Natural Resources Committee on Nov. 16th, 2009

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

In the previous incarnation of this bill we had a presentation by some of the representatives of the insurance industry. They explained to us some of the nuances of this. The committee should probably look at that testimony again before we go to clause-by-clause.

From the industry's perspective, or even from an environmental perspective, if there were more competition in the industry, the ability to raise the liability limits with fewer costs would be there as well.

What could be done to enhance competition or bring more players in to provide insurance for the market? Do you have any ideas or suggestions for the committee?

[Murray Elston]

At this stage we are involved with other utilities following the current process, which is to go to the department and get a designation. That is effectively a very slow process, and we haven't been able to make much headway on that.

We have resorted to--and I mean “resort” in a good way and not as the last step--engaging the people at NIAC, the insurance association, to see if there are ways we can move considerations of premium cost. We are also becoming more directly engaged with the insurers so they understand our needs. Looking forward at the costs associated with this legislation and the way that organization operates to put the insurance--

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Before my time runs out, is there anyone else who wants to comment?

[Shawn-Patrick Stensil]

I don't know the details of competition within the industry. I would just say that at a high level--and I will ask Murray afterwards why there has been such a blockage on this--I don't think you would see any opposition to that in principle, although I do not know the details.

[Theresa McClenaghan]

The only thing I would add is that in America additional resources are brought to the table by requiring that the other operators also put money in if there is an incident. They would pay that for up to 10 years to help bring that pool up.

[The Vice-Chair, Liberal, Alan Tonks]

Mr. Trost, we're out of time.

In the interest of getting on with the next panel, I'm going to thank the witnesses very much for appearing before us.

Mr. Elston, you may have your wish, but that remains to be seen.

Thanks very much to all of you for being here.

We'll break for a minute or two. We'll allow the witnesses to withdraw and have the next panel of witnesses come to the table, please.

Thank you.

[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.

[Dr. Gordon Thompson, Executive Director, Institute for Resource and Security Studies]

Okay.

[The Vice-Chair, Liberal, Alan Tonks]

Then we will have a round of questions from the members. Through the chair we'll direct those questions as appropriate. I'll try to keep you keyed in with respect to questions that may be coming for you.

[Dr. Gordon Thompson]

Thank you.

[The Vice-Chair, Liberal, Alan Tonks]

Mr. Hénault, you have up to 10 minutes.

[Jacques Hénault, Advisor, Nuclear Liability, As an Individual]

I was invited here as an individual and I don't have a presentation. I can speak to the act and what it proposes if you want, but I anticipated being here to answer any questions.

[The Vice-Chair, Liberal, Alan Tonks]

It's entirely up to you. We can go to the other presenters, and then if you would like to make comments, perhaps you can precede Mr. Thompson.

Is that all right with you?

[Jacques Hénault]

Okay.

[The Vice-Chair, Liberal, Alan Tonks]

Good.

We will go to the Canadian Security Commission and Mr. Binder.

[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]

Thank you, Mr. Binder, for that presentation.

We'll now go along to GE-Hitachi Nuclear Energy Canada Inc.

Mr. Mason, would you like to make your presentation, please?

[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.

[The Vice-Chair, Liberal, Alan Tonks]

Thank you, Mr. Mason, for your presentation.

Mr. Thompson, we will now go to you, sir.

[Dr. Gordon Thompson]

Thank you.

My name is Gordon Thompson. I'm the executive director of the Institute for Resource and Security Studies in Cambridge, Massachusetts. I am a research professor at Clark University in Massachusetts.

I've been working on nuclear safety and security issues for about 30 years. Some of those projects have been in Canada. For example, I worked for the Ontario nuclear safety review in 1987 and for the Senate energy and environmental committee in 2000. I have prepared a report for Greenpeace Canada assessing the Nuclear Liability and Compensation Act. I assume Greenpeace will make that report available to you. The report contains my own views and is not in any way dictated by the client, Greenpeace.

The report covers a range of issues. I'd like to focus here on a technical issue that I believe is important for the committee. That issue is the probability and magnitude of a release of radioactive material to the environment. My thesis in this area is that the committee--and through it, the Canadian Parliament--has not been properly informed about the risk of a large release of radioactive material.

Mr. Hénault, who is before you, stated at a conference in Toronto in October that the liability limit of $650 million has in part been set because it addresses what he terms “foreseeable accidents” rather than catastrophic Chernobyl-type accidents. What Mr. Hénault is actually referring to is what is known in the industry as a design-basis accident. That is an accident that a nuclear power plant is designed to accommodate, and that is what he's referring to when he describes an accident as foreseeable.

We know that a very large release to the environment occurred from the Chernobyl nuclear power plant in 1986. That was certainly an event outside the design basis. It's also common knowledge that in 1979 there was an event at the Three Mile Island nuclear power plant in Pennsylvania, also outside the design basis. But that event did not lead to a large release of radioactive material. However--and this is not as widely known as I believe it should be--at some other nuclear power plants then operational in the United States, the same sequence of events would have led to a large release of radioactive material. And had the accident continued further down the sequence that it was following, it could have led to a large release at Three Mile Island.

The historical occurrence of these events suggest that their analogue in the future is a foreseeable event. Indeed, there is a large body of technical analysis to show that these two events are not aberrations. They are instances of design-basis accidents, and such an accident could occur at any nuclear power plant anywhere in the world.

The technical analysis that covers this area is known as probabilistic risk assessment, PRA, or sometimes probabilistic safety assessment, PSA. The Canadian nuclear industry, the Nuclear Safety Commission, and its predecessor, the Atomic Energy Control Board, are aware of the field of probabilistic risk assessment and have conducted studies in this genre.

I regret to say that the quality of these studies and their completeness does not reach the level that was set for this field of technical inquiry by the U.S. Nuclear Regulatory Commission in its study, NUREG-1150, which was published in 1990. That is a point of reference from which one can judge the quality and completeness of technical studies of severe accident potential at nuclear power plants.

Now to the implications of this field of study and the two historical events I mentioned for the Nuclear Liability and Compensation Act, specifically the liability limit of $650 million.

First, studies done by the Canadian nuclear industry show potential exposures of the public to radiation, which, when monetized at the rate used for occupational protection decisions in the nuclear industry, yield health costs that can be in excess of $50 billion--clearly an amount far in excess of $650 million.

As another example, Defence Research and Development Canada estimated the cleanup costs of a dirty bomb event at the CN Tower in Toronto. Depending on the cleanup standards used in this analysis, the cost of cleanup could reach $250 billion. The amount of radioactive material that was assumed for that study is one two-thousandth part of the inventory of that same radioactive isotope in the reactor core of an existing CANDU nuclear power plant.

The Canadian nuclear industry claims that the probability of such an event at a nuclear power plant is extremely low. I dispute that finding. The dispute is a technical issue, which clearly is not appropriate to argue before the committee at this time. However, it is important to note that we know from available evidence about the premiums set by nuclear insurers to provide insurance to nuclear power plants. These insurers assume a probability of release many orders of magnitude in excess of the probability claimed by the Canadian nuclear industry. I would therefore suggest there's a case for the committee on that fact alone to be extremely cautious in accepting the industry's claims of a very low probability.

In conclusion, I would argue that the committee, and indeed Parliament, before enacting this proposed legislation, should request that the Canadian government provide a much more thorough and complete and open analysis of the risk of a large release of radioactive material and the offside costs of such a release.

Thank you.

[The Vice-Chair, Liberal, Alan Tonks]

Thank you, Mr. Thompson.

Mr. Hénault, do you wish to take a few minutes or would you prefer to wait for questions?

[Jacques Hénault]

I prefer to wait for questions.

[The Vice-Chair, Liberal, Alan Tonks]

All right, good. Thank you.

Just to get some direction, members, it's six minutes after five. In order for there to be equity and fair sharing of the time, could I suggest we reduce the seven minutes to five minutes? It will ensure that every member would get their opportunity for their time. Is that all right?

[Some hon. members]

Agreed.

[The Vice-Chair, Liberal, Alan Tonks]

Okay.

All right. We'll start off with Mr. Bains for the first five minutes.