In this article, Terence Trennepohl and Georgia Diederichsen examine the implications of one of the most prominent environmental disasters to occur in Brazil, the disruption of a tailing dam from Samarco Mineração.

The “Fundão” tailing dam was part of a mining undertaking operated by Samarco Mineração, an iron ore producer currently controlled by huge Brazilian VALE and Australian BHP Billiton. At the time of the disruption, in November 2015, the structure was allegedly licensed by the environmental authorities, although the legality and adequate coverage of such procedure have been greatly challenged (which shall not be evaluated herein).

As per the information made available by the Public Attorney’s Office and the Governmental Authorities, the event caused a massive residues release, causing severe damage to the environment and to local communities. An entire village was destroyed and several people were killed (at least 17 individuals died, and 2 are still missing) after the disorderly movement of residues (estimated 62 million m³). The press usually refers to such substance as “toxic mud”, as the tailing dam was filled with mining residues (mostly from iron ore extraction) combined with dirt and other elements used in the production process. Samarco, on the other hand, claims that the residue is not actually toxic, as it is composed by silica, sand and iron. Further examinations in this regard will be conducted during the judicial procedures by technical experts.

Environmental Liability Enforcement:

  • Civil Sphere: Samarco, VALE and BHP Billiton shall answer for the recovery and compensation of the damages caused (jointly and severally).
  • Civil liability is of a strict nature – irrespective of fault. Also, the fact that the activity is embraced by valid environmental licenses does not prevent the recovery of all damages caused.
  • Action/inaction entails environmental civil liability (strict). Demonstration of cause-effect relationship suffices to trigger the obligation to restore environmental conditions.
  • Relevant Brazilian legal writing and court cases sustain that judicial claims seeking environmental compensation are not subject to statutes of limitation.
  • In March 2016, Samarco, VALE and BHP Billiton committed to the recovery of 42 million hectares of degraded areas and 5,000 wellsprings. The companies already settled for a disbursement of R$ 4,4 billion over the next 3 years, but other investments in this regard are estimated up to 2031, depending on the effectiveness of the recovery.
  • Criminal Sphere: Civil Police requested the imprisonment of the Samarco’s former president and 6 others allegedly related to the disaster (operation manager, technical coordinator and others). Individuals were charged for homicide, flooding and pollution, but it must still be properly processed and confirmed by our courts.
  • Although possible, no criminal fines were settled up to this date.
  • Administrative Sphere: multiple infraction notices were issued by federal and state environmental agencies. Fines can range from R$5,000 to R$50,000,000, but the competent authorities may impose other sanctions as embargo, demolition, warning, suspension of funding granted by official institutions.

The development of the foregoing is monitored by our associates on a constant basis, as the media has broadcasted it as a notorious social and environmental tragedy, yet far from reaching an end. The incident was recently aggravated by constant rain, which rapidly moved the residues to local rivers. The enhanced water flow reached the sea (in the State of Espírito Santo) within few days and caused the mortality of a huge amount of fish along the way. Water supply has been affected in several Municipalities.

The Samarco disaster is the perfect case study towards environmental liability and the extent of recovery obligations – pursuant to the legislation in force, environmental liability may cause civil, administrative and criminal outcomes, and a sole fact or conduct can trigger consequences in the three spheres.

Terence Trennepohl