As I blogged in late February, there has been progress toward implementing the U.S.-India Nuclear Deal. I also pointed out that obstacles remain to the deal’s entry into force, including completion of an agreement regarding a nuclear spent fuel reprocessing facility and approval by New Delhi of a liability limitation bill for U.S. firms.
With the news last week that the government decided not to introduce the Civil Liability for Nuclear Damage Bill in the Indian parliament, there is still no telling when U.S. firms will be able to start reaping the benefits from nuclear trade with India. The tragic comedy that many opponents of the deal warned it would become seems to be playing out as predicted: U.S. efforts to rewrite the rules on international nuclear trade are likely to end up benefiting firms in Russia, France, and other nations much earlier (and perhaps even far more) than their U.S. counterparts…
The proposed liability limitation bill would shield U.S. suppliers from liability in the event of a nuclear accident and make plant operators responsible for damages from any accidents. It would cap legal liability for international nuclear reactor operators at $65 million and limit the Indian government’s financial obligation to roughly $385 million. It would also require that all assertions of wrongdoing be filed inside of 10 years.
Without such legislation U.S. firms would likely be unable to get the necessary insurance to engage in nuclear cooperation. Competitors to U.S. firms such as France’s Areva and Russia’s Rosatom do not require liability limitation legislation because they are covered by protections from their home governments.
While the Indian cabinet has approved the legislation, consideration of the bill was pulled on March 15 by the lower house of parliament, the Lok Sabha. Speaker Meira Kumar deferred consideration after receiving notice from at least four members of the opposition that they intended to block the bill at the introduction stage, as they found it to be in violation of the Indian Constitution and several former Supreme Court rulings.
The ruling government in India largely supports the bill, as it is in their interest to fully implement the U.S.-India Nuclear Energy Cooperation Deal. They argue that the nation requires a liability structure to bring it up to par with global standards, especially given the frequent power blackouts that affect even the capital, New Delhi. Analysts believe Prime Minister Manmohan Singh wanted to secure approval of the legislation before he travels to Washington in April for President Obama’s Nuclear Security Summit. They now estimate he will seek passage of the bill before Obama visits India later this year.
Critics of the bill in India include members of the Bharatiya Janata Party and the Communist Party of India (Marxist). They have voiced concern that the bill is being forced through parliament as a result of U.S. pressure, noting that the ruling government is “safeguarding the interests of the United States at the expense of the safety of Indian people.” They argue that the legislation does not provide adequate protection for residents and leaves the bulk of responsibility for any ensuing land reclamation efforts to Indian citizens. Under the bill, the majority of compensation for victims of nuclear accidents would fall on Indian taxpayers.
One observer notes, however, that the bill does have a loophole allowing the operators of Indian nuclear power plants the “right of recourse” against supplier firms if an accident results “from the willful act or gross negligence on the part of the supplier of the material, equipment or services, or of his employee.” This right is not included in the IAEA’s Convention on Supplementary Compensation for Nuclear Damage (CSC), which India also plans to join, and, according to the observer, should work to allay Indian concerns that the supplier is completely protected, even if the amount is capped. Omer Brown of the DC-based council for the Contractors International Group on Nuclear Liability (CIGNL) also emphasized that joining the CSC would ensure that India would be “eligible to get supplemental funds from the CSC international fund paid by the United States and other CSC Member States.”
Information Minister Ambika Soni has stated that the ruling coalition would pursue an understanding with the opposition prior to sending the measure back to parliament. Science and Technology Minister Prithviraj Chavan also supports reconsideration, noting that “there is no urgency to introduce the bill.” Meanwhile, Foreign Minister Nirupama Rao, who was in Washington early last week, continued to insist that the U.S.-India deal was “proceeding smoothly and satisfactorily,” adding that “we are in the process of operationalizing the agreement through close coordination between our two governments.”
In other news, little progress appears to be being made in negotiations on a spent fuel reprocessing arrangement, which is an additional required step before the U.S. and India can begin nuclear trade. Current estimates are that negotiations may not conclude until after the May NPT RevCon.
One thing we know for sure is that while the U.S.-India deal remains in limbo, countries such as Russia and France, which do not face the same impediments to nuclear trade, will continue to eat up more of the lucrative Indian nuclear energy market pie, estimated to exceed $150 billion in coming years . Will there be any pieces left for the U.S. by the time all of the roadblocks are removed?
