Parliamentary panel for supplier liability in nuclear mishaps

Addressing a major apprehension of opposition, a parliamentary committee looking into the Nuclear Liability Bill today recommended inclusion of a clause in the proposed legislation to make suppliers accountable for any mishap involving an atomic plant.

The report of the Standing Committee on Science and Technology, which was tabled in both Houses of Parliament, also recommended raise in the cap of compensation, to be given by the operator, from the original amount of Rs 500 crore to 1,500 crore, "specially keeping in view the present level of inflation and the purchase value of the Indian currency."

The other amendments proposed in the Civil Liability for Nuclear Damage Bill, 2010 include extension of the period of claim in the event of nuclear accident from 10 years to 20 years, creation of a Nuclear Liability Fund and making a specific mention that the operator of an atomic plant will be only the government.

The report, which was tabled amid uproar created by Left parties in the Rajya Sabha, has notes of dissent from CPI(M) and Forward Bloc.

To hold the supplier accountable, the Committee said Clause 17(B) needed to be rephrased as "the nuclear incident has resulted as a consequence of latent or patent defect, supply of sub-standard material, defective equipment or services or from the gross negligence on the part of the supplier of the material, equipment or services."

In the original bill, the Clause 17(B) said - "the nuclear incident has resulted from the willful act or gross negligence on the part of the supplier of the material, equipment or services, or of his employee."

The committee observed that the words "willful act or gross negligence" mentioned in the original bill were "vague" and "hence there should be clear cut liability on the supplier of nuclear equipments/material in case they are found to be defective."

It noted that the Clause 17(B) gives "escape route to the suppliers of the nuclear materials, equipments, services of his employees as their willful act or gross negligence would be difficult to establish in a civil nuclear compensation case."

This clause was a major cause of dispute between the government and the opposition parties, which were alleging
that it would allow foreign suppliers to go scot-free particularly considering that India would be receiving material and equipment from foreign companies. 

The committee also recommended that the operator, which will be Indian government entity as per the present laws, "must secure his interest through appropriate provisions in the contract with the supplier".

"Even though the supplier is liable to the operator as per Clause 17(A), (B) and (C) of the bill, the committee recommends that if a written contract between the operator and the supplier provides for the right to recourse, the operator may, after compensating the victims, exercise the right of recourse against the supplier in accordance with the provisions of the contract," the report said.

Agreeing with the view of experts who deposed before it, the Committee noted that the compensation, which has been capped at Rs 500 crore in the original bill, "seems to be inadequate" keeping in view the disastrous effects of a nuclear incident and the consequent loss or injury to life, damage to property, economic loss and cost of measures for reinstatement of the damages to the environment.

"The committee, after considering the issue feels that the principle of no fault/strict liability of the operator should be explicitly stated in the Bill and the amount of liability of the operator should be Rs 1500 crore," the report said.

The committee felt that a lower amount may result in the operator marginalising the issue of safety and security of the nuclear power plant, which may lead to an accident. 

"Since the operator holds a no-fault liability and is being held responsible for a nuclear incident, the committee is of the opinion that it should bear a substantial cost of payment of compensation for the nuclear incident," it said.

The Committee also observed that the definition of the term 'operator' as provided in Clause 2(1) of the Bill is "not clear".

It recommended that the clause may be modified as "Operator, in relation to a nuclear installation, means the person designated by the Central government as per Section 3(A) of the Atomic Energy act, 1962 as the operator of that installation."

The committee also recommended modification of Clause 6(1)
of the bill which talks about the limit of liability in respect of each nuclear incident.

Clause 6(1) in the original bill says "the maximum amount of liability in respect of each nuclear incident shall be the rupee equivalent of three hundred million Special Drawing Rights'.

As per the recommendation, it should be modified as - "the
maximum amount of liability in respect of each nuclear incident shall be the rupee equivalent of three hundred million Special Drawing Rights or such higher amount as may be notified by the Central government from time to time."

The committee termed as "not justified" the proviso to Clause 6(2) of the Bill which gives power to the central government to either increase or decrease the amount of liability of the operator by notification, having regard to the extent of risk involved in a nuclear installation.

Asserting that the decrease in liability cannot be accepted, the Committee "recommends that while government may increase the amount, in no case it should decrease it." 

At the same time, the committee noted that high level of financial security may not be required for many research reactors which are small and other facilities such as fuel fabrication, reprocessing, transportation.

In this regard, it said the government, if required, may create a separate category for such facilities based on the extent of risk involved. 

The committee also recommended that the compensation amount should be determined by an officer not less than the rank of additional secretary to government of India or a judicial authority of a similar rank, instead of an officer of the rank of a joint secretary as proposed in the bill.