1.Following my thread yesterday
@katyafimava responded by with a series of tweets in which she said my arguments were false. Sadly, on inspection her responses do not stand up to any close examination.
@katyafimava responded by with a series of tweets in which she said my arguments were false. Sadly, on inspection her responses do not stand up to any close examination.
2. I said at point 2 of my thread 'The German regulator is not obliged to consult any other Member State-this flies in the face of the ruling of the EU General Court in Case T-883/16 Poland v. Commission, known as the OPAL case'.
3. KY: ‘False. While deciding on 'derogation'- not 'exemption' as the OPAL case (under appeal) relates-the German regulator is not obliged to consult other MS unless the pipeline is located in the territory of more than one MS- NS2 clearly is not-but decided to hear their views’
4. This is an incorrect description of how the gas directive 2009 (as amended by directive 2019/62/EU) operates. In the first instance it has to be recognized that Union legislation is not applied in isolation to the Treaties or Union case law.
5. The gas directive is subject to the hierarchy of norms. It is subject to the Union’s Treaties, and specifically in this case to Article 194(1) TFEU-This has been interpreted by the EU General Court in OPAL to impose obligations for national authorities and the EU institutions
6. The key paras of the ruling..
Para 72 …’the principle of solidarity also entails a general obligation on the part of the European Union and the Member States, in the exercise of their respective competences, to take into account the interests of the other stakeholders’
Para 72 …’the principle of solidarity also entails a general obligation on the part of the European Union and the Member States, in the exercise of their respective competences, to take into account the interests of the other stakeholders’
7. Para 73 ‘more specifically, the energy policy of the European Union, that policy requires the European Union and the Member States ..to avoid adopting measures liable to affect the interests of the European Union and the other Member States..
8. Para 73.. as regards security of supply, its economic and political viability, the diversification of supply or of sources of supply, and to do so in order to take account of their interdependence and de facto solidarity’
9. Para 77 ‘the EU institutions and the Member States are obliged to take into account, in the context of the implementation of that policy, the interests of both the European Union and the various Member States and to balance those interests where there is a conflict’.
10. It is difficult to see given the argument of the General Court how NS2 can avoid application of the OPAL ruling to any attempt to seek a derogation or an exemption. In either case Union law requires an assessment of the interests of all the Member States and the EU as a whole
11. It is clear from the approach of the General Court that although the Court was considering an exemption in that specific case it is a ‘general obligation’ on the EU and the Member States to take account of the interests of the other stakeholders.
12. This view is reinforced by considering the relevant provision of the amendment to the gas directive contained in article 49(a).
13. Just as in respect of the exemption provision contained in Article 36(1) the national regulator is required to consider whether granting a derogation would be detrimental to competition, the functioning of the internal market or security of supply.
14. Such considerations the General Court has indicated in OPAL obligate national regulators to consider the interests of all Member States and the Union as a whole.
15. The fact that Germany (and notably not the European Commission) has appealed the OPAL case to the CJEU is of no legal relevance to the interpretation of the gas directive at this juncture. The only applicable law on this point is the ruling of the EU General Court in OPAL.
16. From the perspective of NS 2 I would not hold out much hope from an appeal to the CJEU. It may not only uphold the ruling of the GC but the Advocate General may well provide an expansive opinion on the obligations of solidarity which then influences national regulators & EU
17. Frankly, if I had been advising Nord Stream 2 I would have recommending lobbying Berlin not to appeal the OPAL ruling as a CJEU ruling combined with an Advocate General opinion could remove any remaining room for maneuver for national regulators.
18. For the avoidance of doubt and as I mentioned in my first thread, NS2 is not eligible for a derogation in any event, which takes me to @katyafimava ‘s next argument.
19. @katyafimava then challenged my fourth point, ‘(b) that the German regulator can grant NS2 a derogation. It cannot. Derogations are only for pipelines completed before 23rd May 2019.’
20. @katyafimava, said ‘False. It can if it deems the pipeline 'completed'. In my view, the German energy act, transposing the amended Directive, allows for several interpretations’.
21. With respect this is not possible. Union law is Union law. It is not optional for Germany or any other Member State. If Union sets a time limit for a derogation, 23rd May 2019. Then that is the time limit.
22. In no use of ordinary language or statutory construction can NS2 be magically be transformed into a completed pipeline.
23. on the due date 23rd May 2019 only 40% of the pipeline had been completed and it still did not have all the route permits in place. How can NS2 or @katyafimava claim NS2 is anyway a ‘completed pipeline’ when it was substantially incomplete and lacked all of its route permits?
24. Which brings me to the final investment decision (fid). The argument here is that NS2 has been prejudiced by the fact that it had made the fid before the amendment came into force and that decision is tantamount to saying the pipeline is completed.
25. The difficulty with that argument is that the fid was made prior to NS2 receiving all its route permits. No responsible investor makes a fid until it has all the route permits-Can NS2seriously seek to rely on a fid argument when it did not have all the route permits in place?
26. The fid issue also raises the question of whether the reason for the rush to a fid was due to the fear of oncoming EU legislation. This will be an issue in any litigation and is likely to result in discovery proceedings.
27. @katyafimava then challenged my ninth point, ‘And then (c) that it would be possible for the German regulator to grant a partial derogation. No such creature exists within the four corners of the Directive’
28. KY responded by saying ‘False.The German regulator would be able to request certain changes to be made in respect of e.g. capacity allocation & tariff principles, which would apply to the German section of NS2, but such that would not have a material detrimental impact onNS2'
29. I do wonder if we are talking at cross-purposes here. There is certainly no creature such as a ‘partial derogation’ in the text of the directive.
30. However, if the derogation procedure were available, subject to the requirements of the OPAL ruling, in principle a derogation decision could deal with such issues as capacity allocation and tariff regulation.
31. The core problem remains that there is no basis for derogation as the pipeline was not completed by 23rd May 2019.
32. It may be that the underlying argument here is to seek to argue that the pipeline was ‘completed’ in German waters by 23rd May 2019. There are two problems with that argument.
33. First, as I understand the situation as a practical matter the pipeline route in German waters was not in fact completed by 23rd May 2019.
34. Second, whatever was constructed in German waters by 23rd May 2019 was not a functioning pipeline through which gas could flow. By no ordinary or reasonable interpretation of the law could it be deemed to be a ‘completed’ pipeline in German waters. Ends.
