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Executive Order 531/19 of the Province of Buenos Aires

Through Executive Order 531/19, the Executive Branch of the Province of Buenos Aires repealed historic Executive Order 1741/96, regulating Law 11,459, governing the opening and operation of industrial establishments in the province, thus setting forth new regulations (the “New Regime”).

The Province of Buenos Aires thus follows the path taken by the Provincial Legislature in early 2019, which, through Law 15,107, raised to four (4) years the duration of Environmental Fitness Certificates (“EFCs”) and set forth a new procedure to issue them, divided into three (3) integrated phases (the “Phases”):

-          Phase 1: it comprises the Classification of the Level of Environmental Complexity (“CLEC”) and determines the category of the industrial establishment.

-          Phase 2: it comprises the authorization to construct the works and the granting of the environmental fitness to the establishment project.

-          Phase 3: it comprises the authorization for the productive activities of the establishment and the verification, at the outset of the operation, that the approved works have been carried out or the conditions set out have been satisfied.

Furthermore, Law 15,107 introduced the concept of “irregularly operating establishment” to refer to establishments that operate without an EFC or have an EFC that has expired and have not applied for a new one within 12 (twelve) months following the publication of the law (January 4, 2019).

Below is a summary of the important aspects of the New Regime.

  1. Business Activities Covered. The business activities covered are specified based on the list of business activities (NAIIBB-2018) approved by the Province of Buenos Aires Revenue Agency (ARBA). The enforcement authority, that is, the Provincial Sustainable Development Agency (OPDS), reserves the right to periodically revise the groups according to their categories and business activities.
  1. Formula to Calculate the Level of Environmental Complexity. The formula to calculate the Level of Environmental Complexity (“LEC”) of industrial establishments was approved, creating categories 1, 2, and 3.
  1. Zoning. Guidelines are established to certify the zoning carried out by municipalities, in keeping with the territorial planning of each district, according to the following classifications:

(i)        Zone A (exclusively residential): unfit for industrial establishments.

(ii)       Zone B (mixed): fit for establishments of categories 1 and 2 in accordance with the Urban Planning Code and the pertinent local ordinances.

(iii)     Zone C (exclusively industrial): fit for establishments of categories 1, 2, and 3.

(iv)     Zone D (other zones): it permits industrial establishments of categories 1, 2, and 3, taking into account the Urban Planning Code and the pertinent local ordinances, the compatibility of the business activity with the purpose of the region according to its resources, the population distribution, and its general geo-economic characteristics, at the municipality’s discretion.

The interested party cannot apply for or obtain the CLEC if the municipality determines that (a) the area is not fit for the opening or operation of the establishment in question or (b) there is a municipal prohibition on some type of industrial activity in that district.

  1. Pre-Existing Establishments. Industrial establishments that, when Executive Order 1741/96 was in force, proved that they predated the issuance of that order, may keep operating at their current locations, even if they are in an unfit zone. The municipality must certify the pre-existence of the establishment for the purposes of the CLEC to be issued by the enforcement authority.  Modifications of production processes or expansions of premises in those establishments will be permitted as long as they imply a technological and environmental improvement and are previously authorized by the enforcement authority.
  1. Establishments of Categories 1 and 2. Municipalities may issue their own regulations to grant EFCs to industrial establishments of categories 1 and 2. The owner or person in charge of the establishment must in all cases previously obtain the CLEC from the enforcement authority. If a municipality proves that it is technically unable or does not have resources to grant EFCs to industrial establishments of category 2, the enforcement authority may enter into agreements to transfer the respective powers.
  1. Procedure. Applications for approval and Environmental Impact Assessments (“EIA”) must observe the order, fields, and requirements set forth under the resolution implementing the electronic process. The enforcement authority must gradually implement the specific electronic processes. While the specific processes are pending approval, ongoing proceedings will be governed by Executive Order 1741/96.
  1. Citizens’ Participation. Applications for EFCs for new industrial establishments will be subject to a stage with the participation of citizens before their issuance.
  1. Expansions and Modifications. The enforcement authority will set out requirements to be met by any establishments wishing to expand or modify their processes, buildings, rooms, or premises, determining the procedure to reclassify the CLEC, its scope and effects, and the cases where a new application and/or EIA must be submitted before the new EFC is granted.
  1. Pre-Feasibility. If an industrial establishment wishes to move or have its LEC reclassified, it may apply for a pre-feasibility certificate, which is valid one hundred and eighty (180) days, within which it may continue the application for the CLEC.
  1. Procedures Pending Regulation. The New Regime requires the enforcement authority to approve procedures intended to fulfill the following provisions:

(i)        Industrial establishments that need to obtain an EFC for the first time, whether they are new or already in operation (with works commenced and/or active industrial processes), must go through the Phases. However, differences must be set forth in the scope, depending on whether the industrial establishment is new or already in operation and regularizing its situation.

(ii)      The EFC renewal must be applied for within 60 (sixty) consecutive days before its expiration and implies that the LEC values will not be modified. A new EFC will not be issued; instead, the duration of the existing one will be extended.

(iii)     When an industrial establishment with an EFC wishes to modify its premises and processes, a proceeding involving all Phases must be started. The reclassification process, if successful, will result in the granting of a new EFC for 4 (four) years, regardless of when it is carried out.

(iv)     Whenever it is proved that an industrial establishment does not comply with the EFC issuance conditions or with existing regulations, a reasonable period might be granted to remedy any breaches. The enforcement authority may revoke the EFC whenever the seriousness of the breach so warrants, through a resolution stating the grounds for the revocation.

  1. Changes of Ownership / Company Name. Changes of ownership must be notified whenever they imply a change in the Taxpayer’s ID Code (CUIT) of the individual or business entity. Besides, any changes of company name, legal representative, or general attorney-in-fact of the establishment must be notified within the following 10 (ten) days.
  1. Preventive Closure. The New Regime provides for guidelines to impose progressive penalties for violations and regulates the process for preventive closures, which are appropriate whenever (i) it is verified that the establishment failed to obtain or renew the EFC as and when due and/or (ii) there is a serious risk of damage to the health of workers, the population, or the environment and preventive measures must be adopted urgently.
  1. Industrial Groups. EFCs for industrial groups will be issued exclusively by the enforcement authority within the specific framework to be created. They will not need renewal unless modifications are projected in connection with the type or category of establishment that might be opened in the group or with their expansion in size. Industrial establishments that are part of the group must individually comply with the New Regime.
  1. Public-Use Ports and Prisons. In the jurisdiction of public-use ports owned by the Province of Buenos Aires, prisons, and other real property of provincial jurisdiction, the enforcement authority will issue the EFC regardless of the category.