Beveridge & Diamond
 

China Adopts Strengthened Environmental Protection Law

Beveridge & Diamond, P.C., April 28, 2014

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China adopted its new Environmental Protection Law (EPL)[1] on April 24, 2014.[2] A product of three years of contentious debate,[3] the new EPL sharply elevates China’s commitment to environmental protection in its self-described “war against pollution.”[4] The new EPL’s provisions are extensive, consisting of 70 separate articles, and far-ranging. We address here in abbreviated fashion only a few of the key provisions: the new law raises the liability risks of non-compliance for polluters, enhances enforcement incentives for local government, and opens the door for increased public participation, including by giving certain environmental organizations standing to file public interest suits. While time will tell what use government authorities and environmental groups make of the new enforcement provisions, multinational companies doing business in China will want to ensure that they understand the law’s requirements and enforcement provisions, and account for the EPL in existing global environmental management and compliance systems. The law goes into effect on January 1, 2015.

Heightened Liabilities for Non-Compliance

The law significantly raises the potential liability for non-compliance. Violators of environmental protection laws may be subject to daily penalties with no cap.[5] (Previously, violators were subject to considerably smaller fines, which often meant that paying the fine was cheaper than compliance.) Responsible persons working for a non-compliant enterprise may also be detained for up to 15 days.[6]  Infractions that may lead to detention include discharging without a permit, failure to comply with certain orders issued by an environmental protection bureau, or refusing to cease production or use of a banned pesticide.[7] 

Enhanced Enforcement Incentives for Local Governments

The law also enhances incentives for local officials to enforce environmental laws. In China, local governments control the bulk of the personnel and finances for environmental enforcement. Historically, enforcement has often been lax due to conflicting priorities, such as economic development and maintaining good relations with companies. The new law confronts this problem by enhancing enforcement incentives for local authorities. It requires governments at or above the county level to account for environmental protection targets in evaluating bureaucrat performance.[8] Additionally, officials who neglect to enforce may be subject to significant penalties, such as demotion, dismissal, and criminal prosecution.[9]

Public Disclosure Requirements and Public Interest Litigation

The law also opens the door for increased public participation and potentially for enhanced citizen enforcement of environmental laws. Although China has historically lagged in environmental transparency, significant progress has been made in recent years.[10] The new law aims to continue and intensify this trend. To a greater extent than required under prior laws, enterprises and local governments will be required to publicly disclose environmental-related information (including environmental quality, monitoring, incidents, licensing, and penalties), conduct environmental impact assessments (EIAs), and solicit public comment in EIA development.[11] Additionally, certain social public interest organizations will have standing to file lawsuits in the public interest. To qualify, a social organization must 1) be legally registered with the civil affairs departments at the prefecture level or higher, and 2) have been continuously and especially active in environmental public interest activities for five consecutive years or more, and have no record of violating Chinese law.[12] The law also protects whistleblowers and requires an agency who receives a whistleblower report to treat as confidential any information concerning whistleblower identity.[13]

Potential Implications

The new EPL represents a significant step towards the development of a more robust environmental protection regime in China. It reflects the central government’s growing commitment to sustainable development. However, whether it will fulfill its intended role depends on proper implementation at the local level, an issue that has long plagued Chinese environmental protection efforts.[14]

Beveridge & Diamond advises Chinese companies on the environmental considerations of doing business in the U.S. and, through relationships with a network of Chinese national law firms on environmental issues faced by multinational companies doing business in China.  Firm Principals Karl Bourdeau and Scott Fulton recently traveled to China to participate with various stakeholders in a roundtable discussion – organized in part by Beveridge & Diamond – of China’s evolving environmental regulatory regime and to speak at a seminar organized by China’s Ministry of Environmental Protection on environmental pollution liability insurance. Click here for more information on our China Practice, or contact Karl Bourdeau at (202) 789-6019, kbourdeau@bdlaw.com, or Scott Fulton at (202) 789-6030, SFulton@bdlaw.com.


1. Huanjing Baohu Fa (环境保护法) [Environmental Protection Law] (promulgated by the Standing Comm. Nat’l People’s Cong., Apr. 24, 2014, effective Jan. 1, 2015), http://bit.ly/1y59TMO.

2. For the official English-language media report (issued by Xinhua, China’s state press agency), see Yang Yi, China's legislature adopts revised Environmental Protection Law, Xinhuanet (Apr. 24, 2014), http://news.xinhuanet.com/english/china/2014-04/24/c_133287570.htm.

3. For a history of the law’s drafting process, see Jost Wübbeke, The three-year battle for China’s new environmental law, ChinaDialogue (Apr. 25, 2014), https://www.chinadialogue.net/article/show/single/en/6938-The-three-year-battle-for-China-s-new-environmental-law.

4. China to 'declare war' on pollution, premier says, Reuters (Mar. 4, 2014), http://www.reuters.com/article/2014/03/05/us-china-parliament-pollution-idUSBREA2405W20140305.

5. EPL, Art. 59. The amount of the daily fine is determined under existing laws, but the enforcing agency has discretion over whether to levy the fine on a daily basis, and also to modify the amount of the fine. Id.

6. EPL, Art. 63.

7. Id.

8. EPL, Art. 26.

9. EPL, Art. 68.

10. See Christina Larson, In China, a New Transparency On Government Pollution Data, Yale Environment 360 (Dec. 20, 2010), http://bit.ly/1twqfiL.

11. EPL, Art. 53-56.

12. EPL, Art. 58. Some estimate that three hundred NGOs may meet the criteria. Christina Larson, China Gives Teeth, Finally, to Beijing’s New 'War on Pollution', Bloomberg Businessweek (Apr. 28, 2014) http://www.businessweek.com/articles/2014-04-28/china-gives-teeth-finally-to-beijing-s-new-war-on-pollution (citing interview with Barbara Finamore, Asia Director of the Natural Resources Defense Council).

13. EPL, Art. 57.

14. See, e.g., Guizhen He, et al., Revising China’s Environmental Law, 341 Science 133 (2013);  Liu Jianqiang, China's new environmental law looks good on paper, ChinaDialogue (Apr. 24, 2014), https://www.chinadialogue.net/blog/6937-China-s-new-environmental-law-looks-good-on-paper/en; see also Implementation of China's environmental law vital: vice minister, ChinaDaily (Apr. 29, 2014) (citing Pan Yue, Vice Minister, China Ministry of Environmental Protection) (stating that although the law is "’the most powerful legislation in the environmental category’ .  . . it could still fail without ironclad enforcement”), http://www.chinadaily.com.cn/bizchina/greenchina/2014-04/29/content_17473705.htm.

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