Environment Relief Fund Scheme

What is ERFS ?

The Environment Relief Fund (ERF) was established under the Public Liability Act, 1991 (PLIA), to provide immediate relief to victims of accidents involving hazardous substances.

Founded on the principle of no-fault liability, and in response to the Supreme Court of India pronouncements on absolute liability in M.C. Mehta v Union of India, 1987, the PLIA requires industries dealing with hazardous substances to subscribe compulsorily to public liability insurance.

Apart from contributions from hazardous industries that opt for insurance under the PLIA, the ERF consists of compensation awarded by the National Green Tribunal (NGT) for damage to the environment under Section 24 of the NGT Act, 2010.

Need for Environment Relief Fund ?

On 29th March 1985, following the Bhopal Gas Tragedy of December 2nd, 1984, the Processing of Claims Act 1985 was passed by the Government of India for the speedy disposal of claims arising out of or connected with the Bhopal gas leak disaster. The Act was challenged in the Supreme Court for its constitutional validity.

On 22nd December 1989, while disposing of the matter, the SC stressed the need for fresh legislation to ensure the speedy disbursal of compensation to industrial victims and creation of an industrial disaster fund.15 The Court also suggested the broad contours of this legislation. Thus it was believed that a more stringent no-fault liability fund be established.

 Challenges of Environmental Relief Fund 

The National Green Tribunal has slammed the Ministry of Environment and Forests (MoEF) for non-utilization of over Rs 800 crore meant towards the Environment Relief Fund for victims of accidents in the process of handling hazardous substances.

The UPA government notified the Environment Relief Scheme in 2008 under which the United India Insurance Company Limited was appointed the fund manager for administering and managing the Fund. The fund manager is responsible for investing the amount in the Fund, making claim settlements as per the Collector’s order and maintaining account statements. These account statements along with the audit reports are to be submitted annually to the Ministry of Environment, Forest and Climate Change.

The Fund is born out of the “no fault liability” principle as it compels industry owners to compensate victims of hazardous substances even if no responsibility can be attributed to the owner. It is also the spine of sustainability as NGT can award damages under the polluters pay principle to ensure that environmental concerns are not traded off in the name of development. Therefore, the money in the Fund is intended to support the recovery of damages by the victim and the restoration of the environment to undo industrial or urban damage.

However, in the nearly 30 years of its existence it has become doubtful if the Fund has been achieving its purpose as accounts of under-utilization and indifference by the authorities keep surfacing.

The environmental jurisprudence in the country has evolved to be sympathetic to the environmental costs of development. It has attended to the victims, and gone beyond reparation to award punitive damages. However, the law can be of only so much use in the books if the relief is not reaching the victim and the environment not being actively restored. Right from the Central Government to the local Collector, the authorities need to be held accountable for their inaction. Attention needs to be drawn to the effective monitoring of large volumes of public money lying untouched in the Fund.

 

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