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1985 Report of the Auditor General of Canada

Overview

8.1 The Atomic Energy Control Board (AECB) was established in 1946 to make provision for control and supervision of the development, application and use of atomic energy for peaceful purposes, and for effective participation in measures of international control of atomic energy. The mandate was broad but skeletal - an inevitable consequence of the limited knowledge of the subject matter and the international situation at the time.

8.2 The Board, consisting of five persons appointed by the Governor in Council, is assisted by 260 staff persons in the AECB. The Board has delegated some regulatory authority to the AECB staff.

8.3 Health and safety concerns. In 1959, the responsible Minister, in a reassessment of the Board's role, indicated it would assume increased responsibility for the health and safety of workers and the public.

8.4 In 1960, the regulations were amended to give the Board powers, for the first time, to control the health and safety of atomic energy industry workers. Since then, they have been expanded in detail many times. There are now regulations aimed at limiting the risks to the health and safety of workers and the public for most areas of the atomic energy industry. For example, there are regulations for nuclear powered electricity generating stations, nuclear research facilities at universities, radiation treatment facilities in hospitals, radiographic use of nuclear sources in industry, uranium mining and refining, heavy water plants and radioactive waste disposal. There are also regulations for the transport packaging of radioactive materials and the physical security of nuclear facilities. The accompanying photographs show a spectrum of Board regulatory responsibilities.

8.5 Safeguards and non-proliferation. A major continuing purpose of the AECB has been to participate in measures of international control of atomic energy to prevent the spread of nuclear weapons. Canada has signed the Treaty on the Non-proliferation of Nuclear Weapons that came into force in 1970; non-proliferation is pursued by monitoring the peaceful uses of atomic energy to detect whether nuclear materials are being diverted to nuclear weapons or other nuclear explosive devices. If diversion is detected, sanctions can be applied. Pursuant to the Treaty, Canada has an agreement with the International Atomic Energy Agency (IAEA), whereby Canada will establish controls over nuclear materials, and IAEA is authorized to inspect Canadian facilities to ensure that these materials are properly accounted for and thus not diverted. AECB is responsible for administering Canada's obligations arising from the agreement.

8.6 AECB is the technical administrator of several nuclear co-operation agreements signed with Canada's nuclear trading partners. These co-operation agreements require the recipient country to permit IAEA inspections of Canadian-supplied nuclear materials and equipment. In accordance with Canada's nuclear policy, AECB also regulates exports of prescribed nuclear materials, equipment and technology.

(Photos not available)

8.7 Status of legislation. The legislative framework within which the AECB exercises regulatory control was established in 1946 and has remained basically unchanged since that time. In 1976, the Law Reform Commission reported that the Atomic Energy Control Act was outdated. In 1978, a bill proposing a revised version of the Act died on the order paper when Parliament prorogued. Some groups have criticized the AECB in recent years; for example, the Select Committee on Ontario Hydro Affairs, a B.C. Royal Commission on Enquiry into Uranium Mining, and the Cluff Lake Board of Enquiry in Saskatchewan. In our opinion, it appears that many of their criticisms are actually directed at perceived deficiencies in the legislation. The following are some of the perceived weaknesses in the current legislation:

- There is a perception of potential conflict of interest in the use of part-time Board members who belong to institutions or organizations that are licence holders or that have commercial relations with licence holders.

- There are currently some unresolved jurisdictional conflicts among the various involved regulatory agencies at the federal and provincial levels. Some industry representatives consider there are too many regulatory agencies involved.

- For a number of years there was a lack of clarity as to whether Crown corporations, for example Atomic Energy of Canada Limited and Eldorado Nuclear Ltd., were subject to AECB regulation. In recent years, AECB has taken the position that it has the mandate to regulate such corporations, and we were informed that no substantive challenge to its authority has resulted.

- In some other regulatory situations, Parliament has passed laws specifying, for example, the factors that are to be considered in setting standards. Or Parliament's laws may indicate that public hearings are to be held, what process should be used and whose opinions should be considered in coming to regulatory decisions. The current legislation provides no guidance to the AECB on such matters.

- In some other regulatory processes, there is provision for the appeal of decisions; there is no such provision in the current Act or regulations, except for appeals to the Board itself.

- Waste management - storage and disposal - is a growing and long-standing problem that remains to be resolved. The technical aspects of the problem seem, at least to some informed people, to be addressed adequately by current research efforts; however, the resolution is complicated not only by technical difficulties but also by jurisdictional matters.

Audit Scope

- design, construction, operation, maintenance and decommissioning of electric power generation reactors;

- construction, operation and decommissioning of uranium mines, refineries and fuel fabrication facilities;

- transport packaging of radioactive materials;

- radioactive waste management;

- operation of heavy water production facilities;

- radioisotope use in both medicine and industry including agriculture; and

- construction and operation of accelerator and research reactor facilities.

8.10 As part of our annual work, we reviewed the Board's financial affairs and gave an audit opinion on the financial statements presented in its annual report. In addition, we examined the Board's key administrative support systems and controls.

Observations and Recommendations

Licensing, Inspection and Enforcement Processes

8.12 Current regulations require that any person or organization wishing to produce, mine, refine, process, sell, use or export prescribed substances and devices or equipment containing radioactive substances, or operate a nuclear facility for the production of heavy water or nuclear energy in Canada, is required to obtain a licence from the Board. Before issuing a licence, the Board requires the person or organization to provide sufficient information to show that required health, safety and security standards will be met and maintained, and that the effluents and wastes will be managed satisfactorily. AECB defines the standards that must be met (such as radiation exposure limits, effluent discharge rates and volumes, and transportation container characteristics), assesses the capabilities of the potential licensee to meet and maintain the standards, and then may issue a licence, subject to certain conditions, for a specified period of time.

8.13 Inspections are conducted by AECB inspectors to determine whether regulated standards are being met and that all license conditions are satisfied.

8.14 Procedures call for reports to be written for each inspection, except for selected routine inspections carried out by resident officers at nuclear power stations. If corrective action is needed, procedures call for various forms of follow-up by AECB personnel.

8.15 Health and Welfare Canada operates a registry of cumulative worker doses and exposures to radiation. Workers who have received radiation doses or exposures in excess of the regulatory limit must be removed from work; once removed, they may return to work only with Board approval.

8.16 Observations. In each area of Board responsibility we found well defined licensing, inspection and enforcement procedures. In general, the procedures were extensively documented. However, in the areas of major power reactor inspections, uranium mine inspections and radioisotope use, licensing documentation is not yet complete. We reviewed a sample of files from each area and found the defined procedures were followed.

8.17 The frequency of inspections is guided by the knowledge and experience of the licensee, the results of earlier inspections of the performance of the licensee, the risks involved, etc. For example, for large power reactors, there are several on-site inspectors. In the Elliot Lake underground uranium mines, there are several inspections each week. In the Saskatchewan open-pit mines, there are several inspections a year. Users of slightly radioactive radioisotopes might be inspected once in three years.

8.18 Inspection reports are often widely distributed - copies can be sent to other regulatory agencies, licensee management and labour representatives as well as to designated AECB staff.

8.19 In all the areas for which inspection reports are written, we found that procedures for follow-up of non-complying situations were followed. For example, special follow-up inspections are done where relatively significant deficiencies have been found. Otherwise, follow-up can be by mail, and corrections verified on the next scheduled inspection. Education and persuasion are the preferred approaches to ensuring compliance, although prosecution is used occasionally.

8.20 Individual exposure. Since 1951, the Radiation Protection Bureau of Health and Welfare Canada has maintained a national registry of reported dosages of radiation received by radiation workers. The register includes workers exposed to ionizing radiation, whether the source is X-rays - which are in provincial jurisdiction - or radioisotopes, nuclear reactors or accelerators - which are in the federal jurisdiction. About 60,000 of the 300,000 people in the national registry are exposed to radiation sources in the federal jurisdiction.

8.21 Atomic Radiation Workers are those persons who in the course of their employment may be exposed to ionizing radiation in excess of a regulatory level. Most of these people wear individual dosimeters which are read periodically and the results recorded in the national registry.

8.22 When a person's registered dose or exposure exceeds a specified level, the AECB is informed. The AECB action depends on the seriousness and is governed by established procedures.

8.23 The AECB has not carried out any regular or detailed analysis of the data in the national register. It has assessed and analysed the dose distribution among the employees of major licensees on the basis of annual reports submitted by the licensees. This assessment and analysis should be extended to include the entire population of Atomic Radiation Workers; it would be useful in identifying sectors or employers where there was more exposure than was reasonable even though still less than the regulatory limit. Trends in exposure could also be identified. To do such analysis, it is our understanding that minor modifications in AECB's reporting requirements would be needed. The Board might also need to employ a person skilled in statistical or epidemiological analysis. Retrospective health effect assessments would be made easier if such analyses were available.

8.24 Conclusion. Other than the limitation in the analysis of the personal dosage data in the national register, we found no significant weaknesses in the administration of the Board's licensing, inspection and enforcement processes.

Regulatory Framework

8.26 The AECB uses a co-operative, co-ordinated approach in creating its regulatory framework. In this approach, the Board, as the principal federal regulatory agency, invites appropriate federal, provincial or municipal agencies to participate. Public interest groups, industry and unions may also participate. The Board has adopted the philosophy that it will not be the primary regulator of non-nuclear health and safety matters where there exists another agency which has the necessary capability and is exercising its jurisdiction at non-nuclear facilities. For example, a provincial ministry of labour often has responsibility for conventional occupational health and safety issues in industrial facilities within that province. To avoid having to acquire the capability in the AECB or in Labour Canada, the Board may sign an agreement with the provincial ministry to have the provincial inspectors apply provincial occupational health and safety regulations in nuclear facilities.

8.27 Special arrangements can be made to give the force of law to any such provincial regulations. For example, the Ontario Mining Regulations are incorporated into the Atomic Energy Control Regulations by referring to them. Alternatively, a Memorandum of Understanding may be signed by the two agencies to record the role of each agency, although such an arrangement is not legally binding. We noted some cases where neither type of arrangement has been completed.

8.28 Regulatory update. A very important task of a regulatory agency is to review and update the regulatory framework through which it exercises control. The purpose of the review and update is to ensure that its regulatory objectives are still appropriate and are being achieved with a minimum of regulatory burden. The outputs of this review process are new or revised regulations.

8.29 In 1978, the Government introduced a requirement that major new or revised regulations be preceded by a socio-economic impact analysis (SEIA) designed to determine whether the costs of regulation are likely to exceed the benefits. A SEIA is designed to forecast the effects of the proposed regulations or revisions on market structure and market efficiency, distribution of income, regional balance, technological progress, employment and inflation. The purpose of this policy is to promote a more thorough and systematic analysis of the impact of new or modified regulations and to provide an opportunity for increased public participation in the regulation-making process.

8.30 The first step in a SEIA is a screening exercise to determine whether the regulation is likely to have a minor or major socio-economic impact. If the costs are forecast to be greater than $10 million, the regulation is deemed to be major and a full SEIA is done. Alternatively, if a specific group will be heavily affected, or the public at large affected significantly, a full SEIA can be called for. If the impact is deemed minor, the SEIA process is terminated at the screening stage.

8.31 Observation. The AECB has done screening exercises for several draft regulations but has not yet done a full SEIA. In this regard, it is operating in compliance with government practice on SEIAs. However, our review of several cases indicates that the government practice on SEIA may not be completely appropriate for application to all sectors and components of the industries regulated by the Board.

8.32 For example, consider the proposed Uranium Mining Regulations that were developed following extensive discussions among the Board staff, Elliot Lake uranium mine operators and union representatives. A screening exercise was done that found the effect of the draft regulations not to be "major" and thus not meriting a full SEIA. On the other hand, industry representatives have indicated to us that in their opinion the conclusion of the screening exercise was wrong because it used inappropriate criteria and methods of analysis. Their view is that the Mining Regulations will have a major impact on the Elliot Lake mining operations and that a full SEIA should be done. At the time of the audit, we were informed that the industry had not clearly communicated its view on this matter to the Board.

8.33 The AECB should develop criteria and analysis that are appropriate for determining the need for socio-economic impact studies in each particular sector of the atomic energy industry that it regulates.

Safeguards and Non-proliferation

8.35 International safeguards. When a country is committed to non-proliferation and international safeguards, it will sign an agreement with the International Atomic Energy Agency. It thereby undertakes to create a state system meeting international standards to account for and control nuclear materials. In this system, material balance areas are established that cover the country's nuclear materials and activities that are subject to international safeguards. For each material balance area, the nuclear facility operators must keep records of nuclear materials retained, received, shipped, consumed or transformed. The state nuclear authority inspects the records, procedures, inventories and so on of the nuclear facility operators.

8.36 The IAEA then inspects the state system to verify its effectiveness. This might involve maintaining electronic and other passive surveillance procedures at strategic locations inside selected material balance areas. IAEA inspectors will also be present for critical operations at certain nuclear facilities. For example, the transfer of spent CANDU fuel bundles between storage bays at some Canadian nuclear power stations is monitored by IAEA's inspector by methods that include direct observation of the spent fuel bays and, in some cases, use of specially developed surveillance instruments. This practice is designed to detect possible substitution of dummy fuel bundles for the spent fuel bundles, which contain small amounts of plutonium, a strategic material.

8.37 Safeguard procedures are applied in accordance with the strategic value of the material being safeguarded, with greater emphasis being placed on control of material from which nuclear weapons could be made more directly. For example, emphasis is placed on safeguarding highly enriched uranium whereas the uranium produced by Canada's mines is not safeguarded until it has been upgraded to uranium dioxide or uranium hexafluoride.

8.38 The IAEA reports its findings on these inspections stating whether significant amounts of nuclear materials are unaccounted for.

8.39 Safeguards in Canada. AECB acts as Canada's nuclear authority with respect to Canada's agreement with the IAEA. Accordingly, AECB set up and maintains the Canadian state system of accounting for and controlling nuclear materials. Compliance with the system is ensured through AECB's comprehensive licensing and inspection system whereby the general requirements of international safeguards are incorporated into the facility licence issued by AECB.

8.40 The AECB assists the IAEA inspectors in implementing their safeguarding activities in Canada. For example, it provides the IAEA each month with material balance reports and inventory change reports for all material balance areas. It also participates in major inspections.

8.41 Safeguards on exported materials. Canadian nuclear exports can go to only those countries that have undertaken to accept, in a formal agreement, a number of requirements designed to minimize the risk that they will be used to make a nuclear weapon or other nuclear explosive device. These requirements are additional to those contained in each country's agreement with the IAEA. The additional requirements include: provision for fallback safeguards if the IAEA is unable to continue; control over the re-transfer of Canadian supplied nuclear items; control over spent fuel, its reprocessing and the re-processing products; and an assurance that adequate physical protection measures will be applied.

8.42 The IAEA reports annually whether it has detected any diversions of significant quantities of nuclear materials from peaceful nuclear activities to the manufacture of nuclear weapons or other nuclear explosive devices or for purposes unknown. The AECB in concert with other agencies of government reviews this report and other pertinent information to verify that nuclear materials of Canadian origin have not been diverted.

8.43 Compliance with other requirements of the nuclear co-operation agreements is not based on international safeguards but on mutual trust and general watchfulness. For example, some Canadian technology and equipment are controlled only through the export licence. It is considered that if such technology or equipment were to be used to produce a nuclear explosive device, it would be done only with great effort that would likely be noticed because many safeguarded components would also be required.

8.44 As a final control, the AECB can refuse to issue an export licence for any nuclear materials or technology if such refusal is determined to be in Canada's interest.

8.45 Observation. The AECB has documented its safeguard procedures. Our review of files and interviews with AECB staff show the procedures are followed. The review of these procedures is an ongoing management activity. The IAEA reports that in its inspections, it has found no significant diversions of safeguarded materials in Canada or elsewhere. In general, we found AECB's administration of its safeguard procedures to be satisfactory.

Effectiveness Measurement

8.47 The AECB has yet to complete a program evaluation of any of its activities, but a review of the Nuclear Liability Act was in progress at the time of the audit. While most of the normal elements of a program evaluation infrastructure are not in place, the AECB has produced an evaluation plan. We examined this against our criteria for such documents and found it to be incomplete.

8.48 AECB should establish procedures to ensure that the cyclical evaluation of the effectiveness of its programs is carried out and that the results are appropriately reported.

8.49 Ongoing measurement. We reviewed AECB's ongoing effectiveness measurement activities to verify whether effectiveness indicators and measurement reports were being used for management control purposes. We found that the indicators listed in the operational plan were not always used. Those identified for the regulation of reactors and accelerators were used, and reports were being prepared for review by management. Planning for the use of the regulatory research indicators has taken place and a first analysis was expected at the end of the 1984-85 year. The situation is less favourable for the regulation of fuel facilities and materials; management informed us that it considers many of the listed effectiveness indicators to be unsatisfactory. A study will be made to develop appropriate indicators.

Nuclear Liability Act

8.51 The insurance agreement covering civil liability for nuclear damage is deficient in that it provides coverage that is narrower than the Act calls for. Specifically, it provides for coverage of bodily injury in place of the broader personal injury and it does not cover damages resulting from the emissions occurring during the normal operation of a designated nuclear installation. There is, however, a Reinsurance Agreement between the insurers and the government under which the government provides insurance for the excluded items. AECB is aware of the variance between parliamentary expectation and the private sector coverage now provided. An interdepartmental working group was created in 1982 to review this Act; its report was expected in June 1985.

8.52 Based on the information available at the time of our audit, we believe a review by Parliament of the Nuclear Liability Act would be appropriate.

Administration

8.54 Human resource management. At AECB, we found no significant deficiencies in human resource practices and systems likely to have an adverse effect on the Board's ability to deliver its programs. Specifically, the AECB is an organization oriented to people, with managers at all levels displaying considerable interest and dedication to their management. Key decisions in each human resource area rest with line managers who rely on personnel specialists only for technical guidance and administrative support. Senior managers control the job classification process, and we noted no significant shift in classification levels since 1981. Performance appraisals are very well done and are used by management.

8.55 In general terms, we found that personnel at AECB were being managed in a way that encouraged individuals to maximize their personal contribution to achieving the Board's objectives.

Mr. Kenneth M. Dye
Auditor General of Canada
240 Sparks Street
Ottawa, Ontario

Dear Mr. Dye:

We have reviewed the chapter on the comprehensive audit of the Atomic Energy Control Board (AECB). We find it factual and correct and have no disagreement-in-principle with its conclusions, recommendations or observations.

I acknowledge the chapter's conclusions that the administration of the AECB's primary activities is generally satisfactory. Those primary activities are the licensing, inspection and enforcement of nuclear facilities and prescribed substances in the interests of health, safety and security, and the safeguards and security control of prescribed substances and equipment. I also acknowledge the conclusion of generally satisfactory with reference to the supporting activities of financial and human resources management and resource administration.

Two recommendations have been made. These are with regard to socio-economic impact analysis (SEIA) screening criteria and analysis and to program evaluation. These recommendations and the AECB response thereto follow:

RECOMMENDATION:

The AECB should develop criteria and analysis that are appropriate for determining the need for socio-economic impact studies in each particular sector of the atomic energy industry that it regulates.

AECB RESPONSE:

Although we believe that the current Treasury Board socio-economic impact analysis (SEIA) criteria and analysis are appropriate for all sectors of the nuclear industry, we will address this matter in conjunction with the current triennial Treasury Board SEIA policy evaluation.

AECB should establish procedures to ensure that the cyclic evaluation of the effectiveness of its programs is carried out and that the results are appropriately reported.

AECB RESPONSE:

The AECB program evaluation plan will be further developed and the infrastructure strengthened to ensure that cyclical program evaluations are well conducted and appropriately reported.

We have appreciated and benefitted from our association in this comprehensive audit which was facilitated by our shared goals and by the courtesy, thoroughness and professionalism of all involved members of the Office of the Auditor General.

Yours sincerely,

J.H. Jennekens