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Romania Passes New Law Regarding Urbanism Requirements for Renewable Energy Projects

Romania Passes New Law Regarding Urbanism Requirements for Renewable Energy Projects

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Recognizing the pressing need to rectify certain conflicting provisions within the existing legal framework applicable to the permitting process of renewable energy projects (as previously reported in the Wolf Theiss Client Alert dated January 12th, 2023 available here), Romanian lawmakers have been working since the start of 2023 to introduce legislative amendments to Urbanism Law 350/2001 and Construction Law 50/1991.

Legal Background

A law recently adopted by the Romanian Parliament was promulgated by Presidential Decree on 31 May 2023, thus becoming Law 166/2023 (the “Law 166/2023“). The law was published in the Official Gazette on June 7th, 2023 and will enter into force on 10 June 10th, 2023. By correcting certain legislative discrepancies, Law 166/2023 aims to simplify and accelerate the process of obtaining the necessary authorizations for renewable energy projects in Romania.

Amendments Introduced by Law 166/2023

Law 166/2023 introduces an exception to the general provisions of both Urbanism Law 350/2001 and Construction Law 50/1991, which require the prior existence of territory planning documents and/or urbanism documentation as a condition for the issuance of a building permit.

Once Law 166/2023 enters into force, building permits for renewable energy projects may be validly issued even in the absence of a General Urbanism Plan (PUG) or of a Zoning Urbanism Plan (PUZ), regulating  the urbanism requirements applicable to the project lands. This exception to the general rule will be applicable regardless of whether the renewable energy projects will be developed on intra muros or on extra muros land surface areas.

We would note however that Law 166/2023 must be read in conjunction with art. 92 paragraph (2) letter j) of Land Law 18/1991, which addresses the exception to the restriction to build renewable energy projects on extra muros land (i.e. agricultural lands, pastures, vineyards, orchards, as well as land benefitting from improvements) that has  soil fertility quality classes III, IV and V, provided that the projects fit within a maximum surface area of 50 hectares.

In practice, developers and investors in the industry are facing  the current interpretation at the level of the Ministry of Agriculture whereby the construction of renewable energy projects on extra muros land surface areas of more than 50 hectares is forbidden, even if the investor/developer has carried out the zoning procedure of changing the land from extra muros into intra muros. Unfortunately, Law 166/2023 does not bring any arguments to contradict this (in our view, flawed) interpretation, and the exception under Land Law 18/1991 remains under debate among legal practitioners until further legislative clarity is provided.

Another amendment brought by Law 166/2023 is to allow investors to obtain separate building permits for multiple investments on a larger plot of land, based on a single urbanism certificate, provided that the constructions are clearly delimitated in the building permit technical documentation.

Nevertheless, this amendment does not address the regime of prior endorsements and approvals to be obtained within the permitting process, i.e. whether they should follow a similar regime to the urbanism certificate or if separate endorsements and approvals must be obtained for each building permit. It remains to be seen how this new amendment will be interpreted and applied in practice by the Romanian authorities.

Conclusion

These provisions aim to further streamline and clarify the procedure for obtaining building permits for renewable energy investments. In conjunction with the previous legislative amendments implemented in July 2022, Romania seeks to establish a legal framework that facilitates a straightforward permitting process for renewable energy projects. These efforts align with Romania’s ambitious targets to significantly increase renewable energy production by 2030.

Nonetheless, there are still many questions to be answered regarding practical problems in developing renewable energy projects (such as the interpretation on the 50 hectares exception for projects located extra muros). However, we note that certain legal aspects which  have arisen the path to adopting a legal framework in this area, have begun to be clarified.

By Bryan W. Jardine, Partner, Dana Toma, Counsel, Adrian Manolache, Associate

Romanian Knowledge Partner

Țuca Zbârcea & Asociații is a full-service independent law firm, employing cross-disciplinary teams of lawyers, insolvency practitioners, tax consultants, IP counsellors, economists and staff members. It also operates a secondary law office in Cluj-Napoca (Romania), and has a ‘best-friend’ agreement with a leading law firm in the Republic of Moldova. In addition, thanks to the firm’s dedicated Foreign Desks, the team provides the full range of services to international investors seeking to gain a foothold or expand their existing operations in Romania. Since 2019, the firm and its tax arm are collaborating with Andersen Global in Romania.

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