Who is liable?

Gom seems lenient towards Union carbide’s new owners

Published: Thursday 15 July 2010

Who is liable?

imageThe group of ministers (GoM) has not made it clear whether Dow Chemicals, the company that acquired UCC in 2001, is to be held liable for the threat to public safety as a result of the toxic waste the pesticide factory dumped on its premises.

It has only said the case against Dow Chemicals in the Madhya Pradesh High Court will continue.

The GoM decided on June 21 that India would take up the cleaning of the factory premises and continue to pursue Dow for the clean-up expenses. In 2005, the Union Ministry of Chemicals and Fertilizers moved the Madhya Pradesh High Court to direct Dow to deposit Rs 100 crore towards environmental remediation. The case for clean-up has been going on since 2004; Dow is one of the respondents.

Dow Chemicals has maintained it bought over UCC 10 years after all claims had been settled with the Indian government for US $470 million. Therefore, it does not have any of UCC’s liabilities (see ‘Subterranean Leak’, Down To Earth, December 1-15, 2009). “Dow’s defence can be struck down on the basis that its contractual agreement is contrary to the public doctrine of polluter pays; statutory liability is not a matter of contract,” said Dhavan.

The polluter-pays principle is law in India, and intent or knowledge of contamination is not a prerequisite for being held accountable. The Hazardous Waste (Management and Handling) Rule of 1989 stipulates that producers of the contaminated waste are responsible for decontamination.

Experts believe the Indian government should stress on the fact that UCC’s full settlement was for compensation to victims and not for environmental remediation. And that the cleaning up of the site has nothing to do with the accident, but the fact that it was dumped in and around the factory long before the gas leak occurred. “The 1989 settlement order never touched upon contamination,” Baxi commented. “This makes it all the more important for the Indian government to intervene on environmental contamination in the civil case pending in US district court in New York. The government of India has to file an affidavit and make a case on behalf of Bhopal victims,” he added.

Coming forward to clean up the toxic waste could be one of the victimappeasement tactics of the government without intending to hold anyone liable. But if it does have the intent, said G Mohan Gopal, director of the National Judicial Academy in Bhopal, the government should file a fresh petition under Article 226 based on the findings with the CJM’s court and start the case again. “Once the site is cleaned, there will be no case against Dow and no reason for it to pay,” said Balkrishna Namdeo, member of the Gas Peedit Nirashrit Pensionbhogi Sangharsh Morcha, a victims’ group in Bhopal.

Namdeo wants the government to fix environmental and criminal liability on Dow Chemicals as it is UCC’s successor. “The government should take stringent actions against Dow and set an example for multinationals that they cannot get away with murder,” he added.

This, Namdeo said, was even more relevant in the context of the Civil Nuclear Liability Bill that is being discussed. “A nuclear accident is going to have multiple impacts and if the government frees the suppliers of liabilities it will give them the licence to kill,” the activist said.

Civil nuclear liability bill

The recently introduced Civil Nuclear Liability Bill, under review by the Parliamentary Standing Committee on Science and Technology, Environment and Forests, seeks to limit the liabilities of companies establishing nuclear power plants in India.

The bill has been opposed from the beginning because it fixes a liability of about Rs 2,050 crore or US $450 million on the operator and absolves the suppliers of any responsibility towards safety. “The amount is even less than what the Bhopal victims got. It is peanuts,” said Anil Chaudhary of the non-profit Coalition for Nuclear Disarmament and Peace in Delhi. “Everyone involved in the process of producing nuclear energy should be held liable. Why should suppliers go scot-free?” he asked.

Of the Rs 2,050 crore, the proposed bill caps the operator’s liability at Rs 500 crore. The government will bear the balance (see ‘Radioactive Mirage’, Down To Earth, October 1-15, 2009).

The Nuclear Power Corporation of India Limited (NPCIL) under the Department of Atomic Energy is the operator for all nuclear power plants in the country. In case of an accident, the Government of India will have to cough up all of the Rs 2,050 crore—unless a private operator is allowed. But this can only be through an amendment to the Atomic Energy Act.

“It is difficult to say whether an amount is high or low, but it is worth asking why India has a low liability and why does it have a cap. Germany has unlimited nuclear liability,” said Ambuj Sagar, professor at IIT Delhi. The limited liability and the cap are attributed to the fact that India wants to be a part of the International Atomic Energy Agency’s (IAEA’s) Convention on Supplementary Compensation (CSC), which aims to establish a worldwide liability regime. As per the convention there is a cap of 300 million SDRs (special drawing rights, a quasi currency) on the liability amount. The 300 million SDRs are equivalent to Rs 2,050 crore. In case of a nuclear mishap CSC will enable India to receive compensation above the capped liability limit from other countries party to the convention.

But the twist is CSC is not operational. It will become operational only if a country with a major nuclear programme such as Japan accedes to the convention.

Could India then go the US way and create a liability pool? Analysts explained that would be possible only if there were a large number of private operators in the country.

Then, in the bill, there is the right to recourse against suppliers in case of wilful act or gross negligence under clause 17 (b). There is no such clause in the CSC. The Indian government considered removing this clause, but it decided to let it remain.

India has two options: to remove the 17(b) clause in its bill to become a part of CSC or to stay out of the convention like South Korea. The latter will ensure India can approach the court of the nuclear supplier country in case of a mishap, wrote Siddharth Varadarajan in a recent article in The Hindu. He is a senior journalist and one of the members called to depose before the standing committee meeting on nuclear liability.

Analysts, though, point towards an injustice in section 18 of the proposed bill. “This section states that claims for compensation for nuclear damages can be made only within 10 years. Nuclear accidents can affect health for generations, so it is unfair to limit the number of years to file for compensation,” said M R Madhavan of PRS Legislative Research, a think-tank in Delhi. The bill defines “nuclear damage” as loss to life and property as “notified by the Central government”, he said. “The Central government being the operator of the plant through NPCIL cannot notify the true extent of the loss incurred. This is conflict of interest,” he added.

Clause 46, though, preserves the victims’ right to file claims. This raises the possibility of criminal liability in case of negligence on the part of the operator. “Given the unhappiness over the Bhopal settlement, the standing committee must ensure the nuclear bill does not dilute the victims’ right to file claims against any party in the event of an accident,” Varadarajan wrote. Nuclear energy is almost half a decade old, and two major accidents later it is still unclear what should be the liability amount and who should bear it.

New technologies and dangers

What happens to liability in case of new technologies? Take for example, genetically modified organisms (GMOs), purportedly to increase food pro - duction, and carbon capture and storage (CCS) that seeks to bury the emitted carbon dioxide somewhere deep into the earth. CCS is considered one of the methods to mitigate global warming triggered by emissions from fossil fuels. GMOs are a reality in India, with Bt Brinjal (despite a mora torium) and many others waiting for the nod.

At present, the National Green Tribunal Act 2010 does provide for compensation, relief and restitution of any damage to the environment, including flora and fauna. But its efficacy remains to be tested.

Internationally, especially in the EU, the GM liability clauses are well defined. Austria has the strictest regime, with a pre-sowing authorization system, which guarantees its moratorium. The Cartagena Protocol on Biosafety held its meeting in Kuala Lumpur on June 15- 19, 2010. The meeting stressed providing financial security so that damages do not remain unredressed under the liability regime.

As far as CCS is concerned, no country is really prepared for this fairly new technology, said Sagar. “There is no clarity on the magnitude of potential disasters they could cause,” he added.


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