Lately, rapid industrialization and especially the manufacturing sector has contributed majorly to environmental pollution. With time it has been realized that these industries too are the social units having duties towards ensuring environmental conservation and maintaining public health conditions. The polluter pays principle works on the same line.
The polluter pays principle requires the polluter to meet the costs of the pollution control and prevention measures. It states that polluters should bear the expenses of preventing and controlling pollution to ensure that environment is in an acceptable and clean state. Put simply, it imposes liability on a person who pollutes the environment to compensate for the damage caused to the environment.
Evolution of the principle
The Principle was recommended in 1972 by the World Commission on Environment and Development as an economic measure to internalize environmental costs. Organization of Economic Cooperation and Development (OECD) was the first to introduce the said principle in 1972 itself.
In context to International Law, it found space in principle 21 and 22 of the Stockholm Declaration, 1973 and in Principle 15 and 16 of the United Nation Conference on Environment and Development, 1992.
Principle 15 provides says, “In order to protect the environment, the precautionary approach shall be widely applied by states according to their capabilities. Where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation”.
Principle 16 stated, “National authorities should endeavor to promote the internalization of environmental 42 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”.
It was after the Stockholm Declaration of 1972 that India formulated a wide range of laws for environment protection which includes the Water (Prevention and Control of Pollution) Act, 1974, the Air (Prevention and Control of Pollution) Act, 1981, the Environment (Protection) Act, 1986 and the Forest (Conservation) Act, 1980, but the polluter pays principle in India was made applicable by the courts through various judgments.
Judicial interventions in India
In environmental jurisprudence, the theory of absolute liability in the cases of environmental injury has found legal validation only because of the polluter pays principle. Theory of absolute liability says that a party/company in a hazardous industry cannot claim any exemption. It has to mandatorily pay compensation, whether or not the disaster was caused by its negligence.
One can find the principle of absolute liability enshrined under section 17 of the National Green Tribunal Act 2010. The provisions say that the tribunal can apply the provision of absolute liability even if the disaster caused is due to an accident.
For the first time, though inexplicitly, the Supreme Court applied this principle in Oleum gas leakage case (MC Mehta v. Union of India, 1987 AIR 1086). The Court held:
“……an enterprise engaged in a hazardous or inherently dangerous industry which poses a potential threat to the health and safety of persons working in the factory and to those residing in the surrounding areas. It owes an absolute and non-delegable duty to the community to ensure that no harm results to anyone on account of the hazardous or inherently dangerous nature of the activity which it has undertaken. The enterprise is absolutely liable to compensate for such harm and irrespective of all reasonable care taken on his account”.
Once again, the Supreme Court reiterated the principle of absolute liability based on the polluter pays principles in the matter of Indian Council for Enviro-Legal Action v. Union of India (1996). The apex court held:
“…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”.
Again in the Vellore tanneries pollution case (Vellore Citizens Welfare Forum v. Union of India 1996), the Supreme Court elaborated the concept of the polluter pays principle. The court observed:
“…polluter pays principle means the absolute liability for harm to the environment extends not only to compensate the victims of pollution but also to the cost of restoring the environmental degradation”. The court further said that “remediation of the damaged environment is part of the process of sustainable development”.
The principle was recently applied by the National Green Tribunal in the case of Bonani Kakkar v. Oil India Limited (also known as the Baghjan Gas Leak Case). On 27 May 2020, Baghjan gas well in Assam’s Tinsukia district started leaking. Thousands of people and nearby villages were evacuated. On 9 June, the well caught fire and it continues to blow out till now. The incident has created a deep impact on the nearby environment.
The green court constituted an expert committee to investigate into the matter and share the findings. The committee revealed that OIL had flouted the norms enshrined under the Environment Impact Assessment Notification 2006, the law which is responsible for granting environmental clearances to the development projects.
Based on the recommendations of the expert committee, NGT ordered OIL to pay interim compensation ranging from Rs. 2 lakhs to Rs. 25 lakhs to the ones who were affected by the incident based on the polluter pays principle.
Similarly, earlier this year in May, an unfortunate industrial disaster happened in the city of Vizag in Andhra Pradesh. A chemical plant operated by the South Korean company, LG Polymers, got leaked and killed 11 people. NGT constituted an expert committee to probe the incident. It was once again found that the units were being operated by LG Polymers in violation of several environmental clearance provisions.
It was also noted that gas leak was caused due to non-compliance by the company to Manufacture, Storage and Import of Hazardous Chemical Rules 1989, which requires a company to maintain both onsite and offsite plans to ensure prevention of damage in emergency situations.
Based on the suggestions of the expert committee, NGT imposed a penalty of Rs. 50 crores on the company. The court also observed that the company was under the strict and absolute liability for the environmental damage and consequential loss of life and public health.
The green court made it clear in its order that the companies are liable to restore the harm caused to the environment and reinstated the observation made in the Vellore Citizens Welfare Forum case. It reaffirmed that even in the absence of statutory recognition, the polluter pays principle is enshrined in the environmental law jurisprudence and very much applicable to a case like this.
(Author works with the research and communications team at SDC Foundation. He tweets at @stoic_gautamkr)