Economic development
is sustainable as long as the true environmental costs of all inputs and
products are reflected in the market price. When markets and government
policies fail to factor in the true price of the ecosystem, the communitycan
induce the government/industry to take action and correct for adverse
effects in the system.Thus a community can potentially play a significant
role in the environmental management of an economy, besides the government
(regulator) and the industry. In environmentally conscious societies,
governments adopt stricter environmental policies when political support
is determined by the environmental sensitivity of its policies (based
on the voting communities' priorities). Communities can also induce industry
to change its behaviour and produce environmentally friendly products
in the market (through cooperative or coercive action) and thereby drive
the market to incorporate the true environmental costs of the system.
Thus community participation in environmental management has gained importance
across the globe in order to make economic growth more ecologically sensitive.
In theory, the optimal level of environmental quality can be achieved
through different regimes, and three such regimes are popularly considered
in the literature. First, following Coase, property-rights of environmental
resources can be defined and the economic agents can decide the desired
level of pollution (given the true costs and benefits from pollution)
through mutual negotiations. As long as the number of players is small
and transaction costs negligible, the optimal equilibrium will be achieved.1
Second, under a command and control (CAC) approach, the regulator can
enforce the environmental standards based on the optimal level of pollution
(where the social marginal cost equals social marginal benefit of pollution).
As long as these standards are enforced, the social optimum can be achieved.
Third, the regulator can adopt economic or market-based instruments
(MBIs) to abate pollution, and these cover instruments that harness
self-interest of economic agents for environmental goals. MBIs include
price-related instruments like pollution taxes and permits, as well
as indirect economic instruments like law of liability for damages,
and environmental information disclosure systems [Paulus 1995]. The
use of economic instruments triggers the industry into innovating with
cheaper ways to cut down on pollution and encourages firm action that
projects a more environmentally friendly image in the market (through
the information disclosure system).
In most countries across the globe, CAC measures including standards
on emissions and effluents from different polluting sources (whether
stationary point sources like firms or mobile point sources like vehicles)
define the pollution abatement regime. In developed countries, the CAC
regime is largely complemented by economic instruments: for example,
the US has by far the most extensive use of tradable pollution permits
in the world, and in Europe pollution taxes are more in vogue. Even
developing countries have utilised economic incentives to induce pollution
reduction in industry. Coasian type of bargaining to control industrial
pollution has been documented in Asian countries, including Japan and
Indonesia, between local inhabitants and plant management [O'Connor
1995, Pargal and Wheeler 1996, Hettige et al 1996]. According to a World
Bank study, in India, however, community pressures (in terms of proxy
measures of better-educated and higher income communities) do not seem
to induce lower pollution [Pargal et al 1997], but communities do seem
to have a significant effect on the level of inspections.2
This paper illustrates that community pressure in India has played
a significant role, quite distinct from those documented in other Asian
countries like Indonesia, through the environmental public interest
litigation system and judicial activism. The Indian citizen's constitutional
right to a clean, healthy life and the liability of pollution damage
on polluters have encouraged community action through environmental
public interest litigation (PIL), and subsequently judicial activism.
The rise of environmental PIL and judicial activism in the last 15 years
has encouraged development of new and stricter environmental legislation,
and also created incentive for the industrial polluters to increase
abatement (as a result of both new regulations and threat of community
action). The establishment of the law of liability of environmental
damages (polluter-pays principle) endorsed by these cases has led to
indirect market pressure on polluting agents in India especially during
the 1990s. This in turn has helped in the growth of an environment market
(including pollution abatement equipment as well as environmental consulting
services) in the country, which has begun attracting foreign investors.
Environmental Management Regime
In India, the pollution control regime is almost purely of the CAC
nature, supplemented by economic incentives, for example, subsidies
on catalytic converters/compressed natural gas for vehicles; benefits
for industrial pollution control equipment; and fines and/or imprisonment
for violation of environmental norms. The domestic environmental legislation
is well-developed and industrial pollution norms spell out effluent
standards by source. Yet, despite the existence of elaborate pollution
standards in India, the problem in controlling pollution arises from
the poor enforcing of standards. Attention has been focused on initial
compliance (installation of abatement equipment) rather than continuous
compliance of actual effluent concentration (and ensuring that the installed
equipment is actually operating). In effect, pollution would not reduce
after installation because pollution equipment is not running. It is
possible for a firm to be compliant by installing abatement equipment
but not operating it! Thus Pargal et al (1997) found that plant level
pollution is unaffected by formal inspections by state PCBs in India,
since firms probably activate the equipment only when inspections are
scheduled.
Also, since plant-specific standards are in terms of the concentration
of effluent and not volume, concentration compliance can be achieved
by diluting the pollutant discharge while pollution load increases!
Ambient and source standards are set independently, unrelated in terms
of the volume of pollution generation; thus it is possible for
environmental quality to deteriorate despite a high degree of compliance
among individual polluters. The fines and penalties for non-compliance
are low in India, and the penalty structure is insensitive to the degree
of default, since the same penalty is charged for violation of environmental
standards irrespective of the size of violation (whether small or large)
or the pattern of offence (occasional or repeated violations).
The problem in achieving the optimum arises from the difficulty of
enforcing these environmental standards.3 Monitoring by
the pollution control boards (PCBs) is poor and the lack of comprehensive
data/information on polluting activities of industries exacerbates the
problem (since, by law, the PCB has the entire burden of proof of any
offence by an industrial unit). The PCBs often tolerate non-complying
units due to the work overload at the boards, lack of staff, budget,
equipment and facilities. About 65 per cent of the members in 17 state
PCBs were found to be technically incompetent to do a job that required
high technical skill (Down to Earth, July 31, 2001). Since the
boards are expected to generate funds through consent fees, and other
charges, lack of proper monitoring and implementation in turn translates
into inadequate fund generation. Even when cases are filed by the PCBs
against erring firms, they remain pending for years in the lower courts.
In the 1990s, the environmental regulation for Indian industry began
to focus on environmental management procedures, incorporating compulsory
environmental impact assessment and audit. Environmental audit (under
Environmental Protection Rule 14) became effective in 1993, and in 1994,
environmental clearance was made mandatory for industrial activities.
In 1994, environmental impact assessment (EIA) was made mandatory for
29 categories (increased to 30 in the year 2000) of developmental activities
including industrial projects, thermal power plants, mining projects,
river valley hydroelectric schemes and infrastructure projects [MoEF
2001]. EIA is designed as a management tool to ensure that development
options are environmentally sound and sustainable.
The merits of using economic instruments like industrial pollution
taxes were recognised in the 1992 policy statement on pollution abatement
of the ministry of environment and forests and the implementation of
market-based instruments in India are in the pipeline.4
The government also issued the national conservation strategy and policy
statement on environment and development in 1992 that recognised the
role of non-government organisations (NGOs), industries and the public
to preserve resources and protect the environment while ensuring developmental
activities. Indeed, during the past 15 years, the lack of enforcement
of environmental norms and the rapid rise in pollution levels has prompted
public interest environmental litigation and the rise of judicial activism
in India's environmental management.
Coupled with the increase in public interest litigation, the role
of the Indian community in pollution control has increased through public
hearings on environmental impact assessment procedures for economic
activities. Since 1997, development activities including industrial
projects, thermal power plants, mining projects, river valley hydroelectric
schemes and infrastructure projects (30 categories in all) have mandatory
public hearings in order to assess the environmental impact completely
before being granted clearance by the state. However, the SSIs were
exempt from a public hearing under a draft notification issued 2001.
The current trend of the active participation of Indian citizens in
pollution control management will continue to grow. Moreover, this trend perfectly
matches with the 1992 national environmental strategy and policy statement,
which recognised the important role of the public and non-governmental
organisations in protecting the environment while pursuing economic
development.
The increase in judicial activism thus has become a significant threat
to polluting units in the country. While formal enforcement remains
weak in India, the constitutional right of the polluted agents has become
an important instrument of pollution control. Two polluting sectors
have been under scrutiny of the judiciary in the past decade: the industrial
and the transport sector, from which pollution loads have been increasing.
Since judicial activism has been the most significant through the Supreme
Court (SC) rulings, this paper considers some of the most significant
SC case rulings impacting environmental management in the transport
and industrial sectors in India.
Environmental Property Rights
Degradation of living conditions has prompted Indian society to seek
remedy through civil action. A good environment is a constitutional
right of the Indian citizen under the Right to Life (Article 21), and
the protection of the environment is a fundamental duty of each citizen
(Article 51A). These provisions have been used especially by the Supreme
Court in dealing with environmental cases, and considering environmental,
ecological, air, water pollution,as amounting to violation of Article 21.
This interpretation of the fundamental right to life entitles citizens
to invoke the writ jurisdiction of the Supreme Court and high courts.
There has been a clear movement towards public interest litigation to
reduce pollution in India, some of which have had far-reaching consequences.
This seemingly pseudo-Coasian approach in India has brought industries
and industrial estates to court in lieu of the negotiating table between
polluters and victims of the Coase model, implemented with reasonable
success in Indonesia [O'Connor 1995, World Bank 2000].
Apart from the Indian Constitution, environmental legislation also
has provisions for polluter prosecution. Under section 16 of the Environment
Protection Act 1986 (EPA), a company is punishable for an offence. The
'cognisance of offence' clause of the EPA (section 19), Air Act (amended
1987) and Water Act (amended 1988) allows any citizen to prosecute a
polluting firm, provided a notice of at least 60 days is given to the
polluter. Citizens have a right to information on polluters from pollution
control boards for the purpose of prosecution (section 43 of Air Act,
amended 1987, and section 49 of Water Act, amended 1988). To grant compensation
for environmental damages, the courts have used provisions under the
Public Liability Insurance Act (1991) and Factories Act (1995).5
Several of the public litigation cases have resulted in polluting
units been closed down or relocated away from residential areas, and
more importantly, ushering in new regulations (in the road transport
sector) during the last decade. Increasingly, the polluter pays principle
has been evoked by the court, and damages to restore the environment
imposed on polluting units. In a recent ruling in March 2002, the Supreme
Court clarified:
Pollution as a civil wrong… a tort committed against the community
as a whole. A person, therefore, guilty of causing pollution has to
pay damages (compensation) for restoration of the environment and ecology.
He has also to pay damages to those who have suffered loss on account
of the act of the offender. The powers of this Court under Article 32
are not restricted and it can award damages in a PIL or a writ petition
as has been held in a series of decisions. In addition to damages aforesaid,
the person guilty of causing pollution can also be held liable to pay
exemplary damages so that it may act as a deterrent for others not to
cause pollution in any manner.
(Ruling dated March 15, 2002, in Beas River Case of Mehta vs Kamal
Nath WP182/1996, reproduced in Legal and Scientific Resources for
Asia).
The increase in environmental public interest litigation and judicial
activism (prompted by individuals as well as by NGOs) during the past
15 years began to be perceived as a significant threat by polluting
units across the country. The establishment of the law of liability
has created a deterrent effect on pollution by creating an incentive
for polluters to limit the risk of environmental damages. Thus, while
formal enforcement remains weak in India,the constitutional right of
the victims of pollution has become an important instrument of pollution
control.In particular, the civil action has helped to focus the regulator's
attention on an important pollutian sector like road transport (which
is a major source of urban air pollution) and an usher in new environmental
regulations.
Prior to 1990, India had no environmental standards for vehicles.
The new rules for cleaner vehicles on city roads largely followed from
Supreme Court rulings in public interest litigation to reduce urban
air pollution. The original petition was filed in 1985 (M C Mehta vs
Union of India WP 13029/1985), and a spurt of rulings followed in the
1990s. Some of the most significant rulings of the Supreme Court in
vehicular pollution cases during 1990 through 2001, resulted in mandatory
measures to reduce pollution in city road transport. Table
1
lists some of the major SC rulings on vehicular pollution.
