Answers to questions on the nuclear damage bill the Centre withdrew from the Lok Sabha on Monday

What is the bill’s purpose?

The Civil Liability for Nuclear Damage Bill seeks to set down mechanisms and rules for liability claims and payments that might arise because of a nuclear incident and to pave the way for India to join an international liability regime.

What kind of nuclear liability regime does India have at present?

All of India’s nuclear power reactors and nuclear facilities are owned by the central government, or by the Nuclear Power Corporation and Bharatiya Nabhikiya Vidyut Nigam (Bhavini) — both public sector enterprises. Any liability issues that emerge from incidents become the responsibility of the central government. The inter-government agreements between India and Russia under which Russia has supplied two nuclear reactors at Kudankulam in Tamil Nadu do not clarify liability issues. This has meant uncertainty over trans-boundary liability issues.

Why has the bill become necessary now?

The Indo-US civilian nuclear agreement allows US suppliers to sell nuclear power reactors to India. But the companies have been concerned about the absence of a well-defined nuclear liability regime in India. Environmental groups believe foreign companies will be reluctant to invest without a liability regime in place because they do not want to run the risk of having to compensate without a cap for a nuclear incident. Without the bill, under the existing legal regime, a company may have to encounter absolute, unlimited and non-delegable liability.

What does the bill propose?

A leaked version of the proposed bill circulated by environmental groups indicates that the government plans to cap the maximum liability for each nuclear incident to 300 million Special Drawing Rights ($460 million or Rs 2,100 crore). This is lower than the $470 million settlement in the Bhopal gas disaster.

If the claims for compensation for nuclear damage exceed SDR 300 million, an additional 300 million SDR may be available through an international convention.

The liability of a nuclear power operator (so far only the NPC and Bhavini) for each nuclear incident will be Rs 500 crore. The limit will also apply to private companies if they are allowed entry into the sector.

The central government will be liable for nuclear damage if the liability exceeds the operator’s limit.

Why has this generated controversy?

The bill has generated the widespread perception that it will allow US companies to go scot-free in the event of a nuclear accident and saddle the Indian government with the liability — in other words, Indian taxpayers will have to pay for damages. Some environmental activists are contrasting the proposed Indian cap of $460 million with the much larger $10 billion pool of funds available in the US to cover liability and provide compensation to the public in the event of a nuclear accident. Some legal experts are arguing that there is no place for a cap on liability under Indian law. Any such legislation would be vulnerable and open to challenge and could be easily struck down as a violation of the environmental jurisprudence established by India’s Supreme Court.

Will the bill really allow foreign companies to go scot-free?

A clause in the bill appears to allow the nuclear operator to have “a right to recourse” —which would mean the operator could seek assistance — when the nuclear incident has resulted from negligence on the part of a foreign supplier of a material, equipment or service. However, this would have to be reflected in written contracts between the Indian operator (the NPC, for now) and the foreign suppliers. Environmental groups are sceptical, and fear that this will not emerge in actual contracts.

How is the bill linked to the international nuclear liability regime?

The Convention on Supplementary Compensation under the International Atomic Energy Agency provides for an international fund to compensate for nuclear damage in the event of an accident. The convention envisages a two-tier system — the state will ensure availability of at least 300 million SDR, and an international fund for which all participating nations are obliged to contribute. Any country that plans to join will have to ensure its national legislation is consistent with the convention’s provisions. By enacting domestic legislation, India could join the convention and — should the event arise — also seek money from the much larger international fund, which could help India access an additional 300 million SDR.

How is nuclear liability covered in the US?

The Price-Anderson Act enacted in 1957 ensures the availability of a large pool of funds — about $10 billion — to provide compensation to people who incur damages from a nuclear accident — no matter who is liable.

Have nuclear liability claims been paid in the US?

The American Nuclear Society estimates that the nuclear insurance pools have paid a total of $151 million in the past 43 years. The US energy department has paid $65 million.

What kind of liability regimes do other countries have?

They vary from country to country. Belgium has set a liability amount of 300 million Euros, and the France 91.5 million Euros, and the UK £40 million. Germany has set unlimited liability though a financial security limit is set at about 2,500 million Euros. Japan also has unlimited liability, but a maximum financial security limit of 60 billion yen.