Nuclear Power, Politics and Law: The Bumpy Road to Phasing Out Germany’s Nuclear Industry
Posted by K.E. White on June 21, 2011
Will constitutional law stop Germany from heading towards a nuke-free future?
No, but it may put a steep price-tag on it.
Last month, reacting to Japan’s March 2011 nuclear catastrophe and a shocking electoral shellacking in Baden-Wuerttemberg, Chancellor Angela Merkel announced plans to phase out nuclear energy as soon as possible.
The result? Even worse political fortunes, and—now—the risk of paying billions in damages to Germany’s nuclear industry.
E.On, the world’s largest investor held energy service provider, announced last Friday that it would challenge the bundle of nuclear energy proposals recently made law in Germany.
And yesterday, E.On released a legal memo crafted by Gleiss Lutz detailing their claims against the government. Specifically, the memo argues that E-on should be compensated for the German government’s illegal expropriation of their property. Deutshe-Welle explains the reasoning of the possible suit:
The reasoning behind the claim focuses on the amount of electricity from nuclear power that energy companies would be allowed to generate before they are shut down.
Lawyers for the companies reportedly argue that these remaining kilowatt hours – to be produced in the future – are the property of the energy companies and are therefore protected as proprietary rights of ownership by the German constitution.
The amount of money at stake? According to Eon’s Friday press release, “billions of Euros.”
Whatever the merits, this case shows the difficulties countries may have in rapidly phasing out nuclear energy. Furthermore, it suggests Merkel’s awkward political 180 will stay in the news for weeks to come.
This commentator has no knowledge of German property law; but, if EU law, is any guide–this property suit may have some trouble. (The German constitution’s Art. 14 has similar language). Art. 17 of the EU Charter specifically states:
No one may be deprived of his or her possessions, except in the public interest and in the cases and under the conditions provided for by law, subject to fair compensation being paid in good time for their loss.
Now the “fair compensation” may seem like an easy hook. But one case made clear that one isn’t deprived of their possessions by simply restricting their uses (for example, telling a person who bought a wineyard that they haven’t been “deprived” after EU law banned such a use, because they could always use it to sit on and enjoy–at a steep economic cost).
Now here, if the property being dealt with is unused kilowatt hours, deprivation may be more easily proven. But, then again, the “public interest” prong is likely much more compelling.
And there’s always the business-risk argument: When a private industry takes the chance–as did small coal producers before the advent of the ECSC–it knows there’s an always present risk that regulatory guidelines may come down that drive them out of business. It seems here, while E-On could argue they can met every reasonable safety precaution and could not foresee such a quick change in Germany’s energy policy. But the Greens have discussed knocking out nuclear energy, and there’s always the inherent risk of nuclear technology to argue the industry should have always known a regulatory ban could come at any time.
And while there are due process concerns, the phase out is not immediate: rather it lays down a 10-year plan (the really meeting the severe due process concerns at play in the Kadi case where a person placed on a UN sanctions list could not receive any of his funds to play for basic living expenses while he was challenging this designation.).
Hence, if German case-law has a similar trajectory to EU law the case could be in trouble.
In any case, it’s a fun case to map out, and a case with huge consequences for the German government and E.On.
If anyone can find the actual the Gleiss Lutz legal opinion, released yesterday, detailing Eon’s legal claims (in English), I’d be very appreciative.