Evidence of meeting #34 for Natural Resources in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was insurance.
A recording is available from Parliament.
Conservative
The Chair Conservative Leon Benoit
Good morning everyone.
Before I introduce the witnesses and get on to the business of today's meeting, I would like to ask the committee about a couple of things.
Next Tuesday we're going to do the clause-by-clause study of this bill. Next Thursday we will deal with the summary on rare earths. It was suggested by Ms. Moore that we be prepared, in case we get through clause-by-clause examination early, to start discussing the report on rare earths.
Is that agreeable to everybody here?
Conservative
The Chair Conservative Leon Benoit
Then the other thing that we need to decide is....
First of all, in case the clause-by-clause study goes longer than the two hours, is it agreed that we go as long as it takes to complete the clause by clause of Bill C-22?
Is that agreed?
NDP
Conservative
The Chair Conservative Leon Benoit
Yes. Well, we never know about votes.
Okay. So that's what we'll do.
The final thing is on the propane study. We should set a deadline for all parties to have their list of witnesses in. That would be happening on Tuesday, June 17.
Could we quickly set a date for all parties to have their witness lists in for the propane study on Tuesday, June 17?
Liberal
Conservative
NDP
Christine Moore NDP Abitibi—Témiscamingue, QC
I'm sorry, the translation wasn't good. You just told me “Wednesday the five”, and I'm saying to myself, “But we are already at the fifth”.
So that's great.
Conservative
The Chair Conservative Leon Benoit
Thank you.
Now we'll get to the business we have before us today.
I want to start by thanking all of the witnesses for being here.
Mr. Labonté, this is two meetings in a row, and we're looking forward to your presentation and your answers to questions by members today.
We are here today to continue our 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.
For the first three-quarters of an hour this morning, we have from the Department of Natural Resources Mr. Jeff Labonté, director general of the energy safety and security branch, energy sector. Again, thank you.
We have Dave McCauley, director of the uranium and radioactive waste division in the electricity resources branch, energy sector. Welcome to you, sir.
And we have Joanne Kellerman, general counsel and executive director, legal services. Thank you for being here today as well.
Go ahead, please, with your presentation. Then we'll get to the questions and comments after that. I look forward to a meeting as productive as the last one.
Go ahead, please.
Jeff Labonté Director General, Energy Safety and Security Branch, Energy Sector, Department of Natural Resources
Thank you, Mr. Chair and members of the committee. It's a pleasure to be here this morning to speak to you about the second part of Bill C-22. This will focus on nuclear compensation and liability.
This morning, it is my pleasure to provide you with some background about the second portion of this bill.
A presentation has been circulated. I hope everyone has a copy. As with previous representations, we will try to move through the presentation fairly quickly and open the floor for your questions and comments and will do our very best to respond to those.
The purpose today is to brief on the nuclear components of the energy safety and security act. In essence, the act proposes to amend the nuclear regime to establish greater legal certainty, and enhance liability and compensation procedures, protocols, and aspects related to the unlikely event of a nuclear incident in Canada.
For background, the act will replace our current nuclear liability regime, which is based on a 1976 nuclear liability act. My legal counsel has reminded me that the act was tabled in parliament in 1970 and wasn't in to force until 1976.
To point out a couple things, the act provided for liability limited to $75 million in the event of a nuclear incident. There are aspects of the act that I think it would be fair to say are outdated and that we would hope to modernize. Certainly it doesn't reflect international standards, nor international conventions that have emerged to manage transboundary and transnational issues related to nuclear incidents in the event that they ever occur. Those are the focal points, to us, in terms of the policy logic for the bill.
I think most committee members may know this, but I'll say it for the record. The bill has been introduced four times before parliament and has not managed to make its way to a vote and to royal assent. That said, I think it's an important piece of legislation that we hope we can help advance, and certainly respond to your questions in a fashion that allows so.
With regard to highlights of the bill, it is really about three things. One is to strengthen compensation and bring it in line with international peers and with other international context. Two is to clarify the compensation definitions and the procedures in which compensation would be provided and how it would be determined. Three is to allow Canada to sign and ratify the International Atomic Energy Agency convention on supplementary compensation for nuclear damage. That is in effect a convention that allows countries to work together to deal with transboundary incidents and to share resources in the event that there's an incident in a member country to the convention.
As well, the bill—similar to the offshore portion of the bill—has elements that are quite consistent with what was proposed in the Commissioner of the Environment and Sustainable Development's fall 2012 report. It looked at liability limits for all of Canada's energy production regimes and natural resource sector areas.
I will now discuss what is found on slide 4 of our presentation.
The nuclear sector is important for Canada's economy. It provides 30,000 direct jobs, of which 5,000 are in the uranium and aluminum sectors, and 25,000 in services and energy production from uranium. In total, over $6 billion in revenues are produced annually in Canada. This is a major aspect of our economic context as well as development.
On the fifth page, I'll cover a couple of key elements of the act in terms of highlights. I'm certain you'll have a more deeper look at things, but there are elements of the bill that focus on improving accountability and looking at the liability aspect.
First, the act maintains that liability for operators is exclusive and absolute. Similar to the offshore portion of the bill, that would mean that in the event there were an incident—and we believe that such an incident would be highly unlikely—the operator of the facility would be absolutely liable. There would be no need to provide fault or negligence to demonstrate that liability.
The bill proposes to increase absolute liability to $1 billion over a period of three years in several steps. It requires that operators have a commensurate amount of insurance or fiscal security that demonstrates they are able to handle the $1 billion worth of absolute liability. It also provides that the government will provide coverage where there is no insurance, and there are several instances where we might find that in this part of our economic sector. One example is small reactors or reactors that relate to research areas. The second example is in areas where the insurance community is not prepared to look at 30-year horizons, for example, for coverage of certain damages.
The act also provides a mandated review of liability amounts every five years so that at least Parliament will have the opportunity every five years to increase the amounts of liability and compensation that are fundamental in the act.
The second part or theme of the bill is really to look at increasing the response capability, so the bill goes quite a ways in expanding the definition of categories of what are the compensable damages. It provides for a limitation period and expansion for bodily injury for claims from 10 years to 30. It provides the compensation of remedial measures to repair and to deal with environmental damages and it establishes authorities to simplify the claims-handling process through a tribunal, should it ever be necessary.
It also allows Canada to enhance its transparency and to join the international community, so the bill provides for Canada to ratify membership in the convention on supplemental compensation for nuclear damage. Once in force, this convention will provide certainty for liability in jurisdictions for trans-boundary and trans-national issues. It specifies how these issues will be dealt with. It provides supplemental coverage should Canada ever need it and it provides that Canada would also contribute to supplemental coverage from another member country, should it ever be needed as well.
In terms of next steps for the bill, it was introduced on the 30th of January. Following royal assent and entry into force, part 2 requires a number of regulations to be established, and we expect to do those in the coming months and, over the next 12 to 18 months, one regulation is to provide for an insurance policy and another is to establish the definition of a nuclear installation.
Once it has come into force, Canada will then formally complete its process to ratify the convention. So we've signed the convention, but it isn't formally ratified until the policy is in place domestically in law and several regulations are in place, and then we're able to actually ratify the convention and become formal members of it. So there are several steps along the path that gets us to being a member. The annex includes the acts that will be amended either directly or consequentially through this process.
Thank you, Mr. Chair.
Conservative
The Chair Conservative Leon Benoit
Thank you very much for your presentation, Mr. Labonté.
We go now to questions, the seven-minute rounds, starting with Ms. Crockatt.
Go ahead, please, for up to seven minutes.
Conservative
Joan Crockatt Conservative Calgary Centre, AB
Thank you very much, Mr. Chair.
Good morning to the departmental officials. It's nice to see you again, although it feels like it's only been a few hours.
We're now into the nuclear portion of this bill. Thanks for your presentation this morning. I'm wondering if you can just outline sort of on a big-picture basis the policy objectives of this bill and why the legislation raises our operator liability to $1 billion.
Director General, Energy Safety and Security Branch, Energy Sector, Department of Natural Resources
From a big-picture point of view, it's partly related to the age of the current act that we work under and the limit that's provided at $75 million. The bill really focuses on raising that to be consistent with what would be expected of a nuclear regime, something that's consistent with holding accountable the operators of those installations across the country, recognizing that there is an insurance community that supports those operations and that there's a balance between having a liability amount that's reasoned and one that's economically viable in trying to manage what the cost structures would be and how the insurance would work.
If we look also from a broad perspective, countries around the world that have nuclear facilities and nuclear operations as we do in Canada, predominantly for energy generation, have a range of different liability limits. They range from $100 million in Norway and in France, to $500 million in the Netherlands, to $1.2 billion in Switzerland. So Canada's view of putting $1 billion and making it absolute puts us squarely among the leading countries and is certainly an amount that we think is appropriate given the context that we have here in Canada.
Conservative
Joan Crockatt Conservative Calgary Centre, AB
Is the public aware of those liability limits? Is this so the public can be assured that the industry is operating in that accountable framework, or is it more so that the government has that level of assurance, or is it both?
Director General, Energy Safety and Security Branch, Energy Sector, Department of Natural Resources
I suggest it would be both. I think Canadians in general are committed to the view that operators of industrial activities with an element of risk associated with them ought to be prepared for incidents and accidents, through the design and the operations of their industrial activity, their emergency plans, and all the prep they do in the event something happens, and then the work they do to prevent it.
At the same time from a government perspective, there needs to be an assurance that the operators of these facilities have the resources and are able to deal with them from a financial point of view. And then there needs to be a regulatory system that requires them to have the plans, to exercise the plans, to demonstrate to the satisfaction of the regulator who's independent of government that they're prepared, that they've done everything they can to mitigate and prevent things. Most Canadians are not fully aware of the number of dollars involved, but I think their expectations are pretty straightforward. They expect people to be ready, to take every action possible to avoid things, and to be prepared to deal with incidents should they ever arise.
Conservative
Joan Crockatt Conservative Calgary Centre, AB
You mentioned that this bill has been introduced four times before. Did you calculate how many hours of debate it's had to date?
Director General, Energy Safety and Security Branch, Energy Sector, Department of Natural Resources
I'll take the fifth on that.
Conservative
Director General, Energy Safety and Security Branch, Energy Sector, Department of Natural Resources
I think it's been to committee twice. There's a positive side to that, which is that it's had a lot of consultation, a lot of discussion and debate, and a lot of comments.
And we've advanced the bill each time, so there are changes in this bill that weren't included in the previous bill. I can cover those if you wish, but it's had a number of laps around the track, if you will.
Conservative
Joan Crockatt Conservative Calgary Centre, AB
Since you raised it, what is in this bill that was not in previous bills? Is it a stronger bill than previously?
