ENFORCEMENT OF ENVIRONMENTAL IMPACT ASSESSMENT IN THE NATURAL GAS SECTOR IN PERU: A PRACTICAL APPROACH ALDANA, MARTHA INES Sub

Director of Instruction, Enforcement and Incentives Direction, Assessment and Enforcement Environmental Agency. Manuel Gonzles Olaechea 247, San Isidro, Lima, Peru, maldana@oefa.gob.pe SUMMARY Environmental impact assessment (EIA) in Peru is the most important environmental management tool, regulated in the national legislation since 1990. This paper presents the main contents of these regulations including its institutional aspects, focusing in the emerging industry of natural gas, particularly, in the Camisea Project. This project, located in a highly fragile ecosystem with a particular social environment, brought since 2002 great challenges related to the enforcement of the compromises included in the environmental studies applicable. Important lessons related to the need of adequate tools for an effective intervention of the enforcement authority have been learned from this and are recommended to be considered in the future by the new EIA enforcement authority of the country. 1 EIA AND ENVIRONMENTAL INSTITUTIONALITY IN PERU: A BRIEF STORY Peruvian environmental legislation developed EIA regulations since its first comprehensive environmental law given in 1990, the Environment and Natural Resources Code (Legislative Decree 613). The Code was subject to important modifications in 1991 derived from the investment promotion legislation given in those years. In this context, the authorities competent to regulate the different economic activities (sectorial authorities) received the legal mandate to approve regulations related to the EIA process applicable to the activities under their scope. In the energy and mines sector, the mining environmental regulation was approved in 1993 as well as the hydrocarbon environmental first legislation (which was lately changed in 2006); besides, in 1994, the electric activities environmental legislation was also approved. These different EIA sectorial regulations developed in the nineties, made necessary an integrated EIA legislation which was passed in 2001, as the Environmental Impact Assessment National System Act (Law N 27446). This Law suspended its effects until the approval of its regulation. This particular rule, among other rules of the EIA Law, was modified in year 2008, when a new EIA Law was issued, as part of the free trade agreement between Peru and the US. In 2009, the Ministry of the Environment approved the EIA Law regulation, ordering the sectorial authorities to modify their EIA regulations according to the EIA new rules; nevertheless, this mandate hasnt been complied yet. Therefore, EIA sectorial regulations are, at this time, the main legal tools that regulate EIA procedures and enforcement rules applicable. Regarding institutional environmental enforcement, sectorial authorities (the Ministry of Energy and Mines in the case of natural gas activities) received in 1991 also the mandate to enforce environmental laws applicable to them, including EIA regulations. This institutional arrangement changed in 1996, in the energy and mines sector, with the creation of the regulatory agency for energy activities (dependent from the Prime Ministers Office) which took responsibility, among other tasks, of the one related to the environmental enforcement of energy activities. Lately in 2007, mining activities were also assumed by this agency.

When the Ministry of the Environment was created in 2008, an environmental enforcement agency was also created, the Assessment and Enforcement Environmental Agency (OEFA, for its name in Spanish). OEFA has received from the regulatory agency the competence to develop enforcement actions related to mining activities since July 2010, and to hydrocarbon, gas and electricity activities since March 2011. In 2009, an additional legislation was passed establishing the Environmental Assessment and Enforcement National System (Law N 29325) with OEFA as its leading authority. This law gave OEFA competences not only related to the direct supervision and sanction of different economic activities transferred to this new institution but also, to the supervision of the performance of other authorities with environmental enforcement competences in the national, regional and local levels. In addition, OEFA also received the competence to regulate and give incentives related to environmental enforcement. Through this recently created enforcement system, is expected that OEFA will harmonize and strengthen the development of environmental enforcement in the country. Decentralization of the enforcement institutionality constitutes an important challenge for EIA development in Peru. Nevertheless, in most of the regions, decentralized authorities depend from an office aimed to promote investments in the region. This means that the separation of environmental enforcement from investment promotion achieved at the national level is not replicated at the regional level, situation that does not contribute for the needed strengthen of environmental enforcement in the country. For more details on Peruvian EIA legislation see the Annex of this paper. 2 EIA IN THE NATURAL GAS SECTORAL IN PERU: FROM THEORY TO PRACTICE

2.1

The Camisea Project1 The Camisea gas extraction and pipeline project is one of the most significant energy infrastructure projects in Latin America. Camisea is expected to make an important contribution to Perus economic development, creating jobs and significantly increasing the countrys standard of living. Camisea will also allow Peru to become one of the few Latin American countries able to meet its own internal energy needs as well as export natural gas. The Camisea Project involves two different stages. The first stage includes the construction of the facilities required to produce gas in Block 88; to separate the natural gas from the associated natural gas liquids to transport the natural gas to Lima (where it is consumed); and to transport the natural gas liquids to a processing plant on the Peruvian coast in order to produce propane, butane, natural gasoline, and diesel. The next stage involves the development of a second field (Block 56) near Camisea, the expansion of the natural gas transportation system, and the construction of a liquefaction plant. The two stages of the Project have an approximate cost of five billion dollars. Most of the projects development cost will be borne by international consortiums of private sector companies in charge of the project, which consists of natural gas production and gas processing (Upstream Component), pipeline transportation (Downstream Component) and natural gas distribution in Lima and the surrounding metropolitan area (Distribution Component). The Upstream Component includes four well pads to extract natural gas from two natural gas reservoirs (located in the Camisea fields at the Ucayali Basin) and an initial processing plant to separate natural gas and natural gas liquids. This component also includes a fractionation plant and marine terminal on the coast for processing and exportation of. the natural gas liquids Downstream Component consists of two pipelines (one for natural gas and one for natural gas liquids) that will transport the gas across the Andes. Both pipelines run in

parallel from the Camisea field (in the amazon basin), 431 km. east of Lima, to the city of Pisco. The natural gas pipeline then continues northward along the coast up to the capital city, Lima. Development of Camisea is a central component of the Peruvian governments energy strategy, with the potential of producing $5.2 billion in energy cost savings in present value terms over a thirty year period. By developing a stable, low-cost source of energy, it is expected that Camisea will provide direct benefits to the Peruvian population and increase the competitiveness of Peruvian industry. Marginal costs of power generation will be reduced by 30 percent on average, and air pollution in Lima will decrease air pollution by virtue of the conversion to the use of natural gas, the cleanest of the fossil fuels. While Camiseas economic impact is of a nation-wide level, the Department of Cusco, where Camisea is located, through its regional government receives substantial revenues under a royalty-sharing scheme, aimed to foster sustainable development in this important tourist and historic area of Peru. The contract for the exploitation of this field was executed in 2000, and its production stage began in August 2004. Camisea is located in the Peruvian forest, and people who reside in the area of the project are native communities, whose members live in accordance with centuries-old customs. In the area, there are also small groups in voluntary isolation who do not want to have contact with other cultures or populations. From an environmental point of view, Camisea is located in a hot spot of biodiversity. Except for small areas used by the native communities, Camisea is a tropical forest that has never been interfered with by human hand. Additionally, a small part of the Project--Block 88--is located in the buffer area of a wildlife reserve2. From the year 2002 to 2011, seven different incidents in the liquid gas pipeline and problems related to the distribution of the income received by the districts where the project is located generated a critical opinion against the project. These aspects brought up the issue related to the capacity of this mega project to really improve life quality in its areas of influence. 2.2 Environmental Studies at the Camisea Project At 2002, more than 20 studies regulated the environmental aspects of the Camisea Project, including its different components: downstream, upstream and distribution of gas in urban areas, in addition of studies for variants in the construction of the gas pipeline, complementary works studies, an aerial cross of the pipeline, constructive close, among other studies. These studies content an important amount of information to be processed considering that each one of them consisted of various volumes and included the answers given by the companies responding to the observations generated in the process of approval of such instruments. Unfortunately, in the EIA administrative process there is no stage where the information becomes integrated in a unique text that should condense the final outcome of the process itself. There is a need of such an integrated document that would become a useful tool for the companies themselves, for the enforcement authority and for the public that would know, in an easier way, the enforceable duties of the project. Environmental Enforcement of the Camisea Project at the Regulatory Agency Since the initial development of the construction phase of the project, in year 2002, the energy regulatory agency, as it was said before, dependant of the Prime Ministers Office developed enforcement actions, related to the supervision of the project. There were, initially, about 20 professionals of different specialties (engineers, sociologists, biologists, among others) that were distributed along the different construction places in order to verify the 2.3

compliance of the numerous environmental compromises established in the environmental studies, in addition to the verification of the compliance of environmental regulations applicable. Lately, this area became the Natural Gas Enforcement Managers Office of the energy regulatory agency, created in the year 2008, which comprised the different natural gas projects developed all over the country, with around 150 professionals. In the beginning, a number of difficulties needed to be resolved. An important issue was the different language and concepts that were managed by lawyers and engineers related to what was required to be considered in order to determine the initiation of the sanctions administrative procedures. It was needed to conciliate these different understanding of concepts and requirements (formal and substantial issues) which was not an easy task to do. Additionally, the project itself brought major problems when the before mentioned faults (spills involved) happened, either in highlands or in amazon areas. The faults required special supervision visits, to contract specialized companies in order to investigate the real causes of them and made the project accountable to the media and people affected by them. The Natural Gas Enforcement Managers Office of OSINERGMIN published, on its web page, information about the legal procedures finished on February 20113, which includes only the procedures concluded in the administrative branch and excludes those ones pending to be solved either in first or second instance within this institution. From the total of 64 sanctions published (for approximately 10 million dollars), 46 of them4 are related to the enforcement of the Camisea Project5, including the construction and operation phases of the project6. From these 46 sanctions, 34 (for approximately 8 million dollars) are related to non compliance of EIA obligations or to development of activities without EIA previously approved. Even though the payment of these sanctions arise approximately 7% of this amount (the rest of it is being discussed in the judiciary branch), they meant an important consideration of the environmental enforcement authority by the operating companies which is a fact that promotes compliance by themselves. The most important sanction imposed (of the ones published) arises to approximately 1.2 million US dollars) and was related to the development of activities not approved in the EIA applicable and exceeding the maximum length for construction activities of the pipeline. 2.4 Main lessons learned in the environmental enforcement of the Camisea Project The environmental supervision of the Camisea Project, thus, became an interesting experience in order to learn, in practice, the positive and critical aspects related to the content of this preventive environmental management tool. Among the main issues raised during the development of these enforcement actions, we can point the following: a) Lack of a clear and direct language in the text of the EIA, allowing different interpretations about the extent and content of the compromises acquired. This is a very important issue as long as it is common to find that the whole legal process is developed around the discussion of grammatical issues, referred to the meaning of words used in the text of the study. Derived from this issue, comes the need to require the consultant companies that elaborate the studies to be precise in its texts and to the sectorial authority in charge of assessing and approving these studies, to be careful and not to permit the use of a language that could cause different, and grammatically valid, interpretations. An example of a phrase of this kind7: Nocturnal works wont be permitted as though they affect the surrounding population.

The discussion developed around the meaning of this phrase, related to determine if it was a close prohibition therefore considering a consequence that the surrounding population will always be affected due to this kind of works, or if it was necessary to have evidence about this consequence in the surrounding population in order to apply the referred prohibition. In addition, sometimes, the studies establish recommendations, such as the following8: It is recommended to reinforce the training of communities on the actions to be taken in the case of a spill. This kind of compromises allow the discussion related to its enforceable nature. In some cases, the proper environmental standard applicable is established as referential data; turning it into not enforceable, as well9. b) Lack of a compendium of the enforceable duties established in the EIA, considering the modification of them generated in ts approva processi. The content of these studies are usually developed in several volumes, sometimes in thousands of pages. In addition, during the administrative procedure for the approval of the studies, an important number of questions (observations) and answers are generated; including the cases when it is required to present additional information in order to approve the answer given. These questions and answers, regularly, modify the initial content of the study and sometimes they vary it substantially; nevertheless, they become an additional amount of information to be considered in the analysis of the compromises to be enforced, becoming necessary to match this information with the original text of the study. In the enforcement of the Camisea Project we have found cases where the actions developed in the field were the ones described in the original version of the EIA, when it, finally, became a different regulation considering the answer given by company itself during the administrative procedure of the EIA approval. Therefore, it is necessary to require that in the approval procedure, a consolidated version of the study must be developed; which will be a useful tool not only for the enforcement authority but also for the proponent of the project, and also for the general public that could be interested in the monitoring of the environmental performance of the project. Unfortunately, the actual regulation on this issue does not include this requirement. c) Existence of different environmental standards in the EIA and in other authorizations required for the development of the project, such as effluent permit, deforestation permit, cultural heritage permit and others; which are given by other authorities different to the sectorial one. This constitutes an incoherence that affects the strength of environmental enforcement and confuses the proponent of the project. In the environmental studies of the Camisea project you can find different regulations related to treatment of waste water, nevertheless this, regularly, does not coincide with the regulations established in the permits obtained from the water authorities. In the case of effluent permits, the actual legislation requires that the EIA must be approved and presented to the water authority in order to obtain this one; nevertheless it does not require the sectorial authority that approves the effluent permit the necessary consideration of the content of the EIA into this other permit; not assuring the needed integration between both permits. d) Consideration of extra environmental compromises in the EIA. The integrated nature of the environment makes different topics to be considered in the studies. In the experience of the sanctions of the Camisea Project there have been different environmental sanctions based on occupational health or security or technical issues.

For example, there is a sanction based in the non compliance of the duty of giving security lectures before the beginning of the works of the day based on the obligation established about this theme in the EIA10. There are others related, for instance, to a massive intoxication of workers in camps that was based on the regulations about the catering service, where the legal basis comes from compromises established in the correspondent EIA11; and other based on the lack of signals and lights in a road inside the installation aspects that derived from the investigation related to a fatal accident occurred in the constructing phase of one of the facilities12. This kind of sanctions, regularly, wouldnt be a problem; nevertheless, considering the changes in the institutional arrangements developed in the country it is highly possible that this will become a problem as long as the environmental enforcement is the only issue that has been transferred to the Ministry of the Environment; but the enforcement of the environmental studies (considered as an integral document) have also been transferred, which includes, as it has been said, regulations related to extraenvironmental issues and there the question remains referred to whom will be in charge of enforcing, in the future, this kind of rules considered in the EIA. These are some of the issues raised during the experience of EIA implementation in the Camisea Project. These lessons are applicable not only to environmental enforcement but for the legal enforcement used in other areas with initial development such as occupational health, industrial security and technical duties and also to the environmental enforcement required to be developed in other economical sectors. It is also an important outcome to be considered in the new institutional scheme for EIA enforcement in the country. An aspect to consider is, also, the need of an adequate coordination between the enforcement authority and the one in charge of the approval of the studies (the Ministry of Energy and Mines, in the case of the gas sector) in order to develop in a harmonized way the basis for a successful EIA enforcement, which are related to the EIA approval process and the sectorial legislation applicable too. 3 CONCLUSIONS a) EIA regulations in Peru have been evolving since its original text in the Environmental Code in 1990. In the nineties, sectorial environmental regulations developed EIA rules applicable to the different economic activities. In 2001, a national integrated EIA legislation was passed which required EIA sectorial regulations to be adapted to the new legal scheme, mandate that hasnt been complied yet. Therefore, at this time, the main content of Peruvian EIA regulations are developed in sectorial environmental regulations, including the hydrocarbon activities environmental legislation. b) Environmental enforcement institutionality has been transferred from the jurisdiction of the Ministry of Energy and Mines, to the Prime Ministers Office and then to the Ministry of the Environment, through its enforcement agency: OEFA. The purpose of this development responds to the need to separate the promotion of investments role of the authority from the enforcement one. Nevertheless, the decentralization process has brought a regression considering that the enforcement authority at this level is an office dependent from an investment promotion office. c) The Camisea Project, the biggest energy project of the history of Peru, developed its EIA documents since 2002 which included more than 20 environmental studies that were subject to enforcement by the regulatory agency located in the Prime Ministers Office. This amount of information and the number of inspections developed

represented a great effort from a multidisciplinary team gathered to develop the follow up of this mega project. d) Until February 2011, there were a total of 46 legal procedures concluded in the administrative branch (which are the ones made public by the regulatory agency) with environmental sanctions applied to this project. 34 of these procedures (for approximately 8 million dollars) are related to non compliance of EIA obligations or to development of activities without EIA previously approved. The most important sanction imposed (of the ones published) arises to approximately 1.2 million US dollars) and was related to the development of activities not approved in the EIA applicable and exceeding the maximum length for construction activities of the pipeline. e) From the implementation of the environmental enforcement of the Camisea Project different lessons learned can be developed such as: - the need of a direct and clear language in the text of the EIA that could not allow different interpretations of the content of the compromises established; - the need of a compendium of the enforceable duties established in the EIA considering the modifications that are made to the original text of it during its approval process; - the need of harmonization of EIA content and other authorizations given by authorities different to the environmental sectorial authority; - the need to integrate regulation of non properly environmental issues regulated within the EIA which are also subject to extra environmental regulations and to the enforcement of other authorities; - the need of a close relation between the authority competent for the EIA approval and the environmental enforcement authority itself. f) The new institutional arraignment established in Peru since the creation of the Ministry of the Environment in 2008, and its enforcement authority (OEFA) brings a great challenge for environmental enforcement in the country. This new enforcement authority has begun to develop direct environmental enforcement actions, since July 2010, in energy and mines activities and is focused in the development of this important task.

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REFERENCES

Interamerican Development Bank. Camisea Project Overview (15 March, 2011) available at http://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=462033 2 Guardia, Gian Carlo. The Camisea Project: developing legal frameworks for avoiding social and environmental conflicts in sensitive areas. Houston Journal of International Law. Spring, 2009. 3 Natural Gas Managers Office at OSINERGMIN ( 12 March, 2011) available at http://gasnatural.osinerg.gob.pe/contenidos/uploads/GFGN/Rel_Sanciones_FC_GFGN_Enero _2011.pdf 4 The difference are sanctions related to technical issues or imposed to other natural gas projects different from Camisea. 5 In addition to the monetary sanctions, the Camisea Project received 11 administrative measures related to the restriction of the activity mandate by the regulatory agency. 6 It must be considered that there is another number of sanctions in process which are not disclosed to the public until the finalization of the correspondent legal procedure. 7 Resolutions N 2811-2007-OS/GG and N 726-2007-OS/CD emitted by OSINERG.

Pluspetrol Peru Corporation. Modification to the Environmental Impact Study of the Block 88, Camisea. November 2002. page 20. 9 About this issue there is an administrative procedure related to it, but as long as its legal procedure has not finalized it can not be referred in this text. 10 Resolutions N 650-2008-1-OS/GFGN and N 242-2009-OS/CD emitted by OSINERG. 11 This is a case not concluded yet. 12 Resolutions N 2360-2008-OS/GFGN and N 244-2009-OS/CD emitted by OSINERG. 5 BIBLIOGRAPHY

Aldana Durn, Martha Ins. - Environmental Impact Assessment in Hydrocarbon Activities. A practical approach. Revista Peruana de Derecho de la Empresa. Empresa y Ambiente. No.65. Year XXIII. May, 2008. - Past, Present and Future of Environmental Institutionality in Peru. Revista de la Gerencia de Fiscalizacin de Gas Natural de OSINERGMIN. November, 2009. Gamboa, Csar. Cueto, Vanessa. Dvila, Jimpson. - The peruvian government complied with Camisea. Final Diagnosis of the compliance of compromises of Peru in the Camisea Project. DAR, October, 2008. - Guardia GianCarlo. - The Camisea Project: developing legal frameworks for avoiding social and environmental conflicts in sensitive areas. Houston Journal of International Law. Spring. 2009. ParksWatch. - Machiguenga Communal Reserve. http://www.parkswatch.org/parkprofile.php?l=eng&country=per &park=macr&page=thr. Accessed 20/02/11 Torres Slimming, Paola. - Globalization, the Camisea Project and the health of the Matsiguenkas. Rev. Peru Med. Exp. Salud Pblica. 2010; 27(3): 458-65.

ANNEX 1 1.1 ENVIRONMENTAL IMPACT ASSESSMENT LEGISLATION IN PERU

In the Environmental Code The first Peruvian environmental regulation was the Environment and Natural Resources Code (1990). This Code included a special chapter dedicated to Environmental Impact Assessment, where the mandate to develop Environmental Impact Studies (EIA, for its name in Spanish) -subject to approval by the competent authority- was established for every project of works or activities, public or private, that could cause non tolerable damages on the environment. In addition to this general rule, the Code established an open list of projects subject to this procedure1. Additionally, the Code regulated the main content of the EIA including the effects of the project in the physical and social environment, the mandate to establish the required measures to avoid and reduce the damage to tolerable levels, and to present a summary of the study for publicity purposes2.

The studies, according to the Code and until these days, can only be developed by qualified and registered entities, and its elaboration costs correspond to the responsible of the project3. Regarding to public participation, the Code established that the EIA were available to the public in general; being possible to request the reserve of confidential information related to industrial property or personal security4. The authorization of the project, according to the Code, should refer the environmental conditions of mandatory compliance for its development5. Finally, the Code regulated the possibility to establish an EIA for ongoing activities that could be generating negative environmental impacts to the environment in order to require the adoption of the correspondent corrective measures6. In the early nineties, Peru was subject to structural changes that focused in promoting investments in the country. In this context, the Environment and Natural Resources Code suffered an important number of modifications and derogations. As a consequence of this, EIA regulations of the Code were changed. Then, the screening rule established in the Code for EIA projects subject to this procedure was derogated by the Framework Law for the Promotion of Investments (1991) that established the competence of sectorial authorities (the authorities in charge of the promotion of the economic activities) to regulate and enforce environmental legislation, including environmental impact assessment regulations7. Therefore, since those years, environmental enforcement of energy activities were subject to the Ministry of Energy and Mines authority, also responsible of promoting the growth of this sector. EIA sectorialized Following this mandate focused in the sectorialization of environmental regulations, the energy and mines authorities developed, separately, the environmental protection regulations applicable to mining activities (1993), to hydrocarbon activities (1993) and to electricity activities (1994). All of these regulations established the competence of the environmental sectorial authorities to approve EIA related to these different activities. Particularly, in the hydrocarbon sector, the regulation original from 1993 was reformulated in 2006. The actualization of the sectorial regulations of the EIA process is a pending issue in the mining and electricity sectors. Besides, the energy and mines sector regulated public participation in the EIA process since 1996, presenting an institutional evolution looking for broader possibilities to public intervention in environmental decisions. Nevertheless, other sectors such as agriculture, health, transportation, sanitary services, have not yet (and until these days) approved EIA regulations applicable to these specific activities under their scope of competences. 1.3 EIA general legislation In this context of lack of an integral and harmonized regulation related to EIA procedures, appeared the need of a national legislation in this matter. Then, in 2001, was enacted the Environmental Impact Assessment National System Act (Law N 27446) that established a unique and coordinated system for identification, prevention, supervision, control and anticipated correction of the negative environmental impacts generated as consequence of investment projects; creating a public management system (the National Environmental Impact Assessment System) in charge of the national environmental authority. This law required the approval of its proper regulation in order to be effectively in force. This regulation was approved in 2009, through the Supreme Decree N 019-20091.2

MINAM, given by the Ministry of the Environment. Therefore, the content of this law aimed to harmonize sectorial EIA regulations, was not a enforceable for more than eight years. A year before, in May 2008, within the legislative measures given in order to facilitate the Free Trade Agreement between US and Peru, the executive branch promulgated the Legislative Decree N 1078 incorporating a number of changes in EIA national legislation such as the inclusion of the strategic environmental impact assessment for the first time in the national legislation, and introducing new competences in this matter for the Ministry of the Environment, recently created in those days, precisions in the content of the studies, and also the abrogation of the rule that required the approval of this laws regulation in order to make it applicable. However, this legislation did not change the rule related to the sectorial competence for the approval of the environmental studies, which is an attribution subsistent until these days. The before mentioned regulation of the EIA Law, emitted by the Ministry of the Environment in 2009, established new rules as the one that requires the environmental studies to be updated every five years; the requirement for the intervention of different environmental authorities in the EIA approval process; the list of activities required to present EIA to the different environmental sectorial authorities; and the administrative process to be developed in the environmental regulations of each sector, among other changes. As a consequence of the implementation of this regulation, environmental sectorial authority were requested to reformulate their sectorial EIA rules applicable to regulate the EIA process to the activities under their jurisdiction. A due date was given to develop such task, but it hasnt been complied out yet8. Nevertheless, it is expected that the current sectorial regulations that constitute the actual legal framework for the application of EIA in the country will be modified in the near future; as a consequence of the mentioned mandate.

2 2.1

INSTITUTIONAL ARRANGEMENTS FOR EIA ENFORCEMENT

In the Energy and Mines Sector Peruvian environmental institutions have been subject to constant changes in the last years, with the aim of strengthening the national environmental management. This included the institutional scheme related to environmental enforcement authorities. As it was said, the National Environmental Code of 1990 was the first Peruvian environmental legislation in the country. This regulation created a National Environmental System including the different public institutions with environmental competences. The coordinator of this system was supposed to be designed by the Prime Ministers Office. Nonetheless, a year later, this particular chapter of the Code was derogated by the investment promotion regulation of 1991, mentioned before. Then, EIA rules established in the Code were changed to give a sectorial emphasis to its regulations giving sectorial authorities the task to regulate and enforce environmental legislation, including environmental impact assessment regulations. In 1992, an Act was passed by the executive branch (Decreto Ley N 25763) that established the requirement of environmental enforcement actions for mining, hydrocarbon and electrical activities. This legislation established, for the first time in the country, the possibility of developing environmental enforcement activities through third parties (auditing and inspecting companies), financially supported by the proper enforced actors. This particular aspect and the fact that the law established that the authority itself was not permitted to develop environmental inspections, but only to intervene through those auditing

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and inspecting companies, made this scheme object of different critics and questionings related to the impartiality of the outcome from such enforcement actions. Related to environmental enforcement of mining activities, in the year 2001, a law was passed (Law N 27474) which established the figure of external enforcers required to be registered in the Ministry of Energy and Mines, who were authorized to develop environmental enforcement visits and were paid by the mining companies through a tax collected by the Ministry of Energy and Mines, avoiding in this way the direct payment between the company and the external enforcer. Also, this law recognized the legality of enforcement visits developed by the proper ministerial authorities. Nevertheless, in the mining enforcement sector, the criticism continued based on the fact that, finally, it was the proper Ministry in charge of the promotion of mining investments the one that was in charge of imposing sanctions and limitations to the development of these activities. 2.2 In the Regulatory Agency As an answer to these problems and in the privatization tendency of the nineties, in the year 1996, was created the Energy Investment Regulatory Agency (OSINERG, for its name in Spanish) pertaining to the Ministry of Energy and Mines, and lately (2001) pertaining, as the other regulatory agencies, to the Prime Ministers Office (PCM, for its name in Spanish). OSINERG was, then, created for the development of enforcement actions in the hydrocarbon and electricity activities, among other duties. Lately, and related to mining activities, in the year 2007, a law was passed that transferred the mining environmental enforcement from the Ministry of Energy and Mines to the existent regulatory agency (Law N 28964); therefore making the enforcement institutionality in mining activities dependent from PCM too. The environmental enforcement activities under the regulatory agency were based in third parties (supervisors) requested to be registered and qualified by the regulator in order to develop this function. In the Ministry of the Environment Although, an institutional change was still an unsolved issued: the creation of the Ministry of the Environment. The context given for this decision was the delegation of regulatory power given by the National Congress to the executive branch, in the year 2008, which was preceded by a public declaration of the President of the Republic referred to the need of giving the national environmental authority the maximum hierarchy possible in the public administration through the creation of the Ministry of the Environment. When the legislation that established the Ministry of the Environment was published, in May 2008, it included, among other institutions, a proper environmental enforcement authority: the Environmental Assessment9 and Enforcement Agency (OEFA, for its name in Spanish). OEFA, the enforcement arm of the national environmental authority, was created as an independent agency within the Ministry of the Environment and began its implementation in the year 2009, having assumed, up to this date, the environmental enforcement of the energy and mines sector10. In 2009, an additional legislation related to environmental institutionality established the Environmental Assessment and Enforcement National System (Law N 29325) with OEFA as its governing entity. This law gave the national environmental enforcement authority functions not only related to the direct supervision and sanction of different economic activities transferred to this new institution but also, to the supervision of the performance of other authorities with environmental enforcement competences in the national, regional and local levels. In addition, this authority also received the competence to 2.3

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regulate and give incentives to promote environmental compliance. Through this recently created enforcement system, is expected that OEFA will harmonize and strengthen the development of environmental enforcement in the country. A particular consideration that has to be taken is the descentralization of the enforcement institutionality which has been developed in the mining sector. Here the descentralized authority in charge of this issue is dependent from an office aimed to promote investments in the region. This, to our understanding, constitutes a regression to the institutional scheme where the environmental enforcement was dependent from the promotion of investments authority, which is not recommendable in order to strengthen environmental enforcement. 3
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REFERENCES Legislative Decree 613, article 8. 2 Legislative Decree 613, article 9. 3 Legislative Decree 613, article 10. 4 Legislative Decree 613, article 11. 5 Legislative Decree 613, article 12. 6 Legislative Decree 613, article 13. 7 Legislative Decree 757, article 50. 8 The 2009 EIA regulation gave a 180 days period in order to comply with the mandate to adapt sectorial EIA regulations to it, but it hasnt been complied yet. 9 The concept assessment relates to monitoring and vigilance of the environmental quality in order to develop enforcement actions. 10 Up to this date, OEFA has received from OSINERGMIN the transference of the environmental enforcement functions related to mining activities (since July 2010), and to liquid hydrocarbons, natural gas and electricity activities (since March 2011).

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