– E AS T AS IA AND P ACIF IC 66535 D I S C U S S I O N P A P E R S DE VE L OP MEN T C H I N A STRENGTHENING CHINA’S ENVIROMENTAL PROTECTION ADMINISTRATIVE SYSTEM: ANALYSIS AND RECOMMENCONDATIONS S US TAINABL E October 2009 ©2012 The International Bank for Reconstruction and Development / THE WORLD BANKD1818 H Street, NW Washington, DC 20433, U.S.A. Telephone: 202-473-1000. Internet: www.worldbank.org. E-mail: feedback@worldbank.org All rights reserved. October 2009 This report is one of the study reports of the World Bank Technical Assistance Program “China: Strengthening Environmental Administration�. It was prepared by the Sustainable Development Department of the East Asia and Pacific Region of the World Bank. Environmental and natural resources management issues are an integral part of the development challenge in the East Asia and Pacific (EAP) Region. 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WORLD BANK TECHNICAL ASSISTANCE PROGRAM “CHINA: STRENGTHENING ENVIRONMENTAL ADMINISTRATION� POLICY PAPER Strengthening China’s Environmental Protection Administrative System: Analysis and Recommendations JianXie Zhong Ma THE WORLD BANK Sustainable Development Department East Asia and Pacific Region October 2009 Table of Contents Acronyms and Abbreviations ........................................................................................... iv Acknowledgments .................................................................................................................. v Summary ...................................................................................................................................... vi 1． Introduction ................................................................................................................ 1 2． Background and Need for Environmental Protection Administrative Reform.......................................................................................................... 2 Context and Current Environmental Situation .............................................................................. 2 Government Efforts ...................................................................................................................... 3 Need and Opportunity for Strengthening Environmental Administrative System ........................ 4 3． Basic Concept, Objectives, and Scope .......................................................... 6 Conceptand Elements of Environmental Administration .............................................................. 6 Objectives and Scope of the Study ............................................................................................... 6 4． Current Situation and Problems with China’s Environmental Protection Administrative System ................................................................................. 8 Legal Framework .......................................................................................................................... 8 Role and Responsibilities ofEnvironmental Protection Authorities ............................................ 10 Coordination of Government Agencies and Environmental Policy Making ............................... 13 Capacity of MEP and local EPBs................................................................................................ 14 Relationships between MEP and Local Governments ................................................................ 15 5． Lessons Learned from Chinese and International Experiences .... 17 Evolution of Public Administration and Environmental Administration Reform in China ........ 17 International Experiences in Environmental Administration ...................................................... 18 6． Recommendations.................................................................................................... 22 Clarifying Roles and Responsibilities among Relevant Government Agencies ......................... 22 Reforming and Strengthening Environmental Laws ................................................................... 23 Establishing a National Environmental Policy Office ................................................................ 24 Reorganizing and Strengthening MEP for Carrying out Its Responsibility for Unified Environmental Supervision across Sectors and the Country ...................................................... 25 Strengthening Local Environmental Administrative Functions .................................................. 27 Strengthening the Overall Capacity of MEP to Conduct Environmental Governance ............... 28 7． Concluding Remarks ............................................................................................. 31 List of Background Papers to This Report ............................................................. 32 References ............................................................................................................................... 33 Endnotes ................................................................................................................................... 36 Figures Figure 1.Current China’s Environmental Protection Law System .................................................... 9 Figure2.China’s Environmental Protection Administrative System—Current Allocation of Supervision and Management Functions ........................................................................................ 12 Boxes Box 1. Employees and Budgets of Ministries of Environment in Selected Countries .................... 20 Box 2.The U.S. Council on Environmental Quality (CEQ) ............................................................ 20 Annex Table 1. Current Organizational Structure of MEP ......................................................................... 34 iii Acronyms and Abbreviations CCICED China Council for International Cooperation on Environment and Development CEQ Council on Environmental Quality EPA Environmental Protection Agency EPBs Environmental Protection Bureaus EPL Environmental Protection Law EPO Environmental Quality Office MEP Ministry of Environmental Protection MEPL Marine Environmental Protection Law MLR Ministry of Land and Resources MOA Ministry of Agriculture NEPA National Environmental Policy Act SOA State Ocean Administration SEPA State Environmental Protection Administration SEPC State Environmental Protection Committee SFA State Forestry Administration TA Technical Assistance iv Acknowledgments This policy note is the summary report of the World Bank Technical Assistance (TA) Program entitled “China: Strengthening Environmental Administration.� It was prepared by Jian Xie and Zhong Ma. The policy note draws upon a set of background study reports completed by a team of Chinese experts led by Zhong Ma, as well as the reviews of international experience prepared by international experts for the TA program. The experts contributing to the set of background reports are Hongqiang Jiang, Hui Yu, Jian Wu, Lin Han, Xiangang Zeng, Jack Bowles, Jaeyong Song, and Hiroshi Ono. The peer reviewers of the policy note were Jane Nishida and Robert Crooks. Carter Brandon, Charles Di Leva, Cheryl Wasserman, Hongjun Zhang, Jack Bowles, Robert Crooks, and Yuan Tao provided useful inputs or suggestions to the final version of the Bank policy note. Li Yang, Lei Shi, and Honglin Li provided research assistance. The policy note and its background reports also benefited from the comments and suggestions received at several review meetings organized by the Ministry of Environmental Protection and from an international workshop held in November 2008 in Beijing. In particular, the support, participation, and contributions of Shaomin Zhang, Guozeng Wu, Xiaozhi Song, Pei Li, Yujun Zhang, Xin Wang, Ying Hai, Jin Qiu et al. of the Ministry of Environmental Protection (MEP), as well as external review experts and participants of the international workshop and review meetings, are highly appreciated. The World Bank’s TA program is managed by Jian Xie under the general guidance of John Roome, David Dollar, Ede Jorge Ijjasz-Vasquez, and Magda Lovei at the World Bank. We gratefully acknowledge the generous financial support provided by the Government of the Republic of Korea. v Summary The Chinese economy has experienced for action in six main areas. an unprecedented 30-year period of economic growth and development that The main recommendations are: has delivered enormous social and economic benefits to the people but has  Clarify the roles and responsibilities had seriously adverse and continuing of relevant government agencies. The effects on the state of the environment. key environmental law, the Environmental Protection Law (EPL) of The government is well aware of the 1989, identifies a role for a single agency problem. Over the last five to ten years, to be responsible for the unified environmental objectives have become supervision of environmental protection increasingly important in priorities set work across the country, but then splits under successive national five-year the responsibility among different plans. To address these problems, the departments, including some government has provided increasingly departments that are also responsible for large infusions of capital and the exploitation of resources. This implemented a series of administrative creates potential conflicts of interest. In reforms. Notwithstanding all these the short term, this matter could be actions, the state of the national addressed through rules promulgated by environment continues to deteriorate, the State Council, but a more substantive and further action is clearly needed. long-term solution would be through revision of the EPL. Similarly, MEP’s This policy note focuses particularly on authority over provincial and lower level continuing issues related to the environmental protection bureaus operations of the Ministry for (EPBs) needs to be clarified, as does its Environmental Protection (MEP), authority to intervene to rectify poor including the legal framework under environmental performance by lower which it operates and its operational level units or to address trans-boundary relationships with other agencies at the issues. national level and with its counterparts at lower levels of government. This focus  Reform and strengthen is justified given that MEP’s environmental laws. As mentioned, the effectiveness is critical to the Environmental Protection Law requires effectiveness of the government’s overall amendment to clarify responsibilities and environmental objectives. Without an authorities. Certain other laws, most effective MEP, the other elements notably the Marine Environmental necessary for China’s environmentally Protection Law, also require amendment sustainable development will not be able to confirm and delineate MEPs to achieve these national goals. supervisory responsibility, consistent with the provisions of the EPL. The This note examines the current situation Radioactive Pollution Control Law needs and problems with the administrative to be expanded—and renamed as the system for environmental protection, Geological Environmental Protection reviews past government administrative Law—to create a basis for regulating reforms and international experience, discharges and disposal of other and sets out a series of recommendations nonradioactive substances into the vi geological environment that are national and regional levels, eco- presently unregulated. Finally, the State systems, and rural environment as Council’s Information Management authorized by environmental laws. Ordinance needs to be revised to Divisions within the departments would mandate sharing and public disclosure of be reorganized to facilitate integrated environmental information among environmental management. To various ministries and local strengthen environmental supervision at governments. the regional level, existing regional supervision centers should be upgraded  Establish a National Environmental to the status of regional branches of the Policy Office. MEP already has a role in ministry and structured to mirror the reviewing and supervising the structure of the central office. implementation of environment-related development policies, programs, and  Strengthen the environmental plans, but it lacks sufficient authority to supervision of lower levels of ensure that the work of other ministries government. Most applied environmental is consistent with the government’s work in China is done by provincial and overall environmental objectives. lower governments. Steps need to be Drawing from the U.S. experience with taken to strengthen the effectiveness of its Council on Environmental Quality their vertical relationship with MEP, as (CEQ), China could establish a high- opposed to their horizontal relationship level Environmental Policy Office (EPO) with their own level of government on under the State Council. The EPO matters relating to environmental would be a permanent office, directly protection. In addition, responsibilities reporting to the president and/or the regarding trans-boundary environmental premier, independent of any line issues need to be clarified. Finally, ministries, with its own staff and budget MEP’s regional offices need to be given (even though small). Its objective would expanded authority to directly oversee be to assist the president and/or the the performance of local EPBs. premier to review and make policy decisions related to environmental  Strengthen MEP’s operational protection. capacity. MEP needs additional resources to carry out its responsibilities  Strengthen MEP’s organizational and to be strengthened in terms of structure. MEP needs to be reorganized financial capacity, human resources and to strengthen its administrative skills, information management, and effectiveness. As a general principle, its public participation. departments and bureaus should be established in a way to focus on the effective protection of the various environmental media.MEP should establish subordinated departments supervising (a) water environmental protection, (b) atmospheric environmental protection, (c) soil and geological environmental protection, (d) marine environmental protection, and (e) protection of natural reserves at the vii 1． Introduction China has made significant progress in for environmental protection at the building an administrative system for national level, especially reforms related environmental protection over the past to the Ministry of Environmental 30 years, but the nation still is Protection (MEP) and to its relationships confronted by serious and growing with local governments and local environmental problems that require environmental protection bureaus further significant advances. Key (EPBs). challenges include a lack of clarity in the allocation of responsibility for The report consists of seven sections. environmental supervision among This introductory section is followed by different government agencies; a section reviewing the background and ineffective administrative arrangements the necessity for reforming the national for pollution management; complex environmental administrative system for administrative systems and protection, including the development relationships; inadequate resources and context, environmental problems and staffing; and a lack of reporting and causes, and political commitments to accountability by local levels of strengthening environmental government. management. Section 3 presents the basic concept, objectives, and scope of Within the government, there is a high the paper. Section 4 examines the level of understanding of the economic current situation and problems with the and social consequences of continued environmental protection administrative environmental deterioration and a system, focusing on the legal political commitment to confronting and framework, the responsibilities of resolving key issues, which provides a environmental protection authorities, solid basis for further reform. It is coordination among various line therefore timely to carefully assess the agencies, the capacity of MEP and local environmental problems and challenges EPBs, and the relationships among MEP, facing China, identify further other line agencies, and local opportunities for reform, and strengthen governments. Section 5 reviews the the foundation for environmental experience and lessons learned from past protection efforts to improve government administrative reforms and environmental quality and protect public international experience. Section 6 welfare. presents recommendations for actions. Concluding remarks are in Section 7. This policy note is intended to contribute to that objective. While the note touches on a wide range of issues related to more effective environmental administration, its recommendations focus on the particular challenge of strengthening the administrative system 1 2． Background and Need for Environmental Protection Administrative Reform Context and Current Environmental management in precisely those parts of Situation the country with the lowest government capacity. Since its opening up in 1978, the Chinese economy has grown rapidly and The end result has been a serious converted quickly from an agrarian/ deterioration in environmental quality industrial economy to an by almost all measures. In 2008, a total industrial/services economy with a of 57.2 billion tons of wastewater was globally significant industrial sector that, generated, of which about 58 percent (33 in recent years, has been referred to as billion tons) was from residential the “world’s factory.�1 China is now the sources and 42 percent (24.2 billion world’s largest producer of many tons) from industrial sources. manufacturing products and one of the Government statistics indicate that only largest consumers of mineral resources. about 56 percent of urban residential However, much of the increase in wastewater was treated in 2006; the industrial output is being achieved actual figure is expected to be lower inefficiently. Many industrial sectors in because many wastewater treatment China are still highly energy and facilities may not be fully operational. resource intensive and polluting, with As a result, in 2008, about 45 percent of energy and resource utilization monitored river sections in China were efficiencies much lower than the unsuitable for human consumption or standards of the developed world. The contact. 2 The situation was even worse combination of massive increases in in lakes and reservoirs; 39 percent of 28 industrial output, continuing population major monitored lakes and reservoirs growth, and compounding increases in were worse than the Grade V standard. per capita resource consumption is The severity of water pollution is creating great environmental pressure aggravating an already serious water throughout the country— particularly in scarcity problem in northern China rural and poor areas—due to China’s (World Bank 2009). enormous regional economic disparities. China’s economic development pattern Air pollution presents similar problems. is characterized by a relatively wealthy Many urban areas, especially medium eastern coast and poor inland and and large cities in northern China, are western regions. Per capita GDP in facing severe air pollution conditions, eastern China is 2.1 times higher than in with a large population exposed to poor central China, and 2.5 times higher than air quality. In 2008, total SO2 emissions in western China (2006 data). Driven by were 23.2 million tons, mostly (86 high labor costs and tougher percent or 19.9 million tons) from environmental management industrial sources. Among 519 cities requirements in the east, polluting across the country that reported air industries and ecologically harmful quality data in 2008, 23 percent were agricultural practices are gradually classified as Grade III or worse, moving from east to west and posing according to the relevant environmental new challenges for environmental quality standard (22 percent were 2 classified as Grade III, the lowest of the administration� under the State Council three grades, and 1 percent were worse to take responsibility for unified than Grade III), although it should be “supervision and management� of the noted that this represents a significant environmental protection work of the improvement over results from only entire nation, and also authorizes seven years earlier.3 creation of similar “competent departments� by local Peoples’ Rural environmental problems and their governments to supervise and manage impacts are serious and increasing but environmental work at and above the still largely unnoticed, in part due to the county level. In apparent contradiction lack of basic environmental protection to the creation of an overall authority for infrastructure in rural areas and environmental supervision and inexperience with pollution management management, Article 7 also authorizes in most villages. Pollution of other certain state departments to undertake environmental media (ecosystems, supervision and management of certain oceans, and the geological environment) matters relating to pollution control and and depletion or degradation of natural natural resources protection.4 resources are all occurring at alarming rates. The economic costs of Over the last ten years, environmental environmental pollution are high and protection has become one of the top growing. The government itself priorities in the political agenda. As a estimated that the total annual cost of result, environmental protection bodies environmental pollution in 2004 at the state and lower levels have been amounted to about 3.05 percent of GDP strengthened through a series of public (SEPA and NSB 2006), while other administration reforms, and estimates are even higher. environmental performance objectives have formed increasingly important Government Efforts parts of national five-year plans, including the current 11th Five-Year Since establishing its first leading group Plan. The Chinese leadership now fully for national environmental protection in realizes the urgency of environmental the early 1970s, China’s administrative protection. It has set ambitious targets system for environmental protection has for pollution reduction and energy grown from essentially nothing to a very saving, is undertaking a series of actions comprehensive institutional framework to improve environmental quality, and is today, comprising a total of 26 statutes willing to deepen its environmental relating to environmental protection and administrative reforms. In 1999, the natural resources management. The key State Council issued “Decisions on piece of legislation is the Environmental Promoting Law-Based Administration in Protection Law (EPL) of 1989, which An All-Round Way.�In 2004, the State provides the basis for the national Council promulgated the “Outline for environmental protection programs and Promoting Law-Based Administration in the basic structure of the administrative An All-Round Way.� Meanwhile, the system for environmental protection. government’s overall administrative reform has been moving forward. Article 7 of the EPL creates the Establishing MEP as a cabinet member authority for a “competent department of of the State Council during the recent environmental protection 3 government reorganization in 2008 was desulfurization facilities,5 and a program a particularly important milestone in to shut down small polluting thermal strengthening the administrative system power plants was continued with a total for environmental protection and of 16.7 GW of capacity (about 5 percent reflected the elevated priority of of total installed coal-fired generating environmental protection in the capacity) being taken offline. Total country’s political and economic agenda. discharges of COD and SO2 have In 2009, the State Council issued dropped by 4.4 percent and 6.0 percent, “Regulations on Environmental Impact respectively since 2007, and 6.6 percent Assessment of Plans,� which mandate and 9.0 percent respectively since 2005. the responsible authority to conduct an environmental impact assessment during Need and Opportunity for the preparation of a plan or program and Strengthening Environmental before its adoption or implementation. Administrative System This demonstrates the government’s resolution to include environmental Despite these efforts and achievements, factors in its decision-making processes. the effectiveness of the environmental Apart from the specific legal protection system is still far below both requirements, the regulations also expectations and needs. As shown by the provide a window for MEP to strengthen continuing poor environmental quality its vertical integration with its local and unsatisfactory environmental offices and to promote regional management performance, regulatory approaches. The environmental protection capacity has implementation of the regulations will failed to keep pace with economic also pose further challenges for MEP’s growth. capacity building and budget allocation. It will surely also affect MEP’s A wide range of factors are contributing interaction and collaboration with other to the nation’s poor environmental agencies and with the industry. Overall, performance. Some of the most the regulations provide an important important relate to inadequacies in opportunity for MEP to strengthen its administrative arrangements, including environmental governance capacity and an ineffective legal and policy to ensure that Chinese policy makers framework, weak organizational will integrate environmental values into arrangements and capacity, and poor their decision-making processes by coordination between environmental considering the environmental impacts authorities and other line ministries and of their proposed actions. between national and local governments. These are the key components Planning and administrative initiatives influencing the effectiveness of a have been backed by financial national environmental protection commitments and actions on the ground. administrative system. They are In 2008 alone, urban sewage treatment examined further in the next section, capacity was increased by 11.5 million which reviews the current system of tons/day (an increase of 38 percent over environmental administration in China. the 2005 treatment capacity), coal-fired power stations with installed capacity of The conventional mode of governmental 97.1 GW were fitted with administration system reforms in China seems to have been more related to crisis 4 response rather than crisis prevention. enhance environmental management Governmental administrative and capacity. institutional reforms in China historically have been triggered by In addition to political will, the severe periods of socioeconomic crisis increasing financial capacity of the and natural disasters; for instance, the country also provides favorable devastating floods in 1998, the 2003 conditions for institutional reforms that SARS scare, the widespread ice storm strengthen environmental management. disaster in south China in 2008, and the Environmental expenditures have Sanlu baby milk formula incident in become a key budgetary element of 2008, all of which pushed the public expenditure and, although still government to improve aspects of its relatively small, have grown rapidly in public administration and policies. recent years. In sum, the current political Environmental pollution incidents in and financial situation—which is built recent years—as well as the persistent up from many years of effort—provides failures to meet pollution control targets a good chance for the government to set in the Five-Year Development seize an opportunity to speed up and Plans—have also helped raise public deepen its public administrative reforms, awareness about serious environmental especially the reform of its problems and pushed the government to environmental protection administrative take more actions to strengthen systems. environmental administration and 5 3． Basic Concept, Objectives, and Scope Concept and Elements of and providing implementation tools, and Environmental Administration capacity building. The national environmental To be effective in supervising and administration system consists of many managing the environment, an components, including (a) the national administrative system for environmental environmental agency, (b) national protection requires a strong legal basis sectoral ministries, (c) the national and judicial system, effective decision- judiciary, and (d) the counterparts of making mechanisms, clear missions and these three groups at the provincial, goals, clear allocation of responsibilities municipal, and county levels. In this and functions, a sound policy paper, we focus primarily on the framework, sufficient financial support, national-level administrative system for efficient organizational arrangements environmental protection. and mechanisms for daily environmental management and emergency response, The main components and activities effective information management, and involved in environmental public participation. administration include legislation and policy making, planning, standard Objectives and Scope of the Study setting, regulating, inspection and enforcement, oversight and The purpose of this paper is to provide accountability, management of priority recommendations for reforming environmental information, monitoring, and strengthening the state-level funding, budgeting, managing administrative system for environmental intergovernmental relationships, protection in China. administering environmental impact assessments, permitting/licensing, Complete reform of the environmental supervising and carrying out emergency administrative system will involve many responses, research, and public agencies at various levels of government participation. and various sectors, and will affect the interests of many different parties. But Based on international experience, a the first priority should be to strengthen national environmental agency plays the MEP and the legal and administrative central role in environmental framework within which it operates. administration, even if some or most of MEP is the central element of the the above activities may be the primarily system. Its weak capacity and inability responsibilities of other branches and/or to deliver the government’s levels of government. The national environmental objectives are the main environmental agency should be actively causes of China’s pervasive involved and take a leading role in environmental problems. To some legislation and policy making, planning, extent, reform of MEP could set an standard setting, conducting oversight example for the wider institutional and evaluation, backstopping reforms that will be required, environmental protection efforts, particularly (a) internal restructuring of providing financial support, developing MEP to optimize allocation of 6 responsibilities; (b) improving supervision offices; (d) enhancing the functional relationships between the collection and dissemination of national and lower level environmental environmental information; and (e) protection agencies; (c) strengthening improving the quality of human the effectiveness of MEP’s regional resources. 7 4． Current Situation and Problems with China’s Environmental Protection Administrative System MEP faces a huge range of issues that unambiguous, and sufficient authority to compromise its effectiveness. The national and local environmental detailed background studies prepared for protection bureaus (EPBs) to permit this report (see the list at the end of this them to carry out their work. MEP and policy note) identified six priority action local EPBs have insufficient authority to areas: (a) strengthening the legal establish environmental legal measures, framework; (b) clarifying the allocation impose legal penalties, and enforce of roles and responsibilities between noncompliance. different agencies within the administrative system; (c) addressing The Environmental Protection Law is issues affecting the coordination of the the nation’s basic environmental statute. environmental work of government In addition, there are a set of statutes agencies and environmental policy with specific objectives to manage development; (d) addressing environmental media, polluting organizational arrangements within activities, or pollutants. These statutes MEP; and (e) tackling problems can be classified into three categories in associated with MEP’s relationships accordance with their legislative with counterparts in lower levels of objectives (see also Figure 1): (1) government. protecting environmental media, such as the Marine Environmental Protection Legal Framework Law; (2) controlling pollution activities or behaviors that endanger the The adequacy of the legal framework environment, such as the Water determines the effectiveness of nearly Pollution Prevention and Control Law; every other aspect of the environmental and (3) controlling particular types of management system. China has made pollutants, such as the Radioactive significant progress in environmental Pollution Prevention and Control Law. legislation over the past 30 years and now has an impressive list of 26 statutes There are also some ambiguities and related to environmental and natural contradictions in China’s environmental resources management to back up the laws that undermine the effectiveness of basic Environmental Protection Law environmental administration. These (EPL), which was passed in 1989. problems are most serious in the following two areas. Nevertheless, there is still significant room to improve the legal framework,  Unclear hierarchy of the including key environmental laws like environmental law system. The first EPL. problem with the Chinese legal system is the unclear hierarchy and relationship The most significant problem with between the EPL and other laws that China's environmental laws is that they have overlapping or related objectives. are vague and do not provide clear, In principle, the EPL is the basic and 8 Figure 1. Current China’s Environmental Protection Law System Comprehensive Law on Environmental Protection Environmental Protection Law of People’s Republic of China Special Laws on Environmental Protection Legislation Objective: Legislation Objective: Legislation Objective: Protecting Environmental Media Controlling Pollution to Environmental Media Controlling Special Pollutants Marine Environmental Protection Law of the People's Republic of Law of People’s Republic of China China on the Prevention and Law of the People's Republic of Control of Atmospheric Pollution China on the Prevention and Control of Environmental Pollution Law of the People's Republic of by Solid Waste China on the Prevention and Control of Water Pollution Law of the People's Republic of China on Prevention and Control of Pollution From Environmental Noise Law of the peoples Republic of china on prevention and control of Radioactive pollution comprehensive law for environmental supervision� of the environment, which protection in China 6 and ought to is the key task assigned to it by the EPL. occupy the highest level of the legal hierarchy. However, the law lacks any There are also some ambiguities and statement to this effect. 7 As a result, contradictions in China’s environmental there are ambiguous relationships laws that undermine the effectiveness of between the EPL and some lower-level environmental administration. These laws and sector-specific laws. For problems are most serious in the example, the Marine Environmental following two areas. Protection Law (MEPL), which was enacted after the EPL, is treated as a law Unclear hierarchy of the of equal force to the EPL instead of environmental law system. The first being subject to it. Furthermore, the problem with the Chinese legal system MEPL assigns responsibility for marine is the unclear hierarchy and relationship environmental protection to both MEP between the EPL and other laws that and the State Ocean Administration have overlapping or related objectives. (SOA), which creates a clear potential In principle, the EPL is the basic and for conflict between the two agencies comprehensive law for environmental and significantly compromises MEP’s protection in China8and ought to occupy ability to effectively carry out “unified the highest level of the legal hierarchy. 9 However, the law lacks any statement to example is the activity of discharging this effect. 9 As a result, there are wastewater deeply into the geological ambiguous relationships between the environment. EPL and some lower-level laws and sector-specific laws. For example, the The existing environmental laws thus Marine Environmental Protection Law cause confusion and to some extent (MEPL), which was enacted after the create a complicated situation for EPL, is treated as a law of equal force to effective environmental management the EPL instead of being subject to it. and oversight. There is thus a clear need Furthermore, the MEPL assigns for further improvement of the responsibility for marine environmental environmental legal system and protection to both MEP and the State clarification of relevant environmental Ocean Administration (SOA), which laws. creates a clear potential for conflict between the two agencies and Role and Responsibilities of significantly compromises MEP’s ability Environmental Protection Authorities to effectively carry out “unified supervision� of the environment, which Article 7 of the EPL directs that: “The is the key task assigned to it by the EPL. competent department of environmental protection administration under the State  Ambiguous objectives and Council shall conduct unified relationships among specific or sector supervision and management of the laws. A second problem is related to the environmental protection work objectives and relationships of various throughout the country.� Frequently sector-specific laws. The MEPL protects used in Chinese environmental laws and specific ecological systems. The Water regulations, the term “environmental Pollution Prevention Law and the supervision� refers to the monitoring Atmospheric Pollution Prevention Law and oversight of environmental control pollution activities affecting protection activities carried out by other certain environmental media. The Solid agencies. The “Rules regarding major Waste Law and Radioactive Pollution responsibilities, internal organs and Prevention and Control Law control the personnel staffing of the Ministry of use and handling of specific types of Environmental Protection,� which were pollutants. Laws and regulations promulgated in 2008 by the State focusing on pollution prevention and Council, give MEP the authority to control measures cannot fundamentally “strengthen environmental management and effectively address the protection of and the guidance, coordination, and some environmental media and have the supervision functions of ecological potential to create overlapping and protection and fulfill national pollution conflicting responsibilities between the reduction targets and environmental environmental protection authority and supervision responsibility.� Through the other line agencies. Due to the lack of a rules, the State Council assigns MEP 12 legal basis for comprehensively specific responsibilities. Four of them protecting some environmental media, are about establishing the institutions for pollutants may be discharged into and environmental protection, developing pollute an environmental medium environmental research and without violating laws. One such technologies, conducting international environmental cooperation, and carrying 10 out environmental communication and agencies are also given the role of education programs. The remaining oversight for environmental protection eight are all related to the supervision activities for certain specific (monitoring and oversight) and environmental media. For instance, as management of environmental illustrated in Figure 2: protection activities. They are:  The State Ocean Administration  supervision and management of (SOA) has the responsibility for major environmental issues (Article supervision and management of 2) marine environmental protection.  supervision and implementation of  The Ministry of Land and Resources total emission control and the waste (MOLR) has responsibility for discharge permit system (Article 3) supervision and management of  supervision of fixed-assets geological environmental protection. investment in the environmental  The State Forestry Administration protection area (Article 4) (SFA) is responsible for supervision  conducting environmental impact and management of terrestrial assessments(EIA) on major ecological protection, including economic and technological policies, nature reserve management. development plans, and economic  The Ministry of Agriculture (MOA) development programs(Article 5) is responsible for supervision and  supervision and management of management of aquatic ecological environmental pollution protection and rural environmental control(Article 6). protection.  supervision of ecological protection work(Article 7). These arrangements lead to two  supervision and management of fundamental problems: (1) conflicts of nuclear safety(Article 8). interest, and (2) overlapping  environmental monitoring(Article 9). responsibilities. In working to implement these 12 tasks, First, conflicts of interest arise because MEP’s overall responsibility is the some of the line agencies mentioned unified supervision and management of (particularly SIA, MOLR, SFE, and environmental protection nationwide, MOA) have management which should cover the oversight of responsibilities for development and/or environmental management activities for management of natural resources as well all environmental media—freshwater, as the supervision/ oversight of their the marine environment, soil, and environmental protection. Such ecological systems. MEP is also conflicts of interest are contrary to the involved in decision making through its fundamental principle of separating review of EIAs for major projects, regulation from execution and thus development policies, plans, and significantly weaken the integrity and programs. effectiveness of environmental management. However, under current arrangements, a number of other national government 11 Figure 2. China’s Environmental Protection Administrative System—Current Allocation of Supervision and Management Functions Supervision and Management Level Resource Development Authorities Ministry of Agriculture Ministry of Land and Resources Ministry of Environmental Protection State Ocean Administration State Forestry Administration soil& geological ecological & rural water atmospheric marine environmental environmental environmental protection environmental protection protection environmental protection protection Five Environmental Media Local governments Ministry of Land and Resources State Ocean Administration Local governments Implementation Level 12 Second, the responsibility of unified controlling pollution in the Huai River environmental supervision assigned to basin—show that, from time to time, the MEP by the EPL is significantly national government may need to play a undermined by the fact that it is required more significant role in coordinating or to share with (rather than be solely even implementing environmental responsible for or delegate to) SOA, management, especially planning, MOLR, SFA, and MOA the financing, and oversight. Since there is responsibility for supervision/oversight no clear delegation procedure for functions of marine environmental environmental management from the protection, geological environmental national government to local protection, ecological protection, and governments, the final responsibility and rural environmental protection accountability for environmental and respectively. natural resource management problems are not always clear under such Third, there are still some environmental circumstances. Considerable delays can issues that are not clearly assigned to occur while the administrative and managed by MEP or any other arrangements are worked out on a case- agencies under the current arrangements. by-case basis. Geological environmental protection is such an example. While environmental Coordination of Government Agencies protection authorities pay attention to and Environmental Policy Making the environmental impacts of extractive industries through EIA and A number of line agencies have environmental monitoring and conflicting and/or overlapping roles in enforcement, no agency in China has the environmental supervision and specific responsibility for the management, especially in natural supervision and management of the resource protection areas. Even if that overall geological environment. 10 For problem is resolved, most line agencies years, the geological environment has will still make sectoral development been used to dispose of industrial policies, programs, and plans with wastewater (such as those from oil environmental impacts. In addition, fields) and radioactive wastes. Without there are still various agencies as well as the laws and administrative structure to local governments responsible for manage and protect the geological environmental protection in their sector environment, there is also a significant or jurisdictional areas. How to threat to groundwater and eventually coordinate these parties and ensure that public health. policies are consistent with the national environmental interest—instead of A final ambiguity arises in relation to the sectoral or local interests—is crucial to management of cross-boundary effective environmental management environmental issues. The EPL and an urgent matter to be addressed by specifies that local governments are the State Council. responsible for local environmental issues in their jurisdiction and that MEP This problem has been recognized by has only technical guidance and Chinese experts and administrators for supervisory roles. Certain cases, many years. It was expected that the however—such as the problem of problem would be solved by establishing a coordination mechanism within the 13 State Council, such as the State protection work at different levels and Environmental Protection Committee the national significance of (SEPC) created under the State Council environmental responsibility at those in 1984–98, and the interagency same levels. There are about 180,000 roundtables that currently exist among people working on environmental relevant departments on specific issues. protection at environmental protection However, neither the SEPC nor agencies and their affiliated institutions roundtables have the authority or at all levels of government in China, of capacity to make decisions beyond the which only 1.3 percent are employed at interest of the particular agencies they the national level (in MEP and its represent. They have thus not been able affiliated research institutes), 6.1 percent to deliver the necessary policy at the provincial level, 22.7 percent at coordination. Something stronger is the municipal level, and 67.1 percent at needed, such as a high-level entity the county level. 11 Some 100,000 whose authority is higher than individual environmental protection employees agencies. This entity would have the work at the county level, many of whom capacity to support the State Council in are inadequately qualified and/or making policy in areas that affect both trained, or have no relevant economic and social development and qualifications at all. environmental issues across sectors and regions. A model that seems to be In recent years, the national government particularly well-suited to the Chinese has paid more attention to capacity situation—given the size of the country building of MEP as well as local EPBs. and diversity of the economy, the The national plan for capacity building division of governing responsibilities of environmental regulation and between different levels of government supervision under the 11th Five-Year and the distribution of responsibilities Plan provides for expenditures of nearly between national level agencies—is the RMB 15 billion (RMB 7.8 billion from Council on Environmental Quality the national budget) to build the capacity (CEQ) in the United States, which is of MEP and local EPBs, including discussed later in this report. environmental monitoring, supervision, research, information, and education. Capacity of MEP and local EPBs MEP now employs only about 330 staff, Although MEP has the main role and plus about 1,950 staff in its affiliated responsibility for environmental research institutions or semi-managerial management, especially environmental offices. Even though this represents a supervision, most of the human significant increase over the levels of 10 resources available to actually years ago, it still compares very poorly implement environmental policy are with counterparts in other countries on located at lower levels of government, which China should be modeling itself. within environmental protection bureaus The most glaring disparity is in (EPBs) at the provincial, municipal, and comparison to the U.S. EPA, which has county levels. One of the most notable about 17,000 employees. As discussed features of the Chinese environmental further below, MEP’s human resource administration system is the almost allocation also compares poorly with a complete disconnect between the human range of other relevant countries. resources available for environmental 14 MEP’s organizational arrangement also Annex Table 1 shows MEP’s detailed suffers from a number of structural organizational chart. Departments with problems, including: direct responsibility for environmental supervision and management can be  Overlap of functions. For example, divided into three groups, namely: the Department of Pollution Control and the Department of Total Emission  Departments established in Control of Pollutants have many accordance with the different aspects of overlapping responsibilities. environmental management, such as the Department of Environmental Impact  Incomplete coverage of functions. Assessment, Department of For example, there is no specific Environmental Monitoring, Department department that is responsible for the of Pollution Control, Bureau of supervision and management of the Environmental Supervision, and geological environment. Department of Total Pollutant Emission Control.  Separated functions. Some functions should be implemented in a  Departments responsible for unified and integrated way but are managing specific environmental media, separated. For example, pollutant such as the Department of Nature and discharge declarations, pollutant Ecology Conservation. discharge fees, and pollutant discharge permits are given to the Department of  Departments regulating special types Pollution Control, Bureau of of pollutants, such as the Department of Environmental Supervision, and Nuclear Safety Management. Department of Total Emission Control of Pollutants, respectively. This Given MEP’s relatively small size, the increases the cost and reduces the organizational structure is extremely effectiveness of coordination. complex, with over 80 units of divisional status or above. Assuming all  Difficulty in information sharing leadership positions are filled, this and management. For example, means that nearly 25 percent of the information related to environmental regular staff are managers and that the quality, pollutant discharges, pollutant average size of divisional units is very discharge fees, and pollutant discharge small. Of course, it also needs to be permits are located in four different remembered that there are nearly six departments. The sharing of this staff employed within MEP’s affiliated information is difficult and inadequate. institutes and semi-managerial offices for every MEP staff member, Relationships between MEP and representing a significant supplementary Local Governments resource. However, since the research institutes are encouraged to seek out As indicated by the distribution of external contracts, their staff members human resources between the different are not available 100 percent of the time levels of government in the to work on MEP priority activities. environmental administrative system, MEP operates at a very strategic level. It 15 is mainly responsible for strategic enforcement authority and the financial national environmental planning, setting tools to significantly influence the environmental protection goals, defining environmental management environmental performance standards, performance of local governments. coordinating environmental quality Even though MEP has the duty to guide monitoring, and supervising the local EPBs, it is hard for MEP to make environmental work of other relevant sure local EPBs follow its instructions units. Most of the daily environmental because local EPBs directly report to management work is actually carried out local governments and rely on local by lower levels of government through budgets instead of national budgets or their respective EPBs. MEP funding. A proposal has been developed to underwrite vertical Although MEP is legally mandated with management of environmental the role of supervising environmental protection bureaus by the national protection activities nationwide, the government through MEP which, if reality is that it lacks both the adopted, might help solve this problem. 16 5． Lessons Learned from Chinese and International Experiences There are many lessons that can be government and improve efficiency. As learned from past experiences with part of this, the then-State public administration reform in China Environmental Protection and internationally. This section Administration (SEPA) was upgraded to summarizes some of those experiences. the level of a full ministry, renamed MEP, and assigned a position on the Evolution of Public Administration State Council. After the national reform, and Environmental Administration local environmental protection agencies Reform in China also started to upgrade their administrative status within the local Reform of the environmental government accordingly, from administrative system in China cannot Environmental Protection Bureau to be separated from reform of the overall Department of Environmental public administrative system. The Protection. All of these measures had government has paid much attention to been recommended by experts for many public administration reform based on years. its belief that administrative and institutional reform is important for The administrative reform strategy has improving the political system, adopting been deepened since the current a market economy, and strengthening administration took office in 2003.It can the economic framework. be summarized as follows: There have been six reforms in the  The goal of administrative reform government’s administrative system evolved from adjusting the since 1978, with the most recent ones in administrative system according to the 1998, 2003, and 2008. The reforms economic system reforms to improving instituted in 1998 revoked the authority and deepening economic and political of governmental departments to system reforms together. administer industries and business, and separated government functions from  Institutional reforms have focused enterprise management as part of the on rationalizing governmental functions, transition to the market economy. They enhancing the efficiency of also decentralized some authority for administrative structures, and making detailed business decisions to legitimizing administrative behavior. local governments, and reduced the Special attention has been paid to the number of institutions and staff within interaction among governmental the State Council. The 2003 reforms functions, structures, and behavior. mainly restructured departments in charge of macroeconomic regulation and  To improve the market economy and redefined their functions. The reforms strengthen social management and in 2008 were guided by the concept of public service, the principles of establishing a system of “super- government have been transformed, ministries� with comprehensive giving priority to public service over functions so as to trim the size of the 17 economic development, and to focused capacity strengthening of MEP and local public administration in place of overall EPBs. management. Given the challenges and constantly Generally speaking, these continuous changing nature of environmental administrative system reforms have met management in China, the central the fundamental needs of socioeconomic government cannot take the complete development and thus contributed to responsibility for environmental achieving the nation’s opening up and management in the nation, although it is economic development goals. However, ultimately accountable for the reforms remain incomplete and there environmental problems. While the is much room for further progress. The central government is responsible for crucial challenge is to make public enacting and overseeing the administration more comprehensive and implementation of environmental laws integrated. Past reforms mainly resulted and regulations, local governments in adjusting or separating the functions should implement and enforce the laws of ministries and in economic regulation under the supervision of the higher-level and market management. For example, government agency. In future reforms, the 1998 reforms focused on the central government needs to consider administrative departments of industry how to clearly delegate the and business related to market economy responsibility of local environmental regulations; the 2003 reforms adjusted management to local governments and departments charged with regulating the set overall policies in ways that are overall economy; and the 2008 reforms sensitive to complicated and diverse enhanced the administrative level of the local economic and environmental environmental protection authority. situations. Serious consideration needs Even after these reforms, most agencies to be given to the balance of in charge of natural resources remain environmental regulatory basically intact, and the conflicting and responsibilities assigned to different overlapping problems faced in the areas levels of government. of environmental and natural resource management still largely exist. In the International Experiences in future, the organizational reform of Environmental Administration environmental and natural resource management should focus more on Over the past 40 years, approaches to addressing these conflicts and overlaps environmental administration among and strengthening environmental various nations have gone through a administrative capacity. significant evolution that has proved critical for controlling environmental Special attention in future reforms pollution and improving environmental should be given to (a) a clearer quality. Based on a detailed review allocation of responsibilities for carried out as background to this report, environmental management among some key characteristics and MEP, other line agencies, and local developments have been identified that governments;(b) more effective are of relevance to the Chinese situation. coordination and decision making across agencies and governments; and (c) 18 Clear Legal Endorsement of Effective Interagency Coordination Rulemaking and Enforcement Mechanism. Effective interagency Authorities. In many nations, the coordination mechanisms are essential if rulemaking and enforcement authorities environmental administrative bodies are of environmental administrative to satisfy the government’s bodies—for example, the U.S. environmental objectives. Many Environmental Protection Agency countries have established structures to (EPA)—are clearly and unambiguously facilitate interagency coordination in set forth by the legislature through relation to national environmental national laws. Such national laws policies. One example that is considered provide clear-cut legal authority to particularly relevant to the Chinese environmental administrative bodies for situation is the U.S. Council on their rulemaking and enforcement Environmental Quality (CEQ). CEQ activities. With a clear legal was established to oversee endorsement, environmental implementation of the National administrative bodies are able to Environmental Policy Act by federal implement their rulemaking and agencies and to develop and recommend enforcement powers without possible to the president national policies and internal hesitation and external legislation for environmental quality interruption. (see Box 2). Of course, the effectiveness of such organizations is Strong Capacity of Environmental determined by their ability to affect Administration Body. Through decisions at the highest level of national statutes or executive orders, government, for which they need to be environmental administrative bodies in situated at an appropriately high level in many countries are also provided strong the national decision-making system and financial support, personnel, and other be able to maintain a high degree of capacities. For example, the U.S. EPA independence. has over 17,000 employees and a budget of about$8–10 billion annually. Effective Regional and Vertical Environmental agencies are also Management. In many nations, authorized to set up their research, regional environmental management training, testing, and other capacities so systems for river and lake basins, that their rulemaking and enforcement economic zones, and nature reserves can be timely and effectively play an important role in environmental supported. 12 More examples on the administration. Laws also have staffing of environment ministries in established differing roles for other countries are provided in Box 1. environmental administrative bodies at Some countries have adopted the national, provincial/state, and local supplemental measures to strengthen levels. Typically, national agencies can capacity, including outsourcing certain supervise or otherwise substantively regulatory functions, creating dedicated influence subnational agencies so that funding sources (e.g. trust funds), and local protectionism can be minimized.13 utilizing voluntary incentives and citizen-based monitoring. 19 Box 1. Employees and Budgets of Ministries of Environment in Selected Countries France: In 2007, the French Ministry for the Protection of Nature and the Environment (Ministère de la Protection de la Nature et de l’Environnement) employed 2,351 staff and had a budget of about €21 million. Most of the funds were used as seed money to stimulate more investment in the environmental industry. Germany: In 2002, the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BundesministeriumfürUmwelt, Naturschutz und Reaktorsicherheit) employed about 2,000 people, including 870 in the Bonn headquarters and the Berlin office. Its budget for the same year was €550 million, excluding other environmental project funds. Japan: According to a survey in January 2006, the Japan Ministry of Environment employed 1,134 people, including those working at local offices. In 2007, the ministry’s budget was $20 billion, or about 1 percent of the country’s total budget. South Korea: In 2005, the South Korean Ministry of Environment had 1,596 employees, including 472 working within the ministry and 1,124 working for affiliated entities. In 2006, the ministry’s budget was about $3.3 billion. Box 2. The U.S. Council on Environmental Quality (CEQ) CEQ was established in 1970 during the Nixon administration. Directly reporting to the president, CEQ is responsible for (a) overseeing implementation of the National Environmental Policy Act (NEPA) by federal agencies; (b) developing and recommending to the president national policies and legislation for environmental quality; (c) conducting investigations, studies, research, and analyses related to ecological systems and environmental quality; and (d) documenting changes in the natural environment and their underlying causes. The CEQ chairman is a political post appointed by the president with the consent of the Senate. CEQ has a small staff team of about two dozen people. Although the Environmental Protection Agency (EPA) and CEQ enjoy a close working relationship, each organization has its own jurisdiction and authority. Fundamentally, CEQ’s task is to oversee and serve as a focal point for federal environmental policy, broadly defined. It generally does not have day-to-day management responsibilities for implementation of environmental laws, which are under the jurisdiction and authority of EPA. On the other hand, EPA works closely with CEQ on developing national environmental policy, and is an active partner and participant in many meetings and collaborations initiated by CEQ. 20 Meaningful Utilization of Judicial developed countries have laws requiring System. The judicial system must play public hearings to gather inputs from an important role in environmental stakeholders prior to rulemaking or the enforcement. Most effective construction of new and environmental agencies have established environmentally significant facilities. a strong legal division that can not only Such transparent processes provide a impose administrative penalties on warning system to any potential violators by itself, but also bring violators and significantly prevent violators to court. Court decisions on potential corruption by officials. In civil and criminal penalties are often many countries non-regulatory much more severe than administrative approaches—such as the establishment penalties, so the existence of a potential of public watch dogs using information link with the judicial system disclosure mechanisms—have proven significantly enhances the enforcement more effective in promoting compliance ability of agencies. In some countries than traditional command and control such as the Philippines, Thailand, and measures. India, where the environmental enforcement system has been weak, the China has been actively learning from judiciary has stepped in to ensure international environmental experience, implementation of environmental especially those in developed countries. policies and protections. In fact, many of China’s environmental protection laws and programs were Transparent Information Disclosure modeled on those from other countries. and Public Participation. Because However, it is not practical to simply environmental protection is a public copy other countries, given China’s interest, environmental administrative specific situation. Learning from bodies must rely on the participation of international experience should take into other stakeholders during the course of account the country’s current rulemaking and enforcement. An development stage, political and judicial effective and efficient information system, public administrative structure, disclosure system is necessary to social formation, public awareness and encourage public participation. In many support, and the pace of reform. Any countries, transparent processes— reform proposal must be based on a established either by environmental thorough understanding of the local agencies themselves or by general context. administrative measures—have been established to carry out rulemaking and enforcement efforts. For example, most 21 6． Recommendations As discussed in section 1, China faces a MEP’s institutional setup and inner wide range of constraints on its ability to workings are by and large prescribed by meet its ambitious environmental goals. the “State Council Circular on the Main This note focuses on actions required to Responsibilities, Internal Organs and improve the environmental Personnel Management of the Ministry administrative system at the national of the Environmental Protection� (Guo level. Ban Fa [2008] No. 73), issued on July 10, 2008 (the 2008 Organic Circular). Clarifying Roles and Responsibilities Numerous ancillary regulations to the among Relevant Government EPL also contain certain provisions on Agencies the power and authority of MEP in particular areas or vis-à-vis certain China’s Environmental Protection Law environmental media. Therefore, in the explicitly gives the national endeavor to clarify MEP’s functions and environmental protection authority responsibilities, the 2008 Organic (currently MEP) the responsibility for Circular and the ancillary regulations to unified supervision of national the EPL may well need to be amended in environmental protection work. This conjunction with the EPL revisions. should be emphasized and implemented. Nevertheless, updating of the EPL is Based on the general principles of public considered to be an essential first step on administration, existing EPL the road to reform. requirements, and past and international experience, the roles of supervision and In addition, the interagency rivalry in execution should be separated by Beijing has meant that national agencies different bodies and the role and oftentimes compete with one another to responsibilities of environmental develop new laws that, in addition to protection authorities at the national their stated goals, will create more level should be further clarified by the power for the agencies themselves and State Council in its rules regarding justify their call on national resources. organizational setup and responsibilities. One result of this phenomenon is a In the longer term, consideration should proliferation of sometimes overlapping be given to revision of the EPL itself to or contradictory laws and regulations bring it up to date with current administered by agencies with varying conditions and to make the role and commitments and experiences. responsibilities of the national Therefore, while it is important for MEP environmental protection authority clear, to assume more responsibility, it is explicit, and unambiguous. It must also advisable not to lose sight of the broader be recognized that, while MEP is institutional context within which MEP directed and authorized by the EPL to operates. Lack of authority is clearly a establish appropriate national standards challenge for MEP, but perhaps a bigger and to oversee their implementation by challenge is how to acquire more subnational agencies, the EPL, by authority and power without stepping on definition, was not intended to be an the toes of other agencies. organic law and hence does not form the sole power base for the MEP. Indeed, The main role and responsibilities of 22 national environmental protection MEP consistent with the responsibilities authorities, MEP in particular, should be assigned to it under the EPL. to (a) regulate and supervise the environmental management of local Reforming and Strengthening governments on behalf of the national Environmental Laws government rather than be directly responsible for the execution of local A sound legal system will provide the pollution management and prevention; basis and support for effective (b) supervise all relevant sectoral environmental protection administration. agencies (e.g. agriculture, oceanic, As discussed previously, there is plenty forestry, and land and resources) on their of room for reforming and improving environmental management China’s current environmental legal performance in their sectors; and (c) system. Specific recommendations participate in environment-related include (a) reforming the national decision making through environmental environmental legal system to establish impact assessments of development a clearer authority allocation to MEP policies, programs, and plans as well as and EPBs, and (b) amending sectoral key investment projects. laws and regulations to clarify MEP’s specific supervisory role. The national environmental protection authority delegates the power of Reforming national environmental legal environmental management to system provincial and lower level governments and supervises them through periodic The EPL should be amended or performance reviews. In this effort, MEP redrafted to provide MEP and EPBs needs to avoid “stepping on the toes� of with clear and sufficient legal authority local governments and taking over the to establish environmental legal execution responsibility of local measures, impose environmental governments, except in an extreme case penalties, and enforce noncompliance. when it becomes necessary to revoke the The EPL should provide a clear delegation due to lack of cooperation or authority allocation between MEP and unsuccessful implementation by a local local EPBs, and between MEP and other government, or when the magnitude of line agencies under the State Council. an environmental problem goes beyond the boundary and capacity of provincial The EPL should also be amended to governments or relevant regional provide that the State Council, as well as government entities. Clear instructions relevant line agencies, should further and procedures should be developed to prepare and develop the corresponding govern situations where MEP is required administrative regulations and rules for to intervene in such circumstances. implementing the law’s requirements. All laws and regulations should clearly Line agencies in the national specify the role of supervision and government are responsible for execution and leave the unified development and environmental environmental supervision role to MEP management issues in their respective according to the EPL. sectors, but they should all be subject to the unified environmental supervision of Amending or establishing sector or specific laws and regulations 23 Recommended actions include: its capacity.  Amending the current Marine Establishing a National Environmental Protection Law to make Environmental Policy Office it subject to the authority of EPL, and authorizing MEP alone to supervise the Environmental problems are cross- adequacy of marine environmental sectoral and usually go beyond MEP’s protection. jurisdiction. Many macroeconomic and sectoral policies, programs, and plans  Issuing the Ecological Protection established and implemented by other Law (Natural Reserve Law). Under the line agencies or local governments have authority of the EPL, this law will potential environmental impacts, some authorize MEP to supervise the significantly negative. MEP has a role in adequacy and effectiveness of the reviewing and supervising the management of natural reserves, and implementation of environment-related revoke any ordinances creating development policies, programs, and ambiguous and overlapping authority in plans, but it has insufficient authority to the environmental supervision of nature decide or overrule decisions made by reserves. other agencies, some of which are more powerful and influential in the  Developing a Geological government system.14From time to time, Environmental Protection Law policy recommendations and decisions (combining it with the Radioactive from line agencies—including MEP and Pollution Control Law)to authorize MEP local governments—are made based on to supervise the geological environment. their own interest. The State Council or the president and the premier need to be  Modifying the State Council’s able to effectively manage and balance Information Management Ordinance to the interests of line agencies and local require the sharing and public disclosure governments and make policy decisions of environmental information among that are in the best interest of various ministries and local environmental protection. governments. The Chinese experience with inter- Given the weak capacity of MEP in ministry commissions or roundtables— environmental supervision in certain with the representatives of relevant line sectors, the strengthening of MEP’s ministries sitting on the board—does not execution of environmental supervision provide a useful solution for overcoming can be implemented in phases. In a the individual interests of line ministries. sector where MEP is currently weak in The U.S. experience with the Council on monitoring and supervising Environmental Quality (CEQ)may be a environmental management useful guide for China; as discussed performance and the relevant line earlier, CEQ provides direct and agency is traditionally strong and has a important support to the chief good record in environmental executive’s environmental decision management, MEP may delegate its making. environmental supervision authority to such an agency, at least until it develops Therefore, it is recommended that China establish a high-level Environmental 24 Policy Office (EPO) under the State instructions be issued by the State Council. The EPO should be a Council to provide MEP with clear and permanent office, directly reporting to unambiguous authority for the president and/or the premier, environmental supervision; that is, independent of any line ministries, and overseeing the nationwide performance have its own staff and budget (even of environmental management on behalf though small). Its objective would be to of the national government. assist the president and/or the premier to review and make policy decisions In addition, MEP’s role in the related to environmental protection. environmental oversight of certain EPO’s policy recommendations or areas—the protection of ecological proposals should be free of individual environment and nature reserves, interests of line agencies. oceanic environment, rural environment, and geological environment—should be As for the existing National clarified or reconfirmed through a clear Environmental Advisory Committee and allocation of responsibilities by the State the China Council for International Council so that line agencies responsible Cooperation on Environment and for resource development and Development (CCICED), both would environmental management of their own continue to be managed by MEP (which sectors would all be subject to the already houses their secretariats) and environmental supervision of MEP. play an advisory role to the national Information sharing and reporting and government, especially to MEP. monitoring mechanisms need to be established to ensure MEP supervision. Reorganizing and Strengthening MEP for Carrying out Its Responsibility for Specifically, the supervision/oversight Unified Environmental Supervision unit of nature reserves should be across Sectors and the Country separated from resource management agencies such as SFA and moved to As recommended above, MEP should be MEP, while relevant line agencies are authorized by law to carry out the still responsible for natural resource unified supervision/oversight of development and daily environmental environmental management programs management. The responsibility of and performance of all other line geological environmental protection agencies and local governments. To should be separated from MLR and fulfill this large mandate, MEP needs to moved to MEP. MLR’s role would be be reformed and strengthened. The focused on resource development actions recommended below concern management. SOA will be responsible MEP’s role and responsibilities, for environmental supervision of reorganization, and regional inspection. oceanic environment; MEP will assume A comprehensive study on the the role of unified supervision. MEP reorganization and effectiveness of MEP would also be actively involved in the and local EPBs would benefit the climate change area, especially from the deepening of the reform. perspective of environmental impacts of climate change. MEP’s environmental Clarified and expanded role of MEP supervision capacity is weak, especially in some natural resource sectors in The EPL should be amended or other 25 which MEP is traditionally little supervision of the activities related to involved. If necessary, MEP may the particular environmental medium. delegate its environmental supervision While enforcement is largely a local authority in a certain sector to a line responsibility, it is subject to local agency for a certain period given the political and economic pressures. A capacity of both sides. But it has to be highly visible and strong national made clear the final accountability of presence is essential to the successful environmental supervision in such a implementation of environmental sector is with MEP. programs and required to achieve consistent enforcement of national Reorganization of MEP environmental laws. There should be a department overseeing both For MEP to fulfill its challenging and environmental supervision and expanded responsibilities, it needs to be enforcement. A National Bureau of reorganized and strengthened with a Environmental Supervision and more effective structure. As a general Enforcement under MEP may be an principle, its departments and bureaus option for such enhancement. This will should be established in a way that not only assure that visibility, but also focuses on the effective protection of the enable MEP to address cross-media various environmental media. environmental enforcement and supervision issues. It is recommended that MEP establish subordinated departments in charge of MEP should retain its current water environmental protection, departments of personnel and atmospheric environmental protection, institutional affairs, nuclear safety soil and geological environmental management (i.e., National Bureau of protection, marine environmental Nuclear Safety Management), planning protection, and natural reserves, and finance, policies and regulations, ecological and rural environmental EIA review, education and protection. The divisions within the communication, and international departments of environmental media cooperation and general administration. should be organized to facilitate integrated environmental management. Strengthening environmental For example, the Department of supervision at the regional level Atmospheric Environment should have divisions in charge of atmospheric MEP has already established regional environmental monitoring, pollution supervision centers, but these should be prevention and response, emission upgraded to regional bureaus that act as permits and total pollution control, and regional branches of MEP to ensure inspection and supervision. appropriate environmental supervision by region. Their function and personnel MEP should also focus on enhancing its staffing should also be expanded. The environmental oversight and regional branches should also have enforcement functions first. Each divisions by environmental medium to department in charge of protecting an reflect the structure of the head office, environmental medium should have a but should be adapted to suit the division dedicated to environmental particular situation in each region. This 26 pattern may not only address the well as subnational political boundaries, shortage of personnel staffing, but also thus diminishing parochialism imposed extend part of supervision and by these boundaries. Along with this management functions of the approach, MEP should continue utilizing departments of environmental media at a hybrid of punitive and rewarding the national level into regional regulatory tools as discussed in Section environmental protection work. For 2. example, the division of water environment under regional bureaus is Strengthening Local Environmental an extension of the work of departments Administrative Functions of water environment at the central level. The Environmental Protection Law requires that local governments—such Promoting regional regulatory as provincial or municipal approaches governments—are responsible for local environmental quality, and that local China’s current environmental laws pose EPBs are responsible for conducting a unique set of problems that are less unified supervision and management of frequently noted: cross-boundary local environmental protection. As externalities. Environmental pollution discussed earlier, there are foreseeable respects no boundaries. This is difficulties faced by local EPBs. First, especially true with water pollution and as local EPBs are under the authority of air pollution in China, where gigantic local governments, there could be rivers run through dozens of. Typically, conflicts between local development the laws presuppose a common national priorities and the requirements set by the commitment to the goal of national environmental protection environmental protection and a higher policies and higher-level governments. degree of administrative cohesion than Second, the higher-level government currently exists. It is assumed that and even central government should be subnational agencies and governments responsible for solving environmental will want to meet, if not exceed, problems that occur in more than one nationally set environmental standards. jurisdiction; that is, cases where more Little attention is focused on than one local government is involved, environmental problems that transcend a and in which no single local government single province or municipality. The has the capacity to manage the problem. law presumes that local environmental Third, through amendment of the EPL, protection bureaus, which report regional offices of MEP should be principally to local government officials, authorized to oversee local EPBs. will successfully coordinate with MEP. Finally, there is a serious shortage of These assumptions are not borne out by staff in regional offices and provincial reality. EPBs. Clearly, a careful study on the reform and strengthening of To overcome local protectionism and environmental protection administrative also to address the issue of externality, systems at the local level is essential and MEP may need to consider promoting needs to be commissioned. Without regional regulatory approaches that cut that, this paper would only focus on the across existing geographic boundaries as possible role of the national government. 27 The national government should support addition to local governments. At a local governments by authorizing both minimum, there should be sufficient administrative functions and financial national funding for MEP to influence transfers in order to allow local EPBs to and oversee the behavior of local EPBs. take full responsibility for the unified supervision and management of local Strengthening the Overall Capacity of environmental protection work. This MEP to Conduct Environmental should be under the supervision of Governance environmental protection authorities at a higher level and ultimately under MEP Strengthening MEP’s capacity to fulfill supervision. On behalf of MEP, the its current and proposed responsibilities existing regional centers or bureaus of is essential, especially with regard to the environmental supervision should be the following four aspects: financial main authority. Their administrative capacity, human resources and skills, and supervision functions should be information management, and public extended to be able to oversee the local participation. EPBs on behalf of MEP. First, the government needs to provide The EPL and relevant regulations and sufficient financial resources to MEP rules need to be amended to establish the and local EPBs to fulfill their mandates. strong supervisory mechanism of a In addition to allocating a portion of superior environmental protection pollution levy/fine revenues to MEP and agency that oversees all of the lower local EPBs, the government has to level environmental protection agencies. provide them with the necessary For example, Article 63 of the Water financial resources from its annual Law has already provided that where the budget. The public fiscal expenditure for governments at or above the county environmental protection so far is still level—or the administrative departments the smallest portion of the total for water resources at a higher level— government budget in comparison with discover violations of law or negligence other public sectors. It has been widely of duty committed by the administrative observed that environmental protection department for water resources at the financing has lagged behind the need for same level or a lower level in coping with development for many supervision and inspection, they shall years. Given the government’s increased order the violating department to rectify financial strength, more financial this within a set time limit. Comparable resources should be secured for provisions should be incorporated into environmental protection authorities. the EPL. Regional bureaus should have MEP should seize the opportunity and the adequate means, financial or establish an effective financial administrative, to discipline the violating mechanism for environmental local government entities in a similar protection. manner. Second, the staffing of the existing In the long run, local EPBs should, at environmental protection agencies, least partially, be funded out of the particularly at the higher levels (state national budget and have the and province) is obviously insufficient responsibility of reporting to MEP in to deal with the scale of environmental management challenges faced by China. 28 The capacity and professional Environmental information sharing and knowledge of many staff are also reporting mechanisms should be set up inadequate. To strengthen human between MEP and other line agencies resources capacity, the following steps and local governments. should be considered: (a) recruit high- level staff with the expertise necessary Fourth, incentive-based mechanisms can to carry out the various administrative be utilized to improve the effectiveness responsibilities for environmental of environmental administration and protection, especially at the national and regulation. (1) To motivate government provincial levels; and (b) provide officials, in addition to oversight and professional training to the lower level enforcement authority, the MEP should staff. More effort should also be put into use career and promotion as incentives environmental education and public for good environmental performance, awareness-raising to improve the quality and to participate in the decisions that of human resources in the long run. concern staff salaries, operating budgets, and other important financial matters. Third, governments at both the national (2) To alter firms’ behavior, the balance and local levels should improve their of incentives and penalties should be environmental information sharing factored into MEP’s policy design. mechanisms. Relevant environmental Incentives and penalties, if implemented information includes pollution properly, can be mutually productive. As prevention and control, EIA, and an illustrative example, in the U.S., environmental supervision and planning. under various compliance incentive Incomplete, asymmetric, and inaccurate programs, the U.S.EPA is able to reduce information directly affects decision or waive penalties for firms that making and the administration of voluntarily audit, disclose, and correct environmental protection. To some environmental violations and that take extent, the failure to provide timely and action to prevent future harms. EPA also accurate information is caused by allows returning collected fines as an institutional barriers. Therefore, one of incentive for self-correction or for the priorities for administrative reform is meeting EPA’s compliance.15 to establish a well-functioning information mechanism for the Fifth, alternative dispute resolution administration of environmental should be studied and developed. protection. Two programs could be set Throughout its long imperial history, up to improve access to accurate and Chinese civilization relied on moral comprehensive environmental precept and local custom to resolve information at this stage. First, the many problems that other societies have government should release the inventory addressed through public, positive law of pollution sources by cities to the (and through litigation). Nor has public, public. Second, the government should positive law been a central means for channel and unify the environmental ordering society throughout much of the quality and emissions information history of China. As a result, collected by various sources—such as environmental litigation has proved a environmental statistics, pollution rarity in China. Indeed, most countries, sources, EIAs, and pollution levies— including the U.S., have seen the inside the MEP and local EPB systems. shortcomings of relying wholly on the 29 judicial system as a means to encourage also remain as an avenue of potential environmental enforcement, given that it redress for smaller, more localized often moves slowly and can be problems. expensive. Therefore, it is advisable to study and implement an array of Finally, the government should enforcement tools, including possible encourage and enable more public alternative dispute resolution participation in the decision-making mechanisms and other administrative process as it relates to environmental tools. For these reasons, alternative issues. Recommended actions include(a) mechanisms should be encouraged as an improving the laws and regulations alternative to judicial adjudication. regarding public participation; (b) Administrative solutions should defining objectives and procedures for continue to be used in order to alleviate public participation; and (c) building an the caseload burden on judicial operational mechanism for public personnel. Meanwhile, mediation should participation. 30 7． Concluding Remarks Despite the progress made in environmental administration reform— environmental protection, China is still high political commitment, increasing facing a daunting task to effectively public awareness of environmental manage its environment. The nation’s problems, and strong financial capacity. environmental protection capacity is The government needs to capitalize on weak and below expectations, as this opportunity to strength illustrated by pervasive environmental environmental administration and pollution problems and the degradation improve the chances of meeting its of almost all environmental media in environmental objectives. China. This policy note focused on MEP, The administrative system for primarily at the national level, and its environmental protection is the key structure and relationships. But there element of environmental governance. are many other dimensions to the It is essential to effective environmental problem. Consideration needs to be management and environmental quality. given to additional options for To fulfill its duty of safeguarding the strengthening environmental supervision environment and protecting public of local EPBs, including the potential health, China’s national administrative value of direct financing options, as system for environmental protection recommended above, and additional needs to be reformed and strengthened. ways to influence and guide The key aspects of the reform involve improvements and actions for acceptable (a)clarification of the roles and environmental performance. As noted responsibilities of central government above, China has mechanisms in place agencies and local governments;(b) for overseeing and holding accountable establishment of a comprehensive government officials for achieving goals environmental legal system;(c) set forth in the Five-Year Plans. strengthening of the coordination and However, the other elements of the decision-making capacity of the central environmental protection effort lack government; and (d) reorganization and comparable mechanisms. For example, improvement of MEP. there is a lack of mandatory oversight and accountability mechanism if local The government has been making efforts officials fail to meet local environmental to reform its public administrative goals. Finally, the introduction of system in order to improve its governing environmental permitting is new to efficiency and effectiveness. These China, implemented now through the reforms have been successful, but more water law and, in the future, likely still needs to be done to establish an through the air law.MEP needs to effective public administrative system explore and strengthen the relationship for promoting environmentally between the EIA review function and sustainable development. China now permitting procedures for new facilities. has a favorable internal environment for 31 List of Background Papers to This Report Note: The following reports were prepared by a team of Chinese and international experts for the World Bank’s China Environmental Administration TA. These studies provided the basis for preparing this policy note. Ma, Zhong. 2009. Policy Recommendations for Continuously Strengthening the Management Responsibility of the Ministry of Environmental Protection. Draft report (in Chinese) prepared for the World Bank’s China Environmental Administration TA. Yu, Hui.2008. The Reform of the Environmental Protection Administrative System in the Context of Public Administration System Reform in China. Draft report (in Chinese) prepared for the World Bank’s China Environmental Administration TA. Wu, Jian.2008. Study on the Legal and Policy Basis for Environmental Administration in China. Draft report (in Chinese) prepared for the World Bank’s China Environmental Administration TA. Jiang, Hongqiang. 2008.Study on the Responsibility Allocation and Organizational Setting for Environmental Protection in China. Draft report (in Chinese) prepared for the World Bank’s China Environmental Administration TA. Han, Ling. 2008.Study on Operational Mechanisms and Capacity Building of National Environmental Protection Administrative System in China. Draft report (in Chinese) prepared for the World Bank’s China Environmental Administration TA. Zeng, Xiangang. 2008. Summary of International Experience in Environmental Administration. Draft report (in Chinese) prepared for the World Bank’s China Environmental Administration TA. Bowles, Julian. 2008. A Description of Intergovernmental Environmental Administration in the United States. Draft report prepared for the World Bank’s China Environmental Administration TA. Ono, Hiroshi. 2008. Environmental Administration in Japan. Draft report prepared for the World Bank’s China Environmental Administration TA. Song, Jaeyong. 2008. Quick Study on Environmental Administration in Korea: An Executive-Level Overview. Draft report prepared for the World Bank’s China Environmental Administration TA. 32 References SEPA (State Environmental Protection Administration—now MEP). 2006. The 2005 State of Environment in China. Beijing: State Environmental Protection Administration. SEPA (State Environmental Protection Administration—now MEP) and NBS (National Bureau of Statistics). 2006. Study Report on Green National Accounting 2004. Beijing: China Academy of Environmental Planning. SEPA (State Environmental Protection Administration). 2007a. 2006 State of the Environment. Beijing: Environmental Science Press. SEPA (State Environmental Protection Administration). 2007b. China Environment Bulletin 2006. June 5, 2007. World Bank. 2009. Addressing China’s Water Scarcity: Recommendations for Selected Water Resource Management Issues. Washington, DC: World Bank. 33 Annex Table 1. Current Organizational Structure of MEP Departments Divisions Administrative Office General Duty Room Minister’s Office Division of General Management Division of Archive Management Office of Information Technology Research Office Office of Supervision on Administration Office of Public Complaints Settlement Department of Planning and Division of General Management Finance Division of Planning Division of Budget Division of Investment Division of Financing Office of Internal Accounting Department of Policies, Laws, Division of General Management and Regulations Division of Laws and Regulations Division of Environmental Polices Division of Administrative Reconsideration Department of Institutional Division of General Management Affairs and Human Resources Division of Institutional Reconstructing Management Division One of Personnel Management Division Two of Personnel Management Division of Human Resources Development Division of Personnel Supervision Department of Science, Division of General Management Technology and Standards Division of Environmental Science and Technology Development Division of Environmental Standards Management Division of Environmental Technology Guidance Division of Environmental Health Management Department of Total Emission Division of General Management Control of Pollutant Division of Total Control of Water Pollutant Division of Total Control of Atmospheric Pollutant Division of Statistics Department of Environmental Division of General Management Impact Assessment Division of Planning Environmental Impact Assessment Division One of Environmental Impact Assessment of Construction Projects Division Two of Environmental Impact Assessment of Construction Projects Division Three of Environmental Impact Assessment of Construction Projects Division of Environmental Check and Acceptance of Construction Projects Department of Environmental Division of General Management Monitoring Division of Environmental Quality Monitoring Division of Pollution Sources Monitoring Division of Monitoring Quality Management Department of Pollution Control Division of General Management Division of Drinking Water Sources Protection Division of Air and Noise Pollution Control Division of Water Pollution Control for Key River Basins Division of Marine Pollution Control 34 Division of Solid Waste Management Division of Chemicals Environmental Management Department of Nature and Division of General Management Ecology Conservation Division of Rural Environmental Protection Division of Ecological Functions Protection Division of Nature Reserves Management Division of Biodiversity Conservation Department of Environmental Division of General Management Supervision Division of Pollutant Discharge Fees Management Division of Supervision and Inspection Division of Regional Supervision Division of Administrative Penalty Department of Nuclear Safety Division of General Management Management Division One of Nuclear Power Division Two of Nuclear Power Division Three of Nuclear Power Division of Nuclear Reactors Division of Nuclear Fuels and Transportation Division of Radioactive Waste Management Division of Nuclear Safety Equipment Division of Nuclear Technology Utilization Division of Electromagnetic Radiation and Mining & Metallurgy Division of Radioactive Monitoring and Response Division of Nuclear Safety Staff Personnel Qualification Administration Department of International Division of General Management Cooperation Division of International Organization and Treaty Division of Asian Affairs Division of European Affairs Division of American & Oceania Affairs Division of International Cooperation on Nuclear Safety Department of Education and Division of General Management Communication Division of News Division of Publicity and Education 35 Endnotes 1 The gross value of industrial output as a percentage of GDP has been more or less steady at between 45 percent and 50 percent for the last 30 years, but the financial significance of that share has increased significantly as growth in total GDP has increased at nearly 10 percent per annum over the same period. During the same period, the gross value of agricultural output declined from around 30 percent of GDP to only 11 percent and the significance of the services sector increased substantially from 2 MEP regularly monitors water quality at 409 monitoring stations on 200 rivers throughout the country and classifies the results at each station in accordance with the national environmental quality standard GB3838-2002. In 2008 (MEP 2009), 24 percent of monitored sections fell into Class IV (waters suitable for industrial uses and recreational purposes not involving direct human contact) or Class V (waters suitable only for irrigation), while 21 percent were worse than Class V (unsafe for any use). 3 In 2001, 32 percent of reporting cities were worse than Grade III. 4 In particular, Article 7 authorizes the following departments to “conduct supervision and management of the prevention and control of environmental pollution�: the state administrative department of marine affairs, the harbor superintendency administration, the fisheries administration and fishing harbor superintendency agencies, the environmental protection department of the armed forces and the administrative departments of public security, transportation, railways and civil aviation at various levels. Article 7 also authorizes the following departments to “conduct supervision and management of the protection of natural resources� in accordance with relevant laws: departments of land, minerals, forestry, agriculture, and water conservancy of the people's governments at or above the county level. 5 This represents about 27 percent of installed coal-fired generating capacity as of 2005. 6 Article 1 states that the EPL is “formulated for the purpose of protecting and improving peoples’ environment and the ecological environment…and facilitating the development of socialist modernization.� 7 For example, a statement to the effect that the provisions of the EPL override and govern the provisions of any and all other current and future laws impinging on or relating to the protection and improvement of the peoples’ environment. 8 Article 1 states that the EPL is “formulated for the purpose of protecting and improving peoples’ environment and the ecological environment…and facilitating the development of socialist modernization.� 9 For example, a statement to the effect that the provisions of the EPL override and govern the provisions of any and all other current and future laws impinging on or relating to the protection and improvement of the peoples’ environment. 10 The 2003 Radioactive Waste Prevention and Control Law prohibits disposal of radioactive wastes into the geological environment, but provides no control over nonradioactive pollutants. 11 The data in this paragraph are from MEP’s China Environmental Condition Bulletin in 2007. 12 Although China’s environmental expenditures are very small in comparison to the U.S., they have nevertheless increased significantly in recent years. For example, in 2008 alone, total central government environmental expenditures increased by 33 percent, although they still only account for 1.67 percent of total central government expenditures, which is far less than the level needed to fully address the country’s problems. (http://www.mof.gov.cn/mof/zhuantihuigu/zhongguocaizhengjibenqingkuang/caizhengzhichu/200905/t 20090505_139518.html). 13 For example, under the U.S. Comprehensive Environmental Response, Compensation, and Liability Act(1980), commonly known as Superfund, when the EPA is unable to identify responsible parties, the agency is authorized to clean up the contaminated sites itself, using a special federal fund that is made 36 immediately available as soon as a cleanup plan is formulated. Similar practice is also found in the European Union. The EU Directive 2004/35/CE on Environmental Liability is based on the similar notion as Superfund. The European Regional Development Fund and the European Agricultural Guidance and Guarantee Fund have both financed the cleanups of contaminated industrial sites. 14 China’s EIA Law includes a process referred to as Strategic Environmental Assessment (SEA), which provides a mechanism for MEP to review the environmental implications of development plans and programs. In recent years, MEP has used this mechanism to influence or guide decision making in some sectors (such as hydropower) and some heavily polluted regions. However, the capacity to prepare and review SEAs is still somewhat limited in China and, in any event, the process needs to be applied in a more systematic way for the full benefits of the process to be realized. 15 See EPA, Guidance on the Use of Stipulated Penalties in Hazardous Waste Consent Decrees, guidance memorandum for the application of the consent decrees under the Comprehensive Environmental Response, Compensation, and Liability Act of 1986 (CERCLA), 42 U.S.C. S 9601 - et seq., as amended, and Section 7003 of the Resource Conservation and Recovery Act of 1976 (RCHA), 42 U.S.C. S 6973, at 6 (Sept. 21, 1987). 37 Sustainable Development Department East Asia and Pacific Region The World Bank 1818 H Street, N.W. Washington, D.C. 20433, USA Telephone: 202 473 1000 Fascimile: 202 522 1666 Internet sites: www.worldbank.org/eapenvironement