Federal Administrative Court – Inadmissible Issuance of the Operating Regulation Ordinance and Licence for the Reserve Power Plant in Birr

In its ruling of 19 February 2024, the Federal Administrative Court (FAC) found that the Federal Council should not have issued an operating ordinance for the reserve power plant in Birr. In its judgement, the FAC recalls the principles of public law. It places high requirements on the examination and justification of economic intervention measures and their proportionality.

In order to prevent an electricity shortage, the Federal Council issued a regulation in December 2022 on the operation of reserve power plants and emergency power groups in the event of an imminent or existing shortage (Operating Ordinance, available only in German). It based this on the National Economic Supply Act (NESA). The latter stipulates that the Federal Council may take temporary economic intervention measures in the event of an imminent or existing severe shortage. Based on the Operating Ordinance, the Federal Department of the Environment, Transport, Energy and Communications (DETEC) issued an operating licence for the Birr reserve power plant until 31 May 2023. Following a prior objection, a local resident appealed against this operating licence with the FAC, claiming that there was no severe power shortage in the winter of 2022/2023 and that both the Federal Council’s regulation and DETEC’s operating licence were therefore inadmissible.

As part of the appeal, the FAC examined as a preliminary question the validity of the Operating Ordinance to determine whether it complied with the law (concrete judicial review of statutes). It first established in general terms that the Federal Council is in principle authorised to take economic intervention measures to secure the supply of electrical energy. In doing so, however, the Federal Council must exercise the discretion to which it is entitled in accordance with its duties. Intervention measures must therefore comply with the legal purpose and adhere to the basic principles of the Swiss constitution.

The FAC first examined the existence of a severe electricity shortage. This is a prerequisite for the Federal Council to be formally authorised to issue the Operating Ordinance. It came to the conclusion that the lower instance – DETEC – had not sufficiently substantiated the electricity shortage. The FAC considered DETEC’s comments on the political situation in Europe, the shutdown of many French nuclear power plants and the study of the Swiss Federal Office of Energy (SFOE) on the security of electricity supply to be too general. Therefore, the FAC considered a serious shortage had not been established. According to the FAC, the conditions for economic intervention measures were therefore not met.

From the substantive point of view, the FAC concluded that the Operating Ordinance violated the principle of proportionality. In particular, the FAC found that it was not clear what other intervention measures had been considered as an alternative for the Birr reserve power plant. Against this background, the FAC upheld the appeal and found that the operating licence for the Birr reserve power plant was inadmissible.

It is remarkable that the FAC retrospectively considers an imminent electricity shortage not to have materialised despite the circumstances put forward by DETEC, in particular the war in Ukraine, and without conducting its own factual investigations. However, it is to be welcomed that the court sets high requirements for the justification and proportionality of state interventions in this ruling and does not shy away from criticising the Federal Council as Switzerland’s highest executive. That said, given the fact that the operating licence expired on 31 May 2023 in this case anyway, the FAC’s ruling has no direct consequences. This probably favoured the harsh criticism of the approach taken by the Federal Council and DETEC. It would be desirable if the FAC were to give more weight to the high standards invoked in decisions with direct consequences.

The FAC decides in the last instance, since an appeal to the Federal Supreme Court is excluded by law for decisions in the area of national economic supply.

The press release of the FAC can be found under the following link: https://www.bvger.ch/de/newsroom/medienmitteilungen/fehlende-voraussetzungen-fuer-reservekraftwerk-birr-1223. You can access the judgement under the following link: https://bvger.weblaw.ch/cache?id=ea722fa0-5944-43ae-bbb3-76fb0c729f71&guiLanguage=de&sort-field=relevance&sort-direction=relevance