Vol. 137, No. 13 — June 18, 2003

Registration
SOR/2003-212 5 June, 2003

NUCLEAR SAFETY AND CONTROL ACT

Canadian Nuclear Safety Commission Cost Recovery Fees Regulations

The Canadian Nuclear Safety Commission, with the approval of the Governor in Council, pursuant to subsection 44(1) (see footnote a)  of the Nuclear Safety and Control Act (see footnote b) , hereby makes the annexed Canadian Nuclear Safety Commission Cost Recovery Fees Regulations.

May 22, 20003

P.C. 2003-869 5 June, 2003

Whereas, pursuant to subsection 44(12) of the Nuclear Safety and Control Act (see footnote c) , a copy of the proposed Canadian Nuclear Safety Commission Cost Recovery Fees Regulations, substantially in the form set out in the annexed Regulations, was published in the Canada Gazette, Part I, on February 1, 2003, and a reasonable opportunity was thereby given to interested persons to make representations to the Canadian Nuclear Safety Commission with respect to the proposed Regulations;

Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of Natural Resources and the Treasury Board, pursuant to subsection 44(1) (see footnote d)  of the Nuclear Safety and Control Act (see footnote e) , hereby approves the making of the annexed Canadian Nuclear Safety Commission Cost Recovery Fees Regulations by the Canadian Nuclear Safety Commission.

CANADIAN NUCLEAR SAFETY COMMISSION COST RECOVERY FEES REGULATIONS

PART 1

GENERAL

Interpretation

1. The following definitions apply in these Regulations.

"Act" means the Nuclear Safety and Control Act. (Loi)

"actual full cost" means the full cost verified by audited financial statements. (coût entier réel)

"Class I nuclear facility" means a Class I nuclear facility as defined in the Class I Nuclear Facilities Regulations. (installation nucléaire de catégorie I)

"Class II nuclear facility" means a Class II nuclear facility as defined in the Class II Nuclear Facilities and Prescribed Equipment Regulations. (installation nucléaire de catégorie II)

"Class II prescribed equipement" means Class II prescribed equipment as defined in the Class II Nuclear Facilities and Prescribed Equipment Regulations. (équipement réglementé de catégorie II)

"direct regulatory activities" means those activities, such as assessing applications, issuing licences and certificates, granting approvals and authorizations, verifying and enforcing compliance and providing information, products and services, that are required for the Commission to fulfil its regulatory responsibilities. (activités de réglementation directes)

"dosimetry services" means dosimetry services within the meaning of the Radiation Protection Regulations. (services de dosimétrie)

"fee period" means the 12-month period beginning on the date of issuance of a licence and, after that date, beginning on each anniversary date of the licence. (période d'application des droits)

"fiscal year" means the period beginning on April 1 in one calendar year and ending on March 31 in the next calendar year. (exercice)

"former Regulations" means the AECB Cost Recovery Fees Regulations, 1996. (ancien règlement)

"full cost" means the sum of the costs of the Commission's direct regulatory activities and indirect regulatory activities, including salaries and benefits, rental of office accommodation, supplies and equipment, professional services, communications, travel and training. (coût entier)

"indirect regulatory activities" means those activities that are in support of direct regulatory activities, such as management, training, administration, human resources, finance, information technology services and the preparation of documents, including policies, standards, guides, procedures and notices. (activités de réglementation indirectes)

"mine" or "mill" means a mine or mill as defined in the Uranium Mines and Mills Regulations. (mine ou usine de concentration)

"waste nuclear substance activities" means activities in relation to waste nuclear substances that are not located at a Class I or a Class II nuclear facility or at a mine or mill. (activités liées aux déchets de substances nucléaires)

Application

2. These Regulations do not apply to

• (a) a secondary school or a specified educational institution as defined in subsection 2(1) of the Canada Student Loans Act;
  (b) a not-for-profit organization that carries out research and is wholly owned by an institution referred to in paragraph (a);
  (c) a not-for-profit institution that receives funds from the federal government, a provincial government or the government of a city, town or regional municipality and that provides medical services prescribed by a medical practitioner for the purpose of maintaining health, preventing disease or diagnosing or treating injury, illness or disability in patients;
  (d) a not-for-profit organization that responds to accidents and incidents, such as a fire department, a police department, an emergency response service, an emergency medical service or an ambulance service;
  (e) a department or agency of the federal government, a provincial government or the government of a city, town or regional municipality if the department or agency that applies for or holds a licence from the Commission in respect of a contaminated site that is abandoned on the coming into force of these Regulations and the contamination did not result from the activities of the applicant or licensee; or
  (f) a department as defined in section 2 of the Financial Administration Act.

PART 2

REGULATORY ACTIVITY PLAN FEES

Application

3. This Part applies to applicants and licensees in respect of

• (a) Class I nuclear facilities;
  (b) mines and mills; and
  (c) waste nuclear substance activities.

Estimated Annual Fee

4. Before the beginning of each fiscal year, the Commission shall

• (a) calculate the estimated annual fee payable by an applicant or a licensee for that fiscal year using the estimated full cost of the regulatory activity plan prepared by the Commission for the applicant's or licensee's facility or activity; and
  (b) notify each applicant or licensee, in writing, of the regulatory activity plan and the estimated annual fee payable.

Quarterly Invoicing

5. (1) On a quarterly basis, the Commission shall send each applicant or licensee an invoice for an amount equal to 25% of the estimated annual fee payable.

(2) Within 30 days after the date of the invoice, the applicant or licensee shall pay to the Commission the amount invoiced.

(3) If changes occur in the Commission's regulatory activity plan for any facility or activity for a fiscal year, the Commission may re-calculate the estimated fee for that facility or activity for the fiscal year and adjust the amount invoiced accordingly.

Annual Fee Adjustment

6. (1) Each year, following the end of the fiscal year, the Commission shall, for each facility or activity,

• (a) calculate the actual full cost;
  (b) calculate the fee adjustment by subtracting the estimated annual fee as calculated under section 4 from the actual full cost; and
  (c) notify the applicant or licensee in writing of the amount of the actual full cost and the amount of the fee adjustment.

(2) If the fee adjustment calculated under paragraph (1)(b) is

• (a) less than the estimated annual fee, the Commission shall refund the difference to the applicant or licensee or apply it against any amount payable by the applicant or licensee to the Commission; or
  (b) greater than the estimated annual fee, the Commission shall invoice the applicant or licensee for an amount equal to the difference, and the applicant or licensee shall pay to the Commission that amount within 30 days after the date of the invoice.

Initial Application

7. (1) In the case of an initial application for a facility or activity for which an estimated annual fee has not been calculated, the applicant shall pay to the Commission, with the application, a deposit of

• (a) $25,000, if the application is in respect of a facility; or
  (b) $5,000, if the application is in respect of a waste nuclear substance activity.

(2) On receipt of the application and deposit, the Commission shall calculate the estimated annual fee payable for the current fiscal year in accordance with paragraph 4(a).

(3) On a quarterly basis over the remaining quarters of the fiscal year after receipt of the application, the Commission shall invoice the applicant for the amount of the estimated annual fee payable, which is calculated on the basis of the number of quarters remaining in the fiscal year and is reduced by the amount of the deposit.

(4) Within 30 days after the date of the invoice, the applicant shall pay to the Commission the amount invoiced.

(5) After the end of the fiscal year, the estimated annual fee shall be adjusted in accordance with section 6.

Transitional Provision

8. If an applicant or licensee paid a fee or deposit under the former Regulations, the Commission shall

• (a) in the case of an annual fee or a fee paid every two years, apply an amount equal to the fee paid for the number of days remaining in the fee period against the fees payable by the applicant or licensee to the Commission; and
  (b) in the case of a deposit towards an hourly rate fee, apply any remaining balance of the deposit against any amount payable by the applicant or licensee to the Commission.

PART 3

FORMULA FEES

Application

9. This Part applies to applicants and licensees in respect of

• (a) Class II nuclear facilities;
  (b) Class II prescribed equipment;
  (c) dosimetry services; and
  (d) nuclear substances and radiation devices to which the Nuclear Substances and Radiation Devices Regulations apply, except with respect to applications and licences for waste nuclear substance activities.

Formulas

10. (1) Fees under this Part shall be calculated using the formulas set out in Part 2 of Schedule 1.

(2) The formulas comprise

• (a) base hours as described in section 11;
  (b) variable hours as described in section 12;
  (c) a compliance coefficient as described in section 13; and
  (d) an hourly rate as described in section 14.

Base Hours

11. For each type of application or licence, the base hours are the number of hours spent by the Commission

• (a) for the assessment of applications; and
  (b) to verify the licensee's compliance with regulatory requirements.

Variable Hours

12. For each type of application or licence, the variable hours are the additional number of hours of direct regulatory activities as a result of the number of

• (a) treatment rooms, bunkers, laboratories and locations with separate postal addresses;
  (b) devices;
  (c) device manufacturers; and
  (d) types of Class II prescribed equipment as defined in the Class II Nuclear Facilities and Prescribed Equipment Regulations.

Compliance Coefficient

13. For each type of licence, the compliance coefficient is derived from the additional number of hours of direct regulatory activities spent by the Commission as a result of non-compliance by a licensee with regulatory requirements.

Hourly Rate

14. The hourly rate is the full cost divided by the total number of hours spent by the Commission on its direct regulatory activities.

Publication

15. Before the beginning of each fiscal year, the Commission shall publish, by electronic or other means likely to reach applicants and licensees, for each type of application or licence for a facility or activity set out in Part 1 of Schedule 1, the base hours, variable hours, compliance coefficient and hourly rate.

Payment of Fees

16. (1) On an initial application for a licence in respect of an activity or a facility listed in Part 1 of Schedule 1, the applicant shall pay to the Commission the assessment fee and the annual fee in accordance with subsections (2) and (3).

(2) The assessment fee payable for a licence in respect of an activity or a facility listed in column 1 of Part 1 of Schedule 1 shall be calculated using the applicable fee formula set out in Part 2 of that Schedule, which is determined by the applicable formula number set out in column 2 of Part 1 of that Schedule.

(3) The annual fee payable for a licence in respect of an activity or a facility listed in column 1 of Part 1 of Schedule 1 shall be calculated using the applicable fee formula set out in Part 2 of that Schedule, which is determined by the applicable formula number set out in column 3 of Part 1 of that Schedule.

(4) On an initial application for a licence for an activity or a facility that is not listed in Part 1 of Schedule 1, the applicant shall pay the deposit and fees in accordance with Part 5.

(5) If an initial application is withdrawn by the applicant before the assessment of the application by the Commission has begun, the assessment fee and annual fee paid shall be refunded to the applicant or applied against any amount payable by the applicant to the Commission.

(6) If an initial application is withdrawn by the applicant or rejected by the Commission after the assessment of the application by the Commission has begun, the assessment fee paid shall not be refunded and the annual fee paid shall be refunded to the applicant or applied against any amount payable by the applicant to the Commission.

(7) A re-application after withdrawal by the applicant or re-jection by the Commission shall be treated as a new initial application.

Invoicing

17. (1) Every year before the licence anniversary date, the Commission shall issue to the licensee an invoice for the annual fee payable.

(2) The licensee shall pay the fee to the Commission by the later of 30 days after the date of the invoice and the licence anniversary date.

Fee Not Affected

18. Changes in the number of any of the items referred to in paragraphs 12(a) to (d) during the fee period do not affect the fee payable for that period.

Revocation of Licence

19. (1) If a licence is revoked within the first year after its issuance, there shall be no refund of the annual fee paid.

(2) If a licence is revoked after the first year of its issuance and the licensee has paid the annual fee for the current fee period,

• (a) that fee shall be reduced by an amount equal to the product obtained by multiplying 25% of the annual fee paid by the number of full quarterly periods remaining in the fee period; and
  (b) the Commission shall refund that amount to the former licensee or apply that amount against any amount payable by the former licensee to the Commission.

Transitional Provision

20. (1) If, under the former Regulations, an applicant or a licensee paid an hourly rate fee or a deposit and

• (a) a licence was issued before the coming into force of these Regulations, the fee payable under this Part shall be calculated in accordance with the number of remaining days in the current fee period, and any remaining balance of the fee or deposit paid shall be refunded or applied against any amount payable by the licensee to the Commission; or
  (b) a licence was not issued before the coming into force of these Regulations, the applicant shall pay the assessment fee calculated in accordance with section 26.

(2) If, under the former Regulations, an applicant or a licensee paid an annual fee and

• (a) a licence was issued before the coming into force of these Regulations,
  • (i) if the amount of the annual fee paid is more than the annual fee payable under this Part, the fee payable under this Part shall be calculated in accordance with the number of days remaining in the current fee period, and any remaining balance of the annual fee paid shall be refunded or applied against any amount payable by the licensee to the Commission, and
    (ii) if the amount of the annual fee paid is less than the annual fee payable under this Part, the annual fee under this Part shall be payable on the earliest of the next licence anniversary, renewal or extension date; or
  (b) a licence was not issued before the coming into force of these Regulations,
  • (i) the annual fee under this Part shall be payable on the licence issue date,
    (ii) if the amount of the annual fee paid is more than the annual fee payable under this Part, the difference shall be refunded or applied against any amount payable by the applicant to the Commission, and
    (iii) if the amount of the annual fee paid is less than the annual fee payable under this Part, the applicant shall pay the difference to the Commission within 30 days after the invoice date.

(3) If, under the former Regulations, an applicant or a licensee paid a two-year fee and

• (a) a licence was issued before the coming into force of these Regulations,
  • (i) if the amount of the annual portion of the fee paid is more than the annual fee payable under this Part, the fee payable under this Part shall be calculated in accordance with the number of days remaining in the current fee period, and any remaining balance of the fee paid shall be refunded or applied against any amount payable by the licensee to the Commission, and
    (ii) if the amount of the annual portion of the fee paid is less than the annual fee payable under this Part, the fee under this Part shall be payable on the earlier of the licence extension or renewal date; or
  (b) a licence was not issued before the coming into force of these Regulations,
  • (i) the annual fee under this Part shall be payable on the licence issue date,
    (ii) if the amount of the annual portion of the fee paid is more than the annual fee payable under this Part, the difference shall be refunded or applied against any amount payable by the applicant to the Commission, and
    (iii) if the amount of the annual portion of the fee paid is less than the annual fee payable under this Part, the applicant shall pay the difference to the Commission within 30 days after the invoice date.

(4) If, under the former Regulations, an applicant paid a one-time fee for the assessment of an application that is pending when these Regulations come into force,

• (a) if the amount of the fee paid is more than the assessment fee payable under this Part, the difference shall be refunded or applied against any amount payable by the applicant to the Commission; and
  (b) if the amount of the fee paid is less than the assessment fee payable under this Part, no additional assessment fee shall be payable by the applicant.

(5) If, under the former Regulations, an applicant or a licensee paid a one-time fee for the issuance of a licence and

• (a) a licence was issued more than 12 months before the coming into force of these Regulations, the fee under this Part shall be payable on the earliest of the licence anniversary, renewal or extension date; or
  (b) a licence was issued within the 12-month period before the coming into force of these Regulations and the fee paid is more than the annual fee payable under this Part, the difference shall be refunded or applied against any amount payable by the licensee to the Commission.

PART 4

FIXED FEES

Application

21. This Part applies to applicants in respect of

• (a) licences to transport nuclear substances under the Packaging and Transport of Nuclear Substances Regulations, except licences to package or transport under special arrangement;
  (b) certifications of package designs under the Packaging and Transport of Nuclear Substances Regulations, except certifications of designs for special form radioactive material;
  (c) certifications of radiation device models under the Nuclear Substances and Radiation Devices Regulations;
  (d) certifications of Class II prescribed models of equipment under the Class II Nuclear Facilities and Prescribed Equipment Regulations; and
  (e) certifications of exposure device operators under the Nuclear Substances and Radiation Devices Regulations.

Payment of Fees

22. For each type of application set out in column 1 of Schedule 2, the applicant shall pay to the Commission, with the application, the fee set out in column 2.

Withdrawal

23. If an application is withdrawn by the applicant after the assessment of the application by the Commission has begun, there shall be no refund of the fee paid.

Transitional Provision

24. If an application is pending under the former Regulations on the coming into force of these Regulations, the applicant shall pay the fee calculated in accordance with section 26.

PART 5

SPECIAL PROJECT FEES

Application

25. This Part applies to applicants and licensees for special projects in respect of

• (a) licences to package or transport under special arrangement under the Packaging and Transport of Nuclear Substances Regulations;
  (b) certifications of designs for special form radioactive material under the Packaging and Transport of Nuclear Substances Regulations;
  (c) licences or certifications not referred to in Parts 2, 3 or 4; and
  (d) information, products or services not referred to in Parts 2, 3 or 4.

Calculation of Fee

26. For each special project, the fee payable under this Part is equal to the sum of

• (a) the product obtained by multiplying the hourly rate referred to in section 14 by the number of hours of direct regulatory activities

and

• (b) if the Commission obtains professional and special services under contract, the cost of those services.

Application and Deposit

27. (1) The applicant shall deposit, with the application, the sum of $5,000.

(2) The Commission shall apply the deposit against the fee payable.

(3) On completion of a special project, any remaining balance of the deposit paid shall be refunded to the applicant or applied against any amount payable by the applicant to the Commission.

Invoicing

28. (1) On a monthly basis, the Commission shall send to each applicant and licensee an invoice for the fees payable.

(2) Within 30 days after the date of the invoice, the applicant or licensee shall pay to the Commission the amount invoiced.

Transitional Provision

29. If, under the former Regulations, an applicant or a licensee paid an hourly rate fee or deposit, any remaining balance of the fee or deposit paid shall be refunded or applied against any amount payable by the applicant or licensee to the Commission.

PART 6

TRANSITIONAL, REPEAL AND COMING INTO FORCE

Transitional Provision

30. (1) Any fees payable within the three years after the coming into force of these Regulations shall be reduced as follows:

• (a) in the first year, by 15 percent;
  (b) in the second year, by 10 percent; and
  (c) in the third year, by 5 percent.

(2) Subsection (1) does not apply in respect of the fees payable for special projects referred to in paragraph 25(d).

Repeal

31. The AECB Cost Recovery Fees Regulations, 1996 (see footnote 1)  are repealed.

Coming into Force

32. These Regulations come into force on the first day of the month following the month in which they are registered.

SCHEDULE 1
(Sections 10, 15 and 16)

PART 1

FEE FORMULA NUMBERS

Item	Column 1 Activity, Facility, Device or Substance	Column 2 Formula Number for Assessment Fee	Column 3 Formula Number for Annual Fee
	Class II Nuclear Facilities and Class II Prescribed Equipment
1.	Linac and/or electrostatic particle accelerator research facility
	(a) construct	1	1
	(b) operate	1	1
	(c) decommission	1	N/A
2.	Positron Emission Tomography cyclotron facility
	(a) construct	1	1
	(b) operate	1	1
	(c) decommission	1	N/A
3.	Geophysical logging accelerator	2	2
4.	Particle accelerator medical facility
	(a) construct	10	1
	(b) operate	10	10
	(c) decommission	1	N/A
5.	Pool-type irradiator facility
	(a) construct	1	1
	(b) operate	1	1
	(c) decommission	1	N/A
6.	Calibration irradiator facility
	(a) construct	1	1
	(b) operate	1	1
	(c) decommission	1	N/A
7.	Other irradiator facility
	(a) construct	1	1
	(b) operate	1	1
	(c) decommission	1	N/A
8.	Radioactive source teletherapy machine
	(a) construct	10	1
	(b) operate	10	10
9.	Brachytherapy facility — high dose rate and low dose rate remote afterloader
	(a) construct	10	1
	(b) operate	10	10
10.	Brachytherapy facility — any remote afterloader other than high or low dose rate	1	1
11.	Service — Class II prescribed equipment	11	11
	Dosimetry Services
12.	Commercial — external radiation	1	1
13.	Commercial — internal radiation	1	1
14.	Commercial — radon progeny	1	1
15.	Commercial — consolidated licence (any 2 of external radiation, internal radiation and radon progeny)	1	1
16.	In-house — external radiation	1	1
17.	In-house — internal radiation	1	1
18.	In-house — radon progeny	1	1
19.	In-house — consolidated licence (any 2 of external radiation, internal radiation and radon progeny)	1	1
	Nuclear Substances and Radiation Devices
20.	Consolidated uses of nuclear substances	6	6
21.	Gauges
	(a) fixed gauges	2	7
	(b) portable gauges	1	7
22.	Industrial radiography	8	7
23.	Nuclear medicine and human research
	(a) diagnostic nuclear medicine	2	2
	(b) therapeutic nuclear medicine	2	2
	(c) human research	1	2
24.	Petroleum exploration and production
	(a) logging — sealed source	2	2
	(b) other petroleum exploration and production	2	2
	(c) borehole tube tagging	1	2
25.	Servicing, installation and dismantling of devices
	(a) basic servicing — portable gauges or fixed gauges (not both)	1	3
	(b) complex servicing — industrial radiography devices or any combination of portable gauges, fixed gauges and industrial radiography devices	1	3
26.	Unsealed nuclear substances
	(a) laboratory studies	2	9
	(b) processing a quantity not exceeding 10 GBq	1	1
	(c) processing a quantity exceeding 10 GBq	1	1
	(d) repair of components containing radioactive luminous compounds	1	1
	(e) veterinary nuclear medicine	2	2
	(f) manufacturing of nuclear substances	1	1
27.	Sealed sources and radiation devices
	(a) low risk	1	1
	(b) medium risk	1	1
28.	Distribution of nuclear substances
	(a) drop shipment	1	1
	(b) less than 740 MBq	1	2
	(c) equal to or greater than 740 MBq	1	2
29.	Sealed sources — Group II
	(a) device manufacturing	1	1
	(b) calibration	1	1
	(c) medium risk	1	1
30.	Manual brachytherapy	1	4
31.	Development and testing of devices	1	1
32.	Possession of deuterium	1	1
33.	Storage	N/A	5

PART 2

FEE FORMULAS

Formula Number	Fee Formula
1.	base hours x hourly rate x compliance coefficient
2.	[base hours + (variable hours per location x number of locations)] × hourly rate x compliance coefficient
3.	[base hours + (variable hours per device manufacturer x number of device manufacturers)] x hourly rate × compliance coefficient
4.	[base hours + (variable hours per treatment room x number of treatment rooms)] × hourly rate × compliance coefficient
5.	[base hours + (variable hours per device x number of devices)] × hourly rate × compliance coefficient
6.	[base hours + (variable hours per laboratory × number of laboratories)] × hourly rate × compliance coefficient
7.	[base hours + (variable hours per location × number of locations) + (variable hours per device × number of devices)] × hourly rate x compliance coefficient
8.	[base hours + (variable hours per device manufacturer × number of device manufacturers) + (variable hours per bunker × number of bunkers)] × hourly rate × compliance coefficient
9.	[base hours + (variable hours per location × number of locations) + (variable hours per lab × number of labs)] × hourly rate × compliance coefficient
10.	[base hours + (variable hours per bunker × number of bunkers)] × hourly rate × compliance coefficient
11.	[base hours + (variable hours per type of Class II equipment × number of types of Class II equipment)] × hourly rate × compliance coefficient

SCHEDULE 2
(Section 22)

FIXED FEES

Item	Column 1 Type of Application	Column 2 Fee
1.	An application for a licence to transport nuclear material, other than a licence to transport under special arrangement	$500
2.	Except in respect of a certification for the package design of a special form radioactive material, an application for certification of a package design
	(a) having an "A" value (see note) not exceeding 1 with fissile material
	(i) assessment of a new package design	$8,000
	(ii) assessment of a package design similar to a certified package design	$2,650
	(iii) assessment of a package design identical to a certified package design	$1,000
	(b) having an "A" value greater than 1 and not exceeding 10 with no fissile material
	(i) assessment of a new package design	$12,000
	(ii) assessment of a package design similar to a certified package design	$4,000
	(iii) assessment of a package design identical to a certified package design	$1,000
	(c) having an "A" value greater than 1 and not exceeding 10 with fissile material
	(i) assessment of a new package design	$20,000
	(ii) assessment of a package design similar to a certified package design	$6,650
	(iii) assessment of a package design identical to a certified package design	$1,000
	(d) having an "A" value greater than 10 and not exceeding 100 with no fissile material
	(i) assessment of a new package design	$14,000
	(ii) assessment of a package design similar to a certified package design	$4,650
	(iii) assessment of a package design identical to a certified package design	$1,000
	(e) having an "A" value greater than 10 and not exceeding 100 with fissile material
	(i) assessment of a new package design	$22,000
	(ii) assessment of a package design similar to a certified package design	$7,350
	(iii) assessment of a package design identical to a certified package design	$1,000
	(f) having an "A" value greater than 100 and not exceeding 3000 with no fissile material
	(i) assessment of a new package design	$20,000
	(ii) assessment of a package design similar to a certified package design	$6,650
	(iii) assessment of a package design identical to a certified package design	$1,000
	(g) having an "A" value greater than 100 and not exceeding 3000 with fissile material
	(i) assessment of a new package design	$28,000
	(ii) assessment of a package design similar to a certified package design	$9,300
	(iii) assessment of a package design identical to a certified package design	$1,000
	(h) having an "A" value greater than 3000 with no fissile material
	(i) assessment of a new package design	$24,000
	(ii) assessment of a package design similar to a certified package design	$8,000
	(iii) assessment of a package design identical to a certified package design	$1,000
	(i) having an "A" value greater than 3000 with fissile material
	(i) assessment of a new package design	$32,000
	(ii) assessment of a package design similar to a certified package design	$10,650
	(iii) assessment of a package design identical to a certified package design	$1,000
3.	An application for certification of a radiation device model
	(a) Type 1 — A device containing nuclear substances in a quantity greater than the exemption quantity and less than 10 times that quantity
	(i) assessment of a new radiation device model	$1,500
	(ii) assessment of a radiation device model similar to a certified radiation device model	$1,000
	(iii) assessment of a radiation device model identical to a certified radiation device model	$1,000
	(b) Type 2 — A device containing nuclear substances in a quantity equal to or exceeding 10 times the exemption quantity for the following: bone mineral analysis, dew point detection, electronic component testing, fuel gauging, low energy imaging, liquid scintillation counting, radioluminescence, static detection, static elimination, smoke detection, surge voltage protection and X-ray fluorescence analysis
	(i) assessment of a new radiation device model	$3,000
	(ii) assessment of a radiation device model similar to a certified radiation device model	$1,000
	(iii) assessment of a radiation device model identical to a certified radiation device model	$1,000
	(c) Type 3 — A device containing nuclear substances in a quantity equal to or exceeding 10 times the exemption quantity for the following: beta backscatter gauging, calibration, fixed gauges and portable gauges
	(i) assessment of a new radiation device model	$6,000
	(ii) assessment of a radiation device model similar to a certified radiation device model	$2,000
	(iii) assessment of a radiation device model identical to a certified radiation device model	$1,000
	(d) Type 4 — A device of the following type: industrial radiography device, self-shielded irradiator and neutron activator
	(i) assessment of a new radiation device model	$9,000
	(ii) assessment of a radiation device model similar to a certified radiation device model	$3,000
	(iii) assessment of a radiation device model identical to a certified radiation device model	$1,000
4.	An application for certification of Class II prescribed equipment
	(i) assessment of new Class II prescribed equipment	$9,000
	(ii) assessment of Class II prescribed equipment similar to certified Class II prescribed equipment	$3,000
	(iii) assessment of Class II prescribed equipment identical to certified Class II prescribed equipment	$1,000
5.	An application for certification of an exposure device operator	$1,000

NOTE: "A" value means the maximum number obtained by dividing the quantity of radioactivity in the package design by the appropriate "A₁" or "A₂" value as defined in the Packaging and Transport of Nuclear Substances Regulations.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Description

As Canada's nuclear regulatory agency, the Canadian Nuclear Safety Commission (CNSC) regulates all activities related to the use of nuclear energy and nuclear substances in Canada, including: nuclear power reactors, non-power reactors, nuclear research and test facilities, uranium mines and mills, uranium refineries, nuclear substance processing facilities, medical and non-medical accelerators, and a wide variety of nuclear substances and prescribed equipment for use in industry. The CNSC regulates over 1,700 fee paying licensees as well as approximately 500 licensees who are exempt from paying fees.

It is government policy to implement user charges for services that provide identifiable recipients with direct benefits beyond those received by the general public (Cost Recovery and Charging Policy, 1997). The Atomic Energy Control Board, the CNSC's predecessor, first introduced external user charging in 1990. Licence fees have been prescribed in the Cost Recovery Fees Regulations under the Atomic Energy Control Act (AEC Act) and have been amended several times. These Cost Recovery Fees Regulations were last amended in 1996, based on actual costs for the 1992-1993 fiscal year.

The current Cost Recovery Fees Regulations are not adequate for the following reasons:

• (1) Actual costs have increased since 1992-1993 due to inflation and increased regulatory effort. More regulatory effort has been required due to the changes in the regulatory environment.

• (2) A careful review of CNSC costs, using an activity based accounting model, has also shown that there are inequities in the current Cost Recovery Fees Regulations. Some licensees pay fees that recover a substantial portion of their costs, while many licensees are paying fees that recover only a small portion of the costs of regulating their licensed activities. Also, in some circumstances licensees are paying too much.

The current Cost Recovery Fees Regulations do not comply with the federal government's Cost Recovery and Charging Policy, 1997. Nor do the current Regulations comply in all respects with provisions 44(2) and 44(3) of the Nuclear Safety and Control Act (NSC Act). These provisions state that fees may not exceed a reasonable estimate of the cost of the CNSC's regulatory activities.

A 1992 report from the Office of the Auditor General also recommended that the CNSC establish its licence fees in line with its yearly costs to minimize the yearly excess of cost over revenue. It was recommended that the CNSC consider using forecasted costs to resolve this issue. Since the CNSC operates in a regulatory environment and the fee revision process is lengthy, it was also recommended that the CNSC should consider using multi-year fee schedules or specified fee-adjustment formulae to determine its licence fee values.

New Cost Recovery Fees Regulations are allowing the CNSC to recover the actual cost of regulating the nuclear industry equitably and in accordance with the federal government's Cost Recovery and Charging Policy, 1997 and to comply with the requirements of the NSC Act, which replaced the AEC Act in May, 2000. In accordance with the authority to levy fees contained in the NSC Act, paragraph 44(1)(j), the CNSC is establishing:

•  a method of calculating fees using the actual effort and cost for major licences; and

•  an equitable standard-hour or prescribed fee method to calculate fees for other licences, certifications and other regulatory work undertaken based on a reasonable estimate of the actual cost of these regulatory activities.

These methods of calculation will be incorporated into the new Cost Recovery Fees Regulations to enable fees to be updated annually in line with changes in activity levels and costs.

The new Cost Recovery Fees Regulations will enable the Government of Canada to achieve a more equitable approach to the financing of the CNSC's regulatory activities. All fee-paying licensees will contribute their fair share of the costs of the regulatory regime established by Parliament to protect health, safety, security and the environment.

In addition to ensuring that licensees bear the full costs associated with regulating their licensed activities, the new Cost Recovery Fees Regulations will have the added benefits of:

•  promoting and reinforcing compliance with the NSC Act, and the associated regulations and licence conditions, by enabling the CNSC to reduce or increase fees as appropriate for those licensees having good or poor compliance records. This would provide a financial incentive to licensees to comply with their regulatory obligations; and

•  facilitating performance monitoring and planning, by using the cost information generated to identify resource requirements for specific regulatory programs, thereby promoting the efficient allocation of CNSC resources.

These changes apply only to those licensees designated as fee-paying; there is no change for the licensees who are currently exempt from paying licence fees. Exempt licensee costs will continue to be paid from the general revenues of the Government of Canada and are not paid by fee-paying licensees.

In developing its new cost recovery program, the CNSC evaluated a number of alternative fee setting methodologies used by other Canadian government regulatory agencies and international nuclear regulatory agencies. The CNSC has taken into account changes in the scope of its regulatory activities and reviewed which of its activities should be subject to cost recovery. It has also identified licensees exempted from paying fees and a new method of calculating fees.

The CNSC reviewed the activities involved in the design, delivery and support of its regulatory mandate against the provisions of the NSC Act and guidelines in the federal government's Cost Recovery and Charging Policy to determine which activities are cost-recoverable and which are non-recoverable.

Recoverable Activities

Recoverable activities are those that "provide identifiable recipients with direct benefits beyond those received by the general public" (Cost Recovery and Charging Policy). Recoverable activities are associated with the provision and maintenance of licences and certificates including proportionate shares of the costs of applicable regulatory policies, standards, guides and procedures. Licensees realize tangible benefits such as legal rights to develop, possess, use, transport and produce nuclear energy or nuclear materials and prescribed equipment as well as minimized risks to the health and safety of their workers. Licensees may also realize economic benefits 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 industry. The costs of recoverable activities performed on behalf of exempt licensees will continue to be paid from the general revenues of the Government of Canada and are not paid by fee-paying licensees.

Recoverable Activities

Activity	Description
Licensing, Certification and Examination	Licensees obtain legal right to operate commercial business
Regulatory Policies, Standards, Guides and Procedures	Guides and standards written for use by licensees and certificate holders for assistance in meeting regulatory requirements under the NSC Act and its regulations
Contract Projects	Contract projects undertaken at the request of an outside entity for the direct benefit of that entity

Non-recoverable Activities

Non-recoverable activities are those that do not "provide identifiable recipients with direct benefits beyond those received by the general public" (Cost Recovery Charging Policy). These activities are not subject to cost recovery. The costs for these activities are borne by the government.

Non-recoverable Activities

Activity	Description
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 NSC Act and its regulations to protect health, safety, security and the environment and respect Canada's international commitments on the peaceful uses of nuclear energy
Government Cooperation	Sharing information with other federal and provincial bodies including clarification of roles to avoid or reduce regulatory overlap
Information Services	Provision of information to the public

Implementation of the cost recovery program is proposed to commence in the fiscal year 2003-2004.

Alternatives

Two alternatives were considered in developing the new Cost Recovery Fees Regulations:

(1) The status quo was rejected because the current regulations are not in compliance with the NSC Act and the most recent version of the federal government's Cost Recovery and Charging Policy, 1997. The current Cost Recovery Fees Regulations have not been amended since 1996, at which time the fees levied were based on the actual costs for the 1992-1993 fiscal year.

(2) A fixed fee approach was rejected because it would not fairly reflect the changes in activity levels and costs that can occur from year to year.

As a result, new Cost Recovery Fees Regulations are necessary. The new regulations will use new methods of calculating fees which are designed to reflect the characteristics of the different types of licensees, the regulations they are subject to, and the level of effort expended by the CNSC and the related costs. These methods will also reflect the changes in costs that can occur from year to year.

Benefits and Costs

Benefits

The new CNSC Cost Recovery Fees Regulations will comply with federal law and policy and will allow the CNSC to recover from fee-paying licensees their portion of the actual costs of regulation.

Benefits will accrue to both the CNSC and licensees through joint planning and the up-front exchange of information. CNSC will be able to receive feedback from licensees on planned initiatives and ways to improve service delivery. The fee setting process will be transparent to licensees as activities performed and their associated costs are documented. Licensees will only pay for the regulatory oversight which they actually receive, thereby minimizing to the extent possible one class of licensees paying for the cost of regulation for another.

The regulations also have the added benefit of promoting and reinforcing compliance with the NSC Act, associated regulations and licence conditions, by enabling the CNSC to adjust the fees in accordance with the compliance records of licensees. This will provide a financial incentive to licensees to comply with their regulatory obligations. Furthermore, these changes will promote efficient resource allocation at the CNSC, by using the generated cost information. This benefits the Canadian public by improving the CNSC's regulatory effectiveness and efficiency.

Costs

The structure of the CNSC's new fees will be significantly different from the current approach. This is due to the changes made to improve the measurement and allocation of costs and to explicitly link the fees charged to the costs of regulatory activities required for a particular licence or group of licences. The new fees are expected to involve increases for many licensees (some significant), and reductions for others.

The following table shows by the percentage fee increase, the percentage of licensees affected for both the pre-consultation fee calculation and the revised fee calculation based on licensee feedback. The table also illustrates the dollar value range of fee increases.

Projected Impact on CNSC Fee-paying Licensees

Fee Increase	% of Licensees & # Pre-Consultation Estimate	% of Licensees & # Revised Fees Estimate	Range of Fee Increase (decrease) $$$
Over 500%	2% (42)	1% (12)	$1,800 to $12,600
250 to 500%	4% (68)	2% (31)	$1,500 to $22,700
100 to 250%	10% (174)	7% (126)	$350 to $100,000
50 to 100%	13% (231)	9% (162)	$500 to $1,500,000
25 to 50%	20% (351)	18% (301)	$100 to $4,800,000
0 to 25%	15% (257)	28% (477)	$50 to $455,000
Fee Reduction	36% (611)	35% (597)	($50) to ($100,000)

Over one third of all licensees will experience an immediate decrease in fees. This is a reflection of the cost recovery program's focus on eliminating any cross-subsidization of fees. Overall, the increase in fees is 41%. Seventy per cent (70%) of the projected overall revenue will be paid by the four power reactor licensees.

The following is an analysis of those most severely impacted, i.e., by more than 100%:

• The group of licensees with the largest percentage increase (over 500%) is comprised of 12 large companies who hold multiple licences for radioactive devices or gauges. They are also classified as either high-risk licensees or licensees with a large number of devices and/or locations. The dollar value of the increase is relatively small ($1,800 to $12,000) with an average increase of $7,000. Currently, these large licensees are paying the same amount as licensees with fewer locations and devices.
  There are 31 companies who hold multiple licences for radioactive devices or gauges whose fee increases range from 250% to 500%. The average increase for this group is $5,800 and, again, these are classified as high-risk licensees or licensees with a large number of devices and/or locations.
  The next group with significant fee increases (100% to 250%) consists of 124 nuclear substances licensees with an average increase of $3,000. The other two licensees in this group are major nuclear facilities with the higher fee increases of $28,000 and $100,000. For these two major facilities, regulatory activity plans have been provided to explain the fees.

Conclusion

Currently the fees for these services are not in line with the costs, therefore new Cost Recovery Fees Regulations are required.

Consultation

Cost Recovery Advisory Group

The federal government's Cost Recovery and Charging Policy, 1997 "emphasizes the need for participatory consultation between departments and agencies and their stakeholders before introducing or amending user charges, and on a continuing basis thereafter". As part of its efforts to establish processes for ongoing consultation with stakeholders and in line with the principle of increased openness with regard to cost recovery, the CNSC has established a Cost Recovery Advisory Group. Group members consist of stakeholder representatives from the CNSC and industry.

The mandate of the Cost Recovery Advisory Group is to:

•  be a forum for ongoing consultation with stakeholders regarding the CNSC's regulatory activities and resulting fees;

•  provide input to the CNSC on stakeholder concerns regarding the potential impact of any proposed increase in fees;

•  provide feedback to the CNSC on the process for making changes to the fees; and,

•  discuss alternative models for future amendments to cost recovery fees.

Ongoing consultations on cost recovery fees will benefit both stakeholders and the CNSC by:

•  generating a common understanding of the CNSC's cost recovery program and fees;

•  providing licensees with the opportunity to advise the CNSC of the impact of regulatory fees on their industries;

•  providing private sector insight into the CNSC's cost structure and ways to improve the program delivery; and,

•  providing the CNSC with feedback on its costs and expenditure streamlining initiatives and on other aspects of the program.

Consultation — Prior to the Canada Gazette, Part I Publication

Prior to drafting new regulations and publishing them in the Canada Gazette, Part I, the CNSC conducted extensive consultations with licensees and stakeholders, followed by a self-evaluated Business Impact Test (BIT). The focus of these consultations was on the proposed fee structures and on-going management of cost recovery.

All licensees and key stakeholders were advised of the consultation process through a letter in March 2002 notifying them of proposed new CNSC Cost Recovery Fees Regulations. All fee paying licensees received an outline of their proposed 2003-2004 fees. Information was also posted on the CNSC Website, including the consultation document, which explained the new fee structure and the CNSC cost recovery program. Stakeholders and licensees could request additional information by e-mail or through a toll free telephone number.

Licensees were encouraged to provide feedback through participation in the CNSC consultation meetings, completion of a Summary Comments Form, and/or submission of written comments/presentation. Ten half-day consultation meetings were held between April 25, 2002, and May 15, 2002, in Toronto, Ottawa, Saskatoon, Edmonton, Vancouver, Halifax and Montreal. The sessions were conducted in both official languages. The Cost Recovery Advisory Group was instrumental in structuring consultation information and will continue to facilitate ongoing, meaningful consultation with the fee-paying community.

In total, 142 organizations provided comments; of these, 75 participated in the meetings and an additional 67 provided written or verbal comments. The CNSC received comments from all licensee groups with almost a 100% response rate from major fee paying licensees; as indicated below, this group, although comprised of a small number of organizations, contributes the bulk of CNSC revenue. Conversely, the largest group of licence holders — Nuclear Substances and Prescribed Equipment — contributes a relatively small amount to CNSC recoverable costs.

The following table shows the percentage of licensees in each category responding as part of this consultation process by licence type and by contribution to the total projected recoverable costs of approximately $50 million.

Type of Licence	Participation byLicence Type (%)	Contribution to Total Projected Revenue (%)
CLASS I Nuclear Facilities
Power Reactors and Heavy Water Plants	100	61.3
Non-Power Reactors	100	<1
Nuclear Research and Test Establishments	100	6.9
Particle Accelerators	100	1.0
Uranium Processing Facilities	83.3	2.5
Nuclear Substance Processing Facilities	100	1.0
Radioactive Waste Facilities	100	1.9
Fusion Facilities	100	1.0
CLASS II Nuclear Facilities	57.1	<1
Uranium Mines and Mills	94.1	7.2
Waste Nuclear Substances	100	<1
Dosimetry Services	100	<1
Nuclear Substances and Prescribed Equipment	9.5	2.1
Total	12.5	86.4

This consultation process was very well received with a number of licensees commending the CNSC for its efforts to seek stakeholder feedback. The CNSC Audit and Evaluation Group examined the consultation process and found it to be well planned and executed, that it met federal policy expectations and that it was appreciated by external stakeholders.

Overall, those licensees who provided comments indicated support for the general direction of the CNSC's cost recovery proposal and represented 86% of the CNSC's total projected revenue. The need for change was recognized and accepted and comments offered were constructive and forward looking. However, licensees had many questions and specific issues with some key areas of the proposal.

The CNSC carefully assessed all feedback and, to the extent possible, revised the cost recovery program. Options were weighed against the CNSC's mandate and varied stakeholder requirements. One example of how CNSC is proposing to respond to concerns from licensees on potential negative impact on business is the introduction of a phase-in of the new fees regulations. These issues are discussed below.

1. Of the licensees who provided comments, the vast majority are facing fee increases. Almost all indicated that the size of the proposed increase appears to be unreasonable. Of prime concern was the proposed hourly rate.

• The hourly rate is a corporate hourly rate, determined annually based on the full cost of its regulatory activities divided by the total number of hours spent by technical staff performing licensing and compliance work. This rate includes costs such as salaries, benefits, travel, training, rent, administration, etc.

• CNSC current fees are based on the actual costs for the 1992-1993 fiscal year. Proposed changes to CNSC fees reflect a cost recovery adjustment over a ten year period. Since 1992-1993, the CNSC's annual operating expenditures increased at a compound rate of 4.9% per year and are estimated to increase by an average of 3.7% per year between 2000-2001 and 2003-2004. Personnel, counted as Full Time Equivalents (FTEs), increased at a lesser rate — an average of 3.3% per year from 1992-1993 to 2000-2001 and are estimated to increase by an average of 0.6% from 2000-2001 to 2003-2004. Cost recovery revenues were equivalent to 69% of operating expenditures in 1997-1998, the first full year of the current Cost Recovery Fees Regulations, and then fell in each subsequent year, reaching 59% in 2000-2001.

• All of these increases are reflected in the proposed $200 hourly rate for the 2003-2004 fiscal year.

• Funding and resource requirements have increased since the development of the current fees regulations. This growth has been largely due to inflationary increases since 1992-1993, but also due to the requirements for additional regulatory effort. The level of regulatory effort has increased as a result of:

• •  the introduction of the new NSC Act, which has expanded the CNSC's regulatory mandate, notably for environmental protection. It has increased regulatory effort in such areas as the environment, decommissioning, financial guarantees, worker protection and quality assurance;

• •  the events of September 11, 2001 and the increased public awareness of the dangers related to the nuclear industry. This has prompted increases in required levels of domestic licence assessment and compliance efforts;

• •  the introduction, in 2000, of licensing requirements for dosimetry services that provide independent measurement and verification of the doses received by industry workers;

• •  the proclamation in 1995 of the Canadian Environmental Assessment Act, which imposed new and significant regulatory requirements to ensure protection of the environment;

• •  the transfer of regulatory responsibilities for pressure retaining components in nuclear facilities, as a result of a Supreme Court Ruling in 1993, from provincial to federal jurisdiction; and,

• •  the expanded use of nuclear technology, such as in the medical field.

2. Most of the comments with regard to the costing framework focused on the CNSC's intention to recover costs for activities that are perceived by the licensees to be of benefit to the public (i.e. regulatory guides and standards).

• The CNSC has reviewed the activities involved in the design, delivery and support of its regulatory mandate against the provisions of the NSC Act and guidelines in the federal government's Cost Recovery and Charging Policy to determine which activities are cost-recoverable and which are non-recoverable.

• Fees will be set fairly and equitably to recover the costs of activities that confer direct benefits to licensees. Recoverable costs are for those CNSC activities incurred primarily as a result of the CNSC's regulatory responsibilities. Regulatory guides and standards assist licensees to deliver on the requirements under the NSC Act and accordingly are cost-recovered. Costs of activities carried out in support of other commitments or responsibilities of the federal government are borne by the government.

3. Licensees commented on the need for cost containment mechanisms within the CNSC. Licensees also felt the CNSC should implement service standards and performance measures in conjunction with the cost recovery program.

• The CNSC is committed to ensure that the CNSC regulatory regime is effective and efficient. Regulatory effectiveness equates with safety, and safety is always the first priority of the CNSC. Regulatory efficiency provides value-for-money for both the public and licensees through increased confidence that resources are directed to where they are most needed to fulfill CNSC's mandate.

• Several initiatives that draw upon principles of Modern Comptrollership are underway to address effectiveness and efficiency. Fundamental to this process was a restructuring of the organization to enable a clearer definition of authorities and accountabilities. A risk-informed process is now being used to prioritize regulatory activities and determine resource requirements. In conjunction with this, management systems have been put in place to allow managers to accurately track resource use. The CNSC is also developing risk-informed decision-making processes for CNSC staff that embraces the notion of expert judgment. As a pilot project, a preliminary set of regulatory performance indicators, developed with the Nuclear Energy Agency, will be used this year.

• The CNSC is also moving to a standardized compliance program that will communicate clearly to licensees the requirements for compliance. This will assist licensees to meet priority requirements as well as promote consistency in enforcement by CNSC staff.

4. Several organization representatives questioned their status as fee paying licensees and asked to be reclassified as exempt.

• The CNSC has identified two institutions which are wholly-owned by universities and which carry out advanced research in an academic setting, but which by reason of the nature of their incorporation do not meet the definition of educational institution as found in the current Cost Recovery Fees Regulations. CNSC is proposing to slightly expand the current definition of licensees exempt from paying fees to include non-commercial institutions that are wholly owned by the education institutions who are exempt from paying fees under the current definition. The two licensees would be exempt from fees by this change and have an estimated cost of regulation of approximately $350,000.

• The CNSC is also proposing to exempt "first responders" from paying fees. First responders are defined as those organizations who intervene in response to incidents in order to save lives (e.g., fire departments, explosive or hazardous material teams, police departments, emergency medical/ambulance organizations). In response to events of September 11th, 2001, the federal government will be training first responders to respond to chemical, biological, radiological and nuclear emergencies, as part of Canada's emergency preparedness network. To facilitate training, these agencies will be required to possess low-power radioisotopes and licences which require licensing by the CNSC. The cost of regulation related to these to-be exempt licensees is not expected to be significant.

5. Given that the cost recovery proposal now directly links level of effort to fees, the level of regulatory activity necessary to fulfill CNSC's mandate was questioned by licensees at all face-to-face meetings.

• Cost recovery practices and fees will not compromise the effectiveness of the CNSC's mandate to protect the health, safety, security and the environment. That being said, the CNSC is committed to regulatory efficiency and has made and continues to make numerous efforts to reduce administrative and other costs and to redirect resources to strategic priorities and to core regulatory activities. Changes have been made to the CNSC's management processes and reporting systems so that actual activities (which are predominantly time-based) and expenditures can be compared to budgeted activities on a regular basis. This will also allow the CNSC to ensure that resource allocation is in line with regulatory priorities.

6. Many licensees expressed agreement with the concept of a formula to calculate fee amounts based on regulatory effort, noting that the underlying principles are fair. There was virtually no support for maintaining the existing flat fee structure. The majority of licensees also supported the risk and performance based approach to fee calculation. There were, however, many comments on the weightings assigned to the variable components of the formulas. Numerous suggestions were offered regarding modifications to the fee formulas to enhance flexibility on usage, type, number of locations and size of business operations.

• As a result of comments from consultation with licensees, the CNSC has reviewed the level of effort assigned to all classes of licences. The CNSC has changed the fee formula weightings to reflect such factors as a scaling for varying volumes of nuclear substances held and to include specific fees for new licences. The recalculation of fees following these changes has reduced the overall impact of fee increases for a majority of licensees.

7. While licensees appear to favour a compliance based approach to fee calculation, most were not in support of an across the board initial compliance rating. Some felt that licensees with a history of poor compliance should immediately pay more while others felt that organizations with excellent compliance records (supported by internal safety programs and recognized certification such as ISO 9000) should be given a lower numerical compliance rating, thereby reducing their overall fee payment.

• Users of nuclear substances would have their licence fees determined in part by a compliance coefficient. As for the assignment of a lower initial compliance rating to good performers, the rating is already based on the minimum level of regulatory effort to meet requirements under the NSC Act. The compliance factor will be initially set at the minimum "1.0" for all licensees. The CNSC feels that in fairness to all licensees, implementation of the new cost recovery program should recognize an across the board compliance rating of "1.0" for the first year as opposed to retroactively charging licensees for past poor performance. This coefficient in future years will be used to fairly adjust the fee for extra costs that may be incurred due to poor compliance records of licensees.

8. The CNSC received several comments of support for the CNSC's intention to establish fees for any given year on the basis of planned level of regulatory activity. An increased flow of information between the CNSC and licensees over both planned activities and actual level of effort for those activities was seen to be one of the most positive aspects of the new cost recovery program. Licensees did request a phase-in period to assist with the financial impact on business. There is also an issue of fairness during transition for licensees that currently pay bi-annual fees upon issuance or renewal of a licence.

• The CNSC is proposing a phase-in of licence fees to minimize the business impact of fee increases on industry. In determining a recommended approach for a phase-in, the following factors were considered: equity, public fairness, fairness to the licensees, administrative complexity and government revenue.

• The CNSC initially proposed a phase-in whereby for all licensees 85% of recoverable cost is recovered in the first year, and 100% of recoverable cost in the second year. This will lessen the impact of fee increases and allow licensees some time to plan and adjust for the increase. CNSC is now proposing to extend the phase-in period based on the Canada Gazette, Part I consultations. This is explained in the later part of this document.

• The CNSC is also proposing transition rules for nuclear substance licences, which will apply in favour of the licensees. They are currently issued two year licences. The new fees will only apply upon renewal or extension of their licence.

9. Several licensees perceived a weakness in the dispute resolution process in the CNSC's proposal; a core issue appears to be the establishment of some independent avenue for contesting the level of regulatory activity upon which fees would be based.

• Under the NSC Act, the CNSC has the mandate to determine the required level of regulatory oversight needed such that activities of the nuclear industry do not pose unreasonable risk to health, safety and the environment. While the CNSC proposes to be open to licensee concerns, the CNSC cannot entertain appeals to outside bodies on its discretion in this area. The CNSC proposes to amend the Terms of Reference for the Cost Recovery Advisory Group to provide a window of opportunity for discussing regulatory issues of broad concern to licensees. The CNSC will also formalize the current process within the CNSC for resolving disputes over regulatory activities. Licensees will have access to the senior managers (Director General and Vice-President) responsible for regulating their type of licence.

10. Many licensees indicated a need for more information, particularly of the proposed fee amounts.

• Under the new regulations, regulatory activity plans will be shared with licensees. These plans along with fees estimate will be provided to licensees prior to the start of the fiscal year to which the fees relate. The level of regulatory effort and cost will be open and transparent. CNSC is also committed to improve reporting on costs and revenues to Parliament through its Report on Plans and Priorities and the Departmental Performance Report.

Business Impact Test

The consultation outlined above was followed by the Business Impact Test (BIT). The BIT was administered by a third party through a questionnaire posted on the CNSC's Website. Only 90 licensees, out of a total of approximately 1,700 fee paying licensees, replied. These 90 respondents break naturally into two groups. The first group, "Major Licence Holders" consists of 9 respondents, out of a possible 32, who hold licences for Power Reactors, Non-power Reactors, Nuclear Research and Test Establishments, High Power Particle Accelerators, Uranium Processing Facilities, Nuclear Substance Processing Facilities, Pool Type Irradiators and Uranium Mines/Mills. The second group consists of 81 firms, who use nuclear substances or equipment containing nuclear substances in their businesses, but who do not consider themselves to be part of the Canadian nuclear industry.

Only two (2) of the nine major licence holders who replied to the survey indicated that they would be strongly affected by the proposals. The first, the operator of a non-power reactor, suggested that the proposed fee increases might be enough to force a premature shutdown of their operation. The second, a manufacturer of products containing tritium, claimed that these proposals would significantly reduce their ability to compete in a "very competitive international marketplace". No significant trends were noted for the remaining seven (7) respondents.

The other 81 respondents, users of nuclear substances, further subdivided into two groups. The first group, consisting of 49 holders of licences for fixed gauges, portable gauges and industrial radiography, expect significant impacts as a result of the proposed fee revisions. They indicated there would be major decreases in revenues, negative effects on existing and potential markets, negative effects on customers and clients, and negative impacts on their ability to meet customer requirements. They were also concerned that, with limited ability to pass on the fee increase to their clients and customers, there would be significant and negative impacts on their cash flow, profitability, ability to weather financial fluctuations, and long-term return on investment. It was stated that impacts might result in these respondents changing to an alternative (non-nuclear) technology or ceasing the activities requiring a licence altogether.

The remaining 32 users of nuclear substances were less concerned about the impact of the proposed fee increases. While some indicated that they might look for alternate ways of conducting their business, including contracting out work or reducing the number of employees, others felt that the level of fees was reasonable. Some of these respondents also felt that there were definite benefits from CNSC's program: a level playing field, public confidence and inability to operate without CNSC support. Others felt that the fees were too high already, and suggested that benefits from CNSC's program were minor, and that they would like to see their fees reduced.

The BIT was not intended to produce statistically valid outputs but rather to focus on specific cases that fall outside the norm. The BIT response rate was quite low, only 5% of the fee paying population took the opportunity to use the forum to communicate regulatory impact.

CNSC Response

In its revised proposed regulation, the CNSC has attempted, to the extent possible, to address licensee concerns while remaining compliant with federal government policy. Attempts have also been made to mitigate the impact of fee increases through implementation and management (i.e., phase-in of the fee amounts and better provision of information). Licensees have been kept informed well in advance of implementation of proposed changes; licensees have received a year's advance notice of proposed changes to the fees regulations.

Canada Gazette, Part I, Consultation

The proposed Cost Recovery Fees Regulations were pre-published in the Canada Gazette, Part I, February 1, 2003. Interested parties had 30 days in which to make comments. All licensees and key stakeholders received a letter late January 2003, informing them of the Canada Gazette, Part I consultation, and, where applicable, an outline of the licensee's proposed 2003-2004 fees. The proposed regulations and fee estimates for 2003-2004 were also posted on the CNSC Website. Comments could be provided to the CNSC by mail, fax, e-mail or by telephone. All comments received were taken into consideration and some resulted in changes to the proposed regulations.

Feedback from licensees and the Cost Recovery Advisory Group indicates continued support for the basic principles of the fees regulations such as, the use of formulas to calculate fee amounts; the risk and performance based approach to fee calculations; and the linking of fees charged to the cost of regulation. Feedback has also shown strong support for the openness and transparency of the program.

The CNSC received comments from 74 participants. Of these, 33 participants had no issues with the proposed regulations or simply required clarification, and 41 participants had concerns or suggested improvements to the proposed regulations. The following table shows, by type of licensee, those participants who had concerns or suggested improvements to the proposed regulations.

Comments received by type of licensee	# of licensees
Power Reactors	3
Other Class I Nuclear Facilities	8
Waste Nuclear Substances	3
Class II Nuclear Facilities, Dosimetry and Nuclear Substances	22
Associations / Interested Parties	5
Total # of Comments received	41
Total # of licensees / (including exempt)	~1700/(2200)

The CNSC's response to the comments received is discussed below. The comments were grouped into seven (7) common issues. The Canada Gazette, Part I consultation did not identify any new issues, but many of the comments brought forward new perspectives and concrete suggestions. The CNSC responses to the issues identified prior to the formal Canada Gazette, Part I consultation, are still valid. The following provides further clarification or response to the specific suggestions raised as a part of this formal consultation.

1. Licensee Impact

• Comments: There was concern that the effect of the fee increases on the nuclear industry indicates or suggests a lack of support for the nuclear industry, on the part of the CNSC. Some felt that to alleviate the impact of fees increases, a longer phase-in period should be considered, while others opposed any increases in fees at all. There was also concern that the hourly rate of $200/hr is too high compared to other commercial professional organizations.

• Response: The CNSC regulates for health and safety, not for economic reasons. Under the NSC Act the CNSC must serve the public good by being an effective, transparent and trusted regulator.

• The proposed fee changes reflect a cost recovery adjustment for the first time in eleven years. Current cost recovery fees are based on the actual costs for 1992-1993 fiscal year.

• The Canada Gazette, Part I version of the regulations proposed a two year phase-in period. A phase-in is now being proposed where 85% of recoverable costs are recovered in the first year, 90% in the second year, 95% in the third year and 100% in the fourth and successive years. This will lessen the impact of any fee increases, allowing the licensees more time to adjust.

• The CNSC is committed to openness and transparency and all fee increases have been and will continue to be explained to the Cost Recovery Advisory Group and made available to all licensees and the public. The CNSC cost recovery program is transparent with the costs of the program open to public scrutiny.

• The CNSC will allocate resources based on risk to provide assurance that resources are tied to the areas of the highest safety concern. If there is an improvement in licensee performance that indicates that there is less risk in a particular area, resources will be appropriately adjusted in that area.

• The hourly rate of $200/hr reflects the cost of operating an independent, stringent, open and transparent regulatory regime. The rate includes the full costs for licensing, compliance, research and the development of regulatory documents. It also includes a portion of indirect costs for such activities as the Commission, public hearings, executive management, accommodations, human resources, finance, communications, telecommunications, etc. The current hourly rate is $150/hr, based on the 1992-1993 fiscal year. An increase of $50/hr is not unreasonable given cost increases over the 11 year time span. The hourly rate is calculated using sound accounting practices and is open to external review. An external audit of the cost recovery accounting process, including the hourly rate, will be conducted by the Office of the Auditor General later in 2003.

2. Public/ Private Split

• Comments: Compliance with federal government's Cost Recovery and Charging Policy 1997, was questioned by some of the participants; the concern being that the CNSC is attempting to recover costs that are perceived to be of benefit to the public. Some felt that the nuclear industry was being targeted with a higher recovery rate compared to that charged by other federal departments. Another concern was that the cost recovery for Environmental Assessments at the front end of new projects would place additional financial burden on innovation and job creation.

• Response: The CNSC complies with policy requirements and uses the methodology recommended by the Office of the Auditor General in 1999 in determining the public/private split, as well as guidance from TBS. Since all regulatory programs are different and the analysis of activities must be done on a program by program basis it is not relevant to compare recovery rates between programs. The CNSC reviewed the comments related to whether specific activities (e.g., environmental assessments) should be public or private and determined that the proposed allocation is appropriate.

3. Cost Efficiency

• Comments: There was concern over the CNSC's ability to control costs, and the lack of performance indicators and service standards. There was also a request, that the annual adjustments of fees be tied to service standards and performance indicators; and that the CNSC fully investigate potential opportunities to increase its efficiency as an alternative to the proposed fee increases.

• Response: The CNSC regulates the use of nuclear energy and substances in Canada to protect the health, safety, security and the environment. The demand for industry-driven standards could compromise our legislative mandate for safety. However, the CNSC recognizes that certain performance standards and indicators are a reasonable expectation.

• The CNSC already has some performance standards and indicators in place and is expanding their development to other areas as part of on-going improvement initiatives. The CNSC has time-line standards for licence applications and amendments in nuclear substance regulation. These standards cover over 95% of the licences regulated by the Commission. The CNSC will continue to develop performance standards and performance indicators in consultation with licensees and is looking at implementing them gradually over the next few years with implementation complete by the end of the phase-in period. This will be done while recognizing that the safety standards and regulatory independence of the CNSC must always be maintained.

• The CNSC will provide more details on improvement initiatives such as benchmarking activities. The CNSC is currently undertaking a benchmarking exercise of the Commission Tribunal against other similar Canadian Tribunals. The results of this study will be made available later this year, when it is completed. The CNSC commits to complete benchmarking reviews of the various parts of the organization such as Finance and Administration, Human Resources and Information Technology and Support directorates by end of fiscal year 2004-2005.

• The CNSC will prepare annual regulatory activity plans, estimate the cost of those plans, and share this information with licensees. This level of external transparency will provide a means to assure that the CNSC's regulatory regime is effective and efficient. It is also fair, because the fees paid by licensees are related to the costs incurred in regulating them. In conjunction with these initiatives, management systems have been put in place to allow managers to accurately track resource use and ensure that resource levels are aligned with risk areas. The cost recovery program will continue to impose significant change on how CNSC conducts its business in line with the expectations of modern comptrollership.

• The principle of openness and transparency of the CNSC Cost Recovery Program provides a strong incentive for cost efficiency. In addition, the Cost Recovery Advisory Group will provide ongoing meaningful input to the CNSC on stakeholders' concerns. Furthermore, cost recovery at the CNSC is subject to scrutiny by the CNSC's Audit and Evaluation Group as well as the Office of the Auditor General. The CNSC will report to TBS annually through existing reporting channels. CNSC cost increases have to be rationalized and fully justified to the Treasury Board.

4. Exemptions

• Comments: The CNSC received several requests for fee exemptions. These include provincial governments who have taken over abandoned contaminated sites as remediators of last resort, a provincially owned commercial research reactor and commercially operated nuclear medical facilities.

• Response: In addition to the exemptions listed in the current proposal, the CNSC is proposing to expand the current definition of exempt licensees to include provincial or municipal governments that provide long term management of contaminated sites that were abandoned before these Regulations will have come into effect.

• These organizations clearly are providing a public service to the society at large. The licensees in these cases have inherited the sites and have not, and will not receive any direct benefit from them. They are providing a service to the public by providing long-term management to protect the health and safety of persons and the environment.

• The licensees are mainly Ministries in Ontario and Saskatchewan, with an estimated regulatory cost of approximately $300,000 in the fiscal year 2003-2004. This regulatory cost is for the initial licensing of these facilities and it is expected that the costs for these facilities will decrease in future years. Given the research done by various federal departments, it is unlikely that there are many contaminated land sites as yet unidentified in Canada. Nor is the number of abandoned contaminated sites expected to increase in future years since the CNSC now requires financial guarantees for the decommissioning of nuclear facilities.

• Commercially operated research reactors and nuclear medical facilities will continue to be charged fees as there is no policy justification upon which to base an exemption.

5. Fee Structures/ Formulas

• Comments: While there was overall support for the fee structure to be linked to the level of effort, based on risk and performance, there were still a number of comments concerning fee structures/formulas. The fairness of some of the nuclear substance fee formulas was questioned. As the hourly rate has a significant effect on the fees, it was suggested a review of this rate following the first year of implementation would be appropriate.

• Response: Specific weightings and formulas were changed where appropriate. For example, one licence type has been recategorized based on the strength of the source. Another situation included an upper limit on the number of hours that could be charged to a portable gauge licence. The draft regulations have also been modified to allow licensees to request a re-estimation of their activities/fees, if there is a change in the licensee's plans for the licensed activity.

• The CNSC has already begun sharing detailed information on costs of regulating the nuclear industry. The CNSC will also annually provide the Cost Recovery Advisory Group with detailed information on the costs and the methods used to calculate fees. This information will also be made available to the public through postings on the CNSC Website. An external audit of the cost recovery accounting process, including the hourly rate, will be conducted by the Office of the Auditor General later in 2003. Additional audits will be carried out if there are significant changes in the program such as a change to the corporate hourly rate.

6. Dispute Resolution

• Comments: There is a need for an effective mechanism for resolving disputes over fees.

• Response: Independent dispute resolution inevitably involves questioning the regulator's discretion on allocation of time and resources, and thus would infringe upon the independence of the Commission and could introduce limitations on the CNSC's ability to protect the public. The CNSC has established two dispute resolution mechanisms, internal to the CNSC. One will address complaints regarding the administration of fees. The other will address disputes over regulatory activity assignments through the line management in the CNSC Operations Branch. Details of this mechanism will be published on the CNSC's Website and all licensees will be informed of the process for using this mechanism. The Cost Recovery Advisory Group mandate has also been expanded to provide the opportunity for licensees to discuss industry-wide regulatory concerns.

7. Ongoing Provision of Information

• Comments: There were some requests for more information on the regulatory effort performed to explain the fees and on-risk-based regulation, used to determine the regulatory effort. There were some requests to have fees fixed over a longer time period. Some licensees felt that the proposed cost estimates did not provide sufficient detail to explain the rationale for the level of regulatory effort performed.

• Response: The CNSC will continue to seek input/feedback from the Cost Recovery Advisory Group on what information should be provided to licensees. As the program matures, the ability to forecast activities and the related fees will improve and the predictability of fees will increase. Longer planning periods are under review. A permanent Web page including program information will be continually updated with costing and fee information, including the results of any studies (i.e., benchmarking of overhead costs).

Summary

Extensive consultation was carried out in preparing the Cost Recovery Fees Regulations. All comments received at the various stages of consultation were considered. Adjustments have been made to the regulations and the Cost Recovery Program where possible and appropriate. Changes have been made to the nuclear substance formula fees and a provision has been added to allow licensees whose fees are based on Regulatory Activity Plans to request a re-estimation. The CNSC is committed to publishing performance measures for all licensing areas and target dates for key improvement initiatives (such as benchmarking). The CNSC will continue to work with the Cost Recovery Advisory Group on the provision of information. The Cost Recovery Fees Regulations and its supporting Cost Recovery Program are in compliance with Federal policy and the NSC Act.

Compliance and Enforcement

Licensing action by the CNSC is contingent upon fee payment in good standing by applicants and licensees. Failure to pay prescribed fees as required by the regulations constitutes an offence under the NSC Act and its regulations as well as grounds for refusing to take the requested licensing action.

Subsection 24(2) of the NSC Act allows the Commission to issue, renew, suspend in whole or in part, amend, revoke or replace a licence on receipt of an application accompanied by the prescribed information and the prescribed fee.

Paragraph 48(k) of the NSC Act states that any person who fails to comply with the Act or any regulation made pursuant to the Act commits an offence and is subject to the penalties provided by sections 50 and 51.

The CNSC Compliance Policy calls for a spectrum of compliance measures ranging from education, to meetings with licensees, to notices and warnings and finally to possible orders, licensing action or prosecution in the event that other compliance measures prove ineffective.

Contact

• James Clarke
  Executive Director, Office of Regulatory Affairs
  Canadian Nuclear Safety Commission
  P.O. Box 1046, Station B
  280 Slater Street
  Ottawa, Ontario
  K1P 5S9

Footnote a 

S.C. 2001, c. 34, s. 61

Footnote b 

L.C. 1997, c. 9

Footnote c 

L.C. 1997, c. 9

Footnote d 

S.C. 2001, c. 34, s. 61

Footnote e 

L.C. 1997, c. 9

Footnote 1 

SOR/96-412

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