Penalties to Corporations and Executives Further Clarified in Law of China on Prevention and Control of Solid Waste Pollution.
Law of China on Prevention and Control of Solid Waste Pollution was amended on April 29th, 2020 and will take effect on September 1st, 2020 (“2020 Amendment”). 2020 Amendment has, as often happens in recent environmental legislations, raised the penalties to corporations and their executives and further clarified the acts of violations potentially leading to criminal liability.
Compared with 2016 amendment, 2020 Amendment applies more penalties to corporate executives. Most of them are economic, but the following violations, if found serious, likely have criminal implications.
1) Illegal dumping or disposal of solid waste;
2) Damage to environmentally sensitive areas;
3) Disposal of solid waste without license or engage un-licensed vendor to dispose solid waste;
4) Transferring solid waste without authority approval;
5) No environmental protection measures to control solid waste pollution.
No-fault responsibility of legal representative
2020 Amendment defines persons subject to penalties as “legal representative, primary responsible person, direct responsible person and other responsible person”. Judging from the face of it, even if playing no part in the violation, legal representative is nevertheless subject to penalties under 2020 Amendment. The legislation trend tends to hold legal representative liable for the overall management of the legal entity. The penalty is applied because of the non-performance by legal representative. Certainly, this type of no-fault responsibility will not implicate administrative detention or criminal liability, but the economic penalty can be up to CNY 1 million.
Direct responsible person mentioned above refers to person-in-charge who plays a key role in deciding, approving, organizing, planning, directing, authorizing, instructing or consenting the act of violation. Other responsible person refers to those who actively participate in the act of violation under the direction or instruction of direct responsible person or those who materially contribute to the act of violation. As a result, the responsible persons can be only executives, but also frontline workers.
Although 2020 Amendment does not mention the liability of the actual control person of a legal entity, according to juris interpretations, when the actual control person plays a role in the violation, that person takes the same liability as the above mentioned responsible persons. When having the knowledge of the act of violation, but failing to stop or prevent such act, the actual control person will also be held liable to the violation.
Illegal dumping or disposal of solid waste
Illegal dumping or disposal of solid waste is the most often penalized violation. Interpretations from China Supreme Court and Supreme Prosecutors Office On Issues Regarding Applying Laws to Environmental Criminal Cases lists out multiple acts which shall be considered as illegal dumping or disposal of solid waste. The standard for seriousness of the violation are 1) discharge quantity exceeding 3 ton; 2) containing certain amount of metals, 3) causing serious damage, etc.
In reality, some companies of good standing commit acts of violation, but often times their corporate executives are not aware of illegal dumping or disposal of solid waste. Because of negligence or insufficient compliance system, they fail to understand the nature of the solid waste and adapt an inappropriate measure to dispose the waste.
Impeding government inspection by deception or non-cooperation
2020 Amendment has added provisions regarding impeding government inspection by deception or non-cooperation, which often include:
1) change without approval the sample testing method or sampling point;
2) alter or falsify monitor data;
3) refuse to provide or provide false waste discharge filing information;
4) instruct or force someone to impede law enforcement;
5) retaliate whistleblower;
6) shut down operation to obstruct inspection.
The above impeding acts may lead to penalties to corporation and its executives, but 2020 Amendment only provides economic penalties in this aspect. However, in cases of illegal dumping or disposal, these impeding acts could be used as evidence for guilty intent and therefore aggravate the penalty. In addition, if found serious, impeding government inspection may also lead to administrative or criminal penalty for impeding law enforcement.
Monitoring and tracking
Except clarifying liabilities, 2020 Amendment also puts emphasis on monitoring the whole process of collection, transfer and disposal of solid waste. A database will be established to track each participants in the process. Actually, this makes it easier and more efficient for companies to stay compliant. Meanwhile, as the monitoring becomes increasing efficient, violators will find it more challenging to deny accountability.
