Answering "No", to this question in the Water Section, will NOT result in the entire module being scored zero. This is because the facility has (or should have) a valid permit, which is the requirement in the Site Info and Permit section for Environmental Permits. As this is Level 1, and without achieving Yes or Partial Yes in any question in Level 1, you will not be able to move to Level 2 or 3 in the Water Section.
Not working as per the limits in the permit is not taken into consideration in the FEM, as this is the responsibility of the relevant authority to enforce the permit requirement, and the Module or the verifier cannot take any action on it.