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Professor: The Nord Stream 2-pin is passed on to a new government

CHRONICLE: The current Danish government, unlike Sweden and Finland, hesitated to approve Nord Stream 2 through Danish waters. The decision on the route has now been postponed to the general election. This leaves the problem to a new government, writes Bent Ole Gram Mortensen.

By Bent Ole Gram Mortensen 
Professor of Environmental and Energy Law at the University of Southern Denmark, Deputy Chairman of the Energy Complaints Board and consultant for lawyers in relation to Nord Stream 2

As previously described here at Altinget, two applications have been submitted for the establishment of a further German-Russian gas pipeline – Nord Stream 2 – through the Baltic Sea via a route through Danish territorial waters, respectively, south of Bornholm and a route through international waters north of Bornholm.

The case is still being dealt with by the Danish authorities, and at the moment it does not seem that we can expect a Danish permit provisionally, since the Danish Energy Agency is now requesting studies of a third route .

At the same time, Denmark is the last coastal state that has not approved the route guidance. There are already more than 1,200 km of pipelines on the seabed corresponding to more than half of the total pipeline network, and the pipelines are rapidly approaching Danish waters.

A jaw in the wheel
On the basis of the Danish Energy Agency’s permission from 2009, a gas pipeline consisting of two parallel gas pipes between Russia and Germany – the so-called Nord Stream – was established in 2010 and 2011. The Danish Energy Agency gave its permission for this gas pipeline to go through Danish territorial waters south of Bornholm.

Energy, Supply and Climate Minister Lars Chr. Lilleholt (V) explained in January 2016 about the election in a letter to the Folketing that “it was assessed better than alternative lines, for example north of Bornholm, which Denmark would otherwise be obliged to allow”.

In April 2017, an application was submitted to be able to establish another connection between Russia and Germany with similar capacity and route through Danish territorial waters – Nord Stream 2. The choice of the requested route parallel to the existing route seems logical. Thus, you already know the seabed conditions on that stretch, and precisely that alignment has previously been prioritized by the Danish authorities.

Neither the existing Nord Stream nor the upcoming Nord Stream 2 entail the landing of natural gas in Denmark, and it has previously been argued here at Altinget that Denmark has no interest in or opportunity to stick a stick in the wheel of Nord Stream 2 .

New rules of the game
With effect from January 2018, the Folketing changed the legislation so that the Foreign Minister must be asked and actually have the right to veto if gas lines must go through Danish territorial waters. In the law, it was explicitly stated that the amendment also included already submitted but not yet settled applications.

Although the amendment was formulated neutrally, only one current project was included – Nord Stream 2. For the same reason, one might consider naming the amendment law for lex Nord Stream 2.

It is uncommon and legal certainty for a parliament to change the legal framework for a specific project for which a permit has already been sought.

Furthermore, the introduction of this veto-like option has fundamentally changed the administrative law basis for the construction of the transit pipeline. A special and marvelous construction means that the foreign minister’s veto is referred to as an “attitude” and not a decision. Thus, according to the observations of the Act, the Minister for Foreign Affairs must not observe the rules of the Public Administration Act on, among other things, party consultation and justification in connection with the preparation of the recommendation ”, which is an unusual deviation from the general requirements in Danish administrative law.

Furthermore, the recruitment option is excluded in relation to the “recommendation” of the Foreign Minister. The ordinary recruitment body in the field – the Energy Complaints Board – is now prevented from trying the material content in a possible refusal based on the foreign minister’s recommendation.

The parliament changed the legislation after a number of politicians expressed concern about the establishment of Nord Stream 2. With the provisions introduced, the legislature has achieved that the establishment of Nord Stream 2 through Danish territorial waters can be prevented, regardless of whether there were objective grounds or not according to the previous legislation to refuse a routing through Danish territorial waters.

No reply from the Foreign Minister
Now, two years ago, permission was sought to put Nord Stream 2 south of Bornholm on Danish territorial waters, and more than one year ago that the legislation was changed and the case was submitted to the Foreign Minister. There is still, and for whatever reason, no recommendation from the Minister.

The requirement of good administration  otherwise imposes limits on the ability of the Ombudsman to delay the decision in a case. The Ombudsman has a considerable practice of postponing cases and has generally focused on case processing time. Based on this practice, the previous treatment can be questioned.

Without a response from the Foreign Minister, it is not surprising that in August 2018 an application was submitted for a new route outside Danish territorial waters, more specifically through the international waters (Danish exclusive economic zone), which lies between Sweden and Denmark north of Bornholm.

Outside the territorial waters, the foreign minister’s attitude according to Danish law must not be obtained. Instead, it is a more classic administrative law decision under Danish law based on the basic law of the Convention on the Law of the Sea to abolish, inter alia, transit lines. The provisions of this Convention support a general right to lay pipelines through the exclusive economic zone. The same rules were applied for the approval of Nord Stream 2 by Finland and Sweden.

Borderline agreement between Poland and Denmark
Before submitting the application for a route northwest of Bornholm (the northern route), the Danish Energy Agency, which belongs to the Energy, Supply and Climate Ministry, announced that it was not possible to use a route south of Danish territorial waters due to the lack of clarification on the boundary drawing in the exclusive economic zone between Denmark and Poland.

Meanwhile, an intergovernmental agreement has been concluded between the governments of Denmark and Poland on this. However, the agreement is, as far as is known, not yet ratified by Poland and will only enter into force 30 days after both parties have notified each other that the internal procedures have been completed.

The requirement for studying a new route
At the end of March, the Danish Energy Agency made the decision not to make any decision on the route north of Bornholm. Instead, the Nord Stream 2 project company in the DEA’s decision has been “requested” to investigate a third route, this time south of Bornholm, but outside Danish territorial waters.

The term “requested” should now not be taken for a friendly recommendation. The Danish Energy Agency will simply not consider the application for the northern route before a new southern route has been investigated.

The Danish Energy Agency states in its decision on the examination of a third route that it will ensure that permission is only granted for the route that is most advantageous from an environmental and safety perspective. To ensure this, the DEA believes that it is necessary to have another route investigated.

What is not clear from the decision is that an application has already been submitted for a route south of Bornholm, but through Danish territorial waters. This is the route through Danish territorial waters, which the Foreign Minister has not yet addressed.

The DEA’s decision is now brought before the Energy Complaints Board. This has been done at the same time as the Nord Stream 2 project company has applied for the third route, without, however, withdrawing the two previous applications and, furthermore, subject to the company’s rights.

The question that the Energy Complaints Board has been asked to consider is whether it is in accordance with Danish law (the Continental Shelf Act) and the underlying provision of the Convention on the Law of the Sea in the specific case to require examination of a third route, that is, where Two applications have already been applied for, and the case processing has already taken more than two years.

Legal investigation requirement? 
The Foreign Minister has held the application for the first requested route for a long time without making an opinion. Otherwise, one would think that the case was currently adequately informed. Good administrative practice, including the requirement not to draw the case unnecessarily, also applies in such cases.

What is the reason for the foreign minister to hesitate?

The Danish Energy Agency will not currently consider the alternative route north of Bornholm. Instead, the Danish Energy Agency asks for studies of a new and third route. If precisely that examination requirement is legal, the Energy Complaints Board must now decide on.

I myself do not wish to express my opinion on the issue. On the one hand, I am incompetent with my previous involvement in the case, and partly as the Vice-Chairman of the Energy Complaints Board, I completely refrain from engaging myself in the treatment of a specific board case where I am just incompetent.

There has been geopolitics in the
Back, however, a political reality. There has been geopolitics in the case. Danish politicians have spoken out against the establishment of Nord Stream 2. The current Danish government, unlike Sweden and Finland, hesitated to approve a route.

The result is that Denmark is now at the center of an international political pressure and games that obviously take place. The risk of a possible claim for damages against the Danish state is also available. If so, it will be a requirement for a three-digit million amount, also in euros. Could Denmark not have avoided standing in that situation?

The decision on Nord Stream 2’s routing is now definitely postponed to after the parliamentary election. This leaves the problem to a new government.

Politically, however, there is still a way out of the situation. The Danish Energy Agency can at any time resume and evaluate the case. If the Danish government finds a route south of Bornholm more appropriate, they can approve the route through Danish territorial waters.

A hot potato
The political pressure that Denmark is genuinely exposed to is not in itself a substantive reason for not giving permission to the route north of Bornholm or to delay the issuance of this permit. Both international law and Danish administrative law also apply to the unpopular.

In addition, with the decision to amend the gas directive, the EU Member States have now determined the balance between the competence of the Member States and the European Commission respectively. Denmark can no longer hope that the EU will take over what has ended up as a hot political potato.

At the Folkemødet on Bornholm until June, I have been invited to give my view on the matter in a debate entitled ‘When infrastructure becomes political’. I hope that also members of the newly elected Folketing and possibly a new government will contribute to clarifying how Denmark comes out of this cat pain.

This is the English language translation of the article published on the Danish Altinget news website.