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Top lawyers decry nuclear liability Bill

Written By Gopal Krishna on Tuesday, December 15, 2009 | 12:08 AM

Even before being tabled in Parliament, the Civil Nuclear Liability Bill has run into opposition with a former Attorney-General, Soli Sorabjee, describing as a violation of fundamental rights the proposed attempt to cap the level of compensation victims of a nuclear accident will be entitled to.

“In view of several Supreme Court judgments, which are part of Indian jurisprudence and whose thrust is on the protection of victims of accidents as part of their fundamental rights under Article 21 of the Constitution, there is no warrant or justification for capping nuclear liability,” he said in a written opinion to the environmental NGO, Greenpeace India.

According to U.S. law, passage of the Bill limiting liability is a necessary condition for American nuclear vendors to export to and install plant and equipment in India. The Bill, which was cleared by the Cabinet just before Prime Minister Manmohan Singh’s visit to Washington last month, is likely to be tabled in the ongoing session of Parliament.

Though the draft text has not yet been made public, the provisions of the Bill reportedly cap the level of compensation at $450 million in the event of an accident at a facility. It will also be the operators’ liability to seek insurance cover for a maximum of $450 million.

Any compensation over and above this amount would be borne by the Indian government. More importantly, the responsibility for paying compensation would rest on the operator (likely to be the Nuclear Power Corporation of India), and not the private supplier or foreign company setting up reactors in the country.
“Can be challenged”

Sharing Mr. Sorabjee’s view, senior Supreme Court lawyer and constitutional expert P.P. Rao said: “This [Bill] can be challenged in a court of law as it may not stand judicial scrutiny. It is vulnerable, arbitrary and unfair.” He wondered how the government could legally deprive a victim of fair and just compensation. Any such move would be violative of the right to life.

According to Mr. Sorabjee, Supreme Court judgments have clearly laid down that in case of accidents in plants 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.
Lesson from Bhopal

Pointing out that the main lesson from the Bhopal gas tragedy was that foreign companies engaged in hazardous industries must be made strictly and absolutely liable for any damage caused by their units, Supreme Court lawyer Prashant Bhushan said “the proposed Bill, instead, seeks to limit the liability, which is absurd.

Aarti Dhar/J. Venkatesan
December 2009
The Hindu

The U.S.-India nuclear deal--one year later

* Last October, despite opposition from the arms control community, the United States and India entered into an agreement that allowed for nuclear commerce between the two countries.
* The early returns seem to indicate that the agreement is here to stay, as already many Indian and U.S. companies are experiencing a financial windfall from it.
* With the relaxed trading guidelines, other countries such as Russia, Sweden, and France also are looking to conduct nuclear business with New Delhi.

October 8 marks the one-year anniversary of former President George W. Bush signing into law the so-called U.S.-India nuclear deal. The deal proved controversial from its inception because it ended a 34-year U.S. ban on nuclear trade with India, a non-signatory to the Nuclear Non-Proliferation Treaty (NPT). And yet despite heavy criticism of the deal--especially from arms control and disarmament advocates--one year later, it appears solidly entrenched as long-term policy.

As Secretary of State Hillary Clinton told the U.S.-India Business Council's Synergies Summit in June, "The first stage of Indo-U.S. relations was ushered in when President Bill Clinton opened a new chapter of engagement with India. Then President George [W.] Bush took it to the second level with the Indo-U.S. civilian nuclear agreement. The Obama administration is determined to take it to the third stage, which would allow the countries to move beyond concerns about the status of India's nuclear program to a framework of economic and technical cooperation."

At its heart, the U.S.-India deal is really about big business, which has boomed since the agreement entered into force. In fact, intensive lobbying by corporate sectors in both the United States and India helped overrule the concerns of the arms control community. For Ron Somers, the president of the U.S.-India Business Council, the calculus was simple: "[The U.S.-India nuclear deal] will present a major opportunity for U.S. and Indian companies," he promised in July 2007. He added that the deal would create up to 27,000 "high-quality" jobs per year over the next decade in the U.S. nuclear industry. And so, Somers and U.S. and Indian corporations took to Capitol Hill and sold the deal hard. According to the Washington Times, New Delhi spent about $1.3 million on two lobbying firms, one of which, Barbour, Griffith, and Rogers, was headed by former U.S. Ambassador to India Robert Blackwill until July. Meanwhile, the Confederation of Indian Industries funded numerous trips to India for U.S. congressional delegations. Modest estimates placed the total cost at about $550,000.

Those investments have already paid off. Reportedly, the Indian government recently told Washington that it was ready to buy $150 billion worth of U.S. nuclear reactors, equipment, and materials. (See "India Says Lift Ban on Dual-Use Items; Dangles $270 Billion Business".) Indian Prime Minister Manmohan Singh's Special Envoy Shyam Saran also has promised that U.S. companies would "benefit for decades" from Indian orders for military hardware orders, ranging from fighter jets and aircraft carriers to anti-nuclear missile shields. As with the run-up to the deal's approval, any criticism of these transactions is being overwhelmed by the sheer magnitude of the money involved. For example, almost no one of any influence is paying attention to Indian academic and activist Dhirendra Sharma who has questioned how such long-term, large deals can be made "without clearance from the Reserve Bank of India and without engineering and technical assessment of old American reactors."

Thus, business proceeds apace. The Deccan Chronicle reported in June that Kaiga in the southern state of Karnataka, already the site of four indigenous nuclear reactors, was being "pushed hard" as the location for the new U.S.-built reactors. The current Kaiga plants include two that are outside the purview of International Atomic Energy Agency safeguards, and thus, they are officially set aside for "strategic" or military use. Six months earlier in January, the Mumbai-based Indian conglomerate Larsen & Toubro (L&T) and the U.S.-based Westinghouse Electric Company signed a memorandum of understanding for "cooperation to effectively address the projected need in India for pressurized water nuclear reactors with modular construction technology." The memorandum of understanding also envisions "turnkey construction of nuclear power plants including supply of reactor equipment and systems, valves, electrical and instrumentation products, and fabrication of structural, piping, and equipment modules for the Westinghouse AP1000 plants."

Similarly, in late May, L&T and U.S.-based GE Hitachi Nuclear Energy signed a memorandum of understanding for cooperation on boiling water reactors and advanced boiling water reactors. Under the agreement, GE Hitachi and L&T will plan for the construction and engineering management resources needed to build an advanced boiling water reactor power station, and GE Hitachi will serve as the technology provider for certain equipment and components. Two months prior, GE Hitachi announced an advanced boiling water reactor development agreement with the Nuclear Power Corporation of India, the country's only nuclear utility and operator of 17 domestic reactors. More largely, GE Hitachi says it is building its local supply chain in India and is exploring new business opportunities for civilian Indian nuclear power, including plant services and providing fuel for existing and new plants.

Non-U.S. companies also are getting in on the action. (As part of the U.S.-India nuclear deal, the Nuclear Suppliers Group, or NSG, waived its standard conditions to do business with India, which had not met its nonproliferation guidelines previously, giving the bilateral deal a multilateral character.) For instance, in April, a Swedish business delegation on nuclear technology and safety management arrived in India. Its mission--to understand the Indian nuclear energy market and explore business opportunities. That same month, L&T and Russia-based Atomstroyexport signed a memorandum of understanding to cooperate on Russian-designed VVER reactors. Atomstroyexport is part of the government-controlled corporation Rosatom and implements intergovernmental agreements on constructing nuclear facilities abroad. It accounts for more than 20 percent of the world market volume of nuclear power equipment and services--including participation in the construction, as well as management, of nuclear plants. It is the only company performing contracts in four countries simultaneously--China, India, Iran, and Bulgaria. In short, Atomstroyexport can be expected to offer stiff competition to U.S. companies doing business in India.

And then, of course, there's industry leader Areva. In January, Bharat Forge Limited, a large Indian manufacturer of automotive forgings, signed an agreement with the French firm to build a manufacturing facility for heavy forgings in India by 2012. Bharat Forge is the $2.4-billion flagship firm of the Kalyani Group, a leading Indian industrial company. Bharat Forge has manufacturing units in five foreign countries--the United States, China, Germany, Sweden, and Britain. So far, Paris seems impressed with the partnership: It chose Singh as the chief guest at its National Day Parade, a very public sign that it would like to keep its nuclear commerce with New Delhi going.

A lot of India's nuclear trade will hinge on uranium imports due to its poor domestic resources. Here, the concerns of anti-nuclear weapon activists are particularly acute. They argue that if India is allowed to import a large amount of uranium, it will free up more domestic uranium for the country's military program. Some in the Indian government basically have admitted as much. "Given India's uranium ore crunch, it is to India's advantage to categorize as many power reactors as possible as civilian ones to be refueled by imported uranium and conserve our native uranium fuel for weapon-grade plutonium production," the former head of New Delhi's official National Security Advisory Board, K. Subrahmanyam, wrote in the Times of India.

Three years ago, Moscow ruled out providing enriched uranium to India for its Tarapur nuclear power plant, citing NSG rules. But after former Russian President Vladimir Putin visited India in January 2007--and with the U.S.-India nuclear deal right around the corner--Moscow cleared the way for uranium exports to India. Likewise, Australian Prime Minister Kevin Rudd ruled out selling uranium to India when he took office in November 2007. But not long after that, Rudd surprised his supporters by announcing that he was in favor of granting India the NSG waiver.

For devout domestic supporters of the U.S.-India nuclear deal, it is mission accomplished. After all, as Times of India columnist Swaminathan Aiyar wrote in an April article, "The multinationals of France, the United States, and Japan want to manufacture nuclear equipment in India to meet not just Indian, but global demand. Once India becomes part of the global supply chain, it will become effectively sanctions-proof. As a supplier of global equipment, it will be in a position to impose sanctions on others, not just be at the receiving end." He added, "De facto, India will become a member of the privileged [permanent five] when it becomes part of the global supply chain of nuclear equipment in the next 10 years."

Much of this potential could dissipate, however, if New Delhi doesn't meet certain conditions--namely, agreeing to a nuclear liability law covering its facilities. In June, U.S. Assistant Secretary of State for South and Central Asian Affairs Robert Blake told the House Foreign Affairs Committee, "We're hoping to see action on nuclear liability legislation that would reduce liability for American companies and allow them to invest in India."

The stated purpose of the law will be to shield U.S. and international suppliers from liability in the event of a nuclear accident and make plant operators responsible for damages from any accidents. As such, operators must set aside about $450 million for compensation in case of damage, with the signatory governments covering additional claims. Competitors to U.S. firms, such as Areva and Rosatom, are covered by sovereign immunity because they are fully or partially controlled by their governments. Former Secretary of State Condoleezza Rice and other State Department officials have repeatedly stated that they expect India to create a "level playing field" for U.S. companies. It is difficult to see the Obama administration taking a different stance.

Chances are that New Delhi will adhere to Washington's wishes. An unnamed minister in Singh's government recently told a reporter: "The draft of the Nuclear Liability Bill is ready. What this will do is indemnify American companies." The move, however, will face stiff resistance from the government's opposition and the country's anti-nuclear movement. It remains to be seen how the government will counter this resistance.

Some analysts see the biggest hurdle to the proposed partnerships with India--whether it is Paris's partnership, Moscow's partnership, or Washington's partnership--arising from a declaration that came out of the recent Group of Eight summit in Italy, which talked of curbing transfer of enrichment and reprocessing technology to countries that haven't signed the NPT. India, however, seems unconcerned. "We have a clean waiver from the NSG," Finance Minister Pranab Mukherjee, who served as New Delhi's external affairs minister when the U.S.-India nuclear deal was being negotiated, told the Indian Parliament in July. "Every [NSG member] can trade with us. . . . Therefore, we are not deeply concerned."

And until multinational corporations are convinced that there is no more money to be made collaborating with India on nuclear projects, New Delhi probably doesn't have reason to be concerned.

J. Sri Raman
October 2009
Bulletin of the Atomic Scientists

Spurring nuclear Bhopals?

U.S. and Indian industry pressure to cap liability for civilian nuclear accidents will create a regime that shields offending corporations and punishes the public.

AS far as the atmospherics of her visit to India went, Hillary Clinton was charm unlimited. But beneath the always-smiling, relaxed and breezy manner of the United States Secretary of State lay a hard-nosed agenda: of further developing a broad-based relationship with India on terms defined by, and tilting heavily towards, the U.S. in the fields of defence, space, education, science and technology and nuclear energy.

Hillary Clinton secured an allotment from the Indian government of two “greenfield” sites in Andhra Pradesh and Gujarat for the construction of nuclear power plants based on U.S. technology. These are “of significant acreage”, have forested buffer zones (what a use to put forests to), and allow for future expansion.

The U.S. is keen on getting a share of India’s nuclear-power pie, set to expand thanks to the U.S.-India nuclear deal and exemptions secured by Washington from the International Atomic Energy Agency and the Nuclear Suppliers’ Group on restrictions on nuclear commerce with India imposed after the Pokhran-I explosion of 1974 and tightened after the 1998 blasts.

The U.S. nuclear industry – which has not secured a single domestic order for new reactors for 36 years – as well as American construction giants and related corporations are loath to see the nuclear business opportunities in India being exploited so far by France and Russia alone. But their “participation” will claim a price. They will only invest in India if their legal liability for mishaps in the nuclear power stations they build and/or operate is deliberately curtailed to a small amount.

The U.S. has mounted enormous pressure on India to pass a law to reduce the liability of American corporations and force the Indian public to bear the cost of damage caused by their profit-seeking activities, which result in accidents involving personal injury, or the release of small quantities of radioactivity all the way to a catastrophic core meltdown such as Chernobyl in 1986, which wreaks havoc on the life and well-being of hundreds of thousands of people.

U.S. pressure is overt and crude. On June 25, U.S. Assistant Secretary of State for South and Central Asian Affairs Robert Blake told a House committee: “… we are hoping to see action on nuclear liability legislation that would reduce liability for American companies and allow them to invest in India…” Former U.S. Ambassador David Mulford even lobbied for the passing of an ordinance in case Parliament could not urgently enact the law.

U.S. pressure is also effective. An Indian Minister has been quoted as saying: “The draft of the nuclear liability Bill is ready. What this will do is indemnify American companies so that they don’t have to go through another Union Carbide in Bhopal.”

This perversely depicts the perpetrator of the world’s worst chemical accident as a victim and pledges legal protection for a possible nuclear Bhopal. But it is entirely in keeping with the efforts of the U.S.-India Business Council and industrialists such as Ratan Tata to secure a clean chit for Carbide’s successor, Dow Chemical, and let it off the hook as far as cleaning up the contaminated site of the Bhopal plant is concerned.

Domestically, the U.S. nuclear industry has long enjoyed a special protective dispensation through a law called the Price-Anderson Act, passed in 1957, which limits its liability and the compensation available to the public in the event of a nuclear accident, however serious. This is one of the more deplorable – and one of the most widely criticised —– aspects of the framework within which the U.S. nuclear industry operates, with inadequate accountability to the public and a meagre obligation to compensate it for harm.

The Act was designed to create an incentive to industry because investors were unwilling to accept the then-unquantified (but presumably high) risks of nuclear energy without some limitation on their liability. Originally, the Act required nuclear plant operators to obtain the maximum possible insurance cover against accidents, then determined to be a measly $60 million.

It provided a further government commitment of $500 million to cover any claims in excess of private insurance. Companies were relieved of any liability beyond the insured amount for any incident releasing radiation, regardless of fault or cause. The Government Accountability Office of the U.S describes this as a subsidy.

Since then, the insurance cover has been raised to a still-measly $300 million and a fund has been provided for, to which all operators must contribute up to $111.9 million if an accident occurs. As of 2008, the maximum size of the fund is $11.6 billion.

But a serious reactor accident will cause damage, which is hundreds of times higher than this amount. For instance, the damage from Chernobyl is estimated at some $250 billion. If a core meltdown were to happen in Germany, the loss would be an estimated Euro 2000-5000 billion-of the same order as its gross domestic product. The public must bear this cost. This is grossly unfair.Three international conventions also attempt to provide such indemnity to the global nuclear industry: the Paris Convention (1960), the Vienna Convention (revised in 1997) and the Convention on Supplementary Compensation for Nuclear Damage (CSC), which has only been ratified by three countries and hence has not entered into force.

The CSC limits the compensation payable by the operators of nuclear plants for any accidents or damage to $450 million, leaving the responsibility for the rest to national governments. It is a mere coincidence, if a cruel and obnoxious one, that this paltry amount is of the same order as the total compensation paid ($470 million) to the victims of the Bhopal gas disaster under a collusive settlement imposed on them by the Indian government and the Supreme Court – an epochal case of injustice if there ever was one.

The proposed Indian nuclear indemnity Bill, which is apparently ready to be tabled, will make India a party to a similar form of injustice, albeit of a probably higher magnitude. Yet, Indian business organisations are piggybacking the U.S. and lobbying for such a law. FICCI (Federation of Indian Chambers of Commerce and Industry) has just produced a working group report, which recommends legislation to limit liability. The group was headed by the Nuclear Power Corporation chairman, and included representatives of a host private companies keen to get into nuclear power.

To appreciate the full import of what is in the offing, just consider the following. Nuclear power is inherently and extremely hazardous. Each stage of the so-called nuclear fuel cycle, from uranium mining to fuel fabrication, and from the operation and maintenance of nuclear reactors to the handling or reprocessing of spent fuel, is fraught with exposure to ionising radiation. Radiation is a unique and long-acting poison that causes chromosomal damage even in small doses – and hence cancer and genetic damage. Radiation cannot be neutralised or destroyed. And there is no threshold below which it is safe.

Nuclear power generation, as well as the transportation and handling of nuclear materials, inevitably exposes occupational workers to radiation. It is also fraught with routine emissions and effluents that are hazardous to the public in the vicinity. It leaves behind wastes, which remain dangerously radioactive for tens of thousands of years.

For instance, the radioactive half-life of Plutonium-239 is 24,400 years and that of Uranium-235 a mind-boggling 710 million years. Science has not yet found a way of safely storing, leave alone disposing of, such long-acting wastes. The economic lifespan of a nuclear reactor is only 30 or 40 years. But it remains hazardous for thousands of years.

Most important, nuclear power is the only form of energy generation that is capable of undergoing a catastrophic accident such as a core meltdown, with enormous radioactivity releases causing death and destruction over thousands of square kilometres. The death-toll from Chernobyl is estimated at 65,000. And every commercial reactor type now in operation in the world can undergo a Chernobyl-style accident.

All this demands that strict liability should apply to nuclear power – including all hazards from mining, processing, handling and transportation, and covering suppliers of components and equipment as well as power plant operators. The CSC’s central objective is to limit liability solely to the operator, and the jurisdiction to a single country, normally the one on whose territory an accident has occurred. This is utterly irrational and violative of natural justice.

Yet, there are alternatives. For instance, Austria has extended the liability regime to suppliers of equipment and other entities involved in transporting or dealing with nuclear fuel/waste. It does not limit the liability jurisdiction to one country and imposes no cap on liability. This is a worthy example.

India needs to have a proper system of regulation in place before it expands nuclear power generation and allows foreign investment in it – a course about whose wisdom one must be sceptical. . This system must respect the imperatives of safety, health, transparency, accountability and environmental sustainability. It must fully separate the Atomic Energy Regulatory Board from the operators of nuclear installations and empower it with independent personnel, equipment and a budget. And above all, it must hold

PRAFUL BIDWAI
August, 2009
Frontline

US pressure for soft nuclear liability law

Intense lobbying is on to exempt American nuclear suppliers of any liability in case of a nuclear accident in reactors they are planning to sell to India.

Two sites of "significant acreage" with potential for future expansion as well as forested buffer zones have already been identified by Indian authorities in Andhra Pradesh and Gujarat. The deal is all set to be announced during the current visit of Hillary Clinton, according to officials of the US India Business Council.

In return, the government is under pressure to bring in a liability law because American companies don't want extended battles for liability and compensation as it happened after the Bhopal gas tragedy.

The suggestion for exemption of foreign suppliers of nuclear plants from any liability in case of a nuclear accident has been made by a committee headed by a top Indian government nuclear official. The liability should be limited to operators of the plant.

If the nuclear industry has its way, this and other provisions relating to nuclear liability could become part of a new domestic legislation - the Civil Nuclear Liability (CNL) Bill - which is in the making. The proposed law is supposed to be a key step to operationalising the US-India civil nuclear agreement.

The US nuclear suppliers have been demanding a legislation like this one and complete exemption from liability in case of a mishap.

"It is imperative to indemnify the industry and the participants from any damage arising from any circumstance beyond control through normal diligence that is expected at nuclear installations," suggested the panel headed by S.K. Jain, chairman and managing director of the Nuclear Power Corporation of India Limited (NPCIL), a unit of the department of atomic energy.

This is necessary because nuclear accidents result in largescale damage involving a multitude of claimants and "attributing and fixing fault to a party is a lengthy and technical process", the panel observed. Therefore, the liability should be solely attached to the operator.

Even the operator's liability should be fixed, it has been suggested.

"Prescription of unlimited liability with the Bhopal gas tragedy case in hindsight will serve as a great deterrent for all potential entrants," the panel pointed out.

The proposed CNL should also put a limit to liability, in line with international conventions on compensation, the panel suggested.

According to international conventions on the CNL and practice in other countries, it says, the proposed Indian law should fix the liability for a nuclear accident at Rs 2,150 crore.

The amount is based on minimum threshold of liability prescribed in the Convention on Supplementary Compensation for Nuclear Damage.

Each nuclear operator should be required to maintain financial security equivalent to maximum liability for one nuclear accident.

As this burden of financial security to meet liability for any nuclear accident may be too much for an operator, the committee wants the central government to bear part of the financial security and permit operator of a plant to maintain lower security.

The panel also sought an "absolute waiver" to agencies responsible for handling and transportation of radioactive material from any liability. Such non-operator liability should stand transferred to the operator.

Given the fact that, at present, the Indian government operates all nuclear power plants, this would mean all liability stands transferred to the government and it would have to pay damages if a mishap occurs in a nuclear power plant supplied to by the US or any other country.

The panel was set up by the Federation of Indian Chambers of Commerce and Industry after the nuclear deal was signed and includes representatives of government and private power companies. It submitted its report recently. The US- India Business Council has also sought "limits on liability in the event of a nuclear mishap". "No lessons have been learnt from the Bhopal gas disaster either by India or the United States," said Satinath Sarangi of the International Campaign for Justice in Bhopal. "Indians want a clear nuclear liability regime that will lay out who will pay in the event of a nuclear disaster.

This is important as a nuclear catastrophe would dwarf the Bhopal tragedy in its scale of impact." The central government has proposed amendments to the Atomic Energy Act of 1962 to allow private sector in nuclear power generation. Till this happens, the NPCIL will remain the only company in nuclear power generation and the only way the US and other foreign nuclear suppliers can do business with India is to sell their reactors and other equipment to NPCIL. The Jain panel has some significant observations on selection of sites for nuclear plants, virtually seeking a relaxation in regulatory norms. It says in view of the additional safety measures for new plants, the Atomic Energy Regulatory Board could reduce requirement for "exclusive zone distance" and merge sterilised zone with emergency planning zone.

Dinesh C Sharma
July, 2009
India Today
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