An obligation of the state environmental monitoring risks to be put on business in Ukraine

11/ 08/ 2022

This is how you can briefly characterize draft law No. 7327 on the state environmental monitoring system. On July 8, the Verkhovna Rada did not support the document, sending it for revision for a second first reading. And already on July 28, the VRU Committee on Environment approved the new version which has practically not undergone any changes. Firstly, European directives envisage that provision, publication, and updating of environmental information are primarily performed by state authorities at various levels, as well as individuals and legal entities performing public administration functions in accordance with current legislation. Companies can be involved in the collection of environmental information that they possess as part of their activities, and provide it in a consolidated form on a periodic basis or upon request. These include data on discharges into water bodies, emissions of pollutants into the air, generation and management of waste, etc. Business already submits such information to various authorities in the form of reports under current legislation. Meanwhile, draft law No. 7327 obliges all enterprises to monitor the state of the environment or its components on an ongoing basis. Subsequently, such information may be classified as information needs for environmental protection management and transferred free of charge to the Ministry of the Environment. And information needs, as interpreted by the draft law, are the basis for the formation and functioning of the state environmental monitoring system and its subsystems, as well as the implementation of state statistical activities. Therefore, it is not without reason that there are fears that environmental monitoring functions, which should be performed by the state, may be assigned to businesses by default. Secondly, according to the current legislation, the financing of the state environmental monitoring system and its subsystems is carried out at the expense of state and local budgets. In 2021, the Cabinet of Ministers even approved the State Targeted Environmental Program for technical re-equipment of the hydrometeorological service with 308.6 million hryvnias from the state budget. The program provides for atmospheric air monitoring stations to be automated by 2022-2024. Taxes and payments of companies make up a significant share of such revenues, that is, business de facto already contributes to monitoring. Besides, eco-tax funds may be spent on the needs for environmental monitoring. From 2017-2021, businesses paid 27 billion hryvnias of eco-taxes to the budgets of various levels, but modern automated atmospheric air monitoring systems were installed with state funds only in the Kyiv and Dnipropetrovsk regions. Therefore, it would be expedient to establish the financing of the state environmental monitoring system, taking into account the possibilities already provided for this. Thirdly, monitoring the state of the environment on an ongoing basis requires significant additional resources and costs. For example, the cost of one atmospheric air monitoring station with an automated system for collecting and transmitting environmental data starts at 5.6 million hryvnias at the current exchange rate. And since they are not produced in Ukraine, and they need to be imported, the price can be even higher. Besides, monitoring other components of the environment also requires the involvement of relevant specialists, which can significantly affect the financial situation of companies. Thus, additional pressure is created on businesses and interference in their economic activity. Besides, the draft law contains other provisions that do not correspond to the European approach to state environmental monitoring: Empowering the State Environmental Inspection to use information from the state environmental monitoring system for prompt response to threats or events that may have a negative impact on the environment. This may create additional conditions for preventive inspections of enterprises. Expanding the scope of inspections of the State Geotechnical Inspectorate to the protection and use of subsoil actually duplicates the current powers of the State Geological Survey. The ban on classifying environmental information as confidential contradicts both the Aarhus Convention and current national legislation, which guarantees companies the right to refuse to provide information that may constitute a commercial secret or contain a component of intellectual property and affect the protection of their economic interests. Olga Boiko. EBA Industrial Ecology and Sustainable Development Committee Coordinator. During almost 6 months of the war, business is making great efforts to support the country′s economy. As of the beginning of August, according to public data, it was taxpayers, that is, companies, who contributed the most to the budget - by UAH 444.7 billion. And this is not taking into account the constant voluntary support of the military of the Armed Forces and the Ministry of Defense, medical institutions and internally displaced persons, etc. Business believes in Ukraine, in our victory, and is already preparing investment projects for post-war recovery. And at the same time, it hopes for constructive cooperation with state bodies in terms of deregulation and joint efforts in creating favorable conditions for increasing the investment attractiveness of Ukraine as a candidate for EU membership. Such conditions include, particularly, a balanced approach to the distribution of obligations in the field of environmental protection. Therefore, the European Business Association calls on the MPs to revise draft law No. 7327 in accordance with the proposals of the business community, in order to jointly create a document that would help transparent businesses to continue their work.

Firstly, European directives envisage that provision, publication, and updating of environmental information are primarily performed by state authorities at various levels, as well as individuals and legal entities performing public administration functions in accordance with current legislation. Companies can be involved in the collection of environmental information that they possess as part of their activities, and provide it in a consolidated form on a periodic basis or upon request. These include data on discharges into water bodies, emissions of pollutants into the air, generation and management of waste, etc. Business already submits such information to various authorities in the form of reports under current legislation.

Meanwhile, draft law No. 7327 obliges all enterprises to monitor the state of the environment or its components on an ongoing basis. Subsequently, such information may be classified as information needs for environmental protection management and transferred free of charge to the Ministry of the Environment. And information needs, as interpreted by the draft law, are the basis for the formation and functioning of the state environmental monitoring system and its subsystems, as well as the implementation of state statistical activities. Therefore, it is not without reason that there are fears that environmental monitoring functions, which should be performed by the state, may be assigned to businesses by default.

Secondly, according to the current legislation, the financing of the state environmental monitoring system and its subsystems is carried out at the expense of state and local budgets. In 2021, the Cabinet of Ministers even approved the State Targeted Environmental Program for technical re-equipment of the hydrometeorological service with 308.6 million hryvnias from the state budget. The program provides for atmospheric air monitoring stations to be automated by 2022-2024. Taxes and payments of companies make up a significant share of such revenues, that is, business de facto already contributes to monitoring. Besides, eco-tax funds may be spent on the needs for environmental monitoring. From 2017-2021, businesses paid 27 billion hryvnias of eco-taxes to the budgets of various levels, but modern automated atmospheric air monitoring systems were installed with state funds only in the Kyiv and Dnipropetrovsk regions. Therefore, it would be expedient to establish the financing of the state environmental monitoring system, taking into account the possibilities already provided for this.

Thirdly, monitoring the state of the environment on an ongoing basis requires significant additional resources and costs. For example, the cost of one atmospheric air monitoring station with an automated system for collecting and transmitting environmental data starts at 5.6 million hryvnias at the current exchange rate. And since they are not produced in Ukraine, and they need to be imported, the price can be even higher. Besides, monitoring other components of the environment also requires the involvement of relevant specialists, which can significantly affect the financial situation of companies. Thus, additional pressure is created on businesses and interference in their economic activity.

Besides, the draft law contains other provisions that do not correspond to the European approach to state environmental monitoring:

Empowering the State Environmental Inspection to use information from the state environmental monitoring system for prompt response to threats or events that may have a negative impact on the environment. This may create additional conditions for “preventive” inspections of enterprises.
Expanding the scope of inspections of the State Geotechnical Inspectorate to the protection and use of subsoil actually duplicates the current powers of the State Geological Survey.
The ban on classifying environmental information as confidential contradicts both the Aarhus Convention and current national legislation, which guarantees companies the right to refuse to provide information that may constitute a commercial secret or contain a component of intellectual property and affect the protection of their economic interests.

Olga Boiko EBA Industrial Ecology and Sustainable Development Committee Coordinator

During almost 6 months of the war, business is making great efforts to support the country′s economy. As of the beginning of August, according to public data, it was taxpayers, that is, companies, who contributed the most to the budget - by UAH 444.7 billion. And this is not taking into account the constant voluntary support of the military of the Armed Forces and the Ministry of Defense, medical institutions and internally displaced persons, etc. Business believes in Ukraine, in our victory, and is already preparing investment projects for post-war recovery. And at the same time, it hopes for constructive cooperation with state bodies in terms of deregulation and joint efforts in creating favorable conditions for increasing the investment attractiveness of Ukraine as a candidate for EU membership. Such conditions include, particularly, a balanced approach to the distribution of obligations in the field of environmental protection.

Therefore, the European Business Association calls on the MPs to revise draft law No. 7327 in accordance with the proposals of the business community, in order to jointly create a document that would help transparent businesses to continue their work.