Against crisis, China attempts to tighten enforcement of pollution laws

Following last month's acid spill in Jiangsu, China's government has acted to tighten enforcement of the country's environmental laws. Charles McElwee's China Environmental Law Blog reports that the Ministry of Environmental Protection (MEP) has issued a new Notice containing several innovative policies, including a focus on corrective action, designed to strengthen enforcement of China's environmental laws (see also previous post on problems in the country's environmental enforcement).

This move comes as part of a broader effort by Beijing to improve environmental protection, especially as it concerns water pollution. In February, following the Jiangsu disaster, a senior MEP official acknowledged that despite several previous attempts to control pollution, "The general situation of environmental pollution does not allow us to be optimistic" (see Xinhua).

This month appears to have brought redoubled efforts to redress the situation. An MEP circular issued last week castigated local authorities for lax enforcement of water pollution laws, and to improve water quality monitoring (see Xinhua). Officials also announced today (March 30) that thirteen officials in Henan province were punished (one with a prison sentence) for failing to stop arsenic contamination on a stretch of the Dasha river, which news reports said was some 899 times healthy levels (see Xinhua).

Such efforts to strengthen the enforcement of environmental laws are necessary, but they illustrate an important failing in China's environmental policy: its obsession with the idea of a centralized "policy cudgel." What I mean by this is the insistence that the central government's policies would indeed improve China's environmental situation, if only local governments could be cowed into following orders (this appears to be a primary motivation behind recent MEP Regional Supervision Centers- more on this later). This approach is far too blunt an instrument, particularly when China's legal system doesn't bear anything like the enforcement capabilities wielded by, say, the US Environmental Protection Administration.

Instead of focusing on building a bigger and more potent cudgel, Beijing should focus on the longer-term tasks of enhancing citizen participation and NGO monitoring capabilities to aid in environmental enforcement, while also pursuing political and legal reforms that will make it easier to take polluters, and the corrupt officials that protect them, to court. Promotion of officials based on economic growth statistics should be ended. Moreover, less coercive, market-based approaches like Payment for Ecosystem Services should be pursued aggressively.

Robust environmental protection requires an expensive, resource- and bureaucracy-intensive edifice. But the public interests it protects- clean air, clean water, healthy people- are vital to a prosperous, sustainable society.

Approval of foreign investment in China to be linked to environmental index

In a notable step, China's Commerce Ministry announced late last week that approval of "foreign-funded enterprises" will now be based in part on an "environmental protection index" and a "land-use intensity index." According to Xinhua, the environmental index "will include capital input in the areas of environmental protection, annual sulfur dioxide emission and chemical oxygen demand." The land-use intensity index, meanwhile, "will include gross fixed-asset investment and the total area of land used, as well as a breakdown of how that land is used -- for example, for buildings, residential facilities or 'green' areas."

This new regulation, announced jointly by the Ministry of Commerce (MOC) and the Ministry for Environmental Protection (MEP), requires foreign-funded enterprises to submit assessments on these factors prepared by local environmental protection departments. Again according to Xinhua, the regulation is intended to "tighten scrutiny of energy-intensive and polluting facilities funded by foreign investments."

It's a little hard to read this particular regulation. Broadly, it seems like a promising step, but there are obvious difficulties with ensuring uniform enforcement of the regulation. The fact that local governments will prepare the environmental index assessments does nothing to address the rampant corruption that usually attends foreign investment approval at the local level. Nonetheless, given the level of foreign investment in China, the regulation could have a significant impact in terms of forcing foreign investors to pay more attention to China's environmental regulations. The capital input criterion is a clear reference to China's efforts to create a low-resource-intensity economy. The land-use intensity requirement may also help to reduce tensions in areas where industrial development is eating up valuable farmland. At a deeper level, this regulation, and the coordination between MOC and MEP, seems to bode well for MEP's stature relative to other, more established state ministries.

On two points, the regulation is a little disturbing. Most importantly, it says nothing about greenhouse gas emissions, though this isn't surprising given China's hesitancy to take any action that may disadvantage its own industry. Second, the regulation, in applying only to foreign-funded firms, carries a whiff of green protectionism. CGS would never, of course, argue that such firms are entitled to shirk Chinese environmental regulations, but one would hope that this regulation does not signal any less stringent enforcement of environmental regulations for state-owned enterprises or private domestic firms.

Charles McElwee on recent post "Environmental Enforcement in China"

Charles McElwee, one of the foremost authorities on Chinese environmental law and policy, and author of China Environmental Law, attempted to leave a comment on CGS's recent post, "Environmental Enforcement in China," but was prevented from doing so by a technical error. It makes an excellent point, and is reprinted below:

I would add one item to your list of "what's to be done?" recommendations--permit citizen suits in China (I can't remember whether this was one of the OECD [Organization for Economic Cooperation and Development] recommendations). Citizen suit provisions allow private citizens to enforce environmental laws (sue for penalties, for instance) where the primary enforcement authority has failed to do so. Thus, they fit in nicely with your theme of "citizen participation." As a practical matter, NGO's will probably need to fund and support most of these actions, but that seems doable.

Environmental Enforcement in China

So far, CGS hasn't commented on environmental enforcement in China, and as China celebrates the thirtieth anniversary of reform and opening, it is high time to do so.

It's common wisdom that while the Ministry of Environmental Protection (MEP) takes enforcement of environmental regulations quite seriously, local agencies often fail in implementing them. This common wisdom is well-founded, but also tends to obscure the potential for cooperation to enhance the effectiveness of environmental regulation. In this post, CGS strives to present a more balanced view of environmental enforcement in China.

The Good:

A report from the Chinese Academy for Environmental Planning noted that in 2004, "China's legal framework for environmental management include[d] 9 laws on environmental protection, 24 laws on natural resources management and environmental related provisions, 34 administrative rules and regulations and some 427 standards for environmental protection." The central government, according to the report, uses a variety of environmental quality metrics to assess local government performance on air and water quality, as well as waste management. Moreover, some legislation, such as the National Renewable Energy Promotion Law, is quite progressive. Article 6 of the Law states that "The Government lists the development of utilization of renewable energy as the preferential area for energy development." Washington,for one, has so far failed to express any such preference, either in spirit or in law.

One event last year further illustrates the innovative approaches that MEP sometimes adopts to environmental regulation and enforcement. According to an article on the government-run Xinhua news website, MEP in 2007 launched an initiative to persuade banks to bar lending to companies proven to have violated environmental regulations. This "green credit policy" was said to have resulted in the denial of loans to 12 violators, and the withdrawal of some 1 billion RMB in loans already granted to malfeasant debitors. For these unfortunates, environmental enforcement was no slap on the wrist.

The Bad:

Now, the other side of the story: the article went on to quote Pan Yue, now Vice-Minister of MEP, as saying that

"Many of the high-energy consuming and polluting industries are at the same time the most lucrative industries in some areas, and some local governments refuse to order to cut off loans. Moreover, a number of these companies are turning from banks to social groups for financing, which is not within the jurisdiction of our policy."

The green credit policy, then, nicely illustrates both what is promising and lacking about environmental regulation in China. The "governance gap" between the center and local environmental protection bureaus often leave regulations lightly enforced, or suboordinated to economic development priorities. The root causes of this governance gap, which concern corruption and the political power structure in China, are beyond the immediate remit of CGS. Suffice it to say, the center faces great difficulties in implementing and enforcing its environmental policy, no matter how well-conceived or intentioned. A 2006 OECD report perhaps puts it best:

China's environmental policy suffers from "a lack of coherence among environmental regulations, conflicting interests at different levels of the administration, and insufficient technical capacity and resources available to environmental institutions to carry out their duties. The general policy framework favouring development over the environment compromises the work of enforcement bodies at the subnational level and results in widespread non-compliance with environmental requirements."

A poignant example of this incoherence was provided in Charles McElwee's post on "A New Environmental Enforcement Unit?": the penalty under Chinese criminal law for "causing a serious environmental pollution accident which leads to the serious consequences of heavy losses of public or private property or personal injuries" is the same as for "desecration of national symbols." Not to disrespect China's national symbols, but to equate the (hypothetical...) actions of a drunken graffiti artist with one who discharges radioactive materials into the water supply?

The Future:

So, what's to be done? The OECD report proposes a number of excellent recommendations, including increasing the size of the relatively tiny MEP, but CGS would like to focus on the last of them:

Promoting public participation in environmental decision-making should continue to be one of the key objectives of the state and local environmental authorities. By enhancing environmental awareness, encouraging environmental associations and providing training, the public can become an active implementation agent. Studying mechanisms for public participation in OECD countries can help to adapt the best approaches to the Chinese context.

CGS has noted before the apparent willingness of the Chinese government to enhance public participation in environmental enforcement- a rare opportunity, it asserts, to strengthen civil society without provoking Beijing's distrust. Moreover, it's cheap and relatively easy to do so. An Asian Development Bank report entitled "Growth and Environmental Regulation: reports on international experiences and their importance for Chinese regulation" provides a number of promising suggestions for enhancing citizen participation in environmental enforcement.

First, replicating the US Toxic Release Inventory (TRI) would provide citizens with a means to reliably track hazardous materials discharge in their communities (p. 51). Second, creating the post of "environmental omsbudsman" would present a less politically-charged channel for citizens to bring environmental grievenences to the attention of local officials (p. 129). Third, financing the use of inexpensive environmental monitoring equipment by citizens' groups (called "bucket brigades" in America) can help to supplement the monitoring capabilities of local officials.

All of these initiatives attempt "secondary enforcement": ensuring that primary, national-level policy is implemented and enforced on the local level. It's important to be clear that secondary enforcement is no substitute for a coherent national environmental policy, or indeed for a robust rule of law system. The Growth and Environmental Regulation report notes, for example, that perhaps the most effective secondary enforcement mechanism possessed by the US Environmental Protection Administration (US EPA) is its ability to withold federal highway funding from any state which fails to comply with national environmental regulations (p. 126). Nonetheless, focusing on participatory secondary enforcement has the advantage of being less dependent on systemic reform, and hence less likely to antagonize Beijing.

In closing, it's worth noting that although these recommendations target citizen participation in China, they offer opportunities for international cooperation. Replicating the TRI would be best facilitated by technical cooperation between the US EPA and MEP, while the establishment of environmental ombsbudsmen and bucket brigades would be a worthy goal of NGOs like Natural Resources Defense Council and Greenpeace. The ultimate message, then, will be familiar to CGS regulars: China's environment is in peril, but there are plenty of opportunities for foreigners to aid in its rescue.