Samarco Agreement Draft A Springboard To Model Language on All TSF’s With “Extreme” Hazard Classification

“There will be complete restoration of socio-economic conditions and of the affected environment. And I want to emphasize: There will be no financial limits until there is full reparation,” Rousseff said, according to AFP. “We want to build a new life on the ruins.”
Attached please find a still very crude Google/Bing  translation* of  the February 26th draft of the Samarco, BHP, Vale settlement agreement on the $US5.2 billion in civil damages.

The actual final is still not available for examination but this draft as of a few days before the final was signed and announced, offers a  powerful, enlightened springboard to model language that should attend all approvals of TSF’s with “Extreme” or “Very High” hazard rankings. With eloquence, wisdom and  clarity this document recognizes the nature and extent of present, still unfolding and enduring loss and the impossibility of restoration to “as before” for so much of the social, cultural, biologic,terrestrial, riverine,watershed, marine and other losses this man-made, avoidable catastrophe has caused.  Even stray dogs and cats are mentioned and wild animals who have lost habitat as is the enduring collective trauma of witness to this event and the psychological damage of non-presence of any help or relief in its wake.

 

childs drawing before and after failure

When the river was clean, I and my family would go swimming every Saturday and Sunday. But that can’t happen anymore because it’s dirty and orange” 

​​”Quando o rio estava limpo, eu e minha familia ia tomar banho todo sabado e domingo. Mas agora não pode mas tomar porque está sujo de lixo e laranja.

By Gabrielly , Regencia, Brazil
Principal features of the agreement that are readily generalizable as  conditions attending any permit for any TSF and urgently needed as revised conditions for already permitted facilities with an “extreme” or “very high” hazard classification are:
(1) There is no limit of liability only an agreed commitment to full reparations and restorations over a 15 year period and beyond if necessary  under an open transparent  publicly controlled and monitored process completely apart from the permitting process and its authorities. This follows from the strict liability in Brazilian law from which miners everywhere have traditionally negotiated exemption . ( Strict liability in common law automatically applies to all consequence for ultra hazardous activities without limitation.  It is negligence per se for which no defense( other than natural catastrophe) is available).  It is therefore most likely that this provision is in the final agreement.
(2) The liability  is joint and several among Samarco, Vale and BHP and the original $US5.2 billion of the civil suit is reaffirmed as the best available estimate  and without any agreement to limit liability even to this amount.  This also follows from Brazilian law which has  cut through provisions built in where a subsidiary cannot finance its own liabilities for damages.  So this provision almost certainly is in the final agreement as it follows directly from law.  The schedule of payments are minimums and  part of a system of penalties for non compliance )  Again,there is no financial cap on the civil liability which by law is unlimited where strict liability applies.
​(3) The creation of a foundation as the vehicle for undertaking the main part of the reparation and restorations transfers no liability.  The liability remains with Samarco,Vale & BHP​.  The foundation is merely a public interest non profit vehicle for passing the funds from the miners to the many programs and projects it will take to carry out the full mandate of the agreement.  The one government seat on the foundation board allows an ongoing inside eye on the foundation’s operations and management.  The main control and oversight is via a separate external committee of municipalities and government agencies who decide what qualifies under this agreement.  Virtually all of what Samarco had claimed “as already spent on clean up” was disallowed.  The miners have no control over what consiitutes restitution, compensation, restoration and reconstruction.  These decisions are all solely in the public realm with full transparency and full accountability to each affected sector of the mine affected area.
(4) Funding is not pre conditioned on continued operation of the mine or its economic feasibility.  The obligation is to all of VALE, BHP and Samarco. ( again as distinguished from the BHP settlement at OK Tedi which transferred the mine itself to a “public benefit entity” and BHP was free of all liability via that transfer of ownership).
(5) No part of the reparation and restoration is for the mine itself ( at Mt Polley all of the money was spent on the mine itself essentially annexing, not restoring Hazeltine Creek. The responsibility and financing to make the TSF and waste piles safe against continued seepages, flows and breaks is in the context of the permit.
(6) The process of settlement of  damages is separate and apart from the law governing permitting operations and oversight and also only for civil liabilities.  The criminal charges are active under a separate “Environmental Crimes” statutes which have their own oversight as separate branch of law.  (It wasn’t designed for mining, it was designed for illegal clear cutting of the amazon but it has been serviceable and effective in  its application to this man made catastrophe).  I haven’t  seen any other comparable structures in law ..it is very different in purpose to say EPA ,Environment Canada  or at the State level in the U.S. DEP’s and  makes great sense for any political jurisidiction which has an extraction based economy.
(7) The agreement provides, overall, a fluid pre-determined out of court process for damages to have their own focus , their own accountability, that is not co entangled with the mine revenues.
As a condition of permits it would provide for immediate response on a finding that there was no “natural non MCE ( Maximum credible event) Cause”. More importantly it would disallow approval of any extreme or high hazard TSF without up front corporate capacity and commitment of security.  Simply put, applicants without extra deep pockets can’t build extra hazardous TSF’s.  They would have to go back to the drawing board with a less hazardous design or partner up with a deep pocket entity accountable to the permit authority ( ege through pledge of security in actual shares of the parent).  With a collective global commitment for miners and their permitting authorities to account centrally for consequence of loss, it will be possible to refine expected losses beyond what was done in Bowker Chambers 2015.  For now using best available data we can say that a non-mine source of revenue must be available to a specific mine project  to fund a $543 million loss over 10 years.   And of course only a handful of companies are large enough to do that.
(8) this obligation will have to be reflected on the books for Samarco Vale and BHP.  BHP has already taken a $5.2 billion write down for its share of the Samarco which is entirely separate accounting to do only with the present and future viability of the mine and nothing to do with this legal obligation for damages caused by faulty operation of the mine  BHP’s and Vale’s unlimited accountability  for these damages will have to be provided for in its annual statements at least until 2031.  This underscores the absurdity of  licensing TSF’s with an extreme or very high hazard rating to entities with no financial capacity whatsoever to be responsible for its own negligence.  The probability modeling used to justify these permits is actuarially absurd and further exacerbated by the reality that when miners stray from sound practices they dramatically increase the probability of loss and that loss will be felt in the mining affected area. .
The Samarco BHP Vale unlimited liability settlement underscores that the main emphasis, as respects existing and planned TSF’s, must be on preventing loss and not issuing permits or even accepting applications from entities that do not already possess the actual technical and financial capacity to develop a proven financially viable resource  for its projected life.  No community can absorb losses of this scale.  And THIS IS THE SCALE THAT ATTENDS MEGA SCALE SUPER LOW GRADE ORE  PROJECTS LIKE PEBBLE or the rejected Prosperity.
It is of note that Vale & BHP two of the worlds top miners, to protect their own viability, together still had to negotiate even the minimal payments set up to establish minimum compliance.. had to negotiate even  the  minimum annual payments schedule.  What this means is that there are only a handful of mining companies in the world large enough  to enter a compensation and reparations agreement of this scale with any hope of making good on it.
Bowker Associates believes that incorporating this language into all existing permits for extreme and high hazard TSF’s would most likely force large miners to establish some form of joint professionally managed self insured retention facility with an attending underwriting division that independently holds each TSF to the  highest standards.  Vale would not likely  have signed off on going ahead with the $3.1 billion expansion at Samarco knowing there was not adequate TSF capacity, knowing production would push the Fundao to  unacceptable limits, knowing there was no available land on site to create a facility that is big enough, knowing that an upstream dam should never have been used for a facility of this size in the first place,.   ( Of course no local permitting entity would accept certificate of insurance from any such facility..the local entity would rely only on security posted in the form of actual shares in the company guaranteeing the losses)
 Bowker Associates  will try to smoothe  the translation  out a bit more but does not have the resources to commission a full professional translation.  . If you are able to offer smoothe text for any portions would be very grateful if you would share.

Lindsay Newland Bowker, CPCU, ARM Environmental Risk Manager

Bowker Associates
Science & Research In The Public Interest
15 Cove Meadow Rd.
Stonington, Maine 04681

lindsaynewlandbowker@gmail.com

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About lindsaynewlandbowker

Bowker Associates, Science & Research In The Public Interest, is an independent non profit providing self initiated pro bono analysis on key issues with a potential for massive adverse environmental impact . Bowker Associates has been an internationally recognized and cited voice in analysis of the Samarco failure, its consequence, and the possibilties for recovery. In 2015 Bowker Associates collaborated with globally respected geophysicist David M. Chambers to recompile global authoritative accounts of significant TSF failures in recorded history and to analyze these data in the context of gloal mining economics 1910-2010 ( Risk, Economics and Public Liability of TSF Failures, Bowker/Chambers July 2015) In 2014 Bowker Associates commissioned globally respected geophysicist and hydrogeologist Dr. David Chambers to undertake two technical works: (1) development of technical go no go criteria for vetting mine applications tp://lindsaynewlandbowker.wordpress.com/2014/01/05/a-new-statutory-regulatory-framework-for-responble-sulfide-mining-should-this-mine-be-built/ and (2) a case study of Maine's Bald Mountain, an un mined low grade high risk VMS deposit demonstrating the efficacy and accuracy of two risk assessment tools in vetting mine proposals https://lindsaynewlandbowker.wordpress.com/2014/02/28/mountain-x-would-you-issue-a-permit-to-this-mine/ In Maine, Bowker Associates has deeply engaged and been a public voice in the Searsport DCP LPG Tank, The Cianbro proposal for a Private East West Toll Road, JD Irvings rolling pipeline of Bakken crude to its plant in St. John and review of Phase II plans at The Callahan Superfund site in Brooksville, Maine, and Maine's revisitation of mining in statute and regulation... Our only “client”: is always “the pubic interest”. Our model is to focus on only one or two issues at a time so that we have a substantive command of the relevant field as our foundation for ongoing engagement. Our core work is in envirommental risk management, science and technology as well as bringing any available “best practices” models to the fore. The legal and regulatory history/best models are also a major thrust of our work in building and evaluating public policy. Director/Principal Lindsay Newland Bowker, CPCU, ARM is a recognized expert in Environmental Risk Management., Heavy Construction Risk Management and Marine and Transit Risks and has more than 3 decades of engagement in buiding public policy. Appointed by Governor Mario Cuomo to New York State Banking Board (served 1986-1996); President New York Chapter Chartered Property and Casualty Insurers; Environmental Committee, Risk and Insurance Management Society; Director, Convenor/Co-Chair Bermuda Market Briefing "From Captive to Cats" Hamilton Bermuda. Published Articles of Significance The Risk Economics and Public Liability of Tailings Facility Failures, co-authored with David M. Chambers, July 2015 Beyond. Polarization: Superfund Reform in Perspective, Risk & Insurance Managing Risk For Loss Prevention & Cost Control (Jan. 24, 1997). Lead Hazards and Abatement Technologies in Construction: A Risk Management Approach CPCU Journal 1997 Employee Leasing: Liability in Limbo Risk Management June 1 1997 Environmental Audit Privilege and the Public interest Risk & Insurance Managing Risk For Loss Prevention & Cost Control, April 1997 Asbestos:Holes In Abatement Policies Need To Be Plugged, Lloyd’s Environmental Risk International, May 1993 Editor Published Letters Evironmental Risk Management Beware of Facile Policies Like Fetal Protection Business Insurance 1995(?) High Court Review May Increase Sale of Bank Annuities Business Insurances August 8, 1995 Professional Profiles Protecting the Big Apple’s Core Managing Risk For Loss Prevention & Control December 1996 Major Career Highlights First rigorous analysis showing Relationship Between declining ore grades and TSF Failures of increasing consequence ( July 2015) FIrst Documentation that Gentrification Has Same Impacts as Unassisted Displacement from Urban Renewal Sites Direted Court Ordered EIS of FHA Mortgage Scandal Created Nation's First Homeownership Program for Low Income People (SHIP) Created Earliest Geographic Information Systems Using Defense Technology Developed By IBM Designed and Conducted Parallel Census Count to Show Systematic undercount in minority neighborhoods Documented Bias in ISO Territory Rating Plans for Private Passenger Auto Insurance Using ISO's own Rating Techniques Demonstrated Inherent Bias in Mortgage Policies of Banks With Inner City Branches Demonstrated that NY Telephones Plan for Area Code Split To accommodate anticipated cell phone demand was not efficient and would exhaust in 5 years ( which it did) Undertook First Systematic Evaluation of Child Protective Services Caseload Using Multi Variate Analyic Techniques Developed Child Protective Caseload Management and Tracking System (CANTS) and directed implementation in 4 client states including Illinois, Florida and New York Created and Ran Office of Risk Management for NYC DEP the Nations largest Water & Sewer Authority . Designed, Created and Administered Nation's First Owner Controlled Insurance Program (OCIP)for High Risk Tunneling Education Masters NYU Graduate School of Public Administration BSC New School For Social Research Maine Public Schools Deering High School
This entry was posted in Analysis TSF Failures, BHP, Measuring Magnitude of Consequence TSF Failures, Samarco Settlement Agreement, TSF Design & Management Standrds, TSF Failure Environmental Costs, TSF Failures Consequence, TSF Risk Management, TSF Risk Profile, Uncategorized, Vale SA.. Bookmark the permalink.

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