Legal Aspects

National and European norms concerning the construction of new nuclear facilities

EU State Aid Rules

The Treaty on the Functioning of the European Union (TFEU), specifically article 107 and article 108, is the Guiding Act which regulates the main situations in which the granting of state aid is admissible. The leading principal is that any state aid granted by a Member State or through state resources in any form whatsoever distorts or threatens to distort competition by favouring certain undertakings, as far as trade between Member States is concerned, is prohibited.

Art. 107, par. 3 of the TFEU, however, allows exceptions to the basic rule, with permissible exemptions being regulated by EU secondary legislation. In the event that the state aid concerned does not fall within the scope of Regulation no 1998/2006 (minimum aid rules not exceeding EUR 200 000, 3 for three financial years), Regulation no 800/2008. (Group exemptions or block exemptions) or under other framework decisions on eligible state aid to the Commission ( Services of general economic interest), it should be communicated to the EC for a detailed assessment of the compatibility of state aid with EU competition and internal market rules. The Member state is obliged to await the final decision of the EC, and any aid granted before obtaining prior approval from the EC is unlawful. State aid within the meaning of art. 107, para 1 covers a wide range of instruments through which public authority can support an enterprise, including preferences, state guarantees and tax deductions, contract for differences, etc.

However, in order to classify a measure as state aid, the first and most necessary condition is to finance it directly or indirectly from State resources/public funds. According to the jurisprudence of the European Court of Justice, a measure is state aid and, in cases where an undertaking owned by the State or under its control uses its means in a way that can be fastened a responsibility to the state. The only exception in which the spending of public funds in favour of an undertaking is not considered state aid is when a public authority invests funds under conditions which would be acceptable to a private investor operating under conditions of market economy. Placing an undertaking in a more favourable situation and distorting competition in the internal market is the other criteria which the Commission takes into account in assessing the compatibility of the measure with article 107.

The classification of a measure as state aid does not always lead to a violation of art. 107 of the TFEU. When the measure does not fall under any of the exceptions mentioned in the introductory paragraph, it is subjected to an individual assessment by the EC for compatibility with the law and principles of the internal market. A basic principle in the assessment of conformity to art. 107, para 3 is the measure constituting state aid leading to the achievement of an objective of common interest for the EU and its positive effect is greater than the negative effects on trade and competition. In its communication with guidelines on state aid for environmental protection and energy for the period 2014-2020, the Commission identifies a number of criteria that need to be met cumulatively to allow a measure to be considered Compatible with art. 107,

These criteria include a contribution to a well-defined objective of common interest, the need for State intervention (to eliminate a pronounced market failure), the appropriateness of the measure (the instrument is appropriate to achieve the relevant objective and it is possible least pronounced impact on competition), the measure has an incentive effect and the amount of aid is limited to the minimum necessary to achieve the objective and does not lead to overcompensation (proportionality).

Procedure under the provisions of the Euratom Treaty to notify projects concerning the construction of new nuclear facilities

According to Art. 41 of the Euratom Treaty (ET) projects for the construction of new nuclear power plant falls within the scope of investment projects to be communicated to the Commission (also art. 1, para 1 Council Regulation (EURATOM) no 2587/1999; § 11 Annex II to ET) comments and further discussion within a period which shall normally not exceed 2 months. When a detailed procedure is opened, the deadline for the Commission to adopt final recommendations is 6 months.

Upon expiry of that period or at the request of the other party, the Commission shall, within two months, give its opinion on the basis of the information in its possession. It is not recommended to start the implementation of the project before the Commission has been pronounced. The Notification pursuant to art. 41 is a compulsory measure under the Euratom Treaty, the procedure itself being purely coordinated. The Commission’s assessment is not binding.

At the end of 2012, Kozloduy NPP – New Builds has provided the European Commission (EC) with preliminary information about the decision in principle of the government approving the investment intent to build nuclear power plant at the site of Kozloduy NPP. This, however, does not relieve the investor from the obligation to submit an official notification pursuant to art. 41 by the ET before the EC when the necessary information about the project is available.

However, where significant changes are made to key project parameters (i.e. main characteristics of the project, type of reactor, fuel, characteristics of the facility) it is necessary to re-process the whole procedure. “Substantial amendments” means those which make the project substantially different from that which is the subject of the initial notification.