Enforcement Actions on VOCs and Challenges for Enterprises

Environmental Protection Series No. 10

Special Enforcement Actions for VOCs Starting from July 1: Challenges and Countermeasures for Enterprises

In recent years, China has paid special attention to the prevention and control of air pollution. The air quality has improved to some extent, but ozone pollution is still relatively serious and has become an important factor affecting the air quality, particularly in the summer months. Volatile Organic Compounds (“VOCs”), as the main precursors of ozone pollutants, have long been the focus of law enforcement and governance by environmental protection authorities. In order to effectively control ozone pollution in summer, the Ministry of Ecology and Environment and local authorities plan to implement special enforcement actions for VOCs soon. This article will provide advice for enterprises to fully prepare for and respond to the special enforcement actions for VOCs from the perspective of compliance management.

Ⅰ

The Implementation of Special Enforcement Actions by Environmental Protection Authorities

On June 3, 2020, the Ministry of Ecology and Environment (“MEE”) issued the Opinions on Actively Serving and Implementing the “Six Priorities” and Resolutely Winning the Battle against Pollution under the Premise of the Normalization of Epidemic Prevention and Control, which clearly pointed out that the control of VOCs in the summer and autumn months (from May to September) should be strengthened in areas with severe ozone pollution. In addition, relevant authorities should focus on the control of VOCs and nitrogen oxides (NOx) in some industries and promote the comprehensive control of VOCs in key industries such as petrochemicals, chemicals, industrial printing, packaging and printing, oil storage and transportation, industrial parks and enterprise clusters.

On June 24, 2020, the MEE officially issued the 2020 Volatile Organic Compounds Tackling Governance Plan (the “Plan”), which proposed a number of measures for VOCs governance, requiring environmental protection authorities at all levels to pay close attention, and pointed out that enforcement actions shall be carried out in accordance with a mode of “Two Random Selections and One Informational Publicity”. Enterprises that fail to meet the emission standards and fail to meet the unorganized emission control requirements shall be punished in accordance with the laws and regulations. The authorities shall focus on investigating and punishing illegal activities which result in serious consequences or are repeatedly committed and then publicly expose these cases.

We have also noted that local environment protection authorities have issued documents to carry out special enforcement actions for VOCs, especially in summer and autumn.

Ⅱ

Potential Legal Liabilities for VOC-related Issues

The MEE listed 10 specific illegal acts that shall be investigated and punished in the Plan: (1) the storage, transfer, transportation and disposal of materials containing VOCs in the form of direct contact with ambient air, such as opening and leakage; (2) the use of open-type and open delivery production equipment in chemical and other industries; (3) the opening of inlet and outlet ports, access ports and observation ports of VOCs material reaction devices when not in operation; (4) the operation of open-type spraying and (air) drying production  devices (except for large workpieces); (5) obvious leakages such as seepage and dripping at sealing points between equipment and pipeline components; (6) leakages such as odour and air leakage that occur in the conveying pipelines of organic waste gas; (7) direct contact of high-concentration organic wastewater with ambient air during  collection, storage and treatment; (8) direct emission of organic waste gas during production and use without collection and treatment; (9) the unauthorized shutdown or abnormal operation of waste gas collection and treatment facilities and VOCs automatic monitoring facilities; (10) the discharge of pollutants without license by enterprises in the petrochemical, chemical, organic chemical raw material manufacturing, fertilizer manufacturing, coking, wood-based panels and furniture manufacturing industries that should obtain pollutant discharge permits.

In terms of legal liability, if an enterprise produces and sells raw materials and products that do not meet the quality standards or requirements for VOCs content, pursuant to Article 103 of the Atmospheric Pollution Prevention and Control Law, then authorities for the administration of market regulations have the power to confiscate the raw materials, products and illegal proceeds and impose a fine of not less than one but no more than three times the monetary value of the goods. If an enterprise violates the relevant regulations on VOCs control during the production process, pursuant to the circumstances specified in Article 108 of the Atmospheric Pollution Prevention and Control Law, the environmental protection authorities have the power to order the enterprise to make a correction, impose a fine of up to 20,000 yuan but not more than 200,000 yuan and order it to stop production for rectifications if it refuses to make a correction. In addition to administrative liability, if an enterprise violates the relevant laws and discharges VOCs and other harmful substances which cause serious environmental pollution, it may constitute a crime of environmental pollution and bear criminal liability.

Ⅲ

Coping Strategies and Compliance Management of Enterprises under Special Enforcement Actions for VOCs

In order to fully respond to the special enforcement actions for VOCs conducted by the environmental protection authorities, we believe that enterprises shall, in accordance with the Atmospheric Pollution Prevention and Control Law and local regulations on VOCs governance, strictly review their own VOCs governance status and strengthen their compliance management, with particular focus on the following aspects:

(1) Quality Standards: When producing, importing, using  and selling raw materials and products containing VOCs, enterprises shall ensure that the content of VOCs meets the quality standards or requirements. We have noted that the latest standards for hazardous substance limits and VOCs content limits have been formulated for products such as coatings, adhesives, inks and cleaning agents at the national level. Enterprises should also conduct self-inspection on whether the products involved in their business will meet the corresponding requirements after the implementation of such standards.

(2) Production Requirements: When enterprises engage in production activities that generate VOCs, they shall conduct such activities in an enclosed space and install and use pollution prevention facilities and equipment. If the space or the equipment is not enclosed, measures shall be taken to reduce the discharge of waste gases. According to our search of relevant cases, discharging VOCs directly without enclosed treatment is the most common situation under which enterprises are penalized and therefore such requirements need to be paid close attention to.

(3) Treatment Facilities: Enterprises shall regularly check the operation of VOCs treatment facilities, including whether waste gas collection and treatment facilities have any faults, whether the facilities are operating synchronously with the production process and equipment, whether the facilities have sufficient treatment capacity, whether there is leakage in the conveying pipelines, etc., and perform timely maintenance and repair work to avoid environmental protection authorities questioning the idleness or non-operation of VOCs treatment facilities during on-site inspections.

(4) Setting up Ledgers: Enterprises shall prepare environmental management ledgers according to laws, regulations and applicable standards. Key industries in areas such as petrochemicals, chemicals, industrial painting, packaging and printing, oil storage, transportation and marketing shall carry out plans of “One Factory, One Policy” and keep VOCs management ledgers. Industrial coating enterprises shall use coatings with low VOCs content and set up ledgers to record the amount of use, the amount of waste, the destination and content of VOCs of the raw and auxiliary materials. The ledgers shall be kept for not less than three years.

(5) Emission Standards: Enterprises shall pay attention to comply with national, industrial and local standards for the emission of air pollutants and VOCs. It should be noted that three mandatory national standards issued by MEE and State Administration for Market Regulation, Standard for Fugitive Emission of Volatile Organic Compounds (GB 37822-2019), Emission Standard of Air Pollutants for Pharmaceutical Industry (GB 37823-2019), Emission Standard of Air Pollutants for Paint, Ink and Adhesive Industry (GB 37824-2019), will officially apply to enterprises which existed before the implementation of the standards from July 1, 2020. Relevant enterprises shall strictly implement the above standards in the process of production and operation, and especially comply with the specific requirements of VOCs emission limits to avoid compliance risks.

Ⅳ

Conclusion and Suggestions

In the context of VOCs special enforcement actions conducted by environmental protection authorities, enterprises shall pay close attention to the regulatory focus of environment protection authorities, conduct “health checks” on VOCs treatment status, identify and deal with potential compliance risk points in a timely manner and improve their compliance management abilities. They shall also pay attention to and implement VOCs emissions standards to be implemented in the near future. In the event of an administrative case, the enterprise should quickly determine whether it needs professional environmental lawyers to assist and deal with the case and protect its legitimate rights and interests through legal means such as a defense and hearings. If you have any specific questions, please contact us by email: [e-mail].

JunHe EHS Team

JunHe, with over 800 professionals, is one of China’s largest comprehensive law firms with an international reputation for providing high quality legal services. As one of the pioneers in the legal area of environment, health and safety production ( EHS ””) in China, JunHe’s EHS team provides multinational enterprises with a full range of EHS legal services that covers, among other things, the project development and incorporation of joint ventures, M&A transactions, daily operations, EHS compliance, government investigations, administrative punishments, reconsiderations and litigations.

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ZHU, He

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NI, Tianling

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CHEN, Qingyuan

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