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NEW REGULATION FOR CITIZENS PARTICIPATION IN THE EXECUTION OF HYDROCARBON ACTIVITIES

Supreme Decree N° 002-2019-EM

On January the 5th was published in the official gazette "El Peruano" the Supreme Decree N° 002-2019-EM, which approved the Regulations for Citizens Participation in the execution of Hydrocarbon Activities (hereinafter "the Regulation").

The Regulations are applicable to any entity who plans to execute or develop hydrocarbon activities in Peru and is aimed at informing surrounding populations on the nature and scope of the activities as well as to collect their concerns raised during its implementation in order to carry out the activities within a harmonious social scenario.  

The phases in which a Citizens Participation (“CP”) procedure must be implemented are:

A. DIRECT NEGOTIATION OR BIDDING ROUNDS FOR HYDROCARBON EXPLORATION AND/OR EXPLOITATION CONTRACTS

In this stage the CP is carried out prior to the negotiation of a contract or the call to a tender process aimed at subscribing exploration / exploitation contracts and concludes with the introduction of the awarded company after the execution of the contracts. In this phase the procedure is conducted by PERUPETRO, the Peruvian Government’s National Hydrocarbon Agency.

During this stage there are some mandatory CP mechanisms. The idea is that through these mechanisms PERUPETRO releases information on the planned activities as well as on the actions that it has been carrying out for the negotiation or tender of hydrocarbon exploration and/or exploitation areas. Also, the official presentation of the new contractor to the population, once the at contract is executed. Mandatory mechanisms are:

a)  On-site events public hearings.

b)  Communication and information mechanisms

Phases of citizen participation:

(FIRST PHASE) 

(SECOND PHASE)

(THIRD PHASE)

Prior to the start of the process of negotiation or tender

Prior to the submission of the draft Contract to the Ministry of Energy and Mines

Subsequent to the execution of the Contract

PERUPETRO informs through its website and through the development of on-site hearings the following:

a) Process of negotiation or tender to be launched.

b) Map of the areas (blocks).

c) Oil Company (ies) interested.

d) Criteria for Company (ies) selection and / or result of the qualification of the oil company (ies).

e) General aspects of the contracting process indicating the benefits of the activity for the population.

f) General aspects on the hydrocarbon industry indicating the technical, environmental and social legislation.

PERUPETRO communicates through its website or other mechanisms of communication and information, the following:

a) Name of qualified oil company (ies)

b) Contracting modality used

c) Map of the area.

PERUPETRO coordinates the on-site hearings with the contractor company and provides the following information to the population:

a) General information on the contractor

b) Contents of the Supreme Decree which authorizes the signing of the contract.

c) Criteria for the selection and/or the contractor qualification.

d) Map of the Contract Area (Block).

e) Minimum work program and other relevant contract clauses.

It should be noted that this phase is carried out within a maximum length of 60 days from the signing of the contract.

On-site public hearings:

In relation to the on-site public hearings to be held prior to the negotiation or tender process and after the execution of the hydrocarbon exploration and/or exploitation contracts, the following rules must be considered:

  • PERUPETRO summons the concerned population considering of the activities are to be conducted in onshore or offshore prospects.
  • PERUPETRO can hold coordination meetings prior to the hearings with local, public and private actors but these meetings do not constitute a mechanism of CP.
  • The hearings are to be held on dates that do not coincide with holidays and cultural activities of the population, and at times which allow the participation of men and women.
  • PERUPETRO may request the participation of other public offices in the hearings as well as request them the information that it deems necessary for the development of CP.
  • PERUPETRO receives all the queries or claims collected within this phase of the CP procedure and passes them to the different authorities according to their competencies; and this must be brought to the attention of the population involved and the Ministry of Energy and Mines.
  • In case circumstances or events prevents or impede a public hearing, PERUPETRO can reschedule it, up to within the 10 days following the original date and can even modify the venue and hour of the hearing. If there are new circumstances that prevent realization of the hearing in the second date, other communication and information mechanisms other that the hearing may be employed.
  • After the hearings PERUPETRO shall elaborate a minute summarizing the development of the event, list the names of the assistants and as applicable, the place of origin and the organization to which they belong.

Reports of CP:

PERUPETRO shall produce the following reports:

a) A report which contains the detail and analysis of the CP process developed during the first and second phase:

  • Prior to the start of the process of negotiation or tender
  • Prior to the submission of the draft of the hydrocarbon exploration and exploitation contract to the Ministry of Energy and Mines. 

b) A report containing the detail and analysis of the process of CP in the third phase, which is after the signing of the hydrocarbon exploration and exploitation contract.

Modifications of contracts:

In case of modifications to exploration and/or exploitation contracts involving the change of the operator or of the contractor with respect to 100% of participating interest, PERUPETRO shall conduct an on-site hearing to officially introduce the new operator / contractor. Additionally, PERUPETRO must publish in its website any modification to the contracts once it is executed and while the contract is in force.  

Expenses for the public hearings:

PERUPETRO assumes the expenses that arise in summoning and conducting the public hearings prior to the negotiation or tender of new contracts. The Contractor shall be responsible for the costs of summoning and executing the public hearings after the contract has been signed.

B.     ENVIRONMENTAL IMPACT ASSESSMENT (“EIA”)

The CP mechanisms are conducted by the owners of the hydrocarbon activities jointly with the competent environmental authority.

Once an EIA has been approved, the CP is governed according to the provisions included in the said EIA and with applicable regulations and is subject to control from the competent environmental authority.

Competent authorities:

In this stage, the citizen participation process must be conducted by the competent environmental authorities that are part of the National Environmental Impact Assessment System, which are: the General Directorate of Environmental Hydrocarbons Affairs  - DGAAH of the Ministry of Energy and Mines, the National Service of Environmental Certification for Sustainable Investments (SENACE), and the Regional Environmental Authority in Energy and Mines, within the scope of their respective competences.

Phases of citizen participation:

a)   Phase prior to the presentation of the EIA: The owner of the hydrocarbon activity, presents the CP Plan before the competent environmental authority for its evaluation and corresponding approval.

In this phase the owner of the hydrocarbon activity shall carry out at least one of the mechanisms of CP through which it informs its work frame, the description of the project and presents the environmental consultant in charge of the elaboration of the EIA, as well as, when appropriate, presents the research methodology to be developed to gather the information from the EIA. The competent environmental authority can accompany the owner of the hydrocarbon activity in the execution of the chosen CP mechanisms.

b)   Phase during the evaluation of the EIA: The owner of the hydrocarbon activity informs the population on the possible environmental impacts to be generated by the execution of the proposed activities, and the environmental and social management measures to be executed.

The environmental authority shall accompany the owner of the hydrocarbon activity during the execution of the CP mechanisms and consider the concerns raised by the population during them in the evaluation process for the EIA. The CP during this phase shall be carried out during the evaluation period of the EIA.

CP for Complementary Environmental Management Studies:

The owner of the hydrocarbon activity, as applicable shall implement the CP mechanisms aimed at broadcast the scope of the proposed new activity to the population, such as the abandonment, modification or expansion of its approved activities together with the environmental and social management measures proposed in the said studies.

Mechanisms of CP:

With the previous approval from the competent environmental authority, the mechanisms to be proposed in this stage are, among others:

  • Distribution of the executive summary of EIA;
  • Distribution of informative documents;
  • Implementation of a mailbox for objections, suggestions, comments and contributions;  
  • Interviews and / or focus groups;
  • Facilitators team;
  • Informative bureau;  
  • Open house;
  • Workshops;
  • Public Hearing;
  • Guided visits to the area or project facilities;
  • Communal surveying and monitoring activities; and,
  • Radio announcements.

CP Plan:

Before initiating the elaboration of the applicable environmental study, the owner of the hydrocarbon activity, as applicable, shall present the CP Plan that has to  be approved by the competent environmental authority for its subsequent execution. This authority is entitled to resolve the incorporation of additional CP mechanisms to those proposed in the original CP Plan.

It should be noted that in no case can the environmental study be elaborated if the competent environmental authority has not approved the CP Plan.

After the approval of the CP Plan, and at any time, the owner of the hydrocarbon activity may request the authority to modify the Plan, in case justified. The modification can be sustained in the change of circumstances, area of influence, social context, the stage of the project, among others, and must not distort the objectives of the original CP Plan.

CP mechanisms applicable for environmental study type:

a)     Environmental Impact Declaration (“DIA”): CP is applied prior to the presentation of the environmental study and during its evaluation, save in the case DIA corresponding to hydrocarbons commercialization in which case only takes place the CP during the evaluation of the DIA.

The CP mechanisms applicable for the DIA could be all those previously listed with the exception of the public hearings and workshops.

b)     Semi-Detailed EIA (EIA-sd) and Detailed EIA (EIA-d):  For the EIA-sd and the EIA-d the CP mechanisms are applied prior to their presentation and during their evaluation. In both cases, prior to its presentation, the owner of the hydrocarbon activity presents to the authority a CP Plan for prior approval. After approval, the owner is then authorized to execute the CP mechanisms as therein indicated.

In this sense, prior to the presentation of the EIA-sd and the EIA-d, the owner of the activities shall organize Workshops as included in its CP Plan, that shall be conducted by the environmental authority, in order to present the Consultant who will in charge for preparing the study and collect the concerns and opinions of the population in order to consider them while elaborating the EIA-sd or the EIA-d. Additionally, it may carry out other of the previously listed CP mechanisms with the exception of the public hearing.

In the case of an EIA-d, it is established at least 2 Workshops to be held prior to its presentation. The first, to broadcast information regarding the characteristics of the proposed hydrocarbon activity, present the work team of the Consultant, the work schedule and to set out the work frame for the EIA-d; and the second, to provide information on the environmental baseline (situation of the area) and the scope of the proposed activity.

Subsequently, during the evaluation phase, after a favorable opinion to the Executive Summary, for the case of an EIA-sd, the owner of the activity shall organize a public hearing to be conducted by the competent environmental authority in order to inform on the environmental baseline, including information regarding relevant aspects for the collective rights in the case of indigenous or native peoples, in accordance with the provisions of the Regulation for the Environmental Protection in Hydrocarbon Activities, as approved by Supreme Decree N° 039-2014-EM; the Analysis and Identification of Impacts, the Environmental Management Plan and the Abandonment Plan.

In the case of an EIA-d, during its evaluation the diffusion of the environmental baseline is made through a workshop, carried out by the owner of the activities with its environmental consultant, counting with the presence of the environmental authority and as applicable with the Regional Government environmental authority. After the workshop, the owner of the activities shall organize a public hearing.

CP mechanisms for modifications to environmental studies:

For the approval of modifications to an EIA, the presentation of a CP Plan is required when such modification involves an impact to populations not originally contemplated within the area of the project influence.

In case the modifications to the EIA do not contemplate such a new impact, before the presentation of the modification its terms shall be made available to the population through the distribution of informative materials or workshop or the implementation of a mailbox for concerns, suggestions, comments or contributions.

During the evaluation for the EIA modification, the owner of the Activity shall organize a workshop to depict the impacts that may be generated, as well as the proposed environmental management or mitigation measures.

In that sense, the following is established:

a)     Explanatory Technical Report (“ITS”): In this case a CP Plan is not needed. Prior to the presentation of the ITS, the owner of hydrocarbon activities shall inform the population through the distribution of informative materials, workshop or the implementation of a mailbox to collect concern, suggestions, comments or contributions with respect to the proposed modification. This is not applicable hydrocarbons commercialization activities.

b)     Other complementary environmental management studies (“IGAC”): For them it is not required to present a CP Plan as long as the main contain of the proposed project and of the studies in general is made available to the population in certain selected venues and / or through the website of the environmental authority in order to receive comments. Complementarily, the owners of the activity must release an add that has been previously approved by the environmental authority.

Additionally, before and during the evaluation of the study and after its approval, the owner may implement any of the CP mechanisms previously listed, with the exception of the public hearing and the workshop.

Publicity of the resolution approving the environmental study and IGAC:

The competent authority must send a copy of the directorial resolution that approves the environmental study and the report that sustains it to each of the parties / authorities involved in the CP process, as the approved in the corresponding CP Plan, so that they get acquitted if their contributions were considered. Additionally, said documentation shall be published in the website of the environmental authority.

It should be noted that in each and every stage of CP the competent entities and the owners of the hydrocarbon activities must promote and guarantee gender and intercultural approaches, in equal conditions and opportunities between women and men, as well as the rights of indigenous or native peoples.

Likewise, in the case of CP process in areas where indigenous or native peoples live, the participation of interpreters and authorized translators included in the data base ​​of the Ministry of Culture must be ensured.

In this regard, it is important to point out that the provisions described in these new regulations refer solely to CP in hydrocarbon activities, without prejudice of the applicable regulations to conduct a Prior Consultation to indigenous or native peoples (under ILO 169 Covenant) when it corresponds and according to the special existing legal framework.

In reference to the application the newly approved regulations to existing CP procedures it is provided as follows:

  1.  The owners of the hydrocarbon activities whom at the date of entry into force of these regulations, have approved CP Plans, environmental studies or IGAC must adapt to the provisions provided in these regulations when an update procedure is applicable. 
  2. Upon the date on which these regulations came into force, its provisions are of immediate application to the activities of CP carried out within the framework of PERUPETRO's competences with respect to the contracting processes in course. The administrative procedures for evaluating the CP Plans, environmental studies and complementary environmental management studies initiated before the entry into force of these regulations, will continue their processing according to the rules established by Supreme Decree N° 012-2008-EM, and the Guidelines for Citizen Participation in Hydrocarbon Activities, approved by Ministerial Resolution N° 571-2008-MEM / DM.

Authors

Picture of Carlos Hamann
Carlos Hamann
Partner
Lima
Picture of Augusto Astorga
Augusto Astorga
Partner
Lima
Picture of Vito Verna
Vito Verna C.
Partner
Lima
Picture of Paola Carbajal
Paola Carbajal
Partner
Lima
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