Scarcity of hydraulic resources and hydroelectric concessions

The influence of climate change on the management of water resources is becoming more and more significant, as shown by the multiplication and recurrence of drought episodes. Beyond the consequences affecting the level and frequency of precipitation, the rise in temperature reinforces the phenomenon of evaporation, which ultimately increases the intensity and duration of droughts.

In a 2019 information report on France's adaptation to climate disruption by 2050, the Senate's delegation on foresight indicated that the average annual flow of rivers in metropolitan France could fall by 10 to 40% by 2046-2065 (according to figures from the Explore 70 project).

This evolution of water resources affects all water users and the way in which they can share it. It therefore necessarily impacts the production of electricity thanks to the dams built on many rivers in France, a fact that is increasingly reported in the press (S. Wajsbrot, "Sécheresse : les barrages hydroélectriques sous haute surveillance", Les Echos, 18 May 2022; M. Cessac, "La sécheresse complique encore le casse-tête de la production d'électricité", Le Monde, 18 July 2022).

A decision handed down on 28 November 2022 by the Administrative Court of Appeal of Marseille in a case (No. 20MA00011) opposing the beneficiary of the Torrent du Gâ hydroelectric concession to the State demonstrates once again how environmental constraints affect economic operators and land-use projects. 

Granting of a hydropower concession and information on flows

Above the 4.5 MW threshold, hydroelectric dams and plants are in principle operated under a concession contract awarded by the State. This activity is therefore governed by a complex corpus of rules largely contained in the Environmental Code, the Public Procurement Code and the Energy Code.

Until their codification in the Energy Code in 2011 (for the legislative part) and in 2015 (for the regulatory part), the specific rules applicable to the award and execution of hydroelectric concessions were set by Law of 16 October 1919 relating to the use of hydraulic energy and by Decree no. 94-894 of 13 October 1994 relating to the concession and the declaration of public utility of works using hydraulic energy

The award of a concession contract for the development of a dam is therefore likely to be subject to prior obligations of advertising and competitive bidding when the contract to be awarded does not fall within any case of exclusion.

Under the terms of the aforementioned Decree of 13 October 1994, applicable in this case, the signing of the concession contract had to be preceded, on the one hand, by a selection phase allowing the designation of the successful operator or grouping and, on the other hand, by a phase of examination of the successful bidder's file, qualified as a "concession application".

Candidates for the award of a public contract must be provided with all the information necessary to prepare their bids (CE, 2 July 1999, Sté Bouygues, No. 206749). In accordance with this principle, article 2-6 of Decree of 13 October 1994 provided that the consultation folder provided to candidates admitted to submit a bid had to include a "document presenting the minimum characteristics and requirements of the planned concession". This document had to include the main parameters relating to water flows and levels.

Candidates must be familiar with this essential information in order to be able to prepare a solid financial offer, likely to commit them to the State for several decades.

Scarcity of hydraulic resources and compensation of the successful bidder

The decision rendered on 28 November 2022 by the Administrative Court of Appeal of Marseille regarding the Torrent du Gâ concession shows the importance of the hydraulic resource and the accuracy of the data made available to the candidates.

On 29 March 2011, the French State thus published a public invitation to tender for the award of this concession on the territory of the city of La Grave in the Hautes-Alpes department.

On 16 May 2012, the services of the Provence-Alpes-Côte d'Azur regional directorate for the environment, land use planning and housing (DREAL) invited applicants to take into account, for the preparation of their bids, an average flow rate value of the torrent of 1,440 liters per second.

Upon submission of their bid in September 2012, the bidding companies (later named as awardees) produced a study measuring a flow rate of 1,290 liters per second. It is understood that this study was used to construct said bid.

It is also clear from the judgment that these companies finally concluded that the actual average flow rate was 1,083 liters per second when preparing their concession application file, after the contract was awarded. It appears that this data prevented - or dissuaded - the consortium from submitting a concession application file that complied with the requirements set out in the procedure.

On 21 March 2017, the State put the grouping on notice to produce a finalized concession application file within one month. Failing that, the State reserved the right to declare the bidding procedure as non-consecutive.

The group then filed an action for compensation before the Marseille Administrative Court to obtain compensation for the expenses and costs incurred in connection with this project. In a judgment dated 5 November 2019, the Court dismissed the claim on the grounds that "the companies did not establish that by providing them with information relating to the flow of the torrent that was allegedly erroneous, the State had committed a fault likely to engage its responsibility".

The group having appealed, the Administrative Court of Appeal of Marseille was called upon to rule on this dispute.

A debate on the proof of the operative event

In its judgment of 28 November 2022, the Court rejected the group's claim for compensation.

As a matter of principle, it does not seem to contest the possibility of engaging the responsibility of the State in the event of communication of erroneous data or broken promises. This possibility is constantly admitted by the jurisprudence (see in this sense for example: CE, 5 April 2004, Cne de Marly, n° 241790; CE, 30 May 2005, M. Tordjman, n° 265307).

However, the Court of First Instance and the Court of Justice have been particularly demanding as to the proof of the existence of erroneous data.

In the first instance, the Tribunal found that the initial study indicating a flow rate of 1,440 liters per second had not been proven to be erroneous. It also noted that the study indicating a value of 1,083 liters per second was the result of a model and not of a physical survey.

On appeal, the applicant companies produced photographs and a certificate showing the installation of a water level gauge and a probe in order to demonstrate that the calculation of the flow rate was made by a physical survey and not by simple modeling.

However, the Court dismissed these additional elements, considering that "even if physical surveys had been carried out, it has not been established, nor even seriously argued, that these surveys could have made it possible to measure with sufficient approximation the "modulus" of the flow, i.e. the average flow calculated on an interannual basis" (point 4).

As a result, the judge considers that there is no need for compensation because there is no sufficient proof of the existence of erroneous information.

This situation is reminiscent of the decisions rendered by the administrative courts concerning the liability of the concessionaire State in the event of unilateral modification of a concession contract. After the Constitutional Council confirmed the principle of compensation of the concessionaire in such a case (Cons. Const, 24 June 2011, Sté EDF, n° 2011-141 QPC), the administrative courts have successively confirmed this principle while systematically rejecting its implementation for more or less questionable reasons concerning the evidence produced by the claimant (CE, 26 December 2013, Ministre de l'écologie, de l'énergie et du développement durable, n° 359230; CAA Paris, 25 May 2020, Ministre de la transition écologique et solidaire, n° 18PA03961).

Although the administrative judge is liberal in terms of the principles of liability of the public authorities, it may be particularly demanding in his examination of the factual circumstances and the conditions laid down by the case law. To anticipate this difficulty, it is essential to try to obtain the appointment of an expert by the Court, either in summary proceedings or on the merits. The judge will often be more reluctant to dismiss the work of an expert appointed in this way.

Rémi Ducloyer and Madeleine Oulié