The President enforces the National Security and Defense Council decision on subsoil use
On 26 March 2021, a presidential decree (No. 122/21) (the "Decree") on subsoil policy to combat illicit extraction entered into force. This is part of the Zelenskiy administration's efforts to combat wide-reaching illegal extraction of mineral deposits in Ukraine, such as oil, gas, and solid minerals such as sand, amber, etc.
In particular, the Decree enforces a decision on subsoil use (the "Decision") adopted by the National Security and Defense Council of Ukraine, and assigns control of its implementation to the Secretary of this organization.
Legislative activity
The Cabinet of Ministers of Ukraine is instructed under the Decree to provide support in Parliament for the following bills:
- Bill No. 3576 aims to criminalize the illegal extraction of minerals falling within the competence of local authorities under existing subsoil legislation, and to increase criminal sanctions for illegal extraction in general;
- Bill No. 4187 aims simplify and make more transparent the regulation of subsoil use, minimize government influence on the industry, increase competition and establish a new list of cases for granting a special permit without an auction in the field of subsoil use.
Additionally, the Cabinet of Ministers is instructed to submit to the Verkhovna Rada (Parliament) parliamentary bills to:
- update the National Program for the Development of Ukraine's Mineral Resources Base by 2030, by adopting measures to increase the production of natural gas, oil, shale gas, and gas (methane) from coal deposits;
- amend the Subsoil Code of Ukraine to introduce provisions for the protection of national interests, to ensure equal opportunities for subsoil use, the transparency of auctions for special permits for subsoil use, the transparency of the state monitoring system of subsoil use and protection, as well as to strengthen control and increase sanctions for violations of legal requirements in the field of subsoil use.
Unscheduled inspections
The Decree also instructs government agencies to carry out unscheduled inspections of business activities within subsoil use in 2021 and contact regional state administrations and local self-government bodies regarding illegal extraction on a quarterly basis for information processing. Such inspections would be focused on permit-holders which have failed to take in use permits for oil and gas- related activities within set deadlines after being awarded, or where permits were awarded without a tender. The State Service of Geology and Subsoil of Ukraine is instructed to prepare quarterly reports on the results of these unscheduled inspections.
Access to information
Information about the location, nature, quantity, and depth of mineral deposits and similar information, is currently considered as state secrets (i.e. classified). The Decree instructs government ministries to declassify such information related to mineral deposits, with the exception any information about uranium deposits, which is to remain classified in view of its strategic importance.
Sanctions
Violations of subsoil legislation can lead to both administrative and criminal liability, with different levels of sanctions provided for in the Criminal Code and Code of Administrative offences, which range from moderate fines and an obligation to compensate damages, to sizeable fines and prison sentences in the most serious cases.
For further information, please contact Asters' partner Yaroslav Petrov and associate Olena Sichkovska-Chornobyl.
