Bill C-22 (Historical)

Energy Safety and Security Act

An Act respecting Canada's offshore oil and gas operations, enacting the Nuclear Liability and Compensation Act, repealing the Nuclear Liability Act and making consequential amendments to other Acts

Part 1 of this enactment amends the Canada Oil and Gas Operations Act, the Canada Petroleum Resources Act, the Canada-Newfoundland Atlantic Accord Implementation Act and the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act (the “Acts”) primarily to update, strengthen and increase the level of transparency of the liability regime that is applicable to spills and debris in the offshore areas.
More specifically, Part 1, among other things,
(a) expressly includes the “polluter pays” principle, which is consistent with the notion that the liability of at-fault operators is unlimited;
(b) increases to $1 billion the limit of liability, without proof of fault or negligence, to which certain operators are subject in the event of a spill or damages caused by debris;
(c) provides that an applicant for an authorization for the drilling for or development or production of oil or gas must demonstrate that it has the financial resources required to pay the greatest of the amounts of the limits of liability that apply to it;
(d) establishes a regime in respect of the development of transboundary pools and fields;
(e) provides for new circumstances in which information or documentation that is privileged may be disclosed;
(f) establishes a legal framework to permit the safe use of spill-treating agents in specific circumstances;
(g) harmonizes the environmental assessment process for projects for which the National Energy Board, the Canada-Newfoundland Offshore Petroleum Board or the Canada-Nova Scotia Offshore Petroleum Board is the responsible authority, as defined in the Canadian Environmental Assessment Act, 2012, with the requirements of that Act, including by establishing timelines for carrying out environmental assessments and creating participant funding programs to facilitate the participation of the public in environmental assessments; and
(h) creates administrative monetary penalty regimes.
Finally, Part 1 makes amendments to remove certain discrepancies between the English and French versions of the Acts, as well as to modernize the language in the Acts.
Part 2 of the enactment repeals the Nuclear Liability Act and enacts the Nuclear Liability and Compensation Act to strengthen the liability regime applicable after a nuclear incident. It also provides for the establishment, in certain circumstances, of an administrative tribunal to hear and decide claims and implements certain provisions of the Convention on Supplementary Compensation for Nuclear Damage. It also makes consequential amendments to other Acts.

[Christine Moore, NDP, Abitibi—Témiscamingue, QC]

Yes.

In summary, this amendment deletes “and no person other than an operator”, and brings the supplier into the liability process.

As the testimony showed, the current legislation poses a real problem because only the operator is held liable in the event of an accident. Suppliers providing services in the nuclear installations would not be held liable, for example, in the event of negligence or a poorly executed operation.

This is a major problem that absolutely has to be fixed during the study on Bill C-22. Of course, the operator must be held liable, but if the suppliers of goods or services with whom the operator is doing business have no liability in the event of an accident, I see a major problem. This absolutely must be corrected.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Mr. Chair, yes, I would like to speak to PV-10.

Again, this is consistent with earlier efforts to amend the act, in this case returning to the discussion we had earlier of non-use values. In subclause 20(3) of C-22, in determining the amount of liability and proof of financial wherewithal to deal with potential damage, the National Energy Board is specifically directed:

When the National Energy Board determines an amount under subsection (1) or (2), the Board is not required to consider any potential loss of non-use value relating to a public resource that is affected by a spill or the authorized discharge....

My amendment is very straightforward. It alters the paragraph 180 degrees to say that as an affirmative responsibility, the National Energy Board is required to consider any potential loss of non-use value. This amendment also comes from the brief by Ecojustice and was presented as their fourth recommendation.

Under Bill C-22, we're asking that the industries that operate within these new liability limits have proof of financial resources to pay for damages up to the absolute liability. We're not requiring them to show that they have financial resources to deal with the potential for unlimited at-fault liability, which of course remains, as we've heard from the officials.

When you don't have to consider potential costs associated with environmental losses, or so-called non-use losses, damaged ecological systems, and so on, when determining whether they have the financial wherewithal to pay, you've left out a significant part of what the ultimate damages may be.

I think the effect of my amendment is clear. If the act is to be serious about suggesting there will be liability for non-use values, environmental values, and loss of cultural and traditional rights within the act, then we really should be removing the “not” that appears in subclause 3.

Thank you, Mr. Chair.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Thank you, Mr. Chair.

This is on the same topic, and I'm glad we've brushed the surface of it. It is really a commendable aspect of Bill C-22 that sees the recognition that non-use values are explicitly identified as a new category of damages, and that if you have damage in a non-use value, you are, under proposed section 26 of the act, opening up the environmental or natural resources damages that affect something that's categorized as a non-use value, such that they are now open to compensation.

The gap here—and my amendment seeks to address this gap, just as the previous NDP effort did—is that while recognizing that damage to a non-use value is open to compensation within Bill C-22, there is no parallelism in the regulation-making powers to ensure that there can be a consequential implementation of that non-use value. For instance, we definitely need to know about baseline ecological information and inherent difficulty in assigning monetary values to environmental values. Without having that information, it's very hard to know how the spirit of the law would translate practically in saying that we can recognize non-use values as opening up a door to compensation following damage. If you don't have any way of evaluating that, of finding a way to monetize that, then it becomes a fairly ineffective protection of “non-use value”.

Very simply, what the Green Party proposes is that in clause 14 a new paragraph be added. We have proposed paragraphs 14(3)(h.1), (h.2), and (h.3) already in the bill. To create the opportunity to evaluate such value, we would insert, at the very top, proposed paragraph 14(3)(h.01), creating the opportunity concerning the calculation and recovery of damages for a loss of a non-use value. We really do need to put some meat to the bones of the new and commendable effort to include non-use values within the category of damages for which compensation can be claimed under the polluter pay principle.

Thank you.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Thank you, Mr. Chair, for the latitude.

The effect of this amendment would be to remove the exemption, which would mean it would revert to absolute liability. I can be corrected, but that's how I understand it would work.

The reality is that the science around the dispersant agents is still evolving. By creating the carve-out exemption in Bill C-22 as is currently being proposed, there'd be no effective pressure on manufacturers to consider that the spill-dispersant agent they're using could have a negative impact. It could be even more of a disaster than the spill they're trying to clean up. By maintaining that they're not exempt from environmental damage, there will be more pressure to ensure that spill-dispersant agents are both effective in dealing with a spill and don't become yet another source of problems.

The classic example is what happened with a spill-dispersant agent used after the Deepwater Horizon disaster in the Gulf of Mexico. Some of the spill-dispersant agents themselves contributed to long-lasting negative environmental impacts.

[The Chair, Conservative, Leon Benoit]

Good morning, everyone. Welcome to committee. We're here to do clause-by-clause study of Bill C-22, an act respecting Canada's offshore oil and gas operations, enacting the Nuclear Liability and Compensation Act, repealing the Nuclear Liability Act and making consequential amendments to other acts.

With us today to give us guidance and to answer any questions members may have, we have witnesses from the Department of Natural Resources.

We have Mr. Labonté here again. Thank you very much.

We have Tyler Cummings, deputy director, frontier lands management division, petroleum resources branch. Welcome.

We have Dave McCauley, director, uranium and radioactive waste division, electricity resources branch, energy sector. Welcome.

We have Jean-François Roman, legal counsel, legal services. Welcome.

Also, there is Joanne Kellerman, general counsel and executive director, legal services. She will be here, will she?

Natural Resources

[Greg Rickford, Conservative, Minister of Natural Resources and Minister for the Federal Economic Development Initiative for Northern Ontario]

Mr. Speaker, I thank the member for Sault Ste. Marie. I appreciate his work for northern Ontario. Our government is taking action to ensure that our resources are developed responsibly. That is why we have introduced the energy safety and security act to strengthen protection for taxpayers in the event of an incident in the offshore and nuclear sectors. Bill C-22 is being studied by the natural resources committee, and I look forward to further debate when it returns to this place.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you.

The next question is that according to the 2014-15 main estimates, the Canadian Nuclear Safety Commission will receive about $1.6 million more in funding than the amount planned in the 2013-14 main estimates, but $1.2 million less than was actually spent in the last fiscal year, when this year's main estimates were tabled. So the question is, in light of this $1.2-million reduction in the estimates, what impact will the adoption and enforcement of Bill C-22 have on the commission's budget?

[Geoff Regan, Liberal, Halifax West, NS]

Thank you very much, Mr. Chairman.

Let me start with Mr. Binder.

Thank you all, by the way, for being here this morning.

Mr. Binder, numerous Canadians, as you can imagine, have written to the committee, our members' offices, in relation to Bill C-22. One of them was Mr. Chris Rouse of New Clear Free Solutions in New Brunswick. He wrote to my office some time ago and made a submission to the committee earlier in the week to say that he has asked the commission for the definition of nuclear safety and risk used in deciding liability limits—the legal definitions you apply. He claims he's not able to get an answer, so I wonder if we could ask you to provide one. I don't expect you to have it just at your fingertips, but I wonder if it would be unreasonable to ask you to provide it before Tuesday's clause-by-clause meeting.

[Christine Moore, NDP, Abitibi—Témiscamingue, QC]

Mr. Stensil, in Bill C-22, are there any other ways to make service providers liable, besides the one in the amendment you proposed?

[Shawn-Patrick Stensil, Nuclear Analyst, Greenpeace Canada]

Thank you for this opportunity to give Greenpeace's views and recommendations on the proposed nuclear liability and compensation act contained in Bill C-22.

I will make my presentation in English, but I will be pleased to answer your questions in French.

While listening to the debate on Bill C-22 during second reading, I heard from the opposition parties that they viewed this bill as a step forward but with important flaws. They hoped that the bill could be improved upon and the flaws addressed at committee.

I didn't hear from the government that they were opposed to improving the bill.

In my presentation to you, I will provide four recommendations on how to improve Bill C-22. These recommendations are reasonable and based on precedent.

First is international best practices, which I hope the Canadian government would be striving to meet. Second is modern principles of Canadian law and jurisprudence; specifically the inclusion of the polluter pays principle.

There are two key reasons that the bill should be amended. It increases the risk to the public and to the taxpayer.

The Fukushima disaster had yet to occur when Parliament last debated this bill, so the context has changed. In Greenpeace's view, this new version of the NLCA does not take into account lessons learned from Fukushima. We're now seeing major nuclear accidents, somewhere in the world, about once a decade. This regular occurrence of nuclear accidents was not what the nuclear industry predicted when Parliament passed the original Nuclear Liability Act in the 1970s. Three Mile Island, Chernobyl, and Fukushima all have a common cause and it has nothing to do with engineering. These accidents were caused by humans and companies, corporate entities, failing to put public safety first.

In a post-Fukushima world, where we know that nuclear accidents are caused by irresponsible companies, does it make sense for the Canadian government to increase the protection given to the nuclear industry at the expense of public safety? From a public interest perspective, I think the answer is clearly no. You don't encourage public safety by shielding companies from the consequences of their actions. This is a key weakness of Bill C-22.

It also poses an unneeded risk and burden on the taxpayer. Natural Resources Canada has portrayed the $1-billion cap on operator liability as balancing public compensation while ensuring that reactor operators aren't burdened with high insurance costs. But as seen with the oil and gas section of Bill, you can require $1 billion in insurance and absolute liability with no coinciding cap on overall liability. You heard from representatives from CAPP, on Tuesday, that this wasn't a problem.

I will assert this: removing the $1-billion liability cap will not increase costs to operators. As written, the NLCA needlessly transfers all of the financial risks above $1 billion onto Canadians. This is contrary to the polluter pays principle, which brings me to my first recommendation.

The polluter pays principle has been omitted from the purposes section of this bill. It is 2014, not 1974, and this is a glaring omission. Greenpeace recommends the committee import the language regarding the polluter pays principle from the purposes section of the oil and gas section of Bill C-22.

Greenpeace recommends clause 3 be amended to read as follows:

The purpose of this Act is to ensure accountability in accordance with the “polluter pays” principle in case of a nuclear incident.

To apply the polluter pays principle, Greenpeace recommends amending the clauses shielding operators and suppliers from liability; specifically, clause 24 (1) should be amended to state that reactor operators have unlimited liability above the $1 billion in absolute liability.

This is the same as for offshore oil and gas.

Unlimited liability is now an international best practice for operator liability and it is also the approach used by the government for the offshore oil and gas industry.

Similarly, clause 13, which completely shields reactor suppliers from liability even if negligent, should be amended. Greenpeace recommends clause 13 be amended to read:In respect of damage that is caused by a nuclear incident, an operator may seek recourse against any person whose gross negligence causes an incident.

This would provide consistency between the oil and gas and nuclear sections of C-22 and meet another international best practice. India's nuclear liability legislation exposes suppliers to liability.

My final recommendation is forward-looking. There is ample documentation showing that the Department of Natural Resources Canada has intentionally avoided over the past decade, under both Conservative and Liberal governments, consulting Canadians while developing this bill. It is unsurprising, then, that NRCan believes it is acceptable to cap liability and transfer the majority of risk created by the nuclear industry onto Canadians.

Subclause 26(1) requires that the NLCA be reviewed every five years. Greenpeace recommends amending this clause to stipulate such reviews must be public and done in consultation with non-industry stakeholders. There's also international precedence for this.

That concludes my comments. I look forward to your questions.

[Dr. John Barrett, President and Chief Executive Officer, Canadian Nuclear Association]

Thank you, Mr. Chair, and thanks to the members of the committee for inviting me to appear on behalf of the Canadian nuclear industry.

The Canadian Nuclear Association is a non-profit organization established in 1960 to represent the nuclear industry in Canada. The association promotes the development and growth of nuclear technologies for peaceful purposes. It represents the nuclear spectrum from uranium mining to waste management and all the points in between.

The Canadian nuclear industry provides isotopes that improve cancer diagnostics and therapies, imaging that improves manufacturing quality, electricity that avoids greenhouse gas emissions that in turn drive climate change. Through these activities, the Canadian nuclear industry directly employs 30,000 Canadians and another 30,000 Canadians indirectly through our suppliers.

According to the Canadian Manufacturers and Exporters association, the industry generates nearly $7 billion of economic activity, exports $1.2 billion in goods and services, and pays $1.5 billion in federal and provincial taxes. In all of our activities, our business is safety. It is inextricably and permeates our corporate culture.

Nuclear power plant operators hold an enviable safety record highly regarded by employees, by host communities, and nuclear industry globally. We are proud of the fact that there has never been a claim under the Nuclear Liability Act. We are determined to see that none will ever occur under the proposed Nuclear Liability and Compensation Act. Our industry supports the passage of Bill C-22. This legislation would improve the nuclear liability framework, bringing it in line with international standards. It would protect Canadians and improve the industry's ability to manage risk responsibly.

With the passage of the Nuclear Liability Act in 1976, our industry accepted the principles of absolute and exclusive operator liability, mandatory financial security, and liability limitations in time and amount. These principles are standard features of nuclear legislation in the United States, Europe, and elsewhere.

Bill C-22 adequately balances the needs of industry and the needs of Canadians. In updating the 1976 legislation, Parliament would bring Canada in line with modern international standards and our members appreciate the government's flexibility in proposing financial instruments as insurance alternatives.

Moreover, the nuclear industry strongly supports the ratification of the Convention on Supplementary Compensation. This treaty already ratified by the United States will provide further protection in the case of an international incident. It will also improve the industry's ability to export Canada's significant nuclear expertise.

There are significant global opportunities presented by the current construction of 71 nuclear reactors in the world, including five in the United States and 20 in China. Canada enjoys an enviable international reputation as a nuclear pioneer and global leader in technological innovation and regulatory effectiveness.

Mr. Chair, we support the provisions of this proposed legislation and we urge Parliamentarians to pass it into law. With that said, there are two points that deserve the government's attention. The first is we would urge the Minister to use his authority to increase the number of eligible insurers. Our members face a substantial increase in premiums and would appreciate the benefits of open and fair competition in the insurance market. The government's recent actions have ended a long running monopoly, but greater competition will be needed when this bill is proclaimed.

Second, we seek clarification of the term “nuclear installation”. We detect a difference between the interpretation provided in the bill and that provided in the backgrounder that accompanies the bill. In the backgrounder, nuclear installations are defined as “Canadian nuclear facilities such as nuclear power plants, nuclear research reactors, fuel processing plants and facilities for managing used nuclear fuel”. In the bill however, the definition of nuclear installation is potentially much broader. If the backgrounder is correct in identifying only these four types of installations, then the legislation should be made equally clear.

In summary, Mr. Chair and committee members, the Canadian nuclear industry supports this bill just as we have supported the government's previous efforts to amend the Nuclear Liability Act. These amendments, long overdue, would bring Canada's nuclear liability regime in line with international standards.

We encourage you and your colleagues to pass this legislation with the improvements that we have recommended.

Thank you very much, Mr. Chair.

[The Chair, Conservative, Leon Benoit]

Good morning everyone. We continue our study of Bill C-22.

We have with us for the second part of our meeting three witnesses.

We have, first of all, from the Canadian Nuclear Association, Dr. John Barrett, president and chief executive officer. Welcome to you, sir. Thank you for being here on such short notice.

We have from Greenpeace Canada, Shawn-Patrick Stensil, nuclear analyst. Welcome to you, sir.

We have from the Canadian Nuclear Safety Commission, Dr. Michael Binder, president and chief executive officer. Welcome to you, sir.

We'll go ahead with presentations. We've asked you to limit them to five minutes, so that we have ample time for questions and comments from members.

We'll go in the order that you are listed on the agenda, starting with Dr. Barrett from the Canadian Nuclear Association.

Please, go ahead, sir.

[Geoff Regan, Liberal, Halifax West, NS]

He recommended a number of amendments to Bill C-22. One of them called for the bill to give cabinet the ability to make regulations for the calculation of non-use environmental damages.

[Christine Moore, NDP, Abitibi—Témiscamingue, QC]

Thank you.

I am indeed interested in seeing their modelling.

In Bill C-22, absolute liability is set at $1 billion. You mentioned scenarios that you had analysed, but those are not the worst case scenarios that could take place.

I know nuclear safety is very, very important in Canada and that it appears very unlikely for an accident to happen. However, the fact remains that such an accident would be quite costly. How can we ensure that taxpayers do not end up footing the bill?

[Jeff Labonté]

Thank you for your question.

I think your comment contains a few sub-questions. I would like to answer by making several points.

There certainly is a risk of accidents happening in the nuclear sector. The risks are there and it's always a possibility. However, we think the probability is very low. At the same time, we need a compensation system and legislation to protect citizens as well as every aspect of our economic activity, the environment and public health.

In developing Bill C-22, we have had many discussions with various stakeholders and with the population. We have imagined scenarios that could lead to an accident in Canada, taking into account our nuclear reactor's model, system and context.

With your permission, I will carry on in English.

We modelled the context—and certainly it was done a number of years ago—such that the design of the reactor and the situation provide for an incident contained within the design parameters and within the structures of the reactor. Procedures are built into the engineering to provide for things to shut down or to happen, and there are backup procedures and backups to backups that limit the potential for an incident to escalate into a more substantial incident.

The modelling looked at a scenario in which an incident would be contained within a nuclear facility. It also looked at a number of different contexts, one in

Gentilly, in Quebec, and another one here in Ontario, where there are reactors. In such cases, I believe the scenario would amount to $100 million, which includes costs and expenditures from an accident that would take place in the context of developing or installing a reactor.

In that context, it was believed to be in the order of about $100 million. The modelling did not model the scenario of a Fukushima or a Chernobyl, being that these are a very, very low probability and, if you will, very unique circumstances. In each of those, it hasn't been something that we've looked at in terms of trying to design a system to protect against those types of incidents.

In the case of Fukushima, I believe the cost of the Fukushima accident is in the order of $30 billion at this point and is expected to be much more as it goes on. It's a running total, if you will. In the Chernobyl case, I'm not sure of the figures for that one. It is not one in which the countries involved have been as transparent about the cost structures.

I think you had a third reference. Three Mile Island? For Three Mile Island in the United States, I'll have to get back to you on the exact numbers of that particular incident, although it's not considered a severe incident, if I could use language of that sort. There was one in the United Kingdom in the 1950s that was a bit more substantial in terms of an incident in which there was a release of radiation.

For the three examples that you have posed, certainly we can get back to you with the numbers, if you wish. On the design scenarios around the Canadian context, our colleagues at the Canadian Nuclear Safety Commission would have done and have done some modelling work also, and some work in terms of incidents, and may be able to provide further evidence and further information to you in response to your question.