FEDERAL REG

SOR/2016-88: Nuclear Liability and Compensation Regulations

REGISTRATION OF FEDERAL REGULATION - VIA OIC DATABASE, PRIOR TO PART II OF THE GAZETTE

Registered
May 6, 2016


REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the Regulations and the Rules.) Issues The Nuclear Liability and Compensation Act (the Act) is intended to replace the current Nuclear Liability Act to provide a stronger legislative framework that will better address the question of liability and compensation after a nuclear incident. The Act establishes the absolute liability r... (Click for more)


Published on May 6, 2016

Bill Summary

SOR/2016-88: Nuclear Liability and Compensation Regulations

REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the Regulations and the Rules.) Issues The Nuclear Liability and Compensation Act (the Act) is intended to replace the current Nuclear Liability Act to provide a stronger legislative framework that will better address the question of liability and compensation after a nuclear incident. The Act establishes the absolute liability regime for operators of nuclear installations; however, the provisions of the Act may not apply until nuclear installations have been designated, which may only occur by regulations. This is why the Nuclear Liability and Compensation Regulations (the Regulations) need to enter into force at the same time as the Act. The Regulations are required to (i) designate which nuclear facilities will be subject to the Act; and (ii) establish classes of nuclear installations and their respective liability amounts. In addition, upon entry into force of the Act, another regulation must be made to repeal the existing Canada-United States Nuclear Liability Rules, which implement a reciprocity arrangement between Canada and the United States relating to the compensation for injury or damage arising from a nuclear incident. Canada’s decision to join an international nuclear civil liability convention supersedes the need to maintain the reciprocity arrangement with the United States and the rules implementing this arrangement. Background The Act is intended to establish a civil liability regime for the operators of classes of nuclear facilities that contain or utilize “nuclear material.” These facilities are to be designated as “nuclear installations” under the Act. Nuclear material is material that is capable of a self-sustaining chain process of nuclear fission (criticality), or radioactive material that is produced as a result of that criticality. Nuclear facilities designated as nuclear installations include nuclear power generating plants, research reactors, nuclear material processing plants, as well as facilities used for managing nuclear fuel waste and other radioactive waste produced as a result of the criticality process. The civil liability regime provided for by the Act differs from a fault-based liability regime, which many other industries are subject to, as it establishes absolute, exclusive and limited liability on the operator for civil damages. It is designed to provide certainty on the treatment of legal liability for nuclear damage resulting from a nuclear incident and to provide prompt compensation with minimal litigation, since the persons who have suffered damage do not have to establish which party or parties were at fault. Under a fault-based regime, a person who suffered damage would have to prove which party or parties were at fault, defendants would have access to a number of defences including the exercise of due diligence, and litigation could take years and claimants could end up with no compensation. The activities associated with other types of nuclear facilities, such as those involved in mining, milling and the physical concentration of uranium ores, the manufacture or processing of natural uranium, and the storage or transport of natural uranium, do not involve high levels of radioactivity or the risk of criticality; therefore, it is not deemed necessary for these activities to be subject to the provisions of the liability regime of the Act. Civil liability with respect to the activities associated with these types of nuclear facilities is therefore left to the rules of common civil liability law. The Act sets the absolute liability limit of an operator of a nuclear installation to an amount that will gradually increase to $1 billion over four years after its coming into force. In setting this limit, the following considerations were taken into account: (1) it is sufficient to deal with the consequences of a nuclear incident at a Canadian nuclear power plant involving controlled releases of radiation; (2) it is within the capacity of insurers to provide insurance at this level for reasonable costs; and (3) it is more in line with liability limits in other countries. Under the current Nuclear Liability Act, designated installations (as defined in the Canadian Nuclear Safety Commission [CNSC] CMD 05-H35 document) and their respective insurance requirements are as follows: This table presents the insurance requirements. Name of installation Operator Required insurance Bruce "A" Generating Station Bruce Power Inc. $75 million Bruce "B" Generating Station Bruce Power Inc. $75 million Darlington Generating Station Ontario Power Generation $75 million Gentilly-2 Nuclear Power Station Hydro-Québec $75 million Pickering Generating Stations "A" and "B" Ontario Power Generation $75 million Point Lepreau Generating Station New Brunswick Power Nuclear Corporation $75 million Chalk River Nuclear Laboratories Atomic Energy of Canada Limited (AECL) 0 McMaster Research Reactor McMaster University $1.5 million École Polytechnique: SLOWPOKE Reactor École Polytechnique, Montréal $500,000 Royal Military College of Canada: SLOWPOKE Reactor Royal Military College of Canada 0 Saskatchewan Research Council: SLOWPOKE Reactor Saskatchewan Research Council $500,000 University of Alberta: SLOWPOKE Reactor University of Alberta $500,000 Cameco Fuel Manufacturing Facility Cameco Fuel Manufacturing Inc. $2 million Port Hope Conversion Facility Cameco Corporation $4 million Douglas Point Waste Storage Facility Atomic Energy of Canada Limited 0 Gentilly-1 — Waste Storage Facility Atomic Energy of Canada Limited 0 Western Waste Management Facility Ontario Power Generation $6 million Whiteshell Nuclear Research Establishment Atomic Energy of Canada Limited 0 The Nuclear Liability Act does not require federal government departments or agencies or federal Crown corporations (e.g. AECL) to carry insurance, which is why there are zero dollar amounts for such installations. Under the Nuclear Liability Act framework, the federal government self-insures the risks with respect to any incident associated with one of its departments, agencies or Crown corporations. Under the Nuclear Liability and Compensation Act, federal Crown corporations will be responsible for insuring their risks, whereas federal departments and agencies will continue to be self-insured by the federal government. Under the Nuclear Liability Act, an operator is only liable for civil injury or damage in Canada. However, the Nuclear Liability Act contains a provision that if the Governor in Council is of the opinion that satisfactory arrangements exist in any country for compensation for injury or damage resulting from a nuclear incident, the Governor in Council may declare that country to be a reciprocating country for the purposes of the Act. The Nuclear Liability Act also provides that the Governor in Council may, with respect to a reciprocating country, make such rules as considered necessary to implement any arrangement between Canada and the reciprocating country relating to compensation for injury or damage. The only country declared to be a reciprocating country for the purposes of the Nuclear Liability Act is the United States. This arrangement is in the form of a 1975 exchange of notes between the U.S. Ambassador to Canada and the Secretary of State for External Affairs. Through this arrangement, each country assures the other of access to the coverage provided by its nuclear civil liability legislation and of access to its courts. The Canadian component of the arrangement is established through an order, Declaring the United States to be a Reciprocating Country for Purposes of the Act, and by the Canada-United States Nuclear Liability Rules of April 24, 1975. The latter implements the Canadian component of the reciprocity arrangement that exists between Canada and the United States with respect to nuclear liability. Objectives The objectives of the Regulations and the Rules are to designate which nuclear facilities will be subject to the Act; establish classes or categories of nuclear installations and their respective liability amounts, so that operators are held responsible and accountable to the Canadian public for any incident that may occur at their installations; and repeal the Canada-United States Nuclear Liability Rules. Description Nuclear installations The “Designation of Nuclear Installations” section of the Regulations prescribes which nuclear facilities are designated as “nuclear installations.” In order for the provisions of the Act — including the provision of a $1 billion liability limit — to apply to nuclear facilities, the Regulations must designate them as “nuclear installations” for the purposes of the Act. This will ensure that the liability regime provided for by the Act will apply to the operators of nuclear facilities that contain or utilize nuclear material (i.e. nuclear power plants, research reactors, nuclear material processing plants, as well as facilities for managing nuclear fuel waste and other radioactive waste produced as a result of the criticality process). The Act does not apply to facilities that do not contain or utilize nuclear material (e.g. uranium mines, refineries utilizing natural uranium, hospital nuclear laboratories). Classes of nuclear installations The Act provides that operators of nuclear installations will be subject to a $1 billion absolute liability limit (or a higher limit as may be established by future regulations). However, the Act also provides that lower liability limits may be established, through regulations, for operators of certain classes of nuclear installations, depending on the level of risk associated with the nature of their activities. This is to ensure that the level of liability of these operators (and the amount of insurance that they are required to carry) is commensurate with the nature of the activities of their nuclear installations. For nuclear power plants, the liability limit of the operator will be $1 billion, or a higher limit as may be established by future regulations. For all other nuclear installation classes, such as nuclear research reactors, fuel fabrication facilities and nuclear fuel waste management facilities, the “Classes of Nuclear Installations” section of the Regulations will establish classes of nuclear installations and lower operator liability limits that are commensurate with the respective risk of these classes. In addition to the class of nuclear power plants, eight classes will be established, comprising 14 nuclear installations. In the absence of the reduced liability amounts provided by the Regulations, these low-risk nuclear installations would be subject to the same level of liability as nuclear power plant operators, and would be required to carry insurance that will gradually increase to $1 billion over four years. The liability amounts prescribed by the Regulations reflect the respective risk of the classes of nuclear installations. The classes of nuclear installations and limits were developed by the Department of Natural Resources, and are based on a relative risk assessment (relative to the risk of nuclear power plants) undertaken by the CNSC. This is a technical assessment that evaluates the nature of the nuclear installation and the nuclear material contained in it. For example, a nuclear power plant contains a large nuclear reactor (or multiple nuclear reactors) containing over 100 t of nuclear material (nuclear fuel). Each nuclear reactor is capable of producing large amounts of energy (hundreds of millions of watts). By contrast, a typical university research reactor contains 1 to 5 kg of nuclear material (nuclear fuel) and produces 20 000 W of energy. Similarly, a nuclear fuel waste management facility may contain hundreds of tonnes of used nuclear fuel, but this nuclear fuel is in safe storage mode. These facilities are subject to inspection by the CNSC and are not capable of producing large amounts of energy. The designated installations under the Regulations and their respective liability amounts are as follows: This table presents the designated installations under the Regulations and their respective liability amounts. Name of installation Class Operator Liability amount Bruce Nuclear Generating Stations A and B Power Reactor Bruce Power $650 million, increasing to $1 billion over 4 years Darlington Nuclear Generating Station Power Reactor Ontario Power Generation $650 million, increasing to $1 billion over 4 years Pickering Nuclear Generating Station Power Reactor Ontario Power Generation $650 million, increasing to $1 billion over 4 years Point Lepreau Nuclear Generating Station Power Reactor New Brunswick Power Nuclear Corporation $650 million, increasing to $1 billion over 4 years Chalk River Laboratories Reactor Over 7 MW Canadian Nuclear Laboratories $180 million McMaster Nuclear Reactor Reactor 1 MW to 7 MW McMaster University $1.3 million École Polytechnique: SLOWPOKE reactor Reactor Less Than 1 MW École Polytechnique de Montréal $0.5 million Royal Military College of Canada: SLOWPOKE reactor Reactor Less Than 1 MW Royal Military College of Canada $0.5 million Saskatchewan Research Council: SLOWPOKE reactor Reactor Less Than 1 MW Saskatchewan Research Council $0.5 million University of Alberta: SLOWPOKE reactor Reactor Less Than 1 MW University of Alberta $0.5 million Cameco Fuel Manufacturing Nuclear Fuel Production Facility Cameco Fuel Manufacturing Inc. $2.3 million Port Hope Conversion Facility Nuclear Fuel Conversion Facility Cameco Corporation $3.3 million Douglas Point Waste Storage Facility Nuclear Fuel Waste Management Facility Canadian Nuclear Laboratories $13 million Gentilly-1 — Nuclear Waste Storage Facility Nuclear Fuel Waste Management Facility Canadian Nuclear Laboratories $13 million Gentilly-2 Nuclear Fuel Waste Management Facility Hydro-Québec $13 million Western Waste Management Facility Nuclear Fuel Waste Management Facility Ontario Power Generation $13 million Whiteshell Nuclear Research Establishment Nuclear Fuel Waste Management Facility Canadian Nuclear Laboratories $13 million Nuclear Power Demonstration Waste Management Facility Management of Radioactive Waste other than Nuclear Fuel Waste Canadian Nuclear Laboratories $1 million Role of the CNSC Currently, the CNSC, the independent federal agency that is responsible for regulating and licensing nuclear activities in Canada, determines which nuclear facilities are designated as nuclear installations under the current Nuclear Liability Act. It sets insurance requirements for the designated installations, and it ensures that operators maintain the appropriate insurance coverage through its licensing process. The CNSC’s mandate is to regulate the use of nuclear energy and materials to protect health, safety, security and the environment; implement Canada’s international commitments on the peaceful use of nuclear energy; and disseminate objective scientific, technical and regulatory information to the public. The level of insurance a nuclear installation is required to carry is outside the scope of this mandate and is more appropriately set out in regulation. The CNSC will continue to act in an advisory role to the Minister of Natural Resources on the development of the Regulations. However, the Minister of Natural Resources will be responsible for all issues related to the financial responsibility of the operators pursuant to the Act. Convention on Supplementary Compensation for Nuclear Damage The Act will also implement the provisions of the International Atomic Energy Agency’s Convention on Supplementary Compensation for Nuclear Damage (the Convention), permitting Canada to become a party to the Convention. This Convention is an international agreement to address nuclear civil liability among signatory countries in the event of a nuclear incident, including nuclear incidents that involve transboundary damage or take place during the transportation of nuclear material. For the provisions of the Act to apply, nuclear installations need to be designated. This is why the Regulations are necessary. Once the Act is in force, the provisions of the Convention would be implemented. The Regulations would be in compliance with Article 4.2 of the Convention Annex. The Canada-United States Nuclear Liability Rules Canada becoming a party to the Convention will result in the creation of treaty relations between Canada and the United States, which is already a party to the Convention. This supersedes the need to maintain the existing reciprocity arrangement with the United States and the rules implementing this arrangement. Accordingly, the Rules Repealing the Canada-United States Nuclear Liability Rules will take effect on the day that Canada becomes party to the Convention. “One-for-One” Rule The Regulations and the Rules will only (i) prescribe which nuclear facilities will be subject to the Act, (ii) prescribe classes of nuclear installations and their corresponding liability limits, and (iii) repeal the Canada-United States Nuclear Liability Rules. There are no reporting requirements associated with these prescriptions. Given that the Regulations do not impose an administrative burden on business, the “One-for-One” Rule does not apply. Small business lens The Regulations would only affect medium to large businesses. Therefore, the small business lens does not apply. Consultation Consultations on modernizing the Nuclear Liability Act occurred in two phases. The first phase was during the period from 1996 to 2005 to hold discussions with stakeholders and refine policy proposals prior to developing draft legislation. Following this first phase of consultations, four bills were introduced between 2007 and 2011 to revise the Nuclear Liability Act, but were all unsuccessful as a result of the prorogation or dissolution of Parliament. The second phase of consultations was during the period from 2012 to 2014, and served to re-examine earlier proposals in light of issues that were raised by parliamentarians and stakeholders when the bills were before Parliament, namely (i) what constitutes an appropriate operator liability limit, (ii) concerns of municipal and provincial governments about emergency services costs, (iii) concerns of research reactor operators with respect to their financial security against the liability imposed on them by the Act, and (iv) consideration of Canadian compliance with a nuclear civil liability international convention to address liability and compensation for damages arising from trans-boundary and transportation nuclear incidents. First phase of consultations The first phase of consultations began in 1996 with the release of a discussion paper for comment on preliminary proposals for revisions to the legislation based on an extensive review by the Department of Natural Resources. Consultations were held with the operators of nuclear installations, provincial governments of nuclear power generating provinces (i.e. Ontario, New Brunswick and Quebec), and the nuclear insurers. Based on the comments received from these stakeholders, the proposals were refined through interdepartmental consultations and resubmitted to stakeholders for further consultations. Provincial government officials consulted in Ontario, Quebec and New Brunswick supported the proposals as presented. However, Quebec and New Brunswick officials expressed concern that increased operator liability would result in greater insurance premium costs at a time when additional costs were being imposed on nuclear power generation (e.g. enhanced security measures to address the risks associated with terrorism, new CNSC cost-recovery measures, and reserve funds for nuclear fuel waste management). While these concerns were initially raised by Quebec and New Brunswick officials, they expressed support for the efforts made thereafter to reduce the impact of the increases to insurance premiums for operators (i.e. phasing in liability amounts and allowing alternative forms of financial security). While nuclear operators were concerned about the impact the new legislation would have on their insurance premiums as a result of the increased mandatory insurance they would have to carry, they were generally supportive of the changes. During this phase, consultations were also held with the operators of nuclear installations — other than nuclear power plants — on the levels of reduced liability amounts that would be prescribed under the Regulations. At the time, stakeholders were aware of and accepted these amounts, which were increased from the current amounts prescribed under the existing Nuclear Liability Act to levels calculated relative to the amount for nuclear power plants. Concerns were raised by the operators of SLOWPOKE university research reactors, who indicated that any significant increase in the insurance premiums they pay could jeopardize the continued existence of their facilities. Accordingly, their liability limit under the Regulations will remain at the level prescribed in the current Nuclear Liability Act (i.e. $500,000). The operators of the other low-risk nuclear installations did not raise any concerns. Second phase of consultations In 2012, the Department of Natural Resources returned to key stakeholders (i.e. the operators of all nuclear installations, provincial governments of nuclear power generating provinces — Ontario, New Brunswick and Quebec — and the nuclear insurers) to obtain written comments on a consultation document that was released in advance of the steps taken by the Government of Canada to move forward on new proposals to revise the Nuclear Liability Act. In particular, the consultation document sought comments on what constitutes an appropriate liability limit for nuclear power operators under new legislation, on what constitutes an appropriate financial security amount for research reactor operators to cover their liability, and on the possibility of canadian compliance with the Convention on Supplementary Compensation for Nuclear Damage. While the operators of nuclear power plants expressed concern with the higher cost of insurance premiums needed to cover a $1 billion liability amount, they recognized the need to modernize the legislation and that they have benefited financially from not being required to carry higher amounts of financial security for civil liability since the enactment of the Nuclear Liability Act in 1976. In October 2014, preliminary consultations on the substance of the Regulations were undertaken with all nuclear installation operators (i.e. the nuclear power plant operators and the operators of other nuclear installations). The operators were invited to comment on the designations, the nuclear installation classes, and the liability limits. There were no major issues identified as a result of these consultations. Only three operators provided comments. One operator sought clarification on the implications of the designation of its nuclear installations. One operator suggested that the nuclear installation class “reactors 1 MW to 7 MW” be modified to “reactors 1 MW to 10 MW” to provide it with the flexibility to increase the power of its reactor in the future. One operator expressed concern over the classification of Gentilly-2 as a nuclear power reactor, given that it is in safe-shutdown mode. In order to address these concerns, the Department of Natural Resources, in consultation with the CNSC, engaged these operators further during the development of the Regulations. No additional concerns have been raised since that time. Prepublication in the Canada Gazette, Part I These Regulations were prepublished in the Canada Gazette, Part I, on June 27, 2015, followed by a 30-day comment period to provide interested persons with the opportunity to make comments. One comment was received from Bruce Power Inc. seeking that its Bruce “A” Generating Station and Bruce “B” Generating Station be designated as a single nuclear installation under the Regulations. Apart from the Bruce Power Inc. comment, no other comments were received. The Department of Natural Resources, following consultation with the CNSC pursuant to subsection 7(1) of the Act, reviewed Bruce Power’s request and found it reasonable and falling within the authority of the new Act’s provisions concerning the designation of nuclear installations. The recommendation is therefore made that the Regulations should be amended such that the Bruce A and Bruce B facilities are designated as a single nuclear installation. Rationale The Act establishes the absolute liability regime for operators of nuclear installations; however, the provisions of the Act may not apply until nuclear installations have been designated, which may only occur by regulation. This is why the Regulations are required. The Regulations designate which nuclear facilities will be subject to the Act, and establish categories of nuclear installations so that liability limits are commensurate with the risk the installations represent. This ensures operators are held responsible and accountable to the Canadian public for civil damages resulting from any radiation release resulting from their nuclear installation or from transport of nuclear materials to or from their nuclear installation. The Regulations provide greater flexibility to prescribe and/or amend liability limits for different classes of nuclear installations, when necessary. The Regulations support public well-being as they require operators of nuclear installations to carry enhanced financial security for the compensation of civil damage. Prescribing reduced liability levels for certain classes of nuclear installations is beneficial to the operators of these classes, because the financial security that they will be required to carry will be commensurate with the nature of the activities associated with these classes. Nonetheless, the operators of nuclear installations — other than nuclear power plants — will carry increased costs as a result of the liability limits imposed by the Regulations. The incremental costs to these operators stem from increases to the insurance premiums they will be required to pay for commercial insurance needed to cover their prescribed liability amounts as required by the Act. The total incremental aggregate cost for the affected operators of the 13 low-risk nuclear installations is approximately $180,000 annually. The bulk of this increase — $130,000 — will be borne by Canadian Nuclear Laboratories for insurance on its nuclear installations that it — as a federal Crown corporation — was not required to carry under the existing Nuclear Liability Act. Lastly, Canada becoming a party to the Convention renders the Canada-United States Nuclear Liability Rules obsolete, so they will be repealed. Implementation, enforcement and service standards The Regulations will come into force on the date that the Act comes into force. The Department of Natural Resources will oversee the enforcement of the Regulations, and the CNSC, prior to granting a licence to operators, will ensure that they have the required financial security in place to cover their respective liability amount, as established by the Act and the Regulations. Section 77 of the Act provides for a fine of not more than $300,000 for each day on which an operator fails to maintain financial security in the form and manner required by the Act or the Regulations. Contact Dave McCauley Director Uranium and Radioactive Waste Division Natural Resources Canada 580 Booth Street, 17th Floor, Room C2-4 Ottawa, Ontario K1A 0E4 Telephone: 343-292-6192 Email: [email protected] Footnote a S.C. 2015, c. 4, s. 120 Footnote b S.C. 2015, c. 4, s. 120

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