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27 August 2013
Given the strict liability regime set out in Brazil's legal system, special care must be taken when evaluating mergers and acquisitions for environmental liability.
Most cases of environmental liability from such operations stem from environmental permits held by the previous owner or issues of prior contamination. For this reason, the target's previous environmental records should be analysed and due diligence proceedings completed before the merger or acquisition in order to assess the environmental liabilities that the acquirer will eventually assume.
An environmental clearance certificate should also be obtained from the relevant environmental bodies and public attorneys, which may help to further knowledge of any remaining environmental issues.
No specific laws apply to the shutdown or sale of a facility. However, depending on the activity being shut down, it may be necessary to obtain authorisation from the environmental agency responsible for the permitting procedure, in order to ensure that the shutdown is executed properly and that no contamination or environmental liability remains. At state level, the Rio de Janeiro Environmental Council has enacted Resolution 02/2008 establishing Directive DZ-77, which details the termination authorisation that must be issued by the state environmental agency attesting to non-contamination of the area where the facility was installed.
With regard to the sale of a facility, the measures mentioned above in relation to property transfers should be considered in order to distinguish between the environmental obligations of the previous owner and those of the new owner.
The protection of private land was introduced into Brazilian legislation 20 years ago and has continued to improve ever since. So-called 'private reserves of natural resources' grant owners of land with relevant natural resources the possibility of protecting such areas legally and perpetually from pollutant activities. In accordance with Federal Law 9985/2000, such reserves are created before the Instituto Chico Mendes de Conservação da Biodiversidade at the request of the landowner interested in protecting any environmentally relevant features. Consequently, the institute will evaluate whether the area for which legal protection is requested complies with the requirements set forth in the regulations.
Federal Law 12,334/2010 establishes the National Policy for Dams, which sets out safety rules for the planning, construction, management, operation and oversight of dams in order to prevent overflows.
An earlier version of this update first appeared in Latin Lawyer.
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Maria Alice Doria