Volume 5, Number 15, Page 2

Brazilian Environmental Law

It is advisable for the foreign investor in Brazil to become acquainted with Brazilian environmental law, which is extensive and sometimes labyrinthine with its federal, state and municipal laws and regulations. Generally speaking, the Brazilian legal system promotes a nondiscriminatory policy toward foreigners. However, there are some restrictions regarding the purchase of rural properties and some kinds of companies.

The Federal Constitution of 1988 deals specifically with environmental matters and expressly provides for the possibility of criminal and administrative sanctions for activities and conduct considered to be damaging to the environment.

The main legislation is Law 6938 of August 31, 1981, which establishes the National Environmental Policy (amended by Law 7.804/89; regulated by Decree 97.623/89 and Law 8.028/90). Law 6.938/81 (the “Environmental Law”) establishes the objective of Brazil’s environmental policy: the “preservation, improvement and recuperation of the environmental quality, adequate for life, assuring the country of conditions for socioeconomic development, for the interests of national security, and for the protection of the dignity of human life.”

The Environmental Law is a well-developed regulatory framework which introduced important conceptual improvements, primarily by concentrating on environmental protection and not merely pollution. The legislation applies the “theory of the risk” to activity relating to strict liability for pollution. As a result, liability for pollution requires no evidence other than how much pollution has been caused and who caused it to find anyone strictly liable for environmental impact. Defenses of the polluter are limited to the denial of the activity and the inexistence of the damages.

The Environmental Law also establishes the means for implementing the environmental policy. These include the use of standards for environmental quality, environmental zoning impact, licensing and review of actual or potential polluting activities and the imposing of disciplinary or compensatory penalties on parties that fail to comply with environmental regulations.

Law 7.347/85 regulates class action lawsuits for damages caused to the environment and the consumer. This law enables environmental protection groups and any interested party to initiate an investigation whenever they find a potential environmental violation.

Companies which operate or own property in Brazil are subject to regulations dealing with air and water pollution, disposal of hazardous wastes, control of the use of toxic substances, and treatment of effluents. In addition to the Environmental Law which brought the broad concept of environmental protection to the fore, there is still considerable preexisting legislation concerning the control of pollution which remains in force.

Decree Law 1.413/75 provides that all industries must prevent or correct inconveniences and damages resulting from pollution and contamination of the environment. The law created “critical areas” which encompass the metropolitan regions of the main Brazilian cities. Law 6.803/80 provides that within the critical areas the industrial zones shall be defined and classified according to use and by saturation criteria. Pollution control programs and granting of licenses depend on the level of saturation in each zone. The states approve land occupation and use standards, and the municipalities may define their own urban zonings and impose local rules on environmental and pollution control.

With regard to reforestation policy, it is important to mention the Environmental Ministry ruling n.01 of September 5, 1996. This ruling establishes mandatory reforesting by legal entities and natural persons who utilize, deplete or otherwise transform forest resources throughout the national territory.

Environmental Public Agencies

The National Environmental Policy, as defined in the Environmental Law, provides for the various institutions responsible for the protection and improvement of the environment. This institutional structure is as follows:

The Environment Department is an agency of the executive branch which, among other functions, plans, coordinates and monitors all activities related to the National Environment Policy.

Act 99.274/90 institutes the structure of the National System for the Environment (SISNAMA), comprised of various bodies and entities of the union, states, municipalities and foundations instituted by the government.

(a) Governing Body: Government Council.

(b) Consulting and Deliberating Body: CONAMA (National Counsel for the Environment).

(c) Central Body: SEMAN/PR, which is coordinated by the Environment Department of the executive branch.

(d) Executive Board: IBAMA (Brazilian Institute for the Environment and Renewable Resources). This body is responsible for policing and enforcing all federal environmental laws. In its databanks, one can access all the information concerning fines or other environmental problems the target company may have had.

(e) District Bodies: Of the various agencies mentioned here, the state environmental bodies are the first bodies to be contacted by a prospective purchaser of a Brazilian company. The functions of these state agencies include regulating the use of environmental resources, conducting inspections and granting licenses. In the state of Sao Paulo the district body is CETESB (State Company of Basic Sanitation Technology). Every state has its own governing body.

(f) Local Bodies: These are bodies or municipal entities responsible for the control and inspection of conduct related to environmental impact in their respective jurisdiction.

Due to the many governmental bodies holding concurrent or common jurisdiction over environmental matters, it is not unusual for conflicts to arise which must, at times, be settled in the courts. It is expected that an Environmental Code will be promulgated in the not-too-distant future that will consolidate, improve and expand environmental legislation, thereby helping to diminish the problems caused by overlapping jurisidiction.

Noronha Advogados is an international law firm based in São Paulo, Brazil, with offices in Rio de Janeiro, Brasilia, Miami, London, Lisbon and Buenos Aires.