1 Environmental Policy and its Enforcement
1.1 What is the basis of environmental policy in your jurisdiction and which agencies/bodies administer and enforce environmental law?
Russia’s state environmental policy is designed to ensure protection, reproduction and sustainable use of natural resources as the prerequisites for a healthy environment and environmental safety.The right of Russian citizens to a healthy environment is guaranteed by the Constitution of the Russian Federation. The principles underlying the country’s environmental law are:
Russia’s Ministry for Natural Resources and the Environment is the main authority administering the government policy for nature management and environmental protection. It coordinates and controls the activities of its subordinate agencies:
In addition, the Russian Constitution refers nature management, environmental protection and safety matters to the joint competence of the Russian Federation and the regions (constituent entities), each of them having their own authorities administering the state environmental policy.
1.2 What approach do such agencies/bodies take to the enforcement of environmental law?
The government authorities develop and approve binding environmental protection rules and standards, carry out environmental monitoring, prosecute those violating environmental laws, elaborate environmental protection and improvement measures and procure financing for them.
1.3 To what extent are public authorities required to provide environment-related information to interested persons (including members of the public)?
The Russian Constitution guarantees everyone’s right to reliable information about the state of the environment. Authorities collect environmental information from regular reports submitted by businesses impacting on the environment, and conduct ongoing environmental monitoring.
Much environmental information is published in the media and on the Internet. Any environmental information is accessible to anyone upon request. Also, the law requires that the public be informed of any degradation in the environment to an extent endangering human health.
2 Environmental Permits
2.1 When is an environmental permit required, and may environmental permits be transferred from one person to another?
The main types of adverse environmental impact are:
Each of these impacts requires a specific permit.
Environmental permits may only be transferred from one person to another along with the relevant source of impact, i.e. while taking over/acquiring an operating facility.
2.2 What rights are there to appeal against the decision of an environmental regulator not to grant an environmental permit or in respect of the conditions contained in an environmental permit?
It is not for the environmental regulator to determine the level of adverse environmental impact requiring a permit, but for the applicant, relying on its design documentation; the conditions to be contained in an environmental permit are set by the applicant itself.
The environmental regulator may refuse a permit if the declared extent of the impact will result in an unhealthy environment. Such refusal to issue an environmental permit may be appealed by an applicant through the state courts.
2.3 Is it necessary to conduct environmental audits or environmental impact assessments for particularly polluting industries or other installations/projects?
Under Russian environmental law, preliminary environmental impact assessment must be carried out for any planned operations. In some cases, the law also requires a state environmental expert review to be performed as part of the project design documentation.
In industrial operations, environmental monitoring is also required.
2.4 What enforcement powers do environmental regulators have in connection with the violation of permits?
A fee is charged for each type of adverse environmental impact. If a permit is violated, the impact fee is calculated with a scale-up factor of 5 to 25. Administrative liability might also follow in the form of a fine or suspension of operations.
If the permit violation causes harm to human health, offenders may be held criminally liable.
3.1 How is waste defined and do certain categories of waste involve additional duties or controls?
In Russia, waste is defined as substances or objects generated during production, work, services or consumption that are disposed of, intended to be disposed of or required to be disposed of. What distinguishes waste is that it is unwanted and needs to be got rid of.
In Russia, waste is divided into five hazard categories (category V being virtually non-hazardous). Handling of categories I–IV requires a special licence.
Each producer of waste of any hazard category must have waste generation rates (a set amount of a specific type of waste generated per unit of production) approved and obtain an Environmental Authority permit setting the waste disposal limit (maximum amount of a specific type of waste allowed for disposal, in a specified manner and for a specified period of time, at waste disposal facilities, taking into account the local environmental situation).
Waste categories I–IV also require a waste passport indicating the waste composition and certifying its classification within the relevant waste type and hazard category.
3.2 To what extent is a producer of waste allowed to store and/or dispose of it on the site where it was produced?
The Russian legislation permits only temporary (up to 11 months’) storage (accumulation) of waste on the site where it is produced and fully prohibits burial of waste anywhere other than at designated waste disposal facilities (WDFs). All such facilities are registered on the government register of WDFs. Design documentation for WDFs is subject to compulsory state environmental expert review.
3.3 Do producers of waste retain any residual liability in respect of the waste where they have transferred it to another person for disposal/treatment off-site (e.g. if the transferee/ultimate disposer goes bankrupt/disappears)?
Producers of waste retain no liability in respect of transferred waste.
Even so, waste in hazard categories I–IV is to be transferred to a party licensed to handle waste. In this way, the government controls waste handling through licensing.
The only liability retained by waste producers in respect of waste transferred for disposal (storage and/or landfill) is to pay the environmental impact fee calculated with reference to the types and amount of the transferred waste.
3.4 To what extent do waste producers have obligations regarding the take-back and recovery of their waste?
Waste producers have no obligations regarding waste transferred to third parties.
Russia prohibits landfilling of certain types of waste containing useful components. Such wastes are to be recycled to keep useful components in the stream of commerce. Even so, recycling of waste containing useful components is not the exclusive liability of waste producers and may be performed by other transferees. Also, recycling of hazard category I–IV waste containing useful components requires a special waste handling licence.
4.1 What types of liabilities can arise where there is a breach of environmental laws and/or permits, and what defences are typically available?
The most common types of environmental wrongdoing are pollution, emission and waste exceeding the limits. They result in an increased environmental impact fee, calculated with scale-up factors ranging from 5 to 25.
Environmental incidents not covered by permits require the offender to make compensation for the environmental damage in full. The statute of limitations in environmental damages cases is 25 years.
Also, some environmental wrongdoings constitute administrative offences triggering substantial fines; in some cases, a decision may be made to suspend operations causing damage to the environment.
The most common defence is provided by materials of industrial environmental control exercised by the operator, which might confirm that the polluting activity is operated within permitted limits.
To avoid administrative liability, absence of guilt must be proven; a party is found guilty of an administrative offence if it is established that it could have complied with the rules and regulations that, if violated, trigger administrative liability, yet failed to take every step within its control to do so.
4.2 Can an operator be liable for environmental damage notwithstanding that the polluting activity is operated within permit limits?
If the polluting activity is operated within permit limits, the operator must pay only the environmental impact fee, calculated without scale-up factors. This fee cannot be called liability for guilty acts and should rather be seen as a set condition for the permitted environmental impact under the ‘user pays’ principle.
4.3 Can directors and officers of corporations attract personal liabilities for environmental wrongdoing, and to what extent may they get insurance or rely on other indemnity protection in respect of such liabilities?
Officers of corporations, including directors, may be held liable for environmental wrongdoings constituting administrative offences. In practice, corporations appoint a special officer to be in charge of environmental matters, who would be held administratively liable in the event of violations. If no such officer is designated by the corporation’s internal documents, its CEO will be the responsible officer.
It is to be noted that fines for officers are considerably lower than for corporations. Consequently, the environmental authority would impose liability on officers rather than on corporations in the event of minor environmental wrongdoings. Even so, it has the power to hold both an officer and the corporation administratively liable for one and the same wrongdoing.
Such officer’s employment contract might provide for various indemnity protections in the event of their administrative liability.
4.4 What are the different implications from an environmental liability perspective of a share sale on the one hand and an asset purchase on the other?
Sale of shares in a corporation with environmental liabilities (the Target) does not entail a change of the responsible person, i.e. the Target remains liable.
In the event of sale of assets, the new owner assumes environmental liabilities relating to use of the purchased assets from the time of purchase only. The new owner is not liable for the previous owner’s wrongdoings.
4.5 To what extent may lenders be liable for environmental wrongdoing and/or remediation costs?
The Russian legislation is based on the personal liability principle. The general rule is that lenders may not be held liable for the borrower’s environmental wrongdoings. Even so, in practice, if a loan is granted for narrowly specified purposes and disbursement is conditional on the borrower’s compliance with environmental requirements, lenders require that borrowers confirm such compliance and suspend lending in the event of violations.
5 Contaminated Land
5.1 What is the approach to liability for contamination (including historic contamination) of soil or groundwater?
For urban land, maximum allowable concentrations of soil contaminants are established. Owners of contaminated land plots must perform land remediation, irrespective of who caused the contamination. Owners are entitled to claim compensation for land remediation costs from the contaminant (if any).
For other land categories (e.g. farm, industrial, forest, etc.), liability is established only for actual instances of contamination (e.g. accidental oil spills, other contaminants released on the soil), in which case the contaminant must also carry out land remediation.
Liability for underground water contamination may be imposed on the party whose operations resulted in such contamination.
5.2 How is liability allocated where more than one person is responsible for the contamination?
In this case, joint and several liability arises whereby the regulator is entitled to demand discharge of obligations from either all responsible persons jointly or any of them separately, either in full or in part. Jointly and severally responsible persons remain liable until the obligation is discharged in full.
5.3 If a programme of environmental remediation is “agreed” with an environmental regulator, can the regulator come back and require additional works or can a third party challenge the agreement?
If specified land quality indicators are not achieved following completion of an environmental remediation programme, the environmental regulator may demand that the previously approved programme be changed and works continued in order to achieve the required quality indicators.
Third parties have no legal grounds for challenging an agreed environmental remediation programme. They may, however, examine the land remediation report, take remedied land quality samples and, if the specified quality indicators are not attained, demand additional works to be performed to attain them.
5.4 Does a person have a private right of action to seek contribution from a previous owner or occupier of contaminated land when that owner caused, in whole or in part, contamination; and to what extent is it possible for a polluter to transfer the risk of contaminated land liability to a purchaser?
If a private owner acquires a land plot from a previous private owner under a sale and purchase agreement (SPA), all issues and claims are resolved on execution of the SPA. The land purchaser has the right to inspect the land plot and obtain full and exhaustive information about its state, including chemical composition of the soil and levels of both chemical and surface contamination (physical littering).
The actual state of the land plot being sold is a matter of negotiation between the seller and the purchaser. Following negotiations, the parties might agree that the land plot is to be cleaned up before it passes to the new owner, or that the price of the contaminated land plot is to be reduced.
The law does not provide an independent private right of action to seek contribution from a previous owner. Any claims against the previous land plot owner may only be brought within the terms of the SPA. If the SPA contains no specific terms regarding contamination of the land plot, the law presumes that the purchaser agrees to take ownership of the land plot ‘as is’. In this case, the purchaser takes on all consequences and potential risks related to contamination of the land plot.
If a publicly owned land plot is sold into private hands, its contamination does not even affect its price; the ‘take or go’ principle applies.
5.5 Does the government have authority to obtain from a polluter, monetary damages for aesthetic harms to public assets, e.g. rivers?
Russian legislation neither contains the concept of ‘aesthetic harm’ nor sets any rules for recovery of damages for aesthetic harms.
Russia has no rules for assessing and determining the extent of aesthetic harm, so monetary damages arising from aesthetic harms cannot be determined.
Contamination of public assets, land, forests, rivers, etc. is an administrative offence punishable by fixed fines that take no account of aesthetic harm.
6 Powers of Regulators
6.1 What powers do environmental regulators have to require production of documents, take samples, conduct site inspections, interview employees, etc.?
The government authorities for environmental protection have the power to conduct regular (scheduled) and unscheduled (triggered by stakeholder applications) inspections of the operations of enterprises affecting the environment. During such inspections, the environmental regulators request, obtain and analyse environmental protection documents, including industrial environmental control materials of the operator and measured values of pollutant concentrations in the atmospheric air and waste waters of its various units.
In addition, the environmental regulators may themselves, by engaging independent laboratories and in the presence of the operator’s officers, take water, air and soil samples on the operator’s territory and determine actual pollutant concentrations.
The environmental regulators may also interview employees of the operator to obtain the fullest possible information about the state of the environment on the operator’s territory and the extent of any adverse impact caused by its operation.
Following a decision to conduct an inspection, the environmental regulator sends the operator a written confirmation of the decision (Scheduled/Unscheduled Inspection Order) indicating the time of the inspection and the names of the authorised inspectors and listing the issues to be checked and documents to be provided for inspection by the operator. Following the inspection, a report is drawn up recording all identified violations (if any). Later, this inspection report may be used as a basis for a government authority’s decision to hold the offender liable.
7 Reporting / Disclosure Obligations
7.1 If pollution is found on a site, or discovered to be migrating off-site, must it be disclosed to an environmental regulator or potentially affected third parties?
Any adverse environmental impact (pollutant emissions into the atmospheric air or discharges into water bodies, waste generation and disposal) constitutes grounds for regular quarterly reporting to an environmental regulator.
Each production site must be equipped with a storm drain preventing uncontrolled off-site migration of pollutants.
At the same time, if an accident and/or unforeseen act of nature triggers an adverse environmental impact that results or might result in fatalities or harm to human health, such an incident is classified as an emergency requiring prompt notification of not only the environmental regulator but also the government authorities for civil defence, emergencies and disaster relief, as well as municipalities, which, in turn, must take actions to promptly notify the population and arrange for evacuation, if necessary.
7.2 When and under what circumstances does a person have an affirmative obligation to investigate land for contamination?
The Russian Federation has never imposed an obligation on individuals to investigate land for contamination.
The statutory provisions previously in effect obliged operators owning land plots to exercise industrial land control, including over the condition of land and its contamination level. In 2015, however, this obligation was cancelled.
Today, all forms of control over the condition of land are referred exclusively to the competence of government authorities and municipalities. Also, the law provides for the right, rather than an obligation, of citizens and NGOs to exercise public control over the condition of land in Russia.
7.3 To what extent is it necessary to disclose environmental problems, e.g. by a seller to a prospective purchaser in the context of merger and/or takeover transactions?
Environmental information must be disclosed to the extent set forth in merger and/or takeover transaction documents. The seller and the
purchaser are entitled to decide for themselves to what extent environmental information is to be disclosed. There are no specific statutory obligations for parties to merger and/or takeover transactions in the law.
In common practice, the seller discloses all information about existing environmental permits as part of legal due diligence. Even so, it is advisable also to carry out technical environmental due diligence in respect of production facilities that have a substantial adverse impact on the environment.
8.1 Is it possible to use an environmental indemnity to limit exposure for actual or potential environment-related liabilities, and does making a payment to another person under an indemnity in respect of a matter (e.g. remediation) discharge the indemnifier’s potential liability for that matter?
Environmental protection matters fall under public law. Russian environmental law is based on the ‘user pays’ and ‘polluter pays’ principles. The responsibility for compensating for the damage always lies with the operator whose acts (activities) result in an adverse impact on and/or damage to the environment.
The law requires that environmental damage be compensated for in full, so the amount of compensation payable to the state treasury may not be limited by any legal tools.
Any environmental indemnity terms of M&A or asset transactions will be disregarded in the relations between an operator and government authorities. Nor will payments to another person under an indemnity be offset against compulsory environmental impact fees (EIFs) payable to the treasury and/or accepted as compensation for environmental damage.
The statutory EIF payment procedure envisages advance payments calculated on the basis of actual impact data for the previous year.
If, however, such advance payments turn out to be less than the actual impact charge for a given year, the operator will be required to pay the difference at the end of that year. So advance payments do not limit liability.
8.2 Is it possible to shelter environmental liabilities off balance sheet, and can a company be dissolved in order to escape environmental liabilities?
Environmental liabilities are registered on the government authorities’ records independently from the balance sheet.
If a decision is made to dissolve a company, the law stipulates mandatory notification of all its creditors via the media. Any monetary claims within environmental liabilities are to be satisfied prior to winding up. If the company does not have sufficient funds on its accounts to satisfy such claims, including those brought by the state environmental authorities, it may be put into bankruptcy proceedings. In this case, monetary claims within environmental liabilities are payable in the same priority as tax liabilities, i.e., they have priority over other monetary claims by third parties in the normal course of business.
8.3 Can a person who holds shares in a company be held liable for breaches of environmental law and/or pollution caused by the company, and can a parent company be sued in its national court for pollution caused by a foreign subsidiary/affiliate?
The Russian legislation is based on the personal liability principle.
Generally, company shareholders who are not its officers may not be held liable for breaches of environmental law committed by the company itself.
Even so, if the company’s corporate documents authorise a shareholder to issue instructions binding on the CEO (general director) of the company and if it is proven that the breach of environmental law committed by the company resulted from the shareholder’s express instructions, such a shareholder may be treated as a company officer and held liable for the breach.
If a foreign company operates in Russia though its branch or representative office, it might be sued in Russian courts over breaches of environmental law committed by its branch or representative office.
If a Russian company commits a breach of environmental law, it is this company that will be sued, independently of its (foreign or Russian) parent.
8.4 Are there any laws to protect “whistle-blowers” who report environmental violations/matters?
No, there is no such law. Even so, the right of citizens to a healthy environment is enshrined in the Constitution of the Russian Federation. The exercise of this right in Russia is facilitated by NGOs, which carry out public environmental control and inform the regulator of any environmental violations/matters they identify.
The law also sets the rules for public environmental control, whereby individuals desiring to assist the government supervisory authorities in their environmental protection efforts act voluntarily and free of charge as public inspectors for environmental protection and liaise with public councils of the government forestry and environmental supervision agencies.
8.5 Are group or “class” actions available for pursuing environmental claims, and are penal or exemplary damages available?
Russian courts recognise group actions pursuing environmental claims. Russian environmental law requires operators causing damage to the environment to compensate for such damage in full.
Even so, compensation for environmental damage does not imply any direct compensation payments to claimants. Monetary compensation for environmental damage must be directed to restore the disrupted environment. This is a function of the government environmental protection authorities.
8.6 Do individuals or public interest groups benefit from any exemption from liability to pay costs when pursuing environmental litigation?
A party initiating an action for compensation for environmental damage pays symbolic court fees. Even so, such initiators (individuals or public interest groups) do not themselves receive the funds awarded in environmental damages, if any. Consequently, they have no personal financial interest in the outcome of the litigation and act in support of collective interests and the right to a healthy environment.
9 Emissions Trading and Climate Change
9.1 What emissions trading schemes are in operation in your jurisdiction and how is the emissions trading market developing there?
There is no emissions trading market in Russia. Each owner of air pollution sources must have its own emission permit and pay the
environmental impact fee calculated with reference to the makeup of pollutants and quantity of emissions.
9.2 Aside from the emissions trading schemes mentioned in question 9.1 above, is there any other requirement to monitor and report greenhouse gas emissions?
Each owner of air pollutant emission sources must submit regular reports on the composition and quantity of emissions, including greenhouse gas emissions (if any), to the government authority. The government authorities rely on these reports and regular measurements of ambient air quality characteristics and greenhouse gas concentrations at the emission source in carrying out atmospheric air monitoring and calculating greenhouse gas emission quantities for the entire territory of the Russian Federation.
9.3 What is the overall policy approach to climate change regulation in your jurisdiction?
Russia has ratified the Kyoto Protocol. The government policy is aimed at reducing greenhouse gas emissions. The Russian Government has approved the Concept for Greenhouse Gas Emissions Monitoring, Reporting and Verification.
10.1 What is the experience of asbestos litigation in your jurisdiction?
We are not aware of any asbestos litigation having been heard by Russian courts.
10.2 What are the duties of owners/occupiers of premises in relation to asbestos on-site?
Asbestos dust, including chrysotile asbestos, is considered a carcinogenic and fibrogenic substance. Russia has established a maximum allowable concentration of asbestos dust; if it is exceeded, owners of premises and/or asbestos dust emission sources may be held liable.
For working zone air, the maximum one-time concentration of asbestos dust may not exceed 2 mg/m3 (6 mg/m3 for asbestos cement dust) and the shift-average concentration – 0.5 mg/m3 (4 mg/m3 for asbestos cement, asbestos bakelite and asbestos rubber dust).
For community air with up to 10% chrysotile asbestos content in the dust, the maximum daily average concentration of asbestos dust may not exceed 0.06 fibres/ml.
11 Environmental Insurance Liabilities
11.1 What types of environmental insurance are available in the market, and how big a role does environmental risks insurance play in your jurisdiction?
Environmental law declares environmental insurance a means for protecting the property interests of individuals and corporations against environmental exposure and provides for potential introduction of compulsory state environmental insurance.
At this stage, however, there are no statutory requirements to insure against environmental risks. Voluntary environmental insurance is possible in theory but is not common in Russia because of the complicated premium calculations and high price of such insurance.
11.2 What is the environmental insurance claims experience in your jurisdiction?
We have not encountered any environmental insurance claims in our practice. Environmental insurance is not common in Russia because of the complicated premium calculations and high price of such insurance.
12.1 Please provide, in no more than 300 words, a summary of any new cases, trends and developments in environment law in your jurisdiction.
From 2019, comprehensive environmental permits covering all types of adverse impact will be introduced for category I facilities – those with substantial adverse effects on the environment. They will also be required to install automated continuous emission monitoring systems (CEMS).
These new developments will provide for a continuous flow of more detailed information about environmental impact and for prompt response to ‘burst releases’ of air pollutants, thereby promoting a substantial improvement in the environmental situation in cities and villages where category I production sites are located.