By Wan Li, Andrew H. Perellis, and Craig B. Simonsen

China map icon with a recycle iconIn the last twelve months the Ministry of Environmental Protection (MEP) in the People’s Republic of China (PRC) has been remarkably vocal about environmental law, monitoring, and fraud, especially under the new environmental law and supplemental measures.

For instance, the MEP announced on June 16, 2015, that it had organized local branches that were responsible for the monitoring of pollution sources to “intensify the supervision and inspection on the operation and management status of automatic monitoring facilities” and to bring to justice any identified “environmental offences including fraudulent monitoring data….” The announcement was made to trumpet the MEP’s efforts to enforce the new revised environment protection law, and its crack down on monitoring data fraud.

In the MEP announcement, Zou Shoumin, the Director General of Environmental Supervision and Inspection Bureau, provided details for numerous examples of fraud cases. To illustrate the severity of these cases, in one example, the company received a penalty of 1.45 million yuan (about $233,000) and had confiscated one million yuan (about $160,000) of its incompliance deposit. In the same incident, a manager who was in charge of the company’s environmental protection and the manager who was heading the company’s instrument department were both subjected to a “7-day administrative detention,” because of the company’s “willful modification of online monitoring data.”

In another announcement from the MEP, it was proclaimed that in a legal explanation issued by the PRC Supreme People’s Court, “polluters will be held accountable for any discharge, even if it is within national or local standards, that causes damage.” According to the announcement, as an incentive for companies to expedite costly modifications to reduce pollutants, a daily penalty system was introduced with no limit set on fines. More than that, polluting enterprises will be “named and shamed.” Reiterating the country’s seriousness as to environmental violations, the Chinese Premier, Li Keqiang, said in March, that “polluters will pay a price ‘too high to bear’ for their illegal acts.”

In another announcement to demonstrate the seriousness of these issues, it was noted that there was an “urgent requirement for taking strong measures to crack down on environmental violations.” Under the revised environmental law and supplemental measures the MEP will be adopting stronger measures to “substantially aggravate the punishment.” Continuous daily fines, seizure and distrainment of property, restricted production, suspension for rectification, and administrative detention or individual managers are among the tools that the MEP will now use to enforce the environmental laws.

Multinational businesses and industries that have interests and facilities in China may wish to examine the extent of any potential liability for their holdings, especially since the “polluters will be held accountable for any discharge, even if it is within national or local standards.”