Goa Case Study: Regulatory Collapse and its Consequences Background
Goa is far better known for the two million vacationers who throng its beaches every year than for its iron mines. But starting just a few kilometers inland from its coastal resorts, the state has about 90 working mines that yielded some 45 million tons of iron ore in 2010 -- 20 percent of India's total. Goan iron was worth well over Rs 21.5 crore (US$5 billion) in 2011 and production has skyrocketed in recent years in response to rising global prices. State government officials estimate that the mining industry directly employs some 20,000 people and indirectly supports the livelihoods of tens of thousands more. Goa is a tiny state and many of its mines are clustered closely together and directly adjacent to nearby communities. The local industry is dominated by three large firms that all have their roots in the state: Fomento, Salgaocar and Sesa Goa; the last of which was acquired by mining giant Vedanta in 2007. "A Total Lack of Governance" The mining industry in Goa stands as a stark example of the broader patterns of regulatory collapse described later in this report. Goan anti-mining activists complain that mine operators flout the law while government institutions plagued by incompetence, incapacity or corruption stand by and do nothing. Surprisingly, when Human Rights Watch put these allegations to key state government and industry officials, many acknowledged that they were true. A senior official with one of Goa's top three mining companies, speaking on condition of anonymity, put it this way: "There is a total lack of governance in the mining sector. The government has no idea what is going on.... Absent a real change in governance, there will just be more corruption and more chaos from year to year." An official in Goa's own mines department complained to Human Rights Watch that the state and central governments' approach to oversight of the mining sector was "lethargic to an extreme." Even mining industry spokesman S. Sridhar estimated to Human Rights Watch that 40 percent of all mining operations in Goa fail to comply with at least some laws and regulations and that perhaps another 5 percent is entirely illegal, taking place on land miners have no right to work on. "The remaining mining is done legally," he said. Then Goa Environment Minister Alexio Sequeira told Human Rights Watch he thought the true figures were less alarming but added, "He [Sridhar] should know better than me." P.S. Banerjee, general manager for Fomento, one of Goa's "big three" mining companies, told Human Rights Watch that his company's own operations were meticulous in adhering to the letter of the law. But speaking of the industry more broadly, he said that "Mining in Goa works in shades of gray. The problem is not just legal versus illegal mining, but there is a huge gray area in between and that is the most important issue." Banerjee described this approach to the law euphemistically as "creative compliance." But in practical terms, "creative compliance" simply means non-compliance that government regulators fail to detect or respond to. Failure to Track Basic Indicators of Compliance Consent to Operate On paper, Goa's Pollution Control Board has the responsibility to verify whether mining companies (and other industries) are complying with India's air and water acts. Those laws are important tools to help ensure that mines do not cause serious harm to human health and the environment. But in practice, the board is ineffectual and carries out little meaningful oversight activity of mining or any other industry. As of late 2011, the board had only 16 technical staff to oversee the environmental and pollution-related practices of the entire mining industry as well as of every other business in the state -- including even visiting cruise ships. Then, Goa Environment Minister Alex Sequeira was dismissive of the board's oversight role, calling it a "mere post office" that did little more than ferry paperwork between the central government and operations based in Goa. But in principle, the board is one of Goa's key oversight institutions. It has the power to conduct surprise inspections, including of mine sites, and to shut down operations that do not maintain consents to operate issued by its staff -- but it does not have the manpower to do either of these things. Board Chairman Simon DeSousa told Human Rights Watch that with his office's small staff, "We are handicapped. It is impossible to oversee all these industries." Perhaps worse, Dr. DeSousa admitted to Human Rights Watch that he had no idea whether mining firms and other companies were bothering to maintain the "consent to operate" from his own office they are legally required to possess. These consents are normally given and renewed almost automatically if miners can prove that they have obtained all other required government clearances -- in practical terms they serve as a way for the state government to verify that miners are in compliance with other baseline legal obligations. "It is quite possible that 40 percent of mines are operating without clearances," DeSousa told Human Rights Watch. "Some mines may not have obtained consent to operate from the board -- we cannot police that. We cannot see who is operating illegally unless someone complains." He blamed the problem on his office's lack of a coherent filing system. Under mounting public pressure due to a scandal around allegations of mining-related illegalities and corruption in the state, the board stated in 2011 that 41 of Goa's 90 mines were not in compliance with the law. Outside parties apparently informed board officials that it had not issued those mines with up-to-date consents to operate, and questioned whether they possessed the other government clearances needed to obtain them. Thirtyfour of the forty-one leaseholders reportedly failed to comply with an initial deadline and were told to cease operations until necessary permissions could be obtained. While the board's action was an important step to bring the state's mines into compliance with the law, the board still lacks any independent means to track compliance. Production Figures Goa's Mines Department tracks production figures based entirely on figures submitted by mine operators themselves. The department had only 12 technical staff as of September 2011 and Dr. Hector Fernandez, the department's senior geologist, conceded to Human Rights Watch that the government had no way of verifying whether company figures were accurate. "With this staff we cannot," he said, "It's impossible." This means that the state does not actually know if mines are producing ore in excess of what they claim, thereby cheating the government out of tax revenue and royalties. Critics allege that this is precisely what has taken place. A September 2011 report by the Goa legislature's Public Accounts Committee detailed what it called unexplained discrepancies between production and export figures. Those could translate into steep revenue losses for the state government, since no royalties or other taxes would be paid on unreported production. Industry officials questioned the figures, arguing that there could be benign explanations for many of the apparent discrepancies. Alarmingly, the state government could neither confirm nor deny the allegations because it did not have any data of its own. Central Government Failures The Indian central government imposed a moratorium on new mining leases in Goa in February 2010, apparently at the request of the state government. However, this did not result in remedying deficiencies with the clearances underpinning the state's existing mines. Many of Goa's mines appear to have been established on the basis of Environmental Impact Assessments that contained erroneous or fabricated data -- a nationwide problem that is discussed in detail below. As detailed below, a government commissioned study of the EIA reports underpinning all of Goa's currently operational mines seems likely to confirm widespread fabrication of data in those reports. In theory, the environment ministry's regional office in Bangalore monitors whether mines in Goa and neighboring states are operating in compliance with the law and with the terms of their environmental clearances—and can shut them down if they are not. But in practice, regional office staff rarely visits the state and have never halted the operations of any mine in Goa. This problem -- also a nationwide affliction -- is addressed in detail below. Conflicts of Interest and Allegations of Corruption If it is illegal, why does the Government not act? Because the government is involved, politicians are involved. At every level, everywhere. Bureaucrats, everyone. If I point it out, they will stop my legal mining, so I have to keep my mouth shut. --S. Sridhar, spokesperson, Goa Mineral Ore Exporters Association, May 2011 Many Goan mine operators are increasingly reliant on contractors to operate their mines or transport their products to the port. Encouraged by the vast profits being made in the mining sector, Goan politicians have gotten in on the mining business by becoming contractors themselves. A 2011 investigation by the Goa Herald newspaper documented the alleged involvement of six senior state government officials in the mining business. Some denied any involvement while others openly admitted it to the paper. The trend towards using contractors is driven largely by economic considerations -- labor costs are lower and companies do not wish to invest heavily in new equipment that may lose its value if commodity prices and iron production decline. But in some cases there is also a political calculation. Some contractors are hired because their ties to politicians make them better able to either navigate or evade the regulatory framework, not because of their competence or reputation for responsible operation. Officials with two different Goan mining firms, speaking on condition of anonymity, told Human Rights Watch that companies often selected contractors with political ties for the wrong reasons, and that contractors linked to politicians often displayed little interest in working responsibly or even obeying the law. "Sometimes you proactively go to a politician and say, ‘Look, let's do this together,' so you get it done faster," one company official said, adding that he disapproved of the practice. "Politicians have entered into this mining business and are spoiling the names of established mining companies. Their actions tar the reputation of the whole industry." An official with another mining firm complained about companies' use of contractors with "no competence or value added except that they work well with politicians." Jaoquim Alemao, until March 2012 Goa's politically influential Minister of Urban Development, started a company called Rhissa Mining Services. The company is run by his son. The former minister does not deny his involvement in the mining business and says that Rhissa's only role is to purchase heavy machinery and rent it out to established mining firms, which is not illegal. Some observers have raised concerns about the true nature Rhissa's activities. Rama Velip, a farmer and anti-mining activist in the south Goa village of Rivona, says he was approached by a representative of Rhissa who attempted to persuade him to abandon his opposition to nearby mining developments—mines that Rhissa had little or no clear economic stake in. He told Human Rights Watch that he felt he was being approached by the powerful minister behind the company, rather than the company itself. Goa's Mineral Ore Exporters Association was not clear about Rhissa's role in the local industry. When asked, association spokesman S. Sridhar shook his head slowly and replied: "I don't know what he [Jaoquim Alemao] is doing. I really don't know." But he later added that, "Naturally if a politician is there I will give him the contract if it is economical to me.... It happens everywhere." These practices are worrying because they create conflicts of interest that can lead public officials to push back against, rather than support, action by already weak regulatory officials. Then Goa Environment Minister Alex Sequeira said that he had no financial stake in the mining industry but defended the right of other government officials to enter the business. While acknowledging that conflicts of interest were possible, he asked Human Rights Watch, "You talk in terms of wanting a clean government, but how am I supposed to look after my family if you say I should not do business?" Some in Goa's mining industry also allege that corruption often plagues their attempts to comply with the law by obtaining necessary clearances and permissions. Activists allege that this problem also pushes weak regulatory institutions even deeper into complacency and inaction. Some company officials complain that it can be almost impossible to obtain necessary government clearances in a reasonable amount of time without bribing officials to move necessary paperwork through the system. Industry spokesman S. Sridhar told Human Rights Watch: Unless you go and talk to them personally nothing is happening. There is corruption everywhere in getting these approvals. If I do not want to pay a bribe I have to wait four or five years. So I'll pay the bribe to get the approval or I'll just start producing [illegally] while I wait. Local activists also allege that police officers also profit from the mining industry by purchasing trucks they contract out to haul ore from mine sites—creating a conflict of interest when local protests shut down a mine that helps supply their income. India's Prevention of Corruption Act outlaws such practices but critics allege that some police officials circumvent the law by putting trucks in the names of their wives or relatives. A police official at the station in Quepem whose officers have been deployed to break up mining-related protests in the area told Human Rights Watch that, "No police officer in Quepem owns a [mining] truck. It's different if a wife or children are doing business." Human Rights Impacts South Goa's cluster of iron mines is relatively new, with most springing up within the last 10 years (modern, mechanized mining has been taking place in north Goa for several decades). Human Rights Watch visited mining-affected communities in south Goa's Quepem taluk [district] and found evidence that some communities are suffering precisely the kind of harm that government regulation of the industry is supposed to prevent. The mostly agricultural communities in south Goa are profoundly divided in their attitudes towards the industry. Residents who allege that mining has destroyed vital groundwater supplies, ruined crops and created serious health risks have protested strenuously against local mine operators. On the other side of the divide, villagers who have derived direct economic benefits from mining activity—often by purchasing trucks they hire out to haul ore away from the mine sites—have emerged as ardent proponents of the industry. Health, Environmental and Livelihood Concerns Health Concerns Some residents of mining-affected communities told Human Rights Watch they worried that dust emissions from passing ore trucks could be linked to respiratory disease in their communities. "People are getting breathing problems," one farmer complained. Hundreds of heavily laden ore trucks pass through narrow roads leading through those communities every day, spewing clouds iron-rich dust as they pass. According to residents, the dust settles in thick coats on the crops that stand in nearby fields, on homes, and even on a schoolhouse that sits adjacent to the road. Sufficient data does not exist to measure the extent of any health damage caused by dust emissions in mining areas of Goa—neither the state nor central governments have carried out any studies to obtain that data. A 2001 study of mining areas in Goa found that overloaded ore trucks were responsible for "fugitive dust emissions…sharply exceeding the ambient national air quality standards for residential areas." Broader studies of the health impacts of dust emissions by iron mines have generally focused on occupational health issues, not impacts on surrounding communities. But such studies indicate that inhalation of iron oxide can cause respiratory ailments. Studies also indicate that exposure to silica, which is often a constituent part of iron ore dust, may be linked to serious ailments including silicosis and other lung diseases such as lung cancer. Some communities in Goa resort to making use of surface water for at least part of the year because their groundwater supplies have been damaged or destroyed by nearby mining operations. In some cases that surface water is itself contaminated by runoff from the same mines. In 2010, India's Ministry of Environment and Forests declared its intention to commission a study on the environmental impacts of all existing mines in Goa, but at the time of writing the study had yet to be carried out. So far, however, the state and central governments have not treated the potential health impacts of irresponsible mining with the seriousness they deserve. In an interview with Human Rights Watch, then-Goa Environment Minister Alex Sequeira professed the government has not been able to act because people in mining-affected communities are uninterested in their own health: The local in many areas believes that money is God. You and I may believe he is sacrificing his health but he does not care. Locals own trucks and are provided things by mining companies—money, air conditioners. So even if this activity is taking a toll on their health, they will not allow us to act. Water and Agriculture People living in and around two south Goa villages visited by Human Rights Watch—Rivona and Caurem—complained that adjacent mines have polluted nearby rivers and streams through irresponsible waste disposal and that natural springs used to irrigate fields have been destroyed as mines puncture the water table and damage aquifers. "Because of water pollution, there is no water for agriculture," said farmer and anti-mining activist Rama Velip. "Some wells are dry. Some spring water is destroyed." Other residents of the two communities echoed his complaint. "I have had no sugar cane for three years," said one farmer who alleges that dust and groundwater pollution have destroyed his crops. Another local resident said that since mid-2010, "murky water is suddenly coming from the springs," and attributed this to nearby mining activity. Other farmers alleged that their crop yields had decreased dramatically due to clouds of iron-rich dust from passing trucks that settle on and kill their crops. Most mines in Goa operate below the water table, and many are forced to continually pump out vast quantities of water in order to keep mine pits dry. Often, mine operators simply discard the water rather than reinject it into the ground to help regenerate the resource. One woman living near Caurem told Human Rights Watch that in 2011, one nearby mine broke through the water table and unleashed a torrent of water that flowed from the mine site down a hill and across a nearby road for more than a week; by the time it stopped flowing, nearby springs had completely dried up. Many of these claims are impossible to verify because sufficient data does not exist -- and that is part of the problem. Public officials have done nothing to study alleged harms caused by the cumulative impact of mining operations in south Goa, and do not know how many mine operators are engaged in irresponsible and illegal practices that could bring about such harm. The data that does exist, however, is troubling. Goa mining industry spokesperson S. Sridhar told Human Rights Watch that mining did not cause any loss of drinking or irrigation water anywhere in Goa. "Water is available everywhere," he said. But a study published by his own association in 2010 acknowledged that mining in Goa has "quantitative and qualitative impacts on the water regime in and around the mines," including through pollution and through damage to aquifers. And one mine near Caurem was shut down in March 2011 for damaging local springs, dumping its waste on the banks of a nearby river and causing other harm. Its closure followed extended protests by local residents. One villager told Human Rights Watch that before the mine shut down, company officials met with villagers to ask, "‘What do you want? Money? Something to implement in the village?' We said we don't want anything, just our land and our water." A 2009 study by the National Environmental Engineering and Research Institute (NEERI) found that mining around Sirigaon village in north Goa had created "water scarcity" by puncturing the water table and reducing the area available for groundwater recharge by rain. The study also found that silt carried as runoff from mine waste dumps had "degraded the soil fertility in the agricultural fields" around the village. Such mine runoff problems are common in Goa and are exacerbated when mine operators locate waste dumps close to riverbanks—generally in violation of the terms of their environmental clearances. Goa receives more than 3000 mm of rainfall annually and monsoon rains often cause these dumps to collapse, causing pollution and heavy siltation of agricultural fields, irrigation canals, rivers and creeks. Studies have found that this phenomenon can have serious negative impacts on agricultural yields, groundwater quality and fish populations that mining-affected communities depend on. Human Rights Watch observed that some mine operators distribute water in metal drums to communities whose own water supplies have been destroyed or damaged. This practice implies the creation of localized water scarcity problems that did not exist prior to the onset of mining activity. It also begs the question of how the impacted communities will obtain drinking and irrigation water after mining operations have been completed -- the damage to their aquifers will not vanish when local iron deposits are exhausted. Simon DeSousa of Goa's Pollution Control Board acknowledged to Human Rights Watch that depletion of water resources by mining was a problem in south Goa. Asked why miners were allowed to dig below the water table if that was the case, he said he did not know. Protest and Response In 2011, growing local discontent around the impact of iron mining operations in south Goa led to peaceful protests and also to violent confrontations between local residents and mine employees. Residents of Caurem told Human Rights Watch that in a separate incident in April 2011, fights between angry villagers and private security guards at one mine site left individuals on both sides injured. Residents in Rivona and Caurem have staged prolonged sit-in protests, blocking the roads providing access to local mine sites. Protesters told Human Rights Watch that in May 2011 they were confronted by a group of truck drivers who threatened violence if they did not clear the road; ultimately the police dispersed the protesters and arrested at least 94 people. Quepem police official S.S. Narvekar told Human Rights Watch that the arrests were a "preventative" measure to avert violence between anti-mining activists and truck drivers, that they were carried out with "minimum force" and that all those detained were released at the end of the same day. Many of the villagers arrested see things differently, and allege that police carried out a lathi (baton) charge against them without being provoked. Narvekar acknowledged the seriousness of the protesters' complaints, but said the police were powerless to address those issues. "If the [state government] confirmed that what these mines are doing is illegal, it would be different," he said. "But without that, on what basis can we ask them to stop?" Threats and Violence There have been occasional reports of violence and direct threats against anti-mining activists in Goa. Nilesh Gaukar, a resident of Caurem village who helped organize local anti-mining protests in 2011, told Human Rights Watch that he received an anonymous phone call in early May warning him that "mine owners and contractors" were planning to attack him. On May 12, as he alighted from a public bus at the nearby industrial estate where he worked, a man wielding an iron bar attacked him: I got off the bus and as I was going to the gate someone hit me with an iron rod. Ten or 15 people were around [but] he got away on a motorcycle -- one person was waiting there on the bike. I saw him get on the bike and flee. He tried to get me on the head but only got me on the shoulder and elbow. Gaukar spent four days in the hospital and when he returned home, police officials in Quepem provided him with a 24-hour police guard. No one was arrested. Another prominent local voice against mining, Cheryl DeSousa, told Human Rights Watch that she has suffered a long string of phone calls threatening violence against her and her daughter in extremely graphic terms. DeSouza owns more than 200 acres of farmland in the heart of south Goa's iron mining belt and has participated in anti-mining protests by nearby villagers. DeSousa says that she has been approached with highly lucrative offers to buy her land but has consistently refused, partly because her late husband is buried there. She told Human Rights Watch that because of her refusal to sell, she has received numerous threatening phone calls from anonymous callers. She said that some have threatened to gang rape her teenage daughter and throw acid on her face. "They also told me that my problem is that I haven't had a man in so long, and they will fix that." She did not file a complaint with the police, describing that as a "waste of time." An Inevitable Scandal When Human Rights Watch first visited Goa in May 2011, industry and state government officials appeared complacent about the state's mining troubles. Many of those who openly acknowledged the worst problems described above expressed no urgency to correct them. By September 2011, the situation had changed dramatically. This was due largely to the arrival of a Commission of Inquiry convened by the central government and headed by retired Supreme Court Justice M.B. Shah. The Shah Commission was tasked with investigating illegal mining of iron ore and manganese nationwide. Goa -- to the apparent surprise of Goan politicians and industry leaders—was the commission's first stop. Within days, Shah began talking to the press, making statements that seemed highly critical of the mining industry and the state government. Many in the government considered this especially alarming, coming on the heels of a scandal that had brought down the government in neighboring Karnataka state earlier in the year. Prominent critics of the state's ruling Congress Party began calling for the resignation of Goa's chief minister, Digambar Kamat, who in addition to being chief minister since 2007, had held the post of mines minister for more than a decade. National media attention focused suddenly and intensely on Goa. Some Goans expressed hope that the scandal could lead to real accountability, and that the Shah Commission would name names. Sujoy Gupta, editor of the Goa Herald, told Human Rights Watch that he hoped that due to the Shah Commission's work, "the ugly face of illegal mining will be exposed because the individuals involved will be exposed. That is what has been missing in the past." The Shah Commission's report was submitted to the central government in March 2012, but to date has not been made public. By late 2011 the mining industry was focused on trying to avoid a shutdown of iron exports similar to the one that decimated the industry in Karnataka. Industry spokespeople emphasized the potentially devastating impact an industry shutdown could have on the state economy as well as mine workers, their families, truck drivers and others who rely on mining for their incomes. "Any good doctor can find 10 things wrong with you even if you are perfectly healthy," Goa mining industry spokesman S. Sridhar told Human Rights Watch. "But why should he want to put you in the hospital for that?" Not all industry officials were convinced that a temporary shutdown was such a bad idea. An official with one of Goa's major mining firms, speaking on condition of anonymity, told Human Rights Watch: "I would be happy if they stopped all mining and said, 'OK, let's look at everything fresh, make sure everything is clean and get rid of the bad operators and then restart it.' My company might not be happy and maybe some people would get hurt but personally, I would be very happy." A Test for Goa's New Government In February 2012 the Congress Party lost control of Goa in statewide elections. In part, the vote was seen to reflect rising public anger over the state's increasingly public mining scandals. The opposition Bharatiya Janata Party (BJP), eager to turn the tables on its Congress Party rivals after being tarnished itself by the scandal in Karnataka, had sharply criticized the state government's failure to curb abuses in the mining sector. In March 2012, Manohar Parrikar was sworn in as chief minister of a new BJP-led government. As an opposition legislator, Parrikar had publicly denounced the state government's failure to tackle its mining problems in harsh terms. A 2011 report Parrikar wrote as a member of the legislature's Public Accounts Committee found that, "Mining in the state is beset with substantial illegalities" and concluded that there had been a "complete breakdown" of all key regulatory institutions in the state. The report also alleged that illegalities by miners had "resulted in strain on the infrastructure, ecology, [and] agriculture and threatens to destroy the water security of the state, if not curbed immediately." Parrikar's report found that "Environmental Impact Assessment studies have been found to be manipulated or... full of incorrect data" regarding the presence on or near mining leases of protected tribal populations; schools; agricultural fields; and water bodies. As an opposition politician, Parrikar's criticisms of the Kamat government carried with them a strong implicit commitment to reform. In an interview with Human Rights Watch in September 2011—before the election that made him chief minister—he said: "I am a supporter of regulated, properly controlled mining" and accused the state and central governments for failing to implement that kind of control. "If you are just going to give permission for every single mine, what is the point of needing permission? If everyapplication is granted it means you are either careless or corrupt." He also alleged that widespread corruption lay behind many of the state government's worst oversights, saying some illegalities by miners were so conspicuous that, "this is only possible when a politician is there. It is not just incapacity. They are looking the other way." Even before the February 2012 election, public criticism spurred some welcome action on the part of Goa's hitherto lethargic state government. Goa's woefully understaffed Pollution Control Board was allocated funds to hire dozens of new staff in late 2011 -- a prerequisite to any kind of credible monitoring by that office. In addition, then Environment Minister Alex Sequeira partnered with a Goan NGO to assess the credibility of the Environmental Impact Assessment reports underlying every mine in the state—an initiative described in more detail below. In 2012, the state government announced that all of Goa's 460 licensed iron ore traders would have to reapply for licenses to continue their business; only 186 elected to re-apply. ### FULL TEXT OF REPORT: http://www.hrw.org/sites/default/files/reports/india0612ForUpload_0.pdf