State Council

Order of the State Council of the People’s Republic of China

No. 460

The “Regulations Governing the Licensing for Water Drawing and the Levying for Water Resource Fees”, which was adopted at the 123rd
executive meeting of the State Council on January 24, 2006, is hereby promulgated, and shall come into force on April 15, 2006.

Premier of State Council, Wen Jiabao

February 21, 2006

Regulations Governing the Licensing for Water Drawing and the Levying for Water Resource Fees

Chapter I General Provisions

Article 1

The present Regulation is formulated in accordance with the “Water Law of the People’s Republic of China” for the purpose of strengthening
the administration and protection of water resources, and promoting the conservation and reasonable exploitation and utilization
of water resources.

Article 2

The term “water drawing” as mentioned in the present Regulation shall refer to the drawing of water resources directly from rivers,
lakes or underground with the use of water drawing engineering structures or facilities.

Any entity or individual that draws water resources shall, except for the circumstances prescribed in Article 4 of the present Regulation,
apply for a license certificate for water drawing, and pay water resource fees.

The term “water drawing engineering structures or facilities” as mentioned in the present Regulation shall refer to water gates, dams,
channels, artificial watercourses, siphons, pumps, wells and hydropower stations, etc.

Article 3

The competent departments of water administration of the people’s governments at the county level or above shall, in light of the
scope of powers by graded administration, take charge of organizing and implementing, supervising and administering the license
system of water drawing.

The drainage basin administration authorities established by the competent department of the water administration of the State Council
at the localities of important rivers and lakes determined by the state (hereinafter referred to as the drainage basin authorities)
shall, in accordance with the present Regulation and upon the authorization by the competent department of the water administration
of the State Council, take charge of organizing and implementing, supervising and administering the license system of water drawing
within their respective jurisdictional scopes.

The competent department of water administration, the administrative department of public finance and the competent department of
price of a people’s government at the county level or above shall, according to the present Regulation and their scope of administrative
powers, take charge of levying, administering and supervising water resource fees.

Article 4

Under any of the following circumstances, the party concerned does not have to apply for a license certificate for water drawing:

(1)

A rural collective economic organization or any of its members uses the water in the pond or reservoir of the said organization;

(2)

A small amount of water is drawn as drinking water for family life, or livestock or poultry under sporadic or enclosed breeding,
etc.;

(3)

The water must be drawn (discharged) for responding to temporary emergencies in order to guarantee the engineering production safety
of underground structures such as mines, etc.;

(4)

The water is drawn for responding to temporary emergencies in order to eliminate the harms endangering public safety or public interests;
or

(5)

The water must be drawn for the use of temporary emergencies in order to fight an agricultural drought or maintain ecology or environment.

The limitation for drawing of a small amount of water as prescribed in Item (2) of the preceding paragraph shall be set forth by the
people’s government of the province, autonomous region, or municipality directly under the Central Government; the water drawing
as prescribed in Item (3) or (4) shall be timely reported to the competent department of water administration of the local people’s
government at the county level or above or the drainage basin authority for archival filing; the water drawing prescribed in Item
(5) shall be subject to the consent of the competent department of water administration of the people’s government at the county
level or above., or the drainage basin authority

Article 5

A license for water drawing shall first satisfy the needs of the urban and rural inhabitants in their living use of water and give
concurrent consideration to the agricultural, industrial, ecological and environmental need for water as well as to the needs of
navigation.

The people’s government of a province, autonomous region, or municipality directly under the Central Government may, upon scope of
power prescribed in the present Regulation, determine the specific order sequence on the various items of water use as prescribed
in the preceding paragraph within the same drainage basin or region according to the actual situation. .

Article 6

Actualizing the license for water drawing must conform to the water resource comprehensive planning, the drainage basin comprehensive
planning, the medium and long-term planning for the supply and demand of water and the functional division of water, and be in compliance
with the water allocation scheme approved in accordance with the “Water Law of the People’s Republic of China”. If no water allocation
scheme is formulated, the license for water drawing shall be in compliance with the agreement concluded between the relevant local
people’s governments.

Article 7

To grant a license for water drawing, the principle of giving overall consideration to surface water and ground water, and the principle
of finding more water sources while saving water with priority given to water saving shall be adhered to, and the control of total
amount combined with the quota-based management shall apply.

The total amount of water consumed upon approval for water drawing within a drainage basin shall not exceed the utilizable amount
of water resources of the drainage basin concerned.

The total amount of water approved for drawing within a jurisdiction shall not exceed the water amount allocated by the drainage basin
authority or the competent department of water administration at the next higher level for drawing within the jurisdiction concerned;
among which, the total amount of ground water approved for drawing shall not exceed the exploitable amount of ground water within
the jurisdiction concerned, and shall meet the requirements of the planning on the exploitation and utilization of ground water.
For making the planning on exploitation and utilization of ground water, opinions shall be solicited from the competent department
of state land and resources.

Article 8

The license for water drawing and the levy and management of water resource fees shall be in compliance with the principles of publicity,
fairness, justice, high efficiency and facilitating people.

Article 9

Any entity or individual is obligated to conserve and protect water resources.

The people’s governments at the county level or above shall commend and award the entities and individuals who have made prominent
contributions in conserving and protecting water resources.

Chapter II Applications for Water Drawing and Acceptance of the Applications

Article 10

An entity or individual that applies for water drawing (hereinafter referred to as the applicant) shall file an application to the
approval organ having the approval power. While if it/he applies for utilizing more than one water source, and there are different
approval organs regarding the licenses for drawing of water sources, it/he shall file an application to the approval organ at the
top level.

Where the scope of power to grant the license for water drawing remains with the drainage basin authority, the application shall be
filed to the competent department of water administration of the people’s government of the province, autonomous region, or municipality
directly under the Central Government where the water intake is located. The competent department of water administration of the
people’s government of the province, autonomous region, or municipality directly under the Central Government shall, within 20 working
days as of receipt of the application, propose its opinions, and transmit the opinions along with all the application materials to
the drainage basin authority. The drainage basin authorities shall, after receipt of the opinions and application materials, handle
the matter in accordance with Article 13 of the present Regulation.

Article 11

To apply for water drawing, the applicant shall submit the following materials:

(1)

the application letter;

(2)

relevant statements having an interest relationship with the third party;

(3)

relevant archived materials in case of a project for archival filing; and

(4)

other materials prescribed by the competent department of water administration of the State Council.

Where water drawing is needed in a construction project, the applicant shall, in addition, submit the water resource argumentation
report on the construction project, which is worked out by an entity having the eligibility for water resource argumentation of construction
projects. The argumentation report shall include the source of water drawing, the rationality of using water, and the impacts to
the ecology and environment, etc.

Article 12

An application letter shall include the following particulars:

(1)

name and address of the applicant;

(2)

reasons for application;

(3)

starting time and term of water drawing;

(4)

purpose of water drawing, amount of water drawing, amount of water consumed in each month within the year, and so on;

(5)

water source and place of water drawing;

(6)

means of water drawing, way of measurement, and water saving measures;

(7)

location for the withdrawal of water, main pollutants contained in the water that is withdrawn, and the sewage treatment measures;
and

(8)

other particulars prescribed by the competent department of water administration of the State Council.

Article 13

The competent department of water administration of a local people’s government at the county level or above or the drainage basin
authority shall, within 5 working days as of receipt of the application for water drawing, examine the application materials, and
handle the matter in light of the following different circumstances:

(1)

If the application materials are complete and meet the legal requirement, and fall within the scope of acceptance by the present authority,
it shall accept the application;

(2)

If the submitted materials are incomplete or the contents of the application letter are not clearly filled, it shall notify the applicant
to make supplements or corrections; and

(3)

If the application does not fall within the scope of acceptance by the present authority, the present authority shall inform the applicant
to file an application to the authority with the power of acceptance.

Chapter III Examination of and Decisions on the License for Water Drawing

Article 14

The licenses for water drawing shall be subject to hierarchical examination and approval.

The water drawing under the following different circumstances shall be subject to examination and approval of the drainage basin authorities:

(1)

drawing water from the trunk streams of the Changjiang River, the Yellow River, the Huaihe River, the Haihe River, the Luanhe River,
the Zhujiang River, the Songhua River, the Liao River, the Jinsha River and the Han River, from the Taihu Lake, or from the designated
reaches of other rivers or lakes covering different provinces, autonomous regions, or municipalities directly under the Central Government,
which is above the limitation;

(2)

drawing water from designated reaches of international trans-border rivers or international border rivers, which is above the limitation;

(3)

drawing water from inter-provincial border rivers or lakes, which is above the limitation;

(4)

drawing water trans- provinces, autonomous regions, or municipalities directly under the Central Government;

(5)

drawing water for large-scale construction project approved or ratified by the State Council or the competent department of investment
of the State Council;

(6)

drawing water within the riverways (reaches) or lakes under direct administration of the drainage basin authorities.

In the preceding paragraph, the designated reaches, the limitations, and the riverways (reaches) or lakes under direct administration
of the drainage basin authorities shall be prescribed by the competent department of water administration of the State Council.

The water drawing under other circumstances shall be subject to examination and approval of the competent department of water administration
of the local people’s government at the county level or above pursuant to the approval power prescribed by the people’s government
of the province, autonomous region, or municipality directly under the Central Government.

Article 15

The approved water allocation scheme or concluded agreement shall be the basis for determining the control of the total amount of
water licensed for drawing within a drainage basin or jurisdiction.

Where no water allocation scheme is made or no agreement is concluded for a river or lake covering different provinces, autonomous
regions, or municipalities directly under the Central Government, the index on controlling the total amount of water licensed for
drawing in the provinces, autonomous regions, or municipalities directly under the Central Government concerned shall be proposed
by the drainage basin authority in consultation with the competent departments of water administration of the people’s government
of the provinces, autonomous regions, or municipalities directly under the Central Government concerned according to the water resource
conditions of the drainage basin, the comprehensive planning on water resources, the comprehensive planning of the drainage basin,
the medium and long-term planning for the supply and demand of water, and in light of water drawing situation as well as the supplies
and demands of each province, autonomous region, or municipality directly under the Central Government, and shall be reported to
the competent department of water administration of the State Council for approval. The index on controlling the total amount of
water licensed for drawing within the jurisdiction of a districted city or a county (city) shall be made by the competent department
of water administration of the people’s government of the province, autonomous region, or municipality directly under the Central
Government according to the index on controlling the total amount of water licensed for drawing of the provinces, autonomous regions,
or municipalities directly under the Central Government concerned, and in light of water drawing situation and the supplies and demands
of each locality, and shall be reported to the drainage basin authority for archival filing.

Article 16

The water consumption amount verified according to the quota for the industrial use of water shall be the main basis for examination
and approval of the amount of water for drawing.

The competent department of water administration and the administrative department of quality supervision and inspection of the people’s
government of a province, autonomous region, or municipality directly under the Central Government shall guide the making of the
quotas for the industrial use of water for the jurisdictions concerned and organizing the implementation thereof.

Where the above-mentioned administrative departments have not yet made the quota for the industrial use of water for the jurisdictions
concerned, they may use the quota for the industrial use of water made by the relevant competent department of industrial administration
of the State Council for reference.

Article 17

An approval organ shall, after acceptance of an application for water drawing, examine the application materials for water drawing
in an all-round way, and comprehensively consider the possible impacts of water drawing to the conservation and protection of water
resources as well as the economic and social development, so as to decide whether to approve the application for water drawing or
not.

Article 18

Where an approval organ holds that the water drawing involves public interests and a hearing is needed, it shall make an announcement
to the general public, and hold a hearing.

Where the water drawing involves the major interest relationship between the applicant and others, the approval organ shall, before
making a decision on whether to approve the application for water drawing or not, inform the applicant and the interested persons.
If the applicant or any of the interested persons requests a hearing, the approval organ shall organize a hearing.

Where the application for water drawing causes any dispute or lawsuit, the approval organ shall notify the applicant in written form
to suspend the examination and approval procedures; and shall not resume the examination and approval procedures until the dispute
is settled or the lawsuit is terminated.

Article 19

The approval organ shall decide to approve or disapprove an application for water drawing within 45 working days as of acceptance
of the application. If it decides to approve the application, it shall simultaneously issue an approval document for the application
for water drawing.

With regard to an application for drawing of ground water in an urban planning area, the approval organ shall solicit the opinions
of the competent department for urban construction, and the competent department for urban construction shall, within 5 working days
as of receipt of the materials for soliciting opinions, give its opinions and transmit them to the water drawing approval organ.

The time limit for examination and approval as prescribed in Paragraph 1 of the present article shall not include the time needed
for holding hearings and soliciting the opinions of the relevant departments.

Article 20

Where any of the following circumstances arises, the approval organ shall not approve the application, and shall, when making a decision
on disapproval, notify the applicant in written form the of the reason or basis for disapproval:

(1)

Underground water is drawn in a prohibited area for exploitation of ground water;

(2)

Increasing the amount of water drawn in a region where the total amount of water licensed for drawing has reached the controlled total
amount under license for water drawing;

(3)

Heavy damages might be caused to the functions of the water areas in the water functional regions;

(4)

The layout of water drawing or water withdrawal is unreasonable;

(5)

When the urban public water supply pipes can satisfy the needs in water use, the construction project owner draws ground water with
its own water drawing facilities;

(6)

Heavy damages might be caused to the interests of any third party or the general public;

(7)

The project which ought to be archived is not submitted for archival filing; or

(8)

Other circumstances prescribed any law or administrative regulation.

The amount of water approved for drawing shall not exceed the amount of water designed with the water drawing engineering structures
or facilities for drawing.

Article 21

An applicant may not build water drawing engineering structures or facilities until its application for water drawing has been approved
by the approval organ. For a construction project in need of state approval or ratification, the competent department of projects
shall not approve or ratify the construction project before the applicant obtains the approval document for the application for water
drawing.

Article 22

Where, within 3 years after an application for water drawing is approved, the construction of water drawing engineering structures
or facilities has not started, or the construction project subject to state approval or ratification has not been approved or ratified
by the state, the approval document for the application for water drawing shall be invalidated automatically.

Where any water drawing content in a construction project is substantially modified, the construction project owner shall make water
resource argumentation of the construction project anew, and re-apply for water drawing.

Article 23

After the construction of water drawing engineering structures or facilities is completed, the applicant shall, in accordance with
the provisions of the competent department of water administration of the State Council, submit the relevant materials on trial operation,
etc. of the water drawing engineering structures or facilities to the water drawing approval organ. If the project is found qualified
through inspection, the approval organ shall check and issue the license certificate for water drawing.

Where an applicant directly makes use of the existing water drawing engineering structures or facilities to draw water, it shall be
issued a license certificate for water drawing after examined by the approval organ if it is found to be qualified.

The approval organ shall timely notify the issuance of license certificates for water drawing to the competent department of water
administration of the local people’s government at the county level where the water intake is located, and shall announce the issuance
of the license certificates for water drawing at regular intervals.

Article 24

A license certificate for water drawing shall include the following contents:

(1)

name of the entity or individual that draws water;

(2)

term of water drawing;

(3)

the amount of water for drawing and the use of the water to be drawn;

(4)

type of the water sources; and

(5)

the location of water drawing and water withdrawal, the way of water withdrawal, and the amount of water withdrawn.

The amount of water for drawing as prescribed in Item (3) of the preceding paragraph shall be the allowed maximum amount of water
to be drawn by the water drawing entity or individual on the basis of the average amount of water in rivers and lakes and of ground
water for years.

The license certificates for water drawing shall be made by the competent department of water administration of the State Council
in a unified form, and the approval organ may only charge the cost for certificate making when checking and issuing the license certificates
for water drawing.

Article 25

The valid term of a license certificate for water drawing shall generally be 5 years, and shall not exceed 10 years. If, at expiry
of the valid term, the license certificate needs to be renewed, the water drawing entity or individual shall file an application
to the original approval organ 45 days prior to the expiry of the valid term. The original approval organ shall, prior to the expiry
of the valid term, make a decision on whether or not to approve the renewal.

Article 26

Where a water drawing entity or individual requests for modifying any content stated on the license certificate for water drawing,
it/he shall apply to the original approval organ in accordance with the present Regulation, and shall go through the relevant modification
procedures upon approval of the original approval organ.

Article 27

Where an entity or individual enpost_titled to water drawing according to law conserves water resources by adjusting product and industrial
structure, by reforming the process, or by saving water, etc., it/he may, within the valid term of the license for water drawing
and the water drawing limitations, lawfully assign the conserved water resources on a non-gratuitous basis upon approval of the original
approval organ, and go to the original approval organ to go through the modification procedures for water drawing right. The specific
measures shall be formulated by the competent department of water administration of the State Council.

Chapter IV Administration of Levy and Use of Water Resource Fees

Article 28

A water drawing entity or individual shall pay water resource fees.

A water drawing entity or individual shall draw water according to the approved annual water drawing plan. For the water drawing exceeding
the plan or quota, water resource fees shall be charged progressively on the excessive part.

The Levy standard of water resource fee shall be made by the competent department of price of the people’s government of the province,
autonomous region, or municipality directly under the Central Government jointly with the administrative department of public finance
and the competent department of water administration at the same level, be reported to the people’s government of the present level
for approval, and then be reported to the competent department of price, the administrative department of public finance and the
competent department of water administration of the State Council for archival filing. Thereinto, for the water conservancy projects
directly under the administration of the Central Government or covering different provinces, autonomous regions, or municipalities
directly under the Central Government for which the water drawing shall be subject to examination and approval of the drainage basin
authority, the levy standard of water resource fee shall be set by the competent department of price of the State Council jointly
with the administrative department of public finance and the competent department of water administration of the State Council.

Article 29

To set levy standard of water resource fee , the departments concerned shall comply with the following principles:

(1)

Promoting the reasonable exploitation, utilization, conservation and protection of water resources;

(2)

Being suitable with the local water resource conditions and the economic and social development level;

(3)

Making an overall arrangement on reasonable exploitation and utilization of surface water and ground water, and preventing excessive
exploitation of ground water;

(4)

Fully considering the differences of different industries.

Article 30

The local people’s government at each level shall take measures to improve the efficiency of agricultural use of water, and to develop
water-saving agriculture.

The levy standard of water resource fee for the water drawn for agricultural production shall be set according to the local water
resource conditions, the rural economic development situation and the needs in promoting agricultural conservation of water. The
levy standard of water resource fee for the water drawn for agricultural production shall be lower than those of water for other
uses, and the levy standard of water resource fee for grain crops shall be lower than those of economic crops. The procedures of
levying water resource fees of the water drawn for agricultural production and the scope thereof shall be prescribed by the people’s
government of the province, autonomous region, or municipality directly under the Central Government.

Article 31

The responsibility to levy water resource fees shall remain with the water drawing approval organ. Among which, if the water drawing
is subject to examination and approval of the drainage basin authority, the water resource fees shall be levied for drainage basin
authority by the competent department of water administration of the people’s government of the province, autonomous region, or
municipality directly under the Central Government where the water intake is located.

Article 32

The amount of payment of water resource fees shall be determined according to the levy standard of water resource fee at the locality
of the water intake and the actual amount of water for drawing.

For the water for hydroelectric use and the water for cooling use in thermal power tubular turbines, the amount of payment may be
determined according to the levy standard of water resource fee at the locality of the water intake and the actual amount of electricity
generated.

Article 33

A water drawing approval organ shall, after determining the amount of payment of water resource fees, serve the notification on payment
of water resource fees to the water drawing entity or individual, and the water drawing entity or individual shall make the payment
within 7 days as of receipt of the notification on payment.

Where any water drawing entity or individual directly draws water resources from a river or a lake or under the ground to engage in
agricultural production, the said entity or individual shall, according to the levy standard of water resource fee at the locality
of the water intake and the actual amount of water for drawing, pay the water resource fees for the water resources that exceed the
limitation of water used for agricultural production as prescribed by the province, autonomous region, municipality directly under
the Central Government. For the water drawing within the prescribed limitation of water used for agricultural production, no water
resource fees need to be paid. To draw water from the water supply engineering structures to engage in agricultural production, the
water drawing entity or individual shall pay the water fees to the water supply entity on the basis of the actual water consumption
amount, and the water supply entity shall uniformly pay the water resource fees. The water resource fees shall be counted into water
supply costs.

With respect to the temporary emergent water transfer implemented under a trans-jurisdictional water allocation scheme upon approval
of the state for the sake of public interests, the water drawing entities or individuals in the water-receiving area shall pay the
water resource fees according to the local levy standard of water resource fee and the actual amount of water for drawing.

Article 34

Where a water drawing entity or individual is unable to pay its or his water resource fees on time due to a particular difficulty,
it/he may, within 7 days as of receipt of the notification on payment of water resource fees, apply for postponement of payment to
the competent department of water administration that sent the notification on payment; and the competent department of water administration
that sent the notification on payment shall, within 5 working days as of receipt of the application for postponement of payment,
make a written decision and notify the applicant. If the said competent department of water administration fails to make a decision
within the time limit, it shall be deemed to consent to the application. The period postponed for payment of water resource fees
shall not exceed 90 days.

Article 35

The levied water resource fees shall be separately turned over to the treasuries of the Central Government and of the local governments
in accordance with the provisions of the administrative department of public