BAKER & MCKENZIE

Latin American Legal Developments Bulletin Vol. 5; No. 3

CHILE

The Environmental Impact Assessment System under Chilean Law

The Chilean legal framework regarding environmental impact assessment has been completed and become obligatory. Following is a general discussion of constitutional provisions regarding the environment and rules of the environmental law setting environmental impact assessment requirements. Following the general discussion is a more detailed description of Regulation No. 30, enacted on April 3, 1997, which implements the constitutional and environmental law provisions.

Environmental Provisions of Chile's Political Constitution

In 1980, Chile's Political Constitution (the "Constitution") for the first time recognized the importance of protecting the environment, as part of the State's duty to promote welfare. The Constitution guarantees all people the "right to live in an environment free of pollution." It adds that "[t]he State is duty bound to assure that such right not be affected and to care for the conservation of nature."

The constitutionally-guaranteed right to a pollution-free environment potentially conflicts with other constitutional rights, such as the right to engage in economic activity and the right to property. In this regard the Constitution provides that a basic constitutional right may be limited for environmental reasons only by "law" (not by any hierarchically inferior norm), and then only to the extent that the limitation does not affect the essence of the right.

Chilean Environmental Framework Law (Law 19,300)

The Chilean Environmental Framework Law ("the Law") was adopted in March, 1994. It establishes general criteria for the country's environmental policy. It regulates all major activities that may likely have an environmental impact. It maintains in force all previous environmental regulations (some 700 legal norms), unless they conflict with its terms.

The most meaningful contribution of the Law is the creation of the Environmental Impact Assessment System (herElnafter the "El System"). The El System is the procedure used to determine whether the environmental impact of a given activity or project is consistent with the applicable legislation. The El System is implemented by the National Environmental Commission (Conama), when more than one region is involved, or by the respective regional Commission (Corema) when only a single region is involved.

The Regulation of the El System

On April 3, 1997, the Regulation of the El System (herElnafter the "Regulation") was published and took effect. Its principal provisions are described below.

Scope

The Law provides that parties that wish to initiate or modify certain types of projects are subject to the El System. Title I of the Regulation further identifies such projects. Among others, Title I subjects the following types of projects to the El System:

a) Highways and public roads that may affect protected areas.

b) Ports, navigable waterways, shipyards and maritime terminals.

c) Industrial facilities that produce construction materials.

d) Forestry projects of industrial size on fragile soil or on soil covered by native forest, pulp plants and paper mills, chip plants and sawmills.

e) Projects involving the regular production, storage, transportation, disposal or re-utilization of toxic, explosive, radioactive, inflammable, corrosive or reactive substances

f) Plants for the treatment and disposal of solid and liquid industrial wastes.

g) Execution of works, programs or activities in national parks, national reserves, natural monuments, virgin areas, nature sanctuaries, marine parks or reserves, or in any area that is officially protected.

Parties undertaking or modifying projects that are subject to the El System must submit an environmental impact statement ("El Statement") or an environmental impact declaration ("El Declaration") to Conama or the corresponding Corema.

An El Statement is a detailed document with numerous attachments. Preparing one requires a substantial amount of analysis of the environmental impact the project will have.

An El Declaration, on the other hand, is simpler and less time-consuming to produce. An El Declaration must set forth only the type of project and a description of the same, background information indicating that the project complies with environmental laws, and a statement that it will not produce any environmental impact that would require the submission and approval of an El Statement (see discussion below). El Declarations are published in the Official Gazette.

Projects requiring the submission and approval of an El Statement, not just an El Declaration

In general, if it is anticipated that a project will have any of the following environmental impacts, an El Statement must be submitted and approved:

a) Risk to human health. The Regulation uses various parameters to determine whether such a risk exists. The parameters generally are liquid effluent and air emission standards.

b) Significant adverse effects on the quantity and quality of renewable natural resources, including soil, water and air.

c) Relocation of human communities or significant alteration of living systems and customs of population groups.

d) Proximity to inhabited or protected areas or resources, or to an area defined as being of environmental value.

e) Significant alteration of the touristic or scenic value of an area.

f) Alteration of monuments and sites with anthropological, archeological or historical value and, in general, those monuments and sites which form part of the cultural heritage of the country.

Obviously, there is a degree of ambiguity as to when a project requires an El Statement as opposed to an El Declaration. Moreover, the determination is slightly paradoxical--in order to make the determination it is necessary to know in advance the environmental impact that the project will have.

We understand from informal consultations with environmental authorities that the general rule will be to require only El Declarations, with El Statements bElng required for larger projects.

The Regulation provides that every El Statement must contain the following information:

a) Index identifying the chapters, topics, tables, figures, plans, maps and schedules of the El Statement.

b) A summary, which cannot exceed 30 pages, containing: a general description of the project; an environmental compliance plan; a summary of the baseline study; a description of the environmental impacts which require the submission of the El Statement; identification, prediction and evaluation of the environmental impacts of the project; the plan for mitigating such impacts and repairing and compensating for the same; measures of risk and accident control if applicable; and a follow up plan for relevant environmental aspects.

c) A description of the project containing general information regarding its location, the area involved, duration, a chronological description of the different stages, a justification of the location; a description of the construction phase; a description of the operating phase, covering maintenance and conservation measures; and a description of the actions, works and measures to be implemented upon closing and abandoning the project.

d) The plan for compliance with applicable environmental laws.

e) A detailed description of the environmental impacts which require that an El Statement be presented for the project.

f) A baseline study for each of the environmental elements that will be affected within the area of influence of the project. The baseline study must include the following:

• The physical environment: weather, geology, geomorphology,.hydrogeology, oceanography, etc. Also, levels of noise, vibrations and luminosity, air quality, water resources etc.

• The biodiversity environment: identification, location, distribution, diversity and abundance of species, highlighting protected species.

• The socio-economic environment: information and analysis regarding the population, and demographic, social, economic, employment, mortality and other data.

• The construction environment: infrastructure works and economic activities.

• A description of the way in which the different environmental elements (e.g., water, land, forests) are used.

• The status of natural and artificial elements which compose the cultural heritage of the country.

• A description of the affected landscape, including its visibility, fragility and quality.

g) A prediction and evaluation of the environmental impact of the project, including the situations of potential risk.

h) A plan of measures of mitigation, reparation and compensation, designed to minimize and eliminate the adverse effects of the project. It must also include a description of risk prevention and accident control measures.

The purpose of the mitigation measures is to avoid or diminish the adverse effects of a project or activity. The goal of the reparation and/or restoration measures is to restore one or more of the environmental components or elements to a quality similar to the one existing prior to the occurrence of the environmental damage, or if this is not possible, to reestablish its basic characteristics. Finally, the purpose of the compensation measures is to produce or generate an alternative positive effect which offsets environmental damage.

i) A follow up plan regarding how the parties will monitor and measure the relevant environmental impacts on an on-going basis throughout the life of the project.

j) A description of the actions taken prior to the presentation of the El Statement, including meetings with the local community and the people directly affected by the project and the results of said actions.

k) The schedules: laboratory reports, specific studies, photographs, a list of all the people that participated in preparation of the El Statement, including thElr professions and the specific tasks that they performed in respect of the El Statement.

With the exception of those documents that contain technical, financial or other information which the parties interested in the project specifically request be maintained as confidential, El Statements and thElr attachments are matters of Dublic record.

Environmental Impact Evaluation

The environmental impact evaluation of a project begins after the El Statement or the El Declaration has been presented to Conama or the corresponding Corema. Following such presentation, Conama or the corresponding Corema has five business days to rule that the El Statement or El Declaration complies with the formal requirements and is therefore acceptable in form. If an El Statement or Declaration is deemed unacceptable, the party must correct the deficiencies. If the El Statement or Declaration is deemed acceptable, Conama or the corresponding Corema must, within three business days, send copies to each of the environmental authorities with jurisdiction over the specific project (collectively, the "Environmental Authorities") .

Evaluation of El Statements and Issuance ot Technical Report

Any Environmental Authority that receives a copy of the El Statement must issue a report within 40 business days of receipt. Prior to issuing its report the Environmental Authority may ask the interested party for clarifications, rectifications or greater amounts of information, as necessary.

The reports prepared by the Environmental Authorities must state whether the project complies with applicable environmental laws and, if so, the Environmental Authorities must issue the corresponding permits. Naturally, if an Environmental Authority finds that the project is not acceptable, it will deny the corresponding permit.

Once the reports are completed, the Environmental Authorities must send them to Conama or the corresponding Corema. The reports are used by the Technical Committee of Conama or the Corema, as the case may be, to prepare a final technical report (a "Technical Report").

A Technical Report must contain, among other information, a reference to the reports of the Environmental Authonties and a summary of the comments made by the community organizations and individuals directly affected by the project, in accordance with the public participation provisions of the Law. Once the Technical Report is completed, it is sent to the various Environmental Authorities, who have five business days to approve it or reject it. The approvals or rejections of the Environmental Authorities are attached to the Technical Report. This final document, including the various attachments, is referred to as the "Final Technical Report".

Environmental Qualification of Projects

The Final Technical Report is considered by the Political Committee of Conama or the relevant Corema, which Committee has the ultimate power to determine the environmental acceptability of a project. Conama or the relevant Corema issues a resolution that qualifies or rejects the project (the"Resolution"). The Regulation provides that when issuing the Resolution, Conama or the relevant Corema must "consider", inter alia, (i) the reports issued by the Environmental Authorities and the Final Technical Report, and (ii) the observations made by the community organizations and individuals directly affected by the project.

Conama or the relevant Corema has 120 business days to issue the Resolution, counted from the time the El Statement is initially submitted. This term is extended if the Environmental Authorities require clarifications, rectifications or greater information with respect to the El Statement.

If the Resolution approves the project (a "Positive Resolution"), it certifies that the project complies with the applicable environmental requirements and laws. A Positive Resolution is an irrefutable prima facie indicator that the project complies with environmental law and, consequently, no Environmental Authority may refuse to grant a permit to be issued by it in respect of a project for which a Positive Resolution has been issued.

If the Resolution rejects the project (a "Negative Resolution"), it declares that the project cannot be performed and prevents the Environmental Authorities from issuing the corresponding authorizations and permits.

Finally, the Regulation contemplates the possibility of initiating a project with a temporary authorization, before the issuance of a Positive Resolution, provided that the project participants procure an insurance policy to cover environmental risks. If the final Resolution is a Negative Resolution, the project is halted despite the existence of insurance.

Action against a Resolution

If a project receives a Negative Resolution, the interested party has 30 business days to present an action before the Executive Director of Conama seeking a reversal. The Executive Director of Conama has 30 days to rule on the matter. A negative ruling (i.e., one confirming the Negative Resolution) may be appealed to the Ordinary Courts of Justice within 30 business days.

Community Participation in the Process of Evaluation of Environmental Impact

An excerpt from the El Statement, including a description of the principal adverse environmental effects of the project, must be published in the Official Gazette and in a regional or national newspaper of general circulation within 10 business days following its submission to Conama or the corresponding Corema. Community organizations and individuals that are directly affected by the project have 60 business days to submit observations regarding the El Statement. Conama or the corresponding Corema must consider such observations when issuing the Resolution .

Community organizations and individuals directly affected by the project may present an action against the Resolution when they believe that thElr observations have not been duly considered. This action does not suspend the effects of the challenged Resolution.

As indicated previously, an El Statement in general is a matter of public record.

Enforcement

The Regulation provides that the Environmental Authorities are to monitor compliance with the provisions and requirements of the environmental laws, and with any conditions under which an El Statement was approved or a Positive Resolution issued. In case of a violation, Conama or the corresponding Corema may issue a warning, impose a fine of up to approximately US$30,000 in each instance or, in more aggravated circumstances, revoke the Positive Recolution

Final Comments

The Regulation represents an important step in the development of Chilean environmental law. It took approximately three years to enact. The effect that the Regulation will have on projects undertaken in Chile remains to be seen. It will depend in large part on how demanding the entities that participate in the El System prove to be.

Finally, it remains to be seen whether the Regulation will be legally challenged. There is at least a theoretical risk that the Regulation could be deemed to be too broad, in the sense that it affects rights that arguably should be affected only by a Congressionally passed law.

Antonio Ortúzar Sr. and Pedro Felipe Vial (Santiago)

Tel: (56-2) 367-7000

E-mail