To effectively tackle non-compliance with environmental laws and regulations, the Environment Protection Administration (EPA) of Taiwan has been actively exploring and implementing its power to confiscate the “illicit gains” resulting from non-compliance with environmental laws, rather than levying the maximum fine it can impose as provided for in individual statutes.

Under Taiwan’s previous administrative law regime, in cases of violation of administrative laws, an agency could only impose fines not exceeding the maximum amounts provided in the statutes. However, Articles 18 and 20 of the Administrative Penalty Act (APA), which was enacted in 2005, provides that governmental agencies may increase the fines imposed on violations of administrative laws to “the extent appropriate within the scope of the benefit gained,” if the gained benefit therefrom exceeds the maximum statutory amount of fine. Until the EPA’s active utilization of such provision, the said authorization of the APA was applied by agencies only in extremely exceptional cases.

Back in February 2009, the EPA referred to Article 20 of the APA for the first time and confiscated a wastewater treatment facility operator’s “illicit gains” of more than NT$130 million, in addition to levying a NT$0.6 million fine (which is already the maximum amount provided for in the Water Pollution Prevention Act). Although this case is still under review in administrative courts, the Supreme Administrative Court has rendered an opinion more supportive of the EPA’s decision.

Since the February 2009 case, the EPA has been expanding its utilization of Articles 18 and 20 of the APA, both at the individual case level and at the institutional level. For individual cases, the most prominent to date is that of a local government, as instructed by the EPA, recently demanding a power plant to pay more than NT$400 million for the latter’s use of coal exceeding its registered volume, while the maximum fine allowed under the Air Pollution Prevention Act is NT$1 million. The EPA also internally established a system to review all incoming non-compliance cases to determine whether or not any “illicit gains” need to be taken into consideration. Furthermore, the EPA has been amending its various penalty standards, for the reference of its officers and local bureaus in determining the penalties applicable in individual cases, to explicitly incorporate “illicit gains” as one of the key factors in determining the fines to be imposed on individual cases.

With the EPA’s initiative to actively utilize Articles 18 and 20 of the APA to increase fines resulting from a violation of environmental laws (usually a significant amount of fine will be triggered), this not only significantly increases the potential penalties, but also makes the assessment of environmental liability more difficult for enterprises who have operations in Taiwan.