Brazilian rural land authority issues rules for approving projects in settlement areas
New measure set to provide mining, energy and infrastructure projects with greater security and predictability
On December 22, 2021, the National Institute for Colonization and Agrarian Reform (Incra) published new regulations regarding the procedures for approving mining, energy and infrastructure activities within areas designated for settlement projects. Normative Instruction No. 112 took effect as of January 3, 2022.
The new rules determine that Incra’s approval is required for undertaking mining operations, including exploration and exploitation.
To obtain approval, interested parties must submit a request to Incra via the regional branch in charge of the settlement project. The submission must also include a series of documents:
- The plan or design of the intended activities and the impacted area within the settlement project;
- Justification for using the terrain for the intended activity;
- Site plan and description;
- Impact matrix for the intended activity, together with the company’s assumed obligations.
Depending on the project, interested parties may be required to provide documents concerning environmental questions, such as:
- A copy of the environmental license;
- Environmental control reports and plans (RCAs and PCAs);
- Degraded Area Restoration Plan (PRAD);
- A risk assessment approved by the environmental licensing agency.
If the use of the area involves constructing and operating a tailings dam, the dam’s safety plan must also be submitted.
Furthermore, approval from the Brazilian Congress is required where the designated area for use exceeds 2,500 hectares.
Interestingly, the new rule provides that Incra’s documentation requirements must not exceed those of the environmental authority regarding licensing, nor the Brazilian Mining Agency’s (ANM) requirements for granting authorization for exploration rights or mining concessions. The purpose of this provision is to avoid unnecessary duplication of the licensing process.
When reviewing a request, Incra must take into account whether the corresponding project can feasibly coexist with the settlement program, the location and dimension of the area intended for mining activities, as well as potential alternative locations for the project (should they exist).
Compensation for land use
Normative Instruction No. 112 establishes that as a condition of use, companies may be required to pay:
- Compensation to Incra for using the land;
- Compensation for loss and damage to the National Agrarian Reform Program (PNRA), and to land occupiers – whether individually or collectively;
- A participation on the mining results to Incra, in accordance with the law.
In addition, companies may be obligated to implement other measures, including:
- Resettlement or relocation programs for affected land occupiers;
- Installation, improvements or maintenance of infrastructure to benefit the settlement project;
- Compensation for land occupiers’ loss of profits;
- Improvements to assist with land occupiers’ productivity;
- Technical assistance to land occupiers;
- Construction of infrastructure or providing equipment for the sustainable development of the settlement projects;
- Support to the environmental regularization of the settlement project area and surroundings;
- Support to Incra’s monitoring and inspection work throughout the implementation process of measures stipulated in the approval.
Environmental and social issues
Normative Instruction No. 112 also establishes that mining activities within settlement projects must align with environmental conservation and sustainable use practices, environmental licensing obligations, social, cultural and economic development principles and settlers’ rights.
Moreover, Incra will only allow such activities if they comply with plans and projects approved by the competent authorities. Considering this, it may be necessary to hold a meeting with settlers occupying the area relevant to a given mining project to provide clarifications concerning the project, regardless of whether a public hearing has occurred during the environmental licensing process.
Incra can formalize its approval of a company’ use of settlement areas through a public deed of servitude or a concession agreement for the use of the land. Therefore, in order to facilitate formalization, models of these documents were issued as attachments to Normative Instruction No. 112 itself.
Authority for approving projects
Once as application for Incra’s consent has been reviewed and its technical assessment completed, Incra will issue a concluding statement to its Regional Decision Committee (CDR), which is then forwarded and reviewed by its Settlement Project Development Board. Subsequently, after receiving authorization from the Board, Incra’s president will announce a decision and shall sign the necessary deed/concession to implement it. As described above, Incra’s internal process for handling requests involves several bodies, leading to concerns that analysis will not be as dynamic and efficient as expected.
If Incra rejects an applicant’s request to conduct mining activities in a settlement project area, the latter may submit a request for reconsideration within 30 days. After further technical analysis by the Settlement Project Development Board and a legal statement from the Specialized Federal Attorney’s Office, a decision on this request will then be made by Incra’s Board.
Effective January 3, 2022, Incra’s Normative Instruction No. 112 applies both to applications already under review and to ongoing projects that are yet to submit a request.
Given the previous lack of specific rules on this matter, Incra has provided greater legal certainty to both companies and land occupiers, as many mining projects require access to, and use of, areas demarcated as rural settlements.
With that said, the new normative instruction seems to have been conceived for projects at more advanced stages, while it provides the same treatment to infrastructure, energy and mining projects. In the case of the latter, it seems that it does not consider the particular characteristics and low intervention of mineral exploration works. Therefore, it remains to be seen how Incra will handle mineral exploration projects in their initial stages that have not made any major permanent interventions in settlement areas.
For more information, contact Mattos Filho’s Infrastructure and Energy practice area.