Proposal for a Council Regulation establishing a Cohesion Fund (Codified version)
Date: 2003-06-16
Institutions: European Commission
Subjects: Cohesion Fund, Community acquis, Council of the European Union, EC Regulation, codification of EU law

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 16.6.2003
COM(2003) 352 final

2003/0129 (AVC)

Proposal for a

COUNCIL REGULATION

establishing a Cohesion Fund

(Codified version)

(presented by the Commission)

EXPLANATORY MEMORANDUM

In  the  context  of  a  people’s  Europe,  the  Commission  attaches  great  importance  to
simplifying  and  clarifying  Community  law  so  as  to  make  it  clearer  and  more
accessible to the ordinary citizen, thus giving him new opportunities and the chance
to make use of the specific rights it gives him.

This aim cannot be achieved so long as numerous provisions that have been amended
several times, often quite substantially, remain scattered, so that they must be sought
partly  in  the  original  instrument  and  partly  in  later  amending  ones.  Considerable
research work, comparing many different instruments, is thus needed to identify the
current rules.

For  this  reason  a  codification  of  rules  that  have  frequently  been  amended  is  also
essential if Community law is to be clear and transparent.

On  1  April  1987  the  Commission  therefore  decided1  to  instruct  its  staff  that  all
legislative acts should be codified after no more than ten amendments, stressing that
this was a minimum requirement and that departments should endeavour to codify at
even  shorter  intervals  the  texts  for  which  they  are  responsible,  to  ensure  that  the
Community rules were clear and readily understandable.

The  Conclusions  of 
the  Edinburgh  European  Council
(December 1992) confirmed this2, stressing the importance of codification as it offers
certainty as to the law applicable to a given matter at a given time.

the  Presidency  of 

Codification  must  be  undertaken  in  full  compliance  with  the  normal  Community
legislative procedure.

Given  that  no  changes  of  substance  may  be  made  to  the  instruments  affected  by
codification, the European Parliament, the Council and the Commission have agreed,
by  an  interinstitutional  agreement  dated  20  December  1994,  that  an  accelerated
procedure may be used for the fast-track adoption of codification instruments.

The  purpose  of  this  proposal  is  to  undertake  the  codification  of  Council
Regulation (EC)  No  1164/94  of  16  May  1994  establishing  a  Cohesion  Fund3.  The
new Regulation will supersede the various acts incorporated in it4; this proposal fully
preserves the content of the acts being codified and hence does no more than bring
them together with only such formal amendments as are required by the codification
exercise itself.

COM(1987) 868 PV.
See Annex 3 to Part A of the Conclusions.
Carried out pursuant to the Communication from the Commission to the European Parliament and the
Council – Codification of the Acquis communautaire, COM(2001) 645 final.
See Annex III to this proposal.

1.

2.

3.

4.

1

2

3

4

2

                                                
5.

The codification proposal was drawn up on the basis of a preliminary consolidation,
in  all  official  languages,  of  Regulation  (EC)  No  1164/94  and  the  instruments
amending  it,  carried  out  by  the  Office  of  Official  Publications  of  the  European
Communities, by means of a data-processing system. Where the Articles have been
given new numbers, the correlation between the old and the new numbers is shown
in a table contained in Annex IV to the codified Regulation.

3

(cid:1) 1164/94 (adapted)

2003/0129 (AVC)

Proposal for a

COUNCIL REGULATION

establishing a Cohesion Fund

THE COUNCIL OF THE EUROPEAN UNION,

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular
Article (cid:2) 161 (cid:3) thereof,

Having regard to the proposal from the Commission,

Having regard to the assent of the European Parliament1,

Having regard to the opinion of the European Economic and Social Committee2,

Having regard to the opinion of the Committee of the Regions3,

Whereas:

(1)

(2)

1

2

3

4

5

Council  Regulation  (EC)  No  1164/94  of  16  May  establishing  a  Cohesion  Fund4  has
been substantially amended several times5. In the interests of clarity and rationality the
said Regulation should be codified.

(cid:1) 

(cid:1) 1164/94 Recital (1) (adapted)

Article 2 of the Treaty includes the task of promoting economic  and  social  cohesion
and  solidarity  among  Member  States  as  objectives  essential  to  the  Community's
development  and  success.  The  strengthening  of  such  cohesion  is  (cid:2) cited (cid:3)  in
point (k) of Article 3 of the Treaty as one of the activities of the Community for the
purposes set out in Article 2 of the Treaty.

OJ C , , p. .
OJ C , , p. .
OJ C , , p. .
OJ L 130, 25. 5. 1994, p. 1. Regulation as last amended by Regulation (EC) No 1265/1999 (OJ L 161,
26.6.1999, p. 62).
See Annex III.

4

                                                
(3)

(4)

(5)

(6)

(cid:1) 1164/94 Recital (2) (adapted)

Article (cid:2) 158 (cid:3) of the Treaty provides for the Community to develop and pursue its
actions leading to the strengthening of its economic and social cohesion, and provides
in particular that it shall aim at reducing disparities between the levels of development
of the various regions and the backwardness of the least-favoured regions. Community
action through the Cohesion Fund, (cid:2) hereinafter referred to as “the Fund”,(cid:3) should
support the achievement of the objectives set out in Article (cid:2) 158 (cid:3) .

The conclusions of the European Councils held in Lisbon on 26 and 27 June 1992 and
in Edinburgh on 11 and 12 December 1992 concerning the establishment of the Fund
set out the principles governing it.

(cid:1) 1164/94 Recital (3) (adapted)

(cid:1) 1164/94 Recital (4) (adapted)

The  promotion  of  economic  and  social  cohesion  requires  action  by  the  Fund  in
addition  to  that  taken  through  the  Structural  Funds,  the  European  Investment  Bank
(cid:2) (EIB) (cid:3) and the other financial instruments in the fields of the environment and
transport infrastructure of common interest.

(cid:1) 1164/94 Recital (5) (adapted)

The  Protocol  on  economic  and  social  cohesion  annexed  to  the  Treaty  reaffirms  the
Community's task of promoting economic and social cohesion and solidarity between
Member  States  and  specifies  that  a  Cohesion  Fund  will  provide  a  financial
contribution to projects in the fields of the environment and trans-European networks
in the Member States subject to two conditions: firstly that they have a per capita gross
national product (GNP) of less than 90% of the Community average and secondly that
they  have  a  programme  leading  to  the  fulfilment  of  the  conditions  of  economic
convergence as set out in Article (cid:2) 104 (cid:3) of the Treaty. The relative prosperity of
Member  States  is  best  assessed  on  the  basis  of  per  capita  GNP,  measured  in
purchasing power parities.

(7)

Meeting the  convergence criteria calls for a (cid:2) continuous and (cid:3) determined effort
from  the  Member  States  concerned.  In  this  context,  all  of  the  beneficiary  Member
States  are  to  submit  to  the  Council  a  convergence  programme  (cid:2) or  stability
programme (cid:3) designed for that purpose and to avoid excessive government deficits.

(cid:1) 1164/94 Recital (6) (adapted)

5

(cid:1) 1264/1999 Art. 1 point 1(a)

(8) With  regard  to  the  economic  convergence  criterion,  the  current  macroeconomic
conditionality provisions will continue to apply. Accordingly, no new projects or new
project  stages  shall  be  financed  by  the  Fund  in  a  Member  State  in  the  event  of  the
Council,  acting  by  qualified  majority  on  a  recommendation  from  the  Commission,
finding that the Member State has not respected the Stability Growth Pact.

(9)

The  provisions  to  speed  up  and  clarify  the  excessive  deficit  procedure,  having  as  its
objective to deter excessive general government deficits and, if they occur, to further
their prompt correction were set out in Council Regulation (EC) No 1467/976.

(cid:1) 1264/1999 Art. 1 point 1(b)

(cid:1) 1264/1999 Art. 1 point 1(d)

(10)

Provision  should  be  made,  in  conjunction  with  the  fulfilment  of  the  conditions  of
economic  convergence  as  set  out  in  Article  104  of  the  Treaty  and  with  the  need  for
sound  management  of  the  government  deficit,  for  a  form  of  conditionality  in  the
granting  of  financial  assistance.  In  that  context,  compliance  with  the  obligations
arising  from  the  Treaty  must  also  be  assessed  having  due  regard  to  the  guidelines
adopted in  the  Resolution  of  the  European  Council  of  17  June  1997  on  the  Stability
and Growth Pact7 and the concept of excessive deficit is to be interpreted in the light
that  Resolution.  For  each  participating  Member  State,  macroeconomic
of 
conditionality should be assessed taking account of the responsibilities of that Member
State in respect of the stability of the euro.

(11) (cid:2) In accordance with(cid:3) the second paragraph of Article (cid:2) 161 (cid:3) of the Treaty, a
Cohesion  Fund,  (cid:2) set  up  by  the  Council, (cid:3)  is  designed  to  provide  a  financial
contribution to projects in the fields  of  environment  and  trans-European  networks  in
the area of transport infrastructure.

(cid:1) 1164/94 Recital (7) (adapted)

(cid:1) 1164/94 Recital (8) (adapted)

(12) Article  (cid:2) 155 (cid:3)  (1)  of  the  Treaty  provides  that  the  Community  may  contribute
through the Cohesion Fund to the financing of specific projects in the Member States
in  the  area  of  transport  infrastructure,  whilst  taking  into  account  the  potential
economic viability of the projects. Projects financed by the Fund should form part of
trans-European network guidelines which have been adopted by the Council including
those  covered  by  the  plans  for  trans-European  networks  approved  by  the  Council  or
proposed  by  the  Commission  before  the  entry  into  force  of  the  Treaty  on  European

6

7

OJ L 209, 2.8.1997, p. 6.
OJ C 236, 2.8.1997, p. 1.

6

                                                
Union. However, other transport infrastructure projects contributing to the attainment
of the objectives of Article (cid:2) 154 (cid:3) of the Treaty may be financed until the Council
has adopted the appropriate guidelines.

(cid:1) 1164/94 Recital (9) (adapted)

(13) Article  (cid:2) 174 (cid:3)  of  the  Treaty  defines  the  objectives  and  principles  of  the
Community in the field of the environment. The Community may contribute, through
the Fund, to actions designed to achieve those objectives. In accordance with Article
175(5) of the Treaty and without prejudice to the principle that the polluter should pay,
the Council may decide on financial assistance from the Fund where a measure based
on paragraph 1  of  that  Article  involves  costs  deemed  disproportionate  for  the  public
authorities of a Member State.

(14)

The  principles  and  objectives  of  sustainable  development  are  established  in  the
Community's  programme  of  policy  and  action  in  relation  to  the  environment  and
sustainable development as set out in the Council Resolution of 1 February 19938.

(cid:1) 1164/94 Recital (10)

(15) A  suitable  balance  must  be  struck  between  financing  for  transport  infrastructure

projects and financing for environmental projects.

(cid:1) 1164/94 Recital (11)

(16)

The  Commission's  Green  Paper  on  the  Impact  of  Transport  on  the  Environment9
reiterates  the  need  to  develop  a  more  environment-friendly  transport  system  which
takes into account the sustainable development needs of the Member States.

(cid:1) 1164/94 Recital (12)

(17) Any  calculation  of  the  cost  of  transport  infrastructure  projects  must  encompass

environmental costs.

(cid:1) 1164/94 Recital (13)

(cid:1) 1164/94 Recital (14) (adapted)

(18)

In the light of the undertaking by the Member States concerned not to decrease their
investment  efforts 
transport
infrastructure,  the  principle  of  additionality  within  the  meaning  of  Article  (cid:2) 11  of

the  fields  of  environmental  protection  and 

in 

8

9

OJ C 138, 17.5.1993, p. 1.
COM(92) 46 final.

7

                                                
Council  Regulation  (EC)  No  1260/1999  of  21  June  1999  laying  down  general
provisions on the Structural Funds10 (cid:3) will not apply to the Fund.

(19)

In  accordance  with  Article  (cid:2) 267 (cid:3)  of  the  Treaty,  the  EIB  is  to  facilitate  the
financing  of  investments  in  conjunction  with  assistance  from  the  other  Community
financial instruments.

(cid:1) 1164/94 Recital (15) (adapted)

(20)

It is necessary to co-ordinate action taken in the fields of the environment and of trans-
European transport infrastructure networks through the Fund, the Structural Funds, the
EIB  and  the  other  financial  instruments  in  order  to  enhance  the  effectiveness  of
Community assistance.

(cid:1) 1164/94 Recital (16) (adapted)

(cid:1) 1164/94 Recital (17) (adapted)

(21) With  a  view  to  helping  Member  States  in  the  preparation  of  their  projects,  the
Commission should be in a position to ensure that the  necessary technical support is
available 
the  preparation,
implementation, monitoring and evaluation of projects.

them,  particularly 

to  contribute 

in  order 

to 

to 

(22)

Particularly in order to ensure value for money, a  thorough  appraisal should precede
the  commitment  of  Community  resources  in  order  to  ensure  that  they  yield
socio-economic benefits in keeping with the resources deployed.

(cid:1) 1164/94 Recital (18)

(cid:1) 1264/1999 Recital (11)

(23) While  the  principle  of  a  high  level  of  assistance  is  retained,  the  search  for  other
sources of finance, in particular the beneficiary Member States effort to maximise the
leverage of  Fund  resources by  encouraging  greater  use  of private sources  of  funding
should be supported by the  Commission.  The  rates  of  assistance  should  be  varied  to
improve the leverage of Fund resources and to take better account of the rate of return
on projects. Application of the polluter-pays principle laid down in Article 174 of the
Treaty must be complied with in operations financed by the Fund.

10

OJ  L  161,  26.6.1999,  p.  1.  Regulation  as  amended  by  Regulation  (EC)  No  1447/2001  (OJ  L  198,
21.7.2001, p. 1).

8

                                                
(24) Assistance  from  the  Fund  must  be  consistent  with  Community  policies,  including
environmental  protection,  transport,  trans-European  networks,  competition  and  the
award  of  public  contracts.  Environmental  protection  includes  the  assessment  of
environmental impact.

(cid:1) 1164/94 Recital (19) (adapted)

(25)

There should be provision for an indicative allocation of the global resources available
for  commitment  between  the  Member  States  in  order  to  facilitate  the  preparation  of
projects.

(cid:1) 1164/94 Recital (20)

(26)

Total  annual  receipt  in  any  Member  State  from  the  Fund  under  this  Regulation,  in
combination  with  assistance  provided  under  the  Structural  Funds,  should  be  limited
under a general capping dependent on the national absorption capacity.

(cid:1) 1264/1999 Art. 1 point 1(c)
(adapted)

(27)

The  preliminary  and  final  figures  for  the  public-sector  borrowing  requirement,  gross
domestic  product  (cid:2) (GDP) (cid:3)  and  GNP  must  be  compiled  in  accordance  with  the
rules of the European system of integrated economic accounts established by Council
Regulation (EC) No 2223/9611.

(cid:1) 1264/1999 Recital (9) (adapted)

(28)

It is necessary, given the requirements of economic and social cohesion, to provide a
high rate of assistance.

(cid:1) 1164/94 Recital (22)

(29)

In  order  to  facilitate  the  management  of  assistance  from  the  Fund,  there  should  be
provision for identifying the stages of projects which may be be considered technically
and financially separate and for grouping the projects together, if necessary.

(cid:1) 1164/94 Recital (23)

11

OJ  L  310,  30.11.1996,  p.  1.  Regulation  as  last  amended  by  Regulation  (EC)  No  359/2002  of  the
European Parliament and of the Council (OJ L 58, 28.2.2002, p. 1).

9

                                                
(cid:1) 1164/94 Recital (24)

(30)

It should be possible to opt for assistance from the Fund either by annual instalments
or for the whole of the project and, in accordance with the principle laid down by the
European  Council  meeting  at  Edinburgh  on  11  and  12  December  1992,  payment
instalments  following  an  initial  advance  should  be  closely  and  transparently  linked
with progress towards the completion of projects.

(31)

The respective powers and responsibilities of the Member States and the Commission
concerning financial control over the Fund's operations should be specified.

(cid:1) 1164/94 Recital (25)

(32)

The Commission and the Member State should improve their cooperation on checking
projects and this cooperation should be made systematic.

(cid:1) 1265/1999 Recital (5)

(cid:1) 1164/94 Recital (26) (adapted)

(33)

In the interests of the proper management of the Fund, provision should be made for
effective  methods  of  evaluating,  monitoring  and  checking  Community  operations,
specifying the principles governing the evaluation, defining the nature of and the rules
governing  the  monitoring,  and  laying  down  the  action  to  be  taken  in  response  to
irregularities  or  failure  to  comply  with  one  of  the  conditions  laid  down  when
assistance from the Fund was approved.

(34) Where irregularities are detected, there should be a system of financial corrections to

protect the financial interests of the Community.

(cid:1) 1265/1999 Recital (6)

(35) Adequate information should be provided, inter alia, in the form of an annual report.

(cid:1) 1164/94 Recital (27)

(36)

Provision  should  be  made  to  give  adequate  publicity  to  Community  assistance  from
the Fund.

(cid:1) 1164/94 Recital (28) (adapted)

10

(37)

Publication in the Official Journal of the European Union of calls for public  tenders
concerning projects receiving assistance from the Fund should mention the assistance.

(cid:1) 1164/94 Recital (29)

(38)

In  order  to  facilitate  the  application  of  this  Regulation,  the  implementing  provisions
should be defined in Annex II. To ensure the necessary flexibility in their application,
the Council, acting by a qualified majority on a proposal from the Commission, should
be able, if necessary, in the light of experience gained, to amend those provisions,

(cid:1) 1164/94 Recital (30)

HAS ADOPTED THIS REGULATION:

(cid:1) 1164/94

Article 1

Definition and objective

1.

2.

3.

1.

A Cohesion Fund, hereinafter referred to as “the Fund”, is hereby established.

The Fund shall contribute to the strengthening of the economic and social cohesion
of  the  Community  and  shall  operate  according  to  the  provisions  set  out  in  this
Regulation.

The Fund may contribute to the financing of:

(a)

projects; or

(b)

stages of a project which are technically and financially independent; or

(c)

groups of projects linked to a visible strategy which form a coherent whole.

(cid:1) 1164/94 (adapted)

Article 2

Scope

The  Fund  shall  provide  financial  contributions  to  projects,  which  contribute  to
achieving the objectives laid down in the Treaty on European Union, in the fields of
the  environment  and  trans-European  transport  infrastructure  networks  in  Member
States with a per capita gross national product (GNP), measured in purchasing power
parities,  of  less  than  90%  of  the  Community  average  which  have  a  programme
leading  to  the  fulfilment  of  the  conditions  of  economic  convergence  referred  to  in
Article (cid:2) 104 (cid:3) of the Treaty.

11

2.

With  regard  to  the  GNP  criterion  referred  to  in  paragraph  1,  the  Member  States
referred  to  in  the  (cid:2) second  subparagraph  of  paragraph  3 (cid:3)  shall  continue  to  be
eligible  for  assistance  from  the  Fund  provided  that,  after  a  mid-term  review
(cid:2) carried  out  before  the  end  of  2003  based  on  per  capita  GNP  as  shown  by
Community data for the period 2000 to 2002 (cid:3) , their GNP remains below 90 % of
the Community average. Any eligible Member State whose GNP  exceeds the  90 %
threshold at that time shall lose its entitlement to assistance from the Fund  for new
projects  or,  in  the  case  of  important  projects  split  into  several  technically  and
financially separate stages, for new stages of a project.

(cid:1) 1264/1999 Art. 1 point 2
(adapted)

3.

To be eligible under the Fund from 1 January 2000, the beneficiary Member States
must  have  introduced  a  programme  as  provided  for  in  Articles  3  and  7  of  Council
Regulation (EC) No 1466/9712.

The  four  Member  States  meeting  the  GNP  criterion  referred  to  in  paragraph  1  are
Spain, Greece, Portugal and Ireland.

(cid:1) 1164/94 (adapted)

Article 3

Eligible measures

1.

The Fund may provide assistance for the following:

(a)

environmental  projects  contributing  to  the  achievement  of  the  objectives  of
Article  (cid:2) 174 (cid:3)  of  the  Treaty,  including  projects  resulting  from  measures
adopted pursuant to Article (cid:2) 175 (cid:3) of the Treaty and, in particular, projects
in line with the priorities conferred on Community environmental policy by the
Programme  of  Policy  and  Action  in  relation  to  the  Environment  and
Sustainable Development;

(b)

transport  infrastructure  projects  of  common  interest,  supported  by  Member
States, which are identified within the framework of the guidelines adopted by
Decision No 1692/96/EC of the European Parliament and the Council 13.

(cid:1) 1264/1999 Art. 1 point 3

12

13

OJ L 209, 2.8.1997, p. 1.
OJ L 228, 9.9.1996, p. 1.

12

                                                
2.

Assistance may also be granted for:

(cid:1) 1164/94
(cid:4)1 1264/1999 Art. 1 point 3

(a)

preliminary  studies  related  to  eligible  projects,  including  those  necessary  for
their implementation;

(b) (cid:4)1 technical  support  measures, 
campaigns, particularly: (cid:5)

including  publicity  and 

information

(i)

horizontal measures such as  comparative studies to assess the impact of
Community assistance;

(ii) measures  and  studies  which  contribute  to  the  appraisal,  monitoring
(cid:4)1 , supervision (cid:5) or evaluation, of projects,  and  to  strengthening  and
ensuring the co-ordination and consistency of projects, particularly their
consistency with other Community policies;

(iii) measures  and  studies  helping  to  make  the  necessary  adjustments  to  the

implementation of projects.

Article 4

Financial resources

(cid:1) 1264/1999 Art. 1 point 4
(adapted)

For  the  Fund  under  this  Regulation,  from  1  January  2000,  total  resources  available  for
commitments  in  the  period  2000  to  2006  (cid:2) shall  amount  to (cid:3)  EUR  18  billion  at  1999
prices.

Commitment appropriations for each year of that period (cid:2) shall amount to (cid:3):

– 

– 

– 

– 

– 

– 

– 

2000: EUR 2.615 billion;

2001: EUR 2.615 billion;

2002: EUR 2.615 billion;

2003: EUR 2.615 billion;

2004: EUR 2.515 billion;

2005: EUR 2.515 billion;

2006: EUR 2.510 billion.

In the event of a Member State becoming ineligible, resources for the  Fund will be reduced
accordingly.

13

(cid:1) 1264/1999 Art. 1 point 5
(adapted)

Article 5

Indicative allocation

An  indicative  allocation  of  the  total  resources  of  the  Fund  shall  be  made  on  the  basis  of
precise  and  objective  criteria,  principally  population,  per  capita  GNP  taking  account  of  the
improvement in national prosperity attained over the previous period, and surface area; it shall
also  take  account  of  other  socioeconomic  factors  such  as  deficiencies  in  transport
infrastructure.

The indicative allocation of the total resources resulting from the application of those criteria
is set out in Annex I.

Total  annual  receipts  from  the  Fund  under  this  Regulation,  in  combination  with  assistance
provided  under  the  Structural  Funds,  should  not  exceed  4%  of  national  (cid:2) gross  domestic
product (cid:3) (GDP).

(cid:1) 1264/1999 Art. 1 point 6

Article 6

Conditional assistance

1.

2.

No new projects or, in the event of important projects, no new project stages shall be
financed  by  the  Fund  in  a  Member  State  in  the  event  of  the  Council,  acting  by  a
qualified  majority  on  a  recommendation  from  the  Commission,  finding  that  the
Member  State  in  the  application  of  this  Regulation  has  not  implemented  the
programme  referred  to  in  Article  2(3)  in  such  a  way  as  to  avoid  an  excessive
government deficit.

The  suspension  of  financing  shall  cease  when  the  Council,  acting  under  the  same
conditions, finds that the Member State concerned has taken measures to implement
that programme in such a way as to avoid an excessive government deficit.

Exceptionally, in the case of projects directly effecting more than one Member State,
the  Council  acting  by  a  qualified  majority  on  a  recommendation  from  the
Commission may decide to defer suspension of financing.

14

(cid:1) 1164/94

Article 7

Rate of assistance

1.

The  rate  of  Community  assistance  granted  by  the  Fund  shall  be  80%  to  85%  of
public  or  equivalent  expenditure,  including  expenditure  by  bodies  whose  activities
are undertaken within an administrative or legal framework by virtue of which they
may be deemed to be equivalent to public bodies.

(cid:1) 1264/1999 Art. 1 point 7
(adapted)

However, this rate may be reduced to take account, in cooperation with the Member
State  concerned,  of  the  estimated  revenue  generated  by  projects  and  of  any
application of the polluter-pays principle.

To achieve this, the Commission shall support beneficiary Member States' efforts to
maximise  the  leverage  of  Fund  resources  by  encouraging  greater  use  of  private
sources of funding.

(cid:1) 1164/94

2.

3.

4.

Where assistance is granted for a project which generates revenue, the amount of the
assistance from the Fund shall be established by the Commission, taking account of
revenue  where  it  constitutes  substantial  net  revenue  for  the  promoters  and  in  close
collaboration with the beneficiary Member State.

“Project which generates revenue” means:

(a)

infrastructures the use of which involves fees borne directly by users;

(b)

productive investments in the environment sector.

The  beneficiary  Member  States  may  submit  proposals  for  preparatory  studies  and
technical support measures.

Preliminary  studies  and  technical  support  measures,  including  those  undertaken  at
the Commission's initiative, may be financed exceptionally at 100% of the total cost.

Total expenditure carried out pursuant to this paragraph may not exceed 0.5% of the
total allocation to the Fund.

15

(cid:1) 1164/94 (adapted)

Article 8

Co-ordination and compatibility with Community policies

Projects financed by the Fund shall be in keeping with the provisions of the Treaties,
with  the  instruments  adopted  pursuant  thereto  and  with  Community  policies,
including  those  concerning  environmental  protection,  transport,  trans-European
networks, competition and the award of public contracts.

The  Commission  shall  ensure  co-ordination  and  consistency  between  projects
undertaken pursuant to this Regulation and measures undertaken with  contributions
from  the  Community  budget,  the  European  Investment  Bank  (EIB)  and  the  other
financial instruments of the Community.

(cid:1) 1164/94

Article 9

Cumulation and overlapping

No  item  of  expenditure  may  benefit  both  from  the  Fund  and  from  the  European
Agricultural Guidance and Guarantee Fund, the European Social Fund, the European
Regional Development Fund or the financial instrument of fisheries guidance.

The combined assistance of the Fund and other Community aid for a project shall not
exceed 90% of the total expenditure relating to that project.

(cid:1) 1164/94 (adapted)

Article 10

Approval of projects

The  projects  to  be  financed  by  the  Fund  shall  be  adopted  by  the  Commission  in
agreement with the beneficiary Member State.

A suitable balance  shall  be  struck  between  projects  in  the  field  of  the  environment
and  projects  relating  to  transport  infrastructure.  This  balance  shall  take  account  of
Article (cid:2) 175 (cid:3) (5) of the Treaty.

1.

2.

1.

2.

1.

2.

16

(cid:1) 1164/94
(cid:4)1 1264/1999 Art. 1, pt. 8

3.

4.

Applications for assistance for projects under Article 3(1) shall be submitted by the
beneficiary Member State. Projects, including groups of related projects, shall be of a
sufficient scale to have a significant impact in the field of environmental protection
or  in  the  improvement  of  trans-European  transport  infrastructure  networks.  In  any
event, the total cost of projects or groups of projects may in principle not be less than
(cid:4)1 EUR (cid:5) 10 million. Projects or groups of projects costing less than this may be
approved in duly justified cases.

Applications  shall  contain  the  following  information:  the  body  responsible  for
implementation, the nature of the investment and a description thereof, its costs and
location,  including,  where  applicable,  an  indication  of  projects  of  common  interest
situated on the same transport axis, the timetable for implementation of the work, a
cost-benefit  analysis,  including  the  direct  and  indirect  effects  on  employment,
information  enabling  impact  on  the  environment  to  be  assessed,  information  on
public  contracts,  the  financing  plan  including,  where  possible,  information  on  the
economic viability of the project, and the total financing the Member State is seeking
from the Fund and any other Community source.

They shall also contain all relevant information providing the required proof that the
projects comply with the Regulation and with the criteria set out in paragraph 5, and
particularly that there are medium-term economic and social benefits commensurate
with the resources deployed.

5.

The following criteria shall be applied to ensure the high quality of projects:

(a)

their medium-term economic and social benefits, which shall be commensurate
with  the  resources  deployed;  an  assessment  shall  be  made  in  the  light  of  a
cost-benefit analysis;

(b)

the priorities established by the beneficiary Member States;

(c)

(d)

(e)

the contribution which projects can make to the implementation of Community
policies  on  the  environment  (cid:4)1 including  the  polluter-pays  principle (cid:5)  and
trans-European networks;

the  compatibility  of  projects  with  Community  policies  and  their  consistency
with other Community structural measures;

the  establishment  of  an  appropriate  balance  between  the  fields  of  the
environment and transport infrastructure.

6.

Subject  to  Article  6  and  to  the  availability  of  commitment  appropriations,  the
Commission shall decide on the grant of assistance from the Fund provided that the
requirements  of  this  Article  are  fulfilled,  as  a  general  rule  within  three  months  of
receipt  of  the  application.  Commission  decisions  approving  projects,  stages  of
projects or groups of related projects shall determine the amount of financial support
and  lay  down  a  financing  plan  together  with  all  the  provisions  and  conditions
necessary for the implementation of the projects.

17

7.

The  key  details  of  the  Commission's  decisions  shall  be  published  in  the
Official Journal of the European Union.

1.

2.

3.

4.

5.

1.

(cid:1) 1164/94
(cid:4)1 1264/1999 Art. 1 point 9

Article 11

Financial provisions

The commitment appropriations entered in the budget shall be granted on the basis of
the decisions approving the measures concerned, in accordance with Article 10.

Assistance relating to the projects referred to in Article 3(1) shall as a general rule be
committed  by  annual  instalments.  However,  in  appropriate  cases,  the  Commission
may  commit the total amount of the assistance  granted when it adopts the decision
granting the assistance.

Expenditure  within  the  meaning  of  Article  7(1)  shall  not  be  deemed  eligible  for
assistance from the Fund if incurred by the beneficiary Member State before the date
on which the Commission receives the relevant application.

Payments made after an initial advance  must  be closely and  transparently  linked to
progress made in the implementation of the projects.

Payments shall be made in (cid:4)1 euro (cid:5) and shall be subject to the specific provisions
set out in Annex II.

Article 12

Financial checks

(cid:1) 1264/1999 Art. 1 point 10

Without  prejudice  to  the  Commission's  responsibility  for  implementing  the
Community budget, Member States shall take responsibility in the first instance  for
the financial control of projects. To that end, the measures they take shall include:

(a)

verifying that management and control arrangements have been set up and are
being implemented in such a way as to ensure that Community funds are being
used efficiently and correctly;

(b)

providing the Commission with a description of these arrangments;

(c)

ensuring  that  projects  are  managed  in  accordance  with  all  the  applicable
Community  rules  and  that  the  funds  placed  at  their  disposal  are  used  in
accordance with the principles of sound financial management;

18

(d)

(e)

(f)

(g)

(h)

certifying that the declarations of expenditure presented to the Commission are
accurate  and  guaranteeing  that  they  result  from  accounting  systems  based  on
verifiable supporting documents;

preventing  and  detecting  irregularities,  notifying  these  to  the  Commission,  in
accordance  with  the  rules,  and  keeping  the  Commission  informed  of  the
progress of administrative and legal proceedings. In that context, the Member
States  and  the  Commission  shall  take  the  necessary  steps  to  ensure  that  the
information exchanged remains confidential;

presenting to the Commission, when  each  project, step  of project  or  group of
projects is wound up, a declaration drawn up by a person or department having
a  function  independent  of  the  designated  authority.  This  declaration  shall
summarise the conclusions of the checks carried out during previous years and
shall assess the validity of the application for payment of the final balance and
the  legality  and  regularity  of  the  expenditure  covered  by  the  final  certificate.
The  Member  States  may  attach  their  own  opinion  to  this  declaration  if  they
consider it necessary;

co-operating with the Commission to ensure that Community funds are used in
accordance with the principles of sound financial management;

recovering any amounts lost as a result of an irregularity detected and,  where
appropriate, charging interest on late payments.

2.

The  Commission  in  its  responsibility  for  the  implementation  of  the  Community
budget shall ensure that Member States have smoothly functioning management and
control systems so that Community funds are efficiently and correctly used.

laws, 

To  that  end,  without  prejudice  to  checks  carried  out  by  the  Member  States  in
accordance  with  national 
regulations  and  administrative  provisions,
Commission officials or servants may, in accordance with arrangements agreed with
the  Member  State  in  the  framework  of  cooperation  described  in  Article  G(1)  of
Annex  II,  carry  out  on-the-spot  checks,  including  sample  checks,  on  the  projects
financed  by  the  Fund and on management and  control systems  with  a  minimum  of
one  working  day's  notice.  The  Commission  shall  give  notice  to  the  Member  State
concerned with a view to obtaining all the assistance necessary. Officials or servants
of the Member State concerned may take part in such checks.

The  Commission  may  require  the  Member  State  concerned  to  carry  out  an
on-the-spot check to verify the correctness of one or more transactions. Commission
officials or servants may take part in such checks.

(cid:1) 1265/1999 Art. 1 point 7

Before  carrying  out  an  on-the-spot  check,  the  Commission  shall  give  notice  to  the
Member  State  concerned  with  a  view  to  obtaining  all  the  assistance  necessary.
On-the-spot checks by the Commission without notice shall be subject to agreements
reached  in  accordance  with  the  Financial  Regulation.  Officials  or  agents  of  the
Member State concerned may take part in checks.

19

The  Commission  may  require  the  Member  State  concerned  to  carry  out  an
on-the-spot  check  to  verify  the  correctness  of  payment  applications.  Officials  or
agents  of  the  Commission  may  take  part  in  such  checks,  and  must  do  so  if  the
Member State concerned so requests.

The Commission shall  ensure  that  any  checks that  it carries out  are  performed  in a
co-ordinated manner so as to avoid repeating checks  in respect  of the same subject
matter  during  the  same  period.  The  Member  State  concerned  and  the  Commission
shall  immediately  exchange  any  relevant  information  concerning  the  results  of  the
checks carried out.

(cid:1) 1164/94 (adapted)
(cid:4)1 1264/1999 Art. 1 point 10

3.

Member  States  shall  make  available  to  the  Commission  any  appropriate  national
control reports on the projects concerned.

(cid:4)1 4. (cid:5)

The  Commission  shall  adopt  detailed  rules  for  the  application  of  this  Article

and shall inform the European Parliament thereof.

Article 13

Appraisal, monitoring and evaluation

1.

2.

3.

4.

5.

6.

The  Member  States  and  the  Commission  shall  ensure  that  the  implementation  of
projects under this Regulation is effectively monitored and evaluated. Projects must
be adjusted on the basis of the results of monitoring and evaluation.

In order to ensure  the  effectiveness  of  Community  assistance,  the  Commission  and
the beneficiary Member States shall, in cooperation with the EIB where appropriate,
carry out a systematic appraisal and evaluation of projects.

On  receipt  of  a  request  for  assistance  and  before  approving  a  project,  the
Commission  shall  carry  out  a  thorough  appraisal  in  order  to  assess  the  project's
consistency with the criteria laid down in Article 10(5). The Commission shall invite
the EIB to contribute to the assessment of projects as necessary.

During  the  implementation  of  projects  and  after  their  completion,  the  Commission
and  the  beneficiary  Member  States  shall  evaluate  the  manner  in  which  they  have
been carried out and the potential and actual impact of their implementation in order
to  assess  whether  the  original  objectives  can  be,  or  have  been,  achieved.  This
evaluation  shall,  inter  alia,  address  the  environmental  impact  of  the  projects,  in
compliance with the existing Community rules.

In  vetting  individual  applications  for  assistance,  the  Commission  shall  take  into
account  the  findings  of  appraisals  and  evaluations  made  in  accordance  with  this
Article.

The  detailed  rules  for  monitoring  and  evaluation,  as  provided  for  in  paragraph  4,
shall be laid down in the decisions approving projects.

20

Article 14

Information and publicity

1.

2.

The Commission shall present an annual report on the activities of the Fund, for the
purposes of examination and their opinion, to the European Parliament, the Council,
the European Economic and Social Committee and the Committee of the Regions.

The European Parliament shall deliver an opinion on the report as soon as possible.
The Commission shall report on how it has applied the observations contained in the
European Parliament's opinion.

The Commission shall ensure that Member States are informed of the activities of the
Fund.

The  Member  States  responsible  for  implementing  a  measure  receiving  a  financial
contribution  from  the  Fund  shall  ensure  that  adequate  publicity  is  given  to  the
measure with a view to:

(a) making  the  general  public  aware  of  the  role  played  by  the  Community  in

relation to the measure;

(b) making  potential  beneficiaries  and  professional  organisations  aware  of  the

possibilities afforded by the measure.

Member  States  shall  ensure,  in  particular,  that  directly  visible  display  panels  are
erected  showing  the  percentage  of  the  total  cost  of  a  given  project  which  is  being
financed  by  the  Community,  together  with  the  Community  logo,  and  that
representatives  of  the  Community  institutions  are  duly  involved  in  the  most
important public activities connected with the Fund.

They shall inform the Commission of the initiatives taken under this paragraph.

3.

The Commission shall adopt detailed rules on information and publicity, shall inform
the European Parliament thereof and shall publish them in the Official Journal of the
European Union.

(cid:1) 1164/94

Article 15

Implementation

The provisions for the implementation of this Regulation are set out in Annex II hereto.

21

(cid:1) 1164/94 (adapted)
(cid:4)1 1264/1999 Art. 1 point 11

Article 16

Final and transitional provisions

1.

2.

3.

The  Council,  acting  on  a  proposal  from  the  Commission  in  accordance  with  the
procedure  laid  down  in  Article  (cid:2) 161 (cid:3)  of  the  Treaty,  shall  re-examine  this
Regulation (cid:4)1 by 31 December 2006 at the latest (cid:5) .

This  Regulation  shall  not  affect  the  continuation  of  measures  approved  by  the
Commission  on  the  basis  of  the  provisions  of  Regulation  (EEC)  No  792/93
applicable  before  the  entry  into  force  of  Regulation  (cid:2) (EC)  No  1164/94.  This
Regulation (cid:3) shall consequently apply, (cid:2) as from its entry into force, (cid:3) to those
measures.

Applications presented within  the framework  of Regulation  (EEC)  No 792/93  shall
remain valid.

(cid:1) 

Article 17

Repeal

Regulation (EC) No 1164/94 is repealed.

References to the repealed Regulation shall be construed as references to this Regulation and
shall be read in accordance with the correlation table in Annex IV.

(cid:1) 1164/94 (adapted)

Article 18

Entry into force

This  Regulation  shall  enter  into  force  on  the  (cid:2) twentieth (cid:3)  day  following  that  of  its
publication in the Official Journal of the European Union.

22

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels,

For the Council
The President

23

(cid:1) 1264/1999 Art. 1 point 12
(adapted)

ANNEX I

Indicative allocation of the total resources of the Fund among the beneficiary Member States:

—

—

—

—

Greece:

Spain:

Ireland:

16% to 18% of the total

61% to 63.5% of the total

2% to 6% of the total

Portugal:

16% to 18% of the total.

_____________

24

(cid:1) 1164/94

ANNEX II

IMPLEMENTING PROVISIONS

(cid:1) 1265/1999 Art. 1 point 1
(adapted)

1.

2.

3.

4.

Article A

Designation of projects, of stages or groups of projects

The  Commission  may,  in  agreement  with  the  beneficiary  Member  State,  group
projects  together  and  designate  technically  and  financially  separate  stages  of  a
project for the purpose of granting assistance.

For the purpose of this Regulation, the following definitions shall apply:

(a)

a  “project”  shall  be  an  economically  indivisible  series  of  works  fulfilling  a
precise technical function and with clearly identified aims from which to judge
whether  the  project  complies  with  the  criterion  laid  down  in  Article  10(5)
(cid:2) (a) (cid:3) ;

(b)

a “technically and financially independent stage” shall be a stage which can be
identified as operational in its own right.

A  stage  may  also  cover  preliminary,  feasibility  and  technical  studies  needed  for
carrying out a project.

To  comply  with  the  criterion  in  Article  1(3)  (cid:2) (c) (cid:3)  ,  projects  meeting  the
following three conditions may be grouped:

(a)

(b)

(c)

they  must  be  located  in  the  same  area  or  situated  along  the  same  transport
corridor;

they  must  be  carried  out  under  an  overall  plan  for  the  area  or  corridor  with
clearly identified goals, as provided for in Article 1(3);

they  must  be  supervised  by  a  body  responsible  for  co-ordinating  and
monitoring the group of projects in cases where the projects are carried out by
different competent authorities.

25

(cid:1) 1164/94 (adapted)
(cid:4)1 1265/1999 Art. 1 point 2
(cid:4)2 1265/1999 Art. 1 point 3

Article B

(cid:2) Appraisal (cid:3)

1.

2.

1.

2.

The Commission shall examine applications for assistance to verify in particular that
the  administrative  and  financial  mechanisms  are  adequate  for  the  effective
implementation of the project.

Pursuant to Article 13(3), the Commission shall appraise projects to determine their
anticipated  impact  in  terms  of  the  objectives  of  the  Fund,  quantified  using
appropriate  indicators.  (cid:4)1 The  beneficiary  Member  States  shall  provide  all
necessary information, as set out in Article 10(4), including the results of feasibility
studies and ex ante appraisals. In order to make this appraisal as effective as possible,
Member States shall also provide the results of the environmental impact assessment
in conformity with the Community legislation, and their consistency with a general
environmental or transport strategy at administrative unit or sector level, and, where
appropriate:

(a)

an indication of the possible alternatives that were not chosen; and

(b)

the links between projects of common interest located along the same transport
corridor. (cid:5)

Article C

Commitments

Budgetary  commitments  shall  be  made  on  the  basis  of  the  Commission  decisions
approving the measures concerned (project, stage of project, group of projects, study
or technical support measure). Commitments shall be valid for a period determined
by the nature of the measure and the specific conditions for its implementation.

Budgetary  commitments  in  respect  of  assistance  granted  to  projects,  stages  of
projects or groups of projects shall be carried out in one of two ways:

(a)

commitments in respect of the projects referred to in Article 3(1) to be carried
out over a period of two or more years shall, as a general rule and subject to the
provisions of subparagraph (b), be effected in annual instalments.

The commitments in respect of the first annual instalment shall be made when
the  decision  granting  Community  assistance  is  adopted  by  the  Commission.
(cid:4)2 Commitments  in  respect  of  subsequent  annual  instalments  shall  be  based
on  the  initial  or  revised  financing  plan  for  the  project  and  shall  normally  be
made at the  beginning of each budget  year  and  as  a  general  rule  by  30  April
each  year,  based  on  the  expenditure  forecasts  for  the  project  for  that  current
year; (cid:5)

26

(cid:1) 1265/1999 Art. 1 point 3

(b)

for  projects  to  be  carried  out  over  a  period  of  less  than  two  years  or  where
Community assistance is less than EUR  50  million,  an  initial  commitment  of
80% of assistance may be made when the Commission adopts the decision to
grant Community assistance.

The balance shall be committed according to the implementation of the project.

(cid:1) 1164/94

In the case of the studies and technical support measures referred to in Article 3(2),
the  assistance  shall  be  committed  when  the  Commission  approves  the  measure
concerned.

The arrangements for commitments shall  be  specified  in the  Commission  decisions
approving the measures concerned.

(cid:1) 1265/1999 Art. 1 point 3

Except in duly justified cases, the assistance granted to a project, group of projects or
project  stage  on  which  work  has  not  begun  within  two  years  from  the  date  of  its
expected  start  as  indicated  in  the  decision  granting  assistance  or  the  date  of  its
approval if later, shall be cancelled.

In  any  case  the  Commission  shall  inform  in  good  time  the  Member  States  and  the
designated authority whenever there is a risk of cancellation.

(cid:1) 1164/94
(cid:4)1 1265/1999 Art. 1 point 4

Article D

Payments

Payments of financial assistance shall be made in accordance with the corresponding
budget  commitments,  to  the  authority  or  body  designated  for  the  purpose  in  the
application  submitted  by  the  beneficiary  Member  State  concerned.  (cid:4)1 Payments
may  take  the  form  of  payments  on  account,  interim  payments  or  payments  of  the
final  balance.  Interim  payments  and  payments  of  the  balance  shall  relate  to
expenditure  actually  paid  out,  which  must  be  supported  by  receipted  invoices  or
accounting documents of equivalent probative value. (cid:5)

3.

4.

5.

1.

27

2.

Payments shall be made as follows:

(cid:1) 1265/1999 Art. 1 point 4

(a)

a single payment on account of 20% of the Fund assistance as initially decided
shall be paid when the decision granting Community assistance is adopted and,
except  where  duly  justified,  after  signature  of  the  contracts  relating  to  public
procurement.

All or part of a payment on account shall be repaid by the designated authority
or  body  referred  to  in  paragraph  1  if  no  payment  application  is  sent  to  the
Commission within 12 months from the date on which the payment on account
is paid;

(b)

interim  payments  may  be  paid  provided  that  the  project  is  progressing
satisfactorily towards completion and shall be made to refund the expenditure
certified and actually paid, subject to the following conditions:

(i)

(ii)

the Member State has submitted an application describing the progress of
the  project  in  terms  of  its  physical  and  financial  indicators  and  its
conformity  with  the  decision  to  grant  asssistance,  including  where
appropriate any specific conditions attached to the assistance;

the observations and recommendations of the national and/or Community
inspection  authorities  have  been  acted  on,  in  particular  as  regards  the
correction of any observed or presumed irregularities;

(iii)

the main technical, financial and legal problems that have arisen and the
measures taken to correct them have been indicated;

(iv)

any departures from the original financing plan have been analysed;

(v)

the steps taken to publicise the project have been described.

The Member States shall be informed without delay by the Commission if one
of the abovementioned conditions is not fulfilled;

(c)

the total amount of the payments made under (a) and (b) may not exceed 80%
of  the  total  assistance  granted.  This  percentage  may  be  increased  to  90%  for
important projects committed in annual instalments and in justified cases;

(d)

the  final  balance  of  Community  assistance  calculated  on  the  basis  of
expenditure certified and actually paid shall be paid provided that:

(i)

(ii)

the  project,  stage  of  project,  or  group  of  projects  has  been  carried  out
according to its objectives;

the  designated  authority  or  body  referred  to  in  paragraph  1  submits  an
application  for  payment  to  the  Commission  within  six  months  of  the
deadline for completion of the work and for expenditure laid down in the

28

decision  granting  assistance  to  the  project,  stage  of  project  or  group  of
projects;

the  final  report  referred  to  in  Article  F(4)  is  submitted  to  the
Commission;

the Member State certifies to the Commission that the information given
in the application for payment and in the report is correct;

the Member State has sent the Commission the declaration referred to in
Article 12(1);

all the information and publicity measures drawn up by the Commission
under Article 14(3) have been implemented.

(iii)

(iv)

(v)

(vi)

If  the  final  report  referred  to  in  paragraph  2  is  not  sent  to  the  Commission  within
18 months of the final date for completion of the works and payments as given in the
decision  granting  assistance,  that  part  of  the  assistance  representing  the  remaining
balance for the project shall be cancelled.

Member  States  shall  designate  the  authorities  empowered  to  issue  the  certificates
referred to in paragraph 2(d).

(cid:1) 1164/94

Member  States  shall  ensure  that  applications  for  payment  are  submitted  to  the
Commission as a general rule three times a year, by 1 March, 1 July and 1 November
at the latest.

(cid:1) 1265/1999 Art. 1 point 4

(cid:1) 1164/94
(cid:4)1 1265/1999 Art. 1 point 4

Payment shall be made to the authority or body designated by the Member State, as a
general rule not later than two months after receipt of an admissible application for
payment (cid:4)1 provided budget funds are available (cid:5).

In  the  case  of  the  studies  and  other  measures  referred  to  in  Article  3(2),  the
Commission shall determine the appropriate payment procedures.

3.

4.

5.

6.

7.

8.

The Commission shall lay down common rules on the eligibility of expenditure.

(cid:1) 1265/1999 Art. 1 point 4

29

(cid:1) 1164/94
(cid:4)1 1265/1999 Art. 1 point 5

Article E

Use of the (cid:1)1 euro (cid:2)

Applications  for  assistance,  together  with  the  relevant  financing  plan,  shall  be
submitted to the Commission in (cid:4)1 euro (cid:5).

The amounts of assistance and the financing plans approved by the Commission shall
be expressed in (cid:4)1 euro (cid:5).

Declarations  of  expenditure  in  support  of  the  corresponding  payment  applications
shall be expressed in (cid:4)1 euro (cid:5).

Payments of financial assistance by the Commission shall be made in (cid:4)1 euro (cid:5) to
the authority designated by the Member State to receive such payments.

For  Member  States  not  participating  in  the  euro,  the  conversion  rate  shall  be  the
Commission's financial accounting rate.

(cid:1) 1265/1999 Art. 1 point 5

(cid:1) 1164/94

Article F

Monitoring

The  Commission  and  the  Member  State  shall  ensure  effective  monitoring  of
implementation of Community projects part-financed by the Fund. Monitoring shall
be carried out by way of jointly agreed reporting procedures, sample checks and the
establishment of ad hoc committees.

Monitoring shall be carried out by reference to physical and financial indicators. The
indicators shall relate to the specific character of the project and its objectives. They
shall be arranged in such a way as to show:

(a)

the stage reached in the receipt in relation to the plan and objectives originally
laid down;

(b)

the progress achieved on the management side and any related problems.

Monitoring  committees  shall  be  set  up  by  arrangement  between  the  Member  State
concerned and the Commission.

30

1.

2.

3.

4.

5.

1.

2.

3.

The  authorities  or  bodies  designated  by  the  Member  State,  the  Commission  and,
where appropriate, the EIB shall be represented on the committees.

Where regional and local authorities are competent for the execution of a project and,
where appropriate, where they are directly concerned by a project they shall also be
represented on such committees.

4.

For  each  project,  the  authority  or  body  designated  for  the  purpose  by  the  Member
State shall submit progress reports to the Commission within three months of the end
of  each  full  year  of  implementation.  A  final  report  shall  be  submitted  to  the
Commission within six months of completion of the project or stage of project.

(cid:1) 1265/1999 Art. 1 point 6

This report shall include:

(a)

a description of the work carried out, accompanied by the physical indicators,
the  expenditure  by  category  of  work  and  any  measures  taken  under  specific
clauses in the decision granting assistance;

(b)

information on all publicity measures;

(c)

certification that the work conforms to the decision granting assistance;

(d)

an  initial  assessment  as  to  whether  the  anticipated  results  as  indicated  in
Article 13(4) are likely to be achieved, including in particular:

(i)

the actual starting date of the project;

(ii)

the way in which it will be managed once finished;

(iii) confirmation,  if  appropriate,  of  the  financial  forecasts,  especially  as

regards the operating costs and expected revenue;

(iv)

(v)

confirmation  of  the  socioeconomic  forecasts,  in  particular  the  expected
costs and benefits;

an  indication  of  the  environmental  protection  measures  taken,  and  their
cost, including compliance with the polluter-pays principle.

5.

On the basis of the results of monitoring, and taking account of the comments of the
monitoring committee, the Commission shall adjust the amounts and conditions for
granting assistance as initially approved, as well as the financing plan envisaged, if
necessary on a proposal by the Member States.

(cid:1) 1164/94

31

6.

7.

1.

The decision granting assistance shall include  appropriate arrangements  for making
the  modifications,  differentiating  between  them  on  the  basis  of  their  nature  and
importance.

(cid:1) 1265/1999 Art. 1 point 6

(cid:1) 1164/94

For the greater effectiveness of the Fund, the Commission shall ensure that when the
Fund is administered particular attention is paid to transparency of management.

The  monitoring  arrangements  shall  be  laid  down  in  the  Commission  decisions
approving the projects.

Article G

Checks

(cid:1) 1265/1999 Art. 1 point 7

The Commission and the Member State shall on the basis of bilateral administrative
arrangements co-operate to co-ordinate plans, methods and implementation of checks
so  as  to  maximise  the  usefulness  of  those  carried  out.  They  shall  immediately
exchange  the  results  of  the  checks  carried  out.  At  least  once  a  year  the  following
shall be examined and evaluated:

(a)

the results of the checks carried out by the Member State and the Commission;

(b)

(c)

any  comments  made  by  other  national  or  Community  control  bodies  or
institutions;

the financial impact of the irregularities noted, the  steps already taken or still
required to correct them and, where necessary, adjustments to the management
and control systems.

Following this examination and evaluation and without prejudice to the measures to
be  taken  immediately  by  the  Member  State  under  Article  H,  the  Commission  may
make  observations,  particularly  regarding  the  financial  impact  of  any  irregularities
detected.  These  observations  shall  be  addressed  to  the  Member  State  and  the
designated  authority  of 
the  project  concerned.  The  observations  shall  be
accompanied,  where  necessary,  by  requests  for  corrective  measures  to  remedy  the
management shortcomings found and correct those irregularities detected which have
not already been corrected. The Member State shall have the opportunity to comment
on these observations.

Where  following  or  in  the  absence  of  comments  of  the  Member  State  the
Commission  adopts  conclusions,  the  Member  State  shall  take  the  necessary  steps

32

2.

3.

within  the  deadline  set  to  comply  with  the  Commission's  request  and  inform  the
Commission of its actions.

Without  prejudice  to  this  Article,  the  Commission  may  suspend  all  or  part  of  an
interim  payment  if  it  finds  that  the  expenditure  concerned  is  linked  to  a  serious
irregularity. The Commission shall inform the Member State concerned of the action
taken and the reasons for it.

For a period of three  years, unless  otherwise decided  in the bilateral  administrative
arrangements,  following  the  payment  by  the  Commission  of  the  final  balance  in
respect of a project, the responsible body and authorities shall keep available for the
Commission all the supporting documents (either the originals or versions certified to
be  in  conformity  with  the  originals  on  commonly  accepted  data  carriers)  regarding
expenditure and checks on the project concerned.

This period shall be interrupted either in the case of legal proceedings or at the duly
substantiated request of the Commission.

(cid:1) 1164/94

Article H

(cid:1) 1265/1999 Art. 1 point 8

Financial corrections

1.

If, after completing the necessary verifications, the Commission concludes that:

(a)

the implementation of a project does not justify either part or the whole of the
assistance granted to it, including a failure to comply with one of the conditions
in  the  decision  to  grant  assistance  and  in  particular  any  significant  change
affecting  the  nature  or  conditions  of  implementation  of  the  project  for  which
the Commission's approval has not been sought; or

(b)

there  is  an  irregularity  with  regard  to  assistance  from  the  Fund  and  that  the
Member State concerned has not taken the necessary corrective measures,

the Commission shall suspend the assistance in respect of the project concerned and
stating  its  reason,  request  that  the  Member  State  submits  its  comments  within  a
specified period of time.

If  the  Member  State  objects  to  the  observations  made  by  the  Commission,  the
Member State shall be invited to a hearing by the Commission, in which both sides
make efforts to reach an agreement about the observations and the conclusions to be
drawn from them.

2.

At the end of the period set by the Commission, the Commission shall, subject to the
respect  of  due  procedure,  if  no  agreement  has  been  reached  within  three  months,
taking into account any comments made by the Member State, decide to:

33

(a)

reduce the payment on account referred to in Article D(2); or

(b) make the financial corrections required. This shall mean cancelling all or part

of the assistance granted to the project.

These decisions shall respect the principle of proportionality. The Commission shall,
when deciding the amount of a correction, take account of the type of irregularity or
change  and  the  extent  of  the  potential  financial  impact  of  any  shortcomings  in  the
management  or  control  systems.  Any  reduction  or  cancellation  shall  give  rise  to
recovery of the sums paid.

(cid:1) 1164/94
(cid:4)1 1265/1999 Art. 1 point 8

(cid:4)1 Any sum received unduly and to be recovered shall be paid to the Commission.
Interest on account of late repayment shall be charged in accordance with the rules to
be adopted by the Commission. (cid:5)

The Commission shall lay down the detailed rules for implementing paragraphs 1 to
3 and shall inform the Member States and the European Parliament thereof.

(cid:1) 1265/1999 Art. 1 point 8

3.

4.

(cid:1) 1164/94 (adapted)
(cid:4)1 1265/1999 Art. 1 point 9

Article I

Public contracts

In the context of the application of Community rules on the award of public contracts, notices
sent for publication in the Official Journal of the European Union shall specify those projects
for which Community assistance has been applied for or granted.

Article J

Information

The information to be given in the annual report provided for in Article 14 shall be as set out
in the (cid:2) Appendix (cid:3) to this Annex.

The Commission shall be responsible for organising an information meeting with the Member
States every six months. (cid:4)1 At this meeting the Commission shall inform the Member States
in particular of the relevant subjects for the annual report and its actions and decisions taken.
The  Commission  shall  send  the  Member  States  the  appropriate  documents  in  good  time
before the meeting is held. (cid:5)

34

Article K

Review

If necessary, in the light of experience gained, the Council may, acting by a qualified majority
on a proposal from the Commission and after consulting the European Parliament, amend the
provisions of this Annex.

_____________

35

(cid:3) Appendix (cid:4) to Annex II

The annual report shall provide information on the following:

1.

2.

3.

4.

5.

6.

7.

8.

9.

financial assistance committed and paid by the Fund, with an annual breakdown by
Member State and by type of project (environment or transport);

the economic and social impact of the Fund in the Member States and on economic
and social cohesion in the Community, including the impact on employment;

(cid:1) 1265/1999 Art. 1 point 10

(cid:1) 1164/94 (adapted)

summary of information on the programmes implemented in the beneficiary Member
States  to  fulfil  the  conditions  of  economic  convergence  referred  to  in  Article
(cid:2) 104 (cid:3) of the Treaty and on the application of Article 6 of this Regulation;

information  on  the  conclusions  drawn  by  the  Commission,  with  regard  to  the
suspension  of  financing,  from  decisions  taken  by  the  Commission,  such  as  those
mentioned in Article 6;

to 

the contribution which the Fund has made to the efforts of the beneficiary Member
States 
to  strengthen
trans-European transport infrastructure networks; the balance between projects in the
field of the environment and projects relating to transport infrastructure;

implement  Community  environment  policy  and 

assessment of the compatibility of operations of the Fund with Community policies,
including those concerning environmental protection, transport, competition and the
award of public contracts;

the  measures  taken  to  ensure  co-ordination  and  consistency  between  projects
financed by the Fund and measures financed with contributions from the Community
budget, the (cid:2) EIB (cid:3) and the other financial instruments of the Community;

the  investment  efforts  of  the  beneficiary  Member  States  in  the  fields  of
environmental protection and transport infrastructure;

the  preparatory  studies  and  technical  support  measures  financed,  including  a
specification of the types of such studies and measures;

10.

the results of appraisal, monitoring and evaluation of projects, including information
on any adjustment of projects to accord with the results of appraisal, monitoring and
evaluation;

11.

the contribution of the EIB to the evaluation of projects;

36

12.

summary of information on the results of checks carried out, irregularities found and
administrative and judicial proceedings in progress.

_____________

37

(cid:6)

ANNEX III

Repealed Regulation and its amending Regulations

Council Regulation (EC) No 1164/94

(OJ L 130, 25.5.1994, p. 1)

Council Regulation (EC) No 1264/1999

(OJ L 161, 26.6.1999, p. 57)

Council Regulation (EC) No 1265/1999

(OJ L 161, 26.6.1999, p. 62)

_____________

38

ANNEX IV

CORRELATION TABLE

Regulation (EC) No 1164/94

This Regulation

Article 1(1) and (2)

Article 1(1) and (2)

Article 1(3), first indent

Article 1(3), second indent

Article 1(3), third indent

Article 2(1)

Article 2(2)

Article 2(3)

Article 1(3)(a)

Article 1(3)(b)

Article 1(3)(c)

Article 2(1)

—

Article 2(2)

Article 2(4), first and second subparagraphs

Article 2(3), first and second subparagraphs

Article 2(4), third subparagraph

--

Article 3(1), first indent

Article 3(1), second indent

Article 3(2), first indent

Article 3(2), second indent

Article 3(1)(a)

Article 3(1)(b)

Article 3(2)(a)

Article 3(2)(b)

Article 3(2), second indent, point (a)

Article 3(2)(b)(i)

Article 3(2), second indent, point (b)

Article 3(2)(b)(ii)

Article 3(2), second indent, point (c)

Article 3(2)(b)(iii)

Article 4, first paragraph

Article 4, second paragraph

—

—

Article 4, third paragraph

Article 4, first paragraph

Article 4, fourth paragraph

Article 4, second paragraph

Article 4, fifth paragraph

Article 4, third paragraph

Articles 5 and 6

Article 7(1)

Article 7(2), first indent

Articles 5 and 6

Article 7(1)

Article 7(2)(a)

39

Article 7(2), second indent

Article 7(2)(b)

Article 7(3) and (4)

Articles 8 and 9

Article 10(1) - (4)

Article 10(5), first indent

Article 10(5), second indent

Article 10(5), third indent

Article 10(5), fourth indent

Article 10(5), fifth indent

Article 7(3) and (4)

Articles 8 and 9

Article 10(1) - (4)

Article 10(5)(a)

Article 10(5)(b)

Article 10(5)(c)

Article 10(5)(d)

Article 10(5)(e)

Article 10(6) and (7)

Article 10(6) and (7)

Articles 11 - 13

Article 14(1)

Article 14(2), first indent

Article 14(2), second indent

Article 14(3)

Article 15

Article 16(1)

Article 16(2)

Article 16(3)

Article 16(4)

—

Article 17

Annex I

Annex II:

Article A

Article B(1)

Article B(2), first indent

Articles 11 – 13

Article 14(1)

Article 14(2)(a)

Article 14(2)(b)

Article 14(3)

Article 15

Article 16(1)

—

Article 16(2)

Article 16(3)

Article 17

Article 18

Annex I

Annex II:

Article A

Article B(1)

Article B(2)(a)

40

Article B(2), second indent

Article B(2)(b)

Article C

Article D(1)

Article D(2)(a)

Article C

Article D(1)

Article D(2)(a)

Article D(2)(b), first indent

Article D(2)(b)(i)

Article D(2)(b), second indent

Article D(2)(b)(ii)

Article D(2)(b), third indent

Article D(2)(b)(iii)

Article D(2)(b), fourth indent

Article D(2)(b)(iv)

Article D(2)(b), fifth indent

Article D(2)(b)(v)

Article D(2)(c)

Article D(2)(c)

Article D(2)(d), first indent

Article D(2)(d)(i)

Article D(2)(d), second indent

Article D(2)(d)(ii)

Article D(2)(d), third indent

Article D(2)(d)(iii)

Article D(2)(d), fourth indent

Article D(2)(d)(iv)

Article D(2)(d), fifth indent

Article D(2)(d)(v)

Article D(2)(d), sixth indent

Article D(2)(d)(vi)

Article D(3) and (4)

Article D(3) and (4)

Article D(4a)

Article D(5)

Article D(6)

Article D(7)

Article E

Article F(1)

Article F(2), first indent

Article F(2), second indent

Article F(3)

Article D(5)

Article D(6)

Article D(7)

Article D(8)

Article E

Article F(1)

Article F(2)(a)

Article F(2)(b)

Article F(3)

Article F(4)(a), (b) and (c)

Article F(4)(a), (b) and (c)

41

Article F(4)(d), first indent

Article F(4)(d)(i)

Article F(4)(d), second indent

Article F(4)(d)(ii)

Article F(4)(d), third indent

Article F(4)(d)(iii)

Article F(4)(d), fourth indent

Article F(4)(d)(iv)

Article F(4)(d), fifth indent

Article F(4)(d)(v)

Article F(5), (6) and (7)

Article F(5), (6) and (7)

Article G – K

Annex to Annex II

—

—

Article G – K

Appendix to Annex II

Annex III

Annex IV

____________

42