Basic Facts of the Case:
From January 2012 to February 2013, the Taixing Jinhui Chemical Company, et al., six defendants, dumped nearly 26,000 tons of acid by-product into the Rutai Canal and the Gugaman River, causing severe ecological damage. All six defendants entered contracts to sell the acid by-product at the rate of 20 to 100 yuan/per ton to companies that were not licensed to handle hazardous wastes. The plaintiff Taizhou Environmental Protection Federation (TEPF) petitioned to the court to assign environmental restoration expenses of 160,666,745 yuan (US $26 million) and 100,000 yuan (US $14,285).
Results of the Adjudication:
The court of first instance, Taizhou Intermediate Court rendered the judgment and opinion that TEPF is a not-for-profit social organization that legally registered and engaged in environmental protection programs and thus has the authority to file environmental public interest litigation (EPIL) cases. The six defendants sold the acid by-products to companies that were not licensed to handle hazardous wastes at a rate that is much lower than the market rate to treat the by-product in accordance with the law. The defendants’ actions led to the tons of acid by-product being dumped into the river, which resulted in serious environmental pollution and the defendants should bear the liability to pay for damages and restore the ecological environment. The court reasoned that even though the water quality at the site where the acid by-product was dumped has been improved over time, it does not mean the river ecosystem has been restored. It is likely the river is still impaired with more than 26,000 tons of acid by-product having been dumped into it. Due to the fact that the cost for restoration is difficult to calculate, the court supported the method called “virtual remediation (治理) cost” to calculate the damages which are mostly based on the costs that the defendant should have spent if they had treated the acid by-product legally. The amount of the damage is 160,666,745 yuan (US $26 million). The court also supported the claims for judicial assessment fees that were spent on calculating the damages. The court of appeal, the Jiangsu High Court affirmed the decision of the court of first instance but changed the methods of the six defendants to carry out their obligation. The High Court ordered that 60% of the owed damages were to be paid into a special account at the Taizhou Environmental Welfare Fund within 30 days of the judgment’s entry into force. The remaining 40% was to be used for technological upgrades for pollution prevention and control and was to be paid within a year of the judgment. Three out of these six defendants filed a retrial application to the Supreme People’s Court. The Supreme People’s Court (SPC) upheld the Taizhou Intermediate People’s Court’s decision and rejected the retrial application. SPC stated in its decision: companies that produced chemicals and hazardous chemicals should pay extract attention or due care to the management of those products and the by-products to avoid pollution and should be in compliance with the laws and regulations and to ensure that the production, sales, transportation and storage of the chemicals are in compliance with the law and not impose significant risks to the environment. Even though the river has its own circulation and the site of dumping seems to be back to its previous water quality, due to the limits of environmental capacity, such large amounts of acid by-products dumped into the lake will certainly cause damage to the water quality, the aquatic system, the riverbed and the systems downstream. Without promote and proper remediation, the pollution will accumulate to a level that the damages cannot be reversed. Therefore, the defendants’ liabilities cannot be relieved just because the segment of the water body where the waste acid has been dumped is restored.
Why this case is significant?
The SPC selected this case as a typical case based on the following six points: 1) the case was referred by media as “sky-high award” case that involved multiple parties, NGO as plaintiff and Procuratorate as support litigant; 2)the first instance court correctly affirmed the standing for the TEPF and found that the defendants are liable for damages to restore the environment based on the fact that the defendants intentionally violated the laws on handling hazardous waste and their actions led to the dumping of the waste to the river that suffered harm;3) the first instance court also based its decision of the amount of damages on the assessment conclusion and the expert witness which showcased the combination of use of assessment conclusion and experts opinions on important scientific questions;4)the second instance court has balanced the healthy development of the industries and the protection of environment that it experimented new methods of payment of the damages to encourage the companies to upgrade their processes to handle by-products; 5)In addition to affirming the lower courts’ decisions, the SPC clarified the rule that companies produce hazardous chemicals or chemicals should pay more attention to its supply chain management; 6) in this case, the SPC also sets up a principle in water pollution cases that even though the segment of the originally affected water body has been recovered due to its own purification system, the polluters should still bear the liability to restore the river ecosystem once the pollution has occurred.