The legalities of leaving nuclear

Abstract

The current political consensus favors continued reliance on civilian nuclear power in France, but a reduction in that reliance was discussed during the 2012 presidential election, and debate on that score continues. If the political consensus ever shifts toward a nuclear phase-out, the French government has several options through which it can reduce or abandon civilian nuclear power generation. The parliament can pass a law to discontinue nuclear power. The people can do the same, through referendum. Or the executive branch of government can simply not authorize the construction of new nuclear plants. If the parliament, the executive branch, or citizens acted to eliminate nuclear power, EDF, the operator of France’s 58 nuclear power plants, could seek compensation for lost revenue. The legal considerations involved in such an effort vary, depending on whether the nuclear shutdown were enacted into law or instituted through executive-branch regulation. Currently, it is unclear what chances of success a compensation claim might have. Over time, though, France will retire at least part of its aging fleet of nuclear reactors. The executive branch and parliament should pay careful attention to the structure of laws and regulations related to nuclear shutdowns, to reduce the likelihood that successful legal action will ensue.

The 2011 accident at the Fukushima Daiichi Nuclear Power Station has had a dynamic effect on nuclear countries around the world. While most nations rushed to subject their nuclear fleets to stress tests, hoping to assure citizens that plants were safe, other countries—including Germany, Switzerland, and Belgium—promised to close the book on nuclear energy for good. But for France, a country where 75 percent of electricity is fission-generated, can a nuclear exit be a realistic—and legally supportable—course of action?

A decision by France to exit the civilian nuclear power industry would have consequences that would extend over decades and would involve several generations of elected officials. Ultimately, political consensus must be sought before any such decision can be made, and the two main governing parties—the conservative opposition party, Union pour un Mouvement Populaire and President François Hollande’s governing Socialist Party—have historically supported the nuclear sector.

The economic arguments in favor of nuclear energy are powerful in France, a country with relatively small domestic energy reserves. A decision to shut the country’s plants would be a financial blow to Électricité de France SA (EDF), the Paris-based, state-controlled firm that operates power-generating reactors in France, not to mention Areva SA, the state-controlled company that offers a variety of products and technologies to utilities around the world— from uranium mining and enrichment to reactor construction and waste reprocessing.

Still, during the 2012 presidential election, candidates raised the possibility of reducing France’s reliance on nuclear energy; whether such a reduction will actually happen remains a subject of some debate. The Hollande government has sought to shutter the country’s oldest nuclear plant, and the new president has not completely backed away from his campaign promise to decrease, over time, the country’s reliance on nuclear power.

If the political consensus ever shifts toward a nuclear phase-out, the government would have several legal options through which it could reduce or abandon civilian nuclear power generation. These options involve different players. Parliament (i.e., the National Assembly and the Senate) can pass a law to discontinue nuclear power. Citizens, through a referendum, are able to do the same. But ending nuclear power is achievable even without legislative intervention: The executive branch can refuse to authorize new plants, meaning that existing ones would not be replaced at the end of their operational lives.

Although a regulatory approach of this sort might seem unusual or legally tenuous, it has historical precedent: In 1974, the executive branch did not ask Parliament for its approval of an enormous nuclear power plant construction program launched by then-Prime Minister Pierre Messmer. Even now, the Multiannual Investment Program, which allocates the proportion of each electricity-generation source in the nation’s energy mix, is drafted by the executive branch. It is presented to the assemblies for informational purposes but published in the form of a simple decree: Energy choices are made specifically by the executive branch, not the legislature.

EDF, the operator of France’s 58 nuclear power plants, could seek compensation for lost revenue if the parliament, the executive branch, or the citizens pulled the plug on nuclear power. This creates an unusual situation: A firm in which the state owns a majority share can sue the state for damages. The legal considerations involved in such an effort would depend on whether the shutdown were enacted into law or instituted through government regulation, and it is unclear what chances of success any such legal action would have. Over time, however, France will retire at least part of its aging fleet of nuclear reactors. The executive branch and Parliament should pay careful attention to the structure of laws and regulations related to nuclear shutdowns—before adopting or amending them—to reduce the likelihood that successful legal action will ensue.

The legislative approach to a nuclear exit

In the French parliamentary system, either the executive branch or a member of Parliament can submit a bill calling for a nuclear reduction or exit. In either case, such an act sets a schedule and provides an outline and objectives for a nuclear exit; it would also likely include provisions regarding transition measures, operator settlements, the fate of nuclear research, and the economics of dismantlement. In view of the public benefits of a nuclear exit, the legislation can prohibit compensation being paid.

Once passed, a legislative act setting out the process of a nuclear exit can be challenged before the Constitutional Council, the highest constitutional authority in France. The council makes its decision on the constitutionality of a phase-out act either when the president signs it, or—if the act was not previously challenged—on the request of a person with a direct interest in challenging the law’s constitutionality during a trial. ¹

The French constitution also provides a route to ban the use of nuclear fission for electricity generation. The procedure, stipulated in Article 89, requires executive and legislative consensus, which means that opposition from the president, the prime minister, or either of the two assemblies could prevent the proposed constitutional amendment from becoming law.

Either the president—upon the prime minister’s proposal—or members of Parliament can pursue a constitutional amendment. In the first case, the initiative is a constitutional amendment bill; in the second case, it is a private member’s constitutional amendment bill. Either type of bill is handled in accordance with normal legislative procedure. Both assemblies, which have the same powers in constitutional matters, must adopt the text.

Both types of bill must be approved by referendum—with one exception, which applies only to a constitutional amendment bill. For a bill initiated by the executive branch, the president can avoid a referendum by submitting it to the National Assembly and the Senate, gathered in Congress in Versailles. Approval of a constitutional amendment bill requires a three-fifths majority of the votes cast in Congress.

French voters can also effect a nuclear phase-out through a referendum that either approves a bill or amends the constitution; in the latter case, the referendum takes the place of a congressional vote. In the case of a bill, the executive or the two assemblies of Parliament, acting jointly, must ask the president to organize the referendum; he has the final decision on whether to call for a public vote. ²

The regulatory approach

The executive branch of the French government can embark on a nuclear phase-out on its own—that is, without action by Parliament—by refusing to authorize the construction of new plants and by declining to extend the lives of those now operating.

There is a problem with this approach: In France, the operational life of a nuclear power plant is not defined in any particular legal text. Today’s nuclear fleet was designed to operate for 30 years, and this was the depreciation period arranged between the state and EDF. But now that more than one-third of France’s nuclear power capacity is older than this, EDF has increased reactor lifespans to 40 years.

In legal terms, the only indication of the operational lives of power plants appears in texts on the control and compliance obligations of plant operators. The country’s environment code requires nuclear reactor operators to conduct safety inspections every 10 years, unless a plant’s authorization decree states otherwise. These assessments last several months and require a temporary shutdown of the plant.

The operator must present—to the Nuclear Safety Authority and to the minister in charge of nuclear safety—an inspection report and, if applicable, plans to remedy problems or to improve plant safety. The authority then decides on the suitability of the plant to operate for an additional 10 years, and possibly imposes new technical prescriptions.

When the authority issues a negative opinion—identifying serious risks in terms of public safety, public health, or the environment—the government can suspend plant operations until improvements have been made. If the government finds this measure inadequate for addressing the risks, it can issue a decree ordering the final shutdown and dismantling of the plant.

This regulatory, executive-branch path toward nuclear power production is, however, legally vulnerable. The government’s refusal to authorize continued operation of a nuclear plant and its refusal to allow the construction of new nuclear plants could be challenged before the Council of State, which has the power to override authorization refusals if it determines that they contravene applicable standards.

Once the legislative or executive branch revokes a nuclear plant’s authorization to operate, the closure and dismantling of the plant are governed by stringent procedures set out in the Environment Code. ³ The Transparency and Nuclear Safety Act of June 2006 also provides a ministerial-closure mechanism if continued operation poses serious risks to safety, public health, or the environment.

Fessenheim: Case study for future compensation claims?

Following a 2012 campaign promise arising from an electoral agreement with the Greens, President Hollande announced that the Fessenheim power plant in Alsace—the oldest French nuclear plant in operation—would be closed in 2016; it was commissioned in 1977. The year before Hollande’s announcement, however, the Nuclear Safety Authority (ASN) had authorized a 10-year life extension for the plant, conditioned on upgrades to keep it in compliance with safety laws (ASN, 2011).

After the Fessenheim closure was announced, the weekly newspaper Journal du Dimanche reported that EDF planned to sue the state to cover both the costs incurred in obtaining an operating-life extension for the plant, which would be closed down before it had fully depreciated, and the profits projected to be lost over 10 years (Journal du Dimanche, 2012). EDF subsequently denied the report and has not, as yet, filed a compensation claim. Since the question of compensation has been raised, however, it is worth exploring the grounds that could be put forward to claim compensation in any forced nuclear shutdown.

Compensation claims and the regulatory approach to phase-out

In general, public-authority liability can be invoked in France if the claimant, in this case EDF, manages to demonstrate that the administration has defaulted (i.e., breached a defined regulatory obligation). For instance, EDF can claim that it has met all legal requirements for obtaining a 10-year life extension and that the government has defaulted on its obligation to grant the extension.

If no default can be demonstrated, the plant owner can seek compensation from the state on the grounds that there had been a breach of the principle known as “equality before public burdens.” If the decision to shutter a nuclear plant is regulatory—that is, made by the executive branch—administrative law suggests that, theoretically, a claimant can win compensation by proving the existence of a specific (as opposed to general) prejudice against the regulated entity and proving that the prejudice is abnormal in terms of its gravity. This means that EDF would have to demonstrate that the regulatory act caused an extraordinary prejudice against the firm that no other firm suffered.

Nevertheless, the administrative court holds that the victims of lawful regulatory decisions have no grounds to claim compensation. The same applies when the decision is aimed at protecting a pre-eminent public interest.

Compensation claims and the legislative approach to phase-out

There are very few cases in which the state has been found liable for compensation as a result of the passage of a law. Public-authority liability arising from a law has, however, been recognized since La Fleurette in 1938. In that case, a dairy-products firm sought and won compensation for losses arising from a law that prohibited the sale of products that resembled cream but were not made entirely from milk (Council of State, 1938). According to the ruling in the case, the law placed an unfair burden on the company by forcing it to stop selling its cream substitute, even though there was no finding it was dangerous to the public.

Due to the ruling in that case, compensation for prejudice arising from a law can be granted even if the law does not explicitly allow for the possibility of recovery for victims; to avoid compensation claims, the law must clearly state that damages cannot be granted. But compensation is prohibited if the law clearly pertains to interests of a completely public nature, such as environmental protection. The legislature can, therefore, prohibit payment of damages to those affected by a law, even if the result of such a provision appears discriminatory in regard to a particular firm.

With regard to a nuclear shutdown, numerous obstacles might thwart any compensation claim by EDF, whether the closure of nuclear plants is imposed by executive-branch decree or by a law passed by Parliament. EDF would have to prove that the decree or law caused a specific and serious prejudice against the firm. These two conditions could conceivably be met; EDF would be the only company affected by the measure and the prejudice—complete shutdown of operations—is abnormal.

It would be difficult for EDF to recover damages for a nuclear phase-out, however, if the law prescribing the phase-out explicitly said that compensation could not be claimed and if the text of the law explicitly asserted that it aimed to protect the public’s interest in safety, health, and the environment.

Nevertheless, at this stage—given that there has been no formal move toward a nuclear exit and that the political consensus leans against such action—it is far too early to give a precise opinion on EDF’s chances of success in a compensation claim in a phase-out scenario.

Though a nuclear exit is clearly legally feasible in France, the current political consensus does not favor one. The difficulties involved in the closure of the Fessenheim plant, which may postpone that shutdown, reflect some of the major problems decision makers would face in a broader nuclear phase-out.

Legal planning for a rainy day

The current French political consensus supports nuclear power for economic reasons and because of its implications for climate change. The nuclear power industry has made France a world leader in providing inexpensive energy with low carbon dioxide emissions, and the country earns billions each year from its electricity exports. The economic argument for nuclear is especially powerful in France, where, during last year’s presidential campaign, then-candidate Sarkozy projected huge job and industrial losses if France were to shut down its nuclear power program.

Still, a significant reduction in the country’s reliance on nuclear power is hardly unthinkable. During his election campaign, Hollande, himself, called for a 50 percent reduction in France’s reliance on nuclear energy, and a national energy debate is being planned.

Given the age of France’s nuclear fleet, reactor closures will be required in coming decades. Even though it is majority-owned by the French state, EDF, as a private firm, will likely attempt to sue for damages caused by any plant closures. It seems appropriate for the executive and legislative branches of the French government to examine its laws and regulations, existing and contemplated, to make sure they protect the state if France’s reliance on civilian nuclear power is reduced or ended.