Oct. 03, 2019 - Chapter 2 of Davies Governance Insights 2019
Canada to Raise Liability to $1 Billion for Nuclear and Offshore Oil & Gas Operators
On January 30, 2014, the federal government reintroduced the proposed Nuclear Liability and Compensation Act under Bill C-22 to replace the existing liability regime for damage from nuclear incidents. Bill C-22 would also amend the current liability regime for offshore oil and gas.
For the proposed changes to the nuclear liability regime, the substance of Bill C-22 generally mirrors four previous bills that the federal government has introduced since 2007 to replace the existing Nuclear Liability Act. However, each of those bills died on the Order Paper, including the government’s most recent attempt in 2010 with Bill C-15 (which died when Parliament was dissolved in March 2011).
The proposed Nuclear Liability and Compensation Act updates the regime in several respects:
- The legislation increases the maximum compensation payable by the operator of a nuclear facility to third parties on an absolute liability basis (i.e., payable regardless of negligence or fault) from $75 million to $650 million as soon as Bill C-22 comes into force.
- This absolute liability limit will increase to $750 million one year after Bill C-22 comes into force, to $850 million after two years and finally to $1 billion after three years. The government is then to review these limits at least every five years.
- Operators will be required to maintain insurance (or alternate security) for this full liability limit.
- Bill C-22 extends the ultimate limitation period for bringing a claim for bodily injury to 30 years (with other damage remaining subject to a 10-year limitation period).
Bill C-22 will harmonize Canada’s nuclear liability regime with the global liability regime contemplated in the International Atomic Energy Agency’s Convention on Supplementary Compensation for Nuclear Damage. Canada signed that treaty in December 2013, and enacting Bill C-22 will permit Canada to ratify the treaty, under which a country must ensure that compensation is available for damage that a domestic nuclear incident causes outside that country. Once ratified, Canada can establish a relationship for civil nuclear liability with the United States, which is already a party to the treaty.
Bill C-22 also amends the liability regime for offshore oil and gas. While liability for damage resulting from fault or negligence is unlimited, offshore oil and gas operators currently have absolute liability for $30 million in the Atlantic offshore areas and $40 million in the Arctic. The absolute liability for both areas will be increased to $1 billion.
Oct. 03, 2019 - Davies Governance Insights 2019 is a comprehensive report that analyzes the governance trends and issues most important to Canadian public companies. Now in its ninth edition, Governance Insights is designed to be a playbook for navigating the diverse and complex challenges facing...