Nová legislativa EU v rámci boje s odlesňováním - část pátá: co když nesplním

New EU legislation to combat deforestation - part five: what if I don't comply?

There is a perception that the European Union is generally 'toughening up' on sanctions, particularly in the area of environmental protection. It is true that the measures and penalties laid down by the EUDR are rather on the stricter side and therefore deserve increased attention.

First of all, it should be pointed out that the EUDR is indeed a regulation, i.e. a directly applicable piece of legislation. Simply put - the obligations arising out of the EUDR apply per se and do not need to be implemented by a local law.

Nevertheless, the Regulation contains elements that are more typical for directives, as it only includes framework conditions and a basic list of measures and penalties that Member States can impose on operators and traders. It is up to the individual Member States to decide which particular ones they will implement (and, where appropriate, up to what amounts); as promised in the previous episode, we will also touch on national legislation in our series. The subject matter of this episode, however, is the measures and penalties envisaged by the Regulation itself.

The first category is interim measures. The Regulation provides the least guidance on these - they are to be immediate measures when potential non-compliance of the relevant commodities or products with the Regulation is detected, and they are to include seizure or suspension of their placing or making available on or export form the market.

The next category is corrective actions. These are taken by the operator or trader at the request of the competent authorities and must include at least one of the following:

• rectification of formal non-conformities;
• preventing the placing or making available on or export form the market of the relevant product concerned;
• withdrawal or recall of the relevant product;
• donation of the relevant product to charity or its disposal, as appropriate.

If these corrective actions are not taken by the operator or trader, the competent authorities shall ensure their implementation by all means available. It should also be borne in mind that corrective actions are not a substitute for penalties, which may be imposed in addition to them.

Penalties should, in the words of the Regulation, be effective, proportionate and dissuasive. As the EUDR only lists a minimum scope of penalties and leaves the final form to the individual Member States, the range of penalties or their amounts may vary from one EU Member State to another.

The minimum scope is:

• fines;
• confiscation of relevant products;
• confiscation of revenues gained;
• temporary exclusion from public procurement and access to public funding;
• temporary prohibition to place or make available on or export from the market in relation to relevant commodities and products;
• prohibition from exercising of simplified due diligence.

Member States must set the fines in such a way that they amount to a maximum of at least 4% of the total annual Union-wide turnover in the preceding financial year. The Regulation also foresees a gradual increase of the fine if repeatedly imposed, and also emphasises the need for the fine imposed to be higher than the economic benefit potentially gained from the breach of the EUDR.

The measures and penalties envisaged by the EUDR thus have the potential to be truly severe. We will therefore take a look at the Czech national regulation, which should give a closer idea of what they will actually be, in the next episode.

If you would like more detailed information, please contact the authors of this article or other members of the EY team with whom you work.

Authors:

Jan Turek

Veronika Juhasová