Nuclear power – Nuclear processing plant – Justification – Application for approval of nuclear plant made when construction almost completed – Respondents ignoring costs already incurred in construction when assessing economic benefits of plant – Respondents concluding plant justified – Whether respondents obliged to take into account costs already incurred – Article 6.1 of EU Council Directive 96/29/EURATOM – Appeal dismissed
The appellant environmental protection charities were opposed to a proposal by the third respondent (BNFL), a nuclear power company, to construct a plant at Sellafield to recycle used plutonium into a fuel known as MOX. The first and second respondent Secretaries of State were responsible for approving such proposals. In deciding whether to do so, they were required to apply EU Council Directive 96/29/EURATOM.
By Article 6.1 of the directive, new types of practices involving a hazard from ionising radiation had to be “justified in advance of being first adopted or first approved by their economic, social or other benefits in relation to the health detriment they may cause”. The European Commission’s comments on the directive stated, in relation to Article 6, that a determination of justification should take place at the earliest possible stage to “reduce the influence of the already incurred costs in balancing economic and social factors against health detriment”.
The Secretaries of State approved the plant proposal after finding that its economic benefits were sufficient to justify it. In assessing those benefits, they did not take into account the costs of constructing the plant incurred prior to the application for approval. Since BNFL had submitted its proposal for approval at a late stage, when construction of the plant was almost completed, the effect of the approach taken by the Secretaries of State was to disregard the greater part of the capital costs of the venture.
In judicial review proceedings brought by the appellants, the court held that the Secretaries of State had been right to disregard costs that had already been incurred.
The appellants appealed, contending that: (i) the decision as to whether to approve a new practice ought not to depend upon when, in relation to the expenditure of capital costs, that decision was taken; and (ii) since the directive took a generic approach to justification, and a decision on justification would apply to the practice of MOX manufacturing generally, it was impermissible to ignore the costs that had already been incurred in a particular project when making that assessment, since the decision would permit the practice at other plants whose capital costs had not been incurred already. BNFL submitted, inter alia, that the latter argument did not apply, since its proposed plant would, in reality, be the only one in the United Kingdom.
Held: The appeal was dismissed.
It was plain that BNFL’s plant had been the sole plant under consideration for approval by the respondent Secretaries of State. Article 6 of the directive did not require them, in such circumstances, to take into account the costs already incurred in building it, which could not be recovered and were not going to be incurred anywhere else. The Secretaries of State had been entitled to decide the matter in the real world, and it would have been absurd for them to bring into account costs that had already been incurred on the fictional basis that the approval might be invoked in relation to other operations in the future. In the light of that, the conclusion of the Secretaries of State that the economic benefits of the proposed plant were sufficient to justify it was one that had been open to them.
Such considerations aside, the appropriate general approach was that the capital costs inherent in a new type of practice were a cost of the practice and relevant when evaluating the overall economic benefit or detriment likely to result from it. Hence, such capital costs could not be ignored when considering whether to give approval for plants that had not yet been built. The critical question, however, was what was to happen in a case where the capital costs had already been expended. On that matter, the wording of the directive and of the Commission’s comments did not appear to be helpful to the appellants’ arguments.
Lord Lester of Herne Hill QC, Michael Fordham and Ben Jaffey (instructed by the solicitor to Friends of the Earth and the solicitor to Greenpeace) appeared for the appellants; Philip Sales and Jonathan Swift (instructed by the solicitor to the Department for the Environment, Food and Rural Affairs and the solicitor to the Department of Health) appeared for the first and second respondents; David Pannick QC, Alan Griffiths and Dinah Rose (instructed by Freshfields Bruckhaus Deringer) appeared for the third respondent.
Sally Dobson, barrister
