Proposed changes to nuclear liability would bring Canada in line with international standards

It is hoped the latest round of proposed changes to federal nuclear installation requirements – including the call to increase absolute liability for operators to $1 billion and to ratify Canada as a party to a convention on supplementary compensation – will prove a charm.

“The existing act is 40 years old,” Jacques Henault, an analyst of nuclear liability and emergency preparedness for Natural Resources Canada, said Wednesday during the annual general meeting luncheon of the Nuclear Insurance Association of Canada.

“It’s old, it’s outdated legislation, the liability limit has not changed over time and the language of the legislation is archaic. We no longer are in line with international standards,” Henault told attendees.

Several attempts have been made since 2007 to update how to address liability and compensation in the event of a nuclear incident, he said. With the previous minority governments, though, each attempt died on the order paper as a result of prorogation or the dissolution of parliament.

Bill C-22, the Energy Safety and Security Act, is titled an Act respecting Canada’s offshore oil and gas operations, enacting the Nuclear Liability and Compensation Act, repealing the Nuclear Liability Act (NLA) and making consequential amendments to other acts. As with the existing NLA, the proposed law applies to Canadian nuclear facilities such as nuclear power plants, nuclear research reactors, fuel processing plants and facilities for managing used nuclear fuel.

The nuclear section of the omnibus bill – which also addresses offshore oil and gas liability – is meant to replace the existing act “with a better regime, and also to implement the convention,” Henault said.

While many principles will remain the same, one key difference in the proposed legislation is that it would allow Canada to become a party to the Convention on Supplementary Compensation for Nuclear Damage, which Canada signed in December 2013. “This bill is different from all the other ones because effectively we’re making the decision to join the convention,” Henault said.

“It’s important that we as a country join one of these conventions because it addresses liability and compensation for transboundary and transportation incidents,” he explained.

“The benefits of joining a convention are really to address liability compensation for transboundary and transport nuclear installation incidents and provide more universal protection for citizens in terms of adequate funds and not having to prove negligence. And it’s very important for encourage the participation of suppliers and contractors in worldwide nuclear development,” Henault said.

Not yet in force, the convention will take effect once it has been ratified by at least five countries with an installed nuclear capacity of 400,000 megawatts thermal, notes a Bill C-22 backgrounder. Beyond Canada, the convention will need one more signatory, with Japan and South Korea both appearing to be possibilities. “We expect that to actually happen in the not-too-distant future,” Henault said.

Henault also regards the convention as a good fit. It “is a wise choice for us because our neighbour, the United States, is a member, and in terms of a bilateral relationship with the United States, it’s important that we join,” he said.

As for things that are the same in both the existing and proposed legislation, the basic principle is maintained that “operators of nuclear installations that are subject to the act are absolutely and exclusively liable for damage,” Henault said.

With absolute liability, the backgrounder notes, the operator is responsible for civil injury and damage, and victims do not need to prove fault to make claims for injury or damages; with exclusive liability, the operator alone is liable, to the exclusion of others, such as suppliers and contractors.

If approved, the bill will increase the amount of compensation available to address civil nuclear damage from $75 million to $1 billion (an amount commensurate with current international standards); broaden the number of categories for which compensation may be sought; and improve the procedures for delivering compensation.

“Operators will be permitted to guarantee their financial liability with traditional insurance and other forms of financial security. The government will provide coverage for certain risks for which there is no liability insurance; it will also provide increased coverage for lower-risk nuclear facilities, such as small research reactors at universities, through an arrangement with approved insurers,” the backgrounder adds.

“The operator will be liable for damages in Canada and its exclusive economic zone, which is a zone that extends 200 nautical miles, I believe, from Canada’s territory, or within a contracting state. That’s a member state to the convention and its exclusive economic zone,” Henault explained at the luncheon.

The $ 1 billion amount will be phased in over three years, starting at $650 million on proclamation, he said. The limit can be reviewed by the minister on a regular basis, but at least once every five years, and can effectively be raised by regulation, he added.

The increase in the amount “brings Canada in line with liability amounts in other countries,” Henault said, and, in fact, surpasses current amounts in many countries, including the United Kingdom and France.

The “$1 billion under the new legislation will be exclusively for compensation for victims,” he said, “so operators will have to avail themselves of other means to pay for legal fees or claims administration costs.” This, too, is in line with the convention.

Among other things, Bill C-22 proposes the following:

• expanded definitions of compensable damage to include economic loss, preventive measures and environmental damage;
• a longer limitation period for submitting compensation claims for bodily injury (30 years compared to the current 10 years) to address latent illnesses — such as certain forms of cancer detected more than 10 years after an incident; and
• establishing a quasi-judicial claims tribunal to replace regular courts if necessary, to accelerate claims payments and provide an efficient and equitable forum.

A number of factors were considered when coming to the liability limit, Henault said at the luncheon. In essence, however, the amount had to be sufficient to deal with a consequence of controlled release of radiation, he said.

A “reasonable expectation of an accident in Canada would involve a controlled release,” he said.

Originally, there had been discussions that the proposed changes could possibly come into force Jan. 1, 2015, Henault said, but added, “I don’t think there’s any way that can happen now.”

Bill C-22 was tabled on Jan. 30 and received second reading in the House of Common on March 25. It then needs to go to committee.