The subject of this client note, is the procedure of obtaining land use rights by subsoil users. Please note that the new Law «On land» was adopted on 20 June 2003. Many subsoil users are interested in how it has influenced the procedure for obtaining land use rights, or whether there are features of new land legislation pertinent to the subsoil users.

First, we would like to state that the new Law «On land» does not make substantial changes to the procedure for obtaining land use rights by subsoil users. The most essential changes took place in the legal regulations of relationships concerning agricultural allotments.

Comprehension of the subsoil user right.

Comprehension of the subsoil use right is considered with the right of possession and subsoil right within the limits of Contract territory rendered to subsoil user, in accordance with the order established by the legislation of the Republic of Kazakhstan. Subsoil use rights provide their owner with the power to execute the works related to geological research of subsoil, prospecting and mining, including the works connected with prospecting and mining of groundwater, medical filth, prospecting of the subsoil for fault of soil water, as well as the works for construction and exploitation of underground building not connected with the mining.

The owner of subsoil right is obliged to obtain the permission for use of their allotment on which they have plans to execute subsoil operations.

Order of obtaining the land use permission.

Legislation of the oblast executive body (city of republican purpose) — the Akim, decides the issue on submission and requisition of allotments for the purpose of subsoil use. The provision of allotments for execution of activity related to the subsoil, is performed only after obtaining and registering a subsoil use right. At the same time, the subsoil contract is the basis for immediate legalisation of allotments.

Legislation provides separately for the subsoil right for mining generally used minerals for one's own necessities, to be transferred with land use rights simultaneously.

Granting the right for use of state allotment to subsoil users is performed in the following order:

1. Application to local executive body on submitting the land use right; Subsoil users are obliged to join the copy of the subsoil contract to the application. The application is considered during three months.
2. Preparing and approving the project of organization of the use of land;
3. Decision of oblast executive body (city of republican purpose), on submitting the land use right to the subsoil user;
   The decision on submitting the allotment, or refusal to submit the allotment, is adopted on the basis of the conclusion of a commission being made up of a local executive body from the members of local representative bodies, representatives of territory land resources authorities, architecture and town-planning bodies, and local self-government bodies.
4. Establishment of the scope of the allotment on-site;
5. Preparation and issue of the documents confirming the right to an allotment; The oblast executive body (city of republican purpose), decides on granting the land use right and is entrusted with preparing the lease agreement with the owner of the subsoil right, for a term of validity of the subsoil contract, with the Land resources authority (hereinafter referred to as «Land Committee»)
6. State registration of the land use right. If the contract territory is within private property or belongs to private persons, the local executive body, in case of need, is entitled to withdraw the allotments submitted, and submit other equal allotments instead.

Order of registration of the land use right.

On the basis of the decision of the local executive body (city of republican purpose), the Land Committee prepares the lease agreement with the local executive body (city of republican body), from one side, and the owner of the subsoil right, from another side. The registration is performed during the five working days from the moment of submission of the application by the owner of the subsoil right.

Lease payment for the land use right.

The amount of annual lease payment is established within the limits of 100%-120% of the basis rate of payment for land use right, approved by the Government of the Republic of Kazakhstan.

The basic rate of payment for allotments in case of state rent or state land users rent, is equaled to the amount of the land tax calculated per allotment in accordance with tax legislation of the Republic of Kazakhstan. The amount of lease payment is established on a per hectare basis.

Order of restitution of the allotment to the state.

The conditions and order of restitution of an allotment used for subsoil purposes, is determined by the subsoil contract.

After expiry of the subsoil contract, or on stepwise restitution of Contract territory, the Contractor shall transfer the contract territory in a state which is suitable for further use upon direct purpose in accordance with the legislation of the Republic of Kazakhstan. Any transgressions (deteriorations) against the environment within the contract territory during the validity of Contract, shall be restored at the expense of the Contractor, until conditions suitable for further use for direct purpose are attained.

Until termination of the validity of the Contract, or at the latest two years from the moment of when a mining contract becomes valid, the subsoil user shall submit the program of liquidation of the consequences of their activity according to the contract, to the Geology and Subsoil Protection Committee for approval, including the expenses estimation for liquidation. The liquidation program shall include the cancellation and liquidation of constructions and equipment used during the procedure of activity of Contractor upon the contract territory. For the complete financial provision of the execution of the liquidation program, the Contractor shall establish a liquidation fund. The Subsoil user is obliged to make periodic payments to the liquidation fund, on deposit to an account in any banks of the Republic of Kazakhstan.

After liquidation of all consequences of execution of operations for subsoil purposes, the Geology and Subsoil Protection Committee shall decide on the transfer of the allotment to the oblast executive body (city of republican purpose).

Thus, we can conclude that the new land legislation did not resolve the problems of subsoil users. We note that in accordance with the Land Code, the subsoil contract is the basis for immediate legalization of land use right upon the Contract territory. However, as practice shows, the procedure of consideration of an application of a subsoil user, from submitting the land use right upon the Contract territory lasts approximately three months. We think that is why there is currently the requirement to elaborate the submission procedure for subsoil users.