Why in the News?

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

What’s in Today’s Article?

• Environmental Protection Fund (Background, Objectives, Fund Utilisation, Administrative Structure, Accountability & Audit Mechanism, Significance, etc.)

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.

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.