Will the proposed changes to the Environmental Impact Assessment Act improve the real estate development process? | In Principle

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Will the proposed changes to the Environmental Impact Assessment Act improve the real estate development process?

A proposal to amend the regulations on issuance of project permits was released on 18 May 2022. The proposal is expected to streamline development procedures, primarily for issuing decisions on environmental conditions.

Application of the current Environmental Impact Assessment Act in the real estate development and construction process in Poland constantly highlights the shortcomings of the existing regulations which should be eliminated. Some of the proposed changes seem particularly relevant to investors, and are therefore worth addressing.

Shifting and clarification of definitions: nature inventory, intended construction project, strategic investment

The definition of “nature inventory” is to be moved from Art. 66(1)(2a) of the Environmental Impact Assessment Act to the statutory glossary in Art. 3. The nature inventory will continue to be a collection of field studies conducted to characterise the elements of the natural environment.

Currently, the law states that along with a description of the methodology, the results of the nature inventory constitute an appendix to the report. The draft would clarify that these results must be submitted in both descriptive and cartographic form.

This change is related to entry into force (on 23 April 2022) of the Regulation of the Minister of Climate and Environment of 17 March 2022 concerning the nature inventory and environmental impact assessment reports. The change will allow entities obliged to carry out a nature inventory to avoid doubts regarding the form and method for submission of the results from these studies.

Additionally, a definition of “intended construction project” would be introduced. This concept is an element of the crucial term “undertaking” for environmental impact assessment procedures. It is to be understood as “an intended construction project or other interference with the environment involving transformation or change of the method of land use, including mineral extraction.” In this definition, to eliminate doubts, the proposal would clarify what an intended construction project is.

Currently, this concept is interpreted taking into account Art. 33(1) of the Construction Law of 7 July 1994, according to which the construction permit applies to the entire intended construction project. Additionally, the amendment refers to the dictionary meaning of this concept in the Polish language. As a result, an intended construction project is to be “a change of use of a structure or part thereof, or construction works consisting in construction, reconstruction, extension or assembly.”

The proposed change is consistent with the term “undertaking” and would clarify it, which should be evaluated positively. The Polish legal provisions do not deny that an undertaking may mean not only construction works leading to achievement of a certain goal, but also other types of activity. Still, when defining the concept of construction, reconstruction, extension or assembly, the investor should rely on the Construction Law and the case law of the administrative courts.

It is also planned to introduce the concept of “strategic projects.” For such projects, no local plan is to be submitted, and the location of such projects would not be examined against the local plan. Strategic projects would be the projects enumerated in the new wording of Art. 59a(3) of the Environmental Impact Assessment Act, e.g. public roads, railway lines, and public facilities for supplying the population with water and for transfer and removal of sewage.

Changes regarding the analysis of variants for the planned project

Analysis of variants of the planned project is one of the most important elements of an environmental impact assessment. The correctness of the selection, description and analysis of the project solutions is essential for the reliability of the results of the environmental impact assessment for the project. But this aspect of the assessment procedure continues to raise significant doubts in interpretation.

According to the provisions currently in force, the environmental impact report should include a description of the variants taking into account the specific characteristics of the undertaking or its impact. This description should include the variant proposed by the investor, a reasonable alternative, and additionally, the most reasonable variant for the environment. Also, the report should include a justification for their selection, determination of their predicted impact on the environment, a comparison of the impacts of the analysed variants on particular elements of the environment, and a justification for the variant proposed by the investor.

The draft amendment specifies that the report should contain “a description of reasonable variants taking into account the solutions for the planned undertaking, in terms of technology, location or other relevant parameters, with an indication of the proposed variant.” When comparing the impacts of the analysed variants, the report should include an indication which of them is the most beneficial for the environment.

The proponents of the amendment explain that the change serves to eliminate doubts arising under the current provisions, in particular concerning the number of alternative solutions that are to be described in the report and the method of differentiating them. There is a view in the case law that the report on the environmental impact of a project should contain a description and analysis of at least three variants for implementation of the project, but in the drafters’ opinion, the existing regulations do not expressly impose such an obligation.

For example, the Supreme Administrative Court held in the judgment of 20 April 2021 (case no. III OSK 376/21): “The presentation of a minimum of three variants allows for creation of a comparison grid, on the basis of which the body verifies the proposed variant, which may be accepted by it. The most beneficial variant for the environment is the third variant, the description of which should be included in the report on the impact of the project on the environment. Therefore, the number of project variants required to be presented in the report does not depend on the will, discretion, or judgment of the investor.” This holding was neither precedent-setting nor isolated, as similar rulings were issued by the Province Administrative Court in Poznań in the judgment of 7 June 2018 (case no. IV SA/Po 343/18) and by the Supreme Administrative Court in the judgments of 1 June 2021 (case no. III OSK 2478/21) and 5 April 2022 (case no. III OSK 4690/21), to name a few.

The draft amendment recognises that such a view may lead to an undesirable situation in which the most environmentally beneficial variant may not be the one that the investor intends to implement. But the problem briefly indicated in the justification of the draft amendment is more complex and multidimensional, and the proposed amendment seems to solve it only partially.

The change proposed in the amendment should be viewed in three dimensions.

First, the draft does not assume a minimum number of variants; in particular, it does not require presentation of an analysis of three variants (the investor’s variant, an alternative, and the variant most beneficial for the environment). But at the same time, the draft does not indicate how many options should be described, analysed and compared. Indeed, it is conceivable that a certain project might be implemented in a dozen different ways, depending on the technology used, the location or other parameters. In light of the proposed rules, should an investor take all of them into consideration? Or does it have some freedom of choice in this regard?

Second, the draft corrects a shortcoming of the current regulation by providing that the description of variants should include a “solution regarding the planned project, in terms of technology, location or other relevant parameters.” Currently, the manner for differentiating the analysed variants is not expressly indicated in the provisions, but arises from the legal literature, the case law, and interpretation of relevant EU regulations. Thus, the planned amendment directly sanctions what has been developed in the literature and in the practice of applying the law.

Third, the draft correctly frames the provisions on variants in such a way that the outcome is identification of the variant most beneficial to the environment—the result of comparing the impacts of the analysed variants. In a sense, the current wording has reversed this reasoning, assuming that, when preparing the report, the investor will describe the variants first and immediately indicate which of them is the rational variant most beneficial for the environment, and only then determine their impact and compare them with one another. In practice this usually works correctly, i.e. identification of the most environmentally beneficial variant is the result of the impact analyses performed and comparison of particular variants. So it is good that it has been proposed to sort out this issue.

But as a result, the approach to understanding the concept of the most favourable variant for the environment will change. One of the other doubts present in practice concerns whether the benefit for the environment should be related exclusively to variants considered by the investor, or whether it should be treated independently, assuming that it is a variant in which the undertaking may be rationally implemented and which is the most beneficial from the perspective of the environment. In other words, the doubt concerns whether the “most environmentally beneficial variant” should be selected only from among the project implementation methods presented by the investor, or whether a variant should be indicated from outside this catalogue. This is often a source of disputes, especially when the variant preferred by the investor is also regarded by the investor as the most beneficial for the environment.

In drafting these provisions of the proposal, the Minister of Climate and Environment appears to have favoured the first interpretation. Such an approach facilitates and streamlines the development process, but in certain situations it may create another risk, of omitting in the course of the environmental impact assessment a variant that is rational and the most beneficial for the environment, but was simply not selected by the investor for analysis.

Assessment of compliance with the local zoning plan at the preliminary stage of the proceedings

In the practice of development procedures, cases have occurred where, after a lengthy process of environmental impact assessment, it turned out that the project cannot be carried out because it does not comply with the local zoning plan. Therefore, the draft would introduce an obligation to conduct an analysis of compliance of the project location with the local zoning plan (if one has been adopted) at the initial stage of the proceedings. Currently, doubts often arise as to the stage at which such an examination should be carried out: immediately preceding issuance of a decision on environmental conditions, or earlier, shortly after initiation of the proceedings. From the investor’s point of view, this is a beneficial change, as in the case of potential contradictions, it will allow the investor to save time and find a possible alternative.

So far, the case law of the administrative courts has also been unequivocal as to whether, in the event of a conflict with the local plan, the remaining elements of the environmental impact assessment should be carried out as part of obtaining an environmental decision, or further activities in the case, such as obtaining the opinions and arrangements referred to in Art. 77 of the Environmental Impact Assessment Act, should be discontinued. For example, in the judgment of 16 November 2021 (case no. II SA/Lu 423/21), the Province Administrative Court in Lublin held that if the local plan does not provide for designation of land for a specific undertaking, and the project does not comply with the plan, the body must issue a negative decision, without further examination of the actual impact of the planned activity on the environment.

The draft proposes that the body will first examine the compliance of the location of the undertaking with the local zoning plan, and only then proceed to further acts. These activities would include:

  • Screening in the case of undertakings with potentially significant impacts on the environment
  • Scoping or joining the assessment process for undertakings deemed to always have a significant impact on the environment.

The proposal, which would require issuance of a decision refusing consent to implementation of the project, without pursuing further investigations, seems common-sensical and beneficial from the point of view of businesses.

Binding nature of arrangements

Under current law, the nature of the arrangements reached by the regional director for environmental protection has been determined primarily by the administrative-court jurisprudence and the literature on the subject. The courts have pointed out that, as opposed to an opinion, an arrangement is a firm type of finding binding on the administrative body deciding in the main proceedings (e.g. judgment of the Province Administrative Court in Łódź of 14 April 2021, case no. II SA/Łd 51/21).

The draft proposes to add Art. 77(10) of Environmental Impact Assessment Act, to state that decisions on arrangements are binding for the body conducting proceedings on the decision on environmental conditions. From a practical point of view, this change will not add much, as it will only confirm the current line of jurisprudence. This change will even more forcefully establish that the administrative body issuing the decision on environmental conditions may not be free to refrain from taking into account the conditions specified in the previously issued decision on arrangements issued by the regional director.

The changes presented in the draft amendment are in line with calls to streamline development procedures. The changes are not revolutionary, but they should eliminate some of the doubts arising during the environmental process. However, it cannot be ruled out that they will become a source of further doubts themselves. This could particularly be the case with the changes in preparation of variants for assessment.

Further changes to streamline development procedures can be expected. The European Commission sent a strong signal in its REPowerEU plan, announced on 18 May 2022, which foresees significant acceleration of the development procedures for renewable energy sources, in particular obtaining permits for implementation and deployment of renewable installations.

Dr Adrianna Ogonowska, attorney-in-law, Dr Dominik Wałkowski, adwokat, Environment practice, Wardyński & Partners