Easing EIA Regulations for the Pharmaceutical Sector: A necessary evil?

Easing Environment Impact Assessment Regulations for Pharmaceutical Sector: A necessary Evil?

– Geethanjali K.V., Legal Associate, CEERA-NLSIU

Introduction

An impact can be termed as the effects a particular activity or scenario could have on something or someone when it is carried out. It could also mean the ‘consequences’ of an action. Applying this concept to measure a project, or an activity, based on the environmental implication it could have, can be termed as Environmental Impact Assessment. Environmental Impact Assessment in the simplest terms is the process of taking into account the environmental factors during a decision-making regarding a project. An inclusive version of this definition would identify the probable consequences on the bio-geophysical environment and human health and welfare that are likely to result from a proposed project.[1] Although initially, project assessment were made on the basis of Cost-Benefit Analysis similar to the economic theory of ‘Coasian bargaining’ proposed by Ronald H. Coase, problem arose when measuring impacts on monetary terms, especially of environmental intangibles, and future impacts were to be measured, which included large participants and affected parties,[2] a new evaluation process need to be introduced and that was Environmental Impact Assessment. The EIA is said to indicate to the decision makers the probable consequences of their decision over a project, this makes EIA a planning and management tool where it enables government agencies, project proponents and developers, the affected public to understand the inferences of a project and help the stake holders arrive at an informed decision.

Environment Impact Assessment

EIA in India was first introduced in 1976-77 when the Planning Commission directed the Department of Science and Technology to provide its views from an environmental paradigm to river-valley projects; subsequently these assessments became a norm for projects involving approval from the Public Investment Board. In 1994, the Ministry of Environment and Forests, Government of India, under the Environmental Protection Act, 1986, provided for EIA notification making Environmental Clearance a mandatory requirement for the expansion and modernization of activity, or for setting up new project listed in Schedule I of the notification[3] for 29 categories of projects and processes involving an investment of Rs. 50 crores and above. The 1994 notification came under review based on the recommendations of a project by World Bank and by the Govindarajan Committee in Disinvestment[4] thereby getting suppressed by the present EIA Notification issued on 14^th September 2006. The stages[5] of Environmental Clearance under the notification are as follows:

1. Screening: where projects are scrutinized based on scale of investment, project location and the type of development and whether or not the project would require further environmental studies.
2. Scoping: at this stage a project is accessed based on its potential impacts, the zones of potential impacts, possibilities of its mitigation and further need for monitoring of the project.
3. Public consultation: at this stage the concerns of locally affected persons and other stakeholders in environmental impact of the said project are ascertained.
4. Appraisal: detailed scrutiny of the documents submitted by the applicant for the grant of environmental clearance by the Expert Appraisal Committee at the Central and State level.

The 2006 Notification had many salient features, one such significant feature was the categorization of projects into two categories, such as

• Category ‘A’ projects reviewed at the Central level and Category ‘B’ projects to be reviewed at the State level;
• Constitution of State Level Environment Impact Assessment Authorities and Committees for appraisal of Category ‘B’ projects;
• Provision of timeline of 6 months to provide environmental clearance.[6]

Where all Category ‘A’ projects are said to have potentially significant impacts on the environment and are required to mandatorily carry out environmental clearance process and fulfill a public hearing prior to granting of environmental clearance by the Ministry of Environment, Government of India. Whereas category ‘B’ projects are said to have potentially less significant impacts on the environment and are to be evaluated and granted clearance by the above mentioned authorities at the state level.

In 2013 based on the recommendations of a committee under the chairmanship of the Director of National Environmental Engineering Research Institute, Nagpur, the Category ‘B’ under the EIA Notification, 2006, was re-categorized into ‘B1’ and ‘B2’.[7] Where,

• Category ‘B1’ projects would require EIA and public consultation for appraisal;
• Category ‘B2’ projects are exempted from both of these requirements and are to be appraised based only on the application coupled with pre-feasibility report and such other documents.

Pharmaceutical Industry

According to the Department of pharmaceuticals, established in July 2008 under the Ministry of Chemicals and Fertilizers, Government of India, Indian Pharmaceutical Industry is ranked 3^rd worldwide by volume of production, 14^th by value and accounts for 10% of world’s production by volume and 1.5% by value. With exports to over 200 countries globally India is also ranked 4^th in terms of generic production and 17^th in terms of export value of bulk actives and dosage forms.[8] Indian Pharma industry contributes substantially to improve public health outcomes around the world by fulfilling a majority of World Health Organizations demands of certain vaccines.[9] With the vastness of the pharmaceutical industry in India it is only apparent that the employment in this sector is robust and in constant demand of highly skilled technicians. The Pharma Industry involves a range of industrial activities ranging from simple packaging operations to complex manufacturing operations involving chemical and biochemical synthesis. Therefore the need to have an environmental impact assessment becomes apparent to this industry. However, the recent Amendment to the Environment Impact Assessment Notification 2006, has reclassified the pharmaceutical industry to ramp up availability and production of bulk drugs within a short span of time in the unprecedented situation caused due to the global outbreak of Novel Corona Virus (COVID-19).[10]

Environment Impact of Pharmaceutical Industries

Environment pollution from Pharmaceutical products happens at different stages of stages throughout its life cycle however, since the Pharma Industries use a variety of chemicals in its manufacturing processes it should not come as a surprise that major negative impacts of it to the environment happen at this stage. Pharma Industries have a direct and equal effect on the inhabitants and the animals, particularly aquatic life, around its production plant whereby contaminating the food and water sources with discharges and wastes from the plant.

The World Banks Environmental Assessment Source Book[11] had briefly enumerated certain critical concerns regarding the impact of pharmaceutical industries on the environment. They are as follows:

• The raw materials and such other material used in the manufacture of pharmaceutical products are highly toxic chemicals that may also be hazardous and inflammable. Certain reaction processes may be highly reactive compounds requiring high temperature and pressure in the process.
• The toxicological properties of certain compounds, in the materials used in manufacture of pharma products, may not have been completely investigated. The risk of those materials causing long-term effects even in low concentrations would be high.
• Pharma industries would require plenty of water throughout its processes for cooling, cleaning and various other activities. It is obvious for water to become contaminated with the by-products and such other chemicals requiring the assistance of a wastewater treatment plants to reduce the concentration of pollution levels to acceptable levels.
• These would not only affect the surface water but also the groundwater through direct discharge of contaminated water, run-off from tanks and production area, flushing and cleaning water or accidental release of raw materials and finished products.
• Air pollution is an added impact through the release of toxic gaseous compounds like sulphur oxides, carbon and nitrous oxides, including certain volatile organic compounds during the production processes of pharmaceuticals.
• The production process may also result in certain solid waste like remnants from raw materials, sludge from boilers, cleaning equipment, and packaging waste including those contaminated with chemicals.

With the above-mentioned environmental impacts the need for obtaining an environmental impact assessment prior to setting up a pharmaceutical industry would be considered a necessity. Therefore the Government of India had brought in the Environment (Protection) Third Amendment Rules, 2009, through which serial number 73, titled ‘Pharmaceutical (manufacturing and formulation) Industries’, was inserted to Schedule I of the Environment (Protection) Rules, 1986, setting effluent standards and parameters to be complied with by the said industries[12] and in-turn classifying pharmaceutical industries under Category ‘A’ projects requiring mandatory EIA.  However, owing to the current coronavirus (COVID-19) pandemic and the need for bulk drugs for its prevention has the government easing certain restrictions under the EIA of pharmaceutical industries.

Prioritization of health over environment

The outbreak of Coronavirus (COVID-19) started in China in December 2019 and was designated as a pandemic by the World Health Organization in March 2020[13] declaring it a global threat that needs carful consideration and fast action to contain its spread. This in-turn meant the increase requirement of drugs and pharmaceuticals to treat those affected and research on prevention of its spread. Noticing the urgency, the Ministry of Environment, Forest and Climate Change issued an Official Memorandum, as part of preparedness for the outbreak of Novel Coronavirus (COVID-19), to consider projects and activities relating to bulk drugs (Active Pharmaceutical Ingredients and Bulk drug intermediates) out of turn and to give expeditious clearance.[14]

This was followed by an amendment to the Environment Impact Assessment Notification 2006, MoEFCC on March 27^th 2020.[15] The amendment re-categorized projects and activities related to manufacturing of bulk drugs and its intermediates from the existing Category ‘A’ to Category ‘B2’ to scale up production and availability of bulk drugs in short notice. The features of the said amendment are as follows:

• Category ‘B2’ projects and activities are exempted from the EIA process such as Screening, Scoping and Public Consultation;
• The amendment is said to have decentralized the appraisal to State level in order to fast track process;
• States have been given advisories to process the proposals expeditiously;
• The amendment is applicable to proposals received up to 30^th September 2020.

It is said that within two weeks of the said amendment over 100 proposals have reached the ministry.[16]

An Official Memorandum by the Impact Assessment Division of MoEFCC followed the amendment on 13^th April 2020,[17] whereby the States were advised of the same and issued directions to conduct appraisal of proposals through information technology platforms, like video conferencing, to expedite environmental clearances within 30 days from submission of such application. The memo also required all application to be submitted through PARIVESH portal[18] and that States are to submit a report in case they are unable to adhere to the suggested timeline.

This amendment could also be said to be a progression towards a 2015 recommendation by Dr. V.M. Katoch Committee Report on Active Pharmaceuticals Ingredients (APIs) where it had identified, as one of its recommendations, that bulk drug manufacturing industries were one of the prime polluting industries but had recommended further to strike a balance between managing pollution levels, which requires capital intensive technologies, and quality of output.[19] Moreover the National Disaster Management Plan 2019 provides powers to the Central and State governments to amend any Act, Rule and Regulation to scale-up disaster-adaptable development measures and intensify our capacity to recuperate from them.[20]

The pharmaceutical industries have faced many challenges one of which has been a dependence on external markets for the supply of Active Pharmaceutical Ingredients, especially China[21] and this had posed a threat of raw material supply disruption and price volatility which was realized during the COVID-19 scenario. The Ministry of Commerce and the Ministry of Pharmaceuticals convened meetings with various stakeholders to boost domestic API manufacturing. The result of these meetings were that the Indian Government set aside finds and came up with a plan to shift reliance on API from foreign countries to domestic manufacturing. One can hope and assume that this amendment would have the Indian Pharmaceutical Industries seize the opportunity and develop the infrastructure for the same.

EIA is a significant legal tool, which considers environment, economic development and social welfare to achieve sustainable development. However as India declared the Novel Coronavirus (COVID-19) as a notified ‘disaster’ bringing into purview Section 64 of the Disaster Management Act, 2005, which provides powers to make amendments to any rule, regulation, notification, guidelines, instruction, order, scheme or bye-laws to prevent disasters or to mitigate it, therefore making this EIA amendment valid. Looking at this amendment from an environmental fanatic paradigm, one would say that desperate times have called for a shift in the focus of EIA from conservation of natural resources to its utilization and exploitation. The environmental impact of pharmaceutical industries mentioned above could turn out to be the probable impact this amendment could have on the environment if left unchecked. However, one has to bear in mind another angle of this amendment is that pharmaceutical industries, as per Rule 3(A) of the Environment (Protection) Rules, 1986, would still have to adhere to the parameters and standards specified in Schedule VI.[22] Nonetheless, several of the provisions of the EIA 2006 have been challenged in the National Green Tribunal (NGT) over the years. It, however, remains uncertain whether this amendment would follow suit or not.

***********

[1] Environmental Impact Analysis – Principles and Procedures, R. Munn (1979) 2^nd edn, SCOPE Report No. 5

[2] “Coasian bargaining” by Environmental justice organizations, liabilities and trade. Available at http://www.ejolt.org/2015/09/coasian-bargaining-2/ accessed on 20 April 2020.

[3] Entry 8 of Schedule I of EIA notification 1994 specifies “bulk drugs and pharmaceuticals” under the ‘list of projects requiring environmental clearance from the Central Government’ http://extwprlegs1.fao.org/docs/pdf/ind4656.pdf

[4] https://parivesh.nic.in/writereaddata/ENV/FAQecs.pdf

[5] Q. 13-17 of FAQs for PARIVESH website, available at https://parivesh.nic.in/writereaddata/ENV/FAQecs.pdf accessed on 20 April 2020.

[6] Q20 of FAQs for PARIVESH website, available at https://parivesh.nic.in/writereaddata/ENV/FAQecs.pdf accessed on 20 April 2020.

[7] Office Memorandum available at http://environmentclearance.nic.in/writereaddata/FormB/EC/EIA_EMP/011220151XV9WM14EIAEMPB2.pdf accessed on 20 April 2020.

[8] Pharma Industry Promotion, Department of Pharmaceuticals, available at https://pharmaceuticals.gov.in/pharma-industry-promotion accessed on 20 April 2020.

[9] Indian Pharmaceuticals industry – the way forward, Indian Pharmaceutical Alliance, June 2019, available at https://www.ipa-india.org/static-files/pdf/publications/position-papers/2019/ipa-way-forward.pdf accessed on 20 April 2020.

[10] F.No. 22-25/2020-IA.III http://environmentclearance.nic.in/writereaddata/om/5567GFTCVIUEXExpeditiousDisposalOMAPI13APR2020.pdf

[11] World Bank – Environment Department: Environmental Assessment Source Book, Vol. I: Policies, procedures, and cross-sectoral issues, World Bank Technical Paper No. 139 (1991), available at http://documents.worldbank.org/curated/en/223391468174870007/pdf/multi-page.pdf accessed on 23 April 2020.

[12] Ministry of Environmetn and Forests Notification [G.S.R. 512(E)], 9 July 2009, available at http://extwprlegs1.fao.org/docs/pdf/ind90317.pdf accessed on 23 April 2020

[13] WHO Director-General’s opening remarks at the media briefing on COVIC-19, World Health Organization, available at https://www.who.int/dg/speeches/detail/who-director-general-s-opening-remarks-at-the-media-briefing-on-covid-19—11-march-2020 accessed on 26 April 2020

[14] OM Dated 12.03.2020:Consideration of projects or activities in respect of Bulk drugs (Active Pharmaceutical Ingredients and Bulk drug intermediates), out of turn, as a preparedness to the outbreak of Novel Corona virus (COVID-19), available at http://moef.gov.in/wp-content/uploads/2018/03/covid-19.pdf accessed on 27 April 2020

[15] Key amendment to Environment Impact Assessment (EIA) Notification 2006,to ramp up availability/production of bulk drugs within short span of time, Press Information Bureau, available at https://pib.gov.in/newsite/PrintRelease.aspx?relid=202284 accessed on 23 April 2020.

[16] Ibid

[17] OM Dated 13.04.2020: Expeditious disposal of proposal relating to Active Pharmaceutical Ingredients (API) as Category B2 – EIA Notification, 2006 r/w subsequent amendment vide S.O. 1223 (E) Dated 27.03.2020 – in light of resent situation arising from CoVID 19 outbreak, available at http://environmentclearance.nic.in/writereaddata/om/5567GFTCVIUEXExpeditiousDisposalOMAPI13APR2020.pdf accessed on 23 April 2020

[18] Pro Active and Responsive facilitation by Interactive, Virtuous and Environmental Single-window Hub – online application portal of MoEFC to monitor proposals seeking environment, forest, wildlife and CRZ clearances from Central, State and district level authorities.

[19] Salient Features of the recommendations of the Katoch committee Report on Active Pharmaceuticals Ingredients (APIs), Government of India, Ministry of Chemicals & Fertilizers, Department of pharmaceuticals, available at https://pharmaceuticals.gov.in/sites/default/files/Katoch%20Committe%20Report_0.pdf accessed on 23 April 2020

[20] National Disaster Management Plan, November 2019, Chapter 7 – Building Disaster Resilience-Responsibility Framework: Part B, Sub-chapter 7.15 – Biological and Public Health Emergencier (BPHE) p. 235- 248, available at https://ndma.gov.in/images/policyplan/dmplan/ndmp-2019.pdf accessed on 27 April 2020.

[21] Indian Pharmaceuticals industry – the way forward, Indian Pharmaceutical Alliance, June 2019, available at https://www.ipa-india.org/static-files/pdf/publications/position-papers/2019/ipa-way-forward.pdf accessed on 27 April 2020.

[22] General Standards for Discharge of Environmental Pollutants containing five parts relating to effluents, waste water generation, load based, general emission and noise standards respectively.

Image courtesy – Cowen Construction – http://www.cowenconstruction.com/environmental-innovations-in-the-construction-industry/