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EU legislation

EU legislation

The EU treaties are binding agreements between EU MSs. They set Community objectives, rules for EU institutions, procedures for decision-making and the relationship between the EU and its Member States. Every action taken by the EU is founded on the Treaties.

European integration, the ‘European project’, started with the aim of a shared management of raw materials (European Coal and Steel Community and Euratom, 1951; Hámor, 2002; Hámor, 2004[1]). In spite of this historical evidence, NFNF-energy mineral resources have not been the focus of EU policies and consequently not part of the legal framework of the EU for a long time. However, an integrated European strategy on the secure supply of raw materials, including minerals, had not been established before the Raw Materials Initiative was published in 2008.

The categories and areas of competences of the Union and the MSs are defined in the first articles of the Treaty on the Functioning of the European Union[2] (TFEU) and the Treaty on the European Union (TEU), the two fundamental documents of the EU, recently modified by the Treaty of Lisbon (2009). Raw materials are mentioned in the TFEU indirectly in Article 191(1), emphasising the principle of prudent and rational use of natural resources. However, the principles expressed in the Raw Materials Initiative are now incorporated in several pieces of the secondary EU legislation accepted or amended in the last five years (Concessions Directive, Public Procurement Directive, Utilities Procurement Directive and Environmental Impact Assessment (EIA) Directive).

Derived from the Treaty of Lisbon, the mining legislation is ‘within the full competence of the Member States’. Before the Raw Materials Initiative, EU policies affecting the minerals sector focused on environmental, safety and health, and human rights issues, provisions indicated explicitly in the TFEU.

As a general framework, the TFEU defines a set of important principles and provisions that directly or indirectly affect the functioning of the NFNF-energy extractive industry (NEEI) and have strong effects on permitting in the sector.

Part I, Title I, sets up the general principles and competences. The exclusive competences of the EU relevant to raw materials are the establishment of the competition rules necessary for the functioning of the internal market (Article 3(1)(b)) and the conclusion of an international agreement (Article 3(2)), which is necessary to enable ‘the Union to exercise its internal competence, or in so far as its conclusion may affect common rules’.

Shared competences (Article 4) of relevance are other parts of the internal market legislation (Article 4(2)(a)), as well as the environment, agriculture and common safety concerns in public health matters.

Among other activities of the MSs, industry, administrative cooperation and civil protection are competences that can be supported, coordinated or supplemented by actions of the EU with its competence but, in general, these fields – which also include mineral resource management, permitting and mining legislation – are in full competence of the MSs.

Research and technological development are fields where the EU has competence to carry out activities, in particular to define and implement programmes; however, this shall not result in MSs being prevented from exercising their competences (Article 4(3)).

In Title II, the TFEU establishes generally applicable provisions for defining and implementing its policies and activities, which are reflected in separate EU secondary legislation items: internal market, environmental, nature protection and health and safety legislation.

In accordance with the Charter of Fundamental Rights[3], these generally applicable provisions include, inter alia, the promotion of employment and the guarantee of adequate social protection, a high level of protection of human health (Article 9); high importance of environmental protection (Article 11); nature protection, protection of other living beings and habitats (Article 13); services of general economic interest (Article 14); the right to civil society participation (Article 15) and the right to legal representation for EU institutions and bodies (Articles 20 and 24).

Another set of basic principles are defined in Part III, Title I, of the TFEU, necessary for the functioning of the internal market: free movement of goods (Article 32), freedom of establishment (Article 49), freedom to provide services (Article 56) and free movement of capital and payments between MSs and between MSs and third countries (Article 63), in accordance with the provisions of the Treaties[4].

Under the common rules of competition (Title VII), Articles 101, 102, 106 and 107 set provisions for the competition rules defined as exclusive competences of the EU (see Article 3(1)). These articles are debated frequently and also form the legal grounds for law cases at the European Court of Justice (ECJ). As important rules for the functioning of the EU internal market, these provisions have effects on the permitting of mineral development projects.

Article 101 prohibits cartels and other agreements between undertakings, decisions by associations of undertakings and concerted practices that may restrict or disrupt competition. This principle shall be considered in relation with the sector because of the limited availability of economically viable (or feasible) mineral deposits, especially of high-value minerals such as metallic ores.

Article 102 prohibits any abuse by one or more undertakings with a dominant market position within the EU's internal market. In principle, it needs to be considered in concession tendering, permitting and trade talks, and authorities must prevent any firm from achieving a monopolistic position.

Article 106(1) defines the requirements of MSs when granting special and exclusive rights. The main focus of this article is to maintain national impartiality and support the provisions of Articles 101–109 in granting special or exclusive rights to undertakings or public undertakings in cases falling under procurement processes. Exclusivity of rights to perform exploration and extraction activities is of specific importance for minerals; therefore, this paragraph is highly relevant.

Article 106(1) in combination with Article 102 establishes provisions that prohibit a MS from granting an exclusive right to a firm to enable it to acquire a dominant market position. This issue is considered in the Greek Lignite (brown coal) case (ECJ Case T‑169/08); however, cases from the European NEEI have not yet been identified. Article 106(1), on the other hand, may also be interpreted in a specific way for the permitting processes of the extractive industry. Because of the specific nature of mineral deposits, rights for exploration – except prospection and reconnaissance –and for extraction are also usually exclusive. This article is important for permitting, since security of tenure[5] is one of the principal factors that a mining company takes into consideration during the exploration phase. As presented, the provisions of Article 18 and of Articles 101–109 shall and may also be considered in these cases.

Provisions on state aid are laid down in Article 107. Article 107(1) restricts state aid because it distorts competition. The complexity of Articles 107 and 108 is reflected in the fact that this topic is governed by a specific Regulation[6] concerning what aid may be compatible with the regulations of the TFEU. Some NEEI projects fall into this category (Cases T‑210/02 and C‑487/06P, British Aggregates Association versus the European Commission)[7].

State aid that may be considered compatible with the internal market (exceptions to the prohibitions) is defined in Article 107(3). This includes aid that would promote economic development in areas with abnormally low living standards or high unemployment, or in cases where such aid would promote the execution of ‘an important project of common European interest’. A mineral development project that ‘strongly contributes to the security of supply’ may be interpreted, based on the concepts of the Raw Materials Initiative, as ‘an important project of common European interest’. However, it is not treated explicitly in Regulation No 651/2014 and no jurisdiction case evidence is available as yet.

The approximation (or harmonisation between MSs) of laws, regulations and administrative actions is a strong and general principle laid down in Article 114 of the TFEU. It is referred to in numerous internal market directives (Public Procurement, Concessions, Transparency and Market Surveillance Directives). In addition, the approximation of laws is also a strong requirement in the fields of health, safety, environment protection and consumer protection.

Derogation from provisions in Article 114 is permitted in some cases. Paragraph 5 of Article 114 gives an MS the option of derogation, if, after harmonisation, the MS deems it ‘necessary to introduce national provisions based on new scientific evidence relating to the protection of the environment or the working environment on grounds of a problem specific to that MS arising after the adoption of the harmonisation measure.’

Title X (Social Policy) includes, inter alia, provisions related to occupational safety and health (OSH). Article 153 (Paragraph 1(a)) provides the legal base for instruments in the field of OSH. Under the OSH Framework Directive (89/391/EEC) around 30 individual daughter directives cover the spectrum of health and safety, concerning workplaces and equipment, limitations on exposure to chemical substances, physical hazards and biological agents, as well as sector-specific provisions. According to Paragraph 4, MSs may maintain or introduce more stringent protective measures compatible with the Treaties. Article 156 provides that the Commission shall encourage cooperation between the MSs and facilitate the coordination of their actions in social policy fields, including labour law and working conditions and the prevention of occupational accidents and diseases.

The environmental policy framework is defined in Title XX of the TFEU. Article 191(1) is the only provision that mentions natural resource efficiency as a main policy area in relation to the environment. The ‘prudent and rational utilisation of natural resources’ provides a basis for the concepts of resource efficiency and decoupling of resource use from environmental impacts. In this context, the Darley Energy Poland (DEP) ECJ case[8] (still pending) is relevant. The Polish Minister of the Environment argued that the concession was granted to KGHM Polska Miedź S.A. on the ground that it intended to perform a more extensive set of exploration works (exploring not only the potash salt beds but also the copper and silver bearing beds underneath), resulting in more extensive geological information that would allow resource management in the future that would better benefit society.

Article 191(2) contains the main principles of environmental protection – such as the precautionary principle, the polluter pays principle and the principle of remedy the pollution at source – which are important requirements reflected in the EIA Directive. This is of special importance because the EIA Directive is one of the major instruments in the permitting of new installations and activities.

Article 191(3) establishes that, when preparing its policy on the environment, the EU shall balance environmental and socio-economic objectives and evaluate a no-action alternative. This is aligned with the sustainable development approach that lies at the heart of the Raw Materials Initiative´s second pillar (fostering a sustainable supply of raw materials from European sources). In paragraph 3, it is emphasised that the EU shall consider not only ‘the environmental conditions in the various regions of the Union’ but also the ‘the potential benefits and costs of action or lack of action’ as well as ‘the economic and social development of the EU as a whole and the balanced development of its regions’.

Article 193(3) defines the priority objectives of the environmental policy, which are set out in general framework programmes. The current framework program[9] targets the more efficient internalisation of the external effects of mineral resource extraction. This secures the improvement of the statement of different environmental media (soil, underground and surface waters, and air), while influencing the fiscal conditions of mineral development projects and promoting more investment in abatement technologies.

The Civil protection title (XXIII) includes policies that relate to the Environmental Liability, Extractive Waste and the Water Framework Directives and are directly applicable to the permitting of mineral projects (Article 196). Risk prevention and elaboration of effective systems for preventing and protecting against natural or man-made accidents are the main requirements of this article. Transboundary effects of accidents are to be considered in relation to other MSs or third parties.

[1] Hámor T. 2002: Legislation on mining waste management in Central and Eastern European Countries - Joint Research Centre, Ispra, EUR 20545 EN, 188 p.

Hámor T. 2004: Sustainable mining in the European Union: The legislative aspect – Environmental Management, Vol. 33., pp. 252-261

[2] http://eur-lex.europa.eu/collection/eu-law/treaties.html

[3] Charter of Fundamental Rights of the European Union (2012/C 326/02).

[4] According to Art. 1(2) of TFEU, the TFEU and TEU constitute the Treaties on which the Union is founded. These two Treaties, which have the same legal value, shall be referred to as ‘the Treaties’.

[5] The security of tenure (or title) is one of the key elements of (mining) laws. Such security allows the holder of the permit/licence to have the exclusive right to explore and mine minerals in the area covered by the licence, ensuing that no one else has access to that area for exploration or mineral extraction purposes.

[6] Commission Regulation (EU) No 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market in application of Arts. 107 and 108 of the Treaty.

[7] Other relevant cases (still pending) are T 233/11 and T 262/11 Hellenic Republic, and Ellinikos Chrysos AE Metalleion kai Viomichanias Chrysou v. the European Commission (details on this case are available in Section 7.4.1.5), and the Darley Energy Poland (DEP) v. the Polish Minister of Environment – DEP argued that by extending the concession award period and subsequently granting the exploration concession (for potash in Poland´s northern Baltic coast) to KGHM Polska Miedź S.A., the partly state-owned Polish major mining company, the Minister of Environment concurred in illegal state aid. DEP filed a complaint to the EC concerning illegal state aid in December 2014. The response from the European Commission has not yet been announced. Details on this case are available in Section 7.4.1.5

[8] Darley Energy Poland (DEP) v. the Polish Minister of Environment – DEP argued that by extending the concession award period and granting the exploration concession (for potash in Poland´s northern Baltic coast) to KGHM Polska Miedź S.A., the partly state-owned Polish major mining company, the Minister of Environment concurred in illegal state aid. DEP filed a complaint to the EC concerning illegal state aid in December 2014. The response from the EC has not yet been announced. Details are available in Section 7.4.1.5

[9] ‘Living well, within the limits of our planet', published as Decision No 1386/2013 of the European Parliament and the Council

Jurisdictions of the Court of Justice of the European Union (CJEU)

Case law has a special role in the development of Continental Law and also in the supranational EU Community law, beyond the Common Law, in which it traditionally has a prime role. The judgments of the Court of Justice of the European Union (CJEU) are also relevant for raw materials affairs. There are a few dozen cases related directly to the extractive industry and many more on waste management. The subject of most of these appeals is economic origin (debate on the supply of financial state aid in Cases T‑156/9826[1], T‑50/06, T-359/04, C‑100/16 and C‑15/14P), deferred terms of tax and royalty payments (Cases T‑89/98 and C128/92), the dumping of mining products, exploration tenders and personal affairs (occupational diseases and early retirement schemes for miners), appeals against FP5 funding decisions in mining (Case 231/86) and failure in transposing the acquis on asbestos exposure in mines (Case C‑240/89). Only a few appeals are related to environmental affairs and extraction rights. More cases are related to mineral supply contracts, for example for uranium (Cases C‑357/95 and C‑161/97) or coal (Case C‑128/92).

The relevant cases can be divided into four main categories according to their subject. The first category is mining waste management, the second the question of state aid related to mining activities, the third environmental issues and the fourth legal standing issues. Case C‑304/94 was a preliminary ruling and the main question was the definition of ‘waste’ and whether or not its economic value is relevant (marble waste). The CJEU held that the economic value is not relevant and referred to Article 1 of Council Directive 75/442/EEC on waste. According to this Directive, ‘waste’ means any substance or object (listed in the Annex I of the Directive) that the holder discards, intends to discard or is required to discard.

The CJEU made similar decisions in the Cases C‑9/00 and the Case C‑114/01. In the first case, the Court declared that leftover rocks from a quarry have to be regarded as waste and therefore should be subject to EU waste handing rules. The task of the Court was to clarify the definition of waste for unused quarry stones. In the second case, the Court had to decide whether or not mining activities fall within the scope of the waste definition. As a conclusion, the Court found in both cases that the subject of the cases, namely the leftover rocks and the residual sand, should be classified as wastes. However, backfilled inert rocks are not classified as waste.

In Case C‑6/00, the Court confirmed that the deposit of hazardous waste in a disused mine to secure hollow spaces (mine sealing) does not necessarily constitute a disposal operation for the purposes of the Waste Framework Directive (2008/98/EC). Deposits must be assessed on a case-by-case basis to determine whether or not it is a recovery or a disposal operation for the purposes of the Directive.

The most important cases about state aid are the joint Cases T‑233/11 and T‑262/11. In these cases, state aid was granted by the Hellenic Republic to the mining company Elinikos Chrisos. The EC received a complaint about the two aid measures granted and opened a formal investigation. In Decision 2011/452/EU, the EC declared that the aid was incompatible with the internal market and ordered the Hellenic Republic to recover the aid. The main ground on which the Commission based its decision was the fact that the disputed sale neither offered by open tender nor subjected to an evaluation by independent experts. Subsequently, the Greek government and the mining company issued an action for annulment of the Commission´s decision. The Court dismissed the action but an appeal has been launched and the procedure is still in progress.

Another state aid case was the case C‑15/14 P (European Commission v MOL Oil and Gas Company HU). Although this case concerns energy minerals, the judgment has relevance to the internal market rules and to national legislation with regards to undistorted competition versus exclusive contracts between the government and a licensee. The case is important because it determined the conditions by which a situation shall be classified as prohibited state aid. The verdict determined that, to define a measure as prohibited state aid, it is necessary that the advantage be granted selectively and that it be liable to certain undertakings in a more favourable situation than that of others.

In the Case T‑50/06, the Court also dealt with unduly received state aid. In its judgment, the Court annulled Commission Decision 2006/323/EC concerning the exception from excise duty of mineral oils used as fuel for alumina production. The Court found that exemptions from excised duty can be regarded as state aid within the meaning of Article 87(1) EC-Treaty. Furthermore, the Court ordered the states concerned to take all measures to recover the exemptions from the beneficiaries. Similarly, in Case T‑359/04, the Court annulled Commission Decision C (2004) 1614 of 7 May 2004 not to raise objections to the change in the exemption in Northern Ireland from the levy on aggregates in the United Kingdom.

Among the cases related to the environment, water-related cases are very relevant. The EU water policy declared that polluted water shall attain clean water status and the clean status of the waters shall be maintained. This principle was interpreted by the Court in Case C‑461/13, which determined that MSs are required – unless a derogation is granted – to refuse the authorisation for an individual project if it may cause a deterioration of the status of a body of surface water or if it jeopardises the attainment of good surface water status or of good ecological potential and good surface water chemical status. Therefore, the good water status requirement, considering the Court ruling, may make certain future metallic mineral resource projects extremely costly.

In relation to the issue of legal standing, the judgment of the Court in Case C‑263/08 should be mentioned. The court found that the provision of the Swedish Environmental Code, to require an NGO in Sweden to have at least 2 000 members to have the right for legal standing was dismissed. The reasoning was that only two environmental organisations satisfied this requirement in Sweden and, in this sense, wide access to justice could not be maintained (which is a right granted by the Aarhus Convention).

[1] Specific references to all these cases can be found on the CJEU’s website (http://curia.europa.eu/en/content/juris/c2_juris.htm).

European Commission Communications, and other EU policy documents relevant to the field of raw materials

Definitions

Commission Communication is a policy document with no mandatory authority. The European Commission takes the initiative of publishing a Communication when it wishes to set out its own thinking on a topical issue. A Communication has no legal effect.[1]

Commission Recommendation is a legal instrument that encourages those to whom it is addressed to act in a particular way without being binding on them. A recommendation enables the European Commission (or the Council) to establish NFNF-binding rules for the Member States or, in certain cases, Union citizens.[2]

Green Paper is a consultation document published by the European Commission on a specific topic to prompt reactions from interested circles on a variety of questions. The Commission's aim in publishing a Green Paper is to better determine the future orientations of its policy on the question.

List of European Commission Communications, and other EU policy documents relevant to the field of raw materials, in a historical order starting with year 2000, hyperlinked to Eurlex, the official electronic source of European Community legislation and documents:

European Parliament (EP), European Economic and Social Committee (EESC), and Committee of the Regions (CoR) – Opinions and Resolutions

The European Parliament is the directly elected legislative body of the European Union that acts as a co-legislator, sharing with the Council the power to adopt and amend legislative proposals and to decide on the EU budget. It also supervises the work of the Commission and other EU bodies and cooperates with national parliaments of EU countries to get their input[1].

The Committee of the Regions (CoR) is to represent Europe’s cities and regions. It is an advisory body composed of representatives of Europe’s regional and local authorities. It gives the regions of Europe a say in EU policymaking and checks that regional and local identities, competences and needs are respected. The Council and the Commission must consult the CoR on matters that concern local and regional government, such as regional policy, the environment, education and transport.[2]

The European Economic and Social Committee (EESC) is an advisory body of the European Union. It is a unique forum for consultation, dialogue and consensus between representatives from all the different sectors of “organised civil society”, including employers, trade unions and groups such as professional and community associations, youth organisations, women’s groups, consumers, environmental campaigners and many more[3][4].

Definitions

Opinion: is an instrument that allows the institutions to make a statement in a NFNF-binding fashion, in other words without imposing any legal obligation on those to whom it is addressed. An opinion is not binding. It can be issued by the main EU institutions (Commission, Council, Parliament), the Committee of the Regions and the European Economic and Social Committee. While laws are being made, the committees give opinions from their specific regional or economic and social viewpoint[5].

List of opinions and resolutions with relevance to raw materials:

[1] European Parliament; About Parliament - http://www.europarl.europa.eu/aboutparliament/en

[2] European Commission, 2014, How the European Union works - Your guide to the EU institutions

[3] ibid

[4] To learn more about how the EU works, please refer to the publication by the European Union:

How the European Union works - Your guide to the EU institutions

http://bookshop.europa.eu/en/how-the-european-union-works-pbNA0113090/

[5] https://europa.eu/european-union/eu-law/legal-acts_en

[1] http://ec.europa.eu/civiljustice/glossary/glossary_en.htm#Communication

[2] ibid