New Regulation Allows Delegation of Federal Environmental Licensing Authority to State and Municipal Agencies

On February 20, 2019, the Brazilian Institute of the Environment and Renewable Natural Resources (“IBAMA”) published Normative Instruction No. 8/2019 (the “normative instruction”), which establishes how IBAMA may delegate its authority to conduct the federal environmental licensing process. Under the circumstances set forth in the rule, IBAMA may delegate the licensing process to state or municipal environmental agencies or public consortia.

The normative instruction also allows any company that has applied or will apply for a license to request that IBAMA delegate the licensing process. The rule also safeguards the company’s right to be informed of what is happening during the delegation proceeding whenever it was initiated by IBAMA or by a state or municipal environmental agency.

The normative instruction authorizes IBAMA to delegate its authority to a single state or municipal environmental agency even in situations concerning activities that affect more than one state or municipality. 

IBAMA may also delegate the licensing process to a certain state or municipal agency when there is a dispute in court about which is the right agency to conduct the licensing process and when this dispute may result in a delay in the granting of the license and in governmental liability.

The delegation will be implemented through a Technical Cooperation Agreement ("ACT") between IBAMA and the delegated environmental agency and will last for a period noted in the agreement.

The delegation process will be subject to the supervision of IBAMA's Department of Environmental Regulation and Delegations (“SERAD”) and will require a legal analysis of administrative convenience and opportunity by IBAMA. The delegation may also be revised at any time, provided that the revision is preceded by due process of law.

The normative instruction emphasizes that, in the event of a delegation followed by  environmental infractions by the licensed company, the delegatee will have the authority to assess the infractions and issue the relevant infraction notices.;

The regulation also clarifies that, except if otherwise set forth in the delegation instrument, IBAMA has the authority to assess and calculate the environmental compensation, which is an amount set forth by Brazilian Law due by companies engaged in activities with a high potential to pollute to offset adverse environmental impacts that cannot be mitigated or avoided.

It also should be noted that any agreement concerning the delegation of authority signed before the publication of the normative instruction will remain in force during the term of the agreement, and, upon its renewal, the agreement must be amended in accordance with the provisions of the new regulation.

Taking that into account—and as part of the environmental management of its enterprise—any company waiting for an environmental license from IBAMA or that intends to apply to IBAMA for a license should assess the plausibility of, and balance the pros and cons of, a delegation of authority from IBAMA to a state or municipal environmental agency or a public consortium. The company should also be prepared to follow—and to file or make a statement in relation to—administrative proceedings regarding the delegation of authority for conducting the environmental licensing process.