Environmental Law 2020

Last Updated November 13, 2020

Chile

Law and Practice

Authors



Schultz Carrasco Benítez is a boutique law firm in Santiago, Chile, that specialises in providing counsel to both local and foreign companies in environmental and natural resources law, as well as corporate/M&A and general practice matters, backed by a litigation department in those areas. The firm was founded to provide legal advice, giving a quick response to companies and people seeking a personalised and efficient service with high standards and specialisation. The firm focuses on both immediate and long-term goals with its clients, helping them address and anticipate challenges across a changing environment and providing strategic and innovative solutions. Additionally, the firm's collaborative culture allows the firm to work across departments, continually sharing its insight and experience with clients.

The Chilean Constitution (Article 19 No 8), sets forth the right to live in an environment free of pollution and establishes that it is the State’s duty to ensure both that the environment is not negatively affected and the preservation of nature.

Law No 19,300

This mandate is further detailed in Law No 19,300 on General Bases of the Environment, which outlines the main aspects of several mechanisms to protect the environment, such as:

  • the Environmental Impact Assessment System (Sistema de Evaluación de Impacto Ambiental, SEIA):
  • the strategic environmental assessment;
  • environmental audits; and
  • environmental responsibility.

It also details the functions, organisation and other aspects of the Ministry of the Environment and the Environmental Assessment Service (Servicio de Evaluación Ambiental, SEA).

The key principles of environmental law in Chile are also found in Law No 19,300. These include the preventive principle, the participation principle and the efficiency principle.

S.D. No 40/2012

There is also the S.D. No 40/2012, Regulations of the Environmental Impact Assessment System, that detail the functioning of the SEIA. Any project or activity listed in Article 10 of Law No 19,300 must be assessed through the SEIA in order to obtain an environmental licence (Resolución de Calificación Ambiental, RCA). Within the system, several public agencies comment on projects submitted and are able to impose conditions for those projects' operation within the sphere of their respective competencies. The project must then be carried out in accordance with the conditions established in its permit.

Law No 20,417

Another key environmental regulation is Law No 20,417, Organic Law of the Superintendence of the Environment (Superintendencia del Medio Ambiente, SMA), which provides the regulatory framework for that institution and its main functions, such as environmental inspections, punitive procedures and incentives for compliance.

Law No 20,600

Law No 20,600 creates the Environmental Courts. There are currently three Environmental Courts in Chile with jurisdiction in the northern (Antofagasta), central (Santiago), and southern (Valdivia) regions of the country. The Environmental Courts are collegiate bodies conformed by two judges who are lawyers and one with a degree in the sciences. This range of expertise enables them to grasp the technical complexities of the cases brought before these courts. It is important to note that, as this legislation is relatively new, the contours of the right to live in a pollution-free environment, and of environmental law in general, have been defined, in many respects, by jurisprudential criteria. Therefore, the Environmental Courts and the Supreme Court play an important role in the construction of environmental law application criteria, permanently shaping the limits and powers of each environmental agency when they regulate an issue or adjudicate over a dispute. They are not part of the executive branch; they are independent and impartial.

Other Regulations

Other important regulations are air emissions standards, and prevention and decontamination plans, which are established by the authorities for certain geographical areas depending on their pollution levels.

Ministry of the Environment

The main regulatory authority on environmental matters in Chile is the Ministry of the Environment (Ministerio del Medio Ambiente, MMA), which collaborates with the President of the Republic in the design and application of policies, plans and programmes on environmental matters, as well as in the protection and conservation of biological diversity and of renewable and water resources, promoting sustainable development, the integrity of environmental policy and its normative regulation.

The Council of Ministers for Sustainability is chaired by the Minister of the Environment and composed of the Ministers of Agriculture; Finance; Health; Economy, Development and Tourism; Energy; Public Works; Housing and Urban Development; Transport and Telecommunications; Mining; and Planning. The main functions of this Council are proposing environmental public policy to the President of the Republic, and giving its opinion regarding environmental Bills and administrative Acts.

SEA

Another key regulatory authority is the SEA, which is in charge of managing the SEIA and, when applicable, the process of citizen participation and of participation of indigenous communities in the SEIA in accordance with ILO Convention 169.

The SEA, additionally, manages a public information system about the projects that are assessed within the system, handling the environmental licences and authorisations and a public register of certified environmental consultants.

Regarding its regulatory authority, the SEA is in charge of drafting guidelines that standardise and unify criteria for the application of environmental law. Also, the SEA interprets RCAs, whenever there are doubts over the scope of their text or their content.

SMA

Another key agency is the SMA, which is in charge of overseeing compliance with environmental licences, laws, regulations and other permits. The SMA also has broad authority to inspect, and request information from, regulated parties and is entitled to impose significant fines and penalties in cases of environmental breach. These penalties include fines up to 10,000 Yearly Tax Units (approximately USD7.5 million), cancellation of the RCA, and temporary or permanent closure of facilities.

As an independent and impartial body, the role of the Environmental Courts, described in 1.1 Key Environmental Protection Policies, Principles and Laws, is also key, as they oversee the application by the SMA, SEA and MMA of the environmental law and regulations.

Biodiversity and Protected Areas Service

It must be noted that, at the time of writing (October 2020), Chile still does not have a public agency devoted to managing protected areas. The Bill creating the Biodiversity and Protected Areas Service (Servicio de Biodiversidad y Áreas Protegidas, SBAP), which is an institution envisioned in the institutional reform of 2010, is still under discussion in the Chilean Congress, after over ten years.

Other

Finally, other authorities with relevant attributions in environmental terms are the General Water Directorate (Dirección General de Aguas, DGA), the Agricultural and Livestock Service (Servicio Agrícola y Ganadero, SAG), the National Corporation of Forestry (Corporación Nacional Forestal, Conaf), and the National Service of Geology and Mining (Servicio Nacional de Geología y Minería, Sernageomin).

The enforcement of environmental licences, legal standards and regulations in Chile is carried out by the SMA. The SMA has powers to investigate and prosecute administrative liability due to environmental damage or to breaches of RCAs and other applicable regulations.

In this context, the SMA may impose fines and penalties, which include fines up to 10,000 Yearly Tax Units (approximately USD7.5 million), termination of the RCA, and temporary or permanent closure of facilities.

Additionally, the SMA manages several reporting and disclosure systems, which operate on web-based platforms and are not publicly available, unless the SMA starts a punitive proceeding against a regulated entity.

The SMA is also charged with managing several incentives for compliance, such as compliance programmes and self-reporting measures. A compliance programme is a set of verifiable measures to return a project or activity to environmental compliance. If the programme is accepted by the SMA and is successfully fulfilled, it will result in the non-application of the fine that would have been imposed otherwise. 

Self-reporting, on the other hand, consists of the informing, by a regulated party, of an environmental breach to the SMA. The result of the self-report is that, if the party successfully completes a compliance programme, the fine that would have been applicable will not be applied by the SMA.

Finally, any person or entity may file a complaint before the SMA denouncing a breach of environmental licences or regulations. The SMA may further investigate and, if it deems it appropriate, will pursue a punitive proceeding.

The SEIA is an administrative process managed by a specialised agency, the SEA, in which several public agencies with environmental competencies, make observations within the scope of those competencies regarding the environmental impact(s) of the project or activity being assessed. As a result, these agencies can, with respect to the relevant statutes, impose measures and conditions on the project owner in order to mitigate these impacts. 

Article 10 of Law No 19,300 lists the projects or activities that must be assessed under the SEIA, in order to obtain an RCA to operate. If the RCA approves the project assessed, it will also approve the environmental contents of sectorial permits applicable; which may not be rejected thereafter due to environmental reasons.

DIA and EIA

A project can enter the SEIA by means of an environmental impact declaration (declaración de impacto ambiental, DIA) or study (estudio de impacto ambiental, EIA). In general, a project that must enter the SEIA will be assessed by a DIA; unless it generates or creates any of the impacts, effects or circumstances described in Article 11 of Law No 19,300. If the project generates any of these more significant impacts, it must be submitted through an EIA. 

These impacts, effects or circumstances are significant adverse impacts and consist of, among others:

  • endangerment to public health;
  • adverse effects on natural resources;
  • proximity or location inside protected areas.

Community Input

The administrative record of the environmental assessment is always publicly available, whether on the website of the SEIA or in the offices of the SEA. Exceptionally, and at the request of the interested party, the authority may keep technical, financial or other background information under reserve so as to protect commercial or industrial confidentiality, or to protect patents or inventions linked to the assessed project or activity.

Additionally, communities affected by a project under assessment may participate in the process, making observations to the project being assessed. Communities may always participate in an EIA, and in a DIA if:

  • this is requested by ten directly affected persons, or by two or more citizen organisations with valid legal entity; or
  • when the project assessed places an environmental burden on nearby communities.

Whenever an indigenous community is affected by a project assessed in the SEIA, the SEA will open a special participation stage, tailored to the requirements laid out by ILO Convention 169.

Observations and comments made by the community or by indigenous communities will be considered by the SEA as an integral part of the assessment process and must be addressed by the SEA, who must issue a well-founded response to every one of these comments. If the SEA fails to properly respond to any of the observations and comments made by the community, the person who made the observation my file an appeal to invalidate the RCA. 

Amendments and Permits

RCA provisions are strictly binding throughout the life cycle of the project. Any significant amendments must be assessed within the SEIA. Where there is doubt over whether an amendment is significant, it is possible to ask the SEA its opinion through an appropriateness letter (consulta de pertinencia). The answer of the SEA will not have the status of a permit or an authorisation, rather it will be merely the opinion of the SEA as to, in light of the information provided, whether the project or amendment studied should enter the SEIA.

Within the SEIA, the project’s owner must also request specific permits for the project. These are sectoral permits granted by different sectoral authorities, but that have environmental contents. These are the environmental sectorial permits (permisos ambientales sectoriales, PAS). Examples of these permits include

  • permits to cut down native forest;
  • permits to build a tailings deposit; or
  • permits to build large hydraulic works.

The environmental aspects of those permits are assessed and approved within the SEIA, and the RCA will duly note this circumstance. The project holder will have to then process these permits before the corresponding authority for the sectoral approval, showing the RCA. Although the authority might reject the permit for technical reasons, it will not be allowed to reject the sectoral permit for environmental reasons.

Appeals Process

The project holder may appeal the RCA if it imposes onerous conditions or requirements; or if the RCA rejects the project assessed. Appeals against an RCA shall be filed before the Executive Direction of the SEA if the challenged RCA was based on a DIA; or before the Council of Ministers, if the challenged RCA was based on an EIA. In turn, these decisions may then be reviewed by the Environmental Court; whose decisions are subject to review by the Supreme Court via a cassation remedy, in applicable cases.

Also, as previously mentioned, members of the community that made observations of the project assessed, and who feel their observations were not duly considered in the RCA, may also appeal the RCA, following the same routes mentioned above.

The following are the key types of liability related to environmental damage or to the breach of environmental regulation.

Administrative Liability

Administrative liability arises from a breach of environmental regulations, of the project RCA, or from the causation of environmental damage, regardless of any further environmental or civil liability that might arise. The, SMA, as stated in 2.1 Key Regulatory Authorities, can investigate any project or activity in order to verify environmental compliance. Note that the SMA usually considers any deviation from the RCA a breach of its contents.

If a breach is detected, the SMA can file charges against the project owner, starting an administrative procedure that can conclude with penalties ranging from a written reprimand to fines of up to 10,000 Annual Tax Units (approximately USD7.5 million), including total or partial closure of the respective project and/or revocation of its RCA.

Alternatively, if environmental damage can be repaired, the SMA can order the project owner to execute a repair plan. If the damage cannot be repaired (such as damage to an archaeological site), then the SMA can impose a fine, or other measures such as the ones detailed above.

When indicted, a project holder can also submit to the SMA a compliance programme for its approval. Note that compliance programmes can be presented only once and cannot cover very serious violations.

This plan must be executed in its entirety, and any breach in the programme will result in the reopening of the penalty proceeding and imposition of up to twice the original fine. If the plan is completely executed, and this is approved by the SMA, then the proceeding will be concluded and no other penalty will be imposed.

Penalties imposed by the SMA can be appealed before the Environmental Court.

Civil Liability

Civil liability arising from environmental damage is set forth in Articles 51 to 55 of Law No 19,300. According to this Law, anyone causing environmental damage, whether by malice or fault, must restore those damages. In addition, breach of any administrative regulations will result in a presumption of liability. After the Environmental Court has established liability, the affected parties may seek redress as per general rules before the civil courts.

Criminal Liability

At the time of writing (October 2020) there are no general provisions setting forth a general regime for criminal liability linked to environmental violations. The Criminal Code and other statutes set forth few specific provisions of limited scope related to criminal offences of an environmental nature.

For example, the Criminal Code punishes, among other things, the malicious poisoning or infection of water intended for public consumption as well as withdrawal of water flows without water rights. Another environmental criminal offence is found in the General Law on Fishing, which punishes anyone who introduces, or orders the introduction of, any pollutants into any body of water causing damage without previous neutralisation.

Indeed, the Chilean criminal environmental liability system has been considered as insufficient. There is currently a Bill in Congress whose purpose is to set forth a broader scheme for criminal liability linked to environmental crimes and damage. It should be noted that, under the current legislation, environmental damage is not a criminal offence.

In Chile there are no special regulations regarding the environmental liability of current landowners arising from historical incidents or past owners’ actions.

In accordance with Law No 19,300, there is a five-year statute of limitations to file an environmental damage claim, beginning from the definitive cessation of the event causing the damage.

Regarding civil damages, if the claim is filed directly before a civil court (without a ruling from an Environmental Court establishing the existence of environmental damage), the term to file the claim is the general term for torts (four years from the occurrence of the event).

Administrative Liability

Administrative liability has been addressed in the 4.1 Key Types of Liability. As previously discussed, the SMA can file charges against the project owner, who may:

  • respond to the charges submitting its defences; or
  • submit a compliance programme, in applicable cases.

Please note that these are either/or alternatives.

If a project owner decides to submit a defence, it can use all means admitted by law, which will be evaluated by the SMA pursuant to the logical and reasonable rules of evaluation and procedure (sana crítica). 

Environmental Damages Liability

In relation to liability due to environmental damage, Chile operates a fault-based system, and apart from specific cases where the law sets forth a strict liability scheme (such as application of pesticides, hydrocarbon spillages into bodies of navigable waters, etc), fault expressed as malice or negligence is required to establish liability. Additionally, the following requirements must be met:

  • an action causing environmental damage;
  • significant damage or injury to the environment; and
  • the causal connection between action and damage.

Environmental damage claims such as these must be filed before the Environmental Court by:

  • the individual who suffered the damage;
  • the municipality in whose territory the environmental damage happened; or
  • the State.

In this case, the burden of proof lies on the plaintiff. Key defences include:

  • denying causal connection between action and damage;
  • arguing against the significance of the damage; or
  • proving there was no malice and that standards of due care were followed.

It is important to note that, in order to give rise to environmental liability, the damage must be “significant”. It is accepted that any human activity will cause some sort of damage to the environment. Therefore, the damage must be significant in order to allow a claim for reparations from the person or entity that caused it. The law does not define the concept of “significance”, so the Environmental Courts and the Supreme Court have defined some criteria to establish the existence of significative damage on a case-by-case basis, which include:

  • duration and entity of the damage;
  • quality and quantity of natural resources affected;
  • effects on the ecosystem; and
  • capacity, and time required, for regeneration.

According to Chilean legislation, environmental damage can be caused by any person or legal entity, and the same can be said of breaches of environmental law.

There is a general provision related to corporate liability in Chilean Law No 18,046, on Stock Corporations, transferring the liability of the company to its administrators or representatives unless their lack of participation in, or their opposition to, the act constituting the infringement is proven. In other words, in case of breach of environmental law, or in case of environmental damage, the administrators or legal representatives of a stock corporation will be liable unless it is proven that they did not participate or that they opposed to the act constituting the violation.

However, this could change in the future, as there is currently a Bill in Congress regarding the criminal liability of legal entities.

Currently, in Chile, shareholders or parent companies are not liable for breaches of environmental law. As stated in 6.1 Liability for Environmental Damage or Breaches of Environmental Law, the party liable before environmental authorities is the project owner. However, it should be noted that this could change in the future with the Bill regarding the criminal liability of legal entities.

In some cases, however, financial entities had been held liable for environmental damage. In a 2013 ruling, the Supreme Court ordered the company Forestal León Ltda. and the Banco de Chile to jointly repair the environmental damage caused in the El Peñasco estate by the illegal cutting down and burning of native forest.

According to Chilean legislation, any person – whether a natural or a legal entity – wilfully or negligently causing environmental damage is liable both to restore the damaged environment and also to compensate those affected by that damage.

Breaches of an RCA or of environmental law, prosecuted by the SMA, may result in fines of up to 10,000 Annual Tax Units (roughly USD7.5 million), as well as closure or cancellation of that RCA.

In case of stock corporations, liability can be transferred to its administrators or representatives unless their lack of participation in, or their opposition to, the act constituting the breach is proven. 

In relation to obligations arising from a mine closure plan, Law No 20,551 provides that the mining company or the mining entrepreneur are responsible for compliance with the closure plan, whether that plan is executed directly or by a third party. If the requirements of the mine closure plan are infringed, the legal representatives of the mining company, and whoever is responsible for the breach, will be sanctioned with a fine ranging from 100 to 1,000 Monthly Tax Units (approximately USD64–64,000).

There is no regulation in Chile regarding insurance against environmental liability. However, insurance could be purchased to cover the civil damages related to this liability.

The party appearing as the project holder before the environmental authority is liable for breaches of environmental laws and regulations, or for environmental damage according to Article 24 of Law No 19,300.

Therefore, financing or lending entities are not liable before the environmental authorities in the case of a breach of environmental laws and regulations, or in the case of environmental damage.

Even though lender protection is not regulated in Chile, and lenders will not be liable before the environmental authorities if they are not listed as the project owners before those environmental authorities, there are several steps that can be taken in order to protect their investments.

For example, lenders could protect themselves by conducting environmental law due diligence to investigate potential environmental liabilities, and by drafting contractual clauses limiting their liability in the case of an environmental offence or contingency.

Environmental liability arises from the generation of environmental damage. If environmental liability is established, it is possible to claim reparation for civil damages derived from the environmental ones.

This claim must be filed before a civil court, only after the Environmental Court has determined that environmental damage exists.

If the Environmental Court rules that there was no environmental damage, there could still be liability to compensate those civil damages caused, actionable as per the general rules of civil liability before civil courts.

Chilean legislation provides that compensation should cover only the damage caused according to the principle of “integral damage reparation” (ie, the claimant should be restored to the position they would have held if the damage had not occurred). Therefore, the courts cannot award exemplary or punitive damages.

There are no class or group actions in Chilean environmental law. Parties with standing to claim environmental damage are those directly affected (whether natural or legal entities), municipalities or the state.

In some cases, the Supreme Court has broadened the definition of "standing", admitting a more relaxed evidential standard for parties to prove they have been “affected” in relation to the constitutional right to live in an environment free of pollution. However, this broader standing does not fall into the definition of a class or group action. The only class actions recognised in Chilean law can be found in consumer protection legislation.

As there are no class actions in Chile, there are no landmark cases to highlight. 

The holder of an environmental licence is solely responsible for its fulfilment and is the only liable party in the case of a breach of permits or regulations, or in the case of environmental damage. Because of this, the relevant environmental authority must be informed of any change in ownership of a project that has been environmentally approved.

Even though it is possible to transfer or apportion liability among the parties, these agreements are only binding among the parties, and not to the regulator. In other words, the party registered as the project owner before the authority is the only liable party, regardless of any private agreement to the contrary.

Chilean legislation does not provide for overall environmental insurance covering environmental damage or breaches of environmental legislation. There are, however, forms of private insurance that could cover such events, such as policies covering the costs of compensation to third parties or the costs derived from a clean-up operation. These are governed by the common rules applicable to insurance.

There is no special legal regime related to remediation of contaminated land in Chile, which shall fall under the environmental damage regime.

If environmental damage is caused with negligence or intent, it will give rise to two different liabilities:

  • the “environmental” liability to repair the damaged environment; and
  • a civil torts liability, to indemnify those whose rights have been harmed by the environmental damage.

Usually, the SMA will pursue reparation, and then the government might pursue civil liability against the responsible parties.

Chile has been an active part of the international negotiations regarding climate change, and is part of the UN Framework Convention on Climate Change, the Kyoto Protocol and the Paris Accords. However, Chile is not among those countries with binding greenhouse gas emissions reductions targets. 

In 2020, Chile presented its Nationally Intended Contribution (NIC), which consists of different measures, aimed at reducing greenhouse gas emissions. 

The NIC also proposes means of implementation and data to improve the quality of information and transparency.

It is noteworthy that, as per its NIC, Chile is aiming at reducing its greenhouse gas emissions by 30% by 2030 in relation to 2019 emission levels, with the long-term goal of becoming carbon neutral by 2050.

Moreover, the NIC states that under certain enabling conditions there is a 45% by 2030 emission reductions potential target, taking into account mitigation and/or carbon capture actions.

Finally, at the time of writing (October 2020), there are Bills being discussed in the Chilean Congress that relate to climate change. Of these, the most notable is the Framework Law on Climate Change, which lays the foundations for drafting and implementing long-term climate policy.

In April 2020, the Chilean government presented its 2020 NIC to the UN Framework Convention on Climate Change, which contains Chile’s commitment to reduce its greenhouse gas emissions by 30% by 2030 (compared to 2019 emission levels) and to become carbon neutral by 2050.

Additionally, the Ministry of Energy has set the goal of closing every thermoelectric power plant in Chile by 2040. Regarding this matter, a Schedule of Withdrawal or Reconversion of Coal Plants was presented. It establishes the closure of the eight oldest plants by 2024, which represent 19% of Chilean carbon-based power plant capacity. The schedule also establishes a commitment to define dates in worktables formed every five years, which will allow the setting up of specific retirement schedules in the future.

Since the enactment of S.D. No 656/2000, the production, import, distribution, sale and use of asbestos or any other product of material that contains it is forbidden, with the exceptions set forth in the mentioned regulation.

Asbestos is also addressed in S.D. No 594/2000, which provides for minimum health and safety standards in workplaces, forbidding the use of blue asbestos-crocidolite, and considering asbestos (both dust and fibres) as a hazardous waste material to be handled as per the regulations set forth in S.D. No 148/2003.

There are various statutes governing the handling, storage, transportation and final disposal of waste according to the different classes of waste involved:

  • Hazardous waste (S.D. No 148/2003).
  • Solid industrial waste and health and environmental conditions in workplaces (S.D. No 495/2000).
  • Waste from hospital centres (S.D. No 6/2009).
  • Sludge from wastewater treatment plants (S.D. No 4/2009).
  • Health and safety conditions in landfills (S.D. No 189/2005).

Generation, transport and elimination of waste, whether hazardous or not, must be reported through the Pollutant Release and Transfer Registry (Registro de Emisiones y Transferencias de Contaminantes, RETC) web platform. It should be noted that the above-mentioned statutes merely include provisions governing the handling of waste that has already been generated and do not provide any mechanisms for incentivising waste minimisation, recycling or recovery.

Law No 20,920 on extended producer responsibility and recycling promotion (Ley de Responsabilidad Extendida del Productor, REP Law), is the broader statute pertaining to waste and includes an economic instrument for waste management, seeking to reduce waste generation and increase recovery. The MMA will gradually set goals for waste generation and recovery, and compliance will be overseen by the SMA.

The REP Law sets forth a hierarchy for waste handling.

  • First, prevention of waste generation.
  • Second, reuse.
  • Third, recycling.
  • Fourth, total or partial energy recovery.

Waste elimination is seen as the last resort for waste handling. Also, the REP Law represents an important step towards a more comprehensive waste handling policy, that includes recovery and recycling in the life cycle of waste.

The REP Law sets forth an extended liability for the producers of products designated as a “priority” by the Law due to their size, hazardous characteristics, or the presence of exploitable components, with the purpose of decreasing generation of waste and promoting their reuse, recycling and other types of recovery. Those priority products are lubricating oils, electric and electronic equipment, packaging and containers, tyres, and batteries.

The extended producer liability set forth by the REP Law entails that the producer of priority products will remain responsible for them until they are properly recovered or eliminated by another authorised entity, such as a waste treatment facility or a landfill.

The REP Law sets forth a hierarchy in waste handling where elimination is the last alternative (see 14.1 Key Laws and Regulatory Controls). This way, any waste with the potential to be recovered must be recovered. This is one of the obligations that form the extended responsibility of the producer of a priority product.

The MMA will issue regulations considering different instruments to prevent generation of waste, such as eco-design, labelling and rebates. Also, the MMA will set goals for waste collection and recovery. To date, the regulations in force are the Regulations of the Recycling Fund (S.D. No 7/2017) and the Regulations Setting the Procedure for Setting Recycling Goals for priority products (S.D. No 8/2017).

At the time of writing (October 2020), the regulations setting the collection and recovery goals for packaging and containers have been drafted and are being reviewed by the General Comptroller of the Republic. The MMA is still drafting the regulations setting forth collection and recovery goals relating to used oils.

Projects with an RCA, and also those sources subject to emissions standards and other instruments named in R.E. No 885/2016, must inform the SMA of any environmental emergency or event associated to them. Also, RCAs often include different disclosure obligations to the SMA, which are determined on a case-by-case basis. Reporting must be conducted online through the RCA follow-up system of the SMA, within 24 hours of the event.

The SMA also has different computer systems to report environmental variables, for example:

  • a system to report emissions by thermoelectric power plants;
  • a system to report the payment of green taxes; and
  • a system to report updates in the execution of Compliance Programmes.

Finally, projects with an RCA must inform the SMA whenever the development stage of the project changes (ie, the start of construction, commissioning or abandonment).

Public services in Chile are guided by the principle of transparency. All information held by the administration, and all administrative proceedings, shall be public unless there are reasons provided in the law for making that information reserved or secret. If the information has not been made publicly available by the authority, the public is allowed to request access to such information, which will be granted unless there is a legally valid reason for not releasing such information.

There are several public databases of environmental information. The most relevant of these are the following:

  • E-SEIA, where the electronic records of environmental impact assessment processes are publicly available;
  • Sistema Nacional de Información de Fiscalización Ambiental, SNIFA, where all punitive proceedings carried out by the SMA are public; and
  • the website of the MMA, which also contains public databases of the process of elaboration or review of policies, regulations, and emission and quality standards.

There are different regulations providing the corporate disclosure of environmental information. For example, release of emissions and waste must be reported through the RETC carried by the MMA. Different emissions standards provide reporting requirements. Also, many RCAs establish the obligation to provide monitoring and reports that must be disclosed to the relevant authority.

Finally, all regulated parties have the duty to disclose any information requested from them by the SMA.

The party liable for the breach of environmental obligations is the party appearing as the holder of the project before the SEA. Therefore, environmental due diligence is usually conducted whenever there is a relevant transaction involving projects, activities or facilities governed by environmental law.

The review is usually composed of documents and information provided by the seller, public information sources and rounds of questions and answers targeted to determine compliance and possible exposure to liability due to the breach of environmental obligations.

Liability is determined by the statute of limitations, which runs for five years following the environmental damage being evidenced, and for three years for administrative breaches in general.

Although Chilean contract legislation is built upon the principle of good faith, there is no specific obligation to disclose environmental information to a prospective purchaser.

Considering that environmental liability falls upon the party registered as the project owner before the authority, environmental due diligence is a useful tool for having a clearer view of the risk involved in a specific transaction. In addition, indemnity clauses, even when they have no validity before the regulator, can be an aid to recovery of costs associated with liability.

Chile recently established a tax on emissions to the atmosphere of carbon dioxide, particulate matter, nitrogen oxide and sulphur dioxide produced by facilities whose fixed sources, formed by heaters or turbines, add up to 50 MWt or more.

The tax is also applicable to new vehicles, light and medium, depending on their performance, emissions and sales price. The tax levied amounts to USD5/ton.

This regulation was recently modified by Law No 21,210, which removed the requirement that these emissions should be produced by establishments whose fixed sources are heaters or turbines, as well as the requirement of thermal power. This modification will come into effect on 1 January 2023.

Schultz Carrasco Benítez

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Chile

+22 385 0000

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Trends and Developments


Authors



Schultz Carrasco Benítez is a boutique law firm in Santiago, Chile, that specialises in providing counsel to both local and foreign companies in environmental and natural resources law, as well as corporate/M&A and general practice matters, backed by a litigation department in those areas. The firm was founded to provide legal advice, giving a quick response to companies and people seeking a personalised and efficient service with high standards and specialisation. The firm focuses on both immediate and long-term goals with its clients, helping them address and anticipate challenges across a changing environment and providing strategic and innovative solutions. Additionally, the firm's collaborative culture allows the firm to work across departments, continually sharing its insight and experience with clients.

Discussion for a New Constitution

On 25 October 2020, there will be a referendum in Chile on whether to replace the current constitution with a new text, and on the composition of the group in charge of drafting the proposed new constitution. One alternative, the Constitutional Assembly, will be formed, in its entirety, of elected citizens, with a criteria of gender parity. The second alternative, the Mixed Convention, will be composed, in equal parts, of elected citizens and of congressmen and women.

With the occasion of this referendum, discussion has emerged as to what should be the role of the government in preserving nature and the environment. In this sense, common themes have been the need to avoid sacrifice zones, environmental justice and recognition of the role of biodiversity in ensuring a healthy environment. Natural resources have also been a matter of discussion, notably the regulation of water rights, as some have suggested enhancing the protection afforded to these resources in the proposed new Constitution, especially in relation to property rights. The recognition of indigenous communities in the Constitution has also been suggested.

After the referendum of 25 October, if the option to replace the Constitution’s current text wins, there will be an election in 2021 to elect the members of either the Constitutional Assembly or the Mixed Convention. With so much in this area still to be decided, these matters will not be discussed in further detail in this article.

Bill for the Framework Law on Climate Change

In January 2020, the Chilean Senate began discussion of the Bill for the Framework Law on Climate Change. The purpose of the Bill is to face the challenges of climate change, moving towards forms of economic development that:

  • are low in greenhouse gas (GHG) emissions;
  • increase resilience against the effects of climate change; and
  • comply with international commitments.

In this vein, one of the goals of the Bill is to achieve neutrality in GHG emissions by 2050; and the Bill sets forth a range of instruments to make this possible at both the national and local levels.

For example, a Long-Term Climate Strategy that will contain, among other things:

  • national and sectorial emissions budgets to years 2030 and 2050;
  • medium-term objectives, goals and indicators; and
  • guidelines for cross-sectoral adaptation measures.

In addition, the Bill sets forth several instruments for managing climate change at the local level, such as strategic plans for water resource management in basins and emissions reductions certificates.

Furthermore, there is currently another Bill being discussed in Congress to modify Law No 19,300 on the General Bases of the Environment, in order to add the phenomenon of climate change to its provisions, as an element to be taken into account in the environmental assessment of projects and activities.

Bill Creating the Service of Biodiversity and Protected Areas

The creation of a specialised government agency in charge of managing protected areas is long overdue in Chile. The first attempt, Law No 18,362 on the National System of Protected Areas of the State (SNASPE), promulgated in 1984, never entered into force.

The Biodiversity and Protected Areas Service (Servicio de Biodiversidad y Áreas Protegidas, SBAP) is the last outstanding institution still to be created after the reform of environmental institutions carried out by Law No 20,417; it still has a long way to go. The first Bill creating the SBAP was submitted to Congress in 2011 and withdrawn in 2014 (Bill No 7,487-12). The second Bill entered the Senate that same year (Bill No 9,404-12) and is still being processed in Congress.

The objective of the Bill is the integration of the attributes and responsibilities for the protection of nature and protected areas into a single agency, which can co-ordinate the different actors around the management of such areas, with an integrated view of the country. Currently, these functions are dispersed among different Ministries: Agriculture, Economy, Environment, Culture and National Property.

The Bill also seeks to create a single National System of Protected Areas (Sistema Nacional de Areas Protegidas, SNAP), integrating all the existing protected areas in Chile.

Law Protecting Urban Wetlands

On the initiative of some Chilean Senators, it was decided to create a law aimed at protecting urban wetlands, an initiative that was later sponsored by the executive through the Ministry of the Environment: Law No 21,202 amending various legal bodies with the aim of protecting urban wetlands (Law No 21,202), which was published in the Official Gazette on 23 January 2020.

Law No 21.202 protects urban wetlands, which are declared by the Ministry of Environment or at the request of the respective municipality. One of the most notable aspects of this law is the amendment it makes to Article 10 of Law No 19,300 on the General Bases of the Environment (Law No 19,300), which details the different projects or activities that have to be assessed in Chile's Environmental Impact Assessment System (Sistema de Evaluación de Impacto Ambiental, SEIA), in order to attain an environmental licence (Resolución de Calificación Ambiental, RCA) to operate.

This amendment adds a new type of project or activity that must be assessed in the SEIA. These are, activities that are carried out in or near a wetland located within the urban radius and that could lead to that wetland's physical alteration; or the chemical alteration of its biotic components or their interactions, or their ecosystem flows.

The amendment is written in broad terms, covering all types of activities that may affect wetlands located within the urban radius. In order to further specify activities falling into this category, the executive, through the Ministry of Environment, has drafted a Regulation that is in process of being published.

For example, Article 22 of Law No 21,202 establishes a period of 12 months for the Environmental Assessment Service (Servicio de Evaluación Ambiental, SEA) to prepare guidelines for the environmental assessment of projects or activities that could generate an environmental impact on urban wetlands. As the regulation is still being processed, the guidelines are yet to be drafted.

Use of IT in Environmental Enforcement

The execution, organisation and co-ordination of environmental enforcement and inspection is the exclusive responsibility of the Superintendence of the Environment (Superintendencia del Medio Ambiente, SMA). This includes the enforcement of environmental instruments such as environmental licences (RCA), emission standards and environmental prevention or decontamination plans.

Nowadays, the SMA has several computer systems for reporting environmental variables that contribute to the efficiency of its inspection work, allowing the analysis of the data obtained and its causes.

Along the same lines, the SMA plans to implement, within the next few years, a series of technological innovations that will contribute to greater public awareness of this information and, at the same time, to add new dimensions to the analysis, allowing anticipation of the results and modification of proposed actions in order to obtain the desired environmental outcomes.

These innovations include the use of data science, IoT sensors, radar, thermal cameras, AI and drones, as well as a new environmental tracking platform, with remote monitoring, real-time connection and satellite images.

Consequently, individuals and legal entities owning projects under the supervision of the SMA (ie, among others, all projects that have an RCA), will have to incorporate the tools and information technologies needed to keep up with the new methods mentioned.

Bill on Environmental Crimes and Environmental Damage

On 21 January 2019, the government presented to the Senate a Bill on environmental crimes (Bill No 12,398-12), which also seeks to promote a system to prevent environmental damage.

One of the declared objectives of this Bill is to punish particularly serious behaviour that harms the environment without necessarily being an administrative offence.

The Bill presents the following objectives.

  • To punish environmental damage, considering criminal punishment as the last resort or ultima ratio.
  • To strengthen the role of the SMA in the prosecution of certain environmental offences and reinforce its powers to repair the damaged environment.
  • To include those environmental crimes defined in Law No 20,393 on the criminal responsibility of legal entities, so as to incentivise prevention of environmental crimes through prevention models.

Furthermore, the project defines new environmental crimes, of which the most relevant are:

  • environmental damage (serious or significant);
  • submitting false information; and
  • impeding the exercise of control functions.

According to the most recent draft, causing serious environmental damage, or serious contamination, will be punished with 541 days to three years of imprisonment, as well as fines of 100 to 5,000 Monthly Tax Units (approximately USD6,370–318,500). 

In addition, knowingly submitting false information to the environmental authority – whether in an appropriateness letter (consulta de pertinencia), an environmental impact study or declaration, or to prove compliance with environmental instruments, among others – will be punished with 61 to 540 days of prison, as well as a fine of 50 to 100 Monthly Tax Units (approximately USD3,130–6,370). 

The Bill is currently (October 2020) in its first phase before the Senate, under review by the Constitutional Commission, who will report on it.

Decarbonisation Plan

In accordance with the framework of the international treaties that have been ratified by Chile regarding climate change (Kyoto Protocols and Paris Agreement), the government presented, in June 2019, a document titled National Contribution to the Paris Climate Agreement 2015, which establishes Chile’s commitment to reduce its GHG emissions by 30% per unit of GDP by 2030, compared to 2007.

As 78% of GHG emissions are generated by the energy sector, the government has made a commitment to start the process of decarbonisation of the Chilean electrical industry. For this purpose, a timeline for the withdrawal or reconversion of coal-powered plants was presented, whose main objective is to close all carbon-based power plants in Chile by 2040.

This timeline establishes the closure of the eight oldest plants by 2024, which represent 19% of the capacity of Chilean coal power plants. The timeline also establishes a commitment to define further dates by a task force formed every five years, which will allow the setting up of specific retirement schedules.

The government has stated that this timeline successfully balances the goal of decarbonisation and the security of the national electrical system. A faster process would mean an excessive reliance on petrol and gas, raising the costs of these fuels. In contrast, the proposed timeline will contribute to the reduction of GHG emissions and sustain the efficiency of the electrical system.

Schultz Carrasco Benítez

Isidora Goyenechea 3250
8th Floor
Las Condes
Santiago
Chile

+56 2 2385 0000

+56 2 2385 0002

contacto@scyb.cl www.scyb.cl
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Law and Practice

Authors



Schultz Carrasco Benítez is a boutique law firm in Santiago, Chile, that specialises in providing counsel to both local and foreign companies in environmental and natural resources law, as well as corporate/M&A and general practice matters, backed by a litigation department in those areas. The firm was founded to provide legal advice, giving a quick response to companies and people seeking a personalised and efficient service with high standards and specialisation. The firm focuses on both immediate and long-term goals with its clients, helping them address and anticipate challenges across a changing environment and providing strategic and innovative solutions. Additionally, the firm's collaborative culture allows the firm to work across departments, continually sharing its insight and experience with clients.

Trends and Development

Authors



Schultz Carrasco Benítez is a boutique law firm in Santiago, Chile, that specialises in providing counsel to both local and foreign companies in environmental and natural resources law, as well as corporate/M&A and general practice matters, backed by a litigation department in those areas. The firm was founded to provide legal advice, giving a quick response to companies and people seeking a personalised and efficient service with high standards and specialisation. The firm focuses on both immediate and long-term goals with its clients, helping them address and anticipate challenges across a changing environment and providing strategic and innovative solutions. Additionally, the firm's collaborative culture allows the firm to work across departments, continually sharing its insight and experience with clients.

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