Environmental Impact Assessment for Construction Projects in China

i. construction of nuclear facilities, top-secret projects or other types of special projects;

ii. construction projects that cross provinces, autonomous regions or administrative districts of a municipality directly under the central government, or

iii. construction projects to be approved by the State Council or relevant department authorized by the State Council.

For foreign-invested projects, the Administration of the Verification of Foreign-invested Projects Tentative Procedures, effective from October 9 2004 (Foreign-Invested Projects Procedures) provides that verification from the National Development and Reform Commission (NDRC) is required for certain projects (see Table 1). In such circumstances, EIA documents are required to be submitted to the NDRC as part of the verification process.

Pursuant to the Foreign-Invested Projects Procedures, the NDRC is authorized by the State Council to verify the foreign-invested projects listed in Table 1. It appears that these projects, which are required to be submitted to the NDRC for verification, are also required to comply with the EIA Measures.

In addition, the Measures for the Classification Approval of Construction Projects EIA Documents, issued by SEPA and effective from January 1 2003, provides a comprehensive list of projects (with corresponding total investment amounts) that require SEPA approval. The projects include specific types and sizes of projects, such as machinery, forestry, water, energy, transportation, information, raw materials, tobacco, textiles and city and environmental construction.

However, certain provincial and municipal authorities such as those in Shanghai have issued specific regulations that substantially mirror the requirements of the EIA Measures. The effect is that certain foreign-invested projects that only require approval from provincial-level authorities may need to comply with requirements substantially similar to the EIA Measures.

Documentation required

EIA documents (which include EIA reports and the relevant forms and specific EIA registration forms) should be prepared in accordance with the Catalogue of Environmental Protection Classification of Construction Projects (Environmental Classification Catalogue), issued by SEPA and effective from January 1 2003.

Under the Environmental Classification Catalogue, an EIA report is generally required for construction projects that may have a significant impact on the environment. These projects include leather production, paper manufacturing, basic chemicals manufacturing, tyre manufacturing and pharmaceuticals manufacturing. For construction projects that have a lesser impact on the environment, such as synthetic leather processing, Chinese medicine processing (in certain districts), machinery manufacturing and large-scale apparel processing, an EIA report form is required. An EIA registration form is required for construction projects that have a minor impact on the environment, such as small-scale apparel processing and machinery transformation, these will not be required to carry out an EIA.

Entities permitted to prepare EIA documents

The EIA Measures provides that a construction unit (the project owner company) must engage an entity that has obtained a Grade 'A' EIA qualification² to prepare and draft the EIA report and report form. By comparison, the EIA Law vaguely provides that the EIA report and report form must be prepared by a corresponding qualified EIA entity. Foreign investors should note that if an appropriate consultant is required for EIA work, there does not seem to be any foreign entities with Grade 'A' EIA qualifications on the current list published by SEPA.

Submission of EIA documents

Under EIA Law, it is unclear when EIA documents are required to be submitted for construction projects. By contrast, the EIA Measures clearly specifies when EIA documents should be submitted for different types of construction projects. For projects that require verification by the NDRC, EIA documents should be submitted to SEPA before providing the NDRC with application reports.³

Examination criteria

After receipt of the EIA documents, SEPA will consider whether a technical evaluation is required. The EIA evaluation entity must organize experts to evaluate the EIA report if a technical evaluation is necessary.

SEPA takes into consideration the following criteria when examining EIA documents:

i. whether the project complies with relevant laws and regulations;

ii. whether the project conforms with state industrial policies and clean manufacturing policies;

iii. the location of the project and whether it satisfies corresponding environmental standards or requirements for its biological and environmental functional district;

iv. whether environmental protection measures to be adopted satisfy state discharge standards, and

v. whether biological protection measures can effectively prevent and control damage to the environment.

Requirement for public hearing

In cases where a construction project has a significant impact on the environment, the EIA Law provides that, in addition to preparing an EIA report, a construction unit is required to hold evidentiary meetings, hearings, or adopt other methods to seek the opinions of relevant units, experts and the public. In practice, however, project owners seldom exercise their discretion and conduct public hearings. Once the EIA documents are approved by the environmental authority, the issue of whether a public hearing is required should arguably be closed.

By contrast, the EIA Measures provides SEPA with the authority and discretion to initiate a hearing to obtain the feedback of relevant units, experts and the public on whether the project should be approved or not, in the following circumstances:

i. where the construction projects may have significant impact on the environment;

ii. where the construction projects may severely impact the living environment of residents around the construction area, or

iii. where there is a huge difference in public opinion.

Internet public announcement

The EIA Measures provides that, prior to making a decision, SEPA will list the projects under its consideration and those which are proposed to be approved on its government website for a period of five days. After approval, the results of the project examinations and approvals will be published on SEPA's website.

Time for approval

The EIA Measures specifies a time period within which SEPA is required to make its decisions after receipt of the EIA documents (see Table 2).

However, if there is a hearing, expert examination and technical assessment, the EIA Measures provides that the specified time periods do not apply. Also, if a construction project commences five years after it has been approved, the EIA documents may be required to be resubmitted to SEPA for reassessment.

Future impact of EIA Measures

The uncertainties that existed under the EIA Law on the procedures and timing of EIA documents submission and approval have now been mostly clarified by the EIA Measures. Although the impact of the EIA Measures appears limited as it only applies to large-scale projects, certain provincial authorities have issued specific regulations which substantially mirror the requirements of the EIA Measures. The effect is that foreign-invested projects that only require approval from the provincial-level authorities will need to comply with requirements that are substantially similar to the EIA Measures.

Furthermore, the EIA Measures may be the first step towards giving SEPA more authority to implement the requirement of public hearings in the EIA process. On November 10 2005, SEPA issued a Consultation Paper on the Measures for more Public Involvement on Environmental Impact Assessment (Consultation Paper). The Consultation Paper provides that public hearings are required for all construction projects that may have a major impact on the environment. It also sets out the procedures for conducting public hearings. According to SEPA officials, projects with a major impact on the environment refer to those listed in the Environmental Classification Catalogue and those decided at the local environmental protection bureau's discretion.

If a public hearing requirement is enforced (and it appears that the probability of this happening now is higher), it would cause problems for construction projects, given that they may be potentially delayed (subsequently increasing costs) and lose business opportunities. These considerations would be a major concern for project owners and lenders providing limited recourse financing.

Endnotes

* The authors would like to thank Sarah Chow, Ding Yi and Du Bo for their assistance in preparing this article

1 The EIA Law was issued by the Standing Committee of the National People's Congress and was effective from September 1 2003.

2 The list of Grade 'A' EIA qualified entities is published on SEPA's website (www.sepb.gov.cn)

3 Under the State Council, Reform of the Investment System Decision, enacted by the State Council, effective from July 16 2004 (Investment System Decision), the foreign-invested projects listed in Table 1 require verification by the NDRC.