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PUBLIC BILL COMMITTEE: 31 OCTOBER 2017 OUTLINE OF VIEWS ON NUCLEAR SAFEGUARDS BILL

The Nuclear Safeguards Bill (https://services.parliament.uk/bills/2017-19/nuclearsafeguards.html) represents an important but limited step in the process of withdrawal from Euratom, and this article focuses on the context and effects of that step.

Background

If the UK is to maintain involvement in the international nuclear community, it must have in place an internationally acceptable safeguards regime. Detailed regulations and adequate resource within the Office for Nuclear Regulation will be needed to operate and enforce that regime.

An acceptable safeguards regime is the first step towards replacement of the existing Euratom and bilateral nuclear cooperation agreements (NCAs) on which the UK relies. It will not be possible to conclude or even make meaningful progress with the negotiation of replacement NCAs until the UK can demonstrate that it will have an acceptable replacement safeguards regime in place on withdrawal from Euratom.

In context of the challenging withdrawal timetable, the replacement UK safeguards regime will need to be such that no reasonable counterparty to any NCA negotiation can delay or disagree on the basis of inadequate safeguarding. To avoid any perceived competitive advantage and to facilitate agreement of replacement NCAs, the new regime is likely to need to carry forward the full scope of the Euratom safeguards regime, which goes beyond the current UK Voluntary Offer Safeguards Agreement (VOSA) and Additional Protocol.

To maintain international acceptance, the UK will also need to conclude negotiations with the IAEA on a replacement VOSA and Additional Protocol, both of which are currently predicated on Euratom membership. The new UK domestic safeguarding regime must then fulfil those agreements.

Purpose of Nuclear Safeguards Bill

Within its limited ambit, the Nuclear Safeguards Bill is broadly an effective but small step towards implementation of an internationally acceptable safeguards regime (https://publications.parliament.uk/pa/bills/cbill/2017-2019/0109/18109.pdf).

The Bill is limited to the creation of enabling powers for subsequent safeguards regulations. To avoid a disruptive hiatus in international nuclear cooperation, primary focus should already be on:

  • Preparation of those regulations;
  • Ensuring that ONR has sufficient resources to take over full responsibility for safeguards in 2019; and
  • Detailed proposals and assurances surrounding negotiations with Euratom and IAEA, and with states with which the UK will need to enter into replacement NCAs.

Crucially, the Nuclear Safeguards Bill cannot be regarded as a “contingency” (as stated by Greg Clark in the second reading debate https://hansard.parliament.uk/commons/2017-10-16/debates/84828D23-EAA6-4855-99D0-4C47BD5D3633/NuclearSafeguardsBill) to be used only if the UK is not able to conclude a satisfactory agreement with Euratom.

  • Unless the UK remains a full member of Euratom (whether permanently or during any transitional phase following exit from the EU), the legislative powers and additional ONR responsibilities set out in the Bill are required as a matter of urgency. Any delay in relation to the above tasks on the basis that the Bill may not be required would be an extremely high-risk strategy (hansard.parliament.uk/commons/2017-10-16/debates/84828D23-EAA6-4855-99D0-4C47BD5D3633/NuclearSafeguardsBill)
  • In the absence of full Euratom membership, continued reliance on Euratom safeguarding arrangements would entail acceptance and payment for full application of relevant treaty obligations, regulations (including Commission Regulation (Euratom) 302/2005), inspections, enforcement powers and ECJ jurisdiction. Even then, it is likely that the UK could continue to operate within Euratom NCAs only with the agreement of each state counterparty to those NCAs. The UK would still need to replace the IAEA VOSA and Additional Protocol to reflect the UK’s changed status in relation to Euratom, so amendments to Section 93 of the Energy Act and other legislation referred to in the Bill would remain necessary.

If in referring to the Nuclear Safeguards Bill as a “contingency”, government is indicating a desire to continue full Euratom membership, at least during a transitional phase, this is to be welcomed (although unnecessary express reference to Euratom in the UK’s notification of withdrawal under Article 50 will not have assisted in achieving this).

Contrary to the government’s stated position, there are good legal arguments against any necessity to exit Euratom at the same time as exiting the EU. The Commission statement in its recommendation for a European Council decision authorising opening of negotiations on UK withdrawal simply acknowledges that Article 50 applies to Euratom. This is correct, but does not address the question as to what application of Article 50 means in context of the Euratom Treaty.

Jonathan Leech & Rupert Cowen, 6 November 2017

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.

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

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EURATOM

Despite rumours to the contrary, the UK government is now set in its declared determination to leave Euratom at the same time as departing from the EU.

On a political level, maintaining membership of Euratom would entail accepting jurisdiction of the ECJ.

The Government has not demonstrated that it has any desire to consider the absence of legal necessity to leave Euratom at the same time as leaving the EU, or at all. On the other hand, there does also appear to be a gradual recognition of the implications of Euratom exit, including various implications relating to energy security, management of the UK’s nuclear legacy and continued supply of medical isotopes.

It is to be hoped that a sufficient number of Euratom members will have an interest in maintaining a relatively stable UK nuclear industry and will agree to practicable transitional arrangements, allowing the UK sufficient time to develop its own adequate safeguarding arrangements as a basis for negotiation of bilateral nuclear cooperation agreements with the partners on whom the UK relies.

Prospect Law and Prospect Advisory provide a unique combination of legal and technical advisory services for clients involved in energy, infrastructure and natural resource projects in the UK and internationally.

This article is not intended to constitute legal advice and Prospect Law and Prospect Advisory accepts no responsibility for loss or damage incurred as a result of reliance on its content. Specific legal advice should be taken in relation to any issues or concerns of readers which are raised by this article. 

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.

For more information, please contact Jonathan Leech and Rupert Cowen on jrl@prospectlaw.co.uk and rcc@prospectlaw.co.uk, or by telephone on 020 7947 5354.

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BREXIT WHITE PAPER CONFUSES EURATOM DEBATE

The 2008 EU Amendment Act is not a justifiable legal basis for the UK government’s belief that Brexit must also mean an exit from Euratom, write Jonathan Leech and Rupert Cowen of Prospect Law.

The government’s white paper on the UK’s “exit from and new partnership with” the European Union published last week confirms its position that “When we invoke Article 50, we will be leaving Euratom as well as the EU”.” In support of this, the document asserts that the European Union (Amendment) Act 2008 “makes clear that, in UK law, references to the EU include Euratom”.  This is presumably an assertion that references to the EU in the Referendum Act, the referendum question and the withdrawal bill automatically include Euratom – something both the Leave and Remain campaigns omitted to mention.

The 2008 EU Amendment Act tells us that “A reference to the EU in an Act or an instrument made under an Act includes … a reference to [Euratom].” The white paper overlooks the point that the 2008 Act does not apply to Article 50 of the Treaty on European Union – which is of course neither an Act nor an instrument made under an Act. This is significant, because there is a good legal argument that triggering Article 50 of the Treaty on European Union will have no legal effect on the UK’s membership of Euratom, and that to exit Euratom the government will need to trigger equivalent exit provisions in the Euratom Treaty. This would mean, absent that separate trigger, legally the UK remains in Euratom.

The white paper also states that “The Euratom Treaty imports Article 50 into its provisions.”  This is correct – to a point. The Euratom Treaty applies a version of Article 50, re-written to refer to Euratom and the Euratom Treaty in place of references to the EU. Again, this supports existence of a separate Euratom exit process that is similar to but is not part of a single EU Article 50 process. This is an important distinction.  It gives the government a choice, at least in relation to its approach to the timing of Euratom exit – a choice that it would be unwise to ignore.

The legal meaning of the withdrawal bill is also critical. The bill is the government’s response to Supreme Court confirmation that parliamentary authority is required before Article 50 can be triggered. It is highly likely that the government also needs parliamentary authority to trigger exit from Euratom.

Clause 1 is very specific. “The Prime Minister may notify, under Article 50(2) of the Treaty on European Union …”  There is nothing in the 2008 Act to suggest that reference to the Treaty on European Union automatically includes reference to the Euratom Treaty. Arguably the bill as drafted does not therefore give authority to trigger exit under the Euratom Treaty. It would have been preferable to include separate authority for Euratom exit, both to avoid this element of doubt and to provide a clear basis for the government to take additional time before triggering Euratom exit should the government conclude that this is in the national interest.

In addition to securing parliamentary approval for a Euratom exit, the government will need to be confident that, once triggered, the two-year Euratom exit timetable is sufficient to put in place replacement arrangements to avoid a damaging hiatus for the UK nuclear industry. This is likely to require a good deal of preparatory work before starting the 2-year countdown.

Since the UK accession to Euratom in 1973 the regulation and international acceptability of the UK nuclear industry have been closely entwined with Euratom. The Euratom Treaty sets out eight areas of activity: promotion of research, establishing and policing uniform safety standards, facilitating investment, ensuring a regular supply or ores and fuels (via the Euratom Supply Agency), applying safeguards, exercising rights of ownership over ‘special fissile materials’, creation of a nuclear common market and establishing relations with other countries and international organisation to foster progress in nuclear energy. Of these areas, safeguards and international relations are likely to place the greatest strain on the exit timetable.  Withdrawal also creates vast uncertainty for the future of UK fusion research.

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). 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.

Nuclear trade between the UK and other Euratom members relies on common Euratom safeguarding arrangements. Nuclear trade between the UK and other countries relies on either Euratom nuclear cooperation agreements, or bilateral nuclear cooperation agreements predicated on UK continued participation in Euratom safeguards.

Of the circa 50 bilateral nuclear cooperation agreements the UK has entered into since 1956 (when the European Atomic Energy Community came into being), over 30 specifically recite and rely upon UK participation in Euratom safeguards. Without demonstrably adequate safeguards key countries will simply cease trade with the UK in nuclear materials, technology and know-how. For example, absence of a Section 123 Agreement with the US would prevent supply of key components for both the Hitachi-GE ABWR and Westinghouse AP1000 reactors. Absence of a nuclear cooperation agreement with Australia would cut off a key source of uranium imports. Perhaps more crucial would be maintaining supplies of medical isotopes.

If the government continues to assert that Euratom and EU exit timetables must align then it will have two years to:

  • design, resource and implement new UK safeguarding arrangements in line with accepted international standards;
  • replace current safeguarding commitments under the NPT (which are also predicated on Euratom membership);
  • identify and plan negotiation of replacement nuclear cooperation agreements with every country with which the UK has ongoing nuclear trade; and
  • ensure it has the resources to conduct all of those negotiations, and be confident that those negotiations will be concluded successfully before Euratom exit takes effect.

Disentanglement from the Euratom Supply Agency and Euratom ownership arrangement for special fissile materials (including enriched uranium and plutonium) should, hopefully, prove to be predominantly an administrative task, provided that the UK can satisfy continuing Euratom members as to its safeguarding arrangements.

Turning to fusion research, the UK based Joint European Torus experimental fusion facility is dependent on Euratom funding. If the facility is to continue, the UK government will need to negotiate a new basis for UK involvement in the project and new funding arrangements, whether as a “third country”, “associated country” or on some other basis. Exiting Euratom also calls into question UK involvement in the International Thermonuclear Experimental Reactor, in the initial stages of construction in France.  In both cases, in addition to protecting UK involvement in ongoing research, UK interests in intellectual property used or created in those projects will require careful consideration if the UK is not to be disadvantaged in future exploitation of fusion technology.

This article was originally published in World Nuclear News on 9th February: http://www.world-nuclear-news.org/V-Brexit-white-paper-confuses-Euratom-debate-08021702.html 

Prospect Law and Prospect Advisory provide a unique combination of legal and technical advisory services for clients involved in energy, infrastructure and natural resource projects in the UK and internationally.

This article is not intended to constitute legal advice and Prospect Law and Prospect Advisory accepts no responsibility for loss or damage incurred as a result of reliance on its content. Specific legal advice should be taken in relation to any issues or concerns of readers which are raised by this article.  

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.

For a PDF of this blog click here