National Nuclear Regulator Bill: discussion

Meeting report

MINERALS & ENERGY PORTFOLIO COMMITTEE
21 October 1999
CONSIDERATION OF NATIONAL NUCLEAR REGULATOR BILL [B 11-99]

Documents Distributed
Explanatory Note Regarding Liability and Compensation for Nuclear Damage (attached below - Appendix 1)
Department of Minerals and Energy statements on the Application of the Nuclear Regulator Bill to Mines (attached below - Appendix 2)
Further Proposed Amendments to the Nuclear Regulator Bill (attached below - Appendix 3)
Portfolio Committee On Minerals and Energy Proposed Amendments to National Nuclear Regulator Bill [B 11-99]

SUMMARY
The Committee continued their informal consideration of the National Nuclear Regulator Bill. They stopped at Clause 38, flagging clauses that need further debate for the meetings to be held on the 25 and 26 October.

MINUTES
The Committee went back to clauses 3, 4 and 7 which had been skipped over in the previous meeting. There were no debates surrounding these clauses.

There were no debates for clauses 14, 15, 16, and 17.

Mr Nel (NNP) asked if there was any difference between the restrictions in Clause 17 and those in Clause 18. If the clauses were duplicated, they could be combined. Mr De Waal, from the Department of Minerals and Energy, explained that Clause 17 relates to restrictions, while Clause 18 relates to application. Mr Nel (NNP) asked again if there was a difference between the two in terms of restriction. It was agreed that there was nothing wrong with this Clause and no changes were made.

Mr Oliphant (ANC) asked if the restrictions include companies and institutions. Ms van Schoor, Law Advisor, answered that institutions and companies are included.

There were no disagreements surrounding Clause 19.

Regarding Clause 20, Mr Davidson (DP) asked about the conditioning terms of sub-section two. He wanted to know why mines were in a specific category. The Department asked to have this issue flagged so that they could look at it more closely and come back to the Committee.

There were no debates on clauses 21 and 22.

Concerning Clause 23 (3) Mr Nel asked about the use of the word "return". He thought that the word "report" or "account" should be used since it related to money. Mr Mokoena, from the Department of Minerals and Energy, answered that "monthly return" is commonly used in other legislation.
Mr van Schoor, Law Advisor, agreed by saying that a "return" can be related to money. Mr Oliphant (ANC) stated that the Committee needs to be very clear in this legislation; if they meant report then they should say report. This issue was flagged for the State Law Advisors to consider further.

There were no debates for Clause 24.

Mr Davidson (DP) commented that Clause 25 was another example of shifting the authority from the Regulator to the Minister. He did not want to ask a question; he just wanted to point it out.

Mr Oliphant (ANC) asked for the context around removing sections (c) and (d) of Clause 25. Mr Mokoena answered that the Department was trying to be consistent with the philosophy that the Regulator must be independent. They are trying to avoid conflicts of interest and money. He agreed to come back to the issue if the Committee wanted to flag the issue.

Mr Davidson (DP) commented again that the original fees permitted by the Minster were by recommendation of the Board, which had been changed to "after consultation". The shift has gone from the original authority, the Regulator, to the Minister. The Chairperson, Mr Mohamed (ANC), pointed out that the shift is taking place because the Minister is trying to carry out a transformation process within the Council for Nuclear Safety (CNS). If things remain the same then this transformation cannot take place. Mr Davidson (DP) did not understand how the determination of fees had to do with transformation. Mr Mokoena pointed out that it is common to determine fees in consultation with the Minister. Mr Davidson said that he could agree to "in consultation" but not "after consultation". The Committee decided to flag the issue so that the Department could consider it further.

Mr Mokoena referred to the Explanatory Note regarding Liability and Compensation for Nuclear Damage. The Department wanted the Committee to understand the background behind the drafting of the liability section of the legislation.

Mr Davidson (DP) told the Department that he feels that the real debate revolves around the submission made by CNS and the Chamber of Mines with regard to mines. He is concerned that they are not allowing a lesser regime for mines in terms of liability. They decided to flag Mr Davidson's concern and go through the chapter, clause by clause.

There were no debates surrounding Clause 26. Mr Davidson (DP) pointed out that Clause 27 (5) alluded to the problem earlier of strict liability. He explained that workers in a nuclear installation, in case of a nuclear accident, are automatically entitled to damages. Managers are also entitled to damages but they are not limited. Workers are limited under the Compensation for Occupational Injuries and Diseases Act, 1993 (COIDA). Mr Davidson claimed that this Clause was not in the legislation when it was tabled, therefore this section was never up for public debate. The Chairperson asked Mr Davidson what he would like to propose. He suggested that "…in terms of Compensation for Occupational Injuries and Diseases Act, 1993 (Act No. 130 of 1993), that person's entitlement to benefit in terms of this Act lapses." could be removed.

Ms Dudley (ACDP) asked why Clause 27(2) leaves out consulting the Board and places notice in the Gazette. Ms van Schoor asked Ms Dudley if she would be satisfied if "Minister" was deleted from 26(1)(b).

Mr Oliphant wanted an explanation for what that would mean in practise. Dr de Waal explained that Clause 26 related to financial security of holders of nuclear installation licences. It was up to the Minister of Minerals and Energy and the Minister of Finance to determine the level of financial security. The Minister had the power to increase or decrease the level of financial security. In addition, the Minister could discharge a holder from financial security.

Ms Dudley (ACDP) referred back to her question regarding notice in the Gazette. She pointed out that it is still being left out. Ms van Schoor recommended to change section 26(1)(b) to include the Gazette and take out 26(2) because it will not be needed. She also recommended changing the wording to make it sound better. It was agreed to flag this issue so that the State Law Advisors could work on the wording of the Clause.

Mr Bruce (DP) asked if compensation is more under COIDA or under this act. In addition, he asked if Clause 27(5) could be reworded so the compensation from COIDA would lapse. Mr Davidson (DP) added to Mr Bruce's comments by saying that that the whole Clause should be removed because by introducing COIDA in nuclear installation they are introducing discrimination on the level of damage. This issue was flagged for the Department to consider further.

There was no debate on Clause 28.

Mr Davidson asked about Clause 29. He asked the Department whether they had thought through the consequences of this Clause. He used the example of an accident on a mine, which results in someone being injured by inhalation of radium. That individual will have to establish intent or negligence in order to make a claim. Mr Davidson wanted to make sure this was accurate.

Dr De Waal explained the different categories and reasons why they had chosen strict liability. Firstly, nuclear installations have strict liability for the public and the workers because of their potential for serious accidents. Nuclear vessel licences have strict liability for the same reason. However, for holders of a certificate of registration, where facilities do not have potential for lethal exposure they have provided COIDA for workers and the common law applies to the public. Dr De Waal explained that there is no justification for strict liability for the public in terms of certificate of registration. Mr Davidson responded that the international community was going toward removing common law from liability. Dr De Waal was not aware that this was happening.

Mr Mokoena explained further that they needed to make judgement calls when it came to liability. They had to choose when the common law, COIDA, or strict liability applied. Where there was no potential for a catastrophe, like in the mines, then they chose the common law. The Committee agreed to flag this issue for further consideration

There were no debates on clauses 30 and 31. Clause 32 was flagged because it has the same problem with including COIDA. The Committee agreed to clauses 33, 34, and 35.

Mr Oliphant (ANC) asked if there was a time restriction in Clause 36 on how long records are kept. Dr De Waal was not aware of a specific time restriction but he would look into the issue.

There were no debates on Clause 37.

Mr Oliphant (ANC) wondered why "no authorised person" was used in Clause 38 and "no person" was used in Clause 36. Ms van Schoor explained that even though they were worded differently they meant the same thing. Clause 38, she said, was just a little wider than Clause 36. Mr Oliphant (ANC) wanted to reserve the right to revert back to this Clause. Ms Dudley (ACDP) suggested that the Committee should revert to using simple language. The Chairperson asked the Department to look into changing the language and gave Mr Oliphant the right to revert back to Clause 38.

Mr Bruce moved ahead and raised a concern regarding Clause 46. He pointed out that one purpose of redrafting South Africa's nuclear legislation was to change what was done under Apartheid. Mr Bruce felt that this Clause reflects a type of Apartheid legislation where rules are being imposed that are more severe than in ordinary transactions. Dr De Waal pointed out that this is a security issue where facilities have to be protected from terrorism and threats. Mr Bruce agreed that there was a need for physical security but not for information security where the information is with held from the public.

Mr Mokoena understood Mr Bruce's concern but he reminded the Member that they are dealing with material that has the potential for damage. He pointed out that even the International Atomic Energy Agency safe guards are limited to a certain extent. Mr Bruce still referred to the Clause as Apartheid legislation. Mr Oliphant (ANC) disagreed because it was dealing with serious issues of security. He asked the Member to propose an amendment if he had a problem with the Clause.

There were no debates on clauses 39 or 41. Clause 42 was accepted along with the Further Proposed Amendments to the Nuclear Regulation (Appendix 3). Mr Davidson (DP) was satisfied that these changes provided for a trigger mechanism for the Minister of Minerals and Energy to consult with the Minister of Environmental Affairs and Tourism in case of a dispute. Mr Davidson has requested this be done in previous meetings.

There were no debates on clauses 41, 43, 36, 45, and 47.

Mr Louw (ANC) informed the Committee that the Friday morning meeting was called off. The Committee would be sitting on both Monday 25 and Tuesday 26. The formal consideration of the Nuclear Bills would take place during these meetings. The Committee would like to have the Bills ready for debate in the Chamber by Thursday.

These minutes have been supplied by Contact

Appendix 1
PARLIAMENTARY PORTFOLIO COMMITTEE: MINERALS AND ENERGY (21 OCTOBER 1999)
NUCLEAR REGULATOR BILL
EXPLANATORY NOTE REGARDING LIABILITY AND COMPENSATION FOR NUCLEAR DAMAGE

The proposals on liability and compensation in the Nuclear Regulator Bill (Chapter 4) are based on the principles as given in the document "Liability and Compensation for Nuclear Damage, An International Overview", 1994, published by the Nuclear Energy Agency, Organisation for Economic Co-operation and Development. The following aspects addressed in the document are discussed:

Page 21 Origins
Page 22 Strict liability
Page 23 Exclusive liability
Page 24 Compulsory Financial Security
Page 25 Limits on Liability
Page 25 Time limits
Page 26 Role of the State
Page 27 Scope of Special Liability Regime

Origins
In the mid-195Os, the governments of many industrialised countries viewed the development of nuclear power as a possibly limitless source of indigenously-produced energy that would enable their economies to develop rapidly and then usher in a new era of prosperity. However. fears of financially devastating liability claims in the event of an accident were inhibiting investments by potential nuclear operators and were causing suppliers and construction companies to refuse to accept contracts. For, under the ordinary law, both operations and suppliers would he subject to unlimited liability in the case of an accident.

The report "Theoretical Possibilities and Consequences of Major Accidents in Large Nuclear Power Plants" published by the U.S. Atomic Energy Commission in March 1957 estimated that damage meet from an accident could reach up to 7 billion dollars. Furthermore, the report concluded "An inherently stable reactor is not completely immune to destructive runaways" In these circumstances, the reluctance of industrialists was understandable The investment required would be considerable, and the losses even greater.

Above all. governments were concerned to protect operators from massive liability claims that could destroy their enterprise and put them into bankruptcy. Yet. at the same time, governments were also conscious of their responsibility towards the welfare of their citizens and of the need to ensure (hat that they would be properly protected in the case of an accident. In the case of a catastrophe, thousand of people could be injured and their property contaminated. Some means had to he found to compensate the victims, without destroying the enterprise.

These conflicting interests, the benefits to the economy that might accrue [from' the development of nuclear power, the avoidance of ruinous claims for damages, and the need to protect the population , all had to be reconciled. Governments sought a solution that would encourage the development of the nuclear industry by removing the legal and financial impediments at the same time as providing adequate compensation for any damage.

Strict Liability
From the beginning, there was no doubt that the nuclear industry was a perfect example of the sort of activity in which the concept of strict liability for risk should be applied. Governments, jurists, operators and insurance companies all agreed. Due to the unusual hazards posed by nuclear activities. it was acknowledged that permission to operate nuclear installations could not be granted unless the operator agreed to accept full responsibility for any injurious consequence. For, despite the utmost precautions an accident could always occur and it was only just that the cost should be borne by the person who created the risk and not by the innocent victim.

Therefore, in all nuclear liability legislation (except that of the United States; see Chapter VII), the basis of liability is not fault, but strict liability for risk. Strict liability relieves the victim of the burden of proving fault or negligence. requiring the payment of compensation on mere proof of a causal link between the damage and the nuclear accident in issue. Since it would be virtually impossible for any victim to have detailed knowledge of what had taken place in the nuclear installation or in the course of the carriage when the accident occurred, strict liability is necessary for justice.

Channelling and the Exclusive Liability of the Operator
At the initial stages of the development of the nuclear industry. suppliers and construction companies were afraid that excessive liability claims would ruin their business. For. under the common law, the suppliers or construction companies would he liable if an accident resulted from their fault or negligence. As a consequence, to encourage such companies to become operative in the nuclear field, governments introduced into their legislation the concept of "channelling" all liability to the operator. That is, the operator would he liable regardless of whose acts or omissions were the actual cause of the accident.

Compulsory Financial Security
In order to ensure that funds would actually be available to pay the claims, the provision of some kind of financial security was made compulsory. Usually, this security would be furnished in the form of third party liability insurance, hot it could also be a bank guarantee or a form of self-insurance. In some countries a guarantee or indemnity is provided by the State.

The desire to protect the nuclear industry and the necessity of relying on insurance required both monetary and temporal limits on compensation. Although capacity for nuclear insurance has expanded greatly since the earliest times when insurers were uncertain of the risk, it still remains limited. Governments have generally been careful to stipulate a financial guarantee that does not exceed the capacity of the insurance industry, and for which the premiums would not he beyond the means of the operators to pay.

Limits on liability
In the general law on liability there is no limit on the amount of compensation payable for damage caused by an accident: the person liable will have to pay the full amount, albeit within certain parameters related to the proximity of the causation. However, in the nuclear field. for the reasons outlined above - the desire to encourage the nuclear industry and to relieve operators of the'1 burden of ruinous liability claims - most laws on nuclear liability provide for a limit on liability. which means a limit on the compensation payable in the case oft an accident

Time limits
For reasons of certainty, insurance companies have also limited their coverage in time, to not more than ten years from the date of the accident. Neither the insurance companies nor the operators could tolerate the prospect of remaining liable to pay compensation for an extended period of time, even knowing when a claim might suddenly arise.

The Role of the State
Even before an accident occurs, the State has an important role to play in setting the conditions of the holding of financial security by the operator and ii' ensuring that the security is maintained. In some States, the security is a State guarantee or is backed by a State guarantee, meaning that if the security fails (or example. through the bankruptcy of the insurance company), the State will provide the funds required. In addition, this is required under some of the international conventions.

Given the various limitations on the liability of the operator outlined above, the question arose of how to fully compensate the victims in case the operator's liability were ineffective or insufficient. In the view of most commentators, and governments, the obvious answer was that the installation Slate should intervene. There were (our basic reasons for this. First, the State was responsible for deciding to permit nuclear activities to he carried out in the first place. Furthermore, the State was responsible for supervising nuclear activities and for ensuring that they were conducted in the safest possible manner.

Third, the State was generally responsible for the welfare of its citizens, and for this reason customarily provided assistance to them in the event of natural disasters, such as floods or earthquakes. Hence, it was only natural to suppose that the State would intervene in the case of a nuclear accident, to occur the victims and to compensate them for the injury and damage suffered beyond the limits of the operator's liability.

Fourth, compensation by the State would amount to a social spreading of the risk in the interests of national solidarity. For, although the operator benefits from his activity financially through taking profits. the general population would also benefit from the electricity produced by a nuclear power plant or from the knowledge acquired through the use of a research reactor. If the State directly compensated the victims, the entire population would do so indirectly through the payment of their taxes, Since the entire population would have benefited from the activity. it would be unfair for only a proportion of them to bear the costs of the inevitable damage.

Hence, in most national legislation, the State is required to compensate the victims if the claims exceed the limit of the operator's liability. Furthermore, in many national laws, the Slate will pay for the damage if the operator is exonerated, and in some, it will pay compensation for claims arising beyond the limitation period. As noted above, such intervention is only to he expected, due to the State's responsibility for the welfare of its citi7ens and the principle of national solidarity.

Finally, in certain States, the government will itself organise or control the process of compensation in particular, if the cost of the damage exceeds the operator's liability limit. Further details on State intervention are provided in Chapter V.

Scope of the Special Liability Regime
The special liability regime for nuclear activities outlines above applies only to "nuclear installations" in which highly dangerous processes are carried on, such as reactors used in nuclear power plants, research reactors, factories for the manufacturing or processing of nuclear substances, factories for the separation of isotopes of nuclear fuel, and factories for the reprocessing of irradiated nuclear fuel. There processes are complex and hazardous in themselves, as well as involving nuclear materials which may react in such a way as to cause a major catastrophe.

Appendix 2
PARLIAMENTARY PORTOLIO COMMITTEE MEETING ON 20 OCTOBER 1999
DEPARTMENT OF MINERALS AND ENERGY STATEMENT ON THE APPLICATION OF THE NUCLEAR REGULATOR BILL TO MINES

Arising from the proposed amendment to delete Clause 2(2)(e), the mining industry is no longer excluded from the Bill. Therefore ALL of the provisions of the Bill, where applicable, apply to mines.

The different activities that require nuclear authorization are
- nuclear installations
- nuclear vessels
- other actions involving radiation, including mines

The Bill defines certain facilities within the nuclear fuel cycle as nuclear installations. These facilities involve highly dangerous nuclear materials and processes, which have a potential for serious accidents involving lethal exposures or nuclear reactions with catastrophic consequences. Nuclear installations operate under nuclear licences.

Mines, on the other hand, do not involve highly dangerous nuclear materials and processes, which have a potential for serious accidents involving lethal exposures or nuclear reactions with catastrophic consequences. Mines therefore will operate under certificates of registration.

Technically, the start of the nuclear fuel cycle is the excavation and processing of ore containing uranium. However, it is only in subsequent stages of the nuclear fuel cycle that accidents involving lethal exposures or nuclear reactions with catastrophic consequences can happen. Therefore it is necessary to exclude from the definition of a nuclear installation the facilities that involve the excavation and processing of ore.

Despite the above, the Bill also makes provision in Section 2(3) for the Minister to declare ANY facility to be a nuclear installation if required for reasons of safety. The previous proposed amendment to Clause 2 (page 5, paragraph 4) which limited this provision in respect of mines will be deleted.


The Nuclear Regulator Bill therefore does not exclude mines from its provisions.

Appendix 3
PARLIAMENTARY PORTFOLIO COMMITTEE: MINERALS AND ENERGY (21 OCTOBER 1999)
FURTHER PROPOSED AMENDMENTS TO THE NUCLEAR REGULATOR BILL
1 On page 6 of the proposed Amendment Document in the proposed Clause 6(3), after "must", to insert "after consultation with the board"
2 On page 40 of the Bill, in line 38, after "may," to insert "after consultation with the board and"