Appendix No. 1: Detailed description of the legislative proposals, their practical and legal impact

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1 Appendix No. 1: Detailed description of the legislative proposals, their practical and legal impact In this Appendix No. 1, we summarise the legislative proposals and their potential impact on access to justice and the courts and publics ability to control large investment projects. 1. Proposal for amendment of the Administrative Procedure Code 1.1. On 1 June 2017, members of the ruling party (GERB) submitted a proposal to the Bulgarian Parliament to amend the Administrative Procedure Code (APC) under No (the APC Proposal). 1 On 22 June 2017, the APC Proposal was adopted at first reading in plenary. Appendix No.2 to this letter provides an English translation of selected provisions of the APC Proposal. The key features of the ACP Proposal for the purpose of this letter are as follows: The APC Proposal envisages significant fee increases for cassation appeals, as follows: A standard fee of 90 leva (approximately EUR 45) will be imposed for citizens, sole proprietors, state and municipal bodies and a fee of 450 leva (approximately EUR 225) will be imposed for organizations. 2 For certain categories of court cases, which are considered to have value of the claim that may be determined such as cases concerning environmental impact assessment (EIA), tax disputes, public procurement and competition disputes, appeals against concessions for exploitation of natural resources etc., the court fee shall be one percent of the value of the claim, but no more than 3,400 leva (approximately EUR 1,700). For court cases with value of the claim above 10,000,000 leva (approximately EUR 5,000,000), the fee is 9,000 leva (approximately EUR 4,500). In cases concerning EIA, the value of the claim shall be the value of the investment proposal or the value of the expansion or amendment of the investment proposal, for which EIA is required. In cases concerning concessions for exploitation of natural resources, the value of the claim shall be the higher of the projected value of the investment and the estimated income from the concession for the concession period. The court may waive any of the above fees for citizens, who do not possess enough funds to pay it The APC Proposal also aims to restrict certain administrative acts to first instance court review, therefore the decision of the court of first instance is final. These administrative acts are as follows: Plans for management of conservation areas including national and environmental parks, reserves and nature landmarks (the APC Proposal suggests the necessary amendments to the Law on Protected Areas). 3 Resolutions for change of the designation of agricultural land for non-agricultural purposes (the APC Proposal suggests the necessary amendments to the Law on Protection of the Agricultural Land). 4 1 Administrative Procedure Code, Promulgated in State Gazette No. 30 of 11 April 2006, in legal effect since 12 July 2006, last amendment in State Gazette No. 63 of 4 August APC defines organization as a legal entity or an association of legal or natural persons that is organisationally constituted based on a law. 3 Law on the Protected Areas, Promulgated in State Gazette No. 133 of 11 November 1998, last amended in State Gazette No. 58 of 18 July Law for Protection of the Agricultural Lands, Promulgated in State Gazette No. 35 of 24 April 1996, last amended in State Gazette No. 58 of 18 July 2017

2 2. Proposal for amendment of the Environmental Protection Act (the EPA Proposal) 2.1. A proposal for amending the Environmental Protection Act (EPA) was submitted to the National Parliament on 11 July 2017 under No This proposal relates to investment proposals for large-scale infrastructure projects that are classified as objects of national importance, including the extension and amendments of such projects. The amendments envisage that for such projects: decisions of the court of first instance are final; and any appeal procedure shall be terminated within six months from submission of the appeal The EPA Proposal envisaged identical amendments to the Biological Diversity Act (BDA) 6 with regards to appealing decisions that relate to assessments carried out in accordance with Article 6, paragraph 3 of the Habitats Directive. Such assessments determine whether a plan or projects will be likely to have a significant effect on the conservation objectives of a site Development of the EPA Proposal has been as follows: On 11 July 2017, the draft law was submitted to the National Parliament. On 19 July 2017, the draft law was adopted at first reading in plenary. On 27 July 2017, the draft law was adopted at second reading in plenary. On 7 August 2017, the President imposed a veto on the draft law. The EPA Proposal was processed very quickly and without participation of the public, 7 therefore, it was not given the required consideration. Following the veto by the President, the National Parliament shall vote on the draft law again. If the law isadopted, it shall be promulgated in the State Gazette and enter into legal effect. 3. Practical consequences of the increased fees for cassation appeal (APC Proposal) 3.1. The APC Proposal provides for significant increase of the court fees for cassation appeal of administrative acts. Currently, the fee for appeal to the court of first instance is 10 leva (approximately EUR 5) for natural persons and non-for-profit organisations, and 50 leva (approximately EUR 25) for other entities. The fees for cassation appeal, which is also the second and final court for review for administrative acts in Bulgaria, is 50% of the above fee for appeal before the court of first instance The fee increases would be a substantial bar to appealing administrative acts. Generally, there are three groups of stakeholders in EIA cases: the investor, the public body issuing the EIA resolutions and third parties (individuals, environmental NGOs). Practice shows that only investors will be able to afford court fees at the increased rate. The public bodies responsible for EIA have limited budgets and often face difficulties securing court expenses. The general public and non-for-profit organizations, whose budgets are based on donations and project funds, would struggle to afford the increased fee. This situation would violate the principles of fair trial and procedural equality of the parties The increased fee for cassation appeal of certain acts of the administration will be calculated on the so-called value of the claim (in Bulgarian: материален интерес). This principle is well developed in disputes between private parties, where court fees are a percentage of the value of the rights claimed. Calculating fees based on the value of investment proposals only reflects the value of the 5 Environmental Protection Act, Promulgated in State Gazette No. 91 of 25 September 2002 г, last amended in State Gazette No. 58 of 18 July Biological Diversity Act, Promulgated in State Gazette No. 77 of 9 August 2002, last amended in State Gazette No. 58 of 18 July The Ordinance of the Bulgarian National Parliament provides the right to NGOs and members of the public to give positions on all legislative proposals.

3 disputed rights for the investor and the concessionaire. It is important to note that there is no mechanism in place for assessment of the value of the claim. As consequence, the court will have no prerogative to check the correctness of the investor s claim. In addition, there is no sanction against a possible misuse with the right of the investor to determine the value of the claim. In any event, this high fee will have to be paid by local communities if they want to challenge developments in their local area that may have significant adverse effects on the environment The high fees for cassation appeal will also be a de facto bar to complaints at first instance. In practice, a party has no certainty whether the court case will be subjected to cassation appeal by the other party. In the event of an unfavourable decision, court expenses (including court fees for cassation appeal) will be awarded against the losing party, irrespective of whether it brought the case before the court of second instance. The legislative proposal does not suggest measures to remedy this risk. 4. Practical consequences of the single-instance court review for certain administrative acts and termination of the procedure within six months from submission of the appeal (EPA Proposal) 4.1. The EPA Proposal significantly weaken the courts control over projects of national importance. Under Bulgarian law, projects are determined to be of national importance by means of a resolution of the Council of Ministers. In practice, a large number of investment projects have been classified as objects of national importance without clear criteria followed in the decision-making process (Appendix No. 3 lists projects that have been classified as objects of national importance in recent years). Not only is there no legal criteria for how a project could be categorised as an object of national importance, but resolutions of the Council of Ministers for doing so cannot be appealed before court. The suggested amendments would significantly increase the powers of the Government to decide whether certain projects will be subjected to a procedure of weakened control for enforcement of the environmental standards by the court and the public. This is a move in the opposite direction to the milestones set under the Cooperation and Verification Mechanism for Bulgaria and Romania which promote the independence of the judicial system The EPA Proposal could affect the fair competition between the State and private business as investors. The State is an investor in most infrastructure projects. The Government can give State-run projects an advantage by classifying them as objects of national importance. In addition, the prerogative of the Council of Ministers to classify a project as one of national importance has potential to trigger corruption. It is easy to imagine a situation where a private investor will be ready to pay money for their project to be fast tracked. Passing such law may impede Bulgaria s ability to adhere with its milestones relating to the prevention of corruption under the Cooperation and Verification Mechanism for Bulgaria and Romania Many projects classified as objects of national importance (Appendix No. 3) are infrastructure projects listed in Annex I to Article 4, paragraph 1 of EIA Directive (2014/52/92). If the EPA Proposal enter into law, projects that may have major environmental impacts will be subjected to one court review only. This breaches the principle of environmental law as enshrined in the environmental impact legislation of the European Union (EU), according to which projects with more substantial environmental impact shall be subjected to scrutiny that is more rigorous The EPA Proposal envisage the decision of the court of first instance to be final and the court procedure to terminate within a six-month period. Imposing a time limit for closure of the court procedure is at odds with the general principles of administrative law, such as the principles of lawfulness and truthfulness. EIA cases are usually closed within a period of a year and a half to two years before the court of first instance. At the present moment, courts react positively to any request from the parties to deal with EIA proceedings quickly, usually scheduling hearings at the nearest

4 possible date and final decisions are taken shortly after the last court hearing. This happens at both the first and the cassation court instance The legal consequences of a court procedure terminating within six months of lodging an appeal are unclear. Adoption of such a legal provision may be interpreted as an obligation of the court, which may face the risk of sanction in the event the court procedure takes longer. The principle of timely procedure cannot take priority over the principle of lawfulness In addition, a Court has a duty under Article 8 of the EIA Directive (2014/52/92) to ensure it has the appropriate information it needs to make an informed decision. Recital 34 to the EIA Directive provides context to this, explaining that with a view to ensuring transparency and accountability, the competent authority should be required to substantiate its decision to grant development consent in respect of a project, indicating that it has taken into consideration the relevant information gathered Practically speaking, in EIA litigation, if the court decides to check the findings of the EIA or reports under Article 6 of Habitats Directive, necessary data collection often can only be collected at certain times of the year. For example, migration of birds can only be observed and studied in spring and in late summer; research of whether plant species are available at a site can only be done in the vegetation period of the species in question (spring and early summer); air pollution in winter (especially in places where temperature inversions are observed) can only be established in the cold months of the year. In many instances, the requirement to terminate the procedure within six months from submission of the appeal will have the consequence that authorities and courts cannot base their decisions on the appropriate information and will be in breach of the EIA Directive. 5. Violations of the applicable law of the European Union and the Constitution of the Republic of Bulgaria It is recognized that the effective justice systems of the Member States play a crucial role in upholding the rule of law and the fundamental values of the EU, as well as in ensuring effective application of EU environmental law. 8 The suggested amendments would significantly limit access to justice in environmental cases and threaten the quality of the courts control over the environmental impact of larger number of acts of the administration The European Convention of Human Rights (ECHR) and the Charter of Fundamental Rights of the European Union Article 47 of the Charter of Fundamental Rights of the European Union (the Charter), as well as Article 6 and Article 13 of the European Convention on Human Rights (ECHR) enshrine the right to a fair trial and the right to an effective remedy. In a number of its rulings, the European Court of Human Rights has dealt with the compatibility of charges for judicial review with these rights In Weissman and Others v. Romania, No /00, 2006, the court ruled that a fee, defined as a percentage of the value of the claim violates Article 6 of the ECHR. The court emphasized that limiting access to court is compatible with the ECHR only if it pursues a legitimate aim and if there is a reasonable degree of proportionality between the means used and the aim pursued: that the amount of the fees, assessed in the light of the particular circumstances of a given case, including the applicant s ability to pay them and the phase of the proceedings at which that restriction has been imposed, are factors which are material in determining whether or not a person enjoyed his 8 Communication from the Commission of , Commission Notice on Access to Justice in Environmental Matters Brussels, C(2017) 2616 final

5 or her right of access to a court or whether, on account of the amount of fees payable, the very essence of the right of access to a court has been impaired (Para. 37) In the case of Kreuz v. Poland (28249/95), the court found that a fee equivalent to the average annual salary for the country is significant for the plaintiff and violates the ECHR. The amount of the fee in the proposed amendment to the APC is up to 9,000 leva (approximately EUR 4,500), which is equivalent to nearly 20 times the monthly minimum wages and nearly 9 times the monthly average wage for the country The Aarhus Convention The increase in court fees in the APC Proposal would be prohibitively expensive according to Article 9, Paragraph 4 of the Aarhus Convention, which has been incorporated into EU law through Article 3(7) of the Public Participation Directive 2003/35/EC (PPD) Both the Aarhus Convention and the PPD states that review procedures before a court of law shall be fair, equitable, timely and not prohibitively expensive When assessing whether a fee regime is prohibitively expensive, the Aarhus Convention Compliance Committee (in its findings in C-57/Denmark) has determined that: the following aspects of the system as a whole to be particularly relevant: a) the contribution made by appeals by NGOs to improving environmental protection and the effective implementation of the Danish Livestock Act: b) the expected result of the introduction of the new fee on the number of appeals by NGOs to the NEAB; and c) the fees for access to justice in environmental matters as compared with fees for access to justice in other matters in Denmark. (Para.48) As it is likely that a similar decision would be reached in similar communications in the future, it is relevant to point out that none of the legislative proposals were preceded by an assessment as to whether the new fees regime would be prohibitively expensive in light of the criteria formulated by the Aarhus Convention Compliance Committee in C-57/Denmark In line with the formula outlined above, firstly, Bulgarian environmental NGOs (ENGOs) have contributed to improving environmental protection on countless occasions. Over the past ten years since Bulgaria became member of the EU a number of violations of the environmental acquis communautaire have been brought to the attention of European and international authorities by ENGOs. The successful lawsuit of the European Commission in Case C-141/14 of the CJEU was triggered by a complaint of the Bulgarian Society for the Protection of Birds. Similarly Bulgarian ENGOs succeeded to prove that Bulgarian authorities failed to comply with a number of provisions of the Aarhus Convention Secondly, authors of the APC Proposal have declared (in their justification (reasons) to the legislative proposal) that the aim for increasing court fees is to reduce the number of cases brought before the Supreme Administrative Court by ENGOs. One of the main arguments for increasing the value of cassation court fees is stated to be that: Introduction of higher court fees will prevent [claimants] from misusing their right to appeal and from asking the cassation court many times to deal with the same subject and in contradiction to the res judicata principle. 9 See the findings of the Aarhus Convention Compliance Committee in C-58/Bulgaria and in C-76/Bulgaria; the findings in C-58/Bulgaria have been supported by MOP decision V/9d.

6 No evidence has been provided that any EIA cassation court appeal has misused the right to appeal, nor is there any evidence of a situation where the cassation court has had to deal with the same subject in violation of the res judicata principle. The idea that a correct implementation of the principle of res judicata can be achieved via introduction of prohibitively high court fees is objectionable Thirdly, in some instances, the proposed fees may be too high to allow access to justice in other matters, in addition to matters concerning EIAs. According to the authors of the APC Proposal, the value of the claim for EIA cases amounts to the cost of construction of an investment proposal. Thus, for the first time in administrative justice matters parties, authorities and affected parties such as ENGOs and citizens are required to pay proportionate court fees until now proportionate court fees were only paid by parties to civil court procedures. It is also to be noted that in similar matters where public interests are involved such as consumer rights, administrative court procedures or cassation procedures where Industrial Emissions Permits are appealed, court fees remain unchanged. Surprisingly the highest amount of cassation court fee in appeal procedures against decisions of the Commission on Protection of Competition is set at 8000 levas (approximately EUR 4,000), while the analogous fee in EIA court procedures is 9000 levas (approximately EUR 4,500). Thus, a court fee in cases where only private interests are involved may turn out to be lower than a court fee in EIA cases where a variety of interests of the public concerned are at stake In appeals to acts of the administration, Bulgarian law requires the court to award the costs incurred by the winning party to the losing party. The APC Proposal provides mechanism for waiver of the fee for cassation appeal only for individuals. This means that environmental NGO-s will be fully exposed to the risk of being awarded prohibitively high court expenses. This is contrary to the EU environmental law and the Aarhus Convention, which provides for facilitated access to justice to environmental NGO-s as representatives of public interest on environmental cases It is to be noted that in Bulgaria there is no domestic legal provision that implements the obligation in Article 3, paragraph 4 of the Aarhus Convention: Each Party shall provide for appropriate recognition of and support to associations, organizations or groups promoting environmental protection and ensure that its national legal system is consistent with this obligation. Thus, ENGOs are left without State support when court and attorneys fees must be paid To conclude, the APC Proposal fails to meet the standard of Article 9, paragraph 4 of the Aarhus Convention with respect to costs [court fees] not being prohibitively expensive The Constitution of the Republic of Bulgaria Article 56 of the Constitution proclaims the right of every citizen to legal protection when his / her rights or legitimate interests are violated or threatened. The Constitutional Court has already had the opportunity to rule on disputes concerning court expenses. The Constitutional Court has stated that excessively high fees, which would make it difficult or impossible to appeal against administrative acts, violate the rights of legal protection as promulgated by the Constitution The APC Proposal will limit the ability of citizens and organizations to appeal the acts of administration before court. The case law of the constitutional court requires the legislative proposal to be assessed in the light of Art. 120, para. 2 of the Constitution and in particular with the test introduced by resolution of the Constitutional Court, according to which certain acts may be excluded from judicial review "in exceptional cases and subject to the requirements of proportionality, including international mandatory standards for access to judicial protection". 11 The stated motivation for the APC Proposal, 10 Decision No. 5 of 17 April 2007 on constitutional case No. 11/ Resolution of the Constitutional Court No 14 of 4 November 2014 on constitutional case No. 12/2014

7 namely to prevent "abuse of the right to complain" and "repeated referral of the same matter solved by judgment" do not meet these requirements and do not comply with international standards for access to justice (and in particular the ECHR and the Aarhus Convention).