The Constitution of the Dominican Republic, enacted in 2010, recognises the right of the country's inhabitants to enjoy a healthy environment for the development and preservation of life, the landscape and nature.
The General Law of Environment and Natural Resources No 64-00 (GENRL) was enacted in 2000, which organised the legal and environmental framework in the Dominican Republic and established the basis for environmental protection, management, liability and the use of natural resources.
The basic values of the GENRL include the prevention principle, the polluter pays principle, the tort principle, the participation principle, the in dubio pro natura principle, the ab initio prohibition principle, the strict liability principle and the public order principle.
The legal framework is completed by several other legal instruments and technical regulations in areas such as water, waste, agrochemicals, soil, dangerous materials, the metal sector and air. Other key instruments include the law on protected areas.
The GENRL appointed the Ministry of Environment and Natural Resources as the “environment, ecosystems and natural resources policy-making body”. In addition, this entity has the responsibility to monitor the compliance of the environmental policy, through the system of environmental impact assessment and inspections.
On the other side, the Office for the Defence of the Environment and Natural Resources is a specialised department of the Attorney General’s Office, which exercises representation and defence of the state and society’s interests on environmental issues in all proceedings for violations of environmental legislation.
Finally, the National Council on Climate Change is in charge of promoting and following up all initiatives and policy regarding climate change.
The environmental regulator has broad powers to require documents, take samples during inspections, conduct site inspections, interview employees and take whatever other measures are needed to determine the existence of an infringement to environmental law.
Accessibility to the sites to be inspected has to be always available without restrictions in favour of the environmental authorities.
Also, according to the Environmental Authorisation Proceeding, the Environmental Agency will be in charge of following up, auditing, inspecting and verifying compliance of the operations under a certain environmental authorisation. If failure to fulfil the obligations is found by the environmental authorities, it shall enforce several penalties through administrative action that include suspension of activities and cancellation of the permit.
In this context, the Environmental Control, Surveillance and Inspection, and Administrative Sanction Enforcement Regulations establish that inspectors from the Environmental Agency (the Ministry of Environment and Natural Resources) are empowered to take all necessary measures as needed to prevent damage to the environment. These powers include confiscation of objects and related measures.
Prior to implementation, it is necessary to apply for an environmental permit or licence for every project, infrastructure work, industry or any other activity that may affect the environment and natural resources, the quality of the environment as well as the health of the population.
Depending of the impact level, there are four categories of activities and projects that require approval by licence, permit or certificate. The first two categories (A and B) require the arrangement of an environmental impact assessment. The remaining two categories (C and D) require that certain technical information is completed in order to evaluate properly if an environmental management plan is required (C). For certain activities or projects with minimum impact, category D will apply, and the environmental agency will issue the environmental permit.
The Environmental Authorisation Proceeding (EAP) – in force since September 2015 – includes two different lists of projects, one regarding the projects that need environmental authorisation to operate and a second list that includes those projects and activities that are exempt from requesting environmental authorisation. In this order, certain sectorial permits (non-objections) could be granted for those activities or minor projects that may have a particular impact on the environment.
Obtaining Permits and Rights to Appeal
The environmental permit is obtained after complying with the administrative process that has been developed in the compendium of environmental legislation; this establishes that the promoter of the activity must present several relevant documents with the information of the project, and then these documents will be evaluated by the environmental authorities, which will determine the category of the project through the references terms (TDR). After the promoter presents the environmental studies to the specifications of the ministry, another evaluation will be initiated and then, if the project complies with the regulations, the permit is issued.
Given that environmental authorisation – or its denial – is an administrative act, it may be challenged through the different remedies available in the Dominican legislation, including appeal or revision, as appropriate.
Another option available for the promoter of the project or activity would be to file relevant information that proves that the project or activity has been substantially modified and would then meet the requirements to be approved by the environmental agency.
As a last resort, and in the presence of a final judgment issued by the Administrative Court, it may be contested through an appeal to the Supreme Court of Justice.
Civil, administrative and/or criminal liability could result from environmental damage or breaches of environmental law, depending on the fault committed.
The GENRL sets forth the environmental liability by including the strict liability principle whereby the classic exclusions in liability clauses are not applied to environmental civil liability. Legal responsibility arises from the production of the damage itself. This doctrine establishes that anyone who causes damage to the environment and natural resources will be liable for it and will have to restore it to its previous condition (Article 169 of the Environmental and Natural Resources General Law 64-00). If that is not possible, additional compensation will apply.
Within the Dominican legal framework, the seller is responsible for any latent defects, even if unknown to him or her; this principle applies to contaminated land. Such liability may be reduced by contractual provisions at the moment of the sale. However, the provisions are not valid before third parties.
The GENRL sets forth environmental liability by including the strict liability principle. Anyone who causes damage to the environment and natural resources will be liable for it and must restore it to its previous condition.
Despite the liability imposed on the former landowner, restoration and compensation measures may be imposed on the purchaser or current operator.
Administrative liability has become the most frequent type of liability when a breach of environmental laws and/or permit occurs. The main administrative penalties foreseen in environmental legislation are the following: (i) a fine of up to 3,000 times the minimum wage, (ii) seizure and/or confiscation, and (iii) prohibition or temporary suspension of activities, or partial or total closing of the establishment.
As to civil liability, damages caused to third parties as a result of pollution are considered within the Civil Code. Several penalties can arise: (i) the order materially to restore the damage caused, (ii) an indemnity order in favour of the state (for the community where the damage was done) and/or any individuals affected, and (iii) an order to re-establish the environment to the condition prior to the deed, whenever possible.
As to criminal liability, competent criminal jurisdiction may impose penalties on individuals or companies which have infringed the Environmental General Law, among which are:
Regardless of the type of liability in question, the individual or company sanctioned will always have the corresponding remedies or procedural defence, in administrative and judicial courts.
In general, as per the provisions set forth in the GENRL, the consequences of environmental disasters originated by negligence shall be the exclusive responsibility of the persons or entities that caused the same, which shall restore the areas or resources destroyed or affected, if possible, and shall respond criminally and civilly for caused damages (Article 76). Additionally, the GENRL provides that, notwithstanding the sanctions provided by said law, anyone who causes harm to the environment or to natural resources shall have strict liability for damages that may occur, in accordance with said law and other supplementary provisions of the law. Also, said persons shall be compelled to repair materially at their own expense, if possible, and to indemnify accordingly.
When an infraction under the GENRL is committed by more than one person, everyone participating in the infraction shall be jointly and severally liable for economic damages. The GENRL also provides particularly that in the case of legal persons (eg, corporate entities), liability provided above shall be also established considering the participation of the directives and representatives of the legal entity that caused the damage.
Traditionally, at least for the more common business associations and corporate vehicles used in the Dominican Republic, the country's legal regime has provided for companies to have separate legal capacity (as a legal person) and assets and liabilities different and separate from those of their shareholders, members, directors, officers and employees. Dominican corporate law recognises the so-called principle of separate legal capacity of companies and partnerships, except in the case of businesses carried out by sole proprietors and partners in general or limited partnerships, forms of business associations provided under Dominican law in which the partners may each be liable for all the debts of the business (unlimited liability).
The system follows accordingly the legal assumption of a "corporate veil" and that actions of the corporation are not the actions of its shareholders; therefore, in principle, shareholders have no individual liability for the corporation’s actions. Their liability is limited to the sums that they have contributed to the company’s capital stock – that is, to the extent of their investments in shares or quotas of such company or partnership. In the absence of fraud or other deceptive practice, there is no personal recourse against shareholders for the obligations of the company. Thus, in principle, the corporate entity will protect the shareholders from liability beyond their investments – ie, shareholder’s liability is limited to the amount individually invested.
Based on the above, civil liability to a shareholder of a company that has caused damages to the environment or its natural resources may only be established in principle if the shareholder has participated directly in the commission of the pertinent actions or has authorised the same.
As provided by Article 171 of the GENRL, any manager, administrator, director or officer of a company authorising activities, actions or the developments of a project that causes harm to the environment shall be jointly and severally liable with the company and other individuals implementing the activity or development. Criminal liability of a representative or shareholders of a company, as per the provisions set forth in Articles 174 and 186 of the GENRL, may only be established upon such person’s wilful misconduct or criminal intent. In general, a person determined as liable for damages to the environment shall be required to repair and/or indemnify for such damages for an amount set by the court by taking into consideration the reports from the Ministry of Environment's technicians and inspectors, or any other experts appointed by the acting judge. A corporate entity may also be required to pay fines and a court may order its activities to be suspended from a month up to three years. Other criminal penalties may include imprisonment of up to three years.
As provided by Article 173 of the GENRL, the Ministry of Environment may require a mandatory civil liability insurance policy to cover damages to the environment, to the extent caused accidently.
A lender in general should not be liable for the actions of its borrower, or individuals acting on behalf of said borrowers, in the case of corporate entities.
Typically, lenders would include indemnification clauses in their loan documents and provide for affirmative and negative covenants on the borrower in relation to its environmental obligations. Monitoring the borrower's activities periodically and requesting evidence of formal compliance with any regulatory reporting requirements to the environmental authorities is also common for credit facilities in the Dominican Republic.
Civil liability, as set out in the Dominican Civil Code, arises from damages caused to third parties. This means that any damage caused by a person shall be paid to the victim (Article 1382 Civil Code and following), including the damages brought by negligence or imprudence, as well as the ones caused by dependents (children, employees, etc).
The Dominican legal system is a civil law system largely influenced by French law. Regarding damages, it does not allow the use of punitive damages. The criteria in this matter only includes the concept of compensation up to the amount of the damages caused to the victim.
So, the concept of punitive damages as a sanction or exemplary manner of making a statement on certain cases would exceed the limit of simple retribution. Nevertheless, within the "compensatory issue" the judge has a wide range of actions and could decide a compensation more or less severe, depending on the case or the circumstances, without trespassing the limit of the indemnity.
The GENRL set forth the possibility of class action for pursuing environmental claims. Certain restrictions regarding NGOs apply, as it is required that the NGO has as its main object the protection of the environment and should have been incorporated prior to the date of the environmental damage.
The last two years have seen much activity when it comes to international arbitrations related to environment. In one case, the former company that managed the main landfill in the Dominican Republic lost its contract due to environmental breaches; the arbitration process is still ongoing.
In another international case, an investor started an arbitration process against the Dominican government due to discrimination of investment according to the DR Cafta Investment Treaty, caused by the rejection of an environmental permit requested for the development of the second phase of a tourist and real estate project. This award was decided in favour of the Dominican State, based on a technical issue, the double-nationality of the investor, without addressing or considering the rejection of the environmental permit.
Environmental provisions in the Dominican Republic, as established by the GENRL, are of public order. Therefore, any agreements between the parties that lower liabilities in the case of environmental damage will have no effect on third parties, including the regulators.
However, it is possible to limit liability. Said contractual provisions may include the creation of an escrow fund to protect the purchaser in case of any event and would be valid among the parties.
An insurance bond to fulfil the obligations established in the Environmental Management Programme for the operation are mandatory and will be presented as a condition of approval of the environmental authorisation. Its renewal must also be filed yearly with the environmental regulator.
Additionally, the GENRL establishes the possibility of obtaining a mandatory civil liability insurance. However, the regulation is still pending approval.
Contaminated land was not specially regulated within the Dominican legal framework. Different dispositions apply, including certain provisions in the GENRL and special resolutions from the Ministry of Environment and Natural Resources. In general, the Dominican Republic does not have one landmark statute that regulates the remediation of contaminated land or provides guidance as to liability and apportioning such liability among multiple liable parties.
However, the GENRL sets forth environmental liability by including the strict liability principle. Anyone who causes damage to the environment and natural resources will be liable for it and will have to restore it to its previous condition. If that is not possible, additional compensation will apply.
Contamination to soil or groundwater must be rectified by the polluter who must also control the impacts and immediately notify the environmental authorities, as established by Article 83 of the GENRL.
The Environmental Agency may also use public funds to restore land contaminated by unknown persons.
The Dominican Republic has signed various treaties regarding climate change, such as the United Nations Convention on Climate Change in 1992 and the Kyoto Protocol to the United Nations Framework Convention on Climate Change, signed in 1996 and the Paris Convention on Climate Change.
Additionally, the Dominican Constitution recognised the importance of climate change for the Dominican territory and ordered the approval of territorial planning law considering this aspect. In this sense, the government created the National Council for Climate Change, which has the general goal of implementing renewable energy, energy efficiency, methane recovery, the use of cleaner fuels and reforestation projects among others within the framework of the Convention on Climate Change and the Kyoto Protocol.
As a consequence, the National Congress approved the Law on National Development Strategy 2010-30 (Law 1-12), which establishes the basic objectives for sustainable development and adequate adaptation to climate change.
There is currently a discussion of an initiative at the Congress that aims to establish the regulatory framework or policies, principles, strategies and instruments to manage the cause and consequences of climate change in the national territory.
There are no specific regulations establishing requirements to monitor and report greenhouse gas emissions, other than the requirements on air emissions monitoring. However, Law 1-12 on National Strategy of Sustainable Development (2010-30) refers to certain measures to be taken towards the reduction of greenhouse gas emissions, but, again, without establishing targets.
The Dominican Republic contributes with low emissions to the environment, having taken the commitment to reduce emissions by 25% under the "business as usual” (BAU) project by year 2030.
The Economic Development Plan, compatible with climate change, includes the strategy promoted by the Dominican Government to reduce emissions (GEI) for the following sectors: energy, transportation, tourism, cement, and solid waste. These sectors are the ones with the highest potential to achieve relevant reductions on emissions to the air.
The Management of Hazardous Substances and Chemical Waste Regulation, which makes reference to the National List of Hazardous Substances and Chemical Waste, classifies asbestos as a toxic substance. Any activity that involves management of these types of substances requires a permit and special registration from the Ministry of the Environment.
There is no general law on waste management in the Dominican Republic or recognition of the extended producer responsibility principle. However, the Ministry of Environment has approved several regulations for different types of waste. In this sense, it is relevant to mention the Regulation for Environmental Management of Non-Hazardous Solid Waste, pathogenic waste, hazardous waste, metallic waste and radioactive waste, among others.
In general, said regulations include specific dispositions in regard to labelling, elimination of hazardous materials, segregation, transportation and final disposal.
The Dominican Republic is also part of the Basel Convention on Trans-boundary Movements of Hazardous Waste and Disposal, which implies fulfilling certain obligations when it refers to the importing and exporting of such wastes.
In more recent updates, the Environmental Agency has issued a new ruling on waste with the purpose of promoting the recycling of certain waste. New obligations apply to single homes, buildings, towers, commercial business, industry and public institutions. In this sense, waste has to be segregated and disposed in two different bags: inorganic waste (paper, cartons, plastics, glass and metals) in one bag and organics (food, wood, etc) in another bag. Local authorities have to provide a selective service for handling the bags and transporting them to special areas where materials will be recovered for recycling. However, such provisions cannot be fulfilled by the citizens, as selective recovery services should be provided by the state.
Disposal of certain waste (hazardous or pathogenic, for example) that needs specific handling and compliance with disposal obligations has to be dealt with by authorised companies, among other requirements. In general, the producer would retain liability if said obligations were not fulfilled.
However, if the producer complied with all obligations and still there has been a damage to the environment, the producer's liability – even joint and several liability with the third party – would depend on the circumstances of disposal. The transfer of the waste would not release the producer from third-party claims.
The extended liability producer has not been included in the Dominican legal framework. This means that there is no legal obligation for a producer to design, take-back, recover, recycle or dispose of the goods once they become waste.
The Ministry of Environment issued a rule that set forth the principle of the three Rs (reduce, reuse, recycle) that is unlikely to be implemented.
As mentioned, in recent updates the Environmental Agency issued a new ruling on waste with the purpose of promoting the recycling of certain waste. New obligations apply to single homes, buildings, towers, commercial business, industry and public institutions. In this sense, waste has to be segregated and disposed in two bags: inorganic waste (paper, carton, plastics, glass and metals) in one bag and organics (food, wood, etc) in another bag. Local authorities have to provide a selective service for the handling of said bags and transporting them to special areas where materials will be recovered for recycling. However, certain aspects remain uncertain, especially regarding timings, implementation of selective recovery, etc.
In addition to the above, at the Congress there’s an initiative that aims to prevent the generation of waste, and establish the legal regime for the management, to promote reduction, reuse, recycling, use and other forms of recovery and integral management, as well as regulate contaminated sites. This initiative also includes the concept of the extended liability of the producer.
All citizens are responsible for notifying to the environmental regulator any event that could negatively affect the environment. If said damage could cause risks to the health of the community, it must be immediately notified to the Ministry of Health.
If the pollution was caused under operations authorised by the environmental permit, the operator has the obligation to inform the authorities as soon as possible, restore and fix the problems that caused the incident, and include this information within the Environmental Compliance Report filed every six months with the environmental authority. This event will be included in the report, as well as the description of the actions taken to restore the environment to the previous condition.
The GENRL establishes the right to free access to environmental information as it guarantees all citizens “access to truthful and timely information concerning the situation and condition of natural resources and the environment” (Article 6 of General Law 64-00).
In addition, the Free Access to Public Information General Law No 200-04 sets forth that “any individual has the right to request and receive complete, truthful, adequate and timely information from anybody of the Dominican State, as long as this access does not affect national security, public order, health or moral, or the right to privacy and intimacy of a third party or others’ right to reputation".
However, certain exceptions apply when "information may jeopardise public health and safety, the environment and public interest in general” (Article 17 of Free Access to Information General Law).
As mentioned, recently developments include the signature by the Dominican State of the Escazu Agreement, the regional Latin American environmental treaty that includes provision regarding access to environmental information and justice, as well as protection to environmental activists.
Corporate entities are not required to disclose environmental information in their annual reports. However, under the country's securities market law and regulation, a corporate entity issuing debt or equity instruments in said market may be required to disclose environmental information to the extent that such is deemed as "relevant information" – this is generally understood to mean any facts, circumstance or information that may influence the placing of a security, its value or the decision of an investor in negotiation with such security.
Environmental due diligence is typically conducted on M&A and finance deals, although in many circumstances, depending on the activities of the targeted business, the due diligence is limited to verifying formal compliance with the GENRL and its rulings of enforcement by assessing the existence of required environmental permits and compliance with reporting obligations.
A business deemed potentially and materially to affect the environment may require the appointment of special environmental consultants to carry out further and more extensive due diligence and assessment efforts.
In general, a seller would be required to disclose all environmental information to a purchaser.
In the Dominican Republic, there is only one type of green tax, introduced for the first time in 2012 with tax reform. This green tax consists of a reduction of the payment of the first registration of the car if the vehicle was considered of low environmental impact due to low emissions of CO₂.
Discussion about new green taxes began during 2018, due to the inclusion of a 0.2% green bond (tax) applicable to all goods, included in the bill on waste; this is currently under discussion in the Congress. Once the bill is approved and comes into force, this green tax would be used to assure a sanitation infrastructure to manage wastes as well as the application of extended polluter liability. Of course, the nature of this tax will be widely discussed and questioned.