PUBLIC DOCUMENT OF THE INDEPENDENT CONSULTATION AND INVESTIGATION MECHANISM ME-MICI002-2012 COMPLIANCE REVIEW REPORT MAREÑA RENOVABLES WIND PROJECT (ME-L1107) (2644/OC-ME) This document was prepared by Victoria Márquez-Mees, Director of MICI Under the Access to Information Policy, this document is subject to Public Disclosure. i i THE COMPLIANCE REVIEW PROCESS OF THE MICI The purpose of the proposed Compliance Review is to investigate the allegations of Requesters who claim that their rights or interests have been, or are expected to be, adversely affected in a direct, material, and substantial way by acts or omissions of the Inter-American Development Bank, as the result of the Bank’s noncompliance with one or more of its Relevant Operational Policies in connection with the operation. The objective of the Compliance Review investigation is to establish whether (and if so, how and why) a particular act or omission of the Bank’s with respect to the Bank-financed operation has resulted in a breach of its ROP, thus causing (real or potential) direct, substantial, and adverse effects on the Requesters. Compliance Review is an exercise in factual investigation. It is designed to help the Board of Executive Directors promote the observance of the Bank’s Operational Policies, reinforce the positive outcomes of development in Bank-financed operations, and foster institutional learning. The Compliance Review only address the Bank’s compliance with the ROP, and does not draw any conclusions regarding the actions of any party other than the Bank in matters concerning the respective Bank-financed operation. ii ACKNOWLEDGEMENTS The MICI wishes to thank the support and patience of the Requesters, the Client, Management and the Board of Executive Directors during this long investigative process that coincided with diverse institutional events at the Mechanism. This work would not have been possible without the collaboration of all Parties. To the Requesters and their representative, Leonardo Crippa from Indian Law Center, we thank them for their trust, availability and support during the process. We wish to particularly acknowledge the help received from requesters and community members at the Tehuantepec Istmus during the investigative mission undertaken by the Panel members. Also, our thanks to Civil Society Organizations’ representatives with whom we met and from whom we obtained different perspectives of the process. To Management, our thanks because at every step, they maintained their willingness to meet with us, provide information and support our fact checking. Also our thanks to the IDB Mexico Chair, and the Mexican Federal and State Officials for their openness and support for this process from the start. We wish to thank the members of the Panel: Rosemary Brusewitz, Korinna Horta y Mario Epstein for their detailed investigative work. Also our thanks to case officers Ashley Morse and Julio Patiño who supported the processing of this case all through the Compliance Review Phase. Without doubt, our acknowledgement to the all staff at MICI for their support in the process who in their different roles helped achive this outcome. In sum, the MICI recognizes the environment of collaboration, support and institutional maturity that allowed this indagatory process to take place and hopes that its results add to the richness that the Bank´s work provides to the Latin America and Caribbean Region. iii CONTENTS EXECUTIVE SUMMARY .................................................................................................................. 1 I. INTRODUCTION AND CONTEXT ............................................................................................... 8 A. Introduction ...................................................................................................................... 8 B. The project ....................................................................................................................... 9 C. The Request and Allegations of the Requesters ..............................................................11 D. Geographic and Social Context .......................................................................................13 E. Legal Context of Landholding ..........................................................................................14 F. Wind Development on the Isthmus ..................................................................................15 G. The project prior to the Bank’s involvement .....................................................................16 1. San Dionisio del Mar Wind Farm .................................................................................18 2. Santa María del Mar Wind Farm .................................................................................20 3. Transmission Rights ...................................................................................................21 II. THE INVESTIGATION .............................................................................................................23 A. The Bank’s Involvement ..................................................................................................24 B. Findings of the Investigation ..............................................................................................27 1. Regarding the Environment and Safeguards Compliance Policy (OP-703) .................27 2. Regarding the Access to Information Policy (OP-102) ................................................47 3. Regarding the Operational Policy on Indigenous Peoples (OP-765) ...........................51 III. CONCLUSIONS .....................................................................................................................59 IV. RECOMMENDATIONS ............................................................................................................61 A. Recommendations Specific to the Mareña Renovables Wind Project ..............................61 B. General Recommendations to the Bank ..........................................................................61 iv ANNEXES PRINTED ANNEXES Annex I Joint Response of IDB-IIC Management to the Preliminary Draft of the MICI’s Compliance Review Report on the Mareña Renovables Wind Project (ME-L1107) in Mexico Annex II Requesters’ Observations to the Preliminary Draft of the MICI’s Compliance Review Report on the Mareña Renovables Wind Project (ME-L1107) in Mexico ELECTRONIC LINKS Request filed by the Indian Law Resource Center on behalf of the Requesters 1. https://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=37520692 Determination of Eligibility for the Consultation Phase 2. https://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=38811285 Determination of Eligibility for the Compliance Review Phase 3. https://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=38068277 Recommendation for a Compliance Review and Terms of Reference for Loan 2644A/OC-ME 4. https://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=39499203 Project Abstract – Mareña Renovables 5. https://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=36416890 Environmental and Social Strategy (ESS) – Mareña Renovables 6. https://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=36416994 Environmental and Social Management Report (ESMR) – Mareña Renovables 7. https://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=36537741 Presentation for communities 8. https://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=37531846 Compliance Review Mission Agenda 9. https://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=40395187 Bibliography 10. https://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=40381701 v ACRONYMS AND ABBREVIATIONS APIITDTT Assembly of Indigenous Peoples of the Isthmus of Tehuantepec in Defense of Land and Territory CAP Corrective Action Plan CFE Federal Electricity Commission Client Mareña Renovables Capital SAPI de CV SOFOM WNR and/or Macquarie Mexican Infrastructure Fund EA Environmental Assessment EIA Environmental Impact Assessment EIS Environmental Impact Statement ERM Environmental Resources Management [consulting company] ESAP Environmental and Social Action Plan ESG Environmental Safeguards Unit of the IDB ESMP Environmental and Social Management Plan ESMR Environmental and Social Management Report ESS Environmental and Social Strategy FEMSA Fomento Empresarial Mexicano IDB Inter-American Development Bank IIE Electrical Research Institute ILO International Labor Organization INAH National Institute of Anthropology and History INEGI National Institute of Statistics and Geography ISMP Integrated Social Management Plan LAWEA Latin American Wind Energy Association MICI Independent Consultation and Investigation Mechanism OR Operating Regulations OS Open Season PROCEDE Program for the Certification of Ejido Land Rights and the Titling of Urban House Plots Project Mareña Renovables Wind Project, which includes the San Dionisio and Istmeño Wind Farms, the 52 km transmission line, the docking stations, and the access roads QRR Quality and Risk Review RAN National Agrarian Registry ROP Relevant Operational Policies SCF Structured and Corporate Finance Department of the IDB SEMARNAT Department of the Environment and Natural Resources SSF Safeguard Screening Form TL transmission line 1 EXECUTIVE SUMMARY A. The Project On November 23, 2011, the Bank’s Board of Executive Directors approved the loan for the “Mareña Renovables Wind Project” (ME-L1107), financed under the Bank’s private sector window. The project consisted of the construction and operation of the 396