Éamon Ó Cuív (Galway West, Fianna Fail)
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Question 569: To ask the Minister for the Environment, Community and Local Government the progress made to resolve the State aids issue that has arisen for grants in excess of €200,000 to non-commercial projects in the village and community services programmes of the Leader programme; and if he will make a statement on the matter. [1297/12]

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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State aid refers to any aid granted by a Member State which distorts or threatens to distort competition by favouring certain undertakings or goods. EU Member States are required, under State Aid rules that originate in the Treaty of Rome, to submit a notification to DG Competition in the European Commission when they propose to provide state support for schemes and programmes that could be considered to distort competition in any way. Commission Regulation EC 1998/2006 allows for aid of up to €200,000, known as de minimis aid, to be provided from public funds to enterprises over a period of three years as this amount is considered too small to have an effect on economic activity between competing forces. In the original Rural Development Programme (RDP) document approved by the EC in July 2007 Ireland outlined that, as the aid to be granted under two of the Axis 3 measures of the RDP would not in any way distort competition, it would not constitute State Aid and would, therefore, not require notification to DG Competition. The measures concerned, Basic services for the economy and rural population and Village renewal and development provide support for non-commercial community based projects and focus particularly on community infrastructure.

Recently Ireland was notified by the EC that only DG Competition has the competence to judge whether or not state support can be deemed to be State Aid and now require Ireland to complete the notification process as soon as possible and obtain the necessary state aid clearance in order to proceed with projects requiring grant aid in excess of €200,000. As the consequences of non-compliance with State Aid rules are significant, particularly for project promoters, it is necessary to suspend the allocation and approval of projects where grant amounts not covered by state aid clearance exceed €200,000 cumulatively over a three year period until EC approval has been granted.

The preparation of the documentation for the State Aid notification is at an advanced stage and will be submitted shortly.