Canada Ratifies International Convention on Supplementary Compensation

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On Wednesday June 6, 2017 the Permanent Representative of Canada to the International Atomic Energy Agency (IAEA), Ambassador Mark Bailey, delivered the instrument of ratification to IAEA Director General Yukiya Amano at a ceremony at IAEA Headquarters in Vienna, Austria. Canada’s ratification follows the entry-into-force on January 1, 2017 of the Nuclear Liability and Compensation Act, domestic legislation that strengthened Canada’s nuclear liability regime and permitted Canada to ratify the Convention on Supplementary Compensation for Nuclear Damage. The United States, Canada’s closest neighbour, ratified the Convention in 2008. The implications are significant for Canada as Article XIII provides that with few exceptions, jurisdiction over actions concerning nuclear damage from a nuclear incident lie only with the courts of the Contracting Party within which the nuclear incident occurs. For foreign suppliers and contractors with assets for example, in the United States who are working on refurbishments of the Darlington or Bruce Nuclear Generating Stations in Canada, they are no longer exposed to lawsuits in the U.S. arising from a nuclear incident at either of these sites in relation to work they are doing in Canada.


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The CNLO is delighted  to announce that Evguenia Prokopieva, Senior Counsel at OPG is joining the CNLO  Board of Management . At the same time, Carlton Mathias , the current OPG member of the Board, is leaving to pursue his new responsibilities in OPG’s Office of Corporate Secretary. The CNLO will miss Carlton’s sage counsel and wish him well in his new role.

Supreme Court Denies Leave To Appeal Approval Of Darlington Nuclear New Build

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April 28, 2016

Despite a dissenting opinion in the Federal Court of Appeal, the Supreme Court of Canada today denied leave to appeal the Federal Court of Appeal’s  September 10, 2015 decision. That decision  overturned  the Federal Court Trial Division’s decision which would have  sent the environmental assessment (EA)  for the proposed Darlington Nuclear New Build Project back to the Joint Review Panel and invalidated  approvals rendered by the Governor- in -Council , the Canadian Nuclear Safety Commission (CNSC) ,  the Department of Fisheries and Oceans and Transport Canada.

The Trial Decision Trial Division Judge Russell had mistakenly  concluded that the Canadian Environmental Assessment Act S.C. 1992, c.37 (CEAA) requirements had not been met in three instances:

1. the Panel failed to fully  consider the environmental effects of  hazardous substance emissions , in particular liquid effluent and stormwater runoff and the sources , types and quantities of non-radioactive wastes to be generated by the project.

2, the Panel failed to consider radioactive waste management and more particularly the management of spent nuclear fuel off-site

3. the Panel failed to consider the effects of a common cause accident involving both the existing and proposed nuclear reactors , but left this issue to be addressed by the nuclear regulator prior to the actual construction some 8 years down the road.

The Federal Court of Appeal Decision The Appeal Court was unanimous in deciding that the waste management issue and the common cause accident had been adequately addressed by the Panel. The Terms of Reference did not require consideration of spent nuclear fuel off-site and the improbability of a common cause accident supported  the Panel’s deferral of the issue to a later date as a reasonable conclusion .

The Appeal Court had disagreed on the question of whether the effects of hazardous substances emissions had been properly considered. The majority found that there had been a reasonable  consideration and that was all that was required. The reasonableness of the consideration was found in the acceptance by the panel of the plant parameter envelope or bounding approach under which the proponent did not propose one design or technology but four separate ones . The distinct characteristics of each design giving rise to the greatest adverse effects set the boundaries for the environmental impact assessment. Without any firm design selection the full suite of effects could not be predicted fully at the assessment stage , but the majority of the court found that the approach was reasonable when accompanied by recommendations for further regulatory action if and when the project proceeded.

 The full appeal court decision may be found at 2010-09-10-federal-court-of-appeal-reasons. The Supreme Court provides no additional reasons.

IMPLICATIONS OF THE DECISION TODAY With the decision today by the Supreme Court of Canada and  the Federal Court of Appeal’s decision on April 13, 2016 upholding the environmental assessment for the refurbishment of Ontario Power Generation’s four Darlington reactor units, the ability to challenge the CNSC’s scoping of nuclear projects , or the  factors to be assessed as part of the EA, will now be limited to determinations of fact and law on issues central to the Commission’s  decision made without regard to evidence , in bad faith  or for an improper purpose. Deference to responsible authorities and joint review panels under CEAA has been reaffirmed.


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On April 13, ampoule 2016, the Federal Court of Appeal dismissed the appeal of the Federal Court decision to dismiss the application for judicial review of the environmental assessment (EA) decision on the refurbishment and continued operation of the Darlington Nuclear Generating Station.

The appeal was commenced in November 2014 by Greenpeace Canada, the Canadian Environmental Law Association, Lake Ontario Waterkeeper and Northwatch. They argued that the Federal Court erred in dismissing their application for judicial review because the Responsible Authorities unreasonably excluded severe low-probability nuclear accidents from the scope of the assessment. They also claimed that the Federal Court unreasonably failed to adequately consider the long-term management of nuclear fuel waste.

The Federal Court of Appeal did not agree. Its decision, among other points, stated that “…the Canadian Nuclear Safety Commission is much better placed than a reviewing court to factually assess and determine what types of possible accidents are likely to occur at a nuclear power plant and how to conduct the assessment of the environmental impacts of potential accidents. It is therefore inappropriate for a reviewing court to second-guess these determinations through a detailed re-examination of the evidence as the appellants would have us do in the instant case.” [60]

More Information Sought on Low and Intermediate Level Nuclear Waste Repository

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The following news release appeared on the CNSC website on February 18, 2016 — The Minister of Environment and Climate Change, the Honourable Catherine McKenna, today requested additional information and further studies on the environmental assessment for the proposed Deep Geologic Repository (DGR) Project for Low and Intermediate Level Radioactive Waste in Kincardine, Ontario.

After considering the Joint Review Panel Environmental Assessment Report, the Minister has requested that the proponent, Ontario Power Generation, provide additional information on three aspects of the environmental assessment: alternate locations for the project, cumulative environmental effects of the project, and an updated list of mitigation commitments for each identified adverse effect under the Canadian Environmental Assessment Act, 2012 (CEAA 2012).

Ontario Power Generation has been asked to provide the Canadian Environmental Assessment Agency, by April 18, 2016, with a schedule for fulfilling the information request. The Minister will contact the Panel, at a future date, regarding its role in the review of the additional information and studies.

The Minister’s request for information from the proponent has paused the timeline for an environmental assessment decision to be issued, as per section 54(6) of CEAA 2012. At a later date, the Minister will seek a further timeline extension from the Governor in Council.

CNSC Approves Darlington Refurbishment and Extends Operating Licence to November 30, 2025

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December 23, 2015 The Canadian Nuclear Safety Commission today announced its decision to renew Ontario Power Generation’s (OPG) Nuclear Power Reactor Operating license for the Darlington Nuclear Generating Station until November 30, 2025. The decision authorizes OPG to undertake the refurbishment and life extension of four nuclear reactor units and to operate the four units beyond the 210,000 equivalent full power hours up to the proposed refurbishment outages to a maximum of 235,000 equivalent full power hours. The public hearing was held in two parts and included 281 intervenors. The decision anticipates annual oversight  reports by the Commission’s staff on the status of the refurbishment project and emergency planning . A presentation of these reports will be required at public proceedings of the Commission. OPG will also be required to provide updates on the status of the refurbishment project following the return to service of each reactor unit. A more comprehensive update of the return to service of the first reactor unit will be considered at a public meeting of the Commission no later than half-way through the licence period . In its decision summary the Commission stated that: ” The detailed findings of the Commission will be presented in a comprehensive Record of Proceedings, including Reasons for Decision, to be published at a later date.”


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November 27, ask 2015  The Governor- in- Council , pilule on the request of the Minister of Environment and Climate Change, patient extended the timeline to issue a decision on the Deep Geologic Repository for low and intermediate- level nuclear waste by 90 days to March 1, 2016. The Repository is proposed to be built in Kincardine, Ontario adjacent to the eight existing Bruce nuclear reactors on the shore of Lake Huron. The federal government received a report earlier this year from the Joint Review Panel set up under the Canadian Environmental Assessment Act and the Nuclear Safety and Control Act , recommending that  the project should proceed with a number of conditions . The tribunal concluded that the project would not cause any significant adverse environmental effects if the conditions it recommended were implemented. For a full review of the tribunal decision see the upcoming article by Stanley D. Berger in Key Developments in Environmental Law 2015 , ed. Stanley D. Berger, published by Canada Law Book, December 2015. With the recent change in the federal government in October , it would not be surprising for the new Minister of the Environment and Climate Change , not to mention Cabinet as a whole,  to wish more time to familiarize themselves with the file.

Supreme Court of Canada restores Rate Regulator’s Disallowance of $145 million in OPG Staff Compensation Costs

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September 25, 2015 The Supreme Court of Canada today issued two decisions dealing with the regulation of utility rates which will significantly impact on how regulated utilities manage their internal costs going forward . In Ontario (Energy Board) (OEB) v. Ontario Power Generation Inc. (OPG) (2015) SCC 44 and Atco Gas and Pipelines Ltd. v Alberta (Utilities Commission)(2015) SCC 45, the Supreme Court concluded that neither the Ontario Energy Board nor the Alberta Utilities Commission were required to apply the prudence methodology in the setting of rates. In a prudence review a decision made by utility’s management with respect to its costs, is evaluated on the basis of the “circumstances that were known or ought to have been known by the utility at the time the decision was made.” Hindsight is not used in determining prudence .

OPG had applied to the Ontario Energy Board (OEB)  under s.78.1 of the Ontario Energy Board Act 1998 S.O. 1998 c.15 sched. B to fix the rates it was entitled to charge its customers for the year following its application, (“the forward test period” ) a period during which employee compensation was largely set by two collective agreements, one with the Power Workers Union and the other with the Society of Energy Professionals . The OEB  had reduced OPG’s application for nuclear staff compensation costs by 145 million dollars. The Board  used a benchmarking study of comparator employees that was not in existence at the time OPG entered into the collective agreement with its unions. That study revealed that the salaries of non-management employees were in the 75th percentile of a survey of industry salaries . The Board considered a proper benchmark salary  to be the 50th percentile., the same percentile against which OPH benchmarks management compensation.


The Ontario Court of Appeal at (2013) ONCA 359 overturned the OEB’s decision to reduce staff costs observing that “it is unreasonable to require that OPG manage costs that, by law , it cannot manage.” (at par.37) The costs relating to staffing numbers and rates of pay were fixed by OPG’s collective agreements for the future test period and OPG was bound to pay them.The Supreme Court reinstated the OEB’s cost reduction of 145 million dollars. In determining that the OEB’s analytical approach to disallowing the nuclear staff costs was just and reasonable the Court found it useful to review whether these costs were “forecasted” or “committed”.

The Board had the methodological discretion to adopt “a mixed approach that did not rely on quantifying the exact share of compensation costs that fell into the forecast and committed categories.” (at par. 117)The Majority also rejected the argument accepted both in the Court of Appeal and in Judge Abella’s dissenting opinion that the Canadian Nuclear Safety Commission (CNSC) imposed staffing levels on OPG to ensure the safe and reliable operation of its nuclear stations.


“…While the regime put in place by the CNSC surely imposes operational and staffing restraints on nuclear utilities (see OPG record, at pp. 43-46), there is nothing in the Board’s reasons, and no argument presented before this Court, suggesting that the Board’s disallowance will result in a violation of the provisions of the Nuclear Safety and Control Act, S.C. 1997, c. 9 “.(at par. 119)

After reviewing American and Canadian case-law on the prudence investment test, the Supreme Court accepted that a regulatory board could accept a no-hindsight prudence review not only for capital costs but operating costs as well.(at par. 102) However, the Court concluded that the mere decision not to apply the prudence test when considering committed costs did not render its decision on payment amounts unreasonable. (at par. 103)


“The question of whether it was reasonable to assess a particular cost using hindsight should turn instead on the circumstances of that cost. I emphasize, however, that this decision should not be read to give regulators carte blanche to disallow a utility’s committed costs at will. Prudence review of committed costs may in many cases be a sound way of ensuring that utilities are treated fairly and remain able to secure required levels of investment capital…” (at par.104)   


The prudence test would be of more significance in the review of capital as opposed to operating costs so as to ensure that utilities are not discouraged from optimizing investment in the development of their facilities.


“…Capital costs, particularly those pertaining to areas such as capacity expansion or upgrades to existing facilities, often entail some amount of risk, and may not always be strictly necessary to the short-term ongoing production of the utility. Nevertheless, such costs may often be a wise investment in the utility’s future health and viability….” (at par. 107)


The Board’s decision  was intended to have the effect of making OPG more hesitant in the future about committing relatively high compensation costs . Prudence reviews tended to be focused on one-time investments not ongoing “repeat-player” relationships. The Board’s disallowance , according to the Court, was animated by its effort to get OPG’s ongoing compensation costs under control. For full decision of Court click here.

OEB OPG SCC rate decision