Evidence of meeting #5 for Natural Resources in the 39th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was nuclear.
A recording is available from Parliament.
9:30 a.m.
Conservative
The Chair Conservative Leon Benoit
Yes, and I have made a ruling on this, Mr. Bevington. I believe that in fact your statement isn't necessarily correct, that there could be an added liability on government as well.
Mr. Tonks.
9:30 a.m.
Liberal
Alan Tonks Liberal York South—Weston, ON
Could you just explain why you're declaring it out of order? I don't mean to be argumentative; I just would like clarification on that.
9:30 a.m.
Conservative
The Chair Conservative Leon Benoit
Okay.
Bill C-5 limits the financial liability of a nuclear installation's operator to $650 million. The amendment proposes to increase this threshold in cases where an operator fails to prove that a nuclear incident was not caused by the operator's negligence.
The rule against offending the financial initiative of the crown applies. And here I note that the bill is accompanied by a royal recommendation that provides for “the appropriation of public revenue under the circumstances, in the manner and for the purposes set out”.
This is expressed in Marleau and Montpetit on page 655: “An amendment is therefore inadmissible if it imposes a charge on the Public Treasury, or if it exceeds the objects or purposes or relaxes the conditions and qualifications as expressed in the Royal Recommendation.”
It's clear that in proposing to introduce an additional financial liability limit the amendment is altering the terms and conditions of the royal recommendation. Therefore, I find that the amendment infringes on the financial initiative of the crown, and on that basis I must rule it inadmissible.
9:35 a.m.
Liberal
Alan Tonks Liberal York South—Weston, ON
Mr. Chair, I have a point of clarification.
We obviously vote. You have a very valid recommendation, and we'll probably have to support that; that's the process. But witnesses illustrated that there was a backstop on the government's part, that they were going out to private insurance--they had 21 insurers--and that whatever the liability was, the established $650 million or whatever, they would take that to the private market. That's the assumption we're going on.
That recommendation implies to me, and I think to the committee, that the government is responsible for whatever the amount is. We were never able to establish that—at least not in my mind—because they kept saying they were going out to the private insurance companies, that there's a pool of insurers.
So I'm not sure. I'm going to support your position. I don't think you have any choice. But I think there's a misunderstanding, or whoever assembled that opinion is doing it on the basis of different premises. The premise here is that the government is liable for $650 million, and therefore the royal recommendation stands. My understanding was that this is a little bit of a hybrid in that they are actually going out to the private insurance market. I think that is...not erroneous, but inconclusive in terms of what actually exists.
Thank you for the opportunity just to say that, because that's the confusion I've had all along.
9:35 a.m.
Conservative
The Chair Conservative Leon Benoit
I was taking that as a point of order.
Is there any further discussion on clause 21?
Yes, Mr. Alghabra.
9:35 a.m.
Liberal
Omar Alghabra Liberal Mississauga—Erindale, ON
Thank you, Mr. Chair.
I agree with you, Mr. Tonks.
But before we take this further, I want to hear from the officials, for further clarification on how the number $650 million.... I know it was brought up earlier in their previous testimony, but we heard from witnesses who said that in the United States it was close to $9 billion, or billions of dollars. So I would like the officials to help the committee understand how that number was derived, what the international standards are, and perhaps respond to some of the concerns.
I know some of the witnesses had an anti-nuclear agenda and a different motivation. But I hope they can help us understand the number and how to get there.
9:35 a.m.
Acting Director, Uranium and Radioactive Waste Division, Department of Natural Resources
Certainly. The $650 million was based on a number of factors. You mentioned “international experience”, and we looked at the current amounts in the international conventions that govern this area, notably the Paris Convention and the Vienna Convention. Both of those conventions require 300 million SDRs, and I think the equivalent today is around $500 million. So that was one of our considerations.
Another consideration was the existence of insurance to cover the liability. When we went to the insurers, they indicated roughly $850 million worth of capacity would be available. But they were concerned that catastrophic events throughout the world—hurricanes, etc.—could have downward pressure on that amount. So we felt the $650 million amount would be more appropriate.
Thirdly, the Senate committee studied this issue and came back with a proposal that the amount be increased to $600 million, which they equated to an international figure.
Finally, we looked at the risk of a worst-case design-basis incident. We relied on a study that was undertaken by the Canadian Nuclear Safety Commission, which indicated that for a worst-case design-basis incident, the extent of damages would vary between roughly $1 million and $100 million, based on the parameters.
So taking all those factors into consideration, we suggested the $650 million, and we consulted extensively with the operators on that amount and in time they were generally supportive of that amount.
9:40 a.m.
Acting Director, Uranium and Radioactive Waste Division, Department of Natural Resources
The United States liability amount is made up of two tiers. The first tier is the insurance tier, under which operators are required to carry...I believe it's roughly $300 million Canadian, so an insurance tier similar to the $650 million we would require. It's roughly $300 million Canadian.
Then above that tier is an industry-pooling mechanism, under which each operator is required to carry $100 million of financial security for each reactor they own. When you look at the American situation whereby I believe they have 111 nuclear reactors, when you pool all those amounts, you come up with that very large liability amount of roughly $9 billion.
9:40 a.m.
Acting Director, Uranium and Radioactive Waste Division, Department of Natural Resources
Oh yes, there is.
9:40 a.m.
Acting Director, Uranium and Radioactive Waste Division, Department of Natural Resources
It's $9 billion. It's the individual operators, $300 million, plus the benefit of the industry pool, which, when accumulated, brings the total available compensation to roughly $9 billion.
9:40 a.m.
Liberal
Omar Alghabra Liberal Mississauga—Erindale, ON
The pooling implies that any time a new nuclear reactor is added, the pooling will become bigger. Does that mean the cap changes, adjusts, depending...?
9:40 a.m.
Acting Director, Uranium and Radioactive Waste Division, Department of Natural Resources
That's right. The cap would go up, and when reactors are taken out of service, the cap would go down.
9:40 a.m.
Liberal
Omar Alghabra Liberal Mississauga—Erindale, ON
They don't have an absolute legislative cap, then, except the insurance requirement per operator. Is that accurate?
9:40 a.m.
Acting Director, Uranium and Radioactive Waste Division, Department of Natural Resources
Yes, I would say that's accurate. Each individual operator has a fixed amount that they are responsible to secure financially. That amount is based on insurance and an additional tier for their individual reactor.
9:40 a.m.
Liberal
9:40 a.m.
Conservative
9:40 a.m.
Liberal
Ken Boshcoff Liberal Thunder Bay—Rainy River, ON
Thank you very much.
When was this Bill C-5 actually drafted, physically? Was it over the summer or springtime? I know you've been fine-tuning it and continuing to work on it, but I mean the essence of the draft.
December 4th, 2007 / 9:40 a.m.
Acting Director, Uranium and Radioactive Waste Division, Department of Natural Resources
9:40 a.m.
Liberal
Ken Boshcoff Liberal Thunder Bay—Rainy River, ON
The reason I ask, Mr. Chairman, is that the insurance market has changed dramatically in the last 18 months. We are now in what is known as a soft market condition; the capacity of the industry to absorb either quantum or reduced premiums, or even the interest of reinsurers for this.... When you see all our own insurance dropping 30%, 50%, 60%, to me, it means that in terms of a contemporary examination of this bill, the conditions by which you set the $650 million or the $850 million have changed.
First I'll let you address that.