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THE ENVIRONMENT (PRINCIPLES AND GOVERNANCE) BILL: ENVIRONMENTAL STANDARDS AFTER BREXIT

On 19 December 2018 the government published draft Clauses on Environmental Principles and Governance. These are supposed to address the arrangements for the effective enforcement of environmental laws in England after Brexit, when enforcement by the European Commission and the Court of Justice of the European Union will no longer be available.

Publication of the Clauses followed a consultation which produced over 175,000 responses. The Clauses, published as a draft Environment (Principles and Governance) Bill are intended to be part of a wider Environment Bill to be introduced in 2019, covering air quality, protection and enhancement of landscapes, wildlife and habitats, more efficient handling of resources and waste and better management of surface, ground and waste water.

The government now summarises its legislative proposals, made in pursuance of section 16 of the European Union (Withdrawal) Act 2018, as follows –

“The draft Environment (Principles and Governance) Bill sets out how the government will maintain environmental standards as we leave the EU. It also details how we will build on the vision of the 25 Year Environment Plan.

This includes creating an independent body – the Office for Environmental Protection (OEP) – which will-

  • scrutinise environmental law and the government’s environmental improvement plan (EIP)
  • investigate complaints on environmental law
  • take enforcement action on environmental law.

The draft Bill commits the government to publishing a policy statement which will set out how ministers should interpret and apply environmental principles. It also commits government to have a plan for environmental improvement.

The broader Environment Bill will also include measures on air quality, nature recovery, waste and resource efficiency and water management.”

By Brexit, the UK will lose  –

  • Treaty obligations reinforcing environmental laws;
  • Enforcement by the European Commission;
  • Enforcement by the Court of Justice of the European Union;
  • The ultimate sanction of EU Member States risking fines for continuing breaches of EU law;
  • Legal requirements on government to secure that penalties for breaches are “effective, proportionate and dissuasive” (see e.g. Water, Waste, Air Quality Framework Directives, REACH Regulation etc); and
  • Rights of individuals to activate enforcement of environmental laws, at no cost, through complaints to the Commission

In May 2018, Secretary of State EFRA, Michael Gove MP, declared that –

“Our new Environmental Principles and Governance Bill is designed to create a new, world-leading, independent watchdog to hold government to account on our environmental ambitions once we have left the EU. The role which has been played in the past by the EU Commission and courts should be filled now by a UK body embedded in the UK’s parliamentary democracy.”

The May 2018 consultation considered (para 137-8) that –

“Subject to the outcome of this consultation, we believe the most appropriate approach may be to create an independent body that will be accountable to Parliament…”

However in place of the robustly independent body, accountable to Parliament, that was proposed, the Office of Environmental Protection would under these clauses be appointed, and funded, by the same Secretary of State.

The Office of Environmental Protection would be able to issue an Information Notice, a Decision Notice, and eventually to make a “review application” to the High Court or Court of Session, and maybe to make a public statement about breaches of environmental law, but all mention of the powers of the European Commission to seek and the Court of Justice of the European Union to impose, a fine for non-compliance with environmental laws has been omitted.

The draft Clauses apply the environmental principles to the actions of Ministers and public authorities through the Secretary of State’s Policy Statement. It is the Policy Statement to which Ministers must have regard.  This allows much scope for Ministerial lobbying against enforcement action, and for re-interpretation of which principles should apply and how, instead of applying the principles directly to the discharge of functions by public bodies.

Three wide exemptions are driven through the scope and application of the Policy Statement on the application of Environmental Principles –

“The statement may not deal with policies relating to—

(a) the armed forces, defence or national security,

(b)  taxation, spending or the allocation of resources within government, or

(c)  any other matter specified in regulations made by the Secretary of State.

These exemptions appear unjustified, inconsistent with EU environmental law which the government has promised to transpose into national law, and inconsistent with the express ambition of the Secretary of State to have a “world-leading, independent watchdog to hold government to account on our environmental ambitions once we have left the EU”. There is a long way to go in amending these Draft Clauses before they can be said to deliver anything equivalent to the force and enforcement of EU environmental laws.

                                                         William Wilson, Prospect Law Ltd

About the Author

William Wilson is a specialist environmental, regulatory and nuclear lawyer with over 25 years experience in government, private practice and consultancy. He worked as a senior lawyer at the UK Department of the Environment/DETR/Defra, and helped to build up the environmental and nuclear practices at another major law firm, as well as running his own environmental policy consultancies. William has experience of all aspects of environmental law, including water, waste, air quality and industrial emissions, REACH and chemicals regulation, environmental protection, environmental permitting, litigation, legislative drafting, managing primary legislation, negotiating EU Directives and drafting secondary legislation.

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

This article is not intended to constitute legal or other professional advice and it should not be relied on in any way.

For more information or assistance with a particular query, please in the first instance contact Adam Mikula on 020 7947 5354 or by email on adm@prospectlaw.co.uk.

For a PDF of this blog click here

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POST-BREXIT IMMIGRATION UPDATE –WHITE PAPER PUBLISHED

The UK government published a White Paper yesterday setting out its plans for post-Brexit immigration, which are expected to be brought into force from 1 January 2021.

The long awaited White Paper (WP) is the official approval by the government of the recommendations made by the Migration Advisory Committee in September 2018.

Click here to view the full white paper.

Post-Brexit Immigration

The White Paper proposes a single, skills-based immigration system, focused on talent and expertise rather than nationality. Essentially the proposal is to continue with our existing points based immigration system but to bring EU nationals within it.

It includes the following positive changes:

  • Removing the quota on Tier 2 General visas: The WP proposes to remove the cap on these visas which is currently set at 20,700 per year.
  • Removing resident labour market test: The WP proposes to abolish the requirement for employers to complete a Resident Labour Market Test (RLMT) before sponsoring a foreign worker for a Tier 2 General Visa. Currently, employers are required to advertise a vacancy for 28 days to confirm that no British or EEA nationals are suitable for the role.
  • New short-term visa for low-skilled workers: The WP proposes to create a new visa category for low-skilled workers, allowing initial visas up to 12 months that will not require employer sponsorship. The 12 month visa will provide the right to work, but people arriving on this route will not be able to bring family members with them or take benefits nor will they accrue rights to settle in the UK. They will also have a 12-month cooling off period once their visa expires.
  • No visa for EU visitors: The WP proposes that EU nationals would be able to enter the United Kingdom for short-term trips as tourists or business visitors without a visa.
  • Consultation on salary threshold: The WP confirms that UK authorities will launch a public consultation on the current minimum salary requirement of £30,000 for Tier 2 (General) Visa applications.
  • There are also proposals for improved border security checks and an Electronic Travel Authorisation (ETA) Scheme including allowing citizens from Australia, Canada, Japan, New Zealand, USA, Singapore and South Korea to use e-gates to pass through the border on arrival, alongside EU and UK citizens.

The proposed changes would partly address a number of concerns expressed by businesses over the past months, including the anticipated drain of low-skilled EU workers after Brexit. It would also hopefully make the system much quicker given the removal of the Tier 2 quota and the RLMT. Conversely, the government admits that these proposals could reduce the UK workforce by between 200,000 and 400,000 EEA nationals over the first 5 years meaning that GDP would be between 0.4 and 0.9% lower than it otherwise would have been in 2025.

This new immigration system will be implemented in a phased approach from 2021 following an extensive 12-month programme of engagement with businesses, stakeholders and the public by the Home Office. The proposals may of course change depending on any future trade deal struck with the EU.

EU Citizens already living in the UK

It is important to note that the White Paper outlined above is about the UK’s future post-Brexit migration system and does not affect EU citizens already living in the UK, who will be able to (and will need to) apply for “settled status” in order to stay legally after Brexit.

In summary under the terms of the proposed Settlement Scheme:

  • EU citizens and their family members who, by 31 December 2020, have been continuously resident in the UK for five years will be eligible for “settled status” enabling them to stay indefinitely;
  • EU citizens and their family members who arrive by 31 December 2020, but will not yet have been continuously resident here for five years, will be eligible for “pre-settled status”, enabling them to stay until they have reached the five-year threshold. They can then also apply for settled status;
  • EU citizens and their family members with settled status or pre-settled status will have the same access as they currently do to healthcare, pensions and other benefits in the UK;
  • Close family members living overseas will still be able to join an EU citizen resident in the UK at any time after 2020, where the relationship existed on 31 December 2020 and continues to exist when the person wishes to come to the UK. Future children are also protected; and
  • Settled status will only be lost after 5 years’ absence from the UK.

No Deal

If we leave the EU on 29 March 2019 with no deal, the protections on offer to EU citizens will be diluted as follows. See the Department for Exiting the EU’s no-deal paper on citizens’ rights published on 6 December 2018 for further detail:

  • The Settlement Scheme will only apply to EU citizens who arrive before 29 March 2019 rather than as currently planned for EU citizens arriving up to the end of 2020.
  • There will be a shorter deadline for applications, of 31 December 2020, rather than 30 June 2021.
  • There will be no right of appeal to an immigration judge to challenge a refusal of settlement under the scheme.
  • There would be a cut-off point of 29 March 2022 for family members of EU citizens with settled status to join them in the UK.

There is so far no clarity on the status of EU nationals arriving in the UK between 30 March 2019 and 1 January 2021 in the event of no-deal.

On the plus side in a no-deal scenario, the Home Office says that the Settlement Scheme would still be generous and user-friendly, with case-workers “looking to grant status, not for reasons to refuse”. The Home Office are not always known for being generous and user friendly so this would be a welcome development.

Please note that if you are an EU national and have already been living in the UK for several years, you may already have acquired a permanent or other right of residence under existing EU regulations. Given that the UK is still for the moment a full member of the EU and depending on your personal situation, it might be a good idea to regularise your situation now to ensure minimal disruption over the next few years.

About the Author

Alice Boyle is a solicitor with extensive experience in all areas of immigration law. She can assist both corporate and individual clients with any immigration, nationality or asylum matter and possesses a sound understanding of Tier 1 Investors, Tier 1 Entrepreneurs and Tier 2 matters. Alice has substantial experience of challenging UK Home Office decisions, regularly representing clients in appeals at both the First-Tier and Upper Tribunal and also by way of Judicial Review applications in both the Upper Tribunal and UK High Court.

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

This article is not intended to constitute legal or other professional advice and it should not be relied on in any way.

For more information or assistance with a particular query, please in the first instance contact Adam Mikula on 020 7947 5354 or by email on adm@prospectlaw.co.uk.

For a PDF of this blog click here

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THE IMPACT OF BREXIT ON ENERGY INDUSTRY BUSINESS: ISSUES AND CHALLENGES

BREXIT appears to have put everybody in a frenzy, not only over the form of the UK’s withdrawal but also its future relationship.  For energy industry businesses, irrespective of any political accommodation, the challenge in trading with the EU will be immeasurably different and more challenging from 30th March.

Procurement Opportunities

As we all know, Central Governments across the EU have considerable influence over their domestic energy producers, and consequently procurement opportunities are published and managed in accordance with the procedures of the Official Journal of the European Union.  Irrespective of any ‘deal’, being outside the EU will reduce the opportunities for UK businesses to successfully compete.  The natural priority will be to award contracts to those companies residing within the 27 Member States, before considering those outside of EU jurisdiction.

We have all heard the words that business requires ‘certainty’, and that ‘uncertainty’ is bad.  However, ‘change’ is the watchword of business, with businesses continually investigating market positioning and product development in order to beat the competitor.  BREXIT provides some short-term uncertainty, but the entrepreneurial businesses are already looking into the future to define those new ‘rules for success’.

Future Approach

The UK business model, which is perceived as more adversarial and aggressive than the ‘Latin’ relationship approach, may not be appropriate.  Whilst the UK cost and contract driven approach has commendable attributes, particularly over certainty of delivery, continuity of client relationship has a much lower value and relevance – it is just not ‘bankable’.

One thing that is patently obvious is that the UK approach into Europe will have to change, and change quickly, if trade is to be maintained and grow.  Partnership, and the development of local targeted subsidiary businesses employing a mixture of local and UK personnel, may be an appropriate approach.

These risks and challenges are real and overnight success will not be achieved.  There are many imponderables e.g. which state; a satellite office or partnership; a mirror image business or one that has potential to diversify; financial exposure and potential return; and finally integration of the different business cultures into a cohesive profitable entity.

Conclusion

The opportunities available to the energy industry are real, with the UK able to provide innovative approaches and solutions to its many challenges.  Energy security with diversity is seen as reducing risk potential, be it from adversarial political influence, the effect of climate change or just bad-luck due to a major system failure.

There is no ‘one-size fits all solution’ open to governments, project developers and financiers.  A fully open mind is required to explore the issues, challenges and propose workable solutions: this is the skill and expertise offered by the UK Business as it looks with excitement, tinged with trepidation, at our changing energy world.

About the Author

John Ireland is an internationally experienced energy specialist and senior business executive skilled in the development, negotiation, and management of businesses and technically complex contracts within both the Government and private sectors.  John, a Chartered Engineer and Fellow of the Institution of Chemical Engineers, has been Chief Engineer advising clients on nuclear new build in Romania and investigating opportunities in Saudi Arabia, Jordan and Turkey, and Project Manager for the treatment and management of toxic and radio-toxic chemical wastes in the UK, Japan, and the EU.                                                   

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

This article is not intended to constitute legal or other professional advice and it should not be relied on in any way.

For more information or assistance with a particular query, please in the first instance contact Adam Mikula on 020 7947 5354 or by email on adm@prospectlaw.co.uk.

For a PDF of this blog click here

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AN ANALYSIS OF THE CONSULTATION ON AN ENVIRONMENTAL PRINCIPLES AND GOVERNANCE BILL: PART II

Perhaps unnoticed, Defra’s consultation on ‘Environmental Principles and Governance after the United Kingdom leaves the European Union’, is probably the most important consultation affecting environmental laws to be introduced for at least the last ten years. It goes right to the heart of how environmental laws will, or should, or may not be, enforced, after the UK leaves the EU.

The second part of this series addresses losses the UK may suffer in terms of environmental law enforcement once it leaves the EU, as well as the likely aims of bodies set up under the Environmental Principles and Governance Bill  and environmental justice concepts  in operation in  the USA.

What the UK will lose in terms of environmental law enforcement on leaving the EU

On top of the existing failures to deliver effective enforcement of existing laws, the U.K. will now, after Brexit, lose:

  • Treaty obligations reinforcing environmental laws;
  • enforcement by the European Commission;
  • enforcement by the Court of Justice of the European Union;
  • the ultimate sanction of Member States risking fines for continuing
    breaches of EU law;
  • the legal requirement upon government to ensure that penalties for
    breaches are “effective, proportionate and dissuasive”; and
  • the right of individuals to activate enforcement of EU environmental laws, at no cost, by raising complaints with the European Commission.

Environmental governance                                                                                              

Any body, or set of bodies, set up, under the U.K. government’s proposed Environmental Principles and Governance Bill and/or parallel legislation in the devolved Parliaments will need to aim to deliver a consistent approach to environmental law enforcement across the UK; to be independently financed, established by statute and answerable to Parliament(s); to have the right to take up and investigate individual citizen complaints of breaches or non-enforcement of environmental laws without the prohibitive costs of judicial review; and to be able to hold government and public bodies to account.

Issues of Environmental Principles

With respect to the principles covered by section 16 of the European Union (Withdrawal) Act 2018 , as a minimum:

(a) government and public bodies at all levels should have regard to them  when discharging their functions; and

(b) where they are already embedded in retained EU law, there should be a commitment by government to reflect that, and not to dilute their application.

Environmental Justice

In America, there are much better developed concepts of environmental justice in the way in which environmental laws and regulation are applied. As an example, the Presidential Executive Order for 1994 stated that:

…”to the greatest extent practicable and permitted by law…each Federal agency shall make achieving environmental justice part of its mission by identifying and addressing as appropriate disproportionately high and adverse human health or environmental effects of its programs, policies and activities on minority populations or low-income populations.

Another way that this was explained to the author of this article, by Professor Robert Kuehn of Tulane University Law School was as follows:

The observation that most community environmental struggles are not won solely through the hands of lawyers is profoundly accurate. If equal enforcement of environmental laws is to be achieved, then all aspects of the enforcement process need to be opened up to residents of affected communities – their participation in making enforcement decisions must be sought out, their opinions and desires respected and addressed, and their ability to protect their own communities and police the facilities in those communities enhanced.”

Concepts of environmental justice, and the approach to law making and enforcement recommended there by Professor Kuehn, might well have helped to avoid some of the worst aspects of the Grenfell fire disaster. It may be time to consider what lessons there are to learn from American approaches to environmental justice when considering environmental governance in the UK.

The fundamental structures of enforcement of environmental laws are being re-designed from scratch. At a time of some legislative and constitutional turmoil, environmental lawyer, and those interested in effective environmental laws, need to identify what really matters, and to speak up for it.

Prospect Law Ltd, September 2018

About the Author

William Wilson is a specialist environmental, regulatory and nuclear lawyer with over 25 years experience in government, private practice and consultancy. He worked as a senior lawyer at the UK Department of the Environment/DETR/Defra, and helped to build up the environmental and nuclear practices at another major law firm, as well as running his own environmental policy consultancies. William has experience of all aspects of environmental law, including water, waste, air quality and industrial emissions, REACH and chemicals regulation, environmental protection, environmental permitting, litigation, legislative drafting, managing primary legislation, negotiating EU Directives and drafting secondary legislation.

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

This article is not intended to constitute legal or other professional advice and it should not be relied on in any way.

For more information or assistance with a particular query please in the first instance contact Adam Mikula on 020 7947 5354 or by email on adm@prospectlaw.co.uk.

For a PDF of this blog click here

LEGAL ADVICE FOR BUSINESSES ON ‘NO-DEAL BREXIT’ PLANNING

The European Commission published a briefing on ‘no-deal Brexit planning’ on 19 July 2018, followed by sector briefings covering many different industries and areas, and emphasised the need for all organisations and businesses to be prepared for all outcomes when the UK leaves the EU on 29 March 2019.

The UK government is due to start publishing its own technical notices about preparations for a no-deal Brexit as part of its contingency planning, and the notices will start appearing between 23 August and the end of September 2018. Sources suggest that these notices will cover 83 or more different topics, many of them of critical importance to our clients, such as chemicals regulation, civil nuclear power, electricity trading, environmental standards, nuclear research, oil and gas, renewable electricity and so on.

Prospect Law Ltd is already advising on many aspects of Brexit and will be following these developments closely. Please continue to monitor our social media for additional updates.

For further information, advice on how these developments may affect your business or to be referred to a specialist member of the team who can help, please contact Edmund Robb on er@prospectlaw.co.uk or 07930 397 531 or Edward de la Billiere on edlb@prospectlaw.co.uk or 07824 506 022.

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AN ANALYSIS OF THE CONSULTATION ON AN ENVIRONMENTAL PRINCIPLES AND GOVERNANCE BILL: PART I

Perhaps unnoticed, as people head to the beach in August, Defra’s consultation on ‘Environmental Principles and Governance after the United Kingdom leaves the European Union, which closed on 2 August 2018, is probably the most important consultation affecting environmental laws to be introduced for at least the last ten years. It goes right to the heart of how environmental laws will, or should, or may not be, enforced, after the UK leaves the EU.

It proposes a new Bill, to set up a new body with the essential task of holding government and public bodies to account for environmental law enforcement, in place of enforcement of EU law by the European Commission and Court of Justice of the European Union.

The Bill will also address how the key environmental principles which underpin EU environmental laws should be reflected in UK laws after Brexit. The new Bill will only apply to England, as responsibility for the environment is a devolved matter, but similar issues will arise for each devolved administration. Debates continue over the workability of having four separate enforcement bodies, or a single body for the UK applying consistent standards but (and this is now a pressing need) taking real and full account of the concerns in each of the UK’s constituent parts.

In this article, the author argues that given the current failures of enforcement under existing legal structures, there now needs to be a legal duty upon all levels of government“ to secure the effective enforcement of environmental laws” for which they are responsible. He also argues that government and public bodies must, as a minimum, have regard to environmental principles when discharging their functions, and must commit not to dilute the existing application of those environmental principles where already reflected in EU law; and that it is time to introduce the principle of environmental justice to UK law.

Issues of non enforcement of existing EU environmental laws

The consultation does not address the really serious issue of non-enforcement of existing EU laws under existing structures. Examples of this are as follows.

Volkswagen and ‘defeat devices’

Volkswagen placed 590,000 vehicles containing defeat devices to mislead emissions tests on the US market. After investigations by Congress, State Attorneys General, the FBI, the Department of Justice, the State of California, Volkswagen in 2017 agreed to plead guilty and to pay $4.3 billion in criminal and civil penalties, ($2.8 billion criminal and $1.5 billion civil penalties). Six executives and employees were named and indicted.

Volkswagen placed 1.2 million cars fitted with similar devices on the UK market. Initially, the then Transport Secretary wrote to the European Commission saying that he hoped they would “investigate this matter thoroughly and take appropriate action to avoid a recurrence”. On 8 December 2016, the European Commission opened infringement proceedings against 7 states, including the UK and Germany “for failing to set up penalties systems to deter car manufacturers from violating car emissions legislation, or not applying such sanctions where a breach of law has occurred.” Since that time, it does not appear that any UK enforcement authority has taken any enforcement action of any description against Volkswagen for this matter.

Air quality and the ClientEarth cases

The UK’s non- compliance with EU air quality legislation, and the ClientEarth series of cases in different jurisdictions to try to enforce it, are a matter of record. Successive UK governments must know quite well what EU laws require on air quality; but ClientEarth has been obliged to go back and back to court to obtain one ruling after another that the UK government is in breach.

Illegal waste sites

It is becoming clear that in parts of the UK there may be hundreds of illegal waste sites that are not yet being tackled by the environmental regulators, who are somewhat given to complaining that they simply lack the resources to do more to enforce existing laws in the area. This gives rise to two questions. First, is there the will to enforce existing law? Secondly, if the issue is really about resources, what can and should be done, for example, to share more of the proceeds of crime recovered in waste cases with the regulatory agencies, instead of with the Treasury?

Enforcement of river pollution incidents

The current referral to the European Commission by Afonydd Cymru of the inactions by the NRW in enforcing existing river and nitrate legislation underlines both the availability at present of a European remedy to breaches of EU environmental law, and the importance of oversight of environmental regulators as a practical issue for environmental law enforcement.

Failure to enforce existing environmental laws, at a time when the UK is, on Brexit, removing many of the most effective powers and means for their enforcement, risks sending a signal that pollution pays, that compliance with environmental laws is for the little people, not large companies, and that regardless of public concern, there isn’t the political will to make enforcement effective. Again, if environmental laws are not going to be effectively enforced, it doesn’t greatly matter what they say.

What is needed to make enforcement of environmental laws effective is –

(i)        clearly drafted laws;

(ii)       a strong political message, from the top, that environmental laws are there to do an important job, and will be enforced, against individuals, and companies of all sizes;

(iii)      a proper statement of enforcement policy by regulators;

(iv)      properly resourced, adequately informed and skilled, independent and robust regulators; and

(v)        a legal duty on all levels of government “to secure the effective enforcement of environmental laws” – something which the new environmental regulator can focus on, and support.

The follow-up to this article will address losses the UK may suffer in terms of environmental law enforcement once it leaves the EU, as well as the likely aims of bodies set up under the Environmental Principles and Governance Bill and environmental justice concepts  in operation in  the USA.

About the Author

William Wilson is a specialist environmental, regulatory and nuclear lawyer with over 25 years experience in government, private practice and consultancy. He worked as a senior lawyer at the UK Department of the Environment/DETR/Defra, and helped to build up the environmental and nuclear practices at another major law firm, as well as running his own environmental policy consultancies. William has experience of all aspects of environmental law, including water, waste, air quality and industrial emissions, REACH and chemicals regulation, environmental protection, environmental permitting, litigation, legislative drafting, managing primary legislation, negotiating EU Directives and drafting secondary legislation.

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

This article is not intended to constitute legal or other professional advice and it should not be relied on in any way.

For more information or assistance with a particular query please in the first instance contact Adam Mikula on 020 7947 5354 or by email on adm@prospectlaw.co.uk.

For a PDF of this blog click here

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SECTOR DEAL BETWEEN GOVERNMENT AND THE NUCLEAR INDUSTRY—KEY MESSAGES

This article was first published on Lexis®PSL Energy on 18 July 2018. Click for a free trial of Lexis®PSL.                                                                                                                                                                                            Energy analysis: Rupert Cowen, senior commercial and nuclear energy lawyer at Prospect Law, highlights some of the key messages of the sector deal between the UK government and the nuclear industry

Original news

£200m nuclear deal to secure UK energy mix, LNB News 28/06/2018 94

The Department for Business, Energy & Industrial Strategy (BEIS) has announced a £200m deal with the nuclear sector to secure the UK’s diverse energy mix and drive down nuclear energy costs. The deal includes £32m to kick-start a new advanced manufacturing programme to develop potential world-leading nuclear technologies like advanced modular reactors, and a commitment to increasing gender diversity in the civil nuclear workforce, with a target of 40% women in the sector by 2030.

What are the key messages and conclusions of the sector deal? Is there anything unexpected or new?

 To those of us old enough to remember the 1970’s, when the government of the day offered support to ‘the white-hot heat of technology’, the new industrial strategy is back to the future with its ‘grand challenges’ to put the UK at the forefront of the industries of the future.

Although the strategy promises government support in many sectors, it is a moot point whether nuclear can be said to be an industry of the future. Although, it is clear that some in this government believe that if the price of constructing generating capacity can be reduced, it does have a future in the UK.

As a mark of the confusion which reigns within the government authorities seeking to assist industry, even before the ink is dry on the nuclear sector deal, the National Infrastructure Council’s National Infrastructure Assessment cautions against a rush to agree government support for multiple new nuclear power stations, and proposes that after Hinkley Point C in Somerset, the government should agree support for only one more nuclear plant before 2025. This following on from the government’s refusal to support the Severn barrage.

Among the hyperbole of the nuclear sector deal, is the promise to ‘transform our future’. The deal does at least make good on the promise of financial support with confirmation of £56m for R&D in advanced modular reactors (AMRs), £85m to replace the funding Culham lost because of the withdrawal from Euratom; and other promises include £40m toward a facility to develop advanced nuclear technologies together with support for an advanced manufacturing program and a national supply chain programme.

The stand out point is that, although there will be government support for AMRs, that support does not extend to the small modular reactors (SMRs). Despite its disappointment, Rolls Royce—who would have been the main beneficiary of government support for SMRs—said that it continued to believe that ‘UK SMR can be a significant contributor to providing low cost, low carbon electricity’.

Nuclear energy supporters see AMR’s as a lower cost alternative to traditional reactors which are struggling to compete with the rapidly falling cost of renewables.

The other stand out points were:

  • acknowledgement of the need for direct government advanced financial support to reduce the cost of construction of the existing planned nuclear development in the UK
  • the new facility to develop advanced nuclear technologies is possibly going to be located at Trawsfynydd with support from the Advanced Manufacturing Research Centre (AMRC)

In return, those members of the industry who canvassed the Nuclear Industry Council have made a commitment to:

  • reduce the cost of new nuclear build projects by 30% over the next 12 years
  • reduce the cost of decommissioning old nuclear sites by 20%—reference is made to the current debate on the proper end state for legacy nuclear sites and the BEIS consultation on funding decommissioning

To the more cynical reader, the relationship between end state and cost reduction will not be lost.

This announcement comes only days after EDF announced that the cost of constructing Hinkley Point C had increased by a further £1.5bn to over £20bn.

Are there any remaining unanswered questions?

The government has indicated in a vague and unsubstantiated way that in the case of Wylfa Newydd, it might consider attaching taxpayer funds to the construction of the site, but with the ambition of achieving a strike price for the electricity that will be about £15/MWh cheaper than for Hinkley. Such a strike price would be about £77.50/MWh. This price is still higher than the £57.50/MWh allocated for UK offshore wind contracts in September 2017.

Are there any other important points worth mentioning?

The sector deal does not help with the biggest own goal for the nuclear industry in the UK and ensuring it is not affected by Britain leaving the European Union, and to aim for continuity with Euratom arrangements to enable the nuclear industry to continue operating after 29 March 2019.

About the Author

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

This article remains the copyright property of Prospect Law and Prospect Advisory and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

Rupert Cowen has worked in various countries on nuclear projects and has drafted for and provided ongoing guidance to those creating or revising national legal regulatory frameworks. He is recognised as a leading expert in international nuclear law and regulation; he lectures on a frequent basis around the world and has published papers on various aspects of nuclear regulation, particularly nuclear waste strategies.

Prices quoted are indicative and may be based on approximate or readjusted prices, indices or mean levels discussed in the market. No warranty is given to the accuracy of any view, statement or price information made here which readers must verify.

For more information or assistance with a particular query, please in the first instance contact Adam Mikula on 020 7947 5354 or by email on adm@prospectlaw.co.uk.

Prospect Law Ltd, July 2018

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UK GOVERNMENT PUBLISHES DRAFT NUCLEAR SAFEGUARDS REGULATIONS

On 9 July 2018 the UK government published a consultation on draft Nuclear Safeguards Regulations (see link). The draft Regulations are the next essential piece in the framework being introduced in the UK following the decision to leave the Euratom Treaty in parallel to the decision announced to leave the European Union. These are important Regulations with wide implications for all nuclear operators and those in the nuclear supply chain.

The consultation runs to 14 September 2018 and covers all parts of the UK. Consultation workshops will take place in London on 2 August 2018 and in Manchester on 15 August 2018, and others may be announced later.

Following the triggering of Article 50, Treaty for European Union, the UK government concluded that leaving the European Union had the consequence of the UK being required to leave the Euratom Treaty, and it gave notice of that intention at the same time [see earlier Prospect Law briefings in June 2017 and March 2018, parts 1-3].

In order to avoid any actual or potential gaps in the coverage of nuclear safeguards, and to ensure its continued firm commitment to both the international system of nuclear non-proliferation and uninterrupted support for civil nuclear developments, the UK government has had to go to considerable lengths.

On 26 June 2018 the Nuclear Safeguards Act 2018 received Royal Assent, introducing a new and enhanced framework for the Office for Nuclear Regulation ‘ONR’ to apply safeguards outside of Euratom. The Nuclear Safeguards Act 2018 will amend relevant provisions of the Energy Act 2013.   Publication of the draft Nuclear Safeguards Regulations on 9 July 2018 is the next step in addressing the detailed regulatory requirements of this process.

The Regulations will aim to deliver an equivalent regime to that applying under Euratom from Day One of the UK’s exit from the European Union and Euratom, by whatever route that now takes. As expected, most of the new day to day responsibilities will fall on the ONR.

The UK Department for Business, Energy and Industrial Strategy ‘BEIS’ has also set up a working group with those with like responsibilities in Scotland, Wales and Northern Ireland, and this has been considering related issues such as the shipment and treatment of radioactive waste.

In addition, the UK has prioritised development of bilateral Nuclear Cooperation Agreements with four jurisdictions with their own particular legislation controlling nuclear trade and cooperation, namely Australia, Canada, Japan and the USA, and a UK-USA Nuclear Cooperation Agreement was signed on 4 May 2018.

The Regulations will contain important definitions such as those of “fissionable material” and “relevant international agreement”. It is intended that on Brexit, key Euratom regulations will become “retained EU law” under the European Union (Withdrawal) Act 2018, and then be repealed when the draft Nuclear Safeguards Regulations come into force.

If the draft Withdrawal Agreement between the EU and UK, on which political agreement was reached in March 2018, takes effect, then the Euratom regime will last through to 31 December 2020. However, if the UK leaves the EU on 31 March 2019 without being able to conclude a Withdrawal Agreement, the legislative framework of which these Regulations are part aims to ensure continuity.

About the Author:

William Wilson is a specialist environmental, regulatory and nuclear lawyer with over 25 years experience in government, private practice and consultancy. He worked as a senior lawyer at the UK Department of the Environment/DETR/Defra, and helped to build up the environmental and nuclear practices at another major law firm, as well as running his own environmental policy consultancies.

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

This article is not intended to constitute legal or other professional advice and it should not be relied on in any way.

For further information or for assistance from the Prospect Law nuclear team in assessing the impact of these Regulations for your operations, or in preparing input to the consultation process, please contact Edward de la Billiere on +44 (0)7824 506022 or by e-mail on edlb@prospectlaw.co.uk.

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BREXIT, EURATOM AND NUCLEAR LIABILITIES: PROSPECT LAW AT THE WM SYMPOSIA 2018 IN PHOENIX, ARIZONA PART II:

The following series of articles is written further to Jonathan Leech’s attendance at the Waste Management Symposia 2018 in Phoenix, Arizona, on 22nd March, and examines the UK’s impending exit from EURATOM and responsibility for international nuclear safeguards.

See link to Jonathan Leech’s presenter profileList of exhibitors and Conference Program

The second part of this series examines the UK’s nuclear cooperation agreements and post-exit relationship with EURATOM.

Future Relationship with Euratom

Phase 1 negotiations have focused on separation issues (such as ownership of special fissile materials). Phase 2 will move onto the future relationship between the UK and Euratom.

The UK Government’s aim is to remain as close as possible to existing arrangements, achieving maximum continuity without actually remaining as a full member of Euratom (recognising that Euratom membership is comprised exclusively of EU member states). Aside from the badge of membership, there is nothing at all about the UK’s relationship with Euratom that the UK Government would like to change.

There is no established model for the form of close association the Government seeks. The solution will be bespoke. It seems that anything is now open to negotiation. Even recognition of some on-going jurisdiction for the European Court of Justice, previously seen as a red line, may now form part of a future relationship. Government is confident that “there is a sensible solution, which may involve the ECJ …”. This would be a victory for pragmatism. Government has not found any ECJ case on Euratom affecting the UK in all the time it has existed. “It may be a point of principle for some people, but in practice as an appellate jurisdiction it has not even been needed.

In essence, Government is seeking an arrangement that has all the benefits and obligations of membership, but without actually being a member of Euratom.

Transitional period

Government has stated that there should be a time-limited transitional period of “about 2 years”, with the UK “staying in all the EU regulators and agencies during that limited period … [meaning] that companies will only have to prepare for one set of changes as the relationship between Britain and the European Union evolves.” It is not clear whether this or any other transitional period will apply to Euratom.

The BEIS Committee Report published on 13 December 2017 refers to the committee’s assumption that staying in all EU regulators and agencies “includes membership of Euratom” (whilst also noting that “the Government has not said so explicitly). Euratom is neither a regulator nor an agency. It is a community with its own legal identity. This does not mean that that UK cannot remain a full member of Euratom during a transition period, but the position is not clear.

A transitional period during which current arrangements for implementing safeguards within the UK via Euratom monitoring and inspections would alleviate time pressure on establishing domestic safeguarding capability within the UK Office for Nuclear Regulation. Assuming the UK does not remain a full Euratom member, the UK will still need to preserve or re-create existing safeguarding obligations currently enshrined in Euratom regulations.

The UK is only likely to be able to retain the benefit of existing Euratom nuclear cooperation agreements during a transition period if the UK does remain a full Euratom member during the transition period. Each Euratom nuclear cooperation agreements is made between Euratom for the benefit of its members and a third country. It is unlikely that Euratom can unilaterally extend the benefit of any cooperation agreement to a non-member (as the UK would then be) without the agreement of that third country.

Nuclear safeguards and cooperation agreements

Safeguards are essential to international nuclear commerce – verifying for an international audience that nuclear material is where it should be and is used only for its intended purpose. International safeguards are administered by the International Atomic Energy Agency (IAEA) under the Non-Proliferation Treaty (NPT), which requires that non-nuclear-weapon states accept comprehensive safeguards on all nuclear material. Similar arrangements are in place to safeguard civil nuclear material in nuclear weapon states (including the UK) under Voluntary Offer Safeguards Agreements negotiated with the IAEA. Safeguarding requirements applicable to the UK therefore arise from both the IAEA and Euratom. Euratom safeguarding requirements go beyond IAEA requirements, both in relation to quantities of material and nuclear facilities requiring inspection.

Currently the UK satisfies its safeguarding obligations via Euratom, with Euratom inspectors carrying out inspections of UK plant and inventories and submitting reports to the IAEA.

In a written statement made on 14 September 2017 the Secretary of State for Business, Energy and Industrial Strategy provided a clear commitment, recognising that “it is vitally important that the new domestic nuclear safeguards regime, to be run by the Office for Nuclear Regulation, is as comprehensive and robust as that currently provided by Euratom.” The statement confirms the Government’s decision to establish “a domestic regime which will deliver to existing Euratom standards and exceeds the standard that the international community would require from the UK as a member of the IAEA.” Government has no interest in reducing current safeguarding obligations to achieve a commercial advantage.

Government has made clear that it regards the current Safeguards Bill before Parliament as a contingency arrangement, to be used if an appropriate future relationship with Euratom cannot be achieved. The Bill provides enabling powers for development of a domestic safeguarding regime but does not itself make clear whether that regime will be designed to meet obligations under the UK’s replacement Voluntary Offer Safeguards Agreement with the IAEA or to maintain equivalence for current (and possibly future) Euratom safeguarding requirements. To maintain equivalence, Government will need to develop detailed regulations replicating current Euratom commitments.

Delivery of a state system of accounting and control to meet those commitments immediately on Euratom exit will remain a practical challenge. Evidence provided by ONR and others to the BEIS Committee highlights the difficulty in securing, training and mobilising sufficient resource before the current Euratom exit date of 29 March 2019. ONR is confident of meeting IAEA obligations by that date, but additional time will be required “to include all the activities necessary for an assurance regime which is robust and as comprehensive as that of Euratom.” It would be possible for the UK as a non-member during a transition period to continue to rely on Euratom inspections and monitoring (as distinct from Euratom nuclear cooperation agreements as referred to in Paragraph 5.4 above). If would however still be necessary for a safeguarding regime to be set out in UK law in place of current Euratom regulation.

Jonathan Leech is a solicitor specialising in project and infrastructure work, with particular emphasis on the energy, nuclear and utility sectors. His work includes advising on legal and contracting strategies and regulatory issues associated with major nuclear development, decommissioning, waste and reprocessing projects, energy infrastructure and other utility and infrastructure related projects.

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

For more information please contact Jonathan Leech on 020 7947 5354 or by email on: jrl@prospectlaw.co.uk.

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THE EU ‘REACH’ CHEMICALS REGULATION AND BREXIT NEGOTIATIONS:

The critically important benchmark for many industries is the EU REACH Chemicals Regulation, from chemicals to those dependent on complex international supply chains, including the automotive and aerospace sectors. Compliance with REACH will remain a requirement for businesses exporting to the EU, and REACH is, to an increasing extent, the model for comparable regimes in chemicals regulation elsewhere in the world. UK trade associations have therefore been lobbying hard to ensure that post-Brexit, the UK either retains a system of ‘mutual recognition’ between UK law and REACH, or at least the closest possible ‘equivalence’.

Through 2017, little information was emerging from the negotiating process on the kind of regime that the UK envisaged would follow on from REACH after Brexit. Industry was, at the same time, being told to ensure that registrations of chemical substances were made on time for the 2018 deadline for the lowest tonnage band; and, by postings on the website of the European Chemicals Agency ‘ECHA’ from September 2017 that all such Registrations by UK-based companies would become “non existent” after Brexit.

Pressure from industry bodies resulted in a CBI Report on 21 December 2017 that clearly identified key bodies and regimes, including ECHA for REACH, where close alignment was crucial to business.

The Prime Minister’s Speech on Trade Negotiations:

On 2 March 2018, in her Major Speech on trade negotiations, Prime Minister Theresa May noted these concerns, stating –

We will also want to explore with the EU, the terms on which the UK could remain part of EU agencies such as those that are critical for the chemicals, medicines and aerospace industries: the European Medicines Agency, the European Chemicals Agency, and the European Aviation Safety Agency.

We would, of course, accept that this would mean abiding by the rules of those agencies and making an appropriate financial contribution.”

The Prime Minister listed the advantages of such associate membership, for the UK and the EU, as including products only needing one set of approvals, in one country; UK contributions of technical expertise to the critical role of these agencies in setting and enforcing relevant rules; dispute resolution in national courts rather than the CJEU; and UK capacity in contributing to the regulatory workload and scientific expertise available.

European Council President Donald Tusk, when introducing the EU’s draft negotiating guidelines for the next phase of talks on 7 March 2017, replied –

A pick-and-mix approach for a non-member state is out of the question… The Union will preserve its autonomy as regards its decision-making, which excludes participation of the United Kingdom as a third country to EU institutions, agencies or bodies.”

Prime Minister May anticipated these objections in her own speech, noting that –

The fact is that every Free Trade Agreement has varying market access depending on the respective interests of the countries involved. If this is cherry-picking, then every trade agreement is cherry picking.”

UK-EU Withdrawal Agreement:

Negotiations now move on to finalising the text of the Draft Withdrawal Agreement between the UK and EU, announced on 19 March 2018 and considered at the European Council Meeting of 22 March, and from that to the continuing negotiations on a Trade Agreement.

For the purposes of REACH, the continued validity of REACH Registrations held by UK-based companies for the duration of the Transition Period may be intended to be achieved through Article 4 of the Draft Withdrawal Agreement, but confirmation of that from the UK government and ECHA would be welcome.

As negotiations progress to the next stage of a proposed Trade Agreement between the UK and EU, the question remains of how the UK would deliver, in law, associate membership of the EU agencies that it identifies as being of critical importance.

The European Union (Withdrawal) Bill

The European Union (Withdrawal) Bill, presently going through Parliament, would repeal the European Communities Act 1972 and the basis for supremacy of EU law in the UK; whereas the Prime Minister is proposing that the UK would abide by the same rules as EU Member State participants in ECHA, which are, of course, ultimately enforced by the European Commission and the Court of Justice of the European Union.  Even amendments to the European Union (Withdrawal) Bill to achieve what might be agreed political objectives are anything but straightforward, with the present Parliamentary arithmetic.

If, on the other hand, the UK takes the line that it must be a ‘rule maker’ and not a ‘rule taker’, or if a different agreement on a relationship with ECHA, EASA and the European Medicines Agency is not achieved in the trade negotiations, then the REACH Regulation would need to be re-enacted into UK law to achieve ‘equivalence’.

In such a case it is clear that the general provisions of the European Union (Withdrawal) Bill will not suffice, which would demand a long, complex and politically sensitive Statutory Instrument made with reference to the much debated Henry VIII clauses of the European Union (Withdrawal) Bill, making necessary changes to the REACH Regulation to correct what would otherwise be “deficiencies” in its application in UK law.

This secondary legislation would need to establish the HSE, or some other body, as a UK equivalent to the European Chemicals Agency; to resolve the issues arising from the devolution of powers to make environmental legislation to the devolved Parliaments; and to address how the UK equivalent to REACH would keep track of future developments in the REACH Regulation (and the CLP Regulation and other related chemicals legislation) instead of continuing to diverge from it (which might well in turn have implications for trade agreements with the EU).

William Wilson, Prospect Law Ltd

William Wilson is a specialist environmental, regulatory and nuclear lawyer with over 25 years experience in government, private practice and consultancy. He worked as a senior lawyer at the UK Department of the Environment/DETR/Defra, and helped to build up the environmental and nuclear practices at another major law firm, as well as running his own environmental policy consultancies. William has experience of all aspects of environmental law, including water, waste, air quality and industrial emissions, REACH and chemicals regulation, environmental protection, environmental permitting, litigation, legislative drafting, managing primary legislation, negotiating EU Directives and drafting secondary legislation.

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

For more information please contact William Wilson on 020 7947 5354 or by email on: wew@prospectlaw.co.uk.

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