C-308/90

(2) Commission Decision 90/465/Euratom of 20 August 1990 relating to the appoint­ * Original language: English. ment of a board responsible for imple-

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menting Commission Decision If, contrary to the applicant's first two sub­ 90/413/Euratom (OJ 1990 L 241, p. 14). missions, the Court should find that a sanc­ tion could be imposed, the applicant requests that the Court substitute, for the sanction imposed by the Commission, the lesser sanc­ tion of a warning pursuant to The decision of 1 August 1990 placed ANF Article 83(1)(a). It is to be noted that by vir­ Lingen, as regards part of its operation, tue of Article 144 of the Treaty the Court under the control of a board of administra­ has unlimited jurisdiction as regards, in par­ tors for a period of four months, pursuant to ticular, sanctions imposed under Arti­ Article 83(1)(c) of the Treaty, while the cle 83 of the Treaty, and it may therefore decision of 20 August 1990 appointed the modify any sanctions imposed by the Com­ three administrators in question and fixed mission. the dates of their mission. Thus, it is in sub­ stance the first decision which is the subject of challenge; if that decision is annulled, the second decision will fall with it. In what fol­ lows, therefore, I shall refer simply to 'the 5. In what follows, I will first set out in contested decision', meaning the decision of greater detail the relevant Community provi­ 1 August 1990. sions, before turning to the incident and its aftermath. I shall then discuss whether the Commission's response was justified.

(a) ores, source materials and special fissile materials are not diverted from their intended uses as declared by the users; The nature and the extent of the require­ ments referred to in the first paragraph of this Article shall be defined in a regulation made by the Commission and approved by (b) the provisions relating to supply and the Council.' any particular safeguarding obligations assumed by the Community under an agreement concluded with a third State or an international organization are com­ Article 81 gives the Commission the power plied with.' to send inspectors into the territories of Member States. By the second paragraph of Article 81, such inspectors shall have access at all times: The expressions 'ores', 'source materials' and 'special fissile materials' are defined in Arti­ cle 197 of the Treaty; 'special fissile materi­ als' include, in particular, any substance con­ 'to all places and data and to all persons who, taining enriched uranium. It may be noted by reason of their occupation, deal with that, by virtue of Article 86 of the Treaty, all materials, equipment or installations subject special fissile materials which are produced to the safeguards provided for in this Chap­ or imported by a Member State, a person or ter, to the extent necessary in order to apply an undertaking and are subject to the safe­ such safeguards to ore, source materials and guards provided for in Chapter VII, are the special fissile materials and to ensure compli­ property of the Community. ance with the provisions of Article 77. ...'.

By Article 8, the 'particular safeguard provi­ 9. The procedures for the application of the sions' referred to in Article 7 are drawn up provisions of Chapter VII were revised and by means of an individual decision of the codified in Commission Regulation (Eura­ Commission, after consultation with the per­ tom) No 3227/76 of 19 October 1976 con­ son or undertaking concerned and the cerning the application of the provisions on appropriate Member State. In the case of Euratom safeguards (OJ 1976 L 363, p. 1), ANF Lingen, the 'particular safeguard provi­ hereafter 'the regulation'. Although only sions' in force at the time of the incident Article 79 of the Treaty confers on the Com­ were adopted by a decision of the Commis­ mission an express power to adopt a regu­ sion dated 5 June 1985. A copy of that lation, Regulation No 3227/76 is based on decision was supplied by the Commission at Articles 77, 78, 79 and 81. the request of the Court.

11. Part II(Articles 9 to 23) of the regu­ 10. Part I (Articles 1 to 8) of the regulation lation deals with the accounting and control deals with the declaration of the technical systems for nuclear materials which are characteristics of an installation and the required to be established pursuant to Arti­ adoption of 'particular safeguard provisions' cle 79 of the Treaty, and Part III (Articles for the installation. Articles 1 to 5 provide 24 to 28) deals with the advance notifications for the declaration of characteristics, and which are required in the event of the export Article 6 provides for the communication to or import of source or special fissile materi­ the Commission of certain other infor­ als to or from a non-member State. mation. By Article 7, acting on those decla­ rations and communications:

'The persons and undertakings referred to in ...'. Article 1 shall maintain a system of account­ ing for and control of nuclear materials. This system shall include accounting and operat­ ing records and, in particular, information on By Article 36(r), a 'material balance area' is the quantities, nature, form and composition an area in which the conditions are such that of these materials in accordance with the the balance of nuclear material can be estab­ requirements of Article 21 [which contains lished, and by Article 36(m) the 'book inven­ detailed rules concerning notifications and tory' of a material balance area is the alge­ records], their actual location, the particular braic sum of the most recent physical safeguarding obligation, and the way in inventory and all subsequent inventory which the persons or undertakings con­ changes. cerned have stated that they intend to use such materials ...'. 14. Article 24 provides that:

By Article 10: '(a) The persons and undertakings referred to in Article 1 which export source or special fissile materials to a non- member State shall give advance 'The accounting records shall show in notification to the Commission of every respect of each material balance area [as such export. ... defined in Article 36 of the regulation]:

However, advance notification is required (a) all inventory changes, so as to permit a determination of the book inventory at only: any time;

(i) where the consignment exceeds one ...'. effective kilogramme;

(ii) where the "particular safeguard provi­ By Article 11: sions" referred to in Article 7 so specify, in the case of installations habitually transferring large total quantities of materials to the same State, even though 'The operating records shall include, if no single consignment exceeds one effec­ appropriate, for each material balance area: tive kilogramme.'

15. As I have already mentioned, the 'partic­ 16. It is to be noted that the obligations aris­ ular safeguard provisions' applicable to ANF ing under the above provisions may also be Lingen were laid down by a Commission enforced by national laws or regulations of decision of 5 June 1985, which replaced a the appropriate Member State; the Commis­ previous decision of 1 December 1980. The sion has the power under Article 83(3) of the annex to that decision sets out, pursuant to Treaty to make any recommendations to Article 7 of the regulation, the procedures by Member States concerning such national which ANF Lingen is to meet safeguard provisions. In the case of Germany, the cur­ requirements imposed by the Treaty, the rent national provisions are contained in the content of the communications required Atomgesetz of 23 December 1959, in the ver­ under Article 6, and the conditions in which sion of 15 July 1985 (BGBl. I p. 1565). The advance notification is required of shipments operation of an installation for the process­ and receipts of nuclear material. As regards ing of nuclear materials requires authoriza­ the latter conditions, paragraph 1.3.2 of the tion under Article 7 of the Atomgesetz, and annex requires advance notification of is subject to supervision under Article 19. By exports to a non-member State even in the Article 19(3), the supervisory authorities can case of consignments not exceeding one issue instructions to enforce, in particular, effective kilogramme, pursuant to Article conditions attached to such authorizations. 24(a) of the regulation (and similarly in the In practice, therefore, the internal operating

regulations governing safeguard procedures 19. In order to carry on its manufacturing at an installation are drawn up under the operations, ANF Lingen regularly receives supervision of the national regulatory auth­ shipments of nuclear material from ANF ority, which can also require their amend­ Richland. On 8 May 1990, at its plant in Lin- ment from time to time. In the present case, gen, a box was removed from one of two the appropriate national authority is the containers on a loading pallet holding a total Ministry of Environment of Lower Saxony; of four boxes of enriched uranium dioxide, as we shall see, the Ministry made use of its two to each container. After that operation powers under Article 19(3) to issue instruc­ had been completed, the pallet, still contain­ tions to ANF Lingen on 23 May 1990. ing three of the four boxes, was temporarily placed in an area of the plant adjacent to the storage area for empty containers. By an oversight, the pallet was not returned to the store for non-empty containers, and on 17. It can be seen that safeguard procedures 11 May 1990 the two containers on the pallet at nuclear installations within the Commu­ were mistakenly loaded along with a con­ nity are subject to regulation at three distinct signment of empty containers destined for levels. In the first place, general obligations shipment to Richland via Seattle. The are imposed on persons and undertakings by employee responsible for the loading opera­ Chapter VII of Title Two of the Treaty and tion observed that the two containers were its implementing regulation. Secondly, the labelled 'radioactive'. However, believing Commission adopts 'particular safeguard them to be part of the consignment of empty provisions' under Article 8 of the regulation, containers, he replaced those labels with ones imposing requirements in respect of a partic­ indicating that the containers were empty. ular installation. Finally, the national super­ The containers arrived in Richland on visory authorities retain competence to 15 May 1990, and after a routine examination impose their own regulatory requirements, the presence of radioactive material was dis­ insofar as such requirements are compatible covered. An examination of the seals on the with the aims of the Treaty; indeed, by Arti­ containers revealed that no material had been cle 192 of the Treaty, they are obliged to do removed in transit. so to the extent necessary to ensure fulfil­ ment of the obligations arising out of the Treaty or to facilitate the achievement of the Community's tasks.

the applicant, under Article 19(3) of the checks were carried out, and by a letter dated Atomgesetz, requiring a clearer demarcation 1 August 1990 the Commission informed the of the storage area for empty containers applicant that the inspection gave rise to no from the unloading area, and requiring particular observations on the part of its stricter rules to be observed regarding the Safeguards Directorate. As the Commission removal of markings on containers. Both of explains in its defence, that statement was those measures were to be incorporated into intended to express that it was now satisfied the internal operating regulations of ANF that the incident was an isolated case, and Lingen, and were to be implemented imme that the physical inventory now sufficiently

As the Commission stated in its tion under Article 83(1)(c) of the Treaty. letter to the applicant dated 29 June 1990, the Article 2 of that decision placed ANF Lin- object of the inspection was to check that the gen under administration for a period of four technical characteristics of the installation months 'as regards aspects connected with were in conformity with those previously the safeguards mentioned in Chapter VII, declared to the Commission, to check the Title Two, of the Treaty'.

It seems that by that statement the Commission intended to convey that the incident had prevented it from carrying out its task under Article 77(a) of the Treaty (cited above at paragraph 7). In 23. Before that sanction was imposed, ANF the letter the Commission also alleged that Lingen had the opportunity of stating its the incident had given rise to a breach of case at a hearing which took place in Brus Articles 24, 10(a), 11(a) and 32 of the regu sels on 13 July 1990.

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Copies the statement made by the applicant in its of both the report and the communication reply, the new internal regulations were were forwarded to the Ministry of Environ communicated to the Commission on ment of Lower Saxony, which on 25 April 23 July 1990. 1991 in turn forwarded a copy of the report to ANF Lingen. By an application lodged on 4 February 1991, ANF Lingen had requested the Court to order copies of the assessment report to be provided both to ANF Lingen

Ministry of Environment, and annexed by mission made such an application on ANF Lingen to its reply lodged at the Court 15 November 1990, and the Court granted on 29 May 1991. immediate enforcement of the sanction by an Order of 7 December 1990 [1990] ECR I- 4499. In its observations on the Commis sion's application, ANF Lingen pointed out that although it had, by a letter of 8 October 1990, given its assent to the administrators 26. From that report, it appears that the completing their assignment, that assent had board of administrators made four visits to been given without prejudice to the claims ANF Lingen's installation, on 29 August, 20 made in its application. It is clear, in fact, and 21 September, 29 and 30 October, and that when the Court granted immediate exe 13 and 14 December 1990.

25. The administrators appointed by the 1991, which concludes in the following Commission drew up an assessment report terms:

29. In order for a sanction to be imposed under Article 83(1) of the Treaty, it is suffi­ cient for at least one obligation under Chap­ ter VII of Title Two to have been infringed. 27. I now turn to the questions at issue in In the event, the contested decision alleges, this case. It will be recalled that the applicant as we have seen, three such infringements, has raised three objections to the Commis­ namely breaches of: sion's decision to impose the sanction of administration. In the first place, the appli­ cant claims that its obligations under the Treaty were not breached as a result of the incident; it contends, secondly, that the sanc­ (1) Article 10(a) of the regulation, tion of administration could not be imposed in respect of an infringement which had already ceased; and it submits, finally, that the sanction was in any event disproportion­ ately severe. In what follows I shall discuss each of those submissions in turn. (2) Article 11(a) of the regulation, and

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asserts that the incident gave rise to a breach report under Article 27 of the regulation of Article 24 of the regulation. It will be (which serves a similar purpose to the report recalled that Article 24(a) requires undertak­ prepared under Article 18). Where however ings to give advance notification to the Com­ an undertaking transfers nuclear material in a mission of every export of source or special consignment of containers which it itself fissile materials to a non-member State. It is sends to a non-member State, the undertak­ not disputed that the materials covered by ing must, it seems to me, be regarded as hav­ that prohibition include the enriched ura­ ing made an export requiring advance notifi­ nium dioxide which, as a result of the inci­ cation under Article 24(a). dent, was inadvertently exported to the USA. It will be recalled, furthermore, that notification under Article 24 is required even where the consignment exported does not 34. Thus, for the purposes of Article 24 of exceed one effective kilogramme, where the the regulation, the incident gave rise to an 'particular safeguard provisions' applicable export of special fissile materials on the part to the installation in question so provide. In of ANF Lingen, and in failing to give the case of ANF Lingen such provision is advance notice of such an export the appli­ made by paragraph 1.3.2 of the applicable cant was in breach of Article 24. Accord­ 'particular safeguard provisions' (see para­ ingly, since it is clear that that provision graph 15 above). must be regarded as further defining the obligations of undertakings under Article 79 of the Treaty, it follows that the applicant was in breach of its obligations under Chap­ ter VII of Title Two of the Treaty.

sanctions for breach of competition rules 38. Nor, in my opinion, can any distinction which are referred to in Article 87(2)(a) of be drawn in that regard between sanctions the EEC Treaty, the applicant argues that imposed under Article 83(1)(c) and the other sanctions imposed under Article 83(1) Eura­ sanctions imposed under that paragraph. The tom should be compared to 'penalty pay­ primary purpose of placing an undertaking ments' rather than to 'fines', in the sense that under administration, pursuant to Article they are designed to put an end to a continu­ 83(1)(c), is clearly to ensure the better func­ ing breach rather than being imposed in tioning of safeguard procedures at the instal­ respect of a past infringement. lation. The improvement of safeguard proce­ dures may however be necessary as much in order to prevent a possible recurrence of a past infringement as to put an end to a con­ tinuing breach. In my view, therefore, the 37. In my view that argument cannot be sanction of administration may in principle accepted. There is nothing in the wording of be imposed whenever a breach of an obliga­ Article 83 to suggest that sanctions are per­ tion under Chapter VII has been established, mitted only in the case of continuing whether or not the infringement is continu­ breaches. As the Commission points out, ing at the time of the imposition of the sanc­ sanctions imposed under Article 83 clearly tion. have the aim of preventing a future recur­ rence of Treaty infringements, and not only that of bringing to an end a current infringe­ ment, and are in that respect more analogous to 'fines' than to 'penalty payments': com­ pare Case 44/69 Buchler v Commission [1970] ECR 733, at paragraph 49 of the judg­ 39. It does not seem to me, moreover, that ment. Such an interpretation of the Commis­ an infringement of the obligation to give sion's powers under Article 83 of the Treaty advance notification of export is in any way is confirmed by Article 83(4), according to cured by the giving of a later notification. which: The purpose of Article 24 is to keep the Commission informed in advance of the movement of nuclear materials, a purpose which is not fulfilled by a notification made after the event. Thus, if an unnotified expor­ tation of materials has occurred a breach of 'Member States shall ensure that sanctions the Treaty has been established, notwith­ are enforced and, where necessary, that the standing any subsequent notification to the infringements are remedied by those com­ Commission. mitting them' (my emphasis).

41. It will be recalled that placing under administration is, in increasing order of severity, the third of the four sanctions 43. As we have seen, the applicant's first which can be imposed under Article 83(1). It submission, on the issue of proportionality, appears that the applicant does not enjoy any is that the contested decision is based upon special benefits which could be withdrawn an inflated view of the seriousness of the under Article 83(1 )(b). The applicant there­ incident. It must be observed however that fore suggests that if any sanction is to be such an exaggeration, even if established, imposed as a result of the incident, the may not in itself be decisive of the central appropriate sanction is the issue of a warning issue in this case, namely the validity of the pursuant to Article 83(1 )(a) rather than a decision to impose a sanction of administra­ placing under administration pursuant to tion. If, as the Commission claims, a four- Article 83(1 )(c). month period of administration was neces­ sary to ensure that an incident of a similar type could not recur, a claim which will be examined below, it would be difficult indeed to argue that the means chosen were out of 42. A Community measure satisfies the proportion to the importance of that aim. principle of proportionality only where it is For the inadvertent exportation of nuclear both appropriate and necessary to the objec­ material to a non-member State cannot be tive pursued; that is to say, only where it is regarded as a trifling matter, undeserving of established, in the first place, that the means the efforts required to prevent a recurrence it employs to achieve its aim correspond to of such an event with the highest degree of the importance of that aim and, in the second assurance available. In those circumstances, place, that they are necessary for its achieve­ therefore, it does not seem to me that it can ment: see Case 66/82 Fromançais v FORMA be argued that the Commission should have [1983] ECR395, at paragraph 8 of the judg­ contented itself with a lesser degree of secu­ ment; Case 15/83 Denkavit Nederland v rity. The possibility remains, none the less, Hoofdproduktscbap voor Akkerboiiw- that the seriousness of the incident may have produkten [1984] ECR 2171, at paragraph 25. been exaggerated by the Commission. The applicant attacks the proportionality of the sanction imposed by the Commission in both those respects. First, it argues that the choice of sanction was inappropriate, because it was based upon an exaggerated 44. The applicant argues, in the first place, view of the seriousness of the alleged that the errors giving rise to the incident infringements; and, secondly, that the sanc­ concerned a single area only of its operation,

45. It seems to me that there is some merit in that submission. Even if the incident gave It seems to me that it would be difficult to rise, as the Commission claims, to breaches deny that the Commission was obstructed in of three distinct provisions of the regulation, its task during the period between 11 and rather than to an infringement of Article 16 May 1990, when the Commission was 24 alone — a proposition which, as we saw unaware that a quantity of nuclear material above at paragraphs 31 to 34, is open to had been lost from the applicant's installa­ doubt — it is clear none the less that there tion. That state of affairs was however an was in substance a single failure in the appli­ inevitable consequence of the applicant's cant's safeguard procedures. Thus, even if breach of Article 24 of the regulation, which the incident amounted to a technical breach is one of a series of provisions laid down for of Articles 10 and 11 of the regulation, as the purpose of facilitating the Commission's well as to a breach of Article 24, the former task under Article 77 (and hence under Arti­ breaches were secondary consequences of a cle 2(e)) of the Treaty. Thus, the reason that primary failure to prevent material being prior notice is required before nuclear mate­ shipped in a consignment of empty contain­ rial is exported to a non-member State is ers. As I have already observed, however, precisely in order that the Commission can that could not in itself be a sufficient reason be kept informed at all times of the quanti­ for regarding the sanction of administration ties of material present in the territory of the as disproportionately severe, since that single Community, so that it can in turn carry out failure was in itself a sufficiently serious mat­ its task under Articles 2(e) and 77 of the ter to merit the most strenuous measures Treaty. The infringement of Article 24 of the necessary. regulation to which the incident gave rise was merely the specific way in which that task was temporarily obstructed.

'The serious nature of the infringement is 49. In discussing whether the sanction of further reinforced by the fact that it involved administration was necessary to achieve the a significant quantity, in terms of weight, of Commission's aim, it must first be consid­ enriched uranium, which could very easily ered what powers the Commission would be further enriched to levels where it would have enjoyed in the absence of such a meas­ be of strategic value.' ure. As we have seen, the Commission has extensive powers of inspection under Arti­ cles 81 and 82 of the Treaty, which give its inspectors a right of access to places, data That statement is contested by the applicant, and persons to the extent necessary to apply who argues that the degree of enrichment of safeguards and ensure compliance with the the material in question was not such as sig­ provisions of Article 77, and in particular to nificantly to facilitate the task of enriching it verify the records referred to in Article 79. to levels possessing a strategic value. The Thus, inspectors have a general duty to ver­ applicant also suggests that a potential thief ify, as necessary, any accounts, records or in search of nuclear material is unlikely to notifications made by those responsible for look for such material in containers labelled operating an installation, and to check in par­ 'empty'. It does not seem to me that there is ticular the state of the physical inventory at sufficient evidence before the Court to any given time. It is clear, on the other hand, decide whether the incident did in fact give that inspectors do not have any power to rise to the danger of a strategically significant issue instructions to the undertaking con­ loss of material. As I have already empha­ cerned, even where an infringement of the

51. In the present case, when the procedural errors which gave rise to the incident came to light, it became necessary to amend the relevant internal operating regulations so as to ensure that an incident of the same type would not recur. As we have seen, initial amendments were made on the instructions of the Ministry of Environment of Lower 52. It is true that the applicant's willingness Saxony as soon as the incident was reported. to co-operate with the Commission in the It appears however from the report of the elaboration of improved safeguard proce­ Commission's administrators that further dures is not in dispute. Thus, the Commis­ refinements of the safeguard procedures sion has not suggested that its administrators were elaborated during the course of their received anything other than the full administration: see paragraphs 2 to 7 of the co-operation of ANF Lingen in what file note of 2 October 1990, paragraph 3 of appears to have been a joint effort of refining the file note of 5 November 1990, and para­ and improving safeguard procedures at the graph 2 of the file note of 19 December 1990. plant and drawing up plans for a computer-

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53. Nor can I accept the argument, put for­ ward by the applicant in its reply, that in substance no administration ever took place, on the ground that the board had confined 56. That conclusion is not affected, in my itself to four visits, each lasting for one or view, by the fact that the Commission has two days and consisting for the most part of subsequently imposed the lesser sanction of inspections of the installation and amicable a warning, pursuant to Article 83(1)(a) of the discussions with the applicant's staff. It can­ Treaty, in respect of infringements commit­ not in my view be held against the Commis­ ted by another undertaking. At the hearing, sion that the administration it imposed was the applicant referred to the sanction conducted with discretion and tact, or that it imposed in respect of infringements of the

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59. I am accordingly of the opinion that the Court should:

(1) dismiss the application;

(2) order the applicant to pay the costs.

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