Pollution of the Songhua River: A Catalyst for Environmental Reform

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The recent toxic spill into the Songhua River has thrust China's environmental problems into the international spotlight. In response to this accident and to demonstrate its determination in fighting pollution, the State Environmental Protection Administration (SEPA) has started imposing more stringent environmental requirements. These requirements are ostensibly aimed at bringing businesses in China into compliance with environmental laws and regulations. Chinese courts also seem more willing than before to hear tort claims against businesses causing environmental pollution. As a result, businesses engaged in chemical or other heavy industries potentially hazardous to the environment are starting to feel pressure to 'clean up their acts' on both the judicial and administrative fronts.

Judicial response to the accident

In response to the Songhua River spill, several restaurant and public bathhouse owners, together with individual residents, filed a collective lawsuit against the chemical plant that caused the spill in both the Jilin Provincial People's High Court and the Heilongjiang Provincial People's High Court. It remains to be seen whether either court will hear the case.

Historically, Chinese courts have been reluctant to hear tort claims against businesses causing pollution. This reluctance has persisted despite the enactment of the 1986 PRC Civil Code and relevant environmental laws, which provide that victims of environmental pollution have the right to claim damages from the party or parties whose negligence or misconduct caused the pollution. Lack of enforcement of these rules has been particularly pronounced with respect to tort claims against state-owned enterprises (SOEs) and foreign-invested enterprises (FIEs). The courts have sought to protect the interests of SOEs and FIEs, in order to maintain social stability and improve the local economies.

However, while local emphasis on social stability and economic growth remains prevalent, the push for sustainable development by China's central government has shaken the ability of local governments to resist prosecuting environmental accidents. In another pollution case in 2005, involving the Yellow River, a trial court in Baotou, Inner Mongolia, awarded a local state-owned water supply company Rmb2.88 million (US$ 357,890) for its economic losses due to pollution in the Yellow River caused by the operations of a few local paper-making companies. Although it was eventually settled between the parties for Rmb2.3 million at the suggestion of the appellate court, this case can be viewed as an indication of the Chinese judicial system attending more seriously to environmental pollution cases.

Administrative response to the accident

On December 3 2005, the State Council, China's legislative body, issued the Decision on Implementing the Scientific View of Development and Enhancing Environmental Protection (the Decision). The Decision aims to, among other things, promote a permit system for pollutant discharges, temporarily stop the processing of investment projects that have a large volume of pollutant discharge or a significant negative impact on the environment, and strengthen the control and supervision over business entities that do not meet statutory pollutant discharge standards or that exceed their permitted discharge volume.

The Decision further adopted a 'green' GDP index system. This system uses a formula to calculate a value for damage to the environment and humans, which is subtracted from the gross GDP to produce a 'green' index value. The 'green index' value is then used to measure local governments' overall economic achievement. While it may take some time to see how the 'green' GDP index system will affect the priorities and performance of local governments, the Decision shows that the central government is looking to confront nonchalance at the local level with respect to environmental protection.

In February 2006, SEPA launched a series of environmental supervision measures and programmes. These measures and programmes are a combination of new initiatives and a reiteration of existing environmental legislation, including:

(i) a national environmental safety examination of all industries; (ii) a thorough examination of 127 chemical and oil projects nationwide; (iii) cessation of approval for investment projects that are located in chemical parks or bases and that have not gone through the 'planning environmental impact assessment' process or have accepted other investment projects that generate toxic or contaminated materials; (iv) implementation of a 'construction project environmental impact assessment' for all proposed chemical and oil investment projects and other investment projects that generate toxic or contaminated materials; and (v) cessation or temporary suspension of approvals for certain projects that are geographically sensitive and environmentally hazardous.

Stricter environmental regulations

The aftermath of the Songhua River pollution accident and other environmental considerations are bringing about stricter enforcement and greater adherence to environmental regulations. Existing and proposed businesses engaging in chemicals or other heavy industries potentially hazardous to the environment will be more heavily scrutinized by the relevant approval authorities in their formation, and more strictly supervised and regulated by SEPA and its local branches in their daily operations. In addition, they now face substantial risk of being sued in tort for environmental pollution.