The New EIA Law and Environmental Protection in China

Government Plans and Public Participation

The most dramatic and important new provisions of the Law relate to government plans. While not directly affecting foreign investors, the plans deserve attention because they demonstrate the great importance being given to environmental protection and the growing maturity and transparency of the PRC law-drafting process.

The Law requires government plans to undergo varying types of environmental impact assessment (EIA), some of which are subject to comments by experts, by "concerned units" and by the public.

Two Types of Government Plans

The Law sets out two types of EIA requirements, depending on the government plan's category. The types are preliminary, and will be defined in more detail in the future.

The first category, as preliminarily defined by the Law, contains plans on land utilization, and plans on construction, development and utilization of regions, watershed areas and sea areas.¹ For this first category of plan, it is sufficient for the draft plan to be accompanied by "writings or explanation" of the plan's environmental impact.²

The second category, as preliminarily defined by the Law, contains "special" plans for development of industry, agriculture, animal husbandry, forestry, energy resources, water conservation, traffic, city construction, tourism and natural resources.³ These "special plans" must be accompanied by an environmental impact report.⁴ The report must be examined and include the written opinions of an examination team, which includes experts selected randomly from a list to be established in according to rules issued by SEPA. If a special plan may cause an adverse impact on the environment that directly involves the environmental rights and interests of the public, then comments must be invited from the public as well as experts and concerned units, unless State regulations require secrecy.⁵

The Law does not indicate the legal status of an improperly approved plan, or whether a private party affected by an approved plan would have the standing to raise objections.

The Legislative Process

Earlier drafts of the Law submitted for consideration by the Standing Committee of the National People's Congress attempted to extend the requirement for an EIA beyond government plans to include government policies. This extension was rejected after concerned government departments objected that the provisions were vague, impractical and premature.

The same process of legislative consideration and objections from concerned government departments apparently forced two distinction between different types of government plans, and the requirement of random selection of experts publicly.

In contrast, no objections were publicly raised to the Law's provisions strengthening public participation.

Construction Projects, Expansion and Renovations

Foreign investors will be affected most directly by the Law's section on "construction projects". This phrase is not defined in the Law but is understood to include not only construction of new facilities but also renovation or expansion of existing facilities.⁶ This section refers frequently to the "construction unit", an undefined phrase that is understood to refer in most cases to the entity owning the construction project. ⁷

A Big New Piece in a Complex Puzzle

As the newest and highest-level legislation in an area affected by many overlapping laws and regulations,⁸ the Law variously reaffirms, broadens or changes pre-existing requirements and penalties.

The pre-existing regulations most important to EIAs for construction projects are the 1998 Administration of Construction Project Environmental Protection Regulations (the 1998 Regulations).⁹ The Law and the 1998 Regulations will interact in varying ways, unless the 1998 Regulations are repealed or amended before the Law comes into effect. In accordance with general principals of PRC legal interpretation,¹⁰ where the Law contradicts the 1998 Regulations or other regulations, the Law will prevail. Where the Law omits (without contradicting) details included in the 1998 Regulations or other regulations, those details will remain effective. Where the Law reaffirms points addressed in the 1998 Regulations or other regulations, those points will become more authoritative, will have status equal to other laws, and will prevail over other contradictory regulations.

Identifying Required Documents and Procedures

The Law does not change the three levels of "EIA documents" required by the 1998 Regulations, and that depend on a construction project's potential environmental impact. Where the potential impact is "major", it is necessary to draw up an environmental impact report that contains a comprehensive assessment of the resulting environmental impact. Where the potential impact is "light", it is necessary to draw up an environmental impact report form that contains an "analysis or special assessment" of the resulting environmental impact. Where the potential impact is "very small", it is sufficient to file an environmental impact registration form.¹¹ To determine which level of EIA documents is required for a particular construction project, reference may be made to SEPA's Catalogue for Construction Project EIA Classification Management.¹²

The construction unit may simplify the EIA for a specific construction project included in a government plan that has already gone through an EIA approval.¹³

Selecting Service Providers

The Law strengthens the right of a construction unit to make its own selection of EIA preparers and technical service providers. One provision prohibits the selection of an EIA preparer from being made by any "unit or individual" other than the construction unit.¹⁴ A second provision requires that an entity providing technical services to an EIA must not have any "interest relationship" with the environmental protection authority responsible for approving the EIA, or with other relevant approval authorities.¹⁵ A third provision prohibits fees from being received by the department handling examination and approval (or preliminary examination) of construction project EIA documents.¹⁶

These restrictions will require substantial changes in recent practice under which the local environmental approval authorities routinely recommend their own formal or informal affiliates as technical service providers and/or EIA preparers. One consequence of these restrictions may be to encourage these entities to cut their links with local authorities.

Verifying Post-approval Compliance

The Law includes several new provisions strengthening verification of compliance after approval of EIA documents.

The Law broadens the scope of changes that require re-submission of revised EIA documents, including "major changes to ... measures taken for preventing pollution and ecological damage"¹⁷ in addition to the "major changes to the construction project's nature, scale, location or production processes", which had already been mentioned in the 1998 Regulations.

If the actual environmental impact of construction or operation differs from the approved EIA documents, the construction unit (and presumably any entity that has taken over operation of the project) is required to assess and correct the difference, and to file a report on the same with the original environmental impact assessment approval authority and project approval authority.¹⁸ The environmental protection authority is required to conduct follow-up monitoring of actual environmental impact and is entitled to instruct the construction unit to assess and correct any non-conformance.¹⁹

The Law omits "inspection and acceptance" of environmental protection facilities by the environmental approval authority, which is to be performed before commencement of full-scale operations. This key procedure was specifically addressed in the 1998 Regulations; its omission is not believed to indicate any present intention to repeal that procedure.

Liability for Non-compliance by Companies and their Personnel

The Law increases penalties on non-complying companies and their personnel and extends penalties to personnel of more government departments for additional types of misconduct.

Construction Units and their Personnel

The maximum fine for non-compliance by construction units has been increased from Rmb100,000 under the 1998 Regulations to Rmb200,000 under the Law.²⁰

The Law does not address the liability of construction units to provide compensation to parties damaged by environmental impacts. The PRC Environmental Protection Law and other laws address this type of liability.²¹

Government Departments and their Personnel

The Law imposes administrative and criminal liability on individual personnel in government departments that unlawfully grant approvals of construction projects.²²

The Law broadens the liability of individual personnel of environmental approval authorities, to include unlawful grants of approval, as well as the other types of misconduct previously identified by the 1998 Regulations. The latter includes favouritism, irregularities, abuse of authority and neglect of duties.²³

The Law also imposes liability on individual governmental personnel that commit misconduct in the preparation²⁴ or the approval²⁵ of government plans.

SEPA's Role

Though the Law represents top-level endorsement of many views promoted by SEPA, it is not likely to eliminate turf battles between SEPA and other government departments. SEPA will have new authority to examine and approve the EIAs accompanying special plans.²⁶ In addition, it will continue to be responsible for matters such as defining the qualifications of EIA technical service providers²⁷ and the classification of construction projects,²⁸ and handling examination and approval of certain major construction projects.²⁹

The Law makes no substantial change in the designation of government departments to handle examination and approval of EIA documents. As before, SEPA itself is authorized to handle examination and approval of EIA documents for certain construction projects that: (i) are of a special nature, such as nuclear facilities or top-secret projects; (ii) straddle a border between provincial-level regions; or (iii) entail examination and approval (of the project) at the national level.³⁰

For EIA documents of other construction projects, provincial-level governments are authorized to set examination and approval authority limits. In case of conflicting conclusions by authorities in two or more affected regions (including sub-regions within provinces), the authority at the next level higher is authorized to handle examination and approval.

The Role of NGOs

The Law appears to reflect input from a variety of sources, including the large amount of research done in recent years by non-governmental organizations (NGOs), which are variously affiliated with SEPA, with other government departments and academic institutions, and with foreign public and private organizations. Many of these organizations receive technical support and funding from foreign sources, and are being allowed to play a growing role in public education and expert debate on PRC environmental issues.

Conclusion

The Environmental Impact Assessment Law will strengthen trends towards higher technical standards and stricter enforcement of existing standards. The law's promulgation can be seen as a direct response to the severe and worsening environmental degradation affecting public health and the sustainability of economic growth in the PRC. Foreign-invested enterprises will continue to be regarded as having the technical and financial ability to be held to a particularly high standard of compliance.

Endnotes

1 Article 7 of the Law.

2 Idem.

3 Article 8 of the Law.

4 Idem.

5 Article 11 of the Law.

6 The inclusion of renovation or expansion within the concept of "construction projects" is indicated by Article 5 of the 1998 Administration of Construction Project Environmental Protection Regulations.

7 The meaning of "construction unit" is not formally defined by legislation, and can only be inferred to mean the entity either owning a construction project or otherwise responsible for the compliance of such a project with environmental protection requirements.

8 The concept of using EIAs for construction projects has been developed and implemented in stages, beginning in 1979. It was mentioned in the PRC Environmental Protection Law (Trial Implementation) (issued by the Standing Committee of the National People's Congress on September 13 1979), and replaced with the PRC Environmental Protection Law on December 26 1989.

9 Issued by the State Council on November 29 1998.

10 For general principals on the ranking of laws, regulations and other governmental documents, see the PRC Legislation Law, issued by the National People's Congress on March 15 2000 and effective as of July 1 2000.

11 The Law, Article 16.

12 SEPA updated the Catalogue on October 13 2002 (effective as of January 1 2003), including standards for classifying environmental impact as "major", "light" or "very small", and a detailed list of examples falling within each of the classifications. The current Catalogue can be viewed at www.china-eia.com/hpdw/hpdw/htm.

13 The Law, Article 18.

14 Ibid, Article 20.

15 Ibid, Article 19.

16 Ibid, Article 22.

17 Ibid, Article 24.

18 Ibid, Article 27.

19 Ibid, Article 28.

20 Ibid, Article 31.

21 Article 41 of the Environmental Protection Law provides that a unit that has caused an environmental pollution hazard shall have the obligation to eliminate it and make compensation to the unit or individual that suffered direct losses. Similar provisions are also included in Article 124 of the PRC Civil Law General Principles (promulgated by the National People's Congress on April 12 1986 and effective as of January 1 1987).

22 The Law, Article 32.

23 Ibid, Article 35.

24 Ibid, Article 29.

25 Ibid, Article 30.

26 Ibid, Article 13.

27 Ibid, Article 19.

28 Ibid, Article 16.

29 Ibid, Article 23.

30 Idem.