RE:RE:Even hold ups for the buyers at Taliwang. Join the clubThey are not wasting their time. They will have to spend a lot more time waiting. That is if they get approval. Don't forget the new Government will be around as well and we all know that might make things worse. Cheers.
4.4. Environmental aspects of the new regulatory framework
All business activities, including mining projects, which potentially have significant impacts on the environment, are required to carry out Environmental Impact Assessments – EIA (known as AMDAL). This provides the basis for the government (Minister, Governor or Mayor/Regent) to issue the environmental license. For projects that have no significant impacts (e.g. supporting mining facilities), the IUP holder must undertake Environmental Management Efforts (UKL) and Environmental Monitoring Efforts (UPL). The evolution of this legislation and the current approvals are analysed below.
4.4.1. The evolution of environmental legislation It is widely considered that Mining Law 11/1967 was severely lacking in providing appropriate safeguards for the environment. Hamilton (2005) states that there were no requirements for preservation of topsoil, contemporaneous reclamation, or control of onsite or offsite environmental effects such as water pollution during mining operations. Similarly, financial guarantee and bonds were not required to assure proper land reclamation and any habitat restoration, particularly should the company become insolvent or at the mine closure stage.
To ensure appropriate environmental safeguards in mining, the first environmental regulation of mining operations in Indonesia was enacted through the MEMR Ministerial Regulation 4/1977 (under the 1967 Mining Law) on the prevention and handling of disturbance and pollution of the environment caused by general mining. This regulation imposed on mine operators the necessity to prevent disturbance and pollution of the environment where possible and to mitigate any damage caused by mining. This regulation was brief in nature and lacked specific performance standards or operational requirements. Subsequently, the Director-General of Mines released Decrees 7/1978 and 9/1978 for the prevention and mitigation of damage cause by surface mining, mineral processing and refining (Hamilton, 2005). These two regulations were seen as a significant improvement in highlighting environmental requirements and concerns in mining. However, there was no requirement for comprehensive management and maintenance systems. In addition, the government had difficulties in enforcing mining companies to comply with these requirements.
Furthermore, Indonesian coal producers are required to sell at least 24.17 per cent of their
output to the domestic market, commencing in 2011. The domestic market for coal was
mainly PT Perusahaan Listrik Negara (Persero), the State Electricity Company, and this
provides 90 per cent of the power generated in Indonesia. The new regulation would affect
53 coal-mining companies involved in 42 coal contracts of work, 10 mining rights and mining
license holders, and PT Tambang Batubara Bukit Asam
32To take another step in directing the operations of surface mines, the mines department (now MEMR) announced another Decree, 1211/1995, that replaced and expanded the three regulations: 4/1977, 7/1978 and 9/1978. The 1211/1995 Decree imposed an obligation directly on the Mine Technical Manager to take preventive measures against the possibility of environmental damage and pollution. If damage should occur, the Technical Manager was required to undertake corrective measures immediately. Monitoring and environmental management plans were required to be submitted to the MEMR as the Chief Mine Inspector and to the head of the appropriate provincial mine inspection agency. Similarly, the decree addressed the obligations of the Technical Manager, prevention and mitigation of environmental damage, and the management of mines after closure and guarantee of reclamation. Reclamation obligations were later regulated in 2008 through Ministerial Decree 18 of Reclamation and Mine Closure. This decree covers principles, procedures, assessment and approval, guarantee of reclamation and closure of mines. Through this decree, environmental management in mining enterprises became more tightly controlled by the government.
In the broader environmental development of Indonesia, the enactment of Law 4/1982 on Basic Provision of Living Environment was the significant foundation for environmental management in the country. This law covered the basic provisions of preservation, conservation and the utilisation of natural resources and their environment. The later implementation of GR 29/1986 established an EIA process (AMDAL). These regulations, however, did not specify the requirements for particular sectors of development, such as mining.16
Following the international release of the Brundtland Report in 1987, Indonesia was influenced by international movements toward sustainable development. As a result, institutions (mainly academic and government) focused more on the environment and existing environmental issues. This saw the creation of a Centre for Environmental Study (PSL) in several universities and the creation of the Indonesian Environmental Impact Management Agency (BAPEDAL) based on Presidential Decree 23/1990. Moreover, environmental NGOs began to appear, including NGOs that specifically monitored the environmental activities of mining operations, namely the mining advocacy network JATAM. JATAM’s stance is very clear, being anti-mining, observing that mining activities negatively impact the environment (see Section 2.4.4).
Since 1990, the pressure to have better environmental protection and management has become stronger. Law 4/1982 was replaced with Law 23/1997 on Environmental Management and later, revised with Law 32/2009 on Environmental Protection and Management. AMDAL has also evolved in many ways17 and has become a requirement in major project approvals. Most recently, the government has required major projects to acquire an environmental permit as part of the AMDAL process.
16 https://wwwnew.menlh.go.id/home/index.php?option=com_content&view=article&id=60%3Asejarah-dan-latar- belakang&catid=37%3Aprofil-klh&Itemid=99&lang=id [Retrieved 5th September 2012]. 17 As highlighted in the previous section, AMDAL was recognised in Indonesia in 1986 through its regulation of 29/1986. This regulation was replaced with the Government Regulation No 51/1993 on Environmental Impact Analysis. To accommodate changes due to the enactment of Law No 23/1997, No 51/1993 was subsequently replaced by Government Regulation No 27/1999.
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4.4.2. Environmental approvals: AMDAL and the new environmental license The legal provisions for mining projects to consider the environment are described in the GR 23/2010:
- Article 23 – environmental consideration is one of the criteria for companies to obtain the exploration and operation production licences.
- Article 26 – the environmental criteria (as mentioned in article 23) are the approvals of environmental documents as provided under the environmental legislation.
Subsequently, mining projects are required to meet the legal requirements of environmental approvals in Indonesia that are based on:
- Law 32/2009 on Environmental Protection and Management. - GR 27/2012 on the Environmental License. - Ministerial (Environment Minister) Decree 11/2006 on types and activities of
investment plans that need to conduct the AMDAL.
A significant feature of the current environmental approval regime in Indonesia is the requirement for business entities to obtain an environmental license as part of AMDAL and the UKL/UPL process (see Box 2). Furthermore, the environmental license is a prerequisite for a business entity to obtain other relevant business permits. The environmental license can be granted by the Minister for the Environment, Governor or Regent/Mayor as applicable.
Other features that are necessary for consideration with regards to the current issuance of environmental approvals are:18
- Mandatory environmental audits – periodic environmental audits must be carried out by businesses that are likely to have a significant impact on the environment and are suspected of non-compliance with environmental regulations. If a company fails to carry out an environmental audit, the Minister for the Environment is authorised to carry out or appoint a third party to undertake the audit.
- Security funds – the environmental license holder must set aside funds (an environmental bond) that will be used for environmental rehabilitation and recovery. The funds must be deposited in a government bank designated by the Minister for the Environment, Governor or Regent/Mayor, as applicable.
18 https://asia.legalbusinessonline.com/industry-updates/indonesia-soemadipradja-taher/new-environmental- law-better-protection-or-more-legal-hurdles-for-industry/46199
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Box 2: Environmental Permit under Government Regulation 27/2012
The environmental license is a new requirement as part of AMDAL and UKL/UPL’s approval, mandated through the GR 27/2012. This regulation imposes mandatory environmental audits and security funds for the purpose of environmental rehabilitation and recovery. The intended purposes of environmental license are to:
- Provide better protection for the environment. - Impose new requirements and restrictions on industries whose activities are considered to be
a high environmental risk, including manufacturing, construction, mining, oil and gas, and pulp
and paper industries. - Impose harsher penalties on polluters and violators.
The environmental license may be revoked if:
- The supporting documents submitted with the application are incorrect or false, - The granting of the environmental license fails to follow the required procedure, or - The holder fails to meet the requirements in the AMDAL or UKL/UPL.
If the environmental license is revoked, the relevant business and or activities permits, which allow the business to operate, will also be revoked.
Source: GR 27/2012
The implications of the new environmental law for the general public are: the community and NGOs have greater rights in filing legal claims concerning environmental pollution or damage. Furthermore, Law 27/2012 provides immunity to any person who fights for a sustainable and healthy environment from any criminal charges or civil claims. In addition, the environmental law provides stronger administrative and criminal penalties for any violations of various provisions (e.g. criminalisation of actions where quality standards have been exceeded). The new law imposes penalties on local or central government officials who grant environmental permits without following the proper procedures.
Complaints were raised by the industries due to the onerous provisions of the environmental permit as well as the AMDAL approval and UKL/UPL recommendation (Kandar and Sidharta, 2010). Similarly, the environmental permit will increase complexities and potential delays following the involvement of regional governments in issuing permits, the requirement to undertake mandatory environmental audits, the creation of the security fund and the requirement to comply with stricter provisions on quality standards.
Furthermore, this law has been seen as a misconception of the meaning of environmental licence. The original push from the environmental NGOs in Indonesia (e.g. ICEL) was to integrate all environmental permits together, as currently there are many permits that need to be obtained by mining companies. All environmental permits are supposedly reflected in the AMDAL document as the basis for issuing an environmental license. In fact, rather than
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bringing together requirements in an integrated way, the new regulation simply adds a new permit on top of other existing permits under the name of an environmental licence. 19
4.4.3. EIA or AMDAL process Under the current government administration, the responsibility for environmental policy rests with the Ministry of the Environment and its implementation is conducted by the regional environment office.20 This Ministry makes the environmental decision whether to grant a potential project with the environmental license, which is based on the outcomes of AMDAL. A diagram of the EIA processes in Indonesia is provided in Box 321 with its explanation provided below.
The EIA (AMDAL) processes in Indonesia are conducted in two ways: - For projects with significant impacts, it is compulsory to conduct AMDAL. - For projects with non-significant impacts, it is compulsory to conduct the UKL/UPL.
As outputs of the AMDAL process, there are several documents, such as: - KA – ANDAL (the EIA guideline). - ANDAL (Environmental Impact Statement or EIS) and RKL/RPL (Environmental
Management Plans/EMPs). - UKL (Environmental Management Efforts) and UPL (Environmental Monitoring
Efforts). The procedures for AMDAL consist of:
- Screening whether projects need to conduct AMDAL. - Announcement and public consultation (10 days). - Scoping: the formulation and evaluation of KA – ANDAL (30 days). - The development and evaluation of AMDAL documents (75 days). - The issuance of an Environmental Decree (10 days) or UKL/UPL recommendation (14
days).
After the issuance of the Environmental Decree or UKL/UPL recommendation, a company needs to follow the next procedure for the issuance of an environmental license. The request will be publicly announced for 10 days (ANDAL, RKL and RPL) and 3 days (UKL/UPL).
19 A private discussion with ICEL during the AusAid Scoping Mission in June 2012. 20 In the past, BAPEDAL as a non-departmental agency reporting directly to the President of Indonesia was a specific body that had the responsibility for EIA (based on Presidential Decree No 23/2993). The regional BAPEDAL was created in 1994. BAPEDAL was consolidated in 2002 to the Minister for the Environment. The regional BAPEDAL was then transformed as the local government entity of the environment office. 21 Information provided in Box 3 is extracted from the presentation material of the Ministry of the Environment (Deputy of Environmental Governance) on PP 27/2012 of the environmental license/permit.
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Box 3: Diagram of EIA processes in Indonesia
For the GR 27/2012 to effectively function, it requires additional legislation which is yet to be developed. Essentially, the DoE needs to develop eleven new ministerial decrees to support the implementation of this regulation, of which some are:
- - -
4.5.
4.5.1.
A new guideline for the development of AMDAL documents (Article 6). A new procedure to involve community in the AMDAL process (Article 9). A procedure in the issuance of an environmental permit (Article 52).