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No Longer “Cheap to Pollute”: MEP Sets Regulations to Enforce New Environmental Law

17 October, 2014 – MEP released four new draft ordinances, related to daily fines, seizure of pollution sources and information disclosure, to ensure companies comply with the newly amended Environmental Protection Law. The ordinances set a higher cost for environmental violations, aiming to change the fact that it was cheaper to pollute than clean-up.

The draft ordinances are currently under publication consultation. Once passed, they will be effective on 1 January, 2015.

Ordinance on Daily Fines for Polluters

Those that violate the new law with the following actions (but not limited to), could be subject to “daily fines”:

  • projects without EIA approval;
  • pollution control equipment is not appropriate;
  • companies which are lack or exceed pollution discharge permits;
  • companies which make use of illegal discharge methods (e.g. pipes); or
  • companies which supply false data, etc.

In the past, such violations would only receive a one-off fine.

How does the new daily fine penalty work?

Previously, the violation fee was set at twice of the discharge fee, which is defined for each pollutant by national or local government authorities. it is worth noting that China will increase the wastewater discharge fee nationwide up to at least RMB1.4 per pollution equivalent (Note: the unit is subject to each pollutant) for COD, NH4, and five major heavy metals (lead, mercury, chromium, cadmium, arsenic).

Under the new law, the penalty will be the violation fee (as before) times the number of days until the violations are corrected. The details are as below:

“…..

Article 7 Review: environmental protection authority shall arrange review of the correction action of environmental violations within 30 days after the issuance of the written order to the polluter.

….

Article 13 Penalty period of consecutive daily fines: from the following day after the polluters receive the written order to correct violations, until the day of review by the environmental protection authority. If the polluter refuses to correct after several times of reviews, the number of penalty days will be accumulated.

Article 14 Penalty amount: the amount of daily fine for environmental violations is the original penalty amount.

Article 15 Penalty frequency of consecutive daily fines: if the polluter being fined and ordered to correct the violation action, refuse to correct, such penalty of consecutive daily fines can be implemented successively.

…….”

Ordinance on Closure or Seizure of Pollution Sources

Ordinance on Production Limitation or Suspension of Polluting Companies

For violations such as below (but not limited to), the MEP may seize assets, limit production and suspend or even close production facilities:

  • discharging illegal (e.g. hazardous, radioactive, heavy metal) waste;
  • polluting drinking water;
  • causing large environmental accidents;
  • not turning on pollution control equipment; or
  • non-compliance with the MEP’s remediation orders, etc.

Ordinance on Corporate Environmental Information Disclosure

  • The new law requires companies to disclose environmental data (unless deemed a national secret).
  • Actions hindering accurate data disclosure will be fine for RMB30,000.
  • The MEP will also have the power to direct financial institutions to withhold credit, restrict access to special funds and limit participation in government procurement.

This ties in with the Measures on Corporate Environmental Credit Evaluation, which has been in force since 1 March 2014, and the National Social Credit System Plan 2014-2020.