Three New Laws for the Regulation o

On 29 November 2017, three laws were issued in relation to nuclear power: (1) Law No. 209 of 2017[1] establishing a new body, the Executive Agency for Supervision of Nuclear Power Plant Construction Projects, (2) Law No. 210 of 2017[2] amending the law establishing the Nuclear Power Plants Authority,[3] and (3) Law No. 211 of 2017[4] amending the law for the Regulation of Nuclear and Radiation Activities.[5] In general, the three laws enable the relevant regulatory entities in supervising the construction of nuclear power plants, and enhancing their administrative and technical capacity. Besides establishing the new Agency, the laws reinforce the competencies and financial resources of existing regulatory entities, and introduce amendments to the boards of these institutions, their powers, and the representation of other ministries and authorities therein.

Background

There are three main public institutions that have to do with nuclear power in Egypt: (1) The Atomic Energy Authority (“AEA”), (2) The Nuclear Power Plants Authority (“NPPA”), and (3) The Nuclear and Radiation Regulatory Authority (“NRRA”). Of these, AEA is the oldest, as it was established in 1957 to replace the Atomic Energy Committee originally established in 1955. The aim was to allow the State to exploit atomic power for peaceful purposes. AEA’s role was primarily focused in the theoretical aspect of that field, such as the training of specialists in scientific disciplines that are related to atomic energy, and supporting scholarships, studies, research, and proposals aimed at realizing benefits for the State from atomic energy.[6] It is also worth mentioning that AEA has not had an effective role, since the executive regulations of its establishing law were not issued until 1991, i.e. 30 years after the date of its establishment. As for the NPPA, that was established in 1976. NPPA is a general authority, subordinate to the Minister of Electricity. It is in charge of anything that has to do with the construction of nuclear power plants, starting from proposing the establishment of a power plant, conducting the necessary studies and research, to setting out the specifications of construction projects and implementing and monitoring the same.[7] Finally, NRRA was established in 2010. It is an independent authority subordinate to the prime minister. Its establishment was in the context of an attempt to regulate nuclear and radiation activity in a comprehensive manner in order to make use of atomic energy for peaceful purposes, while guaranteeing the safety of people and the environment.[8] Although the purposes of NRRA and AEA could seem similar, the powers vested in NRRA seem to allow it to achieve that purpose in practice. For instance, NRRA has the power to issue, amend, and revoke licenses for construction and nuclear activities, and the authority to assess safety tests submitted by the applicant. It also has the power to suspend the administrative activities of facilities in violation, and respond to nuclear and radiation emergencies. The three new laws add a new body to the above regulatory framework, and mainly amend the powers of NPPA, and NRRA.

The New Executive Agency

Law No. 209 of 2017 establishes the Executive Agency for Supervision of Nuclear Power Plant Construction Projects as a general authority of special nature, with technical, financial and administrative autonomy. The new Agency is subordinate to the Minister of Electricity and Renewable Energy. It is in charge of supervising the executive aspect of nuclear power plant construction projects. Its duties include putting in place a supervision program for the implementation of projects, studying the means to be used in the project, and monitoring the contractor during implementation. It also includes supervising the trial operation of the project and detecting any obstacles in the delivery process, as well as submitting periodical reports to the Minister of Electricity containing developments and achievements. The new Agency will also conduct expert work in and out of Egypt, as well as any other tasks referred to it by the Minister. In order to enable the new Agency to achieve its purpose, the law gives it the power to directly contract with persons, financial institutions, local and international entities in and outside of Egypt, without being bound by the provisions of any other laws. In addition, it has the power to import all its needs, machinery, supplies, and material that is necessary for its activities – directly or through others – without being bound by the laws and regulations of import and foreign currency. Moreover, the law exempts its imports from all custom duties and fees, and it has the right to enforce administrative seizure if there is reason for that according to Administrative Seizure Law No. 308 of 1955. The law provides that the board of directors of the new Agency is the supreme entity in charge of its affairs. The Chairman is appointed by a presidential decree that is based on a presentation from the Prime Minister, and a recommendation from the Minister of Electricity. The board consists of 14 members representing the following entities: the ministries of Defence, Interior, Electricity, Finance, Planning, Telecommunications, Military Production, and Environment, the governorate in which the project is located, the Head of the Fatwa Department at the State Council, and two experts. The law also requires inviting representatives from the General Intelligence Agency, and the Administrative Control Authority, without them having counted votes. The Chairman of the board is appointed for four renewable years, with no limitation in the law on the number of renewals. The board undertakes typical board activity, such as approving the organizational structure of the new Agency, its internal and labour regulations. The decisions of the board are however only applicable upon ratification from the Minister of Electricity, or his non-objection within seven business days. The law also allows the board to temporarily contract Egyptians, or qualified foreigners in the event that the required qualification or expertise is not fulfilled in Egyptian candidates. However, in the latter case the appointment of foreigners is subject to the approval of the relevant authorities. Nevertheless, the law allows the exemption of foreigners from all taxes on payments arising from said contracts, and it allows them to repatriate these sums in foreign currency. The law provides additional benefits to facilitate the operation of the new Agency, such as exempting foreign consulting offices that the Agency contracts from complying with minimum profit distribution thresholds, and the maximum threshold for foreign employment. In addition to the above specific exemptions, the law generally states that the laws and rules of the Central Agency for Organization and Administration, those related to high positions in the State’s administrative body, the maximum thresholds for the salaries of government employees, Civil Service Act, and VAT will not apply to the new Agency. The law temporarily confers the competencies and benefits of the new Agency to the NPPA with respect to the construction of the new Nuclear Power Plant in Dabaa, until the formation of the Agency is complete.

Amendments to the Laws Regulating the Existing Bodies

• NPPA

Law No. 210 of 2017 changes the nature of the NPPA making it an “economic authority” of special nature.[9] Economic authorities are distinct in being autonomous public entities, with boards of directors that are the supreme entity in charge of the authority’s affairs. The board of an economic authority issues the decrees and regulations that run its financial administrative and technical operations, without being subject to governmental rules. The State’s General Budget does not include the budgets of economic authorities, rather separate budgets are prepared for these entities which the Minister of Finance presents to the Prime Minister, who in turn submits these separate budgets to the House of Representatives for ratification. It is worth noting that the scope of work of the aforementioned new Agency lies within the general jurisdiction of NPPA, where the latter is responsible for the implementation, operation, and management of nuclear power plants. The new law thus adds a provision that grants NPPA the right to delegate others in performing these tasks. After amendment, the powers of NPPA include the right to sign agreements with similar bodies in and outside of Egypt within its fields of competence, on the condition that such does not conflict with national security considerations. In addition, the amendment gives NPPA the right to conduct application trials of nuclear power plant technologies, enhance the capacity of personnel through training to satisfy implementation, operation, and management needs of the stations, as well as the right to establish or participate in joint stock companies. In addition to the tax and custom exemptions which NPPA already enjoyed on its imports (said being similar to those granted to the new Agency), and exempting the interest on loans and facilities that NPPA enters into from all taxation, the law added some new benefits and amended existing ones. For instance, all NPPA contractors and sub-contractors – not just foreign contractors – are now exempt from all taxation and fees arising as a result of their contractual relationship with NPPPA. Furthermore, the amendment distinguishes foreign contractors by exempting them from minimum profit distribution and minimum foreign employment thresholds. However, it abolishes the provision that used to exempt foreign workers from taxes on their salaries resulting from their work in implementation of NPPA projects. The new law also amends the formation of NPPA’s board, making the appointment of the Chairman by way of presidential decree that is based on presentation from Cabinet, and the recommendation of the competent minister. Previously, the Minister of Electricity was the Chairman of the board by default. The amendment also increased the number of ministry and government entity representatives from five to 10, while it decreased the representation of specialists in NPPA’s field from five to four, and removed the representation of specialized experts who used to have three seats on the board. Members are now appointed for four years renewable for only one similar term by way of a prime ministerial decree based on presentation from the competent minister. The Chairman is also appointed for four years, renewable for only one similar term. Previously, the Chairman’s tenure was unlimited. The amendment kept some of the board’s old competencies and it added to those a number of powers, including allowing NPPA to establish or participate in joint stock companies, the ability to preserve 10% of net profit from NPPA activities, or that arising from its corporate contributions as reserve for the settlement or loans, contributions, or damages that NPPA owes to the State Treasury or other entities. Similar to the case with the new Agency, the law allows NPPA’s board to temporarily hire Egyptians or qualified foreigners under the same conditions and exemptions set out for the new Agency. NPPA’s decisions must be ratified by the competent minister before they are enforced, or that he/she does not object to said decisions within 10 business days from receipt. The law did not previously set a time period for the ratification of NPPA decisions into force, it rather stated that they were enforceable if not objected to within 30 days. Finally, the amendment exempts NPPA from the provisions of the Central Agency for Organization and Administration, and VAT Law, in addition to all other laws which the new Agency is exempt from complying with.

• The Law for the Regulation of Nuclear Activity

Law No. 211 of 2017 makes a number of amendments to Law No. 7 of 2010 on the Regulation of Nuclear Activity. First, it amends the definition of some terms such as “nuclear safety”, defined as the prevention, detection and “combatting of the theft, loss, vandalism, unauthorized access, illegal transfer and other prohibited acts in relation to nuclear or radioactive material, or the institutions thereof”. The amendment to the preceding definition adds violations to the safety of documents and IT systems in relation to nuclear or radioactive material, or the institutions thereof. Furthermore, the law amends the definition of “person” under Chapter VI which tackles civil liability arising from nuclear damage, so that it is in line with the Vienna Convention on Civil Liability for Nuclear Damage,[10] and the Joint Protocol Relating to the Application of the Vienna Convention and the Paris Convention on Civil Liability for Nuclear Damage.[11] The amendment changes the definition of “person” so that it refers to any natural person (individual), in addition to any company, private or public entity – whether or not such is a legal person – and any international organization or institution that has legal personality according to the laws of its origin. The difference here is that the previous definition did not include companies and entities that do not have legal personality, which means the definition has been expanded. As for the formation of the NRRA and its board, the law has limited the number of times for which the appointment of the Authority Head and board members could be renewed to one four-year term. This is in contrast to renewals being unlimited previously. The amendment also added to the representation of ministries on the NRRA board a representative from the Ministry of Defence, and it introduced representation of the NRRA’s Legal Counsel, while removing the representation of the Head of the Fatwa Department in the State Council. The law also alters the board’s capacity in setting the fees for licenses and permits, by curbing it at the mere “suggestion of category amendments” for fees. It further grants the board the right to set out the rules for investment of NRRA funds, and those relating to complaints from subordinate bodies. The law also exempts the board from submitting reports to the Central Agency for Organization and Administration. That is in addition to exemptions already contained in the law prior to its amendment, such as the exemption from complying with the rules of the government’s administrative body, and exempting NRRA employees from the obligation to list on government and State administrative body salary schedules. Moreover, the amendment added that NRRA be exempt from the Law on Maximum Wage for State Employees, and exempted it from submitting its labor regulations to the Central Agency for Organization and Administration. With respect to the NRRA’s financial resources, these have been amended to include revenue from investment, loans, and administrative fees in exchange for conducting the necessary inspections, tests, and studies prior to issuing licenses. The law also amends licensing fees as although they remain unchanged, the amendment removed their capping at the listed prices, which means they could be increased. Furthermore, the amendment has fine-tuned the language in relation to the exemption of the operator of the nuclear station from the liability for damages in the event of loss that is resultant from the act or negligence of the person who suffered the damage.  The new language makes clear that the burden of proving negligence lies with the operator, and that the exemption from the payment of damages is with respect to damage suffered by the victim alone, and thus does not encompass all damage resulting from the incident.  As for the operator’s right of recourse against third parties for sums paid for nuclear damage resulting from negligence, the amendment states that the operator may seek recovery from the “individual” who’s act it was that resulted in the damage. This could be taken to mean that the operator’s right to recourse against legal persons is restricted. It is also noteworthy that the amendment has given a role to the Ministry of Defence where one did not exist before, and that is in relation to guaranteeing the safe handling and protection of radioactive material in international transport. The law also requires that the ministry is represented on the board of the NRRA, and that it is consulted - among other ministries such as the ministries of Interior, Foreign Affairs, Transport, Aviation, and Environment – on the application of a nuclear safety system for nuclear institutions and activity. In addition, the law requires that representatives from the General Intelligence Agency, and the Administrative Control Authority be present at NRRA board meetings but without having a counted vote. In affirmation of our previous statement about the role of the AEA being more on the theoretical side, and that of the NRRA being more practical, Law No. 211 of 2017 has transferred the subordination of the Centre for Nuclear and Radioactive Safety – being a research centre – from the NRRA to the AEA.

Conclusion

These legislative amendments run parallel to the government’s interest in diversifying energy sources so that they include nuclear power, currently represented by the nuclear power generation project in Dabaa. Although the establishing law of the new Executive Agency states that it shall be solely in charge of supervising the construction of nuclear power generation plants, with respect to the Dabaa project, the law has temporarily delegated the task of monitoring all project related activities to NPPA. That is until the institutional capacity of the nascent Agency is established and it becomes fully operational.   [1] Law No. 209/2017 establishing the Executive Agency for Supervision of Nuclear Power Plant Construction Projects, Official Gazette, Issue No. 47 (bis) (b), 29 November 2017. [2] Law No. 210/2017 amending certain provisions of Law No. 17/1976 establishing the Nuclear Power Plants Authority, Official Gazette, Issue No. 47 (bis) (b), 29 November 2017. [3] Law No. 17/1976 establishing the Nuclear Power Plants Authority, Official Gazette, Issue No. 7, 12 February 1976. [4] Law No. 211/2017 amending certain provisions of Law No. 7/2010 on the Regulation of Nuclear and Radiation Activities, Official Gazette, Issue No. 47 (bis) (b), 29 November 2017. [5] Law No. 7/2010 on the Regulation of Nuclear and Radiation Activities, Official Gazette, Issue No. 12 (bis) (a), 30 March 2010. [6] Note: The Atomic Energy Committee was established in 1955 by virtue of Law No. 509/1955, which was repealed. Presidential Decree No. 288/1957 established the Nuclear Energy Institution, however it is referred to in the current laws as well as Law No. 7/2010 (Article 19) as the Atomic Energy Authority. [7] Law No. 17/1976 establishing the Nuclear Power Plants Authority, Articles 1 & 2. [8] Law No. 7/2010 on the Regulation of Nuclear and Radiation Activities, Article 11. [9] The term ‘economic authorities’ refers to those entities established in accordance with Law No. 61 of 1963 on the establishment of general authorities, or those established by way of a law or a presidential decree which declares them as such. [10] The Vienna Convention on Civil Liability for Nuclear Damage was approved by virtue of Presidential Decree No. 78/1965. [11] The Protocol Relating to the Application of the Vienna Convention and the Paris Convention on Civil Liability for Nuclear Damage was approved by virtue of Presidential Decree No. 89/1989.