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CHINA LEGAL SCIENCE 2019年第6期 | 环境公益诉讼惩罚性赔偿制度的构建
日期:20-03-28 来源:CHINA LEGAL SCIENCE 2019年第6期 作者:zzs

THE ESTABLISHMENT OF PUNITIVE DAMAGES IN ENVIRONMENTAL PUBLIC INTEREST LITIGATION


Chen Hong


I. INTRODUCTION
 
In recent years, China has built the civil environmental public interest litigation (EPIL) system from scratch. Legislatively, the civil EPIL system was established under article 58 of the Environmental Protection Law of the People’s Republic of China of 2014 and article 55 of the Civil Procedure Law of the People’s Republic of China of 2017, and later its relevant judicial interpretations were issued by the Supreme People’s Court and the Supreme People’s Procuratorate, improving the specific rules of EPIL. Practically, ever since the framework for civil EPIL was established, it has been put into normal judicial practice. Constant breakthroughs and improvements have been made, especially in judicial procedures, the rules of evidence and the methods for assumption of liability.

Due to various factors such as diverse environmental subjects and highly complicated and specialized environmental technologies, the initiation and judgment of EPIL ‘not only learn from past experience, but also guide future practice ... public interest litigation (PIL), with the function of shaping public policy, tends to change the existing distribution pattern of interests and eventually leads to new norms’. When determining the methods for assumption of liability in civil EPIL which takes the function of judicial power as the standard, it is necessary not only to prevent the aggravation of environmental pollution or ecological destruction, but also to consider exemplary punishment for irreversible environmental damage. Such pressure has made it essential to introduce punitive damages into civil EPIL.

Type research means ‘categorizing social disputes according to certain standards so as to lay a social empirical foundation for designing corresponding channels for litigation relief or filling the gaps in the litigation system.’ Considering the current adjudication methods used in PIL according to procedural law, many problems remain to be solved before introducing punitive damages into civil EPIL: Are there any theoretical foundations for such introduction? How should the application scope of punitive damages be defined? How should the amount of damages be determined? How should the damages be distributed and attributed? These problems deserve our in-depth thinking and research.
 
II. DIFFICULTIES OF APPLYING PUNITIVE DAMAGES TO EPIL

Since punitive damages were applied in China, they have demonstrated strong deterrent effect in such fields as consumer protection. Some scholar suggests that China introduce punitive damages into the environmental law and apply them to specific types of environmental tort. By ordering the wrongdoer to pay a huge amount of punitive damages, the system will give full play to the deterrent and preventive effect of mechanism for tort liability. However, there remain disputes over this view. Generally, the traditional methods for assumption of tort liability can be divided into compensatory damages and punitive damages. When it comes to the application of punitive damages system, scholars in legal circles hold different views. Some civil law scholar contends that punitive damages are applicable to two kinds of cases: contract disputes and product liability disputes. Some environmental law scholar, however, opposes the introduction of punitive damages into civil EPIL which essentially concerns the third party other than victims. The object of such litigation is the damage to the environment but not damage to any other person. In this case, it can be concluded that EPIL should not ‘involve any private interest’, that ‘only by excluding the issue of compensation for damage from EPIL may an appropriate system be established’, and that ‘EPIL alone can never bear the whole responsibility of environmental protection’.

Apart from the dualization of public law and private law and the general application of homogeneous relief in civil liability, the lack of legal provisions also fails to provide legal support for the application of punitive damages in EPIL, meaning the lack of standards for the application scope and the amount of damages, as well as the difficulties of attributing a punitive damages award. These have become barriers to the application of punitive damages in civil EPIL. 
 
A. Lacking the Legislation on Punitive Damages in EPIL
 
Through the investigation of the relevant legal provisions and legislative purposes of traditional civil tort liability, it is found that the existing environmental law focuses on the relief of infringed private interest. The Supreme People’s Court prescribes in article 18 of the Interpretation of the Supreme People’s Court on Several Issues concerning the Application of Law in the Conduct of Environmental Civil Public Interest Litigations (hereinafter referred to as the Civil EPIL Interpretation) that the plaintiff filing an civil EPIL lawsuit against those who pollute the environment and damage the ecology may request the defendant to assume the civil liabilities like paying for the loss, and in article 19 that the people’s court may support the plaintiff who requests the defendant to assume the expenses incurred for taking reasonable prevention and disposal measures. The Environmental Protection Law prescribes in article 64 that where any damage is caused by environmental pollution or ecological disruption, the tortfeasor shall assume tort liability in accordance with the relevant provisions of the Tort Law of the People’s Republic of China. Within China’s existing legal system framework, therefore, no provisions on punitive damages in EPIL could be found.

In the past, the court scarcely awarded punitive damages as a way for the defendant to assume the liability of civil EPIL for lack of legal norms. For example, in the EPIL lawsuit in 2014 in Taizhou City, Jiangsu Province, the court adjudged Changlong and other 5 chemical plants a hefty 160 million yuan as fees for environmental restoration. Only the fees for environmental restoration and damage assessment were enumerated in the judgment.

From the above introduction, it is clear that the legislative loopholes in EPIL have led to the lack of legal basis for putting punitive damages into practice and the difficulties of actual relief. Against the background of ever-increasing EPIL cases, China must face up to such legislative problem.
 
B. Lacking the Standards for the Application Scope and the Amount of Punitive Damages in EPIL
 
China has not established the system of punitive damages in environmental law. Traditional environmental tort law only stipulates compensatory liability for damage to the person, property and ecology caused by environmental pollution or ecological destruction. Based on actual personal and property damage, this way of compensation conforms to the principle of fairness, but fails to remedy ecological damage which does harm to the public interest. Moreover, since the severity of the consequences cannot be fully assessed when environmental damage occurs, and the cost of restoration changes over time, there is often a gap between the relief offered by the law and actual environmental damage. With the function of compensating for social damage, punitive damages are undoubtedly a reasonable choice to fill the gap.

The Civil EPIL Interpretation prescribes the object of prosecution in civil EPIL as ‘any conduct that pollutes the environment and damages the ecology, which has damaged the public interest or has the major risk of damaging the public interest.’ Does it mean that punitive damages apply to all objects of prosecution? The lack of further interpretation of the major risk in the law and unified standard in practice has failed to ensure the coordination and unity of the application of law. In view of the severity of punitive damages and strong culpability of the object of prosecution, the application scope of punitive damages and specific types of conduct to which punitive damages are applicable should be carefully determined and specified through legislation. Meanwhile, legislation should be adjusted in time to social realities so as to avoid excessive law enforcement.

In addition, the particularity of EPIL requires the calculation of punitive damages to be highly professional and technical, bringing about the problem of how the amount of punitive damages should be determined. Excessive deterrence will not ensure social efficiency, while its opposite will not constrain environmental damage effectively. In brief, the lack of explicit standards adds practical obstacles to the application of punitive damages in EPIL. 
 
C. Lacking the Standards for the Attribution of Punitive Damages in EPIL
 
For a long time, the absence of provisions of superordinate law has led to different juridical practice concerning the ownership of compensation for environmental damage in China’s EPIL. The standards of the following aspects remain vague.

On the one hand, the attribution of compensation for environmental damage is yet to be specified. At present, damages awarded in EPIL are used as special funds for environmental restoration, managed by administrative agencies or replaced by alternative restoration schemes. Although the above three innovative patterns have some positive effect on the restoration of the damaged ecology and environment, they do not solve the essential problem of ‘who owns the awarded damages’ from the root. In practice, due to the lack of legal system for the attribution of damages, China’s courts hear EPIL cases without any legal norms to refer to, and offer no clear explanation on the ownership of damages in the written judgment. After the judgment has taken effect, damages can only be transferred to a specific account of the court.

On the other hand, there are not sufficient standards governing the use of compensation for environmental damage. After the pronouncement, the key to dedicating the awarded damages for the restoration of the environment is to supervise the management and use of the damages effectively. If the compensation is delivered to a special foundation which is under rare legal constraint, there will be no standardized procedures for its allocation, management and operation; if it is delivered to environmental administrative agencies for management and use, it will remain doubtful whether there will be any confusion between the compensation for environmental damage and local fiscal expenditure, and whether the unified expenditure will be earmarked for its specified purpose; if the compensation is replaced by environmental restoration schemes, the duties of administrative agencies seem to be transferred, and since there is no clear stipulation in legislation on this mechanism, the basis for its application will remain in doubt. Moreover, it is also a problem in practice whether the court which awards the damages is qualified to manage and use them.

Therefore, it is necessary and realistic to consider introducing punitive damages in EPIL and regulating the use of huge punitive damages.
 
III. THE INVESTIGATION AND ENLIGHTENMENT OF PUNITIVE DAMAGES OF CITIZEN SUITS IN THE US
 
A. The Theoretical Origin of Punitive Damages in the US
 
Originating in England and developed in the US, punitive damages refer to a monetary award ordered by the court with an amount far beyond the actual loss. English law employs the term ‘exemplary damages’ to emphasize the exemplary effect and general deterrence of a sanction, while American law applies ‘punitive damages’ to punish wrongdoers, underlining the specific deterrence of such damages. In the early stage, there were no obvious differences in the application scope and function of punitive damages (or exemplary damages) between the US and England. The core function of the system was to compensate for non-specific infringement on the victim. Punitive damages (exemplary damages) were restricted mainly to cases where (i) the tort is committed by servants of the government; (ii) defendant’s conduct has been calculated by him to make a profit for himself which may well exceed the compensation payable to the plaintiff; and (iii) the injury is inflicted under circumstances of aggravation, insult or cruelty, with vindictiveness and malice.

Since then, punitive damages of the two countries have been constantly improved and seen differences in development, but both of them have shown a trend of socialized development, especially the American system which has reflected this trend in all three stages of its development. In the first stage (19th Century), punitive damages were introduced to fill the gap of tort law in the remedy against mental distress. In the second stage (20th Century), punitive damages began to be independent from the damages of general tort litigation, and were awarded to compensate for damage to the public interest rather than personal interest. In the third stage (21st Century), despite continuous questioning, many states in the US established through legislation the system of punitive damages which served as relief of social damage, meaning that the function of the system has been transformed from ensuring adequate remedy for individual victims only to safeguarding the public interest by punishing the wrongdoer and deterring potential wrongdoers with huge amount of punitive damages. Exemplary damages in England tend to be a means of implementing social policy. Some scholar even believes that the real purpose of the British government’s introduction of exemplary damages is to save the cost of establishing the prosecution system through the alternative system of private prosecution. Additionally, British people do not welcome a strong police or prosecution system, fearing that too much executive power might infringe on their liberty. Due to insufficient law enforcement officers, the country could only rely on private litigation to maintain public order, and award additional damages to encourage people to file lawsuits.

Looking back on the development of punitive damages in England and the US, it can be found that they have evolved from pure private law liability to a special type of legal liability which serves to safeguard the public interest and implement public policy.
 
B. Civil Penalties of EPIL in the US
 
In the US, EPIL cases could be filed in the form of citizen suits, class actions, and attorney general claims, of which citizen suits, advocated by Professor Joseph L. Sax at the University of Michigan Law School, were considered as ‘the most widespread, evident and sustainable institutional innovation in contemporary environmental law’. Many countries spoke highly of the system and followed suit.  The concept of citizen suits first appeared in the Michigan Environmental Protection Act of 1969, and was incorporated into the Clean Air Act of 1970. Since then, many American environmental protection laws and regulations have adopted and developed the system.

The Clean Air Act of 1970 solely prescribed injunctive relief, and only later did the Clean Water Act include civil penalties to curb and compensate for environmental damage or public health risk. The Clean Water Act originally stipulated that the court may fine 10, 000 USD per day, but the 1987 amendment raised the amount to 25, 000 USD per day, greatly increasing the deterrence of civil penalties. There are essential differences between civil penalties and the liability of compensation for loss in China’s EPIL system, in that civil penalties does not directly consider the scope of the loss caused or possible to be caused by the illegal act. The amount of a civil penalty mainly depends on the benefit component of the defendant and the gravity component determined by the degree of the illegal act. Therefore, it has preventive, punitive and deterrent effects.

1. The Subject of Claimant. — When it comes to the subject of claimant, any person, including private citizens, corporations, associations or other legal persons, may file a citizen suit as the plaintiff. However, three elements are required to establish a standing: injury-in fact, redressability and causation.

In addition, as the subject of prosecution, citizens are subject to specific restrictions. Federal environmental laws do not prescribe that the plaintiff may claim damages from the defendant in a citizen suit. Generally, no citizens shall make a claim for environmental damage itself, except under certain provisions, like section 505(a) of the Clean Water Act and section 7002 of the Resource Conservation and Recovery Act. After the Exxon Valdez oil spill, such environmental groups as the Sierra Club sued Exxon Mobil over environmental pollution under the above provisions. As a severe economic sanction against the defendant, civil penalties may only be claimed by government entities. Private citizens may not directly make a claim. They are required to send a 60-day notice of (their) intent to file a suit to the entity for its alleged violation, and copy the state regulatory agency and the Administrator of US Environmental Protection Agency (EPA), and all civil penalties must be paid to the US treasury.

The defendant of a citizen suit may be any person who is alleged to be in violation of the citizen suit provisions and is actionable, including private citizens, corporations and various social organizations, except the legal entities with public power such as governmental instrumentality or agencies.

2. Restrictive Clauses. — The evident punitive nature of civil penalties is conducive to enhancing the deterrence of citizen suits and encouraging the plaintiff to file lawsuits. However, in order to prevent abuse of litigation and waste of judicial resources, citizen suit provisions also impose certain restrictions on the prosecution procedure of the plaintiff, that is, a citizen has the obligation to inform the alleged violator prior to the commencement of a citizen suit. 

A plaintiff is required to provide notice to the EPA, the State, and to any alleged violator of the Clean Air Act sixty days prior to the initiation of any suit. The citizen plaintiff’s entire suit will be dismissed as moot if the defendant has come into compliance with the Act, and entered into a consent decree with the plaintiff within sixty days after the plaintiff has given notice. Otherwise, the plaintiff may file a citizen suit after expiration of the sixty-day notice period. However, regardless of the time limit of a pre-suit notice, a suit may be filed immediately in the case of special emergencies or serious pollution incidents.

Under citizen suit provisions, government agencies may file lawsuits against environmental polluters in the interest of the public and claim monetary compensation for environmental damage. Whatever type of the assessment scheme of natural resource damage the plaintiff adopts, he or she shall propose the specific amount and basis for determination of damages, as well as the corresponding restoration plan. Otherwise, the court may not grant the plaintiff’s request. Therefore, in order to make a successful claim, the plaintiff will prepare a detailed and operable restoration plan in advance and make it public in accordance with law.

The opposition between the plaintiff and the defendant in American citizen suits determines that the plaintiff has to make public the specific purpose of damages in advance when claiming compensation for environmental damage, so that the damages, under supervision of the public, will not be abused or misappropriated, but be used for environmental restoration.

3. Supportive Clauses. — Civil penalties are not recoverable by the citizen plaintiff, but rather are deposited into the US treasury. Although civil penalties are not directly awarded to citizens, in order to mobilize the initiative of citizen plaintiffs, the law stipulates that the plaintiffs who win a lawsuit may get the attorney’s fees and part of the litigation costs paid by the defendant. Some provisions even provide material incentives for plaintiffs by establishing interest-drive mechanisms.

The most typical example is qui tam action, where the relator (private party), who brings an action on the government’s behalf, will be entitled to a percentage of the recovery of the penalty under the False Claims Act if the government (real plaintiff) succeeds. Under Proposition 65, a California law which is officially known as the Safe Drinking Water and Toxic Enforcement Act of 1986, private enforcers are entitled to 25 percent of civil penalties that are imposed.

4. System for the Attribution of Damages. — The US has a relatively mature system determining the ownership of civil penalties in citizen suits. When environmental damage occurs, the federal agency or the State government has the right to sue the responsible party for the prevention cost of environmental damage and the cost of environmental restoration in order to take timely preventive or restoration measures. The use of environmental damages is also governed by special funds for environmental pollution treatment. 

For example, under the Oil Pollution Act, the President, or the authorized representative of any State, Indian tribe, or foreign government, shall act on behalf of the public, Indian tribe, or foreign country as trustee of natural resources to present a claim for and to recover damages to the natural resources. Sums recovered under this Act shall be retained by the trustee in a revolving trust account to pay the costs of restoring natural resources and preventing pollution.

In addition, the relatively mature trust fund system in the US guarantees the payment of huge amount of damages. The Gulf of Mexico oil spill involved a civil penalty of 1.3 billion USD, not to mention the restitution for lost natural resources and the cost of recovering equivalent natural resources. Later BP set up a fund of billions of dollars for environmental restoration, through which it paid for the costs of environmental pollution treatment and the claims of victims. At the same time, local governments and institutions could also claim from the fund for expenses of preventive and temporary repair measures.
 
C. Enlightenment from the Experience of the US
 
At present, the general framework of China’s EPIL system has been established, and refined by relevant laws, regulations and judicial interpretations. However, there is still a long way to go before the system is perfected, tested by practice, and eventually matured. Although it is not common for international community to introduce punitive damages into environmental litigation, a comprehensive examination of the citizen suit system in the US will, to some extent, inspire China to the application of punitive damages in EPIL.

First, punitive damages are essentially complementary and theoretically applicable to China’s EPIL. Through the investigation of the evolution of the punitive damages system in the US, it is clear that such system is designed for punishing and deterring wrongdoers by ordering them to compensate for the part of damage that is difficult to be remedied under the traditional damage compensation system. In China, punitive damages were mainly applicable to consumer protection, food safety responsibility and other fields, so it could be inferred that punitive damages were introduced into China’s law originally to maintain market order and ensure the equal status of market participants. In the above fields, the wrongdoer causes damage to the person and property, as well as to the public interest. Hence China’s current legal system, designed for remedying the damage to the overall interest of society, also takes the maintenance of the public interest as the value goal of punitive damages. Therefore, China should keep pace with the times by taking compensation for social damage as the goal of the system of punitive damages. The introduction of punitive damages into civil EPIL has its sufficient theoretical basis and reasonable value.

Second, when designing the proportion of distribution punitive damages in EPIL, China should pay attention to the ‘priority of administrative agencies’ which is also known as notice in American law. An environmental citizen suit may not be commenced prior to giving notice of the alleged violation to the relevant administrative agencies. Only when the administrative agencies fail to prosecute diligently a civil or criminal action within the statutory time limit may the legal proceedings be initiated. Although this idea has not been established yet in China’s legislation, it has become a consensus that a similar system may be established in the future. In juridical practice, administrative agencies will definitely intervene in litigation, which will lead to a situation where subjects of prosecution vary greatly in the time and degree of participation in EPIL. In this case, the proportion of damages awarded to different subjects should be reasonably distributed to ensure the appropriateness of incentives.

Third, China should reasonably design the applicable conditions and scope of punitive damages in EPIL so as to give full play to its due system effectiveness. The system of citizen suits in the US is not intended to replace the right to environmental management, and no citizens shall abuse their right to environmental supervision when filing suits. Civil penalties shall be applied only to violations of prescribed effluent standard or limitation, or an order issued by the Administrator or a State with respect to such a standard or limitation. The theoretical basis of such restriction is that administrative agencies have the right to manage environmental entities in accordance with law. Other social subjects cannot directly formulate environmental standards, decide whether to issue licenses or not, or obtain private compensation through filing public interest lawsuits. The system distinguishes environmental public interest from private interest, making punitive damages work effectively in EPIL. Will the introduction of punitive damages into China’s EPIL lead to an explosion of lawsuits due to the free-riding lawsuits filed by subjects whose private interest is damaged? The practice of citizen suits in the US fully demonstrates the importance of administrative enforcement in safeguarding social welfare. By clarifying the realization of PIL, distinguishing between the relief of private and public interest, and strictly defining the applicable conditions and scope, the system of punitive damages will achieve full institutional value of EPIL.

Fourth, the rules for punitive damages in China’s EPIL should conform to the mechanism for internalization of external costs. At present, compensatory damages are the core method for assumption of liability in China’s civil EPIL. Limited by the scope of compensation, environmental organizations are only awarded the costs of the investigation and assessment of environmental damage, but these damages can hardly cover the costs of what environmental organizations have done, let alone provide incentives for them. Since it is difficult to realize the internalization of external costs, environmental organizations generally lack the initiative of filing EPIL lawsuits. This is also an important reason why relevant organizations have little enthusiasm to file EPIL lawsuits though they have the right to do so in accordance with law. Therefore, in order to encourage social organizations such as environmental groups to file public interest lawsuits, we can learn from the experience of the US by awarding a certain proportion of damages to the plaintiff who wins a lawsuit. In short, it is feasible to arouse the initiative of social organizations to file lawsuits by establishing an interest-driven mechanism.

IV. INTRODUCTION OF PUNITIVE DAMAGES INTO CHINA’S CIVIL EPIL

 
A. Specifying the Order of Plaintiffs in Civil EPIL
 
As a legal proverb goes ‘no plaintiff, no judge’. Given the diversity of plaintiffs in EPIL, as well as the apparent differences among them in their capacity for litigation and relevance to the public interest, clarifying their order is of evident importance in selecting the optimal plaintiff and improving the efficiency of litigation. Moreover, the deterrence of the punitive damages is such that plaintiffs should be ordered specifically so as to prevent their abuse of litigation, save judicial costs, and eventually make the system work in civil EPIL. Under article 55 of the Civil Procedure Law, ‘an authority or relevant organization as prescribed by law’ is eligible for PIL. Based on this, the author proposes to establish a system regarding the order of plaintiffs in civil EPIL where administrative agencies take priority, social organizations supplement and procuratorial organs give final support.

Punitive damages should be designed to strengthen the deterrence of civil EPIL by giving full play to the punitive and incentive function of the damages. Since administrative agencies have incomparable advantage over other plaintiffs in terms of the efficiency of law enforcement, which means they can ensure the maximization of public environmental welfare through their reasonable use of limited enforcement resources, their first place in the prosecution will help achieve the administrative goals which were unachievable due to limited power, reduce the possible risk of administrative litigation from the root, and conform to the fundamental pursuit of market economy. If social environmental groups, in accordance with existing laws, may file lawsuits based on actual environmental damage or possible environmental risks, they will be prone to abuse of litigation. In this regard, China can learn from the practice of the priority of administrative agencies in American citizen suits and follow suit. To be specific, social organizations shall notify relevant administrative agencies of their priority of prosecution prior to filing an EPIL lawsuit. If the administrative agencies do not take practical measures to urge environmental violators to come into compliance with laws and regulations or file a lawsuit within the statutory time limit, social organizations are entitled to file a supplementary lawsuit. The citizen suit could be rendered moot once the goal of protecting environmental public interest is achieved within the prescribed time limit. As for the time limit of pre-suit notice, it still needs to be reasonably stipulated based on China’s reality and the demand of environmental resources protection.

Social organizations eligible for litigation have the right to intervene in EPIL and supervise environmental polluters to abide by the law when administrative agencies fail to diligently perform their duties required by law. Finally, even if there is no administrative agency or social organization to file an EPIL lawsuit and request punitive damages, procuratorial organs will provide final support by assuming the role of plaintiff. The priority of social organizations over procuratorial organs in PIL will bring about reasonable allocation of judicial resources and high efficiency of procuratorial work, and ensure that procuratorial organs will file a lawsuit as the last means to safeguard environmental public interest.

In the face of complicated environmental violation, limited judicial resources should be focused on solving key problems, and it is not appropriate to establish a one-size-fits-all system governing the subjects of prosecution. By specifying the order of plaintiffs like a filter, punitive damages will better demonstrate its deterrent effect, and achieve the goal of EPIL.
 
B. Specifying the Application Scope of Punitive Damages in Civil EPIL
 
The severity and punitiveness of punitive damages make it necessary to carefully define their application scope so as to avoid excessive deterrence. The Civil EPIL Interpretation prescribes the object of prosecution in civil EPIL as ‘any conduct that pollutes the environment and damages the ecology, which has damaged the public interest or has the major risk of damaging the public interest’. However, the author holds that an important basis for the application of punitive damages lies in the strong culpability and reprehensibility of the objects, meaning that punitive damages are not applicable to all the objects. In view of this, the application scope of and specific actions applicable to punitive damages should be carefully determined and defined through legislation.

Environmental law theory usually makes the following distinction between environmental risk and environmental hazard. Generally speaking, environmental risk refers to the degree of risk that environmental damage can hardly be excluded with practical reason, that is, the risk is inevitable. Environmental hazard, on the other hand, refers to the unbearable risk of environmental damage, meaning the risk is highly probable. According to the above concept, some scholar defines risk and hazard based on the probability of damage. Referring to relevant concepts, the author considers that the application scope of punitive damages in EPIL should be restricted to the conduct in violation of rules for environmental hazard control. It is because modern law limits the probability of damage to the expected range of society by establishing the code of conduct adaptable to current economic basis. As a sociologist points out, ‘in advanced modernity the social production of wealth is systematically accompanied by the social production of risks’ and ‘in the course of the exponentially growing productive forces in the modernization process, hazards and potential threats have been unleashed to an extent previously unknown’. The original intention of EPIL should be to prevent ecological damage rather than to restore the damaged environment, and the prosecution for violation of rules for environmental hazard control better meets the need for relief in advance.

Specifically, the rules for environmental hazard control set up in the system of punitive damage include two types: preliminary procedures and environmental standards. The violation of the above rules is culpable in that it raises the probability of damage to an unacceptable extent. In contrast, even if the conduct causes adverse consequences, if it is within the scope of the rules and does not have a strong culpability, the defendant may only compensate for the damaged interest in accordance with relevant laws. Preliminary procedures assess the probability of damage and keep it within an acceptable level. Environmental standards provide reasonable guidance for the conduct. By giving specific and explicit codes of conduct and listing the possible environmental risks caused by relevant conduct, the purpose of restraining such conduct could be achieved.

Therefore, any conduct in violation of the rules for environmental hazard control should be considered as the application scope of punitive damages in civil EPIL. Civil EPIL cases can be classified as follows: cases where emission of pollutants by exceeding the prescribed standards causes damage to environmental public interest, and the ones where the violation of preliminary procedures causes damage to environmental public interest, such as cases where the construction entity commences construction of a project at its own discretion while the preliminary procedures have not been approved yet, which violates article 31 of the Law of the People’s Republic of China on Environmental Impact Assessment.
 
C. Establishing Rules of Determining the Amount of Punitive Damages in Civil EPIL
 
Punitive damages are introduced mainly to curb environmental tort, and the amount of the damages has a direct bearing on the achievement of this goal. Exorbitant damages may cause excessive deterrence, while low amount may fail to ensure its deterrent effect. Therefore, the amount of punitive damages should be scientifically and reasonably determined by considering the factors of discretion over the amount, and the calculation method. 

Firstly, the factors of discretion over the amount should be reasonably prescribed to ensure the deterrent function of punitive damages and avoid arbitrary application of the system in judicial judgment. In the past, punitive damages in China were mainly applicable to consumer protection, commodity-related fraud and other fields. The amount of punitive damages depends on the actual price of the transaction and the legal multiple, leaving almost no room for discretion in judicial practice. In recent years, the application of punitive damages in tort has drawn the attention of legal scholars to the study of factors of punitive discretion. Referring to the laws and regulations as well as the judicial practice in the US, a scholar in Taiwan summarizes 14 factors of discretion. Specifically, these factors can be classified into three types. The first type is reprehensibility. It is worth considering as the reprehensibility of the unlawful act determines the necessity of awarding punitive damages, the intensity of punishment, and whether the punitive function of such damages will be achieved. The second type is deterrence which is examined to determine whether the awarded punitive damages will effectively prevent the defendant from engaging in the same conduct in the future. The third is relevance to damage, the investigation of which serves to ensure that the awarded punitive damages match the objective damage caused by the unlawful act. To sum up, when introducing punitive damages into China’s civil EPIL, the above three types of factors of discretion should be taken into consideration so that the rules for determining the amount of punitive damages will be reasonably set up.

Secondly, the method of calculating the amount of punitive damages should be scientific. At present, the amount of punitive damages, calculated mainly by three models, could be ‘fixed’, ‘unfixed’ or ‘flexible’. Based on the analysis of the above three models and China’s reality, the author’s views on the calculation of punitive damages are as follows.

A fixed-amount mode does not apply to China’s EPIL. When the maximum amount of damages for the wrongdoer is reached, such damages are meaningless due to various differences such as property among different subjects. As a scholar puts it, it is like ‘lashing ants and elephants with the same whip’. One of the most important functions of punitive damages is to impose individual punishment on the wrongdoer, but the fixed-amount mode restricts such function to a large extent. Analyzing the relevant legislation in the US, some scholar points out that ‘a system with the maximum amount of punitive damages seems like a roaring tiger turning into a sick cat which has lost its punitive and deterrent effect’. If the maximum amount of punitive damages is specified through legislation, its system function will be completely lost.

Therefore, it is feasible to adopt a calculation model which makes a flexible amount of punitive damages. As mentioned, the environmental tort in EPIL violates the rules for environmental hazard control, including both the conduct that has caused personal and property damage, and the one that has not caused any damage but has a major risk of causing damage. For the former conduct, the amount of punitive damages may be calculated by multiplication. Specifically, the amount is determined with the aforementioned factors of discretion as the multiplier, and the actual loss caused by the tort as the calculation base. In terms of the latter, the above calculation model is not applicable as no actual loss has been caused or it is too difficult to calculate the loss. However, the scope of punitive damages applicable to civil EPIL is only limited to the conduct in violation of the rules for environmental hazard control, as well as other laws, regulations or preliminary provisions, and therefore may result in corresponding public law liability. In view of this, liability under public law may serve as the basis for the calculation of punitive damages and the amount may be determined in a fixed proportion or by specifying a minimum limit. For example, the plaintiff may claim punitive damages from the environmental polluter for emission of pollutants by exceeding the prescribed standards, and awards of the damages shall amount to a number of times the amount of the penalty; when the amount is too low, it may be determined according to the minimum legal amount.
 
D. Establishing Rules for the Distribution and Attribution of Punitive Damages in Civil EPIL
 
The subjects participating in the distribution of damages in civil EPIL include not only victims in traditional cases to whom punitive damages are applicable, but also such plaintiffs as administrative agencies, procuratorates and social organizations. One of the most important purposes of introducing punitive damages is to compensate for damage to the public interest, motivate the plaintiff with extra compensation, and eventually safeguard the public interest. However, excessive damages and deterrent level may easily lead to waste of public resources or even damage to the public interest. Such contradiction reflects the dilemma of incentives in China’s civil EPIL. Originally citizen suit in the US only employed injunction as the primary relief in order to ensure its nature of public welfare. More incentives like the catalyst theory and attorney fee-shifting emerged through practices, of which the catalyst theory was rejected by the US Supreme Court later to avoid excessive citizen suits brought to enforce environmental laws. However, the insufficiency of incentives followed as another problem. It is thus evident that the same dilemma is also reflected in the practice of citizen suits in the US. Therefore, to avoid such dilemma, the distribution and attribution of punitive damages should be reasonably specified in China’s civil EPIL. To be more concrete, the function, nature and purpose of punitive damages should be taken into consideration when determining how they should be awarded.

First, as discussed above, the primary function of punitive damages is to compensate for the loss of the public interest and encourage the plaintiff to file lawsuits. On the premise of realizing their deterrent function, punitive damages must be reasonably distributed to ensure the appropriateness of incentives.

Second, punitive damages serve as a method for assumption of liability of safeguarding the public interest. Based on such nature, punitive damages in civil EPIL are supposed to be included into government revenue, but for the purpose of implementing public policy, a certain proportion of damages may be awarded to private plaintiffs as an incentive. As the purpose of public policy changes, the distribution mode needs to be adjusted in time and constantly improved based on the practical demands.

Finally, the purpose of punitive damages comes down to environmental restoration and the protection of environmental public interest, which is also the ideal purpose of civil EPIL. Although incorporating punitive damages into the government’s non-tax revenue also helps achieve the purpose, it is not a well-targeted approach. A more appropriate one would be to include the damages into special funds for environmental treatment. In practice, to make up for the possible defects of public financial expenditure, punitive damages have been incorporated into special environmental funds on a trial basis.

To sum up, the plaintiff of an EPIL case, the government’s non-tax fiscal revenue and special environmental funds are all entitled to punitive damages, meaning that specific distribution rules should also be carried out in practice among them.

The author proposes that the optimal distribution subject be further clarified in future legislation in order to distribute punitive damages reasonably. In other words, whether government finances and funds for environmental protection could be the subject of distribution deserves in-depth research. The advantages and disadvantages of the two subjects are as follows: the management of government finances is relatively formal and legitimate, but its drawbacks such as low efficiency in the use of funds and undefined applicable areas are also obvious; environmental funds boast clear applicable areas as well as efficient and professional management, but defects also exist, such as uncertain subjects of management, imperfect management mechanism, and immature standards for the use of funds. In addition, an important purpose of introducing punitive damages in the environmental field is to make up for low management efficiency of public institutions. Therefore, the establishment and operation of the whole system should always focus on such purpose, and taking environmental funds as the subject of distribution obviously conforms to this purpose. A comprehensive comparison between the two makes it clear that environmental funds, which will be perfected through continuous exploration in judicial practice, are a better choice.

In addition, in contrast to private plaintiffs, procuratorial organs shall have the conduct costs of EPIL covered by state expenditures. If procuratorial organs participate in the distribution of damages, such secondary compensation might lead to uneven distribution of benefits and abuse of litigation by administrative agencies and procuratorial organs. Therefore, a comprehensive review of China’s national conditions reveals that environmental funds for the public interest may become the key distribution subject of punitive damages in the future. In the EPIL cases where the plaintiff is an administrative agency or a procuratorate, the awarded damages shall be included into environmental funds.
 
V. CONCLUSION
 
The establishment of civil EPIL system contributes to mobilizing social and judicial forces, effectively curbing the trend of environmental deterioration, and resolving current environmental problems. However, as a newly-established system, there remain many weak links and deficiencies in its implementation. The author holds that the absence of punitive damages in China’s civil EPIL has limited its deterrence and implementation effect drastically. To fill the gap promptly, it is necessary to introduce the system of punitive damages and fine-tune it through constant exploration, so that a relief system without any loopholes will take shape.


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