China - Guide To Contaminated Land.

Legal News & Analysis – Asia Pacific - China – Construction & Real Estate - Regulatory & Compliance

7 November, 2015

 

Legislative framework

 

1 Do you have any statutes specifically relating to land contamination?

 

The People’s Republic of China (PRC) has recently begun issuing ministerial rules addressing land contamination, which include the following:

 

  • In November 2012, the Ministry of Environmental Protection (MEP) issued the Notice Regarding Environmental Security Protection for Site Redevelopment of Industrial Enterprises.
  • In January 2013, the State Council released the Recent Arrangement for the Soil Environmental Protection and Comprehensive Treatment Work.
  • In February 2014, the MEP issued the Glossary of Contaminated Sites (the “Glossary”) and four related, mandatory, technical guidelines covering environmental site investigation (HJ 25.1), environmental site monitoring (HJ 25.2), risk assessment of contaminated sites (HJ 25.3) and site soil remediation (HJ 25.4).
  • In May 2014, the MEP issued the Notice Regarding Strengthening Pollution Prevention and Control of Industrial Enterprises in the Process of Closing, Relocation and Site Redevelopment.
  • In October 2014, the MEP issued the Notification Regarding Issuance of 2014’s First Directory of Technology Applications in Contaminated Sites Remediation.

 

Besides the above, various other laws and regulations of the PRC have provisions that govern or at least mention the general concept of soil contamination, including the Environmental Protection Law, PRC Solid Waste Pollution Prevention and Control Law, the Measures for the Prevention and Treatment of Environmental Pollution from Discarded Hazardous Chemicals, the PRC Agriculture Law and the PRC Criminal Law.

 

2 Is there a definition of contaminated land in your laws?

 

The Glossary provides that the term “contaminated site” refers to a site in which the pollution is ascertained to exceed the risk level acceptable to human health or ecology through investigation and risk assessment of the potential contaminated site. The term “potential contaminated site” refers to a site that has been polluted by: manufacturing, operation, disposal or storage of hazardous substances; piling up or disposing of potentially hazardous wastes; or by activities like mining, and thus poses a potential risk to human health or ecology. The “acceptable risk level” refers to the risk level that will not cause adverse effects to the exposed population, including the acceptable risk level of carcinogens and the acceptable hazard quotient of non-carcinogens.

 

Statutory responsibility for cleanup

 

3 Are there any cleanup or remediation laws with regard to contaminated land?

 

Yes. The PRC Environmental Protection Law, the PRC Solid Waste Pollution Prevention and Control Law, the Measures for the Prevention and Treatment of Environmental Pollution from Discarded 

 

Hazardous Chemicals, the Opinion Regarding Strengthening Soil Pollution Prevention and Control Work (“Opinion”), and the Notification Regarding Issuance of Guidelines for the Environmental Assessment and Remediation for Soil at Manufacturing Facilities (For Trial Implementation) address issues concerning cleanup and/or remediation of contaminated land. However, the relevant provisions in these laws and regulations are not very detailed, and generally state either that companies causing “environmental pollution or public hazards” must adopt prevention and control (including cleanup) measures or, when a company has caused “severe” environmental pollution, it is required that they eliminate and control the pollution within a certain time frame. It should be noted, however, that clear definitions are not stated for what constitutes “environmental pollution or public hazards” or “severe” environmental pollution.

 

4 If so:

 

4.1 Who is primarily responsible for the cleanup?

 

Under the “polluter pays” principle set out in Article 6 of the PRC Environmental Protection Law, the polluter will be held primarily responsible for the cleanup.

 

4.2 If it is the polluter, what happens if the polluter cannot be found? Is the liability passed on to the owner or the occupier?

 

In practice, where the polluter is not easy to identify, the occupant or holder of land use rights may be responsible for the cleanup. For example, local environmental protection regulations in Hebei Province stipulate that a lessor of land use rights should reach an agreement with the lessee on the liability for the prevention and cleanup of discharges causing contamination of the property. If such an agreement is not reached, the lessor shall be held liable for the prevention and remediation of the property. In addition, the PRC Solid Waste Pollution Prevention and Control Law provides that if an entity acquires land use rights and the polluter has been terminated prior to the law’s effectiveness, then the liability for existing untreated industrial solid waste lies with the transferee unless the parties have allocated this responsibility differently. The Opinion similarly provides that if an entity that causes pollution has been terminated, the transferee of the polluter’s land will be responsible for cleanup, but also provides that if the polluter cannot be identified due to historical reasons, the government authorities concerned will be responsible for cleanup and remediation. Given that site remediation principles are yet evolving and emerging in the PRC, forced cleanups are not common and are usually implemented only if a severe health risk exists.

 

4.3 If the polluters are both the owner and the occupier (e.g., the landlord and a tenant), how is the liability apportioned between them?

 

In such a situation, liability for property contamination could be contractually apportioned. If no contract exists, the holder of the land use rights ultimately will be liable, unless it can be shown that the contamination was done by the tenant. The parties are not allowed to allocate the responsibility for “prevention” of further environmental pollution, as this responsibility rests with the current holder of the use rights to the land.

 

4.4 Does the liability to clean up include historical contamination? If not, who pays for this cleanup?

 

The holder of the land use rights to the site would be responsible if the polluting party could not be found. Cleanup or remediation would pertain only to those sites that pose an immediate serious threat to human life or property. 

 

Cleanup standards

 

5 How is it decided whether cleanup is required? For example, are there regulations specifying limits to polluting substances that are permitted, or is some form of risk assessment carried out?

 

In practice, cleanup or remediation would only pertain to those sites that pose an immediate serious threat to human life or property. Risk assessment and remediation should comply with the mandatory technical guidelines that took effect on 1 July 2014, namely the HJ 25.1, HJ 25.2, HJ 25.3 and HJ 25.4.

 

6 What level of cleanup is required?

 

According to the Glossary, “site cleanup and remediation” means to remove, reduce or fix the site contamination, or to keep the risk within the acceptable risk level. The “acceptable risk level” refers to the risk level that will not cause adverse effects to the exposed population, including the acceptable risk level of carcinogens and the acceptable hazard quotient of non-carcinogens. HJ 25.3 specifies that the acceptable risk level of a single kind of carcinogen is 10-6 and the acceptable hazard quotient of a single kind of non-carcinogen is 1.

 

7 Are there different provisions relating to the cleanup of water?

 

Yes. Under Article 76 of the PRC Water Pollution Prevention and Control Law, the cleanup of water pollution is required within a specified time limit. Fines and other penalties are decided according to the toxicity of the pollutants discharged into the water body. If the discharger is not able to remediate the spill/discharge, then the relevant environmental bureau has the authority to appoint a qualified company to clean up the spill/discharge.

 

Also, under Article 31 of the PRC Water Law and Article 12 of the PRC Marine Environment Protection Law, persons causing water pollution in excess of approved discharge limits are responsible for cleanup measures.

Penalties, enforcement and third-party claims

 

8 Is it a criminal offense to contaminate land or to own contaminated land? If so, what are the penalties?

 

It is a criminal offense to contaminate land. Under Article 338 and Article 346 of the PRC Criminal Law and under Article 46 of the Amendment to the PRC Criminal Law (8), any entity who discharges, dumps or disposes of radioactive waste, wastes containing infectious disease pathogens, toxic substances or other dangerous wastes, in violation of state regulations and causing severe environmental pollution, shall be sentenced to fines, and the responsible persons of the said entity shall be sentenced to a fixed-term imprisonment of not more than three years or criminal detention, and/or a fine. If the consequences of such discharging, dumping or disposing are exceptionally serious, then such persons shall be sentenced to a fixed-term imprisonment of not less than three years but not more than seven years, and a fine. Owning the land use rights to contaminated land is not classified as a criminal offense under PRC law.

 

9 Is it a criminal offense not to comply with the requirement to clean up? If so, what are the penalties?

 

Generally, it is not. The PRC Criminal Law currently does not explicitly address situations where cleanup requirements are not met. However, it is conceivable that if land contamination is very serious (and has damaged property or living things), a cleanup requirement could be part of a criminal penalty levied in relation to that severe contamination. 

 

10 What authority enforces cleanup?

 

The main PRC government bureaus that might be involved in cleanup are the MEP and environmental protection bureaus at the local level. Generally, the local environmental protection bureaus take the lead role in overseeing cleanup. However, other government bureaus at the central and local levels could be involved, depending on the specific circumstances and issues implicated by the spill/discharge.

 

11 Are there any defenses?

 

Yes. Under Article 16 of the PRC Criminal Law, where pollution was not the result of intent or negligence, but is attributable to factors that could not have been prevented or foreseen, the polluter could be exempted from liability.

 

12 Can third parties / private parties enforce cleanup?

 

Generally, a third or private party cannot enforce cleanup. Under applicable PRC laws and regulations, only certain government bureaus are designated and authorized to have the power to enforce cleanup.


13 Can third parties claim damages?

 

Yes, under Article 124 of the PRC General Principles of the Civil Code, anyone who pollutes the environment in violation of state regulations regarding environmental protection and the prevention of pollution, and such pollution results in damage to others, shall assume civil liability according to law.

 

Further, under Article 65 of the PRC Law on Tortuous Liability, it is similarly specified that the polluter bears tortuous liability to the extent that the pollution of the environment causes damage and thus infringes upon the civil rights or interests of third parties.

Unlike some other jurisdictions, the causal connection between the contamination and injury does not have to be proved by the plaintiff; but rather, the defendant will be required to prove there is no causal connection. This is specifically provided for under Article 66 of the PRC Law on Tortuous Liability, which states that if pollution gives rise to a dispute, the polluter shall bear the burden of proof as to the existence of exonerating or mitigating circumstances provided for in laws and the absence of causation between the act and the damage.

 

In 2015, the amended Environmental Protection Law took effect, which allows for the filing of public interest lawsuits by qualified non-governmental organizations.

 

Acquisition of contaminated land

 

14 Is it a legal requirement in your jurisdiction to conduct investigations for potential contamination in connection with the sale of property?

 

Generally, it is not. However, the main exception would be a situation where the property was used by an entity that manufactured, stored or used hazardous chemicals, and then such property will no longer be used for such operations. Under those circumstances, the company is required to test the soil and groundwater, conduct environmental risk assessment, and report the findings to the local environmental authorities before leaving/transferring the property. If contamination is found, the company then must design a remediation plan that needs to be approved by environmental authorities and then implemented. Once remediation is completed, the site shall be tested by a qualified testing institution. 

 

15 Can a party responsible for cleanup under statutory law pass on its cleanup liability to the purchaser?

 

15.1 Under the general law?

 

Generally, if an entity acquires land use rights, then the liability for existing untreated industrial solid waste lies with the transferee unless the parties have allocated this responsibility differently. If an entity that causes pollution has been terminated, or cannot be identified due to historical reasons, the government authorities concerned will be responsible for cleanup and remediation.

 

15.2 Contractually?

 

No. Under Article 35 of the PRC Solid Waste Law, no party is exempted from cleanup liability through a contractual agreement.

 

16 Is there anything else about contaminated land that you would bring to the attention of a potential purchaser of that land?

 

Potential purchasers are advised to conduct, prior to their purchase, proper environmental due diligence and other surveys on the property to be purchased. Also, land users should be prepared for major changes in the PRC environmental laws in relation to property contamination. It is anticipated that such changes will cause liability obligations to move more in the direction of strict liability, coupled with joint and several liability. 

 

 

For further information, please contact:

 

Danian Zhang, Partner, Baker & McKenzie 

[email protected]