Natural Resources Committee on Nov. 22nd, 2007

[The Vice-Chair, Liberal, Lloyd St. Amand]

I would like to call the meeting to order. Good morning, everyone.

I understand that Mr. Anderson may have a point of order. Mr. Anderson, do you wish to address a preliminary matter?

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Mr. Chair, I just wanted to thank the members of the committee for their cooperation on Bill C-15. We were able to get it passed the other day at all stages because we had good cooperation from the other members of the committee. So I want to acknowledge that and recognize the fact that we worked together on that, and I look forward to working together on the other issues as well.

[The Vice-Chair, Liberal, Lloyd St. Amand]

Thank you very much.

Principally, we're here this morning graced with the presence of the Minister of Natural Resources, Gary Lunn, and two individuals from the department. Good morning, Ms. Kirby and Mr. McCauley.

The first hour of the meeting will be devoted to a study of Bill C-5. I'm wondering, Minister Lunn, if without further ado I could turn it over to you for your ten-minute presentation on Bill C-5.

[Gary Lunn, Conservative, Minister of Natural Resources]

Thank you very much, Mr. Chair. It is my pleasure to be back before committee.

First of all, I'd like to thank you for your understanding when I had to provide you with an extra two hours free time in your schedule on Tuesday. I actually had an unscheduled cabinet committee hearing. Again, I thank you for being so gracious, not only to have cancelled at the last moment on Tuesday, but I'm glad we're able to actually be here to devote time to Bill C-5 and the estimates this morning.

With that, let me introduce my staff, as you did, Mr. Chair. Sue Kirby is the ADM of the energy policy sector. She's new at the department, has been there about three weeks, but has a wealth of experience. If she digresses and talks about fish today, it's because she just came from DFO. We'll try to keep her focused. So if you have some good fish questions, we can probably take those too.

Dave McCauley comes from the energy policy sector, specifically in the nuclear shop, so he has some expertise there.

With that, Mr. Chairman, thank you for giving me the opportunity to appear before you. Again, my appreciation for the all-party cooperation on Bill C-15. That was very appreciated. I think it's great for the people in Nova Scotia, to move that legislation through the House so quickly.

We're here this morning to focus on Bill C-5, the Nuclear Liability and Compensation Act. This proposed legislation is about protecting the interests of Canadians by modernizing Canada's nuclear compensation and civil liability framework. It does so to address damages as effectively and efficiently and fairly as possible in the unlikely event of a radioactive release from any nuclear facility in Canada.

As members of the committee will know, the current legislation dates back to the 1970s. So this legislation has been introduced for a number of reasons. First, it will ensure that Canada's laws governing nuclear liability are meeting the international standards. We want to not only ensure the highest standards for nuclear power in Canada, but also align our liability with that of international standards.

Secondly, it will increase the liability of nuclear operators for damages and injury. It will also increase the amount of compensation that will be available to address civil damages.

Third, Bill C-5 will broaden the number of categories for which compensation may be sought and improve the procedures for delivering that compensation.

It could be argued that Canada's current legislation, the Nuclear Liability Act, more or less accomplishes the objectives, a certainty regarding insurance and legal liability. So why do we need new legislation when we already have a serviceable act in place already? The simple answer, as I've said earlier, is that the current act is outdated. It was passed in 1970. Remarkable. I was not even in high school then, Mr. Chair, so it's going back quite a way. My notes say this was a period of ancient history, but I don't think I'll go there. But Bill Gates just turned 15. In any event, it's some time in the past.

Again, we need to ensure that the Nuclear Liability Act reflects the technology and science thinking as we move forward. In the interim, it's not only the technology of nuclear energy that has advanced considerably but the evolution of jurisprudence has contributed to substantial increases in the potential liability for nuclear incidents. Accordingly, we have to upgrade our legislation.

So what are we doing? Well, there are certain fundamentals of this current act that must be retained: number one, absolute liability; two, exclusive liability; and three, mandatory insurance.

Basically, absolute liability means that the operator will be held liable for compensating victims, if there were ever a nuclear incident, without the recourse of traditional defences available under the common law. This means that victims would not be faced with proving that the operator was at fault.

Secondly, in the related principle, exclusive liability means that there is no question who is responsible. No other party than the operator, no supplier, no subcontractor, nobody else can be held liable except for the operator. Again, it means the victims would not have to prove who was at fault, especially in such a highly complex industry, and there'd be no question about where they'd take their claim for compensation.

Nevertheless, to modernize our liability scheme, we must have legislation that goes further. For example, we must increase liability amounts, increase the mandatory insurance requirements, add new definitions of damage, and provide a more effective compensation process. We must do this to meet the practical needs and realities of today.

Mr. Chairman, the proposed legislation makes significant changes in the matter of compensation. In financial terms, it increases the liability for nuclear operators. The 1970 act sets the amount at $75 million, an amount that presently is one of the lowest within the G-8.

The international norm is just below $500 million, but in Bill C-5 we believe the standard that's been suggested as an appropriate amount will raise it to $650 million. This balances a need for operators to provide adequate compensation without burdening them with huge costs for unrealistic insurance amounts. Again it's striking that right balance. It's what is the right balance for the appropriate amount of compensation, while ensuring that we're providing realistic insurance amounts. This increase will put Canada on par with most of the western nuclear countries. The proposed legislation also increases the mandatory insurance operators must carry by almost ninefold.

As I've said, Bill C-5 makes Canada's legislation more consistent with international conventions. It does so not only with respect to financial matters, but also with clearer definitions of crucial matters such as what constitutes a nuclear incident, what damages do or do not qualify for compensation, and so on. These enhancements will place the Canadian nuclear firms on a level playing field with competitors in other countries. This is important if Canada is to maintain its international presence in matters of nuclear energy. Canadian companies welcome the certainty of operating in accordance with the accepted international norms.

Mr. Chair, both the current liability framework and Bill C-5 contain limitation periods restricting the time for making claims. Under the act passed in the 1970s, claims must be brought within ten years of an incident. However, since the passage of that earlier liability legislation, we have come to understand that for some related injuries obviously that's not adequate. Accordingly, the limitation period for claims has been extended to thirty years under Bill C-5.

Both the earlier Nuclear Liability Act and Bill C-5 provide for an administrative process that will operate faster than the courts in an adjudication of claims arising from a large nuclear incident. However, the proposed legislation clarifies the arrangements for a quasi-judicial tribunal to hear those claims. These new processes will ensure that claims are handled both equitably and efficiently.

In closing, Mr. Chair, I would like to underscore that Bill C-5 is about being prepared for the events that are unlikely to ever happen in this country. Our nuclear fleet is arguably one of the safest of any of the fleets in the entire world with an extraordinary safety record. Canada's experience goes back some 75 years. For the past 30 years nuclear power has been a regular part of Canada's energy mix. In all of this time, safety has been the watchword of Canada's nuclear industry. Moreover, the reactor for which we are known elsewhere is the CANDU, and as I said, it is one of the safest and cleanest reactors in the world. With the progress of nuclear technology, our reputation for safety will become even more secure.

Nevertheless, we must be realistic and we must be responsible. Although it is extremely unlikely that Canada will see a nuclear incident, we must be prepared. That is the principal reason we have proposed to modernize Canada's nuclear liability and compensation legislation by tabling the bill you are considering at this time.

Those are my opening comments, Mr. Chair. I look forward to the members' questions.

Thank you very much.

[The Vice-Chair, Liberal, Lloyd St. Amand]

Thank you very much, Minister Lunn.

We'll commence our first round, a round of seven minutes, as you will recall.

Mr. Alghabra.

[Omar Alghabra, Liberal, Mississauga—Erindale, ON]

Thank you, Mr. Chair.

Good morning, Minister. Good morning, everybody. Thank you for being here today.

I want to thank the department and you, Minister, for tabling this bill, because I do agree with you. It is time to modernize and update that act. I'm looking forward to listening and hearing from stakeholders when they come in front of this committee and share their feedback and input on this bill to see if there is a need for some changes or not.

In general I agree with you. The bill is doing some housecleaning that needed to be done, especially at this time. I think the need for nuclear energy is rising and we're having this discussion domestically and internationally. I think it's timely, given the fact that producers and consumers are looking to a much more stable and predictable system.

I want to take this opportunity and ask you about the global nuclear energy partnership. Ever since the Prime Minister in 2006 publicly expressed enthusiasm about this partnership, we have heard practically nothing from the government about the direction it wants to take with this partnership. I want to take this opportunity and ask you on behalf of yourself and your government what the government's position on GNEP is.

[Gary Lunn, Conservative, Saanich—Gulf Islands, BC]

Thank you very much.

First of all, the short answer is that I can't tell you, but hopefully we'll be able to let you know soon. Obviously it's before the government. They are considering that. A final decision hasn't been made, but I would anticipate hopefully sometime in the very near future we'll be able to give you a definitive answer.

The global nuclear energy partnership originally compromised five or six countries. They invited another 11 countries, I believe, to join, Canada being one of them. There are some benefits. I think there are a lot of benefits for us to look at it. We're all aware in this committee that Canada is a larger producer of uranium than any other country in the world. If you look at some of the stated principles, to deal with non-proliferation issues, on the entire fuel cycle to ensure that we're extracting the maximum amount of energy, on recycling, all those issues, the most efficient use of uranium is one of the issues they're looking at, and to promote nuclear as a clean source of energy. Those are just some of the high-level principles of GNEP.

There were some other issues they were talking about that Canada had concerns about, but again, we are clearly looking at this. Once the government has made a decision, I would be quite happy to come back to committee.

[Omar Alghabra, Liberal, Mississauga—Erindale, ON]

Minister, do you expect the decision to be made before a public discussion or debate has taken place on this issue?

[Gary Lunn, Conservative, Saanich—Gulf Islands, BC]

We welcome your viewpoints and your thoughts on this. We would be more than prepared to take those into consideration. So if you obviously wanted to give us the committee's thoughts or submissions, we'd welcome those. But it's something that we are actively considering at this point in time.

[Omar Alghabra, Liberal, Mississauga—Erindale, ON]

Don't you think it would be prudent of the government to have an engaging discussion on this issue to demonstrate what the pros and cons are and offer its ideas, and then hear some feedback? In fact, we're seeing some kind of silencing on behalf of the government of their ministers or reluctance to speak about this issue.

I have a quote here from you that says, “As a nation of energy consumers we must be prepared to have an open discussion about nuclear power.” So I'm encouraged. Don't you think it would be prudent of the government to have an open discussion about this?

[Gary Lunn, Conservative, Saanich—Gulf Islands, BC]

I will just say this, that most people in the industry said they haven't seen the openness that they have for many, many years.

I am very open in speaking publicly about the benefits of nuclear. We all recognize that nuclear energy is a decision by the provinces. It's the jurisdiction of the provinces to decide on their energy mix. But in terms of the federal responsibility as the regulator, we have very open and frank discussions.

The federal government enters into many international agreements and across all departments. We evaluate these, and people expect that leadership, for us to make a decision. That's exactly what we're doing.

Again, I would welcome your comments or input, but at the end of the day, it will be a Government of Canada decision, if we believe it's in the interests of the Canadian people and that this would be a benefit for us to serve in. And again, I would anticipate we'll have a decision soon.

[Omar Alghabra, Liberal, Mississauga—Erindale, ON]

What I do believe is that it's in the interests of the Canadian public that I ask you these questions and that I encourage you to have an open discussion about this.

There are two items in this partnership that are causing concerns among Canadians. One of them is the fact that it will compel or require exporters to take back fuel for reprocessing. The other one talks about developing a new reactor system that is not what Canada has been subsidizing for a while, or it doesn't mention that it's CANDU. So there are two major issues that this partnership avoids, or discusses, actually, but the Canadian government doesn't refer to.

[Gary Lunn, Conservative, Saanich—Gulf Islands, BC]

As far as taking back fuel, it's something we would never consider. We have expressed that very clearly. I can say that this is a principle they have said they completely understand.

We would not be required to take back spent nuclear fuel from any country, and it's not something we would ever consider doing. I should be very clear on that. It's something we've been very consistent about all along. So that's one. They haven't looked at that. We did raise that as a concern, and they have expressed assurance that it would be acceptable.

The second concern was not necessarily about developing new technology. It was about enriching uranium and the specific controls on that. We would insist on maintaining our sovereign right to make those decisions within Canada, whether or not that's something we would want to do in the future. Again, we've received assurances from the global nuclear energy partnership that our sovereignty would be respected.

So we corrected both those issues early on. We have said that these are unacceptable to Canada and that we would not accept those conditions, and that's been understood.

[The Vice-Chair, Liberal, Lloyd St. Amand]

Thank you, Mr. Alghabra.

We'll go to Madame DeBellefeuille.

[Claude DeBellefeuille, Bloc, Beauharnois—Salaberry, QC]

Thank you, Mr. Chairman.

Minister, thank you for coming here this morning to answer our questions. I'm somewhat taking advantage of the comments made by my Liberal colleague to tell you that the Bloc québécois does not really share your opinion that nuclear energy is clean energy. You also referred to the advantages, but you completely disregard the disadvantages. When you present an idea that you believe in, you should be frank and inform the Quebec and Canadian public of the advantages and disadvantages it entails.

As you know, the entire question of waste management is one of the disadvantages. We've had discussions, but you told me that we would be debating this for another 30 years. The fact remains that the debate on this subject is not over. Among other things, we have to see where the waste would be buried. The idea of promoting a form of energy that will spread around the world and the quantity of waste from which will consequently increase, when we don't yet know where it will be buried, is quite surprising.

I agree with you that choosing nuclear energy is a decision for the provinces. However, the effect of that choice by the provinces is that the federal government will have work to do on waste management and safety. I believe it can be said that, by making that choice, a province would be choosing to share responsibilities with the federal government and thus with Canadian taxpayers as a whole.

I believe we will have opportunities to debate this, minister. The matter is not over. It is somewhat unfortunate that we have to use a forum such as the study of this bill to address the subject with you. I agree with the Liberal member that it would be more appropriate, before accepting the invitation sent to you, to take part in the negotiations in the context of the Global Nuclear Energy Partnership, to clearly debate the conditions of that agreement and the implications for Canada of belonging to it. Among other things, if waste must be recovered from around the world to be buried in Canada, on the ground that we are the primary producers and exporters of uranium, I can tell you that we will not agree. There is a kind of lack of transparency and debate in this matter.

Furthermore, you are quite silent these days about nuclear energy. I don't know whether you've been kindly asked to be discreet on the topic, but we hear less from you. There must be a reason for that. That concludes what I had to tell you about nuclear energy, minister.

Now I'm going to move on the Bill C-5. For the questions that are somewhat more specific, your deputy ministers may perhaps be able to help you.

Could you explain to me what the premium is for an operator that must carry coverage of $650 million? I'm particularly interested in that because, back home in Quebec, the Gentilly station belongs to Hydro-Quebec, thus to Quebec taxpayers. Does increasing insurance, and thus premiums, mean that, as a taxpayer, I'm going to receive a bill for the cost of that premium?

I'd also really like you to clarify the principle of reciprocity between countries. In the context of a negotiation with a country, what does this concept included in the bill mean for Canada in concrete terms? I find it hard to understand. I also want to know why you're limiting the guarantees to 50%? From what I understand, Hydro-Quebec will have to guarantee premiums up to $325 million, which represents 50% of the $650 million.

My last question concerns the claims tribunal. Will it operate only in the event of accidents, or will it be a permanent structure for which we will have to pay operating costs, and make appointments and so on?

[Gary Lunn, Conservative, Saanich—Gulf Islands, BC]

Thank you very much.

You touched on the GNEP. Let me be absolutely crystal clear. Canada under no uncertain circumstances will accept nuclear spent fuel or nuclear waste from any other country. We do not support that. The spent nuclear fuel we produce here in Canada, and that's everything from medical isotopes to the nuclear reactors that produce electricity—primarily in Ontario, but there are also reactors in Quebec and New Brunswick. Obviously, we are taking steps to deal with the safe storage and management of the spent nuclear fuel here in Canada. We will not under any circumstances accept having to deal with spent nuclear waste from another country. It would be their responsibility to look after that.

We're very clear on that principle. Hopefully I've been able to clear that issue up for you.

With respect to the waste, you're right—it's an issue. I said nuclear energy is clean. It produces no greenhouse gases and no pollution when it's producing, but there is the issue of the storage of the spent nuclear fuel. We acknowledge that. There is work being done on that by the Nuclear Waste Management Organization, and we've accepted their report.

I would stress that it's only one source of energy of many in Canada. We are blessed with a lot of hydro. We have a lot of potential for renewable energy. We're using coal-fired electricity production in Canada, and nuclear. It's the provinces' jurisdiction to decide on their energy mix, not the federal government's. We will respect that jurisdiction and not wade into what they want. But when they do decide—as in Ontario, which recognizes the importance of nuclear energy—we have to make sure that we're there to provide the right regulatory regime and that it's safe for all Canadians. That's our role and we take it very seriously.

With respect to the premiums, the industry understands that the current limits are woefully inadequate—$75 million. Yes, the premiums will go up. There will be a sixfold increase in premiums from what they're currently paying. They will be phased in over time—over four years, I believe. The liability insurance will go up, and the government will assist in the interim. The industry will, over four years, ramp up, or they'll be facing increased insurance premiums. They've accepted that and are generally supportive of this legislation because they understand it has to come up to the international standards. Where the costs are passed on or how they're passed on would obviously be up to the operator and the provinces. That would be their jurisdiction. It's not something we would deal with.

It's our responsibility to ensure that the Nuclear Liability and Compensation Act is meeting the standards of the day, and today it's not. That's why it's important we're doing this.

But there is no question, this will cause a sixfold increase in insurance premiums for the nuclear operator.

[The Vice-Chair, Liberal, Lloyd St. Amand]

Mr. Bevington, please.

[Dennis Bevington, NDP, Western Arctic, NT]

Thank you, Mr. Chair.

Thank you, Mr. Minister, for meeting with us today on this bill.

Of course everyone is concerned about energy in this country, and the work coming forward on the nuclear aspect of energy is important. It's important to put it in context with other energy sources, and I think in some ways the question of the cost of liability is an important issue to be taken into account in the choices we make about energy in the future.

If we're looking at nuclear energy as a potential substitute for other forms of energy, then we need to put its cost in context. We have to make a level playing field between its costs and costs of other potential opportunities that we have in the energy field, so it's important to look at the liability that's engaged in nuclear energy. It's certainly greater than wind power or solar power or many of the other alternatives we're looking at for energy sources in this country. They don't contain much liability, and the liability is in relatively small increments, rather than in very large increments.

Of course occurrences are less frequent, but the potential for liability within the nuclear industry is, in the extreme case, very large. I think that's been identified in the United States, where we see a limit of $9.7 billion. There is a two-tier system of liability within the United States for nuclear energy, one borne by the operator and one that fits within the industry as a whole. That's another solution they have to the larger issue of nuclear liability.

When we compare our limits to liability, we can put them in the context of an international standard or we can put them in the context of a North American standard; in this case, the most likely match to our conditions would be our nearest neighbour, the United States.

In some ways the idea of limited liability is archaic. In this bill we're limiting liability for damages to $650 million; however, the liability issues could be quite a bit larger than that, and it may be important to look at it in terms of unlimited liability.

My question to you is this: where did we set this limit, why are we putting the limit where we are, and why are we continuing with a limited liability policy?

[Gary Lunn, Conservative, Saanich—Gulf Islands, BC]

I can try to take on a couple of your questions, and thank you very much.

First of all, you were right that they do look at the pool in the United States. The U.S. operators are required to carry $330 million Canadian in insurance. So it would be very similar to the amount that we're going to be requiring of the Canadian operators. If you look at comparing to the U.S. and in the event you had to have a greater liability, that would be something that would come back before Parliament if there was ever an incident, but all of the research shows that this is going to meet the international standards of $650 million, that it is the appropriate amount of insurance required by the operator to carry, and that the standard has been met. So we had a hard look to ensure that this meets the international standards, and again it's very similar to the amount the U.S. operator is required to carry.

You have to find and strike that balance of what is the appropriate amount to impose. There is a cost. As our colleague from the Bloc has recognized, this will increase their premiums sixfold, and again it will meet the international standards. And we believe with the addition to the limitation periods this is the correct amount of insurance for the operator to carry in Canada.

[Dennis Bevington, NDP, Western Arctic, NT]

The $650 million would probably be a minimum international standard. Quite clearly, you're saying that then the nuclear industry would be subsidized by Parliament for any greater liability than $650 million.

In the U.S. right now, the industry as a whole is responsible for damages that exceed the operator's amount. Is that not correct?

[Gary Lunn, Conservative, Saanich—Gulf Islands, BC]

You're saying...?

[Dennis Bevington, NDP, Western Arctic, NT]

The nuclear industry in the U.S. is pooled for larger amounts of liability than the $350 million that the individual operators carry.

[Gary Lunn, Conservative, Saanich—Gulf Islands, BC]

Yes, that is accurate, that they do pool.

But you have to look at the Canadian industry as well. There are 20 reactors in Ontario, one reactor in New Brunswick, and one reactor in Quebec. We can't just say that because the United States is doing it, that model would work perfectly here.

We've had a hard look at this, with the international standards around the world. France is a country with 58 reactors, and 80% of its energy comes from the nuclear sector; Spain, the United Kingdom, Norway, Denmark, Belgium.... This legislation will bring us in line with the international standards.

This is absolutely the correct amount of insurance, and it's been recommended to us to increase it by this amount. Clearly $75 million is not adequate, but obviously you can't require the operator to carry unlimited liability.

[Dennis Bevington, NDP, Western Arctic, NT]

No.

[Gary Lunn, Conservative, Saanich—Gulf Islands, BC]

That's simply not feasible.