15. Environmental and Health and Safety Compliance: Avoiding Costly Penalties

Environmental regulation in Colombia, and some other countries in Latin America, was issued originally by the sanitary and health and safety authorities. Nowadays, environmental legislation and institutions have their own rules and procedures for granting permits and authorisations as well as monitoring activities.

This chapter therefore addresses compliance and the avoidance of costly penalties from two legal perspectives: (1) environmental compliance; and (2) health and safety compliance. The focus is on the characteristics, similitudes and differences in Colombia, with some examples from other countries in Latin America.

It is well known that Latin America contains a major portion of the world’s bio­diversity, making it an attractive region in which to develop projects that involve the use of natural resources, which in turn affect the environment and, necessarily, local workforces. This is one of the main reasons why the governments of these countries constantly regulate activities related both to the environment and to the health and safety of workers. In particular, this is important because technological and industrial advances generate risks to the environment, workers, stakeholders and others. Consequently, governments need to enhance relevant laws that regulate these relationships and risks.

To comply with relevant regulations and remain up to date regarding legal requirements, regulated entities should have a mechanism, system or procedure to identify any new laws or modifications of laws issued by national or local government to ensure compliance with environmental and health and safety regulations.

Although there is no specific regulation in Colombia that requires regulated entities to implement such a mechanism or system to keep abreast of new environmental legislation, keeping up to date may reduce risks in the event of legal breaches. Additionally, there are some technical tools and certification systems that help companies to comply with current regulations and minimise exposure to potential penalties.

In this chapter, we highlight some of the current mechanisms available to keep abreast of fast-changing legislation and comply with environmental and health and safety regulations.

Specific local laws: keeping abreast of fast-changing legislation

Environmental law in Colombia

The main laws that include environmental protection regulation are the Political Constitution of 1991, Decree 2811 of 1974 (National Code of Natural Resources), Law 99 of 1993 (which established the National Environmental System) and Decree 1076 of 2015 (which is the Unique Regulatory Decree for the environmental and sustainable development sector). Decree 1076 brings together all the environmental decrees issued by the government to regulate, among other things, the use of water, wastewater, emissions, and solid and hazardous waste. In addition, Law 1333 of 2009 established the sanctioning administrative procedure.

As has been mentioned, legislation to protect the environment in Latin America is constantly changing. For example, throughout 2019, the Colombian government issued regulations to further develop the management of natural resources and to improve environ­mental compensation actions. Some of the key regulatory changes are described below.

Article 321 of Law 1955 of 2019 establishes that an environmental licence holder should update the sum of any compensation investment of not less than 1 per cent of the project value, if the investment is still pending. In addition, under Article 13 of Law 1955, the government has determined that a wastewater discharge permit must be obtained only when final disposal is directly into the sea, the ground or any other body of water.

Since 2009, the Ministry of Environment in Colombia has issued several regulations to implement a circular economy for specific products, such as batteries, car batteries, fluorescent lamps and electronic waste. A circular economy aims to eliminate waste and reduce the exploitation of natural resources.[2] The government issued specific resolutions in this respect in 2016 and 2018, following the national politics of transition from a linear economy to a circular economy. Specifically, Resolutions 668 of 2016 and 1397 of 2018, which regulate the rational use of plastic bags, are the most recent decisions by the government and should be considered by everyone.

The government also issued Decree 2106 of 2019, which regulates a number of procedures before the environmental authorities. For example, the Decree determines that the lifting of the ban on some endangered species of flora will no longer be an authorisation granted by the Ministry of Environment and Sustainable Development; instead the competent environ­mental authority must establish the compensation actions for the project.

Finally, the Ministry of Environment and Sustainable Development is working with the Ministry of Internal Affairs to regulate the process of prior consultation with the indigenous communities, which until now has only been addressed by decisions of the Constitutional Court. This prior consultation, although not an environmental matter per se, is relevant for projects that may affect not only the environment but also the culture of the indigenous people.

Health and safety law in Colombia

Employers in Colombia must enrol their employees in the social security system, which is composed of the health, pensions and occupational hazards systems (OHS).

The OHS operates as an insurance policy. Consequently, there are three essential parties that participate in the scheme: (1) the Occupational Hazards Administrator (OHA), which acts as the insurer; (2) the employer, which acts as the policy holder; and (3) the employee, which acts as the insured. The main regulations are Decree 1295 of 1994, Decree 2800 of 2013, Law 1562 of 2012 and Decree 1072 of 2015.

Compliance with health and safety obligations within labour relationships in Latin America is highly regulated. Peru and Chile, for instance, have their own laws and regulations that act as a guideline to prevent employers’ liability, administrative sanctions and protect employees from labour accidents or diseases. The main regulation in each country is as follows:

  • Peru: Law 29783 and Supreme Decree 005-2012-TR; and
  • Chile: Law 16,744 and the resolution compilation.

Complying with these regulations is often a requirement for employers wishing to partici­pate in public contracts. In addition, the risk of non-compliance could lead to administrative sanctions or disputes with occupational hazard entities. We therefore give a brief summary of health and safety regulations, the main risks to which employers are exposed and how to prove compliance.

Software tools to monitor compliance, licences and permits

The Colombian government has undertaken several measures in recent years to improve the software tools to monitor compliance, licences and permits. Resolution No. 1484 of 2013 established the Environmental Information System of Colombia[3] (SIAC), which is made up of the Environmental Information System (SIA) and the Environmental Planning and Management System[4] (SIPGA).

SIAC is an integrated system of stakeholders, policies, processes and technologies involved in managing environmental information to facilitate the generation of knowledge, decision-making, education and social participation for sustainable development. This system allows the environmental authorities to monitor not only the environment’s natural resources but whether licence holders and permit holders are complying with the given authorisations.

In addition, applicants for environmental licences and permits are required to use a specific geodatabase, which allows the environmental authority to identify the specific area where the project or activity is going to be developed. This mechanism helps the environmental authority to recognise the specific environmental characteristics of the area and how it will, or will not, be affected by a project or activity.

The government of Chile has established a registry of emissions and polluting transfers, which is an open database that collects, systematises and specifies all the information that each company is required to report periodically according to certain sector regulations (mainly emission standards).[5] The indicators to be reported include (1) atmospheric emissions, (2) emissions of liquids, (3) solid waste (hazardous and non-hazardous) and (4) compliance with recycling goals.

The health and safety sector in Colombia has not yet developed any software tools to monitor the activities and performance of employers; this is mainly because the OHA has constant access to the information uploaded by employers to the OHS. This allows the authority to monitor any information submitted, and to establish whether it complies with what is stated in the labour regulation.

Identifying and addressing potential liabilities: Colombia

Environmental and health and safety liabilities arise from breaches of the law or permits granted by the competent authorities. Bearing in mind that the administrative authority that monitors environmental compliance is not the same competent authority that monitors the compliance of health and safety regulation, it is important to understand the types of liabilities that may arise from a breach of environmental law and the liabilities arising from non-compliance with labour law.

Environmental liabilities

The enforcement of Colombian environmental law follows the rules of administrative procedural law. The liability regime is stated by Law 1333 of 2009, which regulates the environmental administrative punitive proceeding. According to this Law, the competent authorities (the National Authority for Environmental Licensing and regional and local environmental authorities) have enforcement powers to investigate a presumed breach of any environmental legislation, permit violation or environmental damage within their jurisdiction, and initiate an environmental punitive administrative process with a view to imposing penalties and establishing measures to compensate for any environmental damage.

The penalties that may be imposed by the environmental authorities vary from economic penalties to the suspension of a licence or of activities. It also enables the environmental authorities to impose preventive measures to avoid any likely environmental damage occurring.

It is also possible for civil and criminal liability to arise from the same breach of an environ­mental law or permit. Regarding civil liability, it implies that there may be contractual and tort liability. In any of these cases, liability must be assumed by the person or project causing the environmental harm; the person or project will also be obliged to indemnify the claimant within the civil proceeding. The civil liability process is different from the environ­mental liability process, in which the claimant must demonstrate the existence of the three elements that determine someone’s civil responsibility: (1) an action or omission committed with negligence or wilful misconduct; (2) the existence of damage; and (3) the connection of these two elements in the liability that is being investigated.

Finally, regarding criminal law, Articles 328 to 339B of the Colombian Criminal Code regulate crimes associated with natural resources and the environment that generate a criminal liability, including:

  • illegal use of renewable natural resources;
  • violation of national frontiers for the use of natural resources;
  • illegal use and manipulation of genetically modified organisms and micro-organisms;
  • illegal manipulation of exotic species;
  • damage to natural resources;
  • environmental contamination;
  • environmental contamination caused by solid hazardous wastes;
  • environmental contamination caused by the exploitation of hydrocarbons;
  • illegal experimentation with species, biological material or biochemical material;
  • illegal fishing;
  • invasion of protected areas;
  • illegal exploitation of mines;
  • illegal hunting; and
  • animal abuse.

Criminal law in Colombia has a unique procedure whereby if a defendant is found responsible for the charges, it should be sanctioned with the penalties described in the Criminal Code, including imprisonment and monetary fines. Note that the three above-mentioned liabilities may occur at the same time and may arise from the same breach of law or permit.

How to avoid environmental liabilities

To avoid any type of liability, regulated entities should establish a mechanism that allows them to identify the legal obligations for the specific project. If it is a new project, it is important to identify these legal requirements before the project begins. On the other hand, if it is an ongoing project, it is necessary to perform due diligence to verify the current environ­mental legal status of the project and determine whether it should obtain new permits or authorisations or comply with a specific regulation with which the project is not yet in compliance.

In addition, to avoid environmental liabilities, environmental licensees or permit holders should identify the legal requirements for each phase of the project, including the construction phase, the operation phase and the closure phase. In accordance with the environ­mental legal framework, the main legal requirements that should be considered for a project in Colombia include:

  • environmental licences: for projects specifically listed in Decree 1076 of 2015;
  • permits to use natural resources:
    • discharge of wastewater permit;
    • water concession;
    • emissions permit; and
    • logging permit;
  • registers: anyone generating hazardous waste; and
  • parameters or standards:
    • wastewater; and
    • emissions.

To establish mechanisms to be updated in the regulation, there are a number of alternatives. As already mentioned, one of these is to conduct due diligence to determine and evaluate the environmental legal requirements, including obligations imposed by environmental permits, licences, follow-up requirements made by the environmental authorities or prior consultation, if applicable.

Another option is to apply an environmental management system such as ISO 14001, which seeks to manage the environmental responsibilities of a project in a systematic manner, including all the regulations that have been issued by the respective governments. There is not a specific law or authority that establishes a guideline or mechanism that regulated entities may adopt or follow to avoid any type of liability.[6]

ISO 14001 is an international certification that helps organisations to achieve the intended outcomes of its environmental management system. This certification will provide value for the environment as well as interested parties. The certification enhances the environ­mental performance of the organisation, the fulfilment of compliance obligations and the achievement of environmental objectives.

For this reason, organisations should constantly update their regulation database and consider having an external legal expert that evaluates and determines whether an organisation is complying with environ­mental regulations and the permits granted by the competent environmental authority.

It is important to bear in mind that neither due diligence nor a certification can guarantee that an organisation is complying with all applicable regulations. The contingencies identified during the verification processes, and the recommendations proposed by external legal experts, should be addressed by the organisation.

Health and safety liabilities

Companies that fail to comply with the obligations established under the OHS may be subject to administrative sanctions or disputes with the OHA regarding recognition of the covered benefits. The Ministry of Labour may impose fines of up to 1,000 monthly minimum legal wages.[7]

Colombian legislation adopts a strict liability standard for health and safety matters, which means that, as a rule, whenever a work-related accident occurs or occupational disease is experienced, the affected employee is entitled to compensation regardless of the possible liability of the employer. In the event of a work-related accident or an occupational disease, the OHA will compensate the employee for the damage suffered based on a tariffed scheme defined by law, and only in the exceptional circumstances of the employee’s gross negligence could the OHA deny compensation to the employee.

Decisions rendered by the Colombian Supreme Court of Justice have indicated that there is a contract-based liability resulting from occupational accidents and diseases.[8] As a result of this contract-based liability, in the event of an occupational accident or disease, the employer will also be liable for all proven damage suffered by the employee, provided that:

  • the relevant work-related accident resulted in organ injury, a pathological state or functional impairment, whether temporary or permanent;
  • the relevant work-related accident resulted in the permanent or temporary disability or death of the employee;
  • the employer breached health and safety obligations; or
  • the relevant work-related accident occurred as a consequence of the violation by the employer of its occupational health and safety prevention obligations.

This type of responsibility could apply to an employer or a contractor that had to comply with health and safety obligations for work performed on the contractor’s premises.

Colombian law does not provide a maximum level of damages or a way to calculate them owing to contract-based liability. In the event of a judicial claim, the amount will be decided by the court and based on the evidence provided by the plaintiff. These damages may include (1) actual damages, (2) consequential damages and (3) compensatory damages. The indemnification will be payable even if the OHA handles the cost of the survival pension and funeral expenses.

How to avoid health and safety liabilities

Under the OHS, all employers must comply with the following occupational health and safety obligations.[9]

  • Enrol employees in the OHS and pay the resulting fees to the OHA in a timely manner. The fees are a percentage of each employee’s salary, which varies between 0.522 per cent and 6.96 per cent, depending on the type of activity to be performed by the employee and the risks associated with that activity. Failure by an employer to enrol its employees in the OHS will render the employer directly liable for any work-related accident or occupational disease.
  • Inform the OHA of any work-related accident or incident.
  • Draft and execute a management system for safety and health in the workplace, which must include the sub-plans required by law. These sub-plans must include at least an emergency plan and a risk matrix.
Health and Safety at Work Committee (COPASST)Resolution 2013 of 1986For employers with 10 or more employees, appoint and retain a health and safety at work committee.
Health and Safety at Work OfficerDecree 1295 of 1994For employers with fewer than 10 employees, appoint a health and safety at work officer to oversee compliance with health and safety regulations.
Health and Safety at Work RulesColombian Labour CodeFor employers with 10 or more employees, prepare and implement the Health and Safety at Work Rules.
Coexistence CommitteeLaw 1010 of 2006Employers with direct employees must incorporate a coexistence committee, made up of a representative of the employees and a representative of the employer, with their relevant deputies. For companies with more than 20 employees, there will be two representatives for each party with their relevant deputies.
Health and Safety at Work SystemDecree 1295 of 1994 and Law 1562 of 2012Implement and undertake a health and safety at work management system. This system must include, at least, an emergency plan, risk assessment, and all other requirements ordered by law.
  • Provide employee training in occupational health and safety matters.
  • Carry out prevention and awareness-raising activities regarding occupational hazards.
  • Set up and maintain a health and safety committee (the Committee) made up of representatives of the company and the employees, or a health and safety supervisor, depending on the number of employees working in the company.
  • The Committee or the supervisor must meet every month and must (1) audit the prevention activities initiated by the company and (2) help to investigate work-related accidents or incidents.
  • Enforce an updated occupational health and safety regulation.
  • Provide workers with protective equipment that is adequate for the degree of risk to which they are subject while performing their assignments.

In addition, pursuant to Article 3 of Resolution 2346 of 2007, employers bear the costs of the following medical examinations for their employees:

  • pre-hiring examination;
  • periodical examinations (at least once a year); and
  • termination examination.

With respect to the beneficiary of the work performed by the employees or contracting party (the Contractor), Article 15 of Decree 2800 of 2003 sets forth:

Prevention by contracting parties: Natural persons and legal entities must include their independent contractors in their management system for safety and health in the workplace, and allow such contractors to participate in their occupational health and safety committee.
Paragraph. For the purposes of prevention, promotion and occupational health activities in general, independent contractors will be deemed to be dependent employees.

Note that if an employer fails to enrol its employees in the OHS or fails to pay the required fees, the employer will be liable for all amounts that otherwise would have been covered by the OHA. Additionally, the employer will have to pay to the OHA default interest at the highest legal rate.[10]

To prevent potential liability and comply with labour legislation regarding the OHS, the employer must have all social security contribution payment receipts. These documents will provide third parties with the certainty of compliance and prevent sanctions.

Demonstrating compliance as an advantage in winning contracts

Legal compliance is the main element that anyone with an interest in signing a private or public contract should demonstrate to obtain an advantage over other proposals. As part of the due diligence developed by the different economic sectors, the environmental and health and safety standards are very important legal elements that are valued in the adjudication processes.

In addition, during the financing processes to develop any project, the investors verify the main legal aspects, specifically the relationships between the person who is going to develop the project and the different competent authorities and the process of obtaining the permits, licences or authorisations required for developing the project.

Demonstrating compliance is an advantage in any public or private contract because investors prefer to invest in projects led by companies that already comply with the legal system and that will continue to comply with the regulations and the obligations established in the permits or authorisations granted to the project.

In addition, some organisations are exclusively financing projects that have a positive environmental impact. The World Bank, for instance, has an Environmental and Social Policy for Investment Project Financing.[11] In particular, the Policy states that:

C. Environmental and social due diligence
30. The Bank will conduct environmental and social due diligence of all projects proposed for support through Investment Project Financing. The purpose of the environmental and social due diligence is to assist the Bank in deciding whether to provide support for the proposed project and, if so, the way in which environmental and social risks and impacts will be addressed in the assessment, development and implementation of the project.[12]

This is an example in which it is clear that financing organisations are tending to provide finance to ‘sustainable’ projects rather than those that are not considering environmental compliance as a priority.

Conclusion

Governments in Latin America are constantly updating their regulations to protect the environment and those who are part of the workforce of the different projects that are being developed in their jurisdictions.

Considering the liabilities that a project may face if failing to comply with regulations and obligations arising from permits and licences granted by competent authorities, regulated entities should implement mechanisms that allow them to verify their compliance, especially the main legal aspects of environmental and health and safety rules.

Additionally, demonstrating compliance with environmental and health and safety regulations is an important factor in gaining access to public and private contracts and in obtaining financing. Finally, it is important that companies are mindful that the prior consultation process, and the socialisation of projects, are also legal mechanisms that should be applied to avoid costly penalties, and that companies should develop projects with the support of the communities within the relevant jurisdictions of those projects.


[1] Luis Fernando Macías Gómez and Carolina Porras are partners and Alexander Acosta Jurado, María Paula González Espinel and Irene Salazar are associates at Philippi Prietocarrizosa Ferrero DU & Uría.

[2] GreenCircle Certified LLC provides third-party certification of environmental claims, known as Closed Loop Product Certification < www.greencirclecertified.com/closed-loop-product>.

[3] For monitoring environmental resources.

[4] For tracking and evaluating the planification instruments of regional environmental authorities.

[5] MInistry of Environment, Registry of Emissions and Polluting Transfers < https://retc.mma.gob.cl/datos-retc/>.

[6] ISO 14001:2015 – Environmental management systems: Requirements with guidance for use < https://www.iso.org/standard/60857.html>.

[7] For 2020, the monthly minimum wage is of 877.803 Colombian pesos (approximately US$259.83).

[8] Supreme Court of Justice, Labour Chamber, 16 February 1959.

[9] Decree 1295 of 1994, Article 21; and Law 1562 of 2012.

[10] Law 1562 of 2012, Article 7.

[12] id., at p. 7.

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