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The NEC case

The facts
On 02. 05. 1997 with Decision #457, the Council of Ministers (CM) placed the National Electric Company (NEC) on the list of government agencies and other entities whose information should be classified as state secret and that are protected by special security units. The request to the Council of Ministers for such a decision was justified as a step towards solving particular issues of production security and the security of energy distribution as well as issues of limiting access to the energy-production units, energy supplies, information of cases of bad management, property damages, thefts and misuse of materials and finally securing the secrecy of classified documents.

The request is made possible by Articles 6, 2 and 4 (1) of the Regulation on the Activities of the National Security Service (NSS) ("the Regulation") which mandate the NSS to protect strategic premises, places and activities as well as classified information. There is no explicit referral, though, to these provisions of the Regulation in the request to the CM. The Regulation was adopted by the Council of Ministers with Decree #324 of 24. 12. 1994 and promulgated in the Official Gazette, no. 5 /1995, amended no. 64 /1996. Article 6 entitles presidents of legal entities, which are not government1 , to request the Council of Ministers, with the consent of the NSS, to be declared of strategic and life-saving importance to national security. Over some minor objections on legal technicalities, raised by the Legal Department at The Council of Ministers, and with a statement of support by the Coordination and Information Analysis Service at the Ministry of Interior (MI), which substituted the consent of the NSS, and with the agreement of the Structural Reform Department, the request was introduced by the Chief Secretary to the CM and voted in favour by the CM.

For one to have a better understanding of the significance of the problem, it should be point out that the NEC manages and controls the energy production and supply to the whole country. It also deals in the export and import of electric power, develops the strategy for the future of the national energy production and supply system, and determines together with the Committee on Energy the price of energy.

The Short History of the List.
The List (Decision #457 record 58 of 26. 10. 1995, point 3) passed on ground of Article 4 (1) of the Regulation, includes the so called places of strategic and life-saving importance to national security. Their special protection is entrusted to the NSS in accordance with the above mentioned Regulation, passed in accordance with Art 14 (3) of the NSS Act, Article 14 sub-paragraph 4 of the MI Act and Art 105 (2) of the Constitution of the Republic of Bulgaria. The List was first published in 1994 as an appendix to Decree #210 of the CM (Official Gazette no 84/ 1994), which preceded the current Regulation. Until then, state and official secrets were regulated by rules that were never published (the rules themselves being secret). After a short period of publicity, Decree #210 was suspended on 28. 12. 1994. (Official Gazette no. 5/ 1995). The list was created again, this time with an unpublished Decision #457 of the CM of 15. 11. 1995 and new entities were added to it by Decision #93 of 19. 02. 1996 ant Decision #457 of 02.05.1997, the one adding the NEC. Currently the list is considerably longer than its earlier versions. It includes: the customs, the duty free zones, the Bulgarian Telecommunication Company, the National Statistics Institute, the State Savings Bank, county administration, the Sofia City Municipality and the Bulgarian Academy of Science. Among the corporations under special protection are the production units of the Arms Production Industry, the oil refineries and Kremikovtsi. Of the energy production industry the Atomic Power Station Kozloduj and the Maritsa Iztok Complex are on the list. It would be very hard to get access to the list, the only available route being through the legal information system of the CM, which is not publicly accessible.

Putting the NEC on that list, and of any other industry or entity for that matter, is made that more easy, because of the lack of any legal definition of the term national security. This is also true of the term "strategic places and activities". Whether it is necessary to put any given state agency or organization on the List, the CM would decide in every particular case without having to take into consideration any legal requirements. Former state-owned businesses, now registered as commercial companies with the government being the sole shareholder, (such as NEC) are used to being under special care from the times of the Cold War. They are still pretty much dependent on the government, in the particular case of NEC on the Committee of Energy and Energy Resources which makes it that more easy for an agreement to be reached to put them on the secret activities list.

The legal issues
On the basis of these facts the following conclusions could be reached. There are relevant and sufficient legal grounds for the NEC to be classified. This is so, as in accordance with Article 4 (1) of the Regulation, the Council of Ministers has unfettered discretion in deciding whether a place or entity is of strategic importance for the national security. The purpose of such a decision is to limit the constitutionally guaranteed right to seek, gather and distribute information in the control of government agencies and institutions in accordance with Article 41 (1-2) of the Constitution. Although it is true, that such a right must certainly not be directed against the national security and the state secret. The decision of the CM could not be challenged in the Supreme Administrative Court, as according to Article 125 (1) and Art 120 (2) of the Constitution the courts may review acts of the Government only with respect to their legality. The possibility of challenging the CM decision in court would be very difficult also because of the fact, that it would be very hard to find anybody with
standing to sue.

The consequences
I. The special protection consists of:

• protection of places and activities; and
• control of access through a licensing everybody entitled to access to such premises and places (like workers) and also establishing additional control of access to classified documents.
  

According to the Regulation, the protection of places and activities of strategic importance is done by:
- physical protection; and
- information protection, through, administrative, organizational, technical, and cryptographic measures.

It should be, that only places and premises are provided with physical protection, while protection of information is provided for activities. It is not clear from the Regulation itself what exactly these measures are, what exactly does "activities" mean, and how such measures are applied. Given the lack of legal definitions, it seems quite probable that each and every one would decide for themselves. There are some hints in NEC's request that the NEC's understanding of what should be protected is far reaching. Physical protection is provided by a security unit, which as a matter of fact is an officer of the NSS, employed by the entity under protection. The physical access and access to classified data and records is granted by the NSS or the regional security services, depending on the particular case. Another important issue is the procedure and the standards for classifying data.
The procedure is rather straightforward. The entity under protection would adopt on its own a list of information that should be classified. It should take for guidance the List of State Secrets adopted by Parliament (Official Gazette, no.31 /1990, last amendments no.99/1992). The degree of confidentiality of every document is decided by the head of the entity placed under special protection. Every document will be stamped with an inscription "secret", "top secret" or "top secret of particular importance" and with a catalogue number. Then it is filed in a secret archive. Only a person with a special permit may use such documents. A record is kept on the persons who had used a particular document.

Comments. Possible consequences
General remarks
Apparently, there is no control whatsoever, over classifying documents by the individual entities, which makes the List of State Secrets, passed by Parliament of no meaning at all. If the particular entity is outside the system of government administration, not control could be exercised by a superior authority. Therefore, if a citizen claims that there is no need for a particular document to be classified, he or she could not address any authority that might hear such claim.
Most of the time, a person willing to challenge a decision to classify some information will have no standing. To have standing he will have to demonstrate an interest in obtaining such information, but with respect to over zealously classified information the concern is not denial of access, but the exclusion of such documents from the generally available documents. The NEC is a corporation outside the system of the government administration and its acts are not subject to judicial review in accordance with the provision of the Administrative Procedure Act. As cryptography is used, this means that the data protection, apparently is also aimed at impeding the access to documents, and this is for documents with far less clearly defined content, than those described in the List of State Secrets passed by Parliament.

Specific remarks

Surely, one could only guess what are the reasons for NEC to ask for such special protection and what the exact consequences would be. Since NEC is a private company with the state being the sole shareholder, it is entitled to keeping it commercial information secret. Now that it was granted special protection as a place of strategic interest, however, NEC can erect new barriers to information accessibility, that did not exist before.
First, NEC is a party to numerous contracts for the supply of electric power, and it should give information on price forming, more so as there are no competitors that would push it to keep prices down.
Second, according to the provisions of the Regulation on Providing Information with respect to the Privatization Act, potential buyers are entitled to all the necessary legal, financial, economic, organizational and environmental information with respect to the company to be privatized.
The potential buyer should keep this information secret, and could be held criminally liable for disclosing it. There is also the question of whether NEC will provide such information at all, as part of the reasons for requesting special protection are "problems, related to the procedure of holding auctions".
In addition, it is not certain, whether NEC will publish its annual balance sheet, which it is required to do by law, or all financial information will be kept secret.
Some obligations of NEC to grant access to information stem from the Environmental Protection Act. On the basis of chapter 2 and chapter 4 NEC is obliged to provide access to information, such duty having both a positive and a negative side to it.

Positive duty:
every activity of the Company may be subject to an environmental impact assessment. Under Article 20 such an assessment is mandatory and the information should be submitted to the relevant authorities.
The Company is also obliged to notify the public of any emergency that has or might occur.
Negative duty:
everybody should have access to the available environmental information. The right of access to such information under Article 15 of the Environmental Act may not be inforced if the information is classified. Refusal to grant access to such information could be justified on grounds of the Constitution, where Article 41 (2) sets forth the constitutional limitations on the right to information. It was mentioned already that it would be very hard to challenge to decision to classify such information because of the lack of an appeal procedure, lack of standing and the vague wording of the provisions, that regulate the protection of information on "activities".

In conclusion, it should be pointed out that the right, provided by Article 6 of the Regulation is too broad in content and allows the special protection by the NSS to too many. And this one might think is part of past of the Bulgarian Law. If such a protection is considered necessary, for the Arms Production
Complex for example, a precise definition should be given to "places and activities of strategic importance to national security". Otherwise, the list would grow larger and information on companies of substantial interest to everyone, such as NEC, would become more and more inaccessible.

1 The literal translation of the term is "non-government agencies and organizations". It is not used otherwise in legislation and most likely means any legal entity not part of the government.