State Ecological Inspection of Ukraine Launches a Major Assault on Polluting Factories: What Is Important to Know for Those Who Now Face State Environmental Examination


Oleg Kachmar

Partner, Attorney-at-Law

Domestic Litigation,
Restructuring and Insolvency,

Declaration of War against Polluters 

On 3 February 2020 an interim head of the State Ecological Inspection of Ukraine announced through social media that the Prime Minister of Ukraine ordered the Inspection to conduct mass and comprehensive examination of the factories polluting the environment. The full list of such factories contains 200 names, according to the head of the Inspection, 100 of them (only in Ukrainian) are available to the public as the most polluting. Among them, there are water utilities companies discharging sewage, mining and processing plants which produce contaminating waste and thermal power plants polluting the air. However, only 50 of them will be the first in the queue (the same announcement on the website of the Government says that 35 factories will be inspected at first). 

The announcement was accompanied by ambitious promises that neither political affiliations nor the names of the owners or their citizenship will be of any assistance for evading the examination. The message is harsh: any attempts to impede the examination will be followed by applications to the law enforcement authorities entailing the respective consequences. At the same time, the examinations are promised to be transparent and covered by media. The question persists: what does it mean, legally?

The Legal Side of The Issue: What We Have in 2020?

Yet in 2019, the moratorium on state inspections, including the environmental ones, expired. Introduced in August 2014, it was supposed to relieve the business from the pressure of countless government examinations and thus to improve the business climate in Ukraine already harmed by the outgoing war in the East of Ukraine. Gradually, more and more exemptions to the moratorium were instituted until it came up to the end on 1 January 2019. As such, the system of state control over economic activity came back almost as it was before the moratorium: the special moratorium Law was gone, the Law of Ukraine “On the Main Principles of State Supervision (Oversight) in the Area of Commercial Activity” (“Law”) effective from 2007 is now, again, the principal legislative act in the field.

Scheduled and extraordinary inspections

As well before the raucous declaration of the interim head of the Inspection, there are two types of state inspections: scheduled and extraordinary. The first ones are known to the owners well in advance, announced on the special website (only in Ukrainian). The annual schedule of such inspections shall be made public before 01 December of the previous year, precise the date and the period of the inspection and cannot prescribe for more than one inspection of the same factory during the year.

The frequency of the inspections and their subject-matter depends upon the level of risk posed by the factory, which can be low, medium or high (with one inspection in 5, 3 and 2 years accordingly). The latter is defined by the State Ecological Inspection based on the methods and criteria established by the Cabinet of Ministers of Ukraine. Each inspection shall be preceded by the notice served in a due manner, at least 10 days in advance.

Since the scheduled inspections for 2020 were set for before 01 December 2019, the State Ecological Inspection’s official could have meant nothing but a series of extraordinary inspections. This type of inspections cannot take place unless it relies on one of the bases from the exhaustive list prescribed by Article 6 of the Law. This is where the most interest part begins.

Order of the Prime-Minister of Ukraine – A Valid Basis for Examination of The Enterprises of Certain Fields 

In November 2016 the Parliament passed an amendment to the list adding “order of the Prime-Minister of Ukraine regarding the examination of the enterprises of certain fields”. Such an order shall be made in relation to “systematic violations or an accident causing harmful repercussions to the life and health of people or to the environment”.

The provision fails to elaborate on the issue of how the systematic character of the violations is determined or how serious should be an accident to empower the Prime Minister of Ukraine to order the inspections. Neither the reliable court practice has been developed to assist with the matter. As for now, it seems that the power of the Prime Minister to order such inspections is all within their personal discretion.

Some Important Things to Remember

Although an extraordinary inspection is also a form of governmental intrusion to the habitual activity of the enterprise, made without advance notice, and can be a source of additional disturbance, factory owners and its representatives still enjoy plenty of rights related to the inspection procedure. As in the case with the scheduled inspections, the owner and/or its representative is entitled to be present during the inspection, to verify the documents identifying the inspectors and their title to act, to prevent the officials from conducting the inspection if they violate or have violated certain rights of the owner/representative. The owners or its representatives shall be informed about the subject-matter (issues) of the examination, they can submit written observations/objections to the final report, they can film the process of examination and, at the same time, they can demand that confidential information of a commercial character not be exposed to third parties. The inspection itself cannot last more than 10 days and can be conducted exclusively during the working hours of the enterprise, while the fact of inspection shall be noted in the special record book maintained by the enterprise. Notably, the State Ecological Inspection cannot conduct an extraordinary inspection more than once on the same basis. In other words, “special order of the Prime Minister” cannot serve as a basis for extraordinary inspection more than once.

The pivotal point – in the course of the examination, the enterprise should be represented by the lawyer, which would be able to check and to note all the violations of the procedure committed by the State Inspector. These violations, as well as a lack of legal basis to conduct the examination, may be recognized as valid and sufficient reasons to cancel the final report, yet a heavy fine imposed in the result, in the court.

Published: Lexology, 7 February 2020

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