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The issue of renewal of special permit for subsurface use: our experience

Among the services that our company provides, one of the most popular and valuable ones for the Client is consulting on issues from a wide variety of branches of law.

In July 2019, an agro-industrial enterprise contacted us for a qualified consultation, which required an urgent answer to the question below:

Is there a need to extend a special permit for subsoil use, which provides for the extraction of drinking water?

Essence of the matter


In the course of its activities, the Client worked using the specified permit. However, the Client had a problem, which was that the validity period of their permit expired, and the legislation that regulated the legal relationship of the mandatory receipt of such permission has changed in the past few years.

New wording in the legislation prompted the Client to the idea that there was no need for a permit, which in their case could significantly save funds on the continuation of their activities. At the same time, the signing of the contract in the amount of 1 million hryvnias was at stake, the implementation of which would be in jeopardy if the rules were not interpreted correctly.

In addition to the expert opinion of our lawyers, the Client was also interested in the practice of higher courts on this issue.

Considering all the wishes and the individual situation in which the Client’s enterprise found itself, the lawyers of our company divided each question into separate mini-consultations:

  • How were legal relations regulated in practice under the previous version of the legislation?

Answering the first question, the lawyers analyzed the current legislation, took into account the judicial practice, which applied the previous legislation and the information contained in the explanatory note to the draft which was amended.

The previous revision was quite problematic in practice due to the incomprehensibility of the terms “groundwater abstraction productivity” and “for own domestic, household and practical needs”. It was also difficult to come to a conclusion whether such kinds of water usage as watering plants and animals (pets) were considered domestic needs. In addition, the company was given one permit for all water intakes that were in its use, even if they were in different cities. All this created significant problems for agricultural enterprises, in terms of the application of the rule of law in their direct activities.

It is worth noting that among the changes made there were not those that would concern the limitation of the volume of groundwater that could be extracted without a special permit.

  •  What does the current legislation say regarding the legal regulation of the situation of the Client’s enterprise?

When providing an answer to the second question, not only the norms directly regulating legal relations were taken into account, but also the norms of related legislation and by-laws, which made it possible to understand how the issue was regulated, when a permit was or was not available.

The current version of the legislation details and clarifies the subject, namely, “agricultural producers whose share of agricultural production for the previous tax (reporting) year is equal to or exceeds 75 percent”, without changing other conditions, including the amount of the volume of produced water (up to 300 cubic meters per day).

Our service: Subsoil Permit

  •  Does practice, including judicial practice, regulate issues regarding the mandatory receipt of the specified special permits?

Practice of the courts provided further clarification as to how to calculate the volume of use of water intakes in a particular subsoil plot. So, we cited as an example the decision of the local court, which noted that since underground water was extracted from subsoil areas whose boundaries were determined by the coordinates of the field or its section, water withdrawal capacity of up to 300 cubic meters per day referred to the actual extraction of underground water from one subsoil plot. Moreover, it was carried out regardless of the number of land plots on which a single water intake was located, as well as the number of corresponding wells.

Conclusion

As a result, the Client received a comprehensive understanding of how their issue was regulated before the adoption of the relevant changes, after the adoption of the relevant changes and, most importantly, received practical recommendations and advice from our lawyers.

Namely: after analyzing the previous version of the legislation, the current version of the legislation and judicial practice, we came to the conclusion that a special permit to use subsoil was needed. Moreover, the Client was given an explanation on the steps that they needed to take to extend the validity of the current  permit and securely sign the contract with their own Clients.

If you want to get legal advice on the practical application of the rules of the law governing precisely those legal relations of which you are a participant, you can contact us in any way convenient for you. We can also provide you with all the necessary information about a subsoil permit or obtain it for you.

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