A Statement Regarding the preliminary coordination of the working draft of the Decree defining the conditions and procedures of establishing artificially created conditions for applications for support by means of the European Agricultural Guarantee Fund and the European Agricultural Fund for Rural Development (22.01.19)

On the occasion of the presentation of a draft working project of the Decree defining the  conditions and procedures for establishing artificially created conditions for applications for support by funds from the EAGF and EAFRD (a draft Decree) in relation to the promulgated in the Official State Journal of Bulgaria, issue 2 of 2018, an amendment to the Agricultural Support Act (ASA) delegating powers to the Minister of Agriculture, Food and Forestry for the issuance of such a statement, we hereby expresses the following opinion:

BAALO supports, in principle, the introduction of a legal framework at national level which, in a clear and tangible way, regulates the procedures for establishing the rules under which the existence of artificially created conditions for obtaining financial assistance by applications for funding by the EAGF and EAFRD, insofar in compliance with EU law in this area is sought and the normal competitive environment and effective management of public funds in the agriculture sector can be guaranteed to a higher extent.

However, we also believe that the draft Decree thus presented does not fully respond to the challenges outlined above, on the contrary, certain provisions create prerequisites for a lack of legal certainty and predictability, both for administrative arbitrariness by the authorities designated as responsible for examining and also for establishing the existence of artificially created conditions.

First of all, we pay attention to Art. 2 text in the draft Decree, where the term “artificially created conditions” is forwarded for reference to the provision of Art. 11, par. 4 of Regulation (EU) 1307/2013, which reads as follows:

“No advantage resulting from the avoidance of reduction in payments shall be granted in favour of farmers in respect to whom it has been established that, after 18 October 2011,  artificially create conditions to avoid its effects”.

We consider that the reference to this text of EU Regulation1307/2013 does not contribute to clarifying the meaning of the term ‘artificially created conditions’. In essence, it clarifies the consequences in case of the already established ones. 

The draft Decree repeatedly uses the term “related” for individuals and companies. We consider that the whole terminology contained in the draft Decree should be unified and the concept of ‘related parties’ should be used all along, thus giving a clear definition of the concept by a direct reference or to a literally quoted definitions of links existing in the current national regulations (Commercial Law, Small and Medium Enterprises Act, Tax and Social Security Code, Law on Corporate Income Tax).

The most significant concerns have been aroused by the draft provisions concerning the indicator system in annexes No1 and No2 of the draft regulation.

Firstly, we believe that the existence of such indicators should not be in legal acts but rather in internal administrative acts regulating at an internal level the functioning of a risk management system.

The introduction of similar indicators in legal acts of general application and the way in which  the actions of the controller have been mentioned in the draft Decree in case of the presence of only one of the many indicators listed, will lead to automation in imposing sanctions on actions done by the beneficiary/s which were exclusively dictated  by objectives related to receiving undeserved advantages by creating artificial conditions that are contrary to the objectives of a specific support scheme or broader EU legislation.

We consider that, with the proposed automation of administrative establishment of artificially created conditions, the least that can be done is to limit the choice the beneficiary has when renting, authorising or concluding a contract with qualified experts administrators or specialists, for the management and delivery or management of other specific activities in the agriculture sector. The indicators thus set would be interpreted at all times in association with and be in assistance to more than two beneficiaries in the same region or locality, their general supplier or the use of the same agronomist, consultant, veterinarian, etc.

We believe that there is a restriction on the choice of consultant on the projects of the EAFRD, consultant-operator related to the proceedings and schemes under “Organic Agriculture”, “Agrarian Ecology” and “Agricultural Land Use”. There is no clear specification as to how the currently proposed indicators will be implemented.

As a serious omission in the proposed draft Decree, we point out the absence of an explicit text to clarify that the presence of one or more of the aforementioned indicators in a given case does not necessarily imply the presence of ‘artificially created conditions’ and that the existence of such should be objectified in an administrative Act which satisfies all legal requirements, that is, to be justified (motivated) in legal and factual terms, subject to administrative and judicial review respectively.