Cost Recovery Advisory Group
Canadian Nuclear Safety Commission (CNSC)
Cost Recovery Advisory Group
Minutes of Meeting
December 7, 2006
Members in Attendance:
Canadian Nuclear Association
Tony Farr (for Imtiaz Malek) - Ontario Power Generation
Lori McLinton-Lazier (with Tony Farr) – Ontario Power Generation
Peter Risteen - Bruce Power
Uranium Processing Facilities and Uranium Mines
John Jarrell – Zircatec (for Lloyd Jones) and Cameco Corporation
Nuclear Substance Processing
Jackie Kavanagh (for Lloyd Hillier) - MDS Nordion
Gerard Strugala – Pharmalogic
Canadian Industrial Radiography Safety Association
Rick DeBruyn – Aztec Inspection
Canadian Council of Independent Laboratories
Stephen Walker – John D. Paterson & Associates Limited
Nuclear Substances and Prescribed Equipment
John Dyer – Nomad Inspection (industrial radiography)
Trevor Beniston (for Stuart Hunt) – Stuart Hunt & Associates (servicing, etc. radioisotopes/calibration)
Jeanne Richardson - Schlumberger Canada Ltd. (oil and gas exploration)
Jean St. Pierre – Jacques Whitford Limited (Portable gauges)
Rick Robichaud – Bretech Inspection (NDT) Ltd. (Nondestructive Testing Management Association)
Jim Clarke - Chair
Introduction and Opening Remarks
J. Clarke opened the meeting by reviewing the current Cost Recovery Advisory Group (CRAG) membership which is posted on CNSC website. It was noted that the CRAG membership has changed quite a bit since last year. New members are Rick DeBruyn (Canadian Industrial Radiography Safety Association), Stephen Walker (Canadian Council of Independent Laboratories), Gerard Strugala (Accelerators), Jeanne Richardson (oil and gas exploration) and Imtiaz Malek (Nuclear Reactors). With the new representation from the Canadian Industrial Radiography Association and the Canadian Council of Independent Laboratories, CNSC took this opportunity to review the nuclear substances and prescribed equipment membership. Taking into account members’ past participation, Richard Flanagan and Remi Vachon were informed that their involvement in CRAG was no longer required. In addition to this, John Vanier recently submitted his resignation to CRAG. It has yet to be determined whether this position will be filled.
J. Clark took this opportunity to remind CRAG members of their responsibility in participating on the CRAG. A member of CRAG represents an industry, type of facility or user group. It is expected that CRAG members will have consulted with those they represent and in turn get back to them following meetings, where possible.
Status of Last Year’s Action Items
J. Clarke summarized the status of the action items raised at last year’s meeting. CRAG members had no comments.
Looking over the Past Year
Members were invited to provide comments or identify issues that have arisen over the past year with respect to CNSC cost recovery. No comments or issues were raised.
Operational Management of Cost Recovery
Performance Measurement Update
K. Pereira made a presentation on Performance Measurement Update.
A high level overview of CNSC performance measurement framework was described, outlining how effectiveness (outcome measures) and efficiency (performance standards) are measured. The results for 2005/06 outcome measures and the targets for 2006/07 and performance standards can be found in CNSC 2005/06 annual report and the Departmental Performance Report (the annual performance report tabled in Parliament in October of each year).
Regulatory Activity Plans
K. Pereira made a presentation on Regulatory Activity Plans (RAP). Since last year’s meeting the CNSC has worked on strengthening communications and continues to work on improving in this area. CNSC’s goal continues to be to minimize “surprise bills”. At last year’s meeting there was a suggestion made that RAPs or components of them could be posted on CNSC website. This suggestion was considered and it has been decided not to do this, as RAPs are considered to be a matter of concern between the regulator and the individual licensee.
CNSC has decided not to proceed with the two cost recovery changes proposed at last year’s CRAG meeting for power reactors. Further evaluation is required with respect to the proposal to change how the indirect costs that are common to all power reactors are distributed, to take into consideration the impact of new builds. In addition, upon further review, it has been established that the other proposal to include management and administration time into the direct cost would require changes to the CNSC Cost Recovery Fees Regulations and therefore will not be implemented at this time either. While CNSC will not be going forward with last year’s proposed changes there are some changes that will be implemented for power reactors for the current fiscal year. New builds will be included so that they equitably support their portion of indirect efforts that are common to all power reactors (e.g. cost of regulatory documents, research and support). CNSC will continue to review existing costing methodology to ensure that the fees charged are equitable and more predictable.
A CRAG member asked for clarification on what feedback on fees they can expect for fiscal year 2007/08. CNSC explained that the benefits of the tools that they are currently implementing will start to be realized in fiscal year 2007/08, when mid-year actual costs will be able to be provided to licensees. CNSC recognized that providing actual costs is a first step towards providing regular revised estimates or forecasts to licensees. Another CRAG member was glad to hear that CNSC is working on better feedback on fees, as they received a “surprise bill” and they would not like this to happen again. This CRAG member said that they would like mid-year costs to be provided by the end of the calendar year for their own internal budgeting purposes.
Action: CNSC to provide actual mid-year costs to licensees for the fiscal year 2007/08 and to report back at the next CRAG meeting on the status of licensee feedback on fees.
CNSC pointed out that it is striving to find the right balance with the level of planning. Increased efforts in planning do not necessarily result in more accuracy in the estimated fees as there will always be a reactive and licensing component to the plan that is difficult to pin down. As a result, CNSC is currently striving to plan at a higher level.
While one CRAG member complemented the usefulness of the RAPs, another CRAG member said that they do not find RAPs to be very useful, as it does not give them a breakdown of the direct and indirect costs, to allow them to judge what is fair and what is not. CNSC responded by saying that it is continuing to work on its planning and it would hopefully be able to provide a better breakdown in the future.
A CRAG member wanted clarification on how indirect costs were currently assigned to power reactors. A. Joannette explained that currently most indirect costs are allocated to the 4 power reactor licensees in the same proportion as direct costs. CNSC is currently evaluating various options with the goal of ensuring an equitable distribution of all indirect costs.
CRAG members were invited to send J. Clarke any further questions or concerns over the allocation of indirect costs for power reactors.
A CRAG member wanted to know the impact and timing of cost recovery for new builds. I. Grant said licensees have been given an initial ballpark estimate on the fees expected for this year. Most recently, a new CNSC division has been created to address new builds and will be responsible for developing the appropriate RAPs. It was explained that planning is in the early stages and further refinements will take place as we move forward.
Compliance Coefficient Update
R. Jammal made a presentation on the Compliance Coefficient Update and Cost Recovery. Definitions and results of Type I and II inspections were explained and compared. Type I inspections are more detailed and complex and involve more resources. The biggest problem with the Type I inspections is the time it takes to close a non-compliance issue. The extra regulatory effort on the part of CNSC staff to follow up on these non-compliance issues can be costly.
A CRAG member suggested that licensees are not receiving enough education and questioned whether CNSC has statistics to compare the performance of professional and contracting firms. R. Jammal said that he wouldn’t get into statistics here but the results are not as one might expect.
A CRAG member asked if the compliance coefficient is still one. R. Jammal said that yes, it was still one and he reminded members, as explained last year, that the compliance coefficient will be based on the actual extra regulatory effort spent on a particular licensee (not to a user group as a whole, as originally proposed). CNSC is currently collecting further information on individual licensees and is hoping by mid fiscal year 07/08 to be in a position to implement the compliance coefficient.
A CRAG member wanted to clarify that licensees are not paying for the training of new inspectors. R. Jammal confirmed that this cost was absorbed by CNSC.
A CRAG member wanted to know if the sealed source tracking system was under cost recovery. R. Jammal said that it was currently under development, but that eventually the sealed source tracking system would be cost recovered.
R. Jammal invited CRAG members to discuss issues they had with the sealed source tracking system with him outside of the CRAG meeting.
Report on International Regulatory Review Team Mission
J. LeClair made a presentation on the IAEA Regulatory Review Services (IRRS) and CNSC. The key objectives, history and status of the IRRS and CNSC were summarized, including the status of the Corrective Action Plan (CAP) resulting from the Self-Assessment conducted in May 2006. The CAP identifies five major projects. The challenge will be to integrate all of these projects to maximize the benefits and CNSC resources.
Overview of the CNSC Management System
J. LeClair made a presentation on the Management System. An overview of the quality council, measures of success, projects and status were provided. Next year it is expected that CNSC will be able to show significant progress on management system initiatives.
Action: CNSC to include a report on CNSC Management System on next year’s CRAG agenda.
Review of OAG Financial Audit of Costing Methodology
A. Joannette made a presentation on CNSC Annual Finance Audit.
The Office of the Auditor General (OAG) audit results of the CNSC’s costing methodology for fiscal year 2005/06 were that CNSC has complied with the CNSC Cost Recovery Fees Regulations. For fiscal year 2004/05, there was however, the opinion that CNSC needed to continue to improve its ongoing monitoring of the actual full costs of activities. The OAG has looked at what CNSC has initiated since last year and is satisfied with the progress it has made.
A. Joanette made a presentation on CNSC Financial Update.
A CRAG member wanted to know why for the 2005/06 actual cost of operations there was zero cost associated with exposure device operator certificates. R. Jammal explained that these certificates were in fact administered by Natural Resources Canada and that CNSC only assigns 0.012 FTE (Full Time Equivalent) towards this.
A CRAG member wanted to know the status of the hourly rate. A. Joanette replied that the hourly rate is $200/hour and he does not foresee a change in that.
A CRAG member wanted to know what percentage CNSC cost recovers. A. Joanette explained that the CNSC recovers about 65%. As agreed, further clarification on recovered and non-recovered activities is explained in these minutes below.
Recoverable activities are those that provide licensees with tangible benefits, such as the legal right to develop, possess, use, transport and produce nuclear energy or nuclear substances and prescribed equipment. Licensees may also realize economic benefits from CNSC regulatory activities in the form of reduced risks and liability, improved market access for their products and services, enhanced credibility as suppliers and enhanced public confidence in the nuclear sector.
Recoverable activities performed on behalf of exempt licensees will be paid from the general revenues of the Government of Canada. Section 2 of the CNSC Cost Recovery Fees Regulations lists
those to which the regulations do not apply.
Licensing, Certification and Examination
Licensees obtain legal right to operate commercial business
Regulatory Policies, Standards, Guides, Procedures and Notices
Guides and standards written for use by licensees and certificate holders for assistance in meeting regulatory requirements under the Nuclear Safety and Control Act (NSCA) and its regulations
Contract projects undertaken at the request of an outside entity for the direct benefit of that entity
Non-recoverable activities are those that are result from CNSC obligations that are carried out regardless of the licensees, such as international obligation and cooperation and the maintenance of legislation and regulations. The costs for these activities are paid from the general revenues of the Government of Canada.
International Obligation and Cooperation
Fulfillment of the federal government’s international nuclear policies and obligations
Development and Maintenance of Legislation and Regulations
Development and amendment work to the NSCA and its regulations to protect health, safety, security and the environment and respect Canada’s international commitments on the peaceful uses of nuclear energy
Sharing information with other federal and provincial bodies including clarification of roles to avoid or reduce regulatory overlap
Provision of information to the public
Dispute Resolution Mechanism
A. Joanette made a presentation on the Dispute Resolution Update.
A CRAG member wanted to know if the independent dispute resolution mechanism identified in the User Fees Act was used by CNSC and whether it applied to other Canadian regulatory departments and agencies.
J. Clarke said that he could not speak on behalf of other regulatory departments or agencies but that CNSC has been and is using its own dispute resolution mechanisms (DRM_REG.pdf and (DRM_FEES.pdf). In CNSC’s case, an independent dispute resolution approach could involve questioning the regulator’s discretion on the allocation of time and resources required for regulatory oversight, and thus could infringe upon the independence of the Commission. This could conceivably introduce limitations on CNSC’s ability to protect the public.
A CRAG member wanted to know if the disputes have been resolved to the satisfaction of the licensees. CNSC responded that, yes, to the best of our knowledge that the disputes have been resolved to the satisfaction of the licensees. Disputes resolutions have mainly involved misinterpretations and the need for clarification on various issues.
A CRAG member said that they would like to see performance standards for Environmental Assessments (EA). It was acknowledged that this was raised last year and the CRAG member would like to see at least parts of EA looked at from the point of view of performance standards.
Action : J. Clarke said that he would pass this comment along to P. Thompson, Director General, Directorate Environmental Assessment and Protection and will keep CRAG members informed of any developments in this area.
A CRAG member commented that they noticed an inconsistency between different Regulatory Activity Plans. It is perceived, from their point of view, that cost recovery is simply an allocation of resources rather than management making risk informed decisions on the activities that need attention.
A CRAG member wanted to know the status of the amendments to the Rules of Procedure. J. Clarke explained that amendments to the Rules of Procedure are under development and consultation on the proposed amendments will occur in 2007.
J. Clarke took this opportunity to thank all CRAG members who submitted comments on the Terms of Reference. All comments received will be taken into consideration and that the Terms of Reference will be submitted to CNSC Executive Committee for approval in the near future. Once the Terms of Reference is approved CRAG members will be informed and it will be posted on CNSC website.
Action: CNSC to inform CRAG members when the Terms of Reference is approved and post it on CNSC website.
Action: All CRAG members are invited to send follow-up notes to J. Clarke outlining any outstanding issues between now and the next meeting.