By continuing its rule of law row with Brussels, PiS deprives Polish citizens of the much-needed EU recovery money. But there's a way to fix that- the management of funds could be entrusted directly to local governments. "It is a perfectly legal solution"- says attorney Elżbieta Buczek of law firm Dubois & Partners.
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The European Commission has put Poland’s National Recovery Plan on hold. One of the reasons for this is the recent ruling of the Polish Constitutional Tribunal declaring the primacy of the national constitution over EU treaties.

There is also the problem with Poland’s rule of law breakdown in general. The Court of Justice of the European Union has challenged Poland’s disciplinary regime for judges, asking it to abolish the Disciplinary Chamber of the Supreme Court (along with the removal of the effects of its decisions to date) through statutory changes that would come into force by June 2022 at the latest. The date is to be marked next to the "milestone" in the Polish National Recovery Plan, the achievement of which would be a condition for settling the first advance tranche of EU money. So far, however, the Law and Justice party government has disregarded implementing the interim measures imposed by the CJEU.

The national recovery plans of all EU member states are based on a system of six-year "milestones", e.g. in climate policy or digitization, i.e. indicators checked by the European Commission with the participation of all 27 EU countries. Other than the EUR 23.9 billion euros in non-repayable grants, the recovery budget includes another 12.1 billion in low-cost loans. The first tranche amounts to EUR 3.1 billion, i.e. 13% of the EUR 23.9 billion grants for Poland.

By continuing to its rule of law row with Brussels, the Polish government risks delaying the pay-out of the much-needed EU funds even further. The main losers of this decision, however, would be ordinary Polish citizens. We asked attorney Elżbieta Buczek whether there is another way for Poles to still receive this money and whether it would be legally possible to entrust its management to administrative entities other than the Polish government.

Dominika Maciejasz: In the EU regulation establishing the National Recovery and Resilience Facility instrument we read that the state is the party responsible for the allocation of EU funds. But the target beneficiary, although it is not formally stated in the regulation, are also local governments, among whom the state is to distribute the funds. Do local governments have any legal tools to ensure that they get the money on the basis of the EU regulations?

Elżbieta Buczek, Dubois & Partners law firm: EU Regulation 2021/241 states clearly: member states are beneficiaries. This is in line with the very premise of this document of February 12,  2021. - One must remember why these instruments were created in the first place.

Already in the recitals of the regulation we read that it is about supporting the member states of the European Union, which for the first time is struggling with a crisis of this scale, caused by the SARS-CoV-2 pandemic. Therefore, it is the member states that are given instruments to strengthen the economy that has been damaged by the pandemic. And it is the governments of the individual countries that must develop a strategy for the allocation of these funds - obviously relating to the key issue areas outlined by the EU, such as green transformation, sustainable development, etc.

But let’s remember that our National Recovery Plan, i.e. the Polish document based on the European one, already mentions local governments.

Local governments claim the document marginalizes their role.

The local government sector is supposed to receive EUR 11.233 billion, i.e. 31.2% of the entire National Recovery Fund money. Anyway, on the 500 pages of the document laying out the plan, local governments were mentioned relatively rarely. The voivodeship [Poland’s largest administrative division], on the other hand, is assigned a major role; it is supposed to implement and coordinate investment programs financed from EU funds.

However, the voivodeship is nothing more than a link between the regions and the government.

On the other hand, territorial self-government units - communes, districts - have a whole range of particular tasks and powers. And the European Union recognizes that as well, pointing out that in order to ensure the effectiveness of the program, people with professional knowledge are needed – 1400 people, including supporting institutions. Do only people at the government administration level have such knowledge?

After all, it’s the local leaders who know best what problems their communities have to deal with.

Gminas [primary administrative units] also have a range of specific areas to take care of- from social welfare, health care, environmental protection, education, road construction, waste disposal, to spatial order, such as covering the land with zoning plans. These tasks partially coincide with the premises of the EU regulation.

It's the first time the EU is confronted with a problem on such an expansive scale. It knows that our local governments need financial support to recover from the pandemic-induced damages, but it does not trust a state that blatantly violates EU treaties. Are there any tools that would allow local governments to reach for these funds on their own, bypassing the national government?

The very structure of the European Union is based on a premise of the membership of states. Of course, there are other special regulations governing cooperation at the local level between units, but the primary entity is always the state. And it must spend the EU funds in accordance with the objectives and regulations set by the EU.

However, the very question of distribution of these funds, i.e. which specific entity in Poland should do it, is not regulated by the EU. It does not interfere in the decision, colloquially speaking. It only grants the funds, but the rules and supervision of their spending are left to particular member states.

So, there is a way out.

The state has the exclusive right to obtain funds from the EU within the framework of the "Recovery and Resilience Facility". For local governments, there would have to be some special regulations at the EU level allowing for such a possibility. At the moment, there is no such possibility, local governments are not entitled to represent the state, which is represented by the central administration.

As far as the distribution of funds is concerned, there is room for discussion, especially if one pays attention to the assumptions of the National Recovery Plan and the objectives to be fulfilled by the allocated funds, but it is still at the level of the government administration that decisions are made as to what, to whom, and in what proportion.

Entrusting a larger part of the money to local governments is possible, especially considering that in our legal system local government units have legal personality.

I do not know what it is like in particular EU member states, perhaps there are countries in Europe, where territorial government units do not have this personality. But ours do, and it works to their advantage in this situation.

And if the state is failing to meet EU goals...

It is not only the government administration but also local governments that could dispose of the EU funds through their institutions.

How could this be done?

It would require changes in our internal document, the National Recovery Plan. The implementation form of some reforms or investments would have to be changed. The responsibility for their implementation would have to be shifted onto local administrative units. Of course, practically, this isn’t applicable to all possible areas – local governments would simply not have enough manpower to make it work.

Such changes in our National Recovery Plan would be compatible with the EU regulation.

Who can make such changes?

On the one hand, changes in the National Recovery Plan, which has already been submitted to EU institutions, can be made only by the government. However, it should be kept in mind that even at the stage of preparing the draft plan, the vast majority of proposals made by local governments were not even taken into consideration.

On the other hand, the government is currently working on a draft act on the rules of implementing tasks financed from European funds in 2021-27, the so-called Implementation Act. One of its aspects is precisely transferring the provisions on the National Recovery Plan to national legal acts of statutory rank.

Yet, given that local governments do not have a legislative initiative, and given the current parliamentary makeup, the government has the upper hand here.

Other than local governments, who have no legislative initiative, can anyone else request changes to the National Recovery Plan? The president? Parliamentary opposition?

It is important to distinguish between making changes to the National Recovery Plan document and changes to the implementation law.

In the case of the draft plan that was sent to the EU institutions, it is not a statutory document, so anyone, including the president or parliamentary opposition, can request modifications. The Implementation Act is supposed to transpose the National Recovery Plan into the national legal order - therefore, without changing the allocation rules in the plan, it will most likely not be possible to change them in the Implementation Act itself.


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