CELEX: 51998PC0804
Language: en
Date: 1999-01-11
Title: 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

COMMISSION OF THE EUROPEAN COMMUNITIES
                                                           Brussels, 11.01.1999
                                                           COM(1998)804 final
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                                            Proposal for a
                                COUNCIL REGULATION (Euratom)
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             defining the investment projects to be communicated to the Commission in
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             accordance with Article 41 of the Treaty establishing the European Atomic
                                         Energy Community
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 ---pagebreak---  ---pagebreak--- 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
 ---pagebreak--- 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.        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.
II.       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 ECU 3 u 2 .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
                                                 J
 ---pagebreak--- 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
 ---pagebreak--- 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
 ---pagebreak---                                    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
 ---pagebreak---                                                                I Millions o f E U R 0
1                            '                                   ii                   I III
 Sectors                                                         New installations     Replacements and
                                                                                       conversions
  1. Mining of uranium and thorium ore                           30                    15
 2. Concentration of such ores                                   30             N      15
 3. Chemical processing and refining of uranium and 30                                 15
      thorium concentrates
 4. Preparation of nuclear fuels, in any form                    10                    5
 5. Fabrication of nuclear fuel elements                         10                    5
 6. Production of uranium hexafluoride                           10                    5
 7. Production of enriched uranium                               80                    40
 8. Processing of irradiated fuels for the purpose of            80                    40
      separating some or all of the elements contained therein
 9. Production of reactor moderators                             30                    15
  10. Production of hafnium-free zirconium or compounds          15                    7.5
      thereof
  11. Nuclear reactors of all types andforall purposes           50                    25
  12. Facilities for the industrial processing of radioactive    20                    10
      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                    5
      way for the construction of plants involved in any of
      activities 3 to 10
 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
                                                   -^L
 ---pagebreak--- 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
 ---pagebreak---                                                                   ISSN 0254-1475
                                                            COM(98) 804 final
                                              DOCUMENTS
EN                                                            12 09 01 10
                                    Catalogue number : CB-CO-98-807-EN-C
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