How to comply with the green laws

This article is from the Environmental Protection chapter of the 2015 Annual Review and is available for download here.


Jihong Wang of Zhong Lun Law Firm advises companies to focus on environmental protection in their daily operations, projects and due diligence to avoid fines and even greater risks

1. What is your opinion on the enforcement of the amended Environmental Protection Law so far?

The newly amended PRC Environmental Protection Law, dubbed China's strictest environment law in history, greatly increases the authority of the environmental protection departments to impose administrative penalties, adding penalty measures such as “placement under seal”, “seizure”, “restricting production” and “suspending production”, as well as the system of “per-diem fines without an upper limit”. After the law took effect on January 1 2015, enforcement efforts have been stepped up, signaling that the Chinese government has started paying increasing attention to environmental protection. Furthermore, with the implementation of the Supreme People's Court, Interpretation on Several Issues Concerning the Application of the Law in the Trial of Environmental Civil Public Interest Lawsuits, the number of civil environmental public interest lawsuit cases has markedly increased, greatly raising enterprises' costs for violating environmental laws.

2. How will the environmental protection tax will be implemented? How does this affect businesses?

On June 11 2015, the Legislative Affairs Office of the State Council published the PRC Environmental Protection Tax Law (Draft for Comments) and its explanatory notes. Under normal circumstances, this law should be submitted to the Standing Committee of the National People's Congress for deliberation by the end of the year and, if everything proceeds smoothly, levy of the environment tax could commence in 2017.

The environmental protection tax constitutes the implementation of the “fee to tax” reform under the Environmental Protection Law and will replace the pollutant discharge fee once levy of the tax begins. Furthermore, the tax rate specified in the Environmental Protection Tax Law is basically identical to the rate at which the pollutant discharge fee is currently charged. Accordingly, in theory, the levy of an environment tax will not have an adverse impact on the average enterprise such as by increasing burdens and costs. However, heavy polluters, for example, enterprises involved in fossil fuel power generation, coal, mining, chemicals and petrochemicals, which are listed as “key (polluting) taxpayers subject to monitoring”, are subject to automatic monitoring and stiffer taxation. Furthermore, they may be charged multiples of the tax for exceeding pollutant discharge standards, potentially increasing their environmental costs.

3. What reporting requirements do businesses need to comply with under this regime?

Under normal circumstances, enterprises chiefly face the following reporting requirements to comply with environmental protection rules:

(1) before commencement of a construction project, the enterprise is required to conduct an environmental impact assessment and submit the results to the environmental protection department for check and approval or record filing;

(2) after completion of construction, the enterprise is required to apply to the environmental protection department for an inspection of the environmental protection facilities;

(3) if pollutant treatment facilities are to be demolished or left unused, the enterprise needs to report the same in advance to the environmental protection department for approval; and

(4) if pollutants are to be discharged, the enterprise must carry out reporting and registration of such act and apply for a pollutant discharge permit as required.

Furthermore, where an enterprise is involved with special substances such as radioactive substances, hazardous chemicals and hazardous waste, it faces other special reporting requirements.

4. What additional environmental measures do companies need to take before embarking on construction projects?

According to regulations such as the Environmental Protection Law and the Regulations for the Administration of Environmental Protection in Connection with Construction Projects, before an enterprise commences construction of a project that will have an impact on the environment, it is required to engage a professional environmental impact assessment firm to conduct an environmental impact assessment and submit the results to the environmental protection department for examination or filing. Construction may not commence until the assessment has been conducted.

5. Polluting entities are now more susceptible to lawsuits. Have there been any significant cases so far? What are the liabilities?

In recent years, China has experienced a few major environmental pollution cases, such as the Zijin Mine dam break incident in 2010, which caused major environmental pollution, human deaths and injuries and property loss, resulted in the imposition of a fine of Rmb9,563,130 by the Fujian Provincial Environmental Protection Bureau, setting the record for the highest fine imposed on a polluting enterprise. The person in charge of the enterprise was also found criminally liable. The Penglai 19-3 oil field oil spill accident in 2011, which resulted in contamination of 6,200 square kilometres of the Bohai Sea, caused losses to fishermen and aquaculturists in Hebei and Liaoning and the payment of damages totalled Rmb1.683 billion to be paid by ConocoPhillips and CNOOC, setting a record for ecological damages in China.

6. What risk management plans should companies have in place in light of the pollution crackdown?

In their day-to-day operations, companies should conduct an objective assessment of their existing environmental risks, promptly remedy any areas of non-compliance based on the assessment results and engage environmental lawyers or other professional firms to provide environmental compliance training to management personnel and employees in key positions so as to ensure environmental compliance in the enterprise's operations and avoid penalties.

Once an environmental protection authority has issued an administrative penalty decision or a notice to an enterprise ordering it to effect rectification within a specified period of time, it should promptly and actively implement the same or effect rectification as required, so as to avoid more serious penalty measures such as a per diem fine.

7. What opportunities do foreign investors have in 'green' sectors such as clean energy, pollution treatment systems and environmental monitoring technology? Are there any incentives to invest in these areas?

Foreign investors have numerous opportunities to invest in environmental protection-related industries. The Foreign Investment Industrial Guidance Catalogue (Amended in 2015) contains a large number of green industries that fall within the encouraged category, including the development of clean energy, the manufacturing of equipment related to clean energy, manufacturing of environmental pollution treatment equipment and environmental pollution treatment and monitoring technologies.

Certain incentive policies are available to the environmental protection industry, such as the three year exemption and three year reduction by half of the enterprise income tax, which is to say, commencing from the first tax year that an enterprise engaging in a qualified environmental protection, energy saving or water saving project derives its initial production/business income to the third year, it is exempted from enterprise income tax for such income and is subject to such tax at half the normal rate during the fourth to sixth years. Furthermore, comprehensive resource utilisation enterprises and qualified energy saving service companies that implement contractual energy management projects are eligible for the exemption and refund of value-added tax. Moreover, the clean energy industry is not only eligible for tax relief but also for fiscal subsidies.

8. What is your outlook for the future? What further measures are in the pipeline to ensure that businesses fully comply with environmental laws?

From looking at the development trends in China, environmental protection requirements on enterprises and law enforcement efforts are getting stricter, meaning that environmental protection compliance has become a subject to which enterprises must pay particular attention in their operations.

With respect to environmental protection compliance, enterprises need to observe regulations on environmental impact assessments and the “Three Simultaneities” when constructing new plants and facilities: Before acquiring a new enterprise, they need to carry out environmental compliance due diligence and provide for the pertinent arrangements in the acquisition documents. During their operations, enterprises need to ensure lawful pollutant discharge and punctually pay the pollutant discharge fee (or environment tax). After the occurrence of an environmental incident, they need to promptly launch their environmental protection contingency measures to limit contamination of the environment.


Author biography

Jihong Wang
Partner

Jihong Wang is one of the pioneers in the environment, resources and energy field in China, and is currently the deputy director of the Environment, Resource and Energy Law Committee of the All China Lawyers Association and a member of the Legal Expert Committee of the All-China Environment Federation. She has provided legal services to numerous government departments, including the Ministry of Environmental Protection, the Ministry of Commerce and the Beijing Municipal Environmental Protection Bureau and, as a well-known environmental law expert, she has participated in the discussions and deliberations on the formulation of several sets of environmental regulations and on major environmental cases. Jihong can provide legal services for various types of environmental projects and has handled numerous domestic and foreign environment, resource and energy project financing, M&A and dispute resolution cases.

中伦律师事务所的王霁虹律师建议企业应在日常营运、项目及尽职调查中注重环境保护以避免罚款或其他更大的风险

1. 对迄今修订后的《环境保护法》的执法，您有什么意见?

新修订的《环境保护法》号称为中国史上最严环境保护法，大大增加了环境主管部门的行政处罚权，新增了“查封”、“扣押”、“限产”、“停产”等处罚措施以及“按日计罚、不设上限”制度,自2015年1月1日施行以来，环境部门的执法力度有所提高，标志着中国政府开始加强对环境保护的关注。且随着最高人民法院《关于审理环境民事公益诉讼案件适用法律若干问题的解释》的实施，各地环境民事公益诉讼案件开始明显呈上升状态，企业环境违法成本大幅提高。

2. 请解释一下环境保护税是如何执行的? 对企业有什么影响?

2015年6月11日，国务院法制办公布了《环境保护税法》(征求意见稿)及说明全文。在正常情况下，这部法律今年年底可能提交人大常委会审议，若一切顺利，2017年可能开征环境税。

环境保护税系《环境保护法》项下费改税的落实，开征后将替代排污费，且该《环境保护税法》规定的税额标准与现行排污费的征收标准基本一致。故从理论上，开征环境税，对普通企业不会造成负担增加、成本上升等不良影响。但对于火电、煤炭、采矿、化工、石化等重污染企业，因被列入“重点监控(排污)纳税人”之列，国家将对其实行自动监控，税收征缴更加刚性，且可能因超标排污被加倍收取税费，故其环境成本可能会增大。

3. 在此体制下，企业需要遵行什么申报要求?

通常情况下，企业环保合规主要有以下申报要求：

(1) 建设项目施工之前，需进行环境影响评价并提交环保部门审批或备案；

(2) 建设项目竣工后，需向环保部门申请环境保护设施竣工验收；

(3) 拆除或者闲置污染物处理设施的，需事先报环保部门批准；

(4) 排放污染物的，须对排污行为进行申报登记，并按要求申请排污许可证。

此外，涉及放射性物质和危险化学品、危险废物等特殊物质的企业，另有一些特殊的申报要求。

4. 在开展建筑项目前，企业还需要采取哪些环保措施?

依照《环境保护法》、《建设项目环境保护管理条例》等规定，企业在开始建设对环境有影响的项目之前，应聘用专业环境影响评价机构进行环境影响评价，并报环保部门审批或备案。未依法进行环境影响评价的建设项目，不得开工建设。

5. 污染企业现在更易招致诉讼。迄今有没有任何重大的案件? 当中引致什么法律责任?

近年来，中国发生了一些环境污染重大案例：如2010年紫金矿业溃坝事件，造成重大环境污染、人员伤亡和财产损失，被福建省环保局罚款956.313万元人民币，创下污染企业的最高罚款纪录，且企业负责人亦被判承担刑事责任。再如2011年蓬莱19-3油田发生漏油事故，造成渤海6200平方公里海水污染，和河北、辽宁渔民和养殖户的损失，康菲公司和中海油需支付总计16.83亿元的赔偿款，此数额创下了中国生态索赔的最高纪录。

6. 在打击污染的情况下，企业应制定什么风险管理计划?

在日常经营中，公司应对现存环境风险进行科学评估，根据评估情况对不合规之处予以及时补正，并聘请环境律师等专业机构对管理人员及关键岗位职工进行环境合规培训，保证企业经营的环境合规性、避免处罚。

在环保机构对企业下达行政处罚决定书或限期改正通知书后，应及时依照其要求，积极予以落实或整改，以避免遭受“按日计罚”等更为严重的处罚措施。

7. 绿色产业如清洁能源、污染处理系统和环境监测技术为外资带来了什么机遇? 投资这些行业有什么优惠措施?

外国投资者在环境保护相关产业的投资机会很多，《外商投资产业指导目录（2015年修订）》的 “鼓励类”投资产业目录中，有大量的绿色行业，包括清洁能源开发、清洁能源相关的设备制造、环境污染处理设备制造及环境污染治理及检测技术等等。

环保产业享有一些优惠政策，如企业所得税施行“三免三减半”，即企业从事符合条件的环境保护、节能节水项目的所得，自项目取得第一笔生产经营收入所属纳税年度起，第一年至第三年免征企业所得税，第四年至第六年减半征收；此外，资源综合利用企业及符合条件的节能服务公司实施合同能源管理项目，还可享受增值税免税、退税政策。而且，对于清洁能源行业，不仅有税收优惠，还有可享有财政补贴。

8. 您对于未来有什么展望? 有什么进一步的措施正在策划中以确保企业全面遵守环保法规?

从中国的发展趋势来看，对企业的环保要求及执法力度日趋严格，环保合规已成为企业经营需重点关注的部分。

对于企业环保合规而言，在新建厂房及设施时，需遵守环境影响评价及“三同时”的相关规定；在并购新的企业之前，需进行环境合规尽职调查，并在并购文件中作出相应安排；在企业运营中，要保证合法排污，并及时缴纳排污费
（或环境税）；在环境事件发生后，要及时启动环保应急措施，减少对环境的污染。


作者简历

王霁虹
合伙人

王霁虹律师是中国较早介入环境、资源与能源领域的专业律师，现为中华全国律师协会环境、资源与能源法专业委员会副主任，中华环保联合会法律专家委员会委员。她曾为环境保护部、商务部、北京市环保局等多个政府部门提供法律服务，并作为知名环境法专家参与了多部环境法规制定及重大环境案件的探讨与论证。王律师可为各种环境类项目提供法律服务，曾处理过多个国内外环境、资源与能源项目的融资、并购、争议解决等案件。