“broad principles of environmental laws are given but the methodology for assessing/determining compensation is not provided in the Statute”
The National Green Tribunal in its judgment has yet again widely analyzed the scope of the Polluter pays principle and the problems that arise with the quantification of the cost of environmental damage. Polluter Pays Principle (PPP) is mentioned in Principle 16 of the Rio Declaration on Environment and Development. It works on the simple rule that those who pollute the environment should be held responsible and accountable and should bear the cost to rectify the damage caused to the environment. The recent trend of the quantum of fines imposed by the National Green Tribunal (NGT) for the damage caused to the environment has seen a great rise. In the last year, the NGT imposed fines ranging from Rs. 2080 cr, 900cr, and 500cr on the governments of Punjab, Delhi, and Karnataka respectively.
The pertinent question arises is what would be the method or formulae that must be used to quantify the cost of degradation of the environment. For instance, if any industry discharges polluted water in a river, then how the concerned authorities will quantify in terms of monetary compensation for the damage caused per liter of water?
In this article, the author tries to delve into the question of how the concerned authorities or environment courts for that matter, quantify the damage caused to the environment in India and what all are the major factors that are taken into consideration while the quantification of the environmental damage for the better implementation of “Polluter Pay Principle.” The first limb of this article deals with how the courts and tribunals have been quantifying the environmental damages and show how there is a lack of uniformity. The second limb deals with the formulae that Central Pollution Control Board (CPCB) come up with and how the National Green Tribunal (NGT) critically analysed the methods and suggested changes in them.
CALCULATION OF COMPENSATION: THE TYPICAL TREND
The cost to the polluter may include not only the cost of reparations for destroyed property and environment but also the cost of reimbursement to individual sufferers of the pollution. The concepts of restitution and repayments both rely on the premise that there is a quantifiable amount for the damage caused to the environment. Under the PPP, there is some sort of assumption and expectation that the contribution made by the polluter will be proportionate to the damages caused to the environment. However, the practice that is followed by the National Green Tribunal (NGT) demonstrates a different situation, in which the amount that is being calculated is hardly relied on for various reasons.
In various instances, the NGT finds itself in a dilemma as to what would be compensation that has to be charged from the polluter. There is no straight jacket formula pertaining to the quantification of environmental damage. In Samir Mehta v. Union of India, there was an oil spill in the ocean that was caused due to the sinking of the respondent’s ship, NGT noted that there are various sorts of pollution caused due to the sinking of the ship. It affected the marine environment that includes aquatic life, seawater, mangroves, etc., NGT found it difficult to know what would be compensation that has to be levied on the respondent as the damage caused cannot be quantified in terms of money with precision. The environment court further noted that in circumstances like these, this must be done on the premise of some hypothesizing or guesswork. For instance, as in this case, the harm done to marine life, mangroves, seashores, and tourists cannot be precisely quantified in terms of monetary loss. By following the method of guess work the tribunal imposed a fine of Rs 100 crore on the company.
Further, the NGT justifies the method of guesswork due to the absence of any factual information that can be taken into account to quantify the damage caused to the environment. Whenever there is any damage caused to the environment, the Environment Court turns to the Pollution control boards to ascertain the damage that is caused to the environment and the impact of such non-compliance with the set standards. Moreover, it will not be fair and feasible to absolve a person merely for the reason that it is not possible to quantify the environmental damage in terms of money, hence the principle of guesswork is a more feasible choice. The principle of guesswork has also been recognised by the Supreme Court as well and it cannot be termed the primary invention of the National Green Tribunal.
There are some other methods as well that can be taken into consideration depending on the facts and the information available. The compensation can be measured in terms of money by considering the size of the company and its total worth. There are some cases where compensation was calculated by this method for rectifying the damage caused to the environment. The other method that can be taken into consideration while calculating the compensation is by taking into consideration the size and cost of the project itself that caused a certain type of pollution. In Tanaji Balasaheb Gambhire v. Union of India, the tribunal held that the amount to be paid was five percent of the total cost of the project. It shows an aberration from the precedents and how the criteria change based on the facts and circumstances of each case.
In Prem Prakash Prajapati vs Project Director, PIU Sonipat and Others, NGT directed the National Highway Authority of India (NHAI) to pay compensation of Rs 2 crore for the violations on the polluter pays principle even if violations are by its officers or contractors. In Mahakar Singh v. State of Uttar Pradesh and Others, the NGT directed the polluters to pay a hefty sum of Rs. 113.25cr as Environmental compensation and observed that various international methods like Clean-up cost or Total pollution cost may be some relevant factors to ascertain the damage cost but since we are a diverse country and hence there can be no single factor can be used as a straight jacket formula for the computation of Environmental Damages.
In the present case of Suo Motu Action in Illegal Mining vs Union of India, National Green Tribunal observed as follows:
“broad principles of environmental laws are given but the methodology for assessing/determining compensation is not provided in the Statute. Even Rules framed under NGT Act, 2010 are silent on this aspect. Issue of determination of environmental compensation is significant in the sense that it should be proportionate to or bears a reasonable nexus with the environmental damage and its remediation/restoration.”
Hence, there is a lack of uniformity about the reasons and grounds on which the courts and Tribunals determine the amount of compensation that needs to be paid by the polluter.
CPCB’S DEVELOPED FORMULA FOR QUANTIFICATION
In the landmark judgment of Paryavaran Suraksha Samiti & Anr v. Union of India & ors the National Green Tribunal (NGT) sought some information from the Central Pollution Control Board (CPCB) about the “various compliance and non-compliance of effluent treatment plants, sewage treatment plants, etc” across the nation. It also asked the authorities to incorporate or develop an environmental compensation regime for those who are not complying with the norms or the environmental rules and further for those who do not satisfy the prescribed discharge standards. In response to the compensation regime, the CPCB provided a formula to bring some uniformity in the calculation of the cost to restore the environmental damage.
Photo source: Central Pollution Control Board Site, https://cpcb.nic.in/uploads/report-15.07.2019.pdf.
The method considers the Pollution Index, number of days, size of activity (micro, small, medium, large), and closeness to major habitations. Apart from this method, some specific formulas were devised by the board to address a certain and more specific type of violation like the issue of extraction of groundwater illegally, discharge of untreated sewage water in the water body, etc. The committee set up by CPCB further provided that the funds that are collected through the imposition of the Environmental Compensation using this formula on the businesses or organizations that do not comply with the environmental standards or that violate any of the CPCB's instructions are to be put away in a distinct bank account. The total quantity that has been collected is going to be put toward environmental protection. The report submitted by the CPCB includes various other methods as well.
However, this method is a mere recommendation and not binding per se and doesn’t take various other elements into account for the computation of the cost of the environmental damage. The NGT has stated that “we find that these are only broad suggestions, ignoring several relevant aspects which have to be considered while determining environmental compensation in a given case, therefore, cannot be taken as a ready-made application to all situations for determining environmental compensation.”
The NGT observed that the minimum and maximum value of “R” and “S” is set without any reasonable cause or justification. Furthermore, the above method excludes the actual loss to the environment and the cost of remediation including damage to flora-fauna and human beings. The NGT observed as follows:
“PCB has failed to consider that the purpose of determination/computation/assessment of environmental compensation and levy thereof, involves various factors like (i) cost of damage to the environment, (ii) cost needed for restoration/remediation of damage caused to the environment, (iii) element of deterrent/provincial, (iv) liability arising for violation of statuary mandatory law relating to environment namely requirement of consent, EC and NOC, etc.”
THE WAY FORWARD
The abovementioned decision shows various aberrations of the concerned authorities from its precedents. The factors or criteria on which the compensation amount is calculated differ based on the circumstances of each case. As mentioned above, the NGT gave a detailed judgment specifying various methods based on which the method of quantification can be improved. The report submitted by CPCB included various methods and the NGT in its judgment has critically analysed these methods and observed that most of them are based on some assumed fractions based on some unjustified grounds. The CPCB is required to come up with more specific and unified guidelines dealing with the scale of compensation. Furthermore, a bare perusal of Principle 16 of the Rio Declaration states that the national authorities should promote the internalisation of environmental costs and use of economic instruments that polluters should bear the cost. The recent trends and the above mentioned methods show that instead of promoting the internalisation of environmental costs, the authorities are relying more on economic instruments by levying heavy fines on the polluters and hence defeating the whole idea of Principle 16.
The Polluter Pays Principle (PPP) is a pertinent concept to ascertain and impose liability on the polluter for causing damage to the environment. As it is difficult to quantify in terms of money the damage caused to the environment but merely because something cannot be quantified should not be the reason to absolve a polluter from its liability. Hence, the courts and tribunals in India have been relying on various methods and criteria to calculate the damage caused to the environment in terms of money.
However, attaining uniformity regarding the calculation of the compensation has not been done yet. The compensation is calculated based on the facts and circumstances of the case by taking into consideration various factors. The CPCB has also come up with a formula to measure the compensation that a polluter needs to pay but there are some lacunas in that formula as well, such that there might be certain information that might not be accessible or known to the authorities while calculating the compensation.
Hence, the guesswork principle that has been applied by the courts is feasible but it cannot be the sole basis for calculating the compensation. There is still a need for a method that can bring uniformity in the calculation of the compensation for the better implementation of the Polluter Pays Principle in India.
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