China’s State Council released its “Plan for Controlling the Implementation of the Pollution Discharge Permit System,” (the Plan), which establishes guidelines and policy goals for the pollution permitting system being designed and implemented by the Ministry of Environmental Protection (MEP), on November 21, 2016. The permits will set specific limits on the amount and concentration of each pollutant that may be emitted, and companies without a license will be forbidden to discharge any pollutants. However, the scope of pollutants that will be covered by the permit system is not yet clear, and some reports indicate that heavy metals and certain other toxic compounds will not be covered.

Implementation of the Plan will begin immediately for thermal power plants and paper mills, which were required to obtain permits by the end of 2016. The Plan calls for 15 other industries to be subject to its guidelines by the end of 2017, and all stationary sources of air or water pollution are expected to be covered by 2020. Licenses will be valid for 3 years after issuance, and for 5 years after the first renewal. The licenses will be issued by county and provincial-level environmental protection bureaus according to regulations and guidelines established by MEP. Information on issued licenses, applications, verification and enforcement activities will be made public beginning in 2017. The Plan is part of a broader trend towards transparency, and an attempt to engage the public in environmental stewardship and supervision, including through the use of citizen suits. How the government will address concerns related to confidential business information, however, remains to be seen. Violations of the limits contained in the permit will be subject to penalties ranging from a shutdown of the offending facility to criminal charges, depending on the circumstances of the violation. In addition, violations will become part of the offending company’s credit record, and may hinder their ability to borrow in the future.

China’s efforts to develop a pollution discharge permitting scheme date back to the 1980s, but the focus has been primarily at the provincial level. At present, 27 provinces and provincial-level administrative regions (such as Beijing and Shanghai) have issued policies relating to pollution discharge licenses, covering approximately 240,000 companies, according to Wang Jian, vice-director of the atmospheric management division of MEP. However, this plethora of local regulation, combined with a lack of effective enforcement and oversight, has not reduced the amount of pollution in the country, as evidenced recently by “red alert” smog conditions under which Beijingers celebrated the arrival of 2017. Shortly before the New Year, a group of lawyers brought the first administrative lawsuit against the local governments of Beijing, Tianjin and Hebei province for failing to enforce air pollution laws. Whether the courts will accept such a lawsuit, however, is uncertain.

Since January of last year, MEP has been working to develop a national system to comprehensively regulate pollution discharges as part of a full-scale overhaul of environmental regulation, beginning with the new Environmental Protection Law promulgated in 2014. Enormous challenges still remain in implementing an effective pollution discharge permit system, including setting appropriate guidelines for the discharge limits applied to companies, and whether such limits will be based on available pollution reduction technologies or historical emissions. Nonetheless, the issuance of this Plan by the State Council is another example of the shift towards robust environmental regulation in China.