The cult article of AI

by Oksana Martynyuk
(Atyrau, specially for Exclusive)

“The cult” the name which the participants of the sixth Atyrau international legal conference gave to the article 243 of Administrative Infractions Code of RK on 11th April of 2008. Namely this article doesn’t give a moment’s rest to Tengizchevroil (TCO) and the lawyers of other oil-and-gas companies in Kazakhstan. On 28th March the Atyrau regional administration of environmental protection of Kazakhstan brought administrative penalty to TCO in sum of 37bn tenges ($307m). On 18th April the press service of TCO informed that company wants to appeal a decision.  It is already the second ADMINISTRATIVE penalty. TCO was fined exactly in that sum at the end of last year for the same reason, but with wording “for violation the environmental protection”. It was done from the side of Ministry of Ecology and again by the 243 “cult” article.

UNFINISHED CODE?
The professor of Caspian social university, Doctor of Law Roman Podoprigora says that the AI code has become very conflicting, undeveloped in many positions and its disadvantages have become evident right after it was published and implemented. Despite the long preparation, the final version of Code was taken in a hurry without considering the opinions of most of the scientists and practitioners, which almost immediately returned the results.
For instance, one of the paradoxical regulations of Code indicates that it is connected with the concept of administrative infraction. While the determination of infraction is given quite clearly in respect of physical bodies, then nothing is said about the fault in respect of artificial bodies. In practice it has led to the fact that it isn’t necessary to prove the fault of artificial body which is absurd without saying. You are guilty if you are charged? 
One more article of AI Code says that imposition of administrative penalty on physical body doesn’t free the artificial body of administrative responsibility and vice-versa. Per se, the speech is about the fact that double responsibility may come for one delinquency; thereby, the basic principles of responsibility are violated.
There are problems with the new sanction “Suspense or the prohibition of artificial body’s activity” as well which appeared in Code in 2001, says Mr. Podoprigora, where the confusion of civil and administrative institutes is so obvious.
The professor thinks that while imposing billionth administrative penalties the doubt arises that the given infraction is not administrative at all.

The question is simple: 25 thousand or 37 billion? - the answer isn’t obvious
Zhumageldi Yelyubaev, the managing legal adviser of Eurasian branch of corporation “Chevron” states that the code 243 (for “The excess of regulations of emission into environment, set in the ecological permission, or the absence of ecological permission”) has become the effective instrument in the hands of State ecological services for taking the considerable amount of money from nature managers. “In fact, the hidden confiscation of the profits of managing subjects is under way, which are performed on the basis of false and maybe fully intentional interpretation of regulations of administrative code”. It can be understood as the robbery in broad daylight.
In the article 243 of AI Code it says about the penalty which is imposed on the artificial bodies who are the subjects of large entrepreneurship “In sum of one thousand percent of payment rate for emission into environment for the exceeded volume of emission”. That’s why all these disputes are going about how to calculate the penalty size correctly. Mr. Yelyubaev thinks that the size of penalty is only 1000% of the payment rate for placement of one ton of wastes. The rate makes up 2565 tenges, and then the size of penalty should be 25650 tenges. That’s all. The State ecological bodies(and the courts frequently support them) consider that the size of penalty makes up 1000% of the rate for each ton and multiply 1000% of rate on the volume and as a result the penalty becomes billionth.
Yelyubaev thinks that it is contrary to the basic principles of the AI Code. Particularly, because another article of Code runs as “the size of the penalty imposed on the artificial body, which is the subject of the large entrepreneurship cannot exceed two thousand monthly calculated rates”, that is 2,336 million tenges maximum. The exceptions from this general rule are specific articles of the Special part of Code, but according to the legal adviser, it doesn’t affect the present case in a strange way.
However, according to Yelyubaev, the courts continue to support the wrong position and determine the sizes of penalties with the compulsory account of volume of emissions.
On the contrary, the judge of Supreme Court Vladimir Borisov thinks that the words “for exceeded volume of emission” in the article mean that it is necessary to consider the volume. Moreover, in his opinion, the article 243 falls under the points of Special Code, in which it is said about the volumes.
“In Supreme Court of USA, in case of difficult interpretation of law, they find out what the legislator meant. In the present case, the speech was about toughening the punishments, so it means that volume of  pollution should be considered otherwise they wouldn’t say anything about toughening; on the contrary they would say about encouragement”, - said Mr. Borisov.

Do they want to fine so much?
It is not all the same for TSO and other oil companies how the size of penalty is calculated-in any way, there is a difference between 25 thousand tenges and 37 billion tenges! Naturally, there is a difference for the State treasury as well.
However, today the huge sums of penalties conform to the philistine feeling of fairness more than letter of the law. It is no coincidence that these questions were raised in the conference, the major sponsors of which were the Chevron and Tengizchevroil. TCO doesn’t want to throw out 37 billion every year, especially when the law is ambiguous, but passing to the tough defense methods immediately; for instance, addressing to the International Arbitration Tribunal in Stockholm is very hard step which can be done if the worst comes to the worst. At the present time, one can initiate the discussions, assessments, investigations, researches, and then maybe the changes in this annoying article.
There is another important thing, cult is the name which was given to the article 243 of the AI Code has been changed for three times - in 2001, 2003 and 2007 and as a result it has become so that it could be interpreted ad lib (as one wanted). “I do as I want” - this is how people talked in the lobbies of conference.

The Kazakhstani Tengizchevroil has been fined in sum of $307m again
Friday, 18th April 2008
ALMA-ATA (Reuter) - The Atyrau regional administration of environmental protection of Kazakhstan brought administrative penalty to TCO, subsidiary company of Chevron, in sum of 37bn tenges ($307m). The company wants to appeal a decision, informed the press-service of TCO.
It is the second huge penalty, brought to TCO for storing the sulphur in Tengiz without permission of authorized bodies. The administrative penalty is equal to that sum which was imposed on TCO last year for violation of environmental protection.
“Tengizchevroil expresses its decisive disagreement with any statement, which is contrary to the results of our activity, connected with the production and storage of sulphur, the valuable resource of Kazakhstan, which is done in accordance with the demands of industrial security and legislation” – is said in the message of press-service.
“Tengizchevroil will appeal a decision and protect the results of its activity actively in accordance with the legislation and norms of Republic of Kazakhstan”, - is said in the text of message.
According to the data of State inspection checks TCO has been made answerable for 22 times in total sum of 142 million tenges for the violation of demands of legislation about environmental protection.
Moreover, in autumn of 2007 the Ministry of Ecology brought penalty to Tengizchevroil in sum of 74.4 billion tenges (about $609 million) for the pollution of environment.
The court of first instance reduced the sum of penalty twice up to 37 billion tenges. The company contests the decision.
The oil minefield Tengiz, where the company works, is rich for hydrogen sulfide and separated some million tons of sulphur in the course of refinement are stored in the open air.
At the beginning of April of 2008 the Ministry of Ecology of Kazakhstan reminded TCO of the necessity of sulphur utilization in the “shortest period of time” for several times.
In 2007 the company increased the sales of sulphur to 24% up to 2.05 million tons as compared with 2006.
In 2007 the total volume of accumulated sulphur was reduced for almost half million up to 8 million tons.
The half of capital of the company belongs to the American Chevron, 25% to ExxonMobil, 20% to the State Company Kazmunaigas and 5% to the LUKArco which is under control of Russian Lukoil.

The mined reserves of Tengiz are estimated at 1.3 billion tons of oil.