Environmental Regulation

SYNOPSIS

A. INTRODUCTION 26.101

1. Government Organization 26.104
2. The Constitution 26.109
3. Provincial Constitutions 26.112

B. BASIC LEGISLATION

1. Federal Law

1.1. Hazardous Waste 26.113
1.2. Water 26.118
1.3. Toxic Substances 26.119
1.4. Underground Storage Tanks 26.121
1.5. Transportation of Hazardous Waste and Substances 26.123
1.6. Oil & Gas 26.128
1.7. Mining 26.149
1.8. Electric Energy 26.159

2. Provincial Law

2.1. Buenos Aires
2.1.1. General Environment 26.168
2.1.2. Industries 26.172
2.1.3. Hazardous Waste 26.174
2.1.4. Water 26.177
2.1.5. Air 26.182
2.2. Other provinces 26.184

C. CIVIL AND CRIMINAL LIABILITY 26.185



A. INTRODUCTION

26.101 Until the end of the 80’s, environmental protection was not a public concern in Argentina; and although there existed a considerable number of environmental regulations since the beginning of the century -either at federal, provincial and municipal levels-, there was little or no enforcement.

26.102 The growing demand for the protection of the environment in the country, starting in the early 90’s, recognizes several causes, among others: (i) the process of democratization and consolidation of democratic institutions, initiated in 1983; (ii) the economic stability since 1990; (iii) a process of privatization of state-owned companies, mainly those dealing with public services, that were in most cases the major polluters within the country; (iv) the environmental requirements and conditions imposed by international financing organizations, such as IDB and the World Bank; and (v) the economic integration of the region through MERCOSUR (Common Market of the South), that requires the harmonization of legislation of its members.

26.103 The consequences of that trend were: (i) the creation of a Federal Secretary of Natural Resources and Sustainable Development; (ii) the ratification of a number of environmental international treaties; (iii) the enactment of legislation at all levels, dealing with the protection of the environment; (iv) the introduction into the new Constitution, of the right to live in a healthy environment, and the concept of sustainable development; and (v) the launching of several calls for bids for the restoration of polluted sites.

1. Government Organization

26.104 As we have already described in Chapter 1, Argentina is organized as a federal republic, currently divided into 23 provinces and the City of Buenos Aires. Thus, the provinces retain those powers not specifically granted to the federal government by the Constitution.

26.105 Dominion and jurisdiction over natural resources are provincial powers never delegated by the provinces to the federal government, so, theoretically, they have remained under the province’s sphere. Notwithstanding that, the federal government may regulate environmental protection by means of constitutional clauses, such as those that empower Congress to rule inter-jurisdictional and foreign commerce and navigation and to sign international treaties that become constitutionally the supreme law of the land, as well as the powers delegated through the so called "progress clause", that allows the nation to take measures to enhance the public welfare.

26.106 In practice, at the provincial level, each province has functioned as an isolated unit, creating its own environmental protection system, through the enactment of environmental legislation and the creation of Environmental Authorities. The result is the coexistence of a wide variety of non-coordinated systems and norms, this being the main consequence of the lack of a federal environmental policy.

26.107 The institutional and legal organization of each of the provinces will depend on its political framework and economical status. Therefore, there are provinces that have developed a complete and efficient system of protection of the environment (e.g. Buenos Aires and Mendoza), while others have only few regulation on the matter (Chaco, Formosa, Santiago del Estero).

26.108 Notwithstanding the stated above, there are some common characteristics among the provinces that are worth pointing out: most have included the right to live in a healthy environment into their Constitutions; they have enacted legislation regarding the protection of water bodies, fauna and flora conservation, and protected areas. Some of them have regulations regarding soil and air pollution control, land use and planning and industrial sites, and only few of them have legislation regarding industrial waste.

2. The Constitution

26.109 The 1853 Constitution had no provisions referred to the protection of the natural resources or the environment. The right to live in a healthy environment was thus considered implied into article 33º, which establishes that the rights enumerated in the Constitution do not exclude other rights not expressly stated, but originated in the principle of sovereignty of the people, and the republican form of government.

26.110 The 1994 reform introduced, by means of article 41º, the right of all inhabitants to live in a healthy environment, the obligation to preserve it and the obligation to remediate, when feasible, environmental damage.. It also establishes that the government is responsible for the preservation of natural resources and has the obligation to provide environmental information and education to the people. It also grants the nation the power to set minimum standards of protection, while the provinces have the power to complement them. The ambiguity of this provision is heightened by the other one stated in article 124º, that reinforces the original dominion of the provinces over their natural resources.

26.111 Finally, article 43º establishes a tool for the protection of all rights established in the Constitution, through an injunction called in Spanish "recurso de amparo", by means of which the affected person, the ombudsman, and the non-governmental organizations may request that a public or private person stop an action or conduct that affects a constitutional right.

3. Provincial Constitutions

26.112 In the last decade, most of provincial constitutions have been reformed, the majority of them include the right to live in a healthy environment, and the right of any citizen to have access to Justice, in order to stop actions of private or public persons that may damage the environment.



B. BASIC LEGISLATION

1. Federal Law

1.1.) Hazardous Waste. Law 24.051

26.113 Law 24.051 (HWL), enacted in 1991 and designed to legislate all matters concerning hazardous waste, is in effect the most comprehensive attempt at enacting environmental legislation, and covers solid, liquid and gaseous effluents and protects all recipient environments. The system provides for a full cycle, "cradle to grave" control of waste.

26.114 HWL contains administrative (local) regulations, as well as civil and criminal (federal) provisions.

26.115 Administrative regulations are applied to the generation, operation, transport, treatment and final disposal of hazardous waste:

1. when such activities are carried out in federal jurisdiction; or,

2. when the waste generated within provincial jurisdiction, may cause damages to the persons or the environment beyond the boundaries of the province; or

3. when there is a transport of waste between two or more jurisdictions.

26.116 The Enforcement Authority of the law is the Federal Secretary of Natural Resources and Sustainable Development and the law creates a Federal Registry of Generators, Carriers and Operators of Hazardous Waste, depending from the Federal Secretary of Natural Resources. It is mandatory to obtain an annual Environmental Certificate and to pay an annual fee.

26.117 Accidents: Should an accident or any other contingency occurs that may cause damages to persons or the environment within federal jurisdiction or beyond the provincial jurisdiction where a plant is located, it will be mandatory to report the event to the Federal Secretary of Natural Resources and Sustainable Development, within 30 working days.

1.2.) Water. Decrees 674/89 and 776/92

26.118 Both decrees regulate water pollution in Buenos Aires City and a major part of the Greater Buenos Aires area. The enforcement authority is the Secretary of Natural Resources and Sustainable Development of the Nation.

1.3.) Toxic Substances. Decree 1.095/96

26.119 The Decree establishes the obligation for all companies dealing with toxic substances, to apply for registration before the Secretary of Prevention of Drug Addictions. The registered companies should inform the Secretary about all transactions involving such substances on a three month basis.

26.120 It is important to point out that the Certificate of Registration is an essential document in order to carry out any kind of transaction involving the substances listed by the Decree.

1.4.) Underground Storage Tanks. Resolutions SE 419/93, 404/94 and 76/97

26.121 Resolution 419/94, as amended by Resolutions 404/95 and 76/97 of the Secretary of Energy, regulates the auditing and control of leaks of underground storage tanks containing hydrocarbons, with a capacity of 4,000 lts. or more.

26.122 The norm also establishes technical requirements regarding the safety of underground storage tanks, as well as the actions to be taken in case of accident.

1.5.) Transport of Hazardous Waste and Substances.

26.123 Resolution 233/86 Sec. Transport: This Resolution approves the general regulations applicable to hazardous materials transported by road. Said regulations govern such materials and objects defined as hazardous by the Secretary of Transportation, including gases and vapors, packed or unpacked solid materials.

26.124 Resolution 720/87 Sec. Transport: This Resolution contains the list of hazardous materials, the hazardous material incompatibility table, emergency directions and the identification specifications both for the vehicle and packaging.

26.125 Resolution 14/94 Sec. Transport: This Resolution provides for the standard forms and instructions for the hazardous waste carriers to register with the Federal Registry of Hazardous Waste Generators and Operators, at the Federal Secretary of Natural Resources and Human Environment.

26.126 Resolution 195/97 includes technical rules to the "General Rules for the Transport of Dangerous Materials by Roads", approved by Decree 779/95.

26.127 Resolution 195/97 classifies and defines the different types of dangerous materials, establishing general and particular rules for the handling and transport of such materials.

1.6.) Oil & Gas

26.128 The environmental protection regulations for hydrocarbon exploration and exploitation, both onshore and offshore, are contained in Resolution Nº 105/1992 issued by the Secretary of Energy.

26.129 Resolution Nº 105/92 Sec. Energy: It applies both to continental areas and the sea platform of the whole territory of the Republic of Argentina. The Enforcement Authority is the Federal Secretary of Energy.

26.130 Regulations are divided into "Exploration Stage" and "Exploitation Stage". We will analyze the duties to be performed in each stage:

26.131 Exploration Stage: During this stage and before drilling the first exploration well, a Preliminary Environmental Survey (Estudio Ambiental Previo -EAP-) must be prepared by professional experts or consulting firms registered with the Registry of Environmental Consultants kept by the Secretary of Energy. Copy of said survey must be forwarded to the Federal Board of Resources at the Secretary of Energy. When drilling starts -and until the well is abandoned if it were barren- works and tasks should be monitored for environmental care purposes. The monitoring activity will be performed by the Provincial entity designated therefor by the Secretary of Energy, the operator will outsource such monitoring services, upon prior notice to the Secretary of Energy. The resulting monitoring report shall be submitted before the Federal Board of Resources at the Secretary of Energy within thirty days upon completion of the drilling operations and tests.

26.132 Exploitation Stage: During this stage a Preliminary Environmental Survey should be submitted for such area where a hydrocarbon discovery has resulted. The Preliminary Environmental Survey for this stage should be more comprehensive than the one prepared for the exploration well. This Survey will commence within three months from any discovery and assessment of the finding and shall be submitted before the Secretary of Energy for evaluation thereof within six months as from its commencement. At this stage, a yearly monitoring of works and tasks shall be also conducted both for future fields and for those already under exploitation at the time the Resolution was passed.

26.133 Fields prior to Resolution 105/92: Regarding fields discovered before legislation was passed (November 1992), the development area's operator should have submitted, prior to March 31, 1994, an environmental study of the area under development.

26.134 Chapter 2 of the Resolution refers to the environmental care to be taken during the exploration stage, such as the proper erection of camps, control of waste disposal at camps, careful digging of access ways and trails so as to avoid soil erosion, use of explosives during seismic surveys, backfilling of shallow seismic wells and the use of seismic vibrators.

26.135 Chapter 3 governs the environmental protection during the drilling stage for development purposes. It sets forth standards for the selection of the site or location, the development of access ways or roads, the supply of fresh water, location of camps, equipment, materials and waste on the esplanade, the design of casing, the handling of waste, drilling fluids and completion, the storage of fuel liquids, the handling of well test gases, handling of salt water and oil based or distilled fluids, handling of test hydrocarbons, etc.

26.136 Finally, Chapter 4 deals with environmental protection during the development and production stages, providing that development operations shall be carried out based on: the location of development wells and access thereto, the drilling of development wells, catch basins, treatment plants and ancillary services, by-pass oil pipelines, storage and dispatch plant for crude, assisted recovery plants, camps and further operating procedures.

26.137 As from the enactment of Resolution 105/92 and for supplementing purposes, new Resolutions regarding environmental protection have been passed:

26.138 Resolution 252/93 Sec. Energy: It describes the advisable and guiding procedures for the preparation of the environmental surveys required by Resolution 105/92.

26.139 Resolution 341/93 Sec Energy: This resolution, dated November 1993, establishes a schedule and standards for the revamping of pits and recovery of soils. It refers to four types of pits, based on the criterion of minimizing risk exposure for the various natural resources. Those pits not removed, due to their regular and necessary use, must comply with the requirements under the Resolution such as: no oil contents, clean and empty, wire fenced, warning signs, watertight, etc.

26.140 As to soil, the Resolution establishes that soil should be restored following the same criteria described for pits and always focused on risk minimization.

26.141 Resolution 342/93 Sec Energy: This Resolution establishes the scheme for the "Contingency Plans" required by Resolution 252/93.

26.142 "Contingency Plans" must be prepared by the operators and submitted before the Secretary of Energy jointly with the Environmental Surveys. For those fields existing prior to Resolution 105/92, this filing should have been made prior to March 31, 1994.

26.143 Emergencies and Accidents: Operators are also required to give notice to the Federal Board of Resources, at the Secretary of Energy, about any emergency that actually threatens or is likely to threaten natural resources or social-economic assets. Operators shall file with the Secretary of Energy a final report within 30 days after completion of the contingency remedial works.

26.144 Resolution 236/93 Sec Energy: this Resolution prohibits natural gas vents from gas and oil wells wherever the gas/oil ratio exceeds 100m3/m3. The Secretary of Energy may grant temporary exemptions to this prohibition, at the operator's request, for Federal interest purposes, whenever venting derives from the well testing upon completion or repair thereof or whenever a works schedule aimed at correcting the situation within a reasonable time is submitted. Likewise, regular vents are allowed for the purposes of unblocking the pump at such wells with production through mechanic pumping, whenever there is no transmission line installed. Temporary vents are allowed at remote and low productivity areas until nearby pipelines are constructed or consumption points are established. Finally temporary vents are allowed in the case of oil wells producing gas associated with hydrosulphuric acid, nitrogen, carbon dioxide or other gases (either inert or toxic) provided their utilization is not possible or their reinjection is not economically feasible.

26.145 Resolution 5/96 Sec. Energy: This Resolution is applied to those wells to be abandoned at the moment of release of the Resolution (January 9, 1996), or in the future. Therefore, wells abandoned prior to the release of the Resolution, are not subject to same. Abandonment may be temporary or permanent, in accordance with technical, commercial and/or operational reasons.

26.146 Wells to be abandoned at the moment of effectiveness of the Resolution have a 5, 10 or 15 year period for their abandonment, depending on their categorization. Wells to be abandoned in the future, should be abandoned immediately.

26.147 It is mandatory to submit annually, a tentative schedule of the works related to the abandonment of wells, and a final report stating the activities carried out in respect of the wells which have been abandoned during the year.

26.148 Four years before the termination of a concession, or at the moment of reversion of same, the concessionaire and/or permit holder must submit to the Regulatory Authority, a technical and economic study, on the advisability of abandoning -temporarily or permanently- each inactive well in the area.

1.7.) Mining

26.149 Law 24.585 included into the Mining Code, environmental protection for mining activities. The law introduces -through a complementary chapter to be part of the Mining Code- the obligation to protect the environment during mining activities. Among Law 24.585's highlights, the following can be mentioned:

26.150 Environmental Impact Assessment: It is mandatory to submit, prior to the commencement of any mining activity, a report on environmental impact. The enforcement authority will evaluate the report and will pronounce in favor of approval by means of a statement of environmental impact for each of the stages of the project or actual implementation of same.

26.151 The environmental impact statement will be updated at most biannually, and it will be necessary to file a report detailing the results of the actions of environmental protection taken, as also any new developments.

26.152 For those activities, the commencement of which was prior to the enactment of the law, the report of environmental impact must be filed within one year as from the effective date of the law (i.e. 90 days as from the publication in the Official Gazette).

26.153 Certificate of Environmental Quality: Any person that carries out mining activities and meets the requirements of the law, may request from the enforcement authority the issuance of a certificate of environmental quality.

26.154 Registers: Law 24.585 creates two registers: a) a register of consultants and laboratories for the carrying out of monitoring and external auditing work; and b) a register of infringers.

26.155 Liabilities: Persons carrying out mining activities, and all those under their authority, contractors and subcontractors, and proprietors of mining rights, will be jointly liable in respect of any environmental damage caused as a result of noncompliance with the law.

26.156 Persons causing present or residual damage to the environment will be obligated to mitigate, recondition, restore or repair same, as appropriate.

26.157 It is important to point out that, in respect of those activities the commencement of which is prior to the enactment of the law, the irreversible and inevitable impacts caused may under no circumstance affect the activities being carried out.

26.158 Penalties: The penalties include warning, fines, suspension of the benefit of the certificate of environmental quality of the products, repair of the environmental damage, temporary closure and disqualification.

1.8.) Electric Energy

26.159 The process of transformation of the argentine electric sector implied a change of attitude of the companies integrating the Wholesale Electricity Market, with regard their responsibility for the protection of the environment. This change has its origin mainly in: (i) the incorporation of specific obligations for environmental protection in the bidding conditions of privatization and concession of the generation, transport and distribution of electric energy; (ii) the setting of minimum standards for air emissions; and (iii) the control by ENRE (Federal Regulatory Entity for Electric Energy), of all aspects involving environmental pollution.

26.160 The regulations applicable to the electric sector are: (i) environmental norms of the Secretary of Energy; (ii) resolutions of ENRE´s Board of Directors; (iii) laws and regulations on environmental protection at federal, provincial and municipal levels; and (iv) environmental clauses included in the generation, transport and distribution of electric energy’s Concession Contracts.

26.161 Law 24.065. Articles 2, 16, 17 and 56 a) & k) establish the main environmental obligations that must be carried out by the Wholesale Electricity Market’s Agents, as well as the powers of ENRE Regarding public safety and the protection of the environment.

Resolutions of the Secretary of Energy

26.162 Resolution 149/90. The resolution approves the "Environmental Management Plan for Thermal Plants of Electric Energy Generation".

26.163 Resolution 15/92. Approves the "Guidelines of Environmental Management of the System of Extra High Tension Electric Energy Transport"

26.164 Resolution 342/93. It establishes the structure of the Contingency Plans, to be performed by the Market’s Agents.

26.165 Resolutions 154/93 and 195/96. Both resolutions set forth the environmental conditions to be achieved by the generators of conventional thermal electric energy, for plants in operation or to be operated in the future.

26.166 Resolutions 32/94 and 52/95. These resolutions establish the guidelines and minimum standards for the Environmental Management Plans (EMP) that must be carried out and implemented by the Wholesale Electricity Market’s Agents.

26.167 Resolution 13/97. Approves the "Practical Guide for the Atmospheric Environmental Impact Assessment", to be performed previous to any modification or enlargement of the Plant, that may vary the atmospheric emissions, implying a change in the quality of the surrounding air.

2. Provincial Law

2.1.) Buenos Aires
2.1.1.) General Environment. Law 11.723

26.168 The aim of the Law is to protect, preserve, improve and recover natural resources and the environment in general, in all the territory of the province of Buenos Aires. The final goal is the preservation of life in a broad sense, to achieve a sustainable development and to heighten the protection of the biological diversity.

26.169 The Law establishes the rights of all inhabitants to live in a healthy environment, the access to the information regarding natural resources management by the government, as well as the right to participate in the processes that involve natural resources and the protection, conservation, improvement and restoration of the environment in general.

26.170 Among the citizen’s obligations are the protection, conservation and improvement of the environment and its elements, taking all the necessary measures or avoiding those actions that may harm it.

26.171 The law also prescribes that all projects consisting in works or activities that may produce a negative impact to the environment of the province of Buenos Aires, should be accompanied by an Environmental Impact Assessment.

2.1.2). Industries. Law 11.459

26.172 This Law replaces ancient Law 7.229 on industrial sites. It prescribes that all industries located in the territory of the Province of Buenos Aires must apply for registration, in order to obtain an Environmental Certificate, which approves the plant’s location and functioning.

26.173 The Certificate is issued by the provincial Secretary of Environmental Policy, once completed and approved all the requisites listed by the law, and should be renewed every two years. Moreover, modifications on the processes or the facilities, may require the granting of a new Environmental Certificate.

2.1.3.) Hazardous Waste. Law 11.720

26.174 The Law is applicable to the generation, operation, handling, transport, treatment and final disposal of hazardous waste, within the territory of the province of Buenos Aires. All individuals or corporations reached by the law, must apply for registration before the provincial Registry of Hazardous Waste of the Secretary of Environmental Policy, in order to obtain the Special Certificate of Permission.

26.175 The Certificate, which approves the procedures -generation, operation, handling, transport, treatment and final disposal -applied to the waste, must be renewed every two years.

26.176 Regarding the transport of hazardous waste, the same may be done either for the owner of the waste, or for a third party. In both cases, the carrier should be registered before the Registry of the Federal Secretary of Natural Resources -if an interjurisdictional transport of waste exists-, or the Registry of Environmental Policy of the Province -if the transport is carried out within the boundaries of the province-.

2.1.4.) Water. Law 5.965

26.177 This Law protects water bodies located within the territory of the province of Buenos Aries. Temporarily, it is not applicable to those industries located in greater Buenos Aires area, where Federal Decrees 674/89 and 776/92 are applicable.

26.178 By means of the Law and their regulatory decrees, it is mandatory to obtain, before making any discharge of effluents to the water, a permit issued by the water supply utility -AGOSBA-. AGOSBA also controls the quality of industrial effluents, in accordance with the standards set by Resolutions 287 and 288. Fines and partial or total closures of pipes -temporary or definite- may be applied in cases of noncompliance with the Law.

26.179 Besides, the Department of Water of the Ministry of Public Works of Buenos Aires Province is competent to inspect those effluents that may pollute water bodies under its jurisdiction. It is also empowered to apply fines, and to determine partial or total closures, depending on the case.

26.180 Although the provincial Law of Ministries establishes that those departments with concurrent competencies have to coordinate their tasks, in order to avoid an overlapping of functions, in practice, both AGOSBA and the Department of Water, -although depending on the same Ministry of Public Works of the Province-, act independently one from the other.

26.181 Special Waste Law 11.720 is applicable to water discharges containing industrial waste. The enforcement authority for the law is the Secretary of Environmental Policy.

2.1.5.) Air. Law 5.965

26.182 The Law protects the quality of air, establishing standards for gaseous emissions, and the obligation to obtain a permit, prior to the commencement of any activity that may involve air emissions. The permit must be requested before the Secretary of Environmental Policy of the Province.

Municipal Level

26.183 Many Municipalities have sanctioned Ordinances related to the protection of the environment- that a company should check.

2.2.) Other Provinces

26.184 Many Provinces at Provincial and/or Municipal level have enacted legislation related to the protection of the general environment, water, air, oil and gas, and waste disposal that should be considered when choosing a site in Argentina or purchasing a Company.



C. CIVIL AND CRIMINAL LIABILITY

26.185 Under Federal Law 24.051, both civil and criminal liabilities are strict, joint and several for directors, managers, and representatives of a company, in the event of infringement.

26.186 Regarding civil liability, the law modifies the Civil Code, establishing that the owner or guardian of an hazardous waste cannot exempt his liability by proving fault on the part of a third party for whom he is not responsible for and whose action could have avoided the liability through the use of due care.

26.187 The system of liability set out by the law is the so-called "from the cradle to the grave", since the generator of hazardous waste is liable, as the owner of same, for any damage caused by it, and his liability does not disappear as a result of the transformation, development, change or treatment of the hazardous waste, with the only exception of those damages caused as a consequence of a defective treatment carried out at the plant for treatment or final disposal.

26.188 Finally, carriers and treaters of hazardous waste are liable as guardians of same, for any damage caused by the waste.

26.189 As a general principle, no one may transmit a better title to property than one originally possessed (Article 3270). Henceforth, real estate property is sold with all its characteristics, defects and encumbrances.

26.190 From this perspective, there is no legal way of acquiring a real estate, without acquiring the ownership and liabilities of the hazardous waste existing in the site. Nevertheless, there are legal means of addressing potential contingent liabilities arising from the owner’s prior pollutant activities, or the disposal of hazardous waste pertaining to such activities. A transaction on real estate properties shall contain provisions dealing with any such problems existing on the property at the time of acquisition. Nevertheless, it is our opinion that purchaser's liability before third parties (including the Government) cannot be avoided. A way to minimize such liability would be to include some provisions in the purchase contract, by means of which the vendor would commit to hold harmless the purchaser from any future contingent liability resulting from hazardous waste disposed in the past, by the vendor or a third party during vendor’s ownership.

26.191 In order to make effective the application of the contractual clause described in the previous paragraph, it would be essential to carry out a due diligence study of the site.

26.192 It is important to point out that any disclaim of liability included a the contract, would only operate between vendor and purchaser, and not regarding third parties -including the Government-, since both vendor and purchaser may be liable for the damage the waste may cause to the persons, their assets, or the environment in general: according to Hazardous Waste Law, the vendor as the generator -owner- of the waste, and the purchaser as the guardian of same.

26.193 Regarding criminal liability, Hazardous Waste Law provides for criminal sanctions including imprisonment for managers and directors of companies responsible for causing environmental harm either through willful misconduct or negligence.