China: New Progress On PRC Environmental Protection Law And Key Management Issues Regarding Environmental Compliance Of Foreign Enterprises In The PRC

Last Updated: 24 July 2017
Article by Broad & Bright
Most Read Contributor in China, October 2017

The PRC legalization of environmental protection was launched upon the promulgation of first PRC environmental protection law (i.e. the Environmental Protection Law (For Trial Implementation)) in 1979, and has lasted for more than 30 years since then. However, with the rapid growth of the Chinese economy, Chinese environmental pollution has become more and more serious over the past 30 years, especially air, water and soil pollution, which attracted extensive attention from Chinese citizens, government and arouse widespread concern at home and abroad. Since the 18th Chinese Communist Party (the "CPC") National Congress, the Central Committee of the CPC and Chinese government has paid unprecedented attention to the work of environmental protection. Mr. Xi Jinping, President of the PRC and General Secretary of the CPC, has made more than 200 comments and instructions on ecological protection. Mr. Li Keqiang, Prime Minister of the State Council, has made important comments on environmental protection on many occasions and expressly stated to "firmly fight against pollution". In other words, the CPC and the State Council have demonstrated their determination and action in resolving the current outstanding environmental problems (including air pollution), the intensity and degree of which are unprecedented1.

From 2013 to 2016, a series of environmental protection laws and regulations have been revised and updated, especially the promulgation of the so-called the strictest "Environmental Protection Law" in 2013, which led to tremendous changes of Chinese legal regime on environmental law. Consequently, the pollutant emission enterprises' cost of violation of laws rose sharply, and the regulatory department's supervision and punishment intensity significantly increased. In 2016, the Executive Meetings of the State Council passed the "Ecological and Environmental Protection Plan for the 13th Five Year Plan", proposed that aim for environmental protection is to improve the overall quality of the ecological environment by 2020. To achieve this goal, the PRC government is intensifying its supervision on the environment and will keep intensifying the same in the foreseeable future. For the multinational companies operating in China, the abovementioned changes of law convey a clear signal that environmental protection has become a priority task or even a political task for the PRC government and the era of stricter environmental regulation has come. In view of the earlier case of GlaxoSmithKline, foreign invested companies shall not take chance with the new Environmental Protection Law. On the contrary, foreign invested companies in the PRC shall be prepared in advance to avoid becoming the a experimental target for law enforcement under the new Environmental Protection Law.

In view of the above, this article intends to give an overview introduction of the latest developments in Chinese legislation and law enforcement of environmental protection, and remind the companies on the environmental legal risks under the new situation, as well as key management issues for environmental compliance, so as to help foreign invested enterprises in China to adapt to the new changes to the PRC environmental legal regime.

I. LEGISLATION AND LAW ENFORCEMENT PROGRESS ON CHINESE ENVIRONMENTAL PROTECTION

1. New Environmental Protection Law

The new PRC Environmental Protection Law was promulgated on April 24, 2014 and has been implemented since January 1, 2015. This was the first revision on PRC environmental protection law since the promulgation of the first PRC Environmental Protection Law in 1989. The new Environmental Protection Law is known to be the strictest environmental protection law ever. It focuses on solving the issues arising from the past weak implementation; strengthening enterprises' responsibilities for environmental pollution prevention; intensifying the punishment for enterprises' violation of environmental law and establishing a regime of environmental public interest lawsuit.

The following key revisions of the new Environmental Protection Law is worth noting:

(1) Strengthening Enterprises' Responsibilities for Environmental Protection:

  1. Environmental Impact Assessment: The new Environmental Protection Law expands the scope of projects that require environmental protection assessment. All plannings on development and utilization as well as construction projects that imposes adverse effect on the environment shall undergo environmental impact assessment2. Without environmental impact assessment, the plannings are not allowed to be implemented, the construction projects are not allowed to start3, otherwise, the construction may be ordered to be suspended, a fine may be imposed and the construction unit may be ordered to restore the construction to the original condition.4

    Meanwhile, for those construction projects that are required to formulate environmental impact assessment report, the new Environmental Protection Law further clarifies the requirements and methods for public participation. The construction unit shall, in the course of formulating the environmental impact assessment repot, explain the situation to the public who may be affected and fully solicit their opinions. The department responsible for approving the environmental impact assessment repot shall publish the full text of such report. Where the construction unit has not fully solicited public opinions, the construction unit shall be ordered to solicit public opinions.5
  2. Enterprise Environmental Protection Accountability System: The new Environmental Protection Law provides that pollutant emission enterprises and institutional organizations shall establish environmental protection accountability system and specify the responsibilities of the person(s) in charge and relevant personnel. Key pollutant emission enterprises shall install and ensure normal use and operation of monitoring equipment, and keep the original records of monitoring.6
  3. Total Emission Quantity Control System for Key Pollutants: The new Environmental Protection Law provides that enterprises shall, in the course of implementing national and local pollutant emission standards, comply with the total discharge quantity control indicators of key pollutants applicable to the enterprise.7
  4. Pollutant Emission Administration System: The new Environmental Protection Law explicitly enforced the "Pollutant Emission Administration System"8. At the end of 2016, the General Office of the State Council issued the "Implementation Plan for Controlling Pollutant Emission Permit System"9 and the Ministry of Environmental Protection also issued the Interim Provisions on the Administration of Pollutant Emission Permit.10

    The new Environmental Protection Law treats pollutant emission permit as the core of the environmental management of fixed pollutant source, and connects environmental assessment system, incorporates the total quantity control system for pollutant emission and provides unified pollutant emission statistics for pollutant emission fee, environmental statistics, pollutant emission right trading and so forth.11 Pollutant emission permit is the main legal instrument for enterprise and institutional organization's acceptance of environmental supervision during production and operation period and environmental protection department's implementation of supervision, which requires enterprises to make own declarations, discharge pollutant based on the pollutant emission permit, carry out self-monitoring, establish book of accounts, report regularly and disclose information to the public12. Pollutant emission permit implements the administration of "comprehensive license with one certificate", makes unified standards on enterprise and institutional organization's discharge of air, water and other kinds of pollutants. The authority responsible for issuing the pollutant emission permit shall reasonably determine the type, concentration and emission volume of the pollutants according to pollutant emission standards, total quantity control indicators, environmental impact assessment documents, requirements of the approval and so forth13. Currently, the pollutant emission permit concentrates on air pollutants and water pollutants, and will gradually include into the noise, solid waste, hazardous waste and etc14.
  5. Establishment of Relevant Information Disclosure System: The new Environmental Protection Law includes a special chapter on information disclosure and public participation, which explicitly requires that key pollutant emission enterprises shall truly publish to the public, the name of its key pollutants, emission method, concentration and total quantity of pollutant emission, information on excessive emission as well as construction and operation of pollution prevention facilities, and accept supervision from the public.15

To read this Report in full, please click here.

Footnotes

1 http://www.ce.cn/ztpd/xwzt/zhibo/hbb1/zbqw/ (Mr. Chen Jining, the Minister of the Ministry of Environmental Protection accepted the media interview.)

2 Section 1 of Article 19 of the Environmental Protection Law

3 Section 2 of Article 19 of the Environmental Protection Law

4 Article 61 of the Environmental Protection Law

5 Article 56 of the Environmental Protection Law

6 Article 42 of the Environmental Protection Law

7 Article 44 of the Environmental Protection Law

8 Article 45 of the Environmental Protection Law

9 GuoBanFa[2016]No.81 (issued by the General Office of the State Council on November 10, 2016)

10 HuanShuiTi[2016] No.186 (issued by the Ministry of Environmental Protection on December 23, 2016)

11 "Strengthening corporate responsibilities of enterprise and promoting refinement management of environment" - The Vice Minister of the Ministry of Environmental Protection explained the "Implementation Plan for Controlling Pollutant Discharge Permit System" (http://www.nxep.gov.cn/info/1445/53803.htm)

12 Article 11 and 33 of the Interim Provisions on the Administration of Pollutant Discharge Permit

13 Article 6 and 10 of the Interim Provisions on the Administration of Pollutant Discharge Permit

14 "Strengthening corporate responsibilities of enterprise and promoting refinement management of environment" ——The Vice Minister of the Ministry of Environmental Protection explained the "Implementation Plan for Controlling Pollutant Discharge Permit System" (http://www.nxep.gov.cn/info/1445/53803.htm)

15 Article 55 of the Environmental Protection Law

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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