Bill C-20 (Historical)

Nuclear Liability and Compensation Act

An Act respecting civil liability and compensation for damage in case of a nuclear incident

This enactment establishes a liability regime applicable in the event of a nuclear incident that makes operators of nuclear installations absolutely and exclusively liable for damages up to a maximum of $650 million. Operators are required to hold financial security in respect of their liability. This amount will be reviewed regularly and may be increased by regulation. The enactment also provides for the establishment, in certain circumstances, of an administrative tribunal to hear and decide claims. Finally, this enactment repeals the Nuclear Liability Act and makes consequential amendments.

[Rex Loesby]

Thank you for giving me a few minutes to talk with you about Bill C-20 regarding liability caps for nuclear reactors in Canada.

The bill is of interest to our company as we are working to provide clean and safe electric power to remote communities and mines in Canada through the use of small nuclear power stations.

First, I want to give you a little background on Canadian Remote Power, and then I'll address a concern we have about the regulations that may accompany the bill.

The idea to pursue the use of small reactors grew out of my work for a mineral exploration and development company, Western Troy Capital Resources. We're developing a copper-molybdenum project in a remote area of Quebec, and we found our power costs were going to be very high with a long power line from Hydro-Québec or a diesel power plant. This led us to look at a small reactor as an alternative. We found that a number of countries are developing small reactor designs, but we were surprised to find that in a country where low-cost power is needed in remote areas, no one was pursuing the idea here. So we formed Canadian Remote Power Corporation to do just that.

Now, Canada has a national treasure in its nuclear industry. Its CANDU reactors, along with its nuclear scientists and engineers, have gained world recognition. Over the past 50 years, 45 CANDU reactors have been built around the world, and they have operated without a significant safety incident. Nuclear power is one of the most economical methods to generate electricity, and there are no carbon emissions. Canada can continue to be a world leader in the industry as long as it is willing to encourage the industry and keep its regulatory system consistent with recognized world standards. Canada has the opportunity to play a leading role in the world to reduce carbon emissions.

At Canadian Remote Power we recognized very early that we needed a very strong technical team, and we're very fortunate that good Canadians are available. Your handout lists these folks, along with a bit of their background. I'll highlight one member of the team, just to give you an idea of the calibre of the people we've been able to attract.

Dr. Gary Kugler is on our board of directors and is a member of our technical advisory team. Dr. Kugler is the chairman of the board of Canada's Nuclear Waste Management Organization and is a director of Ontario Power Generation. He was with Atomic Energy of Canada Limited for 34 years.

The question is this. Is there a real need for small nuclear plants in Canada? Currently, electric power for remote communities and mines is generated using diesel engines. These diesel plants generate approximately 17 million tonnes of carbon emissions per year and the electric power produced costs between 25 cents and $2 per kilowatt hour, as compared to what you might pay connected to the grid, about 4 to 10 cents per kilowatt hour. In Nunavut alone, the diesel fuel budget is more than $200 million a year. With small nuclear plants we can eliminate carbon emissions and substantially reduce the power costs for these communities and mines. While we don't believe nuclear plants are the only answer, we believe they can and should be a large part of the solution to the challenges of maintaining and developing sustainable communities in the north.

On the mining side, there are currently eight mines in the north using large diesel power plants. There are projected to be 18 by 2016. These mines are projected to need 400 megawatts of generating capacity. In the Northwest Territories, there are 11 world-class mineral deposits that could be mines if power costs could be reduced. Another application for small nuclear plants is to provide heat for oil sands recovery.

Can small reactors be safe? Well, we're looking at a number of reactor designs. One design is a TRIGA reactor designed by General Atomics in San Diego. In your handout is a picture of a TRIGA reactor. As with all the reactor designs we're considering, the whole installation might require only two acres of land. This design is attractive for two more reasons. First, if there's any unplanned rise in reactor core temperature, the chemistry of the fuel shuts the reaction down. Secondly, there are 67 TRIGA reactors installed around the world. Some have operated since the 1950s. They are installed in hospitals and universities. There has never been a problem.

We're also considering other designs, including Canada's CANDU reactor. There's a Toshiba 4S that we're looking at. Argentina has a CAREM design. We haven't decided which way we're going to go yet.

I will talk about nuclear safety.

You see in your handout a table showing the fatalities over the past 40 years in the United States and the United Kingdom for three major electric power sources: coal, natural gas, and nuclear. This table is from a June 2008 publication of the World Nuclear Association entitled, Safety of Nuclear Power Reactors. Chernobyl is not included in this as there was no containment structure at Chernobyl, and there was not an internationally recognized safety regimen in place like there is in Canada. You can see that nuclear energy is by far the safest of the three sources. It's misleading, though, because I haven't included hydro. There are actually 4,000 fatalities in hydro, but those are as a result of boating accidents on the reservoirs. Obviously, if you can do hydro, you want to do hydro.

Technological innovation in all areas of clean energy development will come from both public and private entities and ventures. Canada will be well served if its government can respond to the clean energy challenge by making the regulatory environment as conducive to innovation as possible without compromising public safety. One of those innovations may be small nuclear power reactors.

The regulatory process for permitting such small reactors will be difficult and there are substantial uncertainties in the permitting process. The more these uncertainties and timeframes can be reduced, the more likely it is we will be able to raise funds for our venture. We hope to work with Parliament and the regulatory agencies to reduce the uncertainties and timeframes in many areas, without compromising public safety.

The issue before you today is Bill C-20 , which would bring Canadian regulations more into line with international standards regarding liability caps for nuclear power plants. How might Bill C-20 impact our efforts?

Well, in the past the maximum insurance cap for all reactors, as you know, was $75 million, and existing regulations allowed lower insurance caps for small reactors. The amount of these caps for small reactors is determined by Natural Resources Canada and the Canadian Nuclear Safety Commission through the regulations developed by those agencies. Bill C-20 sets the maximum at $650 million, and the bill has a provision for setting lower caps for small reactors. Paragraph 66(c) reads:

66. The Governor in Council may make regulations

(c) fixing an amount of reinsurance for any nuclear installation or for any prescribed class of nuclear installation;

An outline of the regulations related to Bill C-20 has been drafted by Natural Resources Canada. There are provisions in the outline for reduced insurance caps for small reactors, but the caps are not well defined. We've discussed this with the staff at Natural Resources Canada and suggested the regulations should include consistent and better defined caps for all reactors. The staff there has been really responsive and has encouraged us to suggest modifications to the outline.

Our suggestion is to include the language you see in the handout in the regulations. It gets fairly technical, and to keep my presentation short, I won't read through it now. This addition to the regulations will provide a greater level of certainty for developers of nuclear power stations as well as preserve the right of the Governor in Council to modify the liability caps for special circumstances.

How does this affect us? If we do not have that certainty for the insurance caps for our small reactors, we would have to assume pretty much the worst case for our fundraising efforts. If we were required to carry the maximum of $650 million of liability coverage, our insurance underwriter has suggested our premium could be $1 million or more per year for each installation. If the liability is capped using the formula we've suggested, our annual premium would fall to an estimated $100,000, thus improving the overall economic forecast for our business and potentially lowering the power cost to the consumer.

Thank you for taking the time to hear our story and suggested language for the regulations to follow the bill. I would be happy to answer any questions when the time comes.

Thank you.

[The Vice-Chair, Liberal, Alan Tonks]

I call the meeting to order.

This is the 40th meeting of the Standing Committee on Natural Resources. Pursuant to the order of reference of Monday, June 1, 2009, we are discussing Bill C-20, An Act respecting civil liability and compensation for damage in case of a nuclear incident.

Today we are continuing our deliberations. We welcome our guests and witnesses. In the first panel, from 3:30 to 4:30, we have Mr. Rex Loesby, president of Canadian Remote Power Corporation, and from Ontario Power Generation Inc. we have Mr. Albert Sweetnam, executive vice-president and director of nuclear new build, and Mr. Pierre Tremblay, senior site vice-president, Pickering. Welcome.

Through our videoconference technology, from Toronto we have Mr. Norman Rubin, director of nuclear research for Energy Probe. Mr. Rubin, welcome. Are you hearing us okay?

[Paule Brunelle, Bloc, Trois-Rivières, QC]

Mr. Binder, there is more and more talk of terrorism and more and more concern because of it. You know that the city of Trois-Rivières sits right next to the Gentilly nuclear generating station.

To what extent does Bill C-20 deal with it? Would terrorism be considered an exclusion like any other disaster that might happen? In some policies, for example, there are exclusions for armed conflicts and things like that.

[Dr. Gordon Thompson]

That's a good question. Before I answer that, I'd just like to address Mr. Bains' question about the scope of Bill C-20. The scope of damages has been expanded, and that's a change that I welcome. The expansion is not in the magnitude but simply in the range of types of damage that would be addressed. I believe the current scope is a better match with what we know about the long-term consequences.

In regard to your question about the basis for the $650 million liability cap, Mr. Hénault spoke to that issue, as I said, at a conference in Toronto in October. He said it comes from a balance of considerations, one of which is that it addresses what he terms “foreseeable” accidents, which as I explained is a term of art meaning design-basis accidents, accidents that plants are designed to withstand. Experience and a very large body of technical literature show that there is actually a universe of accidents well beyond the design basis that are indeed entirely foreseeable, because two major events of this kind have occurred.

Insurance against an industrial accident surely has to accommodate events that are foreseeable in the sense that they have occurred and in the sense that technical analysis shows they could occur again.

In the chemical industry, for example, the Bhopal accident is a historical event. It was beyond the design basis, and yet it's part of a reality. If one were insuring a chemical plant, one would have to consider a Bhopal-type event.

The $650 million limit does not consider events that are foreseeable and that indeed have occurred.

[Peter Mason, President and Chief Executive Officer, GE-Hitachi Nuclear Canada Inc.]

Thank you, Mr. Chairman.

It's my pleasure to be here today to tell you why this bill is important to GE.

We have put forward a written presentation to the committee, but in the interests of time I'll just hit the high points, and then you can ask questions.

As many of you are aware, I think, GE is a very large, diversified global company, with revenues of $180 billion a year around the world and over 300,000 employees.

It has a wide range of products, from light bulbs to aircraft engines, and, in our energy portfolio, from wind turbines to nuclear reactors.

In the U.S., GE has developed its nuclear technology and today builds nuclear reactors, together with Hitachi, of Japan, in a number of sites in the world.

If we turn our attention to Canada, GE in Canada has been an integral part of the nuclear industry. In 1955 we joined together with AECL and Ontario Hydro to build the first commercial reactor in Canada, in Rolphton, Ontario, and since that time we have played a role in serving the industry. Today we supply the majority of the CANDU fuel to the CANDU reactors in Canada, together with inspection and maintenance services, the design of robotic equipment for inspection and maintenance, and service of the existing fleet equipment.

There is no doubt we could do a lot more than we do today, but we're prevented from doing so by the inadequacy of the current nuclear liability legislation in Canada. At this point in time, we are unable to leverage the resources of our parent company, depriving our customers of technology, expertise, and those resources that have been developed over many years.

I'll give you an example of why this is such an issue. WIth the current legislation that exists between the two countries, in the event of a nuclear incident in Canada, a U.S. claimant could take their case to a U.S. court; the U.S. court could deem the $75 million cap to be inadequate for potential compensation and therefore hear the claimant in a U.S. court. Under those circumstances, all of the assets of the General Electric Company would then be vulnerable to that claim. That is a risk that the shareholders of the company are not prepared to take, and that is the situation for many other private sector companies. Other companies that are perhaps in the public sector do not have the same risk profile, but it's certainly something that shareholders of private sector companies are not prepared to take.

If we turn our attention to Bill C-20, this is really a very important step in addressing the liability issue for Canada. First of all, the bill will ensure the channelling of liability through the operator of the facility where the incident occurred, rather than being open to the discretion of different courts. Secondly, the increase of the liability cap from $75 million to $650 million is very much a step in the right direction, and certainly it is consistent with the International Atomic Energy Agency's Convention on Supplementary Compensation for Nuclear Damage. With minor amendments to this bill, Canada would be in an excellent position to move forward and ratify the Convention on Supplementary Compensation, which would address both of the issues necessary for us to be able to work fully in Canada.

One might say, “Well, what about Canadian companies?” The fact is that if Canada signs this Convention on Supplementary Compensation—and I would add that the U.S. government has already ratified it—this would form a global legal framework for the nuclear industry. This, in turn, would protect Canadian companies as they engage in export activities around the world.

I would ask this committee to move forward with the bill, particularly the minor technical amendments that need to be made in order for it to conform to the conventional supplementary compensation, which, as I mentioned earlier, should be ratified as soon as possible.

I'd like to thank you all for listening to me, and I'd be happy to take any questions.

Thank you.

[Dr. Michael Binder, President and Chief Executive Officer, Canadian Nuclear Safety Commission]

Thank you, Mr. Chairman.

I'm pleased to be here today to discuss the role of the Canadian Nuclear Safety Commission and Bill C-20.

As you know, the CNSC is Canada's nuclear regulator. Nuclear regulation is exclusively in federal jurisdiction. We regulate all nuclear activities in Canada, including those facilities covered by the proposed legislation.

The CNSC mandate is clear. We regulate for the protection of the health, safety, and security of Canadians and the environment, while respecting the Canadian international commitment to the peaceful use of nuclear energy. In essence, the CNSC works every day to ensure safety across Canada's nuclear industry. Every licensing action, every inspection, every audit, every compliance activity is designed to mitigate risks and to minimize the probability of incidents that could result in claims under the proposed legislation. Our job, along with the nuclear facilities operators, is to ensure that this legislation is never used and that no claims are ever filed. Nevertheless, we recognize the need for insurance and are therefore supportive of the proposed legislation.

As the minister stated in her appearance to open the committee's consideration of Bill C-20, Canada's nuclear regulatory framework is embodied in three pieces of federal legislation: the Nuclear Safety and Control Act, which created the CNSC; the Nuclear Fuel Waste Act, which created the Nuclear Waste Management Organization; and the Nuclear Liability Act, which would transition to the Nuclear Liability and Compensation Act through Bill C-20.

The Government of Canada recently hosted an international peer review by the International Atomic Energy Agency, the IAEA, of Canada's nuclear regulatory framework. Their report, which will be published soon, commended Canada for maintaining a modern regulatory framework, a framework that is based on safety culture. Canada has an impressive internationally recognized record of nuclear safety and reliability. Our oversight is prescribed by the Nuclear Safety and Control Act, which came into force in 2000.

This is modern legislation which sets high-level safety requirements and a strict licensing and compliance framework which the CNSC monitors on a daily basis.

It enables us to ensure that the nuclear industry is safe and secure, and that the environment and the health of Canadians are protected.

The CNSC oversees approximately 3,300 licences and 2,100 licensees. Last year, we deployed 800 staff, including 115 inspectors conducting over 2,000 inspections, to ensure compliance. Our framework is designed to mitigate risk to health and safety. Our licensees must have a strong safety culture and be safe; otherwise they would not receive a licence from us. We look in detail at what could go wrong with the facilities, and we require licensees to have multiple barriers, both physical and procedural, to limit the probability of a serious incident. Through the oversight of our on-site staff, our ongoing compliance program ensures that all the safety protocols remain effective and in place. The CNSC pushes licensees to continue to improve operational performance as new information and technology become available.

I would also like to stress to the committee the importance of transparency in ensuring trust in our activities. The CNSC conducts public hearings in renewing licences for major facilities. In fact, the last three commission hearings have been on the road in Saskatchewan, in Bruce County last month, and in Port Hope in August.

These hearings are open to the public and are webcast. I hope that you have had the opportunity to catch one of these broadcasts off our website.

I will turn to today's subject and Bill C-20.

The CNSC's role concerning nuclear liability is clarified under the proposed legislation. Under the current Nuclear Liability Act, which has been in force since 1976, the CNSC and its predecessor, the AECB, have been responsible for both the administration of the legislation and for the designation of facilities.

As an aside, I'm really pleased to report, Mr. Chairman, that during our tenure as administrator of the Nuclear Liability Act, no claims were made under this act, and we look forward to a similar track record in the future.

The CNSC is supportive of the new legislation and of our new reduced role. We would no longer designate the facilities and we would no longer be the administrative authority for the legislation. The primary role for the CNSC under the proposed legislation would be to support and provide technical advice to the Minister of Natural Resources on the designation of sites. Because we license all nuclear facilities in Canada, the CNSC is in the best position to know which ones are authorized to have fissile material, a prerequisite for the requirement for nuclear liability insurance. There are currently 19 sites designated, and we will continue, under the new legislation, to provide advice on these designations to the government.

In conclusion, Mr. Chairman, we have been regulating nuclear facilities in Canada for over 63 years. Our track record for safety is excellent. Canada must continue to demonstrate responsible leadership in its nuclear sector and its regulatory framework, and modernizing the nuclear liability regime is a step in continuous improvement and clarity, which are hallmarks of our approach to ensuring safety for Canadians.

Thank you, Mr. Chairman, for allowing me the opportunity to speak about nuclear safety in the context of consideration of the proposed legislation.

Merci beaucoup.

[The Vice-Chair, Liberal, Alan Tonks]

Pursuant to the order of reference of Monday, June 1, we are continuing with Bill C-20, An Act respecting civil liability and compensation for damage in case of a nuclear incident.

I would like to welcome, on behalf of the committee, Mr. Jacques Hénault, who will be appearing as an individual.

From the Canadian Nuclear Safety Commission we have Mr. Michael Binder, president and chief executive officer; and Mr. Peter Elder, director general, directorate of nuclear cycle and facilities regulation.

From GE-Hitachi Nuclear Canada we have Mr. Peter Mason, president and chief executive officer. By videoconference from Cambridge we have Mr. Gordon Thompson, who is with the Institute for Resource and Security Studies.

We will begin with our presentations.

I will be coming to you last, Mr. Thompson.

[Theresa McClenaghan]

Almost the only difference between the current bill and Bill C-20 is the amount of insurance. So yes, while Canada has been out of compliance for a long time with what to this point has been some of the international practice, in our view the $650 million is still so inadequate that it won't make a meaningful difference to the public.

[Michael Lees]

Maybe I can take the first crack at that.

First of all, in terms of what is a reasonable value, $650 million or some higher number, my understanding is that the $650 million exceeds what the current levels are in other countries. I am aware that other countries talk about unlimited liability, but you have to be very careful in how you interpret that. Those same countries will allow a nuclear utility to create a corporation where the only asset in that corporation is the nuclear plant itself, so inherently you're able to create a liability that is much lower than you might perceive it to be when people talk about unlimited liability. I think that needs to be clearly understood when we talk about comparisons between what Canada might do and what other countries might do.

I also understand that Bill C-20 has the ability to increase the level on an ongoing basis subject to approval and perhaps some level of review by NRCan. So there is a provision already built into the bill that allows an escalation of the dollar value if it is deemed at some point in time to not be adequate or not consistent with the CSC as it may evolve in time.

I don't know, Murray, if you have anything to add to that.

[Shawn-Patrick Stensil, Energy and Climate Campaigner, Greenpeace Canada]

Thank you very much for this opportunity to speak to you again.

Greenpeace released a report today analyzing the subsidies that are provided to the nuclear industry by this act. I hope you have received it by e-mail; it will also be provided to the clerk. Il y a aussi un résumé de ce rapport en français.

By way of introduction today, let me present a contrast. The federal government has provided $650 million in subsidies this year to Atomic Energy of Canada Ltd. for waste cleanup, designing its next-generation reactor, project cost overruns, and simply keeping the lights on. I think it's useful to contrast this subsidy from 2009 to AECL with the cap on liability proposed in this act.

I think it raises some common sense questions about whether Bill C-20 would in fact provide an adequate level of environmental and financial protection to Canadians from any potential future accident. I think it also underlines that this is an industry that can't afford itself. Indeed it raises an issue I spoke to you about previously, three weeks ago: despite receiving billions of dollars in direct and indirect subsidies over the past 50 years, this industry has failed to innovate, lower its costs, and build safe reactor designs.

Special protection for the nuclear industry and the framework for this liability regime date back to the 1950s, when American nuclear vendors feared being sued for the catastrophic damages if one of their reactors underwent an accident. This situation was originally supposed to be temporary, but the industry still needs it today.

Commendably, this government and past governments have begun a process to modernize Canada's nuclear industry by transferring the costs from the taxpayer to the industry through the privatization of AECL. Greenpeace believes that forcing this industry to take responsibility for itself, as any 50-year-old industry should, is a good thing for the taxpayer, for the environment, and, one could even argue, for the nuclear industry itself.

The Nuclear Liability and Compensation Act as it stands before you now is not a modern piece of legislation. It is still built on the 1950s legislative framework that prioritizes protection of the industry over citizens and the environment. Greenpeace would like to urge this committee and the minority Parliament in general today to work collaboratively to modernize this bill and, like the government's efforts to privatize AECL, force this industry to grow up. Such collaborative work would benefit taxpayers, victims of any potential nuclear accident, and nuclear safety, and it would aid Canada in meeting its commitments towards transitioning towards a more sustainable economy.

What follows is a summary of our concerns.

The liability cap, as it stands, shortchanges Canadian victims in industry compensation compared to those in other western countries. The cap under the revised Paris convention is over $1 billion Canadian. Japan and Sweden are moving in a similar direction, and other countries such as Germany, as Theresa mentioned, have completely removed the cap on operator liability.

This cap on liability also represents a hidden subsidy to nuclear power: the report that we released today estimates that the subsidy from the cap is equivalent to 5.4¢ to 11¢ a kilowatt hour. It's a huge subsidy. Based on the electricity output from Canada's reactors in 2007, the Nuclear Liability and Compensation Act would provide an implicit subsidy of $4.8 billion to $9.7 billion. This creates an unfair playing field for safer green energy technologies and contradicts Canada's commitment to sustainability and the polluter pays principle.

The $650 million cap also shifts responsibility for cleaning up nuclear accidents from the industry to the federal government. Much like the off-book liabilities that we witnessed recently with the cost overruns at the Point Lepreau nuclear station, these were theoretical risks; then suddenly this year, in 2009, the federal taxpayer had to dole out $300 million. This creates a massive unaccounted-for liability to the Canadian taxpayer. The federal government has failed to carry out, to our knowledge, any studies to tell Canadians how large this liability actually is or to develop any mechanisms for reducing it or eliminating it over time.

Industry studies show that even just the health consequences of a catastrophic accident at the Pickering B nuclear station would total over $52 billion. Again, that is a significant off-book liability, and from an accounting framework, it's not too responsible.

Our long-term commitment to the polluter pays principle requires that we, at a minimum, put in place mechanisms to track, reduce, and eliminate this liability, that is, transfer nuclear risks from the taxpayer back onto the industry. I would ask this committee to examine ways of revising the bill in order to do this.

Greenpeace also questions the adequacy of the federal risk studies used to support the $650 million liability cap for so-called foreseeable nuclear accidents. Greenpeace would like to note that the nuclear risk studies are increasingly being withheld from the public, raising transparency issues. Under the proposed Nuclear Liability and Compensation Act, risks are public, and we deserve the ability to scrutinize and assess the risks imposed on us.

Other industry studies contradict the $650 million cap. For example, a foreseeable nuclear accident at the Pickering B Nuclear Station, if calculated out, would surpass $1 billion. So in terms of the government's own criteria for setting the cap, it's not meeting that criteria.

Finally, at a high level, this act ignores Canada's modern commitments and legal obligations to sustainability and the polluter pays principle. Indeed, the Nuclear Liability Act breaks this principle and requires Canadians to pay, potentially, for the industry's pollution.

Fundamentally, many of my affirmation concerns regarding transparency, financial, and environmental risks imposed on the public would be addressed if this act was amended to acknowledge and implement Canada's goals towards sustainability. On this point, I would like to speculate why this legislation has overlooked Canada's commitment to sustainability.

Minister Raitt, just two weeks ago, told this committee that the Nuclear Liability and Compensation Act:

...is the culmination of years of consultation involving extensive discussions with major stakeholders, including nuclear utilities, the governments of nuclear power generating provinces, and the Nuclear Insurance Association of Canada--and it has received broad support.

Support from industry, that is to say. She omits any mention of consultation with the Canadian public or, for example, municipal governments that would be negatively impacted by a nuclear accident.

Greenpeace acquired, through access to information, a 2004 Natural Resources briefing note that explicitly acknowledged that consultations with non-industry stakeholders were being avoided during the development of this bill. The document stated, and I quote:

Consultation with non-industry organizations is an issue. Municipalities, environmental groups, and the general public have not been consulted.

Another extract from the document reads:

Consultations with non-industry groups would attract a fair amount of attention.

Similar to most studies in the nuclear industry, government has avoided broader public consultation to avoid, I would add, justified criticism and scrutiny of this act.

Mr. Elston noted that this act has been delayed a number of times because Parliament has been prorogued. I would also note in other documents we've acquired through access to information dating from 2004 that the nuclear industry was advising the industry not to table this legislation at that point. I'm not sure why, but it didn't seem politically convenient. So we should have room to have a bit of a step back on this one.

All in all, this has resulted in a bill that prioritizes industry interests, shortchanges Canadians, and ignores the federal government's modern legal obligations to sustainability. I would urge this committee, then, to work collaboratively to create better legislation that is in the public interest and not solely in the industry's interest.

At a high level, Greenpeace recommends the following: increase the insurance cap to at least 700 million euros, or about $1 billion Canadian, that is, the industry-insured norm in western countries; above that, remove the liability cap and transfer risk back onto the industry—countries such as Germany have done this, and Sweden just received a report recommending they do this just three weeks ago—and acknowledge Canada's commitments to sustainability and the polluter pays principle in the goals of the act. These factors should be a driving motivation in future revisions of the act, such as the five-year review on the liability cap.

With regard to the five-year reviews, future reviews must address the lack of public transparency we've seen with the current act; that is to say, they should not be simply at the discretion of the minister, as it is currently worded.

Such reviews must explicitly consider and report to what extent the Nuclear Liability Act distorts electricity markets by subsidizing nuclear operators, and a motivating objective of future reviews should be the polluter pays principle.

Finally, we've heard from some colleagues today about the Convention on Supplementary Compensation. We should probably have a broader discussion about that.

My understanding of that convention is that it also would leave Canada open, potentially, to paying for the cost of accidents overseas, so if an accident signs on another member of the convention, Canadian taxpayers may be on the hook for that as well. Given that this would be a Canadian liability, we should probably have a broader discussion about that.

That concludes my remarks.

[Theresa McClenaghan, Executive Director and Counsel, Canadian Environmental Law Association]

Yes, I will.

Before I start, maybe I would say that's one thing we have in common: the view that the bill is long overdue for revision.

I was noticing in reviewing some historical material for today that my organization, the Canadian Environmental Law Association, made submissions on the Nuclear Liability Act and proposals to revise it in 1984, and I myself was involved in the litigation concerning the current legislation from about 1988 to 1995.

I thank you for inviting the Canadian Environmental Law Association to appear before you. Our organization is a non-profit public legal clinic. We were established in 1970, and our mandate encompasses using existing laws to protect the environment, as well as advocating law reform.

I should say, with my apologies, my written submission was not ready on time for prior translation. It has been provided to the clerk, but I understand, with the rules of the committee, you won't see that until a later date.

I also expect that we will file a supplementary letter with more detail on potential amendments, but I'll speak to them briefly here.

We have three main submissions to make with respect to Bill C-20. Firstly, we would recommend that the bill be amended to remove the cap on liability and to remove the exemption on third-party liability, and I'll speak to each of these in turn. Secondly, we would recommend that the minimum amount of insurance and financial assurance required to be carried by operators be amended so as to substantially increase the available resources even beyond what Bill C-20 provides and to provide for the consequences of a catastrophic accident with off-site impacts. Thirdly, we would recommend that the bill be modernized to accord with principles of sustainability.

I'll speak to each of these in turn.

With respect to the first submission, to remove the cap on liability and to eliminate the exemption that is accorded to suppliers, many other nations are either in the process or have removed their liability caps. The original argument was that nuclear power generation would not be pursued for peaceful purposes without such a cap, but we would submit that's long out of date; that's no longer applicable. Nuclear power was commissioned in Canada decades ago and is well established today. Just as Germany and Japan were able to remove the cap, Canada should be able to do that, too.

Those countries that did remove the cap wanted to “normalize” their nuclear power plant operation in accordance with other fields of industrial activity and also to exhibit the confidence their government had in the safety of their reactors.

Also, as we've often argued, the provision of a cap on liability operates as a subsidy to that single form of electricity generation—that is, nuclear-powered generation. No other form of electricity generation has such an advantage. The subsidy amounts to the costs that the operators would otherwise incur to either insure for or pay the real costs of a severe nuclear plant accident. Those who bear those costs today or under Bill C-20 that might exceed that amount are the public, whose damages and claims would not be compensated except to the limited amount provided by the cap, unless government chose to step in and account for the difference, which is discretionary.

I might add that a serious accident in which radioactive materials escaped containment is a credible scenario that we do have to consider if we're going to allow this type of generation and make the rules governing its operation. In the written brief—when you get it—you'll see a citation from the Auditor General's report from 1992, echoing the fact that because we've had relatively successful accident-free operation on the part of the Canadian nuclear program doesn't mean that accidents can't happen or that we shouldn't consider what the consequences would be if they did.

In the litigation that I mentioned to you earlier, evidence was led on the part of the plaintiffs that damages for a very severe accident could extend between $375 million and $30 billion in 1990 dollars, but in that case, even the industry estimate, which I might add was based on U.S. studies because no Canadian studies had been done, was that such a severe accident could amount to $10 billion. In either case, it far exceeds the amount that is proposed under Bill C-20.

Similarly, the act proposes to cover certain potential damage from transportation of fuel to or from the nuclear power generating plants. Again, there was a contention in the evidence in another case about 10 years ago involving the shipment of mixed-oxide fuel for tests at the Chalk River reactor; the contention was whether the containers were meant to properly protect against serious, especially airborne, accidents. Again, the sufficiency of the cap would be an issue.

With regard to the issue of the act's removal of liability from third parties, as you know, in both the current act and the proposed act, the legislation exempts all of the other parties in the supply chain from any liability whatsoever. This dates from original indemnities that were provided to those suppliers by operators such as AECL and Ontario Hydro, in some cases with federal government consent. That was replaced subsequently by the Nuclear Liability Act.

First of all, I would note that no other supply chain in the electrical generation industry obtains that kind of protection from liability. I would also say that because the industry is well established today, the need to continue to provide that kind of protection is not evident.

The next point I'd like to speak to is an increase in the minimum insurance requirements. Such an increase could be done through a variety of mechanisms, such as pooling or other arrangements, so as to increase the available coverage. I spoke earlier about the fact that the coverage required could greatly exceed the amount provided by this bill.

The note I would make on that point is that in the United States, as you may know, the Price-Anderson act provides a pooling of insurance such that, depending on which dollar exchange you're using and which year you're using, the range is between $9 billion and $11 billion available from a single accident through a combination of insurance, pooled insurance, contribution from the industry, and supplement by the state. Similarly, under the pooling arrangements and state supplements in other countries such as Germany and Japan, as well as others that subscribe to the Brussels convention, much greater resources are available to those who might suffer in the event of a serious accident. I would submit that even the proposed $650 million amount here is not in any way comparable to the amount available just on the other side of our international border.

The third point is to modernize the bill in accordance with principles of sustainability. I will speak to those very briefly. I will first mention the Rio Declaration, which Canada acceded to in 1992.

One of the principles is the principle of intergenerational equity. We would submit that the provisions of this bill should explicitly meet principle 3 of the Rio Declaration. As well, principle 16 is the polluter pay principle under the Rio Declaration. National authorities should endeavour to promote the internalization of environmental costs and the use of economic instruments, taking the approach that the polluter, in principle, should bear the cost of pollution. Another way to put this in the environmental discourse is that costs of potential harm should be internalized to the activity. We would say that removing the cap, increasing the resources available, and eliminating the third-party supplier exemption would more firmly align with principle 16.

To conclude, we think the present bill needs to be amended.

I would like to note that there are multiple objectives the bill may serve. First, if the objective is to provide for compulsory insurance, we would submit that this objective can be achieved without the liability exemptions and limitations. Second, if the objective is to provide a special duty or absolute liability, this can be done, again without completely exempting non-operators and without the caps on liability, just as is the case in other jurisdictions. If the objective is to expedite compensation, this can be done, again through a provision for a special claims tribunal. Similarly, if the objective is to provide some level of protection to suppliers, this could be done by indemnity agreements and without a statutory removal of the plaintiffs' or claimants' rights.

Finally, if the objective is to promote nuclear power generation, I would submit that the committee should recognize that the mechanism of a cap on total liability and exemption of third-party supplier liability is promoting nuclear power generation by imposing the difference in cost on the public. I would submit that's not merited in this day and age.

Finally, I would request that you view the question of amending the Nuclear Liability Act as a question of what system of compensation should be in place in the event of an accident. I would submit that you not view the act primarily as a mechanism to expedite the operation of nuclear power generation facilities.

In my submission, the system we would want in place in the event of a real accident would not consist of historical legislative protection to the industry from the consequences of an accident; rather, we would want a much more significant amount of minimum insurance and pooled resources to assist accident victims. We would want a removal of that cap on liability and the exemption to third parties. We would want to retain other elements such as absolute liability, extended limitation periods, retention of jurisdiction of the courts, and a specialized tribunal, but there is no necessity for the package to include the cap on liability or the exemption for third-party suppliers in order to accomplish those means.

Thank you.

[Michael Lees, President, Babcock & Wilcox Canada Ltd.]

Sure.

First of all, thank you very much for the opportunity to appear in front of the committee. I look forward to providing some input on Bill C-20 from the perspective of a supplier of equipment and services to the global nuclear industry.

What I'll do, in terms of the presentation, is just give you a very brief background to B&W Canada, followed by a summary of the key points as to why this bill is important.

First of all, at B&W Canada we've been in business since 1844. Our roots go well back in history. We've always been an active supplier to the power generation industry in Canada and worldwide.

Currently, we have facilities in Cambridge, a large manufacturing facility, where we do both nuclear and other components for the power generation industry. We also have a facility in Melville, Saskatchewan, as well as regional offices across Canada.

We employ about 1,000 people, and over half our business is related to nuclear. We provide highly engineered components to the CANDU systems, owned by utilities, both internationally and domestically, and we also provide services domestically and internationally as well.

We are the only nuclear fabricator that still remains in North America, all the rest having closed their shops as the decline in nuclear manufacturing took place through the seventies and eighties. As a matter of fact, I think B&W Canada is a good example of how a company has taken technology developed for the CANDU business and turned around and applied it to an international market for PWR reactors. Over the last 20 years, we've built approximately $1.5 billion worth of equipment and exported it to customers in the U.S. and across Europe.

We feel it's important to have an updated Nuclear Liability Act in Canada in order to allow, really, Canada to ratify the CSC. CSC is the Convention on Supplementary Compensation for Nuclear Damage, and the CSC is an IAEA initiative that basically commits the international community to common standards for handling claims from a nuclear facility accident. So we feel that's very important.

There are five reasons why prompt CSC ratification is important to both Canada and B&W Canada. One, it gives Canada a credible voice on the international stage in nuclear power, in non-proliferation, and on the role of the IAEA. Without Canada being a signatory to that treaty, our credibility is diminished.

Two, it allows an active export industry to both grow and develop, and therefore that export business allows us to control the type of equipment and technology that we send outside our borders. With those restrictions on the use of technology, it does allow us to control, to some extent, how that technology is used. Also, that technology inherently makes other nuclear plants safer, an advantage of western technology.

We also believe the CSC will allow more exports to occur, and that will help Canada's balance of trade as well, which we feel is important.

We also see that a ratified CSC would also preserve Canada's nuclear infrastructure. What I mean by this is that considerable investment takes place to enhance our capabilities to be competitive in a global market, and a broader industry and market being served both in Canada and internationally allows us to make those investments. If we were to rely simply on the Canadian market, we would have difficulty making the types of investments required to grow a business.

And the last point I would make is that it brings new vendors and new technology to Canada. Many companies are prohibited from or feel constrained in doing business in Canada because of the lack of the CSC treaty. This would allow that technology to come into Canada, it would generate competition, it would generate innovation, and it would generate lower costs for Canadian utilities.

In summary, we feel that Bill C-20 should be passed in a form that is consistent with the CSC, and that after adoption of Bill C-20, the CSC treaty should be promptly ratified.

Thank you, and I'd be happy to answer any questions at the conclusion.

[The Vice-Chair, Liberal, Alan Tonks]

This is the thirty-ninth meeting. Pursuant to the order of reference of Monday, June 1, 2009, we are dealing with Bill C-20, An Act respecting civil liability and compensation for damage in case of a nuclear incident.

We have the various briefs that have been provided through the clerk. There is one from Babcock & Wilcox Canada Ltd., and we also have a submission from Bruce Power. Also, at the end of the committee's proceedings, could we have a few minutes? We also have the budget for the committee's study of Bill C-20. Perhaps around 5:35 or 5:40 we can deal with that.

Today, for the first panel, we have Michael D. Lees, president of Babcock & Wilcox Canada Ltd.; Mr. Murray Elston, vice-president, corporate affairs, Bruce Power; Theresa McClenaghan, executive director and counsel for the Canadian Environmental Law Association; and Shawn-Patrick Stensil, energy and climate campaigner, Greenpeace Canada.

To all of you, welcome.

We will be going to approximately 4:30. I think all of you know generally what the routine is. We first have the presentations, and we try to keep them within 10 minutes. Then we have seven-minute rounds of questions from the members.

Without any further ado, we will proceed.

The second panel will begin around 4:30.

I think we'll go in the order of the names I called out. Mr. Lees, as president of Babcock & Wilcox Canada Ltd., perhaps you'd like to lead off.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

I'm interested in your reprocessing facility, because this also has implications with respect to Bill C-20, on the liability insurance. As is proposed in this bill, if I understand it correctly, in Canada the owner-operator would have that liability.

What are the transportation issues? You're talking about fuel coming from Japan to this facility. Who bears the liability and who bears the insurance on the nuclear fuel being transported?

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Thank you, Mr. Chair, for that formal introduction.

Thank you to our guests today. I have just a few questions on the bill and one in general. When we're looking at insurance, it seems to me the big thing about that is related to safety and risk. There's always this discussion, and I think we sometimes get clouded in our discussions about AECL and then try to blend that into Bill C-20, and neither of the two shall meet. From my standpoint, in each of our installations in Canada we typically have a utility that is operating that installation. Do we see any of that restructuring having an impact on this bill, and do we think anything will be any less safe in Canada as a result of the restructuring of AECL, or will CNSC be impacted by that?