The current French mining code was implemented by a government ordinance on 20 January 2011 and was therefore not debated in Parliament. The mining code regulates not only mining, but also oil and gas activities, as most of the rules for these three activities are related. France has considered reforming the code since September 2012.
Although a committee consisting of elected officials, legal experts, and representatives of non-governmental organizations and industry submitted a draft of a new mining code to the government in December 2013, the reform has been postponed with no explanation by the government.
A new version of the mining code - departing from the 2013 draft - was put to public consultation by the government on 17 March 2015 (the "Draft Law"). Interested parties could submit observations until 10 April 2015.
This new version is principally aimed at bringing the mining code into compliance with certain environmental principles, providing legal certainty for carrying out mining activities and providing transparency in the decision-making process relating to mining authorisations.
Industry is eagerly awaiting enactment of these reforms as it looks for more visibility and a more secure legal framework. Indeed, a striking difference in treatment between mining activities and oil and gas activities has arisen. On the one hand, mining activities have increased in the last several years as companies have received exploration permits for copper, zinc, lead, gold, silver, antimony, tin or tungsten. On the other hand, oil and gas activities have endured significant delays in the administration's processing of applications for new hydrocarbon exploration permits, and also for the transfer or renewal of existing permits. These delays have created a highly insecure legal framework for developing hydrocarbon activities in France. In fact only two new exploration permits have been awarded since 2011, while the government has remained silent on more than 120 permit applications, which had nevertheless been declared admissible.
2. The Main Features of the Reform
The Draft Law sets out two different types of provisions. First, the Draft Law outlines in 43 articles the main principles applicable to mining activities. Most of these principles will be detailed in implementing regulations. Second, the Draft Law empowers the government to reform the mining code by way of government ordinances, and sets out the guiding principles of the reform.
At the outset, it is important to note that the Draft Law's structure is unusual in France; and the government has not yet provided sufficient explanation as to its choice of a two-step reform. Moreover, although the Draft Law's main principles applicable to mining activities are intended to coexist with the current mining code, they contradict each other in part. Leaving aside the uncertainties and confusion engendered by this structure, the Draft Law provides an idea of the main features of the reform, which can be summarised as follows:
a. Two types of mining authorisations required
The Draft Law does not change one of the basic principles of French mining regulations, namely that all exploration or exploitation works are subject to an additional authorisation or declaration procedure.
b. Creation of a High Council for Mines ("Haut conseil des mines")
The Draft Law provides for the creation of a High Council for Mines which shall be consulted by any minister on questions related to the scope of the mining code, proposed amendments to the mining code, or administrative decisions implementing the mining code. The scope of the competences of this new body is unclear, especially as another public body, the Conseil général de l'économie, de l'industrie, de l'énergie et des technologies, is already entrusted with the authority to opine on decisions relating to mining titles. The Draft Law also envisages the enactment of an implementing decree.
c. Creation of a national mining plan
A national mining plan, which would be updated every 10 years, would notably include guidelines for the development of known or estimated resources, collection of data in relation to subsoil resources and their location, and a description of allowable exploration and exploitation techniques and their impacts. It is currently unclear, however, when this plan would be implemented and how the authorities would use it to make decisions relating to mining titles. Moreover, there is concern that by proscribing the permissible techniques for exploration and exploitation the plan will become outdated and fail to include the latest and most efficient techniques, thus adding an additional hurdle for investors.
d. Public information and participation
The Draft Law includes several provisions that aim at increasing public awareness and participation within the decision-making process. Current regulations have been criticized for a lack of transparency in the authorisation process and the inability of the public, who are affected by some projects, to comment or stay sufficiently informed about the decisions taken. Therefore, the Draft Law provides that local authorities shall be informed about and consulted on the granting of mining titles. Moreover, the Draft Law provides that the issuance of a mining title might be subject to the prior implementation of an exceptional procedure of public information and participation if it relates to an environmentally sensitive area. The reinforced procedure of public information and participation shall be led by an information and consultation group comprised of local authorities, NGOs and local stakeholders and chaired by the State's representative. The group would have the power to request expert assessments and the applicant would be granted the right to submit a second expert opinion. The group must submit a report within six months (extended to twelve months, subject to approval given by ministerial order) and state how the recommendation should be handled.
e. Deadlines for the issuance of mining titles and related authorisations
One of the major issues for operators in respect of the current mining code is the length of time for regulators to assess, process and grant mining titles. For example, under the current set-up, an application for a concession is deemed rejected if no explicit decision is taken by the minister within three years. The Draft Law provides a shortened period: the administration must act within six months (for the granting of exploration titles) or nine months (for the granting of exploitation titles), with the possibility to extend this time period up to the same duration. A decree shall provide whether the silence of the administration at the end of this period will amount to a refusal or an approval of the application.
Moreover, the Draft Law and the presentation note prepared by the administration suggest that for certain authorisations relating to mining titles, an implementation decree could set out shorter assessment periods as well as a mechanism whereby an application is deemed accepted if no explicit decision is taken by the administration. Such a mechanism would be an improvement given that current applications for renewal or assignment of mining titles are implicitly rejected if no decision is taken by the administration within a very long period of time (between fifteen months and two years, depending on the type of application and mining title).
f. Environmental issues
The current mining code has been heavily criticized for not adequately considering environmental concerns. The Draft Law proposes the following changes in this respect:
- The environmental impact of the envisaged works would be taken into account at the stage of granting the mining title. Under the current system, mining titles are granted without the administration having a clear understanding about the envisaged works and techniques. The new mechanism is designed to allow the administration to carry out a proper environmental assessment at a very early stage; and
- Mining works would be subject to the regulations that apply to classified installations for the protection of the environment, with some adjustments (which have not yet been disclosed).
g. Judicial clearance of the authorisations granted under the mining code
The Draft Law allows any interested party to request that an administrative court validate the procedure upon which authorisations have been granted. By this procedure, a party would ask the court to confirm that the processing of an application was compliant with applicable rules. If the court found that the procedure had been conducted irregularly, the court would issue an injunction requiring that the breach be remediated. Conversely, if the court found that the procedure had been conducted correctly, no future claim could be brought on these grounds against the relevant authorisation. Under the current rules, claims challenging the validity of the various authorisations can, as a matter of principle, be filed within a limited period of time, i.e., two months as from the granting of an authorisation. However, the duration of the court proceeding can be extremely long, e.g., in excess of two and a half years before a court of first instance. While the filing of a claim against the authorisation does not legally oblige the operators to suspend their works, such a claim may dissuade them in practice from pursuing their activities. The judicial clearance procedure has been introduced to provide greater legal certainty to mining operators. However, the maximum duration of the judicial clearance procedure –up to nine months– is likely to dissuade some operators from deliberately applying for it, and the operators might continue taking the risk of claims and lengthy court proceedings.
h. Liability regime of mining title holders and operators
The Draft Law reaffirms the principle that the entity in charge of exploration works or the holder of the mining title can be held liable for damages caused by its activity and reinforces the possibility of gaining compensation for any such damages. It sets out that if the mining title holder (or the entity in charge of the mining works) is subject to an insolvency proceeding, the court dealing with the insolvency proceeding may demand that the party controlling the insolvent entity remedy any damages resulting from mining operations. If the liable entity ceases to exist or fails to remedy the damages, the State shall participate in the compensation of such damages. It is regrettable that the government preferred such a liability regime to more straightforward mechanisms such as a bank or parent company guarantee, or a provisions for a decommissioning account.
Some of the principles set forth in the Draft Law suggests that the government is responding to criticism expressed about the current regulations and is striving to improve the conditions for carrying out mining activities in France.
However, there is a feeling that the mountain has laboured and brought forth a mouse and that this long-awaited reform is incomplete and unintelligible. The government's choice in terms of structure is unique in France: the principles laid down by the Draft Law will coexist with those set out by the current mining code, while subsequent ordinances adopted by the government - without any debate before the Parliament - will supplement or amend such principles. The coexistence and the implementation of these various laws and regulations are likely to lead to a confusing situation; and rather than creating a more secure legal framework, it may create a less stable framework.
Moreover, the timeframe for completing the new regulatory framework for mining operations is far from clear, although it seems likely that the Draft Law will not be enacted before 2016. If one last criticism is allowed, we would point out that the Draft Law does not address one of the major issues at stake, i.e., the level of royalties that are paid for mining operations, despite the fact that an increase of such royalties could result in a better acceptance of mining operations at a local level.
This article was originally published in the Energy & Natural Resources – France Newsletter of the International Law Office.