Environmental Law 2019 Second Edition

Last Updated November 13, 2019

Peru

Law and Practice

Authors



LQG Energy & Mining Consulting is more than a law firm or a traditional consultancy – since 2008 it has provided comprehensive strategic advice covering a 360-degree services platform. Its multidisciplinary team of more than 70 professionals deals with, among others, strategic finances, legal and regulatory matters, land tenure, and social and environmental management. In environmental management, the team assists investors by providing technical studies such as environmental models and archaeological evaluations, and helps them in the elaboration and obtaining of all environmental requirements, such as environmental impact assessments (EIAs), water-use licences and deforestation authorisations, as well as offering environmental due diligence, and legal advice and representation in sanctioning procedures. The firm was recently involved in the development and approval of an EIA for Hydroglobal Peru for the transmission line of San Gaban III (an investment of USD85.13 million) and the EIA for Inland Energy for the hydropower plants Lluclla and Lluta (an investment of USD970 million). It is currently working on the EIA for Monte Azul for a storage and dispatch terminal for fuels and gas (an investment of USD90 million).

The main key policies, principles and laws that govern environmental protection in Peru are included in the constitution, which establishes the right of all people to live in a balanced and adequate environment for their life development. It also states that natural resources are part of the nation's patrimony and the state can grant rights to third parties for the management of these natural resources, overseeing their performance.

The General Law of Environment (Law No 28611) expands on this and establishes the rights for sustainable development, access to information in a timely manner, participation in environmental management and decision-making processes, and access to environmental justice. It also mentions that with the right to live in a healthy and adequate environment, comes the general duty to contribute to effective protection of the environment. It also institutionalises the principles of sustainability, prevention, precaution, internalisation of costs, environmental responsibility, equity (policies must contribute to the eradication of poverty) and environmental governance (there must be harmony and agreement across institutions and regulations).

The Organic Law for the Sustainable Use of Natural Resources (Law No 28245), establishes the means by which third parties can access natural resources, such as concessions, authorisations, permits and licences.

Peru is also bound by international environmental agreements that have been signed and ratified, such as the Convention for Biological Diversity, Framework Convention of Climate Change, the Ramsar Convention, the Basel Convention and CITES, among others. In 2018, Peru signed the Escazú Agreement about Access to Information, Public Participation and Access to Justice in Environmental Matters (pending ratification).

Since the creation of the Ministry of Environment in 2008, all environmental competencies have been progressively transferred from different sectors/ministries to the environmental sector in order to standardise criteria in proceedings and regulations. In the last three years, this has been very noticeable within the competence of evaluating environmental impact assessments (EIAs); transferred from most sectors to SENACE (National Environmental Certificate Service), which is part of the Ministry of Environment.

Ministries retain the competence of promoting the activities of their sector and establishing their regulations and policies. Institutionally, a recent change occurred in 2017 when the former Vice Ministry of Energy was divided in two, creating the Vice Ministry of Electricity and the Vice Ministry of Hydrocarbons.

In terms of enforcement, OEFA (Environmental Assessment and Control Agency), also part of the Ministry of Environment, is in charge of overseeing the fulfilment of environmental commitments under EIAs and regulations. 

It is also worth mentioning that there are specific cases where regional governments have competence in EIA evaluation and surveillance, due to the decentralisation process.

In addition, specific natural resources have their own authorities:

  • water (inland): National Water Authority, Ministry of Agriculture;
  • forest and wildlife: National Service for Forest and Wildlife, Ministry of Agriculture; and
  • fisheries and hydrobiology: Vice Ministry of Fisheries, Ministry of Production.

In the administrative jurisdiction, OEFA is in charge of supervising compliance with EIA commitments and environmental laws. If during regular supervision OEFA discovers a possible breach of law, it will start an investigation. This can also happen as a result of a public denouncement received by OEFA. When decentralisation has occurred or if the sector has not been transferred to OEFA, then the regional government or the correspondent ministry will fulfil such a function. OEFA oversees these entities to ensure they comply with their function.

Titleholders are compelled to receive the authority and provide access to the projects area, documentation and all information required. Failure to comply, may be considered an infringement.

In Peru, all economic activities that are likely to have a significantly negative environmental impact are required to obtain environmental certification prior to their development. According to the magnitude of the negative impact, they are classified as:

  • Category I for low-impact activities requiring an Environmental Impact Declaration (DIA);
  • Category II for moderate-impact activities requiring a semi-detailed Environmental Impact Assessment (EIAsd); or
  • Category III for high-impact activities requiring a detailed Environmental Impact Assessment (EIAd).

The evaluation process aims to identify, evaluate and describe the environmental impact that will occur during execution of the economic activity. The resolution approving the environmental study (of any of the three categories) constitutes the environmental certification.

The Ministry of Environment keeps an updated list of the types of project that need one of these three environmental studies. If the project is not on the list, depending on the sector, a Technical Impact Report (FTA) may need to be presented. If this is not the case, then the project is still bound by all the environmental regulations. If it is not clear if the project is on the list, then the matter proceeds to a formal consultation at the Ministry of Environment to clarify if the project requires an environmental study.

Once environmental certification has been obtained, the titleholder can proceed to obtain the other required permits and authorisations, for water use, deforestation, etc, from the corresponding authority (eg, National Water Authority, National Service for Forest and Wildlife).

If the EIA, permits or authorisations are denied, the titleholder can ask for a review, or they can appeal the decision to the same entity through a second instance. If the decision is still not to their satisfaction, they can appeal before a judicial court.

In order to simplify environmental requirements, SENACE and the Ministry of Energy and Mines are applying a new process called “Integrambiente” or global certification, where in the same process of EIA evaluation, the authority can approve other related environmental permits and authorisations (possibly up to 14 related permits). 

Environmental regulations classify infringements according to the detrimental effect they have on the environment and human health. The authority can impose administrative measures as well as monetary sanctions.

Monetary Sanctions

In terms of monetary sanctions, these can go up to 30 000 Tax Units (approximately USD38,181,818). The fine to be imposed cannot be higher than 10% of the gross annual income received by the offender in the year prior to the date on which they committed the offence. Where the titleholder proves that they are not receiving income, they must provide the information required to estimate their expected income; and if they have not received income from the project because the economic activity is under closure or has been abandoned or another situation of a similar nature, the titleholder must provide information regarding gross annual income received for the previous two years.

Administrative Measures

In terms of administrative measures that can be imposed during the investigation of an environmental law infringement, these can take the form of particular mandates (ie, to fulfil technical studies or environmental monitoring), preventative or cautionary measures (ie, temporary closure, and seizure of machinery, merchandise or tools; or destruction of infrastructure). The titleholder is bound to comply or face monetary sanction. They may appeal this, or ask for a review of these measures.

Once the investigation has been finalised, in addition to the fine, the authority can impose a corrective measure to reverse or reduce the damage to the environment, natural resources or people’s health (ie, seizure of goods, total stoppage of activities, restoration or compensation). The titleholder is required to report the fulfilment of these measures. Failure to comply, may result in a fine.

The titleholder has the opportunity to reduce a possible fine by 50% by accepting responsibility in the early stages of the procedure, or by 30% after presenting their defence discharges. Once the fine has been applied, they can reduce it by 10% by paying within 15 days of being notified of the resolution.

If the infringement is also considered to be a criminal offence (ie, contamination of natural water resources, deforestation without authorisation, etc), then the administrative authority may inform the Environmental Prosecutor to start a criminal investigation against the party that is legally responsible (eg, the CEO or general manager of the titleholder).

Historic environmental liabilities follow the titleholder that created them. Only in a case where it is not possible to identify the responsible titleholder, will the state take charge of remediation or promote the remediation of the new titleholder.

Identification and Remediation of Contaminated Sites

As a general framework for contaminated sites, it is up to the new operator or landowner to identify possible contaminated sites in its project area. If the existence of contaminated sites caused by past activity is determined, the current owner of the project or activity is not required to continue with its evaluation and subsequent remediation, unless it is responsible for such contamination or has assumed responsibility for remediation of the site by contractual agreement with the party responsible for the contamination.

If the owner is not responsible for remediation, the owner must apply measures to protect the integrity and/or health of people from the dangers associated with the contaminated sites identified within their facilities, wherever necessary. The owner may voluntarily take on the remediation of contaminated sites, without prejudice to the right of repetition that may be exercised against the party responsible for the contamination.

The Mining Sector

In the mining sector, environmental liabilities are regulated by Law No 28271 and its regulations are approved by DS No 059-2005-EM. The Ministry of Energy and Mines is in charge of identifying those responsible for mining operations that have abandoned deposits of waste, labour or mining facilities, generating environmental liabilities in their various modalities. When an environmental liability is discovered, the ministry has to identify the responsible party in order to proceed with remediation. If the responsible party is not found, then the ministry has to proceed with a Closure Plan for the Environmental Liabilities.

If the liabilities have economic value and could be subject to reuse, the new mining titleholder can request permission from the ministry to reuse them, taking into consideration environmental management, mitigation, remediation and closure measures, and including environmental guarantees.

The mining concession holder whose area includes mining environmental liabilities that may be reused, must request permission for this within the period established in the regulations. After this period, the Ministry of Energy and Mines may authorise reuse by third parties.

If the mining environmental liability that can be reused is located in an area of free availability, any interested party may request the area and propose its reuse.

The titleholders of mining activities that reuse mining environmental liabilities will not have the right to any type of reimbursement from the party responsible regarding the expenses of remediation of the environmental liability. However, those guilty of the environmental liability will continue to be jointly responsible before the state until the end of the post-closure stage.

As per 2019, the ministry has identified about 8,448 mining environmental liabilities. The full updated inventory was approved by DS No 010-2019-MEM/DM.

The General Environment Law (LGA) includes a definition of environmental damage and it states the general principle by which a party that may cause environmental damage must bear the costs involved in its prevention or its mitigation.

The LGA defines environmental damage as "all material impairment suffered by the environment or any of its components, which may or may not contravene any legal disposition, and which generates current or potential negative effects”. It also establishes that: “Everyone has the right to quick, simple and effective action, before the administrative and jurisdictional entities, in defence of the environment and its components, ensuring the proper protection of the health of people individually and collectively, the conservation of biological diversity, the sustainable use of natural resources, as well as the conservation of cultural heritage linked to those. ”

The legitimacy to act in the case of environmental damage is established in the Civil Procedure Code in its article 82° and in article 143° of the General Environmental Law, establishing that any natural or legal person is entitled to exercise the action referred to in this law, giving legitimacy to any natural persons to file an action, and not only to the public ministry, regional governments, local governments, population or communities in whose jurisdiction the environmental damage occurred. The main difference in civil jurisdiction is that it establishes that all compensation shall go to the local government in order to repair the damages.

The main difficulty in the process is that those who claim to have suffered the actual or potential damage, must prove that the unlawful or illegal act is what caused the damage, in addition to accrediting it, and sometimes this is very difficult or even impossible, if the damage has occurred over time. 

Limits to liability are mentioned in Article 146° of the LGA. It states that there will be no responsibility in the following cases: 

  • when concurring a malicious action or omission of a person who suffered compensable damage; 
  • when the damage or environmental degradation is exclusively due to an inevitable or unavoidable event; and 
  • when the damage or environmental degradation has been caused by an action or omission which does not breach regulations, and which took place with the prior consent of the injured party and with knowledge of the risk of harmful consequences arising from such action or omission.

The current civil liability system regulated in the LGA, Civil Code and Civil Procedure Code, present difficulties with respect to the probative activity for environmental damages and the economic quantification of the damage. The legislation in Peru still contains gaps on the causal link and the proof of damage, especially if it is “potential”.

In a recent Resolution of OEFA (Resolution No 1060-2019-OEFA/DFAI), in the case of an oil spill in the rivers of the Amazon region, OEFA proved the causal link between the spill and the damage to flora, fauna and health, and also proved that the spill was linked to a breach of the EIA mandate requiring periodic maintenance of pipelines, after carrying out a series of on-site studies. OEFA determined a fine of 20,780.53 Tax Units (approximately USD26,447,947).

According to regulations in Peru, titleholders of a project or activity (whether corporate entities or individuals) are liable for environmental damage or breaches of environmental law in terms of administrative, civil and criminal law.

Administrative Law

This is the more common form of liability and generally involves fines, as well as administrative and corrective measures to repair the damage. Administrative liability is imposed by OEFA, the ministries (where the function has not yet been transferred to OEFA), or the regional governments (where the function has been transferred from the ministry due to the decentralisation process). Also, specific entities have competency for certain resources management, such as the National Water Authority when the damage concerns natural water resources or a breach of water regulations, or the National Service of Forest and Wildlife when the damage concerns a forest, wildlife or a breach of its regulations.

Civil Law

This is not really widely used due to the lack of specific knowledge of the courts and the long processes involved; it results from civil lawsuits, either in the form of collective actions or those based on the Liability Law, and generally results in judicial rulings ordering polluters to carry out restoration, compensation or remediation.

Criminal Law

This can be used in the case of acts that are considered environmental crimes. When the crime is committed by a corporation, the main representative of the corporation is regarded as the person responsible for the acts. See 7.1 Directors and Other Officers.

In March 2008, a specialised body of Environmental Prosecutors was created to investigate environmental crimes (Fiscalías Especializadas en Materia Ambiental or FEMA) in 11 regions: Piura, Loreto, Amazonas, Ucayali, Junín, Arequipa, Cusco, Pasco, Puno, Ayacucho and Lima. Today, there are 41 FEMA around Peru.

In May 2018, the first Specialised Court in Environment was established in Madre de Dios (part of the forest region). Now there are 12 Specialised Courts in the following regions: Arequipa, Lambayeque, Piura, Cusco, Arequipa, Tacna, Ucayali, Huánuco, Puno, Loreto and Lima. The Ministry of Justice has confirmed they will establish more of these courts around Peru.

In September 2019, the Environmental Justice Observatory of the Judiciary was created, as a virtual platform that will provide information and knowledge to the judiciary, native communities, civil associations, universities, private companies and citizens, around public policies and the debate between the relevant actors in environmental justice in Peru.

The general rule is that when the state identifies the cause of environmental damage and can prove who is responsible, the cost of the damage must be borne by the polluter. However, when the state cannot identify the cause or cannot obtain from it the economic means to repair the damage, the cost of the damage must be borne by society and repaired by the state.

When the entity responsible for the environmental damage or breaches of environmental law has been identified, only the entity itself is held responsible, unless it falls under a case of joint liability with a shareholder, parent company or similar entity.

Cases of joint liability must be explicit in the law; for example the liability for damage caused by the subordinate (Article 1981 Civil Code), which states that if one party is in charge of another, the first party is also responsible for damage caused by the latter party, if that damage was done in the course of duty or in compliance with the respective service. The direct author and the indirect author are subject to joint and several liability.

If several parties are responsible for the damage, they will respond jointly and severally (Article 1983 Civil Code). However, if one party paid the entire compensation, they may request reimbursement from the other parties, and it is up to the judge to determine proportional payment according to the seriousness of the role of each of the participants. When it is not possible to discern the degree of responsibility of each party, the responsibility will be equally distributed.

See 6.2 Shareholder or Parent Company Liability. If a natural person is liable, they are subject to the same liabilities and penalties as a corporation. In addition, when a violation gives rise to criminal liability, the individual may be subject to incarceration.

In recent years, criminal action in relation to environmental issues has increased significantly and there is now a specialised body under the prosecutor's offices in charge of all investigations in environmental matters. 

Criminal action will proceed only against individuals, therefore in the case of a corporation, it will proceed against the corporation's representative (ie, the CEO or general manager) who will be held responsible for criminal offences against the environment. Sanctions can range from two to ten years of incarceration, with 60 to 1,000 fine-days.

In January 2018, a modification in criminal liability came into force (as a requirement of the Organisation for Economic Co-operation and Development – OECD) establishing criminal liability for companies in specific crimes such as bribery offences, money laundering, crimes related to illegal mining, organised crime and terrorist financing. Applicable sanctions consist of fines, disqualifications, cancellation of licences, closure of premises or establishments, and the dissolution of the legal entity.

Peruvian legislation now recognises the independent criminal responsibility of a legal person for this sort of crime. 

Bear in mind that under Peruvian regulations, private law entities are legal entities, as well as associations, foundations, non-governmental organisations and non-registered committees, irregular companies, entities that administer an autonomous heritage and companies of the Peruvian state or mixed economy societies.

It is possible to insure against some liabilities in civil and administrative law, but not against criminal liability. 

As lenders, financial institutions are not liable for environmental damage or breaches of environmental law committed by the borrower. Nonetheless, as any problem with the continuity of a project might affect the lender's ability to meet their commitments, financial institutions consider environmental and social risks in their evaluation. In that sense, international organisations such as the World Bank have promoted the adoption of environmental risk assessment guidelines prior to determining a loan and its conditions.

In Peru, the Superintendency of Banks and Insurance (SBS) approved the Regulation for Environmental and Social Risks Management (Resolution SBS No 1928-2015) in 2015 with the aim of establishing minimum requirements for social and environmental risk management for projects with a total investment of over USD10 million, in order to promote good practices and prudent risk-taking in financial companies. This regulation does not seek to transfer to financial companies the responsibilities or functions of government entities such as SENACE in evaluating and determining the environmental viability of a project through the EIAs, nor does it hold those companies accountable for possible breaches of social and environmental regulations by a project's borrowers or a project’s primary providers. 

Lenders will often proceed with a due diligence before extending credit, in order to understand the risk, including environmental and social risks, as well as properly value any collateral. They may also include covenants and clauses limiting the use of the property or policing housekeeping and compliance. Insurance may be available.

As mentioned before, civil claims are not widely used in environmental matters due to the lack of specific knowledge of the courts and the long processes involved. According to the Civil Code (Article 1969°), any person who intentionally or negligently causes harm to another party is obliged to indemnify that party. The disclaimer for lack of intent or fault lies with its author.

A key issue is the proof of causal nexus. Once the cause is identified and the damage determined, the claim can be evaluated and remedies can be established to repair the damage and compensate the victims.

Punitive damages are a legal institution proper to common law, which concern a sum of money granted to a victim autonomously or independently of what the victim can receive as compensation for damages. Punitive damages have a different purpose to damage compensation or victim compensation, as they seek to punish the perpetrator of the damage for acting intentionally or for demonstrating malicious conduct of serious indifference towards the victim.

The main function of Peruvian regulated civil liability is not to punish or disincentivise, but rather to promote satisfaction and reparation. Whether an act was committed intentionally or by negligence, the damage and compensation are considered the same. In Peruvian legislation (Civil Code Article 1985), compensation includes consequences arising from an action or omission, generating the damage, including loss of earnings, damage to the person and moral damage, and there must be an adequate causal relationship between the fact and the damage caused. Thus, punitive damages are not applicable in Peruvian legislation. 

Nonetheless, in a recent labour case of unjustified dismissal, the court established punitive damages payable by the employer. The judges stated that although punitive damages are not regulated in Peru, they can be considered an extension of “moral damage”. These criteria have not (yet) been appliedto environmental issues in Peruvian jurisprudence.

Class or group actions are possible for environment-related civil claims. In that sense, the Civil Procedure Code (Article 82°) establishes rules for sponsorship of diffuse interests such as environmental interests.

Diffuse interest is where ownership corresponds to an undetermined group of people, with respect to goods of invaluable heritage value, such as the environment, or cultural, historical or consumer heritage.

These claims may promote or intervene in this process by the public ministry, regional governments, local governments, peasant or native communities, in whose jurisdiction the environmental or cultural heritage damage occurred. Also, non-profit associations may have the right to stand in a duly motivated resolution, according to the judge's criteria.

The Peasant Rounds that accredit legal status have the same rights as the Peasant Communities or the Native Communities in places where these do not exist or have not appeared in court.

If processes related to the defence of the environment or cultural property or values are promoted, without the intervention of the local governments indicated in the previous paragraph, the judge must incorporate them as necessary parties to the case.

In these cases, a summary of the claim will be published in the Official Gazette El Peruano or in another that publishes the judicial notices of the corresponding judicial district. The rules on subjective accumulation of claims in what is pertinent are applicable to processes of diffuse interests.

If the judgment does not cover the claim, it will be raised in consultation with the Superior Court. The final sentence that declares the claim founded will also be mandatory for those who have not participated in the process.

The compensation established in the sentence must be handed over to the district or provincial municipalities that intervened in the process, so that it may be used to repair the damage caused or to preserve the environment in its constituency.

A very well-known landmark case in civil jurisdiction is the Choropampa case.

On 2 June, 2000, a transport truck spilled 151kg of inorganic mercury which extended along the highway, crossing the town of San Sebastián de Choropampa. 

As a result, hundreds of people had contact with the substance, which was the property of a mining company, spilled by a transportation company. Indeed, the inhabitants in the immediate vicinity collected some of the spilled mercury, not realising that it was a toxic substance. Within a few hours many people had been attracted by the news of the presence of this mineral and had come into contact with it. Also, in the lawsuits that were filed, it was reported that the mining company began a campaign to recover the metal, offering money per kilogram of recovered metal, without informing the population that it was a toxic material.

A lawsuit was filed in 2002, against the mining company, the transportation company and the driver, in which the main claim was compensation of USD4,200,000 for non-contractual civil liability, ie, material damage (to the environment and people’s health) and moral damage. 

The court ruled that the mining and transportation companies were both jointly responsible.

In a controversial ruling in 2008, the lawsuit was dismissed because the mining company signed extra-judiciary individual agreements (with approximately 300 people) in which they accepted compensation and agreed not to issue a lawsuit; and these agreements were regarded as valid.

A recent ruling in 2017 (IX Pleno Casatorio Civil Casación No 4442-2015-Moquegua), has modified the jurisprudence establishing that extra-judiciary agreements may be annulled if the court finds reasons for annulment, even if the parties have not claimed it. 

The ruling of 2008 (I Pleno Casatorio Civil Casación 1465-2007-Cajamarca) established that extra-judiciary agreements were valid and, therefore, a victim of environmental or health injury could not overrule them and start a lawsuit. See 9.4 Landmark Cases. Nonetheless, the more recent ruling in 2017 (IX Pleno Casatorio Civil Casación No 4442-2015-Moquegua), modified the jurisprudence establishing that extra-judiciary agreements may be annulled if the court finds reasons for annulment, even though the parties have not claimed it. Those reasons could be related to human rights and their inalienable nature, including environmental matters and the right to live in a healthy environment.

Binding insurance is determined by law; for example, insurance for all vehicles against accidents and third-party claims (Civil Code Article 1988°). 

Regarding environmental issues, there is no general binding insurance, but there is a requirement that all titleholders of risky projects must grant a guarantee for when their project is closed or abandoned. This guarantee serves to ensure the implementation of recovery or compensation measures in the area where the project took place. 

The key laws governing contaminated land are those regarding soil quality and soil protection. In this regard, the Ministry of Environment has set Environmental Quality Standards (ECA) for natural components such as soil, water and air. In the case of soil, they are approved by DS No 011-2017-MINAM which sets the highest parameters that soil can have to be considered in a “healthy” state. 

DS No 012-2017-MINAM approved Criteria for Contaminated Land Management. It establishes three stages for ECA application:

  • identification: all titleholders must carry out historical research and a technical survey to identify the possible existence of a contaminated site within their project’s area. If they identify a possible contaminated site, then it must be sampled to determine if it meets the ECA. For new projects, the results are usually placed within the EIA’s project; 
  • characterisation: the titleholder must characterise the contaminated site and prepare a Soil Decontamination Plan (according to RM No 085-2014-MINAM, Guidelines for Soil Sampling and the Elaboration of Soil Decontamination Plans), which must contain remedial actions, the development of sampling detail, a characterisation study and the Health and Environmental Risks Assessment (according to RM No 034-2015-MINAM, Guidelines for the Elaboration of Health and Environmental Risks Assessments on contaminated land); and
  • remediation: after the Plan's approval, the titleholder must implement all measures towards remediation and the fulfilment of ECA parameters. The Plan must be carried out within a three-year period, which may, in exception circumstances, be extended by an additional year or longer. After executing the Plan, titleholders must submit a report.

RM No 125-2014-MINAM approved the Protocol for Environmental Emergency Sampling. This applies to ongoing projects which, during their activities, may cause contamination of land. The Protocol establishes the necessary steps in terms of sampling, and measures to reduce, control and mitigate negative effects.

Peru has signed and ratified the United Nations Framework Convention on Climate Change (UNFCCC) Kyoto Protocol and is part of the Paris Agreement. Its system therefore includes principles such as: prevention, precaution, common but differentiated responsibilities, and transparency. 

As one of the Annex I countries of the Kyoto Protocol, Peru did not have to comply with national targets to reduce greenhouse gas emissions. But with the Paris Agreement scheme of National Determined Commitments (NDC), Peru has set different goals in terms of reducing greenhouse gases. 

In 2009, by DS No 012-2009-MINAM, the Ministry of Environment enacted the National Environmental Policy. As part of its objectives, it establishes the fostering of appropriate technologies to adapt to climate change and to mitigate greenhouse gases. In this regard, DS No 009-2009-MINAM establishes the objective for public entities to implement eco-efficient measures in their installations and in their activities. In 2015, the ministry approved the National Strategy on Climate Change by DS No 011-2015-MINAM.

With the aim of involving all sectors and aligning all government and public society efforts in climate change, in March 2018 the congress approved the Framework Law on Climate Change (the first of its kind in Latin America). The Climate Change Law established that the Ministry of Environment will provide guidelines to add to the analysis of climate risk and vulnerability, as well as the mitigation and adaptation measures relating to climate change in the EIA process. The rulings of the law are currently under indigenous consultation process according to ILO Convention 169.

In line with the Paris Agreement, Peru has determined its own contributions to reduce greenhouse gas emissions by 20%, as compared with a business-as-usual scenario in 2030. 

For this purpose, Peru has set 91 adaptation measures corresponding to 46 products. The measures are distributed among the following areas: agriculture, 17 measures (19%); forestry, 12 measures (13%); fisheries and aquaculture, 18 measures (20%); health, 14 measures (15%); and water, 30 measures (33%). 

Peru has also set 62 mitigation measures, corresponding to five emission sectors:

  • energy, consisting of measures in energy – stationary combustion and energy – and mobile combustion;
  • industrial processes and product use;
  • agriculture;
  • land use, change of land use and forestry; and
  • waste, conforming with measures in solid waste disposal and wastewater treatment. 

Furthermore, the government has enacted the Legislative Decree of Promotion of the Investment for the Generation of Electricity using Renewable Energies (Legislative Decree 1002) and its regulations. It was approved by Supreme Decree 012-2011-EM.

The Ministry of Environment has also published the National Strategy on Climate Change (Ministerial Resolution 227-2014-MINAM, approved on 23 July 2014). This reflects the state's commitment to comply with Peru's commitments under the UNFCCC. This project is being revised for future approval.

Peru's regulatory framework establishes protective and preventative measures for the production, export, use, commercialisation and transportation of products containing asbestos.

Since 2011, Law No 29662 proclaimed a general ban of amphibole asbestos, considering it to be cancer-causing, and regulated the use of chrysotile asbestos. Its rulings approved by DS No 028-2014-SA, refer in detail to this matter.

The regulations of Law 29662 determine the processes for the elimination, final transportation and disposal of amphibole asbestos. Even though it may not be certain that a building contains this type of asbestos, the ruling says that the presumption is enough to proceed with demolition. All waste should be treated as hazardous waste. The control of chrysotile asbestos includes aspects such as accreditation and authorisation for its use, labelling and importation, as well as the processes of removal, transportation and final disposal.

The Ministry of Health is in charge of overseeing the fulfilment of these regulations and of imposing sanctions when the regulations are breached. Monetary sanctions can range from 50 to 600 Tax Units (approximately USD63,636 – 763,636).

Solid waste management is regulated by DL No 1278 and its rulings are approved by DS 014-2017-MINAM. These norms establish the rights, obligations, attributions and responsibilities of society in to maximise efficiency of the use of materials and to ensure that solid-waste management is adequate in terms of health, the economy and the environment.

Waste is classified according to its hazardousness as dangerous and non-dangerous; and is dealt with by the competent municipal and non-municipal management authorities. 

Among the set of management instruments is the Plan for Minimisation and Management of non-municipal solid waste and the Annual Declaration on minimisation and management of non-household solid waste. A digital system for solid waste management (SIGERSOL) has also been created.

The Ministry of Environment regulates waste management (formerly a function of the Ministry of Health), OEFA supervises law compliance and SENACE evaluates the EIAs for solid-waste management projects.

These regulations promote a reduction in waste, efficiency in the use of material, and opportunities for recycling and reuse.

Other specific waste regulations include:

  • Law No 28256, Law on Land Transport of Hazardous Solid Waste and Hazardous Materials;
  • DS No 001-2012-MINAM sets the National Regulation for Electronic Waste Management, which mandates that this type of waste must be separated and delivered to an authorised entity for its final transportation and disposal; 
  • DS No 003-2013-VIVIENDA concerns the Rulings for Construction and Demolitions waste management; and
  • DS No 016-2012-AG, Regulations for Solid Waste Management in Agriculture.

The law regulates the principle of Extended Producer Responsibility (Article 5.c), which promotes that manufacturers, importers, distributors and sellers should manufacture or use products or packaging according to eco-efficiency criteria that minimise the generation of waste and/or facilitate its recovery, taking advantage of resources in a sustainable way and minimising the impact on the environment. They are also responsible for participating in the products' life cycle stages.

This law also states the principle of Shared Responsibility (Article 5.d), which establishes that integral waste management is a social co-responsibility that requires the joint, co-ordinated and differentiated participation of generators, waste operators and municipalities.

In this sense, as a general rule, once a producer has disposed of waste with a registered entity and according to these regulations, it is not liable for how the third-party acts.

Solid Waste Management Law promotes in general the recovery and recycling of goods. It establishes a special regime for the waste management of prioritised goods. These are defined as those goods that require special handling at the time of becoming waste, since they require differentiated handling for final disposal. The Producer's Extended Responsibility Principle applies to these goods, holding the producer responsible for the goods throughout the product's life cycle.

The Ministry of Environment, through a Supreme Decree endorsed by the related sectors, is in the process of approving a list of prioritised goods that are subject to this special solid waste management regime, as well as the objectives, goals and deadlines for the implementation of management systems.

OEFA has regulated the Environmental Emergencies Report of the activities under its competence (RCD No 018-2013-OEFA). The regulation defines an environmental emergency as a sudden or unpredictable event generated by natural, human or technological causes that affects the activity of the titleholder and that causes or can cause deterioration of the environment, which must be reported to OEFA by the entity concerned.

The following must be reported as environmental emergencies: fires, explosions, floods, oil spills and/or leaks in general, tailings of toxic substances or hazardous materials, and extraordinary dumping of production or waste water, among others.

The titleholder must report the occurrence of the environmental emergency within 24 hours (via email or in their offices, exceptionally via telephone) in the format approved by OEFA and must present the final report within ten business days of the occurrence of the emergency, using the final environmental emergency report format provided by this same regulation.

The Peruvian constitution recognises the right to information. The Law on Transparency and Access to Public Information (Law No 27806) aims to promote the transparency of state acts and regulate the fundamental right of access to information.

This law establishes that all public administration entities must have a Transparency Portal, providing periodically updated information relating tothe general data of the entity and its organisation.

This regulation also states that public administration entities have an obligation to reproduce information for those who require it, provided that the information is in an accessible format. All government entities must therefore facilitate access to information, including environmental and public health records, to whoever requests it, without any discrimination. The entity must respond within ten business days. The only exceptions to providing this information rely on national security reasons, ongoing investigations, banking confidentiality or other reasons listed in 16 Transactions and 17 Taxes.

Specific to environmental information, the Ministry of Environment and its bodies place relevant information for easy public access on their websites. For example:

  • the Ministry of Environment has the National System of Environmental Information where anyone can access news, maps, laws, statistical data, publications and others;
  • OEFA provides public records such as:
    1. the Record of Environmental Offenders, which lists individuals or legal entities that have failed to comply with their environmental obligations; and
    2. the Record of Environmental Good Practices, which lists individuals or legal entities that have fulfilled their environmental commitments and that promote positive environmental practices; and
  • SENACE provides EIA summaries during evaluation so that people can comment on and participate in the process. They also provide public access to the Record of Authorised Entities to elaborate EIAs, the Record of Approved EIAs, and information on approved Environmental Base Lines, so that other titleholders of new projects may use this in their EIA.

There are no specific obligations for companies to report on environmental issues in their annual corporate reports.

However, companies that have securities registered in the stock market must submit an Annual Corporate Report to the Stock Market Superintendence. This report must include ongoing sanctioning proceedings or the possibility of proceedings to be initiated against or in favour of the company or its subsidiaries, if they could have a significant impact on the result of its operations and the financial position of the company. 

Also, companies that are titleholders of a project with an approved EIA, are required to make Annual Environmental Performance Reports, in which they present information about their environmental commitments’ compliance to OEFA or the relevant competent authority. These reports are publicly accessible. 

Environmental due diligence is common in M&A, finance and property transactions. Both parties to the contract would like to obtain all the necessary environmental information to objectively value and establish the final price of a sale, or to stop the transaction if risks and environmental contingencies are found.

Environmental due diligence is usually limited to a legal review of:

  • the permits and authorisations obtained and outstanding;
  • compliance with legal environmental requirements; and
  • ongoing administrative procedures and litigation.

However, depending on the level of risk and the value of the transaction, specialised environmental consultants may be required to review technical aspects, or even to prepare a new EIA for the project.

It is common for parties to agree to hire an independent environmental consultant to perform a technical environmental audit. 

There are no specific rules for disclosure of environmental information in connection with business transactions. Therefore, general civil and corporate laws apply. 

Civil Code states that the seller must deliver the property free from any encumbrances or hidden defects, and that the seller is liable to compensate the buyer if encumbrances or hidden defects arise. General rules on negligence and wilful misconduct apply, to determine the degree of the seller's responsibility.

Disclosure of environmental information in connection with asset and share sales is usually covered, especially in sophisticated transactions, by representations and warranties included in transaction documents.

Regulations on Plastic

Peru approved its first environment-related tax in July 2019, in Law No 30884, which regulates the use of plastic and of disposable containers. The law prohibits the consumption of plastic products that are considered unnecessary, those that cannot be recycled or those that pose a health risk to the public and/or the environment.

Law No 30884 established a tax on the consumption of plastic bags to cover the serious environmental cost of these in the price and, consequently, to decrease consumption. 

The consumer, whether a natural or legal person, who acquires plastic bags for the purpose of loading or carrying goods from commercial establishments or services, is the taxpayer. No matter the modality: whether the consumer has obtained the plastic bag for free or as a part of a purchase, the consumer must pay the tax.

As of 1 August 2019, consumers must pay PEN0.10 for each bag they purchase. However, the increase in the tax will be gradual, as follows: PEN0.20 in 2020, PEN0.30 in 2021, PEN0.40 in 2022, PEN0.50 in 2023 and so on.

OEFA Contribution

There is also a contribution for regulation, which is not really considered a tax, but is a payment that titleholders must consider.

This contribution goes to OEFA and is intended to finance the environmental inspection of energy and mining activities (as stated in Law No 30282). The contribution must be paid by all mining and energy (hydrocarbon and electricity) companies and entities that are subject to environmental inspection by OEFA.

The contribution should not exceed 1% of the annual turnover of the relevant company, after the deduction of VAT and municipal tax.

During the period from 2017 to 2019, the contribution paid by all mining and energy companies must equal 0.11% of annual turnover, after the deduction of VAT and municipal tax (Supreme Decree 096-2016-PCM and Supreme Decree 097-2016-PCM).

LQG Energy & Mining Consulting

Av. Alfredo Benavides 1555
Of. 801
Miraflores, Lima
Perú

+511 6281502

vparedes@lqg.com.pe www.lqg.com.pe
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Law and Practice

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LQG Energy & Mining Consulting is more than a law firm or a traditional consultancy – since 2008 it has provided comprehensive strategic advice covering a 360-degree services platform. Its multidisciplinary team of more than 70 professionals deals with, among others, strategic finances, legal and regulatory matters, land tenure, and social and environmental management. In environmental management, the team assists investors by providing technical studies such as environmental models and archaeological evaluations, and helps them in the elaboration and obtaining of all environmental requirements, such as environmental impact assessments (EIAs), water-use licences and deforestation authorisations, as well as offering environmental due diligence, and legal advice and representation in sanctioning procedures. The firm was recently involved in the development and approval of an EIA for Hydroglobal Peru for the transmission line of San Gaban III (an investment of USD85.13 million) and the EIA for Inland Energy for the hydropower plants Lluclla and Lluta (an investment of USD970 million). It is currently working on the EIA for Monte Azul for a storage and dispatch terminal for fuels and gas (an investment of USD90 million).

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