post

DECOMMISSIONING LARGE SCALE ENERGY PLANTS: DISCHARGING LIABILITIES SAFELY AND COST EFFECTIVELY

PART II: THE DECOMMISSIONING PLAN

In the first article of this series we pointed out the desirability of having a robust and appropriately underpinned plan to discharge any liabilities arising from the operation of a facility, whether it be nuclear, conventionally hazardous, or physically complex, and the importance of a rigorous risk and uncertainty analysis, and the advisability of having independent verification of the plan. This article looks at the other key elements contributing to a robust plan.

Any plan has to be technically sound and should be developed against appropriate base case assumptions. The assumptions should be clearly stated and justified. Current good or accepted and internationally benchmarked practice need applying to the proposed decommissioning technologies and techniques. Quantities and metrics must be stated and justified, eg with regard to waste arisings.

Scope must be adequately defined with bounding assumptions and exclusions clearly stated. All work necessary to successfully deliver the proposed end state needs explaining and justifying. In particular the scope of work must be fully understood, with plan describing ‘how’ it will be carried out and not ‘what’ is required – its surprising how often this aspect is overlooked. A programmatic approach should normally be adopted pulling together inter-related elements of scope and allowing work packages or projects to be expressed in the context of an overall end state objective.

Schedules must be logically linked and reflect all the scope and assumptions needed to successfully deliver the plan: durations are reasonable, and there is a clearly described critical path through to the proposed end state. Interdependencies and milestones should be clear and realistic and schedules need to tie in with risk mitigation measures (see part 1 of this article).

Cost estimates must be as robust as possible at that stage of the plans maturity and must reflect the totality of the scope required, being phased according to scope and schedule. The techniques used to estimate cost and uncertainty should be appropriate and reflect good international practice. Cost and quantity data sets must be appropriately robust and wherever possible benchmarked. Where uncertainty exists, eg with regard to waste disposal, this should be made clear and appropriate contingency values applied.

It is important to fully consult regulators with consent milestones clearly articulated and demonstrably deliverable. In the latter regard adequate allowance in terms of time and effort should be made for developing appropriate cases and the iteration of these with the regulator before consent is granted. Stakeholders are also an important part of this process and should be engaged during the development of the decommissioning plan, and where appropriate their responses captured in the plan.

The above is of course predicated on the operator having a mature quality management system in place to provide oversight and governance during development of the plan and this should also be documented in the plan. Many operators back this up with independent verification of the plan’s quality during and after its drafting, with the operator documenting how the verifier’s findings have been incorporated into the finished product. Such verification is particularly valued if the operator is dealing with highly politicised or heavily regulated decommissioning programmes, providing authorities and the public with assurance that the programme is being or will be delivered safely, cost effectively and in an environmentally responsible manner.

Funding the plan is a separate but very important matter and clearly the two are closely inter-related, for which several models exist. These will be discussed in a future article.

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.       

Chris Kaye is a nuclear specialist and senior commercial executive with over 40 years experience in negotiating, managing, and assuring the performance of multi-billion pound strategically and technically complex contracts, to Board and Ministerial level, within Government and private sectors. From 2006 and prior to joining Prospect Group in 2017 Chris was a function head of a major UK Non-Departmental Public Body. There he was responsible for assurance and oversight of all the UK private sector nuclear operators’ decommissioning strategies, plans and costings on behalf of the UK Government where a third party or the taxpayer has an interest in funding and risk.

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 us on 020 7947 5354 or by email on: info@prospectlaw.co.uk.

Click here for a PDF of this blog

post

US AND KOREAN NUCLEAR PLANT CANCELLATIONS: IMPLICATIONS FOR UK NEW NUCLEAR BUILD

The US currently has 100 nuclear power plants in operation supplying about 20% of its power needs. A further four were under construction, two each in Georgia and South Carolina, until the owners of the South Carolina plants recently announced the cancellation of construction of its two Westinghouse AP1000 units, Summer 2 and 3.

Summer 2 and 3 had been under construction since 2013, with original operational dates of late 2019 and late 2020.  However, due to construction delays and cost overruns, these were later revised to December 2022 for Summer 2 and March 2024 for Summer 3.  The finances were a key factor in the decision to cancel construction, with the original estimate of $11.5 bn having more than doubling to $25 bn. The reasons behind this are no doubt complex, but as the US has not constructed a new reactor since the 1970s, the loss of nuclear expertise must be a factor.

Summer 2 and 3 were intended to showcase advanced nuclear technology and pave the way, along with the Georgia plants – also Westinghouse AP1000s, for a nuclear renaissance in the US.  A further four AP1000s and 12 SMRs (Small Modular Reactors) are currently proposed and several more are in the early stages of planning. The fate of these and the two Georgia plants remains to be seen.

The economics of nuclear have always been the subject of much debate, but what seems to have swayed the South Carolina decision to cut losses is the availability cheap natural gas, enabled by the more liberal attitude to fracking in the US, and a flat energy demand due to improved energy efficiency. Ironically, the cancellation of Summer 2 and 3 will mean South Carolina’s coal plants will need to run for longer, whereas they were originally intended to be shutdowns upon the nuclear units coming online. A decision to proceed or not with the Georgia plants is expected soon.

The Westinghouse bankruptcy has also complicated the picture in the US, with its AP1000 design being used for the South Carolina and Georgia projects and its role being reduced to a vendor supporting the EPC. Their situation has also had an effect in the UK, with Toshiba’s stake in Nu-Gen now being considered by KEPCO. Rather than utilise the Westinghouse design, which was approved by the UK nuclear regulator, ONR, in March this year, KEPCO wants to use its own technology, which will cause a delay in construction of the Moorside plant while the necessary regulatory design assessment is undertaken.

The South Korean nuclear industry is also in difficulty, with the new anti-nuclear government suspending construction of the Shin Kori 5 and 6 nuclear plants for several months while it undertakes a public consultation on their future. This decision has generated much debate in the country and is seen as a threat to its nuclear exports, and KEPCO’s future Nu-Gen.

Decisions to be taken in the next few months will be crucial for the future of nuclear in the US and Korea. The Korean decision in particular will have an impact on the Moorside project in the UK, and may put the government’s climate change targets in jeopardy. Unlike the US, it is doubtful that the supply of natural gas from fracking will be a welcome alternative.

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.       

Edward de la Billiere is a Solicitor and co-founder of Prospect Law. He was educated at Newcastle University and trained at the leading Middle East firm Trowers and Hamlins, working in both their London and Dubai offices, predominantly in the oil sector. On qualification, Edward moved to Magnox Electric, which was taken over by the nuclear operator BNFL. He has retained a strong interest in infrastructure and, in particular, energy related projects and has advised recently in respect of energy and waste projects for corporate, local authority and private clients across the UK and internationally.

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 us on 020 7947 5354 or by email on: info@prospectlaw.co.uk.

For a PDF of this blog click here

post

DECOMMISSIONING LARGE SCALE ENERGY PLANTS: DISCHARGING LIABILITIES SAFELY AND COST EFFECTIVELY

PART I: EFFECTIVE DECOMMISSIONING PLANNING

A robust plan for discharging the liabilities associated with a facility’s operation is important not just for compliance with legislation but to establish the correct basis for funding and implementing safe, environmentally sound, and cost effective decommissioning for that facility whether it be nuclear, conventionally hazardous, or physically complex. The plan will form the basis on which work is presented to market and, once contracted, performance monitored.

The UK’s Nuclear Decommissioning Authority terminated a major clean up contract for 12 nuclear sites earlier in 2017 because of the emergent mismatch between the work that was specified in that contract which dated to 2012, and an emerging work that actually needed to be done (click here to see Prospect blog covering Written Statement to Parliament by Energy Secretary Greg Clark on 27 March 2017) While this was no reflection on the performance of the contractor it did illustrate the desirability of having a fully underpinned decommissioning baseline plan prior to any commercial commitment.

Of course the robustness of the baseline will be a function of the time prior to executing the work: while it is self evident that however well you plan, time and the reality on the ground will act to confound that plan, this should not put off the need for proper underpinning at appropriate points through the lifecycle of the facility irrespective of whether that facility is nuclear or conventional.

In that regard treatment of risk and uncertainty is a key factor. While this is recognised, rigorous analysis can often be overlooked when it comes to developing a decommissioning plan.

There are two principle objectives to risk and uncertainty analysis – informing contingency values in the cost estimate and identifying work required to mitigate or to retire each risk.  While the former is well recognised the influence of the latter may not be, especially if budgets are tight. To help address this the UK has implemented a formalised and structured approach to risk mitigation within decommissioning planning, with its own technical baseline specifying for each relevant risk the work needed, timescale, owner and cost. Crucially this approach links execution of the work to the timescale required for the ‘solution’ within the decommissioning plan (which in turn influences, and should reduce, the cost contingency value going forward).  Parking or transferring risk should not normally be an option: the operator should implement measures to address these even if not under its direct control.

For this reason and others there are obvious attractions to both the operator and the regulator in having the facility’s decommissioning plan independently verified in order to provide assurance to regulators, funding bodies, and others that the liabilities attaching to that facility can be discharged safely, cost effectively and in an environmentally responsible manner.

Please click here for an appendix covering factors any decommissioning plan should take into account

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.       

Chris Kaye is a nuclear specialist and senior commercial executive with over 40 years experience in negotiating, managing, and assuring the performance of multi-billion pound strategically and technically complex contracts, to Board and Ministerial level, within Government and private sectors. From 2006 and prior to joining Prospect Group in 2017 Chris was a function head of a major UK Non-Departmental Public Body. There he was responsible for assurance and oversight of all the UK private sector nuclear operators’ decommissioning strategies, plans and costings on behalf of the UK Government where a third party or the taxpayer has an interest in funding and risk.

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 us on 020 7947 5354 or by email on: info@prospectlaw.co.uk.

For a PDF of this blog click here

post

CHRIS KAYE JOINS PROSPECT’S NUCLEAR TEAM

Prospect is pleased to announce the further development of its multi-disciplinary infrastructure practice through Chris Kaye joining the firm as an expert on the negotiation and management of multi-billion pound infrastructure projects, particularly in the nuclear sector. On behalf of the Department of Energy, Chris led the review of Hinkley Point C’s waste and decommissioning plans, providing advice to the Secretary of State on the approvability of the power station’s Funded Decommissioning Programme, and liaising with private and public sector advisory bodies.

Prospect remains the only regulated firm to offer combined legal and technical services to clients in the infrastructure sector and its position is further strengthened by the addition of Chris Kaye.

Chris has over 40 years experience in negotiating, managing, and assuring the performance of multi-billion pound strategically and technically complex contracts within Government and private sectors. From 2006 to 2016 and prior to joining Prospect Group, Chris was a function head of a major UK Non-Departmental Public Body, where he was responsible for assurance and oversight of the private sector nuclear operator’s decommissioning strategy, planning and costing where the Government has an interest in its funding and risks. This work was primarily directed at assuring the robustness of detailed plans for decommissioning the UK’s most modern nuclear power station fleet and associated spent fuel liabilities, with a total value of c. $25bn.

Chris has also led the assurance, on behalf of the UK’s Department of Energy, of all three of the UK’s new nuclear power plants’ decommissioning plans and cost estimates, in order to support the UK Government’s decision on whether or not to approve the operator’s liabilities funding arrangements for this first of a kind development. This included Hinkley Point C.

Outside the UK, Chris also led assurance reviews of Canadian, Swedish and Swiss nuclear facilities’ decommissioning plans on behalf of their respective governments and has provided consultancy advice to the Taiwanese and Chinese governments and private enterprises. Prior to 2006, Chris worked as an independent consultant on various technical assignments for major clients including the UK Atomic Energy Authority, Arthur D Little and the UK Government, significantly influencing the eventual decision to create the Nuclear Decommissioning Authority (NDA).

Chris also participated in reviews of private sector companies’ performance as part of the UK Business Excellence Award process utilising the European Foundation for Quality Management Business Excellence model. He has also worked in a variety of roles in the UK electricity supply industry. Initially covering waste management R&D and policy, for 12 years Chris led the negotiation and management of all contracts for the supply of uranium, new fuel, and spent fuel management services for the UK’s private sector nuclear fleet. Chris has also been a ‘high risk projects’ reviewer for the UK Cabinet Office Infrastructure and Projects Authority, participating in major government infrastructure projects in overseas construction, justice, immigration, rail franchise and national emergency planning. He is a Member of the Chartered Institute of Purchasing & Supply.

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 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 us on 020 7947 5354 or by email on: info@prospectlaw.co.uk.

For a PDF of this blog click here

post

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.

For a PDF of this blog click here

post

PROSPECT ADDRESSES THE INTERNATIONAL FRAMEWORK FOR NUCLEAR ENERGY COOPERATION (IFNEC) MEETING IN PARIS

Rupert Cowen, a specialist nuclear lawyer at Prospect Law, has addressed the International Framework for Nuclear Energy Cooperation (IFNEC) Meeting in Paris on the impacts of Brexit on the European Atomic Energy Community (EURATOM).

Click here to download the presentation slides

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.

For more information please contact us on 020 7947 5354 or by email on: info@prospectlaw.co.uk

post

INTERNATIONAL NUCLEAR LIABILITIES: THE CHANGING LANDSCAPE

The global nuclear liabilities landscape is changing. The last 2 years have seen significant developments, with the Convention on Supplementary Compensation finally entering into force on 15 April 2015 and significant progress towards ratification of the 2004 Protocols to the Paris and Brussels Conventions.

Please click here to download an article on this subject prepared by two of Prospect Law’s specialist nuclear lawyers, Jonathan Leech and Rupert Cowen.

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 mentioned above 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 us on 020 7947 5354 or by email on: info@prospectlaw.co.uk

post

WRITTEN STATEMENT TO PARLIAMENT OF ENERGY SECRETARY GREG CLARK, 27TH MARCH

In a Written Statement to Parliament issued today, 27 March, the Energy Secretary Greg Clark has made the following announcement in relation to the management and decommissioning of twelve nuclear reactor sites in the UK.

1. Termination of NDA contract with Cavendish Fluor Partnership (CFP)

The contract with CFP was for the management and decommissioning of 12 redundant Magnox nuclear power sites. The NDA ran a £6.1 billion tender process in 2012 which resulted in a 14 year contract being awarded to CFP. However, in the statement issued today the Government said it had become clear that “there is a significant mismatch between the work that was specified in the contact as tendered in 2012 and awarded in 2014, and the work that actually needs to be done.”

The statement continues to say that the scale of the additional work “is such that the NDA Board considers that it would amount to a material change to the specification on which bidders were invited in 2012 to tender”.

The NDA is consequently exercising its right to terminate on 2 years’ notice.

The Government in the statement emphasised that the termination “is no reflection on the performance of Cavendish Nuclear or Fluor” and that they will continue to manage the sites for another 2.5 years, during which time the NDA will establish arrangements for a replacement contracting structure to be put in place.

2. Settlement of Outstanding Litigation

In the same statement the Government announced that the NDA has settled outstanding litigation claims against it by Energy Solutions and Bechtel in relation to the 2014 Magnox award. NDA has withdrawn its appeal against the judgment of the High Court of 29 July 2016. The settlements were made without admission of liability on either side, but it was clear the statement said “that this 2012 tender process, which was for a value of up to £6.1 billion, was flawed”.

Because of the amount of the settlement payments and the costs (£76.5 million to Energy Solutions and £8.5m of costs, and $14.8m to Bechtel plus costs of around £462,000) there will be an inquiry into the conduct of the 2012 procurement process and the reasons why the 2014 contract proved unsustainable.

The inquiry will be led by Steve Holliday, the former Chief Executive of National Grid.

We will update on this situation as it develops.

For any immediate enquiries please contact Jonathan Leach on 020 7947 5354 or by email on jrl@prospectlaw.co.uk

Prospect Law provides legal and business consultancy services for clients involved in the infrastructure, energy and financial sectors.

This article remains the copyright property of Prospect Law 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.

For a PDF of this blog click here

post

HINKLEY POINT C AND THE ESPOO CONVENTION: THE CURRENT POSITION

We discussed in a previous blog the findings of the Implementation Committee of the Convention of the Environmental Impact Assessment in a Transboundary Context (Espoo Convention), who had investigated complaints from some countries alleging that an accident at Hinkley Point C  would have the potential to cause serious pollution across Europe, and that the UK had failed to properly consider the possible impact of such an incident.

Background

The committee informed the UK Government of their “profound suspicion” that the UK had fallen foul of the Convention, which has been in force since 1997. The UK has long argued that as the Hinkley Point C Project is unlikely to create a “significant transboundary environmental impact”, there was no need for discussions with European neighbours. However, the Implementation Committee last year recommended that the UK:

  • Endorse the committee’s view that the UK is in ‘non-compliance’ with the convention in relation to the planning of the Hinkley Point C project.
  • Engage in discussions with those parties likely to be affected by the Hinkley Point C NPP, including those “that cannot exclude a significant adverse transboundary impact from the activity at HPC”.
  • Report back to the Committee on the progress of any such discussions.
  • Send notifications to all parties that could potentially be affected by an incident at any other Nuclear Power Plant they may plan, bearing in mind the worst possible scenario.

Updated Situation

On 17 February this year, the UK Government indicated its intention to address the Committee’s findings. It had written to all parties to the Convention last December asking whether they considered that a notification under the Convention was “useful” at the current stage of development of HPC.

The UK also indicated that it would in future notify the Parties for all future nuclear power plant development applications, which goes further than the recommendations of the Committee. It is understood that Norway, the Netherlands and Germany have indicated they would find this “useful”.

At the 20-22 February meeting of the Committee, they expressed concern that continuation of development at HPC might influence the views of the parties to the Convention contacted by the UK in December.  They seemed to be worried that this might affect the outcome of any transboundary EIA procedure and render its results irrelevant.

The Committee has said it will ask the UK to consider refraining from carrying out works at the proposed activity until it established whether notification was “useful” and that if a potentially affected party requests it be notified, the UK should suspend HPC development until the EIA procedure is finalised.

In the meantime, the Friends of the Irish Environment has written to the Irish Minister of Communications, Climate Action and Environment complaining that its representations to the Irish Government on the above findings of the Implementation Committee had been ignored and that they should raise the matter with the UK at the upcoming UK-Ireland Contact Group on Radiological Matters. The UK Supreme Court had already rejected a challenge from An Taisce, the Irish National Trust.

Impact on Progress of Development of HPC

So is it foreseeable that the UK will consider asking EDF to suspend its construction activities?

From EDF’s point of view, project delay would be intolerable as the site would have to be suitably prepared, workers laid off and there would surely be breaches of contract with suppliers.

Also, would suspension serve any “useful” purpose in any case?

EDF has said that it’s EIA, prepared for the UK’s Planning Inspectorate, had addressed the transboundary impact issue and the Inspectorate, in granting permission, had concluded that there was no likelihood of significant transboundary effects. The Department of Business, Energy and Industrial Strategy has strengthened this point by saying that the Environment Agency and Office for Nuclear Regulation have also independently assessed the environmental impact of HPC.

With the current confusion about matters nuclear surrounding BREXIT and BREXATOM, further complications from the requirements of the Espoo Convention would appear to be far from “useful”.

The ability of overseas governments to bring two separate lines of attack against the EIA procedure in the HPC case arises from a dispute procedure in the Espoo Convention which is quite distinct from enforcement action in the national (and EU) courts to deal with alleged infringements of the EU EIA Directive which implements the Convention.

Under both the Convention and the Directive, proposals for nuclear power plants which are likely to have significant trans-frontier impacts must be notified by the project host country to other countries likely to be affected.  The onus of deciding whether the notification duty applies rests initially on the project host country whose courts (with possible references to the CJEU) must adjudicate on whether any such decisions have been lawfully made.

However, the Espoo Convention provides for a country which considers that it would be affected by significant trans-frontier boundary effects of a nuclear power plant in another country to trigger discussions with the project host country (in the absence of a notification) and ultimately to submit the question of whether there is likely to be a significant adverse transboundary impact to an inquiry commission.

The possibility (and in the case of HPC, reality) of conflicting decisions is unfortunate.  As indicated above, the UK Government has sensibly decided to avoid such conflicts in the future by pre-notifying other countries of proposals for nuclear power plants irrespective of their likely impacts.  However, it is strongly arguable that the Espoo Convention was not intended to encourage disputes to be carried on under its aegis after the matter has been conclusively settled in the national courts of the host party where overseas governments and their citizens have the right to be represented.

We will continue to monitor the situation and report our findings through this blog.

Edward de la Billiere is a Solicitor and co-founder of Prospect Law. He was educated at Newcastle University and trained at the leading Middle East firm Trowers and Hamlins, working in both their London and Dubai offices, predominantly in the oil sector. On qualification, Edward moved to Magnox Electric, which was taken over by the nuclear operator BNFL. He has retained a strong interest in energy related projects and has advised recently in respect of energy and waste projects for corporate, local authority and private clients across the UK and internationally.

Andrew Waite is a solicitor and specialist in environmental law, advising on regulatory and liability issues for a broad range of industries. He defends prosecutions for breaches of environmental legislation, deals with regulatory appeals and civil litigation and advises on environmental issues relating to projects and transactions. He deals with all the main areas of environmental law including waste, energy, nuclear, contaminated land, pollution controls, environmental permitting, water rights, flooding, climate change and nature conservation.

Prospect Law provides legal and business consultancy services for clients involved in the infrastructure, energy and financial sectors.

This article remains the copyright property of Prospect Law 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.

For more information please contact us on 020 7947 5354 or by email on: edlb@prospectlaw.co.uk.

For a PDF of this blog click here

post

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