In addition to the Federal Constitution, which designates a specific chapter (Article 225) for the protection of the environment, the main national policies and environmental laws are:
There are other relevant policies regulated by law that have been established for specific topics:
The main principles are those already recognised internationally: polluter pays, prevention and precaution. Recently, national courts have been discussing the concept and breadth of the principle of prohibiting environmental retrocession.
Notable Developments, Regulatory Changes, Government/Regulatory Investigations
The biggest discussions regarding environmental law in Brazil in the last two to three years have taken place in the courts. The highlight has been the implementation of environmental legislation and the discussion on the conformity of actions and developments to the law. The jurisprudence follow-up has revealed a lack of unity in the decisions granted by the courts of the country.
Developments in Environmental Policy and Law
At the present moment, attention is drawn to the proposal to establish the General Environmental Licensing Law, which is being discussed by the National Congress. It intends to establish a new national regulation for the licensing of enterprises and activities that may potentially cause an environmental impact. The factors that have led to this development arise from the need to improve the existing mechanism and give greater agility to the licensing processes, responding to a desire of the productive sector, as well as the government, which intends, with the revision of the legal framework, to rekindle the economy.
Environmental NGOs or Other Environmental Organisations/Groups
Federal Law 7.347/1985 gives legitimacy to NGOs and other institutions for filing environmental class actions. In addition to the ordinary roles they play around the world, such as advocacy, these organisations in Brazil often propose class actions. Some of the most significant infrastructure projects installed, or being installed, in the last few years were and are subject to class actions filed by NGOs.
Federal Law 6.938/1981, which established the National Environment Policy, also established that the organs and entities of the federal government, the states, the federal district and the municipalities, as well as the public foundations, are responsible for the protection and improvement of the environmental quality, forming the National Environmental System (SISNAMA). Thus, each member of the federation, within its territory of jurisdiction, is responsible for environmental policy and enforcement. Complementary Law 140/2011 and the Federal Constitution set out the competences of each entity and body that is a member of SISNAMA, avoiding conflicts and overlapping.
In order to determine environmental incidents, the environmental agencies open administrative processes, in which the acts performed by the environmental agency and by the interested party are registered, which occurs in preventative protection (ie, environmental licensing processes) and in repressive enforcement of actions that are not in line with environmental legislation (ie, fine, warning, suspension). The environmental agencies rely on inspections, technical reports and other technical information produced during the process, by the body or entity itself and by the interested party, always observing the substantive due process of law.
Approach to Enforcement
In preventative guardianship, the approach is usually conciliatory. The environmental agencies allow the interested party to submit all the information for the analysis of their requirement by the environmental body.
In repressive guardianship, the regulation provides the interested person a possible correction of conduct and, in the case of sanctions, allows him or her to take measures for reparation or compensation that may result in the reduction of the fine.
Requirement for an Environmental Permit
Federal Law 6.938/1981 defines environmental licensing as an instrument of the National Environmental Policy. Environmental licensing is the administrative procedure under which environmental permits will be granted. The general rule establishes that activities or undertakings that use environmental resources, effectively or potentially polluting or capable in any way of causing environmental degradation, will depend on previous licensing (Article 2, item I of Complementary Law 140/2011).
Requirement for an Environmental Impact Assessment
The Environmental Impact Assessment, the most complete environmental impact measure method foreseen in regulation (the National Council of Environmental Affairs (CONAMA) Resolution 01/1986), is required for the environmental licensing of works or activities potentially causing significant environmental degradation. Ventures or activities that do not have significant potential may be licensed by presenting simpler assessment modalities, depending on the expected impacts for the installation and operation of the enterprise or activity. Among others, the following assessments should be highlighted: environmental report, environmental control plan and project, preliminary environmental report, environmental diagnosis, management plan, degraded area recovery plan and preliminary risk analysis (Article 1, item II, of CONAMA Resolution 237/1997).
The event of exception of environmental assessment is possible and must be verified in the concrete and specific case, and it must be registered and justified in an express statement of the environmental agency.
Obtaining Permits and Rights to Appeal
The environmental licences are obtained in proper administrative processes. In the event of rejection, the law and the Federal Constitution guarantee the interested party the right to file an appeal, addressed to the hierarchically superior authority of the one who decided to reject the requirement (Article 5, item LV, of the Federal Constitution and Article 56 of Federal Law 9.784/1999).
Integrated Permitting Regimes
In accordance with Article 13 of Complementary Law 140/2011, environmental licensing must take place at a single level of competence, which means that the interested party must apply for their environmental licence before a single environmental agency, the one designated by the legislation. The notion of integrated licensing or multiple licences does not correspond to the Brazilian licensing system.
Transferring Environmental Permits
The rule establishes that the licence is linked to the activity or to the enterprise, not tied to its holder, so that if there is a change regarding the person responsible for the activity, a transfer is not only possible but is legally due, observing the formal administrative procedures established by the environmental agency issuing the licence.
Time Limits and Onerous Conditions
Environmental licences are linked to the impacts of the installation and operation of the enterprise or activity. Therefore, they are limited to their characteristics, and conditions that are not related to the impacts of the enterprise or activity may not be imposed. The interested party can challenge the imposition of onerous and unusual conditions through appeal. The requirement of onerous or unusual conditions is contradictory to the notion of sustainability that must substantiate the act of issuing a licence. The enterprise or activity is only feasible from the environmental point of view if the conditions for its installation and operation are reasonable. If, for the issuance of the licence, it is necessary to meet costly and unusual conditions, the first premise of environmental, social and economic viability will not be fulfilled; in other words, the enterprise or activity is not viable and therefore must have its licence application denied.
Penalties/Sanctions for Breach
The penalties and sanctions provided for in Federal Law 9.605/1998 are:
There are three types of environmental liability under Brazilian law and those who break the law or cause environmental damage can be held accountable at the administrative, civil and criminal levels, independently.
Due to the regime of objective civil liability in Brazilian law, if there is environmental damage, the explorer of the activity (or the owner of the property), for the sole reason of dedicating himself to that activity, accepts the harmful consequences that are inherent to him. This means that the explorer of an activity can be held liable at the civil level for all the damages resulting from his activity, without being aware of the fault, simply by demonstrating the damaging event and its link with the activity. Thus, even if the activity is regular, if it results in damage, the explorer will be held responsible. Therefore, the one who acquires a property that has suffered environmental damage is equated to the explorer, so that he (the owner or purchaser) can also be responsible for the repair of the damage.
On the administrative level, according to Article 70 of Federal Law 9.605/1998, anyone who practises unlawful conduct can be held liable, even if it does not result in environmental damage. Thus, the explorer or property owner may be held liable at the administrative level if they have acted unlawfully.
On the criminal level, the liability only affects the one that causes the environmental damage, so the agent causing the damage receives the penalty. Also, according to Law 9.605/1998, the legal entity can be held accountable, not excluding the responsibility of the individual, author, co-author or participant of the same fact.
Accountability takes place independently at three levels: administrative, civil and criminal.
On the administrative level, liability is subjective. An infringement is not characterised by the occurrence of damage, but by the non-observance of legal regimes that may or may not have consequences. In other words, accountability for environmental infraction at the administrative level happens if there is an occurrence of a conduct (commissive or omissive) that can be characterised as in disagreement with a law. There is no need for concrete damage, but only irregular behaviour. The conduct may be attributed to the individual or legal person, public or private, who has participated, by action or omission, to practise the infraction.
On the criminal level, responsibility is also subjective and only affects the one causing environmental damage. As it is a very personal sanction, the agent causing the damage must fulfil the penalty. According to Law 9.605/1998, the legal entity can be held liable, not excluding the responsibility of the individual, author, co-author or participant of the same fact.
Regarding civil liability, an individual or legal person, whether public or private, who is directly or indirectly responsible for an activity that causes environmental degradation is considered a polluter, with objective liability being defined as imposing a liability on the polluter to recover and/or indemnify the damages caused to the environment, regardless of the existence of fault. Therefore, the one who directly or indirectly causes or aggravates the damage will be civilly liable. Whatever is the participation (direct or indirect) in the outbreak of damage, there is a duty to recover it or, as a last resort, to indemnify it.
In November 2016 a serious accident occurred in Mariana, Minas Gerais. As widely reported by the world press, the mining company's dams broke, causing a torrent of mud and debris that not only devastated the immediate region, but travelled hundreds of miles. The incident resulted in a number of fatalities and seriously affected large areas of land, dozens of watercourses and even the sea; in fact, all the ecosystems that exist in such environments.
To date, the mining company has already been fined more than ten times by the federal environmental agency, with fines totalling more than BRL300 million.
At the judicial level, the company, 22 individuals and three other legal entities have been named in a lawsuit pertaining to the practice of environmental crime. In addition, they are subject to a series of actions aimed at condemning the company and its parent companies, and compelling them to repair the damages caused and to indemnify the damages that are not being repaired.
All persons, individuals or legal entities can be held accountable at the three levels — civil, administrative and criminal — in the same way. When individuals and legal entities act as co-authors or participants, all individuals and legal entities may be held liable.
The rule is that only the company responsible for the activity, conduct or environmental damage is liable for the damage or environmental infraction. However, shareholders or parent companies can be liable if the company responsible for the activity presents a corporate framework that portrays “an obstacle to the compensation of damages caused to the quality of the environment” (Article 4 of Law 9.605/1998). Simple proof is required of the impossibility of the legal person honouring the payment of their obligations.
In principle, whenever the criminal responsibility of the company is found, there will also be present the fault of the administrator who has given the command for the conduct considered unlawful. Likewise, any employee who somehow has collaborated for the outcome or obeyed the illegal order will respond for the crime.
On the administrative level, the liability will remain with the company, unless the conduct of the individual is not confused with that of the company itself; that is, in the event that the director or employee acts for his own benefit, unrelated to the activity and interest of the company.
On the civil level, responsibility as a rule remains with the legal person, unless there is an event of disregarding the legal personality, or, as stated above, the individual acts for his own benefit, unrelated to the activity and interest of the company, in which case it may be directly sued.
There are some types of environmental liability insurance for legal entities in the market, but it is not possible to assert clearly that they are sufficient to insure all liabilities or penalties.
It is possible for financial institutions to be liable for environmental damages resulting from activities supported by them. The arguments derive from Law 6.938/1981, which instituted the National Environmental Policy and which was seen as quite broad in the definition of "polluter". In addition, the arguments are based on the objective theory applied to environmental civil liability (see Article 14, §1 of Law 6.938/1981) and imply joint liability.
The best way for creditors and funders to protect themselves is through implementing measures to monitor the activities financed by them, requiring the submission of documents proving the regularity of their works or projects, as well as audits, etc. In addition, mechanisms such as environmental insurance and environmental damage repair funds may be used.
Whenever a conduct or activity causes environmental damage, the causer may be required to repair the damage caused, restore the environment to its previous undamaged state, or to compensate for the environmental damage that cannot be repaired.
Brazilian law does not recognise exemplary or punitive damages. However, the STJ (Supreme Court) states that in setting the value of the conviction, the judge must take into account the theory of discouragement, which has a punitive character.
The reparative action of environmental damages can be collective or individual and collective actions are quite common.
Actions aimed at environmental accountability are already a common reality. For example, there are claims to repair damage allegedly caused to vegetation when it is suppressed without authorisation, to repair contaminated areas, to protect wildlife species and to protect indigenous rights.
Environmental civil liability has a joint and objective nature. Nevertheless, contracts may be used to transfer to third parties the liability for any environmental damage through specific clauses. However, this does not mean to say that those co-responsible for any environmental damage will not be responsible if the contracting party does not bear his obligations.
In terms of civil law, insurance is the contract by which the insurer undertakes, through the payment of the premium, to guarantee the legitimate interest of the insured, relative to the person or thing, against predetermined risks. Objectively, environmental insurance does not differ in its structure and characteristics from any other type of insurance. The distinction lies solely and exclusively in the object to be insured, or, in the wording of the civil code, in the "person or thing" to be insured. Environmental insurance, like indemnity funds, is an important instrument for implementing the principle of full compensation for environmental damage because it guarantees the availability of financial funds required to offer full reparation for the damage caused to the environment, even in the event of the insolvency of the polluter.
Even for solvent companies, in the event of a major accident – which is not uncommon in certain production sectors – environmental insurance alleviates the economic impact caused by heavy investments that may need to be made, not only in the remediation of the damage but also in the adoption of more efficient pollution control equipment. It means that an environmental accident does not necessarily shake the financial stability of the business and ensures the permanence of jobs and the normal continuity of activities, as well as covering the integral repair of any damage.
The Brazilian legal system, when establishing the National Policy on Solid Waste (Law 12.305/2010), has determined in Article 40 that “in the environmental licensing of enterprises or activities that operate with hazardous waste, SISNAMA licensing agency may require the contracting of a civil liability insurance for damages caused to the environment or to the public health, subject to the rules on coverage and maximum limits of fixed hiring in regulation”.
In practice, in Brazil environmental insurance timidly appears as an appendix of the General Civil Liability Insurance to cover only the damages resulting from “sudden or unexpected pollution” of lower cost and more modest requirements, rather than specific insurance of the “continuous pollution” of greater value; it always lacks a rigorous environmental diagnosis, so few are effectively prepared.
In any case, when the environmental insurance is instituted, it must be relevant to the size, nature, location and characteristics of the enterprise, which are reflected on the damage potentiality.
The most recent Brazilian legislation establishes preventative procedures related to contaminated areas, establishing some criteria and values related to soil quality regarding which chemical substances are present and providing guidelines for the environmental management of these areas.
Soil protection must be carried out in a preventative way or, when already contaminated, in a corrective way, always with the purpose of safeguarding its quality and socio-environmental function.
The management of contaminated areas occurs through procedures ranging from the identification of areas suspected of contamination to intervention with possible environmental remediation and control actions.
The areas in which contamination outbreaks are found must be reported by the environmental agencies. Providing this information to the public is relevant to ensure restriction of the use of these areas and to seek the recovery of their environmental quality. In addition, access to this information is an important tool so that those who have effectively contributed to the contamination of these areas are held responsible for repairing the environmental damage. Without such publicity and without preventative studies, the contaminated areas will be perpetuated and the responsibility for their remediation will simply be transferred to their new purchasers.
Definition of Contaminated Land
According to CONAMA Resolution 420/2009, which regulates the matter at the federal level, contamination is the presence of chemical substance(s) in the air, water or soil, resulting from anthropic activities, in such concentrations that restrict the use of this environmental resource for current or intended uses, based on human health risk assessment, as well as the assets to be protected, in a standardised or specific exposure scenario.
Legal Requirements for Remediation
In the proven occurrence of natural concentrations of chemicals that may pose a risk to human health, competent agencies shall develop specific actions to protect the exposed population. Article 7 of the CONAMA Resolution (see above) determines that the evaluation of soil quality, regarding the presence of chemical substances, shall be carried out based on the guiding reference values of quality, prevention and research. Soil Quality Reference Values (VRQs) for naturally occurring chemicals will be established by the competent environmental agencies of the states and the federal district.
Liability for Remediating Contaminated Land
The occurrence of environmental damage can trigger the imputation of responsibility on the three levels.
The Superior Court of Justice peacefully understands that the environmental obligations associated with real estate are of a propter rem nature. Moreover, the right of return action is traditionally guaranteed in Brazilian legislation.
Therefore, if contamination in a property is confirmed, even if it is carried out by a third party, the current owner of this property is jointly responsible for the contamination and, consequently, for the adoption of measures to manage the liability, including here the measures of remediation and/or control, until the conditions acceptable by the current legislation are reached.
Simultaneously, if it is proved that the contamination in the property was due to activities outside the current owner and the owner of this asset is responsible for the remediation of the liabilities, the polluter may suffer a return action because it was the cause of this pollution.
The infringement, on the administrative level, is characterised not by the occurrence of damage but by unlawful conduct, which may or may not result in environmental damage. The unlawful conduct of the agent is subjective and cannot be imputed to another person.
In this sense, if the owner of a contaminated property has not committed any illegal conduct, consubstantiated in the act of contamination itself (pollution), it is not necessary to speak about the imputation of administrative infraction.
However, it is worth bringing to light Article 13 of São Paulo Law 13.577/2009, which deals with the management of contaminated areas in the State of São Paulo and considers the owner of the area as legally and jointly liable for the prevention, identification and remediation of the area contaminated. It means that if the pertinent measures for remediation of the area and risk reduction are not adopted to the acceptable levels set forth in current legislation, it is possible to frame an omissive conduct, under Articles 41 and 42 of State Law 13.577/2009; Articles 82, 84, 85, 87 and 88 of State Decree 59.263/2013; and Article 62, item VII, of Federal Decree 6.514/2008.
Only if an unlawful conduct of pollution is found can a criminal responsibility, characterised as a crime under the terms of Article 54 of Law 9605/1998, be attributed.
Therefore, if contamination is confirmed and the pertinent measures for remediation of the area and risk reduction are not adopted to the acceptable levels set forth in the current legislation, due to the provisions of the legislation of the State of São Paulo, it is possible to frame an omissive conduct, under the terms of §3 of Article 54 of Law 9.605/1998 and in Article 68 of the same norm.
Ability to Transfer Liability to a Purchaser
As stated above, the Superior Court of Justice understands peacefully that the environmental obligations associated with real estate are of a propter rem nature.
In this way, the purchaser of a contaminated property, as he becomes the current owner alone, takes on the propter rem nature responsibility for the conservation of the property, with a view to achieving its social role.
In this jurisdiction, Federal Law 12.187, of 29 December 2009, instates the National Policy about Climate Change (PNMC), regulated by the Federal Decree of 15 September 2010. This law created and outlines the policy's principles, objectives, guidelines and instruments.
The greenhouse gases are carbon dioxide (CO₂) and methane (CH₄), and negative effects occur when those gases absorb part of the infrared radiation reflected by the Earth's surface, stopping the radiation from escaping into space and causing global changes in climate.
Many countries are now mobilised to study this new issue. Following the United Nations' Climate Change convention in 1992 and Environmental Issues and Development convention later the same year, the Kyoto Protocol – to which Brazil is a signatory – was eventually created in 1997. It is the most far-reaching commitment thus far in terms of climate change and is effective until 2020. The Kyoto Protocol resulted in, among other things, a search for "mechanisms of clean development" by which to reduce greenhouse gases.
The biggest challenge of Brazilian Agenda 21 is to internalise the principles and values of sustainable development in public policies, with the aim of generating commitment to environmental issues within the wider society. It posits a new partnership between government and individual members of society, encouraging a greater synergy regarding the national project of sustainable development. The key to its success will be a sense of shared responsibility, joint liability and integration.
To promote the reasonable use of energy, a proposal has been created to initiate a campaign against the waste of water and energy. This campaign should stress different aspects across the country and aim to create partnerships between large, medium-sized and small companies; share the concept of eco-efficiency as a synonym of rentability increase; reduce wastage of energy, water and other production resources; and stimulate the creation of cleaner and more sustainable production centres.
Emissions Trading Schemes
An environmentally friendly fuel emissions measure existent in Brazil's legal system is the market of buying and selling carbon credits. This was designed by the Kyoto Protocol, as a result of an ingenious Brazilian proposal that predicts certified emission reductions. Those who promote the reduction of fuel emissions have the right to account carbon credits and trade them with other countries that have yet to reach the targets. This is an incentive for "cleaner production" and aims for greater efficiency in the reduction of fuel emissions. According to the law, a part of the reduction promoted by those who pollute less can be converted in tradable credit. Those who pollute have to pay; those who do not can earn money.
The Brazilian Ministry of the Environment has established a special commission regarding asbestos and its health issues: CONAMA – Nacional Council of Environmental Affairs (Resolution 5, 4 January 1986). It has also established a number of resolutions about the asbestos issue, as follows:
Brazil has also signed two conventions about labour law and the issues surrounding asbestos: the International Labour Organisation, Convention 162 (Geneva, 1986); and the International Labour Organisation, Recommendation 172 (Geneva, 1986).
A statement specifying responsible use of this product is present in Law 9.976, 3 July 2000.
Responsibilities of the Landowner or Occupier
The landowner, as well as the occupier, has full responsibility for removing or managing asbestos. The rights and duties regarding a property are inherent to it (propter rem). In other words, the landowner has all the rights regarding his or her property, but he or she also has all the duties, such as the managing of asbestos and other harmful products.
Asbestos litigation is not unusual. The courts tend first to verify if there is a causal link between the harm of the employee and the company policy. If so, they will try to find which was the action or omission of the company that resulted in the employee harm. If the mentioned link is found, the court will condemn the company to pay physical and/or moral damages to the employee. The company can also be legally compelled to change its policy.
Establishing a Claim for Damages
In order for a claim in damages to be brought, actual physical harm does not have to be established: the eminent risk of harm is sufficient to give the employee the right to complain about his or her situation. Under the Consolidation of Labour Laws, 1943 (CLT), the employer is responsible for the employee environment inside the company and for any liability regarding the conditions of work to which his or her employees are subjected.
Significant Cases on Asbestos Liability
Examples of significant cases are as follows.
Ordinary appeal: negligence of employer in the provision of safe work environment. Emotional distress – proven.
“When the employer abstained from observing the labour law, demanding from his/her employee, in the strict performance of his duties, staying in an unhealthy environment due to the presence of asbestos, without providing a safe labour environment, the employer must answer for the damage caused due to this omission. Proved – the causal link between the employee illness and his occupation, the illegality and fault from the actions of the employer and the emotional distress suffered by the claimant; recognition of the liability of that person for the injury suffered by him results in the duty of indemnifying him for emotional distress. I beg for Judge Maria das Graças de Arruda França to adopt the report of her vote presenting at a Judgment Session.”
Proces: RO – 0001408-41.2011.5.06.0004. Editor: Eneida Melo Correia de Araújo. Date of trial: 16 October 2012, Second Panel. Publication date: 29 October 2012.
TRT-6 – RO: 00014084120115060004. Date of trial: 16 October 2012, Second Panel.
Labour illness: exposure to asbestos – inexistent causal link.
Event in which the existence of a causal link between the pathology that led the worker to death and the professional activities developed in favour of the employer has not been proven. Failure to configure the assumptions of civil liability (Article 927 of the Civil Code). Judgment of inadmissibility maintained.
TRT-4 - RO: 02045000820075040661 RS 0204500-08.2007.5.04.0661. Editor: Herbert Paulo Beck. Date of trial: 13 March 2014, 1st Labour Court from Passo Fundo.
As seen above, the causal link determines the existence of the right to indemnity, or its inexistence.
Federal Law 12.305, of 2 August 2010, instated the National Policy on Solid Waste, regulated by Federal Decree 7.404, of 23 December 2010. The law applies to individuals or legal entities, from private or public law, responsible, directly or indirectly, for the production or management of solid waste. To help to regulate this law, the federal government created the Interministerial Committee for the National Policy on Solid Waste, the aim of which is to support the structuring and implementation of the NPSW as it applies to governmental entities and private institutions.
The Brazilian Environmental Law adopts "strict liability", which means that, combined with the shared responsibility for the life cycle of the product (provided by Article 30 of the PNRS), the producer will always be responsible for the post-consumer products, even if the environmental damage comes from a third party.
According to Article 33 of the PNRS, every producer, distributor, merchant and/importer ("business sector") has the obligation to implement a Reverse Logistic System, consisting of the returning of the post-consumer product to the business sector to establish the adequate environmental destination of those post-consumer products; those who infringe this obligation are liable to administrative penalties such as warnings and fines. For now, the only products that are obliged to adopt the Reverse Logistic System are:
There is no information applicable in this jurisdiction.
In Brazil, the right of access to information by all is guaranteed by Article 5, items XIV and XXXIII of the Federal Constitution. The National Environmental Policy (Law 6.938/1981, Article 4, item V) had already listed the dissemination of environmental data and information as one of its purposes; Article 9, item VII provided for the national system of information on the environment – regulated by Article 11, item II of Decree 99.274/1990, as modified by Decree 3.942/2001 – as one of its instruments.
Law 10.650 was amended in 2003, regulating public access to the data and information existing in the agencies and entities that are part of the national environmental system. This law guarantees to any person, regardless of the evidence of specific interest, access to information through a written request, in which he or she will undertake not to use the information collected for commercial purposes, under the penalties of civil law, criminal law, copyright law and IP rights, as well as to mention the sources, if by any means, through which such data will be disclosed. The environmental agency response must be provided within 30 days from the date of the request, according to §5 of Article 2. In the event of overturn, the decision must be reasoned and subject to appeal.
In 2011, Law 12.527 of 18 November 2011 was amended and is known as the Law on Access to Information, which provides that any citizen, without having to state the reasons for a request, may – in person, by telephone or via the internet – request a copy of any public documents of the executive, legislative and judiciary departments, whether in the federal government, states and municipalities, or in the direct administration and private entities subsidised by governments, except when they involve the privacy of others or constitutional secrets.
Corporates are not required to disclose environmental information in their annual reports. Some citizens and public authorities and bodies seek, in the published financial statements, information about the company through the "social balance sheet", which serves as an instrument for the disclosure of social information. This statement is not yet mandatory, but its publication may facilitate the distinction between companies that are concerned with these aspects.
Environmental due diligence is now more typically conducted on M&A, finance and property transactions.
Environmental Liability for Historic Environmental Damage
The acquirer will be responsible for the asset, even if the environmental damage is previous to the deal, in the same way he or she will be responsible for any other damages.
Environmental Due Diligence by a Purchaser of Shares/Assets
The analysis of the following relevant environmental themes takes place in the sale/purchase of assets:
The seller is required to disclose environmental information to a purchaser in accordance with the principle of good faith governing the contractual relations, under the Brazilian Civil Code. However, many of the liabilities or potential environmental liabilities involving the asset under negotiation may not be known by the seller, which is why environmental due diligence becomes so important in this type of process.
Environmental Warranties, Indemnities or Similar Provisions
The indemnities or similar provisions typically given on a share or assets sale – risk allocation – differ depending on the structure of the transaction. Some common environmental risks and tools are:
Federal Law 11.101/2005 – which regulates judicial and extrajudicial recovery, as well as the bankruptcy of the entrepreneur and the company – provides in Article 83 a payment order, according to the classification of credits. The amounts of fines and indemnities for environmental damages can be categorised in item VII of the Article: "contractual fines and penalties for violation of criminal or administrative laws, including tax penalties."
The Brazilian national legal system is very restrictive to the creation of new taxes, including green taxes, requiring changes in the federal constitution to do so.
Thus, it is not a case of creating a green tax per se, but of the use of existing taxes in an extra-fiscal way to induce cleaner and preservationist behaviours.
Federal Law 6.938, of 31 August 1981, has the objective of preservation, improvement and recovery of the necessary quality for the life-supporting environment. In Article 17-B it gave to the Brazilian Institute for the Environment and Renewable Natural Resources (BAMA) and the Institute of Environmental Supervision and Control Fee (TCFA) the exercise of police power to control and oversee the potential polluting activities that use natural resources. Annex VIII of said law contains the potential polluting activities that use natural resources subject to the Environmental Supervision and Control Fee.
Regarding the new trends in environmental law, it is possible to foresee, mainly due to the environmental disasters that have occurred in Brazil in recent months, a strengthening of compliance practices, especially with regard to the prevention of damages. The environmental compliance sector is still a relatively new area and deserves thorough development, relying on professionals from the most diversified areas in order to be effective.
In the area of damage prevention, it is certain that the attorney's work is not sufficient, and it is necessary that the compliance department of large companies be formed by a multidisciplinary team, whose reports should also be audited by reliable external companies. When environmental risk is at stake, a checklist is not a satisfactory tool in order to achieve the required levels of good practice.
The recent oil spill accident on a large part of the Brazilian coast has also shown that the technical tools for preventative management should be strengthened, not only those in Brazil, but in several other countries that do not have instruments to detect the passage of “ghost ships” that can bring inestimable damage to nature, precisely because they are not subject to regulation, whether under international law related to the rights of the sea, or the domestic legal systems of countries.
Strong Growth Expected in Bio-inputs Market
In addition, innovation in agriculture is increasingly pervaded by the development of so-called bio-inputs, thus understood as having biological assets in their composition, such as fertilisers, inoculants, bioremediators, biological pesticides and plant extracts. These are alternatives composed of elements derived from nature itself (micro-organisms, macro-organisms, biological extracts, natural biomolecules or equivalent) intended for growth, increased immunity, and pest and disease control, among other functions, used in the production of plants and animals. Global markets for biodefensives and biofertilisers, two of the most representative bio-inputs, are expected to go by approximately 14.1% each over the next five years, while Latin America is the only region with the potential to witness even higher numbers (Mordor Intelligence). These forecasts follow expectations for the expansion of the organic market, which is expected to be around USD323 billion by 2024.
Bio-inputs are an alternative to chemicals in the context of sustainability, as they are renewable resources with positive impacts on the environment. Because certifiers require the demonstration and proof of farm-to-fork traceable products, the registration of such products with the relevant environmental bodies is also a new working trend for environmental advocates. However, despite such an advance and new regulation allowing on-farm production of unregistered biological products for own use, it is certain that, because the provisions of Federal Laws 7.802/1989 and 6.894/1980 that regulate inoculants, fertilisers and pesticides demand extremely bureaucratic testing and recording modalities from entrepreneurs, bioagroeconomic innovations – having their roots in co-operatives, small owners, start-ups and mid-size companies – have great difficulty moving forward.
Tackling the Waste Management Problem with Reverse Logistics
Another issue that shall also be the subject of attention is the environmental management of cities, which involves greater rigidity regarding the production and disposal of solid waste. Decentralisation of waste management is a problem to be faced by companies with national operations, wherein they have to adapt to rules from different federated entities, generating great legal uncertainty and inefficiency in meeting regulatory measures to protect the environment.
Although requiring a strong commitment from the public authorities with its implementation, the reverse logistics system, provided for in the National Solid Waste Policy, is a milestone in waste management as it has brought about the concept of “shared responsibility for the product life cycle”, and it also deserves to be distinguished as one of the trends for the coming years, especially in large urban centres. Involving not only the companies that hold the public services of urban cleaning and waste management in the process of its realisation, but also covering the manufacturers, importers, distributors, traders and consumers, the reverse logistics system indicates the necessity of rigorous planning and a great ability of companies in the development of strategies in the disposal process, in view of the mandatory recovery of their products.
At national level, some sectors are already involved in its implementation, but there still need to be further efforts in this direction. There are successful examples in some states, but it is worth mentioning the example of the State of São Paulo, which has already entered into terms of commitment to various production sectors and issued a standard to establish a procedure for incorporating reverse logistics in the context of environmental licensing.
Licensing at Forefront of Environmental Issues to be Addressed
Brazil does not yet have a General Law on Environmental Licensing. Today, the licensing rules generate legal uncertainty and make numerous enterprises unfeasible because they are multiple, confusing and, in some cases, subjective, allowing an excess of discretion for the licensing and supervisory bodies. In this sense, there is a consensus that Brazil needs to follow the examples of most developed countries and determine the licensing rite in federal law.
In light of the current discussion of an Act that deals with this issue, the search for a path of greater efficiency in environmental licensing, aimed at unlocking the production sector without compromising the environmental protection mechanism, shall continue to occupy the environmental agenda next year and shall involve enormous challenges, especially the intensification of dialogue between all social actors involved in this theme.
Another relevant topic within the government's concession and privatisation agenda concerns the environmental liability of concessionaires and investors for environmental damages that occurred prior to the auction. This is a relevant issue, as the Public Prosecutor's Office has been trying, in a wrongful way, to impute to concessionaires the strict liability for such damages.
Also, regarding privatisation processes, it is important to note that the privatisation of some activities, currently carried out by the government at zoos and research botanical institutes, should deserve special attention, including pro bono services, in order to ensure animal safety and welfare, as well as intellectual property of state research assets.
2030 Agenda Set to Shape Sustainable Development
Going through the trends for environmental law, the 2030 Agenda for Sustainable Development and commitments to the 17 SDGs (Sustainable Development Goals), an ambitious goal but one that should guide all our actions, is on the horizon. The SDGs were established in a participatory manner, building on the successful experience of the Millennium Development Goals (MDGs), which made major progress in promoting human development between 2000 and 2015.
As clarified by the document, partnerships shall be sought to “mobilize the means required to implement this Agenda through a revitalized Global Partnership for Sustainable Development, based on a spirit of strengthened global solidarity, focused in particular on the needs of the poorest and most vulnerable and with the participation of all countries, all stakeholders and all people. The inter-linkages and integrated nature of the SDGs are of crucial importance in ensuring that the purpose of the new Agenda is realized. If we realize our ambitions across the full extent of the Agenda, the lives of all will be profoundly improved and our world will be transformed for the better.”
The 2030 Agenda is, in essence, an action plan that shall serve as a strategy for economic, social and environmental development, which, in turn, highlights the interdependence and need for balance between these three dimensions in the planning and implementation of public policies in the world.
In 2020, the world shall review its progress in sustainable development through the SDGs, the Paris Agreement and the Convention on Biological Diversity, when it is to be hoped that it will have effectively embraced a new global agreement for nature and people.
If there is no global effort around the vital need for each SDG to be fulfilled, nothing shall happen and the 2030 Agenda shall be another rhetoric piece.
Last but not least, environmental legal practice needs to pay attention to the development of new technologies and artificial intelligence as well. Numerous new tools are being made available to lawyers, and good practice requires them to be assimilated to improve service delivery.