The Company, its subsidiaries, jointly controlled companies and affiliates are subject to extensive legislation and regulation in the environmental sector related, among other aspects, to atmospheric emissions, waste management and interventions in specially protected areas. The Company needs licenses and authorizations from government agencies to conduct its activities. In the course of the environmental licensing process, the licensing agency may delay the analysis of requests for the issuance or renewal of licenses and authorizations necessary for the Company’s business, or even reject these requests, requiring compliance with complex and onerous conditions, which may delay the implementation of the Company’s projects, negatively impacting the project schedule and the costs of its implementation. The Company’s inability to meet the technical requirements (conditions) established by such environmental agencies in the course of the environmental licensing process, may harm, or even prevent, as the case may be, the installation and operation of the projects, as well as the development of activities of the Company, which may adversely affect its operating results.
In the event of violation or non-compliance with such laws, regulations, licenses and authorizations, as well as obligations assumed in terms of conduct adjustment or terms of environmental commitment or in judicial agreements, the Company may suffer administrative sanctions, such as fines, interdiction activities, cancellation of licenses and revocation of authorizations, as well as criminal sanctions (including its administrators), which may materially and adversely affect our reputation, image, revenue and operating results. The Public Prosecution Service may initiate a civil investigation and / or, from the outset, promote a public civil action aimed at compensating for any damages caused to the environment and third parties.
Additionally, in the civil sphere, the environmental damage caused, directly or indirectly, by the Company, its subsidiaries, jointly controlled and associated companies may imply joint and several liability, this means that the obligation to repair the damage caused may affect everyone, directly or indirectly. indirectly involved, regardless of the agents’ proof of guilt or fraud. As a consequence, environmental damages, even if they result from activity carried out by contracted third parties, may generate liability for the repair to the Company, at which time the company that has better financial conditions to do so may be required to remedy or pay damages. it, subsequently having the right of recourse against the other companies involved. In Brazilian law, there is no provision for a ceiling or limit on the amount to be fixed as an indemnity for environmental damage, which will be proportional to the damage caused. Still, the doctrine and the jurisprudence have a majority understanding that the repair and / or indemnification of environmental damages is not subject to prescription, as it involves diffuse and collective interests, which deserve to be widely protected.
Violations of environmental legislation may also result in administrative penalties, such as fines provided for in Federal Decree No. 6,514 / 2008, in the amount of up to R $ 50 million in more serious cases, when major environmental damage and / or with risk to human health. Such fines are applicable in double or triple, in case of recurrence. Among others, administrative penalties may also involve warning, work or activity embargo, demolition of the work or partial or total suspension of its activities, especially when there is an imminent danger to public health, serious risk of environmental damage or in cases of recalcitrance, where the fines previously imposed have not been sufficient to correct the offender’s conduct. It should be noted that administrative and criminal sanctions will be applied regardless of the obligation to repair the damage caused to the environment and to affected third parties. The environmental legislation also provides for the possibility of disregarding the legal personality, whenever this represents an obstacle to the recovery of damages caused to the quality of the environment, and may give rise to the liability of the Company’s partners and administrators.
Government agencies or other authorities may also issue new stricter rules or seek more restrictive interpretations of existing laws and regulations, forcing the Company to spend additional resources on environmental adequacy and / or on licensing areas that will be used for the implementation of new projects.