Draft Law No. 8410 on EIA may permanently deprive businesses of the right to implement investment projects

On June 22, the Environmental Committee of the Verkhovna Rada of Ukraine (VRU) approved a new version of the draft law No. 8410, amending the procedure for environmental impact assessment (EIA) that was previously adopted in the first reading and recommended it for voting in the parliament as a whole.

The European Business Association has actively participated in the work on draft law No. 8410 since its public discussion at the Ministry of Environmental Protection and supported the proposed changes, particularly in terms of the developers’ aim to reduce the duration of the EIA procedure, transition to electronic document flow, and the possibility of continuing the EIA procedure in areas affected by hostilities or adjacent to them, among other aspects.

However, during the preparation of the document for the second reading, the main concerns of businesses regarding the discretionary powers of the authorized body, increased regulation of the procedure, and interference in business activities were not taken into account. Moreover, the business community’s concerns have intensified due to the inclusion of specific new provisions that contribute to further uncertainty in the EIA procedure.

Firstly, the draft law allows the authorized body to deny a company the issuance of an EIA conclusion, giving them the authority to refrain from deciding whether economic activities can be carried out. According to the existing Law No. 2059-VIII on EIA and Directive 2011/92/EU, the authorized body must decide on and assess the feasibility of a specific project, providing appropriate justifications. The option of refusing to issue the document is not provided in the Directive or the existing EIA Law. Moreover, the authorized body’s refusal of an EIA conclusion is considered an EIA legislation violation and can result in penalties for officials. In the case of repeated violations – removal from certain positions or activities for one year. However, according to the data from the Unified Register of EIA and judicial practice, decisions to refuse the issuance of EIA conclusions have been consistently made since at least 2019. But they are often successfully challenged by companies in court. However, the time and resources spent by companies on going through all stages of the EIA procedure and defending their rights in court are not compensated, which further erodes trust in the authorized bodies.

Secondly, attention should be drawn to the reasons for refusing to issue an EIA conclusion. These reasons include (1) non-compliance of submitted documents with environmental legislation requirements and/or requirements of legislation in other areas if such requirements relate to environmental impact (the relevance to the EIA procedure is not entirely clear); (2) violation of disclosure requirements for announcing the commencement of public discussions on the EIA report and/or the publication and accessibility of the EIA report and other necessary documentation; and (3) recognition of public hearings as not taking place due to the absence of the business entity, and its violation of the Procedure for conducting public hearings (although there are often cases when representatives of the authorized body do not attend public hearings). All the mentioned procedure violations in the EIA process can be identified before the authorized body decides on the EIA case. Moreover, they duplicate the general grounds for the non-issuance of a regulatory document – the EIA conclusion. Namely, the submission of an incomplete set of documents by the enterprise and the identification of inaccurate information in the submitted papers.

Therefore, considering the widespread abuse of power by authorized bodies, the lack of accountability for such actions, and, most importantly, the ambiguity in formulating grounds for a refusal to issue an EIA conclusion, the business community perceives significant corruption risks in this new provision and insists on its exclusion. It is advisable to solely reference the grounds for non-issuance of an EIA conclusion as a regulatory document by the legislation on the permitting system in economic activities.

Thirdly, decisions on the inadmissibility of activities (negative EIA conclusion) can now be issued due to established legal prohibitions or restrictions. For example, a mining company acquires a special permit for subsoil use through an auction for a specific area, part of which contains a natural protected area. Subsequently, as required by legislation, the company undergoes the EIA procedure for exploration and drilling, and after a few years, if the activities are successful, builds new facilities within that area, which also requires a separate EIA procedure. This is where difficulties may arise. According to the new provision of Draft Law No. 8410, the authorized body can issue a decision on the inadmissibility of activities, permanently prohibiting the company from implementing its investment project in the area that previously obtained a legitimate permit and invested significant resources. In reality, such an area should not be auctioned off at all. Although the Ministry of Ecology still approves the sale of areas intersecting with natural protected areas or forest lands through electronic auctions conducted by the State Geology and Subsoil Service. This effectively confirms the conducting of economic activities in those areas. Considering the trend of expanding territories and objects subject to special protection regimes, even those mining companies that currently do not have protected area objects in their areas may suddenly find them appearing, and the company will only learn about it retroactively, as the process of coordinating the expansion/creation of protected areas does not require consultation with the business (unless it is the landowner). Therefore, this potentially corrupt position should be excluded from the draft law or modified to allow the authorized body to decide on the admissibility of activities (positive EIA conclusion) with specific environmental conditions.

Fourthly, during the state of war, public hearings for EIA are proposed to be completed via video conferencing.According to the current EIA legislation, public hearings should be conducted by either a contracting organization or the authorized body, including remote territorial communities. However, public hearings may not be performed due to unstable internet coverage or its complete absence, lack of technical equipment, and the need to take shelter during air raid sirens. It is worth noting that since mid-2020, during the quarantine period, public hearings as part of the public discussion process were temporarily suspended, and this did not hinder the EIA procedures or the public’s ability to provide their comments. Therefore, it would be reasonable to continue the public discussion of the EIA report without conducting public hearings until the end of the state of war.

Olga Boiko Industrial Ecology and Sustainable Development Committee Coordinator

The Association is concerned about the situation surrounding the EIA procedure. The proposed changes in draft law No. 8410 have nothing to do with deregulating business activities in Ukraine and also undermine Ukraine’s European integration efforts, particularly in the areas of the rule of law and anti-corruption, which are key steps towards EU membership. In this context, the most optimal solution would be to leave the EIA procedure unchanged altogether.

The business community calls parliamentarians to send the document for further revision and not to support it in its current version.