Monday, June 28, 2010

Super Fund and Disaster Liablity

The compensation 'settled' with Union Carbide ( a 50.9% subsidiary of Union Carbide - with the remaining portion coming from some Indian investors including Mr Keshub Mahindra) for the Bhopal tragedy was USD million - abysmally low for the amount of damage that the company has done. What is ridiculous is this. After the disaster , UCC offered USD 350 Million - the insurance amount. Indian Government claimed USD 3.3 Billion and settled for USD 470 Million !!!!! ( which was the insurance amount with interest). Wonder in whose Interest the Government was working for ! The site still has hazardous wastes and UCC's new owner Dow is refusing to clean it up.

Following the uproar after the recent pathetic judgment , the GoM has rushed with a INR 1500 Crore compensation - which is a really thoughtful gesture - particularly considering that it is funded by tax payers money !

And now what is more ridiculous is - the Government is pushing a civil nuclear liability bill capping the liability at USD 100 Million (which even the paragon of free economy - 'The Economist' says is low by international standards. And it does'nt require one to be a nuclear scientist to know the potential damage of a nuclear disaster.

The US corporate sector has an unrivaled record of polluting - NY Times says there are over 1200 sites waiting to be cleaned up and of this half are what are called orphan sites - where ownership and responsibility is difficult to establish.

The basic principle in handling disasters should be that the polluter should pay ( not the tax payer). One significant and relevant development in this is that the US Environment Protection Agency has asked the Congress to reinstate Superfund taxes. This was first introduced by the Carter Administration in 1980 and abandoned by the Republicans (naturally !). This fund was essentially built over time by excise and taxes on oil, chemical and certain other industries and was used to clean up contaminated ( and abandoned ) sites. In some cases, however, it was hard to pinpoint responsibility because sites had changed hands over the years or the owners had gone bankrupt. So Congress created an “orphan fund” financed by corporate excise taxes to clean sites where the polluter could not be clearly identified.

Representative Earl Blumenauer, Democrat of Oregon, has introduced a bill that would raise about $19 billion over 10 years by imposing excise taxes on oil producers, refineries, chemical manufacturers and a few other industries. It remains to be seen if the Industry lobby will let is pass.

This is one lesson we urgently need to learn - if we want US companies or probably after British Petroleum's contribution to pollution - every company that wants to do business in India - in addition to fixing a liability amount on every company, we will need to have a Super fund - which will be generated from taxes on certain industries - like oil, chemicals and of course nuclear power - to handle damages to men and worksites they could possibly pollute , plus also contribute to clean up the mess and redress damages that their counterparts cause(d).

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