Section 3: Designated responsibilities

43.     Section 3 sets out the principal functions of the NDA and arrangements for the NDA to be given designated responsibility for particular installations, sites or facilities. In line with the White Paper (Cm. 5552), the prime function is the decommissioning and cleaning up of designated nuclear installations and designated nuclear sites. The definitions of 'nuclear site' and 'person with control' are to be found in section 36 and other key terms are defined in section 37. Decommissioning and cleaning up are defined broadly in section 37(1) to include dealing with anything that needs to be removed so that the site or installation is suitable to be used for other purposes and to include the construction of any new facilities which might be required for achieving it. "Installation" is defined in section 37 to include buildings, structures and "apparatus", and a "nuclear installation" to mean an installation on a principal nuclear site plus any pipes, conduits and other apparatus connected to it that are not on the principal nuclear site, but not including an installation comprised in an NDA facility.

44.     Section 3 is framed in general terms so that, in addition to the BNFL and UKAEA sites described in the White Paper, the Government could in future give the NDA responsibility for the decommissioning and cleaning up of Ministry of Defence sites and, with the consent of the company concerned, also give it responsibility for securing the decommissioning and cleaning up of sites operated by companies in the private sector. This last point reflects both recent experience with BE and responses to the White Paper which suggested that it would be in the public interest if the NDA's responsibilities could go wider than public sector civil nuclear liabilities as proposed in the White Paper.

45.     Paragraph (a) of subsection (1) covers the operation of Magnox nuclear power stations pending the commencement of their decommissioning. Paragraph (d) covers the operation of designated facilities for treating, storing, transporting and disposing of hazardous material. "Hazardous material" includes nuclear matter and radioactive waste. The note on section 37 contains more detail on the definition of 'hazardous material'. Paragraph (d) will include the operation of BNFL's Thermal Oxide Reprocessing Plant ("THORP"), the Sellafield MOX Plant ("SMP") and other commercial plants and facilities at Sellafield, which, as the White Paper explained, for regulatory and operational reasons, has to be managed as a single, integrated site. "Treating" includes reprocessing and manufacturing fuel (see the definition of "treat" in section 37) to cover some of the operational installations which will fall under the responsibility of the NDA, such as THORP and SMP. Many facilities will include buildings, structures or apparatus and accordingly "facility" in paragraph (d) is defined in section 37 to include an installation (see note on section 37 below). This means that installations contained in facilities on principal nuclear sites can be designated for decommissioning under subsection (1)(b) or, if they are comprised in NDA facilities, under subsection (1)(f), see below. "Facility" also includes a business or undertaking so, for example, the NDA could be given responsibility for operating the BNFL subsidiary which transports nuclear fuel and spent fuel. No decision has yet been taken on that. Subsection (1)(d) also covers the low level waste disposal site at Drigg.

46.     Paragraph (e) of subsection (1) is intended to cover situations where the NDA has responsibility for treating, storing and disposing of nuclear matter, radioactive waste or contaminated matter which is not necessarily on a nuclear site which is the responsibility of the NDA.

47.     Paragraph (f) of subsection (1) covers the decommissioning of installations which form part of facilities which the NDA has had responsibility for operating under subsection (1)(d). Such installations are not included in the definition of 'nuclear installation' and cannot therefore be designated under subsection (1)(b). Disposal facilities do not currently require a licence under the Nuclear Installations Act 1965 (c.57), and it is conceivable that certain kinds of treatment or storage facilities may not be licensable. The Act therefore provides for the cleaning-up of a category of principal nuclear site on which there is a treatment, storage or disposal facility that has been operated by the NDA but which is not on a licensed or Crown site. "Nuclear site" is defined in section 36.

48.     Subsection (2) explains by way of a cross reference that the NDA can only discharge its responsibilities under section 3 by carrying out its duties under sections 15 and 16.

49.     Subsection (3) provides that designation of an installation, site or facility or for the treatment, storage, transportation or disposal of matter or waste is achieved by means of a direction given by the Secretary of State to the NDA.

50.     Subsection (4) provides that the NDA can only be given responsibility for installations, sites or facilities which are controlled by a Crown appointee, the UKAEA, a publicly owned nuclear company (for example, BNFL) (or the wholly owned subsidiary of such a company), the NDA itself, or otherwise where the person with control of that installation, site or facility has given his consent.

51.     Subsection (5) requires directions to cite the specific provision in subsection (1) under which a designation is being made. Subsection (6) requires the NDA to decommission all installations on a principal nuclear site designated for cleaning-up, unless the designation specifically provides otherwise.

52.     Subsection (7) requires the Secretary of State to lay a copy of every direction containing a designation before Parliament and to publish it subject, in both cases, to the exclusion of any material which, in his view, should - under subsection (9) - be withheld in the interests of national security.

Section 4: Additional responsibilities under designating directions

53.     Section 4 enables the Secretary of State to give the NDA certain additional responsibilities when, or after, making a designation under section 3.

54.     Subsection (1) is aimed at a situation in which the NDA is responsible for operating an installation or facility on a site which it does not have responsibility for cleaning-up and which it needs to be able to manage.

55.     When the NDA has responsibility in relation to a principal nuclear site, subsection (2) enables the NDA to be given responsibility for operating or managing research facilities, general facilities on the site (e.g. car parks, etc), land which is occupied together with the site by a person with control (e.g. land owned by BNFL in the vicinity of its sites) and facilities on such land (e.g. the visitor centre at Sellafield, offices, research laboratories, etc). There are some research facilities on principal nuclear sites, for example the BNFL Technology Centre at Sellafield.

56.     Subsection (3) limits the nature of these additional responsibilities the NDA can be given to ones that will assist it in carrying out functions it already has or ones which are incidental to that purpose.

57.     Where the NDA is given responsibility under section 3(1) or 4(2)(a), (b) or (d) for the operation of an installation or facility, it will by implication have power to do anything it needs to do in order to operate the installation or facility concerned, including building or replacing anything on which the operation depends. Because the designation under section 3(1)(e) is in respect of particular matter or waste, the NDA may need to be able to build and operate an installation or facility to be able to deal with it, and subsection (4) contains the necessary power.

Section 5: Supplemental provisions of designating directions

58.     Section 5 makes additional provisions in relation to the terms of directions which may be given under section 3.

59.     Subsection (1) provides that a designation may be made to come into force at a later date. This means a designation could have effect for certain purposes under the Act before the NDA has to carry out the principal function concerned. For example, when the NDA is first established, designations of BNFL and UKAEA will be made so that the NDA can begin preparing its annual plan in readiness for its first year of operation, expected to begin on 1 April 2005. The designations will come into force on that date. Where the NDA is given responsibility for installations, sites or facilities owned by what is currently a private sector company, subsections (2) and (3) allow for the possibility that the company concerned may be required to pay for work carried out by, or on behalf of, the NDA. The expectation would be that, insofar as funds were available to pay for such work, either an upfront payment would be made to public funds or a direction would require appropriate ongoing charges to be imposed by the NDA.

60.     Subsections (4) and (5) provide for the modification or revocation of directions by a further direction given by the Secretary of State. As in the case of section 3(4), any such direction may only be given where the installation, site or facility concerned belongs to the Crown, UKAEA or BNFL, a company which is currently publicly owned, the NDA, or with the consent of the person with control. A direction giving the NDA responsibility for the decommissioning of an installation or clean up of a principal nuclear site may, under subsections (6) and (7), only be revoked if the Secretary of State is satisfied that the NDA has fully discharged its responsibilities.

Section 6: Designations relating to Scotland

61.     Section 6 provides for Scottish Ministers to act with or be consulted by the Secretary of State when making, varying or removing directions which give the NDA responsibilities in Scotland.

62.     Subsection (2) sets out the cases in which Scottish Ministers act jointly with the Secretary of State in respect of sites in Scotland. The subsection draws a distinction not made elsewhere between licensable sites and other principal nuclear sites. As well as sites which require a licence under the Nuclear Installations Act 1965 and sites which would require a licence if they did not belong to the Crown, this category includes a site on which there is a fusion reactor (there is only one site with a fusion reactor in the UK which is in England). Directions in respect of sites that are not licensable will be given jointly by the Secretary of State and Scottish Ministers.

63.     Subsection (3) requires Scottish Ministers to be consulted by the Secretary of State where directions relate to giving, removing or varying certain NDA responsibilities in respect of licensable sites in Scotland.

Section 7: Supplemental functions

64.     Section 7 gives the NDA other functions to the extent that it considers these appropriate. As foreshadowed in the White Paper, these include the carrying out and promotion of research into matters relating to its functions; raising the profile of nuclear decommissioning through the provision of information; educating and training persons about those matters. Subsection (1)(e) also provides for the encouragement and support of initiatives to promote socio-economic development or that produce other environmental benefits for communities living near its sites, recognising that in some areas the NDA will be a major contributor to local economic activity and, consistent with its principal functions, will have a role to play in local socio-economic and environmental development.

65.     The function in subsection (2) is required as a consequence of the restructuring plan for British Energy ("BE") under which the Government has given certain undertakings underwriting the cost of decommissioning and clean up of BE sites (subject to approval of the agreement by the European Commission). The intention is that, in order to safeguard the interests of the taxpayer, the NDA should have the capacity to act as the nominee of the Secretary of State under the terms of the agreements with BE and generally to ensure that BE's decommissioning plans and the basis on which it operates its stations and subsequently carries out decommissioning and clean up of its sites are such as to minimise any call on public funds. Subsection (3) enables the Secretary of State to require NDA to meet the costs of such an agreement so that all Government's responsibilities in respect of nuclear clean up can be managed within the same framework.

66.     Subsection (4) additionally gives the NDA the functions where required to do so by the Secretary of State of providing advice (generally or in relation to a particular installation site or facility) either to the Secretary of State or to third parties where the NDA has particular expertise in respect of its functions (set out in subsection (5)). Scottish Ministers can also require such advice to be given to them as far as Scotland is concerned. The NDA can also provide general advice to the Secretary of State or Scottish Ministers on its own initiative where the NDA thinks it appropriate.

67.     Subsection (6) ensures that the NDA's principal functions, defined in section 3(1), are not to be adversely affected by the carrying out of any of the NDA's supplemental functions under subsection (1) or by its giving general advice. This duty on the NDA does not apply where the Secretary of State is requiring the NDA to act on his behalf under subsection (2) or (3) or where the Secretary of State or Scottish Ministers require advice.

68.     Where the NDA is required to provide advice to Scottish Ministers without the agreement of the Secretary of State the NDA can charge them for the advice given.

Section 8: Special functions in relation to pensions etc.

69.     Section 8 gives the NDA particular functions in respect of (a) establishing and maintaining a pension scheme covering employees of organisations involved in decommissioning and clean up activities, and other employees in the nuclear industry who are of such a description as may be designated by the Secretary of State; and (b) administering a compensation scheme covering those employees. At present BNFL administers a compensation scheme on behalf of the nuclear industry. The NDA will have power to participate in such a scheme under its general powers but the power to administer is necessary in case the members of the scheme decide at any time that the NDA is best placed to administer it.

70.     Subsection (2) identifies those employees who can benefit from such schemes. In addition to UKAEA employees and those employed for the purposes of carrying out NDA functions, the Secretary of State can designate others employed in the nuclear industry who can so benefit, after consultation with the NDA (subsection (3)).

Section 9: General duties when carrying out functions

71.     Section 9 places a duty on the NDA, in carrying out its functions, to do all the things specified in subsections (1), (2), (3), (4) and (6).

72.     Subsection (1) requires the NDA to have particular regard both to relevant Government policy, including that of devolved administrations (defined in subsections (7) and (8) respectively), and to the regulatory framework in respect of the environment, health and safety, and nuclear security (as defined in subsections (9) and (10)). This underlines the importance of decommissioning and clean up being carried out safely, securely, cost effectively and in ways which protect the environment. The definition of "nuclear security" is adapted from and consistent with the provisions on security in section 77 of the Anti-Terrorism, Crime and Security Act 2001.

73.     Subsection (2) also requires the NDA to promote the development of a competitive market for clean up and other contracts; to ensure the availability of a skilled workforce capable of sustaining its work programmes over the long term; and to secure the adoption of good practice across its sites.

74.     By virtue of paragraph (d) of subsection (2) the NDA is required to secure best value for the taxpayer within this overall framework, but not at the expense of its other duties in subsections (1) and (2).

75.     Subsection (3) places a duty on the NDA to consider and act in the overall public interest in decisions on operating its facilities and managing its sites. So, for example, the NDA should seek to obtain value for the taxpayer from any asset it owns but for which it no longer has a use.

76.     Subsections (4) and (5) require the NDA, in carrying out its function under section 7(1)(e), to support and encourage activities benefiting the social and economic life of local communities, to have regard, in particular, to the extent to which the previous operator was supporting such activities before designation of a site to the NDA, and to consider the obligations that should be imposed on its site operators or management contractors in respect of such activities.

77.     Subsection (6) places a duty on the NDA, before entering into any contract in relation to a site, installation or facility to require its proposed contractors to produce their procurement strategy for carrying out work under the contract, and to consider the likely effect on the economic life of the local community of implementing this strategy.

Section 10: Powers for carrying out functions

78.     Section 10 gives the NDA the general and specific powers it requires to carry out its functions. In addition to the general powers, in subsection (1), some particular powers are identified in subsection (2) which might not be thought to fall within its general powers in the absence of a specific mention. They are included because they are or may become a necessary part of the NDA's activities. The power to operate power stations is for the NDA to be able to operate, besides the Magnox stations that will be designated under section 3(1), the Combined Heat and Power station at Fellside which provides essential steam and electricity to the Sellafield site and the Maentwrog hydroelectric station which is located on the lake which supplies a Magnox decommissioning site. The power to hold a nuclear site licence is there as a fall back lest it is decided that the NDA must take more direct responsibility for the work on any site. The NDA would of course need to demonstrate it met all the requirements of a site licensee before it could secure a licence from the Nuclear Installations Inspectorate of the Health and Safety Executive.

79.     Other powers covered by subsection (2) include those to make grants or loans for the benefit of socio-economic development or other activities that produce other environmental benefits or for research into decommissioning and clean-up; and to use facilities on its sites for carrying out research for third parties and in this respect or otherwise to generate funds which will ultimately contribute to the resources to be made available to the NDA. In order to carry out its functions, the NDA may exercise its statutory powers itself or contract with others to do things on its behalf. The section does not empower the NDA to do anything which is not required for the purpose of, or in connection with, the carrying out of its functions.

80.     Subsection (3) gives the NDA power to charge for work done in relation to sites, installations or facilities for which it is not itself financially responsible (for the definition of financial responsibility see section 21) subject to the approval of Ministers either under the initial designation or otherwise.

Section 11 and Schedule 2: Strategy for carrying out functions

81.     Section 11 places a duty on the NDA, once established, to prepare a strategy for carrying out its functions and to keep that strategy under review. Whenever the NDA is given a new responsibility for securing the decommissioning or clean up of an installation or site, it must review the relevance of its strategy for that purpose and, if need be, revise its strategy accordingly (subsection (2)).

82.     Under Schedule 2, the strategy must be approved by the Secretary of State and, in respect of responsibilities given to the NDA jointly under section 6, by Scottish Ministers. Schedule 2 sets out various procedural arrangements for preparing and revising the NDA's strategy including timing; consultation by the NDA as part of the process of preparing or revising its strategy; approval of the strategy by the Secretary of State, and publication of the strategy once approved. Further information can be found at the notes to Schedule 2.

Section 12: Contents of strategy

83.     Section 12 sets out various requirements regarding the matters the strategy is to address and the basis on which it must address them. The key requirements are that the strategy must:

• cover both the decommissioning and clean up of the installations and sites for which the NDA is responsible and its strategy for operating installations and facilities whilst they remain operational (subsection (1));

• set out the NDA's objectives in relation to the decommissioning and clean up of the various installations and sites for which it is responsible, including the condition to which sites are to be restored, and how, and over what period and at what estimated cost, it intends to achieve those objectives (subsections (4) to (7));

• set out the NDA's priorities, and how it intends to promote a skilled workforce, competition, good practice, and encourage or support activities benefiting the socio-economic or environmental development of communities near its installations and sites, as well as the rationale for its strategy (subsection (2)). It must also set out how the NDA intends to publicise its strategy, engage in stakeholder dialogue, and listen to external views (subsection (3)).

84.     Subsection (9) requires the strategy to take account of sites, installations and facilities which have been designated, but which have yet to become the responsibility of the NDA by that designation entering into force.

Section 13 and Schedule 3: Annual plans

85.     Section 13 requires the NDA, for each financial year, to prepare a plan showing how it intends to carry out its functions during the year in question and to submit it to the Secretary of State and Scottish Ministers for approval. Scottish Ministers' approval is needed in respect of responsibilities given to the NDA jointly with the Secretary of State under section 6. The plan will relate directly to the NDA's strategy - i.e. the plan will set out the basis on which the NDA proposes to implement its strategy in the twelve months concerned.

86.     Subsection (2) requires the plan to be submitted for approval not less than three months before the start of the financial year in question. Subsections (3) and (4) specify certain matters which the plan must cover in relation respectively to decommissioning and clean up and the operation of installations and facilities. Subsection (5) requires that the plan must also set out all the activities of significance that the NDA proposes to carry on during the year in question in relation to its other functions. Subsection (6) gives the Secretary of State power to direct the NDA to deal with other matters in its plan for any financial year. Subsection (7) ensures that in preparing its annual plan the NDA can anticipate it taking on responsibility for other sites, installations or facilities for which a designation is due to come into force in that year.

87.     Schedule 3 deals with various matters relating to the preparation and revision of annual work plans, in particular as regards consultation with stakeholders, approval of plans by the Secretary of State, the publication of plans once approved, and their laying before Parliament and the Scottish Parliament by the Secretary of State and Scottish Ministers. The provisions are very similar to those in Schedule 2, including the requirement that the Secretary of State must consult Scottish Ministers on any proposals for sites in England and Wales relating to the non-processing treatment, storage or disposal of hazardous material that would have an effect on the management of hazardous material or availability of a site in England and Wales for the treatment, storage or disposal of hazardous material located in Scotland. The main difference between Schedule 3 and Schedule 2 is that, given that work plans will implement an approved strategy, paragraph 2(2) of the Schedule leaves open the possibility, in cases where a plan is revised in year, of the NDA only consulting those stakeholders directly affected by the changes proposed before submitting the revised plan for approval. As with Schedule 2, the method of consultation is left for the NDA to decide with its stakeholders.

Section 14: Annual reports

88.     Section 14 deals with the preparation and publication of the NDA's annual report.

89.     Subsection (1) requires the NDA to produce an annual report on the discharge of its responsibilities and the carrying out of its other functions as soon as reasonably practicable after the end of the year in question and to send it to the Secretary of State and Scottish Ministers.

90.     The report must cover all the matters specified in subsection (3) and any others which the NDA may be directed to cover by the Secretary of State after consulting the Scottish Ministers. Subsection (5) requires that the report must also deal separately with activities in respect of decommissioning and clean up and operational installations and facilities such as the Magnox stations, THORP and SMP. This reflects the commitment in the White Paper to provide specific information on the performance of Magnox, THORP and SMP and the rationale for keeping them open.

91.     Subsections (6) and (7) require the Secretary of State to lay the NDA's report before Parliament and to publish it in the manner which, in his opinion, is most appropriate for bringing it to the attention of stakeholders. Subsection (8) requires the report to be laid before the Scottish Parliament. Under subsection (9), the Secretary of State may exclude anything before laying and publishing the report which he considers to be against the interests of national security, or which relates to the private affairs of an individual or the commercial interests of a particular body of persons where publication of such information would seriously and prejudicially affect the interests of that individual or body.

Section 15: Duty to decommission and clean up installations and sites

92.     Section 15 sets out what the NDA has to do in order to discharge a responsibility it is given under section 3 for decommissioning or cleaning-up. It puts a specific duty on the NDA to take all such steps as it considers appropriate for securing the implementation of its approved strategy and annual work plan in respect of each of the installations and sites which it has designated responsibility for decommissioning and cleaning up. This includes achieving the objectives set out in the strategy under section 12(4) and (5), for each installation or site. Where a site is a contaminated site rather than a principal nuclear site (for definitions see section 37), the duty is subject to such directions as the Secretary of State may make in respect of the discharge of the NDA's responsibilities for such sites (subsection (3)). Such directions are to be given jointly with Scottish Ministers in respect of sites in Scotland. Thus the Secretary of State cannot give the NDA directions as to how the NDA is to carry out its main decommissioning and cleaning up task on principal nuclear sites. This is to be up to the NDA, subject to the need for the Secretary of State to approve the strategy and annual plan under sections 11 and 13 respectively.