Chinese foreign investment law requires the issuance of an Environmental Impact Assessment (EIA) in before many types of projects are commenced，particularly construction and renovation projects (this requirement applies to both new and existing enterprises). The EIA is used to evaluate whether proper and effective protective measures have been taken with respect to the project’s potential environmental impact. The trend in China is towards stricter environmental standards and more consistent enforcement.
Since certain Foreign Invested Enterprises may be exempted from the EIA, it would be wise to submit a brief but thorough environment impact self-assessment in the feasibility study report, addressing the following issues:
* Raw materials and chemicals stored or in use
* Technical aspects of the production process
* Types and discharged volume of pollutants, including sewage, solid wastes and atmospheric emissions
* Discharge of liquid waste (sewage), and volume and concentration of key parameters
* Measures for prevention and control of environmental impact.
In the event that an Environmental Impact Assessment is nevertheless deemed necessary, its scope will be decided by the Environmental Protection Bureau at the level of government (township, local, provincial, national) that supervises your project, but will likely be more extensive. In general, an Environmental Impact Assessment must cover water pollution (sewage), atmospheric pollution, solid wastes discharge and noise pollution. If, for example, only one type of atmospheric pollutant is assessed likely to pose environmental problems, the scope of the Environmental Impact Assessment may focus only on this type of pollutant. If pollutants must be discharged, a permit will often be required. Failure to obtain an approved EIA and the necessary permits can result in various penalties including the shut-down of your project.
Although the time taken to complete an Environmental Impact Assessment depends on its scope, it usually takes 2-3 months. There is no fixed tariff system for Environmental Impact Assessment reports, but the regulations provide for 5 fee-based components: research, supervised sampling, laboratory experiments, testing, evaluation and reporting.
Cleaning Up – If you are purchasing a site with existing environmental contamination, be aware that the Chinese law usually attributes liability for clean-up to the party that caused the contamination. However, the environmental regulatory regime is rapidly developing, and future regulations may require current Land Use Rights holders or occupants to clean up environmental contamination. Accordingly, due diligence should include a thorough environmental survey before land use rights are acquired.
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