Navigating Brazil’s Stringent Environmental Licensing: What You Need to Know

Brazil’s unique geography and strong mining and power sectors have attracted a lot of international investments. But before diving into these opportunities, especially for Chinese companies, it’s crucial to grasp local environmental laws. Understanding these regulations and securing the necessary permits is non-negotiable.

Brazil’s environmental licensing system is key to protecting its natural resources. Established by the National Environmental Policy in 1981, it demands careful oversight of projects that impact the environment. This regulation was updated in 2011 to clarify the roles of federal, state, and municipal authorities in the licensing process.

According to Article 10 of the National Environmental Policy, any project that may pollute or use environmental resources requires prior approval from government agencies. This ensures that every stage—planning, construction, and operation—meets environmental safety standards.

The licensing process involves various governmental levels:

• Federal Level: The Brazilian Institute of Environment and Renewable Natural Resources oversees projects that affect federal conservation areas or multiple states.
• State Level: State agencies manage projects that fall outside federal and local oversight.
• Municipal Level: Local agencies handle licensing for projects impacting communities.

This process also needs input from other organizations, like the Chico Mendes Institute for Biodiversity Conservation, which helps maintain the environmental quality in Brazil.

Environmental licensing typically goes through three stages:

• Preliminary Licence: This is essential during the planning phase. It checks if the proposed site and environmental framework are feasible and outlines measures for protecting the environment during construction. Major projects will need an environmental impact assessment and possibly hold public hearings.
• Installation Licence: This allows construction to begin once the basic environmental plan is approved by authorities.
• Operation Licence: The final licence, confirming compliance with all environmental aspects, must be requested at least 120 days before the existing one expires.

Moreover, companies may need other permits related to specific environmental activities—for example, registering under the Federal Technical Registry of Potentially Polluting Activities if they use natural resources or ensuring they have the necessary permissions for discharging wastewater or vegetation removal.

It’s crucial for companies to secure these licences early and follow the rules strictly. After a project is finished, they need to report back to the authorities on operational impacts and restore damaged environments. Failing to comply can lead to serious consequences, including fines, project shutdowns, or even criminal charges in severe cases.

Wang Jihong and Xu Yibai are counsel members at Zhong Lun Law Firm. They specialize in helping businesses navigate Brazil’s environmental laws.