Major changes in legislation on subsoil use

• Russia

25-05-2021

On April 30, 2021, the President of the Russian Federation signed Federal Law No. 123-FZ “On Amending the Law of the Russian Federation “On Subsoil”, Article 1 of the Federal Law “On Licensing of Certain Types of Activities” and invalidating the Resolution of the Supreme Council of the Russian Federation “On the procedure for enacting the Regulations on the procedure for licensing the use of subsoil” and certain provisions of legislative acts of the Russian Federation” (hereinafter - the “Law”).

The Law comes into force on January 1, 2022 and introduces major changes to the legislation on subsoil use.

Emphasis should be placed not only on the innovations outlined below, but also on the codified nature of the Law which invalidates the Resolution of the Supreme Council of the Russian Federation of July 15, 1992 N 3314-1 “On the procedure for enacting the Regulations on the procedure for licensing the use of subsoil” (one of the main acts regulating subsoil use), and also stipulates that the provisions of the Federal Law of May 04, 2011 N 99-FZ “On Licensing of Certain Types of Activities” do not apply to activities associated with the licensing of subsoil use.

Among the numerous changes and clarifying provisions of the Law, we would like to note below the following significant innovative measures.

Auctions for the provision of the right to use subsoil

In accordance with the Law, from the moment of its entry into force, bidding for granting the right to use subsoil plots of federal or local significance, as well as plots not classified as federal or local, are conducted in an electronic format according to the auction procedure prescribed by the acts of the Government of the Russian Federation. Thus, the tender procedure is completely excluded.

Register of bad faith auction participants

Auction participants who are recognized as winners but have not paid the one-time payment for the use of subsoil plots in due time, will be included in the open register of bad faith auction participants for the right to use subsoil plots. Such inclusion can be challenged in court.

Such persons will be prohibited from participating in auctions and submitting applications for provision of the right to use subsoil without conducting an auction. Information about the persons included in the register will be excluded from it after two years from the date of their entry into the register.

Granting of the right to use subsoil

The Law also provides for subsoil to be granted for use for the construction and operation of underground facilities for the disposal of radioactive waste (disposal sites) as well as for the production and consumption hazardous waste classified under levels I-V (waste disposal facilities).

In addition, the Law excludes the rule according to which subsoil could not be provided for the extraction of widespread minerals for the production of building materials under the condition that it is possible to use wastes from mining and other industries that are alternative sources of raw materials.

The Law also establishes the possibility of granting the right to use subsoil with a depth restriction. The restriction shall be imposed when issuing a license for the conduction of certain types of activities, including for the exploration and production of minerals and the construction and operation of underground structures not related to the extraction of minerals. Such a depth limitation can also be established in accordance with licenses for the use of subsoil for geological exploration of subsoil and mining carried out under a combined license of exploration and production of hard-to-recover minerals and other activities.

Procedure for the use of subsoil

According to the Law, the use of certain subsoil plots can also be limited or prohibited for the purposes of rational use and protection of subsoil. Previously, the basis for the restriction could only be established on the grounds of ensuring national security or environmental protection.

The Law provides for a change in the procedure for termination, suspension and restriction of the right to use subsoil resources. The relevant powers were transferred to a commission established by the federal management body of the state subsoil fund or by its territorial body. In respect to subsoil areas of local significance, said powers were transferred to a commission established by the state authorities of the constituent entities of the Russian Federation.

• Yury Pugach
• Partner
• +7 495 662 6434
• +7 495 662 6434
• Connect with Yury Pugach on LinkedIn

• Alexey Bardin
• Counsel
• +7 495 662 6434
• +7 495 662 6434
• Connect with Alexey Bardin on LinkedIn

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