Province of Buenos Aires - New Law of Environmental Liabilities Is Enacted

On January 23, 2012, Law No.14,343 was published in the Official Gazette of Buenos Aires Province, which regulates the identification of environmental liabilities and the obligation to restore contaminated sites or areas of risk for the population’s health, in order to mitigate the negative impacts on the environment.

Three points deserve special attention:

1. The regulation not only of environmental liabilities, but also of the burdens imposed on those responsible for generating environmental damage;
2. The submission for approval of “closure audits” in the event of definitive closure or transfer of activities, and
3. The obligation to report the existence of environmental liabilities to any person and/or public official.

Regarding the definition of environmental liability, the law itself specifies it as “ joint of environmental damages in terms of water, soil and air pollution, deterioration of natural resources and ecosystems, produced by any public or private activity, during its regular operation or by unforeseen events throughout its history, which constitute a permanent and/or potential risk for the population’s health, the surrounding ecosystem and the property, and that has been abandoned by the party responsible.”

The incorporation of the concept of “abandonment by the party responsible” is interesting, while it draws a line between environmental damage itself and environmental liability. Thus, there may be damage without environmental liability, but not the reverse.

With the identification of an environmental liability, there will be a responsible party obliged to restore the environment: the holders of the activity generating the damage and/or the property owners, in the event that the activity’s owner cannot be identified. The environmental liability can be found either on the own property or adjacent land, whether public or private.

The “restoration” and “remediation” of the damaged environment find their own definition in the Law. While the definition of “remediation” is not novel, it elevates to a legal standard the criteria of reducing pollutant elements to acceptable levels, setting aside the principle provided in Section 28 of the General Environmental Law, which aims at reverting the environmental situation to the time before the damage occurred. While the new regulation reflects what it is usually defended from remediation techniques, it must be pointed out that there is a legal obligation, set by a federal law, which may be more demanding. The coexistence between both principles will surely result in judicial debate.

Not only those “responsible” are bound to report environmental liabilities, but the community as a whole, since, if a person or public official becomes aware of the existence of an environmental liability, the former will be required to report it.

Given the hypothesis of definitive closure or transfer of activities, the rule provides for, as a preventive procedure, the presentation of a closure audit for its evaluation by the Enforcement Authority, which is subject to subsequent regulation. Notwithstanding, it empowers the Executive to delegate to the Enforcement Authority the determination of the technical requirements that may contain the aforementioned audit, which minimally must cover the following requirements:

• - A description of the activities and facilities;
• - A sample and analysis of soil and groundwater;
• - Measures of prevention and control of soil pollution;
• - Hydrological study.

The regulation -that should be issued in a timely manner- should clarify exactly what it is meant by “transfer of activities”, whether or not it affects the transfer of stock, the sale of assets, transfer of goodwill, etc. Depending on the regulation to be issued, this new institute could become a key factor for future transactions of companies or assets located in the Province of Buenos Aires.

The result of the closure audit evaluation will determine the obligation to restore sites after closure or transfer of activities. When the evaluation detects damages to the environment, the party responsible for the activity may not be released from the obligation to restore the site until such obligation is fulfilled. On the contrary, restoration obligations will not be required when no environmental damages are found by the Enforcement Authority.

The rule also sets forth what could be called ‘Protocol of Action’, in the event that environmental damages have been produced or could occur. The responsible party, without delay and without prior notification, shall take urgent measures to repair, restore or replace natural resources provisionally and immediately, notwithstanding the additional criteria set up for the same purpose by the Enforcement Authority.

In addition, the party responsible for generation of damage to the environment must report to the Enforcement Authority the urgent mitigation measures adopted, and shall propose remedial measures for damages caused for their approval, within the term of 24 hours after the damaging event occurs.

Section 19 of the Law reproduces the requirement of hiring environmental insurance as provided in the General Environmental Law for all people “who carry out activities hazardous to the environment, ecosystems and their constituent elements”, summoning the Enforcement Authority to determine hazardous activities on which the burden of obtaining this insurance will fall.

The Law contains its own sanctions’ regime: warnings, fines, temporary or permanent closure, up to the cancellation of the records existing in the Enforcement Authority in the event of contaminated sites. The figure of recidivism is foreseen in the event of committing a new infringement within the term of one year, counting from the time that the penalty becomes final.

Finally, the Registry of Environmental Liabilities of the Province of Buenos Aires has been created, whose importance lies in the fact that by registering an environmental liability, the Enforcement Authority shall inform the Provincial Real Estate Registry, to enable it to record a marginal note thereof in the last registration of domain. This marginal note will be cancelled when the authority reports the completion of the restoration measures to the Registry, and the cancellation from the Registry of Environmental Liabilities takes place.

It should finally be mentioned that while the law created the Provincial Fund for the Environment (“Fondo Provincial del Ambiente” - FOPROA), destined to restore environmental liabilities and contaminated sites in the cases where those responsible for their generation can not be identified. Said institute was vetoed by the Executive when enacting the law.

Implementing regulation of the Law should be issued within the next 180 days as provided by the same. At that time the evaluation of the true scope of the obligations emerging from these new regulations, as well as their enforcement, shall be considered.