Compliance Considerations Regarding Emergency Emission Reduction

Environmental Protection Series No. 6: 

Compliance Considerations Related to Emergency Emission Reduction during Heavily Polluted Weather

Introduction: Emergency emission reduction for heavily polluted weather is one of the important measures to prevent and control atmospheric pollution. In practice, it is not uncommon for enterprises to be investigated and even imposed of administrative penalties due to problems in relation to emergency emission reduction for heavily polluted weather. 

Recently, the Ministry of Ecology and Environment of the People’s Republic of China has issued the 2019-2020 Year Autumn and Winter Comprehensive Treatment Action Plan in Beijing, Tianjin, Hebei Province and the Surrounding Areas, and thereafter, many regions throughout the country have successively issued pre-warnings of heavily polluted weather, initiated emergency measures, and conducted assault inspection on enterprises’ implementation of emergency emission reduction. In practice, due to the characteristics of emergency emission reduction of heavily polluted weather such as abruptness, time effectiveness and policy-orientation, enterprises are often caught unprepared when implementing emergency emission reduction measures or even when facing unexpected environmental investigation and administrative punishment. Under such background, we have summarized and sorted out the regulatory requirements and some compliance considerations in respect of emergency emission reduction for heavily polluted weather, in hope to help enterprises further enhance compliance awareness of emergency emission reduction for heavily polluted weather and strengthen management as well as prevent risks.

I. The Legal Basis for Emergency Emission Reduction for Heavily Polluted Weather

After the Law of the People's Republic of China on the Prevention and Control of Atmospheric Pollution made some principle regulations on the heavily polluted weather pre-warning and emergency emission reduction, the State Council and the Ministry of Ecology and Environment respectively promulgated the Three-year Action Plan to Win the Battle for the Protection of Blue Sky in 2018, the Guiding Opinions on Strengthening the Countermeasures to Heavily Polluted Weather and Consolidating Emergency Emission Reduction Measures and the Technical Guidelines on Formulating Emergency Emission Reduction Measures of Key Industries for Heavily Polluted Weather (the "Technical Guidelines") in 2019, specifying more detailed emission reduction proportions and emission reduction measures. The abovementioned documents divide heavily polluted weather into three pre-warning levels and stipulate corresponding requirements on emission reduction proportion: the emergency emission reduction proportion of major pollutants such as sulfur dioxide, nitrogen oxides, particulate matter and volatile organic compounds shall reach more than 10%, 20% and 30% of the emission amount of the whole society respectively during the pre-warning periods of yellow (Level III), orange (Level II) and red (Level I). In practice, different local governments may also increase the aforesaid proportions. 

II.Differentiated Management and Control Requirements on Key Industries Grading

The Technical Guidelines classifies 15 key industries (iron and steel, coking, alumina, electrolytic aluminum, carbon, copper smelting, ceramics, glass, lime kilns, foundry, oil refining and petrochemical, pharmaceutical, pesticide, paint, printing ink, etc.) into three performance grades, i.e. Grade A, B, and C according to the relevant indicators (such as process equipment level, fuel type, pollution control technology, emission control and limits, monitoring and control level, cleanliness of transport methods, etc.). Different grades of enterprises in each industry are subject to different emission reduction measures and control, and enterprises of Grade A and Grade B will be published on the website of the relevant competent authorities of provincial levels. Such performance grading evaluation is related to the differentiated requirements imposed on enterprises in respect of specific emission reduction measures, frequency of inspections and so on; in general, the emission reduction measures for Grade C enterprises are the most stringent, while those Grade A enterprises are not treated as the focus and the frequency of inspection is reduced. Taking foundry industry as an example, Grade A enterprises may take emission reduction measures at their sole discretion in combination with the actual situation; Grade B enterprises shall stop all air-pollution-related production process and are prohibited from using any heavy cargo vehicle (including gas) of national standard IV or below for materials transportation during the pre-warning period of orange or above; Grade C enterprises shall stop all air-pollution-related production process and are prohibited from using any heavy cargo vehicle (including gas) of national standard IV or below for materials transportation during the pre-warning period of yellow or above. In addition, enterprises of non-key industries shall also carry out differentiated emergency emission reduction, but their control measures for emission reduction shall rely more on the requirements of local regulatory authorities.

III.Legal Consequences of Enterprises’ Failure to Implement Emergency Emission Reduction Measures

The policies and guidelines mentioned above mainly focus on raising requirements for government to organize emergency emission reduction, but not directly stipulate emission reduction measures for enterprises to follow. In practice, many enterprises lack relevant compliance awareness and experience or have cognitive bias and insufficient experience, which results in failure to timely or accurately implement emergency emission reduction measures. In recent years, the government authorities continue to strengthen the supervision and enforcement on emergency emission reduction. With regard to the enterprises that "fail to implement emergency emission reduction measures", the government authorities may take various regulatory measures such as issuing a notice of criticism, decreasing the performance grading of such enterprises, making record in such enterprises’ credit files and disclosing such information, and imposing administrative penalties, or even leading to criminal liability. In terms of administrative punishment, according to Article 96 and Article 121 of the Law of the People's Republic of China on the Prevention and Control of Atmospheric Pollution, enterprises that refuse to implement emergency measures for heavily polluted weather such as stopping soil and stone work on the construction site or building demolition construction, may face fines amounting to more than RMB 10,000 and less than RMB 100,000.

IV.How Enterprises Prevent Compliance Risks of Emergency Emission Reduction

Firstly, enterprises should thoroughly study and earnestly comprehend the laws, regulations and regulatory requirements on emergency emission reduction for heavily polluted weather, avoid any non-compliance occurring in actual implementation caused by wrong understanding, and should pay great attention to performance grading evaluation, strive for higher management and control grading evaluation by promoting the clean production level, prudently formulate the implementation plan of emergency emission reduction of "one factory one policy" and fill and file the list of emission reduction measures, and publicize specific emergency emission reduction implementation plans in the factory. Meanwhile enterprises should strictly implement the implementation plan and filed list of emission reduction measures, so as to prepare for emergency emission reduction inspections or investigation by government authorities from time to time. During the governmental inspection or investigation, enterprises should actively clarify relevant facts to avoid potential misunderstanding; and enterprises should, at the first time after knowing the government inspection or investigation, consider whether to hire professional environmental lawyers and discuss countermeasures, taking into consideration of the enterprises’ own experience and the difficulty of the subject matter involved.

V.Conclusion and Suggestions

Under the current background of the state’s strengthening the prevention and control of heavily polluted weather and enforcement of environmental protection law, in general, enterprises should strengthen their awareness of the laws, regulations and regulatory requirements on emergency emission reduction. When facing governmental inspection or investigation, enterprises may protect their own legitimate rights and interests through due process and effective defense under the legal regime. Even in a case where there existing illegal act, enterprises can still strive for an exemption of penalty under legitimate circumstances or apply for the lowest fine within the range stated. The participation of environmental lawyers can help enterprises during different phrases such as explanation, hearings, administrative review, administrative litigation, etc. In this regard, we will continue to update you. If you have any specific questions, please e-mail: [e-mail].

About JunHe's environmental practice team: JunHe is a premier full service PRC law firm with almost 800 lawyers. It has a pioneer environmental law practice and one of the largest environmental practice teams in China assisting multinational clients in all aspects of EHS matters during project development and joint venture formation, in M&A transactions and daily operation of manufacturing facilities in China as well as compliance, governmental investigation, administrative review and litigation relating to EHS fines and penalties.

ZHU, He

[e-mail]

Practice Area

Corporate and M&A

Infrastructure and Project Finance

Environmental Compliance

NI, Tianling

Partner

[e-mail]

Practice Area

Corporate and M&A

Private Equity/Venture Capital

Environmental Compliance

WANG, Yu Associate

[e-mail]

Environmental Protection

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