Amendments to the Land Law with a positive impact on renewable energy projects

Law no. 254 of 20 July 2022 on the amendment and completion of the Land Law no. 18/1991 and on the amendment of Art. 5 para. (3) letter b) of the Government Emergency Ordinance no. 34/2013 was published in the Official Gazette of Romania no. 736 of 21 July 2022, entering into force on 24 July 2022 (Law 254/2022).

The main legislative changes are:

The possibility of erecting buildings on "pastureland”, located outside the city limits

The general rule in our system of law is that buildings of any kind are to be erected within the city limits. By way of exception, it is allowed to build certain construction objectives outside the city limits, but only on land with a quality class between III and V and having the use category of arable land, vineyards and orchards (more recently also on pastureland – this being the novelty introduced by Law 254/2022) or on land plots with land improvement works.

Placement of renewable energy projects outside the city limits

Law 254/2022 expressly introduces renewable energy projects among the construction objectives that may be located outside the city limits, clarifying for good the controversy as to whether such projects were required to be located within the city limits or not.

In principle, such projects, especially wind farms, could have been covered by art. 92 para. (2) letter (a) - i.e., "investment objectives which are the subject of public and private projects, and which may generate polluting effects on the environment", which were exempted from the rule of location inside the city limits. Nonetheless, the practice of various local authorities has been diverse and contradictory, by differently interpreting the legal provision from city to city.

It should be noted, however, that the area of agricultural land located outside the city limits on which such renewable projects may be located may not exceed 50 ha.

Dual use of the land

It should be noted that for energy projects using renewable resources, the law allows the dual use of the land on which such projects are built, meaning that only the area of land strictly necessary for the energy objectives will be withdrawn from agricultural circuit and will redesignated as constructible land, whereas the remaining land can be used for agricultural production, and the statutory fee for withdrawal from the agricultural circuit will be paid only for the area actually withdrawn, i.e., for the land area that is used for the construction of the building elements of the renewable energy projects. Law 254/2022 expressly stipulates that the redesignation from the agricultural circuit takes place when the building permit is obtained.

It is to be noted that the dual use of the land is not permitted in case or arable land, but only for pastureland, vineyards, and orchards, and for land plots with land improvement works (yet not arable land).

The possibility of using permanent pastureland in this dual system for the purpose of setting up new renewable energy production facilities is also mentioned in the Government Emergency Ordinance on the regulation of permanent pastureland No 34/2013, also amended by Law 254/2022.

The approval for the withdrawal from the agricultural circuit in case of renewable energy projects will be granted by the Director of the County Agricultural Office, with the approval of the Ministry of Agriculture and Rural Development, for plots of land larger than 1 ha. As a novelty, Law 254/2022 provides that, in case the director's decision or the prior approval are not issued within a maximum of 45 days from the date of the request, the withdrawal shall be deemed to have been tacitly granted.

It is important to note that, as per the provisions of another law which entered into force on 28 July 2022 (i.e., Law no. 262/2022 for the amendment of the Land Law no. 18/1991 and for completing the Law no. 50/1991 on the construction permitting procedure), the investment projects which can be, by exemption, erected on land plots located outside the city limits, including renewable energy projects, must commence the specific works within 5 years from the date when the land was withdrawn from the agricultural circuit. In case of non-compliance with this requirement, the land will be reintroduced into the agricultural circuit by default.

The impact of the amendments to the Land Law on the field of energy law

Although at a first glance the possibility of dual use of agricultural land located outside the city limits is beneficial for investors, considering that the applicability of these legal provisions is time barred, i.e., until 31 December 2026, whereas on operating license has a validity period (depending on the data submitted by the applicant) of up to 25 years, the conclusion to be drawn from this is that a potential investor will be able to benefit from these provisions for a duration of maximum 4 years (in which also the time necessary for obtaining the relevant documentation for the approval, construction, and commissioning of energy projects is to be considered).  

For more information, please contact the Băncilă, Diaconu și Asociații SPRL team.