Madras High Court Strikes Down Policy On Ex Post-Facto Environmental Clearances

The Madras High Court ("HC") in Fatima vs Union of India & Ors. [W.P.(MD)No.8866 of 2021] has set aside the Standard Operating Procedure dated 07.07.2021 ("SOP") and Office Memorandum dated 19.02.2021 ("OM") (collectively "Impugned OMs") issued by the Ministry of Environment, Forest and Climate Change ("MoEF"). These instruments governed the grant of ex post facto environmental and coastal regulation zone clearances. The judgement has its roots in two key environmental legislations.

1. Environment Impact Assessment Notification, 2006 ("EIA"): The EIA requires that project proponents, before commencing new projects or making major modifications to existing ones, obtain prior Environmental Clearance ("EC") from either the central or state level impact assessment authority. This applies to:
   • New projects or activities
   • Expansions, modernizations or changes in product mix or raw material use that exceed the capacity thresholds listed in Schedule I of the EIA.
2. Coastal Zone Regulation Notification, 2011 ("CRZ, 2011"): CRZ, 2011 places strict restrictions on setting up and expanding operations, industries and processes in coastal areas. It requires that project proponents obtain prior clearance ("CRZ clearance") for activities permissible in coastal zones.

Both the EIA and CRZ notifications are issued under the Environment (Protection) Act, 1986 ("EPA") and mandate obtaining EC and CRZ clearance (collectively referred to as "Environmental clearances") prior to starting any project. Any project commenced without the required clearances is treated as a violation and any application for clearances after such commencement is deemed a "violation case" seeking ex post facto clearance.

To streamline the process of dealing with these violation cases, the MoEF issued the Impugned OMs, which set out the procedure for considering applications for ex post facto clearances.

Legal Issue

The central issue before the Madras High Court was whether environmental clearances could be granted ex post facto, i.e., after the project had already commenced, through the issuance of government notifications, office memorandums, circulars, standing orders, or general statutory rules.

Court's Analysis and Observations

1. Ex Post Facto Clearance under the EPA: The court noted that while the EPA does not expressly prohibit ex post facto clearances, it also does not provide any enabling provision for such clearances. The absence of such an enabling provision, combined with the EIA's requirement for "prior" clearance, makes ex post facto clearance a violation of the law.
2. Powers of the Central Government: The court observed that the central government's powers under Sections 3 and 5 of the EPA are aimed at protecting the environment and reducing pollution. These powers, the court held, cannot be used to nullify the EIA's requirement for prior clearance.
3. 'Prior' permission: Drawing on the Supreme Court's decision in Life Insurance Corporation of India vs. Escorts Ltd. & Ors. [(1986) 1 SCC 264], the court emphasized that when a legal requirement is for "prior" permission, it cannot be granted retrospectively.
4. Supreme Court Precedent on Ex Post Facto Clearances: The Supreme Court (SC) has repeatedly held against ex post facto clearances, except in exceptional circumstances. The High Court noted that while the SC has not entirely ruled out the possibility of ex post facto clearances, it has discouraged their routine use and limited them to exceptional cases.
5. Effect of Impugned OMs: The court noted that the Impugned OMs and other instruments issued by the MoEF effectively transformed what was supposed to be an exception into a norm, allowing ex post facto clearances in a broad range of cases rather than in the limited circumstances outlined by the SC.

Conclusion

The Madras High Court prospectively set aside the Impugned OMs, clarifying that applications for ex post facto environmental clearances already submitted would be considered on their merits. This offers a final lifeline to projects that violated environmental regulations by allowing them to become compliant and obtain necessary clearances.

Interestingly, the HC did not examine the contents of the Impugned OMs in detail, focusing instead on the manner in which they were enacted. The court highlighted a critical distinction between "defending the Impugned OMs" and defending the "making of the Impugned OMs." In this case, it seems that the court's decision rested more on issues related to the procedural enactment of the OMs than on their substantive content.

This distinction is pertinent because the MoEF, while issuing the Impugned OMs, had argued that the clearances granted under these instruments were prospective in nature and not ex post facto. Furthermore, the ministry indicated that violators of the EIA and CRZ provisions would still be subject to penalties under the EPA and environmental damages would be recovered from project proponents responsible for harming the environment.

This judgment has broader implications, particularly because the SOP that was struck down is also the subject of a separate challenge before the SC. It will be interesting to see whether the SC takes a different approach, possibly evaluating the merits of the Impugned OMs or adopts the Madras High Court's line of reasoning in determining their procedural propriety.

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