Continuing Liability and Distribution of Responsibility for Radioactive Waste – and after Coal Phase-Out

Final disposal site mining is mainly characterised by the transfer of the responsibility for the disposal to the Disposal Fund. But apart from that, the energy companies remain responsible – without any option of being released from liability. This continuing responsibility is laid down in the German Continuing Liability Act (Nachhaftungsgesetz). Is there also a continuing liability for the mining industry in light of the coal phase-out?

This article is a continuation of the author’s comments in Frenz, W. (ed.), Atomrecht, 2019.

1  Closing a gap with the Continuing Liability Act

The German Continuing Liability Act (Nachhaftungsgesetz – NachhG) closes a gap in the law which was considered unacceptable in the nuclear sector, but which still exists outside this field. § 303 of the German Stock Corporation Act (Aktiengesetz – AktG) only provides for a very limited continuing corporate group liability of the parent companies of the operating companies in the event of termination of the control and profit-and-loss transfer agreements, and it does so in two respects: The entitlement is directed solely to the provision of security and not to the assumption of costs and, in accordance with case law, it is furthermore limited to five years after its creation. As to reorganisation law, comparable provisions (1) apply. But the dismantling of a nuclear power plant alone will take a much longer period of time and a final disposal site will probably not be available before 2050 (2). And so does aftercare after the end of the mining works extend over long periods of time. A very long liability applies as long as events can be traced back to mining (3).

Also, merely refraining from a claim against the polluter may be considered as state aid if the state then is likely to be obliged to remedy or avert a damage at its own expense. This is to be expected in the case of sites with nuclear contamination, as well as in the case of mining aftercare obligations, such as the reuse of opencast lignite coal mining sites. Particular difficulties arise from the fact that long-planned rehabilitation concepts are being cancelled out by the early coal phase-out, thus creating a higher and above all earlier cost burden, which is also not (any longer) secured by income from coal-fired electricity generation (4). The German Coal Committee (Kohlekommission) is therefore already demanding stronger safeguards for operating plans that still have to be approved: Where there is no corporate group joint liability, it demands insolvency-proof safeguards (5). Therefore, a financially very complex state action is foreseeable if security on the part of the enterprise is not given (any longer). Therefore, it is to be considered state aid if the nuclear corporate groups are released from their liability for nuclear contamination, in particular for the decommissioning and disposal of nuclear power plants, even if it were by a possible outsourcing to operating companies with insufficient financial resources. The same applies if the mining companies are released from rehabilitation obligations and other aftercare obligations which are causally attributable to mining and which are not caused by the earlier termination of coal mining for electricity generation.

Therefore, the parent company’s liability by lifting the corporate veil is necessary with regard to state aid regulations. Such liability goes beyond the liability pursuant to § 4 (3) sentence 4 of the German Federal Soil Protection Act (Bundes-Bodenschutzgesetz – BBodSchG) by taking effect generally in case where there is a majority of capital or voting rights or where the operating company is managed, and not only in abusive constellations (6). A potential de facto domination suffices, which, on the basis of an independent definition, remains unaffected by the changes in civil law – in contrast to the liability caused by lifting the corporate veil under the soil protection law (7). In this way, a permanent responsibility of the nuclear groups for nuclear site contamination due to the decommissioning of nuclear power plants in accordance with the polluter-pays principle is comprehensively ensured (8). For coal mining, the question arises as to who will be liable after the end of coal-fired electricity generation, especially if the mining companies are moving into other business areas and possibly want to spin off their mining activities.

2  Comprehensive corporate group responsibility

§ 1 (1) NachhG, in the form of a general clause (9), stipulates a comprehensive – albeit subsidiary – responsibility of the nuclear groups for their operating companies: For all present and future public-law payment obligations of an operator of a domestic nuclear fuel fission plant for the commercial generation of electricity resulting from the decommissioning and dismantling of such plants pursuant to § 7 (3) of the German Atomic Energy Act (Atomgesetz – AtG) or from the orderly disposal of radioactive waste pursuant to § 9a  (1) sentence 1 AtG (disposal tasks until the final disposal of radioactive waste) – in particular any obligations under §§ 21a and 21b AtG as well as under the German Ordinance on Advance Payments for the Final Disposal of Radioactive Waste (EndlagervorausleistungsVO) – and under §§ 21 et seqq. of the German Repository Selection Act (Standortauswahlgesetz – StandAG) – the controlling companies are liable to the respective entitled body if the operator fails to fulfil such payment obligations.

The competent body under public law therefore is entitled to claim subsidiary payment against all corporate group companies that are superordinate to the operating company (10). In this regard, it does not matter whether there is direct or indirect control (10). Due to the comprehensive purpose of securing the actual payment and financing responsibility of the nuclear power plant operators, including the operators behind them, it is only decisive whether control is exercised and not how that control is exercised. All structures of control, which are defined in more detail in the law, are to be included.

§ 2 (1) NachhG defines companies as controlling if they directly or indirectly own at least half of the shares in an operator, or if they hold at least half of the voting rights in the company of an operator, or if they, independently of the former, are able to exercise, alone or jointly, a dominant influence over an operator in other cases. Ultimately, it is less the form that counts but rather the result of the controlling influence over the shares, over the voting rights or in any other way. Pursuant to § 3 (1) NachhG, the continuing liability established thereby does not expire if the status as controlling company ends after 1st June 2016. This liability also cannot be transferred to a third party with discharging effect after that date (§ 3 (2) NachhG).

The case that the operating company ceases to exist is also included specifically. In this particular case, the competent public body will no longer have a debtor at its disposal. Therefore, if the operating company disappears, the existing payment entitlement against it must be replaced. For this reason, the competent public body has an independent entitlement to payment towards the corporate group company that is superordinate to the operating company (10).

In this way, the polluter-pays principle stipulated in German atomic energy law is implemented. The burden-sharing principle is excluded by placing the financing of the nuclear energy phase-out on further pillars (10). The interests of the state and society with regard to the considerable financial risks arising from the insolvency of the responsible operating companies are protected (10). In this respect, the primary responsibility of the nuclear power plant operators is implemented at the secondary level.

As the parent companies only bear subsidiary contingent liability, the interventions affecting the individual rights of the respective companies are limited considerably, i. e. such interventions are reduced to the case that the financing secured by the operating companies through the formation of provisions fails or is endangered (10). The provisions kept at the operating companies are usually sufficient, so that the contingent liability of the corporate group companies is the exception and above all prevents attempts of circumvention aiming at reducing the amount of liable capital (11).

By not exhaustively enumerating the obligations ( i. e. “in particular”), any payment obligations introduced in the future may also be included (12). Thus, the current connecting point are the previously regulated payment obligations, fees and contributions under the Atomic Energy Act and the advance payments on contributions under the German Ordinance on Advance Payments for the Final Disposal of Radioactive Waste as well as the levy pursuant to the German Repository Selection Act. However, this only covers the previously planned steps of decommissioning and dismantling the nuclear power plants and disposing of the radioactive waste, without this arrangement being final. Rather, payment obligations introduced later may continue to trigger continuing liability. The payment obligations are therefore not exhaustively enumerated (9).

The controlling companies and thus the parent companies can also be held liable pursuant to § 1 (2) NachhG if the operator fails to meet its obligation to bear costs in the event of enforcement or substitute performance.

3  End of the corporate group responsibility

An end of the liability is subject to an objective condition. According to § 4 NachhG, it ends at the latest when the substances subject to mandatory delivery have been delivered in their entirety to a final disposal site and the site is sealed, which is only possible, however, when the waste is stored without creating any further hazards. The site must be federal facility. In any case, the subsequent liability ends when the obligations pursuant to § 1 NachhG no longer exist because the payment into the public fund and the decommissioning, dismantling and proper packaging have been completed. Then the continuing liability for the costs of fulfilling these obligations also ends accessorily (13). However, there is still the liability for areas not covered by the Disposal Fund, such as the dismantling of the nuclear power plants, until such dismantling has been completed. This may give rise to significant obligations. For the purposes of differentiation, the areas for which the nuclear energy corporate groups are no longer liable should be discussed in more detail. Such a model might also be suitable with regard to the aftercare in lignite mining – after its implementation with regard the already phased-out hard coal mining industry.

4  Transfer of financial responsibility for final disposal

The German Disposal Obligations Transfer Act (Entsorgungsübergangsgesetz – EntsorgÜbG) takes into account that the nuclear power plant operators have paid into a fund in accordance with the German Disposal Fund Act (EntsorgFondsG) the funds required for the disposal and final disposal of radioactive waste. This creates the basis for releasing the plant operators from their financial burden and their responsibility for action and for transferring both of these to the fund created for this purpose. As the name already implies, the law transferred the financing and responsibility of the disposal. The cut-off date was 1st January 2019.

Since that date, the nuclear power plant operators do no longer have to worry about the final disposal of radioactive waste, but rather the fund or third parties assigned by the fund have to do so. This now also applies to the disposal of properly packaged radioactive waste after it has been handed over to the federally owned interim storage facility operator (§ 2 EntsorgÜbG). The payment obligations are distributed accordingly. If the nuclear power plant operators still have to take action, they may demand reimbursement of the costs incurred pursuant to § 3 (5) EntsorgÜbG. At the same time, the fund assumes full responsibility. The basic pre-requisite for this, however, is that the nuclear power plant operators have made the required payments, which was – as a matter of fact – done immediately. The amount of this payment has been set at 24 bn € in line with the EU prohibition of state aid and includes a reserve for future cost increases to ensure that the public sector will have no own payment obligations.

However, this does not include the costs for the interim storage and dismantling of the nuclear power plants. The power plant operators continue to bear these costs themselves. For this purpose, the aforementioned Continuing Liability Act has been drawn up, so that the costs and responsibility of action of the operators are not outsourced to companies that are not capable in this respect. The EntsorgÜbG therefore only affects the next stage, i. e. when the power plant operators dispose of the radioactive waste generated during the dismantling of the nuclear power plants so that it can be permanently deposited.

§ 1 EntsorgÜbG transfers the obligation to finance facilities for the disposal of radioactive waste from the plant operator to the fund under the EntsorgFondsG, while § 2 EntsorgÜbG transfers the obligation to act and thus not only the obligation to pay for the disposal of radioactive waste. The connecting point is the operator’s obligation to pay costs or fees pursuant to § 21a of the Atomic Energy Act (AtG), to pay contributions for advance payments pursuant to § 21b AtG and to pay levies pursuant to § 21 of the StandAG. These financial burdens correspond to the tasks which the fund has to bear according to the EntsorgFondsG.

By referring to § 9a (3) AtG, § 21a AtG applies to collection points for interim storage as well as to facilities for the final disposal of radioactive waste; § 21b AtG is concerned with the creation of the prerequisites such as planning, acquisition of land, etc. and with the construction, extension and renewal of such facilities. § 21 StandAG covers the protection of areas that are taken into consideration as best possible safe sites for the final disposal against any changes that might impair their suitability, and provides for compensation in the event of a ban on changes of more than five years (§ 21 (5) StandAG in conjunction with § 9g (5) AtG).

5  Transition of the obligation to dispose of the radioactive waste

§ 2 EntsorgÜbG transfers the obligation to take action for the disposal of the radioactive waste from the operator to the German federal government or a third party commissioned by the federal government. As the final disposal of the radioactive waste has already been a federal government responsibilty, this concerns the existing obligations of the operators to dispose of their radioactive waste from the moment the properly packaged waste is handed over to the federal interim storage facility operator (14). The interim storage facility operator then has the duty to act. The plant operators thus can dispose of their radioactive waste that stems from the operation and decommissioning, safe confinement and dismantling of a plant for the fission of nuclear fuels for commercial electricity generation. How this is done is provided for in more detail in § 2 (2) et seqq. EntsorgÜbG.

Thus, the operator can transfer properly packaged waste to the Gesellschaft für Zwischenlagerung (BGZ), a federally owned interim storage operator company founded in March 2017, which was to be set up in accordance with § 2 (1) sentence 2 EntsorgÜbG in the form of a company under private law whose shares are wholly owned by the federal government (14). Thus, it is merely an organisational privatisation. A separate unit under private law is created, which is, however, owned by the federal government. For this reason, the federal government has full subsidiary liability.

As stipulated by § 2 (2) EntsorgÜbG, the obligations with regard to the proper disposal of the delivered radioactive waste are transferred onto the federally owned interim storage facility operator pursuant to § 2 (1) sentence 1 EntsorgÜbG. This applies in particular to the obligation to deliver the radioactive waste to a facility for final disposal pursuant to § 9a (2) sentence 1 AtG as well as the obligation to temporarily store it until it is delivered to such a facility.

This enables the operators of nuclear power plants to dispose of their waste without having any further duties to act as to that waste. In particular, their disposal responsibility also ceases in the event that such waste is improperly handled by the federally owned interim storage facility. The responsibility ends definitively at this point.

§ 2 (3) EntsorgÜbG concretizes the option to dispose of spent nuclear fuels and radioactive waste stemming from the reprocessing of spent nuclear fuels created by § 2 (1) sentence 1 EntsorgÜbG. Such disposal has been an option since 1st January 2019. § 2 (3) sentence 2 nos. 1 and 2 of the EntsorgÜbG specifies additional prerequisites for the delivery to the federally owned interim storage operator. The spent nuclear fuels must be delivered in transport containers and storage containers that comply with the acceptance conditions of the respective interim storage facility. This also applies to radioactive waste from the reprocessing of spent fuel elements. In each case, the competent supervisory authority must make an assessment to this effect. Packaging must therefore be realised in transport and storage containers approved in accordance with traffic and transport regulations (14).

In addition, radioactive waste from reprocessing is to be transferred to the interim storage facility in accordance with the overall concept for the return of radioactive waste from reprocessing of 19th June 2015 (14). According to § 2 (3) sentence 4 EntsorgÜbG, the interim storage facility to be used is determined by the federally owned interim storage facility operator. In accordance with § 2 (3) sentence 3 EntsortgÜbG, irradiated nuclear fuels should be transferred to the respective interim storage facility located at the site. This means that a spatial attribution takes place.

§ 2 (4) EntsorgÜbG also regulates the transfer of the duties to act, but in relation to low-level radioactive heat-generating waste. The nuclear power plants are listed in Annex 1 EntsorgFondsG.

In addition, the radioactive waste must meet the requirements of § 2 (5) EntsorgÜbG, i. e. it must be properly packaged (15). It must be delivered, in accordance with § 2 (5) no. 1 EntsorgÜbG, as waste packages for which the third party, pursuant to § 9a (3) sentence 2 halfsentence 2 AtG, has assessed the prerequisites for the delivery to the third party pursuant to § 2 (1) sentence 1 EntsorgÜbG, i. e. to the federally owned interim storage facility operator.

§ 2 (4) sentence 2 of the EntsorgÜbG regulates acceptance. The obligation to do so exists upon delivery to the storage facility operated at the site by the interim storage facility operator assigned by the federal government. If no storage facility operated in this way is available, acceptance shall be deemed to have taken place at the time when the fulfilment of the requirements of § 2 (5) EntsorgÜbG is confirmed, i. e. upon proper packaging.

Upon acceptance, the operator of the interim storage facility retains unrestricted responsibility, within the scope of nuclear regulations, for the storage of the radioactive waste. Pursuant to § 2 (4) sentence 4 of the EntsorgÜbG, such responsibility continues until transport to a storage facility operated by an interim storage site operator assigned by the federal government. During this period, therefore, the operator of the interim storage facility has to ensure that nuclear regulations obligations are met. Pursuant to § 2 (4) sentence 5 EntsorgÜbG, transitional storage until transport does not entail a separate financial compensation from the federal government to the operator of the facility. Thus, transitional storage until transport is not remunerated (15).

§ 2 (5) EntsorgÜbG defines in more detail the requirements with regard to the proper packaging of low-level radioactive heat-generating waste in order for it to be accepted by the federally owned interim storage facility operator (15). Admissibility presupposes that low-level radioactive heat-generating waste is delivered in the form of waste packages for which the third party pursuant to § 9 (3) sentence 2 halfsentence 2 AtG has assessed the prerequisites for its delivery to the federally owned interim storage facility operators.

In addition, radioactive substances as set out in § 2 (5) sentence 1 no. 2 EntsorgÜbG must not be clearable pursuant to applicable clearance regulations for the purpose of release from supervision within the scope of the German Atomic Energy Act or the German Radiation Protection Ordinance (Strahlenschutzverordnung), and now the German Radiation Protection Act (Strahlenschutzgesetz), or any ordinance adopted on the basis of the German Atomic Energy Act. If all conditions are fulfilled, the nuclear power plant operator is entitled to an interim decision issued by the federally owned interim storage facility operator pursuant to § 9a (3) sentence 2 halfsentence 2 AtG.

§ 2 (6) of the EntsorgÜbG ensures that the federal interim storage facility operator receives all data required for final storage (15). Therefore and in accordance with the German Radiation Protection Act, the operator must hand over the waste generator data required for subsequent delivery to a final disposal site, as well as the documentation on the waste and all data from the electronic accounting system. The information must be recorded in such a way that the recorded information is made available without delay at the request of the competent authority.

6  Transfer of the interim storage facilities

§ 3 (1) EntsorgÜbG regulates the transfer of interim storage facilities in accordance with Annex Table 1. The operators were transferred free of charge on 1st January 2019. However, the annex provides for a special regulation for the Brunsbüttel on-site interim storage facility (15). Insofar as an approval had not been issued as on the transfer date, the federally owned interim storage facility operator entered the approval procedure. After the transfer, the nuclear-law approvals continued to apply pursuant to § 3 (1) sentence 2 EntsorgÜbG, as did any orders amending such decisions pursuant to § 19 (3) AtG and licences.

However, continued monitoring is still in place. The German Federal Office for the Safety of Nuclear Waste Management (Bundesamt für kerntechnische Entsorgungssicherheit) has to examine within reasonable time how the federally owned interim storage facility operator guarantees the continuation of operation. This examination covers organisational measures and the provision of material and human resources. In this way, the federal office can ensure that the requirements and precautions contained in the approvals and permits are still met. In practice, this ensures the aftercare for the transfer of the approval.

Pursuant to § 3 (2) EntsorgÜbG, the interim storage facilities listed in Annex Table 2 will be transferred. However, this will not take place until 1st January 2020. The transfer will also be free of charge. The approvals will be transferred onto the federally owned interim storage facility operator (§ 3 (2) sentence 2 halfsentence 1 EntsorgÜbG). By this transfer, the federally owned interim storage facility operator assumes all rights and obligations of the former plant operators. In order to ensure that it can do this, the supervisory authority checks, within reasonable time, if the continuation of operation is guaranteed; it does so with regard to organisational measures and the provision of material and human resources (§ 3 (2) sentence 2 halfsentence 2 EntsorgÜbG).

§ 3 (3) EntsorgÜbG governs the period after the transfer of the aforementioned interim storage facilities. The federally owned interim storage facility operator company immediately assumes the obligations of the previous approval holders. In principle, the federally owned company assumes this responsibility by itself and immediately (§ 3 (3) halfsentence 1 EntsorgÜbG). However, the previous operator may be entrusted with the management of operations, albeit for a limited period of time.

Pursuant to § 3 (3) sentence 3 EntsorgÜbG, the federally owned interim storage facility operator company can set up a central supply storage for the final disposal site Konrad. This is a receiving storage facility exclusively for low-level radioactive heat-generating waste. For other radioactive waste, a central interim storage facility is not planned but the aforementioned individual interim storage facilities are used.

In favour of the federally owned interim storage facility operator, § 3 (4) EntsorgÜbG allows the storage of waste that has not yet been properly packaged in order to avoid an extension of interim storage capacities at the sites of the nuclear power plants and to ensure swift dismantling (16). Waste may otherwise only be delivered to the interim storage facility when properly packed in accordance with § 2 (5) EntsorgÜbG. Before that, the operators themselves are responsible. This date is preponed by § 3 (4) EntsorgÜbG.

However, this provision also requires safety precautions. Cross-contamination must be ruled out. In addition, § 3 (4) EntsorgÜbG regulates the obligations of the operators. The BGZ may demand the fulfilment of this obligation and may set a reasonable deadline for remediation.

The costs for removal or, before that, packaging by the federal interim storage facility operator must be borne by the plant operator, since the operator is liable according to § 3 (4) sentence 7 EntsorgÜbG for all expenses caused by the fact that the waste is not properly packed in accordance with § 2 (5) EntsorgÜbG. This includes all damages during operation in the storage facility. Since the causes are not specified in more detail, consequential damages are also included.

§ 3 (5) EntsorgÜbG deals with the reimbursement of costs from the moment when the plant operator has made its contribution to the Disposal Fund. The plant operator can then obtain reimbursement from the federally owned interim storage facility operator for the costs incurred from operating the storage facility. This applies to the storage facilities listed in Tables 1, 2 and 3 of the Annex. This thus applies to the situation where the plant operator continues to operate the storage facility, even though in fact the operator should have been freed from any obligation to act due to its payment to the Disposal Fund. Correspondingly, § 3 (5) sentence 2 EntsorgÜbG stipulates the end of the entitlement to reimbursement. Such entitlement ends with the transfer of the interim storage facility to the federally owned interim storage facility operator pursuant to § 3 (1) or, as the case may be, § 3 (2) EntsorgÜbG.

§ 3 (6) sentence 1 EntsorgÜbG establishes an upper limit for reimbursement. The necessary expenditure for the construction of interim storage facilities and for retrofitting that are necessary upon the coming into force of the EntsorgÜbG is reimbursed only up to the amount of the payments made by the operator to the Disposal Fund, and only if such payments are related to the construction of interim storage facilities and retrofitting (“for this purpose”). Otherwise, the reimbursement would constitute state aid.

Finally, § 4 EntsorgÜbG regulates how the Fund reimburses the federal government, in accordance with the EntsorgFondsG, for expenditures for the disposal of radioactive waste. The basis for this reimbursement is an annual account of revenue and expenditure after the end of the financial year prepared by the federally owned interim storage operator, who then has the annual accounts verified by an auditor or an auditing company (§ 4 (2) sentence 2 EntsorgÜbG).

7  Conclusion

It is true that the Continuing Liability Act ensures that the nuclear groups remain liable even in the event of spin-offs and splits. However, the bulk of the burden of the final storage and the disposal of radioactive waste is no longer borne by the private sector, which has paid 24 bn € into the Disposal Fund, though. But the private sector still has to dismantle and dispose of the nuclear power plants – a laborious and expensive process. The rehabilitation and aftercare in the light of the now initiated coal phase-out is also costly. Only the resulting additional costs due to rescheduling etc. can be borne by the public authorities, while the coal industry, on the other hand, has to bear the costs of dismantling – in accordance with the prohibition on state aid in conjunction with the polluter-pays principle, which also dominates cost distribution in the course of the nuclear phase-out and thus in final repository mining. Ideas could thus be borrowed from this parallel process with regard to the coal phase-out – e. g. in the form of an aftercare fund bearing at least the additional costs caused by the public authorities and compensating for any insolvencies and defaults in case there is no overall solution, which, however, must do justice to the question who causes the costs in each case.