affairs, the Ministry of Finance, the Ministry of Home Affairs and the Law Ministry. The Cabinet note, accessed by this newspaper, is silent about any consultation with the Ministry of Health, a curious omission given the effect of any nuclear accident on the health of people.

Though the law has acquired urgency for the government because of a commitment it made to Washington, the government has been working on the Bill for more than a decade.

Shortly after the Kudankulam project began in 2000, the DAE set up a two-man committee consisting of legal scholar V.B. Coutinho and nuclear scientist Rajaraman to study the legislative framework on nuclear liability of different countries. The committee produced a report soon thereafter, recommending India's accession to the CSC and drafting a broad nuclear liability law for the country.