Unification of Legal Tools
Classifier of permitted land plots usage types and public policy in the area of agricultural lands’ use and protection
Unification of legal tools used to define land plots’ legal status, as may be clearly seen in new laws and regulations, as well as in draft bills, is one of the focus areas of public policy as regards land use and protection. As of recently, public authorities have tended not to assign categories to land plots and, consequently, not to set permitted use of plots. This is why identification of permitted use of land plots, including those outwith any town planning zones, is one of the urgent matters at present.
In 2010, Federal Law “On amending Federal Law ‘On valuation activities in the Russian Federation’ and certain laws of the Russian Federation” was passed and, as a result, a new stipulation was added into Clause 2, Article 7 of the Land Code of the Russian Federation (hereinafter: “Land Code”) to the effect that the types of permitted land use shall be identified in accordance to a classifier officially introduced by a federal executive authority agency. In 2011, the Ministry of Economic Development of Russia (hereinafter: “Ministry of Economic Development”) began preparing the said classifier. One of the obstacles in the preparation of this normative legal act was that two distinct approaches had arisen with regard to the concept of legal regulation of agricultural lands use.
On the one hand, in order to implement the Directive of the Government of the Russian Federation “On fundamentals of the public policy regarding land use in the Russian Federation from 2012 to 2020”, a draft Federal Law “On amending the Land Code of the Russian Federation and certain laws of the Russian Federation as regards a shift from assigning categories to land plots towards area zoning” was prepared. The said draft bill contemplated that agricultural zones would be created, which would include agricultural estates that may accommodate production facilities and residential buildings; moreover, the bill proposed that any amendment of agricultural zone boundaries would involve a lengthy and complicated procedure.
On the other hand, at the same time, in order to safeguard Russian Federation’s national interests and to implement the stipulations set forth in the Executive Order of the President of the Russian Federation no. 650 of 6 August 2014 “On applying certain, special economic instruments in order to ensure national security”, a draft Federal Law “On amending certain laws of the Russian Federation as regards the prohibition against transferring agricultural lands into another land use category and against altering their permitted use” was prepared. This draft bill limited the grounds on which agricultural estates or land plots within such estates might be assigned a category other than that of agricultural use. In particular, the draft bill proposed to exclude such category reassignment grounds as construction of community centres and service facilities, healthcare or education facilities when no other planning options exist for such facilities. Moreover, the draft bill in essence put a ban on annexation of agricultural lands by towns and cities, since it did not include such a ground as setting or amending a town or city boundary. At the same time, the draft bill proposed to relax the regime which guaranteed that the most valuable agricultural estates cannot be assigned any other use category, since the bill included no legislative guarantee in the form of a prohibition against reassignment of land use category for the most fertile and valuable agricultural lands. This follows from the fact that none of the permitted grounds for transferring agricultural lands into another use category rules out a possibility that use category be changed for land plots whose cadastral value exceeds the average figure for the respective community.
Thus, the environment of legislative proposals had two legal regulation development concepts as regards the use of agricultural estates, and these two concepts were, in fact, in opposition to each other. Given this, a classifier of the types of permitted land use was bound to strike a compromise between the legislator’s two distinctly different approaches.
On 24 December 2014, the Directive of the Ministry of Economic Development of Russia “On approval of classifiers of permitted land use” took effect. Its stipulations represent a compromise. Thus, by analysing the types of permitted land use included in the Classifier of permitted land use (hereinafter: “Classifier”) and applicable to agricultural lands, one may clearly see that permitted land use for plots within such estates includes construction of facilities for production, storage, primary and deep processing of agricultural produce; however, no residential buildings may be constructed in agricultural estates.
One has to note that, as per the Statutes of the Ministry of Economic Development, this Ministry was created as a federal executive authority agency in charge of formation of public policy and normative and legal regulation of relations that concern land use (except agricultural lands). As regards agricultural lands, it is the Ministry of Agriculture of Russia that is in charge of formation of public policy and normative and legal regulation. Therefore, by issuing the said Classifier on its own and by including in it permitted land use types applicable to agricultural estates’ lands, the Ministry of Economic Development overstepped the boundaries of its competence.
Moreover, Clause 6, Article 36 of the Town-planning Code stipulates that no town-planning standards may be set for agricultural estates included in agricultural lands. One may thus conclude that agricultural estates are excluded from the sphere or town-planning zoning activities. However, the said Classifier (rows 1.0 through 1.18) defines such types of agricultural lands use which, by virtue of an explicit statutory stipulation, shall be permitted for agricultural estates.
At present, all existing town-planning standards are modified so as to correspond to what is stated in the Classifier; in addition, registered land plots’ data held in the national property cadastre (hereinafter: “Cadastre”) are modified. These activities result in creation of original descriptions of land plots within agricultural lands. Quite often, one finds that the title document indicates the plot’s permitted use as “agricultural production”, whereas the Classifier states it as “accommodation of agricultural facilities and agricultural estates”.
One has to note that these changes have a positive effect. Title documents whose data were used to insert entries into the Cadastre often contained such wording as “agricultural production”, whereupon title holders did not fully realise that their land plots were part of agricultural estates to which special legal regime applied. On the other hand, the wording that expresses permitted land use type as entered into the Cadastre, “accommodation of agricultural facilities and agricultural estates”, in fact creates a mixed legal regime for land plots, since the legal regime of agricultural estates considerably differs from that of land plots that accommodate agricultural facilities (which are real property).
The very stipulation of the Classifier whereby permitted land use types are defined for agricultural estates must be considered disputable. On the one hand, it seems that by including the said stipulation the legislator attempted to consolidate the purposes for which agricultural lands are allocated for agricultural production (considering Article 78 of the Land Code), rather than the types of permitted land use of such land plots (if neither any legal grounds nor any procedure to determine their existence could be found with respect to a particular land plot).
At the same time, types of permitted land use were set forth formally and legally, and on these grounds the title holders could assume that town-planning and construction standards were applicable to land plots included in agricultural estates. As a result, some title holders have attempted to change the primary and the auxiliary types of permitted land use for their plots by acting independently, without procuring any resolution or approval, since Clause 4, Article 37 of the Land Code states their right to choose a permitted land type. This practice arose because title holders sought to change their existing land use type, “agricultural use”, into another, more profitable permitted use type which includes construction of residential buildings (in particular, detached countryside cottages).
At present, courts have reached a uniform practice based on a legal position which, in essence, stipulates that any changes of permitted land use for land plots within agricultural estates may be done only by transferring such plots into another land use category and such transfers may be carried out only in exceptional circumstances when no other options exist for planned facilities’ accommodation. It seems that this practice arose for two reasons: firstly, there are no other statutorily instituted procedures for changing agricultural lands’ permitted use; secondly, the enforcer’s position was that any transfer of agricultural lands into another land use category should not and cannot be carried out through a procedure simpler than that stated in the Federal Law “On agricultural land turnover”. Given these approached that have arisen out of judicial practice, it seems that formal introduction of a list of permitted land use types with respect to agricultural estates cannot constitute any significant legal ground to apply legal tools used in town-planning zoning activity to the said lands.
The wording used in the Classifier to define one of the permitted land use types for agricultural lands deserves a comparison with the Land Code stipulations. In particular, Article 77 of the Land Code stipulates that agricultural lands are to be used, among other, for accommodating facilities in which primary processing of agricultural produce is carried out. The Classifier, however, in fact stipulates that not only primary processing but also deep processing facilities are included. Furthermore, the applicable laws do not define the term “deep processing of agricultural produce”, although several laws use it in juxtaposition to “primary processing”. Therefore, the Classifier seems to contain stipulations that allow constructing industrial facilities intended for secondary processing of agricultural produce on agricultural lands. Thus, the Classifier actually permits using agricultural lands to carry out a full range of agricultural produce processing activities, which is economically sound. At the same time, such stipulation cannot be set forth by a normative legal act (a Directive of the Ministry of Economic Development): this is an inappropriate level for such a stipulation, as it contradicts a Federal Law (the Land Code).
Finally, it has to be said that, despite the problems of legal regulation that have arisen due to the Classifier taking effect, the Classifier represents a compromise between different approaches to instituting a legal regime for agricultural lands; in addition, it is a vital step towards developing of legal regulation in respect of such lands’ use and protection. On the one hand, the Classifier recognised a universal nature of permitted use of land plots as a foundational element of their legal regime, including the land plots within agricultural estates. On the other hand, the Classifier does not provide any grounds for including agricultural estates into the sphere of ton-planning zoning activities. Still further, though the Classifier has not created any implications that residential construction may be permitted on agricultural lands, it has delineated a tendency of land-related laws development towards economically sound expansion of the scope of permitted land use types for agricultural lands so as to accommodate a full range of agricultural produce processing activities.
Nevertheless, one must keep in mind that the Classifier as such does not address the legislative gap that exists as regards changing the permitted use of land plots within agricultural lands without assigning such plots to another land category. In particular, it is still unclear which legal tools the legislator is going to use to resolve this issue and it is likewise unclear whether one may expect a decisive expression of the public policy in the area of agricultural lands’ use and protection and in the area of national food security.
Lawyer, MA student at Law School, Mikhail Lomonosov Moscow State University
The General Counsel of the Legal Support Department for Investment Projects
Deputy Head of the Legal Support Department
The business tax amnesty in Russia has ticked off. Comments by Dmitry Kvitko, Head of International Corporate Finance
Lawyer, MA student at Law School, Mikhail Lomonosov Moscow State University