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Interpretation of Polluter Pays Principle (PPP) In India

Written by: Mr. Himanshu Choudhary 4th year student of Gujarat National Law University, Gandhinagar
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"If anyone intentionally spoils the water of another ... let him not only pay damages, but purify the stream or cistern which contains the water..." [1] - Plato
Polluter Pays Principle has become a popular catchphrase in recent times. 'If you make a mess, it's your duty to clean it up'- this is the main basis of this slogan. It should be mentioned that in environmental law, the 'polluter pays principle' does not refer to "fault." Instead, it favors a curative approach which is concerned with repairing ecological damage. It's a principle in international environmental law where the polluting party pays for the damage done to the natural environment. It is regarded as a regional custom because of the strong support it has received in most Organization for Economic Co-operation and Development (OECD) and European Community (EC) countries. International environmental law itself mentions little about the principle.

In recent days, the polluter pays principle is seen as a way of internalizing pollution-related costs within the context of the economic rationality of the enterprise. There is a close relationship between a country's environmental policy and its overall socioeconomic policy .[2] Furthermore, under this principle it is not the responsibility of government to meet the costs involved in either prevention of environmental damage, or in carrying out remedial action, because the effect of this would be to shift the financial burden of the pollution incident to the taxpayer. But State practice does not support the view that all depollution costs should be borne by the polluter, particularly where transnational dispute is involved. [3]

Author is going to deal with the history of the principle and its implementation at domestic level, as also the major flaws prevailing in the implementation of this principle in India. The author concludes by presenting the major problem our country is facing in its implementation.

II. Historical Evolution of the PPP:

The first major reference to the PPP appeared 1972 in the OECD Guiding Principles Concerning International Economic Aspects of Environmental Policies (henceforth called OECD Guiding Principles). The PPP as a guiding principle across countries became necessary because some countries faced complaints by national firms about rising costs and a loss of international competitiveness following a national implementation of the PPP within their borders.The OECD Guiding Principles define the PPP as an instrument for "... allocating costs of pollution prevention and control measures".[4]

The polluter should bear these costs in order to achieve and maintain an "... acceptable state of environment" which is determined by the public authorities. The OECD Guiding Principles also state that the PPP should "... not be accompanied by subsidies that would create significant distortions in international trade and investment ." This weak or standard definition of the PPP neither requires polluters to bear the costs of accidental damages, nor do they have to pay for residual pollution. [5]

The range of costs to be borne by the polluter has expanded over time. In 1989, the OECD suggested extending the PPP in order to cover the costs of accident prevention and to internalise the environmental costs caused by accidents. In 2001, the OECD Joint Working Party on Agriculture and Environment stated that according to the PPP
"... the polluter should be held responsible for environmental damage caused and bear the expenses of carrying out pollution prevention measures or paying for damaging the state of the environment where the consumptive or productive activities causing the environmental damage are not covered by property rights." This version of the PPP is referred to as the extended or strong PPP in the literature. [6]

Only one year later, the European Community followed the example of the OECD Principles from 1972 by adopting the first Environment Action Programme (EAP). Since 1987, the PPP has been part of European Law. It is included in Article 174 of the EU Treaty (1997). Since 1990, when the International Convention on Oil Pollution Preparedness, Response and Co-operation was agreed upon by the International Maritime Organization (IMO), the PPP has been acknowledged as a " ...general principle of international environmental law." In 1992, the Rio Declaration (UNCED) included the PPP in Principle 16: "National authorities should endeavour to promote the internalisation of environmental costs and the use of economic instruments, taking into account the approach that the polluter should, in principle, bear the cost of pollution with due regard to public interest and without distorting international trade and investment." [7]

III. Flaws in the PPP:

It is true that polluter pays principle has a positive effect to reduce pollution. The principle seems quite relevant for pollution that occurs during industrial activity, although it remains inefficient in the case of historical pollution. Most developing countries, however, have not yet subscribed to the PPP as a main environmental policy guideline. As Rege (1994) points out, this is due to adverse economic conditions. Legal theorists discovered few loopholes of this rule.

The flaws are as follows:
Firstly, ambiguity still exists in determining 'who is a polluter'. In legal terminology, a 'polluter' is someone who directly or indirectly damages the environment or who creates conditions relating to such damage. Clearly, this definition is so broad as to be unsupportive in many situations. [8]

Second, a large number of poor households, informal sector firms, and subsistence farmers cannot bear any additional charges for energy or for waste disposal.

Third, small and medium-size firms from the formal sector, which mainly serve the home market, find it difficult to pass on higher costs to the domestic end-users of their products.

Fourth, exporters in developing countries usually cannot shift the burden of cost internalisation to foreign customers due to elastic demand.

Lastly, many environmental problems in developing countries are caused by an overexploitation of common pool resources. Access to these common pool resources (in line with the PPP) could be limited in some cases through assigning private property rights, however, this solution could lead to severe distributional conflicts.

All of these problems make it difficult to implement the PPP as a guideline for environmental policy in developing countries. Despite the fact that Polluter Pay Principle was publicized by early conservationists as a means to reduce ecological pollution, still many consider it as a 'vague idea'. [9] Some put forward their argument that under this principle a polluter fulfils his obligations when he pays at least some of administrative expenses of the agencies who regulate pollution activities .'Exxon Valdez' case is the best example of this criterion of Polluter Pays Principle. [10] Others argue that it can only be satisfied by polluters when they will pay the total depollution cost. And the rest support the view that tax (like 'Carbon Taxes') should be legitimised on the users of the natural resources that cause atmospheric hazards. [11]

IV. Indian Judiciary and PPP:

"we are interested not only in the development but also in the enforcement of law" [12] - Justice Christopher G. Weeramantry [Vice President of the ICJ]
The judiciary in India recognizes the Polluter Pays Principle as is seen from the judgment delivered by the Supreme Court of India in writ petition no 657 of 1995. [13] In its order dated Feb.4, 2005, The Supreme Court held that " The Polluter Pays Principle means that absolute liability of harm to the environment extends not only to compensate the victims of pollution, but also to the cost of restoring environmental degradation. Remediation of damaged environment is part of the process of sustainable development ."

In order to link law and sustainable development we split sustainable development into two components:-
Environmental Justice
Social Justice
The two principles of justice are
Polluter Pays Principle (PPP)
Precautionary Principle (PP)

During the two decades from Stockholm to Rio "Sustainable Development" has come to be accepted as a viable concept to eradicate poverty and improve the quality of human life while living within the carrying capacity of the supporting eco-systems. "Sustainable Development" as defined by the Brundtland Report means "development that meets the needs of the present without compromising the ability of the future generations to meet their won needs". We have no hesitation in holding that "Sustainable Development' as a balancing concept between ecology and development has been accepted as a part of the Customary International Law though its salient features have yet to be finalised by the International Law jurists.

Some of the salient principles of "Sustainable Development", as culled-out from Brundtland Report and other international documents, are Inter-Generational Equity, Use and Conservation of Natural Resources, Environmental Protection, the Precautionary Principle, Polluter Pays principle, Obligation to assist and cooperate, Eradication of Poverty and Financial Assistance to the developing countries. We are, however, of the view that "The Precautionary Principle" and "The Polluter Pays" principle are essential features of "Sustainable Development".

"The Polluter Pays" principle has been held to be a sound principle by this Court in Indian Council for Enviro - Legal Action v. Union of India, [14] . The Court observed, "We are of the opinion that any principle evolved in this behalf should be simple, practical and suited to the conditions obtaining in this country" . In this case the number of private companies operated as chemical companies were creating hazardous wastes in the soil, henceforth, polluting the village area situated nearby, and they were also running without licenses, so an environmental NGO, filed writ petition under article 32 of the COI, which sought from the court to compel SPCB and CPCB to recover costs of the remedial measures from the companies.

The Court ruled that "Once the activity carried on is hazardous or inherently dangerous, the person carrying on such activity is liable to make good the loss caused to any other person by his activity irrespective of the fact whether he took reasonable care while carrying on his activity. The rule is premised upon the very nature of the activity carried on".

Consequently the polluting industries are "absolutely liable to compensate for the harm caused by them to villagers in the affected area, to the soil and to the underground water and hence, they are bound to take all necessary measures to remove sludge and other pollutants lying in the affected areas".

The "Polluter Pays" principle as interpreted by the Court means that the absolute liability for harm to the environment extends not only to compensate the victims of pollution but also the cost of restoring the environmental degradation. Remediation of the damaged environment is part of the process of "Sustainable Development" and as such polluter is liable to pay the cost to the individual sufferers as well as the cost of reversing the damaged ecology.

The court further stated that:
"according to this principle, the responsibility for repairing the damage is that of the offending industry. Sections 3 and 5 empower the Central Government to give directions and take measures for giving effect to this principle. In all the circumstances of the case, we think it appropriate that the task of determining the amount required for carrying out the remedial measures, its recovery/realisation and the task of undertaking the remedial measures is placed upon the Central Government in the light of the provisions of the Environment [Protection] Act, 1986. It is of course, open to the Central Government to take the help and assistance of State Government, R.P.C.B. or such other agency or authority, as they think fit."

In M.C.Mehta V. UOI, [15] SC reffered the case of Enviro-Legal Action and Vellore Citizens case and ordered the Calcutta tanneries to relocate and pay compensation for the loss of ecology/environment of the affected areas and the suffering of the residents.

In Vellore Citizen's case [16] , court held that:

The precautionary principle and the polluter pays principle have been accepted as part of the law of the land. Article 21 of the Constitution of India guarantees protection of life and personal liberty. Article 47, 48A and 51A(g) of the Constitutional are as under:
# Article 47. Duty of the State to raise the level of nutrition and the standard of living and to improve public health. - The State shall regard the raising of the level of nutrition and the standard of living of its people and the improvement of public health as among its primary duties and in particular, the State shall endeavour to bring about prohibition of the consumption except from medicinal purposes of intoxicating drinks and of drugs which are injurious to health.

# Article 48A. Protection and improvement of environment and safeguarding of forests and wild life. - The State shall endeavour to protect and improve the environment and to safeguard the forests and wild life of the country.

# Article 51A(g). To protect and improve the natural environment including forests, lakes, rivers and wild life, and to have compassion for living creatures.
Apart from the constitutional mandate to protect and improve the environment there are plenty of post independence legislations on the subject but more relevant enactments for our purpose are : The Water (Prevention and Control of Pollution) Act, 1974 (the Water Act), The Air (Prevention and Control of Pollution) Act, 1981 (the Air Act) and the Environment Protection Act 1986 (the Environment Act). The Water Act provides for the Constitution of the Central Pollution Control Board by the Central Government and the Constitution of the State Pollution Control Boards by various State Governments in the country. The Boards function under the control of the Governments concerned. The Water Act prohibits the use of streams and wells for disposal of polluting matters. Also provides for restrictions on outlets and discharge of effluents without obtaining consent from the Board. Prosecution and penalties have been provided which include sentence of imprisonment. The Air Act provides that the Central Pollution Control Board and the State Pollution Control Boards constituted under the Water Act shall also perform the powers and functions under the Air Act. The main function of the Boards, under the Air Act, is to improve the quality of the air and to prevent, control and abate air pollution in the country. We shall deal with the Environment Act in the later part of this judgment.

In view of the above mentioned constitutional and statutory provisions we have no hesitation in holding that the precautionary principle and the polluter pays principle are part of the environmental law of the country.

Even otherwise once these principles are accepted as part of the Customary International Law there would be no difficulty in accepting them as part of the domestic law. It is almost accepted proposition of law that the rule of Customary International Law which are not contrary to the municipal law shall be deemed to have been incorporated in the domestic law and shall be followed by the Courts of Law. To support we may refer to Justice H.R. Khanna's opinion in Addl. Distt. Magistrate Jabalpur v. Shivakant Shukla [17], Jolly George Varghese's case [18] and Gramophone Company's case. [19]

In the Kamalnath's case [20], court by considering the PPP as the law of the land, ordered that:

"It is thus settled by this Court that one who pollutes the environment must pay to reverse the damage caused by his acts." Court disposed this matter by giving a show cause notice to the span motels, that, why Pollution-fine and damages be not imposed as directed by us.

This case subsequently came up in front of the court in the year 2000 [21] and court directed to the span motels that: "The powers of this Court under Article 32 are not restricted and it can award damages in a PIL or a Writ Petition as has been held in a series of decisions".

Henceforth, court directed a fresh notice to be issued to M/s. Span Motel to show cause why in addition to damages, exemplary damage be not awarded for having committed the acts set out and detailed in the main judgment. Finally in 2002 [22] , while granting exemplary damages court held that:
"Liability to pay damages on the principle of 'polluter pays' in addition to damages, exemplary damages for having committed the acts set out and detailed in the main judgment. Considering the object underlying the award of exemplary damages to be to serve a deterrent for others not to cause pollution in any manner. So the quantum at Rs. 10 lakhs is fixed for the span motels."

V. Conclusion:
Its good that India that imbibed the Polluter Pays Principle (PPP) in their Law of land. And, it also had actually helped in imposing damages on the polluter but still the problem with this principle is that it hasn't been implemented peoperly. If we look at the exemplary damages granted to span motels doesn't serve the purpose of the exemplary damages. Ten lakhs rupees is nothing for the big corporations like span motels. For them at least 10 crores Rs. exemplary damges should be given. And again if we look at the penalty imposed in the Vellore Citizens case, then it just shocks me that how 10,000 rupees can justify the pollution spreaded by the tanneries in the nearby areas. The Author personally feels that this is not an effective way of fund raising. We should reconsider the criteria's laid to decide the compensation amount. Atleast it should deter the polluters from spreading pollution. This principle needs a strict interpretation from our judiciary with immediate effect and we just can't afford any sort of delay in its proper implementation in developing country, like India.

Endnotes:-
[1] The Dialogues of Plato: The Laws, vol. 4, book 8, section 485(e), translated by Jowett B, Oxford : Clarendon Press (4th ed.), 1953.
[2] This is a part of the International Environmental Agreements Compendium, compiled 1995 by the Pollution Prevention and Pesticide Management Branch, Ministry of Environment, Lands and Parks, British Columbia, Canada .
[3] http://www.thedailystar.net/law/2007/january/04/depth.htm
[4] stats.oecd.org/glossary/detail
[5] webdomino1.oecd.org/horizontal/oecdacts.nsf/
[6]www.eoearth.org/article/Polluter_pays_principle
[7] www.springerlink.com/index/MN1GK731450477U5.pdf
[8] For example, Mr.Aryaan owns a BMW .If his BMW emits harmful gas in the atmosphere, he will be directly liable for the emission .Furthermore, the manufacturer of the vehicle will be indirectly liable for committing ecological damage too and so the retailer of the vehicle and the fuel supplier, and the government who created 'conditions relating to the damage' by building roads and neglecting public transport regulations.
[9] http://www.unece.org/ie/intersol/documents/s.8e.pdf (Who can pay for depollution ? an economic approach)
[10] In 1989, an oil tanker owned by Exxon spilled out over 300,000 barrels of crude oil into the sea and caused significant environmental hazard. Exxon was forced to pay $125 million in fines to the federal government and the state of Alaska and $900 million into a fund for environmental projects controlled by government, habitat protection, and scientific research, among other things
[ 11] Barrister Abu Hena Mostofa Kamal, "Polluter pays principle and its limitations"
[12] www.e-wasteproject.org/docs/del_usha.pdf
[13] AIR1996SC1446, Indian Council for Enviro-Legal Action v. UOI & Ors.
[14]J.T. (1996) 2 196
[15] WP 3727/1985 (19 December, 1996)
[16] AIR1996SC2715
[17] MANU/SC/0062/1976
[18] MANU/SC/0014/1980
[19] MANU/SC/0187/1984
[20] (1997)1SCC388
[21] 2000 AIR SCW 1854
[22] AIR2002SC1515

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