Will the Emerald Network in Ukraine bring better environmental protection or new corruption risks?

26/ 04/ 2021

At the end of last year, draft law №4461 On the Territories of the Emerald Network was registered in the parliament. Its main task is to develop policies and measures for the management of areas of special conservation interest to preserve certain species of flora and fauna and natural habitats. Even though the work on the text of the draft law itself lasted for about three years, in general, it received a significant number of comments from various parties, including central executive bodies and the business community. Besides, the National Agency for the Prevention of Corruption (NAPC) conducted an anti-corruption examination of the document, which revealed a range of corruption-causing factors. The authors of the draft law held several meetings with stakeholders to discuss the potential risks contained in the draft law and ways to address them. On April 14, the Verkhovna Rada Committee on Environmental Policy and Nature Management recommended the adoption of the Draft Law as a basis in the first reading with the need to finalize some of its provisions before the second reading. Thus, the European Business Association and the NAPC note that the current version of the draft law contains some aspects that may complicate the implementation of business investment projects, in particular, due to the possibility of ambiguous interpretation and application of certain provisions and may be a ground for potential corruption risks. Particularly, we are referring to the following problematic provisions of the draft law: 1.An absolute ban on activities in the absence of reasonable grounds for determining their negative impact on the territory of the Emerald Network. First, it does not comply with the provisions of Directive №92 / 43 / EC, which nevertheless provides for the possibility of implementing projects of public interest. Secondly, the criteria for establishing such a negative impact are proposed to be defined in the bylaw which was separately identified by the NAPC as a corruption-causing factor. In such circumstances, a negative conclusion is obtained based on criteria that are not determined by the law and it will mean the impossibility of conducting further activities and loss of investment that exacerbates the existing corruption risks. To reduce such risks, the EBA Industrial Ecology experts and NAPC emphasize the need to define the criteria of negative impact on the Emerald Network directly in the draft law, as well as to introduce the term public needs following the Law of Ukraine №1559-VI on alienation of land plots and other objects of real property located on them, which are in private ownership, for public use or the reasons of public need. 2.The need to obtain from the executive body a decision on the absence of the need to conduct an impact assessment on the territory of the Emerald Network (EIAEN) or a decision on the absence of negative impact on the territory of the Emerald Network as a permit to conduct business activities in the Emerald Network. First, it may lead to differences in the application of the provisions of the draft law. Secondly, such a lack of definition of exhaustive cases, grounds, forms, terms, the procedure for exercising such powers, control over their exercise, and responsibility for possible abuses during their exercise may lead to the potential establishment or expansion of discretionary powers of a public authority and is a factor for corruption practices. Therefore, it is expedient to provide directly in the Draft Law a clear list of activities for which the EIAEN is needed following the example of Law of Ukraine №2059-VIII On Environmental Impact Assessment, or criteria for determining the absence of negative impact on the Emerald Network. 3. The need to conduct EIAEN in the process of land management, as well as before obtaining a range of permits. First, such an approach does not fully comply with the provisions of Directive 92/43 / EEC, according to which an impact assessment on a site should be carried out on a plan or project and not on any intermediate actions that may be relevant to the plan or project. Secondly, in practice, this may lead to the need to conduct EIAEN several times to implement a single project. Such an approach poses a special threat to companies in the field of subsoil use, as the Draft Law provides for the implementation of EIA before obtaining a special subsoil use permit, namely, for geological study and research and development of mineral deposits. Thus, the activities of companies that bought their licenses through auctions for hundreds of millions of hryvnias may be blocked, which in turn increases the risk of obtaining illegal benefits to the authorities. Therefore, we consider it necessary to amend Part 2 of Art. 11 of the Draft Law. 4. Lack of a clear answer to the question of whether it is necessary to pass EIAEN to companies that have already received all permits and passed the environmental impact assessment (EIA) procedure. Thus, the conclusion from the EIA, which is issued after the EIA procedure, is valid for 5 years. Therefore, the business has concerns that those EIA conclusions that were issued before the adoption of the Draft Law, but the activities on which began after the adoption of the Draft Law, can be appealed against in court due to the lack of a conclusion on the EIAEN. We consider it necessary to reflect in the Draft Law that EIAEN will not apply to those business entities that have already received all necessary permits and passed the EIA procedure on the date of entry into force of the Draft Law, as stated in the draft Law On the territory of the Emerald Network , Developed by the Ministry of Ecology and Natural Resources of Ukraine in 2019. 5. Lack of a transition period for the entry into force of the Emerald Network management plans, which establish a list of prohibitions and restrictions on certain activities. Once the Emerald Network areas have been identified and entered in the National Register, a management plan is developed for such an area within 6 years, which will potentially establish biodiversity conservation measures and a list of activities that are prohibited or restricted in the Emerald Network. First, it does not comply with Directive 92/43 / EEC, which sets out a list of activities that cannot be carried out in such areas. Second, compensation for losses resulting from prohibitions or restrictions on activities in the Emerald Network delayed until the approval of the management plan for such an area can lead to unexpected negative consequences for companies. Therefore, it is necessary to provide for an exhaustive list of restrictions and prohibitions on doing business directly in the Draft Law, and secondly, to provide for a transitional period for the entry into force of the provisions of the Draft Law that establish such restrictions for business. Representatives of the European Business Association and the NAPC believe that the draft law needs significant revision. Besides, we would like to express again our readiness to re-provide expert support to eliminate corruption-causing factors and gaps that create conditions for pressure on the business. Be the first to learn about the latest EBA news with our Telegram-channel – EBAUkraine.

At the end of last year, draft law №4461 “On the Territories of the Emerald Network” was registered in the parliament. Its main task is to develop policies and measures for the management of areas of special conservation interest to preserve certain species of flora and fauna and natural habitats.

Even though the work on the text of the draft law itself lasted for about three years, in general, it received a significant number of comments from various parties, including central executive bodies and the business community. Besides, the National Agency for the Prevention of Corruption (NAPC) conducted an anti-corruption examination of the document, which revealed a range of corruption-causing factors. The authors of the draft law held several meetings with stakeholders to discuss the potential risks contained in the draft law and ways to address them.

On April 14, the Verkhovna Rada Committee on Environmental Policy and Nature Management recommended the adoption of the Draft Law as a basis in the first reading with the need to finalize some of its provisions before the second reading.

Thus, the European Business Association and the NAPC note that the current version of the draft law contains some aspects that may complicate the implementation of business investment projects, in particular, due to the possibility of ambiguous interpretation and application of certain provisions and may be a ground for potential corruption risks. Particularly, we are referring to the following problematic provisions of the draft law:

1.An absolute ban on activities in the absence of reasonable grounds for determining their negative impact on the territory of the Emerald Network. First, it does not comply with the provisions of Directive №92 / 43 / EC, which nevertheless provides for the possibility of implementing projects of public interest. Secondly, the criteria for establishing such a negative impact are proposed to be defined in the bylaw which was separately identified by the NAPC as a corruption-causing factor. In such circumstances, a negative conclusion is obtained based on criteria that are not determined by the law and it will mean the impossibility of conducting further activities and loss of investment that exacerbates the existing corruption risks. To reduce such risks, the EBA Industrial Ecology experts and NAPC emphasize the need to define the criteria of negative impact on the Emerald Network directly in the draft law, as well as to introduce the term “public needs” following the Law of Ukraine №1559-VI on alienation of land plots and other objects of real property located on them, which are in private ownership, for public use or the reasons of public need.

2.The need to obtain from the executive body a decision on the absence of the need to conduct an impact assessment on the territory of the Emerald Network (EIAEN) or a decision on the absence of negative impact on the territory of the Emerald Network as a permit to conduct business activities in the Emerald Network. First, it may lead to differences in the application of the provisions of the draft law. Secondly, such a lack of definition of exhaustive cases, grounds, forms, terms, the procedure for exercising such powers, control over their exercise, and responsibility for possible abuses during their exercise may lead to the potential establishment or expansion of discretionary powers of a public authority and is a factor for corruption practices. Therefore, it is expedient to provide directly in the Draft Law a clear list of activities for which the EIAEN is needed following the example of Law of Ukraine №2059-VIII “On Environmental Impact Assessment”, or criteria for determining the absence of negative impact on the Emerald Network.

3. The need to conduct EIAEN in the process of land management, as well as before obtaining a range of permits. First, such an approach does not fully comply with the provisions of Directive 92/43 / EEC, according to which an impact assessment on a site should be carried out on a plan or project and not on any intermediate actions that may be relevant to the plan or project. Secondly, in practice, this may lead to the need to conduct EIAEN several times to implement a single project. Such an approach poses a special threat to companies in the field of subsoil use, as the Draft Law provides for the implementation of EIA before obtaining a special subsoil use permit, namely, for geological study and research and development of mineral deposits. Thus, the activities of companies that bought their licenses through auctions for hundreds of millions of hryvnias may be blocked, which in turn increases the risk of obtaining illegal benefits to the authorities. Therefore, we consider it necessary to amend Part 2 of Art. 11 of the Draft Law.

4. Lack of a clear answer to the question of whether it is necessary to pass EIAEN to companies that have already received all permits and passed the environmental impact assessment (EIA) procedure. Thus, the conclusion from the EIA, which is issued after the EIA procedure, is valid for 5 years. Therefore, the business has concerns that those EIA conclusions that were issued before the adoption of the Draft Law, but the activities on which began after the adoption of the Draft Law, can be appealed against in court due to the lack of a conclusion on the EIAEN. We consider it necessary to reflect in the Draft Law that EIAEN will not apply to those business entities that have already received all necessary permits and passed the EIA procedure on the date of entry into force of the Draft Law, as stated in the draft Law “On the territory of the Emerald Network “, Developed by the Ministry of Ecology and Natural Resources of Ukraine in 2019.

5. Lack of a transition period for the entry into force of the Emerald Network management plans, which establish a list of prohibitions and restrictions on certain activities. Once the Emerald Network areas have been identified and entered in the National Register, a management plan is developed for such an area within 6 years, which will potentially establish biodiversity conservation measures and a list of activities that are prohibited or restricted in the Emerald Network. First, it does not comply with Directive 92/43 / EEC, which sets out a list of activities that cannot be carried out in such areas. Second, compensation for losses resulting from prohibitions or restrictions on activities in the Emerald Network delayed until the approval of the management plan for such an area can lead to unexpected negative consequences for companies. Therefore, it is necessary to provide for an exhaustive list of restrictions and prohibitions on doing business directly in the Draft Law, and secondly, to provide for a transitional period for the entry into force of the provisions of the Draft Law that establish such restrictions for business.

Representatives of the European Business Association and the NAPC believe that the draft law needs significant revision. Besides, we would like to express again our readiness to re-provide expert support to eliminate corruption-causing factors and gaps that create conditions for pressure on the business.

Be the first to learn about the latest EBA news with our Telegram-channel – EBAUkraine.