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Client Update: CEPA introduces new environment management fees

24 February 2016

In brief: Papua New Guinea's Conservation and Environment Protection Authority commences implementation of its new fee structure this year. Partner Vincent Bull (view CV) and Senior Associate Ryan Warokra look at the changes and how they will be administered.

Background

Legislative background

In January 2015, the Conservation and Environment Protection Authority Act 2014 (the Act) commenced operation. The Act established the Conservation and Environment Protection Authority (CEPA).

At the same time as the commencement of CEPA's enabling legislation, certain consequential amendments to the Environment Act 2000 in connection with the creation of CEPA also came into force.

The result is that CEPA is now the government agency responsible for administering PNG's environment laws, including the Environment Act.

The new CEPA Regulation

The Conservation and Environment Protection Authority (Environment Management Fees) Regulation 2015 (the CEPA Regulation), which was enacted in October 2015 and commenced operation on 3 December 2015, contains three concepts relevant to CEPA's new fee structure.

Environment Management Fee

The Act provides than an environmental management fee shall be imposed as prescribed by regulation, which provides the basis on which the fee is calculated.

Several mandatory general principles for calculation are given:

  • certainty, so that volatility is minimised or the manner of the calculation of fees is known in advance;
  • cost recovery of both CEPA's forecast ongoing expenditure and unforeseen and emergency risk management expenditure;
  • fee minimisation, subject to cost recovery;
  • non-discrimination; and
  • transparency, so that payees are informed of the rationale of the fee-charging structure proposed by CEPA.
CEPA Budget

A budget consisting of estimates or receipts, borrowings and expenditure for the following year must be approved by the Minister. The budget becomes an input to the calculation of fees under the CEPA Regulation.

CEPA Administrative Orders

The CEPA Board is empowered to make administrative orders concerning, among other things, procedures and other matters connected with the imposition and collection of environment management fees.

CEPA indicates that an Administrative Order has been prepared but is not yet publicly available.

What are the new fees?

The CEPA Regulation repealed the Environment (Fees and Charges) Regulation 2002 and creates a number of fees, all under the general heading of the environment management fee. These are set out below.

Fee typeDescription

Permit Application Fee

Fees associated with determining applications for an environment permit.

Admin (Annual) Fee

Admin fee in respect of each year or part thereof during which a person holds an environment permit.

Admin (Water Extraction Permit) Fee

Admin fee in relation to an environment permit that allows water extraction only.

Admin (Composite) Fee

Admin fee imposed where a person holds more than one environment permit at least one of which relates to water extraction. In these circumstances, CEPA may impose a single fee in respect of all permits.

Admin (Application) Fee

Admin fee payable for each year or part thereof during which an application under the Environment Act is pending.

Compliance Fee

Fees associated with undertaking audit and compliance checks.

Enforcement Fee

Fees imposed upon breach of certain provisions of the Environment Act.

Permit Amalgamation Fee

Fees associated with determining applications for amalgamation of environment permits.

Permit Amendment Fee

Fees associated with determining applications for amendment of an environment permit.

Permit Renewal Fee

Fees associated with determining applications for renewal of an environment permit.

Permit Transfer Fee

Fees associated with determining applications for transfer of an environment permit.

Permit Surrender Fee

Fees associated with determining applications for surrender of an environment permit.

The fees will be assessed and determined by CEPA, then an assessment notice (prescribed by the CEPA Regulation) specifying the applicable fees will be issued to permit applicants/holders.

Administration fees payable annually consist of the applicant's/permit holder's portion of the annual 'recurrent costs' of CEPA, as set out in the most recent finalised budget.

Others are to be calculated by reference to the cost to CEPA of processing particular applications, determining conditions, monitoring compliance, etc.

Objections

A person aggrieved by the assessment of fees under the CEPA Regulation may issue a notice of objection in writing to the CEPA board.
Upon receipt of a notice of objection, the CEPA board must consider and issue a determination within 45 days.

Transparency

The method by which CEPA will calculate its fees is unclear.

Certain fees, such as annual administration fees, are calculated by reference to the permit applicant's/holder's 'portion' of CEPA's fixed costs as set out in its budget while other fees are calculated by reference to the 'cost' to CEPA of doing the relevant work which may include an allocation of fixed costs plus variable costs. Conceptually, this may be difficult to reconcile.

The mandatory general principle of transparency expressed in the Act may require CEPA to issue a clear written rationale, perhaps through Administrative Orders, for the calculation of its fees that is consistent with the Act.

Timing

CEPA has begun issuing assessment notices for its new fees to permit applicants and holders.

CEPA indicates that this is being done on a sector-by-sector basis and is expected to be completed in February/March 2016.

What does it mean for you?

Non-payment of an environment management fee prescribed by the CEPA Regulation may potentially have drastic consequences.

For permit applicants, CEPA may suspend the processing of the application until the requisite fees are paid.

As regards permit holders, the payment of an environment management fee is deemed to be a condition of an environment permit and non-compliance may lead to suspension or cancellation of a permit.

For further information, please contact:

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