On 4 April, 2014 the Standing Committee passed China’s new Environmental Protection Law which comes into force on 1 January, 2015 (2015 EPL). This momentous law is a massive update of the two and half decade old 1989 Environmental Protection Law (1989 EPL). The new law adds 23 articles including a new Chapter, number V, on “Information Disclosure and Public Participation” and creates a stronger system of environmental protection. It also potentially creates new opportunities for enterprises.
This paper describes the main amendments to the EPL.
I. Environmental Impact Assessments (EIAs)
EIAs are already a part of China’s environmental protection framework but the 2015 EPL greatly increases their impact and the penalties for non-compliance.
Article 19 clarifies when EIAs are needed: for (1) development and utilization plans; and (2) construction projects those affect the environment. Such plans and projects cannot be implemented or started unless an EIA is carried out.
In carrying out the EIAs, construction entities must explain the project to those that might be affected and solicit their opinions (Article 56).
Construction entities that begin construction without a properly approved EIA can be (1) ordered to suspend construction; (2) fined; and (3) ordered to restore the site to the original condition (Article 61).
II. Public Disclosure
As stated above, the 2015 EPL contains an entirely new chapter entitled “Information Disclosure and Public Participation” which requires both polluting entities and the government to disclose certain information. The provisions of Chapter V stipulate: (1) what information must be disclosed; (2) which parties are responsible for the disclosure; and (3) the process for disclosing the information.
The law requires entities that pollute to disclose information and solicit public opinion. Article 55 states that, “key pollution discharge entities shall truthfully disclose the names of their major pollutants, discharge ways, emission concentration, total emissions, and excessive emissions as well as the construction and operation of pollution prevention and control facilities and accept social supervision.” In addition, Article 54 requires government officials at the county level or above to list those enterprises and institutions that violate the EPL on a publicly available list. These changes add a new “public relations” element to decision making about environmental issues.
Article 54 also requires government offices at the county level and above to publically release certain information including information on “… environmental administrative licensing, administrative penalties, and the collection and use of fees for pollutant discharge.”
III. Public Oversight
The 2015 EPL opens the door for two forms of oversight by providing whistleblower protection and by allowing social organizations to bring environmental cases against polluters.
Article 57 deals with environmental whistleblowers. When someone finds that an entity or individual is polluting they can report it to the appropriate department(s). What’s more, if that department does not act on the information (to the extent required by the law) the person can report it to the higher level/supervisory department. The organ that receives these reports is required to keep the information confidential and protect the whistleblowers “legitimate rights and interests.”
In addition, Article 58 allows certain “social organizations” to bring cases against polluters (which the courts must accept). These organizations must meet two requirements: (1) it must be registered at the multiple-district city (“设区的市”) level or above; and (2) it must have engaged in “public environmental protection” for five years “without records of violations.” These thresholds are relatively high and as such few organizations will qualify.
IV. Stricter Penalties for Non-Compliance
Article 65 stipulates that the persons responsible for environmental damage shall be held liable for the harm caused. In addition, it states that government agencies that practice fraud in their services are jointly and severally liable for the damage caused by such fraud.
Furthermore, the 2015 EPL adds new administrative penalties for environmental violations such as:
- In certain circumstances, the competent departments are authorized to restrict or suspend production until a renovation is complete (Article 60).
- In other circumstances, the competent departments are authorized to “seal up and detain” the facilities and equipment of the enterprises and institutions (Article 25);
- In certain cases of serious environmental violations, those responsible may be detained for up to fifteen days by the public security Bureau (Article 63).
VIII. Opportunities and Incentives
The 2015 EPL states that the state shall adopt “finance, tax, price and government procurement” measures to encourage the development of the green sector and to support enterprises and institutions that reduce the “further reduce the discharge of pollutants” (Article 21, 22). In addition, Article 23 states that the government shall support enterprises and institutions that shift their production lines, relocate or close down to improve the environment.
IX. Other Changes
X. Pollution Discharge License
The 2015 EPL requires the creation of a pollution discharge license management system. Enterprises and institutions that fail to obtain a pollution discharge license may not discharge pollutants. Enterprises and institutions to do obtain such a license may only discharge pollutants as per the requirements of their license (Article 45).
XI. Environmental Protection Tax
Article 43 states that enterprises should pay pollution discharge fees for the discharge of pollutants. It also allows for the possibility of environmental protection taxes. In cases where environmental protection taxes are levied, no pollution discharge fee will be collected.
XII. Public Awareness
Article 9 of the 2015 EPL requires “[t]he administrative departments for education and all schools [to] incorporate the environmental protection knowledge into the school education and cultivate the students' awareness of environmental protection.” It also requires “[t]he news media [to] publicize the environmental protection laws, regulations and knowledge, and supervise illegal environmental acts.”
The 2015 EPL is a massive update to the 1989 EPL and sends a clear message that environmental issues are now a high priority for the government. The price of non-compliance with environmental requirements and standards will increase as the 2015 EPL is implemented and this will likely change the cost-benefit analysis for many enterprises and institutions. Government agents, too, are incentivized with both carrots and sticks to meet environmental goals and ensure that enterprises and institutions comply with environmental rules. As such, companies are well-advised to ensure that they comply with the letter of the law when it comes to environmental issues and avoid any temptation to skirt the rules.