New Regulation: Environmental Aptitude Certificate for Province of Buenos Aires

On May 23, 2019, Decree No. 531/2019 (the "Decree") was published in the Official Gazette of the Province of Buenos Aires. The Decree approved the new regulation of Provincial Law No. 11,459 on industrial facilities and abrogated the previous regulation (Decree No. 1,741/1996).

This new regulation was enacted on the basis of the recent amendment of article 11 of Law No. 11,459 (through Law 15,107), which will result in a reduction in processing times, greater transparency in the stages and conditions of approval and rejection of the environmental license, and the limitation of the scope of administrative discretion.

Below we will list some of the main changes introduced by the Decree related to the issuance of the Environmental Aptitude Certificate (the "CAA", after its Spanish acronym):

a. Activities affected by the Decree (Annex 1 - Article 2)

The Decree provides that those activities grouped in Annex 3 on the basis of the Activity Nomenclature approved by the Collection Agency of the Province of Buenos Aires will be expressly affected by this regulation. The Provincial Agency for Sustainable Development of the Province of Buenos Aires (the "OPDS", after its Spanish acronym) will periodically review and keep the list of items and activities updated, and publish a list of activities excluded from the application of Law No. 11,459.

b. Changes in the Classification of the Environmental Complexity Level (Annex 2)

Like the previous regulation, the Decree provides for three categories of facilities. The values corresponding to categories 1 and 2 have been modified. The 1^st category applies for facilities whose Environmental Complexity Level (the "NCA", after its Spanish acronym) is up to 15 points. The 2^nd category applies for facilities with an NCA greater than 15 points and, less than or equal to 25. The 3^rd category applies -like the previous regulation- for industries with an NCA greater than 25 points.

c. New formula to calculate the NCA (Annex 2)

The Decree modifies the formula for calculating a facility’s NCA, introducing a factor referred to the risk for handling dangerous substances or merchandise. The new formula may be described as follows:

NCA = Ru (Item or Activity) + Lo (Facility Location) + Di (Sizing) + Ef Re Em (Effluents, Wastes and Emissions) + Sp (Hazardous Substances)

The "Ru" component (Item or Activity) will be determined according to one of the four groups of activities contemplated in Annex 3 of the Decree.

The "Lo" component (Facility Location) will depend on whether the activity is developed or not in an industrial cluster or in port jurisdiction.

The "Di" component (Sizing) will be determined based on the installed active power (HP) and the surface of the facility affected to production.

The "Ef Re Em" component (Effluents, Wastes and Emissions) will be determined based on: (i) the generation of special or non-special waste in the industrial process; (ii) the generation of liquid effluents with or without the need of prior treatment; and (iii) the emission of combustion gases from natural gas and/or water vapor or other components.

Lastly, the “Sp” component (Hazardous Substances) will be determined based on the handling of hazardous substances, either as part of the production process or as a consequence of maintenance tasks.

d. Zoning (Annex 1 - Article 6)

The Decree establishes 4 possible zones (instead of 5 as foreseen in the previous regulation): (i) Zone A (Exclusive Residential), which is not suitable for the installation of industrial facilities; (ii) Zone B (Mixed) that is suitable for the installation of facilities classified as 1^st and 2^nd categories; (iii) Zone C (Exclusive Industrial), which is suitable for any industrial category; and (iv) Zone D (Other Zones), which admits facilities included in any of the categories, taking into account the local urban code and the respective local ordinances, the compatibility of the activity with the area or region based on its resources, the distribution of the population and its geo-economic characteristics in general, at the Municipality's discretion.

e. Processing rules (Annex 1 - Articles 6 and 8)

The Decree provides that the Municipalities may establish their own procedures for the issuance of the CAA for facilities included in the 1^st and 2^nd categories. However, in all cases, the owner or manager of the facility must previously obtain from the OPDS the Classification of the Environmental Complexity Level (the "CNCA", after its Spanish acronym) - Phase 1- .

In order to comply with the terms established in article 8 of Law No. 11,459, the OPDS must progressively implement the specific electronic proceedings throughout the Web Portal established by Decree No. 1,072/18. The issuance of the CAA must be expressly resolved in all cases.

Until the new specific proceedings are approved, current procedures will be governed by the procedural rules set forth in Decree No. 1,741/1996.

f. CAA granting (Annex 1 – Article 3 and 6)

Unlike the previous regulation, the Decree sets out that the CAA for facilities included in the 2^nd category will be issued by the corresponding Municipality, unless it proves technical incapacity and/or lack of resources to carry out the process. In such case the OPDS may sign an agreement with the Municipality to agree a transfer of competences.

The Municipalities remain competent to grant the CAA for 1^st category facilities while the OPDS is still competent to grant the CAA for 3^rd category facilities.

g. Citizen participation phase (Annex 1 – Article 7)

All CAA issued by the OPDS for the installation of new industrial facilities will have to comply with a citizen participation phase. This phase must be performed prior to the issuance of the CAA.

h. Phases to obtain the CAA (Annex 1 – Article 11, section a)

Those facilities that require the issuance of the CAA for the first time, whether new or in operation, must comply with the whole process of approval including the 3 phases set in article 11 of Law No. 11,459 (as amended by Law No. 15,107).

The phases are the following: (i) Phase 1 (the classification that determines the category of the facility); (ii) Phase 2 (the authorization for works which grants the environmental aptitude of the project); (iii) Phase 3 (the authorization for the operation of the productive activities in the facility, that allows to verify the approved works or conditioning set, in the beginning of the start-up process).

i. CAA renewal (Annex 1 – Article 11 section b)

The Decree provides that the renewal of the CAA must be initiated within 60 days prior to its expiration date. The renewal of the CAA implies the extension of its validity term.

j. Facilities modifications and extensions (Annex 1 - Art. 11 section D)

When facilities -that already have a CAA- require carrying out extensions, modifications or changes in their processes, buildings, environments or facilities, they must first initiate a reclassification process. If a facility modifies its category a new CAA must be issued.

The OPDS must establish a reclassification process that clearly differentiates the requirements of the procedure that must be met, according to the magnitude of the requested change and the NCA. Any reclassification process successfully completed will derive in the issuance of a new CAA for another four-year term, regardless its execution date.

k. Existing facilities (Annex 1 – Article 29)

The facilities that under the validity of the previous regulation have proved their prior existence to the sanction of such regulation may continue operating in the place in which they are located, even if it is a non-suitable zone. They will not be able to modify its processes or to expand its current size unless those modifications represent environmental and/or technological improvements and they are approved by the OPDS. The corresponding Municipality must certify the preexistence of the facility for the purposes of the CNCA that will be carried out by the OPDS.