Natural Resources Committee on June 5th, 2014

[The Chair, Conservative, Leon Benoit]

I'm going to ask one final question if I may.

If the situation were to change, where we had a private nuclear reactor owner and operator in Canada, first of all, is it fair to say the legislation would be changed to accommodate that?

Secondly, is it fair to say that there would be a lot of lead time because it takes a lot of time to go through the regulatory process and to build a nuclear reactor of any kind?

[Jeff Labonté]

I can't comment on the will of Parliament in the future except to say that the lead time to build a new reactor in Canada would be extensive. My colleagues in the regulatory community could probably tell you that they would do their very best to move it along as quickly as they could, but given the design and the development, we're talking about likely a decade or so.

[The Chair, Conservative, Leon Benoit]

Thank you very much for being here again, Mr. Labonté, Mr. McCauley, and Ms. Kellerman.

We very much appreciate your being here and giving us information to help us deal with this important piece of legislation.

I'll suspend the meeting for just a couple of minutes as we go to our next panel of witnesses. We'll come back for the rest of the meeting and question those witnesses.

[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.

[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]

Thank you very much, Mr. Barrett, for your presentation. It is much appreciated.

We go now to Shawn-Patrick Stensil from Greenpeace Canada.

Go ahead, sir, with your presentation for up to five minutes.

[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.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Stensil from Greenpeace Canada.

We go now to our third witness from the Canadian Nuclear Safety Commission, Michael Binder, who is president and chief executive officer.

Go ahead please, sir, with your presentation for up to five minutes.

[Dr. Michael Binder, President and Chief Executive Officer, Canadian Nuclear Safety Commission]

Good morning, Mr. Chair and committee members.

My name is Michael Binder and I am the President of the Canadian Nuclear Safety Commission. It is a pleasure to accept your invitation to be here today.

The CNSC is Canada’s nuclear regulator. Under the Nuclear Safety and Control Act, the CNSC carries out its threefold mandate: regulating the use of nuclear energy and materials to protect the health, safety and security of Canadians and the environment; implementing Canada’s international commitments on the peaceful use of nuclear energy; and disseminating objective scientific, technical, and regulatory information to the public.

The CNSC is an independent, quasi-judicial administrative tribunal. It regulates all things nuclear in Canada including uranium mining, nuclear fuel fabrication, nuclear reactors and power plants, the production and use of medical isotopes, and the decommissioning and remediation of nuclear sites. The CNSC is therefore directly involved in regulating the nuclear facilities to which the Nuclear Liability and Compensation Act will apply.

As you know the government is responsible for setting policy such as this act, the NLCA, and the CNSC's role is to carry out its responsibilities under the act. We welcome the NLCA as it will modernize and clarify the various roles and responsibilities of those involved in case of a nuclear accident.

The CNSC's job is to make sure no claim is ever filed under the NLCA. We will not license a facility unless we are convinced it is safe. The CNSC is a hands-on regulator, and we have a robust regulatory framework in place to ensure that our licensees are operating safely and meeting their licence conditions.

One of the ways in which we do this is to conduct all kinds of studies. We undertake probabilistic safety analysis, we simulate large accident consequences, we look at physical protection measures to ensure security, and we do research to determine the life of pressure tubes. All these studies aim to ensure there are no weaknesses in the safety case and to bring in new measures to address any gaps identified.

For example, yesterday we released for public comment the “Study of Consequences of a Hypothetical Severe Nuclear Accident and Effectiveness of Mitigation Measures”, a study that investigates the health consequences of a release due to a hypothetical severe accident involving four reactors, and the mitigation measures needed to safeguard public health. This is only the latest example of the CNSC's ongoing work as a safety regulator.

You have heard references to the Fukushima Daiichi accident in Japan in 2011. I can assure you that this unfortunate accident spurred a global effort to raise standards to guard against events that were previously considered to be improbable. For our part, the CNSC ordered a review of the safety case of all nuclear operators. The result has been increased safety measures in the design and operation of our nuclear facilities.

There is now added capacity to ensure the redundancy of emergency mitigation equipment to maintain safe shutdown of one or multiple reactors simultaneously. This added capacity includes 21 portable and mobile diesel operators to provide emergency power; 20 cooling water pumps on site with municipal fire trucks acting as off-site support; enough fuel to operate for days without off-site refuelling; and additional hydrogen mitigation equipment, such as passive recombiners, have been installed to ensure protection of containment, and, hence, reduce the likelihood of release. Furthermore, the NPP licensees have established a memorandum of understanding to construct a centralized emergency response centre to provide off-site support in case of an accident.

These enhancements in the on-site emergency mitigation capabilities, as well as off-site emergency response readiness, have been procured, installed, and designed so that potential for this kind of accident ever happening in Canada is practically eliminated.

Canada enjoys an enviable safety record with no claim ever having been made under the Nuclear Liability Act. Our role is to ensure this does not change under the new act.

Our role under the proposed act is to provide advice to the minister on the designation of facilities containing nuclear material as nuclear installations that will be covered by the act.

We will also verify on an ongoing basis that licensees who are required to carry liability coverage under the proposed act are in full compliance with this obligation.

In closing, the CNSC is actively involved in overseeing all of Canada's nuclear licensees. As such, we are fully familiar with the facilities existing in Canada and the nature of nuclear materials contained on those sites. We stand ready to provide any assistance the minister requires in implementing this new legislation.

I would be pleased to answer any questions you might have. Thank you.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Mr. Binder.

Thanks very much to all of you again for being here on short notice, and for your presentations to kick off the second part of our meeting today.

I'll go to the seven-minute round, starting with Mr. Leef, followed by Ms. Moore and Mr. Reagan.

Go ahead please, Mr. Leef, up to seven minutes.

[Ryan Leef, Conservative, Yukon, YT]

Thank you, Mr. Chair. Thank you to our guests today.

Mr. Binder, you indicated early on in your statement to the committee that you'll not license a facility unless you're convinced it's safe. Then you went on to talk a bit about your regulatory framework and some of the testing you've done. Can you comment on the current sites that exist in Canada in terms of their location, and contrast that with the Fukushima site? I mean, we can construct but we can't control acts of nature. I think what I've heard from the testimony is that there is low probability, but I think we all recognize that there's high consequences, of any sort of disaster. So the probability of an incident based on what you put in place seems low, but, of course, we know that the consequences are high.

What kind of assessment is done in the Canadian context for location? What sort of contribution, in terms of location, did the Fukushima disaster have on that incident?

[Dr. Michael Binder]

The most noticeable thing that changed in Fukushima is something that our technical expert called “beyond design“ accidents.

Those facilities were designed with some very conservative accidents in mind. They assumed events based on historical records of seismic events, tornadoes, all kinds of ice storms and so on, and then they designed those facilities way, way back, about 30 years ago.

What Fukushima taught us here was that we can get too preoccupied with the technical analysis. What we decided to do is to assume a doomsday scenario, as I call it, that there will be a big, big accident. So what can you do to actually prevent it? By preventing it, we mean we don't try to preserve the asset; what we want to make sure of is that there will be no releases. What happened in Fukushima is that they were not able to bring water to the plant fast enough.

All the things we've done in Canada is create a post-Fukushima action plan with many, many mitigations to deal with how to make sure that we cool the plant. That means water, being able to draw water from the lakes, making sure that we can bring in back-up power fast enough to cool things.

I can go on for a long time on some of the technical details, but that's the lesson we've learned.

[Ryan Leef, Conservative, Yukon, YT]

Sure. That's perfect. That's what I was curious about. I'm sure we could have a really interesting discussion getting right down into the nitty gritty of the operational design and considering all of the possible doomsday events and mitigation things, but that would take us quite a while.

You mentioned in your report that you've established an MOU to construct a centralized emergency response centre to provide off-site support in case of an accident. Can you give us an indication of the timing of the construction project on that, when it's going to be done and the scope and scale of it?

[Dr. Michael Binder]

In North America as a whole the U.S. is now establishing, if memory serves me right, five central locations where there will be assets. I'm talking about diesel fuel, fuel, and all kinds of equipment and material that can be flown to any site required.

In Canada, they've done a deal in which Pickering can help boost power in Darlington and vice versa. All of them can bring what exists on their sites, which are mobile, to the other sites in case of an accident. This memorandum of understanding is in place. They are now actually thinking about whether they really need to construct, on top of all of that, a centre that will be common to all of them.

[Ryan Leef, Conservative, Yukon, YT]

When you contemplated that worst-case scenario, did you do it in the context of costs? My question is really around that: where does the $1 billion get us? Do you measure these worst-case scenarios and your response in terms of the financial capacity that you have to deal with them, or just the operational capacity?

[Dr. Michael Binder]

Our mandate is not to deal with economic issues and cost controls. All we want to assess is where, if you have an additional dollar to invest in increasing safety, you would put it.

That's as close as we can get to a cost-effectiveness measurement to enhance safety. Our mandate is not economic. Our mandate is purely safety.

[Ryan Leef, Conservative, Yukon, YT]

Then in that respect, how about the assessment of the expertise of the contractors? We heard about the pooled liability of expertise in international global contracting support. Do you take that into account? And where does Canada stand in terms of its expertise or its ability to draw on nearby expertise to immediately respond to that kind of disaster?

[Dr. Michael Binder]

We will seek expertise whenever we can get it. But we also have some pretty impressive experts on staff who are expert in nuclear physics, nuclear engineering, mechanical engineering, environmental assessment—you name it. They are expert, and when they lack a particular expertise, we will contract outside for some help. And we continuously participate with our regulatory communities to share information and share experiences.

[Ryan Leef, Conservative, Yukon, YT]

Mr. Stensil, you made some interesting recommendations for the committee. You talked a little bit about shielding the operators by not extending the absolute liability.

In respect to some of the testimony we've heard—that these are publicly owned companies and one privately operated but still publicly owned—does that stance create a slightly different shift in exploration of liability, compared with other countries that have purely industry-driven or non-publicly owned companies?

[Shawn-Patrick Stensil]

I think we should look at it in the context—

[The Chair, Conservative, Leon Benoit]

Mr. Leef's time is up, so please, if you could, give a very brief response.

[Shawn-Patrick Stensil]

I would say this. The provincial governments own these reactors. In other fields of risk transfer to the federal government, the federal government has recently done something very good, in saying that they will not backstop the risk for cost overruns at reactor projects and transfer them back to the province.

That's where the risk should lie. It's the same with radioactive waste. This is an exception, for some reason, in the federal regime that I think would be addressed by just taking the cap off.

[The Chair, Conservative, Leon Benoit]

Thank you very much.

We go now to the official opposition, to Ms. Moore for up to seven minutes, please.

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

Mr. Stensil, I would like to come back to your recommendation about absolute liability and the fact that under this bill, it only applies to the operator and not those who are part of the supply chain with respect to services. Mr. Binder may be able to add some comments to your answer.

If a subcontractor does welding or provides parts for a reactor, or tests the welding through X-rays but does his work poorly, what are the repercussions? Does that person have to be insured for a certain amount of money so as to cover the work they have done?

What about the case of a subcontractor working on a nuclear reactor, even though the reactor belongs to a crown corporation?

[Shawn-Patrick Stensil]

At this time, in terms of liability, a reactor supplier has no obligation if an accident occurs. That is how the law is worded and that is also true of the new version. In our opinion, this is not a good thing.

In the case of Fukushima, it was demonstrated that the designer, General Electric, was aware of the reactor's problems not only in design but also in manufacturing. That was not what caused the accident, but it did contribute to the radiation leaks into the environment. In any other industry, the Japanese could have sued the company.

We therefore recommend that there be a right of recourse in that respect.

The operator is always the entity that can be sued. However, a negligent supplier could be sued by the operator as he is in the best position to do so and thus obtain the largest amount of compensation for the affected population. That is what we are requesting.