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<P align="center"><font color="#660000"><b><font face="Arial, Helvetica, sans-serif" size="4" color="#990000">Frequent
Legal Issues for Contractors on <br>
Sakhalin Oil and Gas Projects<br>
</font></b></font><font size="2" face="Arial, Helvetica, sans-serif">(Appearing soon in the Russian Energy Law Journal)</font></p>
<p align="center"><font color="#990033" size="2" face="Arial, Helvetica, sans-serif"><strong>XV.
Water Use Licensing</strong></font></p>
<p align="left"><font size="2" face="Arial, Helvetica, sans-serif"><em>Presented
by <a href="../subpage/attorneys.html#rpg_vlad">Natalia Prisekina</a>, senior associate attorney and Director of the
Vladivostok branch office of Russin & Vecchi</em>.</font></p>
<p><font size="2" face="Arial, Helvetica, sans-serif">The Water Code of
the Russian Federation and its implementing regulation, establish the
main parameters for the regulation <font size="1">(161) </font>of water
use in Russia. Although the Water Use Regulation establishes that the
RF Ministry of
Natural Resources (MNR) or its territorial bodies <font size="1">(162)</font> license
water use, a subsequent MNR Order clarifies that construction, exploitation,
exploration,
amenities, and operation of undersea deposits including hydrocarbon resources,
are licensed by the MNR in Moscow. <font size="1">(163)</font></font></p>
<p><font size="2" face="Arial, Helvetica, sans-serif">As a general rule,
rights to use water areas are acquired on the basis of a water use
license issued by a state authorized body, and under an
agreement for the use of the water area concluded in conformity therewith. <font size="1">(164)</font> In
the event the agreement for use and the provisions of the water use license
are contradictory, the agreement shall be deemed invalid. <font size="1">(165)</font></font></p>
<p><font size="2" face="Arial, Helvetica, sans-serif">Short-term use of
a body of water may be established for a period of up to three years,
and long-term use for a period from three to 25 years,
with the opportunity to prolong at the initiative of the water user.
<font size="1">(166)</font> The MNR has taken the position that advances
in drilling technology are
so frequent that long-term licenses are inappropriate.</font></p>
<p><font size="2" face="Arial, Helvetica, sans-serif">The licensing body
considers water use license applications within 30 days of their receipt
along with the necessary accompanying documentation.
Depending on the complexity and volume of materials, the licensing body
may extend the term of its consideration by an additional 30 days. Moreover,
if deemed necessary, the licensing body may order additional study of
the application and its accompanying documentation, but must then issue
its decision on licensing within 15 days of receipt of the results of
the additional study, and in no case later than 60 days from the initial
date of filing. <font size="1">(167)</font> Rejection of a water use
license application must be accompanied by a decision of the licensing
body explaining the rejection <font size="1">(168)</font>.
Decisions and other actions of RF licensing bodies may be judicially
contested. <font size="1">(169)</font><br>
<br>
Although a positive ecological examination is a mandatory prerequisite
for the MNR to grant a water use license <font size="1">(170)</font>,
it alone is not a guarantee of license issuance, as the application
may be rejected, for example,
due to the inadequacy of the license application or the necessary accompanying
documentation.</font></p>
<p><font size="2" face="Arial, Helvetica, sans-serif">The MNR must form
a commission of independent experts to conduct the ecological examination
within
30 days of receipt of an application accompanied
by all of the necessary documentation and payment of the required fee. <font size="1">(171)</font> The
commission must reach its conclusions within four months from the date
of issuance of a receipt confirming the applicant’s payment
of the fee. Where the MNR determines that an ecological examination is
complex, the term for consideration may be extended for two additional
months. </font></p>
<p><font size="2" face="Arial, Helvetica, sans-serif">Ecological examination conclusions must be either positive or negative
and must be approved by a majority of the independent experts on the
commission. Special consideration (which is undefined in the Law on Ecological
Examination) must be given to the opinions of independent experts who
disagree with the conclusions of the majority. The MNR must approve conclusions,
and the head, the responsible secretary, and each independent expert
of the commission must sign them in order for them to have legal force.
Such conclusions cannot be altered without the consent of these individuals.
This statutory framework appears to provide the MNR with the ability
to delay the implementation of positive conclusions and the granting
of a water use license by acting deliberately in approving or rejecting
positive conclusions. Ecological examination conclusions may be judicially
contested. </font></p>
<p><font size="2" face="Arial, Helvetica, sans-serif">Once issued, a water use license, depending on the manner and objectives
of use of a water area, must contain the following:</font></p>
<blockquote>
<p><font size="2" face="Arial, Helvetica, sans-serif">- information on the water area;<br>
- information on the water user;<br>
- information on the water consumers;<br>
- a statement of the manner and objectives of use of a water area;<br>
- an indication of the spatial limits (coordinates) of the water area
or part thereof made available for use, and whenever necessary, the places
of intake (drainage) of water;<br>
- information on the limits of water use;<br>
- information on the obligations of the water user with respect to the
water consumers;<br>
- the period of license validity;<br>
- requirements for the rational use and protection of water areas and
the environment. <font size="1">(172)</font></font></p>
</blockquote>
<p> <font size="1" face="Arial, Helvetica, sans-serif">(161) Decision No.
383 “On
Approval of Regulations on Granting Use to Water Areas which are State
Property, Setting and Revising Water Use
Limits, and Issuing Water Use Licenses and Managerial Licenses” dated
April 3, 1997 (“Water Code Regulation”). <br>
(162) Water Code Regulation, Point 20.<br>
(163) MNR Order No. 226 “On Distribution of Authority in Accordance with
Objects
of Licensing,” October 14, 1998, Addendum 1, Points 2.4 and 2.6.<br>
(164) RF Water Code, Article 46.<br>
(165) RF Water Code, Article 56.<br>
(166) RF Water Code, Article 42.<br>
(167) Water Code Regulation, point 32.<br>
(168) Water Code Regulation, point 33.<br>
(169) Water Code Regulation, point 47.<br>
(170 )Federal Law No. 174-FZ “On Ecological Expertise.” November
25,
1995,
Article 11, Point 7.<br>
(171) Section II of the Regulation promulgated to implement the Law on Ecological
Expertize
(RF Government Decision No. 698 “On Approval of the Regulation on the Procedure
for Conducting State Ecological Expertize” of June 11, 1996).<br>
(172) RF Water Code, Article 49. </font> </p>
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<td width="29%"><div align="center"><strong><font size="2" face="Arial, Helvetica, sans-serif"><a href="chapter_XVI.html">Next</a></font></strong></div></td>
<td width="36%"><div align="center"><strong><font size="2" face="Arial, Helvetica, sans-serif"><a href="chapter_XIV.html">Previous</a></font></strong></div></td>
<td width="35%"><div align="center"><strong><font size="2" face="Arial, Helvetica, sans-serif"><a href="RusEnergyLaw_index.html">Table of Contents</a></font></strong></div></td>
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