Environmental Impact Assessment
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This article is written by Shikha Pokhriyal pursuing law from Delhi Metropolitan Education, GGSIPU. This article talks about the principle of polluter pays and how it is interpreted and applied by India and the United States.


Pollution means degradation or destroying the environment and making it difficult to live a healthy life. The industrial revolution helped our economy to rise from scratch; it created a massive amount of opportunities for the people. But in this development, our environment is still suffering. In the name of the betterment of human lives, we are making the air we breathe poisonously and the trees that provide that fresh air are being cut for construction and other purposes. The majority of the people harm the environment and without feeling guilty they move on. To punish all these people the Environmental Protection Act, 1986, was enacted in the year 1986 to save our environment that is the home to various flora and fauna.

The provisions like the polluter pay principle, sovereignty and responsibility principle, sustainable development principle, the precautionary principle, and others like these were introduced to make people aware of the damage they were doing to the environment and also impose harsh penalties. 

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To control and regulate the actions of the industries such principles were established. The impact of industries have been positive by creating opportunities for the people but it also has been disastrous due to certain negligence of the industries because of which a lot of people lost their life. Here we will explore one such principle of environmental law that is the polluter pays principle and how it is interpreted.    

Polluter pays principle

The phrase polluter pays principle can be understood, that whoever creates a mess then that person must look after it and clean it. The polluter pays principle imposes an obligation on a person who pollutes the environment and tries to destroy it, to compensate for the damage that person caused. It does not matter whether the person is aware or not, that the activities they are conducting will destroy the environment, they have to pay and help the environment to restore to its original state. This principle helps the government to help those people whose livelihoods and lives are being destroyed by the people who are harming the environment. It does not impose a whole obligation on the government only but on the person who was liable for destroying the environment, therefore it helps to reduce the financial burden on the government.  For instance, a factory that is involved in the production of some items that require potentially healthy poisonous substances, then it becomes the responsibility of the factory to implement a plan for its safe disposal. The factories while conducting their production discharge large amounts of harmful effluents in the air and water. 

This creates a lot of problems for the people living nearby. So the main purpose of this principle is to make these factories liable for the damage they are creating.

The principle of polluter pays was introduced in 1972 by the Organization for Economic Cooperation and Development (OECD). It stated that the polluter should pay for the damage caused by them. Pollution in the law means contamination of the environment in the land, air, or water. The broader guidelines to guide sustainable development Rio Declaration Principle 16, states that authorities are under an obligation to promote the industrialization of the environmental cost, taking into account that the polluter should bear all the expenses for causing pollution, concerning the public interest. Principle 16 also states that the principle of polluter pays shall also be applied specifically to the emission of greenhouse gases that is responsible for various kinds of changes in the climate. Greenhouse gas is a gas that absorbs and emits radiant energy causing a greenhouse effect. 

The greenhouse is considered a form of pollution as they cause potential damage to the environment. Society does not take greenhouse emissions seriously, and it’s an effect on climate and the environment. There is a need to make society aware of the effects of greenhouse emissions. The principle of polluter pays helps to provide a moral and legal approach. For instance: economic activities that involve the emission of some harmful activities are advised to install filters to reduce pollutants or if they are causing any damage to the environment then they should compensate or establish sector-wide compensation funds.

In the cases of pollution, it sometimes becomes difficult to identify and track the person who caused pollution, and also if it becomes possible then it becomes tough to find those people who are affected by activities that cause pollution. Pollution like air pollution, water pollution can be caused by releasing harmful pollutants, these pollutants are released from different locations and sources, these locations may lie across international borders. Therefore it becomes difficult sometimes to trace the potential person who is polluting the environment. For example, factories producing goods for India, and the pollutant of this production is being released in some other community and affecting the people of that community. In this case, it becomes difficult to hold that person running the factory accountable. The harm that is caused to society is also distributed. People living in the centre parts of the city do not have to face problems of pollution released from the factory, but the people who live near these production factories on roads or cottages are more exposed to pollution and that affects their health severely. The Greek philosopher Plato said, “If anyone intentionally spoils the water of another let him not only pay damages but purify the stream or cistern which contains the water”.   

In the case of MC Mehta v. Kamal Nath (1997), the Court held that the “one who pollutes the environment must pay to reverse the damage caused by his acts”. To save the motel, the motel administration changed the course of the river to save the motel from future floods. The Court said that the administration of the motel is liable to pay the cost of damage that they caused to the environment and the ecology of the area. Also, the pollution caused by the motel administration by conducting various construction in the riverbed and the banks of River Beas has to be removed or reversed.  

Interpretation of polluter pays principle – India and the US

The polluter pays principle outlines two essentials: one that the person who is causing pollution known as the polluter should pay for the administration of pollution control and second the polluter is responsible to bear the cost of the pollution that caused damage to other people.  This principle reduces the financial burden on the government, as the government is not responsible to pay for the damage caused to the environment or to pay compensation to the people who are affected by this. The Indian Judiciary incorporated the polluter pays principle as a part of environmental law. The Indian courts used this principle of polluter pay to render justice to the affected people. The principle of polluter pays is based on the economic theory of internalization of externalities. This theory “imposes on the polluters the social costs borne by public authorities responsible for inspecting, monitoring and controlling pollution”. The principle of polluter pays imposes a liability on the operators involved in the hazardous installation to bear the cost of reasonable measures to prevent and control accidental from that installation.

Polluter pays principle in the Indian context

The Indian Jurisprudence includes the principle of polluter pays in the environmental law and is considered as the most important provision of environmental law. The polluter pays principle according to Indian jurisprudence includes environmental costs as well as the direct cost to people who are affected by it and the property. The Supreme Court stated that “remediation of the damaged environment is a part of the process of sustainable development and as such, the polluter is liable to pay the cost to the individual sufferers as well as the cost of reversing the damaged ecology”.

In the case of M.C. Mehta v. Union of India (1986), the Supreme Court applied the principle of polluter pays and stated that the Indian legislature needs to create more legal provisions that can adequately deal with the new problems that are arising due to a highly industrialized economy. In this case, a company Delhi Cloth Mill limited had a subsidiary company Shriram Food and Fertilizer, that was producing caustic chlorine and oleum at a plant surrounded by a thick population. To control and regulate the effect of this a public litigation was filled in the court to address the issue. The Supreme Court in this case issued the principle of strict liability that means that whoever is engaged in hazardous or inherently dangerous activities and keeps or collects such substances should compensate the people who are harmed or affected by it. This principle applies to non-natural users of land and not to the act done naturally or happens due to the act of God. The court also pointed out that if an enterprise is indulged in a hazardous industry, they are under an obligation to provide for the safety and health of the people involved in the factories as well as for the people who are residing near the place where all such dangerous activities take place. 

This principle was first applied in the case of the Indian Council for Enviro-Legal Action v. Union of India (1996), the Court defined polluter pays as absolute liability that a person has to bear for harming the environment and it does not only extend to compensating the people who are affected by it but also to bear the cost of restoring the environment to its original phase.  

Polluter pays principle in the United States

As mentioned earlier, the polluter pays principle is based on the fact that if you make a mess then you have to clean it. In the United States principle of the polluter pays,  is applied in the form of taxes. The United States has not codified the principle of polluter pays but it is applied by their Courts while rendering various judgments. The position of the US on this principle is still vague and not definite. In the United States, the principle of polluter pays was applied in the case of the Exxon Valdez oil spill in the year 1989. In this case, the oil tanker carrying 300,000 barrels full of crude oil poured the oil into the Alaskan river and it caused a lot of pollution and economic loss to the people living there. Exxon under the principle of polluter pays was held under an obligation to pay a fine of  USD125 million to the United States Federal Government and USD 900 million to the state of Alaska for the civil claims and apart from this some cleanup cost was also paid by Exxon.   

To hold polluters responsible for their acts, a long process of court trials are involved and the underprivileged community may not be able to fight for their rights. Sometimes these big companies give them less money to keep them away from the court. In these cases, there is a requirement to make people aware of their living conditions and the state should help them with the lawyers fighting to save the environment.  

In the United States, for environmental law, a resource-specific approach is adopted. Various statutes implement programs to control pollution. Legal provisions like Clean Air Act, 1963 and Clean Water Act, 1972 are applied to establish environmental standards and provide guidelines to the polluters about how they should monitor their activities causing pollution and what will be their duty.

The United States also applies several types of taxes like:

  • Gas Guzzler Tax for cars: This type of tax is collected by the Internal Revenue Service and applies to cars with low fuel efficiency and its purpose is to offset the amount of air pollution this type of vehicle causes.
  • Corporate Average Fuel Economy: It is just like the gas guzzler tax and it determines how far a car can go on a gallon of fuel
  • The SuperFund Law: This type of law ensures and puts polluters under an obligation to pay for the cleanup of hazardous and toxic or poisonous sites.   


The polluter pays principle means that the person creating pollution should be held liable to pay for the damage caused to the environment and the people. In India, polluter pays is considered an important and inherent part of environmental law and has been applied to many cases to render justice. Whereas in the United States, this principle is being applied in a different sense like in the form of tax. Both the countries use this principle to protect the environment from the people who are polluting it and degrading its quality.  


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