|February 14, 2012|
Previously published on February 2012
In January 2012, the O’Neill Government introduced a bill to repeal certain amendments made in 2010 to the Papua New Guinea (PNG) Environment Act 2000. The purpose of this briefing is to inform you about the proposed new law and its potential consequences particularly for the mining and oil and gas sectors in PNG.
Overview of Environment Act 2000
The Environment Act 2000 (Act) is the primary legislation in PNG which regulates the environmental impact of development activities and how any adverse effects of such activities should be avoided, remedied or mitigated. Under the Act, developers must apply to the PNG Department of Environment and Conservation (DEC) for an authorisation to undertake activities which materially impact the environment. The type of authorisation required depends on the nature of the proposed activities and the level of impact involved. The Act imposes hefty fines for developers who undertake activities without an appropriate authorisation. Broadly speaking, certain activities (prescribed by the Act as ‘level 3 activities’) require the developer to undertake an environmental impact study (EIS), to be made available by the DEC for public review and comment, before a decision is made as to whether an authorisation should be granted. An EIS is required for ‘level 3 activities’ such as the submarine disposal of tailings waste from mine operations and the recovery, processing, storage and transportation of oil and gas.
Repeal of Environment (Amendment) Act 2010
The Act was amended in 2010 by way of the Environment (Amendment) Act 2010 (2010 Amendment) to allow retrospective certification and authorization of activities which may have otherwise been deemed illegal under the Act.
Pursuant to the 2010 Amendment, the Director of the DEC was granted power to:
- retrospectively certify and authorise any activity by a developer which relates to or is associated with an activity permitted by an existing authorisation, notwithstanding non-compliance with any procedural requirements of the Act;
- certify and exempt any act, work or omission undertaken by a developer which was not in accordance with an existing authorisation;
- on application by a developer, certify that a particular methodology or conduct undertaken, or proposed to be undertaken, by the developer meets the best practice standards required by an existing authorisation;
- certify and authorise an activity as being a necessary and inevitable consequence of any conduct that is permitted by an existing authorisation; and
- certify an act, work or activity as being in compliance with an existing authorisation.
Generally, the grant of a certificate by the Director in the above circumstances would:
- constitute conclusive evidence that the relevant activity is authorised and therefore lawful;
- be final and not subject to challenge or review in any court, except by the holder of the relevant authorisation (i.e. the developer); and
- constitute a bar to any claim in tort or other civil cause of action brought as a result of the activities the subject of a certificate.
In January 2012, the above amendments were proposed to be repealed in their entirety by Parliament pursuant to a bill tabled by the O’Neill Government. It is understood that upon certification by the Speaker of Parliament, the new law will come into force immediately and will have retrospective effect.
Potential legal implications
The new law could impact the resources sector in a number of ways depending on the specific circumstances. Below are some examples of possible legal implications:
- Developers could be faced with higher compliance costs for their projects - i.e. costs to ensure that their projects meet the requirements of the Act by holding the required authorisations.
- Projects which were modelled on the (now repealed) 2010 Amendment to the Act may need to be re-modelled as a result of the new law.
- Material delays to project schedules may be encountered by the need to obtain new authorisations under the Act and to satisfy the applicable requirements for such processes. This could particularly arise where an EIS is required for a current or proposed ‘level 3 activity’ that had previously been certified.
- Activities which had been certified by the Director could now be unlawful, thereby exposing developers to prosecution under the Act. Additionally, a past decision by the
- Director to grant a certificate could now be subject to legal challenge by aggrieved third parties.
Developers could now be materially exposed to civil claims for damages (including in tort) by third parties affected by any activities that had previously been certified by the Director.
Developers who received certification from the Director pursuant to the 2010 Amendment should seek legal advice on the extent to which their business is impacted by the new law, and how and to what extent they can avoid or mitigate such impact. This may be particularly critical for projects in the mining, oil and gas and other sectors which regularly undertake ‘level 3 activities’.