Corporate Environmental Compliance

Published on 02/09/2014

First Update 29/03/2017

Prevention and Control of Pollution

The Water (Prevention and Control of Pollution) Act was a Central Act of Parliament passed in 1974, which provided for Water Pollution Control and also established the State (Water Prevention and Control of Pollution) Boards, subsequently renamed as the Pollution Control Boards. The Air (Prevention and Control of Pollution) Act 1981 and the Environment Protection Act 1986 followed. These were also Central Acts of Parliament. While the Water (Prevention and Control of Pollution) Act 1974 was to be adopted by the State legislative Assemblies, the then existing State Water Prevention and Control of Pollution Boards were entrusted with the responsibilities of the Air (Prevention and Control of Pollution) Act 1981 and the Central Government with the responsibilities of the E.P. Act 1986. The Central Government could delegate certain functions under the E.P. Act 1986 to the State Pollution Control Boards, the State Government or any other agency as prescribed.

The Water Act 1974, as the Water (Prevention and Control  of  Pollution)  Act  1974  is  also known, had amongst others the following provision:

1) That no effluents, beyond the prescribed standards, shall be discharged by any person into any stream, sewer, well or on land (Section 24, Water Act 1974).

2)    That no effluents would be discharged into any stream, sewer, well or land without the consent of the State Pollution Control Board.(Section 25 / 26 Water Act 1974)

Similar provisions were also introduced through the Air Prevention and Control of Pollution Act 1981wherein it was provided that:

1)   No person operating any industrial plant in any air pollution control area shall discharge   or   cause   or   permit   to   be discharged the emission of any air pollutant in excess of the standards laid down by the State Board.(Section 22, Air Act 1981)

2)   No person shall without the previous consent of the State Pollution Board, establish or operate an industrial  plant  in  an  air  pollution prevention control area. (Section 21, Air Act 1981)

In the early days of implementation of the Water Act 1974 and the Air Act 1981, or immediately before the promulgation of the said Acts, many new development projects and industries had come up without adequate pollution control measures and the major problem before  them was that they were  not  aware  of  the  environmental implications and responsibilities while planning for the project. It was also generally observed that most financial viability assessments were undertaken without including the costs for pollution control. This was a severe impediment in Industrial growth and an administrative blockage. Industry wanted to run the plant, recover funds and then invest in pollution control – the Board could not permit this. It was then that the concept of availing a No Objection Certificate was introduced by the Boards – primarily to advise industries on their responsibilities for pollution control, make them provide for it before commissioning and assess the financial viability of their projects accordingly.  The N.O.C. was also meant  to enable the regulators, facilitators, bankers, etc understand  the  project  in  its  complete perspective and minimise the risks involved in clearing environmentally unsound proposals.

Establishment of an Industrial Plant was covered under the provisions of N.O.C. as above.

Legalizing No Objection Certificate:

While the Air Act had already prescribed for a consent to establish, it was through the amendment of 1988 that specific legal provisions were made  in  the  Water  Act  to  legalize N.O.C. by prescribing that:

1)   No person shall without the previous consent of the State Board (Section 26 / 26 of Water Act)

a)   Establish or take any steps to establish any industry, operation or process, or any treatment  and disposal system  or  an extension or addition there to which is likely to discharge sewage or trade effluents into a stream or well or sewer or an land or

b)   Bring into use any new or altered outlet for the discharge of sewage or

c)   Begin to make any new discharge of sewage

These provisions require that the concerned persons (Industries, local bodies, developers etc) make  an  application  for  Consent  to  Establish and Consent to Operate to the State Pollution Control Boards as provided in Section 21 of the Air Act 1981 and Sections 25 / 26 of the Water Act 1974.

The Board after making due enquiries grants or refuses consents within a period of 04 months as specified. Consents are normally granted with conditions for specified validity periods by the State Pollution Control Boards. These conditions are binding as per law and have to be complied with.

Any person aggrieved by an order (order of consent) of the Board passed under section 25 / 26 of the Water (Prevention and Control of Pollution) Act 1974 or Section 21 of the Air (Prevention and Control of  Pollution)  Act  1981  can  prefer  an  appeal within 30 days under Section 28 of the Water Act and Section 31 of the Air Act respectively. Appeals under Section 25/26 of the Water Act lie with the National Green Tribunal. In case of orders of the Board passed under section 21 of the Air Act, the appeal lies with the Appellate Authority created under section 31 of the Air Act and appeals against the orders of the Appellate Authority would lie with the National Green Tribunal. In order to be within the period of limitation it is advisable to remember this deadline of 30 days.

Section 27 of the Water Act also enables the State Boards to review on their own or in an implied way, on a request made to it, the consent orders and consent conditions and make necessary variations after giving proper opportunity to be heard. The Air Act does not enable the Board on this account. The Board can however as per section 26, review the conditions and make variations after giving proper opportunity of hearing.

Orders under section 33A of the Water Act and section 31 A of the Air Act and orders cancelling a consent or revising the consent conditions can only be passed by the State Boards after according proper opportunity of hearing as prescribed in law. Judiciary is very particular on this and therefore Industry is advised to avail this opportunity of Natural Justice. Industry is also advised to ensure that proper compliance of procedures for sampling and notice have been adhered to before the Board inspects a premises or collects samples. This will help the Industries to seek Judicial redressal in case of grievances.

Applications to Court and Punitive measures:

The Pollution Control Boards have powers to make application to courts for restraining apprehended pollution of water in streams or wells (Section 33 of the Water Act 1974) and the powers to issue directions (Section 33A of the Water Act 1974) which may include directions to close any industry   or process and the stoppage or regulation of the supply of electricity, water or any other service. Penalties and procedures have been prescribed and in so far as non-compliance to Section 24 / 25 / 26 / 33A of the Water Act and compliance to conditions of consent to establish or operate, are concerned, the Act provides for imprisonment for a term which may not be less than 18 months but which may extend to six years and with fine. Continued offence invites further penalties. (Section 42, 43 and 44 of Water Act).

With reference to non – compliance of provisions of the Air (Prevention and Control of Pollution) Act  1981,  the  Boards  have  powers  to  make application  to  courts  for  restraining  persons from  causing  air  pollution  (22A  of  Air  Act). Penalties  for  non  –  compliance  of  Consent provisions  and  conditions  (CTE;  CTO),  not ensuring  compliance  to  prescribed  standards and not complying with directions of the Board have also been prescribed in the Air Act of 1981 and   non   –   compliance   is   punishable   with imprisonment  for  a  term  extending  from  18 months to 6 years and with fine. (Section 37 of the Air Act). Repeated offence invites penalties that are more stringent. The Boards also have the   power   to   issue   directions   for   closure, prohibition   or   regulation   of   any   industry, operation   or   process   or   the   stoppage   or regulation of supply of electricity, water or any other service. (Section 31 A of the Air Act).

Public Interest Litigation

It was somewhere during the evolution of these tools that public interest litigation was also recognised as a cooperative effort in which the petitioner, the state or the public authority and the court endeavoured to secure legal rights, benefits and privileges conferred upon the weaker sections of society and to reach social justice to them. It was also emphasized that the state or public authority which is arrayed as a respondent in public interest litigation should in fact welcome it as it would give an opportunity to right a wrong or to redress an injustice done to the poor and weaker section of the community whose welfare is and must be the prime concern of the State or the Public authority. It was this period that witnessed the emergence of the courts as courts for the poor and struggling masses of the country and of public interest litigation as a tool to solve problems of the poor and the vulnerable sections of society.(S.P.Gupta and others vs. President of India and others, AIR 1982, S.C.149; Peoples Union for Democratic Rights and others vs Union of India and others, AIR 1982, S.C. 1973)

Of special importance to enviro-legal action is writ Petition no. 8209 and 8821/83, which was the first public interest Litigation in the country, involving issues related to environmental and ecological balance. It brought into sharp focus the conflict between development and conservation and emphasised the need for reconciling the two in the large interests of the country. Against an imbalance to ecology and hazard to healthy environment due to working of lime stone quarries in the Mussoorie ranges, the Supreme court ordered the closure of lime stone quarries.

The ball had been set rolling for a dynamic movement in the country. Coupled with increasing environmental awareness and an imperative need to conserve environment, individuals and groups started looking to the courts for a judicial redressal to social problems. The Supreme court stated that it would respond even to a letter addressed by any individual in matters of public interest. A number of issues were thrown up. It was recognised that non compliance of pollution control laws was a serious offence. Non conformity to standards stipulated by the Pollution Control Board elicited decisions involving immediate closure. Episodal pollution and hazards thereof brought to the fore the importance of industrial siting and absolute liability. Industries were asked to shift from non conforming land use areas. Forest rights were restored, workers rights protected, health compensations awarded. A number of important directions were given by the courts from time to time which have served as indicators of judicial thought and the seriousness with which they view environmental inaction.

  1. Where an enterprise is engaged in a hazardous or inherently dangerous activity and harm results to any one on account of an accident in the operation of such hazardous or inherently dangerous activity resulting in the escape of toxic gas, the enterprise is strictly and absolutely liable to compensate all those who are affected in the accident and such liability is not subject to any of the exceptions which operate vis a vis the tortious principle of strict liability. In such a case, the measure of compensation must be correlated to the magnitude and capacity of the enterprise because such compensation must have a deterrent effect. The larger and more prosperous the enterprise, the greater must be the amount of compensation.
  2. Where in a public interest litigation owners of some of the tanneries did not care in spite of notice to them even to enter appearance in the Supreme Court to express their willingness to take appropriate steps to establish the pretreatment plants, it was held that so far as they were concerned an order directing them to stop working their tanneries should be passed. It was further observed that the financial capacity of the tanneries should be considered as irrelevant while requiring them to install PETPs.
  3. Where a person though not a riparian owner is a person interested in protecting the lives of the people who make use of the water flowing in the river Ganga his right to maintain the petition connot be disputed. Stay by High courts should not normally be granted and if granted the matter should be disposed off within a short period, say about two months.
  4. Where remedial measures are required, the Supreme Court directed the Central Government to assess the amount which the respondents are liable to pay to improve and restore the environment in the area, damaged by their action. In case of failure of the respondents to pay the amount, the same could be recovered by the Central Government in accordance with Law.
  5. The Supreme Court ordered the closure of 168 hazardous industries in Delhi and also ordered them to shift out side the capital. The court has given protection to the workers by directing that they shall be treated as continuing in their employment, with a shifting allowance. Those who want to quit their jobs or cannot shift could claim retrenchment benefits plus the shifting allowance. Similarly on 19 Dec 1996, the Supreme Court directed 550 tanneries to a new site by April 1997. They were asked to deposit 25% of the price of the new land. All units which deposit the money were directed to be permitted to operate till they are relocated. Directions were also issued that workmen will not be retrenched but allowed to continue at the same site. They should be considered as actively employed between the closure and relocation. The tanneries opting for closure will have to pay 6 years (Six) wages to the retrenched workers. ( Jan. 1997) Similarily the Supreme Court to save the Taj Mahal from pollution being caused by polluting industries at Agra ordered for the shifting/ relocation of industries and directed some to adopt gas based technologies.
  6. The Supreme court has ordered that compensation be paid to the heirs of the deceased workers, suspected to have succumbed to silicosis; ailing workers and even to those who have succumbed to the desease because of living in the neighbour hood of quartzite crushing units in Jhargram, West Bengal
  7. The Supreme court has ordered the polluting tanneries in Tamil Nadu to compensate the affected persons and to pay the cost of restoring the damaged ecology
  8. The Gujrat High Court has ordered the closure of dyeing and printing units, holding them responsible for polluting the drinking water. The dyeing units were also required to pay 1% of their 3 years turn over as penalty to the people affected by the polluted water

The National Green Tribunal

The National Green Tribunal, constituted through the National Green Tribunal Act of 2010, deals with the effective and expeditious disposal of cases relating to environmental protection and conservation of forests and other natural resources and also adjudicates on legal rights and compensation for damages. The Tribunal specifically addresses to questions arising out of the implementation of the Water (Prevention and Control of Pollution) Act 1974, the Water (Prevention and Control of Pollution) Cess Act 1977, the Air (Prevention and Control of Pollution) Act 1981, the E.P. Act of 1986, the Forest Conservation Act of 1980, the Public Liability Insurance Act of 1991 and the Biodiversity Act of 2002. This includes adjudication of disputes arising out of decisions taken by the appellate authorities constituted under the aforesaid acts and disputes arising out of orders passed by the Pollution Control Boards, Forest and Environment Departments, National and State Biodiversity Boards, Central and State Environmental Impact Assessment Authorities. The highlight of the Act has been the inclusion of provisions for the use of scientific knowledge in the settlement of disputes, which has affected the manner in which the cases need to be pleaded in court. The procedure for filing application prescribes that an application or appeal to the tribunal can be made by the applicant or appellant either in person or through an authorised agent or by a duly authorised legal practitioner. There is no doubt that the NGT will play a significant role in the development of environmental jurisprudence in India. Its recent judgements points to two important trends: (i) the liberal interpretation of locus standi, which allows almost any person to intiate proceedings against a clearance granted to a project; and (ii) a conclusion that serous procedural irregularities in the environmental clearance process. The NGT has also shown that with a technical member, it would also require additional technical studies if it deems such a requirement necessary.

Environmental Clearances under the E.P. Act 1986:

Recognizing the importance of Environmental Impact Assessments in locating development activities in an environmentally sustainable manner, the Ministry of Environment and Forest, Government of India prescribed a procedure for imposing restrictions and prohibitions on the expansion and modernization of activities being undertaken in any part in India unless environmental clearance has been accorded by the Moef, Government of India or in certain cases by the State Government. This was through the E.I.A. notification of 1994 and its various amendments. The Central Government, through the Environmental Impact Assessment Agency, was granting environmental clearance subject to certain conditions. In order to monitor effectively the implementation of the recommendations   and   conditions   subject   to which the environmental clearance has been given, the project authorities concerned were expected to submit half-yearly reports to the Impact Assessment Agency. Non-compliance of conditions is a violation of the Environmental Protection Act.  Compliance monitoring under the E.I.A. notification of 1994 as amended was and is also being performed by the Regional Officers of the Ministry of Environment and Forest, and the State Pollution Control Boards as part of the consent mechanism. The E.I.A. notification of 1994 as above was superseded and replaced by notification no S.O. 1533 dated 14-09-2006 issued by the Government of India. This notification provided for the establishment of the State Environmental Impact Assessment Authorities, the Central and State Expert Appraisal Committees and the procedures for granting environmental clearances. It is under this notification that clearances are issued by the MoEF after 2006.

Enforcement and Compliance of Conditions:

Clearances issued, both under the E.I.A. notification of 1994 and of 2006 stipulate that the conditions of clearance shall be enforced among others, under the provisions of the Water (Prevention and Control of Pollution) Act 1974, the Air (Prevention and Control of Pollution) Act 1981, the E.P. Act 1986 (and others as in the condition). Compliance reporting is also essential if a project wants to go in for expansion or diversification and a certificate from the Moef has been made mandatory before an application for expansion could be considered by the concerned Authority.  Project Proponents and occupiers are well advised to strictly enforce compliance, as the consent mechanism is a lifelong procedure and non – compliance severely punishable. Apart from the State Pollution Control Boards which can take action for non – compliance, the Central and the State Governments and the Central Pollution Control Board can also enforce regulations under provisions of the  E.P.  Act  of  1986.  All three organizations have the power to give directions for the closure, prohibition or regulation of any industry, operation or process or the stoppage or regulation of the supply of electricity   and   water   or   any   other   service. (Section 33 A of the Water Act 1974, Section 31A of the Air Act 1981 and Section 5, E.P. Act) Penalties for contravention of the provisions of the E.P. Act, rules, orders and directions are stringent and may invite imprisonment upto 05 years and a fine of Rs. 1 lakh or both. For continued non – compliance a fine of Rs. 5000 per day is prescribed and an imprisonment upto 7 years if the non – compliance continues even one year after the first conviction.(Section 15 of the E.P. Act 1986)

Validity Period, Time and Cost over runs:

An important issue for consideration here is the validity period of the clearance issued. Some clearances may specify the validity by including a deemed to be cancelled clause to certain conditions. This has to be taken special care of by the project proponents.

The E.I.A. notification of 1994 states that the Environmental clearance shall be granted for a sanctioned capacity and shall be valid for a period of 5 years for commencing the construction, operation or mining.[Para 2 of SO no.60 (E) dated 27-01-94].

The   2006   notification,   on   the   other   hand, provides that validity is the period from the date on   which a prior environmental clearance is granted   or   deemed   to   be   granted   by   the regulatory authority, to the date of start of production operations or completion of all construction   operations  in  the  case  of construction projects. (Para 9 of SO no. 1533 dated 14-09-2006)

It is important to understand this because while a clearance issued under the E.I.A. notification of 1994 would be indefinitely valid if construction has been started within the validity period, the clearance under the E.I.A. notification of 2006 would cease if production has not been started or construction has not been completed (for construction projects) in the validity period.

Therefore, for all clearances issued under the E.I.A.  notification  of  2006,  the  project proponents should ensure that production is started or construction is completed within the validity period. If due to any circumstances, the validity periods needs to be extended then (this facility only appears to be present for building and construction project) an application has to be made to the regulatory authority by the applicant within the validity period together with an updated Form 1 and Supplementary Form 1A. (Para 9 of SO 1533 dated 14-09-2006). If proper care is not taken then this may introduce tremendous cost and time over runs.

Post Environmental Monitoring procedures have also been prescribed in the notification of 2006 under which the project management has to submit half yearly compliance reports in respect of the stipulated prior environmental clearance conditions to the concerned regulatory authority on 1st June and 1st   December, each calendar year. Non – compliance would lead to an automatic cancellation or cessation of validity. If the proponents are aggrieved by any condition’ or decision they should file appeals as provided immediately. Every stipulated condition should be read and analyzed properly and then acted upon.

Serious and Not so serious non – compliances:

While  it  is  important  that  all  conditions  be complied with, in  view  of  the social responsibilities and the strict  provisions  of  law,  it  is absolutely important that project proponents take compliance of conditions very seriously in order to avoid closure or legal proceedings. Of considerable importance are the clauses which have  to  be  complied  with  in  a  time  bound manner, yet for the sake of focused action, some priorities could to be fixed. The MoEF, Government of India had constituted a committee on “Development of Criteria and formation of Guidelines  for  categorization  of  non– compliances into the category of serious and not so serious”. The committee under the Chairmanship of Dr. B. Sen Gupta has given its report in October 2011. The committee has suggested that  any  non  –  compliance, anticipating an immediate threat to public life and property, should be treated as serious default and the concerned authorities may issue closure directions under Section 5. The project proponents may examine this in the E.C. issued and prioritize accordingly. The committee has also classified non – compliances into not so serious violations where notices could be issued or where the Boards  and  project  proponents could be asked to take necessary action. The committee has further said that generally serious non – compliances are those where

a)   Equipments  for  pollution  control  have  not been installed.

b)   Standards for emissions and effluents are not met.

c)   Fly Ash Management rules are not complied.

d)   The  stipulated  area  for  plantation  /  green belt is not achieved.

e)   Process  and  Operation  related  conditions are not complied with.

f)  Stipulations for carrying out studies on ecology, wildlife and pollution management are not complied.

g)   Specific conditions stipulated have not been complied with.

h)   Any directions with regards to Circulars / Office Orders / Memorandum as specified in the conditions are not complied with.

The committee has also given an activity wise listing of all the ‘8’ categories of projects or activities requiring Environmental Clearance under the 2006 notification and the ‘serious’ and ‘not so serious’ compliance issues in each.

Institutionalizing   Corporate   Social   Responsibility:

The business sector has been extremely successful in generating wealth and value for its shareholders over the post independence years. It is commendable, but at the same time, triggered by an increasingly unmanageable population,   we have been faced with an India, besieged with problems of poverty, malnutrition, illiteracy and unemployment. The Government is undertaking ambitious development schemes but the magnitude of services required, necessitates that all stakeholders join hands in achieving the development objectives of dream India. The business sector therefore has been asked to assist by taking up socially responsible business practices. The new Company’s Act of 2013   has made provisions for Corporate Social Corporate Responsibility with a budgeted spend of 2% of the Average profits over the past 3 years and made CSR and the reporting of C.S.R. activities mandatory.( Section 135, Company Act 2013) The Environmental Impact assessment notification of 2006 enables the government to prescribe compulsory incorporation and implementation of C.S.R. initiatives. Noncompliance has been regarded as a punishable offence.

Social responsibility initiatives are of advantage to the corporate also as they  provide intangible benefits through enhancing brand loyalties, community satisfaction, stronger employee morale and greater investment confidence and have a great potential to enhance the competitiveness of business because of a better social acceptance for the enterprise. It should therefore be planned accordingly rather than a purely philanthropic exercise.

A good C.S.R. initiative will help in building a positive and long term relationship with communities by providing support where government support is inadequate. It will assist in overall prosperity of the region of operation and the creation of a healthy resource base for the corporate. Shareholder values will increase when customers exercise a preference in favour of businesses with a sound C.S.R. involvement.

As per the provisions of the E.I.A. notification, the project proponent is required to submit 06 monthly progress reports relating to the status of implementation to the concerned regulatory authority. The reports are also to be submitted to the regional officers of the MoEF under whose jurisdiction the project site falls.

In wanting the compliance reports to be put in the public domain along with the action taken by the Government, compliance monitoring is likely to emerge as one of the most sensitive issues and may create immense public pressures for compliance.

Do This Immediately:

One of the first tasks before project managers, looking at an environmental clearance or a Consent/ Authorisation order that they have just received, is to examine whether:

1)      There is any condition which includes a deemed to be cancelled (in case of non – compliance) clause. This needs priority attention.

2)      There are any conditions which are at variance to the basic proposals or current state of affairs within the Industry and which would require a proper representation, review or appeal. It should be understood that everything that is difficult to comply must be suitably represented and taken care of.

3)      There are any conditions which require time bound compliance or compliance before start of construction.

4)      There are any conditions which require carrying out further studies and submission of reports.

5)      There are other statutory clearances to take before start of construction.

These are some issues which would need priority attention and have to be immediately brought to the  notice  of  the  top  management which would also like to fix responsibilities and periodically review compliance. Third party evaluations of compliance and reporting to the Board of Directors of the Company are an important tool.

With regulators, judiciary, public and shareholders becoming increasingly conscious, a sound compliance monitoring mechanism with the industry will help it to build immense social acceptability. Better compliance will result in more efficient utilization of resources, lesser mandays lost, better employee satisfaction and increased profitability

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