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Mainstream, Vol XLVIII, No 41, October 2, 2010

Legal Regulation of Nuclear Power

Wednesday 6 October 2010

by Lathika Nath

Nuclear generated electric power meets the energy demands of many countries around the world. This is a reliable source of energy without any release of greenhouse gases, smoke or emissions. In a developing country like ours, it will significantly impact on the quality and comfort of life and bring about significant changes. In the years ahead nuclear energy for civilian purposes will meet our growing energy demands.

India’s stand on non-proliferation was an important factor while entering into an agreement with the US on civilian nuclear power last year, and also with the NSG. India is the only country that can trade in nuclear fuel and technology even though it is not a signatory to the Non-Proliferation Treaty. Presently in the process of regulating nuclear power demands (approximately 25,000 MW by 2020) issues of limited liability, consolidation of all claims and limitation for settlement of claims need to be sorted out in order to attract foreign invest-ment.

In the 1950s many countries, such as UK, France and the US explored avenues to meet their energy demands vital for development. Nuclear generated electric power was a feasible option. In 2009 approximately 14 per cent of the world’s electric power came from nuclear power.

Presently there are 438 nuclear reactors in the world. As many as 104 are situated in the US, UK, France and Japan together account for 216. India and China have 19 each, In China 23 are under construction and this accounts for 42 per cent expansion globally. There have been three nuclear incidents: in 1957 at Windscale, UK, in 1979 Three Mile Island and in 1986 at Chernobyl, Ukraine. Claims were met under the regulatory regime that was already in place internationally and by the states where the plants were installed.

Initially, the private sector was not interested in investing in this high-risk business. A single incident could put the enterprise out of business while settling claims. At Tort Law, absolute liability (no-fault principle) and unliquidated damages (unquantified damages) did not make it an attractive business proposition. Modifications and changes were made in the compensatory system in order to attract investment, the liability was limited to enable the investor/operator/to make the enterprise financially viable. Together with a stipulated time-based framework to settle claims, the government was able to attract the necessary investment.

In the US, the Price-Anderson Nuclear Industries Indemnity Act made effective changes by indemnifying nuclear industries from claims arising from accidents. Nuclear reactor companies which demanded limited liability were made to compulsorily contribute to a special fund under the provision of law. The fund would be used for additional compensation by the state, if necesary. Further, the government undertook to pay more if required under the Tucker Act. All claims would be consolidated into one at the Federal Court. A time limit of three years was fixed for the filing of claims. In the well-known case of Duke Power Company versus Carolina Environmental Study Group, the Court was of the opinion that these benefits were “necessary to remove economic impediments to stimulate private development of electric energy by nuclear power, while simultaneously providing for public compensation in the event of a catastrophic nuclear incident”.

This was not the only industry where the government put in efforts to protect both the investor and future claims. Operators of off-shore oil platforms were made to pay eight cents per barrel of imported crude to an Oil Spill Liability Trust Fund to meet with the eventuality of any claims. Some sections of the public view this as an insurance subsidy to boost the industry and corporate sector. Limiting liability by quantified damages modifies the law of torts. Also courts would be unable to levy punitive damages thus placing constraints on the judicial process.

The need of the hour is to develop strategies to deal with a nuclear incident and subsequent claims. If the government is to guarantee further amounts to meet with such claims, undoubtedly this would come from the taxpayers. Taxes raised from the citizens would benefit private enterprise. Remedies available to the claimants would be whittled down. Several provisions of the law would need to be amended to deal with such an incident and the claims and penalties available at common law.

AT the international level, some Conventions over the last few decades have put into place a nuclear liability regime. The Paris Convention, 1960 with its two Protocols broadened the scope of liability to include carriage storage and transport of nuclear material. It covered third party liability. Non-party states were also included within its purview. The Vienna Convention relating to Civil Liability for Nuclear Damage, 1963, increased the liability to $ 500 million. The joint protocol of 1988, combined the provisions at civil law to improve regulatory effectiveness.

The Convention on Supplementary Compen-sation for Nuclear Damage, 1977 brought into being a Claims Commission. Claims would be decided on the basis of natural justice. Both nuclear power generating and non-generating states were included. A fund would outlay additional amounts to settle claims. Ninety per cent would come from generating states and 10 per cent from the contracting states as assessed by the UN. This was seen as a benefit to the nuclear power industry.

India, after years of isolation and sanctions, decided to use nuclear generated electricity to meet the growing demands of society. Separating the nuclear power industry for military and civilian use, it signed an agreement with the US and moved the NSG for supply of material and technology. It set the liability (both joint and several) of operators at Rs 500 crores beyond which the government would settle claims to the extent of Rs 2000 crores. This would instill confidence in both the operator and the supplier. The nuclear regulatory regime would need effective implementation in order to make it function effectively. A careful scrutiny of our domestic laws needs to be made in the light of the danger posed by this industry at the hands of private enterprise. The traditional insurance law will not apply to this industry in the light of the indemnity against claims. Legal provisions to deal with claims arising in the future must be appraised once again including the Public Liability Insurance Act. Health and safety concerns are paramount. Hence there is need for a regulatory body to monitor and inspect the premises and work. A defective design or outmoded technology could lead to disastrous consequences (as Chernobyl). In the US the Vermont Yankee Nuclear Plant leak led to settlement of claims of $ 10 million.

However, damage to the environment cannot be quantified in specific terms. The clean-up operations are costly and time consuming. Until an effective regulatory regime is put in place, foreign firms will hesitate to invest. India is poised on the threshold of playing an important role in the emerging regime of a new international nuclear order.

Dr Lathika Nath is an Associate Professor, Department of Law, Bangalore University, Bangalore.

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