Chile's new law risks rewarding corporate negligence in environmental approvals

A proposed amendment to Chile's Reconstruction Law has sparked controversy by introducing a provision that would require the state to compensate companies if their Environmental Qualification Resolutions (RCA) are revoked by courts. Critics argue this creates an unacceptable incentive structure, effectively shielding poorly designed or unviable projects from consequences. The measure, presented as a legal certainty for investors, could encourage companies to submit flawed proposals, knowing that any judicial reversal would be financed by public funds.

An example cited is the SLM NX Uno de Peine potassium salts production plant in the Salar de Atacama, owned by Grupo Errázuriz. This project has faced rejection from three previous administrations due to fundamental deficiencies, including insufficient indigenous consultation and inadequate hydrogeological modeling. Despite these issues, the current government granted its RCA. Under the proposed law, if environmental courts overturn this approval, the state would be obligated to indemnify the company, effectively subsidizing a project that was previously deemed inadequate by multiple governments.

The author distinguishes this from reasonable efforts to streamline environmental permitting processes, emphasizing that while clear timeframes for project review are necessary to prevent undue uncertainty, they should not come at the expense of substantive environmental and social standards. The amendment is seen as rewarding negligence rather than promoting robust, well-prepared projects that meet international standards. The core argument is that the state's role should be to ensure national sustainability, not to act as a guarantor of private failure.