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Market Plans

Venezuela Environmental Export Market Plan
Chapter 3
Legal and Regulatory

Principal Environmental Institutions

The major institutional players and their responsibilities are as follows:

Ministry of the Environment and Natural Renewable Resources (MARNR): The MARNR was the first environmental ministry established in Latin America. It is the main environmental authority. The MARNR is responsible for designing and establishing the country's environmental regulations, policies, plans, and infrastructure projects. The ministry is also responsible for the enforcement of regulations. The MARNR is being restructured with the following goals:
1) Decentralizing the operational activities;
2) Strengthening environmental management by modernizing the institutional capacity at the national, state, and municipal levels;
3) Strengthening the role of the private sector and nongovernmental organizations in environmental
management; and

4) Modernizing the national cartography system.

Central Office of Coordination and Planning of the President's Office (CORDIPLAN): CORDIPLAN is responsible for the government's development planning. Policies drawn up by this agency are included in the national plans, which are produced every presidential term and revised every year to assess accomplishment. The current plan, called IX Plan (1994-98), has a special chapter for the environment that describes the government's strategies for environmental and territorial issues.

National Commission for Environmental Technical Regulations: This commission was created by Presidential Decree 2237 on March 30, 1992 and is made up of representatives from the ministries of Development, Sanitation and Social Assistance, Agriculture and Livestock, Energy and Mining, Transportation and Communications, and Urban Development, three representatives of the private sector, and two representatives from non-governmental environmental organizations. The commission is a forum through which all sectors can discuss technical aspects about current and future regulations.

Ministry of Sanitation and Social Assistance (MSAS): The MSAS sets standards, e.g., potable water standards, and develops technical sanitary regulations. The MSAS is responsible for the construction
and operation of water services in areas with populations of less than 1,000 inhabitants and is also responsible for the verification and control of waste management facilities and hazardous waste storage.

Ministry of Industry and Commerce: This agency was formerly called the Ministry of Development. Its mission is to develop the activities of the National Executive in the industrial and commercial sectors and in customer protection. The ministry's specific functions in the environmental sector are in tariff setting for water and wastewater at the national level in coordination with the municipalities.

National Commission of Industrial Norms (COVENIN): This commission has established over 200 standards for industrial and other equipment manufactured and assembled in Venezuela. These standards have also increasingly been applied to imports, which many foreign exporters feel constitutes a nontariff barrier. For certain exporters to Venezuela, compliance with these specifications can be costly.

C.A. Hidrologica Venezolana (HIDROVEN): HIDROVEN is the state-owned water utility holding company. Created in 1990, it is responsible for the implementation of policies and plans defined by the MARNR. HIDROVEN and its ten subsidiaries (table 3) are responsible for providing water and sewage services in the country. By law, these services should be provided by the municipalities and for that reason HIDROVEN is
in the midst of a decentralization process. The goal is to phase out the subsidiaries and replace them with municipal or state companies that will be responsible for providing water services.

Although municipalities are responsible for supplying public services by law, historically, the federal government has been involved in financing and providing many of these services. The decentralization
program aims to transfer the provision of services to the municipalities. Figure 4 illustrates the overall institutional framework of environmental agencies.

Table 3: HIDROVEN’s Regional Subsidiaries
Company Location
HIDROANDES Trujillo, Mérida and Barinas States (except for E. Zamora municipality - Barinas State)
HIDROCAPITALCaracas and its metropolitan area, Miranda St. and Vargas Municipality
HIDROCARIBE Sucre Anzoátegui and Nueva Esparta States
HIDROCENTRO Aragua, Carabobo and Cojedes
HIDROCCIDENTALPortuguesa and Yaracuy States
HIDROPAEZGuarico State
HIDROSURESTE Táchira state and Ezequiel Zamora Municipality, Barinas State
Source: Hidroven.

Environmental Laws and Regulations

More than 80 laws and 400 regulations govern the environment. Many of these are not consistent with each other. In an effort to create a clear regulatory framework, the Venezuelan Government created the Environmental Penal Law in 1991, which is an extension of the Organic Environmental Law of 1976.

The main environmental laws and regulations can be separated into three groups: organic laws, ordinary
laws, and complementary technical regulations. The main regulatory framework is as follows:

Organic Laws:
Environmental Organic Law
Central Administration Organic Law
Administrative Procedures Organic Law
Organic Law for Land Use Planning
Organic Law for the Urban Land Use Planning

Ordinary Laws:
Forestry Law on Soils and Waters
Law for the Protection of Wildlife
Environmental Penal Law

Complementary Technical Regulations and Decrees:
Decree 276- Partial Regulations for the Organic Law
Decree 1257 - Regulations on Environmental Evaluation of Activities Capable of Degrading the Environment
Decree 2210- Technical Regulations and Procedures for Radioactive Materials Management
Decree 2211- Regulations for the Control of Hazardous Waste Generation
Decree 2216- Regulations for the Management of Solid Waste
Decree 2213- Partial Regulations for the Organic Law of the Environment Regarding Environmental Impact Studies
Decree 883 - Regulations for the Classification and the Quality Control of Bodies of Water and Discharges
Decree 638 -Regulations on Air Quality and Atmospheric Pollution Control
Decree 2217- Regulations for the Control of Pollution Generated by Noise
Decree 2218- Regulations for the Classification and Management of Waste Originated in Health Centers

Draft Awaiting Approval: Regulations for the Control and Recovery of Hazardous Materials and Hazardous Waste Management
Ministry of Sanitation and

Figure 4: Institutional Framework of Venezuelan Environmental Institutions

Central Office of Coordination and Planning of the President's OfficeNational Commission for the Environmental Technical Regulations
PlanningMinistry of the Environment and Natural Renewable ResourcesRegulations
General Director
Director of Environmental Quality------------Director of Infrastructure-----------------------------------------Unit for Project Promotion
Director of Air QualityProject DirectorsProject Financing
Director of Water Quality
Director of Waste Disposal
Ministry of Sanitation and Social Assistance
Water Quality StandardsHIDROVEN (National Water Utility Holding)
Water Pricing
Ministry of Development
Regional Water Utilities
Environmental Organic Law (1976): This law sets forth the basic principles for environmental protection. It includes regulations about: land use; rational use of renewable and other natural, continental, and marine resources; prohibition of activities that degrade the environment; educational tools for the development of an environmental conscience; and Venezuelan participation in international environmental cooperation efforts.

The law authorized the National Environmental Council as a consulting entity for the Presidency of the Republic. When established, this entity will be responsible for coordinating regulations at the federal, state, and local levels for adjusting national programs to include environmental conservation, and for developing a defense and enhancement plan.

Environmental Penal Law (1991): The main objective of this law is to make criminal those activities that violate the regulations set forth by the Environmental Organic Law. It also establishes corresponding fines, preventive and damage repair measures, and criminal penalties. Penalties include up to ten years in prison, fines of up to one million bolivares ($50,000), community service, damage repair, and other penalties subject
to a court's decision.

For industry, the law establishes cumulative penalties. After a number of violations, the companies can be subject to temporary or permanent closings. The party responsible for the corporation is held personally accountable for all fines and sanctions.

The MARNR has chosen to use the sanctions provided by the Environmental Penal Law sparingly, preferring negotiations with violators rather than confrontation. Some partial factory closings were
implemented, particularly in the Maracaibo and Lake Valencia areas, because of the seriousness of the contamination problems in those regions.

Technical Regulations: While the Environmental Penal Law qualifies certain environmental activities as criminal, individual decrees provide the specifications, permissible limits, and standards for each different type of pollution source. The most relevant decrees, discussed in this section, illustrate the regulatory framework.

Decree 883 - Regulations for the Classification and Quality Control of Bodies of Water and Discharges. This decree goes beyond setting discharge limits and requires that entities discharging wastewater take into account the wastewater's impact on the water quality of the receptor body.

Two special decrees were published by the MARNR to set limits on discharges into Valencia Lake (Decree 2221) and Maracaibo Lake (Decree 2222) due to the recovery projects that are taking place at these important sites.

Decree 2216 - Regulations for the Management of Solid Waste. This decree sets the rules for the storage, collection, transportation, recovery, recycling, and disposal of hazardous waste. Beyond providing the definition of what is considered nonhazardous solid waste, the decree defines the characteristics of waste containers, transportation vehicles, landfill site selection, accepted treatment technologies, and operation rules for landfills. The decree prohibits the incineration of waste in open areas.

The solid waste management regulations in Decree 2216 establish that the management of all activities related to the handling of solid waste is the responsibility of the municipality. The MARNR provides technical assistance required by the municipalities and ensures compliance with the regulations.

Decree 2211- Regulations for the Control of Hazardous Waste Generation. Decree 2211 defines the wastes considered hazardous. Companies complain that the definition is too general because most of the industrial waste is described as hazardous, when in many cases it can be recovered or recycled.

Decree 2211 also sets specifications for hazardous waste containers, transportation vehicles, landfill site selection, accepted treatment technologies, and operation rules for the landfills. This decree has been ignored by industries due to the shortage of disposal facilities, and the inconsistencies of transportation and storage laws at the state and federal levels. The decree says that all the hazardous waste has to be stored on-site until sent for disposal to a hazardous waste facility. Since there are no hazardous waste facilities in Venezuela, companies must store all their hazardous waste on-site for an indefinite period. The decree prohibits the introduction of hazardous waste into the national territory and only allows exportation to countries that accept its importation.

The MARNR is in the process of publishing a new decree: Regulations for the Control and Recovery of Hazardous Materials and Hazardous Waste Management. This decree will alter the standards for hazardous waste, and make a clearer distinction between hazardous waste and a recoverable hazardous material.

In addition to Decree 2211, the MARNR has regulations regarding fertilizers, pesticides, radioactive materials, and biological waste.

Decree 638 - Regulations on Air Quality and Atmospheric Pollution Control. This decree establishes
regulations for the improvement of air quality and prevention and control of atmospheric pollution produced by fixed or mobile sources capable of generating gas or particle emissions. The decree takes the existing air quality of the region where the activity is proposed into account and establishes the required control mechanisms.

Decree 1257 - Regulations on Environmental Evaluation of Activities Capable of Degrading the Environment. The regulations of Decree 1257 establish procedures for evaluating the environmental impact of activities capable of degrading the environment. The regulations set forth the requirements, including documentation requirements, for conducting both environmental impact studies and more specific environmental evaluations. These regulations require the incorporation of environmental considerations in all stages of new projects and industrial activities.

Decree 2213 - Partial Regulations for the Organic Law of the Environment Related to Environmental Impact Studies. This decree establishes the basic principles, requirements, and procedures for the completion of environmental impact studies to mitigate the effect of activities capable of degrading the environment.

Enforcement Activities and Trends

By law, all companies in Venezuela have to submit environmental compliance plans. When companies
report that they are out of compliance, these plans must include a schedule of investments to bring them into compliance with environmental standards. The amount of time given to an industry to bring itself into compliance varies. Because of the difficult economic situation in recent years, most of the companies are behind in implementation of these plans and have made requests to the MARNR for extensions.

Environmental enforcement in Venezuela has been weak over the last ten years, in large part due to a lack of financial resources to support a nationwide inspection system. The MARNR has only a small enforcement body, an average of three inspectors per state, so as a practical matter it tends to inspect only the larger companies. Environmental inspection visits are infrequent, even to large companies, averaging one inspection visit every 18 months. In most cases, these firms are found to be up to date with environmental upgrade plans submitted to the ministry.

The National Environmental Management Project, supported by the World Bank and slated for implementation in 1998, has a special initiative for surveillance and enforcement. This initiative will focus on both legislation and regulations, as well as a private sector self-reporting system.

Fiscal Incentives

There are no current fiscal incentives for environmental improvements in Venezuela. When the difficult economic situation of the early 1990s affected the government's income, all existing incentives for the protection of the environment were canceled. Now that the Venezuelan economy is improving, the MARNR is discussing with the government's executive branch the reinstatement of some of the environmental incentives that previously existed. Since 1998 is an election year in the country, environmental fiscal incentives are expected to be a part of major party campaigns.

Pollution Prevention and ISO

With the gradual recovery of the economy, larger Venezuelan companies and subsidiaries of multi-nationals
are investigating ways to reduce air emissions, wastewater discharges, and other wastes created by the production process.

The ISO (International Standards Organization) 14000 series establishes a common framework for industry for the prevention of environmental pollution around the world. In 1993, Venezuela's standards entity, COVENIN, established a technical committee to work towards compliance with ISO standards. The federal government is studying plans to provide incentives for the adoption of ISO 14000 standards. One idea is to provide lowcost loans to companies that receive certification. This is still in the early formulation stage, but could emerge as an additional market driver.

Petroleos de Venezuela (PDVSA), the national oil company, is planning to restructure its environmental strategy in early 1998 to meet ISO 14000 standards. Because of its leadership position in Venezuela, PDVSA will spur changes not only in its subsidiaries, but also in the rest of the country's major industries. Corporación Venezolana de Guayana (CVG) is following suit and pressuring its own companies to obtain basic ISO 9000, and ultimately ISO 14000, certification.

Multinationals established in Venezuela also have a high degree of interest in achieving ISO 14000 compliance. Although it is too early to judge the short-term impact of ISO 14000 on pollution prevention in Venezuela, it is clear that it will catalyze projects in the medium term.

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