Chapter 4: Authorisations Relating to Radioactive Waste

38.     Chapter 4 makes amendments to the Radioactive Substances Act 1993 (c.12) which will allow the Environment Agency (EA), the Scottish Environment Protection Agency (SEPA) and the chief inspector in Northern Ireland to use a streamlined and simplified process in dealing with applications for the transfer of radioactive discharge authorisations when there is a change of operator at a nuclear site. The changes will improve the effectiveness and efficiency of regulation whilst maintaining the robustness of the discharge authorisation process.

Chapter 5: Miscellaneous Provisions Relating to Nuclear Industry

Nuclear Liability

39.     Clause 79 gives the Secretary of State a power to amend UK legislation by order in respect of the UK's international obligations governing third party liability in the event of nuclear accidents (Paris and Brussels Conventions).

Nuclear Security

40.     Clause 80 extends the scope of the enabling power in section 77 of the Anti-terrorism, Crime and Security (ATCS) Act 2001 (c.24) to make regulations to ensure the security of the UK's civil nuclear industry. The territorial application of this provision is the same as section 77 of the ATCS Act i.e. to the United Kingdom. Nuclear security is a reserved matter in Scotland, an excepted matter in Northern Ireland and is not a transferred matter in Wales.

41.     Section 77 of the ATCS Act does not currently permit regulations to be made to ensure the security of equipment capable of being used to enrich uranium or software containing information relating to uranium enrichment (including uranium enrichment carried out overseas) held outside nuclear premises, and the security of this equipment and software when they are being held, transported or transmitted. Uranium enrichment technology is used in the civil nuclear industry and has been sought by States seeking to develop nuclear weapons.

42.     Section 77 of the ATCS Act does not currently permit regulations to be made to ensure the security of sensitive nuclear information being held, transported and transferred by carriers, where such carriers are not directly involved in activities on or in relation to nuclear sites or other nuclear premises.

43.     Section 77 of the ATCS Act does not currently permit regulations to be made to ensure the security of holdings of sensitive nuclear information in the United Kingdom, where (a) such information is held in relation to uranium enrichment activities outside the United Kingdom, and the transport and transmission of such information; and (b) the person holding the information is not involved in activities on or in relation to nuclear sites or other nuclear premises in the United Kingdom.

Authorisation of Government expenditure

44.     As part of the restructuring of British Energy (BE), the Government has agreed to enter into a series of principal agreements with the company. The agreements detail the arrangements by which British Energy and HMG will contribute to the costs of discharging BE's nuclear liabilities going forward.

45.     The Secretary of State intends to give effect to most of her obligations under the documents using her powers under Schedule 12 to the Electricity Act 1989 (c.29), as amended by the Electricity (Miscellaneous Provisions) Act 2003 (c.9) (EMPA), and as to be amended by clause 36 of the Bill. She will also have available additional, free-standing powers conferred by EMPA.

46.     Clause 82 gives the Secretary of State explicit statutory authority to incur expenditure as a result of options included in the documents. The provision is general, but goes further than the free-standing provisions in EMPA by authorising spending on two elements of the agreements not currently covered by legislation:

• in circumstances where British Energy has sold one of its nuclear power stations to a third party, the acquisition of the power station from that third party and subsequently operating it. This would follow the exercise of an option on the part of HMG to acquire the station for this purpose; and

• the acquisition of British Energy's shareholding in Nirex, and to incur expenditure on any consequences of such an acquisition.

47.     As a matter of law, the Appropriation Acts give the Secretary of State the authority to spend money on the exercise of her functions, but as a matter of practice, the agreement with Parliament known as the Baldwin agreement and the guidance set out by the Treasury in Government Accounting have the effect that new functions involving significant and continuing expenditure should normally be identified by an Act other than the Appropriation Act.

Option to purchase BE's nuclear stations from third party

48.     As part of the restructuring documentation, British Energy will grant the Secretary of State an option to acquire any of its power stations. The option may be exercised in relation to any of the nuclear power stations currently owned by British Energy. The option can be exercised at a time when British Energy, or a third party purchaser, chooses to shut them, either to prolong their operation where it is economically advantageous to do so, or to decommission them within the private sector.

49.     The Electricity Miscellaneous Provisions Act 2003 (c.9) provides specific statutory authority for the Secretary of State to spend money on the acquisition of assets of British Energy and on carrying on an undertaking using such assets. However, it does not authorise expenditure on acquiring or running assets which at the time they are acquired no longer belong to a BE company. This clause will provide such authority.

Option for the Secretary of State to acquire BE's shares in Nirex

50.     As part of the restructuring documentation British Energy will grant an option for the Secretary of State to acquire British Energy's shares in Nirex. Nirex is a company formed jointly by British Energy, BNFL and UKAEA to manage the UK's intermediate level radioactive waste. If she exercises the option, the Secretary of State will acquire the company's shares in Nirex, its rights and benefits under loans made by the company to Nirex and British Energy's liabilities, as Nirex shareholders, under their research and advisory contracts (RASC) with Nirex.

51.     This clause again gives the Secretary of State specific statutory authority to incur expenditure in connection with the acquisition of any securities in Nirex or in consequence of such an acquisition.

COMMENTARY ON CLAUSES

CHAPTER 1: NUCLEAR DECOMMISSIONING

Clause 4: The Nuclear Decommissioning Authority

52.     Clause 4 provides for the establishment of the NDA as a body corporate and makes it clear that it is not to be treated as a body enjoying Crown status, privilege or immunity or (with one exception mentioned below) as exercising functions on behalf of the Crown.

Clause 5 and Schedule 1: Constitution of NDA

53.     Clause 5 deals with the membership of the NDA and the basis on which members are to be appointed. It should be read in conjunction with Schedule 1 which contains more detailed provisions on terms of appointment and the basis on which the NDA is to conduct its business.

54.     The clause essentially provides for an NDA board of not less than seven and no more than thirteen members of which the majority must be non-executive members. This reflects the Government's view that the role of the board should be to challenge the executive management team to do better and to hold it to account for its performance. Subsections (7) and (8) are specifically designed to ensure, so far as practicable, that the non-executive majority is maintained at all times.

55.     The non-executive members will consist of a Chairman and up to eleven other persons (depending upon how many executive members are appointed). The Government intends that all appointments will be made by open competition under the rules set out by the Office of the Commissioner for Public Appointments (OCPA). The Chairman will be appointed by the Secretary of State. Other non-executives will be appointed by the Secretary of State after consultation with the Chairman. The Secretary of State will consult Scottish Ministers before making these appointments.

56.     The executive members will consist of a Chief Executive (appointed by the non-executive members subject to the approval of the Secretary of State) and up to three other persons appointed by the non-executives after consultation with the Chief Executive. Again, appointments will be made following open competition carried out on an open and transparent basis. The Secretary of State will consult Scottish Ministers before approving the appointment of the Chief Executive. Subsection (6) provides that the requirement to consult Scottish Ministers may be satisfied by consultation that took place wholly or partly before the commencement of clause 5.

57.     All these provisions are designed to ensure that final decisions on the NDA's strategy and annual work plans (see notes to clauses 14 to 16 below), rules of procedure and delegation of functions are taken by the Board and are not effective unless a majority of members present are non-executives. The procedure during the initial period (as defined) is set out in Schedule 1, paragraph 4.

Clause 6: Designated functions

58.     Clause 6 sets out the principal functions of the NDA and arrangements for the NDA to be given designated responsibility for particular installations, sites or facilities. In line with the White Paper (Cm. 5552), the prime function is the decommissioning and cleaning up of designated nuclear installations and designated nuclear sites. The definitions of 'nuclear site' and 'person with control' are to be found in clause 39 and other key terms are defined in clause 40. Decommissioning and cleaning up are defined broadly in clause 40(1) to include dealing with anything that needs to be removed so that the site or installation is suitable to be used for other purposes and to include the construction of any new facilities which might be required for achieving it. "Installation" is defined in clause 40 to include buildings, structures and "apparatus", and a "nuclear installation" to mean an installation on a principal nuclear site, but not including an installation comprised in a NDA facility.

59.     Clause 6 is framed in general terms so that, in addition to the BNFL and UKAEA sites described in the White Paper, the Government could in future give the NDA responsibility for the decommissioning and cleaning up of Ministry of Defence sites and, with the consent of the company concerned, also give it responsibility for securing the decommissioning and cleaning up of sites operated by companies in the private sector. This last point reflects both recent experience with BE and responses to the White Paper which suggested that it would be in the public interest if the NDA's responsibilities could go wider than public sector civil nuclear liabilities as proposed in the White Paper.

60.     Paragraph (a) of subsection (1) covers the operation of Magnox nuclear power stations pending the commencement of their decommissioning. Paragraph (d) covers the operation of designated facilities for treating, storing, transporting and disposing of hazardous material. "Hazardous material" includes nuclear matter and radioactive waste. The note on clause 40 contains more detail on the definition of 'hazardous material'. Paragraph (d) will include the operation of BNFL's Thermal Oxide Reprocessing Plant (THORP), the Sellafield MOX Plant (SMP) and other commercial plants and facilities at Sellafield, which, as the White Paper explained, for regulatory and operational reasons, has to be managed as a single, integrated site. "Treating" includes reprocessing and manufacturing fuel (see the definition of "treat" in clause 40) to cover some of the operational installations which will fall under the responsibility of the NDA, such as THORP and SMP. Many facilities will include buildings, structures or apparatus and accordingly "facility" in paragraph (d) is defined in clause 40 to include an installation (see note on clause 40 below). This means that installations contained in facilities on principal nuclear sites can be designated for decommissioning under subsection (1)(b) or, if they are comprised in NDA facilities, under subsection (1)(f), see below. "Facility" also includes a business or undertaking so, for example, the NDA could be given responsibility for operating the BNFL subsidiary which transports nuclear fuel and spent fuel. No decision has yet been taken on that. Subsection (1)(d) also covers the low level waste disposal site at Drigg.

61.     Paragraph (e) of subsection (1) is intended to cover situations where the NDA has responsibility for treating, storing and disposing of nuclear matter, radioactive waste or contaminated matter which is not necessarily on a nuclear site which is the responsibility of the NDA.

62.     Paragraph (f) of subsection (1) covers the decommissioning of installations which form part of facilities which the NDA has had responsibility for operating under subsection (1)(d). Such installations are not included in the definition of 'nuclear installation' and cannot therefore be designated under subsection (1)(b). Disposal facilities do not currently require a licence under the Nuclear Installations Act 1965 (c.57), and it is conceivable that certain kinds of treatment or storage facilities may not be licensable. The Bill therefore needs to provide for the cleaning-up of a category of principal nuclear site on which there is a treatment, storage or disposal facility that has been operated by the NDA but which is not on a licensed or Crown site.

63.     Subsection (2) explains by way of a cross reference that the NDA can only discharge its responsibilities under clause 6 by carrying out its duties under clauses 18 and 19.

64.     Subsection (3) provides that designation of an installation, site or facility or for the treatment, storage, transportation or disposal of matter or waste is achieved by means of a direction given by the Secretary of State to the NDA.

65.     Subsection (4) provides that the NDA can only be given responsibility for installations, sites or facilities which are controlled by a Crown appointee, the UKAEA, a publicly owned nuclear company (for example, BNFL) (or the wholly owned subsidiary of such a company), the NDA itself, or otherwise where the person with control of that installation, site or facility has given his consent.

66.     Subsection (5) requires directions to cite the specific provision in subsection (1) under which a designation is being made. Subsection (6) requires the NDA to decommission all installations on a site designated for cleaning-up, unless the designation specifically provides otherwise.

67.     Subsection (7) requires the Secretary of State to lay a copy of every direction containing a designation before Parliament and to publish it subject, in both cases, to the exclusion of any material which, in his view, should - under subsection (9) - be withheld in the interests of national security.

Clause 7: Additional responsibilities under designating directions

68.     Clause 7 enables the Secretary of State to give the NDA certain additional responsibilities when, or after, making a designation under clause 6.

69.     Subsection (1) is aimed at a situation in which the NDA is responsible for operating an installation or facility on a site which it does not have responsibility for cleaning-up and which it needs to be able to manage.

70.     When the NDA has responsibility in relation to a principal nuclear site, subsection (2) enables the NDA to be given responsibility for operating or managing research facilities, general facilities on the site (e.g. car parks, etc), land which is occupied together with the site by a person with control (e.g. land owned by BNFL in the vicinity of its sites) and facilities on such land (e.g. the visitor centre at Sellafield, offices, research laboratories, etc). There are some research facilities on principal nuclear sites, for example the BNFL Technology Centre at Sellafield.

71.     Subsection (3) limits the nature of these additional responsibilities the NDA can be given to ones that will assist it in carrying out functions it already has or ones which are incidental to that purpose.

72.     Where the NDA is given responsibility under clause 6(1) or 7(2)(a), (b) or (d) for the operation of an installation or facility, it will by implication have power to do anything it needs to do in order to operate the installation or facility concerned, including building or replacing anything on which the operation depends. Because the designation under clause 6(1)(e) is in respect of particular matter or waste, the NDA may need to be able to build and operate an installation or facility to be able to deal with it, and subsection (4) contains the necessary power.

Clause 8: Supplemental provisions of designating directions

73.     Clause 8 makes additional provisions in relation to the terms of directions which may be given under clause 6.

74.     Subsection (1) provides that a designation may be made to come into force at a later date. This means a designation could have effect for certain purposes under the Bill before the NDA has to carry out the principal function concerned. For example, when the NDA is first established, designations of BNFL and UKAEA will be made so that the NDA can begin preparing its annual plan in readiness for its first year of operation, expected to begin on 1 April 2005. The designations will come into force on that date. Where the NDA is given responsibility for installations, sites or facilities owned by what is currently a private sector company, subsections (2) and (3) allow for the possibility that the company concerned may be required to pay for work carried out by, or on behalf of, the NDA. The expectation would be that, insofar as funds were available to pay for such work, either an upfront payment would be made to public funds or a direction would require appropriate ongoing charges to be imposed by the NDA.

75.     Subsections (4) and (5) provide for the modification or revocation of directions by a further direction given by the Secretary of State. As in the case of clause 6(4), any such direction may only be given where the installation, site or facility concerned belongs to the Crown, UKAEA or BNFL, a company which is currently publicly owned, the NDA, or with the consent of the person with control. A direction giving the NDA responsibility for the decommissioning of an installation or clean up of a site may, under subsections (6) and (7), only be revoked if the Secretary of State is satisfied that the NDA has fully discharged its responsibilities.

Clause 9: Designations relating to Scotland

76.     Clause 9 provides for Scottish Ministers to act with or be consulted by the Secretary of State when making, varying or removing directions which give the NDA responsibilities in Scotland, falling within subsection (2).

77.     Subsection (2) sets out the cases in which Scottish Ministers act jointly with the Secretary of State in respect of sites in Scotland. The subsection draws a distinction not made elsewhere between licensable sites and other principal nuclear sites. As well as sites which require a licence under the Nuclear Installations Act 1965 and sites which would require a licence if they did not belong to the Crown, this category includes a site on which there is a fusion reactor (there is only one site with a fusion reactor in the UK which is in England). Directions in respect of sites that are not licensable will be given jointly by the Secretary of State and Scottish Ministers.

78.     Subsection (3) requires Scottish Ministers to be consulted by the Secretary of State where directions relate to giving, removing or varying certain NDA responsibilities in respect of licensable sites in Scotland.

Clause 10: Supplemental functions

79.     Clause 10 gives the NDA other functions to the extent that it considers these appropriate. As foreshadowed in the White Paper, these include the carrying out and promotion of research into matters relating to its functions; raising the profile of nuclear decommissioning through the provision of information; educating and training persons about those matters. Subsection (1)(e) also provides for the encouragement and support of initiatives to promote socio-economic development or that produce other environmental benefits for communities living near its sites, recognising that in some areas the NDA will be a major contributor to local economic activity and, consistent with its principal functions, will have a role to play in local socio-economic and environmental development.

80.     The function in subsection (2) is required as a consequence of the restructuring plan for British Energy (BE) under which the Government has given certain undertakings underwriting the cost of decommissioning and clean up of BE sites (subject to approval of the agreement by the European Commission). The intention is that, in order to safeguard the interests of the taxpayer, the NDA should have the capacity to act as the nominee of the Secretary of State under the terms of the agreements with BE and generally to ensure that BE's decommissioning plans and the basis on which it operates its stations and subsequently carries out decommissioning and clean up of its sites are such as to minimise any call on public funds. Subsection (3) enables the Secretary of State to require NDA to meet the costs of such an agreement so that all Government's responsibilities in respect of nuclear clean up can be managed within the same framework.

81.     Subsection (4) additionally gives the NDA the functions where required to do so by the Secretary of State of providing advice (generally or in relation to a particular installation site or facility) either to the Secretary of State or to third parties where the NDA has particular expertise in respect of its functions (set out in subsection (5)). Scottish Ministers can also require such advice to be given to them as far as Scotland is concerned. The NDA can also provide general advice to the Secretary of State or Scottish Ministers on its own initiative where the NDA thinks it appropriate.

82.     Subsection (6) ensures that the NDA's principal functions, defined in clause 6(1), are not to be adversely affected by the carrying out of any of the NDA's supplemental functions under subsection (1) or by its giving general advice. This duty on the NDA does not apply where the Secretary of State is requiring the NDA to act on his behalf under subsection (2) or (3) or where the Secretary of State or Scottish Ministers require advice.

83.     Where the NDA is required to provide advice to Scottish Ministers without the agreement of the Secretary of State the NDA can charge them for the advice given.

Clause 11: Special functions in relation to pensions etc.

84.     Clause 11 gives the NDA particular functions in respect of establishing and maintaining both a pension scheme and a compensation scheme covering employees of organisations involved in decommissioning and clean up activities.

85.     Subsection (2) identifies those employees who can benefit from such schemes. In addition to UKAEA employees and those employed for the purposes of carrying out NDA functions, the Secretary of State can designate others employed in the nuclear industry who can so benefit, after consultation with the NDA (subsection (3)). At present BNFL administers a compensation scheme on behalf of the nuclear industry. The NDA will have power to participate in such a scheme under its general powers but the power to administer is necessary in case the members of the scheme decide at any time that the NDA is best placed to administer it.

Clause 12: General duties when carrying out functions

86.     Clause 12 places a duty on the NDA, in carrying out its functions, to do all the things specified in subsections (1), (2) and (3).

87.     Subsection (1) requires the NDA to have particular regard both to relevant Government policy, including that of devolved administrations (defined in subsections (4) and (5) respectively), and to the regulatory framework in respect of the environment, health and safety, and nuclear security (as defined in subsections (6) and (7)). This underlines the importance of decommissioning and clean up being carried out safely, securely, cost effectively and in ways which protect the environment. The definition of "nuclear security" is adapted from and consistent with the provisions on security in section 77 of the Anti-Terrorism, Crime and Security Act 2001. Subsection (1)(a) also sets out that relevant Government policy includes the desirability both of optimising, through the NDA's employment arrangements and other contracts, the social and economic life of the communities living near designated installations, sites or facilities, and of maintaining or enhancing so far as practicable the levels of support to such communities that were made by the operators of designated installations, sites or facilities before the NDA designation was made.

88.     Subsection (2) also requires the NDA to promote the development of a competitive market for clean up and other contracts; to ensure the availability of a skilled workforce capable of sustaining its work programmes over the long term; and to secure the adoption of good practice across its sites.

89.     By virtue of paragraph (d) of subsection (2) the NDA is required to secure best value for the taxpayer within this overall framework, but not at the expense of its other duties in subsections (1) and (2).

90.     Subsection (3) places a duty on the NDA to consider and act in the overall public interest in decisions on operating its facilities and managing its sites. So, for example, the NDA should seek to obtain value for the taxpayer from any asset it owns but for which it no longer as a use.