Baghjan blowout shows why we need to fix liabilities

There is also a need to address inland oil spills through regulations

By Abhishek Chakravarty, Mahesh Menon
Published: Friday 19 June 2020
In spite of having so many inland spills and blowouts, India does not yet have a a proper regulation or legislation in this regard. Photo: @HimashreeBhara3 / Twitter__

After nearly two weeks of uncontrolled leakage at an oil well in Upper Assam’s Baghjan village, a massive explosion followed by all-engulfing fire is ravaging the area. Two people have already lost their lives, one person is missing and more than 7,000 people from three villages — Baghjan, Dighaltarang TE and Dighaltarang have been affected by the incident and are now living in relief camps.

Besides this, the fire and condensate spillage has damaged farmlands, tea estates and has threatened the wildlife and aquatic species in the eco-sensitive area.

The oil well lies within a 10-kilometre (km) radius of the Dibru Saikhowa National Park and Bherjan-Borajan-Podumoni Wildlife Sanctuary, besides being right next to the Maguri-Motapung wetland (1 km from the site) — an Important Bird Area (IBA).

Despite the sensitive location, the project received a clearance from the Union environment ministry. In fact, recently, the ministry also gave clearance to Oil India Ltd (OIL) for drilling inside the Dibru Saikhowa National Park at seven locations.

The well has also been claimed as a scientific failure. Research by a senior scientist of Halliburton Corp revealed that the Baghjan oil well, where the present blowout has happened, was never a gas well; rather it was a condensate well.

Condensate wells are highly inflammable and often lead to explosion and fire. OIL has also suspended two of its employees on grounds of negligence and has also sent show-cause notice to its outsourced private operator John Energy Pvt Ltd.

Absolute liability

Now that the incident has happened, the next logical step would be to limit damages, clean up the spill and last but not the least, establish liability. The principle of absolute liability’ laid down by the Supreme Court in 1986, in the MC Mehta vs Union of India decisions (popularly known as the Oleum Gas Leak Case) needs to be recounted here. 

For many centuries, liability in law centered around the concept of fault’ — ie some form of a shortcoming in the conduct of the polluting party. This meant that to affix liability, it had to be shown that the polluting party had done it deliberately; or that s / he was rash or negligent in the way that s / he acted.

Fault’, in this sense, was notoriously difficult to establish as one had to have evidence to demonstrate on whose part the shortcomings lay. The limitations of this approach was felt in the years of the Industrial Revolution, which led the courts to frame the less demanding principle of strict liability’ — where there was no need to establish fault.

The rule was that “any person, who, for his own purposes, brings on his lands and collects and keeps there, anything likely to do mischief if it escapes, must keep it in at his peril, and, if he does not do so, is prima facie answerable for all the damage which is the natural consequence of its escape”.

To put it differently, any entity that engaged in activities that were dangerous, could be held liable, if any accidents were caused, irrespective of any fault on their part.

There were however, exceptions to this rule too, like if the damage was caused by circumstances beyond the control of the entity (an act of God); or that third parties not connected to the entity had caused the accident; or that the person who suffered the injury had consented to that act.

These exceptions often made strict liability not effective enough and led to situations where it was difficult to ascertain who had to pay for the losses.

It was in this specific context that the Supreme Court propounded a new principle — one of absolute liability. Taking into account the limitations of the law, the court held that entities that engaged in hazardous / inherently dangerous activities had an absolute and inexcusable duty towards the community to prevent any harm.

As a result of this, “...the enterprise must be absolutely liable to compensate for such harm and there should be no answer to the enterprise to say that it had taken all reasonable care and that the harm occurred without any negligence on its part” (emphasis supplied) [MC Mehta vs Union of India, AIR 1987 SC 1086.

This meant that when it came to activities that were inherently hazardous (such as oil drilling), there was an absolute liability to pay for losses if things went wrong and there were no exceptions to this. This was indeed a great legal innovation that the court brought about in environmental torts jurisprudence, sealing all the gaps when it came to ascribing liability.

In 2010, Parliament enacted the National Green Tribunal (NGT) Act, which set up the NGT — an exclusive environmental court to deal with environmental matters. However, Parliament chose to ignore absolute liability and settled that the "The Tribunal shall, in case of an accident, apply the principle of no-fault” (Section 17, NGT Act).

It is quite clear from this language that the standard of liability is at best a strict one and not an absolute one. Scholars have argued the need to apply the “absolute liability” standard, with some even suggesting that the NGT can do that. However, the argument is difficult to sustain on the face of things as the language of Section 17 makes it clear that lack of fault is the crucial element that the NGT cannot overlook.

This, however, does not mean that the absolute liability has been given a legislative death in India. Section 17 only makes it clear that the NGT cannot traverse beyond strict liability. The constitutional courts of our country can continue to apply the standard of absolute liability.

The Supreme Court and High Courts can continue to exercise jurisdiction over environmental matters despite the NGT. This is because the right to environment has been declared to be an aspect of Article 21 (the Right To Life) and the writ jurisdiction can be invoked to address and respond to violations.

The writ jurisdiction cannot be legislatively curtailed (L. Chandra Kumar v. Union of India) and any limitations are only self-imposed.

While the constitutional courts often refuse to entertain an environmental case because the NGT exists as an alternate remedy, there have been a number of instances when the courts have chosen to exercise their jurisdiction (to illustrate, the Bombay and Delhi High Courts and even the Supreme Court has stepped into address air pollution, in recent times).

Further, there is also the principle of polluter pays’ — which is that the entity that caused the environmental damage must pay for the cleanup and should compensate the losses. The Supreme Court of India has used and referred to this principle for the first time in the 1996 Indian Council for Enviro Legal Action v. Union of India case, followed by a number of other instances.

Thus, the principle of absolute liability is far from dead — it is merely that the NGT may not be able to apply it. However, the writ courts can continue to employ the principle.

A stronger regulatory framework

This is not the first time that an oil well blowout has taken place in India. In the past, we have seen several instances, two of which are from Assam itself — in Dikom in 2005 and way back in 1967 in the Rudrasagar oil field, both of which lasted for nearly two months. In 1995, there was a major blowout in Pasarlapudi, Andhra Pradesh, that continued for 65 days and caused considerable damage in the region.

When it comes to blowouts and oil spills, most regulations and legislations in the country focus on spills that occur in the marine environment. The Merchant Shipping Act, 1958, and The Merchant Shipping (Prevention of Pollution of the Sea by Oil) Rules, 1974, deal with spills, leakages and discharge from vessels in the sea.

These laws and regulations miss out cases of inland oil spills and blowouts. Oil spills would, without doubt, fall within the scope of the The Disaster Management Act, 2005 (DMA’) however, this framework is only a responsive one and leaves no institutional-regulatory mechanism to deal with an oil spill and can only provide an ad-hoc process and response.

Besides, the DMA does not deal with liabilities and its consequences. Therefore, a regulatory gap exists when it comes to incidents like the one that happened at Baghjan in Assam.

In the aftermath of the Exxon Valdez oil spill in 1989, the United States of America enacted the Oil Pollution Act of 1990. The Act streamlined and strengthened the United States Environment Protection Agencys ability to prevent and respond to catastrophic oil spills.

A trust fund financed by a tax on oil is available to clean up spills when the responsible party is incapable or unwilling to do so. It also covers regulations on onshore oil facilities albeit the primary focus is on offshore spills. Further, the Clean Water Act, 1972, also provides for guidelines relating to onshore facilities.

In spite of having so many inland spills, the deliberation of having a proper regulation or legislation in this regard has not surfaced in India. Following the fire incident at an oil depot in Jaipur in 2009, the MB Lal Committee was constituted.

One of its recommendations — of building emergency response centres to handle major oil fires, was to be completed in 2014. Till date, it has not been set up despite having so many blowouts in the country during this period. According to the Oil Industry Safety Directorate, eight accidents in oil and gas installations took place between April and June 1, 2020.

Looking at the fact that such instances are common in India, there is a necessity to enact a specific legislation in this regard — which would not only provide for a rule to affix liabilities, ensure safety concerns, compliance of the environmental norms and most importantly ensure that questions the costs of cleaning up and compensation are not left in the lurch.

Abhishek Chakravarty is an Assistant Professor of Law at Sai University and Faculty at Daksha Fellowship. He specialises in Environmental Law

Mahesh Menon is an Assistant Professor of Law at Sai University and Faculty at Daksha Fellowship. He specialises in Human Rights Law

Views expressed are the authors’ own and don't necessarily reflect those of Down To Earth

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