A procedure is coming into force for assessing damage to the atmosphere caused by stationary sources
Pepeliaev Group advises that on 16 February 2021, the Procedure[1] comes into force that sets the rules for assessing damage caused by emissions of polluting substances into the atmosphere from stationary sources on these sites.
The grounds for the approval and application of this Procedure are the rules of Federal Law No. 7-FZ “On environmental protection” dated 10 January 2002 (“FL-7”) and of Federal Law No. 96-FZ “On protection of the atmosphere” dated 4 May 1999 (“FL-96”):
We should note that neither FL-7 nor FL-96 contain any provisions that the payment for an adverse impact is a form of compensation for the damage caused to the environment as a result of violating environmental legislation. Therefore, in the case of a violation such as emitting a pollutant in excess of the permitted volume (weight):
The second formula differs from the first one:
The grounds for the approval and application of this Procedure are the rules of Federal Law No. 7-FZ “On environmental protection” dated 10 January 2002 (“FL-7”) and of Federal Law No. 96-FZ “On protection of the atmosphere” dated 4 May 1999 (“FL-96”):
- according to article 77(3) of FL-7, environmental damage caused by a legal entity or and individual entrepreneur must be compensated in accordance with the duly approved tariffs and procedures for assessing environmental damage and if they are not available, on the basis of the actual expenditure on restoring the damaged environment taking into account the losses incurred including lost profit;
- according to article 78(1) of FL-7, the environmental damage caused by a breach of environmental legislation must be assessed based on the actual expenditure on restoring the damaged environment taking into account the losses incurred including lost profit, as well as in accordance with any plans for rehabilitation and other restoration work, and if such plans are not available, in accordance with the tariffs and procedures for assessing environmental damage approved by executive authorities responsible for the state environmental regulation;
- According to article 32 of FL-96, any damage caused to the life and property of individuals as well as property of legal entities and the environment by the atmosphere being polluted, must be compensated in full and in accordance with tariffs and procedures for assessing damage and if they are unavailable, it must be compensated in full and in accordance with the actual expenditure on restoring the health and property of individuals and of the environment at the expense of individuals and legal entities guilty of polluting the atmosphere.
 | Please note that article 77(3) of FL-7 provides that the tariffs and procedures have priority when the damage is assessed and article 78(1) of FL-7 provides that the actual expenditure has priority when the damage is assessed, which means that these rules contradict each other. At the same time, the case law[2] provides that when the damage is assessed, tariffs and procedures must be taken into account in the first instance and only if they are unavailable should the actual costs of restoring the damaged environment be taken into consideration. Article 32 of FL-96 also provides that tariffs and procedures have priority. In view of this, the rules of the Procedure will be mandatory in all cases provided for by such Procedure. |
1. Cases of damage to which the Procedure applies
The Procedure applies to all cases where damage results from activities of legal entities and individual entrepreneurs operating at sites that have a negative environmental impact (the “NEI sites”) of categories I, II and III and emitting from stationary sources into the atmosphere polluting substances in amounts exceeding the following limits:- for sites of category I - technological limits and limits of acceptable emissions of highly toxic substances and substances having carcinogenic or mutagenic properties (substances of hazard classes I and II) established by a complex environmental permit (“CEP”)[3];
- for sites of category II for which it is possible to obtain a CEP - technological limits and limits of acceptable emissions of highly toxic substances and substances having carcinogenic or mutagenic properties (substances of hazard classes I and II) established by the CEP;
- for sites of category II not covered by the previous paragraph - limits of acceptable emissions of pollutants to the atmosphere set in the environmental impact statement (the “EIS”);
- for sites of category III – (i) limits of acceptable emissions of highly toxic substances and substances having carcinogenic or mutagenic properties (substances of hazard classes I and II) and (ii) limits of acceptable emissions of pollutants to the atmosphere specified in the report on the organisation and results of industrial environmental control (the “Report”)[4].
- outside periods of unfavourable meteorological conditions;
- during periods of unfavourable meteorological conditions when legal entities and individual entrepreneurs having sources that emit pollutants into the atmosphere must take measures to limit emissions of pollutants into the atmosphere[6].
2. Connection between the payment for an adverse environmental impact and compensation for damage caused to the atmosphere
The Procedure states that contributing a payment for an adverse environmental impact collected under article 16 of FL-7 does not release legal entities and individual entrepreneurs operating at sites having a negative environmental impact from the obligation to compensate damage caused to the atmosphere[9]. | A similar rule was previously established in article 16(4) of FL-7: “The payment of the fee established in clause 1 of this article does not release business and other entities from implementing the measures aimed at protecting the environment and compensating damage caused to the environment”[10]. Apparently, the Russian Ministry for the Protection of the Environment and Natural Resources, which has approved the Procedure, intends to maintain this approach. |
We should note that neither FL-7 nor FL-96 contain any provisions that the payment for an adverse impact is a form of compensation for the damage caused to the environment as a result of violating environmental legislation. Therefore, in the case of a violation such as emitting a pollutant in excess of the permitted volume (weight):
- the party that has performed the emission will be obliged to apply the factor of 100[11] to the rates of payment for the adverse impact on the environment in relation to the volume (weight) of the emission exceeding the permitted volume (weight) of the emission; and
- it will be possible to collect from such party the amount of the damage caused to the environment by the volume (weight) of the emission exceeding the permitted volume (weight) of the emission assessed on the basis of the Procedure.
| Under the current regulation, the payment for the adverse environmental impact, the amount of which is calculated using the factor of 100, is essentially a penalty collected in addition to the amount of damage caused to the environment. At the same time, one can see that in the example above with ammonia, the payment for the adverse impact calculated using the factor of 100 is approximately 16 times less than the amount of damage calculated in accordance with the Procedure. The fact that this payment is essentially of a punitive nature and the amount of damage calculated in accordance with the Procedure exceeds it many times over, leads to a conclusion that the tariffs approved by the Procedure and used for calculating damage are also of a punitive nature, despite the compensatory purpose of them. |
3. Formulas for assessing damage caused to the atmosphere
The Procedure provides for two formulas for assessing damage caused to the atmosphere as a result of a violation of the technological limits and limits of acceptable emissions of highly toxic substances and substances having carcinogenic or mutagenic properties (substances of hazard classes I and II) established by the CEP and the limits of acceptable emissions of pollutants into the atmosphere set in the EIS or the Report[12]:- for assessing damage caused outside a period of unfavourable meteorological conditions;
- for assessing damage caused during a period of unfavourable meteorological conditions.
The second formula differs from the first one:
- by the method for calculating the weight of the pollutant emitted in excess of the permitted amount[13]; and
- by a factor being used in the second formula to take into account the increased levels of pollution of the atmosphere during periods of unfavourable meteorological conditions[14].
What to think about and what to do
We recommend reviewing the Procedure carefully and taking its requirements into account when you plan and perform your business activities.Help from your adviser
Pepeliaev Group’s lawyers are ready to provide legal support to companies on any issues relating to the compensation of environmental damage including in connection with the new Procedure being applied.[1] The Procedure for assessing damage caused to the atmosphere as an environmental component (the “Procedure”) approved by Order No. 59 of the Russian Ministry for the Protection of the Environment and Natural Resources dated 28 January 2021. No similar procedures existed previously.
[2] Resolution No. AKPI19-1029 of the Russian Supreme Court dated 20 March 2020 and Clause 4 of Resolution No. 49 of the Plenum of the Russian Supreme Court “On certain aspects of applying legislation on compensation for damage to the environment” dated 30 November 2017.
[3] A CEP must be obtained for sites of category I. A CEP may also be obtained for sites of category II if the corresponding best available technique reference documents are available (article 31.1(12) of FL-7).
[4]Apparently, this rule was established in view of the following provision of article 16.3(8) of FL-7: “when payment is assessed for an adverse environmental impact with respect to sites of category III, the volume or the weight of emissions of pollutants specified in the organisation's report on the organisation and results of the industrial environmental control is treated as conforming to the limits of permitted emissions, except for radioactive substances, highly toxic substances or substances having carcinogenic or mutagenic properties (substances of hazard classes I and II)”.
[5] Clause 4 of the Procedure.
[6]The obligation to take such measures is set in article 19(3) of Federal Law No. 96-FZ “On the protection of the atmosphere” dated 4 May 1999. According to this regulation, such measures must be agreed with executive authorities of the constituent entities of Russia that are responsible for state environmental supervision in the region.
[7] Clause 5 of the Procedure.
[8] Clause 7 of the Procedure.
[9] Clause 6 of the Procedure.
[10] We should note that despite the fact that this rule has been removed from FL-7, this law does not contain a provision that a payment for a negative impact is a form of compensation for the damage caused.
[11] article 16.3(5)(8) of FL-7.
[12] Clauses 8 and 9 of the Procedure.
[13] In the first formula the weight of the pollutant emitted in excess of the permitted amount is identified as the difference between the actual amount of the pollutant emitted as assessed by the state environmental supervisory authority and the permitted emission amount for this substance.
In the second formula the weight of the pollutant emitted in excess of the permitted amount is identified as the difference between the actual amount of the pollutant emitted as assessed by the state environmental supervisory authority and the reduced weight of the pollutant emitted in accordance with the plan of measures aimed at reducing the emissions of pollutants into the atmosphere to be implemented during periods of unfavourable meteorological conditions. The “reduced weight” means the amount of the emission after the measure has been taken to reduce the emissions. The amount of a “reduced emission” is specified for each measure in the list of measures aimed at reducing the emissions of pollutants into the atmosphere during periods of unfavourable meteorological conditions (for example, see the column “Amounts of emissions after the measure has been taken” in the table provided in Attachment No. 3 to the “Requirements for measures aimed at reducing emissions of polluting substances into the atmosphere during periods of unfavourable meteorological conditions” approved by Order No. 811 of the Russian Ministry for the Protection of the Environment and Natural Resources dated 28 November 2019. The Procedure also sets the rules for identifying the weight of a reduced emission when no plan is available of measures aimed at reducing emissions of pollutants into the atmosphere during periods of unfavourable meteorological conditions (the last paragraph of clause 11 of the Procedure).
[14] This factor takes into account the height of the emissions. For example, it is 1 if the height of the emissions is over 100 m and 1.5 if the height of the emissions is between 51 and 100 m inclusive.
[15] Attachment to the Procedure. For example, the tariff for an emission of 1 tonne of ammonia is RUB 92,701.
[2] Resolution No. AKPI19-1029 of the Russian Supreme Court dated 20 March 2020 and Clause 4 of Resolution No. 49 of the Plenum of the Russian Supreme Court “On certain aspects of applying legislation on compensation for damage to the environment” dated 30 November 2017.
[3] A CEP must be obtained for sites of category I. A CEP may also be obtained for sites of category II if the corresponding best available technique reference documents are available (article 31.1(12) of FL-7).
[4]Apparently, this rule was established in view of the following provision of article 16.3(8) of FL-7: “when payment is assessed for an adverse environmental impact with respect to sites of category III, the volume or the weight of emissions of pollutants specified in the organisation's report on the organisation and results of the industrial environmental control is treated as conforming to the limits of permitted emissions, except for radioactive substances, highly toxic substances or substances having carcinogenic or mutagenic properties (substances of hazard classes I and II)”.
[5] Clause 4 of the Procedure.
[6]The obligation to take such measures is set in article 19(3) of Federal Law No. 96-FZ “On the protection of the atmosphere” dated 4 May 1999. According to this regulation, such measures must be agreed with executive authorities of the constituent entities of Russia that are responsible for state environmental supervision in the region.
[7] Clause 5 of the Procedure.
[8] Clause 7 of the Procedure.
[9] Clause 6 of the Procedure.
[10] We should note that despite the fact that this rule has been removed from FL-7, this law does not contain a provision that a payment for a negative impact is a form of compensation for the damage caused.
[11] article 16.3(5)(8) of FL-7.
[12] Clauses 8 and 9 of the Procedure.
[13] In the first formula the weight of the pollutant emitted in excess of the permitted amount is identified as the difference between the actual amount of the pollutant emitted as assessed by the state environmental supervisory authority and the permitted emission amount for this substance.
In the second formula the weight of the pollutant emitted in excess of the permitted amount is identified as the difference between the actual amount of the pollutant emitted as assessed by the state environmental supervisory authority and the reduced weight of the pollutant emitted in accordance with the plan of measures aimed at reducing the emissions of pollutants into the atmosphere to be implemented during periods of unfavourable meteorological conditions. The “reduced weight” means the amount of the emission after the measure has been taken to reduce the emissions. The amount of a “reduced emission” is specified for each measure in the list of measures aimed at reducing the emissions of pollutants into the atmosphere during periods of unfavourable meteorological conditions (for example, see the column “Amounts of emissions after the measure has been taken” in the table provided in Attachment No. 3 to the “Requirements for measures aimed at reducing emissions of polluting substances into the atmosphere during periods of unfavourable meteorological conditions” approved by Order No. 811 of the Russian Ministry for the Protection of the Environment and Natural Resources dated 28 November 2019. The Procedure also sets the rules for identifying the weight of a reduced emission when no plan is available of measures aimed at reducing emissions of pollutants into the atmosphere during periods of unfavourable meteorological conditions (the last paragraph of clause 11 of the Procedure).
[14] This factor takes into account the height of the emissions. For example, it is 1 if the height of the emissions is over 100 m and 1.5 if the height of the emissions is between 51 and 100 m inclusive.
[15] Attachment to the Procedure. For example, the tariff for an emission of 1 tonne of ammonia is RUB 92,701.