The Government offers its vision of the algorithm for creating a National Commission for State Regulation of Transport. Experts say its approach can be very risky

At the meeting on January 12, the Cabinet of Ministers approved amendments to the Law “On Transport” (hereinafter — the draft law) that determine the legal and organizational basis for the creation and operation of the National Commission for State Regulation of Transport (hereinafter — the NCRT).

Since the beginning of the newly elected Verkhovna Rada’s work, several draft laws “On the National Commission for State Regulation of Transport” have been developed. In particular, these are the draft laws developed by the government, MPs, and BRDO experts. However, it is the MPs’ draft law #3927 that was registered.

The biggest issue for both the previous draft laws and the draft law approved by the Cabinet of Ministers as amendments to the Law of Ukraine “On Transport” is the independence of such a regulator. Actually, the creation of one more CEB was envisaged, and therefore it is logical to ask: for what purpose? What is the feasibility of one more body if it is politically motivated and lacks independence? 

By the way, BRDO experts have repeatedly published analytical materials and recommendations on how to ensure the independence of the body in the current legislative environment.

Regulations on the National Commission, the maximum number of its employees are approved by the President; it is subordinate to the President; the Chairman and members of the commission are appointed by the President

Such provisions are unconstitutional, as the powers of the President and the Verkhovna Rada are clearly defined in the Constitution of Ukraine. Additional empowerment enshrined in the laws is unacceptable, and the Constitutional Court of Ukraine has repeatedly emphasized this fact in its decisions:

#5-r / 2019 of 13.06.2019 (Decision in the case of the National Commission for State Regulation of Energy and Public Utilities);

#21-rp / 2008 of 08.10.2008 (Decision in the case of the National Commission for State Regulation of Communications of Ukraine).

Unconstitutional provisions in the draft law threaten the stable functioning of the NCRT and allow blocking the work of the body at any time. Therefore, we propose to bring such provisions in line with the Constitution.

Lack of independence of the body in decision-making

Following Directive 2012/34/EU and the recommendations of the Organization for Economic Co-operation and Development (hereinafter — the OECD), a national transport regulator should be an independent (stand-alone) authority which is, in organizational, functional, hierarchical, and decision-making terms, legally distinct and independent from any other public (government) or private entity.

This draft law currently contains provisions that completely undermine the independence of the body:

regarding the election of the chairman and members of the body,

decision-making, approval, and registration of acts

financing of the NCRT from the State Budget

Additional risks: Unpredictability of regulation for business. The draft law contains some provisions that do not comply with the principle of legal certainty and do not allow to predict the consequences of regulation, in particular:

Unclear provisions that allow avoiding public discussion of a regulatory act

There is no liability for non-compliance with the requirements of the Regulator by business owners, there is no provision (it is not specified) for the personal liability of Regulator’s members.

The adoption of the law with unconstitutional provisions involves the risk for the operation of the newly created body to be partially or completely blocked by the Constitutional Court at any time.

The lack of sufficient guarantees of the independence of the body and its members following the requirements of the Directives carries the risk that no impartiality and fairness of regulation will be ensured.

BRDO experts have drafted a law that not only eliminates the gaps of draft law #3927 in terms of unconstitutionality and non-compliance with European obligations but also offers much more guarantees for the sustainable, uninterrupted functioning of the independent and professional NCRT.  

The draft law prepared by the BRDO, like the draft law #3927, is based on the text of the Law of Ukraine “On the National Commission for State Regulation of Energy and Public Utilities” in the version that contained the most requirements for transparency of the NCRT and guaranteed the widest possible involvement of non-governmental organizations and businesses to discuss draft decisions. The draft law was prepared developed taking into account the provisions of the Constitution of Ukraine and the decision of the Constitutional Court of Ukraine #5-r/2019 of 13/06/2019; #21-rp/2008 of 08/10/2008, Directive 2012/34/EU establishing a single European railway area, recommendations of the Organization for Economic Co-operation and Development, proposals of business associations and the Ukrainian context.

Source: ICC