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An Analysis Of The Polluters Pay Principle In Indian Framework

'Polluters pay principle' is a much celebrated and accepted environmental principle accepted and celebrated widely. It states that those who pollute should be made to pay for the prevention of damage to human health and the environment. It places the responsibility on those who have the moral obligation and the capacity to pay.

Since the focus is shifting toward protecting the environment or the earth, countries are pledging to net-zero targets.

It becomes essential to check on the polluters, if they are damaging the environment or affecting human health, they should be made liable to pay damages. Corporations in India breached their duty of care and were made liable to pay on multiple accounts, most recently the LG Polymers in 2020.

Covid-19 halted the pace of the world economy. It severely affected the economy of many countries and significantly affected the business growth of many industries. As the lockdowns lifted, countries tried to put their economies back on track. Industries tried to restore the supply chain aggressively, putting pressure on the environment.

In such a scenario 'polluter pays principle' comes to the rescue and automatically becomes vital to have a good knowledge of this principle.

Plato has correctly summarized the principle in his one statement - '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]

This principle holds that:
"The polluter is responsible for the damage done to the environment and is liable to pay for every damage done to the environment."

He must compensate the pollution victims along with restoring the damage done by him to the environment. Only the person or organization is liable for the damage; There is no point in the government paying for the polluter.

Historical Background
This term was first introduced by the Organization for Economic Co-operation and Development Council (OECD) in 1972 as an economic principle for deciding costs of pollution control.[2]

Since then, it has been generalized and extended. Further, the Rio Declaration of 1992 was re-affirmed in Principle 16:
'National authorities should endeavor to promote the internalization 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 the public interest and without distorting international trade and investment.'[3]

Thus, it is clear from the principle that without directly mentioning the 'Polluter Pays Principle', the Rio Declaration has emphasized the internalization of environmental costs, i.e., an economic concept where the polluter is charged to pay for all the costs that his/her activity has created. Though such an idea is utopian because it is tough for the polluter not to bear the cost of damage affecting uncompensated victims, he/she pays only the compensation for the social cost of damage - the cost to society.

Jurisprudence Evolution
The principle is not explicitly given in any statute concerning the environment. However, it evolved in India through judicial precedents.

1987 was the year when the Supreme Court indirectly used the principle in the M.C. Mehta case [4]. In this case, the tort of 'absolute liability' was born. The bench held they had no hesitation in holding the 'precautionary principle' and the 'polluter pays principle' as part of the country's Environmental law. The court opined that the compensation should be correlated with the magnitude and capacity of the enterprise because it should act as a deterrence.

After almost a decade, in 1996, SC explicitly defined and applied the principle for the first time in Indian Council for Enviro-Legal Action case [5]. The court stated that the polluted environment's redemption is part of the process of sustainable development; thus, the polluter is liable to pay for the individual compensation and the restoration of the polluted ecology.[6] Post the judgment, the litigation for compensation stretched for over 15 years, but that is not the concern here.

In the same year, in the Vellore Citizens Welfare case, the court made it clear that the principle is not just part of the country's environmental law but also an integral part of Article 21 of the constitution. Besides, there is a constitutional mandate to protect the environment under Articles 48-A and 51-A(g) of Directive Principles of State Policy.

Also, the principle had already become customary in International law, so the bench stated that it automatically becomes part of domestic jurisprudence. Under Article 3(3) of the Environmental Protection Act [7], an authority was ordered to be constituted to look into environmental degradation-related cases and scientific assessment-based compensation.

1996 was a historic year for the principle as landmark judgments were delivered in this year only. Finally, the Taj Trapezium case [8] was a watershed moment in India's environment management history. The court, especially Justice Kuldeep Singh, gave a dimension by ordering 'compensatory benefits' to the employees of the polluter industries.

It was made clear that the workers are the victims of the polluting industries and should not suffer on account of the polluting activities of their employers. Hence, the declaration of compensation, gratuity, or shifting allowances gave a new direction to Environmental legislation in India.

Extant Position
Several statutes passed by the Parliament directly or indirectly deal with the 'Polluter Pays Principle. The Supreme Court widened Sections 3 and 5 of the Environment Protection Act, 1986 [9], in the 'Indian Council for Enviro-Legal Action v. Union of India' thus giving the Central government powers to issue directions and take necessary measures for protecting and promoting the environment. Including prohibiting activity, closing an industry, directing or carrying out remedial measures, and imposing the cost of remedial measures if required. [10]

Under Public Liability Insurance Act, it was mandatory for industries with a capital value over ₹2 lakhs to be insured. The premium is to be collected to the 'Environment Relief Fund,' which would be used to pay the victims in case of a mishap [11]. This Would Not Prevent The Victim From Filing For Separate Compensation.

National Environment Tribunal Act states that the tribunals can award compensation on any ground of environmental damage and the amount to be credited to the Environmental Relief Fund [12]. Further, Parliament, with an act in 2010, created National Green Tribunal with statutory powers to expeditiously dispose of environmental issues. Though there is a high number of vacancies (14 out of total strength of 20) in NGT itself is a different issue and is not suitable to discuss here.

Moreover, there are instances when NGT failed to protect the environment and human health, for example, the stubble burning issue in north India, especially in Delhi-NCR. NGT has not taken concrete steps to prevent this significant issue as many studies have found that high pollution exposure can severely affect human health.

In another case against clearance of land to Mopa Airport, it took nearly 3 years - though NGT Act stipulates to decide on an appeal within 6 months from the date of filing, to decide the appeal and it dismissed them in just 1 paragraph.[13] Notwithstanding, NGT is trying to expeditiously try the cases at least at micro levels, as is the case of the mentioned case, on which this entire project is done.

Juxtaposing American position with us
The principle is not as clearly evolved in the USA as in India. It is applied in the form of taxes and has not been codified. The Exxon Valdez oil spill case [14] was the most famous case where this principle was applied. The Exxon Valdez was ordered to pay billions of dollars for compensation over a massive pollution incident.

For environmental laws, there is a resource-based approach adopted in US jurisprudence. Various statutes adopted, such as Clean Air Act, 1963 and Clean Water Act, 1972, provide guidelines to polluters about how they should Corporate Average Fuel Economy similar to Gas Guzzler tax and the Superfund law for cleaning up toxic and hazardous sites, are also applied to curb the polluting activities by industries and ordinary citizens.

In the USA, the principle has not received much attention as in India because there have already been laws and taxes dealing with pollution. No need was felt to define the 'polluter pays principle either by the court or Congress. On the other hand, in India, there was no clear law or act dealing with pollution. In 1986, after the Bhopal Gas Tragedy [15], Parliament drafted a law for protecting the environment, Environment Protection Act, 1986. Furthermore, it did not deal with the principle; it was the Supreme Court that acted and helped evolve the principle.

However, there is a strong need to make the NGT more potent so that it can take active steps in curbing environmentally degrading activities without any interference from any organ of the government. It was created to protect the environment so it could provide a safer environment to the citizenry. Now, it becomes pertinent on the part of the NGT to work proactively on those areas where it is failing to work, such as stubble burning in the Northern region of the country.

  1. The Dialogues of Plato: The Laws, vol. 4, section 485(e), translated by Jowbett, B Oxford: Claredon Press [4th edition, 1953]
  2. OECD, 'The Polluter-Pays Principle' (1992)
  3. Mann, Howard. "The Rio Declaration." Proceedings of the Annual Meeting (American Society of International Law) 86 (1992): 405-14.
  4. M.C. Mehta v. Union of India 1987 AIR 1086
  5. Indian Council for Enviro-Legal Action v. Union of India [1996] AIR 1446 SCC (3) 212
  6. Supra 13
  7. The Environment (Protection) Act, 1986.
  8. M.C. Mehta v. Union of India [1996] SCC (4) 750 JT 1966 (6) 129
  9. Supra 13 [33]
  10. Environment (Protection) Act, 1986 s 3
  11. Public Liability Insurance Act, 1991 s [4] [7]
  12. National Environment Tribunal Act, 1995 s 3 22(1)
  13. Bhardwaj, Prachi, Prachi Bhardwaj, and Devika Sharma. 2022. "Environmental Clearance For Development Of Airport At Mopa, Goa To Be Revisited | SCC Blog". SCC Blog. Accessed 12 August 2022
  14. Britannica, T. Editors of Encyclopedia. "Exxon Valdez oil spill." Encyclopedia Britannica, March 17, 2022.
  15. Supra 1

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