environment law

1. ENVIRONMENTAL LAW
Environmental Liabilities

2. What is Environmental Liability?
• Environmental liability refers to the potential environmental costs that a
buyer incurs when purchasing or leasing an asset.
• The liabilities arise when a buyer is conducting due diligence on the
property and will be required to take ownership of the asset and all
liabilities associated with the asset post-acquisition.
• Environmental assessment to determine the types of environmental
liability associated with the asset being purchased.

3. TYPES OF ENVIRONMENTAL LIABILITIES
The various environmental liabilities vary depending on their source. Usually,
environmental liabilities are associated with federal/Central, State, or local laws,
and are enforced by public agencies at each level of government.
The common environmental liabilities:
 Compliance obligations:
Compliance obligations are the regulations that guide the manufacture, use, and disposal
of chemicals and other harmful substances in the environment. When purchasing an asset
to be used in the manufacturing process of goods, a business must consider existing
compliance regulations and the possibility that new laws will be enacted. To ensure
compliance with current laws, a business will be required to incur certain costs that protect
it from future liabilities.

4. Remediation obligations:
Remediation obligations require businesses to manage the effects of pollution or industrial activities that pose a risk to
human health and the environment. Environmental liability is associated with compliance obligations since managing the
current obligations can help reduce the remediation obligations that the business will be required to meet in the future.
Fine or penalty:
The cost of the fine or penalty can be predetermined or assessed by a public agency when assessing the extent of the non-
compliance and the effect of non-compliance on humans and the environment. Typically, the amount of fines is set in a
way that equals the costs that the firm saved through non-compliance. It can vary from a few amounts to several million
dollars for every violation against the environment committed by the firm.
Compensation obligations:
Compensation obligations comprise compensation for damages that a firm caused to individuals or their property. This is
caused by the release of harmful substances to the environment. A firm can face compensation obligations even after
being in compliance with all the other environmental obligations. Compensation obligations may be classified as personal
injury, property damage, or economic loss.
Punitive damages:
Punitive damages serve the same purpose as compensation obligations, but they charge high costs than the latter. The goal
of punitive damages is to discourage the conduct of a firm that disregards other stakeholders in the environment and deter
other firms that operate in the same industry from engaging in similar conduct. Punitive damages are rarely assessed, and
they usually exceed the cost of the damage or loss caused to a person, community, or the environment.

5. Environmental Assessment
• When discussing with the seller of an asset or business, the buyer
must conduct due diligence to identify the various environmental
liabilities that the business will be required to meet in the future.
• On the other hand, the seller must be prepared to provide the actual
records of their past environmental obligations and any obligations
that may arise in the future.

6. Precautionary Principle
• In 1992 United Nations Conference on Environment and Development, also
known as the Earth Summit held in Rio de Janeiro
• Principle 15 of the Rio Declaration developed at the conference states: “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.”
• The precautionary principle was introduced in supersession of the
“assimilative principle.”
• The assimilative principle is based on the belief that scientific theories are
certain and adequate to predict the harm that may be caused to the
environment and also to take remedial action for ecological restoration
whenever pollution occurs.
• The assimilative principle suffered a setback with the revelation of
inadequacies in science, especially when seen in the context of the
environment.

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• It is the inadequacies of science that have led to the origin of the
precautionary principle.
• It is based on the theory that it is better to err on the side of caution
and prevent environmental harm that may indeed become
irreversible.
• The principle involves the anticipation of environmental harm and
taking measures to avoid it or to choose the least environmentally
harmful activity.
• This principle underlines the importance of taking precautionary
measures, despite scientific uncertainty, to preempt any anticipated
damage to the environment.
• Notably, this principle would apply where clear scientific data is
lacking. Thus, there is a presumption that where the studies clearly
establish the link between an activity and its detrimental impact on
the environment, such activity would be undoubtedly avoided.

8. Case laws
• In India, the precautionary principle has come to be accepted as an integral
part of our domestic law and policy as a result of judicial pronouncements.
• First, in Vellore Citizens’ Welfare Forum v. Union of India and Others,
(1996 (5) SCC 647) the Supreme Court not only applied the precautionary
principle but also introduced the idea that the burden of proof is placed on
the developer or the industry to prove that the proposed activity is
environmentally benign.
• Thereafter, in A.P. Pollution Control Board v. M.V. Nayudu, (AIR 1999 SC
812) this principle was emphatically upheld by the Supreme Court.
• Again in Narmada Bachao Andolan v. Union of India (AIR 2000 SC 3751),
the Court explained when there is a state of uncertainty due to the lack of data
or material about the extent of damage or pollution likely to be caused, then,
in order to maintain the ecology balance, the burden of proof that the said
balance will be maintained must necessarily be on the industry or the unit
which is likely to cause pollution.

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• This principle has been widely accepted in India.
• It has been providing guidance to the enforcement agencies in
deciding upon complex environmental matters where the threat to the
environment and health is evident but the scientific data to determine
its extent may be missing.
• In February 2010, adopting a precautionary principle-based approach,
the Ministry of Environment and Forests imposed a moratorium on the
release of Bt brinjal until there are independent scientific studies that
establish the safety of the product from the point of view of its long-
term impact on human health and environment.
• The Department of Telecommunications in India recently issued
stringent norms on the electromagnetic frequency radiation (EMR) of
mobile towers and handsets in the absence of definitive scientific data
on the impact of EMR on the environment and human health.

10. Polluter Pays
• The polluter-pays principle was initially promoted by the Organization for
Economic Cooperation and Development (OECD) during the 1970s.
• There were demands on government and other institutions to introduce policies
and mechanisms for the protection of the environment and the public from the
threats posed by pollution in modern industrialized society.
• Polluter pays is an elementary principle of environmental jurisprudence. It has
remained largely undisputed.
• The cost of environmental restoration and remediation must be borne by the one
who is responsible for causing the damage to the environment.
• For the application of the polluter-pays principle, it is immaterial whether the
environmental damage has been caused as a result of any fault on the part of the
polluter or not.
• This principle is based on the premise that potentially hazardous activity impacts
not only the individuals and property but also the environment at large.
• When the polluter is clearly responsible for compensating the victims for loss of
life or property, the cost of restoring the environment cannot be left to the
government.

11. Important case laws of the Supreme Court of India
M.C. Mehta v. Union of India, AIR 1987 SC 1086
• The Supreme Court observed that the polluter-pays principle demands that the financial
costs of preventing or remedying the damage caused by pollution should lie with the
undertakings that cause the pollution or produce the goods that cause the pollution. Under
this principle, it is not the role of the government to meet the costs involved in either
preventing such damage or in carrying out remedial action, because the effect of this
would be to shift the financial burden of the pollution incident to the taxpayer.
Indian Council for Enviro-Legal v. Union of India & Others, AIR 1996 SC 1446
• The Supreme Court endorsed the polluter-pays principle in this case which the polluting
industry involved in the use of harmful chemicals was required to compensate for the
removal of sludge lying in and around their manufacturing plant.
• The Court said, “the Polluter Pays Principle as interpreted by this Court means that the
absolute liability for harm to the environment extends not only to compensate the victims
of pollution but also the cost of restoring the environmental degradation. Remediation of
damaged environment is part of the process of sustainable development.”

12. Incorporation of the Polluter Pays Principle in
India
This principle is also embodied in
Section 9(3) of The Environment (Protection) Act of 1986.
• It provides that in case of the discharge of environmental pollutants in
excess of the prescribed standards or pollution, the cost of remedial
measures to be taken by the government toward environmental restoration
should be recovered from the polluter.
Section 20 of The National Green Tribunal Act, 2010
• Tribunal to apply certain principles. -The Tribunal shall, while passing any
order or decision or award, apply the principles of sustainable development,
the precautionary principle, and the polluter pays principle.

13. ABSOLUTE LIABILITY
• The Supreme Court of India conceived of the absolute liability principle in the case of
M.C. Mehta v. Union of India (987 SCR (1) 819) by enlarging the scope of strict
liability principle.
• In this case, the leak of oleum gas from a factory injured several Delhi citizens.
• Justice Bhagawati had extended the concept of strict liability to that of absolute liability.
• The principle of strict liability is based on the premise that if a person collects and keeps
on his lands anything likely to cause harm if it escapes, he must keep it at his peril, and if
he does not do so, he is prima facie answerable for all the damage that is the natural
consequence of its escape.
• However, this person can be excused by showing that the escape was not due to any act or
omission on his part or was the consequence of vis major, or an act of god.
• The underlying rationale for absolute liability is the same as for strict liability, but the
principle of absolute liability does not provide any exemptions from liability.

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• The court in the above landmark judgment observed that the strict liability principle was promulgated in the
19th century and stressed, “the law has to grow in order to satisfy the need of the fast-changing society and
keep abreast of the economic developments taking place in the country.”
• In this judgment, the court did not feel constrained by the limited liability principle, which was universally
accepted at that point of time, and felt the need to go beyond strict liability.
• In a remarkably assertive manner, the Court stated,
“We no longer need the crutches of a foreign legal order . . . . We in India, cannot hold back our hands and I
venture to evolve new principles of liability which English courts have not done.”
The Supreme Court held that 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. The rule is premised on the very nature
of the activity carried on.
The components of the absolute liability principle are:
• It applies to an enterprise that is engaged in inherently dangerous or hazardous activities.
• The duty of care is absolute.
• The exception to the strict liability developed in Ryland v. Fletcher is not applicable.
• The larger and greater the industry, the greater should be the compensation payable.

15. ABSOLUTE LIABILITY = (STRICT LIABILITY-
EXCEPTIONS)
• India is a developing country and with that, it is a developing economy
too and the doctrine of strict liability is a very old principle.
• The rule of absolute liability has evolved as a result of the old rule of
strict liability and it can’t be applied in Indian Law Perspective as it is
inappropriate for the reason because its evolution is because of high
industrial growth, agricultural use of land etc.
• The old rule evolved when there was low or limited scope for
industrial development compared to today’s scenario which is high in
industrial growth in the country.

16. Scope of Rule of Absolute Liability
• In most of the places, the rule of strict liability and absolute liability is seen as exceptions in the law and the
individual is held liable only when he/she is at fault.
• But, in absolute liability, the individual could be held guilty even if he is not at fault.
• After the catastrophic accident of Oleum Gas Leak case the act of Public Liability Insurance Act, 1991 was
introduced with the main purpose of providing immediate relief to people who are victims of the accident in
which handling of hazardous substances is involved.
• The reason behind this act was that the act will create a public liability insurance fund which will eventually
be used for the purpose of compensating the victims.
• Hazardous Substance under this Act is defined as any substance which by reason of its chemical or any
properties is liable to cause any damage to human beings, other living creature, plants, microorganism,
property or to the environment.
• The term “handling” is described in Section 2(c) of the Public Liability Insurance Act,1991 which is the clear
expression of the rule of absolute liability laid down in M.C Mehta vs Union of India.
• Section 2(c) in The Public Liability Insurance Act, 1991
• (c) “handling”, in relation to any hazardous substance, means the manufacture, processing, treatment,
package, storage, transportation by vehicle, use, collection, destruction, conversion, offering for sale,
transfer or the like of such hazardous substance.

17. Principle of Sustainable Development and
Intergenerational Equity
• The concept of sustainable development was first discussed at the international
level in the Stockholm Declaration of 1972, where the complex relationship
between environment and development was highlighted.
• This concept was given a definite shape and clarity in the World Commission on
Environment Report, as “Our Common Future”
• It defined sustainable development as “development which meets the needs of the
present without compromising the ability of future generations to meet their own
needs.”
• A more comprehensive blueprint for achieving sustainable development was laid
down in the Rio Declaration of 1992.
• The Rio Conference declared that human beings are at the center of concerns for
sustainable development.
• Human beings are entitled to a healthy and productive life in harmony with nature.
• The Rio Declaration further emphasized that in order to achieve sustainable
development, environmental protection shall constitute an integral part of the
development process and cannot be considered in isolation from it.

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• The concept of sustainable development is “human-centric” rather than “environment-centric” and
aims at meeting human needs in a sustainable manner.
• There is an underlying assumption that natural resources should be used in such a manner that the
needs of future generations are not compromised.
• The United Nations 2005 World Summit Outcome Document considers economic development,
social development, and environmental protection as the interdependent and mutually reinforcing
pillars of sustainable development.
• However, as pointed out by Justice B.N. Kripal: “different levels of societies have their own
concept of sustainable development and the object that is to be achieved by it. For instance, for
rich countries, sustainable development may mean steady reductions in wasteful levels of
consumption of energy and other natural resources through improvements in efficiency, and
through changes in lifestyle, while in poorer countries, sustainable development would mean the
commitment of resources toward continued improvement in living standards.”
• This principle holds special relevance for a developing economy like India. The government often
finds it challenging to balance ecological as well as developmental needs. Though the industry is
no longer viewed as being opposed to the environment, any unplanned and unscientific
development activity can cause irreversible damage to the ecology.

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• Therefore, there is a need to plan developmental activities in a manner that does not create
excessive pressure on natural resources, thereby avoiding compromising the needs of future
generations.
• This concept has come to be recognized as an integral part of life under Article 21 of the
Constitution of India and has been recognized by the Supreme Court of India in M.C. Mehta v.
Union of India (1987 AIR 1086).
• In State of Himachal Pradesh v. Ganesh Wood Products, (AIR 1996 SC 149), the Supreme Court
invalidated forest-based industries, recognizing the principle of intergenerational equity as being
central to the conservation of forest resources and sustainable development.
• In N.D Jayal v. Union of India, the Supreme Court declared that “the adherence to sustainable
development is a sine qua non for the maintenance of symbiotic balance between the right to
development and development.

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• Article 226 of the Constitution gives the right to citizens to approach the High
Court to enforce their fundamental rights and the High Courts are given the
power to issue various writs.
• Article 32 of the Indian Constitution could be invoked by the citizens for
enforcement of the Fundamental Rights.
• Article 21 of the Constitution guarantees one of the important Fundamental
Rights to the citizens and says that no person shall be deprived of his life and
personal liberty, except according to procedure established by law.
• This “right to life” contained in Article 21 has been given a very wide
interpretation by the Supreme Court of India to include a healthy environment as
a fundamental right.
India implemented the 42nd amendment to the Constitution in 1976.
• Article 48-A was inserted through which protection and promotion of the
environment, forests and wildlife became a part of the Directive Principles of State
Policy.
• Through Article 51A (g) protection of the environment was made a fundamental
duty of all citizens.

21. The Doctrine of Public Trust
• Public Trust Doctrine (PTD) is a doctrine that governs the management of natural resources and
the environment.
• It is an ancient doctrine having its root in Roman law.
• It acts as a public property doctrine by limiting the government’s actions over public property.
• According to this doctrine, the public is treated as the beneficiaries while the government is their
trustee.
• In India, private ownership of natural resources, such as forests and water bodies, is very
uncommon. The state is the trustee of all natural resources.
• The Public Trust Doctrine in India gives this responsibility of protecting the environment to the
State/government. The doctrine mandates the state to protect and improve the public property
(natural resources) and regulate the activities of private parties who own such public property.
• In M.C. Mehta v. Kamal Nath, ((1997) 1 SCC 388)
• The supreme court, in this case, introduced the Public Trust Doctrine and stated that certain natural
resources like water, air, sea, and forest are very important for living, which cannot be owned by
anyone in person. The honourable court held that certain natural resources are public property and
not private property and are to be managed in trust by the state for the benefit of the public at large.

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• In M.I. Builders Pvt. Ltd. v. Radhey Shyam Sahu ([1999], S.C.C. 464 )case, the
Supreme Court took precautionary action against M.I.Builders.
• In this case, the Lucknow City Corporation gave permission and made an
agreement with the M.I.Builders to construct an underground shopping mall in a
park situated in Lucknow.
• The Court set aside the agreement made between the parties and gave an order
directing Mahapalika to bring back the park to its original form within three
months.