Nuclear Law & Regulation

INTRODUCTION

This article provides an overview of:

the new nuclear programme; the English regulatory regime in connection with that programme; considerations for contractors; and civil liability under English Law (and briefly, the interrelationship between English Law and International Law) for third party nuclear damage. THE NEW UK NUCLEAR PROGRAMME

The election of the Conservative-Liberal Democrat Coalition Government (the Coalition Government) earlier this year has given the green light to the new nuclear build programme in the UK and a new era in British energy policy has begun.

In particular, new planning and design regimes have been introduced to pave the way for the substantial new build and these legislative measures have been met by a proactive response from the industry which is also gearing up for the new build. British Energy has been acquired by EDF1; a 20% stake in British Energy was subsequently sold on by EDF to Centrica; EDF sold off its network division to the Cheung Kong Group and various joint ventures and commercial collaborations have been announced.

The reasons behind the reforms are both regulatory and need driven. The government is obliged by the EU to generate 15% of UK energy from renewable sources by 2020 and has a commitment to a 30% reduction in carbon emissions by the same date2. In addition to this, the UK currently has 19 reactors which generate about 18% of its electricity and all but one of these will have reached the end of its natural life by 20233.

The cost of the new build will be enormous. Alan Key, Chief Operating Officer of Costain, estimates that the likely spend per nuclear power station will be around £5bn with a total estimated spend for the new build of £40bn, the contracts for most of which will probably be awarded to UK contractors.

It is expected that around 80% of the finance will come from private sources and the Coalition government has therefore taken steps in a new Energy Bill to try and give greater certainty to those who invest in nuclear power. The 2008 Energy Act4 compels nuclear developers to have sufficient funds available to decommission nuclear facilities at the end of their natural life and to manage the associated nuclear waste. The provisions of the new Bill are hoped to provide some commercial certainty as to how this might operate in practice.

Further comfort ought to be provided to investors by the completion of the design of the proposed £1 billion Green Investment Bank in the spring of 2011, which will fund the early and risky construction phases of complex infrastructure projects such as the new build.

NUCLEAR INDUSTRY LEGISLATIVE FRAMEWORK

The key enabling legislation is the 2008 Energy Act (the Energy Act) and the 2008 Planning Act (the Planning Act) which were introduced by the Labour Government to provide the framework for the new nuclear build.

The 1965 Nuclear Installations Act (the 1965 Act) deals with liability and governs the construction and safe operation of nuclear plants. The 1965 Act makes provision for licensing, liability and insurance in relation to the installation and operation of nuclear reactors and nuclear installations in general. The 1965 Act is supported by the Ionising Radiations Regulations 1999 which require employers to ensure radiation exposure of workers and the general public remains within specified safe limits.

Design

The HSE has adopted a Generic Design Assessment (GDA) process under the Planning Act whereby the safety and environmental impact of each of the industry's preferred reactor designs is assessed by the regulators at the request of the reactor vendor. This is the stage the nuclear new build is at in the UK in that GDA's are currently underway in respect of Areva's European Pressurised Reactor and Westlinghouse's AP100 reactor designs. The results are expected in June 2011.

The purpose of the GDA process is to provide developers and promoters of new nuclear power stations with an indication as to whether the design will be accepted and a site licence obtained (as to which please see paragraphs 3.11 to 3.15 below) prior to committing significant sums to the planning, licensing and build stages. Most potential operators will probably wait for the outcome of any GDA prior to submitting an application to the HSE for a site licence (which is needed in addition to planning consent).

Planning / siting

The planning enquiry for Sizewell B took 27 months and cost around £30 million and the Labour Government was therefore forced to take steps to ensure that there would not be a repeat for the new build. The Labour government implemented the Planning Act for the purposes of the new build5 and eleven sites were originally nominated by the former Labour Government with a view to nuclear reactors being built on them. Most of the proposed new build sites are in areas with a pre-existing nuclear presence, such as Sellafield, which, coupled with the new planning regime ought to make siting relatively uncontentious.

The Coalition Government has continued to reform the planning system to improve its speed and efficiency for the new build and has continued the Planning Act system of unified consent for Nationally Significant Infrastructure Projects. This system is essential in light of the short timescales for the new build.

The cornerstone of unified consent is the Nuclear National Policy Statement (the Policy Statement) which was drafted by the Labour Government and subsequently revised by the Colation Government to exclude two of the sites that had previously been earmarked for nuclear development. The revised Policy Statement further provides assurance from the Coalition government that it is satisfied that there are sufficient measures in place for the disposal of nuclear waste in respect of the developments that are to proceed...