Friends Of The Earth Ltd & Anor v Secretary Of State For Environment Food And Rural Affairs & Ors

Under Article 6.1 of Directive 96/29/Euratom, justification is required for a generic class or type of radiation-producing practice, rather than ordinarily for a particular site. The economic assessment is made at the date of decision and may apply standard economic principles, including disregarding capital expenditure that has become a sunk cost. The decision-maker is not required to reconstruct an earlier economic position or deduct irrecoverable expenditure from prospective benefits. A generic assessment does not require fictional allowance for equivalent costs at other sites where the approval is, in reality, sought for a single existing plant. Economic benefits may be balanced against health detriment, together with wider social and economic benefits.

The appellants challenged the Secretaries of State’s decision that the manufacture of mixed oxide fuel at BNFL’s Sellafield MOX Plant was justified under Article 6.1 of Directive 96/29/Euratom. The challenge alleged that the decision-makers had unlawfully excluded the plant’s capital costs, although those costs had already been incurred.

Collins J dismissed the judicial review claim in the Queen’s Bench Division. He held primarily that capital costs of establishing a new practice were to be ignored and alternatively that the Secretaries of State were entitled to adopt the conventional treatment of sunk costs. The central issue on appeal was whether Article 6.1 required irrecoverable capital expenditure to be deducted from the economic benefits of the practice.

1. The appeal was dismissed. The Secretaries of State were entitled to conclude that the manufacture of MOX fuel was justified.
2. Article 6.1 of Directive 96/29 requires a generic assessment of a class or type of practice. It is not ordinarily a site-specific assessment. The language referring to practices being first adopted or approved supports that construction.
3. The capital costs inherent in establishing a new practice are relevant costs when assessing its overall economic benefit or detriment. They cannot be treated as irrelevant merely because the assessment is generic. Nevertheless, Article 6.1 does not require the decision-maker to deduct capital costs which have already become irrecoverable sunk costs.
4. The question is whether approval of the practice, assessed at the date of decision, produces economic benefits sufficient to outweigh the health detriment. Nothing in Article 6.1 requires standard economic principles concerning sunk costs to be displaced. The policy desirability of earlier applications and decisions does not alter the legal test.
5. Nor did the generic nature of the assessment require the Secretaries of State to assume that equivalent capital costs would be incurred at hypothetical future plants. In the circumstances, the approval was concerned in reality with the existing Sellafield plant. Bringing irrecoverable expenditure into account on that fictional basis would be economically nonsensical.
6. The decision-makers were entitled to take account of prospective economic benefits, wider employment and economic benefits, and the very minor radiological detriments identified in the decision letter. The court was concerned with their legal entitlement to adopt the approach, not with substituting its own economic assessment.
7. Lord Justice Waller and Lord Justice Dyson agreed with Lord Justice Simon Brown. The order was: appeal dismissed; no order for costs.

• Court of Appeal (Civil Division): The appeal from Collins J was dismissed on 7 December 2001.
• Queen’s Bench Division: Collins J dismissed the judicial review challenge on 15 November 2001.