The new version of the draft law amending the Geological and Mining Law Act and certain other Acts, in the version adopted by the Economic Committee of the Council of Ministers, has appeared on the website of the Government Legislation Center (“RCL”).
It is worth recalling that the last significant amendment of the Geological and Mining Law entered into force on 1 January 2015. Within 2 years of that amendment, practical problems have been identified which impact on the legislator’s intention and the manner of conducting administrative proceedings, which was the main reason for the newly proposed amendments.
The most important amendments provided for in the draft are as follows:
1. New principles regarding the priority right
The draft would re-word Article 15 of the Geological and Mining Law, which concerns the so-called priority right. The new wording says that a company is entitled (instead of merely having a claim) to apply for the establishment of a mining usufruct with priority over others.
Presently, the company has 3 years to submit a claim to conclude an agreement. The amendments foresee that the company must submit a claim within 3 years of the priority right’s existence. In practice, this may cause many problems because this change makes it difficult to determine when the company should file an application to establish a mining usufruct so that an agreement may be concluded. Likewise, the amendment does not specify any criteria regarding a refusal to conclude such an agreement.
Moreover, the draft introduces de facto new amendments regarding the entitlement to apply for the priority right, because this right can be applied for by anyone who:
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recognised the storage complex of CO2 and documented it in sufficient detail to enable a zoning plan to be drawn-up and to obtain a decision approving the geological documentation;
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documented the mineral deposit to a degree that allows a zoning plan to be drawn-up and to obtain a decision approving the geological documentation. It will be significant whether the documentation occurred regarding a hitherto unknown and undocumented mineral deposit, based on a prospecting concession, or regarding a mineral deposit which was already documented based on a prospecting or exploration concession. In the latter case, in order to obtain the priority right it will be necessary to improve the category to which the mineral deposit is identified. The company will acquire the priority right only in relation to the deposit area where the identification has been improved.
2. The most important entitlements for hydrocarbons
2.1. A new procedure known as the “open door” procedure”
The amendment introduces a second procedure (alongside tenders) for granting hydrocarbon concessions, knows as the “open door” procedure, which enables tendering proceedings to be carried out at the company’s request. The hitherto procedure is also retained, whereby the Minister of the Environment determines the areas over which he intends to grant the concessions. The Ministry of the Environment believes this will reduce the costs of issuing concessions, because the open door procedure does not require that information be prepared about the area. From the perspectives of the companies, it will allow to request for prospective areas
2.2. Simplification of the qualification procedure
The qualification procedure will be amended by removing the company’s duty to demonstrate its experience in seeking, prospecting or extracting hydrocarbons. Moreover, in the event of a change in circumstances indicated by the company in its concession application, this will not automatically require an amendment of the qualification decision – such amendment will be discretionary (i.e. the licensing authority will decide whether the company’s changed circumstances require that the decision be amended).
2.3. Simplification the so-called joint operating agreements for mining operations
The Amendment foresees changes to joint operating agreements for mining operations, which are widely used in other countries. It is expected that this will result in the deletion of a provision requiring that the operator’s share of costs and profits resulting from the company’s cooperation shall exceed 50%. This may contribute to the more frequent use of such agreements in practice.
3. The concession’s 2020 issue
3.1. Extending a concession
The draft amends Article 205 of the Geological and Mining Law by adding section 5, which modifies the procedure for acquiring mining concessions to extract black and brown coal from a mineral deposit. The change would enable a concession’s duration to be extended after receiving the opinion of the district mayor (town mayor or president of a city) who is competent for the location where the planned business activity is executed. To date, instead of requiring such an opinion, it was necessary to acquire official consent via lengthy administrative proceedings. The proposed amendment will significantly reduce the procedure itself. It primarily addresses the hitherto concerns of companies which extract brown and black coal from mineral deposits.
As regards many concessions currently in force, their validity period will expire by 2020. Therefore, the primary purpose of these changes is to enable the continued exploitation of coal mineral deposits without needing to obtain a new concession. In order to utilise this less onerous procedure, there must be no changes (other than the validity period itself) to the concession and the extension must comply with the principle of rational management of minerals deposits.
3.2. No requirement to obtain an environmental permit
Furthermore, in the Act of 3rd October 2008 on disseminating information on the natural environment and its protection, community involvement in environmental protection and environmental impact assessment, two new elements were added to Article 72 section 2 point 2, which conditionally remove the duty to obtain an environmental decision (letter j-k).
The introduced amendment would remove the requirement to obtain an environmental decision in the case of a single extension of the deadline for the validity of a concession to extract black coal, provided that such an extension is justified by the rational management of mineral deposits and provided that the scope of the concession is not extended. As regards concessions for extracting brown coal, the same rules will apply, but it will only be possible to extend the concession’s validity for up to 6 years.
The draft also allows companies to choose to comply with hitherto legal provisions and conditions where the procedure for obtaining such an environmental decision has already been conducted.
The draft law is presently being considered by the Economic Committee of the Council of Ministers. It remains to be approved by the Council of Ministers and the Polish Parliament, so it cannot be precluded that further amendments will be made. The estimated date of entry into force is July 2018.