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37th PARLIAMENT, 2nd SESSION

Standing Committee on Aboriginal Affairs, Northern Development and Natural Resources

EVIDENCE

CONTENTS

Tuesday, November 19, 2002

1105

The Chair (Mr. Raymond Bonin (Nickel Belt, Lib.))

Mr. Inky Mark (Dauphin—Swan River, PC)

The Chair

Mr. Inky Mark

The Chair

Mr. Pat Martin (Winnipeg Centre, NDP)

The Chair

Mr. Pat Martin

The Chair

Mr. Pat Martin

The Chair

Mr. Pat Martin

The Chair

Mr. David McLellan (Acting Director General, Energy Resources Branch, Natural Resources Canada)

1110

1115

The Chair

Mr. David Chatters (Athabasca, Canadian Alliance)

Mr. David McLellan

Mr. David Chatters

Mr. David McLellan

The Chair

Mr. Serge Cardin (Sherbrooke, BQ)

1120

Mr. David McLellan

Mr. Serge Cardin

Mr. David McLellan

The Chair

Mr. Joe Comartin (Windsor—St. Clair, NDP)

Mr. David McLellan

Mr. Joe Comartin

Ms. Joanne Kellerman (Acting General Counsel and Manager, Legal Services, Natural Resources Canada)

Mr. Joe Comartin

Ms. Joanne Kellerman

Mr. Joe Comartin

Ms. Joanne Kellerman

Mr. Joe Comartin

Ms. Joanne Kellerman

Mr. Joe Comartin

Ms. Joanne Kellerman

1125

Mr. Joe Comartin

Ms. Joanne Kellerman

Mr. Joe Comartin

Mr. David McLellan

Mr. Joe Comartin

Mr. David McLellan

Mr. Joe Comartin

Mr. David McLellan

The Chair

Mr. Inky Mark

Ms. Joanne Kellerman

Mr. Inky Mark

Ms. Joanne Kellerman

The Chair

Mr. John Godfrey (Don Valley West, Lib.)

Ms. Joanne Kellerman

1130

Mr. John Godfrey

Ms. Joanne Kellerman

Mr. John Godfrey

Ms. Joanne Kellerman

Mr. John Godfrey

Ms. Joanne Kellerman

Mr. John Godfrey

Ms. Joanne Kellerman

The Chair

Mr. Serge Cardin

1135

Mr. David McLellan

The Chair

Mr. Joe Comartin

Ms. Joanne Kellerman

Mr. Joe Comartin

Ms. Joanne Kellerman

Mr. Joe Comartin

Ms. Joanne Kellerman

Mr. Joe Comartin

Ms. Joanne Kellerman

The Chair

Mr. Inky Mark

1140

Mr. David McLellan

The Chair

Mr. Joe Comartin

Mr. David McLellan

Mr. Joe Comartin

Mr. David McLellan

Mr. Joe Comartin

Mr. David McLellan

Mr. Joe Comartin

Mr. David McLellan

Mr. Joe Comartin

Mr. David McLellan

Mr. Joe Comartin

Mr. David McLellan

The Chair

Mr. Serge Cardin

1145

Mr. David McLellan

Mr. Serge Cardin

Mr. David McLellan

The Chair

Mr. John Finlay (Oxford, Lib.)

The Chair

1150

Mr. Mike Taylor (Executive Director, Canadian Nuclear Safety Commission)

The Chair

Mr. Al Shpyth (Director, Office of Regulatory and Environmental Affairs, Canadian Nuclear Association)

1155

1200

The Chair

Mr. David Chatters

Mr. Mike Taylor

1205

Mr. David Chatters

Mr. Mike Taylor

Mr. David Chatters

Mr. Mike Taylor

Mr. David Chatters

The Chair

Mr. Serge Cardin

Mr. Al Shpyth

Mr. Serge Cardin

Mr. Al Shpyth

1210

Mr. Serge Cardin

Mr. Al Shpyth

The Chair

Mr. Joe Comartin

Mr. Mike Taylor

Mr. Joe Comartin

Mr. Mike Taylor

Mr. Joe Comartin

Mr. Al Shpyth

Mr. Joe Comartin

Mr. Al Shpyth

Mr. Joe Comartin

Mr. Al Shpyth

Mr. Joe Comartin

Mr. Al Shpyth

Mr. Joe Comartin

1215

Mr. Al Shpyth

Mr. Joe Comartin

Mr. Al Shpyth

Mr. Joe Comartin

Mr. Al Shpyth

Mr. Joe Comartin

Mr. Al Shpyth

Mr. Joe Comartin

Mr. Mike Taylor

The Chair

Mr. Inky Mark

Mr. Al Shpyth

Mr. Inky Mark

Mr. Al Shpyth

Mr. Inky Mark

Mr. Mike Taylor

Mr. Inky Mark

Mr. Mike Taylor

1220

The Chair

Mr. John Godfrey

Mr. Mike Taylor

Mr. Bernie Shaffer (Legal Counsel, Canadian Nuclear Safety Commission)

Mr. John Godfrey

Mr. Mike Taylor

Mr. John Godfrey

Mr. Mike Taylor

1225

The Chair

Mr. Serge Cardin

Mr. Al Shpyth

The Chair

Mr. Joe Comartin

Mr. Al Shpyth

Mr. Joe Comartin

1230

The Chair

Mr. Mike Taylor

The Chair

Mr. Al Shpyth

The Chair

CANADA

Standing Committee on Aboriginal Affairs, Northern Development and Natural Resources

NUMBER 003

2nd SESSION

37th PARLIAMENT

EVIDENCE

Tuesday, November 19, 2002

[Recorded by Electronic Apparatus]

Á (1105)

[English]

The Chair (Mr. Raymond Bonin (Nickel Belt, Lib.)): Bonjour. Welcome. We'll call the meeting to order. The order of the day is Bill C-4, an act to amend the Nuclear Safety and Control Act.

We will proceed with the agenda as published, although there had been suggestion of a request to deal with another issue beforehand. The problem is I don't have a quorum and it would require a vote. We are eight members and there should be nine. I waited seven minutes. I'm late. I explained to Mr. Loubier that I can't deal with the request of altering the agenda because it requires a vote. Therefore, we are now into the agenda as is because we don't need a quorum for witnesses.

Mr. Mark.

Mr. Inky Mark (Dauphin—Swan River, PC): Mr. Chair, before we recess this meeting, perhaps we could deal with the issue at the end.

The Chair: We're planning to deal with the issue today. Am I correct?

Mr. Inky Mark: Yes.

The Chair: It will be after we've heard from our witnesses. The request was to deal with it before the witnesses and I can't proceed.

Therefore, from the Department of Natural Resources, we welcome Joanne Kellerman, general counsel, legal services, and David McLellan, acting director general, energy resources branch.

Mr. Pat Martin (Winnipeg Centre, NDP): Mr. Chair, I have a point of order. It seems to me we now have a quorum, not to be disrespectful to our witnesses.

The Chair: We now have a quorum but I'm into the hearings. I've waited seven minutes.

Mr. Pat Martin: Mr. Chair, in the interests of the matter that was put well in advance, with the rules, with 48 hours' notice, I'm asking if the committee would entertain the idea of dealing with this motion now that we have a quorum.

The Chair: I will not run a Mickey Mouse committee.

Mr. Pat Martin: No. This is not a Mickey Mouse operation, Mr. Chair.

The Chair: We have witnesses here whom we have welcomed and invited.

Mr. Pat Martin: Yes, we do. Rather than interrupt them, I'm suggesting we deal with the matter first and then they'll make their presentations.

The Chair: I'm ruling on your point of order. We will deal with the witnesses at this time.

I apologize, Ms. Kellerman and Mr. McLellan. We will now proceed with your presentation on Bill C-4.

Mr. David McLellan (Acting Director General, Energy Resources Branch, Natural Resources Canada): Mr. Chairman, thank you for the opportunity to appear before you today.

Bill C-4 is a one-clause bill that clarifies the wording in subsection 46(3) of the Nuclear Safety and Control Act. The act provides the Canadian Nuclear Safety Commission, or CNSC for short, with the authority to regulate the use of nuclear energy and materials. The act enables the CNSC to protect health, safety, security, and the environment and to respect Canada's international commitments on the peaceful use of nuclear energy.

Under section 9 of the act, part of the CNSC's mandate is to prevent unreasonable risk to the environment and to the health and safety of persons associated with the development, production, possession, or use of nuclear energy.

Sections 24 to 26 of the act provide for the CNSC to license nuclear facilities. There are over 3,500 licences. In section 24 of the act, the CNSC is given broad powers to request financial guarantees in granting a licence and to ensure there are sufficient funds to cover known future cleanup costs and costs of decommissioning facilities.

Sections 29 to 36 provide for inspections to verify compliance. Section 44 provides for the CNSC to make regulations.

Sections 45 to 47 provide exceptional powers for dealing with radioactive contamination. Under subsection 46(1), the CNSC may conduct a hearing to determine whether there is nuclear contamination at any place where it has reasonable grounds to believe there may be such contamination. Under subsection 46(2), the CNSC may, after conducting the hearing and determining there is contamination, file a notice of contamination where the title to the land is recorded.

Subsection 46(3) of the act, which is the subject of the amendment in Bill C-4, currently reads,

Where, after conducting a hearing, the Commission is satisfied that there is contamination referred to in subsection (1), the Commission may, in addition to filing a notice under subsection (2), order that the owner or occupant of, or any other person with a right to or interest in, the affected land or place take the prescribed measures to reduce the level of contamination.

Hence, under subsection 46(3) the CNSC could order the owner, occupant, or any other person with a right to or interest in the land to clean up contamination. A person with a right to or interest in the land could include a lender who has a mortgage interest in the nuclear site but is not involved in the management of the facility. As currently written, subsection 46(3) places potential unlimited liability on the lenders, a situation that does not exist in federal environmental law pertaining to other industries.

Governments are encouraging more private sector participation in the ownership and management of facilities in all energy sectors. Companies with nuclear operations need access to the same financial instruments available to other companies. This means that companies need the participation of banks and other financial organizations to attract market capital in order to finance ongoing and future operations. Accordingly, Bill C-4 clarifies subsection 46(3) by deleting the mention of “any other person with a right to or interest in” and substituting “any other person who has the management and control of”.

Á (1110)

Under the amended subsection 46(3), private sector owners, operators, or managers will still be liable for cleanup. As regards lenders, the amendment qualifies their risk. If Bill C-4 is enacted, a lender would stand to lose at most no more than the moneys advanced. The lender would not face a potential unlimited liability. However, a lender who goes into management and control of a nuclear facility would be within the reach of this subsection.

Canadian law generally limits lender liability to those with charge, management, or control of secured assets.

The current wording is an anomaly to be dealt with because it is discouraging private sector lending to nuclear facilities by banking institutions. In the near term, these loans are needed to refurbish, modernize, and extend the life of nuclear power plants.

Bill C-4 is not a measure to provide favourable treatment to the nuclear industry. As already mentioned, no other industrial sector or power generation sector is encumbered by such a federal provision, which discourages access to lending from financial institutions.

In addition, the proposed amendment does not represent a transfer of risk from the private to the public sector. Canada has in place a modern, stringent nuclear regulatory regime under the Canadian Nuclear Safety Commission that is designed to deal with the spectrum of risks posed by nuclear activities in Canada. There are tough sanctions for offences of the Nuclear Safety and Control Act, and it is an offence to fail to comply with any condition of a licence. The CNSC can also suspend, revoke, or amend a licence if conditions are not met.

The nuclear industry is an important part of the Canadian economy. Nuclear power has been in commercial operation for over 30 years in Canada and presently supplies 13% of our electricity. In addition, nuclear technology is an integral part of industrial, medical, and scientific applications. Canada is a world leader in producing medical isotopes that are used every day to diagnose and treat disease. Bill C-4 will put the nuclear industry on an equal footing with other industrial and power generation sectors in obtaining lending. At the same time, it will not weaken Canada's stringent licensing and regulatory regime.

Thank you, Mr. Chairman.

Á (1115)

The Chair: Thank you.

We have 25 minutes. How would four minutes do--is that enough time, colleagues?--for questions and answers?

Some hon. members: Agreed.

The Chair: Under the principle we agreed to, the official opposition would get five minutes, then we'll go to the other parties for four minutes each, and after that we'll alternate with whatever time we have left.

Mr. Chatters, you have four minutes for questions and answers.

Mr. David Chatters (Athabasca, Canadian Alliance): Thank you, Mr. Chairman.

My question is pretty straightforward. Why does the wording in the bill that now exists exist in that form, given that it seems at odds with the general Canadian law and certainly, as you say, is an anomaly? Why does that wording exist, and is it really a thinly veiled way of preventing public participation in the nuclear industry, or did somebody mess up when the bill was drafted and put this wording in unintentionally? I guess that's the issue we have to deal with.

Mr. David McLellan: When the bill was originally passed by Parliament--actually, it was given assent in March 1997, which is five and a half years ago--prior to passage the bill was subject to widespread public consultation, and this issue was not raised. The issue has emerged subsequent to the adoption of the bill five and a half years ago.

Mr. David Chatters: But my question was, were the drafters of this bill deliberately inserting that wording for a purpose, or was it just an oversight on the part of the drafters of the bill?

Mr. David McLellan: I would really only be able to say that the drafters at the time produced a bill that was subject to consultation and was passed by Parliament, but I wouldn't be able to comment on the intention of the drafters at the time.

[Translation]

The Chair: You have four minutes, Mr. Cardin, for questions and answers.

Mr. Serge Cardin (Sherbrooke, BQ): Thank you, Mr. Chairman.

Good morning to the witnesses. Still on the same subject, everyone knows how things work when we get down to the clause-by-clause stage. We analyse and focus on the scope of various provisions. This particular clause already existed in 1997. Any member or anyone working on the bill at the time could have spotted this right away.

You may think of this as merely a claim, but I'm still convinced that the aim of all this was to make anyone with financial ties to this industry directly accountable. You maintain that it isn't a matter of transferring private sector accountability to the public sector. We've heard from some owners, such as Bruce Power, that their financial situation is tenuous. These companies manage to maintain fairly limited responsibilities through various means, loans and transfers. Ultimately, who is accountable? It's the government.

Could you answer a question for me? Was exactly is the mandate of a company such as Bruce Power that currently manages a nuclear plant, although it doesn't actually own it? What are the company's responsibilities?

Á (1120)

[English]

Mr. David McLellan: Regarding the mandate of the commission, I believe the next panel includes a member of the commission who would be much better qualified than I to respond, if you would agree to defer until the next panel.

Regarding the proposal itself in Bill C-4, it is to essentially put the nuclear industry on the same footing as all other industry in Canada with respect to the responsibility to address contamination on-site; namely, anyone who has ownership, management, or control of the site would be liable, but not someone whose involvement was confined to lending funds and in return receiving a mortgage interest.

[Translation]

Mr. Serge Cardin: Some of the witnesses have argued that generally speaking, the legislation adversely affects the ability of private sector industries to invest in nuclear plants as well as the future growth of the nuclear industry.

Would the department like to see the number of nuclear plants in Canada increase as a result, of course, of more private sector investment?

[English]

Mr. David McLellan: The amendment in Bill C-4 removes a barrier to financial houses from lending funds to nuclear operations. The decision to lend would still be made by the financial houses. The objective of the bill is to simply remove an impediment to such lending. But it would be up to nuclear facilities to decide to seek private sector lending and it would be up to the lenders in the private sector to decide to lend.

The Chair: Mr. Comartin.

Mr. Joe Comartin (Windsor—St. Clair, NDP): Mr. McLellan, are you a lawyer or an accountant?

Mr. David McLellan: No, but we have our legal counsel here. I didn't have the charisma to become an accountant; I studied economics.

Mr. Joe Comartin: I see.

Ms. Kellerman, then. The legal system has not changed since this law was originally passed in any of the provinces. Is that correct?

Ms. Joanne Kellerman (Acting General Counsel and Manager, Legal Services, Natural Resources Canada): That's my understanding.

Mr. Joe Comartin: So in terms of the points we heard from Mr. McLellan with regard to the legal liability both within the nuclear industry and other energy sectors, it's the same now as it was when the law was passed originally, which I think was around 1975?

Ms. Joanne Kellerman: The Nuclear Safety and Control Act was passed originally in 1995. There may have been amendments to provincial legislation in terms of liability for contaminated sites since that time. It's possible.

Mr. Joe Comartin: But in common law, there have been no changes in terms of liability. Is that right?

Ms. Joanne Kellerman: No, there have been no significant developments in common law on the subject.

Mr. Joe Comartin: So in terms of all of the arguments now being made for this amendment, are they based on a policy change by the government?

Ms. Joanne Kellerman: I don't know that there has been a change in the policy of the government. I think Mr. McLellan will have to address that point.

At the time the legislation went forward, those lawyers reviewing the legislation who would have recognized the scope of the words in proposed subsection 46(3) might not have recognized that this would present an issue to the nuclear industry.

Mr. Joe Comartin: Is that because at that time there was no private ownership or management of any of the nuclear sites, nor was there any contemplation at that time that there would be private ownership or management of the nuclear sites?

Ms. Joanne Kellerman: I don't agree with that statement. The scope of proposed subsection 46(3) applies to any property in Canada that may be radioactively contaminated. It's not restricted to licensed nuclear facilities run by provincial crown corporations, and it's certainly true that, in 1995, the uranium mining sector was completely composed of private companies.

Á (1125)

Mr. Joe Comartin: And they functioned under that system until the present time?

Ms. Joanne Kellerman: Yes, that's correct.

Mr. Joe Comartin: Mr. McLellan, does this in fact signal a change in policy by the government, in the sense that they are now endorsing the privatization of the nuclear industry, both in terms of management of the sites and maybe ultimately in terms of ownership of the sites?

Mr. David McLellan: In my view, the amendment constitutes an effort to clarify a wording in the original act that has been deterring the private sector from lending. For the various nuclear facilities—for example, power plants in Ontario—the issue of whether or not to privatize them is an issue that is in the hands of the provincial government, not those of the federal government.

Mr. Joe Comartin: Other than Bruce, are you aware of any sites that required financing but have not gotten it?

Mr. David McLellan: I believe there are sites other than Bruce. At the same time, I wouldn't consider it appropriate to talk about any individual company's affairs. I believe, however, that the issue presented by the existing wording of subsection 46(3) is broader than one particular company.

Mr. Joe Comartin: Without going into specifics, you say you believe there are sites. Has your department been specifically notified that, other than at Bruce, there have been lending arrangements that didn't go ahead because of the current legislation?

Mr. David McLellan: I don't believe we have received any formal written notification, but in terms of general conversations or a monitoring of the press, I think there are other transactions in which this has been raised as a problem.

The Chair: Mr. Mark.

Mr. Inky Mark: Thank you, Mr. Chair.

First let me say that the PC Party supports the amendment. My question follows Mr. Comartin's question about liability.

As you know, energy is an international industry. There's no doubt that international players will take part in Canadian energy facilities. How far, then, does the liability extend beyond our borders? I'm sure the company will be liable, but does it extend to foreign governments if they underwrite financing? For example, if British Energy takes an interest in Bruce Power and buys a big chunk of it, how does that play out in the long run, in the event that a major accident takes place, if it ever does?

Ms. Joanne Kellerman: I'm not familiar with the relationship between the British government and any particular corporate entity.

Mr. Inky Mark: I just used that as an example, if they elected to—

Ms. Joanne Kellerman: At the moment, the wording in subsection 46(3) requires that the order could reach “the owner or occupant of, or any other person with a right to or interest in” a property. Those words legally would relate to a recognized legal interest in the property, not necessarily a shareholder interest in the company that might own the property.

The Chair: Next is Mr. Godfrey for four minutes.

Mr. John Godfrey (Don Valley West, Lib.): Mr. Chairman, I apologize for my lateness. I did read the opening statement.

My curiosity concerns the words “or any other person with a right to or interest in”. Are these words unique to this legislation or can one find them in other bits of legislation, particularly of an environmental sort?

Ms. Joanne Kellerman: They're certainly well understood legal concepts. I couldn't point to other federal or provincial environmental legislation that uses this particular wording. But in terms of the legal concept, it's quite clear.

Á (1130)

Mr. John Godfrey: If it's a legal concept, presumably it derives its legitimacy from actually being in a law or bill or something. It clearly states a certain degree of liability. You're not aware of where one finds these words, but they're not words that were made up especially for this bill.

Ms. Joanne Kellerman: No, these words weren't made up for this bill. Certainly, they're well understood in property law and in the case law in the common law system.

Mr. John Godfrey: If I were to do a computer scan of federal or provincial legislation, do you think I'd find these words? Why are they uniquely here? If it's a well understood concept, why, to the best of your knowledge at least, is this the only place they occur? I don't want to put words in your mouth.

Ms. Joanne Kellerman: I think if you were to do a computer search of federal or provincial legislation, which is entirely possible to do, you would find these words in many places. But the context you would find them in is secured transactions, where a credit arrangement is entered into, and the words “right to or interest in” would be found in secured credit arrangements or in property law transactions in relation to mortgages.

Mr. John Godfrey: We're all speculating here because neither of us has done the scan. So in every other case you would expect that there wouldn't be this element of unlimited liability, that by the nature of the transaction we would know what the damage was. It would be a knowable thing, as opposed to this. Is it possible that these words could exist and that would also carry with it the implication somewhere of unlimited liability, which is what we're worried about here?

Ms. Joanne Kellerman: One would not find unlimited liability established in documents or legislation dealing with secured transactions. Secured transactions give a creditor the right to reclaim their debt from the debtor. So it's not a context where unlimited liability of the creditor for the debtor's business is an issue. To find legislation that addresses those points, one has to look to environmental legislation, and we have in fact looked at provincial contaminated sites regimes and comparisons with that legislation.

Mr. John Godfrey: If you restrict this scan of where we find the words, are you saying that as concerns federal or provincial legislation for contaminated sites, you have not found the words “or any other person with a right to or interest in” in that particular context? This is a unique context.

Ms. Joanne Kellerman: This is definitely a unique context. In those other regimes those words may be found, but the regimes are tailored carefully to make sure the person who lends on the security of a property will not be found responsible for the contamination and cleanup of that property unless they take certain steps, unless they exercise management and control of those properties and put a receiver or an occupier manager in place. Under some of the provincial regimes, if a creditor exercises that degree of management and control, takes possession of a site and does something with it, then yes, they can be held responsible.

The Chair: Colleagues, we really don't have time for another round, but we will have another round of two minutes. That will make us a little bit late, but we have a witness who is not appearing. So we'll go opposition, government, opposition, government, until we've all had a chance.

M. Cardin, deux minutes.

[Translation]

Mr. Serge Cardin: As I see it, the fundamental problem with this bill is the accountability issue. The entire nuclear industry is placed on the same footing when as everyone knows, upward of 3,000 licences have been issued whereas there are only 22 nuclear reactors in Canada. To absolve persons of their responsibility simply means to promote private sector involvement and funding. That's the gist of the change you're proposing with this amendment. However, you fail to draw any distinction whatsoever between various practices and situations that exist within the industry itself, notably between nuclear power plants and health care facilities that use nuclear equipment. There's no comparison between the two, but your amendment would remove any responsibility so that nuclear power can be promoted across Canada. Does the department still intend to promote the establishment of nuclear power plants in Canada?

Á (1135)

[English]

Mr. David McLellan: The legislation does not remove the liability of the owner-operator or person with management and control. Those entities remain liable for the cleanup of any contamination found at the site.

The lender, on the other hand, has every incentive in every transaction to exercise due diligence, because they are potentially liable for the entire value of the money they lend to the plant. Their liability simply does not exceed that; it does not become unlimited. Instead, it is a liability that the lender can measure.

You mentioned medical isotopes. This is perhaps more of a footnote, but there are some medical isotopes produced in power reactors.

[Translation]

The Chair: Your time is up.

[English]

Anyone on the government side?

Mr. Comartin.

Mr. Joe Comartin: Ms. Kellerman, I want to follow up on Mr. Godfrey's question.

In Canada in the common law jurisdictions--I don't know if it's the same in Quebec--if you take a mortgage against a piece of property, the ownership of that property goes to the mortgage company, or the holder of the mortgage.

Do you agree that's the legal position in Canada?

Ms. Joanne Kellerman: I'm not certain that's so. Certainly the person who is otherwise the owner of the property, the mortgagee as we say, has an equitable ownership of the property that we call the equity of redemption. The bearer's legal title may technically transfer, although in terms of the titles registered in our titles system, it does not transfer.

Mr. Joe Comartin: You're wrong.

Let's just make the assumption that's the case, dealing with toxic sites. If in the legislation of most provinces, in those circumstances, if I'm correct, the title passes--and it does--by registration, then everybody who takes that mortgage, the holders of that mortgage, would be held responsible for the cleanup of those sites. Correct?

Ms. Joanne Kellerman: I think that would depend on the interpretation of the word “owner” in the statutory scheme and whether it was intended to reach those persons.

Mr. Joe Comartin: The ownership is simply not defined, or is defined as anybody who has legal ownership of the title. They would be held responsible under all provincial legislation, as far as cleanups.

Ms. Joanne Kellerman: I don't believe that's the way the provincial legislation has been interpreted. If you look at the provincial legislation, because they have specific statutory provisions dealing with the role of those with security interests, I think you'd have to interpret each of those statutory schemes.

Mr. Joe Comartin: Why does every bank--

The Chair: Your time is up. I'll give you another 30 seconds.

Mr. Joe Comartin: --and lending institution in this country conduct these searches and testing of soils? Why do they do that if in fact they're not going to be held responsible?

Ms. Joanne Kellerman: I can't speak for the banks and lending institutions.

The Chair: Mr. Mark.

Mr. Inky Mark: Thank you, Mr. Chair.

On the same point, what is the liability of financial institutions in Britain or the United States when it comes to nuclear power? Do you know what they are?

Á (1140)

Mr. David McLellan: I can only express my understanding in respect of the United States that the situation of a lender is similar to what Bill C-4 would create in Canada.

I'm not aware of the situation in the U.K.

The Chair: Colleagues, because of the few questions we can have another round if you wish. I suspect that some didn't finish their issues, so we'll do another round of two minutes. I need an indication now as to who will participate.

One, two, three and nominations are closed.

Mr. Comartin, Mr. Cardin, Mr. Finlay, two minutes question and answer.

Mr. Joe Comartin: Mr. McLellan, you used the U.S. as an example. The reality is that in the U.S. most of the power plants are in private hands.

Mr. David McLellan: Most nuclear power plants in the United States are investor-owned.

Mr. Joe Comartin: They also have significantly greater liability insurance-wise than anything we've imposed in Canada.

Mr. David McLellan: The power plants in Canada are responsible for insurance for their facilities. They either purchase insurance or they are self-insured. Perhaps you're referring to the Nuclear Liability Act. The Senate committee has issued recommendations concerning raising the insurance levels under the act. I know in NRCAN we are reviewing the limits and are preparing recommendations to address that issue.

Mr. Joe Comartin: The limits are $75 million now?

Mr. David McLellan: That's under the Nuclear Liability Act, that's correct. But that's applying to third-party liability whereas Bill C-4 is addressing contamination on-site, which is a different issue.

Mr. Joe Comartin: Do you know what the carriage is for insurance by the sites now? How much would Bruce be carrying?

Mr. David McLellan: I don't know the insurance they would be carrying, but I know they have posted with the commission the financial guarantees to address--

Mr. Joe Comartin: Which at the present time is $225 million at Bruce.

Mr. David McLellan: I believe it's in that ballpark, but slightly higher than that.

Mr. Joe Comartin: Nowhere near adequate for a major spill, or a contamination?

Mr. David McLellan: Sorry, I should explain that the guarantee is designed to cover the costs of putting the reactors in a safe operating state should there be a requirement to shut down. But moneys for site remediation are a separate requirement under the CNSC licence.

[Translation]

The Chair: Mr. Cardin.

Mr. Serge Cardin: I believe the question was already put to you and you responded that there hadn't necessarily been any problems associated with the financing of activities aside from hydro electrical power generated by nuclear plants, in light of responsibility for contamination. Of course, we have to consider that this answer is coming from someone who is calling for changes to the legislation. As we are aware, the greatest risk of contamination is associated with nuclear generating stations.

Atomic Energy of Canada is the agency responsible for this area. It also sells CANDU reactors.

Getting back to my question, because financial institutions are not being held as accountable as they once were, the possibilities of investing in nuclear power are greater. And, given this reality, Atomic Energy of Canada... Therefore, since the government is promoting, indirectly, the development of nuclear power by providing financial institutions with greater financing options and by holding them less accountable, is it in fact the government's intention to promote the development of the nuclear industry in Canada?

Á (1145)

[English]

Mr. David McLellan: The proposed amendment to subsection 46(3) opens the door to financial institutions to lend money using nuclear power plants or other nuclear facilities as security. It does not represent a policy change by the government. It is basically a clarification of the wording of the existing act.

The amendment does not diminish the regulatory regime. It is a very stringent one exercised by the Canadian Nuclear Safety Commission that is very vigilant to ensure that nuclear power plants are in fact extremely safe operations.

The liabilities, in terms of third-party liability as well as for cleanup of facilities, remain the responsibility of the owners or operators of the plants. They do obtain insurance for that purpose.

[Translation]

Mr. Serge Cardin: Nuclear power is said to be a fairly risky business. Therefore, to all intents and purposes, the full burden of responsibility for the nuclear industry is being shifted indirectly to the public sector.

[English]

Mr. David McLellan: I think the nuclear industry actually has a very remarkable safety record in Canada. It is an extremely safe industry.

I don't believe the amendment transfers risk to the public authorities. The responsibility for cleanup of contamination that might be determined by the commission at a site as a consequence of subsection 46(1) and subsection 46(2) remains the responsibility of those who operate or control the site.

The Chair: Mr. Finlay.

Mr. John Finlay (Oxford, Lib.): Thank you, Mr. Chairman.

At the risk of oversimplifying things, my understanding is the current wording in the act has been interpreted to extend site remediation liabilities beyond owners and managers to also include lenders, which is what we're talking about, creating for them unknown financial obligations that may by far exceed their commercial interests.

If it is true, the consequence is it will discourage private sector interest in lending to the nuclear industry. This change will limit the liability of those managing and controlling lands that may be contaminated with nuclear substances. They will have to get insurance, as our witness says, or will have to put aside money.

It seems to me it wasn't too long ago, Mr. Chairman, that we dealt with the storage of waste. The act there is very strict. The nuclear industry must put aside millions of dollars each year in order to look after it.

I'm struck with the fact that we're searching for reasons for not doing a fairly simple thing.

Thank you.

The Chair: Thank you.

This completes this part of our meeting today. I wish to thank Mr. McLellan and Ms. Kellerman for their contribution.

We will now proceed to inviting to the table the Canadian Nuclear Safety Commission and the Canadian Nuclear Association.

We will run until 12:30 p.m., at which time we will go in camera and deal with the issues on future business.

If I sense the members have a need for an extra five or ten minutes, I'll rule on it and you can challenge it.

My agenda indicates that with the Canadian Nuclear Safety Commission we have present Mr. Mike Taylor, executive director, office of regulatory affairs, and from the Canadian Nuclear Association we have Mr. Al Shpyth, director, regulatory and environmental affairs.

Á (1150)

I see there's a third person here to present. I will invite you to introduce colleagues as you wish. Please proceed.

Mr. Mike Taylor (Executive Director, Canadian Nuclear Safety Commission): Thank you, Mr. Chairman, and good morning. Thank you for inviting the Canadian Nuclear Safety Commission to appear before you.

With me today is Mr. Bernie Shaffer, senior legal counsel with the Canadian Nuclear Safety Commission. I appreciate this opportunity to present our views on Bill C-4 and to respond to your questions.

The mandate of the CNSC is that it is an independent federal agency with a quasi-judicial tribunal that reports to Parliament through the Minister of Natural Resources. The tribunal consists of a seven-member commission of which the president is currently the only full-time member. Members of the tribunal are appointed by the Governor in Council. The commission employs about 400 staff who provide licensing recommendations to the commission tribunal and conduct on-site compliance activities and other regulatory activities.

The commission's role is to regulate the nuclear industry in Canada in such a manner that the development and use of nuclear energy do not pose an unreasonable risk to health, safety, the environment, and national security. The nuclear industry has a wide scope, from uranium mining to power reactors and waste disposal. It also includes the use of radioisotopes for industrial and medical purposes and the transport of nuclear material.

We also have responsibility for the implementation of certain international obligations relating to the safeguarding and non-proliferation of nuclear materials. The commission has a comprehensive and detailed licensing assessment and compliance process to implement this mandate.

If I may, I will turn to the impact of Bill C-4 on the commission's effectiveness. It is the view of the commission that the changes to the Nuclear Safety and Control Act proposed by Bill C-4 are of a financial rather than a safety or environmental nature. Financial considerations are of concern to the commission to the extent necessary for it to conduct its mandate.

The commission is satisfied that the proposed revised wording of subsection 46(3) provides it with sufficient capability to order the owner, occupier, or person in control of the land in question to obtain necessary remediation of contamination in excess of the prescribed limit. Accordingly, the commission has no objection to the proposed legislation before you.

Thank you.

The Chair: Mr. Shpyth.

Mr. Al Shpyth (Director, Office of Regulatory and Environmental Affairs, Canadian Nuclear Association): Good morning. I want to thank you, on behalf of the Canadian Nuclear Association, for the opportunity to speak to Bill C-4. I also want to briefly pass on the regards of our association president, Bill Clarke, who some of you know. He would have been here this morning if not for his participation in the government's innovation summit in Toronto today.

Bill C-4 and its timely consideration is important to the nuclear industry, and the association would welcome the support of this committee. The bill is important for three fundamental reasons. First, it corrects current wording in the Nuclear Safety and Control Act, which is having the unintended and unforeseen effect of blocking investment by private sector companies in the nuclear power sector. Second, the bill amends wording in the Nuclear Safety and Control Act that can fairly be seen as an anomaly that puts the nuclear industry at an unfair disadvantage, with regard to financing, with other forms of electricity generation. Third, the bill addresses the unintended and unforeseen effect of subsection 46(3) while still maintaining the full regulatory authority of the Canadian Nuclear Safety Commission, the federal regulatory authority over the nuclear industry.

Our submission, which has been provided in French and English and includes an executive summary, provides additional representations on the issue that has been created by the current wording of subsection 46(3). For our industry, the amendment proposed by the bill will effectively address the unintended and unforeseen consequences with regard to financing by bringing the language in line with Canadian common law and statutes. Importantly, we believe it will do so without impacting the ability of the CNSC to ensure an adequate level of protection to the public, workers, or the environment.

For us, the issue again is one of financing. It arises as a result of the current wording of subsection 46(3) ascribing extraordinary liability to “any other person with a right to or an interest in” land contaminated by nuclear substances. Unlike all other Canadian laws—and we did a search—subsection 46(3) has been seen as creating an unlimited liability on anyone with a legal right to or an interest in land. Lenders are considered to have the legal right to or an interest in lands and facilities they have provided mortgages on, and as a consequence they have refused to lend on the security of nuclear power assets.

We believe lenders accept the long-established common law principle that exists in Canada that they are liable when they exercise their rights and take ownership, management, and control of contaminated properties. The amendment to subsection 46(3), as proposed in the bill, will re-establish this tough but fair principle for the nuclear industry.

The industry believes the financing issue—which again we see as unintended and unforeseen at the time—was created for three reasons. The subsection appears in the Nuclear and Safety Control Act as an extraordinary power, but due to its broad wording, it is seen to apply to lands and facilities under regulatory control.

When we read the act, we see that the purpose of the Nuclear and Safety Control Act is to limit, to a reasonable level, the risks associated with nuclear energy and substances, not limit the ability of the industry to raise financing nor preclude private sector participation in the development, production, and use of nuclear energy.

We also see that the Nuclear and Safety Control Act empowers the CNSC to require financial guarantees, order remedial action in hazardous situations, and require responsible parties--I put the emphasis on responsible parties--to bear the costs of such measures if those parties that exercise ownership, operatorship, management, or control are in charge of such facilities or substances.

Finally, we believe this was unintended and unforeseen, for if these were the intended effects, if these were foreseen, they would never be exerciseable. If the intent was to impose liability on lenders for environmental remediation, lenders would not lend and would never become liable.

We also believe this section of the act, as currently worded, is an anomaly under Canadian law because it extends liabilities to lenders from the onset, not when they take ownership, management, or control. Bill C-4 will simply make the language under the act consistent with Canadian common law and place responsibility on the proper parties--the owners and operators. It will not exempt owners and operators from their responsibilities under the act.

Á (1155)

The CNSC has extensive regulatory powers with which they can limit to a reasonable level the risk associated with the nuclear industry, including instances, should they arrive, of environmental contamination. These powers include licensing, inspection, monitoring, and enforcement, among others.

The CNSC can and does require financial guarantees to ensure adequate provisions for the decommissioning of nuclear facilities, and it can ensure that licensed operators have the ability to provide full and appropriate responses to any environmental threat. Licences can, under the law, we note, contain any condition or provision in this regard, including the provision of additional financial guarantees. And once required, guarantees such as those for decommissioning, are a condition precedent to the granting of a renewal of a licence to operate.

From our perspective, then, the extensive regulatory powers of the CNSC mean that the owners and operators of Canadian nuclear facilities cannot simply walk away from their responsibilities and that the federal government is protected from incurring the cost of decommissioning nuclear facilities they do not own or operate.

To conclude, Bill C-4 is required in order to address the unintended and unforeseen consequences of an anomaly in the language of subsection 46(3) of the Nuclear Safety and Control Act. Bill C-4 would align liability for environmental remediation with Canadian common law and statutes and allow project financing and additional investments in the nuclear power sector. Without Bill C-4, the ability of private sector companies to invest in and/or partner in nuclear power plants in Canada is diminished.

In seeking the amendment to subsection 46(3) of the act, the industry is not seeking special privileges or to be excused from responsibility as the owners and operators of nuclear facilities. We are, however, seeking redress from the unforeseen consequences of the original wording of subsection 46(3).

Bill C-4 provides an opportunity to place the nuclear power industry on an equal footing with regard to the ability to raise financing. In our view, Canada needs investments in nuclear power to allow it to meet its clean air and greenhouse gas commitments and to generate electricity to power its homes and industries.

Again, we ask for both your support for Bill C-4 and a recognition of the benefits that would come from additional investments in nuclear power in Canada, and again, we thank you for the opportunity to speak.

I'd be pleased to answer your questions.

Â (1200)

The Chair: Thank you.

Now, for the record, Mr. Mike Taylor from the Canadian Nuclear Safety Commission is accompanied by Bernie Shaffer, senior counsel. Welcome.

The official opposition has five minutes.

Mr. David Chatters: Thank you, Mr. Chairman.

I have a couple of things. I first have to say that I was disappointed by what appeared to be the deliberate vagueness of the director general of the energy resources branch in that he didn't seem to want to present the same impression that you are in fact presenting, that the wording in the current bill was unintended and simply an error. In fact, legal counsel has suggested that the drafters of the bill were very much aware of the effect of the wording that exists, so I have to assume it was put there for a reason. Whether that reason was to limit private participation in the nuclear process, I don't know, but of course that's the effect it has had. I reject the impression that the wording was unintended, and we have to go from there.

Because on Thursday of this week we are going to hear presentations that say the changing of the wording to allow private participation in the nuclear industry is a bad thing, I have two questions. The first is, can I have your assurances, particularly that of the Canadian Nuclear Safety Commission, that private participation in the nuclear industry presents absolutely no threat to public safety whatsoever? I think that's so important and we need that on the record.

The other question I have of either group is, why did you--or did you in fact--raise concerns about the wording of this clause when we passed the Nuclear Safety and Control Act in 1997? And if you didn't, why didn't you?

Mr. Mike Taylor: Thank you. On the first question, about the assurance of safety, section 24 of the act requires that the commission not issue a licence unless it is satisfied that the applicant will make due provision for safety and the environment, security, and the obligations to meet Canada's international commitments.

I believe this committee can take it that the independently appointed tribunal does not issue licences lightly. There is a very formal, documented, public process that goes into the issuing of licences, and each case is taken on its merits. I can only assure you that the licences that have been issued to date, and any other licence that the commission will issue, are based on a very careful consideration of the licensee's ability to provide assurances in terms of safety. Furthermore, the commission has staff at the key facilities, it carries out a very detailed inspection and compliance program, and the commission has the power to withdraw or amend licences as necessary.

Â (1205)

Mr. David Chatters: Thank you, and your response to my second question...? I'd really like to have the answer to that one.

Mr. Mike Taylor: Thank you for reminding me. Before I try to answer the second question, it's extremely important that I make it very clear that the commission is neither for nor against. Its interest is to make sure that the public is protected and that it carries out its mandate with respect to safety and the environment and security.

We have carefully carried out a review of the drafting notes, the proceedings that went into this act. We cannot find any written reference to this particular clause; therefore I cannot venture an opinion about why. We have not found any record. All I can say is, it did go through the House; the consultation was carried out, and it was not commented on at the time.

Mr. David Chatters: You likely missed it, just like we did.

Mr. Mike Taylor: Likely.

I cannot provide you assurance one way or the other, I apologize for that, but that is the fact. We do not have any record of discussion of this issue.

Mr. David Chatters: Thank you.

[Translation]

The Chair: Thank you. Before I turn the floor over to Mr. Cardin, I would remind my colleagues to identify the person to whom they are directing their questions.

You have four minutes, Mr. Cardin.

Mr. Serge Cardin: I have a brief comment for the witness representing the Canadian Nuclear Safety Commission. I understand your position. Your job is to ensure safety, but let's be clear about this. There are certain risks or dangers associated with the nuclear industry. The Commission was created to monitor the industry's activities and to prevent, as much as possible, the occurrence of all kinds of unfortunate situations. I understand that, and I also understand where you're coming from. This provision does not affect you. Your mandate, namely to ensure the safety of the nuclear industry, remains unchanged.

My question is for the official from the Canadian Nuclear Association. When was your association created?

[English]

Mr. Al Shpyth: Our association has been in place, if memory serves me correctly, since 1968, and the industry has been in place now for 50 years in Canada.

[Translation]

Mr. Serge Cardin: Would it be fair to say that when the existing wording was agreed to five years ago, you were not in the loop or you did not receive any requests from financial institutions concerning private sector investment? This provision has been in place for five years. Why have you waited until now to propose this amendment? Is it because you hadn't received any applications prior to this time?

[English]

Mr. Al Shpyth: In answering the question, hopefully I will also answer Mr. Chatters' question.

Why wasn't this concern caught in 1997? We too have looked through our records of our submissions and the House of Commons debate, and yes, this was not captured. I think from a licensee's perspective, at the time, when we saw it under a title in the act called “Exceptional Powers”, we did not see this as applying to us as licensees.

To give you an example, the logic there is that the whole subsection has language along the lines of “When the commission becomes aware”, and for licensees, where you have a regular ongoing licensing process, inspections, monitoring programs, and the like, and at nuclear power plants in particular, where there are resident inspectors, the commission will likely become aware of such things if they come about through the normal course of business, and there would be no--

Â (1210)

[Translation]

Mr. Serge Cardin: Since our time is limited, I would like you to limit your answer as well.

Basically, in the past five years, the financial institutions working with your associations have not seen any need either to exclude this provision or to amend it, because more than likely no one requested any financing from them. Now, however, there's the very real situation where Bruce Power has requested additional operating funds. As far as I know, however, it does not own this generating station. The company wants to expand its operations and in order to do so, must turn to financial markets for funding. Why haven't any financial institutions brought this matter to light before now?

[English]

Mr. Al Shpyth: That's a good question. At the time the act was passed in 1997, there was a mix of public and private sector companies in Canada involved in the nuclear industry—as both of the previous speakers said. The nuclear industry is quite broad, from uranium mining and milling to fuels manufacturing, reactor operators, nuclear medicines, and companies who provide parts and pieces to the nuclear industry. So it's quite a broad mix of public and private companies.

This concern was triggered as a result of the deal in which Bruce Power leased the Bruce nuclear generating station from the Government of Ontario. So yes, this is what caught it. It brought the issue to our attention. We're hoping to see it remedied.

The Chair: Mr. Comartin.

Mr. Joe Comartin: Mr. Taylor, was there any legislation using this type of a clause that preceded the act in 1997?

Mr. Mike Taylor: The legislation that preceded this act was passed in 1946 and did not contain any provisions of this type.

Mr. Joe Comartin: At any time from 1946 to 1997 was it amended to include this type of provision?

Mr. Mike Taylor: No, it was not.

Mr. Joe Comartin: We've heard from Mr. Taylor. I think you've confirmed that you found no notes of the discussion that went on in committee or in the House at the time section 46 was passed, the way it was passed.

Mr. Al Shpyth: That's correct.

Mr. Joe Comartin: In spite of that, you used the term that this was a mistake, an anomaly, or an unintended effect. That's your interpretation of the law as it stands now.

Mr. Al Shpyth: Yes, that's correct. We certainly do see this wording as having unforeseen consequences in its impact on the financing in the nuclear industry.

Mr. Joe Comartin: Do you agree with me that the other interpretation is that it was in fact intended? It's not an anomaly; it's not a mistake. The legislature at that point in fact did not want to privatize the industry. It used this as a mechanism to prevent it.

Mr. Al Shpyth: No, I'm afraid we do not.

Mr. Joe Comartin: Is this the other possible interpretation?

Mr. Al Shpyth: I guess we believe that if it truly were the position of the Government of Canada that there should be no private sector participation in the nuclear industry, it would be clearly spelled out somewhere and not come out as part of a subsection of a bill.

Mr. Joe Comartin: You don't think this spells it out? This prevents the privatization of the nuclear industry.

Â (1215)

Mr. Al Shpyth: It has impacted financing in the nuclear power sector. But again there are private sector companies today who are active in the nuclear industry in Canada.

Mr. Joe Comartin: But not in any major operations? They're all in small ones, in medical and other areas.

Mr. Al Shpyth: Well, Chemical Corporation is the world's largest uranium producer, and it's now a privately held company.

Mr. Joe Comartin: But it's operating under this legislation.

Mr. Al Shpyth: Yes, so that's why we believe it has been both unforeseen and unintended that it came up in the context in the nuclear power sector. We think if it was the intent originally—

Mr. Joe Comartin: Can you point to any instance in which this legislation has prevented development on the mining side?

Mr. Al Shpyth: No, I cannot.

Mr. Joe Comartin: Mr. Taylor, on the licensing side, I'm not clear, quite frankly. Is the provision that Bruce Power is faced with—this guarantee for a shutdown—a licensing requirement? Or is it simply the leasing arrangement between the Government of Ontario and Bruce Power?

Mr. Mike Taylor: It was a licensing requirement. I think it's important to understand the basis for this. The act says the commission may require guarantees, and it requires two types of guarantees. One is a decommissioning guarantee, and in the case of Bruce Power, which was the first time a non-governmental organization was going to operate a nuclear power plant, we chose to follow U.S. practice and require an additional guarantee, which is called an operational guarantee, to ensure that if Bruce Power, for whatever reason, was unable to operate this station, particularly as it's their sole source of revenue, they would have enough money to keep it in a safe state until the necessary arrangements could be made to either decommission it or get it going again. In other words, that operational guarantee is six months' operating budget.

The Chair: Mr. Mark.

Mr. Inky Mark: Thank you, Mr. Chair.

In the CNA document you listed a number of countries, the U.S., the U.K., Germany, Switzerland, Sweden, Finland. In light of the amendment we're looking at, how do we compare with these countries in access to funding and liability?

Mr. Al Shpyth: One of the questions Mr. Chatters asked concerned the difference between public and private--is there any? The industry believes there isn't, and as evidence we put forward that around the world there are a number of countries that have private sector operators of nuclear power plants, not just the U.S. and the U.K, but, for example, Germany and Sweden. In all cases the nuclear power industry operator works under the control of national regulators such as we have here in Canada. In all cases those countries would have provisions for cleanup, decommissioning, and other things.

So I'll answer that way, but sometimes in discussion I've noted we've touched on liability under the Nuclear Liability Act, which is for third-party liability, which, in our view, is separate and distinct from the question of responsibility for environmental remediation .

Mr. Inky Mark: How do we compare? Is it a level playing field across the board with the change in this legislation?

Mr. Al Shpyth: Yes. Bill C-4 would put Canada back on an equal footing.

Mr. Inky Mark: With the issue of urgency and quantity of applications, how does that affect the permit process?

Mr. Mike Taylor: I'm not sure Bill C-4 makes any difference. The commission issues licences for a discrete period. The licences come up for renewal. I'm not sure I understand the point of the question.

Mr. Inky Mark: There are a number of applications and there's an urgency to get these things approved. Does that change your mode of operation?

Mr. Mike Taylor: No. The commission has a statutory process for carrying out its licensing business, which includes public meetings. I don't foresee that this would change if there were more applications.

Â (1220)

The Chair: Mr. Godfrey.

Mr. John Godfrey: I regret that we don't seem to have here the full bill, not the one with the amendment, but the Nuclear Safety and Control Act, and so this is a question asked in some ignorance. The measure we're talking about today refers quite specifically to contamination, which would be one impact of what we will politely call a nuclear incident--God forbid something dreadful should happen, but we've got to be prepared for the worst. There would be other forms of liability and other forms of damage, presumably. There would be damage to people, notionally, if something terrible happened.

I'm curious as to whether there is in another part of the act some reference to liability for human health or liability for compensation if people were killed or hurt or something else, and whether in those sections this particular phrase that is troubling people, “or any other person with a right or interest in the land”, does not appear. Where in the act does the issue of liability for things other than contaminated ground exist?

Mr. Mike Taylor: I'll ask my colleague, Mr. Shaffer.

Mr. Bernie Shaffer (Legal Counsel, Canadian Nuclear Safety Commission): Yes, sir, there are other provisions in the act that protect human health and safety. In the case of an emergency, for example, under section 47 the commission has the power, which it exercised post-September 11, to increase security at certain facilities.

As well, in sections 29 to 36 there is an inspectorate. As Mr. Taylor said, some of that inspectorate is located on-site at the major nuclear facilities. Others are located in regional offices across the country. Some are located here at headquarters in Ottawa. They go out on regular inspections. They have the power, under section 35, to make orders in the event there is a place or a nuclear facility being operated in an unsafe manner. If necessary, in order to restore its safety they can make orders against the operators of those facilities.

Mr. John Godfrey: This particular change suggests that something has already happened. It's not that we haven't inspected properly, or whatever else; it's happened, and we need to deal with the mess. We're cleaning up the mess afterwards.

The question I'm asking is, if part of the mess is a human mess, what happens to people as opposed to contaminated ground? Are there provisions in the existing act that deal with this? If there were a liability issue for financial institutions because ground was contaminated, you'd expect that there would also be a liability issue for financial institutions if people were hurt and claims made in their name.

Mr. Mike Taylor: The answer, I believe, is that it's in the Nuclear Liability Act, which is a separate piece of legislation. Now, that act is intended to deal with what you politely want to call “incidents”. But that is a separate piece of legislation. I understand that revisions to the legislation are under consideration, but it is a piece of legislation that is under the control of Natural Resources Canada, not the Canadian Nuclear Safety Commission.

Mr. John Godfrey: So the actual issue of liability is dealt with in a wholly separate act. What is supposed to be the relationship between that wholly separate act, which would deal with contaminated sites as well--that's one of the things you might be liable for, I assume--and this act? How do they interrelate?

Mr. Mike Taylor: This act gives the commission control of people who exercise the use of nuclear material or nuclear energy. Generally speaking, it's limited to the licensed premises. So the commission has a great deal of control over people on licensed premises or people who are carrying out nuclear activities.

However, in the very low likelihood of an accident occurring that spreads that contamination beyond the nuclear facility, if that is an instance of the sense that calls up the Nuclear Liability Act, then that act comes into play. If, however, we are finding contamination that may be historic contamination, that may have been there before any of this legislation was in place, then sections 45 and 46 of this act would come into play, and the commission could use these extraordinary powers to hold somebody liable.

Â (1225)

The Chair: Thanks. Time's up on that.

We don't have time for a full second round. By a show of hands, perhaps you could indicate those of you who would like a two-minute question and answer. I'll take the names.

I have Monsieur Cardin and Mr. Comartin.

Nominations are closed.

Monsieur Cardin, two minutes.

[Translation]

Mr. Serge Cardin: Thank you, Mr. Chairman.

Based on what you're saying, sir, for years, no one has felt any need to call for amendments to the legislation. The need arose when the private sector became involved in the operation of nuclear power plants. Presumably, then, the danger associated with other activities didn't stop financial institutions from investing.

As far as nuclear plants generating electrical power, you claim that we need to be on the same footing as other world countries. If that were the case, then one could also argue that a growing number of countries are moving away from nuclear power as a means of generating electricity. What is the reason behind the proposed amendment to the act? Isn't the real aim to promote private sector investment in the nuclear industry?

I think people are aware of this fact. The act's shortcoming is that it attempts to draw a distinction between different activities within the nuclear industry. Bruce Power has problems, British Energy is experiencing financial woes and Cameco seems to be interested in investing. As we know, Cameco sells the uranium used in nuclear power plants. The problem extends beyond the scope of a mere clause in the bill. The proposed amendment would mean that the private sector would be able to invest in the industry's without any opportunity for public input.

My question to you is this: by promoting private sector investment in nuclear power plants, are you not in fact promoting the proliferation of nuclear power plants in Canada?

[English]

Mr. Al Shpyth: We think Bill C-4 would remove an impediment to private sector participation in the nuclear power industry. If provincial governments have an interest in bringing private sector partners into the industry, it would certainly facilitate that. And if there were to be new nuclear reactors built in Canada, it would allow for the possibility that they could be constructed by private sector operators. If that came forward, it would have to be, I think, in a context that recognized the clean air and greenhouse gas contributions nuclear could make, but it could only happen following rigorous review by the federal regulator, and in that review process there would be an opportunity for public involvement, as there would be in the requirement for an environmental assessment. So this would not happen in such a way that the public would not have an opportunity to comment and participate, should it happen in the future.

The Chair: Mr. Comartin.

Mr. Joe Comartin: Thank you, Mr. Chair.

Do you have any information from within the industry, now that the New Brunswick government has indicated they're not going to take on those repairs to Lepreau, of any private sector interest in that site?

Mr. Al Shpyth: The only information I have is the stated intention of the Government of New Brunswick to restructure New Brunswick Power and to invite private sector participation in that restructured company, not only with respect to nuclear power, but across the board.

Mr. Joe Comartin: I'm concerned, Mr. Chair. I want to signal that I'm bringing a motion on Thursday morning to ask for the committee to issue a subpoena requiring Bruce Power to appear, since they've indicated by telephone that they're not going to, based on the newspaper article that was in the Globe and Mail on the weekend about the situation there.

Â (1230)

The Chair: Is there an interest in more questions?

I invite Mr. Taylor and, after him, Mr. Shpyth to give two-minute closing remarks.

Mr. Taylor.

Mr. Mike Taylor: Thank you very much, Mr. Chairman.

All I wish to do is reiterate the commission's position that it is an independent agency. Its interest is in safety and the environment. It does not object to this proposal, but it will obviously do whatever the House instructs it to do.

The Chair: Thank you.

Mr. Shpyth.

Mr. Al Shpyth: Thank you again for the opportunity to speak.

Our closing would be to remind the committee that these words are unique to the Nuclear Safety and Control Act with respect to environmental remediation. The words are extraordinary in Canadian law and statute. The bill that is put before you would address the unintended and unforeseen effects that have been impacting on the financing and nuclear power sector of our industry. The bill does not confer on our industry any special treatment nor take away from our responsibilities as owners and operators. There is no reduction in the liability we face as operators or our responsibility as owners and operators. Again, the unforeseen effect cannot, in fact, be realized, so there is really no liability being removed from the banks in the nuclear power sector. None have been taken.

We thank you for your consideration of the bill and look forward to its favourable passage.

The Chair: Thank you very much. This concludes this part of our meeting. We will go in camera for future business and ask that the room be cleared. We are not taking a break. We wish to clear the room very quickly and start immediately.

[Editor's Note: Proceedings continue in camera]