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