EUROPEAN COMMISSION Strasbourg, 23.10.2018 COM(2018) 703 final COMMUNICATION FROM THE COMMISSION The principles of subsidiarity and proportionality: Strengthening their role in the EU's policymaking {COM(2018) 490}

{COM(2018) 491}



The principles of subsidiarity and proportionality: Strengthening their role in the EU’s policymaking I want our Union to have a stronger focus on things that matter, building on the work this Commission has already undertaken. We should not meddle in the everyday lives of European citizens by regulating every aspect. We should be big on the big things. We should not march in with a stream of new initiatives or seek ever growing competences. We should give back competences to Member States where it makes sense. President Jean-Claude Juncker’s State of the Union Address 2017 1.Introduction This Commission concentrates on the issues that matter. It has put evidence-based policymaking and better regulation at the heart of its actions. It has proposed lean work programmes focused on President Juncker’s ten priorities. This Commission has emphasised the need to be big on the big things and modest elsewhere. Subsidiarity and proportionality are core elements of the Commission’s better regulation agenda which underpins how the Commission prepares its policy proposals. This Commission has invested heavily in better regulation and it is now becoming part of the Commission's DNA. The lessons learnt from past experience and the views of stakeholders and civil society have been firmly placed at the centre of the policy-shaping process before new legislation is proposed. The Commission’s efforts have been recognised recently by the OECD which now ranks the Commission as a top performer in terms of good regulatory practice. We do not rest on our laurels however. The Commission is taking stock of the package of reforms covering the entire policy cycle it introduced in May 2015. The aim of the reforms was to boost openness and transparency in the EU decision-making process, improve the quality of new laws through better impact assessments for draft legislation and amendments, and to promote constant and consistent review of existing EU laws. The stocktaking exercise will focus on refining and further improving our better regulation policy, including as regards the treatment of subsidiarity and proportionality. This stocktaking takes place alongside the reflection that has been given to the future of Europe, on which subject the Commission presented a White Paper in March 2017. This presented five scenarios to illustrate how the Union might look in 2025 and launched a process with over 2000 public events aimed at allowing Europeans to have a say on the future of their Union. Commenting on this discussion in his State of the Union speech in 2017, President Juncker presented his vision of a more democratic Union based on freedom, equality and the rule of law. To take this work forward, President Juncker set up a Subsidiarity and Proportionality Task Force to take a critical look at all policy areas to make sure the Union acts only where it adds value and in particular to look more deeply at Scenario 4 “Doing Less More Efficiently” according to which the Union would focus its limited resources on a smaller number of activities in order to tackle its priorities more efficiently. The Commission has already made progress in finding ways to deliver the Union's policies more efficiently by doing less at Union level and more at national level. Today more than 97% of State aid measures are implemented directly at national, regional or local level, based on clearly defined criteria, without needing prior approval by the Commission. The empowerment of national competition authorities has also enabled them to take around 85% of antitrust enforcement decisions since 2004. The proposed simplification of the Common Agricultural Policy recognises the diversity of local conditions across the Union and gives back responsibility to national authorities to deliver effective and tailored solutions to support agriculture and the environment. Looking ahead, the approach that has been developed over the course of this Commission should be further embedded in the Commission’s activity. It should become part of an ongoing process of reflection on the extent to which it is for the EU to regulate or not citizens’ daily lives. With this objective in mind, this Communication sets out how the role of the principles of subsidiarity and proportionality should be strengthened in the EU’s policymaking. In particular, it sets in motion the Commission’s follow-up to the recommendations of the Task Force, as well as the means of highlighting where others need to act. The Commission intends to fine-tune the details as part of the better regulation stocktaking exercise in the first half of 2019, having heard the views of all parties who have an interest in better regulation. 2.The importance of subsidiarity and proportionality The principle of subsidiarity goes to the heart of what the Union does. Under the Treaties, the Member States have conferred certain competences to the Union and the subsidiarity principle governs how they are used. In areas not falling within its exclusive competence, the Union shall only act if the objectives being pursued cannot be sufficiently achieved by the Member States, either at central level or at regional and local level, but by reason of the scale or the effects of the envisaged action, rather be better achieved at Union level. The check on compliance with the principle is essentially a political question entrusted to the EU’s political institutions and the national Parliaments. It was with this in mind that President Juncker underlined in his Political Guidelines the importance of strengthening the interaction with national Parliaments as a way also of bringing the Union closer to its citizens. Protocols No.1 and No. 2 of the Treaties set out the role of national Parliaments in the Union and empower them to check subsidiarity. In particular, a Commission proposal for a legislative act must be transmitted to national Parliaments, which then have a period of eight weeks in which to submit a reasoned opinion and each national Parliament is allotted two votes. If their combined votes exceed a certain threshold the Commission must review its proposal and explain why it maintains, changes or withdraws it. Where a simple majority of national Parliaments’ votes exists for a proposal subject to the ordinary legislative procedure, the Commission must justify why it maintains its proposal (should it not withdraw or amend it) and the European Parliament and the Council must consider whether it is compatible with the subsidiarity principle. If a simple majority of members of the European Parliament, or 55% of Council members, finds that the proposal breaches the principle of subsidiarity, the proposal will not be considered further. The Court of Justice adjudicates on actions based on the infringement of subsidiarity brought by the Member States (or notified by them on behalf of their national Parliaments) or by the Committee of the Regions where it has a right to be consulted under the Treaty on the Functioning of the European Union. In practice, subsidiarity is about identifying the best level of governance to make and implement policies. The Union should do so only where it is necessary and where it delivers clear benefits over and above measures taken at national, regional or local levels. The potential added value of EU action and the cost to the EU of not acting (often referred to as the “cost of non-Europe”) are closely related concepts. The political assessment of whether a particular EU policy instrument can be considered as adding value may change over time, depending on the political priorities of the moment. Subsidiarity is often characterised as a choice between EU action or no action at all. This is not correct. Subsidiarity means leaving room for the most appropriate level of governance to assume its responsibility to act. Member States are also free to act where the Union does not and action may be necessary at all governance levels for a given policy. Generally, the Commission’s assessments will explore the EU dimension of the problems and impacts of each new initiative. The principle of proportionality requires that the content and form of Union action must not exceed what is necessary to achieve the objectives being sought. Protocol No. 2 sets out in more detail the proportionality requirements for draft legislation. Any financial or administrative burdens which fall on the Union, national governments, local and regional authorities, and economic operators must be minimised and be commensurate with the objectives to be achieved. For the Commission, this means delivering our ambitious policies in the simplest, least costly way and avoiding unnecessary red-tape. It is about carefully matching the intensity of the proposed measure with what is to be achieved. Proportionality is a cornerstone of the Commission’s better regulation policy and its Regulatory Fitness programme. The Court of Justice is the ultimate arbiter of proportionality and may strike down acts it finds to have breached the principle. Given the importance of the correct application of both principles, and in view of the Commission’s close relationship with national Parliaments, the Commission publishes an annual report on both these matters. The 2017 annual report on relations between the European Commission and national Parliaments and the 2017 annual report on the application of the principles of subsidiarity and proportionality accompany this Communication. 3.Subsidiarity & proportionality: Key components of better regulation Subsidiarity and proportionality are core elements of the Commission’s approach to better regulation which is built on the three fundamental processes of evaluation, impact assessment and stakeholder consultation. This Commission has invested significant resources to improve its approach. These changes have also had a marked improvement on the assessment of subsidiarity and proportionality: –The Commission has increased the transparency, legitimacy and accountability of its work. The “contribute to law-making” website allows stakeholders to participate fully in the Commission’s work throughout the policy cycle from providing feedback on initial ideas to comments on the Commission’s adopted proposals and draft delegated and implementing acts.

–Public consultations accompany major initiatives and the most important of these will be available in all official languages. –The Commission prepared the first ever integrated guidelines on better regulation in May 2015 and completed a major update of them in 2017. These guidelines and tools guide the work of Commission staff across the entire policy cycle and have revamped guidance on how to assess subsidiarity and proportionality. They are published with the aim to facilitate further engagement of the European Parliament, the Council and other interested parties in the Union’s policymaking process. –A new Regulatory Scrutiny Board was established with three members recruited from outside the European institutions. This independent Board checks the quality of impact assessments and selected evaluations of existing legislation and makes public all its opinions. In principle, a positive opinion of the Board on the impact assessment is needed. Otherwise, the Commission needs to explain publicly why it has decided to proceed. Weaknesses in the analysis of subsidiarity and proportionality are among the most frequent causes of negative opinions. –The experts on the REFIT Platform assist the Commission with providing solutions to simplify existing legislation. The Platform has adopted over 80 opinions helped by a representative from the Committee of the Regions. –In April 2016, the European Parliament, the Council and the European Commission signed a new Interinstitutional Agreement on Better Law-Making. This covers all aspects of better regulation including subsidiarity and proportionality, transparency of the legislative procedure, the use of delegated acts and annual and multi-annual programming of political priorities. The application of these better regulation tools has promoted more proportionate legislative proposals. The effective application of EU law is also essential so that its intended benefits are delivered in practice. Impact assessment and evaluation help ensure effective implementation. They are complemented by a more strategic approach to the implementation and enforcement of EU law, including through helping Member States to implement EU law correctly and by focusing infringement procedures on systemic problems where the Commission’s enforcement action can make a real difference. The Commission is currently taking stock of how this better regulation policy is working and is actively seeking the views of all interested parties. The stocktaking exercise will aim to identify whether and how our better regulation tools can be used more effectively and efficiently, including strengthening the role of subsidiarity and proportionality in our policymaking. The Report of the Task Force on Subsidiarity, Proportionality and “Doing Less More Efficiently” The Task Force comprised members from the Committee of the Regions and national Parliaments. It looked at the role of subsidiarity and proportionality in the work of the institutions, the role of local and regional authorities in the EU’s policymaking and whether responsibility for policy areas or competences could be left or returned to the Member States. In just over six months the Task Force compiled a comprehensive and focused response to these questions drawing on the contributions of many stakeholders in the process. The Task Force’s report presents nine recommendations together with a number of actions to help implement them. They cover the Commission’s policy preparation processes, the role of national Parliaments in scrutinising Commission proposals and the legislative procedure. The key findings are: –A new way of working is needed to make better laws based on a common understanding of subsidiarity and proportionality across the policy cycle. –More “active subsidiarity” is needed which gives a stronger voice to the local and regional authorities and national Parliaments and which promotes ownership of what the Union does. –The Union should use its resources more efficiently and prioritise its actions but there are no reasons to re-delegate Treaty competences or entire policy areas back to the Member States. The Task Force’s recommendations are set out in the Annex to this Communication. Many of the recommendations touch upon the practical application of better regulation. The Commission supports the analysis put forward by the Task Force on the need to strengthen the application of the subsidiarity and proportionality principles in the EU’s policymaking as part of the wider better regulation agenda. It is essential that the 41 national Parliament chambers, 74 regional legislative assemblies, the 280 regions and the 80 000 local authorities, who are at the forefront of implementing EU laws, are more fully engaged in the policy process. Active subsidiarity and a new way of working with these entities will help deliver policies that work while strengthening the understanding and ownership of what the Union does. 4.Actions to strengthen the role of subsidiarity and proportionality The Commission has considered carefully the Task Force’s report and highlights the areas below where action is necessary. 4.1.Promoting a common understanding of subsidiarity and proportionality While all actors involved in the EU’s policymaking must respect the principles of subsidiarity and proportionality, there is no common definition to support each institution’s work. Protocol No. 2 of the Treaties on subsidiarity and proportionality no longer contains the illustrative criteria that once were a part of a similar protocol annexed to the Amsterdam Treaty. The Commission published the first ever integrated guidance on how it would implement better regulation in May 2015. This guidance covers the entire policy cycle including the assessment of subsidiarity and proportionality. This guidance already incorporates the criteria originally contained in the Amsterdam Treaty. The Task Force advocated a tool to make assessments of subsidiarity and proportionality and to present the results in a structured way (the “grid”). The tool is annexed to this Communication. The Commission does not currently present the results of its assessments in the form of the “grid” but, in the future, the Commission intends to integrate the grid into its better regulation guidance and to use it as part of the impact assessments, evaluations and explanatory memoranda that accompany its legislative proposals. These proposals are transmitted to the European Parliament, the Council, the national Parliaments and (where relevant) the consultative committees at the start of each legislative procedure.

The Commission notes that the European Parliament and the Council both recognise the importance of subsidiarity in their rules of procedure and that both are committed to take full account of the Commission’s impact assessment during the legislative procedure. The full benefit of the assessment grid can only be realised if it is used by all parties in the decision-making process. It is now for the European Parliament and the Council to decide whether additional, specific and systematic consideration should be given to the issues of subsidiarity and proportionality during the legislative procedure. In particular, the co-legislators often introduce substantial amendments to the Commission’s proposals, but the impacts of these amendments and concerns about subsidiarity and proportionality are infrequently assessed. The Commission calls on the co-legislators to implement more effectively their commitment to prepare impact assessments of their substantial amendments. The Commission also considers that the national Parliaments should use the assessment grid presented above and adapted to their purposes if necessary. The Commission believes that this will give greater impact to their reasoned opinions but will not prevent them from expressing other concerns in their opinions not related to subsidiarity and proportionality. It is the Commission’s view that there is scope in many cases for the views of national and regional Parliaments and those of local and regional authorities to be reflected better by each Member State during the legislative procedure. These administrative levels are closest to the actual implementation of legislation and have a wealth of experience to share. While it is for the co-legislators to decide whether it is appropriate to involve representatives of local and regional authorities during the legislative procedure, the Commission considers that increased transparency of the legislative procedure would enable greater awareness and engagement of local and regional authorities and the public generally. The Commission supports the ongoing efforts to make the legislative procedure more transparent and accessible via improvements to EUR-Lex and pursuant to the Interinstitutional Agreement on Better Law-Making (such as the joint legislative database). Follow-up of the recent case law of the Court of Justice and the findings of the Ombudsman on the transparency of trilogues will improve transparency and help all interested parties to participate in the democratic decision-making process. The Commission stands ready to participate constructively in this work. In any event, the Commission will continue to make the co-legislators aware of the feedback it receives about its proposals, including from local and regional authorities, in fulfilment of its commitment under the Interinstitutional Agreement on Better Law-Making. The Commission intends to: ·Incorporate the grid for assessing subsidiarity and proportionality in its better regulation guidance and use the grid to present its findings in impact assessments, evaluations and explanatory memoranda. ·Use the grid as guidance in its communication with national Parliaments. ·Make more visible the feedback it receives about its proposals from local and regional authorities to the European Parliament and the Council in each legislative procedure. 4.2.Enabling national Parliaments to scrutinise more effectively National Parliaments have the right to raise concerns related to subsidiarity during a period of eight weeks following receipt of the Commission’s proposal. The Commission already excludes the month of August when determining the eight-week deadline. The Commission believes that the period over Christmas and the New Year should also be excluded but cannot decide this unilaterally as any extension also affects the work of the European Parliament and the Council. The Commission invites the views of the co-legislators on this with a view to accommodate the wish of national Parliaments in a pragmatic way that does not affect relevant Treaty provisions. In its annual report on subsidiarity and proportionality, the Commission presents those legislative proposals which have received the greatest number of reasoned opinions. However, the Commission agrees with the Task Force that it should give greater visibility to the views of national Parliaments. The Commission intends to prepare an aggregated response where a significant number of national Parliaments have raised similar concerns even where the threshold for a “yellow card” is not attained. The opinions of regional Parliaments with legislative powers sent directly to the Commission could also be reflected without affecting the primary role of national Parliaments in the operation of the subsidiarity control mechanism. The aggregated response would set out the Commission’s position on the issues raised and be transmitted to the European Parliament and the Council as rapidly as possible given the desire not to delay the legislative procedure. The Commission encourages national Parliaments to consult regional Parliaments and to cooperate on EU matters. This may help give greater visibility to the concerns of regional Parliaments and to improve the assessment of subsidiarity-related issues, but the Commission recognises that such cooperation remains wholly a matter for the Parliaments in question. The Commission intends to: ·Continue to discount the month of August when determining the 8-week period for national Parliaments to submit reasoned opinions. ·Explore with the European Parliament and the Council whether the Christmas/New Year period could also be discounted as requested repeatedly by national Parliaments. ·Give greater visibility to the views of national Parliaments reasoned opinions by providing aggregated responses, where relevant, and targeting their concerns and identifying proposals raising most comments in its annual reports on subsidiarity and proportionality. 4.3.More active involvement of local and regional authorities This Commission has opened up its policymaking processes to outside involvement in addition to its proactive engagement with socio-economic partners on developing and implementing legislation in the social and regional policy fields. The Commission is already actively consulting social partners including the Treaty-based two stage consultation in the social policy field. Roadmaps are published at the outset of each new initiative that explain what the Commission intends to do. These invite feedback and allow all interested parties to prepare for the various consultation activities that follow. Public consultations now accompany each major initiative and the questionnaires are translated into all official languages for those in the annual work programme. Draft delegated acts and implementing acts are also published online before they are finalised. The Commission also transmits to the co-legislators the feedback it receives from all stakeholders (including local and regional authorities) on its proposals at the start of the legislative process. Despite these advances, the important voice of local and regional authorities is often unheard in the early phases of policymaking. Local and regional authorities and regional assemblies are different to other stakeholders because they are at the forefront of implementing Union law. As such, greater efforts are needed by all to ensure that their experience and views are captured better in the policymaking process. In the context of the ongoing better regulation stocktaking exercise, the Commission will examine how to revise its questionnaires so that space can be dedicated to the issues of concern to local and regional authorities. The Commission will also improve how it reports on the views of local and regional authorities in its impact assessments, evaluations and explanatory memoranda. For its part, the Commission encourages local and regional authorities to sign-up to the Commission’s web portal where all interested parties can contribute to policymaking. It will also publicise important initiatives on social media but organisations representing local and regional authorities should consider how they can promote the engagement of local and regional authorities. The Commission intends to: ·Amend its better regulation guidance to highlight the importance of capturing the views and experience of local and regional authorities. ·Revise its public consultation questionnaires to include questions about issues relevant for local and regional authorities including regional assemblies. 4.4.Improving assessment and presentation of relevant impacts Union legislation may have particularly significant effects at local and regional levels and for public authorities. The Commission has developed methodologies for territorial impact assessments which have been tested on a number of legislative proposals since 2016. The Commission’s approach is to assess these impacts when they are relevant for the decision-making process and it is proportionate to do so (for example, if there are large variations between regions). The Commission intends to raise the importance of this issue in its guidance to its staff and, as indicated earlier, will present more clearly its assessments of subsidiarity (including EU added value) and proportionality in its impact assessments, evaluations and explanatory memoranda. However, it is not always obvious that such effects are likely or that the raw data exists to allow a detailed assessment to be made. The more active engagement of local and regional authorities in consultation processes is an essential element of improving the quality of assessments of territorial impacts. The Commission intends to: ·Amend its better regulation guidance to highlight the importance of screening and assessing territorial impacts. ·Present more clearly its assessments of subsidiarity, proportionality and information about who is affected (and how) in its impact assessments, evaluations and explanatory memoranda.