Concerns Over Amendments to India’s Nuclear Liability Laws
Context:
In her Union Budget speech, Finance Minister Nirmala Sitharaman announced the government’s intent to amend the Atomic Energy Act and the Civil Liability for Nuclear Damage Act.
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- This move is expected to be welcomed by the U.S., where successive administrations have opposed India’s existing liability framework, which places some responsibility on nuclear manufacturers in the event of an accident.
- However, for India, any attempt to indemnify suppliers raises serious concerns about nuclear safety and accountability.
- These reactors come with exorbitant costs, making them financially unviable. Additionally, the inherent risks of nuclear accidents, as evidenced by the Fukushima disaster in 2011, demand robust safety mechanisms rather than reduced accountability for suppliers.
Atomic Energy Act, 1962
It provides a regulatory framework for all activities related to the atomic energy program and the use of ionizing radiation in India. The Act aims to develop, control, and use atomic energy for the welfare of the people of India and for other peaceful purposes. The Act empowers the Central Government to produce, manufacture, use, and dispose of atomic energy and radioactive substances. The Atomic Energy Regulatory Board (AERB), designated by the Central Government, is the competent authority for granting, renewing, or revoking consents for nuclear and radiation facilities.
Civil Liability for Nuclear Damage Act, 2010
The Civil Liability for Nuclear Damage Act (CLNDA) was adopted by Parliament in 2010. The Act aims to provide civil liability for nuclear damage and prompt compensation to victims of nuclear incidents. The CLNDA imposes strict and no-fault liability on the operator of a nuclear plant, making them liable for damages regardless of fault. It limits the operator’s liability to ₹1,500 crore, requiring insurance or financial security. The government steps in if damage claims exceed this amount. The government liability is limited to the rupee equivalent of 300 million Special Drawing Rights (SDRs), approximately ₹2,100 to ₹2,300 crore. The operator’s liability is capped at Rs 500 crore.
The Liability Framework and Its Shortcomings
- Nuclear Accidents: Nuclear accidents have far-reaching consequences, affecting victims, plant operators—most often the state-owned Nuclear Power Corporation of India Limited (NPCIL)—and equipment suppliers, which are typically multinational corporations.
- Supreme Court’s Ruling: The Supreme Court of India, in the aftermath of the Bhopal gas tragedy (1984), ruled in the 1986 Delhi Oleum gas leak case that enterprises engaging in hazardous activities bear absolute liability for any resulting harm.
- However, the Civil Liability for Nuclear Damage Act of 2010 diluted this principle by channeling primary liability to the operator and capping it at ₹1,500 crore.
- This is vastly inadequate, given that the estimated clean-up cost for Fukushima ranges between ¥35 trillion and ¥80 trillion (₹20 lakh crore to ₹46 lakh crore), highlighting the disparity between potential damages and legal provisions.
- Right of Recourse: To address this concern, civil society groups and political opposition successfully pushed for a “right of recourse” clause in the 2010 law, allowing the operator to seek compensation from suppliers if an accident results from defective equipment or substandard services.
- This clause is crucial because liability laws in many other countries, shaped by the historical influence of U.S. nuclear corporations, entirely indemnify suppliers.
The Risks of Supplier Indemnity
- Design Flaws: History has shown that design flaws have contributed to major nuclear accidents.
- The Mark 1 containment system, used in Fukushima’s reactors, had a known weakness flagged as early as 1972 by the U.S. Atomic Energy Commission official.
- General Electric, the reactor’s designer, ignored these concerns and, protected by Japan’s indemnity laws, faced no financial consequences after the Fukushima disaster.
- Supplier’s Liability: Similarly, the 1979 accident at Three Mile Island revealed that the supplier, Babcock & Wilcox, had been aware of a safety hazard from a prior incident but failed to take corrective action.
- If nuclear suppliers are absolved of liability in India, they would have no financial incentive to prioritize safety once reactors are sold.
Backtracking on Accountability
- Despite strong initial opposition to supplier indemnity, the UPA government attempted to dilute the right of recourse, even before the liability law was enacted.
- Ironically, after coming to power, the NDA government followed a similar approach, seeking to reassure U.S. corporations.
- Following President Barack Obama’s 2015 visit to India, the Ministry of External Affairs issued a set of FAQs suggesting that the right of recourse could be circumvented through contracts between suppliers and NPCIL.
- Yet, these reassurances have not satisfied American nuclear suppliers, who remain wary of any legal exposure in India.
- Their concerns are twofold: first, a future Indian government may increase the liability cap, exposing them to higher financial risks. Second, a liability law that holds suppliers accountable could set a precedent for similar measures in other countries, undermining the industry’s longstanding demand for complete indemnity.
The Economic and Safety Costs of American Reactors
- The AP1000 reactor, the leading American design on offer, has a poor track record in its home country.
- In the U.S., construction on four AP1000 reactors led to massive cost overruns, with two being abandoned after $9 billion had already been spent.
- The two that were completed in Georgia cost a staggering $36.8 billion—far exceeding the initial $14 billion estimate.
- Even with lower labor costs in India, electricity generated from such reactors would be significantly more expensive than other available energy sources.
- Additionally, newer designs like Small Modular Reactors (SMRs) are even less economical due to their lack of economies of scale.
A Hollow Commitment to Safety
- The liability debate exposes the exaggerated safety claims made by nuclear suppliers.
- Westinghouse, for example, asserts that a significant radiation release from an AP1000 reactor would occur only once in 50 million years.
- However, if such reactors are truly safe, why do their manufacturers seek complete protection from accident-related liabilities?
- If these companies acknowledge the real possibility of a disaster, why should Indian citizens bear the associated risks while corporations remain shielded?
The government’s willingness to amend India’s nuclear liability law under U.S. pressure raises concerns about its commitment to protecting Indian citizens. Nuclear energy carries inherent risks, and shielding suppliers from liability would remove essential safety incentives.
