Intergenerational equity documents

Intergenerational Equity is the idea that each future generation should inherit as much opportunities and resources as we did. A simple rule of thumb is that everytime we sell or otherwise “alienate” an inherited asset, we must create a new “non-wasting” asset of at least equal value. In economics, this is Hartwick’s Rule.

The Intergenerational Equity Principle is deemed a part of the right to life. In the Goa mining case, the Supreme Court was determined to implement intergenerational equity and formed an Expert Committee to examine the issue. The implementation of Intergenerational Equity is moving forward on multiple fronts. This page attempts to be a relatively comprehensive overview of Intergenerational Equity in the context of Goa.

History of Intergenerational Equity in India

The concept of Intergenerational Equity was kickstarted by the Brundtland Report titled “Our Common Future” in 1987. On 15th February 1988, the Goa Guidelines on Intergenerational Equity were formulated by 6 eminent jurists from different continents who met in Goa, India. Asia was represented by the Chief Justice of the Supreme Court of India, R.S. Pathak. Another attendee, Edith Brown Weiss, wrote the seminal works: “In Fairness to Future Generations” in 1989, and “Intergenerational Equity: A Legal Framework for Global Environmental Change” in 1992. UNESCO issued the “Declaration on the Responsibilities of the Present Generations Towards Future Generations” on 12th November 1997.

Intergenerational equity has been an integral part of personal succession law, although implicitly. In both Hindu (Mitakshara) and Muslim personal law, the present generation are considered only custodians over inheritances, the true owners are the present and future generations. The Intergenerational Equity principle explicitly enters Indian jurisprudence with the 1995 judgement in State of HP & ors vs Ganesh Wood Products & Ors (1995 SCC (6) 363), where the continued availability of Khair wood for katha was examined from an intergenerational equity perspective. On 9th September 2010, the judgement in Glanrock Estate (P) Ltd vs State of TN (WP(c) 242 of 1988) invoked Intergenerational Equity and clarified that it is part of Article 21 (Right to Life) of the Indian Constitution. Judgements arising from matters arising from the T.N Godavarman Thirumulpad vs Union of India case apply the Intergenerational Equity principle to the environment.

Supreme Court – Writ Petition (Civil) 435 of 2012 (Goa Mining Case)

The Shah Commission first raised the issue of Intergenerational Equity in Part III of its report on Goa. Chapter 6 dealing with Modification of Mining Plan calculates the balance reserves and compares it with the approved extraction levels. It concludes “If the permission granted for extraction of 66 million tones by IBM and MoEF is taken into consideration, then the reserve would last only for 9 years. If 30 million tones is taken as average production per year, the iron ore would last for 20 years only.”

Goa Foundation, the petitioner in the Goa mining case, raised the issue of Intergenerational Equity in its petition. In the course of the hearings, Adv. Prashant Bhushan, representing Goa Foundation, submitted a detailed note on the legal aspects of Intergenerational Equity.

On 11-Nov-2013, the Supreme Court ordered a “Committee of experts must conduct a Macro EIA Study on what should be the ceiling of annual excavation of iron ore from the State of Goa considering its Iron Ore resources and its carrying capacity keeping  in  mind  the  principles  of  sustainable development  and  inter-generational  equity  and  all  other relevant factors.” The Supreme Court appointed ECOC comprised of:

  • An ecologist (Dr. C.R. Babu)
  • A geologist (Dr. S.C. Dhiman)
  • A mineralogist (Prof B.K. Mishra)
  • An expert on Forestry (S. Parameswarappa)
  • A representative of Department of Mines, Government of Goa (Parimal Rai)
  • A representative of MoEF (Arun K. Bansal)

Two submissions were made by Goa Foundation to the ECOC. The first letter on 22nd January 2014 enclosed a few key documents. Implementing Intergenerational Equity in Goa (Rahul Basu) provided much of the overall framework, and was the basis for the academic paper published on 20-Dec-2014 in Economic & Political Weekly (EPW) titled “Implementing Intergenerational Equity in Goa“. It also showed that over a 5 year period (2004-05 – 2008-09), Goa had lost over 99% of the value of its iron ore. Intergenerational Equity Unachievable without Ban on Iron Ore Exports (Rajendra Kakodkar) argues that minerals are an opportunity for Goa, and by exporting the ore we are failing intergenerational equity. The note on Legal aspects of Intergenerational Equity previously submitted to the SC was also provided to the ECOC. A fourth paper examined Employment & Mining in Goa (Goa Foundation) and found that official statistics show a much lower mining dependent employment than commonly assumed.

The second submission to the ECOC was on 5th March 2014. This included a significant paper titled “When should Goa convert iron ore to other assets?” (Prof. Pranab Mukhopadhyay). This paper concludes that there are no pressing fiscal or GDP reasons for the continuation of mining. A number of other materials were attached to both submissions. Here are two relating to Permanent Funds (a) Sovereign and Permanent Wealth Fund Rankings; (b) Sovereign and Wealth Funds Around the World.

The ECOC, in its 2nd interim report submitted on 25th March, 2014, recommended an interim cap of 20 mtpa, and a Permanent Fund on grounds of weak sustainability. These recommendations found their way into the final judgement of the Supreme Court.

The Supreme Court judgement on 21st April, 2014 in the Goa mining case had a number of significant elements

  • All mining after 22-Nov-2007 was illegal (mining finally stopped on 12-Sep-2012);
  • Dumps outside mining leases were held to be illegal;
  • Fifteen million tons of extracted iron ore was deemed the property of the state, and was ordered to be e-auctioned under the supervision of a Monitoring Committee appointed by the Supreme Court;
  • The ECOC was given 6 months to submit its report on mining dumps (20-Oct-2014), and 12 months to submit its final report (20-Apr-2015);
  • An interim cap was set of 20 mtpa;
  • The Goa Iron Ore Permanent Fund was established on grounds of intergenerational equity and sustainable development.

After the Supreme Court judgement

There are a few different aspects that need to be considered, including:

Goa Foundation advocacy

The Goa Foundation has been assisting the authorities with the required information on several issues arising from the judgement. The Goa Foundation has also submitted documents on the value of illegal mining and on the Goenchi Mati Permanent Fund.

Nine days after the judgement, Goa Foundation wrote to the Chief Secretary, Goa on 30th April 2014 with an estimate of the amount recoverable on account of illegal mining after 22-Nov-2007. The conservative estimate was Rs. 25,149 crores on account of the ore, Rs. 10,631 crores of interest @12% pa, adding up to Rs. 35,780 crores. Rs. 2,45,450 per man, woman and child. These figures were revised significantly upwards in December using the actual legal provisions.

Goa Foundation next wrote a letter on 15th May 2014 to the Chief Minister, Goa, Manohar Parrikar, with a detailed proposal on how mining could restart scientifically taking into consideration the Supreme Court judgement. This proposal keeps Intergenerational Equity at its core – (a) minimize loss of value while mining; and (b) save all mining receipts in a Permanent Fund. It would be implemented in 3 phases (a) an initial phase of a couple of years where e-auction supports activities; (b) the second phase where dumps are either sold or used to restore abandoned mines; and (c) fresh mining. Since there is a clean slate, a tabula rasa, the government would be able to conduct fresh mining efficiently in a concentrated manner – perhaps only 1 or 2 mines run by the Government. It recommends all receipts from mining be deposited into the Goenchi Mati Permanent Fund. It also incorporates a number of global best practices in management and control over mining.

This proposal was also the basis for the academic paper published on 19-Sep-2015 in EPW titled “Catastrophic Failure of Public Trust in Mining: Case Study of Goa“. It should be mentioned that the above proposal targets a 90% capture rate, potential investment of the capital into infrastructure, health and education, and use of the real income by the government. A deeper consideration of the issues involved has lead to a demand for zero loss equivalent to a 100% capture rate; deposit of the entire capital into the Permanent Fund as investments in infrastructure, health and education are wasting assets (lose value over time or at the expiry of the individual); and the only permissible distribution being of the real income only as a Citizen’s Dividend – it is essentially a cooperative dividend, people get a direct stake in the mineral, and it eliminates easy money for the government to mis-manage. Anything less than 100% investment into the Permanent Fund and distribution only to citizens would create a slippery slope to zero, the current situation.

Soon after on 26th May 2014, Goa Foundation wrote to the CM, Manohar Parrikar on the necessity of auctioning leases in the state. On 19th June 2014, Goa Foundation sent a letter to the CM, Manohar Parrikar, providing a lot of information that would be useful for designing the Goenchi Mati Permanent Fund from across the globe.

Next, Goa Foundation wrote on 8th Jul 2014 to Prime Minister, India (“PM”), Narendra Modi, sharing with him the public interest perspective on mining scenario in Goa. Later that month, on 22nd July 2014 Goa Foundation shared extremely detailed calculations on mining in Goa with the CM, Manohar Parrikar. On 11th August 2014 GF wrote to the Union Minister for Mines, Narendra Singh Tomar, on needed amendments to MMDR Act, 1957 taking into account the intergenerational equity perspective.

Finally, on 11th December 2014, GF wrote to the Chief Secretary, Goa revising upwards the estimate of amount recoverable on account of ore illegally mined after 22-Nov-2007 to bring it in line with legal provisions. The revised conservative estimate was Rs. 65,058 crores on account of the ore (earlier Rs. 25,149 crores), Rs. 53,603 crores of interest @ 24% pa (earlier Rs. 10,631 crores), adding up to Rs. 118,661 crores (earlier Rs. 35,780 crores). This is a loss of  Rs.8,13,560 per man, woman and child (earlier Rs. 2,45,450), approximately 4 times the per capita income.

What actually happened – High Court, Goa government, lease renewals, MMDR ordinance, Goa Foundation new PILs (Goa lease renewal case), allocation of the cap

The Supreme Court judgement was issued on monday. That friday (25-Apr-2014), 28 erstwhile mine lessees started approaching the High Court (“HC”) of Bombay at Goa, asking for a renewal of their leases on grounds of promissory estoppel. The Goa government opposed these petitions in their affidavit of 25-Jun-2014. The HC pronounced its judgement on 13-Aug-2014 directing the Goa government to grant a renewal of mining lease to the 28 parties, as well as consider various other applications for renewal within a period of 3 months.

Despite the earlier robust defense, the Goa government did not appeal the HC judgement at the Supreme Court. Instead, on 18th August 2014, the CM, Manohar Parrikar, laid a statement on the floor of the Goa Legislative Assembly essentially saying that the government wanted to renew the leases as the alternatives were (a) auctioning mines – worse due to the possibility of the mining mafia entering Goa – as though a fully illegal industry over nearly 5 years can be considered less than a mining mafia; or (b) mining through a public sector entity – worse due to the possible corruption and inefficiency – as though public sector corruption can be worse than a 95% loss rate, or 100% illegal mining for 5 years.

In September 2014, Goa Foundation filed a Special Leave Petition (civil) 16080 of 2014 in the Supreme Court appealing the HC judgement. Among other things, it asked for interim relief by way of a stay order on any lease renewals. It came up for hearing multiple times, but no interim relief has been granted, not has judgement been passed. During the process, it has become SLP (civil) 32138 of 2015.

On 1st October 2014, the Directorate of Mines and Geology, Goa put the draft Goa Grant of Mining Leases Policy, 2014 on its website. It was based around the CM statement earlier in August. The draft made it clear that the policy was subject to approval of the finance department.

Lease renewals commenced on 5th November, 2014. Between 5th and 10th November, 14 leases were renewed. On 8th November 2014, Manohar Parrikar resigned as Goa CM and Laxmikant Parsekar was appointed in that post. There was a hiatus.

A number of Supreme Court judgements had made it necessary to amend the MMDR Act. In anticipation, Goa Foundation had written a detailed letter to the Union Minister of Mines, Narendra Singh Tomar on 11th August, 2014 on the needed amendments considering intergenerational equity and global best practices. On 19th November, 2014, the Union Ministry of Mines released its draft MMDR Amendment Bill 2014 for public consultation. The objective was to introduce and pass the amendment in the winter session of Parliament, 24th November – 23rd December, 2014. Goa Foundation was heard and submitted two responses on first on 4th & second on 10th December, 2014.

The government was unable to pass the bill in Parliament during the winter session. On 25th December, 2014, it was reported that the mines ministry had moved an ordinance to the Union cabinet for approval. On 6th January, 2015, it was reported that the Union cabinet had approved the mining ordinance. Among various provisions, the new law would no longer permit lease renewals – auctions become mandatory. However, leases would be given for a uniform period of 50 years. Existing leases would terminate at the earlier of (a) the existing lease expiry; (b) 50 years from inception or (c) 5 / 15 years (merchant / captive mine) from ordinance promulgation.

On 12th January, 2015, the MMDR Amendment Ordinance was promulgated. While the provisions were similar to what had been reported earlier, there was one crucial change. Existing leases would now terminate at the later of (a) the existing lease expiry; (b) 50 years from inception or (c) 5 / 15 years (merchant / captive mine) from ordinance promulgation. Since existing leases were not auctioned, extension would be a simple transfer of wealth from the people to the miners, gush up instead of trickle down.

The Ordinance also brought into place the District Mineral Foundation. The DMF was introduced on grounds of sustainable development, administered by the district administration, for the benefit of mining affected people and areas, and funded by a new levy not exceeding 30% of royalty. Later, the miners and the Goa government would argue that the DMF and the Permanent Fund serve the same objective. This is clearly wrong – the DMF is for mining affected people and areas. The Permanent Fund is for everyone in Goa as a right of ownership.

The lease renewal process in Goa restarted with vigour linked to reports of the forthcoming ordinance. 10th December saw 3 leases renewed. The pace picked up on 24th December with 10 leases renewed. A further 8 were renewed between 1st and 5th January, 2015. On 6th January, in a spurt of productivity probably triggered by the news of cabinet approval, 21 leases were renewed. Another 2 were renewed on 9th January, 2015. Finally, 12th January 2015, the day the MMDR Amendment Ordinance was promulgated, saw an incredible 31 leases renewed. In all, 88 leases had been renewed.

Incredibly, the state government notified the final Goa Grant of Mining Leases Policy 2014 on 20th January, 2015. The policy was infructuous from the very beginning – it contemplated lease renewals, whereas the MMDR Act no longer allowed renewals. And all the leases had already been renewed, prior to the Policy.

In view of the extremely large loss to the public and on many other legal grounds, Goa Foundation filed complaints against the CM, Director – Mines and Secretary – Mines with the Comptroller & Auditor General (CAG), the Central Bureau of Investigation (CBI) and the Directorate of Vigilance, Goa. CBI responded that it was outside their jurisdiction. Since no response was received from the other two watchdogs, Goa Foundation filed a new public interest litigation (PIL) at the Supreme Court challenging the renewal of the leases. This Writ Petition (civil) 711 of 2015 has been clubbed with the earlier SLP 32138 / 2015 and a couple of other petitions filed by other Goans.

In practice, not all 88 leases have received consent to operate from the Goa State Pollution Control Board (GSPCB). The cap of 20 mtpa is being prorated among the leases based on their EC limit.

ECOC Reports and responses

In line with the judgement, the ECOC submitted its report on mining dumps, and later its final report on the cap. The final report recommends a higher cap of 30 mtpa on both grounds, i.e., stretching out the opportunity to mine as well as limited the environmental damage. The final report also examines the MMDR amendment in 2015 introducing the District Mineral Foundation, and concludes that the Permanent Fund would still be required. The ECOC in fact recommends the introduction of Permanent Funds across the nation.

Responses to the reports of the ECOC were filed by the Goa government, Ministry of Environment Forests & Climate Change (“MoEFCC”, earlier MoEF), Union Ministry of Mines and Goa Foundation. The Goa government takes the position that the Permanent Fund should be removed, and the accumulated corpus be merged with the DMF. It recommended revisiting the capping subject to improvement of infrastructure, road network, jetties, etc.

The Union Ministry of Mines makes long and detailed explanation of why the DMF was created and with what provisions, but doesn’t take a stance on the caps or the Permanent Fund. The MoEFCC made specific mention of the various recommendations of the ECOC, including the caps and the Permanent Fund and said it was in agreement with the recommendations of the committee. This is very significant as it represents the views of the entire Government of India.

The Goa Foundation in its response severely criticised the methodology used to determine the caps. It also criticised the proposed caps for violating common sense. For example, 30 mtpa was shown by Shah Commission to complete extraction in 20 years. Many severe environmental impacts have been shown much below a 30 mtpa level. The cap in Bellary is 25 mtpa, for an area twice as large with much much lower ecological sensitivity.

The Goa Foundation recommended separate caps. One based on extension of the life of the resource to seven generations, through a cap of 1/200th the proven reserves. A separate cap was proposed based on the lowest level at which the precautionary principle would come in to action. Thus far, at 12 mtpa, the benthic life in the rivers had nearly become extinct. This would be the initial cap on extraction. Goa Foundation also proposed that this cap could be increased cautiously – every 5 years, by at most 5 mtpa. However, if any environmental parameter like water quality goes beyond permissible limits, or other significant damage is observed, the cap would drop immediately.

The Supreme Court is yet to provide a final decision on Expert Committee reports.

Challenge to the Permanent Fund, Drafts by Goa Government

A few of the miners starting with Sesa Goa filed Interlocutory Applications (“IA”) with the Supreme Court. In essence, the plea was that the Permanent Fund and the District Mineral Foundation served the same purposes as the Permanent Fund was on grounds of intergenerational equity and sustainable development, while the DMF was on account of sustainable development. The Goa government also helped the miners’ cause by drafting Permanent Funds and DMFs that were confusingly similar.

It began soon after the lease renewals. On 14th Jan 2015, two days after the MMDR ordinance, the Goa government notified the Goa Mineral Ore Permanent Fund Scheme. It soon became clear that it had been drafted without consultation with the CEC (as required by the SC judgement). The first challenge, IA 87 in WP(c) 435/2012 was filed by Sesa Goa on 14th July 2015. Soon more challenges were filed by Fomento, GN Agarwal, Geetabala Parulekar and Prafulla Hede.

The Supreme Court briefly heard the matter on 14th August 2015, and asked for responses from the Goa government, MoEF and the Union Ministry of Mines explaining compliance with the judgement, views on the Expert Committee reports and responses to the challenges to the Permanent Fund. The Goa government response showed that no consultation with CEC had been attempted prior to notification of the scheme except for a single letter. The Goa government also supported the miners contending that the DMF and the Permanent Fund were similar. The MoEFCC supported the Permanent Fund being separate from and in addition to the DMF.

Goa Foundation gave written submissions to the Supreme Court at its next hearing on 15th December. At the same hearing, the Goa government offered to redraft the Scheme, which was accepted by the Supreme Court.

On the 17th December 2015, Sesa Goa (now Vedanta) filed a rejoinder affidavit with the Supreme Court. On 13th January 2016, the Goa Mineral Ore Permanent Fund Trust Scheme was uploaded on the DMGGoa website. Just two days later on 15th January 2016, the Goa Districts Mineral Foundation Rules 2015 were notified. Strangely, both had a similar structure – half the inflows were to be saved and half to be spent. Of the amount saved, the interest would largely be spent. The rules for the DMF were clearly contrary to those required by law.

The Supreme Court heard the limited matter of the Permanent Fund on 21st January 2016 and stated that it could not find a comprehensive scheme that would meet the requirements that of the judgement. It therefore gave the Goa government six weeks to draft version three. This included one week for the CEC to furnish its comments. Goa Foundation was also allowed to put forth its views on the structure of the Permanent Fund, which it submitted on 29th January 2016.

On 3rd April 2016, one month late, the Goa government submitted its draft Goa Iron Ore Permanent Fund Trust Scheme. Not much has changed, it is still an impermanent Permanent Fund that utterly fails to achieve its objective of ensuring future generations inherit the mineral value.

STAY Tuned !