AUTHORITY AND ROLE OF LOCAL GOVERNMENTS ON ENVIRONMENTAL MANAGEMENT: A STUDY OF IMPLEMENTATION OF OIL AND GAS INVESTMENT IN INDONESIA

International Journal of Civil Engineering and Technology (IJCIET) Volume 9, Issue 5, May 2018, pp. 1102 1110, Article ID: IJCIET_09_05_123 Available online at http://www.iaeme.com/ijciet/issues.asp?jtype=ijciet&vtype=9&itype=5 ISSN Print: 0976-6308 and ISSN Online: 0976-6316 IAEME Publication Scopus Indexed AUTHORITY AND ROLE OF LOCAL GOVERNMENTS ON ENVIRONMENTAL MANAGEMENT: A STUDY OF IMPLEMENTATION OF OIL AND GAS INVESTMENT IN INDONESIA Ismail Rumadan Pusat Penelitian dan Pengembangan Hukum dan Peradilan Mahkamah Agung Republik Indonesia ABSTRACT The purpose of this study is to describe the authority and role of local government on environmental management in the implementation of oil and gas investment in Indonesia after the implementation of regional autonomy. The approach method used in this study is the juridical-normative analysis using secondary data as the main data in the form of legislation, legal principles and positive law rules, as well as other literary materials. The result of the research shows that not yet fully the authority of environmental management is given to the local government because there is no synergy between legal product which regulate the problem of environmental management in oil and gas mining activity. Key words: Local Government, Environment, Oil and Gas Cite this Article: Ismail Rumadan, Authority And Role of Local Governments On Environmental Management: A Study of Implementation of Oil and Gas Investment In Indonesia, International Journal of Civil Engineering and Technology, 9(5), 2018, pp. 1102 1110. http://www.iaeme.com/ijciet/issues.asp?jtype=ijciet&vtype=9&itype=5 1. INTRODUCTION Resource exploitation of oil and gas which is only used to support economic growth without regard to proportional preservation of the environment can affect the carrying capacity of environmental functions. It is also damaging even within certain limits where the oil industry in a region and not just put as an alien entity (Schulze, 2007), but also in many cases a source of social distress (Rinaldi, 2006). For oil and gas mining activities are industries that cause drastic changes to the environment, thus threatening the preservation of environmental functions and socio-cultural functions of local communities. Positive potentials of the oil and gas mining sector are often unable to compensate for these negative potentials, so that the oil http://www.iaeme.com/ijciet/index.asp 1102 editor@iaeme.com

Authority And Role of Local Governments On Environmental Management: A Study of Implementation of Oil and Gas Investment In Indonesia and gas mining industry has a high potential for conflict in the interest of the local community. The position of the Regional Government in the implementation of oil and gas investment contracts in Indonesia has not been one of the parties directly involved. However, the existence of the Regional Government here is as a party associated with the implementation of the contract, because the area of contract implementation of oil and gas mining is located in the region. Thus, the area or land used for the implementation of oil and gas investment is to become part of the authority of the regional government to participate in determining the policy on the spatial and regional planning in the area. On the one hand, in the implementation the regions are not involved and are not given roles, especially to exclusively exclusive oil and gas mining activities, on the other hand the negative excesses of oil and gas investments in the environment become the burden and responsibility of the local government. This is certainly a weak factor for local governments to outline the law's order in the context of the implementation of regional autonomy on the utilization of natural resources and the environment in the regions. In relation to the above issues, this research is conducted to analyze various legal policies related to the implementation of regional autonomy and the environment as well as the law on oil and natural gas as the basis of reference for the parties in the utilization of the environment. It appears to be contradictory in the application of the three legal products mentioned above in the utilization of the environment, on the one hand the regional autonomy law provides full authority for the blood in utilizing the environment in the region, on the other hand the environmental law and the oil and gas law are central in the utilization of the environment, thus this certainly reduces the spirit of implementation of regional autonomy based on the mandate of the constitution. Various studies have been conducted on the authority of local governments on the management of natural resources in the context of the implementation of regional autonomy, but these studies generally highlight the implementation of regional autonomy in general, there are also highlights on legal protection of natural resources related to forest protection arrangements in the implementation of regional autonomy as reviewed by Mujibussalim (2009). So, this study is certainly different from previous research because this study examines the problem problems associated with oil and gas investment in areas that have been impressed closed and does not give any contribution to the region in general, even after the implementation of mining the area left behind the burden of environmental damage from former oil and gas mining activities. Thus, this research is interesting to be studied based on the principles and legal policies in force in Indonesia. From the description above the problems described in this paper is related to the authority and role of local government in environmental management of special studies on the implementation of oil and gas investments in Indonesia that can protect the sustainability of natural resources and environmental functions in the region after the implementation of regional autonomy. Based on these issues, this paper aims to describe the authority of local governments on environmental management in the implementation of oil and gas investment in the region. 2. RESEARCH METHODS To ensure the truth and scientific accountability in this study, the epistemological aspect (of this research activity) is absolutely necessary. The aspect of epistemology is concerned with how research gains the knowledge of the problem under study (Suriasumantri, 1999). Thus, the method of approach used in this study is, the method of juridical-normative approach, namely a method in the study of normative law by studying and reviewing the principles of law, especially the rules of positive law derived from primary legal materials in the form of legislation- invitations relating to research objects and other literary materials. This study is analytical descriptive, which aims to obtain a description or general overview of the whole and systematic, and aims to describe the existing circumstances or facts (Awiati, 2003). Data collection is done by literature study to obtain data in the form of documents or writings, http://www.iaeme.com/ijciet/index.asp 1103 editor@iaeme.com

Ismail Rumadan through the investigation of legislation, documents in the form of scientific literature and research experts and experts who are in agreement with the object and problems studied. Authority of Regional Government in Environmental Utilization related to Oil and Gas Investment Local Government is very interested in the implementation of oil and gas investment in the region. If studied further, against the implementation of oil and gas investment in the region, there are four parties that are indirectly involved or related, namely; Government of the Republic of Indonesia (Central Government) representing the interests of the State, Local Government representing regional interests in which investment in oil and gas mining is located, investors and the public. The parties concerned must have different interests to the oil and gas investment activities include: First, the Central Government has the interest to get income tax and income from mining investment and interests in its position to protect the national interest. Second, the interest of local government, is to obtain income tax from oil and gas investment so that it can contribute to regional income, as well as in its position as an accountable government to the community in protecting people's rights and fulfilling the needs of the people in the region. Third, the investor's interest in obtaining the territory in the future can be developed as an economically viable mining area so as to guarantee a reasonable return on investment; and, Fourthly, the local community is concerned because its rights and livelihoods may be disrupted by the impacts of oil and gas mining activities. Clearly missing rights are the right to land ownership in addition to other rights. In practice, oil and gas investment has so far only two parties that play a role in every implementation of oil and gas investment, namely the central government and investors, while the local government and community have never been invited to participate in any planning process of oil and gas investment in the region, which regulates the involvement of the parties to participate in determining the implementation policy of oil and gas investment in the region. It can be seen that, basically, the determination of oil and gas area allocation policy is a balance of interest from several parties mentioned above. The allocation of oil and gas mining areas is the beginning of the investment process that determines the success of the development of the oil and gas industry sector both from the interests of investors and the interests of the public and the state. The management of oil and gas resources can be run effectively and efficiently, it is necessary to use spatial management approach, because in this oil and gas investment policy involved the above interests which need to be accommodated and get protection in the process of oil and gas investment allocation. On the one hand, oil and gas mining activities have a direct and very wide impact, and are very serious on the environment. On the other hand, based on the provisions of Law No. 32 of 2004 on Regional Government and Government Regulation 38/2007, one of the decentralized government responsibilities to regional governments is the authority for environmental management. This authority is based on a reason that the participation of local governments in the management of the environment will facilitate in every control over the utilization of the environment in the region. Similarly, the area is considered more know and understand the characteristics of the region and understand the needs in utilizing every potential natural resources owned, so that utilization is intended in accordance with the capacity and environmental carrying capacity for the prosperity and welfare of the community. Thus, decentralization of environmental management is a good approach to the implementation of development in the region because it opens the door for community participation in the region. Related to that matter, in the provision of Article 5 paragraph (3) of Law No. 32 of 1997 on the Environment Chapter III on the Rights, Obligations and Roles of Communities. That every person has the right to play a role in the framework of environmental management, as well as http://www.iaeme.com/ijciet/index.asp 1104 editor@iaeme.com

Authority And Role of Local Governments On Environmental Management: A Study of Implementation of Oil and Gas Investment In Indonesia that the community has equal opportunity and as much as possible to play a role in environmental management. This kind of role is done in a way; a. to enhance self-reliance, community empowerment, and partnerships; b. to cultivate community capability and pioneering; c. to cultivate the public's ability to exercise social oversight; d. to provide opinion advice; and e. to submit information and / or submit reports. Therefore, in the environmental field, Law 32 of 2004 and government regulation No. 38 of 2007 provide political recognition through transfer of authority from the central government to regions that: a. putting the region in an important position in environmental management; b. requiring local initiatives in designing public policy in the regions; c. building inter-regional interdependence relationships; and d. establishing a territorial approach. It can be said that the consequences of the implementation of Law No. 32 of 2004 with government regulation no. 38 of 2007, in terms of environmental management, the emphasis is on the Region, so that based on the authority owned, would be a burden for local governments when the function of environmental management is not handled properly in accordance with what is mandated by law. Prior to the enactment of Law 32 of 2004, the government's authority in environmental management as mentioned in Article 8 paragraph (2) of the Environmental Law is: Regulate and develop the environment, and the reuse of natural resources, including genetic resources; Regulate the supply, allocation, use, environmental management, and reuse of natural resources, including genetic resources; Arranging legal actions and legal relationships between persons and / or other legal subjects as well as legal acts against natural resources and artificial resources, including genetic resources; controlling activities that have a social impact; and developing funding for the preservation of environmental functions in accordance with prevailing laws and regulations. Meanwhile in Article 10 of the Environmental Law states that, in the framework of environmental management the government is obliged; realizing, growing, developing, and raising awareness and responsibility of decision makers in managing the environment; Realizing, growing, developing, and raising awareness and responsibility of the community in awareness of community rights and responsibilities in environmental management. Further Article 12 paragraph (1) states that; to realize alignment and harmony in the implementation of national policies on environmental management. Governments in accordance with legislation may delegate certain powers of environmental management to devices in their territories; and involves the role of local governments to assist the central government in the implementation of environmental management in the regions. In view of the above provisions, before the enactment of the Law on Regional Government, the duties and authorities of the regional government in the management of the environment are deconcentrated. This means that the local government as a representative of the central government in the region served to carry out the functions and authorities of the government on it. Likewise, the tasks and functions of environmental management can also be residual. That local government can exercise the remaining authority of the central government in environmental management. As mentioned in Article 11 paragraph (1) ENVIRONMENTAL LAW. In the context of the implementation of regional autonomy, the authority of environmental management is no longer deconcentrated or residual, the authority has been decentralized based on the principle of autonomy. Therefore, the above provisions are changed or amended in accordance with the provisions in the area of regional government in order that http://www.iaeme.com/ijciet/index.asp 1105 editor@iaeme.com

Ismail Rumadan the implementation of the functions and authority of the management of the environmental field does not seem contradictory, because the implementation of the implementation of regional autonomy within the context of the authority of environmental management has so far refers to ENVIRONMENTAL LAW, that the management is still centralized, while Law No. 32 of 2004 and PP 38 of 2007 have stated explicitly the decentralization of authority in the field of environmental management. Thus, this reflects the absence of consistency from the government in applying the law policy especially after the implementation of regional autonomy, thus implicating the weakness of local government authority on the use of the environment in the oil and gas investment policy contained in the region. Likewise, in the case of determining regional or spatial planning policies in the regions, in addition to the authority of regional governments in managing the environment based on the provisions of the Regional Government Law, in the context of determining spatial and regional policies. The local government also has the authority to determine the policy of the use of space or territory for each region which is intended for development in the region including the determination of oil and gas industry area. Such authority as contained in the provisions of the Regional Government Law and Government Regulation No. 38 Year 2007 and Law no. 24 of 1992 on Spatial Planning. The failure of the functions and authorities of the local government well in terms of environmental management and the determination of policies on the use of areas and spaces in oil and gas mining activities are caused by overlapping legal rules relating to the environment, spatial and regional spheres as well as in the field of regional autonomy, so that the condition can position the local government in a weak position to the authority of the management and utilization of the environment, especially in the case of the involvement of the regional government in determining the legal policy of the use of territory or region in oil and gas investment in the region based on their authority and function in accordance with the mandate of the Constitution translated into the provisions of the Regional Government Law and Government Regulation 38 Year 2007. The Role of Regional Government on the Policy of Environmental Utilization in the implementation of Oil and Gas Investment The above is the issue of the authority of environmental management between the central and regional governments after the implementation of regional autonomy, where the regions are given the authority to manage and utilize their environmental functions, while the central government still holds the provisions of ENVIRONMENTAL LAW where the authority of environmental management still exists on the central government, so this certainly causes weak local government authority in carrying out its functions and responsibility based on the Local Government Law on the utilization of the environment in the oil and gas mining activities in the region. Likewise, in the case of oil and gas investment implementation with reference to the provisions of Oil and Gas Law. If examined in an implementation in an effort to protect the law against the impact of environmental damage with reference to the provisions of Oil and Gas Law, there is no clear provision on the way or mechanism against it. Especially in negotiating oil and gas contracts, environmental aspects are often under-paid in every implementation of oil and gas investment in the region. Several provisions on the environment as contained in the Oil and Gas Law are only general and seem to be non-binding. For example, it is mentioned in Article 2 of the Oil and Gas Law 2001 that the operation of oil and gas business activities is based on people's economy, integrity, benefits, justice, equity, equity, common prosperity and the welfare of the people, security, safety and legal certainty and environmental insight. Therefore, all oil and gas mining activities in the upstream sector and downstream sector should be oriented towards environmental insight, so that in every implementation of oil and gas investment in Indonesia this becomes the main prerequisite. Furthermore, Article 11 paragraph (3), states that the Cooperation Contract in oil and gas implementation shall contain at least the http://www.iaeme.com/ijciet/index.asp 1106 editor@iaeme.com

Authority And Role of Local Governments On Environmental Management: A Study of Implementation of Oil and Gas Investment In Indonesia main provisions, one of which is "environmental management". Similarly, to a Business Entity or Permanent Establishment that carries out oil and gas mining activities to ensure the sustainability of environmental functions It can be said that there is no provision that specifically indicates the mechanism of environmental management in oil and gas mining activities. Assuming that this law upholds the principles and rules of law relating to environmental management, there should be a provision stipulating that, the mechanism for enforcing the environment in this law shall be established or referring to the provisions of the Environmental Law, shall be conducted in coordination between sub-sectors involving all related elements in the implementation of oil and gas investment, both central government elements and local government elements, so that this as a reflection of the regularity and obey the principles of law and harmony of environmental management. There is no special provision on environmental management and utilization mechanisms in the Oil and Gas Law which further indicates the existence of sectoral ego in the utilization of natural resources. In the context of supervision, for example, Article 41 of the Oil and Gas Law states that, "The responsibility of supervision activities on the work and the implementation of oil and gas business activities against the obedience of the provisions of the legislation in the upstream sector is on the Implementing Body, while for the downstream area the responsibility is to the Regulatory Body. Furthermore Article 42 of the Oil and Gas Law states that the supervision as referred to in Article 41 covers among others, good engineering norms, as well as environmental management. Thus, it can be seen that those who have the authority to supervise the environment in oil and gas mining activities are the Upstream Activities Executing Agency or BP MIGAS (Executive Agency for Upstream Oil and Gas Business Activities (now replaced by Oil and Gas Executing Working Unit/SKK Migas). It should base on the rules and principles of legislation that uphold the value of benefit and professionalism, the authority for environmental supervision in oil and gas mining activities becomes the authority of an authoritative institution, in this case is the Ministry of the Environment, in order to maintain the attitude of integrity and quality supervision. For example, the results of the Audit Board of the Republic of Indonesia on Lapindo (Sidoarjo mud) case, revealed the weak supervision by the government in this case BP MIGAS. The Board stated the supervisory system of the Director General of Oil and Gas and BP MIGAS to Oil and Natural Gas Production Sharing Contractors is very weak, almost non-existent. One of the highlights is that there are still many violations, ranging from permit location drilling, to weak supervision when the well began to be excavated. The permit of the Banjar panji-1 well location is only five meters from the settlement and 37 meters from the toll road. This would violate the rules of the Indonesian National Standardization Body which requires the location of at least 100 meters well from public facilities and housing, as well as related to the spatial law of Sidoarjo regency, the area is not actually reserved for the industrial area. It can be mentioned that between Oil and Gas Law and environmental law have a contradictory orientation. The Oil and Gas Law focuses more on exploitation to gain the most profit, while environmental law focuses on environmental conservation, this contradiction is sometimes one of which is defeated. Environmental preservation must be defeated by efforts to gain the most profit in the implementation of oil and gas investment. Thus, the various environmental damage that occurred by oil and gas mining activities cannot be solved properly (Rinaldi, 2006). It is therefore clear what Erich Fromm has to say in his book The Heart of Man: Its Genius for Good and Evil, as quoted by N.H.T Siahaan (2004), which categorizes human nature into two types, biophilia type, which is the orientation of a living attitude to nourish (for the neighbor and the environment) and the opposite type of necrophilia, the type of human being with the deadly behavior of his neighbor and his environment. Such a type appears in human http://www.iaeme.com/ijciet/index.asp 1107 editor@iaeme.com

Ismail Rumadan nature that manifests to the utmost the will to shut down, the will and the uncontrollable desire will produce an impact on the environment (Peeters, 2006). One disadvantage also in legal protection of environmental functions that causes the pattern of accountability for environmental damage occurring in oil and gas mining activities is the government's silent position in the oil and gas sharing contracts (Silalahi, 2006). The oil and gas production sharing contract pattern places the government in conflict situation with the government's own interest. The government is faced with a situation to determine whether it should reduce profits, which means it must be explicit in applying environmental protection and other aspects affected by oil and gas activities or the option to increase or pursue profit by taking all risks due to various environmental damage. The Audit Board findings also state that the core tasks of BP MIGAS, according to the provisions of Law No. 22/2001, are the core tasks of these agencies to monitor upstream activities, from technical aspects, to occupational health. In fact, BP MIGAS is often just focusing on budget control rather than technical exploitation and exploitation. In this context, it is sometimes that the interest to protect the environment is ignored by the desire to gain greater profit in negotiating a contract for oil and gas. The above conditions indicate that environmental laws or laws and regulations in the environmental field are still less synergistic with other sector legislations. Many inconsistencies, overlapping and even contradictory, both in the existing legislation at the national level as well as existing legislation in the region. This condition certainly has implications on the function and role of local government to environmental management in the implementation of oil and gas investment in areas that have been seemingly closed. Legal products related to oil and gas investment should not be contradicted, moreover the provisions of the Local Government Law, or need not rule out one and impose the other, but what should be done here is to build synergies with each other. It does not mean that oil and gas mining concessions should cease only because of the preservation of the environment, and on the contrary the efforts to conserve the environment cannot be stopped because of the exploitation of oil and gas mining. Similarly, oil and gas mining activity does not have to turn off the function and role of local government in utilizing natural resources of oil and gas for development in region. The solution is that the oil and gas mining concession keeps running on condition of keeping abreast of the rules and regulations of the environment, and giving a significant role to the local government to participate in the oil and gas investment process. To provide strengthening as an effort to mainstream the principles of development in the region in the context and spirit of the implementation of regional autonomy and to support sustainable development, the development of oil and gas investment law related to the utilization of the environment needs to change the pattern of paradigm and construction as a whole integrated between sub-sector and sub-interests (Silalahi, 2006). For example, between the Oil and Gas Law, Environmental Law and the Law on Regional Government, as well as the Spatial and Regional Law should support each other, as well as at the level of implementing regulations of the aforementioned Law, shall not be contradictory to one another. The integrated process, for example, at the beginning of planning for the opening of a new block for the exploration and exploitation of oil and gas resources, which is done first is to adjust the area of oil and gas exploration with the spatial plan area where there is a source of oil and gas potential, because the region has authority in terms of determining the policy of designation spatial area in the region (Chalid, 2005). This integrated approach to the mining area is important because in the context of decentralization, local governments are also obliged to assess whether a mining industry activity is detrimental or not, to participate in determining the licensing process (Peeters, 2006), and to make a harmonious compromise between growth requirements and environmental conservation and social aspects of the planning side (Schulze, 2007) to the oil http://www.iaeme.com/ijciet/index.asp 1108 editor@iaeme.com

Authority And Role of Local Governments On Environmental Management: A Study of Implementation of Oil and Gas Investment In Indonesia and gas investment policy in the form of determining the area or industrial area including oil and gas industry based on the spatial and regional planning of the region where there is an investment of oil and gas mining. This abovementioned is an integrated approach, the next approach that should involve local government is in terms of supervision. This supervision is also very important in controlling oil and gas mining activities through a process of Environmental Impact Assessment (Silalahi, 2007), because weak control or supervision can result in negative impacts arising from environmental functions, an integrated approach in this important ruler, which is not only done by BP MIGAS alone but must involve all elements or stakeholders interested in oil and gas investment. 3. CONCLUSION AND RECOMMENDATION From the results of the research described above can be concluded that: 1. The legal policy to support the function of the environment in the implementation of oil and gas investment in Indonesia as a form of legal protection for regional interests is not sufficient, this is because there is no synergy between legal products related to the authority of environmental management, especially in the implementation of oil and gas investment, showed an ego-sectoral character, thus implicating the weak authority of the local government towards the use of the environment in the implementation of oil and gas investment after the implementation of regional autonomy. 2. The regional government as one of the parties having an interest in the management of environmental functions in the implementation of oil and gas investment shall not be given optimal and proportional role to participate in determining or deciding the area where the oil and gas mining activities shall be conducted based on the local spatial layout. Based on these conclusions, it can be proposed some recommendation. First, Government as the party that gave birth to the law policy in the field of oil and gas investment, should conduct comprehensive studies to understand every structure and law especially relating to environmental management, so that the parties are given role in accordance with the functions and tasks based on the authority given in environmental management especially in the implementation of oil and gas investment. Coordination between the parties involved is a key element in any environmental utilization for oil and gas mining activities in the region, so that each component, (central government, local government, and community) feels respected and respected capacity and existence. Therefore, there needs to be adjustment of legal provisions to one another synergize and support each other, especially in the utilization of natural resources of oil and gas in the region. It is possible that the government in the near future will issue a Government Regulation to anticipate the existence of such contradictions while processing the amendments of the contradictory laws, as an intention to realize the legal rules in Indonesia. ACKNOWLEDGMENT This paper is part of the author's dissertation, Legal Aspects of Oil and Gas Investment in Indonesia Connected with Regional Interests Based on Justice Principles in Achieving the Purpose of Welfare State, at Postgraduate Program of Padjadjaran University, Bandung, 2009. http://www.iaeme.com/ijciet/index.asp 1109 editor@iaeme.com

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