Proposal for a Council Regulation (Euratom) defining the investment projects to be communicated to the Commission in accordance with Article 41 of the Treaty establishing the European Atomic Energy Community
Date: 1999-01-11
Institutions: European Commission
Subjects: EU law - national law, Euratom loan, disclosure of information, industrial investment, investment policy

COMMISSION OF THE EUROPEAN  COMMUNITIES 

Brussels,  11.01.1999 
COM(1998)804  final 

Proposal for a 

COUNCIL REGULATION  (Euratom) 

defining  the investment projects to be communicated  to the Commission in 
accordance with Article 41 of the Treaty establishing the European Atomic 
Energy Community 

(presented by the Commission) 

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Explanatory  memorandum 

Chapter 4 of the Euratom Treaty concerns investment in the Nuclear Industry. In particular  article 41 
of the Treaty  states that  investment projects  shall  be communicated  to the Commission.  Annexe  II to 
the Treaty lists the industrial sectors for which this type of communication  is an obligation.  Article 43 
of the Treaty  states that  the  Commission  shall communicate its  'point of view'  on each project to the 
investor and to the Member State concerned. 

To implement  these provisions  of chapter  4 of the Treaty two regulations  have been adopted;  one by 
the Council  (Regulation No 4  of 15.109.1958)  and one by the Commission for  implementation  of the 
Council  Regulation  (Regulation  No 1  of 05.11.1958). 

Council  regulation  No  4  contains  a  table  with  a  list  of  industrial  sectors  and  to  each  sector  there 
correspond  two  limits  (ceilings)  expressed  in  money  units.  One  ceiling  has  to  do  with  new 
installations  and  the  second  with  modifications.  Any  investment  within  any  of  the  listed  industrial 
sectors whose size is above the ceiling corresponding to that sector has to be declared. 

The  money  units  used  in  Council  Regulation  No  4  is  the  EPU  (European  Payment  Unit).  This  was 
introduced  in  1958 and has no or little relevance to any of the European national currencies of present 
time neither to the EURO which is expected to be introduced on the  1st of January 1999. 

This problem  led the  Commission to  search for  a  method  to revise the  ceilings  and  express them  in 
EURO.  This  created the  opportunity  to  study and  decide if any clarification  to this  regulation  would 
also be beneficial.  Although this regulation is almost 40 years old and has served well up to now, it is 
also a fact  that the state and  needs of the nuclear industry today are different  than what they were 40 
years ago. The opportunity was taken in order to 'modernise' the regulation. 

Main  areas proposed for updating or clarification  : 

•  Updating  of the ceilings  in  order to express them  in  EURO and to  make them  more relevant  to 

the current situation in the* industry 

•  Clarification  of the scope of certain industrial  sectors in the regulation 

• 

Suggestions  to  allow  publication  by  the  Commission  of  information  of  general  nature  on  the 
opinions delivered. 

1. The ceilings : 

a) Method  used for the adaptation of the ceilings from EPU to EURO units 

This arithmetic conversion requires two things: 

•  A price index series for European nuclear industry, 

• 

the relation of the EPU to the EURO. 

None of the two is available. To complicate things even more, the definition of the EPU has changed 
through the years making it impossible to follow in any concrete fashion. 

The  definition  of the  EPU  was  made in  1957 based  on a fixed  amount  of gold  to be  equal to  1 US 
dollar  ($) which  was  also  defined  in  the  same way.  It is reasonable to  assume  that  it  makes no real 
difference  if the prices paid for  investments in the nuclear  industry were expressed in US $ or EPU's 
in  1958 since the exchange rate between them was fixed  (1:1). Furthermore the same assumption can 
be made for  1997 US $ and  1997-ECU's although in this latter case the exchange rate changes. Hence 
one can express the  1958 EPU  in  1997-ECU's  through their  equivalence in dollars. The  equivalence 
in the years in between  is irrelevant and may be forgotten  for the purposes of changing the ceilings in 
the  regulations.  This  solution  also  has  the  advantage  that  the  price  index  series  for  the  nuclear 
industry can be expressed in US $ and can, as such, be used for the final transformation  of the ceilings 
in  the  regulations  today.  For  this  second  part  of the  problem,  an  appropriately  weighted  mixture  of 
price index series from the electricity generation, chemical industries and uranium supply market may 

be used.  No data were  found  to  make this possible  Alternatively  the well-known  general  price  index 
series  for  the  dollar  may  be  used  as  a  last  resort.  Of  course  one  can  argue  that  the  price  index 
evolution in the US was different  from  the European but the US $ has been the  'global'  currency  after 
the  Second  World  War and  any evolutionary  differences  are at  least partly  reflected  in  the  exchange 
rates. 

Schematically,  in order  to connect  the  EPU of  1958 to the  ECU of  1997  it  is  proposed  to  start 
from  the EPU  of  1958, go to the $ of  1958, use the US $ price index series to  go to the  US S of 
1997 and then convert to the ECU of  1997. The equvalence of the EURO to the ECU has  been 
fixed at a rate of 1:1 by Article 2, paragraph 1 Regulation 1103/97 (OJ No L 162,16.9.97, p. 1) 

Calculation of the equivalence between the 1958-EPU and the 1997-ECU. 

Assumptions: 

I. 

II. 

Price index changes are equally reflected  in the general consumer price index (CPI) of the US 
as in the specific nuclear industry price index of Europe (which does not exist anyway). More 
specifically  it  is assumed  that  the  CPI acceptably  reflects  the price  index  of the US  nuclear 
industry  which  should  not be  significantly  different  from  the  European  price  index  for  the 
same industry. 

The effects  of inter-European  exchange rates can not be calculated  with acceptable  accuracy 
because basket  definitions  changed  many  times,  new  countries  have  since joined  the  union 
and the exchange rates continued to change throughout this period. 

The CPI-U (CPI for urban consumers; the most general CPI available) is: 

160.1 for  1997 (1st May) 

28.9 for  1958 (year average) 

1 for  1913 (the US $ data starting year) 

Note: The CPI for electricity consumption for  1958 is 29.1 and for  1997 it is  130.6, an  18%  difference 
from  the general  CPI-U.  (All  CPI values were taken from the Bureau of Labour Statistics of the 
US government) 

1 EPUi958 -  1  $1958 (both based on a fixed amount of gold, 0.88867088 grams) 

1 $1958= 160.1/28.9 $1997 = 5.5397 $1997 hence 1 $1997 = 0.180512 $1958 

1 $1997 = 1/1.2485 ECU1997 = 0.80096 ECU1997 

Hence 0.180512  $1958 = 0.80096 ECU1997 and finally assuming a 3% annual inflation we get 

1  EPUi958  =  4.4371  ECUi997= 4.71  ECU3u2.98=  4.71  EURO1999 

A  simple  multiplication  by  5 will  serve  sufficiently  well  in  order  to  transform  the  EPU  of  1958 to 
EURO of 1999. 

b)Other issues in relation to the ceilings. 

An  important  factor  concerning  the  revisions of the ceilings in the regulation  is the changes  in both 
size, structure and technology of nuclear installations.  Clearly the intention of the existing regulation 
is to have investment  declarations of projects whose size is not small but  significant.  Without  such a 
filter  a  serious  bureaucratic  burden  for  both  the  industry  and  the  Commission  would  be  created 
without any obvious benefit.  The ceilings for nuclear reactors, for  example, referred  to reactors of all 
kind  (including  research  reactors)  whose  size  was  considerably  smaller  than  power  reactors  built 
during the last two decades. 

Following  informal  exchange  of  views  with  industry  representatives  and  a  brief  look  into  recent 
investment declarations it is concluded that the ceilings must be increased by a factor  larger than the 
'5'  dictated by purely price index-exchange rate considerations in order to maintain a balance between 
the  'need  to  know'  of  the  Commission  and  the  usefulness  of  declared  information.  The  ceilings 

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however should  not  be  increased  too  much  thus  resulting  in  excluding  important  installations  whose 
size is small  but  importance is high (prototype reactors for example). 

c)  The  table  under  article  1  of  the  draft  Council  Regulation  in  annex,  contains 
the  new  ceilings  proposed. 

2.  Clarifications  about  activities  to  be  declared  concerning  the  treatment  and/or 
storage/disposal  of radioactive waste and facility  decommissioning. 

Item  12  of  annexe  II  of  the  EURATOM  treaty  reads  ;  "Facilities  for  the  industrial  processing  of 
radioactive waste, set up in conjunction  with one or more of the activities specified  in this list." 

The interpretation of this has in the past led to 'disagreements' in cases where the installation was set 
up independently  of any other installation for the treatment or storage or disposal of radioactive waste 
or used fuel. The importance of both of the above types of investment relative to operational safety  and 
the environment  is evident.  As these installations  form  an  increasingly  important  and  integral  part of 
the  nuclear  fuel  cycle,  both  from  the  commercial-financial  and  public  opinion  points  of view,  it  is 
considered  safer  for  the potential  investor to make  it clear that  such  investments  must be declared  to 
the Commission  under the provisions of articles 41 -43 of the treaty. 

Waste  handling/storage/disposal  and  facility  decommissioning  were  not  at  the  centre  of political  or 
commercial  concerns in  1958 when the nuclear industry was still in it's very early days. It is however 
now certain that they will play an increasingly and potentially dominant role in the developments and 
the future  of nuclear power. 

a) Waste and used fuel  treatment, storage, interim storage or disposal. 

Long  term  radioactive  waste  disposal  may be the  human  activity  for  which the  longest  term  effects 
have to be best predicted,  and as such it assumes an exceptionally important status. Furthermore it is 
an  area  of  an  increasing  research  activity  which  might  provide  technical  solutions  for  a  problem 
considered by many to be both very difficult  and  serious.  Allowing the  Commission to keep track  of 
the activities and developments in this area is of primary importance if co-ordinated development is to 
be expected. The revised  draft  regulation  contains, under  article  1, the added reference to  'interim  or 
final  storage  of  used  fuels  or  radioactive  wastes'  thus  clarifying  that  these  activities  are  within  the 
general  scope  of  the  regulation.  Additionally  the  clarification  that  'facilities  for  treatment,  storage, 
interim storage or final disposal of radioactive waste or used fuels pertain to sector n°  12' was added. 

b) Decommissioning of nuclear  installations 

The  same  type  of  argument  holds  for  the  investment  projects  on  decommissioning  of  nuclear 
installations,  an  issue which  is expected  to dominate both  the  'politics'  and finances of the fuel  cycle 
industry in  the  immediate and  not so immediate future.  Decommissioning activities are not explicitly 
mentioned in the list of industrial  sectors and although a decommissioning operation falls logically in 
the category of 'conversion' by it's very nature, annexe II rather refers to  'industrial activities' leaving 
it open to interpretation  whether for  example the decommissioning  of a reactor is a  'conversion'  of a 
reactor  to,  say  for  example,  an  empty  field.  Until  today  no  decommissioning  activities  have  been 
reported. The new draft  regulation contains under article  1, the added explicit reference to the general 
activity of 'dismantling installations'. 

The Commission is currently keeping track of activities in the field  of radioactive waste management 
in it's fourth  'Situation  Report'  which however contains technically  oriented information  rather than 
financial.  The two (the fourth  'Situation Report'  and the information to be submitted under articl;e 41 
provisions can be considered  complementary. 

3.  Other  clarifications 

The following clarifications  are also made in order to avoid potential differences  of interpretation: 

I  Any  processing  or  by  physical  or  chemical  methods  of  source  or  special  fissile  materials  falls 

under sector 4 of the regulation. 

2.  That dc-lluorination of effluents/wastes  fail  under one of the sectors 4, 6. 8 and  12. 

3.  That  investment  projects  below  5 million  EURO need  not be  communicated  formally  following 
the procedure laid  down in article 43 of the treaty but instead by a simplified  communication  of 
only the basic essential characteristics. 

4. Publication of limited information  by the Commission 

The collection declarations under the provisions of articles 41-43 of the treaty form what may well be 
a unique data base of not only historic value but also useful  in  studies important in energy planning. 
The freedom  to publish will give to the Commission the opportunity to communicate to the public its 
point of view on each investment.  This may well prove to be beneficial  for the  investors  who operate 
in an area of serious public concern. These publications will not contain any  'sensitive'  data  nor any 
data which  may interfere  with competition.  Article four  is an addition  to the new draft  regulation  in 
order to allow the Commission to publish its 'point of view'. 

5.  Taking  into  account  the  proposed  updatings  and  clarifications  mentioned 
above, the Commission is proposing to the Council : 

- to adopt the attached proposal for a EURATOM Council Regulation 
- and, at the same time, to abrogate Regulation EURATOM n° 4 of the Council of 15 September  1958 
- to circulate the present proposal to the European Parliament 

PROPOSAL  FOR A 

COUNCIL  REGULATION  (EURATOM) 

of 

defining  the investment projects  to be communicated  to the Commission  in 
accordance with Article 41 of the Treaty establishing the European  Atomic 
Energy  Community 

THE  COUNCIL OF THE EUROPEAN  UNION, 

Having  regard  to  the  provisions  of  the  Treaty  establishing  the  European  Atomic 
Energy Community (EAEC), and in particular Article 41  thereof; 

Having regard to the proposal from the Commission; 

Whereas,  in  order  to  attain  the  objectives  laid  down  in  the  Treaty  establishing  the 
EAEC,  the  Commission  must  be  notified  of  investment  projects  concerning  new 
installations  and  of  replacements  or  conversions  involved  in  the  industrial  activities 
listed  in Annex  II to  the  Treaty  when  such projects  are  sufficiently  extensive  and  are 
likely to have a direct influence on production, productivity or nuclear safety; 

Whereas  it  is  the  responsibility  of  the  Commission  to  facilitate  a  co-ordinated 
development of these investments and to make its point of view known about them, 

Whereas the full  establishment  of the internal market  requires the removal of technical 
barriers, the harmonisation of the construction and safety, 

Whereas  the  investments  made  in  the  entire  fuel  cycle,  including  waste  management 
and  decommissioning,  afe  basically  necessary  for  the  development  of  nuclear  energy 
and a correct and responsible operation of the nuclear industry, 

HAS ADOPTED THIS REGULATION  : 

Article 1 

Persons  or  undertakings  engaged  in the  industrial  activities  listed  in  Annex  II  to  the 
Treaty  establishing  the  EAEC  shall communicate  to  the  Commission,  within the time 
limits laid down in Article 42 of the Treaty, their investment projects aimed at : 

creating a production capacity; 

maintaining quantitative and qualitative production capacity; 

directly increasing production capacity; 

directly increasing productivity; 

improving the quality of production; 

dismantling installations; 

management of spent fuel  or radioactive waste (including treatment, interim or 
final  storage and/or  disposal); 

when, in the industrial activities listed in column I, the cost exceeds the corresponding 
amount in column II for  new installations  and that in column III for replacements and 
conversions 

1 

Sectors 

' 

I Millions of  E U R0 

ii 

I  III 

New installations  Replacements  and 

conversions 

1.  Mining of uranium and thorium ore 

2.  Concentration of such ores 

30 

30 

N 

3.  Chemical  processing  and  refining  of  uranium  and  30 

thorium concentrates 

4.  Preparation of nuclear fuels, in any form 

5.  Fabrication of nuclear fuel elements 

6.  Production of uranium hexafluoride 

7.  Production of enriched uranium 

10 

10 

10 

80 

8.  Processing  of  irradiated  fuels  for  the  purpose  of  80 
separating some or all of the elements contained therein 

9.  Production of reactor moderators 

30 

10. Production  of  hafnium-free  zirconium  or  compounds  15 

thereof 

11. Nuclear reactors of all types and for all purposes 

50 

12. Facilities  for  the  industrial  processing  of  radioactive  20 
waste,  set  up  in  conjunction  with  one  or  more  of  the 
facilities specified in this list 

13. Semi-industrial  installations  intended  to  prepare  the  10 
way  for  the  construction  of  plants  involved  in  any  of 
activities 3 to 10 

15 

15 

15 

5 

5 

5 

40 

40 

15 

7.5 

25 

10 

5 

Preparation  of nuclear fuels,  in any  form  (sector  n°4),  includes  chemical  processing  and 
conversion  of  source  materials  or  special  fissile  materials. 

De-fluorination  processes  for  effiuents/wastes  after  enrichment  pertain  to  sectors  n°  4, 
6,  8 and  12. 

Facilities  for  treatment,  storage  or  disposal  of  radioactive  waste  or  used  fuels  pertain 
to  sector  n°  12,  even  if these  facilities  are  not  located  on  the  site  of  any  other  nuclear 
industrial  facility  mentionned  in Annex  II of the Euratom  Treaty. 

Decommissioning  of any kind  of installation is  considered  as  a  conversion. 

Projects  for  new  installations  for  nuclear  reactors  of  any  type  and  for  any purpose  and 
projects  concerning  the  replacement,  transformation,  modernisation  or  power  increase 
of  such  installations,  where  the  costs  does  not  exceed  five  million  EURO,  may  be 
notified  through  a  simple  declaration  giving  only  their  essential  characteristics;  the 
procedure  laid  down  in  Article  43  of  the  Treaty  establishing  the  EAEC  need  not  be 
applied. 

Article  2 

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For the purpose  of calculating the costs referred  to in Article  1 all expenditure  arising 
directly  from  the  carrying  out  of the investment  projects  shall be taken into  account, 
irrespective of the time at which such expenditure is incurred. 

Article 3 

Communication  of projects in pursuance of this Regulation  shall include all the details 
required  for  the  discussion  provided  for  in  Article  43  of  the  Treaty  establishing  the 
EAEC and in particular all the information  relating to : 

!.  the type of products or activity and the production  or storage capacity; 

2.  the  total  amount  of  expenditure  directly  chargeable  to  the  project  under 

consideration as well as the share of its essential components; 

3.  the length of time likely to be required for carrying out the project; 

4.  the prospects as regards supplies for and operation of the installation. 

Article 4 

Without prejudice to the provisions  of article 44 of the Treaty establishing the EAEC, 
the  Commission  may publish  the  essential  elements  of  a general nature  of its  opinion 
and  the  main  features  allowing  the  identification  of  the  project,  except  for  those 
elements  of  a  commercial  nature,  related  to  intellectual  property  or  likely  to  affect 
competition. 

Article 5 

This Regulation will enter into force on 1st January 1999. 

It will be published in the OffwialJournal of the European Communities. 

This  Regulation  shall  be  binding  in its  entirety  and  directly  applicable  in  all Member 
States. 

Article 6 

Regulation  n°  4  of  the  Council  of  the  European  Atomic  Energy  Community  of 
15 September  1958 is repealed. 

Done at Brussels, ... 

For the Council 

The President 

8 

ISSN 0254-1475 

COM(98) 804 final 

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