Transfer of agricultural lands to lands of other categories: some issues of theory and practice of law enforcement

Ustyukova Valentina Vladimirovna ORCID: 0000-0002-3118-4805 Doctor of Law Professor, Chief Researcher of the Environmental Sector, Institute of State and Law of the Russian Academy of Sciences 119019, Russia, Moscow, Znamenka str., 10 ustyukova.v@yandex.ru

The article was prepared with the information support of the legal reference system "ConsultantPlus".

In the Strategy for Sustainable Development of Rural Territories of the Russian Federation for the period up to 2030, approved by the Decree of the Government of the Russian Federation No. 151-r dated February 2, 2015, improvement of land relations and termination of irrational transfer of agricultural land to other categories are named as one of the directions of policy in the field of rural development. Earlier, the need to establish mechanisms to protect agricultural land from retirement from agricultural turnover was discussed in the Fundamentals of the State Policy for the Use of the Land Fund of the Russian Federation for 2012-2020, approved by the Decree of the Government of the Russian Federation No. 297-r dated March 03, 2012.  Meanwhile, during the period of validity of the above-mentioned Foundations, no special mechanisms have been adopted in terms of improving the procedure for transferring agricultural land to other categories, in particular, such measures as, for example, the establishment of a ban on the extraction of common minerals in an open manner on agricultural land and limiting the placement of objects not related to with agricultural production, on agricultural land.

Article 7 of Federal Law No. 172-FZ of December 21, 2004 "On the Transfer of Lands or Land Plots from One Category to Another" (hereinafter - Law No. 172-FZ), designed to regulate the specifics of the transfer of agricultural lands or land plots as part of such lands from agricultural lands to another category, from the moment of its the entry into force has changed slightly. The additions made to this article in 2005, 2006 and 2023 were mainly of a clarifying, terminological nature (for example, in 2023, instead of the term "cadastral value of the average district level", a more correct term "cadastral value for a municipal district (municipal district, urban district)" was introduced. However, the practice of applying this Law shows that the mechanisms provided for by it to protect agricultural land from retirement from agricultural turnover are clearly insufficient.

Let us pay attention to the fact that Law No. 172-FZ uses in Article 7 a term that does not fully correspond to the name of the Law, speaking about "agricultural lands or land plots as part of such lands from agricultural lands", and not about any lands and land plots of this category. Apparently, in this way the legislator wanted to emphasize the special importance of agricultural land (arable land, meadows, pastures, haymaking, etc.) for the production of agricultural products, however, this term itself is somewhat jarring.

It should be noted that the opinion has been expressed in the legal literature that the indication in Part 1 of Article 7 of the said Law on the "exclusivity of cases" of translation can be considered as a corruption factor, and therefore it should be rejected  refuse ^{[1, pp.77-81]}. Let's take the liberty of disagreeing with a colleague. Of course, this term is very vague, evaluative, therefore, the element of corruption is certainly present here, which scientists have already paid attention to earlier. S.A. Lipsky, in particular, believes that "the complexity of the procedure for transferring land from one category to another, the absence of specific regulatory signs of the validity of the transfer create certain difficulties for the rightholders of land sites and lead to the adoption of arbitrary decisions, which, in turn, leads to the emergence of corruption-causing factors" ^{[2, pp.59-65]}. At the same time, the absence of an indication of the "exclusivity of cases" would further expand the "discretion" of the law enforcement officer, which R.V. Sekretarev, like other researchers, attributes to the shortcomings of Law No. 172-FZ ^{[1, p.77]}.

In the commentary to Law No. 172-FZ, prepared by the author's team of the Institute of State and Law of the Russian Academy of Sciences, seven criteria for classifying situations as exceptional are highlighted. These are environmental, environmental, economic, socio-economic, socio-political criteria, as well as criteria for rational use of natural resources and safety ^[3]. This is an interesting approach applicable to various situations when it may be necessary to transfer land from one category to another, and not only to cases of transfer of agricultural land. But it would be good to specify these criteria at least approximately in the Law or fix it at least in such a way that it would be easier for state authorities and courts to assess specific cases of translation.

Law No. 172-FZ allows the transfer of farmland lands to another category in exceptional cases, in particular, related to the extraction of minerals in the presence of an approved reclamation project (paragraph 8, part 1, Article 7 of the Law). Moreover, Part 2 of this article allows such a translation, even if we are talking about particularly valuable productive farmland.

Currently, the existence of a reservation on the "exclusivity of cases" allows in a number of situations to prevent unjustified translation. So, for example, recognizing as lawful the refusal of the Government of the Tver Region to a Limited Liability Company to transfer land plots from the category of agricultural land to the category of industrial land for the purpose of quarrying sand and gravel material, the court, in particular, pointed out that from the provisions of Law No. 172-FZ it does not follow that "the fact itself mining is an exceptional case, the presence of which causes the transfer of land from the category of agricultural purposes to another category" (See: the decision of the Fourteenth Arbitration Court of Appeal of March 14, 2013 in case no. A66-6561/2012). In resolving the dispute, the court was guided, among other things, by the Rules of Work Organization in force at that time when considering petitions for the transfer of lands or land plots within such lands from one category to another, approved by the order of the Government of the Tver Region dated November 16, 2011 No. 262-rp. According to the said Regulations, the Interdepartmental Commission under the Regional Government on Land Relations considers petitions for the transfer of land, while the members of the commission consider the petition for: a) the validity (validity and exclusivity) of the transfer of lands or land plots as part of such lands from one category to another; b) the presence (absence) of grounds provided for by law for refusing to transfer lands or land plots as part of such lands from one category to another.

In this case, the Commission did not consider this case exceptional, and accordingly recommended that the Government refuse the transfer, which was done. The correctness of this approach has been confirmed by higher judicial instances (See: The Ruling of the Arbitration Court of the North-Western District of July 10, 2013 in case no. A66-6561/2012 and the Ruling of the Supreme Arbitration Court of the Russian Federation of October 16, 2013 No. VAS-14104/13 in case no. A66-6561/2012). 

There are other court decisions when the courts do not see the exclusivity of the circumstances and refuse to transfer land. For example, the Resolution of the Arbitration Court of the Far Eastern District dated July 23, 2020 No. F03-2309/2020 (SPS ConsultantPlus) stated that "the desire of the company to carry out mining (on agricultural lands – V.U.) on the basis of a valid license does not indicate the presence of an exceptional case in the situation under consideration." (See also: Resolution Arbitration Court of the North Caucasus District dated February 20, 2020 No. F08-11124/2019 in case No. A32-7436/2019, etc.).

However, there is a different kind of practice. For example, the resolution of the Arbitration Court of the Volga-Vyatka District dated February 05, 2021 No. F01-15949/2020 in case No. A28-5966/2020 satisfied the requirement to invalidate the decree of the Government of the Kirov region on the refusal to transfer two land plots from the category of agricultural land to the category of industrial land (again, transfer for the purpose of mining).

The regional government motivated the refusal by the fact that the Company did not justify the expediency of transferring land from one category to another and that the plots should be used for agricultural production. The Government also referred to the fact that the right to extract minerals (a license to use the subsoil of the Otyatskoye deposit for the purposes of exploration and production of clays) and an approved reclamation project is not an exceptional case for transferring a land plot from one category to another. However, this time the court did not take this statement into account. Perhaps the court took this position because neither the Ministry of Agriculture and Food of the region nor the local self-government body of the district objected to the transfer of the requested two land plots to another category.

The Court of Cassation instance in the decision stated: "Given the long absence of agricultural production in the disputed areas, the location of the Otyatskoye field on their territory, the courts of two instances correctly established that the Government had no legal grounds for refusing the Company to satisfy the application for the transfer of land plots with cadastral numbers 43:12:430162:258 and 43:12:430162:264 from one category to another, expressed in the contested resolution."

Taking into account the above, such a different approach of the courts, it would be advisable not to refuse to indicate the exclusivity of cases of translation, but, on the contrary, to give at least an approximate list of them. For example, in one of the court decisions, such cases as the finding of a land plot within the boundaries of a deposit of rare minerals and the actual impossibility of using the land plot for agricultural production are named as exceptional (the Decision of the Arbitration Court of the Novosibirsk Region of June 11, 2015 in case No. A45-5847/2015).

In this case, the closed joint-stock company also challenged in court the legality of the refusal of the Department of Land and Property Relations of the Novosibirsk Region to consider a petition for the transfer of a land plot from the category of agricultural land to industrial land for the purpose of mining.

In the decision to refuse to consider the application, the Department indicated that the requested land plot does not fall within the boundaries of the Eastern section of the Kolyvan deposit, provided for the development of anthracite to the Company in accordance with the license, and on the basis of this cannot be used by the Company for mining. In the applicant's application for the transfer of a land plot to another category, there is no actual or documentary justification for the exclusivity of the transfer of this particular plot. The possibility of extraction of anthracite (a common mineral) does not indicate the exclusivity of the case for translation. Circumstances such as the economic feasibility or inexpediency of the owner of a land plot of a particular type of activity cannot be considered as evidence of the exclusivity of the case and the need for transfer. Based on the above, the Company's demand to recognize the Department's refusal as illegal was not satisfied.

I would like to comment on the above position of the court on the economic feasibility or inexpediency of the transfer. In the context of the case under consideration, it seems to be correct, but it is impossible to completely ignore the economic feasibility of using land for certain purposes. Because if the conduct of agricultural production is not profitable for the rightholder of the land plot, this plot will not be used. However, its rightholder has certain legal mechanisms for changing a situation that is unfavorable for him (sale of a land plot if he owns it, termination of a lease agreement, refusal of a land plot if it belongs to the rightholder on the right of permanent (indefinite) use or lifelong inherited possession, etc.).

One can agree with the proposal made in the literature to supplement Article 7 of Law No. 172-FZ indicating that "an exceptional case in which the transfer of agricultural land plots to another category is allowed should be understood as an objective, consistent with socially significant interests, the need to change the purpose of the land plot. When determining the presence or absence of exclusivity, it is also necessary to take into account the interests of adjacent land users that are affected in connection with the change in the category of a neighboring land plot" ^{[4, pp.38-42]}.

  One more important note. In the above-mentioned court dispute in case No. A28-5966/2020, the Government of the Kirov region expressed the opinion that "prolonged non-use" of plots in agriculture cannot serve as a basis for transferring land to another category. And, in our opinion, this is correct, since "prolonged non-use" may be the basis for bringing the rightholder to administrative responsibility and subsequently for the seizure of these land plots in accordance with the established procedure, but not for transferring them to another category within the procedure provided for by Law No. 172-FZ. Therefore, the executive authorities should not allow the transfer of such lands to other categories, but rather intensify work to involve them in economic turnover, especially since an appropriate regulatory framework has now appeared for this. Meanwhile, in recent years, courts have often taken this circumstance into account (See, for example: Resolution of the Arbitration Court of the Volga-Vyatka District of 24.10.2022 No. F01-5594/2022 in case No. A11-10874/2021, etc.).

  Sometimes courts do not directly refer to the duration of non-use of a plot in agricultural production, but they seem to have it in mind. Thus, by the resolution of the Arbitration Court of the North Caucasus District dated June 30, 2020 No. F08-4167/2020po case No. A32-31189/2019, the refusal of the Department of Property Relations of the Krasnodar Territory to consider a petition for the transfer of agricultural land owned by LLC Dorsan to industrial lands was declared illegal.

 It can be seen from the case materials that the requested land plot was acquired by the company on the basis of a purchase and sale agreement in July 2010. The contract was concluded on the basis of the resolution of the district administration dated May 14, 2010 No. 867, the decision of the Arbitration Court of the Krasnodar Territory dated February 28, 2008 in case No. A32-8452/2007-31/200 (the ownership of real estate objects was recognized) and the certificate of state registration of the right dated October 15, 2009. The production buildings of the asphalt plant are located on the land plot, acquired according to a paid transaction with JSC UPTK Novokubanskoye in 2007. The site was provided for production activities - for an asphalt plant under a lease agreement between JSC UPTK "Novokubanskoe" and MU "Municipal Property Management of Novokubansky district". The production buildings of the asphalt plant were operated from the 60-70 years of the last century and are operated by the company after major repairs. The purpose of the transfer is to eliminate legal uncertainty in the category of land.

In connection with the above, a lot of questions arise: how did the production buildings of the asphalt plant turn out to be located on productive farmland many years ago? If the plot was provided by OAO Novokubanskoye for conducting production activities, then why did Dorsan have it with permitted use "for the production of agricultural products"? Why have specially authorized bodies not been interested for many years that the site is being used for other purposes? What kind of land tax has Society been paying all these years – as for agricultural land? But is it many times lower than the tax for other lands? And isn't this the reason that, having acquired the plot in 2010, the Company raised the question of transferring it to another category only in 2018?

The said resolution of the Arbitration Court of the North Caucasus District of June 30, 2020 has already attracted the attention of researchers. Commenting on it, L.V. Schennikova quite naturally raises the question: "why were the social interests of preserving agricultural lands, and especially valuable and productive lands, completely unaccounted for?" ^{[5, pp.231-240]}. And it is really unclear why the arguments of the Department that the cadastral value of the requested plot exceeds the average level of the cadastral value of agricultural land of the corresponding type of use for the municipality of Novokubansky district and that the plot partially falls into the list of lands of particularly valuable productive agricultural land in the district are not taken into account.

The question also arises: why do legal entities carry out their activities on agricultural lands in general, whose documents certifying their rights to land plots include such types of permitted use as "quarry development", "maintenance and operation of a reservoir", "landfill for solid household waste", "low-rise residential construction", "for the accommodation of the sanatorium" and others. All formulations are written out from court decisions published in the SPS "ConsultantPlus", i.e. they were contained in documents submitted to the court. And even if in these cases we are talking about non-agricultural land as part of agricultural land, then for them these types of permitted use are unacceptable.

         It is with regret that we have to admit that judicial practice has recently become increasingly widespread, when refusals by the executive authorities of the subjects of the Russian Federation to transfer agricultural land to other categories of land (in particular, industrial and other special purpose land) are recognized as illegal. Accordingly, on the basis of these decisions, agricultural lands are eliminated from their use for agricultural purposes (See, for example: Resolution of the Arbitration Court of the Volga-Vyatka District of July 30, 2018 No. F01-2913/2018 in case No. A11-7116/2017; Resolution of the Arbitration Court of the Ural District of September 11, 2020 No. F09-4310/20 in the case No. A76-31077/2019; Arbitration Court of the West Siberian District of June 16, 2020 No. F04-23/2020 in case No. A46-10176/2019; Resolution of the Arbitration Court of the Volga-Vyatka District of January 26, 2021 No. F01-15641/2020 in case No. A28-1721/2020, etc.). And although in some cases refusals to transfer land may indeed be unreasonable, this trend itself raises concerns.

Of course, the practice is negative when agricultural producers themselves apply for the transfer of agricultural land to other categories. Sometimes such an appeal is caused by objective circumstances, in particular, it is possible if land of the worst quality was initially allocated for agricultural production; the agricultural producer was convinced that it was extremely difficult for him to conduct agricultural business on this land plot and justified the need to transfer the land plot to another category. However, often applying for the transfer of agricultural land to another category indicates that citizens or organizations were not going to engage in agricultural production, but purchased the relevant land plots, because their cost is significantly lower than the cost of land of other categories, hoping in the future to resolve the issue of changing the category.

For example, an individual entrepreneur T., who, since September 13, 2018, owned an agricultural land plot in the Tversky district of the Tver region with an area of 17,288 sq. m.m already on September 25 of the same year (i.e. less than two weeks after the registration of ownership of the plot) applied to the Government of the Tver region with a request to transfer the plot from the category of agricultural land to the category of industrial land, referring to the immediate proximity of the Site to a major transport hub - the federal highway M-10 "Russia" - the main public highway of federal significance Moscow - Tver - Veliky Novgorod - St. Petersburg. In the petition, the Entrepreneur indicated that the transfer of land to the named category is necessary for the construction of a roadside complex, including a truck parking lot, truck tire service, a cafe, and a parking lot for passenger cars. By order of the Government, the Entrepreneur's petition was denied.

The entrepreneur, believing the said order to be illegal, appealed to the arbitration court with a corresponding application. However, the courts of all three instances have not established the existence of legal grounds for recognizing the Government's order as illegal. The courts proceeded from the documents presented in the case materials, in particular, from the territorial Administration of Rosreestr - information that as part of the Site (for the transfer of which the petition was filed)  agricultural lands (pastures) have been taken into account; from the Office of the Federal Service for Supervision of Consumer Rights Protection and Human Welfare in the Tver region - information on the need to organize a sanitary protection zone of 100 m in size for the placement of roadside service facilities and on the absence of conditions for establishing such due to the location at a distance of 43 - 53 m from the requested plot of land with the type of permitted use - for personal subsidiary farming and individual housing construction; from the Ministry of Agriculture - information on the possibility of using the Plot for farming, including without land reclamation, as well as on the availability of agricultural producers interested in using agricultural land on the territory of the municipality.

Taking into account these circumstances, the refusal of the Regional Government was recognized as legitimate (the Decision of the Arbitration Court of the North-Western District of December 6, 2022 in case No. A66-4618/2022). So the entrepreneur will either have to conduct agricultural production on this site, or sell the site to someone who wants to do it.

The grounds for refusing to transfer agricultural land plots to another category of invalid may be, for example, violations by interested parties, such as the absence of an approved land reclamation project among the documents justifying the need for such a transfer, if the transfer is related to the extraction of minerals (paragraph 8, part 1, Article 7 of Law No. 172-FZ) (See, for example: The Appeal Ruling of the IC on Administrative Cases of the Supreme Court of the Russian Federation No. 33-APA 19-8 dated May 15, 2019), as well as the inconsistency of the requested purpose of land plots with approved territorial planning documents and documentation on the planning of the territory, land management documentation paragraph 3 of Article 4 of Law No. 172-FZ.  Consequently, having established this circumstance, the courts also refuse to recognize the relevant decisions of the executive authorities as illegal (if they are appealed by interested persons) (See, for example: Resolution of the Arbitration Court of the East Siberian District of October 29, 2019 No. F02-5430/2019 in case No. A33-27406/2018; Resolution of the Arbitration Court of the Far Eastern District of 23 July 2020 No. F03-2309/2020 in case No. A51-17830/2019, etc.).

In connection with the latter circumstance, citizens sometimes, for the purpose of subsequent transfer of agricultural land, initially apply to local self-government bodies with petitions for amendments to territorial planning documents. Thus, the head of the peasant (farmer) economy (hereinafter – KFH) B. appealed to the administration of the municipal district with proposals to amend the general plan of the Velikoselsky rural settlement of Gavrilov-Yamsky municipal district in respect of two agricultural land plots belonging to her. Specifically, the applicant proposed changing the functional zone of agricultural use in which the plots are located to a production zone in order to further transfer these land plots to industrial lands, with the type of permitted use "subsoil use". Since the proposals were rejected, the head of the farm appealed to the court to declare this decision of the district administration illegal.

The district administration refused to initiate the procedure for making the proposed changes to the General Plan of the Velikoselsky rural settlement, indicating that it considers such changes inappropriate, since according to the available cartographic materials, the land plots belonging to the head of the farm belong to agricultural land. In addition, the plots are located at a distance of no more than thirty kilometers from the borders of rural settlements, therefore, on the basis of Article 78 of the LC of the Russian Federation, they cannot be used for purposes unrelated to agriculture. For the socio-economic, investment climate of the district, the implementation of the socio-economic Development Program of the district, the change in zoning and the transfer of agricultural land to the category of industrial land is of no value.

The courts of all three instances recognized the actions of the Administration as legitimate and refused to satisfy the stated requirements. Challenging the decision, the head of the farm referred to Materials on the justification of the transfer of land plots from agricultural lands to industrial lands prepared by LLC Design Institute "SPETSSTROYPROEKT" in 2019, however, the court noted that these materials do not contain conclusions about the erroneous attribution of the applicant's land plots to agricultural lands, nor that these land plots cannot be used as agricultural land. The court also stressed that the head of the farm was aware of the existing restrictions on the use of agricultural land at the time of their acquisition in 2018. The establishment of a legal regime for a land plot that does not correspond to the owner's plans is not a violation of his rights (Resolution of the Arbitration Court of the Volga-Vyatka District of August 13, 2020 in case No. A82-8449/2019).

As practice shows, the norm of Part 2 of Article 7 of the Law that the transfer of agricultural land, the cadastral value of which is fifty percent or more higher than the average cadastral value for a municipal district (municipal district, urban district), and especially valuable productive agricultural land to another category is not allowed, insufficiently protects these lands from retirement from agricultural production, especially since some exceptions to the general rule are established in the norm itself.

In part 4 of Article 79 of the Land Code of the Russian Federation, the compilation of lists of especially valuable productive farmland (land), the use of which for other purposes is not allowed, is assigned to the jurisdiction of the subjects of the Russian Federation. But, as I.A. Ignatieva rightly notes, such a ban, established at the level of the subjects of the Russian Federation, is overcome by the possibility provided for by Law No. 172-FZ to transfer such agricultural land to another category ^{[6, pp.12-17]}. Nevertheless, the presence of these lists still protects productive farmland to a certain extent. And in many subjects of the Russian Federation, regulatory legal acts that approved such lists have been adopted ^{[7, pp. 20-23]}, but not in all. V.N. Kharkiv points out that, for example, in the Tula region, the composition of such lands is not defined, although the establishment of such a list is provided for by Article 8 of the Law of the Tula Region "On the Regulation of Individual land relations in the Tula region" (Tula News. 2007. November 22). In this regard, he proposes to establish in Article 79 of the RF CC not the right, but the obligation of the subjects of the Russian Federation to form the composition of especially valuable agricultural land.  This duty, according to the author, can not be imposed only on the cities of federal significance and the territories of the Arctic zone of the Russian Federation) ^{[8, pp. 17-20]}.

The author's reservation about the territories of the AZ of the Russian Federation is not entirely clear, because in some subjects of the Russian Federation located in this zone, the relevant regulations have already been adopted. For example, the Decree of the Government of the Republic of Sakha (Yakutia) dated December 2, 2020 No. 368 approved the Procedure for forming and maintaining a list of especially valuable productive agricultural land plots in the Republic of Sakha (Yakutia), the use of which for other purposes is not allowed (SPS ConsultantPlus. Regional legislation). But in general, one can agree with V.N. Kharkov's proposal, because in the absence of an appropriate list of especially valuable productive farmland approved by law or other regulatory legal act of a subject of the Russian Federation, even those weak guarantees against the unjustified transfer of these lands to other categories provided for by Law No. 172-FZ cannot be used.

Other proposals have been made in the legal literature concerning the improvement of the procedure for transferring agricultural land to other categories. For example, V.I. Krause proposes to prohibit the transfer of farmland to another category altogether in connection with the placement of industrial facilities on them, however, firstly, it is unclear why the ban is established only for cases of placement of industrial facilities, and, secondly, it is unlikely that this proposal will be accepted, since in certain cases such a transfer may be expedient. At the same time, some provisions of Law No. 172-FZ of the Russian Federation, which were mentioned above, really need clarification.

In conclusion, we note that we share the idea of a social obligation of owners and other right holders (land users, landowners, tenants) for the conservation and rational use of agricultural land, put forward and defended by L.V. Schennikova ^{[5, pp. 231-240]}.  And this idea should become the main one for all persons whose activities are somehow connected with agricultural production, with the use of agricultural land. This also applies to legislators, who should proceed from this idea when drafting relevant laws, and executive and judicial authorities that apply such laws.