Bill that amends the Dam Safety Law provides for new obligations, administrative and criminal sanctions

08/07/2020

Author of the Article

Bill amending the Dam Safety Law proposes new obligations, administrative, and criminal sanctions

With increasing concerns about dam safety and environmental issues, amendments to Brazil's New Mining Regulatory Framework are being proposed in the Chamber of Deputies, alongside various bills aimed at effectively protecting ecologically balanced environments.

Among these, the Federal Bill No. 224/2016 ("Bill" or "Project"), authored by Senator Ricardo Ferraço, stands out, proposing substantial and highly controversial changes for the mining sector. This necessitates an analysis of the proposal and its potential implications.

The Project aims to enhance Federal Law 12,334/2010, which establishes the National Dam Safety Policy, aiming to strengthen its effectiveness and reaffirm the entrepreneur's objective civil liability.

In line with Federal Law 9,605/1998 – Environmental Crimes and Administrative Sanctions Law, the Project introduces criminal liability for those who contribute to criminal acts, as well as for those with hierarchical authority within legal entities who, aware of criminal conduct by others and capable of preventing it, fail to do so. It also introduces new monitoring and enforcement measures to ensure the legislation's effectiveness.

Key obligations proposed by the Bill include (i) mandatory validation by an independent professional with recognized expertise in dam safety for high-risk dams' projects and Safety Plans, which must (ii) be submitted to the regulatory body before construction begins. It also stipulates that (iii) the Dam Safety Plan must remain updated and operational until the dam is fully decommissioned.

Insurance Requirement

The debate over mandatory risk insurance for mining companies is a sensitive topic in discussions on the New Mining Regulatory Framework. Leonardo Quintão, the Project's rapporteur in the Chamber of Deputies, rejected two amendments suggesting mandatory insurance in 2014. However, Quintão recently reversed this stance and now supports requiring environmental insurance, a trend reflected in the presented Project.

Thus, Bill No. 224/2016 also proposes that high-risk and high-potential damage category dams must obtain insurance or provide financial guarantees to cover damages to third parties and the environment in case of accidents or disasters.

It also requires insurance for the decommissioning costs of dams used for final or temporary disposal of industrial waste or mining tailings, aiming to prevent environmental liabilities from improperly secured decommissioned dams.

Criminal Liability and Administrative Sanctions

A contentious aspect of the Project involves administrative and criminal liability for non-compliance with the legislation. Accordingly, the Bill not only specifies appropriate administrative sanctions but also criminalizes certain behaviors.

The proposed administrative sanctions, as per the Bill's wording, draw upon definitions in Law 9605/1998, encompassing warnings, fines, daily fines, work stoppages, demolition of works, or partial or total suspension of activities, varying according to the severity, reasons, and consequences of the infringement on society and the environment. The offender's compliance history with dam safety regulations and their economic situation are also considered in determining fines.

The Project outlines strict criminal penalties ranging from one month's detention to five years' imprisonment for offenses such as:

(a) Failing to adopt, when required by the regulatory body, recovery or decommissioning measures for dams posing risks of accidents or disasters.

(b) Drafting or submitting to the regulatory body Partially or completely false or misleading Periodic Safety Review Reports or regular or special inspections, including by omission, allowing for culpable behavior (where there is no intention).

(c) Failing to register and keep updated information related to the dam in the SNISB ('National Dam Safety Information System').

The Project is particularly stringent by expressly stating that individuals who fail to prevent crimes, despite being able to do so, will incur the same penalties as those directly involved, listing examples such as directors, administrators, board and technical committee members, auditors, managers, proxies, or representatives of the entrepreneur aware of criminal conduct by others.

New Instruments

Regarding new instruments proposed in the currently pending Project, highlights include establishing a communication channel for receiving dam safety-related complaints, maintained by the SNISB; the Brazilian Dam Safety Forum; and guides for best practices in dam safety. It also allows regulatory bodies to issue regulations on the safety of structures within their jurisdiction and create an accreditation system for technicians and specialized companies to support inspection activities.

Emergency Action Plan

Significant emphasis is placed on the Emergency Action Plan (EAP). As outlined by the Senator, it mandates consulting civil defense agencies and the potentially affected population during the EAP's development phase, concerning safety measures and evacuation procedures in emergencies.

Furthermore, before dam filling, new requirements must be met, including (i) installing emergency alert equipment and signage for evacuation routes and meeting points; (ii) holding a public hearing to present the EAP; (iii) conducting evacuation training with the potentially affected population; and (iv) informing the public of contact details for reporting dam safety concerns.

Currently, the Project is under review by the Senate's Committee on Environment, Consumer Protection, and Oversight, awaiting Senator Jorge Viana's report.

Alexandre Sion