Economy v. Environment- India’s evergreen conundrum.

As observed in a landmark judgment of National Green Tribunal (NGT), building construction activities in our country have been carried out without much attention to environmental issues and this has caused tremendous pressure on various finite natural resources. The green cover, water bodies and ground water resources have been forced to give way to the rapid construction activities. Modern buildings generally have high levels of energy consumption because of requirements of air-conditioning and lighting in addition to water consumption. In this scenario, it is necessary to critically assess the utilization of natural resources for these activities.

The Building & Construction sector is governed by various environmental norms and one of such laws is the Environment Impact Assessment Notification, 2006. The Ministry devised this as a tool to minimize adverse impacts of developmental projects on the environment and to achieve sustainable development through timely, adequate, corrective and protective mitigation measures.  

The real estate sector is one of those sectors which have witnessed boom and busts globally for varying reasons. Improper due diligence often leads to escalation of cost which is one of the major issues for project failure. 

Speaking particularly about India in this respect, more often the norms are violated resulting in unnecessary series of litigations. Apart from the regular fight between the builders and owners of plots due to delay in handing over of possession, the builders have to be conscious of not faltering on environmental norms as the same would compel them to cough up huge environmental compensations which might lead to unwanted escalation of cost.

The real estate sector has always been a strong lobby due to their contribution to the GDP of the country which has resulted in the recent dramatic change of stand of the Ministry of Environment, Forests and Climate Change which is the nodal agency entrusted with protection of the natural resources of our country. For getting a clearer picture of the legislative changes we would have to understand the evolution of the environmental norms with respect to real estate sector.

The first S.O.60 (E) Environmental Impact Assessment (EIA) Notification (Notification of 1994) enacted in January 1, 1994 which governed many project and activities did not see the inclusion of the building and construction industry and the sector was largely considered exempt from it. 

Need felt for inclusion of the Building & Construction sector into the EIA framework: 

Notification S.O.1236 (E), 2003- But in the year, 2003, the Ministry of Environment and Forests felt a need to regulate this sector and issued a draft Notification S.O.1236 (E) on the October 27, 2003(draft Notification of 2003), wherein it stated that “…. whereas, such projects have an adverse impact on environment including wetlands, lakes, rivers and coastal waters posing serious health hazards to the local population including children. Even for construction of a house in a Panchayat area, plans are approved only after the provision of a septic tank. For an industrial project, an effluent treatment plant is necessary and for an industrial estate, a common effluent treatment plant is necessary. On the other hand, local bodies/development authorities in towns have been approving new construction projects of various categories and sizes without any concern for the environment”.
 

The draft Notification of 2003 went onto quote an order of the Supreme Court^[1] wherein it stated that the Central Government should consider and inform the court whether it should not amend the rules under the Environment (Protection) Act,1986(“the Act”) so as to require the EIA for the purposes of the Town Planning Act, 1954.
 

Notification S.O.801(E), 2004- It is pertinent to note after a lot of deliberation by the legislature that the final EIA Notification S.O.801(E) dated July 7, 2004 (Notification of 2004) came to be notified on August 23, 2004 to bring in new construction projects and new industrial estates with prescribed threshold levels within the purview of Notification of 1994. The Notification of 2004 did retain the major aspects with regard to the project criteria and evaluation, but its salient features lay in the following that it introduced two additional sectors in Schedule I, namely:

a. New construction projects and

b. New industrial estates.
 

As a consequence of these inclusions, it also exempted from the Notification of 2004 any construction project falling under Entry 31 of Schedule- I for newly constructed projects,  including new townships, industrial townships, settlement colonies, commercial complexes, hotel complexes, hospitals and office complexes for 1,000 persons or below or discharging sewage of 50,000 litres per day or below or with an investment of Rupees fifty crores or below. The Notification of 2004 also laid down certain criteria with regard to the project proponent’s phased manner of construction and investment put in on the date of commencement for its enforcement.

Amendments to the EIA 1994 Notification

Notification S.O.1533 (E), 2006- Following the 2004 amendment to the Notification of 1994, a major re-haul was observed in the S.O.1533 (E) EIA Notification dated September 14, 2006 (Notification of 2006), wherein, in Schedule I, it retained building and construction projects with the criteria that the built up area must range between 20,000 sq. metres and 1,50,000 sq. metres and townships and area development projects were to be covering an area of less than or equal to 50 hectares, or a built up area of more than or equal to 1,50,000 sq. metres. It is also pertinent to note that these two sectors were duly exempted from the process of public consultation, the third stage of EIA.

The Notification of 2006 which is the current prevailing law governing all project developments in India is the product of the exercise of powers conferred by sub-section (1) and clause (V) of sub-section (2) of section 3 of the Act, read with clause (d) of Sub-Rule 3 of Rule 5 of the Environment (Protection) Rules, 1986(“the Rules”).  As per the provisions of the Notification of 2006, the project or activities falling under Category ‘A’ of the schedule require prior permission from the Central Government while project and activities falling under Category ‘B’ require prior permission from the State Environment Impact Assessment Authority (SEIAA). These permissions are to be obtained before any construction work or preparation of the land by the project management except for securing the land is started on project or activity. So the power of granting an Environmental Clearance (EC) rested with the Ministry of Environment, Forest and Climate Change (MoEF&CC) or SEIAA of the respective States.

It was mandatory as per the provisions of the Notification of 2006 to obtain a clearance from SEIAA or MoEF&CC itself in cases of construction of new projects or activities or the expansion or modernisation of existing projects or activities listed in the Schedule to the Notification (Regulations) entailing capacity in addition with change in process and/or technology with the sole purpose of protecting the environment at the place of activity in question from the likely adverse impacts of such activity. 

Notification S.O.1533 (E), 2009- Subsequently, through the  S.O.3067 (E) EIA Notification dated December 1, 2009 (Notification of 2009), the sector of ‘building and construction’ which was exempt from public consultation was amended to read that such exemptions of building or construction projects or area development projects shall be given only to which do not contain any category ‘A’ projects and activities.

The problem

However, the law remained largely confined to the books and building construction activities in our country kept on being carried out without much attention to environmental issues which caused tremendous pressure on various finite natural resources. Construction activities were being carried out without obtaining environmental clearance for projects which were covered under the Notification of 2006 thereby frustrating the very object and purpose of the Act, the Rules and the Notification of 2006. 

Initially the Ministry tried to adopt an approach of compounding of the violations of starting construction without obtaining prior clearance as mandated under the Notification of 2006^[2] however since that approach met with obstacles at the judicial forum, the Ministry interestingly came out with a draft S.O. 1595 (E) EIA Notification dated April 29, 2016 (draft Notification of 2016) which diluted and exempted prior EC for buildings and construction projects making material alterations with regard to item 8 of Schedule of the Notification of 2006. The draft Amendment Notification of 2016 inserted paragraph 14 to Notification of 2006, which, in effect, grants to the States, the option to by-pass the mandatory requirement of a prior  Environment Clearance (EC)  for building and construction projects of built-up area between 20,000 sq. metres to 1,50,000 sq. metres if the standard set of conditions, as mentioned in the amendment, Notification are integrated with the building permission which is granted by Local Authorities. As per the Notification, the States adopting these objective and standard set of conditions in their building bye-laws and relevant laws and incorporating these conditions in the approvals given for building and construction making it legally enforceable shall not require a separate EC for individual buildings. Through the amendment the Ministry tried to adopt a box ticking mechanical approach which did not really needs application of scientific acumen and the scientific studies like preparation of the EIA Report which detailed out every minute aspect relating to the project which was mandatorily being done under the EIA Notification 2006 was completely side-lined through the amendment. 

The case before National Green Tribunal (NGT)

The concurrence to the said bye-laws sought to defeat and do away with the provisions of the EIA Notification, 2006  requiring of an Environment Clearance by buildings and construction projects under item 8(a) of the Schedule to the Notification of 2006 and hence this draft 2016 notification was challenged before National Green Tribunal(NGT) in Original Application No. 168 on April 6, 2016 in the case Society for Protection of Environment & Biodiversity v. Union of India & Ors as being bad in law. 

The NGT vide Order dated September 30, 2016 directed the respective authorities to abide by their statements made before the Tribunal which amongst others included that the MoEF&CC would consider all objections on various aspects of the Draft Notification being in contradiction to the mandate of the parent Act i.e. EP Act 1980 and the EIA Notification.

However instead of considering the concerns raised by public with respect to such drastic change being undertaken by the Ministry, the Ministry went ahead to bring out the final Notification dated December 9, 2016 (final Notification of 2016) which in nutshell did the following to the environmental norms governing the building and construction sector:

1. The Notification did away with the provisions of the Notification of 2006, relating to the requirement of an environment clearance by buildings and construction projects

The final Notification of 2016 did not change much in essence from the draft Notification thereby completely ignoring the orders of the court and sought to do away with the provisions of the Notification of 2006, relating to the requirement of an environment clearance by buildings and construction projects under item 8(a) of the Schedule to the Notification of 2006 and defeated the very purpose of environmental assessment process for one of the most fast growing development sector which had huge environmental implications. In the name of ‘ease of doing business’ to the extent of building and construction of areas which are more than 20,000 sq. metres and less than 150,000 sq. metres where, in the prior environmental clearance which was previously a prerequisite for more than 20,000 sq. metres to 150,000 sq. metres projects was now being exempted and thereby completely diluting the EIA Notification with regard to the said sector in contravention of the Act.

2. Reduced the power of the Pollution Control Boards and Committees & revoked a statutory power provided under two different Central Acts.

It further took away the power of the Pollution Control Boards and Committees to grant consent to establish or operate for building and construction projects up to an area of 1,50,000 sq.. metres. 

Interestingly the said amendment Notification 2016 also sought to revoke a statutory power under two different Acts namely the Water (Prevention and Control of Pollution) Act, 1974 and the Air (Prevention and Control of Pollution) Act, 1981 without any express provision within it which was clearly bad in law. 

In so far as the Notification of 2016 is concerned it entrusted the Urban local bodies with powers without considering the fact that there is no independent agency/institution provided for, under the said Bye-Laws for the evaluation and monitoring of the impact caused by the building and construction projects. Further it is relevant to note at this stage that the urban local bodies on whom such immense powers were bestowed of approving and certifying compliance of environmental norms due to integration of environmental conditions into the sanction building plans have no technical expertise or knowledge, to evaluate the environmental impact caused due to the building and construction activities. 

The validity of the Notification of 2016 challenged before NGT

The validity of this Notification of 2016 was also challenged before the NGT in the matter of Society for protection of environment & biodiversity v. Union of India & Ors O.A. No 677 of 2016. The NGT vide judgment dated December 8, 2017 held that although the object of the Notification is laudable, amendments would have to be in consonance with the law, where certain provisions of the amended Notification of 2016 are in consonance with the provisions of the Act and do not suffer from the vires of illegality. However, the Court opined that some other provisions of the same Notification ex facie suffered from legal infirmities and were incapable of being implemented in accordance with the scheme of federal structure under the Constitution of India. Out of them, the NGT held that some provisions are directly opposed to the Principle of Non-regression as they considerably dilute the existing environmental laws and standards to the prejudice of the environment. Thus, applying the doctrine of severability the NGT declared some of the provisions of the Notification as ultra-vires or ineffective while holding the other part of the Notification as legally sound and sustainable. 

Since one of the major objections by the Ministry was on the power of the NGT to delve into the vires of the amendment Notification, the NGT vide its judgment relying on its previous judgments like Wilfred J. v. Union of India, 204 ALL (I) NGT REPORTER  2013, S P Muthuraman v.  Union of India, 2015 ALL (I) NGT REPORTER (2) DELHI  170 and Himmat Singh Shekhawat v.  State of Rajasthan & Ors., ALL (I) NGT REPORTER (1) DELHI 44 held that the NGT has power to look into the vires of a Notification issued under the EP Act.

The NGT held that the following provisions of the notifications were ultra-vires: –

(i) clause 14(8) of the Notification 2016
 

(ii) the provisions relating to exclusion of consent to operate and consent to establish under Water (Prevention and Control of Pollution) Act, 1974 and the Air (Prevention and Control of Pollution) Act, 1981 in clause 14 of the impugned Notification;
 

(iii) Appendix-XVI relating to Constitution and functioning of Environmental Cell, cannot be sustained and are liable to be quashed.
 

The NGT stayed the implementation of the Notification and directed MoEF&CC to re-examine its Notification

After the NGT judgment dated 8th December 2017 the Ministry preferred a statutory appeal against the NGT judgment Union of India v Spenbio & Ors to the Supreme Court (The appeal is sub-judice and pending before the Supreme Court CA 2522 of 2018) wherein the Ministry during the course of one of the hearings undertook to deal with all pending application before Environment Cell to be considered by State Environment Impact Assessment Authority (SEIAA) in different States. Hence, the Ministry vide OM dated April 3, 2018 in compliance to the Supreme Court Order dated March 23, 2018 decided to deal with all pending application before Environment Cell to be considered by SEIAA in different States. It was clarified that all proposals received in light of Amendment Notification of 2016 shall be considered by SEIAA and all building/construction projects/townships and area development covered under item 8 of the Notification of 2006 shall continue to be dealt by SEIAA/State Expert Appraisal Committee (SEAC) as per provisions of EIA Notification 2006.

The comeback of Self Declaration Form & increase in threshold value from 20,000 sq. metres of Built Up Area to 50,000 sq. metres

Then, in dramatic turn of events, the Ministry again went back to its stand of taking Item 8 out of EIA Notification in Self Declaration Form to be submitted to the local authority vide draft Notification dated March 13, 2018. The Ministry vide S.O 5733 (E) Notification dated November 14, 2018 has delegated power to municipal bodies to ensure the compliance of environmental conditions as specified in appendix with respect to building and construction projects with built up area less than 20,000 sq. metres to 50,000 sq. metres and industrial sheds, educational institutions, hospitals and hotels for educational institutions less than 20,000 sq. metres to 150,000 sq.. metres along with building permission to ensure conditions specified in appendix are complied with before granting occupancy/completion certificate. Yet again the very next day i.e. S.O. 5736 (E) Notification of November 15, 2018 the Ministry issued another Notification finally reiterating the November 14, 2018 Notification.

Both the Notifications dated November 14, 2018 and November 15, 2018 have been stayed by the Delhi High Court in the matter of SAFE v. Union of India & Ors, WP (C) No 12517 of 2018

Analysis

1. The overprotective approach of the Ministry to save the Project Proponents in one way or other.

While on one hand the Ministry through its various amendments gave power to the State Level Expert Appraisal Committees to consider applications for compounding of violations done by project proponent by starting construction without obtaining prior EC, on the other hand the Ministry is also simultaneously taking the whole Item 8 (building and construction/township projects) out of the ambit of EIA Notification.

2. A retrograde step of the Ministry of delegating the powers to Urban local bodies.

Another contrasting stand adopted by the Ministry in this regard is that all through while compounding violations the Ministry took upon itself the obligation for issuing directions under Section 5 of the Act, however with the recent approach adopted by the Ministry of delegating its powers to local bodies, the powers would be exercised under the local municipal laws by the municipal bodies which lack multi-disciplinary/multi-sectoral expertise to assess the environmental damage proposed to be caused by such projects and is a step of regression. 

Moreover, considering the fact that the building and construction sector is already exempt under the process of public consultation/public hearing under the principal Notification of 2006 itself, the further culmination of EIA laws into local body regulations is a retrograde step in achieving the objectives for which the EIA was initially set out.

3. Such steep levels of decentralization affect the impartiality with which EC’s would be granted.

The Notification 2016 and subsequent amendment Notification of 2018 certainly aims to delegate powers to Urban Local Bodies which will appraise projects (for buildings only above 20000 sq. metres) and certify the compliance of these environmental conditions prior to the issuance of Completion Certificate and consent to operate, as applicable, as per the requirements stipulated for such buildings. In the current scenario where even under the existing laws the States while considering the projects which fall within category B of the EIA Notification have approved projects that seem economically beneficial for them. Now that the power to grant EC to the buildings based on certain criteria that Appendix XIII of the Notification lists out, has been solely accorded to the local bodies and development authorities, being a interested party in the development of the State and region the permissions will be granted to the Project Proponents in true terms of “Ease of Doing Business”.

4. Lack of transparency in the whole mechanism as well as a lack of post-clearance monitoring process.

For if the Notification of 2006, with its subsequent amendments is to be delved into, it would be interesting to note that it is mandatory for the project management to submit half-yearly compliance reports in respect of the stipulated prior EC terms and conditions to the regulatory authority concerned on June 1 and December 1 of each calendar year. Even the recent Amendment Draft Notification dated September 10, 2018 mentions that, to improve compliance status of implementation of EC conditions for projects granted by MoEF & SEIAA & District Level Environment Impact Assessment Authority (DEIAA) the concept of randomised third-party compliance monitoring of EC conditions by national level reputed government institutions would be done. All this would be bypassed by the projects falling under Item 8 of the EIA Notification 2006 and hence transparency will be done away with. 

Further, as per the current statutory framework i.e. Notification of 2006 all such compliance reports are required to be submitted by the project management which are then treated as public documents and copies of the same given to any person on application to the concerned regulatory authority. Also, the latest such compliance report is required to be displayed on the website of the concerned regulatory authority. But neither the Model Building Bye Laws, 2016 issued by the Ministry of Urban Development and the Town and Country Planning Organisation, nor the Unified Building Bye-Laws for Delhi, 2016, accommodate or advocate such principles of transparency. 

This defeats the very purpose with which the ECs are granted under the current statutory framework. Therefore, with zero follow-up mechanisms in place, the entire ‘eco-friendly procedure’ shall be an absolute failure.

Although the principle 17 of Rio Declaration 1992, to which India is a signatory goes on to state the following, “Environment impact assessment as a national instrument, shall be undertaken for proposed activities that are likely to have a significant adverse impact on the environment….”, the Ministry in its quest for ease of doing business has tried to take the whole sector out of the EIA Notification 2006 at a time when building and construction is at its peak and so is the pollution. The building sector being one of the biggest contributors of Greenhouse Gases emissions instead of being monitored closely is being let free without much hassle.

Truly said, it happens only in India!!!

^[1] In Re. “And Quiet Flows the Maily Yamuna”; Writ Petition (C) No.725 of 1994.

^[2] See OM dated 16.11.2010, wherein for the first time Ministry despite observing that clearance is mandatory decided that henceforth, all such cases of violation which are submitted to the Ministry would be referred to the EAC/SEAC and depending upon their recommendations, the proposals would be finally dealt with; provided other requirements of the Office Memorandum were satisfied. This OM was superseded by another Office Memorandum of 12.12.2012 which stated that on verification of the violation the Project proponent was supposed to file undertaking to ensure that violations are not repeated the OM dated 12.12.2012 was subsequently modified by 27.06.2013. However, both OMs got quashed by NGT Judgment in S.P. Muthuraman v Union of India & Ors, OA. 37 of 2015.