I. Abstract
Environmental law requires strict compliance with rules like obtaining prior environmental clearance. But it does not automatically become clear if closure should be the consequence when an establishment continues operation without the required clearance. Soo, even though strict compliance is necessary for environmental protection, it is also important to see how closure affects workers, businesses, and other persons dependent on the establishment. This article examines whether the emerging judicial approach to such cases is based on proportionality, protection of livelihood and economic interests, or regulatory fault. Financial loss or employment consequences should not be used to justify continued operation, where an establishment knowingly fails to comply with a legal requirement. But the establishment may not be treated in the same manner as one that deliberately ignored the law where the non-compliance occurs because of regulator’s own permission, error, or misunderstanding. The article distinguishes between failure to comply in general and failure to comply because of regulatory confusion or error. It also argues that economic and livelihood consequences should influence only the choice of remedy, and not excuse an environmental violation. Based on this distinction, the article proposes a framework that considers the seriousness and duration of environmental harm, regulatory conduct, the establishment’s subsequent compliance, and the availability of remedies short of closure.
Keywords: Environmental Clearance; Proportionality; Regulatory Fault; Environmental Enforcement; Closure; Sustainable Development.
II. Introduction
Environmental closure orders may be necessary where continued operation poses threat of serious or irreversible damage to the environment. It is indeed one of the best suited sanctions to prevent environmental harm, since fines and conditions imposed after the harm is done cannot undo pollution that has already occurred, but these orders also lead to some extremely severe consequences. Workers lose employment, and lenders call in loans when a Pollution Control Board seals a plant, or the National Green Tribunal orders a unit to stop production, and the establishment may not resume operation, even if the defect is cured at some point later, bringing an industrial activity to a complete halt. The mere existence of an environmental violation does not warrant closure. Whether closure is justified must depend on whether it is proportionate to the nature and circumstances of the particular violation.
When an establishment fails to comply with an environmental requirement, but the reasons for the non-compliance are not entirely within the operator’s control, it becomes imperative to draw a distinction. For example, the regulatory authorities may themselves have given the necessary permissions, issued consents, interpreted the requirements in a particular way, or acted in a way that led the operator to understand its obligations differently. However, this does not mean that the environmental requirement was not legally binding, it simply argues that the circumstances of the violation may be relevant in deciding whether closure is an appropriate response. Therefore, the central question is how the law should decide the consequences that should follow once a violation has occurred.
Even the recent decisions of the Supreme Court illustrate that the circumstances leading to an environmental violation are relevant when deciding that closure is the appropriate sanction. In Pahwa Plastics (P) Ltd. v Dastak NGO, the units did not have prior environmental clearance, but they had obtained Consent to Establish and Consent to Operate from the State Pollution Control Board. A similar issue arose in Neetu Solvents v Vineet Nagar, where the units possessed regulatory consents and the regulatory authorities had themselves not appreciated the requirement of prior environmental clearance. These decisions suggest that the circumstances around non-compliance, including the conduct and understanding of the regulator, may affect the appropriate remedial response.
At the same time, the Supreme Court’s environmental jurisprudence does not say that regulatory failure or economic consequences will automatically excuse environmental violations. Sterlite Industries (India) Ltd. v Union of India signifies how regulatory delay or lack of alacrity does not eliminate the consequences of serious violations where the regulator’s conduct had not caused the violations.
These cases suggest three related considerations: proportionality, livelihood and economic consequences, and regulatory fault. Proportionalitry requires the Court to not impose closure where a less severe measure can adequately address the environmental objective. Secondly, where closure affects employees, investment, or an already established industrial activity, livelihood and economic consequences should be considered. Regulatory fault becomes important where the conduct or interpretation of the regulatory authority materially contributes to the operator’s non-compliance. The distinction between the three is very important because proportionality is considered at the stage of deciding the consequence of an already established violation. However, it does not require the Court to dilute an environmental standard merely because compliance has economic consequences. Nor does it convert regulatory confusion into substantive compliance. The decision in Vanashakti v Union of India also reflects the limits of this approach using proportionality to retrospectively validate non-compliance. The Court held that there still exists a requirement of prior environmental clearance, signifying the preventive character of environmental regulation, and clarifying that proportionality cannot be used to turn post-facto approval into lawful prior compliance.
Against this background, this article examines the Supreme Court’s approach to environmental closure orders through the relationship between proportionality and regulatory fault. It analyses Lafarge Umiam Mining (P) Ltd. v Union of India, Electrosteel Steels Ltd. v Union of India, Pahwa Plastics (P) Ltd. v Dastak NGO, Sterlite Industries (India) Ltd. v Union of India, Vanashakti v Union of India and Neetu Solvents v Vineet Nagar to identify the circumstances in which courts have treated closure as an excessive consequence of non-compliance. These cases are used to highlight the nature and seriousness of the violation, the duration and character of the non-compliance, the permissions and consents held by the establishment, the operator’s compliance record and subsequent conduct, the possibility of remediation through less restrictive measures, and the role played by the regulatory authorities.
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