Environmental Protection Fund Rules – Explained

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• The Union government has notified detailed rules governing the utilisation of the Environmental (Protection) Fund, created from penalties imposed under key environmental laws. 

Background of the Environmental (Protection) Fund

• The Environmental (Protection) Fund has been created to ensure that penalties imposed for violations of environmental laws are channelled back into environmental restoration, pollution control, and sustainability-related activities. 
• The legal basis for the fund was laid under the Jan Vishwas Act, 2023, which decriminalised several minor environmental offences while retaining monetary penalties to ensure regulatory compliance.
• The fund draws resources from penalties levied under major environmental legislations, including laws related to air pollution, water pollution, and the Environment (Protection) Act, 1986. 
• The notified rules provide clarity on how this fund will be credited, administered, audited, and utilised for specific environmental purposes, addressing long-standing concerns regarding the effective use of environmental penalties.

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Objectives of the Environmental (Protection) Fund

• The primary objective of the Environmental (Protection) Fund is to convert regulatory penalties into tangible environmental outcomes. The rules seek to:
  • Strengthen pollution prevention, control, and mitigation mechanisms
  • Support remediation of environmentally contaminated sites
  • Promote research and adoption of clean and green technologies
  • Enhance the institutional capacity of environmental regulatory bodies
• By doing so, the fund aligns with the broader principle of “polluter pays,” ensuring that environmental damage leads to corrective and restorative action rather than remaining a purely punitive measure.

Permitted Areas of Fund Utilisation

• The notified rules specify 11 broad categories of activities for which the Environmental (Protection) Fund can be used. These include:
  • Prevention, control, and mitigation of air, water, and soil pollution
  • Remediation and restoration of contaminated and degraded environmental sites
  • Installation, operation, and maintenance of environmental monitoring equipment
  • Development of laboratory infrastructure for environmental testing and compliance
  • Capacity building of regulatory institutions and technical personnel
  • Research and innovation in clean technologies and sustainable practices
  • Development of Information Technology (IT)-enabled systems for environmental monitoring
• These provisions aim to ensure that fund utilisation directly contributes to improving environmental quality and regulatory effectiveness rather than being diverted for unrelated purposes.

Administrative Structure and Fund Management

• The rules clearly outline the institutional framework for administering the Environmental (Protection) Fund. 
• The Union Ministry of Environment, Forest and Climate Change will be the primary authority for administering the fund, or it may notify any other competent body for this purpose.
• To ensure decentralised yet coordinated implementation:
  • Dedicated Project Management Units (PMUs) will be created at both central and state levels
  • Penalties collected will be credited to the fund following a standardised procedure
  • The Central Pollution Control Board (CPCB) will develop and maintain an online portal for managing fund-related processes
• This digital interface will serve as a common platform for coordination among central ministries, state governments, pollution control boards, and other stakeholders.

Distribution of Funds Between Centre and States

• A significant feature of the rules is the transparent sharing mechanism between the Centre and States. According to the notified provisions:
  • 75% of the penalty amount collected will be transferred to the Consolidated Fund of the concerned State
  • 25% of the amount will be retained by the Centre for national-level environmental initiatives
• This arrangement recognises that most environmental violations and remediation activities are local in nature, while also enabling the Centre to fund large-scale or cross-cutting environmental projects.

Accountability and Audit Mechanisms

• To strengthen transparency and public accountability, the rules mandate robust oversight mechanisms. 
• The Comptroller and Auditor General of India (CAG) will audit the Environmental (Protection) Fund periodically. 
• This audit requirement is crucial to prevent misuse, underutilisation, or diversion of environmental penalty funds.
• Further, the online portal managed by the CPCB will act as a monitoring tool, enabling real-time tracking of fund allocation, utilisation, and project outcomes. 
• Together, these measures aim to enhance public trust in environmental governance.

Significance for Environmental Governance in India

• The notification of these rules marks an important shift in India’s environmental regulatory approach. 
• Instead of treating penalties merely as revenue, the framework institutionalises their use for environmental improvement. 
• It also complements the decriminalisation approach adopted under the Jan Vishwas Act by ensuring that monetary penalties have a corrective and restorative purpose.
• For India, which faces persistent challenges related to pollution, waste management, and ecological degradation, the Environmental (Protection) Fund can serve as a critical financial instrument to bridge regulatory gaps and support sustainable development goals.

Source: TOI | IE