Legal consequences of the current water crisis
The southeast region of Brazil is currently experiencing severe drought, and the population, corporations and public authorities are in high alert regarding water consumption and management. The manufacturing and agribusiness sectors in the country have suffered greatly with the drought. The National Policy of Water Resources (PNRH) was established by law in 1997 to integrate multiple interests of use of water resources. The current drought in this region has been forcing environmental agencies and public authorities to scrutinize the use of water resources and to follow the terms of PNRH.
According to the terms of PNRH, all the different sectors which are water resources users are entitled to water access but human consumption and animal thirst quenching take priority in the water use in situations of scarcity. The current water resource crisis has been affecting all sectors of the economy, and most importantly, the supply for millions of people.
As a result, in 2014 environmental authorities responsible for water management have been adopting a more proactive approach, especially in connection with water management in the State of São Paulo. In the beginning of that year, the National Water Agency (ANA), and the Department of Water and Energy of the State of São Paulo (DAEE) created the Technical Advisory Group for the Cantareira System Management (GTAG - Cantareira), responsible for monitoring the data for the tanks and components structures in addition to evaluating water storage.
The Federal and the State of São Paulo Prosecution Offices have also been very active and have filed civil class actions suits in connection with Systems Alto Tietê and Cantareira questioning the reduction of water flow intake.
The current water crisis will take long to be resolved, and even after it is resolved the public supervision of water use will remain strict, the requirements for granting of the use of water resources and the definitions of water use and changes in consumption patterns .should both stay in place.
The current water scarcity might also impact the production in certain companies increasing production costs in various industry sectors. As a consequence, companies must become more aware of their use of water and have looked for more alternative methods to reduce consumption. The banks have also been considering companies′ initiatives to reduce water consumption and their dependence on water resources before the granting loans or providing financing.
The failure to comply with water resource legislations may also result in liability to wrongdoers. Individuals or corporation that use water without proper authorization, in breach of its technical conditions, or pollute waters, are subject to administrative penalties that may range from warnings, fines up to R$ 50 million, injunctions, and other sanctions, in addition to civil liability to repair environmental damages, which usually involves civil investigations and class actions lawsuits.