On 18 December 2017, the Law of Ukraine "On Environmental Impact Assessment" (the "Law") was put into operation. This aims to improve, through decision-making processes effecting business activities, environmental protection, security and transparency, prevent adverse effects on the environment, and ensure the balance of public and private interests. This Law transposed the requirements of Directive 2011/92/EU of the European Parliament and of the Council of 13 December 2011 "On the Assessment of the Effects of Certain Public and Private Projects on the Environment". Following the adoption of the Law, the Energy Community Secretariat closed the case against Ukraine related to the improper transposition of the Directive undertaken by Ukraine within the framework of its membership of the Energy Community.
The new Law introduces mandatory environmental impact assessment (the "EIA"), which replaces the ecological examination (expertise) procedure. EIA extends to a broad range of business activities, and, importantly, the Law establishes the general procedure of EIA with fixed timelines, involving public consultations and subject to publication of all key documents relating to EIA, in an online, publicly accessible register.
However, broad discretion is vested in decision-making authorities, and heavy sanctions are envisaged, raising concerns about potential abuses and adverse effects on business operations. Secondary legislation required to ensure the proper implementation and application of the Law is being under preparation, and much would depend on how this would evolve.
EIA will be mandatory for a broad range of business activities
The EIA will be mandatory for a broad range of business activities and facilities which are grouped by the Law into the following categories:
(1) "First category", including: gas and oil refineries; thermal power stations; facilities for the production, enrichment and utilisation of nuclear fuel; ferrous and non-ferrous metallurgy facilities; certain types of chemical production; construction of airports, certain types of roads, main railways of general use, hydraulic structures of sea ports, dams and husbandry facilities; facilities on handling hazardous waste, as well as household or other waste with the volume of 100 tons per day or more; extraction of oil and natural gas on the continental shelf; construction of gas pipelines with a diameter of 0.8m or greater and over 40 km in length; and aerial electricity lines with a voltage of 220kV or more and over 15 km in length; and
(2) "Second category", including: deep drilling; certain agriculture and infrastructure projects; forestry and water management projects; certain mining and extraction industries; raw material processing; hydropower plants; wind power plants with two or more turbines or where their height is 50m or more; metal production and processing plants; chemical plants; and food and textile plants, etc.
The Ministry of Ecology and Natural Resources of Ukraine (the "Ministry") should issue opinions on EIA for the first category of activities. Also on the first category, applicants are required to check whether there are grounds to undertake transboundary EIAs of the activity contemplated. Environmental departments of local state administrations should issue opinions on EIA for the second category.
EIAs should be carried out prior to the issuance of any permits authorising relevant activity; conclusions and other results of EIA сan be used during 5 years for the purpose of obtaining other permits required for such activity.
EIA is not required for the facilities which passed the state ecological evaluation
An EIA is not needed where an entity obtained a conclusion of the state ecological evaluation – under the procedures previously in force – before the enactment of the Law.
However, an EIA will be necessary in the event of reconstruction, modernisation, capital repairs, expansion or technical re-equipment of those existing facilities which fall under the category of objects subject to an EIA, except where this does not have significant effects on the environment according to the criteria remaining to be determined by the government.
Business activities can be temporarily suspended or terminated if not compliant with the EIA
A failure to comply with the legislation on EIAs can result in the temporary suspension or termination of business activities. Such suspension or termination can only be made on the basis of a court decision upon the submission of a competent state body, or any other party, whose rights or interests are violated.
The general grounds for termination of business activity of a company or its separate divisions or production units are the following: (i) carrying out activity without an EIA, where such EIA is required; and/or (ii) systematic breaches in the field of an IEA which cannot be rectified or eliminated for technical, economic or other causes.
Notably, the Law does not establish an exhaustive list of grounds for the application of the above sanctions, nor does it set any criteria for a systematic nature of breaches (e.g., frequency or number) or differentiate between instances when the entire business activity or activity of a division or a production unit should – or should not – be terminated. An absence of legislative guidance on the above issues leaves room for the discretion of public bodies, and may result in abuses and adverse effects on businesses.
EIA will be a complex multi-stage process involving public consultations
Importantly, the Law sets out the general procedure of EIA and establishes fixed timelines for the major stages of the procedure. EIA takes the form of a multi-stage procedure, which can be summarised as follows:
(a) An entity should notify a relevant authority of a contemplated activity which is subject to IEA, and it should prepare and submit a detailed report on EIA to that authority.
(b) Public consultations should be conducted during the 25-35 working days following publication of a report. The government set out the procedure for public consultations. The results of public consultations should be shown in a report issued by a relevant authority.
(c) Within 25 working days following the public hearings, a competent authority should issue a conclusion on EIA; this is at no charge to an applicant. The results of public consultations are not mandatory, but they are considered by an authority during the preparation of a conclusion. A conclusion is mandatory for an applicant; it can prohibit or allow certain activity, as well as establish environmental conditions and restrictions on the activity sought by an applicant. The above time limits for the issuance of a conclusion on EIA do not apply to those procedures where transboundary effects are assessed, and the Law does not determine any fixed timelines for transboundary EIA procedures.
If an entity wants to change design documentation, it is necessary to undertake the entire procedure again.
Post-project monitoring can be required to be carried out
A conclusion on EIA can impose post-project monitoring obligations on an entity. The Law does not specify any conditions when this is necessary, nor does it provide any criteria, guidelines or procedures for carrying out such monitoring. Hence, a decision is left entirely to the authority issuing an opinion on EIA.
Based on the outcome of post-project monitoring, additional measures can be imposed on an entity with a view to preventing or limiting adverse effects of its activity on the environment. In addition, where new significant effects are found and which were not previously considered during when conducting a EIA, such activity should be terminated upon a court decision, and (again) a new procedure for EIA should be launched.
A unified register enables public online access to information on EIA through Internet
A new Unified EIA register is established administered by the Ministry, which will contain information on all notifications, reports, conclusions, decisions and other information related to EIA. This register is open to the public and accessible online.