Santiago Court Imposes Fine on Real Estate for Unauthorized Groundwater Extraction

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Santiago Court Upholds Groundwater Fine Against Real Estate Firm

SANTIAGO, CHILE – In a ruling that underscores the importance of responsible water resource management, the Court of Appeals of Santiago has upheld a fine levied against a real estate company for unauthorized groundwater extraction. the decision, made public on September 22nd, 2025, reinforces the regulatory authority of the General Directorate of Aguas (DGA) and sets a precedent for stringent enforcement of water usage regulations.

The case stemmed from a claim by a real estate developer who argued the sanction of 551 UTM (a local Chilean unit of account) was disproportionate, asserting that the water extracted was solely for land stabilization-moisture and compaction-and not for commercial purposes. They contended the volume was minimal, posing no threat to aquifers or other water rights, and highlighted their prompt cooperation in halting the extraction after inspection. They also argued the location within a restricted area shouldn’t amplify the penalty.

However,the DGA maintained its position,citing direct evidence of unauthorized extraction at a rate of 1.3 to 2.85 liters per second. Crucially,the company lacked a registered water usage right,and the extracted water was undeniably used for construction-related activities,not purely domestic needs. Furthermore, the well’s location within a declared restriction zone since 2007 justified the increased fine.

The Court of Appeals dismissed the company’s appeal, clarifying that the legal process is designed to review the legality of the DGA’s actions, not to re-evaluate the technical basis of its decisions.It emphasized that securing a water usage right through official channels and registration is mandatory. the court further clarified that Chile‘s Water Code protects only water extraction for exclusive domestic use, a condition not met by the real estate firm. Additionally, the court upheld the request of a penalty increase of up to 75% for infractions occurring in restricted areas, even without demonstrable impact on consumers or the ecosystem.

Key Detail	Information
Fined Company	Real estate developer
Regulatory body	General Directorate of Aguas (DGA)
Fine Amount	551 UTM
Extraction Rate	1.3 – 2.85 liters/second
Location of Well	Declared Restriction Zone (since 2007)

Did you know? Chile is experiencing increasingly severe water scarcity, especially in central regions. Recent studies indicate rainfall has decreased by up to 30% in some areas during the last three decades, highlighting the urgency of enduring water management practices. https://www.worldbank.org/en/news/feature/2024/04/11/chile-s-water-crisis-can-technology-and-policy-innovation-help

This ruling underscores a growing global trend toward stricter enforcement of environmental regulations. The case highlights the necessity for businesses to proactively secure necessary permits and adhere to water usage laws.

Pro Tip: Before commencing any project involving water extraction, always verify local regulations and obtain the required permits. Failure to do so can result in significant financial penalties and legal repercussions.

Is this ruling likely to impact future growth projects in water-stressed regions of Chile? What steps can businesses take to ensure compliance with water regulations and promote sustainable water usage?

What specific legal provisions within Chile’s Water Code were violated by the real estate developer’s unauthorized groundwater extraction?

The Ruling and its Implications for Chilean Water Rights

A Santiago court recently levied a significant fine against a prominent real estate developer for extracting groundwater without the necessary permits. This landmark decision underscores the increasing scrutiny of water resource management in Chile and sets a precedent for future enforcement of water rights regulations. The case highlights the critical importance of adhering to legal frameworks surrounding groundwater extraction and the potential consequences of non-compliance. The fine, reportedly exceeding 5,000 UTM (Unidad Tributaria Mensual – a Chilean tax unit), also mandates the developer to implement a remediation plan to address the environmental impact of the unauthorized extraction.

Understanding Chile’s Water Code and Groundwater Regulations

Chile’s Water code (Código de Aguas) is the foundational legislation governing water resource allocation and use. it establishes a system of water rights, granting individuals and entities the right to use a specific volume of water from a defined source. However, the system has faced criticism for prioritizing water allocation to established rights holders, often at the expense of environmental sustainability and community needs.

Here’s a breakdown of key aspects related to groundwater:

* Groundwater as Public Good: While water rights are private, groundwater is considered a national asset for public use.

* Permitting Requirements: Any significant groundwater extraction requires a permit from the Dirección General de Aguas (DGA), the national water authority. These permits are subject to technical studies assessing the impact on the aquifer.

* Maximum Allowable Extraction: Permits specify the maximum volume of water that can be extracted, based on sustainable yield calculations.

* Monitoring and Reporting: Rights holders are typically required to monitor and report their water usage to the DGA.

Details of the Santiago Court Case

The real estate developer in question was found to have been extracting groundwater for construction purposes – specifically, for concrete mixing and dust suppression – without obtaining the required DGA permit. Investigations revealed that the volume of water extracted significantly exceeded what would have been permissible under a standard permit, raising concerns about potential depletion of the local aquifer and impacts on neighboring water users.

Key findings presented in court included:

1. Lack of Environmental Impact Assessment: the developer failed to conduct a proper environmental impact assessment prior to commencing extraction.
2. Insufficient Metering: Inadequate metering systems made it challenging to accurately determine the volume of water extracted.
3. Violation of Water Code Article: the court cited a direct violation of Article 145 of the Water Code, which mandates permits for all significant water withdrawals.
4. impact on Local Aquifer: Expert testimony indicated a measurable decline in the water table in the vicinity of the construction site.

Consequences Beyond the Fine: Remediation and Future implications

The court’s decision extends beyond the financial penalty. The developer is now obligated to:

* Develop and Implement a Remediation Plan: This plan must outline steps to mitigate the environmental damage caused by the unauthorized extraction, potentially including artificial aquifer recharge or the development of option water sources.

* cease Unauthorized Extraction: All unauthorized groundwater extraction must promptly cease.

* Regular reporting to DGA: The developer will be subject to increased scrutiny and regular reporting requirements to ensure compliance with water regulations.

This case is expected to have a ripple effect throughout the Chilean real estate and construction industries. It sends a clear message that the DGA is actively enforcing water regulations and that companies will be held accountable for non-compliance. Expect to see increased due diligence regarding water rights during project planning and a greater emphasis on sustainable water management practices.

Best Practices for Real Estate Developers & Construction companies

To avoid similar legal and financial repercussions, real estate developers and construction companies operating in Chile shoudl prioritize the following:

* Early Water rights Assessment: Conduct a thorough assessment of water availability and water rights requirements before commencing any project.

* Secure Necessary Permits: Obtain all required permits from the DGA before initiating any groundwater extraction.

* Accurate Metering and Reporting: Install and maintain accurate metering systems to track water usage and submit regular reports to the DGA.

* Sustainable Water Management Plan: Develop and implement a thorough sustainable water management plan that minimizes water consumption and promotes water conservation.

* Environmental Impact Assessment: Conduct a thorough environmental impact assessment to identify potential impacts on water resources.

* Legal Counsel: Engage experienced legal counsel specializing in Chilean water law to ensure compliance with all applicable regulations.

The Role of Technology in water Resource Management

Emerging technologies are playing an increasingly important role in water resource management in Chile. These include:

* Remote Sensing: utilizing satellite imagery and aerial surveys to monitor groundwater levels and identify areas of