EU Law: Legal base Structural Funds and Cohesion Fund

Secondary legislation of the Structural Funds and the Cohesion Fund of the European Community (European Union) is based on two Articles of the Treaty establishing the European Community.

We look at the current Treaty establishing the European Community and the Lisbon Treaty (Treaty on the Functioning of the European Union) before presenting references to the legal acts, which govern the second largest tranche of EU spending (hopefully investment).

Both projects and administrators have a tough job to fulfil all the requirements of the detailed provisions.

As always, readers are invited to share their experiences in the comments section.


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Articles 161 and 162 TEC

The two Articles strive to accomplish a certain hierarchy of norms.

According to Article 161 TEC (ex Article 130d), the Council shall define the tasks, priority objectives and the organisation of the Structural Funds, which may involve grouping the Funds.

The Council, acting by the same procedure, shall also define the general rules applicable to them and the provisions necessary to ensure their effectiveness and the coordination of the Funds with one another and with the other existing Financial Instruments.

Article 161(2) TEC serves as the legal base for secondary legislation on the Cohesion Fund, aimed at the fields of environment and trans-European networks in the area of transport infrastructure (excluding energy and telecommunications networks).


The third paragraph of Article 161 TEC is now redundant.



Article 162 TEC (ex Article 130e) refers to implementing decisions relating to the European Regional Development Fund (ERDF), which indicates a difference between the general and coordinating norms issued pursuant to Article 161 TEC and these implementing decisions concerning the ERDF. It is less than clear where the more general norms end and where the more specific norms start.

Without distinguishing between more general and coordinating norms compared to implementing ‘decisions’, the second paragraph of Article 162 TEC states that there are separate legal bases for

· Article 37 TEC for the European Agricultural Guidance and Guarantee Fund, Guidance Section (now defunct or more precisely replaced and relocated)
· Article 148 TEC for the European Social Fund
.

Two things appear confusing for a reader. Article 159 TEC mentioned three Structural Funds, but they did not include the Cohesion Fund. Thus, the Cohesion Fund would seem to belong to the category ‘other financial existing instruments’, but the Cohesion Fund is actually treated as a structural fund.

On the other hand, the first of the three structural funds mentioned by Article 159 TEC was the European Agricultural Guidance and Guarantee Fund, Guidance Section (in addition to the European Social Fund and the European Regional Development Fund), but the European Agricultural Guidance and Guarantee Fund, Guidance Section has been replaced by the European Agricultural Fund for Rural Development (EAFRD) and fully integrated into the common agricultural policy (CAP).

Anyway, here are the current Articles 161 and 162 of the Treaty establishing the European Community (TEC), as published in the latest consolidated version of the treaties, OJEU 29.12.2006 C 321 E/119–120:

(TITLE XVII
ECONOMIC AND SOCIAL COHESION)


Article 161 TEC

Without prejudice to Article 162, the Council, acting unanimously on a proposal from the Commission and after obtaining the assent of the European Parliament and consulting the Economic and Social Committee and the Committee of the Regions, shall define the tasks, priority objectives and the organisation of the Structural Funds, which may involve grouping the Funds. The Council, acting by the same procedure, shall also define the general rules applicable to them and the provisions necessary to ensure their effectiveness and the coordination of the Funds with one another and with the other existing Financial Instruments.

A Cohesion Fund set up by the Council in accordance with the same procedure shall provide a financial contribution to projects in the fields of environment and trans-European networks in the area of transport infrastructure.

From 1 January 2007, the Council shall act by a qualified majority on a proposal from the Commission after obtaining the assent of the European Parliament and after consulting the Economic and Social Committee and the Committee of the Regions if, by that date, the multiannual financial perspective applicable from 1 January 2007 and the Interinstitutional Agreement relating thereto have been adopted. If such is not the case, the procedure laid down by this paragraph shall apply from the date of their adoption.



Article 162 TEC

Implementing decisions relating to the European Regional Development Fund shall be taken by the Council, acting in accordance with the procedure referred to in Article 251 and after consulting the Economic and Social Committee and the Committee of the Regions.

With regard to the European Agricultural Guidance and Guarantee Fund, Guidance Section, and the European Social Fund, Articles 37 and 148 respectively shall continue to apply.



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Original Lisbon Treaty (ToL)

Article 2, points 133 and 134 of the Lisbon Treaty amended Articles 161 and 162 TEC respectively 161 (OJEU 17.12.2007 C 306/85):

133) Article 161 shall be amended as follows:

(a) at the beginning of the first paragraph, first sentence, the words ‘Without prejudice to Article 162, the Council, acting unanimously on a proposal from the Commission and after obtaining the assent of the European Parliament’ shall be replaced by ‘Without prejudice to Article 162, the European Parliament and the Council, acting by means of regulations in accordance with the ordinary legislative procedure’. In the second sentence the words ‘The Council, acting by the same procedure, shall also define’ shall be deleted at the beginning and the words ‘shall also be defined by the same procedure’ added at the end;

(b) in the second paragraph the words ‘by the Council’ shall be deleted;

(c) the third paragraph shall be deleted.

134) In Article 162, first paragraph, the words ‘implementing decisions’ shall be replaced by ‘implementing regulations’.



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Renumbering ToL

The Table of equivalences of the original Treaty of Lisbon tells us that Title XVII first became Title XVII with the addition of territorial in the TFEU (ToL), and renumbered Title XVIII Economic, social and territorial cohesion in the consolidated version.

Article 161 TEC initially became Article 161 TFEU (ToL) before the renumbering of the treaty made it into Article 177 TFEU in the consolidated version.

Article 162 TEC initially became Article 162 TFEU (ToL) before the renumbering of the treaty made it into Article 178 TFEU in the consolidated version (OJ 17.12.2007 C 306/217).


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Lisbon Treaty consolidated

Article 177 and 178 TFEU

After specific and horizontal amendments the Articles 177 and 178 TFEU appear like this in the consolidated version of the Treaty of Lisbon (OJ 9.5.2008 C 115/128):

(TITLE XVIII
ECONOMIC, SOCIAL AND TERRITORIAL COHESION)


Article 177 TFEU
(ex Article 161 TEC)

Without prejudice to Article 178, the European Parliament and the Council, acting by means of regulations in accordance with the ordinary legislative procedure and consulting the Economic and Social Committee and the Committee of the Regions, shall define the tasks, priority objectives and the organisation of the Structural Funds, which may involve grouping the Funds. The general rules applicable to them and the provisions necessary to ensure their effectiveness and the coordination of the Funds with one another and with the other existing Financial Instruments shall also be defined by the same procedure.

A Cohesion Fund set up in accordance with the same procedure shall provide a financial contribution to projects in the fields of environment and trans-European networks in the area of transport infrastructure.


Article 178 TFEU
(ex Article 162 TEC)

Implementing regulations relating to the European Regional Development Fund shall be taken by the European Parliament and the Council, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee and the Committee of the Regions.

With regard to the European Agricultural Guidance and Guarantee Fund, Guidance Section, and the
European Social Fund, Articles 43 and 164 respectively shall continue to apply.



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Secondary legislation 2007–2013

Horizontal Regulations

General Regulation 1083/2006

General rules concerning the structural funds are set out in Council Regulation (EC) No 1083/2006 of 11 July 2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation (EC) No 1260/1999 (OJEU 31.7.2006 L 210/25).

Article 161 TEC is cited as the principal legal base.

The 73 Recitals of Regulation 1083/2006 offer an overview of the aims of the structural funds from 2007 to 2013 and they highlight the changes compared to the previous programming period (2000–2006).

The General Regulation refers to the European Regional Development Fund (ERDF) and to the European Social Fund (ESF) and it integrates the Cohesion Fund ‘into the programming of structural assistance in the interest of greater coherence in the intervention of the various Funds’.

Rural development – through the European Agricultural Fund for Rural Development (EARDF) – and development of the fisheries sector – the European Fisheries Fund (EFF) – was integrated into the common agricultural policy and the common fisheries policy respectively.

In other words, there are differences between the classification (and naming) of the structural funds between the treaty level and the secondary (regulation) level, and this partial lack of similarity would persist under the Lisbon Treaty.


The detailed provisions of the General Regulation are essential for a deeper understanding of the main principles and how the structural funds work.

The Regulations together with a few corrigenda are available at:

http://ec.europa.eu/regional_policy/sources/docoffic/official/regulation/newregl0713_en.htm

A consolidated version (1 January 2007) of the General Regulation 1083/2006 is available here:

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CONSLEG:2006R1083:20070101:EN:PDF


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Implementing Regulation 1828/2006

The Implementing Regulation is clearly at a lower hierarchical level than the General Regulation and it is based on it and the ERDF Regulation, but it is horizontal in character.

The Commission has issued and implementing Regulation 1828/2006 with detailed provisions relating to the General Regulation 1083/2006 and the ERDF Regulation 1080/2006.
Commission Regulation (EC) No 1828/2006 of 8 December 2006 setting out rules for the implementation of Council Regulation (EC) No 1083/2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and of Regulation (EC) No 1080/2006 of the European Parliament and of the Council on the European Regional Development Fund (OJEU 27.12.2006 L 371/1) is available here:

http://ec.europa.eu/regional_policy/sources/docoffic/official/regulation/pdf/2007/fsfc/ce_1828(2006)_en.pdf



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Cohesion policy guide

This could be called a horizontal aid, which includes sectoral Regulations.

For people working with the administration of structural funds or with projects co-financed by one of the funds, the Commission’s guide with commentaries and official texts is a very useful resource.

The 164 page publication Cohesion policy 2007–13 Commentaries and official texts is available here:

http://ec.europa.eu/regional_policy/sources/docoffic/official/regulation/pdf/2007/publications/guide2007_en.pdf

(Two caveats, nearly two years after the start of the 2007 to 2013 programme period: Look above for the remark on corrigenda concerning Regulations and notice that the Cohesion policy guide does not contain the Commission’s Implementing Regulation.)

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Vertical Regulations

In addition to the reference to the Cohesion Guide, here are a few pointers to vertical or sector Regulations.


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ERDF Regulation 1080/2006

The ERDF Regulation, officially Regulation (EC) No 1080/2006 of the European Parliament and of the Council of 5 July 2006 on the European Regional Development Fund and repealing Regulation (EC) No 1783/1999 (OJEU 31.7.2006 L 210/1), can be found here:

http://ec.europa.eu/regional_policy/sources/docoffic/official/regulation/pdf/2007/feder/ce_1080(2006)_en.pdf


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European Social Fund (ESF)

The ESF Regulation 1081/2006 is primarily based on Article 148 TEC.
Regulation (EC) No 1081/2006 of the European Parliament and of the Council of 5 July 2006 on the European Social Fund and repealing Regulation (EC) No 1784/1999 (OJEU 31.7.2006 L 210/12) is available here:

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2006:210:0012:0018:EN:PDF


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Cohesion Fund

As we have seen, the Cohesion Fund is in practice treated as a structural fund. The Regulation is based on Article 161(2) TEC.

Council Regulation (EC) No 1084/2006 of 11 July 2006 establishing a Cohesion Fund and repealing Regulation (EC) No 1164/94 (OJEU 31.7.2006 L 210/79) is available here:

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2006:210:0079:0081:EN:PDF


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European grouping of territorial cooperation (EGTC)

Regulation (EC) No 1082/2006 of the European Parliament and of the Council of 5 July 2006 on a European grouping of territorial cooperation (EGTC) (OJEU 31.7.2006 L 210/19) is based on Article 159(3) TEC (referring to specific actions).

The EGTC is an entity for cross-border cooperation, and the EGTC Regulation can be called a legal instrument. It is available here:

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2006:210:0019:0024:EN:PDF


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Rural development and fisheries

EAFRD Rural development


Rural development and fisheries are fully incorporated into the common agricultural policy and the common fisheries policy. In my understanding they fall outside the scope of the structural funds, despite Article 159 TEC (and Article 175 TFEU) referring to the European Agricultural Guidance and Guarantee Fund, Guidance Section, as one of the structural funds.

But they are important in their own spheres, so here are references to the current Regulations.

Council Regulation (EC) No 1698/2005 of 20 September 2005 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) (OJEU 21.2.2005 L 316/10) is available here:


http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2005:277:0001:0040:EN:PDF


EFF Fisheries


Council Regulation (EC) No 1198/2006 of 27 July 2006 on the European Fisheries Fund (OJEU 15.8.2006 L 223/1) is available here:

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2006:223:0001:0044:EN:PDF




Ralf Grahn