The Nuclear Liability and Compensation Act

The Nuclear Liability and Compensation Act (NLCA) establishes a compensation and liability regime in the unlikely event of a nuclear accident resulting in civil injury and damages. This new law entered into force on January 1, 2017 and replaces the Nuclear Liability Act (NLA), legislation which dated back to the early 1970s.

Under the NLCA, the operator of a nuclear power plant is responsible to pay up to C$1 billion for civil damages resulting from an accident at that plant. This is a major increase from the C$75 million that operators were required to pay under the NLCA's predecessor.

Nuclear installations, operators and liability limits

The NLCA applies to Canadian nuclear facilities listed in regulations, such as nuclear power plants, nuclear research reactors, fuel processing plants and facilities for managing nuclear fuel waste. For the purposes of the legislation, these facilities are defined as “nuclear installations” to distinguish them from other nuclear facilities such as uranium mines, to which the legislation does not apply.

The level of risk is different for the activities of each class of nuclear installation, so the operator of a particular class is assigned a liability amount that is proportional to the level of risk posed by that class of nuclear installation.

The existing C$1 billion liability limit must be re-assessed at least once every five years and, based on the assessment, the Government of Canada may increase the amount by regulation.

Table 1: Canadian nuclear installations and related liability amounts

Name of installation	Class	Operator	Liability amount
Bruce Nuclear Generating Stations A and B	Power Reactor	Bruce Power	$1 billion
Darlington Nuclear Generating Station	Power Reactor	Ontario Power Generation	$1 billion
Pickering Nuclear Generating Station	Power Reactor	Ontario Power Generation	$1 billion
Point Lepreau Nuclear Generating Station	Power Reactor	New Brunswick Power Nuclear Corporation	$1 billion
Chalk River Laboratories	Reactor over 7 MW	Canadian Nuclear Laboratories	$180 million
McMaster Nuclear Reactor	Reactor 1 MW to 7 MW	McMaster University	$1.3 million
École Polytechnique: SLOWPOKE 2 reactor	Reactor less than 1 MW	École Polytechnique de Montréal	$0.5 million
Royal Military College of Canada: SLOWPOKE 2 reactor	Reactor less than 1 MW	Royal Military College of Canada	$0.5 million
Cameco Fuel Manufacturing	Nuclear Fuel Production Facility	Cameco Fuel Manufacturing Inc.	$2.3 million
Port Hope Conversion Facility	Nuclear Fuel Conversion Facility	Cameco Corporation	$3.3 million
Douglas Point Waste Storage Facility	Nuclear Fuel Waste Management Facility	Canadian Nuclear Laboratories	$13 million
Gentilly-1 —Waste Storage Facility	Nuclear Fuel Waste Management Facility	Canadian Nuclear Laboratories	$13 million
Gentilly-2	Nuclear Fuel Waste Management Facility	Hydro-Québec	$13 million
Western Waste Management Facility	Nuclear Fuel Waste Management Facility	Ontario Power Generation	$13 million
Whiteshell Nuclear Research Establishment	Nuclear Fuel Waste Management Facility	Canadian Nuclear Laboratories	$13 million
Nuclear Power Demonstration Waste Management Facility	Management of Radioactive Waste other than Nuclear Fuel Waste	Canadian Nuclear Laboratories	$1 million

Nuclear insurance

Approved insurers

The law requires all operators of nuclear installations to be insured to make sure they will be able to compensate claimants for civil damages arising from an accident. The insurance must be in the amount of the operator’s liability. Operators can only buy insurance from insurers that have been approved by the Minister of Natural Resources Canada.

At this time, the insurers approved by the Minister are:

• Nuclear Insurance Association of Canada
• Nuclear Risk Insurers
• Northcourt Limited

Alternate financial security

The operator of a nuclear installation can also choose to use some other form of financial security (for example, provincial government guarantees, self-insurance, etc.) to cover up to half of its liability. Applications for other forms of financial security must be approved by the Minister.

At this time, the operators approved by the Minister to use alternate financial security, in the form of self-insurance, are:

• Bruce Power
• Ontario Power Generation

Insurance agreement

Each nuclear installation operator has entered into an insurance agreement (or agreements) with the approved insurer (or approved insurers) of their choice to cover their liability. A standard insurance policy, approved by the Minister, is used by all approved insurers as the basis for providing insurance cover for the operator’s liability.

Indemnity agreement

Approved insurers will insure most, but not all, risks for which nuclear operators are liable. For example, insurers do not currently provide coverage for claims for bodily injury made beyond 10 years after a nuclear accident.  The Government of Canada provides the coverage for these risks through an indemnity agreement between the nuclear operators and the Minister.  Click here to see the wording of the indemnity agreement.

Compensable damages

Compensable damages include:

1. bodily injury, loss of life and property damage;
2. psychological trauma resulting from bodily injury;
3. economic loss arising from the aforementioned damages;
4. costs incurred as a result of loss of use of property, including the wage loss of employees;
5. reasonable costs of remedial measures taken to repair, reduce or mitigate environmental damage if the measures are ordered by an authority acting under federal or provincial legislation relating to environmental protection;
6. reasonable costs of preventive measures, and the costs and economic loss – including lost wages – arising from the loss of use of property as a result of those measures, if the measures are recommended by an authority acting under a nuclear emergency scheme established under federal or provincial legislation.

The NLCA also makes it clear that costs incurred by authorities in exercising preventive measures during a nuclear incident will not be reimbursable. For example, the costs incurred for the administration of evacuation centres, salaries of emergency services personnel, and the cost of equipment will not be compensable under the legislation. This will ensure that compensation will be reserved exclusively for claimants who experience compensable damages noted above.

Time period for submitting claims

The time period under the NLCA for submitting claims for the compensation of bodily injury is thirty years. This time period has been increased from the 10-year limitation period under the old law. The time period for submitting claims for the compensation of other forms of damage is 10 years.

Special compensation system to accelerate and provide efficient and equitable claim settlements

The NLCA – like the old law – provides for a special compensation system to accelerate and provide efficient and equitable claim settlements. Normally, an individual or a business making a claim would go directly to the operator’s insurer to seek compensation. If unsatisfied with the insurer’s offer of compensation, the individual or business could seek a settlement in court. However, in the case where numerous claims occurred, the Government of Canada may determine that the public would be better served by the establishment of a special tribunal to deal with claims.   The NLCA elaborates the features and process of this special tribunal system.

International nuclear liability policy 

The NLCA reflects modern international principles in the area of nuclear liability.  As such, it permitted Canada to join the International Atomic Energy Agency’s Convention on Supplementary Compensation for Nuclear Damage. By being a member of the Convention, Canada commits to harmonizing its nuclear liability principles with those of other member countries, and provides compensation for civil damages in other member countries resulting from a nuclear accident in Canada.  Reciprocally, another member country would provide compensation for civil damages resulting from a nuclear accident in that country.  The Convention also provides for the establishment of a pool of funds that would be available in the event of an accident, should it be required, to compensate for damage in countries that are members of the Convention. 

Today, the Convention has eleven members:

• Argentina
• Benin
• Canada
• Ghana
• India
• Japan
• Montenegro
• Morocco
• Romania
• United Arab Emirates
• United States

Canada signed the Convention on December 3, 2013, and its June 6, 2017, ratification entered into force on September 4, 2017, making Canada a full participant in the Treaty.

Find out more about nuclear liability in Canada

• Nuclear Liability and Compensation Act
• Nuclear Liability and Compensation Regulations
• Convention on Supplementary Compensation for Nuclear Damage

For specific information on nuclear liability in Canada, please contact us.