Federal government poised to roll out plan to raise nuclear liability cap

OTTAWA – Federal Natural Resources Minister Joe Oliver has confirmed that he is set to roll out his plan to raise the amount in damages that Canadian nuclear operators would have to pay in case of an accident.

He is expected to announce the details at a nuclear conference in Toronto on Monday morning, although he will likely hold off on tabling legislation until the fall, sources tell The Canadian Press.

“Tomorrow, we will announce our commitment to increase nuclear civil liability in our efforts to protect the taxpayer and the safety of all Canadians,” Oliver said in a statement.

The liability cap is now set at $75 million but that is widely considered outdated, especially in the wake of the 2011 Fukushima disaster that has led to tens of billions of dollars of damage claims.

The federal Conservatives have put forward legislation four times in the past that would have increased the liability cap to $650-million, while also giving the minister leeway to increase the cap in the future. But the bills have failed at least three times.

“The NDP filibustered our efforts and effectively killed the legislation,” Oliver said.

The minister is not expected to actually table legislation on the new cap until this fall, in order to avoid having the bill fail yet again if the prime minister happens to prorogue this summer. Rather, Oliver is expected to discuss his plans.

Oliver has said publicly that he was making plans to increase the liability cap for both the nuclear industry and the offshore oil industry. But Monday’s announcement is likely to focus just on nuclear.

Documents obtained by Greenpeace earlier this year showed that this time, Ottawa was contemplating raising the liability cap somewhat higher than $650-million.

Environmentalists want unlimited liability, but nuclear proponents say that would be incentive for a company involved in an accident to declare bankruptcy and walk away, leaving governments on the hook.

“Recent developments may warrant that the amount of $650-million be re-examined,” the government consultation paper states, pointing to expenses involved in the Fukushima accident and the 2010 oil spill in the Gulf of Mexico, as well as moves by other countries to significantly increase operator liability.

International norms have shifted since the $650-million cap was last proposed, the paper says.

“Consideration must be given as to the appropriateness of retaining the $650-million operator liability limit, or moving to a higher limit or unlimited liability,” the paper states, adding that the nuclear insurance pool in Canada is already big enough to cover up to $1-billion in operator liabilities.

Canadian nuclear operators have not opposed raising the limit. Rather, the discussion has been around how to pool resources to create a substantial insurance fund, and how to do that gradually so as not to shock the bottom line.

The document suggests Ottawa has not seriously considered unlimited liability.

“Even if an operator has significant assets, allowing a power utility to become insolvent may not be in a country’s best interests,” the paper states in a footnote, pointing to the Japanese government’s need to inject public money into the Fukushima utility so that it wouldn’t collapse due to compensation claims.

But critics say anything except unlimited liability acts as a subsidy to the nuclear industry.

“Increasing the cap only decreases the subsidy; it does not eliminate it. The government of Canada should proceed with legislation that removes the liability cap entirely rather than legislation that maintains it, or increases it to be harmonious with other jurisdictions,” wrote Joel Wood, a senior research economist at the Fraser Institute, in a 2011 analysis.

Greenpeace has harshly criticized the government for failing to consult beyond industry for the most recent version of its legislation, and quickly condemned Oliver’s announcement.

“Yet another law the Conservatives have concocted in the backrooms with companies that profit from pollution,” said Shawn-Patrick Stensil, Greenpeace Canada’s nuclear campaigner.

“A key lesson of the Fukushima disaster is we need to make all nuclear companies responsible for the risks they create.”