Proposal for a Regulation of the European Parliament and of the Council on the European Regional Development Fund
Date: 2004-07-14
Institutions: European Commission
Subjects: European Regional Development Fund, economic and social cohesion, less-favoured region, regional development, regional policy, sustainable development

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 14.7.2004 
COM(2004) 495 final 

2004/0167 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on the European Regional Development Fund 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

Article  158  of  the  EC  treaty  establishes  the  community  objective  of  promoting  harmonious 
development, and article 160 provides for the European Regional Development Fund ERDF, 
in order to support the correction of regional imbalances.  

The most recent enlargement has heightened regional disparities within the EU, with a large 
increase in regions whose development is lagging. With GDP per head ranging from 30% to 
75% of the community average, they are faced with the challenge of achieving convergence. 
In the more developed regions, on the other hand, the continuing challenge is to establish and 
reinforce their relative attractiveness by increasing their competitiveness in order to contribute 
to the harmonious development of the Community’s territory,.  

Enlargement  has  simultaneously  increased  the  overall  number  of  EU  borders.  This  calls  for 
greater territorial co-operation, based around joint projects for local development under cross-
territorial  development  under 
to 
border  cooperation,  actions  conducive 
transnational development, and networks of development and exchange. 

integrated 

The differences in the level of regional development within the Community, require a both in 
budgetary  and  in  thematic  terms.  ERDF  actions  are  thus  differentiated  depending  upon  the 
beneficiary  region,  whilst  remaining  concentrated  upon  the  Union’s  priorities,  as  defined  in 
Lisbon and Gothenburg. 

Under  the  “Convergence”  objective,  the  ERDF  maintains  a  broad  range  of  interventions, 
which  reflects  the  important  needs  faced  by  these  regions.  This  must  allow  the  regions  to 
mobilise  and  modernise  their  resources  and  launch  a  process  of  integrated  and  sustainable 
regional  development.  A  new  emphasis  is  placed  upon  research,  innovation  and  risk 
prevention, while infrastructures retain an important role.  

The  “Regional  competitiveness  and  employment”  objective  is  constructed  around  a  three-
pronged  menu  of  themes:  innovation  and  the  knowledge  economy,  which  seeks  to  raise  the 
quality  of  regional  economies,  environment  and  risk  prevention,  in  order  to  ensure  the 
sustainability  of  these  developments,  and  accessibility  to  transport  services  and  information 
and communication technologies (ICTs), aimed at reducing regional isolation from transport 
and digital networks, a pre-condition for their attractiveness.  

A specific objective is dedicated to territorial co-operation, which is organised around cross-
border  and  trans-national  elements,  based  upon  a  menu  of  actions  linked  to  the  Lisbon  and 
Gothenburg agenda. The inter-regional dimension, in turn, is part of the joint management of 
programmes  under  the  preceding  two  objectives.  This  is  based  upon  a  bottom-up  approach, 
which ensures the involvement of all actors and the success of actions carried out. Support for 
the  development  of  networks  of  exchange,  analysis  and  study  between  regions  and  local 
authorities  will  continue  to  be  provided  by  this  objective.  Programming  and  management 
rules are simplified and clarified.  

Finally,  the  ERDF  pays  particular  attention  to  territorial  specificities,  in  particular  in 
accordance with article 299(2) of the EC treaty. In this regard, the regulation allows, during 
the  planning  phase  of  programmes,  to  modulate  the  menu  to  take  account  of  the  particular 
situation of urban and rural areas, and areas with natural handicaps. Also, the financing of the 
additional costs brought about by the peripheral location of the outermost regions is allowed 
for. 

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2004/0167 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on the European Regional Development Fund 

THE  EUROPEAN  PARLIAMENT  AND  THE  COUNCIL  OF  THE  EUROPEAN 
COMMUNITY, 

Having regard to the Treaty establishing the European Community, and in particular the first 
paragraph of Article 162 and the second subparagraph of Article 299(2) thereof, 

Having regard to the proposal from the Commission1, 

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

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

Acting in accordance with the procedure laid down in Article 251 of the Treaty, 

Whereas, 

(1) 

(2) 

(3) 

(4) 

1 
2 
3 
4 

Article  160  of  the  Treaty  provides  that  the  European  Regional  Development  Fund 
(ERDF) is intended to help redress the main regional imbalances in the Community. 
The  ERDF  therefore  contributes  to  reducing  the  gap  between  the  levels  of 
development of the various regions and the extent to which the less-favoured regions 
and islands, including rural areas, are lagging behind. 

The provisions common to the Structural Funds and the Cohesion Fund are set out in 
Regulation (EC) No (…)4 laying down general provisions for the European Regional 
Development  Fund,  the  European  Social  Fund,  and  the  Cohesion  Fund.  Specific 
provisions  concerning  the  type  of  activities  which  may  be  financed  by  the  ERDF 
under the objectives defined in that Regulation need to be laid down. 

The ERDF should provide assistance within the framework of an overall strategy for 
cohesion policy which ensures greater concentration of assistance on the priorities of 
the Community, particularly outside the less-developed regions. 

Regulation  (EC)  No  (…)  provides  that  the  eligibility  of  expenditure  is  to  be 
established  at  national  level,  with  certain  exceptions  for  which  it  is  necessary  to  lay 

OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
OJ L […], […], p. […]. 

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(5) 

(6) 

(7) 

(8) 

(9) 

down specific provisions. The exceptions related to the ERDF should therefore be laid 
down. 

Efficient and effective implementation of the action supported by the ERDF relies on 
good governance and partnership among all the relevant territorial and socio-economic 
actors, and in particular regional and local authorities. 

Building on the experience and strengths of the Urban Community initiative foreseen 
by Article 20(1)(b) of Council Regulation (EC) No 1260/1999 of 21 June 1999 laying 
down  general  provisions  on  the  Structural  Funds5,  the  urban  dimension  should  be 
reinforced by fully integrating measures in that field into the operational programmes 
co-financed by the ERDF. 

Particular  attention  should  be  paid  to  guaranteeing  complementarity  and  consistency 
between support granted by the ERDF and that granted by the European Agricultural 
Fund  for  Rural  Development  pursuant  to  Regulation  (EC)  No  (…)6  and  by  the 
European Fund  for  Fisheries pursuant to Regulation (EC) No (…)7. Programmes co-
financed  by  the  ERDF  should  therefore  support  the  diversification  of  the  rural 
economies and the areas dependent on fisheries, away from traditional activities. 

It is necessary to ensure that the action supported by the ERDF in favour of small and 
medium  sized  firms  takes  into  account  and  supports  the  implementation  of  the 
European  Charter  for  Small  and  Medium  Sized  Enterprises  adopted  at  the  European 
Council in Santa Maria de Feira.  

Specific attention should be paid to the outermost regions, namely by enlarging, on an 
exceptional basis, the scope of the ERDF to the financing of operating aid linked to the 
compensation of the additional costs in certain sectors. Such a derogation requires the 
use of Article 299(2) of the Treaty as a legal basis.  

(10)  The  ERDF  should  address  the  problems  of  accessibility  and  remoteness  from  large 
markets confronting areas with an extremely low population density, as referred to in 
Protocol  No  6  to  the  Act  of  Accession  of  Austria,  Finland  and  Sweden.  The  ERDF 
should also address the specific difficulties encountered by certain islands, mountain 
areas  and  sparsely  populated  areas  whose  geographical  situation  slows  down  their 
development. 

(11)  The ERDF should ensure synergy with assistance from the European Social Fund and 
the Cohesion Fund. It should also ensure complementarity and consistency with other 
Community policies. 

(12) 

It  is  necessary  to  lay  down  specific  provisions  concerning  the  programming, 
management, monitoring and control of operational programmes under the “European 
territorial cooperation” objective. 

(13) 

It is necessary to support an effective cross-border and transnational cooperation with 
countries  neighbouring  the  Community  where  this  is  necessary  to  ensure  that  the 

5 
6 
7 

OJ L 161, 26.6.1999, p. 1. Regulation as last amended by the 2003 Act of Accession. 
OJ L […], […], p. […]. 
OJ L […], […], p. […]. 

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regions of the Member States which border third-countries can be effectively assisted 
in  their  development.  Accordingly,  it  is  appropriate  to  authorise  on  an  exceptional 
basis the financing of assistance from the ERDF for projects located on the territory of 
third countries where they are for the benefit of the regions of the Community. 

(14)  Regulation (EC) No 1783/1999 of the European Parliament and the Council of 12 July 

1999 on the European Regional Development Fund8 should be repealed, 

HAVE ADOPTED THIS REGULATION: 

CHAPTER I 
GENERAL PROVISIONS 

Article 1 

Subject matter 

This Regulation establishes that tasks of the European Regional Development Fund (ERDF), 
the scope of its assistance with regard to the “Convergence”, “Regional competitiveness and 
employment”,  and  “European  territorial  co-operation”  as  defined  in  Article  3  of  Regulation 
(EC) No (…) laying down general provisions for the European Regional Development Fund, 
the  European  Social  Fund  and  the  Cohesion  Fund,  and  the  types  of  expenditure  eligible  for 
assistance. 

It  lays  down  specific  provisions  concerning  the  treatment  of  urban  and  rural  areas,  of  areas 
dependent on fisheries, of the outermost regions, and of areas with natural handicaps. 

It  also  sets  out  specific  provisions  concerning  the  “European  territorial  cooperation” 
objective,  particularly  in  terms  of  programming,  implementation,  management,  monitoring 
and control. 

Article 2 

Purpose 

The  ERDF  shall  contribute  to  the  financing  of  assistance  towards  the  reinforcement  of 
economic, social and territorial cohesion by reducing regional disparities and supporting the 
structural  development  and  adjustment  of  regional  economies,  including  the  conversion  of 
declining industrial regions. 

In so doing, the ERDF shall give effect to the priorities of the Community, and in particular 
the  need  to  strengthen  competitiveness  and  innovation,  to  create  sustainable  jobs,  and  to 
promote environmentally sound growth. 

8 

OJ L 213, 13.8.1999, p. 1. 

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Article 3 

Scope of assistance 

1. 

The ERDF shall focus its assistance on a limited number of thematic priorities. The 
type and range of actions to be financed within each priority shall reflect the different 
nature  of  the  “Convergence”,  “Regional  competitiveness  and  employment”  and 
“European territorial cooperation” objectives in accordance with Articles 4, 5 and 6 
of this Regulation. 

2. 

The ERDF shall contribute towards the financing of: 

a) 

productive investment;  

b) 

infrastructure; 

c) 

other  development  initiatives  including  services  to  enterprises,  creation  and 
development  of  financing  instruments  such  as  venture  capital,  loan  and 
guarantee 
subsidies, 
neighbourhood  services,  and  exchange  of  experience  between  regions,  towns, 
and relevant social, economic and environmental actors; 

local  development 

funds  and 

interest 

funds, 

d) 

technical assistance as referred to in Articles 43 and 44 of Regulation (EC) No 
(…). 

Article 4 

Convergence 

Under  the  “Convergence”  objective,  the  ERDF  shall  focus  its  assistance  on  supporting 
sustainable  integrated  regional  and  local  economic  development  by  mobilising  and 
strengthening  endogenous  capacity  through  programmes  aimed  at  the  modernisation  and 
diversification of regional economic structures, primarily in the following areas: 

1) 

2) 

Research and technological development (R&TD), innovation and entrepreneurship, 
including  strengthening  of  regional  research  and  technological  development 
capacities,  aid  to  R&TD  in  small  and  medium-sized  enterprises  (SMEs)  and  to 
technology  transfer,  improvement  of  links  between  SMEs  and  universities,  and 
research  and  technology  centres,  development  of  business  networks  and  clusters, 
support  for  the  provision  of  business  and  technology  services  to  groups  of  SMEs, 
fostering  of  entrepreneurship  and  innovation  funding  for  SMEs  through  new 
financing instruments; 

including  development  of 

local  content,  services  and 
Information  society, 
applications, improvement of access to and development of on-line public services, 
aid  and  services 
information  and 
communication technologies (ICTs); 

to  adopt  and  effectively  use 

to  SMEs 

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3) 

4) 

5) 

6) 

7) 

8) 

9) 

Environment,  including  investments  connected  with  waste  management,  water 
supplies, urban waste-water treatment and air quality, integrated pollution prevention 
and control, rehabilitation of contaminated sites and land, promotion of biodiversity 
and  nature  protection,  aid  to  SMEs  to  promote  sustainable  production  patterns 
through  the  introduction  of  cost-effective  environmental  management  systems  and 
the adoption and use of pollution-prevention technologies; 

Prevention  of  risks,  including  development  and  implementation  of  plans  to  prevent 
and cope with natural and technological risks; 

Tourism,  including  promotion  of  natural  and  cultural  assets  as  potential  for  the 
development  of  sustainable  tourism,  protection  and  enhancement  of  the  cultural 
heritage in support of economic development, aid to improve the supply of tourism 
services through new higher value-added services; 

Transport  investments,  including  trans-European  networks  and  integrated  city-wide 
strategies for clean urban transport, which contribute to improving the access to and 
quality of passenger and goods services, to achieving a more balanced modal split, to 
promoting intermodal systems and reducing environmental impacts; 

Energy, including trans-European networks, which contribute to improving security 
of  supply,  completing 
integrating  environmental 
considerations, improvement of energy efficiency and the development of renewable 
energies; 

internal  market,  and 

the 

Education investments, which contribute to increasing the attractiveness and quality 
of life in regions; 

Health,  including  investments  to  develop  and  improve  health  provision  which 
contribute to regional development and quality of life in regions; 

10) 

Direct aid to investment in SMEs contributing to creating and safeguarding jobs. 

Article 5 

Regional competitiveness and employment  

Under  the  “Regional  competitiveness  and  employment”  objective,  the  ERDF  shall  focus  its 
assistance,  in  the  context  of  regional  sustainable  development  strategies,  on  the  following 
priorities: 

1) 

innovation  and  the  knowledge  economy,  through  support  to  the  design  and 
implementation  of  regional  innovation  strategies  conducive  to  efficient  regional 
innovation systems, and specifically:  

a) 

enhancing regional R&TD and innovation capacities directly linked to regional 
economic  development  objectives  by  supporting  industry  or  technology-
specific  competence  centres,  by  promoting  technology  transfer,  and  by 
developing technology forecasting and international benchmarking of policies 

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to  promote  innovation,  and  by  supporting  inter-firm  collaboration  and  joint 
R&TD and innovation policies; 

innovation 

stimulating 
in  SMEs  by  promoting  university-enterprise 
cooperation networks, by supporting business networks and clusters  of SMEs 
and  by  facilitating  SMEs’  access  to  advanced  business  support  services,  by 
supporting the integration of cleaner and innovative technologies in SMEs; 

promoting  entrepreneurship  by  facilitating  the  economic  exploitation  of  new 
ideas,  and  by  fostering  the  creation  of  new  firms  by  universities  and  existing 
firms; 

creating  new  financial  instruments  and  incubation  facilities  conducive  to  the 
creation or expansion of knowledge-intensive firms. 

b) 

c) 

d) 

2) 

environment and risk prevention, and specifically: 

a) 

stimulating  investment  for  the  rehabilitation  of  contaminated  sites  and  land, 
and  promoting  the  development  of  infrastructure  linked  to  biodiversity  and 
to  sustainable  economic  development  and 
Natura  2000  contributing 
diversification of rural areas; 

b) 

stimulating energy efficiency and renewable energy production; 

c) 

d) 

promoting clean urban public transport; 

developing  plans  and  measures  to  prevent  and  cope  with  natural  and 
technological risks. 

3) 

access, outside major urban centres, to transport and telecommunication services of 
general economic interest, and specifically: 

a) 

b) 

strengthening  secondary  networks  by  improving  links  to  TEN-transport 
networks,  to  regional  railway  hubs,  airports  and  ports,  or  to  multimodal 
platforms, by providing radial links to main railways lines, and by promoting 
regional and local inland waterways; 

promoting access to and efficient use of ICTs by SMEs by supporting access to 
networks,  the  establishment  of  public  Internet  access  points,  equipment,  and 
the development of services and applications. 

Article 6 

European territorial cooperation 

Under  the  “European  territorial  cooperation”  objective,  the  ERDF  shall  concentrate  its 
assistance on: 

1) 

the  development  of  cross-border  economic  and  social  activities  through  joint 
strategies for sustainable territorial development, and primarily: 

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a) 

by encouraging entrepreneurship and, in particular, the development of SMEs, 
tourism, culture, and cross-border trade;  

b) 

by encouraging the protection and joint management of the environment; 

c) 

d) 

by  reducing  isolation  through  improved  access  to  transport,  information  and 
communication  networks  and  services,  and  cross-border  water,  waste  and 
energy systems; and 

by  developing  collaboration,  capacity  and  joint  use  of  infrastructures  in 
particular in sectors such as health, culture and education. 

In  addition,  the  ERDF  may  contribute  to  promoting  the  integration  of  cross-border 
labour  markets,  local  employment initiatives,  equal  opportunities,  training  and 
social inclusion, and sharing of human resources and facilities for R&TD. 

2) 

the  establishment  and  development  of  transnational  cooperation,  including  bilateral 
cooperation  between  maritime  regions,  through  the  financing  of  networks  and  of 
actions conducive to integrated territorial development on the following priorities: 

a)  water management, with a clear trans-national dimension, including protection 
and  management  of  river  basins,  coastal  zones,  marine  resources,  water 
services and wetlands; 

b) 

c) 

d) 

improving  accessibility,  including  investments  in  cross-border  sections  of 
trans-European  networks,  improved  local  and  regional  access  to  national  and 
transnational  networks  and  platforms,  enhanced  inter-operability  of  national 
and  regional  systems,  and  promotion  of  advanced  communications  and 
information technologies; 

risk  prevention,  including  the  promotion  of  maritime  security  and  protection 
against  flooding,  marine  and  inland  water  pollution,  prevention  of  and 
protection  against  erosion,  earthquakes  and  avalanches.  Programmes  may 
include the provision of equipment and development of infrastructure, drawing 
up  and  implementing  transnational  assistance  plans,  common  risk  mapping 
systems, and the development of common instruments for studying, preventing, 
monitoring and controlling natural and technological risks. 

the  creation  of  scientific  and  technological  networks  connected  with  issues 
relating  to  the  balanced  development  of  transnational  areas,  including  the 
establishment  of  networks  between  universities  and  links  for  accessing 
scientific  knowledge  and  technology  transfer  between  R&TD  facilities  and 
international  centres  of  R&TD  excellence,  the  development  of  transnational 
consortia  for  sharing  R&TD  resources,  twinning  of  technology  transfer 
institutions,  and  development  of  joint  financial  engineering  instruments 
directed at supporting R&TD in SMEs. 

3) 

reinforcement  of  the  effectiveness  of  regional  policy  by  promoting  networking  and 
exchange of experience among regional and local authorities focusing on the topics 
referred  to  under  Article  5(1)  and  (2)  and  Article  8,  including  cooperation  network 
programmes  covering  the  whole  Community  and  actions  involving  studies,  data 

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collection,  and  the  observation  and  analysis  of  development  trends  in  the 
Community. 

Article 7  

Rules on eligibility of expenditure 

The following expenditure is not eligible for a contribution from the ERDF: 

a) 

b) 

c) 

d) 

e) 

1. 

2. 

VAT;  

interest on debt; 

the purchase of land for an amount exceeding 10% of the total eligible expenditure 
for the operation concerned; 

housing; 

decommissioning of nuclear power stations. 

CHAPTER II 
SPECIFIC PROVISIONS ON THE TREATMENT OF PARTICULAR 
TERRITORIAL FEATURES 

Article 8 

Urban dimension 

In the case of action involving urban regeneration as referred to in Article 25(4) a) 
and 36(4) b) of Regulation (EC) No (…), the ERDF shall support the development of 
participative,  integrated  strategies  to  tackle  the  high  concentration  of  economic, 
environmental and social problems affecting urban agglomerations. 

This  may  combine  the  rehabilitation  of  the  physical  environment,  brownfield 
redevelopment,  and  the  preservation  and  development  of  the  historical  and  cultural 
heritage  with  measures  to  promote  entrepreneurship,  local  employment  and 
community development, as well as the provision of services to the population taking 
account of changing demographic structures. 

By  way  of  derogation  from  Article  33(2)  of  Regulation  (EC)  No  (…),  the  ERDF 
funding  of  measures  under  the  “Regional  competitiveness  and  employment” 
objective falling within the scope of Regulation (EC) N° (…) on the European Social 
Fund shall be raised to 10% of the priority concerned.  

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Article 9 

Rural areas and areas dependent on fisheries 

Member  States  and  regions  shall  ensure  complementarity  and  consistency  between  the 
measures  co-financed  by  the  European  Agricultural  Fund  for  Rural  Development  (EAFRD) 
pursuant to Regulation (EC) No (…) and the actions co-financed by the European Fund for 
Fisheries (EFF) pursuant to Regulation (EC) No (…), on the one hand, and the programmes 
co-financed by the ERDF, on the other.  

The  ERDF  intervention  in  rural  areas  and  areas  dependent  on  fisheries  shall  concentrate  on 
the economic diversification of such areas, including: 

1) 

2) 

3) 

4) 

5) 

infrastructure to improve accessibility; 

acceleration  of  the  rolling-out  of  telecommunication  networks  and  services  in  rural 
areas; 

development of new economic activities outside the agricultural and fishery sectors; 

reinforcement of links between urban and rural areas; 

development of tourism and rural amenities. 

Member States and regions shall ensure complementarity and coherence between the actions 
co-financed by the EAFRD and those co-financed by the EFF on the one hand, and the actions 
co-financed by the ERDF on the other hand. To this end, for actions under points 1), 3) and 5) 
Member  States  shall  set  when  preparing  operational  programmes  clear  demarcation  criteria 
for actions to be supported from the ERDF by virtue of this Article, on the one hand, or from 
the  EAFRD  by  virtue  of  Article  49(1),  a),  b)  and  i)  of  Regulation  (EC)  No  (…),  for  rural 
areas,  or  from  the  EFF  by  virtue  of  Article  (…)  of  Regulation  (EC)  No  (…)  for  areas 
dependent on fisheries. 

Article 10 

Areas with natural handicaps 

Regional  programmes  co-financed  by  the  ERDF  covering  areas  facing  natural  handicaps  as 
referred  to  in  Article  52(1)  b)  of  Regulation  (EC)  No  (…)  shall  pay  particular  attention  to 
addressing the specific difficulties of those areas. 

Without  prejudice  to  Article  3  and  4,  the  ERDF  shall  in  particular  contribute  towards  the 
financing  of  investments  aimed  at  improving  accessibility,  promoting  and  developing 
economic  activities  related  to  the  cultural  heritage,  promoting  the  sustainable  use  of  natural 
resources, and stimulating the tourism sector. 

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Article 11 

Outermost regions 

In accordance with the additional allocation referred to in Article 16(1) d) of Regulation (EC) 
No (…) and by way of derogation from Article 3(2) of this Regulation, the ERDF shall help 
finance  operating  aid  in  the  outermost  regions  to  offset  the  additional  costs  incurred  in  the 
areas  covered  by  Article  4  and  in  the  following  additional  areas,  with  the  exception  of 
products falling within Annex I to the Treaty: 

a) 

b) 

support for goods transport services and start-up aid for transport services;  

support  linked  to  storage  constraints,  the  excessive  size  and  the  maintenance  of 
production tools, and the lack of human capital on the local labour market. 

CHAPTER III 
SPECIFIC PROVISIONS CONCERNING  
THE “EUROPEAN TERRITORIAL COOPERATION” OBJECTIVE 

SECTION 1 
OPERATIONAL PROGRAMMES 

Article 12 

Content 

Each  operational  programme  under  the  “European  territorial  cooperation”  objective  shall 
contain the following information: 

1) 

2) 

3) 

4) 

an  analysis  of  the  situation  of  the  cooperation  area  in  terms  of  its  strengths  and 
weaknesses, and the strategy adopted to deal with it; 

a  justification  of  the  priorities  chosen  in  the  light  of  the  strategic  guidelines  of  the 
Community and the resulting priorities for the operational programme, as well as the 
expected impact as emerging from the ex ante evaluation referred to in Article 46 of 
Regulation (EC) No (…);  

the  information  on  the  priorities  with  their  specific  goals.  Those  goals  shall  be 
quantified  using  a  limited  number  of  indicators  for  implementation,  results  and 
impact.  The  indicators  shall  make  it  possible  to  measure  the  progress  and 
effectiveness of the goals implementing the priorities; 

a breakdown of the spheres of assistance by category, in conformity with the detailed 
rules for the implementation of Regulation (EC) No (…);  

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5) 

a single financing plan, with no breakdown by Member State, comprising two tables:  

a) 

b) 

a  table  breaking  down  for  each  year,  in  accordance  with  Articles  50  to  53  of 
Regulation (EC) No (…), the amount of the total financial allocation from the 
ERDF. The total ERDF contribution provided for annually shall be compatible 
with the relevant financial perspective; 

a table specifying, for the whole programming period and for each priority, the 
amount  of  the  total  financial  allocation  from  the  Community  and  of  the 
matching national public funding, and the rate of the ERDF contribution; 

6) 

the implementing provisions for the operational programme: 

a) 

b) 

c) 

designation by the Member State of all the entities stipulated in Article 14; 

a  description  of  the  monitoring  and  evaluation  systems  as  well  as  the 
composition of the monitoring committee; 

a definition of the procedures for the mobilisation and circulation of financial 
flows in order to ensure their transparency; 

d) 

the provisions laid down to ensure the publicity of the operational programme; 

e) 

a  description  of  the  procedures  agreed  between  the  Commission  and  the 
Member  State  for  the  exchange  of  computerised  data  to  meet  the  payment, 
monitoring  and  evaluation  requirements  laid  down  by  Regulation  (EC)  No 
(…); 

7) 

an  indicative  list  of  major  projects  within  the  meaning  of  Article  38 of  Regulation 
(EC) No (…) scheduled to be submitted during the programming period. 

SECTION 2 
ELIGIBILITY 

Article 13 

Rules on eligibility of expenditure 

Without  prejudice  to  Article  55  of  Regulation  (EC)  No  (…),  the  Commission  may  propose 
rules on eligibility for certain categories of expenditures replacing national rules, following a 
request by Member States. These Community rules on eligibility of expenditure are adopted 
in a Commission regulation in conformity with the provisions of Article 104(3) of Regulation 
(EC) No (…). 

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SECTION 3 
MANAGEMENT, MONITORING AND CONTROL 

Article 14 

Designation of authorities 

1. 

2. 

Member  States  participating  in  an  operational  programme  shall  appoint  a  single 
managing  authority,  a  single  certification  authority  and  a  single  audit  authority 
situated  in  the  Member  State  of  the  managing  authority.  The  certification  authority 
shall  receive  the  payments  made  by  the  Commission  and,  as  a  general  rule,  shall 
make the payments to the lead beneficiary.  

The Member States shall set up a joint technical secretariat, which shall be located 
within  the  managing  authority.  It  shall  assist  the  managing  authority  and  the 
monitoring committee in carrying out their respective duties. 

The  audit  authority  for  the  operational  programme  shall  be  assisted  by  a  group  of 
auditors  in  carrying  out  the  duties  provided  for  in  Article  61  Regulation  (EC)  No 
(…). This group shall be set up by the Member States participating in an operational 
programme.  It  shall  comprise  a  representative  of  an  audit  body  designated  by  each 
Member  State  participating  in  the  operational  programme.  Each  group  of  auditors 
shall  be  set  up  within  three  months  of  the  decision  approving  the  operational 
programme  at  the  latest.  It  shall  draw  up  its  own  rules  of  procedure.  It  shall  be 
chaired by the audit authority for the operational programme. 

The  final  report  of  the  audit  authority  for  the  operational  programme  referred  to  in 
Article  70  of  Regulation  (EC)  No  (…)  shall  have  been  approved  by  the  group  of 
auditors. 

3. 

Each  Member  State  participating  in  the  operational  programme  shall  appoint 
representatives  to  sit  on  the  monitoring  committee  referred  to  in  Article  64  of 
Regulation (EC) No (…). 

Article 15 

Function of the managing authority 

The managing authority shall perform the duties provided for in Article 59 of Regulation (EC) 
No (…), with the exception of those concerning the regularity of operations and expenditure 
in  relation  to  national  and  Community  rules.  In  this  connection,  its  responsibilities  shall  be 
limited to checking that the expenditure of each beneficiary participating in an operation has 
been validated by the approved auditor. 

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Article 16 

Control system 

In order to validate the expenditure provided for in Article 21, each Member State shall set up 
an audit system making it possible to check on the delivery of the products and services co-
financed,  the  soundness  of  the  expenditure  declared  for  operations  or  parts  of  operations 
implemented  on  its  territory,  and  the  compliance  of  such  expenditure  and  of  related 
operations, or parts of those operations, with Community and national rules. Where the check 
on the delivery of the products and services co-financed can be carried out only in respect of 
the entire operation, such a check shall be performed by the auditor of the lead beneficiary or 
by the managing authority. 

Each  Member  State  shall  ensure  that  the  expenditure  can  be  validated  by  the  approved 
auditors within a period of two months. 

Article 17 

Financial management 

1. 

2. 

The  ERDF  contribution  shall  be  paid  into  a  single  account  with  no  national 
sub-accounts. 

Without  prejudice  to  the  Member  States'  responsibility  for  detecting  and  correcting 
irregularities and for recovering amounts unduly paid, the certification authority shall 
recover from the lead beneficiary any amount paid as a result of an irregularity. The 
beneficiaries shall repay the lead beneficiary the amounts paid in error in accordance 
with the agreement existing between them.  

If the lead beneficiary does not succeed in securing repayment from the beneficiaries, 
the  Member  States  on  whose  territory  the  relevant  beneficiary  is  located  shall 
reimburse the certification authority the amount paid in error to that beneficiary. 

Article 18 

European grouping of cross-border cooperation 

Member  States  participating  in  an  operational  programme  under  the  “European  territorial 
cooperation”  objective  may  make  use  of  the  legal  instrument  on  cooperation  established  by 
Regulation (EC) No (…) with a view to making it responsible for managing the operational 
programme by conferring on it the responsibilities of the managing authority and of the joint 
technical  secretariat.  In  this  context,  each  Member  State  shall  continue  to  assume  financial 
responsibility. 

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SECTION 4 
OPERATIONS 

Article 19 

Selection of operations 

1. 

2. 

3. 

Operations  selected  for  operational  programmes  aimed  at  developing  cross-border 
economic  and  social  activities  as  referred  to  in  Article  6(1),  and  for  operational 
programmes  aimed  at  establishing  and  developing  transnational  cooperation  as 
referred  to  in  Article  6(2),  shall  include  beneficiaries  from  at  least  two  countries, 
which shall cooperate in at least two of the following ways for each operation: joint 
development, joint implementation, joint staffing, and joint financing. 

However,  the  operations selected for operational programmes aimed at establishing 
and  developing  transnational  cooperation  may  be  implemented  in  a  single  Member 
State  provided  that  they  have  been  presented  by  entities  belonging  to  at  least  two 
Member States. 

Operations selected for operational programmes involving cooperation networks and 
exchange  of  experience,  as  referred  to  in  Article  6(3),  shall  include  at  least  three 
beneficiaries from at least three regions of at least two Member States, which shall 
cooperate  in  the  following  ways  for  each  operation:  joint  development,  joint 
implementation, joint staffing and joint financing. 

In  addition  to  the  tasks  referred  to  in  Article  64  of  Regulation  (EC)  No  (…),  the 
monitoring committee shall be responsible for selecting operations. 

Article 20 

Responsibility of the lead partner 

1. 

For each operation, a lead beneficiary shall be appointed. The lead beneficiary shall 
assume the following responsibilities: 

a) 

It  shall  lay  down  the  arrangements  for  its  relations  with  the  beneficiaries 
participating in the operation in an agreement comprising, inter alia, provisions 
guaranteeing  the  sound  financial  management  of  the  funds  allocated  to  the 
operation, including the arrangements for recovering amounts unduly paid. 

b) 

it shall be responsible for implementing the entire operation; 

c) 

it shall ensure that the expenditure presented by the beneficiaries participating 
in  the  operation  has  been  paid  for  the  purpose  of  implementing  the  operation 
and corresponds to the activities agreed between the beneficiaries participating 
in the operation; 

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d) 

e) 

it shall check that the expenditure presented by the beneficiaries participating 
in the operation has been validated by the auditors referred to in Article 14(2); 

it  shall  be  responsible  for  transferring  the  ERDF  contribution  to  the 
beneficiaries participating in the operation. 

2. 

The  managing  authority  shall  lay  down  the  implementing  arrangements  for  each 
operation, in agreement with the lead beneficiary.  

Article 21 

Certification of expenditure 

The legality and regularity of the expenditure declared by each beneficiary participating in the 
operation  shall  be  validated  by  the  approved  auditors  referred  to  in  Article  14(2).  Each 
beneficiary  participating  in  the  operation  shall  assume  responsibility  in  the  event  of  any 
irregularity in the expenditure which it has declared. 

Article 22 

Special conditions governing the location of operations 

1. 

2. 

3. 

In the context of cross-border cooperation, in duly justified cases, financing of up to 
20%  of  the  budget  for  the  operational  programme  concerned  may  be  granted  for 
operations in NUTS level III areas adjacent to the areas referred to in Article 7(1) of 
Regulation (EC) No (…). 

In the context of transnational cooperation, in duly justified cases, financing of up to 
20%  of  the  budget  for  the  relevant  operational  programme  may  be  granted  for 
operations which include partners outside the area. 

In the context of cross-border and transnational cooperation, the ERDF may finance 
expenditure  incurred  in  implementing  operations  or  parts  of  operations  on  the 
territory  of  countries  outside  the  European  Community  up  to  a  limit  of  10%  of  the 
amount  of  its  contribution  to  the  operational  programme,  where  they  are  for  the 
benefit of the regions of the Community. 

Member states ensure the legality and regularity of these expenditures. 

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CHAPTER IV 
FINAL PROVISIONS 

Article 23 

Transitional provisions 

This  Regulation  shall  not  affect  neither  the  continued  implementation  nor  the  modification, 
including  the  total  of  partial  cancellation,  of  measures  approved  by  the  Council  or  by  the 
Commission  on  the  basis  of  Regulation  (EC)  No  1783/99  on  the  European  Regional 
Development Fund, which applied prior to the entry into force of this Regulation. 

Applications made under Regulation (EEC) No 1783/99 shall remain valid. 

Article 24 

Repeal 

Regulation (EC) No. 1783/99 shall be repealed with effect from (…). 

References to Regulation (EC) No 1783/99 shall be construed as reference to this Regulation. 

Article 25 

Review clause 

On a proposal from the Commission, the European Parliament and the Council shall review 
this Regulation by 31 December 2013. 

Article 26 

Entry into force 

This Regulation shall enter into force on the twentieth day following that of its publication in 
the Official Journal of the European Union. 

It shall apply from 1 January 2007. 

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

Done at Brussels, […]. 

For the European Parliament 
The President 
[…] 

For the Council 
The President 
[…] 

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