Federal government will raise nuclear liability cap to $1B from $75M

TORONTO – Nuclear operators will face a liability ceiling of $1 billion, up from the current $75 million that has stood for four decades, under proposed new federal legislation.

The change is expected next fall when Parliament resumes following the summer break, Natural Resources Minister Joe Oliver told a major nuclear conference on Monday.

The legislation will also broaden the number of categories for which civil damages compensation may be sought and improve the procedures for delivering it, he said.

Nuclear operators will still be absolutely and exclusively liable for nuclear damage, with no need to prove fault.

Canada also plans to join the International Atomic Energy Agency’s convention on supplementary compensation for nuclear damage, which would add another $450 million to the compensation pool by drawing on additional funds from member countries, said Oliver.

“Our government is committed to a strong and sustainable nuclear industry,” Oliver said told the 34th annual conference of the Canadian Nuclear Society.

“We will bring forward legislation in the coming months to strengthen Canada’s nuclear liability regime above most international standards.”

The current $75-million liability cap has long been considered completely outdated, and critics says the proposed billion-dollar ceiling isn’t nearly high enough.

“Increasing nuclear liability to $1 billion dollars may sound adequate but it’s not,” said John Bennett, executive director of the Sierra Club Canada.

“The cost of the Fukushima Daiichi nuclear power plant in March 2011 is $250 billion and still rising.”

The Harper government tried repeatedly to raise the liability cap to $650 million, while giving the minister room to increase the ceiling in future. The bills all failed in Parliament.

The liability limit is a controversial policy. Environmentalists want unlimited liability, but nuclear proponents say that would encourage 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,” says a government consultation paper obtained by Greenpeace.

The document cites 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 said.

Canadian nuclear operators have not opposed a higher cap. Their 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 policy 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 says in a footnote, pointing to the Japanese government’s need to inject public money into the Fukushima utility so that it wouldn’t collapse under compensation claims.

But critics say anything except unlimited liability subsidizes the nuclear industry.

“Increasing the cap only decreases the subsidy; it does not eliminate it,” Joel Wood, a senior research economist at the Fraser Institute wrote in a 2011 analysis.

“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.”

Greenpeace, which has harshly criticized the government for failing to consult beyond industry for the most recent version of its legislation, 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.”