Nuclear energy — dangerous concessions on liability

The Hindu Editorial Analysis
13 February 2025

Nuclear energy — dangerous concessions on liability

(Source – The Hindu, International Edition – Page No. – 6)

Topic: GS 3: Science and Technology

Context

The line in the Union Budget on the intent to amend the Civil Liability for Nuclear Damage Act should be a matter of serious concern.

Introduction

In the Union Budget speech on February 1, the Finance Minister Nirmala Sitharaman announced the government’s intention to take up “amendments to the Atomic Energy Act and the Civil Liability for Nuclear Damage Act….” This announcement is likely to please Washington, where successive administrations have been unhappy that the law places some minimal responsibilities on nuclear manufacturers in the event of an accident. But, in India, any move to indemnify suppliers should be a matter of serious concern since this could undermine nuclear safety. Moreover, the reactors that the American government is pushing India to buy are extremely expensive and their import makes no sense on economic grounds.

Risks of Nuclear Reactors

• Any nuclear reactor carries the risk of accidents.
• Some of which, such as the multiple reactor meltdowns at Fukushima, Japan (2011), can be catastrophic.
• Such a disaster affects three parties:
  • The victims.
  • The operator of the nuclear plant (likely NPCIL in India).
  • Its supplier, which might be a multinational corporation.

Liability and Legal Framework

• Following the Bhopal gas disaster (1984), the Supreme Court of India ruled in the Delhi Oleum gas leak case (1986) that any hazardous activity is “absolutely liable” for harm to victims.
• However, in 2010, the UPA government created a special law for nuclear accidents, diluting this principle.
• Under this law, primary liability is channeled to the operator and capped at ₹1,500 crore.

Comparison with Fukushima Cleanup Costs

• This is unfair to victims, as the economic damage caused by an accident can be much higher.
• The Japan Center for Economic Research estimated Fukushima cleanup costs at ¥35 trillion to ¥80 trillion (₹20 lakh crore to ₹46 lakh crore).
• More than a thousand times the operator liability cap in Indian law.

Assigning responsibility

• Despite this gross mismatch, the law did have one slightly redeeming feature.
• Under pressure from civil society groups and the political opposition, the UPA government was forced to include a clause called the “right of recourse”.
• This allows the operator to recoup compensation paid to victims from the supplier if the accident was caused by:
  • “Supply of equipment … with patent or latent defects or sub-standard services”.

Global Supplier Indemnity and Its Impact

• Because of the historical monopoly enjoyed by U.S. nuclear companies, liability laws in many other countries lack this feature.
• Instead, they completely indemnify suppliers.
• This simply reflects the influence of powerful corporations and is not based on a scientific analysis of previous accidents.
• Design defects have played a role in every major accident to date.
  • A weakness in the Mark 1 containment used in the reactors at Fukushima contributed to that accident.
  • This defect was flagged as early as 1972, when a U.S. Atomic Energy Commission official warned that General Electric (GE), the reactor’s designer, had used “data from tests not applicable to accident conditions” in safety assessments.
  • The official recommended that “such designs not be accepted for construction permits” in the future.
  • GE brushed aside this concern and, because it is indemnified by the Japanese liability regime, has not paid anything for the Fukushima accident.

Indemnity and Supplier Negligence

• Indemnity removes economic incentive for suppliers to ensure reactor safety once a sale is completed.
• This is not a hypothetical concern.
• Following the 1979 accident at Three Mile Island, the Kemeny Commission established by the U.S. governmentnoted that Babcock & Wilcox, the reactor supplier, had identified a safety hazard in an “earlier accident, bearing strong similarities to the one at Three Mile Island.”
• Even though an engineer at the company had “urged, in the strongest terms, that clear instructions be passed on to the operators” to mitigate this hazard, the supplier failed to do so.

Backtracking on progress

• Nuclear suppliers were furious at the idea that they might have to pay for accidents in India.
• To appease these companies, the UPA government made farcical attempts to dilute the right of recourse, both during and after the parliamentary debates on the law.
• This led Bharatiya Janata Party leader Arun Jaitley to write that a “leopard never changes its spots.”

Policy Shift Under NDA Government

• After assuming power, the National Democratic Alliance government pursued the same policy of prioritising nuclear corporations over potential victims.
• Following U.S. President Barack Obama’s visit to India in 2015, the Ministry of External Affairs issued “frequently asked questions”, downplaying the operator’s right of recourse.
• It also disingenuously suggested that this right could be bypassed using a contractual arrangement between the supplier and the NPCIL.

 U.S. Suppliers’ Concerns

• These machinations have not satisfied U.S. suppliers, who are unwilling to expose themselves to any legal hazard in India.
• Their concerns include:
  • A future government might rationalise the low liability cap, exposing them to large financial risks.
  • Accepting minimal liability in India could endanger their arrangements in other countries, where they have successfully demanded complete indemnity.
  • If liability law mandates an assessment of a supplier’s culpability, victims might hold corporate executives accountable under criminal laws in case of a disaster.

 U.S. Lobbying for Legal Changes

• U.S. officials have actively lobbied on behalf of these politically influential companies.
• Outgoing U.S. Ambassador to India, Eric Garcetti, recently indicated that he had been in touch with leadersfrom both the ruling party and the Opposition to amend the law.
• He also lamented that U.S. corporations had been unable to sell a single reactor to India, nearly two decades after the U.S.-India Civil Nuclear Agreement.
• However, this has helped India avert a costly mistake, as the troubled track record of these reactors in the U.S.shows.

• The leading American reactor design on offer is the AP1000.
• Electric utility companies started construction on four such reactors in the U.S.:
  • Two reactors in South Carolina were abandoned after delays and cost escalations, despite $9 billionalready being spent.
  • Two reactors in Georgia were completed at a staggering cost of $36.8 billion, over 250% of the $14 billion estimate.
• These high costs result in expensive electricity.
• Even with lower labour costs in India, electricity from such reactors would be several times higher than competing sources.
• Small modular reactor designs, such as those offered by NuScale Power, are even less economical due to the loss of economies of scale.

Hollow safety claims

• The debate on liability also exposes the exaggerated safety claims made by suppliers.
• Westinghouse claims that a large release of radiation from an AP1000 reactor would happen only once in 50 million years.
• If reactors are so safe, why would nuclear vendors take extreme precautions to protect themselves from the consequences of an accident?
• If companies such as Westinghouse recognise that the risk of an accident is real and are unwilling to risk financial losses, why should Indian citizens who live near a reactor be willing to risk their lives and property?

Conclusion

Prime Minister Narendra Modi projects an image of a strong global leader. However, the government’s announcement on the liability law is a revealing commentary on that message. When faced with pressure from the U.S. government, which puts the profits of U.S. corporations above all else, Mr. Modi’s government seems unable to stand up for the basic rights and the safety of Indians.

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