PROFESSIONAL ETHICS AND PRACTICES - Column 172
and ask questions. This is where men- tors, including those who are outside your organization can help. Brandy Barnes’s, YP-195, “The impact of an incredible mentor” article and Keri Nutter’s, CPG-11579, “Mentors and mentees” President’s Message in the TPG describe the impor- tance of and the wide variety of mentors available to you. Don’t be afraid to pick up the phone and contact someone you think can help you, even someone you don’t know or know well. I remember talking with many older AIPG members early in my career and the assistance and encouragement I received from them. I periodically get calls about professional ethics issues from folks, some of whom I know and some I don’t. I always enjoy the conversations. And relative age doesn’t matter. I’ve called both Barnes and Nutter about issues they know more about than I do.
Safe harbor for forward-looking statements
Geoscience practice and the securities laws most commonly meet in connection with statements about the potential suc- cess for mining or oil and gas ventures and any associated estimates of mineral or oil and gas resources and/or reserves. Shares in a mining venture or fractional undivided interests in oil and gas or other mineral rights are defined as secu- rities in federal and many state securi- ties laws. But investments in proposed real estate ventures or construction of a plant that require geoscience reports on
potential geohazards or environmental impacts can also be covered; “invest- ments” is the key word.
The one thing geoscientists all know about any estimates about future poten- tial exploration success, estimates of mineral or oil and gas resources and/ or reserves, potential for geohazards or environmental impacts occurring is that such estimates are erroneous, that they are not precisely correct. The precision of such estimates is limited by the number of significant figures that can be used in the estimate, usually no more than 2 or 3 for resource and reserve estimates due to the precision limits of the underlying data. But there are a variety of other rea- sons why the estimates and statements of potential are wrong. These can be due to unknown geologic factors, price and cost unknowns, and many other factors.
This is where the safe harbor for forward-looking statements in the Securities Act of 1933, as amended, Section 27A (15 United States Code 77z-2) comes into play. The safe harbor provides that an issuer or person acting on behalf of the issuer “shall not be liable with respect to any forward-looking statement, whether written or oral, if and to the extent that the forward- looking statement”
• is identified as a forward-looking statement
• is accompanied by meaningful cautionary statements identify- ing the important factors that could cause actual results to dif- fer materially from those in the forward-looking statement.
Although geoscientists recognize that estimates of mineral resources and mineral reserves, the potential for geohazards, or environmental impacts occurring, etc. are inherently forward- looking statements, they must be explic- itly labeled as such to avoid an attorney’s “client-interest induced stupidity” for looking.”
An example of a statement invoking the safe harbor is, “Mineral resource and mineral reserve estimates are inherently forward-looking statements subject to error. Mineral resource and mineral reserve estimation errors can- not be eliminated. The major expected sources of error in the estimates, in order of importance, include: [list of major sources of error]. These factors are continually being reviewed to determine whether any adjustments are needed. The timing and effect of such changes cannot be predicted.” The list of major sources of error vary by project. Another way of dealing with this issue is the use of a “Risk Factor” section in the project report containing a paragraph or so on each of the major sources of error: this helps provide the required meaningful cautionary disclosure.
Because our professional reports, regardless of subject matter, probably contain estimates of future performance, risk avoidance, etc. getting into the habit of providing a meaningful discussion of why our opinions and interpretations will be in error, identifying the probable sources of error and their impact is a good habit to get into. Even if the securities laws are not involved, the concept of the safe harbor for forward-looking state- ments can be a potential defense.
Escaping Water World: Future Sea-Level Rise and How to Fix It
“Escaping Water World: Future Sea- Level Rise and How to Fix It” is the ti- tle of a lecture presented by Dartmouth College Professor Erich Osterberg on 19 June 2019. This is the most thought- ful discussion of global warming, sea level rise, and what we can reasonably do about it that I’ve ever seen or read. Osterberg is neither a fervent denier nor a climate alarmist; he is pragmatic about climate change and suggests things that we can all realistically do about it. I urge you to take the hour to view it:
https://alumni.dartmouth.edu/ learn/faculty-lectures/escaping-water- world-future-sea-level-rise-and-how-fix- it. It counts as CPD.
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