Review of changes to the procedures for issuing special permits for subsoil use

Legal Alert, June, 2018

Review of changes to the procedures for issuing special permits for subsoil use

On June 8, 2018 the Resolution of the Cabinet of Ministers of Ukraine No 333 as of 25.04.2018 was published in the newspaper «Uryadoviy Kurier», which amended procedure for issuing special permits for subsoil use approved by the Resolutions of the Cabinet of Ministers of Ukraine No 594 and 615 as of 30.05.2011.

Among the main changes, there is a significant reduction of terms for the approval of materials for the supply of mineral resources to use by the relevant councils and the Ministry of Ecology and Natural Resources of Ukraine. From now on, materials for of subsoil use should be agreed by:

  • appropriate councils — within 45 calendar days (earlier this period was 90 calendar days);
  • Ministry of Ecology and Natural Resources of Ukraine — within 15 working days (earlier this period was 30 days) from the date of receipt of the relevant materials to the Ministry of Ecology and Natural Resources of Ukraine.

In this case, the so-called » silence procedure» is preserved, which allows the materials to be considered as agreed, if within specified period these authorities have not provided the State Service of Geology and Subsoil of Ukraine with approval or a motivated refusal to agree. In addition, in accordance with the changed procedures for issuing of special permits, the Ministry of Ecology and Natural Resources of Ukraine instead of agreeing will submit proposals and comments to materials on the use of mineral resources and extension of the special permit, which have to be taken into account by the State Service of Geology and Subsoil of Ukraine. The limited list of cases under which the Ministry of Ecology and Natural Resources of Ukraine has the right to submit comments concerning or renewal of special permits defined order of granting special permits for subsoil use, approved by the the Resolution of the Cabinet of Ministers of Ukraine No 615 as of 30.05.2011.

Another consequence of the changes to the procedures for issuing of special permits is the regulation of the issuing by the State Service of Geology and Subsoil of Ukraine a copy of a special permit, the validity period of which has been extended.

For example, a copy of special permits validity of which is extended shall be issued to the applicant within 20 working days after the relevant decision (for oil and gas) or after payment of the full fee for the renewal of the permit (for other natural resources except oil and gas). In this case, the decision to extend the term of the special permit is posted on the official website of the State Service of Geology and Subsoil of Ukraine within 5 working days from the date of its adoption.

It is worth paying attention among the changes in the issuing of special permits for subsoil use to the terms on providing results of assessing the environmental impact of subsoil users when receiving subsoil in use.

Thus, changes made to the procedure for conducting auctions for the sale of special permits for subsoil use, provide for the possibility of concluding with the winner of the auction of two different contracts, namely: a contract for the sale of a permit or a contract for the sale of a permit with contingent condition. However, in this case of a contract with a contingent condition, the winner of an auction undertakes to obtain a report on the environmental impact assessment, according to which the conduct of the planned activity is acceptable, within six months from the date of signing such agreement. At the same time, the procedure does not specify the cases and conditions in the presence of which the winner of the auction is entered into the contract of sale of the permit with the contingent condition.

As for the results of the environmental impact assessment when receiving a special permit without holding an auction or extending its term, there are several important aspects to be mentioned:

  1. the following documents are recognized as environmental impact assessment results: environmental impact assessment report, public discussion report and conclusion on environmental impact assessment;
  2. the results of an environmental impact assessment submitted together with the application for subsoil to obtain special permits without an auction for such activities as a geological study, geological study with research and industrial development and extraction of minerals or renewal of special permits;
  3. provision of the results of an environmental impact assessment is not required in the case of special permits due to expanding the boundaries of not more than 50% previously provided for use subsoil area for the purpose of geological exploration or placing underground and increase mining at the expense of expanding the boundaries of the site but not more than 50% of the reserves determined by the previously granted permission, provided that the adjacent land is not provided for use (subparagraph 2 of paragraph 8 of the Procedure for granting special permits, approved by the Resolution of the Cabinet of Ministers as of 30.05.2011 No 615);
  4. subsoil users, which until December 31, 2018 filed an application for special permits for subsoil use without an auction or extension of the special permits are exempted from the obligation to supply the results of an environmental impact assessment, but have to provide a copy to the application filed under to the Law of Ukraine «On Environmental Impact Assessment», a report on planned activity, which is subject to environmental impact assessment, and information on its introduction in the Unified Register on Environmental Impact Assessment. In this case, the special conditions of the permit include the obligation of the subsoil user to conduct an environmental impact assessment procedure within 6 months from the date of notification of the planned activity to the Unified Register of Environmental Impact Assessment.

In addition to paragraph 17 of the Procedure for granting special permits, approved by the Resolution of the Cabinet of Ministers of Ukraine as of 30.05.2011, No 615, an additional ground for making changes to the special permit in case of participation of a subsoil user in a legal entity (with a share of at least 50%) was introduced in order to continue the activity on provided to subsoil user in the use of the subsurface provided that such a subsoil user meets a number of requirements stipulated by the specified norm. At the same time, this ground does not apply to subsoil users, who are economic entities of the state sector of the economy, as well as enterprises and economic partnerships whose authorized capital is at least 50% owned by the enterprise and / or economic partnership, the share of the state in the authorized capital of which is 100%, and has a limited period of validity, as it expires on January 1st, 2019.

The remaining changes introduced to the procedures for the issuance of special permits for the use of subsoil, approved by the Resolution of the Cabinet of Ministers of Ukraine as of 30.05.2011, No. 594 and 615, and entries into force on June 08, 2019, are of a technical legal nature and are intended to simplify the filing and consideration of applications for granting or prolongation of special permits. Such changes relate to the requirements for the registration and form of applications and documents submitted to the State Service of Geology and Subsoil of Ukraine in connection with the acquisition / receipt of a special permit for subsoil use.

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This Legal Alert is intended as a general overview of latest changes in legislation of Ukraine and does not constitute a legal advice.

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