Peru tries to close legal loophole for pollution fines

Reuters News

5/8/2013 12:53:50 PM - Reuters News

LIMA (Reuters) - Peru is trying to quash the ability of companies to avoid paying environmental fines by lodging judicial appeals that linger for years, part of a push to crack down on polluters in a top exporter of minerals.

Many of the appeals filed by mining and energy firms in Peru effectively suspend penalties indefinitely, rendering environmental sanctions nearly pointless, said Hugo Gomez, the head of Peru's environmental enforcement agency, OEFA.

"The fine remains suspended through the whole process," Gomez told reporters on Tuesday. "That reduces the deterrent impact of the fines."

Under a proposal by President Ollanta Humala, a firm would have to make a deposit equal to the amount of the fine before asking the judiciary to consider suspending it, Gomez said.

Humala has promised to emphasize environmental protection along with the multibillion-dollar mining industry, Peru's traditional engine of economic growth.

Peru's environment ministry is barely five years old, and critics say OEFA, its enforcement arm, is still too under-funded to catch up with environmental violations stretching from mines in the Andes to oil sites in the Amazon.

Concerns that extractive projects will hurt local water supplies help drive some of the many disputes over natural resources in rural provinces in Peru.

More than 80 percent of penalties for environmental infractions since 2011, around $30 million, have not been paid because of appeals, said Jesus Espinoza with OEFA.

"Most environmental fines ... are paralyzed," he said.

OEFA said last year the government levied 215 fines on mining companies and 43 on oil and gas firms.

In March, Peru declared a state of emergency in a part of the Peruvian Amazon where oil has leaked into the environment over four decades.

The government also plans to triple the maximum fine on polluting companies to $42.5 million (111 million soles), reduce fines for companies that voluntarily report infractions, and set up a laboratory where it can independently test for toxic substances.

(Reporting by Mitra Taj and Omar Mariluz; Editing by Vicki Allen)