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Effective Diagnosis for Social License to Operate: Who should perform the diagnosis? What to do after the investigation?

Final in a series of articles about achieving an effective social license to operate

by Jordi Ventura

See Part 1: What is a Social License to Operate (SLO) and How Do Mining Companies Achieve an SLO?

See Part 2: Effective Diagnosis of Social License to Operate – Off-site preparation and on-site investigation

What happens after the investigation?

It is imperative that a follow-up SLO diagnosis report be prepared as soon as practicable after the on-site visit (and, as a time and cost saving measure, perhaps the SLO diagnosis report should be initiated during the visit). The SLO diagnosis report should contain, at a minimum, the following:

  • a description of the scope and methodology employed in conducting the on-site investigative work SLO diagnosis;
  • the on-site investigative work findings and conclusions (making sure that they are duly supported);
  • concrete recommendations for correcting problems/issues encountered during the on-site investigative work; and
  • with the input and assistance of experts in the sustainability concepts, proposals for the adoption of key concepts.

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Effective Social License to Operate: Off-site preparation and on-site investigation

Second in a series of articles about achieving an effective social license to operate

by Jordi Ventura

See the first article in this series: What is a Social License to Operate (SLO) and how do mining companies achieve an SLO?

An effective diagnosis for a Social License to Operate (SLO) will include off-site preparatory work and well as on-site investigation.

Off-site preparatory work

In order to ensure a quick, successful and cost-effective investigation, the SLO diagnosis initially involves preparatory work that takes place away from the proposed mining project and prior to any significant presence of the mining company on the ground. This preparatory work consists of, at a minimum, the following:

  • meeting with relevant members of the company’s senior management team to:
    • ascertain what, if any, endeavors have already been conducted by the company or additional companies (mining or otherwise) concerning the SLO and related matters, and obtain any copies of all documentation;
    • discuss any particular areas of concern that the company may have; and
    • agree to an overall game plan that includes expected deliverables, deadlines and costs.

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We are pleased to announce that Jordi Ventura has joined the Natural Resources and Mining Group at Jeffer Mangels Butler & Mitchell LLP (JMBM), as Of Counsel. Jordi’s practice focuses on the legal needs of the mining industry, with an emphasis on representation in Latin America.

His in-depth knowledge of the legal, business and financial aspects of the mining industry strengthens our firm’s mining practice, and his wide-ranging experience with mining projects in Latin America brings tremendous value to our mining clients.

Read Jordi’s professional biography here. He is licensed in Utah and Colorado; he is not licensed in California.

Today, we bring you the first in a series of articles in which Jordi Ventura explains how mining companies can achieve an effective social license to operate.

Kerry Shapiro, Chair, JMBM’s Natural Resources & Mining Group

 

HOW MINING COMPANIES CAN ACHIEVE AN EFFECTIVE “SOCIAL LICENSE TO OPERATE” IN LATIN AMERICA – PART 1

What is a Social License to Operate (SLO) and How Do Mining Companies Achieve an SLO?

First in a series of articles about achieving an effective social license to operate

by Jordi Ventura

When embarking on a new project in Latin America, a multinational mining company needs to understand it is entering into a pre-existing yet dynamic environment, with established histories and cultures. Complex political, social and economic relations among indigenous groups and other local communities can be thrown into disarray by the introduction of a mining project and the development process that accompanies it. Community relations can become politicized and complicated, and can create conflicts that ultimately cost the company time, money and PR problems.

This is not news to mining companies. In Ernst & Young’s “top risks facing mining and metals in 2019-20,” license to operate is listed as the #1 risk, up from #7 the year prior.

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On May 1, 2019, Petitioner San Joaquin Tributaries Authority, a Joint Powers Authority (Petitioner/Authority) filed a petition for writ of mandate in Sacramento County Superior Court against the State Water Resources Control Board (SWRCB).  The Authority includes the City and County of San Francisco as petitioners.  The petition challenges SWRCB’s approval of the “State Wetland Definition and Procedures for Discharges of Dredged or Fill Material to Waters of the State” (Procedures) on April 2, 2019.

SWRCB released the Procedures in January 2019, shortly after President Trump announced his plan to rescind and replace the Obama Administration’s 2015 definition of “Waters of the U.S.”  President Trump’s proposed definition of Waters of the U.S. is more narrow, and would reduce the scope of waters subject to federal regulation under the Clean Water Act, including activities within those waters, such as the discharge of dredge and fill material.

The SWRCB’s Procedures are intended to, among other things, codify California’s regulatory authority over the discharge of dredge and fill material into waters being proposed for exclusion from federal regulation through Trump’s proposed definition.  The Procedures also seek to regulate dredge and fill activities within all “Waters of the State”, which is broadly defined to include “any surface water or groundwater, including saline waters, within the boundaries of the state.”  This broad definition includes all natural wetlands, modified wetlands, and even some artificial wetlands.

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On April 25, 2019, the California Construction and Industrial Materials Association (CalCIMA) filed a petition for writ of mandate and complaint for declaratory and injunctive relief (“Petition”)  in Ventura County Superior Court challenging the County of Ventura’s approval of a proposed “Habitat Connectivity and Wildlife Corridor” Project and its implementing regulations.  The Project was approved by the County Board of Supervisors in March 2019 and is intended to “discourage” development within the Project area.  The County approved the Project without completing environmental review in accordance with the California Environmental Quality Act (CEQA).

The Project is essentially an overlay zone that is several hundred thousand-acres in size and includes thousands of acres of important mineral resource deposits (construction aggregate) that have been previously identified by the California Geological Survey and, in some instances, designated by the State Mining and Geology Board (both of which are separate divisions of the Department of Conservation) as being “regionally significant” in meeting the region’s building material needs. These important mineral deposits are a protected natural resource under CEQA and are necessary for use in future housing projects, road construction and repairs, and public infrastructure projects.

Due to the importance of these mineral resources, the County previously approved a Mineral Resources Protection overlay zone intended to ensure the resources were available for future extraction, and not encumbered by incompatible land uses.  The County also enacted specific “Goals, Policies and Programs” in its General Plan to provide enhanced protection for these mineral resources.

Despite the importance of these mineral resources, the County approved the Project overlay zone without completing any CEQA review.  The County concluded that CEQA compliance was not required because the Project is intended to benefit the environment.  However, notwithstanding these potential benefits, the Project and its implementing regulations will cause significant environmental impacts that require environmental review in accordance with CEQA, including the Project’s effects on future efforts to extract critical mineral resources. Continue reading

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We are pleased to announce that Martin Stratte has joined us at Jeffer Mangels Butler & Mitchell LLP and is a member of JMBM’s Natural Resources and Mining Group, and our Construction and Building Materials Group.  Martin’s practice focuses on land use, zoning and entitlement issues and he comes to us with experience in representing the mining industry.

He represents clients in administrative enforcement actions and litigation relative to the California Environmental Quality Act (CEQA), National Environmental Policy Act (NEPA), and Endangered Species Act (ESA), among others, and is experienced in working with local jurisdictions and state, regional and federal agencies to obtain regulatory approvals.

Martin is a frequent author on legal issues of importance to the mining industry, has been a member of the editorial board of the Climate Change Law & Policy Reporter and is licensed to practice in both California and Nevada.

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By Kerry Shapiro

Last week, President Trump signed an executive order with potentially wide-ranging implications for the mining industry and many other affected stakeholders. The order directs the Department of the Interior (DOI) to review national monuments, particularly those larger than 100,000 acres, that were designated since January 1, 1996, and to recommend if any of those designations should be modified, resized or rescinded.

The Bears Ears National Monument Controversy

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BLM releases maps showing 1.3 million acres of proposed mining withdrawal

On January 13, 2017, the U.S. Bureau of Land Management (“BLM”) released maps showing the areas that BLM, on December 28, 2016, proposed to withdraw from mining. The withdrawal is designed to “protect nationally significant landscapes with outstanding cultural, biological, and scientific values” and is part of the Desert Renewable Energy Conservation Plan (“DRECP”).

What does the proposed withdrawal do?

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California Mining Update

AB 1142 and SB 209: What operators need to know about SMARA modernization
Changes will be effective January 1, 2017

by
Kerry Shapiro


This article was first published in The Conveyor magazine, a publication of CalCIMA.

On April 18, 2016, Governor Jerry Brown signed into law two bills that together provide the most significant update to the California Surface Mining and Reclamation Act (SMARA) in 25 years.  Assembly Bill (AB) 1142 (Gray) and Senate Bill (SB) 209 (Pavley) are the outgrowth of more modest changes in recent years, and of a promise by the Governor, in 2013, to reform SMARA from “top to bottom.”  Although the bills are not effective until January 1, 2017, operators must be aware of their changes and start planning for their implementation.

Most important in the near term are changes to SMARA’s inspections process, financial assurance approval process, reclamation plan requirements, and inspector qualifications.

Inspections Process

Beginning in 2017, operators must request, on their annual reports, an inspection date within 12 months of their prior inspection.  For inspections conducted in 2016, the 12-month date will be triggered for 2017.

Financial Assurances

The annual inspection date is the starting point for wholly new annual financial assurance review and approval processes.  Note the plural—under AB 1142 and SB 209, SMARA will now have (1) a process for financial assurance cost estimates (FACEs) for new or amended reclamation plans and (2) another process for annual FACE updates.  Each process sets new steps and deadlines that are tied to the annual inspection date.  Moreover, each process provides the Department of Conservation (DOC) a new right to formally consult with lead agencies and operators during the FACE review process, and to give DOC a new right to appeal a lead agency’s approval of a FACE.  Annual financial assurance review was already a SMARA requirement, but the new legislation formalizes the review process to provide greater clarity and transparency.

Corporate self-bonding is now permitted for companies worth more than $35 million, subject to regulations which will be approved by the SMGB.  Multiple operations can combine their assets to pass the financial test, but self-bonding is limited to 75% of the value of an operator’s FACE(s). Continue reading

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California Mining Update

AB 1142 and SB 209: What lead agencies need to know about SMARA Modernization
Changes will be effective January 1, 2017

by
Kerry Shapiro

 

On April 18, 2016, Governor Jerry Brown signed into law two bills that together provide the most significant update to the California Surface Mining and Reclamation Act (SMARA) in 25 years.  Assembly Bill (AB) 1142 (Gray) and Senate Bill (SB) 209 (Pavley) are the outgrowth of more modest changes in recent years, and of a promise by the Governor, in 2013, to reform SMARA from “top to bottom.”  Although the bills are not effective until January 1, 2017, lead agencies and operators must be aware of their changes and start planning for their implementation.

Most important in the near term are changes to SMARA’s inspections process, financial assurance approval process, reclamation plan requirements, and inspector qualifications.

Inspections Process

Beginning in 2017, operators will request, on their annual reports, an inspection date within 12 months of their prior inspection. (For inspections conducted in 2016, the 12-month date will be triggered for 2017.)  Lead agencies may reschedule inspections, and will have 90 days — not 30 days — to file Notices of Completion with the Department of Conservation (DOC).  However, the additional time comes with a catch: lead agencies must use their Notices to describe any problems at operations and their plans for correcting them.

Financial Assurance Approval Process

The annual inspection date is the starting point for wholly new annual financial assurance review and approval processes.  Note the plural—under AB 1142 and SB 209, SMARA will now have (1) a process for financial assurance cost estimates (FACEs) for new or amended reclamation plans and (2) another process for annual FACE updates.  Each process sets new steps and deadlines, tied to the annual inspection date.  Both processes provide DOC a new right to formally consult with lead agencies and operators during the FACE review process, and also give DOC a new right to appeal a lead agency’s approval of a FACE.  Annual financial assurance review was already a SMARA requirement, but the new legislation formalizes the review process to provide greater clarity and transparency. Continue reading