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How do illegal gas stations work "legally"?

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According to the Oil and Gas Association of Ukraine, as of June 1, 2019, there were 1,123 illegal gas stations in Ukraine. Of course, the statistics are incomplete and the real numbers are much higher. In addition, some gas stations are closed from time to time, then start working again.

In practice, illegal gas stations can be divided into several types. The first are completely illegal "pourers", in which there are no documents for land, equipment or goods. When inspecting regulatory or law enforcement agencies, such gas stations sometimes do not have an owner and it is very difficult to find responsible persons.  

Another group is gas stations, which usually have documents for the land, but the land has a purpose, which does not allow to place a gas station on it. In addition, such gas stations usually do not have permits in the field of ecology, fire safety and labor protection.

How government agencies fight illegal immigrants, and how the latter manage to work - we'll talk later.

 Violation of safety rules. Search and seizure of property

The most effective way to stop an illegal gas station is to come and search and seize fuel and equipment. The investigator registers criminal proceedings under Art. 272 or Art. 273 of the Criminal code of Ukraine on the bases that in gas station there are no allowing documents and safety rules are broken. After that, the investigator receives a court order to conduct a search or inspection.

During the investigative action, the property of the gas station is sealed and the investigator goes to court with a request to seize this property. After the court seizes the property (fuel dispensers, tanks, fuel), the operation of the gas station is stopped. The future of such a gas station often depends on the persistence of its owner.

Active owners of illegal gas stations go to the appellate court and cancel the arrest. Arguments for cancellation may be different. For example, the Kropyvnytskyi Court of Appeal in its decision of 04.04.2019 stated that the person whose property was arrested is not a business entity and used fuel for their own needs, and investigators have not proved the fact of selling fuel to others.

Suspension of gas stations at the request of regulatory authorities

 If the rules of fire safety, labor protection rules or missing permits are violated at the gas station, the controlling bodies may file a lawsuit to stop the gas station. In practice, the State Labor Service, firefighters or the Ecoinspection come for an inspection, find violations of the law, and then apply to the administrative court with a claim for response measures in the form of shutdown of gas stations or individual equipment.

However, despite the violations, gas station owners often manage to persuade the court not to stop the facility.

For example, in the Cherkasy region, the State Labor Service filed a lawsuit to stop the operation of the gas tank because the company did not receive a permit to operate it and a permit to perform high-risk work. By its decision of January 22, 2019, the Cherkasy District Administrative Court denied the State Labor Service's claim. The court noted that since the company had issued an order banning the operation of this equipment, there were no grounds to suspend it at the time of the hearing.


Dismantling of gas stations due to violation of landscaping rules

 The rules of improvement of many cities stipulate that temporary structures that are placed without proper permits are considered to be placed spontaneously and are subject to dismantling. It should be noted that even if the gas station was stopped by dismantling, it can later be restored and continue to operate.

For example, in Kyiv, based on the decision of the Department of Urban Development, the Kyiv Rescue Service dismantled the filling station due to the lack of permits. The company appealed to the District Administrative Court of Kyiv and by its decision of 20.08.2018 the court declared the decision of the Department illegal and ordered to return the liquefied gas and storage tanks. The court, in particular, motivated its decision by the fact that the city council did not approve the procedure for obtaining a binding passport for the placement of AGZP, because of this the company could not apply to the permitting authority.

Following the court's decision, the company filed a lawsuit with the Commercial Court to recover the lost profits. In this case, the company also asked the court to take measures to secure the claim. The court granted the company's application and forbade the Kyiv City State Administration Department and the Kyiv Rescue Service to dismantle the filling station. Therefore, for the period of consideration of the dispute over the recovery of lost profits, the company's gas stations will not be able to dismantle.

 Licensing and new rules of operation

 On July 1, 2019, new rules concerning storage and retail sale of fuel came into force. Gas stations that sell fuel must obtain the appropriate license. At the moment, Art. 164 of the Code of Ukraine on Administrative Offenses provides for liability for the operation of gas stations without a license. This is a fine of 17 to 34 thousand hryvnias and confiscation of fuel, equipment and tanks in which fuel is stored.

In addition, if the gas station does not have accompanying documents for fuel, there is a risk of criminal prosecution under Art. 204 of the Criminal code of Ukraine.

It should be noted that from December 31, 2019, fines for fuel storage without a license will increase to UAH 500,000.

The website of the SFS of Ukraine contains a register of entities that have been issued licenses for trade and storage of fuel. Everyone can check if the gas station has the appropriate license.

If the gas station works without a license, you can report it to the police or the tax authorities. These bodies are authorized to draw up protocols under Art. 164 of the Code of Ukraine on Administrative Offenses. 

The decision on confiscation can be made only by the court. However, fuel and equipment may be seized for the duration of the case.

To date, the practice of prosecuting fuel trade without a license has not been established. At the same time, taking into account the consideration by courts of cases of trade in other goods for which a license is required, the owners will still be able to find arguments to refute in court the facts of illegal trade. First of all, this will be due to the shortcomings of fixing offenses by law enforcement agencies.

  As we can see, state bodies have enough mechanisms to influence the operation of illegal gas stations, both in criminal proceedings and through the suspension of facilities in court. However, due to the imperfection of the legislation and the mistakes of the controlling and law enforcement bodies, the illegals manage to circumvent the ban and prove their rightness in the courts. 

At the same time, given the need to obtain a license for storage and trade in fuel, as well as the ability of government agencies to apply penalties and seize fuel with equipment, the number of illegal gas stations may be significantly reduced.


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