A Q&A guide to environment law in Russia. This Q&A provides a high level overview of environment law in Russia and looks at key practical issues including emissions to air and water, environmental impact assessments, waste, contaminated land, and environmental issues in transactions. In addition, answers to questions can be compared across a number of jurisdictions to assist in the management of cross-border transactions (see Country Q&A tool).
This Q&A is part of the PLC multi-jurisdictional guide to environment. For a full list of jurisdictional Q&As visit www.practicallaw.com/environment-mjg.
The main environmental protection legislation includes:
Federal law no. 7-FZ on environmental protection, dated 10 January 2002.
Federal law no. 96-FZ on the protection of atmospheric air, dated 4 May 1999.
Water code of the Russian Federation no. 74-FZ, dated 3 June 2006.
Land code of the Russian Federation no. 136-FZ, dated 25 October 2001.
Forestry code of the Russian Federation no. 200-FZ, dated 4 December 2006.
Federal law no. 89-FZ on production and consumption of waste, dated 24 June 1998.
Federal law no. 52-FZ on the sanitary-epidemiological welfare of the population, dated 30 March 1999.
Federal law no. 174-FZ on ecological expertise, dated 23 November 1995.
Key regulatory authorities in the environmental protection area include:
Ministry of Natural Resources and the Environment (MNR). MNR is responsible for public policy making and statutory regulation in the study, use, renewal and conservation of natural resources, environmental monitoring and pollution control.
Federal Service for Supervision of Natural Resources (Rosprirodnadzor). Rosprirodnadzor supervises and monitors the use of natural resources, providing safety and reasonable nature management.
Federal Agencies for Subsoil, Water Resources and Forestry. These agencies regulate relevant natural resources.
Federal Service for Hydrometeorology and Environmental Monitoring (Rosgidromet). Rosgidromet manages government property and provides government services in hydrometeorology and related areas, and monitors the environment and environmental pollution.
Environmental Public Prosecutor's Department under the Prosecutor General's Office. This department enforces environmental law.
Federal Supervisory Service for the Environment, Technology and Nuclear Management (Rostekhnadzor). Rostekhnadzor drafts government policy and legal regulation for environmental, technological and nuclear power.
Anyone who does not comply with environmental law is subject to civil, administrative and criminal liability. Recently, environmental law enforcement has become more popular in public discussions and in the policy of the Russian Government.
There are a number of active environmental NGOs (for example, the World Wildlife Fund (WWF)). However, they have little impact on the political process.
There is no integrated permitting regime and therefore separate environmental permits must be obtained by companies.
Companies must obtain the following separate permits:
Air emissions by stationary sources.
Air emissions by mobile sources.
Discharge of pollutants into surface and ground water.
Other harmful effects (for example, noise, vibration, electromagnetic and radiation effects, and so on).
There is no integrated permitting regime (see Question 4).
Rosprirodnadzor issues permits for the discharge of pollutants into surface and ground water. The permit details the maximum concentrations of certain pollutants that can be discharged into water by the company.
The following are prohibited:
Discharging pollutants into water without a permit.
Exceeding maximum concentrations of pollutants in waste water. For example, maximum concentrations of pollutants are established for water designated for fishing by Decree of the Fishing Ministry no. 20 on approval of the norms of water quality for water objects designated for fishing, including norms of maximum permitted concentrations of hazardous substances in the water designated for fishing, dated 18 January 2010. Maximum concentrations are also established for water designated for drinking and cultural-community use in zones where storage and destruction of chemical weapons are carried out, (Decree of the Chief Medical Officer no. 123 on approval of hygienic norms no. 126.96.36.1993-03, dated 5 June 2003). These norms set maximum concentrations in water for sarin (C4H10FO2P) and soman (C7H16FO2P).
Discharging prohibited pollutants into water.
Generally, a polluter must pay compensation for water pollution if it conducts prohibited activities. The amount of compensation is calculated according to special regulations and must be equal to the cost of clean-up of polluted water. A polluter can voluntarily pay compensation for water pollution. However, polluters can also be required to pay by a court ruling.
Companies are subject to civil, criminal and administrative liability for water pollution. Administrative fines vary for different breaches (RUB10,000 to RUB50,000). In addition, a facility's operation can be stopped for up to 90 days. Payment of a fine or if the 90-day suspension period expires does not remove the obligation to remedy the breach and pay compensation for the damage incurred. Criminal liability can be imposed for non-compliance that results in severe damage to the environment, harm to health or death.
An air emission permit must be obtained from Rosprirodnadzor for air pollution. This permit sets the limits of emissions and other conditions for air protection.
The following activities are prohibited:
Emitting pollutants into the air without a permit.
Exceeding the limits of maximum concentrations of pollutants in air emissions. For example, maximum concentrations are set out for specific air pollutants in Decree of Chief Medical Officer no. 114 on hygienic norms no. 188.8.131.528-03, dated 30 May 2003, with the relevant amendments and additions. These norms are established for air in settlements and towns.
Emitting prohibited pollutants into the air.
Companies may have to pay compensation for air pollution, depending on the pollution. The amount of compensation is set by special regulations. Methods for calculating the amount of compensation is set by the State Committee for Environmental Protection of the Russian Federation (Guidelines for calculating compensation for the damage caused to the environment as a result of environmental offenses, dated 6 September 1999).
Polluters are subject to civil, administrative and criminal liability for air pollution. Administrative fines vary depending on the breach and range from RUB10,000 to RUB50,000. In addition, a facility's operation can be stopped for up to 90 days. Criminal liability can be imposed for non-compliance if it results in severe damage to the environment, harm to health or death.
There are no fixed targets. However, in recent years environmental issues have increasingly been recognised as important aspects of national policy. In 2010, the Russian Government approved the state programme on energy efficiency in the Russian Federation until 2020. Energy efficiency and increasing the use of renewable energy are also mentioned as targets in various official documents (for example, the State Energy Strategy). In addition, to improve measures for increasing energy efficiency a new decree was passed on 27 September 2012 (no. 1794-r on approval of the plan of measures to develop state regulation in the energy efficiency sphere and increase energy efficiency).
The Russian Federation is a party to the UNFCCC and the Kyoto Protocol. The Russian Federation signed the UNFCCC on 13 June 1992, and it entered into force after its ratification on 28 March 1995. The Russian Federation signed the Kyoto Protocol on 11 March 1999, and it entered into force after its ratification on 16 February 2005.
International agreements are part of the national legal system (Constitution of the Russian Federation 1993) (Constitution). National enactments were adopted as required for implementing the Kyoto Protocol, including Federal Law No. 128-FZ on the ratification of the Kyoto Protocol to the UNFCCC, dated 4 November 2004.
The joint implementation (JI) mechanism is the only Kyoto-related mechanism established in the Russian Federation. It changed in 2009 and again in 2011. On 15 September 2011, the following two new enactments were adopted relating to the approval and implementation procedure of JI projects:
Russian Government resolution no. 780 on measures to implement Article 6 of the Kyoto Protocol to the UNFCCC.
Regulations on implementation of Article 6 of the Kyoto Protocol to the UNFCCC.
Currently, the following two carbon trading mechanisms are available:
JI projects (under Article 6 of the Kyoto Protocol).
Voluntary emission reductions (VERs) trading (a mechanism not covered by the Kyoto Protocol).
In addition to JI, the green investment scheme (GIS) may be implemented based on Government decree no. 884-r, dated 27 June 2009, and Federal law no. 357-FZ, dated 13 December 2010. However, the GIS is not used in practice as the relevant implementation rules have not yet been introduced.
Implementing JI projects is done in the following major stages:
Approval of a project.
Implementation of a JI project.
Issuance and transfer of carbon units.
The latest statutes (see Question 9) removed the tender process for approval of JI projects that was established by previous legislation. Currently, project approval is given by the Ministry of Economic Development (MED). OAO Sberbank (the largest bank in the Russian Federation and Eastern Europe) is an "operator of carbon units" and evaluates the applications submitted to it for their compliance with formal requirements. Project applications are selected based on their compliance with formal legislative requirements.
No fee is paid for selection of applications. Approved projects are registered in the register of projects maintained by the MED, and are published on the OAO Sberbank website (www.sbrf.ru/en/).
A project is to be implemented in accordance with the approved special project documentation. The project investor (a Russian Federation legal entity) is to monitor the project implementation. The project investor must provide a report before the project is implemented to the MNR and OAO Sberbank. In addition, before 30 September of each year, the project investor must submit a progress report on the project's implementation to both the MED and OAO Sberbank. The report must include the opinion by an independent entity chosen by the project investor as expert opinion on the project's implementation prepared by an independent entity chosen by the project investor.
The MED issues emission reduction units (ERUs) (by transforming assigned amount units (AAUs) reserved in the OAO Sberbank account) in an amount equal to that in the expert opinion, subject to:
A positive expert opinion.
Approval of the project by the other party.
No request to terminate the approval of a project within 20 business days from the submission date of investor's report on project implementation.
These ERUs must be credited to the OAO Sberbank account held at the Russian Federation register of carbon units. The functions of the administrator of the Russian register of carbon units are performed by the federal state unitary enterprise FTsGS (Ekologiya) (Government Decree No. 1741-r, dated 15 December 2006). OAO Sberbank transfers ERUs relating to a JI project to the foreign buyer's ERU account based on an agreement between the foreign buyer of ERUs, OAO Sberbank and the project investor.
In making deals with VERs the parties must:
Decide the nature of the agreement governing their project.
Establish verification and certification of rules and procedures to apply in connection with VERs generated by the project.
In practice, there have been some carbon market transactions with Russian Federation VERs (for example, Arkhangelsk Pulp and Paper Mill). This market may grow substantially in the future as there is no international agreement for the post-Kyoto period.
Projects that can have an impact on the environment require EIAs. EIAs must be carried out at both federal and regional levels for certain types of projects listed in Federal law no. 174-FZ on ecological expertise, dated 23 November 1995.
Obtaining positive ecological expertise is a legal pre-condition for carrying out various projects. Ecological expertise in the Russian Federation is intended to determine the compliance of project documentation with the environmental law requirements. A report on ecological expertise is issued by the MNR.
If a project receives a negative review or has no ecological expertise it fails to comply with environmental legislation and the entity performing projects is subject to administrative fines that range from RUB50,000 to RUB150,000. In addition, general environmental liability including civil, administrative, and under certain circumstances, criminal liability can apply. The Criminal Code contains a chapter on ecological crimes which, among other things, include water pollution, air pollution, violation of rules of treatment with hazardous substances and wastes, and so on. Sanctions vary depending on the crime and include fines, compulsory works and imprisonment.
Licences for decontamination and disposal of hazardous waste must be obtained from Rosprirodnadzor, which also issues special permits for the creating waste disposal facilities.
In addition, a legal entity whose activity generates waste must prepare a draft waste generation standard and waste disposal limits, and submit these documents for approval to a regional branch of Rosprirodnadzor.
The following activities are prohibited:
Creating waste disposal facilities without a permit.
Generating or storing waste without a permit.
Generating or storing waste in an amount exceeding the limits stated in the permits.
Neutralising and disposing of hazardous waste without a licence.
A special permit is required to create a waste disposal site. Operators of landfills and other waste disposal facilities must obtain licences for neutralisation and disposal of hazardous waste. Operators of landfills and other waste disposal facilities must meet certain criteria for obtaining a licence, including:
Having property rights for the buildings, equipment and other facilities for waste management.
Having a manager responsible for allowing employees to work with waste.
Having an established system of control in the area of waste management.
Monitoring of environmental pollution on waste management facilities.
Waste is divided into five danger classes depending on its negative impact on the environment. The class applicable can be defined by the legal entity itself or a special accredited laboratory. A "passport" for hazardous waste must be prepared and approved by a regional subdivision of the Ministry of Natural Resources and Ecology. The passport for hazardous waste includes information on the sources of that waste, physical form (for example, solid or fluid) and contents of waste, reasons for considering it hazardous (for example, flammable or toxic) and information on legal entity, and so on.
The following penalties can be imposed on companies for breaches of waste management legislation:
Administrative fines up to RUB250,000.
Suspension of a facility's operation for up to 90 days.
A list of asbestos-containing materials that are allowed for use in construction is contained in sanitary standards. Certain types of asbestos-containing materials, which can be used in construction, are set out in the Decree of the General Medical Officer no. 87 on approval of sanitary rules and standards no. 184.108.40.20687-11 (hygienic requirements related to manufacturing and use of chrysotile and chrysotile-containing materials), dated 1 June 2011. For example, the use of materials containing actinolite, amosite, anthophyllite, crocidolite, tremolite is completely prohibited. It is prohibited to use materials that are not on this list. Activities that do not comply with the sanitary standards and safety regulations are prohibited.
The main obligations of owners of asbestos manufacturing facilities are related to compliance with sanitary standards and industry safety regulations. Industry safety regulations are developed by the organisation in addition to the project documentation and are subject to an expertise by the relevant authorised body (for example, the Gosgortechnadzor carries out an expertise of industry safety regulations developed for rebuilding, renovation or liquidation of hazardous objects). A sanitary protection zone must be established around the asbestos manufacturing facilities. A sanitary protection zone is established to protect the territories outside that zone from possible harm that may be caused by the hazardous object. The construction of these facilities must be carried out according to sanitary standards. Employees of these facilities must be protected from any negative effects of asbestos. Owners of these facilities must ensure appropriate ventilation and heat inside, provide their employees with individual protection (for example, overalls and respirators), create places for rest and make other adjustments for protection of employees working with asbestos-containing materials.
There is no specific permit for activities related to asbestos. Permits required for compliance with environmental legislation (for example, in the waste management area) apply to industrial facilities in general.
There are no specific penalties for activities related to asbestos. Violations of sanitary standards are subject to:
Administrative fines of up to RUB20,000.
Suspension of a facility's operation for up to 90 days.
The main legislation includes:
Federal law no. 7-FZ on environmental protection, dated 10 January 2002.
Land code no. 136-FZ, dated 25 October 2001.
Federal law no. 101-FZ on state regulation providing the fertility of agricultural lands, dated 16 July 1998.
The Government of the Russian Federation establishes the maximum permissible levels for land contamination. These permissible levels are set out in relation to numerous separate contaminants. Sanitary standards and regulations specify the permissible levels for land contamination by setting a list of the regulated contaminants and their maximum permissible levels. The list of maximum amounts of pollutants is provided in the Decree of the General Medical Officer no. 53 on the approval of sanitary rules and standards no. 220.127.116.117-03, dated 17 April 2003.
Land owners or occupiers must maintain land in compliance with the maximum levels permissible for land contamination (Article 42, Land Code of the Russian Federation). Land quality monitoring must be conducted at every stage of project drafting and construction to confirm compliance with sanitary standards and maximum levels of contaminants.
A company is subject to the following for land contamination:
An administrative fine of up to RUB100,000.
Suspension of a facility's operation for up to 90 days.
Generally, the holder of land or occupier is responsible for land maintenance, compliance with the sanitary standards and sustaining levels below the maximum levels of contaminants in land (Article 42, Land Code of the Russian Federation). The holder of land or occupier is also liable for carrying out and paying for environmental investigation and clean-up (Article 77, Land Code of the Russian Federation).
The land owner or occupier is liable for investigation and clean-up of contamination on their land unless they prove the liability of a different person.
Previous land owners or occupiers are liable for contamination they caused in the previous 20 years (Federal law no. 7-FZ on environmental protection, dated 10 January 2002).
Limitations of liability for land contamination are not set out in legislation. However, these limitations can be set out contractually between parties.
Generally, the owner is liable for contaminated land. Lenders who lend to owners of contaminated land have no liability in relation to that contamination.
See above, Lender liability.
An individual can bring legal action for damages resulting from the activities of a polluter, owner or occupier, including damage caused by the movement of contamination onto his land.
Unless there is a specific contractual provision that excludes liability, the environmental damage reduces the quality of the asset. Sellers must therefore provide buyers with accurate information about the condition of that asset (Articles 461, 475, 476 and 565, Civil Code). Otherwise, the purchaser will have various remedies under the purchase contract.
Administrative and criminal liability can be imposed simultaneously on the current asset owner unless the current owner provides sufficient evidence that:
It did not know and could not have known about the environmental violations.
The previous owner's activities caused these violations.
In a share sale, a buyer inherits the pre-acquisition liability as the company that owns the asset does not change.
See Question 18.
In a share sale the seller does not retain any liability after the share sale.
A seller must provide all relevant information on the status of an asset to the buyer, including environmental information. It depends on the circumstances of the case whether information on environmental damage is relevant.
See above, Asset sale.
Environmental due diligence in an asset or a share sale is becoming more common in recent years.
Areas of environmental due diligence, include, among other things:
Compliance with other environmental regulations depending on the type of asset.
An EIA is generally required before, for example:
Projects that are a part of the federal target programme and recognised to have a negative impact on the environment are started.
Entering into a production sharing agreements.
In addition, an EIA can be demanded by citizens and public organisations. If it is demanded, public hearings may be arranged by the municipalities and the experts are involved in preparing the EIA.
Environmental consultants are usually used for EIAs. Engagement letters should contain provisions on the scope of work and limits on a consultant's liability.
Environmental warranties and indemnities are becoming more common in both asset and share sales. However, they are not yet well developed. Major transactions are frequently drafted under foreign laws, English law in particular.
Among the most common environmental warranties is the seller's declaration that the asset subject to sale complies with the applicable environmental and sanitary requirements. The most typical indemnity is an obligation to compensate for damages or fines imposed if any environmental or sanitary breaches are detected within a specified time after closing the transaction.
Warranties and indemnities used in share sales are similar to those used in asset sales (see above, Asset sale).
Typically, limits on environmental warranties and indemnities are set either as a cap for the total exposure or as time limits for responsibility (a combination of both is common).
Various state registers are kept by regulators, including a register on the condition of land and a register of carbon units. For example, the Land Cadastre of the Russian Federation is managed by the Federal Service for State Registration, Cadastre and Cartography of the Russian Federation. This Cadastre contains information of the condition of land. The Russian register of carbon units is maintained by the federal state unitary enterprise FTsGS (Ekologiya).
Third parties can request certain information from most registries for payment. For example, information that can be obtained from the Land Cadastre includes:
Information on the owner and category of the land.
Condition of the land.
Whether the negative conclusion of the EIA was given to the land.
The fees for these services varies from RUB150 to RUB2,400.
Environmental auditing is voluntary.
Companies must report their environmental performance to governmental authorities, but not to the public. However, civil organisations can initiate an inspection of a facility through governmental organisations. Individuals or a group of individuals can claim environmental damages (or threat of damages) caused by a company's activities. Consequently, some companies provide reports on their environmental performance to the public on a voluntary basis based on international standards in order to mitigate any possible conflicts.
Companies do not have to report information about environmental incidents.
Regulators conduct regular inspections to confirm compliance with environmental legislation. Non-regular inspections can be conducted if regulators have grounds to suspect violations of environmental legislation. During inspections environmental regulators have access to documents, location sites and facilities, to ensure they can carry out their investigations and conduct necessary research. The scope of access to a company's documents and location sites is limited (Federal law no. 294-FZ on the protection of the rights of legal entities and individual entrepreneurs during state control (supervision) and municipal control, dated 26 December 2008).
The market for insurance of environmental risks is developing and insurance is becoming common practice. Voluntary environmental insurance is available for a wide range of environmental risks. Mandatory insurance of civil liability for damages resulting from accidents is required for hazardous facilities, which deal with hazardous materials (for example, flammable gases) (Federal law no. 225-FZ, on mandatory insurance of civil liability of the owner of a hazardous object in case of causing harm as a result of an incident, dated 27 July 2010).
As environmental insurance is becoming more popular, more insurance companies offer insurance of various environmental risks.
There are no environmental taxes. However, companies pay taxes in relation to the environmental impact that results from their activities (see below, Tax liability). Additionally, an automobile recycling fee (tax) was adopted after the Russian Federation's accession to the World Trade Organization (WTO) in 2012.
Companies that carry out activities that can cause or result in an environmental impact are liable for making the respective tax payments (for example, the automobile recycling fee). The automobile recycling fee is paid by importers, manufacturers and buyers of cars to which the fee is applicable.
Different calculation methods apply for calculation of various payments. Methods vary depending on the type of environmental impact and other factors.
The following are the main environmental issues proposed in 2012 governmental environment policy document (Principles of State policy in the area of environmental development of the Russian Federation for the period up to the year 2030):
Improving waste management (gradual ban of waste disposal that can be recycled).
Imposing mandatory ecological expertise for hazardous objects.
Ecological education in schools.
Increase of information openness of companies regarding their negative impact on the environment.
Further increase of energy efficiency.
This State policy was adopted by the President's Decree, dated 30 April 2012, which provides for the mechanisms for implementation of different targets/policies.
Main activities. MNR is responsible for public policy making and statutory regulation in the study, use, renewal and conservation of natural resources, environmental monitoring and pollution control.
Main activities. Rosprirodnadzor controls and supervises the area of nature management.
Main activities. This service supervises sanitary standards and control.
Main activities. Rostekhnadzor is responsible for regulation and control over industrial safety, energy facilities and nuclear safety.
Description. Consultant Plus is a legal database that provides the Russian language text of various Russian Federation legislation.
Description. Garant is a legal database that provides the Russian language text of various Russian Federation legislation.
Description. There are no official translations into foreign languages of Russian Federation legislation. However, this website provides unofficial translations of many statutes.
Qualified. Germany, 1990
Areas of practice. Corporate restructurings; financial services; PPP; climate change; mergers and acquisitions.
Qualified. Russian Federation, 2003
Areas of practice. Energy efficiency and climate change; general corporate; mergers and acquisitions.
Qualified. Russian Federation, 2009
Areas of practice. General corporate; mergers and acquisitions; trade and commerce; energy efficiency and climate change.