This SOP has been framed in compliance with the order dated 24.05.2021 passed by the National Green Tribunal (“NGT”) in the case of Tanaji B. Gambhire v. Chief Secretary Government of Maharashtra and Ors. [Appeal No. 34 / 2020 (WZ)] wherein the NGT had directed the MoEF&CC to frame this SOP.

Relevant judicial decisions

The issue of operating a project or carrying out an activity without prior EC or in excess of the capacity permitted under the EC has been a matter of adjudication before several courts in India. Indian courts while dealing with such matters have enunciated the ‘principle of proportionality’ and ‘polluter pays principle’.

The Hon’ble Supreme Court of India (“Supreme Court”) through a judgement dated 02.08.2017 passed in the case of Common Cause v. Union of India & Ors. [W.P. (C) No. 114 / 2014] held that an EC will come into force only on the date on which it is granted and not earlier. The Court further held that the concept of an ex post facto or retrospective EC has not been allowed under the Indian environmental law.

While applying the ‘principle of proportionality’, the Supreme Court through its judgement dated 01.04.2020 passed in the case of Alembic Pharmaceuticals Ltd. v. Rohit Prajapati & Ors. [C.A. No. 1526 / 2016] held that this Court must take a balanced approach to hold accountable the industries which have operated without an EC in the past. However, this may not necessarily mean ordering a closure of their operations even after they have obtained an EC.

The High Court of Jharkhand through an order dated 28.11.2014 passed in the case of Hindustan Copper Limited v. Union of India & Ors. [W.P. (C) 2364 / 2014] held that the proposal of the petitioner company for environmental clearance must be examined on its merits and independent of any proposed action for the alleged violation of the environmental laws.

Definitions

This SOP defines “violation” and “non-compliance” to mean as,

1. “Violation” means cases where projects have either started the construction work or installation or excavation, whichever is earlier, on site or have expanded the production capacity and / or project area beyond the limit specified in the EC without obtaining prior EC or change of scope without prior approval of the MoEF&CC.
2. “Non-compliance” means non-compliance of terms and conditions prescribed by the Regulatory Authority in the prior EC accorded to the project.

Guiding principles of the SOP

This SOP has the following guiding principles:

1. Action has to be initiated under section 15 read with section 19 of the Act against all violations.
2. Projects which are not allowable / permissible for grant of EC as per extant regulations are to be demolished.
3. Projects which are allowable / permissible, but, where prior EC has not been taken as per extant regulations, projects are to closed until EC is granted and projects where prior EC has been granted are to revert back to permitted production level.
4. Violators are required to pay for the violation period and such payment will be proportionate to the scale of the project and extent of commercial transaction.
5. Setting up of a mechanism for reporting violation to the regulatory authorities.

Steps for dealing with the violation cases

Step 1: This step pertains to taking action on the project based on the status of EC of the said project. The action taken will be based on the below mentioned table.

Step 2: This step pertains to taking action under the Act. Under this step action against the violators shall be initiated under section 15 read with section 19 of the Act.

Step 3: This step pertains to appraisal of the project under the EIA Notification, 2006. Under this step, the permissibility of the instant project shall be examined from the perspective of whether such an activity or project was at all eligible for the grant of prior EC.

Project is not permissible: If the project is found to be not permissible, following actions will be undertaken:

1. Demolition or closure of the project shall be ordered after issuing show cause notice and providing an opportunity for being heard to the project proponent.
2. Respective regulatory authorities shall issue direction under section 5 of the Act for such closure and demolition of the project or activity.

Project is permissible: During the scoping stage, if as per extant regulations, the project activity is found to be otherwise permissible following actions will be taken:

1. Terms of reference (“ToR”) shall be issued with directions to complete the impact assessment studies and submission of the EIA report and environment management plan (“EMP”) in a time bound manner.
2. Such violation cases shall be subject to appropriate (a) damage assessment; (b) remedial plan; (c) community augmentation plan by the concerned Central or State Expert Appraisal Committee.
3. Directions by competent authority shall be issued to the project proponent under section 5 of the Act on a case to case basis mandating payment of such amount as may be determined based on polluter pays principle and undertaking activities relating to remedial plan and community augmentation plan.
4. Upon submission of the EIA and EMP report, the project shall be appraised by the concerned Expert Appraisal Committee as if it was a new proposal. After examination of the EIA / EMP report, if the project is considered permissible for operation as per extant regulations, the EC shall be issued which shall be effective from the date of issue.
5. During the appraisal after examination, if it is found that even though the project may be permissible but is not environmentally sustainable in its present form / configuration / features then the project shall be directed to be modified in such a manner that the project becomes environmentally sustainable.
6. If it is not considered appropriate to issue the EC, the project shall be directed to be demolished / closed. However, if the concerned proposal is a case of expansion, the project shall be directed to revert back to the extent of activity for which EC had been earlier granted or to the extent of activity for which EC was not required.
7. Concerned Expert Appraisal Committee may insist upon conducting public hearing for such categories of projects for which EIA Notification, 2006 mandates public hearing.
8. Bank guarantee equivalent to the amount of remediation plan and natural and community resource augmentation plan will be submitted by the project proponent with the concerned pollution control board. This bank guarantee shall be deposited prior to grant of EC and will be released after successful implementation of above mentioned plans.

Penalty provisions

1. New projects: For new projects where operation has not commenced, the penalty will be 1% of the total project cost incurred up to the date of filing of application along with EIA / EMP report. For new projects where operations have commenced without EC, the penalty will be 1% of the total project cost incurred up to the date of filing of application along with EIA / EMP report along with 0.25% of the total turnover during the period of violation.
2. Expansion projects: For expansion projects where operation / production with expanded capacity has not commenced, the penalty will be 1% of the total project cost (attributable to the expansion) incurred up to the date of filing of application along with EIA / EMP report. For new projects where operation / production with expanded capacity has commenced, the penalty will be 1% of the total project cost (attributable to the expansion) incurred up to the date of filing of application along with EIA / EMP report along with 0.25% of the total turnover (attributable to the expanded activity / capacity) during the period of violation.

Please note that the aforementioned percentage rates shall be halved if the project proponent suo motu reports its violations. Also, as per the SOP, where the project proponent fails to provide required information or requisite documents or complete the requisite study for the purpose of EIA / EMP or does not furnish such reports within the specified time for the purpose of appraisal, it shall be inferred that the project proponent is not serious enough and the project or activity shall be directed to be demolished / closed.

The abovementioned penalties shall be in addition to the liability for carrying out remedial measures which shall be worked out based on the damage assessment for quantifying the environmental damage caused due to unauthorised project activity.

Bringing violators under a regulatory regime

With the objective to identify violation cases, the Central Government through this SOP has passed following directions:

1. State Pollution Control Boards (“SPCBs”) and Union Territory Pollution Control Committees (“UT PCCs”) before grant or renewal of consents shall ensure that the project proponents applies for or possesses valid prior EC in terms of extant EIA Notification and shall not grant or renew consent to operate (“CTO”) unless EC (if applicable) has been obtained.
2. The Central Pollution Control Board (“CPCB”), SPCBs and UT PCCs shall identify cases of violation under their respective jurisdiction, report such cases to the MoEF&CC or State / Union Territory Level Environmental Impact Assessment Authority and also, if the concerned unit has been granted CTO then after giving an opportunity of being heard revoke the said CTO.
3. The CPCB, SPCBs and UT PCCs shall expeditiously examine the references relating to violations received from public and other bodies and take necessary steps such as reporting such cases to the MoEF&CC or State / Union Territory Level Environmental Impact Assessment Authority and also, if the concerned unit has been granted CTO then after giving an opportunity of being heard revoke the said CTO.

Conclusion

The MoEF&CC has been receiving requests for regularisation of different categories of violation cases and such cases have been pending for want of an approved procedural framework. Since the present SOP is guided by the observations and / or decisions of Indian courts on the ‘principle of proportionality’ and ‘polluter pays principle’, it provides some clarity and guidance to deal with the cases of violation. However, it would be interesting to note as to how effectively the SOP is implemented so that it helps protect the environment apart from according the industries an opportunity to ensure compliance.

This article was originally published in Mondaq on 15 July 2021 Co-written by: Nawneet Vibhaw, Partner; Ashutosh Senger, Associate. Click here for original article

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